With the New Year’s first power alert called an hour earlier,California Gov. Gray Davis late Monday afternoon outlined his stateenergy crisis plan, calling for state-backed pushes to accelerateconservation and new generation, along with a threat he would usethe power of eminent domain to takeover private sector plants ifprices do not ease. He said the power generators had only oneobjective: “maximizing unheard of profits.”

Part of his plan includes a $1 billion “down payment” (from thestate’s estimated $10 billion budget surplus) to help stabilize thesupply and price of electricity and help provide new powergeneration. He is proposing the legislature allocate another $250million for a statewide conservation effort urging all residentsand businesses to reduce their power usage at least 7%, withstate-backed incentives to do so.

Saying the state will “take back control of the power inCalifornia and commit it to the public good,” Gov. Davis saidCalifornia will “never again let out-of-state profiteers hold thestate hostage or threaten to turn off our lights with the flip oftheir switches” to bring California to the brink of blackouts andutilities close to bankruptcy. In coming out aggressively againstthe state’s five-year effort at electricity deregulation, thegovernor said he will look at what type of state power authorityultimately is necessary to make sure power supplies that areproduced in the state remain in the state.

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

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

Although various energy participants were expecting a moremoderate plan, the governor never mentioned re-regulation, but hewas particularly critical of both the state’s deregulation effortsand merchant power producers and marketers.

He said deregulation in the state has resulted in an “energynightmare.”

Underscoring the governor’s remarks, the California IndependentSystem Operator (Cal-ISO), whose stakeholder board the governorproposed replacing, called a Stage One power alert because itexpected 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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