Energy Crisis Draws Fed Chief to California

Bloomberg News Bloomberg News Saturday, December 23, 2000

NEW YORK The U.S. Federal Reserve Board chairman, Alan Greenspan, will meet with Governor Gray Davis of California next week as California faces an energy crisis that threatens to put its two biggest utilities into bankruptcy, the U.S. central bank said Friday.

While a Fed spokeswoman would not provide further details about the reason for the meeting, it comes as California's two biggest electric utilities struggle under $8.1 billion losses stemming from soaring power costs. The companies have a combined debt of more than $20 billion.

PG&E Corp.'s Pacific Gas Electric and Edison International's Southern California Edison, which have paid about $8 billion more for power since May than they charged customers, won a commitment late Thursday from regulators to consider raising rates to make up for the losses.

Fed officials have called Wall Street dealers who underwrite the companies' short term debt, or commercial paper, two dealers said. A default on a company's commercial paper typically triggers defaults on its other debt.

Pacific Gas Electric Co. and Southern California Edison have racked up losses this year as a rate freeze left them unable to pass on to customers a surge in power prices. Edison, in a regulatory filing this week, said it may have no choice but to seek bankruptcy protection.

In addition to the losses, PG&E Corp. has a commercial paper program of $1.85 billion, some or most of which may come due within the next four weeks.

Southern California Edison has a commercial paper program of $1.6 billion.

California has faced the prospect of blackouts because electricity providers in the Northwest refused to sell power to the utilities over concerns they could not pay.

http://www.iht.com/articles/5257.html

-- Martin Thompson (mthom1927@aol.com), December 22, 2000

Answers

Gov Davis: Hey Alan did you bring those extra megawatts?

Alan: No, but I brought a great book, How to cope with Pakistani power outages.

-- Martin Thompson (mthom1927@aol.com), December 22, 2000.