Setting Power Priorities

Sacramento’s first responsibility to Californians in this power crisis is to keep the electricity flowing. That may mean the state Public Utilities Commission will have to raise customer rates on an emergency basis when it meets Thursday, but it would not be prudent for the commission to adopt any long-term rate schedules. Just keep the power coming.

That basically requires that power generators and power banks be assured that their bills will be paid. Otherwise, the independent companies may refuse to sell power to California. Right now they are being forced to sell under an emergency order issued by U.S. Energy Secretary Bill Richardson. But California cannot count on that source of support much longer. Nor has the Federal Energy Regulatory Commission been inclined to cap wholesale power prices throughout the West, the best immediate solution. California officials and power users must keep pressuring the commission to do so.

Gov. Gray Davis needs to exert more aggressive leadership on the issue. His options for action now may be limited, but he is the one person in a position to explain to the people why deregulation has plunged California into this crisis and describe what can be done, or can’t be done, in working our way out of it.

We need a dispassionate discussion of what went wrong and why, without laying blame or lending credence to the conspiracy theories that are making the rounds. The governor should explain that there are limited short-term actions the state can take to ease the immediate crisis and describe potential solutions for the longer run--principally to bring more competition into the power generation business. At present, there is simply too much demand and too little supply.

Cutting power demand is the best immediate way to relieve the crunch. Many Californians already have taken action. Scoffers refuse, convinced that the crisis is a ruse to bail out the utilities. The utilities themselves should help ease demand by offering rebates on highly efficient appliances.

Consumer activists have long filled an important role as watchdogs of the utilities and the state PUC. But a few of the more strident claims of recent weeks have been irresponsible, for instance that California would be better off if the big two, Southern California Edison and Pacific Gas & Electric, simply went bankrupt. That would put the multibillion-dollar firms under the control of a federal judge and probably cause havoc in the state’s economy. It would not generate a single kilowatt of additional electricity--nor would state confiscation of privately owned power plants.

The major problem is that the utilities--except those of the city of Los Angeles and a few smaller municipalities--no longer generate a majority of the power they need and sell. They must buy it on the deregulated open market, where prices have soared tenfold or more.

What sort of a rate increase should the PUC grant? This is a political issue as well as a public policy and business decision. The increase should be large enough to keep the power flowing and small enough to insulate ratepayers--especially the less affluent--against price shock. It should fairly share the burden between consumers and stockholders. Then, with a short-term rate hike as a thumb in the dike, Davis must keep pushing for conservation, for more generating and transmission capacity--even involving the state directly if needed--and for some help from federal regulators.