District investments in Edison could spell financial trouble

Danette Goulet

NEWPORT-MESA -- School district officials learned Wednesday they have

more to worry about with the state’s energy crisis than just whether the

lights stay on.

With roughly $1.3 million invested in Edison International, which is

on the verge of bankruptcy, rolling blackouts could be the least of the

schools’ problems.

District officials said they are not concerned that county Treasurer

John M.W. Moorlach invested about 3.3% of the countywide school district

investment pool in the floundering utility company.

“What we believe is at risk is not our money, but the percentage of

interest we could have drawn from that,” Supt. Robert Barbot said.

All 31 districts in Orange County contribute to an investment pool

worth $1.3 billion, which is controlled by Moorlach. As of Dec. 31,

Newport-Mesa Unified School District’s stake was nearly $42 million.

Moorlach invested $20 million of the total pool in Edison on Sept. 28.

The investment terminates at the end of this month, making it safe if the

company goes under.

Moorlach invested an additional $20 million Dec. 7. That investment

period does not end until July.

Despite the precarious position of the power company, Moorlach said he

expects the state will come to Edison’s aid and ensure the safety of the

investments.

“I feel confident that we will get our principal back,” he said. “I

believe at this critical juncture that the state has to remedy the

problem.”

Despite the already shaky position of Edison when Moorlach invested

the second $20 million, he said the county investment officers reviewed

the available options and found Edison to be sound.

“At the time of Dec. 7, it was felt that they were confident, I was

confident, with this investment and the holding period,” he said. “And

that the state would not allow our utilities to get to this condition,

but that leadership would have been shown.”

The district’s financial advisor, Mike Fine, the assistant

superintendent of business services, said he agrees with the decisions

Moorlach has made.

“I’m not expecting Edison to go anywhere, and I don’t think John

[Moorlach] was expecting Edison to go anywhere,” Fine said. “I don’t

think Edison has given anyone the straight scoop, and I don’t think the

state has given anyone the straight scoop.”

Fine said he also thought that because the school district consumes

massive amounts of energy in Orange County, the district’s investments

would be safe.

“We pay them a lot of money collectively for their power, and if

Edison is going to default on bonds, as consumers, schools in this county

may very well take their business elsewhere,” Fine said.

Fine added that he thought the bigger problem was Edison’s lack of

cooperation with school districts in preparing for the rolling blackouts

of the kind that affected parts of the state on Wednesday.