On October 11, 2009, Governor Schwarzenegger signed Senate Bill (SB) 695, the Ratepayer Protection Act (the “Act”), into law. The bill, authored by Senator Kehoe, represents a compromise between utilities, consumer groups and business interests. The Act will, among other things, allow a phase-in for nonresidential end-use customers to purchase electricity directly from non utility sources. The phased-in restoration of so-called “Direct Access” or “Customer Choice” electricity purchasing offers the potential for industrial and commercial customers to secure an important business advantage by locking in favorable electricity rates from non utility suppliers. Importantly, the Act does not eliminate the existing prohibition on Direct Access; it merely directs the California Public Utilities Commission (“Commission”) to consider and develop limited Direct Access rules in the coming months. The details of the final rule remain uncertain and warrant close monitoring and/or participation in the rulemaking process.

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