california power update 1 / 17 / 01 pt . iii 1 . california ag exploring investigation of power profits
sources report that the california attorney general ' s office , in a meeting
yesterday , ordered a review of the federal profiteering statute . in keeping
with the recent
rhetoric by gov . davis , this action is almost certainly directed toward
investigations of profits made by generators and marketers .
2 . more detail on bankruptcy - creditors concerned about lengthy " cure period "
the generators want to limit their exposure as general creditors in a chapter
11 proceeding . their ability to their exposure depends on the " cure period "
for
making good on a defaulted payment , which would be dictated by the specific
contract terms . if the " cure period " - that is , the time the utilities have
available to
make up for missed payments before the generators or the power exchange can
take them to court - is a short period of time , for the sake of argument 30
days , then the utilities ' creditors have to swallow another 30 days of
accumulated ( impaired ) receivables before they can move to the more
desirable position of postpetition suppliers ( in which bills do get paid , as
would be directed by the bankruptcy court judge ) . if , however , the utilities
have a longer " cure period " , for the sake of argument 60 days , then their
creditors will effectively have to swallow 60 days of accumulated impaired
receivables on which they will ultimately have to take a substantial haircut .
california power update 1 / 17 / 01 pt . iii
1 . california ag exploring investigation of power profits
sources report that the california attorney general ' s office , in a meeting
yesterday , ordered a review of the federal profiteering statute . in keeping
with the recent
rhetoric by gov . davis , this action is almost certainly directed toward
investigations of profits made by generators and marketers .
2 . more detail on bankruptcy - creditors concerned about lengthy " cure period "
the generators want to limit their exposure as general creditors in a chapter
11 proceeding . their ability to their exposure depends on the " cure period "
for
making good on a defaulted payment , which would be dictated by the specific
contract terms . if the " cure period " - that is , the time the utilities have
available to
make up for missed payments before the generators or the power exchange can
take them to court - is a short period of time , for the sake of argument 30
days , then the utilities ' creditors have to swallow another 30 days of
accumulated ( impaired ) receivables before they can move to the more
desirable position of postpetition suppliers ( in which bills do get paid , as
would be directed by the bankruptcy court judge ) . if , however , the utilities
have a longer " cure period " , for the sake of argument 60 days , then their
creditors will effectively have to swallow 60 days of accumulated impaired
receivables on which they will ultimately have to take a substantial haircut .