Subject: california update 2 / 23 / 01
please contact kristin walsh ( x 39510 ) or robert johnston ( x 39934 ) for additional information .
summary
gov . davis is expected to announce a plan today , however , there have been no breakthrough deals in negotiations that would support a plan .
sources report that at least 7 or 8 democrats have indicated to consumer advocate harvey rosenfield that they would join republicans in blocking any proposed bailout by governor davis . this coalition would be enough to kill any transmission purchase proposal .
the emergency legislative session is closed , after which all current legislation would need to be introduced in a new session .
1 . bankruptcy outlook
an advisor to mbia * is attempting to pull other creditors into an informal pre - petition committee . however , the creditors are finding that their interests are not always the same , and inter - creditor politics are becoming very active at this point . for instance :
- bc hydro is not inclined to take aggressive action , even though they are one of the biggest creditors . as their power is hydro , they are operating with a huge margin - i . e . , they do not owe any other companies for gas used to produce their power .
- reliant , using the " squeaky wheel " theory , took a hard line with the governor and succeeded in extracting a partial payment from dwr in exchange for a 30 - day agreement to supply power . other creditors have seen this and are thinking along similar lines .
- the generators and qfs as a whole are not very organized yet . the qfs are negotiating with the state on reducing the amount they are prepared to get paid for the power they supply , but the negotiations reportedly are not going well , and there is no deal in sight . reportedly the state has offered to pay the qfs $ . 07 / kwh , but the qfs want $ . 09 / kwh .
* mbia is a credit insurer . in other words , if a company issues revenue bonds , mbia , for a fee , will reimburse the bondholders for their losses up to a certain level ( e . g . the first 10 - 15 % ) . i believe it at one time stood for municipal bond insurers ' association . they have a aaa rating .
2 . legislative activity
once the extraordinary session is closed by the governor it ends and all bills in that session are dead . they would have to be reintroduced with new bill numbers and run through the process again . if the bills have already been heard once in committee it is probable these bills will be taken up for a vote . the legislator is having so many hearings on bills this week to try and get as many through before the extraordinary session ends .