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Enron Mail |
For questions or comments regarding this report please contact G. Britt Whi=
tman at ex:5-4014 or Kristin Walsh at ex:3-9510. EXECUTIVE SUMMARY Assembly's MOU Supporters "MIA," Vote Stalled =20 Bailout Hang -Ups: Land, Bonds, and Referendum SoCal Up for Grabs? MOU Support Waning=20 As of last night, Assemblyman Hertzberg reportedly had 25 votes in favor of= the bailout that he could "count on." There were 10 more votes that were = "close" and stood a "reasonable chance" of being cast in favor of the bailo= ut. However, that still left Hertzberg 9 votes short of the 41 he needs. = Earlier today, Sen. Polanco, the bill's sponsor, privately indicated that t= he few remaining votes necessary to pass the amended SB 78XX were in place = due to lobbying efforts by Gov. Davis. No doubt the count will be close, b= ut Hertzberg will only take the bill up in the Assembly for a vote today or= tomorrow if he knows Democrats can muster enough support. =20 The key issues related to getting the 41 votes to pass SB 78XX are the foll= owing:=20 Including the option to buy the transmission lines. For some this is a phi= losophical issue; these members are quite adamant that the option to buy th= e lines needs to be removed from SB 78XX. Excess profits and creditworthiness - In particular how Edison can use any = profits.=20 The philosophy underlying the bill itself as to whether a bailout is necess= ary given the experience with PG&E. And members are skittish about voting = for a bailout with the possibility of a bankruptcy still possible anyway. According to Assembly leadership sources, no Senator has asked the Speaker'= s Office for anything to be put in the bill (except for a Central Valley se= nator, Jim Costa, who played a party in brokering the deal on Shaver Lake).= Leadership sources were surprised by that, and believe that many senators= will not hold to the Burton line of "don't even change a period in the bil= l." Several senators including Polanco and Costa are vested in the bill's = passage and will want to see it brought up for a vote despite significant o= pposition. =20 Many people, including Polanco, believe that Burton may require his worker'= s compensation reform plan to be double-joined to the Edison MOU in order t= o take it up for a vote. Double joining is a legislative maneuver that tie= s the fate of both bills together. It creates a situation where both must = be passed by the legislature and signed by the Governor in order to go into= effect. If the Governor only signs one, neither becomes law. But the Gov= ernor's office has told us that Burton made a direct statement to them last= week that he had no intention to double join workers comp reform to SB 78x= x. =20 Some suggest that Senate opposition lead by Burton (which remains considera= ble) may introduce a new bailout bill if SB 78XX passes the Assembly. This= new bill would be designed to be unacceptable to the Assembly. The Senate= then would pass this bill on the last day of the session, and then adjourn= without a conference committee. The Assembly would then be left to accept= or reject the Senate's bill without the possibility of amendments. (This = is somewhat similar to what the Senate did in July, only now the recess wil= l be until next year.) SoCal Bailout Barriers Regarding media reports referencing Assemblyman Keely's deal with Davis to = exempt 5,000-acres of the Shaver Lake area from the bill's conservation eas= ements, the protesters representing Fresno feel that this is not good enoug= h and they intend to pursue their lawsuit against the state regarding the e= asements. These protestors (and the Republicans who represent them) felt t= hat they had achieved compromise language in the bailout last week, but thi= s language is now gone. While the Shaver Lake amendments (and all conserva= tion easement language) are again in the bill, we do not believe this will = significantly interfere with the bill's passage. Some Central Valley membe= rs voted in support of the bill despite the amendments, and there is only o= ne Democrat, Dean Florez, who may vote against it because of them. Some Senators also reportedly considering removing language from the bond p= ortion of the bailout bill that makes the bonds "Harvey-proof" - that is, i= mmune from a referendum by consumer advocates. This language, which was pr= eviously used in the California rate reduction bonds, is structured such th= at California's credit could be compromised if the bonds are not repaid (th= is is done by involving the California Infrastructure Bank as a party to th= e bonds). Some members of the Senate who are in close contact with Harvey = Rosenfield and the consumer advocates have expressed that they want to remo= ve this language as a diplomatic way to destroy the bailout. If the langua= ge is removed, there is no way that the state's credit is tied to the bonds= . This means that the bonds can be challenged by a voter referendum withou= t endangering the state. Current polls show that such a referendum, which = would allow voters to choose not to pay the surcharge on power bills to bai= l out SoCal, would very likely succeed. This would mean that the bonds cou= ld not be repaid. =20 Wall Street firms have stated expressly that they will not purchase the bon= ds if they are susceptible to a voter referendum, meaning that removing the= "Harvey-proofing" language will likely mean that the bailout bonds will no= t be able to be sold. SoCal is also aware of this possibility; if the lang= uage comes out of the bill, the plan will no longer be acceptable to SoCal. SoCal: Selling Out or Going Under There is word in Sacramento of companies "sniffing around" for a pre-packag= ed purchase of Edison after the bankruptcy occurs. We will continue to inv= estigate possible buyers and report when information becomes available. =20 It is also rumored that if an "inadequate" bill passes - i.e., one that wil= l not return SoCal to creditworthiness - SoCal may declare voluntary bankru= ptcy, then use whatever bailout is passed as a revenue stream in bankruptcy= . The only requirement laid upon SoCal is to attempt to go back into the m= arket by January 2003, and there is no penalty for them failing to do so. = There appears to be nothing in the bailout bill that would preclude them fr= om using money from the bailout in bankruptcy.
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