The Associated Press
California’s governor praised a proposal from state regulators that would allow the state to issue billions of dollars of bonds and funnel money from utility rates to pay its power-buying debt.
Gov. Gray Davis called the agreement “a significant step in the right direction to get energy bonds sold,” and said Thursday he looks forward to quick approval from the state Public Utilities Commission. Three of five PUC commissioners are Davis appointees.
Consumer advocates condemned the plan, saying it would let the state agency that buys electricity, the Department of Water Resources, pass through rate hikes without public input or having to fight for approval from the PUC.
“The ratepayers are going to be stuck with the decisions and costs of Gov. Davis’ electricity trickery,” said Doug Heller of the Foundation for Taxpayer and Consumer Rights.
The plan does not say how much the state hopes to issue in bonds, though officials previously wanted to issue $12.5 billion to cover a deficit of that size the state faces during the next 18 months.
The plan calls for the DWR to use bond money to pay down a $4.3 billion loan and return an additional $6.1 billion to the general fund.
An undetermined portion of electric rates paid by customers of Pacific Gas and Electric Co., Southern California Edison Co. and San Diego Gas and Electric Co. will go toward paying off the bonds, DWR operating costs and some $40 billion of long-term electricity contracts.
The PUC reserves the right to raise electricity rates if more money is needed to pay for these costs. It would set the charges based on financial statements the DWR is required to give it at least once each year.
The plan also would divide the revenue into two streams, one to pay the bonds, the other to pay the DWR’s costs and the contracts. The PUC said this would help ensure bond holders are paid.
In a statement, the PUC also urged the state to continue renegotiating the long-term power contracts for lower prices. It is expected to vote on the proposal Feb. 21.
Sen. President Pro Tem John Burton, D-San Francisco, said in a statement Thursday the sooner the DWR can end its power-buying duties, the better.
“We hear that this agreement can be implemented without a rate increase, which is a positive,” Burton said. “We’re still looking through the agreement to check on the costs involved. Clearly, the sooner there’s an agreement the sooner we can sell the bonds.”
Efforts to issue bonds last year fizzled after the PUC, Davis, state Treasurer Phil Angelides, Burton and others could not agree whether bond holders or power companies should be paid first with the money taken in.
The DWR and Angelides still are determining the size of the state’s bond issuance.