By the OGJ Online Staff
HOUSTON, June 13 -- The California Public Utilities Commission Wednesday ordered Southern California Edison Co. to make back payments of 15% of what it owes small independent power companies or "qualifying facilities," if the companies can prove financial hardship.
Commissioner Henry Wood said he voted for the measure under protest, noting previous overpriced contracts with the QFs forced California consumers to pay "billions" of dollars in overcharges and "led to the push for deregulation that resulted in the current debacle."
But because of the state's desperate need for power this summer, Wood said, there appeared to be no reasonable alternative. He said the upshot will be the state has committed the utilities to buy from generators "who are among the most inefficient in the state" well into the future when more efficient generation will become available.
The PUC order included terms reached Tuesday between Southern California Edison, a unit of Edison International, Rosemead, Calif., and the qualifying facilities (QF) which supply power to the utility under contracts.
Southern California Edison owes the QFs an estimated $1.3 billion in back payments. Earlier this year many QFs quit producing power and threatened to push the utility into bankruptcy after it ran out of cash buying electricity in California's volatile wholesale electricity market.
After the utilities halted payment, some QFs went to court to be released from their utility contracts so they could sell power on the open market. That helped spur the PUC into action.
Altogether, the QFs represent about 11,000 Mw or 22% of the state's electric generating capacity. They have proved pivotal in keeping the lights on in California.
The California Independent System Operator ordinarily can count on about 6,000 Mw being available at any one time because much of the capacity is wind power and that varies.
Pacific Gas & Electric Co., unit of PG&E Corp., San Francisco, the state's biggest utility, was ordered to make back payments of 20% of what it owes QFs by the federal judge presiding over the utility's bankruptcy protection case.
QFs were created under the auspices of Public Utility Regulatory Policies Act of 1978 (PURPA) and are governed by the Federal Energy Regulatory Commission. The PUC, however, said it has the primary role in calculating payments and in overseeing the contractual relations.
Under an earlier PUC decision, both utilities are supposed to be paying the QFs for deliveries they are currently making.
