Gov. Davis shops plan to rescue Edison Costly bankruptcy must be avoided, he tells lawmakers By Jennifer Coleman The Associated Press April 18th, 2001

---------------------------------------------------------------------- SACRAMENTO -- The bankruptcy filing by Pacific Gas and Electric Co. caused wholesale electricity prices to increase, showing why the state must save the other ailing utility, Southern California Edison, Gov. Gray Davis said Tuesday.

Davis first met behind closed doors with Senate Republicans and then with Assembly Democrats to sell lawmakers on his plan to buy Edison’s transmission lines to help the money-losing utility.

The state spent an average of $57.4 million per day the week PG&E filed bankruptcy, Davis said. The week following the filing, the state’s daily average rose to $73.2 million, he said.

"So, for those who say bankruptcy’s not so bad, it is," Davis said. "The more people indicate that bankruptcy is not a bad option, the more they (generators) raise their prices."

PG&E, the state’s largest utility, filed for Chapter 11 bankruptcy protection on April 6. The utility says it has accumulated billions in debt buying costly wholesale electricity. The state’s 1996 deregulation law prevents PG&E from fully recovering those costs from customers.

The state has bought power for Edison and PG&E since January, when creditors cut off both debt-ridden utilities. In May, the state general fund will be reimbursed that money as soon as the state issues $10 billion in revenue bonds.

Assembly Speaker Robert Hertzberg, D-Van Nuys, said lawmakers would examine the governor’s plan and would have the right to make changes to it.

Davis said he was amenable to changes in the plan, as long as "the balance we achieved is maintained so Edison still believes it’s better than bankruptcy."

Key state senators said they fear PG&E’s bankruptcy proceedings won’t fully examine whether the utility’s debts resulted from paying unjust costs.

The Senate’s Energy Committee met for nearly three hours Tuesday to discuss how the PG&E bankruptcy filing could affect the state.

Committee chairwoman Debra Bowen, D-Marina del Rey, said she saw only two ways for PG&E to pull out of bankruptcy: Raise rates or challenge the high wholesale electricity costs that have caused the utilities to amass billions of dollars in debts.

"In bankruptcy, my concern is who is going to stand up and challenge the charges?" Bowen said.

Charles Robinson, an attorney for the state Independent System Operator, told the committee the agency likely will challenge the high wholesale costs in bankruptcy proceedings, even though they are not a creditor.

Analysts with the ISO, keeper of the state’s power grid, say electricity marketers and generators have overcharged the state by more than $6 billion. The Federal Energy Regulatory Commission has ordered generators to issue $124 million in questionable charges.

But Gary Cohen, general counsel for the California Public Utilities Commission, said the utility should explain why it hasn’t aggressively pursued complaints against wholesalers.

PG&E, he said, shows "a lack of recognition of their stewardship of the problem."

Sen. Joe Dunn, D-Laguna Niguel, agreed that PG&E should answer questions about why they have not challenged generators’ charges.

"Little if anything was done by PG&E to protect ratepayers from wholesale costs," he said.

PG&E spokesman Ron Low said the utility asked FERC to investigate rising wholesale prices last summer.

"We’ve been consistent in asking federal regulators to look into the problem in California and we’ve asked for price caps for California and the Western region to try and address this problem," Low said.

Committees investigating the state’s volatile electricity and natural gas markets are scheduled to meet this week.

-- PHO (owennos@bigfoot.com), April 18, 2001

Answers

And the beat goes on -- "Committees investigating the state’s volatile electricity and natural gas markets are scheduled to meet this week."

When we're all sitting at home, out of work, and in the dark, the investingations will continue as to "why, is that?", I fear.

-- PHO (owennos@bigfoot.com), April 18, 2001.

Re: committee meetings: It has been said of "Blue Ribbon Panels" that the reason they are so named is, by the time the panel issues a report you would have time to raise a blue ribbon horse and take him to the county fair...

This is perhaps an epitaph of modern civilization: "Died while waiting for a committee to announce the illness."

-- Andre Weltman (aweltman@state.pa.us), April 18, 2001.