Time running out on Edison deal

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The Associated Press

State lawmakers prepared to rush through hundreds of measures in the remaining two days of the legislative session, but one massive issue remained unsolved Thursday – if and how the state will help Southern California Edison avoid bankruptcy.

By Thursday afternoon, the Senate had done little to consider the Assembly’s revision of a plan the Senate passed in July. Without a Senate vote, the rescue plan will die and leave Edison faced with bankruptcy.

Without a rescue, “we have every indication from Edison that they’ll file for bankruptcy,” said Steve Maviglio, the spokesman for Gov. Gray Davis, who negotiated a deal with Edison in April.

That deal allows the utility to issue revenue bonds, backed by customer bills, to pay most of its $3.9 billion in debts. It also gives the state an option to buy the utility’s transmission grid for about $2.4 billion and hold development rights on more than 20,000 acres of Edison land.

The Legislature must approve the deal by the time it adjourns Friday. Lawmakers are also in a special session devoted to energy issues, which could last longer than the regular session.

The state’s other large utility, Pacific Gas and Electric Co., filed for Chapter 11 bankruptcy in April, after amassing about $8.9 billion due to last year’s sky-high electricity costs. Edison says it has accrued $3.9 billion in debts.

Now, the Senate has an altered version of Davis’ deal, but it appears unlikely to pass it. The bill currently allows Edison to sell $2.9 billion in bonds.

Instead, senators could “gut and amend” an Assembly measure, reverting the deal to something closer to the version they sent the Assembly.

In that bill, by Sen. Richard Polanco, D-Los Angeles, the utility’s bond issue would be capped at $2.5 billion and the state’s option to buy the grid would be for the lines’ book value. That limit would likely be returned to the Senate version.

Edison opposed that deal, saying it would not return them to financial solvency.

The new plan under consideration by the Senate could also change which Edison customers repay the bonds.

The Senate’s earlier version burdened 1,500 of Edison‘s largest industrial customers with the bond repayment, those who use 500 kilowatt hours during peak times.

The Assembly’s plan spread that out among about 180,000 business customers with peak loads of 20 kilowatt hours. Under both plans, rates would not be increased for any customers.

Senators are now considering a threshold for energy use that would be somewhere in between those two plans, perhaps 125 kilowatt hours.

Senate President Pro Tem John Burton, a San Francisco Democrat, has been reluctant to pass an Edison deal. Maviglio said the governor’s staff was trying to work with Burton’s to come up with something.

“We’re ready and willing to meet when he is,” Maviglio said.

The Senate Energy Committee canceled a tentatively scheduled Thursday evening meeting, after learning a draft of the new bill wouldn’t be completed until late.

Once they have the new plan, the committee is considering amending it into an Assembly bill already in their house. That bill would have to be approved by the energy and fiscal committees, then sent to the floor for a vote by the full Senate.

If that happens, “there’s nothing we can do,” said Assembly Republican spokeswoman Dana O’Donnell. “It’s coming back for concurrence. That means we can’t amend it, we can only either vote on it or not vote on it.”

Consumer groups opposed the bill approved by the Assembly last week.

“We’re working pretty hard to prevent them from doing anything,” said consumer advocate Doug Heller with the Foundation for Taxpayer and Consumer Rights. That organization has promised to mount a ballot measure to reverse any Edison rescue deal approved by the Legislature.

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