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Calif., Edison reach deal
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April 9, 2001: 8:03 p.m. ET
State inks deal to buy cash-strapped utility firm's power lines for $2.76B
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NEW YORK (CNNfn) - California Governor Gray Davis and Southern California Edison reached an agreement Monday on the state's bid to buy the cash-strapped utility firm's transmission lines for $2.76 billion.
After a weekend of harried talks, the deal was made as a key part of plans to keep the company solvent.
"This negotiated resolution with the governor is far preferable for our company and our employees and for our customers than is going into bankruptcy," said John Bryson, chairman and CEO of Edison International, parent of Southern California Edison.
Under the terms of the agreement, the state will gain control SoCal Edison's 12,000-mile transmission system with the utility continuing to maintain and operate the grid.
In exchange, Edison International and its subsidiary said they will commit to a capital investment of more than $3 billion in utility infrastructure - power plants and power lines- over the next five years.
The utility also agreed to drop its lawsuit against state regulators once the agreement is implemented by the state legislature and the California Public Utilities Commission.
"Today's agreement does not eliminate the possibility of power interruption this summer," said Steve Frank, president and CEO of Southern California Edison. "Power supply remains very tight. We are going to need full participation of all Californians in strong conservation effort."
Davis had originally proposed buying the portion of the state's transmission grid owned by all three of the state's investor-owned utilities. That plan was dealt a serious blow Friday when Pacific Gas & Electric, the state's largest utility, pulled out of negotiations and filed for bankruptcy protection.
Governor Davis had proposed paying Edison $2.76 billion for its share of the grid.
The deal came as Pacific Gas & Electric turned to the courts for relief from California's deregulation debacle. The company, which became the biggest public utility in U.S. history to file for bankruptcy, said it was unable to reach an agreement with Davis.
Shares in Edison International (EIX: Research, Estimates) closed up 8 percent at $8.92 on Monday on expectations of the deal and then jumped $4.25. or better than 50 percent, in after-hours trade.
- from staff and wire reports 
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