Calif. seeks role as energy broker

State, federal officials discuss formal position to maintain electricity

January 14, 2001|By LOS ANGELES TIMES

LOS ANGELES - With a debt deadline looming, top political and business leaders met on both coasts to work out a plan that would formalize the state's role as an electricity broker to resolve California's energy crisis.

The deal, being worked out through a teleconference in Los Angeles and Washington, would allow the state government to strike long-term deals for electricity, which it would sell in California's energy marketplace. Utilities would then have the opportunity to sell the power at slightly higher rates, and use the difference to retire the multibillion-dollar debts they have run up in the past seven months.

In Los Angeles, Gov. Gray Davis acted as host to the meeting in his downtown office, crammed with about 30 energy executives, legislative leaders and assorted staff. Their images were beamed to Washington, where federal officials and energy executives had gathered at the Department of Energy.

Not present, and apparently not invited, were any representatives of consumers, who stand to pick up the tab for the deal. Under the terms being discussed, California utilities would probably lock in a rate for electricity that would be far below the stratospheric prices they have been paying recently, but perhaps higher than they otherwise would be in a year or two.

A sense of urgency surrounded the negotiations, in part because the situation is so dire and in part because the state's two largest utilities, Pacific Gas & Electric and Southern California Edison, owe installments on their debts Tuesday.

California deregulated its energy market in 1998, a leap into the unknown that was expected to lead to lower prices for consumers. It has done anything but that since May, when electricity prices - prodded by rising natural gas prices and by supply shortages - soared.

The state nearly had to resort to statewide rolling blackouts Thursday when power reserves dipped below 1.5 percent of total usage. The utilities - and their customers - were rescued at the last minute by the state Department of Water Resources, which bought power that the state energy marketplace couldn't buy because its credit, backed by utilities, is so poor.

That is the role that the state would effectively take on formally under the plan under discussion.

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