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Davis to offer energy plan
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January 8, 2001: 2:14 p.m. ET
Calif. governor expected to detail bond package in state-of-the-state address
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NEW YORK (CNNfn) - California Gov. Gray Davis is expected to announce details Monday night of a plan to help alleviate the state's growing electricity crisis and rescue California's two largest utilities from bankruptcy.
The plan, which will be presented as part of the governor's annual state-of-the-state address, is expected to include a proposal to issue state-issued bonds to help the utilities finance the debt they have incurred buying power and to pay for future purchases. The bailout package also may include the creation of a public power authority, millions of dollars earmarked for energy conservation programs and incentives to speed the process of approving new power plants.
The governor's office confirmed the major elements of the package to CNNfn on Friday. The final document, however, is still being hammered out, said Steve Maviglio, a spokesman for Davis.
The plan is expected to be forwarded to the state legislature this week for quick approval, The Wall Street Journal reported.
 PG&E Corp.'s (PCG: Research, Estimates) Pacific Gas & Electric Co. and Southern California Edison, a unit of Edison International (EIX: Research, Estimates), are operating under a rate freeze under California's two-year-old deregulation system. As a result, the utilities can't pass on enough of their skyrocketing wholesale power costs to consumers. The two utilities say they have amassed billions in debts.
Meanwhile, the situation became more dire for the two utilities after credit-rating agencies Moody's and Standard & Poor's last week cut the ratings on the two utilities to their lowest investment grade, making it more difficult for the companies to raise the cash they need to avoid bankruptcy. A third agency, Fitch's, reduced its ratings on the companies' debt to junk level.
The credit rating services and other analysts said they were disappointed with the emergency rate increases imposed by the California Public Utilities Commission last Thursday, saying the surcharges are inadequate to keep the utilities afloat.
 SoCal Edison got more bad news Friday when a federal appeals court rejected the company's request for the Federal Energy Regulatory Commission to step in and limit electricity rates in the state. Also Friday, SoCal also said it will cut 1,450 jobs over the next few months in an attempt to improve its finances. That brings the total number of workers the Rosemead, Calif.-based electric utility said it will lay off to 1,850 since the crisis began.
In afternoon trading, PG&E shares rose $1.56 to $14.19, while Edison International stock gained 81 cents to $11.13. 
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