california 1 17 01 summary late night efforts california assembly craft legislative solution falling short market creditor expectations bankruptcy appears increasingly likely dynamics ch 11 proceeding remain unclear socal edison likely first ch 11 following suspended payments creditors yesterday 30 day cure period attempts bring assets parent companies unlikely succeed bankruptcy would provide davis political cover implement tough decisions far avoided questions rate hikes costs taxpayers connected proposed operations california power authority 1 legislation passes assembly generators consumers remain unhappy first legislation ab lx passed california general assembly last night generators consumers unhappy terms generators object 5 5 cent per kw h price proposed long term contract consumer groups foundation taxpayer consumer rights object state acting purchaser power legislation expected pass senate today signed governor davis early tonight press source reporting morning confirms principal financial creditors utility analysts also unimpressed bill viewed insubstantial falling short creating solution financial pressures utilities 2 financial institutions exposure california utilities bank america 215 million j p morgan 202 million total 12 billion outstanding loans much arranged societe general parents national energy group edison international 417 million mentioned immediate concern southern california edison loans subject immediate repayment aftermath yesterday rating downgrade junk status fed involved except routine way bank regulator making sure appropriate risk reserves made utilities loans securities moral hazard fed going guarantee utilities credits way authority 3 pg e national energy group shielding assets despite considerable anger pg e reorganizing shield profitable assets debt plagued utility business would seem davis little authority intervene question fraudulent conveyance term bankruptcy law transferring assets favored parties long filing transfer reversed court would seem apply since pg dynegy threaten take take edison bankruptcy court default pg e current available 500 cash reserves due feb lst 580 iso 15 th 431 california power exchange contrary press reports leaks governor office yesterday political brinksmanship edison clearly playing negotiating games really short cash situation unlikely executives making fraudulent statements bonds failed pay would 30 day cure period trustees move edison edison already filed three ways financing power purchases going forward 1 state continues buy power sell edison pg 2 pending passage today legislation state legislature authorizes purchase power long term contracts proposed borrowing authority 3 edison files reorganization chapter 11 obtains almost immediately superpriority post petition lines credit secured unmortgaged assets uses pay power puc rest state government recognize rates increase 6 new hampshire experience guide davis following bankruptcy public service company new hampshire bankruptcy judge authorized higher court mandate rate hikes prospect imposed rate hikes bankruptcy court caused state government subsequently determine rate hikes consumers unavoidable passing seven year rate hike 7 5 percent davis similar scenario would provide political cover forced bankruptcy court pass rate hikes part settlement