Demonstrating a newfound consensus often absent over the past 12-15 months, California’s regulatory commission last week unanimously approved a half-dozen energy items on its regular business meeting agenda, including added debt authority for Las Vegas-based Southwest Gas Corp. and a new statewide hearing process looking at the potential rate impact of the two alternative reorganization plans in Pacific Gas and Electric Co.’s ongoing Chapter 11 bankruptcy case.
Ironically, after taking all of its actions on a unanimous basis, the commissioners showed some sharp philosophical and procedural differences in subsequent discussions about approaches the regulatory commission might take regarding some proposed state legislation and efforts to work more cooperatively with other state energy agencies, such as the state energy commission and state power authority. Those disputed issues requiring votes were postponed, so the day’s record of total agreement was maintained.
While encouraging all parties to the bankruptcy “to share their opinions” on the potential rate impact, Loretta Lynch, president of the California Public Utilities Commission, sponsored a new statewide investigation that seeks comments by May 6, with responses by May 27. This will accommodate the San Francisco federal bankruptcy court’s schedule, which envisions a mid-June start of the campaign for creditor support of competing utility reorganization plans.
Although not one of the major utilities normally dealing with the CPUC, Southwest Gas, which serves the less populated desert and mountain regions in Southern California, obtained approval to increase its debt level for operations in the state to $550 million through a combination of rolling over $450 million of existing debt and adding $100 million of new debt. In these post-Enron times where regulators are sensitive to the kinds and levels of debt undertaken, the CPUC put what a staff manager called “significant conditions” on the Las Vegas-based utility.
The restrictions called for added detail on the different types of debt and each application under the overall authority; detailed periodic reporting requirements on debt levels and content; limits on discretion of adding debt without the regulators’ pre-approval; limited exposure to lower-rated debt; and making all debt actions ultimately subject to hindsight “reasonableness” review by the CPUC.
“We obviously don’t want them using anything as risky as what Enron used,” said Lynch before the 5-0 vote in favor of the higher debt ceiling for Southwest.
The other unanimous actions by the CPUC, which now has four appointees of current Gov. Gray Davis, were:
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