Top officials target power crisis

San Francisco: the lights could go out unless officials solve the power crisis

Top US officials are on Saturday to thrash out a deal to solve California's power crisis, amid accusations by a senior industry figure of inaction.

The bottom line is that we haven't seen much real action

Gordon Smith, Pacific Gas and Electric

Senior members of President Clinton's administration are to meet California's governor Gary Davis and electricity firm executives at 1600 GMT to debate a package aimed at avoiding blackouts, and saving the state's major utilities from bankruptcy.

Delegates will include Treasury Secretary Lawrence Summers.

Low level talks opened on Tuesday have discussed ideas including price freezes and a debt repayment holiday in an effort to rescue California's electricity firms.

A tenfold rise in a year in the price which electricity distributors pay generators for power, coupled with state laws preventing them passing on this rise to consumers, has left the firms with debts of $12bn.

Lack of action

Gordon Smith, president of the utility unit of Pacific Gas and Electric, one of California's largest utilities, said on Friday that state and government officials were not doing enough to solve the crisis.

"The bottom line is that we haven't seen much real action," Mr Smith told a conference.

The downgrading of the firm's bonds by ratings agencies has "sent a strong message on the lack of leadership from the state on this issue".

Pacific Gas and Electric is borrowing $1m an hour to ensure electricity supplies to its 4.5 million customers.

Power cuts

Nonetheless, the state almost faced power cuts on Thursday when severe winter storms compounded the power crisis, knocking out one third of output from California's power generators.

Senator Dianne Feinstein: call for legislation

Shipments of electricity from Oregon, and cash from California's Department of Water Resources, were needed to prevent blackouts.

California's electricity purchasing agency has found it increasingly difficult to borrow cash to cover emergencies, because its credit rating has declined in line with the finances of the utilities - its major customers.

Longer term measures proposed for easing the power crisis include a cap on prices utilities pay generators for electricity.

The idea has been backed Anna Eshoo, a congresswoman representing California's Silicon Valley area, and fellow Democrat Dianne Feinstein, who has pledged to introduce legislation to the Senate.

New plant

Generating firm AES has resubmitted plans to reopen a plant in the south of the state which was closed six years ago.

The proposal, which could see the generators restarted this summer, is set on 24 January to go before the California Energy Commission for approval.