Message-ID: <9772046.1075845459523.JavaMail.evans@thyme> Date: Thu, 21 Dec 2000 07:09:00 -0800 (PST) From: judy.e.collazo@ssmb.com Subject: CALIFORNIA SITUATION CLARITY IMPROVING; MOST LIKELY OUTCOME FAVO RABLE FOR ALL Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: "Collazo, Judy E [EQRE]" X-To: undisclosed-recipients:, X-cc: X-bcc: X-Folder: \Greg_Whalley_Oct2001\Notes Folders\Discussion threads X-Origin: WHALLEY-G X-FileName: gwhalley.nsf CALIFORNIA SITUATION CLARITY IMPROVING; MOST LIKELY OUTCOME FAVORABLE FOR ALL * While we do not expect a direct rate increase or removal of the rate freeze for EIX or PCG out of the California Public Utility Commission meeting today, we are encouraged by the conciliatory tone of recent comments. * In our view, acerbic rhetoric has finally given way to pragmatic reconciliation and it now appears that California utilities are on the path towards effectively receiving the rate increases they require to remain solvent. * We believe this has implications not only for the health of the affected utilities, but also for the Growth Energy Merchants and Competitive Generators. * While the credit risk associated with utilities' power market purchases have not been solved yet, the credit risk in the California market has eased somewhat. * While trading may be choppy as the final California remedy is hammered out, we recommend the purchase of the Growth Energy names throughout any near-term weakness possible as a result of the process. * Decision expected today at 4:00 PM EST. <> Raymond C. Niles Power/Natural Gas Research Salomon Smith Barney (212) 816-2807 ray.niles@ssmb.com s Raymond C. Niles Power/Natural Gas Research Salomon Smith Barney (212) 816-2807 ray.niles@ssmb.com s - CA Situation Improving12-21-00.pdf