An Assembly proposal for bailing out the utility would tap big industrial users. Business interests say it’s a political escape.

The Orange County Register

Assembly leaders are drafting a new rescue plan for Southern California Edison that would force the state’s largest businesses to pay for a $3.1 billion bailout of the state’s second- largest utility.

The proposal, backed by Assembly Speaker Robert Hertz berg, D-Los Angeles, and Fred Keeley, D-Boulder Creek, was crafted primarily to protect residential and small-business customers from more large electricity rate hikes like the one approved last month by state regulators.

The latest rescue plan comes after weeks of haggling in the Legislature.

Lawmakers in both the Assembly and the Senate soured on Gov. Gray Davis‘ plan to purchase Edison‘s transmission lines for $2.76 billion. That plan would have allowed Edison to issue $2 billion in bonds to pay off the $3.5 billion in debt it incurred last year buying wholesale power for its customers, who are protected by a rate freeze.

The new proposal has the potential basis of a solution,” said Senate Leader John Burton, D-San Francisco. But the devil of everything is in the details.”

‘ Davis is favorable to the proposal because it offers the possibility of averting a widespread consumer revolt throughout the state.

Davis’ spokesman Steve Maviglio said: Without commenting on the specifics of it, the businesses that use the most energy should have the largest incentive to save on their bills.”

An Edison spokesman said company officials are still reviewing the new plan.

Under the proposal, all Edison customers would pay a 0.3 cent a kilowatt-hour surcharge on their electricity bills through 2003. After that period, only Edison‘s 3,600 largest customers would pay a 1.3-cent-a-kilowatt-hour surcharge for a period of 15 to 20 years. The earlier plan would have imposed an undefined surcharge on all Edison customers for 10 years to fund a $4.76 billion bailout of the utility.

The new plan would have the state issue bonds — to be paid off by the surcharges — to restore the utility to financial health. In exchange, big businesses would be allowed to negotiate their own power contracts after 2003 with large energy companies like Enron Corp. Theoretically, that would give businesses the opportunity to buy power at lower prices.

Jack Stewart, president of the California Manufacturers and Technology Association, said lawmakers believe the plan is a less expensive alternative for businesses than the electricity rate hikes approved last month by the state’s Public Utilities Commission. Those rate increases of up to 50 percent for some large businesses will show up on bills in June.

But businesses also are wary of being forced to buy electricity in the open market after 2003.

We have grave concerns,” Stewart said. I just don’t know how you can throw one-quarter to one-third of demand onto the market and have 3,600 companies out here competing for power.”

Barbara Barkovich, president of the California Large Energy Consumers Association, called the plan unfair.

It’s totally political. They’re saying, Let’s protect the small customers and forget about the big customers because we don’t vote.’ ”

The plan surfaced on the same day that Mirant Corp., an Atlanta-based power supplier, said it would abandon plans to build a 500-megawatt power plant in Antioch because of California’s hostile business climate.” The company said it was deterred by threats from state officials to seize power plants and impose windfall-profit taxes.

The proposal faces obstacles in the Legislature because many lawmakers oppose any Edison bailout.

Consumer advocates failed to embrace the latest plan, despite having argued that large industrial and commercials customers — the primary backers of the 1996 deregulation law — should be forced to bear the brunt of higher electricity costs.

Once the big-business lobbyists show up in Sacramento, we’ll get stuck with the bill,” said Harvey Rosenfield, president of the Foundation for Taxpayer and Consumer Rights, who is threatening a ballot initiative next year to re-regulate the electricity industry.

The rescue plan requires a two-thirds vote to pass the Legislature. Assembly Democrats would need four Republicans to join them for passage with 54 votes; in the Senate, one Republican vote in addition to 26 Democratic ones could ensure passage.

The new plan would require Edison‘s parent company, Edison International to contribute $450 million to its utility’s debts — something the parent company was expected to pay under the original rescue proposal. Many legislators, including Senate President Pro Tem Burton, have demanded that the parent company contribute as much as $1 billion to pay the debt because the utility transferred $4.7 billion to the parent company since 1996.

But some lawmakers say the proposal is a tough sell.

It’s unfair to say that business asked for this mess, therefore they ought to pay for it,” said Assemblyman John Campbell, R-Irvine. People will pay for it in the end in one of two ways: either through prices of the products they buy, or with their jobs when businesses relocate out of state.”