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<Wednesday, June 6, 2001 08:18 PM < <<!--TEXT--< < <By Jason Leopold < <Of DOW JONES NEWSWIRES < <LOS ANGELES (Dow Jones)--California utility regulators appear ready to <vote next <week on a proposal to suspend the ability of large electricity users to sign <contracts directly with energy suppliers. < <The move is called for in the February bill that put the state in the power <business, but its approval by the California Public Utilities Commission <would <damp plans in the Legislature to reduce the burden on Edison International <(EIX) <unit Southern California Edison by making large industrial customers <responsible <for securing their own power. < <"We're still trying to figure that out," said an aide to Assembly Speaker Pro <Tem Fred Keeley, D-Boulder Creek. "We don't know how to get around that right <now." < <Keeley is expected to introduce legislation to shift the burden of rescuing <Southern California Edison to large businesses. Under the proposal, which is <also supported by Assembly Speaker Robert Hertzberg, customers that use 500 <kilowatt-hours of power a month or more would pay a surcharge on their <bills to <help Southern California Edison recoup its losses on wholesale power. < <The so-called direct-access component - under those large users would buy <their <power from suppliers - is the cornerstone of the Keeley plan, for which Enron <has been lobbying hard in recent weeks, according to several aides to key <legislators. < <The Keeley plan is an alternative to the memorandum of understanding Gov. <Gray <Davis signed with Southern California Edison two months ago. Under that <proposal, the state would buy Southern California Edison's power lines for <$2.76 <billion and allow the utility to issue $2 billion in bonds backed by <ratepayers <to recover $3.5 billion in net uncollected power costs. < <That plan has run into snags in the Legislature, which must enact it into <law, <and the PUC, which has been slow to rule on enabling measures. < <One key Democratic Senator said the PUC's move to quash direct access is an <attempt to ensure a deal to rescue Southern California Edison doesn't pass <through the Legislature. < <"The PUC has demonstrated it does not want SoCal Ed to remain solvent," the <senator said. "They have dragged their feet on several key issues they <need to <address in order to make sure legislation to save the utility is never heard." < <A PUC spokesman didn't return calls for comment. < <Direct-access was the key part of the state's 1996 deregulation law, giving <retail customers the opportunity to choose from a variety of energy <suppliers in <an effort to lower their electric rates. < <Commissioners Richard Bilas and Henry Duque said they support direct <access and <would vote against any measure to reverse it. < <"I would never vote against direct access," said Bilas, a Republican, who <authored the agenda item. Bilas said the item was amended by another <commissioner. < <The measure could be held, because it might disrupt negotiations between the <Legislature and Southern California Edison, said PUC Commissioner Geoffrey <Brown, a Democrat. < <The PUC may be looking to protect the state's interest as a power purchaser, <some legislative aides said. < <The DWR's long-term power supply contracts cover the state's wholesale-market <power needs in 2002 and 2003. If large industrial customers were to sign <direct-access contracts, the DWR would lose them as customers and thus <fail to <collect enough revenue to pay off the long-term contracts. < <The agency could be stuck with a large surplus of electricity that it <would be <forced to sell it on the open market at a loss. The market price of power <in the <coming years is expected to be lower than what the state paid for forward <power <in 2001. < <Wholesale power prices plunged this week, and the DWR for the first time sold <excess power on the open market, according to Oscar Hidalgo, DWR spokesman. < <Arnold Rosenthal, of Newport Beach-based Utility Resource Management <Group, an <organization that represents more than 700 large electricity users in the <state, <said state regulators are "looking to get us back into a mode where we are <held <captive once again." < <"The DWR is acting as this super utility," Rosenthal said. "What you're left <with is absolutely no choice. Instead, we'll be subjected to several large <rate <increases." < <Rosenthal said some of his San Diego clients have direct access deals. A <number <of clients served by Southern California Edison want to sign direct-access <contracts to escape recent rate increases imposed by the PUC. < <-By Jason Leopold, Dow Jones Newswires; 323-658-3874; <jason.leopold@dowjones.com < < <2001 Dow Jones & Company, Inc. All Rights Reserved. < <----------------------------------------------------------- <This article on the Excite Money and Investing Channel is produced by <Quicken.com, the objective source for making the most of your money. <Visit Excite Money and Investing at http://quicken.excite.com next time <you need financial news, stock quotes, portfolio services, or information <about taxes, mortgages, and insurance.
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