The decision moves the utility closer to bankruptcy.
Some analysts see the move as a bargaining ploy.
California's power crisis lurched into troubling new terrain Tuesday when Southern California Edison, the utility that serves most of Orange County, defaulted on more than half a billion dollars in debt while millions of state residents woke up to new threats of blackouts. The Power Exchange, the state's market where electricity is bought and sold, was one of the creditors that Edison failed to pay Tuesday. Edison will now have to post collateral to buy power on the exchange or make last-minute cash purchases through the state's grid operator, where prices tend to be the highest. Gov. Gray Davis has proposed having the state buy power under long-term contracts and resell it to the utilities as a way of overcoming the utilities' inability to buy on credit. But generators have said they can't make a profit at the price the governor wants to pay.