| Independently Powered Energy News

A group of manufacturers, universities, retailers, and consumers asked the California Public Utilities Commission December 6 to take another look at thawing the frozen direct-access market. The entities represented by the Alliance for Retail Energy Markets petitioned regulators to open an investigation and establish a regulatory framework to allow large and small energy users to buy electricity from nonutility energy providers. "The problem today is that some retailers have direct access, but because of the suspension, others who want to exercise choice can't have access to the same benefits," said Bill Dombrowski, California Retailers Association president. "Allowing all retailers to have the same low-cost electricity options is a matter of commercial fairness," he said. "I welcome the petition," said Mike Peevey, California Public Utilities Commission president. "Direct access was suspended in early 2001, so it's probably time to revisit the issue." The petition insists that the CPUC can revive the retail energy market without the blessing of the Legislature. It is signed by 38 entities, including the California Manufacturers & Technology Association, the State University and UC Regents, the Western Power Trading Forum, Calpine, and Wal-Mart. It is supported by nearly 150 other private organizations and agencies. The assertion that the CPUC has the authority to lift the direct-access freeze, according to Lawrence Lingbloom, consultant to the Senate Energy, Utilities, and Communications Committee, "is kind of like asking for a pony for Christmas." The regulators' role is ministerial, he added. In 2001, at the height of the state's energy crisis, the California Legislature suspended customer electric choice. The law, AB 1X, was aimed at keeping large ratepayers from leaving investor-owned utilities' bundled service when rates rose. Legislators and others were concerned about saddling ratepayers who were left with the bundled system with $40 billion in emergency power contracts signed by the Department of Water Resources at breakneck speed as ordered by then Governor Gray Davis. Since the crisis, legislation has been introduced annually to discontinue the suspension of customer choice. The measures have floundered because of ongoing concerns about unfair cost shifting to small ratepayers who remain with investor-owned utilities. Other unresolved concerns include how to limit energy users moving to and from utilities and electricity service providers. In addition, investor-owned utilities claim that shifting load could cause them to overbuy power supplies, creating higher costs to their customers. A bill to reopen direct access is expected to be introduced next year. In March 2004, the commission staff assessed rekindling the direct-access market, which was launched by the state's deregulation law in 1998. The staff report was neutral on the issue but worked from the premise that a core-noncore market would be created possibly beginning in 2010. That is the year when the last of the long-term power contracts that DWR bought on behalf of the utilities expire. However, just when the suspension of customer choice ends under AB 1X is under debate. The staff analysis assumes that the electricity sector direct-access market would be modeled after the national natural gas market - split between large and small ratepayers. If customer choice were reopened, the report concluded, the market could make up as much as 30 percent of the total load by 2012. This week's petition urges the commission to investigate opening up direct access and putting ground rules in place by the beginning of 2008. "It is time to restore freedom of choice to California's electricity consumers, and the Commission can and should lead the way in sponsoring the public debate, discussion and eventual implementation of such a change," states the petitioners' brief. Currently, direct-access customers - largely big energy users - make up the equivalent of 10 percent of utilities' load, 27 percent of large industrial customers (those with demand above 500 kW), and 13 percent of commercial interests with loads between 20 and 500 kW. At the height of the direct-access market, nearly 43 percent of large industrial load and 17 percent of large commercial entities was served by nonutility providers. The commission has six months to respond. "If we choose to, we can hold hearings, solicit legal briefs, and take stakeholder comments to decide if the petition has merit and warrants a full investigation," said Terrie Prosper, CPUC spokesperson. - Elizabeth McCarthy

No Result