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Enron Mail |
Maybe you guys were, but I wasn't aware that DWR was doing this. Thus, the
IOU default on the ISO grows. Sue Sue Mara Enron Corp. Tel: (415) 782-7802 Fax:(415) 782-7854 ----- Forwarded by Susan J Mara/NA/Enron on 02/08/2001 11:11 AM ----- "Ronald Carroll" <rcarroll@bracepatt.com< 02/08/2001 11:05 AM To: <acomnes@enron.com<, <jdasovic@enron.com<, <jsteffe@enron.com<, <mary.hain@enron.com<, <smara@enron.com< cc: Subject: Fwd: DJ Calif/Power Purchases -2: DWR Ducking Its Duty -Reliant ----- Message from "Tracey Bradley" <tbradley@bracepatt.com< on Thu, 08 Feb 2001 09:19:53 -0600 ----- To: "Paul Fox" <pfox@bracepatt.com< cc: "Andrea Settanni" <asettanni@bracepatt.com<, "Jeffrey Watkiss" <dwatkiss@bracepatt.com<, "Ronald Carroll" <rcarroll@bracepatt.com< Subject: DJ Calif/Power Purchases -2: DWR Ducking Its Duty -Reliant FYI - Testimony at the court hearing yesterday revealed that the DWR is making the California ISO cover the difference between the real-time power DWR finds appropriately priced and what the state needs to buy to prevent blackouts. The purchases by the ISO will then be billed to the state's three IOUs, two of which are not paying their bills. DJ Calif/Power Purchases -2: DWR Ducking Its Duty -Reliant Copyright , 2001 Dow Jones & Company, Inc. The issue came up in hearings on a lawsuit filed by the California Independent System Operator, which runs the state's transmission grid, against Reliant Energy (REI), which wants to be allowed not to sell power to California if the state won't guarantee that it will be paid. Reliant is concerned that it won't be paid for power being bought by the ISO on the utilities' - rather than the DWR's - behalf. "We're willing to sell to the DWR, but they're not willing to step up to the plate," said Terry Houlihan, an attorney with Reliant. "The DWR has money for short- and long-term power purchases. It can avoid the situation if it does what the state Legislature said. Then there would be no need for a restraining order." The court issued a restraining order Tuesday night requiring Reliant to sell power to California Wednesday, then extended the order for another day Wednesday night. The rapidly deteriorating creditworthiness of PG&E Corp. (PCG) unit Pacific Gas & Electric Co. and Edison International (EIX) unit Southern California Edison first left generators unwilling to supply power to California in mid-December, when the U.S. Department of Energy intervened with an emergency order requiring suppliers to deliver spare power to California on demand. That order was extended several times, but expired Wednesday. Last week, the California state Legislature moved to secure the state's power supplies by passing a bill authorizing the DWR to enter into contracts to buy power and to finance those purchases by selling billions of dollars in bonds. The idea was to shift power purchases to a buyer with better credit than the utilities. While the bill didn't make the department responsible for covering the state's power needs, the clear message from the governor, the Legislature and the DWR was that the department would secure the power the utilities couldn't buy on their own. That apparent mission might have been altered in the face of the state's own mounting power bills, Maviglio said. The DWR has spent $40 million to $50 million a day buying power and has consumed around $750 million since it took over the job in earnest on Jan. 17. According to testimony at Wednesday's hearing, the DWR has left it to the California ISO to cover the difference between the real-time, or emergency, electricity it finds appropriately priced and what the state needs to buy to keep the lights on. The ISO, in turn, has been billing the state's three investor-owned utilities for power it buys to cover the needs of their customers. "In emergency dispatches, the DWR has not agreed to pay a certain price," said Jim Detmers, and operations officer at the California ISO. "If the DWR does not agree that it will pay a certain price, then it will not procure that power. The ISO will be forced to procure it. Then the ISO will bill the utility wherever the power is needed." The utilities have together defaulted on hundreds of millions of dollars in debt service obligations and power bills, and have said they would already have run out of cash had they paid their bills on time. The volume of power left over by the DWR wasn't known. A spokesman for Southern California Edison said that, to date, the utility is unaware that it's being billed for ongoing power purchases. Pacific Gas & Electric wasn't available for comment. The ISO normally bills for power up to 60 days after it's delivered. The California Electricity Oversight Board, which oversees the operations of the ISO, dismissed the generators' concerns, saying they were threatening to withhold supply to gain leverage to force the DWR to sign long-term contracts at high prices. The ISO, however, indicated that credit concerns remain an issue. "The credit issue is an ongoing problem," Detmers said. "Some generators have indicated they would not supply California, because they are not being paid." Steve Fleishman, an analyst at Merrill Lynch, said California needs to take steps to alleviate those concerns. "In the end, there has to be a creditworthy party and someone who is willing to pay to backstop this situation," Fleishman said. Said Reliant President and Chief Operating Officer Joe Bob Perkins in letter to Gov. Davis Tuesday night, "Unless an immediate change in direction occurs, the California ISO and the Department of Water Resources have set the stage today for a return to credit-driven blackouts in California." The ISO argues that Reliant has contractual obligations to continue supplying power to California. -By Jason Leopold, Dow Jones Newswires; 310-666-9986; mailto:jason.leopold@dowjones.com(Andrew Dowell in New York contributed to this article.) (END) Dow Jones Newswires 08-02-01
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