The Associated Press
A key Assembly committee approved a bill Tuesday to rescue near-bankrupt Southern California Edison, sending the measure to the full Assembly for approval.
The Assembly Appropriations Committee passed the bill 11-6. The Assembly could take up the measure as soon as Wednesday.
The committee accepted several amendments, including one to reinstate 20,000 acres of development rights on timberland surrounding Edison‘s hydroelectric facilities.
Consumer groups the Foundation for Taxpayer and Consumer Rights and The Utility Reform Network opposed the bill, saying it didn’t sufficiently safeguard ratepayers from having to pay off Edison‘s $3.9 billion debt.
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. A 1996 deregulation scheme kept the utilities from passing on those high prices to consumers.
PG&E, burdened by $8.9 billion in debts, sought protection from creditors in federal bankruptcy court in April.
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.
Edison officials supported the reworked version of the MOU at Tuesday’s hearing.
“We believe we have a good chance of making this work,” said Edison Vice President Bob Foster.
But the only way to guarantee Edison won’t be pulled into bankruptcy, Foster said, would be “to securitize the whole amount” of the $3.9 billion debt.
Now, 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 unpaid customers to force Edison into involuntary bankruptcy, critics say. It takes only three creditors owed more than $10,000 to force a company into involuntary bankruptcy.
The Foundation for Taxpayer and Consumer Rights plans to craft a referendum to reverse any plan the Legislature approves. The group presented Davis with 30,000 signatures gathered through its Web site from Californians opposed to any plan to rescue the utility.
The governor’s spokesman Steve Maviglio said the rescue deal was the best way to keep the utility from following PG&E into bankruptcy.
“I think that most people realize that under a bankuptcy, their rates could go through the roof,” Maviglio said.
The bill was amended to reinstate conservation easements on more than 20,000 acres of Edison land. Most of the land is in the Central Valley and surround Edison‘s hydroelectric reservoirs.
The Assembly Energy Costs and Availability Committee voted last week to remove the conservation easements. Fresno County officials are concerned about how the land will be used once in the control of state officials.
Assemblyman Fred Keeley, a Boulder Creek Democrat and point man on energy issues in the Assembly, said Fresno officials, together with legislators and Davis administration staff, worked out an agreement to exclude a specific development plan for Shaver Lake from the bill.
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.
