Some fear Arizona electric shock

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Some fear Arizona electric shock

STAFF AND WIRE REPORTS

State leaders worry that Arizona could share in California's energy woes if federal regulators try to help ease the power crunch.

"California is going to be tempted to steal electricity from the neighboring states by getting the Federal Energy Regulatory Commission to order utilities in Arizona and other states in the Northwest to sell to California at low prices, to bail out California," Marc Spitzer, who will begin his new job as an Arizona corporation commissioner next month, told the East Valley Tribune.

"That would be fundamentally unfair, and it would be just like California stealing Arizona's Colorado River water," he said.

But Arizona ratepayers need not be concerned about California's problems, Tucson Electric Power Co. spokesman Steve Lynn said yesterday.

TEP is selling its excess generation into California, and recently increased projected annual earnings as a result.

"What is happening in California cannot be extrapolated to what is happening or will happen in Arizona. We have adequate generation in Arizona and we have rates that are frozen, absolutely capped, through 2008," Lynn said. "Rolling blackouts won't roll across the Colorado River and hit Arizona."

Lynn said a number of generating plants planned or under construction in Arizona will meet the state's future needs with excess generation available for wholesale market customers, including California.

Yesterday, California utility regulators said consumers should pay more to keep the state's largest electric companies from going bankrupt.

"We believe that retail rates in California must begin to rise. It's our intent to maintain the utilities' access to capital on reasonable terms," said the Public Utilities Commission, which ordered an independent audit of the utilities' books before it formally decides whether to lift a rate freeze.

Commission Chairwoman Loretta Lynch said the new rate increase - its amount is still unknown - would take effect Jan. 4 and show up on consumers' bills shortly thereafter.

Pacific Gas and Electric Co. said it would raise bills gradually to "protect the consumers against rate shock."

With electricity imports slowing to a trickle, managers of the state's power grid declared another "stage two" alert yesterday, meaning that power reserves are falling dangerously low, below 5 percent.

Consumers were asked to conserve and some commercial customers were warned that they may have to turn off some power.

In private negotiations with Gov. Gray Davis and other key politicians and regulators, the utilities have asked that customers pay for 20 percent or more of the companies' debt.

Before making any such deal, the commission wants to confirm just how bad the financial picture is for PG&E and Southern California Edison, which together have taken on more than $8 billion in debt buying energy on the open market, but are constrained by a rate freeze from passing the costs on to consumers. San Diego customers, who are not covered by the rate freeze, have seen their bills double or triple.

The commission's action yesterday requires the utilities to open their books to independent auditors and financial analysts selected by the commission. The audits were scheduled to begin this morning.

Energy Secretary Bill Richardson on Wednesday extended by one week an earlier emergency order requiring dozens of Western U.S. wholesale electricity suppliers to provide power to California.

Governors from Colorado, Utah, Oregon, Washington and Wyoming convened an emergency Western Governors Association meeting on the California electricity crisis Wednesday in Denver. Due to its economic might and influential congressional delegation, California wields considerable clout in Washington, D.C.

"Our interest is in ensuring that, in trying to solve a short-term problem in California, the federal government doesn't create long-term problems for Arizona and the rest of the West," said Scott Celley, an aide to Gov. Jane Hull who represented her at the session. "As one of the governors said, when California gets a cold, the rest of us sneeze."

The federal actions already are hurting Washington and Oregon, where hydroelectric power production is down and a Northwestern energy crisis is looming, Celley said.

"The federal government is requiring them to run what little water they have through their dams to produce power for California, which is impairing their habitat and salmon-run situation, and it's increasing the cost of energy in Oregon and Washington to lower the cost in California," Celley said.

So far Arizona has remained in good shape from a power-supply perspective, partially because the state's peak season isn't until the summer. However, there is no guarantee that the turbulent California market will have stabilized by then, Celley said.

http://www.azstarnet.com/star/today/001222electriccrisis.html

-- Martin Thompson (mthom1927@aol.com), December 22, 2000


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