In the wake of generation shortages and price spikes that haveriddled the western power markets this summer, California’s newestregulators last week indicated the state’s experiment with furtherelectricity unbundling should be halted completely or at a minimumplaced on temporary hold. At least that was the message deliveredwhen the two regulators roundly criticized a new California PublicUtilities Commission staff report that advocated continuedunbundling of the state’s electric distribution market.

The CPUC report, “Electric Retail Markets and DistributionServices,” was strongly condemned by CPUC President Loretta Lynchand fellow CPUC newcomer, Carl Wood, both of whom said they wantedto “disassociate” themselves from the staff document, whichadvocates possible further unbundling in the electric industry,although on a qualified basis.

Although none would comment for the record, a number of CPUCsources said the reaction of their commission president signaledthe death knell for deregulation in California or the foreseeablefuture. (CPUC commissioners serve six-year terms.)

Lynch and Wood wrote in a two-page statement, which was attachedto staff report, that they didn’t agree with the document’sassumptions, methodologies and conclusions, noting that neither ofthem were on the CPUC at the time the study of distributioncompetition was ordered.

The newest two members of the five-member panel criticized pastCPUC commissioners for failing to consider “potential adverseconsequences, such as consumer harm” in restructuring theelectrical industry. They said the CPUC over this time has”dismantled” the traditional distribution utility.

“Instead, the commission restructured an entire industry on thebasis of shaky assumptions and ‘policy preferences’- not concreteanalysis of the factual circumstances surrounding high electricrates in California,” Lynch and Wood wrote. “We will not supportmore deregulation of the electric industry until we understandbetter the consequences for our state. The staff study does notcontribute to our understanding.”

The two commissioners cited recent news articles from San Diego,quoting consumers critical of deregulation in the midst of summerelectric price spikes.

Among other things, the CPUC staff report recommends furtherunbundling of services now provided only by utilities, such asbilling and meter reading, and further study to determine if”certain aspects” of electric distribution should be opened tocompetition, although stating that “distribution (for the mostpart) should remain a regulated monopoly service.”

The report concluded the CPUC should view this analysis as onlyone option, and that it should seek input from “consumers, industryparticipants, and legislators” through a variety of fact-gatheringpublic hearings and workshops, along with written comments fromindustry participants.

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