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California Backs Loans for WPEX Software

Fortnightly Magazine - October 15 1996

The California Public Utilities Commission (CPUC) has authorized Pacific Gas and Electric Co., Southern California Edison Co., and San Diego Gas and Electric Co. to guarantee notes totaling $250 million for loans to two trust funds to support the development of computer hardware and software for the state's proposed independent system operator (ISO) and power exchange (WEPEX), but commissioner Jesse J. Knight has dissented, worrying about cost control.

As noted in a parallel story ("PUC Loans Would Bolster ISO, Power Exchange," Headlines, p. 15), the trust covers computer systems for business and engineering, communications infrastructure, facilities for housing the computer equipment, project management, and trust administration. The CPUC declined to include "startup costs" as proposed by the utilities.

The CPUC said its ruling will have no immediate impact on rates or practices of the utilities because the new entities will be regulated by the Federal Energy Regulatory Commission (FERC). The CPUC added that the defined scope of work contemplated by the utilities' application "should minimize any potential for unrecoverable costs in federally approved rates."

Commissioner Jesse J. Knight dissented, alleging that the approved funding structure leaves captive customers at risk for unreasonable incurred costs, and that the CPUC had failed to create adequate incentives to control costs. Re Pacific Gas & E. Co., Application 96-07-001, Decision 96-08-038, Aug. 2, 1996 (Cal.P.U.C.).

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