Power prices to hit all-time highs this summer

These factors, analysts say, will drive up costs for electricity on the spot market, where the state already buys about one-third of the power for two cash-strapped utilities. Those costs will hit $1 per kilowatt hour and maybe $2, said Peter Navarro, a University of California, Irvine, economist.

Navarro, who collaborated with the Utility Consumers' Action Network for a report on summer power forecasts, looked at prices from last summer, those on the recent spot market and electricity-supply limits this year to calculate summer peak prices.

With consumer rates capped at about a dime per kilowatt hour, that leaves a growing gap the state will have to fill with a dwindling power allowance.

To cover the difference, the state could issue additional bonds or raise rates, but both options put ratepayers on the hook for the costs.

Since January, the state has authorized $5.7 billion to buy power for customers of Pacific Gas and Electric Co. and Southern California Edison. The two utilities' credit was cut off after high wholesale costs led them to amass nearly $14 billion in debt. The state's 1996 deregulation law means they can't pass those costs on to their customers.

The state will be repaid by $10 billion in bonds expected to be issued in May. PG&E and Edison customers will pay off the bonds.

Officials expected the $10 billion raised by the bonds to last until September, if the state spent less than 25 cents per kilowatt hour, state Treasurer Phil Angelides said. But the state has already paid more than that, as figures from March show the Department of Water Resources paid a 29-cent average.

In a recent letter, Angelides told Davis the bonds wouldn't last long with high prices.

Although Davis hasn't released details on the state's power buys, Navarro said he's determined that recent wholesale prices have ranged between 25-50 cents per kilowatt hour, a figure that electricity traders for Duke Energy and the defunct Power Exchange confirmed.

Prices will rise even more when summer demand increases power use by about 50 percent, Navarro said.

Even those planning ahead for summer are facing high costs, industry experts say. Power bought this week for delivery in June, July and August, cost between 48 cents per kilowatt hour from the Northwest to as high as 68 cents per kilowatt hour from Arizona.

A report by the Western Systems Coordinating Council, which oversees grid operations in the West, says generation resources for California