Cool weather might keep California power on

A California Highway Patrol officer carries a pig from the Capitol grounds on Wednesday surrounded by members of a consumer advocate group protesting against price gouging

SAN FRANCISCO, California (CNN) -- Forecasters predict cooler temperatures for California Thursday, which could lessen the use of power-hungry air conditioners and lessen the chance of more rolling blackouts.

As California flirted Wednesday with a third consecutive day of temporary power cuts, the Public Utilities Commission proposed electricity rate hikes of up to 35 percent for residents.

The proposal is designed to "encourage conservation," said commission president Loretta Lynch.

Record high temperatures on Monday and Tuesday strained the state's power grid, but officials said cooler temperatures Wednesday helped avoid another round of blackouts.

State power grid managers said residents sweltering in the pre-summer heat wave were ignoring pleas to conserve electricity.

VIDEO CNN's John King reports on how the Bush administration's energy policy may affect gasoline prices and California's power woes (May 8) Play video (QuickTime, Real or Windows Media)     IN-DEPTH SPECIAL The energy crunch in California MESSAGE BOARD Power crisis

About 400,000 customers were affected during Tuesday's outages -- the sixth time California has endured rolling blackouts this year. Power grid operators temporarily cut electrical service when reserves fall too low.

The state is still in a "Stage Two" power alert, meaning that power reserves are at less than 5 percent of demand, and voluntary blackouts are imposed on customers who have agreed to participate in the program.

Use more, pay more proposal

Under the commission's rate proposal, tens of thousands of residents, who have already seen rates skyrocket in recent years, would see an increase in rates.

Lynch said the heaviest users of electricity will see the highest increase in their bills under the tiered billing structure aimed at encouraging conservation.

Customers using less than 130 percent of their baseline rate -- about 50 percent of residential customers -- would see no increase, Lynch said.

A user's baseline rate is a figured at roughly 60 percent to 70 percent of its average normal usage, but is adjusted up or down depending on local climate. A user in a colder climate is assigned a higher baseline rate in winter; a user in a warmer climate gets a higher baseline rate in summer.

The commission approved the largest rate increases in California history on March 27. Since then, officials have been scrambling to put together rate design proposals for customers of Pacific Gas & Electric and Southern California Edison. Those proposals will be voted on by the commission Monday.

Under Lynch's proposal, the heaviest residential users -- those who consume 300 percent over the baseline -- would see rate increases as high as 35 percent. Moderate-use customers would see their rates rise only as much as 12 percent.

Commercial customers, Lynch said, would see rate increases of up to 45 percent, and industrial customers would pay up to 52 percent more.

Lynch said her proposal contains a "bill limiter" that would prevent "bill shock." Residential bills will be capped at 300 percent over baseline. "That won't discourage conservation since 300 percent is still a very high bill," she said.

Thousands powerless for two days

Maintenance at power plants this month has left the state with 12,000 fewer megawatts of power. A 750-megawatt power plant, one of several undergoing maintenance, was expected to return to service Wednesday.

The high demand for electricity created rolling blackouts Tuesday in pockets from San Diego to Sacramento.

The state Independent System Operator, which manages the state power grid, said it imported more power from the Northwest and Canada to avoid blackouts earlier in the day.

Most of the outages occurred in areas served by PG&E and SoCal Edison.

California Gov. Gray Davis urged residents to cut back electricity consumption by as much as 10 percent. But Jim McIntosh, director of grid operations for the ISO, said Californians used about 1,000 megawatts more power Tuesday than Monday.

Monday's power cuts affected more than 88,000 customers of PG&E and SoCal Edison. Other customers of San Diego Gas and Electric and smaller utilities in the Los Angeles area were also affected.

California's two largest utilities have been hammered by a 1995 electricity deregulation law that capped the power companies' ability to raise rates. When wholesale power costs skyrocketed, both SoCal Edison and PG&E suffered billions of dollars in losses, and PG&E filed for bankruptcy protection in April.

The state has been buying power on long-term contracts with money from a $10 billion bond issue the Legislature approved in February.

The California Senate approved on Wednesday the sale of $13.4 billion in revenue bonds to pay for power Wednesday. Opponents say the bonds will cost the average electricity user an extra $2,000 to pay over 15 years.

Consumer advocates say those measures amount to a taxpayer-financed bailout of the two utility companies -- both of which supported the deregulation bill at the time.