The CEO of the miniscule Long Beach, CA-based street lighting company aiming to buy financially crippled Edison International said last week he is establishing a joint powers arrangement among more than 200 cities and townships in the southern half of California to help make the deal economically and politically viable. However, the long shot, high-stakes gambling approach is totally contingent on the California legislature failing to pass a rescue bill for the Edison utility.

State legislative and investor interest is sufficiently strong and by mid-September, City Light & Power Inc. could have a 200-plus city joint powers authority legally constituted, said Bill Simmons, City Light’s CEO, who claimed that 25 cities already have given preliminary approval to joining the specially formed quasi-public sector financing organization, which under state law has to use taxable financing, however.

“We’re trying to convince legislators that as an alternative to the problems these utilities are having, what we are doing is forming a joint power authority of more than 200 local cities, and with an investment banker (Kansas City-based George K. Baum) making a tender offer for EIX (Edison International),” said Simmons, who said he will “pack up his tent and leave” if the offer is rejected. But if he gets an acceptance, City Light would buy all of Edison’s assets, most of which would be sold off to finance the operations of the Southern California Edison Co. distribution system as a joint powers authority.

Simmons said he would “probably” sell all of the Edison utility transmission and generation assets, and that the state legislature has already asked for a right of first refusal to buy them.

“In a point-by-point memorandum proposal we have given the state the right to purchase any of those assets, and they have a high level of interest in having that first right of refusal,” said Simmons, with the caveat that interest was expressed this week, but could change. “If the legislators bail out Edison (the utility), obviously our deal is done. We wouldn’t do anything. If they give [Edison] three-and-a-half billion dollars, they will at least be able to take some of the heat off their back and function as a normal utility.”

Simmons said he intends (“when the timing is right”) to meet with an existing joint powers authority that has financed a number of major generation and transmission projects by Southern California municipal utilities, the Southern California Public Power Authority (SCPPA), based in Pasadena.

“There are probably three or four ways you could form a joint powers authority,” said Bill Carnahan, SCPPA executive director. “But when you get into direct retail service like a utility district, it gets a little more dicey. They are created under a different statute. However, given the fact that we don’t have direct access in California right now and there is no ability for customers to change suppliers, I would question whether they can actually do it if they have no direct ability to serve end-use customers.”

Carnahan, the former general manager of the Riverside (CA) Electric Department, said Tuesday that he had not been contacted by City Light’s people, but he was aware of the proposal and thought that any effort to create a joint powers authority should be supported by those who believe in public power. In any event, Carnahan confirmed that no new state legislation would be required and the new authority could be created under existing laws.

With the concentration of state lawmakers fixed on energy issues these days, Carnahan said that a number of cities are pushing hard for renewed ability for cities to aggregate customer loads in the future. They aren’t interested in acquiring the distribution systems — as City Light is proposing — but at least want to have the ability to aggregate.

SCPPA could be involved in several ways, he said: (1) helping cities jointly acquire transmission and generation assets, or (2) as a place to bring a joint powers “project” to get help creating a municipal system.

“Right now we have a legal joint powers authority drafted,” Simmons said during an interview with Power Market Today. “It is ready to go. And starting just today, we already have 25 cities that have committed through their city managers that they will go to the next step, which is to review and sign the agreement. They already all have a high level of interest in joining a joint power authority.”

Privately held City Light & Power, of which Simmons is the major stockholder, has lined up a former municipal utility executive with more than 20 years of experience to run the joint power authority, and the existing Edison field operations employees would be retained to keep the ongoing power delivery system intact.

The next major step is to continue forming the joint power authority, Simmons said. “It is a timing thing, it takes meetings, takes information and correspondence, but I think that by the end of September we will have enough support to have George K. Baum (the investment banker) go out with letters to five or six Wall Street firms that are interested in being participants in this loan.”

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