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Enron Mail |
State Controller Kathleen Connell held a press conference earlier today to=
=20 discuss four aspects of the energy crisis: ?achievement of long-term energy= =20 contracts; price per megawatt-hour; proprerty tax assessment of power plant= s;=20 and possible anticipation of revenues in the coming year. While she made mention of generators, her remarks were primarily comparing= =20 the Governor's plan =01. which is based upon three assumptions =01.?to the = reality=20 of the situation. ?The three assumptions are: ?success of long-term=20 contracts; spot market prices and anticipated revenue. ?Specifically, she= =20 said: In regards to long-term contracts, the Controller indicated that less than = 1%=20 of California's energy purchases are through long-term contracts =01.?compa= red=20 to the anticipated 40%. ?In addition, most of these contracts are for prior= =20 to July 1 and after September 30. ?And most of the terms can be renegotiate= d=20 if revenue bonds aren't approved.=20 Governor assumes spot market prices will decrease to $195mwh this summer.= =20 ?Currently prices are higher than this, and there is no indication that the= y=20 will drop. [Connell made mention of a $533.2 million check made out to=20 Mirant by the state for purchases in the spot market -- instead of through= =20 long term contracts. ?She also made mention of the Reliant purchase @ 1,900= =20 mwh.]=20 State may fall short $4 billion (more or less) =01.?requiring Connell to re= lease=20 "revenue anticipation notes in February to make up for shortfall. ?(These= =20 don't require approval by the legislature, and must be repaid within a year= )=20 In her capacity at the State Board of Equalization she will hold a hearing = in=20 June to reassess property values at California's generating plants to ensur= e=20 that generators are "paying their fair share" in taxes. Below is a copy of a Dow Jones article on the event.... Thanks, Jean --=20 Jean Munoz McNally Temple Associates, Inc. 916-447-8186 916-447-6326 (fx) Calif Controller:State Behind On Long Term Contract Buys ???? Updated: Monday, May 21, 2001 04:41 PM?ET ?????=20 ? LOS ANGELES (Dow Jones)--California State Controller Kathleen Connell said= =20 Monday that she anticipates the state will need to issue $4 billion in=20 revenue anticipation notes in February, because a $13.4 billion revenue bon= d=20 issue in mid-August will not be enough to cover power purchases.=20 The state is likely to spend more on spot market purchases than the=20 administration has anticipated because the price of summer power will be=20 higher than expected and because the state has secured fewer long-term=20 contracts than expected, she said.=20 ? ???? "The administration projected we'd spend $925 million for long-term contrac= ts=20 in the first six months (of 2001). We've now spent only $36.4 million on=20 long-term contracts of a total $5.1 billion spent on energy purchases - les= s=20 than 1%," Connell said.=20 It is unlikely that an additional $890 million in long-term contracts will= =20 flow through her office in the next five weeks, Connell said.=20 Gov. Gray Davis' energy plan assumes that 32% of all power needs through 20= 01=20 will be met through long-term contracts, with 40% met by long-term power in= =20 the summer months, Connell said.=20 However, the state has not secured as many long-term contracts "as we would= =20 hope to see," and many of the contracts cover periods before July 1 or afte= r=20 Sept. 30, Connell said.=20 Connell said she had received 25 contracts with 17 generators thus far.=20 One of Davis' energy aides said that there were seven more contracts for=20 summer reliability and peaking power on their way to the controller's offic= e.=20 He added that the controller was basing her evaluation on somewhat old=20 information, as there is a time delay between when deals are done and when= =20 the controller is notified.=20 "I don't doubt the controller is accurate in what she is seeing, but the=20 billing is done in arrears," Davis energy aide Joseph Fichera said on a=20 conference call. "For example, April contracts are billed by May 20."=20 The controller said her analysis reflects checks written as of May 17.=20 A $5 billion rate increase approved last week for utilities may not provide= =20 adequate revenue to the CDWR, Connell said.=20 "We may be short as much as $1.7 billion in revenues to cover the projected= =20 expenses of the CDWR," Connell said.=20 The state is now dipping below its cash flow into borrowable resources and= =20 will exhaust those resources by the end of August, making a timely revenue= =20 bond issue crucial, Connell said.=20 Connell added that she will hold hearings in June to determine whether=20 generating plants formerly owned by utilities are being assessed for proper= ty=20 taxes at an appropriate level.=20 "Given (the generators') record profits, we will review whether there needs= =20 to be an additional assessment," Connell said.=20 -By Jessica Berthold, Dow Jones Newswires; 323-658-3872;=20 jessica.berthold@dowjones.com
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