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 Tuesday, Richard Bilas, president of theCalifornia Public Utilities Commission, said he is unsure whenregulators 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 later this weekto extend ongoing settlement talks among Southern California GasCo. and Pacific Gas and Electric Co. and their respective customersand key stakeholders. Talks already have been extended pastpreviously set CPUC deadlines twice over the past six months.

“In a real sense, we were late starting on this — it issomething that should have been done 10 years ago,” said Bilasduring a break from an energy roundtable on energy markets andreliability in California. “I’m not sure quite frankly that thereis the excitement about moving forward in the gas market that therewas in electricity. Electricity prices were high [early in the1990s]. People don’t really pay that much attention to gas pricesout here except maybe in the wintertime. So I think certain partiesare excited, but the vast majority [of stakeholders] don’t seem tooterribly 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 at the one-day roundtable from policymakerswho are uncertain about what blend of market- and regulatory-basedsolutions to develop for both gas and electricity problems that arecropping up in California. “My preference has always been to seewhat we can settle on, and then see what else is left that we mayneed to do further work on,” he said. “So far the settlementprocess is not going as efficiently as I would like to see it, andthat 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 generation needs.There also are gas-related issues with the CPUC’s ongoing look atelectric distribution competition and distributed generation.

Bilas raised the rhetorical question at the roundtable aboutwhether retail competition was still a goal. The feedback hereceived was unclear. “I’m getting kind of mixed signals,” he said.”I think there is this great emphasis on reliability that Sen.[Steve] Peace has articulated and the Energy Commission has agreedwith. We at the CPUC would certainly agree with that, but I don’tthink the issue of retail competition is a dead issue either. Ithink it is something that can be developed over time… Maybe I amtoo optimistic.”

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