california update 5 / 29 / 01 executive summary
? california treasurer angelides sets dates for bridge loans & bonds
? california ' s supreme court may see challenge to " plan b "
angelides on bridge loans and bonds
ca treasurer angelides has said that beginning 15 august , the state will set up a bridge loan . the revenue bonds will not be issued until september or october . angelides is not concerned about a cash crisis in july or august . however , he is quite worried about problems with cash flow in october and november . this is based on calculations he has done with numbers from the dwr and from other parts of the government , not on payment terms for power . he fears there will be a cash management problem .
california supreme court to challenge " plan b "
california attorney michael sturmwasser is expected to challenge " plan b " before the california supreme court on the basis that it results in a retroactive rate increase and that it removes the puc ' s authority to review power purchases . this is because " plan b " enables socal to collect a dedicated rate component to pay both its undercollect and its expenses going forward . socal ( and pg in other words , it has a fair chance of succeeding . however , regardless of whether the challenge succeeds or fails , it is very likely to cloud the issue of the bail - out and significantly deflate the prospects of the plan b .
if ferc were to impose cost - based controls on power prices , sources believe it might " go a long way toward avoiding these problems . " were this to happen , the puc could declare ferc ' s rates " just and reasonable , " which would likely greatly lessen the crisis and keep socal liquid . however , such measures by ferc require significant lead time . sources state that " the state needs to tease the feds into doing this . " this can be done by conducting studies to obtain current cost data and update the data ferc would use for determining the cost controls . sources report that this process of " teasing " ferc has not yet started . this is chiefly because california politicians are focused on flat price caps , which ferc is very unlikely to impose . it appears the state is asking ferc for the wrong measures , which is delaying the process . the only way for the state to avoid these constitutional issues would be for the state to purchase the utilities , as municipal entities would not be subject to puc regulation . however , there remains very significant opposition to this idea , especially on the republican side . a state purchase of the utilities would likely only gain momentum once plan b began to fail for the reasons cited above . additionally , a state purchase of the utilities would be less expensive were both utilities in bankruptcy .
sturmwasser is a partner at sturmwasser & woocher , a santa monica law firm . ( his offices are on the top floor of the tallest building in santa monica , overlooking the beach . ) he has been a utilities lawyer for over 30 years . his clients include the consumer advocacy group turn ( toward utilities rate normalcy ) , among others . sturmwasser will reportedly look for funding to support the legal challenge , but if he cannot find money elsewhere , he will likely be able to support it out of his own pocket .
california update 5 / 29 / 01
executive summary
? california treasurer angelides sets dates for bridge loans & bonds
? california ' s supreme court may see challenge to " plan b "
angelides on bridge loans and bonds
ca treasurer angelides has said that beginning 15 august , the state will set up a bridge loan . the revenue bonds will not be issued until september or october . angelides is not concerned about a cash crisis in july or august . however , he is quite worried about problems with cash flow in october and november . this is based on calculations he has done with numbers from the dwr and from other parts of the government , not on payment terms for power . he fears there will be a cash management problem .
california supreme court to challenge " plan b "
california attorney michael sturmwasser is expected to challenge " plan b " before the california supreme court on the basis that it results in a retroactive rate increase and that it removes the puc ' s authority to review power purchases . this is because " plan b " enables socal to collect a dedicated rate component to pay both its undercollect and its expenses going forward . socal ( and pg in other words , it has a fair chance of succeeding . however , regardless of whether the challenge succeeds or fails , it is very likely to cloud the issue of the bail - out and significantly deflate the prospects of the plan b .
if ferc were to impose cost - based controls on power prices , sources believe it might " go a long way toward avoiding these problems . " were this to happen , the puc could declare ferc ' s rates " just and reasonable , " which would likely greatly lessen the crisis and keep socal liquid . however , such measures by ferc require significant lead time . sources state that " the state needs to tease the feds into doing this . " this can be done by conducting studies to obtain current cost data and update the data ferc would use for determining the cost controls . sources report that this process of " teasing " ferc has not yet started . this is chiefly because california politicians are focused on flat price caps , which ferc is very unlikely to impose . it appears the state is asking ferc for the wrong measures , which is delaying the process . the only way for the state to avoid these constitutional issues would be for the state to purchase the utilities , as municipal entities would not be subject to puc regulation . however , there remains very significant opposition to this idea , especially on the republican side . a state purchase of the utilities would likely only gain momentum once plan b began to fail for the reasons cited above . additionally , a state purchase of the utilities would be less expensive were both utilities in bankruptcy .
sturmwasser is a partner at sturmwasser & woocher , a santa monica law firm . ( his offices are on the top floor of the tallest building in santa monica , overlooking the beach . ) he has been a utilities lawyer for over 30 years . his clients include the consumer advocacy group turn ( toward utilities rate normalcy ) , among others . sturmwasser will reportedly look for funding to support the legal challenge , but if he cannot find money elsewhere , he will likely be able to support it out of his own pocket .