Need any further proof that California is destined to slide off into the sea?




From: Jeff Dasovich on 12/13/2000 01:31 PM
Sent by: Jeff Dasovich
To: skean@enron.com, Richard Shapiro/NA/Enron@Enron, James D 
Steffes/NA/Enron@Enron, Paul Kaufman/PDX/ECT@ECT, Karen 
Denne/Corp/Enron@ENRON, Mary Hain/HOU/ECT@ECT, Tim Belden/HOU/ECT@ECT, Robert 
Badeer/HOU/ECT@ECT, Chris H Foster/HOU/ECT@ECT, Christopher F 
Calger/PDX/ECT@ECT, Joe Hartsoe/Corp/Enron@ENRON, Alan Comnes/PDX/ECT@ECT, 
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Martin Wenzel/SFO/HOU/EES@EES, Douglas Condon/SFO/EES@EES, David 
Parquet/SF/ECT@ECT, Laird Dyer/SF/ECT@ECT
cc:  

Subject: FYI-Edison wants Reregulation


----- Forwarded by Jeff Dasovich/NA/Enron on 12/13/2000 01:29 PM -----

	"Katie Kaplan" <kaplan@iepa.com>
	12/13/2000 01:23 PM
	Please respond to kaplan
		 
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		 Subject: FYI-Edison wants Reregulation

DJ Edison To Call For End To Calif Elec
                  Dereg Wed -Sources

                  Copyright (c) 2000 Dow Jones & Company, Inc.


                  LOS ANGELES (Dow Jones)--Edison International (EIX),
saying the current state of
                  California's power markets threatens the company with
bankruptcy, will call Wednesday
                  for an end to California's four-year experiment with
deregulation, sources familiar with
                  the issue told Dow Jones Newswires.

                       John Bryson, chief executive of Edison International,
is expected to announce that
                  the company's regulated utility unit, Southern California
Edison, won't be able to
                  recover more than $3 billion in losses related to power
purchases and continue serving
                  its retail customers unless the state's deregulated market
structure is scrapped.

                       In a move tantamount to a call for reregulation,
Edison will propose to break ground
                  on new power plants within 90 days and re-enter the
power-generation business
                  Southern California Edison was required to exit under the
state's landmark 1996
                  deregulation law, the sources said.

                       Edison plans to follow the announcement by filing a
request with state regulators to
                  increase retail electricity rates by as much as 20%, the
sources said, even though
                  regulators rejected Edison's request for a rate increase
of 10% last week.

                       The utility has lined up the support of some state
lawmakers for the broader
                  proposal, which would require action by the state
legislature, the sources said.

                       Southern California Edison, with 4.2 million
customers, is one of the country's largest
                  electric utilities. Edison was the first of the state's
utilities to sign on to the deregulation
                  effort and, as it says on its Web site, "played a central
role in the restructuring of the
                  electric industry in California."

                       Among the concessions won by utilities in 1996 is the
rate freeze, which they
                  demanded to help them recover costs related to
deregulation but which is now
                  producing huge losses.

                       Edison's current losses stem from an imbalance
between the soaring prices it must
                  pay to purchase power on the wholesale markets and the
fixed rate at which it can sell
                  power to its customers.

                       About half of those losses are offset the utility's
own power sales revenues, which
                  are accounted for separately and used to pay down
deregulation-related debt. Rising
                  power costs have produced a surplus in that account.
Edison wouldn't reveal the
                  current size of the surplus, but said previously that the
California Power Exchange paid
                  the utility $1.3 billion over its generating costs for
power through the end of September,
                  at a time when its power-purchase losses were $2.4
billion.

                       Power-Purchase Losses Mounting



                       The net losses continue to mount. California's
wholesale power prices hovered at
                  record levels all summer and spiked even higher in the
past two weeks, as colder
                  weather arrived in the Northwest at a time when much of
California's power supply was
                  down for maintenance.

                       The price of power for delivery Wednesday in
California hit an average of $1,182 a
                  megawatt-hour Tuesday, up from $250 a megawatt-hour a week
ago, the result of high
                  demand and a decision by California's wholesale market
operator to lift its cap on prices.

                       The rate Southern California Edison can charge its
retail customers, however, is fixed
                  at $66/MWh.

                       Last week, Merrill Lynch & Co. (MER) downgraded its
ratings for Edison
                  International and PG&E Corp. (PCG), the parent of
California's other major utility, Pacific
                  Gas & Electric, to neutral, saying the utilities may be
forced to file for bankruptcy if the
                  state doesn't allow them to raise their retail rates.

                       A Morgan Stanley Dean Witter (MDW) analyst drew the
same conclusion Monday,
                  also cutting his rating to neutral.

                       Edison to this point has kept its power-purchase
losses off its earnings statement, in
                  hopes that a political or regulatory solution will allow
them to be collected later.

                       The California Public Utilities Commission put the
hope of such a solution further out
                  of reach last week, however, when it ruled against rate
increases sought by Edison and
                  PG&E.

                       Credit rating agency Fitch Inc. on Monday lowered its
ratings for Edison
                  International and Southern California Edison's senior
unsecured debt to the A-minus
                  level, citing "increased liquidity pressure" and
uncertainty about the utilities' ability to
                  recover the costs of their power purchases. The agency
downgraded Edison
                  International, the parent, because half its consolidated
cash flow is provided by
                  Southern California Edison.

                       Edison - which sources said plans to remain in the
retail electricity business - said
                  late last week that it has secured a $1 billion line of
credit and expects to have enough
                  cash on hand to continue to pay for wholesale electricity
for the next several months.

                       California paid more than $1 billion for power last
week, sources said. Some of that,
                  however, was paid to Southern California Edison, which
still generates about 2,800
                  megawatts of power in the state.

                       Shares in Edison International have fallen 21% over
the past three weeks. They
                  closed Wednesday at $18.56, down $0.06.

                       -By Jason Leopold, Dow Jones Newswires; 323-658-3874;
                  mailto:jason.leopold@dowjones.com(Mark Golden contributed
to this article.)

Katie Kaplan
Manager of State Policy Affairs
Independent Energy Producers Association
(916) 448-9499

-----Original Message-----
From: Katie Kaplan [mailto:kaplan@iepa.com]
Sent: Wednesday, December 13, 2000 10:50 AM
To: William Hall; Trond Aschehoug; Tony Wetzel; Susan J Mara; Steve Ponder;
Steve Iliff; Scott Noll; Roger Pelote; Rob Lamkin; Randy Hickok; Paula Soos;
Marty McFadden; Lynn Lednicky; Kent Fickett; Ken Hoffman; Jonathan Weisgall;
Joe Ronan; Joe Greco; Jim Willey; Jeff Dasovich; Jack Pigott; Hap Boyd; Greg
Blue; Frank DeRosa; Eric Eisenman; Eileen Koch; Ed Tomeo; Duane Nelsen; Dean
Gosselin; Dave Parquet; Curtis Kebler; Curt Hatton; Cody Carter; Carolyn
Baker; Bob Escalante; Bill Woods; Bill Carlson; Kate Castillo; Pigott Jack;
Tom Ross; Sue Mara; Stephanie-Newell; Richard Hyde; Paula Hall-Collins;
Norton Kelli; McNally Ray; Marty Wilson; Kristin Vellandi; kent Palmerton;
Katie Kaplan; Kassandra Gough; Karen Edson; Julee Malinowski-Ball; John
Stout; Jeff Dasovich; Jean Munoz; Jan Smutny-Jones; Bob Weisenmiller; B
Brown Andy; Andy Brown; Douglas Kerner
Cc: Douglas Kerner; Julee Malinowski-Ball; Karen Edson; Andy Brown; B Brown
Andy
Subject: FYI-Edison wants back in the generation business



Edison Mission Energy Power Project Starts Construction After Expedited
Approval By California Energy Commission

 Monday December 11 6:39pm
 Source: Dow Jones

 Operation Targeted for August

 IRVINE, Calif., Dec. 11 /PRNewswire/ -- Edison Mission Energy (EME), an
Edison International company (NYSE: EIX), started construction of its new
 Sunrise power plant on Thursday, December 7, having received expedited
approval from the California Energy Commission (CEC) to proceed. The
 power generation facility will be located in Kern County, California, and
will bring both short- and long-term generation capacity to the state, which
is in
 dire need of new power generation.

 "From the onset of the California power crisis, we have sought to find
means to bring new power to the California market," said John E. Bryson,
 chairman and CEO of Edison International. "This CEC approval will help
ensure that this critical new project will be able to provide a significant
amount
 of new peaking power to the state as soon as next August. Our thanks and
appreciation go to the California Energy Commission, and the
 environmental and regulatory agencies for their swift consideration of this
important project."

 "This power has been offered by contract to the state so that the pricing
for it does not depend on California's broken deregulated power market,"
said
 Alan J. Fohrer, president and CEO of EME. "Alternatively, EME will seek to
enter into a long-term, cost-based contract with either Pacific Gas &
 Electric Company or San Diego Gas & Electric Company to further ensure that
California's consumers reap the benefit of this additional power
 resource," Fohrer said.

 The Sunrise Power Project will be completed in two phases. Phase 1 will
consist of a 320-megawatt (MW), simple-cycle peaking facility scheduled to
 be in service during the summer 2001. Phase 2 will convert the peaking
facility to a 560-MW, combined-cycle operation with an in-service date of
 summer 2003. The project will meet or exceed all pertinent environmental
and safety standards.

 Final regulatory approvals have been received for Phase I of the project
only.

 EME will be seeking expedited permitting approval for the Phase II
expansion in line with the fast-track approval process recently enacted by
the
 California legislature.

 EME has also negotiated an agreement with the labor unions for an adequate
supply of highly skilled labor in order to achieve an accelerated
 construction schedule. The accelerated schedule is aimed at providing this
additional power to California by next summer.

 Edison Mission Energy specializes in the development, acquisition,
construction management and operation of global power production facilities.
As
 one of the world's leading global power producers, Edison Mission Energy
owns nearly 23,000 megawatts of generating capacity, including interests in
 75 projects currently under construction or operating in Australia,
Indonesia, Italy, New Zealand, Puerto Rico, Spain, Thailand, Turkey, the
United
 Kingdom and the United States.

 Based in Rosemead, Calif., Edison International is a premier international
electric power generator, distributor and structured finance provider. With
a
 portfolio of approximately 28,000 megawatts, Edison International is an
industry leader in privatized, deregulated and incentive-regulated markets
and
 power generation. It is the parent company of Edison Mission Energy,
Southern California Edison, Edison Capita, Edison Enterprises and Edison
 O&M Services.

 /CONTACT: Kevin Kelley of Edison Mission Energy, 626-302-1033, Fax,
626-302-7827/ 21:35 EST

Katie Kaplan
Manager of State Policy Affairs
Independent Energy Producers Association
(916) 448-9499