FW: EIX. PCG: QFs Prepare to File SCE Involuntary Bankruptcy Next

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----- Forwarded by James D Steffes/NA/Enron on 03/16/2001 07:28 AM -----

Chip Schneider/ENRON@enronXgate
03/16/2001 07:22 AM

To: Rick Buy/ENRON@enronXgate, David Gorte/ENRON@enronXgate, William S
Bradford/ENRON@enronXgate, Christopher F Calger/PDX/ECT@ECT, W David
Duran/HOU/ECT@ECT, Terry W Donovan/HOU/ECT@ECT, George
Schaefer/HPL/Enron@Enron, Greg Blair/Corp/Enron@Enron, James D
Steffes/NA/Enron@Enron, Alan Comnes/PDX/ECT@ECT
cc:
Subject: FW: EIX. PCG: QFs Prepare to File SCE Involuntary Bankruptcy Next
Week

-----Original Message-----
From: Paul Patterson <Paul_Patterson@xmr3.com<@ENRON
[mailto:IMCEANOTES-Paul+20Patterson+20+3CPaul+5FPatterson+40xmr3+2Ecom+3E+40EN
RON@ENRON.com]
Sent: Friday, March 16, 2001 7:11 AM
To: Schneider, Chip
Subject: EIX. PCG: QFs Prepare to File SCE Involuntary Bankruptcy Next Week

Credit Suisse First Boston
Paul Patterson
Good morning,
? Yesterday, Coram, a QF, said that it signed a petition to file involuntary
bankruptcy against Southern California Edison. Reportedly, the petition is
under review by five other renewable QFs. Apparently, certain gas-fired QFs
are now forming a second petitioner group.
? We believe that it should be fairly easy for Coram to collect the two other
signatures needed to make a petition valid. Whether the petition will
actually be filed is unclear since the QFs may only be attempting to expedite
a resolution for the utilities and themselves.
? On Wednesday, a federal court allowed Caithness, another QF, to place a
lien on an Edison asset, thus giving it a secured claim effective in 90 days.
Edison is filing an appeal and an automatic stay of decision.
? The Caithness decision may prompt Edison's other unsecured creditors to
seek similar motions. As we previously indicated, we believe that QFs pose
the greatest risk of filing involuntary bankruptcy against the utilities
because of their dire financial situation.
? Although Governor Davis and the utilities purportedly continue to negotiate
a recovery plan, there is no assurance of legislative cooperation. In
addition, we expect news of the petition to cause near-term weakness in the
utilities' stocks. Therefore, we recommend that investors avoid EIX ($13.59,
Hold) and PCG ($12.92, Hold), unless they have a high tolerance for risk and
volatility.

Please call us with any questions you may have.
Regards,
Paul Patterson, 212-325-5876
Neil Stein, 212-325-4217
Wen-Wen Chen, 212-538-0223
Emily Lao Chua, 212-325-1982

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- ppp031601.pdf