A federal judge in Los Angeles yesterday denied debt-riddenSouthern California Edison’s plea to begin immediately passing onits mounting wholesale power debt load to retail customers.

In a ruling from the bench, U.S. District Judge Ronald Lewrefused SoCal Edison’s request for a preliminary injunction againstthe California Public Utilities Commission (CPUC) to remove its capon residential rates for electric power.

Lew said that granting the injunction would have violated the11th amendment of the Constitution, which protects states’ rights.

Monday’s ruling was seen as a major blow to the financiallycrippled utility, which has run up bills nearing $5 billion becauseit hasn’t been able to pass the full costs of purchasing powerthrough to its retail customers.

The unfavorable ruling for SoCal Edison may be the final strawthat pushes energy suppliers over the edge and forces them to seekbankruptcy against the utility. Even SoCal Edison admitted as muchin its motion for a preliminary injunction.

SoCal Edison tried to put a positive spin on the court ruling.”We are encouraged that the court recognizes the importance andurgency of this case and is dealing with it expeditiously,” thecompany said.

Although the utility was denied fast relief, the issue involvingpassthrough of wholesale power costs “is still up in the air,” aSoCal Edison spokesman told NGI. The judge ruled the issue shouldbe dealt with within the “normal speed” of a trial, he said. Lewscheduled an evidentiary hearing for March 5.

Lew’s courtroom held the spotlight Monday, as financialanalysts, regulators, state officials and energy suppliers awaitedhis ruling. Some believed a decision favorable to SoCal Edisonwould have marked the beginning of the end to California’scontinuing power crisis.

Rosemead, CA-based SoCal Edison filed its lawsuit against theCPUC in November in an attempt to raise retail power rates by about15% over the next three years to recover billions of dollars inwholesale costs.

SoCal Edison claimed the CPUC had violated federal law when —after ordering it to buy wholesale power for its customers from thestate’s newly deregulated wholesale market, and to sell it withoutmarkup — it blocked the utility from recovering the full cost ofdoing so.

In early January, Lew ruled that the utility was entitled torecover the reasonable costs of purchasing power for its customers.But the judge said a trial was necessary to determine whether SoCalEdison’s purchases were prudent.

Yesterday’s court decision did not bode well for thenear-bankrupt Pacific Gas and Electric (PG&E), which has fileda similar lawsuit. The case was recently transferred to Lew’scourtroom and was expected to be consolidated with SoCal Edison’sclaim, but the judge hinted yesterday that he may send it back tothe district court in northern California to be heard.

Immediately following the ruling, shares of EdisonInternational, parent of SoCal Edison, fell by more than 8% ($1.07)to $12.03 on the New York Mercantile Exchange. The company’s stock,reflecting the ongoing energy crisis in California, is more than50% off its 52-week high of $28.50.

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