|
|
Enron Mail |
1. Legislation Passes- Short-Term Measures, Very Long-Term Measures
As we said yesterday, SB-7X passed the California State Senate easily. The bill gives the state the immediate authority to purchase power via the Department of Water and Resources until February 2nd. The Department will have $400 million available to finance power purchases, but there expectations that these costs could easily rise to $1 billion by next week. AB-1X has evolved into a longer-term solution and in its current form, would authorize the Department of Water and Resources to enter into long-term contracts (as opposed to the 15 day contracts in SB-7X) to buy power at a price cap of 5.5 cents per kw/h. This legislation is not expected to pass today and will likely be changed considerably during the upcoming two week period covered by SB-7X, when negotiations between generators, the utilities, and the state are likely to resume. A second piece of legislation under --SB 6X--has created uncertainty in the markets. This legislation will create a California Public Power Authority with bond issuance authority. The uncertainty concerns whether the new authority will address the problem of the $12 billion in outstanding debt owed by the utilities. The current text of the legislation focuses only on longer term measures such as expanding generation capacity and improving efficiency. Yet the legislation also says "the authority may issue bonds, exercise power of eminent domain, and enter into joint power agreements and buy, own, and sell land and facilities necessary for the financing of a project." The general nature of this language leaves open the possibility of either issuing bonds to finance past debts, or using eminent domain or the bond authority to finance the utilities as they enter into a Ch.11 proceeding. 2. Default Update 3. Bush As we reported on Wednesday, the Bush Administration continues to demonstrate little interest in getting involved
|