California PUC to consider restructuring rules change

The California Public Utilities Commission agreed Tuesday to hear on an expedited basis requests by Pacific Gas & Electric Co., a unit of PG&E Corp., and Southern California Edison Co. to collect billions of dollars in unrecovered costs of wholesale power. Some of the approaches to be considered by the commission include taking the revenue earned by generators and using it to net out the operating losses of the utilities, according to a statement.


Ann de Rouffignac
OGJ Online

The California Public Utilities Commission agreed Tuesday to hear on an expedited basis requests by Pacific Gas & Electric Co., a unit of PG&E Corp., and Southern California Edison Co. to collect billions of dollars in unrecovered wholesale power costs.

The two big utilities, under a rate freeze, were forced to buy power to serve their customers in extremely volatile wholesale markets this past summer. Under the California restructuring laws, these two utilities are still collecting money to compensate them for stranded costs and have a rate freeze in effect. They could not pass through to customers the increased costs of power purchased on the spot market this summer. PG&E said it has over $2 billion in uncollected revenue and the bills continue to mount by the hundreds of millions of dollars.

�We could only charge on average 5.4�kw-hr and but had to buy power at 18�,� says Ron Low, spokesman for Pacific Gas & Electric. �In just 3 months we paid $2.2 billion.�

In a filing earlier this month, PG&E and Southern California Edison asked the commission to change rules relating to the restructuring so they can recover the money over a reasonable period of time through retail electric rates.

�That�s the question. What impact will this have on rates,� says Armando Rendon, spokesman for the commission. �Nobody wants to repeat that experience of San Diego again.�

In response to the filing, the commission said Tuesday it will consider actions to protect California�s consumers and to mitigate the effects of power purchase costs on California�s utilities.

Some of the approaches to be considered by the commission include taking the revenue earned by generators and using it to net out the operating losses of the utilities, according to the statement.

Besides the immediate problem of dealing with the billions in wholesale costs, Loretta Lynch, California PUC president, says the entire restructuring bill in California should be reconsidered.

�We should evaluate the reality of California�s energy markets and act to coordinate energy policy based on today�s facts not theories to serve all California businesses, families, and the economy,� said Lynch.

Pacific Gas & Electric and Southern California Edison, a unit of Edison International, in filings earlier this week with the Federal Energy Regulatory Commission asked for a temporary return to cost-of-service rates, the system used before deregulation.

�We want to work with regulators, consumer groups, and policy makers to take the first steps to work out a �rate stabilization plan�,� says Low. �We are not asking to lift the rate freeze now because it would cause too much pain for consumers.�

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