The California Senate balked last week at legislation that would restore Southern California Edison to financial health, choosing instead to adjourn early Saturday without voting on the controversial bill.
But Gov. Gray Davis (D) announced shortly thereafter that he would call for a third extraordinary session of the state legislature, encouraging senators to approve a rescue bill that received a narrow majority in the state Assembly.
“[T]he Senate,” Davis said in a statement released early Saturday morning, “has not gotten the job done.”
Davis said he would call the extraordinary session in approximately two weeks. The state legislature was scheduled to adjourn for the year on Friday, but after a late session that stretched into Saturday morning, state senators went home without putting the Edison bill (SB 78XX) to a vote.
Senate President Pro Tem John Burton (D) was quoted as saying a vote on the bill would “embarrass” the governor. Burton estimated the measure had only seven of the 21 supporters it would need to clear the Senate.
The amended version sent to the Senate would allow Edison to issue up to $2.9 billion worth of bonds to cover an estimated $3.9 billion debt caused by spiraling electricity prices. Those bonds would be secured by a dedicated rate component paid for by large electricity consumers.
None of the money raised by the bonds could be used to pay off large power generators, whom, state officials allege, have engaged in price manipulation. Instead, the money would be used to pay off debts to small generators and renewable power providers. Edison could use its tax refund-about $425 million-to pay off a portion of its debts to the larger power suppliers. By some estimates, large suppliers are owed $2 billion for power supplied to California’s utilities.
In addition, the legislation would give California the option of buying Edison‘s transmission lines at twice book value (approximately $2.4 billion).
Davis continues to stress that keeping Edison out of bankruptcy is the best option for the state. He reiterated that rescuing the utility will ensure that it is able to keep paying small and renewable power generators, which supply 3,000 megawatts to the state.
“Edison has assured me that it will not seek bankruptcy and that it believes that its creditors will continue to show restraint,” Davis said.
Some lawmakers complained that the bill would not prevent Edison from issuing bonds and then voluntarily entering bankruptcy, as its fellow California utility, Pacific Gas and Electric Co., did in April.
On Friday, Edison said it had been given a two-week extension from banks on a forbearance agreement, spurred in part to allow the banks time to recover from the terrorist attack in New York.
Consumer groups, which have fought passage of SB 78XX, hailed the Senate for adjourning without a vote, calling Burton a “hero.”
The Foundation for Taxpayer & Consumer Rights (FTCR) issued a giddy e-mail Saturday entitled: “We Win!
“The Senate showed common sense in protecting residential and small business ratepayers against being forced to pay at least $6 billion in rate increases,” FTCR said. “Senators understood that ratepayers had already paid enough for the colossal failure of deregulation. Edison reaped the rewards of the deregulation law it wrote to the tune of billions of dollars. It is only fair that Edison bear the responsibility for its losses.”
“Burton is truly a hero for the state’s taxpayers and ratepayers,” said Harvey Rosenfield of FTCR.
Edison, however, continued to state its belief that the bill could win approval from the Senate. “We believe this bill is workable, will restore Southern California Edison to investment-grade status and result in the state no longer buying electric power for our customers,” said John Bryson, chairman and chief executive officer of Edison International, the utility’s parent company. “We remain hopeful that the state Senate will return in two weeks and favorably consider SB 78XX, as amended.”
Davis’ decision to call another extraordinary session allows legislators more time to approve the bill, which was drafted and approved by the state Senate in July. An amended version was voted out by the state Assembly by a 42-32 vote on September 6.
The amended version is far more generous to Edison than the bill initially approved by the Senate. Senators must give majority approval to the amended version before it can go to the governor’s desk for his signature.