Schwarzenegger Vetos Energy Shortage Plan

Schwarzenegger Vetos Energy Shortage Plan

Sep 25 - Associated Press/AP Online

SACRAMENTO, Calif. - Gov. Arnold Schwarzenegger on Saturday vetoed a bill that would have required utilities to prepare long-range plans to meet their customers' power needs, a change that supporters said would keep electricity prices from skyrocketing.

Schwarzenegger said he opposed Assembly Speaker Fabian Nunez's measure because it wouldn't have allowed utility customers to shop around for cheaper power among utilities and independent power producers. That element, called "direct access," was a key part of California's 1996 electricity deregulation but was blamed for helping create the state's power crisis of 2000 and 2001.

"This bill creates a redundant and burdensome energy procurement process that would steer the state back toward monopoly utilities without some of the consumer protections necessary to protect rate payers," the Republican governor said in a veto message.

Nunez, a Democrat, said the veto will delay construction of new power plants and leave the state's energy market in control of the "power pirates," a reference to independent producers that drove up energy prices during 2000 and 2001.

"This legislation contained all the elements needed to protect rate payers and stimulate investment in new power plants that our state desperately needs to avoid blackouts," he said.

Nunez and Bowen said direct access was dropped from the bill out of concern that residential and small business customers would get stuck subsidizing large commercial users of electricity.

When wholesale electricity prices jumped during 2000 and 2001, independent producers passed on the higher costs to their customers, who then fled back to utilities, which already were having problems finding power for their customers.

The Legislature later halted direct access when wholesale prices dropped again and customers tried to leave the utilities, which had run up massive debt buying high-priced power but selling it at capped prices.

The bill would have allowed utilities to build their own power plants if the California Public Utilities determined that was the most cost-efficient electricity source. Without it, Bowen said, utilities will have to continue to buy power from private generators at unregulated prices.

"The governor's entire energy policy seems to resolve around raising power rates for homeowners and renters and shoving as much business to ... independent generators as he can," Bowen said.

But Schwarzenegger said he wanted to ensure "sufficient supplies of reliable, competitively priced electricity" and would work with lawmakers to "bring clarity and consistency to California's energy policy in the coming months."

Schwarzenegger also vetoed a bill that would have required utilities to obtain at least 20 percent of their power from renewable sources by 2010 instead of 2017. Schwarzenegger contended the bill would have created an "onerous process" that would impede reaching its goal.

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Associated Press Writer Jennifer Coleman contributed to this report.

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