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California and the West | THE CALIFORNIA ENERGY CRISIS

Panel to Vote on Measures to Ease State Power Crisis

The PUC will consider proposals to fund electricity purchases and boost conservation. A Stage 2 alert is called.


SAN FRANCISCO — The California Public Utilities Commission is poised to vote today on measures that would help the state finance power purchases, restore a major conservation program used by hundreds of businesses and hold parent companies accountable for financially troubled utilities.

One proposal would allow the state Department of Water Resources to issue $12 billion to $14 billion in bonds for electricity procured for utilities.

If the measure is approved, the commission next will establish how revenue from utility bills will be divided among utilities, energy providers and the Department of Water Resources, which has been purchasing power since mid-January. That step is awaiting information from the department on its projected costs of providing power, utilities panel President Loretta Lynch told a news conference Monday.

Consumer groups have criticized the utilities panel for approving an electricity rate increase of about 40% last week without knowing the Department of Water Resource's revenue requirement. But commissioners say any extra money will be refunded to customers.

The utilities panel plans statewide hearings on the structure of the rate increase, which Lynch said should be tiered to penalize heavy users and reward customers who conserve.

Problems with the state's fragile electricity transmission system persisted Monday.

The California Independent System Operator called a Stage 2 alert as reserves fell below 5% because of supply problems. Power plants representing nearly 13,000 megawatts were out of commission because of plant malfunctions or preventive maintenance, and an additional 3,000 megawatts usually supplied by alternative generators remained unavailable because of continuing financial concerns.

In addition, high winds damaged eight towers in the southern Owens Valley, part of an important long-distance transmission line. Repairs are expected to take 10 days, said a spokeswoman for the Los Angeles Department of Water and Power, which operates that portion of the line.

A second proposed utilities panel decision would reinstate the so-called interruptible program, which rewarded businesses for agreeing to have their power curtailed in exchange for lower rates. The program was suspended after businesses complained that this winter's frequent blackouts were putting them in a bind: either shut down and face economic hardship, or keep the lights on and face stiff penalties.

The revised program presents what Lynch called "a panoply of options for businesses to drop [electricity] load."

The order would give businesses the right to "opt out" as of Nov. 1, 2000, or the next billing cycle. If they choose the November 2000 date, they would have any penalties waived but also would have to repay any discounts received since then.

One program would provide a 15% electricity bill discount for companies willing to reduce their load upon request for up to six hours a day, four days per week and 40 hours per month.

Lynch Ready to Launch Inquiry

Last week, Lynch said she was holding off on a proposed investigation of the relationship between the financially strapped utilities and their parent companies, which received billions of dollars from them. She said an investigation might jeopardize the state's negotiations with the utilities for purchase of the California power grid.

However, Lynch said Monday that she is ready to ask the commission to initiate a probe.

The parent companies of Southern California Edison and Pacific Gas & Electric made government filings delaying their fourth-quarter and year-end 2000 earnings reports.

Edison International and PG&E Corp. told the Securities and Exchange Commission that their statements would be delayed until April 17 and may include huge electricity costs they could not collect from customers. Edison said its after-tax charge against earnings may be as high as $2.7 billion, and PG&E said its own may reach $4.1 billion.

Also on Monday, the state Assembly unanimously approved legislation that helps implement the governor's executive order allowing certain new power plants to exceed air quality standards this summer.

So-called peaker plants, which can generate electricity to meet sudden demand, would be granted special air emissions credits.

Adding more peaker plants is a critical part of Davis' plan for avoiding widespread blackouts this summer.


Reiterman reported from San Francisco, Rivera Brooks from Los Angeles. Miguel Bustillo contributed from Sacramento.

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