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Date: Thu, 22 Mar 2001 18:03:03 -0600
From: "Tracey Bradley" <tbradley@bracepatt.com>
To: "Justin Long" <jlong@bracepatt.com>, "Paul Fox" <pfox@bracepatt.com>
Cc: "Aryeh Fishman" <afishman@bracepatt.com>, "Andrea Settanni" 
<asettanni@bracepatt.com>, "Jeffrey Watkiss" <dwatkiss@bracepatt.com>, 
"Kimberly Curry" <kcurry@bracepatt.com>, "Ronald Carroll" 
<rcarroll@bracepatt.com>
Subject: CalEnergy to sell on open market
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FYI - an interesting development.

CalEnergy to sell on open market

By Myra P. Saefong, CBS.MarketWatch.com
Last Update: 6:17 PM ET Mar 22, 2001


EL CENTRO, Calif. (CBS.MW) -- An independent power producer won the right 
Thursday to sell its electricity on the open market, despite contracts 
obliging it to sell the energy to Edison International's cash-strapped 
utility unit.

A judge in an Imperial County Superior Court Thursday ruled that CalEnergy, a 
subsidiary of privately held MidAmerican Energy, should be allowed to sell 
its electricity on the open market, Vince Signorotti, a spokesman for the 
company, said Thursday afternoon.

As a result of the ruling, CalEnergy stopped supplying power to Southern 
California Edison at 1 p.m. Pacific time Thursday and has been selling it to 
entities that will pay for it since then, David Sokol, CEO of CalEnergy said 
during a conference call.

"We're very pleased with his ruling," Signorotti said, emphasizing that the 
ruling is a "short-term solution" but means that CalEnergy will be able to 
keep its plants operating, pay its taxes, vendors, employees and landowners.

Even more importantly, Signorotti said, the move keeps the "environmentally 
renewable resource flowing into the California market."

"It is absolutely our intention that the power stay in the state," Sokol 
said. However, he recognized that the power buyers are not obliged to keep it 
within the state.

The sale to third parties could mean that California and its near-bankrupt 
utilities will pay even higher prices for electricity.

Southern California Edison (EIX: news, msgs, alerts) owes the generator $140 
million from Nov. 1 of last year to date, Signorotti said.

The current ruling doesn't address the issue of past payments. The court case 
on other issues continues on, Sokol said.

The utility is unable to make certain payments to creditors because, along 
with Pacific Gas & Electric (PCG: news, msgs, alerts) , it has run up 
billions of dollars in undercollected costs -- the difference between what 
they paid on the wholesale spot market for electricity and what they received 
from customers under state-capped retail rates.

"We think the ruling probably has significant implications for the entire QF 
(small independent generator) community," Sokol said.

"There's a lot of other QFs that have not taken this action to date," he 
said. "Now I think there is an argument that they can obviously mitigate 
(damages caused by non-payment) based upon this ruling given the statement of 
basically common law in California."

Myra P. Saefong is a reporter for CBS.MarketWatch.com in San Francisco.