KIP:

FYI.  I'm still trying to find someone, anyone (other than Angelides and Davis) who oppose SB 18 XX.

Best,
Jeff


Subject:	Dissent from Commissioners Bilas and Duque Opposing Suspension of DA



 Commissioners Henry M. Duque and Richard A. Bilas, dissenting:

One could say that this order is consistent with the Administration's present third world country mentality. We are punishing the very consumers and providers who made a commitment to ensuring electric restructuring did work by adding a demand retail component to cure the dysfunctions in the wholesale market.

We are not convinced that the Department of Water Resources (DWR) bond ratings depend on killing direct access.  This notion is a scare tactic and a smoke screen. Direct access comprises such a small percentage of overall demand that it cannot reasonably be seen to be a threat to the sale of the bonds. Direct Access should be seen as a benefit to DWR.  It would decrease the amount of the utilities net short obligations and relieve DWR from its power purchasing responsibilities sooner. 

Something else is going on here. We think that the DWR does not want direct access because if the public is presented with alternatives, it will make DWR's purchasing mistakes abundantly clear. The Commission should be holding hearings to test the assertions being made by DWR, Finance and the Treasurer.  Instead, the Commission is making an ill informed, panicked decision to act now and study the repercussions later. 

	DWR and the bonds should not be threatened by direct access if DWR is making prudent energy purchases. Only if DWR's contracts are too expensive, relative to market, will customers seek shelter in lower direct access prices. Indeed, retaining direct access as a way to send price signals to consumers may be the only way to place pressure on DWR to make more prudent purchases. This is a very important consideration since AB 1X prevents us from engaging in any prudency review of the DWR costs to be passed through to ratepayers in order to repay the bonds. If there is no yardstick, how can anyone measure DWR performance? The answer is, one can't, unless SB 18xx is signed into law.  

	We think that additional review of these issues, before suspending direct access, would have produced a more sound decision in the long run. 

For these reasons we must respectfully dissent.




/s/ HENRY M. DUQUE				  /s/ RICHARD A. BILAS
        Henry M. Duque						Richard A. Bilas
     	  Commissioner					   Commissioner

September 20, 2001