Electricity showdown in Senate

By David Whitney Bee Washington Bureau

(Published March 14, 2001) WASHINGTON -- In the first congressional showdown since California's electricity debacle grew into a Western regional crisis, the Senate will decide this morning whether to bar cash-strapped utilities from shedding hundreds of millions of dollars in debts for power purchases by filing for bankruptcy protection.

The amendment by Oregon Sens. Ron Wyden, a Democrat, and Republican Gordon Smith, divided California's two Democratic senators while triggering worries by California's governor and its utilities that it would derail efforts to negotiate a way out of the state's electricity mess.

The amendment would primarily benefit the Northwest's huge Bonneville Power Administration that sold power to California under emergency Energy Department orders.

Wyden said the BPA is owed more than $120 million for that power, and that it would be unfair to the Pacific Northwest if Pacific Gas and Electric Co. and Southern California Edison were permitted to "stiff" them for those debts by turning to bankruptcy courts for protection.

But Sen. Dianne Feinstein, with solid backing from Gov. Gray Davis, the utilities and some of the power generators the amendment is purported to help, equated the Wyden-Smith provision to a "run on the bank" because she said it would trigger bankruptcy proceedings that the state is working diligently to prevent.

Feinstein said the amendment would establish a preference among creditors, and that those who lost out would have no choice but to go to court almost immediately to protect their claims against the failing utilities.

That, she said, would almost certainly favor any court actions the utilities might take to dissolve rather than to reorganize, meaning that the companies responsible for distributing power to millions of individual businesses and homeowners would crumble.

"This would have a major economic impact throughout the rest of the United States," she said.

But Feinstein was the lone California voice trying to fend off a regional attack. Sen. Barbara Boxer, her Democratic colleague, backed Wyden and Smith, saying that the entire West Coast is facing an energy crisis for which the states need to stick together.

"The spirit with which this amendment is offered is not the spirit of anger, but the spirit of fairness," she said. "I don't want (California) to be known as a deadbeat state."

Feinstein's sole supporter Tuesday evening was Alaska Sen. Frank Murkowski, the chairman of the Senate Energy and Natural Resources Committee. Feinstein was counting on Murkowski's tepid opposition to the Wyden-Smith amendment to churn up enough votes to defeat the provision.

Murkowski essentially agreed with Wyden and Smith that California utilities should not be allowed to shed their obligations. But Murkowski raised doubts the amendment would work.

"Somebody's got to pay for this," Murkowski said. "I am not sure we know what we are doing here."

At issue is only a small portion of the $12 billion or so the California utilities owe to power generators because, under the state's deregulation plan, they've been unable to collect from consumers the full cost of power during the crisis.

http://www.capitolalert.com/news/capalert02_20010314.html

-- Martin Thompson (mthom1927@aol.com), March 14, 2001