Energy & Transportation Update
An Information Service of the AFI Energy and Transportation Committee
January 12, 2001
Volume II, Number 1a
High Energy Prices Heat Up the Energy Debate at All Levels of Government
California:
Last week, Governor Gray of California summoned state legislators to discuss various proposals to help resolve the state's energy crisis. The lawmakers issued an emergency 90-day increase in rates, formerly capped by federal regulations, in an attempt to prevent utilities from slipping into bankruptcy as a result of skyrocketing wholesale prices. The increases were lower than what utilities had hoped for, but represent increases to consumers above the already skyrocketing rates.
State legislators in California are also proposing legislation to relieve the energy price increases. Senate President Pro Tem John Burton proposed that the state buy the transmission grid, allowing the utilities to pay off debts. In an effort to help the suppliers meet the surge in demand, the Legislature passed measures to speed up generation projects in the state.
Negotiators from both state and local governments and utility executives and power producers met with Gov. Davis and federal energy administrators in Washington, D.C. January 9-10, 2001 in an effort to solve the energy crisis. The negotiators have suggested a contract that would freeze retail prices at a reasonable level for several years. The argument is that the freeze would protect consumers from retail rate spikes while reducing financial pressure on utilities. Analysts warn the quick-fix in a few years could plunge the state into a similar situation when more power plants come on line reducing rates below the frozen prices. There are still debates whether the state of California will assist utility companies' efforts to reduce their debt and whether the state will assist to wholesale power providers with lost revenues resulting from the rate freezes. Meeting participants felt there was significant progress, but warned there would be much more to be hashed out before the crisis can be seen as over. Yesterday in California two million residents and thousands of businesses narrowly missed rolling blackouts.
New York:
Gov. Pataki of New York voiced concern over high energy prices in a recent speech, arguing local and state regulators should have more control over energy prices. The governor stated he will consult with New York's Representatives and Senators to encourage a strong voice in the utility policy making.
NCSL Staff:
Eileen Doherty
Committee Director
AFI Energy and Transportation Committee
(202)624-8687
Laurie Holmes
Staff Assistant
AFI Energy and Transportation Committee
(202)624-8695
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