Judge denies California utility rate hike request

Edison attorney Ron Olson says the danger of insolvency grows daily for the utility

In this story: Utilities' lawsuits likely to be combined Fifth week of Stage 3 power alerts RELATED STORIES, SITES

LOS ANGELES, California -- A federal judge on Monday denied a request by a California utility for an injunction ordering the state to raise electricity rates.

The setback for Southern California Edison -- one of California's two largest power providers -- was the latest round in a battle between utilities and the government over skyrocketing electricity rates caused by dangerously low supplies and high demand.

Edison had sued the state Public Utilities Commission in November for refusing to lift a rate freeze that has been in effect since the state deregulated its utilities in 1996.

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With U.S. District Judge Ronald S.W. Lew's refusal to grant the request for a preliminary injunction, the suit will go to trial. No date has been set.

Edison has said the California Public Utilities Commission has failed to recognize its financial plight. Edison and the state's other large utility, Pacific Gas and Electric Co., are facing bankruptcy.

The ruling also was a blow to PG&E -- which has filed a similar court request to raise rates, to be heard at a later date.

Utilities' lawsuits likely to be combined

Edison wants to pass onto consumers very high wholesale costs over a three-year period that would raise its rate about 1 cent per kilowatt hour.

Edison said it needs to recoup about $2.5 billion it has spent for wholesale power since last summer, and wanted the increased rates to go into effect within seven days.

Edison attorney Ron Olson said the ruling did not propel the utility closer to bankruptcy, but he said the danger of insolvency grows daily.

Lew said a ruling in Edison's favor would have stripped state regulators of power over interstate rates.

The lawsuit will likely be combined with the suit filed by PG&E. The two utilities serve nearly 9 million residential and business customers throughout California.

Fifth week of Stage 3 power alerts

Monday's decision clears the way for Gov. Gray Davis and the California Assembly -- the state's legislature -- to negotiate a plan that will help both utilities pay their debts. Davis said he hoped to have a proposal by Friday.

California State Attorney General Bill Lockyer said an Edison victory Monday "would have provided a weapon to use against the state" in the negotiations.

The state on Monday entered a fifth week of Stage 3 power alerts. A Stage 3 alert is the highest alert condition in California and is declared by the manager of the state's power grid, the Independent System Operator, when electricity reserves fall below 1.5 percent. Under a Stage 3 alert, the ISO is allowed to begin so-called rolling blackouts without warning to save electricity.

Recent colder temperatures throughout the Northwest increased energy demands, despite the return on line of several newly repaired power plants. No blackouts were expected .

The Associated Press contributed to this report.

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