PG&E; Won’t Block Bond Sale

California’s long-delayed effort to sell $12.5 billion in bonds to finance its costs during the energy crisis could proceed within months now that Pacific Gas & Electric Co. has said it does not intend to interfere with the deal.

In a letter to state Treasurer Phil Angelides, Gordon R. Smith, PG&E;’s chief executive, said this week that although the utility is concerned about the state’s plans to charge PG&E; customers for electricity the state purchased, it will not block the bond deal.

The declaration is significant because PG&E; was widely assumed to be the most likely party to derail the energy bond sale by challenging the Public Utilities Commission’s rate decisions in court.

Angelides hailed the letter Wednesday but cautioned that many other details need to fall into place before he will take the massive bond deal to Wall Street.

Even when all legal and procedural hurdles are cleared, Angelides estimated that it would take 12 to 15 weeks to sell the bonds, and added that he has never thought it could happen before the next fiscal year begins July 1.

“This is good news, not bad news, and PG&E; has done the right thing in the public interest,” Angelides said. “The right course of action is to not hold the state hostage” as PG&E; haggles over differences with the state.

California, which is facing a $17.5-billion budget shortfall, needs to complete the bond sale to pay back the state treasury for more than $6 billion the state spent on electricity. The state entered the power business last year after private utilities ran into financial trouble during the power crunch and could no longer afford to supply their customers.

The financing also will allow the state to pay off a $4.3-billion loan it took out last year to stop the drain of the crisis on the general fund. And it is intended to help the state meet its $43-billion long-term commitment to purchase electricity as a means of stabilizing the power market and preventing blackouts.

The bonds are to be paid off by customers of the private utilities over 10 to 15 years.