Pacific Gas and Electric has called on FERC to reject proposalsthat seek to give California utilities less time to pay theirballooning generation cost obligations, and would absolvegenerators of penalties for not supplying power in emergencysituations if customer creditworthiness standards aren’t met.

The proposals are a “unilateral attempt” by Dynegy PowerMarketing Inc. to get FERC to impose “more rigorous obligations” onCalifornia utilities than those permitted under existing tariff,PG&E said. The proposed actions could have “potentiallydisastrous consequences [for] public health, safety and welfare” inthe state.

“Neither the [Cal-ISO] nor FERC have the power to imposeadditional payment obligations on a customer in excess of thepayment obligations specified in the FERC filed rate schedule,without a filing by the ISO and notice, or without a finding by theCommission that the existing tariff provisions are unjust andunreasonable,” the utility told the Commission [EL01-1-603].

Even if utilities can’t meet their payment obligations and/orcomply with certain creditworthiness standards, Dynegy should bepenalized if it fails to supply power to the California marketduring emergency situations, PG&E said. The Houston-based powermarketer is a signatory to must-run agreements with the Cal-ISO,which require it to generate power when ordered to do so by theISO.

Dynegy’s argument that “penalty provisions should not apply whencreditworthiness standards are not met [by utilities] could turnemergencies into catastrophes,” the California utility warned.

Dynegy also appears to be seeking to “sidestep” its obligationunder the emergency orders issued by Energy Secretary BillRichardson, which require sellers to make available excess power toCalifornia during emergencies, PG&E said. “The Commission hasno power or jurisdiction to overrule the secretary’s orders.”

Dynegy argues that requiring it and other generators to supplypower to the flailing California market — with no prospects forrecovery of their short-run marginal costs — amounts to a”taking” of property that not only violates the Constitution, butwill result in the “complete collapse of the entire supply chain.”

Although Dynegy is concerned about the “potential impact” on itif a California utility goes bankrupt, it “cannot simply walk awayfrom its own obligation as a public utility,” PG&E said.”Should there be a bankruptcy, it is at that time that the FederalBankruptcy Code would come into play.” But until that happens,”Dynegy’s assertions regarding the law that should govern and itsimpact on Dynegy’s obligation to provide service are speculativeand premature.”

The “only viable option” remains the one sought by PG&E —cost-based rates, the utility noted. “Such rates would ensureDynegy what it apparently seeks, recovery of its variable costs,without burdening California consumers with unjust and unreasonablemonopoly rents.”

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