Williams Helps to Restore California Power

Friday, February 23rd 2001, 12:00 am

By: News On 6

SAN FRANCISCO (AP) - As California spent its first time without power alerts in nearly six weeks, state officials prepared to spend half a billion dollars more on emergency power buying bringing the tally to $2.7 billion.

The state also continued to work on long-term power deals. Tulsa-based Williams Energy said Friday it had agreed to a 10-year deal to sell power to the Department of Water Resources.

By April, Williams will provide at least 175 megawatts, enough electricity to supply 175,000 homes, at times of the day when demand for electricity soars. Such peak supplies will increase through next summer and reach 900 megawatts by 2006, according to Williams.

Lawmakers in Sacramento released a flurry of bills Thursday to help solve various aspects of the power crisis. Meanwhile, state power regulators in San Francisco declared the state must buy all power Pacific Gas and Electric Co. and Southern California Edison are unable to either generate or buy themselves.

After a week of intense closed-door negotiations with utility representatives, Gov. Gray Davis was expected to update the state Friday on progress involving a rescue plan for the two utilities.

The governor has proposed buying 26,000 miles of transmission lines to give the utilities an infusion of much-needed cash. He also has proposed allowing the utilities to issue revenue bonds to be paid back by ratepayers over many years.

Talks broke off Thursday night with no resolution, said Ron Low, a PG&E spokesman.

``These are complicated problems that will not be solved overnight,'' Low said. ``There are clearly some issues where we are very far apart.''

High electricity prices and the inability to pass those costs along to customers because of a rate freeze has driven California's two largest investor-owned utilities $12.7 billion into debt.

Power wholesalers will no longer sell to PG&E and SoCal Edison, fearing they'll never get paid. This led to rolling blackouts and a statewide effort to conserve as ratepayers were socked by hefty power bills.

A federal judge was expected to decide Friday whether wholesalers can be forced to sell to the state power grid, even without a creditworthy buyer. A temporary restraining order requiring three generators to keep selling power to the ISO expired Friday.

U.S. District Judge Frank C. Damrell Jr. had extended the temporary restraining order by two days to give attorneys for the grid and the generators more time to try to reach an out-of-court-settlement. No deal was completed by late Thursday afternoon.

Meanwhile, the state has been spending about $1 billion a month to keep the state's lights on by buying electricity for the utilities' customers.

``We're very hopeful this (pace) is going to slow down'' as spring brings warmer temperatures and melting snow to power hydroelectric plants, said Sandy Harrison, spokesman for the Department of Finance.

Davis is using money from the state's general fund to buy electricity through the Department of Water Resources, with a promise the money will be repaid once the state issues $10 billion in long-term bonds this spring. State lawmakers have 10 days to veto Davis' new spending request.

But the state and utilities disagree over the extent of the DWR's power-buying role and how it will be reimbursed, whether through state bonds or ratepayer dollars, for the $2 billion it has already spent, plus the cost of future purchases.

State power regulators ruled unanimously Thursday the DWR must buy any electricity the utilities cannot generate or buy, no matter what price wholesalers are charging.

Commissioner Richard Bilas said the agency has ignored the intent of the bill that authorized the agency to buy power, and is exacerbating the problem.

Davis' spokesman Steven Maviglio said administration officials were studying the decision, but had no comment.

California called off all power alerts Thursday thanks to the availability of more imported electricity and power plants going back online after being down for repairs.

Until last weekend, the state spent 32 consecutive days in a Stage 3 alert _ the most severe category, which means reserves are dangerously low and rolling blackouts are possible.

Meanwhile, officials said fears that natural gas supplies in Northern California would dry up by the end of February have eased because more suppliers have agreed to deliver gas to PG&E. The utility said it will pay all its suppliers Friday for January's supplies.

In Sacramento, lawmakers introduced several bills, including one that would require local governments in areas where power demand exceeds production to identify potential sites for new power plants. Another would speed up state approval of the remodeling of old or retired power plants.