Governor?s Adviser Says Edison Bill Would Gut Core-Noncore Market

Controversial legislation that would guarantee cost recovery for investor-owned utilities? investments in generation and establish a core-noncore market would stop direct access in its tracks, said an adviser to Governor Arnold Schwarzenegger this week. Last week, Assembly speaker Fabian N??ez (D-Los Angeles) introduced AB 2006, a measure known as the ?Edison bill? because of the utility?s imprint on language and aggressive push for its passage (see Energy Circuit , February 6, 2004). The core-noncore bill provisions ?make the ground rules for direct access onerous,? according to James Sweeney, who served on Schwarzenegger?s preelection Energy Task Force. The culprit, according to Sweeney, is the provision that would require customers to give five years? notice before switching to service from nonutility providers. Sweeney, who retains an informal role with the administration, said the model laid out in AB 2006 ?undercuts? rather than promotes a core-noncore market. He did not disclose whether Schwarzenegger supports the legislation. Dan Eaton, chief of staff for Assembly speaker N??ez, said the five-year notice is needed to avoid disruptions in the market, but he added that the time frame was not necessarily set in stone. Elsewhere, AB 2006 is getting mixed reviews. Momentum is increasing for a core-noncore model for electricity, according to Dorothy Rothrock, representing the California Manufacturers and Technology Association. ?The Edison bill shows utilities are risk-averse,? she said, adding that customers are thus left taking ?a beating.? The draft bill contains language calling for the California Public Utilities Commission to establish resource-adequacy requirements to ensure sufficient power reserves for the state. The Independent Energy Producers (IEP) has questioned the need for the legislation, given that the CPUC is already overseeing resource planning. Striking a conciliatory note, commission president Michael Peevey agreed with the IEP. He said he was unsure whether AB 2006 was needed, adding that ?legislation has its own life?; therefore, the most constructive approach is to focus on how to make it work. Direct access was a key provision of the initial electric deregulation. In its first iteration, both large and small customers were able to contract with nonutility providers. In the current version, most expect that only large consumers will be able to contract for energy outside utilities. Hearings on the bill are set for mid-March.

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Governor?s Adviser Says Edison Bill Would Gut Core-Noncore Market

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