Calif DWR Hasn't Received Any Invoice From ISO For Power Friday, September 07, 2001 06:14 PM ET

Of DOW JONES NEWSWIRES

NEW YORK -(Dow Jones)- The California Department of Water Resources has never received an invoice from the California Independent System Operator for power purchased on behalf of the state's insolvent utilities, DWR spokesman Oscar Hidalgo said Friday.

Between the middle of January, when Gov. Gray Davis ordered the DWR to start paying for ISO power purchases and May 31, the ISO has procured about $3.3 billion in power on behalf of California's cash-strapped utilities, PG&E (PCG, news) Corp.'s (PCG) Pacific Gas & Electric Co. and Edison International (EIX, news)'s (EIX) Southern California Edison, according to the ISO.

None of that power has been paid for, according to the ISO, as previously reported. The ISO and DWR have been negotiating the procedure for settling the accounts, but sellers to the ISO have been complaining that it shouldn't take eight months for the state agencies to get payments flowing.

"Until we get a bill that we can account for, we can't write a blank check and send it out. We haven't even received an improper bill," said Hidalgo.

The ISO was unable to comment immediately on whether it has sent a bill to the DWR for power purchased on behalf of the utilities. The ISO has said previously that it can't supply all the information the DWR wants without violating its own confidentiality rules.

The Independent Energy Producers Association, which represents many of the suppliers to the ISO, said this week the ISO market is on the verge of collapsing. Merchant power companies in California, such as Dynegy Inc (DYN, news). (DYN) and Mirant Corp. (MIR) continue to sell to the ISO, as ordered by the Federal Energy Regulatory Commission.

The ISO, which has ultimate responsibility for avoiding blackouts, ensures there is exactly the right amount of power on the state's transmission lines to meet demand at all times, which requires constant buying and selling of electricity.

In mid-January, after the state's two main utilities ran out of cash, an executive order from Davis - backed by state law passed in February - authorized the DWR to pay for any purchases the ISO needed to make for the utilities.

"There is no bill. I don't know as a government agency how the process of payment for a significant amount of money - over $1 billion - would be in anybody's mind as a possibility," Hidalgo said.

The DWR, which has paid more than $9 billion for power it has bought from suppliers directly since January, has set aside money to pay for the ISO's last- minute purchases.

The ISO considers the entire $3.3 billion unpaid, though DWR operations chief Pete Garris said earlier this week that DWR may have paid a majority of that bill directly to power suppliers. The DWR has set aside about $1.25 billion to pay suppliers once it receives a detailed bill from the ISO that meets DWR requirements. Other procedural problems have prevented the DWR from making payment. The DWR wants to pay suppliers directly, which Garris said the ISO is uncomfortable with.

The ISO declined to discuss this direct-payment issue. ISO market rules require that buyers pay the ISO, which, in turn, pays sellers.

The FERC has ordered the ISO to stop buying power on behalf on parties that aren't creditworthy, specifically Pacific Gas & Electric Co. and Edison. PG&E has said that it continues to receive bills from the ISO, and has been told the bills are for informational purposes only.

-By Mark Golden, Dow Jones Newswires; 201-938-4604; mark.golden@dowjones.com

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-- Martin Thompson (mthom1927@aol.com), September 07, 2001

Answers

Re: "Until we get a bill that we can account for, we can't write a blank check and send it out. We haven't even received an improper bill," said Hidalgo (DWR). The ISO was unable to comment immediately on whether it has sent a bill to the DWR for power purchased on behalf of the utilities. The ISO has said previously that it can't supply all the information the DWR wants without violating its own confidentiality rules.

Bwahahahaha! DWR is not supposed to know how much the bill is??????? And ISO does not have authority to write checks? And refuses to itemize charges to convince DWR to pay? If the ISO tells the Dept of Water Resources what is going on, will they have to kill somebody at DWR?

This is rich. Local government is getting screwier and screwier every day. I wouldn't be surprised if ISO hasn't billed the DWR because the ISO computers are still not Y2K-ready, or maybe because the manual that explains how to write up an invoice has not been published yet.

I like surrealism. There's a lot of it here.

-- Margaret J (mjans01@yahoo.com), September 08, 2001.

Electricity expert Rick Cowles 1999 prediction was excellent: The power grid performs its basic function after Y2K, but it is "hardly business as usual." Bingo!

-- Robert Riggs (rxr.999@worldnet.att.net), September 08, 2001.