BILL NUMBER:  AB 69
  VETOED	DATE: 10/14/2001




10/14/01

To Members of the California State Assembly:

I am returning Assembly Bill 69 without my signature.

This bill would allow specific governmental entities in Los Angeles
County, which are currently Southern California Edison customers, to
enter into direct-access electricity contracts with the Los Angeles
Department of Water and Power.

Last June, approximately two percent of the customer load in the
territory served by the three investor-owned utilities (IOUs) were
receiving power from direct access providers. The Public Utilities
Commission (PUC) recently suspended direct access, but the percentage
of load subject to direct access transactions grew to as much as 13
percent or more prior to the suspension. That growth creates a
significant and unfair cost burden for those customers who continue
to receive power from the IOUs and the Department of Water Resources.


This rapid growth in direct access necessitates more concise
cost-containment provisions for the remaining IOU customers than
those contained in this bill, and those provisions should apply to
all direct access contracts.

Moreover, this bill does not clearly authorize fees to cover costs
that may result when direct access customers return to service with
an IOU, which would create new and unanticipated procurement
obligations for the IOU. Those new procurement obligations could come
about solely because the direct access provider no longer chooses to
provide service to its customers because of rising electricity
costs, and instead passes that burden on to the IOU and its
customers.

Any efforts to allow direct access must be equitable for all
stakeholders.

Sincerely,





GRAY DAVIS