Republicans May Block Power Bill

A day after California lost its high credit rating, the state’s financial health became more precarious Wednesday when Republican lawmakers threatened to block legislation aimed at quickly repaying the state budget for billions spent buying power.

Frustrated by their inability to extract information from Gov. Gray Davis, Assembly Republicans said they will oppose the repayment plan unless Davis reveals more details about the costs of the state’s emergency electricity purchases. Since January, the state has spent $5.2 billion in general taxpayer money to buy electricity, and the amount is rising by an average of $54 million a day.

Davis has not provided a breakdown of the spending. He has also refused to release contracts he has entered into with independent power producers, despite a lawsuit filed by GOP legislators.

Without information about the power purchases and other energy-related issues, Republicans said, they will block legislation that would repay the general fund by speeding up the issuance of a record $12.4 billion in bonds--even if it means that the state budget for 2001-02 must be slashed.

“Does that mean that some of the governor’s programs that he proposed in his budget may not be financed? Maybe,” said Assemblyman George Runner (R-Lancaster). “But that doesn’t mean that state employees are not going to get paychecks. If we don’t do this in the next week, it doesn’t mean that state parks are going to get closed down.”

Republicans want an independent study of the information, once Davis releases it. They said they don’t want to make a hasty decision and want to make sure Davis has a strategy to get the state out of the power-buying business before they sign off on the bill.

“It is very arrogant for the governor to ask us to vote for something without all the information,” said Assemblyman Tony Strickland (R-Thousand Oaks). “If Gov. Davis wants the support of the Assembly Republicans, he needs to show us this information.”

Democrats had been planning to put the legislation to a vote today. But the Republicans’ threat makes that unlikely. The legislation requires a two-thirds vote in both houses of the Legislature, giving Republicans, who are in the minority, significant sway.

Davis and state Treasurer Phil Angelides say the bill is vital if California hopes to obtain short-term loans of $4.1 billion and sell as much as $12.4 billion in bonds. The loans and bond sales would finance the power purchases and repay the general fund.

Angelides pleaded with legislators to pass the emergency measure this week, even before the Wall Street rating firm Standard & Poor’s downgraded the state’s credit rating Tuesday amid growing concerns about the financial fallout from the energy crisis. Because of the lower rating, the state’s cost of selling some types of bonds will increase.

Assemblywoman Carole Migden (D-San Francisco) held out hope for a compromise. But she warned that voters might not be pleased if the financing deal falls apart.

“Republicans better wise up and realize they too are vulnerable,” Migden said. “All incumbents are going to have to account for their actions in the power crisis. Obstructing the governor’s proposals might be very costly for incumbents if they have no alternative.”

Under a plan approved by the Legislature and signed into law by Davis in January, the general fund is supposed to be reimbursed for power purchases through the bond sale, which would be the largest in American history. The bonds, in turn, would be paid off by consumers of electricity in their monthly bills during the next 12 or 15 years.

However, that bond sale has run into an array of problems.

Citing ambiguities in the January legislation, Southern California Edison and Pacific Gas & Electric are challenging an order by the state Public Utilities Commission that set aside money paid by ratepayers to reimburse the state for the power it is buying. That challenge threatens to indefinitely delay the issuance of the bonds, and thus, repayment of the general fund.

To outflank the utilities, Angelides called for emergency legislation making clear that the state will be reimbursed for its power purchases from money paid by ratepayers. Although the financing was initially expected to total $10 billion, Davis now says the state will need $12.4 billion.

Many Republican lawmakers fear that further rate increases will be needed to finance the state’s power purchases and that the bonds will not be enough to defray the huge costs the state is incurring.

At the same time, Davis pressed hard Wednesday to corral support in the Legislature for his plan to rescue Edison. He agreed two weeks ago to buy Edison’s share of the electricity transmission system for $2.76 billion.

Davis’ aides are negotiating with San Diego Gas & Electric to buy its far smaller piece of the 32,000-mile transmission system. Efforts to purchase PG&E;’s portion of the grid were put on hold indefinitely when the Northern California utility filed for bankruptcy protection earlier this month.

Most, if not all, Republicans oppose the Edison deal. Several Assembly Democrats are skeptical too. “Buying as is on the blind is not a good way to do business,” said Assemblywoman Hannah-Beth Jackson (D-Santa Barbara) during a hearing at which lawmakers questioned Edison executives about the wisdom of buying only that utility’s portion of the grid.

State Senate Democrats met privately to discuss the deal; several said they too were wary.

Even if the repayment legislation were approved, said Sen. Steve Peace (D-El Cajon), he doubts that the state would be able to sell bonds unless the Legislature approves the Edison deal or some as yet unspecified alternative.

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* BAD BOND DAY FOR STATE

California bonds find few buyers amid credit-rating concerns. C1