DAVIS PUSHED TO FIND PERMANENT POWER FIX.

Byline: Staff and Wire Services

Even as California survived another day of power shortages, the debate heated up Tuesday on long-term solutions to the state's energy crisis.

Sharply criticizing state officials, U.S. Sen. Dianne Feinstein said California should either fully deregulate or re-regulate its electricity market instead of taking ``Piecemeal actions (that) buy time, but ... don't solve the fundamental problem.''

``If you deregulate the retail market, you send a clear price signal to consumers and provide them strong incentives toward cutting their energy use - preventing blackouts and lowering prices,'' Feinstein saidin a speech to the American Public Power Association in Washington.

Feinstein, D-Calif., said that while the commitment by Gov. Gray Davis to buy $10 billion of electricity buys time, a long-term solution must be forged by summer, when severe shortages are expected.

A spokesman for Davis said the senator's suggestion to fully lift the cap on what customers of the state's biggest privately owned utilities pay for power was ``strictly off the table,'' although Feinstein has proposed legislation to prevent price gouging and cap wholesale energy prices until supply is increased.

``Deregulation was promised to consumers as a way to lower rates, and the governor believes they shouldn't have to pay the price for this experiment,'' said Davis spokesman Steve Maviglio.

Meanwhile, state Senate President Pro Tem John Burton pressed his own solution, saying California should buy 26,000 miles of transmission lines - nearly two-third of the state's grid - owned by Southern California Edison and Pacific Gas & Electric in return for helping the cash-strapped companies out of debt.

``If they expect to get money from the ratepayer, the ratepayers get something in return. I give you a dollar, I get a hot dog,'' said Burton, D-San Francisco.

His remarks came as Wall Street continued to pressure the state to find a solution to the utilities' debt problems. Standard & Poor's, a major credit rating agency, issued a statement chastising Davis, the Legislature and the PUC for not taking more aggressive steps to assure the utilities are able to pay their bills.

Meanwhile, a judge in Sacramento on Tuesday evening ordered a major electricity supplier to keep selling to California despite the expiration of a Bush administration order requiring it to do so.

Just hours before the directive's midnight deadline, U.S. District Judge Frank Damrell issued a temporary restraining order requiring Reliant Energy Services Inc. to continue selling power to the state. The order will remain in effect pending a hearing this afternoon.

The judge's action, issued to avoid ``obvious, irreparable harm to the public,'' came after the keeper of the state's power grid sought restraining orders to force three major electricity suppliers to continue selling to California.

The other two, AES Pacific Inc. and Dynegy Power Corp., agreed to continue providing power at least until the hearing.

At issue is enough electricity for roughly 4 million homes.

The U.S. Department of Energy's orders requiring power generators and natural gas producers to sell surplus supplies to California were due to expire Tuesday at midnight PST. The orders, first issued in mid-December by the Clinton administration and extended by new Energy Secretary Spencer Abraham, will not be renewed, the Bush administration said.

That left the managers of California's stressed grid - in the fourth straight week under a Stage 3 power alert - wondering whether enough electricity would be available to avoid rolling blackouts. The ISO ordered scattered outages twice last month.

Adding to the scramble, the ISO predicted that today it would get only about half the 8,000 megawatts it typically draws from the Pacific Northwest during California's morning and evening peak periods.

Davis said the state Department of Water Resources reached agreements on the first long-term electricity contracts, expected to provide power to PG&E and Edison customers more cheaply than the day-to-day purchases on the spot market the state has been making since mid-January.

The initial contracts total about 5,000 megawatts and range from three years to a decade, said state power adviser David Freeman, on leave from his post as head of the Los Angeles Department of Water and Power.

He did not disclose the purchase price or the suppliers.