By the OGJ Online Staff
HOUSTON, Sept. 5, 2001 – California public utility regulators are expected to retroactively end direct access to electricity suppliers other than the local utility Thursday, after delaying a vote on the issue at the request of California legislators.
California Public Utilities Pres. Loretta Lynch Wednesday said the action is required under legislation adopted earlier this year, and commissioners are acting now because state officials cannot proceed with a proposed $13 billion bond issue, unless the PUC suspends direct access.
Many groups have lobbied the legislature and the PUC for an exemption, including green power suppliers, and large industrial consumers. The provision was included to insure the state gets enough money to pay for the power it is buying on behalf of California’s cash strapped utilities.
Many business rushed to buy power on long-term contracts before regulators shut down the direct access market. But the draft decision calls for suspension of the direct access market retroactive to July 6. If the commission adopts the preliminary decision, contracts entered into during the past 2 months could be void.
Previous legislation and draft decisions from the PUC suggested the direct-access market would not be suspended retroactively. The Association of California Water Agencies said ending direct access will harm development of new green power sources. It recommended that at the very least, customers should be allowed to purchase green power through direct access.
Early this year the California Department of Water Resources began buying electricity on behalf of the state’s three major utilities, Pacific Gas & Electric Co., San Diego Gas & Electric Co., and Southern California Edison Co. The utilities could no longer get credit to buy power, after prices skyrocketed, and couldn’t pass on the high costs because retail rates were frozen.
The state plans to reimburse the general fund by floating bonds to be paid off by income from utility revenue. To obtain the highest bond rating, state officials have said they can’t afford to forego any revenue resulting from customers who have entered into direct access contracts.