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Date: Thu, 15 Mar 2001 08:07:40 -0600
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Subject: Reuters - US Senate rejects California utility bankruptcy measure
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In case you haven't already heard about this . . .

Wednesday March 14, 12:22 pm Eastern Time

US Senate rejects California utility bankruptcy measure
By Patrick Connole

WASHINGTON, March 14 (Reuters) - The U.S. Senate on Wednesday rejected a bid 
to force California utility companies to repay power generators for 
electricity they bought under a federal government sales order, even if 
utilities go bankrupt.

In a motion on the Senate floor, lawmakers killed an amendment to a broader 
bankruptcy reform bill that opponents said was a dangerous proposal that 
would have opened the door to involuntary bankruptcy filings by troubled 
California utilities. The utilities in question are PG&E Corp.'s (NYSE:PCG - 
news) Pacific Gas & Electric and Edison International's (NYSE:EIX - news) 
Southern California Edison.

The amendment was sponsored by Oregon Democrat Sen. Ron Wyden, Montana 
Democrat Sen. Max Baucus and Oregon Republican Sen. Gordon Smith.

Proponents said the measure would have protected the customers of the 
federally-owned Bonneville Power Administration and other Northwest utilities 
from unfair rate increases due to the California energy crisis.

``I don't think it's fair for consumers in other Western states to get caught 
holding the bag if California utilities take our power and then run into 
bankruptcy court to avoid their debts,'' Wyden said.

``The Northwest has been more than a good neighbor to California during this 
crisis,'' he said.

Interestingly, the California Senate delegation was split on the matter. 
Democrat Dianne Feinstein opposed the amendment, while fellow Democrat 
Barbara Boxer supported it.

Feinstein called the proposal a ``dangerous amendment'' that would create two 
classes of creditors and ``probably force an involuntary bankruptcy.''

The broader bankruptcy reform bill is expected to be approved by the Senate 
by the end of the week.

Separately, talks between California and its three investor owned utilities 
on a deal under which the state might buy their transmission assets continued 
this week with no deal in sight.

The state is negotiating with PG&E and Edison, along with Sempra Energy 
(NYSE:SRE - news) unit San Diego Gas and Electric.

The deals are aimed mainly at pumping money into PG&E and SoCal Edison to 
keep them out of bankruptcy after they recorded about $13 billion in red ink 
since last spring, paying sky-high prices for power in the wholesale market.

PG&E and SoCal Edison, under the terms of the state's disastrous experiment 
with market deregulation, have been able to pass on to their retail customers 
only a fraction of their power purchase costs.