After last year's blackouts, Calif. may face electricity surplus

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After last year's blackouts, California is facing an electricity surplus

By Karen Gaudette, Associated Press, 11/23/2001 18:02

SAN FRANCISCO (AP) After having to scrounge around for enough electricity to keep the lights on earlier this year, California could find itself stuck with a big and costly surplus of power over the next decade, a state analysis says.

Ratepayers could find themselves paying as much as $3.9 billion for the unused electricity, according to the analysis.

The reason: The state earlier this year signed long-term contracts to buy power at high prices in an emergency effort to stabilize the market and keep electricity flowing. But since then, electricity demand has fallen, in part because of conservation, and prices have dropped, too.

''It's sort of the final absurdity of the California energy crisis,'' said Doug Heller of the Santa Monica-based Foundation for Taxpayer and Consumer Rights. ''It started for us just paying too much for power. Now we're paying too much for power that we don't even use.''

The analysis of those long-term contracts was done for the Legislature by the state Department of Water Resources.

The department projected electricity demand and supply over the next decade. It concluded that the state will end up re-selling about a third of the purchased electricity at losses close to 80 cents on the dollar.

The department said that energy bought at an average price of $75 per megawatt hour earlier this year will go for just $16 in 2002.

The findings are fueling criticism from consumer advocates and others that Gov. Gray Davis' administration overpaid for electricity when it signed the long-term contracts, which lock the state into paying a fixed price for electricity even if market prices drop.

Consumer advocates have called on Davis to renegotiate the more than 50 long-term contracts.

Steve Maviglio, spokesman for Davis, said Friday he was unfamiliar with the report and had no comment. Repeated calls to the water department, which buys the state's power, were not returned.

Electricity in California is now so abundant that homeowners are not being warned to turn off their Christmas lights as they were last year.

The surplus is attributed to conservation and to more businesses buying power directly from wholesalers, rather than through the state.

Davis has defended signing the contracts, saying they helped the state avoid more rolling blackouts and prevented two other utilities from following Pacific Gas and Electric Co. into bankruptcy. He has asked several electricity wholesalers to renegotiate their contracts.

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-- Anonymous, November 24, 2001

Answers

Does this surprise us? Not me. I knew the shortage last year was just blip and probably manufactured, why didn't Gov Davis know that??

-- Anonymous, November 25, 2001

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