Energy crisis deepens at state, federal levels

The rate increases were only about half as big as Southern California Edison and Pacific Gas and Electric Co. wanted, and they warned that they are headed for financial ruin, in part because of deregulation.

The two utilities have lost more than $9 billion since June because of soaring prices for wholesale electricity and a state-imposed rate freeze that prevents them from passing the costs on to their customers. That, in turn, affects their ability to borrow money to buy power and avert blackouts.

The prospect of bankruptcy filings by the two utilities prompted Clinton to set a meeting in Washington on Tuesday.

Energy Secretary Bill Richardson, Treasury Secretary Lawrence Summers and Gene Sperling, director of the National Economic Council, are expected to meet with California officials and the chairman of the Federal Energy Regulatory Commission.

"The idea there is to try to create some sort of framework that could help to alleviate the supply crunch that California is experiencing now in energy," said White House spokesman Jake Siewert.

Steve Maviglio, a spokesman for Gov. Gray Davis, said it was unclear if Davis will attend.

Also Friday, the U.S. Court of Appeals in Washington rejected a bid by SoCal Edison to order FERC to cap prices for wholesale electricity. FERC had argued that the utility's request would not solve the crisis.

The three-judge panel said SoCal Edison "has not demonstrated that its right to this relief is clear and indisputable."

SoCal Edison said it was disappointed with the ruling but would not say what it planned to do next.

The rate increase affects about 25 million Californians. The average monthly residential bill of $54 will go up by about $5. Customers could see the increases in their bills as soon as next week.

The rate increases weren't enough to placate Wall Street. The major credit rating agencies downgraded both utilities. And their stocks have plunged in the past few days.

Politicians, utility executives and others have offered various solutions to the energy crunch, including establishing a state power authority that would promote the building of power plants; bailing out the utilities at taxpayer expense; giving taxpayers rebates from California's expected $10.3 billion surplus to cover higher electricity bills; and sending energy-saving light bulbs to residents.

Rosenfield warned that state politicians could face a ratepayer rebellion if lawmakers appear to bail out utility companies.<