In the midst of an ever-widening series of battles facing merchant electricity generators during California’s energy crisis, the state’s small generator trade association Wednesday lauded the newly inked deal with Southern California Edison Co. and many of the state’s small qualifying facility (QF) generators as good for consumers and a means of “stabilizing” state wholesale power prices. A string of legal suits by both the utility and QFs has been suspended as a result.

The power producers group also hopes that Monday’s federal price mitigation efforts in the West will be helpful, although it intends to watch the new provisions unfold over the next 30 days and is particularly interested in how the new provisions will impact existing and future bilateral power contracts between suppliers and end-users.

Jan Smutny-Jones, executive director of the California Independent Energy Producers Association (IEP), praised Gov. Gray Davis and a former state legislator, Richard Katz, for successfully concluding what amounted to six months of negotiations on the issue of how much QFs get paid. He said the Edison deal could “work equally well” with Pacific Gas and Electric Co. IEP hopes to move this deal into the federal bankruptcy court to get the judges okay for the PG&E utility to sign a similar agreement.

There are still three great “unknowns” to the Federal Energy Regulatory Commission order, Smutny-Jones said:

“The amount of political noise that is occurring in California’s market is having a very negative effect on longer term investment here,” said Smutny-Jones, noting that state legislative proposals to impose windfall profits taxes, criminalize energy market manipulation and confiscate power plants have had a chilling effect on the future market. “I think we need to be very cautious about where things go from here.”

Regarding the current political advertising campaign against Davis that began this week, Smutny-Jones said IEP and none of its members to his knowledge are involved in that effort to discredit the governor’s handling of the electricity situation that has gripped the state for more than a year.

On a more positive note, he said that efforts by existing generators to get their plants fully operational for this summer’s supply crunch, along with the settlement bringing all of the QFs back online, has allowed the state grid operator, Cal-ISO, to face the year’s first peak demand in excess of 40,000 MW (Wednesday) without issuing a power alert or warnings of rolling blackouts. Earlier in the year at peak demand level no more than 30,000 MW, alerts and rolling blackouts were called almost daily at one stretch.

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