California PUC delays action on end to direct access

By the OGJ Online Staff

HOUSTON, June 27, 2001 — California Public Utilities Commission Pres. Loretta Lynch delayed until July 3 a decision on when to formally end retail choice for California consumers.

The PUC was scheduled to take up the matter at Thursday’s meeting. Wednesday Lynch said she was acting at the request of California Assembly Speaker Robert M. Hertzberg (D-Van Nuys) to give state lawmakers time to “explore other possibilities.”

Large California electricity users and marketers have mounted a lobbying campaign in the legislature to keep direct access alive as an option. Sources have said it’s become a pivotal negotiating point in California Gov. Gray Davis’s efforts to win Republican support for his proposed bailout of Southern California Edison Co.

Davis ushered in the end of retail choice for electricity consumers when he signed a bill Feb. 1 that authorized the state to buy power on behalf of Pacific Gas & Electric Co. and Southern California Edison. The retail choice provision was added as amendment to the legislation. But it also left it up to the California PUC to set a date suspending the right of retail customers to select and use an alternative energy supplier.

Wednesday Commissioner Carl Wood said it was time to end direct access for all classes of customers to assure the financial markets there will be revenue available to secure a $13 billion bond offering the state is planning for August. Proceeds of the revenue bonds are to be used to repay the general fund for electricity the state has purchased on behalf of the state’s investor-owned utilities and to buy additional power. California law calls for the bonds to be retired from revenue the utilities take in from their customers.

“We should not be providing an avenue of escape for large customers,” he said, leaving small businesses and households with the burden of paying off the bonds.

Lynch said July 3 is the latest the PUC can act and meet the state treasurer’s deadline to prepare the bond sale by August.

Earlier, the Alliance for Retail Energy Markets complained the PUC seemed ready to scuttle chances for achieving progress by moving ahead prematurely to set a date to end competition.

“There’s no point for the PUC to support an order when it might be superseded by legislation,” said Tracy Fairchild, a spokeswoman for the marketing organization whose members include Shell Energy Services, a unit of Shell Oil Co.; Enron Energy Services, a unit of Enron Corp.; both of Houston; GreenMountain Energy Co., Austin, Tex.; Commonwealth Energy Corp., White Rock, BC, and Strategic Energy LLC, an affiliate of Kansas City Power & Light Co., Kansas City, Mo.

While retail electric deregulation is in trouble in many parts of the country, big business is managing to keep its options alive. Nevada recently all but rescinded its deregulation law that would have given all classes of customers the right to choose a supplier and ordered incumbent Sierra Pacific Resources, Reno, to halt the sale of its power plants.

But users of one megawatt or more of electricity were exempted at the last minute and can still buy from suppliers other than the regulated utility units of Sierra Pacific Resources.