California’s Gov. Gray Davis signed a slew of energy bills last Tuesday, but only two were significant in their potential impact, and both should help the state’s major private-sector utilities restore their creditworthiness, according to political and industry officials.

“The financial community is all well aware of this bill (AB 57), and frankly without it, regaining investment-grade would be impossible,” said Bob Foster, president of Southern California Edison Co., who participated with the state lawmakers and environment/renewable proponents. The law directs the California Public Utilities Commission to assure that the state’s investor-owned utilities are allowed to cover their wholesale power costs in a timely manner as a means of facilitating their move back into the procurement function that has been carried on by the state for the past two years. AB 57 also calls for a 1% increase in renewable purchases annually.

The second new law (AB 58) establishes so-called “net-metering” for renewables, such as wind and solar power, so business and residential customers can essentially gain credit against power they pull from the grid for each kilowatt generated from an on-site renewable source of electricity. Both its sponsor and the western representative for the Natural Resources Defense Council (NRDC) called the legislation “cutting edge” and a chance to “restore balance” to the state’s private utility electricity portfolios that became too dependent on the volatile spot market as recently as two years ago when the electricity crisis hit the state.

“For a long time, California frankly had a number of impediments to net metering that got in the way of expanding solar and wind energy, and the energy crisis in a ‘silver-lining’ kind of a way created the opportunity to revisit this and look at what some of the barriers and obstacles were,” said state Assemblyman Fred Keeley. The lawmakers originally put the net metering in place for a one-year trial period last year and over that period solar and wind energy net metering grew by “1000% even when people knew it was only going to be around for a year.”

The NRDC’s lead West Coast attorney, Ralph Cavanaugh, said from a national perspective, California’s 2002 state legislative session “could well be the most productive state session ever on energy and environmental issues.” He called Keeley’s net-metering a “break-out opportunity” for all of the solar and other renewable systems. And AB 57, authored by Assembly Energy Committee Chairman Roderick Wright, “restores the crucial resource procurement responsibilities of our utilities.”

Edison’s Foster and the lawmakers emphasized that these bills, along with regulatory actions taken earlier in the month, should allow the California Treasurer’s Office to sell the nearly $12 billion in public sector electricity revenue bonds in the next two months. Keeley said that discussions he has had this week with the state Treasurer’s Office and the legislative budget analyst indicated that the deficit-plagued state budget, for cash flow reasons, needs the sale to be completed in the October-November time frame.

Foster called the two bills “very large steps on the path to having the utilities back in the procurement business.” Noting that the state’s energy crisis taught policymakers and utilities that the state energy system was “badly in need of repair,” Foster said AB 57 will help put “confidence back in the financial community that California is not going to repeat the crisis of 2000-2001, and that it is in fact putting its regulatory house in order.”

The other 10 new laws — cited but not highlighted by the state officials — cover a wide range of subjects that will streamline energy siting and regulatory processes for the industry, local government and consumers:

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