california update p . 2 ; 5 / 29 / 01 executive summary
? senator keeley spearheads a new " plan b "
? state to offer little aid in pg this announcement could come this afternoon . if it is not this afternoon , it will be later this week . sources report the republicans were working with keeley , but then felt shut out of the process , so they developed a plan of their own ( a lightly publicized point last week ) . however , sources believe that the plan b is very likely to have enough republican support to pass the assembly . the senate will likely be a much tougher fight , but opposition to the plan remains pessimistic that they will be able to stop it . the senate appears likely to broaden the base of people who would have to pay the dedicated rate component , which will be unpopular . borrowing from elements of the joe nation and florez " plan b ' s , " keeley ' s new plan is said to :
? set up a dedicated rate component for socal to deal with part of their undercollect . this dedicated rate component would apply more to " high - end customers . " where the line would be drawn between who would pay and who would not is still subject to negotiation . the size of the dedicated rate component is also subject to negotiation . socal has suggested $ 3 m for 10 to 12 years . note , sources report that at this time , a dedicated rate component for socal to pay for power going forward is not included in the plan b that will be announced . the assembly is not certain whether this additional dedicated rate component will be needed . if the bond issuance is enough to cover the cost of power purchases , no dedicated rate component for forward purchases will be needed . by 2003 and 2004 , enough additional generation should be online that power prices should be low . therefore , the key question becomes what will be the cost of power in 2002 ? if the cost of power is high , rates may have to be increased at that time for socal to continue operating .
? the state would make a secured loan ( secured against the transmission assets ) to socal to pay back the remainder of the undercollect . this loan would be paid back by socal granting the government a lower rate of return on the transmission system for a period of 10 to 15 years . this provides an incentive for socal to sell its transmission system to the state , since it would not be making as much money from the system . were this to happen , the value would be credited toward the loan .
? in return , the state would receive the withdrawal with prejudice of the filed rate doctrine case . also , socal would reduce the price of native power generation . finally , business customers ( including those that would have to pay the dedicated rate component ) would have the right to apply for direct access to power .
if this plan is passed , ( better than 50 / 50 chance - as reported earlier ) the constitutional challenge from michael sturmwasser is still likely to go forward . this is because sturmwasser is chiefly concerned with the fact that the plan results in a retroactive rate increase to pay socal ' s undercollect . sources believe it is likely that socal will eventually sell its transmission assets to the state if this plan is passed . therefore these assets would become municipal , making the reduction in the puc ' s authority constitutional .
legislature leaves pg & e to throws of bankruptcy
today , there have been discussions concerning pg & e regarding " plan b " and the legislature . currently , the legislature is not considering offering keeley ' s " plan b " solution to pg & e . if the plan b mentioned above passes the senate , it is more likely that the state will purchase pg & e out of bankruptcy . both the assembly and the senate leadership are talking seriously about purchasing pg & e out of bankruptcy , though the republicans remain strongly opposed . the state then , would likely sell off pieces of pg & e ( except for the transmission assets , which it would retain ) .
california update p . 2 ; 5 / 29 / 01
executive summary
? senator keeley spearheads a new " plan b "
? state to offer little aid in pg this announcement could come this afternoon . if it is not this afternoon , it will be later this week . sources report the republicans were working with keeley , but then felt shut out of the process , so they developed a plan of their own ( a lightly publicized point last week ) . however , sources believe that the plan b is very likely to have enough republican support to pass the assembly . the senate will likely be a much tougher fight , but opposition to the plan remains pessimistic that they will be able to stop it . the senate appears likely to broaden the base of people who would have to pay the dedicated rate component , which will be unpopular . borrowing from elements of the joe nation and florez " plan b ' s , " keeley ' s new plan is said to :
? set up a dedicated rate component for socal to deal with part of their undercollect . this dedicated rate component would apply more to " high - end customers . " where the line would be drawn between who would pay and who would not is still subject to negotiation . the size of the dedicated rate component is also subject to negotiation . socal has suggested $ 3 m for 10 to 12 years . note , sources report that at this time , a dedicated rate component for socal to pay for power going forward is not included in the plan b that will be announced . the assembly is not certain whether this additional dedicated rate component will be needed . if the bond issuance is enough to cover the cost of power purchases , no dedicated rate component for forward purchases will be needed . by 2003 and 2004 , enough additional generation should be online that power prices should be low . therefore , the key question becomes what will be the cost of power in 2002 ? if the cost of power is high , rates may have to be increased at that time for socal to continue operating .
? the state would make a secured loan ( secured against the transmission assets ) to socal to pay back the remainder of the undercollect . this loan would be paid back by socal granting the government a lower rate of return on the transmission system for a period of 10 to 15 years . this provides an incentive for socal to sell its transmission system to the state , since it would not be making as much money from the system . were this to happen , the value would be credited toward the loan .
? in return , the state would receive the withdrawal with prejudice of the filed rate doctrine case . also , socal would reduce the price of native power generation . finally , business customers ( including those that would have to pay the dedicated rate component ) would have the right to apply for direct access to power .
if this plan is passed , ( better than 50 / 50 chance - as reported earlier ) the constitutional challenge from michael sturmwasser is still likely to go forward . this is because sturmwasser is chiefly concerned with the fact that the plan results in a retroactive rate increase to pay socal ' s undercollect . sources believe it is likely that socal will eventually sell its transmission assets to the state if this plan is passed . therefore these assets would become municipal , making the reduction in the puc ' s authority constitutional .
legislature leaves pg & e to throws of bankruptcy
today , there have been discussions concerning pg & e regarding " plan b " and the legislature . currently , the legislature is not considering offering keeley ' s " plan b " solution to pg & e . if the plan b mentioned above passes the senate , it is more likely that the state will purchase pg & e out of bankruptcy . both the assembly and the senate leadership are talking seriously about purchasing pg & e out of bankruptcy , though the republicans remain strongly opposed . the state then , would likely sell off pieces of pg & e ( except for the transmission assets , which it would retain ) .