Governor Davis tells California's city-owned utilities to sell cheap or else : LUSENET : Grassroots Information Coordination Center (GICC) : One Thread

Governor Says He's Prepared To Seize Power

Davis Tells City-Owned Utilities To Sell Cheap Or Else

Paul J. Young, Staff Writer

May 31, 2001, 10:17 p.m. PDT

LOS ANGELES -- When it comes to power, Gov. Gray Davis doesn't play around.

During a stop in Los Angeles Thursday, the governor again affirmed how serious he is about using the authority of his office to guarantee that all available electricity in the state is redistributed to try to prevent rolling blackouts.

There's been some question lately about whether the state's sundry municipal power generators will agree to provide their electrical surpluses this summer at the rates desired by Davis and state officials.

The governor recently told The Chronicle that municipal -- city-owned -- utilities have been as bad or worse than out-of-state generators in charging usurious prices for megawatts.

"I was very disappointed to learn that they were charging us more for power than the [out-of-state] power suppliers," Davis said.

It's estimated that so far this year, well over $8 billion dollars in taxpayer money has been spent by the state to purchase megawatts for the financially crippled investor-owned utilities.

The governor and state Energy Czar S. David Freeman have been negotiating long-term contracts with power generators that would assure the acquisition of electricity at fixed rates.

According to the Chronicle, the contracts will end up draining nearly $40 billion out of the state budget.

The governor and state energy officials are looking to municipal power generators to sell their surplus electricity cheap for the duration of the power crunch.

But it's uncertain whether the cities will agree to provide megawatts when it's not profitable.

"They're supposed to provide power on a cost of service basis," Davis told CBS 2 News Thursday.

"They're not supposed to make a zillion dollars by charging us more than these out-of-state generators, who've set the Guinness Book of Records for greed themselves, but munies are doing even more."

Among those Davis accused of overcharging the state is the Los Angeles Department of Water and Power.

But Mayor Richard Riordan shot back Thursday, saying that, if anything, the DWP has been generous, considering that it's still owed $180 million for wattage sold to keep the juice flowing in California.

"L.A. DWP sells lowest cost power to the city's own customers by law," Riordan told CBS 2 News. "What we're selling to the state is our most inefficient and our most expensive to produce.

"We're making far, far less profit than anybody else. We've limited our profits to 15 percent and will continue to do that."

According to The Chronicle, Davis is prepared to seize up to 800 megawatts of output (enough to light 800,000 homes) from municipal generators if their prices don't come down.

He's giving them two weeks to lock in low-cost rates with the state.

"But if they don't go through with contracts, I'm going to seize the power," Davis told CBS 2 News.

Both of L.A.'s mayoral candidates vowed to fight any move by Sacramento to forcibly take power generated in Los Angeles.

"I don't believe that the state should step forward, and I'll fight that" former Assembly speaker Antonio Villaraigosa said Thursday.

City Attorney James K. Hahn said that the governor's approach is wrong.

"I don't think the governor, the state legislature who created this mess ought to be trying to blame people in Los Angeles for this," Hahn said.

-- (, June 01, 2001


They are going to have a civil war in Kalifornia if Davis keeps on with his "nationalization" program. Why should anyone, anywhere, sell to California when they don't get paid? Kalifornia owes all the power generator companies money in the millions. If I were LA I would cut production down to LA's needs and thats it! Davis doesn't have the balls to put his own price caps on by just saying "we will pay this much and no more". He knows that the State would just be cut off. He would rather Bush did the price caps so then Bush could take the heat. Davis keeps acting like he is negotating from a place of strength rather than weakness. Everyone but Davis realizes that you cannot negotiate from a place of weakness. First and foremost in his head is his political career. He doesn't want to get stuck with any of the blame. Its always the other guy's fault!

-- Taz (Tassie, June 01, 2001.

The really aggravating part is that the Guv can't decide whether to be a free-market capitalist or a central-planning socialist. Even if he said OK, I'm an evil socialist and I'm seizing your plants, see you in court, comrades - the cost to the State of California probably would have been a lot less than his secret deals with So Cal Edison and secret power purchases. We're not supposed to know exactly how much we paid until 2003? Yeah, right.

As for the municipal utilities, he probably has to talk tough because more and more small utilities are telling Cal ISO that they will no longer "cooperate", which threatens the whole house of cards. Whether he will actually do anything remains to be seen. Their customers are his constituents, after all, and elections are coming up!

-- Margaret J (, June 01, 2001.

Whee! I love to see this infighting between Davis and cities in his own state. Shows clearly that he can't blame all of California's power problems on Bush and his Texas energy pals, hard as he tries.

-- Uncle Fred (, June 01, 2001.

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