Calif Reaches Power Line Deal with SCE

Los Angeles, CA -- -

Los Angeles, CA -- The state of California reached an agreement aimed at jumpstarting Southern California Edison on the road to financial recovery by authorizing a bond sale to cover its unpaid bills for high-priced electricity purchases. In exchange for the state's backing, Edison formalized a February tentative agreement to sell its 12,000 miles of high-voltage transmission lines to the state for $2.76 billion, more than twice what they are worth. "For Edison, the road to recovery will be a long and difficult one, but this is a step in the right direction," Gov. Gray Davis told a Monday afternoon news conference. Pacific Gas & Electric is the state's largest utility and serves Northern and Central California. Edison serves Southern California and filed for Chapter 11 bankruptcy last Friday, citing a perceived lack of movement on the energy issue on the part of Davis and the state legislature. Edison also agreed to dedicate its generators to producing low-cost power that would remain in the state. It will drop a lawsuit aimed at forcing a rate increase that would have covered the mounting tab for wholesale power bought at a price well above what Edison is allowed to charge its customers. The company also will set aside nearly 29,000 acres of undeveloped land in the eastern Sierra and around its Big Creek hydroelectric facility for wildlife habitat, and will invest $3 billion over the next five years in capital infrastructure improvements. In return, Edison gets a much-needed infusion of cash from the power-line sale and the bonds that should keep the company out of bankruptcy, pay off its debt and heal its shattered credit. "This negotiated resolution with the governor is far preferable for our company ... and our customers than is going into bankruptcy,'' said Edison International Chairman John Bryson. "Our customers and the state's economic vitality will benefit greatly from a financially healthy utility which can retain experienced and skilled employees and can invest the billions of dollars needed to maintain a sound electric infrastructure system," he said. Final details of the 40-page memorandum of understanding between the state and Edison must be negotiated, and approval of the deal will be required from the California Public Utilities Commission and the legislature.