Megawatt Daily
A California Assembly committee yesterday continued hearings on a controversial bill to rescue Southern California Edison from the threat of bankruptcy after moving forward with several amendments to a measure approved by the state Senate last month.
The Assembly’s Energy Costs and Availability Committee was set to continue hearings yesterday to consider amendments to the bill before voting to move it to the Appropriations Committee.
In hearings late Monday, committee members took a significant step toward meeting the utility’s demands that any deal make it creditworthy. The committee agreed to add an amendment that would include a five-year option for the state to purchase SoCalEd’s transmission lines for two times book value, or $2.4 billion.
Legislation passed in the state Senate last month abandoned the idea of purchasing the transmission lines, but Assembly members resurrected it last week. Legislators proposed that the state pay only book value – $1.2 billion – for the lines.
The latest plan would also allow SoCalEd to collect $2.9 billion through a carved-out portion of retail rates paid by large industrial and commercial users.
Company officials told legislators last week that a low valuation of the utility’s transmission assets could undermine the deal and obscure SoCalEd’s chances to fully return to creditworthiness.
“There must be a fair market value consideration given” to any assets the company decided to sell, Jim Scilaaci, SoCalEd’s chief financial officer, told investors during a conference call Friday. Company officials would not comment yesterday on the legislative process, saying developments were moving too quickly.
While lawmakers and the utility continued to discuss the nuances of the package, consumer groups began to line up against the measure.
“We don’t like it,” Mindy Spatt, media director for The Utility Reform Network, said last week. TURN was looking for consumer benefits in the deal, she asserted.
“A bailout is not necessarily better than bankruptcy unless it makes a better deal for consumers,” she said.
Harvey Rosenfeld of the Foundation for Taxpayer and Consumer Rights is patently against any deal that helps the utilities pay off the costs of deregulation at the expense of ratepayers, and Rosenfeld is preparing a ballot initiative for November 2002 that he says will turn back any deals too favorable to the utilities.
“Governor ‘Give-Away’ Gray Davis and Assembly Speaker ‘Bailout Bob’ Hertzberg want to force ratepayers to bail Edison out of its economic troubles,” Rosenfeld says. The total cost to consumers, Rosenfeld estimates, could be $15 billion if the Legislature makes similar moves to allow Pacific Gas and Electric and San Diego Gas and Electric to pay off their back debts.
A representative for Assembly Republicans indicated that the party was increasingly against the bill to bail out SoCalEd since it involved more state participation in the power sector and did not provide any long-term solution to California’s energy problems.
