Creditors Push SoCal Edison Closer to Bankruptcy

LOS ANGELES (KFWB) 9.29.01, 1:10P --

Five major energy producers served notice on Southern California Edison that it must produce a plan to pay them for previous electricity purchases within two weeks.

Reliant, Mirant, Dynegy, Enron, and Puget Sound Energy are believed to be collectively owed about $1 billion. Any three creditors can force Edison into bankruptcy.

The massive debt was incurred last Autumn and Winter when the spot market prices for electricity skyrocketting, but the Governor and PUC would not allow Edison or PG&E to raise their prices to ratepayers. PG&E declared bankruptcy in April 2001.

The timing of the producers' demand coincides exactly with the special session of the state legislature called by the Governor. Both houses of the legislature have been ordered to Sacramento October 9 to deal specifically with plan to help Edison solve its massive debt problem. The legislature adjourned its regular session without approving a bond measure to help Edison, knowing that state help seemed the only alternative to bankruptcy.

Edison had already reached agreement with dozens of smaller suppliers, to whom the investor-owned utlity owed an estimated $1 billion. On Tuesday, Edison reached agreement with the City of Long Beach to pay off its $14 million debt for electricity generated by the city's Terminal Island co-generation plant.

Edison has placed its current indebtedness at $3.9 billion. One of the smaller claimants is Orange County, which holds about $1 million in defaulted Edison bonds in its county retirement fund. Orange County Treasurer John Moorlach has said he'd now be willing to push Edison into bankruptcy himself over that million dollars. (Orange County became the largest municipality to declare bankruptcy in US history in the early 1990s.)

Gov. Davis has proposed that interest on bond sales to rescue Edison be repaid by ratepayers, not taxpayers. The state of California has spent more than $10 billion of taxpayers' money to buy electricity for utilities that could no longer make purchases on the open market, eliminating the previously-projected sgtate budget surplus.

-- PHO (owennos@bigfoot.com), October 01, 2001