Lawmakers Advance Edison Rescue Deal as Critics Plan to Stop It

SACRAMENTO – As lawmakers advance a plan to rescue Southern California Edison from bankruptcy, consumer advocates are gearing up for the ballot-box fight to overturn it.

That could mean the plan that passed the Assembly late Thursday and is moving toward Gov. Gray Davis' desk may not provide Edison the relief it seeks to dig out from $3.9 billion in debt.

Instead, it could set off a referendum fight that could wipe out any rescue effort and spill over into a contentious 2002 general election campaign.

Late Thursday night, the Assembly passed the bill that would let Edison sell $2.9 billion in bonds backed by customers by a 41-32 vote. Now the bill moves back to the Senate, which passed a slightly different version in July.

The current bill includes the deal Davis struck with Edison in April. Davis and the bill's supporters say it will keep Edison from following Pacific Gas and Electric Co. into bankruptcy.

Nonsense, said consumer advocate Harvey Rosenfield Friday. Edison doesn't deserve or need a "bailout."

"If you overspend on your credit card ... do you hire a lobbyist and go to Sacramento and have them pass a law saying all the rest of us have to pay off your credit-card debt?" Rosenfield said.

The Senate, he said, should do nothing.

But if it doesn't, and Davis goes on to sign any Edison-related bill, Rosenfield's group, the Foundation for Taxpayer and Consumer Rights, will launch a statewide ballot measure to reverse it. It will also target legislators who voted to help Edison.

Rosenfield has recruited Bill Lord-Butcher, an Orange County political consultant who worked on one of the state's best-known ballot-box revolts, the 1978 Proposition 13 fight.

That initiative, which rolled back property taxes statewide, also swept in a wave of new Republican lawmakers, said Assemblyman Bill Leonard, a Rancho Cucamonga Republican first elected that year. The Republicans picked up seven seats in the Assembly and one in the Senate, although Democrats retained majorities in both houses.

For voters who can't tell much difference between politicians, a compelling ballot measure lets voters "ask the candidates 'where do you stand?' and then vote for the one they agree with," Leonard said. "It's the easiest litmus test."

Rosenfield hasn't decided if he'll try a referendum or an initiative to counter a successful Edison bill, he said.

A referendum would stop the law from taking effect until voters approved it. An initiative could do the same thing, but it could also go further and actually write state law.

Those able to spend a couple million dollars can get a measure on the ballot by paying signature gatherers, said Clark Kelso, a professor at the McGeorge School of Law.

"Secondly, groups familiar with the initiative process, and that includes Harvey, generally need to be taken somewhat seriously," he said.

Rosenfield's initiative would likely be similar to the successful 1978 tax revolt. The campaign would mail petitions for signatures to voters. Then 419,260 registered voters would have to return the signed forms to put the measure on the November 2002 ballot. The deadline for those signatures is June 27, 2002.

Then would come a long political fight, Kelso said, that would pit Rosenfield's group against well-funded opponents helped by the rescue plan. That would probably include Edison, its parent company and its creditors, who would finally get paid if the utility could raise $2.9 billion from the bonds.

Already this year Edison has spent more than $5 million on an advertising campaign aimed at getting voters to support a legislative bailout.

Also, Leonard said, much depends on how Edison is faring in November 2002. If the bill passes and Edison is doing better financially, "it may be harder to energize the electorate."

Just as the weather helped ease the energy crisis this year, it could play a role next year, Kelso said. A hot summer and blackouts that make energy a major issue next year "could fuel the initiative."

Preliminary research, Rosenfield said, shows voters don't want an Edison bailout. Voters angered by high electric bills could push an initiative past even deep-pocketed opponents.

However, while Proposition 13 passed, a 1998 initiative that sought to overturn electricity deregulation failed. That measure, also led by Rosenfield, garnered only 27 percent support.

Sen. John Burton, a San Francisco Democrat skeptical of the Edison deal, said the current of the version of the plan "guarantees an initiative and it's guaranteed to pass."

Burton said if the bill is altered again in the Senate, it could mollify the critics "and they won't be compelled to do the initiative."

The bill goes to the Burton-led Senate Rules Committee, where he planned to hold a hearing on the bill. Rosenfield predicted Burton would be "the target of the biggest special-interest onslaught in California legislative history" as the bill reached that house.

Senators could consider lowering their threshold for which customers will repay the bonds, Burton said. The Senate's version had 1,500 of Edison's largest industrial users shouldering the bond repayment — the Assembly plan spread that out to about 180,000 business and commercial customers.