As regulators continue to investigate industrywide restructuring as an answer to regional electric rate disparities and calls from large consumers for price reductions, the trend of dealing with the problem through rate discounting also remains strong. Regulators have taken steps to ensure that shareholders bear at least some of the risk for revenue shortfalls that might result under the new contracts. In addition, utilities have been careful to avoid asking for current rate increases for services provided to smaller customers.
The California Public Utilities Commission (CPUC) has approved a set of "preapproved generic discount" contract rate options for large industrial and commercial electric users served by Pacific Gas & Electric Co. (PG&E). It rejected allegations by ratepayer groups and representatives of independent power producers in the state that the discount programs would impede the effective restructuring of the state's electric industry. The CPUC emphasized that the programs are consistent with current market conditions, including the economics of cogeneration. It added that as with the overall goals of its industry reform efforts, the utility's shareholders assume the risk for any future costs of uneconomic assets "should there be a restructuring of the California electric industry." Commissioner Jessie J. Knight, Jr. dissented, however, claiming that the new discount rules allow PG&E to advantage itself in the future restructured electric services industry by offering current discounts funded in large part by ratepayer dollars. Knight noted that the terms of the proposed discount contracts apply "well into the restructured era." He also said that the decision contains a bias against direct access in favor of "virtual direct access" that would occur through implementation of a power pool.