EXECUTIVE ORDER D-42-01
WHEREAS, on January 17, 2001, I proclaimed a State of Emergency to exist within the State of California due to the existing energy shortage in the State of California and ordered that the Department of Water Resources, separate and apart from its powers and responsibilities with respect to the State Water Resources Development System, shall enter into contracts and arrangements for the purchase and sale of electric power with public and private entities and individuals as may be necessary to assist in mitigating the effects of this emergency (the "Proclamation"); and
WHEREAS, the contracts and agreements authorized by the Proclamation will require financial resources in addition to the significant resources already expended and it is necessary that the Department of Water Resources (the "Department"), on my behalf, be authorized to accept loans that are offered to the State by persons, firms or corporations for the purpose of mitigating the effects of this emergency, as more fully set forth in this Order; and
WHEREAS, the proceeds of loans authorized hereby are needed currently to provide funds for the purchase of power and related costs as provided herein and thereby to mitigate the emergency described in the Proclamation, and therefore at this time it is not possible or practicable to use the proceeds of any such loan to repay to the General Fund any advances heretofore made to the Department from appropriations made to the Department of Water Resources Electric Power Fund (established in Section 80200 and Division 27 of the Water Code as defined below; the "Fund") from the General Fund, or any General Fund moneys expended by the Department pursuant to the Proclamation; and
WHEREAS, it is necessary to effectuate my Proclamation by defining with greater specificity the role of the Department and the Public Utilities Commission (the "Commission") under the Proclamation in preventing widespread and prolonged disruption in electric service in California and the continuing threat of such disruption; and
WHEREAS, the Proclamation and this Executive Order together constitute authority for, and direction to, the Department to accept one or more loans as described herein, and constitute complete, separate and alternative authority for the powers, obligations and activities described in Division 27 of the Water Code, as adopted by Statutes 2001, 1st Extraordinary Session, Chapter 4 and as it shall be amended upon the effective date of Statutes 2001, 1st Extraordinary Session, Chapter 9 ("Division 27"), and the intent of this Order is to authorize and direct the Department to accept loans as described herein and in connection therewith to authorize and confirm as necessary to mitigate the emergency described in the Proclamation the powers, obligations and activities described in Division 27, to the extent not inconsistent with this Order;
NOW, THEREFORE, I, GRAY DAVIS, Governor of the State of California, in accordance with the authority vested in me by the California Emergency Services Act (Chapter 7, Article 3, Division 1, Title 2 of the Government Code, Sections 8550 et. seq.; the "Act"), and in particular, Section 8567 of the Government Code, and in furtherance of my Proclamation of a State of Emergency, hereby issue this order to become effective immediately:
A. Pursuant to Section 8647 of the Act, on my behalf the Department is authorized and directed to accept loans, and to evidence such loans by the issuance of bonds, notes and other obligations of the Department which it deems necessary or appropriate to finance its purchase of electric power or natural gas for the generation of electric power and other costs related thereto (as more specifically authorized by paragraph B of this Order) or to refund such loans, with the prior written approval of the Treasurer and the prior written approval of the Director of Finance. The loans accepted pursuant to this Order may not exceed, in the aggregate (not including loans accepted to refund loans previously accepted hereunder) a principal amount of five billion dollars ($5,000,000,000). Loans accepted pursuant to this Order shall not be deemed to constitute a debt or liability of the State or any political subdivision thereof, other than the Department, or a pledge of the faith and credit of the State or of any such political subdivision, but shall be payable solely from the Fund and as otherwise provided for in the agreement pursuant to which such loans are accepted. Neither the faith and credit nor the taxing power of the State of California shall be pledged to the payment of the principal or interest on the loans so accepted. The acceptance of the loans shall not directly or indirectly obligate the State or any political subdivision thereof to levy or to pledge any form of taxation whatever therefor or to make any appropriation from the General Fund for the payment of loan.
B. The Department is authorized and directed to utilize the proceeds of the loans to make payments on or after the date hereof to purchase electric power and purchase natural gas to be used for the generation of electric power and to pay costs related thereto and to fund capitalized interest and reserves required in connection with such loans.
C. In addition, the Department and the Commission (and their officers and any persons executing any documents in connection with the loans accepted pursuant to this Order) are hereby granted, and directed to exercise, the powers, authorities and rights and granted all the protections described in Division 27 as if set forth herein, including but not limited to, the authority and obligation to provide for the payment (including from the Fund) and security (including, but not limited to, the Department's entitlement to the recovery of its revenue requirements, and such pledges and other covenants as may be necessary or desirable to meet the conditions of the loans and to induce such loans at favorable interest rates) for the loans authorized hereby.
D. The principal amount of any future bonds issued pursuant to Division 27 plus the outstanding principal amount of any loans accepted hereunder and not retired by those future bonds shall not exceed the maximum principal amount of bonds authorized under Statutes 2001, 1st Extraordinary Session, Chapter 9.
I FURTHER DIRECT that as soon as hereafter possible, this order be filed in the Office of the Secretary of State and that widespread publicity and notice be given to this order.