california update 3 26 01 executive summary cpuc likely pass rate hikes tomorrow politicians bowing inevitable many questions still unanswered notably size structure rate increase past utility debts past undercollect major sticking point little help available transmission deal long term contracts reliant seeking relief circuit court emergency orders large generators increasingly angry davis blame game qfs waiting details rate hike new price formula crucial socal ability make payments bankruptcy outlook increasingly complex debt rescheduling remains subject failure late friday report wrote davis could order rate hikes last ditch effort action would address undercollection issue still high chance bankruptcy either larger generators commercial paper holders less still possible qfs time running events unfolding exactly along lines 1 rate hikes cpuc president lorretta lynch came weekend favor rate hikes davis many legislators recognize rate hikes quickest solution potentially painful political price attached davis probably come support structured rate system passing hikes business industrial users california politicians starting face reality rate hikes calenergy ruling massively reduced leverage creditors able sell outside state get similar relief courts qfs giant reliant energy appealing ninth circuit court san francisco federal judge frank damrell series rulings forcing large generators continue sell california 2 impact rate hikes rate rises stabilize situation going forward messy scramble assign blame liability past debts form rescheduling possibility number accidents could happen yet result bankruptcy utilities seek protection creditors 3 undercollection net short still unaddressed developments fail address past undercollection bond revenue plan still passage rate hikes could speed legislature fronts well bulk rate hikes go first repay dwr commercial creditors absent transmission line deal bond revenue plan would restructured repay past undercollect long term power contracts still relatively meaningless 2003 majority contracts kick 4 large power suppliers losing patience relations also deteriorating davis large power suppliers davis part careful cultivate drawn negotiations talking several main ceos almost daily state legislators officials rapidly trying initiate investigations alleged market manipulation overcharging deflect growing political heat agitating larger generators every day passes reliant loses case may also tempt larger generators force issue bankruptcy financial creditors also waiting growing impatience utilities contemplating voluntary bankruptcy pg 2 many move court quickly lose possible standing future court action interests number creditors wait hope negotiated settlement reached others large incentive game situation threaten force bankruptcy bullish news pg e gets extended forbearance april 13 th banks socal announces pay qfs actual amount payments qfs still subject cpuc approving revised pricing formula satisfactory qfs decision come tomorrow 6 outlook last week wrote qfs felt point filing today want see get legislature week likelihood get cpuc hearing next week next 48 hours crucial massive rate hikes 40 higher roughly would address undercollect issue davis unlikely authorize one source told us age denial mostly coming end main source hope california begin move forward situation complex many players angles involved negotiated solution past debt problem still complicated vulnerable failure