Calif. Power Giant Defaults on Payment

Jan. 16 -- California power officials declared a Stage Threepower alert this morning, meaning rotating blackouts are possible, and an energy supplier threatened to take two utility companies to bankruptcy court.

One of the state's major utilities also announced today it was defaulting on at least $596 million in payments.

The Stage Three alert, which was accompanied by pleas to consumers to conserve as much electricity as possible, meant power reserves had dropped to below 1.5 percent.

California's legislators are meeting today to consider Gov. Gray Davis' plan to deal with the problem.

Taking Edison into Bankruptcy

Houston-based electricity supplier Dynegy Inc. said Monday it would take Southern California Edison and Pacific Gas & Electric to bankruptcy court if they do not make payments due this week.

"When and if they [Edison] default on Thursday, it puts us in a position where we have to take them intobankruptcy, and I'm sure others will be right beside us," Stephen W. Bergstrom, president of Dynegy,told the Los Angeles Times.

Bergstrom refused to say how much money Dynegy is owed but saidif any three creditors jointly petitioned the court, it would beenough to start involuntary bankruptcy proceedings.

Dynegy purchased three Southern California power plants whenSoCal Edison, PG&E and San Diego Gas & Electric auctioned offassets as part of deregulation. The company's plants can generateenough electricity to supply 2.8 million homes.

Defaulting on Payments

Southern California Edison saidtoday it had temporarily suspended at least $596 million ofpayments, and was in default to some of its noteholders.

In a filing today with the Securities and ExchangeCommission, the unit of Rosemead, Calif.-based EdisonInternational said it has "temporarily suspended" payment duetoday of $230 million of principal and interest on 5.875 percentnotes, $215 million to the California Power Exchange, and $151million to qualifying facilities, as well as "certain otherobligations."