California senator calls for full deregulation, end of rate freeze Filed: 02/06/2001

WASHINGTON (AP) — A California senator made the case for total deregulation of California's electricity market Monday, breaking from Gov. Gray Davis' trend toward shielding customers from high electricity bills.

Sen. Diane Feinstein, D-Calif., said that while the commitment by Davis and the Legislature to buy $10 billion of electricity buys time, a long-term solution — either toward full deregulation or re-regulation — must be forged by summer.

Power shortages are expected to become more dire in the summer months, when Californians crank up air conditioners to avoid sweltering heat.

Rate increases on use above basic levels, Feinstein said, is one way to force conservation.

"Everybody has done what they can do to try to solve the problems, but everything is being done because tomorrow might be a blackout," Feinstein told the San Francisco Chronicle. "What this does is buy the state time to really give some thought on where to go and ... that thinking needs to be done."

Davis's spokesman Steve Maviglio said lifting the price cap on electricity is "strictly off the table."

Electricity prices have been frozen since California's deregulation law went into effect in 1996. The state Public Utilities Commission ordered a temporary rate hike last month after two cash-strapped utilities told them they were nearing bankruptcy and that their credit ratings made it nearly impossible to buy power.

"Deregulation was promised to consumers as a way to lower rates, and the governor believes they shouldn't have to pay the price for this experiment," Maviglio said.

Feinstein suggested some of the state's 30 closed military bases be considered as sites for new power plants. She also called for an energy summit with input from economists and other experts that would examine where the state now stands and how it should proceed.

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-- Martin Thompson (mthom1927@aol.com), February 06, 2001