FOR IMMEDIATE RELEASE
04/11/2001 

GOVERNOR GRAY DAVIS SIGNS LANDMARK ENERGY CONSERVATION PACKAGE
APRIL 11, 2001
(Construction noise in background) Well, maybe they're building a power 
plant. Think of it that way.
My friends, for the last 10 years California failed to build a single major 
power plant. Because of that we're facing a power shortage. Rest assured, my 
administration is moving at warp speed to correct the situation. 
Since I've been Governor we have approved 12 new plants; 7 are under 
construction as I speak to you, which is a record; 4 will be on line this 
summer; 3 next summer. By the end of 2003 this problem will correct itself. 
But between now and then we need everyone to do their part to conserve -- so 
we can get through this summer without major disruptions.
The bills I'm going to sign today give incentives to consumers and businesses 
to do their part and reduce the energy consumption they would otherwise use 
by at least 10 percent. 
The centerpiece of these proposals are $500 million in incentives for 
consumers and businesses. Fifty percent rebates if you buy a new refrigerator 
or air conditioner. If you're a business, we'll pay for energy efficient 
lighting -- whether it's dimmers or occupancy sensor devices. We'll pay for 
the cost of the item; we'll pay for the cost of the installation. 
We have a series of proposals including $60 million to municipal power 
authorities like the Department of Water & Power, so they can augment their 
conservation programs. Because clearly, the cheapest megawatt this summer is 
the megawatt we don't have to buy. We need every consumer to do their part to 
help us through this difficult period.
As I said, this problem will correct itself over time -- but you cannot make 
up for 12 years of inaction overnight. Between now and 2003 we need everyone 
doing their part.
It is our hope that the combination of incentives in this legislation, which 
applies to the urban and agricultural areas, commercial and industrial, and 
residential, will save at least 2000 megawatts this summer.
The whole purpose of these bills is to achieve conservation this summer. The 
money runs out if it's not spent by next March. We want a big response this 
summer. And if people can't get it all done this summer, we want them 
prepared to conserve electricity by next summer.
There is also in this package $240 million for low-income people to 
weatherize their homes, making them more energy-efficient. So we have a range 
of incentives for consumers and businesses, and I'm counting on everyone to 
pull together as one state and do their part. 
With 34 million people, even though we're facing a power shortage, we are not 
powerless. We have the power to use less electricity, then the generators who 
are marking up the price by 800 percent want us to use. By using that power 
we will not only reduce our bills, but we will minimize the possibility of 
blackouts.
So I thank Californians for responding to my call. Already they're saving 8 
percent. I want them to get up to 10 percent so we can get through these 
difficult times, but help is on the way. By the end of 2003 we'll have more 
plants than we need. And to make electricity deregulation work, you must have 
more power than you need. 
We currently have a 20 percent deficit. By the end of 2003, early 2004 at the 
latest, those lines will cross and we'll have more power than we currently 
need. 
I intend to get that differential up to 15 percent. Most experts, including 
Alan Greenspan, say you need a 15 percent margin of capacity over demand. 
That forces the price down in the spot market and that gives the state 
leverage against the generators -- rather than generators leverage against 
the state.
I'm very pleased the Legislature responded as quickly as it did. This is a 
big day. The consumers and the business in this state now have financial 
tools to help them conserve power. If you're a consumer we'll pay 50 percent 
of the cost of an energy-saving device. If you're a business, because they 
use 70 percent of our power, we'll pay for the whole cost and install it 
ourselves. We've got one goal - which is to save at least 2000 megawatts this 
summer in this part of our energy conservation program.
Our overall goal, including my 20/20 program, which gives people a 20 percent 
rebate if they save 20 percent of the power they used last year is to save 
between 4 and 5000 megawatts this summer. These bills I'm signing today 
should get us at least 2000 megawatts.
Let me sign the bills and then call on the legislators who helped make this 
possible to add their comments. 
Introductions
They worked long and hard. This represents the most aggressive and the most 
expensive conservation program ever launched in America. It's designed to 
save megawatts this summer. Not five years from now; not seven years from 
now. This summer, and worst case, next summer. 
This is a crash program, all guns blazing. We are paying for conservation 
devices; we're installing them ourselves. We want to make sure that every 
building, every office building, every retail shop, every high-tech 
community, every agriculture concern, squeezes down the megawatts they use as 
much as is humanly possible - and still allows them to continue and make a 
profit. We're going to do with this measure.
Let me entertain any questions you might have.
Questions/Answers
Question: Governor Davis, can you talk about the way this is going to be 
promoted. How is word about this going to get out? I see there's a provision 
in it, but what are people going to begin to hear about how to use these 
incentives?
Governor: We have, as you know, a program run by the Consumer Affairs 
Department, which advertises ways in which people can conserve energy. 
They're going to reinforce the message that these incentives are here; 
they're available to consumers and businesses alike. And they're the most 
attractive incentives ever devised by a state in America.
We hope to encourage people to take advantage of this program. It's not going 
to last forever. It disappears next March. This is a one-time opportunity to 
do the right thing for yourself, and the right thing for your state. 
So basically, through television, through lots of literature that goes out 
from various departments... all the information will be on our web site. 
We'll work through various business organizations from Chambers to -- 
manufacturing groups, homeowner groups. We'll take advantage of every 
opportunity to get the word out.
Question: Is there now an enforcement element in case people maybe don't take 
the carrot, is there a stick?
Governor: We're going to actually contact, just start going down the list 
starting with the largest consumers of power in this state which tend to be 
big businesses and say: We've got a device, we want to install, when can we 
come in. So we're not waiting for them to call us. 
This is a race against time, and we have to fight back against these 
generators. And the best way to fight back is to use less of their power than 
they want us to. That's the best weapon we have. Conservation is the best 
weapon we have against price gouging and blackouts.
Question: Governor, regarding P.G.&E. and the bankruptcy, are you hopeful you 
can somehow you can reopen negotiations with them and come along?
Governor: First of all, I think Southern California Edison proved that if you 
stay at the table... If you're responsible... If you care about the customers 
you're serving - good things can happen. We intend to get a similar 
arrangement with Sempra. An extensive meeting is occurring as I speak to you. 
I hope that can be done within two weeks; it may be sooner.
Then we intend to inform the bankruptcy judge in San Francisco of how we 
we've negotiated settlements with two of the state's three utilities, in the 
hopes that he will order either an identical transaction, or something very 
similar to P.G.&E. 
Because P.G.&E. has chosen to go into bankruptcy, keep in mind its creditors 
did not force it. They chose to go into bankruptcy. That's the form through 
which we have to communicate. But I think if we can get two of the three 
utilities tied down to a similar arrangement, the bankruptcy referee will be 
persuaded by that, and it will lend great weight to that. 
Question: Governor, a lot was said about profiteers around the state today. 
Do you have a comment on the L.A. Times decoding the CAL ISO Study that 
showed the DWP was among the profiteers last year; it was number eight on a 
list of ten?
Governor: First of all, it gives me an opportunity to thank David Freeman for 
helping us secure power on a long term basis. He had no leverage. He began 
the process February 1st. I can't imagine a more difficult assignment. He did 
a great job.
The Department of Water & Power sold us power, which is more than I can say 
for generators. Yes, they had a mark-up, but we desperately needed power. 
They came through. They're part of this state. They realized their obligation 
to serve the entire state. Once they've met their constituents' need, they've 
shared additional power with us.
I don't know how much money we currently owe the Department of Water & Power, 
but it's certainly over $100 billion. So they have provided us power when we 
needed it. I don't think they've excessively priced it, particularly when you 
compare them against some of the out-of-state generators. And they've been 
patient with us, knowing that they would eventually get their money back. And 
they will get their money back.
So I'm not going to join the chorus of critics. Without the Department of 
Water & Power, we would have had more blackouts than we had. 
I told them that if my plan doesn't work, my fallback plan is for the 
Department of Water & Power to --- --- the rest of the state.
Question: As a follow-up to that question, does that mean you're not going to 
ask FERC for a refund from DWP sales, as you have for other ---?
Governor: Well no, I have to fight for my folks. I just talked to Pat Wood, 
who is the new nominee of President Bush, and laid out the situation. I 
described how we're dealing with it and went over a number of the details of 
the Southern California Edison transaction. I hope, and he expressed to me, 
interest in making sure that there were refunds. He didn't want to pre-judge 
the case, because he hasn't seen all the files. 
When I told him that we spent roughly $7 billion for power as a state in 
1999; $35 billion, roughly, in 2000; and the projections are something on the 
order of $60 billion this year. He instinctively knew that was too much. 
He told me he was going to aggressively review the filings against 
generators, alleging that they charged us too much. So, without telling me 
that he's going to refund money, I know we have at least a kindred spirit 
when it comes to responsible pricing.
Question: But the refunds would include refunds from --- the DWP...?
Governor: Well it would be refunds against anyone that ISO feels overcharged 
us. That's a decision that FERC has to make. I'm certainly not going to 
undercut the ISO findings. If they feel someone overcharged us, then I'm 
going to support that position before FERC. 
Having said that, the lights would not have stayed on, on several days if DWP 
didn't come through with power, which is more than I can say of other 
generators. They just wouldn't give us power unless we paid them outrageous 
prices which we refuse to do.
Question: On a separate issue, have talks started today with S.D.G.&E. on the 
transmission ---?
Governor: Yes, they started at 11:30 this morning.
Question: Governor, why do you think P.G.&E. went in the direction they did, 
whereas Edison made the opposite decision? Do you think... P.G.&E. has said 
that the state reneged on some of the parts of the agreement, parts of the 
original deal. Do you think the state had any role in that? Why the 
difference? Why the contrast between the two companies?
Governor: I don't mean to continually cast dispersions at Pacific Gas & 
Electric, but I genuinely believe they are in denial. And that they are 
unduly greedy. To give your management and your employees a $50 million bonus 
hours before you dive into bankruptcy, not pushed, dive into bankruptcy, I 
think casts doubts on your motives. 
I really believe they're trying to fashion a world for them that is at least 
as good, if not better, than it would have been if deregulation had worked 
out the way they hoped when they supported it back in 1996. 
Southern California Edison realized that just can't happen. So they sat down 
with us in good faith. We came up with a fair deal. As a matter of fact, some 
of the Wall Street analysts, Goldman Sach being one, was little critical of 
that. It seems that they thought they were too generous. I don't think they 
were too generous. 
This was tough, arduous negotiating. I think both sides came away with what 
we need. We have long term power for 10 years, very cheap. They're basically 
a regulated industry for 10 years. They give us their transmission lines. 
They invest $3 billion in upgrading the delivery and transmission system. 
They give us a non- regulated utility, Sunrise, for 10 years. They pay a $2 
million penalty if they don't get Sunrise up and running by August 15th. 
There's a whole list of things we get that I think are at least comparable 
value.
You can't make someone come to the table. They have to want to find a 
solution. They decided to leave the table. If they want to come back they are 
welcome. My attorney presented to them a week ago yesterday, the same deal 
that we offered P.G.& E., altered for P.G.&E.'s circumstances. Just filled 
out the term sheet and handed it to them. So they were given, within one or 
two details that were worked out over the weekend, precisely the transaction 
that Southern California Edison approved. So I can't tell you why they 
decided not to do it.
Question: In terms of the California Legislature approving the deal with 
Edison, what is the timetable?
Governor: I'm going to take this opportunity to chat with some of my friends 
after this meeting. That's up to them. Obviously, we would like to move this 
process along as quickly as we can, consistent with an appropriate 
examination of the conditions by the Legislature through their normal hearing 
process. 
I don't want to give a time frame, but obviously, we want to see these ideas 
that we negotiated now come to fruition. And that does require timely 
response - not by the Legislature, but also by the Public Utilities 
Commission.