SAN FRANCISCO -- Consumer advocates warned yesterday that a week's delay by state power regulators on issues key to dismantling deregulation could lead to residential customers shouldering most of the state's $9.5 billion power bill.

During that week, the consumer advocates fear, big businesses will try to persuade state officials to continue direct access -- an option that allows customers to switch from local utilities to generally lower-cost power providers.

If direct access is continued and big businesses opt to go with companies such as Enron or Green Mountain Energy, that would reduce the pool of ratepayers from which the state collects a percentage of rates to recoup its power-buying costs.

That could leave residential customers paying the bill for energy purchases the state had to make this year to keep the lights on throughout California, consumer groups said.

The Legislature ordered the Public Utilities Commission to suspend direct access in order to lessen the blow to each ratepayer by spreading the cost across as many customers as possible.

At yesterday's packed meeting, the PUC again delayed suspending direct access retroactive to July 1. Direct-access proponents have vowed to sue the PUC if contracts signed since then are nullified.

State Treasurer Phil Angelides said the state will have to re-time the sale of $12.5 billion in bonds.

"This bond sale is essential to repay the general fund, ensuring funding for critical programs such as education, health care and children's services," Angelides said. "This office will release a revised timetable for bond issuance after the PUC has acted."

"I think we are being negligent in failing to respond to this threat," said PUC Commissioner Carl Wood. "What we are faced with, with the likelihood of direct access continuing, is that the cost will be dumped on small businesses and consumers."

Businesses successfully lobbied for less of a rate-hike burden in the spring, and consumer advocates worry that businesses will find a way to keep direct access as a way to avoid paying their share of power bought by the state.

Direct access was a key component of the state's effort to deregulate its electricity market. Its impending demise marks the latest dismantling of deregulation,

Lawmakers promoted direct access as the method by which deregulation would foster competition and trigger lower electric rates.

After power costs soared earlier this year and California enacted the nation's second-highest electric rates, the state has spent billions of taxpayer dollars buying power, created an agency to build power plants, tried to buy transmission lines and now is trying to keep competing utilities out.

Energy marketers and direct-access proponents renewed vows for a legal battle, though only 200,000 customers switched utilities at any one time since the launch of deregulation in 1998.

The PUC delayed votes on several key issues that also would affect Californians' electric bills and further dismantle deregulation, in order to have more time to review a flood of comments:

A proposal to raise rates for San Diego Gas & Electric Co. residential customers by an average of 12 percent.

A proposal to grant the state's power-buying agency the authority to raise electric rates on its own without PUC review to ensure that such rates are justified.

A proposal that bills Pacific Gas and Electric Co. $6.5 billion, Southern California Edison Co. $4 billion and SDG&E $1.5 billion to help the state recoup its power-buying costs.

A little easier to read......

Residents may be stuck with tab, advocates say

By Karen Gaudette
ASSOCIATED PRESS

September 7, 2001