Recent Developments in California's Energy Crisis

A breakdown of recent developments in California's energy crisis:

MONDAY:

-- Federal energy regulators order price restraints on electricity sales throughout 10 Western states and California, but not the stringent cost-based controls sought by Gov. Gray Davis and other state officials. The 5-0 vote by the Federal Energy Regulatory Commission is effective through Sept. 2002 and expands price restrictions the agency imposed in April on California's wholesale electricity sales to include power transactions 24 hours a day, seven days a week. The price cap will be pegged to the cost of production at the least efficient electricity generating plant in the region.

-- A bill clarifying how to create a municipal utility district passes out of the Assembly energy committee. A public agency and an unincorporated area can organize a municipal utility district, as can two public agencies with or without an unincorporated area. The bill, by Patricia Wiggins, D-Santa Rosa, clarifies that when two areas vote, either is eligible to create a municipal utility if a majority approves it. But its eligible voters must total at least two-thirds of the voters in both areas. The bill now goes to the Assembly floor.

-- Gov. Gray Davis promises San Diego utility customers they won't have to pay the $750 million debt amassed since last summer. Davis says the deal with Sempra Energy, the parent company of San Diego Gas & Electric Co., also allows the state to buy the utility's 1,800 miles of transmission lines for about $1 billion. That portion of the plan requires legislative approval. SDG&E customers saw their electric rates triple last summer when their utility fully deregulated.

-- More than 200 of Pacific Gas and Electric Company's top managers and employees could share $17.5 million in bonuses if the utility can convince U.S. Bankruptcy Judge Dennis Montali it will lose key employees without awarding the extra money. Montali asked that PG&E confirm it will not use the bonuses as a reason to request future electric rate hikes, and asked that the utility provide him with evidence that employees have left, as well as a list of the titles and dollar amounts it expects to give to the top 23 employees.

-- Commissioner Carl Wood of the Public Utilities Commission urges his fellow commissioners to exempt the state's oil refineries from rolling blackouts to ensure a steady supply of gasoline. In a written statement, Wood says refineries and other facilities involved in gasoline production should be exempt as early as the PUC's June 28 meeting. Refinery representatives say a blackout could shut down production for up to three weeks.

-- A member of the state Board of Equalization says the state should assess the property value of private power plants in California. Johan Klehs says he'd like to overturn a 1999 decision to allow counties to assess the value of plants. The assessed value provides the basis for property taxes. Counties are limited in the amount they can raise taxes, but the state's authority in that area is not, he says.

-- A California Energy Commission committee is recommending approval of a proposed 600-megawatt power plant in the Coyote Valley in South San Jose. The committee also recommended several mitigation measures for Metcalf Energy Center, including increased emissions monitoring. A public hearing on the decision will be held July 26.

-- The manager of the state's power grid expects the state to remain free of blackouts for the rest of Monday.

WHAT'S NEXT:

-- San Francisco officials plan to announce a lawsuit Tuesday at 9 a.m. that claims a national energy supplier and regional governmental body are in violation of the federal clean air act for their permitting of power plants. Three community groups are also parties in the suit.

-- The Senate Energy Committee begins hearings Tuesday on variations of Gov. Gray Davis' proposal to aid financially strapped Southern California Edison. Senate Judiciary and Senate Natural Resources committees also plan hearings in advance of the Aug. 15 deadline for action.

-- The Senate Governmental Affairs Committee, chaired by U.S. Sen. Joseph Lieberman, D-Conn., holds hearing Wednesday on the power crisis.

THE PROBLEM:

High demand, high wholesale energy costs, transmission glitches and a tight supply worsened by scarce hydroelectric power in the Northwest and maintenance at aging California power plants are all factors in California's electricity crisis.

Southern California Edison and Pacific Gas and Electric say they've lost nearly $14 billion since June to high wholesale prices the state's electricity deregulation law bars them from passing on to consumers. PG&E, saying it hasn't received the help it needs from regulators or state lawmakers, filed for federal bankruptcy protection April 6.

Electricity and natural gas suppliers, scared off by the companies' poor credit ratings, are refusing to sell to them, leading the state in January to start buying power for the utilities' nearly 9 million residential and business customers. The state is also buying power for a third investor-owned utility, San Diego Gas and Electric, which is in better financial shape than much larger Edison and PG&E but also struggling with high wholesale power costs.

The Public Utilities Commission has approved average rate increases of 37 percent for the heaviest residential customers and 38 percent for commercial customers, and hikes of up to 49 percent for industrial customers and 15 percent or 20 percent for agricultural customers to help finance the state's multibillion-dollar power buys.