The California PUC issued a draft decision holding that the existing Direct Access (DA) cost responsibility surcharge (CRS) cap of 2.7 cents/kWh applicable to each of the three utilities shall continue to remain in effect for the period beginning on and after July 1, 2003. The Draft Decision stated that the 2.7 cents cap will be subject to possible future adjustment, as deemed necessary to pay off DA CRS undercollection by 2011, through periodic review in annual DWR revenue requirement proceedings. The final recorded confirmation of the DA CRS undercollection for 2001-2002, together with the adoption of the final adopted allocation of 2003 DWR power charges to the DA CRS will be determined and implemented on a parallel basis in coordination with the implementation of the 2003 DWR revenue requirement redetermination. The exit fee cap draft decision matter is set for consideration at the June 19, 2003, meeting. The full text of the CPUC Draft Decision is available on the NEM Website.

SB 888 passed the Senate by a vote of 21-16. Many lawmakers supported the bill only after voicing their concerns that the measure needs more work. Critical to the bill’s passage was a provision added just before the floor vote that SB 888 “shall not become operative” and is “for display purposes only.” Senator Dunn told fellow lawmakers that the change ensures that discussions with industry stakeholders about the bill would continue.

SB 888 had 108 amendments before it was heard in the Appropriations Committee. Senator Jim Battin (R-La Quinta), vice chairman of appropriations, complained that the late flurry of changes rendered the committee unable to fully grasp the possible effects of SB 888. Dunn stated that this week’s large number of amendments came from mere renumbering and reordering of various passages. Other substantive changes included new wording to promote renewable technologies and “environmentally clean, efficient” power applications.

Dunn also claimed confirmation that Governor Gray Davis would sign SB 888. “We’ve had three face-to-face discussions about the bill,” Dunn said in an interview with California Energy Markets.

By a vote of 63-0, the California Assembly also gave their approval to AB 428 (Richman). The bill would keep competition alive in the state’s electric markets. AB 428 calls for all customers of an investor-owned utility—both core and noncore—to pay for energy reserves.

It is reported that Richman and CPUC president Michael Peevey have held discussions about how best to implement direct access. Richman’s Chief of Staff stated that, despite a recent article indicating that Davis will support SB 888, he believes that AB 428 will be signed into law by Governor Gray Davis. He also predicted that AB 428 and SB 888 could end up in conference committee later this year so the bills’ similarities and differences could be addressed together.

Other energy bills acted on in the Assembly include: (1) AB 808 (Canciamilla) to put an end to the California Energy Commission and the California Power Authority and make the CPUC subsidiary to a new Department of Energy. The bill passed 75-0 on May 29;(2) AB 151 (Vargas) to impose a fee of $0.001/KWh on power shipped north from plants in Mexico with insufficient emission controls. This bill passed by a vote of 45-31; (3) AB 426 (Richman) to allow solar panels to be erected over state water conveyances. This bill passed by a vote of 71-4; (4) AB 1685 (Leno) to extend until 2008 the state’s incentive program for distributed generation resources. This bill passed by a party-line vote of 54-25.

Assembly energy bills are now eligible to be taken up in the Senate starting next week.

A workshop will be held on June 27, 2003, from 2:00 p.m. to 4:00 p.m., at the Albany offices of the Public Service Commission. The purpose of the workshop is to discuss the scope of appropriate methodologies for assessing the costs and benefits of various retail renewable portfolio designs, weighing these against other factors. Consultant Robert Grace, of Sustainable Energy Advantage, will participate in this workshop. Department of Public Service Staff will discuss the scope of its cost and benefit analyses. A telephone bridge will be made available. The full text of the NYPSC Notice is available on the NEM Website.

PUCO denied Volunteer Energy Service's motion for emergency relief from Columbia Gas of Ohio's secusrity requirements. In April, Volunteer Energy Services filed a complaint against Columbia alleging that its imposes onerous security requirements as a prerequisite to providing service in Columbia's territory. Volunteer asked the Commission to rule that the untariffed security formula is unlawful and unreasonable and wanted emergency relief suspension of the security requirements. PUCO did not grant Volunteer's motion but did set this matter for a settlement conference on June 24, 2003, to determine if the matter could be informally resolved. The full text of the PUCO Order is available on the NEM Website.

The Pennsylvania PUC released its Summer 2003 Keystone Competition Report. The Report discussed the next steps on various competition issues including the following: (1) The Commission intends to hold another meeting for the POLR Work Group this summer to begin developing proposed regulations; (2) Staff is developing a Strawman proposal for circulation to the SOLR Working Group this summer; (3) The Demand Side Response (DSR) Working Group will meet on June 18, 2003, to develop principles on DSR programs implemented by electric distribution companies.

Additionally, the Report stated that on May 1, 2003, service commenced for those small commercial PECO customers that accepted their assignment to alternative generation suppliers under the Market Share Threshold (MST) processes. The MST program provides for a price-based competitive bidding process for the assignment of specific classes of PECO customers to alternative electric generation suppliers. In addition to the commercial program, there is a residential MST process that was organized into 2 phases. No eligible suppliers submitted bids on May 15 to participate in the first phase. A second auction for residential customers will occur in September 2003. The full text of the Keystone Competition Report is available on the NEM Website.

The Public Utility Commission of Texas proposed an amendment relating to Capacity Auctions. The proposed amendment will require that two-year strips be auctioned for the 2004 through 2005 time period. In addition, the proposed amendment delay the September 2003, auction until October 2003. Comments on the proposed are due June 20, 2003. The commission requested specific comments regarding the costs associated with, and benefits that will be gained by, implementation of the proposed section. The full text of the Proposed Amendment is available on the NEM Website.

A DVP representative stated that the utility will continue to offer a wires charge discount to C&I pilot participants beyond 2005 when the pilots end until 2007. NEM and other parties submitted comments on the DVP pilots last week. NEM submitted multiple comments in Virginia that the current wires charge is a major factor inhibiting competition in the state.

At a meeting this week on DVP's pilots, the name of the default service pilot was changed to "competitive bid supply service (CBSS)" to more accurately reflect that the pilot will test the competitive bid process for choosing default suppliers. The CBSS pilot will include about 43,000 customers in four 50-mw blocks that will be bid out to suppliers on a retail basis.