Plan would trim hundreds of millions from price
SACRAMENTO – A new plan to rescue Southern California Edison unveiled by several lawmakers Friday would trim several hundred millions dollars from the price Gov. Gray Davis has proposed paying for the utility’s transmission lines.
The bill significantly alters the rescue deal Davis crafted to keep the embattled utility out of bankruptcy.
Davis offered $2.76 billion, or 2.3 times book value for the 6,000 miles of transmission lines. The bill, by Assembly Speaker Robert Hertzberg, D-Van Nuys, and three other lawmakers, would offer Edison twice book value for the lines.
“That’s less than market value for the transmission lines,” said Paul Hefner, spokesman for Hertzberg.
Brian Bennett, Edison vice president of external affairs, estimated that would be $2.4 billion, of which $1.2 billion would go to retire the utility’s debts against the transmission system.
Despite the changes, Davis said he was glad to see the “flurry of activity” in the Legislature concerning a proposal many consider politically dangerous.
“I am optimistic that some modifications to the Edison Memorandum of Understanding will be approved, perhaps as early as next week,” he said.
The bill’s other authors are Democratic Assembly members Fred Keeley of Boulder Creek, John Dutra of Fremont and Jackie Goldberg of Los Angeles.
The plan costs much less than the governor’s plan, Keeley said.
“It proposes to buy the transmission system for less money and it creates a mechanism for reducing the amount that’s paid to generators,” Keeley said.
The bill uses Davis’ deal with Edison as a framework, but alters it in several ways, including creating a trust that would pay Edison’s power debts at 70 cents on the dollar.
Money in the trust would come from a loan Edison would take out against the transmission lines, while the sale to the state was pending. The trust to repay the generators would be operated by the state and the Public Utilities Commission, which will review all claims by generators and then offer them 70 percent, Keeley said.
The bill would also:
— Establish an account to allow consumers to benefit as power costs fall. The governor’s plan has a similar account, but Keeley says this bill would require that any surplus be returned to utility customers.
— Require power suppliers selling into California’s market to increase their “green” energy profile. Keeley says this will lessen the state’s dependence on natural gas.
— Let the state retain long-term oversight of electricity rates for residential and small-business customers.
— Allow commercial users to buy power in a competitive market, and bypass utilities if they can get lower rates. In return, those customers repay “the preponderance” of Edison’s debts if they leave the system.
“Our proposal protects those who deregulation has hurt most — consumers — and ensures that California never sees a crisis like this again,” Hertzberg said. “It holds accountable those who have taken advantage of us.”
Assembly Republican Caucus spokesman Jamie Fisfis said the Democrat’s plan wouldn’t gain needed bipartisan support because of the direct access clause.
“How can you shift the entire load to big business?” he said, adding that business will “flee the state” if that is approved.
Bennett said there are still additional details the utility would want to see before endorsing the plan, including how much the company could issue in bonds to repay the rest of their debts. Those bonds, which are also included in Davis’ plan, would be repaid by consumers over a decade.
Consumer advocate Harvey Rosenfield said “not one more penny” should be charged to residential consumers.
“Residential users have been the piggy bank for the utilities for five years,” Rosenfield said.
If lawmakers approve a plan that further hikes rates, “there’ll be hell to pay on election day,” he said. “Voters will hold accountable individual lawmakers who vote to make ratepayers pay more so Edison executives and shareholders can enjoy their summer vacations.”