With proposed solutions already given to both state policymakers and utilities alike, the independent electric generators met Monday in an attempt to hammer out common strategies for repairing California’s tattered electricity restructuring efforts, including a wholesale spot power market that is continuing to produce historically high prices.

They reportedly met with large end-use customers, presumably including the state’s major investor-owned utilities, large consumer groups and residential ratepayer representatives to come up with proposed solutions that would get the state’s push for competitive energy markets back on track. “We’re looking for market structure solutions that we can work on going forward,” said one major Texas-based generator. “We don’t have any details of that yet, but certainly we need take interim steps, too.”

As part of the participants, both Dynegy and Duke Energy met with other members of the California Independent Energy Producers in Sacramento, seeking to agree on a commonly backed proposal that can be passed on to Gov. Gray Davis this month as he seeks stakeholder input prior to announcing some initiatives regarding longer-term electricity in November.

Individually, Duke has proposed longer term, fixed-price power deals and accelerated siting approvals for new power plants, and it is hoping to meet with the governor’s energy advisers again, according to Duke’s California’s spokesperson. In August, Duke offered 2,000 MW of power at $50/MWh over five years to San Diego Gas and Electric as a means of working out a longer-term, fixed price deal to hedge against the wholesale market’s extreme price volatility. Dynegy has made similar offers. SDG&E has been reluctant to commit to that long of a deal.

In the meantime, both state and federal investigators looking at the causes for this summer’s severe electricity price spikes are contacting all of the merchant generators operating in the state. Duke’s California spokesperson said his company recently had to explain to California Public Utilities Commission staff investigators how the free market works. “It is something they know nothing about since they are in the business of regulating monopolies,” the spokesperson said.

Dynegy officials said it has been responding to the California Independent System Operator (Cal-ISO) on its efforts to line up additional supplies now for next summer and expand demand-side management programs. “At the end of all this (data-gathering process), Gov. Gray Davis is going to be involved, and we have to get the investor-owned utilities into the forward market hedging their risk and levelizing the price spikes,” said Dynegy’s California executive, Greg Blue.

“The bottom line is that a coalition has to be formed among all the parties so we can sit down and re-assess where we’re at and make the proper changes that are warranted, and eventually end up with the benefits that were promised in AB 1890 (California’s 1996 electricity law). I think it is a timing issue of when those benefits are going to arrive that has been debated lately.”

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