- The Washington Times - Friday, February 2, 2001

From combined dispatches

SACRAMENTO, Calif. California Gov. Gray Davis signed a $10 billion plan yesterday aimed at keeping California's lights on while lawmakers try to fix the state's spiraling energy crisis.

The law, which took effect immediately, puts California into the power-buying business. It allows the state to sign long-term power contracts for up to a decade and sell the power to customers of cash-strapped Southern California Edison and Pacific Gas and Electric Co.

"With the signing of this bill today I'm assuring everyone that California can and will pay its bills," Mr. Davis said after the Assembly approved the legislation, 54-25.

The vote cast after legislative leaders and Mr. Davis won over a Democratic holdout and two Republicans came despite Republican protests that the bill will result in higher electricity rates. The legislation failed to pass earlier yesterday.

Several Republicans criticized a provision that allows the Public Utilities Commission to raise rates to repay the state for its power purchases.

"This is a pig in a poke," said GOP Assemblyman Rod Pacheco, who voted against the bill. "It is an unlimited rate increase, and there is no question about that."

The two utilities are California's largest and together serve nearly 9 million residential and business customers.

The utilities say they have been pushed more than $12.7 billion into debt by the state's 1996 deregulation law. The law required utilities to sell off power plants and blocks them from recovering soaring wholesale electricity costs from customers.

The state has spent more than $400 million since mid-January buying power for the utilities, which cannot secure credit.

The legislation lets the state spend up to $500 million buying more electricity on the expensive spot market where the state has been spending $40 million to $50 million a day while reaching cheaper long-term deals with wholesalers.

The governors of 10 Western states and the top energy officials of the Bush Administration began meeting last night in an emergency summit to find a way to stop California's electricity crisis from short-circuiting the region's and maybe the nation's economy.

The new Bush administration is represented by Energy Secretary Spencer Abraham. Curt Hebert, the new chairman of the Federal Energy Regulatory Commission (FERC), also is attending the meeting, which continues today.

California's energy problems driven not just by deregulation but high wholesale prices, high demand and a tight supply are expected to persist through the summer.

The state was in its 17th straight day with a Stage 3 alert yesterday as power reserves hovered at 1.5 percent. The northern two-thirds of California had two days with rolling blackouts last month as electricity fell short.

Surrounding states have felt the impact of soaring prices, with two major Nevada utilities earlier this week seeking to raise electric rates for their customers by an average 17 percent.

Northwestern states such as Washington and Oregon have been facing their own critical power shortages as a severe drought has drawn down rivers feeding hydroelectric dams that during a normal year would generate 75 percent of the region's power.

Most of that electricity comes from water tumbling toward the Pacific Ocean through 31 federal dams managed by the Portland, Ore.-based Bonneville Power Administration.

Also yesterday, Pacific Gas and Electric told the Securities and Exchange Commission that it cannot pay more than $1 billion owed for power bought on the open market and sold at lower, regulated prices.

The debts included $611 million owed to the state Power Exchange and to the Independent System Operator, keeper of the state's power grid.

Southern California Edison is expected to make a similar SEC filing today.

Separately, Mr. Davis issued an executive order that requires California retailers to substantially reduce outdoor lighting during non-business hours or risk $1,000 daily fines. The order takes effect March 15.

He also said his $404 million conservation program includes incentives for consumers and businesses to buy energy-efficient appliances and equipment, and funding to reduce power consumption during peak periods.

Judicial Watch Inc., a conservative public-interest law firm based in Washington, filed suit against Mr. Davis yesterday for refusing to provide documentation on the crisis.

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