As a backdrop to the latest series of blackouts, California Gov. Gray Davis huddled Wednesday in Sacramento with large merchant generators while his chief utility regulator prepared for next week’s electric rate decision. The largest residential users and all businesses will carry the burden of retail price increases up to 52% for some customers. Both low-income and low-energy-consuming residential customers will be exempted for the rate increase.

In his continuing efforts to gain rebates on past wholesale power expenses and lower-cost power for the future in long-term, fixed price contracts, Davis invited the CEOs of the 12 major merchant power generators with plants in California and surrounding states. In most cases, the CEOs declined to attend, but sent representatives.

Reliant Energy, which sent its senior vice president, John Stout, said it planned to discuss what it called a “two-cent-per-kilowatt-hour wholesale power offer” that will help the state’s utilities assure more reliability in their future supply mix. It also provided the governor and his staff with a proposal for “a region-wide megawatt supply that could substantially reduce the chance of rolling blackouts that are currently affecting California consumers.”

A Reliant spokesperson, Richard Wheatley said the two-cent offer is the ‘”same one that has been on the table for six months, involving up to a five-year duration with supplies of 250 MW this year, ramping up to 2,500 MW in future years. The energy company’s other proposal would involve paying interruptible customers during peak-demand times in the midst of statewide power alerts, he said.

Although not expected to immediately impact the state’s chronic power shortage, the head of the California Public Utilities Commission Wednesday outlined two proposals for how to spread $5 billion in electricity rate increases for the state’s two largest and financially ailing private-sector utilities, starting June 1. On March 27, the CPUC approved a 3-cent/kW rate hike for Pacific Gas and Electric Co. and Southern California Gas Co., but deferred deciding how to spread it to consumers and businesses. It will do that Monday at its next scheduled regular business meeting in San Francisco.

The state regulators will consider two proposals for establishing “tiered” rates that exempt customers whose usage levels stay below a basic level from any of the increase, and apply the increases progressively as usage levels increase in tiers.

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