State power purchases increase to $5.7 billion since January Filed: 04/20/2001

By JENNIFER COLEMAN

Associated Press Writer

SACRAMENTO (AP) -- The state's power buyers have asked for another $500 million to keep buying electricity for customers of two debt-ridden utilities.

The request by the state Department of Water Resources brings the total authorized for power buys to $5.7 billion since January, when the state stepped in to prop up Pacific Gas and Electric Co. and Southern California Edison. The two utilities, with combined debts of nearly $14 billion, could no longer buy power on their own.

Earlier this week, Gov. Gray Davis said the state's expenses rose after PG&E declared bankruptcy April 6. He said that move scared generators, who started charging "credit premiums" for power.

Power buys averaged $57.4 million a day the week PG&E filed bankruptcy, Davis said. The next week, the state's daily average rose to $73.2 million.

PG&E and generators deny the bankruptcy caused the jump in power costs. They attribute the increase to a federal order requiring the state to back last-minute power buys, tight electricity supplies throughout the West and high natural gas prices.

Lawmakers should soon see legislation to approve Davis' plan to keep the state's other ailing utility from declaring bankruptcy. The plan calls for Edison to sell the state its transmission lines for about $2.8 billion, hand over development rights on 20,000 acres in the Sierra Nevada mountains and sell cheap power to the state for 10 years.

Bob Foster, an Edison vice president, said the Legislature's approval was necessary, and he hoped they wouldn't tinker with the "balanced" deal the governor and Edison officials had crafted.

While "you never put a take-it-or-leave-it deal in front of another Constitutional body," Foster said, "it's either the agreement or bankruptcy. It's that simple."

Edison provides two-thirds of its customers' power through contracts and by its own power plants. If Edison declared bankruptcy, a federal judge could cancel the contracts and sell power plants to pay the company's debts, Foster said.

That would leave the state buying 100 percent of Edison's power needs, instead of the current 30 percent, he said.

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-- Martin Thompson (mthom1927@aol.com), April 20, 2001

Answers

After much head-scratching and contemplation, as the result of reading about all this California turmoil, I have come to the conclusion that the dire effects of all of this are well known to Greespan and the Fed. And, that is why they did an between-meetings interest rate cut, for only the 4th time in history. They know, what the Stock Market does not know yet, that our bubble-economy is on the verge of collapse. Why else would they send their Fed govenors througout the country last month suggesting loudly that there would be no further cut until their May meeting, and hintng broadly that it would be no more than a quarter point. Now, just this past Wednesday, socko! An unexpected one-half point cut.

Shock value? Something big that suddenly materialized before them since March? What?

The Fed is acting very strangely, very un-Greenspan-like.

Ominous overtones, indeed.

-- Wellesley (wellesley@freeport.net), April 21, 2001.

More smoke and mirrors by Easy Al and the Fed manipulators. What was the result of the Fed lowering interest rates in '29 -'31? What was the result in '73 - '74? What was the result of the Bank of Japan (an Asian version of the Federal Reserve)lowering rates between '90 - 'o1? The answer in a word, nothing. The rate in Japan is now ZERO.

Will the recent rate reductions open all the failed companies? Will they rehire all the empolees laid off and fired? Will they reimburse all the poor folks who lost their shirts through margin calls? Will they produce more power? Will they lower gas prices? The answer is NO, to these and 24 more questions just like them. Easy Al and his cronies are rearranging the chairs on the Titanic.

-- Warren Ketler (wrkttl@earthlink.net), April 21, 2001.