TURN Doubts CA Utility Financial Woes Exist
Utility watchdog group The Utility Reform Network (TURN) isn't
quite convinced that California's two major utilities are hurting
financially from this summer's wholesale power price spikes.
Nettie Hoge, TURN's executive director, said the utilities have
been fabricating a picture of "financial ruination" that is not
real if deregulation transition revenues are considered in the
The group released a study at a San Francisco press conference
yesterday claiming that utility transition charges could more than
offset higher power costs. In a filing made Tuesday with California
Public Utilities Commission (CPUC), it asked state regulators to
agree with that assessment.
The CPUC already has called for a series of evidentiary hearings
to determine how to deal with the issue. A decision from those
proceedings is expected by the end of the year.
Meanwhile, the utilities have asked the CPUC for expedited
handling of their so-called "under-collections" on an emergency
basis. That isn't likely to happen, however. A statement on Tuesday
by CPUC President Loretta Lynch indicates regulators will deal with
the issue more carefully and slowly than the utilities wanted.
TURN's report alleges that Pacific Gas and Electric Co. and
Southern California Edison Co. have collected a combined $18
billion in so-called "competition transition charge" (CTC)
revenues, including several billion dollars from electricity sales
from its nuclear and hydroelectric generating plants this summer.
Some of these funds could be used to make the two utilities
whole for their almost $5 billion in power costs from May through
September that exceeded retail rate recovery. Retail rates have
been frozen since mid-1996 as part of the state's deregulation
PG&E and Edison are assessing how to deal with the revenue
under-collections in soon-to-be-announced third quarter earnings.
CPUC's Lynch said the commission is examining financial data on
each company so it can "evaluate claims to investors and the media
that recent power purchase liabilities have undermined the
financial integrity of California's utilities. The magnitude of
these claims imposes a responsibility on regulators to evaluate the
utilities' financial circumstances on behalf of utility customers
and the state."
In the meantime, the CPUC is asking the utilities to help
identify "initial steps" in changing the regulators' accounting
provisions to provide some "interim relief." Lynch indicated that
one step might be to apply some of the stranded cost funds
recovered over the past three years by the utilities to the
wholesale power cost under-collections. That is strongly opposed by
the utilities, which argue that would be contrary to the provisions
of the state's 1996 electric industry restructuring law.
Richard Nemec, Los Angeles
©Copyright 2000 Intelligence Press, Inc. All rights
reserved. The preceding news report may not be republished or
redistributed in whole or in part without prior written consent of
Intelligence Press, Inc.