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Governor Arnold Schwarzenegger today called on the California Public Utilities Commission (PUC) to rapidly implement reforms to California's electricity market. The Governor stated his strong support for measures that will encourage new energy investments so that California can realize reliable power supplies and lower expenses.
"Enacting these measures will encourage investment in California's energy infrastructure, ensure long-term electricity reliability and reduce the likelihood of blackouts," said Governor Schwarzenegger. "I encourage the PUC to move quickly to adopt this regulatory framework so that California's consumers and businesses can begin to realize the benefits of lower electricity costs and stable energy supplies."
In a letter sent to the California Public Utilities Commission today outlining his objectives on energy policy, Governor Schwarzenegger called on the PUC to fully implement Assembly Bill 57 (Chapter 835 of 2002) which is designed to correct some of the key flaws of California's electricity market design.
The Governor's framework supports an electricity market structure that encourages utilities to enter into long-term contracts procured through a competitive bid process on the wholesale market. This structure will ensure that utilities have the confidence that they can recover the costs of the long-term contracts -- something they did not have during the energy crisis. By insisting upon a competitive procurement process, the Governor seeks to secure the lowest rates available for ratepayers.
The Governor also called on the PUC to strengthen the resource adequacy requirements that the PUC recently adopted. The Governor wants utilities to hold power reserves of 15 percent to ensure adequate supply and prevent blackouts. The PUC recently called for the resource adequacy requirements to be phased in by 2008; the Governor urges the PUC to accelerate the implementation of those standards to 2006 -- a date he indicated in his State of the State address that electricity shortages may return. Accelerating the adoption of electricity reserves will force utilities to enter into long-term contracts sooner and will result in more power plants being built to serve California's growing demand.
The Governor is also asking the PUC require utilities to identify their power needs and disclose how they will meet those demands in the future. The Governor believes that utility resource portfolio plans should emphasize conservation, energy efficiency and renewable energy sources. In the past, the Governor has called for an acceleration of the renewable portfolio standard phase-in, by which the utilities would supply 20 percent of their power needs through renewable power by 2010, rather than 2017.
In addition, the Governor expressed his support for a core/non-core retail market structure that allows for large businesses the choice of leaving the utility service and contracting directly for their power needs. However, the Governor stated that he wants to ensure that residential customers who remain with the regulated utility service do not bear an additional burden as a result of departing business customers. He acknowledged that this change needs to be made legislatively, and indicated that he looked forward to working with the Legislature to accomplish this goal.
