Lawmakers OK California Energy Bill

(2/21/01 4:41:01 AM PT) Associated Press

SACRAMENTO, Calif. -- Five years after California's groundbreaking energy deregulation law, the state took another significant step toward returning to the power business.

The Senate on Tuesday approved legislation that would allow the state to buy power plants or build new ones to meet increased demand for electricity. The bill still needs approval from the Assembly.

"I think we can say deregulation in the state of California is officially dead," said Republican Sen. Bill Morrow after the 24-14 vote, which Republicans opposed.

The bill would create the California Consumer Power and Conservation Financing Authority, which would give the state more control over the wholesale electricity market by buying or creating state-owned power plants that could charge lower rates.

Ratepayer advocates said the state should have moved toward the public power model five years ago instead of its "failed experiment" with deregulation, citing lower rates municipal power customers have paid throughout the crisis.

But Jan Smutny-Jones, executive director of the Independent Energy Producers Association, said the move might backfire if the state starts seizing plants and deters private companies from building more power generators in the state.

"That's the big concern I have that as California starts to creep toward nationalizing their system, they're going to drive away the very plants they need to attract," he said.

Pacific Gas & Electric Co. spokesman Ron Low declined to comment on the legislation. Southern California Edison representatives didn't immediately return calls seeking comment.

Skyrocketing wholesale electricity prices, due to high natural gas prices and scarce supplies, have nearly driven the state's two largest utilities into bankruptcy.

California's two largest utilities say they've lost nearly $13 billion due to high wholesale power prices, which the state's 1996 utility deregulation law blocks them from recouping from customers.

The state has already stepped in, committing $10 billion to purchase power for customers of Edison and PG&E. That and other fixes under consideration including a state purchase of 26,000 miles of transmission lines could cost consumers and taxpayers $20 billion, or roughly $590 for every California resident.

Democratic Sen. Steve Peace, who was one of the primary authors of the state's 1996 energy deregulation law, urged the governor to seize the state's power plants, many of which are owned by Texas companies.

"This is the only choice the kidnappers have given us," Peace said. Either take control of the generation plants "or raise the Lone Star flag to the top of the Capitol and give up the ghost."

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-- Martin Thompson (mthom1927@aol.com), February 21, 2001