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California chief assails utilities

Outages partly due to failure to pay generators, he says

SACRAMENTO, Calif. — Gov. Gray Davis said the state's two largest utilities are partly to blame for this week's widespread blackouts because they've failed to pay millions of dollars owed to environmentally friendly power generators.

Davis accused the utilities of taking in money from customers while failing to pay the small, alternative generating plants, which include solar, wind and geothermal energy producers.

The state has been spending about $45 million a day since January to buy power for customers of Southern California Edison and Pacific Gas and Electric Co., which are so credit-poor that suppliers refuse to sell to them.

"It's wrong and irresponsible of the utilities to pocket this money and not pay the generators," the governor said at a Capitol news conference Tuesday. "They've acted irresponsibly and immorally and it has to stop."

The state lost about 3,100 megawatts, or enough electricity to power 3.1 million homes, on Tuesday from alternative energy plants that say they can't afford to keep operating because the utilities haven't paid their bills in weeks.

Davis said the PUC planned to issue an order next week directing the utilities to pre-pay future bills to the alternative plants.

PG&E called Gray's statements "inappropriate and unjustified," adding that it was negotiating a payment plan with the suppliers. Edison said it is intent on paying creditors and working with the Public Utilities Commission to pay the plants for future power sales.

Edison and PG&E say they have lost more than $13 billion since last June to climbing wholesale electricity prices, which the state's 1996 deregulation law prevents them from passing on to ratepayers.

Keepers of the state's power grid were cautiously optimistic that California might get through Wednesday without another day of rolling blackouts after two idle plants were returned to service. A Stage 1 power alert, the mildest of three forms of alerts, was called around 6 a.m. Wednesday as power reserves fell to around 7 percent.

"Never say never — but it appears we are going to be in better shape tomorrow (Wednesday) and for the rest of the week," said Patrick Dorinson, a spokesman for the California Independent System Operator, which oversees most of the state's power grid.

About a half-million customers were hit by Tuesday's blackouts, which snarled traffic and plunged schools and businesses into darkness from San Diego to the Oregon border.

On Tuesday, Assembly Republican leader Bill Campbell called on PUC President Loretty Lunch to resign. Lynch was appointed by Davis.

Lynch couldn't be reached for comment, but a spokesman for the governor dismissed Campbell's complaints.

Meanwhile, a leading lawmaker on energy issues said the PUC may soon have to raise rates by about 15 percent to cover the state's costs and its utilities' bills.

"My sense is that people will appreciate having some certainty and being able to plan for it," said Assemblyman Fred Keeley. "They don't have to like it, but I think they'll appreciate it."

Davis has said he is confident the utilities and the state can pay their bills without further rate increases.

In the meantime, the ISO is counting on conservation to avoid more rolling blackouts. Dorinson estimated that conservation accounted for about 900 megawatts in savings during Tuesday's peak usage.

"That probably was the difference today in helping us avoid any rolling blackouts late into the evening," Dorinson said.

Tuesday's outages began at 9:30 a.m. and continued in 90-minute waves until about 2 p.m., when the ISO lifted its blackout order. They were blamed for at least one serious traffic accident.

The blackouts were caused by a combination of problems, including unseasonably warm weather, reduced electricity imports from the Pacific Northwest, numerous power plants being shut down for repairs and the loss of power from alternative generators.