Subject: California 5/23 pt.3
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]
Date: Wed, 23 May 2001 07:32:00 -0700 (PDT)

Forgive the rough formatting, but this is a rush report...

My analysis- it is significant that both Dems and Repubs are talking about 30 
percent haircuts, but there is not yet an agreement on what to do with the 
transmission lines.

RJ

Source X reports the following regarding the Republican Plan B
proposal:

- Encourage direct access for consumers.  (The problem with this, however,
is that these direct access deals would not have a dedicated rate component,
and too many might undermine the cash flow and credit worthiness of the
bonds.)
- The Republicans will "suggest" that generators take a 30% haircut.  "We
think this is doable."
- The Republicans strongly oppose purchasing the transmission assets.
- Restore the invetor-owned utility model for generation.  They would
establish a dedicated rate component for construction of native generation
by the utilities.  They would grant ratepayers equity interest in these
plants.
- Resolve the QFs' financial issues.

- Assemblyman Cox commented afterward that the Republcans have been trying
to work on a bilateral basis with the Democrats on these issues, but they
feel "frozen out."  Moreover, he senses the Democrats moving back toward
having an option to purchase SoCal's transmission assets, which the
Republicans oppose.

Source reports the following regarding the Democratic Plan B:

- The Democrats are formulating a Plan B that incorporates the Governor's
MOU, the Nation Plan B and other ideas that they have.  This plan reportedly
has not yet been introduced into the legislature yet because it is still
being finalized and the Democrats are not certain that it will work.
Specifically, the option to purchase SoCal's transmission assets is
reportedly still being debated.  Some Democrats reportedly believe that this
may be unnecessary.

- The details of the plan are reportedly as follows:

- Set aside the $3.1 bilion undercollect in a separate account funded by a
dedicated rate component.
- The generators can either get a check instantly from the bonds for 70% of
their claim or they can try to get up to 100% of their claim adjudicated
through a dispute.
- This plan could be used as a template for going to the bankruptcy judge to
strike a deal for PG&E.

- Sources indicate that the Democrats are developing a post-petition plan in
cast SoCal files for bankruptcy, including the following:

- The state would buy both utilities out of bankruptcy.  It then would sell
of pieces of the utilities to various private-sector buyers, but with a
lifetime stipulation on how they will be run.
- Some Democrats reportedly believe the state could do this with as little
as $5 billion if it assumed the utilities' debt and got a cram-down by the
bankrutpcy judge to quell the protests against such a plan that would very
likely erupt.  Democrats reportedly believe that the Judge Montali would
support this idea.