Officials Wrestle on Calif. Power

Sunday, January 14th 2001, 12:00 am

By: News On 6

LOS ANGELES (AP) â€” A solution to California's electricity crisis remained out of reach after seven hours of negotiations between state, federal and utility company officials.

No decisions were reached during Saturday's talks, but further negotiations were scheduled over the next two days. The talks took place via live satellite hookup between Los Angeles and Washington, D.C.

Gov. Gray Davis, who's been pushing to put the state into the role of an electricity broker, said Saturday that California is ``a credit-worthy purchaser. All of us that met today are joined at the hip and if we are going to move forward, we will move forward together.''

Representatives from power providers Pacific Gas & Electric and Southern California Edison refused comment after the meeting.

Douglas Heller of The Foundation for Taxpayer and Consumer Rights, a consumer advocacy group, was wary about the plan.

``If the state becomes a public power agency buying electricity, will the public benefit from that?'' Heller asked. ``Or is it a mechanism for giving utilities their bailout?''

A state agency, under emergency powers from Washington, already has spent roughly $30 million buying electricity in the past month to stave off rolling blackouts during the power crisis. Officials want California to expand and continue wholesale electricity buys, selling the power to utility companies, said Steve Maviglio, a Davis spokesman.

The California Department of Water Resources made the earlier emergency power purchases, including about 24,000 megawatt hours of electricity on Thursday and Friday, Carl Torgersen, the department's chief of utility operations, said Saturday. The department acted under authority of emergency orders by U.S. Energy Secretary Bill Richardson.

''(This) is something we've never done before,'' Torgersen said. ``We're in a new era with deregulation.''

Wholesale power prices have increased fivefold in California since last summer, accompanied by a series of drops in the state's power reserves.

On Thursday, power reserves in California dipped below 2 percent after a storm cut production at a key nuclear station.

The Independent System Operator, which manages most of the state's power grid, said electricity supplies had rebounded but were still tight.

Davis and Govs. John Kitzhaber of Oregon and Gary Locke of Washington said Friday that they would urge their residents to cut electricity demand 7 to 10 percent, try to reduce power use by their state governments by at least 10 percent, and look into joining forces to buy energy-efficient products for state and local agencies to get through the crisis.

Davis and California's two largest investor-owned utilities have pointed fingers at energy wholesalers, saying they have exacerbated the crisis by taking advantage of the tight supplies for their own profit.

Pacific Gas & Electric Co. and Southern California Edison say they have lost more than $9 billion because of wholesale price increases and the state's 1996 deregulation law that froze rate hikes. The utilities, which won permission to raise rates, said the temporary increases approved by the state Public Utilities Commission weren't enough and have warned they could go bankrupt if something isn't done.

Davis, Kitzhaber and Locke said in a written statement that the Federal Energy Regulatory Commission should impose immediate wholesale price controls.

``The federal government must take up its responsibility to prevent the chaos that threatens to engulf the entire western electricity system,'' the governors said.

Sen. Dianne Feinstein, D-Calif., said she would propose legislation to give the U.S. energy secretary authority to cap skyrocketing wholesale electricity prices in 11 western states. It would let the secretary impose a temporary wholesale price cap if there is ``unjust pricing'' and would remain in effect until prices stabilized, said Howard Gantman, the senator's spokesman.