Gas Co. fears it will be loser in credit crisisgreenspun.com : LUSENET : Grassroots Information Coordination Center (GICC) : One Thread
Wednesday, January 31, 2001
Gas Co. fears it will be loser in credit crisis
By Dana Bartholomew Staff Writer
Southern California Gas Co. officials said Tuesday that a proposal going before state power regulators today would put the company at risk by forcing it to supply fuel to Pacific Gas & Electric on credit.
PG&E, its credit destroyed by energy deregulation, has sought an emergency order compelling The Gas Co. to use its credit to buy $300 million worth of natural gas each month for PG&E's 14 million customers.
The Gas Co. said the plan would make it the equivalent of a banker for PG&E and that it might not be able to collect, putting it into the same financial danger as PG&E and Southern California Edison.
"This is not an issue of inadequate gas supplies," said Gas Co. spokeswoman Denise King. "This is a credit issue.
"Forcing The Gas Co. to buy natural gas for PG&E will drag us down the same path into insolvency. We simply cannot pick up PG&E's financial burden without jeopardizing the 18 million people we serve."
The Public Utilities Commission will consider today whether to order PG&E to better account for its electric and gas debts before it reviews the emergency request Feb. 8.
But Gas Co. officials say they need an immediate answer: its bankers are threatening not to renew short-term credit lines as long as the request is on the table.
Southern California business advocates are not happy with the proposal.
"It's unbelievable," said David Fleming, chairman of the Economic Alliance of the San Fernando Valley. "You've got two very, very sick companies, and you want to make a third one sick (as well)?" PG&E had requested earlier this month that the Southern California utility begin buying gas Feb. 6, the day a federal order expires requiring gas and electric suppliers to sell energy to California's cash-strapped utilities.
With suppliers demanding advance payment, PG&E risks shutting off gas to 3.8 million households and businesses.
"Our people are in jeopardy of losing gas service, and we're looking at any solution we can," said PG&E spokeswoman Staci Homrig. "The proposal we have made would ask SoCal Gas to procure gas for our customers only if they would do so without hurting their customers."
PG&E has few options other than to give its gas business away to companies willing to "swoop in" on its customers.
It could also request its industrial users to buy gas for eventual repayment by residential and small-business users -- not a likely prospect considering most "noncore" industrial users are independent power generators owed millions by PG&E.
-- Martin Thompson (firstname.lastname@example.org), January 31, 2001