>X-Sender: mflorio@mail.turn.org
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>Date: Fri, 03 Nov 2000 18:24:35 -0800
>To: "Bill Marcus" <bill@jbsenergy.com>,"Sara Myers"<ssmyers@hooked.net>,
> <mshames@ucan.org>,<Dan_Kirshner@environmentaldefense.org >,
> "Jim Caldwell" <tgaljhc@aol.com>,<vjw@cleanpower.org>,
> "Julian, Bill" <bill.julian@gov.ca.gov>
>From: Mike Florio <mflorio@turn.org>
>Subject: Fwd: Re: Wohin gehen wir?
>
>I forgot to hit the "reply to all" button when I responded to Rich . . . .
>
>
>>Date: Fri, 03 Nov 2000 18:20:06 -0800
>>To: Rich Ferguson <Rich@Cleanpower.org>
>>From: Mike Florio <mflorio@turn.org>
>>Subject: Re: Wohin gehen wir?
>>Cc: ETeam
>>
>>Rich--
>>         I like the idea, but I'm not sure I'm a very good test case.
>After all, I have been branded as the last living defender of command and
>control regulation, socialist central planning, and everything else "bad"
>that you've ever thought of.
>>         Could the role of CalPower be better filled by an existing
>for-profit company? [eg Enron?].  NO WAY!  Any private seller would have all
>the same conflicts as the utilities, and then some.   But Michael Shames is
>interested in the idea of auctioning off all or parts of the retail
>franchise in San Diego, since SDG&E doesn't seem to want to be in the
>business anymore.  I have been pushing a core/noncore distinction such as
>you suggest, although I haven't been bold enough to suggest a non-profit
>procurement entity.  (I did push this idea for PG&E's gas procurement back
>in the bad old Gas Accord days, but the idea got nowhere then.)  What I've
>talked about is including the retained (at least for now) generation in the
>core portfolio, along with some contracts and some spot.  Haven't developed
>any numbers yet.
>>         I would certainly encourage shopping the idea.  Sellers will
>probably hate it, because this entity would have more market buying power
>than even the current UDCs.  But so what, that's what we want, right?  I'd
>suggest running it by Bill Julian for a political straight face test, but I
>would guess he'd like it.  And it would be a perfect vehicle for RPS, which
>we would certainly like to revive.    Let's keep exploring this.    MIKE
>>
>>
>>
>>At 04:52 PM 11/03/2000 -0800, you wrote:
>>>Folks,
>>>I am growing increasingly worried about future public policy oversight of
>utility power purchases, given the current conventional wisdom that more
>long term purchases should be made. I have been promoting the notion that
>the default power portfolio should be maintained by a new non-profit
>quasi-public entity with revenues guaranteed by the PUC, rather than by
>three separate IOUs subject (or not) to reasonableness reviews. Your
>comments on this notion are eagerly sought.
>>>
>>>Purchasing power for default customers
>>>The recently proposed FERC decision essentially puts California back where
>it was in 1990. There appears to be near universal agreement that the IOUs
>should enter into long term power purchase agreements and limit exposure to
>the spot market. As you recall, the BRPU reached the same conclusion,
>decided how much should be purchased, held the auction, etc.. And then FERC
>blew it up after deciding that the state's avoided cost estimates were
>wrong. FERC appears now to agree it made a mistake, and essentially orders
>us to start the process all over again.
>>>
>>>However, the proposed order makes no mention of state oversight of utility
>purchases. But at the briefing held last Wednesday for Bowen and legislative
>staff, FERC staff made it clear that they were not mandating any alternative
>to replace the must sell/buy requirement that they were eliminating.
>Presumably the state could still mandate the IOUs buy 90% in the PX (or
>whatever) and still comply with the FERC order. As long as the utilities
>remain regulated by the PUC, the state can control their power purchases.
>>>
>>>The problem is that after screwing around for ten years, there is now
>enormous pressure to let the utilities do what they will, a result that I
>fear would be bad for consumers and bad for the environment. On the other
>hand, there no time nor stomach for repeating the BRPU process.
>>>
>>>My preferred solution is the establishment of a new, not for profit
>"utility", that would make power portfolio decisions for default customers -
>let's call it CalPower.  The three existing regulated utilities would no
>longer sell energy at retail. CalPower decisions would be subject to
>whatever public policy conditions the legislature and/or the PUC chose to
>impose. However, some kind expedited review process would allow CalPower to
>be very nimble in the power market and recovery of their revenue requirement
>would be guaranteed. Direction of CalPower could be by political appointees,
>elected representatives, or some combination. My fantasy is a governance
>structure similar to CalPERS, in which broad legislative guidelines are
>interpreted by a board of directors and implemented by experienced traders.
>>>
>>>Compared to the present structure in which default portfolios are designed
>by three different for-profit utilities, CalPower appears to have the
>following advantages:
>>>The non-profit structure eliminates all financial conflicts of interest in
>portfolio design and ensures optimum implementation of public policy goals;
>>>It ensures equitable treatment of all customers state-wide, with price
>differences reflecting market realities rather than differing purchase
>criteria by each utility;
>>>It allows CalPower to be as nimble in the market as any other commercial
>trader by allowing the PUC or other state agencies to participate in
>portfolio design issues up-front, rather than requiring lengthy after the
>fact review.
>>>
>>>CalPower's disadvantage appears to be that it requires yet another new
>state-chartered non-profit organization. Politicians appear intent on
>blaming the two they have already and returning to the old utility-centric
>system, rather than risk their necks by proposing solutions that they then
>would be responsible for.
>>>
>>>Obviously, there are many questions and details to be worked out.
>>>Which customers would be default customers? [My option would be to declare
>all customers under 50 KW permanent default customers - green or other
>marketers could participate through contracts for differences, but physical
>power would be acquired for all these customers by CalPower. Customers >
>50KW would be on their own.]
>>>What is the relationship with the PUC? With the legislature?
>>>Could the role of CalPower be better filled by an existing for-profit
>company? [eg Enron?]
>>>How are the benefits/costs of existing utility generation assets and PP
>contracts shared?
>>>Etc
>>>
>>>Is this concept attractive enough to be worth pursuing? The next step
>would be to get a group of interested parties together to put some meat on
>these bones and float the idea seriously - perhaps even get some draft
>legislation on paper to shop around. Interested? Let me know.
>>>
>>>Regards,
>>>Rich
>