CA Regulators Ease PX Control
Looking beyond rate freezes and charges for stranded
investments, California regulators last Thursday opened the door
for greater retail electric price fluctuations in a decision
allowing the state's three major investor-owned electric utilities
to buy and sell some of their power outside the state-mandated
nonprofit power exchange (Cal-PX).
The move was part of a larger decision on so-called
"post-transition electricity rates," including a $430 million
refund for San Diego Gas & Electric customers for used portions
of rate reduction bonds.
Under California's 1996 electricity restructuring law, large
customers or retail energy service providers can buy their power on
the open wholesale market, but for the majority of small
residential and business customers continuing to get their power
from one of the three IOUs, the utilities have been required to buy
and sell all of their supplies through the Cal-PX, at least through
2002 or until their stranded costs are paid off.
The California Public Utilities Commission now has decided the
utilities can buy from "any qualified exchange" during the ongoing
transition period. After the transition period --- which only
applies to two of the three IOUs --- the PX buy requirement is
The action "releases the grip of the power exchange on
California markets," said CPUC commissioner Richard Bilas, in
supporting the majority in a 3-2 vote by the five-member
commission. A Cal-PX spokesperson said the exchange will file for
rehearing of the decision. The two most recent CPUC appointees by
Gov. Gray Davis opposed the idea of opening up utility purchases
outside the state-created exchange, arguing it was too soon to do
The issue of the utilities' power buying mandate was brought on
by SDG&E's lifting of its rate freeze when it essentially paid
off its stranded costs (which were relatively small compared to its
two biggest sister electric utilities) last summer. SDG&E
struck a settlement that includes the Cal-PX and consumer groups
under which the utility would continue to buy about 80% of its
supplies through the power exchange, remaining free to buy up to
20% of its supplies on the open market.
As an adjunct to Thursday's decision, SDG&E will be required
to make a one-time, lump sum credits to customers for their $430
million share of unrealized savings from excess rate reduction bond
proceeds the utility has collected since the lifting of its rate
freeze. On average that equates to about $290 for residential
customers and about $900 for small business customers.
Richard Nemec, Los Angeles
©Copyright 2000 Intelligence Press, Inc. All rights
reserved. The preceding news report may not be republished or
redistributed in whole or in part without prior written consent of
Intelligence Press, Inc.