California power cash fears grow

By Christopher Parkes, Los Angeles Published: January 30 2001 21:35GMT | Last Updated: January 30 2001 22:48GMT

Southern California Edison, one of the west's leading electricity companies, will run out of cash in two weeks at the most, and its parent has neither the reserves nor borrowing ability for a bail-out, an official audit has found.

The findings by KPMG, hired by California's Public Utilities Commission, confirmed claims from the company and its parent, Edison International.

They again highlighted the relentless drain of high wholesale electricity prices.

While Gray Davis, governor, ordered more cash to be released from reserves, the legislature continued work on a plan to issue bonds to cover power costs in return for stock options in the utilities.

Still believing that the recovery of share prices in Edison and PG&E - now under way - would cover the state's costs, Mr Davis said the audit did not convince him further rate increases would be needed.

Critics said audit evidence that SoCal Edison transferred almost $5bn in dividends to its parent between 1996 and the end of last November proved it was not as hard-pressed as claimed.

The audit showed the company had debts of $4.5bn, $1.2bn in cash and would be in default or overdue on due payments of $1.4bn due by tomorrow.

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-- Martin Thompson (mthom1927@aol.com), January 30, 2001