Davis said that his plan would attack the problems of supply and price over the short and long term. "Electricity is not an exotic commodity like pork bellies, to be traded in the chaotic equivalent of a futures market," Davis said. "No… Electricity is a basic necessity of life. It is the very fuel that powers our high-tech economy."

Davis asked California commercial and residential owners to cut back on power consumption 7% by turning out lights when a room is empty or shutting computers off when not in use. During his speech, he also proposed $250 million cash incentives to replace inefficient appliances with more efficient models. Davis said that the state would lead by example. "Every single day, state government will cut its consumption by at least 8 percent," he said. "During Stage 2 alerts, we'll save 20 percent."

California's two largest utilities – Pacific Gas & Electric (PG&E) and Southern California Edison – helped to push deregulation through the legislature five years ago, claiming that it would result in more competition and lower prices. Instead, the opposite has taken place.

After raking in unheard-of-amounts by selling off most of their generating facilities, thus forcing the big utilities to shell out outrageous amounts to buy power from the smaller companies. "It has not lowered prices and it has not increased supply," said Davis. "In fact, it has resulted in skyrocketing prices, price-gouging and an unreliable supply of electricity. In short, an energy nightmare."

Although there is little to be done now to bring a quick fix to the state's energy crisis, Davis has proposed the following steps:

-Restructure of the governing boards so that advocates for the power companies can be replaced with advocates for the public;

-Overhaul the crazy bidding process for electricity, which currently guarantees that every generator is paid according to the highest bid, rather than their own bid;

-Streamline the process for utilities to enter into low-cost, long-term contracts for electricity and then apply pressure to the out-of-state generators to supply that power;

-Give the Public Utilities Commission 50 new inspectors to monitor – and stand guard if necessary – at any facility suspected of deliberately withholding power from the grid; and

-Provide $4 million to the Attorney General to investigate and prosecute possible racketeering, market manipulation, price fixing and other potential violations by merchant operators.

Instant Insights /

California Governor Speaks Out On State's Energy Crisis

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