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Date: Tue, 08 May 2001 08:51:33 -0500 From: "Tracey Bradley" <tbradley@bracepatt.com< To: "Justin Long" <jlong@bracepatt.com< Cc: "Aryeh Fishman" <afishman@bracepatt.com<, "Andrea Settanni" <asettanni@bracepatt.com<, "Charles Ingebretson" <cingebretson@bracepatt.com<, "Charles Shoneman" <cshoneman@bracepatt.com<, "Deanna King" <dking@bracepatt.com<, "Dan Watkiss" <dwatkiss@bracepatt.com<, "Gene Godley" <ggodley@bracepatt.com<, "Kimberly Curry" <kcurry@bracepatt.com<, "Michael Pate" <mpate@bracepatt.com<, "Paul Fox" <pfox@bracepatt.com<, "Ronald Carroll" <rcarroll@bracepatt.com< Subject: Calif. Assembly approves $13.4 bln power bond sale Mime-Version: 1.0 Content-Type: text/plain; charset="us-ascii" Content-Disposition: inline FYI Calif. Assembly approves $13.4 bln power bond sale Monday, May 07, 2001 11:18 PM ET (updates with vote, quotes from governor, treasurer) By Joshua Chaffin SACRAMENTO, Calif., May 7 (Reuters) - The California Assembly approved a plan Monday to sell $13.4 billion in bonds to pay for electricity during the state's power crisis, marking what would be the biggest municipal bond issue in U.S. history. The bill, approved 49-29, now moves to the Senate for a concurrence vote. But the state cannot sell the bonds until at least August because lawmakers Monday were short -- by five Republican votes -- of the two-thirds majority needed to pass the measure as emergency legislation that would have taken effect immediately. Gov. Gray Davis blasted Republicans for "playing partisan politics" with an energy crisis that threatens the world's sixth biggest economy. California's power purchases have drained the state treasury of some $6 billion, spurring state officials to warn that the nation's most populous state risks costly financial ratings downgrades and could see funding shut off for important programs such as health or education. The bond issue is intended to pay the state back, with the debt to be paid off over 15 years through a portion of Californians' monthly power bills. " The Assembly Republicans' refusal to support emergency legislation puts the state's fiscal integrity at great and continuing risk, and does great serious harm to essential services from education to public safety to health care," State Treasurer Phil Angelides said in a statement. Now Angelides -- who wanted to issue the debt by June -- will have to wait at least 90 days for it to take effect as regular legislation. Senate President John Burton said the upper chamber would take up the measure no later than Thursday, before handing it on to Davis. Assembly Republicans refused to support issuing so much debt and instead proposed a more limited bond proposal that used the state's budget surplus to pay off power purchases. "This is a blank check drawn on the ratepayers' accounts," Assembly Republican Mike Briggs said in a statement. Still, authorizing the bond amount is a step toward ensuring a $5 billion bridge loan aimed at helping the state weather the energy crisis until the treasurer can issue the debt. "It would have been preferable to have had this done on an urgency basis," said Assemblyman Fred Keeley, a Democrat who has taken on a leading role during the energy crisis. "It would have sent a more confident message to the Street. Our choice was do it on this basis or do nothing." The state's power crisis stems from a bungled 1996 deregulation plan that allowed wholesale electricity prices to soar but capped retail rates. The result has brought a spotty power supply, rolling blackouts and forced the state's biggest utility into bankruptcy protection. The state legislature earlier this year approved issuing at least $10 billion in debt to pay for emergency power purchases. That plan, however, tied the bond amount to the California Procurement Adjustment, a formula that divided revenues from consumers' electricity bills between the state and its two biggest utilities. When PG&E (PCG, news) Corp.'s Pacific Gas & Electric challenged the CPA in bankruptcy court last month to demand a bigger slice of the pie, the bond sale was effectively scrapped -- leaving officials and lawmakers scrambling both to come up with a total amount and to authorize Angelides to issue bonds. Copyright 2001 Reuters Limited.
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