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Davis puts state in power business

BY JENNIFER COLEMAN
Associated Press

SACRAMENTO -- California will no longer be held captive by energy suppliers charging high prices for power, Gov. Gray Davis said Wednesday as he officially put California into the electricity wholesale business.

By signing a bill by Sen. John Burton, D-San Francisco, Davis created the California Consumer Power and Conservation Financing Authority -- a new state agency that can issue up to $5 billion in revenue bonds to build, purchase, lease or operate power plants.

Plants financed by the authority will provide cost-based electricity to California consumers, Davis said, which will help stabilize the state's volatile energy market.

The power authority is modeled after one in New York, which has 10 power plants, 1,400 miles of transmission lines and produces about 25 percent of the state's power. Nebraska also has a power authority, which created a market in which residents pay 22 percent less than the national average, Burton said.

An increase in the number of power plants down for repairs this year ``is strong evidence that people are manipulating the market by withholding power,'' Davis said.

``The only way we can fight back against this type of price gouging and manipulation is to build more plants,'' he said at the bill-signing ceremony in front of a Sacramento Municipal Utility District power plant.

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The bill gives the power authority the power of eminent domain, but Burton said if the state were to seize any power plants he would prefer that it would be by using the governor's emergency power, because that process is quicker.

Few Republicans in the Legislature supported the bill, saying the state shouldn't get further into the power business. They also warned that it could discourage private companies from building plants.

The bill was sponsored by state Treasurer Philip Angelides, who conceded that it won't save California from blackouts this summer but will help stabilize the energy markets as more generators are built.

The state has been buying power for the customers of three major utilities since mid-January.