Utility shares climb on plan progress 
Tentative deal to buy transmission system for $2.7 billion 

	
By Myra P. Saefong, CBS.MarketWatch.com 	
Last Update: 11:56 AM ET Feb 26, 2001	
SACRAMENTO, Calif. (CBS.MW) - Shares of PG&E and Edison were lifted slightly 
Monday by indications that efforts to end California's energy crisis are 
moving forward.
On Friday, California Gov. Gray Davis said the state had reached an 
"agreement in principle" to buy Southern California Edison's power lines in a 
move to keep the cash-strapped utility solvent.
"This is a significant step forward for Edison and the resolution of the 
California power credit crisis," Steven Fleishman, an analyst at Merrill 
Lynch, said in a research note Monday. 

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Under terms of the deal, Southern California Edison will sell its electricity 
transmission lines to the state for $2.76 billion, or 2.3 times their 
estimated book value. See full story.
A formal agreement may be completed in working sessions this week, according 
to Bob Foster, Edison's EIX: news, msgs, alerts) senior vice president of 
public affairs. There is desire from both parties to "conclude this as 
rapidly as possible," he said during a conference call to note holders on 
Friday.
The sale of the transmission lines would help Edison's SoCal Edison unit pay 
off $4.1 billion in debts accrued from having to buy power on the wholesale 
power market at prices high above what it's able to charge its customers 
under state-capped retail rates, Fleishman said.
However, discussions with the state's other near-bankrupt utility, Pacific 
Gas & Electric "were flailing last week," he said, in part because the 
utility's undercollected costs of more than $5 billion at the end of 2000 are 
much bigger than SoCal Edison's. However, PG&E is likely willing to work out 
a deal within the proposal's framework, Fleishman said.
"It may be that the only way the numbers can work is with a rate increase," 
he added. 
Shares of Edison climbed by 33 cents to $15.02, and PG&E shares gained 55 
cents to $14.25 Monday.
In another positive development, Edison International said its bank creditors 
will refrain from collecting interest on what they're owed through March 14.
Additionally, power generators have agreed to sell their excess energy into 
the state for another two weeks following a federal court order to extend the 
sales until the next court hearing on March 16.