Edison Won't Accept Changes To Calif Rescue Deal -Exec  ????
Updated: Thursday, April 19, 2001 05:40 PM?ET ??
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By Jason Leopold 

Of DOW JONES NEWSWIRES 

NEW YORK (Dow Jones)--Edison International (EIX, news, msgs) unit Southern 
California Edison isn't willing to modify the rescue agreement it reached 
last week with the state in order to convince lawmakers to support the plan, 
a senior Edison International executive told Dow Jones Newswires Thursday. 

On Wednesday, Gov. Gray Davis, in a meeting with Senate Democrats, said he 
was willing to consider amendments to the proposal, which has been criticized 
by Republicans and Democrats as a utility bailout at consumers' expense. The 
Edison executive, however, warned against tinkering. 

"This has been negotiated to the hilt," the executive said. "The MOU, as 
negotiated is a balanced deal. The negotiated agreement we entered into with 
the governor is no different than the agreement in principle" reached in late 
February. 

The terms of the deal, signed last week by Davis and Edison International 
Chief Executive John Bryson, call for the state to buy Southern California 
Edison's 12,000 miles of transmission lines for $2.76 billion and allow the 
utility to issue bonds backed by ratepayers so it can recoup $5.5 billion in 
unrecovered power costs. 

The Edison executive said the memorandum of understanding is non-negotiable 
and should be accepted by legislators "as-is." 

Senate President Pro Tem John Burton, however, told reporters Wednesday that 
many aspects of the Edison deal would have to be amended, particularly the 
securitization package. State Sen. Debra Bowen, D-Redondo Beach, chair of the 
Senate energy committee, agreed. 

"It probably would take less time to list the things that don't have to be 
changed in the MOU," Bowen said Thursday. "If it's a take it or leave it 
proposal, it's a pretty simple choice for me." 

If lawmakers don't pass legislation to implement the buyout by Aug. 15, the 
deadline set in the agreement, the utility could find itself dragged into 
involuntary bankruptcy proceedings by creditors, the executive said. 

"I think we'll have big (problems)" if legislation isn't passed by Aug. 15, 
the executive said. "We got all these creditors out there, and no one knows 
how long they'll forbear." 

Bankruptcy Would Worsen Crisis -Executive 

Some lawmakers think ratepayers and taxpayers would be better off with 
Southern California Edison in bankruptcy. 

"I still don't see how ratepayers could be any worse off with (SoCal Ed) in 
bankruptcy than they would with the governor's plan," Bowen said. 

Sen. Joe Dunn, D-Santa Ana, said a filing would take the burden of the 
company's cash-flow crisis off of legislators. 

"A Bankruptcy Court judge would make the decisions without political 
interference," said Dunn, who still wasn't convinced the state will benefit 
from the deal. 

Moreover, lawmakers have said Davis' transmission-line buyout doesn't make as 
much sense now that PG&E Corp. (PCG, news, msgs) unit Pacific Gas & Electric 
has sought bankruptcy-law protection as an alternative to continuing 
negotiations with the state. 

The Edison executive, however, warned that another utility bankruptcy would 
be a "black eye" for California. 

"I think the practical questions are... what are the alternatives here?" the 
executive said. "Is the state going to allow another utility to go bankrupt 
and choose the path of years and years of litigation?" 

If the utility winds up in bankruptcy, the executive said, "the crisis gets a 
lot worse, because there is not only a shortage of supply, but the power grid 
begins to decline." 

At the same time, if the state were to become the owner of the utility's 
transmission lines and the power lines owned by Sempra Energy (SRE, news, 
msgs) unit San Diego Gas & Electric, a purchase it is now negotiating, it is 
almost guaranteed that a Bankruptcy Court judge would approve the sale of 
PG&E's power lines to the state as well, the executive said. 

"If the state were to buy Edison's and SDG&E's lines, it would be the 
inevitable purchaser of PG&E's transmission lines," the executive said. "One 
of the first things a bankruptcy judge will look at is the sale of assets. 
And if the state purchased Edison and SDG&E's lines, it would be in the 
strongest position to buy PG&E's system as well." 

In addition, the Edison executive said, even without PG&E's transmission 
lines, the state would still have substantial control of the grid in Southern 
California, which has much better access to new generation sites being 
developed. 

"Sixty-eight percent of all new generation capacity approved or in the 
process of being approved can link directly to Southern California Edison's 
transmission system," the executive said. 

Lawmakers, however, remain skeptical. 

"It's a deal that every Edison shareholder and creditor loves, because it's 
financed 100% by ratepayers," Bowen said. "But it's not in the best interest 
of the state or in the best interest of Edison's ratepayers." 

SoCal Ed Can't Pay QFs Money Owed Due To Cash Crunch  ????
Updated: Thursday, April 19, 2001 05:35 PM?ET ????

By Jason Leopold 

Of DOW JONES NEWSWIRES 

NEW YORK (Dow Jones)--Edison International (EIX, news, msgs) unit Southern 
California Edison is unlikely to pay more than $900 million in past due power 
bills any time soon to the state's small independent power producers the 
utility buys electricity from because it "simply (doesn't) have the dollars 
to do that," a senior executive with Edison International told Dow Jones 
Newswires Thursday. 

"We wish to pay them going back," the executive said. "But we simply don't 
have the dollars to do that." 

The executive said utility officials are meeting with some of the owners of 
the so-called qualifying facilities on the issue of back payments and new 
contract prices. 

Many of the state's QFs, gas-fired and renewable energy producers, have been 
off-line for several months due to SoCal Ed failing to pay its past due power 
bills to the companies. 

The power producers said they owe millions to natural-gas suppliers who have 
refused to sell them the commodity until they pay their bills. 

Last week, SoCal Ed paid the QFs $206 million for power produced on a forward 
basis. PG&E Corp. (PCG, news, msgs), which recently filed for Chapter 11 
bankruptcy protection because of $8.9 billion in unrecovered power costs, 
paid the QFs $34.6 million for forward power sales. 

However, the QFs said the issue of past-due payments needs to be addressed 
before they return their plants to service. About 2,000 megawatts in QF 
generation remained off-line Thursday because of the back-payment issue. Last 
month, the loss of 3,000 MW in QF generation contributed to two days of 
statewide rolling blackouts. 

The Edison executive said the company can only pay the QFs for power going 
forward, as ordered by state regulators last month, and the utility will pay 
all of its creditors once it's restored to financial stability. 

California Regulators May Provide Some Relief 

But the state's 688 QFs, which provides the state with one-third, or about 
9,500 MW, of its total supply, may get some relief on the issue of back 
payments from the California Public Utilities Commission. 

The commission voted unanimously Thursday to start an investigation into the 
reasons some QFs have remained off-line and whether they have violated their 
contractual obligations with the utilities, despite the fact that they have 
been paid on a forward basis. 

Commission President Loretta Lynch said, "I do think...we need to take a hard 
look at whether utilities pay certain QFs that are on the brink of bankruptcy 
for back payments. Back payments are a critical part of the mix and are key 
to preventing some QFs from meeting contractual obligations." 

But the ruling has some hiccups. 

At least 20 QFs have sued both utilities seeking the right to sell their 
power on the open market until PG&E and SoCal Ed become creditworthy. 

The PUC wants to try and stop that, which has infuriated the 12 or so members 
of the Renewable Energy Creditors Committee, made up of wind, solar and 
biomass energy producers. 

They said the commission shouldn't try to stop them from trying to sell their 
power on the open market. 

"In criticizing QFs for seeking to sell power on the open market, the 
(investigation) is criticizing alternative providers for trying to survive," 
the creditors committee said in a statement. "The committee views the order 
as the latest attempt by the PUC to squeeze renewable and other QFs into 
oblivion." 

-By Jason Leopold; Dow Jones Newswires; 323-658-3874; 
jason.leopold@dowjones.com
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