Legislation to rebuild market a work in progress

The Assembly voted 49-24 to pass the bill by Assembly Speaker Fabian Nunez, D-Los Angeles.

Nunez's bill would let the state's largest electricity users to shop around for cheaper power a provision that was a cornerstone of California's ill- fated experiment with electricity deregulation in 1996.

"We need to bring the price down for the large energy users, but also make sure we take care of small businesses and residential customers,' Nunez said.

In 2001, California lawmakers halted "direct access' which allowed retail customers to leave their electricity utility and shop around for cheaper power. Utilities had ran up billions in debts buying wholesale power for their customers at sky-high rates. But utility rates rose to pay for that debt, customers began fleeing for cheaper power, leaving the remaining customers stuck with the bill.

Consumer advocates are concerned there isn't a way to avoid that cost-shifting and would like to continue the ban on direct access.

But allowing large electricity users to leave utility service will foster innovation in energy production, said Assemblyman Keith Richman, R-Chatsworth.

Richman objected, however, to the bill's provision requiring direct access customers to give five years' notice to the utilities before leaving or returning, calling that a "true impediment' to choice.

But Nunez's bill also requires utilities to arrange for sufficient power for all their customers, something the utilities say they can't do if customers leave and return to service at will.

Gov. Arnold Schwarzenegger said earlier this year that he would like the Public Utilities Commission to establish the regulatory framework for California's electricity market, and said the Legislature should focus solely on the direct access issue.

Assemblyman John Campbell, who voted against the bill, urged Nunez and other supporters to work with Schwarzenegger to craft a law where residential customers have stable prices, and commercial customers have the opportunity to shop around, along with "the risk that comes with that.'

The energy crisis isn't over, said Campbell, R-Irvine, and if the state doesn't set rules for an electricity market, "we face blackouts again.'

On the Net:

Read the bill, AB2006, at http://www.leginfo.ca.gov

AP-WS-05-27-04 1952EDT

Visit http://www.powermarketers.com/index.shtml for excellent coverage on your energy news front.