Southern California Edison’s petition asking a federal appealscourt in Washington, D.C. to force FERC to reinstitutecost-of-service rates for electricity sales in the Californiamarket is impracticable, legally indefensible and not in thepublic’s best interest, the Commission said.

The “asserted problems” facing Edison — which it seeks toresolve with its court petition — are now in the hands of theCalifornia Public Utilities Commission (CPUC), FERC said last weekin its reply to the utility’s petition for writ of mandamus thatproposes a return to cost-based rates to tame skyrocketingwholesale prices.

The Commission already has done its part for California, andit’s up to the CPUC and other state authorities to “correspondinglyaddress [the] problems” within their jurisdiction, the agencynoted.

The relief being sought in Edison’s petition would not rescuethe utility from potential bankruptcy, necessarily preventspiraling electricity prices or improve the “already woeful” supplysituation in the state. It offers little more than a “Band-aid” forthe flailing California power market, leaving the “seriousunderlying problems” in place, FERC told the court.

“Edison is apparently hoping that imposition of cost-of-serviceratemaking would return it to the halcyon days of past spot marketswhen its average monthly price ‘never exceeded $40/MWh,'” theCommission noted, adding that this prospect was highly unlikely.

The “quick fix that Edison seeks from this court may be neitherquick nor a fix. Equally troubling, it is unclear whether this fixwould benefit consumers with lower prices, and it could interferewith the development of much-needed generation” in California. FERCcontends the Rosemead, CA-based utility is focused on its own”immediate short-term interests,” rather than the public good.

Edison filed the petition with the U.S. Court of Appeals in D.C.after FERC failed to immediately respond to the utility’s requestfor rehearing of the Dec. 15 order in which the Commissionattempted to overhaul the out-of-control California wholesale powermarket. FERC enacted a series of reforms, including freeing Edisonand the other state utilities from their over-reliance on the spotmarket (and its price volatility) to meet all of their energyneeds.

But “Edison has claimed harm before attempting to give theCommission’s market reforms a chance to work,” FERC told the court.

Edison charged the Commission violated the Federal Power Act(FPA) by allowing sellers to charge market-based rates forwholesale power sold in California, despite apparent evidence ofmarket-power abuses. FERC countered that it didn’t find “specificexercises of market power,” but rather said the “structure andrules for wholesale sales” in California offered the opportunityfor unjust and unreasonable rates to occur at “certain times undercertain conditions.”

Although Edison has attempted to cast its case as “an outrightviolation of a clear statutory provision,” the Commission contendsthe utility “is really asking this court to consider the merits ofthe orders at issue,” even before FERC has completed its review ofthem.

As for the writ of mandamus, federal regulators argue thatEdison has failed to meet the conditions necessary to receive such”extraordinary” relief. For starters, contrary to Edison’sarguments, the FPA does not specify that cost-based ratemaking isthe only method available to FERC for setting “just and reasonable”rates, the agency said. Moreover, “Edison’s petition does notsuggest that the Commission shirked its duty to act,” nor has”Edison made a showing that no other adequate remedy is availableto it.”

©Copyright 2001 Intelligence Press Inc. All rights reserved. Thepreceding news report may not be republished or redistributed, inwhole or in part, in any form, without prior written consent ofIntelligence Press, Inc.