Juneau keeps tabs of investment with troubled utility

Posted: Friday, April 13, 2001

JUNEAU (AP) -- Juneau officials are keeping an eye on the city's $2 million investment in financially troubled Pacific Gas & Electric Co.

The California utility filed for bankruptcy protection last week.

The subject came up Wednesday during a budget overview at a Juneau Assembly finance committee meeting.

The city's $85 million investment portfolio is controlled by city code and assembly policy, city finance director Craig Duncan said. The city purchased a 90-day investment in PG&E in November when it had the highest utility bond rating possible. The rating fell overnight when the utility began to experience cash flow problems, Duncan said.

The PG&E bond represents 2 percent of the city's total investments. Duncan said the utility's problems could mean a decrease in the city's investment earnings. How much might be lost is unknown.

The city earned $5 million on its investments last year, Duncan said. City staffers have participated in teleconferences about the utility's situation every two weeks along with 400 to 500 other groups and businesses, Duncan said.

The city was receiving interest on its investment with PG&E up to April 2. Long-term, Duncan said the city benefits from its investment procedures.

''This is the first time I can think about where the (city's) treasury has had an investment default,'' he said.

The development comes as the assembly begins work on its fiscal year 2002 budget. City Manager Dave Palmer said the city's finances are better off this year than last, but urged caution.

''Were not looking at the tough picture we were last year, but it's not so rosy that were out of the woods,'' he said.

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