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United States

A MISERABLE YEAR FOR CALIFORNIA

Despite promises of radical intervention, the California legislature has failed this session to pass any legislation that would shape the outcome of the intended restructuring of the state's electric utility industry by the California Public Utilities Commission (CPUC).

The fate of pro renewables legislation proposed by Democrat Assembly Member Byron Sher now hangs in the balance. In a bill called AB 1123 he attempted to provide for a separate charge on customer utility bills to pay for renewables, conservation and research and development programmes.

The bill had met with initial disapproval from mainline wind lobbyists, but proposed amendments would have removed the concerns of the American Wind Energy Association. AWEA was worried that the bill conflicted with its renewable portfolio standard, which aims to level the energy market playing field instead of asking for subsidies.

The way ahead for the bill, however, was far from clear. Other agreed changes would have reduced support for clean power programmes from 3.6% to 3.3% of utility revenues, an amount of money that is now estimated to represent $600 million annually. Of this amount, roughly $100 million was earmarked for renewable resources.

Another measure -- AB 1048 by Republican Assembly Member Mickey Conroy -- would have allowed industrial facilities that own power plants to wheel power from one to the next without having to sell power to a utility and then buy back the electric supply at retail rates. It, too, failed when the Senate refused to hear any Assembly bills until the CPUC signalled what deregulation direction it was going to take.

Nevertheless, the role of the legislature will be critical in January when legislators return to start the 1996 session. Two substantial pieces of legislation have already been identified by the Independent Energy Producers as necessary for paving the way for a newly proposed power pool and direct access hybrid system to start on January 1, 1998.

One measure is expected to provide for the creation of an Independent System Operator to manage power sales from the new wholesale power pool and to make direct access purchases available. The second piece of expected legislation will give the CPUC the authority to order the recovery of sunk utility investments through a charge on customer utility bills for current wind power installations as well as nuclear power plants.

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