Utilities, power plant owners, consumer advocates, economists and organizations with big appetites for power wrangled over how to fund construction of new power plants. The PUC wants to "ensure that we have adequate generation in the future," said Michael Peevey, the panel's president.

Forecasters have warned that without new generation, economic and population growth and power plant shutdowns are likely to push California into a power crunch in anywhere from two to six years. System failures and hot weather could cause blackouts as early as this summer.

Also hovering over Tuesday's session were memories of the 2000- 01 energy crisis. Michael Florio, a lawyer for the Utility Reform Network, a consumer group, noted that exactly 10 years ago the PUC issued a "blue book" that committed California to reduce regulation and open its power industry to competition. "Your predecessors launched the greatest man-made disaster in economic history," he told the PUC members.

TURN and the utilities seek a return to a long-standing system in which utilities line up power for customers and regulators set retail rates to insure utility profits.

Pursuing the competitive reforms that preceded the crisis would amount to asking California consumers to perform "crash testing for another retail market design," warned Robert Foster, president of Southern California Edison.

But Peevey -- who himself once was the president of SoCal Edison - - wants to limit the role of those entrenched monopolies. "Absent some challenges, utilities tend to behave like government," he said. "They don't innovate."

Instead, Peevey wants to expand a program known as "direct access" that allows large electricity users to drop utility services and shop for electricity supplies, using as a model an existing system where utilities buy natural gas for small customers while big users do their own shopping. "In a democracy, people believe in choice," he said.

Among the people who turned out Tuesday to support choice were Joe Young of the East Bay Municipal Utility District, which is seeking relief from its $14 million PG&E bill, and Jonathan Mayes, government relations vice president for Safeway. Any steps taken by the PUC "must not be punitive to large energy users," he warned.

Even if a majority of the PUC agrees with Peevey, legislation introduced by Assembly Speaker Fabian Nunez, D-Los Angeles, could limit direct access and set rules to favor the utilities.

That worries power sellers, who compete with the utilities. They have 5,000 megawatts of generation capacity -- enough to light more than 4 million homes -- permitted and ready to build if utilities are allowed to sign contracts for the output, said Jan Smutny- Jones, a spokesman for power plant owners. "There is a lot of pent- up interest in investing money in this market," he said.

Power sellers and others at the meeting also expressed interest in a plan by Joe Desmond, Gov. Arnold Schwarzenegger's new top energy adviser, that would allow the buying and selling of rights to use power plant capacity.

PG&E Corp. sought to stake out a separate position. Senior Vice President of Public Affairs Dan Richard said the company wants its customers to have choices but, in the meantime, PG&E wants a green light from the PUC to immediately start lining up new power supplies. Regulators need to act quickly to approve a soon-to-be- issued long-range plan and assure creditors that rates will be set high enough to allow the utility to meet its contractual obligations, he said.

A panel of economists urged regulators to continue to expand competition but warned that protecting big users from risks in a competitive market could undermine a new system. "Direct access either has to stand on its own two feet or you shouldn't be doing it," said Severin Borenstein, director of the University of California Energy Institute.

And skeptics, citing widespread public backlash against deregulation, said that further deregulation seemed like a bad idea so soon after rolling blackouts and PG&E's utility bankruptcy. Said PUC member Carl Wood: "It has only taken three years for us to proceed down this path, to figure out how we're going to create a new disaster."