Southern California Edison Co. said it reached a new agreement with most small electricity generators known as QFs to pay past due bills during first quarter of 2002.
The plan amends agreements reached between the QFs and SCE last June by adopting new payment terms and sets the price for power going forward at 5.37à‚¢/kw-hr for 5 years.
“We reaffirm our effort to pay all of our past-due obligations with interest during the first quarter of 2002,” said Stephen Frank, CEO of Southern California Edison.
The amended plan provides that QFs be paid a certain portion of the past due bills as soon as SCE can arrange bridge financing. Southern California Edison, the utility unit of Edison International, suspended payments to QFs and other creditors earlier this year after a retail rate freeze prevented the utility from recovering skyrocketing wholesale electricity costs for several months, the company said.
The utility teetered near bankruptcy until the state started buying power on its behalf and regulators increased retail rates to pay for wholesale power. In late March, the utility resumed paying the QFs for power delivered going forward and negotiated a plan for payment of past due amounts. QFs provide 90% of the utility’s renewable power.
The previous plan included an immediate 10% payment with the balance to be paid after a plan was adopted to restore Southern California Edison’s creditworthiness. But the utility’s recovery plan path changed substantially this fall and required the June agreements with the QFs be amended, the company said.
After two special legislative sessions failed to pass a rescue package, the utility and California Public Utilities Commission Oct. 2 reached a settlement intended to allow SCE to pay its debts, restore its credit rating, and begin buying power on its own again.
CalEnergy a unit of MidAmerican Energy Holdings Co., sued Southern California Edison last month for breach of the June agreement and sought to recover past due bills for wholesale power that began accumulating in December 2000. With the new agreement announced Tuesday, CalEnergy said it dropped its litigation against Southern California Edison.
SCE said a few remaining QFs have not agreed to the new payment plan yet but negotiations are proceeding.