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Date: Wed, 4 Apr 2001 03:27:00 -0700 (PDT)
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Please see the following articles:

Sac Bee, Wed, 4/4:  "Davis' solutions may be in trouble: New plants built
 in California don't have to sell electricity here, state lawyers conclude"

Sac Bee, Wed, 4/4: "Davis' solutions may be in trouble: Skepticism is now=
=20
growing=20
among Democrats over a plan to purchase transmission lines"

Sac Bee, Wed, 4/4:  "PUC to probe money transfers "

Sac Bee, Wed, 4/4:  "Dan Walters: Politicians seek shelter as energy=20
Armageddon looms"

San Diego Union, Tues, 4/3: "Rate jump lurks for customers of SDG&E "

San Diego Union, Tues, 4/3:  "PUC expected to approve new incentives to cut=
=20
power usage"

San Diego Union, Tues, 4/3:  "Davis warns of spring problems, urges=20
conservation incentives"

LA Times, Wed, 4/4: "Energy Firms' Mixed Message Is Focus of Inquiry"

LA Times, Wed, 4/4:  "Probe of Utility Money Transfers Ordered"

SF Chron, Wed, 4/4:  "Worst Power Shortage Likely In May and June, Davis=20
Warns "

SF Chron, Wed, 4/4:  "Vocal Citizens Berate PUC=20
Police remove several protesters"

SF Chron, Wed, 4/4:  "PUC faces angry backlash to electricity rate increase=
s=20
"

SF Chron, Wed, 4/4:  "California regulators face angry backlash to=20
electricity rate increases"

SF Chron, Wed, 4/4:  "Developments in California's power crisis"

Mercury News, Wed, 4/4:  "Power gap greatest in May, June"

Mercury News, Wed, 4/4:  "Already a power giant, state may build plants"

Orange County, Wed, 4/4:  "Manager of AES' Huntington Beach plant becomes a=
=20
controversial
figure amid plans to expand capacity"

Orange County, Wed, 4/4:  "PUC gives 'interruptibles' a way out"

Orange County, Wed, 4/4:  "Davis to give TV address on energy crisis Thursd=
ay"

Individual.com, Wed, 4/4:  "Power Supplier Files Lawsuit Against Pacific Ga=
s=20
and=20
Electric Company; Dynamis, Inc. Seeks to Suspend Power Purchase Agreement=
=20
in Order to Provide Power to Grid"

Energy Insight, Wed, 4/4:  "Resurrection of Residential Energy-Efficiency
Programs"
---------------------------------------------------------------------------=
---
-----------------------------------------
Davis' solutions may be in trouble: New plants built in California don't ha=
ve=20
to sell electricity here, state lawyers conclude
By Carrie Peyton
Bee Staff Writer
(Published April 4, 2001)=20
California can't require builders of new power plants to sell electricity=
=20
here, even as a trade-off for super-fast environmental review, lawyers at t=
he=20
state Energy Commission have concluded.=20
Their position, reached despite Gov. Gray Davis' vow that new megawatts "wi=
ll=20
stay in California," emerged as part of a fast-track approval for expanding=
 a=20
south state power plant.=20
It comes as the agency that oversees plant licensing is whittling away at t=
he=20
presumption that emergency "peaking" plants installed this summer will be=
=20
temporary. Some of the peaking plants - to be used only at times of highest=
=20
energy demand - are now proposed to stay in place 30 to 40 years.=20
Both issues have bubbled up quietly during California Energy Commission=20
reviews, sometimes addressed only indirectly in staff reports.=20
"This is a major public policy issue for all of California. If we're buildi=
ng=20
these plants on an expedited basis and we're not getting any electricity ou=
t=20
of it, why are we doing it?" asked William Workman, Huntington Beach=20
assistant city administrator.=20
The answer, according to the Governor's Office and the Energy Commission, i=
s=20
twofold. First, the plants are needed no matter what, because the entire We=
st=20
is power poor. And second, it looks like a California sales clause would=20
violate federal interstate commerce law.=20
"We're not supposed to take protectionist action against our fellow states,=
"=20
said Bill Chamberlain, chief counsel to the Energy Commission. He said=20
numerous Supreme Court decisions have held that a state can't use its=20
regulatory powers - such as permitting processes - to give its residents an=
=20
economic advantage.=20
Although there is no guarantee, the Governor's Office, power plant builders=
=20
and the state Environmental Protection Agency say most of the plants being=
=20
rushed to life will probably end up selling to the state Department of Wate=
r=20
Resources.=20
"The people who are building these power plants know very well that we expe=
ct=20
it to be used in California, and we're confident that it will be," Davis=20
spokesman Roger Salazar said.=20
Cal-EPA Secretary Winston Hickox said the "preponderance" of new peaking=20
plants will devote their electricity to California.=20
"We will do everything that we can to encourage that the energy produced as=
 a=20
result of our bending over backward to be accommodating is sold to=20
California. We're not there yet, but I believe we'll get there," Hickox sai=
d.=20
He also said the three-week reviews of peaking plants have cut no corners i=
n=20
terms of fundamental environmental standards.=20
Two of those plants scheduled for Energy Commission votes today were praise=
d=20
by environmentalists as having relatively low emissions of smog-forming=20
compounds, but they still were concerned by the 21-day review.=20
"If you're having a quick review, a plant shouldn't be allowed to continue=
=20
for more than the summer," said Gail Ruderman Feuer of the Natural Resource=
s=20
Defense Counsel.=20
The first peaking plant approved by the commission, the United Golden Gate=
=20
Project in San Mateo County, was given permission to run for three years.=
=20
But the next two, in San Diego and Palm Springs, are being recommended for=
=20
indefinite approval, and their builder, InterGen North America, said it=20
intends to keep them running for 30 to 40 years.=20
"There's no way affected communities can know what's going on with the=20
processes that are so short," said Sandra Spelliscy, general counsel of the=
=20
Planning and Conservation League. "I don't want to say negative things abou=
t=20
that particular peaker (but) =01( I think we're going to wake up in six to =
12=20
months and realize we did a lot of stuff that we regret."=20
In Huntington Beach, city officials say they are largely pleased with the=
=20
fast-track process that protected most of their major concerns over a=20
proposal by AES to quickly revive two mothballed steam turbines at its=20
seaside plant.=20
But a slower review process would have offered even more, Workman said. It=
=20
would have delayed the plant for results of studies on sea life injured or=
=20
killed by cooling water intakes and potential increases in ocean pollution.=
=20
He worries that his city's residents gave up those protections without any=
=20
certainty that California will benefit from the extra 450 megawatts AES wil=
l=20
be able to crank out.=20
Huntington Beach sought a California buyer clause in the AES permit, which =
is=20
scheduled for an Energy Commission vote next week, but it was rejected in a=
=20
cryptic report that only notes the commission staff has taken no stand on t=
he=20
issue.=20
AES would have opposed such a provision, because it believes the Energy=20
Commission has no authority to tell it where to sell, said Aaron Thomas, a=
=20
manager at AES Pacific.=20
"In our case, there is no need to have a shotgun to our head," he said. AES=
=20
is negotiating to sell all 450 megawatts to the state.=20
Meanwhile, the governor acknowledged what an Energy Commission report=20
outlined last week - that his goal of 5,000 more megawatts online by July=
=20
will not be met.=20
"We have a real challenge in the early part of the summer," Davis said=20
Tuesday. "We do have more than 4,000 megawatts coming online by late summer=
.=20
Usually, the challenge is in August and September. This year, the challenge=
=20
may well be in May and June."=20
The Bee's Carrie Peyton can be reached at (916) 321-1086, cpeyton@sacbee.co=
m.=20
Emily Bazar of The Bee Capitol Bureau contributed to this report.=20
---------------------------------------------------------------------------=
---
---------------------------------------------
Davis' solutions may be in trouble: Skepticism is now growing among Democra=
ts=20
over a plan to purchase transmission lines
By Emily Bazar
Bee Capitol Bureau
(Published April 4, 2001)=20
A deal that Gov. Gray Davis had touted as a potential solution to the state=
's=20
energy crisis is faltering, as talks with the utilities have yet to produce=
=20
concrete results and lawmakers grow increasingly skeptical.=20
For weeks, the administration has claimed progress in its negotiations with=
=20
Pacific Gas and Electric Co. and Southern California Edison to purchase abo=
ut=20
32,000 miles of the transmission grid in exchange for helping the utilities=
=20
pay off billions of dollars in debt.=20
Though talks are moving forward with Edison, little headway has been made=
=20
with PG&E.=20
Now, a new contingent of naysayers is emerging from within the Capitol -=20
Democratic legislators who would be asked to approve the deal.=20
Convinced that a takeover of the transmission grid presents too many=20
obstacles, some top lawmakers are suggesting utility bankruptcy or other=20
alternatives might be better for the state.=20
"The governor feels very strongly that bankruptcy should be avoided at all=
=20
costs," said state Sen. Jackie Speier, D-Hillsborough, immediately after sh=
e=20
and other state Senate Democrats met with Davis on Tuesday.=20
"But there's growing sentiment in the caucus that bankruptcy is not the wor=
st=20
thing in the world. =01( We'd have more control, in many respects, over our=
=20
destiny."=20
It has been seven weeks since Davis first publicly indicated that he favore=
d=20
a takeover of the power transmission grid.=20
Shortly thereafter, on Feb. 23, he announced an "agreement in principle" wi=
th=20
Edison, laying out a conceptual deal to buy the utility's transmission line=
s=20
for $2.76 billion.=20
On the same day, Davis acknowledged he needed to buy PG&E's share of the=20
transmission grid, as well as San Diego Gas & Electric Co.'s, to make his=
=20
rescue package viable.=20
But Davis still has not reached an "agreement in principle" with the two=20
remaining utilities and continues to negotiate with Edison over details.=20
Administration officials presented PG&E representatives with a proposed=20
agreement Tuesday, the first time in three weeks the two sides had met.=20
Republican legislators have long opposed buying transmission lines, and=20
Democrats increasingly are questioning the deal.=20
Democratic support began to dwindle two weeks ago, when the state was hit b=
y=20
two days of unexpected rolling power blackouts. The blackouts were caused i=
n=20
part by the unanticipated shutdown of some alternative energy providers,=20
which had not been paid by utilities for months.=20
Many legislators expected the Democratic governor to work out a deal with t=
he=20
small generators before the blackouts hit, and they blame him for letting t=
he=20
situation get out of hand.=20
Now, many are taking critical looks at the governor's bid to purchase the=
=20
transmission lines and believe the plan contains too many pitfalls.=20
For example, a state purchase of transmission lines would need federal=20
approval because they are part of an interstate system.=20
By some estimates, that approval process could take as long as two years. T=
he=20
state would not be able to sell bonds to finance the purchase of the=20
transmission lines until the deal is blessed by the federal government.=20
Then there's the cost. Senate President Pro Tem John Burton, D-San Francisc=
o,=20
long an advocate of the deal, said the administration - which has reportedl=
y=20
offered as much as $7 billion for the utilities' shares of the grid - would=
=20
be paying "too much."=20
"This is not supposed to be a bailout," he said. "This is supposed to be a=
=20
purchase based on fair market value."=20
As a result of these and other sticking points, some legislators believe th=
e=20
utilities can't be saved through state intervention.=20
"I think we're going to end up in a bankruptcy at this point," said Sen.=20
Debra Bowen, D-Marina Del Rey. "I just don't see any of it coming together.=
"=20
Bowen said she wants the state to be prepared if utilities opt for, or are=
=20
forced into, bankruptcy.=20
Should the utilities enter bankruptcy proceedings, there is a 20-day interi=
m=20
period during which the state, or any other creditor, can attempt to persua=
de=20
the court to forbid bankruptcy.=20
Bowen said some work has been done to prepare for that, but it "needs to be=
=20
updated."=20
In addition, senior legislative staff members met with the governor's=20
negotiators a week ago, urging them to prepare contingency plans in case of=
=20
bankruptcy.=20
PG&E spokesman John Nelson declined comment on a report that the utility's=
=20
board recently voted narrowly against entering Chapter 11 on a voluntary=20
basis.=20
The utility still believes that bankruptcy is not a solution, he said, "but=
=20
that conclusion is re-evaluated on a daily basis in light of actions by the=
=20
(Public Utilities Commission) and the state."=20
Nelson said bankruptcy represents a substantial risk because the proceeding=
=20
"would turn over the utilities to a federal bankruptcy judge whose powers a=
re=20
not well defined."=20
Speier said she and other Democrats believe the governor should consider=20
seizing hydroelectric or other power plants or levying a "windfall profits=
=20
tax" against generators selling electricity at exorbitant prices.=20
Despite growing pessimism among legislators, Davis continues to insist that=
=20
the transmission deal will prevail.=20
"I believe we will purchase the transmission lines, and that will allow us =
to=20
make needed improvements," he said Saturday about the status of negotiation=
s.=20
On Tuesday, Davis asked television stations for time to address state=20
residents on Thursday evening about "California's energy emergency." The=20
governor had previously promised to announce his position on state utility=
=20
rate increases.=20
Davis also indicated he has made plans should the federal government reject=
 a=20
future deal.=20
If that happens, he said, the state will attempt to acquire the utilities'=
=20
hydroelectric plants.=20
"Plan B would be to take hydro assets in lieu of the transmission lines,"=
=20
Davis said. "They are not worth as much in book value, but they generate=20
revenue every year, which the transmission lines don't do, so they are very=
=20
valuable."=20
The Bee's Emily Bazar can be reached at (916) 326-5540 or ebazar@sacbee.com=
.=20
---------------------------------------------------------------------------=
---
----------------------------------------------------
PUC to probe money transfers=20
By Dale Kasler
Bee Staff Writer
(Published April 4, 2001)=20
SAN FRANCISCO - With protesters being ejected for storming the stage, state=
=20
regulators Tuesday launched an investigation into how California's two=20
near-bankrupt utilities shipped billions of dollars in profits to their=20
parent corporations.=20
The Public Utilities Commission voted 4-0 to determine whether the parent=
=20
companies should have to send any money back to the utilities, which have=
=20
been nearly bankrupted by soaring wholesale power costs.=20
The PUC also took steps to approve a formula for how much the utilities mus=
t=20
reimburse the state for its power purchases.=20
Utility executives said the formula could significantly worsen their=20
financial plight and vowed to fight the plan. Commissioners called the=20
utilities' warnings premature but said they had to act to protect the state=
=20
treasury.=20
The formula also sets a $13.4 billion ceiling on the bonds the state can se=
ll=20
in order to finance the power purchases by the Department of Water Resource=
s.=20
While the formula is a crucial if arcane element of the state's plan to fix=
=20
the energy crisis, the PUC was upstaged by several dozen activists seething=
=20
over the 30 percent rate increase the commission granted last week to Pacif=
ic=20
Gas and Electric Co. and Southern California Edison.=20
For 90 minutes, speaking one by one, the protesters from the Green Party an=
d=20
other groups scolded the commissioners and urged the seizure of generating=
=20
plants. They led supporters in chanting, "Public power now!"=20
A Davis woman, Lellingby Boyce, led the crowd in chanting, "PG&E, stop=20
pimping off me." Several speakers challenged the commissioners to attend a=
=20
meeting they've organized on rate hikes. Only PUC Commissioner Geoffrey Bro=
wn=20
committed to attending.=20
Then protesters went beyond talking. Mary Bull declared, "This meeting's a=
=20
sham," and walked briskly toward the dais where commissioners sat. About a=
=20
half-dozen other protesters followed but were halted by California Highway=
=20
Patrol officers.=20
Officers escorted about dozen people from the building, including a man who=
=20
was dragged out. There were no arrests.=20
Brown called the disruption "the height of undemocratic behavior" but said=
=20
he'd still attend the activists' meeting.=20
Then the commissioners voted to initiate the probe into the relationship=20
between the utilities and their holding companies. Audits have shown that=
=20
Edison shipped $4.8 billion in profits to its parent, Edison International,=
=20
over five years, while PG&E sent $4.6 billion to parent PG&E Corp.=20
Edison called the probe "unnecessary and redundant," while PG&E said earlie=
r=20
investigations "found nothing improper or illegal in the (parent) company's=
=20
relationship with the utility."=20
The two utilities said they'll be hurt by the PUC's calculation of the=20
California Procurement Adjustment - a measure of how much utility revenue i=
s=20
available to send to the water department. The department has been buying=
=20
power on behalf of PG&E and Edison since mid-January.=20
Both utilities said there isn't nearly as much money available as the PUC=
=20
believes, and the calculation could cost them billions.=20
"Rates aren't high enough now for both (the department) and Edison," said J=
im=20
Scilacci, the utility's chief financial officer.=20
Commissioners, who will determine in about two weeks just how much utility=
=20
money to send to the water department, are walking a fine line.=20
The two utilities are nearly bankrupt. Between them, they expect to take $6=
.8=20
billion in post-tax charges to earnings April 17, according to Securities a=
nd=20
Exchange Commission filings.=20
But with the state water department having spent more than $4 billion on=20
power purchases, the PUC wants to send as much money as possible to the=20
state.=20
"A lot of our focus at this point is in preserving the state Treasury,"=20
Commissioner Carl Wood said later.=20
With an eye toward summer, the PUC also approved new conservation incentive=
s=20
for customers of the three big investor-owned utilities.=20
The Bee's Dale Kasler can be reached at (916) 321-1066 or dkasler@sacbee.co=
m.=20
Bee Staff Writer Carrie Peyton contributed to this report.=20
---------------------------------------------------------------------------=
---
------------------------------------------------
Dan Walters: Politicians seek shelter as energy Armageddon looms=20


(Published April 4, 2001)=20
There's been a subtle but unmistakable shift in the political atmosphere th=
at=20
envelops California's energy crisis.=20
Politicians have concluded that the crisis is largely beyond their control=
=20
and the die is more or less cast. Whatever fate decrees - massive summer=20
blackouts, soaring utility bills or even the bankruptcy of the state's=20
utilities - will happen, and politicians from Gov. Gray Davis downward are=
=20
scrambling to insulate themselves from voters' anger and single out rivals=
=20
for blame.=20
No one is saying that publicly, of course, but the fatalistic mood is very=
=20
apparent in the Capitol, whose denizens have dropped their preoccupation wi=
th=20
energy and moved to other matters. Legislative committees are working on th=
e=20
hundreds of bills that had been stalled for three months while the special=
=20
committees that had been holding almost daily sessions on the energy crisis=
=20
have gone into semihibernation.=20
Last weekend's Democratic state convention in Anaheim was dominated by fear=
s=20
that when the crisis hits home, the party's dominance of the Capitol will=
=20
backfire. "Just remember Jimmy Carter," state Controller Kathleen Connell=
=20
warned fellow Democrats, adding that they will have "no excuses" for=20
perceived failure to deal with the crisis forthrightly. "We will be=20
accountable on Election Day 2002," she said.=20
Next year's elections are very much on Davis' mind, since he'll be seeking =
a=20
second term and polls indicate that his approval ratings have declined=20
sharply in recent weeks. He devoted much of the weekend to defending his=20
actions, saying, "I believe we've moved at warp speed to address this=20
problem," and trying to pin blame on Republicans.=20
Republicans, meanwhile, sense that the crisis gives them an avenue of escap=
e=20
from the dungeon of irrelevancy to which they had been exiled by heavy loss=
es=20
in the last three elections. The only remaining statewide GOP officeholder,=
=20
Secretary of State Bill Jones, is running for governor by accusing Davis of=
=20
mismanagement, and Republican Assembly members dumped their leader, Bill=20
Campbell, on grounds that he had been insufficiently aggressive vis-a-vis=
=20
Davis.=20
The political positioning reflects the reality that the crisis shows every=
=20
sign of worsening. Although Davis' office is distributing a brochure entitl=
ed=20
"Meeting the Energy Challenge" to defend the governor's actions, it's=20
apparent that none of the steps the governor has taken is bearing much frui=
t.=20
The state is spending at least $50 million a day on emergency power=20
purchases, but what was supposed to be a short-term program has evolved int=
o=20
a monthslong drain on the state's rapidly shrinking budget reserves. The=20
long-term supply contracts that were supposed to replace daily spot purchas=
es=20
have bogged down, and without firm contracts and a revenue stream to pay fo=
r=20
them, Wall Street is reluctant to market the bonds the state wants to float=
.=20
Many authorities now believe Davis' decision to step into the power purchas=
e=20
market in January was a strategic error because it gave power suppliers a=
=20
deep new pocket to tap just as the utilities themselves ran out of credit.=
=20
Davis, meanwhile, is refusing to embrace a rate increase approved by the=20
state Public Utilities Commission, which sends a mixed message to Wall=20
Street, and efforts to resolve problems with unpaid bills from power=20
generators and have the state acquire the utilities' intercity transmission=
=20
grid have stalled, perhaps permanently.=20
The crisis may careen totally out of control as summer arrives, raising the=
=20
specter of elderly and/or ill Californians dying from having their air=20
conditioners or medical equipment shut down. And the utilities are closer t=
o=20
bankruptcy now than at any other point in the nearly yearlong crisis.=20
Plan A isn't working, and there is no Plan B - except for bankruptcy. With=
=20
Armageddon looming, politicians have retreated into the bunker, hoping to=
=20
protect themselves from what could be a firestorm of anger.=20
The Bee's Dan Walters can be reached at (916) 321-1195 or dwalters@sacbee.c=
om
.
---------------------------------------------------------------------------=
---
------------------------
=20
Rate jump lurks for customers of SDG&E=20



By Ed Mendel=20
UNION-TRIBUNE STAFF WRITER=20
April 3, 2001=20
SACRAMENTO -- Last year, San Diego was on the front line of the electricity=
=20
crisis, but this year it's more like a rearguard action -- a lower priority=
=20
treated with less urgency.=20
State regulators last week imposed the biggest rate increase in California=
=20
history on the customers of the two biggest utilities, Pacific Gas and=20
Electric and Southern California Edison.=20
But for better or worse, as the Public Utilities Commission plans to meet=
=20
today in San Francisco, it's unknown when the commission will impose a rate=
=20
increase on San Diego Gas and Electric customers or how big that increase=
=20
will be.=20








PUC expected to approve new incentives to cut power usage=20
?=20



The Legislature enacted urgency legislation in September that capped SDG&E=
=20
rates after bills doubled and tripled for some customers, when the utility=
=20
became the first to be deregulated.=20
A bill that would extend the SDG&E cap to an estimated 4,500 businesses and=
=20
some residences, which stalled when Democrats tried to use it as leverage t=
o=20
get Republican votes on other issues, passed an Assembly committee yesterda=
y.=20
"They are the only customers in the state who are paying the day-to-day rat=
es=20
and cost of electricity," said Sen. Dede Alpert, D-Coronado, the author of=
=20
the bill.=20
Gov. Gray Davis proposed a "20/20" conservation plan last month, a 20 perce=
nt=20
cut in utility bills for a 20 percent cut in energy use when compared with=
=20
the same summer month last year.=20
But some say the plan is unfair to SDG&E customers, who cut energy use last=
=20
summer because of soaring bills. Assemblyman Juan Vargas, D-San Diego, want=
s=20
the comparison for SDG&E customers to be with the same month in 1999.=20
"We are looking into it," said Roger Salazar, a Davis spokesman. "It's a=20
concern."=20
The rate increase proposed by SDG&E -- 2.3 cents per kilowatt hour -- is=20
significantly lower than the 3-cent increase imposed by the PUC on the=20
customers of PG&E and Edison last week.=20
An SDG&E spokesman said the PUC has asked the utility to participate in=20
discussions of a rate increase, effective June 1, that is expected to=20
encourage conservation by imposing the highest rates on the biggest users.=
=20
"As for specifics pertaining to us, I don't know," said Art Larson of SDG&E=
.=20
Commissioner Carl Wood said the PUC is looking at a number of issues,=20
including the fact that SDG&E rates were capped by legislation, unlike the=
=20
rates of the other two investor-owned utilities.=20
"We are looking at whether we have the authority to change rates, and if we=
=20
do, by how much -- and things like that," Wood said.=20
PUC President Loretta Lynch said yesterday that she plans to hold hearings=
=20
throughout the state as the regulatory agency designs the specifics of the=
=20
new rate increase.=20
"I think it's really key and critical that we have input not just from folk=
s=20
who can hire lawyers to be at the PUC in San Francisco, but from all=20
Californians and all businesses," Lynch said.=20
Businesses may get some of the biggest rate increases. Legislation exempts=
=20
residences that use up to 130 percent of the "baseline," a minimum amount o=
f=20
electricity that varies with climate zones.=20
Lynch said a question has arisen about whether the PG&E and Edison rate=20
increase was effective immediately. Bills will not increase until May or=20
later, and the plan was to add the amount owed since March 27 to ratepayer=
=20
bills in monthly installments.=20
"We have asked for additional briefing on that," said Lynch, offering littl=
e=20
explanation.=20
The governor, who called the rate increase premature, may make a proposal o=
f=20
his own in two weeks. He has asked for information on various factors,=20
including state spending to buy power for utility customers.=20
The state has spent about $4 billion, which will be repaid by a bond that=
=20
will be paid off by ratepayers. The PUC is taking a series of steps that wi=
ll=20
give the state money from the monthly bills paid by utility customers.=20
Lynch said yesterday that the state will receive $3 billion to $3.5 billion=
 a=20
year, enough for a bond of $12 billion to $14 billion -- by far a record fo=
r=20
the biggest municipal bond issue in the nation.=20
State Treasurer Phil Angelides had hoped to obtain a bridge loan of $5=20
billion by the end of last month, easing the drain on the state general fun=
d.=20
But a spokeswoman said "obstacles" have developed that Angelides plans to=
=20
discuss tomorrow at a news conference.=20
The PUC also is scheduled to consider a revised program today that will=20
encourage businesses to agree to have their power "interrupted" this summer=
,=20
in exchange for lower bills and protection from blackouts. Some guidelines=
=20
for blackouts also may be set.=20
"Facing rolling blackouts on an almost routine basis is a completely new=20
phenomenon," Wood said. "It's not something that I think we have experience=
=20
in in any developed country, until very recent times."=20
Lynch also will propose an investigation into whether the parent firms of=
=20
utilities should help pay off the debt of utilities, a move urged by consum=
er=20
groups.=20
---------------------------------------------------------------------------=
---
--

PUC expected to approve new incentives to cut power usage=20



ASSOCIATED PRESS=20
April 3, 2001=20
SAN FRANCISCO =01) With summer and the threat of hours of rolling blackouts=
=20
drawing ever closer, California power regulators are expected Tuesday to=20
expand programs they hope will coerce businesses to cut electricity use in=
=20
trade for cheaper rates.=20
Under the Public Utilities Commission plan outlined Monday by Commissioner=
=20
Carl Wood, businesses can contribute to California's desperate cause by=20
volunteering to turn off their power for up to 120 hours during a three-mon=
th=20
period in exchange for a 15 percent discount on their electricity bills.=20
The power interruptions will be limited to a maximum of 6 hours per day and=
=20
24 hours per week. The caps are designed to avoid a repeat of what happened=
=20
in January when the businesses in a previous voluntary program were require=
d=20
to suffer 120 hours of blackouts in a span of just a few weeks.=20
The frequency of the outages caught some businesses off guard and almost=20
caused a gasoline shortage by shutting off the power to key pipelines for=
=20
extended periods.=20
As the PUC work to stave off future troubles, managers of the state's power=
=20
grid continued a Stage 2 power alert early Tuesday morning. The Independent=
=20
System Operator called for energy conservation Monday after gusty winds=20
yanked down Southern California power lines, keeping 3,000 megawatts of=20
imported electricity from reaching California.=20
The ISO calls a Stage 2 alert when electricity reserves drop below 5 percen=
t.=20
and Stage 3 when reserves drop below 1.5 percent.=20
It could take up to 10 days to repair all the state's downed lines, said=20
spokespeople for the ISO and the Los Angeles Department of Water and Power.=
=20
The downed lines crowded an already strained transmission bottleneck that=
=20
transfers electricity up the state, ISO spokesman Patrick Dorinson said=20
Tuesday morning.=20
Additionally, power plants that would have produced 12,900 megawatts were=
=20
down for repairs. Another 3,000 megawatts from alternative energy providers=
=20
who are owed more than $1 billion by two near-broke utilities were also=20
unavailable to grid operators.=20
One megawatt is roughly enough power for 750 homes.=20
In Sacramento, an Assembly energy committee approved six power-related bill=
s,=20
including two that aim to increase electricity generation with incentives f=
or=20
building power plants.=20
One bill would give cities and counties that approve large power plants=20
additional state aid equal to 25 percent of the property tax the plant brin=
gs=20
in.=20
The estimated $62.5 million in state incentives is designed to encourage=20
local governments to allow power plant construction within their boundaries=
,=20
said the author, Assemblywoman Rebecca Cohn, D-Sarasota.=20
Another bill would give $53.25 million in incentives primarily to small pow=
er=20
plants that can be built quickly to serve specific commercial customers. Bo=
th=20
bills now go to the Assembly Appropriations Committee for consideration.=20
There were no developments announced Monday in Gov. Gray Davis' efforts to=
=20
reach deals to buy 26,000 miles of transmission lines owned by the state's=
=20
three financially troubled investor-owned utilities.=20
PUC President Loretta Lynch said Monday she planned to end months of delay=
=20
and officially open an investigation into the conduct of the parent compani=
es=20
of the nearly bankrupt utilities Pacific Gas and Electric Co. and Southern=
=20
California Edison Co.=20
The inquiry will focus on allegations that the parent companies have hoarde=
d=20
cash and assets that should have been used to ease the utilities' financial=
=20
crisis.=20
The commission is expected to approve a key accounting benchmark that will=
=20
authorize the state to issue anywhere from $12 billion to $14 billion to bu=
y=20
electricity. The maximum amount, based on a formula created by state=20
lawmakers, is higher than the $10 billion envisioned just a few months ago.=
=20
Lynch said she hoped the new energy-curtailment program will help cut energ=
y=20
demand. The old program curtailed demand by as much as 3,200 megawatt hours=
.=20
Companies that already contributed 120 hours of voluntary power outages thi=
s=20
year could sign up and receive additional discounts.=20
Businesses also can make money by agreeing to sell part of their usual ener=
gy=20
load for $350 per megawatt hour during crisis periods. Regulators might be=
=20
willing to pay businesses even more for the extra energy, depending how muc=
h=20
money power wholesalers demand on the spot market this summer.=20
The California economy already has been hit with the double whammy of risin=
g=20
electricity bills and an energy shortage that has triggered rolling blackou=
ts=20
in January and March.=20
Now, regulators find themselves paying businesses to curtail their operatio=
ns=20
so the damage doesn't become even worse this summer.=20
Regulators aren't sure how much the new incentive program will cost the=20
state, but they believe California stands to lose even more if businesses=
=20
aren't paid to reduce their energy usage.=20
Blackouts are "threatening to almost become an everyday experience," Wood=
=20
said Monday as he made his case for the new business incentive plan.=20
Depending on how much the state can conserve, California is expected to=20
suffer anywhere from 20 hours to 200 hours of rolling blackouts this summer=
,=20
based on the estimates of industry experts.=20
Because the state won't substantially increase its energy supply by this=20
summer, cutting electricity demand represents the state's best chance of=20
minimizing the expected blackouts.=20
In another move expected to lower energy usage, the PUC last week approved =
a=20
rate increase of as high as 42 percent for customers of Edison and 46 perce=
nt=20
for customers of PG&E.=20
Lynch said regulators are still collecting information to create a tiered=
=20
rate structure that will impose the largest increases on the biggest=20
electricity users.=20
The higher rates might not show up in customer bills until May or June, but=
=20
Lynch said she wants the higher prices to be retroactive to March 27.=20
With the latest incentives offered by the state, it's conceivable that some=
=20
businesses might find it more profitable to simply close their plants for=
=20
days at a time and sell their energy to the state, Wood said.=20
But Wood believes it's more likely that companies will remain open and make=
 a=20
little extra money by slightly reducing their power usage.=20
---------------------------------------------------------------------------=
---
-----


Davis warns of spring problems, urges conservation incentives=20



By Steve Lawrence
ASSOCIATED PRESS=20
April 3, 2001=20
SACRAMENTO =01) Gov. Gray Davis urged lawmakers Tuesday to quickly approve =
$1.12=20
billion in energy conservation incentives to ease a warm-weather power crun=
ch=20
he said could hit as early as next month.=20
The Assembly Appropriations Committee approved one conservation bill after=
=20
changing it, over the author's objections, to limit how much agricultural=
=20
customers could have power shut off during rolling blackouts.=20
The chairwoman of the Senate Appropriations Committee put off a vote on=20
another conservation measure at least until Wednesday, saying senators need=
ed=20
more time to study the legislation.=20
Davis met for about two hours with Senate Democrats and urged them to pass=
=20
the conservation bills this week so the programs start working as soon as=
=20
possible. The two bills have been moving slowly through the Legislature for=
=20
the last month.=20
The governor's office announced later in the day that Davis had requested=
=20
time from television stations for a five-minute statement Thursday evening =
on=20
the energy situation.=20
The governor said the state could face its biggest power shortage in May or=
=20
June because new power plants capable of producing 4,000 megawatts of=20
electricity won't be coming online until late in the summer.=20
"Usually, the challenge is in August and September," he said in a dimly lit=
=20
hallway outside the Senate lounge. "This year it may well come in May or=20
June."=20
He said he hoped to avoid more rolling blackouts, but he added, "We are=20
hoping for the best and planning for the worst."=20
One of the bills, by Assemblywoman Christine Kehoe, D-San Diego, would=20
allocate $408 million for energy efficiency and conservation programs,=20
including $50 million for rebates for consumers who buy new, more=20
energy-efficient refrigerators.=20
The bill also would includes:=20
=01) $60 million to distribute subcompact fluorescent lights and other=20
energy-saving devices through community organizations.=20
=01) $50 million for grants or loans to low-income residents or small busin=
esses=20
to make buildings more energy efficient.=20
=01) $50 million for large businesses that install electricity meters that=
=20
charge the customer more for power during peak demand periods.=20
The Senate Appropriations Committee discussed the bill for more than an hou=
r=20
Tuesday but put off a vote at least until Wednesday.=20
The other measure, by Sen. Byron Sher, D-Stanford, was sent to the Assembly=
=20
floor Tuesday by the Assembly Appropriations Committee.=20
It would allot $710 million for conservation and efficiency efforts,=20
including $240 million to help low-income Californians weatherize their hom=
es=20
and pay their natural gas and electricity bills.=20
It also includes $50 million for incentives for agri-businesses to buy=20
energy-efficient equipment and $50 million to install energy-saving=20
technology in state buildings.=20
Sher objected to an amendment added by the committee to allow officials to=
=20
cut off power to agricultural customers no more than four hours a day and 2=
0=20
hours a month during power emergencies.=20
Sher said the amendment had no place in a conservation bill.=20
The committee's chairwoman, Assemblywoman Carole Migden, D-San Francisco,=
=20
said the amendment was pushed by Assembly leaders and refused to change it.=
=20
The meeting with Senate Democrats was the second that Davis has talked behi=
nd=20
closed doors with lawmakers to discuss the state's energy crisis. He met wi=
th=20
Assembly Democrats last week and plans to sit down with Assembly Republican=
s=20
on Wednesday.=20
In a speech Saturday to the state Democratic Party convention, Davis said=
=20
Republicans caused the state's power problems by pushing for utility=20
deregulation. He also complained they had not offered a "constructive,=20
comprehensive solution to the problem."=20
Asked what he would tell GOP lawmakers Wednesday, the Democratic governor=
=20
said he would "explain the challenge and just tell them they can be part of=
=20
the solution or part of the problem."=20
Although there were some raised voices during Tuesday's meeting, Sen. Tom=
=20
Torlakson, D-Martinez, said the session with Davis was "very positive" and=
=20
that he was "much more confident" about how the state is dealing with its=
=20
power problems.=20
"We got some good information we had not had before," he said.=20
But Sen. Jackie Speier, D-Daly City, said Davis and his aides didn't know i=
f=20
the state's two biggest utilities had followed a Public Utilities Commissio=
n=20
order to set aside money to repay the state for its power purchases.=20
She said if the utilities go bankrupt "that money could be sucked up" by=20
other creditors.=20
---------------------------------------------------------------------------=
---
-------

Energy Firms' Mixed Message Is Focus of Inquiry=20

Deregulation: Senate panel will investigate whether suppliers were being=20
misleading when they promised lower rates for consumers while they were als=
o=20
predicting bigger profits for investors.=20

By ROBERT J. LOPEZ and RICH CONNELL, Times Staff Writers=20

?????In the summer of 1999, a top official with a major player in=20
California's power market testified during a congressional committee hearin=
g=20
in support of speeding up deregulation. Unleashing market forces, said the=
=20
Dynegy Inc. executive, would ensure "maximum customer savings" and "low-cos=
t=20
power."=20
?????That same month, the Houston-based firm made a far different pitch to=
=20
Wall Street: Deregulation and major swings in electricity prices would boos=
t=20
revenue and stock value. "We know how to take advantage of volatility spike=
s=20
across the gas and power market," Chief Executive Officer Charles Watson=20
declared in a publication targeting large investors. "The energy=20
marketplace," he predicted, "will simply get more volatile."=20
?????Dynegy was not alone, a review of federal filings, company documents a=
nd=20
public records shows. In the years since California's pioneering deregulati=
on=20
plan was approved, other major out-of-state energy suppliers were sending=
=20
similar, seemingly contradictory signals to the public and stock buyers.
?????Now, those divergent messages--electricity prices will fall but=20
corporate revenue and profits will climb--will be a key focus of a special=
=20
state Senate committee charged with investigating the alleged manipulation =
in=20
the power market.
?????"How you can tell your investors you're about to make a whole ton of=
=20
money in the very short term, and tell the consumers of California you're=
=20
about to get lower rates?" said Sen. Joe Dunn (D-Santa Ana), a former=20
consumer attorney who is heading the legislative probe.=20
?????Investigations by the state attorney general and federal regulators ar=
e=20
continuing, but remain largely secret.
?????The Senate panel could offer the most open and wide-ranging examinatio=
n=20
yet of alleged misconduct among power sellers. The bipartisan panel expects=
=20
to begin requesting documents from power producers as early as today and=20
begin hearings in a few weeks. Committee members stress that they are hopin=
g=20
the power companies will cooperate but are ready to issue subpoenas if=20
necessary.

?????Suppliers Deny Misleading Public
?????The legislative probe comes as many state officials are moving=20
aggressively to expose alleged market manipulation and overcharges totaling=
=20
billions of dollars by the power suppliers.
?????"Somewhere along the line, there may be a skunk in the woodpile. And i=
f=20
there is, we need to find out about it," said K. Maurice Johannessen=20
(R-Redding), the committee's ranking Republican.
?????Another panel member, Sen. Debra Bowen (D-Marina del Rey), noted that=
=20
all companies try to maximize profits. "But [we want] to understand how the=
=20
market was manipulated and how sellers took advantage of the market."
?????The power traders strongly deny acting improperly or sending misleadin=
g=20
signals to the public.
?????"Hogwash," said Tom Williams, spokesman for North Carolina-based Duke=
=20
Energy. Spokesmen for Dynegy said there was nothing inconsistent in the=20
statements of their executives.
?????The companies maintain that California's problems stem from soaring=20
electricity demand, lagging power plant construction and a faulty=20
deregulation plan adopted by the Legislature in 1996. "You have a flawed=20
structure there," said Dynegy spokesman John Sousa.
?????Sousa and executives of other power suppliers say their comments to th=
e=20
general public and to Wall Street are not contradictory because unfettered=
=20
competition--not the California model--would have created opportunities to=
=20
both make money and cut rates.
?????Still, regulators, lawmakers and ratepayer groups note that only half=
=20
the promises made by the power dealers have been realized so far--their=20
earnings and stock prices have risen at record rates as electricity prices=
=20
have soared.
?????"The big lie was, while they were telling ratepayers to 'Trust us, we'=
re=20
going to lower your rates,' they were planning the entire time to raise the=
=20
rates," said San Diego attorney Michael Aguirre, a former federal prosecuto=
r=20
who specialized in fraud cases. Aguirre is representing state ratepayers in=
 a=20
class-action lawsuit against the power companies.
?????Just last month, California's independent grid operator reported that=
=20
many power sellers "used well-planned strategies to ensure maximum possible=
=20
prices." Potential overcharges could total nearly $6.3 billion.=20
?????The Senate panel wants to track information that Dynegy and other=20
generators were providing to the investment community in the 1990s as a=20
possible way of determining whether they entered the California market with=
=20
plans to run up electricity costs. Among many other things, the committee=
=20
plans to seek internal projections of how the firms expected wholesale pric=
es=20
and profits to rise under deregulation.=20
?????Members also want to know how the suppliers expected to recoup billion=
s=20
in outlays for California power plants being unloaded by regulated utilitie=
s.=20
Some of the purchases were far above book value, stunning analysts.
?????"What did they know that the rest of us didn't at the time they were=
=20
purchasing those generations facilities?" asked Dunn. "They knew something.=
"
?????One thing the power wholesalers say they did know was that tight power=
=20
supplies in California would probably boost prices, at least for a time.
?????"They were going anywhere where they thought energy [use] would spike=
=20
upward," recalled market analyst Joan Goodman, who was familiar with compan=
y=20
pitches. "California was one of those places because it didn't have=20
sufficient [power] plants."
?????Duke Energy projected that prices would rise after 2000, although the=
=20
company says it did not foresee the huge increases that occurred, according=
=20
to spokesman Williams.
?????However, when the company sealed one of the first packages of power=20
plant purchases in the state in 1997, Chief Executive Officer Richard Prior=
y=20
said in a press release it would "deliver greater value" to California=20
customers.
?????The publicity spin was similar when Edison's sprawling beachfront powe=
r=20
plant in El Segundo changed hands the following year. "Consumers in=20
California will begin to benefit from more competitively priced electricity=
=20
and more vibrant economy," announced Craig Mataczynski, vice president of=
=20
Minneapolis-based NRG Corp., a partner in the purchase with Dynegy.

?????Big Growth Was Predicted
?????Utilities reaping profits from plant sales also trumpeted the consumer=
=20
windfall theme. Electricity rates would drop 20% by 2001, Pacific Gas &=20
Electric's top executive, Robert Glynn, said in early 1998. "There is no=20
product bought on a daily basis that has such a predictable downward price=
=20
trajectory into the future."
?????But to its Wall Street audience, the power suppliers emphasized climbi=
ng=20
revenues.
?????Atlanta-based Southern Co., now Mirant, told investors in 1999 that it=
s=20
plan to buy plants and market power had brought the company to the "doorste=
p=20
of significant growth opportunities."
?????"We believe our strategies will result in the best shareholder return=
=20
available," Bill Dahlberg, then-chief executive officer, said shortly after=
=20
buying three California plants.
?????Mirant spokeswoman Jamie Stephenson said assurances given the public a=
nd=20
assumptions directed to Wall Street were "just a different way of deliverin=
g=20
the same message." The firm was saying it would be "reliable to shareholder=
s=20
and reliable to consumers."
?????Now, with rolling blackouts and record electricity bill increases,=20
federal and state authorities are alleging that large energy suppliers play=
ed=20
the power market too hard.
?????Last month, the Federal Energy Regulatory Commission said it found=20
evidence of $124 million in "unjust and unreasonable" charges during the=20
severest periods of electricity shortage. The commission, often criticized=
=20
for being too lenient on private power companies, ordered the firms to refu=
nd=20
the money or further justify the charges.
?????Some firms are contesting the findings, saying the prices they charged=
=20
were justified.=20
?????Investigators and regulators have faced a vexing challenge trying to=
=20
unravel the complex financial workings of the large power traders. The=20
companies closely guard information, and some recently refused to comply wi=
th=20
subpoenas from the state Public Utilities Commission, which is also probing=
=20
the power market.
?????Whether the Senate investigating committee will have the resources and=
=20
tenacity to get much further remains to be seen. But Democrats and=20
Republicans alike insist they are serious about untangling how the power=20
market went haywire.
?????"I haven't seen that much smoke where there hasn't been a fire," Dunn=
=20
said.=20

---------------------------------------------------------------------------=
---
-------------------------------------

Probe of Utility Money Transfers Ordered=20

Finance: PUC wants to know whether payments to holding companies were prope=
r,=20
and whether parent firms gave all the help they could to subsidiaries.=20
Companies deny any impropriety.=20

By TIM REITERMAN and NANCY RIVERA BROOKS, Times Staff Writers=20

?????SAN FRANCISCO--After dozens of protesters assailed them for a recent=
=20
electricity rate hike, state regulators Tuesday ordered an investigation in=
to=20
the transfer of billions of dollars from utilities to parent companies and=
=20
whether the parents failed to help them during the energy crisis.
?????"This order is absolutely necessary to establish the credibility for a=
ny=20
rate hike," said California Public Utilities Commission member Geoffrey=20
Brown. "We should be assured no assets were transferred imprudently to the=
=20
parent companies and no assets in the parent were available" to help=20
financially troubled utilities.
?????The commission adopted the order on a 4-0 vote during an uproarious=20
meeting that started with 1
 hours of public testimony and was disrupted=20
repeatedly by a few dozen protesters who chanted "public power now" and urg=
ed=20
state takeover of the utilities.
?????The PUC probe targets Pacific Gas & Electric Co., Southern California=
=20
Edison Co., San Diego Gas & Electric Co. and their respective holding=20
companies.
?????Spokesmen for the parent companies--PG&E Corp., Edison International a=
nd=20
Sempra Energy--denied any impropriety and said previous PUC audits have fou=
nd=20
no wrongdoing.
?????"The commission, which is probably faced with one of the greatest=20
challenges since the state was formed in 1850, is wasting its time reviewin=
g=20
old ground," said PG&E Corp. spokesman Greg Pruett.
?????Commissioners expressed concern that the utilities transferred billion=
s=20
of dollars to their holding companies while experiencing financial=20
difficulties. They said the parents evidently did not help out the utilitie=
s,=20
which sought rate increases to cover their excess costs.
?????"We will examine whether this apparent failure violates [PUC=20
regulations] that the holding company give 'first priority' to the capital=
=20
needs of its utility subsidiary," the order said.
?????The PUC said the parent companies disbursed much of the money as=20
dividends, stock repurchases and other payments.
?????Sempra spokesman Art Larson dismissed any suggestion that the parent=
=20
neglected SDG&E, noting that it invested $324 million in the utility last=
=20
year. "It's the most in the past seven years," he said. "That speaks for=20
itself."
?????PG&E Corp.'s Pruett said millions of dollars in dividends and loan=20
repayments to shareholders would have been made whether there was a holding=
=20
company or not. "It's a specious argument [by the PUC]," he said. "It's a=
=20
smoke screen."
?????Since early February, the commission had repeatedly delayed ordering t=
he=20
investigation, in part to avoid jeopardizing the state's recent negotiation=
s=20
for the purchase of the power grid and other assets of Southern California=
=20
Edison and Pacific Gas & Electric Co., which say they are billions of dolla=
rs=20
in debt and in danger of bankruptcy.
?????Edison International Chief Financial Officer Ted Craver declined Tuesd=
ay=20
to say whether Edison is close to signing an agreement, noting, "Discussion=
s=20
are at a critical point right now."
?????Under the proposed deal, the state would purchase Edison's massive=20
high-voltage transmission system for $2.76 billion and receive other assets=
.=20
The utility could use the cash to restructure debt.
?????"It is not a done deal; it is very close to final," said Joseph Ficher=
a,=20
a consultant representing Gov. Gray Davis in negotiations with Edison.
?????However, a top utility executive, speaking on the condition of=20
anonymity, said, "There are serious disagreements on major issues."
?????The state's talks with PG&E, which had been dormant for weeks, resumed=
=20
Tuesday as that utility's negotiators met with the governor's staff,=20
according to a company official.=20
?????If a deal for transmission lines can be struck, it is subject to=20
approval by federal regulators.
?????Davis said Tuesday that if federal officials reject any deal, his "Pla=
n=20
B" is to seek state ownership of private utilities' hydroelectric plants.
?????"We are then entitled to have assets of comparable value," Davis told=
=20
reporters. "We have told utilities by that we mean their hydro assets,=20
because those are moneymakers."
?????PG&E, which operates more hydroelectric plants than Edison, has=20
repeatedly made it clear that it does not intend to give up those operation=
s.
?????Davis said he is buying five minutes of television time at 6:05 p.m.=
=20
Thursday to discuss California's energy situation.
?????The PUC, in other action to ease the energy crisis, on Tuesday adopted=
 a=20
measure that allows the Department of Water Resources to sell $12 billion t=
o=20
$14 billion in bonds to help pay for the state's power purchases for=20
cash-starved utilities and their customers.
?????That is a significant increase over the maximum $10 billion approved b=
y=20
the Legislature.
?????The PUC next must devise a formula to divide customer electricity=20
revenue among the utilities, power providers and the Department of Water=20
Resources.
?????Edison executives said they fear that the PUC is underestimating=20
electricity costs--in particular those of the alternative, natural gas fire=
d=20
generators that the commission recently ordered the utilities to resume=20
paying. Even with last week's rate increase of about 40%, Craver said=20
customer revenue could fall short, which may add to the utility's debt.
?????"At best, the utility is standing still: Its cash position has not=20
improved," said Craver. "At worst, it's going backward."
?????A controversial PUC program that pays companies to use less electricit=
y=20
got an overhaul to make it more attractive to business and more useful in=
=20
helping to avoid blackouts.
?????Companies that no longer wish to participate in the so-called=20
interruptible power program will be allowed to leave without penalty, but=
=20
must repay any discounts received since Nov. 1.
?????Julie Puentes, executive vice president of the Orange County Business=
=20
Council, said the group is pleased that businesses will no longer be=20
penalized for past failures to interrupt power. But she said the decision=
=20
does nothing to help companies that did comply and lost business as a resul=
t.
?????"They were good corporate soldiers," Puentes said.
?????Companies receive discounted rates in exchange for agreeing to reduce=
=20
power use when supplies are tight, but in the last year companies have been=
=20
asked to cut power dozens of times or face big fines.
?????The new program limits power interruptions to no more than six hours a=
=20
day, four days a week and 40 hours a month. Other programs will allow=20
customers--even groups of residential customers--to be paid for reducing=20
power use, and expand a Southern California Edison operation that=20
automatically turns off some air-conditioners.
?????The commission heard more than three dozen speakers Tuesday during its=
=20
public comment period, and several protesters were ejected for disruptions.
?????Protesters challenged the commission to attend a community meeting at =
a=20
San Francisco school on April 18. Commissioner Brown agreed, saying, "I hop=
e=20
you treat me as courteously as we tried to treat you."
---=20
?????Times staff writers Dan Morain and Carl Ingram in Sacramento contribut=
ed=20
to this story.

---------------------------------------------------------------------------=
---
---------------------------------------
Worst Power Shortage Likely In May and June, Davis Warns=20
Lynda Gledhill, Chronicle Sacramento Bureau
Wednesday, April 4, 2001=20
,2001 San Francisco Chronicle=20
URL:=20
http://www.sfgate.com/cgi-bin/article.cgi?file=3D/chronicle/archive/2001/04=
/04/M
N107852.DTL=20
Sacramento -- Gov. Gray Davis acknowledged yesterday that the state would=
=20
fall short of its goals for increased power generation this summer and warn=
ed=20
that the toughest phase of the energy crisis might be just weeks away.=20
Davis said May and June would be the most critical time for rolling blackou=
ts=20
because several planned new power plants would not be on line. He said only=
=20
4,000 megawatts of new power would be flowing by summer's end, a sharp drop=
=20
from the 5,000 megawatts he had promised in February to have on line by the=
=20
start of summer.=20
"I hope we don't have major disruptions," the Democratic governor said. "Bu=
t=20
we're hoping for the best and preparing for the worst."=20
Davis' frank admission came after a meeting with Senate Democrats to discus=
s=20
the energy crisis. Many lawmakers have expressed frustration with the lack =
of=20
information coming from Davis and his aides as the energy crisis drags on.=
=20
The governor plans to discuss the crisis during a five-minute statewide=20
television address at 6:05 p.m. tomorrow.=20
Despite the gloomy forecast, Davis said he thought California would be=20
generating more power than it needs in three years, but "we have to get=20
through the next two (years)."=20
Yesterday everyone agreed that only conservation and luck would prevent=20
summer blackouts.=20
"Everyone's concerned," said Sen. Debra Bowen, D-Marina del Rey, chairwoman=
=20
of the Senate's energy committee. "It's not possible for me to be more=20
concerned. We're hearing from businesses about the economic impact of the=
=20
interruptions of power supply. They are more concerned with the reliability=
=20
than the price."=20
The Public Utilities Commission approved last week a tiered electric rate=
=20
increase averaging 40 percent in the hope that higher prices would encourag=
e=20
conservation.=20
Lawmakers might take even more drastic action. Some senators said there is=
=20
growing support for using the state's power of condemnation to seize privat=
e=20
power plants.=20
Under the state's 1996 deregulation plan, the major utilities were required=
=20
to sell many of their power plants to private firms. State Sen Jackie Speie=
r,=20
D-Hillsborough, said senators now believe the state should take over those=
=20
generating plants.=20
CALL FOR BOLD ACTION
State Sen. Don Perata, D-Oakland, said he and several other lawmakers have=
=20
told the governor he must take bold action so people can be confident in=20
their leadership.=20
"I told him he needs to sell energy the same way he sold education," Perata=
=20
said, adding that he supports taking over the power plants.=20
"If in fact we're being taking advantage of by a school-yard bully, we need=
=20
to put a roll of pennies in our fist and cold-cock the guy," Perata said.=
=20
Speier said the governor did not dismiss the condemnation idea outright.=20
Other lawmakers believe that there is also support for a windfall-profits t=
ax=20
on private generators that have made huge profits during the power crisis.=
=20
Money raised by the profits tax could be returned to consumers or to the=20
state for its power purchases, which have topped $3.7 billion so far this=
=20
year.=20
Meanwhile, Davis aides resumed talks with Pacific Gas and Electric Co.=20
yesterday to purchase the utility's power transmission system.=20
The administration wants to buy the transmission lines to help restore=20
financial solvency to the state's investor-owned utilities, including Pacif=
ic=20
Gas and Electric Co. The utilities would then be able to use the money to p=
ay=20
off their $14 billion debt.=20
Southern California Edison already has tentatively agreed to sell the state=
=20
its transmission lines for almost $3 billion.=20
Negotiations for PG&E's transmission lines have bogged down. Davis said he=
=20
also is considering a backup plan to acquire PG&E's hydroelectric plants=20
should PG&E or Uncle Sam scuttle the transmission system deal.=20
PLANS THREATENED
"Part of the negotiations is that if the transmission lines purchase is not=
=20
approved by the federal government, we would still get an asset like the=20
hydro plants," Davis said.=20
As the crisis wears on, Davis has become a leading proponent of energy=20
conservation. Davis has promised a 20 percent rebate on power bills to all=
=20
Californians who reduce their electricity consumption by one-fifth beginnin=
g=20
June 1.=20
Davis continued his push yesterday, encouraging lawmakers at yesterday's=20
meeting to pass several conservation bills this week. But two key=20
conservation bills faced difficult hearings yesterday.=20
An Assembly bill that would spend $400 million on various conservation=20
efforts stalled in the Senate Appropriations Committee because the Davis=20
administration had not agreed to it.=20
The second bill, by Sen. Byron Sher, D-Palo Alto, which would allocate $700=
=20
million for conservation measures, has been languishing for weeks. It passe=
d=20
the Assembly Appropriations Committee yesterday over the objections of the=
=20
author, after negotiations between Democrats and Republicans the night=20
before.=20
E-mail Lynda Gledhill at lgledhill@sfchronicle.com.=20
,2001 San Francisco Chronicle ? Page?A - 1=20
---------------------------------------------------------------------------=
---
---------------------------------------------------------------
Vocal Citizens Berate PUC=20
Police remove several protesters=20
David Lazarus, Chronicle Staff Writer
Wednesday, April 4, 2001=20
,2001 San Francisco Chronicle=20
URL:=20
http://www.sfgate.com/cgi-bin/article.cgi?file=3D/chronicle/archive/2001/04=
/04/M
N196936.DTL=20

The normally subdued San Francisco chambers of the state Public Utilities=
=20
Commission rang out with chanting, song and even poetry yesterday as Bay Ar=
ea=20
consumers turned out in force to protest an average 40 percent rate increas=
e.=20
About half a dozen protesters were escorted or dragged from the auditorium =
by=20
California Highway Patrol officers.=20
"You no longer represent the public," Oakland resident Joel Tena told the=
=20
commissioners. "You represent big business. You are cronies for the=20
corporations."=20
Most speakers called on the PUC to support seizure of power plants by the=
=20
state and a tax on energy companies' profits. They also criticized the=20
commissioners for what protesters termed "back-room deal-making."=20
"Every one of you people should wake up in a prison cell for robbery," said=
=20
San Francisco resident Judy Brady.=20
The commissioners remained expressionless throughout nearly two hours of=20
public testimony. At the end, though, after repeated interruptions and=20
chanting, PUC member Geoffrey Brown voiced his irritation.=20
"A disruption of this body represents the height of undemocratic behavior,"=
=20
he said. "The Green Party should be aware that if they want to be taken=20
seriously, they must abide by the legal processes."=20
A man in a Green Party T-shirt shouted back, "Civil disobedience is a=20
response of necessity." He was immediately escorted from the hall by a CHP=
=20
officer.=20
VOTES ON SEVERAL ISSUES
Protests aside, the PUC also found time for some important business. Among=
=20
yesterday's actions:=20
-- The commission approved a series of measures intended to promote=20
conservation and ease the threat of blackouts this summer. However, it=20
remained unclear who will pay the multibillion-dollar price to implement th=
e=20
programs.=20
-- An investigation was begun into money transfers between California's=20
near-bankrupt utilities and their affluent parent companies. The PUC wants =
to=20
know if the transfers violated state law.=20
-- Pacific Gas and Electric Co. was blocked from selling off a Kern County=
=20
power plant and ordered to restore the mothballed facility to operational=
=20
status.=20
-- PG&E was ordered to study the environmental effect of upgrading power=20
lines running between the southern and northern halves of the state. A=20
midstate bottleneck now leaves Northern California more vulnerable to power=
=20
failures.=20
Consumers were equally displeased yesterday with the PUC, utilities, power=
=20
companies and Gov. Gray Davis, who has portrayed himself as having been out=
=20
of the loop when his appointees on the commission approved the largest rate=
=20
increase in state history last week.=20
SONG OF PROTEST
Lellingby Boyce, a retired Oakland schoolteacher, got the audience singing=
=20
along with her original song, "PG&E Stop A-Pimping Off Me."=20
Among the lyrics: "It's clear to us consumers we're the jokers getting=20
screwed. I'm reading now by candlelight, wrapped in blankets day and night.=
"=20
Meanwhile, San Francisco poet David Alt offered a loftier critique of the=
=20
PUC's rate increase. "Your stench of unspoken arrogance disgusts us," he re=
ad=20
aloud.=20
A number of speakers took the commissioners to task for overlooking the=20
hardship of rate increases on low-income and elderly people.=20
"I thought you would look out for our best interests," said Marie Harrison,=
 a=20
resident of San Francisco's Bayview-Hunters Point district. "But my faith i=
s=20
gone. I can't believe you overlooked us."=20
"It makes me angry when the utilities tell us to cut back," agreed Berkeley=
=20
resident Jenna Woloshyn. "We're already using less electricity, and we can'=
t=20
pay for it."=20
Eva Skoufis said she moved to the United States from Greece in 1968 to esca=
pe=20
the military dictatorship that had taken control of the country. She now ow=
ns=20
a coin laundry in San Francisco's Noe Valley and said her energy bills have=
=20
tripled in recent months.=20
'CAPITALISTIC DICTATORSHIP'=20
"I came from one dictatorship," Skoufis said. "Now I face a capitalistic=20
dictatorship. I want to believe that democracy in this country works."=20
Mary Bull, a San Francisco computer consultant, addressed the PUC with a=20
plastic handcuff attached to her $243 PG&E bill.=20
"Anyone who believes that you are anything more than Gov. Davis' political=
=20
lackeys are gravely mistaken," she said. "This hearing is a sham."=20
Bull then called on the crowd to join her in taking over the commissioners'=
=20
dais and declaring the meeting adjourned.=20
As protesters swarmed forward, CHP officers raced down the aisles and began=
=20
herding people outside.=20
One protester, San Francisco student David Russitano, had to be dragged fro=
m=20
the hall.=20
RULES OF BATTLE
Before yesterday's meeting, CHP Sgt. Ed Saenz had spoken quietly with=20
consumer activist Medea Benjamin. He politely told her that she would not b=
e=20
able to return if he was forced to throw her out.=20
Benjamin said she understood but noted that her left shoulder was hurt. "Yo=
u=20
can pull on this one," she told Saenz, "but not this one."=20
"OK," the officer replied.=20
After Bull brought the raucous hearing to a close, Saenz made sure he was t=
he=20
one to escort Benjamin outside.=20
E-mail David Lazarus at dlazarus@sfchronicle.com.=20
,2001 San Francisco Chronicle ? Page?A - 6=20
---------------------------------------------------------------------------=
---
---------------------------------------------------------------
PUC faces angry backlash to electricity rate increases=20
MICHAEL LIEDTKE, AP Business Writer
Wednesday, April 4, 2001=20
,2001 Associated Press=20
URL:=20
http://www.sfgate.com/cgi-bin/article.cgi?file=3D/news/archive/2001/04/04/s=
tate0
345EDT0115.DTL=20
(04-04) 06:37 PDT SAN FRANCISCO (AP) -- While California Gov. Gray Davis=20
urged lawmakers to approve $1.12 billion in energy conservation measures,=
=20
state power regulators bore the brunt of the public's outrage over rising=
=20
electricity rates during an animated hearing Tuesday.=20
In strident remarks delivered in crowd-pleasing rap songs, indignant poetry=
=20
and pleas of poverty, utility customers blasted the Public Utilities=20
Commission for its March 27 decision approving electricity rates increases =
of=20
more than 40 percent on average for customers of Pacific Gas and Electric C=
o.=20
and Southern California Edison Co.=20
While the details differed during 90 minutes of venting, the gist of the=20
statements shared a common theme. Virtually everyone portrayed the state's=
=20
energy watchdogs as the lapdogs of both the utilities and the power=20
generators reaping huge profits at California's expense.=20
``You are cronies for big business,'' sneered Oakland resident Joel Tena.=
=20
``Your stench of unspoken arrogance disgusts us,'' said San Francisco=20
resident David Alt as he read from an acerbic poem.=20
The backlash aimed at the PUC came on the same day that the regulators ende=
d=20
months of delay and agreed to investigate for signs of financial misconduct=
=20
at the parent companies of PG&E, SoCal Edison and San Diego Gas and Electri=
c.=20
The inquiry will focus on whether the holding companies, PG&E Corp., Edison=
=20
International and Sempra Energy Corp., milked the nearly bankrupt utilities=
=20
for cash and hoarded profits from their unregulated businesses that should=
=20
have been used to help bail out the utilities.=20
Forced to pay more for electricity on the wholesale market than they could=
=20
charge their customers, the two utilities say they have run up combined deb=
ts=20
of about $14 billion in 10 months.=20
If the PUC probe finds evidence of wrongdoing, the holding companies could =
be=20
fined and forced to inject more cash into the ailing utilities, a move that=
=20
might reverse the recent rate increases.=20
Insisting that they have done nothing wrong, the utility holding companies=
=20
described the PUC investigation as a waste of time.=20
Meanwhile in Sacramento, the Assembly Appropriations Committee sent three=
=20
power-related bills to the full Assembly that would fund energy efficieny=
=20
programs and speed up the siting of power plants and cap the rates of large=
=20
business customers of San Diego Gas and Electric Co., the only customers in=
=20
the state currently paying the full market rates for power.=20
Independent power producers say Davis' hopes for 5,000 more megawatts of=20
power by summer will probably fail to emerge because existing plants that=
=20
produce thousands of megawatts are going off-line because they haven't been=
=20
paid in months.=20
A megawatt is enough electricity to power about 750 homes. The state was fr=
ee=20
of power alerts Wednesday morning as reserves stayed above 7 percent.=20
In other actions, the PUC also approved measures meant to encourage more=20
businesses to volunteer for power outages of up to 40 hours per month in=20
exchange for year-round 15 percent discounts on their bills.=20
The new program also will expand the power customers exempted from future=
=20
energy-saving blackouts to include all hospitals. Previously, utilities wer=
e=20
allowed to cut power to hospitals with backup generators or fewer than 100=
=20
beds.=20
With the expanded ``voluntary interruption'' program, the PUC hopes to free=
=20
up more power and reduce the frequency of blackouts expected to bedevil=20
California during the heat of the summer.=20
But the program also threatens to worsen the financial condition of the=20
utilities because it doesn't include financing provisions to cover the 15=
=20
percent discounts.=20
The program will cost SDG&E about $1.5 billion annually, estimated PUC=20
Commissioner Henry Duque, who proposed adding a new surcharge to finance th=
e=20
plan.=20
PG&E and SoCal Edison also said the voluntary program will hurt them=20
financially, but couldn't provide a specific breakdown on the additional=20
expense.=20
PUC Commissioner Geoffrey Brown said the surcharge was a good idea, but the=
=20
timing was bad. ``The psychology of (a surcharge) would be disastrous for t=
he=20
commission right now,'' he said. ``I could just see the newspaper headlines=
''=20
if the surcharge were passed.=20
The PUC rejected the surcharge 3-1.=20
Retired school teacher Wellingby Boyce of Davis drew the biggest reaction=
=20
when she sang a song titled ``PG&E Stop Pimping Off Me.''=20
``I'm reading now by candlelight, wrapped in blankets day and night,'' Boyc=
e=20
rapped to a cheering audience that included protesters from the Green Party=
=20
and a grass-roots group called ``Public Power Now.''=20
Both groups are pushing the state to seize control of the regulated utiliti=
es=20
and California's electricity plants.=20
Other speakers told more somber stories. San Francisco Laundromat owner Eva=
=20
Skoufis, who immigrated to California from Greece in 1968, said her=20
electricity bill is already 2 1/2 times higher then a few months ago and=20
wonders whether her business can survive another price shock.=20
``I came here because I wanted to escape a (Greek) dictatorship,'' she said=
=20
during an interview. ``But I think we are living in a capitalist dictatorsh=
ip=20
here.''=20
PUC President Loretta Lynch said she believed the protesters conveyed=20
widespread frustration over the rapidly rising price of power.=20
``I'm glad people are upset because it means they are paying attention,''=
=20
Lynch said. ``Hopefully, we can all band together against the energy=20
wholesalers responsible for this mess.''=20
---------------------------------------------------------------------------=
---
----------------
California regulators face angry backlash to electricity rate increases=20
MICHAEL LIEDTKE, AP Business Writer
Wednesday, April 4, 2001=20
,2001 Associated Press=20
URL:=20
http://www.sfgate.com/cgi-bin/article.cgi?file=3D/news/archive/2001/04/04/n=
ation
al0008EDT0402.DTL=20
(04-04) 07:23 PDT SAN FRANCISCO (AP) -- Some Californians have turned to so=
ng=20
and rhyme to vent their anger at the commission that approved electricity=
=20
rate increases for customers of the state's cash-strapped utilities.=20
``Your stench of unspoken arrogance disgusts us,'' said San Francisco=20
resident David Alt, reading an acerbic poem.=20
``I'm reading now by candlelight, wrapped in blankets day and night,'' rapp=
ed=20
retired teacher Wellingby Boyce of Davis, drawing applause Tuesday at a=20
meeting of the Public Utilities Commission.=20
The commission last week approved rate increases of more than 40 percent fo=
r=20
customers of Pacific Gas and Electric Co. and Southern California Edison Co=
.=20
On Wednesday morning, the state was free of power alerts as reserves stayed=
=20
above 7 percent. State power grid officials issued a Stage 2 alert -- meani=
ng=20
reserves were below 5 percent -- on Monday after transmission lines were=20
downed by high wind, interfering with electricity imported from the=20
Northwest.=20
Commissioner Geoffrey Brown dismissed the protesters at Tuesday's meeting a=
s=20
unruly ``self-appointed activists'' who were long on rhetoric and short on=
=20
solutions.=20
Commission President Loretta Lynch said she believed the protesters conveye=
d=20
widespread frustration over the rapidly rising price of power.=20
``I'm glad people are upset because it means they are paying attention,''=
=20
Lynch said. ``Hopefully, we can all band together against the energy=20
wholesalers responsible for this mess.''=20
The majority of protesters belonged to the Green Party and a group called=
=20
``Public Power Now,'' which are pushing the state to seize control of the=
=20
regulated utilities and California's electricity plants.=20
Also Monday, the commission agreed to investigate the parent companies of=
=20
PG&E and SoCal Edison, as well as Sempra Energy Corp., the holding company=
=20
for San Diego Gas and Electric, for possible financial misconduct.=20
The companies said they have done nothing wrong and described the PUC=20
investigation as a waste of time.=20
The inquiry will focus on whether PG&E Corp. and Edison International milke=
d=20
the nearly bankrupt utilities for cash and hoarded profits from their=20
unregulated businesses that should have been used to help bail out the=20
utilities.=20
Forced to pay more for electricity on the wholesale market than they could=
=20
charge their customers under the state's 1996 energy deregulation law, the=
=20
two utilities say they have run up combined debts of about $14 billion over=
=20
the last 10 months.=20
---------------------------------------------------------------------------=
---
----------------
Developments in California's power crisis=20
The Associated Press
Wednesday, April 4, 2001=20
,2001 Associated Press=20
URL:=20
http://www.sfgate.com/cgi-bin/article.cgi?file=3D/news/archive/2001/04/04/s=
tate0
907EDT0141.DTL=20
, , -- (04-04) 07:47 PDT Here is a look at developments in California's=20
electricity crisis:=20
WEDNESDAY:< ?-- An Assembly committee are expected to hear a bill by Assemb=
lyman Dean ?Florez, D-Shafter, that he calls an alternate to Davis' plan to=
 buy the ?utilities' transmission lines. ?Florez' bill would create special=
 districts of each utilities' properties, ?including their land, transmissi=
on lines, power plants and even their ?corporate offices. Each district wou=
ld issue bonds against the property, and ?the state would assess a tax on t=
hat property to repay the bonds. If a ?utility defaulted on the taxes, the =
state would be first in line to take the ?property after paying the balance=
 of the bonds. ?-- The state remained free of power alerts early Wednesday =
morning as ?reserves stayed above 7 percent. ?-- The University of Californ=
ia, Los Angeles, is expected to release a report ?on how the state's energy=
 problems have effected the state and national ?economies. ?-- Energy Commi=
ssion lawyers have decided that California cannot require ?builders of new =
power plants to sell electricity to California, even in ?exchange for a rus=
hed environmental review of their projects, The Sacramento ?Bee reports. ?T=
UESDAY:<=20
-- Gov. Gray Davis asks television stations statewide to cover a live 6:05=
=20
p.m. five-minute broadcast from his office Thursday for what a spokesman sa=
ys=20
will be a statement on energy.=20
-- Davis launches a new public relations effort, sending national and=20
California media daily updates on his efforts to solve the state's energy=
=20
problems.=20
-- Davis says California's hot-weather power crunch could hit as early as M=
ay=20
or June because new power plants will not be up and running until July or=
=20
August. He's urging lawmakers to approve more than a billion dollars in=20
energy conservation incentives this week to reduce the likelihood of more=
=20
rolling blackouts.=20
Meanwhile, Sen. Jackie Speier, D-Daly City, says after Senate Democrats mee=
t=20
privately with Davis that there is growing support among senators for seizi=
ng=20
power plants.=20
-- A committee sends three power-related bills to the full Assembly: one=20
funding energy efficiency programs; one speeding up the siting of power=20
plants; and one capping the rates of large business customers of San Diego=
=20
Gas and Electric Co., the only customers in the state currently paying the=
=20
full market rates for power.=20
-- Independent power producers say Davis' hopes for 5,000 more megawatts of=
=20
power by summer will probably fail to emerge because existing plants that=
=20
produce thousands of megawatts are going off-line because they haven't been=
=20
paid in months.=20
-- Power grid managers ease the state's Stage 2 alert as demand drops and=
=20
supplies increase. The alert was declared Monday when downed transmission=
=20
lines complicated the flow of electricity up the state and about 13,000=20
megawatts of electricity remained off-line for repairs or maintenance.=20
Some 3,000 megawatts of alternative energy remains unavailable because the=
=20
generators have not been paid by utility companies in months. One megawatt=
=20
can power about 750 homes.=20
-- Customers and consumer advocates lambast the Public Utilities Commission=
=20
for last week's huge electric rate hikes, delivering their criticism in=20
everything from rap songs to indignant poetry.=20
-- Ending months of delay, the PUC agrees to investigate for signs of=20
financial misconduct at the parent companies of PG&E and SoCal Edison. The=
=20
inquiry will focus on whether the holding companies, PG&E Corp., and Edison=
=20
International, milked the nearly bankrupt utilities for cash and hoarded=20
profits that should have been used to help bail out the utilities.=20
-- The PUC approves measures meant to encourage more businesses to voluntee=
r=20
for power outages of up to 40 hours per month in exchange for year-round 15=
=20
percent discounts on their bills. With the expanded ``voluntary=20
interruption'' program, the PUC hopes to free up more power this summer and=
=20
reduce the frequency of expected blackouts.=20
--The PUC approves a biological study to determine whether a critical Centr=
al=20
Valley transmission line known as ``Path 15'' can be expanded to ferry more=
=20
power from Southern California to Northern California.=20
--The PUC orders PG&E and San Diego Gas and Electric to develop a program=
=20
that will enable the utilities to turn off household air conditioners durin=
g=20
periods of energy shortages. Households that participate in the program,=20
scheduled to be introduced in the summer of 2002, would receive rebates of=
=20
$25 to $100.=20
-- The PUC exempts all hospitals from rolling blackouts, after urging from=
=20
the California Healthcare Association calls on the PUC to exempt hospitals=
=20
from rolling blackouts. The association says more than a dozen hospitals lo=
st=20
power during two days of blackouts last month.=20
-- Officials at Southern California Edison Co. announce two more lawsuits=
=20
from alternative energy suppliers, bringing the total to eight. The supplie=
rs=20
are suing for payments owed since November.=20
-- Edison says it will file its annual earnings information with the=20
Securities and Exchange Commission on April 17. Edison said last week that=
=20
its filing would be late.=20
-- In a conference call with bondholders, Edison officials say the recent P=
UC=20
rate increase of 3 cents per kilowatt hour won't do anything to help Edison=
=20
pull out of its financial problems.=20
An Edison analysis of the increase indicates that all of that money will go=
=20
to the state to pay for power, not to the utilities, Edison's Ted Craver=20
said. ``I believe that is the practical conclusion,'' Craver said. ``The=20
phrase `Show me the money' comes to mind. We don't know whether they intend=
=20
to take additional action, but it appears that we are standing still.''=20
-- A group of 10 alternative power providers issues a statement increasing=
=20
the amount they are owed by $150 million to more than $700 million. The=20
suppliers said they are owed by Edison and PG&E for power supplied since=20
November. The companies, which include EnXco, Caithness and Coram, say they=
=20
supply 3 million homes' worth of power to the state grid.=20
-- Western States Petroleum Association calls on lawmakers to approve a bil=
l=20
exempting fuel refineries from rolling blackouts. The association says it=
=20
takes days for refineries to reopen, endangering gasoline production.=20
-- State Sen. Jim Battin, R-Palm Desert, warns Gov. Davis in a letter that=
=20
people could die unless the state enacts his bill to bar rolling blackouts =
in=20
areas where the temperature exceeds 105 degrees.=20
-- California Poultry Federation and Pacific Egg and Poultry Association wa=
rn=20
that summer blackouts could kill millions of chickens within minutes if pow=
er=20
for ventilation and cooling is cut off.=20
-- Crews dismantling the Rancho Seco nuclear power plant near Sacramento=20
begin removing radioactive fuel rods from a pool where they were cooled for=
=20
more than 10 years.=20
-- The stock of PG&E's parent, PG&E Corp., drops 19 cents a share to close =
at=20
$11.56. Edison's parent, Edison International, sees its stock fall 9 cents =
a=20
share to close at $12.55.=20
<=20
WHAT'S NEXT:< ?-- The Davis administration continues negotiations with Edis=
on, PG&E and San ?Diego Gas & Electric Co. over state acquisition of their =
transmission lines. ?-- FERC holds a conference April 10 in Boise, Idaho, o=
n Western energy ?issues. ?-- The House Government Reform Committee plans e=
nergy hearings in three ?California cities, including April 10 in Sacrament=
o, April 11 in San Jose and ?April 12 in San Diego. ?< ?THE PROBLEM:<=20
High demand, high wholesale energy costs, transmission glitches and a tight=
=20
supply worsened by scarce hydroelectric power in the Northwest and=20
maintenance at aging California power plants are all factors in California'=
s=20
electricity crisis.=20
Edison and PG&E say they've lost nearly $14 billion since June to high=20
wholesale prices that the state's electricity deregulation law bars them fr=
om=20
passing onto ratepayers, and are close to bankruptcy.=20
Electricity and natural gas suppliers, scared off by the two companies' poo=
r=20
credit ratings, are refusing to sell to them, leading the state in January =
to=20
start buying power for the utilities' nearly 9 million residential and=20
business customers.=20
---------------------------------------------------------------------------=
---
----------------




Power gap greatest in May, June=20
Posted at 10:09 p.m. PDT Tuesday, April 3, 2001=20
BY JOHN WOOLFOLK AND DION NISSENBAUM=20

Mercury News=20


Californians bracing for acute power shortages and rolling blackouts this=
=20
summer may see the worst of the crisis as early as next month, Gov. Gray=20
Davis acknowledged Tuesday.=20
Urging lawmakers to pass power conservation measures, Davis noted what many=
=20
energy officials have been eyeing with growing concern: that state efforts =
to=20
secure more power won't bear much fruit until late summer or fall.=20
Plans to obtain power contracts and portable generators for the summer are=
=20
falling short. In addition, supplies from northwest dams and alternative=20
energy generators are drying up.=20
``Usually the challenge is in August or September,'' Davis said. ``This yea=
r,=20
the challenge may well be in May and June.''=20
Underscoring the severity of the crisis, Davis announced he has asked=20
television stations to grant him five minutes of airtime at 6:05 p.m.=20
Thursday to talk about energy. The last time a governor asked to address th=
e=20
public in a special broadcast was nine years ago when Gov. Pete Wilson talk=
ed=20
about the state's budget problems.=20
The state's sense of urgency comes amid growing evidence that California's=
=20
gap between power demand and available supply may be greatest in late sprin=
g=20
and early summer.=20
Meanwhile, state regulators on Tuesday adopted a rash of proposals aimed at=
=20
easing the pain of coming shortages and blackouts at a raucous hearing pack=
ed=20
with protesters and others seeking exemptions.=20
When Davis announced a series of initiatives in February to pull California=
=20
out of the crisis, he expected to have 95 percent of the state's unmet powe=
r=20
needs secured in long-term contracts with energy suppliers.=20
He launched financial incentives and streamlined approval measures to bring=
=20
new power supplies online by early to mid-summer, hoping to alleviate peak=
=20
shortages and curb runaway power prices.=20
Two months later, much of that has failed to materialize. The state so far=
=20
has signed contracts for just half the amount needed, and most of that powe=
r=20
won't be available for a few years. This year, the state has signed up abou=
t=20
a third of what is needed.=20
In addition, initiatives to put a host of small, portable generators in pla=
ce=20
to meet peak summer power demand are lagging. Plans by the California=20
Independent System Operator, which runs the main transmission grid, to get=
=20
3,000 megawatts of power from these ``peaker'' plants came up with less tha=
n=20
half that amount.=20
Likewise, Davis' initiative to get an additional 1,000 megawatts of peaker=
=20
power online by the end of August has netted just 362 megawatts, with the=
=20
first plants firing up in July. The Davis administration last month extende=
d=20
the deadline to the end of September, a move expected to boost the amount o=
f=20
peaker power to 960 megawatts.=20
Other major power sources coming this summer, two Calpine Corp. plants=20
totaling 1,060 megawatts in July and 360-megawatts in August, have long bee=
n=20
in the works. They remain on schedule, but won't do anything for May and=20
June.=20
Meanwhile, supplies once counted on are evaporating. A severe drought in th=
e=20
Pacific Northwest has dried up the dams that are a major source of imported=
=20
hydroelectric power for California.=20
And small alternative-energy producers that provide a third of the major=20
utilities' power have been cutting off supply, pulling some 3,000 megawatts=
=20
off the grid and contributing to blackouts last month.=20
The generators say they can no longer supply power because the nearly=20
bankrupt utilities haven't paid them, and are not satisfied with efforts by=
=20
the governor and regulators to fix that problem.=20
``You could easily see another 1,000 megawatts off-line by the end of the=
=20
month,'' said Jan Smutny-Jones, executive director of the Independent Energ=
y=20
Producers Association.=20
An updated forecast from the system operator last week predicts a loss of=
=20
1,000 megawatts of hydroelectric power and the most severe shortage occurri=
ng=20
in June rather than August. The state is expected to be short nearly 6,000=
=20
megawatts in June, a figure that will drop to 3,500 megawatts in August as=
=20
new power sources come online.=20
``Because of new generation coming online later in the summer, it is May,=
=20
June and July that are going to be the tougher months,'' said system operat=
or=20
spokeswoman Lorie O'Donley.=20
The new report did not calculate shortages for May, but shortages during th=
at=20
month are certainly possible. Last year's first acute power shortage was=20
recorded May 22, prompting a Stage 2 alert that forced businesses to trim=
=20
power usage.=20
Davis spokesman Steve Maviglio downplayed the significance of the governor'=
s=20
warnings about May and June. He noted that the system has proven=20
unpredictable and that no one expected blackouts would hit in January and=
=20
March.=20
``I wouldn't read too much into that,'' Maviglio said. ``It's just going to=
=20
be tight in general, and people are just going to have to conserve, beginni=
ng=20
now.''=20
To stave off a spring crisis, Davis urged Senate Democrats to pass two bill=
s=20
providing more than $1.1 billion to pump up programs that provide rebates a=
nd=20
other financial incentives to conserve energy in homes and small businesses=
.=20
``The only way to fight back against the generators is to use less of their=
=20
product,'' Davis said. ``The less we use, the less money they make.=20
``The hope is, we don't have major disruptions. We're hoping for the best a=
nd=20
planning for the worst.''=20
The California Public Utilities Commission agreed to exempt all hospitals=
=20
from rolling blackouts, in which utilities cut power for an hour or so from=
=20
one circuit to the next to prevent total system failure.=20
The move came after hospitals, once considered exempt, complained of being=
=20
shut off during two days of outages last month.=20
Commissioners also revamped a program that gives rate discounts to business=
es=20
that reduce power use on demand during shortages. They also told utilities =
to=20
implement a program that gives customers a discount in exchange for having=
=20
their air conditioners remotely switched off.=20


---------------------------------------------------------------------------=
---
--------------------------------




Already a power giant, state may build plants=20
Published Wednesday, April 4, 2001, in the San Jose Mercury News=20
BY DION NISSENBAUM=20

Mercury News Sacramento Bureau=20


SACRAMENTO -- Step by step during the energy crisis, California has=20
transformed itself into a power baron, spending billions on electricity and=
=20
looking to buy 26,000 miles of transmission lines.=20
But the state is about to take a far more significant step in trying to gai=
n=20
control of its energy destiny: adopting a sweeping plan to build its own=20
power plants and become one of the largest public power authorities in the=
=20
nation.=20
Under the proposal, a new group of seven state officials could spend $5=20
billion or more to build enough generators to supply about 15 percent of th=
e=20
state's power. It would also have the extraordinary power to seize existing=
=20
plants around the state.=20
``This is the one place where we're actually crafting an energy policy in=
=20
response to a crisis,'' said Doug Heller, a consumer advocate with the=20
Foundation for Taxpayer and Consumer Rights.=20
Although the measure has drawn little attention in a capital focused on=20
preventing disruptive blackouts this summer, it has moved swiftly through t=
he=20
Legislature and could reach Gov. Gray Davis as soon as today. Davis, who ha=
s=20
repeatedly promised that the state will take control of its energy future,=
=20
has endorsed the idea.=20
``It comes down to a choice,'' said state Treasurer Phil Angelides, who is=
=20
sponsoring the plan. ``Do we want to hope and pray that the private sector=
=20
builds enough, or do we exercise some prudence to build enough so that we c=
an=20
control our own destiny?''=20
The goal for supporters like Angelides is to make sure the state builds and=
=20
owns enough energy capacity so that it no longer finds itself at the mercy =
of=20
a dysfunctional market that has forced the state to spend $50 million a day=
=20
to buy electricity.=20
Senate President Pro Tem John Burton, D-San Francisco, and other public pow=
er=20
advocates view this proposal as a hammer California can use to drive down t=
he=20
prices charged by out-of-state power companies, which state and federal=20
officials have accused of gouging California.=20
How it worked elsewhere=20
But critics worry that the proposal may create an inefficient and expensive=
=20
bureaucracy that could end up as the kind of financial boondoggle that near=
ly=20
toppled public power agencies in New York and Washington.=20
``I am skeptical of the idea,'' said Severin Borenstein, director of the=20
Energy Institute at the University of California-Berkeley. ``I am far from=
=20
convinced that the state should own generation facilities.''=20
As a model, supporters of the public power authority idea point to New York=
,=20
where the state has spent 70 years building a power company that produces=
=20
about a quarter of the state's energy needs.=20
But even members of the New York Power Authority have a hard time seeing th=
e=20
similarities.=20
``I can't say that it wouldn't work, but I have a hard time envisioning it,=
''=20
said Jack Murphy, a spokesman for the authority.=20
``It's like it's going to be a grown-up power authority from the start,'' h=
e=20
said. ``We kind of grew one plant at a time and the purpose was not a=20
crisis.''=20
New York set out in the early 1900s to prevent private companies from=20
harnessing the famous waters that cascade over Niagara Falls. At the time,=
=20
former President and New York Gov. Theodore Roosevelt backed the plans to=
=20
combat ``waterpower barons'' from taking over state rivers.=20
But it took decades to get the project off the ground and the agency has be=
en=20
criticized for offering poor service, making bad business decisions and=20
creating an inefficient bureaucracy.=20
Even now, the agency is drawing criticism for not building enough plants in=
=20
recent years and for scrambling to prevent blackouts this summer by setting=
=20
up emergency plants in places being challenged by environmental groups.=20
Ashok Gupta, senior energy economist with the Natural Resources Defense=20
Council in New York, said the state public power programs did a good job fo=
r=20
years in backing conservation. But he said the board appointed by the=20
governor isn't acting in the public interest. Consumer activists have sued=
=20
the state agency and accused it of ignoring environmental and health concer=
ns=20
to set up emergency power plants to get through the summer.=20
``It doesn't work that well because there is little or no accountability,''=
=20
Gupta said. ``In New York state our public power authority basically ignore=
s=20
public input and that says a lot.''=20
Critics also point to a debacle even closer to home: Washington state. In=
=20
1983, the state public power authority was forced into what was then the=20
largest bond default in the nation's history in a failed bid to build two=
=20
nuclear plants.=20
The financial disaster has left the Washington Public Power Supply System=
=20
tagged with an unwanted nickname: ``Whoops!''=20
Supporters say they understand the dangers. Whether it is a public authorit=
y=20
or a private business, anything run by human beings runs the risk of failin=
g.=20
But Angelides and others contend that the benefits far outweigh the risks.=
=20
L.A. example of success=20
Some point to Los Angeles, where the head of the local power authority, S.=
=20
David Freeman, has emerged as a kind of folk hero in the energy crisis. In=
=20
1997, Freeman stepped in to head a beleaguered and nearly bankrupt Los=20
Angeles Department of Water and Power. He slashed jobs, cut debt and is=20
credited with keeping cheap electricity flowing to the city's 3 million=20
residents.=20
Freeman has become a close adviser to Davis on the energy crisis, led the=
=20
negotiations with power companies for long-term contracts and is mentioned =
as=20
a possible candidate to run the new state power authority.=20
The new California power authority aims to work with private companies, not=
=20
drive them out of the market, and follow in the footsteps of other public=
=20
power authorities that have a strong track record of providing the cheapest=
=20
power available.=20
Advocates of public power are not bothered by the contention that such=20
entities would deter the private power companies that have been making=20
millions in profits during the energy crisis from building more plants.=20
``I find it difficult to think of anybody shedding tears for these guys,''=
=20
Burton said during the Senate floor debate over his bill. ``There has been =
no=20
one since the days of the robber barons that has gotten away with what thes=
e=20
guys have gotten away with.''=20

Contact Dion Nissenbaum at dnissenbaum@sjmercury.com or (916) 441-4603.
---------------------------------------------------------------------------=
---
---------------------------------------------------------------------------=
---
------------






Power player=20
Manager of AES' Huntington Beach plant becomes a controversial figure amid=
=20
plans to expand capacity.=20
April 4, 2001=20
By KATE BERRY
The Orange County Register=20







Ed Blackford, who runs the AES Huntington Beach power plant, is facing loca=
l=20
outrage over the state's fast track for a plan to bring two dormant=20
generators online by this summer
Photo: Paul E. Rodriguez / The Register
?
?

HUNTINGTON BEACH It appears as if everyone is against Ed Blackford.=20
Surfers hate the sight of the Huntington Beach power plant that he operates=
,=20
saying it destroys the beauty of the coastal landscape. Environmentalists=
=20
worry about the plant's effect on air and water quality. And local resident=
s=20
complain that his company is driven by corporate greed and refuses to "give=
=20
back" to the community.=20
"Let's face it, no one wants to live near a power plant," said Blackford, a=
=20
soft-spoken chemical engineer who is president of AES Huntington Beach. "On=
=20
the other hand, everyone wants the lights to go on when they walk into a=20
room."=20
As the local public face of Arlington, Va.-based AES Corp., Blackford, 53, =
is=20
at the center of a controversy provoked by California's electricity crisis.=
=20
Residents and city officials are outraged that the Huntington Beach plant w=
on=20
approval from the California Energy Commission for speedy review of a plan =
to=20
revive two dormant generators. Obtaining the proper permits for the plant=
=20
would usually have taken more than a year. But state regulators cut the=20
process to just 60 days under an emergency order from Gov. Gray Davis to ge=
t=20
more megawatts online by this summer.=20
The energy commission will hold a daylong hearing Monday at Huntington Beac=
h=20
City Hall. The capacity expansion could receive final approval as soon as=
=20
April 18.=20
The quick review has struck an emotional chord in Huntington Beach, where=
=20
homeowners and beach-goers would rather see the plant, which has anchored t=
he=20
coastline since the early 1960s, shut down than expanded.=20
"I don't think the plant has been a very good neighbor. It's a big, ugly=20
thing in the community," said Connie Boardman, a Huntington Beach=20
councilwoman. "There's no way the CEC staff and our city staff can adequate=
ly=20
analyze bringing these units online by this summer."=20
The fast-tracking means the two generators are likely to be up and running=
=20
before any environmental studies are completed.=20
Scientists at the University of California, Irvine, have a theory that ties=
=20
the power plant to a rash of beach closures in recent years.=20
The plant sucks in ocean water as part of a cooling process, and heated wat=
er=20
is then discharged into the ocean. There is concern that the heated water m=
ay=20
set up currents that draw in plumes of bacteria-laden sewage from a=20
sanitation outflow pipe five miles offshore. With the capacity expansion, t=
he=20
plant would suck in and discharge more ocean water, possibly exacerbating t=
he=20
problem, experts fear.=20
"We've been trying to figure out what it is about the area that makes it=20
contaminated," said Stanley Grant, an environmental engineer at UCI who fir=
st=20
hypothesized in November a link between the AES plant and contamination. Th=
e=20
Orange County Sanitation District followed up with a field experiment, also=
=20
in November.=20
Nearly a dozen studies or surveys will be conducted this summer in the area=
,=20
Grant said.=20
The CEC has recommended requiring AES to pay to clean up any pollution=20
created by the planned expansion.=20
Blackford is the first to admit that relations with the city are strained.=
=20
"I think there are true issues in the water and the air," he said. "There's=
=20
going to have to be conditions to make sure it doesn't create anyone's=20
nightmare of beach closures."=20
AES is taking steps to mitigate air pollution. The plant's two existing=20
generators are scheduled to be shut down starting this month as it installs=
=20
catalytic converters - scrubbers that could reduce smog emissions by 90=20
percent.=20
Blackford blames Southern California Edison, the plant's previous owner, fo=
r=20
not taking steps earlier to reduce emissions.=20
"Not a lot has been done at this plant for a number of years," he said.=20
"Clearly, Edison didn't put much money into this facility other than=20
maintaining the electric generation."=20
HAD PLANNED TO RETIRE=20
Blackford moved to California three years ago with plans of early retiremen=
t.=20
He said the white sandy beaches remind him of his grandfather's cottage in=
=20
New Jersey. He has two grown children and lives in Huntington Harbour with=
=20
his wife, a retired schoolteacher.=20
"Ed basically came out west to do his last stint, and it turned out to be a=
=20
hotbed of politics," said Aaron Thomas, a lobbyist for AES Corp.=20
Blackford found himself in the spotlight when the city launched an=20
unsuccessful attempt two years ago to pass Measure Q, which would have=20
generated millions in revenue for the city by taxing the plant's sales.=20
Blackford has no experience in politics. He is more a product of an=20
industrial corporate culture, having worked at an AES coal-fired power plan=
t=20
in Pennsylvania for more than 15 years.=20
"Suddenly there was all this interest in the plant," he said. "And I really=
=20
wasn't that comfortable with it in the beginning."=20
Bill Workman, an assistant city administrator, said the state's energy cris=
is=20
has given Blackford and AES "justification" to rebuild the plant's two=20
dormant boilers - rather than overhaul the entire plant, something the city=
=20
has advocated for years.=20
"More than anything, we want a commitment that we would see the plant=20
eventually torn down and replaced with a contemporary,=20
environmentally-friendly plant, like those in Redondo Beach and Morro Bay,"=
=20
Workman said. "It's difficult because of the weak relationship the plant ha=
s=20
had with the community in the past."=20
AES' plant in Huntington Beach is not reaping the enormous profits of other=
=20
power generators. Before electricity prices soared last year, AES signed a=
=20
20-year contract to sell all power produced at the Huntington Beach plant a=
nd=20
its two other Southern California plants to Williams Cos. AES gets only the=
=20
contractual price from Williams, which can sell the power at much higher=20
market-based rates.=20
AES has incentive to get its two dormant units up and running quickly.=20
Those units would not be subject to the Williams contract, and AES could se=
ll=20
the power to the state at much higher prices.=20
"Ed has a love for the community," Workman said. "But he also is a senior=
=20
member of the corporate staff for AES, and he's certainly seeking what's be=
st=20
for the corporation and trying to balance out as best he can what's good fo=
r=20
the community."=20
---------------------------------------------------------------------------=
---
---------------------------------------------------------------------------=
---
---------




PUC gives 'interruptibles' a way out=20
The agency's S.F. hearing is disrupted by consumers protesting last week's=
=20
rate increase.=20
April 4, 2001=20
By KATE BERRY
The Orange County Register=20
Consumer advocates and ratepayers denounced state energy regulators at a=20
raucous meeting in San Francisco on Tuesday at which the California Public=
=20
Utilities Commission approved an opt-out provision for companies and school=
s=20
in so-called interruptible contracts with Southern California Edison.=20
Scores of demonstrators tried to break up the meeting to protest a rate hik=
e=20
of as much as 36 percent approved by the commission last week. Chanting "He=
at=20
and light are a right,'' the protesters forced PUC President Loretta Lynch =
to=20
demand twice, over a chorus of voices: "We will have order in this=20
commission.''=20
After almost two hours of comments from 34 ratepayers and consumer activist=
s,=20
the commission approved several measures, as expected.=20
Regulators dramatically revised a decade-old program in which businesses an=
d=20
schools received discounted electricity rates in exchange for curtailing=20
power use when requested during periods of peak demand. Business groups,=20
including the Orange County Business Council, had lobbied heavily for the=
=20
changes in the interruptible contracts, which impose heavy penalties on use=
rs=20
that don't cut power when requested. Customers will now be allowed to opt o=
ut=20
of the program and avoid paying penalties accrued since November.=20
"It is mostly good news,'' said Julie Puentes, OCBC executive vice presiden=
t=20
of public affairs.=20
But she said businesses are still upset that they will be notified only=20
minutes before a rolling blackout occurs, making interruptions difficult fo=
r=20
manufacturers with sensitive equipment.=20
In all, three new programs to encourage energy conservation by businesses=
=20
were adopted. The PUC also allowed Edison to expand a program in which=20
residential customers agree to have their air conditioning automatically sh=
ut=20
off in times of power shortages.=20
Among the business options, one proposal will pay customers $350 a=20
megawatt-hour to reduce usage by at least 100 kilowatts on a same-day or=20
day-ahead basis. Another exempts customers from rolling blackouts if they=
=20
agree to reduce usage during each Stage 3 power alert.=20
Customers currently in interruptible contracts with Edison can opt out of=
=20
their contracts, either retroactive to Nov. 1, 2000, or at the start of the=
=20
next billing cycle. Those dropping out can either pay penalties accrued sin=
ce=20
November or reimburse their utility for a 15 percent discount on rates.=20
The commission also launched a formal investigation into the financial=20
relationships between the state's two cash-strapped utilities, Edison and=
=20
Pacific Gas & Electric, and their parent companies, which have received=20
billions of dollars from the subsidiaries in recent years. Both corporation=
s=20
objected.=20
"The CPUC should be taking steps to restore the credit-worthiness for=20
California utilities so they can build, maintain and operate a reliable=20
electric system,'' said Thomas Higgins, an Edison senior vice president. Th=
e=20
companies have said that the cash transfers from the utilities, for=20
dividends, taxes and other payments, were normal business practice and were=
=20
in keeping with rules set by regulators.=20
The commission also approved the maximum size of a state bond issue, allowi=
ng=20
State Treasurer Phil Angelides to move forward on selling bonds to pay for=
=20
power purchases. The bond issue, set at $13.4 billion, will enable the=20
state's Department of Water Resources to pay for power purchases.=20
The commission also voted for all acute-care hospitals to be exempt from=20
rolling blackouts. Previously, only hospitals with 100 beds or more were=20
exempt. Residential customers on life-support equipment will be notified by=
=20
their utility prior to a blackout.

---------------------------------------------------------------------------=
---
---------------------------------------------------------------------------=
---
------------------



Energy notebook=20
Davis to give TV address on energy crisis Thursday=20
April 4, 2001=20
SACRAMENTO Gov. Gray Davis plans to deliver a five-minute statewide=20
television address Thursday evening to discuss California's energy crisis a=
nd=20
make what his office described as a major announcement.=20
Davis will "speak in detail about California's energy emergency," his offic=
e=20
said. The address will originate in the governor's Capitol office.=20
Also Tuesday, Davis said late spring and early summer will be the most=20
difficult periods for power shortages.=20
"Usually, the challenge is in August or September; this year, the challenge=
=20
may be in May or June," Davis said after a two-hour private meeting with=20
Senate Democrats. He said new power plants that are scheduled to go into=20
operation by late summer, including "peaker" plants, could provide 4,000=20
megawatts to cushion against outages. A megawatt is enough to light from 75=
0=20
to 1,000 homes.=20
The governor also said the state would seek to acquire the utilities'=20
power-generating dams if federal regulators do not approve California's pla=
n=20
to purchase the companies' transmission lines.=20
"The hydro assets would be Plan B," the governor said.=20
The state has spent nearly $4.2 billion to buy power for the beleaguered=20
utilities. A bond sale to recover that money, as well as pay for cheaper=20
power under long-term contracts, is planned for next month.=20
Investors weigh petitioning for Edison's bankruptcy=20
Rosemead An investor holding defaulted debt sold by Southern California=20
Edison told utility executives on a conference call he and other investors=
=20
are closer to having a bankruptcy court decide how to reorganize the cash-=
=20
strapped utility.=20
The comment came after Ted Craver, the chief financial officer of the=20
utility's parent, Edison International, told investors that he agreed there=
=20
has been "frustration" in waiting for a solution.=20
Craver said he was "somewhat amazed at how disciplined" the investors have=
=20
been holding off seeking a remedy in the bankruptcy courts.=20
Any three unsecured investors holding more than $10,000 in defaulted debt c=
an=20
file a petition with the court to put the company into involuntary=20
bankruptcy. The state's second-largest investor-owned utility holds=20
conference calls every Tuesday and Friday for holders of the more than $696=
=20
million of debt it has defaulted on since Jan. 16.=20
Register staff writer John Howard and Bloomberg News contributed to this=20
report.=20

---------------------------------------------------------------------------=
---
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---
---------------

Power Supplier Files Lawsuit Against Pacific Gas and Electric Company;=20
Dynamis, Inc. Seeks to Suspend Power Purchase Agreement in Order to Provide=
=20
Power to Grid



SANGER, Calif.--(BUSINESS WIRE)--April 3, 2001 via NewsEdge Corporation  -
In the continuing
saga of California's energy crisis, yet another power supplier remains
non-operational because of PG&amp;E's failure to pay for past deliveries
of power.


Dynamis, Inc. filed a lawsuit today in Fresno Superior Court
seeking payment from Pacific Gas and Electric Company (PG&amp;E) for over
$3 million for past deliveries of power and to suspend its electric
power purchase agreement in order to allow Dynamis to resume
delivering electric power to the California electrical grid. Dynamis,
a natural gas-fired cogeneration facility located in Sanger, Fresno
County, was forced to shut down operations in February of this year
after PG&amp;E paid it only a small portion of the amounts due for the
deliveries that Dynamis had made in December 2000 and January 2001.


"Unless Dynamis is enabled to sell power in the open market, the
facility will be forced to remain idle," said Michel Gaucher, Director
and Owner, Dynamis, Inc. "Dynamis simply does not have the financial
resources to continue extending credit to PG&amp;E, particularly given
PG&amp;E's refusal to make any past due payments and with no assurance of
payment for any future deliveries."


"In light of our state's recent rolling blackouts (on March 19 and
20), and given the predictions of further rolling blackouts as we
approach summer, Dynamis remains committed to finding a method to
operate its facility and sell much-needed power to the California
electrical grid," Gaucher said.


The Dynamis facility has provided power to PG&amp;E and California
consumers since 1991 with a reliability approaching 100 percent. The
42 megawatt "qualifying facility" has the capacity to produce
electricity to supply over 40,000 homes. Dynamis is one of the largest
taxpayers in Fresno County, and provides significant financial and
community resources to the City of Sanger. Dynamis provides employment
to 25 people at the facility.



CONTACT: Dynamis, Inc. |              Michel Gaucher, 514/866-2801 | or |=
=20
Steven Greenwald, 415/276-6528

---------------------------------------------------------------------------=
---



Wednesday, April 4, 2001=20


By Kathleen McFall=20
kmcfall@ftenergy.com=20

While much of the current dialogue about the national energy situation=20
focuses on supply-side solutions, interest is growing in energy-efficiency=
=20
actions and real-time pricing as a means of reducing demand.

"These efforts are far more than public relations," said Michael Reid,=20
consulting director at E Source, a unit of Financial Times Energy in Boulde=
r,=20
Colo. "I view energy efficiency as a significant resource. It's not the=20
solution, but it's part of a solution that also includes new generation and=
=20
transmission."=20

"The cheapest megawatt you can buy this summer is the one you don't have to=
=20
purchase," California Gov. Gray Davis said recently when announcing new=20
conservation programs.=20

The California Energy Commission estimates that, without more conservation =
or=20
new plants this summer, California will be short up to 10% of expected dema=
nd=20
on peak use days. Farther north, the Northwest Power Planning Council in=20
Portland, Ore., said the hydropower-dependent region was experiencing "the=
=20
driest or second-driest (year) on record."=20

Buybacks and related financial incentives for large industrial customers,=
=20
such as for the aluminum industry in Washington and Oregon, were ramped up=
=20
this past summer (see "Interest in energy efficiency growing," Energy=20
Insight, Feb. 9, 2001). Now, in light of the continuing power crisis, the=
=20
efficiency focus is expanding to residential customers.=20

Resurrection of tradition=20
What some analysts dub "traditional" energy-efficiency programs, rebates fo=
r=20
appliances and windows, for example, were more common when utilities were=
=20
subject to the least-cost planning efforts of a structured regulatory=20
framework.=20

"These programs were not the result of a crisis situation. They were seen a=
s=20
the right thing to do from an economic and environmental perspective. Withi=
n=20
the framework of least-cost planning, it made sense for the utility to purs=
ue=20
energy-efficiency measures rather than develop new power," said Reid. "Over=
=20
the past few years, however, utilities pulled back from traditional=20
energy-efficiency programs as the industry restructured. Had the old-style=
=20
programs continued, they would have achieved a lot more by this time."=20

Instead, funds from traditional programs were funneled into more fashionabl=
e=20
"market transformation" approaches in California and elsewhere. For example=
,=20
in a 1997 decision, the California Public Utility Commission (CPUC) scaled=
=20
back rebate programs and, instead, offered incentives to manufacturers and=
=20
builders. Making energy efficiency profitable to businesses was assumed to =
be=20
a more permanent solution.=20

Market transformation approaches take a long-term view, but now, as=20
regulators and utilities need an immediate response, traditional approaches=
,=20
combined with rate hikes and innovative new real-time pricing schedules, ar=
e=20
once again on the table.=20

Using prices to encourage conservation
Some analysts believe transparent pricing is the only effective way to send=
=20
the right signals to consumers to decrease demand. In keeping with that=20
thinking, the CPUC raised electricity rates for millions of retail customer=
s=20
by more than 40% recently, citing the need to get "electricity hogs" to=20
conserve power and stave off blackouts this summer. The CPUC established th=
at=20
a "tiered" pricing structure, still undefined, will be put into place that=
=20
will reward customers who conserve energy and penalize those who do not.=20

In Seattle, the city is seeking a demand decrease of 10%. At the end of=20
February, Seattle City Light said weather-adjusted demand was down by 6.2%.=
=20
The utility attributes this to price-responsive conservation due to a 10%=
=20
rate increase effective in January. It expects even more savings given the=
=20
18% increase that took effect in March.=20

Not everyone agrees that rate increases are essential to achieving greater=
=20
energy efficiency. "Even without a price hike, there's a lot of untapped an=
d=20
cost-effective efficiency measures in California and elsewhere," said Reid.=
=20
"I think the price hikes are more about keeping utilities solvent than abou=
t=20
encouraging conservation. The CPUC approved a huge increase because the=20
accountants said the utilities are in dire straits. Conservation will be a=
=20
byproduct of the higher rates; it's not the main reason for raising them."=
=20

The time-of-use pricing strategy, already common for large industrial and=
=20
commercial users, is an alternative cost-based approach that's fast gaining=
=20
converts. It encourages residential customers to decrease use while allowin=
g=20
utilities to improve load management.=20

Last week, the Oregon Public Utility Commission (OPUC) ordered the state's=
=20
two largest private utilities, Portland General Electric and PacifiCorp, to=
=20
offer 1.2 million residential and small-business customers alternative=20
pricing plans, including a time-of-use approach. Customers who opt for this=
=20
plan will receive a new meter that allocates consumption into peak, mid-pea=
k=20
and off-peak hours.=20

"These (pricing) options are important to our energy future," said Commissi=
on=20
Chairman Ron Eachus.=20

Rebates, mandates
Traditional energy-efficiency rebates also are gaining momentum as utilitie=
s=20
in the West resurrect programs or strengthen existing ones. In California,=
=20
PG&E recently announced new rebates for energy efficient light bulbs,=20
refrigerators, clothes washers and dishwashers.=20

"It is very likely that California will experience severe power shortages i=
n=20
the coming months, and our customers' conservation efforts are going to be=
=20
critical in helping the state get through the crisis with as few blackouts =
as=20
possible," said Beverly Alexander, PG&E vice president of energy management=
=20
programs.=20

In keeping with California style, the state is adding twists to the=20
traditional approach by also offering rebates to residential users who=20
decrease their consumption this summer. Businesses and homeowners can earn =
a=20
20% rebate on their summer electric bills if they cut their use by 20%=20
compared to last year. The one-time discount will apply to bills for June=
=20
through September only.=20

According to the governor's press office, if only 10% of the utilities'=20
customers achieve the 20% reduction, it could result in approximately 3,500=
=20
GWh reduction in consumption and 2,200 MW reduction in peak consumption. Th=
is=20
would result in an avoided power purchase cost of $400 million to $1.3=20
billion.=20

"Instead of paying exorbitant rates to out-of-state generators, I'd rather=
=20
pay California consumers to conserve," Davis said in a statement.=20

While innovative, these programs present challenges. "Will the 20% reductio=
ns=20
be adjusted for weather, for example?" asked Reid. "How will consumers know=
=20
if they have achieved 20% before they get their bill? Consumers lack the=20
sophisticated meters that can give them feedback on their conservation=20
efforts in real time."=20

Gov. Davis also is invoking emergency authority to mandate even more power=
=20
savings from business and residential customers.=20

"All the malls, shopping centers, everything is lit up at night like it's t=
he=20
middle of the day," he said to a group of investors. In response, the state=
=20
is requiring that retailers reduce their consumption of electricity on=20
outdoor lighting for estimated reductions of at least 40% to 60% after=20
business hours.=20

It's too soon to assess the outcome of the renewed push in the West for=20
energy efficiency and load management in terms of savings achieved. This=20
summer, obviously, will be the acid test. However, the crisis situation may=
=20
result in energy-efficiency measures and pricing innovations taking a=20
permanent seat at the policy discussion table. While some of the more=20
innovative, short-term programs may unravel as the price of power declines=
=20
with new supply, it's unlikely that demand management strategies will ever =
be=20
relegated to the sidelines again.