U.S. utility that owes B.C. Hydro to pay 15 cents on the dollar

California default on hundreds of millions of dollars owed to BC.  Hydro hides, Chairman Smith won't return calls, and the government won't comment.

By CHRIS NUTTALL-SMITH
The Vancouver SUN
February 2, 2001

One of the two struggling California power utilities that owe some $300 million to B.C. Hydro said Thursday it will pay its suppliers just 15 cents on the dollar, a development that could further threaten the possibility of an energy rebate for British Columbians.

Pacific Gas & Electric would rather "make partial payments than no payments at all,"said Kent Harvey, a PG&E official, in a conference call with investors.

The company did not make clear when or if it would make further payments. The company did not return calls Thursday.

Shari Graydon, speaking for Premier Ujjal Dosanjh, said the provincial government won't comment until Monday when the situation is clearer.

PG&E was to have made a $611 million US payment Thursday to the California Independent System Operator for energy purchases in November. The ISO acts as a broker through which spot market electricity, including that purchased from B.C. Hydro, is bought and sold in California.

PG&E also owes $437 million to some power generators for deliveries in December. In addition, PG&E and its parent, PG&E Corp., defaulted this week on $726 million in short-term debt.

Dosanjh said last month he was forced to postpone an energy rebate to British Columbians because of the uncertainty over the debt owed Hydro.

B.C. Hydro spokesman Wayne Cousins refused to say Thursday what discussions Hydro has had recently with PG&E or the California Independent System Operator.

Cousins would provide only vague answers to repeated questions about the debt owed to Hydro, saying the utility "expects to be paid."

He added that Hydro would agree to provide flexible payment terms.

Cousins refused to provide specific information about the amount of money the Californian entities owe Hydro. He said Hydro will continue to sell power to "creditworthy" customers in California, refusing to specify what the term means.

Brian Smith, Hydro's chairman, did not return a request for an interview Thursday, but in an interview last month Smith said the two California utilities owe B.C. Hydro some $300 million.

Smith said the utilities are long-time customers and Hydro has offered to provide flexible payment options.

Utilities experts, industry and consumer groups and critics of Hydro have complained that many of the company's operations, as well as those of its export arm, Powerex, are conducted under a shroud of secrecy. Powerex's financial details are woven into B.C. Hydro's financial statements, so the company's activities are mostly concealed from the public's view.

Hydro officials, including Smith, have countered that transparency would put the public corporation at a commercial disadvantage.

B.C. Hydro has not faced a significant review by the BE. Utilities Commission in more than five years, although the corporation has said it is preparing for a coming review.

PG&E's statement Thursday came hours before California's state assembly narrowly passed an emergency rescue plan to keep the lights on in the state.

Governor Gray Davis has vowed the bill, which will allow the state long-term energy contracts with suppliers and sell up to $10 billion of bonds power on behalf of the utilities.

California has suffered from blackouts in the last two weeks. Pacific G&E and No. 2 utility Southern California Edison have not been able to pass on to consumers their soaring wholesale power costs because of a rate freeze imposed under the state's 1996 deregulation law.

In total, the utilities owe about $12 billion.

Chris Nuttall-Smith can be reached at
cnuttall-smith@pacpress.southam.ca

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