Calif. Crafting Long-Term Power Plan

Thursday, January 25th 2001, 12:00 am

By: News On 6

SACRAMENTO, Calif. (AP) â€” Gov. Gray Davis expressed confidence the state could keep its lights on without going broke now that dozens of energy suppliers have made long-term offers to sell the state power.

Though the average bids of $69 a megawatt were higher than the $55 officials had hoped for, they were still far lower than the $600 the state has sometimes had to pay on the open market.

``It's good news and I'm enthusiastic,'' Davis said Wednesday night as he reported results from the state's desperate power auction, which netted 39 bidders.

What's more, electricity rates shouldn't have to rise, Davis said as lawmakers prepared to turn their attention Thursday to crafting a long-range solution to the energy crisis.

Such a solution could also be reached, the governor predicted, before the state exhausts a $400 million emergency fund set aside to buy high-priced power on the open market.

But California still isn't anywhere close to being out of the woods.

Underscoring the state's dilemma, the California Independent System Operator, which controls most of the state's power grid, extended a Stage 3 alert to a 10th straight day Thursday. That means power reserves have fallen to about 1.5 percent and there is a good chance of rolling blackouts.

Such blackouts temporarily shut off power to San Francisco, Sacramento, San Jose and other northern and central California cities last week.

In extending the order to midnight Thursday, grid operators called on consumers to conserve in every way possible. Among other things, they have suggested people watching Sunday's Super Bowl game do so in groups to avoid turning on too many power-draining televisions.

In San Francisco, meanwhile, a court hearing was scheduled Thursday on a bid by Pacific Gas and Electric to keep the California Power Exchange from liquidating its energy contracts.

A similar hearing took place Wednesday in Los Angeles when Southern California Edison moved to stop the Power Exchange from liquidating $215 million worth of its contracts.

The state attorney general's office joined Edison in that battle, arguing that allowing the exchange to sell the contracts could disrupt a low-cost source of power to the state and ``have a severe effect on California's already calamitous electricity situation.''

Superior Court Judge David Yaffe is expected to rule next week.

The state's two largest utilities are more than $10 billion in debt.

The crisis is blamed largely on the state's 1996 deregulation law, which ordered utilities to sell their power plants and buy wholesale power, but capped the rates they could charge customers.

Other problems, including a shortage of new power plants, transmission glitches, low hydroelectric output and plant maintenance, have left the state precariously low on electricity.

As wholesalers began to refuse to sell to the utilities on credit, the state created the $400 million emergency fund to buy power itself. At the rates California has been paying, however, that money will be exhausted within a week, Kellan Fluckiger, the ISO's chief executive, said Wednesday.

But with the bids now in hand from suppliers, Davis said he was confident the Legislature could pass a measure authorizing long-term contracts before the money is gone. Davis said officials would begin immediate negotiations with the bidders.

It will take another $400 million for the state to start providing power under those contracts, said Assemblyman Fred Keeley, D-Boulder Creek, the measure's sponsor.

Despite that, Davis said he believes the state can provide SoCal Edison and PG&E consumers with the electricity they need without additional rate hikes. The Public Utilities Commission voted last month to let PG&E and Edison raise rates 9 percent for residential customers and 7 to 15 percent for businesses.

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On the Net:

ISO: http://www.caiso.com