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Enron Mail |
Below are details of new plan currently being created by California State T= reasurer Phil Angelides and supported by Sen. Burton. The plan is in the i= nitial stages and is not currently on any legislative fast-track. It is al= so not motivated by a desire to save SoCal from bankruptcy. The creator's = goal is to give Californians more control over their energy and electric fu= tures as well as giving the tax/rate payers a share of the pie in return fo= r money that has/will go to the utilities. We will continue to monitor thi= s plan, its supporters and progress. Plan Z California State Treasurer Phil Angelides and a powerful group of legisla= tors are finally taking action and are developing a plan to solve Californi= a's energy crisis this summer. The group is comprised of leftish legislato= rs, environmental advocates, in-state energy company executives and busines= s leaders and they are pulling together a Plan Z. At the core of the plan = is the recently passed authorization to erect a California Public Power Aut= hority that issues bonds, constructs new power plants and buys up transmiss= ion lines. There is even talk within this group of using newly legislated = authority to buy SoCal Edison for $3.5 billion (less than it owes) although= they would face huge obstacles and receive strong opposition from power co= mpanies as well as Edison itself. The five-year goal is to have enough power generation capacity to guarant= ee a 5%-15% "cushion" against energy peak demand. Angelides and Burton wan= t to create enough capacity to form a buyer's market. One of the points of= the plan is to replace private sector generation with more public sector g= eneration. This plan may short-circuit private sector plans to build new p= lants, but the state has the ability to issue $5B in revenue-backed bonds (= in addition to the $12B rate-backed bonds). The second key element in th= e Angelides-Burton Plan Z is additional rate hikes for California's consume= rs and businesses. Although discussions are still underway between this gr= oup and business leaders, Angelides is wanting to propose an additional 45%= increase in residential and commercial electricity rates, however, there i= s immense sympathy for loading a disproportionate share of the burden on bu= sinesses. This increase is on top of the 50%-60% already mandated by prev= ious PUC decisions this year. These rate increases will do two things: sto= p the immediate fiscal drain on the state of California and prevent emergen= cy tax hikes (being serious considered last week). =20 Issues to consider in regards to this plan are: (1) how much will current= shareholders be diluted in return for helping the utilities repay long-owe= d debts (or what would they get if the state decided to buy up all of SoCal= Edison); and (2) how much will creditors have to "eat" in the legislated r= epayment plan? In other words how big will the equity and bond haircuts b= e? There is no answer to these questions right now as legislators work to = cobble together a plan with numbers that work without triggering a massive = and politically destructive rebellion by voters next year.
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