California PUC sets $3.5 billion as floor for bond issue

California Public Utilities Commission Pres. Loretta Lynch Monday said the agency will propose for bond calculation purposes the state Department of Water Resources's share of utility revenue equals $3-$3.5 billion/year. Setting an amount will permit the treasurer to issue bonds totaling $12-$14 billion to buy power and reimburse the state for power already purchased on behalf of Southern California Edison Co. and Pacific Gas & Electric Co.

Apr 2nd, 2001


By the OGJ Online Staff

HOUSTON, Apr. 2�California Public Utilities Commission Pres. Loretta Lynch Monday said the agency will propose for bond calculation purposes the state Department of Water Resources's share of utility revenue equals $3-$3.5 billion/year.

Setting an amount will permit the treasurer to issue bonds totaling $12-$14 billion to buy power and reimburse the state for power already purchased on behalf of Southern California Edison Co. and Pacific Gas & Electric Co. The number was calculated using a formula set prescribed by state law.

"The treasurer can rely on that number to issue bonds," Lynch said during a press briefing.

Meanwhile, to actually apportion how much of the utilities' revenue to date belong to the Department of Water Resources (DWR), she said, the commission still needs additional data from the DWR. The utilities have collected money on behalf of the DWR but are holding the funds.

Lynch acknowledged the DWR has actually spent more than $3.5 billion buying power, and called the number a starting point. Last week the commission raised rates an average 3�/kw-hr and made permanent a temporary 1�/kw-hr rate hike.

The PUC has been under pressure recently to come up with a figure so bonds can be issued. The state has been running through its cash reserves to buy power and the DWR had gone back to the legislature for more. California Democratic state Sen. Steve Peace was said to be holding up additional appropriations until the legislature knew how much the DWR's allocation would be under the formula, a legislative source told OGJ Online.

After spending funds appropriated by the legislature and after lawmakers balked at appropriating more money, the DWR was not assured of funds to pay for power purchases. But by law the agency is mandated to fill the utilities' �net short� position or the difference between utility self-generation and power contracts and their load. DWR has been spending about $40 million/day to buy power.

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