As California energy markets modernize, regulators worry about repeating the past
- As customer choice and a new wave of energy resources spread across California, regulators are warning the state could be plunged back into uncertainty — as with the electricity crisis of 2001 — without sufficient planning and a broad conversation about how the grid is evolving.
- Staff of the California Public Utilities Commission have issued a new paper, "California Customer Choice: An Evaluation of Regulatory Framework Options for an Evolving Electricity Market," and will take comments on the issues through June 4.
- Rooftop solar, community choice aggregators and other non-utility sources of energy are growing, and the state "could drift slowly back into another predicament like the energy crisis of 2001” without sufficient foresight, CPUC President Michael Picker predicted.
California is a pioneer in the electricity industry, which often means it is ahead of the curve — but that can also go the other way. Electricity prices rose significantly in 2000 and 2001 and customers suffered blackouts, a fallout from the deregulation that took place in the 1990s.
The changes happening in the state, such as the rise of distributed resources, mean a repeat of history is possible, CPUC Chair Michael Picker wrote in an opinion piece for The Sacramento Bee.
“In the last electricity deregulation we had a plan, however flawed," Picker wrote. "Now, we are deregulating electric markets through dozens of different decisions and legislative actions, but we do not have a plan.”
The paper looks at areas undergoing a similar transition, including Great Britain, Texas, New York and Illinois. While the paper does not advocate specific policy actions, it does seek to "jumpstart a conversation" with questions about ensuring the electric grid's reliability and a fair, affordable transition.
Regulators will accept public comment on the paper through June 4, and will hold an en banc discussion in mid-June.
Among the questions posed in the staff paper: Does there need to be a single entity for policy target setting, implementation, oversight and enforcement? And how can the state continue to support innovation and provide financing for scaling up new technologies?
Ralph Cavanagh, co-director of the energy program at the Natural Resources Defense Council, said there are potential benefits to the state's ongoing transition, but also challenges that include how to ensure affordable service to low-income communities and how to create coordinated systems of reliability assurance.
Cavanagh was a member of an advisory group for the CPUC staff authors and he shares Picker’s "urgent sense of concern," though he may differ on how the issues should be framed.
"In most of the nation, planning and contracting for such resources is a core responsibility of publicly regulated electric utilities," Canavagh said in a statement. "But for the second time in the past quarter century, California is trying something quite different."
- Special to The Sacramento Bee Choice is here for California’s energy consumers. What’s next?
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