Clock ticks on power deals

CRISIS: State scrambles to lock in lower rates before a federal order expires.

February 5, 2001

By JAMES B. KELLEHER and DENA BUNIS The Orange County Register

Facing another deadline that could complicate California's energy crisis, Gov. Gray Davis this week hopes to sign long- term power-purchase deals, tapping the $10 billion emergency fund authorized last week by state lawmakers.

With a federal order that eased the state's power crunch set to expire Tuesday, negotiators worked over the weekend on the contracts, which could lock in low prices for as much as one-third of California's electricity needs.

The negotiators were also keeping an eye on the clock. Davis has assured the Bush administration he can wrap up the process before the expiration of the federal order that forces generators to sell electricity and gas to California.

But even as negotiators moved to rein in electricity prices and avert blackouts with the long-term deals, Duke Energy, one of the companies talking to the state, warned that a fresh crisis may be looming.

California's two biggest utilities, a Duke spokesman said, may have a tough time buying natural gas after Tuesday because last week's legislation addresses credit concerns regarding electricity only.

"We'll be examining our options when the (federal) order expires," said Duke spokesman Tom Williams. "We need adequate credit assurances from both Edison and PG&E for the gas we sell them, too."

Most natural gas users in Orange County are served by Southern California Gas, a unit of San Diego-based Sempra, and would unaffected by any interruption.

Also this week:

Senate Leader John Burton, D-San Francisco, plans to introduce legislation to help bail out Southern California Edison and PG&E, which have spent as much as $12 billion buying high-priced power. In exchange, the state would take over the $4 billion electricity transmission system.

http://www.ocregister.com/business/power00205cci.shtml

-- Martin Thompson (mthom1927@aol.com), February 05, 2001