The state has no way out of the power crisis -- only hard and really hard : LUSENET : Grassroots Information Coordination Center (GICC) : One Thread

Published Sunday, Feb. 11, 2001, in the San Jose Mercury News


The opinion of the Mercury News

The state has no way out of the power crisis -- only hard and really hard Bad options FOR elected officials, fixing the state's electricity system has become a succession of choosing least-bad alternatives.

This past week, the state was busy buying electricity to keep the lights on. It began to consider whether, and how, to rescue the ailing utilities. And it made plans to speed the construction of more power plants. It faced unpleasant trade-offs at every turn.

No one was enthusiastic about the state buying power, but given that the other choices were letting the utilities go bankrupt, or setting consumers adrift in the turbulent market, it was the least bad alternative.

Few want to shove power plants down the throats of reluctant communities or to bend air quality regulations, but given the need to obtain new sources of power quickly, that's the least bad alternative.

The next category on the menu of unsavory choices is what to do about the near bankruptcy of Pacific Gas & Electric and Southern California Edison.

Caught in a restructured electricity system that required them to buy power at soaring wholesale prices and resell it to consumers at a much lower price, the two have run up billions in debts.

One option is to let them take their chances in court. The utilities are asking a federal judge to rule that ratepayers must reimburse them for the power they have purchased. Or, the businesses to which they owe money may take them to bankruptcy court.

Both the free-market faithful and the ``back to regulation'' consumer advocates have argued that the utilities jumped into the deregulation pool, so it's their tough luck if they drown.

Gov. Gray Davis and many legislators, however, are looking for a middle way. They worry, as do we, about who else might drown with the utilities.

The choices on the table so far are: give the utilities money in return for getting options to buy their stock at certain prices; buy their dams and hydroelectric power plants; buy the long-distance transmission lines.

All have problems. If the state takes a significant ownership position in the utilities through stocks, does it then root for electric rates to rise so the stock price goes up?

Also, there are rumors going around that stock options sometimes turn to dust.

Taking over the hydroelectric system doesn't help the shortage of electricity. When the idea was first broached a year ago, the goal was to prevent the system from being sold to a private company that would squeeze more electricity out of it while harming the river ecosystem. But operating the system to benefit the environment means less generation of electricity.

Which brings us to buying the long-distance transmission lines. Purchasing them might give the utilities cash to pay their bills. State-ownership might facilitate improvements to the lines, because the state can borrow to make enhancements more cheaply than private businesses can.

But state ownership might be opposed by the Federal Energy Regulatory Commission. And the flip side of the ability to finance improvements is that the state, as owner, would be responsible for making those improvements.

Davis hopes to work out a utility rescue package within a week. We hope he can find an even a less-bad option.

-- Tess (, February 12, 2001

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