Contra Costa Times
The quest for billions of dollars to restore stability to California’s troubled electricity industry continued on several fronts Tuesday but at the end of the day there was little visible progress toward ending the year-long crisis.
The electricity mess returned to the spotlight on Tuesday, as legislators, regulators, Gov. Gray Davis, consumer advocates and utility executives all made moves in a complex contest which has turned into a three-dimensional chess game, full of bluffs and feints.
Activity spanned the state. In San Francisco, the Public Utilities Commission put off for two weeks action on new rules needed to clear the way for a $ 12.5 bond issue that would be used to finance future power buys and to repay money already spent from the state’s general fund. Regulators need more time to “carefully consider and address the policy and legal arguments” and a large amount of information submitted by parties to the case, PUC President Loretta Lynch said in a release. Draft decisions will be issued by Aug. 27, and acted on Sept. 6, she said.
PUC action had originally been scheduled for Thursday in order to meet Treasurer Phil Angelides’ goal of selling the bonds by the end of October. While any delay was unwelcome, that deadline can still be met, said Cathy Calfo, a spokeswoman for Angelides.
And a challenge surfaced Tuesday in Sacramento, where Pacific Gas & Electric Co. asked a Superior Court judge to throw out a rate request by the state Department of Water Resources. That rate finding, which was the basis for the proposed PUC rules package. was invalid without public hearings, PG&E said. “DWR is attempting to overcharge electric customers in PG&E‘s service area by over $ 1.4 billion,” Roger Peters, the utility’s general counsel, said in a release. “DWR should not be given a blank check to pay for its high-priced power contracts.”
In its bid to rein in DWR, PG&E found itself allied with an old adversary: Harvey Rosenfield, founder of the Foundation for Taxpayer and Consumer Rights. From the group’s Santa Monica headquarters, Rosenfield issued a fiery commentary threatening to wage “the Mother of All Ballot Wars next year” if state power buyers aren’t subject to more oversight.
The foundation objects to the PUC‘s plan to cede to the DWR authority to set some rates in the electricity bills of 10 million utility customers. Those rates would be used by the DWR to pay the bond debt as well as to pay obligations under its $ 43 billion portfolio of long-term power contracts and administrative costs. “They’re proposing to throw up their hands and say the power companies won, the utilities won and the public has lost,” said Doug Heller, spokesman for the foundation.
“Whatever revenue requirement DWR says it needs, it gets,” he added. “That’s just bad government.”
As part of its package, the commission would also suspend a program that allows customers to shop around among competing power suppliers. Such “direct access” was a central tenet of the state’s 1996 electricity restructuring law, with strong support from large commercial and industrial users.
State finance officials say all these measures are needed to assure Wall Street that customers of the state’s three large utilities will kick into make payments to bond holders. Delay in selling those bonds could cost the taxpayers more money, since at the end of October the interest rate on the state’s $ 4.3 billion short-term “bridge loan” is due to ramp up. But Calfo, the treasurer’s spokeswoman, said concern about the interest rate hike was outweighed by the need to replenish the general fund.
Such concerns have persuaded one PUC member, Commissioner Richard Bilas, a Republican free market enthusiast, to back the proposed rules package. “We’re in a position where we can really mess up the finances of this state, and I’m not going to put myself in a position of doing that,” he said in an interview last week.
Meanwhile, controversy simmered around legislation that would provide billions of dollars of financial relief to SoCal Edison. Rosenfield, who claimed to have 1,000 volunteers ready to participate in a ballot initiative campaign, also threatened to go to the voters if revenue from small electricity users goes to repay utility debts.
That got the attention of SoCal Edison Chief Financial Officer Jim Scilacci, who told investors that he saw in Rosenfield’s “a threat you have to take seriously, and we will.” SoCal Edison, which ran up a $ 4.2 billion deficit buying wholesale electricity that cost more than the retail rate, has been impatiently waiting for a state package as an alternative to a bankruptcy filing. Pacific Gas & Electric filed for bankruptcy in April.
