PG&E, Edison Bankruptcy Risk Rises After Bill Fails

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03/23 09:46 PG&E, Edison Bankruptcy Risk Rises After Bill Fails (Update1) By David Ward

Sacramento, California, March 23 (Bloomberg) -- PG&E Corp. and Edison International face an increased risk of bankruptcy after the California's Assembly late yesterday rejected a plan to provide long-term power contracts for smaller electricity generators, lawmakers said.

The Assembly voted 48-24, six short of the two-thirds majority needed to pass the bill. The measure was needed for the state Public Utilities Commission to approve contracts between Pacific Gas & Electric, Southern California Edison and alternative power producers. PG&E owns Pacific Gas & Electric, and Edison owns Southern California Edison, the state's two largest utilities.

Assembly members will meet again today to attempt to craft a compromise. Without one, the alternative generators, who are owed more than $1 billion and haven't been paid in months, could force the utilities into bankruptcy, lawmakers said.

``We are at a significant risk of bankruptcy,'' said Senate Utilities Committee Chairwoman Debra Bowen, the bill's sponsor.

PG&E Corp. shares fell 33 cents to $10.86 in early trading. Edison shares fell 25 cents to $11.25.

Republican Foes

Assembly Republicans opposed the bill. They criticized the state's spending on electricity, which so far has totaled almost $4 billion. They also said that the measure didn't ensure that alternative generators that use natural gas to power their plants would be paid higher rates if gas prices rose.

``We wanted to debate each of the provisions on their merits, and vote on each separately,'' Senate Republican Leader Bill Campbell said. He said each portion of the bill had enough votes to pass if considered alone.

Assembly Speaker Robert Hertzberg canceled a trip to Washington, D.C., with a group of legislators today, and said the Assembly would work on the issue over the weekend. The Senate is adjourned until Monday.

The Public Utilities Commission meets on Tuesday. Without the bill, it can't approve rules allowing PG&E and Edison to enter into long-term contracts with hundreds of wind, solar, geothermal and gas-fired generating plants.

State Treasurer Phil Angelides had asked that the state get first claim to utility revenue from customers of PG&E and Edison, before the utilities pay creditors. He said bond underwriters had insisted on that provision to ensure the state could proceed with a $10 billion bond offering, which would fund the state's electricity purchases.

$4 Billion

California has spent almost $4 billion buying power on behalf of its utilities, which ran up more than $13 billion in debts buying power at higher prices than regulators would let them pass on to their customers.

The bill's rejection stalls efforts by the state treasurer to issue bridge financing and then $10 billion in bonds approved in previous legislation to cover the state's costs for buying some of the electricity needed by PG&E and Edison.

Assembly Democrats, along with Governor Gray Davis, said that the utilities were claiming that the revenue they received from customers should go to pay down some of their debts before the state is repaid.

http://quote.bloomberg.com/fgcgi.cgi?ptitle=Top%20Financial%20News&s1=blk&tp=ad_topright_topfin&T=markets_bfgcgi_content99.ht&s2=blk&bt=ad_position1_topfin&middle=ad_frame2_topfin&s=AOrthuBSbUEcmRSwg

-- Carl Jenkins (somewherepress@aol.com), March 23, 2001


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