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Sac Bee, Fri, 4/6: "Energy supply setback: Big generator can't be forced to sell emergency power to the state, a U.S. court rules" Sac Bee, Fri, 4/6: "In TV address, Davis embraces rate increase" Sac Bee, Fri, 4/6: Governor's speech transcript Sac Bee, Fri, 4/6: "Dan Walters: Davis finally acknowledges 'crisis,' back= s=20 a rate increase" San Diego Union, Thurs, 4/5: "Davis endorses rate hikes, defends handling = of=20 energy crisis" San Diego Union, Thurs,4/5: "San Diego utility overspent $98 million,=20 consumer group says " LA Times, Fri, 4/6: "Davis Acknowledges Need for Rate Hike" LA Times, Fri, 4/6: "Putting the Heat on 2-Fridge Households" SF Chron, Fri, 4/6: "Davis Proposes Tiered Plan To Boost Rates=20 Governor wants slightly lower increases than PUC adopted " SF Chron, Fri, 4/6: "Legislature Pounds Out Conservation Package=20 Davis expected to sign $1.1 billion measures" SF Chron, Fri, 4/6: "At least 3.6 million families face possible power=20 cutoffs" Mercury News, Fri, 4/6: "Davis reveals plan, including rate hikes" Mercury News, Thurs, 4/5: "Davis gives up fight against rate hikes" Mercury News, Thurs, 4/5: "Western states share shortage of electricity" Mercury News, Fri, 4/6: "Getting real on rates" (Editorial= ) Orange County, Fri, 4/6: "Davis: Rate hikes a must" Orange County, Fri, 4/6: "Davis' power-crisis plan brings questions from= =20 Wall Street" Orange County, Fri, 4/6: "Davis pulls energy switch" Individual.com, Fri, 4/6: "[B] PG&E defaults on Los Alamos Energy power=20 payment" Energy Insight, Fri, 4/6: "Energy-related firms fare well on Fortune 500= =20 list" (Enron mentioned) ---------------------------------------------------------------------------= --- ---------------------------------------------------------- Energy supply setback: Big generator can't be forced to sell emergency powe= r=20 to the state, a U.S. court rules. By Denny Walsh and Carrie Peyton BEE STAFF WRITERS (Published April 6, 2001)=20 In a development that does not bode well for California's energy supply, a= =20 federal appellate court Thursday halted enforcement of a lower court order= =20 that a big electricity generator must sell emergency power to the state=20 without guarantee of payment.=20 State energy officials said the ruling wouldn't have any immediate effect b= ut=20 could precipitate a power emergency if the generator decided to take a plan= t=20 off-line for maintenance.=20 On March 21, citing "rolling blackouts (that have) darkened the California= =20 landscape," U.S. District Judge Frank C. Damrell Jr. imposed an injunction= =20 against Reliant Energy Services Inc., one of the nation's major generators.= =20 Houston-based Reliant controls approximately 3,800 megawatts, or about 20= =20 percent, of the gas-fired generation capacity in the state, and Damrell fou= nd=20 that loss of that production "poses an imminent threat."=20 But Thursday, a three-judge panel of the 9th U.S. Circuit Court of Appeals= =20 granted an emergency stay of the injunction, saying Reliant has shown "a hi= gh=20 likelihood of success on the merits" of its appeal.=20 While not spelling it out, the panel apparently bases its finding on the=20 question of the courts' jurisdiction over the energy market. The panel=20 directed that a hearing on the appeal be scheduled for the second week in= =20 July.=20 The decision leaves California's electric grid more fragile, at least=20 temporarily, according to the state Independent System Operator, which=20 maintains and controls power transmissions.=20 It gives the agency no immediate recourse if Reliant chooses to shut down a= ny=20 of its plants for maintenance, said ISO Vice President Jim Detmers.=20 "It's not going to change anything overnight, and it's not going to change= =20 anything over the weekend," said Detmers. "But if Reliant decided on a=20 unilateral action to take their units off for maintenance ... we definitely= =20 could have a system emergency."=20 Reliant officials, when told of the ruling, took a conciliatory tone but=20 declined to specify their next move.=20 "Reliant ... has pledged to keep the lights on in California," said company= =20 lobbyist Marty Wilson, and "is still of a mind to want to cooperate."=20 Without further comment, the appeals court judges cited a 1980 U.S. Distric= t=20 Court decision. In that case, 14 cities sued Florida Power and Light Co.,= =20 alleging that it was violating a number of laws in its sales of power and= =20 production of electricity.=20 The judge found, however, that the Federal Power Act reserves oversight of= =20 interstate utilities exclusively to the Federal Energy Regulatory Commissio= n.=20 He ruled that only the commission may bring an action involving energy sale= s=20 into federal court -- unless it is a request to review a commission order,= =20 and that goes directly to an appellate court.=20 The lawsuit before Damrell was brought by the ISO to force Reliant and two= =20 other generators to respond to ISO's emergency orders for power, even thoug= h=20 the agency is buying on behalf of two retailers that are broke and hopeless= ly=20 in debt.=20 Because Pacific Gas and Electric Co. and Southern California Edison can't p= ay=20 their bills -- about $14 billion -- some wholesalers want to cut off sales = to=20 the utilities.=20 The other three defendants in the ISO's suit -- Dynegy Power Corp. of Houst= on=20 and Tulsa-based AES Corp. and its marketer, Williams Energy Marketing &=20 Trading Co. -- have entered into written agreements with ISO to continue=20 supplying emergency power until the FERC decides whether they are required = to=20 sell to companies that are not creditworthy.=20 But Charles Robinson, ISO general counsel, points out that the generators c= an=20 rescind those agreements with 48 hours' notice.=20 "My hope is this is a temporary setback," said Robinson. He added, however,= =20 that the practical effect is "at least for now, we don't have a tool to=20 compel them to do what we believe they're obligated to do" -- respond to=20 emergency demands for power.=20 Reliant has insisted since the suit was filed Feb. 6 that Damrell has no=20 jurisdiction over the rate schedules that govern dealings between generator= s=20 and the ISO, and that the Federal Power Act mandates that the FERC must=20 settle any disputes about terms of those tariffs.=20 In issuing the injunction, Damrell acknowledged that the FERC has special= =20 expertise concerning agreements between generators and ISO.=20 "Absent the extreme exigencies of the California power crisis, the court=20 agrees that a stay pending further action by the FERC would be proper," he= =20 said. "But those are not the facts here. Electricity is in critically short= =20 supply. The health and safety of the people of California are potentially a= t=20 risk."=20 Immediately upon receiving the 9th Circuit's order Thursday, attorneys for= =20 the ISO asked Damrell to set an accelerated schedule for its motion to amen= d=20 the suit. The agency apparently has crafted a new complaint stressing its= =20 view that the matter is an ordinary contract dispute over which the judge h= as=20 jurisdiction.=20 Damrell scheduled a hearing on the motion for Thursday.=20 In a further development that could complicate the state's dire need for=20 energy, an alternative supplier won a court fight Thursday to bypass the bi= g=20 utilities and sell its power on the open market.=20 Timber giant Sierra Pacific Industries, which operates four biomass plants= =20 that produce power for PG&E, obtained a temporary restraining order in=20 Sacramento Superior Court that says Sierra Pacific is not required to sell= =20 its power to PG&E.=20 The ruling means PG&E and Southern Edison could lose power as alternative= =20 energy generators, fed up with months of nonpayment, sue to be able to sell= =20 their comparatively cheap product elsewhere, including outside the state.= =20 The Bee's Denny Walsh can be reached at (916) 321-1189 or dwalsh@sacbee.com= .=20 Bee staff writer Dale Kasler contributed to this report.=20 ---------------------------------------------------------------------------= --- ------------------------------------------------------------------ In TV address, Davis embraces rate increase By Dan Smith BEE DEPUTY CAPITOL BUREAU CHIEF (Published April 6, 2001)=20 Seeking to ease Californians' energy fears, Gov. Gray Davis on Thursday=20 proposed a tiered electricity rate increase that would hit the heaviest pow= er=20 users the hardest.=20 The Democratic governor, whose popularity has been plummeting, told a=20 statewide television audience in a five-minute speech from his Capitol=20 office: "It's become increasingly clear ... that some rate increases now ar= e=20 necessary to keep our lights on and our economy strong."=20 The address came as California enters its fifth month of acute power woes= =20 that have resulted in periodic electricity blackouts.=20 In embracing a rate increase as part of the solution to California's energy= =20 nightmare, Davis joined a long list of financial and energy experts --=20 including members of his own staff -- who for months have said a rate=20 increase is imperative.=20 The state Public Utilities Commission last week approved a $4.8 billion a= =20 year, average 30 percent rate increase for customers of cash-strapped Pacif= ic=20 Gas and Electric Co., Southern California Edison and San Diego Gas &=20 Electric.=20 But Davis said his plan, which he will ask the PUC to approve instead, is= =20 better. Administration officials said the governor's plan goes easier on=20 commercial users and conservation-minded residential users, but preserves t= he=20 largest rate increases for heavy residential users. Sacramento Municipal=20 Utility District customers would be unaffected by Davis' proposal.=20 The 55 percent of PG&E residential customers who use less than 130 percent = of=20 the "baseline" amount of power, for instance, would see no increase. Medium= =20 users -- those using between 130 percent and 200 percent of the baseline=20 amount -- would see an average bill of $70 rise to $77. But heavy users wou= ld=20 see their bills go from $138 a month to $189.=20 "Here's the point," Davis said. "The more you use, the more you pay. The mo= re=20 you conserve, the more you save. Conservation is our best short-term weapon= =20 against blackouts and price gouging."=20 The rate increase would come on top of an average 9 percent residential rat= e=20 increase imposed in January. Davis advisers said the proposed increase woul= d=20 eliminate the need for an additional 10 percent increase scheduled to take= =20 effect next year.=20 Davis said his plan would raise enough money to "restore the utilities to= =20 financial stability" if the companies agree to sell their transmission line= s=20 to the state, drop their lawsuits against the state and promise to sell che= ap=20 power for 10 years. The administration has been negotiating to buy the powe= r=20 transmission lines for weeks, and has made little progress with PG&E.=20 Even though the governor's rate proposal would raise about 15 percent less= =20 revenue than the PUC plan, administration officials insisted it would provi= de=20 the utility companies enough money to cover future power purchases and redu= ce=20 their debts over time. They said they discovered that the state can buy pow= er=20 more cheaply than the PUC thought it could and presumed greater savings=20 through conservation.=20 Davis' plan relies heavily on floating billions of dollars in bonds,=20 essentially stretching the impact of a rate hike over as many as 15 years.= =20 Not only would the state borrow about $12 billion to pay for its purchases,= =20 but the utilities would borrow about $8 billion. They'd repay the $8 billio= n=20 through a slice of the money generated by the rate increase. The utilities= =20 also would get a cash infusion of something less than $7 billion from the= =20 sale of the transmission grid.=20 Harvey Rosenfield of the Foundation for Taxpayer and Consumer Rights said= =20 Davis' numbers, while apparently offering a "bailout" of utilities' debts= =20 designed to please Wall Street, simply don't add up.=20 "He's cooking the books to lower the apparent price to the public, and then= =20 they're going to figure out a way to ram this down our throats after the 20= 02=20 election," he said.=20 Analysts called the plan long overdue and questioned whether it would work.= =20 "It's definitely a plan from the Wall Street cookbook, but can he get it=20 done? Can he get it done in a believable time frame?" said bond analyst Sha= wn=20 Burke of Barclays Capital in New York.=20 Davis' speech disappointed nearly all other parties.=20 "Unfortunately, the steps the governor announced tonight still do not appea= r=20 to offer a comprehensive solution to resolve California's energy crisis,"= =20 PG&E said in a prepared statement.=20 Davis continued to blame power generators for "ripping us off" and federal= =20 regulators for failing to stop them, and spent much of his speech detailing= =20 the steps that he and state lawmakers have taken to confront the crisis thu= s=20 far.=20 "Those around (the Capitol) have heard the speech," said Senate President P= ro=20 Tem John Burton, D-San Francisco. "He was talking to 34 million Californian= s=20 who hadn't."=20 Some gubernatorial advisers had been pushing for the speech for weeks,=20 arguing that Davis needed to explain his actions -- and his intentions -- a= s=20 the onset of warm weather enhances the prospect of power blackouts.=20 Davis has come under increasing criticism, including from some members of h= is=20 own party, for failing to stem the crisis. Detractors say Davis has been=20 indecisive -- even inattentive -- in his handling of the crisis, while his= =20 proposals falter in the Legislature and at negotiating tables with=20 near-bankrupt utilities.=20 Consumer groups, meanwhile, say Davis' failure to more forcefully take on= =20 power generators has allowed the crisis to fester, and they blame him for t= he=20 rate increases. As the 2002 re-election campaign looms, some private polls= =20 now say support for the once-popular Davis is eroding.=20 Davis didn't make believers out of Republicans. Assembly GOP leader Dave Co= x=20 said the speech was more talk than substance. "Frankly, he didn't offer any= =20 new solutions to the problems," said Cox, of Fair Oaks. "What we heard=20 tonight was the governor saying, 'Oops, I guess we're going to have to rais= e=20 rates,' while all along he'd been saying a rate increase wasn't necessary.= =20 And, frankly, it wasn't necessary if we'd gotten started back in September.= "=20 Also on Thursday, the Legislature sent Davis a $1.1 billion conservation an= d=20 low-income assistance package aimed at reducing California's risk of rollin= g=20 blackouts this summer.=20 By passing two bills -- SB 5x by state Sen. Byron Sher, D-Palo Alto, and AB= =20 29x by Assemblywoman Christine Kehoe, D-San Diego -- lawmakers met their=20 stated goal of sending conservation measures to Davis before heading off on= a=20 weeklong spring recess.=20 The Bee's Dan Smith can be reached at (916) 321-5249 or smith@sacbee.com.= =20 Bee Staff Writers Amy Chance, John Hill, Kevin Yamamura, Dale Kasler and Ji= m=20 Sanders contributed to this report.=20 ---------------------------------------------------------------------------= --- ------------------------------------------------------------------------- Governor's speech transcript (Published April 6, 2001)=20 Here is the text of Gov. Gray Davis' remarks on energy:=20 Good evening. I'm speaking to you tonight from Sacramento on the most=20 difficult issue facing California: our energy crisis.=20 Simply stated, we have two problems: Supply is too low and costs are too=20 high. Both result from the flawed deregulation scheme created back in 1996.= =20 But no matter how we got into this mess, you hired me to solve problems. An= d=20 that's what I'm doing.=20 The only long-term solution is to build more power plants. We must also cut= =20 back on consumption and stabilize the utilities. But prices won't fall and= =20 supply won't be truly reliable until we generate more power than we consume= .=20 Yet in the 12 years before I took office, not a single major power plant wa= s=20 built in California. Not one. Since I became governor, we've licensed 12=20 major power plants. Ten more are in the pipeline. And we're doing this=20 without weakening our commitment to clean air and clean water.=20 Deregulation required the utilities to sell off many of their power plants = to=20 independent generating companies. The generators are free to charge whateve= r=20 they want because they're governed only by federal regulators who refuse to= =20 control wholesale energy prices.=20 This past winter, the prices charged by the generators shot through the roo= f,=20 driving the utilities to the brink of bankruptcy.=20 In January, with the feds still refusing to do their job, California steppe= d=20 in to purchase the power the utilities could no longer afford to buy. We=20 didn't take over to save the utilities. We took over to keep the power on a= nd=20 the economy strong. That's not all:=20 We also negotiated long-term contracts for electricity at vastly lower=20 prices.=20 I used my emergency powers to seize control of low-cost power contracts the= =20 utilities were about to forfeit to the generators.=20 We began negotiations to buy the utilities' transmission system.=20 We cut red tape and offered cash incentives to speed up construction of pow= er=20 plants.=20 We're launching an $800 million conservation program.=20 We're moving to establish a public power authority to build more power. If= =20 the private sector fails to build all the plants California needs, we'll=20 build them ourselves.=20 And because I share your concern that the generators are ripping us off,=20 we're using every legal remedy to root out and punish illegal conduct.=20 We can't fix 12 years of inaction overnight. But we're making real progress= .=20 Now, as you know, I have fought tooth and nail against raising rates. It's= =20 become increasingly clear, however, that with rising natural gas prices, th= e=20 feds' failure to control costs, and the state's lack of supply, that some= =20 increases now are necessary to keep our lights on and our economy strong.= =20 But I remain committed to protecting average Californians from massive rate= =20 hikes. So I'm urging the Public Utilities Commission to adopt a plan that= =20 will protect average consumers, reward those who conserve and motivate the= =20 biggest users to cut back.=20 Under my proposal, more than half of you won't pay a penny more. For the=20 rest, the average increase will be 26 and a half percent. But many in that= =20 group will pay only about a 10 percent rate increase. The heaviest users wi= ll=20 see their rates rise 34 and a half percent on average. That includes busine= ss=20 paying their share. This is in addition to the 9 percent surcharge we've al= l=20 been paying since last winter.=20 But all Californians can reduce their bills through conservation.=20 Here's the point: The more you use, the more you pay. The more you conserve= ,=20 the more you save. Conservation is our best short-term weapon against=20 blackouts and price-gouging. By flexing your power, you'll help secure our= =20 energy future.=20 Unlike the PUC, my plan includes funds to restore the utilities to financia= l=20 stability -- if they agree to three main conditions:=20 They must provide low-cost regulated power to the state for 10 years. Agree= =20 to sell us their transmission system. And dismiss their lawsuits which seek= =20 to double your electricity rates.=20 My proposal raises rates fairly, assures us of long-term power, stabilizes= =20 the utilities and promotes conservation.=20 Our emphasis on conservation is critical. In order to make it through the= =20 summer, we must cut demand by at least 10 percent.=20 Already we've launched programs to cut back commercial lighting, and reduce= =20 consumption in office buildings, supplies and government facilities.=20 My friends, we do have a power shortage but we are far from powerless. We a= re=20 34 million strong and if each of us does our part, we can minimize=20 disruptions and get through the summer. We are Californians. We've withstoo= d=20 earthquakes, floods, fires, and droughts.=20 Yes, this mess is man-made, but with your help and God's blessing, we'll ge= t=20 through this as well.=20 Thank you and good night.=20 ---------------------------------------------------------------------------= --- -------------------------------------------------- Dan Walters: Davis finally acknowledges 'crisis,' backs a rate increase (Published April 6, 2001)=20 Gov. Gray Davis -- under fire from the media and other politicians for his= =20 passive, incremental handling of the state's deepening energy crisis --=20 unveiled Thursday what he said was a comprehensive scheme to resolve it,=20 including a hefty increase in power rates paid by most consumers.=20 It was a full-court press by Davis and his administration, including a brie= f=20 statewide television address and a turnout of aides to sell the scheme to t= he=20 media. Davis -- for the first time -- even used the term "crisis" to descri= be=20 the situation after weeks of insisting it was merely a "challenge."=20 Clearly, a major motivating factor in the governor's new activism is that h= is=20 own re-election in 2002 is now in peril if the energy crisis persists and h= e=20 continues to deal with it reactively. Editorial writers have been describin= g=20 Davis' reactive approach as cowardly, and private polls have been indicatin= g=20 that since an unexpected power blackout hit last month, Davis' approval=20 ratings have been plummeting, from well over 60 percent to perhaps half tha= t=20 level. And certainly Davis' own nonstop polling has told him the same thing= .=20 While much of Thursday evening's five-minute address was a truncated versio= n=20 of what Davis has been saying publicly for the past few weeks, most recentl= y=20 at the state Democratic convention in Anaheim last weekend, the one new=20 element was an endorsement of rate increases after months of insisting that= =20 the problems could be resolved "within the existing rate structure." Davis= =20 proposed a rate boost similar in structure, but apparently slightly less,= =20 than the one tentatively endorsed by the state Public Utilities Commission= =20 last week. Davis had insisted that the PUC, although controlled by his=20 appointees, had acted on its own, but the widespread skepticism about that= =20 posture merely added to his image problems.=20 Like the PUC plan, the Davis rate scheme would concentrate the rate increas= es=20 on heavy residential power users and businesses. "I'm urging the (PUC) to= =20 adopt a plan that will protect average consumers, reward those who conserve= =20 and motivate the biggest users to cut back," Davis said, adding that the pl= an=20 will "restore the utilities to financial stability" if they agree to sell= =20 their intercity power transmission system to the state, provide low-cost=20 power to the state for 10 years and drop federal lawsuits seeking=20 compensation for their immense debts.=20 It's unclear, however, whether the average 26.5 percent boost in rates to= =20 customers of the three major privately owned utilities -- about 70 percent = of=20 Californians -- will do all that the Democratic governor insists it will. H= e=20 and his aides say it will cover the $5 billion or so that the state's gener= al=20 fund already has spent on emergency power purchases since January, finance= =20 future purchases and still provide enough "headroom" to pay off the=20 utilities' $13 billion in debts, part of which would be covered by the=20 transmission grid buyout. But the utilities and their creditors were alread= y=20 complaining that the PUC's somewhat larger rate boost was too small to cove= r=20 all the various costs and debts.=20 Davis aides refused to release specific numbers on how each cost factor wou= ld=20 be covered by the proposed rate boost. The governor's hike would come on to= p=20 of a 9 percent surcharge on power bills imposed in January and now being ma= de=20 permanent.=20 Even if it pencils out and is implemented by the PUC, however, the Davis pl= an=20 would leave Californians with some of the nation's highest utility rates an= d=20 invite a backlash from consumer activists who have been threatening to=20 sponsor a 2002 ballot measure if there's a "bailout" of utilities. The plan= =20 would also have to win the approval of Wall Street bankers, who would=20 underwrite and market the billions of dollars in bonds that Davis wants to= =20 float to pay for past debts and future power costs.=20 Will it be implemented? Will it work? Will it arrest Davis' slide in the=20 polls? No one can say for certain -- and that includes the governor himself= .=20 The Bee's Dan Walters can be reached at (916) 321-1195 or dwalters@sacbee.c= om .=20 ---------------------------------------------------------------------------= --- ------------------------------------------------------------------------ Davis endorses rate hikes, defends handling of energy crisis=20 By Jennifer Coleman ASSOCIATED PRESS=20 April 5, 2001=20 SACRAMENTO =01) Gov. Gray Davis told Californians in a live address Thursda= y=20 night that he now thinks rate increases are needed to resolve the state's= =20 power crisis.=20 Davis, reacting to record rate hikes of up to 46 percent approved by state= =20 regulators last week for Pacific Gas and Electric Co. and Southern Californ= ia=20 Edison power customers, said he wants to make those who use the most=20 electricity bear the bulk of the price hikes.=20 "The more you conserve, the more you save," Davis said. "Conservation is ou= r=20 best short-term weapon against blackouts and price-gouging."=20 San Diego utility overspent $98 million, consumer group says=20 Text of Gov. Gray Davis' energy speech=20 ?=20 Speaking from his Capitol office in a televised five-minute speech, Davis= =20 lashed out at federal power regulators for failing to help California and= =20 defended his handling of the state's energy problems.=20 The Democrat told viewers California's short power supply and high wholesal= e=20 costs are the result of a "flawed deregulation scheme" signed into law in= =20 1996 by then-Republican Gov. Pete Wilson.=20 "But no matter how we got into this mess, you hired me to solve problems an= d=20 that's what I'm doing," he said.=20 Davis said he has fought utility rate increases "tooth and nail" but now=20 thinks they are needed to help finance the state's power purchases on behal= f=20 of Edison, PG&E and a third strapped utility, San Diego Gas & Electric.=20 The power buys have cost taxpayers $4.7 billion since January, money that= =20 will eventually be recouped from ratepayers.=20 Davis said the utilities were pushed to the brink of bankruptcy by soaring= =20 wholesale power costs and federal regulators' refusal to cap wholesale=20 prices.=20 "In January, with the feds still refusing to do their job, California stepp= ed=20 in to purchase the power the utilities could no longer afford to buy," Davi= s=20 said. "We didn't take over to save the utilities. We took over to keep the= =20 power on and the economy strong."=20 Davis, who repeatedly has said the state can resolve the power problems=20 without rate hikes, told viewers he now thinks rate increases are necessary= =20 to finance the power purchases.=20 His new stance comes after the state Public Utilities Commission last week= =20 approved rate increases of up to 46 percent for customers of Edison and PG&= E.=20 The commission has not yet decided how to spread the rate increases among t= he=20 utilities' customers.=20 Davis said he will propose a tiered rate plan that would mean a 26.5 percen= t=20 rate increase for the average customer. Under the governor's plan, the=20 heaviest power users would see an average 34.5 percent rate increase.=20 According to the Davis administration, the governor's plan would let Edison= ,=20 PG&E and the state's third investor-owned utility, San Diego Gas & Electric= ,=20 to make a total of $8 billion in debt payments over a decade.=20 Davis' plan would shift the burden of the PUC rate increase to heavier=20 residential, commercial and industrial power users while largely sparing=20 agricultural users, who would only see increases of 5 to 15 percent.=20 "We are going to take the governor's proposal under advisement and give it = a=20 lot of weight, I suspect," PUC Commissioner Carl Wood said, adding that the= =20 commission will seek input from consumer groups and businesses before makin= g=20 a final decision.=20 The three utilities say they have lost more than $14 billion since June due= =20 to soaring wholesale power costs. More than $13 billion of that comes from= =20 Edison and PG&E, who have been barred under the state's deregulation law fr= om=20 recovering the rising costs from their customers.=20 Davis =01) facing mounting pressure from Republicans and fellow Democrats t= o=20 resolve California's energy crisis =01) delivered the speech from behind a = desk,=20 with his hands clasped in front of him.=20 He assured residents that the state would survive the crisis.=20 "We are Californians. We've withstood earthquakes, floods, fires and=20 droughts," Davis said. "Yes, this is man-made, but with your help and God's= =20 blessing, we'll get through this as well."=20 He said he would stand by his plan to help restore the utilities to financi= al=20 health by negotiating state acquisition of their transmission lines and=20 requiring them to sell low-cost power to the state for a decade and drop=20 their lawsuits seeking to double their electric rates.=20 Davis urged Californians to help cut power use 10 percent to fend off rolli= ng=20 blackouts this summer, when residents will crank their air conditioners and= =20 demand will rise sharply.=20 The Legislature on Thursday afternoon sent Davis proposals that would spend= =20 $1.1 billion on conservation programs for consumers and businesses. Davis= =20 plans to sign the measures.=20 He listed actions he has taken to try to solve the power crisis, including= =20 negotiating long-term contracts to purchase power and buy the utilities'=20 transmission lines.=20 Davis also said he has cut red tape and provided incentives to speed power= =20 plant construction after a decade with none built.=20 "We can't fix 12 years of inaction overnight. But we're making real=20 progress," he said.=20 The speech, the first such message Davis has delivered besides his annual= =20 State of the State address, comes as the GOP and even fellow Democrats=20 criticize the governor's handling of the crisis.=20 Consumer groups, angered by the rate increases, are promising a revolt at t= he=20 polls in 2002, planning to roll back the rate hikes through an initiative= =20 that would share the ballot with Davis, who is up for re-election then.=20 Consumer advocate Harvey Rosenfield said Davis is failing to protect utilit= y=20 customers. He compared power suppliers to blackmailers charging an=20 "extortionary price for electricity."=20 "Nothing the governor has said tonight will do anything to stop the=20 profiteers," said Rosenfield of the Foundation for Consumer and Taxpayer=20 Rights in Santa Monica.=20 Power supplier Duke Energy said it has done nothing wrong and doesn't deser= ve=20 criticism for the wholesale prices.=20 "We are running our power plants at historically high levels to keep=20 consumers' lights on," Duke said in a written statement.=20 ---------------------------------------------------------------------------= --- ---------------------------------------- San Diego utility overspent $98 million, consumer group says=20 ASSOCIATED PRESS=20 April 5, 2001=20 SAN FRANCISCO =01) San Diego Gas and Electric Co. could have saved its cust= omers=20 $98 million by buying electricity using contracts rather than over-relying = on=20 purchases from the expensive daily market, a state consumer agency says.=20 The state Office of Ratepayer Advocates, the consumer arm of the Public=20 Utilities Commission, filed testimony Thursday recommending the PUC not all= ow=20 the San Diego utility to pass along the amount to its customers.=20 A call to Sempra Energy Corp., the parent company of SDG&E, was not=20 immediately returned Thursday night.=20 In August, the state Legislature capped electricity rates at 6.5 cents per= =20 kilowatt hour for the customers of SDG&E after customers saw their bills=20 skyrocket when the utility began passing along the market price of power.= =20 Since the price cap, SDG&E has undercollected around $400 million from its= =20 customers, said Steve Linsey, an ORA supervisor.=20 "Had SDG&E acted reasonably and prudently, SDG&E rates still would have=20 increased, but not by nearly as much," read a statement from the ORA.=20 "We're not saying that they could have seen the level or extent that the=20 overpricing occurred," Linsey said. "But just based on the history and=20 volatility of the market and supply and demand fundamentals that would have= =20 led them to hedge their portfolio rather than being totally exposed to the= =20 spot market."=20 ---------------------------------------------------------------------------= --- ------------------------------------ Davis Acknowledges Need for Rate Hike=20 Electricity: In a statewide TV broadcast, he says the average would be 26.5= %.=20 For the first time, he calls situation a "crisis."=20 By DAN MORAIN, Times Staff Writer=20 ?????SACRAMENTO--After spending months voicing opposition to rate hikes, Go= v.=20 Gray Davis acknowledged to a statewide television audience Thursday night t= he=20 need for an electricity rate increase that would average 26.5%. ?????For the first time calling it an "energy crisis," Davis enumerated ste= ps=20 he has taken, then said he has fought "tooth and nail against raising rates= ."=20 But citing a need for increases, the Democratic governor called for a tiere= d=20 system in which people who use the most electricity pay the most--as much a= s=20 37% more if they use more than twice their minimum allotment. ?????"Here's the point: The more you use, the more you pay," Davis said. "T= he=20 more you conserve, the more you save. Conservation is our best short-term= =20 weapon against blackouts and price gouging." ?????Davis said his proposed rate plan is sufficient to help reduce the=20 $13-billion debt of Southern California Edison and Pacific Gas & Electric.= =20 Although the bulk of the rate increase would be used to help California=20 finance bonds for long-term power purchases, about 10% to 15% would be=20 earmarked for the utilities--so long as they agree to sell their transmissi= on=20 lines to the state, according to the administration. ?????The decision to offer the utilities at least some rate hike monies=20 brought a sharp response from lawmakers. Consumer advocates also are sure t= o=20 be unhappy. ?????"We are not in this business to bail out these guys," said Senate=20 President Pro Tem John Burton (D-San Francisco). ?????Added Harry Snyder of Consumers Union: "Absolute giveaway . . . He is= =20 going to pay them off completely for all their mistakes." ?????The governor took the unusual step of reserving air time on statewide= =20 television at a time when he is slipping in polls and surveys show that the= =20 public is increasingly concerned about the energy crisis. Gov. Pete Wilson= =20 took a similar step during the recession in 1992 when he moved to raise tax= es=20 and cut government spending. ?????The speech took on greater urgency as the California Independent Syste= m=20 Operator, the entity that oversees power distribution, warned Thursday that= =20 the state will face 34 days of rotating blackouts if consumers and business= es=20 use the same amount of electricity this summer that they did last year. The= =20 blackouts could be extensive enough to darken 5 million homes at once. ?????The governor's speech came hours after the Legislature approved a reco= rd=20 $1.1 billion in energy conservation measures designed to provide consumers= =20 with incentives to reduce electricity use.=20 ?????In his speech, Davis renewed his call to Californians to curtail=20 electricity use by at least 10%, even as a new report was issued warning th= at=20 the state faces repeated summer blackouts because of a major gap in the=20 supply of power during the coming months. ?????"We are 34 million strong, and if each of us does our part, we can=20 minimize disruptions and get through the summer," Davis said. ?????The governor did not speak in detail on any issue, including the rate= =20 hike. The talk lasted a mere five minutes, delivered in fewer than 800 word= s. ?????Under Davis' proposal, Southern California Edison residential customer= s=20 would face an average increase of 2.21 cents per kilowatt hour. San Diego G= as=20 & Electric customers would have a 2.57-cent hike, while Pacific Gas &=20 Electric would have a 2.44-cent boost. Business rates would rise slightly= =20 more. ?????Davis blamed the rate hikes on rising natural gas prices, a lack of=20 adequate generation and the federal government's refusal to cap wholesale= =20 power prices. ?????Rates for customers of the state's two largest utilities rose 9% in=20 January. That boost remains in effect. Legislation approved earlier this ye= ar=20 bars further rate increases for those who use up to 30% more than their=20 so-called baseline allocation. ?????According to administration estimates, 53% of consumers would experien= ce=20 no rate hike beyond the 9% boost approved in January. A fourth of all=20 households would face increases averaging 34.5%. ?????Under the proposal, which requires Public Utilities Commission approva= l,=20 people who use up to 200% of their baseline allocation would see rates on= =20 that portion of their electricity use go up by 9%, plus the 9% already=20 imposed for a total of 18%. ?????Electricity users who consume more than twice their baseline allocatio= n=20 would pay between 33% and 37% more for kilowatts used beyond 200% of their= =20 baseline allocation. ?????Davis' proposed rate increase is somewhat lower than that proposed by= =20 the PUC, in part because he had more information, including the price that= =20 the state is paying for electricity, his aides said. ?????"My proposal raises rates fairly, assures us of long-term power,=20 stabilizes the utilities and promotes conservation," Davis said. ?????Although there has been wide news coverage of the crisis, the governor= 's=20 aides said Davis felt a need to talk directly to Californians to sum up the= =20 steps that he has taken to solve the problem. ?????Perhaps adding to the urgency, utility customers could start seeing=20 increases in their bills as early as next month. Further raising the stakes= =20 for the speech, Davis warned this week that supplies will be so short that= =20 there could be blackouts by the end of the month, and continue into May and= =20 June. ?????"The public is more aware of what is going on on this issue than any= =20 other issue I have seen, ever," said Democratic political consultant Gale= =20 Kaufman. "People have gotten three or four bills that they're unhappy with= =20 and they may have been in a blackout or two. There is a concern for the=20 future. ?????"By not talking to the public for a long time," Kaufman said, "and=20 focusing it on one speech in one day, people will dissect this five minutes= ,=20 much more than if he would have had a regular dialogue." ?????In what some political consultants see as a reflection of Davis'=20 declining political strength, a recent Times poll showed that in Davis'=20 hometown of Los Angeles, only 14% are more likely to vote for a candidate= =20 endorsed by Davis, while 21% would be less likely. ?????Several recent private polls show that a majority of Californians woul= d=20 not vote to reelect Davis if he were on the ballot today, though Davis does= =20 not face voters in a general election for 19 months, giving him plenty of= =20 time to recover. ?????"People need to be reassured that there is a strong sense of direction= ,"=20 said Bill Carrick, a Democratic consultant. "I don't think people are looki= ng=20 for a magic wand. But they need a sense that there is sense of direction." ?????Other political consultants said Davis used television to get his=20 message out because newspaper accounts have raised questions about his=20 handling of the situation. Also, voters who get the bulk of their informati= on=20 from television news generally have less knowledge about the nuances of the= =20 crisis. ?????"He is not doing well with the print story," said Republican consultan= t=20 Wayne C. Johnson, "so he has decided to change venues." ?????Johnson, like many consultants, also said the governor's declining pol= l=20 numbers likely influenced his decision to make the television appearance,= =20 carried on most stations across the state during 6 p.m. news shows. ?????"Gray Davis doesn't do anything that the polls don't dictate," Johnson= =20 said. "He is doing this because the polls show his support is in free-fall.= " ?????Until Thursday, Davis had not characterized the situation as a "crisis= ,"=20 instead calling it a "challenge." That euphemism raised the hackles of many= =20 legislators. ?????"It's pretty clear: The public is angry and scared," said state Sen. D= on=20 Perata (D-Alameda). "They want a sense that someone is in control, and that= =20 there is some certitude of where we're going. We're lacking both." ?????The Legislature, meanwhile, approved two measures touted as ways to cu= t=20 the state's power needs this summer, when hot temperatures traditionally=20 cause demand to surge--a situation that this year could result in blackouts= . ?????The bills had been bogged down in squabbling between the Assembly and= =20 Senate. The delay raises questions about whether the conservation incentive= s=20 will be in place long enough to have an immediate effect. ?????The bills, a $709-million measure by state Sen. Byron Sher (D-Stanford= )=20 and a $409-million measure by Assemblywoman Christine Kehoe (D-San Diego),= =20 contain a dizzying range of financial "carrots" designed to help people cut= =20 power use. ?????There is $50 million to help low- and moderate-income consumers replac= e=20 energy-wasting appliances such as old refrigerators with new, more=20 energy-efficient equipment, $60 million to help consumers replace older=20 lighting systems, $7 million to teach school children about energy=20 efficiency, and $50 million for electricity meters for businesses. ?????The Senate bill won final passage on a 31-6 vote; the Assembly bill=20 cleared the Legislature on a 55-15 vote. However, not everyone supported th= e=20 concept of government subsidies to reduce power use. ?????Meanwhile, utility watchers issued gloomy reports early Thursday,=20 helping to drag down the stocks of Edison International and PG&E Corp.,=20 parent corporations of the beleaguered utilities. Edison closed at $12.64 p= er=20 share, down 34 cents or 2.6%, while PG&E fell to $11.38 per share, down 27= =20 cents or 2.3%, on the New York Stock Exchange. ?????Standard & Poor's said it is unlikely that Southern California Edison= =20 and Pacific Gas & Electric will regain a sound credit rating soon. The Wall= =20 Street debt-rating firm lowered the utilities' credit rating to high-risk= =20 junk-bond status in January when they began defaulting on debt. ?????Standard & Poor's cited a lack of action by Davis and state legislator= s,=20 and said rate increases approved by the PUC will not be sufficient to pay a= ll=20 electricity costs. Banks and other creditors will run out of patience befor= e=20 long unless a settlement is reached to help the utilities pay past debts,= =20 Standard & Poor's said. ?????The firm predicted that "the coming weeks are likely to be critical if= =20 the utilities are to be made financially sound companies once again and avo= id=20 bankruptcy proceedings." ---------------------------------------------------------------------------= --- ------------------------------------------------------------------- Putting the Heat on 2-Fridge Households=20 Electricity: Utilities intensify bid to cut the numbers of spare iceboxes a= nd=20 freezers, which experts say use enough energy to power 200,000 homes.=20 By MARTHA L. WILLMAN, Times Staff Writer=20 ?????Parked next to the two cars in Gordon Gould's Valencia garage is a=20 side-by-side white Whirlpool refrigerator, stocked with all the TV dinners,= =20 Dreyer's ice cream and cold Pepsi he can't squeeze into the duplicate fridg= e=20 in his kitchen. ?????To conservationists, Gould's extra refrigerator--and 1 million more li= ke=20 it in garages throughout the state--is a symbol of how our energy-guzzling= =20 lifestyle is straining the state's power supply. To Gould, it's something h= e=20 can't bear to live without. ?????"I need it for drinks and frozen foods," said Gould, 78, who has lived= =20 alone since his wife died last fall. "We've always had two refrigerators. I= =20 absolutely need it." ?????You wouldn't think of this dilemma as a key part of California's=20 electricity crisis. Yet the state Public Utilities Commission is prepared t= o=20 spend nearly $10 million this year to persuade people to turn in their gara= ge=20 iceboxes. ?????The California Energy Commission estimates that spare refrigerators an= d=20 freezers throughout the state suck up enough juice to collectively power=20 200,000 homes. After air-conditioning units, refrigerators are considered t= he=20 largest consumers of electricity in the typical household. ?????Many owners of spare refrigerators view them as a necessity. Whether= =20 that is true or not, people will tenaciously cling to the appliances becaus= e=20 they offer "a little extra security" at a time in which many still do not= =20 believe that an energy crisis is real, said Dallas Willard, a USC philosoph= y=20 professor. ?????"It represents the idea of something in reserve, and there is not very= =20 much that people have in reserve in this culture," Willard said. "We go for= =20 elaborate security systems such as SUVs with giant tires that look like the= y=20 could run over small buildings, or huge ugly dogs that serve no purpose but= =20 to scare people. It's a sense of a fragility of the system put together wit= h=20 not being sure there is a problem there." ?????Then, too, homeowners can expect scant financial rewards, at least=20 immediately, for giving up their garage refrigerators. In Southern Californ= ia=20 Edison's territory, owners are paid just $35, or offered $50 worth of compa= ct=20 fluorescent light bulbs, in exchange for working refrigerators. As the=20 program expands to Northern California and San Diego County, the bounty wil= l=20 rise to $75. Die-hard adherents of spare refrigerators, such as Gould, scof= f=20 at such offers. ?????"It's important to me," he said, adding that he wouldn't consider even= a=20 $75 rebate. "There's not enough room in my other one." ?????He's got plenty of company. A few blocks away, Robin Ray keeps a simil= ar=20 grip on the 1980s-vintage Kenmore standing tall in his garage. ?????"I utilize that refrigerator way too much to get rid of it," said Ray,= =20 38, who lives with his wife and their 5-year-old son. "We use it to store a= ll=20 the extra meat, fish and chicken we buy every time we run to Costco." ?????Mary Potts has both a gleaming black 23.5-cubic-foot, side-by-side=20 refrigerator and a 20-cubic-foot upright freezer in her garage nearby. ?????"I know it's a luxury--we try to watch our power usage--but you need i= t=20 to keep drinks, soda pops and food for parties," said Potts, an insurance= =20 executive. ?????State officials believe that with energy costs rising, residents will = be=20 more willing to decommission their spare refrigerators. And they point out= =20 that a recycling program in Edison's territory has been a huge success,=20 resulting in 254,000 refrigerators being turned in over the last seven year= s. ?????Still, with more than 9 million new refrigerators sold in the U.S. eac= h=20 year, according to Appliance Magazine, the secondhand fridge market=20 flourishes in classified ads and thrift stores. No one knows exactly how ma= ny=20 refrigerators are permanently disabled or sent out of the country, but ener= gy=20 experts say the number of total units is not dwindling, despite recycling= =20 efforts nationwide. ?????With a median life span of 19 years, refrigerators and freezers "often= =20 take on a second, third and fourth lifetime," said Wayne Morris of the Assn= .=20 of Home Appliance Manufacturers, an international trade organization.=20 ?????Paul Janzen, who recently moved to Telluride, Colo., is advertising "a= n=20 old junker refrigerator for $25" among the furnishings he is trying to shed= =20 at his Orange County apartment. He bought the full-size, used refrigerator= =20 for $45 from a Salvation Army thrift store 10 years ago. "It probably uses = a=20 whole lot of energy, but it still works wonderfully," Janzen said. ?????Indeed, experts say old refrigerators use up to four times the energy = of=20 the newest models. ?????"Most people simply don't think about the refrigerator as a major ener= gy=20 user. It's not like a hair dryer that you have to turn on," said David=20 Goldstein of the Natural Resources Defense Council, an environmental advoca= cy=20 group that has pushed for more efficient appliances. ?????Energy experts estimate that 10% to 14% of California households harbo= r=20 an extra refrigerator or freezer. Appliance repair workers informally guess= =20 that the number in Southern California is higher, based on their firsthand= =20 experience in servicing refrigerators in affluent suburban neighborhoods. ?????"Most people have a spare refrigerator, as a convenience," said Terry= =20 McVicker, owner of Certified Service in Anaheim. But he said calls to fix= =20 spares in the last six months have dropped as more people have complained= =20 about energy costs. ?????Others, however, are so attached to the convenience that they are=20 willing to fix or replace their garage iceboxes. ?????"A lot of times, people get used to them," said Scott Kassner, general= =20 manager of Angel Appliances in North Hills. "So if one dies, they are just = as=20 likely to find a used one to put in its place." ?????Within the next few weeks, the three major private utilities in=20 California will intensify a campaign to capture spare appliances with=20 advertising, bill inserts, roving exhibits and other promotions. ?????"This year we are trying our best to get as many of these refrigerator= s=20 and freezers offline prior to the summer season," said Jeannette Duvall-War= d,=20 refrigerator recycling program manager for Edison, which is also coordinati= ng=20 the effort by Pacific Gas & Electric and San Diego Gas & Electric. ?????To qualify for rebates, refrigerators must be 10 to 25 cubic feet and = in=20 working condition. Edison customers have a choice of a $35 rebate or a=20 five-pack of compact fluorescent lightbulbs worth $50. Because the programs= =20 are new, consumers in the Bay Area and San Diego will receive $75 rebates. = In=20 exchange, customers can expect annual energy savings of $150 or more. ?????Among those taking advantage of the rebates is Ruth Beatty of Covina,= =20 who has turned in three appliances in the last year, collecting $35 rebates= =20 on each. He said the first was a refrigerator only 5 years old that require= d=20 repeated repairs. The second, recycled from a neighbor's garage, "would tal= k=20 to me, like a dog moaning" and caused his monthly electric bills to double.= =20 The latest was a 15-year-old freezer he turned in as a cost-cutting move. ?????"When the electric bill becomes more than the rent, you start=20 investigating," he said. ---------------------------------------------------------------------------= --- ------------------------------------------------------------------ Davis Proposes Tiered Plan To Boost Rates=20 Governor wants slightly lower increases than PUC adopted=20 Lynda Gledhill, Greg Lucas, Chronicle Sacramento Bureau Friday, April 6, 2001=20 ,2001 San Francisco Chronicle=20 URL:=20 http://www.sfgate.com/cgi-bin/article.cgi?file=3D/chronicle/archive/2001/04= /06/M N141706.DTL=20 After months of denying that rate increases were needed to pull California= =20 out of its energy crisis, Gov. Gray Davis yesterday proposed an average 37= =20 percent increase for residential users served by PG&E.=20 The governor's electricity rate increases are slightly lower than the ones= =20 adopted by the PUC last week. He said about half of the state's residential= =20 customers would see no increase at all.=20 Davis has blamed the energy crisis on his GOP predecessor, out-of-state=20 energy generators and federal regulators.=20 But in a rare statewide television address last night, he acknowledged that= =20 pointing the finger would not solve California's flawed deregulation plan= =20 that plunged utilities into debt as wholesale energy prices rose and retail= =20 rates remained frozen.=20 "It's become increasingly clear . . . that with rising natural gas prices,= =20 the (Federal Energy Regulatory Commission's) failure to control costs and t= he=20 state's lack of supply, that some rate increases are necessary to keep our= =20 lights on and our economy strong," Davis said.=20 By embracing a rate increase lower than the PUC's, Davis tried to portray= =20 himself politically as a leader, but he also put himself in jeopardy should= =20 his plan fail.=20 Last week, the PUC approved a rate increase that would average 40 percent.= =20 That includes making permanent a temporary 10 percent average increase=20 adopted by the commission in January.=20 Davis also would make that average 10 percent increase permanent.=20 The PUC's rate would lift the customer's price per kilowatt by about 3 cent= s.=20 Under Davis' plan, the rate for PG&E customers would be 2.44 cents.=20 Consumer advocates blasted Davis' plan as a bailout for investor-owned=20 utilities.=20 "Gov. Davis blamed everyone but himself tonight," said Harvey Rosenfeld,=20 president of the Foundation for Taxpayer and Consumer Rights.=20 Rosenfeld said Davis must have the courage to stand up to out-of-state powe= r=20 generators and, if they don't reduce their profits to fair levels, impose= =20 taxes on their windfall gains. If that doesn't work, he said, the state=20 should move to seize power plants.=20 Even though Davis' plan would generate less revenue than the PUC's increase= ,=20 he says he can do more with less.=20 The governor's plan would eliminate a 10 percent rate increase scheduled to= =20 kick in next March. The PUC's would not.=20 Davis said his slightly lower rate not only would provide enough money to p= ay=20 off a bond California is set to issue for power purchases but also would pa= y=20 off a portion of PG&E and Southern California Edison's $14 billion debt.=20 The remainder of the debt would be erased by the state's purchase of the PG= &E=20 and Edison's transmission lines, an idea Davis again endorsed last night.= =20 The PUC's rate increase did not address the utilities' debt.=20 The state will have to issue a bond of somewhere between $12.4 billion and= =20 $14 billion to cover power purchases, said John Stevens, Davis' top energy= =20 adviser. The state has spent about $4 billion so far.=20 All of this can be in a smaller rate increase because the governor's office= =20 has different numbers, Stevens said. The numbers will be provided to the=20 board,=20 but have not been made available yet.=20 PUC Commissioner Carl Wood said the board would review Davis' plan.=20 "There isn't a big gulf," he said. "These are more recent numbers. But the= =20 PUC has the ultimate responsibility to make rates."=20 While the PUC rate increase has already been adopted, the tiered structure= =20 has not.=20 Reaction to the speech was not overwhelmingly supportive.=20 A statement by PG&E said it supported the governor's efforts to increase=20 conservation but said the speech did not go far enough.=20 "However, the state's power crisis has been ongoing for nearly a year now,= =20 with little relief in sight," the statement said. "Unfortunately, the steps= =20 the governor announced tonight still do not appear to offer a comprehensive= =20 solution to resolve California's energy crisis."=20 Republicans were not any more supportive.=20 Davis' only announced 2002 Republican challenger said Davis had failed to= =20 take responsibility for his "mismanagement" that had made the crisis worse.= =20 "Gov. Gray Davis looked us right in the eye and said nothing," said Secreta= ry=20 of State Bill Jones. "The first responsibility of leadership is to tell the= =20 truth. Gray Davis needs to level with the people of California -- not=20 continue to tell them bits and pieces that he thinks they want to hear." Th= e=20 admission that rate increases are necessary is a politically dicey move for= =20 Davis, but one widely seen as necessary.=20 The Democratic governor had come under increasing pressure to take decisive= =20 action after the PUC's action last week.=20 But Davis political adviser Garry South said Davis needed to take the time = to=20 make sure the numbers were right.=20 "I think people understand when a public official comes forward and looks= =20 them in the eye and says here is what we need to do to solve it," he said.= =20 "The governor clearly has the authority to ask the PUC to do something."=20 Davis said he opposed the increase at the time, and denied having any=20 knowledge of the plan, despite having appointed a majority of the board.=20 In his speech, Davis "urged" the PUC to consider the plan.=20 Davis had maintained since last fall that he wanted to work to solve the=20 energy crisis without a rate increase.=20 "If I wanted to raise rates, I could have solved this in 20 minutes," Davis= =20 said in February.=20 Even with the rate increase there are still many pieces of the energy puzzl= e=20 that must be solved.=20 The rate increase will cover only the utilities' back debt if there is an= =20 agreement to sell the transmission systems. So far, those negotiations have= =20 progressed very slowly.=20 Davis urged conservation as the main way to get through the summer.=20 "The more you use, the more you pay," Davis said.=20 He lauded two conservation bills passed by the legislature yesterday that= =20 provide about $1.1 billion for various programs, such as refrigerator trade= -=20 ins.=20 Also yesterday, Reliant Energy, one of the out-of-state generators providin= g=20 California with power, won a court ruling yesterday that means it no longer= =20 has to make forced sales of electricity to the state.=20 The Ninth Circuit Court of Appeals lifted an injunction from a lower court= =20 that forced the energy provider to sell to California, no matter whether it= =20 was paid or not.=20 E-mail Lynda Gledhill and Greg Lucas at lgledhill@sfchronicle.com and=20 glucas@sfchronicle.com.=20 A look at Gov. Davis' proposed rate increase, by the numbers. Proposed=20 rates do not include the average 10 percent temporary increase adopted in= =20 January that Davis wants to make permanent). -- Increase for the 55 percent of residential customers who use less=20 electricity than 130 percent of their predetermined baseline: 0% Average increase for people who use between 130 and 200 percent of=20 baseline=20 amounts: 10% Average increase for users who surpass 200 percent of baseline: 34.5% Average increase for "flat rate" industrial and commercial users 29% Average increase for "time of use" industrial and commercial users 30% (Proposed rates do not include the average 10 percent temporary increase= =20 adopted in January that Davis wants to make permanent.) ,2001 San Francisco Chronicle ? Page?A - 1=20 ---------------------------------------------------------------------------= --- --------------------------------------------------------------- Legislature Pounds Out Conservation Package=20 Davis expected to sign $1.1 billion measures=20 Greg Lucas, Sacramento Bureau Chief Friday, April 6, 2001=20 ,2001 San Francisco Chronicle=20 URL:=20 http://www.sfgate.com/cgi-bin/article.cgi?file=3D/chronicle/archive/2001/04= /06/M N97060.DTL=20 Sacramento -- After a long day of haggling, both houses of the Legislature= =20 yesterday approved a $1.1 billion package of energy conservation measures= =20 designed to cut California electricity use as quickly as possible.=20 Much of the money goes to existing state programs offering loans, grants an= d=20 cash to business, agricultural, residential and low-income ratepayers. Gov.= =20 Gray Davis is expected to sign the bills.=20 Programs include rebates on new refrigerators and air conditioners, as well= =20 as grants to place reflective surfaces on roofs and replace traffic lights= =20 with energy-efficient bulbs and weatherize homes.=20 "These are well-known programs," said state Sen. Byron Sher, D-Palo Alto,= =20 author of one of the bills in the package. "They have been very effective."= =20 Lawmakers were divided over which consumers should get the most assistance,= =20 and fights flared between urban and rural lawmakers over the size of=20 assistance to agricultural interests.=20 The final compromise gives the bulk of the money to the Public Utilities=20 Commission and the California Energy Commission, which administer a host of= =20 conservation programs.=20 One-fifth of the $1.1 billion is devoted to programs helping the state's=20 poorest consumers.=20 Of the $240 million in low-income aid, $100 million will go to subsidize up= =20 to 25 percent of gas or electric bills in low-income households.=20 A poor household is defined as one that is below 150 percent of the federal= =20 poverty level -- roughly a family of four earning $25,000.=20 The program, known as California Alternate Rates for Energy, is administere= d=20 by the utilities and paid for by $180 million in surcharges on other=20 consumers' bills. The $100 million will go to expand the program.=20 An additional $120 million is pegged for a program that helps households=20 below 60 percent of the state median income -- $33,000 for a family of four= .=20 The program offers subsidies and grants for home-energy efficiencies like= =20 insulation, weather-stripping and low-flow shower heads.=20 Among the other programs receiving more money:=20 -- $50 million to beef up new air conditioner and refrigerator rebate=20 programs run by local utilities.=20 -- $50 million in 3 percent loans to replace inefficient display=20 refrigerators like the ones that hold drinks in mini-marts, liquor stores o= r=20 convenience stores.=20 -- $60 million to municipal utilities like those in Sacramento, Alameda and= =20 Palo Alto to expand their conservation efforts.=20 -- $10 million for cities and counties to replace stoplights with energy=20 efficient light-emitting diodes or LEDs.=20 -- $35 million in grants to businesses that recoat the roofs of their low-= =20 story buildings with reflective surfaces.=20 -- $35 million to create "demand responsive" buildings that use an Internet= =20 connection that can automatically adjust thermostats or lights when power= =20 alerts are called.
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