Posted on 07/20/2002 12:16:35 PM PDT by Jean S
SACRAMENTO, Calif., July 20 (UPI) -- A long-awaited record $11.1 billion bond offering by the state of California soon will be ready for Wall Street's perusal, it was reported Saturday.
The Los Angeles Times said the issuance, which would be the largest ever by a U.S. government agency, would be used to pay the tab for electricity the state purchased in early 2001 when power costs soared and left the state's utilities reeling.
"This is a very unique situation," Dan Aschenbach, senior vice president for Moody's Investors Service, told the Times. "I don't think there is any other type of bond issue that's had to be put in place to resolve an issue as significant as a $6 billion (budget) deficit to the state."
The bonds are needed to both replace the $6.5 billion the state had to divert from the treasury to stave off rolling blackouts, but also a $4.3 billion loan used to buy power in the brutally bullish spot market.
California's deregulation plan implemented in the mid-1990s left the state's major utilities without enough generating capacity to handle growing demand and restricted them from passing on the full cost of buying additional electricity from private energy producers.
When utilities, including Pacific Gas & Electric and southern California Edison, found themselves deeply in debt with their creditworthiness scuttled, the state began buying power on their behalf through the Department of Water Resources.
State Treasurer Phil Angelides proposed the bond sale more than a year ago, however the Times noted bureaucratic delays and differences of opinion between Gov. Gray Davis and the Public Utilities Commission worked in California's favor as interest rates fell.
The supply situation has been largely corrected through temporary wholesale price caps, more long-term supply contracts and new power plants slowly coming on line. The calmer atmosphere should make the bond sale more attractive to financial analysts, the Times concluded.
"They are not buying everything off the spot market any longer," said Aschenbach. "There has been a fair amount of new generation built, which has helped the supply demand balance and helped keep prices moderate.
"It takes the pressure off having to ask for additional revenue," he added. "Those types of factors argue for a more stable rating."
The sale should be ready for vetting by Moody's and the other major Wall Street ratings agencies within a few weeks, the Times said. Once blessed, the next step would be actually pitching the bonds to investors.
The roughly 27 million customers of Edison, PG&E and San Diego Gas & Electric Co. will pay off the bonds over the next 20 years. Electric bills are not expected to be raised to cover the payments.
Keeps the FUN going for another day!
sorry for the double pings!
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And in this investment climate, what kind of an idiot would even think of this as an investment?
Even at a guaranteed 20% return, I will pass, thank you.
Yes I have lived all my life (so far) in California...
For a state perhaps...
If an individual did it he would universally be condemned as criminally irresponsible and certain candidate for imminent bankrupcy.
One does not cover current expenses with long term obligations. Ever.
Economics for Idiots 101
Not ever.
ARTICLE 16 PUBLIC FINANCESECTION 1. The Legislature shall not, in any manner create any debt or debts, liability or liabilities, which shall, singly or in the aggregate with any previous debts or liabilities, exceed the sum of three hundred thousand dollars ($300,000), except in case of war to repel invasion or suppress insurrection, unless the same shall be authorized by law for some single object or work to be distinctly specified therein which...but no such law shall take effect unless it has been passed by a two-thirds vote of all the members elected to each house of the Legislature and until, at a general election or at a direct primary, it shall have been submitted to the people and shall have received a majority of all the votes cast for and against it at such election;
Or has that document become "inoperative"?
Any way you look at it, these bonds come with the promise of future lawsuits. Only a fool would buy them.
Don't even get me started on Democrat Steve Peace, who took the bill over and personally made sure it was to his liking. Your lies don't get better with age.
Another related article suggested that even with the rosiest prognosis, the interest paid on these bonds by the state would equal the amount of the issue--that is $11.1 billion.
I have a sinking feeling that the rest of us scattered through fly-over country will in short order be forced to open out wallets to bail out CA, just like we all had to share in the S & L bailout.
Another two years like the last two and CA will be staring bankruptcy right in the face.
Is there some reason you can you never back up your nitwitery with facts?
Who controlled the Senate, Democrats or Republicans? It was Democrats, so don't lie and say that Republicans controlled the legislature. Who said they controlled the legislature?...They controlled the Assembly in 1996, and there was a Republican(?) Governor.
AB1890 is the deregulation bill "AB" stands for "Assembly Bill"...Is it my fault the Republicans F^&+ed up the states electrical supply?...
I hate to continue to point out your ignorance, but you've forced me to. Here's something else you can continue to ignore:
The 1995-96 legislative session marked the first time since 1970 when Republicans took control of the California State Assembly.
I know it's really hard for narrow little minds to put 2 and 2 together but try this. "Republicans in control of the Assembly" along with a Republican Governor put together a bill ...the bill number is AB(Assembly Bill) 1890 better known as "deregulation", the worst policy mistake in California history!...It was passed and signed into law Sept. 1996
Get It nitwit?
The Republicans had a small majority in the Assembly, but the Democrats solidly controlled the Senate.
When you told the poster up above that he was wrong about who controlled the legislature at the time, you were wrong. Again.
It is true that the bill was originally introduced by Brulte, but it was quickly hijacked by the Dem Senator Steve Peace who headed the hearings on it and rammed his version down the throat of the Legislature. He used to brag that he was "The father of California De-regulation."
His bill was passed UNANIMOUSLY in both houses of the Legislature and sent to Wilson for signature.
You deliberately misstate the facts because of your vendetta. I'd far rather be a nitwit than a liar.
The Republicans had a small majority LOL! in the Assembly, but the Democrats solidly controlled the Senate....
but it was quickly hijacked by the Dem Senator Steve Peace who headed the hearings on it and rammed his version down the throat of the Legislature
Well that doesn't say much for Republicans or having them in a majority or even Governor does it.
What if we had never deregulated?
“You’d still have a supply shortage and you wouldn’t have a (retail) rate cap, so prices would have skyrocketed,” said Sen. Jim Brulte, R-Rancho Cucamonga, the author of the 1996 law.When you told the poster up above that he was wrong about who controlled the legislature at the time, you were wrong. Again
You deliberately misstate the facts because of your vendetta. I'd far rather be a nitwit than a liar
Actually that would make you the liar. Here's my copy and paste quote from post 25
"You are wrong. AB1890(Assembly Bill 1890) was authored by (R) Jim Brulte who was also Assembly Speaker when "the Republicans controlled the State Assembly in 1996"
Your showing your ignorance again "the legislature" includes the State Assembly. In order to control "the legislature" they would have to control both houses.....They didn't
Get it?
You told him he was wrong.
In fact, he was right. The Democrats controlled the state senate, and although the bill was introduced in the Assembly by a Republican, the final bill was written by Steve Peace, a Democrat.
In reality, the deregulation bill was a true bi-partisan effort, passed unanimously in both houses and signed by the Governor.
You selectively report facts in order to convey a far different impression, and you've been doing it for a long time.
Well do a little research. Wilson pushed for, got, then signed into law the deregulation disaster. As to the "20 + yrs in the making" we had Republican governors for 16 consecutive yrs during that period (Wilson for 8 of them)....where were they?
What kind of "a far different impression" can one "convey " when "selectively reporting facts"?...Especially when I provide a link to the fact where nothing is taken out of context.
It would be reassuring if you, cheerleader for the party, would do the same. You still have yet to post any links with or without quotes that can dispute any "selective fact" I've posted.
the final bill was written by Steve Peace, a Democrat. ...Prove it.
I have proven countless times you're wrong....Prove otherwise.
To print: or Select File and then Print from your browser's menu
 |
This article was printed from the News&features |
| section of the Sacramento News & Review. | |
| This article may be read online at: | |
| http://www.newsreview.com/issues/sacto/2001-03-22/cover2.asp | |
| Copyright ©2001 Chico Community Publishing, Inc. | |
| Printed on 7/22/2002 8:12:21 PM. |
| Cover Story A rogues’ gallery By Bill Bradley
DANIEL FESSLER After first trying to lead a revival of nuclear power in California, Fessler settled down to the task of crafting electric power deregulation. An Anglophile who enjoyed affecting a mock British accent, Fessler looked to the electric power deregulation of Britain, sparked by global conservative icon Margaret Thatcher, for inspiration, bringing back many ideas from a trip he and other regulators took there with top utility executives. After originating the deregulation scheme and seeing it through several versions into its final 1996 legislative enactment, Fessler became a high-priced partner of a global law firm that worked on the issue in Britain. He refuses to respond to repeated phone calls and e-mails on the power crisis.
JIM BRULTE Talk about a profile in chutzpah! The Senate Republican leader says he sees “a great political opportunity” in a crisis largely of his own making. Brulte is the actual author of AB 1890, the final version of California’s disastrous deregulation scheme (which the august Times failed to mention). Considering his central role in the debacle as an assemblyman in 1996, Brulte has gotten a remarkably free ride from most of the media, in part because he is an important inside source on Republican and legislative politics for the press corps. Yet, notwithstanding that amazing quote above, there are limits to the Rancho Cucamonga Republican’s chutzpah. Though he is a key California ally of President George W. Bush (one who would dearly love to be governor one day), Brulte has scaled back his ambitions with the advent of the power crisis. Rather than seek statewide office next year, as he had planned, Brulte will run instead for a seat on the obscure but powerful tax policymaking body called the Board of Equalization, in a district that includes Sacramento.
JOHN BRYSON But the green Jedi Bryson turned, if you will, to the dark side. With his legal counsel a principal drafter of the deregulation bill, AB 1890, Bryson pushed for a multibillion-dollar bailout for the utilities’ expensive nuclear plants and turned the once staid utility into a high-flying operation investing in fossil fuel plants around the world.
If Brulte is a study in chutzpah, this bright Democratic state senator from San Diego--whose official bio cites an award from the California Journal as one of the two purportedly smartest legislators--is a study in hubris. Happy in the aftermath of deregulation’s enactment to be called its “architect,” Peace, heretofore best known as the producer of the classic schlock movie Attack of the Killer Tomatoes, was actually merely the chief mediator and broker for disputes and deals around a template devised by others in his role as chairman of the Assembly/Senate conference committee working out differences on AB 1890. As chairman of the energy committee in a Senate controlled by Democrats, he was needed by Wilson, Assembly Republicans and the big lobbyists to grease the bipartisan skids, conducting mind-numbing, marathon meetings which few could follow. Peace doesn’t take credit any longer. Indeed, he has produced a video explaining why he is not the architect of deregulation. Like Brulte, he has dropped plans to run for statewide office next year.
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I have yet to find where Brulte denies being the author.
Now that should be an interesting read!
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