No Accord Near on Edison Rescue

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With Davis’ proposal languishing and rival versions being crafted, the issue continues to be divisive.

Los Angeles Times

The California Assembly has yet to begin debating an alternative plan to save Southern California Edison from bankruptcy–but already Monday, fissures were emerging that could signal trouble for the measure by Democratic leaders.

Consumer groups blasted a new bill spearheaded by Assembly Speaker Bob Hertzberg, calling it a bailout every bit as bad for ratepayers as Gov. Gray Davis‘ original deal to rescue the Rosemead-based utility.

“Lawmakers have attempted to wrap the utility bailout plan in a protective covering,” said Doug Heller of the Foundation for Taxpayer and Consumer Rights, “but the fact remains that this bill would force energy consumers and taxpayers to transfer billions of dollars to utility companies.”

Meanwhile, a group of Democrats and Republicans in the lower house began developing another alternative, one they said more cleanly rescued Edison without any pretense that the state was getting something of equal value in return.

“If we’ve demonstrated anything in the past few months, it’s that the state of California has no business being in the power business,” said Assemblyman Joe Canciamilla (D-Pittsburg), among those discussing the new alternative plan.

Unlike the Davis or Hertzberg versions, this latest plan would not include state acquisition of the utility’s transmission lines.

Judge OKs PG&E Bonuses

In other energy news, a federal bankruptcy judge in San Francisco ruled Monday that PG&E can pay more than 200 top managers $17.5 million in bonuses, but must keep a promise not to pay for them by raising customer’s utility rates.

Judge Dennis Montali said he was not about to second guess PG&E‘s decision that it needs to pay the bonuses to prevent key employees from resigning as it reorganizes its financial affairs.

He rejected opposition from the U.S. trustee’s office and the city of San Francisco, saying PG&E had provided evidence of widespread concern among managers that they would lose their jobs and of other companies hiring away key managers.

In the Legislature, lawmakers have been trying to find a way to avoid having Edison join PG&E in Bankruptcy Court. Until the two utilities become credit-worthy again, the state will have to continue buying electricity on their behalf to pass along to California’s consumers.

The two utilities ran up billions in debt earlier this year and last because they were buying electricity on the wholesale market for much more than they could pass on to consumers under a state-imposed rate freeze.

PG&E took itself into Bankruptcy Court in April rather than continue talks with Davis, but the governor and Edison reached a tentative rescue deal days later.

The Edison deal was dubbed a bailout by consumer groups, which threatened an initiative challenge if it was approved. And it met with skepticism from lawmakers, who questioned the $2.76-billion price tag for transmission lines. It has languished in the Legislature.

After months of near-inactivity, lawmakers in the Senate and Assembly last week began to craft dueling alternative rescue plans in hopes of passing something before their annual summer recess begins Friday.

The two houses remain unable to agree on what the alternative to the Davis plan should be, so each is advancing its own idea. Hertzberg (D-Sherman Oaks) introduced a bill he wrote with three colleagues Friday. The Senate team, led by Byron Sher (D-Stanford), is still shaping a deal and has yet to introduce legislation.

Consumer Groups Opposed

The Hertzberg bill, AB 82xx, would place most of the financial burden of Edison‘s rescue on big business and other large consumers of electricity. Nonetheless, consumer groups fear the costs will be borne by everyone as businesses pass down the costs to customers.

Because the bill also offers carrots to business and environmental groups as a way to win the votes of various legislators, consumer groups compared it with the measure that deregulated California’s power market in 1996.

The details of the Hertzberg bill, which is even more complex than the original Davis deal, are causing concern among some lawmakers, who have taken it upon themselves to come up with what they say is a simpler and more honest bailout for Edison.

Consumer Watchdog
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