PUC to look into deregulation
That's Legislature's job, top lawmakers say as
plan evokes memories of energy crisis for some.

By Shane Goldmacher,
Bee Capitol Bureau — May 25, 2007
Story appeared in MAIN NEWS section, Page A3

The California Public Utilities Commission voted Thursday to open talks to return California to a deregulated retail energy market, despite objections from legislative leaders that it is "not within the discretion" of the utilities panel to do so.

The 4-1 vote means the PUC will open hearings, tentatively scheduled to run through 2009, on whether the panel has the legal authority to deregulate the retail energy market, and if so, how to do it and what such a market would look like.

"Frankly, it continues to astound me that we have choice in most everything in our lives but not electricity service," said the commission's president, Michael Peevey, who wrote the draft decision to begin studying deregulating the retail energy market, also known as "direct access."

"It is true that it's only been six years since we were in the energy crisis, and it is also true that crisis is behind us," Peevey said. "The rationale that justified the suspension of direct access, in my view, no
longer exists."

Direct access was one piece of the complex 1996 deregulation puzzle passed by the Legislature, a system that led to the California energy crisis in 2000 and 2001.

Energy experts disagree on how much of a role it played in the crisis.

In 2001, the Legislature in an emergency session told the PUC to suspend direct access in order to bring stability to the electricity market, with the suspension set to run through 2015, according to the Department of Water Resources.

Now, the PUC will study whether it has the authority to lift that suspension as early as 2009. If its answer is "yes," then it will study how to take that step.

The leaders of the Democratic-controlled Legislature, Senate President Pro Tem Don Perata and Assembly Speaker Fabian Núñez, as well as the lawmakers who head the committees overseeing the state's energy policy, said Wednesday in a letter to the commission that any such move "should be considered only by the Legislature."

But Norm Plotkin, executive director of the Alliance for Retail Energy Markets, which petitioned the PUC to bring back retail competition, welcomed Thursday's decision.

"We're pleased at the outcome and know there's lot of hard work ahead, but we're ready to engage," said Plotkin. "This is the first step in a long road to restoring consumer choice."

Matt Freedman of The Utility Reform Network, a consumer advocacy group, saw it differently.

"We're very disappointed that the PUC and the governor want to return California to the dark day of energy deregulation," he said.

Gov. Arnold Schwarzenegger has been a supporter of direct access, but his office has declined to comment on whether the PUC has the authority to lift the suspension.

The only dissenting vote Thursday came from Commissioner Timothy Simon, whose appointment to the PUC still must be confirmed by the state Senate. Though he generally favors competition, Simon said, "Introducing competition into electricity markets has not always brought about lower rates for
electric customers."

Peevey, and the majority of the independent panel, disagreed.

"So I say to those who will totally ... oppose direct access, why are you afraid of healthy debate?" Peevey asked at Thursday's meeting. "Have you no confidence the average consumer can make rational, reasonable choices? And how can consumer advocates, and I use the term advisedly, claim giving people choice (is) anti-consumer?"

About the writer:
The Bee's Shane Goldmacher can be reached at (916) 326-5544 or sgoldmacher@sacbee.com.