Davis offers rebates to ease summer energy demand

If 10 percent of those customers cut back enough, Davis estimates the rebates would cost the state about $90 million. He urged municipal utilities to offer similar rebates.

Davis said the move is needed to avoid rolling blackouts this summer, when the state's electricity supply is expected to be even tighter than it has been this winter. Power demand typically rises 50 percent in the hot summer months.

"We will save money and reduce costs to consumers," Davis said. "Instead of paying exorbitant rates to out-of-state generators, I'd rather pay California consumers to conserve."

That would cut the state's power use by up to 2,200 megawatts -- enough to power roughly 2.2 million households -- and save the state an estimated $1.3 billion in power costs, Davis said.

The Davis administration has committed $3.7 billion in taxpayer money to buy power for customers of PG&E and Edison since early January. The utilities, which say they are nearly $14 billion in debt due to high wholesale electricity costs, have been denied credit by wholesalers.

Residential and business utility customers who cut their electricity use one-fifth between June and September over the amount they used during the same period last year will receive rebates this fall, Davis said.

Residential and small-business rebates will be based on a 20 percent cut in total consumption; large business customers must cut use one-fifth during periods of peak use to receive the checks.

Legislative Analyst Elizabeth Hill's office said Tuesday that the state Energy Commission is underestimating California's summer electricity shortage. The state faces a shortfall of 3,900 to 7,100 megawatts during daily periods of peak demand, the report says. One megawatt is enough power for roughly 1,000 households.

Davis, using the commission's figures, is overestimating how much new power generation will be online this summer, especially early in the season, and overestimates savings from conservation, the report says.

Davis spokesman Steve Maviglio disputed some of Hill's projections. Hill's estimates still account for some power reserves, he said.

California has faced a tight electricity supply and rising wholesale power costs for months.

The state Senate is forming a special committee to investigate whether power generators illegally manipulated California's electricity market to drive up prices. The suppliers vehemently deny such allegations.

U.S. Rep. Anna G. Eshoo, D-Calif., has asked U.S. Attorney General John Ashcroft to investigate whether out-of-state power suppliers have illegally driven up wholesale prices.

Citing skyrocketing energy costs, particularly in the West, President Bush on Tuesday backed off a campaign pledge and told Congress he will not regulate carbon dioxide emissions from power plants.

The decision comes after heavy lobbying from the coal industry and is a blow to conservationists who see curbing emissions of such "greenhouse gases" as key to reducing global warming.

While California grid operators have seen the supply improve in recent days, removing the need for daily power alerts, there is fear the state will fall short again when temperatures rise this summer. The state had its first widespread blackouts of the crisis in January.

Davis' conservation rebates drew praise from Environmental Defense, which has criticized his efforts to lock in long-term power contracts, saying the energy crisis is likely to ease as supply catches up with demand after next year.

"This is the quickest, cleanest, surest way to buy blackout protection," said David Roe, a senior attorney with Environmental Defense. "The real problem is this summer, and this is the only proposal so far that will target that timeframe."

Harvey Rosenfield of the Foundation for Taxpayer and Consumer Rights praised Davis' rebate order, but said electricity suppliers can simply raise their prices to recoup any profits lost due to conservation.

Also Tuesday, the California Energy Commission received its first two proposals for power plants that would be used to provide electricity during peak use periods.

A 90-megawatt plant was proposed for San Diego's Otay Mesa area, while a 135-megawatt facility was proposed near an existing wind-driven plant in Palm Springs.

Both plants proposed by Houston-based Wildflower Energy LP would use natural gas to run turbine generators. Davis said his administration is attempting to speed up approval to get the plants running in time for summer.<