Dow Jones Newswires
LOS ANGELES (Dow Jones)–A bailout of Edison International (EIX, news, msgs) utility Southern California Edison is unaffordable, unfair, unnecessary and probably unlawful, leading consumer advocate Harvey Rosenfield wrote state legislators Tuesday.
Helping the utility reach financial solvency does nothing to address price-gouging by generators, which has led to the state’s spending billions on power as well as rate hikes, the letter says. The burden of restoring the utility should rest with its parent, which can sell off non-essential assets, cut expenses and borrow money to help SoCal Ed, the letter says.
In early April, Gov. Gray Davis struck an agreement with SoCal Ed to buy its transmission lines and help with a bond issue to help the utility regain financial health. While most lawmakers say the deal is dead in the Llegislature, several alternate proposals still are being considered in the Assembly and Senate.
“The structure of the (governor’s agreement) and the various ‘Bailout Lite’ proposals now floating around Sacramento presume the sale of bonds that rely upon a legislated ‘Dedicated Rate Component’. DRC is a euphemism for ‘securitized’ rate increases….a new and controversial procedure that raises significant legal questions,” Rosenfield says in the letter.
Lawmakers should rewrite legislation to ensure that all money collected from a projected $12.5 revenue bond sale be used to repay the state’s general fund, from which the state has been borrowing for power buys. The governor should also be barred from using general fund money without prior legislative approval, once the amount of the bond sale has been reached, the letter says.
Rosenfield, an attorney and founder of The Foundation For Taxpayer and Consumer Rights, has been a powerful force behind several state ballot initiatives that have altered or killed legislation.
The letter was also signed by FTCR advocates Doug Heller and Jamie Court.