LOS ANGELES, March 22 /PRNewswire/ -- A group of gas-fired QFs
(small, independent power suppliers -- "cogenerators") has developed a plan
that will enable them to stay in business and continue to supply power to the
California market, and save the state as much as $10 million per day in its
electricity purchases. QFs provide approximately one-third of
Southern California Edison's (SCE) power supply.
The cogenerators, which recently formed the SCE Gas-Fired QF Creditors'
Committee, are owed nearly $150 million by SCE. Members of the committee have
continued to work with the legislature and SCE to resolve the energy crisis
even though they have not been paid for power deliveries since November 2000,
nor received any assurances of payment. Some QFs have had to shut down and
certain others are on the verge of bankruptcy.
Through long-term purchase agreements with QFs, SCE saved more than
$800 million in 2000 compared to spot market electric prices. These purchase
agreements between QFs and SCE call for QFs to deliver to SCE electricity
which, during peak periods, is merely one third of the price that the
Federal Energy Regulatory Commission (FERC) has determined as
"just and reasonable."
Statewide, nearly 3,000 megawatts of QFs have had to shut down due to not
receiving payment by the state's investor-owned utilities (IOU) for
electricity the QFs have already provided. The IOUs' failure to pay has made
it impossible for many QFs to secure the fuel needed to operate. This loss of
generating capacity represents enough electricity needed to power as many as
3 million homes, and it represents four to six times as much power as was
needed to avoid Monday's and Tuesday's statewide rolling blackouts.
This forced shutdown of these QFs is very costly. If the QFs are forced
to remain off-line, the state Department of Water Resources (DWR) will
continue to lose approximately $10 million per day as it is forced to buy
significantly higher-priced replacement power. Even worse, the state
legislature appears poised to repeal Public Utilities Code Section 390, which
links the price of QF electric energy to the price of gas. If Section 390 is
repealed, it will lead to a dramatic further reduction in the availability of
QF power.
Under the QFs' plan, they would be permitted to sell electricity to third
parties (including DWR) until a resolution of the crisis can be accomplished.
This will reduce costs to consumers and bring reliable power back onto the
grid. It is essential for the state to recognize the QF's as a critical
component of the State's pool of generating resources.
The Committee hopes to convince Governor Davis that the repeal of
Public Utilities Code Section 390 is a mistake, and the passing of legislation
to allow QFs to sell power to creditworthy third parties is a necessity.
The members of the SCE Gas-Fired QF Creditors' Committee consist of
Berry Petroleum Co., O.L.S. Energy - Chino, O.L.S. Energy - Camarillo,
Carson Cogeneration Co., Mojave Cogeneration Co., The Procter & Gamble Paper
Products Co., E.F. Oxnard, Inc., Smurfit-Stone Container Corporation,
U.S. Borax and Willamette Industries, Inc.
SOURCE SCE Gas-Fired QF Creditors' Committee
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CONTACT:
John Wood for the SCE Gas-Fired QF Creditors'
Committee, 619-515-3030
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