direct access 8 / 10 / 01 below is a brief summary of the main issues regarding direct access . we will continue to the follow the progress and keep you updated .
summary :
direct access was designed to break utility monopolies and was a key component of california ' s 1996 deregulation law . under this concept , all customers could directly access an energy provider other than their regulated utility . the debate over direct access is at the heart of a complicated attempt to solve california ' s costly power crisis . it will determine whether businesses , with residential customers , pay for the bulk of the state ' s future energy purchases . it also could determine whether southern california edison , the state ' s cash - strapped no . 2 utility , will avoid bankruptcy , and whether deregulation will survive in any form .
big businesses , free - market advocates and alternative energy providers have lobbied state legislators to find a way to keep so - called " direct access " . now , as the state prepares to sell $ 13 . 4 billion in bonds to begin paying off its debt , legislators and energy officials say they must prevent big businesses from wiggling out of that obligation by closing off their direct - access escape route . regulators are concerned that if businesses flee the system , the state will be stuck with too much electricity under long - term electricity contracts through 2021 . that would mean residential ratepayers would be stuck paying the bulk of the $ 43 billion in future power costs , a point that has enraged consumer groups . currently , only about 88 , 000 customers buy their energy through direct access ( per cec statistics ) , including about 10 , 000 large commercial / industrial customers , and about 78 , 000 residences . alternative service providers shifted most of their customers back to california ' s primary utility suppliers ( socal ed . , pg & e , sdg & e ) earlier this year when prices skyrocketed and they could no longer compete with utility rates capped by the legislature .
california legislators argue that direct access is the keystone of the latest edison bailout plan , sponsored by assembly speaker pro tem fred keeley . under the plan , the 3 , 600 largest businesses would agree to pay $ 3 . 1 billion of edison ' s debts over 15 years . in exchange , businesses would be allowed to secure their own power contracts by 2003 , but not without first paying an " exit fee . " the fees and which parties would be exempt remain undetermined , however , they would include a surcharge or a complicated calculation in which businesses would pay a percentage of future energy purchases . it is likely that whatever compromise legislators are able to reach regarding direct access , california ' s business community will have extreme difficulty accepting the terms .
to ensure their efforts at resolving the direct access dilemma and abate fears of a collapsing state budget , lawmakers have gone so far as to introduce two bills , ( one sponsored by sen . bowen and defeated in july , and a second by assemblyman dave kelley , ) that would rescind language in previous legislation that authorized the public utilities commission to block direct access . the california puc has thus far stayed a decision on the matter , but is expected to rule by august 23 rd .
complicating the issue is wall street . the state ' s bankers , led by j . p morgan , are nervous about selling as much as $ 13 . 4 billion in planned state bonds if businesses ( currently the largest ratepayers in the state , after governments ) find a way out of the system . the bonds are meant to repay the state for $ 8 . 2 billion in power - buying costs so far this year and to cover some future costs . business and residential electricity customers would repay the bonds through a surcharge on their utility bills . if businesses were allowed to sign on with outside energy providers , that revenue stream would be in jeopardy .
direct access 8 / 10 / 01
below is a brief summary of the main issues regarding direct access . we will continue to the follow the progress and keep you updated .
summary :
direct access was designed to break utility monopolies and was a key component of california ' s 1996 deregulation law . under this concept , all customers could directly access an energy provider other than their regulated utility . the debate over direct access is at the heart of a complicated attempt to solve california ' s costly power crisis . it will determine whether businesses , with residential customers , pay for the bulk of the state ' s future energy purchases . it also could determine whether southern california edison , the state ' s cash - strapped no . 2 utility , will avoid bankruptcy , and whether deregulation will survive in any form .
big businesses , free - market advocates and alternative energy providers have lobbied state legislators to find a way to keep so - called " direct access " . now , as the state prepares to sell $ 13 . 4 billion in bonds to begin paying off its debt , legislators and energy officials say they must prevent big businesses from wiggling out of that obligation by closing off their direct - access escape route . regulators are concerned that if businesses flee the system , the state will be stuck with too much electricity under long - term electricity contracts through 2021 . that would mean residential ratepayers would be stuck paying the bulk of the $ 43 billion in future power costs , a point that has enraged consumer groups . currently , only about 88 , 000 customers buy their energy through direct access ( per cec statistics ) , including about 10 , 000 large commercial / industrial customers , and about 78 , 000 residences . alternative service providers shifted most of their customers back to california ' s primary utility suppliers ( socal ed . , pg & e , sdg & e ) earlier this year when prices skyrocketed and they could no longer compete with utility rates capped by the legislature .
california legislators argue that direct access is the keystone of the latest edison bailout plan , sponsored by assembly speaker pro tem fred keeley . under the plan , the 3 , 600 largest businesses would agree to pay $ 3 . 1 billion of edison ' s debts over 15 years . in exchange , businesses would be allowed to secure their own power contracts by 2003 , but not without first paying an " exit fee . " the fees and which parties would be exempt remain undetermined , however , they would include a surcharge or a complicated calculation in which businesses would pay a percentage of future energy purchases . it is likely that whatever compromise legislators are able to reach regarding direct access , california ' s business community will have extreme difficulty accepting the terms .
to ensure their efforts at resolving the direct access dilemma and abate fears of a collapsing state budget , lawmakers have gone so far as to introduce two bills , ( one sponsored by sen . bowen and defeated in july , and a second by assemblyman dave kelley , ) that would rescind language in previous legislation that authorized the public utilities commission to block direct access . the california puc has thus far stayed a decision on the matter , but is expected to rule by august 23 rd .
complicating the issue is wall street . the state ' s bankers , led by j . p morgan , are nervous about selling as much as $ 13 . 4 billion in planned state bonds if businesses ( currently the largest ratepayers in the state , after governments ) find a way out of the system . the bonds are meant to repay the state for $ 8 . 2 billion in power - buying costs so far this year and to cover some future costs . business and residential electricity customers would repay the bonds through a surcharge on their utility bills . if businesses were allowed to sign on with outside energy providers , that revenue stream would be in jeopardy .