San Jose Mercury News

 With payments looming for the state’s two largest utilities and bankruptcy apparently not far off, lawmakers will be asked today to pass a bailout bill — and fill in the details later.

Key elements of the pact, which are being frantically worked out by Gov. Gray Davis, remain far from resolved — including how much it will cost the public. That rush worries consumer advocates. But others say there is little time to lose.

Adding to the sense of urgency, officials at Southern California Edison said they planned to issue a news statement related to their finances today. But spokesman Steve Hansen declined to confirm or deny whether it involved the possibility of bankruptcy.

Pacific Gas & Electric Co. and Edison both have sizable payments for power due today. PG&E officials say they have enough cash to meet their $ 40 million payment, but Edison is reported to be so short of money that it might not be able to cover its bill, which is believed to be bigger. If one or both utilities default on those obligations, it could prompt suppliers to stop selling them any more electricity.

Suppliers “are nervous about not getting paid,” said Davis’ press secretary, Steve Maviglio. “Utilities are nervous that they won’t have the money to pay. And the state wants to make sure the lights don’t go out.”

Lawmakers also are anxious because the investment community in recent weeks has threatened to stop loaning PG&E and Edison money to buy power, also out of fear that they won’t be repaid.

PG&E‘s parent corporation also is concerned. Late Friday it took action to protect itself from the utility’s possible bankruptcy by getting permission from federal regulators to shuffle many of its assets into a new corporate entity.

By introducing the bill today, legislators say they hope to send a message that the state will find a way to rescue the utilities and that it is safe to keep loaning them money.

“It’s all tied to trying to keep the utilities solvent and the market stable,” said Jan Smutny-Jones, executive director of the Independent Energy Producers Association, who represents suppliers and has been involved in the talks with the governor. He described efforts to get the bill passed as “rolling pretty quickly.”

But consumer advocates, who have been shut out of the negotiations, say a more deliberate process would be better. They fear the plan being cooked up behind closed doors may prove as flawed as the 1996 energy deregulation law, which was done in a hurry without much public involvement and which has largely been blamed for the problems bedeviling California’s electricity system.

“If they just rush it through tomorrow, that’s evidence that there is a bad deal,” said Doug Heller of the Foundation for Taxpayer and Consumer Rights in Santa Monica. “We will be putting ourselves in the same foolish place we were in in 1996, when the legislature avoided sufficient public scrutiny of their deregulation deal.”

If the legislature approves a bill that he and other advocates believe puts an unfair onus on consumers, Heller said, they would consider trying to pass a state referendum that would overturn it.

Typically, state elections officials said, merely circulating a referendum petition can delay a law until it is voted on or otherwise resolved. But its unclear if the same rules apply to a bill passed in a special session.

While it is not unusual for lawmakers to pass so called spot bills — which are purposely vague at first to allow for details to be added later — it is rare for such a measure of importance to be pushed through this quickly.

Since PG&E and Edison are in danger of no longer being able to buy power, Gov. Davis has proposed having the state step in to buy electricity and then resell it at cost to the utilities. The gist of the bill to be introduced today would give the state that authority, probably under the auspices of the California Department of Water Resources, which already buys small amounts of electricity to pump water from Northern to Southern California.

Nonetheless, crucial details about how the process would work remain unresolved.

After a day-long video conference with government authorities, utility executives and power suppliers, Davis insisted on Saturday that whatever deal emerges from the talks wouldn’t cost consumers more than they are paying now. Including the three-month rate increase approved by the California Public Utilities Commission earlier this month, the average resident’s bill is about $ 60 a month, according to PG&E officials.

But how Davis expects to achieve that isn’t clear, since no agreement has been reached yet on the wholesale price that suppliers would charge. Davis has said he wants the state to buy power from suppliers at no more than 5.5 cents per kilowatt hour, but power suppliers say they need a lot more than that.

In fact, officials representing suppliers said they expect whatever deal finally is worked out with the governor to include a variety of prices. That would not only take into account the different costs associated with different types of power plants, but also give generators breathing room in case the price of natural gas — which many power plants use for fuel — jumps wildly in the future.

Suppliers also have asked for the ability to exceed existing state limits on how much pollution their plants can spew into the air.

But so far, they have not heard back from Davis on whether the state would go along with that, said Steve Bergstrom, president and chief operating officer of Dynegy Inc., a supplier based in Houston. “We recognize the political sensitivity there,” Bergstrom said of the pollution issue, adding that such details probably would be worked out after a more general bill passes out of the Assembly.

Another big issue is how much consumers will pay of the $ 12 billion in unanticipated electricity costs that PG&E and Edison ran up this year, because their wholesale power costs far exceeded what they could charge their customers under the state’s retail rate freeze. Davis said this weekend that consumers would only have to pay part of that amount. But consumer advocates strongly oppose paying any of it and some lawmakers aren’t keen about it, either.

“That’s like having the ratepayer pick up the cost of the money these guys blew on their own,” said Senate President Pro Tem John Burton, D-San Francisco.

EditedText: : SAN JOSE, Calif.With payments looming for the state’s two largest utilities and bankruptcy apparently not far off, lawmakers will be asked Tuesday to pass a bailout bill — and fill in the details later.

Key elements of the pact, which are being frantically worked out by Gov. Gray Davis, remain far from resolved — including how much it will cost the public. That rush worries consumer advocates. But others say there is little time to lose.

Adding to the sense of urgency, officials at Southern California Edison said they planned to issue a news statement related to their finances Tuesday. But spokesman Steve Hansen declined to confirm or deny whether it involved the possibility of bankruptcy.

Pacific Gas & Electric Co. and Edison both have sizable payments for power due Tuesday. PG&E officials say they have enough cash to meet their $ 40 million payment, but Edison is reported to be so short of money that it might not be able to cover its bill, which is believed to be bigger. If one or both utilities default on those obligations, it could prompt suppliers to stop selling them any more electricity.

Suppliers “are nervous about not getting paid,” said Davis’ press secretary, Steve Maviglio. “Utilities are nervous that they won’t have the money to pay. And the state wants to make sure the lights don’t go out.”

Lawmakers also are anxious because the investment community in recent weeks has threatened to stop loaning PG&E and Edison money to buy power, also out of fear that they won’t be repaid.

PG&E‘s parent corporation also is concerned. Late Friday it took action to protect itself from the utility’s possible bankruptcy by getting permission from federal regulators to shuffle many of its assets into a new corporate entity.

By introducing the bill today, legislators say they hope to send a message that the state will find a way to rescue the utilities and that it is safe to keep loaning them money.

“It’s all tied to trying to keep the utilities solvent and the market stable,” said Jan Smutny-Jones, executive director of the Independent Energy Producers Association, who represents suppliers and has been involved in the talks with the governor. He described efforts to get the bill passed as “rolling pretty quickly.”

But consumer advocates, who have been shut out of the negotiations, say a more deliberate process would be better. They fear the plan being cooked up behind closed doors may prove as flawed as the 1996 energy deregulation law, which was done in a hurry without much public involvement and which has largely been blamed for the problems bedeviling California’s electricity system.

“If they just rush it through (Tueseday), that’s evidence that there is a bad deal,” said Doug Heller of the Foundation for Taxpayer and Consumer Rights in Santa Monica. “We will be putting ourselves in the same foolish place we were in in 1996, when the legislature avoided sufficient public scrutiny of their deregulation deal.”

If the legislature approves a bill that he and other advocates believe puts an unfair onus on consumers, Heller said, they would consider trying to pass a state referendum that would overturn it. Typically, state elections officials said, merely circulating a referendum petition can delay a law until it is voted on or otherwise resolved. But its unclear if the same rules apply to a bill passed in a special session.

While it is not unusual for lawmakers to pass so called spot bills — which are purposely vague at first to allow for details to be added later — it is rare for such a measure of importance to be pushed through this quickly.

Since PG&E and Edison are in danger of no longer being able to buy power, Gov. Davis has proposed having the state step in to buy electricity and then resell it at cost to the utilities. The gist of the bill to be introduced today would give the state that authority, probably under the auspices of the California Department of Water Resources, which already buys small amounts of electricity to pump water from Northern to Southern California.

Nonetheless, crucial details about how the process would work remain unresolved.

After a day-long video conference with government authorities, utility executives and power suppliers, Davis insisted on Saturday that whatever deal emerges from the talks wouldn’t cost consumers more than they are paying now. Including the three-month rate increase approved by the California Public Utilities Commission earlier this month, the average resident’s bill is about $ 60 a month, according to PG&E officials.

But how Davis expects to achieve that isn’t clear, since no agreement has been reached yet on the wholesale price that suppliers would charge. Davis has said he wants the state to buy power from suppliers at no more than 5.5 cents per kilowatt hour, but power suppliers say they need a lot more than that.

In fact, officials representing suppliers said they expect whatever deal finally is worked out with the governor to include a variety of prices. That would not only take into account the different costs associated with different types of power plants, but also give generators breathing room in case the price of natural gas — which many power plants use for fuel — jumps wildly in the future.

Suppliers also have asked for the ability to exceed existing state limits on how much pollution their plants can spew into the air.

But so far, they have not heard back from Davis on whether the state would go along with that, said Steve Bergstrom, president and chief operating officer of Dynegy Inc., a supplier based in Houston. “We recognize the political sensitivity there,” Bergstrom said of the pollution issue, adding that such details probably would be worked out after a more general bill passes out of the Assembly.

Another big issue is how much consumers will pay of the $ 12 billion in unanticipated electricity costs that PG&E and Edison ran up this year, because their wholesale power costs far exceeded what they could charge their customers under the state’s retail rate freeze. Davis said this weekend that consumers would only have to pay part of that amount. But consumer advocates strongly oppose paying any of it and some lawmakers aren’t keen about it, either.

“That’s like having the ratepayer pick up the cost of the money these guys blew on their own,” said Senate President Pro Tem John Burton, D-San Francisco.