Mountainview Dispute Moves to FERC

A letter this week from California Congress members supporting the Mountainview power plant appears to be a sign of Southern California Edison?s political muscle. The missive was addressed to the Federal Energy Regulatory Commission. Jan Smutny-Jones, Independent Energy Producers executive director, charged that the endorsement letter by 47 California members of Congress was generated by Edison lobbyists but said that the endorsement was unlikely to sway FERC. The letter was the product of an ?effective lobbying strategy? by utility lobbyists, said Smutny-Jones, but FERC is ?sophisticated enough to know the letter was not the product of a thoughtful debate on the hill.? Smutny-Jones added that he doubted whether Congress members would have signed on ?if they knew that terms were kept secret for the 30-year deal.? Mountainview is a partially built power plant on which Edison was able to buy an option for $703 million from its former owner, according to California Public Utilities Commission documents. To use that option to the best advantage for the utility, Edison successfully promoted an arrangement to own the plant through an affiliate that would not be regulated by the CPUC. Though the commission?s stated plans are to cement a ban on affiliate transactions, and CPUC members expressed disapproval of the setup, the CPUC last month approved Mountainview as an Edison affiliate on a 4-1 vote. With that approval, direct regulation is now up to FERC, not the CPUC. With the hurdle of the CPUC out of the way, opponents and supporters have started to aim their arguments at FERC. The Independent Energy Producers and the Western Power Trading Forum, among others, have filed a flurry of protests asking FERC to reject the project. Though she did not sign the endorsement letter from her congressional colleagues, Senator Dianne Feinstein (D-California) favors Mountainview. In a letter this month to Governor Arnold Schwarzenegger, Feinstein urged adoption of a cost-of-service system for investor-owned utility customers and contended that grid reliability will be jeopardized if more generation does not come on line by 2006. Edison has made similar claims about crimps in generation, and the Mountainview rates would be cost-based as opposed to market-based. Feinstein press secretary Scott Gerber disputed assertions from some quarters that the senator engaged in lobbying on behalf of Mountainview. The senator is a supporter, said Gerber, but ?it?s not fair to say she is lobbying other legislators or agencies.? Calpine and IEP, in a January 12 conference call, warned that FERC approval would set a bad precedent for competitive markets on a national level. Joe Ronan, Calpine senior vice president of government and regulatory affairs, is concerned about Mountainview starting a trend. He said it is not likely that FERC could legally approve the type of contract Edison has submitted and assert that it applies only to Edison. Mountainview costs, kept secret during CPUC review, have recently come to light. Though Ronan said that ?the numbers are not remarkable,? both he and Smutny-Jones said that a competitive bidding process would yield lower-cost deals to better serve ratepayers. CPUC president Michael Peevey reiterated earlier statements that Mountainview was an exception and not a precedent. These ?words seem to fall on deaf ears,? said a dismayed Peevey. Edison has asked FERC to approve its Mountainview application without hearings before the end of February, when its option to buy the facility terminates.

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Mountainview Dispute Moves to FERC

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