california update 6 / 5 / 01 executive summary
? edison ' s mou condemned at this friday ' s cpuc meeting
? the idle plan z
? angelides hides state budget concerns
? house committee to vote on energy relief
edison ' s mou doubtful
the unusually calm settling over the california legislature about socal edison ' s potential bankruptcy has finally affected the relentlessly optimistic investment bank analysts and other company shareholders . we have reported that through all plans from b - z , there is not a solid plan to save this company and now executives are even more fearful that this predictions may come to fruition .
over the last few days , edison executives have begun pointing hard at the cpuc meeting this friday as a make - or - break event for the company . the is because after the meeting , davis ' s mou plan to buy socal ' s grid will have no chance of preventing a potential bankruptcy . this plan is essentially dead although governor daivs has yet to say this in a press releases . the final nail will happen after the cpuc adjourns its friday meeting without voting on several necessary mou provisions . unless the cpuc makes a last minute , emergency - amendment to their agenda , the deal will be dead ( despite socal ' s support for letting the deal stand past its deadline ) . sources indicate that cpuc president loretta lynch holds reservations on the mou and continues to distance herself from davis .
attempting to influence policy making , edison executives have spent the last few investor phone conferences warning that june 8 would see substantially increased risks for a creditor - induced bankruptcy if the davis plan dies at cpuc . this is interesting , since no one else seems to have been focused on the date until edison began mentioning it late last week . however , there is no more or less threat of bankruptcy than there is now or will be in two weeks . as reported several times earlier , most everyone had given up on the mou long before this friday ' s cpuc meeting .
plan z shows little progress
meanwhile , the unhurried pace toward a plan z that we reported last friday , has gained little progress . legislators continue to pin - point a plan that will secure re - election votes and at the same time , weigh the need for rate hikes for california ' s corporate and home electricity users . as they hash it out , the state is spending even more on electricity purchases . in spite of better than expected levels of conservation , the state ' s electricity expenditures over the last month rose to an average of $ 79 m / day . the recent rate increases mean more spending by the state and that calls into question the reassuring angelides scenario for california ' s budget prospects later this year .
the california budget crunch
even more worrisome than a idle plan z is increasing evidence that last month ' s conference call with state treasurer angelides was a little misleading . during that conference call angelides claimed that state comptroller connell and many in the financial committee had the numbers wrong . angelides argued that $ 7 . 2 b already spent to buy power since january was really the total amount of authorized spending through late august . in fact , he said only $ 4 . 3 b of that had been " spent . " sources now indicate that angelides was technically correct if you use " spent " to mean only the amount of money for which checks had been written . this is different than the amount of money california had already promised to energy suppliers who had already supplied energy to the state . in fact , when angelides was speaking the state had in fact already promised to pay $ 7 b for energy it had already consumed ( the total committed has topped $ 8 b . ) by the time the state gets its " power bonds " auctioned in august , they will have already spent all $ 12 b and be back to dipping into the general fund . the idea of rans being auctioned before the power bonds get issued is still an option if the general fund doesn ' t make it to august .
the nearest answer to both of these cash flow deficits lies in part in the painful process that the legislature is undertaking now - another round of huge electricity rate hikes to securitize debt issuance . then the hope is that those hikes bridge the gap between now and when new capacity brings wholesale rates down and the debts can be repaid . the only near term path to bringing generating assets on line immediately is the 3 , 500 mw from qf plants which are off line because of cash flow problems . settling their needs is wrapped up in settling the pg & e and edison trade creditor issues , which makes the legislature ' s leisurely approach to the rate hike / haircut situation all the more troublesome .
energy relief
the house energy & commerce committee is scheduled to vote on h . r . 1647 ( the emergency electricity relief act ) tomorrow at 10 : 00 am . the bill which was twice postponed and does not include any provisions on price caps , but during the course of the mark - up , sources indicate that it is possible , even likely , that a democrat could offer a price cap amendment . rep . waxman ( d - ca ) offered a price cap amendment at an earlier mark - up of the bill at the subcommittee level . the waxman amendment was rejected along party lines ( all republicans and 2 democrats voted nay ) . sources inside joe barton ' s office report that staff and members have been meeting to work out a compromise on the price cap issue , but nothing has been resolved . as of this afternoon , those discussions have been terminated in favor of an open discourse in the committee tomorrow . since an agreement was not reached , compromise language is not expected to be offered as an amendment tomorrow . if it is , it would not be something that leaders on the republican and democrat sides have crafted together and therefore would not likely pass . sources indicate that the committee does expect waxman , and possibly others to offer price cap language , but it is not expected to pass .
california update 6 / 5 / 01
executive summary
? edison ' s mou condemned at this friday ' s cpuc meeting
? the idle plan z
? angelides hides state budget concerns
? house committee to vote on energy relief
edison ' s mou doubtful
the unusually calm settling over the california legislature about socal edison ' s potential bankruptcy has finally affected the relentlessly optimistic investment bank analysts and other company shareholders . we have reported that through all plans from b - z , there is not a solid plan to save this company and now executives are even more fearful that this predictions may come to fruition .
over the last few days , edison executives have begun pointing hard at the cpuc meeting this friday as a make - or - break event for the company . the is because after the meeting , davis ' s mou plan to buy socal ' s grid will have no chance of preventing a potential bankruptcy . this plan is essentially dead although governor daivs has yet to say this in a press releases . the final nail will happen after the cpuc adjourns its friday meeting without voting on several necessary mou provisions . unless the cpuc makes a last minute , emergency - amendment to their agenda , the deal will be dead ( despite socal ' s support for letting the deal stand past its deadline ) . sources indicate that cpuc president loretta lynch holds reservations on the mou and continues to distance herself from davis .
attempting to influence policy making , edison executives have spent the last few investor phone conferences warning that june 8 would see substantially increased risks for a creditor - induced bankruptcy if the davis plan dies at cpuc . this is interesting , since no one else seems to have been focused on the date until edison began mentioning it late last week . however , there is no more or less threat of bankruptcy than there is now or will be in two weeks . as reported several times earlier , most everyone had given up on the mou long before this friday ' s cpuc meeting .
plan z shows little progress
meanwhile , the unhurried pace toward a plan z that we reported last friday , has gained little progress . legislators continue to pin - point a plan that will secure re - election votes and at the same time , weigh the need for rate hikes for california ' s corporate and home electricity users . as they hash it out , the state is spending even more on electricity purchases . in spite of better than expected levels of conservation , the state ' s electricity expenditures over the last month rose to an average of $ 79 m / day . the recent rate increases mean more spending by the state and that calls into question the reassuring angelides scenario for california ' s budget prospects later this year .
the california budget crunch
even more worrisome than a idle plan z is increasing evidence that last month ' s conference call with state treasurer angelides was a little misleading . during that conference call angelides claimed that state comptroller connell and many in the financial committee had the numbers wrong . angelides argued that $ 7 . 2 b already spent to buy power since january was really the total amount of authorized spending through late august . in fact , he said only $ 4 . 3 b of that had been " spent . " sources now indicate that angelides was technically correct if you use " spent " to mean only the amount of money for which checks had been written . this is different than the amount of money california had already promised to energy suppliers who had already supplied energy to the state . in fact , when angelides was speaking the state had in fact already promised to pay $ 7 b for energy it had already consumed ( the total committed has topped $ 8 b . ) by the time the state gets its " power bonds " auctioned in august , they will have already spent all $ 12 b and be back to dipping into the general fund . the idea of rans being auctioned before the power bonds get issued is still an option if the general fund doesn ' t make it to august .
the nearest answer to both of these cash flow deficits lies in part in the painful process that the legislature is undertaking now - another round of huge electricity rate hikes to securitize debt issuance . then the hope is that those hikes bridge the gap between now and when new capacity brings wholesale rates down and the debts can be repaid . the only near term path to bringing generating assets on line immediately is the 3 , 500 mw from qf plants which are off line because of cash flow problems . settling their needs is wrapped up in settling the pg & e and edison trade creditor issues , which makes the legislature ' s leisurely approach to the rate hike / haircut situation all the more troublesome .
energy relief
the house energy & commerce committee is scheduled to vote on h . r . 1647 ( the emergency electricity relief act ) tomorrow at 10 : 00 am . the bill which was twice postponed and does not include any provisions on price caps , but during the course of the mark - up , sources indicate that it is possible , even likely , that a democrat could offer a price cap amendment . rep . waxman ( d - ca ) offered a price cap amendment at an earlier mark - up of the bill at the subcommittee level . the waxman amendment was rejected along party lines ( all republicans and 2 democrats voted nay ) . sources inside joe barton ' s office report that staff and members have been meeting to work out a compromise on the price cap issue , but nothing has been resolved . as of this afternoon , those discussions have been terminated in favor of an open discourse in the committee tomorrow . since an agreement was not reached , compromise language is not expected to be offered as an amendment tomorrow . if it is , it would not be something that leaders on the republican and democrat sides have crafted together and therefore would not likely pass . sources indicate that the committee does expect waxman , and possibly others to offer price cap language , but it is not expected to pass .