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California may have little money left to head off blackouts

Posted at 2:13 p.m. PDT Sunday, June 3, 2001

SANTA ANA, Calif. (AP) -- If California keeps buying high-priced power at its current pace, the $12.5 billion Gov. Gray Davis hopes to borrow to head off summer blackouts will soon be gone, a newspaper reported Sunday.

According to a projection of the state's numbers by The Orange County Register, the state is currently spending 66-point-nine million dollars a day on electricity. And if it continues at this pace, it will have spent $10.4 billion -- or 83 percent -- of what it plans to borrow through a bond sale by mid-August.

That leaves only $2.1 billion to buy future energy; and according to the state's own estimates, its needs at least $2.7 billion to pay for such contracts just through June 2002.

But Davis' energy team says not to worry. The outlook is brightening for the energy supply because of new energy contracts -- some taking effect this month -- continued conservation and new power plants, administration officials told the Register. The increased supply should drive down prices, thus reducing the average amount the state is spending each day on energy.

``We'll have room to spare,'' said Davis spokesman Steve Maviglio.

However, Brad Williams, chief economist in the nonpartisan Legislative Analyst's Office, is concerned that the governor is relying on theories. ``There's certainly a vulnerability to these assumptions,'' Williams said. ``The administration assumption that prices will fall is very risky.''

State Controller Kathleen Connell, a Democrat, also has her doubts. ``We don't know whether the governor's estimates are correct. They haven't been correct to date. ... I have always argued that $12.5 billion is not going to be enough.''

According to the Davis administration, it will need to repay itself only $7.9 billion of the bonds it plans to issue Aug. 14, leaving $4.6 billion -- presumably enough to buy an adequate supply of relatively cheap electricity on long-term contracts.

-- Swissrose (cellier3@mindspring.com), June 03, 2001