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Enron Mail |
California State Treasurer Phil Angelides held a press conference this
afternoon to announce that $3.5 billion in interim financing has been arranged through J.P. Morgan and Lehman Brothers, and that an additional $1 billion in financing is expected to be completed next week from an undisclosed source. ? The financing is in conjunction with an executive order issued yesterday by the governor that allows bond?sales for energy purchased by the Department of Water Resources.? Previously, Gov. Davis and Treasurer Angelides had sought legislative approval of the bond issuance, but were not successful.? Further review by state attorneys determined that the governor could authorize the issuance of bonds by executive order with the difference that the bonds can only be used for energy purchases going forward and cannot be used?to backfill past general fund expenditures.? ? A one-page?handout summarizing the financing has been sent to Houston.??The vital statistics are: The authorized loan amount is $5 billion, with an initial $3.5 billion committed; The rate is 4.75%, but will jump to 7% if the bonds are not issued successfully by October 31, which is the scheduled maturity date of the loan (Angelides emphasized that this is not the due date). The goal of the financing is to stem the flow of funds from the general fund for power purchases and avert a cash crisis.? The financing, which also provides working capital for continued?state energy purchases,?is secured by revenues from electricity sales and will be repaid by the bonds. ? Angelides noted that the financing, which he hopes to have totally closed by July 1, precludes generators from walking away from contracts under the clause that requires financing by a certain date.? He said it satifsies "most" DWR contracts and?precludes arguments made by generators for a "credit premium." ? Angelides also said that the financing is important because it "builds momentum" for the huge revenue bond sale and that it "sends a powerful signal to Wall Street that the bond issue is real." ? According to his figures, the general fund is currently out about $5.2 billion net ($6.1 billion in purchases minus $900 million in revenues) in power purchases through June 12. ? Steps still must occur before the bonds can be issued, he said.? The PUC has to adopt rate agreements, adopt a servicing order with the utilities to collect revenues to repay the bonds, and has to enact rate increases of about 3 cents/kwh in SDG&E's territory.? Angelides noted that the lenders have made their financial commitment event though these PUC actions are still outstanding. ? The bonds will not be issued until early September.? Angelides said late August is a terrible time because the financial community is on a pre-Labor Day holiday and that the state would hold off until the more favorable period following the holiday. ? ? Earlier in the afternoon, the Foundation for Taxpayer and Consumer Rights -- Harvey Rosenfield's group -- held a press conference to voice opposition to the Edison MOU.? They all seem to agree that the MOU is likely dead, but are afraid of it arising at a later date in some form. ? When asked about the business community being asked to shoulder the costs of utilities' debt, Rosenfield said that a problem has arisen in that business wants direct access but DWR has already purchased the power they "don't want."? He believes Edison alone should be responsible for its debt; it's government's role to go forward, he said, and Edison's job to "clean up its mess." ? Rosenfield cautioned that if legislators "make the mistake of paying one more penny" towards a bailout there will be a referendum on the bailout and the legislators voting for it.? He said they would be held personally accountable. ? (Exactly what he means by this is unclear.? In California, a "referendum" -- which is the word he used -- is a little-used tool to overturn legislation that has been passed and signed.? Whether he was threatening recall attempts is also unclear.) ? Rosenfield added that depending on how things progress, there could be an initiative and it could include a public power component. ? The press release issued at the press conference, which also featured Harry Snyder of Consumers Union, has been forwarded to Houston.? It is also available through this link: http://www.consumerwatchdog.org/utilities/pr/pr001706.php3 ? ?
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