Fitch says ready to cut Calif utilities to junk status Thursday January 4, 9:38 AM EST NEW YORK, Jan 4 (Reuters) - The credit ratings of Pacific Gas & Electric Co. and Southern California Edison will fall to junk status if the California Public Utilities Commission adopts a proposed rate hike that is less than sufficient, credit rating agency Fitch said Thursday.

The rating agency said it views as "insufficient" the 7 to 15 percent hikes for various customers that the CPUC proposed on Wednesday.

Analysts have said the hikes would average out at around 10 percent, and be insufficient to stem the utilities' credit crunch.

"If the proposal is approved in its current form by the CPUC, Fitch would expect to lower the securities ratings of the two utilities below investment grade," Fitch said in a press release. "The increase is insufficient to stem the utilities' liquidity crisis."

The CPUC is expected on Thursday to vote on the hike.

Pacific G&E is a unit of San Francisco-based PG&E Corp. (PCG), while SoCalEd is a unit of Rosemead, Calif.-based Edison International (EIX).

The utilities are suffering from a cash crunch resulting from their inability, because of a rate freeze, to pass on enough of their soaring power costs to consumers.

Unable to recover what they say is more than a combined $8 billion in wholesale power costs, Pacific G&E and SoCalEd had asked the CPUC for immediate rate hikes of 26 and 30 percent, respectively.

Two other credit rating agencies, Moody's Investors Service and Standard & Poor's, have also warned that they will cut the utilities' ratings to junk status if they do not get enough relief from California regulators.

A downgrade to junk would cause the utilities to default on some of their loans, and even a downgrade to the lower reaches of investment-grade would probably leave them unable to raise enough short-term debt, analysts have said.

PG&E shares closed Wednesday on the New York Stock Exchange at $17, while Edison International shares closed on the Big Board at $12-1/4.

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-- Martin Thompson (mthom1927@aol.com), January 05, 2001