Assembly delays vote on Edison rescue again

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The Associated Press

A key legislative committee delayed voting Tuesday on a reworked bill intended to help Southern California Edison regain its financial health.

The Assembly Energy Costs and Availability Committee planned to return Wednesday afternoon for a third day of debating amendments and to vote on the bill.

The bill, by Sen. Richard Polanco, D-Los Angeles, would let Edison issue $2.9 billion in bonds backed by customers’ rates to pay some of its debts. The utility would still have to pay about $1 billion in debts to energy producers and marketers on its own.

As amended, 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.

“Those businesses, especially the smaller businesses, didn’t ask for deregulation and didn’t benefit from this,” said Doug Heller, consumer advocate with the Foundation for Taxpayer and Consumer Rights.

Businesses would pass on their higher rates to consumers through higher prices, Heller said. “This is not a consumer protection bill.”

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 Monday and Tuesday 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.

“They’re effectively getting $2.9 billion with some certainty, as opposed to $3.9 billion without certainty,” said Assemblyman John Dutra, D-Fremont. “They might not win that case and get that money.”

Bill supporters said Edison could cut the remaining $1 billion debt with its $425 million tax refund.

The committee passed Dutra’s amendment restricting the flow of money from Southern California Edison to its parent company, Edison International, for five years. That would prevent the parent from forcing its subsidiary into bankruptcy by siphoning cash from it.

Dutra’s proposal would require the utility to maintain a credit rating one step above the lowest investment grade before it could pay dividends. Since the utility is wholly owned by Edison International, dividends go to the corporation, not to individual shareholders.

That, Dutra said, will ensure the company has incentive to remain creditworthy and won’t slip back into the financial straits that led to the state’s buying power for it.

“I want to retain cash in the utility,” Dutra said. “I don’t want it transferred to the parent company.”

Dutra’s plan was one of more than a dozen amendments debated Tuesday, including a proposal that doubled the cost of the utility’s transmission lines, if the state choses to buy the system.

Gov. Gray Davis announced in April 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.

By Tuesday’s hearing, that provision was watered down to an option for the state to purchase the lines at net book value, approximately $1.2 billion.

Edison officials said that wouldn’t help them regain their financial footing and the bill was amended to give the state a five-year option to buy the lines at twice the book value – about $2.4 billion.

The new version 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.

Republican lawmakers were concerned the peripheral issues wouldn’t help Edison regain creditworthiness, said Assemblyman Keith Richman, R-Northridge.

“Clearly, the basic issue of getting Edison back into a creditworthy position is being drowned out in all of these extraneous issues, like the grid or the transfer of the 20,000 acres in Fresno County,” Richman said.

Central Valley lawmakers were concerned about a provision in the Memorandum of Understanding with Edison that gives the state development rights on 20,000 acres in the southern Sierra Nevada mountains.

State resources officials have said the land, most of which surrounds the utilities’ hydroelectric facilities, would be managed as it was by the utilities.

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