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Enron Mail |
Sandi's on vacation this week. There are rumors that PG&E's actively seeking
a negotiated solution with legislators and the Governor, but I can't verify and don't have details on what the negotiated agreement might look like. While's Sandi's away, have asked Mona to check in with our Sacramento lobbyists to poke around for information. Will report back soon as we get more info. James D Steffes 09/16/2000 01:12 PM To: Jeff Dasovich/SFO/EES@EES, Sandra McCubbin/SFO/EES@EES cc: Harry Kingerski/HOU/EES@EES Subject: PG&E Rate Cap End What is going on with this issue politically? If PG&E gets its rate cap removed, we need to make sure that this doesn't create more problems for wholesale markets? Jim ___________________________________________________________- California's largest utility is pushing to end a four-year-old retail rate freeze that has protected millions of Northern Californians from the price volatility in the wholesale electricity market that rocked San Diego this summer. PG&E Corp. wants to end the price freeze imposed in 1996 by the state legislature because it is losing money under the arrangement. PG&E's move is going to set the stage for a major confrontation between the utility and state regulators -- the California Public Utilities Commission will have to balance conflicting needs: the utility's desire to protect its shareholders from huge losses and the commission's duty as a regulator to protect the public from a flawed market that appears incapable of delivering "just and reasonable rates required by law." California legislators fear that the state could fall into a recession if electricity prices do not drop soon. California's 1996 deregulation law required all investor-owned utilities to freeze rates at seemingly high levels. Utilities were allowed to use surplus revenues to pay down generation-related debts that regulators said would render them uncompetitive in a deregulated world. It seemed to work well until this summer in California -- wholesale prices for electricity went up suddenly -- and the average price of power consumed today -- for example -- is $ 200 a megawatt hour or nearly four times the amount that PG&E can bill its customers. State Senator Debra Bowen, chairwoman of the California Senate utilities committee commented that the legislature is reluctant to become involved -- she said further, " [T]he legislature feels like somebody who's fallen into poison oak enough times that all we have to do is walk past a bush and we break out in a rash. That's the way we react to these energy issues."
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