2 Scary B-Words: Bailout, Bankruptcy

Political guru Richie Ross advises legislators to run if they see any bill that looks like a utility bailout. Don’t touch it even if the house leader begs or the governor berates.

“ ‘Bailout’ is a bad word,” Ross says. “Voters don’t feel they’ve been treated fairly by utilities. They figure utilities have brought it all on themselves. . . . ‘Bailout’ to the voters means ‘we pay’--no matter how it’s structured.”

Voters--if that means taxpayers--do not pay, really. But Ross knows that an election campaign is no time for a rational discussion of the difference between ratepayers and taxpayers.

Rather, it’s a time for cheap shots and code words--like “special interests” and “bailout.”

Therefore, Ross urges his legislative clients--all Democrats--to vote against any Edison aid bill. This means also siding against the Democratic governor. So far, they have split--two voting for a bill and three refusing.

But Ross’ trepidation reflects most legislators’ skittishness about helping Edison avoid bankruptcy.

“The vast majority of my constituents are thumbs down on any assistance to Edison,” says Sen. Joe Dunn (D-Santa Ana).

That’s despite most of his district being served by Edison--or maybe because of it.

Dunn is a Ross client, but the lawmaker did vote for the Senate’s version of an Edison rescue plan--one that Edison said wasn’t good enough and Gov. Gray Davis, therefore, opposed.

“There’s no point in passing a bill unless it makes Edison credit-worthy,” Davis declares. “You have two crosscurrents going. You have people who say, ‘We want to stick it to the utilities’ and ‘We want to make them credit-worthy.’ Well, those work at cross-purposes. . . .

“I’m giving everyone a few days just to chill out.”

Davis intends to call the Legislature back to Sacramento Oct. 2. The sooner Edison can be made credit-worthy, he notes, the sooner it can resume buying electricity for customers and the state can get out of that business.

“Some relationship repair has to happen first,” asserts Senate Energy Committee Chairwoman Debra Bowen (D-Marina del Rey).

Not only political anxiety but personal animosity is affecting Senate attitudes.

Many senators, including Bowen, were offended when Davis issued a statement on the final night of the legislative session, Sept. 14, lamenting that “the Senate has not gotten the job done.”

Fairly innocuous, most people might think, but the comment touched raw nerves in the sensitive Senate. And it set off President Pro Tem John Burton (D-San Francisco).

Last week, Burton told reporters he didn’t know how a compromise could be reached between his house and forces--the governor, Assembly and Edison--that favor a more generous rescue plan.

“[Senators] aren’t going to vote for something they think is morally wrong and politically dangerous,” Burton said. “Small businesses and homeowners should not be bearing the burden for something that wasn’t their doing.”

Nobody’s asking them to. But a lot of bombast is flying, and that’s why Ross is cautioning lawmakers to duck.

This much already has been agreed to by Davis, Edison and most Democrats of both houses: Edison should be authorized to sell bonds to help pay off its $3.9-billion debt. The bonds should be repaid with a small fraction of current electricity rates. Only Edison business customers should bear the burden. No homeowners. No rate hikes. No tax money.

The fight is over how much borrowing to allow and exactly which businesses would have to bear the bond burden.

Who bears the burden is crucial because all other customers probably will be getting rate cuts as power costs drop.

The Senate passed a bill authorizing $2.5 billion in bonds to be repaid by roughly 3,600 big businesses (those burning at least 500 kilowatts). Edison said that wasn’t a large enough ratepayer pool.

The Assembly approved a $2.9-billion bond and a payer pool of 180,000 medium-to-big businesses (20kw). A Senate consensus was jelling over a 50,000-customer pool (50kw) when the session ended.

Since then, PG&E; has filed its reorganization plan in federal bankruptcy court. It would allow the utility’s nuclear and hydro plants to escape state regulation. Ultimately, PG&E; could become one of the generator-gougers.

“A regulatory jailbreak--a disaster for consumers,” says Assemblyman Fred Keeley (D-Boulder Creek), a lead lawmaker on energy.

Edison is being pressured by its creditors to follow PG&E.;

It may boil down to whether Sacramento wants to retain control over California’s private utilities--or turn it over to Washington and the gouger-friendly Federal Energy Regulatory Commission.

Which word is going to be sounding worse as we tumble toward a recession--”bailout” or “bankruptcy?”