LEAGUE OF CALIFORNIA CITIES INITIAL POLICY GUIDELINES

ELECTRIC INDUSTRY RESTRUCTURING

Support the Concept: The League of California Cities supports the concept of electric industry restructuring if it results in lower electricity rates that continue permanently into the future. The League does not support or oppose any specific form of restructuring and believes the program ultimately implemented must satisfactorily address the adopted criteria listed below. Any new industry structure should be based on a thorough economic analysis of the full costs and potential benefits of the alternatives under consideration.

Equitable Benefits: Any restructuring program should result in all rate payers directly sharing in the benefits equitably.

Municipal Utilities: Any restructuring program should maintain the concept of municipal utilities. No restructuring proposal should abridge the existing authority of municipal utilities to operate or abridge the ability of cities to form municipal utilities in the future.

Franchise Authority: Cities should continue to have the authority to issue franchises and any program should be at least revenue neutral to revenue currently received from franchises.

Local Control: Under any restructuring program, local governments should have the authority to become an aggregator to negotiate the purchase of electricity with electricity suppliers for their customers. The decision of whether the individual customer within a local government jurisdiction should have the option to purchase power directly from an electricity supplier should be made by the local governing body, consistent with the principle of local control.

Stranded Investments: The problem of stranded investments should be resolved in a way that keeps investors, ratepayers, and generators financially whole. Any policy to deal with stranded investents for large energy producers (i.e. nuclear power) should be applicable to all other producers (i.e., independent power producers).

Wheeling: Any program should facilitate the wheeling of electricity between generators and users.

Alternative Sources: Consistent with existing League policy that supports the development of alternative energy sources, any restructuring program should incorporate support of alternative energy in order to enhance the mix of energy sources available in California, both for environmental and strategic energy security reasons.

Biomass: The unique problems of the biomass industry, as they relate to California's solid waste infrastructure, should be fairly resolved in any deregulations program.

Social and Environmental Impacts: Consistent with existing League policy, California should not abandon its energy programs that provide social and environmental benefits. (Revised April, 1995)