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Date: Wed, 21 Mar 2001 12:53:52 -0600 From: "Tracey Bradley" <tbradley@bracepatt.com< To: "Paul Fox" <pfox@bracepatt.com< Cc: "Ronald Carroll" <rcarroll@bracepatt.com< Subject: WSJ - California Legislators Seek Ouster Of State's Top Utilities Regulator Mime-Version: 1.0 Content-Type: text/plain; charset=US-ASCII Content-Disposition: inline FYI March 21, 2001 California Legislators Seek Ouster Of State's Top Utilities Regulator By Mitchel Benson and John Emshwiller Staff Reporters of The Wall Street Journal SACRAMENTO, Calif. -- With blackouts again rolling across the state and lawmakers losing faith in Gov. Gray Davis, legislators called for the resignation of the state's top utility regulator and threatened to cut off further money for buying electricity. The second straight day of blackouts, in which power had to be cut to the equivalent of 500,000 homes, resulted from a combination of unseasonably warm temperatures and a high-level of power-plant outages. Those factors are likely to worsen as a warm spring turns to a hot summer, and Californians switch on air conditioning. The continuing crisis, originally sparked by a utility-deregulation plan gone awry, is draining the patience of political and business leaders, who are stepping up their criticisms of Gov. Davis. Tuesday, Assembly Republican Leader Bill Campbell of Orange County called on Mr. Davis's appointee, Public Utilities Commission President Loretta Lynch, to resign, and for the governor to "replace her with an energy expert in which Californians could have complete confidence." Ms. Lynch, an attorney, had no background in energy or utilities when the governor appointed her as PUC chief a year ago, long before any blackouts. "We have no confidence that Loretta Lynch will play a constructive role in solving this energy crisis in the weeks and months ahead," Mr. Campbell wrote the governor in a letter released Tuesday. "Leaders seek to eliminate barriers to progress. Loretta Lynch stands in the way of a quick solution to California's energy problem." Mr. Campbell and other Assembly Republicans attacked Ms. Lynch for delaying "critical decision-making." In recent weeks, the PUC has been trying to determine how to divide current retail electricity revenues among utilities, their creditors and the state. The commission's decision is considered critical to the success of the state's ability to sell an estimated $10 billion in bonds to help finance continuing electricity purchases. The Republicans say the PUC's inaction has put the bond issue "in jeopardy and Californians at higher risk of rolling blackouts." The PUC is expected to take up this matter again next week. Ms. Lynch couldn't be reached for comment, but Steven Maviglio, a spokesman for Mr. Davis, dismissed the complaints. Pointing out that the state's flawed deregulation plan is based on legislation signed by then-GOP Gov. Pete Wilson in 1996, Mr. Maviglio said, "If the Republicans want to continue to play politics, good luck and God bless. I think Republicans are bankrupt of ideas, and instead of offering constructive solutions, they're playing games." California's legislative plan to deregulate electricity has been derailed by several flaws, including the fact that wholesale rates were allowed to escalate while retail rates were frozen for several years. At the same time, the state experienced an expansion that sent demand soaring while no new generating capacity was added. It's not only Republicans who are putting additional heat on the governor and the PUC. Sen. Steve Peace, a Democrat who is chairman of the Joint Legislative Budget Committee, is balking at the latest request by the administration for emergency electricity funding, saying he fears there isn't yet any mechanism in place for the state to be repaid. On Monday, state finance director Tim Gage requested another $500 million, his sixth such request since Feb. 5. Mr. Gage said the Davis administration is "sympathetic to the senator's concerns, and we are hopeful that the PUC will act appropriately to resolve them." As recriminations rose in Sacramento, officials in Los Angeles and Long Beach took aim at natural-gas suppliers. City attorneys filed suits in state court against units of Sempra Energy and El Paso Corp. claiming they conspired to manipulate gas supplies to drive up prices and eliminate competition. The cities are seeking injunctions and monetary damages. In recent months, natural-gas prices in California have soared higher than in the rest of the country. Beyond the impact on gas consumers, the trend has put upward pressure on wholesale electricity prices, since gas is a major power-plant fuel. A spokesman for El Paso said it hadn't yet been formally notified of the cities' suits, but in response to private suits last December alleging conspiracy, it issued an "unequivocal denial" of the claims. A Sempra spokesman couldn't be reached. Write to Mitchel Benson at mitchel.benson@wsj.com and John Emshwiller at john.emshwiller@wsj.com
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