Background

The state Legislature approved electricity deregulation with a unanimous vote in 1996. The move was expected to lower power bills in California by opening up the energy market to competition. Relatively few companies, however, entered that market to sell electricity, giving each that did considerable influence over the price. Meanwhile, demand has increased in recent years while no major power plants have been built. These factors combined last year to push up the wholesale cost of electricity. But the state’s biggest utilities--Pacific Gas & Electric and Southern California Edison--are barred from increasing consumer rates. So the utilities have accumulated billions of dollars in debt and, despite help from the state, have struggled to buy enough electricity.

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Daily Developments

Gov. Gray Davis reached deals with power producers for the first long-term contracts intended to harness spiraling costs.

The Davis administration told lawmakers the state is exhausting the $500 million allocated five days ago and needs $500 million more by Feb. 15.

Senate leader John Burton introduced a bill that could lead to state ownership of power transmission lines.

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Verbatim

“If this crisis teaches us anything, it teaches us that government has no experience in the power business and even less expertise.”

--Assemblyman Bill Campbell (R-Villa Park)

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Complete package and updates at www.latimes.com/power