California’s energy crisis has become more of an energy war, with public comments from all sides taking on distinctly adversarial tones. Gov. Gray Davis’ current strategy is to go after merchant generators in the news media and legislative forums. At the same time the governor has become the Democratic Party point person, attacking the Bush Administration on its energy policy as it relates to the western states and sky-high wholesale natural gas and electricity prices.

The governor’s chief regulator, the state attorney general and Democratic legislative leaders are attacking power generators for allegedly holding back power production and taking plants off line to create power alerts, which in turn boosted spot market prices, allowing them to collect maximum prices for their megawatts. Although they draw short of alleging collusion among the generators, separate investigations are going forward with results expected in the next 30 days.

Over the weekend, Davis gave the Democratic Party’s national radio address responding to the Bush energy plan released last week. The governor kicked off a door-to-door program for distributing low-energy fluorescent light bulbs, before flying to Chicago where he spent Monday meeting with city officials to learn how they handled a rash of blackouts in 1999.

Based on California’s experience over the past 12 months, the impact of rolling blackouts is getting worse, California Public Utilities Commission member Carl Wood said Monday as he outlined a new statewide program to allow business and industrial customers to apply for power curtailment-exemptions based solely on adverse public health and safety concerns. Companies must apply by June 1. The CPUC expects to make its final determination by Aug. 2.

Wood said that historically California experienced almost no blackouts, but because of market manipulation by merchant generators, they are now all too frequent, and he expects it to continue throughout the summer.

“There is available capacity at certain times that simply doesn’t come on line because it is being held back to tighten up the market, resulting in higher prices,” Wood said. “Sometimes this results in tripping us into rolling blackouts, perhaps without the intent of the generators who are acting in their own economic self-interest. This wasn’t possible under regulation.

“The economic consequences of blackouts are not commonly understood,” said Wood, noting that certain industrial processes can be knocked out for days by a one-hour blackout. In the exemption program, however, the focus is strictly on public health and safety, not purely economic impact, although refiners are making a strong bid in proposed state legislation to get exemptions. The state energy commission also is requesting that the CPUC program exempt refiners and ancillary operations. A Silicon Valley engineering consulting firm, Exponent, using multi-disciplinary team headed by a nationally recognized public health expert, will assist the state in compiling the exemptions.

And in another forum late last Friday, a federal bankruptcy judge in San Francisco rejected the notion that a ratepayers’ committee was needed in the Pacific Gas and Electric Chapter 11 reorganization proceedings, in effect, siding with arguments made by the utility. Davis and consumer advocates reacted angrily to the judge’s decision, noting that is why bankruptcy for utilities is not a good deal for consumers, only for creditors.

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