Governor outlines electricity plan; consumer advocates criticize it

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The Associated Press

Gov. Gray Davis outlined his plan to deal with the state’s burgeoning electricity problems, but the long-awaited announcement drew criticism from consumer advocates.

In a letter to the Federal Energy Regulatory Commission on Friday, the Democratic governor said utilities should be barred from selling off any more power plants and dams until California’s turbulent wholesale electricity market smooths out.

Davis also asked federal authorities to order consumer refunds, new wholesale price controls and strict conservation measures in response to the state’s skyrocketing electricity prices.

But the author of a potential 2002 ballot initiative to reregulate California’s electricity industry delivered a harsh rebuke of the plan.

“There is a leadership vacuum in the state of California in the face of an electricity crisis that is going to become a catastrophe. The governor is waiting for a federal agency to solve the problem,” said Harvey Rosenfield, head of the Santa Monica-based Foundation for Taxpayer and Consumer Rights.

His initiative would, among other things, place electrical utilities under the authority of a citizens’ review board and set up a public agency to operate the state’s power grid.

The state has been roiled for months by price spikes and power shortages. In San Diego, some ratepayers reported a tripling of their bills following deregulation of San Diego Gas & Electric Co. prices.

Davis said his plan, which provided little new information about his strategy, was a work in progress largely dependent on action by state or federal authorities. The federal commission was seeking Davis’ input before issuing a final order Dec. 13 targeting California’s electricity market.

“If you do your job of protecting consumers by rectifying wholesale markets, the steps I have to take can be transitional in nature and limited in scope,” the governor wrote.

Davis was in Mexico on Friday attending swearing-in ceremonies for President Vicente Fox. The governor’s proposals were released by his office at a meeting that included Loretta Lynch, the head of the Public Utilities Commission.

Davis’ letter was noteworthy for what it did not mention, including several hot-button issues that have been discussed at length within the administration.

Those include evenly dividing the estimated $6 billion in excessive wholesale energy charges between ratepayers and utilities, establishing public ownership of California’s electrical grid and creating a new state electricity agency.

Davis’ spokesman Steve Maviglio said the governor hasn’t made a decision on the $6 billion division.

“The governor is looking at many options here,” he said. “There is no silver bullet. We are continuing to review ideas.”

Maviglio said the administration wants to wait until after FERC issues its final order before developing a proposal for next year’s legislative session.

California’s 1996 deregulation law was intended to lower rates by boosting competition in the electricity market. It required investor-owned utility monopolies to sell off assets, including power plants, and buy electricity on the open market by March 2002.

Until the assets are sold, the utilities operate under a rate freeze. After the assets are divested, the rate freeze cap comes off and the utilities can charge their ratepayers market prices.

San Diego Gas and Electric Co., with 1.2 million customers, was the first, in July 1999, to complete the transition to deregulation. When wholesale electricity prices, driven by rising demand and strapped supplies, soared this year, SDG&E passed on the increases to its customers.

State Sen. Debra Bowen said the deregulation issue is so complex that regulators, consumer groups and elected officials have to be cautious in deciding fixes.

“It’s sort of like attempting to disarm a nuclear bomb. We really don’t want to go rushing in with a pickax and power saw. We need to be cautious. We don’t want to make things worse for people,” she said.

On the Net:

Davis’ letter:

Foundation for Taxpayer and Consumer Rights:

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