Deal to rescue Southern California Edison dies in Senate

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The Associated Press

Gov. Gray Davis called a third emergency legislative session early Saturday, after the Senate failed to vote on a plan to rescue Southern California Edison from bankruptcy.

That session, scheduled to start after the Jewish religious holidays in October, would take another shot at saving Edison from sliding into bankruptcy.

“I am proud of the work done by the Assembly to get the state out of the business of buying electricity by restoring Edison to creditworthiness,” Davis in a statement after midnight Saturday. “Unfortunately, however, the Senate has not gotten the job done.”

On the Senate floor, President Pro Tem John Burton, a San Francisco Democrat long skeptical of the Edison deal, said the third session would do little or no good.

If the Senate had considered the Edison deal that passed the Assembly last week, Burton said, it would have received seven votes out of 40 senators.

“We didn’t take it up because we didn’t want to embarrass the governor,” Burton said. “It would have been a rip-off of residential people to help big business and bail out a corporation.”

Sen. Debra Bowen, D-Marina del Rey, said she and fellow senators worked hard to come up with a plan to help Edison and resented Davis’ implication they did not.

“Our goal in the Legislature is not to restore Edison to creditworthiness,” Bowen said. “I got elected to do the best job possible to protect ratepayers and create a business climate.”

Throughout Friday and into early Saturday morning, senators could not come up with a politically palatable way to salvage the Edison deal.

That, Edison officials and Davis aides said, means the state’s second-largest utility will most likely file for federal bankruptcy protection.

Burton’s decision not to bring the deal up for a vote cheered consumer advocates, who shared Burton’s disdain.

“If Edison goes bankrupt tomorrow, we don’t need another extraordinary session, and if they don’t go bankrupt in two weeks, they’ve been lying to us,” said Doug Heller of the Foundation for Taxpayer and Consumer Rights.

The deal’s quiet death in the Senate closed more than five months of work since Davis first announced the plan in April, saying the state would pay $2.76 billion for Edison‘s transmission system and let the utility sell consumer-backed bonds to repay the rest of its $3.9 billion debt.

In July, the Senate passed its first version that would let Edison sell $2.5 billion in bonds and give the state first option of buying the transmission lines for $2.4 billion.

The Assembly followed last week with a bill letting Edison sell $2.9 billion in bonds. It also gave the state an option to buy the power lines for about $2.4 billion and hold development rights on more than 20,000 acres of Edison land.

That left the Senate and Assembly to form a joint committee to reconcile the differing versions of the Edison deal or for the Senate to pass something like the Assembly plan. In the end, the Senate did neither.

With no deal passed and the Legislature done for the year, Edison peers into the abyss of bankruptcy. It already has company.

Pacific Gas and Electric Co., the state’s largest utility, filed for Chapter 11 bankruptcy protection in April, after amassing about $8.9 billion due to last year’s sky-high electricity costs. Edison says it has accrued $3.9 billion in debts.

Assemblyman Fred Keeley, the Boulder Creek Democrat who led his party’s Edison efforts, said he and Assembly Speaker Bob Hertzberg believe a deal “is in the best interest of consumers.”

While the Legislature didn’t complete an Edison plan, it did have a busy night with other energy-related bills that included:

–A Burton bill that would set aside a portion of customer rates to repay $12.5 billion in bonds the state expects to issue in the fall. Burton’s bill, which Davis opposed, would also require the Department of Water Resources to hold public hearings on its long-term energy contracts.

PUC President Loretta Lynch said Burton’s bill would create a “a simpler, cheaper and more efficient bond structure.”

The commission has an alternate plan supported by DWR that it could vote on next week. That plan would allow DWR to raise customer rates without PUC review.

The Assembly approved the bill and sent it to Davis, who promised to veto it.

“It’s dead on arrival,” said Davis spokesman Steve Maviglio.

–A bill also by Burton that would allot $10 million to replacing traffic lights with energy-efficient models that have battery back-ups, in case of power outages. It was approved by the Senate 31-1 and was sent to the governor.

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