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Enron Mail |
1. California AG Exploring Investigation of Power Profits
Sources report that the California Attorney General's office,in a meeting yesterday, ordered a review of the Federal Profiteering Statute. In keeping with the recent rhetoric by Gov. Davis, this action is almost certainly directed toward investigations of profits made by generators and marketers. 2. More Detail on Bankruptcy- Creditors Concerned About Lengthy "Cure Period" The generators want to limit their exposure as general creditors in a Chapter 11 proceeding. Their ability to their exposure depends on the "cure period" for making good on a defaulted payment, which would be dictated by the specific contract terms. If the "cure period" - that is, the time the utilities have available to make up for missed payments before the generators or the power exchange can take them to court - is a short period of time, for the sake of argument 30 days, then the utilities' creditors have to swallow another 30 days of accumulated (impaired) receivables before they can move to the more desirable position of postpetition suppliers (in which bills do get paid, as would be directed by the Bankruptcy Court judge). If, however, the utilities have a longer "cure period", for the sake of argument 60 days, then their creditors will effectively have to swallow 60 days of accumulated impaired receivables on which they will ultimately have to take a substantial haircut.
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