A federal appeals court said Monday that the California Public Utilities Commission may have broken state laws when it hammered out an agreement in secret last October with Southern California Edison that allowed the utility to begin paying the huge electricity debts it ran up during the energy crisis.
The U.S. 9th Circuit Court of Appeals asked the California Supreme Court to rule on three potential violations of state law by the PUC in crafting a rescue plan for Edison. That plan allows Edison to keep electricity rates at current high levels until the utility's power debts are paid.
If the state Supreme Court agrees that the PUC violated these laws, including open-meeting requirements and portions of the landmark law that deregulated the state's investor-owned utilities, then the bailout agreement would be void, said Judge Sidney R. Thomas, writing for the three-judge panel.
But both sides in the legal battle claimed victory Monday.
Edison and the PUC pointed to the court's rejection of challenges to the settlement under federal law.
Consumer advocates, however, predicted challenges to the deal would be upheld under state law, leading to lower rates and consumer refunds.
Analysts expressed concern about the uncertainty caused by the court opinion, but noted that Edison, a unit of Edison International, is collecting more than enough from customer rates to pay its bills.
"These are very serious questions," said Roger Berliner, an energy lawyer who represents Los Angeles County before state and federal utility regulators. The appeals court panel "made it very clear that they think the settlement violates state law in fundamental ways."
The appeals court panel cited three laws the PUC may have broken:
* By reaching an agreement in secret, the PUC may have violated a state law that requires the PUC to meet in public when it discusses changes in rates. The PUC has said it did not violate that law because it was discussing the settlement of litigation, which is allowed in closed session.
* By raising rates and giving Edison until 2005 to continue to collect its old electricity costs, the PUC may have violated the state's deregulation law, AB 1890. That law froze rates and allowed utilities until March 31, 2002, to collect old electricity-related debts. Edison and the PUC contend that these costs are not covered by that law.
