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Re-Reg incoming.... From D.S. George, ALSTOM ESCA August 10, 2000 California's Governor Orders Regulators To Slash Electric Rates in Southern Areas By ANDY PASZTOR and JASON LEOPOLD Staff Reporters of THE WALL STREET JOURNAL Gov. Gray Davis ordered California utility regulators to immediately slash electricity rates in southern parts of the state by about 50%. The move threatens to ratchet up the political debate over high power prices and could end up pitting California against federal regulators. If the appointed Public Utilities Commission approves such a rollback, typical residential electric bills for some 1.1 million customers would shrink to about $55 a month from the current $122 level, according to Sempra Energy's San Diego Gas & Electric Co. unit. Rates have nearly doubled in the past three months. The governor's plan also would essentially freeze rates for the next two years. Consumers and Regulators Seek to Cope With Lingering California Power Crisis (Aug. 4)[PARA]Deregulation Leaves Electricity Market Ripe for Manipulation by Power Firms (Aug. 4)[PARA]California Agencies Are Beset by Major Electricity Shortages (Aug. 3)[PARA]California Cuts Price Cap for Electricity Once Again (Aug. 2) Stretching from the Mexican border to the southern part of Orange County, the region affected by the order has been hard hit by steep price spikes stemming from local power shortages, regulatory confusion and unusually hot weather. As a result of deregulation, area consumers in July 1999 became the first California residents to pay market prices for power. While the utilities commission isn't slated to hold an emergency meeting until Aug. 21, commissioner Richard Bilas said that Wednesday's announcement already was branded as "extreme" by some state lawmakers who accused Gov. Davis of trying to "pre-empt the legislature" by capitalizing on the politically charged issue. The legislature previously had scheduled to take up the issue of proposed rate rollbacks as early as Thursday. The state commission last week rejected call for mandatory rate reductions. But Wednesday, commission president Loretta Lynch said the governor is "calling for the right thing" to provide "price relief and some predictability" to San Diego customers. The governor also announced an agreement with grocery store operators that could result in as much as a 10% voluntary reduction in energy use by such stores when power supplies are especially tight. Democratic State Sen. Steve Peace says that consumption in fast-growing parts of the state, like the San Diego area, have surged to levels that weren't anticipated until 2015. Mr. Peace, the architect of deregulation here, is urging state agencies not to approve any sales of interests in power plants owned by California-based utilities until conditions normalize. Meanwhile, the Navy isn't waiting for state initiatives. With its San Diego power bills projected to climb to $39 million from the $20 million budgeted from June to September, Navy planners have been quietly studying the possibility of bringing in two of their own generators to supply electricity to San Diego bases. In addition, admirals have demanded sharp reductions in power usage, including orders to turn off all lights in many offices during peak times. "We are working by the lights of our computers," said a Navy spokesman. As Sedge's largest San Diego customer, the Navy uses about 130 megawatts per day during high demand periods. Steve Baum, president and chief executive of Sempra, said the "electric market is broken" and all factions must work together to prevent out-of-state generators from "gouging" California residents by selling power "at unconscionably high prices." But he said state utility regulators are better equipped to find ways to cushion the blow from wholesale price hikes than are "instant-pudding bills" proposed by lawmakers. Write to Andy Pasztor at andy.pasztor@wsj.com and Jason Leopold at jason.leopold@wsj.com
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