With a growing interest in changing the state’s energy landscape in the post-2000/2001 crisis, California lawmakers this week will further examine two separate and major proposals for establishing a new foundation for industry matters. Sacramento observers are unsure of the ultimate fate of the two proposals — one in the state Senate and the other in the lower house Assembly.

One energy stakeholder said a bipartisan proposal in the Assembly (AB 808) to create a state energy department may be held indefinitely in the appropriations committee, which hears it on Wednesday. The bill would collapse the current energy commission, power authority and the policymaking part of the California Public Utilities Commission (CPUC) all under the new department headed by a cabinet-level energy secretary.

Although it still has questions about how the splitting of the CPUC will work, a Pacific Gas and Electric Co. utility lobbyist said the company generally favors the proposed consolidation of the state’s numerous energy agencies. The state municipal utility association, however, opposes the bill that is being promoted on a bipartisan basis.

In the state Senate, changes were made in the proposal (SB 888) to eliminate the last vestiges of the state’s 1996 electricity restructuring law to broaden its appeal. The latest changes would establish core/non-core customer categories and permit retail direct access among the largest (non-core) customers.

SB 888’s sponsor, Sen. Joe Dunn, who has headed the Senate’s now two-year-old investigation of alleged wholesale energy price manipulation, originally called his proposal the “death blow” to deregulation in the state. Nevertheless, Monday he said the bill was being amended to direct the CPUC to create guidelines for allowing customers to select their own suppliers. A hearing in the Senate appropriations committee will be held on the revised bill Thursday.

According to one senior staff member in the Senate energy committee, pressure from other state lawmakers and the direct access lobby in the state caused a “significant compromise.”

“We have always been willing to discuss continuing some form of direct access, ” said Dunn in a Dow Jones Newswire report. “It must be done so that long-term planning is possible for utilities and there is no cost-shifting. Right now, small and residential customers are subsidizing large users on direct access.”

In its current form, SB 888 would allow closely regulated wholesale power trading in the state, restraining it by encouraging utilities to invest in generation and sign long-term contracts. A major response to what Dunn and his supporters consider excesses from the restructuring law (AB 1890) is the provision essentially prohibiting utilities from charging market-based rates for their own generation.

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