Two new California laws to begin addressing aspects of theworsening electricity crisis were signed late Thursday by Gov. GrayDavis within hours of their passage by the state legislaturemeeting in a special emergency session called earlier in the month.They are expected to ease concerns among creditors, marketparticipants and the beleaguered investor-owned utilities in thestate.

Still to emerge from the legislature is a law establishing thestate’s longer term buying of wholesale electricity for the state,something that is already beginning under an emergency declarationby the governor late Wednesday night. It now appears that will behandled by two legislative moves: a short-term measure (AB 7X) togive temporary funds to the water resources department to buy powerthrough Jan. 31, giving more time to hammer out the permanent law(AB 1X).

Earlier, the governor indicated that the state has received atleast four offers for long-term, multi-year bulk power in the 5 to5.5-cent/kWh range. He expressed confidence that eventually thestate could make these types of deals.

Gov. Davis said he was “grateful” to the state lawmakers forhelping the state “manage its way through the energy challenge.” Hereiterated that the legislation is designed to “put Californiapower to the public good and keep it in California.”

The passage of the first laws helps begin “repealing a portion”of the state’s 1996 electricity deregulation law, Gov. Davis said.

The laws finalized Thursday prohibit investor-owned utilitiesfrom selling any more generation interests through 2005 (AB 6X),and change the board for the state-chartered transmission grid(Cal-ISO) to a five-member panel appointed by the governor (AB 5X).He named four of the five people to include the current chairman ofthe state’s Electricity Oversight Board, Michael Kahn, as thechairman of the new Cal-ISO Board, replacing a 26-memberstakeholder board called for in the 1996. Davis called it a “majorreform” in the independent grid operator’s oversight because theold board was dominated by people who were advocates for the energycompanies, and it will now be made up of “advocates for theconsumers.”

The other board members include a representative from theSilicon Valley high-tech business establishment, a longtime utilityconsumer group attorney and the current head of the state’sbusiness agency. A fifth member will be named Friday.

Gov. Davis called the legislation part of the “bridge to along-term solution” to the state’s continuing power problems thatwere accentuated during a second consecutive day of rollingblackouts in the northern half of the state with power plants inthe state still out of service totaling 11,000 MW.

“Obviously, there are still a lot of things we have to do toright the ship, but we’re on the job day and night, and I cannotthank the legislature enough for its bipartisan approach to seeingus through this crisis,” said the governor, noting he had a callinto President-elect Bush, informing him he may have to miss theinauguration because of the continuing demands of the state’senergy situation.

California began Thursday continuing the Stage Three emergencypower alert from the previous day, but without rolling blackouts.By mid-morning, however, the Cal-ISO ordered up to 1,000 MW of firmload curtailed on a controlled, rotating basis concentrated in thenorthern half of the state. That total was cut to 500 MW later inthe morning.

By early afternoon the rolling blackouts were stopped. Withmore-than-expected conservation and an unexpected 1,500 MW fromthree units that came back on line, Cal-ISO COO Kellan Fluckigerprojected that the state might be able to avoid the prospect ofrolling blackouts on Friday and through the weekend. He cautionedthat the situation could change from hour-to-hour, however.

Longer term, Fluckiger indicated that the Cal-ISO expects thespecter of rolling blackouts and supply shortages to be present inCalifornia for the next two years, no matter what financial andpolitical solutions are reached among elected officials, utilities,regulators and generators.

The state grid system all day Thursday faced a power supplyshortage greater than Wednesday’s when rolling blackouts were firstrequired throughout the northern two-thirds of the state fromBakersfield to the Oregon border. And early Thursday, Gov. Davisnamed a fifth and permanent member of the California PublicUtilities Commission, Geoffrey Brown, 57, a lawyer and careerpublic defender for 30 years in the City of San Francisco.

In declaring a state of emergency due to the electricityshortages at 10:15 p.m. (PST) on Wednesday, Gov. Davis said hetalked to the CEOs of Duke Energy, Southern Company, Reliant Energyand Dynegy, along with four state legislative leaders from bothparties, noting that the four generators were ready to “pull downthe utilities into bankruptcy today at 12:01 p.m.”

However, according to the governor, the generators agreed thatif state legislation helped relieve the private sector utilities’credit crunch, the generators will hold off trying to collect theirbills, and they will provide the state “the power necessary to keepthe lights on.”

“It’s [the state’s] obligation to provide power to the homes andbusinesses that drive California,” Gov. Davis said. “I’mdisappointed the utilities can’t do it. We have no choice but tostep in and we will do it.

“I know the generators and the utilities think that’simpossible, but we’ve already got four offers in the(5-5.5-cent/kWh) range, and I am confident if we have a blindauction, where nobody knows what anyone else bids, that we can geta lot of power in at that range.”

©Copyright 2001 Intelligence Press Inc. All rights reserved. Thepreceding news report may not be republished or redistributed, inwhole or in part, in any form, without prior written consent ofIntelligence Press, Inc.