Calif. to consider return to customer power choice

NEW YORK, Feb 29 (Reuters) - The California Public Utilities Commission (CPUC) said Thursday it will consider steps to let customers choose their electric suppliers, but must first remove the California Department of Water Resources (CDWR) from the power supply business.

"The CPUC can and should evaluate the merits of ways to extricate (CDWR) from its current role as supplier of energy under those existing contracts," CPUC President Michael Peevey said in a release.

"After that the CPUC can proceed to the question of whether and how to reinstate Direct Access," he added.

Over the past few years, some customers in California, primarily big commercial businesses, have sought the return of customer choice in buying electric supplies.

Assembly Bill (AB) 1X, which passed during the California energy crisis of 2000-2001, however, mandates the suspension of customer choice, known as direct access in California, continue until the CDWR no longer supplies power.

Customers in California were able to buy power directly from competitive suppliers from the mid 1990s until the energy crisis.

During the crisis, PG&E Corp's (PCG.N) Pacific Gas and Electric and Edison International's (EIX.N) Southern California Edison utilities racked up tens of billions of dollars in debt and were no longer able to buy power on behalf of their customers.

So, the state in 2001 had CDWR start buying power for the utilities, which later included purchases for Sempra Energy's (SRE.N) San Diego Gas and Electric subsidiary.

After buying thousands of megawatts of power in short-term purchases, CDWR entered into 56 long-term agreements in 2001 at a cost of $42 billion over 12 years, according to its web site.

Since 2002, CDWR has renegotiated 35 separate contracts with 19 companies at a cost savings of $6.43 billion as it continues to transition out of the supply business, the CDWR said in a release in December.

CDWR still lists more than a dozen long-term contracts on its web site, the last of which will expire in 2015. (Reporting by Scott DiSavino; Editing by Christian Wiessner)