Governor to present plan for solving California's complex energy problems

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Posted at 8:55 p.m. PST Wednesday, Nov. 29, 2000

Governor to present plan for solving California's complex energy problems BY STEVE JOHNSON Mercury News

Gov. Gray Davis is expected Friday to reveal his plan for solving California's energy troubles, and a lot of people think it's about time someone did something.

Ever since the electricity market meltdown last summer, the question ``Who should fix this mess?'' has prompted a dizzying display of finger-pointing among government regulators, politicians, utility company executives, power plant operators and others.

Consumers have waited months for someone -- anyone -- to rescue them. Every other week, it seems, they have been buffeted by the threat of blackouts and warnings that Pacific Gas & Electric Co.'s rate freeze may soon end, potentially exposing them to the kind of price increases that clobbered San Diego this year.

Yet, so far, most of the parties with responsibility for protecting the public have suggested that someone else is more responsible. Experts say this behavior is, in part, a reflection of how complicated the energy problem is.

But if it continues, impatient Californians may take matters into their own hands: A consumer group Tuesday proposed a ballot measure that would reverse much of what the Legislature did in 1996 when it deregulated electricity sales.

``The most startling and shocking thing that deregulation has wrought is the decentralization of authority'' over electricity sales, said Nettie Hoge of The Utility Reform Network in San Francisco. ``The fragmentation just facilitates their ability to duck. But also, people don't know what to do.''

John Nelson, a PG&E spokesman, said he believes most public and private officials are trying hard to find a solution. Even so, ``the huge difficulty for everyone is that there is no silver bullet,'' he added. ``No one entity can come forward to say, `Here is the way to fix it.' ''

Davis has expressed interest in a variety of remedies, some of which would require federal approval, according to sources who have met with his aides. These range from confiscating the profits of power suppliers and pushing for wholesale price caps throughout the West to letting him appoint the boards of several key agencies and promoting energy efficiency with government money. Davis also has considered calling a special legislative session on energy issues. But it's unclear how much of this might be announced this week.

Here is a look at the groups and individuals holding some authority over California's energy system and what they have said so far about solving the current situation.

Federal officials

State regulators, utility firms and consumer groups have been counting on help from the Federal Energy Regulatory Commission, which oversees wholesale electricity transactions. They want it to order wholesale power suppliers to refund their profits, which many people consider excessive, although the companies insist they've done nothing wrong.

California authorities also have asked Congress for assistance, and some federal lawmakers are talking tough. During federal hearings in September, Rep. Bob Filner, D-Chula Vista, called the wholesalers ``criminals'' because of what they were charging. Sen. Dianne Feinstein has proposed beefing up the federal commission's power to order refunds.

But the commissioners say they lack the authority and evidence of wrongdoing to demand reimbursements. So instead, they have advised California on changes it should make to keep prices down.

California agencies

As the federal commission discovered, the trouble in California is figuring out which agency has responsibility for what.

One of its recommendations -- to speed approval of power plants here -- was sent on to the California Energy Commission because it oversees plant permits. Another -- giving utility companies more leeway to buy electricity months ahead of when it is used -- was forwarded to the Public Utilities Commission, which oversees that.

More suggestions were directed at the California Independent System Operator, which supervises most of the state's power grid, while others went to the California Power Exchange, which oversees electricity sales. Meanwhile, the federal recommendation to ease state restrictions on power-plant pollutants went to yet another agency -- the California Air Resources Board.

And to California's Electricity Oversight Board, a largely invisible agency, the federal commission offered this advice: cease to exist because you're not needed at all.

State investigators

Since the Federal Energy Regulatory Commission hasn't yet found proof of price-gouging to warrant refunds, others in California hope the state's own investigators will. Among those looking are the Public Utilities Commission, the Energy Oversight Board and the state attorney general.

But investigators with those agencies say they can't do their job without help from the federal commission because power suppliers won't turn over key financial data. As a result, the investigators have implored the federal agency to order the firms to provide it.

Power firms

Even as they attempt to rein in the profits of power companies by imposing rate caps and making other adjustments, California officials are desperately wooing the same companies to help solve the state's energy nightmare.

Government officials reason that if they can persuade the companies to build more power plants in California, the resulting increase in the electricity supply will make prices plummet. But the companies are playing hard to get, contending their decision to build here hinges on how much profit the state will let them make.

An attractive business climate ``is imperative if we are to move forward with our power plant projects,'' Duke Energy Co. warned recently.

Utility companies

Many people also are seeking solutions from California's three major utility firms, including PG&E. Critics have accused them of failing in the summer to use what authority they had to buy relatively cheap electricity in advance of its use, and they have urged the utilities to do a better job of that in the future.

But PG&E wants help with a bigger problem: the $3.4 billion in unexpected wholesale electricity bills that it incurred in the summer. If federal and state regulators won't order wholesale power firms to refund that money, PG&E wants consumers to bear the cost.

Because of the rate freeze, however, PG&E can't force consumers to pay it. Several months ago, it asked state lawmakers to pass the bills on to the public. That went nowhere. So now, PG&E has taken the request to the Public Utilities Commission and to federal court.

The consumers

In the absence of anyone who can assume clear leadership over the state's problem, fingers increasingly are being pointed at consumers.

Since electricity consumption among California residents jumped 24 percent in June this year over the previous June, they're being asked to conserve more, for one thing. Then there's that $3.4 billion that PG&E wants them to pay. And once the rate freeze is declared over, which PG&E wants to have happen by spring, experts say consumer bills will soar.

Two class-action lawsuits were filed this week in Southern California, trying to force power suppliers to refund their profits. But short of getting help from the courts or through the ballot initiative proposed this week, many consumers are looking for protection from their elected leaders, especially the state's chief executive in Sacramento.

The governor

Gray Davis may be California's most powerful public figure, but when it has come to solving the power problems in recent months, his political juice has seemed sorely constrained.

That's not to say Davis hasn't been busy. He has called for studies, issued executive orders, created a team of energy advisers and signed a few laws intended to ease the problem, including one to speed construction of new plants.

But lately the governor has been forced to spend a lot of time begging the Federal Energy Regulatory Commission for help. And that strikes many people -- including Davis -- as an unfortunate comment on the fractured and sometimes incomprehensible division of authority presiding over California's precarious energy future.

Given ``the severe flaws'' in the state's electricity markets, Davis declared recently, decisions about how to fix them ``must not be left to technocrats that neither live in California nor are accountable to Californians.''

Whether California is ready for that challenge remains to be seen.

Even if Davis proposes new laws Friday, as is likely, he'll have to depend on the Legislature to pass them. That means dumping much of the problem back into the lap of lawmakers who created the deregulated system in the first place.

Among those anxiously awaiting the governor's plan is Carl Wood, a Public Utilities Commission member who was appointed by Davis. ``I'm hoping that it will provide a framework'' for dealing with the problems, Wood said. At the same time, though, he said he fears the flaws in California's electricity infrastructure will prove difficult to repair.

Looking back on the events of the past few months, Wood said, ``I am very skeptical of the ability of this market to work at all.''

http://www0.mercurycenter.com/front/docs1/pbuck1130.htm

-- Martin Thompson (mthom1927@aol.com), November 30, 2000

Answers

The above is not an advertisment. Have no idea where that came from. Must have been the parrots fault.

-- Martin Thompson (mthom1927@aol.com), November 30, 2000.

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