yahoo (San Jose Mercury News)

Saturday December 23 08:15 AM EST Everyone's in the tussle over the price of power

BY BRANDON BAILEY , Mercury News

Wall Street granted California's major utilities a reprieve from possible bankruptcy on Friday, just two days after analysts threatened to drastically lower the power companies' credit ratings unless state officials raised consumers' electric rates.

Analysts at Standard and Poor's and Moody's Investors Service left the utilities' ratings unchanged on Friday, in part because regulators have now declared their intention to approve a rate increase next month.

But the Wall Street companies said that the utilities remain on precarious footing and that their credit status could still be lowered -- particularly, they said, if consumer prices aren't raised high enough.

The state's two biggest utilities -- Pacific Gas & Electric and Southern California Edison -- say they have racked up $8 billion in deficits because wholesale power costs have soared above the rates they are allowed to charge consumers under the state's 1996 deregulation law.

-- Rachel Gibson (rgibson@hotmail.com), December 23, 2000