california update 6 14 01 executive summary bankruptcy fears mount absent mou plan b california puc wagers promise qf payments socal ring fencing california budget problems bankruptcy fears plan b sources becoming pessimistic regarding prospects state bailout socal time negotiations plan b appear danger falling apart governor efforts position legislature take blame socal files due lack movement mou senator burton hostile response governor one responsible delays sign sentiment toward working bailout may disappearing appears likely plan b alternative mou reached due primarily failure achieve consensus spread burden dedicated rate component could likely lead socal bankruptcy filing foreseeable future sources note parties crisis optimistic reaching deal cpuc moves pay qfs according media reports cpuc qf payment plan socal payments qfs contingent legislatures approval mou move publicize cooperation facilitate process today cpuc passed three four mou provisions set davis socal ed negotiations promised examine last provision june 28 th meeting thus cpuc posing hindrance stabilizing socal ed legislature bare burden debating mou plan b sources report appears legislative solution achieved qfs could file involuntary bankruptcy socal yesterday decision raised state price cap qf substantially ought help increase production price caps kept crucial power generation assets market sources note qfs contracts socal cancellation clauses built event socal filing involuntarily something qfs learned experience pg e filing judge montali subsequent rulings financial question payments qfs less whether bankrupt edison whether creditors force edison bankruptcy rather see money leave building sums question huge absolute maximum 50 million told bondholders may well consider 50 million sum worth fighting ring fencing edison international eix issued 1 2 billion bond via mission energy subsidiary proceeds used pay certain credit lines banks sources report paying credit lines negate cross default clauses lines insulate eix effects bankruptcy southern california edison exactly pg e weeks filing chapter 11 convinced lot people game plan eix includes letting sce file restructure bankruptcy rather outside sources comment judge montali approved large bonuses pg e senior management pg e filings made bryson members team reconsider merits bankruptcy california state budget day day stress relief notwithstanding california state budget still shambles 8 billion paid power generators depleting political treasure chest going doled special interest groups years come hope state comes issuance 12 5 billion power bonds financial market participants still questioning whether state california illegally declaring senior creditor one soon probably two bankrupt utilities declaring cpuc rate hikes directed first holders power bonds rather general creditors utilities state saying money spent buying power behalf utilities senior claim state treasurer phil angelides given repeated assurances likely conference call next tuesday concern opinion reportedly dampened enthusiasm 1 billion g bond california issued week one highly respected sacramento columnist said week power bonds better 50 50 get issued