02/03 13:19 California Takeover of Transmission Proposed, L.A. Times Says By Jonathan Berr

Sacramento, California, Feb. 3 (Bloomberg) -- California Senate leader John Burton plans to introduce a bill next week that would give the state control of the electricity-transmission lines of its two biggest utilities, the Los Angeles Times said.

Giving up the networks is Senate Democrats' price for helping Pacific Gas & Electric and Southern California Edison avoid bankruptcy, Burton told the paper. The assets are valued at $3 billion to $4 billion, the paper said.

Governor Gray Davis has advocated that the utilities surrender assets or give the state an equity stake in return for aid. He signed a bill Thursday that allows the state to issue as much as $10 billion in bonds to buy power for the utilities, which no longer have credit with suppliers.

The utilities don't want to give up assets, the paper said. Burton, the Senate Pro Tem, told the Times that the companies can ``get their money elsewhere'' if they don't agree to the plan.

A takeover of the transmission systems would hold down costs for consumers and give the state some control over generators, Burton told the paper.

PG&E Corp., based in San Francisco, owns Pacific Gas & Electric. Edison International, based in Rosemead, California, owns Southern California Edison. Davis said this week the state might help the companies pay some of their more than $11.5 billion in power-buying debt if it gets equity positions.

The utilities are facing bankruptcy because the prices they paid for power soared and they weren't allowed to pass on the higher costs to customers. Average electricity prices in California were four times higher last year than in 1999.

The power shortage may worsen this summer because of a lack of water needed to drive hydroelectric plants, the Times said. The Sierra Snowpack, which provides much of Southern California's water, is about half of normal levels, the paper said.

State officials warn of a possible 80 percent cut in deliveries to farms and cities, which may lead to more groundwater pumping that will require even more energy, the paper said.

(Los Angeles Times 2/3)

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-- Martin Thompson (mthom1927@aol.com), February 04, 2001