EXECUTIVE SUMMARY Senator Keeley Spearheads a New "Plan B" State to Offer Little Aid in PG&E Bankruptcy  Keeley's Collective "Plan B" Sources report that additional details for the Plan B have just been ironed=  out on the Assembly side.
The Assembly is working to announce a plan "as = soon as possible"; this announcement could come this afternoon.
If it is n= ot this afternoon, it will be later this week.
Sources Report the Republi= cans were working with Keeley, but then felt shut out of the process, so th= ey developed a plan of their own (a lightly publicized point last week).
H= owever, sources believe that the Plan B is very likely to have enough Repub= lican support to pass the Assembly.
The Senate will likely be a much tough= er fight, but opposition to the plan remains pessimistic that they will be = able to stop it.
The Senate appears likely to broaden the base of people w= ho would have to pay the dedicated rate component, which will be unpopular.=   Borrowing from elements of the Joe Nation and Florez "Plan B's," Keeley's=  new plan is said to: Set up a dedicated rate component for SoCal to deal with part of their unde= rcollect.
This dedicated rate component would apply more to "high-end cust= omers."
Where the line would be drawn between who would pay and who would = not is still subject to negotiation.
The size of the dedicated rate compon= ent is also subject to negotiation.
SoCal has suggested $3M for 10 to 12 y= ears.
Note, sources report that at this time, a dedicated rate component f= or SoCal to pay for power going forward is NOT included in the Plan B that = will be announced.
The Assembly is not certain whether this additional ded= icated rate component will be needed.
If the bond issuance is enough to co= ver the cost of power purchases, no dedicated rate component for forward pu= rchases will be needed.
By 2003 and 2004, enough additional generation sho= uld be online that power prices should be low.
Therefore, the key question=  becomes what will be the cost of power in 2002?
If the cost of power is h= igh, rates may have to be increased at that time for SoCal to continue oper= ating.
The state would make a secured loan (secured against the transmission asset= s) to SoCal to pay back the remainder of the undercollect.
This loan would=  be paid back by SoCal granting the government a lower rate of return on th= e transmission system for a period of 10 to 15 years.
This provides an inc= entive for SoCal to sell its transmission system to the state, since it wou= ld not be making as much money from the system.
Were this to happen, the v= alue would be credited toward the loan.
In return, the state would receive the withdrawal with prejudice of the fil= ed rate doctrine case.
Also, SoCal would reduce the price of native power = generation.
Finally, business customers (including those that would have t= o pay the dedicated rate component) would have the right to apply for direc= t access to power.
If this plan is passed, (better than 50/50 chance -as reported earlier) the=

California Update p.2; 5/29/01
