With California power grid straining, officials urge 'rebellion'

SAN FRANCISCO - With California's power grid strained to the breaking point and customers outraged over soaring bills, angry politicians Thursday urged a ''ratepayer rebellion'' to challenge the industry in the nation's first deregulated electric market.

California's top utility regulators, after hearing the complaints of consumers whose bills have doubled and even tripled this year, approved a $100 million rebate for electricity consumers in San Diego, the city worst hit by the state's power crisis.

The commission's unanimous vote followed a two-hour hearing before more than 300 people in a jammed auditorium, in which deregulation was denounced as a human and fiscal disaster. Nobody spoke in support of deregulation.

Moments after the vote, officials who had come to the meeting from San Diego said the action by the Public Utilities Commission was too little, too late, and urged customers to refuse to pay more than what they paid a year ago.

''It is starting here, it is starting now. It is a ratepayer rebellion,'' said San Diego Supervisor Dianne Jacob. ''We're telling people to go back to paying what they did in July 1999. What can they do? There are 3 million of us.''

She added: ''We are on the brink of disaster.''

Power grid areas in New England and New York had similar strains on electricity management in early June. But California is in particular trouble because its growing tech industry has sharply increased demand.

Patrick Dorinson, spokesman for California's Independent System Operator, which coordinates power sharing between utilities, said California's energy deregulation hasn't worked smoothly in conjunction with other traditionally regulated states.

''If you deregulate in California and your neighbors haven't, you've got a lot of different systems out there,'' he said.

A population boom in places like Phoenix has diminished the amount of power California can import from the Southwest. And in the Pacific Northwest, where the Bonneville Power Administration wholesales power to western states, water has been diverted this summer for such things as salmon runs.

High demand and tight supplies mean higher prices - particularly in San Diego, the first area in the nation to purchase power in the open market.

In San Diego and a slice of southern Orange County served by San Diego Gas and Electric Co. bills have jumped 200 percent in some areas, due to factors including deregulation, a sweltering summer and increased power consumption across the Southwest.

Deregulation wasn't supposed to work this way. A complex 1996 state law sought to boost competition in the state's $20 billion electrical power industry, then pass on the expected savings to customers.

The law will be phased in gradually, from south to north. The state's largest utility, Pacific Gas and Electric Co., is expected to join deregulation by 2002.

The law, signed by former Gov. Pete Wilson, was generally supported by the electrical industry but viewed with suspicion by consumer groups.

''It was ramrodded through the Legislature in two weeks by utility companies who donated more than $3 million to lawmakers that year,'' said Harvey Rosenfield, an activist with the Foundation for Taxpayer and Consumer Rights in Santa Monica.

This year's cost hikes and continuing power shortages during the summer hot spell - including rolling ''brownouts'' that hit the San Francisco Bay area in June - have spurred demands of a repeal.

A report prepared by the utility commission staff for Gov. Gray Davis stopped short of recommending that the new system be dismantled. But the 40-page study was sharply critical of deregulation, and predicted dire troubles to come.

Under deregulation, private utilities were required to sell off their power plants and open their markets to electrical resellers, and buy power on the open market, paying an amount that may fluctuate from day to day.

California, shunned by some power developers who are uncertain about deregulation, has few power plants in the works. One is scheduled to be completed this year; two others could be finished in 2001 and two more are scheduled in 2002.

By comparison, Ohio has a dozen new plants, many of them coming on line this year, said utility commissioner Richard Bilas.

''You can't have deregulation without new supply,'' he said.

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On the Net:

California PUC: http://www.cpuc.ca.gov

California ISO: http://www2.caiso.com

Energy Department electricity statistics: http://www.eia.doe.gov

North American Electric Reliability Council: http://www.nerc.com

Utility Consumers Action Network: http://www.ucan.org