California Moves Closer to Ending Energy Crisis

LOS ANGELES-California lawmakers are inching closer to finalizing a plan aimed at ending the state’s energy crisis, prompted in part by comments from Federal Reserve chairman Alan Greenspan, who said that the power shortage could threaten the entire nation’s decade-long economic expansion.

Though final details of the plan must be worked out, the framework calls for the state to establish its first-ever power authority and strike a deal with California’s two biggest utilities that would give the companies sorely needed cash. In return, the utilities–LA-based Southern California Edison and Northern California’s Pacific Gas & Electric Co.–would essentially issue stock options to the state.

If shares of the utilities’ stock rebound off their current 52-week lows, California could exercise the options and generate millions–or possibly even billions–of dollars for the state’s treasury. But if the plan doesn’t work, much of the state’s current $10-billion surplus could be wiped out.