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CNN Live Saturday

PG&E Bankruptcy Deepens California Energy Crisis

Aired April 07, 2001 -   ET

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

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
STEPHEN FRAZIER, CNN ANCHOR: Now, issues of power. California's statewide energy crisis took another turn this week when the state's largest utility declared bankruptcy. Pacific Gas & Electric filed for bankruptcy protection after amassing more than $8 billion in debt, the debt a byproduct of the state's efforts to deregulate power.

PG&E also said it is frustrated with the state's efforts to solve the energy problem. It blamed the governor of not fulfilling promises. But in turn, Democrats used their radio address today to accuse the Bush administration for the crisis.

(BEGIN VIDEO CLIP)

REP. JAY INSLEE (D), WASHINGTON: Americans of whatever political stripe deserve a federal government that will enforce the law. The law says people should not be charged unreasonable costs for electricity. We must enforce that law so that Americans can get what they deserve, reasonable electricity prices.

(END VIDEO CLIP)

FRAZIER: PG&E is now looking to federal courts for relief. And you might be wondering what does this bankruptcy filing mean for consumers? Does it mean more rate increases, more rolling blackouts?

CNN's Rusty Dornin has this analysis.

(BEGIN VIDEOTAPE)

RUSTY DORNIN, CNN CORRESPONDENT (voice-over): Blackouts aren't the only "b" word Californians have been hearing since last summer. PG&E first threatened bankruptcy in August. But many thought it was just that, a threat.

VICTOR AYANIAN, DELI OWNER: I'm shocked.

UNIDENTIFIED MALE: I think it's terrible.

DORNIN: Just keeping the lights on in California has been a challenge. Now, Victor Ayanian at the Regency Deli in San Francisco worries the bankruptcy filing will make a dark situation even darker.

AYANIAN: So I don't know what we're going to do now. If we black out, I might as well close the doors and lock up and go home. DORNIN: But PG&E utility officials say customers won't go dark because of the bankruptcy.

BOB GLYNN, CHAIRMAN, PG&E CORP.: Chapter 11 protection protects the company, so it can continue to operate. We expect to be able to give the same level of high quality gas and electric delivery service and customer service that we've been giving before.

DORNIN: Consumer groups already burned up about their bills say the bankruptcy may spell even higher rates sooner.

BARRY SNYDER, CONSUMER UNION: The big fear that consumers have will be that PG&E will attempt to collect $9 billion in back debts that they have lost because they didn't know how to run their business.

DORNIN: Nicole Fiset says she's already feeling a chill from higher rates.

NICOLE FISET, PG&E CUSTOMER: I'm cold. I't been very cold the past couple of weeks and I'm not using my radiator.

DORNIN: And she worries about the bottom line.

FISET: Well, if consumers are putting more money into electricity, they're not putting it into other areas of the economy. So, I guess we're just wondering how it's going to affect our pocketbooks overall.

DORNIN: In the short term, say energy experts, power will still be in short supply and prices will be very high, bankruptcy or not.

SEVERIN BORENSTEIN, UNIVERSITY OF CALIFORNIA ENERGY INSTITUTE: This bankruptcy filing makes it more clear what we already knew that effectively, the consumers and the taxpayers are going to pay for all the power we buy this summer, and it's going to be extremely expensive unless the Federal Energy Regulatory Commission steps in to help.

DORNIN (on camera): Capping prices is something the Federal Energy Regulatory Commission has refused to do all along, claiming it would turn California's deregulation mess into an even bigger fiasco.

Rusty Dornin, CNN, San Francisco.

(END VIDEOTAPE)

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