S&P makes same ratings cuts to Edison International credit as with PG&E

S&P reduced PG&E's corporate debt rating to BBB- and took most debt instruments
down a notch as well.

No news on S&P action on Edison yet, however the assumptions are the same type
of donwgrades are on their way. Sempra's rating was affirmed but remains on
negative credit watch.

One utility fund manager tells me he thinks the legislative solution will be
authorization allowing the utilities to securitize the wholesale power cost differential
with long-term debt. In fact, while clearly credit concerns remain, that would be a
solution that would allow relief from mounting debt while giving the companies time
to negotiate long-term power contracts with generators.

If that solution is approved by the California legislature -- and it appears to be a
solution supported by at least some members of the CPUC -- that would be a
short-term positive for both the financial/liquidity condition of the California utilities as
well as the generators.

However, the legislature must still address the rate issue and the CPUC and
legislature must address the siting, permitting and development issues that will lead
to a long-term solution to the problem, additional supply.

If, indeed, the day ends with this news, there's a glimmer of (electric) light at the end
of the tunnel!

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