On the heels of a federal judge refusing to force stateregulators to grant immediate rate relief, Southern CaliforniaEdison Tuesday faced some of its major creditors in a conferencecall, looking for more of the same forbearance that generators sofar have extended the cash-starved utility and thesimilarly-situated Pacific Gas and Electric Co.

Edison also asked its bankers to hold off pushing the utilityinto bankruptcy earlier on Tuesday, but had not heard back fromthem as of Tuesday afternoon, according to Ted Craver, Edisonsenior vice president and treasurer, adding that bondholders andothers holding a stake in Edison need to “take all the proposalsrunning through the news media with a grain of salt”

“This is tricky stuff,” Craver said. “We have a number ofconstituents we have to satisfy — not all of their interests arealigned. We have to go through a balancing process as to what wewould be able to accept in a settlement to resolve this situationand do it quickly. If anything, there is a bias in the company toget this resolved quickly and get on with our real business ofserving customers.”

Speaking of serving customers — the unexpected loss of sixgenerating units totaling 2,000 MW in Southern California andArizona Monday night put the California grid operator, Cal-ISO, onthe brink of having to call for rolling blackouts late Tuesdayafternoon. It pushed the offline generation to 10,000 MW for theday, with some 7,000 MW unplanned, forced outages due to variousmechanical malfunctions, according to the state grid operator.

The investor-owned utilities were notified earlier in the day tobe ready for possible blackouts. At 4:30 p.m., however, Cal-ISOspokesperson Patrick Dorinson, thought the controlled outages wouldbe avoided due to stepped up conservation and voluntaryinterruptions by commercial/industrial customers totaling more than300 MW. Even though the state’s formal interruptible program hasbeen suspended, some commercial operations apparently arecooperating with requests from the utilities when reserves getcritically low.

In the conference call one bondholder criticized the company forappearing to lean more in favor of protecting shareholders thandebt holders. He pointed to remarks of Edison CEO John Bryson, whowas quoted in the news media as saying he was against selling offassets to reach a settlement on the utility credit problems.

Edison officials noted that work is under way in Sacramento fora settlement to resolve the utilities’ increasingly direcredit-worthiness. The credit crunch is beginning to get in the wayof the state signing long-term contracts with bidders in thestate’s recent power auctions, and generators particularly aretaking proactive steps that could push the utilities and state gridoperator, Cal-ISO, into some federal court or regulatory action.

Three of the power generators holding millions of dollars worth ofunpaid bills from the utility, Dynegy, Reliant Energy and Mirant,formed a creditors committee last Friday to explore avenues to gettingpaid (see Daily GPI, Feb. 12). The holegot deeper Monday when a federal judge denied SoCal Edison’s plea tobegin immediately passing on its mounting wholesale power debt load toretail customers (see Daily GPI, Feb. 13).

Compounding the utilities’ intense financial woes is the statewater resources department’s recent unwillingness to pay suppliersfor the Cal-ISO’s emergency, real-time purchases in addition to thebulk purchases now being made by the state agency.

“If the governor knew what was going on, he could probably fixit with a phone call,” Edison utility general counsel StephenPickett said. “I don’t think DWR’s people have taken a hard andfast position. The position is very fluid and the people with thestate are not familiar with buying energy, frankly.”

As of the end of last week, Edison’s utility cash balance was$1.4 billion, but when payments begin flowing to the Cal-ISO or DWRis unknown at this time.

Edison indicated the negotiations with the state’s qualifyingfacilities (QF), which account for about 30% of the utilities’power supplies, are ongoing and an agreement is not expected beforenext week.

In the meantime, activity continued in several venues Tuesdaywith a consumer coalition promoting its 13-point proposal for anenergy solution while creditors of the financially strappedutilities look to some relief through federal regulators and thecourts.

©Copyright 2001 Intelligence Press Inc. All rights reserved. Thepreceding news report may not be republished or redistributed, inwhole or in part, in any form, without prior written consent ofIntelligence Press, Inc.