California consumer groups urge continuation of retail choice

By Ann de Rouffignac
OGJ Online

HOUSTON, Aug. 21 -- California industry and consumer groups have asked state lawmakers to intervene and also filed a motion with the California Public Utilities Commission to stop state regulators from discontinuing retail choice for electricity.

After months of delay, the PUC Thursday is expected to suspend the 'direct access' program effective Sept. 1. Members of the Direct Access Coalition that includes electricity consumers such as Qualcomm, San Diego; Standard Metal Products, Gardena, Calif.; and Valley Industry & Commerce Association, San Fernando, Calif.; and others asked state elected officials to preserve consumers' right to shop for electricity. The group urged elected officials to take up quickly several pending bills in the legislature that would keep retail choice alive.

Reportedly, the PUC is suspending the program so the state will have the wherewithal to get better financial terms for its multibillion dollar bond sale planned to reimburse funds used to purchase electricity on behalf of the financially strapped utilities.

The Alliance for Retail Markets, representing other industry consumer groups and retail electricity providers, filed a motion last week with the PUC to urge the commission to continue direct access with several modifications.

The alliance that includes AES NewEnergy, a unit of AES Corp., Arlington, Va.; GreenMountain Energy Co., Austin, Tex.; the New Power Co., Purchase, NY; and others proposed retail choice continue for another 12 months. Under the proposal, direct access customers would pay a proportional share of the costs incurred by the general fund and help pay the utilities� debts.

A PUC proceeding would be set to determine if direct access customers would also share in the costs of the Department of Water Resources (DWR) long-term contracts. Customers who have been operating under continuous direct access contracts since May 2000 would not pay the DWR-related costs, and absent legislation, the PUC would revisit the program in 12 months.

At that time, the commission could suspend or modify it. All direct access contracts in effect during the review period would not be subject to suspension or other changes, according to the proposal filed with the PUC.

"If we restrict direct access, it would be like buying a Commodore with a floppy disk�a step in the wrong direction," said Daniel Corrales, spokesman for Standard Metal Products on a conference call.

Corrales said the family-owned metal works shop must compete in a global environment so costs have to be cut to the bone. By shopping for power, the company got a contract that reduced its costs by 25%. He was concerned the company might have to relocate, if the shopping option that reduced its electricity bill were taken away by state decree.

Other power users had similar concerns, but said they would not have the option to relocate. A spokesman for the California Grocers Association said its members must operate refrigerators 24 hr/day 7 days/week. He emphasized shopping for electricity is crucial to grocers who can't shift electricity consumption to off peak hours of the day to save money.

Scott Schmidt of the Valley Industry & Commerce Association said the market should be used to fix the crisis. "Consumers should have options and choices to keep the status quo, self generate, or go to the market and buy their own power," he said.