State cold snaps sap power; focus on utility debts

The Associated Press
Wednesday February 14, 2001

SACRAMENTO — A power-sapping cold snap put California at a renewed risk of blackouts Tuesday as lawmakers considered expanding the state’s role in the electricity business to help two huge utilities out of debt. 

Frosty weather and the shutdown of power plants for repairs raised the risk of blackouts during peak demand Tuesday evening, but enough power was found to fend them off, said Stephanie McCorkle, spokeswoman for the Independent System Operator, which oversees the state power grid. 

The Legislature, meanwhile, worked on proposals to help restore Southern California Edison and Pacific Gas & Electric Co. to financial health. A plan that would have the state buy the utilities’ power lines won Senate energy committee approval Tuesday afternoon. 

Gov. Gray Davis said he hopes the state will be ready to propose a relief plan to the utilities later this week. He moved to dispel criticism from some consumer advocates that the plan will amount to a ratepayer- and possibly taxpayer-financed bailout. 

“What I will propose, hopefully this Friday, will not be a bailout. It will be a buyout,” Davis said at a Los Angeles news conference. 

Davis did not put a dollar figure on the state’s contribution but said California was looking at a range of options, including taking stock or warrants in the utilities, assuming ownership of the transmission lines or other assets such hydroelectric dams. 

“We will insist on receiving commensurate, equivalent value for any value we will confer on the utilities,” Davis said. 

The state is in its fifth straight week under a Stage 3 power alert, with electricity reserves threatening to fall to just 1.5 percent. 

California has scrambled for power for weeks, driven by high demand and a tight supply due in part to scarce hydroelectric power in the Pacific Northwest. 

The power crisis inflicted rolling blackouts on the northern two-thirds of the state twice last month. 

On Tuesday, plants that would have produced 10,000 megawatts were down for repairs, McCorkle said. That’s enough power for about 10 million households. 

In addition to the tight supply, wholesale electricity prices have soared since last summer, pushing Edison and PG&E close to bankruptcy. 

California’s two largest utilities say they’ve lost nearly $13 billion due to high wholesale power prices, which the state’s 1996 utility deregulation law blocks them from recouping from customers. 

Edison faced another financial deadline Tuesday, the expiration of a 30-day extension granted by 23 banks owed about $200 million. The company asked for another extension. 

The state has been spending roughly $45 million a day since mid-January to buy power for customers of PG&E and Edison, both denied credit by electricity wholesalers. 

It is now negotiating contracts for cheaper long-term power that would be financed with an estimated $10 billion in state revenue bonds the utilities’ customers would pay off over a decade. 


On the Net: 

California ISO: www.caiso.com