With reduced debt financing for Pacific Gas & Electric ratepayers dependent on a bill at the legislature?passage of which would kick off the issuance of associated bonds to thin the utility's $8 billion tab?customers may pay $300,000 for every day of delay. After the bill is signed, PG&E has 120 days to apply for a financing order to solicit bonds to pay back creditors, and the California Public Utilities Commission has four months to issue the order. Ratepayers? pocketbooks may be further affected by the lack of a ceiling on the financing costs because there is no regulatory oversight. SB 772 by Senator Debra Bowen (D-Redondo Beach) would refinance PG&E?s $2.21 billion in cash injections with a bond repaid with ratepayer revenue. The financing scheme?a last-minute deal agreed upon by both the utility and major consumer advocate The Utility Reform Network, which was barely passed by state regulators?is projected to save utility customers up to $1 billion over the deal?s nine-year life (see <i>Energy Circuit<\/i>, February 6, 2004). It is estimated that ratepayers will be on the hook for $1.6 million a day, although prompt refinancing could reduce that amount by about $300,000 a day, according to Capitol staff researching the bill. The hefty daily sum covers the $2.21 billion regulatory asset?s revenue requirement. Calls to bond analysts could not confirm or deny the revenue figure. Despite the growing daily pile of deferred expenses, the measure authorizing PG&E?s financing through what is called a ?dedicated rate component? (DRC) as of press time had not been set for a hearing at the bill?s next stop, the Assembly Appropriations Committee. ?There has been no grumbling at this point,? said an Appropriations Committee staffer. It may be one of those hearings that are scheduled at the last minute, she added. PG&E has not performed any calculations on the cost of the delay because until the utility emerges from Chapter 11, expected at the end of March, there will be no bond refinancing, said Ron Low, PG&E spokesperson. Refinancing of the regulatory asset with a DRC will occur ?providing the conditions are met.? PG&E, TURN, and the CPUC are working together to get the legislation passed ?because the refinancing could potentially save our customers an extra $1 billion,? Low added. The tab associated with the regulatory asset began running January 1. According to the bankruptcy decision that the CPUC approved in mid-December, this phantom asset will be ?amortized in retail rates on a mortgage style basis? for nine years beginning in 2004. Legislative delay in passing a bill authorizing the issuance of a DRC with PG&E?s fate was still undecided was the stated reason the utility and a CPUC commissioner opposed creating a dedicated rate component to replace a regulatory asset (see <i>Energy Circuit<\/i>, December 5, 2003). Another bone of contention over the PG&E bond deal structuring is that there is no CPUC oversight of bond transaction costs. ?There is no limit and no continuing oversight,? said one critic. During a February 10 Senate Energy, Utilities and Communications Committee hearing, Senator Bowen said PG&E was ?indifferent? to the bond transaction costs because the ratepayers will foot the bill. Legislators did not see the millions of dollars in professional fees PG&E racked up during its two and a half years in bankruptcy court as a reassuring precedent. Bowen urged CPUC president Michael Peevey to oversee the bond costs. He warned that having the CPUC keep a close watch on costs would ?violate the agreement? between PG&E and TURN. She reminded him about the fees associated with the bond used to cover the state power purchase deals, which have been a cause for concern. ?You and I were on the same side on that one,? she said. PG&E also made a stink about DWR bond costs. TURN attorney Mike Florio said he thought the commission?s ?financing team? was involved in all the financing activities. ?I?m not sure how much comfort that provides,? but that is standard procedure, he said. While under the gun to reach an agreement with PG&E in mid- December, ?the issue was not foremost in our minds,? he noted. ?We were focused first on getting a DRC, and second on trying to lower the other direct costs of the deal.? Unlike the 10 percent rate cut under the 1996 deregulation law that was financed by a dedicated revenue stream from rates, a public agency handled the bond issuance. The debt was issued by the California Infrastructure and Economic Development Bank, and the presumption was that its goal was to serve the public interest. Just exactly how much the transaction costs will be and the price tag for refinancing transaction costs is not known. ?We have not finalized the estimates for the transaction costs and the refinancing fees,? Low said. Those figures are independent of the $20 million UBS Warburg and Lehman Brothers each reap as the exclusive book runners and lead managers on the financing.