California PUC passes buck to state

By Ann de Rouffignac
OGJ Online

HOUSTON, Feb. 22�The California Public Utility Commission voted Thursday to make the state�s Department of Water Resources (DWR) financially responsible for the net shortfall of power consumed but not paid for by the state�s two largest utilities.

DWR finds itself in the same position as most California independent generators�producing and delivering power to the state�s largest utilities without compensation. A number of generators are supplying power to Pacific Gas & Electric Co. and Southern California Edison Co. under federal court order and are not getting paid to do so.

DWR was authorized by the state via legislation passed Feb. 1 to buy power on behalf of the utilities, making up the difference between what the utilities could self-generate and what they needed to serve load (the net short position).

But DWR quickly ran through $400 million emergency appropriation and found itself on the hook for power it continued to buy and send to utility customers. No more money was authorized by the legislature even though the DWR sent a formal request for more the first week of February.

The DWR then turned to state regulators. The department requested in a Feb. 16 letter to Loretta Lynch, president of the California Public Utilities Commission (PUC), a clarification of PUC rules interpreting the new bill.

There was considerable controversy after the passage of the legislation over who was financially responsible for the net short position of the near bankrupt utilities. Some said the utilities were ultimately responsible. Some said the state via the DWR was. In its letter, the DWR asked the PUC to order the utilities to turn over revenue collected from customers corresponding to the power bought by DWR on their behalf.

However, the commissioners voted to postpone until March 15 a decision on whether revenue should be turned over to the DWR. But they approved a measure inserting the name of the Department of Water Resources as responsible for the net shortfall in revenue and struck out the names of the utilities.

Commissioner Richard Bilas said the DWR was caught in a difficult position just like the utilities. It can�t collect enough to pay for wholesale power purchases.

�But DWR won�t go bankrupt,� said Bilas. �The utilities will. If our goal is to keep them out of the bankruptcy court, then we must vote this in.�

Indeed, the commission voted to exclude the utilities from financial responsibility for power purchases beyond what they can self-generate and give that responsibility to the state.