California legislators and regulators returned to work after the Easter holiday with a full plate of actions pending in the state’s electricity crisis, including the implementation of last week’s agreement between the governor and Southern California Edison Co. Meanwhile, the negative fallout from the utilities’ credit-worthiness problems continues to add pressure for faster state action.

While remedies for the billions of dollars of past debt are still weeks away, Edison and Pacific Gas and Electric will begin to pay small “qualifying facility” (QF) generators. Many of those generators, however, are saying publicly they will resist resuming supplies until the past debts are paid. One large QF, CalEnergy, which obtained a court okay to sell its supplies from a Southern California desert-based geothermal plant to other customers, is hoping to get a ruling from the same Imperial County court directing Edison to pay its back bills of roughly $100 million.

Adding more pressure on lawmakers for quick action, the Federal Reserve Bank in San Francisco released a report estimating that the direct and indirect economic impact of the state’s higher energy costs is adding $750, or 1.5%, to the average annual household expenses in the state.

“Every indication is that the legislature in very short order intends to hold hearings on both the Senate and Assembly sides on the [agreement with the governor],” said Edison spokesman Bob Foster, who thinks major consumer groups will actively oppose the agreement.”It is not clear who will be the author of the bill, but we intend to coordinate closely with the governor on the process, marshaling our forces and trying to build up some coalitions.”

Foster said Edison not only will wage a vote campaign in the state legislature, but also will devise a “public education program” to try to get greater, broader understanding of what the agreement is all about, and why it is important to consumers generally.

“We want to be able to describe what this agreement is, what its benefits are, particularly in light of the other alternatives,” one of which is a statewide ballot initiative, which is much feared by both the legislature and the utilities, although it was not specifically cited by Foster. “With cooperation from the administration, we hope to get speedy resolution on this issue,” he said.

In other developments, Edison and the CPUC jointly obtained a stay of the utility’s suit against the regulators in federal court. Everything is “temporarily frozen in place,” including all motions. A CPUC motion to dismiss the case was scheduled to be heard yesterday. More than a dozen lawsuits against the utility by QF generators are in the process of being consolidated and coordinated.

A pre-hearing conference on the CPUC-ordered investigation of utility holding companies is set for April 20. The Edison memorandum of understanding (MOU) is specifically recognized in the order from CPUC President Loretta Lynch on this matter, which Edison officials interpret as a positive sign the regulators will follow through.”I think it is a very positive sign that the commission is going to act expeditiously to consider the CPUC implementing decisions,” said Stephen Pickett, the vice president/general counsel for Edison’s utility.

As a quasi-independent, constitutionally based agency, the CPUC cannot contract with private parties, but they have “undertaken to begin an expedited review of those actions they need to take, so I have every anticipation they will act promptly,” Pickett said.

In the wake of the MOU, Edison hopes to identify cases among its many pending actions at the CPUC it can drop and which ones need further action, said Pickett, noting that this review should be completed this week and later in the month, the company will begin to start making targeted filings to the regulators.

Late last week, Edison sent checks to each of its qualifying facility (QF) generators that had provided estimates of their April output. The utility said it is paying a rate of about 8 cents/kW for “short-run avoid-cost contracts,” using the newly designated Malin, OR, index for the so-called “standard” QF variety; and 12 cents/kW for the nonstandard contracts using the Topock, AZ, border index.

“Going forward, if you look at the indexes for either Topock or Malin, the averages range between 8-12 cents/kW,” according to Edison officials, who noted that the natural gas border indexes apply to all QF generators, gas-fired or not.

Longer term, both the QFs and the utilities would like to renegotiate the bases for the contracts, since neither group is satisfied with the current formulas, Edison officials said, noting that it is a “highly volatile” price structure. “The renewables, especially would like to have long-term, fixed price contracts,” Edison said.

However, Edison’s Ted Craver, senior vice president/CFO, said that at present the QF charges would exceed the monies available to the utility through retail rates, even with the recently approved 3-cent/kW increase in those rates.

“If you were to take all the surcharges (4 cents/kw) you would allocate almost the entire increase to the DWR (state water resources department),” he said. “Based on that assumption, we would under-collect by $1.7 billion.”

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