SACRAMENTO — A Los Angeles federal judge signed off on a $3.3 billion settlement between the California Public Utilities Commission and Southern California Edison Friday, angering consumer groups who called the ruling a “travesty of justice.”
The decision by Judge Ronald Lew to accept the terms of the settlement brings to an end Edison‘s 10-month lawsuit against the state. The agreement, which was reached in private Tuesday, allows the state’s second-largest utility to pay off its debts through rate increases and keeps Edison from joining fellow utility PG&E in bankruptcy court.
While the decision was good news for Gov. Gray Davis and many lawmakers who are happy to put the issue behind them, consumer groups have vowed to keep battling what they view as a consumer bailout of the company.
Opponents of the plan, which include The Foundation for Taxpayer and Consumer Rights and The Utility Reform Network, say the deal not only violates state law by overriding California’s deregulation statute, but because the CPUC is a state agency, the settlement is outside of the jurisdiction of a federal judge.
The groups say they are prepared to file an appeal with the Ninth Circuit U.S. Court of Appeals. They say they are also looking into filing suit in state court and possibly trying to overturn the agreement through a ballot initiative, if legally possible.
“A regulatory agency has no authority to rewrite laws — only the Legislature can do that, and it refused,” said consumer advocate Harvey Rosenfield, referring to the Legislature’s reluctance last month to agree to Gov. Gray Davis‘ Edison bailout plan.
Rosenfield said California’s deregulation laws were intended to protect the public through a rate freeze. He said the settlement Lew approved Friday writes that law out of existence.
“There’s no doubt in any lawyer’s mind that this settlement is beyond the lawful authority of the PUC,” he said.
Michael Florio, a senior attorney with TURN, said not only did the CPUC overstep its authority, but the commission actually gave Edison $400 million more than the company had initially requested from the Legislature.
“It’s not just a bad decision, it’s gross incompetence,” he said. “Either PUC negotiators flunked Negotiation 101 or they didn’t understand the document they signed.”
One person pleased with the decision was the governor.
“My thanks goes to Judge Lew and all the parties whose hard work protected thousands of jobs and ensured there would be no rate increase for Edison‘s customers,” Davis said in a prepared statement.
“Restoring our second-largest utility to financial health is another step toward putting the [energy] crisis behind us.”
Under the settlement, approximately $2 billion of the debts Edison incurred during the energy crisis will be paid with previous rate hikes, with the other $1 billion expected to come from the company’s shareholder dividends. Edison serves about 5 million homes and businesses in Southern California.