[BETA] Fortnightly

Revolutions rarely succeed without a struggle. At the California Public Utilities Commission (CPUC), the move to restructure the state's electric utility industry is no exception. The stakes are enormous. For starters, annual revenues at the state's investor-owned electric utilities (IOUs) exceed $18 billion, making up

2 percent of California's gross state product. Competitively priced electricity is vital to California's $800-billion-a-year economy, one would think. And with its sweeping restructuring plan, the CPUC has found itself riding a tiger, hoping it won't get swallowed whole in the process.

But after five full-panel

hearings in the past six months (em featuring over 100 witnesses, not to mention comments from the general public (em virtually the only consensus to emerge is that very few people are satisfied with IOU regulation in California.

They want lower rates, which at the current level of 10 to 11 cents a kilowatt-hour approach twice the national average and rise higher than those of neighboring states; but they don't agree on how to achieve them.

The CPUC had promised to issue a final policy statement last August, following the April 20, 1994, release of its restructuring proposal, dubbed the "Blue Book." That deadline proved wildly optimistic.

Reflecting on the past year, CPUC president Daniel Fessler told PUBLIC UTILITIES FORTNIGHTLY that "tremendous progress has been made" and he feels a "high level of confidence" that all parties can reach a consensus on key issues. Fessler views the Blue Book as a "discussion vehicle," not an edict. And he has expressed skepticism that the January 1, 1996, implementation date will prove feasible for launching direct access to the largest customers. A frequently suggested alternative to the Blue Book schedule would be to permit a certain percentage of customer classes to go forward, which Fessler finds an idea worth considering.

Fessler is encouraged that the U.S. Department of Energy (DOE) and the Federal Energy Regulatory Commission (FERC) are willing to cooperate on jurisdictional issues, in what Fessler calls a "cooperative federalism . . . . California is not a market unto itself, but is physically connected to an international grid with 12 western states, 2 Canadian provinces, and 2 Mexican states, for a total of 16 jurisdictions." As part of that cooperative spirit, DOE is hosting an international conference in California later this month to begin a dialogue on regional and international issues, and Fessler intends to meet with commissioners of neighboring western states.

The California legislature is increasingly interested in the restructuring and has created a joint oversight committee to monitor the proceedings. The oversight committee is insisting on a preview before the CPUC issues any final policy statement. At the same time, the CPUC finds itself pressed by certain industry segments to act as soon as possible and stay on schedule. In particular, the CPUC is taking heat from a coalition of consumer advocacy groups who oppose the direct-access proposals and fear the impact on residential customers. The restructuring effort has renewed calls within the state for the CPUC to reform its due process rules, specifically ex parte meetings and disclosure