On a strictly partisan 3-2 vote, California regulators Thursdayblocked attempts by the state’s two near-bankrupt investor-ownedutilities to cut their work forces and services in order toconserve cash while awaiting a settlement with the state on theirfuture financial viability. Responding to an emergency request froma coalition of utility workers’ unions, the California PublicUtilities Commission’s (CPUC) action means proposed staffinglayoffs of several thousand regular and contract workers, totalinghundreds of millions of dollars in operating costs, will nothappen.

Two Republican-appointed CPUC commissioners opposed the move,calling it “micromanagement” on the part of the regulators.

On another front, the California grid operator, Cal-ISO, lateThursday morning declared a Stage Two power alert because powerimports from the Pacific Northwest dropped to around 1,500 MW,compared to 2,700 MW on Wednesday. “With the (level-2) alert,Cal-ISO will be able to access emergency resources that will helpmaintain operating reserves,” the grid operator said in itsannouncement. The alert was called despite the fact that forecastpeak-demand statewide has stayed at relatively low levels (below30,000 MW) in recent days. Peak demand for Thursday was expected tobe under 29,000 MW.

In the CPUC action, Southern California Edison Co. and PacificGas and Electric Co. were ordered to rescind “any layoffs ofemployees which are needed to fully staff customer call centers,read meters monthly, timely respond to service calls and outages,and connect new customers.” Edison has laid off 400 workers in itstransmission and distribution units and had proposed eliminating anadditional 1,600 jobs in the months ahead. PG&E’s utility hadlaid off 505 workers and announced plans to eliminate another 675jobs if its cash flow situation is not resolved.

Edison and PG&E reacted negatively to the CPUC’s action,noting that the regulators should be facilitating solutions totheir financial crunch rather than pushing them closer tobankruptcy. A PG&E utility spokesperson said the CPUC is tryingto “micromanage” the utilities. In a prepared statement, Edisonexpressed “serious concern” about the CPUC prohibiting it from”implementing essential cost-cutting measures.” The CPUC action,Edison said, “would serve only to exacerbate its current financialcrisis.” The cost-cutting measures announced last December “weredesigned to preserve our ability to provide electric service,”Edison said. “We believe it is irresponsible of the commissionerswho voted in the majority to disallow needed cash preservationmeasures. No one would seek these cost reductions except in asituation where they are necessary to preserve basic services. Inthe current environment, a failure to act serves customers poorly.”

In offering an alternate approach, which was rejected by themajority, Commissioner Richard Bilas, a former CPUC president, saidhe saw the utilities’ proposals as a means of “struggling to keepthe lights on [and as] consistent with safety and the [having]least impact on customers.” Bilas said he foresees rate increasesahead that will make the cost-cutting measures more critical. “Thiscommission has pushed the utilities into a financial corner. Theyaren’t paying their bills and they are on the verge of bankruptcy.Now [the CPUC] is saying the utilities can’t use their bestjudgment on how to conserve cash. Once again I just ask, why is thestate claiming the utilities must not go bankrupt while thiscommission acts to push them ever-closer?”

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