Message-ID: <29233812.1075863601283.JavaMail.evans@thyme> Date: Thu, 24 Aug 2000 06:12:00 -0700 (PDT) From: carla.hoffman@enron.com To: tim.belden@enron.com, robert.badeer@enron.com, jeff.richter@enron.com, phillip.platter@enron.com, mike.swerzbin@enron.com, diana.scholtes@enron.com, sean.crandall@enron.com, matt.motley@enron.com, mark.guzman@enron.com, tom.alonso@enron.com, mark.fischer@enron.com, kristian.lande@enron.com, monica.lande@enron.com, valarie.sabo@enron.com Subject: FW: Calif Gov Hopes To Get New Rate-Freeze Bill Unveiled Thursday Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: Carla Hoffman X-To: Tim Belden, Robert Badeer, Jeff Richter, Phillip Platter, Mike Swerzbin, Diana Scholtes, Sean Crandall, Matt Motley, Mark Guzman, Tom Alonso, Mark Fischer, Kristian J Lande, Monica Lande, Valarie Sabo X-cc: X-bcc: X-Folder: \Robert_Badeer_Aug2000\Notes Folders\Discussion threads X-Origin: Badeer-R X-FileName: rbadeer.nsf ---------------------- Forwarded by Carla Hoffman/PDX/ECT on 08/24/2000 01:18 PM --------------------------- Enron Capital & Trade Resources Corp. From: "Pergher, Gunther" 08/24/2000 01:14 PM To: "Leopold, Jason" cc: (bcc: Carla Hoffman/PDX/ECT) Subject: FW: Calif Gov Hopes To Get New Rate-Freeze Bill Unveiled Thursday > -----Original Message----- > From: Golden, Mark > Sent: Thursday, August 24, 2000 4:02 PM > To: Pergher, Gunther > Subject: Calif Gov Hopes To Get New Rate-Freeze Bill Unveiled > Thursday > > Calif Gov Hopes To Get New Rate-Freeze Bill Unveiled Thursday > > NEW YORK (Dow Jones)--California Gov. Gray Davis and leading state > congressional representatives hope to introduce in the State Assembly > Thursday > new legislation designed to stabilize the cost of electricity in San Diego > County. > "Staff are trying to finish writing the bill now. We're hopeful that it > can be > introduced (Thursday). There are only eight days left in the congressional > session," Gov. Davis' spokesman, Steven Maviglio, said. > The bill is the result of a compromise reached late Wednesday among Gov. > Davis, San Diego's State Sen. Dede Alpert and the city's State > Assemblywoman > Susan Davis. > It replaces a bill passed unanimously by the Senate on August 10 that > froze > customers' rates without stipulating who would pay for electricity that > San > Diego Gas & Electric Co. must purchase from independent generating > companies to > meet its customers' demand. > Prices for those purchases, made through the state-run California Power > Exchange and the California Independent System Operator, have been several > times > higher than historical norms this spring and past summer. > The new bill (similar to a proposal that the California Public Utilities > Commission rejected Monday) would cap the price of electricity at 6.5 > cents a > kilowatt-hour for residential customers and small businesses. That > translates to > an average residential bill of $68 a month when transmission and > distribution > charges are added in. > "Balancing accounts" would be established to make up the difference > between > what SDG&E is paying in wholesale markets and what it is getting paid by > customers under the cap. In non-summer months, when electricity > consumption and > market prices are usually lower, customers would still pay 6.5 cents/kWh, > and > any money left over would be used to pay down the balancing account. > Surging wholesale electricity prices don't look to be coming down any > time > soon, however. Contracts for winter supplies this year at the > California-Oregon > border, a major trading hub, are at $132 a megawatt-hour, or 13.2 > cents/kWh, and > rising daily. Supply contracts for all of 2001 at Palo Verde, Arizona, > another > major hub for deliveries to California, is at $95/MWh or 9.5 cents/kWh. In > 2002, > that price comes down to $69/MWh. > The new bill raises the question of whether the balancing accounts would > ever > be paid down. Who would pay the difference between the 6.5-cent capped > retail > price and the 9.5-cent wholesale market price? That difference over a > three-year > period has been estimated to be $1.5 billion for SDG&E, a unit of Sempra > Energy > (SRE), if current market conditions persist. > "There is a clause for making annual adjustments (to the retail price > cap), > and that's one of the things being worked on now," Maviglio said Thursday. > > A much-debated price cap for the state limits prices to $250/MWh for any > given > hour, but the ISO has had to break that cap several times since it came > into > effect August 7. And average prices have been higher than they were before > the > cap. > The governor has appealed to the Federal Energy Regulatory Commission > for fair > and reasonable prices from independent power generators, who sell power to > the > state's utilities, and the FERC has agreed to hold hearings in the state. > "As governor, I refused to stand idly by and watch profiteering power > generators gouge San Diego's families and businesses," Davis said > Wednesday in > announcing the agreement on the new bill. > But those generating companies have seen their costs skyrocket as well. > Natural gas, which fuels much of California's power plants, is selling at > record > prices. And nitrogen-oxide pollution allowances are adding up to $50/MWh > to > costs. Generators have to buy such allowances under the state's > environmental > control program. > The stabilized rates would be retroactive to June 1, 2000, and extend to > December 31, 2003. The bill also includes "fast track" authority for > speeding > approval of new power generating facilities, and some relief for mid-size > and > large businesses is included. > Informal talks between the governor's office and generating companies > have > been held. Eventually, Maviglio said, a negotiated settlement will have to > be > reached, but the governor first will see what the FERC decides to do. > -By Mark Golden, Dow Jones Newswires; 201-938-4604; > mark.golden@dowjones.com > > (END) Dow Jones Newswires 24-08-00 > 1954GMT(AP-DJ-08-24-00 1954GMT >