NGI The Weekly Gas Market Report
NGI Archives | NGI All News Access
CA Legislative Proposals Look at Retail Power Choice
Retail choice of power suppliers, a lynch pin of California’s unfulfilled electric industry restructuring, received a renewed boost from California state lawmakers last month with at least two bills submitted in the Assembly aimed at reinvigorating so-called “direct access” options.
One proposed new law (ABl 428) by Republican Assemblymember Keith Richman would compel large business and industrial customers to choose their own power providers starting in 2006, and give residential and smaller business customers the option to do so, establishing a “core, non-core, core-elect” set of categories similar to how the natural gas industry has operated in the state for the past decade.
A second bill (AB 816) by Assemblywoman Sarah Reyes, the Democrat heading the utilities committee, calls for the reinstatement of retail choice under three conditions: (1) that utilities are buying their own power instead of being supplied by the state; (2) the state has issued bonds to pay for long-term contracts; and (3) exit fees are established for customers who leave a utility service.
Initial political reports in news media throughout the state indicate the proposals may run into opposition in the state Senate where Sen. Debra Bowen, the energy committee chairperson, at hearings last month indicated that current exit fee established by the state regulatory commission may be too low, and she wants her committee to consider stepping in to help set these fees permanently. Bowen sponsored legislation last year on re-instating a limited customer-choice option, but it stalled over the exit fee issue. She is not planning to re-submit a bill this year, her legislative aide said last week.
While “deregulation,” or the state’s 1996 industry restructuring law, has been held responsible for the California 2000-2001 energy crisis, pro-market-based advocates believe the state’s structure for approaching deregulation and a lack of supply caused the crisis. “[Retail choice] has gotten an undeserved black eye in the crisis. The big problem was with generation,” said Norm Plotkin, a lobbyist for the pro-market group, Alliance for Retail Energy Markets, as quoted in a Dow Jones wire report Tuesday.
An aide to Assemblymember Richman and the head of the Western Power Trading Forum contend that the lawmaker’s proposal would encourage private investment in new electricity power plants. They acknowledge that power plant development in the state has slowed the past year, and merchant generators increasingly are struggling with tighter credit requirements, depleted balance sheets and a tough time getting financing.
They contend that there are adequate numbers of companies that want to build new plants, but they want to have some assurances of “who their customers are and how they will get paid back” for their multi-million-dollar investments.
The other legislative proposal from Assemblywoman Reyes would ostensibly boost customer choice quicker, its advocates claim, given the three conditions are in place. It also would require “exit fees” from municipalities seeking to expand public sector utilities through annexation of territory now served by investor-owned utilities.
©Copyright 2003 Intelligence Press Inc. Allrights reserved. The preceding news report may not be republishedor redistributed, in whole or in part, in any form, without priorwritten consent of Intelligence Press, Inc.
© 2024 Natural Gas Intelligence. All rights reserved.
ISSN © 2577-9877 | ISSN © 1532-1266 |