Gino DiCaro

Gov. Urged to Veto New Layer of Utility Procurement Requirements

By Gino DiCaro, VP, Communications

Capitol Update, Sept. 3, 2004 Share this on FacebookTweet thisEmail this to a friend

Assembly Speaker Fabian Nunez's (D-Los Angeles) utility procurement and cost recovery legislation, AB 2006, squeaked through the Assembly on the final night of the 2003-04 legislative session and is now on the Governor's desk.

Governor Schwarzenegger is expected to veto the measure which has the support of Southern California Edison and utility labor groups but is opposed by a long list of business organizations. CMTA has sent a letter to the Governor urging him to veto the bill.

AB 2006 undermines AB 57 (Roderick Wright, 2002) by duplicating and adding a new layer of requirements to the procurement planning process currently underway at the California Public Utilities Commission. The requirement for a new and additional planning process would impede and delay resolution of critical resource adequacy proceedings and undermine the goal of bringing new resources on line as soon as possible.

Additionally, the bill would give investor-owned utilities the ability to build power plants outside a competitive process. This would put upward pressure on rates if utilities are not required to buy only the lowest cost power.

Finally, the bill fails to require the elimination of cross-class subsidies and the establishment of cost-based rates, i.e., rates that are based on sound cost-causation principles and reflect the cost to serve various customer classes.

California manufacturers will not thrive in the new global marketplace unless California has a state energy policy that will attract new private investment in generation and ensures that utility rates are fair to all customers.
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