California lawmakers, responding to pressure from utilities andutility employee unions, have enacted a law outlawing customerchoice for residential and small commercial natural gas customersuntil at least the year 2000. The new law (SB 1602) passed in thewaning days of the 1998 legislative session and signed by Gov.Wilson Tuesday prohibits the California Public UtilitiesCommission, which pushed through restructuring of the electricindustry, from moving ahead with gas unbundling . Between now and2000 the CPUC can continue to investigate and talk about choice forsmall customers, but it cannot take any actions without gettinglegislative authorization.

The CPUC early this year had targeted year-end 1998 forunbundling to reach the smallest customers. However, utility unionsformed the “Coalition of California Utility Employees” to educateutility workers and lobby the legislature, aiding the separateefforts from the investor-owned gas utilities. In the spring,Southern California Gas, the largest of three private-sectornatural gas utilities in the state, conducted a series of meetingsfor employees, featuring speakers representing both management andnon-management to discuss the CPUC’s proposed natural gasunbundling. The unions contend 80% to 90% of the union jobs are injeopardy if unbundling is completed.

“The bill is the result of the unions and utilities going in andasking for a bill to get around the regulatory commission’sauthority. That stinks,” said Theresa Mueller, an attorney for theUtility Reform Network (TURN). “The CPUC was going through adeliberative process, so the legislature should have just let theprocess work. You shouldn’t pass a law that invalidates part of acommission decision made just a month earlier. The parties with thestrongest reasons to be against natural gas restructuring were ableto get what they asked for.” Ultimately, Mueller said, the specialinterest law probably won’t have much impact on the outcome,delaying it less than a full year, based on current CPUCtimetables.

San Francisco-based officials at Enron, representing one of thelarger potential energy service providers for both gas andelectricity, expressed concerns and noted that another piece ofsimilar proposed legislation (SB 1757) was being considered at ahearing Wednesday, Aug. 26. It also contains language aimed atslowing gas restructuring and transferring some of the CPUC’scurrent responsibilities in electric restructuring to a five-memberelectricity oversight board appointed by the legislature and thegovernor to monitor the state’s independent system operator (ISO)and wholesale power exchange (PX). An energy consultant familiarwith this other proposed legislation said it would help lessen theextent to which the CPUC’s hands are tied by SB 1602 in that itwould allow regulators to move ahead with plans to expand coreaggregation and begin to implement consumer protection steps.

A spokesperson for San Francisco-based Pacific Gas and Electricsaid the giant combination utility supported the bill sponsored bythe state Senate’s energy committee chairman, Steve Peace. It willpermit PG&E to “gain more experience” with its so-called GasAccord, which began gas unbundling this spring in transmission andstorage for large customers and expanded aggregation for smallcustomers, the spokesperson said. PG&E also cites furtherreasons for its support as being: (1) the current confusing arrayof choices for energy utility customers and (2) the need for theCPUC to take extra time to hold formal hearings on safety andconsumer protection issues unique to natural gas services.

California’s new law effectively extended for another year theCPUC development of a statewide strategy on natural gas that wasoutlined as a broad proposal in January of this year, with theexpectation of being completed early next year.

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