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THE CALIFORNIA ENERGY CRISIS

Power Points

February 14, 2001

Background

The state Legislature approved electricity deregulation with a unanimous vote in 1996. The move was expected to lower power bills in California by opening up the energy market to competition. Relatively few companies, however, entered that market to sell electricity, giving each that did considerable influence over the price. Meanwhile, demand has increased in recent years while no major power plants have been built. These factors combined last year to push up the wholesale cost of electricity. But the state's biggest utilities--Pacific Gas & Electric and Southern California Edison--are barred from increasing consumer rates. So the utilities have accumulated billions of dollars in debt and, despite help from the state, have struggled to buy enough electricity.

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Daily Developments

* A Senate committee approved legislation that would allow the state to buy California's electrical transmission grid and build and operate its own power plants.

* The financial condition of Edison and PG&E remained a top concern, as a grace period granted by Edison's banks expired.

* The state endured its 29th straight day under a Stage 3 power alert, with energy reserves critically low.

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Verbatim

"Some would call it a bailout. I would prefer to call it an infusion of capital."

--Senate leader John L. Burton (D-San Francisco)

Complete package and updates at www.latimes.com/power

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