PG&E, Edison Issue Ultimatums to FERC

In emergency requests filed last week, Pacific Gas and Electric (PG&E) and Southern California Edison delivered strongly-worded ultimatums to FERC - either suspend the authority of sellers to charge market-based rates in the out-of-control California bulk power market by a certain deadline, or they would take their cases to the Circuit Court of Appeals in Washington D.C.

PG&E asked the Commission to act by "no later than the close of business on Dec. 21," while Edison called on FERC to reply by Dec. 20. FERC responded to the urgent requests with a customary tolling order, which essentially gives it 30 days to consider the utilities' requests. If the Commission fails to act within that time period, the requests will be "deemed denied."

PG&E's emergency filing seeks rehearing of the Dec. 15 order in which FERC attempted to overhaul the flailing California power market by allowing utilities to keep their power rather than having to purchase supplies on the spot market [EL00-95-005]. But PG&E contends the fixes fell far short of what's needed. The Commission's action "fails to correct [the] dire situation" in California, as the market continues to "spiral out of control, with massive transfers of wealth and dislocation occurring daily."

Edison also petitioned for rehearing of the Dec. 15 order, charging that the Commission "abdicated" its responsibilities under the Federal Power Act (FPA) by not setting "just and reasonable" prices for power sold in the California wholesale market. Instead, FERC "permitted sellers to charge whatever the market will bear in a market that the Commission found to be dysfunctional."

PG&E criticized the Commission for retaining "market-based rates and market-based pricing authority while the overwhelming evidence demonstrates that the market is incapable of restraining the market power of sellers of power in California."

FERC has failed to protect consumers as required under the FPA, the utility said, adding that this is "legal error, plain and simple." This alleged dereliction, when combined with the California Public Utilities Commission's freeze on retail rates, "has already caused, and continues to cause, irreparable harm."

Edison echoed many of these same claims. PG&E and Edison separately urged the Commission to require immediate cost-of-service filings for all sellers wishing to sell electricity in the state. Moreover, they called on FERC to make all power sales into California subject to refunds, the amount of which would hinge on "just and reasonable" rates to be determined later by the Commission.

Both companies cited their lack of cash flow to pay their bills.

This "relief is necessary to stave off grave injury to PG&E and electric consumers served by PG&E," the utility said. "PG&E is rapidly using up its cash reserves, and is uncertain whether those reserves can be replenished to allow payment of upcoming bills

Likewise, Edison said FERC's failure to implement the requirements of the FPA "has now pushed [it] to the brink of financial ruin."

Susan Parker

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