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Enron Mail |
The guy negotiating the bill on behalf of IEP told me that there's a 35-40%
chance that it will make it out of the Senate by the end of next week, which means that it still has quite a ways to go. Best, Jeff Michael Etringer@ECT 02/23/2001 04:39 PM To: Jeff Dasovich/NA/Enron@Enron cc: Subject: Article on AB47X Jeff, Do you know how this bill is progressing. I was on an IEP call last night where they seem to be rallying the troops to respond in very short order on this bill . During the call they where working towards a Tuesday deadline. It sounded as if there would be some consideration of the bill on Tuesday? If you have any insight it would be greatly appreciated. Mike ---------------------- Forwarded by Michael Etringer/HOU/ECT on 02/23/2001 02:44 PM --------------------------- Steve C Hall 02/23/2001 10:41 AM To: Michael Etringer/HOU/ECT@ECT cc: Subject: Article on AB47X Mike, Here is an article on the QF bill. Small electric producers OK big price cut By Ed Mendel STAFF WRITER February 23, 2001 SACRAMENTO -- Legislators said yesterday that small generators who produce about 30 percent of the state's power have agreed to cut their power prices in half, an important step toward easing the electricity crisis. Negotiations continued on what Gov. Gray Davis has called the final step: the state purchase of the transmission systems of the three investor-owned utilities in exchange for paying off their huge debt. Meanwhile, the amount that the state is spending to buy power for the customers of the utilities grows. Officials gave notice that an additional $500 million will be needed in 10 days, bringing the total to $2.6 billion. But for the first time in nearly six weeks the state did not declare an alert yesterday due to power shortages. More power was available from other states, and some power plants that had been shut down for maintenance resumed operation. Two legislators, Sen. Jim Battin, R-Palm Desert, and Assemblyman Fred Keeley, D-Boulder Creek, said they introduced legislation that sharply reduces the prices paid to small generators after weeks of difficult negotiations. "Ultimately, this bill will reduce the cost of energy to the state and its ratepayers by billions of dollars," said Battin, who represents eastern San Diego County. About half of the small generators use "renewable" technologies such as solar, wind, geothermal and biomass. The rest is "co-generation," when fuel is used for industrial purposes and electricity is generated as a by-product. The small generators have grown to produce nearly a third of California's power under a two-decade-old federal "qualifying facilities" program, which requires utilities to buy their power. Battin and Keeley said that under the bill, SB 47X, the average price for these QF contracts could drop from the current 17 cents per kilowatt-hour to about 8 to 8.5 cents per kilowatt-hour. "We believe that the rates are at least that low, if not lower," said Jan Smutny-Jones, executive director of the Independent Energy Producers, which represents small and large generators. The small generators support the bill because it will give them a stable price for five years, avoiding ups and downs and the possibility that state regulators might make a more unfavorable price cut. Much of the current price formula is based on the price of natural gas at the California border, which has soared this winter. The legislation spreads the price bench mark over a five-year period. "We encourage the Legislature to take quick action to approve SB 47X as quickly as possible to help stabilize the electricity crisis," Smutny-Jones said. He said one of the side agreements to the legislation is the creation of a portfolio of long-term contracts to purchase natural gas for some co-generators, lowering their production costs. The legislation was applauded as "a major step forward" by a group of small generators who formed a creditors committee last week and threatened to take the utilities into bankruptcy. "We call on the Legislature and the governor to act on it immediately," said Chris Thompson, a spokesman for the group. Thompson said Southern California Edison continues to collect money from ratepayers, as the state buys power for its customers, but is not paying anything to the small non-polluting generators. A spokesman for a geothermal generator in El Centro, which filed a lawsuit seeking $45 million from Edison for power provided since November, welcomed the legislation for giving generators stability and ratepayers cheaper power. But Vince Signorotti, a spokesman for CalEnergy, said it would be "premature" to consider dropping the lawsuit. Battin and Keeley said that payment of the small generators depends on the governor's attempt to negotiate the purchase of the transmission systems of Edison, Pacific Gas and Electric, and San Diego Gas and Electric in exchange for payment of their debt. As part of the governor's plan, the utilities would agree to provide low-cost power for five to 10 years from their generators, which provide about a third of the state's power. Davis aides are attempting to negotiate long-term contracts with generators for the remaining third of the power required by the state, sharply reducing the cost of buying power on the expensive spot market. But the governor said this week that many generators are reluctant to sign long-term contracts until they know how the utilities will pay their debt for previous power purchases. The state called off all power alerts yesterday for the first time since mid-January, rescinding a Stage 1 alert declared Wednesday. Grid operators made the change after increased power supplies became available. "The supply situation this week has gradually been improving," said Lorie O'Donley, a spokeswoman with the California Independent System Operator, which manages most of the state's power supplies. However, she said the improvements shouldn't deter consumers from conservation. "It is good news to be out of electrical emergencies but we just want to remind everybody that we are looking at a long-term power supply situation here," she said. "And the high-demand summer is just around the corner. So we would ask that people continue with their conservation efforts." In San Francisco yesterday, state power regulators decided unanimously that the Department of Water Resources is responsible for buying any power that cash-strapped utilities are unable to generate or buy on their own -- no matter what price wholesalers are charging. But the PUC voted 3-2 against taking action that would have allowed the DWR to receive a portion of ratepayer revenues from the utilities to help cover the cost of buying electricity. The state, through the DWR, was authorized by a recent law to buy power for the utilities. Edison and PG&E have such low credit ratings that no power companies will sell to them. SDG&E's rating is much better, but its debt also was mounting. The DWR purchases that portion of electricity beyond what the utilities provide through their own generating plants and through existing long-term contracts. But the DWR has refused to buy power beyond a certain price. That means more last-minute power purchases on the expensive spot market. The utilities and the state had disagreed over how the DWR will be reimbursed -- whether through state bonds or ratepayer dollars -- and the extent of its power-buying role. The author of the bill authorizing the long-term contracts, Assemblyman Keeley, said the legislation's intent was to fully cover the one-third of the power that utilities purchased on the spot market, either through extended contracts or through the state ISO. Staff writer Karen Kucher and The Associated Press contributed to this report.
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