Lost in the higher profile aspects of California’s chronicpage-one headlines surrounding its energy crisis is the statelegislature’s inclusion of a ban on retail direct access powerdeals, dealing the few remaining nonutility power retailers whatcould be a death blow unless a corrective legislative solution isfound. That corrective action was pursued last week when the headof the state Senate energy committee, state Sen. Debra Bowen,proposed to reinstitute retail energy sales (SB 27X) as part of themeasures being tossed around in the second month of a special statelegislative session called by the governor to address theemergency.
The two firms most fully engaged in the retail energy businessin California, once the focus of the state’s electricityderegulation efforts going back to 1996, expressed hope Friday theycan eventually recover if Sen. Bowen’s bill prevails. If it does,they think it will probably come before the end of this month.
“We’re waiting to see what the state does about direct access,and we’re hoping it will be fair and tack on debt service and othercosts to the electricity portion of consumer bills,” said RoyReeves, marketing vice president for Commonwealth Energy Corp,Tustin, CA, the state’s largest energy service provider (ESP), anda major player under another brand in Pennsylvania andprospectively New Jersey and Texas, too. “If that is the case, wefeel fairly confident that we can compete with the utilities or thestate and provide energy to our customers at a lower cost.”
If the commodity charge is made a straight pass-through for thecustomers, it will leave California ESPs in the same position theyhave been in for the past three years. “If that happens, then we’repretty much dead,” said Reeves, noting however that Commonwealthintends to stay in the energy sector in other areas, such asselling a business-to-business Internet-based customer billingsystem it has developed and in the distributed generation business,which is getting a big boost in California from the state in lightof the looming shortages this summer.
Rick Counihan, California public affairs director for GreenMountain Energy, said the retail market is not a top priority amonglegislators right now, but it is in the mix of things that will betaken up in the next two weeks. In the meantime, Green Mountain hasreturned more than 80% of its customers-about 50,000-to theirutilities and kept 8,000 customers who were on fixed-pricecontracts independent of the energy credit offered to the othercustomers through the state-run California Power Exchange, which isin the process of going out of business.
“I think there is enough support behind (legislation) with aclear commitment,” Counihan said. “I think it will be resolved inthe next two weeks.”
Commonwealth has retained most of its 70,000 customers inCalifornia because they for the past 18 months have been onfixed-price (5% below market) long-term contracts. “We were able tosign long-term wholesale power contracts and have been able tostill supply energy to all of our customers,” Reeves said.
In San Diego following last summer’s price spikes and thereaction of re-capping retail rates, Commonwealth’s customersreturned to San Diego Gas and Electric Co., but the ESP has morethan made up for those losses with additional customers bailing outof PG&E in northern California, said Reeves, noting that hecouldn’t blame the San Diego consumers since Commonwealth wasn’tpart of the state legislative-mandated 6.5 cents/kWh retail pricecap.
Like his colleague at Green Mountain, Reeves said he is hopefula legislative solution will salvage a retail energy market in thestate, noting that Commonwealth has been the “lone survivor” inCalifornia. “We’re really the only ESP of significance still doingbusiness here.”
For the few remaining ESPs the “immediate priority,” GreenMountain’s Counihan said, is getting the recently imposedprohibition lifted. “If that doesn’t get done, everything elsedoesn’t matter,” he said, noting that what is really needed is acommitment by the state political leaders to fostering a viableretail market.
“A ‘home run’ would be the state recognizing the value of havinga lot of retailers separate from the distribution function ofmaintaining the poles and wires,” Counihan said.
Richard Nemec, Los Angeles
©Copyright 2001 Intelligence Press, Inc. All rightsreserved. The preceding news report may not be republished orredistributed in whole or in part without prior written consent ofIntelligence Press, Inc.
© 2020 Natural Gas Intelligence. All rights reserved.
ISSN © 2577-9877 | ISSN © 1532-1266 |