The $2.9 billion proposal draws fire from many sides.
Gov. Gray Davis and Assembly Democratic leaders reached agreement Tuesday on a $2.9 billion rescue plan for the state’s second-largest utility, but the pact was immediately blasted by business, consumer and other critics.
The utility itself would be responsible for paying about $1 billion owed to electricity generators, some of which are suspected by state officials of manipulating the energy market.
“I believe we’ve made real progress,” Davis said in jointly announcing the pact with Assembly Speaker Robert Hertzberg, D-Sherman Oaks. “We’re working together, we’re standing here in solidarity and we’d like to see a bill move out of the house as soon as possible.”
The new Edison rescue plan was the focus of an hourlong meeting Davis held Tuesday with Assembly Democrats. It consists of proposed amendments to SB 78xx by Sen. Byron Sher, D-Palo Alto.
Hertzberg said he hopes to pass a bill this week or early next week.
But the proposed rescue plan is expected to face heavy opposition in the Legislature, and Edison officials were guarded Tuesday in their comments about it.
John Bryson, chairman of Edison‘s parent, Edison International, said it’s “not at all clear” the new bill would restore the utility to creditworthiness and allow it to resume buying its own power, a duty the state has assumed since January.
But Bryson said his first impression was that the proposal represented an improvement over the original SB 78xx, passed by the Senate, which called only for large businesses – those using 500 kw or more – to repay the bonds.
Bryson said he doesn’t welcome having to “eat” $1 billion in costs but said the company may have to accept it as a means of keeping the utility from following Pacific Gas & Electric Co. into Chapter 11 bankruptcy proceedings.
“It doesn’t seem fair to me, but that’s a different question,” he said. “We’re in bankruptcy in four weeks if we don’t get something done.”
Senate President Pro Tem John Burton said he had not seen the new proposal but expressed doubt about its prospects.
“It was tough to get the votes for what we had, so I don’t know that you could get the votes for something much different,” he said.
In addition to authorizing $2.9 billion in bonds, the new rescue plan is not expected to raise Edison rates and would:
- Provide an option for the state to purchase Edison‘s transmission lines, but require a vote of the Legislature to exercise it.
- Provide public conservation easements to about 24,000 acres of sensitive lands near Edison‘s hydroelectric plants.
- Include provisions allowing businesses, under certain conditions, to contract directly with generators if the state faces a shortage of electrical supply.
- Require private utilities to increase their supply of renewable energy.
Details of the agreement were sketchy Tuesday.
One substantial change from the Senate-passed rescue plan is that even small businesses, using as little as 20 kw, would be responsible for helping repay the bonds.
Burton said the provision relating to small businesses stood no chance of passage.
“That’s a non-starter in the Senate,” he said.
But the Assembly Democrats’ point man in energy negotiations, Assemblyman Fred Keeley of Boulder Creek, said bankers have warned that the 3,600 large businesses in Edison‘s service area simply aren’t enough to support a $2.9 billion bond.
“The Senate version is fatally flawed,” he said.
The Assembly proposal’s provisions regarding renewable energy and private contracting for electricity – called “direct access” – also would mark substantial changes to the Senate-passed rescue plan.
Assembly Republicans said they were cut out of negotiations and had not been briefed on the new plan.
Assemblywoman Sarah Reyes, D-Fresno, said she has concerns about the conservation easements – specifically, she fears the plan could threaten a 1,600-acre Fresno County development plan near Shaver Lake.
Douglas Heller of the Foundation for Taxpayer and Consumer Rights called the proposal a “public bailout” and threatened a ballot initiative if the new rescue plan is approved.
Businesses would simply pass their bond payments on to consumers in the form of higher retail prices, he said.
“It would be better for the public if the Legislature did nothing to solve Edison‘s financial problems” and let the company fall into bankruptcy, Heller said.