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Enron Mail |
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Below is a brief summary of the main issues regarding Direct Access. We wi=
ll continue to the follow the progress and keep you updated.=20 Summary: Direct access was designed to break utility monopolies and was a key compon= ent of California's 1996 deregulation law. Under this concept, all custome= rs could directly access an energy provider other than their regulated util= ity. The debate over direct access is at the heart of a complicated attemp= t to solve California's costly power crisis. It will determine whether bus= inesses, with residential customers, pay for the bulk of the state's future= energy purchases. It also could determine whether Southern California Edis= on, the state's cash-strapped No. 2 utility, will avoid bankruptcy, and whe= ther deregulation will survive in any form. Big businesses, free-market advocates and alternative energy providers have= lobbied state legislators to find a way to keep so-called "direct access".= Now, as the state prepares to sell $13.4 billion in bonds to begin paying= off its debt, legislators and energy officials say they must prevent big b= usinesses from wiggling out of that obligation by closing off their direct-= access escape route. Regulators are concerned that if businesses flee the = system, the state will be stuck with too much electricity under long-term e= lectricity contracts through 2021. That would mean residential ratepayers = would be stuck paying the bulk of the $43 billion in future power costs, a = point that has enraged consumer groups. Currently, only about 88,000 custo= mers buy their energy through direct access (per CEC statistics), including= about 10,000 large commercial/industrial customers, and about 78,000 resid= ences. Alternative service providers shifted most of their customers back = to California's primary utility suppliers (SoCal Ed., PG&E, SDG&E) earlier = this year when prices skyrocketed and they could no longer compete with uti= lity rates capped by the Legislature. =20 California legislators argue that direct access is the keystone of the late= st Edison bailout plan, sponsored by Assembly Speaker Pro Tem Fred Keeley. = Under the plan, the 3,600 largest businesses would agree to pay $3.1 billio= n of Edison's debts over 15 years. In exchange, businesses would be allowe= d to secure their own power contracts by 2003, but not without first paying= an "exit fee." The fees and which parties would be exempt remain undeterm= ined, however, they would include a surcharge or a complicated calculation = in which businesses would pay a percentage of future energy purchases. It = is likely that whatever compromise legislators are able to reach regarding = direct access, California's business community will have extreme difficulty= accepting the terms. To ensure their efforts at resolving the direct access dilemma and abate fe= ars of a collapsing state budget, lawmakers have gone so far as to introduc= e two bills, (one sponsored by Sen. Bowen and defeated in July, and a secon= d by Assemblyman Dave Kelley,) that would rescind language in previous legi= slation that authorized the Public Utilities Commission to block direct acc= ess. The California PUC has thus far stayed a decision on the matter, but = is expected to rule by August 23rd. Complicating the issue is Wall Street. The state's bankers, led by J.P Mor= gan, are nervous about selling as much as $13.4 billion in planned state bo= nds if businesses (currently the largest ratepayers in the state, after gov= ernments) find a way out of the system. The bonds are meant to repay the s= tate for $8.2 billion in power-buying costs so far this year and to cover s= ome future costs. Business and residential electricity customers would rep= ay the bonds through a surcharge on their utility bills. If businesses wer= e allowed to sign on with outside energy providers, that revenue stream wou= ld be in jeopardy.
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