CC - 2000-68 - Urging State and Government Intervention and Reform in the CA Electric Energy Marketplace0 0.'
RESOLUTION NO. 2000 - 68
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF ROSEMEAD
URGING IMMEDIATE FEDERAL AND STATE GOVERNMENT INTERVENTION
AND REFORM IN THE CALIFORNIA ELECTRIC ENERGY MARKETPLACE
WHEREAS, in the 1990s, the California Public Utilities Commission and the State Legislature
acted to deregulate the electric utility industry in the State of California; and
WHEREAS, the transition and restructuring of this decades-old structure of area-specific
monopolies has been managed by the California Public Utilities Commission
under legislative mandate, mainly from Assembly Bill 1890 and Senate Bill 90;
and j
WHEREAS, the objective of electric market deregulation was to bring competition in
electricity supply to the state and benefits of reduced costs and improved services
to businesses and consumers; and
WHEREAS, the results of electric industry deregulation was supposed to produce lower rates
and improved customer services; unfortunately, these results have not been
achieved in California; and
WHEREAS, before California deregulated its electricity industry in 1998, three investor
owned utilities delivered 80% of the electricity consumed in the state, under the
watchful eyes of state regulators who set the rates that the companies could
charge; and
WHEREAS, as a part of the restructuring process, these utilities have been forced to sell their
power plants to private companies, with the new owners now selling their
electricity back to these same utilities through the marketplace at what have
become dramatically inflated prices that are causing economic hardship and
dislocation to businesses and consumers alike; and
WHEREAS, since deregulation, California has attracted only a handful of new suppliers, and
that lack of competition has compounded shortages of electricity, which have
become acute because the state has not allowed a single new power plant to be
built in the last 10 years; and
WHEREAS, without intervention by the Federal government, Governor and State
- Legislature, millions of Californians will face dramatic increases in power costs in
the near future, not to mention, adverse impacts from the 'disruption in
commerce caused by power outages and energy cost spikes.
NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Rosemead urges
the Federal government, Governor and State Legislature to prevent the complete meltdown of
the California electric marketplace through immediate intervention and reform actions.
Further, the City Council believes the following principles should guide the electricity
marketplace reform and restructuring:
1. There must be a reliable supply of electricity - Utilities should once again be charged
with responsibility to plan for, acquire and assure sufficient power to meet the state's
needs without the threat of interruption. Utilities need the right tools to assure
reliability, and regulatory reform to streamline decision-making and clarify
accountability.
2. Electricity must be affordable - California's economic future cannot continue to be
held hostage to market manipulation. We need a system of cost-based wholesale pricing
where the majority of power is either generated by the utility companies for their
customers, as it was before 1996, or is arranged and delivered under long-term
contracts to the utility companies at stabilized costs
0
3. Both the price and supply of electricity must be determined under a stable framework-
Customers have to be protected from price volatility. Utilities have to be strong enough
to afford that protection, to borrow sufficient funds for operations, and to make vital
investments in service reliability. No matter who supplies the electricity, everyone must
pay his or her fair share for its delivery provided that the current practice of "price
gouging" is eliminated.
4. Investigate market manipulation and anti-competitive practices -The Federal Energy
Regulatory Commission, California Public Utilities Commission, State Legislature, and
Congress should investigate the seriously flawed California electricity marketplace for
evidence of anti-competitive practices by power suppliers who are suspected of
manipulating the wholesale market price of energy at the expense of California utilities
and ratepayers. Enterprises found to have engaged in market manipulation should be
prosecuted to the fullest extent of the law.
5. Disgorge and refund exorbitant profits - Marketers and generators (most of whom are
out of state) found to have engaged in market manipulation, resulting in 800-1000%
increases in earnings and profits by having taken advantage of loopholes in the
deregulation process and made exorbitant profits at the expense of California utilities
and ratepayers, should be required to refund those profits so that utilities and their
ratepayers do not bear the burden of their illicit practices.
6. Emergency rate stabilization - The California Public Utilities Commission should
immediately implement an emergency rate stabilization program that will ensure
consumer protection from price volatility and enable the state's electric utilities to
maintain system and service reliability.
DONE THIS 19th DAY OF DECEMBER, 2000
MAYO
ATTEST:
CITY CLERK
I, Nancy Valderrama, City Clerk of the City Council of the City of Rosemead, do hereby certify
that the foregoing Resolution was duly adopted at an Adjourned Regular Meeting of the City
Council on the 19'h day of December, 2000, by the following vote to wit:
YES: COUNCILMEMBERS BRUESCH, TAYLOR, CLARK,
VASQUEZ AND IMPERIAL
NO: NONE
ABSENT: NONE
ABSTAIN: NONE
NANCY V' DERRAMA, CITY CLERK