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Energy costs and politics escalate in California

The Associated Press
Friday March 30, 2001

Gov. Gray Davis on Thursday asked lawmakers to approve spending $500 million more to buy power for two struggling utilities as Republicans escalated their criticism of the Democrat’s handling of the energy crisis. 

Davis’ request, expected to win approval from the Legislature’s majority Democrats, would bring the state’s power purchases on behalf of credit-poor Southern California Edison and Pacific Gas and Electric to $4.7 billion since the buying started in early January. 

Both utilities said they are starting to pay the state back for the previous power purchases, complying with an order Tuesday by the state Public Utilities Commission. 

Edison paid the state $43 million and PG&E paid $65.2 million for power purchased by the state in January and February. 

Republicans stepped up their criticism of Davis and his fellow Democrats during an Assembly session Thursday morning. 

It was the first legislative session since Assembly Republicans chose a new minority leader this week, Assemblyman Dave Cox of Fair Oaks, who pledged to take a harder line on energy negotiations. 

Assemblyman Jay La Suer, R-La Mesa, ridiculed Davis’ offer of 20 percent rate cuts for consumers who cut their electricity use 20 percent from last summer. 

“My people can’t save 20 percent. They’ve already cut to the bone,” La Suer said. 

He and others blamed Davis for record rate increases of up to 46 percent the PUC ordered this week for Edison and PG&E customers. 

Republicans noted that the PUC is dominated by Davis appointees. Davis has denied any influence and criticized the rate hike as premature. 

Eleven Assembly Republicans filed a lawsuit in San Diego Superior Court asking the court to order Davis to provide more details on the state’s power purchases, saying they need the information for state budget decisions. 

“Governor Davis has an information gray-out,” said Assemblyman Tony Strickland, R-Thousand Oaks, who led the lawsuit. 

The lawsuit, similar to one filed last week by The Associated Press and several newspapers, seeks details on long-term power contracts the state has signed and the short-term purchases it is making for Edison and PG&E customers. 

Davis spokesman Steve Maviglio accused Republicans of engaging in political “bomb-throwing and obstructionism,” saying the information they want to make public would help power suppliers get higher prices from the state. 

He joined Assembly Democrats in accusing the Republican Bush administration and Federal Energy Regulatory Commission of not doing enough to rein in soaring wholesale electricity costs. 

“When are we going to realize that we’ve gotten FERCed?” quipped Assemblywoman Helen Thomson, D-Davis. 

She said Californians are hearing “a giant sucking sound” as their electric payments flow to out-of-state electricity generators. 

Maviglio said the crisis is the product of the 1996 deregulation law signed by then-Republican Gov. Pete Wilson. 

“To think Governor Davis can clean up this mess in a matter of months is just ludicrous,” Maviglio said. 

Cox invited Davis to attend a GOP caucus to discuss energy. Davis spent two hours briefing Democrats on Wednesday. 

Also Thursday, the Assembly resumed hearings in its investigation into California’s highest-in-the-nation natural gas prices. 

Southern California Gas Co. Vice President Rick Morrow vehemently denied allegations in a Los Angeles lawsuit that his company conspired with El Paso Gas Co. at a 1996 hotel meeting to drive up California natural gas prices. 

“That allegation is absolutely absurd,” Morrow told two Assembly subcommittees investigating the gas price-spike. 

The companies are defendants in a lawsuit filed last week by the city of Los Angeles. 

Chris Garner, director of Long Beach Energy, said the spike has cost his customers between $25 million and $30 million. Long Beach gas prices are tied to the cost of gas at the California border, which peaked this winter with costs up to six times as high as in neighboring states. 

California has struggled with soaring natural gas prices, rising electricity costs and a tight power supply for months. 

The state was under a Stage 1 power alert Thursday, with reserves approaching 7 percent. 

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On the Net: 

California ISO: www.caiso.com