Disagreements over Prop. 80 Get Airing

By Published On: September 9, 2005

Opponents say the impact of reregulation initiative Proposition 80, if voted into law November 8, is unclear at best and will create more chaos in the hybrid market. Proponents maintain that its impact is straightforward and good for consumers. “It’s widely misunderstood,” Mike Florio, The Utility Reform Network senior attorney, explained to the Power Association of Northern California September 6. The consumer organization put the measure on the ballot with the financial backing of several unions. Florio suggested that the initiative simply takes existing California Public Utilities Commission policy, such as that regarding the renewables portfolio and direct access, and puts it into law. “It’s a very modest, commonsense measure,” he added. “It’s not a remonopolization measure.” Opponents add that it’s anything but simple and that its passage guarantees protracted litigation. “What’s it adding besides ambiguity?” said Jan Smutny-Jones, Independent Energy Producers executive director. He maintains it’s not so much a policy initiative as a political football to be hurled at the governor by the unions with whom Schwarzenegger picked a fight-including teachers and prison guards. Disagreements over what the initiative would accomplish include: <b>Renewables:</b> Proponents say it codifies the state regulatory goal of having investor-owned utilities include 20 percent renewable power in their electricity portfolios by 2010. Others contend that the wording would cap renewables at 20 percent instead of allowing increased use of their power. A third argument is that it would require increasing increments of 1 percent more renewable power per year out to the future. <b>Direct access:</b> Backers contend that a halt to direct access is needed so utilities can plan for future power supplies and have a base of customers who will be there to pay for it. If direct access to alternative, nonutility suppliers is allowed, they argue, utilities cannot make long-term contracts with suppliers because utilities won’t know who will be around to pay for it. Detractors say the measure is an oxymoron because it prohibits business customers from having direct access but allows entire cities to leave the utilities’ fold and to offer community-choice access. Community-choice access allows a municipality or a district-such as the East Bay Municipal Utility District-to aggregate its customers and provide electrical service instead of investor-owned utilities, and presumably at a discounted retail price. <b>Increased financial certainty:</b> Prop. 80 proponents argue that canceling direct access and putting nonutility generators under regulation will increase certainty in the financial markets. Thus, they say, it will allow for new power plant financing. Opponents, such as Smutny-Jones, say that current, evolving regulations at both the state and federal levels are taking care of the financial risk problem. <b>Competitiveness:</b> The initiative’s advocates say they absolutely want more competition in bidding for new power plant development because it’s the only way to drive down costs. Detractors contend that Prop. 80 muddies the waters as to who would be allowed to compete because that provision is ambiguous. <b>Remonopolization:</b> Proponents deny that the ballot measure is an attempt at solidifying vertically integrated utilities. Opponents call it a “poison pill” that would demolish the current hybrid/competitive market and set utilities back up in an indomitable position.

Share this story

Not a member yet?

Subscribe Now