By Ann de Rouffignac
HOUSTON, Oct. 8, 2001 — Duke Energy Corp. has stopped paying for electricity the company buys from the California grid operator and is netting the purchases against what it is owed for previous deliveries, a spokesman said Monday.
The California Independent System Operator (ISO) dispatches some of Duke’s plants for ancillary services. Tom Williams, Duke’s spokesman, said that since the ISO is still not paying for power, Duke in turn doesn’t pay the ISO for power it buys on the real-time market to supply some of its own contracts. Duke’s purchases are then netted against the amount owed.
“We managed to stop the bleeding here,” said Williams. “Of course, they said we can’t offset bills.” Generators earlier already filed a complaint with the Federal Energy Regulatory Commission alleging the ISO still isn’t paying for electricity it buys, even though FERC ordered the ISO to respect the creditworthy requirement on its tariff.
Payment issues continue to bedevil generators doing business in the state. Many still aren’t sure how quickly they will get their money from Southern California Edison Co., which last week reached an agreement with state regulators that will allow the utility unit of Edison International, Rosemead, Calif., to avoid bankruptcy. The agreement provided that rates would stay high enough to pay $3.3 billion in past power bills and accumulated debt and restore the company to creditworthiness.
SCE landed on hard financial times as debt accumulated from borrowing money to buy power to serve customers. State regulators kept retail rates frozen in the face of soaring wholesale electricity prices that prompted the liquidity crunch.
Duke, Charlotte, NC, and other out-of-state generators are still assessing what the agreement means concerning getting its invoices paid. Duke claimed it is owed much less than the other generators and has fully reserved $110 million of that shortfall. “We support anything that helps get the bills paid quickly. We are assuming it treats all creditor classes equally,” said Williams. “And that’s not clear yet.”
Dynegy Inc., Houston, is owed about three times more than Duke with receivables to date at $313 million.
“We expect to be paid in full,” said Steve Stengel, spokesman for Dynegy. “We need to sit down and work through the when and how we will get paid.”
Stengel said that most of Dynegy’s 2,300 Mw in California is under long-term contracts going forward that are being kept current. Reliant Energy Inc., Houston, said it was unclear how SCE’s latest plan would ensure “SCE’s solvency.”
“SCE indicated that it intends to use the approval of the settlement to swiftly fix the financial crisis and restore certainty for its shareholders. As a creditor it is our hope that SCE’s commitment to pursue the fair and equitable resolution of the claims is legitimate and will avert the need of creditors to pursue other remedies,” Reliant said in a statement.