Edison Attempts to Turn Back CPUC Procurement Decision

Southern California Edison challenged the California Public Utilities Commission?s long-term procurement decision, calling a part of it illegal and ?poor public policy.? A January 19 application for rehearing regulators? landmark post-deregulation policy claims the decision ?illegally? requires utilities to compete with third-party generators. Edison argues that the decision fails to ensure true competition because only utilities, not third-party power producers, have to share savings with ratepayers. The commission requires utilities to share equally in savings between forecast costs and costs that come in under the capped bid. Edison states that it is ?hardly fair and equal ?competition?? when independent generators can reap all profits associated with cost savings. The utility contends that putting a cap on its cost recovery for any excess over its bid violates the California Public Utilities Code and other state law, contravenes due process, and constitutes a ?takings? under the U.S. constitution. ?The commission is arbitrarily preventing a [utility] from recovering cost overruns, if the debt would affect a [utility?s] financial integrity.? Finally, Edison challenges the commission?s decision to adopt a methodology other than cost-of-service ratemaking. ?The commission should not be so willing to give up this option,? Edison asserts. After a long, controversial process to remake the state?s parameters for developing new power plants, the commission decided on a hybrid model in December 2004 ( Circuit , Dec. 17, 2004). In addition to requiring utilities to allow competitors to bid for the least-cost new power sources against utilities themselves, it also requires a procurement process that leans toward renewables projects against fossil-fueled power plants.

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Edison Attempts to Turn Back CPUC Procurement Decision

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