Davis Focuses on Energy Crisis in Speech

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Davis Focuses on Energy Crisis in Speech

By NICHOLAS RICCARDI, Times Staff Writer

Declaring that "the time has come to take control of our energy destiny," Gov. Gray Davis Monday endorsed the idea of creating a public energy authority to build additional power plants as a way to escape from California's energy crisis.

Davis also endorsed laws making it illegal for companies to withhold power and said it was urgent the state keep its largest private utilities from bankruptcy. The governor's State of the State speech also touched on health care and education issues, but its centerpiece was Davis' proposals on how to handle the mess spawned by California's experiment with electricity deregulation.

Engineered by Davis' predecessor, Gov. Pete Wilson, deregulation created a market for energy prices which was supposed to send power costs down but instead has seen them spike upwards, sparking rolling blackouts and shoving the two largest utilities to the brink of bankruptcy. Noting that he was not in office when it was created, Davis called deregulation "a colossal and dangerous failure." The governor listed several immediate fixes, including changing market rules, which currently set the price of energy at the highest bid and making it illegal for power generators to hold back electricity.

Some government officials and experts have accused the largely out-of-state owners of California's power plants of rationing power to jack up prices as much as tenfold. Davis blasted those companies for "legalized highway robbery." His budget includes an extra $4 million to fund an already on-going state Attorney General investigation of the alleged price-gouging.

Davis also warned he was prepared to seize power plants and force them to operate if he must.

In contrast, Davis held out an olive branch to utility companies that had a major role in drafting deregulation but have been hit hard by the experiment. As their stocks and credit ratings have tumbled this month, Pacific Gas & Electric and Southern California Edison have pleaded for state help, saying they are running out of cash because a rate freeze prevents them from passing on the skyrocketing costs of power to their customers.

Davis, who is negotiating a possible state bond package to bail out the utilities, said the state cannot allow the two companies to go under. "Our fate is tied to their fate," he said.

For a long-term fix, Davis said more power plants are needed and that the state must ensure those plans supply Californians. To do that, he said, the state must either join with municipal utilities unaffected by deregulation or act independently to build a public authority to build new plants--an idea also proposed by state Treasurer Phil Angelides. Davis also proposed aid for the construction of private plants provided the energy stays within the state. "I'm not interested in utopian ideas," Davis said. "I want ideas that work in the real world." The energy crisis has become Davis' biggest challenge. In a Times poll released Sunday, the governor's approval ratings slipped and a plurality of respondents said they did not approve of how he has handled the power crunch.

The state legislature is meeting in special session to develop quick solutions to the crisis. In a press conference earlier Monday, Assembly Speaker Robert Hertzberg (D-Van Nuys) endorsed many of the short-term fixes Davis proposed.

http://www.latimes.com/business/reports/power/upd_davis010108.htm

-- Martin Thompson (mthom1927@aol.com), January 08, 2001

Answers

"Davis also warned he was prepared to seize power plants and force them to operate if he must."

How is he going to do this deed? Send in the National Guard or maybe the local sheriff.

-- Martin Thompson (mthom1927@aol.com), January 08, 2001.


Posted at 5:43 p.m. PST Monday, January 8, 2001

Davis focuses on electricity crunch in State of State By Steve Lawrence ASSOCIATED PRESS ---------------------------------------------------------------------- ----------

SACRAMENTO -- Gov. Gray Davis proposed a smorgasbord of solutions for California's electricity crunch Monday in a State-of-the-State speech that also focused on improving schools and expanding health care for the poor.

His answers to the state's power woes included possible formation of a public power authority to buy and build new power plants and using eminent domain to take over plants to "prevent generators from driving consumers into the dark and utilities into bankruptcy."

"Make no mistake," he said in his toughest language yet on the state's power crisis. "We will regain control over the power that's generated in California and commit it to the public good."

Davis said the state's venture into a gradually deregulated electricity market had been a "colossal and dangerous failure" that has left consumers facing the prospect of huge rate increases and two giant investor-owned utilities predicting bankruptcy.

"It has not lowered consumer prices and it has not increased supply," Davis said. "In fact, it has resulted in skyrocketing prices, price- gouging and an unreliable supply of electricity. In short, an energy nightmare."

Davis asked lawmakers to:

-- Earmark $1 billion in the state budget to help stabilize electricity prices and provide generate additional power and spend $4 million to allow the attorney general to investigate whether suppliers manipulated prices.

-- Restructure the boards that manage the state's power grid and overhaul a "crazy bidding process for electricity."

-- Make it easier for utilities to buy electricity through long-term contracts to stabilize prices.

-- Give the state the power to order power plants down for unscheduled maintenance to go back on line and to make it a crime to deliberately withhold power from the state grid if it results in an imminent threat to public health or safety.

-- Require California utilities to hold on to their remaining power plants and sell their power in California instead of out of state.

-- Provide low-interest financing to build more power plants designed to be used during periods of high demand and to "repower" existing ones to make them cleaner and more efficient, and provide state-owned lands to site more generating facilities.

But he said the state had to go further than just building new plants.

"The time has come to take control of our own energy destiny," he said.

That will require either a joint-powers authority made up of the state and California's 30 municipal utilities or a state power authority "that can buy and build new plants," Davis said.

He asked consumers to cut electricity consumption by at least 7 percent and urged lawmakers to allocate $250 million for "cash incentives" to encourage consumers to replace inefficient refrigerators, washers and air conditioners.

He said the state would cut consumption by at least 8 percent and by 20 percent during serious electricity shortages.

On education, Davis proposed adding 30 days to middle schools' academic year, expanding training for reading and math teachers and school principals and vice principals and spending $30 million a year to beef up algebra instruction.

He also said he was forming a task force led by his education secretary, Kerry Mazzoni, and actor-director Rob Reiner, chairman of the California Children and Families Commission, to develop a school readiness initiative to prepare young children for "a lifetime of learning and success."

On health care, Davis said he was asking for a federal waiver to expand the Healthy Families program, which now serves 375,000 children, to also cover 290,000 low-income working parents.

Davis said California's economy is still "fundamentally strong" despite increasing signs of an economic slowdown nationally.

But he said the state could "no longer expect short-term stock-market windfalls or $10 billion budget surpluses."

"Fiscal restraint is more important than ever," he said.

http://www.contracostatimes.com/news/topstory/govstate_20010108.htm

-- Martin Thompson (mthom1927@aol.com), January 08, 2001.


This Yo-Yo! He has no conception of what he's doing. All he has to do is take a leaf from the Texas book. They are way ahead of the curve for developing power facilities through deregulation.

It's Davis' environmental buddies in California that have screwed everything up. No new power plants in the 4 years of deregulation. No new transmission lines. No new nothing. If Davis were not so beholden to the Sierra Club, California would not be in the energy mess it is in.

-- JackW (jpayne@webtv.net), January 09, 2001.


It doesn"t matter who he sends in, if the people of california are unwilling to pay the real cost of electricity there will be no gas to run those generators. Unless the rest of the United States are willing to sacrifice there gas and treat california like a welfare state. How can it be, one of the richest states in the union stealing from my children to warm theirs.

-- Lee Blocher (cblocher@northernway.net), January 09, 2001.

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