California’s two major energy agencies assured a state Senate Utilities and Communications Committee Tuesday in Sacramento that additional “energy action” is needed this year to keep the state on its current track of restoring the major energy utilities to full financial strength and increasing the reliability of the electricity and natural gas systems in the future beyond 2006.

Michael Peevey, president of the California Public Utilities Commission, and Bob Therkelsen, executive director of the California Energy Commission (CEC), appeared before the committee to give newly mandated annual reports to the legislative energy policy committee. The two agencies are the prime movers of a new “energy action plan” outlined last year.

The primary emphasis of the plan is energy efficiency programming along with steps to increase electricity and gas reliability in terms of infrastructure and supply reserves, Peevey told Senate committee Chair Sen. Debra Bowen. He stressed also that the action plan proposes to increase the goals of the state’s mandated renewable portfolio standards (RPS) for private-sector utilities to achieve the 20% level in 2010 rather than the current 2017 target in state law.

Natural gas was given equal emphasis by both the major state energy agency heads, and Peevey said the CPUC had just passed a long-delayed settlement on Southern California Gas Co.’s unbundling of its in-state transmission pipeline and underground storage system, PG&E’s utility had begun a second phase of its own unbundling of gas transmission/storage, and the state has now set upon a two-phase effort to re-configure California’s natural gas markets and delivery infrastructure linked to the major interstate pipelines that supply the state from the Southwest, Rockies and western Canada.

“In 2004, our natural gas outlook rulemaking will make the decisions needed to allow the state’s gas utilities to diversify gas sources and obtain all the supply, storage and pipeline capacity needed for reliable service at competitive prices,” said Peevey, emphasizing that liquefied natural gas (LNG) likely will be one of the new sources in the mix. (He said there were currently nine proposals for terminals that could serve California; Therkelsen later told Sen. Bowen he was aware of only seven proposals.)

“We will be sorting out (in the gas investigation) what combination of supplies and utility contracts best serves ratepayers.”

The Senate’s lead energy policy committee called the informational hearing Tuesday in Sacramento to get a “2004 Outlook and Report” from the state’s two principal energy agencies. It may not be “interesting, but it will be informative,” said the committee chairperson’s chief staff advisor.

Besides the energy action plan and the PG&E utility bankruptcy deal, issues that the CPUC is wrestling with that may require action by the lawmakers include: (a) electricity direct access, (b) allocation of Department of Water Resources (DWR) power supply costs among the three major private-sector utilities, (c) PG&E utility outage investigations, (d) the CPUC’s response to a three-year-old law (SB 39XX) mandating power plant inspections, and (e) the impact on the CPUC from Gov. Arnold Schwarzenegger’s halt of all new regulations.

On specific questioning from Sen. Bowen, both Peevey and Therkelsen said the new governor’s prohibitions on new regulations is not affecting the overall operations of their respective agencies. Therkelsen said the CEC obtained an exemption for its 2005 building standards from the governor’s regulation moratorium.

©Copyright 2004 Intelligence Press Inc. All rights reserved. The preceding news report may not be republished or redistributed, in whole or in part, in any form, without prior written consent of Intelligence Press, Inc.