Greetings:

Hope everyone had a pleasant 4th.

I've read the respective Burton and Hertzberg language on amending AB 1X.  The Burton language looks cleaner and simpler, though there may be reasons to include some of the Hertzberg language, too.

I'm proposing to the group the following as potential amendments to the bond bill.  I would appreciate your feedback.  The amendments would be as follows:

Customers who were on Direct Access when DWR started buying power (Jan. 17th?), and are still on Direct Access when the bill passes, should be exempt from paying for the bonds. 

In short, customers should not be forced to pay for power twice--once from their ESP, and once from DWR.  Since these customers receive power services from their ESP, they never consumed DWR power in the first place and it wouldn't be fair to require them to pay for it.

Customers who have been utility customers since DWR started buying power but subsequently switched to Direct Access should only pay for power provided by DWR that they actually consumed, no more and no less.  

For example, if a customer was a utility customer when DWR started buying power but switched to Direct Access on May 1st, then the customer would only be responsible for reimbursing DWR for power deliveries that took place from Jan. 17th thru April 30th.

I believe that we agreed on these concepts during the negotiations that took place over the past 4-5 weeks.  Or if we didn't explicitly agree during the talks, they seem to be principles on which we ought to be able to agree pretty easily now. And rather than leave the issue hanging, which can create unnecessary and costly uncertainty for customers, I suggest that we include very clear and simple legislative language in the bond bill clarifying what customers' obligations are.  Your thoughts are appreciated.

In addition, we have talked quite a bit about providing customers with incentives in the attempt to get California out of the energy hole that it finds itself in.  Providing (20KW and above) customers with an incentive to switch to Direct Access as soon as possible could 1) reduce the net short position that the state (and ultimately consumers) have to finance, thereby reducing spot purchases and price volatility,  2) reduce electricity purchasing costs, and 3) reduce the burden on the state budget.

With this in mind, I'm also proposing that the group consider an amendment to the bond bill that would exempt from bond charges any customer that switches to Direct Access by September 1st.

Finally, it seems odd that the language directing the PUC to suspend Direct Access is still in the bill.  If a dedicated rate component is created, that seems to eliminate altogether the need to suspend Direct Access.  And if that's the case, would it make sense to delete that language from the bill?

Look forward to your comments and working with you to get support for and passage of the "core/noncore" proposal.

Best,
Jeff