Gino DiCaro

Coalition Forming to Oppose Electricity 'Re-Reg' Bill

By Gino DiCaro, VP, Communications

Capitol Update, May 2, 2003 Share this on FacebookTweet thisEmail this to a friend

It may take a village to raise a child, but it takes a coalition to defeat a bill like Senate Bill 888 (Joseph Dunn, D-Santa Ana).

The electricity "re-regulation" bill is backed by Senate Democratic leaders and several key Democrats in the Assembly. That's the bad news. The good news is that important bills were passed last year to solve the most pressing problems in the California electricity markets. SB 888 is not only unnecessary, it threatens to derail the significant progress being made under that legislation.

CMTA has joined with other business organizations to defeat SB 888. The coalition includes direct access customers, the Alliance for Retail Energy Markets, California Chamber of Commerce, Independent Energy Producers, Pacific Gas and Electric and Sempra Energy. Environmental groups are opposed to the bill and think it does not do enough to ensure environmental goals.

SB 888 may be heard on Tuesday, May 6 in the Senate Energy, Utilities and Communications Committee, which has twice put off consideration of the bill.

The controversial measure repeals direct access and AB 1890, the landmark electric restructuring bill enacted in 1996. Among other things, the bill:

Prohibits the renewal or extension of direct access contracts; Authorizes new utility investment in generation and transmission; Prohibits the sale of utility power plants until 2010; Provides for utility cost recovery through cost-of-service ratemaking; and Allows private rights of action for dereliction of "duty" to ratepayers.

Dunn says he is authoring SB 888 to re-introduce sanity into California's electric market and encourage new investments in power plants. But the bill could actually do the opposite.

SB 888 repeals direct access, the centerpiece of electric restructuring, and with it the ability of customers to manage their own energy requirements. Direct access enables customers to choose an alternate power supplier, and to contract for energy supplies that meet their needs for price, reliability and level of risk. Customer choice made sense when electric restructuring was enacted in 1996 and still makes sense today. Without competition, consumers will always pay more, and receive less, than if they are able to choose between providers vying for their business.

In addition to eliminating direct access, SB 888 would discourage privately-financed generation and could lead to power supply shortages during the transition back to utility-built power plants.

The bill has the strong support of utility labor unions, trial lawyers, and residential ratepayer advocates, including TURN (The Utility Reform Network).

Meanwhile, there are two bills in the Assembly that move toward a sensible regulatory structure for electricity. AB 816 (Sarah Reyes, D-Fresno) lifts the suspension of direct access and AB 428 (Keith Richman, R-Northridge) establishes a core-noncore retail energy market. (CMTA has a "support if amended" position on AB 428, and will support the bill if large users are treated fairly as noncore customers.)

All companies on direct access contracts, or those interested in going to direct access in the future, should contact Joe Lyons, CMTA Policy Director - Energy, at for more information on joining the coalition.

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