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California's power crisis
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December 27, 2000: 6:59 p.m. ET
Energy secretary extends order as utility says it is having financing woes
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NEW YORK (CNNfn) - U.S. Energy Secretary Bill Richardson extended an emergency order Wednesday requiring power generators to sell electricity to California utilities, as one of those utilities warned of serious liquidity problems from being caught between a retail rate freeze and rising energy costs.
Southern California Edison, one of the Golden State's largest utilities, said it has been unable to complete the syndication of a $1 billion revolving credit agreement and that it has not been able to market its commercial paper or other short-term financing alternatives.
 The tenuousness of its finances forced it to repurchase $419 million of pollution control bonds because the bonds "could not be remarketed in accordance with their terms," according to a Securities and Exchange filing made by its corporate parent, Edison International (EIX: Research, Estimates).
Richardson's order came at the request of California Gov. Gray Davis, who met with President Clinton in Washington Wednesday as he sought to deal with the state's growing energy crisis. The order had been set to expire at 3 a.m. Thursday ET, or midnight Pacific time. It is now extended through Jan. 5, the day after the California Public Utilities Commission is set to hear an appeal from utilities for higher retail electric rates.
"I remain concerned that the reliability of the grid in California may be endangered," said Richardson's statement. "Electricity generators and marketers continue to express reluctance to sell power in the state given reports about the financial status of California's investor-owned utilities. I believe the order is warranted to keep power flowing to consumers through January 5. It is my sincere hope that further action under my emergency powers will be unnecessary."
Davis had requested the order stay in effect through Jan. 9. The governor and his spokesmen were not immediately available for comment after Richardson's somewhat shorter order was released.
Davis met with Federal Reserve Chairman Alan Greenspan and U.S. Treasury Secretary Lawrence Summers for more than two hours on Tuesday. He said in a television interview Tuesday evening that he had not asked the two officials to intervene with the utilities creditors.
"This was more of a situation where I explained the problem and sought their advice and guidance," he said. "There are no magic bullets."
Davis said in the television interview that the state's deregulation of the electricity market was not working, and he accused power generators of gouging by charging 800-to-900 percent above their costs to California utilities forced to pay such high rates.
 "There are certain emergency powers I have. If I have to use them I will," he said in the interview. "But the real threat to the generators that should cause them to think twice is if deregulation fails in California, deregulation is over in America. So they have a vested interest in seeing that deregulation down the road can work without sacrificing the California economy that is now contributing disproportionately to the nation's growth."
Credit ratings agencies have lowered the ratings of the state's utilities, which are caught in the squeeze between high prices they must pay for electricity and the rates they're allowed to charge. Some have said without a change in rates at CPUC meeting Jan. 4, a default on some of the bonds is possible. The Southern California Edison filing suggested customers could also be hit by the company's current woes.
"SCE's financial difficulties could lead to reduced quality and reliability of the electricity services SCE provides to its customers, interruptions in service, and further reductions in SCE's work force and capital expenditures," said the filing.
Shares of Edison International lost 44 cents to close at $15.63 in Wednesday trading, while shares of another major California utility, PG&E Corp. (PCG: Research, Estimates), gained 6 cents to $19.88. 
- from wire and staff reports
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