PG&E; Seeks Relief From High-Priced Power Purchases

Pacific Gas & Electric Co. asked a federal bankruptcy judge Thursday to order the state’s power grid operator to stop buying electricity for its customers on the sky-high spot market, unless the utility can recover the full cost.

The move represents PG&E;’s latest attempt in Bankruptcy Court to get relief from actions that the company says are driving it deeper into debt.

PG&E; asked Judge Dennis Montali to enjoin the California Independent System Operator from making the company pay the costs of power purchased on the utility’s behalf. The company said it recently received a $1-billion bill for such purchases in January and February.

“By purchasing wholesale power at a cost higher than the retail rates and sending us the bill, [Cal-ISO] . . . could be reducing the value of our assets by hundreds of millions of dollars a month,” said PG&E; spokesman Ron Low.

In its motion, the company argued that Cal-ISO is violating bankruptcy law by requiring the utility to pay more for power than it can collect from state-regulated rates frozen under California’s deregulation plan. PG&E; said Cal-ISO’s actions would force the utility to seek credit on onerous terms.

The motion also contended Cal-ISO is violating an April 6 order by the Federal Energy Regulatory Commission that said the grid operator could only buy power on behalf of credit-worthy entities.

That same day, PG&E; sought Chapter 11 protection from creditors, saying it was $9 billion in debt. It later filed a motion seeking to halt an accounting change ordered by the California Public Utilities Commission, which the company says is prolonging the rate freeze and preventing it from recouping the cost of power.

Elena Schmid, Cal-ISO’s vice president of corporate and strategic development, said she has not seen the motion and could not fully comment.

But she said Cal-ISO has been discussing billings with PG&E; in hopes of determining which payments fall within the FERC ruling and which are subject to the bankruptcy case.

“We will live by the FERC ruling and whatever constraints the Bankruptcy Court places on us,” Schmid said. “We have indicated to them (PG&E;) that we are sending the bill . . . and they should treat it as information, until we can work it through.”

PG&E; listed Cal-ISO as one of its biggest creditors, with $1.1 million owed for power purchased from third parties.