----- Forwarded by Sharonda Stephens/Corp/Enron on 01/24/2001 09:38 AM -----

	"ANN SCHMIDT, ENRON CORP." <ENRONPR@bloomberg.net>
	01/24/2001 09:37 AM
		 
		 To: sharonda.stephens@enron.com
		 cc: 
		 Subject: (BN  ) Edison Says Banks Put Off Credit Remedies to Feb. 13


               enron story




Edison Says Banks Put Off Credit Remedies to Feb. 13 (Update4)
1/24/1 10:32 (New York)

Edison Says Banks Put Off Credit Remedies to Feb. 13 (Update4)

     (Adds background on missed payments in fourth paragraph,
power alert in seventh paragraph, auction in eighth paragraph. For
more on California's electricity crisis, see {EXTRA <GO>}.)

     Rosemead, California, Jan. 24 (Bloomberg) -- Southern
California Edison Co.'s banks agreed to delay taking action
against the utility until at least Feb. 13 for defaulting on lines
of credit, an executive of its parent company said.
     ``The banks have agreed to forbear'' through that date, Ted
Craver, Edison International's chief financial officer, said in a
conference call with investors.
     The group of 23 banks have the right to demand accelerated
payments or seek other remedies after Southern California Edison,
California's second-largest utility, failed to make $230 million
of payments on maturing notes last week. That produced a ``cross-
default'' on its lines of credit.
     Both the utility and PG&E Corp.'s Pacific Gas & Electric
defaulted last week on commercial paper, a type of money-market
security. In addition, Southern California Edison failed to pay
$366 million to power generators.
     The two utilities have piled up more than $11.5 billion in
power-buying debt because rising demand and short supplies have
driven up the price they pay, and the state's deregulation law
caps the rates they can charge customers.
     For more than a week, the California Independent System
Operator has kept its highest alert in place. The Stage Three
alert is imposed by the ISO, which runs three-quarters of the
state's power grid, when reserves fall to within 1.5 percent
of demand.

                      Bankruptcy Outlook

     The state is now running an auction to solicit bids for
multiyear power contracts on behalf of the utilities. Producers
can submit offers in the auction, which ends at noon California
time, to sell power for as long as 10 years.
     Meanwhile, Southern California Edison and the banks are
getting the final paperwork ``mopped up'' on the forbearance
agreement, Craver said in yesterday's conference call.
     The utility doesn't intend to file for bankruptcy, Craver
said. ``We do not believe that solves anything,'' he said, as it
doesn't change the need for political and regulatory action to
address the utility's cash crunch.
     ``That's why we instituted this additional step of the
temporary payment suspension,'' Craver said. ``We believe we're in
a position to operate the business without running out of cash''
for at least three weeks, he said. He described the utility's net
cash flow as ``at least breakeven'' after the payment suspensions.
     Craver was asked during the teleconference about the chances
that power generators or other creditors might force the utility
into an involuntary bankruptcy.

                          Making Progress

     Generators are aware of the ``not-so-subtle threats that
bubble about'' regarding the state using eminent domain to take
control of power plants or contracts. ``It's in everybody's best
interest'' to find a way out that avoids bankruptcy, Craver said.
``That's the way everybody's operating.''
     California Governor Gray Davis and state lawmakers are
working on potential solutions, including locking in long-term
power contracts, to help keep the two utilities from bankruptcy.
The state's Department of Water Resources has an initial stake of
$400 million to buy electricity for the utilities.
     ``We're continuing to make progress and it's encouraging
that's being recognized,'' said Steve Maviglio, a spokesman for
Davis.
     ``There is now a very great deal of urgency'' among state
leaders to develop a comprehensive framework of solutions, Robert
Foster, Edison's senior vice president of public affairs, said
during the conference call.
     A framework may be in place by Feb. 1, Foster said. ``I
haven't seen anything quite this intense in 30 years'' in the
state capital, he added.

                         Paying the Bills

     Assembly Speaker Robert Hertzberg is working on a bill that
calls for Southern California Edison and Pacific Gas & Electric to
give up hydroelectric plants. In exchange, the state would sell
revenue bonds that repay past spending and finance power purchases
on their behalf.
     ``I don't think at this point we're really able to respond''
to that proposal without more details, Craver said. In response to
a question on the transfer of hydroelectric plants, utility
officials said the issues would include secured bondholders' liens
on Edison's assets.
     Utility officials said they have also been asked about who
will repay the $400 million of initial state spending on power
purchases.
     Based on the legislative intent, it is Edison's understanding
``that this power be paid for directly by the customers, not the
utilities,'' Stephen Pickett, vice president and general counsel
of Southern California Edison, said during the teleconference.
     ``It is not completely clear that that is the case,'' Pickett
said.
     Craver also stressed that Edison, the parent of the utility,
hasn't gone into default on its obligations. ``We're not having
difficulty meeting our obligations,'' he said, and its cash is
about twice the amount of commercial paper outstanding.

--Dennis Walters in Ojai, California, at (805) 646-1475, or
dwalters@bloomberg.net, through the San Francisco newsroom (415)
912-2980/pkc/cs/dw

Story illustration: For a chart comparing the performance of
Edison and PG&E with the Dow Jones Utilities for the past year,
click on {UTIL <Index> COMP D <GO>} or enter the command. Enter
EIX US <Equity> in the second box, and PCG US <Equity> in the
third. Press <GO>.

PCG US <Equity> CN
EIX US <Equity> CN
DUK US <Equity> CN
ENE US <Equity> CN
CPN US <Equity> CN
REI US <Equity> CN
NRG US <Equity> CN
WMB US <Equity> CN
SO US <Equity> CN
SOE US <Equity> CN
AES US <Equity> CN
DYN US <Equity> CN
13622Z US <Equity> CN
SRE US <Equity> CN

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-0- (BN ) Jan/24/2001 15:32 GMT