CALIFORNIA'S ENERGY CRISIS: Power's On--But The Cost!

This year's shocking irony: the lights are on in California, but there's nobody home at Enron. Earlier this year energy shortages caused rolling blackouts that shut down factories and stranded people in elevators. A half-baked foray into deregulation caused the state to pay unbudgeted billions of dollars to energy producers to wheel some juice its way. GOVERNOR GRAY DAVIS blamed the shortage on out-of-state corporate "pirates," such as Enron and Entergy.

Last week Christmas decorations glowed from Yreka to Jacumba. A slacking economy has curtailed demand, while falling fuel prices have lowered production costs. There's power to spare everywhere, so the state no longer has an electricity problem.

Instead it has a fiscal one. Californians are paying twice as much as other states for power, the product of $43 billion in long-term supply contracts that Davis agreed to during the crisis.

That could be expensive politically too. Polls show Davis trailing former Los Angeles Mayor Richard Riordan in next year's gubernatorial election. The Governor is currently renegotiating some of those contracts and petitioning regulators to get power sellers to refund $9 billion.

That could be difficult, since Enron is now bankrupt. Other utilities are also suffering. One reason: investors fear there will be too much electricity available.

--Reported by Laura A. Locke/San Francisco