U.S. orders power suppliers into Calif. market Friday January 5, 7:15 PM EST

By Tom Doggett

WASHINGTON, Jan 5 (Reuters) - U.S. Energy Secretary Bill Richardson on Friday extended an emergency order mandating electricity generators and marketers sell power to California in order to prevent blackouts in the state, a spokesman for California Governor Gray Davis told Reuters.

The emergency order, which was extended through Jan. 10, would have expired Friday at midnight Pacific time without further action.

An Energy Department spokeswoman confirmed the order was being extending.

Generators are worried the two largest utilities in the state -- Pacific Gas & Electric (PCG) and Southern California Edison (EIX) -- are nearly bankrupt and would not be able to pay for the electricity that is supplied to the utilities.

The utilities say they are on the edge of bankruptcy after running up billions of dollars in soaring wholesale power costs that they cannot collect from their customers because retail rates are frozen under state law deregulating the California electricity market.

The utilities are suffering due to skyrocketing wholesale power prices brought on by steep natural gas prices and strong demand for electricity.

The California Public Utilities Commission (CPUC) approved on Thursday a 90-day increase in electricity rates for households and businesses, though not by as much as requested by the utilities.

Top White House economic advisors will convene an emergency meeting next week to address the California power crisis.

Energy Secretary Bill Richardson will attend the meeting. Federal Energy Regulatory Commission (FERC) Chairman James Hoecker and Treasury Secretary Lawrence Summers were also expected to take part in the conference.

Today's extension of the emergency order, which was originally issued in mid December, requires that if the California Independent System Operator (ISO) certifies there is an inadequate supply of electricity, generators would have to make electricity available to the ISO if they have surplus power not needed for customers with so-called "firm" delivery contracts.

Suppliers that have excess firm capacity and have provided power to the California Power Exchange and the ISO over the last 30 days would be subject to the order.

Under the order, the ISO is required to provide notice to each supplier on the amount of power and type of service needed by 9 p.m. EST on the day before the requested service.

The ISO must, to the extent feasible, allocate the request for power in proportion of the amount of each supplier's available electricity.

http://money.iwon.com/jsp/nw/nwdt_rt.jsp?section=news&news_id=reu-n05193466&feed=reu&date=20010105&cat=INDUSTRY

-- Martin Thompson (mthom1927@aol.com), January 07, 2001

Answers

Yeah, right, keep shipping the California kooks electricity at 5 cents per kwhr while maintaining costs almost double that for the vast majority of the American public! It'd probably be 'unfair' to make the screwballs pay market rates.

-- Wake (Up@America.com), January 07, 2001.

Really sad,responses like the above. It thoroughly demonstrates the sucess of the divide and conquer propaganda of the powers that be. Living in mts. of N Cal we pay 9.8 cents per kwhr. People around here don't particularly conserve electricity,they're like most Americans,consume like crazy. It's hardly a matter of crossing state lines,unlike many politicians would have us believe. In the midst of all this brouhaha there seems to be little encouragement toward true conservatiion. With just a little thoughtfulness,most people could use 20-30% less electricity and maintain the same standard of life. Maybe Mr/Ms Wake,you ought to check out how much elec, YOUR neighbors are using before issuing such shoot from the hip statements.

-- h (dryfarmer@hotmail.com), January 07, 2001.

Whoa, h--

5 cents per kwhr is hardly a shot from the hip! Just last week there was an attempt to introduce just such legislation into the Calif. assembly! Certain elements in Calif. feel that it is a 'right' to have cheap electricity at someone else's expense. Better read up, my friend, you obviously missed that item. If you still feel that's a shot from the hip - wait til you see the reaction of all the rest of us who pay at least twice that!

-- Wake (Up@America.com), January 08, 2001.

Here's what your California 'kooks' are trying to pull off -- guess who'd have to pay the difference between what they WANT (5c/kwhr) and what most of us (and you apparently, too) have to pay? This was posted on THIS BB earlier this month--don't shoot the messenger.

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Electricity rate rage growing Consumers fight back with a Web site and calls for a ballot measure.

By Mark Grossi The Fresno Bee

(Published January 2, 2001) As state officials talk about raising electricity rates by 26% to 40% to pay for blundering into a deregulated market, an outrage is building.

There's a campaign for a ballot initiative to lower electricity prices. There's a Web site where you can read the "5-cent solution" -- a proposal to freeze rates at a nickel per kilowatt hour.

And, if the state this week raises electricity rates, as many have predicted, there may be lawsuits. Some people are incensed about paying for the state's mistake.

"What about older people and those on fixed incomes?" asks Mindy Spatt, spokeswoman for The Utility Reform Network. "If these rates can just keep going up, it will make their lives like hell."

The California Public Utilities Commission may vote Thursday to permit rate increases for 24 million people. Residents are already feeling increases in their natural gas bills.

Electricity rate increases would help Pacific Gas & Electric Co. and Southern California Edison deal with credit problems resulting from $9 billion in losses this year.

How did those massive losses happen? The state's deregulation rules and structure allow the two utilities to collect about 5 cents per kilowatt hour, but power on the deregulated or open market is now going for 30 to 40 cents per kilowatt hour.

"It can't go on," said Jon Tremayne, a PG&E spokesman. "We're borrowing money to keep the lights on. If we go bankrupt, you don't know what will happen tomorrow."

You can know, however, what will happen if the rates go up. For a 26% increase, a $55 bill would go to $69.30. A 40% increase would raise the $55 bill to $77.

In its approach to state officials, Edison projected it would need a 76% increase over the next two years. That same $55 bill would climb to $96.80 by 2002 under the proposal.

Don't be fooled, consumer groups say: The lights won't go out if the utilities go belly up. If the taxpayers buy out the utilities, it's a better deal than a bailout, advocate Doug Heller says.

"We need to reregulate the utilities, refund any extra money that people already have paid in and focus on public ownership," said Heller of the Foundation for Taxpayer and Consumer Rights. "Look at the publicly owned districts that are not being touched by this crisis. They're not maximizing profits. They're providing energy at a reasonable cost."

The Sacramento Municipal Utility District and Los Angeles Department of Water and Power are two examples of public districts that provide their own power to customers. They don't have to buy electricity from power generators that have cornered California and used its system to haul out 800% and 900% profits.

Publicly owned utilities might be necessary under an idea floated by TURN -- the so-called "5-cent solution." Rates would be set at 5 cents per kilowatt hour, and a new state agency would be formed to carry out the strategy if the utilities can't or won't oblige.

The 5-cent solution would require the utilities to keep the power plants they still own -- nuclear and hydroelectric facilities. In the deregulation law passed four years ago, utilities were ordered to sell their power production facilities, and they have sold many.

Under the 5-cent solution, the utilities' power from their nuclear and hydro facilities would be used to serve the state's residents and small businesses.

The utilities would provide the power at the cost of operation, and large businesses and industry would purchase on the open market. Any additional need for electricity could be purchased in long-term contracts.

The idea would sink like a rock, Edison spokesman Tom Higgins says. There would not be enough power from the utilities' remaining plants, and the prevailing market prices would cost a lot more than 5 cents per kilowatt hour. He said the state would empty its reserves trying to take over.

"The consequences of the utilities disappearing would be devastating," Higgins said. "The current prices would get passed right through to the consumer. Look at what happened to San Diego last summer when their prices were passed on to the consumer -- 300% and 400% increases in their bills."

But if the Public Utilities Commission or the Legislature ignores their suggestions, consumer advocates promise a 2002 ballot measure.

"We will roll back the prices to just and reasonable rates," Heller said. "We can't let them get away with this."

The reporter can be reached at mgrossi@fresnobee.com or 441-6316.

http://www.fresnobee.com/print/storynews/0,1737,226428.html,00.html

-- Martin Thompson (mthom1927@aol.com), January 02, 2001

Answers

-- Wake (Up@America.com), January 09, 2001.

Sorry Wake,guess it was me that was shooting from the hip. I know that many politicians have a weird frame of reference,but trying to create 5 cents/kwhr power by legislative fiat would really take the cake. And yes,there are alot of kooks out there who think that elec just magically appears out of their sockets w/o any sweat or effort in the real world.

My main questions are,who really does control the "surplus" power supply nationwide and who decides where it goes? Also I feel frustrated by how seldom conservation is mentioned and that many of the energy saving rebate/incentives that were common a few years ago are mostly gone now. Maybe more plants need to be built,but i know that in Oregon(where I lived until last year)that at least four power plants were approved for construction in the 90's. All the hoops had been jumped through and yet they were never built because the financial powers thought they weren't profitable. And then Pacificorp was taken over but a European multinational(who I think could care less us). It seems like most of our national energy supply(and policies) are controlled these speculative interests. And that they have little desire to produce an actual product and develop a long term business customer relationship. If you have some sources that would help me answer these questions I would be eager to read them. h

-- h (dryfarmer@hotmail.com), January 10, 2001.

h--

I share many of your frustrations at the current (sad) state of conservation, (lack of) energy policy, etc.

Having lived in So.Calif. myself (SD County) for almost 20 years in the 70's & 80's I know from whence I speak about 'kooks' - having seen more than a few up close and personal.

PBS interviewed several of 'em just last night about the "power problem" and to say that they were all totally clueless would be an understatement!

Power, as most things, has become completely political. It's about big money, big-time power/control tripping, etc. Probably always was, but it's even more so now. I'd like to think that the solution is simply for those of us who know better to continue our personal conservation efforts and attempts to convert other to 'right' thinking - but it appears that we're well past that.

Here in No. Carolina most folks are pretty conservative in most matters - including energy usage. Simple economics in an area that also has appx 10c per kwhr rates. It just totally frosted me to think that the SoCal kooks were yelling for their 'right' to cheaper electric and that the rest of us should subsidize them.

-- Wake (Up@America.com), January 13, 2001.