California Gov. Gray Davis has signed a bill severely limitingthe future of retail gas unbundling in the state, keeping it on aseparate, more restricted track than electricity. AB 1421 replacesa one-year ban on further gas unbundling passed last year by thestate legislature. The measure was strongly backed byinvestor-owned utilities and utility unions.

One of Gov. Davis’ two new appointees to the California PublicUtilities Commission, Carl Wood, is a former utility union leaderwho pushed for passage of the new law over the majority vote of hiscolleagues on the CPUC. Other energy-related legislation signed byDavis included bills for the most part that were unrelated toenergy industry deregulation except for a special law covering SanDiego Gas and Electric’s financial and ratemaking handling ofspecial state-chartered electric rate reduction bonds.

In contrast to more high-profile utility legislative effortsthis year, SDG&E and its parent company, Sempra Energy, quietlypushed a bill giving SDG&E special treatment of unused revenuereduction bond proceeds owed to ratepayers, providing what, ineffect, is a $10 to $15 million potential reward to Sempra’sshareholders for paying off the bulk of its utility stranded costsearly and lifting a three-year electric rate freeze this past July.

The CPUC had suggested that the issue be left for a decision inongoing regulatory hearings looking at the “post-transition”electric rates in the state. Legislators and the governor, however,did not agree with the regulators.

Richard Nemec, Los Angeles

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