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Sac Bee, Tues, 7/3: Details emerge in power contracts Sac Bee, Tues, 7/3: Duke Energy claims it's been vindicated Sac Bee, Tues, 7/3: Out-of-state generators pull plug over uncertainty on= =20 price controls SD Union, Tues, 7/3: Duke energy agrees to refund money SD Union, Tues, 7/3: State's grid issues stage 2 alert, triggering new pric= e=20 caps SD Union, Tues, 7/3: Full airing of accords touches off new debate SD Union, Mon, 7/2: Duke energy lashes back at charge of price rigging LA Times, Tues, 7/3: Hidden Costs Revealed in Power Pacts LA Times, Tues, 7/3: Davis Scraps Deal With Consultants LA Times, Tues, 7/3: Generator Bows, Pledges to Cut Electricity Bill by $20= =20 Million LA Times, Tues, 7/3: Power Sales Halted by New Pricing Curbs SF Chron, Tues, 7/3: Scorching weather triggers Stage 2 alert, price caps SF Chron, Tues, 7/3: Uncensored power pacts made public=20 State controller says deals will burden general fund for years SF Chron, Tues, 7/3: Corporate casualties=20 PG&E executives are receiving bonuses, while some of its veteran employees= =20 have been waiting months for their disability checks SF Chron, Tues, 7/3: Developments in California's energy crisis SF Chron, Tues, 7/3: Duke Energy slashes $20 million from California power= =20 bill SF Chron, Tues, 7/3: Duke opens record books but keeps mum on prices SF Chron, Tues, 7/3: Duke releases California energy records to counter=20 accusations of price gouging Mercury News, Tues, 7/3: Las Vegas hit by rolling blackouts=20 OC Register, Tues, 7/3: Blackout hits Las Vegas as number 120 comes up Individual.com (AP), Tues, 7/3: State One and Stage Two Emergencies Declare= d=20 as Demand Soars; California ISO Strongly Urges Conservation Individual.com (AP), Tues, 7/3: Duke Energy Releases California ISO, Intern= al=20 Records that Confirm Appropriate Operation of South Bay Plant Individual.com (AP), Tues, 7/3: Calpine's Sutter Energy Center Is Up and=20 Running First New Major Baseload Generator for California Individual.com (AP), Tues, 7/3: Duke Energy Will Offset Receivables Above= =20 FERC Proxy Price Individual.com (AP), Tues, 7/3: New York Power Producers Announce Five-Poin= t=20 Program to Address State's Long and Short-Term Energy Needs IPPNY Plan Designed to=20 Prevent California-style Crisis in New York NY Times, Tues, 7/3: Power Company Rebuts Accusations of Gouging ---------------------------------------------------------------------------= --- ---------------------------------------------------------------------------= --- ----- Details emerge in power contracts=20 By Carrie Peyton and Chris Bowman Bee Staff Writers (Published July 3, 2001)=20 California's power bills for the next decade probably will exceed the=20 forecasts of Gov. Gray Davis, the State Controller's Office said Monday as = it=20 released unedited versions of long-term contracts in a new jab at the=20 governor.=20 The electricity contracts, which Davis' office sought in court to keep=20 secret, offer a glimpse into the rapid, high-stakes deals struck early in t= he=20 state's power crisis and illustrate the way deregulation's unraveling could= =20 haunt California for years to come.=20 Some show that builders of new power plants could recoup the entire cost of= =20 those plants in four years or less. Some show lucrative swaps for power,=20 including one arranged the same day California was rocked by rolling=20 blackouts.=20 More than two dozen additional administrative contracts detail the price=20 California is paying its consultants to seek a way out of the power mess,= =20 from tens of thousands for Davis' aides down to $51 an hour for copying and= =20 phone answering.=20 The governor's office defended its estimates of the state's future power=20 bill.=20 The 41 long-term contracts, 27 consulting contracts, five short-term deals= =20 and stacks of receipts and invoices released Monday by state Controller=20 Kathleen Connell may just be the start.=20 Her office hopes to provide details about how much California has already= =20 paid individual power generators in the volatile short-term, or "spot,"=20 market.=20 The deals include so many intricate pricing formulas that Connell said she= =20 couldn't immediately predict exactly how high California's hourly power cos= ts=20 would go.=20 Walter Barnes, chief deputy controller of finance, said the contracts=20 probably would be "well in excess" of the $69 a megawatt-hour that Davis on= ce=20 said would be California's average cost for contract power for the next=20 decade.=20 The contracts' prices range from $55 to $249 a megawatt-hour, and most are= =20 more than the $69, Connell said.=20 The state Department of Water Resources, the state's power buying arm, late= r=20 revised the $69 forecast to $70 a megawatt-hour through the end of 2010, wi= th=20 the higher priced power coming first.=20 If anything, those figures could decline because natural gas, the fuel for= =20 most new power plants, is getting cheaper, DWR spokesman Oscar Hidalgo said= ,=20 adding that his office sticks with its forecasts.=20 "We're on pretty solid ground here," he said.=20 As the statewide elected official who pays California's bills, Connell=20 repeatedly has criticized the governor for his electricity spending, saying= =20 that she never believed the contracts should be kept secret.=20 But Davis' office blasted her for giving out details that power generators= =20 and traders could use to learn the state's negotiating positions and buying= =20 practices and said the information could boost wholesale prices within days= .=20 "When they open their electric bill next time, every Californian can thank= =20 Kathleen Connell for higher electricity costs," Davis spokesman Steve=20 Maviglio said.=20 The long-term contracts were first released June 15 by the water resources= =20 department with power plant names, performance data, delivery points and=20 other details blocked out under heavy black strokes.=20 Analysts said that was the sort of data they could have used to calculate h= ow=20 much more than the production costs the state was going to be paying for th= e=20 electricity purchased on behalf of three cash-strapped investor-owned=20 utilities.=20 As analysts began sizing up some of the specifics Monday, early reactions= =20 were wary.=20 "This just shows when the state comes in and takes over the utility system,= =20 we're just going to be in deep from all sorts of expenses and inefficiencie= s=20 that we were trying to get away from" with deregulation, said Arthur=20 O'Donnell, who edits a trade newsletter, California Energy Markets.=20 Bill Marcus, a power consultant who had analyzed the edited contracts for a= =20 consumer group, quickly read through the unedited versions muttering things= =20 such as "offensive" and "they got absolutely ripped here."=20 In one swap that was negotiated on a day of rolling blackouts in March, the= =20 state agreed to send Powerex, the trading arm of British Columbia's=20 government utility, 2 times more electricity in the spring than Powerex=20 would return in the summer.=20 Although seasonal swaps are common, the 2 -to-1 ratio was a sign of "panic"=20 and inexperience on the state's part, he said.=20 The consultants who advise California on power deals were frenetic at the= =20 time, with one staffer at the Navigant consulting firm billing for hours=20 worked that were the equivalent of 9.7 hours a day for 34 consecutive days.= =20 The power purchase terms disclosed Monday confirm many energy analysts'=20 predictions that California consumers would be paying premium prices for=20 years to cover the costs of the new plants coming on line.=20 In several of the contracts, the state agreed to pay generators a 25 percen= t=20 to 30 percent annual return on their plant construction costs, which could= =20 pay off the entire plant in four years or less.=20 Before deregulation, utilities generally received 3 percent to 18 percent= =20 annual return on their capital investments over 30 years, said Marcus, a=20 veteran energy analyst whose firm, JBS Energy Inc. of West Sacramento,=20 represents ratepayer groups.=20 "We're all going to have to pay more for power plants over the next 10 or= =20 more years because the generators are looking to pay off their plants in ha= lf=20 the time," he said.=20 "Beyond blackouts and price spikes, this will be the long-term legacy of=20 deregulation," he said. "The private market needs a high rate of return on= =20 their investment."=20 Several contracts were drafted in the late winter and early spring when=20 California endured Stage 2 and Stage 3 energy alerts.=20 The unmasked terms in some of those agreements reflect the state's=20 desperation for megawatts amid fears of routine blackouts when temperatures= =20 and energy use began to rise in the summer.=20 For example, the state agreed in a March 29 contract to pay Calpine $232 a= =20 megawatt-hour to supply 300 megawatts nonstop from July 1 through Sept. 30.= =20 But a more recent Calpine contract calls for about $59 a megawatt-hour,=20 starting Oct. 1.=20 Time made all the difference, said Jim Macias, a Calpine senior vice=20 president. He said that last winter, Calpine couldn't guarantee that plants= =20 under construction in Sutter County and the East Bay would be on line by=20 summer. So the company bought the power on the spot market for the state,= =20 Macias said.=20 "Back in the winter, $232 was a good price for electricity this summer," he= =20 said.=20 Calpine officials said that they made no money on the sale and even knocked= =20 15 percent off their price to maintain good relations with the state power= =20 buyers.=20 The gesture more than paid off with the signing of the 10-year contract, sa= id=20 Kathleen Potter, Calpine spokeswoman.=20 "It was a great transaction for us," Potter said. "We appreciate the=20 business."=20 Proponents of "free-market" energy buying have said that in the long-run,= =20 competitive forces would result in more-efficient, less-costly power=20 generation.=20 But the contracts show that pressed for more electricity this summer and=20 fall, officials resorted to buying power from some of the least-efficient= =20 plants in the state, guaranteeing owners of these aging generators 10 more= =20 years of income.=20 The Bee's Carrie Peyton can be reached at (916) 321-1086 or=20 cpeyton@sacbee.com. Duke Energy claims it's been vindicated=20 By Dale Kasler Bee Staff Writer (Published July 3, 2001)=20 Rebutting allegations that it manipulated electricity output to maximize=20 profits, a major power generator said Monday it's been vindicated by=20 documents suggesting the plants were run at the direction of California's= =20 transmission-grid operator.=20 But a state senator leading the investigation into alleged market=20 manipulation said the generator, Duke Energy Corp., isn't necessarily off t= he=20 hook. Sen. Joe Dunn said Duke must provide detailed data about its pricing= =20 practices if it wants exoneration -- something Duke won't yet do.=20 Duke, rebutting allegations by three ex-workers that it adjusted production= =20 up and down during a time of extreme shortages, released confidential=20 control-room records Monday indicating the production changes were ordered = by=20 the state Independent System Operator. The allegations focused on Duke's=20 practices at two Chula Vista plants Jan. 16-18, when the state experienced= =20 its first wave of rolling blackouts.=20 In some cases, the plants were "literally driven by the ISO" through a=20 computerized system called automatic generation control, said Jeff Stokes, = a=20 Duke executive vice president. In other cases, Duke retained control of the= =20 plants but adjusted production levels in response to computer dispatches se= nt=20 by the ISO, sometimes as often as every 10 minutes, Stokes said.=20 "Duke Energy was not making the decisions to ramp the plant up and down," h= e=20 said. "(The ISO was) ramping it up and down to meet the minute-by-minute=20 changes in the grid."=20 Duke released a memo from Tracy Bibb, the ISO's director of scheduling, to= =20 state officials confirming the accuracy of Duke's records and acknowledging= =20 that Duke was following the ISO's dispatch orders.=20 The memo, along with the plant records, "clearly refute the allegations,"= =20 Stokes said.=20 Yet Dunn, D-Santa Ana, chairman of a Senate select committee probing=20 wholesale power prices, said the Duke investigation will continue.=20 The documents "seem to give (Duke) partial exoneration," Dunn said, but the= =20 generator still needs to disclose how much it charged the state. He also sa= id=20 there were times when Duke seemed to be acting on its own, and not in=20 response to the ISO's directions, when it adjusted output from the plants.= =20 Asked about prices, Stokes declined to release detailed information but sai= d=20 Duke charged California roughly $1,200 a megawatt-hour for power from the t= wo=20 plants during the three January days cited by the ex-workers. The high pric= es=20 mainly reflected a risk premium because of the shaky finances of California= 's=20 electric utilities, he said. The state Department of Water Resources didn't= =20 step in as a creditworthy power purchaser until Jan. 19, the day after the= =20 three-day period that was the subject of the ex-workers' allegations.=20 Stokes said Duke will disclose actual prices "at the appropriate time and i= n=20 the appropriate setting."=20 Stokes also disclosed that Duke agreed Monday to forgive almost $20 million= =20 that it says it's owed by California for power supplied in January and=20 February. The reduction was ordered in March by the Federal Energy Regulato= ry=20 Commission, which said Duke and other generators had overcharged the state.= =20 Even with the $20 million deducted, Duke says it has received just "pennies= =20 on the dollar" for power consumed by California's troubled utilities.=20 On the other hand, the ISO has calculated that Duke overcharged California = by=20 about $804.7 million from May 2000 to February 2001, the latest data=20 available. Only one other generator stands accused of overcharging more,=20 according to a confidential ISO memo that surfaced recently: Williams Cos.,= =20 at $860.9 million.=20 With state officials claiming power generators have overcharged California = by=20 about $9 billion, the allegations by the ex-workers hit Duke like an unwant= ed=20 jolt of electricity.=20 In testimony before Dunn's committee June 22, three former employees of=20 Duke's South Bay 1 and 2 plants in Chula Vista said the company manipulated= =20 supplies to drive up prices Jan. 16-18.=20 Lt. Gov. Cruz Bustamente called their testimony the "smoking gun," while Go= v.=20 Gray Davis invited the trio to breakfast.=20 Duke, already battered by the revelation that it charged the state a whoppi= ng=20 $3,880 a megawatt-hour for power at a different plant in January, took out= =20 full-page advertisements in the state's major newspapers rebutting the=20 ex-workers' charges. It then took the extraordinary step of releasing plant= =20 control-room logs to demonstrate that it was following orders.=20 At the heart of the matter is the computerized "automated dispatch system"= =20 implemented by the ISO last summer to balance supply and demand more=20 precisely. Before that, the ISO had to resort to phone calls to get=20 generators to increase or decrease production.=20 Gregg Fishman, an ISO spokesman, said the ISO will continue its analysis of= =20 market practices by all generators and doesn't consider the Duke matter=20 closed.=20 The Bee's Dale Kasler can be reached at (916) 321-1066 or dkasler@sacbee.co= m.=20 Out-of-state generators pull plug over uncertainty on price controls By Dale Kasler Bee Staff Writer (Published July 3, 2001)=20 Confused by the federal government's new controls on electricity prices,=20 generators withheld so much power from California on Monday that the state= =20 was nearly plunged into rolling blackouts, state officials said.=20 The confusion began when the state's electric grid operators declared a Sta= ge=20 1 power alert in the early afternoon, triggering the price caps for the fir= st=20 time since they went into effect June 21.=20 Out-of-state generators pulled about 1,500 megawatts of electricity off the= =20 table at midafternoon, enough to power about 1.1 million homes, because of= =20 uncertainty about how much they could charge under the new Federal Energy= =20 Regulatory Commission pricing system, said Oscar Hidalgo, spokesperson for= =20 the state Department of Water Resources. The department buys electricity fo= r=20 the state's financially distressed utilities.=20 "They didn't understand what they were going to be paid; there was confusio= n=20 over the FERC order," Hidalgo said. "We saw 1,500 megawatts disappear."=20 The problem was exacerbated by a heat wave across the West, which forced=20 California to compete with other states for scarce electricity, he said.=20 Rolling blackouts hit southern Nevada.=20 Most California officials credit the FERC system, which is based on a=20 variable price cap, with reining in what had been a runaway wholesale power= =20 market. But power generators have complained that the price caps, by limiti= ng=20 profits, could discourage the production of critically needed electricity.= =20 And as Monday's episode suggested, even the uncertainty about where the cap= =20 will fall could lead to unexpected shortages.=20 "That's the risk that you run (with price controls)," said Arthur O'Donnell= ,=20 editor of the newsletter California Energy Markets. "People want any kind o= f=20 certainty at all."=20 Hidalgo said the state avoided blackouts only because of last-minute import= s=20 from the Bonne=0F'ville Power Administration, the federal agency that marke= ts=20 government-produced hydroelectric power in the Pacific Northwest. The state= =20 went into a Stage 2 power alert, the next-to-last level before blackouts ar= e=20 ordered. The alert was canceled in late afternoon.=20 The blackouts would have been the first in California since May 8.=20 FERC imposed a round-the-clock ceiling on power throughout the West. The=20 price fluctuates and is tied to the production costs of the least-efficient= =20 plant operating in California during a "power alert" declared by the=20 Independent System Operator, which runs the state's power-transmission grid= .=20 When there's no alert, prices can't exceed 85 percent of the cap that was= =20 established during the latest alert.=20 Until Monday, the maximum price held steady at about $101 a megawatt-hour i= n=20 California. But when the ISO declared a Stage 1 power alert in early=20 afternoon, signifying that reserve supplies had dwindled to less than 7=20 percent of demand, confusion set in, Hidalgo and others said.=20 Because of a steep drop in the price of natural gas, which fuels many=20 California power plants, suppliers knew the cap would fall. But no one knew= =20 by how much until the price was posted by the ISO.=20 The ceiling for California fell to about $77 at 3 p.m. but was back up to $= 98=20 in two hours, according to the ISO. Those prices include the 10 percent=20 premium that sellers can charge California because FERC said there's a cred= it=20 risk in selling to the state.=20 O'Donnell said it's likely suppliers will pull back from the market every= =20 time the ISO declares a power alert.=20 In-state generators have to operate their plants if summoned by the ISO. Bu= t=20 out-of-state suppliers can withhold supplies, and on Monday it was the=20 out-of-staters that were pulling back, Hidalgo said.=20 The Bee's Dale Kasler can be reached at (916) 321-1066 or dkasler@sacbee.co= m.=20 Duke Energy agrees to refund money=20 By Bill Ainsworth=20 UNION-TRIBUNE STAFF WRITER=20 July 3, 2001=20 SACRAMENTO -- As hot summer weather triggered the first Stage 2 power alert= =20 yesterday in more than a month, Duke Energy agreed to refund money from an= =20 earlier extremely high price to comply with an order from federal regulator= s.=20 While California was able to squeeze by with tight power supplies, southern= =20 Nevada was not so lucky and was forced to endure brief rolling blackouts=20 during triple-digit heat.=20 California's electricity grid manager, the Independent System Operator, had= =20 issued the last previous Stage 2 alert on May 31.=20 The hot weather is expected to continue. "Conservation is going to play a k= ey=20 role in reducing demand," said Greg Fishman, spokesman for the ISO.=20 California's electricity demand peaked at about 4 p.m. with 41,600 megawatt= s,=20 with an available supply of 42,402 megawatts. A megawatt can power about 75= 0=20 homes.=20 Meanwhile, Duke Energy announced that it would follow rather than fight an= =20 order from the Federal Energy Regulatory Commission to refund money from=20 January when it charged a state record $3,880-per-megawatt hour. Duke was= =20 allowed to charge only $273 per megawatt-hour, according to FERC.=20 The North Carolina-based company said that it would slash $20 million from= =20 California's power bill, including $2.1 million from February.=20 Unlike the action for January, the February price cut was not ordered by th= e=20 Federal Energy Regulatory Commission.=20 "It's our way of creating a good working atmosphere to come up with some=20 solutions," said Terry Francisco, a company spokesman.=20 The money is a mere fraction of the $805 million that the ISO says the=20 company overcharged California residents.=20 In all, the ISO says power companies have overcharged California at least= =20 $8.9 billion.=20 Company officials, meanwhile, continued to fight price-gouging charges=20 leveled by former employees of Duke's Chula Vista plant.=20 They held a news conference explaining in detail the actions it took from= =20 Jan. 16 through Jan. 18, a time when it charged the state the record price= =20 for power.=20 Previously, the company had released a memo from the ISO saying that the=20 Chula Vista plant was operating under the grid manager's instructions when = it=20 throttled up and down during that period.=20 Jeff Stokes, executive vice president of Duke, would not detail the price t= he=20 company charged during that time. But in addition to the $3,880 per megawat= t=20 hour, he said, Duke charged between 25 percent and 33 percent of that recor= d=20 price. That would make the other prices about $1,000 per megawatt hour.=20 Yesterday, a megawatt hour sold for $92 on the spot market, and that's abou= t=20 three times the going price in the spring of 2000.=20 Officials from the ISO say the amount of the bids the company offered is=20 needed to determine whether Duke engaged in price gouging.=20 A March report by the ISO accused generating companies of driving up prices= =20 in two ways: by withholding power and by bidding prices so high the state= =20 couldn't afford them.=20 Gov. Gray Davis said, in a written statement, that Duke owes Californians a= n=20 explanation.=20 "Duke has a lot of explaining to do for charging Californians the outrageou= s=20 price of $3,880 a megawatt hour," he said.=20 State's grid issues Stage 2 alert, triggering new price caps=20 By Don Thompson ASSOCIATED PRESS=20 July 2, 2001=20 SACRAMENTO =01) California's electric grid operator triggered price caps in= 11=20 Western states Monday when it issued an energy alert for the first time sin= ce=20 federal regulators imposed the cost ceilings two weeks ago.=20 Power deficiencies were expected to continue Tuesday from 10 a.m. until=20 midnight, according to a statement from the California Independent System= =20 Operator.=20 Unexpectedly high temperatures across much of California and the Southwest= =20 brought higher energy use that required the ISO to declare a Stage 2 alert,= =20 meaning electricity reserves fell below 5 percent.=20 Unless an emergency happen, the ISO said rolling blackouts remained unlikel= y.=20 Still, it asked consumers to conserve, especially during afternoon and earl= y=20 evening peak use periods.=20 "Even if things are OK outside California, if there's a Stage 1 (or higher)= =20 in California they all get" the caps, said Mike Wilczek, a senior western= =20 power market reporter for Platts, the energy market information division of= =20 The McGraw-Hill Companies.=20 The Federal Energy Regulatory Commission's June 19 order expanded price=20 restrictions it imposed in April on wholesale electricity sales in Californ= ia=20 during peak demand periods when blackouts were threatened.=20 The restrictions now cover power transactions 24 hours a day, seven days a= =20 week throughout 10 Western states along with in addition to California. It= =20 also closed several loopholes that allowed power generators to circumvent t= he=20 April order. The price cap is pegged to the cost of production at the least= =20 efficient electricity generating plant in the region.=20 ISO spokeswoman Stephanie McCorkle said the state won't know the baseline= =20 price until the energy alert ends, probably Tuesday. Electricity had been= =20 trading at nearly $92 per megawatt hour before the cap took effect, Wilczek= =20 said.=20 "It's going to be an interesting week," said ISO spokesman Gregg Fishman.= =20 Temperatures were about 5 percent higher than forecast, and the state was= =20 using about 2,000 more megawatts than predicted, said McCorkle. That's enou= gh=20 electricity to power about 1.5 million homes.=20 The Desert Southwest was seeing triple digit temperatures, meaning the regi= on=20 had less electricity to share.=20 Imported electricity into California dropped from about 4,000 megawatts=20 Sunday to about 3,300 megawatts Monday, she said. In addition, California= =20 lost about 1,500 megawatts when a plan went off-line in Southern California= =20 over the weekend. A megawatt is enough power for about 750 homes.=20 The high temperatures were expected to continue through most of the week, b= ut=20 electricity use was expected to fall Wednesday for Independence Day. Howeve= r,=20 energy use could climb higher than normal on Thursday as office buildings= =20 were cooled after being shut down for the holiday, Fishman said.=20 ?? On the Net: Track the state's blackout warnings on the Web at=20 www.caiso.com/SystemStatus.html.=20 Full airing of accords touches off new debate=20 Uncensored electricity contracts show some edge for both sides By James P. Sweeney=20 COPLEY NEWS SERVICE=20 July 3, 2001=20 SACRAMENTO -- Uncensored copies of long-term contracts that commit Californ= ia=20 to buy $43 billion worth of electricity suggest that both generators and th= e=20 state may have cut better deals than previously disclosed.=20 "Some of these prices are more favorable to the utilities than we could tel= l=20 from the earlier contracts," said Roger Bohn, an energy specialist and=20 associate professor at UCSD. "Then there are some provisions that look more= =20 favorable to the state ... at least in the short run."=20 Bohn, who served on the market monitoring committee of the defunct state=20 Power Exchange, reviewed several of the largest contracts, including that o= f=20 Sempra, the parent of San Diego Gas & Electric.=20 Under court order, Gov. Gray Davis' administration released the long-term= =20 contracts June 15. But significant sections of some, and snippets of others= ,=20 had been omitted or blacked out to protect proprietary information and the= =20 state's bargaining position, administration officials said.=20 Several news organizations, including The Copley Press, which publishes The= =20 San Diego Union-Tribune, sued seeking full disclosure. State Controller=20 Kathleen Connell, who has openly feuded with fellow Democrat Davis, also ha= d=20 urged a public airing of the complex documents.=20 A San Diego judge last week issued an opinion in favor of releasing the ful= l=20 contracts, but had not yet made her ruling final.=20 Yesterday, Connell released unabridged versions of some 41 contracts, most = of=20 which stretch over the coming decade. At least one extends 20 years.=20 Connell's move touched off another heated exchange with the governor's=20 office.=20 The controller said the state almost certainly has never before assumed suc= h=20 a massive financial obligation without prior public review.=20 Connell and her top aides said the previously excised portions of the=20 agreements show the governor saddled the state with huge electricity costs= =20 through the end of the decade.=20 She also released short-term contract information which was of particular= =20 concern to the governor's office. Steve Maviglio, the governor's press=20 secretary, criticized that decision, saying it would help power generators= =20 continue to manipulate the market.=20 "Unfortunately, the controller is seeking political vengeance at the expens= e=20 of the California ratepayer," Maviglio said. "She's uninformed and clueless= =20 about the impact of the long-term contracts on bringing down spot-market=20 prices."=20 Few others were weighing in on the debate yesterday. Most consumer advocate= s=20 and other analysts were reserving judgment until they finished poring throu= gh=20 the nearly 30 pounds of documents.=20 But Walter Barnes, the controller's chief financial officer, said the=20 contracts' average cost "probably will be well in excess" of the $69 per=20 megawatt-hour claimed by the governor's chief negotiators.=20 UCSD's Bohn called that conclusion "plausible," but said it will depend on= =20 the future price of natural gas, which no one can predict. Many power plant= s=20 are fired with natural gas, the cost of which gyrated wildly over the past= =20 year.=20 "Neither (Connell) nor the governor are saying what gas prices they assumed= ,=20 so we don't really know what the $69 figure is based on," Bohn said.=20 While generators may have bargained for higher rates than previously though= t,=20 the state secured what appear to be floating market rates with a cap in at= =20 least one major contract, the deal with Sempra, Bohn said.=20 In that agreement, the state is "not locked into an arbitrarily high price= =20 for this summer. The way things are looking now, that may turn out to be a= =20 good deal for California," he said.=20 While largely critical of the contracts, Connell appeared to confirm that= =20 many of the deals have a flexibility that could prove beneficial to=20 ratepayers.=20 She said her staff found an "interesting pattern" in the state's June power= =20 purchases. Given a choice between available long-term supplies and the spot= =20 market, the state's energy traders bought almost as often in the spot marke= t.=20 While entering into long-term contracts, the state's ability to continue=20 buying some power on the spot market benefited consumers when prices on the= =20 market started to fall, according to Davis associates.=20 S. David Freeman, the governor's chief energy adviser, said the long-term= =20 commitments drained some demand and restored some sanity to a spot market= =20 that had been rising to unheard-of prices. Since then, the Federal Energy= =20 Regulatory Commission also has imposed wholesale price controls in Californ= ia=20 and 10 other Western states.=20 Freeman said the state negotiated the best deals it could starting in=20 January, when it endured rolling blackouts and spot market prices averaging= =20 nearly $280 per megawatt-hour.=20 Along with the contracts, Connell released details of power purchases to da= te=20 under the long-term agreements.=20 Contract power purchased so far appeared to average $173 per megawatt-hour.= =20 The administration, however, had warned the rates it negotiated were steepe= r=20 at the front end.=20 Connell said the contract prices range from $55 to $249 per megawatt-hour,= =20 with most exceeding the $69 average the administration has claimed. Perhaps= =20 more troubling, she said, is that many of the contracts contain clauses tha= t=20 could prevent purchase of the power at the lower prices.=20 In addition, she said, "there is a great deal of negotiation that remains t= o=20 be done on many of these contracts as market conditions evolve."=20 "So the state does not have a firm commitment on price, other than a floor= =20 price on many of these contracts."=20 The deals should guarantee nearly 600 million megawatt-hours for the state= =20 over the next decade. That is projected to cover about 45 percent of the=20 amount of power the state's utilities cannot cover with their own plants.= =20 But the price of half the long-term commitments will fluctuate with the pri= ce=20 of natural gas, and 70 percent of the power has been promised from power=20 plants that have not yet been built.=20 Duke Energy lashes back at charge of price rigging=20 By Bill Ainsworth UNION-TRIBUNE STAFF WRITER=20 July 2, 2001=20 SACRAMENTO -- Duke Energy, which has been stung by allegations of price=20 gouging at its Chula Vista plant, has begun fighting back by selectively=20 releasing documents it says exonerate the company of trying to drive up=20 prices by withholding electricity during a critical power shortage in=20 January.=20 Duke has released a memo from the state electricity grid manager saying the= =20 company was following state orders when it powered the plant up and down=20 during three days in January.=20 But the company has refused to release price information that a spokeswoman= =20 from the Independent System Operator, the grid manager, said was critical t= o=20 fully understanding whether the company engaged in price gouging.=20 The dispute is part of a larger battle between Gov. Gray Davis and the powe= r=20 generating companies that have made enormous profits from the California=20 energy crisis.=20 Last month, in a dramatic public hearing before a state Senate committee,= =20 three former workers at the Chula Vista plant accused Duke of turning=20 electricity production up and down to manipulate prices, throwing away spar= e=20 parts and prolonging plant outages.=20 Duke, which is based in North Carolina, leases the plant from the San Diego= =20 Unified Port District.=20 Duke officials called the allegations "baseless," saying plant workers=20 weren't in a position to know why the plant was powered up and down. Duke= =20 spokesman Tom Williams acknowledged that the company never explained its=20 actions to employees, saying it was none of their business.=20 Duke said the plant was following orders from the ISO when it powered down = on=20 Jan. 16 during a Stage 3 alert, when electricity supplies were so low that= =20 rolling blackouts were threatened.=20 Yesterday, the company released a memo from the grid manager confirming tha= t=20 from Jan. 16 through Jan. 18, the company followed ISO direction. "The unit= s=20 did follow the ISO dispatch orders," the memo said.=20 But Duke refused to disclose how much it charged the state for electricity = on=20 those days, saying the information was confidential.=20 The ISO, in a March report, accused Duke and other generating companies of= =20 manipulating the market by withholding power and by bidding prices higher= =20 than the state can afford.=20 Stephanie McCorkle, spokeswoman for the ISO, said the pricing information i= s=20 needed to get a complete picture of Duke's actions in January. She said the= =20 grid manager may have ordered the South Bay plant to power down because Duk= e=20 was charging prices so high the state could not afford them.=20 "The ISO frequently orders plants to ramp down because the plant owner is= =20 charging high prices. Output will certainly fluctuate if the price is so=20 astronomical we can't afford it," she said.=20 The ISO has the pricing information but is not allowed to release it withou= t=20 authorization from the power company.=20 Duke spokesman Williams yesterday said the ISO memo shows that Duke reduced= =20 plant output to keep the electricity grid in balance -- that is, to make su= re=20 that supply was equal to demand.=20 He said Duke charged high prices during those three days in January,=20 including the record price of $3,880 per megawatt-hour, because it feared i= t=20 would not be paid.=20 "It's not a secret at this time that we had some high credit prices," he=20 said.=20 Michael Aguirre, a lawyer who is suing Duke and who helped get the ex-worke= rs=20 to testify to the Senate committee, chastised the company for not fully=20 disclosing the prices.=20 "They should have the courage that these workers had to come forward with a= ll=20 the information," he said. "They should make a full disclosure."=20 The memo from the ISO does not address broader charges by the former=20 employees that the company had been powering its plant up and down for the= =20 entire year to drive up the price of electricity.=20 Glenn Johnson, a former mechanic at the South Bay plant, has said working= =20 turbines frequently were taken offline for "economic reasons." He and other= =20 plant workers say that meant the company was trying to drive prices higher.= =20 Williams yesterday said "economic reasons" meant the cost of running the=20 extra turbines was so high the company could not recover the operating cost= s.=20 "It's not to drive prices up, it's because you can't produce the power and= =20 make money," he said.=20 Aguirre said he was skeptical that Duke could not make money operating clos= e=20 to capacity at a time when wholesale electricity prices were skyrocketing.= =20 Lt. Gov. Cruz Bustamante yesterday accused the company of trying to explain= =20 away its price gouging. "Duke should stop trying to manipulate the media th= e=20 way it has California's energy market," he said.=20 On Friday, Duke asked the ISO to release its memo to just two news=20 organizations, the Los Angeles Times? and the Charlotte Observer? in North= =20 Carolina. But McCorkle refused, saying a document should be available to=20 everybody or to nobody.=20 The newspapers nevertheless obtained the document. Williams said the compan= y=20 selected those two news organizations because it had been working with them= =20 for weeks on the story. He said Duke plans to release the memo to the publi= c=20 at a news conference today.=20 Davis wants nearly $9 billion in refunds from Duke and other companies that= ,=20 under the state's flawed deregulated electricity system, acquired power=20 plants from public utilities and raised wholesale rates dramatically.=20 Duke Energy, which has been accused by state and federal regulators of=20 overcharging California customers for its power, set a California record wh= en=20 it sought $3,880 per megawatt-hour in January.=20 By comparison, during the first half of 2000, power sold for about $30 a=20 megawatt-hour.=20 Hidden Costs Revealed in Power Pacts=20 By RICH CONNELL,ROBERT J. LOPEZ and JEFFREY L. RABIN, Times Staff Writers= =20 ?????California consumers on Monday were given their first detailed glimpse= =20 of the unpredictable and potentially higher costs they'll face in the futur= e=20 under power-buying deals signed by Gov. Gray Davis' administration. ?????State Controller Kathleen Connell released previously secret elements = of=20 the state's long-term electricity contracts, along with a new warning that= =20 the price tag could exceed the administration's previous estimate of $43=20 billion. ?????Technical vagaries in the pacts, Connell said, could leave state power= =20 bills open to wild fluctuations over the next decade. Even after weeks of= =20 analyzing the 41 agreements, she said, her office is still unable to say=20 "what the [cost] ceiling could be." ?????Among other things, the controller said, most costs under the contract= s=20 are now running between $70 and $200 per megawatt-hour, and she predicted= =20 that costs over the next decade will be far higher than the $69 per hour=20 suggested by Davis' aides. ?????More certain are the amounts the state is paying more than two dozen= =20 private consultants who have been drawn into the electricity crisis and who= se=20 contracts also were released Monday by the controller. ?????Some of those consultants--working on behalf of Davis or the state=20 agency that has been purchasing power since January--are making tens of=20 thousands of dollars each month. ?????Connell's release of the uncensored electricity contracts came one day= =20 after the California attorney general said Davis would not appeal a judicia= l=20 order declaring them public records in their entirety. The court action in= =20 San Diego was filed by The Times and other news organizations. ?????Three weeks ago, after another ruling favorable to the media, the=20 administration released the contracts, which will govern the cost of=20 wholesale electricity for years to come. But key technical provisions were= =20 redacted from those documents. ?????Davis planned to release the contracts later this week, but the=20 controller upstaged him Monday, offering her own spin on the deals and=20 prompting the governor's office to shoot back. ?????His aides insisted Connell's warning of possibly higher costs was base= d=20 on incomplete information. Her price figures, they said, were skewed toward= =20 purchases made earlier in the year, when electricity and natural gas prices= =20 were significantly higher. ?????"Unfortunately, the controller doesn't let the facts get in the way of= a=20 good story," said Davis spokesman Steve Maviglio, adding that the controlle= r=20 has been at odds with Davis since he endorsed her rival, Antonio=20 Villaraigosa, in the Los Angeles mayor's race. "This is just a drive-by=20 shooting where she does not have the full set of information." ?????Millions in Hidden Costs ?????Still, the contracts released Monday show for the first time the=20 millions of dollars in hidden costs that are being shouldered by taxpayers. ?????At least one of the energy suppliers, Houston-based Dynegy Inc.,=20 negotiated terms that allow it to pass along to the state high-cost deliver= y=20 charges for natural gas, experts said. ?????Robert Michaels, an energy consultant and professor of economics at Ca= l=20 State Fullerton, said the Dynegy contract permits the firm to use the state= 's=20 most costly benchmark of natural gas prices.=20 ?????Dynegy "has its choice of the highest [cost delivery] point," said=20 Michaels, who once advised the company. Like Connell and others, Michaels= =20 said that even with the complete picture of the contracts, it is difficult = to=20 determine how much added cost ratepayers may face as the deals extend into= =20 the next decade. ?????Also, in just the first three months of the Dynegy contract, the state= =20 picked up about $10 million in pollution, start-up and other operational=20 costs for the firm. ?????Likewise, a contract with San Diego-based Sempra Energy Resources,=20 parent company of San Diego Gas & Electric, allows the company to choose=20 where it delivers electricity into the state grid, Michaels said after an= =20 initial review of the agreement. ?????"It seems to offer a lot of flexibility for the supplier," said=20 Michaels, who also has been a consultant for power suppliers. "It's not=20 obvious what the state got out of this [deal]."=20 ?????The new details on fuel and emission costs underscored some critics'= =20 fears. "As you look at the devil in the details, it gets worse," said UC=20 Irvine economist Peter Navarro. ?????He noted, for example, that Dynegy has been one of the power merchants= =20 labeled by Davis as "pirates." ?????But examining the company's complete contract Monday, Navarro said, it= =20 seemed as if the state was saying, "You pirate, take California's dowry." ?????Navarro and other critics note that power prices have fallen=20 dramatically in recent weeks, well below those the state is paying under th= e=20 long-term contracts. ?????A Times analysis of payments made so far under the contracts shows the= =20 average cost per megawatt-hour has been $173. Recent spot prices for peak= =20 power have been as low as $50 a megawatt-hour, according to surveys by Plat= ts=20 Energy Trader, an industry newsletter. By Monday, when an energy emergency= =20 was declared, the price had risen to about $92 a megawatt-hour. ?????Administration officials, including Davis' chief contract negotiator, = S.=20 David Freeman, have said the state had little negotiating leverage when man= y=20 of the deals were struck early this year.=20 ?????"Early on, we were having a very difficult time gaining any advantage,= "=20 said Oscar Hidalgo, spokesman for the state Department of Water Resources,= =20 which oversees power purchases. Still, Hidalgo and others in the=20 administration contend the power deals will stabilize prices in the long=20 term, and have tamed high spot prices this year. ?????"Now, we have gained the upper hand," Hidalgo said. ?????A Big Payday for Consultants ?????Meanwhile, payments to outside consultants hired to assist the governo= r=20 and the state Department of Water Resources in dealing with California's=20 energy crisis reached nearly $2.8 million by late last month, according to= =20 the figures released Monday. ?????But those payments represent only a fraction of the total contracts th= e=20 state has signed with a broad array of consultants to assist with the=20 purchase of power and acquisition of transmission lines, to provide legal a= nd=20 technical advice, and to mount advertising campaigns and polish Davis' imag= e. ?????The agreements include a $1.5-million multiyear contract with the=20 Washington, D.C., law firm of Grammer, Kissel, Robbins, Skancke & Edwards,= =20 which specializes in energy and environmental law. ?????Attorney Elisa J. Grammer and other members of the firm will represent= =20 the state in proceedings before the Federal Energy Regulatory Commission an= d=20 related court proceedings through the end of May 2004. ?????Another contract calls for the state to pay $1.1 million to two New Yo= rk=20 consulting firms--the Blackstone Group and Saber Partners--at the rate of= =20 $275,000 a month. The contract includes the services of Joseph Fichera, one= =20 of Davis' chief advisors on the energy crisis. ?????Blackstone/Saber could be paid an additional $14.58 million if the=20 Legislature approves deals to buy electric transmission systems from the=20 state's three private utilities--the financially rocky Southern California= =20 Edison, Pacific Gas & Electric, which has filed for bankruptcy, and San Die= go=20 Gas & Electric. Critics say the contract, in effect, provides a huge=20 financial incentive for the consultants to boost the price the state will= =20 have to pay for the transmission system, which would result in higher fees= =20 for them. ?????Davis also drew criticism in late May when he hired two former White= =20 House strategists--Mark Fabiani and Chris Lehane--at $15,000 a month each.= =20 Both also did consulting work for Edison to help the utility win approval o= f=20 a financial rescue package that Davis is pushing. Critics charged the two h= ad=20 a conflict of interest representing both the governor and the utility. ?????The governor announced late Friday that Fabiani no longer works for hi= m=20 and that Lehane would work for less money. Davis' statement said that Lehan= e=20 would be paid $9,900 a month, roughly the same pay as the governor's last= =20 communications director, and he would not work for Edison while consulting= =20 for Davis. ?????Also released was the state's contract with the governor's energy=20 conservation czar, Freeman. The former head of the Los Angeles Department o= f=20 Water and Power is being paid $120,000 for six months' work from April 15= =20 through Oct. 15. ---=20 ?????Times staff writers Nancy Rivera Brooks, Virginia Ellis, Davan Maharaj= ,=20 Doug Smith, Nancy Vogel and Daryl Kelley contributed to this story. Davis Scraps Deal With Consultants=20 Media: One has left his position and the other will get a smaller fee.=20 By DAN MORAIN, Times Staff Writer=20 ?????SACRAMENTO--Under continuing pressure for employing two well-known=20 Democratic communications strategists on the public payroll, Gov. Gray Davi= s=20 announced late Friday that he had scrapped their deal. ?????In a statement released at 7:42 p.m., Davis announced that he had=20 dropped a controversial contract with high-priced communications consultant= s=20 Mark Fabiani and Chris Lehane. Davis' statement said that Fabiani left stat= e=20 service altogether, and that Lehane would work for a lower fee. ?????A month ago, as his poll numbers fell, Davis retained Fabiani and Leha= ne=20 for what was to be a six-month contract at a fee of $30,000 a month in=20 taxpayer funds. Fabiani and Lehane also do consulting work for Southern=20 California Edison, helping the troubled utility win approval of a rescue de= al=20 that Davis is pushing. ?????Critics of the proposed Davis-Edison deal quickly attacked the hiring,= =20 saying that Lehane and Fabiani had a conflict of interest. ?????Republican legislators contended that Fabiani and Lehane, who had work= ed=20 in the Clinton White House defending the former president against a variety= =20 of scandals, are political operatives who should not have been paid out of= =20 taxpayer funds. Fabiani also is a well-known figure in Los Angeles, where h= e=20 once worked for Mayor Tom Bradley, another Democrat. ?????A Republican anti-tax advocate sued to force Fabiani and Lehane to=20 disclose their outside clients and recuse themselves from issues related to= =20 the electricity crisis, while Controller Kathleen Connell, a Democrat feudi= ng=20 with Davis, vowed to withhold their pay. ?????Davis had insisted Lehane and Fabiani are "worth every penny" they wer= e=20 paid, saying last month that they helped him shape his message that=20 independent power generators are responsible for California's energy crisis= . ?????Davis' statement also said Lehane would be paid $9,900 a month, roughl= y=20 the same pay as Davis' previous communications director, and that hewould n= ot=20 work for Edison while consulting for Davis. Generator Bows, Pledges to Cut Electricity Bill by $20 Million=20 Power: Duke Energy had been accused by the state of price gouging. Gov. Dav= is=20 insists that the company still has much to explain.=20 By NANCY RIVERA BROOKS and RICH CONNELL, Times Staff Writers=20 ?????Caving to state and federal pressure, Duke Energy Corp. said Monday th= at=20 it will reduce by $20 million the amount it claims it is owed for electrici= ty=20 sales in California. ?????The Charlotte, N.C., company is one of the state's largest power plant= =20 operators and, with other generators, has been flayed by politicians and=20 regulators in recent months for alleged overcharges in the California marke= t=20 and for supposedly manipulating electricity supplies. ?????Duke also on Monday formally released internal documents of its own, a= s=20 well as from the California Independent System Operator, showing that the= =20 agency was responsible for huge swings in production at a San Diego-area=20 power plant that sparked accusations of price gouging. ?????In sworn testimony June 22 before a state Senate investigating panel,= =20 three former workers at Duke's Chula Vista plant offered internal operating= =20 logs for three days in January, saying they showed that the company throttl= ed=20 generators up and down "like a yo-yo" to boost prices during power=20 emergencies. ?????The company denied the allegations, saying that the workers were not i= n=20 a position to know that Cal-ISO, which operates most of the statewide power= =20 grid, was controlling the changes. ?????Duke has been "shocked and appalled by the accusations that have been= =20 leveled against our company," said Jeff Stokes, its executive vice presiden= t=20 for Western gas and power. The letter from Cal-ISO acknowledging that it=20 ordered the production gyrations in the course of maintaining grid=20 reliability was reported Saturday by The Times. ?????Duke said the $20-million refund for January and February will come fr= om=20 a "credit premium" that it had placed on electricity sales because it feare= d=20 it would never be paid by Southern California Edison and Pacific Gas &=20 Electric, the utility companies then lurching toward bankruptcy. PG&E has= =20 since filed for bankruptcy-law protection, and Edison remains financially= =20 shaky. ?????The Federal Energy Regulatory Commission in June said Duke was entitle= d=20 to no more than $273 per megawatt-hour of electricity in January and ordere= d=20 the company to pay back everything it reaped above that price for the=20 month--including an infamous charge of $3,880 per megawatt-hour, which a=20 spokesman for Gov. Gray Davis called "obscene." ?????Davis said Monday that Duke still has much to explain. ?????"There's no doubt in my mind that there's been an effort by many of th= e=20 power producers to 'game' the system," Davis said, after dedicating Calpine= =20 Corp.'s 540-megawatt Sutter Energy Center in Yuba City, the second of four= =20 major power plants to begin operation this summer. ?????So far, Duke executives said, the company has been paid less than 2=20 cents on the dollar for the power it provided the state in January and=20 February. The federal commission is holding a settlement conference to seek= =20 agreement on possible refunds owed California by power generators and=20 marketers. ?????A Cal-ISO spokesman declined to comment on the Duke revelations, citin= g=20 a gag order imposed by the administrative law judge overseeing the settleme= nt=20 conference. ?????Although Cal-ISO late Friday acknowledged that the ramping at the Chul= a=20 Vista plant was in response to its orders, representatives of the grid=20 agency, the governor's office and the special state Senate committee probin= g=20 alleged power gouging warned Monday that Duke's activities at the plant are= =20 still being scrutinized. ?????The ramping activity ordered by Cal-ISO is only part of the picture,= =20 they say. Further investigation of pricing is underway. ?????State officials suggest, for example, that the grid operator may have= =20 ramped down generation at times to avoid paying unreasonably high prices.= =20 Duke Energy has refused to release details of the prices it charged for pow= er=20 on the days at the heart of the ex-employees' allegations, and did so again= =20 Monday in a conference call with reporters. ?????Under questioning Monday, Duke executive Stokes did indicate that the= =20 prices charged for the power associated with the January logs were in the= =20 range of $1,000 to $1,500 per megawatt-hour, enough electricity to serve=20 about 750 California homes for an hour. ---=20 ?????Times staff writer Eric Bailey in Yuba City contributed to this story.= =09=09 Power Sales Halted by New Pricing Curbs=20 Electricity: Confused suppliers, unsure what they will be paid, refuse to= =20 sell to state, which asks FERC for a ruling but doesn't get it.=20 By NANCY VOGEL, Times Staff Writer=20 ?????SACRAMENTO--Confusion over new federal price restrictions prompted=20 several electricity sellers to back away from sales to California on Monday= =20 afternoon, pushing the state closer to blackouts, energy officials said. ?????The state lost sales that would have provided enough electricity to=20 supply more than 1 million homes, said Ray Hart, deputy director of the=20 California Department of Water Resources, which has been buying much of the= =20 state's electricity since January. ?????At least five companies producing or marketing power "are telling us= =20 that since they don't know what they're going to get paid, they're not goin= g=20 to take the risk, and so they're not going to sell the energy," Hart said. ?????The electricity sales fell through after power consumption soared in= =20 summer heat and grid operators were forced to declare a Stage 1 emergency,= =20 meaning reserves had dipped below 7%. It was the first such emergency since= =20 May 31. ?????Under a June 19 order by the Federal Energy Regulatory Commission=20 intended to bring down wholesale electricity markets across the West, a pow= er=20 emergency in California triggers the setting of a new price limit that=20 applies to power plant owners from Washington to Arizona.=20 ?????The new price is supposed to be based upon whatever it costs to run th= e=20 most inefficient, expensive power plant selling electricity to California= =20 grid operators during the first full hour of a Stage 1 emergency. ?????But much uncertainty remains about exactly how and when the new price = is=20 supposed to be established under the commission's order, and that apparentl= y=20 drove away sellers, Hart said. ?????Shortly after the state issued the Stage 1 alert at 1:30 p.m., putting= =20 the old price limit of $90 per megawatt-hour in question, companies that ha= d=20 committed to provide the state electricity hour by hour Monday afternoon=20 backed out, Hart said. The companies include TransAlta Energy Marketing of= =20 Oregon, Constellation Power of Baltimore and Sempra Energy Trading, a unit = of=20 the San Diego-based energy conglomerate. ?????Forced to dip even deeper into the state's power reserves and declare = a=20 Stage 2 emergency, water agency officials called the federal energy=20 commission's hotline for clarification about what the new price should be a= nd=20 when it should take effect. They got no answer. ?????Hart said commission officials reached at home promised to try to=20 clarify their order today. One outstanding question is what obligations pow= er=20 suppliers have to deliver electricity to California in an emergency. ?????Both buyers and sellers in the market agree that the new price, when i= t=20 is set, will probably be lower than $90 per megawatt-hour because the price= =20 of natural gas, the main fuel in California power plants, has dropped latel= y. ?????Temperatures soared several degrees higher Monday than grid operators= =20 had anticipated. But they said they expected to avoid rolling blackouts in= =20 part because the Bonneville Power Administration in Portland, Ore., had=20 agreed to provide several hundred megawatts of Pacific Northwest hydropower= =20 each hour in exchange for a return of electricity from California later thi= s=20 summer. ?????"Bonneville is giving us emergency power to get us through," Hart said= .=20 Copyright 2001 Los Angeles Times=20 Scorching weather triggers Stage 2 alert, price caps=20 Jim Herron Zamora, Chronicle Staff Writer Tuesday, July 3, 2001=20 ,2001 San Francisco Chronicle=20 URL: http://www.sfgate.com/cgi-bin/article.cgi?f=3D/c/a/2001/07/03/MN225511= .DTL=20 Driven by yesterday's sizzling temperatures, California's Independent Syste= m=20 Operator issued this summer's first Stage 2 energy alert.=20 ISO officials remained uncertain last night whether the state's energy=20 reserves today and tomorrow would drop again to dangerous levels as=20 temperatures continue to hit triple digits in many locations.=20 That's because energy demand may be less than expected if people get a jump= =20 on Independence Day and take off from work early.=20 "It's going to be an interesting week," said ISO spokesman Gregg Fishman.= =20 National Weather Service forecaster Steve Anderson agreed. "In the warmest= =20 areas people will really want to use their air conditioners," he said. "It'= s=20 going to be a long, hot week."=20 Yesterday, Livermore reached a record high of 106 degrees, while Hollister= =20 hit a record 101. Other inland parts of the Bay Area were hot as well, whil= e=20 San Francisco peaked at a comparatively comfortable 80 degrees.=20 The three-hour Stage 2 alert declared yesterday was the first time a=20 California power shortage triggered price caps for 11 other Western states.= =20 Under federal rules adopted June 19, wholesale price ceilings that go into= =20 effect when power reserves in California drop under 5 percent (a Stage 2=20 emergency) were extended to Arizona, Colorado, Idaho, Montana, Nevada, New= =20 Mexico, Oregon, Utah, Washington and Wyoming.=20 The caps are designed to prevent energy suppliers from exploiting shortages= =20 by spiking wholesale prices during threatened blackouts. The restrictions,= =20 which cover all power transactions in the 11 states, are pegged to the cost= =20 of production at the least efficient electricity generating plant in the=20 region.=20 It's not yet clear how the caps will change prices, according to the ISO.= =20 Electricity had been trading at nearly $92 per megawatt hour before the cap= =20 took effect.=20 Triple digit temperatures throughout the desert and mountain regions mean= =20 that many of those states have less energy to export.=20 The energy crisis was felt the most yesterday in Nevada, where soaring=20 temperatures triggered rolling power blackouts yesterday in the southern pa= rt=20 of the state. But power woes did not dim the lights on the Las Vegas strip,= =20 where temperatures were as high as 120 degrees. Virtually all major casinos= =20 and hotels there have backup generators.=20 California's Stage 2 alert came the same day that Gov. Gray Davis threw the= =20 switch to open the 540-megawatt Sutter Energy Center Project in Sutter=20 County, the largest power plant licensed by the state to open since the=20 California Energy Commission began permitting plants in 1976. Last week, th= e=20 state's first new major power plant since 1988 -- the 320-megawatt Sunrise= =20 Power Plant -- opened in Kern County.=20 Chronicle wire services contributed to this report.=20 E-mail Jim Zamora at jzamora@sfchronicle.com.=20 ,2001 San Francisco Chronicle ? Page?A - 3=20 Uncensored power pacts made public=20 State controller says deals will burden general fund for years=20 Carolyn Said, Christian Berthelsen, David Parrish, Chronicle Staff Writers Tuesday, July 3, 2001=20 ,2001 San Francisco Chronicle=20 URL: http://www.sfgate.com/cgi-bin/article.cgi?f=3D/c/a/2001/07/03/MN109919= .DTL=20 State Controller Kathleen Connell yesterday released uncensored versions of= =20 California's energy contracts, including short-term contracts that Gov. Gra= y=20 Davis had hoped to keep under wraps for three months.=20 Connell said the contracts for $43 billion worth of power were negotiated a= t=20 the worst possible times, for higher prices and longer periods than are=20 necessary. But Davis' office countered that Connell was grandstanding and= =20 that her release of short-term contracts would hurt the state in its=20 negotiations with power generators.=20 Connell said the contracts showed California paying more than the $69 a=20 megawatt hour Davis had stated. Ranging from $44 to $249 per megawatt hour,= =20 most are between $100 and $200 a megawatt hour, she said, adding that=20 variables prevented calculating an exact average.=20 But Steve Maviglio, Davis' spokesman, said Connell had selectively mixed in= =20 some higher-priced short-term contracts "to misrepresent facts about the=20 price we negotiated."=20 Although a fellow Democrat, Connell has long had a contentious relationship= =20 with Davis. In an interview yesterday, she said the deals Davis made could= =20 mean the general fund would be in debt for years to come. She added that it= =20 appeared the administration would run out of money to buy electricity by=20 December.=20 Davis is "indebting future generations of Californians to ease the potentia= l=20 pain a port
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