Subject: California Power Update 1/17/01 pt.III
From: [email-masked]
To: [email-masked]
Cc: [email-masked], [email-masked], [email-masked], [email-masked], [email-masked], [email-masked], [email-masked], [email-masked], [email-masked], [email-masked]
Date: Wed, 17 Jan 2001 03:31:00 -0800 (PST)

1. California AG Exploring Investigation of Power Profits

Sources report that the California Attorney General's office,in a meeting 
yesterday, ordered a review of the Federal Profiteering Statute.  In keeping 
with the recent 
rhetoric by Gov. Davis, this action is almost certainly directed toward 
investigations of profits made by generators and marketers.

2. More Detail on Bankruptcy- Creditors Concerned About Lengthy "Cure Period"

The generators want to limit their exposure as general creditors in a Chapter 
11 proceeding. Their ability to their exposure depends on the "cure period" 
for 
making good on a defaulted payment, which would be dictated by the specific 
contract terms. If the "cure period" - that is, the time the utilities have 
available to
make up for missed payments before the generators or the power exchange can 
take them to court - is a short period of time, for the sake of argument 30
days, then the utilities' creditors have to swallow another 30 days of 
accumulated (impaired) receivables before they can move to the more
desirable position of postpetition suppliers (in which bills do get paid, as 
would be directed by the Bankruptcy Court judge). If, however, the utilities
have a longer "cure period", for the sake of argument 60 days, then their 
creditors will effectively have to swallow 60 days of accumulated impaired
receivables on which they will ultimately have to take a substantial haircut.