Facing the prospect of Davis administration regulators sacking electric retail competition, an alliance of large and small interests Tuesday urged California officials to consider alternatives that do not require shutting down the last vestiges of its 1996 restructuring law permitting direct access contracts.

The five-member California Public Utilities Commission (CPUC) is expected at its business meeting Thursday to decide to suspend direct access as a means of facilitating existing long-term power supply contracts and a related $13.4 billion public bond sale now scheduled for early September. About a dozen members of the Alliance for Retail Energy Markets (ARM) called a news conference to offer alternatives.

One contention by the alliance is that the ongoing efforts to restore the creditworthiness of the state’s two largest investor-owned utilities will become much more difficult if direct access is suspended. In addition, it will be difficult to restart retail competition later through proposed state legislation now pending, if the CPUC takes the action that a majority of its commissioners proposes to do.

One of the holdover Republican CPUC commissioners, Richard Bilas, who was former president of the panel, a free-market economist, has an alternative proposal to initiate an immediate regulatory proceeding to explore different alternatives and in the meantime leave direct access in place as an option for customers.

“We’re suggesting there are alternatives, including a couple of proposals in the state legislature that deal with the issue without totally bringing direct access to an end,” said Rick Counihan, state governmental affairs director for Vermont-based Green Mountain Energy Co. “We’re urging the legislature to move expeditiously on those.”

“Why would we want to shut it (retail competition) down right now? People have a choice and are seeking alternative suppliers,” said Sue Mara, a San Francisco-based Enron Corp. executive. “Why shut it down for some uncertain future when the legislature may decide to act who knows when? You are shutting down an industry, shutting down retail suppliers. Once you do that, suppliers go away and it then takes a while to ramp up again, if they come back at all.”

Among the ARM backers is the City of Palm Springs, which several years ago established itself as a municipal aggregator and drew away almost 2,000 customers among Southern California Edison Co.’s customers in the resort city, only to have to return them to the utility when the western wholesale power market went haywire last year.

A Palm Springs representative, George Wyatt, said since the city has maintained its aggregator status, it wants to retain the option of negotiating with new power plants being built in the Southern California desert to try to beat Edison’s future prices. “We’re anxious to see direct access continue,” Wyatt said. “We have no place to go unless we have direct access.”

Wyatt said the city is confident it can negotiate better prices directly than its residents and businesses can get through the traditional utility.

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