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Consumer Group To Ask Judge Fri To Block SoCal Ed Deal
Dow Jones Interactive November 2, 2001 POWER PROBLEMS Dow Jones Interactive November 1, 2001 Calif PUC To Pass Power-Bond Measures By Jan -Counsel Dow Jones Interactive November 1, 2001 Consumer Group To Ask Judge Fri To Block SoCal Ed Deal LOS ANGELES -(Dow Jones)- A consumer group is expected to submit formal arguments Friday in U.S. District Court in Los Angeles that a deal struck between California regulators and Southern California Edison to keep the utility out of bankruptcy violates state law. San Francisco-based The Utility Reform Network succeeded Tuesday in temporarily blocking the settlement between the California Public Utilities Commission and the Edison International (EIX) unit, which would allow Southern Californa Edison to use $3.3 billion of ratepayer revenue to pay its bank debts and electricity costs, after receiving a temporary stay of the deal in the 9th Circuit Court of Appeals. The 9th Circuit Court of Appeals instructed TURN to argue for a permanent stay in U.S. District Court in Los Angeles and delayed the settlement from moving forward for two weeks. The consumer group is expected to argue the deal between the PUC and the utility should be voided because it was reached during two weeks of secret negotiations and because it violates state laws requiring decisions on ratemaking matters to be conducted through public hearings. TURN attorney Mike Florio said the deal unfairly requires the utility's customers to pay higher electricity costs to help the utility pay off its debt. Edison executives said the utility expects to pay off its creditors during the first quarter of 2002, but the company agreed if TURN succeeds in delaying the settlement agreement the utility would be unable to pay its creditors next year. Gil Alexander, a spokesman for Southern California Edison, said the utility will respond to TURN's arguments Tuesday. U.S. District Court Judge Ronald Lew, who earlier this month rejected TURN's arguments calling the deal "fair," will hold a hearing on the matter Friday morning and is expected to rule at that time, according to Lew's court clerk. The 9th District Court of Appeals said if TURN doesn't receive a favorable ruling from Judge Lew, the group can argue its case in the 9th Circuit, which Florio said it would do if it fails to block the deal. Alexander said Southern California Edison will argue that the settlement, ending a year-old lawsuit brought against the PUC, "is very important and meaningful for shareholders and our customers." "We will argue that it is very important for there to be no permanent stay and for the appeal to fail because it takes California back toward no resolution and creates further chaos," he said. Southern California Edison became insolvent this year because state law prohibited the utility from passing on skyrocketing electricity costs to its customers. Separately, TURN and other California consumer groups urged Attorney General Bill Lockyer this week to reconsider a decision his office made last month that consumer groups had "no legal basis for objection or opposition" to the Southern California Edison, California Public Utilities Commission settlement. POWER PROBLEMS The response to terrorist attacks in New York and Washington has understandably pushed a lot of other important public matters out of mind, but a case can be made that some of them deserve renewed attention not in spite of the attacks, but because of them. Power generation is among them. Earlier this year, the agency that runs New York's power grid made a persuasive case that the state needs to bring another 8,600 megawatts of power on line in the next four years to avoid the kind of power shortages that befell California . All that has changed is the urgency: New York's economy has faltered, making it all the more difficult to attract industry to a state where electric rates are exorbitant, while the arrival of foreign terrorism has raised concerns about the security of existing power plants. What stands in the way is a plant-siting bureaucracy that recently stretched out approval of a Greene County plant to more than two years, a year longer than law allows. It's an agonizing process that serves mainly to discourage potential investors from even thinking of building a plant in this state, especially as it compares to more streamlined processes in neighboring states such as Connecticut, which gets the job done in six months. Americans have depended on easy access to electricity for decades, but with the advent of the microchip and all that it has produced - from computers to cell phones to remote controls - our reliance has increased. New York barely had enough power available to get through the peak- usage times of summer. While the weakening economy may actually serve to decrease demand for a time, that slackening should be viewed not as an excuse to delay, but as a grace period that may help the state meet demand for electricity while increasing the available supply. Use may or may not decline during this economic slowdown, but sooner or later, it is bound to rise. Some advocates of a speedier siting procedure see signs of hope, largely because the issue seems to have riveted the attention of the Public Service Commission, which is the lead agency in the approval process. Still, nothing concrete has happened to suggest that the regulatory bottleneck has been opened enough to allow an efficient and careful routine to be established. Given the need - to protect existing supply, to improve economic prospects for the future and to ensure a steady supply in the event of any kind of interruption - the state needs to be sure this matter does not short-circuit during this time of stress. Calif PUC To Pass Power-Bond Measures By Jan -Counsel LOS ANGELES -(Dow Jones)- California utility regulators expect to approve a measure in January that will allow the state to sell $12.5 billion in bonds to repay the state's general fund and banks for power purchases made this year. Delays in the bond issue, originally planned for May, may deepen the state's budget deficit in the coming fiscal year and threaten to further tarnish the state's credit ratings. "At this point, we are aiming to have everything done by January related to the revenue bond sale," said Gary Cohen, general counsel for the California Public Utilities Commission. The PUC refused earlier this month to pass a so-called rate agreement, which would spell out how the bonds would be repaid, because it would give the the state's power buying arm carte blanche to raise electricity rates without public hearings and without oversight by the PUC. In addition, PUC President Loretta Lynch wants the governor's office to renegotiate the tens of billions of dollars in long-term power contracts it signed with more than a dozen energy companies at the peak of the market. One of the commission's objections to the rate agreement is that it would lock the state into overpriced, overlong deals that will saddle ratepayers with high electricity costs for the next decade. So far, neither the state nor the PUC have identified which power pacts they want to renegotiate. Spokesman for Dynegy Inc. (DYN), Williams Cos. (WMB) Calpine Corp. (CPN) and Sempra Energy Resources, a unit of Sempra Energy (SRE), have said they haven't been formally contacted by state officials to talk about renegotiating the deals. Williams and Dynegy said they would consider renegotiating the contracts, but only if the result would benefit both parties. Calpine said it would be difficult to rewrite the pacts, but the company is willing to talk with state officials. The PUC met with members of Gov. Gray Davis' staff last week to figure out a strategy for renegotiating the contracts, and talks are ongoing, Cohen said. "We are all in agreement that we want to renegotiate at least some of the contracts," Cohen said. "We have technical people looking at the contracts to figure out what we want to accomplish, what kind of portfolio we want in terms of duration and price. My view is we need to have a solid plan before we embark on renegotiations." Steve Maviglio, a spokesman for Davis, said the governor's office had no comment on the renegotiation talks. Davis has been criticized for entering into the deals at to high a price just before the spot market for power collapsed. His staff defended the contracts, saying they brought stability to the spot electricity market and helped bring down prices. The parties haven't identified which contracts should be renegotiated, Cohen said. "We're trying to figure out what we want to achieve, how many megawatts we want, and for how long, and at this point I don't know the answer," Cohen said. "It seems like to start off and just pick one to renegotiate will not be effective. We need a plan." Cohen said he cannot predict when renegotiations will take place, but the PUC is "pretty far along" in its analysis. A new rate agreement could be passed in a month, but the PUC is "aiming to have everything done by January related to the bond sale," Cohen said.
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