Bailout Scheme for Edison Fails Tests Again ...

At a late night session Thursday, the California Assembly emulated its deregulation forebears, narrowly adopting another complex, half-understood energy bill from the back rooms.

There are many problems with the proposed state bailout of Southern California Edison. Here are the most fundamental:

* The bailout is much bigger than advertised . Backers, including Gov. Gray Davis, parent company Edison International and some Los Angeles progressives, advertise it as a $2.9-billion deal. In reality, when interest on bonds and other benefits are added in, it will cost closer to twice as much.

* Tangible assets for the public, once central to the deal, have been stripped from it. The Edison rescue was to center on the state’s acquisition of the utility’s transmission lines. Ownership of the grid would have given the state leverage it has lacked over power generators, and state ownership would make critically needed upgrades cheaper to finance. This fell away when Pacific Gas & Electric declared bankruptcy this spring, taking a huge chunk of the private grid off the market. While some Sierra lands receive protection from development, the state gains no ownership. Coastal and desert lands are unprotected.

* Edison already has received three state bailouts. First it, along with the other big private utilities, received billions in a bailout of “stranded assets,” most notably nuclear, that was part of the 1996 deregulation deal. It received billions more as part of the above-market consumer rates locked in by the deregulation deal--until companies that bought the power plants Edison cleverly sold them turned the screws last year. These funds enabled Edison International to run a high-flying global merchant power operation. Then Edison received a third bailout earlier this year, when the state spent $1 billion to replace power lost from the troubled San Onofre nuclear plant.

Edison is hypocritical in coming to the Capitol with its hand out yet again, especially given its central role in pushing through the deregulation scheme from which it now wants to be rescued. Edison International CEO John E. Bryson trades on his past progressive status as a Natural Resources Defense Council co-founder to distract from reality. When Gov. Pete Wilson signed deregulation into law, Bryson called it “a great day for us.”

Yet even with the billions Edison has gotten in previous bailouts, a state rescue effort might be justified were the process not so remarkably compromised. Davis sent Michael R. Peevey, a former Southern California Edison president, to represent the state in negotiations with Edison. Not surprisingly, this led to a generous deal for the company, with the state negotiating for things that the state Public Utilities Commission could have required the company to do anyway. Although that deal died, what is now on the table is fatally flawed by the sweetheart deal template from which it sprang.

So eager is Davis to bail out Edison that he would allow big business customers to cut their own private power contracts. This could leave the rest of us holding the bag on his hugely expensive long-term power contracts.

Perhaps worst of all is the tremendous distraction caused by the months of maneuvering to save Edison from its own miscalculations. As we emerge from panic mode, California has serious problems, including a new crazy-quilt of state energy agencies and long-term power contracts that perpetrate a “green” blackout, ignoring renewable energy in favor of a new generation of fossil fuel plants.

The situation would have been far more rational and efficient had everyone involved not had to waste inordinate amounts of time dealing with the special pleadings of one privileged corporation.

Enough.