Davis Orders Rebates for Power Savers

Hoping to avert blackouts, Gov. Gray Davis ordered a $90-million conservation program Tuesday that will give customers of the state’s three private utilities rebates on their summer electricity bills if they slash their use.

To qualify for the 20% rebates, consumers and businesses must cut use at least 20% from the amount used in the same period last year.

The program will go into effect June 1 and last until Sept. 30. To receive the rebates, customers of Southern California Edison, Pacific Gas & Electric and San Diego Gas & Electric must conserve at least 20% in each of the four months.

Though details of the program are still being devised, Davis said consumers will receive rebates at the end of the four-month period, most likely in the form of credits on their utility bills.

“This program puts money in the hands of California consumers, as opposed to out-of-state generators,” Davis said, speaking at a power plant in Sacramento. “The cheapest megawatt you can buy this summer is the one you don’t have to purchase.”

Davis took the action by using his emergency powers authority, which allows him to bypass the Legislature.

The plan earned quick praise from environmentalists and consumer advocates. David Roe of Environmental Defense in Oakland called it the “smartest idea yet.”

Davis said that if 10% of the utilities’ customers shaved use 20%, the state cost of the rebates would reach $90 million. Demand for electricity would fall by 2,200 megawatts, about enough to power 2.2 million homes. At that level of conservation, the state would save $430 million to $1.3 billion on the cost of electricity purchases.

Davis said he is considering ways to extend the incentives to businesses and residents of Los Angeles and other parts of the state served by municipal utility districts.

With the 20% rebate, consumers could end up trimming their summer electricity bills by a third, given that they would also save because they would be using less electricity, Davis said.

The rebates, to be administered by the utilities, would come from an account the state plans to use to pay the cost of bonds being sold to finance electricity purchases. The state is buying power at a cost of $1 billion a month--about $3 billion so far.

Assembly Energy Committee Chairman Roderick Wright (D-Los Angeles) called the concept “cutesy.” He said that before the state grants rebates, Davis first needs to be certain that California can pay for the electricity it is buying.

Another skeptic, state Senate President Pro Tem John Burton (D-San Francisco), said: “It’s questionable how residential people are going to benefit. Big businesses have meters and keep track of these things.”

Burton said there’s no benchmark by which to measure conservation for people who have moved in the last year. Nor will there be any credit for people who already conserve electricity.

Senate Energy Committee Chairwoman Debra Bowen (D-Marina del Rey) intends to hold hearings on Davis’ latest plan and the state’s overall preparedness for the summer.

“We’re nowhere near ready,” she said.

However, state Senate Republican Leader Jim Brulte of Rancho Cucamonga lauded the rebate plan, which is similar to one he proposed last month.

“By giving rebates,” Brulte said, “we will let individual consumers figure out what the best way is to conserve, rather than having big government programs.”

Roe of Environmental Defense said: “This is the smartest, quickest, cleanest way to turn dollars into blackout protection. It goes right into the pockets of consumers, as opposed to any of the third parties who are making money from the energy crisis.”

Santa Monica consumer advocate Harvey Rosenfield also called the rebate program “a great idea. . . . That’s going to get their attention.”

Claudia Chandler, spokeswoman for the California Energy Commission, said about 1 million California households could cut their consumption by 20%.

The commission estimates that 14% of the state’s electricity on a hot summer day powers residential air-conditioners. Chandler suggested that Californians set thermostats at 78 degrees while at home and 85 degrees when they are out or shut down their air-conditioners altogether.

The utilities will be responsible for calculating whether consumers have cut electricity use by 20%. The firms will offset the costs of the program by reducing their payments to the state Department of Water Resources, which is buying electricity that the utilities can no longer afford to purchase.

The rebate program is the latest in a series of measures pushed by Davis and legislators.

The governor is negotiating a rescue plan with utilities that would give them cash in exchange for assets, including the massive electricity transmission system, land and access to power plants.

In other developments Tuesday:

* Senate leader Burton announced the creation of a select committee to investigate wholesale electricity prices and alleged overcharging by power plant owners and electricity marketers. The committee, with the power to subpoena documents, will look into allegations by both state grid operators and the Federal Energy Regulatory Commission that electricity sellers abused the state’s electricity market.

* Southern California Edison said it will appeal an order that the federal commission issued Friday to 13 generators to refund $69 million in electricity revenues for January or explain why the prices they charged were not unjust and unreasonable. “While the headline was that there were refunds, we view it as a token adjustment and not one that meaningfully addresses the problem,” said Stephen E. Pickett, the Rosemead utility’s general counsel.

*

Times staff writer Julie Tamaki contributed to this report.