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Enron Mail |
Summary
-Yesterday's hearing confirmed imminent death of SoCal MOU -Plan(s) B also drew little support; state "trust" for generators unlikely -QF/SoCal negotiations are "treading water" as SoCal runs out the clock; tries to postpone involuntary filing -BK court unlikely to view SoCal payments to QFs as preferential because of state order Report 1. Few Signs of Legislative Support for SoCal MOU Sources report that Bryson is in regular contact with many legislators, but especially with Hertzberg and Keeley on the Assembly side (from which the Plan B is being directed) and Bowen (Senate Energy Chairperson) on the Assembly side. Sources believe that Bryson's comment may about the legislature 'warming up to the MOU' may be a smokescreen; Democratic Senator Alarcon said in the MOU hearing yesterday that the MOU is dead and is not going to pass. Reportedly no one attempted to contradict him. Members of the Chamber of Commerce, large energy users, TURN, the California Manufacturers' and Technology Association (CMTA) and others also spoke out against the MOU. (Sources found it remarkable that TURN and the CMTA, who have been rivals in Plan B negotiations, agreed with each other in strongly attacking the MOU. 2. Plan(s) B Are Still Foundering The Plan(s) B were not discussed at the hearing, though some of the same issues came up. For instance, it was discussed whether it was possible to transfer all of Edison's obligations to a trust that pays out after the conclusion of litigation. In the opinion of the governor's counsel and other lawyers present, this is "shaky," especially without the consent of creditors. In their opinion, there would have to be an agreement that would pay off everything. The governor's counsel stated there were constitutional problems with setting up a trust for what the generators are owed, then letting them litigate over the trust. Also, he stated that it was not feasible for the state to be offering generators cash on the one hand while the FERC negotiated with them to refund the state for power purchases (as ordered in the FERC decision Monday). The governor's counsel stated that the only reasonable thing for the state to do was to give the generators their cash, then sue them for it. 3. QF/SoCal Negotiations Are "Treading Water" QF sources suggest that the debate between SoCal and the PUC as to whether the QFs should be paid 10% or 15% of what they are owed is "not a real question," but rather a stalling measure allowing SoCal to hold on to cash in advance of a filing or a global solution. "SoCal is just treading water," said a source. 4. SoCal Payments to QFs Unlikely to be Viewed As Preference Payments Sources also comment that SoCal payments to the QFs likely would not be seen as a preference payment in bankruptcy court because they were ordered by a state agency, the PUC. However, comments made in the SoCal conference call yesterday seem to indicate that Solomon Smith and perhaps other creditors may see the payments this way and may be willing to sign a bankruptcy petition.
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