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THE CALIFORNIA ENERGY CRISIS

Firm Offers to Buy State's Power Grid

Washington company suggests $5.25 billion. Senate leader Burton calls the idea 'terrible.'

February 13, 2001|NANCY VOGEL | TIMES STAFF WRITER

SACRAMENTO — State efforts to take ownership of California's power grid could face yet another hurdle: competition. Washington-based Trans-Elect said Monday that it had offered to buy the grid from the state's major utilities for $5.25 billion.

The company, which seeks to create a national network of independently owned transmission grids, is already negotiating to buy grids from five utilities outside California, said Vice President Bob Mitchell. The 2-year-old company has yet to buy any transmission assets, but is prepared to spend $15 billion, he said.

Officials with Pacific Gas & Electric and Southern California Edison had no comment on the offer.

Senate leader John Burton (D-San Francisco) is pushing legislation to allow the state to buy the grid. The utilities would be able to use the proceeds to help bail themselves out of debt.

Mitchell said he believes Trans-Elect could run the utilities' grid more efficiently and independently than California. A Trans-Elect purchase would spare taxpayers $5 billion or more in debt, he said, and the company would pay state and local taxes.

Headed by Frederick Buckman, former chief of the Portland, Ore.-based PacifiCorp private utility, Trans-Elect seeks to gain a niche in the nation's increasingly deregulated electricity industry.

The company would take over a historic function of utilities--maintaining the steel towers and aluminum lines that carry electricity--and manage the power flow in a safe way that does not discriminate against any users of the grid. Its profit would come from federally sanctioned grid fees.

"There is a steady, reliable stream of income," Mitchell said. "When you have that situation, when you pay the appropriate price, financing $5 million or $5 billion is not really much of a different proposition."

Burton called the idea of letting the utilities sell their transmission grids to a private company a "terrible deal" for the state.

"This could even be worse," he said, because it would involve "selling it to someone who has no interest in the state."

But Mitchell said his company could help California improve relations with the neighboring states that supply 20% of the state's power.

"There's a fair amount of resentment in these other states toward California," he said. "A company like us--we don't have any enemies."

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Times researcher Nona Yates contributed to this story.

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