The creditors’ committee in the Pacific Gas and Electric Co. bankruptcy has “expressed interest” in the deal established with Southern California Edison Co., and the governors’ negotiators are in contact with that body, California’s governor told attendees at a J.P. Morgan technology conference in San Francisco Monday. The governor said he hopes to be able to sell the first increment of the state’s multi-billion-dollar revenue bonds very soon.
Wall Street observers predict the cost of the soon-to-be-sold $10 billion in tax-exempt bonds will continue increasing. The cost has increased half a percentage point since the beginning of the year. The bonds are intended to help repay the state for its power and transmission grid purchases and help stabilize the private sector utilities’ financial positions.
Davis said Sempra’s San Diego Gas and Electric Co. is expected to accept a deal similar to the one with Edison. “[They] will also take something along those lines,” he said, “and we have also had communications with the [bankruptcy] creditors’ committee for PG&E, and they like what we’re doing, so we may be able to even work something out with them.”
Nevertheless, the news media and industry stakeholders see the governor increasingly standing on shaky ground because of his so far unsuccessful attempts to bring together a delicate balance of political, economic and energy infrastructure changes that will allow Edison to avoid bankruptcy court and will coax the bankruptcy judge in San Francisco into a deal for Pacific Gas and Electric Co.’s transmission system. There also is the question of whether the Federal Energy Regulatory Commission will approve the transaction, and how the state will handle being subject to FERC jurisdiction.
The California governor, who has championed the efforts to take over the state’s electricity grid and supports efforts to establish a state power authority, nevertheless emphasized his desire to get the utilities back in the business of buying and transporting power. Even with the sale of the transmission assets, he noted, the utilities would continue to operate the system on a lease-back basis. “I’m tired of running the nation’s biggest utility company here,” the governor said. “That is not what I was trained to do.”
He also emphasized the state’s desire to have more private investment in new power plants. He cited his efforts to streamline the state’s permitting process as a means of getting more private investment now and in the future.
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