Edison admits diverting funds

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Edison admits diverting funds

Utilities funneled billions; now cry poor February 11, 2001


SACRAMENTO, Calif. -- Southern California Edison diverted $1.4 billion in excess corporate tax payments to its parent company to help it purchase power plants around the world, executives said.

Edison International Chairman John Bryson told a state Assembly panel on Friday that the payments, received over the past five years, were used to fund acquisitions by Edison International's other companies.

Recent Public Utilities Commission audits confirmed that both SoCal Edison and Pacific Gas & Electric, the state's other major utility, had transferred billions to their holding companies.

The money -- much of which came from selling power plants, as the utilities were required to do under deregulation -- fueled the other subsidiary businesses and represented almost all the parent companies' net income in recent years.

Bryson defended the company, saying it had paid $500 million to fix transmission lines and borrowed $4 billion to "keep the lights on."

But Assemblyman Juan Vargas said Edison International should return the money to SoCal Edison, which is billions in debt and on the brink of bankruptcy.

"They tried to keep both sides separate, but the reality is the holding company benefited from the utilities. It was a huge benefit," Vargas said. "Now is the time to give that back. This should not be a one-way street."

The parent firms were established under PUC rules mandating that the capital needs of the utilities would be the firms' top priority.

An audit of PG&E disclosed that the utility had made tax payments to its parent company from 1997 through 1999 that exceeded what it paid in state and federal taxes by $663 million. But the audit of SoCal Edison failed to disclose a similar overpayment.

According to information SoCal Edison provided the Assembly committee, the utility paid hundreds of millions every year to Edison International to cover its share of the parent company's consolidated tax filings for all Edison companies.

But the payments were often substantially more than Edison International eventually paid the state and federal governments, because other companies under the Edison corporate umbrella were in substantial tax-loss positions.

California is currently purchasing power at the rate of $45 million a day in taxpayer money because the state's debt-strapped utilities are on the brink of bankruptcy.

Edison and PG&E say they have lost nearly $13 billion due to soaring wholesale prices.


-- Martin Thompson (mthom1927@aol.com), February 11, 2001

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