The Associated Press
A key Assembly committee approved a $2.9 billion proposal to rescue financially ailing Southern California Edison on Wednesday, following a third straight day of deliberations.
The Assembly Energy Costs and Availability Committee worked into the evening debating the bill that would allow the utility to issue $2.9 billion in bonds backed by customers’ rates.
The plan also includes an option for the state to buy the utility’s transmission lines for up to twice book value. The bill was approved on a 11-7 vote and now moves to the Assembly Appropriations Committee.
“I am thankful for all the assembly members who voted for this important legislation to protect ratepayers and get the state out of the energy business,” Gov. Gray Davis said in a statement given by spokesman Steve Maviglio on Wednesday. “It is critical that the full assembly continue to move the ball forward to keep Edison solvent and to protect ratepayers.”
Assemblywoman Hannah-Beth Jackson, D-Santa Barbara, presented a list of nine amendments that addressed concerns of consumer groups, including the Office of Ratepayers Advocates in the Public Utilities Commission and The Utility Reform Network.
Of those nine amendments, two were adopted.
One was a provision that would give ratepayers any refund money if the PUC determined the utility improperly transferred money to its corporate parent.
But an amendment was killed that would have ended Edison‘s $70 million subsidy for its San Onofre nuclear facility, which Jackson said gives the utility more than the cost-based rates the deal calls for.
“Assemblywoman Jackson was trying to take a very bad piece of legislation and add some consumer protections and virtually every time, she was defeated,” said consumer advocate Doug Heller of the Foundation for Taxpayers and Consumer Rights.
The bill, by Sen. Richard Polanco, D-Los Angeles, would let Edison issue $2.9 billion in bonds to repay alternative energy suppliers and banks debts. The utility would still have to pay about $1 billion in debts to energy producers and marketers on its own.
The bill shifts the cost of repaying the bonds from the utility’s 1,500 largest commercial customers to about 180,000 Edison business customers.
Polanco said the bond repayment would fit within those customers’ existing rates and no rate hike would be needed.
“My understanding of this is the only residents who would see a rate increase is some Hollywood mogul with a huge mansion who leaves the lights on all the time,” said Barry Goode, the governor’s legal affairs advisor.
Edison amassed $3.9 billion in debt since last summer when electricity prices hit record levels and the utility wasn’t able to pass its highest costs to customers. Since January, the state has purchased about a third of the power needed for customers of Edison, Pacific Gas and Electric Co., and San Diego Gas & Electric Co.
Under the bill’s amendments debated this week in the committee, regulators would be directed to let Edison recover all of its wholesale costs through customer rates. In return, Edison would dismiss a lawsuit against the state over that issue.
Bill supporters said Edison could cut the remaining $1 billion debt with its $425 million tax refund.
In April, Davis announced that he had negotiated a deal with Edison to keep it from following PG&E into bankruptcy. The original deal included the state’s purchase of the utility’s transmission system for $2.76 billion.
That provision has since been changed to an option for the state to buy the lines at twice their book value, or about $2.4 billion.
The amended bill also adopts a proposal by Assemblyman Fred Keeley, D-Boulder Creek, that creates a renewable energy standard for companies selling into California’s wholesale market. It would require that 10 percent of companies’ new generating facilities use renewable energy. Municipal districts would be exempt.