california update - 10 / 02 / 2001 for questions or comments regarding this report please contact g . britt whitman at ex : 5 - 4014 or kristin walsh at ex : 3 - 9510 .
executive summray
? cpuc settles filed rate doctrine case with socal
? cpuc kills dwr rate agreement , davis may reconsider old senate bill
cpuc - socal suit
in a closed hearing today , the california public utilities commission voted 5 - 0 to settle its filed rate doctrine case with socal edison . the implications could save socal from an otherwise immanent bankruptcy , though bankruptcy remains a real threat . under the agreement , the cpuc has stipulated the following points , which have not yet been formalized by administrative law judge , ronald lew :
? the cpuc agrees to maintain a level of rates necessary for socal to pay off under - collect through 2003 .
? all surplus revenue ( revenue above o & m ) generated from any source must be applied to socal ' s back debt .
? socal agrees to pay no dividends on its common stock from now until 2003 , or until all back debt has been recovered . if socal ' s debt has not been recovered by 2003 , the cpuc will extend appropriate rates levels necessary for socal to recover its debt through 2004 . dividend payouts on socal common stock will be subject to cpuc approval during this extension .
? 100 % of any revenue socal receives / generates from ferc / generator refunds will be applied to socal ' s debt .
? once socal ' s back debt has been recovered , any surplus revenue generated from the cpuc rate hikes will be refunded to ratepayers .
cpuc - dwr rate agreement
the fact that the puc voted down the dwr rate agreement ( by a 4 - 1 margin ) puts governor davis and treasurer angelides in a very awkward position . this leaves senator burton ' s bill , sb 18 xx , as the vehicle that sets to payment path for the revenue bonds to repay the general fund .
however , as late as this morning , governor davis vowed ( through his spokesman ) that sb 18 xx was " dead on arrival " and would be vetoed . this move by the puc puts pressure on davis to sign sb 18 xx in order to protect the bonds and the long - term power contacts he has negotiated .
however , 18 xx violates the terms of a number of the long - term power contacts negotiated by the governor earlier this year . for example :
? sb 18 xx splits the revenue streams for payment of the general fund ' s revenue bonds and payment to the dwr for power . it clarifies the funds that will go to repay the general fund , but is much less clear on the funds to pay the dwr for power . sb 18 xx leaves the long - term contracts signed by the governor open to review and renegotiation - something that the governor remains publicly unwilling to do .
? sb 18 xx also violates the terms of the bridge loan the state negotiated with shearson lehman earlier this year . the terms of the bridge loan explicitly state that if 18 xx is passed , the banks can accelerate the loan or impose penalty terms of interest on the state . these terms were suggested by the governor as a means of forcing the legislature to support his dwr rate agreement rather than burton ' s . of course , this effort failed when the legislature easily passed sb 18 xx . today ' s puc action further complicates the situation .
while on the surface this would seem to force the governor ' s hand into signing sb 18 xx , that may not , in fact , happen . it would not be out of character for the governor to instead veto sb 18 xx , then force either the legislature or the puc to " play ball " with him in order to repay the general fund . thus , another leverage point has been created . we will continue to monitor the situation to attempt to determine the likelihood of davis signing or vetoing sb 18 xx .
california update - 10 / 02 / 2001
for questions or comments regarding this report please contact g . britt whitman at ex : 5 - 4014 or kristin walsh at ex : 3 - 9510 .
executive summray
? cpuc settles filed rate doctrine case with socal
? cpuc kills dwr rate agreement , davis may reconsider old senate bill
cpuc - socal suit
in a closed hearing today , the california public utilities commission voted 5 - 0 to settle its filed rate doctrine case with socal edison . the implications could save socal from an otherwise immanent bankruptcy , though bankruptcy remains a real threat . under the agreement , the cpuc has stipulated the following points , which have not yet been formalized by administrative law judge , ronald lew :
? the cpuc agrees to maintain a level of rates necessary for socal to pay off under - collect through 2003 .
? all surplus revenue ( revenue above o & m ) generated from any source must be applied to socal ' s back debt .
? socal agrees to pay no dividends on its common stock from now until 2003 , or until all back debt has been recovered . if socal ' s debt has not been recovered by 2003 , the cpuc will extend appropriate rates levels necessary for socal to recover its debt through 2004 . dividend payouts on socal common stock will be subject to cpuc approval during this extension .
? 100 % of any revenue socal receives / generates from ferc / generator refunds will be applied to socal ' s debt .
? once socal ' s back debt has been recovered , any surplus revenue generated from the cpuc rate hikes will be refunded to ratepayers .
cpuc - dwr rate agreement
the fact that the puc voted down the dwr rate agreement ( by a 4 - 1 margin ) puts governor davis and treasurer angelides in a very awkward position . this leaves senator burton ' s bill , sb 18 xx , as the vehicle that sets to payment path for the revenue bonds to repay the general fund .
however , as late as this morning , governor davis vowed ( through his spokesman ) that sb 18 xx was " dead on arrival " and would be vetoed . this move by the puc puts pressure on davis to sign sb 18 xx in order to protect the bonds and the long - term power contacts he has negotiated .
however , 18 xx violates the terms of a number of the long - term power contacts negotiated by the governor earlier this year . for example :
? sb 18 xx splits the revenue streams for payment of the general fund ' s revenue bonds and payment to the dwr for power . it clarifies the funds that will go to repay the general fund , but is much less clear on the funds to pay the dwr for power . sb 18 xx leaves the long - term contracts signed by the governor open to review and renegotiation - something that the governor remains publicly unwilling to do .
? sb 18 xx also violates the terms of the bridge loan the state negotiated with shearson lehman earlier this year . the terms of the bridge loan explicitly state that if 18 xx is passed , the banks can accelerate the loan or impose penalty terms of interest on the state . these terms were suggested by the governor as a means of forcing the legislature to support his dwr rate agreement rather than burton ' s . of course , this effort failed when the legislature easily passed sb 18 xx . today ' s puc action further complicates the situation .
while on the surface this would seem to force the governor ' s hand into signing sb 18 xx , that may not , in fact , happen . it would not be out of character for the governor to instead veto sb 18 xx , then force either the legislature or the puc to " play ball " with him in order to repay the general fund . thus , another leverage point has been created . we will continue to monitor the situation to attempt to determine the likelihood of davis signing or vetoing sb 18 xx .