Updated Sunday, February 18, 2001

Energy solution cost to state taxpayers and consumers

(AP) February 18, 2001 - Proposals being considered by California's governor and Legislature to solve the state's electricity crisis - are expected to cost taxpayers and consumers about $20 billion. Much of that state outlay is expected to be repaid by California electricity customers over many years.

The biggest cost item proposed is ten billion dollars worth of state bonds to be used in buying power for two near-bankrupt utilities - Pacific Gas and Electric and Southern California Edison. Currently the state is spending about one billion dollars every month to buy power - because wholesale electricity providers won't sell to the financially-troubled utilities.

The next largest state cost would be at least four-and-one-half billion dollars - and possibly twice that amount - to buy the transmission lines of PG&E, Edison and a third utility - San Diego Gas and Electric. The proposed purchase by the state will be the subject of negotiations between Governor Gray Davis and utility officials starting tomorrow. And if the state does buy 26,000-miles of the transmission grid - it will cost an estimated one billion dollars to upgrade the aging system.

Other expected costs include about one billion dollars in state spending for a conservation and energy efficiency program. And the state would spend an unspecified amount of money to protect 165,000 acres of undeveloped land in watersheds that feed hydroelectric plants.

Consumer activist Harvey Rosenfield -- president of the Foundation for Taxpayer and Consumer Rights -- says the ultimate sources of the money to rescue California's electricity system are the wallets of California residents. He said if taxes are not raised and the money comes out of the state treasury -- it will be funds that could be used for education, tax cuts or other worthwhile programs.

As a major part of the cost -- utility customers can expect to be paying at least 19 percent more than they did before the crisis began last summer. Until this year the rates that PG&E and Edison were frozen under state law. An emergency rate increase averaging nine percent for the largest utilities is expected to be made permanent. And a ten percent reduction in rates which was part of state deregulation of the electric industry -- is expected to be put back on consumer bills in 13 months or less.

Governor Davis has said he wants to get out of the power mess without rate increases already set. But many people in the utility business and the legislature -- including some members of his own party -- don't think that will be enough. The utilities have argued the solution is to simply allow them to raise rates to cover their costs.

http://www.newsdirectory.com/go/?f=&r=ca&u=www.kntv.com

-- Martin Thompson (mthom1927@aol.com), February 18, 2001