Calif Must Repay State Pwr-Buy Funds With Interestgreenspun.com : LUSENET : Grassroots Information Coordination Center (GICC) : One Thread
Calif Must Repay State Pwr-Buy Funds With Interest Updated: Tuesday, March 27, 2001 03:59 PM ET LOS ANGELES (Dow Jones)--California will charge the state's electricity consumers interest when it comes time to repay the general fund for money borrowed to buy power in the wholesale market, Gov. Gray Davis' top financial adviser said.
Joe Fichera, California's lead negotiator on the plan to buy the transmission lines of the state's three largest utilities, said last week that electricity consumers will repay the general fund monies at an interest rate of 6%.
The state Department of Water Resources, which started buying a bulk of the state's power needs in January on behalf of the state's cash-strapped utilities, has been spending roughly $45 million a day in the volatile spot market for electricity. As reported, California state Treasurer Phil Angelides said the state Legislature has authorized $3.8 billion in general fund loans to finance wholesale electricity purchases. So far, the DWR has spent close to $3 billion on power, he said.
The office of Assembly Speaker Pro Tem Fred Keeley, who backed the bill that authorized the DWR to buy electricity in lieu of California's nearly bankrupt utilities, confirmed the interest rate Tuesday.
State treasurer Phil Angelides has been trying to secure $5 billion in bridge financing to take the pressure off the general fund. The short-term loan would be used to buy electricity and would be paid back when the state completes its long-term financing by issuing about $10 billion in revenue bonds.
The state has been borrowing money from the general fund in $500 million increments to buy wholesale power. The Senate Budget Committee warned the state two weeks ago that it would be cut off unless state regulators carved out a revenue stream from existing retail electricity rates to ensure the general fund is repaid. The state Public Utilities Commission is expected to take up the issue Tuesday morning.
As reported, the PUC approved an increase of about 25% in the utilities' overall rates Tuesday.
-By Jason Leopold, Dow Jones Newswires; 323-658-3874; firstname.lastname@example.org
-- Martin Thompson (email@example.com), March 27, 2001