Tiny Wind Farm Could Push Edison Into Bankruptcy

As bills mount and patience wears thin, the operator of a tiny windmill farm took a first tentative step Thursday toward forcing one of California’s mammoth utilities into bankruptcy.

Brian O’Sullivan, owner of 283 windmills in Tehachapi, said Southern California Edison hasn’t paid him since October, and he is owed $350,000. With seven employees and only $41,000 left in the bank, O’Sullivan said he believes he has little choice but to sign a petition that could force Edison into involuntary bankruptcy proceedings.

O’Sullivan and his Coram Energy Group are part of a creditors committee that includes eight alternative energy producers. At least two other committee members must sign the petition before any action is taken. That decision will not be made until next week, he said.

“I don’t know what else to do,” O’Sullivan said.

“They won’t make partial payments. They won’t make any payments. They are very, very difficult people to deal with,” he said, referring to Rosemead-based Edison.

O’Sullivan’s company is one of nearly 700 small generators that supply 27% of the power consumed in California.

Edison amassed billions of dollars in debt when it was forced to pay skyrocketing wholesale prices for power but was blocked by state regulators from passing the full cost to consumers. For more than three months, Edison has made no payments to the small producers under contract to sell it power.

Pacific Gas & Electric Co., which also is billions of dollars in debt, has made partial payments to its generators.

An Edison International spokesman said the company is “doing everything we can to avoid bankruptcy.” John Fielder, senior vice president for regulatory policy, said the utility is aware of the involuntary bankruptcy petition that is circulating among alternative generators.

“This is just another log on the fire,” Fielder said. “If they take us in, they take us in.”

O’Sullivan’s step came a day after another member of his creditors committee, Caithness Energy of New York, won a potentially significant ruling in federal court in Las Vegas. Senior U.S. District Judge Lloyd George, acting on a petition by Caithness, placed a lien against Edison’s stake in the Mohave power plant in Laughlin, Nev.

The lien would guarantee repayment of $20 million owed to Caithness, which produces geothermal power and sells it to Edison. Edison said it will appeal the order.

Analyst Daniel F. Ford of the investment firm Lehman Brothers said the ruling has the potential to accelerate an involuntary bankruptcy filing as increasingly impatient creditors jockey for position.

“We believe this ruling will raise concerns of California utility creditors, as it has the potential to reduce available collateral for creditor claims,” Ford said.

O’Sullivan, 50, is a former lawyer who got into the wind power business in 1983. The idea of making electricity out of wind is, he said, “magical.” Unlike many alternative-energy producers, he continues to generate electricity--about 11 megawatts, enough to serve 11,000 typical homes. But without payments from Edison, he is not taking a salary, no longer pays his suppliers and cannot afford to fix his windmills when they break down.

“I’m the first guy who will put pen to paper,” O’Sullivan said, adding that he will send the petition to other creditors next week, asking them to sign it. “If nothing changes from how it is today, I personally don’t see how it wouldn’t go forward,” he said.