PUC Chairwoman Defends Edison Settlement

SANTA MONICA, Calif. (AP) 11.07.01, 10:10a --

The chief executive of Southern California Edison credited the chairwoman of the state's Public Utilities Commission for initiating settlement talks after legislators failed to approve a plan to help return the company to creditworthiness.

The comments made by Edison head Stephen Frank were made Tuesday at the Milken Institute annual conference on the California economy. PUC Chairwoman Loretta Lynch, who received praise from Frank, also was in attendance and defended the decision to settle a federal lawsuit with Edison.

"We looked at the facts and made the hard choice that we need healthy utilities for a healthy economy," she said.

The plan requires the state to keep electricity rates at current levels for at least two years to help Edison repay $3 billion it owes to power generators and creditors.

"Everybody pays some, nobody pays too much," Lynch said. The settlement is being challenged by The Utility Reform Network, a consumer advocacy group.

On Oct. 30, the 9th U.S. Circuit Court of Appeals granted TURN two weeks to try to convince a district court judge in Los Angeles to permanently block the settlement.

Consumer groups say the deal unfairly makes ratepayers carry the burden of the utility's debt, and that the PUC, staff members of Gov. Gray Davis, and Edison lawyers should not have negotiated in secret.

Edison on Tuesday filed a motion opposing TURN's request for a stay, saying the agreement holds no irreparable harm for ratepayers because the PUC could order refunds if the deal is ultimately reversed. Blocking the settlement, however, would hurt Edison's ability to stay afloat, the company said.

"With or without a stay, ratepayers will continue to pay existing rates, at least for the next few years," Edison said in the motion. "But a stay of the judgment undermines its reliability and thus impairs (Edison's) ability to borrow."

Also on Tuesday, Lynch said she supports calls to renegotiate long-term contracts that lock in higher rates for power than is being charged on the spot market today. The contracts were negotiated by the Davis administration earlier this year in an attempt to bring long-term costs down.

But consumer groups say the deals lock in higher rates and have generated a surplus of electricity, some of which is being sold at a loss.

"I'm not saying walk away," Lynch said. "I don't think sellers want to kill the golden goose of the California economy, which they will do if these contracts get locked down for the next 15 years."

State Treasurer Phil Angelides. who delivered the keynote speech at the conference, said the state should use its $300 billion pension fund and its borrowing power to invest in education, transportation and other infrastructure projects to stimulate an economic recovery and future growth.

Angelides said the state could issue as much as $25 billion in bonds at historically low interest rates and structure them so payments will have a minimal impact on the state budget over the next few years. The investments are necessary as the state faces a projected budget deficit of between $8 billion and $14 billion, Angelides said.

Angelides made a similar plea at an economic summit called last week by Davis, who said he would consider issuing bonds to finance a state tourism campaign if private companies would split the bill.

California's economy should recover from a mild recession by the end of next year, according to an economic forecast issued by the institute.

-- PHO (owennos@bigfoot.com), November 07, 2001