california update 9 - 20 - 2001 executive summary
cpuc terminates direct access
pg & e / socal bankruptcy developments
direct access
despite the information that a cpuc representative responded favorably to a vote - delay request sent by the state ' s major business interests , and pressure to delay the vote from governor davis , the cpuc effectively terminated direct access in a 3 - 2 vote . our estimates regarding the votes of commissioners brown , wood , and lynch did play out , as well as the cpuc ' s failure to pursue retroactivity for da agreements . the cpuc ' s move to carry forward the da vote is not a complete surprise , as president lynch has historically presided independently from pressure by governor davis . dismayed that the california legislature was unable to offer resolution , lynch and other commissioners felt obligated to provide direction and move the state forward in securing the state ' s economic base . note that da agreements signed within the last three months may still be held under review by the cpuc , though no official word has yet been issued .
the cpuc also passed two measures that were preventing the progress of california ' s $ 12 . 5 b bond sale . there is still no clear date as to when these bonds will be issued .
socal / pg & e bankruptcies
mirant and reliant ( with mirant leading the push ) are reported have approached several entities as potential third parties for a creditors committee to take sce into involuntary bankruptcy .
the city of long beach has been approached , but we believe long beach will use its leverage as a potential third party creditor to negotiate an independent deal with socal for payment of debt . orange county , coram , and san gorgonio farms are also suspected to have been asked to sign the petition .
contrary to rumor , it is not confirmed that dynegy is considering joining mirant and reliant . however , such a move by dynegy " would be logical " and note that dynegy funded , with mirant and reliant , recent polling research examining the public opinion effects of such a move . dynegy is reportedly discussing the possibility .
we are attempting to determine socal ' s response to the pg & e filing , the mirant - reliant effort , and to try to pulse the likelihood and timing of a voluntary bankruptcy petition .
per earlier media reports , pg & e just announced it is filing three months early of a reorganization plan with the court . we believe that the utility was motivated , in part , by its desire to scuttle any chance of a state mou with socal in the third special session of the legislature . the reactions of key lawmakers ( burton , bowen , hertzberg , keeley ) , and of course the governor , will be important to watch .
the key elements of pg & e ' s plan include :
assumes all responsibility for debt . no state aid requested .
the utility will be split into two , with a distribution company remaining under cpuc regulatory authority and the native generation spun off into a new company free of cpuc oversight but regulated by ferc .
pg & e commits to provide 100 % of its native generation to the state of california for 10 years at cost .
cost of power includes both cost of generation ( currently about 3 . 5 cents per kw / h ) and cost of financing ( estimated by our sources at 1 . 5 cents per kw / h ) .
all debt will be paid , with 90 % of qf debt paid immediately and the remainder over a longer term . large generators will be " substantially " paid immediately and be asked to carry remaining debt over a longer term .
california update 9 - 20 - 2001
executive summary
cpuc terminates direct access
pg & e / socal bankruptcy developments
direct access
despite the information that a cpuc representative responded favorably to a vote - delay request sent by the state ' s major business interests , and pressure to delay the vote from governor davis , the cpuc effectively terminated direct access in a 3 - 2 vote . our estimates regarding the votes of commissioners brown , wood , and lynch did play out , as well as the cpuc ' s failure to pursue retroactivity for da agreements . the cpuc ' s move to carry forward the da vote is not a complete surprise , as president lynch has historically presided independently from pressure by governor davis . dismayed that the california legislature was unable to offer resolution , lynch and other commissioners felt obligated to provide direction and move the state forward in securing the state ' s economic base . note that da agreements signed within the last three months may still be held under review by the cpuc , though no official word has yet been issued .
the cpuc also passed two measures that were preventing the progress of california ' s $ 12 . 5 b bond sale . there is still no clear date as to when these bonds will be issued .
socal / pg & e bankruptcies
mirant and reliant ( with mirant leading the push ) are reported have approached several entities as potential third parties for a creditors committee to take sce into involuntary bankruptcy .
the city of long beach has been approached , but we believe long beach will use its leverage as a potential third party creditor to negotiate an independent deal with socal for payment of debt . orange county , coram , and san gorgonio farms are also suspected to have been asked to sign the petition .
contrary to rumor , it is not confirmed that dynegy is considering joining mirant and reliant . however , such a move by dynegy " would be logical " and note that dynegy funded , with mirant and reliant , recent polling research examining the public opinion effects of such a move . dynegy is reportedly discussing the possibility .
we are attempting to determine socal ' s response to the pg & e filing , the mirant - reliant effort , and to try to pulse the likelihood and timing of a voluntary bankruptcy petition .
per earlier media reports , pg & e just announced it is filing three months early of a reorganization plan with the court . we believe that the utility was motivated , in part , by its desire to scuttle any chance of a state mou with socal in the third special session of the legislature . the reactions of key lawmakers ( burton , bowen , hertzberg , keeley ) , and of course the governor , will be important to watch .
the key elements of pg & e ' s plan include :
assumes all responsibility for debt . no state aid requested .
the utility will be split into two , with a distribution company remaining under cpuc regulatory authority and the native generation spun off into a new company free of cpuc oversight but regulated by ferc .
pg & e commits to provide 100 % of its native generation to the state of california for 10 years at cost .
cost of power includes both cost of generation ( currently about 3 . 5 cents per kw / h ) and cost of financing ( estimated by our sources at 1 . 5 cents per kw / h ) .
all debt will be paid , with 90 % of qf debt paid immediately and the remainder over a longer term . large generators will be " substantially " paid immediately and be asked to carry remaining debt over a longer term .