The San Diego Union-Tribune
SACRAMENTO–Southern California Edison appeared to move a step closer to bankruptcy yesterday as business and consumer groups criticized a rescue plan written by Democratic leaders in the Assembly.
In a surprising move, the Democratic chairman of the Assembly utilities committee also denounced the leadership’s plan and joined with a Republican to sketch the outline of an alternative plan to rescue Edison.
“I have told the author I ain’t voting for it at gunpoint,” said Assemblyman Rod Wright, D-Los Angeles, chairman of the Assembly Utilities and Commerce Committee.
Assembly leaders say they are determined to have a floor vote on a rescue plan before the Legislature’s scheduled departure Friday for its monthlong summer recess, which ends Aug. 20.
Unless there is a breakthrough, there might be no legislative action before Aug. 15, when a memorandum of understanding negotiated by Gov. Gray Davis and Edison more than three months ago can be waived by either party.
More important than that deadline, some legislators think, is action planned by the state Public Utilities Commission in mid-August to support the sale of a bond of up to $13.4 billion.
The bond will repay the taxpayer-supported state general fund for power purchases made since January and cover some future purchases. The bond will be paid off by ratepayers over 15 years.
The PUC, carrying out previous legislation, is expected to ban the direct-access contracts sought by businesses that allow utility customers to shop for cheaper power.
The ban will ensure that enough customers remain in the system to pay off the bond and, in a more recent development, the dozens of long-term power contracts signed by the state at above-market prices.
The Democratic leadership plan, AB 82XX by Assemblyman Fred Keeley, D-Boulder Creek, is an alternative to an agreement negotiated by Davis and Edison that legislators said was too generous to Edison. Davis’ agreement calls for the state to buy Edison‘s transmission system for $2.8 billion.
Keeley was not optimistic about the fate of the bill yesterday as he compared it to treaty negotiations. “It’s time for us to show the world what our best work product is . . . and put it up for a vote,” Keeley said.
A spokesman for the governor said Davis could support the measure if it had a few alterations, such as tightening up a provision to make sure that monthly ratepayer revenue pays off the bond.
“There are a lot more things to like than not to like at this point,” said Steve Maviglio, Davis’ press secretary.
However, Californians for Energy, a coalition of business groups, said the bill could “deal a deathblow to many businesses” by preventing them from shopping for cheaper power.
The bill would ban direct-access contracts for at least two years as all customers help pay off the Edison debt, estimated at $3.5 billion. After two years, only large users would pay off the remaining Edison debt.
“If we don’t bring rationality and fairness to the state’s electricity structure,” said Allan Zaremberg, president of the California Chamber of Commerce, “we’re going to see California companies expanding and relocating to states where the rates are fair.”
A consumer group, the Foundation for Taxpayer and Consumer Rights, vowed to pursue an initiative to overturn the plan if it is enacted. Doug Heller of the foundation said that buying the Edison transmission system and paying off the Edison debt would cost consumers $6.7 billion.
“Lawmakers have attempted to wrap the utility plan in a protective covering, but the fact remains that this bill would force energy consumers and taxpayers to transfer billions of dollars to utility companies,” Heller said.
Wright, chairman of the Assembly utility committee, joined with Assemblyman Keith Richman, R-Northridge, to outline a plan that would require all ratepayers to pay off the Edison debt and would not purchase the Edison transmission system.
“Just come clean and just pay for it,” Wright said. “I don’t want to own their wires, and I don’t need to own their wires to resolve their arrearage.”
In addition to paying off the Edison debt, Wright said, the plan also would allow direct-access contracts for businesses as the state’s expensive long-term contracts expire.
Wright said some of the contracts are for a year or less and will be expiring soon. He said that any refund from overcharges by generators would be used to reduce the Edison debt.