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Sac Bee, Tues, 6/5: Ose electricity bill buffeted by political storms Sac Bee, Tues, 6/5: Bush vs. price caps: Economists correct a faulty power= =20 lecture (Editorial) SD Union, Tues, 6/5: A game of victims and villains SD Union, Tues, 6/5: Idled plants coming back on line SD Union, Mon, 6/4: Planned plant shutdowns easing, boosting state's power= =20 supply SF Chron, Tues, 6/5: Chevron threatens to cut gas supply in state=20 SF Chron, Tues, 6/5: PG&E creditors approve bonuses=20 Utility must file reorganization plan by end of year, or CEO only gets=20 $600,000 extra SF Chron, Tues, 6/5: 56% favor limits on electricity prices, poll finds SF Chron, Tues, 6/5: Developments in California's energy crisis SF Chron, Tues, 6/5: PG&E sues to challenge reimbursement to state Mercury News, Tues, 6/5: Critics say Calpine plan too generous =20 Mercury News, Mon, 6/4: PBS documentary shines light on energy crisis =20 (Enron mentioned) Mercury News, Tues, 6/5: California's big turnoff (Editorial) Mercury News, Tues, 6/5: FERC shirk (Editorial) OC Register, Tues, 6/5: Edison plugging shareholders into Capitol OC Register, Tues, 6/5: SDG&E to seek rate hike to cover $915 million tab OC Regiser, Tues, 6/5: Energy notebook AES power plant repairs might not meet target date Individual.com (Businesswire), Tues, 6/5: GWF Signs Long-Term Contract to= =20 Provide 430 MW of Power to California=20 WSJ, Tues, 6/5: Electricity prices (Chart) NY Times, Tues, 6/5: Surplus of Finger-Pointing In California Energy Crisi= s LA Times, Tues, 6/5: California PSEG Signs 10-Year Contract to Supply=20 Electricity to State LA Times, Tues, 6/5: Panel OKs Subpoenas for Energy Companies Electricity = :=20 Special state Senate committee will demand pricing information in inquiry= =20 into whether California has been gouged ---------------------------------------------------------------------------= --- ----------------------------------- Ose electricity bill buffeted by political storms=20 By David Whitney Bee Washington Bureau (Published June 5, 2001)=20 WASHINGTON -- Rep. Doug Ose's legislation to bring order to skyrocketing=20 wholesale electricity prices is helping House Republicans rescue an emergen= cy=20 electricity bill, but it hasn't quelled Democrats' increasingly strident ca= ll=20 for more extensive price controls.=20 Utility sources, meanwhile, said the Sacramento Republican's legislation=20 won't do enough to stop the rapid escalation in wholesale power rates in=20 California and the West Coast.=20 And Mark Cooper, director of research for the Consumer Federation of Americ= a,=20 charged that the bill would lead to even higher power rates for most=20 Californians. "Ose's bill simply legalizes the transfer of billions of=20 dollars from California to Texas and Oklahoma," Cooper said.=20 Ose, chairman of the House Government Reform Committee's energy policy pane= l,=20 introduced his bill last month. The measure was promptly referred to the=20 House Energy and Commerce Committee, whose Republican leaders saw it as a w= ay=20 out of a politically sticky mess.=20 With Democrats demanding that federal regulators set wholesale rates based = on=20 generators' actual cost of producing power and the Bush administration=20 opposing anything that looks like price caps, Ose's idea contained the seed= s=20 of compromise.=20 Ose expanded on what the Federal Energy Regulatory Commission already had= =20 endorsed in a controversial "price mitigation" order for the California=20 market that took effect last week.=20 That order states that during a power emergency, the wholesale price on the= =20 spot market will be pegged to the cost of production at the highest-cost,= =20 least-efficient plant selling into the market at the time.=20 Ose's bill defuses some of the Democratic criticism of that action by makin= g=20 the order apply at all times and throughout the 13-state Western region.=20 "It is not a cap," Ose said. "It is market driven. It rewards those who are= =20 most efficient, and it rewards those who are most environmentally sensitive= =20 and responsible."=20 House Energy and Commerce Committee leaders hope to use the bill this week = as=20 the framework to jump-start a package of emergency electricity provisions,= =20 including authorization of a $200 million fix of a critical Central=20 California transmission line bottleneck.=20 California Democrats, heartened by the leadership change in the Senate that= =20 strengthens Sen. Dianne Feinstein's hand on her price-control legislation,= =20 are working to derail the Ose compromise.=20 "By allowing the least-efficient generator to set the price, this proposal= =20 creates a system that will encourage massive market manipulation, raising= =20 prices even further," they said in a statement. "This amendment will do=20 nothing to help stop the economic bleeding."=20 The Bee's David Whitney can be reached at (202) 383-0004 or=20 dwhitney@mcclatchydc.com. Bush vs. price caps: Economists correct a faulty power lecture (Published June 5, 2001)=20 In his recent commencement address at Yale University, President Bush salut= ed=20 the C students in the graduating class: "I say you, too, can be president o= f=20 the United States." But when he lectured California last week on the evils = of=20 electricity price controls, the joke seemed less funny. What America's most= =20 famous C student didn't learn in economics class is costing the state dearl= y.=20 "Price caps do nothing to reduce demand, and they do nothing to increase=20 supply," Bush said in his Los Angeles address, repeating a standard lesson= =20 out of introductory economics textbooks. Unfortunately, as 10 energy=20 economists from universities around the nation made clear last week in an= =20 open letter on the state's electricity crisis, Bush must have missed the=20 later chapters.=20 The textbooks' admonitions against price controls apply to competitive=20 markets. When competition breaks down, giving one or a few producers the=20 ability to control prices, the textbooks are equally firm that regulation i= s=20 needed to keep them from exploiting consumers.=20 That's the situation confronting California -- and federal regulators.=20 Electricity markets here long ago ceased to be competitive. Because of a=20 flawed market structure and a temporary imbalance between supply and demand= ,=20 generators learned last year that they had market power: By withholding=20 supply at key times and places, they drove up the price of power beyond the= =20 level that would otherwise prevail in a competitive market.=20 "We cannot expect a market to operate to benefit consumers ... if effective= =20 competition does not exist," the economists said in their letter. "In this= =20 case, cost-of-service prices are an obvious remedy."=20 They noted that several useful proposals have been submitted to the Federal= =20 Energy Regulatory Commission (FERC) for temporary price restraints on=20 wholesale prices. These would last only until new plants now being built co= me=20 online to alleviate the shortage.=20 Such restraints could meet the federal legal requirement that prices be "ju= st=20 and reasonable" without discouraging construction of new power plants or=20 generation from existing plants, which is needed to keep the lights on this= =20 summer. In fact, as some economists have pointed out, the right kind of pri= ce=20 controls could actually increase supply by removing any incentive for=20 generators to withhold electricity to game the market.=20 Bush's regulatory inaction is producing an unprecedented transfer of wealth= =20 from California households and businesses to the generating firms, a shift= =20 that endangers the health of the state's economy. Unless FERC or Congress= =20 steps in, that wealth transfer likely will yield a political backlash not= =20 only against electricity deregulation, but also against market-based polici= es=20 in general. Even a C student should know enough history to understand that'= s=20 not a risk an incumbent politician wants to court. A game of victims and villains=20 Stereotypes cloud the complexity of energy issue By Dana Wilkie=20 COPLEY NEWS SERVICE=20 June 5, 2001=20 WASHINGTON -- When Gov. Gray Davis refers to those Texans taking California= ns=20 to the cleaners with electricity prices, the impression he apparently wants= =20 to leave is one of greedy and unscrupulous Republicans who probably look li= ke=20 oil baron J.R. Ewing.=20 And when Bush administration officials sniff that Californians got themselv= es=20 into this energy mess, they seem to be conjuring up the image of=20 short-sighted, tree-hugging Democrats who care more about Alaskan caribou= =20 than about people.=20 Even if Davis and Bush shook hands and appeared civil in California last=20 Tuesday, the previous weeks of discord between the two left an indelible=20 impression on the public, experts said -- one colored by stereotypes that= =20 easily strike a chord with voters but that also cloud the complexity of the= =20 energy issue.=20 Those stereotypes pit the languid, Birkenstock-wearing Californian against= =20 the respectable Texas corporate man; the gluttonous executive against the= =20 rabid environmentalist; John Wayne against out-of-towners in black hats. Ju= st=20 as when many in this country maligned Arabs during the 1970s oil embargo,= =20 attempts to create victims and villains in the current energy crisis easily= =20 appeal to public emotion.=20 Davis, a Democrat, recently invoked the image of hand-to-hand combat with a= =20 fearsome foreigner: "We are literally in a war with energy companies, many = of=20 which reside in Texas," Davis said after Bush, a Texan, released his energy= =20 plan.=20 The image is straight from an old western.=20 "Gray Davis is playing John Wayne against the guy with the black hat," said= =20 Mark Petracca, chairman of the political science department at the Universi= ty=20 of California Irvine. "You sound like a socialist if you demonize middle-ag= ed=20 white guys in suits who own capital. You sound like a cowboy with a white h= at=20 when you demonize oil barons."=20 U.S. Sen. Barbara Boxer, another Democrat, plopped a black hat on Vice=20 President Dick Cheney, architect of Bush's energy plan: "You have the vice= =20 president sounding like an oil man."=20 Said Petracca: "Of all the possible images that one could pick, the oil bar= on=20 is the easiest to manufacture. It has the deepest cultural resonance, becau= se=20 people have been exposed to this imagery on TV stations for years and years= ."=20 Helping to bolster that image, of course, is the fact that both Bush and=20 Cheney worked in companies involved with oil.=20 While Bush professes no part in the blame game -- "He's not interested in= =20 finger-pointing," said White House press secretary Ari Fleischer -- Cheney= =20 raised the stereotype of the superficial, mollycoddled, air-headed=20 Californian. On a national news program, he called California's electricity= =20 deregulation scheme "harebrained" and Davis' suggestion that Bush allowed= =20 price-gouging "goofy."=20 "You have a war of two biases," said Jack Pitney, a government professor at= =20 Claremont McKenna College. "The bias of Texas as greedy and money-grubbing,= =20 and the bias of California as shallow and narcissistic."=20 No matter how unrepresentative, these stereotypes are a way for the Davis a= nd=20 Bush administrations, and the national political parties, to convince voter= s=20 whom to blame for the energy mess. That one of the parties should be a=20 "culprit" is itself somewhat disingenuous, since the crisis has roots that= =20 run across Republican and Democratic administrations.=20 Davis' once-stellar public approval ratings have withered, as Californians= =20 increasingly disapprove of how he has handled the crisis. Facing re-=20 election next year and a considered a presidential prospect in 2004, the=20 governor often reminds Californians that the crisis grew out of a Republica= n=20 deregulation scheme, and that he is working around the clock to build new= =20 power plants.=20 California Attorney General Bill Lockyer, also a Democrat, recently portray= ed=20 power-company executives as criminals: "I would love to personally escort= =20 (Enron Corp. Chairman Kenneth) Lay to an 8-by-10 cell that he could share= =20 with a tattooed dude who says, 'Hi, my name is Spike, honey,'=20 " Lockyer said.=20 Meanwhile, national Democrats have aired a TV ad in the Long Beach district= =20 of GOP Rep. Stephen Horn that says the congressman teamed with Bush to oppo= se=20 price caps that might have offered relief from summer blackouts.=20 "It's a short-term effort by Davis to blame (others) for his difficulties,= =20 but it's also part of a longer-term national Democratic Party effort to mak= e=20 a case that the administration is rather friendly to the big-energy=20 interests, and less friendly to conservationists," said Bruce Buchanan, a= =20 University of Texas expert on the presidency.=20 If gasoline prices stay high, or if California's electricity problems spill= =20 over into other states, it may be Bush -- and Republicans running in next= =20 year's elections -- who land in trouble with the public. The GOP fears that= =20 voters may perceive Republicans as the monopolistic and environmentally=20 unfriendly tools of oil companies.=20 In the 1970s, politicians found an easy culprit for long lines at gas=20 stations and high fuel prices: They preyed on stereotypes of Arabs.=20 "All you had to do was show a bunch of Arab sheiks -- who already look to u= s=20 sort of exotic -- meeting in some country that makes people think of=20 international terrorism," said UC Irvine's Petracca. "Bingo -- you have som= e=20 people to blame."=20 Now, as then, the images have little to do with reality.=20 Ben Paulos, who promotes alternative power with the Energy Foundation, said= =20 "it's a simplification" to paint the culprits in California's energy crisis= =20 as Texas oil companies.=20 "These are international companies that own things all over the place," he= =20 said.=20 In fact, most of the privately owned power generators in California are own= ed=20 by companies that are not from Texas.=20 And while conservationists get mileage out of associating these companies= =20 with J.R. Ewing -- the Larry Hagman character who ran an oil company on TV'= s=20 "Dallas" -- "these (Texas) companies we're talking about are not oil=20 companies," Petracca said. "They're energy companies, natural gas companies= .=20 But people lump it all together."=20 Said Pitney: "When you're trying to get on (with news anchor) Dan Rather,= =20 detailed matters about energy policy just don't make the cut."=20 Idled plants coming back on line=20 By Don Thompson=20 ASSOCIATED PRESS=20 June 5, 2001=20 SACRAMENTO -- California's electricity production should improve in the nex= t=20 few weeks weeks as more power plants come back on line after spring=20 maintenance shutdowns, the state's grid operator said yesterday.=20 That, coupled with conservation efforts detailed by state officials Sunday,= =20 could help during this summer's high temperatures, independent observers sa= id=20 -- but not enough to stave off blackouts.=20 "We still find blackouts are inevitable," said Michael Zenker of Cambridge= =20 Energy Research Associates, an energy research and consulting organization.= =20 "There just isn't enough generation available."=20 By the middle of this month, every existing plant is scheduled to be=20 producing power. That contrasts with a historic high this spring when about= a=20 third of the state's power generation was unavailable due to scheduled or= =20 emergency shutdowns.=20 The high number of shuttered plants prompted state officials to suggest pow= er=20 generators were deliberately withholding electricity to drive up prices, an= d=20 Gov. Gray Davis ordered inspectors into plants to make sure generators=20 weren't cheating.=20 Generators objected, saying they have run their plants so hard since last= =20 year that routine maintenance was overdue, which caused more unplanned=20 breakdowns.=20 The Independent System Operator, which runs the power grid, says equipment= =20 breakdowns typically account for about 2,500 megawatts being off-line on an= y=20 given day. Forced outages stripped the power grid of 2,673 megawatts=20 yesterday.=20 The power grid was short 4,144 megawatts due to planned shutdowns yesterday= ,=20 beating the Independent System Operator's projections that 5,800 megawatts= =20 would be unavailable. That was down from 9,800 megawatts off-line for=20 scheduled maintenance when the state narrowly avoided rolling blackouts=20 Thursday.=20 The ISO projects that in a week, about 3,000 megawatts should be down for= =20 maintenance, said ISO spokeswoman Stephanie McCorkle. "It looks like we're = on=20 target with our goal of getting the planned maintenance down to zero by=20 mid-June."=20 More generation, however, "doesn't mean consumers can cut back on their=20 conservation, because at the same time more plants come on line, temperatur= es=20 continue to rise," McCorkle said. By summer's peak in August and September,= =20 California can be using more than 45,000 megawatts.=20 Californians cut their electricity use by 11 percent overall, and by about = 10=20 percent during peak demand hours last month compared to the same month last= =20 year, the California Energy Commission said Sunday. In addition, the Davis= =20 administration has signed more power contracts, and the price of that power= =20 is falling.=20 "All that's good news. We're moving in the right direction," said Severin= =20 Borenstein, director of the University of California Berkeley's energy=20 institute. However, "the amount of conservation we're going to need in the= =20 late summer is even greater than we have now. We've got a long stretch ahea= d=20 of us."=20 Planned plant shutdowns easing, boosting state's power supply=20 By Don Thompson ASSOCIATED PRESS=20 June 4, 2001=20 SACRAMENTO =01) California's electricity production should improve in the c= oming=20 weeks as more power plants come back on line after spring maintenance=20 shutdowns, the state's grid operator said Monday.=20 That, coupled with conservation efforts detailed by state officials Sunday,= =20 could help during this summer's high temperatures, independent observers sa= id=20 =01) but not enough to stave off blackouts.=20 "We still find blackouts are inevitable," said Michael Zenker of Cambridge= =20 Energy Research Associates, an energy research and consulting organization.= =20 "There just isn't enough generation available."=20 By mid-June, every existing plant is scheduled to be producing power. That= =20 contrasts with a historic high this spring when about a third of the state'= s=20 power generation was unavailable due to scheduled or emergency shutdowns.= =20 The high number of shuttered plants prompted state officials to suggest pow= er=20 generators were deliberately withholding electricity to drive up prices, an= d=20 Gov. Gray Davis to order inspectors into plants to make sure generators=20 weren't cheating.=20 Generators objected, saying they have run their plants so hard since last= =20 year that routine maintenance was overdue, which caused more unplanned=20 breakdowns.=20 Last Thursday, for instance, when California came within a hair of a sevent= h=20 day of statewide blackouts, one of Duke Energy's 750-megawatt Moss Landing= =20 units began springing boiler leaks.=20 "We almost lost it that day because we'd been putting off scheduled=20 maintenance for so long," said company spokesman Tom Williams. "You can nur= se=20 those along for a while, but after a while they'll trip (off-line) and=20 they'll do it during the peak of the summer."=20 The Independent System Operator, which runs the power grid, says equipment= =20 breakdowns typically account for about 2,500 megawatts being off-line on an= y=20 given day. Forced outages stripped the power grid of 2,673 megawatts Monday= .=20 The power grid was short 4,144 megawatts due to planned shutdowns Monday,= =20 beating the Independent System Operator's projections that 5,800 megawatts= =20 would be unavailable. That was down from 9,800 megawatts off-line for=20 scheduled maintenance when the state narrowly avoided rolling blackouts=20 Thursday.=20 By comparison, California was expected to use about 31,000 megawatts of pow= er=20 during its afternoon peak period Monday, and top out at about 31,800=20 megawatts Tuesday afternoon. The 4,144 megawatts unavailable due to planned= =20 shutdowns Monday would have powered about 3.1 million homes.=20 The ISO projects that in a week, about 3,000 megawatts should be down for= =20 maintenance, said ISO spokeswoman Stephanie McCorkle. "It looks like we're = on=20 target with our goal of getting the planned maintenance down to zero by=20 mid-June."=20 More generation, however, "doesn't mean consumers can cut back on their=20 conservation, because at the same time more plants come on line, temperatur= es=20 continue to rise," McCorkle said. By summer's peak in August and September,= =20 California can be using more than 45,000 megawatts.=20 Californians cut their electricity use by 11 percent overall, and by about = 10=20 percent during peak demand hours last month compared to the same month last= =20 year, the California Energy Commission said Sunday. In addition, the Davis= =20 administration said has signed more power contracts, and the price of that= =20 power is falling.=20 "All that's good news. We're moving in the right direction," said Severin= =20 Borenstein, director of the University of California, Berkeley's energy=20 institute. However, "the amount of conservation we're going to need in the= =20 late summer is even greater than we have now. We've got a long stretch ahea= d=20 of us."=20 Planned maintenance shutdowns this winter and spring helped prompt six days= =20 of rolling blackouts, said ISO spokesman Gregg Fishman. The ISO recently=20 delayed installation of pollution control equipment at five plants until=20 winter so those plants can operate through the hot summer months.=20 "The idea is the plants go down mainly in the springtime, because usually= =20 there's the hydro(electricity) there to replace them," Fishman said. But no= t=20 with this year's water and snowfall shortage: "We got squeezed a couple of= =20 times because of the hydro shortage either here (in California) or in the= =20 Northwest."=20 Chevron threatens to cut gas supply in state=20 Bernadette Tansey, Chronicle Staff Writer Tuesday, June 5, 2001=20 ,2001 San Francisco Chronicle=20 URL: http://www.sfgate.com/cgi-bin/article.cgi?f=3D/c/a/2001/06/05/MN159275= .DTL=20 Chevron Corp. will reduce gasoline production at its two California=20 refineries unless they are exempted from rolling blackouts, the company's= =20 chief executive warned Gov. Gray Davis.=20 In a move that could raise California gas prices, Chevron's Richmond and El= =20 Segundo plants will scale back output and rely solely on the power provided= =20 by their own electrical generators, Chevron Chairman David O'Reilly said in= a=20 letter Friday obtained by The Chronicle.=20 Chevron would not say how much less gas it would supply from its refineries= ,=20 which have a combined capacity of 485,000 barrels per day. But a spokesman= =20 for the California Energy Commission said motorists could feel it at the=20 pump.=20 "Any reduction in production has an impact in the marketplace," said senior= =20 fuel specialist Gordon Schremp. "Prices are going to go up."=20 Chevron's gasoline sales account for more than 18 percent of the California= =20 market, company spokesman Fred Gorell said.=20 While other California refiners met yesterday's deadline to apply to state= =20 regulators for exemptions from temporary outages, O'Reilly said Chevron wou= ld=20 not submit an application.=20 To qualify for one of the exemptions being considered by the state Public= =20 Utilities Commission, Chevron would have had to assert that its vulnerabili= ty=20 to blackouts would present "imminent danger to public health or safety" --= =20 something O'Reilly said Chevron could not do.=20 "Chevron will never operate its facilities in a manner that jeopardizes the= =20 health or safety of its employees or its neighbors," O'Reilly wrote. Unless= =20 the PUC or the Legislature shields Chevron from blackouts, it will rely on= =20 its cogeneration plants.=20 Chevron set no time line for cutting production, but Gorell said the compan= y=20 is looking for state action "as soon as possible."=20 Industry groups, backed by the California Energy Commission, have been=20 pressing state officials to overturn a PUC decision that stripped refinerie= s=20 of a former exemption from blackouts. Legislation that would create a blank= et=20 exemption for refineries is stalled in the state Senate.=20 Davis spokesman Steve Maviglio said the governor has not yet responded to= =20 Chevron's letter and has not taken a position on the refinery exemption law= =20 proposed by Assemblyman John Dutra, D-Fremont.=20 Industry officials have warned that a refinery blacked out for just a few= =20 hours could take as much as a week to bring back online.=20 State regulators could not be reached for comment on Chevron's letter.=20 Gorell said O'Reilly's letter should not be read as saying that conditions = at=20 Chevron could be dangerous if the refineries suddenly lost power. At the=20 Valero refinery in Benicia, however, spokesman Scott Folwarkow said his=20 company did not hesitate to warn in its exemption application that sudden= =20 shutdowns can pose a risk.=20 He said refineries were designed under the assumption that they would have = a=20 reliable supply of power. "If you start flipping the switch on and off,=20 unpredictable things can happen," he said.=20 E-mail Bernadette Tansey at btansey@sfchronicle.com.=20 ,2001 San Francisco Chronicle ? Page?A - 4=20 PG&E creditors approve bonuses=20 Utility must file reorganization plan by end of year, or CEO only gets=20 $600,000 extra David Lazarus, Chronicle Staff Writer Tuesday, June 5, 2001=20 ,2001 San Francisco Chronicle=20 URL: http://www.sfgate.com/cgi-bin/article.cgi?f=3D/c/a/2001/06/05/MN159696= .DTL=20 PG&E's creditors have agreed to management's plan to shower top executives= =20 with $17.5 million in bonuses but balked at the bankrupt utility's initial= =20 demand that the cash come with no strings attached, The Chronicle has=20 learned.=20 Instead, the creditors say they forced Pacific Gas and Electric Co. to link= =20 the bonuses -- in some cases doubling the pay of senior managers -- to=20 quickly filing a Chapter 11 reorganization plan, no later than January.=20 However, PG&E spokesman Ron Low insisted yesterday that the utility had=20 always intended for the bonuses to be tied to submitting a reorganization= =20 plan.=20 "Our original proposal closely resembled what was filed with the court," he= =20 said.=20 The bonuses are expected to figure prominently when PG&E's management holds= a=20 court-mandated meeting with creditors on Thursday in San Francisco.=20 Bankruptcy Judge Dennis Montali, who has the final say on all compensation= =20 questions, is scheduled to issue a ruling June 18.=20 Critics have slammed the utility's "management retention program" as an=20 unwarranted payout to the same executive team responsible for steering PG&E= =20 into its worst-ever financial crisis.=20 But the company insists that without extra incentives, corporate leaders=20 would depart and thus slow PG&E's return to creditworthiness.=20 "It's a question of efficiency," said Allan Marks, a lawyer representing th= e=20 11 companies comprising the creditors' committee in PG&E's bankruptcy=20 proceedings.=20 "It's not a question of whether these people are good or bad managers," he= =20 said. "It's simply more efficient to keep these people in place."=20 Marks said that when PG&E first proposed the bonuses last month, the=20 creditors' committee quickly noted that the cash was a virtual handout to= =20 about 226 top executives.=20 PG&E Chairman Robert Glynn and nearly two dozen other senior managers would= =20 receive 100 percent of their salaries to stay on, while hundreds of other= =20 employees would receive bonuses of between 25 and 75 percent of their=20 salaries.=20 After what Marks described as candid negotiations, he said PG&E had agreed = to=20 link the bonuses to a commitment that its reorganization plan be on the tab= le=20 by the beginning of 2002.=20 "This is one way that we can assure efficiency in the process," he said. "O= ur=20 goal is to make sure the company operates as quickly as possible."=20 But PG&E's Low said that the creditors had actually requested only minor=20 changes in wording and that the timing of a reorganization plan had never= =20 really been in dispute.=20 A reorganization plan is the blueprint for a company's eventual recovery fr= om=20 bankruptcy.=20 Glynn would receive a bonus of 100 percent of his $900,000 annual salary if= =20 PG&E's plan is submitted on time. If he misses the deadline, he would have = to=20 make do with just two-thirds of that amount.=20 While there is no reason to believe that PG&E's managers would have dragged= =20 their heels without piles of extra cash, Marks said it was common in=20 bankruptcy cases for corporate leaders to receive an incentive to remain in= =20 their jobs and seek a resolution to the company's difficulties.=20 "We ended up with something that we think is fair," he said.=20 The creditors' committee includes financial heavyweights Bank of America an= d=20 Merrill Lynch, as well as power giants Enron Corp. and Dynegy Inc. The=20 committee's actions set the tone for PG&E's dealings with its thousands of= =20 other creditors, who are owed more than $9 billion.=20 Harvey Rosenfield, head of the Foundation for Taxpayer and Consumer Rights = in=20 Santa Monica, said that by accepting the bonus plan for PG&E's top brass, t= he=20 creditors' committee had signaled that it would agree to almost anything th= at=20 would help them recover outstanding costs.=20 "The creditors are in this to get reimbursed fully," he said. "Their idea i= s=20 to ultimately soak ratepayers for the entire cost of the bankruptcy."=20 Marks said the creditors would seek nothing less than full payment of PG&E'= s=20 obligations. "We're very firm on this," he said.=20 Full payment will only come if the bankruptcy court sells off some of PG&E'= s=20 assets, such as the utility's power lines or dams, or if consumers end up= =20 paying surcharges on their monthly bills.=20 To date, PG&E has insisted that none of its assets are for sale.=20 E-mail David Lazarus at dlazarus@sfchronicle.com.=20 ,2001 San Francisco Chronicle ? Page?A - 4=20 56% favor limits on electricity prices, poll finds=20 Washington Post Tuesday, June 5, 2001=20 ,2001 San Francisco Chronicle=20 URL:=20 http://www.sfgate.com/cgi-bin/article.cgi?file=3D/chronicle/archive/2001/06= /05/M N212214.DTL=20 Washington -- Most respondents to a Washington Post-ABC News poll released= =20 yesterday agree with California Gov. Gray Davis that the federal government= =20 should set limits on the wholesale price of electricity, which President Bu= sh=20 has said he opposes amid the likelihood of rolling blackouts this summer in= =20 the largest state.=20 Of those polled, 56 percent said they favored price limits, even though it= =20 was pointed out that such a measure could discourage development of new=20 supplies. Forty percent said they opposed price caps, which Davis said he= =20 would seek in federal court after Bush ruled out the idea during a face-to-= =20 face meeting last week.=20 Bush's energy plan, which he announced last month and has been promoting wi= th=20 a series of road trips, is weighted toward increasing production of oil, co= al=20 and natural gas, as well as nuclear power. Democrats contend the plan would= =20 benefit the energy industry without lowering prices for consumers.=20 The poll of 1,004 adults was taken May 31 through Sunday and has an error= =20 margin of plus or minus 3 percentage points.=20 ,2001 San Francisco Chronicle ? Page?A - 4=20 Developments in California's energy crisis=20 Tuesday, June 5, 2001=20 ,2001 Associated Press=20 URL:=20 http://www.sfgate.com/cgi-bin/article.cgi?file=3D/news/archive/2001/06/05/s= tate1 022EDT0151.DTL=20 (06-05) 00:03 PDT (AP) --=20 Developments in California's energy crisis:=20 TUESDAY: * A leading advocacy group for the poor tells state leaders to use the=20 economic power of the state's huge pension funds to leverage power companie= s.=20 The Pacific Institute for Community Organization says the two pension funds= =20 own at least $1.2 billion in stocks and bonds in most of the firms that sel= l=20 electricity to California.=20 MONDAY: * A special Senate committee investigating whether out-of-state power=20 companies are illegally profiteering the state's power crisis gets permissi= on=20 from the Senate Rules Committee to subpoena documents from the companies=20 detailing bidding, pricing and other aspects of their electricity sales to= =20 the state. The committee plans to subpoena Mirant, Dynegy, Williams, AES,= =20 Duke, Enron, NRG and Reliant, and could also issue subpoenas to the Los=20 Angeles Department of Water and Power and the state Department of Water=20 Resources to access details of their power selling and buying processes,=20 respectively.=20 * The state's grid operator says California's electricity production should= =20 improve in the coming weeks as more power plants come back on line after=20 spring maintenance shutdowns. That, coupled with conservation efforts, coul= d=20 help during this summer's high temperatures, independent observers say -- b= ut=20 not enough to stave off blackouts.=20 * The state's expanded Low Income Home Energy Assistance Program (LIHEAP)= =20 program begins with $120 million in state money. It is aimed at helping=20 working poor households, senior citizens, disabled persons, migrant seasona= l=20 farm workers, limited-English-speaking persons and households with very you= ng=20 children whose incomes fall at or below 250 percent of the federal poverty= =20 level.=20 That includes households with four members having an annual gross income of= =20 $44,125 or less; three-member households earning $36,575 or less; two-membe= r=20 families earning $29,025 or less; and individuals earning under $21,475.=20 Further information is available at www.csd.ca.gov or at 1-800-433-4327=20 (HEAP).=20 * Ten schools in three Southern California districts cut their electricity= =20 waste up to 18 percent through the Alliance to Save Energy's Green Schools= =20 Program. Together, the schools saved more than $51,000 over about eight=20 months by changing their usage habits, according to Southern California=20 Edison, which sponsored the program. More information is available at=20 www.ase.org/greenschools.=20 * Critics tell the San Jose Mercury News that the federal agency overseeing= =20 California's electricity market needs to add resources and become more=20 aggressive in watching for energy price gouging, issuing subpoenas for=20 company documents if necessary. The Federal Energy Regulatory Commission ha= s=20 been accused of backing off investigations after energy generators have=20 resisted, prompting some FERC officials to say their own system is flawed.= =20 * The FERC issues a statement saying it won't act on a request from small= =20 power generators to block a March 27 decision from the state Public Utiliti= es=20 Commission that has lowered the price they can charge for electricity. FERC= =20 says it won't step in because the matter is still pending at the PUC.=20 * No power alerts Monday as electricity reserves stay above 7 percent.=20 * Shares of Edison International closed at $10.58, down 42 cents. PG&E Corp= .=20 closed at $11.40, down 25 cents. Sempra Energy, the parent company of San= =20 Diego Gas & Electric, closes at $27.34, up 20 cents.=20 WHAT'S NEXT: * Davis' representatives continue negotiating with Sempra, the parent compa= ny=20 of San Diego Gas and Electric Co., to buy the utility's transmission lines.= =20 * In federal bankruptcy court Tuesday, Pacific Gas and Electric will ask U.= S.=20 Bankruptcy Judge Dennis Montali to stop the manager of the state's power gr= id=20 from buying electricity for utility or charging it for any electricity boug= ht=20 after the utility filed for bankruptcy on April 6.=20 THE PROBLEM: High demand, high wholesale energy costs, transmission glitches and a tight= =20 supply worsened by scarce hydroelectric power in the Northwest and=20 maintenance at aging California power plants are all factors in California'= s=20 electricity crisis.=20 Edison and PG&E say they've lost nearly $14 billion since June to high=20 wholesale prices the state's electricity deregulation law bars them from=20 passing on to consumers. PG&E, saying it hasn't received the help it needs= =20 from regulators or state lawmakers, filed for federal bankruptcy protection= =20 April 6.=20 Electricity and natural gas suppliers, scared off by the two companies' poo= r=20 credit ratings, are refusing to sell to them, leading the state in January = to=20 start buying power for the utilities' nearly 9 million residential and=20 business customers. The state is also buying power for a third investor-own= ed=20 utility, San Diego Gas & Electric, which is in better financial shape than= =20 much larger Edison and PG&E but also struggling with high wholesale power= =20 costs.=20 The Public Utilities Commission has approved average rate increases of 37= =20 percent for the heaviest residential customers and 38 percent for commercia= l=20 customers, and hikes of up to 49 percent for industrial customers and 15=20 percent or 20 percent for agricultural customers to help finance the state'= s=20 multibillion-dollar power buys.=20 ,2001 Associated Press ?=20 PG&E sues to challenge reimbursement to state=20 Greg Lucas, Sacramento Bureau Chief Tuesday, June 5, 2001=20 ,2001 San Francisco Chronicle=20 URL:=20 http://www.sfgate.com/cgi-bin/article.cgi?file=3D/chronicle/archive/2001/06= /05/M N52029.DTL=20 Sacramento -- Saying it is being shortchanged, Pacific Gas and Electric Co.= =20 filed suit yesterday challenging the amount of money California will get fr= om=20 consumers as reimbursement for buying electricity.=20 The suit filed with the state appellate court in San Francisco claims that= =20 the California Public Utilities Commission is giving the state too big a=20 share of the monthly revenue collected from consumers -- all at PG&E's=20 expense.=20 The suit by PG&E was expected. If the utility wins, it could make it harder= =20 and longer for the state to recoup its power purchases.=20 The state stepped in to purchase wholesale electricity for the utilities=20 after their credit soured as power costs skyrocketed. The state has spent= =20 more than $7 billion so far with reimbursement expected from consumers.=20 Earlier, Southern California Edison filed a similar legal challenge.=20 At issue is the amount of money the utilities receive from consumers and th= e=20 amount given to the state to cover electricity purchases.=20 PG&E contends that the PUC's calculation puts the utility $2.2 billion in t= he=20 hole because state regulators underestimated the cost of running the nuclea= r=20 power plant at Diablo Canyon and the cost of contracts with alternative=20 energy producers, like solar and wind generators.=20 The utility wants its share of consumer revenue increased, leaving less for= =20 the state.=20 Under a bill lawmakers passed in January, it was the calculation of how muc= h=20 of consumer money was needed to reimburse the state for energy purchases th= at=20 would dictate how many bonds the state could sell to repay itself.=20 The limit on bond sales was four times that calculation, totaling about $13= =20 billion.=20 But both utilities challenged the PUC's initial decision, saying it was too= =20 generous to the state.=20 Fearing legal action from the utilities, lawmakers passed a second bill in= =20 May that delinked the authorization to sell up to $13.4 billion in bonds fr= om=20 the calculation of how much consumer money the utilities receive.=20 That bill allows the bond sale to happen as early as Aug. 14.=20 As a result, yesterday the Davis administration and State Treasurer Phil=20 Angelides said the utilities' move did not affect the bond sale, scheduled= =20 for late summer.=20 "This doesn't create chaos, it just means we can't sell the bond until the= =20 middle of August," said Joseph Fichera, CEO of Saber Partners and one of Go= v.=20 Gray Davis' energy advisers.=20 Had the utilities not appealed, the PUC's ruling would have allowed the bon= d=20 sale to occur sooner, Fichera said.=20 In its initial ruling in March, the PUC said its allocation of ratepayer=20 money would send $1.8 billion to help pay off the state's bond sale.=20 Fichera said a utility court victory could potentially lead to more rate=20 increases to cover the lost income to the state but added he was "not=20 certain."=20 E-mail Greg Lucas at glucas@sfchronicle.com.=20 ,2001 San Francisco Chronicle ? Page?A - 5=20 Critics say Calpine plan too generous=20 Posted at 10:35 p.m. PDT Monday, June 4, 2001=20 BY MIKE ZAPLER=20 Mercury News=20 In what would be a highly unusual break for a local business, San Jose=20 officials are proposing to rewrite city law and spend tens of millions in= =20 taxpayer funds to ease construction of Calpine's controversial power plant = in=20 Coyote Valley.=20 The provisions highlight just how far the city has come on Calpine's propos= ed=20 600-megawatt Metcalf Energy Center. Just months ago, city leaders stood in= =20 solid opposition to the $400 million project, threatening lawsuits and othe= r=20 tactics to block it. Now, those same officials appear ready to go to=20 extraordinary lengths to make Metcalf happen.=20 Part of an agreement reached last week by Mayor Ron Gonzales and the compan= y=20 would require the city to pay $50 million upfront to extend a recycled-wate= r=20 pipeline needed to cool the power plant. Calpine will reimburse San Jose fo= r=20 just $10 million of that cost, far less than the city had sought, and will= =20 make its payments over 30 years.=20 Another clause would allow Calpine, which reported an increase in=20 first-quarter profits of more than 400 percent, to spread over 10 years a= =20 $3.9 million sewer connection fee. That would be a first for the city.=20 Typically those levies are collected upfront; the city council would have t= o=20 amend a law that set a five-year limit on sewer connection payments.=20 ``I'm not comfortable with that,'' said Councilman and Metcalf opponent=20 Forrest Williams, whose District 2 would be home to Metcalf. ``They're a ve= ry=20 profitable company .?.?. they should pay the connection fee.''=20 Councilwoman Pat Dando said the overall agreement, set to be considered by= =20 the council this afternoon, is probably the best the city could do under th= e=20 circumstances. But she added: ``I believe Calpine's payment should be the= =20 same as other businesses that develop in San Jose.''=20 The money for the pipeline would come from a fund to expand and increase th= e=20 reliability of the entire recycled-water system. Projects the city had=20 planned to build sooner would have to be delayed, but the water pollution= =20 control plant would not raise rates to pay for the Metcalf extension,=20 environmental services director Carl Mosher said.=20 Company at advantage=20 The criticized provisions are part of a larger package settled on after=20 roughly five weeks of negotiations. The talks occurred in a political=20 atmosphere that heavily favored the power company: Gov. Gray Davis endorsed= =20 Metcalf in April, and the California Energy Commission is widely expected= =20 this month to override the city's November denial of the plant.=20 Mayor Ron Gonzales and Calpine executives defended the deal, saying its=20 unusual terms were tailored to a unique project.=20 Metcalf, they said, would become the city's biggest customer of recycled=20 water, consuming an average of 3 million gallons daily -- or nearly one-thi= rd=20 of the current total usage -- to cool the plant. That would help the city= =20 achieve its goal of reducing freshwater usage and diverting more water from= =20 the San Francisco Bay for ecological reasons.=20 And the city would receive other concessions from Calpine, supporters say,= =20 including two extra air-monitoring stations and $6.5 million mostly for par= ks=20 and open space.=20 ``The energy crisis requires us to do business differently than we have in= =20 the past,'' Gonzales said. ``When you take the entire package it's a win-wi= n=20 for the city.''=20 Critics, while acknowledging that Calpine had a commanding position at the= =20 bargaining table, say the city still is giving up too much. They questioned= =20 why Calpine is paying only $10 million -- one-fifth of the total cost -- to= =20 extend the water pipeline, when Metcalf will be its sole customer, at least= =20 in the near future.=20 The city entered negotiations with Calpine wanting the company to cover the= =20 entire $50 million cost of the pipeline extension, a senior city official= =20 said. Others involved in the negotiations say that was never officially=20 broached by the city, although Calpine development manager Ken Abreu=20 acknowledged that ``obviously the city would have been happy for us to pay= =20 for as much of the pipeline as possible.''=20 That's what the city should be demanding, said Issa Ajlouny, a resident of= =20 the Santa Teresa neighborhood adjacent to Metcalf and leading opponent of t= he=20 plant.=20 ``This agreement is giving away millions of dollars of our money,'' he said= .=20 ``The city should be outraged.''=20 Early last year, according to city officials and transcripts of a Californi= a=20 Energy Commission hearing, the city and Calpine had an understanding that t= he=20 power company would pay at least $25 million to $30 million for the=20 recycled-water line if the power plant were built. If San Jose decided to= =20 construct a larger pipeline to serve more customers, the city would make up= =20 the difference.=20 Deal fell apart=20 But that informal arrangement fell apart when Metcalf emerged as a major=20 political battle. Gonzales came out against the plant in June 2000, and the= =20 council went on to vote against it in November.=20 By the time the negotiations began, Calpine didn't really need the city's= =20 help. All indications were that the California Energy Commission would=20 override the city and approve the plant anyway.=20 What emerged from the talks was a $10 million payment, spread over 30 years= ,=20 from Calpine for the recycled-water line. Company officials say that 20=20 percent is roughly the same share of the pipeline capacity Metcalf would us= e.=20 The other 80 percent has yet to be allocated, but officials said they hope = to=20 sign up other recycled-water users, such as golf courses.=20 ``Our perspective is we're doing what's fair,'' Calpine's Abreu said.=20 As the agreement heads to the council this afternoon, some neighborhood=20 activists are accusing the council of trying to suppress public debate.=20 Often, controversial neighborhood issues are heard at evening sessions to= =20 give working residents a chance to be heard.=20 ``This certainly creates an appearance that they're trying to stifle public= =20 input,'' said Elizabeth Cord of the Santa Teresa Citizen Action Group. She= =20 said consideration should be delayed until the next evening council meeting= =20 June 18 to give residents time to review the document.=20 But Gonzales said he's not inclined to defer the item. He said today's=20 meeting is already filled with difficult land-use decisions.=20 ``We have already heard from the neighborhood,'' he said. ``It was their=20 concerns we negotiated.''=20 Contact Mike Zapler at mzapler@sjmercury.com or at (408) 275-0140.=20 PBS documentary shines light on energy crisis=20 LOS ANGELES (AP) -- As California's energy crisis casts a widening shadow,= =20 PBS' ``Frontline'' helps illuminate the issue with a high-wattage=20 documentary.=20 ``Blackout'' is both a comprehensive report and a warning: California's pow= er=20 deregulation woes represent a national problem not destined for a quick or= =20 painless solution.=20 The hourlong film, with reporting by ``Frontline'' correspondent Lowell=20 Bergman done in conjunction with The New York Times, airs 10 p.m. EDT Tuesd= ay=20 on PBS stations (check local listings).=20 If you're a consumer frustrated by price hikes or concerned about what migh= t=20 happen in your state, ``Blackout'' should be considered required viewing.= =20 Major players, ranging from power company chiefs to consumer advocates to= =20 Vice President Dick Cheney, make their case on energy policy.=20 Gov. Gray Davis and others grappling with California's flawed new system,= =20 which has inspired many states to put their own deregulation efforts on hol= d,=20 are interviewed.=20 ``Blackout'' also touches on alleged machinations involving the Federal=20 Energy Regulatory Commission that could affect how much, if at all, the=20 federal government will weigh in on power prices, and renews questions abou= t=20 corporate influence on the Bush administration.=20 What ultimately emerges is a classic debate, framed in 2001 political=20 realities, over whether an unfettered market is invariably the best approac= h=20 or whether capitalism sometimes must bend to regulation.=20 Bergman is adamant about the importance of understanding a power industry= =20 that has undergone massive change.=20 ``We've launched ourselves into a great economic and social experiment in t= he=20 free market with a commodity that 65 years ago the country decided to put= =20 under heavy regulation because it was so vital,'' he said in an interview.= =20 ``We've gone into this experiment without having a full national debate abo= ut=20 what the consequences could be,'' Bergman said. ``It may all work out, but= =20 it's clear that we're at least in a transition period where a lot of people= =20 are going to pay the price.''=20 In New York, for instance, blackouts are a possibility this summer and rate= =20 hikes of up to 40 percent a likelihood, Bergman said.=20 There are those striking it rich in this bold new world. ``Blackout'' opens= =20 on Houston's ``energy alley,'' home to new-breed power companies including= =20 what the documentary calls the 800-pound gorilla, Enron Corp.=20 Enron, which has drawn attention because of chairman Kenneth Lay's close ti= es=20 to President Bush, generates profits by serving as middleman between=20 electricity makers and consumers.=20 The world's largest energy trader, Enron sees from $2.5 billion to $3 billi= on=20 in purchases and sales a day, according to its chief executive officer, Jef= f=20 Skilling.=20 ``We are doing the right thing,'' Skilling tells ``Blackout.'' ``We are=20 working to create open, competitive, fair markets. ... We are the good guys= .=20 We are on the side of angels.''=20 If that's true, Bergman says in the film, the good guys have been winning:= =20 The past year saw a ``vast transfer'' of wealth from energy consumers to=20 power sellers and traders like Enron.=20 They are taking advantage of the end of an era: the federal regulatory syst= em=20 implemented by President Franklin D. Roosevelt in the 1930s to limit abuses= =20 by utility monopolies.=20 In the 1980s, ``Blackout'' tells us, free-market proponents began pushing f= or=20 an end to regulation. In 1992, a federal law was passed that allowed for=20 states to deregulate electricity.=20 There was broad but not unanimous support for such change.=20 ``It's OK for the price of fur coats to go up and down. ... It's not OK for= =20 the oxygen of life in this high-energy civilization,'' David Freeman, the= =20 former Los Angeles Department of Water and Power head and now state energy= =20 czar, tells ``Blackout.''=20 Mark Cooper, director of research at the Consumer Federation of America, wh= o=20 notes there have already been price spikes in electricity in the Midwest an= d=20 New England, says the outcome speaks for itself.=20 ``How do we go from $40 a megawatt for capacity in a regulated system to=20 $1,000 in a deregulated system, and you're telling me I'm better off?''=20 Cooper asks in the documentary.=20 Enron's Lay weighs in on the other side.=20 ``I've yet to see any system in the world ... that over time does a better= =20 job of setting prices and allocating supplies than a competitive market,''= =20 Lay says in ``Blackout.''=20 He has a key philosophical ally in the Bush administration, which says=20 increased supply and not federal intervention is the logical answer.=20 ``We're doing everything we can to help California on a short-term basis,''= =20 Cheney says. ``There's not a lot you can do. You can't manufacture kilowatt= s=20 in the West Wing of the White House.''=20 Bergman, the former ''60 Minutes'' producer who was portrayed in the movie= =20 ``The Insider,'' believes there is one certainty about the power crisis: Th= e=20 media generally has given it short shrift.=20 ``Unfortunately this story has been covered, particularly on television, in= =20 much the same way a car crash is covered. You never learn whether the car w= as=20 safe or the highway was safe. You just see the blood and guts.''=20 ``Nobody's spent the air time to explain to people how this all happened an= d=20 why this may be coming to a neighborhood near you.'' California's big turnoff=20 Published Tuesday, June 5, 2001, in the San Jose Mercury News=20 IF you ask us, we will cut back.=20 California's residents and businesses used 11 percent less electricity in M= ay=20 2001 than they did in May 2000.=20 Keeping up this level of conservation throughout the summer won't necessari= ly=20 insulate the state from blackouts, but it's a big deal all the same. State= =20 power officials have said May and June could be the most difficult months= =20 this year. Additional power is expected to come on line later in the summer= .=20 The most important time to cut back is at the peak of demand, usually hot= =20 afternoons, when blackouts are most likely and the cost of buying electrici= ty=20 can shoot up stupefyingly.=20 With Californians having cut peak usage by 10.4 percent, the price for the= =20 power that the state is buying on the daily market is coming down.=20 June marks the beginning of the state's 20/20 rebate plan, under which=20 customers who reduce their use at least 20 percent from last year will get = a=20 20 percent rebate. It also marks the introduction of new, higher rates for= =20 businesses and for many households.=20 All the more reason for Californians to keep up the good work. FERC shirk=20 Published Tuesday, June 5, 2001, in the San Jose Mercury News=20 THE introduction of a free market in electricity is not cause for federal= =20 energy regulators to start working half days. Instead, their jobs could wel= l=20 become harder and more vital.=20 As of now, the Federal Energy Regulatory Commission does not seem up to the= =20 task.=20 In a pair of stories Sunday and Monday, Mercury News reporters Eric Nalder= =20 and Mark Gladstone described how FERC is unprepared to undertake the=20 extensive data-gathering and sophisticated number-crunching necessary to=20 detect market manipulation in the complicated wholesale electricity market.= =20 Market manipulation, or gaming, encompasses many activities that are entire= ly=20 legal. But a market easily gamed is one that does not provide electricity a= t=20 the best prices to consumers. It is a market in need of reform.=20 Moreover, it is one that does not conform to federal law requiring=20 electricity prices to be ``just and reasonable,'' which FERC is supposed to= =20 enforce.=20 Economists inside and outside FERC say the agency lacks the staff and the= =20 attitude to be a vigorous supervisor of the market.=20 This is not entirely surprising. FERC is hardly the electricity industry's= =20 only player, public or private, to be caught unprepared by the way a=20 restructured market evolved in California and other states.=20 FERC's investigation of price spikes in California early last summer=20 demonstrated its shortcomings. Its report correctly fingered the usual=20 suspects of weather, rising demand, stagnant supply and a badly constructed= =20 market. It failed to decide whether power producers had taken advantage of= =20 the circumstances to push prices skyward.=20 The economist who directed the probe found it weak in analysis and in=20 aggressiveness. FERC, for instance, is reluctant to use its subpoena=20 authority to compel power generators to turn over records.=20 The deficiencies must be remedied. A free market in electricity should not = be=20 an unsupervised market, just as the free market for stocks is not=20 unsupervised. The Securities and Exchange Commission aggressively enforces= =20 rules for accounting, stock sales, disclosure of information. It doesn't=20 hesitate to issue subpoenas.=20 Only FERC can monitor the wholesale market in electricity.=20 If only it would do it. Edison plugging shareholders into Capitol=20 A telephone lobbying effort for Davis' bailout has earned the wrath of=20 legislators.=20 June 5, 2001=20 By HANH KIM QUACH The Orange County Register=20 SACRAMENTO - Southern California Edison has launched an aggressive lobbying= =20 campaign in which it telephones its shareholders, describes the dire=20 consequences for them if the utility goes bankrupt, and then transfers the= =20 call directly to the Capitol so they can personally implore lawmakers to vo= te=20 for a controversial financial bailout plan.=20 The members of the Senate and Assembly and their staffers say that often th= e=20 shareholders - many of whom appear to be senior citizens - are confused, an= d=20 scared at the prospect of their investments in the utility being permanentl= y=20 degraded or wiped out.=20 The tactic has raised the ire of legislators in both parties, although the= =20 cash-strapped utility says it is simply practicing honest, effective=20 lobbying.=20 "The fact that they're targeting them is distressing because it brings a=20 threatening situation to their lives," said Assemblywoman Pat Bates, R-Lagu= na=20 Niguel. "You have a very vulnerable population and I think it's extremely= =20 insensitive.''=20 But Edison International's vice president of public affairs, Brian Bennett,= =20 said keeping shareholders informed and asking for their help is part of the= =20 company's obligation to them.=20 Calling shareholders, many of whom happen to be older, is part of a very=20 above-board $3 million campaign that includes letters, financial reports an= d=20 television commercials to tell them about what's happening in Sacramento, h= e=20 said. The thrust of the message is that if the Legislature continues to try= =20 to craft its own plan, rather than quickly endorse one that Gov. Gray Davis= =20 and Edison favor, the utility could be forced into bankruptcy by its=20 creditors.=20 "We would feel less inclined to spend money if the Legislature would act=20 faster. Then, we wouldn't have to run to commercials and remind the public = we=20 are in dire straits,'' Bennett said. "Legislators need to hear from their= =20 constituents back home, particularly the retirees because of the drop in=20 stock income.''=20 The lobbying effort comes at a critical juncture. The Davis-Edison plan cal= ls=20 for the state's taxpayers to come to Edison's rescue by purchasing the=20 company's transmission lines for $2.7 billion, thus providing it with enoug= h=20 money to hold off creditors who threaten to push the utility into bankruptc= y.=20 Meanwhile, the legislative leadership has been looking at several versions = of=20 that same plan. The latest would force the state's 3,600 largest businesses= -=20 those that pushed for deregulation - to pay for most of the bailout.=20 Lawmakers don't think the Edison lobbying campaign is that effective.=20 Often, the callers don't know that the Davis-Edison plan would have the sta= te=20 buy the transmission lines. And once they do, they often change their minds= ,=20 lawmakers said.=20 The last thing many shareholders want is for the state to be in charge of= =20 transporting electricity, particularly after many believe it bungled the=20 deregulation of the market in the first place.=20 But Bennett said it's unfair for lawmakers to assume the callers are not=20 well-informed.=20 "Our shareholders are average people. But if you're a shareholder and you'v= e=20 seen the dramatic decline of the company, do you think they don't know what= =20 they're talking about or feeling?'' he said.=20 Three Orange County shareholders contacted by Edison representatives said= =20 they did not mind being asked to lobby for the bailout bill. However, one= =20 said he did not know some of its key points and the another said he didn't= =20 realize it was Edison who had called him.=20 Roberto Chica of Laguna Niguel didn't know the state would acquire=20 transmission lines for $2.7 billion - and is against it.=20 "The state should own nothing. They don't have any business in any of this,= ''=20 said Chica, 59, who owns 1,000 shares of Edison. At one point, he said, his= =20 stock was worth $30,000 - three times what it is now.=20 Even though Chica doesn't agree fully with the deal, he agrees with Edison'= s=20 larger goal: avoiding bankruptcy.=20 "It's a mess. You rely on this investment for the long term and the=20 politicians screw it up and you get scared,'' Chica said.=20 San Clemente's Fred Beck, 74, said he didn't know who called him, but he=20 agreed to be patched through to a Bates aide, to whom he expressed his ange= r=20 about the energy crisis in general.=20 Beck said he bought his stock in 1993 for the dividends it would pay out=20 during retirement. He paid about $23 a share; they now trade around $10.=20 SDG&E to seek rate hike to cover $915 million tab=20 That amount was needed to pay another agency for electricity.=20 June 5, 2001=20 By ANNE C. MULKERN The Orange County Register=20 The power company that serves 100,000 south Orange County residents wants t= o=20 hike electricity rates to pay back the state for power purchases.=20 San Diego Gas & Electric Co. proposes raising rates in a five-tiered plan= =20 similar to one approved in May for Southern California Edison customers.=20 The utility needs to collect $915 million to pay the Department of Water=20 Resources, which is buying power for cash-strapped utilities.=20 The hike would be greatest for those using the most power.=20 Low-income customers and those using 130 percent or less of their baseline= =20 allocation would not see any rate hike. Baseline is the amount of power=20 considered necessary for essential uses. About 60 percent of customers=20 wouldn't pay higher rates, said SDG&E spokesman Ed van Herick.=20 Customers who use the most - 300 percent of their baseline or more - would= =20 pay 26.67 cents per kilowatt hour for that extra power, more than twice the= =20 lowest rate.=20 State regulators will vote on the proposal June 28 and, if approved, it wou= ld=20 take effect
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