In emergency requests filed last week, Pacific Gas and Electric(PG&E) and Southern California Edison delivered strongly-wordedultimatums to FERC – either suspend the authority of sellers tocharge market-based rates in the out-of-control California bulkpower market by a certain deadline, or they would take their casesto the Circuit Court of Appeals in Washington D.C.

PG&E asked the Commission to act by “no later than the closeof business on Dec. 21,” while Edison called on FERC to reply byDec. 20. FERC responded to the urgent requests with a customarytolling order, which essentially gives it 30 days to consider theutilities’ requests. If the Commission fails to act within thattime period, the requests will be “deemed denied.”

PG&E’s emergency filing seeks rehearing of the Dec. 15 orderin which FERC attempted to overhaul the flailing California powermarket by allowing utilities to keep their power rather than havingto purchase supplies on the spot market [EL00-95-005]. But PG&Econtends the fixes fell far short of what’s needed. TheCommission’s action “fails to correct [the] dire situation” inCalifornia, as the market continues to “spiral out of control, withmassive transfers of wealth and dislocation occurring daily.”

Edison also petitioned for rehearing of the Dec. 15 order,charging that the Commission “abdicated” its responsibilities underthe Federal Power Act (FPA) by not setting “just and reasonable”prices for power sold in the California wholesale market. Instead,FERC “permitted sellers to charge whatever the market will bear ina market that the Commission found to be dysfunctional.”

PG&E criticized the Commission for retaining “market-basedrates and market-based pricing authority while the overwhelmingevidence demonstrates that the market is incapable of restrainingthe market power of sellers of power in California.”

FERC has failed to protect consumers as required under the FPA,the utility said, adding that this is “legal error, plain andsimple.” This alleged dereliction, when combined with theCalifornia Public Utilities Commission’s freeze on retail rates,”has already caused, and continues to cause, irreparable harm.”

Edison echoed many of these same claims. PG&E and Edisonseparately urged the Commission to require immediatecost-of-service filings for all sellers wishing to sell electricityin the state. Moreover, they called on FERC to make all power salesinto California subject to refunds, the amount of which would hingeon “just and reasonable” rates to be determined later by theCommission.

Both companies cited their lack of cash flow to pay their bills.

This “relief is necessary to stave off grave injury to PG&Eand electric consumers served by PG&E,” the utility said.”PG&E is rapidly using up its cash reserves, and is uncertainwhether those reserves can be replenished to allow payment ofupcoming bills

Likewise, Edison said FERC’s failure to implement therequirements of the FPA “has now pushed [it] to the brink offinancial ruin.”

Susan Parker

©Copyright 2000 Intelligence Press, Inc. All rightsreserved. The preceding news report may not be republished orredistributed in whole or in part without prior written consent ofIntelligence Press, Inc.