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	From:  "Pergher, Gunther" <Gunther.Pergher@dowjones.com>                      
     12/13/2000 06:24 AM
	

To: undisclosed-recipients:;
cc:  
Subject: DJ Edison To Call For End To Calif Elec Dereg Wed -Sources, DJ Ca 
lif PUC Proposes To Let Utilities Out of CalPX


13:16 GMT 13 December 2000 =DJ Edison To Call For End To Calif Elec Dereg
Wed -Sources
(This article was originally published Tuesday)

   By Jason Leopold
   Of DOW JONES NEWSWIRES

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 (MWD) 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;
jason.leopold@dowjones.com
(Mark Golden contributed to this article.)
(END) Dow Jones Newswires 13-12-00
1316GMT Copyright (c) 2000, Dow Jones & Company Inc
13:16 GMT 13 December 2000 DJ Calif PUC Proposes To Let Utilities Out of
CalPX
(This article was originally published Tuesday)
NEW YORK (Dow Jones)--The California Public Utilities Commission has
proposed letting the state's three investor-owned utilities out of the
requirement that they purchase their power through the California Power
Exchange.
The proposed ruling, written by Commissioner Carl Wood, would direct
"jurisdictional utilities to serve their native load, to the extent
possible, with their retained generation and power purchase contracts,
rather than through a bidding process."
Commissioners will take a final vote on the ruling Dec. 21, but the three
Democrats on the five-member commission - including Wood - usually agree on
proposed rulings before the rulings are put on the voting agenda, which was
posted Tuesday.
The change is in line with the U.S. Federal Energy Regulatory Commission's
proposed ruling Nov. 1, which will get a final vote Friday, to remove the
mandate that the utilities buy their power from the state-chartered
California Power Exchange.
The PX has been a lynchpin of the state's electric utility deregulation,
passed in 1996. It was to be a clearing house for a multitude of bulk power
producers and sellers, and its market prices were to be passed on to
remaining customers of the utilities after the deregulation transition to
free markets.
But Sempra Energy (SRE) unit San Diego Gas & Electric Co, which emerged from
the transition period a year ago, was passing on CalPX prices to customer
until this summer, when electricity prices tripled and the PUC fixed SDG&E
rates again.
-By Mark Golden, Dow Jones Newswires; 201-938-4604; mark.golden@dowjones.com

   (END) Dow Jones Newswires  13-12-00
1316GMT Copyright (c) 2000, Dow Jones & Company Inc


G_nther A. Pergher
Senior Analyst
Dow Jones & Company Inc.
Tel.  609.520.7067
Fax. 609.452.3531

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