Last Friday, the California Public Utilities Commission issued a proposed decision on its recommendations to the California Air Resources Board for greenhouse gas regulation.

"The proposal demonstrates that the CPUC did not learn from the disastrous restructuring of California's electricity industry and that artificially created market structures have many unintended consequences," said Jerry Jordan, executive director of the California Municipal Utilities Association.

"The electricity market crisis in 2000-2001 cost California consumers $20 billion a year (an extra $13 billion a year) for the two years of the crisis when previously, the cost had been about $7 billion a year," said Jordan. "The electric industry restructuring plan was recommended to the legislature by the CPUC," he said. "Now, the CPUC is proposing to the California Air Resources Board that it adopt a program of auctioning off at least some of the greenhouse gas allocations. Such auctions can only result in greatly increased costs to consumers and windfall profits to non-electric industry bidders such as hedge funds."

The CPUC proposal also suggests that CARB should regulate energy efficiency and renewable portfolios. California already has mandated all cost effective and feasible energy efficiency and there is great competition for renewable resources amongst all utilities. The CPUC proposal confuses the standards for greenhouse gas emissions with the tools necessary to meet those standards. Publicly owned utilities are fully committed to meeting the greenhouse gas emission standards but must be able to creatively and aggressively manage their portfolio of tools to meet the standards at the lowest cost to their consumers.