Edison bailout plan is oddest piece of legislation in recent memory

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The Sacramento Bee

Senate Bill 78XX may be the most unusual legislation to hit the Capitol in decades, in terms of both its content and its convoluted political dynamics.

The measure is the latest incarnation of months-long efforts by Gov. Gray Davis and some legislators to rescue Southern California Edison from joining its larger cousin, Pacific Gas and Electric, in bankruptcy court. That is odd unto itself, since state legislation to openly provide billions of dollars in benefits to one private corporation may be unprecedented.

Literally dozens of versions of legislation to bail out Edison have floated around the Capitol, ever since Davis announced last spring that he had reached agreement with John Bryson, chairman of Edison International, the utility’s parent corporation. The Edison deal was announced just a few days after PG&E rejected Davis’ overtures and took itself into bankruptcy court. Both utilities ran up many billions of dollars in debts buying power in the last six months of 2000 because the state rejected their pleas to raise retail rates.

Edison‘s — or perhaps Bryson’s — fear of bankruptcy is another puzzling aspect of the issue, given the almost cheerful manner in which PG&E placed itself in receivership. Edison has spent millions of dollars on lobbying, advertising and other forms of political persuasion, trying to nudge the Legislature into passing a rescue plan that lawmakers are clearly reluctant to do.

Is avoiding bankruptcy a matter of personal pride for Bryson? Or, as some suggest, does it stem from Edison‘s tardiness in erecting an impregnable financial fire wall between the utility’s assets and those of the parent holding company, Edison International? Edison scrambled to build a fire wall after bankruptcy loomed, but financial analysts are uncertain that it’s as strong as PG&E‘s.

The dynamics within the Capitol and among various interest groups are equally odd, following none of the patterns that usually explain why politicians do what they do. Legislators of both parties are all over the map on the Edison issue, and factions that are ordinarily allied find themselves at odds. One example: Liberal consumer groups are strenuously opposing any bailout for the utility, while liberal environmentalists like the current scheme because it would bring thousands of acres of Edison-owned Sierra watershed under state control.

Perhaps the most mysterious aspect of the Edison situation is why Davis, ordinarily the most cautious, commitment-averse of politicians, is making such a crusade of keeping the utility out of bankruptcy court. Why would Davis put so much of his gubernatorial prestige behind such an iffy proposition that exposes him to leverage from lawmakers seeking other favors from the governor and, polls indicate, is not popular with voters?

Harvey Rosenfield, the consumer gadfly who has established a “war room” near the Capitol to fight the Edison scheme, believes that Davis’ unusual efforts stem from a desire to run for president in 2004 and a fear that Wall Street would blackball him if Edison follows PG&E into bankruptcy court.

Another possible explanation is Davis’ decades-long relationship with Bryson. The two served together in former Gov. Jerry Brown’s administration (Bryson was Brown’s Public Utilities Commission president) and both have strong ties to the Democratic political organization in West Los Angeles headed by Reps. Henry Waxman and Howard Berman, who, in effect, allowed Davis to launch his career by winning a West Side state Assembly seat in 1982.

The most influential member of Edison‘s board of directors is Warren Christopher, a Democratic elder statesman and former secretary of state. Bryson and Christopher flew to Sacramento late last year to plead with Davis to take command of the energy crisis, allow utilities to raise rates and staunch the red ink. Davis refused, and nearly a year later finds himself trying to keep Edison out of bankruptcy court.

We may never know why Davis is going to bat for Edison, but we will know, very soon, whether he can pull it off or will wind up with egg on his face.

Consumer Watchdog
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