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Enron Mail |
EXECUTIVE SUMMARY
? Of the four =01&Plan Bs=018 introduced recently by California legislature= , only=20 two proposals appear viable for SoCal, and surprisingly, PG&E. The others= =20 either establish vulture funds for when So Cal goes under, or propose new= =20 ways of funding the transmission line deal. The California legislature's= =20 inability to identify an immediate solution has cued the media to limit the= =20 publicity of the lesser =01&plan Bs.=018 ? At this point, SoCal is interested in a making a deal. Not only are they= =20 are the on the verge of bankruptcy, but (unlike PG&E) SoCal has also=20 significantly exposed its parent company to bankruptcy by not taking the=20 necessary steps to protect its assets. As reported earlier with PG&E, we a= re=20 monitoring all activities surrounding SoCal assets, which could signal=20 imminent bankruptcy. The Infamous =01&Plan B=018 Four hours of debate and the absence of Republican representation on Tuesda= y=20 night led members of the state Assembly's so-called "Plan B" group to decid= e=20 backing only legislation introduced by Assemblymen Dean Florez and Joe=20 Nation. A previous proposal by Senate President Pro Tem John Burton that= =20 poised the state to purchase SoCal=01,s transmission lines for $2.76B to se= rvice=20 debt and left the Ca. PUC to determine SoCal=01,s unrecovered power costs p= rior=20 to bond issuance, didn't=01,t win support. As reported earlier, sources=20 indicate that Davis MOU is likely to suffer a similar fate once introduced = by=20 Senator Polanco later this week.=20 ? The Florez Plan Florez=01,s plan is currently under review in the Assembly Energy Committee= . =20 The proposal allows PG&E to issue bonds secured by their assets and use the= =20 revenues to pay creditors. The state would then assess a tax on the bond= =20 revenues aimed at servicing PG&E=01,s debt with the CADWR. Sources report = one=20 drawback to the plan is that PG&E bankruptcy Judge Montali would be require= d=20 to authorize any such a transaction respective of other recommendations=20 available to the court. This may not be the most time-efficient course of= =20 action. PG&E had shown signs of approval over similar plans in the months= =20 preceding their bankruptcy. =20 ? The Nation Plan Nation=01,s plan allows SoCal. Ed to sell bonds backed by ratepayer revenue= s=20 generated from state approved rate hikes. Additionally, the state would ho= ld=20 a five-year option on buying the transmissions lines for book value (roughl= y=20 $1.2B), as well as holding to the SoCal concessions previously mentioned in= =20 Davis' MOU. The drawback to Nation=01,s proposal is that SoCal creditors= =20 (including banks and generators) would have to collectively agree to take= =20 debt repayment at $0.75 on the dollar. Sources report that some SoCal=20 creditors favor attempts to recoup dollar for dollar in bankruptcy court ov= er=20 conceding to a =01&haircut.=018 SoCal. reportedly approves of Nation=01,s = plan=20 sticking to the principals outlined in Davis=01, MOU. =20
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