Subject: California Update 3/22/01
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]
Date: Thu, 22 Mar 2001 11:20:00 -0800 (PST)

?	The legislature will meet and vote to repeal Section 390 of AB 1890.  This will reverse what the QFs get  paid from natural gas costs and replace it with the formula in the governor's current plan - 7.9 cents/kwh for 5-year contracts and 6.9 cents/kwh for 10-year  contracts.  According to sources, this is "locked in to pass."  It  will be implemented by a PUC order on Monday.
 
?	The QFs met on this plan all day yesterday and have calculated what they would get paid.   This  plan would not generate enough money for many QFs to operate profitably.  At  least 2,000 MW of the total 5,407 MW of gas-fired QFs would be unable to generate  a positive cash flow and would have to either operate unprofitably or shut down.
 
?	The QF community is responding with an increased militancy for an involuntary filing, according to sources.  The most aggressive QF after Coram Energy is David Sokol and Walter Scott of Mid-America Energy (based in Nebraska).  Sokol is described  by sources as "extremely aggressive." 
 
?	An involuntary bankruptcy filing appears imminent.   Sources believes the trigger event will either be the legislative passage of the plan  tomorrow or the PUC order implementing the plan on Monday.