Calif. Senate Rejects Power-Buy Plan
S A C R A M E N T O, Calif., Feb. 1, 2001 -- The governor signed a $10 billion plantoday aimed at keeping California's lights on while lawmakerstry to fix the state's spiraling energy crisis.
The law, which took effect immediately, allows the state to signlong-term power contracts for up to a decade and sell electricityto customers of cash-strapped Southern California Edison andPacific Gas and Electric Co.
"This bill before me marks the first critical steps on the roadto recovery from California's energy crisis," said Gov. GrayDavis, headed to Oregon for a power summit with other Westerngovernors.
Davis said he wanted contracts signed by Feb. 5.
The bill was approved after legislative leaders and Davis wonover a Democratic holdout and two Republicans in the Assembly.
Several lawmakers criticized a provision that allows the PublicUtilities Commission to raise rates to repay the state for powerpurchases. Residential customers who use 30 percent more energythan a baseline specified by regional energy use would face higherrates.
"This is a pig in a poke," said GOP Assemblyman Rod Pacheco,who voted against the bill. "It is an unlimited rate increases andthere's no question about that."
SoCal Edison and PG&E, California's largest utilities, togetherserve nearly 9 million residential and business customers.
The utilities say they've been pushed more than $12.7 billioninto debt by the state's 1996 deregulation law. The law requiredutilities to sell off power plants and blocks them from recoveringhigher wholesale electricity costs from customers.
The state has already spent more than $400 million sincemid-January buying power for the utilities, which cannot securecredit and are defaulting on hundreds of millions of dollars inbills.
The legislation lets the state spend up to $500 million buyingmore electricity on the expensive spot market while reachingcheaper long-term deals with power wholesalers.
Another proposal still in the works would let the state issuerevenue bonds to help utilities pay off their debts. It would bepaid back by customers and through utility stock options the statecould sell if their value rebounded. Lawmakers also want speedierpower plant construction and more conservation.
California's energy problems - driven not just by deregulationbut high wholesale prices, high demand and a tight supply - areexpected to persist through the summer. The state was in its 17th straight day of a Stage 3 alertThursday as power reserves hovered around 1.5 percent. Shortagescaused rolling blackouts in northern and central California overtwo days last month.
PG&E told the Securities and Exchange Commission on Thursdaythat it cannot pay more than $1 billion owed for power bought onthe open market and sold at lower, regulated prices.
SoCal Edison is expected to make a similar SEC filing Friday. Separately, Davis issued an executive order that requiresCalifornia retailers to substantially reduce outdoor lightingduring non-business hours or risk $1,000 daily fines. The ordertakes effect March 15.