By -- Source, San Jose Mercury News
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Over the objections of state legislators, the California Public Utilities Commission voted 3-2 to end, retroactive to Sept. 20, the right to choose your own power provider. The freedom to shop around for better power deals, called "direct access," was the cornerstone of the state's 1996 deregulation plan.
But the decision allows big companies and institutions -- such as the University of California and Wal-Mart Stores -- to keep the private power deals they made prior to Sept. 20. That's the time when many big power users switched from local providers such as Pacific Gas & Electric Co., Southern California Edison and San Diego Gas & Electric to cheaper energy service providers such as Enron or Calpine.
Those private deals have become an issue because, by not being local utility customers, the big power users avoided the rate hikes most customers saw in their monthly bills. And this very small group of big users won't have to pay for the $43 billion package of long-term energy contracts the state negotiated during the power crisis.
Unless the PUC charges this group of direct-access customers an exit fee, which is in the works, smaller businesses and residential users would have to foot the big users' portion of the $43 billion bill. That's estimated to be about $4.3 billion over the next 15 years. It's unclear how that would be arranged.
Direct-access customers also aren't contributing to the PUC's proposed bail-out plan for the bankrupt PG&E utility, which hinges on cash gathered from ratepayers.
The decision angered consumer groups and legislators. Thursday's vote appears to conflict with a key energy bill passed in Feb. 2001 that ordered the PUC to suspend direct access. But the PUC delayed suspending it, giving big power customers time to shop for other contracts.
"That's the equivalent of watching 10 people go out for an expensive dinner, then letting the glutton who ate the most skip out before the bill comes, sticking everyone else at the table with his share of the tab," Sen. Debra Bowen, D-Redondo Beach, said in a statement.
Bowen and Sen. John Burton, D-San Francisco, had written a joint letter to the PUC asking the commission to delay voting on the matter until they figured out a way to prevent shifting the extra costs to the utility's smaller customers. Although PUC President Loretta Lynch had put a hold on the vote, the commissioners voted to over-ride it.
Matt Freedman, staff attorney at The Utility Reform Network, called the arrangement a "a body blow to small consumers." Allowing all the private power deals to stand might not directly raise gas and electric bills for smaller consumers, but it could prevent already higher rates from coming down.
"We're not going to see rate reductions for years," Freedman said.
Lynch and Commissioner Carl Wood voted against the proposal. Voting for it were Commissioners Geoffrey Brown, Henry Duque and Michael Peevey, the former Southern California Edison executive whom Gov. Gray Davis appointed to the commission earlier this month to fill a vacancy. Peevey was an unpaid energy adviser to Davis during the energy crisis.
Brown said it's important that the PUC be consistent in its regulations. The commission simply can't be switching its positions when there are many other business transactions involved, he said.
Brown said the PUC will definitely charge the big users an exit fee to protect consumers, and that he hoped the PUC would have the fee in place within six months. Current estimates are exit fees totaling about $340 million a year for at least five years. If the PUC can't get such an exit fee in place, Brown said he would vote to revoke direct access all the way back to Jan. 2001, canceling even more private energy contracts.
