Senate approves $10 billion power-buying bill

Updated: Jan. 31, 2001 - 3:48 p.m. Lawmakers moved Wednesday to make the state a major power buyer under a $10 billion plan to rescue utilities pushed to the brink of bankruptcy by California’s disastrous deregulation law.

Some of the same lawmakers who deregulated the energy industry in California five years ago voted to put the state in the business of buying power to keep the lights on.

The proposal won Senate approval 27-8. It was sent to the Assembly for a final vote and was expected to go to Gov. Gray Davis by day’s end.

“This is a measure I undoubtedly hate as much as anyone on this floor, but it is far less odious than to do nothing,” said Sen. Debra Bowen, a Marina del Rey Democrat, who backed the deregulation law as an assemblywoman in 1996. “There’s no possibility of improvement if we don’t take the medicine that we need to get better.”

The bill lets the state sign long-term contracts to buy power and sell it to the customers of financially strapped Southern California Edison and Pacific Gas and Electric Co., who together serve nearly 9 million residential and business customers.

The state’s two largest utilities, forced by the deregulation law to sell their power plants, say they’ve been pushed $12.7 billion in debt by soaring wholesale prices that same law blocks them from recovering from their customers.

The state has already spent more than $400 million on costly short-term power-buying on behalf of Edison and PG&E, which have been denied credit by suppliers. The legislation lets the state spend up to $500 million buying more electricity on the expensive spot market while reaching cheaper long-term deals with wholesalers for up to a decade.

One controversial element of the legislation was a provision that would allow the state Public Utilities Commission to raise electricity rates to cover wholesale costs.

To encourage conservation, residential customers who use 30 percent more energy than a baseline specified by regional climate and energy use would be punished with higher rates.

The governor sent lawmakers a letter urging them to back the bill, and promising to sign it.

"Our job is not yet done,” Davis wrote. “We need to continue to work together to implement aggressive conservation efforts and to vigorously pursue additional generation in the state.”

A two-thirds vote from each house was required for the bill to take effect immediately after the governor signs it. Republican lawmakers said they wouldn’t join majority Democrats in voting for the bill unless Davis pledged to take full responsibility for the legislation.

Davis has deflected criticism of his handling of the energy crisis by reminding lawmakers that he was not one of deregulation’s architects.

Two demonstrators were arrested Wednesday outside the governor’s office for obstructing police as more than a dozen consumer activists protested what they called a taxpayer-financed bailout.

“These are multibillion-dollar companies that have the ability to bail themselves out without our help,” said Medea Benjamin, a former Green Party U.S. Senate candidate and one of the protesters arrested.

The long-term buying bill, funded through $10 billion in revenue bonds, is part of a larger fix being orchestrated by lawmakers to save the state’s two largest utilities and spare the state from blackouts.

The Legislature’s action came as the state faced its 16th straight day in a Stage 3 power alert with reserves threatening to fall below 1.5 percent. The northern two-thirds of California faced two days with rolling blackouts this month as electricity fell short.

California’s energy problems are expected to persist through the summer. Even the power-buying bill’s strongest supporters said far more action was needed to resolve the energy crisis, including swift power plant construction and aggressive conservation.

California’s electricity crisis continues to put a strain on Western power resources, and the impact is being felt in Washington, D.C.

Senate Democrats criticized President Bush on Wednesday for refusing to act more aggressively in the crisis and said the problem will spread and worsen this summer unless wholesale energy prices in the state are controlled.

Meanwhile, Republican lawmakers in California revealed a series of alternative proposals Wednesday to increase the state’s energy supply and encourage conservation.

“The problem is big and it is going to take a number of large and small steps to solve,” said Senate Republican Leader Jim Brulte, R-Rancho Cucamonga.

The GOP energy plan includes building more hydroelectric power plants, constructing power plants on military bases, giving local governments the property taxes from power plants it approves, and tax credits for people and businesses who reduce their energy use by 10 percent or more.

To read the legislation, AB1X by Assemblyman Fred Keeley, D-Boulder Creek, go to: www.assembly.ca.gov

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-- Martin Thompson (mthom1927@aol.com), January 31, 2001