 


                           BEFORE THE PUBLIC UTILITIES COMMISSION
                              OF THE STATE OF CALIFORNIA


          Order Instituting Rulemaking on the     )
          Commission's Proposed Policies          )         R.94-04-031
          Governing Restructuring California's    )
          Electric Services Industry and          )
          Reforming Regulation.                   )
                                                  )
                                                  )
          Order Instituting Investigation on the  )
          Commission's Proposed Policies          )         I.94-04-032
          Governing Restructuring California's    )
          Electric Services Industry and          )
          Reforming Regulation.                   )
                                                  )


                   COMMENTS OF AGRICULTURAL ENERGY CONSUMERS ASSN.
                       ON THE COMMISSION'S PROPOSED POLICIES   


          COMPETITIVE WHOLESALE MARKETS AND MARKET INSTITUTIONS IN THE
          RESTRUCTURED ELECTRIC INDUSTRY.                             

                    Pursuant to the April 20, 1994 Order of the Commission

          and the July 8, 1994 Ruling of the Assigned Commissioner, the

          Agricultural Energy Consumers Association (AECA) submits its

          comments in this phase of the Commission's investigation and

          rulemaking on restructuring the State's electric services

          industry.

          I.   Introduction.

                    The Commission correctly recognizes, and most parties

          in this proceeding agree, that electricity rates in California

          are too high.  Average rates in California greatly exceed the


                                          1.

          PWH1G4  


          national average.  Accordingly, the Commission has identified one

          of the key principles of this restructuring to be the reduction

          of rates for electricity customers.  

                    AECA strongly believes that the most effective way to

          bring down utility rates in California is through direct access

          to utility providers for all customers.  Utility customers will

          benefit most from a restructuring if they have the ability to

          participate in the marketplace and choose among many competitive

          suppliers.  

                    AECA's members are already taking advantage of the

          limited access allowed to them under the existing regulatory

          framework.  California farmers have opted for diesel, natural

          gas, and self-generation to provide them with the energy they

          need at affordable prices.  AECA's members have already seen and

          sought the benefits of direct access to other energy sources and

          therefore urge the Commission to provide them with direct access

          to electricity suppliers.

                    Many parties have argued that the Commission should

          take some kind of interim step, and only introduce competition at

          the wholesale level at this time.  However, such an interim step

          is insufficient and will not provide the benefits of direct

          access.

          II.  PG&E's Proposal Correctly Addresses the Need for Direct
               Access.                                                

                    AECA agrees with the position taken by Pacific Gas &

          Electric Company (PG&E) that direct access is necessary and an

                                                                                                                  2.

          PWH1G4  


          inevitable development.  Mr. Robert Glynn of PG&E, in his

          testimony before the United States House Subcommittee on Energy

          and Power (a copy of which is attached hereto) urged the adoption

          of direct access through a phased-in approach, starting with the

          largest customers.  Under PG&E's proposal, direct access would be

          available in 1996 to large customers taking high voltage

          transmission service, and to all other electric power consumers

          having access to a retail electric marketplace by January 1,

          2008.   PG&E would not impose on customers transition costs

          associated with its generation facilities, including Diablo

          Canyon.  PG&E would take the full market risk for recovering the

          revenues from its utility-owned generation.

                    While AECA agrees with PG&E's proposal in general, AECA

          disagrees with PG&E's significantly prolonged implementation

          schedule.  Customers should not have to wait 15 years for the

          benefit of competition.  AECA believes that direct access should

          be available for agricultural customers at the earliest possible

          juncture, both for individual farming operations as well as

          aggregated groups.

          III. SCE's Proposal Will Not Provide Additional Benefits for
               California Customers.                                  

                    Southern California Edison Company (SCE) opposes moving

          to retail access before "the necessary foundation" is put in

          place to ensure direct access for all customers and to ensure

          that some state-created institution will carry out the utilities'

          current responsibilities.  SCE proposes instead that the

                                                                                                                   3.

          PWH1G4  


          Commission institute a "power pool" which would provide

          competition at a wholesale level on a regional basis.  "Poolco"

          would be a privately owned company, responsible for dispatching

          regional transmission and generation resources.  However, under

          SCE's proposal the ultimate consumer would still only have one

          supplier.  This proposal does nothing more than perpetuate the

          status quo, as end customers would still lack choice and the

          ability to purchase electricity directly from suppliers.  AECA

          urges the Commission to reject SCE's proposal for wholesale

          competition and their thinly veiled efforts to stall meaningful

          reform.

          IV.  Conclusion.

                    California's electricity rates are too high and need to

          be reduced as soon as possible.  AECA urges the Commission to

          provide direct access to agricultural customers, either alone or

          through aggregated groups, as soon as possible.  Competition is

          not on the horizon, it is upon us.  The Commission must now act

          decisively to remove all barriers to that competition for

          customers to benefit.


          Dated:  July 26, 1994.        Respectfully submitted,

                                        AGRICULTURAL ENERGY CONSUMERS ASSN.


                                        By                                 
                                             Michael Boccadoro
                                             Executive Director

                                                                                                             4.

          PWH1G4  


                                                                                                                       5.

          PWH1G4 