Reliant Files Emergency Stay of Cal-ISO Request
Reliant Energy urged FERC on Friday not to force the financial uncertainty of the near-bankrupt California electric utilities on suppliers across the entire western region by relaxing the credit provisions of the Cal-ISO tariff. Reliant made an emergency filing with the FERC, seeking a stay of such efforts.
"Reliant Energy has taken extraordinary actions to keep its generation facilities available to meet electricity demand in California and has no desire to interrupt its deliveries now," said Reliant CEO Steve Letbetter. "But the Cal ISO's recent action raises anew the need for assurance that all suppliers in the West will be paid for their sales of energy to the California markets."
The emergency request was filed in response to a Cal ISO filing on Thursday, Jan. 4 to modify its tariff to eliminate the investor-owned utilities need to provide payment security to purchase electricity. This would force electricity suppliers to take on greater financial risk for selling electricity in the California market, Reliant noted. The ISO's action followed the downgrading of the credit ratings of Southern California Edison and Pacific Gas and Electric.
The emergency filing not only seeks a stay of the Cal ISO's implementation of relaxed credit standards, but also requests that the FERC act to ensure that power suppliers selling to the Cal ISO are given reasonable assurance of payment for their deliveries.
In a related move, Reliant filed a request with the Department of Energy (DOE) to modify the orders issued by the Secretary of Energy requiring generators to supply energy at the request of the Cal ISO. In both the FERC and DOE filings, Reliant has indicated that it has not interrupted or threatened to interrupt electric deliveries in the past because of credit concerns, and has no desire to do so now, while an acceptable credit solution is being worked out.
"The existing credit situation is not sustainable and must be remedied. It is not unreasonable to be asked to be paid for services rendered," Letbetter said. "The failure of the California Public Utilities Commission to allow the investor-owned utilities to raise rates to rational market levels has placed a tremendous financial strain on the California utilities. The effort to impose this credit burden on the other market participants is irresponsible."
The events of the past several weeks have cast increasing doubt on the ability of the Cal ISO and the Cal PX to continue to make payments, Reliant said. The outstanding balance at any one time of Reliant's total receivables with the Cal ISO and Cal PX has varied seasonally from $5 million to $270 million over the past 12 months, the company added.
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