Message-ID: <1410980.1075851601536.JavaMail.evans@thyme> Date: Tue, 24 Jul 2001 22:48:00 -0700 (PDT) From: mflorio@turn.org To: jeff.dasovich@enron.com Subject: Re: Figures show state lost big on extra power Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: Mike Florio X-To: Jeff.Dasovich X-cc: X-bcc: X-Folder: \Dasovich, Jeff (Non-Privileged)\Dasovich, Jeff\Deleted Items X-Origin: DASOVICH-J X-FileName: Dasovich, Jeff (Non-Privileged).pst I certainly agree on the tip of the iceberg point. They do need to be watched and watched carefully. An isolated incident is one thing, a pattern of losses is quite another. My experience with Campbell has been limited to watching him operate in committee, and I have not been impressed. I would be happy to be surprised in the future. MIKE At 07:09 PM 7/24/2001 -0500, you wrote: >Interesting points. However, I don't ever recall you agreeing with every >Commission decision on disallowances. And I know you wouldn't establish >differing standards for IOUs and state water agencies. > >I just hope that this isn't the tip of the iceberg. > >You really think that Campbell is a dim bulb? A Republican, yes, but I >haven't heard anyone else describe him as a dim bulb. > >Best, >Jeff > > > > > Mike > Florio > > .org> cc: > > Subject: Re: Figures show > state lost big on > 07/24/2001 extra > power > 05:40 > PM > > > > > > > > >Shame on you, Jeff! I expect this sort of thing from inexperienced >reporters and dim bulbs like Campbell. But you KNOW that this sort of >thing is no big deal. And when did the PUC ever disallow these kinds of >losses for the utilities? I don't think my memory has gotten that bad. >MIKE > > > >At 03:20 PM 7/24/2001 -0500, you wrote: > >FYI. Many similar stories in the major papers today. > > > >Best, > > > > > >Jeff > > > > > >Figures show state lost big on extra power > > > > > >Posted at 9:53 p.m. PDT Monday, July 23, 2001 > > > > > >BY JOHN WOOLFOLK > > > > > >Mercury News > > > > > >State figures show California may have lost about $14 million this month > >selling surplus electricity for less than it cost. > > > > > >The Mercury News disclosed last week that some power was being sold at a > >loss. But the new figures provide the first indication of just how much > >excess power the state bought in its desperate effort to avoid blackouts >-- > >and how cheaply some of that power was sold when it turned out not to be > >needed. > > > > > >A Republican lawmaker said Monday the loss also shows Democratic Gov. Gray > >Davis' energy policies are needlessly costing consumers. > > > > > >``This whole thing is a mess,'' said Assemblyman John Campbell, R-Irvine, > >who requested details of the state's surplus power sales. ``The government > >needs to get out of the power business before it costs Californians even > >more money.'' > > > > > >A state spokesman didn't dispute the $14 million figure outright but said > >it is an approximation based on average prices and that the actual loss > >probably is less. > > > > > >``It's a number I'm sure he likes very much, but it's definitely an > >estimated number, and it could be far lower,'' said Oscar Hidalgo, > >spokesman for the state Department of Water Resources. > > > > > >Campbell responded that the loss also could be higher. > > > > > >The state has spent $415 million on power so far this month. > > > > > >State officials last week confirmed that cool weather and consumer > >conservation have left California holding more power than it needs. The > >revelation was a stunning turnaround for a state that months ago was >paying > >top dollar for power, expecting shortages this summer. > > > > > >Price that was paid > > > > > >The state bought 3.5 million megawatt-hours of electricity for July at an > >average price of $118 per megawatt-hour, according to a response Friday by > >the Department of Water Resources to Campbell's inquiry. The state has >sold > >178,000 surplus megawatt-hours in July at an average price of $37, the > >department said. > > > > > >Based on those average prices, the state paid $21 million for the surplus > >power, which it sold for $6.5 million -- $14.5 million less than it cost. > > > > > >A more precise calculation of the state's loss is difficult because > >purchased power is acquired at different times and prices and pooled as a > >``portfolio.'' > > > > > >Purchases included long-term contracts that averaged $138 per >megawatt-hour > >as well as cheaper spot-market buys. > > > > > >State officials last week said they were selling surplus at $15 to $30 a > >megawatt-hour, while some traders cited unconfirmed sales as low as $1. > > > > > >Hidalgo noted that the surplus sales represent just 5 percent of > >California's July purchases, which totaled $415 million. The $6.5 million > >from sales will help lower the state's power bill, he said, adding that > >utilities routinely sell some extra electricity. > > > > > >``Despite the fact that we're in somewhat of a surplus, any power-buying > >operation in the world is going to have to plan for these types of > >situations,'' Hidalgo said. ``It's not unique, and in fact it's normal > >operating procedure for any utility.'' > > > > > >Other Western utilities, including Portland General Electric in Oregon, > >have said they, too, are selling some surplus power at a loss and describe > >it as a cost of doing business. > > > > > >The suppliers buying the state's surplus electricity on the cheap include > >the big out-of-state energy companies that the governor has called > >price-gouging ``snakes.'' Among them are Duke Energy, Dynegy Power and > >Marketing, El Paso Power Services, Mirant, Reliant Energy and Williams > >Energy. > > > > > >`Best bid' taken > > > > > >Hidalgo said the state took the best offers it could find. > > > > > >``It's only reasonable to get the best bid you can,'' he said. > > > > > >Campbell said the $14 million loss is troubling because ratepayers or > >taxpayers will have to cover the cost, whereas a private utility could be > >forced to eat the expense if regulators determined it was unreasonable. > > > > > >State officials say what's more important is that the overall cost of >power > >is dropping, from an average daily tab of $64 million in May to $25 >million > >this month, in part because the state has so much power. > > > > > >Contact John Woolfolk at jwoolfolk@sjmercury.com < > >mailto:jwoolfolk@sjmercury.com> or (408) 278-3410.