State to Reveal Schedule in June for Bond Sale

California’s long-delayed plan to sell bonds to cover electric power costs is getting closer to reality, but Treasurer Phil Angelides on Thursday still couldn’t say exactly when the securities may be sold.

“The major actions that are needed have been completed” to let the bond sale proceed, including regulatory approvals that provide revenue to back the debt, Angelides said during a conference call with investors.

But although other state officials have said the sale may begin in September, “I don’t want to speculate” on a date, Angelides said. The state plans to release a “definitive” schedule next month, he added.

The $11.1-billion offering, which would be the largest municipal debt sale in U.S. history, will let the California Department of Water Resources repay the state’s general fund for a $6.56-billion loan for last year’s energy costs, pay off an interim $4.3-billion borrowing from banks and cover other power-related expenses.

The California Public Utilities Commission in February approved using revenue from the state’s three largest investor-owned utilities to pay off the bonds and cover state energy contracts.

California faces a projected budget deficit of $23.6 billion in the fiscal year beginning July 1. State officials have said they want to sell the power-buying bonds as soon as possible to repay last year’s loans. The state already plans to sell a record $7.5 billion in short-term notes by mid-year to shore up cash reserves.

Angelides revealed more about the expected structure of the power-bond deal. He said that about nine-tenths of the debt will be sold as tax-exempt securities. The rest will be sold as taxable bonds.

About $4 billion of the bonds are expected to be sold on a variable-rate basis, with yields reset periodically, Angelides said.

The power plan involves energy the state water department bought on behalf of PG&E; Corp.’s Pacific Gas & Electric and utility units of Edison International and Sempra Energy. Pacific Gas and Southern California Edison, the state’s two largest power utilities, became insolvent last year buying electricity for more than they could charge customers under state law.