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PUC OKs deal helping small power generators

By Justin Pritchard The Associated Press June 14th, 2001


The state Public Utilities Commission unanimously passed an agreement between Southern California Edison and small power generators that could help the utility avoid bankruptcy and keep the lights on this summer.

By a 5-0 vote Wednesday, the commission approved a version of a deal that Edison struck with smaller generators called "qualifying facilities." It should let these plants keep churning out power as they look to collect more than $1 billion that Pacific Gas and Electric Co. and Edison owe them, PUC Chairwoman Loretta Lynch said.

Small generators account for about one-third of the state’s daily power supply. But many powered down because Edison and now-bankrupt PG&E didn’t pay for months of power they used earlier this year.

The commission-approved plan offers stable rates for five years to generators using wind, solar, geothermal or other renewable sources. It also raises the rates the utilities must pay to gas-fired generators.

Easing back: Small generators have said they will suspend their lawsuits against Edison for 180 days if they receive back payments.

Under the deal, Edison will pay at least 15 percent of what it owes to qualifying facilities.

"If they pay back what they owe us, the lawsuits would be dismissed and the claims would be settled," said Jerry Bloom, a spokesman for the California Co-generation Council, which represents many small, natural gas-fired power generators.

Those lawsuits have been a growing source of concern for Edison, which has been trying to avoid filing for bankruptcy protection.

Wednesday’s vote should also help California’s power managers in their daily search for enough power to avert more rolling blackouts during the summer, Lynch said.

She said that while the small generators could have gotten a higher rate for their power if they could break their contracts and sell electricity on the open market, the deal guarantees that the utilities will buy the power.

"It gives them stability," Lynch said. "Having the qualifying facilities on line this summer is so crucial."

Hitting the switch: In March, the PUC ordered PG&E and Edison to pay qualifying facilities for power delivered starting in April.

Since those revenues began to flow, many small generators have kick-started their operations, adding much needed power to the grid.

Gov. Gray Davis called the PUC approval "a substantial move forward."

But the qualifying facilities agreement the PUC approved Wednesday might fall apart if the Legislature doesn’t approve a rescue plan for Edison that Davis brokered. That plan would have Edison sell its transmission lines to the state to pay its debts.

Davis and Edison signed that "Memorandum of Understanding" on April 9.

On Wednesday, Davis warned that time is growing short for legislative action.

"I believe the patience of (Edison’s) creditors is wearing very thin," Davis said. "I’m beginning to see the same signs as ... with PG&E" before that utility declared bankruptcy.

-- PHO (, June 14, 2001

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