PUBLIC INTEREST RESTRUCTURING FRAMEWORK

[Matt Freedman <freedman@Citizen.ORG>]

  PUBLIC INTEREST PERSPECTIVE ON CALIFORNIA RESTRUCTURING DOCKET AVAILABLE
  FRAMEWORK DOCUMENTS OUTLINE CONCERNS WITH MOU, CPUC PROPOSALS
  
  The debate over electric utility restructuring in California
  remains a volatile topic and has yet to be resolved despite a
  recent decision from the California Public Utilities Commission
  (CPUC) that calls for the creation of a new market structure. 
  Details on the CPUC decision are listed at the end of this
  message.  Because many of the changes sought by the CPUC would
  require new legislative authority, actions by the California
  legislature will ultimately decide the nature of changes to be
  made to the state's utility regulation.  
  
  In the process of reaching its final decision, the CPUC
  solicited comments from all interested parties on an initial
  proposal and then also asked for comments in response to a plan
  submitted by Southern California Edison, the California
  Manufacturers Association, the California Large Energy Consumers
  Association and the Independent Energy Producers.  This
  proposal, known as the "Edison MOU", can be downloaded by
  visiting the Southern California Edison restructuring page
  (http://www.sce.com/html/news/restinfo.htm).
  
  A large coalition of public interest groups and renewable energy
  advocates in California (including Public Citizen) submitted two
  documents to the CPUC that lay out an alternative vision for
  electric restructuring.  In the first, the coalition proposed a
  framework that includes specifics on dealing with market power
  issues, stranded costs, R&D programs, energy efficiency,
  renewable energy, low-income customers and consumer protection. 
  The second document outlines the differences and similarities
  between the coalition's proposal and the Edison MOU.  Both of
  the public interest documents are available via email upon
  request.  
  
  TO RECEIVE EITHER DOCUMENT, SEND A MESSAGE TO CMEP@CITIZEN.ORG
  AND SPECIFY THE FOLLOWING:
  
      - Which documents you would like (framework - 12 pages,
      response to MOU - 18 pages)
  
      - Which format you want - WordPerfect 5.1 (uuencoded) or
      ASCII (text)
  
  THE CALIFORNIA PUC DECISION
  
  The December decision by the CPUC (on a 3-2 vote) would include
  a variety of changes to current utility regulation, including:
      
      - The creation of an independent system operator to operate
      transmission facilities and coordinate power contracts.
      
      - A voluntary wholesale power pool.
      
      - Greater availability of time-of-use rates to customers
      who purchase their own meters.
      
      - Bilateral direct access contracts beginning in 1998 with
      an initial phase open to "a representative number of
      customers from all customer groups" (with an 8 MW limit on
      aggregation and phased in for all ratepayers by 2003).
  
      - Maintaining existing utilities as the provider of last
      resort.
  
      - Eventual divestiture by California utilities of "a
      substantial portion of their generation assets."
      
      - Complete cost recovery for stranded assets as well as
      accelerated recovery of undepreciated generation assets
      with a reduced rate of return that reflects the smaller
      risks associated with recovering these costs.
  
      - Collection of a competition transition charge to be
      applied to all customers engaging in retail transactions.
  
      - Upholding existing utility contracts with QFs and
      wholesale power providers.  Renegotiation of QF contracts
      would be encouraged with provisions allowing shareholders
      to realize 10% of net ratepayer benefits from any changed
      contracts.
  
      - New ratemaking for Diablo Canyon and Palo Verde nuclear
      power plants that would price their output at market rates
      by 2003.
  
      - Adoption of a renewable portfolio standard to establish a
      minimum level of resource diversity.  The level of this
      requirement and implementation details will be determined
      by a working group.
  
      - Creation of a nonbypassable "public goods charge" on all
      retail sales to support RD&D programs and energy efficiency
      activities with funding details to be determined during the
      implementation phase.
  
      - Creation of a nonbypassable surcharge to fund low-income
      rate assistance and low-income efficiency programs.  Funds
      for rate assistance would be uncapped and disbursed based
      upon need.
  
  The CPUC admitted in its decision that these new policies
  could have profound impacts on environmental quality and ordered
  the preparation of an Environmental Impact Report (EIR).  The
  EIR will assess any significant environmental consequences from
  adopting a new structure and identify alternative policies and
  mitigation options.  
  
  More information on the CPUC decision can be accessed at
  http://www.cpuc.ca.gov/elec.html
  ---------------------------------------------------------------
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