CA Regulators Lessen Standby Charges for Electricity

California regulators are getting backlogged with key issues they must resolve in the increasingly complex and tight time frame that is left to fashion an economic solution to the state's energy woes--regardless of how events unfold at the federal level. There is little more than a month for actions that would keep on track the state's proposed bond sale, which now is slated for late summer or early fall.

In the midst of these pressures and the continuing state movement away from more deregulated energy markets, California regulators last Thursday took one step to lessen barriers to distributed electrical generation, but they continued to put off a decision on rules now preventing new interstate gas transmission pipelines from entering the state. The green light for distributed generation lessens the impact of utility standby charges on large customers who want the nonutility power connections without losing connection to the traditional transmission grid.

The five-member California Public Utilities Commission was split along political lines on a more liberal approach to the stand-by charge issue, with the two Republican minority commissioners being over-ruled on that alternative. The ultimate decision was passed unanimously but is a more conservative approach to encouraging distributed generation by assuming higher costs to the utilities for providing back-up power from the grid.

Overall, many important gas and electricity issues continued to be held off the table for various reasons, including five separate actions needed for the agreement between the governor and Southern California Edison Co., actions related to the state's long-anticipated $13 billion public revenue bond sale, lingering settlements to unbundled the Southern California Gas Co. in-state transmission and storage system, and a proposal from the governor for the utilities to expand their use of low-voltage distribution of power to help cut peak demand levels, among others.

The state regulators have items on their plate to assure the state DWR gets full rate coverage for its power purchases, to make sure San Diego Gas and Electric Co. gets the same higher rates to cover wholesale costs in its retail rates that the other two large private-sector utilities already received, and another issue related to the fate of retail customer choice.

In postponing (again) action on exit charges customers must pay to switch to a nonutility pipeline, CPUC President Loretta Lynch said it is "important that the commission understand the results of whatever framework we adopt, and I appreciate the relevance of this decision to customers and pipelines and future natural gas capacity choices in California," but she thinks the regulators need to understand the impacts on remaining utility customers and the various proposals made by parties in the case.

Lynch said she would use the added time for ex-parte meetings with all of the parties in the case "to discuss the details of all the various proposals that have emerged over the next couple of week before the next commission meeting (Aug. 2).

The gas stand-by charge move, which has been repeatedly delayed, could help free up the California leg of Questar Corp.'s Southern Trails converted oil pipeline bringing gas supplies from the Four Corners area of New Mexico. Right now that conversion is only taking place on its east-of-California portions.

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