California Regulators Back Rate Increase For Utilities

California Regulators Back Rate Increase For Utilities

* California regulators indicated yesterday that they are willing to
raise rates for electric utilities EIX and PCG, following a review of their
finances
* Hearings to review utilities' financial status in hearings on Dec.
27 and 28
* KEY DATE: January 4, when we expect they will vote to raise rates
* We see this action as positive for the utilities, because it reduces
the likelihood of insolvency or bankruptcy, although further action is
required, in our view
* We also see it as positive for our Growth Energy companies. Any
reduction in financial pressure on the utilities equates to reduced pressure
to re-regulate the wholesale power industry, in our view
* The results of the action were in line with our expectation; we
recommend investors buy the Growth Energy names on weakness. In particular,
we highlight DYN, CPN, NRG, SOE and DUK.

<<CA Power Market II 12-22-00.pdf<<

Raymond C. Niles
Power/Natural Gas Research
Salomon Smith Barney
(212) 816-2807
ray.niles@ssmb.com

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- CA Power Market II 12-22-00.pdf