FYI.  Couple of pretty good takes from the press.
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Calif Republicans May Prevail With 'Bailout' For Edison     
Updated: Wednesday, July 18, 2001 03:17 PM;ET     ; 
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By Jason Leopold 

Of DOW JONES NEWSWIRES 

LOS ANGELES (Dow Jones)--Assembly Republicans could upstage Democrats in the 
California Assembly Wednesday in a bid to rescue ailing utility Southern 
California Edison Co. from insolvency. 

And they may do so with a bill its backers unabashedly call a "straight 
bailout" for the Edison International (EIX, news, msgs) unit. 

"This how the minority in the Assembly can use their votes to derail majority 
legislation," Jamie Fisfis, spokesman for the Assembly Republican Caucus, 
said Wednesday. 

The bipartisan bill, introduced by Assemblyman Rod Wright, D-South Central 
Los Angeles, and Assemblyman Keith Richman, R-Granada Hills, capitalizes on 
partisan politics and dissatisfaction with several elements of a competing 
bill sponsored by Assembly Speaker Bob Hertzberg, D-Van Nuys, and Assembly 
Speaker Pro Tem Fred Keeley, D-Boulder Creek. 

Both bills face a critical vote Wednesday in the Energy Costs and 
Availability Committee. Wright said he's secured nine votes for his bill on 
the 20-person committee - the eight Republicans and one Democrat. Keeley's 
office said his bill needs one more vote. 

"It's going to be close," Wright said minutes before the committee hearing. 

Assembly Republicans and some Democrats are concerned by provisions in the 
Hertzberg bill that would have the state buy the utility's transmission 
lines, limit consumers' ability to choose their power provider and place the 
burden of the rescue on businesses. 

Bill Forgoes Power-Line Buyout 

Wright's bill would forgo those measures, instead allowing Southern 
California Edison to recoup more than $3.5 billion in unrecovered power costs 
through a surcharge placed on utility bills in exchange for a commitment by 
the utility to sell power from its generation units to the state at cost. 

Southern California Edison executives said the Hertzberg-Keeley bill, which 
would require the company to absorb some of its wholesale-power losses, 
wouldn't allow the company to become creditworthy and return to the power 
business any time soon. 

Consumer groups have criticized both plans as bailouts and have vowed to 
overturn the rescue efforts if either is enacted. Business groups, including 
the state's Chamber of Commerce and the California Manufacturers and 
Technology Association, said if large businesses are stuck paying for the 
bailout, consumers will feel the pinch through increased costs in the retail 
sector. 

Steve Maviglio, press secretary to Gov. Gray Davis, said the governor is 
"working with the Legislature for an appropriate balance that does not place 
any undue burden on any sector." 

Lawmakers have until Aug. 15 to pass legislation supporting an April 
memorandum of understanding between Southern California Edison and the state, 
but have an effective deadline of Friday, the last day before a month-long 
summer break. 

Neither bill in the Assembly nor another bill in the Senate implements in 
full the terms of the MOU, which calls for the state to buy the utility's 
transmission lines for $2.76 billion and allow it to issue bonds to recover 
$3.5 billion in wholesale power costs it hasn't been able to recover from 
customers, whose rates are frozen. 

Edison has said it faces bankruptcy if lawmakers don't act by the MOU's 
August deadline. 

-By Jason Leopold, Dow Jones Newswires; 323-658-3874; 
jason.leopold@dowjones.com 

____________________________________________________
Six Months Later, Edison's Utility May Still End Up Bankrupt
By Liz Goldenberg

Rosemead, California, July 18 (Bloomberg) -- Even if California lawmakers 
pass a rescue plan to bail out insolvent Southern California Edison, some 
analysts say bankruptcy may be the only solution. 

``The reason they haven't filed remains more of a mystery than when they will 
file,'' said Jon Kyle Cartwright, a senior energy credit analyst at Raymond 
James & Associates Inc. in St. Petersburg, Florida, who isn't recommending 
buying any debt sold by California utilities. 

``If the weather heats up or their creditors wise up, they'll have to go into 
bankruptcy,'' said Cartwright. 

Six months after the state's No. 2 utility defaulted on its debt, California 
lawmakers are debating a rescue package designed to restore it to investment 
grade status. Any failure to do so by Friday, when the legislature is 
scheduled to adjourn for a month, may result in a collapse of negotiations 
between the lawmakers, the governor, and the utility, and ultimately, 
bankruptcy. 

There are at least three versions under consideration, each targeting 
different groups, such as large businesses or power suppliers, to help foot 
the bill for the bailout. There isn't any agreement as to what the rescue 
should look like, who will pay, and who is to blame for the situation. 

Acceptable Option? 

The bad news for the utility and its creditors is that ``bankruptcy seems to 
be an increasingly accepted option by the legislature,'' said Dorothea 
Matthews, the senior utility analyst for CreditSights, Inc., a research firm. 

Any three unsecured creditors can file a petition to put the utility into 
bankruptcy. Debt holders, banks, and power generators are Southern California 
Edison's unsecured creditors. 

The original rescue, signed on Apr. 9, between Governor Gray Davis and Edison 
expires on Aug. 15. If legislative action isn't taken by then, either party 
can back out. 

That is something that Southern California Edison may do, ``given the delays 
that have plagued the rehabilitation process at virtually every stage,'' said 
David Bodek, an analyst who covers the utilities industry for Standard & 
Poor's, a credit rating company. 

Edison may decide that its utility may fare better under the eye of a 
bankruptcy judge rather than politicians. 

The lawmakers' goal is to save the utility in a way that is palatable to them 
and to California voters. Stock and debt holders aren't a priority, analysts 
said. 

Do the Right Thing 

``Investors will brunt the majority of the pain here,'' said Raymond James's 
Cartwright. ``An investment thesis that requires a group of politicians to 
get together and do the right thing is ill fated -- there is no way of 
knowing what the state will or will not do.'' 

On a conference call yesterday with investors holding Southern California 
Edison debt in default, Edison chief financial officer Ted Craver said that 
while all the legislation being debated has returning the utility to 
creditworthiness as a goal, the language needed to achieve that wasn't 
included. 

``This is the beginning of the legislative process'' that will go on for the 
next few days, he said. 

Creditworthiness, which Edison officials say is the most important goal, is 
determined by credit rating companies and investors, rather than by the 
legislature or the utility. 

Stay Tuned 

``Our money is still on an eventual filing'' for bankruptcy, said 
CreditSights' Matthews, who puts those chances at about 80 percent. ``Stay 
tuned. It ain't over until the fat lady sings, but we think we can hear her 
warming up in the wings.'' 

Southern California Edison accrued more than $5.4 billion in debts as it paid 
soaring wholesale power costs that a flawed 1996 deregulation law prohibited 
it from passing on to customers. It has defaulted more than $930 million of 
maturing debt since Jan. 16, and lost its investment-grade credit rating. The 
utility owes banks more than $200 million for loans coming due on Sept. 15 
and has no access to the capital markets. 

``With few notable exceptions, (utility) bondholders have been well served by 
regulatory and political support for the financial well-being of'' utilities 
such as Southern California Edison, S&P's Bodek said. 

Lacked Support 

California's utilities have ``lacked such support over the past year, as 
manifested by a stubborn and prolonged resistance to remedial action despite 
imminent insolvency.'' 

Pacific Gas & Electric Co., the state's largest investor- owned utility, 
filed for bankruptcy protection on April 6 after racking up more than $9 
billion in debts. 

The state stepped in to keep the lights on and the power flowing after 
suppliers refused to extend additional credit to the state's two largest 
investor-owned utilities. California has spent more than $7 billion buying 
power since January. 

It is still possible that a last minute deal will satisfy all parties, 
analysts said. 

``What worries me is that there is nothing in the legislation that will allow 
the utility to pass on reasonable power procurement costs in the future,'' 
said Susan Abbott, a managing director in the power group at Moody's 
Investors Service, a credit ratings company. 

``If a bill goes through that in no way addresses the issue of power cost 
recovery for the utility, it would potentially be subject to the same 
conditions that resulted in the financial distress it's experiencing today.'' 
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