While California state officials continue to promise a workoutfor the state’s energy crisis, the California Power Exchange(Cal-PX), a mainstay of the state’s 1996 electric restructuring,announced it had shut down trading in its day-ahead market andwould close out day-of wholesale electricity markets by noon today.

The Cal-PX, a state-chartered, nonprofit public benefitscorporation had been providing a wholesale spot market through whichCalifornia’s three major investor-owned utilities were required to buyand sell all of their wholesale power. By virtue of their financialnear-collapse the utilities are no longer required to do so, theexchange is out of cash, and trading had already slowed to a tricklewhen the Federal Energy Regulatory Commission Monday cited it forfailing to enforce a $150 MWh soft cap (see Daily GPI, Jan. 30).

“Regrettably, Cal-PX must take this extraordinary action inresponse to Monday’s FERC order that directs us to immediatelycomply with the terms of its Dec. 15 order and implement a $150/MWhbreakpoint,” said Cal-PX CEO George Sladoje, who noted that thereis a Feb. 7 oral argument set for the power exchanges emergencymotion and petition with the U.S. Ninth Circuit Court of Appeals,requesting a stay and rehearing of the original FERC Dec. 15 order.

The Cal-PX will not close down entirely as yet. It will continueto perform all scheduling and settlement services for its currentparticipants. “Forward contracts will be scheduled via approvedalternative delivery mechanisms, assuring both buyers and sellerswill not be inconvenienced or exposed to adverse economic impact asa result of the suspension of the day-ahead market,” the exchangesaid in announcing the market closings Tuesday.

In another action, an independent audit of Southern CaliforniaEdison, confirmed that the multi-billion-dollar company would havebeen forced into bankruptcy Feb. 1 without a combination ofcost-containment and stopping payments of its debts. It can now holdout at least through March, and its under-collections are overstatedby about $2 billion when revenues from its own generation over thepast eight months are counted (see relatedstory, this issue).

Meanwhile, in Sacramento, the California state legislativecommittees in both houses continued to hash out details for twoproposed bills that would give the state authority to signlong-term contracts for power and also ones that would establish anelaborate state-backed financial plan for the private-sectorutilities that would have the state perhaps taking an equityinterest, in essence, in both SoCal Edison and Pacific Gas andElectric.

California state legislative leader Robert Hertzberg, AssemblySpeaker, and other legislators have called an 11 a.m. PST pressbriefing today to offer the latest legislative proposals aimed atconserving energy and increasing power supplies.

And spokespeople for Gov. Gray Davis confirmed he is planning atthe end of the week to attend a Western Governors’ Association energyroundtable in Portland, OR, which will include an unprecedentedroster, including at least nine other governors, the U.S. energysecretary, the three FERC commissioners, other state officials and theCEOs of the major western market participants (see related item, this issue).

The governor’s office keeps indicating that some version of thenew state-run energy operation is destined to get launched thisweek, following a general understanding among state politicalleaders that two financially ailing utilities should be bailed out,but only with a promise of stock ownership for ratepayers and withstate-run power procurement and infrastructure organizations thatwill reduce the utilities to little more than billing and retailcustomer service operations.

“I believe that the state will be in the power business for sometime to come,” said Davis late last Friday. “I’m deferring judgmentas to whether deregulation will work in the long term. It will notwork until we have power plants so our supply exceeds our demand.”

The state lawmakers and governor were close to an agreement onthe law that would authorize California to sign long-term powersupply contracts, and it could be enacted before the governor goesto the governors’ conference, and two of his new temporaryexecutive energy advisers, Mike Peevey, the former SouthernCalifornia Edison president; and S. David Freeman, on leave frombeing head of the Los Angeles Department of Water and Power; havemet this week with “some of the more attractive bidders ” from lastweek’s state-run, Internet-based auction, Davis said.

The governor has been waffling slightly on his commitment tosolve California’s crisis without utility rate hikes, saying oflate that it was still his “hope and expectation,” but “no one canguarantee the future; I can’t guarantee what the price of milk is.”

Davis also said his administration and the legislators aremaking “no promises to restore the utilities to their formerluster, but we need them viable and able to honor their commitments(to the QF, generators, et al.) and find a way to accommodate anappropriate portion of the utilities’ long-term debt.” The governorsaid he expected to begin reviewing that CPUC-ordered audits of thetwo utilities to access their financial situations, as well as theparent companies of the utilities.

In the meantime, the CPUC is moving ahead this week with asurvey of several thousand industrial/commercial utility customerswho had been on an interruptible program that has now been setaside while the regulators attempt to get data from the customersbefore re-launching an new interruptible rate program.

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