Subject: a colossal and dangerous failure - cera alert
title : a colossal and dangerous failure
url : http : / / www 20 . cera . com / eprofile ? u = 35 & m = 2185
overview : western energy  * california governor stays the course
california governor gray davis provided his strongest public statements to
date regarding the state  , s power crisis in his annual state of the state
address on january 8 , 2001 . echoing many of his previous positions on what he
perceives as a flawed and unfair california market structure , the governor
labeled the state  , s electricity market system a colossal and dangerous
failure . among other actions , he launched new initiatives valued at $ 1
billion to encourage conservation , provide financing and land to new
generators , grant authority to utilities to engage in a portfolio of
transactions to manage electricity costs , and increase regulatory scrutiny of
existing market suppliers . the governor also called for a greater role for
the state in overseeing and constructing new power plants .
the governor acknowledged that the actions proposed are only some of the
steps necessary to put california on the road to recovery . details regarding
sources of funding for the initiative are still forthcoming . although he
stated that california  , s investor - owned utilities must not be allowed to go
bankrupt , no formal plan for ensuring their solvency was given . the financial
community continues to lack the assurance it requires to continue to provide
financial backing for pacific gas and electric and southern california
edison . at this time the state legislature remains the body most likely to
guarantee their solvency .
the governor again criticized the federal energy regulatory commission for
what he believes has been its failure to manage and restrain properly the
wholesale market . merchant plant generators were accused of gouging the
state , and it was suggested that these generators acted illegally in their
operations , jeopardizing the reliability of the power grid . new , more severe
sanctions were promised for those caught withholding power or extracting what
investigators find as unreasonable profits .
a los angeles times poll released the morning before the governor  , s address
indicated that the majority of californians still do not believe there is an
energy crisis . although the 33 percent growth in the state  , s economy over the
past ten years has nearly outstripped the state  , s and surrounding region  , s
supplies of power , the bulk of the governor  , s statements continue to focus on
the culpability of power producers , rather than the serious supply shortfall .
though the governor introduced steps to fund and facilitate the construction
of new generating plants , increased regulatory scrutiny and the threat of
sanctions will exacerbate the concern already expressed by plant developers
and the financial community that the investment climate in california is
excessively risky .
* * end * *
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strategies and risks for the energy future " in houston , february 12 - 16 ,
2001 ! for more information and to register , please visit
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