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Analysis Calif. Jittery On Energy Reform

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Los Angeles (UPI) Jun 29, 2004
The hangover from the California electricity crisis appeared to have faded Tuesday, although a healthy wariness was evident as the state began looking to the future of the state's energy picture.

Once bitten and now twice shy, a coalition of industry associations Tuesday debuted what appears will be a concerted effort to defeat Assembly Bill 2006, a bill in the Legislature that they believe could set the stage for a repeat of the dizzying electricity crisis of 2000-2001.

We stand in strong support of the governor's plan and in strong opposition to AB 2006, which will allow the utilities to continue to pass virtually unlimited cost overruns onto consumers. It is bad energy policy and even worse, it is terrible for ratepayers, Assemblyman Keith Richman said in a statement issued by the group.

The rolling blackouts that hit California at the turn of the century were not terribly disruptive to the state; however, they threw a significant wrench into the entire vision of deregulation of the entire nation's energy market.

The free-market notion of deregulation was based on the idea that private industry would invest in the power plants and transmission lines needed to meet growing energy demand in various parts of the country. Competition for customers would insure that the price of electricity would remain as low as possible.

All that was needed, proponents said, was a wholesale electricity price that would provide the power merchants with a reasonable rate of return on their investment for the long term.

Deregulation hit a wall in California when wholesale prices began to rise while the state's largest utility companies found themselves prohibited by law from passing on the increases to their customers.

Political finger-pointing and desperation grew as Gov. Gray Davis refused to lift the retail rate caps and the outgoing Clinton administration and the newly elected Bush administration refused to impose price caps on wholesale rates.

Blame game aside, the bottom line was that California was back where it started from and looking at a situation in which investors had no guarantee they would be allowed to pass on their cost increases to their customers.

AB 2006 set out to do just that by requiring the California Public Utilities Commission to approve rates that cover the investments in power plants made by the state's investor-owned utilities.

AB 2006 seeks to establish a solid framework for the state's power industry, which should help encourage investment in new power plants, the bill's authors said. Such investment has dried up in recent years, in part due to regulatory uncertainty. We must replace the current uncertainty in the regulatory environment in California with a clear energy policy to make sure that we secure power when we need it at prices we can afford.

A recent legislative analysis of AB 2006 pointed out that critics were alarmed at what they said were provisions freeing the utilities to pass on the cost overruns of their projects to the consumer, which in the case of a major industrial or commercial account can add up to a lot of money.

The organization said that Gov. Arnold Schwarzenegger was on the right track in trying to get California into a less-regulated energy environment.

The governor understands that in order to avoid another energy crisis, the state must have an electricity-market structure in place that will encourage private investment for the building of new power plants, said Jack Stewart, a POWER leader and also the president of the California Manufacturers and Technology Association. But he also understands that these plants should be built at the lowest cost, not at any cost.

While perhaps sounding like reasonable concern over a potentially complex regulatory issue, POWER's stance appeared oddly out of place. It isn't every day that an industry association calls for the defeat of a bill that follows the free-market approach to utility regulation.

POWER made it loud and clear that it supports a healthy competitive market as the best way to make sure California gets a reliable supply of electricity at the lowest price possible. That was the same thing that was said when deregulation first came into vogue as a concept in the 1990s.

Schwarzenegger and his allies at POWER are equally as gung ho about the chances that California will get it right this time, although they aren't going to move forward without hedging their bets first by eliminating perceived threats such as AB 2006.

All rights reserved. Copyright 2004 by United Press International. Sections of the information displayed on this page (dispatches, photographs, logos) are protected by intellectual property rights owned by United Press International. As a consequence, you may not copy, reproduce, modify, transmit, publish, display or in any way commercially exploit any of the content of this section without the prior written consent of by United Press International.

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Ames Lab Physicists Perturb Superconductor To New Heights
Ames IA (SPX) Jun 29, 2004
At the U. S. Department of Energy's Ames Laboratory, a basic research effort to enhance the properties of magnesium diboride, MgB2, superconductors by doping them with carbon atoms has doubled the magnetic field the material can withstand.

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