December 3, 2001
CalEnergy drops lawsuit against utility and agrees to new plan
ROSEMEAD, Calif., Dec. 3, 2001-Southern California Edison (SCE) announced today that it has reached agreement on a revised plan for paying past-due obligations owed to generators representing more than 90% of SCE's alternate energy supply. (Called "qualifying facilities," or "QFs," these generators are smaller renewable and natural gas-fired power plants that provide approximately one-third of the electricity needed by SCE customers.)
The plan amends agreements reached last June with QFs by adopting new payment terms to accommodate the solution to SCE's financial dilemma represented by the Oct. 2 procurement cost settlement SCE reached with the California Public Utilities Commission (CPUC).
"We appreciate the large number of QFs who have supported our effort to deal fairly and equitably with all creditors and not to single out one group for preferential payments," said SCE Chairman, President and CEO Stephen E. Frank. "We reaffirm our effort to pay all of our past-due obligations with interest during the first quarter of 2002."
"We believe this revised payment plan represents a positive outcome for CalEnergy and other QFs as we seek to recover payments for power delivered at the end of last year and earlier this year," said Doug Anderson, senior vice president and general counsel of MidAmerican Energy Holdings Company, CalEnergy's parent corporation. CalEnergy dropped litigation it recently brought against SCE, choosing instead to accept the new payment arrangement.
SCE temporarily suspended payments to QFs and other creditors earlier this year after frozen retail rates prevented the utility from recovering skyrocketing wholesale electricity costs for several months. In late March, going-forward payments resumed as well as monthly interest payments that continue to date. In June, an agreement was reached with representatives of most QFs on the payment of past-due amounts. The terms of that agreement included an immediate 10% payment with the agreed-upon balance to be paid following adoption of the plan to restore SCE's creditworthiness. The settlement path emerged this fall, requiring the revision of the agreements to accommodate the timing by which SCE will recover financially.
The amended plan calls for QF power producers to be paid the balance agreed to last summer as soon as SCE can arrange bridge financing. It also provides for renewable power purchases at a fixed price-5.37 cents/kWh -over the next five years, eliminating some of the price volatility that has plagued California's energy market during the energy crisis. Finally, the plan extends stays of existing and new legal actions. Certain elements of the amended agreement are subject to CPUC approval.
"We are satisfied that the new arrangement represents the most timely repayment plan feasible for SCE and maintains the spirit and intent of our original agreement," said John O'Rourke, vice president and general manager of El Paso Merchant Energy, the managing partner of Corona Energy Partners, a 47-MW gas-fired QF.
Negotiations continue with the few remaining QFs who have not yet agreed to the new payment plan.
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An Edison International company, Southern California Edison is one of the nation's largest electric utilities, serving a population of more than 11 million via 4.3 million customer accounts in a 50,000-square-mile service area within central, coastal and Southern California.