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Capitol may get utility issue 

ENERGY: Lawmakers probably will decide if providers can recoup billions from 
users. 
October 20, 2000

By KATE BERRY
The Orange County Register 

LOS ANGELES --- The Legislature likely will decide whether the state's three 
investor-owned utilities will be able to recoup $4.2 billion from consumers 
for the high cost of purchasing wholesale electricity this summer, a state 
assemblyman said Thursday at a meeting of the California Public Utilities 
Commission.

Assemblyman Rod Wright, D-Los Angeles, told state regulators that because so 
much money is at stake, the Legislature is the best forum to determine 
whether the utilities should recover billions in electricity costs that 
consumers have not paid because of a rate freeze.  He said the Legislature 
"will probably decide the issue" but that it also could end up in court.  
Wright is chairman of the Assembly Utility and Commerce Committee.

The utilities commission had no plans to vote on the issue Thursday.  Rather, 
it held its regularly scheduled meeting in Los Angeles to give consumer 
groups the opportunity to voice concerns on a variety of issues, ranging from 
electricity to telecommunications. 

About a dozen groups appealed to regulators to solve California's electricity 
crisis before prices escalate throughout the state.  They argued that 
low-income and minority residents would be hardest-hit if higher prices and 
the utilities' billions in costs are passed on to consumers.

The commission, the Legislature and the Federal Energy Regulatory Commission 
are working to resolve before next summer the issues that brought the state 
to the brink of rolling blackouts this summer. 

The unexpectedly high cost of power, coupled with rate caps for most 
utilities in the state, left utilities with a shortfall between the wholesale 
price of power utilities paid this summer and what they were able to collect 
from consumers under a rate freeze. 

The state's giant utilities - Southern California Edison, San Diego Gas & 
Electric and Pacific Gas & Electric - have filed petitions with state 
regulators to recover at least $4.2 billion.  Though Wright criticized 
aspects of the state's 2-year-old experiment with deregulation, "the 
constitution doesn't allow regulators to put the utilities in an upside-down 
situation," he said. 

"It's of grave concern to the public that this commission seems more willing 
to bail out the utilities than to represent consumers," Doug Heller, an 
assistant director of the Foundation for Taxpayer and Consumer Rights, told 
the utilities commission.

The commission voted Thursday on one issue of importance to about 2,500 large 
businesses throughout the state.  The companies, which volunteered to receive 
reduced electricity rates in exchange for having their power cut during peak 
periods of demand, helped keep California from suffering rolling blackouts 
this summer. 

On 17 days during the summer, state utilities called on large customers in 
voluntary programs to cut power use.  Many of the companies had planned to 
opt out of their contracts with utilities during a renewal period in 
November. 

But the PUC, citing a provision in the contracts, voted 4-1 to force the 
companies to remain in the contracts until March.

Only large industrial and commercial customers who signed up for the 
voluntary programs after 1998 can get out of their contracts in November. 

Gary Fabrizi, founder of Premier Utility Consultants in Laguna Niguel, said 
few commercial customers will be affected by the decision because most can 
now opt out in March, before the peak summer demand and the anticipation that 
more emergencies will be called next summer. 

But he said the vote limits the ability of businesses to make contracts with 
other service providers, such as Enron Energy Services Inc.  of Houston, 
before March.  That gives the large incumbent utilities, such as Edison and 
PG&E, months to ramp up their programs to sell energy services to large 
businesses.

"It's unclear if the commission is stalling or if they're trying to make 
arrangements that coincide with other interruptible programs," Fabrizi said.

In a related matter, the commission approved an application by PG&E to sell 
$1.4 billion in short-term debt, which the utility said it needs to cover the 
cost of wholesale power.  Edison was granted a similar request last month to 
sell $1.3 billion in short-term debt. 

The only residential customers affected have been confined to SDG&E in San 
Diego and south Orange County. 

Register staff writer Daniel Weintraub contributed to this report. 
		

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