California regulators postponed a growing backlog of pendingactions in deference to ongoing legislative efforts to develop acomprehensive solution to the state’s energy woes. Regulators lastweek put off action on an allocation of utility revenues to thestate water resources department, which is buying electricity forconsumers and attempting to sign long-term power contracts.

The advent of additional major changes with the state taking anincreasingly bigger role usually provided by the utilities and theCalifornia Public Utilities Commission staff members being used tohelp legislative staffs has brought to a halt most of the usualwork of the commission, according to CPUC President Loretta Lynch.

“So many of the commission employees are now working on theitems of first priority of the legislature and the administration,”Lynch said. “The commission is really turning itself inside out tobe responsive to the legislature and the governor’s administrationon these critical energy issues. Because of this, we have had tochange our priorities on other important matters that are not aspressing.”

Among the issues postponed was the already twice-delayed requestfrom Pacific Gas and Electric Co. for emergency gas supplies fromSouthern California Gas Co., but Lynch indicated that she thoughtthe new securitization contracts were helping to ease thetime-sensitivity of the issue

In addition, for lack of enough votes (it needed 4), the CPUCrefused to consider on an emergency basis a request for the waterresources department (DWR) to okay a process from transferringutility revenues to the state energy-buying department. Former CPUCpresident and still a commissioner, Richard Bilas, was particularlycaustic in voting against taking up the issue on an emergencybasis.

Bilas said the state agency should do what a new state law (AB1X) intended it to do-buy all of the “net short power” for theutilities, including the portion now purchased by the statetransmission grid operator, Cal-ISO, on a real-time emergencybasis.

The regulators did pass another emergency measure regardingadministrative cleanup of the state legislation authorizing DWR’spower buying role, and in doing so, reiterated that the departmentneeds to relieve the Cal-ISO of its market role securing emergencypower, moving away from spot purchases as much as possible. Thisitem clarified that the state department — not the private sectorutilities — is now responsible for all the net-short purchases ofelectricity.

“DWR’s attitude has exacerbated a problem and pushed theutilities closer to bankruptcy,” Bilas said. “We will spend a lotmore for power in the future by adopting such an attitude today.That is a lot like what got us in this mess to begin with. I amaware that there is a revenue shortfall and DWR is trying to dealwith it. Rates are frozen so DWR is now in the same position as theutilities. Rates will not cover DWR’s current costs, but DWR is notnear bankruptcy.”

At one point, Bilas said that maybe what the CPUC needs to do isend the retail electricity rate freeze, although he knows themajority of the five-member commission-now appointees of Gov. GrayDavis-oppose using rate increases to solve the nagging energyproblems.

Richard Nemec, Los Angeles

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