(08-31) 00:17 EDT SACRAMENTO (AP) — A rescue plan for San Diego’s strapped utility customers moved through the Legislature on Wednesday night, offering a $150 million bailout, lower rates and a speedup in power plant construction.
Two parts of the three-piece legislative package were sent to Gov. Gray Davis, who has said he will sign the legislation only if the third bill — still in the Senate — reaches his desk. That bill would accelerate power plant licensing.
The voting began after lawmakers met through the day seeking a compromise on the issue that has dominated the final weeks of the 2000 legislative session.
The Senate, first to act, approved the $150 million proposal, which would defray ratepayers’ hikes if increases exceed 10 percent over the previous month. The Assembly later sent the bill by Assemblywoman Denise Ducheny, D-San Diego, to the governor on a 59-8 vote.
The Assembly sent Davis the core of the relief package, a bill to lower utility rates by averaging costs through 2003, which would reduce the monthly rate $68, down from the current $120.
The governor said the rate-cap bill sponsored by Assemblywoman Susan Davis, D-San Diego, “has many positive aspects,” calling it “relief for overburdened ratepayers.”
But moments after the vote, a major consumer group denounced the proposal and said it is considering a ballot initiative in 2002 to impose controls over the electrical power industry that were removed by California’s 1996 deregulation law.
“This is an awful bailout. It basically lets the taxpayers on the hook for $150 million, and if that’s not enough the ratepayers will pay the rest. It bails out SDG&E after the 2002 elections. This is a ghost of a plan,” said Jamie Court of the Santa Monica-based Foundation for Taxper and Consumer Rights.
Court said the foundation is “seriously exploring a ballot initiative to re-regulate the electrical industry in 2002.”
The bill’s supporters said the $150 million rescue would be used to offset a potential balloon payment, while critics labeled it a government bailout of a rapacious market operators.
“This is one of the most complex issues we will have addressed during the entire two years of this Legislature,” said Assemblyman Tom McClintock, R-Northridge. “But we don’t know what’s in the package. We don’t even have an analysis. We do know it will roll rates back until 48 days after the 2002 elections.”
Assemblywoman Davis urged lawmakers to vote for it, calling it a necessary stop-gap to help San Diegans through a difficult period.
“We’ve got to stop the bleeding,” she said.
The legislative package targets utility bills in San Diego and southern Orange counties, which are served by San Diego Gas and Electric Co.
The single bill remaining, which would expedite new power plants by cutting to six months the usual one-year time for review by the California Energy Commission, was scheduled for votes Thuresday.
Currently, 13 power plants are under review in California.
Earlier, a proposed bill to cushion California’s largest utilities, Pacific Gas and Electric Co. and Southern California Edison Co., from the full impacts of deregulation was scrapped.
By midday, it was transformed into a legislative resolution directed at the Public Utilities Commission.
An early draft of the document reviewed by The Associated Press asks the PUC to investigate potential excesses in the wholesale power market, seeks investigative help from the Federal Energy Regulatory Commission, and urges the commission to take an active, watchdog role in policing the market.
Both utilities, in a transition period to full deregulation, have rate freezes in effect. That means that, unlike SDG&E, they cannot pass on the increased costs of wholesale power to their retail customers.
Both companies are engaging in short-term borrowing to meet their costs.
Each are losing an estimated $15 million to $20 million daily, and since the end of April each company has lost about $1.1 billion to $1.5 billion. The full extent of the shortfalls are expected to be detailed next month in the companies’ quarterly filings to the Securities and Exchange Commission.
Meanwhile, Wall Street, sensing the fiscal hemorrhaging of two major California utilities, monitored the negotiations.
“We’re looking at whether the creditors are going to get their money back,” said David Wyss, chief financial economist for Standard and Poor’s.
“Generally, utilities are highly rated, but their ratings have been slipping after deregulation. Obviously, we’re worried about anything in the political process that makes it uncertain,” he said.
He said that at the heart of the problem is an adequate power supply.
“This is not a price problem. The only way it is going to be solved is if you have more generating capacity,” Wyss said.
^On the Net:<
Read AB1156 by Assemblywoman Denise Ducheny, D-San Diego; AB265 by Assemblywoman Susan Davis, D-San Diego; and AB970 by Ducheny at http://www.assembly.ca.gov
Ã‚Â©2000 Associated Press Ã‚Â