Davis wants $500 million more
SACRAMENTO – Gov. Gray Davis has asked state lawmakers to approve spending $500 million more to buy power for two struggling utilities, bringing his total requests to $5.2 billion.
The good news is the state’s spending has slowed, said Department of Finance spokesman Sandy Harrison.
The bad news is the pace is likely to pick up again, said Davis spokesman Steve Maviglio.
Davis had been asking for an additional half-billion dollars about once a week since January to buy power for bankrupt Pacific Gas and Electric and credit-poor Southern California Edison.
But his last request lasted the state 16 days, as temperatures cooled and prices fell.
An order a week ago by the Federal Energy Regulatory Commission will likely reverse the trend even before hot weather returns, Maviglio said.
FERC ruled that the overseer of the state’s power grid, the California Independent System Operator, must have creditworthy buyers for the last-minute power it acquires to fill gaps in the supply and avoid blackouts.
That could add $5 million to $8 million more a day to state power purchases that had been in the range of $45 million to $50 million a day, Maviglio said.
As a result, “we’re probably going to ramp up again” on state spending, he said. That will get even worse this summer, as supplies dwindle and prices soar.
No decision has been made whether to appeal the FERC order, he said.
Meanwhile, FERC has ordered generators who have sold electricity to the state to share power purchase information with the federal agency, which will then supply the information to a House subcommittee that held three days of hearings this week on California’s energy problems.
In addition, FERC Secretary David Boergers said the commission wants the information to study how successful Davis has been at negotiating long-term contracts and insulating the state from having to buy power on the expensive spot market.
Davis has fought disclosure of the information, saying it would drive up the price of the power the state is buying by telling generators how much the state is willing to pay.
But Rep. Dan Burton, R-Ind., who chairs the House Government Reform Committee, and Rep. Doug Ose, R-Calif., who chairs its energy policy subcommittee, threatened to subpoena the information if it wasn’t provided voluntarily.
Both sharply criticized the Democratic governor’s attempts to keep the information secret. News organizations and Assembly Republicans have also sought the information without success, contending there should be public scrutiny of the power purchases.
FERC ordered the generators to submit the information by the end of business Monday, but promised to keep it secret and submit it to the House subcommittee under a seal of confidentiality.
Davis will begin lobbying lawmakers next week to support his agreement to purchase Edison’s power transmission lines as a way of helping the company pay off its debt.
The governor announced a deal for the state to buy the power lines for $2.76 billion, but lawmakers of both parties have challenged the plan. They question in particular if it makes sense for the state to buy Edison’s portion of the transmission system now that PG&E’s part is locked up in bankruptcy proceedings.
Davis will meet Monday with legislative leaders, Tuesday with Senate Republicans and Assembly Democrats, and Wednesday with Senate Democrats.
Developments in California’s energy crisis
— Gov. Gray Davis asks state lawmakers to approve spending $500 million more to buy power for two struggling utilities, bringing his total requests to $5.2 billion.
— The Federal Energy Regulatory Commission orders generators who have sold electricity to the state to share power purchase information with the federal agency, which will then supply the information to a House subcommittee that held three days of hearings this week on California’s energy problems.
— A business group, the California Alliance for Energy and Economic Stability, says a proposed restructuring of the state’s electric rate structure by the state Public Utilities Commission’s would hurt the state’s economy by putting a greater rate burden on businesses.
— Southern California Edison is granted a stay in a federal lawsuit it brought against the PUC seeking to raise rates. Edison says both sides agreed to stop discovery and postpone hearings on all motions while the state considers an agreement brokered by Davis last week. Either side can request that the stay be lifted with five days notice.
— A Superior Court judge in Los Angeles agrees to consider whether the dozen or so cases filed against Edison by small power generators should be consolidated into one case. The companies say they have not been paid for power delivered to the utility since November.
— Edison says it has sent $206 million in payments to all small power generators that have provided the utility with estimates of their April bills. Under a PUC plan, Edison and PG&E were required to pay the so-called “qualifying facilities” by Monday.
— The state is under no power alerts as reserves stay above 7 percent.
— Davis will lobby legislative leaders on Monday, Senate Republicans and Assembly Democrats Tuesday, and Senate Democrats Wednesday to support his agreement to purchase Southern California Edison’s power transmission lines as a way of helping the company pay off its debt. The governor wants to buy the power lines for $2.76 billion, but lawmakers of both parties have challenged the plan.
— An Imperial County judge could rule Monday whether Edison must pay CalEnergy, a geothermal power producer, $140 million in past payments. CalEnergy has already been granted the right to break its contract with Edison and sell power on the open market.
— Edison and PG&E are expected to file their 2000 earnings reports April 17.
— The state Senate starts hearings April 18 in its inquiry into allegations that electricity suppliers illegally withheld power to drive up California’s wholesale prices. Wholesalers deny such accusations.
— Also April 18, the Assembly plans to resume hearings in its inquiry into California’s highest-in-the-nation natural gas prices.
High demand, high wholesale energy costs, transmission glitches and a tight supply worsened by scarce hydroelectric power in the Northwest and maintenance at aging California power plants are all factors in California’s electricity crisis.
Edison and PG&E say they’ve lost nearly $14 billion since June to high wholesale prices that the state’s electricity deregulation law bars them from passing on to consumers. PG&E, saying it hasn’t received the help it needs from regulators or state lawmakers, filed for federal bankruptcy protection April 6.
Electricity and natural gas suppliers, scared off by the two companies’ poor credit ratings, are refusing to sell to them, leading the state in January to start buying power for the utilities’ nearly 9 million residential and business customers. The state is also buying power for a third investor-owned utility, San Diego Gas & Electric, which is in better financial shape than much larger Edison and PG&E but also struggling with high wholesale power costs.