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To: Think4Yourself who wrote (86484)	2/6/2001 5:05:33 PM
From: excardog	Read Replies (1) \| Respond to of 95453

Some more CA banter: Generators face Calif. sales decision But utilities still owe generators for past purchases By Lisa Sanders, CBS.MarketWatch.com Last Update: 4:22 PM ET Feb 6, 2001 SACRAMENTO, Calif. (CBS.MW) - Electric power generators must decide Wednesday whether to continue selling electricity into California's market after a federal order requiring sales expires. Most are keeping their options open and their decisions quiet. A spokesman for Duke Energy said Tuesday that, at the current time, it intended to sell power into the state Wednesday. "However to speak in any exact terms about the California market is not prudent," said Jeremy Dreier, a spokesman for Duke. Chuck Griffin, a spokesman for Mirant (MIR: news, msgs) , said the company would look to sell power to the state's Department of Water Resources in the short-term. A spokesman for Gov. Gray Davis, who has accused of state generators of price gouging, said Tuesday that he didn't see why generators would be concerned about selling power to the state after the Federal Energy Regulatory Commission order requiring them to do so expires at midnight. "I don't see the problem," said Mike Cicilia, a spokesman for Davis. "The bill that was passed last week authorizes the DWR to purchase electricity, and the state is about to issue $10 billion of bonds to continue buying power." Generators, including Reliant Energy and Duke, have balked, however, because the state has yet to come up with a plan that would let the cash-strapped utility units of Edison International (EIX: news, msgs) and PG&E Corp. (PCG: news, msgs) pay off the billions of dollars in debts they've run up in the spot wholesale power market. Reliant is owed about $300 million and Duke is owed about $400 million, respectively. Reliant spokesman Richard Wheatley said the company is seeking a credit assurance from the DWR that the agency will stand behind future power purchases. Wheatley would not comment on whether the company would sell to the California power market Wednesday. As of Wednesday afternoon, Reliant had not heard from the DWR. In a lawsuit filed last week by Reliant in U.S. District Court in Washington, D.C., the company said it received a letter from the California Independent System Operator, dated Feb. 1, demanding that it provide power to the state indefinitely. Reliant is asking the court to issue an injunction to stop the action by the ISO, "until such time that the court interpret the relevant tariffs, contracts and orders which would in this case be the demand letter and to determine the legal rights and duties of the parties." A hearing has not been set. "Incredibly, the ISO's basis for demanding that plaintiffs provide power, as stated in the Feb. 1 letter, is the fact that the utilities ultimately receiving the power will not be able to pay for it," according to the lawsuit. Wheatley said that under the terms of the ISO tariff, Reliant should not be obligated to sell if there are no assurances that the company would be paid. "In the long-term, we'll seek to sell to whatever creditworthy counterparty is in place," Griffin said. Mirant has never disclosed how much it is owed. The bill referred to by Cicilia - AB1X - only addresses future power purchases and does nothing to address the issue of compensating the generators for past due obligations. On Monday Davis said he hopes the state will complete a plan "to provide a cash infusion to utilities so they can be viable" by Feb. 12. State Senator John Burton introduced a bill Tuesday that would give the state control of Pacific Gas & Electric's and Southern California Edison's transmission lines in exchange for issuing bonds to pay off the utilities' debts. If the generators and the state don't reach an agreement on the issue, it could negatively impact the ratings on Reliant and Duke, said Paul Fremont, who covers both companies for Jefferies & Co. "The two sides need each other," Fremont said. "Logically speaking, it's going to be difficult for the politicians to get what they want if they don't make the generators feel comfortable that they'll get paid." Jefferies recently raised its rating on Reliant to "buy" from "accumulate," on the expectation that the California situation would resolve itself. Duke is rated a "hold." "We hope this will all be resolved today," Wheatley said.