Consumer choice issue put on back burner by California power regulators

KAREN GAUDETTE Associated Press Writer
Thursday, September 6, 2001
Source: Associated Press San Francisco Chronicle

URL: http://www.sfgate.com/cgi-bin/article.cgi?file=/news/archive/2001/09/06/financial1840EDT0368.DTL

(09-06) 15:40 PDT SAN FRANCISCO (AP) --

State regulators on Thursday delayed the repeal of a deregulation law that gives Californians the right to choose their electricity supplier.

Members of the Public Utilities Commission put off the repeal so they can vote on it next week with a number of other proposals that could affect
electricity bills.

Critics of the delay said it might lead to the continuation of the consumer choice program, called direct access. They suggested the program may leave a
dwindling number of local utility customers for the state to tap as it pays off energy purchases that kept the lights on across California.

"I think we are being negligent in failing to respond to this threat," said PUC Commissioner Carl Wood. "What we are faced with, with the likelihood of
direct access continuing, is that the cost will be dumped on small businesses and consumers."

The temporary repeal was ordered by the Legislature to keep three struggling utilities from losing more customers. The PUC is expected to suspend
direct access retroactively to July 1.

Lawmakers promoted direct access as a method by which the deregulation of the power industry would foster competition and lead to lower rates.
About 200,000 customers have switched utilities.

But deregulation has turned into a nightmare for California, prompting rolling blackouts and financial woes for Pacific Gas and Electric Co., Southern
California Edison Co. and San Diego Gas and Electric Co.

Utilities say the 1996 deregulation law barred them from passing on high wholesale power costs to customers. As they fell into debt, their credit ratings
dropped and wholesalers refused to sell to them.

The utilities are now on the hook for billions of dollars the state has spent buying power for them.

Energy service providers, such as solar and wind-powered electricity seller Green Mountain Energy, say the repeal is unconstitutional and have vowed
to fight the PUC in court.

"(Direct access) was one of the few good things that came out of the restructuring," Rick Counihan, vice president and general manager of Green
Mountain Energy.

Separately, a judge in Sacramento ruled Thursday that Enron Corp. must turn over sensitive financial documents to state lawmakers investigating
possible price manipulation of wholesale energy prices. Superior Court Judge Charles Kobayashi the state must give the energy company a
confidentiality agreement.

Enron officials have offered to turn over 25,000 documents that were already in California, but refused to comply with the rest of the subpoena.

On the Net:

www.cpuc.ca.gov