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USA: UPDATE 1-Calif. bankruptcy ripples through utilities shares.
Reuters English News Service, 04/06/2001 Pacific Gas and Electric Company Files for Chapter 11 Reorganization Business Wire, 04/06/2001 Transwestern Pipeline Company; Notice of Application Federal Register, 04/06/2001 USA: UPDATE 1-Calif. bankruptcy ripples through utilities shares. 04/06/2001 Reuters English News Service (C) Reuters Limited 2001. NEW YORK, April 6 (Reuters) - Shares of utilities companies paused, plummeted then pared losses after news on Friday that Pacific Gas & Electric, California's largest investor-owned utility, filed for voluntary bankruptcy, a victim the state's flawed deregulation law. Trade in shares of parent company PG&E Corp. were halted before the filing. When trading resumed, they fell 37.96 percent to $7.06, off $4.32, below its modern stock low of $8.50. Shares in Edison International , California's other financially strapped utility, lost almost 30 percent of its value to trade down $3.72 at $8.92. Stocks of wholesale power suppliers with money owed to them at risk as a result of the California power crisis also fell sharply on the news but recovered slightly in later trade. "California is a problem that's going to be with us for quite some time, but these guys are going to benefit from the fact that rates were increased there recently and going forward they will benefit from power prices that are high relative to historical norms and eventually they are going to get paid on some of these receivables as well," said Dain Rauscher Wessels analyst Mark Easterbrook. Easterbrook said Duke Energy Corp. , Dynegy Corp. , Reliant Energy Inc. and Williams Cos. Inc. each had outstanding amounts of $100 million or more owing to them as a result of the California power crisis, including a significant but as yet unquantified portions owed by Pacific Gas & Electric. Duke was down 4.74 percent or $2.01 at 40.39 while Dynegy was off $2.27 or 4.46 percent to 48.65, up from its low of $46.35. "The market has taken than $1 billion - more than threefold - off Dynegy's market capitalization even though its exposure to reserves is $265 million," said James Yanello, analyst at UBS Warburg. Williams Cos. was down 96 cents or 2.32 percent lower at $40.89 but off its low of $39.60. "Enron, Williams and El Paso's exposure is very limited." said Yanello. Enron Corp. shares were down 2.6 percent or $1.45 at $54.25, off its low of $53.20. "It's unfortunate that the state's largest utility was forced to turn to the court for a resolution. Solutions to the state's energy crisis have been available for months that would have avoided this scenario, but Governor Davis and the legislature lack the bold leadership to take swift, decisive action," spokesman Vance Meyer said. El Paso shares moved off its intraday low of $63.03 to trade up 7 cents at $63.10. Reliant Energy edged back up to $43.51 or down 4.06 percent or $1.84 after hitting an intraday low of $42.65. (-Janet McGurty, New York Equities, +1 212 859 1765 janet.mcgurty@reuters.com). Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. Pacific Gas and Electric Company Files for Chapter 11 Reorganization 04/06/2001 Business Wire (Copyright © 2001, Business Wire) SAN FRANCISCO--(BUSINESS WIRE)--April 6, 2001--Pacific Gas and Electric Company, the utility unit of PG&E Corporation (NYSE: PCG), today filed for reorganization under Chapter 11 of the U.S. Bankruptcy Code in San Francisco bankruptcy court. The company said it is taking this action in light of its unreimbursed energy costs which are now increasing by more than $300 million per month, continuing CPUC decisions that economically disadvantage the company, and the now unmistakable fact that negotiations with Governor Gray Davis and his representatives are going nowhere. Neither PG&E Corporation nor any of its other subsidiaries, including its National Energy Group, have filed for Chapter 11 reorganization or are affected by the utility's filing. "We chose to file for Chapter 11 reorganization affirmatively because we expect the court will provide the venue needed to reach a solution, which thus far the State and the State's regulators have been unable to achieve," said Robert D. Glynn, Jr., Chairman of Pacific Gas and Electric Company. "The regulatory and political processes have failed us, and now we are turning to the court." Glynn added, "Our objective is to move through the Chapter 11 reorganization process as quickly as possible, without disruption to our operations or inconvenience to our customers. Throughout this crisis, our 20,000 employees have been and remain committed to providing safe and reliable service to the 13 million Californians who depend on us to deliver their gas and electricity." Pacific Gas and Electric Company decided to file for the protection of Chapter 11 primarily due to: -- Failure by the state to assume the full procurement responsibility for Pacific Gas and Electric's "net open position" as was provided under AB1X. This has the result of increasing financial exposure to unreimbursed wholesale energy procurement costs, which the utility estimates to be approximately $300 million or more per month. -- The impact of actions by the California Public Utilities Commission (CPUC) on March 27, 2001, and April 3, 2001, that created new payment obligations for the company and undermined its ability to return to financial viability. -- Lack of progress in negotiations with the state to provide recovery of $9 billion in wholesale power purchases made by the utility since June 2000, which have not been recoverable in frozen rates. -- The adoption by the CPUC of an illegal and retroactive accounting change that would appear to eliminate our true uncollected wholesale costs. "In addition, despite Pacific Gas & Electric's best efforts to work with the State of California to reach a consensual, responsible, fair and comprehensive solution to California's energy crisis, no agreement has been reached with the Governor and the Governor's representatives have dramatically slowed the pace and the progress of discussions over the past month. "Furthermore since last fall, we have filed comprehensive plans for resolving this matter with the CPUC, but they have not acted affirmatively on them," said Glynn. On October 4, 2000, Pacific Gas and Electric sought emergency rate action by the CPUC. In November 2000, we filed our rate stabilization plan, which, if adopted, would have increased electric prices by an initial 25 percent, compared with the 46 percent recently adopted by the CPUC. Neither request was acted upon. Had the state acted at that time: -- Pacific Gas and Electric would have been kept creditworthy; -- Pacific Gas and Electric would have been able to enter into long-term power purchase contracts at prices lower than those announced by the state; -- The state would not have had to almost exhaust the state's budget surplus by spending billions of dollars to purchase power for the utility's customers; -- The state would not now need to issue billions of dollars in bonds to cover these power purchases; and -- The state would not now be advancing a proposal to spend billions of dollars to purchase the state's three investor-owned utility's electric transmission systems. "This year, the state has spent more than $3 billion on power purchases and, with the CPUC, has arranged to be reimbursed for these expenses," noted Glynn. "In contrast, since June Pacific Gas and Electric Company has spent $9 billion in excess of revenues to pay for power for its customers and exhausted its ability to continue borrowing, but there has been no progress on a plan to reimburse it for those expenditures as provided by law. "Statements by the Governor and other public officials since last September gave us reason to believe that a solution could be reached outside the context of Chapter 11 that would restore the utility's financial viability and enable it to meet its financial obligations equitably. However, these statements have not been followed up by constructive actions, and a reorganization in Chapter 11 is now the most feasible means of resolution." The utility will utilize existing resources to continue operating its business during bankruptcy, including paying vendors and suppliers in full for goods and services received after the filing. The utility will pay electric commodity suppliers as provided by law. The utility intends to continue normal electric and gas transmission and distribution functions during the Chapter 11 process. Employees will continue to be paid. Health care plans and other benefits for employees and most retirees will continue. The utility's qualified retirement plans for retirees and vested employees are fully funded and protected by federal law. Notice A media teleconference will be held today at 10:15 A.M. Pacific Daylight Time to discuss this announcement. Pacific Gas and Electric Company Chairman Robert D. Glynn, Jr., and Pacific Gas and Electric Company President and CEO Gordon R. Smith will be available for questions. The dial-in number is 888/469-2078, and the password for access is "media." An investment community conference call to discuss Pacific Gas and Electric Company's Chapter 11 filing has been scheduled for 11:15 A.M. Pacific Daylight Time today. A real-time webcast of this conference call can be accessed at www.pgecorp.com. CONTACT: PG&E Corporation News Department 415/973-5930 12:34 EDT APRIL 6, 2001 Notices Transwestern Pipeline Company; Notice of Application 04/06/2001 Federal Register 18238 Copyright © 2001 Federal Information & News Dispatch, Inc. All rights reserved April 2, 2001. Take notice that on March 29, 2001, Transwestern Pipeline Company, P.O. Box 3330, Omaha, Nebraska 68103-0330, in Docket No. CP01-115-000 filed an application pursuant to Sections 7(b) and © of the Natural Gas Act for permission and approval for Transco to replace mainline compression facilities at four existing compressor stations in Arizona, all as more fully set forth in the application which is on file with the Commission and open to public inspection. This filing may be viewed on the web at http://www.ferc.fed.us/online/rims.htm (call 202-208-2222 for assistance). Specifically, Transwestern proposes to abandon in place twelve existing drivers and compressors, totaling 49,500 horsepower, at Stations 1, 2, 3 and 4; and install operate a 41,500 ISO-rated horsepower turbine centrifugal compressor at each of the four stations. Transwestern also requests, to ensure a smooth transition to the new compressor units, to maintain the ability to operate the existing facilities up to six months after the installation of the new units. It is stated that the new units will require less maintenance activity than the existing units as well as operate more efficiently in flowing more gas through its system. Transwestern states that result of the project it will be able to provide incremental capacity of approximately 150,000 Mcf per day on its mainline from Thoreau, New Mexico to California, increasing its total capacity to California to 1,240,000 Mcf per day. It is indicated that the proposed modification will enable it to meet the supply and demand imbalance in the California area. Transwestern proposes to place the facilities into service by June 1, 2002. Transwestern estimates the cost for the proposed construction to be approximately $93,300,000, to be financed with internally-generated funds. Transwestern also states that it is not at this time requesting rolled-in pricing for the new facilities, and understands that it will be at risk for the recovery of costs associated with the proposed modifications. Any questions regarding the application should be directed to Keith L. Petersen, at (402) 398-7421. There are two ways to become involved in the Commission's review of this project. First, any person wishing to obtain legal status by becoming a party to the proceedings for this project should, on or before April 16, 2001, file with the Federal Energy Regulatory Commission, 888 First Street, NE, Washington, DC 20426, a motion to intervene in accordance with the requirements of the Commission's Rules of Practice and Procedure (18 CFR 385.214 or 385.211) and the Regulations under the NGA (18 CFR 157.10). A person obtaining party status will be placed on the service list maintained by the Secretary of the Commission and will receive copies of all documents filed by the applicant and by all other parties. A party must submit 14 copies of filings made with the Commission and must mail a copy to the applicant and to every other party in the proceeding. Only parties to the proceeding can ask for court review of Commission orders in the proceeding. However, a person does not have to intervene in order to have comments considered. The second way to participate is by filing with the Secretary of the Commission, as soon as possible, an original and two copies of comments in support of or in opposition to this project. The Commission will consider these comments in determining the appropriate action to be taken, but the filing of a comment alone will not serve to make the filer a party to the proceeding. The Commission's rules require that persons filing comments in opposition to the project provide copies of their protests only to the party or parties directly involved in the protest. Persons who wish to comment only on the environmental review of this project should submit an original and two copies of their comments to the Secretary of the Commission. Environmental commenters will be placed on the Commission's environmental mailing list, will receive copies of the environmental documents, and will be notified of meetings associated with the Commission's environmental review process. Environmental commenters will not be required to serve copies of filed documents on all other parties. However, the non-party commenters will not receive copies of all documents filed by other parties or issued by the Commission (except for the mailing of environmental documents issued by the Commission) and will not have the right to seek court review of the Commission's final order. [Page Number 18239] The Commission may issue a preliminary determination of non-environmental issues prior to the completion of its review of the environmental aspects of the project. This preliminary determination typically considers such issues as the need for the project and its economic effect on existing customers of the applicant, on other pipelines in the area, and on landowners and communities. For example, the Commission considers the extent to which the applicant may need to exercise eminent domain to obtain rights-of-way for the proposed project and balances that against the non-environmental benefits to be provided by the project. Therefore, if a person has comments on community and landowner impacts from this proposal, it is important either to file comments or to intervene as early in the process as possible. Also, comments protests, and interventions may be filed electronically via the internet in lieu of paper. See, 18 CFT 385.2001(a)(1)(iii) and the instructions on the Commission's web site at http://www.ferc.fed.us/efi/doorbell.htm. If the Commission decides to set the application for a formal hearing before an Administrative Law Judge, the Commission will issue another notice describing that process. At the end of the Commission's review process, a final Commission order approving or denying a certificate will be issued. Linwood A. Watson, Jr., Acting Secretary. [FR Doc. 01-8489 Filed 4-5-01; 8:45 am] BILLING CODE 6717-01-M Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved.
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