california update 2 2 23 01 1 bankruptcy increasingly attractive option davis despite fact lights snowpack approaching normal levels month torrential storms back poker table sacramento situation continues drift toward bankruptcy indeed almost reading governor gray davis political situation shock la federal court ruling makes forcing utilities bankruptcy best bet least one three major power generators pg e seems agree bankruptcy better cutting deal table particularly yesterday ferc ruling okay company shift assets around protect case bankruptcy 2 davis wants keep hope alive analyst meetings next week today crucial determining exact odds bankruptcy since davis wants cut deal possible heading lead national governor association meet wall street analysts tuesday wednesday fact davis desire something definitive say next week reason believe bankruptcy avoided california according talks sides davis offered buy electricity grid three largest power producers pg e socal edison san diego something like 7 billion could use pay money owe suppliers creditors outside corporate shells questions utilities would want deal appears offer leaves many people sides table wondering whether davis actually wants deal excuse get back situation court ordered cover raise electricity rates knows necessary politically difficult according key sacramento officials confidence continues wane davis ability plain fact stick carrying awfully big adds another key people think utilities playing either playing going roll price going pay double transmission assets worth utilities got away kind thing 1996 course davis astute bankruptcy judge could yet political cover resolution lacking since utilities lost court case los angeles 3 little support transmission assets deal transmission assets deal look attractive anyone davis particular affinity adopted state senator burton proposal preferred equity warrants idea began fade legislature wary state involvement power industry concerned vast investment needed network utilities pg state offers tepid support bond scheme also issues quietly emerging utility accounting methods audits pick says one california official way calculate depreciation strange accounts done proper gaap basis instead kind ferc basis would look different even deal goes financing could difficult expensive state definitively ruled putting full faith credit state california behind proposed bonds state treasurer angelides also informed unlikely qualify tax exempt status 5 small ipp players furious big players talk increasing nervousness among small independent alternative generators small companies biggest losers far representative jan smutny jones tossed board california iso closing california px deprives main marketing channel power ceos large companies like dynegy reliant talking davis daily basis small companies loop also lack financial resources diversity income streams resist problems long large companies major bank creditors also aware potential political relationship risks across us get cast role villain california small companies however matter survival legislators sacramento operating assumption would take creditor committee large generators force bankruptcy takes three creditors owed least 11 000 apply bankruptcy two small companies cal energy ridgewood power already resorting courts try press payment bankruptcy triggered immense uncertainty would happen major player talk confident predict outcome especially shock judge lew unexpected ruling los angeles likely issues would decided ultimately state supreme court ferc federal government could also ensnared writs fly many players uncertain mess following bankruptcy looks better certain loss bad deal