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California and the West | THE CALIFORNIA ENERGY CRISIS

Alternative Energy Providers Seek to Cut PG&E Ties


SAN FRANCISCO — Raising the specter of their own bankruptcy, alternative energy providers who claim that Pacific Gas & Electric Co. already owes them $60 million asked a federal bankruptcy judge Thursday to release them from contracts with the utility.

In the first such move in PG&E's Chapter 11 bankruptcy case, four Central Valley companies known as Westside Cogen asked permission to sell their power to someone other than the financially troubled utility.

The legal arguments moved quickly to a central issue in the energy crisis: how much state regulators require utilities to pay small energy providers for power.

"You are forced to buy high and sell low," said Bruce Leaverton, who is representing the group. "We can't continue to provide energy [at prices that are] lower than the cost."

But James L. Lopes, representing the utility, urged the judge to stay clear of the issue. Lopes reiterated that the company has $2.5 billion in cash on hand and gave assurances that the electricity providers will receive $2.9 million in payments due Tuesday.

"Mr. Lopes . . . put your money where your mouth is," Judge Dennis Natali said.

The judge said he would order PG&E back to court Wednesday if the company misses the payment. He scheduled a May 10 preliminary hearing on Westside Cogen's request.

The four companies provide 148 megawatts to PG&E, which has a customer demand of 14,000 to 22,000 megawatts.

PG&E filed for Chapter 11 protection from its creditors a week ago, declaring it was $9 billion in debt.

Marty Quinn, chief operating officer of Ridgewood Power LLC, said lawyers for the company's three gas-fired generators in California are preparing to file a motion in the bankruptcy case.

Judges have already freed two other producers, which generate a combined 330 megawatts, from contracts with PG&E and Southern California Edison because they were not being paid.

The two utilities owe an estimated 700 producers of alternative and renewable energy at least $1.5 billion.


Times staff writer Miguel Bustillo contributed to this story.

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