CA Gov. Calls for Conservation, New Plants

With the New Year's first power alert called an hour earlier, California Gov. Gray Davis late Monday afternoon outlined his state energy crisis plan, calling for state-backed pushes to accelerate conservation and new generation, along with a threat he would use the power of eminent domain to takeover private sector plants if prices do not ease. He said the power generators had only one objective: "maximizing unheard of profits."

Part of his plan includes a $1 billion "down payment" (from the state's estimated $10 billion budget surplus) to help stabilize the supply and price of electricity and help provide new power generation. He is proposing the legislature allocate another $250 million for a statewide conservation effort urging all residents and businesses to reduce their power usage at least 7%, with state-backed incentives to do so.

Saying the state will "take back control of the power in California and commit it to the public good," Gov. Davis said California will "never again let out-of-state profiteers hold the state hostage or threaten to turn off our lights with the flip of their switches" to bring California to the brink of blackouts and utilities close to bankruptcy. In coming out aggressively against the state's five-year effort at electricity deregulation, the governor said he will look at what type of state power authority ultimately is necessary to make sure power supplies that are produced in the state remain in the state.

Davis said he will work with state lawmakers to repeal the 1996 electricity law, particularly its requirement for additional investor-owned utility sales of remaining generation plants, and he and the legislature will "meet the challenge and meet it quickly."

For the immediate term, Gov. Davis asked the legislature, which is currently in a special session caused by the power crisis, to pass new laws covering the following:

  • Restructuring the Cal-ISO and Cal-PX boards, replacing "advocates for the power producers with advocates for the public."
  • Change the Cal-PX bidding system that allows the last acceptable bid to be the price for everyone.
  • Streamline the process for utilities entering long-term power supply contracts.
  • Give state agencies powers to check on power plants idled for unscheduled maintenance, including creating a 50-inspector team of do the oversight.
  • Make it a crime to withhold power from the grid during times of tight supplies.
  • Give the governor expanded emergency powers in the event of power outages.
  • Allocate $4 million to the state attorney general to investigate and "track down" generators or marketers found to be gaming, or illegally manipulating the wholesale power market in the state.

Although various energy participants were expecting a more moderate plan, the governor never mentioned re-regulation, but he was particularly critical of both the state's deregulation efforts and merchant power producers and marketers.

He said deregulation in the state has resulted in an "energy nightmare."

Underscoring the governor's remarks, the California Independent System Operator (Cal-ISO), whose stakeholder board the governor proposed replacing, called a Stage One power alert because it expected reserve levels to drop below 7% at the peak hour of 6 p.m. PST on Monday, the first such alert in 2001.

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