Message-ID: <26674563.1075851647208.JavaMail.evans@thyme> Date: Tue, 25 Sep 2001 08:37:59 -0700 (PDT) From: bkc7@pge.com To: jdasovic@enron.com Subject: FW: Elec Daily - PG&E's brilliant reorganization Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: Cherry, Brian X-To: Dasovich Jeff (E-mail) X-cc: X-bcc: X-Folder: \Dasovich, Jeff (Non-Privileged)\Dasovich, Jeff\Inbox X-Origin: DASOVICH-J X-FileName: Dasovich, Jeff (Non-Privileged).pst -----Original Message----- From: Cooper, Shawn (Corp) Sent: Tuesday, September 25, 2001 8:26 AM To: Cheng, Linda (Corp); Darbee, Peter (Corp); Everett, Leslie (Corp); Gee, David (Corp); Glynn, Robert D. Jr (Corp); Johns, Christopher (Corp); Kline, Steven (Corp); Pruett, Greg (Corp); Stanley, Brent (Corp); Wan, Fong (Corp); Worthington, Bruce (Corp); Cortez, Sonia (Corp); Hertzog, Brian; Jacobs, Erica; Parnell, Renee (Corp); Seaman, Merrilee (Corp); david.rogers@lw.com; jeff.rothschild@lw.com; joel.mack@lw.com; robert.kennedy@lw.com; samuel.fishman@lw.com; Buchsbaum, Craig M (Corp); Chang, Frances (Corp); Encinas, Gary P (Corp); Ford, John E (Law) (Corp); Gavin, Julie (Corp); Hayes, Kathleen (Corp); Jones, Richard C (Corp); Ludemann, Doreen (Corp); Monti, Robert (Corp); Sallaberry, Susan (Corp); Shelley, E Brian (Corp); Tomcala, Karen (Corp); Anderson, David W (Law); Faraglia, Annette (Law); Gardiner, Stuart (Law); Huffman, Mark (Law); Kurz, Edward (Law); Lindh, Frank (Law); Manheim, William (Law); Patrizio, Mark (Law); Post, Jennifer (Law); Reid, Alice (Law); Sampson, Keith (Law); Witalis, Lawrence (Law); Hartman, Sanford; Herman, Stephen; Bar-Lev, Joshua (Law); Busterud, John (Law); Fallin, Jack Jr (Law); Locke, Richard (Law); Ouborg, Peter (Law); Peters, Roger (Law); Richard, Daniel; Vincent, Louis (Law); Warner, Christopher (Law); Andre, Erin; Barpoulis, Sarah; Boren, Thomas G. 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(Corp); Lee, Wondy (Corp); Sallaberry, Jack (Corp); Tapang-Daniels, Angie (Corp); Wong, Annie (Corp); davidt@trbu.com; jeffr@trbu.com; jhinc@mindspring.com; Bourgeois, Megan (Corp); Chan, Eileen (Corp); David, John (Corp); Donnelly, Michael (Corp); Dore, Jay (Corp); Faulk, Angie (Corp); Hendra, Vincent; Togneri, Gabriel (Corp); Follette, William (Corp); Frederickson, Mike; Langer, Laurie (Corp); Sarti, Daniel; Sena, David; Butler, Kevin (Corp); Corey, Jana; Damon, Mary (Corp); Whelan, Steve; Wilson, Sandra (Corp); Hurlburt, Jane; Shaffer, Lyman; Anderson, Don (Gas Distribution); Carter, Rick; Davis, Doug; Document Retention-CPUC; Eastman, Alan; Gross, Robert; Homrig, Staci; Johnson, Kirk; Brennan, Jean (Corp); Bustamante, Janice (Corp); Choy, Dora (Corp); Clark, John (Corp); Doering, Rick (Corp); Hagerty, Sandra (Corp); Hein, Kari (Corp); Nicco, Denise (Corp); Goyhenetche, Greg; Leder, Steve; Rayburn, Stephen; Rozario, Mark; Silva, Michele; Smullin, Albert; andrea-calise@kekst.com; aweiner@kekst.com; laura-leclair@kekst.com; michael-freitag@kekst.com; robert-siegfried@kekst.com; victoria-weld@kekst.com; amy.mcwethy@neg.pge.com; Franklin, Lisa; greg.mccormick@neg.pge.com; jim.lewis@neg.pge.com; megan.frey@neg.pge.com; Mould, David; natalie.wymer@neg.pge.com; Seymour, Bonny; Black, Patricia (Corp); Hill, Thomas; Janis, Megan Smith (Corp); Palazzi, Marsha; Pidcock, Paulette C (Corp); Albrecht, Lorraine; Bedwell, Ed; Dennis, Melinda; Hunter, Dale; Kauss, Kent; Kazama, Joyce; Timmerman, Mark; Chung, Chris; Lim, John; Sanchez-Ng, Gyn; Varjassy, Shannon; Wu, Kathleen; Cherry, Brian; Guliasi, Les; Stock, William; Hardee, Wil; Hobson, Missie; Newman, John; Roake, William; Torrens, John; Blakey, Scott; Coker, Lloyd; Davin, Marilyn; Lewis, Jeff (News); Low, Ronald; Nelson, John (News); Randle, Lisa; Stelling, Terry; Swanson, Brian; Tremayne, Jon; Woo, Linda Subject: Elec Daily - PG&E's brilliant reorganization Editorial on the company's announced POR is the lead story in today's Electricity Daily. Shawn Cooper > -----Original Message----- > Electricity Daily > > Tuesday, September 25, 2001 > > Analysis: PG&E's Brilliant Reorganization > The reorganization plan that PG&E Corp. and Pacific Gas and Electric filed > in U.S. Bankruptcy Court last week (ED, Sept. 21) is brilliant in its > simplicity. It essentially moves as much of the company's hard assets as > possible away from California's notoriously business-averse politicians > and regulators and to the more predictable feds. That step, itself, makes > the businesses creditworthy, because it creates a predictable revenue > stream. > The one element of the business that can't be severed from the > jurisdiction of the rapacious California Public Utilities Commission - the > retail electricity and gas distribution utility - will be so fenced in by > federally-approved wholesale contracts that the CPUC will have no choice > but to pass through costs preordained as just and reasonable or face > certain loss in the courts. In the meantime, PG&E's filed rate case > continues in court, with every likelihood of success, further limiting the > damage that the demented regulators can impose. > PG&E's hydro system is already subject to Federal Energy Regulatory > Commission regulation, although many consumer groups in the state don't > seem to understand that fact. Under the reorganization plan, the Diablo > Canyon nuclear plant would become a wholesale provider with a > FERC-approved tariff. PG&E's pipeline system, historically a "Hinshaw" > pipeline not subject to federal jurisdiction, would become a traditional > interstate system under FERC jurisdiction. > The politicians and regulators quickly recognized what PG&E would do and > have been gnashing their teeth furiously since the announcement. But it > appears there is little they can do other than lament. The plan would not > raise rates, so the court has no reason to consult with the CPUC. And > federal law clearly trumps state law when it comes to protecting > creditors. > The fact that the creditors are lined up behind the reorganization plan is > the worst news the state could hear. According to bankruptcy experts, it > is highly unlikely that the court would reject a plan that the creditors > endorse. Because they get all their money paid, with interest, the > creditors are largely made whole (the largest will have to take some notes > as part of the repayment). > Will the bankruptcy reorganization plan lead Southern California Edison > into bankruptcy? There are two lines of argument on this question, both > valid. One suggests that the plan will lead Gov. Gray Davis and the > backers of his Edison bailout to push harder for quick action, lest Edison > decide it can do better in court than it can in the Legislature. The other > line argues that PG&E's plan will lead Edison's creditors to put the > utility quickly into Chapter 11 involuntarily. > The Reuters news service last week reported that power generators Mirant > Corp. and Reliant Energy are looking for a third creditor to push the > company into involuntary bankruptcy. Sources indicate that the city of > Long Beach may be the third creditor needed to push the state's second > largest utility into bankruptcy > Ted Craver, chief financial officer of Edison International, the utility's > parent, told a conference call to creditors last week that the company > would not voluntarily seek bankruptcy protection and would "vigorously > oppose any involuntary bankruptcy petition." But under bankruptcy law, > according to legal experts, once the creditors file, there is little > Edison could do. > In addition, the unveiling of the PG&E plan last Thursday will embolden > Republicans in the Legislature, and perhaps some Democrats, to put a > rescue package for SCE on hold. The PG&E filing has much to recommend > itself to both Republican and Democratic legislators. It does not raise > retail rates. It does not involve any form of a state "bailout" of the > utility. It provides a clear path for the state to get out of the energy > procurement business. > -- Kennedy Maize > >