Davis/Edison cut a deal to raise rates

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Edison Deal Provides for Possible Future Rate Increases By Gary Gentile The Associated Press

LOS ANGELES (AP) - California must agree to protect Southern California Edison's credit rating - even if it means raising rates - if the utility ever finds itself paying more for power than it collects from customers, according to an agreement reached this week. The provision is designed to prevent a repeat of the existing energy crisis, caused when the wholesale price of electricity soared while the utilities were prevented by a rate freeze from recovering their costs.

Edison and Pacific Gas & Electric say they've lost more than $13 billion since June because of the retail rate freeze enacted as part of the 1996 deregulation.

The memorandum of understanding signed Monday by Gov. Gray Davis and Edison International chief executive John Bryson provides that the state will continue to buy power on behalf of the utility through 2002.

By that time, Edison believes that through the sale of its transmission lines to the state and the collection of a dedicated portion of utility rates, it will have been compensated for its "undercollections" - the $3.5 billion it says it lost through January because of the difference between the cost of buying power on the spot market and the money collected from frozen retail rates.

Beginning in 2003, Edison will buy its own power from wholesalers. In addition, the agreement provides that Edison will sell power from its remaining power plants and a new plant owned by its sister company, Edison Mission Energy, at near cost.

But if the wholesale cost of power continues to rise and the utility finds itself paying more for power than it collects from rates, the agreement provides that the state will take action - including raising rates - designed to protect Edison's credit rating and keep it solvent.

"We wanted a plan that would restore Southern California Edison to creditworthiness and restore our liquidity," Edison International chief financial officer Ted Craver said Tuesday during a conference call with financial analysts. "We think it is imperative the utility be returned to investment grade status."

Edison also said Tuesday that California Public Utilities Commission Chairwoman Loretta Lynch and members of her staff sat in on some of the negotiations between Edison and representatives from the governor's office.

"Lynch and legislative leaders have been involved in discussions and Edison has talked to them," Craver said.

The PUC is an independent decision-making body that must approve key elements of the Edison deal - including repealing a number of its own recent rulings.

The agreement provides that if the PUC fails to adopt certain measures within 60 days, Edison has the option to terminate the deal.

In a document filed with the Securities and Exchange Commission Tuesday, Edison said it paid $43.5 million to the state on March 28 for power the state purchased on its behalf from Jan. 19 through Feb. 11.

AP-ES-04-10-01 1735EDT Copyright 2001 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed. Brought to you by the Tampa Bay Online Network

Edison Deal Provides for Possible Future Rate Increases By Gary Gentile The Associated Press

LOS ANGELES (AP) - California must agree to protect Southern California Edison's credit rating - even if it means raising rates - if the utility ever finds itself paying more for power than it collects from customers, according to an agreement reached this week. The provision is designed to prevent a repeat of the existing energy crisis, caused when the wholesale price of electricity soared while the utilities were prevented by a rate freeze from recovering their costs.

Edison and Pacific Gas & Electric say they've lost more than $13 billion since June because of the retail rate freeze enacted as part of the 1996 deregulation.

The memorandum of understanding signed Monday by Gov. Gray Davis and Edison International chief executive John Bryson provides that the state will continue to buy power on behalf of the utility through 2002.

By that time, Edison believes that through the sale of its transmission lines to the state and the collection of a dedicated portion of utility rates, it will have been compensated for its "undercollections" - the $3.5 billion it says it lost through January because of the difference between the cost of buying power on the spot market and the money collected from frozen retail rates.

Beginning in 2003, Edison will buy its own power from wholesalers. In addition, the agreement provides that Edison will sell power from its remaining power plants and a new plant owned by its sister company, Edison Mission Energy, at near cost.

But if the wholesale cost of power continues to rise and the utility finds itself paying more for power than it collects from rates, the agreement provides that the state will take action - including raising rates - designed to protect Edison's credit rating and keep it solvent.

"We wanted a plan that would restore Southern California Edison to creditworthiness and restore our liquidity," Edison International chief financial officer Ted Craver said Tuesday during a conference call with financial analysts. "We think it is imperative the utility be returned to investment grade status."

Edison also said Tuesday that California Public Utilities Commission Chairwoman Loretta Lynch and members of her staff sat in on some of the negotiations between Edison and representatives from the governor's office.

"Lynch and legislative leaders have been involved in discussions and Edison has talked to them," Craver said.

The PUC is an independent decision-making body that must approve key elements of the Edison deal - including repealing a number of its own recent rulings.

The agreement provides that if the PUC fails to adopt certain measures within 60 days, Edison has the option to terminate the deal.

In a document filed with the Securities and Exchange Commission Tuesday, Edison said it paid $43.5 million to the state on March 28 for power the state purchased on its behalf from Jan. 19 through Feb. 11.

AP-ES-04-10-01 1735EDT Copyright 2001 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed. Brought to you by the Tampa Bay Online Network

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Apr 10, 2001 - 05:35 PM

Edison Deal Provides for Possible Future Rate Increases By Gary Gentile The Associated Press

LOS ANGELES (AP) - California must agree to protect Southern California Edison's credit rating - even if it means raising rates - if the utility ever finds itself paying more for power than it collects from customers, according to an agreement reached this week. The provision is designed to prevent a repeat of the existing energy crisis, caused when the wholesale price of electricity soared while the utilities were prevented by a rate freeze from recovering their costs.

Edison and Pacific Gas & Electric say they've lost more than $13 billion since June because of the retail rate freeze enacted as part of the 1996 deregulation.

The memorandum of understanding signed Monday by Gov. Gray Davis and Edison International chief executive John Bryson provides that the state will continue to buy power on behalf of the utility through 2002.

By that time, Edison believes that through the sale of its transmission lines to the state and the collection of a dedicated portion of utility rates, it will have been compensated for its "undercollections" - the $3.5 billion it says it lost through January because of the difference between the cost of buying power on the spot market and the money collected from frozen retail rates.

Beginning in 2003, Edison will buy its own power from wholesalers. In addition, the agreement provides that Edison will sell power from its remaining power plants and a new plant owned by its sister company, Edison Mission Energy, at near cost.

But if the wholesale cost of power continues to rise and the utility finds itself paying more for power than it collects from rates, the agreement provides that the state will take action - including raising rates - designed to protect Edison's credit rating and keep it solvent.

"We wanted a plan that would restore Southern California Edison to creditworthiness and restore our liquidity," Edison International chief financial officer Ted Craver said Tuesday during a conference call with financial analysts. "We think it is imperative the utility be returned to investment grade status."

Edison also said Tuesday that California Public Utilities Commission Chairwoman Loretta Lynch and members of her staff sat in on some of the negotiations between Edison and representatives from the governor's office.

"Lynch and legislative leaders have been involved in discussions and Edison has talked to them," Craver said.

The PUC is an independent decision-making body that must approve key elements of the Edison deal - including repealing a number of its own recent rulings.

The agreement provides that if the PUC fails to adopt certain measures within 60 days, Edison has the option to terminate the deal.

In a document filed with the Securities and Exchange Commission Tuesday, Edison said it paid $43.5 million to the state on March 28 for power the state purchased on its behalf from Jan. 19 through Feb. 11.

AP-ES-04-10-01 1735EDT Copyright 2001 Associated Press. All rights reserved. This material may not be



-- Tom Flook (tflook@earthlink.net), April 10, 2001


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