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FOR IMMEDIATE RELEASE			CONTACT:	Steve Maviglio
December 15, 2000			 				(916) 445-4571

GOVERNOR GRAY DAVIS ISSUES STATEMENT ON ACTIONS BY THE FEDERAL ENERGY REGULATORY COMMISSION

SACRAMENTO -- In response to actions by the Federal Energy Regulatory Commission on Friday, Governor Gray Davis issued the following statement: 

“The Federal Energy Regulatory Commission has abdicated its responsibility to the people in the West.  Their responsibility is to ensure just and reasonable rates.  Instead, they have chosen to ensure unconscionable profits for the pirate generators and power brokers who are gouging California consumers and businesses.

“Make no mistake: By its unwarranted actions today, FERC itself has substantially raised consumer electricity rates in California. I urge the Public Utilities Commission to take all appropriate action to cushion the impact of this FERC-provoked rate increase. But by refusing to impose regional price caps and by seeking to deny California control over the Independent System Operator, FERC has sided against California consumers and businesses.

“This is an inexplicable decision by armchair Washington bureaucrats fixated on economic ideology that has no practical application to the dysfunctional energy market in California and the West.  Instead of acting in the best interests of consumers and businesses, the FERC commissioners have acted as pawns of generators and power sellers whose only interest is to plunder our economy.

“FERC's failure to act in the interest of our consumers and businesses literally invites California to act to regain control over the energy market. Given this decision California now must move forward on both legal and legislative fronts to assure stabilization, generation and conservation.  

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“Although we had hoped FERC would shoulder its responsibility, we have not stood by idly waiting for them to rescue California. Already we have taken the first steps by encouraging the construction of new generation in California.

“The Energy Commission has approved eight new power plants since April 1999.  Another is on the agenda for action next week.  Twenty-two more applications are pending and the Governor’s Green Team is working to accelerate permitting.

“We’re working closely with the California Air Resources Board and local air districts to find solutions to emissions problems.  Last week, we were able to put 2,000 megawatts of power back on-line to help us through the current crisis. And we’ll do more.

“We’ve refocused long-idle energy conservation programs to save electricity, and we’ve added $50 million from the State’s General Fund to get conservation programs online by this summer.  The State, under the guidance of the Secretary of the State and Consumer Services Agency and the Department of Water Resources has been contributing up to 1,300 megawatts-a-day to the conservation efforts of consumers and businesses throughout the state.  Large industrial users have borne a particularly heavy burden through their interruptible contracts.  

“Now, in response to FERC's failure to meet its obligations, I will call the California Legislature into concurrent Special Session to do at least the following:

-	Replace the so-called stakeholders on the ISO Board with Californians who are more concerned about the prices consumers and businesses pay for power than they are about the profits their companies make.
-	Re-establish the authority for the state to inspect private power plants to assure the coordination of maintenance and operating schedules. (Last week alone more than 11,000 megawatts of power were off-line with half of that in “unscheduled outages.”)
-	Provide low-interest financing for new peaking facilities or re-powering old ones to make them cleaner and more efficient in return for committing their power to Californians at guaranteed low rates.

“We also need to work together to conserve energy. We must quickly develop programs that large industrial and commercial companies can participate in that are reasonable and predictable.

“We must redouble our efforts to educate and involve consumers in conservation efforts that will save energy and money.

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“I will be reserving $1 billion in my January 2001-02 budget for these purposes.

“We also must ensure that there is enough electricity generation built in California to get us through the current crisis and to allow the continuing growth of our economy.

“We need to continue the efforts started under AB 970 through the Governor’s Green Team to site new generation, and to re-power old, dirty power plants with new cleaner, more efficient equipment.  Making a dirty power plant clean can also improve its efficiency by 40 percent.

“We need to explore new opportunities to produce power through the Department of Water and Power. (Hydroelectric power generated by the State Water Project has helped us through the crisis of the last few weeks.)

“And we need to encourage the development of co-generation and distributed generation for businesses throughout California.

“Finally, we need to find a way to stabilize electricity rates for all Californians that does not bankrupt our utilities, but at the same time keeps the pressure on the utilities and the pirate generators and power brokers to keep prices down.  There will be pain, but everyone must share that pain.

“A critical step to making this happen is to stop the bleeding that is occurring even today as the greed of the generators and marketeers threatens our economy.  

“Toward that end, I am asking the Attorney General to expand his investigation to include civil and criminal violations that may have occurred in relation to operations practices of the generators and the pricing of natural gas. This investigation should include coordination with federal authorities to determine if violations of the Racketeering Influenced and Corrupt Organizations Act have occurred. 

“The public health and safety of California’s citizens and the economy of the State cannot be subject to the blackmail of a few greedy privateers working in concert with a handful of Washington bureaucrats.

“FERC has shirked its duty to the people and businesses of California. I will not allow our state to be victimized by unfettered marketers. I will do whatever it takes to protect the economy and security of the people of California.”

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