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Enron Mail |
EXECUTIVE SUMMARY
Senator Keeley Spearheads a New "Plan B" State to Offer Little Aid in PG&E Bankruptcy Keeley's Collective "Plan B" Sources report that additional details for the Plan B have just been ironed= out on the Assembly side. The Assembly is working to announce a plan "as = soon as possible"; this announcement could come this afternoon. If it is n= ot this afternoon, it will be later this week. Sources Report the Republi= cans were working with Keeley, but then felt shut out of the process, so th= ey developed a plan of their own (a lightly publicized point last week). H= owever, sources believe that the Plan B is very likely to have enough Repub= lican support to pass the Assembly. The Senate will likely be a much tough= er fight, but opposition to the plan remains pessimistic that they will be = able to stop it. The Senate appears likely to broaden the base of people w= ho would have to pay the dedicated rate component, which will be unpopular.= Borrowing from elements of the Joe Nation and Florez "Plan B's," Keeley's= new plan is said to: Set up a dedicated rate component for SoCal to deal with part of their unde= rcollect. This dedicated rate component would apply more to "high-end cust= omers." Where the line would be drawn between who would pay and who would = not is still subject to negotiation. The size of the dedicated rate compon= ent is also subject to negotiation. SoCal has suggested $3M for 10 to 12 y= ears. Note, sources report that at this time, a dedicated rate component f= or SoCal to pay for power going forward is NOT included in the Plan B that = will be announced. The Assembly is not certain whether this additional ded= icated rate component will be needed. If the bond issuance is enough to co= ver the cost of power purchases, no dedicated rate component for forward pu= rchases will be needed. By 2003 and 2004, enough additional generation sho= uld be online that power prices should be low. Therefore, the key question= becomes what will be the cost of power in 2002? If the cost of power is h= igh, rates may have to be increased at that time for SoCal to continue oper= ating. The state would make a secured loan (secured against the transmission asset= s) to SoCal to pay back the remainder of the undercollect. This loan would= be paid back by SoCal granting the government a lower rate of return on th= e transmission system for a period of 10 to 15 years. This provides an inc= entive for SoCal to sell its transmission system to the state, since it wou= ld not be making as much money from the system. Were this to happen, the v= alue would be credited toward the loan. In return, the state would receive the withdrawal with prejudice of the fil= ed rate doctrine case. Also, SoCal would reduce the price of native power = generation. Finally, business customers (including those that would have t= o pay the dedicated rate component) would have the right to apply for direc= t access to power. If this plan is passed, (better than 50/50 chance -as reported earlier) the= constitutional challenge from Michael Sturmwasser is still likely to go fo= rward. This is because Sturmwasser is chiefly concerned with the fact that= the plan results in a retroactive rate increase to pay SoCal's undercollec= t. Sources believe it is likely that SoCal will eventually sell its transm= ission assets to the state if this plan is passed. Therefore these assets = would become municipal, making the reduction in the PUC's authority constit= utional. Legislature Leaves PG&E to Throws of Bankruptcy Today, there have been discussions concerning PG&E regarding "Plan B" and t= he legislature. Currently, the legislature is NOT considering offering Ke= eley's "Plan B" solution to PG&E. If the Plan B mentioned above passes the= Senate, it is more likely that the state will purchase PG&E out of bankrup= tcy. Both the Assembly and the Senate leadership are talking seriously abo= ut purchasing PG&E out of bankruptcy, though the Republicans remain strongl= y opposed. The state then, would likely sell off pieces of PG&E (except fo= r the transmission assets, which it would retain).
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