Davis: Power-crisis fixes almost finished

By David Whitney, Bee Washington Bureau

(Published Feb. 28, 2001)

WASHINGTON -- California Gov. Gray Davis said Tuesday the state is two weeks to a month away from completing all the "legislative fixes" to its electricity crisis, and that with "a little luck and a lot of conservation" he hopes to avoid power blackouts this summer when demand is at its peak.

"I see light at the end of the tunnel and it's not a train," Davis said during a luncheon speech before the California State Society. "It is the lights staying on in the state." But the governor, who spent much of his time here at the National Governors Association's winter meeting fending off questions about the state's power situation, left for New York City on Tuesday afternoon without any firm endorsements from the Bush administration.

And despite his rosy recap of his administration's progress, he acknowledged that difficult work remains before deals can be reached to revive cash-starved utilities teetering on bankruptcy, particularly Pacific Gas and Electric Co.

Davis said that he thought he might have an agreement soon -- perhaps by the end of the week -- with Southern California Edison permitting it to sell revenue bonds to repay debts to power wholesalers in exchange for state acquisition of their electric transmission lines.

"PG&E is taking a little longer," the governor said. "Its debt is two times as big. It's a little more complicated situation -- two, three four weeks at the outside and we'll have PG&E worked out."

PG&E declined to comment on the governor's timetable, but spokesman John Nelson confirmed that company officials will take part in talks with the Governor's Office this week.

Deals to take over the utilities' power lines would put the state in the electricity transmission business, even though it's intention is to lease the day-to-day operations back to the utilities. But Davis said the deals would complete "all the legislative fixes" and put the state on course toward stabilizing supplies and price.

"Does this mean we are home free and don't have to worry about anything?" the governor said. "No, but it means we are basically on the downside of the problem."

Striking deals with the utilities is not the only remaining problem, however. State purchase of the transmission lines would require approval by the Federal Energy Regulatory Commission.

Davis was scouting for help Tuesday from Energy Secretary Spencer Abraham on that front.

In a brief meeting with reporters, Davis described Abraham as "open" to the transmission line purchase. Davis said he presented the secretary with a nine-page memo on the Southern California Edison transaction, and Abraham said he'd review it and get back to the governor by the end of the week.

"If he would endorse the plan, that would be a big leg up in terms of getting the FERC's approval," Davis said, even though Abraham cannot simply order the FERC to approve the deal. "I hope by the end of the week he'll be able to endorse the proposal or at least endorse a modified proposal that is satisfactory to us."

In his speech to the California State Society, an organization of Californians who live and work in the Washington area, Davis said the state is on course to add new generating plants over three years so that supply exceeds demand.

But to make it through the summer, Californians are going to have to work hard to reduce consumption, he said. Residences are being asked to curb usage by 10 percent, and mechanisms are in place to squeeze similar savings from industries and commercial buildings through mandatory curtailments and cash incentives.

"We are practicing what we preach," Davis said. He said his wife has turned down the thermostat in their home to 55 degrees. "I go to bed with a heavy sweat shirt on, sweat pants, three blankets and a comforter," Davis said. "Going to the kitchen is like going to Antarctica. My office is so dark at night you could develop film in it."

Davis meets today with analysts on Wall Street, where he will carry forward the same message he delivered Tuesday -- that California is on the road to energy self-sufficiency.

"We'll have utilities back in business paying their bills," he said. "We'll have long-term contracts for power at greatly reduced prices. We'll have a very aggressive conservation program. And we'll have a public power authority not unlike New York, the state of Washington and Tennessee."

Bee staff writer Carrie Peyton contributed to this report.

-- Swissrose (cellier3@mindspring.com), February 28, 2001