DWP WARNS STATE ON POWER BUYS INSISTS PAYMENTS BE TIMELY.

Byline: Rick Orlov  Staff Writer

The Department of Water and Power has told the state it will not sell any excess energy if the state falls behind in future payments - to avoid any further losses beyond the $180 million owed the city, officials said Friday.

``We have told the state that we will stop selling if they do not pay us in a timely fashion,'' DWP Assistant Chief Financial Officer Robert Rozanski told the City Council. ``We are at a point where we have been selling the state $5 million in energy a day and that could add up to a substantial amount very quickly.''

Rozanski's remarks, made to council members who fanned themselves as the air-conditioning level was raised as part of a conservation effort, were part of a regular report on the status of the city in the energy crisis.

Rozanski said the city has been billing the state twice a month for the energy it sells and has been paid within 10 days of each invoice.

The action, he said, is to avoid the problem that resulted early on in the state energy crisis when the city provided $180 million worth of energy for which it wasn't paid because of the bankruptcy filing by Pacific Gas and Electric Co.

``We believe that we stand a good chance of getting that back and have hired attorneys who specialize in bankruptcy to protect our interests,'' Rozanski said.

However, Councilman Rudy Svorinich Jr. expressed doubt the city will be fully repaid.

``We have unsecured debt,'' Svorinich said. ``I think we'll be lucky to get 10 cents on the dollar for what we are owed. And that doesn't even consider the interest money we have lost on this. With $180 million, we could be losing $2.5 million a month in interest.''

Councilman Mike Hernandez, however, said Svorinich was ignoring the profits the city has made in the sale of its excess energy to the state. The DWP sells the energy at its cost plus 15 percent.

``The city has made a windfall on the energy crisis because we do have extra supplies,'' Hernandez said. ``That's something we shouldn't lose sight of.''

Also, Rozanski said the DWP will have adequate supplies for this summer, even if temperatures continue as high as they have been, and the agency is not looking at the prospect of a rate hike within the next five years at the least.

``We think the city is in good shape and unless something extraordinary happens, there will not need to be any kind of rate hike for our customers,'' Rozanski said.