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In a pair of orders issued the same day, the California Public Utilities Commission has denied requests to modify its plan for electric industry restructuring, as set out in its Final Policy Decision of Dec. 20, 1995 (see 166 PUR4th 1), but has initiated new "public service programs" to continue support for energy efficiency and low-income assistance efforts.

So, on the one hand, the commission has reaffirmed its plan to grant direct access rights to electric consumers to choose power from a supplier of choice, but on the other, it has moved ahead to carry out provisions of the state's electric restructuring law (Assembly Bill 1890) that mandated continued support for "public interest" programs, appearing even to go beyond the requirements of the law by creating a new independent regulatory board to administer the benefit programs.

Direct Access. In the first case, the PUC rejected allegations that its "preferred policy" on restructuring was preempted by federal law (em i.e., the Federal Power Act, which prohibits states from ordering direct access. It also stated the guidelines do not violate the Commerce Clause of the U.S. Constitution by requiring the utilities to buy and sell power exclusively through a newly established power exchange.

Moreover, the PUC refused to accept the idea that its restructuring guidelines would amount to an economic taking of utility property without just compensation, because the PUC's plan had failed to ensure that utilities would recover all investment and had set up an independent system operator to occupy and control the electric transmission systems owned by utilities.

Public Purpose Programs. Assembly Bill 1890, enacted last September, had provided for a "nonbypassable surcharge" to fund low-income assistance and energy-efficiency programs, but had left it up to the PUC to decide how to administer the programs. To flesh out the legislative policy, the commission

created an independent board of regulatory representatives and private citizens to oversee programs privatizing energy-efficiency efforts. A similar board will govern funding disbursement for low-income energy assistance efforts.

By contrast, Southern California Edison Co. had wanted to maintain region-specific policies to ensure use of energy-efficiency funds based on utility-specific service territories. Each service territory would have had an advisory board to assist a local utility administrator. Under Edison's proposal, the local utility would have had four of eight voting seats on the advisory board, which would have approved programs designed by the local utility administrator.

While the PUC rejected Edison's proposal, it will nevertheless permit regulated utilities to bid for the administration of the programs. But the commission will no longer establish shareholder incentive mechanisms to encourage their participation. The PUC added that it would develop a special surcharge to apply to all retail gas services. The state's gas utilities may transfer the operation of such programs to the new boards pending its development. Re Proposed Policies Governing Restructuring California's Electric Services Industry and Reforming Regulation, Decision 97-02-021, R. 94-04-031, I.94-04-032 (denying modifications of 1995 policy decision); Decision 97-02-014, R. 94-04-031, I.94-04-032 (creating independent board for public purpose programs), Feb. 5, 1997 (Cal.P.U.C.).

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