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SACRAMENTO, California (CNN) — As California lawmakers work over the weekend to solve the state’s power crisis, consumer advocates are calling a proposed stock option plan designed to help the failing power utilities “highway robbery.”

“We couldn’t be more opposed to this bill,” said Dan Jacobson, of California’s Public Interest Research Group. “This is basically the bailout bill for the utilities.”

Under the plan approved Friday, the state would sell bonds to pay off the debts of Pacific Gas and Electric and Southern California Edison, both of which face possible bankruptcy. The plan is designed to put the utilities on sound financial ground, allowing them to buy power from generators that are reluctant to sell to them now for fear of not being paid.

The state would get power company stock in return for the bond money.

The second part of the proposal involves the state’s move into the power-buying business. In an earlier measure, the state Legislature agreed to use $400 million of the state’s surplus to purchase electricity for about one-fifth of what utilities must now pay. The state would then sell that power, at cost, to the utilities for statewide distribution.

The state would hypothetically make its money back when the price of utility stocks goes up.

Win-win or lose-lose?

Steve Meviglio, spokesman for Gov. Gray Davis, told CNN the proposed stock option plan “is win-win — the state will get the money back, the consumer will get no rate increases and the utilities will stay solvent.”

“It’s not a bailout,” Davis has said. Assembly Speaker Robert Hertzberg said: “It’s not a quick fix, a Band-Aid. It’s not a gift.”

Consumer advocates, however, have a very different view.

“We’re being asked to bail out the utility companies for billions of dollars, but they’re not worth billions of dollars,” added Doug Heller, spokesman for the Foundation for Taxpayer and Consumer Rights.

Instead, consumer groups want the state to play hardball, requiring transfer of assets from the utilities — including power lines and generators — to the state in return for the money. But the utilities oppose those suggestions.

“In their cry for bankruptcy, they’re downvaluing their assets, but if the state comes in and wants to buy those assets at the low price, they say ‘No, they’re worth more’ — so in essence they’re playing both sides of the coin,” Jacobson said.

“It isn’t win-win if the price of the stock goes down — it’s lose-lose,” Jacobson said. “I don’t know anyone who thinks California utility stocks are blue chip.”

Group aims for ballot initiative

Heller added, “Can you imagine a bank saying they will take one-tenth in return and hope in some period of time your company’s stock value multiplies tenfold? If we were to get a one-to-one value on the stock, we would hold the keys to the companies.”

Heller’s group, the Foundation for Taxpayer and Consumer Rights, is working to put an initiative on the state ballot to oppose a bailout scenario.

“We’re being asked to bail the utilities out of the mistakes that were made from their own deregulation bill,” Heller said.

“They made some very serious management decisions that were off-base, inadequate and at times foolish and reckless, so for the taxpayer to come in with unreturned generosity is to tell the utilities they can do anything they want in California, they can turn out the lights, they can threaten bankruptcy and the politicians will rollover and give them whatever they want.”

12 days of power alerts

Many Californians were under a Stage 3 power alert for the 12th straight day Saturday, with only a brief respite Thursday when it was called off for a few hours. Rolling blackouts have hit the central and northern regions of the state twice after the California Independent System Operator ordered utilities to institute them.

A Stage 3 alert means that reserve power on the California electricity grid has dropped to 1.5 percent or less.

Many analysts blame the current power woes on the 1996 deregulation of the state’s power utilities.

The deregulation law ordered utilities to shed power-generating facilities and buy electricity from wholesalers, but barred them from raising customer rates. Then energy prices spiraled upward because of short electricity supplies.