Showdown looms between SDG&E, CalEnergy over back payments

April 14, 2001|By DARREN SIMON, Staff Writer

Monday marks what could be a showdown in the legal battle between local geothermal company CalEnergy and the state's second largest power utility, Southern California Edison.

The two companies will be in the Imperial County Superior Court on Monday for a hearing in which Judge Donal Donnelly could decide whether Edison must make millions of dollars in back payments to CalEnergy.

However, the hearing could be delayed if Edison manages to obtain a stay that would prevent Donnelly from ruling on the matter.

Information on whether Edison did obtain such a stay was unavailable Friday.

Edison, which is facing more than six lawsuits filed against it by renewable energy providers like CalEnergy, has filed a court request in Los Angeles asking that all the lawsuits be dealt with by one court.


While it could take months for a decision on that request, Edison could obtain a stay that would stop Donnelly from ruling on the payment issue until Edison's request is addressed.

Donnelly has said if there is no stay in place by Monday he would rule on the payment.

CalEnergy officials have said Edison owes more than $140 million in back payments as part of the contract Edison has to receive power from the local geothermal company that has 10 power plants in the Valley. Eight of those plants are contracted to sell power to Edison.

For five months Edison did not pay for the power CalEnergy provided, prompting CalEnergy to file a lawsuit.

CalEnergy sought two actions from the court. First it asked that the court suspend the Edison contract and allow CalEnergy to sell its power on the open market.

Donnelly in March did rule that the contract could be suspended and that CalEnergy could sell its power elsewhere.

Since Donnelly's decision, CalEnergy has sold its power to El Paso Merchant Energy, a company that has served as a broker for the power CalEnergy produces.

The second action sought by CalEnergy was to have the court force Edison to pay the money owed for the five months it did not make such payments.

CalEnergy had hoped to have a decision on that matter during a hearing earlier this month. However, Donnelly delayed the matter on the grounds that Edison was seeking to have all the lawsuits filed by renewable energy providers heard in one court.

Another ripple that could affect Monday's hearing is that Edison has announced it will start paying renewable energy providers on a going-forward basis starting this month.

Utility officials have said they expect to pay CalEnergy and all other renewable energy providers with which it has contracts.

Those payments would be for power the utility will be receiving.

Edison officials have said they consider the contract suspension with CalEnergy over since the utility is going to start making payments.

CalEnergy officials have said they consider the suspension in effect until the question of back payments is addressed by the court.

Watching Monday's hearing closely will be two other local geothermal companies, Heber Geothermal Co. and Second Imperial Geothermal Co. Both recently filed a lawsuit together against Edison.

Those companies, which each operate one plant in the Heber area, have released a statement that Edison has failed to pay them collectively a total of more than $35 million.

Both belong to parent company Covanta Energy based in Fairfield, N.J.

A spokeswoman for Covanta, Danielle Tinman, has said Heber Geothermal and Second Imperial Geothermal are seeking similar court action to that sought by CalEnergy.

The two companies are looking to the court to temporarily free them from their contract with Edison and to force Edison to pay the $35 million owed them.

Tinman said she realizes Edison is looking to have all the lawsuits against it heard in one court.

She said the CalEnergy hearing on Monday is important in that it could affect the way in which Heber Geothermal and SIGC proceed with their lawsuit against Edison.

Staff Writer Darren Simon can be reached at 337-4082.

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