Southern California Edison says deal cut with QFs

— Southern California Edison Co. Tuesday said it reached agreement with most qualifying facilities (QF) power producers that could lead to full compensation for past due bills and that creates a mechanism for ending numerous lawsuits.

The California Public Utilities Commission (PUC) previously ordered Southern California Edison, Rosemead, Calif., to make back payments of 15% of what it owes QFs, if the companies can prove financial hardship.

Southern California Edison, the nearly insolvent utility arm of Edison International, said it received signed agreements from QFs representing 95% of its renewable energy capacity and executed those contracts.

A spokesman said certain elements of the agreements are subject to the PUC approval. Provisions to pay the QFs in total are subject to reestablishing Southern California Edison’s creditworthiness, he said.

The plan also calls for generators to provide power for 5.37à‚¢/kw-hr for the next 5 years. Southern California Edison said the agreement also stays all existing legal action, and assures that no new legal action will be initiated, unless the terms of the agreement are not met.

The company owes the QFs an estimated $1.3 billion in back payments. Earlier this year many QFs quit producing power and threatened to push the utility into bankruptcy after it ran out of cash buying electricity in California’s volatile wholesale electricity market.

After the utilities halted payment, some QFs went to court to be released from their utility contracts so they could sell power on the open market. Others sued to obtain liens on the utility’s property.

“We believe this agreement will help bring stability to an important segment of California’s energy market,” said SCE Chairman, President & CEO Stephen E. Frank.

Pacific Gas & Electric Co., unit of PG&E Corp., San Francisco, the state’s biggest utility, was ordered to make back payments of 20% of what it owes QFs by the federal judge presiding over the utility’s bankruptcy protection case.

QFs were created under the auspices of Public Utility Regulatory Policies Act of 1978 (PURPA) and are governed by the Federal Energy Regulatory Commission. The PUC, however, said it has the primary role in calculating payments and in overseeing the contractual relations.

Under an earlier PUC decision, both utilities are supposed to be paying the QFs for deliveries they are currently making. Altogether, the QFs represent about 11,000 Mw or 22% of the state’s electric generating capacity.

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