By Ann de Rouffignac
OGJ Online
HOUSTON, Apr. 30 -- California Gov. Gray Davis Monday predicted the state will not emerge from its energy crisis until 2003.
Furthermore, he said the only way for California to get through the coming summer without numerous blackouts will be to reduce electricity demand by 10% compared to last summer.
"We will have to set the record in the Guinness Book of [World] Records for conservation," said Davis, who gave the keynote address to the JP Morgan Annual Technology Conference in San Francisco. Davis said he felt obliged to talk about his "least favorite" subject given the intense interest in the energy crisis that is currently dominating his agenda.
The state got into the mess, he said, because legislators deregulated the wholesale and not the retail electricity market and utilities were required to sell off their power plants. Power generated by the new owners of the power plants could be sold out of state. As a result, Davis claimed, the state could be shy 3,000-4,000 Mw every day.
Davis said no new power plants were built in California for 12 years preceding his administration. Four words sum up his policy�"build more power plants," he said.
The state will not emerge completely from the crisis until it has at least 15% more electricity supply than demand. That won't happen until fall 2003, even though Gray reported his administration has licensed 13 new power plants.
Permitting time reduced
The state initially reduced the time it takes to permit a power plant to 6 months from 1 year. Now that process has been reduced to 4 months. Peaking plants less than 300 Mw can be licensed for up to 2 years in 21 days, Davis said.
Currently, 8 plants are under construction, 4 will be on line by end of summer 2001, 3 by 2002, and 10 more by 2003, he said. While the state builds its way out of the crisis, getting through this summer will require extraordinary conservation by Californians. Davis recently signed into law $800 million in incentives to reduce electricity use.
"Reducing the use of electricity is cheaper than buying electricity on the spot market," he said. Davis said California has overcome worse crises in its past, including earthquakes and fires."Our obituary has been written many times," he said. "We'll get through this."
Davis said he is eager to get the state out of the business of buying electricity for the utilities and return them to their proper business and operations. He recently cut a deal to buy Southern California Edison Co.'s transmission system. The agreement still must approved by the legislature, federal and state regulators, and company shareholders.
The agreement also includes the necessary improvements be made on Path 15, the bottleneck keeping power from flowing freely between the southern and northern parts of the state.
Davis is also negotiating with Sempra Energy for a similar deal to buy its utility's transmission lines. A creditors' committee for Pacific Gas & Electric Co., which has filed for protection under US bankruptcy laws, expressed interest in doing a transmission deal too, Davis said. "I'm optimistic we might be able to work a deal with them too," he said.
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