Fast Deals Need Sharp Eyes
The price per kilowatt-hour for each switching QF for energy delivered between the QF’s switch date and December 31, 2000, shall be equal to the independent Power Exchange’s hourly day-ahead constrained market clearing price for the zone in which the QF is located, and shall not be subject to adjustment, revision, or true-up of any kind.
--From the text of Senate Bill 47x.
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As it tries to deal with the state’s energy crisis, the California Legislature is venturing where state lawmakers ventured once before, disastrously. As before, it risks acting with more speed than understanding, and there is no way to tell for sure how it will turn out. The paragraph from SB47x quoted above is one random example of the sorts of economic and regulatory detail facing legislators grappling with urgent energy issues. This paragraph was far from the most complex or befuddling one in the 9 1/2 pages of the measure sponsored by Sen. Jim Battin (R-LaQuinta) and Assemblyman Fred Keeley (D-Boulder Creek).
The purpose of the measure is to restructure the rates paid by the private utilities to QFs, or qualifying facilities, the term for nearly 700 small to medium-large alternative energy companies in the state, many of them using renewable and non-polluting energy sources. Some have simply shut down their generators for lack of payment by the utilities.
In a simple world, the Legislature might pass a bill saying: “The rate paid QFs for their power will be changed from 13 cents a kilowatt hour to 8 cents” (these are imaginary rate figures, not from the legislation itself). But this is anything but a simple subject. To begin with, there are gas-fired and non-gas-fired producers, and the rate formulas for the two differ.
Then the measure begins to get complicated, as in Section 391.8 d (3): Notwithstanding paragraph (2) of subdivision (a) of Section 367, the implementation and administration of these agreements and contract modifications shall, in accordance with paragraph (2) of subdivision (g) of Section 391.3, be approved by the commission as reasonable per se for cost recovery purposes and otherwise. Huh?
SB47x received its first full hearing in the Senate’s energy committee late last week under Chairwoman Debra Bowen (D-Marina del Rey). The bill’s authors, the utilities and the power generators were all anxious to keep the alternative producers running and to keep them from pushing the utilities into bankruptcy.
Bowen rightly would not be rushed. While the participants had worked on the bill’s language through hours-long drafting and redrafting sessions, this was its first full public hearing, she noted.
In other words, Bowen was seeking to avoid the same sort of mistake the Legislature made in 1996 when it unanimously voted approval of the incredibly complex and technical electrical deregulation bill. But Bowen also knew her time was not unlimited.
She and other legislative leaders are walking a fine line between full hearings and fairness to the public on one hand and taking the urgent action that appears to be needed on the other.
With the immediate crisis--rolling blackouts--in abeyance, the public focus on power issues has blurred. Bowen’s committee meets again on SB47x this week, and sharper public attention to the result could only help.
To Take Action: To read the bill and analysis of it, go to www.sen.ca.gov/ and click on Legislation, then search for bill No. SB47x.
