[BETA] Fortnightly

So the Federal Energy Regulatory Commission (FERC) won't break up the electric utility industry. But it may happen anyway (em if not at the FERC's direction, then perhaps under pressure from state regulators who, some say, are threatening to link stranded-cost recovery to vertical disaggregation.

What would a breakup mean for bonds and bondholders?

As we reported last month ("New Corporate Structures Place Bondholders at Risk," May 1, 1996, p.

I don't know about you, but the Internet is driving me carzy. Every week I discover a half-dozen new home pages to add to my reading list. Some may view NetscapeÔ as an investment play. I see it as drama.

As a magazine editor (em someone who gets paid to follow the news (em I feel guilty if I don't click on every link and download every file. I call it the "obligation to surf." And the problem grows worse as more government agencies post their decisions online.

After four years and four tries, El Paso Electric Co. (EPE) has finally got a plan, and a ticket out of bankruptcy. EPE's fourth amended reorganization plan has been approved by the federal bankruptcy court as well as federal and state regulators, and received near-unanimous acceptance by creditors and stockholders.

The plan proposes two alternative methods of emerging from bankruptcy. Under the preferred alternative, EPE would use the proceeds from an underwritten public offering of first mortgage bonds to repay the claims of existing secured creditors in full.

The California Memorandum of Understanding (MOU) is an agreement between Southern California Edison Co. (SCE), the California Manufacturers' Association, the California Large Energy Consumers' Association, and the Independent Energy Producers. It tackles three major issues:s recovery of stranded assets

s market power

s market structure.

If the MOU is eventually endorsed, it might be a landmark in electric restructuring \(em and not only in California.

A couple weeks ago, on a beautiful Sunday morning, I picked up my briefcase and wandered down to the Potomac river shoreline to catch up on my summer reading list. There, on the Virginia side, gazing across the river at the Lincoln Memorial, Washington Monument, and Capitol dome, I gathered strength to tackle a foot-high mound of paper.

Central and South West Corp. notified bankrupt El Paso Electric Co. (EPE) on June 9 that it has terminated the companies' proposed merger. CSW had informed EPE on May 23 that it had breached the merger agreement by participating in discussions about and spending large sums on a possible stand-alone reorganization plan.

The CSW board of directors rejected EPE's request to extend the merger agreement for six months until December 8.

A Texas Court of Appeals in Austin has turned back an appeal by El Paso Electric Co. (EPE) challenging a state commission ruling that disallowed rate recovery of the utility's investment in the Palo Verde Unit 3 nuclear generating plant as excess capacity. It rejected the utility's claim that use of the plant for base-load and offsystem wholesales warranted cost recovery.

The Palo Verde disallowance had come in a 1992 commission rate order.

Central and South West Corp. (CSW) has notified El Paso Electric Co. (EPE) that it has breached the companies' merger agreement by participating in discussions about and spending large sums on a possible stand-alone reorganization plan. CSW said it was not terminating the merger, but merely protecting its rights. On May 22, CSW received a request from EPE to extend the merger agreement for six months, until December 8, 1995.

Federal Energy Regulatory Commission (FERC) administrative law judge Jerome Nelson has found the proposed merger between Central and South West Corp. (CSW) and the bankrupt El Paso Electric Co. (EPE) consistent with the public interest (Docket Nos. EC94-7-000 and ER94-898-000). However, Judge Nelson recommended that approval be subject to a FERC decision on a number of comparability issues. (The FERC had issued an earlier opinion imposing comparability as part of the merger deal, but excepting ERCOT members.

The bankrupt El Paso Electric Co. (EPE) has asked the New Mexico Public Utilities Commission for permission to issue securities as part of its proposed acquisition by Central and South West Corp. (CSW) (em a necessary step in consummating the merger. Under EPE's third amended plan of reorganization, the utility would recapitalize by issuing new debt securities and preferred stock. CSW also would infuse additional common equity into EPE. The new securities, along with cash payments and shares of CSW common stock, would be used to settle the outstanding claims of EPE's creditors.