California legislature mulls power crisis in emergency session

California's state legislature is holding an emergency session to find ways to solve the state's energy crisis

From CNN Correspondent Don Knapp

SACRAMENTO, California (CNN) -- With California's power grid near the breaking point, utilities facing bankruptcy, and energy prices skyrocketing, the state legislature has gone into an emergency session to look for a way to end the crisis.

The legislature may consider even setting up state-owned and operated power plants, as proposed by Governor Gray Davis in his State of the State address earlier this week.

State Treasurer Phillip Angelides said a bill will be introduced within a week to create the California Consumer Power and Conservation Financing Authority.

VIDEO CNN's Greg LaMotte explains the complexity of California's problem Play video (QuickTime, Real or Windows Media) CNN's Greg Lefevre explains how the energy crisis is affecting people's habits Play video (QuickTime, Real or Windows Media)     WEB EXCLUSIVE Online coverage of the energy crunch in California   MESSAGE BOARD Power crisis

"In a sense, this power authority allows us to take control of our own energy destiny," Angelides said.

By producing and controlling enough of its own energy, California would ensure that it was "never again victimized by a private market out of control," Angelides said.

But the Legislature is also looking at quicker fixes for the power problem.

"We'll do the fastest things first," said Debra Bowen, who chairs the state Senate Energy, Utilities and Communications Committee. "It's easier to screw in a light bulb than it is to build a new power plant, so we'll do the conservation thing starting right away."

Bowen said conservation -- including more efficient light bulbs and appliances -- can quickly trim as much as 10 percent off the state's peak energy use.

"We're focused on things that will do one of three things," Bowen said. "Put more electrons into the system, more electricity, reduce the demand by conservation and energy efficiency, and make the transmission, distribution, billing and generating system more efficient."

The legislature is expected to remain in special session through next week. Any legislation enacted will take effect within 90 days of the session's end.

In Washington, Governor Gray Davis and a group of state legislators met with U.S. Energy Secretary Bill Richardson and energy suppliers. Emerging from the meetings early Wednesday morning, Davis said, "We made progress, particularly on issues of long-term contracting, to bring down the rates and ensure reliable power."

California may consider state-owned power plants as a way of averting crises brought on by free market price fluctuations

The causes of California's power crunch can be traced back four years to a deregulation that required utilities to sell off most of their electric generating plants. When demand increased, utilities were forced to pay sky-high prices for power on the spot market, while a rate freeze kept them from passing those costs on to customers.

"We know the utilities have incurred a great deal of debt over the last few months because of these out of sight, wholesale prices," says state assemblyman Darrel Steinberg who chairs a special energy committee investigating deregulation. "Yet at the same time, if you go back to 1996, at the beginning of this deregulation process, they gained billions of dollars."

Steinberg says the committee wants to learn what happened with deregulation, and figure out where all those billions of dollars went.

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