NGI The Weekly Gas Market Report / NGI All News Access

California Looks at Next Step in Electric Deregulation

California Looks at Next Step in Electric Deregulation

As part of a broad-based statewide investigation the first half of 1999, California will explore possibilities for opening up electricity distribution to competition as an extension of the state's ongoing energy industry restructuring. Potential impact on the natural gas industry will be part of the investigation ordered earlier this month by the California Public Utilities Commission.

Thus far, nationally and in California, power deregulation has been confined to generation and after-meter services, with the so-called "wires business" (transmission and distribution) being kept a tightly regulated monopoly. The California study may alter this mindset.

By fall of next year, the CPUC intends to have a proposal for the state legislature to address issues and potential changes in the way distribution is regulated. The CPUC indicated it would conduct its study in close cooperation with the state energy commission and the oversight board for the state-chartered Independent System Operator (ISO) that runs the transmission grid and the Power Exchange (PX) operating a nonprofit wholesale electricity market.

"We think the commission's investigation is very timely, and we're very supportive," said Sue Mara, an electric regulatory manager for Enron in its San Francisco office. "We think now is the time to think about what the wires business is going to look like once the stranded costs are paid off."

Parties must file opening comments by March 17, 1999 and follow-up replies by May 17, 1999. Some time thereafter it would be determined if a series of hearings will be conducted on the subject. If so, they would probably take place in the summer.

Part of the initial questions outlined for the CPUC's investigation addresses the "implications on the natural gas delivery infrastructure," its interrelationships and the resulting impacts on customers, the environment and the state's regulatory structure.

What the CPUC calls a "confluence of events" is driving this new investigation, including the advent of distributed generation or on-site generation for small residential and commercial applications and the formation of water districts which generate and distribute power on a piecemeal basis.

"At the end of the process, we plan to issue a proposal outlining the specific steps we will undertake in cooperation with the legislature." Ultimately, the future role of the traditional local distribution utility is going to be examined in this proceeding, not to mention the future viability of distributed power suppliers, of which there are several major and a lot of start-up energy companies already actively involved.

In the new investigation, all of the issues that were addressed in opening up power generation-safety, reliability, stranded costs, etc.-will emerge in looking at the possible competition for distribution.

Richard Nemec, Los Angeles

©Copyright 1998 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.

ISSN © 2577-9877 | ISSN © 1532-1266
Comments powered by Disqus