Subject: California Update 4/9/01
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: Mon, 9 Apr 2001 20:04:00 -0700 (PDT)

Here is what we know so far with the recent announcement of a deal between Socal and the State for the transmission lines:

?	The deal may be enough to save Socal from bankruptcy.  This will depend on the payment terms as well as how soon Socal can receive a positive cash flow.
?	We are not sure if the State can really do a deal without PG&E or a deal for whole grid.  It was thought that a transmission asset deal was not possible without PG&E.  This may still be the case; the state may still be making the deal contingent upon the purchasing of PG&E's assets.  A generator source reports that the state is intending to put pressure on the bankruptcy court to close the deal on PG&E's lines quickly.  However, bankruptcy courts usually do not operate in this manner.  In most cases the court would have to hold open proceedings, have competitive bids, etc.
?	This purchase would need legislative approval, which is not guaranteed.  Previously the plan was for the state to purchase SCE's and PG&E's assets at a premium so that they would not have to finance power purchases - the utilities would be able to buy power for themselves.  Now they would have to purchase SCE's lines, but still finance power purchases because of PG&E.  Additionally, it is possible that Socal swapped the clause allowing then to raise rates in order to recoup past debt in favor for an additional book price.  If this any form of a utility bailout - it would probably no gain legislative approval.
?	The purchase would also need FERC approval.  As stated before, if FERC approves such a plan it would be with several conditions for California.