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To: Rick who wrote (99442)	5/18/2001 11:59:51 PM
From: S100	Read Replies (1) \| Respond to of 152472

This lady seems to be the "mother" of deregulation. This article was in the Nov 1994 Issue of Future Power, vol 1 number 2. CALIFORNIA PUBLIC UTILITY COMMISSIONER -PATRICIA ECKERT Patricia Eckert was appointed to by California Public Utilities Commission (CPUC) by Governor George Duekmejian in March, 1989 and served as the Commission's first woman President in 1991. Patricia Eckert graduated Phi Kappa Phi cum laude with a degree in business from Parsons College. She then obtained a Juris Doctor degree from Loyola Law School in Los Angeles. The unique background that Ms Eckert brings to the Commission includes classic corporate career development in several Fortune 100 corporations - consumer market research at Procter and Gamble and executive marketing positions at the Dow Chemical Company and its subsidiary, Bio-Science Laboratories. One of the reasons she has a real sense for the consumer is that she started her career with Procter and Gamble as one of the original "Procter and Gamble Girls." There were 60 women total who would receive telegrams every other Thursday night notifying them as to where they were to go for their next marketing survey. They would assemble in teams of five to ten and actually go out and talk to consumers face to face about their products and their ideas on how to improve them. They would then report their findings to the brand manager. Being face to face with consumers gave Patricia first hand experience with their knowledge levels. She believes that consumers are not given the credit they deserve. The "Procter and Gamble Girls" were not allowed marriage due to the extensive travel (on the road 50 weeks per year). Patricia Eckert wanted to marry her high school sweetheart. After two years she did so and moved to Los Angeles where she started to work for a clinical testing laboratory called Bio-Science. She was on a team that headed their market research and advertising program. She attended law school for four years at night, while working for Bio- Science, and invested in real estate on the side. When Dow Chemical bought out Bio-Science, Patricia Eckert was transferred into the mainstream of Dow. She was responsible for the inside sales operations of the southern California and Arizona region. Faced with the option of moving to Dow headquarters in Michigan or remaining in California, she opted to stay in California and form a law partnership. In 1982, Eckert established the Beverly Hills law firm of Eckert & Colman. This firm specialized in business transactions, real estate and taxation. Her law practice expanded to include complex federal litigation involving United States defense contract matters. Owning her own business enlightened her to the real problem areas surrounding small businesses. Payroll, workers compensation insurance, liability insurance, office space, taxes, electricity bills, phone bills, advertising costs, and miscellaneous monthly office expenses were just some of the obstacles encountered. Commissioner Eckert has made significant contributions to the re-regulation of energy at both the state and national levels. She has participated in the development of the National Energy Policy Act through testimonials before the committees of the United States Senate and House of Representatives. She has been a force in introducing competition into the natural gas markets by working with the Federal Energy Regulatory Commission. Commissioner Eckert is a member of the American Bar Association and the State Bar of California. She and Norm Shumway are the two members of the State Bar of California who serve as CPUC commissioners. She serves as Energy Vice Chairman for the American Bar Association's Section of Administrative Law and Regulatory Practice. She also has served on the State Bars of California's Commission on Judicial Nominees Evaluation. In 1987, Commissioner Eckert was a gubernatorial appointee to the Dispute Resolution Advisory Council. Commissioner Eckert is the Chairman of the National Association of Regulatory Utility Commissioners (NARUC) Committee on Administration. She is also a member of the NARUC's Electricity and International Committees, and the Western Conference of Public Service Commissioners. In addition to all her committee-ships, she also currently serves on the Board of Directors of Rebuild Los Angeles (RLA) and is active in the civic projects that are helping to revitalize the Los Angeles inner city. In our interview, Commissioner Eckert was candid and informative. She had just returned from a trip to London, England (personally financed) and was able to share first hand experiences with us regarding the United Kingdom (UK) Power Pool. She visited with the head of operations of National Grid and Power Gen, the traders and the large industrial users group. After her visit she came to the conclusion that there exists both "natural pools and unnatural pools" from a market standpoint. The traders in London said to let the natural pools develop based on the market and the needs of the consumers. When England began their power pool, bids where placed by the power producers in order to rank them in priority as to the dispatching of available grid power. Surprisingly, when the bids were submitted, almost 19 major power producers bid zero so that their electricity would be sold first at whatever price the power pool could obtain for it. The secondary market thus was limited to "contracts for differences" (CFD's) which are tied to prices of the regulated pool. Only one regulator of electricity exists in England. Listed are some general perceptions resulting from analysis of the UK electrical restructuring: I) the transmission grids must be separated from the generation companies 2) no one entity should maintain dominance in the generation pool 3) mechanisms for handling transactions " at the edges" need to be developed 4) it is critical to properly price transmission. Accounting for balancing transactions " at the edges" is illustrated in the following example: In an unregulated market what is ordered and what is supplied must be accounted for and balanced. If one company orders 300 MW of electricity but eventually uses 320 MW of electricity, that additional 20 MW must be obtained form an additional source. Even another customer could be a source for that additional 20 MW. In California "natural pools" can develop with proper mechanisms for balancing the flow. "Natural pools" should be allowed to develop in the market place. Over three years ago commissioner Eckert suggested that the California commission should look and learn from other countries regarding the development of our own electric industry. We are trying to create a more competitive electricity, gas and telecommunications market and should acknowledge other achievements as well as problems in order to give insight as to what direction we should be going. Look at some of the positive accomplishments in England as well Procter and Gamble's electricity bill is over $250 million per year alone. If you add in their suppliers electric bills, you end up with an industry consuming over $1 billion per year of electrical services. Even a five percent reduction in electrical costs would yield over $50 million per year savings to that one manufacturer and its suppliers. With those types of savings they conceivably could expand, create new jobs, open new markets, or even pass those savings on to the consumers. General Motors is also a $1 billion user of electricity. They have hired sharp economic financial advisors to assist in controlling the escalating costs of their electrical consumption. Large users of electricity are having to leave the state due partially to the high costs of power here in California. The most forward looking utilities and their leaders have recognized that if they are a high cost producer of electricity, they should find ways to get out from under those expenditures that attribute to the high costs. Other utilities across the country are becoming much more attuned to the needs of their users, listening intently to their concerns and making adjustments to ease the power pricing. When talking about sunk costs and stranded costs and how will they be absorbed, Commissioner Eckert appropriately paraphrased Walt Whitman "If we stand on the shoulders of the giants that have come before us, we can get some perspective of what might be coming in the future." If we look at the way that natural gas was deregulated, it could present a model for the CPUC to follow in determining how the competitive transition costs (CTC's) are allocated. The qualified facility (QF) contracts are the most complex aspect in trying to sort out the CTC's. The problem that the CPUC got into with the ISO4's is that the avoided costs were based on forecasts of future oil prices. Now, in order to relieve the costs of those contracts, the future costs of natural gas must also be weighed. Few have factored in the fact that natural gas costs could escalate significantly in the future due to any number of circumstances. At what point do we know what stranded costs will be? The answer will lie in long term forecasts which are invariably wrong. Commissioner Eckert's current focus has been in overseeing California's comprehensive review of the electric industry restructuring. She also focuses her energy on the enhancement of California's competitiveness within a global telecommunications infrastructure. She speaks extensively on telecommunications regulations and has addressed the European Community DO XIII audiences on the subject. Commissioner Eckert believes that the "invisible hand of the market" is far better than old style command and control regulation. The types of markets and their respective development will be based on the decisions and policy of the CPUC in the upcoming months. Everyone is reminded that the commission is still taking comment in a wide number of public forums and at this stage the blue book remains a proposal. More than anything, it is the market place that is forcing the electric industry to restructuring. To quote commissioner Eckert, "The competitive genie is out of the bottle."

To: Rick who wrote (99442)	5/19/2001 1:50:22 PM
From: JGoren	Respond to of 152472

From what I have heard from various TV news reports, etc., the "justification" was to keep prices the utilities were paying down, because long-term supply contracts cost "more" than spot contracts. The thought was that the utilities should not be engaging in future supply contracts at higher prices, because that was "price gouging," a term bandied about these days. At the time California put its re-regulation (not really deregulation) in place, the price of electricity on the spot market was low. That continued until about a year ago and caused Californians to pay very low rates for several years and they stopped conserving electricity because it was so cheap. When the tide turned the utilities had to buy electricity no more than a day in advance; the California utilities had to buy electricity at any price and the price skyrocketed. Now, anyone who knows anything about forward contracts, and original reason for futures in commodities, was to keep the price stable. The buyer pays a little more to ensure a set and known price in the future. As a result, prices become more stable and the wild swings are avoided, thereby decreasing the overall price over time.