Even before the utility-state regulators bankruptcy settlement emerged, a high profile state legislative proposal (SB 173) to address what some lawmakers perceived as “unreliable” energy price indexes failed to move from its house of origin in the California Senate to the legislature’s lower house assembly. The failure to meet the June 6 state legislative deadline renders the proposal virtually dead for this year with the possibility it could re-emerge next year as a so-called “two-year bill.”

Other bills to re-regulate the electricity industry (SB 888) and establish a core/noncore split between small and large electricity customers (AB 808) did move to their other legislative houses and are expected to begin getting further hearings this week (June 23-28), according to energy observers in Sacramento. However, an unknown at the end of last week, was how much the proposed settlement between Pacific Gas and Electric Co. and the California Public Utilities Commission might affect those bills’ chances of passage.

Sponsored by Sen. Joseph Dunn, the chair of the state Senate’s select investigative committee looking at wholesale energy price manipulation in 2000-2001, got SB 173 out of the Senate energy/utilities committee (on a 4-2 vote) only to see it flop in the Senate judiciary committee which sent it back to its committee of origin. The measure would restrict the use of energy price indexes to those determined by the CPUC to be “reliable and verified as meeting listed requirements.”

Under the proposed bill, Sen. Dunn would mandate that the CPUC establish the standards by which the state would determine if a price index was “reliable” and “verifiable.”

Among many skeptics of the proposed new law are the independent natural gas producers in California. Their representatives expressed relief that the measure was sidetracked, pointing out that if it became law markets for their supplies could have been reduced. The prices the California producers receive for their supplies is almost always tied to the national price indexes.

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