Posted on 08/17/2002 5:56:54 AM PDT by randita
Edited on 04/12/2004 5:41:58 PM PDT by Jim Robinson. [history]
IT IS FURTHER ORDERED that this order shall expire on December 31, 2001 unless extended by further executive order...
Do you have access to the language that extended this and its associated justification? It could be intersting to see if a judge would look at the situation and say that a "true emergency" no longer exists.
WHEREAS, on January 17, 2001, I issued a Proclamation pursuant to the California Emergency Services Act (Gov. Code § 8550 et seq.) declaring a State of Emergency due to an energy shortage in the State of California and ordered the Department of Water Resources to purchase electric power as necessary to mitigate the effects of the emergency; and
WHEREAS, thereafter in February 2001, significant funding was advanced for such purchases from the State's General Fund to the Department of Water Resources Electric Power Fund established by Water Code section 80200, and the Department was authorized to sell revenue bonds to finance the purchase of electric power needed to mitigate the effects of the emergency (Stats. 2001, 1st Ex. Sess. 2001, ch. 4 (AB1X)); and
WHEREAS, on June 18, 2001, I issued Executive Order D-42-01 pursuant to the Proclamation of a State of Emergency and the California Emergency Services Act, authorizing the Department to accept loans and utilize the proceeds to make payments to purchase electric power and natural gas to generate electric power to mitigate the effects of the emergency, and to pay costs related thereto, and to fund capitalized interest and reserves for the loans; and
WHEREAS, pursuant to Executive Order D-42-01, the loans were to be used to purchase power pending the sale of, and to be repaid from, the bonds issued by the Department; and
WHEREAS, the proceeds of these loans were not used to repay the General Fund for the advances made to the Department of Water Resources Electric Power Fund or to pay for the purchases of power made prior to issuance of the Executive Order; and
WHEREAS, the Department anticipates that it will soon issue the bonds to repay such loans and advances from the General Fund; and
WHEREAS, the Department has determined that allocation of the proceeds of the Department's loans to expenditures made by the Department prior to Executive Order D-42-01 will assist in mitigating the effects of the emergency by enabling the Department to reimburse the General Fund and repay the loans at significantly lower cost;
NOW, THEREFORE, I, GRAY DAVIS, Governor of the State of California, by virtue of the power and authority vested in me by the Constitution and statutes of the State of California, including Government Code section 8648 of the Emergency Services Act, and in furtherance of the Proclamation of State of Emergency issued January 17, 2001, hereby issue this order to become effective immediately:
IT IS ORDERED that Paragraph B of Executive Order D-42-01 is amended to read: "The Department is authorized and directed to utilize the proceeds of the loans to make payments to purchase electric power and natural gas for generation of electric power to mitigate the effects of the emergency, or to reimburse the Electric Power Fund for expenditures made prior to the date hereof for such purchases, and for costs related thereto and to fund capitalized interest and reserves required in connection with such loans."
I FURTHER DIRECT that as soon as hereafter possible, this order be filed in the Office of the Secretary of State and that widespread publicity and notice be given to this order.
IN WITNESS WHEREOF I have hereunto set my hand and caused the Great Seal of the State of California to be affixed this the fourteenth day of August 2002.
/s/ Gray Davis
Governor of California
If I were on the FERC staff, that would be the heart of my argument and is probably the real reason why FERC wants to change the balance of the ISO board. Should make for some interesting reading of accounts of the court case.
This is very interesting! Good find!
I am not sure if this is to try to argue that a state emergency trumps normal FERC jurisdiction, or if this is related to a shoring up of the legality of how bond proceeds will be used and paid for. It could be something that some bond attorneys have told the Governor would smooth the waters for a bond issue.
I would like to digest this a bit more as to what it might really mean. Whatever it is, it is probably very significant.
Sorry!
California Assembly Approves Sale Of Power Bonds Worth $13.4 Billion from the WSJ, May 8, 2001.
But since Davis keeps renewing his emergency powers month by month, he can ignore any law, including the one which authorized the bonds.
BTW, "FLUCKED" is in honor of Kevin Fluckinger, one of Davis's energy managers.
It would help if others would send this to simon's web site for an alert.
I have read it 5 times and have a worse headache each time that I read it.
I know less than what I did before I re read it. However, something is being set up or covered up or both by this executive order.
My best guess is that it means that the general fund has been robbed to pay for the power bought last year, and that the $12 billion expected in the bond proceeds will be diverted back to the general fund. But that's not what it says.
If it said that, that would be okay because this is what happened in reality, anyway. But I'm lacking the context of the orders referenced in this order to make that determination. So, I'm just guessing.
Anyway, the bill that authorized the bonds was AB1X in the 2001-2002 session. If you go to http://www.assembly.ca.gov, you should be able to find it. (I can't post the link, because everything on that site is the product of a search.)
But from the LEGISLATIVE COUNSEL'S DIGEST of the bill:
"The bill would establish in the State Treasury the Department of Water Resources Electric Power Fund, to be continuously appropriated to the department, and available for the purposes described above. The bill would require all revenues payable to the department under the bill to be deposited in the fund. The bill would require that payments from the fund be made only for certain purposes. The bill would transfer $495,755,000 from the General Fund to the fund for the purposes described above and require repayment to the General Fund at the earliest possible time. The bill would appropriate $4,245,000 to the department for the 2000-01 fiscal year for administrative cost incurred by the department for purposes of the bill. The bill would permit the Department of Finance to authorize the creation of deficiencies for this appropriation."
So it looks like you were right. Money was "borrowed" from the general fund, and now it is going to be paid back. But if that is what is really going on, why is an EO required? From the text of the bill [long. sorry]
CHAPTER 2.5. BONDS
80130. The department may incur indebtedness and issue bonds as
evidence thereof, provided that bonds may not be issued in an amount
the debt service on which, to the extent payable from the fund, is
expected by the department to exceed the amounts expected to be
available in the fund for their payment. In no event shall the
department authorize the issuance of bonds (excluding notes issued in
anticipation of the issuance of bonds and retired from the proceeds
of those bonds) in an aggregate amount greater than the amount
calculated by multiplying by a factor of four the annual revenues
generated by the California Procurement Adjustment, as determined by
the commission pursuant to Section 360.5. In addition, before the
issuance of bonds, the department shall establish a mechanism to
ensure that the bonds will be sold at investment grade ratings and
repaid on a timely basis from pledged revenues. This mechanism may
include, but is not limited to, an agreement between the department
and the commission as described in Section 80110.
80132. (a) Bonds may be issued by the department upon
authorization by written determination of the director of the
department with the approval of the Director of Finance and the State
Treasurer. The Department of Finance shall notify the Chairperson
of the Joint Legislative Budget Committee and the chairperson of the
committee in each house that considers appropriations of its written
determination. The bonds shall be sold at such prices and in such
manner, and on such terms and conditions, as shall be specified in
such determination, and such determination may contain or authorize
any other provision, condition, or limitation not inconsistent
herewith and such provisions as may be deemed reasonable and proper
for the security of the bondholders. Bonds may mature at such time
or times, and bear interest at such rate or rates, which may be fixed
or variable and be determined by reference to an index or such other
method, as shall be specified in such determination. Neither the
person executing the determination to issue bonds nor any person
executing bonds shall be personally liable therefor or be subject to
any personal liability or accountability by reason of the issuance
thereof.
(b) In the discretion of the department, any bonds may be secured
by a trust agreement by and between the department and a corporate
trustee, which may be any trust company or bank having trust powers
within or without the state, or the State Treasurer. Notwithstanding
any other provision of law, the State Treasurer shall not be deemed
to have a conflict of interest by reason of acting as such trustee.
The department may enter into such contracts or arrangements as it
shall deem to be necessary
or appropriate for the issuance and further security of the bonds.
(c) Bonds shall be legal investments for all trust funds, the
funds of all insurance companies, banks both commercial and savings,
trust companies, executors, administrators, trustees, and other
fiduciaries, for state school funds, pension funds, and, for any
funds that may be invested in county, school, or municipal bonds.
(d) Notwithstanding that bonds may be payable from a special fund,
they shall be deemed to be negotiable instruments for all purposes.
(e) Any and all bonds, their transfer and the income therefrom
shall at all times be free from taxation of every kind by the state
and by all political subdivisions of the state.
(f) Bonds shall not be deemed to constitute a debt or liability of
the state or of any political subdivision thereof, other than the
department, or a pledge of the faith and credit of the state or of
any such political subdivision, other than the department, but shall
be payable solely from the funds herein provided for. All bonds
shall contain a statement to the following effect: "Neither the faith
and credit nor the taxing power of the State of California is
pledged to the payment of the principal of or interest on this bond."
The issuance of bonds shall not directly or indirectly or
contingently obligate the state or any political subdivision thereof
to levy or to pledge any form of taxation whatever therefor or to
make any appropriation for their payment.
(g) The department may pledge or assign any revenues under any
obligation entered into, and rights to receive the same, and moneys
on deposit in the fund and income or revenue derived from the
investment thereof, as security for the department's obligations
hereunder. It is the intention of the Legislature that any pledge of
moneys, revenues, or property made by the department shall be valid
and binding from the time when the pledge is made; that the moneys,
revenues, or property so pledged and thereafter collected from retail
end use customers, or paid directly or indirectly to or for the
account of the department, is hereby made, and shall immediately be,
subject to the lien of such pledge without any physical delivery
thereof or further act; that the lien of any such pledge shall be
valid and binding as against all parties having claims of any kind in
tort, contract, or otherwise against the department irrespective of
whether such parties have notice thereof, and that no resolution or
instrument by which such pledge or lien created pursuant to this
subdivision is expressed, confirmed, or approved need be filed or
recorded in order to perfect such pledge or lien. The provisions
hereof shall in all respects govern the creation, perfection,
priority, and enforcement of any lien created hereby or hereunder.
80134. (a) The department shall, and in any obligation entered
into pursuant to this division may covenant to, at least annually,
and more frequently as required, establish and revise revenue
requirements sufficient, together with any moneys on deposit in the
fund, to provide all of the following:
(1) The amounts necessary to pay the principal of and premium, if
any, and interest on all bonds as and when the same shall become due.
(2) The amounts necessary to pay for power purchased by it and to
deliver it to purchasers, including the cost of electric power and
transmission, scheduling, and other related expenses incurred by the
department, or to make payments under any other contracts,
agreements, or obligations entered into by it pursuant hereto, in the
amounts and at the times the same shall become due.
(3) Reserves in such amount as may be determined by the department
from time to time to be necessary or desirable.
(4) The pooled money investment rate on funds advanced for
electric power purchases prior to the receipt of payment for those
purchases by the purchasing entity.
(5) Repayment to the General Fund of appropriations made to the
fund pursuant hereto or hereafter for purposes of this division,
appropriations made to the Department of Water Resources Electric
Power Fund, and General Fund moneys expended by the department
pursuant to the Governor's Emergency Proclamation dated January 17,
2001.
(6) The administrative costs of the department incurred in
administering this division.
(b) The department shall notify the commission of its revenue
requirement pursuant to Section 80110.
Take a close look at the Public Employee Retirement System borrowing and look at the amount versus the total cost. There is a multiplier of about 7. Most of the other long term bonds have a multiplier of about 2 to under 3. This means that the PERS borrowing is very back end loaded. That is that for the first several years there are no principal payments and maybe even no interest payments.
Someone in Simon's campaign should point this out to the public employees group as this is stealing their retirement funds with promises that future governments will pay the retirement fund back. I would think that this traditional hotbed of democratic support would be up in arms. But hey, Davis is a democrat so he wouldn't hurt them?
I saw that and figured it might just be an incorrect item!
Grampa Dave -- Is this CALPERS?
Remember the current Head was leaving to go to London to head a GOLD group?
I posted the article but can't find it.
I am drawing a blank, wonder if there might be a connection!
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