The Daily News of Los Angeles
Hoping to keep California lighted, save the utilities and hold down rates, Gov. Gray Davis worked through the holiday Monday on an energy plan for state Assembly consideration today.
The plan, drafted with the help of Assembly Speaker Bob Hertzberg, D-Van Nuys, and other lawmakers, did nothing to calm consumer critics who claim it will cost ratepayers and taxpayers as much at $ 10 billion in higher rates to bail out Southern California Edison and other utilities.
”I’m very pessimistic about it,” said Harvey Rosenfield, president of the Santa Monica-based Foundation for Taxpayer and Consumer Rights.
”Ramrodding a bill that nobody understands through the Assembly is an outrage – an abdication of the Legislature’s responsibility to protect the voters. I just think it’s out of control: The utilities have a juggernaut up there, and the public is going to get screwed.”
While cities such as Los Angeles, Burbank and Glendale have escaped the energy crisis directly because they have their own municipal utilities, concerns were raised about the impact on their ratepayers if tax dollars are used to bolster the private utilities.
Los Angeles officials also expressed growing concern about collecting the more than $ 130 million the Department of Water and Power is owed from selling excess electricity to the rest of the state in recent months.
Davis insisted that his package with the state as a middleman broker of energy was fair to all parties and that rates would not go higher than the 9 percent hike approved recently on an emergency basis.
”The governor is adamant about no rate increases,” insisted Davis spokesman Steve Maviglio during negotiations Monday between lawmakers and utilities. ”He’s sticking to his guns.”
The measure, announced by Davis over the weekend, would allow the state to purchase power from wholesalers for a fixed price. The state would then sell the electricity, at cost, to debt-laden utilities.
Davis has said the state could negotiate better prices than financially beleaguered utilities, such as Southern California Edison, which say they have been pushed to the brink of bankruptcy buying energy in a market unhinged by deregulation and supply shortages.
Though the governor had announced the state was willing to pay between 5 cents and 5.5 cents a kilowatt – about one-sixth the rate of recent months – details of the plan remained sketchy Monday.
A year ago California wholesalers charged Edison between 3 cents and 4 cents a kilowatt.
The bill is scheduled for an Assembly energy committee vote today.
Critics contend that if the state-negotiated rate turns out higher than the spot market after the energy crisis subsides, power wholesalers could reap a windfall at California taxpayers’ expense.
Rosenfield’s consumer group has called for four key inclusions to the measure to protect ratepayers and taxpayers:
–That utilities sell power they generate directly to homeowners, renters and small businesses according to the real cost – plus a limited profit – of producing power, as dictated by the Public Utilities Commission.
–That the state, in any long-term contract with power brokers, pay reasonable prices for energy during its duration.
–That the state, by brokering power for utilities, be paid interest for its ”loans.”
–That the PUC regulate rates to ensure that ratepayers don’t pick up the $ 10 billion debt incurred by utilities as a result of deregulation.
The ”spot bill” proposed by Davis and lawmakers has ”no meaningful language to it,” said Rosenfield, who spoke with various lawmakers Monday. ”It’s just one-liner gobbledygook saying California will buy energy and all the details will be ironed out behind closed doors without anyone representing the ratepayers.”
Not true, said a Hertzberg spokesman.
”No one outside our office has seen it (the bill), so I don’t know how anyone with any credibility can call it anything,” said Hertzberg’s press secretary, Paul Hefner.
Customers of the state’s private utilities nearly suffered blackouts late last week because of energy shortages. On Monday, state energy regulators issued a Stage 2 warning, saying reserves had fallen below 5 percent.
The California Independent System Operator, which controls the power grid, did not return numerous phone calls Monday.
Power generators lambasted by Davis for ”gouging” the state’s utilities have called for more power plants to reduce demand. But they balked at the nickel-per-kilowatt offer as significantly less than the 7 cents to 8 cents it will take to recoup costs.
”The difficulty is it won’t cover the costs during the duration of the contract,” said Mark Stultz, spokesman for the Electric Power Supply Association, which represents 34 energy corporations with hundreds of power plants. ”We’re all in a holding pattern.”
There was speculation Edison didn’t have the cash to pay its bill to the state’s Power Exchange. Edison officials would not comment on either the company’s solvency or Monday’s negotiations with the governor.
Consumer groups told The Associated Press on Monday that Pacific Gas & Electric Corp.’s restructuring should make lawmakers and the governor think twice before considering a bailout for troubled utilities.
The Federal Energy Regulatory Commission gave permission Friday for PG&E Corp. to change its corporate structure, effectively insulating the bulk of its assets from the credit problems of its utility.
Government officials, however, praised the effort by lawmakers to stem the state’s energy woes.
”Our goal in this effort is first and foremost to protect consumers from any runaway rate increases (and) restore reliability to a system that has teetered on the brink of blackouts,” Hefner said.
”Obviously, we’re cognizant of doing anything we can to protect consumers and the state.”