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Please see the following articles:
Houston Chron, Sun, 4/1: "Corporate greed isn't to blame for energy crisis in California" Sac Bee, Mon, 4/2: "Report: Potential rate hike included in California power talks" San Diego Union, Sun, 4/1: "Davis softens on rate hikes; Democrats fear backlash" San Diego Union, Sun, 4/1: "Some question value of transmission lines" LA Times, Mon, 4/2: "This Summer, Power-Hungry U.S. May Feel West's Pain" LA Times, Mon, 4/2: "State, Edison Discussed Pact to Pay off Firm's Huge Debt" LA Times, Mon, 4/2: "Vegas lights Undimmed" SF Chron, Mon, 4/2: "Power Crisis Batters Budget Stock slide, rate increases erode state's revenue " SF Chron, Sun, 4/1: "Davis Blames Crisis On State Republicans But Democratic controller points at governor " SF Chron, Sun, 4/1: "Rate Increases May Be Just Beginning Unanswered questions now may mean higher bills soon " SF Chron, Sun, 4/1: "Energy Department Rethinking Clinton Appliance Efficiency Rules " SF Chron, Mon, 4/2: "Hydrogen Powers Energy Hopes Experts say it may be the fuel of the future " Mercury News, Sun, 4/1: "Consumers bemoan formula for power-rate hikes" Mercury News, Mon, 4/2: "High energy prices place firms higher in Fortune 500 ranks" Mercury News, Mon, 4/2: "As energy policy lurches, is Gov. Davis in charge?" (Editorial) Orange County, Mon, 4/2: "Businesses battle the blackouts" (Commentary) Individual.com, Mon, 4/2: "California ISO Declares Stage Two Electrical Emergency; Continued Conservation Urged as Power Supplies Remain Limited" Individual.com, Mon, 4/2: "[B] PG&E says it will take $4.1 bln charge on uncollected power costs (Wrap)" ------------------------------------------------------------------------------ --------------------------------------------------- OUTLOOK Outlook Corporate greed isn't to blame for energy crisis in California JERRY TAYLOR, PETER VANDOREN 04/01/2001 Houston Chronicle 4 STAR 4 (Copyright 2001) TO hear California's politicians tell it, heartless power- generating firms are the cause of the high price of West Coast electricity. Deregulation, the populists claim, allowed them to sell electricity at astronomical prices in an utterly dysfunctional wholesale market. The Federal Energy Regulatory Commission has now joined the witch hunt, ordering power generators to refund the state of California $124 million for "overcharges" during the power emergencies in January and February. The only problem with price controls, we're told, is that they're not more aggressively applied. Have we learned nothing from economic history? The commission maintains that it cost 27 cents on average to produce a kilowatt hour of electricity during peak demand periods last January. California regulators, however, report that they paid an average of 28 cents for that power on the daily spot market. During February, wholesale natural gas prices exploded, resulting in production costs of 43 cents per kilowatt hour. Unfortunately, no published data exist to discern what that power actually sold for. But given the size of the commission-ordered rebates and the extent of the markups observed in previous months, it's unlikely that wholesale prices were more than a few cents higher on average than production costs. Nonetheless, because the commission's mission is to prohibit "unjust and unreasonable" wholesale prices, the commission wants the generators to give back the difference charged during the power emergencies earlier this year. The economic populists have seized on those commission orders as proof that they're being robbed blind. But hold on a minute: The commission's data clearly show that high wholesale electricity prices (which hovered around 3 cents per kilowatt hour before the crisis hit last year) are primarily the result of higher production costs, not corporate greed. To be sure, industry analysts believe that actual production costs during power emergencies are far higher than the commission believes, but at least the commission has recognized that input prices explain most of the spike. The upshot is that higher production costs would have sent wholesale electricity prices through the roof even if the Legislature had not "deregulated" its electricity market in 1996. The commission also implicitly concedes - rightly - that the highest cost source of supply needed to meet demand is the legitimate price for all power sold in the state. For instance, the cost of producing a kilowatt hour of nuclear, coal, or renewable-fired electricity ranges from 2 cents to 6 cents, but the commission does not propose to require those generators to price at cost. Given the overall shortage of electricity in the Western region, the commission grants those power generators the right to charge what the market will bear. But wait: Why is it OK with the commission if some generators charge what the market will bear, but not OK for other generators to do likewise? Top electricity economists spanning the ideological spectrum agree that power supplies are so tight in the West that most natural gas-fired generators can charge more than their costs and still find willing buyers. Not only is this not a crime were it to occur in any other market, it's necessary if electricity is to be allocated to those who need it the most. For the sake of argument, let's assume that about a nickel out of each kilowatt hour sold during the peak demand periods in January represents "profiteering." If so, don't blame the free market . . . it doesn't exist. In California, generators can charge whatever they want during a crisis without fear that the prices they name will reduce sales because the state insists upon maintaining retail price controls. This is called a "dream scenario." Without those rate caps, generators would find that high prices reduce sales, providing a disincentive against charging the moon. The upshot is that retail price controls are themselves primarily responsible for whatever mischief exists. Still, we're arguing about a nickel out of a bill of 28-45 cents per kilowatt hour. That's a lot of to-do about relatively nothing. Drum all those alleged excess profits out of the market and we're still in a world in which California ratepayers are getting one heck of a free ride. Even with the 40 percent rate hike passed last week, California ratepayers are still paying only one-third to one-fifth the cost of the power they are consuming. You don't need a Ph.D. in economics to understand that subsidies like that will inevitably result in excessive consumption, scarcity and blackouts. Those who think that denying the laws of supply and demand are the best way out of this mess will soon be pondering such thoughts in the dark. Drawing: (p. 1) Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. ------------------------------------------------------------------------------ ------------------------------------------------------------------- Report: Potential rate hike included in California power talks LOS ANGELES (AP) -- The state's negotiations to buy power lines from ailing Southern California Edison included a draft proposal that could mean another rate hike for customers, the Los Angeles Times reported Monday. The newspaper said it obtained a 40-page draft memorandum of understanding, dated last week, that among other things could obligate Edison customers to help pay the utility's massive debt through a "dedicated rate component" -- potentially a rate hike -- even if no power line deal is reached. The component, which wasn't specified, wouldn't show up in bills for two years, according to the draft. The document was dated Tuesday -- the same day that the state Public Utilities Commission approved record rate increases of up to 42 percent for Edison and 46 percent for PG&E. The PUC was scheduled to meet Monday to determine how best to hear from as many different groups as possible before implementing the increase. A spokesman for Gov. Gray Davis said Sunday that the draft memorandum -- one of several floated in the state's ongoing, nearly two-month-old talks with Edison -- already is obsolete. "This draft is ancient history," Steve Maviglio said. "We have moved beyond that, and continue to make progress and hope to be able to make an announcement shortly." He did not provide other details. On Friday, Edison officials described as "very active" talks with the governor's office over the sale of its transmission lines to give the struggling utility a cash infusion. But SCE chief financial officer Ted Craver said a deal was not imminent. In addition to Edison, Davis wants to buy electrical lines from Pacific Gas & Electric Co. and San Diego Gas & Electric Co. for a combined total of about $7 billion. Edison and PG&E say they've lost nearly $14 billion since June to high wholesale prices. Talks between the state and PG&E are awaiting the outcome of the Edison deal, PG&E spokesman John Nelson said Sunday. Meanwhile, the Bush administration on Sunday reiterated its opposition to price controls as a method of halting soaring energy costs, including California's. "Our view is that price caps on energy create shortages. They created the gas lines of the 1970s," U.S. Energy Secretary Spencer Abraham said on ABC's "This Week." "If we did them in California, for instance, where this call has gone out, we'd have more blackouts this summer, they'd last longer, and they'd go on into the future," Abraham said. As for helping the state, "we're doing the most that we can," Abraham said. "But as I've said, we don't have a generator in the basement of the Department of Energy where I can automatically send electricity, whether it's to California or another part of the country." ------------------------------------------------------------------------------ ---- Davis softens on rate hikes; Democrats fear backlash By John Marelius? UNION-TRIBUNE STAFF WRITER April 1, 2001 ANAHEIM -- Gov. Gray Davis all but abandoned his once-adamant opposition to electricity rate increases yesterday as angst over the potential political fallout from the energy crisis dominated what had been planned as a weekend of celebrating Democratic electoral gains in California. In a speech to the California Democratic Party Convention, the governor sketched the outlines of an alternative he is expected to propose to the rate increases of up to 46 percent approved last week by the state Public Utilities Commission. "If a rate increase becomes absolutely necessary to keep our lights on and keep our economy strong, you can be sure of one thing from this governor: I'll fight to protect those least able to pay, reward those who conserve the most and motivate those who are the biggest guzzlers to cut back," Davis said. Some question value of transmission lines ? Meanwhile, state Controller Kathleen Connell pointedly decried a "delaying and incremental" approach to the energy crisis and warned of a voter backlash against Democrats in next year's elections. "Just ask President Jimmy Carter what happens when you stall and you don't solve the gas-line problem," Connell said. "We don't want to have that happen to California Democrats." Davis, who has a history of animosity with Connell, shrugged off the unstated but obvious critique of his handling of the crisis. "Everyone's entitled to their point of view, but I believe that we've moved at warp speed to address this problem," he said. "I'm pleased that we've been able to keep the lights on most days. .?.?. Maybe if she's not happy with that, she can run for governor next time." One analyst speculated that may be exactly what Connell has in mind. She is running for mayor of Los Angeles but is not expected to be a major factor, and term limits prevent her from seeking a third term as controller next year. "It's the opening salvo in the 2002 Democratic primary campaign," said Sherry Bebitch Jeffe, a political scientist at the University of Southern California. "I don't know how else to interpret it." With the election of President Bush and Republicans in control of Congress, the Democratic Party finds itself in its weakest position nationally since the Eisenhower administration. Yet in California, Democrats are in their strongest position in decades as they hold all but one statewide office and wide majorities in the state congressional delegation and both houses of the Legislature. A succession of convention speakers -- U.S. Sen. Barbara Boxer, House Minority Leader Dick Gephardt of Missouri and Democratic National Committee Chairman Terry McAuliffe -- excoriated Bush's assault on Democratic environmental and worker safety regulations and held up the California Democratic Party as a national model for Democratic electoral success. "If every Democratic Party in the country did what California did for House Democrats, I would have the (House speaker's) gavel today," Gephardt said. For the first time, Democrats are holding their state convention in Orange County, a Republican stronghold where Democrats have been making solid inroads because of the steady influx of immigrants from Asia and Latin America. "This ain't your grandfather's Orange County," Davis crowed. "You know, Orange County has a Republican past, but it has a Democratic future." Such self-congratulation was tempered by the awareness that because Democrats hold such a position of dominance in California, voters will expect them to solve the electricity problem even as Democrats continue to blame it on the deregulation policies of former Republican Gov. Pete Wilson. "There will be no excuses for Democrats in this state because we dominate state government," Connell said. She warned that continued "finger-pointing" would not solve the problem. Other speakers continued to hammer away at Wilson as some of the walls in the Anaheim Convention Center bore posters reading, "Wilson did it." And then there was the message inside the fortune cookies: "Energy fiasco. DNA proves Wilson at crime scene." "What the voters have to understand is that we inherited this crisis," said California Democratic Party Chairman Art Torres, who was elected to a second four-year term yesterday. "Now we've got to deal with it, and we should be held accountable on how we deal with it." Davis remains a strong favorite to win re-election next year, but his once-robust popularity apparently has taken a major hit in recent weeks, especially when blackouts began rolling across the state. "There are people polling and they show enormous deterioration in Davis' numbers, and it looks like he's got some real political problems," said Democratic strategist Bill Carrick. "But ultimately, he's going to be judged on how he manages the crisis and can he get a solution on this before next year that makes some sense to people." For months Davis said electricity rate increases were out of the question and recently claimed he could have solved the problem in 20 minutes if he had been willing to entertain them. When the PUC voted its increase for Pacific Gas and Electric Co. and Southern California Edison Co. on Tuesday, Davis called the action premature, but did not offer an alternative. Yesterday, he said he was consulting with financial analysts and would propose a rate plan before the end of the 30-day period before the action of the independent commission becomes final. "I will have a fuller statement within the next two weeks, at which time I will speak to what if any rate hike I think is appropriate and how tiered pricing should be implemented," the governor said. Davis lashed back at Republican legislators who have escalated their criticism of his handling of the crisis. He blamed the GOP for the ill-fated 1996 deregulation without mentioning that the plan cleared the Legislature with unanimous Democratic support. "The Republicans who were so enamored with deregulation just five years ago have become even more enamored with criticizing me as I try to clean up their mess," Davis said. "May I remind our Republican friends that this deregulation disaster was authored by a Republican legislator, passed by a Republican Assembly, signed into law by a Republican governor and implemented with undue haste by a Republican PUC." ------------------------------------------------------------------------------ ---- Some question value of transmission lines By Jeff McDonald? UNION-TRIBUNE STAFF WRITER April 1, 2001 Transmission lines have been upgraded. Poles are taller and sturdier. Electricity is shuttled farther and faster than ever before. But like internal combustion engines or indoor plumbing, not much has changed over the past 100 years in the fundamental design of the distribution network that pushes power across North America. The electric grid, a vast collection of wires and switches, has served millions of homes and businesses since the late 19th century. The grid has been expanded again and again, decade after decade. Now, with Gov. Gray Davis negotiating to buy huge sections of the grid owned by three cash-hungry California utilities, questions are being raised about the long-term value of such a dated delivery system. Is the web of power lines a key link in the supply chain whose worth will climb higher and higher as demand for electricity grows? Or will looming technology render the grid obsolete even before the state can pay off the bonds it issues to buy the system? "The usefulness of the grid is still intact -- it does work," said Mark McLaughlin, a researcher with the Alternative Energy Institute, a Tahoe City-based group that promotes renewable power sources. But "it will become less important over time -- 10, 15 years," he said. "As for being completely reliant on it, that is changing now and will continue to change at an ever-increasing pace." Technological advances already are redefining traditional electricity delivery. With blackouts crippling businesses across the state -- and additional outages forecast for this summer -- more and more companies are investing in so-called distributed generation, a broad term applied to any number of devices that can make power on-site. Increasingly popular products such as microturbines, cogeneration plants, photovoltaic systems and residential fuel cells allow consumers to limit their reliance on utility companies such as San Diego Gas and Electric. "This (power) crisis has generated a huge amount of interest in the product," said Mark Kuntz of Capstone, a San Fernando Valley-based company that markets 30-and 60-kilowatt microturbines. "We're in the process of responding to that interest and turning it into orders." The abundance of alternatives for businesses and homeowners has propelled a new debate: what to do with the surplus power produced by distributed generation systems. Investors are banking that the electric grid will remain hugely valuable because it can move energy in any direction. "We are building a company around our bullishness on the grid," said Fred Buckman, chairman of Trans-Elect Inc., a private Washington, D.C.-based company that plans to spend $15 billion acquiring transmission lines. "The deployment of smaller distributed generation systems will reduce the rate at which we have to grow the transmission system, but we don't believe it will replace the grid." Trans-Elect bid up to $5 billion for the lines owned by Southern California Edison, Pacific Gas and Electric, and SDG&E. But that offer was pushed aside by utility company executives when it became clear that Davis wanted the grid for the state of California. More important to utilities, however, may be the eventual sales price. Edison agreed in principle to sell its share of transmission lines to the state for $2.76 billion. But details of that proposed deal -- announced in February -- remain to be worked out. In the meantime, lawmakers are growing anxious about continuing delays. Some legislators say Davis should rethink buying the grid and instead consider acquiring the utilities' hydroelectric networks. The $2.76 billion price tag for the Edison lines is about 2.3 times the their book value -- the base worth used by regulators to set rates of return. If PG&E and SDG&E reach similar deals with the governor, the cost of acquiring some 32,000 miles of transmission lines could reach $7.4 billion -- too much, some consumer advocates worry, to make the transaction a good deal for ratepayers. Public ownership of the grid would give the state a powerful hand in dealing with federal energy regulators, who so far have refused to rein in power generators, consumer groups say. The acquisition also would curtail unnecessary additions to the system, investments that provide guaranteed profits to the current owners, activists say. "The state isn't looking to make money expanding the system," said Michael Shames of the Utility Consumers' Action Network. "The state can establish a policy that says no new grid will be built where distributed generation can substitute." But many experts believe that even as microturbines, fuel cells, windmills, solar power and more cogeneration plants take root in coming years, the grid will be needed to deliver surplus power to other places that can use it. Without having ways to move power from place to place, a major benefit of distributed generation would fall by the wayside. "The only way small assets are useful is if they can be shared when some power isn't needed, and you can't do that without a grid," said Mark P. Mills, an energy consultant and co-editor of the Digital Power Report. "The grid becomes more important the more you distribute things." Nancy Floyd is a co-founder of Nth Power, a San Francisco venture capital group that seeks investment opportunities in utility innovations -- particularly the transmission and distribution of electricity. Five years ago, the firm had $50 million to spend. By 1999, the investment pool had climbed to $350 million. Last year, the company portfolio soared to $1 billion. "This is an area that's attracting a lot of capital, which means you're going to have a steady stream of new products and services," Floyd said. "That is the bright side of deregulation." Pure Energy Corp. of Syracuse, N.Y., has operated the Iceoplex cogeneration plant in Escondido since 1994. It sells its 50 or so megawatts to SDG&E, which transmits the power over the grid for use by its customers. The firm has been floating plans to double capacity at the plant just east of Interstate 15, but company executive Jack Wolf said a ruling by California regulators last week has him rethinking expansion plans. Adding new turbines or cogeneration plants can rub neighbors the wrong way. Smokestacks billow out steam, which some residents say is unsightly even if the plume of white is only harmless water vapors. Wolf said his company met several times with Escondido residents to iron out concerns about boosting capacity at the Iceoplex. "If you're doing something like (expanding), you've got to meet with the communities, understand what their concerns are and work with them," Wolf said. Taxpayer advocates, meanwhile, do not worry whether the grid will remain viable over the next decade or two. Instead, they fear the government takeover of an aging network of poles and wires. "You're going to be socializing a massive infrastructure," said Jonathan Coupal, director of legal affairs for the Howard Jarvis Taxpayers Association. "The state of California can't even maintain the damn roads," he said. "Now we're going to be taking on not only the purchase but the ongoing maintenance of a huge infrastructure?" At the National Renewable Energy Laboratory in Golden, Colo., researchers work to improve the efficiency of alternative energy programs and promote their use among mainstream consumers. But even as workplaces and neighborhoods across the country move toward supplying their own power, the transmission system will remain a vital part of the network that delivers electricity from place to place, experts say. "Will the grid be obsolete in 20 years? Absolutely not. Things don't move that fast," said George Douglas of the National Renewable Energy Laboratory. "But we need to be forward-looking. "If each office park and subdivision has its own power source, that doesn't mean you don't want them linked, because things do fail." Stanford S. Penner, director of the UCSD Center for Energy Research, is convinced that the power grid will remain critical for decades to come. History has shown that implementing new technology takes far longer than inventing it, he said. "The turnover by a new technology has usually taken 40 to 50 years," he said. "Twenty years from now, they will still be relying on the transmission lines. Forty years from now, they may be starting to phase them out." ------------------------------------------------------------------------------ -- This Summer, Power-Hungry U.S. May Feel West's Pain By ERIC SLATER, Times Staff Writer ?????CHICAGO--California's electricity meltdown has been so spectacular that, until recently, much of the rest of the country was sitting back, feet up, watching the rolling-blackout show on television. ?????No longer. As summer approaches, utility operators across the nation are scrambling to shore up their own systems, many of which are themselves in the murky middle of deregulation and in varying states of neglect and disrepair. ?????In Chicago, the recently overwhelmed power provider actually advises competitors on where to build power plants. In New York City, officials say the difference between light and dark this summer may be 11 mini-generators. And in states from Arkansas to North Carolina, legislators are watching California's deregulation fiasco and slamming the brakes on their own plans. ?????The West is bound to suffer the most this summer, experts agree, but it's going to feel long and hot across much of the rest of the country, whether it really is or not. And with the economy already sputtering, the largest power shortage since the Arab oil embargo of 1973 could be nudging the country toward recession. ?????"Pray for continuous clouds," advised San Francisco-based energy consultant Edward Kahn. ?????A good word for cheaper gasoline in the Midwest, strong backs for coal miners in the South and lower natural gas prices from coast to coast might be in order as well. ?????In the U.S., electricity flows a bit like water in that the two largest grids separate roughly along the Continental Divide. Power generated in the West stays there, for the most part, and likewise the juice in the East. (Texas has its own grid.) ?????With California, the world's sixth-largest economy, continuing to founder after its steady diet of deregulation mistakes, the other 10 mostly rural states in the Western grid are likely to suffer as well. As Rep. Jay Inslee (D-Wash.) put it: "You can, today, see blackouts coming, big as life, and an energy crisis going into the fall." ?????The Eastern Interconnect, however, is larger than its Western sibling, more diverse in its sources and more complex in its physical structure, and thereby protected from some Western-style utility woes. But, from a serious transmission-line bottleneck near Eau Claire, Wis., to a 28-year-old Florida law that some say is stifling much-needed growth, the Eastern grid has its own kinks, soft spots and weaknesses. ?????If things start getting out of hand on this side of the Rockies, the first fissure is likely to appear in the last place a fissure is needed: New York. ?????When rates for many California customers shot up by as much as 46% last week, New Yorkers could commiserate. They have seen their rates rise 40% since 1999. A sweltering July or August could send prices up an additional 50%, some analysts predict. As in California, New York has deregulated its power industry, so the market, not the state, sets the price. And as in California, New York is heavily dependent on natural gas to fire its generators--a commodity whose price has skyrocketed recently. ?????New York, again like California, also fell behind in the construction of new plants--the last one going up in 1995--even as demand was growing dramatically. ?????Now the city's power provider, Consolidated Edison, figures it has a thin insulation of extra kilowatts to get it through the summer--unless it's a bad one. Just in case, Con Ed wants to sprinkle the 11 mini-generators throughout the city. Environmentalists, concerned about the air pollutants the generators will kick out, have already filed suit to stop the plan. ?????Upstate New York has electricity surpluses ready to sell to the Big Apple. So does the nearby PJM (Pennsylvania, New Jersey, Maryland) Interconnection, which serves more than 22 million customers along the Eastern Seaboard and has deregulated cautiously and effectively. ?????But "New York City--even assuming those generators come on line--is going to be nip-and-tuck," said Bill Brier, vice president of Edison Electric Institute, which represents private utilities. ?????The reason: Transmission bottlenecks make it all but impossible for the city to import power on especially bad days. The Eastern grid is a much more intricate web than that in the West, a mesh of more and smaller lines ferrying electricity to a more evenly distributed population. But deregulation has fundamentally changed how the grid is used without preparing it for its new free-market role. ?????Constructed as a heavily regulated series of channels for efficiently floating power from one utility with extra power to another in need, the grid is now open to private electricity merchants who sell to the highest bidder. In 1996, 25,000 transactions took place on the grid, according to the Edison institute. By 1999, that figure had rocketed to 2 million. ?????"That," said Brier, "is why you're having more and more bottlenecks in the system." ?????While deregulation has forced utilities to open up their transmission lines to competitors, it has also allowed the marketplace--rather than need--to dictate where new lines are strung. ?????In Minnesota, state officials would like new lines to come in from the west and north, bringing cheap power from the Dakotas and Canada. But Minnesota utilities would rather build lines in the opposite direction, enabling them to sell power to Chicago and Milwaukee for perhaps twice the price they're getting from Minnesota customers. ?????Of course, the utilities are running into the problem that always accompanies proposed construction of 13-story metal towers buzzing with megawatts: massive public opposition. In Wisconsin, a powerful grass-roots group called Save Our Unique Lands calls one proposed line a "250-mile scar" and points out that the line would go primarily to benefit not Wisconsinites but their oft-derided urban neighbors, Chicagoans. ?????Just two years ago, Chicago, not California, was the daytime nightmare of the electrical world. A summer of blackouts large and small began in July, when more than 100,000 customers lost power on a 104-degree day, and continued on and off for weeks, with 30 blocks of the central business district going black for hours one Thursday afternoon. ?????Mayor Richard M. Daley went ballistic when Commonwealth Edison revealed it couldn't warn of rolling blackouts because it wasn't sure how its byzantine cable system works. After hundreds of millions of dollars in upgrades, Chicago will still be vulnerable to blackouts this summer. But the outages will be isolated problems of overload or mechanical breakdown, not the systemic failures likely in the West. ?????In Illinois, restructuring that began in 1997 has gone relatively smoothly, and the state and much of the Midwest has benefited from solid policy and a decent amount of luck. ?????Just over half of Illinois' power comes from coal-fired plants, which are cranking it out at a fraction of the cost of natural gas-driven generators. An additional 42% comes from Illinois' 11 nuclear power plants--more than any other state. ?????Only recently the ultimate utility albatross, nuclear reactors are gaining some favor in the Bush administration. Operated by ComEd, which is still working hard to burnish its image after the 1999 blackouts, every reactor in Illinois is not only up and running but at record output, according to David Helwig, ComEd vice president for operations. ?????In a brilliant public relations move, ComEd also printed maps of the best sites for new generators and handed them out to competitors. With less stringent environmental laws than in California, which hasn't built a major plant in a decade, Illinois has continued to build. ?????More than 3,000 megawatts went online last year--about 10% of the state's total load--and 10,000 more are planned for this year. "If we have a problem in the Midwest, it's not going to be with generation, it's going to be with the transmission grid," said Terry Harvill of the Illinois Commerce Commission. ?????When the Eau Claire-Arpin line in Wisconsin overloaded at the same time as a transformer in southeastern Ohio in June 1998, the Midwest became all but isolated from the rest of the Eastern grid. And the incident demonstrated dramatically another problem of deregulation that could still haunt the system this summer. As operators scrambled to stave off blackouts, prices on the spot market skyrocketed from $25 per megawatt hour to $7,500 per megawatt hour. ?????Tom Overbye, an electrical and computer engineer at the University of Illinois at Urbana-Champaign, wrote about the incident in a paper on deregulation's effect on the power grid. "Imagine your consternation," he wrote in American Scientist, "if one day you pulled into a gas station and discovered the price had increased three-hundredfold, from $1.50 per gallon to $450 per gallon." ?????The South, with its massive coal reserves, slow population growth and, for the most part, a go-slow approach to deregulation, is likely to weather its typical summer swelter, with one possible exception: Florida. ?????With a fast-growing population and a huge predicted shortfall of 11,000 megawatts over the next eight years, Florida had been a key target of merchant operators looking to build. "Everyone saw Florida as the place to go," said Rick Rhodes of Duke Energy, a major private supplier. ?????But when Duke prepared to build a 514-megawatt plant in New Smyrna, the state's three investor-owned utilities filed suit under a nearly 3-decade-old law restricting the entry of power wholesalers into the state. The Florida Supreme Court ruled for the utilities, and Duke and other merchants planning to build certain types of plants have, for the time, shelved their plans. ?????When it comes to transmission, Florida has another problem. Out-of-state power can come from but one direction: north. ?????Supporters of deregulation are swift to point out that tinkering with a $218-billion industry is bound to be painful at first and that while California's debacle will take years to solve, other states will learn from its experience. ?????As spring settles in, the Great Lakes thaw and half a dozen legislatures begin tinkering anew with deregulation plans, a less optimistic school of thought appears to be developing. "The California situation is so bad that it confuses people," said Harvard University energy economist William H. Hogan. "It scares people. It paralyzes people. . . . They learn the wrong lessons and do the wrong things to fix it." Copyright 2001 Los Angeles Times ------------------------------------------------------------------------------ ---- State, Edison Discussed Pact to Pay Off Firm's Huge Debt Proposed deal would commit customers to aiding utility even if that meant another rate hike. Davis spokesman says memo has been changed significantly. By DAN MORAIN, Times Staff Writer ?????SACRAMENTO--A draft agreement between the Davis administration and Southern California Edison would seek to return the utility to financial stability by committing ratepayers to help pay off its multibillion-dollar debt in future years even if the state's proposed purchase of Edison's transmission system falls through. ?????The proposal, which could translate into yet another electricity rate hike on top of the record increase approved last week, contains provisions that would assure investors and creditors of Edison's ability to dodge bankruptcy. Yet those elements appear certain, if they remain in the final version, to anger some consumer advocates and lawmakers. ?????As negotiations continue between Edison and the administration, a spokesman for the governor cautioned that the draft, dated last Tuesday and obtained by The Times, has been updated and changed significantly. ?????Nevertheless, the 40-page memorandum of understanding lays out the most detailed framework yet of the administration's attempt to avert the utility's bankruptcy. Gov. Gray Davis has made a state rescue of debt-ridden Edison and Pacific Gas & Electric Co. a key part of efforts to tame California's energy crisis. Negotiations with PG&E have lagged, but officials believe a deal with Edison could set the stage for similar agreements with the other utilities. ?????"This draft is ancient history," Davis spokesman Steve Maviglio said Sunday of the document dated six days ago. "We have moved beyond that, and continue to make progress and hope to be able to make an announcement shortly." ?????Executives of Rosemead-based Edison could not be reached for comment. ?????There is at least one more recent draft, officials said. But the document from Tuesday reflects the direction of negotiations. Internal memos dating back weeks describe similar elements in the discussions. ?????The talks have been going on behind closed doors for almost two months. Even legislative leaders, including Davis' fellow Democrats, have learned little about details of the talks--to their dismay. ?????"I have no idea what's in the memorandum of understanding," Senate President Pro Tem John Burton (D-San Francisco) said Sunday. "But the Legislature is going to hold very comprehensive public hearings, so we know what we're getting into. . . . Whatever the deals are, we're going to have very full and open hearings: What is it we're getting? What is it we're giving? And what is the price?" ?????The draft shows, as previously announced, that Davis is offering to buy Edison's portion of the 32,000-mile-long statewide system of high-voltage transmission lines for $2.76 billion, or 2.3 times its listed book value. For the transaction to work, Davis hopes as well to buy the portions of the grid owned by PG&E and San Diego Gas & Electric Co., for a total price of about $7 billion. ?????The document says the state would buy the transmission grid "as is, where is, and with all faults" and would contract with Edison to operate its portion at a price to be negotiated. If the state decides to sell the grid at some later date, Edison, like other businesses, would have the right to bid to buy it back. ?????Edison would use cash from the purchase to help pay off its massive debt--the gap between skyrocketing wholesale electricity prices and what the utility was allowed to charge ratepayers. In federal filings, Edison has estimated that debt at $5.5 billion; barring regulatory or legislative relief, the utility's parent company said in its most recent filing, it may take a $2.7-billion charge against earnings for the fourth quarter of 2000. ?????But the state takeover could fail for a variety of reasons; the Federal Energy Regulatory Commission could, for example, block the state effort. ?????The document gives no specifics about a backup plan for the state to acquire other assets if it fails in its efforts to take over the entire transmission system. However, the draft does contain provisions that would allow Edison to again become financially viable. ?????In particular, the draft agreement says consumers could be obligated to pay a so-called dedicated rate component to help the utility restructure its debt, even if the grid sale is not completed. The memorandum further states that the charge would not appear in rates for two years, and that the debt would be repaid over 12 years. ?????The charge, at an amount not specified in the draft agreement, presumably would be on top of electricity rate hikes approved last week that could be as high as 46% for some users. As such, the charge would face certain opposition from Republican lawmakers, who have criticized the rate hikes, and from some Democratic legislators, who are increasingly skeptical about Davis' handling of the crisis. ?????Consumer advocate Mike Florio of the Utility Reform Network explained the provision by saying it may simply authorize Edison to begin restructuring its debt, pending final approval of the highly complex transmission grid sale, which could take a year or more to consummate. ?????"This is a huge transaction," Florio said. "They can't wait until the deal is signed, sealed and delivered." ?????But V. John White, of the Center for Energy Efficiency and Renewable Technology, among the first lobbyists to float the idea of a state takeover of the utilities' transmission systems, said some terms outlined in the tentative agreement are causing him to rethink his position. ?????"I don't see where the public benefits are," White said of the overall deal. "The price of the transmission sale is a complete capitulation to Edison." ?????The tentative agreement contemplates that the California Public Utilities Commission, which has the responsibility to regulate the state's investor-owned utilities, would lose the ability to make at least some decisions. ?????The agreement says, for example, that Edison's credit-worthiness and ability to finance improvements to its remaining holdings would require "greater certainty in respect of [Edison's] ability to earn a fair return on invested capital." ?????Toward that end, the tentative agreement would limit the PUC's ability to pare back the utility's current 11.6% authorized rate of return on investment, the document says. ?????"Nothing like this has ever been done anywhere in the country," White said. "This would be a regulatory jailbreak." ?????Among other provisions, the memorandum says Edison would drop its lawsuit against the PUC seeking the right to pass on its wholesale electricity costs to consumers. ?????The draft is dated the same day that the PUC approved a rate hike of about 40% to cover the state's costs of buying electricity from independent power producers. The state started buying electricity, at an average daily cost of more than $50 million, after Edison and PG&E fell so deeply into debt that they no longer were credit-worthy. ?????Executives at PG&E, the state's largest electric utility, have agreed to consider parting with its portion of the transmission grid. But details remain to be decided. PG&E spokesman John Nelson said Sunday that talks between Davis and his company await the outcome of the Edison deal. ?????"It's not because there is any breakdown," Nelson said. "It is just that they've concentrated their efforts on Edison." Copyright 2001 Los Angeles Times ------------------------------------------------------------------------------ --- Vegas Lights Undimmed Despite soaring prices for electricity, the big hotel-casinos don't plan to reduce their dazzling wattage outside. But they are cutting energy use indoors. By TOM GORMAN, Times Staff Writer ?????LAS VEGAS--The newspaper stories about California's electricity woes can be read easily at night on the Strip, bathed in the brilliance of miles of neon and a gazillion lightbulbs. ?????And Nevada utility officials expect it to stay that way through the summer--when air conditioners work day and night to make the desert heat tolerable--avoiding the power problems that have brought California to its knees. ?????But that confidence is coming at a price: increased electricity rates, to the consternation of the Strip's monster hotel-casinos. Between September and April, rates will have increased by about 46%, driven by forces that are pushing up energy costs nationwide. ?????The typical Strip hotel-casino uses about the same amount of electricity as 10,000 homes, according to utility estimates. Like anxious homeowners, hotel-casino operators are scouring their properties, looking for ways to conserve electricity and--more important perhaps to Wall Street--save money. ?????At the MGM Grand, maintenance crews are working their way through the 5,005 rooms, changing lightbulbs to dimmer ones, reducing each room's consumption to 500 watts from 750. ?????At the MGM and other hotels, incandescent bulbs are being changed for more efficient fluorescent lights in many cases. Thermostats are being installed to reduce air conditioning in unused convention rooms, and motion sensors are being installed to keep the lights off in empty offices. ?????Even slot machines are part of the trend: The newest models consume about 160 watts of electricity, 25% less than older models, said a spokesman for the world's largest slots maker, International Game Technology. ?????But one thing won't change: blazing signs and extensive use of exterior lighting to illuminate the resorts. ?????"Las Vegas has an image and a certain cachet it has to live up to, and that includes the exterior lighting and the neon and the marquees," said John Marz, a vice president of Mandalay Resort Group, which owns four big Strip casino-hotels and operates a fifth. ?????"It's what people come here to see," he said. "And reducing those would be the last thing we do." ?????Even as casinos look for places to cut corners, they're also fighting a bigger battle in the state capital of Carson City to reverse the state Public Utilities Commission's approval of a single, whopping 25% rate hike for casinos, which took effect March 1. At the same time, residential rates increased by nearly 15%. ?????The rate increases were sought by Nevada Power Co., which serves Las Vegas and surrounding areas, and its sister utility in northern Nevada, Sierra Pacific Power Co., to pay for electricity they already have contracted to buy this summer. That one-time increase is in addition to rate hikes approved earlier that are raising rates more than 1% a month, starting last September and continuing until September 2003. ?????By the end of that three-year period, residential electricity rates will have increased about 75%, and the rates charged casinos will have increased by about 65%, said utility spokesman Karl Walquist. ?????The issue is simple, Nevada Power says: Customers must pay more for electricity so the utility can remain solvent and buy power on the open market. Otherwise, Walquist said, the state's two utilities will face the same dire consequences that are playing out in California. ?????Through its own four power plants, Nevada Power generates about 2,000 megawatts. It buys another 300 megawatts from small, private generators in Nevada, and another 230 from the federal hydroelectric plant at Hoover Dam. ?????Though the dam was built to create the Lake Mead reservoir, it was also equipped to generate 2,000 megawatts of hydroelectric power, for sale to agencies in California, Arizona and Nevada. However, it operates at only about 30% capacity, based on the amount of water released through the turbines for purchase by various California and Arizona agencies downstream. ?????Come summer, southern Nevada will need about 4,600 megawatts, nearly double its winter demand. To meet the 2,100-megawatt shortfall, Nevada Power has contracted for electricity generated in Utah, Arizona and Colorado. ?????The most jarring rate increase, yielding $311 million statewide in higher revenue to pay for those advance purchases, was approved by the state's PUC in February without public hearings. ?????That decision triggered an angry response from the state attorney general's consumer advocate, as well as from the gambling and mining industries. ?????They complained that the utilities had failed to publicly prove the need for more money, and that the rate increase violated agreements between the utilities and the PUC--with the casino industry's blessing--calling for the small, measured rate increases every month. ?????A PUC hearing officer on March 23 heard testimony from the utilities and a consumer group on the need for rate increases, and a PUC decision is pending. ?????Nevada legislators and Gov. Kenny Guinn are immersed in the electricity issue. The state began moving toward deregulation four years ago, but reversed itself after watching California's problems unfold. Deregulation is no longer on the state's radar screen. ?????Legislators also are attempting to block plans by the state's utilities to sell their power plants so they can focus on transmission and distribution. The lawmakers fear that if the utilities lose control of power generators, Nevada will be even more at the mercy of private power companies. ?????In the meantime, the Strip's lights continue to shine brightly, and utility officials say skeptics should not look too critically at them as power hogs. ?????"They're very efficient, especially in terms of cooling as many people as they do," said Mike Smart, vice president of resource management for both Nevada Power and Sierra Pacific. Copyright 2001 Los Angeles Times ------------------------------------------------------------------------------ -- Power Crisis Batters Budget Stock slide, rate increases erode state's revenue Greg Lucas, Sacramento Bureau Chief Monday, April 2, 2001 ,2001 San Francisco Chronicle URL: http://www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2001/04/02/M N218239.DTL Sacramento -- Billions of dollars in electricity purchases, rate increases that will drain money from the economy and a crumbled stock market are shriveling California's state budget. Even the modest estimates of revenue growth on which Gov. Gray Davis' budget was based are being erased by the power crisis and the stock slide. "The assumption we had in January is no longer a prudent assumption," said Ted Gibson, chief economist at Davis' Department of Finance. Although the flat economy is already pinching the state's cash intake, the biggest hit will come at tax time 2002 -- 10 months into the budget Davis and lawmakers are trying to put together before the new fiscal year starts on July 1. Next April there won't be the bonanza of capital gains and cashed-out stock options the state has reveled in over the past two years. Hard times in the dot-com world mean hard decisions for the Democratic governor and lawmakers as they put together a spending plan. On the Senate floor last week, President Pro Tem John Burton, D-San Francisco, warned his colleagues not to expect too much from the budget because the state was tapped out. Everything from pork barrel projects to public schools could feel the pain. A raft of one-time spending items are at risk: $250 million in aid to cities and counties, $100 million to clean up beaches, $100 million to replace higher-polluting diesel engines, $40 million in library improvements at state universities. The Senate has already cut $1.9 billion from the $102 billion spending plan sent to them by Davis. Davis' January budget expected the fiscal year to end with $5.8 billion in reserve. Some $3.7 billion in electricity purchases have cut that reserve to $2.1 billion with another $1 billion in energy buys authorized just for this month. That has led the legislative analyst to recommend that lawmakers take no action on $2.3 billion in one-time spending proposed by the Democratic governor. "We're being very cautious because of the number of uncertainties," said Brad Williams, chief economist at the legislative analyst's office. There are several reasons for the worsening cash drain, which will hit hardest next year but is already taking a toll on revenue collections. One-fifth of the state's general fund revenue comes from capital gains and stock options. That won't be happening next April. In January, Davis predicted state taxes paid on capital gains and stock option income would be 10 percent less next year. And projections now are that it will be even less. As more companies use stock options as compensation for employees, the more tightly the state budget is chained to the whims of Wall Street. Last year, the state estimated that $84 billion in stock option income was generated in California. Of that, just seven high-tech companies created half of the income. Cisco Systems alone represented nearly 10 percent of the $84 billion. Since November, the Nasdaq has lost 45.5 percent of its value, a huge hit for California, the center of the dot-com high-tech universe. For example, Cisco has fallen from roughly $55 a share to $16 a share, making it unlikely any holders of stock options will cash out unless they have to. Similar drops have occurred in other big technology companies like Sun Microsystems, Intel and Oracle. "The phase we saw the last several years will not return," said Tom Lieser senior economist at UCLA's Anderson Business Forecast. "The days of the dot- com millionaires are over." "The technology sector will come back, but this year is going to be a tough one, and next year may be transitional," Lieser said. Income from investors realizing capital gains was originally expected to reach nearly $94 billion this year and fall to $84.5 billion next year, but budget analysts now say that next year's projections may be too optimistic. If the stock market soars over the next eight months, the budget picture could brighten. Another budget plus could be the taxes collected this month. Stronger than expected revenue would stanch some of next year's losses. The economy's fade is already being felt. A slow holiday spending season last year has led to less-than-expected sales tax collections for the state. Sales tax revenue for February came in $165 million under estimates. And withholding taxes, which are carved out of an employee's paycheck and sent to the state, are expected to continue to grow, but not nearly at the brisk rate as last year. Then there's the energy crisis. The state is tearing through $50 million a day to buy power for the cash- poor utilities, with authorization for $4.7 billion in purchases. "Even Bill Gates would feel that after a while," said Lieser. So far, the agencies that decide California's credit rating aren't worried because Davis and lawmakers plan to make the state whole by issuing bonds in May or June. That was one reason for the Public Utilities Commission's average 40 percent electricity rate increase: to create a big enough revenue stream to make investors more comfortable about buying the bonds. The rate increase is going to take $4.8 billion from businesses and consumers, money that might otherwise be spent in other parts of the economy. Although total income in California last year was nearly $1.2 trillion, $4. 8 billion is still a chunk of change. "It will be a factor depressing growth somewhat over the next year," said Williams. The economic effect of the energy mess is longer-term. How much will blackouts hurt productivity? Will businesses expand in California or somewhere else with a more reliable supply of energy? Gibson says businesses are going to give the state 18 months to sort out its energy problems which Gibson thinks the state will do. "The silver lining is that the 2-by-4 has been applied to the donkey's head, " Gibson said. "We've learned we have a problem with energy supply, and three or four years down the road this will settle out, and we may even have a surplus." Grumbles Lieser: "The thing about this is it should have been foreseen. People were warning us." E-mail Greg Lucas at glucas@sfchronicle.com. ,2001 San Francisco Chronicle ? Page?A - 1 ------------------------------------------------------------------------------ - Davis Blames Crisis On State Republicans But Democratic controller points at governor Carla Marinucci, John Wildermuth, Chronicle Political Writers Sunday, April 1, 2001 ,2001 San Francisco Chronicle URL: http://www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2001/04/01/M N154353.DTL Anaheim -- The politics of energy dominated the state Democratic convention yesterday, as anxious delegates gave a lukewarm reception to embattled Gov. Gray Davis, who clashed bitterly with party rival, Controller Kathleen Connell. Speaking at the Anaheim convention center, where dimmed lights were a constant reminder of yesterday's Stage 2 alert, Davis blamed California's energy woes on former Gov. Pete Wilson, Republican lawmakers and the Federal Energy Regulatory Commission, which, he charged, has failed to regulate greedy energy firms selling power at "out of control prices." He insisted that he was not sure rate increases were necessary, refusing to say whether he would support huge hikes backed by the Public Utilities Commission last week. He suggested, however, that he favors a system of tiered electricity pricing. "These Republicans -- who were so enamored with deregulation just five years ago -- have become even more enamored with criticizing me as I try to clean up their mess," the governor said to tepid applause from the 1,900 delegates. "This deregulation disaster was authored by a Republican legislator, passed by a Republican Assembly, signed into law by a Republican governor and implemented with undue haste by a Republican PUC." But the governor's Republican-bashing was overshadowed politically by an attack by state Controller Connell, a candidate for Los Angeles mayor -- who rejected what she called Davis' "finger-pointing" and assailed his handling of the crisis. The dramatic development demonstrated both deepening rifts within California's ruling party and the high political stakes of the energy crisis. "There will be no excuses for Democrats in this state, because we dominate state government," Connell said in a convention speech in which she also outlined proposals to require "power hogs," such as malls, to install their own microgenerators. "I spent the past eight years making sure the state had a surplus, and now I'm seeing it eaten away every day by energy costs. . . . Whatever solution (the governor) provides must come fast and be shared openly with the people of California," she said in a dig at Davis, who has been criticized for moving too cautiously and for resisting disclosure of energy contracts to the public. Warning of the costs of "a delay and an incremental approach to an indefinite problem," she said, "I won't stand by and allow the consumers to pick up the tab." DAVIS DEFENDS POLICIES Asked to respond to Connell's critique, Davis told reporters, "I believe we've moved at warp speed to address this problem. . . . We've kept the light on most days." The governor, who endorsed Connell's opponent, former Assembly Speaker Antonio Villaraigosa for mayor, then added, "It might be if she's not happy with that, she can run for governor next time." Garry South, the governor's senior political adviser, was even more caustic, lambasting Connell as a party infidel. "This is why Kathleen Connell doesn't have a friend in all Los Angeles," he said. "She's been picking on the governor since day one." "It's all air," he said of her talk. "Not only hot air but a foul wind." In an interview while campaigning later in the day, Connell toughened her rhetoric, saying, "The emperor has no more clothes here in California." "We are well into the fifth month (of the energy crisis) and we have yet to find any answers from the administration," said Connell, who promised to release her own detailed solutions to the crisis next week. Unlike many Democrats at the convention, festooned with "Wilson Did It" signs, she rejected as "irrelevant" the suggestion by Davis that Republicans were to blame for California's energy woes. "Californians are wearying of this finger-pointing and closed-door negotiations and extended debate," she told The Chronicle. "The public is no longer going to be patient with us. They're going to hold the governor accountable when they get the bill." CONNELL LAGGING IN POLL Connell, who is forced by term limits to give up her post as controller next year, has lagged in her campaign to become mayor of Los Angeles. With 10 days to the election, a recent poll showed her running fourth behind City Attorney James Hahn, Villaraigosa and businessman Steve Soboroff. Despite Davis' words and speculation among delegates, Connell denied she was eyeing the governor's seat for the future. "I'm not looking two or three years down the line," she said. "But I hope the governor is looking toward an immediate solution to this problem." The governor's speech was his first since the PUC announced rate increases of as much as 46 percent. Davis refused to say whether he would support the immediate rate increase approved by the PUC but suggested that he would back a tiered billing system. "If a rate increase becomes absolutely necessary to keep our lights on and our economy strong, you can be sure of one thing from this governor," Davis said. "I'll fight to protect those least able to pay, reward those who conserve the most and 'motivate' those who are the biggest guzzlers to cut back." He later dodged reporters' questions about specifics, repeatedly saying that within the next two weeks he would release a statement detailing "what, if any" increases were needed. "Many advisers from Wall Street are running numbers, and they appear to be different from the PUC's," he said. Davis also said he has already done a lot to address the crisis and had "kick started" construction of new power plants and successfully promoted conservation programs. Some of Davis' backers at the convention, watching the squabbling, expressed concern about some of the governor's tactics. "People want a leader to lead," said Susan Leal, San Francisco's city treasurer. "They're looking for someone to come out and take command, regardless of who started this." But, she said, Davis is a tough and smart politician, and "people are still going to be forgiving if (the governor) does something to attack the problem." OTHER DEMOCRATS BLAME GOP Other Democratic Party leaders were also quick to defend Davis and to blame Republicans. Terry McAuliffe, chairman of the Democratic National Committee, suggested that President Bush has ignored California's energy problems because "he's worried to death about Davis running for president." California is the world's sixth-biggest economy, McAuliffe noted in an interview, and Bush "has basically written it off, saying, 'Good luck to you. You're not getting any help.' " Art Torres, chairman of the state Democratic Party, said Davis "is attacked every day by the backbench Republican yahoos in the Legislature" and predicted that public concern over energy would ebb by next year's election. "We're looking at issues that are going to transcend the energy issues we see now," Torres said, such as crime and violence in the schools, economics, the environment and abortion. But political analyst Sherry Bebich Jeffee said Connell's criticism was evidence of a party split and perhaps "the opening salvo in 2002," when Davis is up for re-election. Davis's entire party, she said, could be in trouble if voters get fed up with higher energy bills. "Do the math," said Jeffee, noting that Democrats hold all but one state office and control of the both houses of the Legislature. "If you're going to throw the bums out, the bums in this state are mostly Democrats." E-mail Carla Marinucci at cmarinucci@sfchronicle.com and John Wildermuth at jwildermuth@sfchronicle.com. ,2001 San Francisco Chronicle ? Page?A - 1 ------------------------------------------------------------------------------ ---- NEWS ANALYSIS Rate Increases May Be Just Beginning Unanswered questions now may mean higher bills soon David Lazarus, Chronicle Staff Writer Sunday, April 1, 2001 ,2001 San Francisco Chronicle URL: http://www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2001/04/01/M N162185.DTL When regulators passed an average 40 percent electricity rate increase last week, they insisted this was the last time the state would be reaching into consumers' pockets to pay for California's energy mess. Don't bet on it. Numerous questions remain about the costly bailout of the state's two largest utilities and the billions of dollars in taxpayer money being spent to keep California's juice fl
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