Direct access bill killed by Ca. Senate committee, but resurrection possible

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Electric Utility Week

A bill to bring back customer access to alternate energy suppliers may have been derailed in the California legislature last week but it is far from dead, according to its proponents.

The Senate Energy, Utilities and Communications Committee at a hearing last Tuesday in a 3-2 vote rejected a bill (AB 428), which had seen strong support in the Assembly as a way to repeal the present suspension of direct access ordered by the state Public Utilities Commission in September 2001.

The vote, however, is not the end of direct access this year even though it has been bumped to next year’s session for further consideration, predicted Dan Pellissier, aide for bill author Assemblyman Keith Richman, on Wednesday. Richman does not want to drop the issue so he will consider his options such as a rule waiver to rehear the bill or putting the bill’s language in another measure that has not been voted down, he said.

Norm Plotkin, lobbyist for The Alliance for Retail Energy Markets, said his group will continue to push for the bill alongside Richman since he believes it is critical that clarity be brought to whether customers will have choice, especially since the state’s investor-owned utilities are working on long-term resources plans by year-end. If IOUs sign power contracts to meet anticipated load, any direct access allowed later will complicate what customers must pay to exit or return to bundled service in order that IOU power costs are paid, he said.

AREM and other direct access advocates at the hearing supported Richman’s bill, which establishes four new classes of IOU customers who may opt for direct access under different conditions. ”Core” customers would be defined as those with demand under 500 kW, while ”non-core” customers would be those with demand over that amount. The two other classes include ”core-elect” customers, or those non-core customers that choose to be served by IOUs, and customers taking retail service from affiliated generators.

By Jan. 1, 2005, the PUC would have to adopt rules to implement the bill, including a deadline by June 30, 2005, for non-core customers to elect core-elect service for at least three years or to elect direct access. Non-core customers who fail to make an election are switched to default service. Beginning Jan. 1, 2006, IOUs must provide commodity service to core customers, as well as core-elect customers that elect to receive service for a minimum term of three years.

The PUC would also be charged with creating provisions to ensure prompt recovery of reasonable costs an IOU incurs to serve customers and provisions to ensure there is no cost shifting between customer classes.

Besides direct access advocates, PUC Commissioner Susan Kennedy at the hearing offered her support, saying that the regulators ”screwed up” when they suspended direct access and that the bill provided the ”framework to move forward.” Small consumer advocates, however, said that the bill would favor large customers, which would be free to switch from the open market back to utility service while leaving bundled, or core, ratepayers to pay for more power to serve their potential need. ”[Large customers] want the best of both worlds, ” said Doug Heller, spokesman for the Foundation for Taxpayer and Consumer Rights.

Committee Chair Sen. Debra Bowen, who voted against the bill, did not believe that Richman’s bill would provide a better alternative to language in a broad energy re-regulation bill she co-sponsored with Sen. Joseph Dunn. The bill (SB 888) until last week had language to have the PUC craft a direct access plan for enactment by the Legislature based on guidelines protecting cost shifting.

”I do believe there is a role for the private sector in competition, but given how critical each decision is…I’d really like to see the entire package before it takes effect, and I was comfortable doing that in SB 888,” she said.

Consumer Watchdog
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