State Controller Kathleen Connell held a press conference earlier today to 
discuss four aspects of the energy crisis: ?achievement of long-term energy 
contracts; price per megawatt-hour; proprerty tax assessment of power plants; 
and possible anticipation of revenues in the coming year.

While she made mention of generators, her remarks were primarily comparing 
the Governor's plan . which is based upon three assumptions .?to the reality 
of the situation. ?The three assumptions are: ?success of long-term 
contracts; spot market prices and anticipated revenue. ?Specifically, she 
said:



In regards to long-term contracts, the Controller indicated that less than 1% 
of California's energy purchases are through long-term contracts .?compared 
to the anticipated 40%. ?In addition, most of these contracts are for prior 
to July 1 and after September 30. ?And most of the terms can be renegotiated 
if revenue bonds aren't approved. 
Governor assumes spot market prices will decrease to $195mwh this summer. 
?Currently prices are higher than this, and there is no indication that they 
will drop.  [Connell made mention of a $533.2 million check made out to 
Mirant by the state for purchases in the spot market -- instead of through 
long term contracts. ?She also made mention of the Reliant purchase @ 1,900 
mwh.] 
State may fall short $4 billion (more or less) .?requiring Connell to release 
"revenue anticipation notes in February to make up for shortfall. ?(These 
don't require approval by the legislature, and must be repaid within a year) 
In her capacity at the State Board of Equalization she will hold a hearing in 
June to reassess property values at California's generating plants to ensure 
that generators are "paying their fair share" in taxes.




Below is a copy of a Dow Jones article on the event....

Thanks,
Jean

-- 
Jean Munoz
McNally Temple Associates, Inc.
916-447-8186
916-447-6326 (fx)



Calif Controller:State Behind On Long Term Contract Buys  ????
Updated: Monday, May 21, 2001 04:41 PM?ET ????? 
?
LOS ANGELES (Dow Jones)--California State Controller Kathleen Connell said 
Monday that she anticipates the state will need to issue $4 billion in 
revenue anticipation notes in February, because a $13.4 billion revenue bond 
issue in mid-August will not be enough to cover power purchases. 

The state is likely to spend more on spot market purchases than the 
administration has anticipated because the price of summer power will be 
higher than expected and because the state has secured fewer long-term 
contracts than expected, she said. 
? ????
"The administration projected we'd spend $925 million for long-term contracts 
in the first six months (of 2001). We've now spent only $36.4 million on 
long-term contracts of a total $5.1 billion spent on energy purchases - less 
than 1%," Connell said. 

It is unlikely that an additional $890 million in long-term contracts will 
flow through her office in the next five weeks, Connell said. 


Gov. Gray Davis' energy plan assumes that 32% of all power needs through 2001 
will be met through long-term contracts, with 40% met by long-term power in 
the summer months, Connell said. 

However, the state has not secured as many long-term contracts "as we would 
hope to see," and many of the contracts cover periods before July 1 or after 
Sept. 30, Connell said. 

Connell said she had received 25 contracts with 17 generators thus far. 

One of Davis' energy aides said that there were seven more contracts for 
summer reliability and peaking power on their way to the controller's office. 

He added that the controller was basing her evaluation on somewhat old 
information, as there is a time delay between when deals are done and when 
the controller is notified. 

"I don't doubt the controller is accurate in what she is seeing, but the 
billing is done in arrears," Davis energy aide Joseph Fichera said on a 
conference call. "For example, April contracts are billed by May 20." 

The controller said her analysis reflects checks written as of May 17. 

A $5 billion rate increase approved last week for utilities may not provide 
adequate revenue to the CDWR, Connell said. 

"We may be short as much as $1.7 billion in revenues to cover the projected 
expenses of the CDWR," Connell said. 

The state is now dipping below its cash flow into borrowable resources and 
will exhaust those resources by the end of August, making a timely revenue 
bond issue crucial, Connell said. 

Connell added that she will hold hearings in June to determine whether 
generating plants formerly owned by utilities are being assessed for property 
taxes at an appropriate level. 

"Given (the generators') record profits, we will review whether there needs 
to be an additional assessment," Connell said. 

-By Jessica Berthold, Dow Jones Newswires; 323-658-3872; 
jessica.berthold@dowjones.com