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Enron Mail |
FYI. Looks like what we suspected is about to launch, i.e., an orchestrated
effort by Davis to go after the suppliers. Just found out the following from Sue Mara, who attended the ISO board meeting today: The ISO is scheduled to release a "report" today claiming that suppliers are price gouging. The California AG has subpoena-ed generator-members of the WPTF---very extensive questions asking for just about everything under the sun. Likely that we can expect a loud call for regional price caps very soon. Best, Jeff Karen Denne 02/28/2001 06:25 PM To: Jeff Dasovich/NA/Enron@Enron, James D Steffes/NA/Enron@Enron, Richard Shapiro/NA/Enron@Enron, Mark Palmer/Corp/Enron@ENRON, John Neslage/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Steven J Kean/NA/Enron@Enron, jkradin@marathon-com.com, rlichtenstein@marathon-com.com, syamane@marathon-com.com cc: Subject: Davis Wants Generators to Accept Less Than Owed (Update2) Davis Wants Generators to Accept Less Than Owed (Update2) 2/28/1 18:56 (New York) Davis Wants Generators to Accept Less Than Owed (Update2) (Adds names of California generators in fifth paragraph, and Reliant comment in sixth.) New York, Feb. 28 (Bloomberg) -- California Governor Gray Davis said he intends to ask power generators to accept partial payment for power sold to the state's cash-strapped utilities this summer and winter, Wall Street analysts who attended a closed-door meeting with the governor said. ``It looks like the people he wants sharing the pain are the companies generating power sold to utilities,'' said Kevin Boone, a bond analyst with Bear, Stearns & Co. who attended the meeting in New York. ``He wants to force them to take cents on the dollar. That seems to be what his initial proposal will be.'' PG&E Corp.'s Pacific Gas & Electric, and Edison International's Southern California Edison, the state's largest utilities, are near bankruptcy after accumulating more than $12 billion in debt buying power from generators at soaring prices. Regulators have not let the utilities pass on most of their power- buying debt to consumers. Davis said some generators have approached him with offers to accept less than full payment, said Michael Worms, a utility analyst with Gerard Klauer Mattison & Co. Davis spoke to about 35 analysts from Wall Street and energy-research firms in New York in a meeting that was criticized by investors and analysts who were not allowed to attend. No Names Mentioned Davis didn't specify which companies came to him with partial- payment proposals, analysts said. Duke Energy Corp., Calpine Corp., Willams Cos., Dynegy Inc. and Reliant Energy Inc. are among the biggest suppliers of electricity to California utilities. ``I'm not aware of him talking to anyone at Duke about forgiveness,'' Duke Energy spokesman Tom Williams said. Reliant spokesman Richard Wheatley said Davis's proposal ``doesn't really come as a surprise'' because politicians in Sacramento, the capital of California, have been discussing the idea for weeks. Reliant has opposed anything other than full payment of its debts. ``Williams fully expects to be paid the money that is owed us,'' spokeswoman Paula Hall-Collins said. ``We have worked in very good faith with the state, selling voluntarily into the market, negotiating with them for long-term contracts and working with them to solve the problem.'' Enron Corp., an energy trader that has set aside unspecified reserve for possible losses in California, has not been approached about debt forgiveness, said Karen Denne, a company spokeswoman. ``This proposal. . . is news to us,'' and does not address the immediate problem of electricity shortages in California this summer, Denne said. Industry analysts say California, which has already had scattered blackouts this winter, will face more this summer when power demand surges. Buying the Grid Davis said at the meeting that negotiations to buy PG&E Corp.'s power transmission system may take another 30 days, though he was optimistic an agreement could be reached within two weeks, analysts said. He offered few other specifics on the PG&E talks, said Steve Fetter, group managing director of global power for Fitch Inc. State officials are trying to reach agreement with PG&E and Edison, as well as with Sempra Energy, to buy their transmission lines as part of a plan to help them pay debt and borrow money at low interest rates to avoid bankruptcy. A tentative agreement to buy Edison's lines for $2.76 billion was reached last week. Talks with Sempra are continuing. The governor said he was optimistic an agreement with PG&E could be reached in two weeks, but negotiations could drag on longer, Fetter said. ``We are making progress,'' Davis said at a news conference after the analysts meeting at the Cornell Club on the east side of Manhattan. ``We are close to a final agreement with (Edison) and relatively close with Sempra.'' The governor told analysts he's confident he can get a utility rescue plan that doesn't require an immediate rate increase, but Davis did say that rate increases are going to be needed at some unspecified time in the future, Fetter said. Davis said he wasn't sure if he resolved all of analysts' doubts about California's plans to save its utilities from bankruptcy. ``He's in a hole and he's got a long way to go to get out of it,'' said Paul Patterson, an analyst with Credit Suisse First Boston who attended the meeting. ``We still don't have a final solution in sight.'' Shares of San Francisco-based PG&E fell 9 cents to $13.96. Rosemead, California-based Edison shares fell 4 cents to $14.90. San Diego-based Sempra fell 16 cents to $22.15. --Mark Johnson and Jonathan Berr in New York (212) 318-2300 or mjohnson7@bloomberg.net and jberr@bloomberg.net with reporting by Margot Habiby in Dallas and Jim Kennett in Houston/alp
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