Please see the PG&E and FERC stories below, provided to me by Bob
Weisenmiller.

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delayed 20 mins - disclaimerGet QuotesThursday September 14, 2:04 pm
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PG&E faces borrowing, write-offs for power costs

By Jim Brumm

NEW YORK, Sept 14 (Reuters) - This summer's surge in West Coast power
prices is causing California's largest utility to seek permission for
increased borrowings and consider significant write-offs, its parent
company PG&E Corp. told the Securities and Exchange Commission Thursday.

PG&E Corp.'s (NYSE:PCG - news) 8K filing also included the company's
first disclosure of Monday's talk with New York analysts.

The company's stock reacted with one of the larger losses in a soft
electric utility group, slipping as low as $29-1/8 Thursday morning
before steadying to trade at $29-7/16, off 7/8.

The regulated utility subsidiary -- Pacific Gas & Electric Co. -- paid
$700 million in unexpected power costs in June and incurred similar
charges in July and August, according to spokesman Greg Pruett.

PG&E's 8K filing noted the utility has authority from the California
Public Utility Commission to issue of to $1.7 billion of short-term
financing. Last Friday, the filing continued, it applied to the
commission for the authority to issue an additional $1.4 billion of
short-term financing.

It also said the utility is considering the sale of additional long-term
debt to finance wholesale power purchase costs and its other capital
requirements.

As noted by several security analysts, PG&E chief executive Robert Glynn
told the New York meeting the utility wants to boost power rates as soon
as possible to recover the surging costs the company has been forced to
pay to buy electricity in California's chaotic wholesale power market.

Other analysts also point out the utility is facing the possibility of
significant write-offs for power costs it will be unable to collect.

In the 8K filing, PG&E said ``if the utility determines that its
uncollected wholesale power purchase costs are not probable of recovery,
then the utility would be required to write off the unrecoverable
portion.''

ABN AMRO utility analysts that attended Monday's meeting said PG&E
estimates the summer price surge has created an additional $1.2 billion
of stranded cost on top of the existing yet to be recovered stranded
cost on its balance sheet of $4.4 billion.

The $4.4 billion total includes unrecovered transition costs of $3.0
billion, which the 8K said could also reduce future earnings.

``A worst case scenario,'' according to ABN AMRO, would be ``a $3.2
billion net, or $8.50 per share, write-off of unrecoverable stranded
cost'' if the present high power prices continue to the end California's
transition to a deregulated power market.

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delayed 20 mins - disclaimerGet QuotesThursday September 14, 5:04 pm
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FERC chairman says deregulation should proceed

WASHINGTON, Sept 14 (Reuters) - U.S. Federal Energy Regulatory
Commission Chairman James Hoecker said Thursday that California's
troubled power markets should force tough changes to make deregulation
work better, not end the movement.

Speaking at the commission's regular meeting, Hoecker and the three
other FERC commissioners reiterated their support for deregulation, but
said the experience in California, where prices spiked considerably for
residents of San Diego and on wholesale markets, must result in new
policies.

``I personally reject the notion that this is the beginning of the end
for deregulation,'' Hoecker said.

FERC conducted a hearing in San Diego on Tuesday, allowing discussion
from utilities, regulators and the public on what has become a
disastrous summer for California's power markets.

Under the terms of the deregulation of California's electric utility
industry, customers of Sempra Energy (NYSE:SRE - news) subsidiary San
Diego Gas and Electric became the first in the nation to pay
market-based rates without a safety net.

Hoecker said now ``was the time to make tough decisions'' on retooling
deregulation laws to make them work better.

FERC Commissioner Curt Hebert said the problem is not just in
California, but also in New York and New England, where structural
problems with deregulation efforts have triggered market power, price,
supply and reliability concerns.

Many California and national lawmakers want FERC to declare that rates
set by suppliers this summer were not ``just and reasonable'' as
required under law.

Such a declaration could be followed by action to impose market
restrictions such as price caps across the western U.S..

Experts say such a move could lead to the demise of the California Power
Exchange, which was set up as part of the deregulationof the state's
power industry.

Twenty-four states and the District of Columbia have enacted laws to
open retail electricity markets to competition.

A report on the California price spikes this summer by FERC
investigative staff is due to be received by the commission by Nov. 1.

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Karen Edson
kedson@ns.net
916/552-7070