Informing & Monitoring
» Capitol Updates
» Leg. Watch
» Press Releases
» Leg Vote Record
» CA Cost Index
» Features
» Audio & Reports
» Job Data
» Calendar
» Coalitions
» Fed Update
» Policy Objectives
» Policy Principles
Membership
»Invest in CMTA
»About Us
»Yellow Pages
»Questions?
Conferences
Oct. 21 California's Regulatory Landscape -- GETTING IT RIGHT
Directories
»CMTA Staff
»Send us e-mail
»Directions to CMTA
»Rent Conference Room
Services & Discounts
»Group WC Program
»Discount Programs
»ETP
Grassroots Activism
Sign up to receive action alerts
 |
Warning: main(includes/datefix.php) [function.main]: failed to open stream: No such file or directory in /target/apacheweb/domains/cmta.net/htdocs/archive/energy_policies04.php on line 62 Warning: main() [function.include]: Failed opening 'includes/datefix.php' for inclusion (include_path='.:/usr/share/php:/usr/share/pear') in /target/apacheweb/domains/cmta.net/htdocs/archive/energy_policies04.php on line 62 California and 10 other states and Canadian provinces have moved ahead with plans to create a market for buying and selling pollution allowances. The Western Climate Initiative on Tuesday unveiled ... Rick Daysog in the Sacramento Bee » California's clean energy future threatened by federal delays, state officials say - Warning: main(includes/datefix.php) [function.main]: failed to open stream: No such file or directory in /target/apacheweb/domains/cmta.net/htdocs/archive/energy_policies04.php on line 62 Warning: main() [function.include]: Failed opening 'includes/datefix.php' for inclusion (include_path='.:/usr/share/php:/usr/share/pear') in /target/apacheweb/domains/cmta.net/htdocs/archive/energy_policies04.php on line 62 Plans for a massive expansion of clean energy in California are being jeopardized by federal foot-dragging, according to state officials who say that more than 20 nearly shovel-ready solar and wind ... Marc Lifscher in the L.A. Times » Calif global warming measure faces legal challenge - Warning: main(includes/datefix.php) [function.main]: failed to open stream: No such file or directory in /target/apacheweb/domains/cmta.net/htdocs/archive/energy_policies04.php on line 62 Warning: main() [function.include]: Failed opening 'includes/datefix.php' for inclusion (include_path='.:/usr/share/php:/usr/share/pear') in /target/apacheweb/domains/cmta.net/htdocs/archive/energy_policies04.php on line 62 A group that supports a November initiative to suspend California's landmark global warming law is challenging the proposed ballot description of the measure. The Howard Jarvis Taxpayers ... Christine Gasparac in the Ventura County Star Legislation to raise the state’s renewable portfolio standard from 20 to 30% will move through assembly policy committees to meet a July 2 deadline. The bill imposes a 2020 deadline on ... more» AB 32 Cap & Trade Program Development This Tuesday, June 22, the California Air Resources Board (CARB) is holding a workshop in Sacramento on Cost Containment and Offsets in the California Greenhouse Gas Cap-and-Trade ... more» Cap and Trade rulemaking picks up steam The California Air Resources Board plans to issue a greenhouse gas cap and trade program regulation by September 2010, to be approved by the CARB by year end. Concepts for the rule, part of ... more» Bill on Bisphenol-A expected back Last year, Senator Fran Pavley's (D-Agoura Hills) SB 797, stalled on the Assembly floor. This bill would prohibit, as of January 1, 20011, the manufacture, sale, or distribution in commerce of any ... more |
In the spring of 2001, large industrial customers of Pacific Gas & Electric and Southern California Edison received rate increases ranging from 80 to over 100 percent. The massive rate increase has dealt a devastating blow to California's manufacturers, as evidenced by recent employment and energy load figures. Since January, 2001, the state's manufacturing workforce has declined by 176,000 jobs, or 9 percent. During the same time period, industrial load has dropped nearly 10 percent. The drastic reduction in employment and energy usage by industrial customers since the 2001 rate hikes underscores the impact of the rate increase on economic activity. Unfortunately, projections for the near term look just as bleak. According to AUS Consultants, the rate increases will cause manufacturing sectors such as electrical equipment and machinery to lose $1.3 - $1.4 billion in total output over four years, and durable and non-durable goods manufacturers are projected to lose $4.5 and $3.2 billion worth of gross output, respectively. For the economy as a whole, this will result in an additional 34,000 lost jobs and nearly $18 billion in lost revenues and output. Meanwhile, the ability of California's manufacturers to compete with companies in other states is further undermined. With the rate hikes, California's electricity rates are nearly double the national average (93 percent). During the same time period, most of the nation's other high cost states have seen their electricity rates decline. The disparity in prices between California and its competitors will surely lead to a further decline in economic activity and permanent plant closures for many businesses. Now more than ever, California's industrial customers need relief from the massive rate increase imposed by the California Public Utilities Commission in 2001.
More businesses will fail or leave the state unless electricity rates are immediately reduced to more competitive levels. Providing rate relief to industrial customers will stop the hemorrhaging effect and stimulate investment in the manufacturing sector.
Specifically, we urge policymakers to:
- Reduce electric rates for industrial users by allocating all future rate decreases to the various classes in the same proportion as rates for each class were increased by Decision 01-05-064;
- Reduce electric rates for industrial users by eliminating the huge subsidies that industrial customers are required to provide to residential rates;
- Require that all shortfalls arising from residential baseline subsidies be borne solely by residential classes.
With exit fees in place and the issuance of DWR bonds, the focus of state policymakers should now be on reforming California's retail electricity market. As soon as possible, the Legislature should lift the suspension of direct access. Reinstating customer choice will provide significant economic and reliability benefits, both for direct access customers and the economy as a whole. It reduces the cost of doing business in California by allowing businesses to manage their energy costs. Public institutions such as the University of California and California State University system stand to benefit greatly as well. Equally important, a competitive retail electricity market benefits the market as a whole, including those customers who are not on direct access. If a customer needs a higher quality of service than the average consumer, customer choice gives them the option to pay more for that service, keeping prices lower for customers that do not need or choose to pay for that extra service. Direct access also establishes a competitive benchmark price against which the cost of bundled service can be evaluated. Customers are also in a position to sponsor new generation through contracts for supply, and thereby enhancing system reliability. Wholesale market reform is achieved as well, inasmuch as a viable direct access market promotes competition.
The notion of a competitive retail electricity market may be battered and bruised but the benefits are plain to seen and the timing couldn’t be better. It is a retail market reform whose time has come.
Core-Noncore
Establishing a distinction between core (residential and small commercial) and noncore (large commercial and industrial) customers may be beneficial if implemented in a rational manner. However, it is essential that the right of noncore customers to select direct access be fully restored and that reasonable rules be adopted to allow noncore customers to take bundled service from the utilities if they so desire. Noncore customers should not be required to make more than a two-year commitment for bundled service or to provide more than six-months notice of their desire to take or to exit from bundled service. Rather than establishing a separate portfolio of power to supply noncore customers seeking bundled service, these customers should be served from the core portfolio. The two-year commitment and six-month notice provisions will ensure that noncore customers taking bundled service will pay their full share of costs and will prevent customers from engaging in seasonal price arbitrages. Noncore customers taking bundled service should pay their share of the bundled portfolio cost and, upon leaving bundled service after fulfilling their two-year commitment and six-month notice requirements, they should have no further obligation to pay for the bundled portfolio.
Establish a Competitive Utility Procurement Process
To encourage the development of generation resources needed to maintain reliable and economic electric service for all Californians, the utilities should be required to conduct an open and fair competitive bid solicitation process to meet future needs. It is important that this process be designed and implemented to ensure that a level playing field exists and that utility affiliates do not have a competitive advantage. Utility affiliates should be permitted to participate in the competitive solicitation process only to the extent that they are physically and structurally separated from the utility, do not share employees, and do not receive any information that is not available to other bidders. An independent administrator (selected by the CPUC and paid for through fees recovered from the bidders) should conduct the bid solicitation and evaluate the bids in conjunction with the utility. To the extent the utility seeks to build and own its own generation facilities, it should comply with the existing “public convenience and necessity” requirements and should be required to demonstrate why its “self build” proposal is superior to other alternatives. The utilities should be assured of full cost recovery for all purchase power agreements and facilities approved under the above-described procedures.
Promote Customer Generation
Distributed generation enhances the reliability of the state's electric grid, and helps customers manage and stabilize their energy costs. Distributed generation also provides businesses with a "hedge" against utility and market prices, enabling them to avoid some of the volatility that has occurred in the wholesale energy markets. One of the key barriers to the deployment of distributed generation is standby rates. SBX1 28 (Sher) established a standby fee exemption for distributed generation until mid-2003. The CPUC has acted to extend this exemption on an interim basis. AB 2307 (Kehoe), which would have extended the standby fee exemption to 2006, stalled in the Senate Energy, Utilities, and Communications Committee. An extension of the standby fee exemption for several years would increase deployment of distributed generation, help customer-generators manage and stabilize their energy costs, and provide important reliability benefits to all Californians.
Extend Interruptible Programs
The interruptible programs should be extended at current incentive levels without any sunset provisions. These programs provide a rate discount to large customers in exchange for which service to these customers may be interrupted when power reserves reach critical lows. As it currently stands, these programs could be terminated by the CPUC as early as 2004. The merits of these long-standing programs are well established. Interruptible and curtailment programs have helped to provide energy reliability since their inception in the mid-1980s. Residential customers benefit from the increased reliability that demand reduction provides. Large industrial and commercial customers benefit by having additional options from which to manage their electricity loads and costs.
Real-Time Pricing
Most large customers already are subject to “time-of-use” rate schedules. Although real time pricing may offer additional benefits, it must be implemented in a manner that does not disrupt business operations. It seems likely that the greatest benefits from real-time pricing would occur in the large commercial market where lighting and HVAC loads represent a significant percentage of the customer’s total load. For manufacturing customers, lighting and HVAC represent a small percentage of the total load and, thus, any response to real-time price signals would require major changes in production processes and schedules. For companies operating on single or even two-shift operations where these types of production changes are not feasible, real-time pricing would dramatically increase rates for these customers. Therefore, it is critical that real-time pricing be implemented on a voluntary basis whereby customers can determine whether it would benefit their operations.