Calif. May See Rise in Power Bills By Jennifer Coleman Associated Press Writer Saturday, March 24, 2001; 2:42 a.m. EST

SACRAMENTO, Calif. –– The state's power purchases for two struggling utilities could cost $23 billion by the end of next year, leaving customers paying as much as 50 percent more for electricity, The Associated Press has learned.

State officials told several key legislators Friday that the state's efforts to help credit-poor Southern California Edison and Pacific Gas and Electric Co. could hit $23 billion by 2003, a legislative source told the AP on condition of anonymity.

That's far more than lawmakers and Gov. Gray Davis estimated when they approved legislation authorizing the state's power purchases.

At the time, they projected they would need $10 billion in revenue bonds to buy power for the two utilities over a decade. The bonds would be repaid by the utilities' customers over several years.

Davis has said repeatedly he is confident the state's power crisis can be resolved without further rate hikes, but the source said cabinet secretary Susan Kennedy, Finance Director Tim Gage and Deputy Chief of Staff John Stevens all warned lawmakers that customers' rates would have to be raised at least 50 percent to cover the new projections.

That increase would come on top of a 9 percent to 15 percent increase the Public Utilities Commission approved in January, as well as an additional 10 percent increase already scheduled for next year.

Davis spokesman Steve Maviglio confirmed that Kennedy spoke with top Democrats on Friday but declined to elaborate.

The source said the calculations were by the administration, not the PUC, which would have to implement any rate increases. Lawmakers weren't told over what time frame such an increase would need to be implemented, the source said.

Consumer advocate Harvey Rosenfield of the Foundation for Taxpayer and Consumer Rights promised a rebellion at the ballot box in 2002 if rates continued to rise.

"If this goes through, this is the beginning of the ratepayers' revolt," he said.

The PUC is expected on Tuesday to address how customer rates will be divided between the state and the utilities.

SoCal Edison and PG&E both have pushed for rate increases, and PG&E has said its current rates would be insufficient to cover its bills and the state's. Both say they've lost more than $13 billion since summer due to high wholesale electricity costs that California's 1996 deregulation law prevents them from collecting from their customers.

PG&E's and Edison's credit was cut off by electricity wholesalers in January, and the state has been spending $40 million to $50 million a day since then to keep the lights on for their customers – about $4.2 billion in taxpayer money so far.

State Controller Kathleen Connell warned this week that the state's power-buying is gutting California's budget surplus and putting the state at financial risk. Wall Street has also been wary. The Standard & Poor's credit-rating agency put the state on a credit watch "with negative implications" when the power purchases began.

California has faced an energy crunch for months, fueled by high natural gas prices, soaring wholesale electricity costs and a tight power supply due in part to California plant maintenance and scarce hydroelectric power in the Pacific Northwest.

The Assembly on Friday opened hearings into the skyrocketing natural gas costs that will include an investigation into whether market manipulation helped drive up prices.

Pacific Gas and Electric Co. customer Gladys Cook of Sacramento told the committee her natural gas bill rose from about $50 a month last year at this time to $344 in February and $112 this month.

"It was just a terrific shock, especially after the Christmas holiday and everything," she said.

Natural gas that sells for $5.25 elsewhere sells for nearly $30 at the California border, said Assemblyman Darrell Steinberg, chairman of the Assembly Energy Oversight Subcommittee.

The cities of Los Angeles and Long Beach filed lawsuits this week accusing several gas companies of conspiring to drive up prices by limiting supply. The lawsuits say the companies decided in a Phoenix hotel room in 1996 to block construction of gas pipelines that could have helped the state avoid its power crisis.

Rick Morrow, vice president of customer service for Southern California Gas Co., denied executives at the meeting were conspiring to drive up gas prices.

"There was no mystery to the meeting," he said. "What is being Calif. May See Rise in Power Bills By Jennifer Coleman Associated Press Writer Saturday, March 24, 2001; 2:42 a.m. EST

SACRAMENTO, Calif. –– The state's power purchases for two struggling utilities could cost $23 billion by the end of next year, leaving customers paying as much as 50 percent more for electricity, The Associated Press has learned.

State officials told several key legislators Friday that the state's efforts to help credit-poor Southern California Edison and Pacific Gas and Electric Co. could hit $23 billion by 2003, a legislative source told the AP on condition of anonymity.

That's far more than lawmakers and Gov. Gray Davis estimated when they approved legislation authorizing the state's power purchases.

At the time, they projected they would need $10 billion in revenue bonds to buy power for the two utilities over a decade. The bonds would be repaid by the utilities' customers over several years.

Davis has said repeatedly he is confident the state's power crisis can be resolved without further rate hikes, but the source said cabinet secretary Susan Kennedy, Finance Director Tim Gage and Deputy Chief of Staff John Stevens all warned lawmakers that customers' rates would have to be raised at least 50 percent to cover the new projections.

That increase would come on top of a 9 percent to 15 percent increase the Public Utilities Commission approved in January, as well as an additional 10 percent increase already scheduled for next year.

Davis spokesman Steve Maviglio confirmed that Kennedy spoke with top Democrats on Friday but declined to elaborate.

The source said the calculations were by the administration, not the PUC, which would have to implement any rate increases. Lawmakers weren't told over what time frame such an increase would need to be implemented, the source said.

Consumer advocate Harvey Rosenfield of the Foundation for Taxpayer and Consumer Rights promised a rebellion at the ballot box in 2002 if rates continued to rise.

"If this goes through, this is the beginning of the ratepayers' revolt," he said.

The PUC is expected on Tuesday to address how customer rates will be divided between the state and the utilities.

SoCal Edison and PG&E both have pushed for rate increases, and PG&E has said its current rates would be insufficient to cover its bills and the state's. Both say they've lost more than $13 billion since summer due to high wholesale electricity costs that California's 1996 deregulation law prevents them from collecting from their customers.

PG&E's and Edison's credit was cut off by electricity wholesalers in January, and the state has been spending $40 million to $50 million a day since then to keep the lights on for their customers – about $4.2 billion in taxpayer money so far.

State Controller Kathleen Connell warned this week that the state's power-buying is gutting California's budget surplus and putting the state at financial risk. Wall Street has also been wary. The Standard & Poor's credit-rating agency put the state on a credit watch "with negative implications" when the power purchases began.

California has faced an energy crunch for months, fueled by high natural gas prices, soaring wholesale electricity costs and a tight power supply due in part to California plant maintenance and scarce hydroelectric power in the Pacific Northwest.

The Assembly on Friday opened hearings into the skyrocketing natural gas costs that will include an investigation into whether market manipulation helped drive up prices.

Pacific Gas and Electric Co. customer Gladys Cook of Sacramento told the committee her natural gas bill rose from about $50 a month last year at this time to $344 in February and $112 this month.

"It was just a terrific shock, especially after the Christmas holiday and everything," she said.

Natural gas that sells for $5.25 elsewhere sells for nearly $30 at the California border, said Assemblyman Darrell Steinberg, chairman of the Assembly Energy Oversight Subcommittee.

The cities of Los Angeles and Long Beach filed lawsuits this week accusing several gas companies of conspiring to drive up prices by limiting supply. The lawsuits say the companies decided in a Phoenix hotel room in 1996 to block construction of gas pipelines that could have helped the state avoid its power crisis.

Rick Morrow, vice president of customer service for Southern California Gas Co., denied executives at the meeting were conspiring to drive up gas prices.

"There was no mystery to the meeting," he said. "What is being alleged is absolutely false."

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On the Net:

California ISO: www.caiso.com

www.assembly.ca.gov

© Copyright 2001 The Associated Press

-- Tom Flook (tflook@earthlink.net), March 24, 2001