CA Regulators Leave Work to the Legislators

California regulators postponed a growing backlog of pending actions in deference to ongoing legislative efforts to develop a comprehensive solution to the state's energy woes. Regulators last week put off action on an allocation of utility revenues to the state water resources department, which is buying electricity for consumers and attempting to sign long-term power contracts.

The advent of additional major changes with the state taking an increasingly bigger role usually provided by the utilities and the California Public Utilities Commission staff members being used to help legislative staffs has brought to a halt most of the usual work of the commission, according to CPUC President Loretta Lynch.

"So many of the commission employees are now working on the items of first priority of the legislature and the administration," Lynch said. "The commission is really turning itself inside out to be responsive to the legislature and the governor's administration on these critical energy issues. Because of this, we have had to change our priorities on other important matters that are not as pressing."

Among the issues postponed was the already twice-delayed request from Pacific Gas and Electric Co. for emergency gas supplies from Southern California Gas Co., but Lynch indicated that she thought the new securitization contracts were helping to ease the time-sensitivity of the issue

In addition, for lack of enough votes (it needed 4), the CPUC refused to consider on an emergency basis a request for the water resources department (DWR) to okay a process from transferring utility revenues to the state energy-buying department. Former CPUC president and still a commissioner, Richard Bilas, was particularly caustic in voting against taking up the issue on an emergency basis.

Bilas said the state agency should do what a new state law (AB 1X) intended it to do-buy all of the "net short power" for the utilities, including the portion now purchased by the state transmission grid operator, Cal-ISO, on a real-time emergency basis.

The regulators did pass another emergency measure regarding administrative cleanup of the state legislation authorizing DWR's power buying role, and in doing so, reiterated that the department needs to relieve the Cal-ISO of its market role securing emergency power, moving away from spot purchases as much as possible. This item clarified that the state department --- not the private sector utilities --- is now responsible for all the net-short purchases of electricity.

"DWR's attitude has exacerbated a problem and pushed the utilities closer to bankruptcy," Bilas said. "We will spend a lot more for power in the future by adopting such an attitude today. That is a lot like what got us in this mess to begin with. I am aware that there is a revenue shortfall and DWR is trying to deal with it. Rates are frozen so DWR is now in the same position as the utilities. Rates will not cover DWR's current costs, but DWR is not near bankruptcy."

At one point, Bilas said that maybe what the CPUC needs to do is end the retail electricity rate freeze, although he knows the majority of the five-member commission-now appointees of Gov. Gray Davis-oppose using rate increases to solve the nagging energy problems.

Richard Nemec, Los Angeles

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