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BA-11 Legislative Bill Action ............................................................... financial investment by utilities and other genera- And, contrary to what its critics say, AB 2006 does tors to build new generating capacity. The second not cut out private, non-utility built generation from part would establish a core/non-core system supplying power to the system. Nor does it give under which large electricity users could purchase the utilities a blank check. their power from third parties through direct access. Complicating the debate and future of AB 2006 is the recent opposition from the Administration. However, as amended August 9, AB 2006 no In lieu of the approach proposed by AB 2006, it longer includes the core/non-core option. The appears that the Administration would prefer to author deleted the direct access option because, reinstate direct access for all business custom- no matter how it was written, it was either op- ers. The different perspectives were summarized posed by industry because it did not cover a large in an article in the August 11 issue of the Sacra- enough group of business customers, or, by mento Bee. "By opposing AB 2006, consumer groups, who feared that cost shifting Schwarzenegger is trying to steer California's would result from the departure of non-core energy policy back toward a free-market, deregu- customers, even though the bill includes require- lated model that he says is the best ticket toward ments to protect against cost shifting. The cheaper and more reliable power. But Democratic League continues to support AB 2006 as an lawmakers and some consumer advocates say important means with which to ensure that Califor- the Republican governor is inviting a potential nia has reliable, environmentally diverse, cost repeat of the energy crisis, when prices soared effective electricity that is a good value to custom- and rolling blackouts struck." ers. At this time, it is too early to hypothesize how A key debate surrounding the bill is the tension the debate over AB 2006 and California's energy between utility-built generation and generation future will conclude. The League remains in build by private "merchant generators". AB 2006 support of AB 2006 and will continue to work with envisions a mix of utility-built generation and the author and sponsor to address any unintended contracted generation built by others, with PUC consequences related to municipal utilities and review of costs of both to ensure that they are community choice aggregation. Stay tuned - and reasonable. Some critics of AB 2006 believe that remember, to help California get through the an open, competitive bidding process alone should summer, turn out unnecessary lights and adjust dictate how new generation capacity is built and the air conditioner thermostat to 78 degrees! financed. Not surprisingly, the so-called merchant Staff: Yvonne Hunter; Status: SenRulesCmte; generators favor this approach. Position: Support. However, others believe that authorizing the merchant generators to build more plants and to contract with the utilities without a reasonableness FOR LEGISLATORS' PHONE NUMBERS, review by the PUC would return California to the "bad old days" in 2001 when energy prices sky- ADDRESSES AND E-MAIL PLEASE SEE THE rocketed. Memories tend to fade regarding the LEAGUE'S WEBSITE (WWW.CACITIES.ORGI high wholesale price of electricity during the height ADVOCACYCENTER). of the energy crisis. At that time, according to a July 27 article in the Business Section of the Sacramento Bee, wholesale energy prices were in the $1900 to $3800 per megawatt hour range, as opposed to the $110 to $165 range they are now. www.cacities.org .. August 13, 2004 PRIORITY FOCUSIPAGE 7 - -- ._. T- .............. .. . -,- ..