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Enron Mail |
Though announced yesterday that Davis and the Assembly Democratic leadership had cut a deal on an MOU for Edison, considerable uncertainty remains:
The legislative language describing "the deal" still has not been released. (We'll get the details out just as soon as they are available.) Of the provisions rumored to be in the deal, Burton (Democratic leader in the Senate) has said publicly that spreading the utility undercollection over customers 20 KW and higher is a "nonstarter in the Senate". (The Senate bill forces 500 KW-and-above customers to pay for Edison's undercollection (which amounts to about 3600 customers behind Edison. Wall Street has said that 3600 customers is insufficient to securitize the undercollection.). Unless the costs are spread across 20 KW-and-above customers, business is likely to oppose the bill strongly. Business may also oppose the bill if it doesn't provide for "meaningful" Direct Access and self-gen, but at this point business seems to care more about spreading the undercollection than Direct Access. There is no indication yet that Davis and the Democratic leadership in the Assembly have convinced a majority of Assembly Democracts to vote for the deal; but Davis is pushing very hard and the assumption is that he'll get the votes in the Assembly if he continues to push. However, given Burton's comments, it's unclear whether the Senate goes along, even if Davis manages to push something through the Assembly. But if Davis and the Assembly want it badly enough, the likelihood is that they will pass a bill that meets Burton's requirements and that Burton will move through the Senate. Bryson, CEO of Edison, has said publicly that he doesn't know whether the deal will make Edison solvent. Consumer groups are strongly opposed to any deal for Edison, saying 1) bankruptcy's the best answer and 2) they will run "the Mother of all ballot initiatives" to roll back any "bailout." As of 1:06 PM CDT, PCG is trading at 16.47 (down 0.07); Edison's trading at 13.94 (down 0.07). Best, Jeff
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