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From LA Times 2/1/2001

Bill to Rescue Utilities With Rate Hikes Stalls in Assembly

Crisis: Plan that would have authorized state to issue $10 billion in bonds to buy electricity is rejected by Republicans as a "bailout" after the measure barely passes the Senate.

-- PHO (, February 01, 2001


Fair use for educational/research purposes only

February 1, 2001 California Assembly Rejects Buying Electricity By THE ASSOCIATED PRESS

SACRAMENTO, Calif. -- The Assembly early Thursday narrowly rejected a $10 billion plan to ease California's electricity crisis by letting the state buy power on behalf of two cash-starved utilities.

The bill's supporters, mostly Democrats, planned to take another vote later, hoping to win over Republican opponents in the meantime.

California's two largest utilities, forced by the state's 1996 deregulation law to sell their power plants, say they've been pushed $12.7 billion in debt by soaring wholesale prices. That same law blocks them from recovering the higher costs from their customers.

The measure, approved a day earlier by the Senate, would have let the state sign long-term contracts to buy power and sell it to the customers of Southern California Edison and Pacific Gas and Electric Co. The two together serve nearly 9 million residential and business ratepayers.

The Assembly's 51-28 vote was three short of the two-thirds needed to send it to the governor.

Several Republican lawmakers took issue with a provision in the legislation that would let the state Public Utilities Commission raise electricity rates to repay the state for its power purchases.

To encourage conservation, residential customers who use 30 percent more energy than a baseline specified by regional climate and energy use would be punished with higher rates.

``It is clear this will result in a rate increase,'' Republican Assemblyman Rod Pacheco said. ``We are not voting for a rate increase.''

The Senate approved the proposal 27-8 Wednesday, and Assembly leaders had hoped to send it to Gov. Gray Davis by midnight. The governor had sent lawmakers a letter urging them to back the bill and promising to sign it.

The state has spent more than $400 million since mid-January on costly short-term power-buying on behalf of Edison and PG&E, both denied credit by suppliers.

The legislation lets the state spend up to $500 million buying more electricity on the expensive spot market, while reaching cheaper long- term deals with wholesalers for up to a decade.

``The critical point that I want to make tonight, is like it or not, we're in the power business,'' Democratic Assembly Speaker Robert Hertzberg said.

More than a dozen consumer activists rallied outside the governor's office Wednesday to protest what they called a taxpayer-financed bailout. Two were arrested for obstructing police.

``These are multibillion-dollar companies that have the ability to bail themselves out without our help,'' said Medea Benjamin of San Francisco, one of the protesters arrested.

Some of the same California lawmakers who backed deregulation five years ago voted to put the state in the business of buying power to keep electricity flowing.

``This is a measure I undoubtedly hate as much as anyone on this floor, but it is far less odious than to do nothing,'' said Sen. Debra Bowen, a Democrat who backed the deregulation law as an assemblywoman.

California's energy problems -- driven by high wholesale prices, high demand and a tight supply -- are expected to persist through the summer.

The long-term buying bill, funded through $10 billion in revenue bonds, is part of a larger fix being orchestrated by lawmakers, including proposals for speedier power plant construction.

Another measure in the works would let the state issue revenue bonds to help the utilities pay off their debts. It would be paid back by Edison and PG&E customers and through utility stock options it could sell as their value -- now in the basement -- rebounded.

The Legislature's work came as the state faced its 17th straight day in a Stage 3 power alert with reserves threatening to fall below 1.5 percent. The northern two-thirds of California had two days with rolling blackouts last month as electricity fell short.

In San Francisco, the PUC approved a plan Wednesday to keep natural gas flowing to millions of PG&E customers. Suppliers had threatened to stop selling to the utility out of fear that it couldn't pay its bills.

The order lets natural gas suppliers draw directly on the revenues PG&E collects from monthly gas bills from its customers. PG&E believes the guaranteed source of payment will keep suppliers interested.

Copyright 2001 The New York Times Company

-- Martin Thompson (, February 01, 2001.

As usual the title of the article is misleading. The objective of the bill ia to get the state's foot in the door to socializing the power industry. If you want to rescue the utilities, rescind the law that limits the utilities to charging less than they have to pay for energy! No business can survive under such insane restrictions.

-- Warren Ketler (, February 01, 2001.

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