California energy regulators, all appointees of outgoing Gov.Pete Wilson, last week requested a meeting after Labor Day with thegovernor in an attempt to head off new state legislation that couldfurther hinder ongoing attempts to streamline regulation and injectmore competition into the natural gas industry. The president ofthe California Public Utilities Commission calls one of the bills”truly anti-competitive.”

Two eleventh-hour pieces of legislation passed by the statelegislature in its last day of this year’s session (Aug. 31) havecaused concern among the five-member, governor-appointed CPUCbecause one bill further hurts its attempt to gain “competitiveparity” between the state’s ongoing efforts to open up theelectricity and natural gas industries and a second new piece oflegislation threatens to create what one CPUC senior adviser called”regulatory gridlock.”

CPUC President Richard Bilas, and P. Gregory Conlon, a formerCPUC president, want to personally brief Gov. Wilson before heconsiders signing the two pieces of legislation. The governor hasuntil the end of this month to decide whether to veto, sign or letthe bills become law without his signature. Earlier in the waningdays of the state legislative session, a third bill was passed andquickly signed by the governor (1602), preventing the CPUC fromproceeding with any new retail natural gas unbundling before theyear 2000. It was requested by utility labor unions with eitheractive support or “neutrality” from the state’s major gasutilities. The law ostensibly is to allow more time to work outsafety and consumer protection concerns related to opening up partsof natural gas service to competition, although the pipelinenetwork would remain a monopoly function of the utilities.

Political and regulatory observers view this as another exampleof the state political leaders reining in energy regulators beforethey go too far on natural gas restructuring, similar to whathappened two years ago when they created AB 1890, the state’selectricity reform law.

CPUC President Richard Bilas said Friday that the regulators areworking closely with legislative leaders to clarify the extent ofthe new law’s limits on the commission. For example, he and hiscolleagues think the CPUC can proceed with removing all limits fromthe gas aggregation program for residential and small commercialcustomers, as well as instituting additional consumer protectionmeasures for natural gas consumers, Bilas said.

“We would hope that we will be able to talk to the governor andpoint out where we think there are weaknesses in both bills andpoint out the consequences of those significant weaknesses,” Bilassaid.

One bill that troubles Bilas attempts to add to the natural gasrestructuring slowdown (SB 1757) by prohibiting Southern CaliforniaGas from offering metering services to Southern California Edisonelectric customers until Edison is allowed to offer the sameservices to gas utility customers. Bilas sees this as”anti-competitive” because it restrains competition in the electricbusiness which has already unbundled metering and billing services.

The bill further mandates that the CPUC and the statewideoversight board for the electric industry’s state charteredindependent system operator (ISO) and power exchange (PX) establisha “memorandum of understanding” specifying which body representsthe state at the Federal Energy Regulatory Commission regardingspecific electricity issues.

Bilas said this law is “totally unnecessary” since his agency,the oversight board and the state energy commission are alreadyworking out a formal understanding and have an interim processcurrently in place.

“In fact, we are meeting Thursday Sept. 10 to establish a set ofprinciples among the CPUC, oversight board and energy commission,”he said. The other bill before the governor concerns opening upthe CPUC to full judicial review. Historically, the stateconstitutionally-based commission’s decisions are only appealableto the California Supreme Court, so effectively very few utilitydecisions are subject to court review.

Last year, Gov. Wilson vetoed a similar bill but okayed anarrower bill to open compliance and enforcement decisions tojudicial review.

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