This story reflects fairly well the debate underway regarding the DA suspension date.
The Treasurer, Angelides, is taking a hard line.  We are working with others to get the date pushed back.
California PUC staff has started calling around trying to estimate how many customers have very recently switched or are trying to.  They have made inquiries to our customers, including UC/CSU.
Best,
Jeff
State fights 6,000 firms' energy deals 
Discount power contracts deemed unfair to consumers 
Bernadette Tansey, Chronicle Staff Writer <mailto:btansey@sfchronicle.com>
Sunday, September 2, 2001 
?2001 San Francisco Chronicle </chronicle/info/copyright> 
URL: <http://www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2001/09/02/MN155174.DTL>
Thousands of California businesses may reap cost breaks on electricity while other utility customers live with record rate hikes if the state lets stand a spurt of last-minute contracts with private power suppliers. 
More than 6,000 firms, including big retail chains and industrial plants, signed discounted power contracts in July and August as market prices dropped. 
State officials are incensed, saying the private "direct access" contracts with electricity providers could shift the burden for millions of dollars in state power purchases onto households and small businesses. 
State Treasurer Phil Angelides said the same companies that benefited as the state depleted its budget surplus to keep the lights on now want to escape paying their share of the billions spent to ensure power supplies for California. 
"I think it's wrong and it's immoral," Angelides said. 
State officials argue that the summer contracts can still be canceled retroactively because California businesses were on notice that their option to shop around for better deals on electricity was about to be suspended by the state Public Utilities Commission. The PUC is set to consider the retroactive ban Thursday. But energy firms say the summer deals were perfectly legal because the PUC had not yet taken action and made a series of draft decisions that put off the effective date of the direct access ban until as late as yesterday. 
"The drafts were not consistent," said Tracy Fairchild, a spokeswoman for Alliance for Retail Energy Markets, a consortium of generators and energy suppliers. "Which one were we supposed to take seriously?" 
The energy trade group is threatening to sue to protect the summer contracts. Angelides fears that a prolonged court fight could block a $12.5 billion state bond sale to reimburse the treasury for California's emergency power purchases. 
The burgeoning conflict is part of a continuing fight by energy firms and some of their business customers to preserve direct access -- a core provision of the state's 1996 deregulation law. 
Deregulation supporters predicted energy consumers would enjoy lower prices if private generators were allowed to compete with the utilities as power suppliers. But the direct access program was thrown into disarray last year when wholesale electricity prices skyrocketed and the state stepped in to buy power. 
To make sure the state's outlay would be paid back by all ratepayers, the Legislature in January directed the PUC to suspend direct access. By that time, 
most direct access customers were fleeing back to the utilities to benefit from a rate cap that protected them from the soaring market power prices. 
The PUC postponed action on the direct access ban while some legislators were sponsoring bills that would have allowed the program to continue under certain conditions. 
But by July, market prices had come down, and energy providers like Enron Energy Services, AES New Energy and Strategic Energy were again offering direct access contracts. 
Businesses were looking for relief from the record rate hikes imposed on utility customers in June, said Phoenix energy consultant Gina Coleman. Coleman said she helped five retail chains with "a significant number" of stores in California negotiate contracts with Strategic Energy this summer. 
"Business is business, and if you can get a better price for something, you should," said Coleman, who declined to name her clients. She said the lower costs will help the stores keep doing business in California and hold their prices down. 
Daniel Douglass, an attorney for the Alliance for Retail Energy Markets, said any attempt by the state to cancel contracts retroactively would violate the constitutional law. He said energy firms have purchased power to serve their customers under the contracts and would suffer losses if they were canceled. 
Angelides said the same firms that ran to the state for protection when their market contracts became too expensive now want to take advantage of lower power prices he attributes to the stabilizing effect of the state's long- term power contracts. 
"You can't take advantage of the state's stabilizing the rates, then say, 'Thank you very much,' and stick everyone else with the bill," Angelides said. 
State officials have not tallied the total number of customers who signed up in July and August, nor have they estimated the revenue loss that would have to be covered by remaining utility ratepayers. 
Figures compiled by the PUC show that commercial and industrial firms signed more than 6,000 new direct access contracts in July alone. A rough calculation suggests that, as a result, the firms might contribute as much as $64 million less annually to the repayment of state costs. 
The loss might not be significant enough to risk a court fight that would delay the bond sale, state officials said. 
Bu Angelides said the same power firms that helped create the energy crisis by charging exorbitant rates are now threatening a bond issue desperately needed to restore funds needed for education, health care and children's services. 
"What they're talking about doing," he said, "is holding us hostage until they get what they want." 
E-mail Bernadette Tansey at btansey@sfchronicle.com <mailto:btansey@sfchronicle.com>. 
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