california update 1 22 01 executive summary discussions continue today bill ablx focus price term new legislation introduced today whereby state try save utilities bankruptcy taking ownership utilities hydro assets exchange rate increases wednesday state receives bids auction rate ranges expected 5 5 8 0 cents per kilowatt hour mid week audit findings released audit expected show pg e utility subsidiary handed 5 b holding company holding company used 4 4 b pay shareholder dividends buyback stock state commissioned study see would benefit possible bankruptcy scenario bankruptcy still possible companies davis concerned possible ballot issues may effect futue solutions bail legislation continued discussion regarding bill ablx senate today discussion focus rate cap 5 5 cents per kilowatt hour well term assemblyman keeley author indicated believed 5 5 cents fantasy impossible obtain today assembly speaker bob hertzberg sherman oaks assemblyman fred keeley boulder creek introduce legislation whereby state would temporary permanently take pg e edision hydroelectric facilities transmission lines exchange keeping utilities bankruptcy state would allow pg e edison impose rate increases however rates would rise beyond hikes approved earlier month cpuc emergency surcharge money collected consumers would go toward paying current debt state would enter long term contracts power generators bill state california would control 10 california electricity imagine legislation received unanimous praise according recent corporate filings pg e hydroelectric plants alone would valued 3 5 billion amount happens davis estimates final amount money state guarantee audit utility companies released political pressure escalated parent companies absorb 12 billion debt davis telling people thinks audit show state help 4 billion debt utilities course say full 12 billion covered wednesday state officials see results sealed bids energy suppliers long term contracts see close reality effort keep utility rates unchanged consumers come davis insists already several bids 5 5 cents per kilowatt hour ceiling though agree opinion handful smaller independent electricity providers 30 share california power market indicated sunday night would come less eight cents less half currently charge return stability long term contracts consumers pay 6 5 cents per kilowatt hour electricity current puc rules hope california work back debts utilities lies hitting something close davis price cap without falling back higher prices consumers level bids particularly important since bond rating agencies moved put state california credit watch friday worried obvious long term repayment plan billions dollars hook spending keep lights state utility audit middle week california auditors release findings much money pg e socal edison actually owe institutions outside holding company structure define limits state guarantee guarantee debt truly explosive part audit may findings two companies used billions dollars consumers buy back stock recent years source knowledge audits said audit expected show last three years pg e utility subsidiary handed 5 billion holding company total holding company used 4 4 billion pay shareholder dividends buyback shares stock another finding audit shows state helped caused current power crisis regulators time deregulation direction former r gov pete wilson forced two utilities sell least half power generating plants auditors expected say utilities still owned plants electricity would cost 7 cents kilowatt hour compared 30 cents hour average december january bankruptcy threat bankruptcy still real utilities senior advisors said utilities path often followed utility companies ended bankruptcy parties involved hunker another intensely political week remain determined avoid bankruptcy push close brink possible hopes squeezing advantage conditions risks one players fumbling triggering great unknowable outcome bankruptcy still quite high california political leaders order series independent analyses determine would suffer case bankruptcy state two utilities short answer one idea findings report possible scenarios would face bankruptcy judge 1 would companies eligible chapter 11 style temporary bankruptcy advisors thought pg e edison finances bad chapter 11 style temporary bankruptcy may even option advisors said bankruptcy judge might take good look corporate debt load decide reorganization would good order companies full liquidation would certainly guaranteed chaos 2 could bankruptcy court actually force puc raise price electricity consumers legal basis passing rate increases consumers lot less solid originally thought particularly widespread public outrage directed electricity companies still question unilateral power bankruptcy judge 3 bankruptcy judge takes job protecting corporate assets seriously finds pg e edison afford buy electricity could order stop buying thus lead massive power outages 4 utilities go bankruptcy first creditors line would lenders bondholders collateral pledges state could become almost last creditor line another electricity supplier one reasons suppliers sell electricity credit companies 5 two companies went bankrupt would largest bankruptcies history straining everyone involved process 6 corporate approval allowing parent company segregate assets utility ferc pg e already place edison may far less effective utilities ratings agencies currently think particularly true week audit shows two corporations transferring billions dollars last years stock buybacks shareholder dividend payments davis opinion polls show governor gray davis getting high marks job utilities increasingly viewed culprits one davis concern according senior official governor office deal carved triggers popular ballot initiative anti utility anti business cripples future growth state according senior official one thought howard jarvis property tax initiative would succeed destroying education system one ballot line lot popular revulsion threat direct popular action least large consumer advocate harvey rosenfield already threatening draw ballot initiative first sign individual electricity consumers asked help utility companies repay debt higher rate payer bills official goes say anger utility companies high almost anything rosenfield could think would pass anything threat begun complicate one escape route debt front always appeared wide open political leaders floating bond issue guarantee money owed institutions outside corporate holding structure letting companies work profits next several years