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California Lawmakers Slow Gas Deregulation Efforts

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&ampE 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&ampE 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

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