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Frontlines

Fortnightly Magazine - November 1 2000

It just assumes a lot of things that we are not proposing here today. What we are asking for is some immediate relief from this dysfunctional market. …

And we are, therefore, asking for a declaration based on an evidentiary record. We are not asking that you do this preemptively, but [that] a determination be made that there does not exist a condition for [the] market to produce just and reasonable rates. …

The fallback in that situation is a cost-based rate. …

Hébert: You can't just say you're going to look at cost-based rates. You do have to assess the PX. You do have to assess how utilities are going to function. …

It's not that simple. It's very complex. It addresses a lot of different functions. And I would like to see how that plays out. …

It's interesting. I was in a hearing in 1992 when testimony came up from one of the California commissioners … I was a state commissioner at that point … and they said, "Don't worry about 'just and reasonable' rates. They're going out the window. Market rates will be less."

And that's why I throw it back to you … I'm just asking you, right, wrong or indifferent, give me a plan. Tell me what your idea is of success here. Lynch: In changing to a market-based structure, we did not have a clearly thought-out plan to get us through the transition to true competition … So I think it's time to reset the starting point back to protecting consumers.

Hébert: I know this is dragging on. I don't mean to be ugly about this. You've asked me to come here … to help you solve a problem. I can only do that if you give me adequate information … I would suggest that you not just look at cost-based rates.

William Massey: I think this is time well spent … because we may be getting down to the [nub] of this partnership _ with the state of California … and the question is what is the ultimate goal of the partnership? Is the ultimate goal … a return long term to cost-based rates for wholesale generation? If that is the nature of the partnership, that is a very difficult partnership for this commission to enter into.

Lynch: We have not collectively on the state and federal level demonstrated a path that works. Until we do that, we need to go to our starting point of protecting consumers.

Hoecker: I have one last question … In a world where generators no longer have an obligation to serve, will cost-of-service rates be sufficient inducement for companies to build generation in California -- do you have any thoughts about that?

Wood: I have some thoughts about that. …

One is that, first of all, the determination that we are asking be made is to declare that in the present circumstances, these costs are not just and reasonable in lieu of the market. We are asking that cost-based rates be set …

Today, if you step outside