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San Jose Mercury News (California)
Aug 11, 2004 - 01:00 AM

by John Woolfolk - Mercury News

Power demand sets record;

ENERGY BILL UNDER DEBATE
Californians set a record for electricity demand Tuesday as Gov. Arnold Schwarzenegger's administration clashed with Democratic lawmakers over how to regulate the state's unsettled energy system to encourage the building of new power plants.

Power demand peaked Tuesday at 44,497 megawatts, topping the 44,360 megawatt record July 21, according to the California Independent System Operator, which manages the grid for Pacific Gas & Electric and other major utilities. A megawatt powers about 750 homes.

Grid operators expect the record will be broken again today, when air conditioners fighting a heat wave could drive demand over 46,000 megawatts. Grid officials don't expect outages but urge consumers to avoid unnecessary power use during the late afternoon when demand peaks.

''If the weather forecast holds true, we could really shatter the record tomorrow, so we are stepping up the conservation message,'' said Stephanie McCorkle, ISO spokeswoman.

Temperatures broke records in several Southern California cities Tuesday, including 108 degrees in Lancaster, 107 in Palmdale and 103 in Ojai, but were milder in the Bay Area. San Jose hit 83 degrees and was expected to reach 86 today before cooling later this week.

While the record electricity demand underscored California's need for more power plants, debate raged in Sacramento over how to structure the state's energy system so utilities and private power merchants can build generators before the state ends up in another crisis.

With California still reeling from its disastrous foray into electricity markets, Democratic lawmakers and consumer advocates are leery of restoring deregulation features such as letting big businesses shop around for the lowest power rates.

But Republicans and big businesses say restoring market-based deregulation features like power shopping, which was capped in 2001, is critical to lowering rates and maintaining a competitive business climate.

Assembly Speaker Fabian Nunez, D-Los Angeles, had initially proposed a ''core/non-core'' system in his bill, AB 2006, that would let big businesses shop for better power deals while the ''core'' residential and small-business customers stayed with regulated utility companies.

But Robert G. Foster, president of Southern California Edison, which supports Nunez's bill, said that provision was dropped this week because it was complicating rules needed to get new plants built -- a higher priority for everyone.

But bill changes prompted Schwarzenegger's Resources Secretary Mike Chrisman to send a letter Tuesday opposing AB 2006.

''This legislation will increase regulatory uncertainty and market instability, resulting in the delay of construction and acquisition of critically needed resources,'' Chrisman wrote.

But consumer groups that had opposed the power-shopping provisions of Nunez's bill threw their support behind the amended version, saying it would provide for a stable electricity supply.

''I think what the speaker recognized is that there's no workable way to try the deregulation experiment again without putting California at risk of another energy crisis,'' said Doug Heller of the Foundation for Taxpayer and Consumer Rights.

Power shopping was just one of several criticisms Chrisman cited about the bill. He called most of the bill's provisions ''unnecessary or duplicative'' with existing law and regulatory policies.

Chrisman echoed top concerns of business groups that the bill would restrict competition in building power plants, allowing utilities to pass cost overruns on to consumers.

But consumer advocates who support the bill disagreed.

''Customers will be protected from unreasonable costs,'' said Mindy Spatt of The Utility Reform Network.

Edison's Foster called the cost-overrun concerns a ''smoke screen'' by generator companies seeking ''market share to dominate the market.''
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Contact John Woolfolk at jwoolfolk@mercurynews.com




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