California takes another look at deregulation


Michael R. Peevey,
San Francisco, CA, U.S.A. — (METERING.COM) — May 29, 2007 – The California Public Utilities Commission (PUC) has agreed to consider whether, or under what conditions, the current suspension on ‘direct access’ should be lifted. Direct access is a retail service option whereby eligible customers purchase electricity from an independent supplier rather than from an investor-owned utility.

The PUC determined that, given the changes that have occurred since the energy crisis in 2001 in terms of regulatory and market reforms, the time has come to consider the possibility of lifting the suspension on direct access and whether that would bring the benefits of competition to Californians.

Assembly Bill (AB) 1X requires direct access suspension until the California Department of Water Resources (DWR) no longer supplies power under AB 1X. Although DWR’s authority to enter into new power contracts terminated as of January 1, 2003, its authority to sell electric power delivered under previously signed contracts continues.

The PUC intends to resolve whether, or under what conditions, it may have legal discretion to lift the direct access suspension. In setting the scope of the proceeding opened today, the PUC seeks to ensure that any program to reinstitute retail competition be guided by sound legal principles, with careful safeguarding of the relevant public policy interests.

"Consumers have choices for most of the purchases they make and we will evaluate whether and how that may include electricity," said PUC President Michael R. Peevey. "We will conduct this proceeding in a careful and balanced manner and take into account any lessons to be learned from previous efforts to bring competition to electric retail markets. If we ultimately conclude that legislative action is required to reopen direct access, this process will have framed the issues and provided a sound basis for further debate in Sacramento."

The proceeding opened today consists of three sequential phases:

  1. Phase I: Examines the PUC’s legal authority to lift the direct access suspension.
  2. Phase II: Considers the public policy issues that surround lifting the direct access suspension and any and all applicable wholesale market structure issues.
  3. Phase III: Develops the rules that should govern a reinstituted direct access market. For example, entry, exit, switching, default service arrangements, and cost recovery issues, among others.

Today’s decision responds to a request by the Alliance for Retail Energy Markets on behalf of 38 petitioners and has more than 140 supportive entities that endorse the goals