Munis Fight Potential State Mandates, Fees

Public power agencies? autonomy is being challenged at the Legislature with an unprecedented number of potential state-imposed mandates?particularly for munis that want to expand their rate base. Among the various legislative measures aimed at municipal power agencies are ones assessing some Pacific Gas & Electric bankruptcy fees on new muni customers and slapping on resource-adequacy requirements. In addition, there is a tug of war between the Senate and the Assembly over whether to require local power agencies to meet the 20 percent renewables portfolio standard, minus the financial escape clause given to investor-owned utilities. ?Very frequently we push back state intrusion onto local decision making and regulatory authority, but this year it is coming from all fronts,? said John Fistolera, Northern California Power Agency legislative director. Many see the effort at the state Capitol to impose state controls on the agencies?which are given autonomy under the state constitution?as a backlash from deregulation. The free-market attempt wreaked havoc on investor-owned utilities but left their public counterparts relatively unscathed. ?Since AB 1890 there have been winners and losers, and this is part of an attempt by the Legislature to level the playing field,? said Henry Martinez, chief operations officer for the Los Angeles Department of Water & Power. LADWP is not too threatened by the Legislature because it has no intention of expanding. At the same time, Martinez and others wondered what benefits placing state controls on local agencies would provide. Munis object to a one-size-fits-all state standard being applied to a diverse group of agencies. ?We do what is best for our customers,? said John Roukema, Silicon Valley Power assistant director. Muni representatives note they have maintained their obligation to serve customers and are responsive to their needs, not those of shareholders. And they are the ones building power plants and adding capacity. ?Legislators? reward for weathering the crisis is to bring us into the regulatory structure that crippled two of the three IOUs and bankrupted the third,? Fistolera said. Many munis that fall short of the state?s 20 percent green power standard don?t object to meeting the state?s 20 percent green power requirement, which may be added to SB 1478, because many of their customers support it, and being anti-renewables is not politically acceptable. The issue largely turns on the possible disparity of application. The provision allowing investor-owned utilities to cover renewable supplies that cost more than an established benchmark price to be covered by public-goods money probably won?t be available to public utilities. ?If there is going to be a level playing field, let?s make it truly level,? said Ignacio Troncoso, Glendale director of public service. The legislation of greatest concern to local agencies, particularly to the Merced and Modesto Irrigation Districts, is Senator Debra Bowen?s (D-Redondo Beach) SB 772. That bill would impose bankruptcy fees on new muni customers because these districts share territory with PG&E (see Circuit , April 9, 2004). Capitol sources don?t see it as fair but say the matter is about sharing the pain?either PG&E customers pay more or their cost is reduced by spreading the cost among more people. The CPUC has been given the job of deciding who pays and how much, a prospect that does not reassure local agencies. ?The PUC in this regard is not exactly unbiased,? said Mike Pretto, Silicon Valley Power?s manager of marketing and prices.

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Munis Fight Potential State Mandates, Fees

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