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		 Subject: Front Page San Francisco Chronicle: Bush appointee warns state PU C 
on 'direct access'


Here's a direct access article that appeared on the front page of today's
San Francisco Chronicle. This article gives Pat Wood of FERC's position
supporting direct access in California.  Edelman worked with Bernadette
Tansey on this article  and provided her with information on AReM and the DA
coalition's goals, as well as background on direct access.  We are also
currently working with the Chronicle's Editorial board to secure an
editorial

****************************************

Bush appointee warns state PUC on 'direct access' 
FERC panelist wants consumers to retain choice of energy firms 
Zachary Coile, Bernadette Tansey, Chronicle Staff Writers
Thursday, June 28, 2001 
,2001 San Francisco Chronicle 

URL:
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2001/06/28/MN207167.DTL 


Washington -- President Bush's key federal energy regulator warned
California that it may hurt consumers if the state approves a proposal to
bar power users from shopping around for the best prices for electricity. 

Patrick Wood, a member of the Federal Energy Regulatory Commission and
Bush's liaison to the state on energy issues, criticized a plan before the
California Public Utilities Commission to suspend a major element of the
state's 1996 deregulation plan. 

Called "direct access," the program allows businesses to cut deals with
private power suppliers and permits consumers to choose among competing
electricity providers, including firms that market renewable sources of
energy. 

Members of the state PUC, which had been set to consider the issue today,
said yesterday that they will delay the vote on direct access until Tuesday
at the urging of Assembly Speaker Bob Hertzberg, D-Sherman Oaks. 

Wood, who met with state PUC chairwoman Loretta Lynch during a two-day trip
to California earlier this week, said he fears that ending direct access
will lock consumers into higher energy prices. 

"I do worry about the future of retail competition," he said yesterday in
Washington. "I think a lot of things they're trying to do to resolve today's
problem may really push off the benefits of direct access for quite a few
years. I'm really concerned about that." 

At the same time, Wood stressed that the federal regulators would not try to
override the commission's and Legislature's decision. "It's their call. It's
a state prerogative," he said. 

The state PUC is expected to suspend direct access Tuesday because the state
needs all energy users -- especially big industrial consumers -- to stay on
as utility customers and help pay off the $8 billion the state has already
spent on energy, and $43 billion more worth of power bought through
long-term contracts. 

Lynch said the PUC must act soon because state Treasurer Phil Angelides has
warned that allowing direct access to continue without restrictions would
threaten the state's ability to sell $12.5 billion in bonds to pay for the
power purchases. 

If some customers are allowed to desert the utilities and buy power from
competitors, fewer ratepayers would be left to pay off the bonds. And the
remaining utility customers would be stuck covering the huge costs racked up
during the energy crisis. 

"We need to be sure the bonds are issued," Lynch said. 

Even though direct access has been allowed since 1996, few businesses or
householders actually did it. At its peak, the program drew about 224,000
households -- about 2.5 percent of the customer base of California's major
utilities. About 13 percent of the industrial market contracted for their
own power. 

When the state took over buying power for the cash-strapped utilities in
January, the Legislature directed the PUC to suspend the direct access
program. 


LAST CHANCE FOR DIRECT ACCESS
Still, Hertzberg asked Lynch to delay the PUC's vote on direct access until
next week so legislators who back the program can try to save it in a deal
that would still provide a steady stream of revenue for the bonds. 

"We're looking at options as a last-ditch effort," Hertzberg said. "If the
PUC had made the decision to suspend direct access, that would have had a
chilling effect on anything we want to do." 

Wood, a champion of energy deregulation, said he believes that California
should not abandon its effort to increase competition by allowing customers
more choices about where they get their power. 

"Deregulation always benefits people," he said. "If it doesn't, you've got
to rework it until it does." 


WARNING FROM CHAIRMAN-TO-BE
Wood, a soft-spoken Texan who is expected to become the regulatory
commission chairman this fall, praised California leaders for their efforts
to address the crisis, including getting new plants built quickly. But in
meetings this week, he cautioned Gov. Gray Davis and other state leaders
against trying to punish the generators for alleged past wrongs. 

"I think the rhetoric is still pretty hot out there," he said. "If I were a
generator looking at 50 states, talking about a windfall profits tax and
expropriation of property. . . . it's not a great climate" for investing in
new plants. 

Zachary Coile reported from the Chronicle's Washington bureau, with
Bernadette Tansey in San Francisco. Sacramento Bureau Chief Greg Lucas also
contributed from Sacramento. / E-mail the writers at zcoile@sfchronicle.com
and btansey@sfchronicle.com. 

,2001 San Francisco Chronicle   Page A - 1