QF files $100 million lawsuit against Southern Calif. Edison

By Sylvie Dale
Online Editor

EL CENTRO, Calif., November 14, 2001 — Power producer CalEnergy Operating Corp. has filed a $100 million lawsuit against the embattled utility Southern California Edison.

CalEnergy’s geothermal power plants, which were Qualifying Facilities (QFs), filed suit today in Imperial County Superior Court charging SoCal Edison with breach of contract for not making payments of more than $100 million for renewable power supplied during the California energy crisis.

The producer sold power to SoCal Edison during the power crisis in the last year.

The utility reached an agreement with state regulators in early October in an effort to save the company from bankruptcy. The utility and the state are still finalizing arrangements on the bailout plan.

Under another agreement, the QFs have agreed not to try to force SoCal Edison into bankruptcy, but the power producer is claiming that SoCal Edison agreed to make partial payments of debts and has not done so.

David L. Sokol, chairman of CalEnergy’s parent company, said, “Our patience, and our ability to carry Edison’s past-due debt, has run out. It has been a year since Edison first stopped making payments to CalEnergy and other renewable energy producers. We entered into a settlement with Edison for payment six months ago. It now is reneging on its agreements with renewable energy producers. Edison protects its shareholders while little players across the state, including vendors and landowners in Imperial County, suffer. Putting us last in line to receive payment is the final insult.”

Edison has built up $3.3 billion, Sokol said. It has repeatedly broken agreements despite assistance from renewable generators in keeping Edison out of bankruptcy and restoring it to creditworthiness, the lawsuit alleged.

Sokol also said that Edison’s repeated refusal to pay CalEnergy, under a written agreement reached June 15, casts doubt on Edison’s ability or intent to live up to its Oct. 2 settlement with the California Public Utility Commission.

In addition to demanding back payment, the lawsuit calls on Edison to begin paying the agreed fixed price for CalEnergy’s electricity. Every month that Edison delays paying that price brings a windfall to Edison of tens of millions of dollars from CalEnergy and other renewable energy providers, Sokol said. “It’s doubtful that the CPUC anticipated Edison reneging on its past debts and getting this windfall through its settlement agreement,” he added.

In November of last year, Edison stopped paying for the geothermal energy CalEnergy was providing under contract for the utility’s California customers. CalEnergy and other renewable generators continued to provide power to Edison without being paid. This helped to stabilize California’s energy supply while the state was paying millions of dollars a day for out-of-state, fossil-fueled electricity at a time of high natural-gas prices and rolling blackouts.

In March, CalEnergy affiliates won a judgment in Imperial County Superior Court releasing them from their contract with Edison. They began selling their geothermal energy on the open market.

In June, Edison reached a written agreement with CalEnergy and other alternative energy generators in which it agreed to pay them for energy going forward. In addition, Edison agreed to make immediate partial payment on past-due amounts and to pay the balance once steps were taken to make it creditworthy. With that agreement, CalEnergy resumed selling its generation to Edison at a rate pegged to natural gas prices.

On Oct. 2, Edison reached its agreement with the CPUC that restored the utility to creditworthiness. However, since then it has made no payment to CalEnergy for the past-due amount, despite two demand letters, and has refused to acknowledge that it will live up to its agreement, the lawsuit claims.

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The Clarion Energy Content Team is made up of editors from various publications, including POWERGRID International, Power Engineering, Renewable Energy World, Hydro Review, Smart Energy International, and Power Engineering International. Contact the content lead for this publication at Jennifer.Runyon@ClarionEvents.com.

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