Here we go (?)

 
Calif Small Generator:To Sign SoCal Ed Bankruptcy Filing
By Mark Golden
  
03/15/2001 
Dow Jones Energy Service 
(Copyright (c) 2001, Dow Jones & Company, Inc.) 


NEW YORK -(Dow Jones)- One of California's small independent electricity 
producers, Coram Energy Group Ltd., will sign an involuntary bankruptcy 
petition Thursday against Edison International (EIX) unit Southern California 
Edison, the owner of the company said. 


The petition is being circulated to five other companies and lists the amount 
of money each is owed by the utility, Coram's Brian O'Sullivan told Dow Jones 
Newswires. O'Sullivan wouldn't name the other companies on the petition, but 
said that they are all "qualifying facilities" as the small generating plants 
are called.


The petition, known as a Form 5, could be filed in U.S. bankruptcy court in 
Los Angeles as soon as next week, O'Sullivan said. 


"I would have liked to have done it myself some time ago, but I couldn't do 
it on my own," said O'Sullivan, who received the papers for signing 
Wednesday. "(The) planets are in line for this to be filed in court. They 
would have to be knocked out of line somehow for this not to be filed." 


O'Sullivan said he would have preferred not to pursue a bankruptcy 
proceeding, but is running out of cash and will have to shut down his 
operations in about a month. That situation, combined with the stalling of 
legislation in the California Senate to deal with the qualifying facilities, 
have left O'Sullivan with no other option, he said. 


Qualifying facilities, from which U.S. utilities have had to buy power since 
the 1970s under federal law, supply California with almost 30% of its power. 
Southern California Edison hasn't paid these producers for months. 


FPL Group (FPL), which owns several qualifying facilities in SCE's territory, 
also may join the group to initiate involuntary bankruptcy proceedings. 


"We are considering it, but haven't made a determination of whether we would 
join such a petition," said FPL spokeswoman Carol Klaussen. "It's extremely 
frustrating to us. We continue to supply electricity to the people of 
California, but we haven't been paid since November." 

     
As reported, California Assemblyman Fred Keely, D-Boulder Creek, said 
legislation to restructure the rates qualifying facilities charge utilities 
for electricity is unlikely to be passed by the state's Legislature. Keely, 
who is Assembly speaker pro tem and a co-sponsor of the measure, SB47X, said 
the bill is still being heard in the Senate's Energy Committee, but the 
committee's chairwoman, Sen. Debra Bowen, has no intention of taking up the 
bill any time soon, an aide in her office said. 

The stalled legislation would reduce the rates charged by the state's 
qualifying facilities to about 8 cents a kilowatt-hour from the 17 cents a 
kilowatt-hour they've charged over the past few months. It would also 
establish a schedule of payments the utilities must make to the qualifying 
facilities. The small generators are owed a combined $1 billion from Southern 
California Edison and PG&E Corp. (PCG) unit Pacific Gas & Electric. 


O'Sullivan said that his and several other companies can't wait any longer. 


"From the beginning, I've been hearing, 'Oh, you guys won't start a 
bankruptcy proceeding.' And we didn't do it, because SB47x, we were told, 
would solve our problem. It was a good faith attempt by us to be part of the 
solution," he said. "Why Bowen stopped it, I don't know." 


Southern California Edison owes Coram $350,000, O'Sullivan said. He's got 
$41,000 in the bank, and has stopped paying most of his bills with the 
exception of salaries for his seven staff members and several other 
absolutely necessary payments. 


"That leaves me with about a month of cash," he said. 


But his legal fees would quickly have surpassed the amount he is owed if he 
were to have taken the utility to court alone. 


"I've got to join with someone who is significantly larger than me," he said. 
"That opportunity has arisen." 


O'Sullivan wouldn't name the larger company, which he said will make the 
final decision about when and if to bring involuntary bankruptcy proceedings 
against Southern California Edison. 


"This could be the biggest bankruptcy in U.S. history, and you can't do it 
without spending the next couple of years in court," O'Sullivan said. "This 
is not anything I want to do, but I don't have any choice." 


-By Mark Golden, Dow Jones Newswires; 201-938-4604; mark.golden@dowjones.com


(Jason Leopold in Los Angeles contributed to this article.) 

     
An Edison International spokesman declined to comment specifically on the 
petition, as the company hadn't seen it. But he said Edison still aims to 
avoid bankruptcy and plans to pay its bills once it's able to do so. 

"We're doing our best to avoid bankruptcy," the spokesman said. "We don't 
believe bankruptcy serves anyone's purposes. We fully intend to pay our bills 
once this situation is resolved." 


-By Mark Golden, Dow Jones Newswires; 201-938-4604; mark.golden@dowjones.com


(Jason Leopold in Los Angeles contributed to this article.)



 

  
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