Judge refuses to grant stay in $3.3 billion settlement

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The Associated Press

Opponents promised to take their case to a higher court after a federal judge refused Friday to block a $3.3 billion settlement between Southern California Edison and power regulators.

On Oct. 31, the 9th U.S. Circuit Court of Appeals gave The Utility Reform Network two weeks to convince the judge to permanently block the settlement.

TURN wanted implementation of the settlement put on hold while the appeal makes its way through the courts.

The San Francisco-based consumer advocacy group opposes the settlement because it requires Edison customers to continue paying among the country’s highest electric rates for the next two years. State officials say the settlement will prevent Edison from following California’s largest utility, Pacific Gas and Electric Co., into bankruptcy.

“The court finds that TURN has failed to show a likelihood of success on the merits of its appeal,” U.S. District Judge Ronald S.W. Lew ruled, citing written arguments submitted by Edison, the Public Utilities Commission and TURN.

Lew’s five-page decision called the settlement agreement “fair, adequate and reasonable to the parties, to the creditors and to the public.”

“A stay of the stipulated judgment at this time would create a greater threat of harm to the parties, the creditors and the public than to TURN,” he wrote.

Under the plan, Edison will pay off $3.3 billion of its estimated $6 billion in debts while charging Edison customers high rates, imposed last May, for the next two years.

Lew said TURN’s argument that Edison ultimately would be unable to pay refunds to ratepayers was speculative and depends on when refunds would be ordered and the time over which they would have to be paid.

He said TURN failed to show the settlement would cause irreparable injury to it or its members.

TURN attorney Michael Strumwasser said outside court that his group will petition the appeals court to issue a stay as a measure to protect the rights of ratepayers to refunds allegedly due to them.

Without a stay, he said, Edison will be free to use the $3.3 billion to pay off its creditors and nothing will be left for refunds.

“Unless there is a stay by February, they will have paid off the creditors,” he said.

“We don’t believe the stay is warranted. … We’re confident the settlement we’ve done with the PUC is in the public interest and a very important step in getting the state out of the business of buying power. We’re confident the ruling will be sustained on appeal,” Edison attorney Stephen Pickett told reporters.

The deal would require Edison shareholders to forego $1.2 billion worth of dividends over three years and have Edison use its available cash to pay the remainder.

Consumer groups, including TURN and the Foundation for Taxpayer and Consumer Rights, have said the deal unfairly makes ratepayers carry the burden of the utility’s debt, and that the PUC, members of Gov. Gray Davis‘ staff and Edison lawyers should not have negotiated in secret.

Consumer Watchdog
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