Davis calls Calif Senate session on Edison

SACRAMENTO, Sept. 26 (UPI) -- After chiding the state Senate two weeks ago for adjourning until January, leaving financially-troubled Southern California Edison without a rescue package, California Gov. Gray Davis Wednesday called the State Legislature back into session to once again tackle what has become an increasingly contentious political issue.

Edison, the second-largest utility in the state, was battered for nearly a year by soaring wholesale electricity prices and supply squeezes that caused a string of rolling blackouts. The likelihood of blackouts has largely faded for the time being, however critics have now questioned the need to ride to the company's rescue using taxpayer dollars.

Senate Leader John Burton said Wednesday that there has been no practical reason to put a rescue plan up for a final vote two weeks ago, and there was no reason for Davis to call the legislature into special session next week.

"Whatever we do, Edison says it's not enough; they want a flat bailout," Burton told reporters. "We're talking about bankruptcy here, not about (Edison) going belly up."

Although many lawmakers indicated they would prefer to wait until the new legislative session begins in January to tackle the Edison issue, others feared they would need to oblige the governor or risk seeing bills that currently in Davis' hands vetoed.

Even so, Burton, a San Francisco Democrat, said legislators were not willing to vote for something that was "morally wrong and politically dangerous."

Edison, which amassed a $3.9 billion debt while keeping the lights on for its 11 million customers in Southern California, could accumulate an additional $1 billion in debt if forced into bankruptcy.

Earlier this year, skyrocketing costs led the largest utility in the state, Pacific Gas & Electric, to seek bankruptcy protection.

Under the latest failed rescue package, Edison would have been permitted to issue $2.5 billion in state-secured bonds to be paid by ratepayers. However, that proposal had little chance of passage in the Senate where lawmakers saw the proposal as placing an unreasonable burden on ratepayers who would have to pay off much of the Rosemead-based utility's debt.

Democratic Sen. Debra Bowen attributed the Edison quandary to a basic philosophical disagreement over what the state's energy system should look like and how the utility's debt should be thinned.

"Only history will tell us if we were right to wait; we won't know until we look back," Bowen said.

Edison's vice president of external affairs, Brian Bennett, said the utility's top executives "remain hopeful" that the Legislature will reach a compromise that prevents Edison's tumble into bankruptcy.

Although Sen. Bob Margett worried that if Edison did lapse into bankruptcy, California could be left with few means to recoup the billions of dollars the state spent making power purchases on behalf of the credit-strapped utility.

Even so, the Southern California Republican said doomsday scenarios did not sway his opposition to a "bail out."

"PG&E went into bankruptcy and the lights are still on. If Southern California Edison does the same thing, (Edison) ratepayers won't notice anything different either," Margett said.

Doug Heller of the California-based Foundation for Taxpayer and Consumer Rights said, calling a special session "for the single purpose of bailing out a single company," is unprecedented.

"The Legislature has already spoken on the issue," he said. "They want to protect the people, not the corporation."