Executive Summary:
?	California Claims Victory Over Easing Power Prices  
?	California's Budget doesn't Look Good for a Vote on Friday

Power Prices
Sources report that generator's acknowledge that the drop in power prices in California last week was due at least in part to the threat of price controls.  Generators and traders are reportedly increasingly unwilling to line up power inventory over the next few months, which sources believe is likely to lead to increased volatility.  While Governor Davis issued statements attributing easing power prices to his negotiating long-term contracts and made no note of increased hydrogenation in the northwest and lighter demand from cool weather in California. 

California Budget has Friday Deadline
Sources indicate that the California legislature missing the June 15th budget deadline, which appears likely, may affect California's ability to secure future financing.  Coupled with poor macroeconomic indicators (such as increasing unemployment), the outlook for the state does not look good.  Sources report that the budget would have to go to print today in order for it to be printed for a vote on Friday.  While not going to print today does not mean that there will not be a vote Friday, sources are pessimistic that the legislature will agree on a budget by Friday. The Republicans are reportedly concerned that the 12.5 B in revenue bonds will not sell when they are issued.  The Republicans are asking for a $3-$5 B budget reserve as insurance against this possibility.  They want to achieve this by cutting the increases to programs (such as education, which was increased more than was mandated by law) while leaving base program amounts alone.  However, to date there has been failure to reach agreement among members over which programs to cut.