Assembly panel OKs two bills to help Southern California Edison

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The San Francisco Chronicle

Two sharply contrasting plans to prevent debt-ridden Southern California Edison from being dragged into bankruptcy cleared a key Assembly committee last night, but a third measure stalled in the Senate.

The first bill approved by the Assembly Energy Cost and Availability Committee calls for the state to purchase Edison‘s transmission lines for $2.4 billion as a way to help the utility out of its estimated $3.5 billion in debt.

The plan drew criticism from business and consumer groups, and many lawmakers who said other aspects of the rescue plan are too complicated wondered openly if it wouldn’t be better to let the utility to go bankrupt.

But Assemblyman Fred Keeley, D-Boulder Creek, an author of the bill, said before the 11-to-9 vote that lawmakers have to work with legislation that is complicated and not entirely pleasing.

“If this was easy, or if this was simple, we wouldn’t call it a crisis,” he said. “This is far beyond a problem or a policy that we can debate and as a consequence the solutions are neither simple or easy.”

After a day of furious activity, the close vote–with some Democrats joining Republicans in opposition–may spell trouble when it reaches the floor of the Assembly.

The Assembly Appropriations Committee approved the plan 12 to 6 late last night, setting up a floor vote for today.

The second plan that cleared the Assembly committee would be a “straight bailout,” said its author, Assemblyman Rod Wright, D-Los Angeles. It was approved 12 to 3. The Appropriations Committee did not take up Wright’s bill.

The state would back $3.5 billion in bonds issued by the utility and then be repaid through a $2-a-month charge for Edison ratepayers.

The Edison deal is considered a linchpin to getting the state out of the power-buying business, something that is costing taxpayers upward of $50 million a day. If Edison joins Pacific Gas and Electric Co. in Bankruptcy Court, there is no clear way out of the electricity-buying business for the state.

Gov. Gray Davis has said that he hopes any rescue plan for Edison would be used as a model for PG&E to get out of court and back into the power-buying business.

Also, a Senate committee defeated another proposal after the company said it would not work. The bill would let the utility issue $2.5 billion in revenue bonds, to be repaid by ratepayers.

The Senate Energy Utilities and Communications Committee’s 4-to-3 vote came as lawmakers struggle to approve some kind of rescue plan before the end of the week, when they are scheduled to start a monthlong recess. The bill needed five votes to pass and the chairwoman of the panel said another vote would be taken today.

Sen. Jackie Speier, D-Hillsborough, who abstained from voting in the committee, said the bill was defeated because senators weren’t prepared to send it to the floor yet.

“The bill does not have broad support in the Democratic caucus,” said Speier, who opposes the bill.

Edison objects to the bill by Sen. Byron Sher, D-Palo Alto, because it contains no way for the company to pay back the other $1 billion it owes generators. Bob Foster, an Edison vice president, said the goal of a rescue plan is to remove the state from the electricity business and restore the utility to creditworthiness.

“This bill can’t do that,” he said in a Senate hearing.

Sher’s proposal would also give the state a five-year option to purchase the transition lines and would make the largest commercial businesses pay for all of the debt.

Business groups and consumer organizations blasted the measure.

“We think you should spread the cost proportionally to all ratepayers,” said Dominic DiMare of the California Chamber of Commerce. “This is businesses subsidizing residents. Everyone used energy during this time period that the debt was accrued, and everyone should pay their share.”

Doug Heller of the Foundation for Taxpayer and Consumer Rights said consumers will see the cost in the end through higher prices passed on by businesses.

But Senate leader John Burton said the proposal by Sher was the only one that might be approved by the Senate.

“It’s a fair, just and equitable offer,” he said. “It puts the burden on those who can most afford it, and it doesn’t overpay for the transmission lines.

Many lawmakers say letting Edison go into bankruptcy may be better than rushing through a rescue plan.

With each house likely to pass different versions of a rescue plan, it is unclear if the difference will be resolved before the break, or if lawmakers will be called back to vote on a final plan during their vacation.

An agreement between Gov. Davis and Edison, which has been all but dismissed by lawmakers who say it is too generous to the utility, contains an Aug. 15 deadline.

Saving Edison

A comparison of three bills that attempt to rescue financially troubled Southern California Edison:

AB82xx by Assemblyman Fred Keeley, D-Boulder Creek (Santa Cruz) and Assembly Speaker Robert Hertzberg, D-Sherman Oaks (Los Angeles County)


Proposes spending $2.4 billion for transmission lines to help cover the utility’s estimated $3.5 billion in debt.


(All of the plans allow the utility to issue bonds to repay the debt, but each has it repaid by customers in a different way)Debt not covered by the sale of transmission lines will be paid back by all ratepayers for two years, then fall exclusively on the shoulders of large commercial customers. Money raised will be placed in a trust account of an amount equal to 70 percent of the utility’s back debt. Generators owed money can either accept partial payment or fight the trust in court.


Phases in the ability of consumers to bypass the utility and contract directly for power. As the state’s obligation to purchase power is reduced, customers may opt for direct access during specified open enrollment periods, to occur at least twice a year. .

AB83xx by Assemblyman Rod Wright, D-Los Angeles


No purchase of transmission lines.


All of the debt will be paid for by all customers with a $ 2-per-month charge.



SB78xx by Senator Byron Sher, D-Palo Alto, and Richard Polanco, D-Los Angeles


Includes a 5-year option for the state to purchase the lines for $1.2 billion.


It would only allow $2.5 billion to be paid to alternative power generators and banks and does not deal with the $1 billion owed to generators. All of the $2.5 billion would be paid by large commercial customers.


Does not address the issue.

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