In California, lights on at home, but not at end of tunnel : LUSENET : Grassroots Information Coordination Center (GICC) : One Thread

In California, lights on at home, but not at end of tunnel

SACRAMENTO, Calif. ó Californiaís $10 billion gamble to plunge into the energy-buying business was greeted at the Capitol with hugs, back slapping and plaudits from the governor.

When the lip service and glad-handing was finished, however, the crisis was far from resolved.

"The current panic is over, but thatís not to say there wonít be others," said Sen. Debra Bowen, D-Marina del Rey.

With dangerously low energy reserves, grim forecasts for a hot summer, drained hydroelectric resources and tight energy imports, the threat of blackouts will continue.

On Saturday, California was in a Stage 3 energy alert - imposed when reserves drop under or threaten to fall below 1.5 percent - and rolling blackouts were possible, although none were ordered. The state has been in a Stage 3 nearly continuously for three weeks.

The ambitious venture approved Thursday to continue buying electricity for consumers of the two largest utilities is just one piece of the energy puzzle being reassembled at the Capitol - five years after lawmakers voted to dismantle it in a deregulation scheme that fizzled.

The 1996 law - and the regulations it spawned - forced utilities to sell their power plants and buy energy on the open market. But rate controls prevented utilities from passing costs along to consumers when wholesale prices skyrocketed.

Southern California Edison and Pacific Gas and Electric Co. claim they lost $12.7 billion, causing them to default on payments to suppliers who shut off the juice, sending the state into the wave of power alerts and blackouts.

The state waded into the crisis Jan. 17, committing $40 million to $50 million a day to keep power flowing.

Under the law signed Thursday by Gov. Gray Davis, the state is committing $10 billion financed by revenue bonds to buy electricity for as long as a decade. Standard & Poorís, a credit-rating agency, has put the state on credit watch status, alerting investors that its AA rating could drop if electric bills continue to drain the budget surplus.

The bill, which creates the possibility of future rate hikes, did not pass without a fight - mostly from Republicans. Even Democrats who supported the bill did so reluctantly, with its sponsor referring to it as the "bill people love to hate."

As weary lawmakers retired for the weekend, a potentially more bruising political battle was on the horizon.

A sweeping bill to let SoCal Edison and PG&E recoup their losses is in the works. Utility executives met with Davis last week to discuss details of the plan that could leave the state with a stake in the utilities - an element the power companies are said to oppose.

Consumer groups have attacked the plan and have promised to take the issue to the ballot box if necessary.

"If they try to put through a bailout thereís no amount of campaign contributions thatís going to protect them from what the voters are going to do to them in the next election," said Harvey Rosenfield, president of the Foundation for Taxpayer and Consumer Rights.

The Legislature could dodge the issue if a federal judge, set to hear arguments by the utilities Feb. 12, orders a rate hike so SoCal Edison and PG&E can erase their red ink.

The Bush administration is also letting emergency orders directing electricity and natural gas suppliers to continue selling to California utilities expire at midnight Tuesday.

The future is further dimmed by forecasts of a hot summer and little snowmelt in the Sierra Nevada to power hydroelectric plants. Even with a cool summer supplies will be tight, said Claudia Chandler, spokeswoman for the California Energy Commission.

"It would be a real problem to meet peak (demand) on summer afternoons," Chandler said.

-- Martin Thompson (, February 03, 2001

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