Calif. Facing Natural Gas Shortage

S A C R A M E N T O, Calif., Feb. 9 -- A federal court ordered power suppliers to keep electricity flowing for at least another week, but now California authorities are scrambling to deal with possible natural gas shortages.

Pacific Gas and Electric announced that customers in northern and centralregions could see shortages by next week if a cold snap moves in.

PG&E said its problems have been compounded because a federal courtorder that guaranteed gas deliveries expired Tuesday.

After the judge's ruling requiring the power companies to keep electricity flowing at least until Feb. 16, when the next hearing is held, Gov. Gray Davis unveiled a plan that he said would addenough electricity to power 5 million more homes by summer.

"We will demonstrate that California can cut red tape, buildmore power and protect the environment," Davis said at a newsconference in Yuba City, where a new 545-megawatt plant is expectedto be operating by July.

State air-quality regulators said they would grant exemptions toease concerns of two of the suppliers who argued they could befined for violating pollution standards if they continued meetingCalifornia's demand.

The third supplier, Houston-based Reliant Energy Services Inc.,said it feared the state's two big cash-strapped utilities wouldnever pay for the power it was supplying.

Alternatives to Bankruptcy

Southern California Edison and PG&E havesaid they are nearly $13 billion in debt, but State TreasurerPhilip Angelides said Thursday that he doesn't believe they willhave to declare bankruptcy.

Lawmakers are discussing enough financial options, includingbuying a stake in the utilities or taking over their transmissionlines, that should enable the companies to pay their bills,Angelides said.

"The next step is up to them," he said, adding that even ifthey did file for bankruptcy, they still could continue operating.

Reliant wants the state to guarantee Edison's and PG&E's powerpurchases, but Davis has balked at that, saying Reliant could tryto drive up the price. Last week, Davis signed a law allowing thestate to negotiate long-term power contracts that would have itspending some $10 billion to provide power to the utilities' nearly9 million customers.