The Associated Press
SACRAMENTO (AP) — The state Assembly approved a bill Thursday evening that would let Southern California Edison shift repayment of much of its $3.9 billion debt to business customers.
The bill, by Sen. Richard Polanco, D-Los Angeles, carries an altered version of the Memorandum of Understanding Gov. Gray Davis reached with Edison officials in April.
It would allow Edison to issue $2.9 billion in revenue bonds, backed by ratepayers, to pay off debts the utility ran up when energy prices soared last year.
The bill was approved 41-32, the bare minimum needed to pass the measure. It now moves to the Senate for concurrence in Assembly amendments.
The measure has also spurred consumer advocates with the Foundation for Taxpayer and Consumer Rights to promise a referendum to overturn the rescue deal. That could stall the implementation of any law approved by the Legislature and signed by Davis.
Assemblyman Fred Keeley, D-Boulder Creek, likened the energy crisis to a forest fire, saying Polanco’s bill was necessary to contain the last of it.
“We have been able to get the retail and wholesale prices stabilized, supplies increase and demand reduced, but there are some significant things left to do,” Keeley said.
Edison, and the state’s other two private utilities Pacific Gas and Electric Co. and San Diego Gas & Electric Co., amassed billions in debts when wholesale electricity prices soared last year. The industry’s deregulation in 1996 kept the utilities from passing on those high prices to state consumers.
PG&E, burdened by $8.9 billion in debts, sought protection from creditors in federal bankruptcy court in April.
Edison officials supported the reworked version of the MOU, saying it will help the utility from having to follow PG&E into bankruptcy court.
The plan requires the $2.9 billion in bonds be used to pay debts to banks and alternative energy suppliers. Edison will have to figure out a way to pay the remaining $1 billion in debt to electricity producers and marketers.
That creates an incentive for those creditors to “throw Edison into involuntary bankruptcy,” said Assemblyman Keith Richman, R-Northridge. “If we’re going to do a deal, we ought to do it right and not look like fools.”
It takes only three creditors owed more than $10,000 to force a company into involuntary bankruptcy.
Assembly Speaker Robert Hertzberg, D-Van Nuys, urged approval of the bill, saying it would move the state out of the power-buying business and would help “thousands of suppliers who will clearly go bankrupt if they don’t get paid by Edison.”
The bill includes granting the state development rights on more than 20,000 acres of Edison land. Most of the land is in the Central Valley and surrounds Edison‘s hydroelectric reservoirs.
The plan also includes a five-year option for the state to buy the utility’s transmission grid for twice its book value — about $2.4 billion. Davis’ original agreement called for the state to pay $2.76 billion for the lines.
Assemblyman Bill Leonard, R-Rancho Cucamonga, said the bill was “loaded up with unnecessary items.”
“All are interesting subjects, but none relate to getting Edison back to creditworthiness,” he said.
Three Democrats voted against the measure — Central Valley Assembly members Sarah Reyes and Dean Florez and Assemblyman Joe Canciamilla of Pittsburg. No Republicans voted for the bill.
Hertzberg told his colleagues he understood the vote was a difficult one to make, but “the choices aren’t always between great and greatest. Sometimes they’re really tough and this is one of them.”
But Hertzberg said after thousands of hours of work that “this is as good as it is.”
Hertzberg said the bill would allow the state to retain control over rates to small business and residential customers and “get out of the morass of deregulation that screwed us up so badly.”