Subject: California Update 5/11/01
From: [email-masked]
To: [email-masked], [email-masked]
Cc: [email-masked], [email-masked], [email-masked], [email-masked], [email-masked], [email-masked], [email-masked], [email-masked], [email-masked], [email-masked], [email-masked], [email-masked], [email-masked], [email-masked], [email-masked], [email-masked], [email-masked]
Date: Fri, 11 May 2001 18:00:00 -0700 (PDT)

?	The extraordinary session is expected to close early next week, after the governor has signed SB 28X, a power plant siting bill.  Yesterday, the governor signed bond financing bill SB 31X.  Once the extraordinary session is closed, a new extraordinary session is expected to be opened immediately.  However, sources report that no one is certain if the bills from this session will have the same numbers in the next session.  The legislature reportedly is trying to arrange so that the bills will not have to be heard again in committee.

?	The MOU still does not have a sponsor.  Governor Davis hopes to reach a deal with Sempra for the state to purchase San Diego Gas and Electric's transmission assets.  He reportedly feels that by having deals in place with SoCal and SDG&E, enough momentum might be added to push the MOU through the legislature.  He then could go to the bankruptcy court and propose adding PG&E's assets, since he would have two of the three pieces in place.  The validity of this logic seems questionable at best.  Sources are skeptical that adding SDG&E to the MOU would increase the chances of the deal going through the legislature.  Also, the governor has claimed to be close to having a deal with SDG&E for several weeks, but such a deal has not yet been finalized.  The governor stated that he will have a sponsor for the MOU by next week when the bill will be introduced.  The MOU might be introduced in the legislature, then amended to indicate a lesser amount for the transmission asset purchase.  This still would not assure passage since so many legislators reportedly are against the MOU.

?	The windfall profits tax bill has not been set for hearing on the Assemble floor.  

?	State Legislature, Elizabeth Hill, published a report earlier this week regarding an analysis of state revenues.  The report stated that revenues for this year would be $3.4B less that was expected in January 2001, not including electricity costs.  She predicts that ongoing state programs will have to be cut by approximately $1.7B.

?	Moody's has put California's credit rating under review for another downgrade.  Sources report that Moody's, S&P, and MBIA have all informed California that "the only way the state will improve its credit rating and look better to investors is to get out of the power business and resolve the undercollected."