By opposing AB 2006, Schwarzenegger is trying to steer California's energy policy back toward a free-market, deregulated model that he says is the best ticket toward cheaper and more reliable power. But Democratic lawmakers and some consumer advocates say the Republican governor is inviting a potential repeat of the energy crisis, when prices soared and rolling blackouts struck.

The apparent deadlock could mean further uncertainty over the future design of California's energy system an uncertainty that could slow the rate of power-plant construction. Independent "merchant" generators say they can't get financing to build plants until California decides on a new market design.

Meanwhile, soaring temperatures are nibbling away at the cushion of available electricity in the state, making new plants an ever- growing need.

The state set another record for peak energy consumption Tuesday, as Californians used 44,497 megawatts of power in late afternoon. But the state had enough energy to cover the demand, thanks in part to an unexpected cascade of power from the Pacific Northwest.

"They have megawatts to share," said spokeswoman Stephanie McCorkle of the Independent System Operator, the quasi-governmental entity that runs the power grid. But things could get tighter today, when peak consumption is expected to exceed 46,000 megawatts.

Schwarzenegger's resources secretary, Mike Chrisman, announced opposition to AB 2006 in a letter to Assembly Speaker Fabian Nez, who's carrying the bill for Southern California Edison.

The split between Schwarzenegger and the Democrats revolves around two main issues: who gets to build the next generation of power plants, and whether big businesses should be able to opt out of the regulated utility system and shop directly for cheaper power. That opt-out is known as "direct access."

Nez recently amended his bill to eliminate direct access, saying he didn't think Democrats and Republicans could find common ground on an opt-out plan. But business groups, which want the freedom to seek relief from California's extraordinarily high power costs, are blasting Nez.

The Partnership for Open and Workable Energy Reform, which represents big commercial and industrial users, applauded Schwarzenegger on Tuesday for "opposing this deeply flawed bill." The partnership's chief backer is Calpine Corp., an independent power generator based in San Jose, but the group also is supported by big power consumers.

As for power plants, Nez would give investor-owned utilities like Edison the right to build them. Schwarzenegger, by contrast, favors a bidding process that would let independent merchant generators like Calpine compete for the right to build.

But to some legislative Democrats, letting merchant generators build more plants would put California at risk for another energy crisis. Several big generators have refunded California hundreds of millions of dollars to settle charges they manipulated wholesale power prices in 2000 and 2001.

Nez said in an interview Tuesday that he's wary of resurrecting a system that let "the Enrons of the world pick our pockets."

He said opposition to his bill shows that "the independent power producers have a lot more influence in this place" than he realized.

But Schwarzenegger and merchant generators argue that Nez's plan would give Edison and other investor-owned utilities too much leeway to bill ratepayers for the costs of new plants. Nez's bill is a "blank check" for the utilities, said Gary Ackerman of the Western Power Trading Forum, an association of merchant generators.

Nez denied that, saying the Public Utilities Commission would have the authority to block runaway construction costs from being passed on to consumers.

Bee staff writer Carrie Peyton Dahlberg contributed to this report.