Edison Stays in Financial Limbo as Lawmakers Debate Rescue Plans
Southern California Edison is in a holding pattern between solvency and bankruptcy as the state Legislature on Friday began considering plans for rescuing the ailing utility.
In a conference call with the holders of $931 million in defaulted SCE notes and bonds, a senior executive at Edison International, SCE’s Rosemead-based corporate parent, said the utility’s finances are no longer deteriorating. Chief Financial Officer Theodore Craver Jr. said he remains concerned, however, that creditors might force the utility into bankruptcy if legislators fail to act soon enough.
Moreover, he is concerned about a pending California Public Utilities Commission decision on how the state’s utilities and the Department of Water Resources will split revenues from a rate increase in June. The state water agency has purchased billions of dollars of electricity on behalf of the state’s troubled investor-owned utilities.
A PUC decision that would prevent Edison from covering its costs would plunge the utility back into financial chaos.
Nonetheless, the company is “encouraged to see some real action on some real bills,” Craver said.
Davis’ Plan Has Little Backing by Lawmakers
Wall Street also was encouraged by the movement at the state level. Shares of Edison International rose 35 cents to close at $14.80 on the New York Stock Exchange on Friday. The stock rose 11% this week.
SCE posted billions of dollars in losses from May 2000 to January 2001, when it bought electricity in the wholesale power market but was unable to recover its costs from customers, who were protected by a state utility rate freeze.
It reached an agreement with Gov. Gray Davis earlier this year to sell SCE’s power transmission grid to the state for $2.76 billion.
The company would use the funds to retire much of its debt and would also issue long-term bonds to pay off the rest. Customers would foot the cost of those bonds.
Davis’ plan has received little support in the Legislature, which must approve the deal.
On Thursday, Assembly members unveiled a proposal that would try to shield homeowners and smaller businesses from higher rates.
The proposal outlined by Assembly Speaker Bob Hertzberg (D-Sherman Oaks) would force industrial consumers to pay SCE’s debts in exchange for allowing big consumers the chance to negotiate their own power deals on the open market.
A rival proposal being discussed in the state Senate would abandon the controversial plan to purchase SCE’s transmission grid.
