Riverside Press-Enterprise: Power industry feels state's grip tightening

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"Beiser, Megan" <Megan.Beiser@edelman.com<
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Subject: Riverside Press-Enterprise: Power industry feels state's grip tig
htening

Here's another direct access-related from the Riverside Press-Enterprise.

********************************
< Power industry feels state's grip tightening
< Deregulation's hallmark right to choose a new power provider may disappear
< today.
<
< BY ROBERT T. GARRETT
< THE PRESS-ENTERPRISE
< SACRAMENTO
<
< Only a year or two after California lunged to the head of the pack in
< deregulating electricity, the state now seems headed in virtually the
< opposite direction: Government is in the driver's seat.
<
< By summer's end, the state may end up with more control of the electric
< industry than was true for several decades before a flawed deregulation
< plan was passed in 1996.
<
< Today, for example, the state Public Utilities Commission is expected to
< put an end to what was supposed to be a hallmark of the 1996 law -- the
< ability of residential and business customers to shop for a new
< electricity provider.
<
< In August, a new state Consumer Power and Conservation Financing Authority
< comes into being. It will be able to borrow $5 billion to build or
< subsidize new power plants, make old ones cleaner and more efficient, and
< help homeowners and small businesses take energy-saving steps.
<
< At a Senate hearing Wednesday on the future shape of the electricity
< market, Democratic lawmakers, aides to Gov. Davis and consumer advocates
< spoke favorably of a strong state role in planning and coordinating the
< generation and transmission of electricity.
<
< "Never again will we embrace the free market," said David Freeman, Davis'
< leading energy adviser. ". . . We want something of a hybrid, (with)
< government restraints on market forces."
<
< But state Chamber of Commerce lobbyist Dominic DeMare said businesses fear
< policymakers are about to trample innovation and consumer choice.
<
< Also, the chamber's members want "the state out of the business of
< procuring electricity," he said.
<
< In January, the state began buying power for customers of California's
< three investor-owned utilities, which had been caught between soaring
< wholesale prices and capped retail prices. The state has signed $43
< billion in long-term contracts.
<
< But many witnesses at the Senate Energy Committee hearing extolled a
< greater role for the state than simply the buyer of last resort.
<
< Lenny Goldberg, a lobbyist for The Utility Reform Network, a consumer
< group, said the state should work toward permanent price caps on wholesale
< power, public ownership of all transmission lines, and regulation of
< retail prices that shields residents and small businesses from gyrating
< prices.
<
< Freeman, a long-time advocate of public power, said the long-term
< contracts and new state authority will help ensure a comfortable cushion
< of supply. "Then we can permit market forces . . . to play a vigorous
< role," he said.
<
< Sen. Debra Bowen, D-Marina del Rey, suggested the state should make sure
< its electricity supply always exceeds demand by 15 percent or more.
<
< Bowen said the price of building the extra generation could be considered
< insurance against blackouts and be spread across all customers in the
< state.
<
< The chamber's DeMare said he would prefer to leave decisions about new
< generation to the free market.
<
< "But are you willing to live with the results if the market does not come
< up with adequate supply," Bowen asked. "You can't have it both ways."
<
< Stuart Wilson, assistant executive director of the California Municipal
< Utilities Association, warned that the state may bite off more than it can
< handle in trying to be a major power buyer, a regulator and a subsidizer
< of new power plants.
<
< "It's pretty complicated right now, and it's getting more complicated,"
< Wilson said. ". . . We think it's pretty fraught with difficulty."
<
< Robert T. Garrett can be reached at (916) 445-9973 or by e-mail at
< rtgarrett@pe.com.
< Published 6/28/2001
<
<