State Senate OKs bailing out Edison from bankruptcy

State Senate OKs bailing out Edison from bankruptcy
Assembly plans own version for utility
Lynda Gledhill and Robert Salladay, Chronicle Sacramento Bureau
Saturday, July 21, 2001
,2001 San Francisco Chronicle
URL: http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2001/07/21/MN133267.DTL
Sacramento -- The state Senate approved a plan yesterday to keep Southern
California Edison from falling into bankruptcy, but the bill crafted as an
alternative to the pact between the utility and Gov. Gray Davis faces an
uncertain future.
The bill by Democratic Sens. Richard Polanco of Los Angeles and Byron Sher of
Palo Alto would give the state a five-year option to buy the utility's
transmission lines and would have the state guarantee no more than $2.5
billion of the utility's debt. Edison amassed an estimated $3.5 billion in
debt as wholesale electricity prices increased but retail rates remained
frozen.
The Assembly was also attempting to craft its own version of a deal last
night, but political maneuvering and fears of repeating the same kind of
mistakes that led to California's botched 1996 deregulation legislation
haunted lawmakers.
Davis continued to apply pressure on lawmakers to put a bill on his desk
before Aug. 15, a date set in the original agreement between Davis and
Edison.
Lawmakers were scheduled to start their monthlong summer recess last night,
but failure to pass the state budget meant no one was leaving town.
"It's a firm deadline, which means this issue has to be fully resolved prior
to the end of the legislative recess," Davis said of the Aug. 15 date.
Davis suggested that a conference committee or working group could be used to
iron out differences between the two bills, but it is unclear whether that
could be accomplished in the next few days.
"I have problems with both bills," Davis said. "I am heartened by the fact
that there's a bill moving in each house."
Both houses struggled to garner enough votes to get their respective bills to
a floor vote, and many lawmakers indicated that they were not happy with the
process.
In the Senate, 22 Democrats voted for the Edison plan, while four Democrats
and all 13 Republicans voted no.
Sen. Jackie Speier, D-Hillsborough, said she would vote for the bill in its
current form, but not if any substantial changes are made.
"The Legislature is ill-equipped to try to craft a deal," she said. "This
particular measure -- and only this one -- has the intent and clarity to
protect ratepayers. I'm leery of the bill going to the Assembly and being
cannibalized."
The Senate bill authorizes Edison to issue $2.5 billion in bonds to pay off
alternative energy producers and their banks. The bonds would be paid off
through increased rates charged Edison's largest customers and would not
cover the $1 billion Edison owes out-of-state generators.
Edison maintains that the Senate bill will not make the company creditworthy,
which would put it back in the position of buying power.
The state has been spending upward of $50 million a day on power since
January, and Davis and lawmakers want the rescue plan in place so that the
utility can once again begin buying power. There is also hope that any deal
would be used as a way to get Pacific Gas & Electric Co. out of bankruptcy.
In the Assembly, two competing measures put pressure on leaders to change
their bill. The rescue plan by Assembly Speaker Robert Hertzberg of Sherman
Oaks and Assemblyman Fred Keeley, D-Boulder Creek, was undergoing changes to
garner more support.
Some of the changes included eliminating the purchase of transmission lines
and taking municipal utilities out of the deal.
Assemblywoman Elaine Alquist, D-San Jose, one of the undecided members on the
Edison agreement, said the original bill was too complex.
"It's a cleaner bill," Alquist said. "I think it comes down to whether this
does not affect our constituents and there is not a link to PG&E. I would say
I'm tentatively satisfied."
Alquist and other Democrats said they were concerned about the rushed nature
of the Edison negotiations. Only a few members of the Assembly -- all former
state senators now in the lower house -- voted to approve the 1996
legislation, AB1890, that brought deregulation to California.
Assemblyman Joseph Simitian, D-Palo Alto, said he gave a courtesy vote to the
Hertzberg-Keeley plan in the Appropriations Committee, in order to get the
measure to the Assembly floor and continue debate.
"As we've learned from the experience of AB1890, the devil is in the details.
I have a lot of questions," Simitian said. "The difficulty is that very
little gets done here until there is a deadline, and then once there is a
deadline, too much gets done."
Hertzberg acknowledged that some Assembly members were afraid the bill was
getting rushed, but he said lawmakers are well-informed about the energy
crisis and its details. He said they have had 200 hours of caucus meetings
and countless hearings on the crisis.
A wild card in the Assembly's plan was a bill by Assemblyman Rod Wright, D-
Los Angeles, that garnered Republican support. The so-called "straight
bailout" would give Edison its $3.5 billion through a $2-a-month fee levied
on utility ratepayers. It was stuck in the Assembly Appropriations Committee.
E-mail the reporters at lgledhill@sfchronicle.com and
rsalladay@sfchronicle.com.
,2001 San Francisco Chronicle ? Page?A - 3