I chipped in and bought 25 shares of QQQ <g>
CA power situation gets uglier (from a legal pov)
NEW YORK -- A group of power suppliers complained to federal regulators Thursday, after the California Power Exchange tried to hold them responsible for hundreds of millions of dollars in electricity bills defaulted on by the state's two largest utilities.
Nine power marketers and generators asked the Federal Energy Regulatory Commission to put a halt to the Power Exchange's attempt to collect the bills via so-called chargebacks, which they argued threatens to subject healthy companies to insolvency and could endanger the state's power supply.
"Chargebacks for the enormous liabilities of SCE and PG&E pose an imminent threat to the financial viability of many power suppliers whose uninterrupted services the region so badly needs," the suppliers wrote in the filing.
At issue is an insurance mechanism designed to maintain participants' confidence in the Power Exchange, which until it closed its doors last week was the state's main wholesale electricity market. Under the mechanism, defaults by Power Exchange debtors are to be "charged back" proportionally to creditors based on their level of participation in the exchange in the three months before to the default.
The companies complaining to FERC argued the mechanism was never intended to handle massive defaults like those of PG&E Corp. (PCG) unit Pacific Gas & Electric Co. and Edison International (EIX) unit Southern California Edison.
The Power Exchange said it has no choice but to try to collect the bills via chargebacks, because Gov. Gray Davis left it no collateral after he seized power contracts owned by the utilities just before the Power Exchange could liquidate them to settle the utilities' debts.
"Because the governor has commandeered this property, we're in a difficult position and having to do this," a Power Exchange spokesman said. "As soon as we're paid for this commandeered property, some of these companies can be made whole."
Suppliers Face Bills For $865 Mln In Util Defaults
On Jan. 18, the Power Exchange invoiced suppliers for their proportionate shares of a $215 million bill Southern California Edison defaulted on Jan. 9.
On Thursday, the Power Exchange said it was preparing to bill suppliers for about $650 million in payments missed by Pacific Gas & Electric and Southern California Edison on Feb. 1.
The bills, which would be due Feb. 15, were likely to be sent out later Thursday, a Power Exchange spokesman said.
"Of course, everyone's going to refuse to pay," said Mark Palmer, a spokesman at Enron Corp. (ENE).
If suppliers don't pay, however, the Power Exchange will begin seizing letters of credit and other collateral on deposit with the exchange, the exchange's spokesman said.
The move has further eroded suppliers' confidence in California's power markets.
Generators are still waiting to be paid for power sold to the utilities through California's power markets over the past few months.
The governor has signed a measure to stabilize power supplies going forward by having the more-creditworthy state Department of Water Resources handle the purchasing, but has yet to act on the utilities massive uncollected power costs and debts.
As reported, a District Court hearing into whether Reliant Energy (REI) is obliged to continue selling power in California revealed the Department of Water Resources - rather than covering the state's power needs as expected - has only purchased the power it finds appropriately priced, leaving the remainder to be covered by the utilities.
"There's really no market in California you can do much business in," Palmer said.
The parties to the FERC complaint, all of whom have been billed by the Power Exchange, are Coral Power LLC, Enron unit Enron Power Marketing Inc., Pinnacle West Capital Corp. (PNW) unit Arizona Public Service Co., Cargill-Alliant LLC, Sempra Energy (SRE) unit San Diego Gas & Electric Co., Avista Energy Inc. (AVA), Sempra Energy Trading Corp., Scottish Power PLC (SPI) unit PacifiCorp and Constellation Energy Group (CEG) unit Constellation Power Source.
The Power Exchange closed its energy markets last week rather than comply with a federal order that the exchange said would have been too costly to implement.
-By Andrew Dowell, Dow Jones Newswires; 201-938-4430; andrew.dowell@dowjones.com |
