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Thursday, 31 May, 2001, 17:59 GMT 18:59 UK
Power bills burning a hole
A power worker in California
Power workers have been struggling to maintain supply
By Maggie Shiels

Californians are getting used to the biggest electricity price hike in the state's history as its energy crisis deepens.

The 47% increase comes after months of rolling blackouts with demand for electricity outstripping supply and prices rocketing.  

From ordinary residential users all the way up to Californian Governor Gray Davis, the crippling bills have everyone worried.

 

According to the LA Times, prices have soared from an average of $31 per megawatt hour in 1999 to $258 by February, with a record of $1,900 during an emergency last month.

The increase was approved by the state's Public Utilities Commission to help struggling electricity companies recover from huge debts incurred since they were deregulated five years ago.

Moving out

One company, Pacific Gas & Electric, has since filed for bankruptcy. The increase comes just months after an earlier 10% rise, designed to encourage consumers to save energy.

The Silicon Valley Chamber of Commerce says its 2,000 members will not be able to bear the brunt of the increases for long.

Spokesman Ken Heiman says: "Some chamber members have said they would consider quite possibly moving out of the area. Others have said they might have to scale back and look at their budgets and see what can be eliminated."

For Jim Young, who  has run a company called Signs By Tomorrow from a San Jose workshop for just over 11 months, the impending rate hike is forcing a major rethink.

 At the moment he is a one-man operation looking to expand.  But with his electricity bill already up from $200 to $300 a month, a further price increase does not bode well.

Jim Young in his Signs by Tomorrow workshop
Jim Young may have to rethink his business plans
"What we are going to get in June could be disastrous," he says. "We are a small company and when you get an increase like that it makes a substantial difference.

"We are at a point right now where we need to hire somebody and if we get hit by this 47% increase, we may have to rethink that."

Nose dive

Meanwhile, an opinion poll has shown Governor Davis' approval ratings nose diving.

Pollster Mark Di Camillo of the Field Institute says the figures show that 42% of Californians approve of his performance and 49% disapprove. In January the approval score was 60%.

"I have never seen a turnabout this quick in overall  job rating, absent a scandal," says Mr Di Camillo.

 "The problem for Davis is that hešs seen as ineffectual .  In January he was taking a very pro-consumer line trying to hold back rate increases. Unfortunately he has not been successful."

Davis under pressure

Governor Davis also failed to persuade President George W Bush to intervene and force down prices. Mr Bush had argued that price-caps would make the problem of chronic energy shortages worse.

Governor Davis, a Democrat, said he would sue the federal government over its alleged failure to ensure energy costs were just and reasonable.

"They [the generators] are charging us extraordinary prices and I'm doing everything I can to stop it.  We had $7bn  we paid in 1999 for all electricity use - a year later it was $28bn, next year it could be $50bn," Mr Davis said.

Governor Davis has been mentioned as a possible challenger for the White House.

But Mr Di Camillo says the governor must first concentrate on getting re-elected for a second term in California.  And  that, says Mr Di Camillo, will be all the more difficult if the energy crisis continues to dominate the political landscape.

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See also:

30 May 01 | Americas
California governor to sue Bush
18 May 01 | Business
Hostile reaction to Bush energy plan
05 Apr 01 | Americas
California's $4bn energy boost
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