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http://www.contracostatimes.com/news/california/stories_statebrk/power_20010413.htm

Posted at 1:13 p.m. PDT Friday, April 13, 2001, in the Contra Costa Newspapers

State requests for power spending now top $5 billion By Don Thompson ASSOCIATED PRESS

SACRAMENTO -- Gov. Gray Davis has asked state lawmakers to approve spending $500 million more to buy power for two struggling utilities, bringing his total requests to $5.2 billion.

The good news is the state's spending has slowed, said Department of Finance spokesman Sandy Harrison.

The bad news is the pace is likely to pick up again, said Davis spokesman Steve Maviglio.

Davis had been asking for an additional half-billion dollars about once a week since January to buy power for bankrupt Pacific Gas and Electric and credit-poor Southern California Edison.

But his last request lasted the state 16 days as temperatures cooled and prices fell since two days of rolling blackouts last month.

An order a week ago by the Federal Energy Regulatory Commission will likely reverse the trend even before hot weather returns, Maviglio said.

FERC ruled that the overseer of the state's power grid, the California Independent System Operator, must have creditworthy buyers for the last-minute power it acquires to fill gaps in the supply and avoid blackouts.

That could add $5 million to $8 million more a day to state power purchases that had been in the range of $45 million to $50 million a day, Maviglio said.

As a result, "we're probably going to ramp up again" on state spending, he said. That will get even worse this summer, as supplies dwindle and prices soar.

No decision has been made whether to appeal the FERC order, he said.

Meanwhile, FERC has ordered generators who have sold electricity to the state to share power purchase information with the federal agency, which will then supply the information to a House subcommittee that held three days of hearings this week on California's energy problems.

In addition, FERC Secretary David Boergers said the commission wants the information to study how successful Davis has been at negotiating long-term contracts and insulating the state from having to buy power on the expensive spot market.

Davis has fought disclosure of the information, saying it would drive up the price of the power the state is buying by telling generators how much the state is willing to pay.

But Rep. Dan Burton of Indiana, who chairs the House Government Reform Committee, and Rep. Doug Ose, of Sacramento, who chairs the Energy Policy and Regulatory Affairs Subcommittee, threatened to subpoena the information if it wasn't provided voluntarily.

Both Republicans sharply criticized the Democratic governor's attempts to keep the information secret. News organizations and Assembly Republicans have also sought the information without success, contending there should be public scrutiny of the power purchases.

FERC ordered the generators to submit the information by the end of business Monday, but promised to keep it secret and submit it to the House subcommittee under a seal of confidentiality.

Davis will begin lobbying lawmakers next week to support his agreement to purchase Edison's power transmission lines as a way of helping the company pay off its debt.

The governor announced a deal for the state to buy the power lines for $2.76 billion, but lawmakers of both parties have challenged the plan. They question in particular if it makes sense for the state to buy Edison's portion of the transmission system now that PG&E's part is locked up in bankruptcy proceedings.

Davis will meet Monday with legislative leaders, Tuesday with Senate Republicans and Assembly Democrats, and Wednesday with Senate Democrats.

He met recently with Assembly Republicans and has not scheduled another meeting with them, Maviglio said.

Davis' agreement with Edison also requires the utility to use its power plants to provide low-cost electricity to the state for 10 years, and dismiss an Edison lawsuit seeking a significant increase in consumer rates.

Meanwhile Friday, the California Alliance for Energy and Economic Stability filed a response to the state Public Utilities Commission's proposed restructuring of the state's electric rate structure.

PUC President Loretta Lynch has proposed putting a greater rate burden on businesses, which the alliance contends "would cripple the state's already strained economy."

The alliance includes the state chamber of commerce, along with manufacturing and retailers' associations.

-- Martin Thompson (mthom1927@aol.com), April 13, 2001