Schwarzenegger is said to be in agreement with the opposition to the revised measure.

Los Angeles Times

The Legislature’s scaled-back plan to revamp California’s electricity system got a jolt Tuesday when a key advisor to the governor declared his opposition to the energy bill, saying it would “increase regulatory uncertainty and market instability.”

Gov. Arnold Schwarzenegger‘s secretary for resources, Mike Chrisman, outlined his disapproval in a letter to the energy bill’s author, Assembly Speaker Fabian Nunez (D-Los Angeles). Chrisman provided Nunez with a proposal that, in the secretary’s words, would “delete the entire bill” except for a few sections and tack on deregulation provisions favored by Schwarzenegger.

A Schwarzenegger spokeswoman said that the governor “has been fully briefed” on Chrisman’s position and that “he shares that position.” Chrisman’s letter stopped short of threatening a Schwarzenegger veto if the bill were passed in its current form, but the implication was there.

Nunez said he was reviewing the letter and proposed amendments. “Obviously, we have some disagreements,” Nunez said. “We’re going to continue our efforts to craft an energy plan that provides California’s residents with stable energy supplies that provide good value to homeowners and small businesses.”

The bill, backed by Southern California Edison parent Edison International, has won approval from the Assembly and the Senate’s committee on energy, utilities and communications. It now faces review by the Senate Appropriations Committee.

The debate over the state’s energy policy, meanwhile, is taking on greater importance as hot summer weather continues to strain California’s electricity supplies. Despite public pleas for power conservation, Californians on Tuesday set another record for electricity consumption.

Tuesday’s formal opposition from the governor’s camp follows a surprise move by Nunez on Monday to strip the energy bill of a key element that was backed by Schwarzenegger but despised by consumer groups.

Gone from the bill is a so-called direct-access provision that would allow corporations and other large electricity users to purchase energy on the wholesale market instead of through the utilities. Consumer groups worried that large businesses would flee traditional utilities like Southern California Edison, leaving small business and residential consumers stuck footing the bills for new plant and power line construction and the ongoing costs of the state’s 2000-01 electricity crisis.

“We certainly are gratified that the speaker has removed the deregulation elements from this energy bill because Californians have no desire to head down memory lane with energy policy,” said Douglas Heller, executive director of the Foundation for Taxpayer and Consumer Rights, a Santa Monica group that opposes deregulating the state’s power market.

One of Schwarzenegger’s amendments would reinstate provisions for direct access. Said Ashley Snee, a spokeswoman for the governor, “The only element necessary for legislative action is direct access, and this bill no longer addresses that issue.”

Still in Nunez’s bill are provisions that would reinforce efforts by the state Public Utilities Commission to set minimum levels for power supplies and encourage investment in new plants at reasonable cost.