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Please see the following articles:
Sac Bee, Tues, 5/1: "$18 billion power tab projected: An immediate=20 outcry greets Davis' plan for state energy purchases through June 2002" Sac Bee, Tues, 5/1: "PUC seeks to retain PG&E control" Sac Bee, Tues, 5/1: "Legislators propose tax on energy profits" Sac Bee, Tues, 5/1: "Dan Walters: Davis finally generates an energy plan,= =20 but will it work?" Sac Bee, Tues, 5/1: "Soaring energy bills hurt eateries: Many restaurants = in=20 capital area,=20 despite good patronage, expect to raise menu prices" Sac Bee, Mon, 4/30: "Empowering the public (Editorial) Obstacles keep cities out of energy" Sac Bee, Tues, 5/1: "Daniel Weintraub: An energy trader says it's time to= =20 limit profits" (Editorial) LA Times, Tues, 5/1: "Power Companies Step Up Lobbying" LA Times, Tues, 5/1: "Power Marketer Ordered by FERC to Refund $8 Million" LA Times, Tues, 5/1: "Davis Turns to Bankruptcy Court for Help in Plan to = Buy Power Grid" SF Chron, Tues, 5/1: "Feds want surcharge to pay utilities' debts=20 THE PLAN: Additional rate boost likely, cash would go to power suppliers" SF Chron (AP), Tues, 5/1: "Lawmakers offer bills aimed at cutting natural= =20 gas prices" SF Chron (AP), Tues, 5/1: "Developments in California's energy crisis" SF Chron, Tues, 5/1: "Second try for tax cut in Oakland=20 Smaller utility levy likely after Brown veto" SF Chron, Tues, 5/1: "Feds want surcharge to pay utilities' debts=20 THE PLAN: Additional rate boost likely, cash would go to power suppliers" SF Chron, Tues, 5/1: "Warning of a summer power 'Armageddon'=20 Davis aide paints dire scenario in push for bonds to buy power " Mercury News, Tues, 5/1: "Cheney rejects conservation" Mercury News (AP), Tues, 5/1: "Federal energy regulators propose surcharge= =20 plan to pay utilities' debt" Mercury News, Tues, 5/1: "Record prices for power expected this summer in= =20 U.S." Mercury News, Tues, 5/1: "Davis calls generators on carpet" Mercury News, Tues, 5/1: "PG&E lobbied heavily just before bankruptcy" OC Register, Tues, 5/1: "Cheney outlines energy strategy for U.S." OC Register, Tues, 5/1: "Bush taking a supply-side policy on energy" OC Register, Tues, 5/1: "Power supplier will pay to settle" OC Register, Tues, 5/1: "Energy notebook: Bills target high natural-gas=20 prices" OC Register, Tues, 5/1: "Leadership blackout Gov. Davis seems unplugged in dealing with the crisis " =20 (Commentary) Individual.com (Bridgenews), Tues, 5/1: "Calif. Gov Davis/ PG&E utility=20 creditors may like grid sale --Davis sees Calif energy supply outstripping need by fall '03 --Davis/ PG&E credit" Individual.com (AP), Tues, 5/1: "Davis Optimistic Despite Power Woes" NY Times, Tues, 5/1: "Cheney Promotes Increasing Supply as Energy Policy" NY Times, Tues, 5/1: "River's Power Aids California and Enriches the=20 Northwest" Wash. Post, Tues, 5/1: "Bush Energy Plan Will Emphasize Production; Cheney= :=20 Conservation Is Part of Effort" Energy Insight, Tues, 5/1: "Western Dreaming: A Buyer's Cartel" ---------------------------------------------------------------------------= --- --------------------------------------------------------------- $18 billion power tab projected: An immediate outcry greets Davis' plan for= =20 state energy purchases through June 2002. By Emily Bazar and Jim Sanders Bee Capitol Bureau (Published May 1, 2001)=20 Seeking to sell his energy rescue plan to reluctant Republicans, Gov. Gray= =20 Davis on Monday released a long-awaited financial plan that shows the state= =20 will spend more than $18 billion on electricity through June 2002, but can= =20 maneuver the energy crisis without additional rate increases or draining th= e=20 state budget.=20 His projections, however, were immediately attacked by lawmakers and indust= ry=20 experts, who called them overly optimistic and unrealistic.=20 The plan, which Davis is using to bolster his energy effort with legislator= s=20 and Wall Street, is based on a series of assumptions, among them that the= =20 state will pay significantly less for electricity on the spot market during= =20 the hottest summer months than it pays now, and that dozens of shuttered=20 small generators will start selling discount electricity again.=20 "No one has a crystal ball into the future," state Treasurer Phil Angelides= =20 told reporters. "The administration's plan makes some assumptions, as any= =20 plan must. The question is, are they reasonable assumptions, and what do we= =20 need to do collectively to make the plan succeed?"=20 The Democratic governor has long faced criticism for refusing to divulge=20 details about the state's power purchases, both on the expensive spot marke= t=20 and under long-term contracts.=20 Last week, the issue was thrust into the forefront when Assembly Republican= s=20 told the governor they would not vote for a bill authorizing the sale of $1= 0=20 billion in revenue bonds to pay for the state's power purchases until they= =20 received additional information.=20 If legislators don't pass the bill -- which requires a two-thirds majority= =20 and, therefore, Republican votes -- Angelides said the state might miss a M= ay=20 8 deadline for closing on a crucial $4.1 billion bridge loan.=20 On Monday, Davis relented, releasing his response in the form of an=20 inch-thick document filled with tables, bar graphs and projections. The pla= n=20 gives the first detailed, month-by-month account of the state Department of= =20 Water Resources' expected power purchases through 2002.=20 But the projections failed to win votes immediately in the Assembly=20 Republican caucus, where Minority Floor Leader Dave Cox said he is not yet= =20 ready to support the proposed $10 billion in bonds. The caucus will meet=20 today to decide what to do next, he said.=20 "Many of the assumptions are questionable and there is no answer as to what= =20 will happen if the assumptions prove incorrect," said Assemblyman Keith=20 Richman, R-Sun Valley. "I'm very concerned."=20 Davis' plan relies on numerous estimates, including likely summer=20 temperatures and annual rainfall, and an assumption that Californians will= =20 use 7 percent less energy this year than they did last year.=20 Private consultants who helped draft the plan also predicted that most of t= he=20 small generators that stopped producing electricity because they hadn't bee= n=20 paid for months will resume production at discounted rates. They argued tha= t=20 their assumptions are conservative and allow for unexpected changes.=20 "There are lots of variables that are not simply assumptions," said Joseph= =20 Fichera, an investment banker with Saber Partners in New York City and a=20 consultant to the administration. "I would say probably 80 percent is what = we=20 know are facts and 20 percent are expectations."=20 Republican lawmakers and others were particularly uncomfortable with the=20 administration's conclusion that the state will spend an average of $195 pe= r=20 megawatt-hour for electricity on the spot market in July, August and=20 September, the hottest months of the year when electricity is expected to b= e=20 sold at a premium.=20 Some have predicted that the costs could go much higher.=20 "There's a reasonable chance this summer that the state will be paying $1= =20 billion per week" for electricity, Severin Borenstein, head of the Universi= ty=20 of California Energy Institute, told state regulators last week.=20 With summer prices forecast to be $500 to $700 per megawatt-hour, and the= =20 state Department of Water Resources expected to need more than 200,000=20 megawatt-hours a day, it would be easy to rack up billion-dollar power bill= s,=20 he said in an interview.=20 The state spent $90 million on power on a single day last week, but prices= =20 declined somewhat afterward, according to the governor's press office.=20 Davis' Cabinet secretary, Susan Kennedy, defended the estimated summertime= =20 cost, saying the state has secured enough long-term contracts to limit its= =20 exposure to the most expensive spot market prices.=20 "It's almost impossible to say what's plausible and what isn't," said Mike= =20 Florio, an attorney with The Utility Reform Network, a Bay Area consumer=20 group.=20 It makes sense that power costs, overall, would drop as more long-term=20 contracts kick in and the state buys less electricity on the spot market, h= e=20 said. But many of those contracts are still being negotiated.=20 "What this assumes about contracts that have not been signed is the really= =20 interesting question," he said.=20 Assemblyman Tony Strickland, R-Thousand Oaks, said the Davis administration= =20 hasn't been able to provide assurances that if bonds are sold now, more won= 't=20 be needed in the future.=20 "Their assumptions are nothing more than educated guesses," Strickland said= .=20 "And the educated guess of the Legislature was that we wouldn't be in the= =20 power buying business in the first place."=20 Kennedy conceded that the administration's plan has its limits, and won't= =20 prevent the state from experiencing rolling blackouts in the coming months = if=20 prices get too high or its assumptions are proved wrong.=20 "The bottom line will be we will either need to borrow a little bit more or= =20 we're going to see more blackouts," she said.=20 The Bee's Emily Bazar can be reached at (916) 326-5540 or ebazar@sacbee.com= .=20 Bee staff writers Carrie Peyton and John Hill contributed to this report. ---------------------------------------------------------------------------= --- --------------------------------------------- PUC seeks to retain PG&E control=20 By Claire Cooper Bee Legal Affairs Writer (Published May 1, 2001)=20 SAN FRANCISCO -- Warning that California consumers and the state economy=20 could be in grave danger, the state Public Utilities Commission urged a=20 federal bankruptcy judge Monday not to sever the commission's regulatory=20 control of Pacific Gas and Electric Co.=20 On April 9, three days after filing for Chapter 11 bankruptcy protection,= =20 PG&E petitioned the Bankruptcy Court to block parts of a recent PUC order.= =20 PG&E said the provisions conflicted with bankruptcy rules and interfered wi= th=20 its legal right to recover skyrocketing wholesale energy coasts.=20 The provisions at issue -- adopted by the PUC on March 27 along with a 30= =20 percent rate increase -- imposed new accounting requirements on the=20 utilities, but the consequences were potentially dramatic. Depending on the= =20 way certain costs are counted, PG&E may or may not be entitled to early=20 termination of an electricity rate freeze adopted by the Legislature five= =20 years ago.=20 PG&E said the accounting provisions changed the rules retroactively and=20 artificially extended the rate freeze.=20 But the PUC disagreed -- and said the issue is even larger. In a series of= =20 documents filed Monday, the commission characterized PG&E's petition as "th= e=20 first step in (the company's) plan to deregulate itself." If PG&E succeeds = in=20 stripping California of its power to regulate its electric utilities, the= =20 commission said, "PG&E may be able to claim an artificial end to the rate= =20 freeze, which could result in drastically higher retail electric rates. The= =20 harm to California's consumers and economy could be grave."=20 The commission said that the petition should be dismissed on grounds of=20 "sovereign immunity" -- the state's right not to be sued by private parties= =20 -- and because the nation's bankruptcy laws bar interference with the state= 's=20 exercise of its regulatory powers.=20 "The accounting proposal the commission adopted was illegal before we filed= =20 for Chapter 11," PG&E spokesman Ron Low said Monday. "Now that we are in=20 Chapter 11, it not only affects our shareholders, it also impacts our=20 creditors."=20 The Bee's Claire Cooper can be reached at (415) 551-7701 or=20 ccooper@sacbee.com. ---------------------------------------------------------------------------= --- ------------------------ Legislators propose tax on energy profits=20 By Kevin Yamamura Bee Capitol Bureau (Published May 1, 2001)=20 With power producers reaping profits that increased fivefold last year, som= e=20 state lawmakers are pushing a tax on future earnings as the best way to kee= p=20 generators honest.=20 California would recoup 100 percent of power profits deemed unreasonable=20 through a "windfall profits tax" proposed by state Sen. Nell Soto, D-Pomona= .=20 Her bill, SB 1x, cleared the Senate Appropriations Committee on Monday on a= =20 7-3 vote.=20 The proposal would force generators to give the state any money collected= =20 above a reasonable limit determined by the state Public Utilities Commissio= n.=20 That money probably would be doled out in equal portions to state taxpayers= ,=20 possibly through income tax returns, though details remain vague.=20 The bill is aimed principally at five out-of-state companies -- AES Corp.,= =20 Duke Energy Corp., Dynegy Inc., Mirant and Reliant -- that bought Californi= a=20 power plants under deregulation and saw profits increase last year at an=20 average of 508 percent, according to Democratic estimates.=20 "What this bill says is, 'You can't come in and rip us off,' " said Senate= =20 President Pro Tem John Burton, D-San Francisco.=20 Critics said the proposal would only discourage companies from building new= =20 power plants in California or producing power when the state needs it most.= =20 During the worst of California's energy blues, utilities and the state have= =20 paid generators and marketers well above 30 cents per kilowatt-hour.=20 Soto has suggested an 8 cents a kilowatt-hour cap, meaning that any price= =20 charged above that would be considered unreasonable. If a generator were to= =20 charge 30 cents, for instance, it would have to return 22 cents to the stat= e=20 in the form of the new tax.=20 Although the proposal could have the direct effect of knocking down soaring= =20 energy prices, it would also send a message that the state will not tolerat= e=20 price gouging, some lawmakers said.=20 "We have been royally mistreated," said Sen. Jack Scott, D-Altadena, a=20 co-author of the bill. "And we have allowed a great deal of California mone= y=20 to leave the state at the expense of ratepayers, taxpayers and businesses."= =20 But energy producers challenged the bill, saying it would simply discourage= =20 companies from building plants in California or from upgrading existing=20 facilities.=20 The tax "does nothing to solve the fundamental problem in California, and= =20 that's mainly the lack of supply," said Richard Wheatley, a spokesman for= =20 Houston-based Reliant.=20 "There is no way, given natural-gas prices today, that we could make any=20 money under the price caps in this bill," said Carl London, a lobbyist for= =20 InterGen, a Boston-based generator.=20 In turn, the state's businesses would suffer through sustained power=20 blackouts because supply would remain low, said Carrie Lee-Coke, general=20 counsel of the California Manufacturers and Technology Association.=20 "There is one simple truth, and that is there is too little energy=20 production," Lee-Coke said, calling Soto's bill the "wrong medicine" for=20 California.=20 Although electricity generated in California would be affected, it is uncle= ar=20 whether the state can legally impose restrictions on power from outside the= =20 state.=20 Republicans on Monday opposed the plan, citing disincentives for power=20 companies to boost supply and resultant blackouts. But the bill needs suppo= rt=20 only from majority Democrats to pass.=20 "The economic reality is that the people cannot afford to be gouged any=20 longer," Soto said.=20 The Bee's Kevin Yamamura can be reached at (916) 326-5542 or=20 kyamamura@sacbee.com. ---------------------------------------------------------------------------= --- ------------------------ Dan Walters: Davis finally generates an energy plan, but will it work? (Published May 1, 2001)=20 After months of issuing buzzwords, sound bites and bold predictions that=20 proved wrong, Gov. Gray Davis finally unveiled Monday what aides said was a= =20 comprehensive plan to shepherd California through the energy crisis.=20 The thick compendium of charts, tables and narrative, prepared by a financi= al=20 consulting firm and peddled to legislators and journalists by a squad of=20 administration aides, was designed to bolster Davis' case for legislative= =20 approval of a $12.5 billion bond issue. About half the money would repay th= e=20 state's beleaguered general fund, which has been drained for power purchase= s,=20 and the rest would ease the impact on ratepayers' bills for future power=20 purchases.=20 Administration officials insisted it is a realistic scheme based on=20 reasonable assumptions -- but legislators of both parties remained skeptica= l=20 since the governor's previous assumptions and projections about the crisis= =20 had proved to be uniformly wrong. It remains uncertain, therefore, whether= =20 the bond issue bill that the administration says is vital will win=20 legislative approval this week -- at least in the size Davis is seeking. Ev= en=20 Democrats are wary.=20 Legislative analysts zeroed in on a couple of assumptions that are central = to=20 the workability of the plan:=20 That Californians will severely curtail their energy use this summer in=20 response to supply shortages, a big ad campaign and sharp price increases.= =20 That the state can buy spot market power this summer at rates far below wha= t=20 it has been paying and what the power futures market indicates will be the= =20 summer spot price.=20 If either of those two assumptions is off the mark, the state could face=20 severe and prolonged blackouts and/or could go billions of dollars deeper= =20 into debt.=20 Administration aides insisted that their assumptions are reasonable, based = on=20 what is known now about power consumption habits and the availability and= =20 price of power for the summer, when demand usually rises sharply to run air= =20 conditioning.=20 "This is not a guess," Susan Kennedy, a top Davis aide, told reporters in= =20 response to sharp questioning about the plan's projection of making spot=20 market power purchases during the summer at an average of $195 per=20 megawatt-hour, 40 percent less than what the state is paying now. The curre= nt=20 futures market price for California-delivered power in July and August is= =20 about $500 per megawatt-hour, but administration officials insist they have= =20 contracted for much of the summer peak load at lower costs, leaving less=20 exposure to the spot market.=20 If it all works as Davis hopes, customers of the three major utilities --= =20 about 70 percent of Californians -- will see a sharp boost in their rates= =20 soon, and that will be enough to finance the $20 billion in power purchase= =20 debts incurred by the utilities and the state so far, plus pay for future= =20 purchases.=20 The bonds would pick up the costs not covered by the raised rates in the=20 early years of the scheme, then be paid off later as rates remain high but= =20 power costs go down. A sharp decline in power costs later in the decade is= =20 another major assumption in Davis' plan, based on still another assumption= =20 that massive generating facilities will be built within a few years.=20 The administration's new set of assumptions replaces suppositions that prov= ed=20 to be very wrong, such as Davis' oft-expressed belief that power rates woul= d=20 not have to be raised. And the new scheme also includes elements that Davis= =20 had rejected last year, such as long-term contracting for power and the=20 ability of rate increases to drive down consumption.=20 Will it work? Will ratepayers, taxpayers, voters, financiers, legislators a= nd=20 others be persuaded that Davis finally has his act together and that his=20 scheme is workable and fair? And will consumer activists be placated by a= =20 plan that assumes ratepayers will shoulder the utilities' massive debts? St= ay=20 tuned. This crisis is still a long way from being a footnote to California= =20 history.=20 The Bee's Dan Walters can be reached at (916) 321-1195 or dwalters@sacbee.c= om . ---------------------------------------------------------------------------= --- ------------------------ Soaring energy bills hurt eateries: Many restaurants in capital area, despi= te=20 good patronage, expect to raise menu prices.=20 By Cathleen Ferraro Bee Staff Writer (Published May 1, 2001)=20 So far, it appears to be the economic slump that wasn't.=20 Across the region, most restaurateurs say they aren't seeing patrons pull= =20 back on how often they eat out or what they order. That's significant becau= se=20 dining out is one of the first luxuries people typically eliminate when tim= es=20 get rough -- or even appear to be slowing down.=20 At the same time, restaurant owners who say business is good remain anxious= =20 about the relentless energy crisis. They complain about big utility bills= =20 that promise to stay bloated through the summer and about higher operating= =20 costs from vendors now passing along their own inflated energy expenses.=20 That all adds up to pricier menus.=20 "I hoped not to increase prices, but there's no slack when basic utilities= =20 are so high now," said Barbara Mikacich, owner of Sacramento's Andiamo=20 restaurant, which expects to come out with a new menu in June.=20 With a few exceptions, local bakery cafes, pizza shops, swanky steakhouses= =20 and more are about to raise food prices while trying to cut back on energy= =20 use. Restaurants are taking such steps because they're bracing for more=20 energy problems and fear that the economic downturn -- while not obvious no= w=20 -- could be around the corner.=20 "We're watching all the little things," said Mark Platt, operating partner = at=20 P.F. Chang's China Bistro in Roseville where sales are still strong. "But= =20 there's no dramatic way for us to save on our use of gas here. We have to u= se=20 woks."=20 No menu price hikes or staff layoffs are in the wind at P.F. Chang's, Platt= =20 said. But the popular restaurant has changed some of its routine tasks to= =20 offset gas and electric utility bills that have climbed from a combined=20 $12,500 a month when it opened in September to $16,000 now.=20 So each morning, cooks at P.F. Chang's no longer spend 20 minutes over=20 gas-fired flames removing carbon from the bottom of nine main woks. Now the= y=20 get the job done in five minutes.=20 Meanwhile, the restaurant's timers have been adjusted so that lights and ai= r=20 conditioners turn on later in the day and shut off sooner.=20 Elsewhere in Roseville, Carvers Steaks & Chops -- traditionally a lunchtime= =20 hot spot with developers, bankers and other professionals -- stopped using= =20 its five gas fireplaces.=20 "We used to run them from 11 a.m. to 11 p.m., six days a week," said genera= l=20 manager Gary Kowalsky. "But we quit lighting them because they're strictly= =20 for ambience."=20 Prompting that change is Carvers' combined utility bill. It used to run=20 $6,000 a month but has jumped to $10,000.=20 No layoffs are planned at Carvers. Menu price hikes took effect six weeks a= go=20 when the restaurant added 50 cents to $1 to the prices for steak dishes.=20 At Casey's Bakery & Cafe on Sacramento's Folsom Boulevard, the gas bill has= =20 doubled since February, said owner Casey Hayden. So instead of running=20 convection ovens "all day long," as he put it, the shop organizes jobs now = so=20 that more pastries and desserts bake at the same time, reducing use of the= =20 cafe's gas ovens.=20 In mid-March, Casey's reduced its operating hours from six days a week down= =20 to just three, Friday through Sunday, in response to the energy crunch,=20 stagnant walk-in business during the week and an increase in wholesale=20 accounts.=20 Sacramento's Cafe Melange at 24th Street and Second Avenue also slashed hou= rs=20 due to higher utility costs, closing now at 7 p.m. instead of 11 p.m. Owner= =20 Marrie Morris said she may raise prices in the next month or two.=20 Heating and cooling the large warehouse environment of Fox & Goose Public= =20 House on R Street has always been challenging. But now the midtown restaura= nt=20 is facing a Pacific Gas and Electric bill that topped $1,200 in March -- or= =20 double the amount from a year earlier.=20 That strain on top of higher produce, dairy and labor costs has prompted Fo= x=20 & Goose to print a new menu due out in June. It will include some of the mo= st=20 popular items from the now-closed Greta's Cafe -- previously operated by Fo= x=20 & Goose owner Allyson Dalton -- and several higher priced items.=20 "About 50 percent of the menu is going up, but nominally, 2 to 3 percent,"= =20 said Dalton.=20 Sacramento's Original Pete's pizza chain, which is slated to open a Davis= =20 outlet, its sixth, this week, cut off its janitorial service. The cleaning= =20 duties will be handled by staffers. The restaurant also turned off many=20 lights and now runs just one oven instead of two during slow times. It, too= ,=20 plans to raise menu prices soon.=20 "We will take a very modest increase across the board, about 3 percent," sa= id=20 founder Steve Presson, who also noted "early warning signs" of an economic= =20 slowdown, including more customers writing bad checks, credit card numbers= =20 being denied and the use of fraudulent cards.=20 Now with the threat of rolling summer blackouts, restaurateurs are even=20 edgier because such power outages might discourage dining out, typically mo= re=20 popular during warm weather and extra daylight hours.=20 A blackout at Carvers, the Roseville steakhouse, for example, would mean a= =20 shutdown of its gas valves and computer-operated cash register system, said= =20 manager Kowalsky.=20 "I hope there's some resolution to all of this," he said. "I can't imagine= =20 anything worse than a building full of hungry people who you can't serve." ---------------------------------------------------------------------------= --- ------------------------ Bee Editorial Empowering the public Obstacles keep cities out of energy (Published April 30, 2001) In a city the size of Davis, how many citizens does it take to kill an=20 initiative to create a public power agency and remove PG&E as the supplier = of=20 electricity? Only three. That's because, under state law, a five-member=20 government agency, the county Local Agency Formation Commission (LAFCO),=20 which operates largely in obscurity, can reject the proposal before it even= =20 gets to the ballot box.=20 Over the past several decades, laws such as this have made it harder for=20 communities to leave the domain of the investor-owned utilities and turn=20 power into a public enterprise. Sacramento's long struggle to create its=20 municipal utility district (SMUD) began in the 1920s. It took two decades o= f=20 fighting a resistant PG&E for SMUD to get into the distribution business. I= f=20 today's laws were in effect back then, Sacramentans might still be fighting= ,=20 or have given up long ago.=20 Amid the pile of energy-related legislation in the capitol is one that seek= s=20 to remove these roadblocks to public power. At the heart of SB 23x by Sens.= =20 Nell Soto of Pomona and John Burton of San Francisco are two valuable=20 reforms. If the private utilities don't manage to kill this bill, the futur= e=20 will provide interesting choices for communities that are beginning to asse= ss=20 their energy options.=20 The first reform in SB 23x would be to prevent LAFCOs from blocking electio= ns=20 to decide whether to create a public power agency. LAFCOs now hold this vet= o=20 power. This is how residents in and around the city of Davis were prevented= =20 last year from voting on a public power initiative on the ballot. They had= =20 thousands of signatures on their initiative petitions. But they didn't have= =20 three votes on LAFCO. SB 23x would give LAFCO an advisory role, so that=20 voters can take their findings into consideration.=20 The second reform would change what happens when a newly formed public powe= r=20 agency decides to purchase the local electric distribution lines from PG&E.= A=20 law passed in the early 1990s gave PG&E considerable leverage in court to= =20 challenge whether it's necessary for the municipal utility to buy its wires= .=20 PG&E seeks to substitute its will for that of the voters. SB 23x returns to= =20 the municipal utility the legal presumption that it can take over the lines= ,=20 leaving the courts to settle on the appropriate price. This is the proper= =20 role of the courts.=20 A new municipal utility doesn't necessarily have to buy the lines and get= =20 into the distribution business. It may simply buy power in bulk and pass on= =20 the savings to its citizens. The first step is for communities to assess=20 their options. Davis residents are once again mulling secession from PG&E, = as=20 are activists in Fresno, communities within Orange County and San Francisco= .=20 It's too soon to say whether these seeds of a modern-day public power=20 movement ultimately come to fruition. Yet the mere threat of secession acts= =20 as an appropriate check against the investor-owned utilities. Communities a= re=20 not their hostages. SB 23x returns to communities the power of choice.=20 ---------------------------------------------------------------------------= --- ------------------------ Daniel Weintraub: An energy trader says it's time to limit profits (Published May 1, 2001)=20 In a sea of angry finger-pointing, name-calling and ridicule, Keith Bailey= =20 stands out as an island of calm, a lonely voice of reason who understands= =20 that a company's long-term self-interest is about more than how much money = it=20 can make today.=20 Most Californians probably have never heard of Bailey, a Kansas City native= =20 and chief executive officer of Tulsa-based Williams Cos. -- a private energ= y=20 trader that has profited handsomely from the state's recent miseries. But= =20 Golden Staters from Gov. Gray Davis on down ought to embrace this Oklahoma= =20 resident. He might be the man who saves our future.=20 Bailey is proposing that federal electricity regulators place temporary cap= s=20 on the profits that he and his competitors may earn between now and fall=20 2002, when supply and demand will be closer to balance and sanity might=20 return to the West's energy market.=20 His rationale is this: To save California's private electricity market, new= =20 power plants are desperately needed. But not enough of those plants will be= =20 built if generators are not confident they will be paid for the product the= y=20 already are providing.=20 Californians, though, don't want to promise payment without knowing they wi= ll=20 be able to afford the bill. Short-term caps on profits, Bailey believes, ar= e=20 the best way to ease the state's fears, get everybody paid and move on to a= =20 system that works -- for suppliers and customers.=20 "One of the things we are hoping to do with our proposal is create somethin= g=20 that California can look at and say, 'So long as prices are determined on= =20 this basis, we're prepared to pay,' " Bailey said in an interview. "This is= a=20 mechanism that lets the state say, 'We're not signing a blank check. We don= 't=20 know what the price is going to be, but we do know how it will be=20 determined.' "=20 Bailey's proposal is different from the limited price caps approved last we= ek=20 by the Federal Energy Regulatory Commission -- and far better for Californi= a.=20 The federal caps would come with all sorts of strings attached, would kick = in=20 only during emergencies and would be focused on prices, not profits. Bailey= =20 is proposing that all power sold from now through summer 2002 be priced at= =20 the cost of producing it, plus a profit of 15 percent. That's more than a= =20 regulated utility would make but less than most private companies seek, and= =20 far less than electricity providers have been earning of late.=20 Cynics might note that Bailey is proposing caps only after his company has= =20 squeezed all it can from California. The firm reported last week that profi= ts=20 doubled in the first quarter of 2001 over a year ago, with pretax income fr= om=20 its energy services nearly tripling, to $600 million. Much of the 4,000=20 megawatts of electricity that Williams controls in California is already=20 committed in long-term contracts -- so Bailey has relatively little to lose= =20 if what remains can only be sold at controlled prices.=20 But here is at least one measure of Bailey's sincerity: His company still i= s=20 owed $252 million for electricity it has provided California. And he's not= =20 insisting that the debt be paid before his proposed profit caps take effect= ,=20 or even as part of the deal.=20 "Clearly there is a past that has to be dealt with," he said. "Whether that= =20 ultimately gets dealt with in bankruptcy court or negotiations with the=20 parties, it will sort itself out one way or another. Perhaps if we find=20 prices that work going forward, that could be used as a framework."=20 Bailey, an engineer by training, says no one should mistake his proposal fo= r=20 a lack of confidence in free markets. He still firmly believes that a=20 deregulated energy market would be best for California and the rest of the= =20 West in the long term. He just wants to make sure there is a long term.=20 Bailey is watching, and listening, to California. He hears talk of seizing= =20 power plants, of turning to a public power system. He describes these ideas= =20 as Draconian and says they would not solve the problem. But he also knows= =20 there is a limit to what Californians -- and their elected leaders -- can= =20 take.=20 "I recognize we live in a democracy, and lots of things could happen," he= =20 said.=20 What he is proposing, in effect, is a safety valve. He wants to limit the= =20 market in order to save it.=20 "This is an extraordinary situation," Bailey said. "We need to help create= =20 some breathing room. ... We all have to work together, and this is the righ= t=20 thing to do."=20 Bailey's proposal, made at a conference of energy producers and traders in= =20 Oklahoma last week, was almost lost amid all the focus on the price caps=20 approved in Washington. But there is still time to give the idea the=20 attention it deserves. Properly nourished, it could be the breakthrough tha= t=20 solves this crisis. Davis and others in California should seize the moment.= =20 The Bee's Daniel Weintraub can be reached at (916) 321-1914 or at=20 dweintraub@sacbee.com. ---------------------------------------------------------------------------= --- ----------------- Power Companies Step Up Lobbying=20 By JULIE TAMAKI and MIGUEL BUSTILLO, Times Staff Writers=20 ?????SACRAMENTO--As California's electricity crisis exploded this year, so= =20 did lobbying by energy companies. ?????Pacific Gas & Electric Co., which has filed for bankruptcy protection,= =20 spent $622,000 lobbying lawmakers and Gov. Gray Davis' administration durin= g=20 the first three months of the year, according to reports filed with the sta= te=20 Monday. ?????The reports show that seven energy companies spent more than $1 millio= n=20 on lobbying as they ramped up their response to the crisis. Houston-based= =20 power producer Reliant Energy, for example, spent nearly $100,000 on lobbyi= ng=20 firms through March 31--almost four times the $25,523 it spent during all o= f=20 last year. ?????The documents show that lobbyists for the firms were hard at work tryi= ng=20 to influence a horde of energy-related measures, from legislation to set ne= w=20 rates for small power producers to a bill that put California in the=20 electricity purchasing business. ?????PG&E spokesman Ron Low said his company racked up hundreds of thousand= s=20 of dollars in expenses in its unsuccessful effort to reach an agreement wit= h=20 the state on the purchase of its transmission lines. An unprecedented numbe= r=20 of energy-related bills added to PG&E's need to hire lobbyists, Low said. ?????"During the first quarter this year, more than 350 bills were introduc= ed=20 in the Legislature that deal with the energy industry," Low said. "Almost a= ll=20 those bills affected our customers and required staff analysis, testimony= =20 before legislative committees, and questions to be answered for legislators= =20 and their staff." ?????Sempra Energy, the parent firm of San Diego Gas & Electric, spent=20 $192,000 lobbying lawmakers in Sacramento and regulators at the Public=20 Utilities Commission, roughly half of what it spent all of last year. ?????The utility also made campaign contributions to political parties and= =20 Sacramento politicians, giving $250 to Lt. Gov. Cruz Bustamante, $750 each = to=20 Assembly members Keith Richman (R-Northridge) and George Runner Jr.=20 (R-Lancaster) and $1,000 to Sen. Kevin Murray (D-Culver City), among others= . ?????A lobbying report for the parent company of Southern California Edison= =20 was not available Monday evening. The reports were required to be filed bot= h=20 electronically and by mail, postmarked by midnight Monday. ?????Electricity merchants and generators also boosted their spending. El= =20 Paso Energy Corp., which owns one of the main natural gas pipelines into=20 California, spent nearly $22,000. It reported lobbying Davis' office and th= e=20 California Energy Commission. ?????Lobbyists hired by the company, according to the report, also spent $6= 07=20 on dinners held in January and February with five lawmakers and an Assembly= =20 staff member to discuss energy-related issues. ?????Assemblyman Roderick Wright, the Los Angeles Democrat who chairs the= =20 Assembly's Utilities and Commerce Committee, dined with a lobbyist=20 representing El Paso on Feb. 21 at the Esquire Grill, a Sacramento=20 restaurant, according to the report. Assemblyman Joe Canciamilla=20 (D-Pittsburg), who heads a subcommittee exploring natural gas issues, also= =20 ate at the Esquire on El Paso's tab that night. ?????The Houston-based power firm Dynegy Inc. spent $32,261 on lobbying=20 through March 31, compared to $24,000 during all of last year. Another=20 Houston energy company, electricity marketer Enron Corp., spent $66,994. ?????Duke Energy is among the firms paying top dollar for Sacramento=20 lobbyists as it seeks to build power plants in California to capitalize on= =20 the state's energy shortage. The company reported spending more than $62,00= 0=20 on lobbying through March 31--more than it spent all of last year. ?????"We would be remiss in not ensuring that our voice is heard in=20 Sacramento," said Duke Energy spokesman Tom Williams, adding that his firm'= s=20 proposed Moss Landing power plant would provide "30% of the new generation= =20 [of electricity] for the whole state of California in 2002." ?????"They're [lobbyists] not speaking for us, he added. "They're helping u= s=20 know exactly who to speak with to make sure we're appropriately heard--and= =20 frankly, to ensure that we can get our power plants built." ---=20 ?????Times staff writer Nancy Vogel contributed to this story. Copyright 2001 Los Angeles Times=20 ---------------------------------------------------------------------------= --- ----------------------------------- Power Marketer Ordered by FERC to Refund $8 Million=20 Energy: Williams Energy agrees to pay but admits no wrongdoing in taking=20 plants offline.=20 By NANCY VOGEL and ROBERT J. LOPEZ, Times Staff Writers=20 ?????In the first action of its kind during the California energy crisis,= =20 federal regulators have ordered an out-of-state electricity marketer to=20 refund $8 million in connection with allegations that plants were improperl= y=20 shut down to hike power prices. ?????Tulsa-based Williams Energy Marketing & Trading has agreed to pay the= =20 refund under an order issued Monday by the Federal Energy Regulatory=20 Commission. ?????The firm, which admitted no wrongdoing in the settlement agreement, wa= s=20 probed for allegedly forcing utilities to pay higher prices by taking key= =20 generating units in Long Beach and Huntington Beach offline in April and Ma= y=20 of last year.=20 ?????Paula Hall-Collins, a Williams spokeswoman, said her company settled t= o=20 end the matter. She said that the company would have been exonerated had it= =20 pursued the case. ?????"We decided to go ahead with the settlement in order to put it behind = us=20 and move forward to more productive matters concerning California power=20 issues," she said. ?????While federal investigations of alleged overcharges by several firms a= re=20 continuing, Monday's order marked the first time a major power merchant has= =20 been forced to pay back earnings since California forged into electricity= =20 deregulation in 1996. ?????Critics and the state's independent grid operator have accused power= =20 sellers of unjustly ratcheting up electricity prices in part by taking plan= ts=20 offline. ?????In the case of Williams, the federal energy panel investigated the=20 shutdown of power plants that were obligated to provide electricity to the= =20 state. ?????Desperate for power, California's grid operator had to turn to another= =20 provider and pay as much $750 per megawatt-hour--more than 10 times the=20 normal price. The $8-million refund will go back to the grid operator. ?????Williams markets power produced at California plants owned by AES Corp= .=20 of Arlington, Va. ?????Federal investigators probed the actions of both Williams and AES, but= =20 the refund order affects only Williams. Initially, FERC had sought a refund= =20 of about $10.8 million, but settled for $8 million in the compromise=20 agreement.=20 ?????AES spokesman Aaron Thomas said the power plants in question were shut= =20 down because of mechanical problems. He noted that his firm derived no prof= it=20 from the replacement power sold by Williams. ?????"We literally get paid to convert Williams' gas into Williams'=20 electricity, which they then sell into the marketplace," Thomas said. "We'r= e=20 not paying any fines, and we didn't do anything wrong." ---=20 ?????Times staff writers Rich Connell and Richard Simon contributed to this= =20 story. Copyright 2001 Los Angeles Times=20 ---------------------------------------------------------------------------= --- ----------------------------------------- Davis Turns to Bankruptcy Court for Help in Plan to Buy Power Grid=20 Utility: He seeks support from panel representing creditors of PG&E. The fi= rm=20 has rebuffed state's offers.=20 By DAN MORAIN and RICHARD SIMON, Times Staff Writers=20 ?????SAN FRANCISCO--Foiled in his first attempt to buy Pacific Gas &=20 Electric's transmission grid, Gov. Gray Davis said Monday that he has tried= a=20 new tactic: bypassing the company and attempting to build support for the= =20 deal in Bankruptcy Court. ?????Davis' plan to buy the grid appeared to have ended disastrously last= =20 month when the giant utility filed for bankruptcy protection. But Davis sai= d=20 his advisors now are trying to sell the idea to a committee of PG&E credito= rs=20 that hold a stake in the utility's Chapter 11 proceeding. ?????The creditors committee, representing the hundreds of companies owed= =20 money by PG&E, does not by itself hold the power to accept or reject the=20 deal, which Davis sees as a key to his plan to restructure the state's=20 crippled electricity system. But the committee will play an important role = in=20 any reorganization plan that is ultimately hammered out in U.S. Bankruptcy= =20 Court. ?????Given that power, Davis sent advisors to brief the committee last=20 Wednesday. The advisors told the committee about the deal they struck with= =20 Southern California Edison to buy its share of the statewide transmission= =20 grid, and the similar deal that PG&E rejected. ?????"I'm not saying they embraced it entirely," Davis said, after speaking= =20 at a conference of technology entrepreneurs put on by the J.P. Morgan=20 investment bank. "But they liked parts of it, asked good questions, and I= =20 thought it was a good beginning." ?????Paul Aronzon, the lead lawyer for the creditors committee, stressed th= at=20 the meeting with Davis' advisors would not lead directly to a deal. The=20 governor's representatives "did not come out and say, 'Would you guys sell = us=20 the transmission grid?' " he said. Rather, Aronzon said, the advisors simpl= y=20 brought the creditors up to speed on what Davis has put on the table. ?????Davis has offered more than $7 billion to buy the transmission systems= =20 of Edison, San Diego Gas & Electric and PG&E. So far, only Edison has=20 accepted the deal. The cash infusion would help the utilities restructure= =20 their debts, and ultimately relieve the state of the need to continue buyin= g=20 electricity on their behalf. ?????The Davis administration made public Monday its most detailed breakdow= n=20 yet on the costs it expects to incur purchasing electricity over the next= =20 years. ?????However, the extra information failed to satisfy Republican lawmakers,= =20 who are holding up legislation needed to repay the state budget for the=20 billions already spent on electricity. ?????California will spend $15 billion buying power this year, according to= =20 projections by Davis' advisors. ?????But that total will drop to $9 billion next year and $7 billion the ne= xt=20 as long-term electricity contracts, energy conservation efforts and new pow= er=20 supplies combine to lower the state's costs. ?????With money from higher electric rates and a planned $12.5-billion bond= ,=20 the state should be able to cover the costs of power and operate at a surpl= us=20 starting in November 2002, the administration projected. ?????Several Republicans took note of the date: It is the month of the 2002= =20 gubernatorial election, when Davis is expected to seek a second term. ?????The figures were based on a dizzying number of assumptions about the= =20 state's energy future. The projections assume, for example, that California= ns=20 will reduce energy consumption by 7%, and that 90% of the state's alternati= ve=20 energy producers will soon generate electricity again. Now only about 65% a= re=20 online. ?????Davis administration officials defended the figures, saying that they= =20 were conservative. ?????The reaction to the figures reflects a growing rift between Democrats= =20 and Republicans over how best to solve the state's problems. Efforts have= =20 been lurching unsteadily on several fronts, including the courts, the state= =20 Legislature and Congress, with considerable political head-butting taking= =20 place in the last two. ?????In Washington today, a key congressional panel is expected to take up= =20 emergency legislation intended to help California, although Davis and other= =20 Democrats have criticized the effort as useless. ?????The bill's 19 provisions would, among other things, provide federal ai= d=20 to relieve a bottleneck in the state's transmission system, permit governor= s=20 to obtain temporary waivers of environmental rules to boost power supplies,= =20 and direct federal disaster officials to help California prepare for=20 blackouts. ?????A spokesman for Davis said the Republican-drafted legislation offers "= a=20 lot of things we don't need, and fails to address the one thing we do need,= "=20 namely firm price controls on wholesale electricity sales. ?????Democrats and Republicans have strong, fundamental disagreements about= =20 how best to solve the crisis, with Democrats supporting price controls, if= =20 only temporarily, and many Republicans, including President Bush, opposed t= o=20 tampering with the market. ?????Several Democrats who attended a White House ceremony Monday to mark= =20 Bush's first 100 days in office spoke briefly to the president about the=20 energy situation. ?????"He was not very sympathetic," said Rep. Bob Filner (D-San Diego), an= =20 advocate of price controls. "They have their minds pretty well made up." ?????In one effort to seize the initiative, a divided state Senate=20 Appropriations Committee approved a bill Monday that would impose a windfal= l=20 profits tax on electricity sellers who gouge California consumers. Revenue= =20 from the tax would flow back to Californians in the form of a credit on the= ir=20 state income taxes, starting next April 15. ?????"Our backs are to the wall," said one sponsor of the bill, Sen. Jack= =20 Scott (D-Altadena). "We believe that this is one time when we can stand up = to=20 an avaricious energy generator and say, 'No more.' " ?????On a 7-3 vote, Democrats on the committee voted for the bill, SB1X, an= d=20 Republicans lined up against it. The measure moved to the Senate floor, whe= re=20 it will require only a simple majority of 21 votes and is expected to pass. ?????Davis has said he is open to signing a windfall profits bill, but he h= as=20 not publicly lobbied for its passage. ?????Also Monday, legislation was introduced in the Assembly to bolster=20 natural gas supplies in the state. Tight supplies have led to soaring costs= =20 for natural gas, the fuel most commonly used to generate electricity in=20 California. ---=20 ?????Morain reported from San Francisco and Simon from Washington. Times=20 staff writers Miguel Bustillo, Carl Ingram and Julie Tamaki in Sacramento,= =20 Tim Reiterman in San Francisco and Mitchell Landsberg in Los Angeles=20 contributed to this story. ---------------------------------------------------------------------------= --- ---------------------------------------------- Feds want surcharge to pay utilities' debts=20 THE PLAN: Additional rate boost likely, cash would go to power suppliers=20 Carolyn Said, Chronicle Staff Writer Tuesday, May 1, 2001=20 ,2001 San Francisco Chronicle=20 URL:=20 http://www.sfgate.com/cgi-bin/article.cgi?file=3D/c/a/2001/05/01/MN9985.DTL= =20 Federal energy regulators have proposed a surcharge on wholesale electricit= y=20 sales in California to compensate generating companies, angering state=20 officials who say the idea amounts to gouging consumers.=20 The Federal Energy Regulatory Commission suggested collecting the money to= =20 reimburse electricity suppliers who have debts from Pacific Gas and Electri= c=20 Co., Southern California Edison and San Diego Gas & Electric Co. Power=20 companies accrued some $6 billion in unpaid bills from California's=20 struggling utilities in late 2000 and early this year, until the state=20 stepped in to take over the purchasing of power.=20 "Under the pretense of helping California, (FERC) is proposing to steal=20 additional money from California ratepayers to pad the pockets of the greed= y=20 energy companies," Gov. Gray Davis said in a statement. "FERC does not care= =20 one wit about the ratepayer. Their plan is a total capitulation to the ener= gy=20 companies."=20 Sen. Dianne Feinstein, D-Calif., who has been an outspoken critic of FERC's= =20 policies in California, said the surcharge would "ensure that power=20 generators get paid fully for their price gouging. That is outrageous and= =20 will further alienate Californians."=20 The surcharge presumably would be levied on the California Department of=20 Water Resources, which, as the state's purchasing agent, has already spent= =20 more than $5 billion on power since January. The DWR's costs, in turn, are= =20 likely to be borne by California's consumers and taxpayers.=20 FERC would require the California Independent System Operator, which runs t= he=20 state's power grid, to collect the surcharge. But state regulators could=20 challenge the surcharge.=20 "We have 30 days to comment to FERC and are considering our options," said= =20 Sean Gallagher, state counsel at the California Public Utilities Commission= .=20 "If (FERC's) concern is public policy and maintaining just and reasonable= =20 prices for consumers, I don't quite understand why they would get into the= =20 middle of a legal wrangle about past bills' getting paid," said Severin=20 Borenstein, director of the University of California Energy Institute in=20 Berkeley. "It is true the firms would like to get paid. I'm not sure what= =20 FERC has to do with helping them collect their money."=20 A 'GOUGING TAX' Consumer advocates characterized the surcharge as a "gouging tax" that=20 underscores the Bush administration's close ties to energy firms, many of= =20 which are based in President Bush's home state of Texas.=20 "This is evidence that FERC and the administration are more interested in= =20 protecting the energy industry than the consumers or taxpayers of=20 California," said Doug Heller, a consumer advocate with the Los Angeles-bas= ed=20 Foundation for Taxpayer and Consumer Rights. "It's back-billing us to pay= =20 prices that were unjust and unreasonable per the FERC's own analysis."=20 FERC's Curt Hebert, a Mississippi Republican whom President Bush appointed= =20 chairman of the commission, was behind the surcharge proposal, which he tol= d=20 the Wall Street Journal was a way "to stabilize the market." Hebert did not= =20 return calls for comment.=20 The surcharge was proposed in FERC's 39-page "mitigation" plan to alleviate= =20 wholesale electricity prices in California during power emergencies; the pl= an=20 was released last week. FERC said it would accept public comment on the=20 proposal for 30 days, after which it would decide whether to implement it.= =20 COMPLICATED ISSUES Even the power industry, the presumptive beneficiary of the surcharge, did= =20 not express whole-hearted support for it.=20 "I'm glad they brought it up," said Gary Ackerman, executive director of th= e=20 Western Power Trading Forum, which represents all major buyers and sellers = of=20 wholesale electricity in California. "But it skirts the issue of what's sta= te=20 regulated and what's federally regulated. I'm not sure how federal regulato= rs=20 can pass a charge on wholesale costs which then ends up on consumers, witho= ut=20 the state saying it's OK."=20 Some of the proposal's wording is unclear. It discusses, for example, wheth= er=20 the surcharge money "should cover all past-due amounts or only future unpai= d=20 bills starting from the date the plan is begun."=20 The reference to "future unpaid bills" is puzzling since, with the state of= =20 California picking up the tab, electricity suppliers no longer are=20 accumulating unpaid bills from the utilities.=20 "That could become a self-fulfilling prophecy; we don't want to go there,"= =20 Ackerman said about the idea of "future unpaid bills."=20 The FERC proposal also implies that electricity generators have reduced=20 production in California, an allegation the power companies themselves deny= .=20 FERC asked for comments on whether the surcharge "would help to increase=20 production by creating a greater assurance that generators will be paid."= =20 E-mail Carolyn Said at csaid@sfchronicle.com.=20 ,2001 San Francisco Chronicle ? Page?A - 1=20 ---------------------------------------------------------------------------= --- --------------------------------------------------------------- Lawmakers offer bills aimed at cutting natural gas prices=20 JENNIFER COLEMAN, Associated Press Writer Tuesday, May 1, 2001=20 ,2001 Associated Press=20 URL:=20 http://www.sfgate.com/cgi-bin/article.cgi?file=3D/news/archive/2001/05/01/s= tate0 949EDT0128.DTL&type=3Dnews=20 (05-01) 06:49 PDT SACRAMENTO (AP) -- Gov. Gray Davis is relying on stringen= t=20 conservation measures, increased electricity supply and quick Legislative= =20 authority to proceed with a $12.5 billion revenue bond issue to head off=20 blackouts this summer.=20 Davis administration officials briefed lawmakers Monday on the governor's= =20 plan to rescue Southern California Edison by buying the utility's=20 transmission lines.=20 The extra financial details Davis' representatives gave Assembly Republican= s=20 include forecasts of the Department of Water Resources' summer power=20 purchases -- the same figures the state will use to find buyers for $12.5= =20 billion in bonds to pay for future power.=20 Those forecasts, some Republicans said, count on too many things falling in= to=20 place, including the assumption that all of the state's financially trouble= d=20 alternative energy producers will be online.=20 Though energy analysts have predicted skyrocketing energy costs for summer = --=20 up to $1,500 per megawatt hour -- the governor's plan calculates an average= =20 cost of $195 per megawatt hour over June, July and August.=20 That's because DWR cut long-term contracts covering a major part of the=20 electricity needed during peak times, said Ron Nichols, senior managing=20 director for Navigant Consulting Inc.=20 Long-term contracts and conservation will minimize the effect of the expect= ed=20 high spot prices, Nichols said.=20 In essence, Davis aides, much of the conservation will be spurred by sticke= r=20 shock felt by consumers when they get their higher rates on their June bill= s.=20 PG&E customers will see a 34 percent increase, Southern California Edison's= =20 will jump 32 and San Diego Gas and Electric rates will jump 44 percent.=20 Davis' consultants predict the state can conserve up to 7,234 megawatts=20 during peak demand -- about 16 percent of a 45,000 megawatt load that summe= r=20 weather can bring on. One megawatt is roughly enough power for 750 homes.= =20 Much of that conservation, 2,484 megawatts, will come from three different= =20 conservation programs through the California Independent System Operator,= =20 keeper of the state's power grid.=20 Davis' ''20/20'' conservation plan is expected to cut another 2,200 megawat= ts=20 of demand. The rest of the cuts come from the sticker shock of higher=20 consumer rates and by estimating how much less power Californians are using= =20 this year compared to last year.=20 ``If we're wrong, there are certain reserves built in,'' said Susan Kennedy= ,=20 deputy chief of staff and secretary of cabinet. Either the state borrows mo= re=20 or there will be blackouts, she added, and if the price of power goes highe= r=20 than expectations, the state won't be able to afford it.=20 By the end of 2002, Davis estimates, DWR will spend $26.9 billion to buy=20 power for customers of the three financially ailing utilities. Of that, $12= .5=20 billion will be paid for by revenue bonds that will add up to one cent per= =20 kilowatt hour to customer bills for 15 years.=20 The Legislature approved the revenue bonds based on a formula that would se= t=20 the amount of the issue. Now Davis' representatives say it's urgent that th= e=20 Legislature approve a bill with a firm cap so they could begin the bond sal= e.=20 ``We need the unambiguous authority to sell bonds. We need it right now. We= =20 cannot afford any delays,'' Kennedy said.=20 A bill putting a $10 billion limit on the bonds stalled in the Assembly las= t=20 week after Republicans refused to vote for it until they received more=20 details about Davis' power buys and long-term contracts.=20 Republicans wondered about the ability of the alternative generators to be= =20 online, a sentiment shared by the industry. Currently, about one-third are= =20 off-line now because PG&E and Edison owe them more than $1 billion.=20 The Public Utilities Commission ordered the utilities to pay those generato= rs=20 every other week starting April 1, but the large debts have the generators= =20 fighting to stay open, said Jan Smutny-Jones, executive director of the=20 Independent Energy Producers.=20 Davis' predictions aren't rosy, but realistic, said Joseph Fichera, a=20 financial adviser for the governor. ``It minimizes the risk of blackouts, b= ut=20 you can never eliminate it.''=20 Also Monday, an Assembly subcommittee unveiled four bills Monday designed t= o=20 increase supplies of natural gas, including streamlining approvals for gas= =20 storage and new pipelines.=20 After conducting hearings on the market, the subcommittee is recommending t= he=20 state streamline the PUC's process to approve underground natural gas stora= ge=20 facilities and new pipelines, allow lower-grade California natural gas to b= e=20 used by industrial users and reform tariffs to see if they discourage=20 investments in a variety of natural gas-related ventures.=20 Meanwhile, the state remained free of power alerts Tuesday morning as=20 reserves stayed above 7 percent.=20 On the Net:=20 The bill numbers are: AB78x by Canciamilla; AB73x by Canciamilla and=20 Dickerson; AB23x, by Assemblyman Dennis Cardoza, D-Atwater, and Assemblywom= an=20 Barbara Matthews, D-Tracy; and AB42x, by Diaz.=20 Read the bills at www.assembly.ca.gov=20 ,2001 Associated Press ?=20 ---------------------------------------------------------------------------= --- --------------------------------------------------------------- Developments in California's energy crisis=20 The Associated Press Tuesday, May 1, 2001=20 ,2001 Associated Press=20 URL:=20 http://www.sfgate.com/cgi-bin/article.cgi?file=3D/news/archive/2001/05/01/s= tate0 946EDT0127.DTL&type=3Dnews=20 , , -- (05-01) 06:46 PDT Developments in California's energy crisis:=20 TUESDAY:< ?-- An Assembly electricity oversight committee releases report o= n its ?investigation of alleged natural gas price and supply manipulation. = ?-- The state remains free of power alerts as electricity reserves stay abo= ve ?7 percent. ?MONDAY:<=20 -- Gov. Gray Davis' staff briefs Assembly Republicans on the plan to purcha= se=20 Southern California Edison's transmission lines. The governor estimates tha= t=20 during peak hours this summer, Californians can conserve more than 7,000=20 megawatts. That's enough power for more than 5 million homes. Davis' advise= rs=20 say the Legislature needs to quickly approve a bill that would let the stat= e=20 issue bonds to buy power for customers of Pacific Gas and Electric, San Die= go=20 Gas and Electric and Edison. The bonds would also repay the general fund fo= r=20 the more than $5 billion the state has already spent on power.=20 -- PG&E's transmission lines could still be bought by the state despite the= =20 utility seeking bankruptcy protection when an earlier deal with state=20 negotiators fell through, Davis says. Davis tells reporters that a creditor= s=20 committee of businesses owed money by PG&E asked the state for a briefing o= n=20 talks to buy San Diego Gas and Electric Co.'s transmission lines. Davis say= s=20 he believes there is still some possibility of buying PG&E's lines.=20 -- Williams Energy agrees to pay $8 million to settle charges by federal=20 regulators that the company withheld power to drive up prices.=20 ``We decided to settle to put this behind us and to put our full attention= =20 toward more productive matters in relation to California versus going throu= gh=20 a costly and long hearing process,'' said Williams spokeswoman Paula=20 Hall-Collins. She said Williams ``is confident that a full hearing of the= =20 facts would have exonerated us entirely.''=20 -- Members of the Assembly Subcommittee on Natural Gas Costs and Availabili= ty=20 unveil legislation to cut natural gas prices.=20 -- The state Assembly approves a bill that lets a private energy company=20 purchase a shuttered PG&E power plant. The North American Power Group plans= =20 to reopen the Kern Power Plant that PG&E shut down in 1985. Once renovated,= =20 it will provide enough electricity about 180,00
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