Regulators open investigation into alternative power providers

<br>SAN FRANCISCO (AP) _ An independent group of small power generators that provides about one-fourth of the state's energy has been scaling back or shutting down as debts owed by California's

Friday, April 20th 2001, 12:00 am

By: News On 6

SAN FRANCISCO (AP) _ An independent group of small power generators that provides about one-fourth of the state's energy has been scaling back or shutting down as debts owed by California's two largest utilities pile up.

State regulators, hoping to prevent California's power crisis from getting worse, launched an investigation Thursday to determine if the reduced output is due to legitimate business reasons or market manipulation.

The alternative power generators, known in the industry as ``qualifying facilities,'' or QFs, are owed an estimated $700 million by bankrupt Pacific Gas and Electric and financially crippled Southern California Edison.

Some small generators say the unpaid bills have forced them to defer much-needed maintenance, leading to more equipment breakdowns that reduce electricity output. Others say they simply can't afford to keep operating.

The California Public Utilities Commission is worried some alternative generators are trying to take advantage of the power crisis to get out of long-term contracts that require them to sell electricity at prices far below the current market rate. Several small companies are suing to get out of those contracts so they can cash in on the open market, said Commissioner Carl Wood.

The alternative generators simply want to be paid for bills that date back as far as November, said Jack Raudy, a spokesman for the Renewable Energy Creditors Committee, which consists of 10 alternative power producers owed a combined $410 million. Those 10 generators produce about 3,000 megawatts, which Raudy said was enough electricity for 3 million homes.

``We are outraged (by the PUC's investigation),'' Raudy said. ``We have heard so much rhetoric over the past five months and still haven't been paid a dime. That is what we are worried about.''

Raudy estimated his group is operating at about 95 percent of capacity.

After the temporary closure of several alternative generators contributed to rolling blackouts around the state last month, the PUC ordered PG&E and SoCal Edison to begin paying them for energy purchased since March 27.

But the order has done nothing to help alternative generators recover past debts. They are now in line in bankruptcy court with 30,000 creditors owed money by PG&E, which expects its unpaid bills to rise to $5.5 billion by the end of this month.

If the small producers get desperate enough, they may decide to push SoCal Edison into an involuntary bankruptcy case, Raudy said.

PUC Commissioner Geoffrey Brown defended the alternative energy providers during Thursday's hearing.

``Any QFs that are not operating right now are doing so for financial reasons, not to game the system,'' he said.