The Associated Press
A federal appeals court temporarily has blocked a settlement between California’s second-largest utility and state power regulators that would keep electric rates at record highs for the next two years.
The 9th U.S. Circuit Court of Appeals on Tuesday granted a consumer advocacy group, The Utility Reform Network, two weeks to try to convince a district court judge in Los Angeles to permanently block the settlement.
Consumer groups, including TURN and the Foundation for Taxpayer and Consumer Rights, say the deal unfairly makes ratepayers carry the burden of the utility’s debt, and that the Public Utilities Commission, members of Gov. Gray Davis‘ staff and Edison lawyers should not have negotiated in secret.
“This order confirms that there are substantial questions about the legality of what the CPUC has done,” TURN Executive Director Nettie Hoge said in a written release. “The appellate court wants to see ratepayers protected while those questions are answered.”
But PUC officials said Tuesday the settlement likely will go forward despite the stay.
U.S. District Judge Ronald S.W. Lew previously said the agreement was “fair, adequate and reasonable to the parties, the shareholders and to the public and is not a bailout by any means.” It is he who would have to overturn his previous ruling for the stay to become permanent.
“The court has not decided anything on the merits of the stay, or the merits of the case,” said PUC spokeswoman Terrie Prosper. “TURN jumped the gun in appealing to the 9th Circuit. We are confident that the settlement agreement is the right thing for consumers, and that Judge Lew will make the appropriate ruling.”
If the settlement goes forward, Edison has said it believes it will accumulate enough cash and gain financing by the middle of the first fiscal quarter of 2002 to pay its debt to banks, bondholders and power generators.
“TURN’s motion for a stay simply has no merit, and we will continue to vigorously oppose it,” Edison said in a written release.
The PUC has said the ruling was fair to ratepayers and should allow Edison to pay its debt by the end of 2003. The ruling also would allow the commission to retain authority over Edison, in contrast to a bankruptcy reorganization plan proposed by PG&E to cope with its financial troubles.
The Edison deal was negotiated over 10 days this fall to keep the Rosemead-based utility from following Pacific Gas and Electric, the state’s largest utility, into bankruptcy.
PG&E and Edison blame their financial woes on California’s 1996 deregulation law that prevented them from passing on skyrocketing wholesale power costs to ratepayers. The state stepped in, buying billions of dollars in power for the cash-starved utilities.