California Lawmakers Slow Gas Deregulation Efforts
California lawmakers, responding to pressure from utilities and
utility employee unions, have enacted a law outlawing customer
choice for residential and small commercial natural gas customers
until at least 2000. The new law (SB 1602) passed in the waning
days of the 1998 legislative session and signed by Gov. Wilson Aug.
25 prohibits the California Public Utilities Commission, which
pushed through restructuring of the electric industry, from moving
ahead with gas unbundling .
Between now and 2000 the CPUC can continue to investigate and
talk about choice for small customers, but it cannot take any
actions without getting legislative authorization.
The CPUC early this year had targeted year-end 1998 for
unbundling to reach the smallest customers. However, utility unions
formed the "Coalition of California Utility Employees" to educate
utility workers and lobby the legislature, aiding the separate
efforts from the investor-owned gas utilities.
In the spring, Southern California Gas, the largest of three
private-sector natural gas utilities in the state, conducted a
series of meetings for employees, featuring speakers representing
both management and non-management to discuss the CPUC's proposed
natural gas unbundling. The unions contend 80% to 90% of the union
jobs are in jeopardy if unbundling is completed.
"The bill is the result of the unions and utilities going in and
asking for a bill to get around the regulatory commission's
authority. That stinks," said Theresa Mueller, an attorney for the
Utility Reform Network (TURN). "The CPUC was going through a
deliberative process, so the legislature should have just let the
process work. You shouldn't pass a law that invalidates part of a
commission decision made just a month earlier. The parties with the
strongest reasons to be against natural gas restructuring were able
to get what they asked for."
Ultimately, Mueller said, the special interest law probably
won't have much impact on the outcome, delaying it less than a full
year, based on current CPUC timetables.
San Francisco-based officials at Enron, representing one of the
larger potential energy service providers for both gas and
electricity, expressed concerns and noted that another piece of
similar proposed legislation (SB 1757) was being considered at a
hearing Wednesday, Aug. 26. It also contains language aimed at
slowing gas restructuring and transferring some of the CPUC's
current responsibilities in electric restructuring to a five-member
electricity oversight board appointed by the legislature and the
governor to monitor the state's independent system operator (ISO)
and wholesale power exchange (PX).
An energy consultant familiar with this other proposed
legislation said it would help lessen the extent to which the
CPUC's hands are tied by SB 1602 in that it would allow regulators
to move ahead with plans to expand core aggregation and begin to
implement consumer protection steps.
A spokesperson for San Francisco-based Pacific Gas and Electric
said the giant combination utility supported the bill sponsored by
the state Senate's energy committee chairman, Steve Peace. It will
permit PG&E to "gain more experience" with its so-called Gas
Accord, which began gas unbundling this spring in transmission and
storage for large customers and expanded aggregation for small
customers, the spokesperson said. PG&E also cites further
reasons for its support as being: (1) the current confusing array
of choices for energy utility customers and (2) the need for the
CPUC to take extra time to hold formal hearings on safety and
consumer protection issues unique to natural gas services.
California's new law effectively extended for another year the
CPUC development of a statewide strategy on natural gas that was
outlined as a broad proposal in January of this year, with the
expectation of being completed early next year.
Richard Nemec, Los Angeles