Posted at 8:59 a.m. PST Monday, Feb. 5, 2001

S&P cuts ISO credit rating to `D,' or default

NEW YORK, (Reuters) - The California Independent System Operator Corp. (ISO), which operates most of that state's power grid, on Monday saw its issuer credit rating cut two notches to ``D,'' or default, from ``CC'' by rating agency Standard & Poor's.

S&P said the downgrade came about because the ISO ``is unable to fully discharge its obligations'' to make full and timely payments to power generators and transmission owners. The agency said it was not changing its ``AAA'' and ``A-1-plus'' ratings on the insured debt that the California Economic Development Financing Authority issued for the ISO's benefit.

The state's two largest publicly-owned utilities, Pacific Gas and Electric Co. and Southern California Edison, have defaulted on payments to those providers, which are channeled through the ISO and the California Power Exchange.

The utilities, which are units of San Francisco-based PG&E Corp. and Rosemead, Calif.-based Edison International , have been unable to pass on to consumers their soaring wholesale power costs because of a rate freeze imposed under the state's 1996 deregulation law.

S&P said the ISO is permitted to use money it collects from the utilities to cover its own day-to-day business operations, and that it is doing so

http://www0.mercurycenter.com/breaking/docs/020891.htm

-- Martin Thompson (mthom1927@aol.com), February 05, 2001