San Diego Union-Tribune

A-1

28-Feb-2001 Wednesday

CALIFORNIA POWER CRISIS 
   Energy chief `open' to plan on transmission-line buyout
 

Toby Eckert 
COPLEY NEWS SERVICE 

WASHINGTON -- Energy Secretary Spencer Abraham is "open" to California's plan to take over utility transmission lines in the state, but stopped short of endorsing the proposal, saying he needed to study it further, Gov. Gray Davis said yesterday.

"From the tone of his remarks, I think his comments will be positive, and I hope by the end of the week he will be able to endorse the proposal or at least endorse a modified proposal that is satisfactory to us," Davis said after meeting with Abraham privately at the Department of Energy.

A spokesman for Abraham said he "couldn't characterize (Abraham's) reaction one way or the other." But he said Abraham was "open to taking a look at the material the governor provided" and would follow up with Davis.

In his effort to drum up federal support for the buyout plan, Davis also invoked a name that resonates throughout the halls of power in Washington: Alan Greenspan.

Davis said the Federal Reserve Board chairman "in a general way thinks it makes sense to acquire transmission lines to make the capacity improvements that have not been done over the past 15 years."

Greenspan and Davis informally talked about the power crisis this week, aides to Davis said. Greenspan's comments could not be confirmed independently.

Davis was in Washington for the four-day winter meeting of the National Governors Association. But he also used the occasion to try to convince the new Bush administration -- and the media -- that his plans to solve California's power woes are sound.

The governor spent about an hour briefing Abraham on the tentative agreement the state struck last week to acquire Southern California Edison's transmission system for $2.76 billion. The state is trying to negotiate similar deals with San Diego Gas and Electric and Pacific Gas and Electric as a condition for helping the utilities pay off about $13 billion
in debt they have accumulated because of soaring wholesale power costs.

The Federal Energy Regulatory Commission probably will have to sign off on any purchase plans, and FERC Chairman Curtis Hebert has made comments indicating he is skeptical of the idea. But Davis believes he can overcome possible opposition at FERC if Abraham backs the plans.

Davis also said he and Abraham had "some creative talks about how we might be able to find more megawatts for this summer" and assigned staff members to work on that "on a daily basis." He did not elaborate on the ideas, saying there may be some details forthcoming "in about two to three weeks."

The governor will continue his East Coast sales pitch for the transmission line purchase -- and other elements of his plan to solve the power crisis -- in a meeting with Wall Street analysts and bond-raters today.

Davis and legislators also have pursued long-term power contracts with energy suppliers to wean the state from the open market, which became wildly expensive last year.

Mirant Corp., which operates power plants in Northern California, said yesterday that it has agreed to shift contracts from the defunct California Power Exchange to the Department of Water Resources, which is the state's electricity buyer.

The contracts amount to about 1,000 megawatts of power over the next 10 months. Last week, Mirant agreed to sell 750 megawatts to the state next month. On a typical winter day, the maximum demand on the grid managed by the state Independent System Operator, about 75 percent of the total state network, is about 30,000 megawatts.

Davis' visit to Washington came against the backdrop of a muted federal response to California's power crisis. The Bush administration, which favors open power markets, has said it is largely up to state officials to solve the problem, rejecting calls by Davis for more aggressive action like caps on wholesale power costs.

But the Democratic governor praised the Republican president publicly on several occasions. He cited the administration's temporary extension of federal orders that kept electricity and gas flowing to the state during emergency shortages and its agreement to speed up federal review of new power plants.

"Secretary Abraham and the Bush administration in general have been wonderfully responsive to my requests. I cannot thank them enough," Davis said yesterday.

Other California Democrats have been less charitable toward President Bush.

"I think the president is going in the wrong direction on this issue," said Rep. Bob Filner, D-San Diego, a staunch advocate of wholesale price controls. "A hands-off approach by the federal government, as the president has suggested, is not going to solve this problem."