California’s top energy regulator thinks the momentum forrestructuring the state’s natural gas industry has lost most of itssteam. Responding to questions during a break at a statewide energyroundtable in San Diego last Tuesday, Richard Bilas, president ofthe California Public Utilities Commission, said he is unsure whenthe regulators will be able to make recommendations to the statelegislature for further gas unbundling.

At the same time, Bilas expressed frustration at the realprospect that he and his colleagues will be asked to extend ongoingsettlement talks among Southern California Gas Co. and Pacific Gasand Electric Co. and their respective customers and keystakeholders. Talks already have been extended past previously setCPUC deadlines twice over the past six months.”In a real sense,we were late starting on this — it is something that should havebeen done ten years ago,” said Bilas during a break from an energyroundtable on energy markets and reliability in California’schanging electricity and gas businesses. “I’m not sure quitefrankly that there is the excitement about moving forward in thegas market that there was in electricity. Electricity prices werehigh (early in the 1990s); people don’t really pay that muchattention to gas prices out here except maybe in the winter time.So I think certain parties are excited, but the vast majority (ofstakeholders) don’t seem too terrible excited.

“We’re still looking at the best options, and we plan to do someanalysis of what we think are the preferred options. With thatanalysis, we will send a report to the legislature that gives themour suggestions for what more ought to be done to open up the gasmarkets. How ultimately we will move, and how far the legislaturewants us to move, is a question I can’t answer.”

Bilas expressed frustration at what he called the “mixedsignals” he was getting from the one-day energy roundtable from acombination uncertainty among policymakers about what blend ofmarket- and regulatory-based solutions to develop for both gas andelectricity problems that are cropping up in California. “Mypreference has always been to see what we can settle on, and thensee what else is left that we may need to do further work on,” hesaid. “So far the settlement process is not going as efficiently asI would like to see it, and that is probably an understatement.”

Aside from a solution for how best to further unbundle gas atthe wholesale level, there are real potential problems for gassupply shortfalls in San Diego, given its future power generationneeds, and there are gas-related issues with the CPUC’s ongoinglook at electric distribution competitive issues and distributedgeneration. Bilas raised the rhetorical question at the roundtableabout whether retail competition was still a goal. The feedback hereceived was unclear. “I’m getting kind of mixed signals,” hesaid. “I think there is this great emphasis on reliability thatSen. (Steve) Peace has articulated and the energy commission hasagreed with. We at the CPUC would certainly agree with that, but Idon’t think the issue of retail competition is a dead issue either.I think it is something that can be developed over time.

Maybe I am too optimistic.”

Richard Nemec, Los Angeles

©Copyright 2000 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.