Contra Costa Times
 SACRAMENTO, Calif.–California consumers will be forced to shoulder millions of dollars of debt incurred by utility companies under a deal being brokered by Gov. Gray Davis.
Davis on Tuesday defended closed-door talks taking place between state officials and utility companies on a plan to charge consumers for the high prices the companies have paid for electricity this year.
The governor’s endorsement of increased electricity rates drew immediate criticism from consumer advocates, who said the public should not be forced to shoulder any of the burden of a failed experiment in deregulating the electricity industry.
At a press conference, Davis said something must be done to help Pacific Gas & Electric Co. and Southern California Edison, the two large utility companies that have yet to enter the deregulated environment. The companies say the cost of wholesale electricity has forced them to take $ 8 billion in losses that they cannot pass on to consumers because their electricity rates are frozen.
“The consumers, while having to bear some of the burden, are not going to bear all of the burden,” Davis said. “There’s no question that everyone has to be part of the solution.”
The remark came as Davis has stepped up his rhetoric concerning the state’s power crunch. In recent days, the governor has lashed out at power generators as greedy profiteers and said matters are so bad for Southern California Edison it could go bankrupt by the end of the week.
Davis said Southern California Edison is prepared to ask for government permission to cut service to half of its customers, roughly 5 million people, for up to six hours each day if the company cannot muster the cash to pay for wholesale electricity.
But Doug Heller, a spokesman for the Foundation for Taxpayer and Consumer Rights, scoffed at the notion that either PG&E or Southern California Edison face financial hardship. Both reported strong profits in third quarter earnings reports, he said.
“These companies are doing fine but they are using creative accounting to scare Gov. Davis and the Legislature into believing they are about to fail,” Heller said. The foundation will pursue a ballot initiative to re-regulate the utility industry if any plan to help the utility companies involves consumers paying more, Heller added.
However, a spokesman for PG&E, said the company is running out of time.
“This is a situation that we cannot continue to sustain,” said Ron Low. “We cannot indefinitely buy power at 50 cents and charge 5 cents. We are very close to the time when we will no longer have the financial wherewithal to buy power for our customers.”
Davis also defended holding non-public negotiations, which began last week, with utility companies over potential increases for ratepayers. He said talks between PG&E and the Public Utilities Commission must be held privately because they involve settling a federal lawsuit PG&E filed last month seeking authority to charge higher rates.
The PUC is holding separate closed-door discussions with representatives of Southern California Edison, said Steve Maviglio, the governor’s press secretary.
“Like a lot of things,” Davis said, “you’re not going to reach the contents of a final agreement if every suggestion, every proposal (and) counter proposal, is played across the morning newspapers. People will not be willing to explore ideas and create them.”
In November, PG&E filed a plan with the PUC that would raise the average monthly East Bay utility bill from $ 54.52 to $ 63.59. The company claims that without that hike, it would be forced to increase the average monthly bill to $ 78 when the rate freeze is lifted.
According to some reports, PG&E has pressed for as much as a 17 percent increase. A company spokesman said he could not confirm or deny the reports.
Any rate increase must be approved by the PUC in a meeting open to the public.
Nonetheless, Heller, the consumer advocate, attacked Davis for hatching the private talks.
“Secret negotiations between the governor and the utility companies will result in another bailout just like the behind the closed door process that created the deregulation process in 1996,” Heller said. “The failed deregulation experiment came out of these kind of private negotiations.”
Still seething from Friday’s action taken by federal regulators, which he said came up far short of fixing the market, Davis said he has recommended three Republicans from the San Diego area to President Bill Clinton as candidates to fill an open seat on the Federal Energy Regulatory Commission. The governor said the commission should have a member who understands California’s pain.
It’s unclear how long someone appointed to the commission could remain before confirmation by the U.S. Senate is required.
Ideally, Davis said, consumers should not have to pay for any of high power costs incurred by the utility companies.
“The customers of course have done nothing wrong and they were promised, under deregulation, lower prices,” Davis said.
