Subject: Urgent- California Update 2/16
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Date: Fri, 16 Feb 2001 12:25:02 -0800 (PST)

Negotiations between Governor Davis and California utilities may be faltering:

Negotiations between Governor Gray Davis and California's three major utilities appear to be taking a significant turn.  Sources report that the proposal by Governor Davis that was splashed in the press this morning is reported to have been rejected by PG&E, and SoCal Ed.  The proposal to purchase debt ridden utilities' transmission lines was outlined in SB33x 

The Governor is expected to revise SB33X and approach the utilities with the following new terms:
		
		1)  Raise the states transmission pruchase bid from $3.5 billion to roughly $6 billion
		
		2)  Finance a $9 to $12 billion payment for the utilities' under-collected debt to generators 	

		3)   Allow the utilities to issue 15 year bonds to repay the state, resulting in surcharges on consumer utility bills.

Consumer groups led by Harvey Rosenfield could provide strong opposition to Davis' plan and it is possible Rosenfield could launch a referendum to kill the bill.

Davis is scheduled to give a press conference today and 2:00 pm (Pac. Time) to comment on negotiations.