california 5 / 25 executive summary :
? legislators in both parties are scared about a fiscal meltdown and looking for a realistic plan b
? the keeley plan is the most likely vehicle and would include the 30 % generator haircuts and revenue bonds backed by a dedicated rate component
? despite uncertainty over dealing with transmission lines and continued oppostion from burton and his consumer group allies , the keeley plan will probably pass the legislature
? the generators will not support the plan until they get clearer guarantees from the state that investigations and lawsuits will end
? pg it will likely take one to two weeks ( more likely closer to two ) to move a deal through the assembly and the senate and to the governor ' s desk once it is introduced .
2 . what would the new plan b look like ?
- this modified plan b deal , which will originate in the assembly , will almost certainly include a dedicated rate component to pay socal ' s undercollect . revenue bonds will be issued securitized by this dedicated rate component . it is also very likely that the generators would be offered 70 cents on the dollar for what they are owed immediately , with the possibility of more if they win litigation . ( sources report that the state is " fairly confident " that at least most generators would not be successful in winning this additional money . ) assembly speaker keeley reportedly remains the driving force behind this plan , and it is being drawn up from within his office .
3 . transmission lines
- it remains unclear at this time whether a transmission line purchase or option to purchase will be put into the deal , since this is a major point of contention between the democrats and republicans . according to sources , the assembly is " working on this . "
4 . plan looks good to pass both assembly and senate
- according to sources , the vote count for passing a deal containing the above components ( except the transmission line purchase , which is not yet settled ) " looks very good . " the vote in the senate would be " very close . " senator burton still opposes a bail - out deal , but he reportedly might not stand in the way of others from voting for the plan , making its passage more likely . even opponents of the plan ( including burton and the consumer advocates ) say that the odds of a modified plan b passing the senate are better than 50 - 50 . these opponents are reportedly " pessimistic " about their chances of stopping a plan b from passing at this point .
5 . caveat : generators are waiting for guarantees that the witch hunt will end
- as reported previously , sources continue to believe that generators would be reluctant to take a 70 cent - on - the - dollar haircut without the state offering them relief from further prosecution . ( without this relief , the state could give them 70 cents , then try to take away even more . ) sources report that even opponents of the plan accept that the generators should be offered this relief from prosecution . thus , it appears likely at this time that most generators would accept a 30 percent haircut if they were paid immediately . also , sources believe that the securitization on the dedicated rate component offered in the modified plan b would be sufficient to pay back those generators who successfully litigated to win more than 70 cents on the dollar .
- sources believe that socal edison ' s creditors are likely to forebear from filing an involuntary bankruptcy long enough for this plan to go through , since it would pay back most of what they are owed .
6 . pg & e could also be dealt in
- if this plan succeeds , it will almost certainly be taken to the bankruptcy court and offered to pg & e as part of a reorganization plan . this plan can be offered at any time within pg & e ' s " period of exclusivity . " this is a 90 - day period ( though it is often extended ) following the filing of a bankruptcy petition .
- however , sources report that the state is concerned about how to approach the bankruptcy court . based on supreme court precedent ( which legal sources within the state have been reviewing ) , the state would likely lose its sovereign immunity if it entered as a party into the bankrutpcy court . this is a problem because the stakes in this case are so high .
7 . bailout bill would require follow legislation for a new rate structure
- even if the state passes and signs a socal bailout , it would still need to pass a rate structure that would allow socal and pg & e to flow through cost increases to prevent them from once again facing bankrtupcy . therefore , this plan does not make the crisis go away .
california 5 / 25
executive summary :
? legislators in both parties are scared about a fiscal meltdown and looking for a realistic plan b
? the keeley plan is the most likely vehicle and would include the 30 % generator haircuts and revenue bonds backed by a dedicated rate component
? despite uncertainty over dealing with transmission lines and continued oppostion from burton and his consumer group allies , the keeley plan will probably pass the legislature
? the generators will not support the plan until they get clearer guarantees from the state that investigations and lawsuits will end
? pg it will likely take one to two weeks ( more likely closer to two ) to move a deal through the assembly and the senate and to the governor ' s desk once it is introduced .
2 . what would the new plan b look like ?
- this modified plan b deal , which will originate in the assembly , will almost certainly include a dedicated rate component to pay socal ' s undercollect . revenue bonds will be issued securitized by this dedicated rate component . it is also very likely that the generators would be offered 70 cents on the dollar for what they are owed immediately , with the possibility of more if they win litigation . ( sources report that the state is " fairly confident " that at least most generators would not be successful in winning this additional money . ) assembly speaker keeley reportedly remains the driving force behind this plan , and it is being drawn up from within his office .
3 . transmission lines
- it remains unclear at this time whether a transmission line purchase or option to purchase will be put into the deal , since this is a major point of contention between the democrats and republicans . according to sources , the assembly is " working on this . "
4 . plan looks good to pass both assembly and senate
- according to sources , the vote count for passing a deal containing the above components ( except the transmission line purchase , which is not yet settled ) " looks very good . " the vote in the senate would be " very close . " senator burton still opposes a bail - out deal , but he reportedly might not stand in the way of others from voting for the plan , making its passage more likely . even opponents of the plan ( including burton and the consumer advocates ) say that the odds of a modified plan b passing the senate are better than 50 - 50 . these opponents are reportedly " pessimistic " about their chances of stopping a plan b from passing at this point .
5 . caveat : generators are waiting for guarantees that the witch hunt will end
- as reported previously , sources continue to believe that generators would be reluctant to take a 70 cent - on - the - dollar haircut without the state offering them relief from further prosecution . ( without this relief , the state could give them 70 cents , then try to take away even more . ) sources report that even opponents of the plan accept that the generators should be offered this relief from prosecution . thus , it appears likely at this time that most generators would accept a 30 percent haircut if they were paid immediately . also , sources believe that the securitization on the dedicated rate component offered in the modified plan b would be sufficient to pay back those generators who successfully litigated to win more than 70 cents on the dollar .
- sources believe that socal edison ' s creditors are likely to forebear from filing an involuntary bankruptcy long enough for this plan to go through , since it would pay back most of what they are owed .
6 . pg & e could also be dealt in
- if this plan succeeds , it will almost certainly be taken to the bankruptcy court and offered to pg & e as part of a reorganization plan . this plan can be offered at any time within pg & e ' s " period of exclusivity . " this is a 90 - day period ( though it is often extended ) following the filing of a bankruptcy petition .
- however , sources report that the state is concerned about how to approach the bankruptcy court . based on supreme court precedent ( which legal sources within the state have been reviewing ) , the state would likely lose its sovereign immunity if it entered as a party into the bankrutpcy court . this is a problem because the stakes in this case are so high .
7 . bailout bill would require follow legislation for a new rate structure
- even if the state passes and signs a socal bailout , it would still need to pass a rate structure that would allow socal and pg & e to flow through cost increases to prevent them from once again facing bankrtupcy . therefore , this plan does not make the crisis go away .