Middle Path for Edison
Sometimes the best thing the Legislature can do is nothing. There’s growing sentiment in Sacramento that inaction might be the wisest course regarding the future of the Southern California Edison Co. After the disaster of electrical deregulation, about the last thing lawmakers want is for voters to think they “bailed out” a utility, especially if the plan doesn’t work. At any rate, a cool July eased the energy crisis and rate increases approved last spring have Edison operating in the black again.
Still, the company is saddled with $3.9 billion in debt and no one knows if or when the firm’s creditors might force the Rosemead-based company into bankruptcy. The best course now is probably a little of both worlds: a reduced rescue plan that gives Edison a lot less than it wants but certainly not nothing. Senate and Assembly energy leaders were planning to meet today and Tuesday to hash it out.
The Senate has passed SB 78xx by Sens. Richard Polanco (D-Los Angeles) and Byron Sher (D-Stanford), a slimmed-down version of the agreement Gov. Gray Davis negotiated with Edison in April. It’s probably the best that Edison can realistically expect.
The Polanco-Sher bill makes Edison kick in another half-billion of its own money to pay creditors, gives the state an option to buy Edison’s part of the power transmission grid and puts Edison lands in trust to the state. In exchange, Edison would get $2.5 billion of its back debt retired by part of the rates that customers now pay. By the start of 2003, Edison would be able to resume buying power on its own, relieving the state of that onerous duty. And no bankruptcy judge could order the forced sale of Edison assets such as its remaining power plants, a sale that would not be in the state’s interest.
Assembly leaders have tried to develop a more comprehensive plan that attempts to rearrange California’s power structure for the future. The Legislature should deal with the Edison debt now and handle the future separately.
The only way for a measure to reach Davis’ desk may be for the Assembly to pass the minimalist Senate bill without any change, not even a comma. This would be highly unusual and require the Assembly to swallow a lot of pride. It could happen if the governor and senators give the lower chamber absolute assurance that the other issues Assembly leaders want settled will be handled in separate legislation later this month.
The nothing option, tempting as it may be, would still leave too much uncertainty hanging over Edison and force the state to keep buying power far into the future.
