Calif. regulators eye plans for electric utilities

The five-member commission is working on a package of resource policies and requirements for California's investor-owned utilities to avoid a repeat of the supply shortages and blackouts that spilled across the grid during the 2000-2001 electricity crisis.

"California is growing fast and we have to make sure we are doing everything right to build a sound electricity market," said CPUC spokeswoman Terrie Prosper.

A heat wave and surging demand for air conditioning hit the California grid this week, with demand climbing toward a record of more than 44,700 megawatts recently.

One megawatt is enough power for about 1,000 homes but in some areas it can shrink to as few as 250 homes during summer hot spells.

Since the 2000-2001 emergency, California has added new power plants and transmission lines among other steps to avoid serious grid problems but more work is urgently needed, energy officials say.

COMPETITIVE BIDDING

Gov. Arnold Schwarzenegger is pushing hard for more competition at the wholesale and retail levels in the electricity market, including competitive bidding to build generating stations, plus a more reliable grid and lower power prices.

Through his secretary of resources, Schwarzenegger has attacked an energy bill by Assembly Speaker Fabian Nunez, which is backed by utility Southern California Edison, a unit of Edison International.

In a letter to Nunez, Mike Crisman, resources secretary, said the bill "will increase regulatory uncertainty and market instability, resulting in the delay of construction and acquisition of critically needed resources."

Crisman said the bill also should allow electricity customers to pick their own power supplier, a feature of the state's flawed 1996 electricity deregulation law that was later suspended.

Michael Peevey, president of the CPUC, backs Schwarzenegger's policies, including a minimum power reserve margin of 15 percent, "customer choice" in a core/non-core market, energy efficiency, and more supplies of renewable energy.

Independent power producer Calpine Corp. urges more market competition in California, one of its principal markets.

"Competitive solicitation for new plants will flush out winners and losers and that's how business works in America," said Kent Robertson, a spokesman for the San Jose, California-based company.