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Morning News

Davis Funnels More Money Into Power-Strapped California

Aired January 30, 2001 - 11:06 a.m. ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

DARYN KAGAN, CNN ANCHOR: California Governor Gray Davis has ordered more state money funneled into power-strapped parts of his state. It's all to help keep the electricity flowing.

Unclear now how long he'll be able to keep that one up. California is remaining under a Stage 3 alert, while lawmakers keep splitting -- actually, keep working to pull it out of the long- standing crisis.

Our financial news correspondent Casey Wian joins us. He's in Sacramento with the latest.

Casey, good morning, again.

CASEY WIAN, CNN CORRESPONDENT: Daryn, good morning.

As California lawmakers continue to struggle to find a solution to the energy crisis, they are now facing a new challenge. The report came out last night that the state has already spent, in 10 days, all of the $400 million in emergency money that was earmarked for power purchases to keep the lights on throughout the state. The longer it takes to find a solution, the less money that will be available in those reserves to keep buying power.

Meanwhile, another deadline is looming. The state's troubled investor owned utilities on the verge of running out of money. For lawmaker struggling to find a solution, time is running out.

(END VIDEO CLIP)

ROBERT HERTZBERG, SPEAKER, CALIFORNIA ASSEMBLY: That's obviously the clock that we're racing against.

Edison's already defaulted on a $596 million worth of debt. They're about to default on Friday on another $500 million worth of debt. PG&E is about to default on another $500 million worth of debt on Friday.

Obviously, we're racing against that clock. We're very aware that this could either drive them into bankruptcy through voluntary means or involuntary means. And that's why we're pushing so hard in an effort to get a solution to stop that from happening.

(END VIDEO CLIP) WIAN: Last night, the state public utilities commission released an audit of southern California Edison. That showed it has overstated the seriousness of its financial condition. But the audit did show that utility is on the verge of running out of money, perhaps by mid- February, not the beginning of the month as the utility has stated.

Edison says it still it underscores the need for a quick legislative action. But opponents say it underscores the need for no consumer-rate increase.

Meanwhile, Republican lawmakers, who are in the minority here, are complaining that they're not getting enough information about emergency power purchases from California's Democratic governor, Gray Davis.

We're expecting a tough legislative battle here over the next couple of days -- Daryn.

KAGAN: Well, Casey, how much of this is turning into a political battle here? You saw a little back-and-forth between President Bush and Gray Davis, some who think he might be a Democratic challenger to President Bush the next time around. How much are the parties within California trying to make this a political issue?

WIAN: Politics are a big subtext here. No one wants to be accused of making this into a political issue, because the economic consequences for the state are so huge. But Republicans, while they're saying they're trying to cooperate in a bipartisan spirit, are definitely complaining that Governor Davis is not sharing enough information with them. So, it is a political issue.

KAGAN: Casey, thank you very much. Casey Wian in Sacramento, California.

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