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No Major Energy Issues Eyed by California Legislature

As the governor's state-of-the-state address underscored last week, the California state legislature reconvenes this week with few, if any, major energy issues before it at the start of the 2006 gubernatorial election year, and some of the Sacramento-based industry representatives told Daily GPI they agree with this first-of-the-year assessment.

State energy agencies and private-sector investment should satisfy the continuing implementation of new energy infrastructure, without any new legislative initiatives, they said.

"The governor's [Arnold Schwarzenegger's] focus was on infrastructure bonds [for transportation, water and ports] and there really is very little needed in the electricity sector right now that would require public financing of infrastructure," said Jan Smutny-Jones, executive director of the California Independent Energy Producers (IEP), a trade group for small and large merchant power plant operators.

Noting it is hard to say what will surface in the legislature in an election year, Smutny-Jones said for the energy industry there has to be vigilance concerning efforts to "constantly change the rules," but it was "pretty clear with [the electricity re-regulation ballot measure last November] Proposition 80 going down with such as huge margin that the voters aren't particularly interested in arguing about energy.

"I don't think there will be any more 90-degree turns. We're on the road to getting some investment made in energy."

Even Calpine Corp.'s Chapter 11 bankruptcy filing last month, and corresponding move to abort long-term, below-market-price wholesale power supply contracts with the state, has not caused a "huge reaction to it," said Smutny-Jones, although he thinks that "obviously the industry is disappointed that it occurred." He points to others -- both utilities, such as Pacific Gas and Electric, and merchant operators, such as Mirant -- that have gone through bankruptcy in recent years and come out of it in relatively strong shape.

PG&E's utility advocate in Sacramento said it is not "problematic" that Schwarzenegger didn't mention energy in any detail in his state-of-the-state address. "For infrastructure generally, we are glad the governor is talking about it for the state as a whole and as a utility that is committed to spending billions of dollars on its own infrastructure in the years ahead," the state legislative advocate said.

The utility advocate said PG&E continues to believe that the California Public Utilities Commission should be "given the opportunity to implement what it has been asked to implement," and that centers on programs such as power supply procurement, reliability reserve margins, and renewable portfolio standards (RPS). "Let's get those things operating very well and let us do our jobs, as opposed to adding more legislative mandates," said the utility lobbyist.

He qualified that to say there are still "some issues we would like to see addressed by the legislature," but there is no disappointment in the industry at this point that no one is pushing energy issues. "We think it is positive that the governor and the legislature are looking at infrastructure, and any time folks are talking about it, they are more likely to be supportive of utility infrastructure being upgraded."

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