The California Public Utilities Commission (CPUC) Wednesdayokayed a process for utility revenues from retail rates to befunneled to the state water resources department (DWR) to cover itsongoing multi-million-dollar purchases of short-term electricitysupplies.

In a strictly partisan 3-2 vote, the regulators also refused tostay a part of a new state law that banned retail direct accesspurchases of electricity. Former Republican Gov. Pete Wilson’s tworemaining CPUC Commissioners could not get a third vote, eventhough the newest commissioner, Geoffrey Brown, indicated hethought the issue was “critically important” and needed to be”explored carefully” in the near future.

A coalition of energy service firms and businesses is attemptingto get retail competition restored in subsequent legislation,calling the ban in AB 1X something that will cost businesses in thestate this summer “thousands of additional dollars” on their energybills.

“Businesses want to know why the state’s policymakers arekilling direct access at a time when businesses need it most toreduce escalating power bills,” said a spokesperson with the DirectAccess Coalition.”

The new state law that authorized DWR as California’selectricity buyer in place of its financially wounded,near-bankrupt two largest investor-owned utilities requires theCPUC to allow revenues from those utilities’ retail rates to coverthe state water agency’s costs of buying power. Wednesday’s actionby the CPUC formalizes the process for transferring the monies. Thecharges are not subject to any reasonableness reviews as utilitypower purchases are.

Former CPUC president and free-market economist Richard Bilaswas unable to get a third vote for his approach on the issue ofdirect access. Bilas still feels that DWR is not sufficientlymandated to cover all utility power costs, including the spotmarket emergency supplies purchased by the state grid operator,Cal-ISO. Gov. Gray Davis’s commission majority prevailed, andCommissioner Carl Wood used the occasion to emphasize hisoften-repeated theme that the state’s electricity restructuring is”an abysmal failure,” therefore, retail competition through directaccess should not be resumed in the state.

“I don’t believe a stay (of AB 1X’s direct access ban) isnecessary at this time,” Wood said. “The very idea of trying topreserve the central focus of the now totally discreditedderegulation process in California in the face of a specificlegislative mandate to suspend direct access is the height oftowering arrogance. The intent of the legislature is clear, and Ithink we should go through our regular procedures of implementingits provisions.”

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