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Deregulation decision no longer a concern for Imperial Irrigation District, officials say

February 13, 2001|By DARREN SIMON, Staff Writer

Since the state adopted legislation in 1996 deregulating the power industry, the Imperial Irrigation District has faced a 2002 deadline to decide whether it would open the local energy market to competition.

Now IID officials say based on the state's power crisis the district likely will never have to make that decision. They say there now is little fear the state will force deregulation on the district.

"In any practical sense it doesn't exist," said IID General Manager Jesse Silva of power deregulation.

Silva said more than likely the IID board will not have to discuss deregulation. He said IID staff is not planning to make presentations on the issue because there is little reason to do so.

"I think that is going to be the least thing on anyone's mind," Silva added.

IID officials have expressed concern about how deregulation would affect the district if the board opted to open the local market.


The fear was IID might lose customers, which would drive up local power rates. That concern was deepened last summer when San Diego residents faced major rate increases under deregulation.

IID Executive Officer Brad Luckey said he agrees with Silva regarding the death of deregulation.

He said it is not in the best interest of IID to open the market to other power providers, and he added IID likely would not want to look at providing power in other markets at this time.

Luckey pointed out that Gov. Gray Davis has called deregulation a failure. Luckey said it is possible there could be legislation in coming months that officially brings an end to the 1996 deregulation legislation.

He said even if that doesn't happen, the state has its hands full trying to solve the power crisis. He added once the crisis is under control, the state is going to have to come up with long-term solutions.

Luckey said there never was true power deregulation in the state and he thinks that partly sparked the power crisis.

He said state officials capped the rates the three investor-owned utilities in the state could charge. He said that prevented those utilities, which provide power to a majority of the state, from taking action when the cost of energy rose.

"It was deregulation but it really wasn't," Luckey said.

The state is having to spend hundreds of millions of dollars to purchase energy to keep power flowing through the state. Two of the investor-owned utilities are facing bankruptcy.

IID officials have said the state cannot afford to do that for long and is going to have to find some solutions.

Luckey said that could prove beneficial for the Imperial Valley.

He said the state is considering steps to ease the process of permitting and building power plants. He said the state also is considering offering incentives to agencies to help with the building of plants.

Luckey said IID has enough power to meet its needs in the Imperial and Coachella valleys but it is going to have to secure new energy as the areas grow. He said the Coachella Valley is growing much faster than the Imperial Valley.

Luckey added if it is possible for IID to build plants, the district is going to have to consider doing so to make sure it can meet future power needs.

In the meantime, IID, which has not faced the Stage 3 power alerts that most of the state has encountered, still has been touched by the power crisis.

Power bills have gone up by 8 percent as a result of the higher cost of producing electricity. The higher bills will remain in effect through the summer.

Staff Writer Darren Simon can be reached at 337-4082.

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