Plan to Save Edison Faces Skepticism in Sacramento

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No legislative clamor for Davis’ bailout deal

The San Francisco Chronicle

Gov. Gray Davis may have a hard time persuading skeptical lawmakers to approve the deal he reached last week to rescue Southern California Edison.

It’s a sell job with the highest stakes. Without legislative approval, the deal collapses, and Edison probably joins Pacific Gas and Electric Co. in bankruptcy court.

“I don’t feel there is a gun to my head to pass this deal with Edison. This is going to be pounded like a cheap steak,” said Sen. Don Perata, D-Oakland.

“It’s the governor who is going to have to come in and sell it to us,” Perata said. “I don’t intend to deal with intermediaries.”

That’s the central tension as lawmakers return today from a one-week spring break.

There is also a mountain of bills on other issues that have languished for months while the Legislature wrestled with the state’s energy mess.

But it is Davis’ $2.7 billion dollar deal — and its bankrolling of a hefty chunk of Edison‘s financial recovery with ratepayer dollars — that could elevate some Democrats’ private grumblings about the governor into open rebellion.


Magnifying that legislative grumpiness, Davis wants lawmakers to rubber-stamp his deal.

“The governor would prefer if they took the negotiation lock, stock and barrel but they have the right to amend it as needed,” said Steve Maviglio, Davis’ press secretary. “We don’t want them to, but they can.”

In an April 10 filing with the Securities and Exchange Commission, Edison suggests that if the Legislature changes the deal or balks at voting for it, all bets are off.

“They can have it that way, as long as they’re comfortable with the answer not being yes,” said state Sen. Debra Bowen, D-Marina del Rey, chairwoman of the upper house’s energy committee. “Last time I checked, the Senate don’t cotton much to ultimatums.”

Bowen, who will lead the Senate’s review of the deal, opposes it.

“I don’t understand why this is a good deal for ratepayers. It looks like a deal for Edison shareholders and the creditors,” she said. “And I don’t understand what the rush is, because it does nothing to help us this summer.”


The deal itself says that if legislative approval is not given by Aug. 15, Edison can walk away.

Maviglio said Davis plans to be in Sacramento this week to meet with lawmakers and pitch his deal. But he did not know when Davis would present proposed legislation.

Frustrated by the governor’s past refusal to present a comprehensive package of bills to address the energy crisis, lawmakers have said they won’t do anything about the Edison deal until Davis gives them a bill to introduce.

There are already signs that Davis’ proposal is anything but a legislative slam dunk.

Senate President Pro Tem John Burton, D-San Francisco, said last week that the plan needs to be subjected to “extensive” legislative hearings by the Senate energy and appropriations committees and possibly the judiciary committees.

Extensive hearings is often legislative code for death by 1,000 cuts.

Lawmakers have also questioned the cost of buying Edison‘s transmission lines. More lawmakers are also wondering what benefit the state gets from owning a portion of the grid instead of all of it.

Before PG&E‘s bankruptcy, much of the Legislature’s and governor’s actions were driven by a desire to prevent bankruptcies for fear it would cut consumers off from power.

But more than a week after PG&E filed for bankruptcy, the lights are still on and, increasingly, lawmakers are saying that perhaps a bankruptcy court is a better venue than the political process to sort out the problems of PG&E and Edison.

“There is a re-evaluation happening,” said Assemblywoman Helen Thomson, D-Davis.


Thomson also said bailing out Edison is not a top-of-the-list priority for Northern California lawmakers.

“What are those Southern California power lines going to connect up to? How’s this deal going to benefit electricity in the north?” Thomson said. “You can buy a lot of health care, school books and traffic relief for $2.7 billion.”

The state has already spent about $5.2 billion to buy electricity on behalf of California’s two largest investor-owned utilities.

Democrats also can vote against the Edison deal with the blessing of consumer groups that brand Davis’ deal a gargantuan giveaway to Edison, with the bailout coming mainly at the expense of ratepayers.

“It’s dead on arrival. It’s a complete capitulation to Edison that will cost ratepayers billions of dollars,” said Harvey Rosenfield, head of the Foundation for Taxpayer and Consumer Rights.

“If the governor says the Legislature stopped me from forcing you, the ratepayer, to bail out Edison I don’t think legislators have much to fear from that criticism,” Rosenfield said.

Besides the price, there are many other aspects of the deal to which Democrats may object. According to an analysis by legislative staff members:

“It will take a while to elevate the comfort level,” said Assemblyman Herb Wesson, D-Los Angeles.

Consumer Watchdog
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