California governor reaches deal to buy Edison's power lines
Tuesday, April 10th 2001, 12:00 am
By: News On 6
LOS ANGELES (AP) _ Southern California Edison's customers will get a break from surging electricity rates thanks to the cash-starved utility's agreement to a $2.76 billion deal allowing the state to buy its transmission lines.
Gov. Gray Davis announced the deal Monday, in which the state's second-largest utility also agreed to a 10-year deal to provide low-cost power to customers.
The deal is a key part of the governor's plan to keep SoCal Edison solvent. It would give the utility money to reorganize its debts and pay power generators, many of which have not been paid since November.
``We will be well-served by having financially healthy utilities with skilled and experienced employees,'' said Edison International chief executive John Bryson.
The deal still requires approval by state legislators and regulators.
``This agreement proves good things can happen when the parties are responsible, resolute and stay at the table,'' Davis said Monday. ``If you walk away from the table, nothing can get done.''
Pacific Gas and Electric Co., the state's largest utility, filed for federal bankruptcy protection on Friday without notifying Davis of its plans.
On Monday, PG&E asked U.S. Bankruptcy Judge Dennis Montali to issue a temporary restraining order against the state Public Utilities Commission _ a request that PUC General Counsel Gary Cohen called a ``declaration of war'' against the commission and its authority to regulate the utility.
The PUC says the utility owes the state more than $8 billion for electricity that the Department of Water Resources bought on behalf of the utility's customers since January. PG&G maintain the commission has miscalculated.
Davis said there was still room for a deal with PG&E if the company wanted to come back to the bargaining table. But PG&E said it would continue to pursue a resolution to its problems through the bankruptcy court.
``We are pleased that Southern California Edison, given its set of facts, and the state have been able to reach an agreement,'' PG&E spokesman Ron Low said. ``Given our set of facts, we continue to believe that a Chapter 11 reorganization is the most feasible means to reach a solution.''
Judge Montali is to hold another PG&E bankruptcy hearing Tuesday to continue determining which creditors will be paid, and in what order.
Critics of the Edison deal attacked it Monday as expensive and impractical. Republican Assemblyman Dave Cox said the power lines could require billions of state dollars to upgrade.
``My guess is the governor will have a difficult time finding a single Republican who is interested or who believes that purchase of the grid was a good business transaction,'' he said. ``It's hard to see any benefit.''
The memorandum of understanding signed Monday gives the utility the right to back out of the deal if the PUC does not implement certain changes within 60 days.
Edison wants a half cent per kilowatt hour dedicated to repaying the utility $2 million it says it lost by buying power at high wholesale rates and selling it at frozen retail rates.
PUC Chairwoman Loretta Lynch said she would expedite consideration of the proposed deal.
Investors were pleased by the news, sending shares of Edison up $2.25, or 25 percent, to $11.17 in early trading Tuesday on the New York Stock Exchange. PG&E also surged, rising $1.52, or 22 percent, to $8.42 on the NYSE.