U.S. Energy Department Moves to Prevent California Power Shortages
FRANK SESNO, CNN ANCHOR: A cold snap, maintenance shutdowns and a credit squeeze have combined to put California in a power squeeze. Now the federal government has stepped in to prevent rolling blackouts there. CNN's Greg LaMotte reports from Los Angeles.</s>GREG LAMOTTE, CNN CORRESPONDENT (voice-over): The power crisis in California is threatening to bring the state's huge economy to its knees and force millions of state residents into the dark. So critical has the situation become, the U.S. Energy Department has issued orders that will:</s>BILL RICHARDSON, ENERGY SECRETARY: Require generators and marketers that refuse to supply power to California because of credit issues to send power into the state.</s>LAMOTTE: California's governor identified 13 power companies in the Northwest that would not sell electricity to California utilities for fear they wouldn't get paid. Some of those suppliers took issue with being on the list. Nonetheless:</s>SEN. DIANNE FEINSTEIN (D), CALIFORNIA: The price of power has risen astronomically on the spot market, and may very well bankrupt two of California's major utilities: Pacific Gas & Electric and Southern California Edison.</s>JOHN BRYSON, CEO, EDISON INTERNATIONAL: The utilities who serve all the customers are having to borrow cash to pay to keep the lights on. And we borrowed and borrowed and borrowed over six months time, and the financial markets are now saying we have to stop because we can't forever just borrow.</s>LAMOTTE: Energy in California is in critical condition. No new major power plants have been built in a decade. A third of the state's power generators are off-line for scheduled maintenance. And because the state deregulated its huge power system, utilities are being forced to buy electricity on the spot market, where prices have skyrocketed 100 times higher than a year ago. And state law says most utilities can't start passing the cost on to consumers until 2002.</s>GOV. GRAY DAVIS (D), CALIFORNIA: We must bring these prices under control. Otherwise, the utilities simply are not liquid enough to pay the prices, to power our economy, keep the lights on, protect the sixth largest economy on the planet.</s>LAMOTTE: The federal government has also announced it will now set the rates for power sold to California.</s>RICHARDSON: While I ensure that the generators receive a fair return, I will not allow them to unjustly profit due to current market conditions. I will demand a fair price.</s>LAMOTTE: Even so, the crisis is not over -- not by a long shot. Energy experts say California could be facing rolling blackouts for years to come, and the economic impact could be devastating. Greg LaMotte, CNN, Los Angeles.