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San Jose Mercury News (California) June 22, 2005 Wednesday MO1 EDITION Nearly five years after rolling blackouts hit California, voters will have the chance in November to shape the state's energy rules, primarily by restricting companies' ability to buy power on the free market. A ballot measure backed by San Francisco-based The Utility Reform Network would prohibit a company from buying power directly from independent energy suppliers such as Calpine unless it has existing relationships with them. The measure qualified for the ballot Monday. TURN argues that forcing all energy consumers to buy directly from traditional utilities like PG&E will give utilities the stability they need to invest in new power plants and transmission lines. San Jose-based Calpine and other independent energy producers would be directly affected by the initiative. They contend the measure will unduly restrict the energy market to the detriment of the state's largest employers. ''If California companies are going to stay competitive internationally, they need to be able to better manage their exposure to energy costs,'' said Kent Robertson, a spokesman for Calpine, one of the state's biggest energy producers. On the open market, he said, ''Everyone gets to go out and get the best price for what they need.'' According to TURN, consumers will benefit because the initiative, if passed, would stabilize the electricity market and further prevent market manipulations like those that afflicted the state during the 2000-2001 energy crisis. The measure is already coming under fierce criticism from business groups. They contend the initiative would undermine the ability of California businesses to plan for future energy costs. Even PG&E, which the measure's advocates say would benefit, is wary because of the uncertainty the initiative would create in the California energy market, according to a company spokesman. Due to the fallout from the energy crisis, companies that are signed up with utilities already are prevented from signing contracts with independent power suppliers until 2013. The initiative would make the ban permanent. About the only thing all sides agree on is that California needs more private investment in building new power plants and transmission lines. State and federal regulators say energy demands could lead to possible blackouts in Southern California this summer. Northern California might see blackouts as soon as 2008, according to the Federal Energy Regulatory Commission and the California Energy Commission. TURN officials said that unless utilities can rely on big energy consumers like heavy industry and the University of California, investors won't work with utilities to build power plants and other infrastructure. TURN blames the lack of investment on California's 1996 deregulation bill, which allowed large energy consumers to shop around for the cheapest power. But leaving electricity to the whims of the free market isn't in the best interest of consumers, said Bob Finkelstein, TURN's executive director. ''No matter how smart we think we are about creating an unregulated market, there are going to be market participants who figure out some way to take advantage of it,'' he said. ''And when they find that out, they're going to drive prices up.'' Currently, 15 percent of California's total daily electricity load is purchased from independent energy producers like Calpine, according to TURN and an independent energy producers' trade association. Calpine's 550-megawatt Sutter Energy Center in Yuba City and its 555-megawatt Los Medanos Energy Center both opened in 2001 and were the first two large power plants built in the state in more than a decade. Two plants the company opened this month are being credited by regulators as helping stabilize the state's energy market. ''This is throwing a very high level of uncertainty into a market that is just now recovering from the crisis of 2000,'' Jan Smutny-Jones, executive director of the Independent Energy Producers Association, said of the initiative. PG&E spokesman John Nelson concurred, adding that a 1998 energy-related ballot measure prompted investors to wait until after an election to make their next move. Justin Bradley, director of energy programs for the Silicon Valley Leadership Group, said it's essential for businesses to be able to buy power on the open market to remain competitive. ''A 'one-size-fits-all' isn't very attractive,'' he said.
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