Message-ID: <27920535.1075846363505.JavaMail.evans@thyme> Date: Wed, 13 Dec 2000 05:31:00 -0800 (PST) From: jeff.dasovich@enron.com To: skean@enron.com, richard.shapiro@enron.com, james.steffes@enron.com, paul.kaufman@enron.com, karen.denne@enron.com, mary.hain@enron.com, tim.belden@enron.com, robert.badeer@enron.com, chris.foster@enron.com, christopher.calger@enron.com, joe.hartsoe@enron.com, alan.comnes@enron.com, sarah.novosel@enron.com, mpalmer@enron.com, sandra.mccubbin@enron.com, susan.mara@enron.com, mona.petrochko@enron.com, jennifer.rudolph@enron.com, jeffery.fawcett@enron.com, dennis.benevides@enron.com, neil.bresnan@enron.com, roger.yang@enron.com, harry.kingerski@enron.com, martin.wenzel@enron.com, douglas.condon@enron.com, david.parquet@enron.com, laird.dyer@enron.com Subject: FYI-Edison wants Reregulation Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: Jeff Dasovich X-To: skean@enron.com, Richard Shapiro, James D Steffes, Paul Kaufman, Karen Denne, Mary Hain, Tim Belden, Robert Badeer, Chris H Foster, Christopher F Calger, Joe Hartsoe, Alan Comnes, Sarah Novosel, mpalmer@enron.com, Sandra McCubbin, Susan J Mara, Mona L Petrochko, Jennifer Rudolph, Jeffery Fawcett, Dennis Benevides, Neil Bresnan, Roger Yang, Harry Kingerski, Martin Wenzel, Douglas Condon, David Parquet, Laird Dyer X-cc: X-bcc: X-Folder: \Steven_Kean_Dec2000_1\Notes Folders\Notes inbox X-Origin: KEAN-S X-FileName: skean.nsf ----- Forwarded by Jeff Dasovich/NA/Enron on 12/13/2000 01:29 PM ----- "Katie Kaplan" 12/13/2000 01:23 PM Please respond to kaplan To: "Douglas Kerner" , "Andy Brown" , "B Brown Andy" , "Bob Weisenmiller" , "Jan Smutny-Jones" , "Jean Munoz" , "Jeff Dasovich" , "John Stout" , "Julee Malinowski-Ball" , "Karen Edson" , "Kassandra Gough" , "kent Palmerton" , "Kristin Vellandi" , "Marty Wilson" , "McNally Ray" , "Norton Kelli" , "Paula Hall-Collins" , "Richard Hyde" , "Stephanie-Newell" , "Sue Mara" , "Tom Ross" , "Kate Castillo" , "Bill Carlson" , "Bill Woods" , "Bob Escalante" , "Carolyn Baker" , "Cody Carter" , "Curt Hatton" , "Curtis Kebler" , "Dave Parquet" , "Dean Gosselin" , "Duane Nelsen" , "Ed Tomeo" , "Eileen Koch" , "Eric Eisenman" , "Frank DeRosa" , "Greg Blue" , "Hap Boyd" , "Jack Pigott" , "Jeff Dasovich" , "Jim Willey" , "Joe Greco" , "Joe Ronan" , "Jonathan Weisgall" , "Ken Hoffman" , "Kent Fickett" , "Lynn Lednicky" , "Marty McFadden" , "Paula Soos" , "Randy Hickok" , "Rob Lamkin" , "Roger Pelote" , "Scott Noll" , "Steve Iliff" , "Steve Ponder" , "Susan J Mara" , "Tony Wetzel" , "Trond Aschehoug" , "William Hall" , cc: "Karen Edson" , "Julee Malinowski-Ball" , "Douglas Kerner" , "B Brown Andy" , "Andy Brown" , "Jan Smutny-Jones" , "Steven Kelly" Subject: FYI-Edison wants Reregulation DJ Edison To Call For End To Calif Elec Dereg Wed -Sources Copyright (c) 2000 Dow Jones & Company, Inc. LOS ANGELES (Dow Jones)--Edison International (EIX), saying the current state of California's power markets threatens the company with bankruptcy, will call Wednesday for an end to California's four-year experiment with deregulation, sources familiar with the issue told Dow Jones Newswires. John Bryson, chief executive of Edison International, is expected to announce that the company's regulated utility unit, Southern California Edison, won't be able to recover more than $3 billion in losses related to power purchases and continue serving its retail customers unless the state's deregulated market structure is scrapped. In a move tantamount to a call for reregulation, Edison will propose to break ground on new power plants within 90 days and re-enter the power-generation business Southern California Edison was required to exit under the state's landmark 1996 deregulation law, the sources said. Edison plans to follow the announcement by filing a request with state regulators to increase retail electricity rates by as much as 20%, the sources said, even though regulators rejected Edison's request for a rate increase of 10% last week. The utility has lined up the support of some state lawmakers for the broader proposal, which would require action by the state legislature, the sources said. Southern California Edison, with 4.2 million customers, is one of the country's largest electric utilities. Edison was the first of the state's utilities to sign on to the deregulation effort and, as it says on its Web site, "played a central role in the restructuring of the electric industry in California." Among the concessions won by utilities in 1996 is the rate freeze, which they demanded to help them recover costs related to deregulation but which is now producing huge losses. Edison's current losses stem from an imbalance between the soaring prices it must pay to purchase power on the wholesale markets and the fixed rate at which it can sell power to its customers. About half of those losses are offset the utility's own power sales revenues, which are accounted for separately and used to pay down deregulation-related debt. Rising power costs have produced a surplus in that account. Edison wouldn't reveal the current size of the surplus, but said previously that the California Power Exchange paid the utility $1.3 billion over its generating costs for power through the end of September, at a time when its power-purchase losses were $2.4 billion. Power-Purchase Losses Mounting The net losses continue to mount. California's wholesale power prices hovered at record levels all summer and spiked even higher in the past two weeks, as colder weather arrived in the Northwest at a time when much of California's power supply was down for maintenance. The price of power for delivery Wednesday in California hit an average of $1,182 a megawatt-hour Tuesday, up from $250 a megawatt-hour a week ago, the result of high demand and a decision by California's wholesale market operator to lift its cap on prices. The rate Southern California Edison can charge its retail customers, however, is fixed at $66/MWh. Last week, Merrill Lynch & Co. (MER) downgraded its ratings for Edison International and PG&E Corp. (PCG), the parent of California's other major utility, Pacific Gas & Electric, to neutral, saying the utilities may be forced to file for bankruptcy if the state doesn't allow them to raise their retail rates. A Morgan Stanley Dean Witter (MDW) analyst drew the same conclusion Monday, also cutting his rating to neutral. Edison to this point has kept its power-purchase losses off its earnings statement, in hopes that a political or regulatory solution will allow them to be collected later. The California Public Utilities Commission put the hope of such a solution further out of reach last week, however, when it ruled against rate increases sought by Edison and PG&E. Credit rating agency Fitch Inc. on Monday lowered its ratings for Edison International and Southern California Edison's senior unsecured debt to the A-minus level, citing "increased liquidity pressure" and uncertainty about the utilities' ability to recover the costs of their power purchases. The agency downgraded Edison International, the parent, because half its consolidated cash flow is provided by Southern California Edison. Edison - which sources said plans to remain in the retail electricity business - said late last week that it has secured a $1 billion line of credit and expects to have enough cash on hand to continue to pay for wholesale electricity for the next several months. California paid more than $1 billion for power last week, sources said. Some of that, however, was paid to Southern California Edison, which still generates about 2,800 megawatts of power in the state. Shares in Edison International have fallen 21% over the past three weeks. They closed Wednesday at $18.56, down $0.06. -By Jason Leopold, Dow Jones Newswires; 323-658-3874; mailto:jason.leopold@dowjones.com(Mark Golden contributed to this article.) Katie Kaplan Manager of State Policy Affairs Independent Energy Producers Association (916) 448-9499 -----Original Message----- From: Katie Kaplan [mailto:kaplan@iepa.com] Sent: Wednesday, December 13, 2000 10:50 AM To: William Hall; Trond Aschehoug; Tony Wetzel; Susan J Mara; Steve Ponder; Steve Iliff; Scott Noll; Roger Pelote; Rob Lamkin; Randy Hickok; Paula Soos; Marty McFadden; Lynn Lednicky; Kent Fickett; Ken Hoffman; Jonathan Weisgall; Joe Ronan; Joe Greco; Jim Willey; Jeff Dasovich; Jack Pigott; Hap Boyd; Greg Blue; Frank DeRosa; Eric Eisenman; Eileen Koch; Ed Tomeo; Duane Nelsen; Dean Gosselin; Dave Parquet; Curtis Kebler; Curt Hatton; Cody Carter; Carolyn Baker; Bob Escalante; Bill Woods; Bill Carlson; Kate Castillo; Pigott Jack; Tom Ross; Sue Mara; Stephanie-Newell; Richard Hyde; Paula Hall-Collins; Norton Kelli; McNally Ray; Marty Wilson; Kristin Vellandi; kent Palmerton; Katie Kaplan; Kassandra Gough; Karen Edson; Julee Malinowski-Ball; John Stout; Jeff Dasovich; Jean Munoz; Jan Smutny-Jones; Bob Weisenmiller; B Brown Andy; Andy Brown; Douglas Kerner Cc: Douglas Kerner; Julee Malinowski-Ball; Karen Edson; Andy Brown; B Brown Andy Subject: FYI-Edison wants back in the generation business Edison Mission Energy Power Project Starts Construction After Expedited Approval By California Energy Commission Monday December 11 6:39pm Source: Dow Jones Operation Targeted for August IRVINE, Calif., Dec. 11 /PRNewswire/ -- Edison Mission Energy (EME), an Edison International company (NYSE: EIX), started construction of its new Sunrise power plant on Thursday, December 7, having received expedited approval from the California Energy Commission (CEC) to proceed. The power generation facility will be located in Kern County, California, and will bring both short- and long-term generation capacity to the state, which is in dire need of new power generation. "From the onset of the California power crisis, we have sought to find means to bring new power to the California market," said John E. Bryson, chairman and CEO of Edison International. "This CEC approval will help ensure that this critical new project will be able to provide a significant amount of new peaking power to the state as soon as next August. Our thanks and appreciation go to the California Energy Commission, and the environmental and regulatory agencies for their swift consideration of this important project." "This power has been offered by contract to the state so that the pricing for it does not depend on California's broken deregulated power market," said Alan J. Fohrer, president and CEO of EME. "Alternatively, EME will seek to enter into a long-term, cost-based contract with either Pacific Gas & Electric Company or San Diego Gas & Electric Company to further ensure that California's consumers reap the benefit of this additional power resource," Fohrer said. The Sunrise Power Project will be completed in two phases. Phase 1 will consist of a 320-megawatt (MW), simple-cycle peaking facility scheduled to be in service during the summer 2001. Phase 2 will convert the peaking facility to a 560-MW, combined-cycle operation with an in-service date of summer 2003. The project will meet or exceed all pertinent environmental and safety standards. Final regulatory approvals have been received for Phase I of the project only. EME will be seeking expedited permitting approval for the Phase II expansion in line with the fast-track approval process recently enacted by the California legislature. EME has also negotiated an agreement with the labor unions for an adequate supply of highly skilled labor in order to achieve an accelerated construction schedule. The accelerated schedule is aimed at providing this additional power to California by next summer. Edison Mission Energy specializes in the development, acquisition, construction management and operation of global power production facilities. As one of the world's leading global power producers, Edison Mission Energy owns nearly 23,000 megawatts of generating capacity, including interests in 75 projects currently under construction or operating in Australia, Indonesia, Italy, New Zealand, Puerto Rico, Spain, Thailand, Turkey, the United Kingdom and the United States. Based in Rosemead, Calif., Edison International is a premier international electric power generator, distributor and structured finance provider. With a portfolio of approximately 28,000 megawatts, Edison International is an industry leader in privatized, deregulated and incentive-regulated markets and power generation. It is the parent company of Edison Mission Energy, Southern California Edison, Edison Capita, Edison Enterprises and Edison O&M Services. /CONTACT: Kevin Kelley of Edison Mission Energy, 626-302-1033, Fax, 626-302-7827/ 21:35 EST Katie Kaplan Manager of State Policy Affairs Independent Energy Producers Association (916) 448-9499