Justices to Review Edison Bailout

The state Supreme Court said Wednesday that it would review whether the bailout plan that allowed Southern California Edison to help pay off its debt during the energy crisis was made in violation of the state’s open-meeting law or the 1996 energy deregulation act.

If the court finds that violations occurred, the rescue plan could be voided -- meaning lower rates for customers and possible refunds, according to consumer advocates. It also could wreak havoc for Edison, which has been recovering from its precarious financial position during the 2000-01 energy crisis with the help of the bailout plan.

“There is a great deal of uncertainty about what will happen if they say this pact violates state law,” said Roger Berliner, an energy lawyer who represents Los Angeles County before federal regulators. “Edison doesn’t have a lot of options.”

The state high court said it would rule on potential violations of state law by the California Public Utilities Commission in hammering out the agreement behind closed doors in October 2001. The deal allowed the state’s second-largest utility to keep electricity rates at current high levels until it had paid off the billions in debt it incurred during the energy crisis.

The U.S. 9th Circuit Court of Appeals in September rejected federal law challenges to the rescue plan but asked the state high court to rule on the possible violation of the open-meeting law and of the landmark law that deregulated the state’s investor-owned utilities.

“This is good. The court will find this settlement was legally and procedurally flawed,” said Nettie Hoge, executive director of the Utility Reform Network, the San Francisco consumer advocacy group that challenged the Edison rescue.

Southern California Edison President Robert G. Foster said the charges were baseless.

“We look forward to briefing the court on the validity of the judgment confirming our settlement agreement” with the PUC, he said in a statement.

Gary Cohen, general counsel for the PUC, said the panel was pleased that the court agreed to review whether the bailout plan was reached properly.

“We believe that the highest court in the state is in the best position to decide these critical issues of state law,” he said.

In a unanimous decision in September, the federal appeals court said that by reaching an agreement in closed session, the PUC may have violated the state law that requires the panel to meet publicly when it discusses rate changes. The court also found that the PUC may have violated the state’s 1996 deregulation law by raising rates and giving Edison until 2005 to pay off debts incurred in the crisis.

Although there is no specific date when the court will begin hearing arguments, the case could begin in the spring, sources on both sides said.

On Nov. 1, the utility, a unit of Edison International of Rosemead, posted a third-quarter profit of $352 million, compared with a $413-million loss a year earlier.

The decision to review the case was posted on the Supreme Court’s Web site shortly before the market closed. Edison International shares were up 28 cents at $11.65 on the New York Stock Exchange.