Doubtful CA Legislature Will Act Soon to Save Edison
California's lower house in the state legislature, the Assembly, went on recess last week like its state senate counterparts and failed to come back to vote on a utility bailout bill, although some discussion among the legislative leaders and various stakeholders did take place. As a result, the state lawmakers are unlikely to act on anything before the Aug. 15 deadline set in the deal between the state and Southern California Edison Co.
The legislators do not return from their hiatus until Aug. 20. Edison's Robert Foster, senior vice president for governmental affairs, said Friday that the parties have now agreed to let the deadline slip and the working group will seek to have a new legislative proposal ready for the legislature's expedited consideration when it returns on the 20th.
The Assembly Speaker planned to call back lawmakers last Friday for a vote on what he hoped would be a new compromise bill. Edison and the assembly working group are attempting to find a way to "improve" the senate's current legislative solution, Foster said.
The legislation (SB 78XX) passed by the senate just before it recessed July 21 is considered a placeholder, and the Assembly is struggling to come up with the long-sought solution to the financial woes of the state's second-largest private sector utility. Gov. Gray Davis belatedly signed a $103 billion state budget July 26 and nary a word about the electricity crisis was mentioned.
Pleading for a comprehensive solution that allows it to avoid bankruptcy, Edison senior officials have urged the legislature to provide help at the same time they categorized SB 78XX as insufficient to stave off potential bankruptcy.
"There is no denying that the state's energy crisis and (Edison's) financial crisis remain unresolved," said Robert Foster, Edison senior vice president for external affairs in a letter written as lawmakers recessed. "Legislative action is needed to equitably deal with past procurement debts and to provide a regulatory framework that will restore trust in California."
Coming on the heels of the utility's parent, Edison International, announcing more dire quarterly earnings earlier this month with a continuing sea of red ink in the second quarter ($102 million loss, or 31 cents/share) and continuing suspension of dividends, observers were noting last week that bankruptcy may soon become unavoidable, and a growing contingent of lawmakers appear to be supportive of letting that happen.
SB 78XX passed on a 22-17 vote, and according to Edison, offers "too little, too late," compared to the original deal struck with Gov. Gray Davis. The new bill, a variation of the governor's memorandum of understanding (MOU), would give Edison the authorization to sell $2.5 billion in bonds to be repaid through utility rates to pay $1.2 billion in back-due wholesale power bills and $1.3 billion to qualifying facility (QF) suppliers, but would still leave the utility about $1 billion short, and it would not include state purchase of the transmission assets for $2.76 billion.
Observers predict that any legislative compromise--whether in the next few weeks or after a return from the recess--will have a better chance if the original proposal for the state to buy the transmission lines is dropped. If it is, as happened in SB 78XX, a provision in a similar MOU with Sempra Energy's San Diego Gas and Electric Co. will drop out, too. That was the only part of the SDG&E deal requiring state legislature approval. The rest hinges with the CPUC.
Other aspects of the SDG&E deal with the governor are scheduled to be taken up by the CPUC when it next meeting holds a business meeting Thursday (Aug. 2).
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