Reliant Energy urged FERC on Friday not to force the financialuncertainty of the near-bankrupt California electric utilities onsuppliers across the entire western region by relaxing the creditprovisions of the Cal-ISO tariff. Reliant made an emergency filingwith the FERC, seeking a stay of such efforts.

“Reliant Energy has taken extraordinary actions to keep itsgeneration facilities available to meet electricity demand inCalifornia and has no desire to interrupt its deliveries now,” saidReliant CEO Steve Letbetter. “But the Cal ISO’s recent actionraises anew the need for assurance that all suppliers in the Westwill be paid for their sales of energy to the California markets.”

The emergency request was filed in response to a Cal ISO filingon Thursday, Jan. 4 to modify its tariff to eliminate theinvestor-owned utilities need to provide payment security topurchase electricity. This would force electricity suppliers totake on greater financial risk for selling electricity in theCalifornia market, Reliant noted. The ISO’s action followed thedowngrading of the credit ratings of Southern California Edison andPacific Gas and Electric.

The emergency filing not only seeks a stay of the Cal ISO’simplementation of relaxed credit standards, but also requests thatthe FERC act to ensure that power suppliers selling to the Cal ISOare given reasonable assurance of payment for their deliveries.

In a related move, Reliant filed a request with the Departmentof Energy (DOE) to modify the orders issued by the Secretary ofEnergy requiring generators to supply energy at the request of theCal ISO. In both the FERC and DOE filings, Reliant has indicatedthat it has not interrupted or threatened to interrupt electricdeliveries in the past because of credit concerns, and has nodesire to do so now, while an acceptable credit solution is beingworked out.

“The existing credit situation is not sustainable and must beremedied. It is not unreasonable to be asked to be paid forservices rendered,” Letbetter said. “The failure of the CaliforniaPublic Utilities Commission to allow the investor-owned utilitiesto raise rates to rational market levels has placed a tremendousfinancial strain on the California utilities. The effort to imposethis credit burden on the other market participants isirresponsible.”

The events of the past several weeks have cast increasing doubton the ability of the Cal ISO and the Cal PX to continue to makepayments, Reliant said. The outstanding balance at any one time ofReliant’s total receivables with the Cal ISO and Cal PX has variedseasonally from $5 million to $270 million over the past 12 months,the company added.

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