Davis renews hopes of saving Edison

By Karen Gaudette Associated Press Writer
Monday August 20, 2001

California governor wants to help power company avoid bankruptcy; some senators are unconvinced 


SAN FRANCISCO – Fresh from a summer break, lawmakers return to Sacramento on Monday to the unfinished business of how to prevent Southern California Edison from following the state’s largest utility into bankruptcy. 

Should Edison go down that road, ratepayers could face higher rates ordered by a bankruptcy judge to help pay the utility’s $3.3 billion debt, warned a group of utility, consumer advocacy and state representatives Sunday. 

Wall Street investors could doubt the state’s commitment to solving its energy problems and not buy enough bonds for California to recoup the billions it has spent buying electricity, they said. The state’s economy could flounder. 

The group, which included the general manager of the Los Angeles Department of Water and Power and a representative of utility employees, urged lawmakers to pass one of many plans before the Legislature that would give Edison just under $3 billion to climb out of debt. 

“The alternative to getting Edison restored to stability is bankruptcy, and that’s ultimately bad for California,” said Hilary McLean, a spokeswoman for Gov. Gray Davis. Bankruptcy, McLean said, would leave many of the utility’s financial decisions up to the court, and lessen the state’s influence. 

Not all lawmakers think bankruptcy is the worst outcome. 

Sen. Debra Bowen, D-Marina del Rey and head of the Senate Energy Committee, has said it’s not clear there’s anything the state can gain by negotiating with one utility while the other is in bankruptcy. 

Pacific Gas and Electric Co. filed for federal bankruptcy protection April 6 and has continued paying county taxes, past-due bills to independent energy producers and still keeps the lights on with help from the state. 

However, legal experts predict the case — which involves more than 50,000 creditors and billions of dollars — could take years to resolve. Though U.S. Bankruptcy Judge Dennis Montali has said he won’t touch electric rates, raising them is an option at his disposal to ensure the utility has enough money to pay back its debts. 

Just how Edison should be saved, and whether it’s necessary, have been subjects of debate since the start of the year, when the financially troubled utility’s credit rating plummeted and it lost its ability to buy electricity for its own customers. 

The state has spent more than $9.6 billion buying electricity for Edison customers, as well as those of PG&E and San Diego Gas and Electric Co. since January. 

To get that money back, it needs to float some $12.5 billion in bonds. To do that, it needs to convince Wall Street investors that enough money is flowing into the state from ratepayers to keep the state funded. 

The upcoming week should tell much about how the state plans to meet its energy needs and solve existing funding and supply predicaments: 

— State power regulators meet Thursday in San Francisco, and are scheduled to decide whether SDG&E customers will see higher electric rates to help the utility cover its energy-buying losses. 

The Public Utilities Commission also will decide whether electricity customers in California can continue to choose who delivers their electricity the same way they pick a long distance phone service. 

And, it will decide whether to allow the water department to receive rate increases without public review — a dramatic loss of PUC authority which for perhaps the first time has brought together consumer advocates, utilities and the state’s major industry and trade groups in opposition to an energy-related issue. 

— The state’s Public Power Authority — charged with building power plants if private investment doesn’t build enough to comfortably meet California’s energy needs — meets for the first time Friday. 

It is yet unclear whether the agency also eventually will take over the Department of Water Resources’ power-buying duties, or work with the manager of the state’s power grid to schedule sufficient amounts of electricity to keep rolling blackouts from returning to the Golden State.