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CPUC's Lynch Encourages Utility Hedging

CPUC's Lynch Encourages Utility Hedging

The head of California's beleaguered utility regulatory commission (CPUC) Thursday encouraged the state's major electric utilities to more fully use existing authority to do short-term forward market hedging deals for power, noting that she wanted to clarify continuing perceptions that the state regulatory body is blocking more utility hedging.

She did not refer to a number long-term deals that both Pacific Gas and Electric Co. and Southern California Edison Co. have submitted to the CPUC in recent weeks, all of which are still awaiting approvals.

"This commission has already given the utilities authority to engage in bilateral contracting," Lynch said during the CPUC's regular business meeting in San Francisco. "That applied to both inside and outside of the (state) power exchange. In a variety of resolutions issued over the past year and a half, some before I arrived at the commission, the CPUC has provided the utilities the ability to contract in the forward markets, and to date the utilities have not used all of their contract authority. For example, PG&E has used about 33 percent and Edison about 59 percent.

"I would encourage the use of short-term contracts and I see no reason for the utilities to delay these contracts"

In other action by the CPUC, San Diego Gas and Electric Co. was given the authority to offer its largest customers a fixed 6.5 cents/kWh rate that is already available through state law to its residential and small business customers as a stopgap measure against last summer's price spikes.

Richard Nemec, Los Angeles

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