State Lawmakers Return to Energy Dilemmas

California lawmakers return today from vacation to confront a question they have long avoided--do they have the will to save Southern California Edison, the state’s second-largest utility, from bankruptcy?

After their brief summer break, they face the puzzle of how far the state will go to relieve the stricken utility of its $3.5-billion debt, who will pick up the tab and what the state will receive in return.

It appears increasingly likely the legislators may choose not to answer any of those questions--leaving one of the biggest casualties of the state’s power crisis dangling on the edge of financial ruin.

On Sunday, a spokeswoman for Gov. Gray Davis told Bloomberg News he is working with state lawmakers to amend legislation to keep SCE out of bankruptcy.

Davis’ plans will become evident this week, spokeswoman Hilary McLean said, without offering more details.

California’s biggest utility, PG&E; Corp. unit Pacific Gas & Electric, sought bankruptcy protection in April, a move widely interpreted as a no-confidence vote in the governor’s strategy for resolving the state’s energy crisis.

Since then Davis has repeatedly said SCE will not be allowed to follow suit. But questions over how the utility’s finances will be put back in order continue to multiply, with few answers in sight.

Competing bills from both houses of the Legislature, which would allow the utility to float bonds to repay a portion of its debt, are struggling to gain support from Davis, SCE, consumer groups and many members of the Legislature.

Edison is pushing a plan allowing SCE to issue as much as $3.5 billion in bonds backed by utility rates to repay debts run up under the state’s flawed deregulation plan.