DOW JONES NEWSWIRES
SACRAMENTO (Dow Jones)–Vowing for months that California Assembly Republicans wouldn’t support legislation to rescue utility Southern California Edison from the brink of bankruptcy, one of the GOP’s members crossed party lines to help push through a bill during a key committee hearing Wednesday that puts the utility one step closer to solvency.
State Assemblyman Bill Leonard, R-Rancho Cucamonga, was one of two members of the Assembly Energy Costs and Availability Committee who changed his vote in order to advance the rescue bill out of the committee. Leonard was the only Republican who voted in favor of the legislation. He left from the committee hearing after voting for the bill and was unavailable for comment.
The measure, as amended by the committee, had originally failed to gain the necessary support from lawmakers to move out of the committee. But a second vote was taken and, with Leonard’s vote, was approved 11-7. The legislation, SB78X, which committee members spent three days amending, now moves to the Assembly Appropriations Committee, where it is expected to be debated Thursday.
Bob Foster, Edison International’s senior vice president, said the utility still has a “long way to go.”
The bill, sponsored by state Sen. Richard Polanco, D-Los Angeles, and state Sen. Byron Sher, D-Palo Alto, was passed by the Senate last month. The measure allows the Edison International (EIX, news, msgs) unit to sell $2.9 billion in bonds, backed by large and small business customers, to be used to pay part of its $3.9 billion debt. A $425 million tax refund Edison International will receive will offset the remaining $1 billion, according to the amended legislation. The state gets a five-year option to purchase the utility’s power lines for $2.4 billion, twice its book value.
“I will continue to fight for passage of this legislation,” said Gov. Gray Davis, who personally lobbied Assembly members to support the bill. “It is critical that the full Assembly continue to move the ball forward to keep Edison solvent and protect ratepayers.”
Lawmakers said allowing SoCal Edison to sell bonds will not trigger rate increases for residential or business customers.
“The only resident who might get a rate increase is a Hollywood mogul who lives in a mansion and leaves his lights on all night,” said Barry Goode, Davis’s legal affairs adviser, who helped negotiate a memorandum of understanding the state signed with SoCal Edison in April.
The MOU called for the state to buy SoCal Edison‘s power lines for $2.76 billion, or 2.3 times book value. It also authorized the utility to sell bonds backed by ratepayers. In all, the package would have allowed the utility to recover the $3.5 billion in power costs the utility was unable to collect from customers under state law.
The MOU has since evolved into the Senate bill.
Polanco said after the Assembly hearing that “in some instances, the bill is stronger” than what the Senate had approved last month.
“I am going to take it back to my members and see what they think,” he said.
State Sen. Debra Bowen, D-Redondo Beach, and chair of the Senate Energy Committee, couldn’t speculate on whether the full Senate would support the bill as amended.
“At this point, I think people may be better off buying a Power Ball ticket,” she said. “There’s still a long way to go before it gets to the Senate.”
Lawmakers Adopt More Than Two Dozen Amendments To Senate Bill
More than two dozen amendments were added to the Senate bill, including a provision sponsored by Assemblywoman Hannah-Beth Jackson, D-Santa Barbara, that would force Edison International to repay money it receives under the deal if state regulators determine that SoCal Edison inappropriately transferred money to its parent company.
Seven other Jackson amendments that consumer groups said would protect the utility’s customers failed.
“Politicians have betrayed the public,” said Doug Heller, a consumer advocate with the Foundation of Taxpayer and Consumer Rights. “If this bill is signed into law, there will be a ballot initiative in conjunction with a ratepayer revolt.”
Heller, along with a half dozen other consumer advocates, have set up a “war room” in the state capitol, handing out yellow “bailout watch” armbands and singing anti-“bailout” songs prior to legislative hearings on the SoCal Edison rescue plan.
The bill would also require the PUC to set up a Ratepayer Benefit Account that would require up to $1.5 billion SoCal Edison may recover from generators in electricity overcharges or “from any litigation” to be held in trust on behalf of the utility’s customers. The bill would also allow SoCal Edison to invest in power plants, backed by a “reasonable” rate of return, either on its own or jointly with the state’s new power authority.
Moreover, the bill would restrict the utility from paying dividends to its parent company for up to five years.