Developments unfolded quickly in the West as California edged toward a takeover of its investor-owned transmission grid and creation of a new agency to finance powerplant construction and upgrades. In Nevada, Gov. Kenny Guinn (R), vowing to "avoid the mistakes made in California," postponed electrical deregulation indefinitely and unveiled a six-point energy protection plan aimed at ensuring energy reliability, consumer protection and long-term rate stability. But industry observers fear that the rapid pace of California's transition and the expanded state involvement could backfire.
Under an agreement outlined Feb. 23 by California Gov. Gray Davis (D), the state will pay $2.76 billion--about 2.3 times book value--for the portion of the state's transmission grid owned by Rosemead-based Southern California Edison Co. sce will continue to manage the grid under a lease arrangement. "They have expertise that has accumulated over the decades, which the state doesn't have," Davis said. He suggested that the state takeover of the grid may help with the estimated $1 billion in upgrades and repairs that the debt-plagued utilities cannot afford.