Calif. Senate Oks Power Authority

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Associated Press

State lawmakers approved a bill Thursday to create a public power authority, sending the measure to Gov. Gray Davis for his signature that would put California in the power business.

The authority is touted as a key step toward pulling California out of its power crisis, which has forced one utility into bankruptcy court and sent blackouts rolling across the state.

Supporters say the authority will give the state more control over the wholesale electricity market by building and operating its own plants. State-owned plants could charge lower rates and adding plants would boost supply, easing prices.

The state Senate vote Thursday was 24-14, following an Assembly vote last week of 47-28.

A Davis spokesman said the governor has not decided whether to sign the legislation. Davis has said he supports creating a power authority similar to the one in New York, which has 10 power plants, 1,400 miles of transmission lines and produces about 25 percent of the state’s power.

Under the bill, the California Consumer Power and Conservation Financing Authority would be allowed to issue up to $5 billion in bonds to pay for plants, natural gas storage and additional pipelines and conservation programs.

The authority would be run by the state treasurer and four others appointed by the governor. The board would be able to seize plants by eminent domain, a power the governor also has under an emergency order issued in January.

Harvey Rosenfield with the Foundation for Taxpayer and Consumer Rights said the authority won’t help the state escape blackouts this summer, but will help restore reliable and affordable electricity.

”The agency is California’s key to survival and independence from the energy cartel,” he said.

Democratic Sen. Steve Peace said California needs the authority because its 1996 deregulation law didn’t create real competition and the Federal Energy Regulatory Commission refuses to control rising wholesale prices.

Deregulation is ”the economic equivalent to the World Wrestling Federation,” Peace said. ”It is not real competition.”

Opponents, most of them Republicans, say the state doesn’t belong in the power business and the authority could obstruct private efforts to build and operate power plants. They argue that California should completely deregulate the electricity market, not rely on a government solution.

Some of the most ”feared words in the English language are ‘I’m from the government and I’m here to help you,”’ GOP Sen. Bill Morrow said.

In San Francisco, Pacific Gas and Electric Co. asked a federal judge Thursday to stop the state’s power grid manager from seeking payment for expensive, last-minute electricity it buys on behalf of the bankrupt utility.

PG&E said bills from the Independent System Operator ”could be reducing the value of the company’s assets by potentially hundreds of millions of dollars per month.” Calls to the ISO were not immediately returned.

Since January, the state has spent millions buying electricity on behalf of customers of PG&E and two other utilities to help them dig their way out of debt. But most buys were long-term contracts, leaving the ISO to buy higher-price electricity at the last minute to keep the lights on.

PG&E filed for bankruptcy protection April 6 after failed negotiations with the state to buy its transmission lines. Davis and state lawmakers are also considering purchasing Southern California Edison‘s system, which would be governed by a separate public authority. Negotiations with San Diego Gas & Electric Co. are continuing.

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