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Davis focuses on electricity crunch in

January 09, 2001

annual speech

By STEVE LAWRENCE, Associated Press Writer

SACRAMENTO — Gov. Gray Davis used his State of the State address to take his toughest stance yet on California's electricity crunch, threatening to take over power plants to avoid blackouts and utility bankruptcies.

He also called Monday for a series of other steps to curb energy use and increase supply, including a government-run power authority to buy and build generating facilities and rebates of up to $200 to encourage consumers to buy more energy-efficient appliances.

The Democratic governor's third annual address to the Legislature also touched on education and health care. Davis proposed expanding teacher training, lengthening middle-school students' academic year and expanding health care for low-income working parents.

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But a fix for California's power crisis was the centerpiece of his 35-minute speech.

‘‘Make no mistake,'' Davis said. ‘‘We will regain control over the power that's generated in California and commit it to the public good.''

Davis said the state's gradual deregulation of its electricity market, approved in 1996 when Republican Pete Wilson was governor, had been a ‘‘colossal and dangerous failure'' that has left consumers facing the prospect of huge rate increases and two giant investor-owned utilities predicting bankruptcy.

‘‘It has not lowered consumer prices and it has not increased supply,'' Davis said. ‘‘In fact, it has resulted in skyrocketing prices, price-gouging and an unreliable supply of electricity. In short, an energy nightmare.''

Doug Heller, a consumer advocate who has been one of the governor's biggest critics on energy issues, praised Davis' threat to use eminent domain to take over power plants and his call for a public power authority.

But he said the governor also should have proposed an excess profits tax on power generators to repay consumers for rate hikes.

Tom Williams, a spokesman for Duke Energy, a major power wholesaler, said that seizing plants and creating a state power authority would ‘‘do nothing to produce power.'' Williams said earlier that Duke would fight any attempt to take over its power plants.

‘‘California needs to increase supply and as rapidly as possible,'' he said. ‘‘We're willing to develop any kind of solutions to increase supply and anything that can be done to reduce demand.''

Davis asked lawmakers to:

— Earmark $1 billion in the state budget to help stabilize electricity prices and provide generate additional power and spend $4 million to allow the attorney general to investigate whether suppliers manipulated prices.

— Restructure the boards that manage the state's power grid and overhaul a ‘‘crazy bidding process for electricity.''

— Make it easier for utilities to buy electricity through long-term contracts to stabilize prices.

— Give the state the power to order power plants down for unscheduled maintenance to go back on line and to make it a crime to deliberately withhold power from the state grid if it results in an imminent threat to public health or safety.

— Require California utilities to hold on to their remaining power plants and sell their power in California instead of out of state.

— Provide low-interest financing to build more power plants designed to be used during periods of high demand and to ‘‘repower'' existing ones to make them cleaner and more efficient, and provide state-owned lands to site more generating facilities.

But Davis said the state had to go further than building new plants.

‘‘The time has come to take control of our own energy destiny,'' he said.

That will require a joint-powers authority made up of the state and California's 30 municipal utilities or a state power authority that can buy and build new plants, Davis said.

He asked consumers to cut electricity consumption by at least 7 percent and urged lawmakers to devote $250 million to provide rebates of up to $200 per appliance to consumers who buy more energy-efficient refrigerators, washers and air conditioners.

He said the state would cut consumption by at least 8 percent and by 20 percent during serious electricity shortages.

Assemblymen Bill Campbell, R-Villa Park, and Fred Keeley, D-Boulder Creek, said Davis didn't address the financial crunch faced by utilities caught between a freeze on consumer rates and big increases in wholesale prices for power.

‘‘He's going to have to be nimble and flexible over the next two to three weeks in order to stave off bankruptcy by the investor-owned utilities,'' Keeley said.

On education, Davis proposed giving schools that agree to add 30 days to middle schools' academic year a financial reward, expanding training for reading and math teachers and school principals and vice principals and spending $30 million a year to beef up algebra instruction.

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