Treasurer urges grid investment

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Contra Costa Times (California)

California Treasurer Phil Angelides, in what was billed as “a major announcement regarding California’s energy future,” called Tuesday for investment in the electricity transmission grid by a state agency that Gov.-elect Arnold Schwarzenegger wants to abolish.

Joined by consumer advocates and one of Gov. Gray Davis‘ top energy advisers, Angelides called for public funding of transmission projects by the state Power Authority, which was created during the 2000-01 energy crisis. He also called for the state to develop a 10-year transmission plan.

Besides addressing a complex but obscure policy question, the proposal was a vehicle for Angelides — who plans to run for governor in 2006 — to differentiate his energy policy from that of Schwarzenegger, who has called for junking the Power Authority.

Because expanded transmission is favored by many who seek to salvage California’s five-year effort to expand electricity competition and continue dismantling its system of regulated monopoly utilities, Angelides also positioned himself as the real savior of deregulation. A stronger grid is needed for “a truly competitive market,” he said.

The Schwarzenegger camp declined to comment on the specifics of the Angelides proposal. While it might have been better received in private, said spokesman Rob Stutzman, “We’ll take a look at it.”

The new governor will take over a state still smarting from the 2000-01 crisis that included rolling blackouts, soaring wholesale prices and market manipulation by power sellers. Elected on a platform favoring competition and deregulation but short on specifics, Schwarzenegger’s success at fending off another energy crisis could be a big factor in his re-election prospects.

Angelides argued that will require government action to eliminate transmission bottlenecks.

That made sense to Mike Florio, a lawyer for the Utility Reform Network, a consumer group. “Focusing on transmission is a good plan, for it’s something that isn’t that well-suited to the private market,” he said.

David Freeman, a Davis adviser who recently resigned as chairman of the Power Authority, opined that a stronger grid could “make the competitive system manipulator-proof.”

Not everyone was ready to join the charge. Representatives of the state Public Utilities Commission, which oversees utility grid projects, were notably absent from the Angelides event. Terrie Prosper, a PUC spokeswoman, said later that the PUC had approved 111 transmission projects since January 2001, and defended its decision to kill or postpone expensive projects that were deemed unnecessary.

Bob Mitchell, the chief executive of Trans-elect Inc., the company that is expanding Path 15, the critical transmission bottleneck between Northern and Southern California, pooh-poohed the need for public funding. “We can attract more private capital to California … certainly enough to meet the needs in California,” he said.

And talk about making electricity competition work led Doug Heller of the Foundation for Taxpayer and Consumer Rights, which advocates a return to utility regulation, to leaven his support for the Angelides initiative with a warning. “If it means fighting Schwarzenegger, if it means fighting Angelides or it means fighting George Bush, we’re going to fight to make sure we have a regulated system,” he said in an interview.

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