END THE FEUD IT'S TIME FOR STATE AND PG&E OFFICIALS TO BURY THE HATCHET.

Byline: Richard Nemec Local View

JUST before Memorial Day weekend, the last remaining regulatory and legal stumbling blocks had been cleared, so the state Treasurer's Office indicated that it would get on with the long-delayed job of selling a (public sector) record $11.1 billion in revenue bonds to pay for the state's wholesale electricity buying the past 18 months.

The bonds are badly needed to close a sordid chapter in the state's recent fiscal history and the governor's uneven stewardship.

No one has much taste for the whole mess given the continuing scandals unfolding in energy trading and the extent to which California's market appears to have been plucked. But it is a dirty little job that has to get done.

The not-so-incidental question has been: Will it ever happen in this governor's political lifetime?

But the giant but bankruptcy-preoccupied utility in San Francisco, Pacific Gas and Electric Co., pulled an eleventh-hour kick in the shins to the governor and his chief regulator.

The fact that PG&E appears to be putting its own deeply felt grudge against the state ahead of the common good should prompt an angry public outcry. Profit-driven Texas-based energy companies have been blamed for causing at least some of the state's electricity woes in the past year, and now one of our own locals is sticking it to us.

While PG&E plays the state's appellate system like a fine instrument, the state officials aren't offering a lot of information or leadership.

Unmentioned in Gov. Gray Davis' estimated $23 billion budget deficit for the next fiscal year that is fast approaching is the fact that it is really closer to $30 billion because it does not count the current missing $6.56 billion taken from state treasury for the first six to eight months of its power-buying at the height of the wholesale price/supply crisis the first half of last year.

It is worth noting that the state contributed mightily to the year-long delay in getting the decks cleared so Treasurer Phil Angelides' troops thought they could begin wooing Wall Street for the advent of such a huge load of tax-exempt and variable rate bonds, closely following a multibillion-dollar state offering scheduled early this summer that is supposed to help shore up California's tattered fiscal house.

The state regulatory commission's president, Loretta Lynch, had a running feud with the state power-buying agency, the Department of Water Resources, that spanned almost six months, from late last summer to early this spring. Then PG&E, after fighting tooth-and-nail with the same state regulator, challenged the DWR rate agreement with the state Public Utilities Commission.

A deadline for the last of the PG&E utility court and regulatory challenges was set to pass May 28, but the utility within a few hours of midnight pulled the rug out from under the Angelides team that once envisioned a bond sale in May - 2001, that is.

Davis has been an interested bystander, it seems, much of the past year. The governor who pushed through the emergency legislation that got DWR into the electricity business and promised a quick return of the then budget surplus dollars has lent little, if any, leadership to this crucial part of the state getting itself out of the power-buying role.

Nevertheless, the governor was silent about the budgetary hole created by the electricity purchases, and he has been focused more on the continuing array of market manipulation revelations as more leverage for the state forcing refunds and renegotiation of its over-market long-term contracts.

The refund bird is in the bush, however, and may be hard to get a hand around any time soon. Meanwhile, the state bonds are closer at hand - albeit most likely still delayed - and need to be pursued to keep an already unholy deficit from becoming a punctured artery that leads straight to the heart of the governor's re-election hopes.

PG&E and the governor's gurus need to bury the hatchet. Let's get the state paid off, and DWR out of the electricity-buying role.