Power Up Edison Co.
California working families will be the big losers if state lawmakers let Southern California Edison go into bankruptcy. This week’s efforts in the Assembly to bail out the utility, and earlier legislation passed by the state Senate, do not go far enough toward ensuring the utility’s solvency.
The energy crisis is a complex and at times confounding subject. But the basic math involving Edison’s efforts to stay afloat is fairly simple. The private utility owes its creditors $3.9 billion--what it paid in higher energy costs charged by wholesalers at a time when Edison couldn’t pass along the increases to its customers under state Public Utility Commission regulations.
The state Senate approved a bill in July that would have allowed Edison to pay back $2.5 billion of its debt through bonds. That still leaves $1.4 billion, which the utility is unable to pay because it does not have the ability to borrow money. The Assembly proposal, which is supported by Gov. Gray Davis, raises the bond amount to $2.9 billion but would impose restrictions that would make it impossible for Edison to raise the rest of the money.
Under either the Senate legislaton or the Assembly proposals, how will Edison come up with the balance? It can’t. And it is highly likely that the remaining creditors--chiefly power generators--would drag the utility into bankruptcy if they don’t get paid.
Why is that bad for working people? First, an Edison bankruptcy would involve much more than a financial black eye for the state. It could well spark a tailspin of negative reaction in a regional economy that went through a disastrous downsizing during the early 1990s recession, when Southern California lost most of its aerospace and manufacturing plants.
If Edison is saved from bankruptcy by responsible legislation and can resume purchasing energy on its own, then the state can get out of the power-buying business. If Edison goes under, state government may have to use taxpayer money to buy power indefinitely. That would be a huge, continuing drain on the general fund, which finances most state programs and services.
Bankruptcy could put at risk myriad state construction projects that could cost thousands of additional public-and private-sector workers their good-paying, mostly unionized jobs. It could divert money from a host of other vital priorities championed by Davis and many legislators, from improving test scores for public schoolchildren to enforcing minimum wage and work-hour laws protecting farm and garment workers.
An Edison bankruptcy could also spur employers to leave the state or forgo plans to locate or expand here. Already, states such as Illinois and Tennessee have sent teams to lure businesses away from California. Pennsylvania’s governor has appeared in television commercials urging companies to move there, where there is plenty of electricity, the ads note.
Finally, an Edison bankruptcy would imperil the livelihoods of more than 12,000 Edison workers. For them, everything would be in jeopardy, potentially even the union contract protections that many enjoy.
Our elected leaders know that private utilities remain essential for a healthy, job-producing California economy. From procuring power to maintaining the infrastructure that delivers electricity, these utilities make major capital investments in our state.
There would be no merit in any legislative plan that cripples Edison’s financial strength. Before the Legislature adjourns for the year in September it must help Edison return to investment-grade status so it can resume buying power for its customers, and get the state out of the electric business.
