Posted on 05/30/2002 9:58:09 AM PDT by Ernest_at_the_Beach
SAN FRANCISCO, May 29 (Reuters) - Pacific Gas & Electric Co. (NYSE:PCG - News) has challenged an order by state regulators needed for California to launch an $11.1 billion bond issue to help recoup the cost of the state's emergency power purchases last year.
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The challenge, made late on Tuesday by the PG&E Corp. subsidiary, California's biggest utility, could delay the bond issue, one of the largest municipal bond sales ever, credit analysts said. While state Treasurer Phil Angelides has not set a schedule for any bond deal, he recently told investors he would likely issue a timetable sometime in June. Nevertheless, California Gov. Gray Davis has projected the big debt issue could come as early as September, but that was before PG&E's move late yesterday. The utility filed an application at the California Public Utilities Commission asking the commission to reconsider its ruling on May 16 on a "servicing agreement" ordering PG&E to deliver state-purchased electricity over its power lines to its 13 million customers. That order was a significant part of the package needed for the state's Department of Water Resources to assure investors it could recover the money it spent buying power. California legislators thrust the water agency into the power business in January 2001 at the height of the state's energy crisis after the state's utilities ran out of cash buying electricity for their customers. The ensuing financial crisis at the utilities eventually forced Pacific Gas & Electric to seek bankruptcy protection from creditors in April 2001. The regulatory commission's order, approved 4-0 with one member abstaining, required PG&E to deliver electricity purchased by the water agency, bill its customers for the power and send the money it collects to the state. PG&E's bid for a rehearing lists a number of grounds, but the main objection is to what the utility believes is an extra charge of $80 million, said Ron Low, a PG&E spokesman. The commission's action May 16 "would have our customers pay an additional $80 million" for power purchases, Low said. The utility's bid for a rehearing, which the commission is scheduled to consider in a closed-door meeting June 6, could wind up in the courts -- a situation that could tie up a bond deal if the legal proceedings dragged on. Should the regulators reject a rehearing and PG&E's request to negotiate a new service agreement with the water agency, the utility could appeal to the state Supreme Court. Low said, however, PG&E has not decided its next steps if the commission turns down a rehearing. Claire Cohen, vice chairwoman at Fitch Ratings, said PG&E's challenge could potentially slow down any bond sale, particularly if the utility took its problem with the servicing agreement to the state Supreme Court. "It is essential to have a servicing agreement in place because you have to insulate the state from PG&E's bankruptcy," Cohen said. "You have to ascertain the money is the Department of Water Resources'," she added. (additional reporting by Michael Kahn in San Francisco)
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Dump Davis!
It is interesting to see this utility going to bat for the consumer, especially since it was PG&E's prohibition against charging the consumer the real price of power that caused the bankruptcy.
I'm glad to see things are kooky as usual in California. It lets me know that the world is still normal.
Davis and his socialist/commies in the legislature want to use bonds to pay for a partially free lunch with the electricity that we used. This is total left wing insanity!
Why not just charge us over a year or two years, the full price of the electricity we used and didn't pay for. PG&E knows how much I was not charged. Just take the amount and divide it by 12 or 24 and charge us that amount each month until PG&E has been paid for actual electricity costs. Charge us interest if necessary. We could opt to pay it off in 90 days with no interest charges.
Then, there would be no stupid wasteful bonds with our children and grandchildren paying for the electricity that we used last year. This whole thing is a sick demented socialist/communist joke that could only happen in Kali where so many people want a free or partially free electrical lunch.
Who would want to buy these junk bonds from the third world Banana Republic of Kali. By the time these bonds even get touted, Kali under the direction of Fasci$t Davis will be over 30 billion in debt. Wall Street will not buy all of these bonds. We will see Cal Pers pick up a lot of these third world junk bonds to go with the other junk Cal Pers has bought from buddies of Davis the past two years.
Stop the insanity DUMP THE INSANE ONE, DAVIS!
Over only $80 million? We've got a LOT bigger problems than this. $80 million is but a rosetta on the cake.
Care to guess how much the commission would be for $11 Billion worth of bonds? Follow the commission, and I'll guarentee you a chunk of the commission ends up in Greyout's campaign coffers, IMHO.....
In today's environment, any company that would do this, is commiting corporate suicide. But what the heck, why not. The mediots will never report it. You are only in trouble if Free Republic or Drudge picks up in this.
What is the commission rate 1 or 2% on a bond deal this size?
If my figuring is correct, a commission rate of 1% would be a $110,000,000 commission.
If he got 10% of this as kinda of a finders/guide fee, that would be $11,000,000.
However, we must recognize that he is doing this for the chilrun, abortion and gay rights for the homosexual predators in California.
This is the amazing thing about Free Republic. When something like this bond issuance bothers you, if you keep bringing it up, someone turns on that little light over your head. Then you go hmmm! Yep, as in all cases with the Rats just follow the money!
Thank you, Go Gordon and Ernest, this mystery re why the bonds issuance is starting become clearer now!
From March 29th: Pacific Gas & Electric Clears Way For California's Plan to Sell Bonds
SACRAMENTO, Calif. -- Pacific Gas & Electric Co. has removed a major obstacle from California's plan to sell up to $11.1 billion in electric-revenue bonds, saying it does not intend to challenge key elements of the sale in the state Supreme Court."Our company has no plans to challenge or impede the recent" decisions by the California Public Utilities Commission that are necessary building blocks to the bond sale, Gordon Smith, the utility's president and chief executive, wrote to Treasurer Phil Angelides in a March 26 letter.
Gordon Smith, A.K.A. Lucy van Pelt...
But I keep getting confused on the amount of the bond issue. Only two weeks ago it was down to $6.5 billion, now it's back up to $11+. Did the Revenue Anticipation Warrants go away?
It's going to be a hot June in Bagramento!
Helping the socialists spend themselves into bankruptcy is a good thing. Socialism is in remission in California, there's been no new social spending recently and programs are being cut left and right. Socialism always ends in bankruptcy so the sooner they run down all their lines of credit the better. At least they bought something we need, electricity, and didn't spend it on a Democrat voter breeding program.
You posted, But I keep getting confused on the amount of the bond issue. Only two weeks ago it was down to $6.5 billion, now it's back up to $11+. Did the Revenue Anticipation Warrants go away?
You conservatives are so nit picking. What the heck is wrong with a little variance of 4.5 billion $'s among Kali taxpayers? Your nit picking will never feed a starving Illegal Alien Child nor enable reparations to be paid to those claiming to be descendents of slaves!
Maybe that 4.5 billion $ variance is going to reelect the great Davis?
Remember this is new math Kali land we are dealing with. Who cares if they are correct, their intent is good and kind. Unlike the evil intent of conservatives who want to balance the budget on the backs of the poor.
By law to be tax exempt bonds, issuance costs can not exceed 2%. Therefore the 1% estimate could happen. Althought what could be interesting is to request that the Treas. require this to be a competitive bond underwriter selection as opposed to a "sole source" or negotiated bond underwriter deal.
Finally, I suspect that the warrants are toast for this fiscal year, which out to make for some interesting cashflow issues at the state.
Why do you suspect the Warrants are dead? That seemed like their way to delay the cash-flow problem until after the election.
I am not sure, but I find interesting (as in Chinese curse) the following article. It may be that Gov Davis and the Democratic Party doesn't want to deal with the politics of the bond rating agencies downgrading California's bonds at the moment.
F.R. Article on Major Companies and Japan getting ratings downgraded due to cash flow concerns
Actually this brings up a campaign strategy point that Simons might want to employ and that is to find out if a bond downrating is likely to happen and then start telling the media and the public that if the state is to avoid problems in Basic services it will need to borrow some money in addition to living within its means and just like when you try to get a credit card, the folks lending the money will evaluate how reasonable you have been in you past spending. Because of this, the State needs to rid itself of the scandel that is following the Davis administration from electricity, to computer software, to shaking down students and teachers for campaign contributions.
Nice simple clear meassage that should make democrats pause. A possible bond rating downgrade could be a good election issue.
Excellent thoughts everyone!
You don't suppose that PG&E saw an opportunity to get a little wicked revenge on the Sacramento politicians?
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