Energy Issues

Please see the following articles:

Sac Bee, Wed, 3/28: "State backs rate hike: But increase still may not=20
resolve crisis"

Sac Bee, Wed, 3/28: "Batten down: Electric storm brews "

Sac Bee, Wed, 3/28: "Use more energy, pay higher rates "

San Diego Union, Wed, 3/28: "Regulators prescribe biggest rate increase in=
=20
state history"

San Diego Union, Wed, 3/28: "City leaders in East County schedule forum on=
=20
energy woes"

San Diego Union, Wed, 3/28: "Developments in California's power crisis"

San Diego Union, Wed, 3/28: "Congressman eyes nuclear vessels as source of=
=20
power"

San Diego Union, Wed, 3/28: "Bush calls California energy crisis 'ominous'=
"

San Diego Union, Wed, 3/28: "Rate hike means new political heat for=20
California governor"

LA Times, Wed, 3/28: "PUC Approves Largest Electricity Rate Increase in=20
State's History"

LA Times, Wed, 3/28: "With Energy Crisis Far From Over, Experts Say More=
=20
Hikes Possible "

LA Times, Wed, 3/28: "Davis Keeps His Distance From Utility Rate Hikes"

LA Times, Wed, 3/28: "Federal Energy Agency Unlikely to Order Refunds"

LA Times, Wed, 3/28: "A Painful Step" (Commentary)

SF Chron, Wed, 3/28: "PUC Votes To Jack Up Power Rates=20
Tiered increases approved as protests disrupt meeting"

SF Chron, Wed, 3/28: "Developments in California's power crisis" =20

SF Chron, Wed, 3/28: "Energy Nominees Would Give GOP Majority on Panel"

SF Chron, Wed, 3/28: "Megawatt Foolish=20
Strike a Pose for Energy Conservation"

SF Chron, Wed, 3/28: "New York mayor calls for cap on power prices "=20

SF Chron, Wed, 3/28: "Power regulators approve rate hikes of up to 46=20
percent "

Mercury News, Tues, 3/27: "No explanation given after officials approve 27=
=20
percent rate hike "

Mercury News, Tues, 3/27: "Impact of increases will vary greatly"

Orange County, Wed, 3/28: "PUC raises power rates"

Orange County, Wed, 3/28: "Energy payments not enough, gas-using generator=
s=20
say"
Orange County, Wed, 3/28: "Bush to nominate 2 who favor free markets for=
=20
energy panel"

Orange County, Wed, 3/28: "Davis backs power rate hikes if 'necessary' "

Orange County, Wed, 3/28: "Cheney says state's on its own"

Orange County, Wed, 3/28: "Highest rate hike in state history raises=20
consumer anger"

Orange County, Wed, 3/28: "Lighten up...it's just a California thing"

Orange County, Wed, 3/28: "Conserve and Save"

NY Times, Wed, 3/28: "RECORD RATE HIKE SET IN CALIFORNIA"

Individual.com, Wed, 3/28: "Calif. Regulators Raise Power Rates "

=20

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State backs rate hike: But increase still may not resolve crisis
By Carrie Peyton and Dale Kasler
Bee Staff Writers
(Published March 28, 2001)=20
SAN FRANCISCO - Brushing aside the shouts and hisses of outraged protesters=
,=20
state regulators approved a $4.8 billion-a-year utility rate hike Tuesday b=
ut=20
couldn't guarantee that the increases will remedy California's electricity=
=20
crisis.=20
With activists chanting "rate hikes no way" and utility executives branding=
=20
the decision as inadequate, the Public Utilities Commission voted 5-0 to=20
raise rates about 30 percent for customers of Pacific Gas and Electric Co.=
=20
and Southern California Edison. The rate hike took effect immediately but=
=20
probably won't show up in customer bills until May.=20
But while PUC commissioners said they were taking a bold step, major holes=
=20
remain in the state's patchwork effort to save the two beleaguered utilitie=
s=20
and ensure reliable energy supplies during what promises to be a long, hot=
=20
summer:=20
The higher rates won't pay off billions in old utility debts, leaving PG&E=
=20
and Edison under the continued threat of a bankruptcy filing by power=20
generators, bondholders or other creditors.=20
The increases will likely curtail energy consumption, but it's unlikely the=
=20
cutbacks will be enough to stave off rolling blackouts this summer. The PUC=
=20
put off a crucial decision on how to allocate the rate hikes across custome=
r=20
categories, and the final rate design could determine how much Californians=
=20
will conserve.=20
The vote may not achieve one of its key goals: reviving the wind farms,=20
cogenerators and other=20
alternative-energy producers that provide more than 20 percent of=20
California's electricity. Hundreds have shut down in recent weeks because o=
f=20
nonpayment by PG&E and Edison, contributing to rolling blackouts March 19 a=
nd=20
20.=20
After months of prodding, the PUC approved what may well be the largest=20
utility rate increase in California's history, saying it had no choice if i=
t=20
was to shore up utility finances and lessen the risk of blackouts. It raise=
d=20
rates just under 30 percent in addition to making permanent a 9 percent=20
surcharge approved in January.=20
The increased revenue will go to pay for the state Department of Water=20
Resources' power purchases on the utilities' behalf, and to=20
alternative-energy producers that supply a major chunk of the utilities'=20
power.=20
The PUC's move could make utility bankruptcies more palatable to state=20
officials because it ensures payment for future power supplies. "Now, if we=
=20
have a bankruptcy, a lot of bad things will probably happen, but there's le=
ss=20
risk to the general public of mass power disruptions," said state Sen. Debr=
a=20
Bowen, D-Marina del Rey, chairwoman of the Senate Energy Committee.=20
PG&E, arguing that the PUC didn't go nearly far enough, said it will demand=
=20
the panel reconsider.=20
"Today's =01( actions, while providing a welcome dose of realism in the ene=
rgy=20
policy debate, unfortunately do not resolve any of the key issues facing=20
California's policymakers," PG&E President Gordon Smith said.=20
Smith said the decision could worsen California's energy problems by forcin=
g=20
the utilities to pay the state Department of Water Resources, which is buyi=
ng=20
power on the utilities' behalf, ahead of other creditors.=20
An Edison vice president, Bruce Foster, said the rate increase "is a step i=
n=20
the right direction" but added, "Only time will tell if it's enough." The=
=20
company announced it will start making interest payments on defaulted bond=
=20
and bank debts.=20
Edison and PG&E both criticized the commission for sharply lowering the PUC=
's=20
estimates of the utilities' debts.=20
PUC commissioners acknowledged they have more work to do to resolve=20
California's energy mess - and some hinted that additional rate hikes may b=
e=20
in the offing.=20
"Have we gotten the number right? I don't know," said Commissioner Henry=20
Duque. But PUC President Loretta Lynch said the $4.8 billion will be enough=
=20
to pay California's ongoing power bills.=20
Meanwhile, Gov. Gray Davis repeated his opposition to rate hikes.=20
"We do not have all the appropriate financial numbers necessary to make a=
=20
decision," Davis said. "Until we do, I cannot support any rate increase. =
=01(=20
While I have opposed rate increases, if it becomes clear that a rate increa=
se=20
is absolutely necessary for the good of the state, I will support one that =
is=20
fair and do my duty to convince Californians of its necessity."=20
Yet most observers believe the PUC acted with Davis' approval - three of it=
s=20
members are Davis appointees - and last Friday his aides shared data with=
=20
business lobbyists indicating rates would rise substantially, said Jack=20
Stewart, president of the California Manufacturers & Technology Association=
.=20
Consumer advocates blasted rate increases as a surrender to the power=20
generators that control much of California's electricity.=20
Noting that the state's grid operator has accused the generators of=20
overcharging Californians by $6.2 billion, they urged the PUC to focus its=
=20
firepower on those "robber barons on steroids," as Berkeley activist Barbar=
a=20
George put it.=20
"It's like dealing with the mob," said Doug Heller of the Foundation for=20
Taxpayer and Consumer Rights. "Instead of breaking our fingers, they're goi=
ng=20
to turn the lights out again."=20
Jamming the PUC's auditorium to near capacity, activists said the state=20
should seize the generators' power plants. They razzed the commissioners wi=
th=20
taunts of "blood money!" and "it's a sham," prompting guards to escort some=
=20
protesters out.=20
PUC President Lynch partially agreed with the protesters, saying the=20
generators are "the real culprits in our energy crisis." But she said the=
=20
commission had to approve rate hikes.=20
The PUC ordered the utilities to help state officials fight the power=20
generators to refund some of their profits. Lynch said the rate hikes would=
=20
be refunded to customers if generators are forced to surrender money.=20
The higher rates will generate $2.51 billion in additional yearly revenue f=
or=20
Edison and $2.28 billion for PG&E, according to PUC estimates.=20
But with most of the money going to reimburse the state Department of Water=
=20
Resources for current and future power purchases, the PUC action doesn't=20
repay the billions the utilities owe to generators and other creditors.=20
"You still have $14 billion, maybe more, of costs that haven't been paid fo=
r,=20
and that's still a problem," said Gary Ackerman of the Western Power Tradin=
g=20
Forum, an association of power generators. "I don't believe creditors are=
=20
going to be infinitely patient."=20
The two utilities have defaulted on billions of debts and face a daily thre=
at=20
of bankruptcy.=20
"That's still an issue that ultimately has to be addressed," said Senior Vi=
ce=20
President John Stout of Reliant Energy Inc., a generator that's owed $370=
=20
million.=20
Davis is negotiating to buy the transmission grid from Edison, PG&E and San=
=20
Diego Gas & Electric Co. as a means of paying off the utilities' existing=
=20
debts. But Bowen, the Energy Committee chair, said she doubts the deal will=
=20
go through.=20
Beyond complaining the PUC didn't solve the existing-debt issue, the=20
utilities were dismayed by a change in PUC accounting that sharply lowers=
=20
estimates of their debts and could have major impacts on how much control=
=20
regulators keep over their operations for months to come. Even though rates=
=20
keep going up, a state ordered rate freeze remains technically in effect, a=
nd=20
that freeze gives regulators ammunition to argue that utilities can't pass=
=20
all their costs on to customers.=20
PG&E's Smith called it the "most egregious" commission action. Edison calle=
d=20
it "illegal."=20
The board voted to raise rates 3 cents a kilowatt-hour - and make permanent=
a=20
1-cent increase approved in January. Documents from Lynch's office said rat=
es=20
would rise on average 29 percent, but Lynch later described it as 26 percen=
t.=20
The PUC put off a decision on how the higher rates will affect each custome=
r=20
category, other than to say it's leaning toward a system that will charge=
=20
more for electricity consumed above a certain threshold. The PUC estimated=
=20
that 45 percent of residential ratepayers - those who use less than that=20
threshold - will see no rise at all. Lynch proposed some businesses would s=
ee=20
rate hikes of as much as 87 percent.=20
"How much conservation will this get us? It will depend very much on how it=
's=20
designed," said Severin Borenstein of the University of California Energy=
=20
Institute.=20
The rate hikes won't affect customers of municipal utilities such as=20
Sacramento Municipal Utility District. SMUD is planning a 16 percent rate=
=20
hike.=20
The PUC vote may do little to help the hundreds of alternative-energy=20
producers known as "qualifying facilities," many of which have shut down fo=
r=20
nonpayment.=20
The PUC on Tuesday ordered PG&E and Edison to start paying these producers =
in=20
April, but some of the producers say the PUC's new pricing mechanism doesn'=
t=20
get them back on their feet financially. Many, following the lead of one=20
Imperial Valley producer, may choose to sever their contracts with the two=
=20
utilities and sell their power elsewhere, even out of state.=20
"This is not a solution," cogenerators' lawyer Jerry Bloom said of the PUC=
=20
vote. "It will drive additional (plants) off the system."=20
California can ill afford to lose suppliers. On Tuesday, the Independent=20
System Operator, which runs the power grid, declared a Stage 2 alert, meani=
ng=20
reserve supplies had dipped to less than 5 percent of demand.=20
And many experts believe California won't be able to avoid blackouts this=
=20
summer. The severe drought hitting the Pacific Northwest will deprive=20
California of a critical source of hydroelectricity.=20
Utility stocks, which shot up Monday in anticipation of the PUC's vote,=20
retreated slightly on Tuesday. PG&E Corp. shares dropped 44 cents to $13.20=
;=20
Edison International fell 39 cents to $14.16.=20
Bee staff writers Dan Smith, Emily Bazar and Kevin Yamamura, and Reuters ne=
ws=20
service contributed to this report.=20
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Batten down: Electric storm brews=20
By Gilbert Chan and Andrew LePage
Bee Staff Writers
(Published March 28, 2001)=20
First higher gasoline prices hit Dust-Tex Service Inc. Then skyrocketing=20
natural gas bills socked the Sacramento industrial laundry service. Now a=
=20
third financial blow looms - higher electricity bills.=20
"It's become a real nightmare. It's pretty scary. You have to find money to=
=20
pay these bills," said Sylvia Compton, co-owner of the longtime family-owne=
d=20
south Sacramento business.=20
It could be worse for Compton, whose business is served by the Sacramento=
=20
Municipal Utility District. It will be for customers of Pacific Gas and=20
Electric Co., who face rate hikes averaging 30 percent in addition to a 9=
=20
percent rate increase already approved.=20
The California Public Utilities Commission gave PG&E and Southern Californi=
a=20
Edison permission to raise electric rates by $4.8 billion a year. How the=
=20
burden will fall on various customer groups hasn't been decided.=20
Although SMUD customers aren't affected by the PUC's decision to sharply=20
raise rates, they aren't likely to be immune. SMUD, also facing skyrocketin=
g=20
energy costs, is considering rate increases ranging from 13 percent to 25=
=20
percent.=20
For Dust-Tex and scores of other California companies, any rate hike would =
be=20
another unwelcome increase in the cost of doing business. It will hit at a=
=20
time the U.S. economy is slowing and employer costs such as health benefits=
=20
are soaring.=20
For consumers, it will mean a double blow, higher electricity bills at home=
=20
and higher prices for goods and services.=20
Raley's, the West Sacramento-based supermarket chain, for example, uses hug=
e=20
amounts of electricity not only for lights and refrigeration at its stores,=
=20
but also to cool food at its distribution centers. Given the thin profit=20
margins of the grocery business, it has little choice but to raise prices.=
=20
"We are doing all we can at Raley's to conserve energy. But as rates go up =
we=20
will have to pass those increases on to our customers in the cost of goods,=
"=20
said Michael Teel, Raley's president and chief executive officer.=20
The higher electric bills approved by the PUC - aimed at keeping the state'=
s=20
two biggest utilities from bankruptcy - mean California businesses and=20
consumers will have almost $5 billion less to spend each year on other=20
things.=20
While that amount represents a huge bite out of consumer spending, by itsel=
f,=20
it won't necessarily lead to a recession, said Brad Williams, senior=20
economist at the state Legislative Analyst's Office.=20
"What we're really talking about is less economic growth," Williams said.=
=20
"Some households will feel this, and it will pinch their budgets and affect=
=20
how much income they have for purchasing goods and services."=20
The state estimates that spending on electricity last year averaged between=
2=20
and 3 percent of both business production costs and household budgets.=20
Some business owners and economists welcomed the boost in electricity rates=
,=20
saying in the long run, they will spur energy conservation efforts, boost=
=20
power generating capacity and prevent rolling blackouts and their devastati=
ng=20
effect on business productivity.=20
"It's much worse for us if we have these damn blackouts. We have 100=20
employees, and if there's a blackout they're all sitting around twiddling=
=20
their thumbs and I've still got to pay them," said Norm Rogers, president o=
f=20
Z-World Inc. in Davis, which designs and builds miniature special-purpose=
=20
computers.=20
Many economists and business experts believe rolling blackouts, not higher=
=20
electricity rates, are the biggest threat to the economy.=20
"It's better to have higher rates and secure power than lower rates and=20
blackouts," said Stephen Levy, senior economist at the Center for Continuin=
g=20
Study of the California Economy. The state can work through the higher powe=
r=20
costs - just as it did when gasoline and diesel prices soared last year, Le=
vy=20
said.=20
In reaction to the higher power rates, a small number of businesses may lea=
ve=20
California, expand out of state, or fail, though most will be able to weath=
er=20
the short run, said Robert Smiley, dean of the Graduate School of Managemen=
t=20
at the University of California, Davis.=20
Most firms will give the state just six to 18 months to solve the energy=20
crisis before "they'll start looking elsewhere," Smiley said.=20
David Molinaro, owner of Yolo Ice and Creamery Inc., a Woodland-based ice=
=20
cream, dairy and ice distributor, can't pick up and leave. He absorbed high=
er=20
diesel fuel costs for his 11 delivery trucks for six months before levying =
a=20
surcharge in January. There's just no way his company can eat the higher=20
electricity costs, he said.=20
"It's frustrating. People are thinking you are getting rich by raising=20
prices," Molinaro said.=20
Other businesses may have little choice but to swallow the higher utility=
=20
costs.=20
"We compete with global suppliers for almost every product. It's virtually=
=20
impossible for us to pass these costs on," said Jeff Boese of the Californi=
a=20
League of Food Processors. "If we don't get a handle on energy costs very=
=20
quickly I would suspect a significant number of food processors to leave th=
e=20
state."=20
In past months, the rocketing energy costs have forced companies to take=20
dramatic steps to shave expenses.=20
Dust-Tex, for example, has scrapped pay raises, raised prices 10 percent, c=
ut=20
hours for some workers, put a freeze on hiring and changed auto insurance=
=20
coverage for its truck fleet. At the same time, it invested $60,000 for a n=
ew=20
energy-efficient dryer.=20
California Family Health & Fitness, which has eight health clubs in the=20
capital region, has tabled plans for two additional gyms until it gets a=20
better handle on future energy costs, according to co-owner Larry Gury. But=
=20
Gury and his partner are looking at spending $150,000 to $200,000 at each o=
f=20
four gyms to install solar panels for heating the pools and running the=20
lights.=20
Some impacts might not be seen for some time. In the health care industry,=
=20
for example, the energy crisis has only added to existing financial=20
pressures, said Larry Levitt, vice president of the Henry J. Kaiser Family=
=20
Foundation.=20
Pressed by higher bills, some employers may opt to trim or eliminate health=
=20
benefits for workers, Levitt said.=20
Bee staff writer Lisa Rapaport contributed to this report.=20
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---------------------------------
Use more energy, pay higher rates=20
By Edie Lau
Bee Science Writer
(Published March 28, 2001)=20
For all the talk of electricity rates going up across the state, there's a=
=20
way every resident of California can avoid the price hit altogether: Just u=
se=20
electricity sparingly.=20
A rate increase approved by the state Public Utilities Commission on Tuesda=
y=20
does not affect households that use less than 130 percent of a baseline=20
amount of power.=20
Forty-five percent of households already stay within that limit, according =
to=20
PUC President Loretta Lynch. The proportion is slightly less in Pacific Gas=
=20
and Electric's territory - 42 percent, utility spokeswoman Jann Tabor said.=
=20
The baseline amount differs from region to region and from season to season=
.=20
The Sacramento Municipal Utility District is not affected by the PUC-approv=
ed=20
increase but is planning to raise rates this spring, as well. It, too,=20
proposes to protect the thriftiest customers by raising the price only of=
=20
kilowatt-hours used over baseline. District rate administrator Alan Wilcox=
=20
said roughly half of SMUD households consume only baseline amounts of power=
.=20
Everyone else has the opportunity to dodge rate increases by scaling back=
=20
their electricity use.=20
How difficult might that be? If you're accustomed to using a central air=20
conditioner all summer and unwilling to turn up the thermostat, it could be=
=20
difficult, by Wilcox's reckoning.=20
"If you're running an air-conditioning load in the Valley, you could probab=
ly=20
expect to get into that second tier (above baseline) a little bit," he said=
.=20
"There are a lot of people who do not use their air conditioning a lot or=
=20
have swamp coolers or just go without."=20
In SMUD territory, the baseline is 700 kilowatt-hours per month in summer,=
=20
and 620 kwh in winter for most customers. (Households that do not use gas a=
nd=20
are powered entirely by electricity get a higher baseline allowance.)=20
Wilcox said the baseline is based upon average consumption - at least, it w=
as=20
the average when the baseline was set in the early 1990s. Consumption has=
=20
crept up a bit since, to 752 kwh a month last year.=20
Under SMUD's rate-increase proposal, the summertime rate would remain at=20
8.058 cents per kilowatt-hour for the first 700 kwh. The price would rise b=
y=20
10 cents a kilowatt-hour for the next 300 kwh used, up to 1,000 kwh.=20
Big energy consumers would pay more than 16 cents for each kwh used over=20
1,000 kwh.=20
Bottom line: The biggest users pay the most.=20
Details of the rate increase approved by the PUC - which will affect PG&E=
=20
customers, as well as those served by Southern California Edison and San=20
Diego Gas & Electric - have yet to be worked out, but the rates are expecte=
d=20
to be structured in a similar tiered fashion.=20
Currently, PG&E customers year-around pay 11.4 cents per kilowatt-hour up t=
o=20
the baseline limit, and 13 cents for every kilowatt-hour over baseline. The=
=20
average baseline throughout the territory is between 300 and 400 kwh, Tabor=
=20
said; it varies from region to region to account for climate.=20
Tabor said the PG&E baseline amounts to between 50 percent and 60 percent o=
f=20
the average electricity use per household in a given territory. That=20
proportion, she said, was taken from a "Lifeline" program in effect from 19=
76=20
to 1984 that was meant to provide a minimum necessary quantity of electrici=
ty=20
and gas at a lower cost.=20
Tabor said 31 percent of PG&E's 4,017,000 residential customers use only=20
baseline amounts of electricity.=20
Bee staff writer Carrie Peyton contributed to this report.=20
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Regulators prescribe biggest rate increase in state history=20

Davis calls ruling for PG&E, Edison premature; consumer groups push for=20
seizure of plants
By Ed Mendel=20
UNION-TRIBUNE STAFF WRITER=20
March 28, 2001=20
SAN FRANCISCO -- State regulators yesterday approved the biggest rate=20
increase in California history for the customers of Pacific Gas and Electri=
c=20
and Southern California Edison, but Gov. Gray Davis said the increase is=20
premature.=20
The governor, appearing to soften his long-standing opposition, said he wou=
ld=20
support a rate increase only if financial information shows that a rate=20
increase is "necessary for the good of the state."=20
The Public Utilities Commission, controlled by Davis appointees, voted 5-0=
=20
for an immediate rate increase. A statement from Davis, who usually demands=
=20
that appointees reflect his policy, did not say whether he would ask the PU=
C=20
or the Legislature for a rollback if he concludes the increase is unneeded.=
=20

Developments in California's power crisis=20
Congressman eyes nuclear vessels as source of power=20
Bush calls California energy crisis 'ominous'=20
Rate hike means new political heat for California governor=20
?=20

"He can ask," said Steve Maviglio, Davis' press secretary. "That is one of=
=20
many options. But now we are waiting for the numbers to plug in the data an=
d=20
see if a rate increase is necessary."=20
The PUC has not yet acted on the request of San Diego Gas and Electric for =
a=20
rate increase. SDG&E has a debt of $681 million but has been paying all of=
=20
its bills, unlike PG&E and Edison. Those companies say they have debt of $1=
3=20
billion.=20
SDG&E is in a different situation because its rates were capped by=20
legislation in September that guarantees payment of its debt, allowing the=
=20
utility to borrow. The bills of SDG&E customers soared last summer when the=
=20
utility became the first to be deregulated.=20
"Since the PUC has approved rate hikes for Edison and PG&E, we would hope=
=20
they give an expedited review to our request for an increase of 2.3 cents p=
er=20
kilowatt hour," said Ed Van Herik, a SDG&E spokesman.=20
Consumer groups warned that out-of-state generators, who have been ordered =
by=20
FERC to make some rebates for overcharging, will make even more money under=
=20
the rate increase. Some are urging Davis to seize California power plants=
=20
owned by the generators.=20
"These people are war criminals," said Mike Florio, an attorney for The=20
Utility Reform Network in San Francisco.=20
The PUC meeting, which occurred on a day when the state was hit by a Stage =
2=20
alert because of reduced imports from the Northwest, was interrupted by=20
shouts from demonstrators who want a state-owned power system. They chanted=
,=20
"Public power now, we won't pay" and "Rate hikes no way, make the energy=20
companies pay."=20
Doug Heller of the Foundation for Taxpayer and Consumer Rights in Santa=20
Monica, which is threatening to put a public power initiative on the ballot=
=20
next year, said some attorneys think the abrupt rate increase can be=20
challenged in court.=20
Assemblyman Rod Pacheco, R-Riverside, announced that he will introduce=20
legislation to repeal the rate increase. He said a decision should be made=
=20
not by appointees but by elected officials who are accountable to the publi=
c.=20
Democratic legislative leaders, who have large majorities in both houses,=
=20
said Monday that they have reluctantly concluded a rate increase is=20
necessary. Davis is scheduled to meet with Assembly Democrats this afternoo=
n.=20
The rate increase approved for PG&E and Edison yesterday is 3 cents per=20
kilowatt hour. The PUC president, Loretta Lynch, said media reports of the=
=20
increase amounting to a 40 percent rise are inaccurate.=20
Lynch said the increase in the monthly bills of ratepayers would be about 2=
6=20
percent if applied across the board. She bases her figure on the total bill=
=20
that includes electricity, transmission, distribution and other costs.=20
The media's characterization of the rate increase as 40 percent is based on=
=20
only the cost of electricity, not the total bill. The electricity costs=20
before the increase were 7.2 cents per kilowatt hour for Edison and 6.7 cen=
ts=20
for PG&E. SDG&E's rate is 6.5 cents.=20
Lynch proposed the rate increase after a report issued last week showed tha=
t=20
the state, which was forced to begin buying power for the utilities in=20
mid-January, will have to spend more than expected. A state plan to lower=
=20
costs through long-term contracts will fall short this summer.=20
The state has been spending about $1.5 billion a month to buy power. The PU=
C=20
also voted unanimously yesterday to give the state a share of the monthly=
=20
bill collected by utilities, which will be used to finance a bond of $10=20
billion or more to repay the state general fund for the power purchases.=20
The state was jolted last week by rolling blackouts that few expected befor=
e=20
summer, when heat drives up the demand for electricity. A number of small=
=20
generators that provide a quarter of the state's power are not operating=20
because they have not been paid by utilities.=20
The PUC voted yesterday to order Edison and PG&E to begin paying the small=
=20
generators under a new formula that links their payments to the price of=20
natural gas at the Oregon border, rather than at the Southern California=20
border with Arizona. Prices at the Arizona border have been 50 percent=20
higher.=20
David Fogarty of the Western States Petroleum Association, which represents=
=20
50 small generators, said many of the small plants in Southern California=
=20
will have to continue to buy their natural gas at the higher price on the=
=20
Arizona border.=20
"Many of them will find it uneconomic to continue to operate," Fogarty=20
warned.=20
Edison has not paid the small generators in the federal "qualifying=20
facilities" program since November. PG&E has been paying them only about 15=
=20
percent.=20
The PUC did not order the utilities to pay off the $1.5 billion they owe to=
=20
the small generators. Jan Smutny-Jones of the Independent Energy Producers=
=20
said some of the small generators will not be able to buy gas until they ca=
n=20
pay their debts.=20
Many of the small generators produce power from "renewable" sources such as=
=20
solar, wind, geothermal and biomass. But most of the small generators use=
=20
natural gas turbines that also produce heat for commercial purposes.=20
Whether Lynch acted on her own when she proposed the increase or was prompt=
ed=20
by the Davis administration is a topic of speculation. Davis aides told=20
reporters during a background briefing yesterday that they did not learn of=
=20
Lynch's proposal until Sunday night.=20
They said the governor was briefed Monday morning and that he did not urge=
=20
his PUC appointees to delay the increase. An Edison official said the utili=
ty=20
received the proposal late Monday morning and had little time to prepare fo=
r=20
a hasty PUC hearing on the increase that afternoon.=20
The two commissioners appointed by former Gov. Pete Wilson, Richard Bilas a=
nd=20
Henry Duque, said they have been urging a rate increase. But both complaine=
d=20
of the short notice and the lack of time to study the complex proposals=20
approved yesterday.=20
Davis aides said they do not understand how Lynch arrived at an increase of=
3=20
cents per kilowatt hour. The governor is waiting for estimates of state pow=
er=20
purchases this summer, available generation, the effect of conservation, th=
e=20
potential for federally ordered refunds from generators, and other data=20
before he makes a rate decision.=20
The Davis appointees on the commission, Geoffrey Brown and Carl Wood, prais=
ed=20
Lynch for showing courageous leadership.=20
The increase approved yesterday, which utility spokesmen said was the large=
st=20
in their history, comes on top of a 9 percent residential increase for Edis=
on=20
and PG&E imposed in January and a scheduled 10 percent increase next March,=
=20
when a "rate reduction" paid for by a $6 billion bond expires.=20
Lynch said the rate increase approved yesterday takes effect immediately bu=
t=20
will not show up on customer bills until May or later. The PUC is working o=
n=20
a plan to design the increase to encourage conservation, giving the biggest=
=20
increases to those that use the most electricity.=20
About 45 percent of the utilities' residential customers will have no=20
increase because of legislation exempting households that use 130 percent o=
r=20
less of the "baseline," a minimum amount of electricity use that varies wit=
h=20
climate zones around the state.=20
-----------------------------------------------------------------

City leaders in East County schedule forum on energy woes=20

UNION-TRIBUNE=20
March 28, 2001=20
Members of the four East County city councils will hold a workshop tomorrow=
=20
to talk about ways to deal with the energy crisis.=20
The meeting is scheduled to begin at 7 p.m. at the La Mesa Community Center=
,=20
4975 Memorial Drive, La Mesa.=20
Council members from La Mesa, Santee, El Cajon and Lemon Grove will discuss=
=20
energy-saving policies and ordinances they could enact.=20
Cities might look at having energy-efficient traffic lights installed or=20
requiring new houses to use alternative energy sources, said La Mesa Mayor=
=20
Art Madrid.=20
"It's acknowledging that we have a problem and coming up with a solution,"=
=20
Madrid said.=20
Kurt Kammerer of the San Diego Regional Energy Office is scheduled to give =
a=20
presentation to the group. Members of the audience will have an opportunity=
=20
to make comments.=20
------------------------------------------------------------------

Developments in California's power crisis=20

ASSOCIATED PRESS=20
March 28, 2001=20
Here is a look at developments in California's electricity crisis:=20
WEDNESDAY:=20
=01) The state remains free of power alerts in the early morning as power=
=20
reserves stay above 7 percent.=20
=01) The Assembly resumes hearings on California's high natural gas prices.=
=20
=01) The Assembly is expected to try again to pass a bill that would let th=
e=20
state Public Utilities Commission order Southern California Edison Co. and=
=20
Pacific Gas & Electric Co. to pay alternative-energy plants.=20
TUESDAY:=20
=01) The PUC votes unanimously to approve electricity rate hikes of up to 4=
6=20
percent for customers of California's two largest utilities. The board vote=
s=20
5-0 to increase rates immediately for PG&E and Edison despite yells from=20
protesters. The increases are the largest in California history.=20
=01) Stock in both utilities suffer slight losses after expectations of the=
rate=20
hikes Monday caused shares in PG&E Corp. to surge 29 percent and Edison=20
International's stock to gain 30 percent. Edison International closed down =
39=20
cents at $14.16 a share. PG&E Holding Corp., parent of Pacific Gas &=20
Electric, closed down 55 cents at $13.20.=20
=01) In a Tuesday afternoon conference call, Southern California Edison say=
s it=20
will begin paying interest to its bondholders after weeks of failure to pay=
.=20
Company authorities say they have not heard whether the news will boost the=
ir=20
credit rating and do not specify a dollar amount for monthly interest=20
payments.=20
=01) The Los Angeles Department of Water and Power, which is not attached t=
o the=20
state power grid and is not affected by deregulation, issues a statement=20
Tuesday assuring that customer rates "will continue to remain stable."=20
=01) Standard & Poors retains California's cautionary credit rating despite=
=20
state regulators' decision to raise electricity rates. The state has been o=
n=20
a credit watch "with negative implications" since it began spending $45=20
million a day to buy electricity for customers of two nearly bankrupt=20
utilities. The crediw watch will remain in effect despite a rate increase=
=20
state regulators approved Tuesday.=20
=01) President Bush says the electricity price caps sought by California's =
Gray=20
Davis and other Western governors would worsen the region's energy crisis=
=20
instead of helping cure it. In a speech to the Kalamazoo Chamber of Commerc=
e,=20
Bush says price controls helped cause the gasoline crisis of the 1970s, and=
=20
he won't make the same mistake.=20
=01) Joseph Fichera, the governor's chief negotiator on the purchase of=20
transmission lines, says he is exchanging drafts of proposed agreements wit=
h=20
Edison officials but won't say how soon a final agreement may be reached. H=
e=20
says negotiations are continuing with PG&E and San Diego Gas & Electric.=20
=01) State agencies announce a March 29 workshop in Ontario for developers =
who=20
hope to build peaking power plants in time for this summer. The event is=20
similar to one held two weeks ago in Sacramento. Peaking plants are used fo=
r=20
short periods when power supplies run low.=20
=01) California's Independent System Operator declares a Stage 2 alert when=
=20
electricity reserves were approaching only 5 percent of available power. IS=
O=20
spokeswoman Stephanie McCorkle says the alert was triggered when 1,000=20
megawatts was unexpectedly lost from the Pacific Northwest. WHAT'S NEXT:=20
=01) The Davis administration continues negotiations with Edison, PG&E and =
San=20
Diego Gas & Electric Co. over state acquisition of their transmission lines=
.
THE PROBLEM:=20
High demand, high wholesale energy costs, transmission glitches and a tight=
=20
supply worsened by scarce hydroelectric power in the Northwest and=20
maintenance at aging California power plants are all factors in California'=
s=20
electricity crisis.=20
Edison and PG&E say they've lost nearly $14 billion since June to high=20
wholesale prices that the state's electricity deregulation law bars them fr=
om=20
passing onto ratepayers, and are close to bankruptcy.=20
Electricity and natural gas suppliers, scared off by the two companies' poo=
r=20
credit ratings, are refusing to sell to them, leading the state in January =
to=20
start buying power for the utilities' nearly 9 million residential and=20
business customers.=20
------------------------------------------------------------------

Congressman eyes nuclear vessels as source of power=20

By Toby Eckert=20
COPLEY NEWS SERVICE=20
March 28, 2001=20
WASHINGTON -- As California braces for more blackouts this summer, a key=20
House Republican has floated a plan that includes mobilizing a federal=20
disaster agency, waiving some environmental regulations and exploring wheth=
er=20
nuclear reactors aboard Navy ships could be connected to the power grid.=20
Several Democrats immediately attacked the plan for not including electrici=
ty=20
price controls sought by Gov. Gray Davis and other California officials. Th=
ey=20
also charged that it would undermine clean air laws.=20
The 17-point plan was drafted by Rep. Joe Barton, R-Texas, chairman of the=
=20
House Commerce Committee's energy and air quality subcommittee. Copies were=
=20
obtained by Copley News Service.=20
Samantha Jordan, a spokeswoman for Barton, confirmed that he had circulated=
=20
some proposals for responding to the Western power crisis among subcommitte=
e=20
members late last week. Some of the ideas were deleted before the list was=
=20
forwarded to the White House, Jordan added, but she would not say which one=
s.=20
Barton has presided over several hearings on the power crunch and has said=
=20
that he is "more than prepared" to draft legislation to help California. A=
=20
White House task force, headed by Vice President Dick Cheney, is also=20
developing a national energy policy.=20
President Bush has repeatedly stated his opposition to caps on wholesale=20
power prices. He has called for a concerted effort to increase energy=20
production.=20
The list of ideas Barton sent to subcommittee members was aimed at boosting=
=20
power generation and transmission in the West, increasing conservation and=
=20
preparing for blackouts.=20
Some of the production and transmission measures called for quickly expandi=
ng=20
a crucial power conduit in the Central Valley known as Path 15, using feder=
al=20
funds for all or part of the project; allowing small power generators to se=
ll=20
electricity to buyers other than the state's cash-strapped utilities; and=
=20
establishing standards for allowing businesses with on-site electricity=20
generation to send surplus supplies to the power grid.=20
Other steps, sure to be unpopular with environmentalists, could be taken if=
a=20
state declares an "electricity emergency." In addition to the idea of=20
harnessing the energy from nuclear-powered Navy ships and submarines, they=
=20
include temporarily waiving nitrogen oxide emission limits at power plants,=
=20
allowing the construction of generating plants on federal and Indian lands,=
=20
restarting mothballed nuclear reactors and delaying for a year a plan to=20
divert water in California's Trinity River from power generation to=20
environmental restoration.=20
On the conservation side, Barton proposed allowing states to lengthen=20
daylight savings time and requiring federal facilities to reduce energy use=
=20
by 10 percent.=20
Finally, the Federal Emergency Management Agency would be directed to open =
an=20
office in California, conduct an educational campaign to prepare the public=
=20
for blackouts and have a plan ready to provide assistance during power=20
outages.=20
Barton has been skeptical of the idea of having the federal government limi=
t=20
the cost of wholesale power in the West and did not include that among his=
=20
proposals. Instead, he said the Federal Energy Regulatory Commission should=
=20
investigate whether wholesale prices are "unjust and unreasonable" -- a=20
finding FERC already has made once.=20
That drew the criticism of four California Democrats -- Reps. Henry Waxman =
of=20
Los Angeles, Anna Eshoo of Atherton, Jane Harman of Torrance and Lois Capps=
=20
of Santa Barbara -- who sit on the House Commerce Committee. They sent a=20
letter to Barton on Friday spelling out their objections.=20
"He's left off the 10-ton gorilla solution, which is directing the FERC to=
=20
.?.?. impose a reasonable cap on the price of wholesale electricity," Harma=
n=20
said.=20
The Democrats also said that Barton's proposals would "undermine the Clean=
=20
Air Act" and that there is "widespread agreement among those directly=20
involved in California's electricity system that clean air rules are not=20
responsible for electricity shortages."=20
-----------------------------------------------------------------

Bush calls California energy crisis 'ominous'=20

But he foresees no quick relief, opposes controls
By George E. Condon Jr.=20
COPLEY NEWS SERVICE=20
March 28, 2001=20
KALAMAZOO, Mich. -- President Bush yesterday made his most extensive remark=
s=20
yet on the energy crisis in California, calling the situation "ominous" and=
=20
proclaiming that "the time to act is now."=20
Despite that pledge, though, he held out little hope of any speedy relief f=
or=20
the hard-hit state. He also restated his opposition to energy price control=
s.=20
The president, who has previously addressed the energy crunch only in answe=
rs=20
to reporters' questions, used a "state of the economy" speech to a business=
=20
group at Western Michigan University to elaborate on his still-evolving=20
energy policy.=20
He broke no new ground in his remarks, but seemed to be reacting to West=20
Coast criticism that the federal government should be more aggressive in=20
finding a solution to the rolling blackouts plaguing the nation's most=20
populous state.=20
"The energy problem wasn't created overnight and we won't solve the problem=
=20
overnight," he said. "But we will at least start down the right road so tha=
t=20
the shortages we face today will not recur year after year."=20
He said a task force headed by Vice President Dick Cheney will come up with=
a=20
long-term strategy, but he ruled out any move by his administration that=20
would remedy the crisis quickly.=20
"We'll not solve the energy problem by running the energy market from out o=
f=20
Washington, D.C.," he said. "We will solve the energy problem by freeing th=
e=20
creativity of the American people to find new sources of energy and to=20
develop the new technologies that use energy better, more efficiently and=
=20
more cleanly."=20
He singled out for criticism any call that Washington cap energy prices.=20
"This administration does not, and will not, support energy price controls,=
"=20
he said to applause from the business-oriented audience. "Price controls do=
=20
not increase supply, and they do not encourage conservation. Price controls=
=20
contributed to the gas lines of the 1970s. And the United States will not=
=20
repeat the mistake again."=20
He portrayed the energy crisis as a clear threat to his hopes of revitalizi=
ng=20
the national economy.=20
And he signaled that he understands Californians are facing hardships.=20
"The lights are dimming in California. Consumers and businesses in Californ=
ia=20
are paying sharply higher energy bills. And as we compare our future energy=
=20
needs to the currently projected domestic energy supply, we see an ominous=
=20
growing gap," he said.=20
He said the blame for the problem belongs to previous decision-makers.=20
"Our people are paying a high price for years of neglect. And the time to a=
ct=20
is now," he said.=20
Meanwhile, Bush said he would nominate utility regulators from Texas and=20
Pennsylvania to fill vacancies at the Federal Energy Regulatory Commission,=
=20
or FERC, the agency that has played a pivotal role in the California crisis=
.=20
However, Bush stopped short of replacing the chairman of the commission,=20
Curtis Hebert, who has drawn fire from Gov. Gray Davis and other California=
=20
officials for his outspoken faith in open power markets and staunch=20
opposition to federal controls on the soaring price of wholesale power sold=
=20
in the West.=20
There was widespread speculation that Hebert, a Republican, was on his way=
=20
out as chairman.=20
A White House spokeswoman would not say whether Bush has ruled out naming=
=20
another commissioner to the top job at a later date.=20
Bush nominated Patrick Henry Wood III and Nora Mead Brownell to round out t=
he=20
five-member commission.=20
Wood is chairman of the Texas Public Utility Commission and was an adviser =
to=20
Bush on energy issues during the presidential transition. Many observers ha=
d=20
expected Bush to name him chairman of FERC.=20
Brownell is a member of the Pennsylvania Public Utility Commission.=20
Both nominees, who face Senate confirmation, were praised by power industry=
=20
officials and consumer groups. They have helped steer deregulation plans in=
=20
their states that are thought to be on sounder footing than California's=20
failed experiment.
------------------------------------------------------------------

Rate hike means new political heat for California governor=20

By Alexa Haussler
ASSOCIATED PRESS=20
March 28, 2001=20
SACRAMENTO =01) Rolling blackouts and a record increase in electricity rate=
s are=20
putting the political squeeze on Gov. Gray Davis just as he prepares for hi=
s=20
re-election campaign.=20
The Democratic governor took a hit Tuesday when the Public Utilities=20
Commission =01) three of its five members appointed by Davis =01) approved =
the very=20
rate hikes he has repeatedly said would not be needed.=20
The power crunch is just the weakness political foes are looking for; it=20
could leave everyone from business owners to consumers looking for someone =
to=20
blame at the polls next year.=20
"He's the face of the problem right now and so he is going to be the target=
,"=20
said Nancy Snow, a political scientist at the University of California, Los=
=20
Angeles.=20
Davis already has been criticized as having a leadership style that is a=20
"little bit too much in the mushy, middle-of-the-road area," Snow said.=20
"That's something that he is going to have to overcome in order to=20
politically survive this crisis."=20
California Republicans blame the first-term governor for four widespread=20
power outages this year that they call "Gray-outs." His first major=20
challenger in 2002, GOP Secretary of State Bill Jones, is making energy a=
=20
campaign centerpiece.=20
A top state financial official and fellow Democrat, Controller Kathleen=20
Connell, says Davis' decision to buy power for Southern California Edison a=
nd=20
Pacific Gas and Electric is putting the state in financial danger.=20
And Democratic lawmakers are privately grumbling about Davis' handling of t=
he=20
crisis as consumer groups threaten a revolt on the 2002 ballot. With up to =
25=20
million Californians affected by the rate hikes, consumer activists hope to=
=20
attract millions of rebels to the polls.=20
The PUC voted unanimously to immediately raise rates up to 46 percent for=
=20
Edison and PG&E customers, saying that would reduce power use this summer a=
nd=20
help keep the cash-starved utilities in business.=20
The increases =01) which come on top of already-approved hikes of 9 to 15=
=20
percent and a 10 percent increase planned next year =01) are the biggest in=
=20
state history.=20
Davis issued a written statement Tuesday easing his ardent opposition to a=
=20
rate hike.=20
"While I have opposed rate increases, if it becomes clear that a rate=20
increase is absolutely necessary for the good of the state, I will support=
=20
one that is fair and do my duty to convince Californians of its necessity,"=
=20
Davis said.=20
Davis' aides are frantically trying to deflect criticism surrounding the=20
increase and assure voters the governor is working to build more power plan=
ts=20
and boost conservation to avert blackouts during the hot summer months.=20
Davis spokesman Steve Maviglio said the governor opposes a rate increase bu=
t=20
has no power to order the PUC to maintain current rates.=20
"They are an independent body, they can do what they want," Maviglio said.=
=20
He insisted the governor wasn't informed of PUC Chairwoman Loretta Lynch's=
=20
plan to announce a rate increase Monday, declaring to reporters: "It's not =
a=20
story =01) it's the truth."=20
Still, some Republicans and Democrats have said the governor has been=20
inconsistent about his pull with the commission.=20
He announced last week at a dinner with state labor leaders that he had=20
directed the PUC to order utilities to start paying overdue bills to=20
facilities that produce renewable energy.=20
In addition, Davis administration officials informed several key Assembly=
=20
members Friday that the state's power-buying for Edison and PG&E could cost=
=20
far more than the $10 billion lawmakers and Davis estimated when they=20
approved legislation authorizing the power purchases, making a rate increas=
e=20
of 50 percent or more necessary.=20
"He is fully dedicated to solving this thing, he doesn't just want to lay i=
t=20
on the lap of a ratepayer or a taxpayer, and he's trying to come up with wa=
ys=20
to do that," Maviglio said.=20
The national attention the power problems draw is raising Davis' name=20
recognition around the country =01) for better or worse =01) as he consider=
s=20
whether to make a presidential run in 2004.=20
Davis has been making the rounds on the national TV news and Sunday morning=
=20
talk shows to explain to the nation why the lights have been going out in=
=20
California.=20
He has attempted to shield himself by continually commenting that he=20
inherited the energy problems; then-Republican Gov. Pete Wilson signed the=
=20
1996 utility deregulation bill largely blamed for the crisis, and Californi=
a=20
went years with no new power plants, Davis says.=20
Republicans turn the criticism back at him. The state GOP has already run=
=20
radio ads criticizing Davis' handling of the power problems and are launchi=
ng=20
an all-out effort to blame him for the rate increases.=20
"It's a colossal failure of mismanagement on the part of the governor's PUC=
,"=20
said Assemblyman Keith Richman, R-Northridge.=20
But even with the energy crisis, Republicans have their work cut out for th=
em=20
in 2002.=20
The state GOP =01) long shackled by infighting between moderates and=20
conservatives =01) is in the minority in the Legislature, holds just one=20
statewide office, Jones', and must come up with millions to match the nearl=
y=20
$26 million Davis had raised nearly two years before the election.=20
And polls have shown residents growing increasingly frustrated with the=20
energy crisis, but not blaming Davis. Those surveys were taken before=20
Tuesday's rate hike and before California was hit last week with rolling=20
blackouts from San Diego to the Oregon border.=20
The governor's political campaign isn't taking any chances, moving quickly =
to=20
bite back at critics.=20
Garry South, Davis' chief political adviser, issued a statement Tuesday=20
saying Jones has failed to put forth his own solution.=20
"Put your megawatts where your mouth is," South said.=20
------------------------------------------------------------------
PUC Approves Largest Electricity Rate Increase in State's History=20

Regulation: Some customers will pay up to 46% more. Commissioners, facing=
=20
strong opposition before their unanimous vote, say they are trying to avert=
=20
blackouts. Critics say move won't solve the crisis.=20

By NANCY VOGEL and TIM REITERMAN, Times Staff Writers=20

PUC President Loretta Lynch and Commissioner Richard Bilas show strain of t=
he=20
meeting at which the panel announced a rate hike. "We maintain the=20
responsibility to keep the lights on," Lynch said
ROBERT DURELL / Los Angeles Times

?????SAN FRANCISCO--With protesters jeering their disapproval, besieged=20
utility regulators Tuesday adopted the largest electricity rate hike in the=
=20
state's history and defended the action as the only way to keep the lights =
on=20
for millions of customers.
?????The California Public Utilities Commission unanimously approved an=20
increase of 3 cents per kilowatt-hour. That will boost rates by as much as=
=20
42% for some Southern California Edison customers and up to 46% for some=20
served by Pacific Gas & Electric Co.
?????The rate increase, which will cost customers nearly $5 billion a year,=
=20
takes effect immediately but will not show up on utility bills until at lea=
st=20
May.
?????The rate hike is the most far-reaching and politically volatile action=
=20
the state has taken thus far to ease an 11-month-old power crisis that has=
=20
nearly bankrupted the two largest utilities and triggered blackouts. But=20
critics say it does not solve the fundamental problem of runaway wholesale=
=20
electricity prices.
?????"The PUC has done all it can do to fight wholesale energy prices that=
=20
are unjust and unreasonable," said commission President Loretta Lynch. "We=
=20
maintain the responsibility to keep the lights on. . . . I believe that=20
adding another 3 cents will comprehensively address the need for revenues."
?????The commission took steps to have utilities begin paying the state=20
Department of Water Resources for the nearly $3 billion in power it has=20
purchased for them since mid-January.
?????The PUC also ordered utilities to start paying for future power from=
=20
alternative energy producers who are starved for cash and struggling to=20
operate. The blackouts last Monday and Tuesday were precipitated in part by=
=20
loss of power from such companies.
?????But it was the rate increase proposal that packed the auditorium at PU=
C=20
headquarters. And the drama of the vote--and the vocal opposition--spurred=
=20
each of the five commissioners to forcefully defend the unpopular action.
?????"These are extraordinary moments in California's history," declared=20
Commissioner Geoffrey Brown, a recent appointee of Gov. Gray Davis. "And=20
extraordinary moments require extraordinary courage. Loretta Lynch has take=
n=20
a lot of bad hits. But it was she who stepped up to the role of leader in=
=20
California."

?????Rate Increase Lacked Support
?????Lynch proposed the rate increase, even though an administrative law=20
judge at the PUC concluded that an increase was unnecessary and the PUC's o=
wn=20
consumer protection arm, the Office of Ratepayer Advocates, opposed it. She=
=20
also did not have the public support of Davis, who appointed her and two=20
other commissioners.
?????Davis has distanced himself from the PUC's action, saying the commissi=
on=20
was acting independently and that he remains unconvinced that a rate increa=
se=20
is necessary.
?????Commissioners Henry Duque and Richard Bilas--who were appointed by=20
Republican Gov. Pete Wilson--called the rate hikes long overdue.
?????"Unless ratepayers want to face substantial rolling blackouts this=20
summer, we have to start paying our power bills," Duque said. "It cannot be=
=20
done with the current rates."
?????Saying "there is just no blood left in the turnip," Bilas warned that=
=20
"absent an immediate rate increase, the utilities will be in Bankruptcy=20
Court."
?????Before the vote, sign-carrying protesters chanted, "Rate hikes, no way=
,=20
make the energy companies pay." And the commission heard a parade of=20
witnesses, most opposing the rate increase. Some called on the state to use=
=20
eminent domain to seize power plants, as Davis said he might do as a last=
=20
resort.
?????Doug Heller, of the Foundation for Taxpayer and Consumer Rights in San=
ta=20
Monica, told the commission, "Go to these power pirates and tell them the=
=20
state treasury is not their money orchard."
?????Barbara George, of Women's Energy Matters, said, "We should give the=
=20
generators 24 hours to sign their plants over to the state and leave." Geor=
ge=20
was one of several people ejected for repeatedly disrupting the meeting.
?????At a hearing Monday, representatives of agriculture and manufacturing=
=20
industries warned that the increase would hurt their members and the=20
California economy.
?????The rate hike is the state's largest, according to the Office of=20
Ratepayer Advocates, which researched the issue.
?????Because the electricity rate is just one of many charges on a monthly=
=20
utility bill, the overall effect will be about a 28% increase in monthly=20
bills, said PUC staff.
?????Before the PUC action, homeowners and renters in Edison territory paid=
=20
7.2 cents per kilowatt-hour for electricity and another 5.3 cents per=20
kilowatt-hour for other services. The new rate, totaling 15.5 cents per=20
kilowatt-hour, boosts the overall bill by about 24%. The increase is about=
=20
26% for PG&E residential customers. But under Lynch's proposal, those=20
increases would not be applied equally.
?????To encourage conservation, she seeks a tiered system that would charge=
=20
miserly consumers of energy no more than current rates but would impose the=
=20
new higher rates on bigger users.
?????The proposal aims the rate increase at those customers who use 30% or=
=20
more beyond a so-called baseline amount, which is about half of the average=
=20
residential use per month and varies by region.
?????Exactly who will pay the higher electricity rate will be determined by=
=20
the PUC in hearings over the next month. Under Lynch's proposal, nearly hal=
f=20
of all residential customers would be spared rate increases.

?????Tiered Rates to Encourage Saving
?????Energy experts say tiered rates would encourage conservation, but they=
=20
disagree about how much.
?????Davis energy advisor S. David Freeman, general manager of the Los=20
Angeles Department of Water and Power, said utilities have long used tiered=
=20
rates when charging low-income customers. "So this is not brand new. It's=
=20
just a more aggressive use of it," he said.
?????UC Irvine economist Peter Navarro said he doubted that tiered rates=20
would do much to stave off blackouts. The greatest conservation gains come=
=20
from investment in efficient appliances, he said, and that's why tiered rat=
es=20
are "no magic bullet."
?????The increase will not show up in utility bills until May at the=20
earliest, said Paul Clanon, chief of the PUC's energy division.
?????The higher charges for electricity consumed between now and whenever t=
he=20
new rate structure is incorporated in monthly bills will be calculated=20
retroactively and charged to future bills, Clanon said.
?????Utility executives and consumer advocates all threw up their hands at=
=20
the question of whether the rate hike will be enough.
?????"Have we gotten the number right?" Duque said. "I don't know. I hope w=
e=20
have. But this is a step in the right direction, and we'll return any money=
=20
not used to buy power."
?????Bruce Foster, a Southern California Edison vice president, also said t=
he=20
rate increase is a step in the right direction. "Only time will tell," he=
=20
said, "if it is sufficient to meet the need."
?????In a statement, PG&E welcomed the PUC action as a "dose of realism," b=
ut=20
said the commission left unresolved a host of issues, including how much=20
money the utility will have to pay for power that the state purchases for=
=20
PG&E customers.
?????The PUC estimates that the increase will bring in an additional $4.8=
=20
billion annually from the 24 million people served by Edison and PG&E.
?????But that amount doesn't go far in today's California wholesale=20
electricity market.
?????The state and utilities spent $5.2 billion in January buying=20
electricity. The state, through the Department of Water Resources, has spen=
t=20
nearly $3 billion in taxpayer money to buy electricity on behalf of the=20
utilities since Jan. 19 because power generators refused to sell to the=20
cash-strapped utilities.
?????Money utilities collect from their customers, even with the new rate=
=20
hike, is expected to cover a wide array of expenses, including payments on=
=20
$10 billion or more in revenue bonds that the state hopes to sell this spri=
ng=20
to cover the state's cost of buying power.
?????"The numbers don't add up," said Jason Zeller, an attorney with the=20
Office of Ratepayer Advocates. "Massive [additional rate] increases are my=
=20
concern. We are sticking a finger in the dike unless wholesale prices come=
=20
down."
---=20
?????Times staff writer Mitchell Landsberg in Los Angeles contributed to th=
is=20
story.
--------------------------------------------------------------------------
With Energy Crisis Far From Over, Experts Say More Hikes Possible=20

Power: PUC action leaves questions unanswered, such as how to handle=20
utilities' debts, whether to buy grid.=20

By JENIFER WARREN and MIGUEL BUSTILLO, Times Staff Writers=20

?????As painful as Tuesday's electricity rate increase will be for some=20
consumers, power experts across the ideological spectrum say California is=
=20
not yet close to being free of the energy crisis that has engulfed it and=
=20
threatened its economy.
?????Because of that, still more rate hikes are possible, they say.
?????Consumer advocates, power company officials, legislators and regulator=
s=20
disagree widely on the causes of and cures for the state's problems. But th=
ey=20
agree that California's energy woes are dizzyingly complex. And the rate hi=
ke=20
makes nary a dent in many dimensions of the problem.
?????"Is it over? Heavens no!" said Assemblywoman Jackie Goldberg (D-Los=20
Angeles), who heads a state Assembly panel investigating summertime power=
=20
supply issues. "It's a necessary step, but we're certainly not out of the=
=20
woods yet."
?????The increase, along with another important action Tuesday by the PUC,=
=20
did resolve two major issues--