Energy Fix point of Contention between Schwarzenegger, Nunez

California is looking at an epic battle as two of the most powerful men in the State Capitol try to muscle their way through the Legislative and Regulatory process to get their "fix" for the State's energy mess:

As California flirted with another power crisis, the Legislature was fashioning what its leaders described as a comprehensive energy policy, essentially returning to the old centralized, highly regulated system that existed before the 1996 deregulation.

Southern California Edison was the chief promoter of the unring-the-bell approach, but it also had strong support from consumer groups and was carried by Assembly Speaker Fabian Núñez.

But business groups didn't like it because it would have made it more difficult for commercial and industrial power users to seek competitive bidding for supplies, nor did independent power producers, who complained that it would restore the utilities' monopoly on generation.

Schwarzenegger, as expected, vetoed the bill. He had already floated his own approach, which would modify, but not eliminate, the market approach to power supply and pricing that was at the heart of the 1996 bill, and he wanted the Public Utilities Commission to implement his plan without new legislation.

Since that veto in late September, the PUC has begun to implement portions of his plan. It voted 3-2 late last month, for instance, to order utilities to speed up their acquisition of additional power supplies to meet peak summer demands - an action that favors new contracts with independent suppliers. The dissenters were Loretta Lynch and Carl Wood, who stand with the consumer groups on the issue of who should control power supplies, but both are scheduled to leave the commission at the end of the year. And that's where the Legislature may play a role in fashioning policy.

Two of the remaining three commissioners, former utility executive Mike Peevey and Susan Kennedy, are strong proponents of Schwarzenegger's approach. But the third, Jeff Brown, has been the swing vote on a number of specific utility issues. To completely bypass the Legislature and push his revised deregulation scheme through the PUC, Schwarzenegger needs a solid majority, but his replacements for Lynch and Wood must also gain confirmation in the state Senate, which by its vote on the Núñez bill is out of sync with the governor.