Davis optimistic about state attracting businesses
SAN FRANCISCO (AP) – California’s largest utility still may sell its transmission lines to the state despite seeking bankruptcy protection when an earlier deal with state negotiators fell through, Gov. Gray Davis said Monday.
Davis told reporters that a creditors committee of businesses owed money by Pacific Gas and Electric Co. asked state negotiators for a briefing on talks to buy the transmission lines of financially troubled San Diego Gas and Electric Co., whose parent company is Sempra Energy.
”The creditors committee called us and asked for a briefing on Sempra last week,” Davis said, adding he believes there is some possibility of buying PG&E’s lines. ”It helps us because it helps get PG&E back in.”
Ron Low, a PG&E spokesman, said the utility has 120 days from filing for Chapter 11 April 6 to present its own reorganization plan.
”We’re not going to speculate on conversations the governor may or may not have had with the creditors’ committee,” said Ron Low, a PG&E spokesman.
The utility filed for federal bankruptcy protection after failed attempts by the state to buy its transmission lines to help the troubled utility pull itself out of a multibillion dollar debt.
The governor struck a $3.5 billion deal with Southern California Edison Co. for its lines, undeveloped land and the promise of relatively cheap power. The deal requires legislative approval. The state has offered $1 billion to Sempra Energy for a similar package.
Davis told a crowd at investment firm J.P. Morgan’s H&Q Technology Conference that his state is boosting spending on technology research and education incentives to keep California attractive to investment.
California has pledged $800 million toward conservation, Davis reiterated, and has sped up power plant approvals to help the state weather the summer heat.
”We’re going to have to set the Guinness World Record in conservation to have enough power this summer,” Davis said, adding that the funds would help businesses install many power-saving devices, such as dimming light switches and energy-efficient bulbs.
”The cost of helping you reduce electricity is cheaper than buying that power on the spot market,” Davis said.
Jay Myers, a technology analyst attending the conference for Bay Area-based Takeda Pacific, said Davis seems to be taking the right approach toward an energy solution. Myers has lived in the state since 1964, and said the energy crisis is just another challenge the state will eventually overcome.
”It just kind of goes through cycles. If it’s not energy, it’s gasoline,” Myers said.
A faltering economy and the recent downgrading of California’s credit rating are raising questions about the financial stability of the nation’s most populous state.
Since January, the state has committed more than $6 billion to buying electricity for the customers of PG&E, SoCal Edison and SDG&E.
But efforts by State Treasurer Phil Angelides to have lawmakers approve selling up to $14 billion in bonds to repay the general fund have stalled. Republican lawmakers last week said they won’t back such a plan unless Davis releases details on the state’s power-buying contracts.
The uncertainty surrounding the state’s ability to replenish its general fund prompted Standard and Poor’s to downgrade the state’s credit to among the nation’s lowest, equal to Hawaii’s and slightly better than Louisiana’s.
S&P is one of three major rating agencies watching the state’s financial performance. Credit ratings help determine how much states and other borrowers must pay when issuing bonds. The lower the rating, the higher the interest rate the state must pay to attract investors.
Scarce power supplies and ever-soaring prices have energy forecasters predicting days of rolling blackouts come summer, which many fear could drive away investment.
On the Net:
Gov. Gray Davis: http://www.governor.ca.gov
See ratings lists at http://www.standardandpoors.com/
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