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California power crisis deepens

By JENNIFER COLEMAN The Associated Press 1/5/01 5:49 PM

SACRAMENTO, Calif. (AP) -- California's power crisis deepened on several fronts Friday, with a utility losing a round in court, President Clinton calling for a high-level meeting, and a consumer activist warning of a ratepayer rebellion when the latest bills go out.

"The fuse has been lit. When people get their bills, it's going to detonate," Harvey Rosenfield, president of the Foundation for Consumers and Taxpayers Rights, said a day after state regulators approved electric rate increases of 7 percent to 15 percent by California's two biggest utilities.

The rate increases were only about half as big as Southern California Edison and Pacific Gas and Electric Co. wanted, and they warned that they are headed for financial ruin, in part because of deregulation.

The two utilities have lost more than $9 billion since June because of soaring prices for wholesale electricity and a state-imposed rate freeze that prevents them from passing the costs on to their customers. That, in turn, affects their ability to borrow money to buy power and avert blackouts.

The prospect of bankruptcy filings by the two utilities prompted Clinton to set a meeting in Washington on Tuesday.

Energy Secretary Bill Richardson, Treasury Secretary Lawrence Summers and Gene Sperling, director of the National Economic Council, are expected to meet with California officials and the chairman of the Federal Energy Regulatory Commission.

"The idea there is to try to create some sort of framework that could help to alleviate the supply crunch that California is experiencing now in energy," said White House spokesman Jake Siewert.

Steve Maviglio, a spokesman for Gov. Gray Davis, said it was unclear if Davis will attend.

Also Friday, the U.S. Court of Appeals in Washington rejected a bid by SoCal Edison to order FERC to cap prices for wholesale electricity. FERC had argued that the utility's request would not solve the crisis.

The three-judge panel said SoCal Edison "has not demonstrated that its right to this relief is clear and indisputable."

SoCal Edison said it was disappointed with the ruling but would not say what it planned to do next.

The rate increase affects about 25 million Californians. The average monthly residential bill of $54 will go up by about $5. Customers could see the increases in their bills as soon as next week.

The rate increases weren't enough to placate Wall Street. The major credit rating agencies downgraded both utilities. And their stocks have plunged in the past few days.

Politicians, utility executives and others have offered various solutions to the energy crunch, including establishing a state power authority that would promote the building of power plants; bailing out the utilities at taxpayer expense; giving taxpayers rebates from California's expected $10.3 billion surplus to cover higher electricity bills; and sending energy-saving light bulbs to residents.

Rosenfield warned that state politicians could face a ratepayer rebellion if lawmakers appear to bail out utility companies.

Meanwhile, Oregon Gov. John Kitzhaber and Washington Gov. Gary Locke on Friday urged Northwest consumers to cut back on electricity use for the next two or three months to avoid blackouts in their states. California is buying higher amounts of Northwest power at a time when dry weather and declining river levels have reduced hydroelectric generating capacity.

"We are not going to let the chaos of California drag us down," Locke said.

Republican state Sen. Tom McClintock and several anti-tax groups Friday proposed spending $5.3 billion of the state's expected surplus on a rebate to taxpayers. Taxpayers could use that rebate -- $530 for families and $200 for singles -- to pay their energy bills, McClintock said.

State government helped cause the energy problem because it "actively discouraged the construction of new power plants" and should provide some short-term relief, he said.

James Mays, a Southern California conservation advocate, said SoCal Edison should send an energy-efficient light bulb to each of its customers.

"If the 5 million customers in the L.A. area had just one of these bulbs, it would save enough electricity to power 50,000 homes," said Mays, of the Coalition for Electrical Energy Conservation. "We don't consider this a panacea, but as a position, it's a shot of penicillin."

http://www.oregonlive.com/newsflash/index.ssf?/cgi-free/getstory_ssf.cgi?a0704_BC_PowerWoes&&news&newsflash-national

-- Martin Thompson (mthom1927@aol.com), January 05, 2001

Answers

A 15% increase is nothing. Those Californians are wimps. The price of natural gas in Minnesota just went up 58%. There was no public outcry. they should pay their bills and be greatful they don't live in India.

-- John Littmann (littmannj@aol.com), January 06, 2001.