As power prices on the open market have skyrocketed this summer, Southern California Edison is going deeper and deeper into debt -- completely wiping out recent gains in the company's stock price.

Edison has racked up more than $1 billion in "under-collections," in which it cannot recover from its customers the full cost of buying power.

That's because in the last three months, the average price of power on the open market has run four to five times last summer's levels, but the rate Edison charges its customers has stayed frozen thanks to provisions in the 1996 state law deregulating the state's electric utility industry.

This revenue shortfall has forced the utility and its parent company, Edison International, to postpone paying off $1.15 billion in remaining debt in preparation for full deregulation of the state's electricity market; the shortfall is in fact adding to that debt month by month.

This in turn has prompted Wall Street rating agencies to place the firm on watch for a possible credit rating downgrade. The stock closed on Sept. 20 at $21.94, the same level it was trading at the end of August. (The stock had run up afterward in response to an announcement by billionaire investor Warren Buffet that he had made an investment in Edison.)