Group Forms to Oppose PUC Pool Proposal : Energy: Broad coalition says effort to deregulate electricity industry ‘sticks it to everyone.’

A broad coalition of manufacturers, oil companies, consumer groups and environmentalists has come together to oppose a sweeping proposal endorsed by most of the California Public Utilities Commission to deregulate the state’s electricity supply.

Led by the California Manufacturers Assn., the group includes the Sierra Club of California, San Francisco-based consumer group TURN, the Environmental Defense Fund, the California Retailers Assn. and the Western States Petroleum Assn., among others.

“The commission must be doing something wrong if it’s able to bring all of us together,” Daniel Kirshner, senior economic analyst for the Environmental Defense Fund, said in a statement.

The group sent a letter Tuesday to PUC President Daniel Fessler attacking a proposal to establish a pool that would function as an independent system operator. The operator would acquire electricity wholesale from power plants through competitive auction and sell it to users.

The proposal, one of two under consideration by the PUC, has the backing of three out of four commissioners, including Fessler, as well as the endorsement of many of the state’s largest utilities, including Southern California Edison Co. (The other proposal would allow direct retail contracts between customers and power generators.)

The wide-reaching effort to deregulate the electricity industry in the state is being closely watched around the country.

A broad coalition of groups, from the San Diego Economic Development Corp. to the Greenlining Coalition, has already lined up in support of the pool proposal.

That plan has been criticized in the past by the manufacturers association and its partners, but Tuesday’s letter marks their first coordinated effort to oppose the wholesale pool.

“The largest flaw in the whole thing is that it doesn’t lower rates,” said Don Fields, a Sacramento political consultant advising the coalition. “The thing that brings us all together is that . . . it literally sticks it to everyone across the board.”

Among other things, the coalition argues that the plan unfairly exempts nuclear power from competition, places alternative-energy providers at a disadvantage, will trigger cuts in energy efficiency services and programs aimed at low-income users, and will pass on artificially high rates to residential and business users.

Fessler had not seen the letter as of late Tuesday but promised to give it careful consideration. However, he disputed its main points.

“The main benefit of the plan is that it would force generators to compete in an open, undisguised market, where the price for generation would be revealed to every customer, not secretly to a few customers,” Fessler said in an interview. “And then the benefits of that open, revealed competitive process would be passed on to all customers, not just a few customers.”

The coalition opposing the proposal will discuss its position at a news conference Monday on the steps of the PUC auditorium in San Francisco. Meanwhile, hearings on the proposal will be held that day in San Francisco and Aug. 21 in Pasadena.