Lower gas prices not a sign power crisis is over, commissioner says

Declining natural gas prices should not lead Californians to decide the electric power crisis is over, Geoffrey Brown, a member of the California Public Utilities Commission, said Wednesday. Brown spoke at a briefing prior to Thursday's commission meeting.


By the OGJ Online Staff

HOUSTON, June 6 -- Declining natural gas prices should not lead Californians to decide the electric power crisis is over, Geoffrey Brown, a member of the California Public Utilities Commission, said Wednesday.

Brown spoke at a briefing prior to Thursday's commission meeting. The agenda includes a number of items dealing with natural gas, including a proposal to change curtailment rules for certain classes of customers of San Diego Gas & Electric Co.

Gas prices go "up and down" and it is "premature" to say energy prices are in a downward trend, Brown said. "It will take some time before we know which way they are going." He attributed the decline in prices to the fact the industry is "under great scrutiny" or possibly to greater supply. But Brown suggested despite price spikes and dips, energy prices on average have been rising.

With July, August, and September still ahead, Brown said it would be unwise for people to let down their guard and resume old consumption patterns. California is still short of power and consumption is still high, he said.

"We would have had to face this crisis sooner or later," he said. "Possibly, it was better to do it during a period of prosperity" rather than when the state was in economically depressed.

Brown also mounted a defense of the PUC for not including items on this week's agenda needed to keep Southern California Edison Co., Rosemead, Calif., out of bankruptcy under a plan negotiated between the utility and Gov. Gray Davis.

Southern California Edison said a June 8 deadline for the PUC to act or else the utility could back out of the proposed deal. The near-bankrupt utility and the governor negotiated a "memorandum of understanding" or MOU in March that would bail the utility out and keep power flowing to its customers. The state would end up owning Southern California Edison's transmission system, which the state would pay for from the proceeds of a bond issue. The bonds would be serviced by revenue from ratepayers.

Brown said the PUC is not "indifferent" to the memorandum of understanding and will give it increasing attention. Some of the items are included on the Jun 14 agenda, Brown noted, but in a representative government "you can't foretell the outcome."

He also said the commission will be spending much of its time in the next 2 months figuring out how money collected by Southern California Edison Co. and Pacific Gas & Electric Co. should be allocated between the two utilities and the California Department of Water Resources which is buying power on behalf of ratepayers.

While Pacific Gas & Electric's bankruptcy protection petition is a complicating factor, Brown said the judge will make his decision, and "we will do what we have to do under the law."

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