SCE Scuttles Bid for Lines
Southern California Edison aborted a private company’s plan to bid $1.8 billion for the utility’s massive transmission network Wednesday, saying instead that it will stick with California Gov. Gray Davis’ offer for the 12,000-mile grid of electric lines.
Trans-Elect Inc., a Washington, D.C.-based firm trying to put together a private transmission grid in California, said it still wants to acquire the system but will wait to see whether the $2.8-billion acquisition agreement between Davis and SCE is approved by the state Legislature.
“We are in the business of buying transmission lines but we don’t want to go where we are not wanted,” said Robert Mitchell, executive vice president of Trans-Elect.
SCE said it agreed to sell only the grid to the state as part of a larger financial plan to keep it solvent.
“Under no circumstances whatsoever will Edison entertain any offer for sale of its transmission system. It is not for sale, nor did we ever intend it to be for sale nor do we want to sell it,” Edison International, the Rosemead-based corporate parent of SCE, said in a statement Wednesday.
Still, some analysts believe that SCE should pay more attention to outside bidders for its transmission lines because such a transaction could put SCE on the road to financial health without government intervention.
“It makes sense to find out if there is a private company that can buy and maintain the lines,” said Douglas Christopher, a utility analyst at Crowell, Weedon & Co. in Los Angeles.
Trans-Elect has yet to consummate a deal, and Christopher said he couldn’t “vouch for the validity” of its efforts to purchase the SCE transmission lines. Yet the company has some backing, including an investment from the financial arm of General Electric Co. and an agreement from GE to invest in Trans-Elect acquisitions in the U.S.
Christopher said he suspects one reason why SCE continues to push for the state bid even though it has received little legislative support is because it would receive “a long-term annuity” in the form of a contract to maintain the lines for the state.
Founded by former power company executives, including Frederick Buckman, former chief of the private Portland, Ore.-based PacifiCorp, Trans-Elect wants to purchase grids and gain efficiencies through their centralized operation. It has talked about purchasing the networks of Pacific Gas & Electric Co., the San Francisco-based utility that sought bankruptcy court protection in April, and San Diego Gas & Electric, which signed an agreement last week to sell its 1,800-mile grid to the state for $1 billion.
“Their design is to actually go in and leverage and double leverage their acquisition and then to seek regulatory approval from the Federal Energy Regulatory Commission to get higher-than-historic rates of return on the leveraged structure so they can support themselves,” said James Avery, SDG&E; senior vice president of fuel and power operations.
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Times staff writer Nancy Rivera Brooks contributed to this report.
