Dead on Arrival: Edison's Power Plant Socialization

California Public Utilities Commission president Mike Peevey rejected out of hand Southern California Edison's plan to spread the cost of new contracted power plant supplies beyond its own ratepayers. "Do you know the term DOA?" Peevey asked Pedro Pizarro, Edison senior vice-president of power procurement. Edison is seeking approval from state and federal regulators for its unprecedented proposal to extend the costs of contracts for power supplies from third-party producers beyond its own ratepayers to direct-access and municipal power agency customers served by the key transmission line SP26. Peevey said the plan, as floated, had a chance only if Edison would consider swapping some of the benefits it has reaped from the state and federal commissions. He noted during a June 2 joint state-federal agency workshop on beefing up the state's power infrastructure that the CPUC and the Federal Energy Regulatory Commission took the unprecedented position of approving Edison's controversial Mountainview power project with a utility affiliate. "Is Edison willing to socialize the benefits of Mountainview?" Peevey inquired. Edison prefers not to socialize the Mountainview project's costs, Pizarro said, adding that the cost-spreading proposal in the upcoming filing is intended as an interim step toward alleviating congestion along the often-clogged SP26 transmission line in Southern California. Mike Florio, senior attorney for The Utility Reform Network, came to Edison's defense. He told regulators that there's a great need for new generation and that spreading the costs would facilitate new resources. He added that the CPUC's resource-adequacy requirement-requiring utilities to have a 15-17 percent supply cushion-provides "benefits that go to everyone." At the end of April, Edison issued a request for proposals for 10-year power deals. In the details of that request, Edison made contracts contingent on spreading out the costs among all SP26 transmission line recipients ( Circuit , April 29, 2005). The resultant filing to the CPUC, which is imminent, will seek to require the commission to spread the cost of new power supplies to direct customers along Path 26 regardless of what FERC decides. The CPUC does not have authority over munis, and Edison plans to ask FERC to allocate the rates among both direct-access and muni customers. The three FERC commissioners present at this week's meeting did not comment on Edison's proposal. Pizarro admitted that the proposal was far from an ideal trial balloon but told Circuit that the application to the CPUC would go forward. Edison was also on regulators' hot seat because they continue to warn it does not have sufficient dependable supplies to meet this or next summer's demand if temperatures soar. "Southern California has the worst electricity supply in the country," said Joe Kelliher, a FERC commissioner. Edison has been wooed as well as hammered to buy third-party supplies. Katie Kaplan, Independent Energy Producers policy director, noted that there are 6,000 MW of installed capacity in the southern half of the state without contracts. "This should be especially alarming to policy makers," she said.

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Dead on Arrival: Edison’s Power Plant Socialization

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