Legislative Proposal Would Block CPUC Opening PX Competition
Riding the coattails of state budget legislation facing a June
30 deadline, California lawmakers are making an end-run around the
state's constitutionally quasi-independent energy regulatory panel
with an amendment to block regulators' latest move to expand
wholesale electricity competition in the state. It is a similar
pattern to what the elected officials have done the past two years
regarding natural gas industry issues.
As part of a budget bill approved late Thursday night,
California's state Senate began the process of turning back a June
8 decision by state energy regulators to allow the major
investor-owned utilities to purchase electricity through exchanges
other than the state-chartered nonprofit California Power Exchange
(Cal-PX). Legislative action on the budget now turns to the state
Assembly, which is expected to debate various issues before
passage, but it is not likely that the obscure electricity
purchasing amendment will gain anyone's attention.
A Republican state senator in a Democrat-dominated state
legislature pushed through the amendment in the budget bill after
it passed out of committee unanimously earlier this week with
support from the two most recent appointees to the California
Public Utilities Commission (both Democratic appointees) and the
Cal-PX. The state Senate's Budget Committee chairman, Steve Peace
(D-San Diego), is considered the prime author of California's
electric restructuring law and a frequent critique of CPUC actions.
"What you have here is a bipartisan effort to make sure the
legislative intent of AB 1890 (California's 1996 electric industry
restructuring law) is secured-if not through the full transition
period, at least through June 2001," said a Pasadena, CA-based
Cal-PX spokesperson, noting that the legislative budget language
would prohibit the CPUC from fostering utility buying outside of
the Cal-PX before June next year at the earliest. In the meantime,
the Cal-PX is continuing to prepare a request to the CPUC for
rehearing of its June 8, 3-2 decision.
The Cal-PX, however, thinks the proposed legislative remedy is
"a more logical approach" to ending the transition than the CPUC
action, reiterating that the whole process for developing
California's '96 electricity law was "a legislative one, lasting
over a year." The spokesperson said "to undo it (the law) in a
couple of weeks with virtually no discussion and debate seemed
The rationale for a legislative stay of the CPUC's action within
days of it taking place is that the issue needs more open debate
and discussion, something the Cal-PX and CPUC president Loretta
Lynch are both advocating.
A competing exchange based in California, the Automated Power
Exchange (APX), was resigned to the fact that the measure likely
will block the CPUC's latest electricity decision, but its
CEO/founder Ed Cazalet said he hoped the legislature and the
regulators would work out a compromise so the decision can be
implemented before June of next year.
Supporters of the CPUC action, such as Cazalet, argue that the
Cal-PX was never intended to hold monopoly status regarding the
investor-owned utilities power purchases. They think the CPUC has
the authority to permit utility purchasing options.
Under the state electricity law, large customers or retail
energy service providers can buy their power directly from
generators, but the investor-owned utilities providing power to an
array of small and medium-sized retail customers must buy and sell
all of their supplies through the Cal-PX at least through March
2002 when the so-called "transition period" is ended or when the
utility stranded costs have been paid off and their rates unfrozen.
San Diego Gas and Electric Co. reached that point last July and
has since allowed its retail rates to vary with the market,
prompting the utility to reach a settlement with the Cal-PX and
state consumer advocates for buying up to 20 percent of its
supplies outside the state exchange. The CPUC administrative law
judge rejected the settlement, saying that until the transition is
completed for all three major utilities, there should not be any
buying outside the Cal-PX.
"Our viability will maintain us beyond the transition period,
but we want to make sure that we will have every advantage that
every other exchange that comes into California has during this
transition period," said the Cal-PX spokesperson, noting that the
state entity adheres to a lot more rules, regulations and reporting
requirements than its potential competitors, such as the private,
for-profit Automated Power Exchange (APX), Santa Clara, CA.
On the other side of the debate, advocates for opening up the
energy market to competition as soon as possible are trying to
convince legislative leaders than the state's mass consumers (also
the voters) will be better off sooner by allowing utilities to shop
around more for their power supplies.
The latest proposed legislative remedy to counter a CPUC action
regarding opening of energy markets has become a familiar scenario
in the state legislature. The past two years, CPUC moves to
accelerate the unbundling of the natural gas industry have been
rolled back by state laws being passed with the support of the
investor-owned gas utilities and their unions.
Richard Nemec, Los Angeles