CPUC Prez Links Direct Access to Democracy

The confluence of political moves regarding new energy policy featuring a form of direct access led the CPUC to host a meeting on the issue April 20. The motivation came from efforts by Governor Arnold Schwarzenegger?s administration, a bill backed by the new Assembly speaker, and a California Public Utilities Commission staff report. But neither the utilities nor even potential direct-access customers could agree on what the new ground rules should be. Southern California Edison argued that reestablishing the right of large customers to directly access nonutility providers would amount to a crapshoot for ratepayers and the economy. (Direct access was suspended in 2001 with exceptions for existing customers.) Direct-access customers and generators, however, said the ability to choose whether to be a utility or a nonutility customer could strengthen the market and offer lower energy bills. Somewhere in the middle, some large-customer representatives said before the market is reconfigured, rates that have been a weight on big consumers need to be reallocated to lower their portion of the cost. ?In a democracy, people have choices,? said CPUC president Michael Peevey. Along with commissioner Susan Kennedy, Peevey sent a letter this week to Assembly speaker Fabian N??ez recommending changes to retail choice and other elements of AB 2006, which was crafted by Edison and carried by the lawmaker. The letter recommended allowing customers to aggregate into larger loads to qualify for direct access. Instead of requiring five years? notice before switching from bundled to direct-access service, the commissioners recommended a one-year notice after legislators authorize a new structure. The letter echoed the language in Peevey?s conclusions in an alternate to last month?s more restrictive staff report. That report suggested a 2009 time frame for a direct-access market and no aggregation (see Circuit , Mar. 19, 2004). Peevey has also advocated real-time prices for direct access, which would reflect actual costs based on when energy was purchased. San Diego Gas & Electric and Pacific Gas & Electric were open to the customer-choice model. They agreed that nailing down resource-adequacy requirements would facilitate a market shift to allowing large customers energy choice. Bob Foster, Edison president, expressed skepticism over whether ratepayers or the economy would benefit from such a shift. ?I?m sure that the citizens of other states will again benefit from our crash testing of another retail market design. However, the citizens of California will tire of being on the bleeding edge of retail design,? predicted Foster. While AB 2006 in its current form would allow direct-access customers to return to bundled service under certain conditions, Foster said leaving should be a one-way ticket. ?When you?re gone, you?re gone,? he advised. Direct-access customers? stance on the issue was not united. Dan Douglass, attorney for the Alliance for Retail Energy Markets, recommended forging ahead with aggregation and noncore direct access. Allowing customers to aggregate is crucial, Douglass said, noting that the average Wal-Mart uses less than 500 kW and that 60 percent of Wal-Mart stores would be ineligible for direct access under the N??ez bill. At the same time, an aggregated string of the stores would qualify. Also pushing aggregation was Dian Gruenich, attorney for the University of California?California State University, who said the school systems have saved millions of dollars on energy bills through direct access. But Bill Booth, attorney for the California Large Energy Consumers Association, said rates need to be changed before the state embarks on noncore direct access because the current allocations unfairly burden large customers. Current rates for big customers are between 70 percent and 90 percent higher than in 2000. By contrast, Booth said, residential rates are up less than 20 percent on average. The hearing, with four of five commissioners in attendance, marked ten years to the day since a ?blue book? or energy blueprint for the state?s initial plunge into deregulation was released.

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CPUC Prez Links Direct Access to Democracy

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