Stage 3 power alert continues in California

In this story: More funds needed Financial straits Stage 3 alert White House task force formed Bush responds to Western governors RELATED STORIES, SITES

From staff and wire reports

LOS ANGELES, California -- Residents in a large portion of California were under a Stage 3 power alert Tuesday for the 15th consecutive day as managers of the state's power grid and politicians searched for power on an hour-by-hour basis.

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Meanwhile, one of the state's two largest cash-strapped utilities came under fire Tuesday following an audit released Monday that showed Southern California Edison transferred $4.8 billion to its corporate parent, Edison International, during the four years leading up to the state's electricity crisis. The amount would have covered much of the massive debt the utility has accrued since May.

"Basically they took the money and ran," Senate President Pro Tem John Burton, D-San Francisco, said late Monday night. "Had they not done that they would not be in the financial problem they are in. If ratepayers bail them out, ratepayers should get something in return, like power lines or something."

Harvey Rosenfield, spokesman for the Foundation for Taxpayer and Consumer rights, said the report shows that SCE has been inflating its losses during the past six months and has $1 billion in cash on hand.

"Solving the energy crisis in California does not require bailing out Edison," Rosenfield said.

A written response to the audit from SCE stated that the funds transferred to the parent company should come as no surprise because they had previously been disclosed to the California Public Utilities Commission. The response also stated that the funds were not profits, but rather payments for quarterly shareholder dividends and for reimbursement to shareholders for their investments in power plants.

Meanwhile, California Gov. Gray Davis has ordered more state money to keep electricity flowing in the energy-strapped state.

The Davis administration would not say Monday how much public money would be freed up, or how long short-term energy buys would remain possible.

The state began buying electricity 12 days ago under emergency legislation that set aside $400 million, but that money was spent by late Sunday, said Mike Sicilia, a spokesman for the Department of Water Resources.

Davis' decision came as independent auditor KMPG released its report Monday night projecting a grim financial future for Southern California Edison.

In addition to the $4.8 billion dividend transfer, the audit showed SoCal Edison has lost about $4.5 billion because of skyrocketing wholesale electricity costs.

Davis believes the audit supports his contention the state can help Edison and Pacific Gas & Electric Co. out of the crisis without a further rate increase for customers, spokesman Phil Trounstine said.

A separate audit report on Pacific Gas and Electric, being prepared by the Barrington-Wellesley Group, has not yet been released.

In Washington on Tuesday, Senate Majority Leader Trent Lott said he was not optimistic the federal government could help California in the short-term.

"This problem didn't just develop. We're not going to resolve it in a few weeks or months," Lott, R-Mississippi, told reporters. He said only that Congress will look at a "national energy policy bill."

The financial revelations came as the California Independent System Operator, manager of the state's power grid, put California under a Stage 3 alert Tuesday, the 15th consecutive day of such a warning.

The alert means state energy reserves are below 1.5 percent and so-called rolling blackouts are possible. State officials said such blackouts, which occurred on two days earlier this month, didn't appear likely.

In a written statement Tuesday, the ISO appealed to customers to conserve electricity in order to avert blackouts, describing as "tremendous" conservation efforts last week that saved more than 1,000 megawatts in energy.

On Monday, President Bush announced the formation of a Cabinet-level task force to work on a solution to California's power crunch and its potential to affect the nation's economy.

"It's becoming very clear to the country that demand is outstripping supply, that there are more users of electricity and natural gas than there are new units being found. We've got to be doing something about that," Bush said Monday when he announced the formation of the task force.

The panel will be led by Vice President Dick Cheney and will include Treasury Secretary Paul O'Neill, Commerce Secretary Don Evans and Energy Secretary Spencer Abraham.

"The task force that is being assembled will not only deal with the very short-run issue dealing with the West, but, obviously, the longer-term issues that will be confronting our country for a while unless we're willing to act boldly and swiftly," Bush said Monday. "Which we will do."

Bush also said his administration will examine California's problems, but he offered little hope of federal help for the state. He said California's electricity shortages should be solved "in California by Californians."

"We're very aware in this administration that the situation in California is beginning to affect neighboring states," Bush added. "Western governors came to see the vice president and they came to see me, as well. And they're deeply concerned about the situation spreading beyond the California borders, and so are we."

Western governors will confer Friday in Portland, Oregon, at a meeting that will be attended by Abraham.

California's problems have sparked some grumbling among states in the Northwest, which are beginning to face problems of their own. A severe drought and heavy power consumption have depleted rivers feeding hydroelectric dams that during a normal year would generate 75 percent of the region's power.

Bush said "it's becoming very clear" that the country needs to develop new sources of energy, and the group that met Monday would explore ways of doing that. Seeking new sources of energy was a prominent part of Bush's campaign, which included a controversial plan to allow oil exploration in Alaska's Arctic National Wildlife Refuge.

Other proposals for warding off future energy crises included developing alternative sources and coaxing U.S. allies in the Persian Gulf region and Latin America to provide reliable oil supplies.

The Associated Press & Reuters contributed to this report.

White House forms energy task force, but offers California scant hope of aid
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January 27, 2001
California governor: Bonds would produce power and cash for consumers
January 25, 2001
Power-starved California seeking suppliers
January 25, 2001

The California ISO
PG&E Corporation
SoCal Edison
  • Deregulation - What this means to you - Electricity Market Issues
California Power Exchange
System Conditions - The California ISO
California Public Utilities Commission
California Utilities Emergency Association

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