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Enron Mail |
----- Forwarded by Steven J Kean/NA/Enron on 02/28/2001 02:19 PM -----
Miyung Buster@ENRON_DEVELOPMENT 02/26/2001 09:03 AM To: Ann M Schmidt/Corp/Enron@ENRON, Bryan Seyfried/LON/ECT@ECT, dcasse@whwg.com, dg27@pacbell.net, Elizabeth Linnell/NA/Enron@Enron, filuntz@aol.com, James D Steffes/NA/Enron@Enron, Janet Butler/ET&S/Enron@ENRON, Jeannie Mandelker/HOU/ECT@ECT, Jeff Dasovich/NA/Enron@Enron, Joe Hartsoe/Corp/Enron@ENRON, John Neslage/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, John Sherriff/LON/ECT@ECT, Joseph Alamo/NA/Enron@Enron, Karen Denne/Corp/Enron@ENRON, Lysa Akin/PDX/ECT@ECT, Margaret Carson/Corp/Enron@ENRON, Mark Palmer/Corp/Enron@ENRON, Mark Schroeder/LON/ECT@ECT, Markus Fiala/LON/ECT@ECT, Mary Hain/HOU/ECT@ECT, Michael R Brown/LON/ECT@ECT, Mike Dahlke/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Mona L Petrochko/NA/Enron@Enron, Nicholas O'Day/AP/Enron@Enron, Paul Kaufman/PDX/ECT@ECT, Peggy Mahoney/HOU/EES@EES, Peter Styles/LON/ECT@ECT, Richard Shapiro/NA/Enron@Enron, Rob Bradley/Corp/Enron@ENRON, Roger Yang/SFO/EES@EES, Sandra McCubbin/NA/Enron@Enron, Shelley Corman/ET&S/Enron@ENRON, Stella Chan/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Steven J Kean/NA/Enron@Enron, Susan J Mara/NA/Enron@Enron, Mike Roan/ENRON@enronXgate, Alex Parsons/EU/Enron@Enron, Andrew Morrison/LON/ECT@ECT, lipsen@cisco.com, Janel Guerrero/Corp/Enron@Enron cc: Subject: Energy Issues Riverside Press 2/23: "Power line plan has new foes" Contra Costa Times, 2/23: "GOP in a fix over power crisis" Sac Bee, Fri 2/23: "Davis says State has tentative deal for Edison grid" SF Chron 2/23: "Utilities Search for Long-Term Fix During Breather..." SJ Mercury 2/23: "State's Energy Price Tag Increases" LA Times 2/23: "Paying for power still a big question" Long Beach Press 2/23: "Lowenthal returns utility money" Sac Bee 2/23: Columnist Dan Walters: "A power grab by politicians" SF Chron, 2/23: "Discount Urged Near Power Plants" Sac Bee 2/23: "At last, power alerts are lifted..." Sac Bee 2/23: "Davis' deadlines on energy much easier set than met" SF Chron, 2/23: "GOP Sees Power Crisis as Davis' Achilles' Heel" Contra Costa Times 2/23: "Pressure Is on Utilities to Accept Grid Sale" SF Chron 2/23: "Energy Firms Won't Pay All of Monster Debt PUC reverses, taxpayers could foot the bill " San Diego Union, 2/23: "Small electric producers OK big price cut" ------------------------------------------------------------------------------ ------------------------------------------------------------------------------ -------------------------------------------------------------------------- Power line plan has new foes La Cresta residents vow to keep electricity equipment out of the Cleveland Forest and a wilderness area. By Thomas Buckley The Press-Enterprise LAKE ELSINORE A new group has raised its objections to Lake Elsinore's proposed hydroelectric plant and the power lines that might carry its electricity to San Diego County. On Thursday, the Elsinore Valley Municipal Water District board set aside for further study later this month a motion by Director Gary Kelley to ensure that both the lines and the actual power plant that make up a $450 million proposal from Enron North America proceed together. But residents of La Cresta, a mountaintop community near where the lines might run, did not care whether the plant and lines happened together. Many of them do not want the lines to be there at all. "We are resolved to keep power lines out of the Cleveland National Forest and the San Mateo Wilderness Area," said La Cresta resident Bill Stockmar. "Our constituents and the local residents impacted by the proposed project are outraged and respectfully demand immediate intervention to stop this project at the planning level." As it stands now, the power lines from the hydroelectric plant would run from Temescal Canyon to Camp Pendleton along the ridge line of the Elsinore Mountains just west of the lake. Those lines could run in a narrow strip of forest land just west of the La Cresta community. Enron project manager Rob Bakondy said the final determination of where the lines might run is not set, but he said the power lines could be built at least a year before the plant itself. Besides serving the hydroelectric plant, the power lines could be used to replace lines San Diego Gas and Electric wants to build through Murrieta and Temecula to bring power to San Diego. The water district also announced it is considering financing and building the lines itself. District General Manager John Rossi said Wednesday that it was too early to say exactly how the lines would be built, but that the district's building or owning the lines, or both, in cooperation with Enron is "one possibility." Board President Kris Anderson said it is too early to tell whether it would benefit the district to become so directly involved in the project. But he said the district would be able to borrow the approximately $50 million needed to build the lines at a lower interest rate than a private company could get. That difference, Anderson said, could mean extra dollars for the district. How Governor Davis' proposal to purchase thousands of miles of transmission lines from the ailing utilities will affect the project is not yet clear, said Enron spokeswoman Kathy Russeth. The timing of the construction of the project, if it is approved by state and federal regulators, will not be finally known until a contract between Enron and the water district has been agreed upon. That is expected to happen by the end of May. ------------------------------------------------------------------------------ ------------------------------------------------------------------------------ -------------------------------------------------------------------------- GOP in a fix over power crisis Leaders seek solutions that won't undercut past support for deregulation By Daniel Borenstein TIMES POLITICAL EDITOR California Republican Party leaders are trying desperately to politicize the state's electricity crisis by blaming Gray Davis, but it seems that the harder they try the more popular the Democratic governor becomes. The latest GOP push will come today when party leaders, meeting in Sacramento for the start of their three-day state convention, hold a hastily organized workshop on energy. "We should be explaining to California that Gray Davis was asleep at the switch last year," said one of the scheduled speakers, Republican strategist Dan Schnur. "But that message can only work if it's coupled with a proposal for an alternative solution." So far, that hasn't happened. For all the complaints about Davis, Republicans are moving even slower. Looking to 2002, when Davis will stand for re-election, the GOP has run radio ads attacking the governor for delays. But the party has yet to distinguish itself with a solid plan of its own. "If Republicans are able in the next couple of months to articulate a clear plan, which is different from the Democratic plan, yes, we can use it as a political message," said Stuart DeVeaux, spokesman for the California Republican Party. "Are Republicans in Sacramento going to come up with a plan that articulates a future for our energy problem? I'm not telling you it's going to be revealed this weekend. It's my hope it will be articulated this weekend." Republicans are caught in an ideological quagmire. Pushing for re-regulation of electricity conflicts with the party's basic tenet of less government interference. Conversely, arguing for full deregulation puts Republicans at odds with a solid majority of Californians. A Los Angeles Times poll taken Feb. 14-15 found that 60 percent of Californians want to go back to a regulated electricity industry, while 25 percent are opposed. The GOP problem is exacerbated because there is no easy policy solution to the energy mess, said Jack Pitney, government professor at Claremont McKenna College. "It's difficult to see how we get out of this situation without considerable cost. If there were a silver bullet, somebody would have found it by now." Republicans have attacked Davis for his plan to buy power lines from private utilities. "Everybody agrees there's $1 billion or $2 billion in deferred maintenance," said GOP consultant Sal Russo, another speaker at the party's convention today. "We need to be in this business like a hole in the head." But the Times poll found that Californians, by a 52-36 margin, favor the idea. Moreover, Davis' job approval rating has climbed this year. In January, 49 percent approved and 25 percent disapproved. In February, it was up to 57-26. Californians give Davis better marks for handling the electricity crisis than they give President Bush. Republicans are going to have difficult time laying the political blame on Davis. "It's 'Murder on the Orient Express.' Everybody did it," Pitney said. "Although you can make a case that Davis was slow in reacting, no one can seriously pin him with the primary blame for the problem." The deregulation bill passed the Legislature in 1996 with the strong support of both parties and a Republican governor, Pete Wilson. Senate Minority Leader Jim Brulte, R-Rancho Cucamonga, is considered one of the Republican Party's top strategists. He was also one of the leading proponents of the deregulation bill. For all of those reasons, Garry South, Davis' political strategist, said he does not fear a GOP attack on electricity. "If the Republicans want to get into a full-out firefight over how this mess came about, I'm more than willing to play. They don't have a very good story to tell." For now, Davis' political strength is stable. But the 2002 primary elections are still more than a year away, and the general election is a political eternity from now. "If this isn't resolved, there is nothing to guarantee that there won't be a voter backlash against the government," said political analyst Sherry Bebitch Jeffe. "And right now the government in California is the Democratic Party." That's the message the Republicans want to drive home. But if they can't come up with their own alternative, they might have a hard time playing the blame game. ------------------------------------------------------------------------------ ------------------------------------------------------------------------------ -------------------------------------------------------------------------- Davis says state has tentative deal for Edison grid Updated: Feb. 23, 2001 - 4:42 p.m. LOS ANGELES -- After a week of intense closed-door negotiations with utility representatives, Gov. Gray Davis said Friday he had reached an "agreement in principle" with Southern California Edison to buy the utility's power lines for an estimated $2.7 billion. The deal also requires Edison International, the parent company of Edison, to sell cheap power to the state for a decade. "This is the framework of a good, balanced deal," Davis said. "It's not a final deal. There's a lot of work to be done, But we're making progress." The governor said he did not expect customer rates to increase as a result of the deal. Edison did not immediately return calls seeking comment. The state has been in talks for a week to buy a total of 26,000 miles of transmission lines from Edison, Pacific Gas and Electric and Sempra Energy, which operates San Diego Gas & Electric. The total cost of the lines could range from $4.5 billion to $7 billion. The effort is intended to help restore the financial health of the state's two largest utilities, PG&E and Edison, both of which are near bankruptcy. The $2.7 billion price for the Edison lines amounts to 2.3 times the estimated book value, Davis said. The utilities say they have lost nearly $13 billion since June, trapped between soaring wholesale power prices and state-imposed rate caps for consumers. The tentative plan announced by Davis would allow Edison to issue bonds for a substantial portion of its losses. Davis said the state is making good progress in its talks with Sempra and "some progress" with PG&E. Thursday, Davis said he will not sign off on any grid buyout without all three utilities' participation. "I do not believe we can make a satisfactory arrangement without 60 percent of the transmission grid, and that would require cooperation with PG&E," he said Friday. PG&E spokesman Ron Low said Thursday night that talks had ended with no resolution that day. "These are complicated problems that will not be solved overnight," Low said. "There are clearly some issues where we are very far apart." Still, PG&E chief executive officer Robert Glynn Jr. said Friday the meeting with Davis was a "milestone in the resolution of California's energy crisis" and said he was willing to meet further to discuss the utility's proposal. "Each utility's issues and opportunities in this crisis are different, and we believe that PG&E has proposed a detailed solution that balances ratepayer and shareholder interests," Glynn said in a statement issued Friday before the governor's news conference. The company said it would have no further comment. The tentative agreement also calls for: Edison parent Edison International to make payments to the utility of about $420 million. Edison International to commit the entire output of its Sunrise Mission power project at low, cost-based rates for 10 years. Davis said that arrangement could save ratepayers $500 million over the next two years. Edison to provide cost-based rates from generating plants it owns for another 10 years. Edison to drop its lawsuit against the California Public Utilities Commission claiming that imposed rate caps were illegal under federal law. "This entire transaction, which I believe is fair and balanced for both sides, will be accomplished within the existing rate structure," Davis said. "We will not be asking any more of consumers to allow this transaction to come to pass." Davis said negotiations will continue in the coming days. Consumer advocate Harvey Rosenfield called the governor's plan "an outrageous giveaway" and predicted that if lawmakers didn't halt it, voters would revolt. "The most outrageous part of this isn't even paying 2.3 times what the lines are worth, but then allowing the parent companies that siphoned off billions of dollars to pay only the tax payment they already owe," Rosenfield said. The Public Utilities Commission already regulates how much the utilities can charge for power their own plants generate, Rosenfield said. --By Leslie Gornstein, Associated Press Writer ------------------------------------------------------------------------------ ------------------------------------------------------------------------------ - Utilities Search for Long-Term Fix During Breather State purchase of power lines under discussion Friday,?February 23, 2001 ,2001 San Francisco Chronicle Sacramento -- A break in the weather and a break in the energy crisis coincided yesterday, as California enjoyed its first day in more than a month without a power alert. With the short-term picture for power improving, representatives of the state's three troubled utilities met separately with Gov. Gray Davis and his staff to work on a longer-range fix for the power crisis that would include state purchase of the firms' transmission lines. Trouble loomed in at least one set of talks, however, as Pacific Gas and Electric Co. said it was "very far" from reaching a deal. The California Independent System Operator, which coordinates the flow of electricity through the state's power grid, removed all power alerts at about 9 a.m. yesterday. Spokeswoman Lorie O'Donley said that with springtime approaching and weather improving, and with some power plants coming back to full output from maintenance, the overall picture is brightening. "We're optimistic," she said. "We're coming into the spring season, the majority of generators have had their maintenance completed. But everything is dependent on the weather and temperature." The last day California had no power alerts was Jan. 13. Since then, there have been two days of rolling blackouts in Northern California and many other days of Stage 3 alerts -- when power reserves dip below 1.5 percent of available capacity. The mildest alert, Stage 1, is declared when reserves are between 5 and 7 percent of capacity. The supply of power has been helped by warmer temperatures in other Western states, cutting demand there, and by an increase in generators on line in California, O'Donley said. Last week, when the state was still in Stage 3 alerts, 10,500 megawatts were offline in California. Yesterday, there were 8,200 megawatts offline, a difference that provides enough power for a couple million homes. O'Donley warned that the supply picture in California is still tight, and conservation still necessary. But the focus of attention was turning to Sacramento and Davis' talks with the utilities. Davis announced a plan last week for the state to purchase 26,000 miles of utility-owned transmission lines in exchange for backing bonds that allow the utilities to repay the almost $13 billion in debt they say they owe. While Southern California Edison and San Diego Gas and Electric have indicated willingness to sell their lines, PG&E has refused to comment on the proposal. It is not clear if PG&E is unwilling to sell or simply trying to strike a harder bargain. The utility had accumulated more debt than its Southern California counterparts, and also owns the largest part of the transmission line grid. Talks between Davis' staff and PG&E did not start until late yesterday afternoon, and indications were that they were more difficult than negotiations involving the other two utilities. "They're just on a different page," Michael Peevey, the former Edison president who is Davis' chief negotiator, told Bloomberg News. PG&E spokesman Ron Low said, "These are difficult problems that cannot be solved overnight. There are clearly some areas where we are very far apart." Davis hopes to make an announcement with at least one of the utilities before leaving today for the four-day National Governors Association meeting in Washington, D.C. The union that represents some 11,000 PG&E employees, meanwhile, called on Davis to negotiate state ownership of two power plants under construction in which PG&E holds large stakes. Jack McNally, business manager of the International Brotherhood of Electrical Workers, Local 1245, in Walnut Creek told Davis in a letter that a transmission line takeover would be a "grand experiment" fraught with danger. Acquiring the two prospective power plants, in Kern and San Diego counties, would do more to address energy shortages than taking over transmission lines that need hundreds of millions of dollars in maintenance, union officials said. Davis spokesman Steve Maviglio countered that state acquisition of transmission lines "would not affect one union job," as the state would simply lease the grid back to the utilities. Maviglio predicted union jobs would increase with investment in new capacity and system upgrades. Chronicle staff writers Patrick Hoge and Robert Salladay contributed to this report. ------------------------------------------------------------------------------ ------------------------------------------------------------------- State's energy price tag increases Published Friday, Feb. 23, 2001, in the San Jose Mercury News BY DION NISSENBAUM Mercury News Sacramento Bureau SACRAMENTO -- California's energy crisis took another big bite out of the state budget Thursday when finance aides to Gov. Gray Davis announced that the cost of buying energy may top $3 billion by mid-March. In a move that raised new alarms for lawmakers, the governor's finance team for the third time this month asked for $500 million to buy electricity in the coming weeks while Davis tries to work out a deal to bail out the state's near-bankrupt utilities. That, combined with money spent last month to buy energy, could drain the state coffers of $3 billion by St. Patrick's Day. The request for more cash came on the same day that California spent its first day in weeks without an official energy emergency and Davis held critical talks with the heads of Pacific Gas & Electric Co. and San Diego Gas & Electric Co. The talks are aimed at rescuing the two companies and Southern California Edison from financial collapse. While Davis had expressed hope last week of working out a deal by today, sources said that an agreement still remains elusive. Until a compromise can be hammered out, the state is being forced to pay upward of $50 million a day from the general fund to buy electricity. State leaders expect that the money will eventually be repaid to the general fund under a $10 billion bond package. But lawmakers are growing increasingly concerned about the short-term impact on the state fiscal plan. Assemblywoman Carole Migden, D-San Francisco, said the latest request for more money could create ``greater concern and anxiety'' among lawmakers and added that the energy crisis was going to make it harder to fund other programs, such as support for abused children. ``It's going to be a bleak year for other budget priorities,'' said Migden, who is chairwoman of the powerful Assembly Appropriations Committee. Earlier this week, the state's independent financial analyst warned that the energy crisis could eat into state money the governor wants to spend on other things such as the environment and public safety. While lawmakers have so far bitten their tongues about the growing power price tag, Migden said the Legislature might be hesitant to allow the costs to go any higher. ``I can't imagine another infusion after this being required,'' Migden said. ``I think this has to be the last request because we're going to hit fundamental core programs.'' Waiting for bailout plan California stepped in to buy the energy last month after PG&E and Southern California Edison lost the financial wherewithal to do it themselves. At the time, state leaders reluctantly agreed to buy the energy for a short period of time as part of a larger plan for California to sign long-term contracts with power generators. But those negotiations have failed to produce much energy so far, and Davis said earlier this week that the power producers are hesitant to sign any deals until California agrees to a bailout plan for the utilities. On Thursday, one power producer -- Williams Cos. -- announced that it had signed a 10-year contract with the state to provide up to 1,400 megawatts of power to California. In a bid to work out the bailout plan, Davis and his advisers met Thursday and were to meet again today with top executives from all three electric utilities in financial trouble. The Democratic governor wants to buy 26,000 miles of high voltage transmission lines owned by the three companies in exchange for helping the utilities pay off $13 billion in debts. The utilities are being asked to protect thousands of acres of wilderness lands they own, hang onto power plants that provide the state with its cheapest electricity, and drop explosive lawsuits that could allow the companies to dramatically raise customer rates. But sources said talks have bogged down on the transmission line deal, which PG&E has been reluctant to accept. Alternative energy helps out While talks slogged along in the governor's office, state lawmakers announced that another key piece of the puzzle needed to solve the energy crisis was falling into place. State Sen. Jim Battin, R-Palm Desert, and Assemblyman Fred Keeley, D-Santa Cruz, said that alternative energy producers had agreed to dramatically lower their prices in a deal that could save California $3 billion to $4 billion. Those energy producers, nearly 700 wind, solar and natural gas-fired plants, provide about a third of the state's energy. ------------------------------------------------------------------------------ --------------------------------------------------------------------------- Paying for power still a big question POWER CRISIS PG&E doesn't like the plan the PUC proposed to collect electricity costs By Mike Taugher TIMES STAFF WRITER Three weeks after Gov. Gray Davis signed into law the state's centerpiece for stabilizing energy costs, big differences remain over how the solutions will be implemented and who will pay for them. The plan, outlined in legislation known as AB1X, was intended first to stop the financial bleeding of California's two largest utilities by asking the state to buy enough unsecured power to keep the lights on. Next, the state would enter long-term contracts for less expensive power that would eventually lessen the need for more costly, last-minute electricity. But the state has balked at buying the entire portfolio of last-minute electricity that is needed, and a disagreement emerged Thursday over what portion of consumers' bills should be used to reimburse state coffers. Meanwhile, progress on completing contracts has been slow, although two were signed Thursday. A spokesman for Davis said more contracts for relatively low-cost power would be signed once the state bought the utilities' transmission lines and other assets, because then the utilities could pay their past-due bills. The governor said last week that he expected a deal with the utilities by today, but that might not happen. "Clearly, there's been challenges getting long-term contracts, but we've turned the corner," said Davis spokesman Steve Maviglio. "We've got three in the bank and 10 more once we get these deals (with the utilities) done." Also Thursday, the Public Utilities Commission was poised to allow the state to collect the entire amount that customers pay specifically for electricity. But Pacific Gas & Electric Co. said it is entitled to deduct other costs from customers' payments before reimbursing the state. That would reduce payments from PG&E to the state by about half, according to the company. The PUC proposal was in response to a request from the state Department of Water Resources that it be allowed to start collecting money so that energy companies would be more willing to sell power to the agency. The two Republican-appointed commissioners of the PUC blocked the move, which needed four of five commissioners' approval to reach the agenda. "DWR's (action) is exacerbating a problem AB1X was meant to alleviate," said Commissioner Richard Bilas. "It is pushing the utilities closer to bankruptcy." PG&E spokesman John Nelson said the proposal brought by PUC President Loretta Lynch would have been unfair to the utilities because AB1X allows them to deduct expenses for buying electricity and generating energy at their own power plants before reimbursing the state. "All of those costs need to be paid going forward. Otherwise, you still leave the utilities to bleed," Nelson said. That stance appeared to be at odds with the office of Assemblyman Fred Keeley, the Boulder Creek Democrat who wrote AB1X. "For PG&E to think it can keep money for electrons it never even owned is astounding to us," said Guy Phillips, a Keeley aide. While nothing has gone smoothly, Phillips and others expressed optimism that the state's biggest effort to date to fix the energy crisis would work. "We think those will be sorted out," said Phillips, who acknowledged there has been much confusion about what lawmakers intended in AB1X. For example, Keeley's office said lawmakers wanted the water resources agency to make up the entire amount of electricity that the state's two largest utilities had not secured ahead of time. The high cost of this last-minute electricity -- and the utilities' heavy reliance on it -- is what drove PG&E and Southern California Edison to the brink of bankruptcy. But the water agency has balked at buying electricity offered at prices it calls "unreasonable." While state officials have refused to say how much electricity it has left to utilities to purchase, the state is paying about $55 million a day to keep electricity flowing. And that amounts to about 90 percent of the electricity purchased on behalf of the utilities on the same day it is needed, according to Phillips. The state's reluctance to buy all of the so-called real-time electricity has led to fears that the utilities will continue to run up debt and that power companies will not collect money owed to them. That dispute has landed in federal court, where a Sacramento judge is forcing three major power suppliers and a marketing company to continue selling power in the state. If a settlement is not reached today, U.S. District Judge Frank C. Damrell is expected to decide whether to extend his order, to modify it or to drop it. Staff writer Andrew LaMar contributed to this story. ------------------------------------------------------------------------------ --------------------------------------------------------------------------- Lowenthal returns utility money By Will Shuck From our Sacramento Bureau SACRAMENTO Assemblyman Alan Lowenthal, D-Long Beach, this week joined a small group of legislators who returned campaign contributions to California utility companies and other energy firms. He sent $5,000 back to Southern California Edison and $500 to Sempra Energy, parent company of Southern California Gas. It was a small portion of the more than Lowenthal $500,000 Lowenthal had raised in 2000 for his re-election campaign. He said he returned the money, as did nine other Assembly members, at the urging of the consumer advocacy group Global Exchange. "We think it's fantastic that he has recognized that in the eyes of the public there is a very serious potential conflict of interest," said group spokeswoman Medea Benjamin. "We applaud him for wanting to ensure the integrity of the legislative process." While Benjamin says it's critical that lawmakers not be tainted by energy money during the state's power crisis, others wonder where the line should be drawn. "In the real world of politics it costs money to run for office and you have to get that money somewhere," said Paul Schmidt, a political science professor at Cal State Long Beach. "To say that you can only make decisions on things involving individuals that haven't given you any money would result in paralysis of government." Benjamin and other consumer advocates say the power crisis calls for special consideration. "There are not many cases in which they're actually voting whether a company will survive with billions of dollars of taxpayer money or go bankrupt, as they're doing with the utility companies," Benjamin said. Lowenthal agreed. "I thought it was an appropriate request," he said. "These are unique circumstances, and I just think it's in the public's best interest that I return that money." ------------------------------------------------------------------------------ --------------------------------------------------------------------------- Dan Walters: A power grab by politicians (Published Feb. 23, 2001) Slowly, but inexorably, control over the generation, acquisition and distribution of electric power in California is being shifted from professional utility managers and independent regulators into the hands of politicians. The 1996 utility "deregulation" scheme enacted by the Legislature was an initial foray into politicization. Legislation granting the governor more control over the makeup of the Public Utilities Commission was another. But the current power supply/price crisis has led to even more direct political influence over -- or interference with -- electric service. One hastily enacted bill, for example, gives the governor direct control of the now-misnamed "Independent System Operator," which operates the statewide power grid. More political intrusion is in the works, from a state takeover of the intercity power transmission grid to the creation of a state power authority that would buy, generate and sell electricity directly. And while local public utilities function well, a state power agency might operate on the whims of professional politicians. The Legislature, for example, wants appointments to the board that would direct a state power authority, and big state power projects would be subject to the same kind of pork-barrel mentality that distorts other public works appropriations. Where power plants were to be built, or where high-voltage lines would be strung, might well depend on who could, and could not, bring political influence to bear, rather than what the system needed to work efficiently. Clues to the potential pitfalls of a state-operated power system are found in the approaches of Capitol politicians to the current crisis. There is, for example, the unspoken goal of avoiding big power rate boosts until after the November 2002 election -- even if it means running up billions of dollars in debts to do it. Would future rates charged by a state power authority be raised or lowered to enhance the prospects of the dominant party or an incumbent governor? There's no evidence in past performances to indicate they wouldn't be. And then there's the knotty question of who would get vital power supplies in the event of shortages -- a situation that is already looming and could become worse in future months. Emergency legislation already gives the state the right to sell power as it pleases, without competitive bidding or even public notice. There's nothing, really, to prevent politically influential power customers such as big industrial enterprises from cutting their own supply deals with politically directed state officials. And whose juice would be cut off if shortages mean blackouts? Approximately 45 percent of current power customers are effectively exempt from rolling blackouts because they are connected to circuits (called "blocks") that also include vital services, such as hospitals, fire and police agencies, water supply systems and communications centers. The Capitol, not surprisingly, is in one of those noninterruptible blocks. With the threat of further blackouts looming, legislation is being drafted to designate which customers will suffer and which will not -- thus taking that authority out of the hands of utilities and regulators. And that, in turn, is generating pressure from lobbyists from all sorts of interest groups to place their clients on protected lists. Should farmers be cut off, or biotechnology facilities, or computer chip plants, or schools? When politicians control any process or system, one can be certain that they will always make expedient political decisions, regardless of the long-term or wider consequences. Thus, we may someday regret allowing the Capitol's self-serving politicians to get their hands on our electric power system. ------------------------------------------------------------------------------ --------------------------------------------------------------------------- Discount Urged Near Power Plants Senator urges electricity rate break for neighbors of generators Friday,?February 23, 2001 ,2001 San Francisco Chronicle As California officials propose building 32 new "peaker" power plants across the state by July, one legislator from plant-rich eastern Contra Costa County thinks residents should get a discount on their power bill for having a generator in their backyard. The proposed bill would provide a little payback for residents of state Sen. Tom Torlakson's district, which is home to a half-dozen plants and has three more in the construction pipeline. Under the bill introduced yesterday by Torlakson, D-Antioch, people living within a 20-mile circle around a power plant would receive a 20 percent discount on their electricity bill and be exempt from blackouts. The legislation was partially inspired by San Jose officials' rejecting a proposal to build a 600-megawatt power plant in the Coyote Valley, as well as Gov. Gray Davis' plan to build 5,000 megawatts of new generating capacity by July 1. "It's a question of fairness," Torlakson said. "People in communities who are shouldering the burden for having plants in their backyard should get some benefit from it." Torlakson said consumers who lived in communities without plants could pick up the tab for the discounts. "But the utilities would have to figure that out within their rate system," he said. A PG&E spokesman said yesterday that the company does not comment on pending legislation. While consumer advocates, environmentalists and power generators were lukewarm to the proposal yesterday, many admit that the state has not thought about how to -- of even if they have to -- offer communities a little incentive to approve a power plant within their borders. However, the state has allocated $30 million for plants that get online by July 1. "As far as incentives, I'd think most communities would see the value of the employment they'd get and the increase to the tax base," said Larry Hamlin, the governor's recently appointed project manager for the plant-building campaign. A spokesman for California's Environmental Protection Agency, which permits plants, said the plan might be a "worthwhile idea for making power plants more palatable to Californians." Michael Shames, head of Utility Consumer Action Network in San Diego said the bill was attacking a "not in my back yard" problem that doesn't exist. "Many San Diego communities are clamoring for plants in the hope that they would bring stability to the market," he said. James Peters of Mirent, the Atlanta-based company formerly known as Southern Energy, said the plan wouldn't encourage generators to build the number of plants needed to solve the energy crisis. Already, communities like Pittsburg have cut deals with power generators before letting them build. In exchange for letting the Calpine Corp. build two large plants in town, Pittsburg received the lifetime option to purchase 100 megawatts of power at below-market rates. Next week, a Pittsburg group is going to begin gathering signatures demanding that city leaders use the estimated 26 megawatts it would take to light residences and businesses to give local residents a break on bills. The group will hold an organizational meeting at 7 p.m. Tuesday at the Los Medanos Community Hospital, 2311 Loveridge Rd. in Pittsburg. ------------------------------------------------------------------------------ ------------------------------------------------------------------- At last, power alerts are lifted: Enjoy respite because crisis far from resolved, experts say By Carrie Peyton Bee Staff Writer (Published Feb. 23, 2001) As oddly as it arrived, California's electric emergency lifted Thursday morning. At 9 a.m., the Independent System Operator, which controls most of California's grid, ended a Stage 1 alert. It was the first time since Jan. 13 that the state hadn't been under a power emergency, declared when low supplies threaten grid stability. The alerts included 32 straight days of Stage 3 emergencies, the black clouds that gather before rotating outages. The clouds cleared on a day when predicted peak use was low -- but not the lowest it has been for the last five weeks. Many power plants were back on line after repairs -- but more plants had been operating during at least one Stage 3 day. So what happened? A little luck, a little planning and maybe a little group psychology, said those who have closely watched recent gyrations of the state's electric roller coaster. "It is a roll of the dice," said Gary Ackerman, head of the Western Power Trading Forum, which represents plant owners and marketers. "If it continues for the next three or four weeks I wouldn't be too surprised. That'll be our respite. Enjoy it." The end of a 40-day string of emergencies could mean a few more lights in store aisles or a little less worry about running an electric furnace. Some speculated it might also mean lower wholesale prices. But major changes are not likely in the steady rain of conservation calls that have fallen on Californians since the north state was twice plunged into rotating blackouts last month. "I hope people don't just go back to wasteful ways," said Mike Florio of The Utility Reform Network, a consumer group. Now that the emergencies have dissipated, "we don't have to talk about imposing hardships on people, but prudent use of energy is an idea we're going to have to live with for a long time," he said. At the ISO, longer days and slightly warmer weather was credited with decreasing peak demand for electricity. Supplies are up within the state, and power imports from the Pacific Northwest have risen significantly, said Jim Detmers, who manages grid operations. Plus, in one of the biggest changes, the state Department of Water Resources has begun getting more power supplies lined up at least a day in advance, he said. Since the department stepped in to buy power on behalf of cash-strapped utilities, it has often managed to line up about 70 percent to 75 percent of what the state needed to supplement utility-controlled supplies, according to Detmers. That meant grid operators had to scramble to buy the rest on very short notice. But starting last Friday, the state began to schedule about 90 percent of its purchases at least one day in advance. "The operators are able to enter a day with a lot more confidence about being able to make it," Detmers said. "You don't have to search to find those megawatts at the last minute." Closely in sync with increased purchases by the state, the ISO dropped from a Stage 3 emergency to Stage 2 on Friday, and then slid to a Stage 1 Wednesday. The stages are based on how much reserve power is left for unexpected crises; a Stage 3 is declared when reserves slip below 1.5 percent. For their part, power buyers at the water resources department weren't sure what has made the difference over the past few days. "It's certainly not that people are lining up to sell us power at cheap prices," said Jim Spence, the department's director of emergency operations. "We're just buying whatever we can, and it turned out that it was easier to make ends meet." He said he couldn't make any prediction about how long that would last. The string of power emergencies has been unpredictable from the start, erupting in winter, when California's hunger for electricity traditionally declines and supplies are usually so flush that plants close for tune-ups. Consumer advocates and power traders blamed finances for the emergencies, rather than a fundamental lack of supply, as fears of utility bankruptcies triggered a descent into market chaos and high-stakes political maneuvering. But basic supply shortages are expected to move to the forefront by summer, when temperatures rise and demand soars. Meanwhile, the brief respite -- whatever the reason -- brought palpable relief to those charged with keeping the power grid stable. "When we found out yesterday during the board meeting that we were only in Stage 1, we broke out in applause," said Florio, who sits on the five-member ISO board. The change also could be good news for consumers, who may one day be paying higher rates for the wholesale electricity now being purchased by the state. "Getting out of a Stage 3 typically means prices are going to ease," Florio said. "When you're even in a Stage 1, that's a signal to everybody, 'They're short, that means we can hold them up now.' " ------------------------------------------------------------------------------ --------------------------------------------------------------------------- Davis' deadlines on energy much easier set than met By Emily Bazar Bee Staff Writer (Published Feb. 23, 2001) Exactly one week ago, Gov. Gray Davis sounded hopeful, optimistic even, when he predicted that the state and its debt-ridden utilities would forge an agreement by today on a plan to save the companies from financial doom. Problem is, it won't work out that way. Negotiations between state officials and the investor-owned utilities have produced no comprehensive agreement to announce today. Davis' predictions during the energy crisis have been wrong before. For weeks, he has set deadlines for agreements and legislative action that haven't been met. On deadline days, even when there's little substantive progress to report, Davis often holds news conferences anyway -- many of them on Friday afternoons after financial markets close. The Democratic governor's office scheduled an "announcement" for today in Los Angeles, even though one utility representative said agreement is far away. Davis' actions have fueled speculation that he's trying to force consensus by setting artificial deadlines and putting a spin on the news, and tarnishing the state's credibility in the process. "I can't see how you would negotiate such a complex deal, like the purchase of the transmission grid, in such a short period of time. It doesn't seem realistic," said Gary Ackerman of the Western Power Trading Forum, an association of wholesale generators. "I guess the people I represent have turned it off. They have stopped listening. They hear it and say, 'OK, sure. Here's another photo op.' " Last Friday, Davis told a gathering of reporters that state officials and the utilities would agree by today on a rescue plan for the utilities. "I believe we'll have agreement before next week is out, on exactly what should go in a piece of legislation," he said at the time. "And hopefully, that legislation will be passed by the end of the following week." Legislative veterans said his comments were ill-advised and unrealistic. Davis met into the night Thursday with top officials of Pacific Gas and Electric Co., but no agrement was reached. "These are complicated problems that will not be solved overnight," said PG&E spokesman Ron Low. "On some issues, we are very far away from agreement." Sources said PG&E has been unwilling to negotiate sale of its transmission lines, which Davis has said is a necessary component of a deal. More progress was reported with the two other near-bankrupt companies -- San Diego Gas and Electric Co. and Southern California Edison -- although sources said talks with them were far from concluded. Davis has been setting specific deadlines for himself and the Legislature for months: In November, the governor promised to present a comprehensive "plan" by Dec. 1 to stave off a full-blown energy crisis, but ended up offering only a modest slate of proposals. Davis called Feb. 12 a "drop dead" date by which he hoped to cement a deal between lawmakers and the utilities. There's no deal yet. Davis told reporters that he and the state's legislative leaders would reach a "consensus agreement" on the proposal to take to utilities by last Friday. It didn't happen; he made the announcement alone. Leon Panetta, a White House chief of staff under former President Clinton, said it's important that the governor set deadlines because the nature of politics is to delay. However, he cautioned against missing deadlines. "You have to be careful that you keep the deadlines you establish, because the more that you establish and not meet, the more that begins to lose its value as a political tool," Panetta said. The governor can't continue to indefinitely set deadlines without facing consequences, cautioned Steven Fetter, managing director of the Global Power Group at Fitch, a credit-rating agency based in New York. At some point, he warned, creditors and power suppliers may push the utilities into involuntary bankruptcy, which would trigger an official deadline that can't be ignored. The dispute would be tied up in court at a judge's discretion. "Eventually, there is going to be a real deadline," Fetter said. "The problem is it's probably not a deadline that will be set by Gov. Davis. It's a deadline that will be set by the banks and the (electricity) suppliers." In several cases when deadlines haven't been met, Davis has held a news conference regardless, unveiling little new information and scant detail. On Jan. 26, for instance, the governor promoted the broad framework of a plan to save the utilities rather than a detailed plan that had been anticipated. One prong of the plan: "Aggressively promote energy efficiency, conservation and demand reduction among consumers, businesses and public entities." Davis spokesman Steve Maviglio said that the governor continues to set deadlines because it's important to show that the state is making progress, particularly to Wall Street. He added that it's not the governor's fault the deadlines have been missed. "Many of the dates have been blown away by factors no one has been able to foresee or have control over: court decisions, actions by creditors, weather, you name it," Maviglio said. "The governor sets deadlines that continue to move the ball forward and he has been successful at doing that." Many of these announcements came after 2 p.m. on Fridays, triggering suggestions that the governor has attempted to spin the facts and manipulate the markets. Timing announcements after the close of East Coast financial markets is commonly used by politicians who don't want to send stocks soaring or tumbling by making an announcement, Panetta said. "You want people to evaluate what's happening so there isn't a panic reaction to a news flash going over the wire," he said. But market analysts say that ever since PG&E and Edison stocks plummeted in early January, the governor's statements haven't significantly affected their performance. "There has been so much news that has been so negative for the companies that I don't think it makes much of a difference," said Ed Schuller, a senior vice president for the full-service brokerage firm Sutro & Co. "It's beyond that point now." ------------------------------------------------------------------------------ --------------------------------------------------------------------------- GOP Sees Power Crisis as Davis' Achilles' Heel Republicans line up to run for governor Friday,?February 23, 2001 ,2001 San Francisco Chronicle Democratic Gov. Gray Davis, politically wounded by the state's power woes, has become the target of a growing pack of Republicans looking to turn him out of office. "Four months ago, Davis looked on track to get re-elected by a voice vote," said Dan Schnur, a GOP strategist. "But the energy crisis has exposed vulnerabilities that have encouraged others to look at the (2002 governor's) race." The governor's backers, however, are confident California voters will recognize Davis is dealing with a problem that has been brewing for years, through previous Republican administrations. "If the Republicans want to have a full-out firefight over who brought this (energy crisis) down, we're ready for it," said Garry South, the governor's top political adviser. "It's a fight they can't win." With the primary election still more than a year away, no one but Davis is a sure bet to leap into the contest, but at least three names will be circulating when California Republicans meet in Sacramento this weekend for their state convention. Secretary of State Bill Jones, Los Angeles investor Bill Simon Jr. and actor Arnold Schwarzenegger all have made noises about challenging Davis, but so far their incipient campaigns have been more talk than action. Simon's effort might be the farthest along, but he also has the longest way to travel. A political unknown, the 49-year-old Simon runs his family's investment company and has been active in a number of charitable organizations in Southern California. Simon, whose father was treasury secretary under President Richard Nixon, has brought in veteran GOP consultant Sal Russo to study a possible run for governor. "Bill Simon feels we need a governor who's prepared to lead and not one who's focused on fund-raising or the next political office," Russo said in a jab at Davis. Simon was an assistant U.S. attorney in New York, but founded William E. Simon & Sons with his brother and late father in 1988. The $2 billion private investment firm owns a number of companies and has also invested heavily in South of Market real estate in San Francisco. Wealthy political outsiders don't have an enviable record in recent California elections. Republican Michael Huffington spent $29 million to lose a 1994 Senate race to Dianne Feinstein. Darrell Issa dropped around $13 million in a losing race for the 1998 GOP Senate nomination. Al Checchi spent about $38 million of his own money to lose the Democratic primary to Davis in 1998. While Simon likely would be spending plenty of his own money on a governor's bid, he's working to get outside support, both political and financial, before committing to the race, Russo said. With the state's problems mounting and the economy increasingly shaky, the time may be ripe for a political unknown, he added. "When things start going bad, people are willing to look outside for a new face, someone who will get things done," Russo said. Jones is anything but a political outsider. A veteran legislator from the Fresno area, he is now serving his second and last term as California's secretary of state. He managed to hang onto his job during the GOP's 1998 electoral debacle, which cost the party every other constitutional office. While Jones has long talked about a run for governor, he's still playing coy. "We have not made any decision and probably won't make one until early March," said Rob Lapsley, one of Jones' top advisers. "Right now we're putting together information for Bill to make a decision." While Jones' role as the state's top GOP officeholder makes him an obvious choice to challenge Davis, he's made a number of political enemies over the years, many of them in his own party. His surprise decision last year to switch his support from George W. Bush to Arizona Sen. John McCain in California's presidential primary won him no fans among Bush supporters and could hurt his attempts to raise money for a gubernatorial bid. Money is a major problem for Jones, who listed $118,000 in his campaign fund last month, compared with nearly $26 million for Davis. Some of his opponents have suggested that fund-raising woes may force Jones to run for an office other than governor. "Right now, we're focused on the governor's race," Lapsley insisted. The real Republican wild card is Schwarzenegger, the movie action hero who would be instantly recognized by nearly every California voter. While Schwarzenegger's publicist told The Chronicle last month that he had no plans to get involved in next year's governor's race, the Austrian-born star was on the telephone to a Los Angeles Times columnist days later, talking about his love for politics and his political ambitions. Fame, however, has its drawbacks, as the 53-year-old Schwarzenegger has found. An article in Premiere magazine entitled "Arnold the Barbarian" accused him of groping women on movie sets and generally boorish behavior, while the supermarket tabloids have him on the cover this week, suggesting that his marriage to Maria Shriver is on the rocks. South, Davis' political adviser, gleefully sent copies of the Premiere article to reporters across the state, suggesting that "the piece lays out a real 'touching' story -- if you get what I mean." Whoever ends up with the GOP nomination still will face an uphill battle against Davis, a popular governor and a "take no prisoners" campaigner. "I've been predicting since Day One that the GOP would find some moneybags candidate to throw against Gray," South said. "That's why we've kept our political and fund-raising operation going since election day." ------------------------------------------------------------------------------ ------------------------------------------------------------------- Pressure Is on Utilities to Accept Grid Sale Energy: Gov. Davis wants accord today, but Edison executive says company might prefer bankruptcy. By DAN MORAIN and NANCY VOGEL, Times Staff Writers ?????SACRAMENTO--His credibility at risk and California's energy future on the line, Gov. Gray Davis on Thursday turned up the heat on the state's utilities to accept today a series of tentative rescue accords that would put the companies' transmission systems into public hands. ?????How far the utilities are willing to bend to the governor's intensified pressure was unclear late Thursday. Given Davis' mandate, a top executive of Southern California Edison said his company is now being forced to seriously contemplate whether it might fare better in Bankruptcy Court. ?????"We are weighing two very unpalatable alternatives," he said. ?????Two alternatives facing the utilities are either to sell their electrical transmission systems to the state at a price they consider too low or gamble in Bankruptcy Court that they could hang onto their valuable assets. ?????After nearly a week of negotiations, Davis administration officials said they hoped to announce today a partial deal that would calm the utilities' jittery creditors and help subdue California's runaway electricity market. ?????State officials said Thursday they were close to agreements with Edison and San Diego Gas & Electric but remained at odds with the state's biggest utility, Pacific Gas & Electric, which has balked at giving up its transmission grid. ?????"These are complex issues that cannot be resolved overnight," said PG&E spokesman Ron Lowe. "There are clearly some areas where we are very far apart." ?????On Thursday, Edison Chairman John Bryson conferred with members of his utility's board of directors. But by evening, the company's top executives still had not decided whether to acknowledge that an agreement is near. ?????Although the utility has begun to contemplate the protections of bankruptcy, it is unclear when, or if, such a dramatic action would occur. ?????Davis is believed to be offering roughly $7 billion for the utilities' transmission grids. The companies could use the cash to restructure their debt, which resulted from the utilities' inability to pass along their soaring wholesale electricity costs to ratepayers. ?????Davis has significant political and fiscal reasons for wanting to make an announcement today. He is scheduled to arrive in Washington for the National Governor's Assn. conference this weekend, meet with U.S. Energy Secretary Spencer Abraham on Sunday, and attend the Democratic Governors Assn. annual fund-raising dinner Monday night. ?????Davis, a prodigious fund-raiser, is chairman of the Democratic Governors Assn., and the dinner is expected to raise more than $5 million. Of that amount, Davis' political organization raised in excess of $1 million, said Garry South, his chief political advisor. ?????Any progress Davis can cite could help improve his national political standing. But his aides say it's especially important to be able to show at least a semblance of an agreement when he travels to New York on Wednesday to confer with Wall Street analysts. ?????On Thursday, those analysts reacted exuberantly to early hints from the governor's office that settlements with the utilities might be announced. ?????The recently anemic stocks of Edison International and PG&E Corp. soared on the New York Stock Exchange on a day when most utility stocks closed lower. ?????Edison jumped $1.50 per share, or 11.15%, to close at $14.95 while PG&E gained $1.49, or 11.41%, to $14.55 per share. ?????"That suggests that someone thinks something good is happening in Sacramento," said analyst James D. von Riesemann of Morgan Stanley Dean Witter & Co. ?????But some analysts fear investor enthusiasm might be hasty. ?????"I'm concerned that the governor's optimism may not coincide with all the parties at the table and it may not coincide with the Legislature," said Paul Patterson, utility analyst at Credit Suisse First Boston Corp. ?????Davis met Thursday with Steve Baum, chairman of Sempra, the parent company of SDG&E. Administration officials are confident that an agreement can be reached. But the San Diego company is the smallest of the state's three major private utilities, and its debt is far smaller--$605 million, compared to the combined $12.7 billion that Edison and PG&E say they have amassed. ?????"[Baum] is willing to listen," said Sempra spokesman Doug Kline. " . . . We're on the record as stating that we are willing to consider the sale of those [transmission] assets if it helps solve the crisis." ?????PG&E executives had been scheduled to start meeting with Davis at 11 a.m. Thursday. But in what was seen a slight against PG&E, Davis' aides did not summon negotiators for the Northern California utility, including company Chairman Robert Glynn, until after 3:30. ?????Although the parties continued to wrangle over details, there was progress Thursday on the sidelines. ?????State officials announced they had signed a long-term contract for a relatively small amount of electricity with a major energy supplier--an achievement that was perhaps more symbolic than substantive. ?????Tulsa-based Williams Cos. said it had agreed to a 10-year deal to sell power to the Department of Water Resources. By April, the company will provide at least 175 megawatts--enough electricity to supply 175,000 homes--at times of the day when demand for electricity soars. Such peak supplies will increase through next summer and reach 900 megawatts by 2006, according to Williams. ?????The agreement is only the second such long-term contract since Davis signed a bill Feb. 1 putting the Department of Water Resources into the power-buying business for many years to come. ?????At least 10 other power suppliers have reached understandings with the state, Davis said Wednesday. But those companies refuse to sign deals, the governor said, until the state finds a way to help California's two biggest utilities pay off their billion-dollar debts. ?????"As soon as we revitalize the utilities," the governor said, "I think you'll see a lot of movement on long-term contracts." ?????Another small but important piece of the state's energy plan emerged Thursday when legislation was introduced by Sen. Jim Battin (R-La Quinta) to slash the rates paid to alternative energy producers--a move expected to shave $3 billion or more in annual costs charged to the big private utilities. Reducing the amount paid to producers of renewable energy such as solar, wind and biomass power is considered a crucial step in keeping expected consumer rate hikes down. ?????And, after 40 days of dangerously low electricity supplies, the state got a reprieve Thursday morning when grid officials lifted the state's "electrical emergency" status for the first time since Jan. 13. ?????So far, the state has spent nearly $2 billion buying electricity on behalf of the utilities, according to the Department of Finance, which informed the Legislature on Thursday that it will release another $500 million for electricity purchases. --- ?????Times staff writers Nancy Rivera Brooks, Nancy Cleeland and Mitchell Landsberg in Los Angeles and Julie Tamaki and Jenifer Warren in Sacramento contributed to this story. ------------------------------------------------------------------------------ --------------------------------------------------------------------------- Energy Firms Won't Pay All of Monster Debt PUC reverses, taxpayers could foot the bill Christian Berthelsen, Chronicle Staff Writer Friday,?February 23, 2001 Under a ruling yesterday by state regulators, California taxpayers could be on the hook for hundreds of millions of dollars in power purchases the state has made in behalf of two troubled utilities. The California Public Utilities Commission voted unanimously to absolve Pacific Gas and Electric Co. and Southern California Edison of responsibility for any costs above the revenue they collect from ratepayers. The ruling reversed a position taken earlier by the commission, which had said the utilities were responsible for making up the difference between the state's costs and their own revenue. John Tremaine, a PG&E spokesman, said the funding needed to make up the difference could come in the form of a surcharge imposed on customers who use 130 percent of the baseline amount of electricity. That is one option under a bill passed last month by the Legislature, he said. But Steve Maviglio, a spokesman for Gov. Gray Davis, said the governor does not believe the money will come from ratepayers' electric bills. The costs, Maviglio said, could be covered by the $10 billion bond measure the state recently issued to cover power purchases. As California tries to resolve its power crisis, state officials
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