USA TODAY
LOS ANGELES — California’s largest utility threw more heat than light on the state’s energy muddle by filing for bankruptcy, power players in the deepening 9-month drama say.
With electric bills climbing and Californians bracing for blackouts this summer, stakeholders in the deregulation crisis are wondering what Pacific Gas & Electric’s surprise action Friday will bring next.
An optimistic view: A solution to the crisis will be sped along by moving the issue of paying off the utility’s $ 9 billion debt to the neutral forum of a court. “This is better than what we had before, we think,” says Gary Ackerman, executive director of the Western Power Trading Forum, a trade group for electricity suppliers.
A pessimistic view: More shortages are coming, and retail rates may become mired in squabbling between U.S. Bankruptcy Judge Dennis Montali and Gov. Gray Davis‘ Public Utilities Commission.
Meanwhile, the lights are still on for PG&E‘s 9 million northern and central California customers.
Here are scenarios envisioned for key forces in the scrimmage:
* The other utilities. Southern California Edison, which owes $ 5.5 billion to wholesalers, says it won’t follow PG&E into voluntary bankruptcy to get a breather from creditors. But unpaid suppliers of energy from solar arrays, windmills and other “alternative” sources may force Edison into bankruptcy.
To forestall this outcome and back up his gibe that PG&E “dishonored itself” in abandoning negotiations with state officials, Davis is working feverishly for a quick deal this week to buy Edison‘s transmission lines for the state for $ 2.7 billion.
But buying and running the power grid can’t be done piecemeal. To complete the package, PG&E‘s lines are needed. The judge may forbid their sale or auction them to private bidders. Davis’ plans are “mortally wounded,” says University of California at Irvine economist Peter Navarro.
* The state government. Sacramento officials, who have spent $ 4 billion buying power for cash-strapped utilities, want to float a $ 10 billion bond issue to make more buys. State Treasurer Phil Angelides says any delays in issuing the bonds, as the bond market weighs the effect of the PG&E bankruptcy, won’t be serious enough to hurt the state budget.
“We may have had one or two new hurdles put in front of us, but we’re confident we can get to the finish line,” he says.
* Consumers. Activist groups say Davis shouldn’t bail out utilities by endorsing rate increases. Some activists view bankruptcy court as a shelter from higher bills. Douglas Heller of the Foundation for Taxpayer & Consumer Rights says federal law doesn’t allow Judge Montali to unilaterally raise rates.
“Bankruptcy court might be the only venue in which we can be somewhat protected,” Heller says. “Gov. Davis has been in full appeasement mode with the blackmail artists from Texas and the utilities. How can we do any worse than that?”
