CDWR asked to pay generators for past due power bills

By the OGJ Online Staff

HOUSTON, Nov. 26, 2001 — The California Independent System Operator invoiced the California Department of Water Resources for $1 billion of power bills accumulated since January 2001.

The money is owed the ISO and ultimately generators and other power companies that sold power to the DWR via the ISO for months without getting paid.

The action comes as a result of a FERC order earlier in November in response to filings by out-of-state generators complaining about power sold to the California ISO but not paid. The ISO justified its nonpayment by a set of definitions about who is a scheduling coordinator and who is a creditworthy backer. FERC agreed with the generators and said DWR had to pay for the power it was buying and scheduling through the ISO.

The California ISO said in a filing last week that it will get the funds from DWR and pay the entire past due bill by Feb. 7, 2002. Payment will come in a series of installments, if FERC approves a payment schedule suggested by the California ISO and if DWR responds to the invoices.

“We are anxiously waiting for an answer from CDWR,” said Gary Ackerman, executive director of the trade association Western Power Trading Forum in San Jose. “We are neither optimistic nor pessimistic just iffy.”

But other observers were skeptical the DWR would follow through with the money. There is some ongoing discussion between DWR and FERC about jurisdiction, sources said.

“CDWR is kicking some sand in FERC’s face over that,” one California observer said.

FERC maintains DWR is a scheduling coordinator and therefore must comply with FERC approved tariffs as well as orders. The ISO argued before FERC that DWR was only a creditworthy backer and agent for the investor-owned utilities. DWR would procure power from third parties and the utilities would schedule it.

DWR is supposed to make its first payment to the California ISO for overdue amounts incurred in Feb. 2001, on Dec. 6. Market participants will receive their payment Dec.13.

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