State Assembly Passes Electrical Reform Bill
The California State Assembly passed a measure that would authorize the Department of Water Resources (DWR) to sell electrical power to retail, end-use customers and, in limited cases, to local publicly owned electric utilities at no more than the DWR’s acquisition costs in a 55–25 vote on Feb. 1.
Assembly Bill 1X (AB1X) would also allow for the creation of a State Treasury Department of Water Resources Electric Power Fund and would authorize an initial transfer of $4.9 million from the State General Fund to the new fund.
Barry Sedlik, manager of economic and business development for Southern California Edison called the passage of AB1X a “very important part of the recovery to stability in California electrical markets...[by enabling] the state to engage in long-term contracts. However, he added, “it does not address the financial integrity of the utilities.”
Sedlik said another assembly bill ABX18, which is still pending in the state assembly, addresses the “under-collection utilities have already experienced.”
There is also a move to offer a similar state bailout to the Southern California Gas Company, according to Scott Edwards, president of the Association of Textile Dyers, Printers & Finishers(ATDPF). Edwards said if the state does bailout the Gas Company, his organization has asked the Public Utilities Commission to require the Gas Company to take their members on as customers.
“Right now we are non-core customers, meaning that we buy our gas from third-party marketers and our rates have gone through the roof,” he said. “So we see that as a potential way to get an indirect subsidy from the state to keep us operating.”
The ATDPF is also in the process of trying to re-negotiating natural gas contracts with its suppliers to shift from current contracts to long-term contracts at a lower rate.
“To give you an idea, the price today is about $17.50 a decatherm and a long-term contract is [at] about $6.60 a decatherm, so that would be a significant savings,” he said, adding, “We don’t want to be there but we would take that for survival.”
Gas prices have risen to the current rate of $17.50/decatherm from $14.12/decatherm in December 2000—already a considerable increase over December 1999 rates of $2.41/decatherm, Edwards said.
