California State Treasurer Phil Angelides held a press  conference this 
afternoon to announce that $3.5 billion in interim financing has  been 
arranged through J.P. Morgan and Lehman Brothers, and that an additional $1  
billion in financing is expected to be completed next week from an 
undisclosed  source.
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The financing is in conjunction with an executive order issued  yesterday by 
the governor that allows bond?sales for energy purchased by  the Department 
of Water Resources.? Previously, Gov. Davis and Treasurer  Angelides had 
sought legislative approval of the bond issuance, but were not  successful.? 
Further review by state attorneys determined that the governor  could 
authorize the issuance of bonds by executive order with the difference  that 
the bonds can only be used for energy purchases going forward and cannot be  
used?to backfill past general fund expenditures.? 
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A one-page?handout summarizing the financing has been  sent to Houston.??The 
vital statistics are:

The authorized loan amount is $5 billion, with an initial  $3.5 billion 
committed;
The rate is 4.75%, but will jump to 7% if the bonds are not  issued 
successfully by October 31, which is the scheduled maturity date of the  loan 
(Angelides emphasized that this is not the due  date).

The goal of the financing is to stem the flow of funds from  the general fund 
for power purchases and avert a cash crisis.? The  financing, which also 
provides working capital for continued?state energy  purchases,?is secured by 
revenues from electricity sales and will be repaid  by the bonds.
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Angelides noted that the financing, which he hopes to have  totally closed by 
July 1, precludes generators from walking away from contracts  under the 
clause that requires financing by a certain date.? He said it  satifsies 
"most" DWR contracts and?precludes arguments made by generators  for a 
"credit premium."
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Angelides also said that the financing is important because it  "builds 
momentum" for the huge revenue bond sale and that it "sends a powerful  
signal to Wall Street that the bond issue is real."
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According to his figures, the general fund is currently out  about $5.2 
billion net ($6.1 billion in purchases minus $900 million in  revenues) in 
power purchases through June 12.
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Steps still must occur before the bonds can be issued, he  said.? The PUC has 
to adopt rate agreements, adopt a servicing order with  the utilities to 
collect revenues to repay the bonds, and has to enact rate  increases of 
about 3 cents/kwh in SDG&E's territory.? Angelides noted  that the lenders 
have made their financial commitment event though these PUC  actions are 
still outstanding.
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The bonds will not be issued until early September.?  Angelides said late 
August is a terrible time because the financial community is  on a pre-Labor 
Day holiday and that the state would hold off until the more  favorable 
period following the holiday.
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Earlier in the afternoon, the Foundation for Taxpayer and  Consumer Rights -- 
Harvey Rosenfield's group -- held a press conference to voice  opposition to 
the Edison MOU.? They all seem to agree that the MOU is  likely dead, but are 
afraid of it arising at a later date in some form.  
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When asked about the business community being asked to  shoulder the costs of 
utilities' debt, Rosenfield said that a problem has arisen  in that business 
wants direct access but DWR has already purchased the power  they "don't 
want."? He believes Edison alone should be responsible for its  debt; it's 
government's role to go forward, he said, and Edison's job to "clean  up its 
mess."
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Rosenfield cautioned that if legislators "make the mistake of  paying one 
more penny" towards a bailout there will be a referendum on the  bailout and 
the legislators voting for it.? He said they would be  held personally 
accountable.
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(Exactly what he means by this is unclear.? In  California, a "referendum" -- 
which is the word he used -- is a little-used tool  to overturn legislation 
that has been passed and signed.? Whether he was  threatening recall attempts 
is also unclear.)
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Rosenfield added that depending on how things progress, there  could be an 
initiative and it could include a public power  component.
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The press release issued at the press conference, which also  featured Harry 
Snyder of Consumers Union, has been forwarded to Houston.?  It is also 
available through this link: 
http://www.consumerwatchdog.org/utilities/pr/pr001706.php3
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