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Wall Street is giving a big thumbs up to California Governor Gray Davis‘ proposed deal to buy Southern California Edison‘s transmission lines for $ 2.7 billion and to allow Edison to recoup part of its multibillion-dollar debt from consumers. Share of the utility’s parent company jumped $ 2.46, or 27 1/2 percent, today. But the response from consumer groups hasn’t been so warm, as Laura Sydell reports.

LAURA SYDELL reporting:

Just days after Pacific Gas and Electric’s widely publicized bankruptcy filing, Governor Davis took an action he hopes will head off a similar fate for Southern California Edison. Like PG&E, Edison is deeply in debt, the result, it claims, of the state’s misguided energy deregulation scheme. But the governor’s proposal sent parent company Edison International stock prices up and pleased analysts like Douglas Christopher of Crowell, Weedon & Company.

Mr. DOUGLAS CHRISTOPHER (Crowell, Weedon & Company): I think they hammered out a fantastic deal.

SYDELL: Consumer groups agree, it is a fantastic deal for Edison, but not for California taxpayers. Harvey Rosenfield, a consumer advocate with the Foundation for Taxpayer and Consumer Rights, claims parent company Edison International has walked away with at least $ 4 billion made from the benefits of deregulation.

Mr. HARVEY ROSENFIELD (Foundation for Taxpayer and Consumer Rights): The parent company has the assets. They ought to bail out the subsidiary. We call it family values, corporate family values.

SYDELL: But a bailout by Edison International would put the strategies and the financiers of the parent company’s other businesses in peril, says analyst Christopher.

Mr. CHRISTOPHER: Looking from that standpoint, would have made the entire thing unstable and thrown us into an even more desperate and volatile situation.

SYDELL: A spokesperson for Edison International says they are returning more than $ 400 million to the state of mostly tax savings and they are giving up their transmission lines. Nonetheless, Southern California Edison may not be out of hot water. Impatient creditors may yet force the company into bankruptcy if consumer objections slow down approval by the state Senate. For MARKETPLACE, I’m Laura Sydell in San Francisco.

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