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Calif. Utility Injunction Denied Updated 5:19 PM ET February 12, 2001
By GARY GENTILE, AP Business Writer LOS ANGELES (AP) - A federal judge on Monday refused to grant a request from one of California's debt-ridden utility giants for an injunction ordering the state to raise electricity rates.
Southern California Edison had sued the state Public Utilities Commission in November for refusing to lift a rate freeze that has been in effect since the state deregulated its utilities in 1996. The company wanted to pass skyrocketing wholesale electricity costs on to customers.
Edison said it needs to recoup about $2.5 billion it has spent for wholesale power since last summer, and wanted the increased rates to go into effect within seven days. It said it wanted to spread that amount over three years, raising rates by about 1 cent per kilowatt hour.
Edison attorney Ron Olson said the ruling itself did not propel the utility closer to bankruptcy, but he said the danger of insolvency grows daily.
U.S. District Judge Ronald S.W. Lew said a ruling in Edison's favor would have stripped state regulators of all power over interstate rates.
The judge ordered that Edison's lawsuit go to trial. No date was set.
The lawsuit will likely be combined with a similar suit filed by Pacific Gas and Electric Co. The two utilities serve nearly 9 million residential and business customers throughout California.
Monday's decision clears the way for Gov. Gray Davis and the Legislature to negotiate a plan that will help both utilities pay their debts. Davis said he hoped to have a proposal by Friday.
Attorney General Bill Lockyer, who was in the courtroom Monday, said he was pleased with the outcome because it gives the state time to negotiate a debt relief plan for the utilities.
He said an Edison victory Monday "would have provided a weapon to use against the state" in the negotiations.
The state entered a fifth week of Stage 3 power alerts Monday. A cold snap throughout the Northwest increased energy demands, even as several power plants returned to service after completing repairs. No blackouts were expected.
-- Martin Thompson (firstname.lastname@example.org), February 12, 2001
Energy Testimony Resumes After Edison 'Bombshell' By David W. Myers Last updated: Feb 12, 2001 03:48PM
LOS ANGELES-Lawmakers today resumed hearings on the causes of the state’s energy crisis, after a top executive from one of the two big utilities admitted Friday that his parent company had collected hundreds of millions in tax payments from its California subsidiary but passed along only a fraction of the money to the state. According to documents that Southern California Edison provided to state officials, the utility forwarded hundreds of millions in tax payments every year to its parent, Edison International. SCE provides power to more than 10 million customers, most of them in Southern California.
Yet, Edison International shifted most of that money to some of its money-losing operations in other states. For example, the documents show, in 1998 SCE forwarded $431 million for taxes to Edison International—but Edison International paid only $1 million to the state and federal governments because the remaining $430 million was largely spread among its money-losing operations in other states.
The SCE records show it paid $291 million last year to its parent to cover its share of taxes. Yet, Edison International paid nothing at all in state and federal corporate taxes. The documents “hit some of us like a bombshell,” one legislator told reporters after Friday’s hearings.
California is currently spending about $45 million a day in taxpayer money to purchase power because its two biggest utilities--Southern California Edison and Pacific Gas & Electric—say they can’t afford to buy the power themselves. Many lawmakers are furious that only a fraction of the money forwarded by SCE to its parent ever made it to the state Treasury, but Edison International CEO John Bryson testified Friday that shifting the revenue to other subsidiaries “was absolutely in compliance with the tax laws” and rules established by California’s Public Utilities Commission.
-- Martin Thompson (email@example.com), February 13, 2001.