California could buy plants in deal with utilities

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State could buy plants in deal with utilities

ENERGY OVERHAUL STRATEGY : ASSEMBLY DEMOCRATS' DRAFT PLAN WOULD GENERATE NEW CASH FOR THE STRAPPED COMPANIES WHILE GIVING THE STATE INCREASED CONTROL OVER ENERGY SUPPLIES

BY MARK GLADSTONE Mercury News Sacramento Bureau

SACRAMENTO -- Assembly Democrats are putting together a package of bills to overhaul California's electricity system that includes a sweeping proposal to give the state authority to purchase assets of the financially troubled utilities.

In a draft of their ``strategic plan'' obtained by the Mercury News, Democrats say they want to ``open a dialogue with the electric utilities to enter into a business relationship to sell assets in exchange for financial assistance.''

Such assets could include power plants. The plan would generate new cash for the strapped utilities while giving the state increased control over limited energy supplies.

If such a partnership were enacted into law, it would mark a major reversal from four years ago, when the Legislature lifted state regulation over the generation of power.

Other possible bills cited in the Democratic package would require conserving energy used at schools and other public buildings, as well as forcing generators to provide electricity or face the threat of the state buying their power plant.

A total of 18 proposals are cited in the plan, subtitled ``Stop the Runaway Rate Increases.'' The measures are being hammered out in private meetings in the Capitol, with the first bill -- on control of the electric transmission lines -- scheduled to be heard by a special electricity committee on Thursday.

The Democrats' plan surfaced one day after Gov. Gray Davis outlined his plans for dealing with California's energy mess, which included setting up some kind of public power authority.

Assemblyman Fred Keeley, D-Santa Cruz, said the proposals under consideration by Assembly Democrats would complement the governor's plans.

Keeley confirmed that the idea of purchasing utility assets is under active consideration. Democrats control both houses of the Legislature.

``No one is saying have the state government take the entire system,'' said Keeley, a member of a newly formed Assembly committee set up to deal with the energy crisis.

``It would be a mistake not to examine every option,'' said Keeley, who has previously suggested that the state purchase hydroelectric facilities from the utilities.

Keeley cast the decision in economic terms. He said lawmakers may need to weigh whether it's a good business move to jump into the energy business.

At issue is whether the state should take public funds to own utility assets, including the actual generation plants, many of them old and in need of overhaul.

``They may be looking for a politically acceptable way to inject cash into the utilities to prevent a bankruptcy,'' said V. John White, executive director of the Center for Energy Efficiency and Renewable Technology.

While the Democratic plan cites the need ``to put into place emergency measures if one or more bankruptcy occurs,'' it offers no details.

A spokesman for Pacific Gas & Electric Co., which has indicated that it is heading toward bankruptcy, declined to comment.

But Assemblyman Bill Leonard, R-Rancho Cucamonga, who helped shape the 1996 overhaul of utility regulation, said the Democratic proposal ``sounds a bit off the wall. I'm not sure what it accomplishes.''

Meanwhile, consumer activists gathered at a Capitol news conference offered a mixed reaction to energy proposals offered Monday night by Davis. They lauded him for being willing to take drastic steps to fix the problems, but they voiced concern that he wasn't more explicit in promising to protect consumers.

http://www0.mercurycenter.com/premium/local/docs/demspower10.htm

-- Martin Thompson (mthom1927@aol.com), January 10, 2001

Answers

I think this is the best idea i have heard! The democrats buy out the utilities, have no flogging boy and four years later the state by some amazing feat becomes republican. If it were only so simple, and they so stupid...

-- Lee Blocher (cblocher@northernway.net), January 10, 2001.

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