The Electricity Daily
It’s the California version of “The Perils of Pauline.” California Gov. Gray Davis has promised to haul lawmakers back for a third “extraordinary session” because he believes the first two did not allow him enough time or leverage to get the Legislature to vote for a bill that is supposed to restore Southern California Edison to creditworthiness. The clock ran out on the last session at midnight on Friday.
As the session ground to a halt, there were frantically competing bills, claims by Edison that even if a bill were to pass as proposed it would not be enough to restore the utility’s financial wherewithal, and the insistent drumbeat of consumer groups to allow the utility to fall into bankruptcy without a bailout.
“The Senate has an omnibus bill called ‘Fat Boy,'” with language from the Edison rescue bill and other pending energy bills, said Nettie Hoge, The Utility Reform Network executive director, about halfway through the last day of session. “The Senate also has a bill on Edison‘s [deal with the governor.] I’m not sure what’s going to happen. I don’t know whether they’ll be morphed or changed.”
Even if a bill had passed, Ted Craver, the chief financial officer of the utility’s parent, Edison International, said it would not be enough to keep the company solvent. “You take a bill that would be difficult anyway and just fall off a cliff.” The last version of the bill reduced the amount of securitized bonds the utility could float from $2.9 billion to $2.5 billion. Friday’s version also toyed with reducing the number of large customers who would be on the hook for paying off the interest on those securitized bonds. “You have to have enough customers to make securitization marketable,” Craver added.
The original deal between Edison and the governor not only called for securitized bonds, but a buyout of the utility’s transmission system for well over twice its book value. That would have allowed Edison twice as much cash influx to pay off debt. Generators, particularly renewables generators, were pushing hard for the plan. They have only been paid 10 percent of what they’re owed since the beginning of the year.
Consumer groups, however, see nothing wrong with pushing Edison into bankruptcy. Northern California consumers have been living with a bankrupt Pacific Gas & Electric since April with no discernible change in service, so the precedent sits well. “The massive public opposition to the bailout was heard loud and clear in Sacramento. Senators understood that ratepayers had already paid enough for the colossal failure of deregulation,” said Doug Heller, The Foundation for Taxpayer & Consumer Rights campaign coordinator.
Davis pledged not to give up and blamed the Senate for inaction. He said the third “extraordinary session” would begin in two weeks “so that Edison can avoid bankruptcy. Edison has assured me that it will not seek bankruptcy and that it believes its creditors will continue to show restraint.” Indeed, last week, banks agreed to a two-week extension of forbearance for Edison‘s debt payments due this week. [JS]