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Edison wins delay in legal joust with CalEnergy

April 17, 2001|By DARREN SIMON, Staff Writer

Southern California Edison on Monday won a 60-day delay in its legal joust with CalEnergy as Edison attorneys alleged the geothermal company is a partner with a company that has gouged on natural gas prices and driven up power costs.

During the four-hour hearing in the County Courthouse in El Centro on Monday, CalEnergy had one decisive victory in its lawsuit against Edison, the state's second-largest utility.

Superior Court Judge Donal Donnelly denied a motion by Edison that he reconsider his March 22 ruling in which he decided CalEnergy could suspend its contract with Edison and sell power on the open market.

That was the only decision in favor of CalEnergy, which has 10 power plants in the Imperial Valley. For 10 years eight of those plants have been contracted to supply power to Edison.


CalEnergy officials claim the company is owed $120 million by Edison for power CalEnergy provided for five months dating back to November. Earlier reports stated CalEnergy was owed $140 million, but officials said Monday that amount was incorrect.

Edison attorneys launched a new defense during the hearing, one that swayed Donnelly to grant a 60-day delay to conduct "discovery."

Edison attorney James Polish used a "clean-hands defense" in which he argued that CalEnergy is a 50 percent partner with El Paso Merchant Energy, a company Polish alleged has been involved in hiking natural gas prices. He alleged EPME's actions have driven up the cost of power in the state.

Polish asked for more time for discovery on CalEnergy's affiliation with EPME.

On March 22, after Donnelly ruled CalEnergy could sell its power on the open market, CalEnergy immediately started to sell its power to EPME, which acted as a broker for the power.

During a press conference after Monday's hearing, CalEnergy executive David Sokol said it is no secret that CalEnergy is a 50 percent partner with EPME in the ownership of the 10 power plants CalEnergy operates in the Valley.

He issued a warning to Edison that it is attacking the reputation of EPME by stating the company has been involved in manipulating natural gas prices.

"Edison needs to be careful," Sokol said, adding there is no truth in those allegations.

Sokol said Edison's actions Monday were merely a delay tactic.

Even without the "clean-hands defense" CalEnergy would not have been awarded Monday any of the money it says it is owed.

Edison has filed a motion to coordinate all the lawsuits filed against it by renewable energy providers. Attorneys said the number of cases has grown to 13. The motion for coordination was filed in the Los Angeles County Superior Court.

Donnelly said that effort has moved far enough along that he could not make a final judgment on the issue of back payment.

CalEnergy officials told Donnelly while he may not be able to make a judgment, he could provide an order on the issue.

CalEnergy attorneys said that order would be a step toward the geothermal being awarded back payments. They said they could submit that order to any court should Edison win its effort to have all the lawsuits against it coordinated.

Early in Monday's hearing, Donnelly offered a tentative ruling stating he might give an order that Edison should pay at least a portion of the back payments.

However, later in the day Donnelly pulled that tentative ruling and gave Edison the 60 days to do discovery. The matter could return to Donnelly's courtroom June 19.

Donnelly did say his jurisdiction over the case could be affected should Edison's coordination motion gain approval or if Edison obtains a stay while the coordination efforts works through the Los Angeles court.

In another twist to the case, Edison handed a $7 million check to CalEnergy attorneys during the hearing. That check was to be the first "going forward" payment by Edison to CalEnergy.

Edison officials have said they are ready to pay for power on a "going forward" basis starting this month.

Edison has not said it is willing to pay for the power it received for the five months when it did not pay.

CalEnergy officials declined to accept the $7 million check.

Sokol said CalEnergy plans to continue selling on the open market until the back payment issue is addressed by the courts or Edison.

In comments to the press, Sokol invited Edison to meet with CalEnergy to work out a payment plan.

Edison attorneys said it is wrong for CalEnergy to state there is no dispute over the amount Edison owes for the five-month period.

The attorneys questioned the prices charged by renewable energy providers this year, which they said were much higher than the prior year. They said for that reason the amount Edison owes is in dispute.

Sokol said neither CalEnergy nor any of the renewable energy providers control the cost of power.

He said that cost is under control of the state Public Utilities Commission, adding it is the payment structure the PUC had in place that caused the cost Edison paid to rise.

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

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