The severity of Californias power problems made national headlines this week, with Governor Gray Davis scheduled to meet with White House officials to discuss solutions to the states spiraling energy crisis. Businesses and consumers have stepped up their complaints, blaming the missteps of energy deregulation for rising energy bills. It is likely that Gov. Davis will push for intervention by the Federal Energy Regulatory Commission (FERC) to prevent the economic damage from spreading even further. Utility officials have suggested that without immediate changes, residents and businesses could face brownouts and energy rationing in the coming months.
Davis met with top utility executives and consumer advocates in late December in an effort to resolve the power problems. According to the Dec. 29, 2000 issue of The Wall Street Journal, the utility companies and consumers are still divided over the key question of who would bear the multibillion-dollar cost of a market experiment that saw costs go out of control.
FERC issued an order in December that imposes a soft cap of $150 per megawatt hour on the prices charged by generators and traders to the utilities. In addition, an emergency price increase was recently granted to Californias two largest utilities by the California Public Utilities Commission that will result in a price increase of between 7 and 15 percent for commercial and industrial consumers. According to a recent report in The Los Angeles Times, California Treasurer Phil Angelides has unveiled a controversial plan to create a $10 billion state authority that would essentially reverse the deregulation process. The authority would construct power plants and take ownership of the transmission system in the hopes of preventing the bankruptcy of Californias major utility companies.
Compiled from reports from ElectricNet.com, The Wall Street Journal, and The Los Angeles Times
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