California lawmakers pass power bill

California has spent more than $400 million on costly short-term power purchases

In this story: Bill supporters fall 3 votes short Consumer advocates decry measure Senator scolds power suppliers RELATED STORIES, SITES

SACRAMENTO, California -- The California Assembly sent Gov. Gray Davis a $10 billion plan Thursday aimed at keeping California's lights on while lawmakers try to fix the state's energy crisis.

The measure will allow the state to sign long-term contracts for up to a decade to buy power and sell it to the customers of cash-strapped Southern California Edison and Pacific Gas and Electric Co.

The Assembly's 54-25 vote -- cast after legislative leaders and Gov. Gray Davis won over a Democratic holdout and two Republicans -- came despite GOP protests that the bill will result in higher electricity rates. The bill had failed to pass earlier Thursday.

The state power grid is in its 17th day of being under the highest level of alert, with rolling blackouts possible on short notice. California officials say they are spending $40 million to $50 million a day to buy electricity on the short-term spot market.

Meanwhile, California's largest utility has defaulted on $726 million of short-term debt. Pacific Gas & Electric disclosed Thursday it would pay its suppliers only about 15 percent of what it owes them. (More on PG&E's partial payment)

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The state Senate passed the measure Wednesday to let the state sign long-term contracts to buy power and sell it to the customers of the state's two largest utilities, PG&E and Southern California Edison. But the measure failed to secure enough support from Republicans in the state Assembly to pass.

Bill supporters fall 3 votes short

California Gov. Gray Davis is expected to sign the bill later Thursday and quickly end the crisis.

The bill will allow California to issue up to $10 billion in bonds to buy power on long-term contracts. The state will repay the bonds with a surcharge added onto consumers' bills. Opponents of the bill argued that taxpayers would be left holding the bag and risking much higher bills.

Republicans and some Democrats in the Assembly took issue with a provision that would let the state Public Utilities Commission raise power rates to cover wholesale costs.

"There is not a single thing in this bill or the bills that I have seen that addresses that little old lady or man who is living on a fixed income," said Assemblyman David Cox, a Republican.

Consumer advocates decry measure

The legislation also drew protests from consumer advocates, who say the bill amounts to a taxpayer-financed bailout of the two companies.

"These are multibillion-dollar companies that have the ability to bail themselves out without our help," said Medea Benjamin, one of two protesters arrested for obstructing police outside Davis' office Wednesday.

SoCal Edison and PG&E supported the state's 1996 deregulation law, which required them to sell their power plants. Now they say they've been pushed $12.7 billion into debt by soaring wholesale prices that, under the 1996 law, they cannot pass on to their customers. California has already spent more than $400 million on costly short-term power purchases on behalf of SoCal Edison and PG&E, which have been denied credit by suppliers.

A state audit found PG&E ignored months of warnings that California was headed toward an energy crisis and took no steps to conserve cash until it was too late. Another audit concluded that SoCal Edison transferred $4.8 billion to its corporate parent, Edison International, in the past four years -- enough to have covered much of the massive debt the utility has incurred since May.

Senator scolds power suppliers

Prices have soared not only in California but also in many of the other 10 states connected in the Western power grid, and several utilities on Wednesday urged the Senate energy committee to impose price controls on wholesale power.

At one point during the committee hearing, Sen. Dianne Feinstein, D-California, asked representatives of out-of-state power generators for "a little cooperation" in addressing her state's electricity crisis.

"All of you have made a lot of money off this," she said, scolding the executives who lined the witness table for appearing "not to care what happens, not to care about the people that are being thrown out of jobs."

President Bush, while conceding that California's power problems are beginning to have widespread impact, has not allowed the Federal Energy Regulatory Commission to impose price controls.

CNN Correspondents Casey Wian and Martin Savidge and Reuters contributed to this report.

Stage 3 power alert continues in California
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White House forms energy task force, but offers California scant hope of aid
January 29, 2001
As lawmakers plug power holes, consumer groups decry 'bailout'
January 27, 2001
California governor: Bonds would produce power and cash for consumers
January 25, 2001

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