The Associated Press
Hoping to convince lawmakers to support his rescue plan for Southern California Edison, Gov. Gray Davis‘ staff has disclosed additional details to legislators, stressing that another utility in bankruptcy could devastate state coffers.
Davis has proposed buying Edison‘s transmission lines for $2.8 billion to help the utility pay its debts. The deal was announced just days after the state’s other major utility, Pacific Gas and Electric Co., declared Chapter 11 bankruptcy on April 6.
In addition to selling the transmission lines, Edison would issue $2 billion in bonds to pay the rest of the utility’s debts. The bonds would be repaid by dedicating a portion of customer rates.
Davis’ staff estimates that Edison customers and the state of California will get a benefit of between $5.5 billion and $25 billion out of the agreement by stabilizing the power supply and avoiding high-cost electricity in the future.
The administration says compelling Edison to sell cheap electricity from its power plants would amount to a savings of between $2 billion and $16 billion over 10 years.
Consumer advocate Doug Heller called that a “fictional savings.”
“That assumes that if we didn’t regulate them, Edison would gouge the heck out of California,” said Heller, of the Foundation for Taxpayer and Consumer Rights. “So, Edison has agreed not to gouge us.”
Assemblyman Fred Keeley said the new figures were helpful, but “there’s quite a bit of additional information we’ll be requesting from the administration in order for us to be able to put this plan through its paces.”
The state also estimates that it would gain up to $3.6 billion through Edison‘s dismissal of a federal lawsuit seeking to raise rates.
Heller doubts there’s any value in dropping a lawsuit that doesn’t have a certain outcome.
“The only savings to the state is the money we would be spending on lawyers that will beat back the Edison lawsuit,” he said. “But it’s certainly not worth $3 billion. That mocks sensibility.”
Lawmakers will need to know how the governor’s advisers arrived at those values before they move the plan forward, said Keeley, D-Boulder Creek, who has played a key role in legislative efforts to solve the energy crisis.
“This is the next level of detail. Now we will want to drill down one more layer from there,” Keeley said.
Edison executives have said they hope the Legislature won’t tinker with the “balanced” deal the governor and company officials had crafted.
While “you never put a take-it-or-leave-it deal in front of another constitutional body, it’s either the agreement or bankruptcy. It’s that simple,” said Bob Foster, an Edison vice president.