Electricity Deregulation Set for March 31

The starting date for deregulation of California’s electricity industry--originally set for Thursday--has been rescheduled for March 31 as a result of the problems with the new market’s complex computer systems that were disclosed last week.

The delay will end up costing an estimated $45 million--that’s how much revenue the operators of the market expected to collect in fees and commissions from power marketers during the first three months of the year. Now ratepayers will end up paying for most, if not all, of that, but not until sometime after 2002, California Public Utilities Commissioner Greg Conlon said.

Despite the delay, residential and small-business consumers of the state’s three investor-owned utilities--Southern California Edison, Pacific Gas & Electric and San Diego Gas & Electric--will receive 10% rate cuts on their electricity bills in January, as mandated in last year’s deregulation law.

But it means big business customers will go on paying, for a bit longer than they would like, rates that are 30% to 50% higher than the national average. And dozens of budding electricity marketers will not be able to start selling cut-rate energy this week as planned.

A Southern California Edison spokesman said there would be no disruption of electricity service because of the delay in implementing deregulation.

Jeffrey Tranen, chief executive of the California Independent System Operator, the agency set up under the state’s deregulation law to manage California’s power grid, told reporters that the “politically set” Jan. 1 start-up date to throw open the electricity market to competition was unrealistic.

“January 1999 or January 2000 would have been a more likely date had the needs of the system been foremost,” Tranen said. “The vision of the Legislature to set a date that soon was aggressive. That’s not meant as a criticism.”

Both the ISO and the Power Exchange, the agency created by deregulation to act as the electronic market where the state’s electricity will be bought and sold, disclosed last week that they were having problems integrating and debugging their computer systems. The three-month delay will give the agencies another two months to complete the system, two weeks for online testing and the two weeks’ notice required by federal officials that the systems are ready to run.

While concerned that the delays could undermine consumer confidence in deregulation, power marketers and consumer groups seemed ready to support them as long as they lead to a system that works.

Michael Shames, executive director of the Utility Consumers’ Action Network, said consumers should be “relieved because had it started earlier, when they weren’t ready, it could have meant financial confusion and service disruptions.”

Jeff Gibson, vice president of Eastern Pacific Energy of Brea, which has signed up 10,000 customers, said the delay puts a burden on the energy providers because it means three months of no revenues or profits.

“You want the consumer to have confidence in what’s happening, and so delays like this just brings a lack of confidence in the industry,” he said.

The $45-million cost of the delay represents salaries for employees and operation of the computers and other facilities at the ISO and the power exchange, officials said.