Lawmaker Seeks to Divert Money From L.A. to State Power Purchases

SACRAMENTO —  The head of the state Senate Budget Committee moved Wednesday to strip $130million from the city of Los Angeles and divert it to the state’s power-buying fund, calling it payback for the high prices Los Angeles charged the state during the energy crisis.

Sen. Steve Peace (D-El Cajon) directed a Senate budget subcommittee to divert $130 million of $400 million the state is expected to give Los Angeles to make up for revenues lost when the Legislature cut vehicle license fees.

The money should instead go to the state Department of Water Resources to ease the burden of electricity purchases on the customers of Southern California Edison, Pacific Gas & Electric and San Diego Gas & Electric, Peace said.

The state water department has been buying power on behalf of those utility customers since January 2001.

The $130 million is Peace’s estimate of how much the Los Angeles Department of Water and Power earned in “excess profit” by overcharging the state agency as it sold surplus electricity from May 2000 through May 2001.

Wading into election-year politics, Peace said former Los Angeles Mayor Richard Riordan--now a GOP candidate for governor--could have offered electricity for sale at slightly above cost and thus helped prevent the hemorrhaging of billions of dollars by the utilities and state to pay for power.

“Dick Riordan insisted on being a pirate,” Peace said.

Riordan’s management of the city’s utility during the electricity crisis has become grist in the governor’s race, with opponents accusing the former mayor of trying to earn top prices at the expense of the rest of the state. Riordan has said he was concerned that the city cover all of its costs.

Peace cannot unilaterally shift the money. The subcommittee he instructed to redirect the funds is headed by state Sen. Richard Polanco, (D-Los Angeles), who did not return a call seeking comment.

Los Angeles Controller Laura Chick said the loss of the money would compound the city’s already shrinking revenues.

“To take another $130 million would be catastrophic,” she said.

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Times staff writers Nancy Vogel, Julie Tamaki and Miguel Bustillo contributed to this report.