GOP candidate says Davis policies mean socialism, bankruptcy

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The Associated Press

Secretary of State Bill Jones on Thursday released his plan to solve California’s energy woes and accused Gov. Gray Davis of running up “massive debt while socializing the delivery of power.”

Jones, a Republican who is running for governor, predicted the state’s power buying for customers of two debt-ridden utilities and other Davis policies would run up more than $66 billion in red ink.

“California is on the brink of fiscal insolvency,” Jones said.

Garry South, the Democratic governor’s chief political adviser, said the state had to begin buying power to keep the lights on, and that much of Jones’ plan was already in Davis’ proposal. The rest, South said, was a “bunch of gobbledygook.”

He said Jones should have proposed federal caps on skyrocketing wholesale electricity prices, “which is the single thing that is driving this situation out of control.”

Jones’ plan would take the state out of the power-buying business, scrap state efforts to buy transmission lines and instead use a combination of state loans, creditor forgiveness and parent company contributions to prop up the state’s debt-ridden utilities.

“California should not be in the energy business – period,” Jones said in a letter to Vice President Dick Cheney.

Under Jones’ proposal:


  • Utility creditors would forgive a quarter to a third of the more than $14 billion in debts run up since last summer by Pacific Gas & Electric, Southern California Edison and San Diego Gas & Electric. In return creditors would get quick payment of the remaining debts.

  • The three utilities’ parent companies would cover another quarter to a third of the debts.

  • The utilities would accept reduced payments for the electricity they generated and sold to themselves at high prices through the state’s now-defunct power pool.

  • The state would make low-interest loans to the utilities to cover the rest of their debts.

Instead of the state buying the utilities’ transmission lines, as Davis has proposed, the utilities would retain their property as loan collateral.

Jones’ proposals also include a number of energy conservation incentives, eliminating market bidding policies that have helped drive up wholesale electricity prices, and encouraging utilities to build more power plants themselves.

A Jones’ spokesman, Alfie Charles, said there would be no need for more electricity rate increases under Jones’ plan if current rates are enough to cover power purchases for the next two years.

In any event, he said, rates would be lower under Jones’ proposal than under Davis program.

Harvey Rosenfield, head of the Foundation for Taxpayer and Consumer Rights, said he agreed with some of Jones’ proposals but said Jones’ opposition to a greater state role in the power business “is the same type of pro-deregulation thinking that got us into this mess.”

“Anybody who calls public power socialism would have to be labeled a nut,” Rosenfield said. “Something like 20 percent of the nation’s electricity is supplied by public power.”

Jan Smutny-Jones, executive director of the Independent Energy Producers Association, said power generators were willing to discuss “any number of different options” to resolve the utilities’ financial problems. But he predicted some generators would balk at writing off as much debt as Jones proposed.

Brian Bennett, vice president for external affairs for Southern California Edison, said Edison was pleased that Jones had made some proposals but was committed to supporting an agreement negotiated with Davis to sell the state its transmission lines for $2.76 billion.

Shawn Cooper, a spokesman for PG&E‘s parent company, PG&E Corp., said the company would not comment on Jones’ proposal until it had a chance to review it.

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