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THE CALIFORNIA ENERGY CRISIS

Governor Postpones Rescue Plan for Utilities

February 10, 2001|NICHOLAS RICCARDI | TIMES STAFF WRITER

Gov. Gray Davis said Friday that in seven days he hopes to finish the framework for a rescue plan to enable the state's two largest private utilities to avoid bankruptcy.

Davis had said a rescue plan needed to be in place by Monday, when a federal judge in Los Angeles will consider Southern California Edison's request to lift 4-year-old rate caps that are keeping it from passing on its multibillion-dollar debt to ratepayers. A similar lawsuit by Pacific Gas & Electric is being consolidated with Edison's case.

Though he once called Monday a "drop-dead date," Davis said Friday that he was not worried about the utilities' litigation.

"They realize litigation is a very long path," Davis said at a news conference outside Tarzana Elementary School, citing the potential for lengthy appeals. "The matter could be dragged on three or four years."

Still, Atty. Gen. Bill Lockyer at Davis' request has asked to continue Monday's hearing to give the state more time to solve the energy crisis. Edison opposes a continuance.

Davis intends to develop a "conceptual agreement" with legislative leaders by the middle of next week, spokesman Steve Maviglio said Friday. After there is an accord, Davis plans to commence negotiations with Edison and PG&E executives.

The talks will go on for weeks, officials said.

On Friday, Davis reiterated his three-pronged plan to wring compensation from utilities for state help with their debts, which the two companies place at $12 billion.

Davis said the state would require the utilities to write off a portion of their debts, tap assets of their parent companies for other chunks and hand over to the state assets such as their transmission lines and warrants, an equity akin to stock options.

"Whatever benefits we confer upon the utilities to allow them to function again, the state or the ratepayers should get an equal benefit," he said. "They pushed hard for this flawed deregulation scheme. . . . They should have to give us assets of commensurate value."

Utility executives had lukewarm responses to the ideas, especially the takeover of the transmission grid. "Asking us to give up transmission lines would be like asking Safeway to stop selling bread and milk and butter," said Robert Glynn, chief executive officer of PG&E Corp.

Tom Higgins, an Edison senior vice president, stressed that the company remains open to negotiations on Davis' proposal. But he cautioned: "You can't expect investors to have their investments surrendered to subsidize the consumption of electricity."

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Times staff writers Carl Ingram and Dan Morain contributed to this story.

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