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California Democrats propose Southern California Edison rescue bill

In a race to claim progress before a July 20 recess, California Assembly Democrats Friday said they were proposing electricity legislation that would reregulate the market for most consumers, while allowing large customers to continue shopping for power.

In exchange for maintaining direct access to suppliers, the bill would require big customers to repay the “preponderance of accumulated debt,” Democrats said in a press release.

Southern California Edison Co., Rosemead, Calif.; Pacific Gas & Electric Co., San Francisco; and the state have run up huge bills buying electricity, but it was initially unclear how such a mechanism would work and whether it applied to all past due bills.

The California Public Utilities Commission has twice postponed setting a date to end direct access to suppliers other than utilities, while state lawmakers worked on terms of a deal that would allow big users to choose a supplier.

Commissoners worried if large customers were allowed to continued shopping for electricity, small users would be stuck with paying off the big bills for wholesale power the utilities accumulated during the state’s botched experiment with deregulation.

Democrats said the legislation uses Gov. Gray Davis’s agreement to rescue Southern California Edison Co. from bankruptcy as a framework, while making a number of significant changes to the memorandum of understanding between SCE and the governor.

Among the changes proposed were that the acquisition of SCE’s transmission system would be done “at less than market value.” The state would pay twice book value under the bill rather the 2.3 times under the deal between the governor and SCE. That would bring the price down to about $2.4 billion from $2.7 billion.

Davis and the utility unit of Edison International signed the complex deal Apr. 9. It is set to expire Aug. 15, before legislators are scheduled to return from recess. If there is no progress, SCE feared creditors could lose patience and break ranks, potentially throwing the utility into involuntary bankruptcy.

The measure is jointly authored by Assembly Speaker Robert M. Hertzberg (D-Van Nuys), Speaker Pro Tempore Fred Keeley (D-Boulder Creek), and members John Dutra (D-Fremont) and Jackie Goldberg (D-Los Angeles).

Hertzberg (D-Van Nuys) said the proposed legislation will hold “accountable those who have taken advantage of us, and it promises consumers that they will see rates go down rather than up. Our proposal protects those who deregulation has hurt most — consumers – and ensures that California never sees a crisis like this again.”

The measure, which will be scheduled for a hearing this week by the Committee on Energy Costs and Availability, also contains the following provisions:

o It directs utilities to make substantial new investments in clean sources of energy over the next decade, increasing the use of renewable energy to at least 10% of overall load by 2010.

o It establishes an Electricity Supplier Claims Resolution Trust to reduce payments to generators who overcharged for power.

o It establishes a Ratepayer Refund Account to allow consumers to benefit as power costs fall.

o It requires no increase in electricity rates for either residential or business customers.