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THE CALIFORNIA ENERGY CRISIS

Power Points

February 24, 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.

Daily Developments

* Gov. Gray Davis said the state and Southern California Edison agreed on the framework of a buyout that includes $2.76 billion for the utility's share of the transmission grid.

* As part of the buyout, Edison would begin selling power in August from a new power plant at below-market rates.

* The governor acknowledged that the Edison deal is meaningless unless the state's largest utility, Pacific Gas & Electric, agrees to it.

Verbatim

"It is important that together we get on with the work of restoring normalcy to California's electricity situation."

-- John E. Bryson, chairman and chief executive of Edison International

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

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