california update 5 / 22 / 01 please treat as confidential a source had a meeting today with california state treasurer phil angelides . here are the main points from their conversation 1 . anglelides certain that socal will go bankrupt corroborating our line over the past four months , anglelides stated with confidence that socal would go bankrupt and that " he was surprised they hadn ' t already . " he noted that the only reason they haven ' t yet is that " they were too stupid to ring - fence the parent " and that " their two biggest equity holders were screaming not to do it . " he added that the davis / socal mou is dead and that all the " plan b ' s " are " speculative " at best . he also thought that socal was being " naive if they thought they would get a better deal from the legislature than from the bankruptcy court . " 2 . bond issuance - $ 12 b not enough angelides conceded that a $ 12 b bond issue would not be enough to buy power for the summer and that the true costs would probably be $ 18 - 24 b . the only reason they didn ' t issue more is that angelides felt that " $ 12 b was all the market could handle . " the current game plan for bonds assumes an average peak price for power of $ 400 / mwh , which angelides said explains the difference between his estimates and the higher estimates from state comptroller ' s kathleen connell ' s office . 3 . new generator construction anglelides was explicit that the california public power authority ( authorized by the legislature last week ) will " build plants and not stop until we [ california ] has a 10 - 15 % capacity cushion above expected demand . angelides expects the state to be " 5 - 10 % short on power all summer . "