IPPs Ask Cal-ISO to Pay Up for Past Power Sales

In the continuing string of unpaid power bills that sits at the heart of California's lingering electricity crisis, the state association of independent power producers last Wednesday asked the state transmission grid operator, Cal-ISO, to pay up. The nonprofit public benefits organization said that it is "working on it."

So far, the California Independent Energy Producers' (IEP) Executive Director Jan Smutny-Jones, the former chairman of the now disbanded Cal-ISO governing board, hasn't even received a "checks in the mail" reply to his letter that was sent Tuesday.

"Where's the money?" asked Smutny-Jones, during a conference call with news media Wednesday to underscore his point. "The generators are producing electricity, the consumers are paying for that electricity, and yet those payments aren't finding their way to the generators. Clearly, this needs to be fixed."

At stake is more than $1 billion, according to Smutny-Jones.

The Cal-ISO's spokesperson said the grid operator, which has to buy spot supplies from time to time to assure adequate generation reserves to supply the state's power grid, hopes to have something worked out later this week to clear up the payment bottleneck.

A combination of increasing complexity in the state's wholesale power buying since the former state-chartered California Power Exchange went out of business earlier this year and the lack of the investor-owned utilities' involvement in the wholesale power buying now have caused delays, the spokesperson said.

Smutny-Jones said that California's business climate and energy market would be harmed if the payments were not made. By not making the payments, he said in a letter requesting an explanation for why Cal-ISO is in violation of its own federally regulated tariffs.

The start of California's electricity emergency last winter began with the two largest private sector utilities losing their creditworthiness, and thus, being unable to buy wholesale power supplies on a spot basis. The state stepped in as a result.

Smutny-Jones in his letter alluded to Cal-ISO and all of its scheduling coordinators jeopardizing their creditworthiness if a solution to the past-due payments is not found. He called the issue "extremely time sensitive," in pleading his case to Cal-ISO CEO Terry Winter.

"The ISO acknowledges that past debt is due," said Winter. "This issue is being handled appropriately through the upcoming Federal Energy Regulatory Commission evidentiary hearings regarding refunds, and at the state legislature as well as through Pacific Gas and Electric Co.'s bankruptcy proceedings. Furthermore the ISO makes specific data available to market participants who may be owed money so that they may take whatever action they deem appropriate."

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