City News Service of Los Angeles
A federal judge held off today on signing a proposed settlement that Southern California Edison reached with the state’s utilities commission, until all interested parties have time to comment on it.
At a hastily called hearing, U.S. District Judge Ronald Lew said he had not had a chance to read the proposed settlement.
But, he said, “If it’s a fair agreement … I will sign off on it.”
Lew gave The Utility Reform Network and Los Angeles County until 4:30 p.m. tomorrow to file responses to the proposal.
After that, SCE and the California Public Utilities Commission will have until 10 a.m. Thursday to file a response. Lew said he will then hold another hearing or make a ruling.
“We had no prior knowledge of the settlement,” said Deputy County Counsel Lillian Salinger.
Michael Strumwasser is a lawyer for TURN, a nonprofit organization that represents the interests of residential and small commercial ratepayers.
He said he was “unaware of the negotiations” and “troubled” by the summary sheet he read on the proposed settlement.
After the hearing, he told reporters that the proposed settlement “looks like a $3.3 billion bailout.”
“The fact that they negotiated in secret and approved it without public notice suggests that they are as ashamed as they should be,” Strumwasser said after the hearing.
During the hearing, SCE attorney Ronald Olson said the agreement “will have great significance … for the entire state of California.”
Olson said it would stabilize an infrastructure, which is particularly important since the Sept. 11 terrorist attacks.
Olson also said he doesn’t believe the other parties “have any right to object or intervene.”
But the judge said he granted TURN and the county intervenor status so he could hear all points of view. He declined their request for more time than he gave them to file their responses.
“The urgency of the resolution of the matter is of utmost importance for the common good,” Lew said.
Financially strapped SCE sued the PUC last November, demanding that the PUC increase the rates the utility may charge customers for electricity. The Rosemead-based utility agreed to suspend its lawsuit in April when it reached a tentative agreement with Gov. Gray Davis to keep it out of bankruptcy.
Davis said today that he called off a third special session he had scheduled for next week to find a way to keep SCE out of Bankruptcy Court.
“Their settlement has protected the public interest and will allow the state’s second largest utility (after San Francisco-based Pacific Gas & Electric) to return to financial health. I am pleased to hear the PUC‘s assurance that this can be accomplished without a rate hike.”
CEO John Bryson said that “throughout the entire energy crisis, Edison has had just one goal: to become creditworthy again.”
The proposed settlement is a “workable way for Edison to become creditworthy, to remove the state from the power business,” and is “in the best interest of California consumers,” Bryson said.
“Particularly at this time of national crisis and a fragile California economy, it is vital to avoid the great uncertainty of potential bankruptcy and lawsuits. By guaranteeing rate stability and making Edison creditworthy, this federal court settlement is in the best interest of California consumers,” he said.
Under the proposed settlement, SCE will pay off about $3 billion in debt, which will be recovered from ratepayers, according to the PUC.
It requires SCE shareholders to contribute at least $1.2 billion in dividends to the recovery plan and a $300 million adjustment, according to the PUC.
Any settlements obtained from refund proceedings or court actions against power generators and marketers must be used to pay down debt. After the debt is paid off, 90 percent of any remaining money will go to ratepayers, under the proposed deal.
The PUC will remain the state regulatory authority over SCE, and the proposed settlement will allow SCE to become solvent.
The proposed settlement won’t increase current rates and also does not affect ratepayer protections now in place, according to the PUC.
“This settlement embodies a fair and judicious way for Edison to become solvent and get back in the business of buying power, while meeting the needs of ratepayers and the state of California,” said PUC President Loretta Lynch.
But opponents of the settlement called it a “secret $3 billion bailout.”
Harvey Rosenfield, a longtime Southern California consumer activist, scheduled a late afternoon news conference in Santa Monica at the Foundation for Taxpayer and Consumer Rights office to denounce the agreement.
Coincidentally, the California Independent System Operator warned consumers today to begin conserving electricity again, noting that numerous power plants are expected to be taken offline in October for maintenance.
The Cal-ISO estimated that up to 9,300 megawatts of generation could be out of service toward the end of the month, due to plant maintenance, emission reduction and unplanned outages.
But the agency that controls 75 percent of the flow of electrons throughout California said it expects to have enough power today and throughout the month to meet demand, as long as conservation practices continue.
