Power producer sues Southern California Edison for $100 million

Ann de Rouffignac
OGJ Online

HOUSTON, Nov. 14 -- CalEnergy Operating Corp. filed suit Wednesday against Southern California Edison Co. in a California superior court to collect $100 million in past due energy payments.

In addition, Des Moines, Iowa-based CalEnergy, a geothermal energy producer, is seeking enforcement of an agreement that sets the price of power going forward. CalEnergy claimed in the Imperial County Superior Court lawsuit that SCE has owed it $100 million since last winter for electricity it has already delivered. SCE until recently was on the brink of insolvency and allegedly couldn't pay.

"We categorically reject as untrue the claim that SCE breached any settlement agreement with CalEnergy or otherwise acted inappropriately," said Brian Bennett, a spokesman for SCE.

SCE agreed in June to pay CalEnergy for energy going forward and make partial payment on past due amounts, CalEnergy said. The balance of the debt SCE owed renewable energy power producers was to be paid as soon as SCE was on sound financial footing.

In return, CalEnergy and other renewable generators who formed a creditors committee agreed to continue to supply power to SCE and not to file involuntary bankruptcy against the Rosemead, Calif., utility unit of Edison International, while the state worked out a rescue plan.

Two of California's utilities were burdened with billions in debt buying wholesale power at soaring prices to serve customers who were paying fixed price low rates. The mismatch drove Pacific Gas & Electric Co. to seek bankruptcy protection and placed SCE on the edge of insolvency.

SCE owes renewable generators and other small power producers known as qualifying facilities (QF) close to $1 billion, according to Jay Lawrence, spokesman for the renewable creditors committee. SCE stopped paying small generators in November of last year. But most of the QFs continued to produce power even after the utilities stopped paying for it, the generators claimed.

SCE reached an agreement with the California Public Utilities Commission in early October that would restore the company to creditworthiness, allowing it to pay off creditors. That agreement required SCE to pay the QFs a fixed rate of 5.37¢/kw-hr for 5 years, Lawrence said.

But he said SCE has not paid CalEnergy anything on the past due debt. Nor is SCE paying for current power at the agreed to rate. Instead, SCE is paying only 2-3¢/kw-hr, said Lawrence.

"Our patience and our ability to carry Edison's past due debt has run out. It has been a year since Edison first stopped making payments. We entered into a settlement for payment 6 months ago. It now is reneging on its agreements," said David Sokol, chairman of CalEnergy's parent, MidAmerican Energy Holdings Co., Des Moines.

CalEnergy cooperated with SCE to help the company avoid bankruptcy protection and also supported legislative efforts to restore SCE to creditworthiness, Sokol said. "Edison was happy with our support and assured us it would live up to its promises during its protracted fight to avoid bankruptcy. We are owed more than $100 million and deserve to be paid," he said.