California to Float Power Grid Purchase

LOS ANGELES -- (UPI) -- California Gov. Gray Davis has announced a long-awaited proposal in which the state would purchase the high-voltage transmission grid owned by the state's two largest utility companies. The deal, which could cost the state billions of dollars, would give taxpayers something in return for a major bond issuance and provide Southern California Edison and Pacific Gas & Electric with a needed financial shot in the arm. The proposal is aimed at keeping PG&E and Edison solvent while sparing consumers from the major rate hikes that are prohibited by the 1996 state law that deregulated the state's power markets. The proceeds from the sale would allow the companies to privately refinance their current mountain of debt, estimated at some $13 billion. Published reports Friday said that Davis' proposal would include a surcharge on consumer utility bills that would help pay off the bonds used to buy the 32,000 miles of power lines. The estimated purchase price for the lines has been estimated as high as $9 billion.