|
|
Enron Mail |
Sue Mara Enron Corp. Tel: (415) 782-7802 Fax:(415) 782-7854 ----- Forwarded by Susan J Mara/NA/Enron on 06/25/2001 12:55 PM ----- "Beiser, Megan" <Megan.Beiser@edelman.com< 06/25/2001 12:26 PM To: "Allen, Stevan" <stevan.allen@edelman.com<, arm@phaser.com, Bob_Anderson@apses.com, "brbarkovich@earthlink.net" <bbarkovich@earthlink.net<, cra@calretailers.com, dennis.flatt@kp.org, dhunter@s-k-w.com, djsmith@s-k-w.com, Dominic.DiMare@calchamber.com, drothrock@cmta.net, "Fairchild, Tracy" <tracy.fairchild@edelman.com<, gdoar@newpower.com, gharrison@calstate.edu, hgovenar@govadv.com, jackson_gualco@gualcogroup.com, "jerryl@abag.ca.gov" <jerryl@abag.ca<, .gov@mailman.enron.com, johnlatimer@capitoladvocacy.com, ken_pietrelli@ocli.com, kgough@calpine.com, kmccrea@sablaw.com, kmills@cfbf.com, lhastings@cagrocers.com, "Manuel, Erica" <Erica.Manuel@edelman.com<, mday@gmssr.com, mmoretti@calhealth.org, nplotkin@tfglobby.com, randy_britt@robinsonsmay.com, richard.seguin@kp.org, RochmanM@spurr.org, rrichter@calhealth.org, sgovenar@govadv.com, smccubbi@enron.com, spahnn@hnks.com, sschleimer@calpine.com, theo@ppallc.com, vincent.stewart@ucop.edu, vjw@ceert.org, "Warner, Jami" <jami.warner@edelman.com<, wbooth@booth-law.com, wbrown@lhom.com, wlarson@calstate.edu cc: Subject: Sunday's SF Chronicle - Direct access falls victim to crisis < Greg Lucas' long-awaited Chronicle story about DA ran this weekend ... < < ENERGY CRUNCH < Direct access falls victim to crisis < Power-buying plan's future is in doubt < Bernadette Tansey, Greg Lucas, Chronicle Staff Writers < Sunday, June 24, 2001 < ,2001 San Francisco Chronicle < < URL: < http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2001/06/24/MNL67535.DTL < < < The option to shop around for the best deal on electricity -- one of the < cornerstones of California's deregulation plan -- could soon be scrapped. < < Businesses may lose the right to cut their own deals with private power < suppliers, and environmentally conscious consumers could be barred from < shifting their business from utilities to renewable energy firms, unless < the Legislature acts quickly to save the program. < < The potential cost savings of so-called direct access to competing < electricity providers was the plum that incited big businesses to fight < hard for deregulation in 1996. But the program -- although it was not < responsible for the soaring rates that piled up state and utility debt -- < may be sacrificed in the state's drive to recoup its costs. < < The fate of the program was thrown into doubt last winter, when < skyrocketing wholesale electricity costs collapsed the nascent direct < access market, weakened the utilities and caused the state to take over < power purchases. < < Industry has been lobbying hard since then to keep the option open for the < future. But the problem for Gov. Gray Davis' administration is that the < state needs big industrial consumers to stay on as utility customers to < help pay off the $8 billion it has already spent buying power and the < estimated $43 billion worth of power it has contracted to buy over the < next 20 years. < < Otherwise, the utility customers left behind -- householders and small < businesses -- will be stuck with the whole bill. < < Competing proposals to allow companies to bail out by paying an "exit fee" < to cover a share of the cost are working their way through the < Legislature. < < But time is running short, state Treasurer Philip Angelides warned the < Legislature and the state Public Utilities Commission this month. < < The state plans to issue $12.5 billion in bonds in September for power < purchases, and officials say underwriters want to be assured that there is < a large enough revenue stream to repay the bonds. < < Angelides and other state officials urged the Legislature and the PUC to < decide by the end of June either to ban direct access or lock in a < procedure to charge each departing company for its share of the state < power costs. < < "The hypothetical and theoretical desires for a direct access market and < the hypothetical and theoretical desire for a bond sale are now < intersecting in reality," said Assemblyman Fred Keeley, D-Boulder Creek < (Santa Cruz County). < < Industry advocates agree that firms should pay a fair share of the < electricity purchased on their behalf. But how much -- and how to make < that calculation -- is a complex issue they fear will be decided in haste, < said Dorothy Rothrock, a lobbyist for the California Manufacturers and < Technology Association. < < "We are reacting to crises, real or man-made, and making decisions in a < rush without considering the consequences," Rothrock said. < < The PUC is set to vote Thursday on a proposed urgency measure to suspend < direct access as of July 1. The ban recommended by a PUC administrative < law judge would continue as long as the state functions as power buyer for < utility customers -- conceivably through the term of state contracts < ending in 2020. < < Lawmakers had authorized the PUC to suspend direct access last winter when < the state took over electricity purchasing. But a divided PUC delayed < action as legislators worked with industry to salvage the program. < < Although direct access contracts are still legal until the PUC acts, in < effect the program was slammed into suspension by the brutal power price < hikes of the past 18 months. Threatened by exposure to rising wholesale < electricity rates, virtually all direct access customers have returned to < the utilities, where they are protected by the state rate freeze. < < Even though the right to deal directly with generators has been on the < books since 1996, few businesses or householders actually did it. < < Many of the residential customers who signed on with alternative suppliers < did so to support the growth of renewable power like solar and wind < energy. At its peak, the program drew about 224,000 households -- about < 2.5 percent of the customer base of California's major utilities. About 13 < percent of the industrial market contracted for their own power. < < Industry has until tomorrow to file plans with the PUC to preserve direct < access under a proposal by public utilities Commissioner Richard Bilas, a < strong supporter of the program. < < Commissioner Jeff Brown said he favors direct access, but the continuing < uncertainty over the form it would take jeopardizes the state's ability to < float its bonds. < < Commissioner Carl Wood, a direct access opponent, said it should be < abolished, because it creates a danger that residential and small business < customers will be stuck paying for relatively high-cost contracts secured < by the state during the energy crisis, while large industries would be < free to buy cheap power from the newer, more efficient plants that will be < coming online in the next few years. < < But Wood said even if the PUC suspends the option, the state Legislature < could order its reinstatement. < < Sen. Debra Bowen, D-Marina del Rey, is carrying a bill to do that while < requiring the exit fees demanded by Angelides and state finance officials. < < < Without those safeguards, utility revenues would dive into a "death < spiral, " where rates would keep rising as more companies abandoned the < system, Bowen said, giving the remaining customers a deeper incentive to < bail. < < State legislators are set to meet this week to start deciding how < California's electricity market should be structured in the future. But < deadlines to deal with the state's financial hangover are pushing < decisions on direct access. < < Bowen said it's unlikely her bill will be passed within a few weeks, the < time frame Davis administration officials have urged to give certainty to < the terms of the bond deal. < < Angelides said the Legislature could still pass a law reviving direct < access before the bond language is written in July. But after that, the < Legislature cannot pass laws that change the terms of contract commitments < made by the state, he said. < < "There is still a window to act here, but they have to act fast," < Angelides said. < < E-mail Bernadette Tansey at btansey@sfchronicle.com and Greg Lucas at < glucas@sfchronicle.com. < < ,2001 San Francisco Chronicle Page A - 21 <
|