May 2, 2001

Edison Pact to Be Considered by California Lawmakers

(Sacramento, California) Edison International’s agreement to sell power lines to the state for $2.76 billion to avert bankruptcy will be put before California lawmakers tomorrow, an aide to Governor Gray Davis said.

The governor’s staff is meeting today with the planned sponsor of the bill, said Davis spokesman Steve Maviglio. Maglio wouldn’t name the sponsor or release the bill.

Edison, owner of No. 2 California utility Southern California Edison, and PG&E’s Pacific Gas & Electric, have accrued more than $14 billion in losses buying power at prices higher than they have been allowed to charge customers. Under California’s deregulation rules, wholesale-power prices are allowed to float while customer rates were frozen temporarily.

The Edison agreement needs the approval of lawmakers, many of whom say they are opposed to it because it appears to be a better deal for Edison than for the state. Maviglio said the governor’s staff believes it can get the two-thirds majority needed in the Legislature for approval.

“It’s going to be a squeaker,” he said.

Rosemead, California-based Edison agreed on April 9 to sell its power lines to the state. Under the agreement, Edison would be allowed to issue $2 billion in bonds to pay off debts.

Davis is holding one-on-one meetings on the Edison agreement with both Democrats and Republicans in the Assembly today, said Joseph Fichera, Davis’s financial adviser on energy issues. Davis also will meet with members of the state Senate, Fichera said.

San Francisco-based Pacific Gas & Electric, California’s largest electric utility, filed for bankruptcy protection last month, saying it couldn’t come to an agreement with Davis on a financial-rescue package similar to Edison’s.

Edison shares rose 6 cents to $9.37 today. PG&E shares fell 4 cents to $8.96.

–Daniel Taub in (Sacramento, California) (310) 770-1292 or dtaub@bloomberg.net, through the San Francisco newsroom (415) 912-2980/dfr/mtw