Treasurer Urges Disclosure of Power Cost

State Treasurer Phil Angelides warned Wednesday that he cannot sell a record $10 billion in bonds to finance purchases of electricity unless the state reveals the price it is paying for power--something Gov. Gray Davis has refused to do.

The warning came as Davis acknowledged that his efforts to secure enough electricity to meet demand could fall short, raising the possibility of more blackouts.

“The real crunch,” Davis said Wednesday, “will be in May and June and late April”--much earlier than the usual peak in August, September and early October. Angelides said he cannot secure the largest municipal bond offering in American history until Wall Street can see what California is spending on power and what it expects to spend in the future.

“You can’t go to the marketplace to sell $10 billion in bonds and say, ‘We don’t have a public plan,’ ” Angelides said.

Angelides announced that he has secured $4.1 billion in short-term “bridge” financing to repay the state for power purchases until the bonds are issued. That deal remains clouded, in part by the utilities’ resistance to using customer payments to repay the bonds promptly.

The governor is scheduled to give a five-minute televised address on energy at 6:05 tonight, expected to be carried by all Los Angeles television stations.

In addition to discussing the potential for more blackouts, Davis is expected to outline his efforts to expand power production, renew his call for Californians to cut electricity use and address the question of rate hikes.

“I’m certainly going to share with [Californians] the progress we’ve made and what we have to do together over the near term to get through this challenge,” Davis told reporters. “ . . . We have to accept responsibility for solving the problem. I’m going to lay out exactly how to do that.”

Sensing the urgency, the Legislature spent much of Wednesday pushing forward a $1.2-billion package of conservation bills crucial to helping California escape widespread power outages during the hot season.

And in another move to boost summer supplies, the California Energy Commission approved two “peaking plants” under a new fast-track, 21-day permit process ordered by Davis.

Designed to produce power to meet sudden demand, such plants are a major part of the governor’s plan to help avert blackouts this summer, and commissioners approved them unanimously. But they expressed qualms about the vague standards in place for the plants--one to be built near San Diego, the other in Palm Springs--in part because the facilities have been exempted from the usual environmental reviews.

Most experts assume that peaking plants are pressed into service only when demand for electricity is highest. But the facilities approved Wednesday are capable of operating for as much as 85% of the time.

The partnership that owns the plants--a venture between Shell Oil and an arm of engineering giant Bechtel Enterprises--is in talks to sell electricity to the state for 10 years or more. But current contracts call for the sale of 500 hours of electricity for the next three years, said John Jones, a representative of the partnership.

The company would sell the rest of its electricity on the open market, presumably at higher prices--and not necessarily in California.

Suggesting that the facilities may not fit the definition of peaking plants, outgoing Commissioner Robert Laurie called for more public disclosure about the implications of Davis’ emergency order.

“They may be large; they may be small,” Laurie said. “They may operate 300 hours; they may operate 8,000 hours.”

Measures Focus on Cutting Consumption

The conservation bills that lawmakers addressed Wednesday--supported by environmentalists and the business community alike--represent the largest such investment in history and are designed to get Californians to cut energy consumption this summer.

The measures would provide everything from rebates for buyers of new, efficient refrigerators to free power-saving lightbulbs for poor people. All told, the measures are expected to save California roughly the amount of electricity produced by eight power plants.

Legislators had hoped to get the bills to the governor’s desk by the end of this week, but some turbulence slowed the progress.

The trouble began Tuesday, when Assembly Democrats and Republicans from agricultural areas said they would not vote for the Senate bill, SB 5X, until it was amended to include programs to help agriculture. Concluding that opposition might stall the bill in the lower house, Assembly leaders agreed to the amendments, including one that protects agribusiness from blackouts.

That move infuriated the bill’s author, Sen. Byron Sher (D-Stanford), and started a war of words between the houses.

“What they did and the way they did it I found a little untoward,” said Senate Leader John Burton (D-San Francisco), calling the agricultural interests “greedy.”

In the end, the bill cleared the Assembly by a vote of 74 to 1 Wednesday. It now returns to the Senate. A second conservation bill, AB 29X by Assemblywoman Christine Kehoe (D-San Diego), containing more than $400 million more for conservation programs, also awaits action there.

While the governor has been pushing for the bills, their price tag exceeds what he has pledged to spend on conservation, and he is expected to trim the legislation once it arrives on his desk.

Concerns About Depleting Treasury

Angelides, meanwhile, sent a letter to Davis outlining his problems in issuing the $10 billion in bonds needed to repay the state for the power it has been buying on the spot market. To avert mass blackouts, California made its risky foray into the power-buying business in January after the state’s two largest utilities said they were nearly bankrupt and generators would no longer sell to them.

The state has been buying power at the rate of roughly $50 million a day. A Davis-sponsored plan calls for the $10 billion in bonds to repay the state; the bonds, in turn, would be retired by utility customers through their monthly bills.

That plan was based on the premise that the state would be able to stabilize, and eventually lower, the price of electricity by entering into long-term contracts with power suppliers. Those lower prices have yet to materialize, raising increasing questions about whether $10 billion will be enough.

“I think there is no doubt that if we continue to chunk out general fund money without end, what’s going to happen is that we’re going to deplete our treasury, we’re going to harm the very programs that we care most about, and our credit rating will come down,” Angelides said.

The governor’s finance director, Tim Gage, said such fears are unfounded. Officials have planned all along to release some details on California’s power purchases to the Public Utilities Commission so the panel could determine how much money is needed to repay the bonds, he said: “I would think that any information required to sell the bonds will be provided. . . . I don’t know how specific it’s going to have to be.”

Also on Wednesday:

* The Assembly and Senate passed a bill placing price caps on large power users in San Diego, currently the only area in California where some are feeling the full sting of the deregulation law adopted in 1996. San Diego was the first and only area where state regulators lifted price caps, the expected outcome of deregulation. The result last summer was that bills doubled or tripled virtually overnight.

The bill, SB 43 by Sen. Dede Alpert (D-Coronado), would protect medium and large power users such as businesses, school districts and hospitals from the full cost of electricity on the open market. Homeowners and other small consumers are protected under legislation approved last year.

* Lawmakers in both houses announced legislation that would place a windfall profits tax on power companies that sell electricity to California at excessive prices. “It’s time to gouge the gougers,” said Assemblywoman Dion Aroner (D-Berkeley), a sponsor of the Assembly proposal.

In the upper house, a bill (SB 1X) that would tax power producers’ profits at an unspecified rate and rebate the money to taxpayers cleared its first committee hurdle. Davis said he has “an open mind” about the legislation.

Power producers said a windfall tax would do nothing to solve the fundamental problem--a shortage of electricity--and would have an inflationary effect because the expense would be passed on to consumers.

* California Public Utilities Commission President Loretta Lynch said no additional electricity rate hikes will be necessary if Californians conserve energy and electricity producers don’t raise prices.

Lynch, speaking to reporters after a speech Wednesday at the UCLA Anderson Business Forecast quarterly meeting on the economy, also said conservation efforts endorsed by Davis will help keep prices down by reducing demand.

“If we conserve, some of those sellers will get cut out,” said Lynch.

*

Times staff writers Julie Tamaki, Seema Mehta, Nancy Vogel, Stuart Silverstein and Jenifer Warren contributed to this story.

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Power Points

Daily Developments

* Gov. Gray Davis acknowledged he might not be able to get enough electricity to meet demand by late April.

* The state treasurer said he can’t sell $10 billion in bonds to buy electricity unless the state reveals what it’s paying for power, which the governor won’t do.

* Congressional Republicans are drafting an emergency bill to help the West deal with the summer’s anticipated electricity shortage.

Verbatim

“It’s going to be a tough summer out West.... I don’t see any scenario where you don’t have severe blackouts on a consistent basis this summer.”

--Rep. Joe Barton (R-Texas)