By Todd Wels

Triplicate staff writer

An administrative law judge has stricken down the proposed sale of Pacific Powers local assets to the Nor-Cal Electric Authority.

In a draft opinion filed last week, a. San Francisco-based Administrative Law Judge for the California Public Utilities Commission denied the application for PacifiCorp to sell its assets and permits to Nor-Cal, on grounds of incompleteness as to facts and legal authority.

Nor-Cal Board Chairman Clyde Eller said Monday that the decision was a hurdle, but not a roadblock to the Nor-Cal process, pointing out that the officers of Nor-Cal and the Jefferson Public Power Authority have approximately two weeks in which to respond to the decision.

Its nothing more than advice, Eller said, noting that the opinion must first be finalized by the judge, and then ratified by the Public Utility Commissioners themselves before it would become binding.

The Nor-Cal Electric Authority was created by agreements between Del Norte County and the cities of Yreka and Dunsmuir last year, when PacifiCorps owner, Scottish Power announced its intent to sell its Northern California assets.

When a Superior Court found counties cannot provide electric power, the Jefferson Public Power Authority (JPPA) was created, under the auspices of Nor-Cal, to actually distribute the electrical power.

The JPPA would be governed by the cities of Yreka and Dunsmuir, but not Del Norte County, according to Eller.

He added that the Superior Court ruling did not expressly forbid counties from owning and financing electric power companies.

According to Administrative Law Judge Orville Wrights ruling, since the JPPA was created to avoid that ruling, and has not undergone a similar court proceeding, it has no authority to sell electric power.

It also found that Nor-Cals statement that it will market $198 million in 30-year, taxable, non-recourse, revenue bonds at 7 percent interest to be uncorroborated.

Wright also found that Nor-Cals application to the PUC did not show how Nor-Cal could ensure that none of its local customers would be negatively impacted by the acquisition.

According to the ruling, the three reasons Nor-Cal cannot make that guarantee are:

The fact that there is no commitment to the underwriting of the proposed bond issue that funds it.

The fact that there is no commitment for insurance of the bonds.

The fact that the purchase agreements, indenture, bonds and resolutions of both Nor-Cal and JPPA have not been validated by the courts.

Eller said many of the concerns raised in the ruling came about because Nor-Cal failed to include them as affidavits or sworn testimony, which could be done within the next two weeks.

I think every element of it can and will be addressed, he said.

This was another in a long series of delays for the transfer of local power distribution to Nor-Cal.

This draft decision was a surprise to all of our attorneys, Eller said. It was totally unanticipated.

He blamed Siskiyou County Counsel Frank DiMarco for further delaying the Nor-Cal purchase, saying that many of the concerns raised in the ruling were those raised by DiMarco in earlier proceedings.

He has held up the process many, many, many months, Eller said.

DiMarco replied that he has only interceded in the Nor-Cal process to make sure it was in the public interest and legally sound.

Eller said Del Norte County power customers could suffer if the sale is denied by the full Public Utilities Commission.

It is absolutely my belief that we can generate and deliver electricity cheaper than investor-owned utilities such as Scottish Power, Eller said.

According to Eller, de-regulation of the power industry has caused electric rates to double throughout much of the state.

Although he conceded that rising generation costs would cause a rise in the rate Nor-Cal customers would pay for their electricity, Eller said that rise would be less for Nor-Cal customers, since Nor-Cal is a public, non-profit organization.

Eller said confidential negotiations remain ongoing between all concerned parties, and that he remained confident that the sale would move forward.

We do not feel that the deal is dead, he said.

The PUC is scheduled to make its final ruling in early September.