9th Circuit Grants Consumer Group’s Motion for Emergency Stay

The U.S. Court of Appeals for the Ninth Circuit this morning temporarily stayed the secret bailout deal signed by Southern California Edison and The California Public Utilities Commission (PUC) four weeks ago today. The emergency stay allows attorneys for The Utility Reform Network to argue its case against the bailout settlement before the U.S. District Court.

“Governor Davis and the PUC‘s secret dealmaking with Edison violated the California Constitution and numerous state laws, and denied ratepayers any semblance of due process,” said consumer advocate Harvey Rosenfield, president of the Foundation for Taxpayer and Consumer Rights (FTCR), which worked to block the bailout in the Legislature. “We are pleased that the federal court of appeals has interceded to protect the sovereignty of state law.”

The bailout agreement between Edison and the Davis-controlled PUC, negotiated in secret after the Legislature refused to bail out Edison, would force ratepayers to pay between $3.3 and $4.9 billion to Edison to cover the company’s alleged deregulation debt.

FTCR and other consumer rights organization have noted a litany of objections to the current Edison–PUC settlement:

• The bailout deal was negotiated in secret by the PUC, in violation of state laws requiring PUC decisions on ratemaking matters to be conducted through public hearings and the opportunity for consumer groups to intervene.
• Two parties to the case — the County of LA and The Utility Reform Network (TURN) — were ignored in the settlement negotiation and did not approve the deal.
• The bailout deal rewrites state laws protecting ratepayers. In doing so, the PUC unconstitutionally usurped the authority of the legislative branch, which refused to approve a bailout this year. The PUC has no authority to rewrite state law or approve of violations of state law.
• The PUC deal transfers regulatory authority over Edison to the federal court through 2005, in violation of the state Constitution, which requires the PUC to regulate rates.
• The US District Court did not provide a full hearing at which representatives of the public could object to the deal.
• Federal Courts are required to defer to the states in the application of state law. But the District Court approved a plan that violates state law and usurps state regulatory authority.

“This ruling does not mean that the bailout has been defeated, but that the battle is far from over. We are confident that the settlement will ultimately be invalidated,” said Rosenfield.

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