Showing unusual candor and market aggressiveness, the CEO ofnonprofit, state-chartered California electricity power exchange(CalPX), George Sladoje, recently outlined plans for the CalPX toexpand through alliances and partnerships with private sectortechnology firms. Expansion plans are drawing heavy criticism fromrival, for-profit power exchange Automated Power Exchange (APX),which wants federal regulators to reign in the stategovernment-created operator of the world’s largest wholesale powermarket.

APX CEO Ed Cazalet said the state PX is going too far. He saidthe CalPX, which has two private-sector partners in OM Technologyand Perot Systems, has tried to compete in other states where hisprivately held, profit-making exchange wants to expand. As a”monopoly” created by the California legislature three years agowhen it passed an electricity industry restructuring law, the CalPXhas an unfair advantage, Cazalet said. Still, in the two places APXhas competed against the CalPX – Nevada and Illinois — Cazalet’sfirm has won.

Cazalet said his private exchange still is not making a profit,and he blames the CalPX’s legislatively mandated operations as a”state-chartered, nonprofit public benefits corporation.” TheCalPX, along with an independent system operator (ISO) for thestate electrical transmission grid, was established by 1996 stateelectricity law. To provide a truly free market and realcompetition, Cazalet and others, such as Enron, argue that theCalPX mandate eventually should end. Sladoje, however, iscontemplating the creation of a new, profit-making subsidiary topartner with other firms in various parts of the country to offerfull or partial exchange services. Cazalet said he thinks the FERCshould prevent Sladoje’s expansion plans.

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