California Governor Backs 2-Tier Energy Market
By Margaret Talev, The Sacramento Bee, Calif. -- April 29
Gov. Arnold Schwarzenegger began laying out his energy policy plans on Wednesday, advocating a system that would allow big business to bypass traditional utilities to shop around for competitive rates.
"Countless businesses have told me that one of the greatest barriers to
doing business in California is high energy prices," the GOP governor
wrote. "By fostering competitive wholesale and retail electricity markets
that are properly monitored by regulators, California can begin to lower
electricity bills and once again become the job-creation machine it once
was."
Some consumer advocates warned that such a system could leave utilities and
their remaining customers vulnerable to artificial shortages and price spikes
such as those that plagued the state during the energy crisis of three years
ago.
The California Manufacturers & Technology Association praised
Schwarzenegger's initial comments, however, saying his plans could reduce costs
and reverse job losses for large companies.
Advisers to the governor indicated Wednesday that Schwarzenegger intends to
try to limit lawmakers' role in reshaping energy policy this year, looking to
regulators instead when possible. One adviser, speaking on condition of
anonymity, said that Schwarzenegger is concerned that "a wholesale rewrite
would take several years and would probably cause delays" in the timeline
for power plant construction.
That drew an angry response from Assembly Speaker Fabian Nunez, D-Los
Angeles, who has proposed his own regulatory overhaul.
Nunez issued a statement saying Schwarzenegger seemed to be placing too much
trust in "the so-called 'invisible hand' of the marketplace that in the
past has picked the pockets of California consumers and businesses alike."
Some new legislation would be needed to craft a system that allows large
businesses to make their own deals, the administration conceded.
Without endorsing any specifics, the governor said in his letter that if
businesses buy electricity directly, they should bear full responsibility for
their choices and that utilities would be expected to manage ups and downs for
residential and smaller business customers accordingly.
In his letter, Schwarzenegger also urged the PUC to expedite a measure signed
by former Gov. Gray Davis that encourages investor-owned utilities to lock into
long-term wholesale pricing contracts now, while rates are relatively low.
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