Edison Still Backs Davis Rescue Plan
Southern California Edison executives said Friday that they will continue to push for implementation of a rescue plan devised by Gov. Gray Davis despite the California Public Utilities Commission’s failure to meet a deadline to make regulatory changes called for in the agreement.
Executives at the financially troubled utility also said they have entered into sensitive negotiations with small power generators owed a combined $1.3 billion in an effort to stave off creditors’ pushing SCE into an involuntary bankruptcy.
“We are disappointed by the slow action of the PUC. However, in the last several days we have actually seen some progress,” said Theodore Craver Jr., chief financial officer of the utility’s parent, Edison International in Rosemead.
In a conference call with creditors, Craver said it remains in the company’s best interest to continue “to work within the framework” of the agreement with the governor.
The so-called memorandum of understanding calls for SCE to sell its electricity transmission lines to the state for nearly $2.8 billion. SCE also would issue ratepayer-secured bonds to pay off $3.5 billion in debt from purchases of electricity at wholesale prices that were above what regulators allowed the utility to charge customers.
Davis and Edison have pushed for the agreement even though it has gained little support in the state Legislature. Although Davis intended for the PUC to take action on six regulatory changes--mostly dealing with rate setting, nuclear power sales and energy procurement--by Friday, the agreement has an Aug. 15 legislative deadline.
Three of the regulatory changes are on the PUC’s agenda for Thursday, and Edison said it has learned that the commission is examining the remaining issues, though they have yet to appear on an agenda.
The slow pace of efforts to rescue the utility has made Edison executives increasingly anxious that they may be forced into bankruptcy proceedings. Similar problems prompted Pacific Gas & Electric, the Northern California utility arm of PG&E; Corp., to file for U.S. Bankruptcy Court protection in April.
Craver told creditors that SCE is “looking to lend stability to the current legal environment”--code words for saying that the utility doesn’t want creditors filing involuntary-bankruptcy petitions.
He said SCE has started talking to the smaller power generators--known in regulatory jargon as “qualifying facilities”--about how to improve their cash positions. Many of these small companies have invested heavily in alternative technology to generate power and are facing their own cash shortages because SCE and PG&E; have not paid them. The utilities commission is considering a plan that would allow for partial payments in some cases.
SCE also is talking to this group about the possibility of engaging in new long-term power contracts, providing an incentive for their patience.
But the mere idea that SCE might make payments to the generators sparked nervous questions from other creditors competing for the utility’s cash. SCE has defaulted on $931 million of commercial paper and notes.
Craver said the utility “did not want to find itself on the slippery slope where one group leapfrogs another,” but he also noted that SCE needed to buy time to become credit-worthy so that it could resume its normal operations of buying and distributing power.
Edison International shares lost 1 cent to close at $11 on the New York Stock Exchange.
