California legislators were spending the day as a lot of their constituents do every month: figuring out how to pay the utility bill.
State power authorities were ordering a second day of rolling blackouts for customers, as legislators mud-wrestled over competing bills with the same intent: take power purchases out of the hands of near-bankrupt utilities by using state money to pay for energy.
The power crisis has outlined the flaws in the pioneering 1996 legislation that deregulated California's energy market. It promises huge new bills for consumers and undermines the position of the state's ambitious governor. And it potentially has a financial and perceptual ripple effect.
One thing it's unlikely to do, though, is have a lasting effect on the California economy, unless the state "mucks it up," said economist Stephen Levy, director of the
Continuing Center for the Study of the California Economy
"It's not a power shortage, it's a huge negotiation," said Levy. For the ongoing power crisis to really hurt California, which accounts for nearly one-seventh of the national economy, the power crunch would have to hurt production, Levy said. That's unlikely, he said.
"We'll turn off the dishwashers. They can manage the blackouts," Levy said.
But an elegant short-term fix is elusive. California got into its problem with a political compromise of a deregulation plan that kept energy rates fixed, divested the utilities of their plants and forbid them to enter into long-term contracts.
A political solution involves the state stepping into the market. California's Gov. Gray Davis has authorized a state agency to make long-term power contracts at a fixed price of 5.5 cents per kilowatt hour. But energy companies are balking at it as too low.
"Even at a 10-year contract it will not be adequate," said Richard Wheatley, spokesman for
, a large power producer in the state.
There is enormous political pressure on Davis -- whose ambitions go beyond the state house -- to come up with a cure. Statewide polls released today put the energy crisis as a top priority among respondents. And the polls have them splitting the blame between greedy power companies and state agencies.
Energy companies are dubious that another political solution from the state will satisfy them, their suppliers and the community that invests in them. They would prefer the state rescue the near-bankrupt utilities.
So would California's senior Sen. Diane Feinstein (D-Calif.), who said that bankruptcy by
Pacific Gas & Electric
would affect thousands of jobs and an international ripple effect.
But the energy companies also worry whether the California crisis will dampen the enthusiasm for utility deregulation around the country that has followed California's example.
"Can the market and regulation work hand-in-hand? It probably can, but it needs to be done correctly," said Kevin Thornton of
, a power plant-operator that is building a 750-megawatt plant in the California desert.