By the OGJ Online Staff
HOUSTON, Sept. 14 -- Southern California Edison Co. officials Friday said the foundering utility received a 2-week reprieve from banks that hold two major credit lines set to expire Saturday.
The utility has billions of unpaid debts and obligations and is still hoping the California state Assembly will pass a rescue package that will make the company creditworthy. Friday is the last day the legislature can pass such a bill. If satisfactory legislation is adopted, the utility could then finance power purchases to serve its entire electric load, instead of counting on the state to buy power on its behalf.
SCE officials deemed an Assembly-passed bill "acceptable." It would have allowed SCE to issue $2.9 billion in revenue bonds to pay off debts accumulated while buying power on a skyrocketing wholesale market last year and the first part of 2001.
That version would give the state a 5-year option to buy SCE's transmission lines for about $2.4 billion or twice book value. The company and Gov. Gray Davis supported the Assembly version and have rejected the version of the bailout being debated now in the Senate.
"It (the Senate version) is unacceptable and will not make us creditworthy," said Ted Craver, chief financial officer of SCE's parent, Edison International, Rosemead, Calif. Davis issued a nearly identical statement earlier Friday, stating that as currently written the Senate version will not make the utility creditworthy.
"This bill fails to do this and is unacceptable," the governor said.
Changes in the Senate bill would reduce the bond issue to cover past debts to $2.5 billion from $2.9 billion and also would reduce the number of customers whose revenue would service the bonds. It would also cut the purchase price of the transmission system to book value not twice book value.
SCE objected to loading the $2.9 billion bond issue onto a smaller customer base. The Senate bill would only require customers that step down power from a 500 kv line to service the bonds. The Assembly version put the cut off at 20 kv. SCE complained the customer base used to support the bond service is too limited and would make the bonds more difficult and more expensive to sell.
"Getting creditworthy is a difficult proposition anyway, but with this we fall off the cliff," Craver said. The legislature is scheduled to adjourn by midnight but might still remain in session early Saturday morning, said Craver.