PUC faces deadline in Southern California Edison case
With a deadline bearing down, the California Public Utilities Commission does not have specific items on this week's public agenda needed to keep Southern California Edison Co. out of bankruptcy under a plan negotiated between the utility and Gov. Gray Davis. The utility defaulted on $200 million more in long-term notes Friday.
By the OGJ Online Staff
HOUSTON, June 4 -- With a deadline bearing down, the California Public Utilities Commission does not have specific items on this week's public agenda needed to keep Southern California Edison Co. out of bankruptcy under a plan negotiated between the utility and Gov. Gray Davis.
"The PUC June 7 agenda is void of any implementing items. That is very concerning to us," said Ted Craver, chief financial officer of Edison International, parent of Southern California Edison Co., during a Friday conference call.
The PUC must act by June 8 on certain provisions of a memorandum of understanding or Southern California Edison can "walk away from the deal," he said.
The near-bankrupt utility and the governor negotiated a "memorandum of understanding" or MOU in March that would bail the utility out and keep power flowing to its customers. The state would end up owning Southern California Edison's transmission system, which the state would pay for from the proceeds of a bond issue. The bonds would be serviced by revenue from ratepayers. The complex MOU has a built-in series of deadlines, including a 60-day window for the PUC to act on the following items:
� Adopt utility ratemaking for utility-owned generation.
� Change the way electricity from the Palo Verde nuclear power plant is sold on the market and return that electricity to traditional rate making.
� Clarify the relationship of the utility with the holding company and affirm the "priority" of the holding company.
� Design an energy procurement mechanism for the utility when it returns to buying power for itself.
� Defer the general rate case until there can be one full test year.
Craver said less the controversial measures, with the possible exception of the one that applies to the relationship between the holding company and the utility, could still show up on the PUC's agenda the day of the meeting. He said PUC rules allow regulators to place the items on the agenda the day of the meeting under emergency conditions.
Craver would not say if the PUC's inaction would move Southern California Edison, which defaulted on $200 million more of long-term notes Friday, closer to filing for bankruptcy. He did say the deal with the governor was not subject to renegotiation.
"The company will evaluate what it does in that case," Craver said. Southern California Edison ran up more than $5.4 billion in wholesale power costs that it could not pay because it could not recover the money from ratepayers during a rate freeze. Faced with similar circumstances, Pacific Gas & Electric Co. filed for bankruptcy protection.
Southern California Edison's financial problems continue to escalate. Some 30 small generators known as qualifying facilities have filed suit for nonpayment of past due bills. Some have obtained liens against the company.