BEFORE THE PUBLIC UTILITIES COMMISSION OF CALIFORNIA Order Instituting Rulemaking on the ) Commission's Proposed Policies ) Governing Restructuring California's ) R.94-04-031 Electric Services Industry and ) Reforming Regulation ) _____________________________ ) Order Instituting Investigation on ) the Commission's Proposed Policies ) Governing Restructuring California's ) I.94-04-032 Electric Services Industry and ) Reforming Regulation ) _____________________________ ) COMMENTS OF THE CALIFORNIA/NEVADA COMMUNITY ACTION ASSOCIATION July 25, 1994 California/Nevada Community Action Association 926 J Street, Suite 408 Sacramento, CA 95814 (916) 443-1721 INTRODUCTION The California/Nevada Community Action Association (Cal/Neva) appreciates the opportunity to submit further comment regarding the proposal of the California Public Utilities Commission (Commission) to restructure the 1 electric services industry. The Commission's final determination in this matter will have far-reaching impacts for all residential customers, particularly for our constituency of low-income ratepayers. Based on Cal/Neva's current, and admittedly limited, understanding of the technical complexities of the Commission's proposed restructure we offer the following comments for consideration. The Commission must level the playing field in this complex proceeding. Cal/Neva continues to be concerned about the rigorous schedule of Full Panel Hearings and comment periods in this proceeding, as well as the costs in time and comment distribution to the extremely cumbersome service list. The fast pace of the schedule and its multiple comment periods continue to make it very difficult for intervenors with limited resources to come up to speed on the complex issues in order to be able to analyze comments from the broad range of parties and offer solid input. It is difficult for Cal/Neva, as well as many other parties, to absorb, interpret and analyze the vast array of complex information which has been submitted by other parties regarding direct access and wholesale wheeling so that informed comments can be formulated on behalf of California's low-income population. The playing field is definitely not a level one. Cal/Neva urges the Commission to make every effort to ensure that all intervenors are able to effectively participate in the process of structuring the deregulation of the electric services industry. Assistance from the Commission, in the form of educational workshops and up-front funding for intervenors with limited financial and technical resources, is necessary in order to facilitate broad-based participation in the examination of such dramatic changes proposed for public policy. Many California ratepayers are not aware of the Commission's proposal. Cal/Neva believes it is essential that outreach and education for residential ratepayers, particularly the low-income and minority populations, be conducted proactively. The majority of this group of electricity consumers is virtually unaware of the Commission's proposal and its potential impacts on their households. Without efforts to effectively inform all ratepayers about the ramifications of this proposed regulatory restructure, the decision in this matter will not encompass input from the majority of California's residential electricity consumers. The notice about Public Participation Hearings for this issue which the respondent electric utilities have been ordered to mail to customers does not provide adequate information for ratepayers to understand the implications of this proceeding so that they can offer informed input to the Commission. This notice states that "the result would be less regulation of electric utilities, and hopefully lower rates" (emphasis added). We believe that this statement is vague and misleading, since it is very possible that residential ratepayers 2 will potentially experience increased electricity rates, at least in the short-term. It is critical that ratepayers are provided with balanced and specific information on which to base their opinions in this matter. Cal/Neva further suggests that the schedule of Public Participation Hearings ignores some of the most populated areas of Southern California. Conducting hearings in only San Diego and Pasadena does not provide for an adequate opportunity in the Los Angeles Basin. We strongly recommend that additional hearings be added to the Commission's schedule for Southern California. Competitive Wholesale Electric Markets. It is essential that the Commission take a long-term perspective and make a commitment to take the time necessary to get all of the details right. Cal/Neva recommends that, to ensure a thorough and effective examination of the future level of competition, the Commission refer the matter to a collaborative process. The already established California Collaborative would be an appropriate mechanism to address the issues and impacts and offer recommendations to the Commission regarding the crafting of a viable plan for the implementation of deregulation in the electric industry. We agree with Amory Lovins that "...such a referral would be far likelier to yield thoughtful foresight, sound proposals, widespread benefits, solid political support, and minimal risk of paralyzing confusion by legislative or litigious intervention..." (May 22, 1994 comments to President Fessler). Cal/Neva believes that retail wheeling will not lower electric rates for all consumers, in fact, it will quite predictably increase residential customers' bills. The development of a competitive wholesale electric market may have the potential to achieve the Commission's objectives without compromising system reliability or the obligation to serve. However, we believe that the implementation of any regulatory reform must be carefully considered in order to ensure that it is done right the first time so that band-aid fixes are not necessary in the future. Haste in public policy decisions of such far-reaching scope subjects ratepayers to higher risks and is not prudent in the long run. The development of a competitive wholesale electric market would appear to have the potential to reduce the risk to all ratepayers, especially residential electricity consumers. An effectively designed wholesale market system could result in lower rates for all customer segments, while providing the framework, through surcharges to all electricity consumers, to deal with uneconomic utility assets and to support programs which address California's broader social objectives. 3 Conclusion Cal/Neva urges the Commission to exercise caution in the pursuit of its vision for the future of the electric services industry. A hasty decision-making process which would abandon a century of regulatory practice in a few months time will probably create more problems than it may solve. We need only to look at the problems and inequities which have arisen as a result of deregulation in other areas, such as the airline and telecommunications industries, to understand the potential pitfalls that California faces in this proceeding. The Commission must make every possible effort to level the playing field so that all intervenors have the opportunity to understand the many complex issues involved in the proposed deregulation of the electric services industry and the ability to participate actively in this process. Additionally, outreach and education must be provided for utility customers, particularly residential ratepayers, so that they have the opportunity to offer informed opinions to the Commission in the Public Participation Hearings which will be conducted. Cal/Neva urges the Commission to conduct additional public hearings, particularly in the Los Angeles area. Cal/Neva recommends that the Commission refer this matter to a collaborative process, such as the already established California Collaborative, for recommendations for crafting a viable plan for regulatory restructure. We believe that the further development of a competitive wholesale electric market may have the potential to achieve the Commission's objectives without compromising system reliability or social objectives. An effectively designed wholesale market system could result in lower rates for all customer segments, while providing the framework, through surcharges to all electricity consumers, to deal with uneconomic utility assets and to support programs which address California's broader social goals. However we firmly believe that the implementation of any radical regulatory reform must be carefully considered in order to ensure that it is done right. It is essential for the Commission take whatever amount of time is necessary to evaluate the options and work out all of the details carefully in order to implement a regulatory vision which will benefit all California ratepayers, not just the largest electricity consumers. The Commission must ensure that residential ratepayers, particularly low-income utility customers, do not become casualties in a bold regulatory experiment. Dated: July 25, 1994 Respectfully submitted, California/Nevada Community Action Association By_________________________________ 4 Cheryl Jacobsen Project Director VERIFICATION I, Cheryl Jacobsen, am a Project Director for the California/Nevada Community Action Association and I am authorized to make this verification on the organization's behalf. I declare under penalty of perjury that the statements in the foregoing document are true of my own knowledge. Executed on July 25, 1994 at Sacramento, California. ____________________________ PROOF OF SERVICE I hereby certify that I have this day served the foregoing document upon all known parties of record in this proceeding by mailing via first-class mail a true copy thereof properly addressed to each party on the attached list. Dated at Sacramento, California this twenty-fifth day of July 1994. _____________________________ Bertha Aguilar 5