Runner asks state to aid consumers

This story appeared in the Antelope Valley Press January 6, 2001.

By BOB WILSON
Valley Press Staff Writer

LANCASTER - Assemblyman George Runner said Friday he would be willing to support using a portion of the upcoming year's state's anticipated tax-revenue surplus to reduce the cost of electricity for consumers.

That support would be contingent upon, among other things, a willingness by a Democrat-dominated state government to allow utility companies to fast-track the construction of new power plants and advance-purchase supplies of electricity at lower costs, the Lancaster Republican said.

"The last people that should be paying should be the consumers. We were promised with deregulation that electricity prices would go down," he said.

Having the state buy down the cost of energy while solutions are found to California's electricity woes "would basically be an energy tax cut," the assemblyman said.

Whether such a proposal will be part of Gov. Gray Davis's proposed budget for the state remains to be seen.

Davis's spending plan for the 2001-02 fiscal year will be announced Wednesday, Runner told members of the Antelope Valley Bar Association at their January luncheon.

On Monday, Davis will give a State of the State address in which is he expected to announce plans for resolving California's power problems.

Runner, vice chairman of the Assembly Budget Committee, will lead Republican efforts in shaping the state's budget plan.

The reason California's experiment with electricity deregulation failed is because "they truly didn't deregulate," Runner said of the 1996 Legislature. "They re-regulated."

Instead of putting electricity completely under the control of market forces, legislators - under a plan blessed by California's major utility companies - required those companies to sell off their electric power plants, he said.

That created a system composed of electricity creators and electricity transmitters.

Under the same plan, the state's Public Utilities Commission placed a cap on the rates electricity-transmitting companies could charge consumers but did not place a similar cap on the rates electricity creators could charge for their product, Runner said.

Further, the PUC required the state's transmitting companies to purchase power in the spot market instead of buying it in advance under long-term contracts that are more economical.

Lacking the ability to create their own power, California's electric transmitting companies were put at the mercy of intra- and interstate electricity producers, he said.

The problem was exacerbated when the state's electric companies postponed plans to build new power plants because of the uncertainties of deregulation. Because of state restrictions, it takes about five years to create a new plant, start to finish.

"In California, we truly have a problem with supply," Runner said. "We also have a group of folks in California who really don't care how high electrical rates go because they really don't want to see anything else built or happen in California.

"We have a core of radical environmentalists who are absolutely delighted if businesses shut down in California," and those environmentalists must not be allowed to derail efforts to fast-track the construction of new power plants, he said.

With power companies threatening to turn off the state's lights because they are on the verge of bankruptcy, the PUC moved Thursday to increase residential rates 9% and business rates 7% to 15%, effective immediately.

Runner said the PUC's move "was an obscene decision" because "the last thing we need to do is go back to ratepayers and ask them to pay more money when we are not letting the utilities buy the most economical energy."

By raising consumer rates, the PUC "created more money coming in the door for the (transmitting) utilities, to be extorted by the power providers," Runner said.

To solve the problem, California electric utility companies once again must be allowed to create their own power for consumers, the assemblyman said. Taking that ability away hampered deregulation, not enhanced it, by reducing the number of competitors in the market.

The state's electric companies also must be allowed to purchase power in advance, and the Legislature must find a way to speed construction of new plants, he said. "The other issue is: We've got to have cooperation from the federal government."

While he remains a proponent of a free enterprise and deregulation, "buying electricity is not like buying orange juice," Runner said.

When orange juice prices go up, "you get to make the decision if you want to switch to tomato juice," he said. "You don't have that decision about electricity."

In his view, federal officials should step in and establish a cap that would give power producers a reasonable profit without letting them gouge consumers, Runner said.

"There also is a dirty little secret you need to know," he continued.

That secret is that some of the same companies that are screaming about their losses in the California marketplace are reaping profits by purchasing power from the plants they still own in other states.

Under deregulation, electric companies were only required to sell their power plants in California, Runner explained. But those same companies can and do buy power at exorbitant rates from plants they own elsewhere.

While the California divisions of major electric companies may be losing money here, they are generating profits at their other facilities, he said.

Several bills already have been submitted in the state Assembly and Senate in an effort to resolve California's electricity crises. They include:

AB 1, by Assemblyman Sam Aanestad, R-Grass Valley, which would establish a rebate rate for energy-efficient technologies.

AB 30, by Assemblyman Anthony Pescetti, R-Rancho Cordova, which would extend deadlines for utilities to comply with deregulation rules for at least one year.

AB 58, by Assemblyman Fred Keeley, D-Boulder Creek, and SB38, by Sen. Debra Bowen, D-Marina del Ray. Both bills seek to change the composition of the board that governs the Independent System Operators, which oversees the state's power grids.

SB 36, by Sen. John Burton, D-San Francisco, which would require electricity wholesalers to register with the state if they're selling power into or purchasing out of California.