||Home | Volunteer | Donate | Subscribe | FTCR Websites | Books | Site Map|
home / utilities / press releases
Jan 08, 2001
CONTACT: Doug Heller - 310-392-0522 x309
A Counter-Proposal to Protect Ratepayers: "Edison Can Bail Itself Out"
Consumer Advocates Offer CEO a PlanConsumer advocates opposed to a $10 billion ratepayer bailout of the state's private utility companies offered what they called a "counter-proposal" to Edison's CEO, John Bryson. The Foundation for Taxpayer and Consumer Rights (FTCR) provided Edison with a plan, under which the company can bail itself out by selling out-of-state power plants, as well as reducing executive salaries, selling its stake in other industries (such as telecommunications, real estate and cable) and eliminating campaign and charitable contributions, advertising and other non-essential expenses.
Edison International's assets are valued at $37.9 billion dollars, according to the company's SEC filing for the third quarter of 2000.
"We've provided Edison with a counter-proposal to protect ratepayers: Edison should bail itself out of the mess it created," said Douglas Heller, a consumer advocate with FTCR. "Edison can solve its financial needs immediately just by following our plan, which would provide more than $10 billion in income and savings, without increasing customers' rates by one cent."
According to Harvey Rosenfield, President of FTCR: "Edison pushed deregulation and reaped its rewards while sticking all the risks on the residential and small business ratepayers. Now it wants ratepayers to pick up the tab for the failure of the deregulation law they wrote. While demanding a 30-70% rate increase, Edison's executives haven't reduced their own bloated bureaucracy, cut executive salaries and perks. That's what the rest of us have to do when we can't make ends meet."
A Counter Proposal on Behalf of Edison Ratepayers:
How Edison Can Bail Itself Out
Edison's plan to escape its present dilemma consists of forcing residential and small business ratepayers to pay approximately $5 billion through rate increases of 30% to 76%. Edison's lobbyists are pressing state officials to approve a series of bonds, backed by the state, which would provide Edison with an immediate bailout. Ratepayers would then be required to pay off the bonds, with interest. Like the $6 billion in bonds financed by ratepayers as part of the 1996 deregulation law, the charges for this bailout would appear on utility bills for many years --perhaps decades. Meanwhile, Edison received state permission last week to increase rates by 10%.
There is, however, an alternative to a ratepayer bailout. Southern California Edison and its parent company, Edison International, have the resources to bail themselves out. Under the 1996 deregulation law, SCE collected approximately $10 billion through the "competition tax," rate reduction bonds, asset sales and generation revenue -- the first ratepayer bailout. These funds were siphoned off to the parent company, used to buy back stock and engage in an international spending spree. This counter-proposal, which protects ratepayers, requires Edison to sell off its non-essential assets to raise cash and to institute strict limits on its expenses -- much as the rest of us must do when we run into a financial jam.
According to Edison International's March 2000 10-K filing with the SEC, as of December 31, 1999:
"[Edison Mission Energy] EME subsidiaries held interests in more than 75 projects worldwide, either operating or under construction with an aggregate power production capability of 28,446 MW, of which 22,770 MW are attributable to EME's interests. These facilities are located in California, Florida, Illinois, Nevada, New Jersey, New York, Pennsylvania, Puerto Rico, Virginia, Washington, West Virginia, Australia, Indonesia, Italy, Spain, Thailand, Turkey, United Kingdom, and New Zealand. EME owns interests in oil and gas producing operations and related facilities in various U.S. locations."
Edison is in a financial position to take care of itself. Below is a list of actions that Edison can take to bail itself out of its financial crisis:
Edison International Action -- Savings
Sell plants purchased from Commonwealth Edison of Illinois in December 1999. -- $4,900,000,000
Sell the Ferrybridge and Fiddler's Ferry coal plants in Great Britain purchased in 1999. -- $2,000,000,000
Sell 40% stake in Contact Energy Ltd, New Zealand, purchased from the New Zealand government in 1999. -- $676,000,000
Sell Homer City Generating Station in Pennsylvania, purchased in 1999. -- $1,800,000,000
Sell Edison Mission Wind Power Italy B.V., purchased in March 2000 -- $43,000,000
Shed investment in a Swiss telecommunications duct network. -- $116,000,000
Sell Boston, Massachusetts-based trading affiliate, Citizens Power LLC, which was purchased from P&L Coal Holdings Corporation and Gold Fields Mining Corporation on September 1, 2000. -- $45,000,000
Sell Latin America Edison Capital stake in a Mexican cable television system and several other Latin American projects. -- $15,000,000
Sell assets owned by Mission Land, which owns and manages industrial parks and other real property. -- $112,000,000
Over the past 12 years, Edison Capital has invested in housing developments representing 26,000 units in 35 states. Divest 1999 investments and commitments in the housing market. -- $293,000,000
Reduce compensation of top executives by at least 76% (Edison CEO Bryson makes $2.2M/year; SCE CEO Stephen Frank - $1.3M. Exec VP Bryant Danner - $1.1M) -- $7,500,000 (estimate)
Do not pay shareholder dividends -- $371,000,000
Eliminate all campaign contributions and lobbying expenses -- $2,000,000
Sell logo on Anaheim Angels' stadium -- $25,000,000
Eliminate all television advertising -- (Total Unknown)
Eliminate all donations to charities -- $40,000,000
Eliminate all non-essential expenditures (i.e., private aircraft, company cars and limos) -- (Total unknown; Rose Bowl float cost $250,000)
Total Quantifiable Savings -- $10,445,750,000
Below is a list of recent acquisitions and new affiliates, which could be sold if necessary:
January 1998 - Edison Capital International (Bermuda) Ltd.
February 1998 - Edison Capital Housing Delaware Inc.
March 1998 - Edison Mission Energy Services B.V. (Netherlands)
March 1998 - Edison Mission Operation & Maintenance Services B.V. (Netherlands)
June 1998 - Edison Capital (Netherlands) Investment B.V.
June 1998 - Edison Capital (Netherlands) Holding Company B.V.
July 1998 - G.H.V. Refrigeration, Inc.
August 1998 - Edison Capital Ventures
September 1998 - Westec Residential Security, Inc.
September 1998 - Valley Burglar & Fire Alarm Company, Inc.
December 1998 - Edison Mission Marketing & Trading, Inc.
March 1999 - Chestnut Ridge Energy Company
March 1999 - EME Homer City Generation L.P.
March 1999 - Edison Mission Energy Fuel Services, Inc.
March 1999 - Mission Energy Westside, Inc.
May 1999 - Contact Energy Limited
July 1999 - Edison First Power Limited
July 1999 - Storm Lake Power Partners I LLC
December 1999 - Midwest Generation, LLC
March 2000 - Italian Vento Power Corporation 4 S.r.l.
March 2000 - EcoElectrica L.P.
April 2000 - ISAB Energy s.r.l.
April 2000 - CPC Cogeneration LLC
June 2000 - Edison Source Norvik Company
July 2000 - Tri Energy Company Limited
August 2000 - Edison O&M Services
September 2000 - Edison Mission Marketing & Trading, Inc. (Citizens Power)
October 2000 - Edison Mission Energy Fuel Services, LLC
back to top
©2000-2004 FTCR. All Rights Reserved. Read our