California Update 07.18.01 ,
 The Senate, the Assembly and the Governor are either poised to engage in very 
difficult negotiations, or the three are about to crash and burn and Edison's 
going to be left dangling.

In the Senate:
The Senate bill 78XX is with about 90% likelihood going to be voted out of 
the Senate tonight---without a vote having taking place in any committee.
Burton announced during one of the two "informational" hearings that "this is 
it," despite the view of just about everyone who appeared before the 
committees the bill likely won't prevent Edison from going bankrupt.
The key features of the bill are:
Banks and QFs get paid in full.
Edison shareholders would be responsible for debts owed to suppliers
No direct access.
There are conflicting reports about whether the Senate will take up the bill 
tomorrow de-linking the bonds from the DWR contracts and whether the 
Republicans will go along with it.

In the Assembly:
The Committee is hearing the Wright and Hertzberg bills as we speak, with 
Hertzberg's the likely winner.
That bill now provides for Direct Access under certain conditions (the 
amendments describing the conditions were faxed today).
We're attempting to get the "July 12" date changed to "the effective date of 
the bill" or later.
The Assembly likely won't vote the Hertzberg bill out until tomorrow at the 
earliest.

The Problem:
The Assembly and Senate bills are diametrically opposed in the way each 
approaches the problem---in short, the bills are two ships passing in the 
night.
The Democratic leaders (Governor, Hertzberg, Burton) aren't talking, and 
Burton hasn't expressed any interest in talking---to anybody.

The likely outcome given the circumstances:  
Burton says he's done what he needs to do (i.e., passed out a "fair" bill); 
the Assembly and Senate can't agree; they finish the budget; time runs out; 
they leave Friday; and Edison's left twisting.

That said, there's still a chance that the Governor could call Burton and sit 
down with Burton and Hertzberg and work something out by Friday, or begin 
talking and postpone the recess until they get it worked out.  But given 
Burton, the chance of that happening seems very slim.

In short, little has changed since yesterday.

Best,
Jeff
richard.shapiro@enron.com, skean@enron.com, susan.mara@enron.com, 