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WALL STREET, CALIFORNIA

Agencies Say They'll Be Ready for Deregulation

Energy: They expect to meet the March 31 start date. Meanwhile, three utilities say customer interest is heating up.

March 17, 1998|NANCY RIVERA BROOKS | TIMES STAFF WRITER

The two agencies responsible for running California's new competitive electricity market told federal regulators Monday that they will be ready to plug in as scheduled on March 31.

Meanwhile, California's three investor-owned utilities said that customer interest in deregulation has intensified, with thousands deciding in recent weeks to switch to new electricity providers.

Under deregulation legislation passed in 1996, customers of Southern California Edison, San Diego Gas & Electric and Pacific Gas & Electric can choose to buy their power from any company registered with the California Public Utilities Commission and the utilities starting at the end of this month. Customers of municipal utilities don't get that option yet.

Ongoing glitches with the complex computer setups that will run the electricity system had raised the possibility that the long-awaited deregulation of California's $20-billion power market, already delayed three months by computer problems, might be put off again.

On Monday, while acknowledging that unforeseen problems could still disrupt the scheduled start-up, the chief executives of California Power Exchange and California Independent System Operator notified the Federal Energy Regulatory Commission by hand-delivered letter that the state's electricity market will be ready to proceed two weeks from today.

Power Exchange, based in Alhambra, will run an electronic market where electricity is bought and sold. The Folsom-based ISO will manage the state's power grid, composed of the electricity transmission systems that will continue to be owned by the three investor-owned utilities.

"The ISO is ready and the PX is ready," Jeffrey Tranen, chief executive of the California ISO, said at a news conference. "We fully expect to start. But . . . picture a NASA launch heading off toward the launch site." The launch could still be scrubbed, "even right up to the last second."

The next step comes next Tuesday when the heads of the three utilities, the ISO and the Power Exchange will speak by telephone to discuss whether each is ready to individually certify, as required by FERC, that the new market is ready to open March 31. The three-month delay left big-business customers continuing to pay rates that are far above the national average. Residential and small-business customers got a 10% rate cut starting Jan. 1, which--because it was financed with bonds--will eventually have to be repaid.

The delay also created problems for the dozens of independent power marketers who flocked to California to sell electricity. But they apparently made use of the extra time.

At the end of 1997, only about 20,000 customers had notified their utilities that they intended to switch to a new electricity provider. Now that figure stands at nearly 39,000.

While 39,000 is a tiny proportion of the nearly 10 million customers eligible to switch, most of those changing providers are higher-volume commercial and industrial users. The utilities would not say how much of their power sales the departing customers represent.

Edison reported that 21,568 of its 4.2 million electricity customers had filed the paperwork to switch to another electricity provider. PG&E said 14,696 of its 4.5 million electricity customers were switching. SDG&E said 2,450 of its 1.2 million electricity customers were switching.

Those utilities will continue to provide electricity to customers who don't switch. Each has an unregulated subsidiary or joint venture that continues to pursue electricity customers.

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