CPUC OKs $7.3-Billion Utility Bond Issue

The California Public Utilities Commission approved plans by the state’s three major investor-owned electric utilities to issue $7.3 billion in bonds to help finance deregulation of the industry. The securities are part of the state’s plan to restructure its electricity industry, ending the existing system of regulated monopolies and allowing customers to choose their power supplier starting in January. Revenue from the bonds will be used to fund a 10% rate cut for residential and small-business customers as well as to pay off utility investments expected to be unprofitable in a competitive market. Consumer groups have vowed to contest the CPUC’s decision, arguing that it places an unfair burden on ratepayers. The consumer advocates also complained the CPUC decision was contrary to state deregulation legislation since it created a link between issuing bonds and the rate reduction. The utilities have said they hope to issue the bonds in early October. San Francisco-based Pacific Gas & Electric Co. requested approval to sell $3.5 billion worth of the new bonds, Los Angeles-based Southern California Edison Co. asked to issue $3 billion and San Diego Gas & Electric Co. plans to sell $800 million.