JAY RICKERTS: California takes a big step in its efforts to get better power deals, but there are some risks involved. Our Kym McNicholas, now live in the west coast bureau with that story. Good morning, Kym.

KYM MCNICHOLAS: Good morning Jay. Well, this week the State petitioned the Federal Energy Regulatory Commission to void more than 30 long-term power deals worth more than 40 billion dollars. To talk more about this I have with us, live from the AMEX in New York, a former advisor to California Governor Gray Davis, Joseph Fichera, he is the CEO of Saber Partners.

MCNICHOLAS: First of all, what were your first thoughts on the Governor's latest actions this week.

FICHERA: Well, I certainly support the Governor and am sympathetic with the Governor's attempts to protect ratepayers from the high energy prices by renegotiating the contracts. He's been trying to do that for a while now to try to get a better deal. This approach is one that is not that new - the California Public Utilities Commission, which is really doing the filing along with the Electricity Oversight Board, which are two independent agencies in the state of California, have been attacking the contracts at FERC since August of last year. I think the PUC filed some things against a Pacificorp contract that was done with DWR. I think notable is that DWR itself, the Department of Water Resources, isn't party to this action at the FERC. Many of its contracts that it did sign, it agreed not to, as part of the negotiation, not to appeal to FERC or challenge them in any federal law matters. So while we're approaching this is maybe a strategy and part of the negotiation, it does have certain risks that need to be brought out. I think there are those that are being considered by the Governor and other people and staff. The Governor tends to not want to shoot from the hip and take more careful deliberate action. This approach to a broad attack on the contracts, led by the PUC, does have certain risks associated with it that have to be considered.

MCNICHOLAS: So what are some of those risks?

FICHERA: Well, first it creates more uncertainty and controversy within the state of California, and therefore the business climate and environment could be hurt negatively. You have to ask yourself that if another crisis occurred in California, and given the fact that these contracts were central in the discussions of last year, how will people approach contracting with the state again. Part of that crisis last year was a crisis of confidence, a crisis of credit. The reason why the utilities were unable to buy power any more because the market had no more confidence that they would be able to pay their bill and that was because the Public Utilities Commission didn't give great assurances to Wall Street that they would honor those commitments on the part of the utilities. Now, with this attack on the contracts and approach, it raises additional questions about being able to pay and contract integrity is very important to business investment and I think it will create more costs ultimately to the ratepayers because generally these things will create what we call - certainly creates- risk, risk is a cost and risk can either be avoided or compensated for. If it is compensated for it means higher bills. And I think that's where this could lead depending upon how everything shakes out. The notion also is that you're not going to get an immediate answer out of the FERC - it probably will take a long time - it means that there will be an overhang in this process.

MCNICHOLAS: Thank you so much, we're out of time. Thank you so much for joining us, Joseph Fichera, he is the CEO of Saber Partners