Message-ID: <12344110.1075844239755.JavaMail.evans@thyme> Date: Mon, 14 May 2001 08:11:00 -0700 (PDT) From: jeff.dasovich@enron.com To: alan.comnes@enron.com, angela.schwarz@enron.com, beverly.aden@enron.com, bill.votaw@enron.com, brenda.barreda@enron.com, carol.moffett@enron.com, cathy.corbin@enron.com, chris.foster@enron.com, christina.liscano@enron.com, craig.sutter@enron.com, dan.leff@enron.com, debora.whitehead@enron.com, dennis.benevides@enron.com, don.black@enron.com, dorothy.youngblood@enron.com, douglas.huth@enron.com, edward.sacks@enron.com, eric.melvin@enron.com, erika.dupre@enron.com, evan.hughes@enron.com, fran.deltoro@enron.com, gayle.muench@enron.com, ginger.dernehl@enron.com, gordon.savage@enron.com, harold.buchanan@enron.com, harry.kingerski@enron.com, iris.waser@enron.com, james.steffes@enron.com, james.lewis@enron.com, james.wright@enron.com, jeff.messina@enron.com, jeremy.blachman@enron.com, jess.hewitt@enron.com, joe.hartsoe@enron.com, karen.denne@enron.com, kathy.bass@enron.com, kathy.dodgen@enron.com, ken.gustafson@enron.com, kevin.hughes@enron.com, leasa.lopez@enron.com, leticia.botello@enron.com, mark.muller@enron.com, marsha.suggs@enron.com, marty.sunde@enron.com, meredith.eggleston@enron.com, michael.etringer@enron.com, michael.mann@enron.com, michelle.cisneros@enron.com, mpalmer@enron.com, neil.bresnan@enron.com, neil.hong@enron.com, paul.kaufman@enron.com, paula.warren@enron.com, richard.zdunkewicz@enron.com, richard.leibert@enron.com, richard.shapiro@enron.com, rita.hennessy@enron.com, roger.yang@enron.com, rosalinda.tijerina@enron.com, sandra.mccubbin@enron.com, sarah.novosel@enron.com, scott.gahn@enron.com, scott.stoness@enron.com, sharon.dick@enron.com, skean@enron.com, tanya.leslie@enron.com, tasha.lair@enron.com, ted.murphy@enron.com, terri.greenlee@enron.com, tim.belden@enron.com, tony.spruiell@enron.com, vicki.sharp@enron.com, vladimir.gorny@enron.com, wanda.curry@enron.com, william.bradford@enron.com, kathryn.corbally@enron.com, jubran.whalan@enron.com, triley@enron.com, richard.sanders@enron.com, robert.williams@enron.com, greg.wolfe@enron.com, james.wright@enron.com, dirk.vanulden@enron.com, steve.walker@enron.com, jennifer.rudolph@enron.com, martin.wenzel@enron.com, douglas.condon@enron.com, wgang@enron.com, sgovenar@govadv.com, hgovenar@govadv.com, jklauber@llgm.com, mike.smith@enron.com, john.neslage@enron.com, janel.guerrero@enron.com, eric.letke@enron.com, richard.sanders@enron.com, gfergus@brobeck.com, michael.tribolet@enron.com, robert.frank@enron.com, richard.sanders@enron.com, gfergus@brobeck.com, susan.mara@enron.com Subject: "Plan B" Starting to Get Notice in Sacramento Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: Jeff Dasovich X-To: Alan Comnes, Angela Schwarz, Beverly Aden, Bill Votaw, Brenda Barreda, Carol Moffett, Cathy Corbin, Chris H Foster, Christina Liscano, Craig H Sutter, Dan Leff, Debora Whitehead, Dennis Benevides, Don Black, Dorothy Youngblood, Douglas Huth, Edward Sacks, Eric Melvin, Erika Dupre, Evan Hughes, Fran Deltoro, Gayle W Muench, Ginger Dernehl, Gordon Savage, Harold G Buchanan, Harry Kingerski, Iris Waser, James D Steffes, James W Lewis, James Wright, Jeff Messina, Jeremy Blachman, Jess Hewitt, Joe Hartsoe, Karen Denne, Kathy Bass, Kathy Dodgen, Ken Gustafson, Kevin Hughes, Leasa Lopez, Leticia Botello, Mark S Muller, Marsha Suggs, Marty Sunde, Meredith M Eggleston, Michael Etringer, Michael Mann, Michelle D Cisneros, mpalmer@enron.com, Neil Bresnan, Neil Hong, Paul Kaufman, Paula Warren, Richard L Zdunkewicz, Richard Leibert, Richard Shapiro, Rita Hennessy, Roger Yang, Rosalinda Tijerina, Sandra McCubbin, Sarah Novosel, Scott Gahn, Scott Stoness, Sharon Dick, skean@enron.com, Tanya Leslie, Tasha Lair, Ted Murphy, Terri Greenlee, Tim Belden, Tony Spruiell, Vicki Sharp, Vladimir Gorny, Wanda Curry, William S Bradford, Kathryn Corbally, Jubran Whalan, triley@enron.com, Richard B Sanders, Robert C Williams, Greg Wolfe, James Wright, Dirk vanUlden, Steve Walker, Jennifer Rudolph, Martin Wenzel, Douglas Condon, wgang@enron.com, Scott Govenar , Hedy Govenar @ ENRON, jklauber@llgm.com, Mike D Smith, John Neslage, Janel Guerrero, Eric Letke, Richard B Sanders, gfergus@brobeck.com, Michael Tribolet, Robert Frank, Richard B Sanders, gfergus@brobeck.com, Susan J Mara X-cc: X-bcc: X-Folder: \Richard_Shapiro_June2001\Notes Folders\Discussion threads X-Origin: SHAPIRO-R X-FileName: rshapiro.nsf From the Dow Jones Newswire: > SoCal Ed May Be Near Financial Solvency With 'Plan B' > > LOS ANGELES (Dow Jones)--Legislators in California are beginning to > embrace > an alternative energy plan, expected to be introduced as a bill this week, > that would get the state out of the power buying business in as little as > six > months and restore Edison International's (EIX) Southern California Edison > unit to financial solvency without requiring the utility to sell any of > its > assets to the state. > If the plan wins the support of both houses of the Legislature, > lawmakers > hope it will also convince a bankruptcy court judge in San Francisco that > it > can be used to lift PG&E Corp.'s (PCG) Pacific Gas & Electric unit out of > Chapter 11 bankruptcy protection. > "Clearly this would be a positive development," said Paul Patterson, a > utility analyst with Credit Suisse First Boston in New York. "It would > offer a > way to restore the utilities to financial viability. We've noticed over > the > weekend that the situation in the Assembly is improving." > The proposal by Assemblyman Joe Nation, D-San Rafael and Assemblyman > John > Dutra, D-Fremont, has gained the interest of some members of the Assembly > Republican Caucus, all of whom have resisted previous attempts at > rescuing > SoCal Ed from near bankruptcy. > Consumer groups have been resistant to any form of what they call a > utility > "bailout." But a spokesman at The Utility Reform Network in San Francisco > said > the group is studying the 'Plan B' proposal. > On Friday, a spokesman to Gov. Gray Davis said state Sen. Richard > Polanco, > the Senate Majority Leader, would introduce legislation this week enacting > the > agreement the governor reached with SoCal Ed exactly one month ago that > would > allow the utility to issue about $3 billion in bonds to recoup its > unrecovered > power costs and sell its power lines to the state for $2.76 billion to pay > off > its debt. > But Nation and Dutra, members of the so-called 'Plan B' group, are > looking > to alter that agreement. > "There are a lot of people who question the validity of buying the grid" > from SoCal Ed," Nation, an economist by trade, said. "I think there is an > understanding that the existing (memorandum of understanding) won't pass." > > One of the problems with having the state purchase the grid at this > point is > that there won't be enough funds available to maintain and upgrade the > lines > to improve the flow of electricity, according to several members of the > Senate > Budget Committee. > "We're preparing for massive budget cuts this week because of this > electricity crisis," the member of the Senate Budget Committee said. > - - > Plan Eliminates Purchase Of SoCal Ed's Power Lines > > Nation's proposal calls for the state to hold a five-year option to buy > SoCal Ed's transmission lines for its book value price of $1.2 billion, > and > eliminate a provision that would ease the regulation of the utility by the > California Public Utilities Commission > In exchange, SoCal Ed can securitize a larger portion of its $5.5 > billion in > unrecovered power costs backed by a larger dedicated rate component. > Moreover, the utility would sell the state additional power at a cost > beyond > the 10 years already agreed upon in the memorandum-of-understanding and > additional power from other company sources. > Nation also wants to set up a ratepayer revenue account to refund > consumers > if generators agree to accept less than 100 cents on the dollar. He said, > however, he does not plan to include a provision in any legislation that > states generators must take a "haircut" on money the companies claim they > are > owed by SoCal Ed. > Republicans, including Assemblyman George Runner, R-Lancaster, and > Assemblyman Keith Richman, R-Granada Hills, have been working closely with > Nation and the 'Plan B' group. Jamie Fisfis, a spokesman for the Assembly > Republican Caucus said the caucus is not yet ready to support the plan, > but > Republicans are "happy" they are being included in the discussions. > "We have two criteria when we evaluate the plan," Fisfis said. "The plan > has > to keep power rates as low as possible and puts more supply into the > grid." > Steve Maviglio, Davis' press secretary, said the governor "has always > said > he's open to improvements" in the memorandum-of-understanding. > "But it has to remain a balanced transaction," Maviglio said. > Nation, a member of the Assembly since 2000, said the state would only > have > to spend a couple of weeks renegotiating the memorandum-of-understanding > with > Edison and that it could likely win a two-thirds majority vote in the > Assembly > shortly after that. > Nation said he has had a number of conversations with Edison > International > executives on his proposal and "they have been generally receptive because > they believe the agreement with the governor won't pass." > A SoCal Ed spokesman was unavailable for comment. > Lawmakers Seeking Quick Exit From Power Buying Business > > California has committed $7.2 billion of its roughly $8 billion general > fund > buying power since January on behalf of PG&E, SoCal Ed and Sempra Energy's > (SRE) San Diego Gas & Electric unit. > But several lawmakers and one of Davis' financial advisers said Sunday > that > the state wants to desperately get out of the power buying business soon > because of the economic impact the energy spending will likely have on > education, transportation and other state programs. > "We are beginning to realize that if we don't get out of the business of > buying electricity, we will be in the same boat as the utilities," said > one > state Senator who is also a member of the Senate Budget Committee. > Nation agreed, saying "the best thing we can do for California is get > out of > this mess we're in. We need to get the DWR out of the business of buying > power." > > Lawmakers Working To Keep SoCal Ed Out Of Bankruptcy > > A number of Democrats in the Assembly, who have said SoCal Ed may be > better > off in bankruptcy, now want to see the utility remain solvent, Nation > said. > "I think several months ago bankruptcy wouldn't have seemed like such a > challenge," Nation said. > Nation said he fears that if SoCal Ed were in a bankruptcy setting, the > state's so-called qualifying facilities, renewable and gas fired power > plants > that contract directly with the utilities, may win the right to sell their > cheap power on the open market. > "If that happens, it will dramatically raise the risk to the state > because > we will be forced to buy that power," Nation said. "I think people > understand > what the risks are and that's a real danger." > > -By Jason Leopold; Dow Jones Newswires; 323-658-3874;