>
>Wednesday, June 6, 2001 08:18 PM
>
><!--TEXT-->
>
>By Jason Leopold
>
>Of DOW JONES NEWSWIRES
>
>LOS ANGELES (Dow Jones)--California utility regulators appear ready to
>vote next
>week on a proposal to suspend the ability of large electricity users to sign
>contracts directly with energy suppliers.
>
>The move is called for in the February bill that put the state in the power
>business, but its approval by the California Public Utilities Commission
>would
>damp plans in the Legislature to reduce the burden on Edison International
>(EIX)
>unit Southern California Edison by making large industrial customers
>responsible
>for securing their own power.
>
>"We're still trying to figure that out," said an aide to Assembly Speaker Pro
>Tem Fred Keeley, D-Boulder Creek. "We don't know how to get around that right
>now."
>
>Keeley is expected to introduce legislation to shift the burden of rescuing
>Southern California Edison to large businesses. Under the proposal, which is
>also supported by Assembly Speaker Robert Hertzberg, customers that use 500
>kilowatt-hours of power a month or more would pay a surcharge on their
>bills to
>help Southern California Edison recoup its losses on wholesale power.
>
>The so-called direct-access component - under those large users would buy
>their
>power from suppliers - is the cornerstone of the Keeley plan, for which Enron
>has been lobbying hard in recent weeks, according to several aides to key
>legislators.
>
>The Keeley plan is an alternative to the memorandum of understanding Gov.
>Gray
>Davis signed with Southern California Edison two months ago. Under that
>proposal, the state would buy Southern California Edison's power lines for
>$2.76
>billion and allow the utility to issue $2 billion in bonds backed by
>ratepayers
>to recover $3.5 billion in net uncollected power costs.
>
>That plan has run into snags in the Legislature, which must enact it into
>law,
>and the PUC, which has been slow to rule on enabling measures.
>
>One key Democratic Senator said the PUC's move to quash direct access is an
>attempt to ensure a deal to rescue Southern California Edison doesn't pass
>through the Legislature.
>
>"The PUC has demonstrated it does not want SoCal Ed to remain solvent," the
>senator said. "They have dragged their feet on several key issues they
>need to
>address in order to make sure legislation to save the utility is never 
heard."
>
>A PUC spokesman didn't return calls for comment.
>
>Direct-access was the key part of the state's 1996 deregulation law, giving
>retail customers the opportunity to choose from a variety of energy
>suppliers in
>an effort to lower their electric rates.
>
>Commissioners Richard Bilas and Henry Duque said they support direct
>access and
>would vote against any measure to reverse it.
>
>"I would never vote against direct access," said Bilas, a Republican, who
>authored the agenda item. Bilas said the item was amended by another
>commissioner.
>
>The measure could be held, because it might disrupt negotiations between the
>Legislature and Southern California Edison, said PUC Commissioner Geoffrey
>Brown, a Democrat.
>
>The PUC may be looking to protect the state's interest as a power purchaser,
>some legislative aides said.
>
>The DWR's long-term power supply contracts cover the state's wholesale-market
>power needs in 2002 and 2003. If large industrial customers were to sign
>direct-access contracts, the DWR would lose them as customers and thus
>fail to
>collect enough revenue to pay off the long-term contracts.
>
>The agency could be stuck with a large surplus of electricity that it
>would be
>forced to sell it on the open market at a loss. The market price of power
>in the
>coming years is expected to be lower than what the state paid for forward
>power
>in 2001.
>
>Wholesale power prices plunged this week, and the DWR for the first time sold
>excess power on the open market, according to Oscar Hidalgo, DWR spokesman.
>
>Arnold Rosenthal, of Newport Beach-based Utility Resource Management
>Group, an
>organization that represents more than 700 large electricity users in the
>state,
>said state regulators are "looking to get us back into a mode where we are
>held
>captive once again."
>
>"The DWR is acting as this super utility," Rosenthal said. "What you're left
>with is absolutely no choice. Instead, we'll be subjected to several large
>rate
>increases."
>
>Rosenthal said some of his San Diego clients have direct access deals. A
>number
>of clients served by Southern California Edison want to sign direct-access
>contracts to escape recent rate increases imposed by the PUC.
>
>-By Jason Leopold, Dow Jones Newswires; 323-658-3874;
>jason.leopold@dowjones.com
>
>
>2001 Dow Jones & Company, Inc. All Rights Reserved.
>
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