Assembly measure stalled
SACRAMENTO – The state Senate approved a bill Friday that significantly alters the plan negotiated by Gov. Gray Davis to help struggling Southern California Edison.
The bill, by Democratic Sens. Richard Polanco and Byron Sher, lets Edison issue $2.5 billion in revenue bonds to pay debts amassed when prices for wholesale electricity reached record-high levels in the last year.
“I believe it’s a measure that gets us to the goal of getting the state out of the business of buying electricity ... and to bring this entity to creditworthiness,” said Polanco, D-Los Angeles.
Approved 22-17, the bill now goes to the Assembly, which is considering a similar measure.
The Polanco-Sher plan shifts the burden of repaying the bonds to commercial and industrial power users and has been opposed by business interests and by Edison, which says it won’t help the company escape bankruptcy.
Davis’ plan, announced in April, offers Edison $2.76 billion for its transmission system and lets it sell revenue bonds to repay the rest of its estimated $3.5 billion worth of debt generated when it had to pay skyrocketing wholesale power prices.
Under the plan by Polanco, and Sher, of Stanford, the state has a five-year option to buy Edison’s grid.
That, said Republican Sen. Ross Johnson of Irvine, gives Edison a bailout it “neither needs nor deserves.
“I am tired of this projection of Edison as a victim. They have their legion of lobbyists here telling us ad nauseam that they didn’t support deregulation,” Johnson said during floor debate. “The idea of Edison as the victim goes down in the annals of real whoppers. Edison paid their lobbyists bonuses for the successful passage of deregulation.”
During the 1995-1996 deliberations that led to deregulation, Edison officials helped create the current system in meetings with business interests and then-Gov. Pete Wilson, a Republican.
Lawmakers are set to go on summer break Friday night until Aug. 20, a schedule that conflicts with the deadline in the Memorandum of Understanding between Davis and Edison. That says the Legislature must approve the deal by Aug. 15.
“It’s a firm deadline, which means this issue has to be fully resolved prior to the end of the legislative recess,” Davis said Friday.
For that to happen, either the Senate bill or a proposal by Assembly Speaker Robert Hertzberg, D-Van Nuys, and Assemblyman Fred Keeley, D-Boulder Creek, has to reach Davis.
“I have problems with both bills,” Davis said. “I am heartened by the fact that there’s a bill moving in each house.”
The Keeley-Hertzberg plan trims at least $300 million from the governor’s offer. It also allows Edison to issue the bonds, which would be repaid by Edison ratepayers over 10 years.
It also attempts to increase the state’s use of “green” energy resources and allow Edison customers to opt for cheaper direct-access energy service.
Critics call the plan too complex and dealing with issues unrelated to saving Edison from bankruptcy. The bill was stalled Friday in the Assembly.
If the Assembly also approves an Edison-related bill, legislators from both chambers will go to a conference committee to work out the differences.
The conference committee would comprise two Democrats and one Republican from each house. They could meet over the summer break to devise a compromise by the Aug. 15 deadline, Davis said.
“I don’t want people to go out fishing for 30 days and come back and worry about it on Aug. 20 because I know we’re going to have reapportionment and other major issues to deal with in that last month,” the governor said.
Developments in California’s energy crisis:
• The state Senate approves a bill 22-17 to let Southern California Edison issue $2.5 billion in ratepayer-financed bonds to avoid bankruptcy. The bill by Sens. Richard Polanco and Byron Sher gives the state a five-year option to buy the utility’s transmission lines, but doesn’t require it. A similar measure that would assist the troubled utility is stalled in the Assembly.
• Edison International Inc. acknowledges its troubled utility collected more revenue in June than it spent on power. Officials insist, however, that the utility still needs state help to avoid bankruptcy. Edison International reported a loss of $102 million in the second quarter, primarily due to unrecovered costs of buying power.
• The latest snapshot of the state’s electricity revenues and expenses was scheduled to be released by the Department of Water Resources Friday, but the agency has delayed the disclosure until Sunday.
• Congress has agreed to provide more than $1.3 million in federal funds to upgrade a bottlenecked transmission line in Central California. The section known as Path 15 is owned by Pacific Gas and Electric Co. It’s a crucial stretch of line that transports power between Northern and Southern California, but often gets clogged when power demand is high. The funds are part of a conference report that must by signed by President Bush.
• Shares of Edison International closed at $14.24, down 46 cents. PG&E Corp. stock closed at $15, down 40 cents. Shares of Sempra Energy, the parent company of San Diego Gas & Electric Co., closed at $26.29, down 83 cents.
• No power alerts Friday as electricity reserves stay above 7 percent.
• The deadline for the Legislature to approve Davis’ rescue deal for Southern California Edison is Aug. 15.
High demand, high wholesale energy costs, transmission glitches and a tight supply worsened by scarce hydroelectric power in the Northwest and maintenance at aging California power plants are all factors in California’s electricity crisis.
Southern California Edison and Pacific Gas and Electric say they’ve lost nearly $14 billion since June 2000 to high wholesale prices the state’s electricity deregulation law bars them from passing on to consumers. PG&E, saying it hasn’t received the help it needs from regulators or state lawmakers, filed for federal bankruptcy protection April 6. Electricity and natural gas suppliers, scared off by the companies’ poor credit ratings, are refusing to sell to them, leading the state in January to start buying power for the utilities’ nearly 9 million residential and business customers. The state is also buying power for a third investor-owned utility, San Diego Gas & Electric, which is in better financial shape than much larger Edison and PG&E but is also struggling with high wholesale power costs.
The Public Utilities Commission has approved average rate increases of 37 percent for the heaviest residential customers and 38 percent for commercial customers, and hikes of up to 49 percent for industrial customers and 15 percent or 20 percent for agricultural customers to help finance the state’s multibillion-dollar power buys.