SACRAMENTO — In a measure that could open the way for California to own power plants, the state Senate on Tuesday voted to create a state public power authority that would generate electricity and sell it at or near cost to consumers.
The action came as the chief negotiators for Gov. Gray Davis--San Francisco attorney Michael Kahn and former Edison executive Michael Peevey--negotiated behind closed doors with Pacific Gas & Electric and Southern California Edison executives over Davis' plan to rescue the utilities from billions of dollars in debt.
Davis spokesman Steve Maviglio characterized the San Francisco talks as "tough," and said he expects they will go on for several more days. The governor announced a plan Friday to give the utilities cash in exchange for the state's power transmission grid and other assets.
One of the sticking points is the price for the grid. Edison has valued its share of the grid alone at $6 billion, while PG&E executives are balking at parting with their share of the system.
While the talks continue, the Senate approved a bill that supporters said would give the state greater control over its energy. In a party-line 24-14 vote, Democrats overwhelmed Republican opponents and sent the bill, SB6x, by Senate leader John Burton (D-San Francisco) to the Assembly.
The bill would establish the power agency and authorize it to sell $5 billion in revenue bonds--to be used to build, buy and own power plants. The state could operate them or form partnerships with private companies.
The authority also would help finance energy efficiency and conservation programs and help pay for environmental improvements at existing power plants.
Burton did not seek approval of a second measure that would authorize the state to buy the transmission system owned by private utilities, including Edison and PG&E. Both companies say they are near bankruptcy.
Burton said he plans to seek approval of the transmission grid plan once he gets a clearer picture of the progress of talks between Davis and executives of Edison and PG&E.
California already is buying power, and has plans to finance power purchases by selling $10 billion in bonds. But Burton said state ownership of power plants would drive down prices charged by what he called "gouging" wholesalers. Such prices are blamed in part for bringing Edison and PG&E to the brink of bankruptcy.
