Expansionary Institute

Michael Zey
futurist3000@aol.com

 
WASHINGTON, (Reuters) - Top White House economic advisors will convene an emergency meeting Tuesday with California Gov. Gray Davis, and senior federal and state energy officials on the California electricity crisis, which has put the state's two largest utilities near financial ruin, sources said Friday.

White House spokesman Jake Siewert said Gene Sperling, director of the National Economic Council would meet with Gov. Davis and representatives from the state's utilities "to get a sense of where things are and whether there is anything we can do to help ease the supply crunch."

Other administration sources said the meeting would take place on Tuesday.

Sources in the Energy Department said Energy Secretary Bill Richardson would attend the meeting. Federal Energy Regulatory Commission (FERC) Chairman James Hoecker and Treasury Secretary Lawrence Summers were also expected to attend the conference.

Gov. Davis met with President Clinton in late December to brief the president on the continuing problems in California.

The state, which was once considered a pioneer in deregulating electricity markets, has been faced with warnings of widespread blackouts throughout the autumn and early winter amid short supplies, boosting electricity prices to record highs.

California's two biggest utilities -- PG&E Corp's (PCG.N) Pacific Gas & Electric and Edison International's  Southern California Edison -- have seen their stock prices tumble as investors fear they cannot pay their bills.

The utilities claim they are on the edge of bankruptcy after running up more than $8 billion in soaring wholesale power costs that they cannot collect from their customers because retail rates are frozen under a 1996 state law deregulating the California electricity market.

The California Public Utilities Commission (CPUC) did approve on Thursday a 90-day increase in electricity rates of 9 percent for residential customers, 7 percent for small businesses, 12 percent for medium-sized businesses and 15 percent for large industrial companies.

The cash-strapped utilities had however sought far higher increases: 26 percent for Pacific Gas and Electric and 30 percent for Southern California Edison.

10:13 01-05-01

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