In an open letter to the governor of California, Vincent Viola,the new chairman of the New York Mercantile Exchange suggested thestate could solve its power price problems if it “promptly” turnedloose large customers and let them buy power for themselves,eliminated any monopoly, “be it the PX, Department of WaterResources, or the Independent System Operator,” and started usingfinancial instruments to protect consumers, rather than lock inlong-term, high-priced contracts.

Should the governor need any help with the suggestions, “Mystaff and I stand prepared to come to California on a moment’snotice to discuss this with you in person,” said Viola, who also isowner of Pioneer Futures, a clearing member of NYMEX and the NewYork Board of Trade. The letter, addressed to Gov. Gray Davis withcopies to the California Senate and State Assembly, said the stateshould not be the buyer for all consumers, but should allowbusinesses, which are capable of negotiating their own powercontracts, to do so.

“Once industrial and medium businesses are allowed to selectfrom competing suppliers, the role of the state would be rolledback to cover the less than 50% of the power market comprised ofhomeowners and small business owners.” The move would “freebillions of dollars of state capital from the risks of volatileenergy markets that it is ill-equipped to handle. Requiring powersuppliers to compete – i.e., fight – for each and every customer’saccount would also undoubtedly lower price and improvereliability.” Viola said legislators need to remove the directaccess ban in state law and encourage larger customers to seektheir own energy supplies.

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