PUC's Electric Power Deregulation Plan Is Debated : Utilities: First legislative hearing draws advocates from both sides of the issue--and a mostly negative reaction.


The early battle lines were drawn Monday over the state Public Utilities Commission's proposal to lower California's electricity rates through broad-scale deregulation.

The first formal--and mostly negative--reactions to the PUC plan came from a long line of California's three big investor-owned electric utilities and their customers, environmentalists, consumer advocates and independent power producers at a packed joint hearing conducted at the Capitol by Gwen Moore (D-Los Angeles), chairwoman of the Assembly Utilities and Commerce Committee, and Byron D. Sher (D-Palo Alto), chairman of the Assembly Natural Resources Committee.

Indeed, Moore said, the hearing arose out of concern that the commission is "trying to railroad through" its proposal without adequate fact-finding and public debate.

Sher said he is concerned both by the PUC's "breathless" pace for public debate of the plan and by the fact that the plan "appears to be inconsistent" with long-held state policies to protect the environment and require a diverse mix of electricity-producing fuels.

PUC President Daniel W. Fessler repeatedly stressed that the commission proposal was released to stimulate such debate, and he announced a beefed-up series of PUC public hearings over the summer.

"I am not interested in pursuing this matter in haste," he told the legislators, noting that the options for restructuring the electric utilities have been under debate for more than 18 months.

Fessler said the first public hearing is scheduled for June 14 in Los Angeles, and a second will be held in San Francisco or Sacramento on July 1. Two more at undecided locations are tentatively set for July 21 and Aug. 4. "And a fifth and a sixth if needed after that," Fessler said, insisting that he plans to cast "the widest possible net" to elicit public views of the proposal.

On April 20, the PUC announced its plan for a broad restructuring of California's electric utilities, designed to bring down the state's relatively high electric power rates by creating a competitive marketplace for all power customers by 2002--from big industrial users to individual residents.

Though some states and other nations have their own plans for deregulation, California's is by most measures the farthest-reaching.

Any plan would also have to be reconciled with current state law.

"This is an important new direction," Sher said before the start of the hearing, "and if it goes forward it will clearly need legislative involvement."

A major concern about the PUC plan is the prospect of an invasion of utilities from other states into a newly opened California market.

These utilities could be expected to strongly compete with California power companies, in large part because they would not have to meet California's demanding air pollution or energy diversity standards at generating facilities in their home states, critics say.

On Friday, a 30-member group representing about 70% of the high-voltage-transmission entities in 11 western states announced the formation of the Western Regional Transmission Assn., conceived to solve the sort of logistical problems that retail competition would create. The group is led by Portland, Ore.-based PacifiCorp., a large utility that has long wanted to enter the California market.

But any PUC plan would require "reciprocal rights" for California utilities to compete in other service territories, Fessler said Monday. He noted that he has met with utility representatives throughout the western states and Canada in the past month and expects to discuss such reciprocity issues with Mexican officials soon.

Consumer advocates objected that only consumers--and not utility shareholders--are called on to pay for expensive nuclear power plants and other investments that would become uneconomical in a competitive retail power market.

Environmentalists condemned what they described as the plan's promotion of low energy prices--"the cheapest electron"--without regard to reliance on foreign oil, reliability of the electric power or environmental protections.

Fessler, promising to answer a barrage of other questions in writing, said he expects that by October the commission will have acquired enough information and comment to agree on "the broad outline of where to go from here."

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