With a meeting with President George W. Bush set for probably Tuesday of next week, Gov. Gray Davis Thursday seemed to be building renewed momentum in his efforts to untangle California’s electricity mess, which becomes more critical as each calendar day pushes closer to summer. He announced a summer power supply deal, a new effort by the state to give more advance notice of rolling blackouts and new initiatives to enter long-term contracts with the state by the largest of the state’s 30 municipal utilities that serve about 25% of the power consumers.

In the process, Davis tossed barbs at the public sector utility operators, which he said in some cases are charging more than the merchant generators for emergency spot market power supplies during power alerts. Then, he proceeded to criticize the private sector utilities for dragging their feet on providing two- or one-day early warnings of impending power blackouts with specific geographical areas to assist police and fire personnel among others.

Beginning in June, Atlanta-based Mirant Corp. will supply the state with 500 MW through a deal negotiated with the state water resource department (DWR), California’s power purchasing unit since the governor declare a state of emergency surrounding electricity last January. Mirant will supply the power from three of its power plants in the San Francisco Bay Area that have a collective total output of 3,065 MW.

“Every megawatt that we can secure through longer term, lower cost contracts reduces our need to purchase power on the spot market at a much higher cost,” said Davis. The governor said the Mirant deal is another “significant step in locking up summer power at a reasonable price.”

Mirant’s Randy Harrison, CEO for western operations, said the added supplies would reduce DWR’s reliance on more costly spot market power in the peak-demand periods this summer.

Under the governor’s blackout warning plan, the public will get 48- and 24-hour warnings, followed by one-day specific alerts on where rolling blackouts might occur. He is exerting emergency powers to force the private sector utilities to divulge in advance the planned geographical locations for the blackouts to various local and state public safety agencies so they can prepare accordingly.

In response to news media questions about next week’s meeting with President Bush, Davis was upbeat and forceful, noting he wasn’t going to pull any punches.

“I want to give the president a first-hand report on all we are doing here in California and the impact this (electricity crisis) is having on businesses and residents,” Davis said. “We didn’t have full-scale blackouts until FERC lifted the price caps last December and he needs to understand that.

“I am fighting back. I am doing it on behalf of our 36 million citizens. The federal government is the only one not doing its part. The president is a practical, well-intentioned man. I hope he will have the time to meet with people from San Diego and South Orange Counties who have experienced this impact first hand. They know better than I do what it has been like.”

On another front, late Wednesday, Davis’ energy financial advisers preparing for the state’s record municipal revenue bond sale later in the summer conducted a conference call with reporters and financial analysts for the second time in 48 hours to respond to criticisms from the state Controller who issued warnings to news media that the bond issue was going to be unable to payback the state general fund surplus which has been paying for emergency spot market power to the tune of almost $7 billion to date.

In making the political point that the Controller, an independently elected statewide constitutional officer who is a Democrat critical of the governor’s handling of the energy mess, Davis’ advisers expressed new-found confidence that the bond issue will successfully go forward at a still-to-be determined date in August, and the state treasury will be paid back “every penny with interest” as soon as the bond revenues are collected.

“I think there will be considerable interest in these bonds,” said Nathan Brostrom, vice president for public financing at J P Morgan, the lead manager for the state’s sale. “We are going to bifurcate them in several ways between taxable and tax-exempt, insured and uninsured, variable rate and fixed rate, in order to maximize investor interest.

“The delay until August does not pose a problem. We are working with the (state) treasurer’s office to determine the optimum time to sell and we will be coming out with information to the investors and the press, along with a more definitive schedule.”

In the increasingly politicized energy wars within the state and between the state and Washington, D.C., Davis’ new top energy adviser, S. David Freeman, 75, the wily public power veteran, is outspoken in criticizing Kathleen Connell, the controller, for taking her criticisms to the news media without checking out the facts of the issue at hand with the governor’s people.

“This is just part of the whole pattern and text when she was trying to get ink in Los Angeles when I was there at the LADWP,” Freeman said. “It’s just a bad habit that needs to be broken.

“If she really wanted to coordinate her thoughts with ours and become enriched by the dialogue, she would present these things to us before she put out these attack-dog press releases. That is not the way she engages.”

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