CPUC Offers Carrot for Edison?s Mountainview Purchase

If Southern California Edison agrees to purchase the Mountainview power plant for itself instead of for an affiliate, it appears that accelerated California Public Utilities Commission approval is likely. In a proposed decision issued November 18, CPUC administrative law judge Carol Brown said she supported Edison?s Mountainview venture, either creating a new utility affiliate or buying the plant. The latter would be ?advantageous? to ratepayers, she said. Edison has admitted it has the cash flow to do so. Brown conceded that ?in today?s financial and regulatory climate,? the utility?s plan for an affiliate purchase would be ?most expeditious? and that the commission?s usual certificate of public convenience and necessity is not required. ?Mountainview is in the public interest,? noted Brown, who said that the utility had established a need for more electricity?although perhaps not all the plant?s 1,054 MW output?until after 2008. Brown, however, was troubled by the whole affiliate plan. For one thing, the CPUC?s affiliate transaction rules were conceived to limit parent company affiliate transactions. In this case, Mountainview would be an affiliate of a utility that in turn is an affiliate of Edison?s parent company, Edison International. Thus, it would be an affiliate of an affiliate. Brown decided, however, that if one were to follow the money?which is set to go directly from Mountainview to Edison International?then the project should be under the commission?s affiliate-transaction rules. The thorny affiliate proposal also concerns some state lawmakers. ?It is kind of unusual,? said State Senator Byron Sher (D-Palo Alto) during a November 19 hearing. ?We have never seen one quite like this,? replied CPUC energy director Paul Clanon. Sher and Senator Debra Bowen (D-Redondo Beach) slammed the CPUC for pursuing secret deals instead of reaching decisions out in the public arena. The financials of the deal continue to be kept secret. What is known is that the option on the site from InterGen, a firm developed by Shell and Bechtel, expires November 30. After that, the price escalates though February. Brown said in her decision that Edison has a better chance of meeting the February due date if outright purchase is chosen. If Edison chooses that option, Mountainview will be under CPUC jurisdiction. If Mountainview were owned by an affiliate, however, it would be under the Federal Energy Regulatory Commission?s jurisdiction?which has generated considerable controversy. Strong objections to the project came from the Office of Ratepayer Advocates, which characterized the proposal as a ?Frankenstein??with pieces of jurisdiction and ratemaking from all quarters. ?It?s riskier for ratepayers,? Scott Logan, ORA analyst, said. ?With cost issues that come up down the road, the FERC jurisdiction puts it out of the control of state legislators,? he added. Edison argued that the commission would have first jurisdiction on the application and FERC would have jurisdiction only after the application is approved. Another issue in the case is the secrecy of Edison?s financial costs for the proposed plant. The Utility Reform Network reluctantly supported the deal, but it was privy to the costs. The Independent Energy Producers were most concerned about the potential for self-dealing in Edison?s plan but were unable to see the financials. Brown may have set a precedent for keeping project costs secret when she found that IEP ?effectively participated? in drafting the proposed decision, despite being kept in the dark. At press time, Edison was evaluating whether it should pursue the utility-generation option.

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CPUC Offers Carrot for Edison?s Mountainview Purchase

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