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Bingaman, Senate Energy Chief, Will Block Bush Plan (Update1)
Bloomberg, 06/05/01 USA: TECO breaks ground on 599-MW Arkansas power plant. Reuters English News Service, 06/05/01 Reuters to Provide Its Customers With EnronOnline Quotes Business Wire, 06/05/01 UK: Intl bonds-Telecoms suffer despite positive market. Reuters English News Service, 06/05/01 Natural gas generators considered to ease electricity demand, prices Associated Press Newswires, 06/05/01 Waste Management to Start Trading Pulp and Paper (Update1) Bloomberg, 06/05/01 Profile: Power Play, Who's to Blame for the Energy Crisis?; Lowell Bergman, "Frontline" correspondent, Laura Holson and Joseph Kahn, The New York Times, discuss the energy crisis ABC News: Nightline, 06/04/01 Bingaman, Senate Energy Chief, Will Block Bush Plan (Update1) 2001-06-05 10:50 (New York) Bingaman, Senate Energy Chief, Will Block Bush Plan (Update1) (Adds company names in fourth paragraph and details about contributions in paragraph 23.) Washington, June 5 (Bloomberg) -- President George W. Bush delivered his energy plan to Senator Frank Murkowski last month, expecting the Alaska Republican to push it more or less intact through the Senate and on to passage by the House. Now the package intended to boost oil and gas production and ease some pollution controls is in the hands of Jeff Bingaman. The New Mexico Democrat disagrees with Bush's approach and wants to start fresh negotiations on what U.S. policy should be. Bingaman, 57, who's spent most of his 19 years in the Senate out of the spotlight, will become chairman of the Energy and Natural Resources Committee when Democrats take control of the Senate later this week. Bush wants to make it easier for companies like Enron Corp., Exxon Mobil Corp. and BP Plc, to build power plants and pipelines by easing regulations, and he's opposed to regulating the carbon dioxide emissions blamed for global warming. Bingaman has introduced legislation to cut emissions to curb global warming. The president's proposal to drill in the Arctic National Wildlife Refuge, in trouble even with Republicans in charge, is dead as long as Democrats have control. Bingaman has no plans to consider it. Bush opposes caps on energy prices; Bingaman is cosponsor of legislation to impose caps on wholesale energy prices in California although, according to a spokesman, he'd prefer the Federal Energy Regulatory Commission do that on its own. Seeking Consensus Bingaman says rather than offer his own plan now, he'll try to sit down with Republicans and negotiate something both sides can agree on. There is already agreement on some proposals, such offering tax credits to encourage domestic drilling and the use by business of renewable energy technology, such as wind-powered turbines. ``Obviously, I'm going to work for consensus,'' he said. ``There's nothing about much of these issues that should be partisan.'' Bingaman says he hasn't decided whether to push a single, comprehensive energy bill or move issues separately. Democrats may insist on separate bills for political purposes, said Tim Evans, a senior energy analyst at IFR Pegasus. ``They'll say, `Let's get all of the most vulnerable Republicans on record supporting drilling and see if they get re- elected,''' he said. Whatever his decision, Bingaman won't meet Murkowski's goal to have a bill for Bush to sign on July 4. ``I'm not anxious to have some artificial deadline so that we can have a bill-signing ceremony on a holiday,'' Bingaman said. ``I don't think that's the way to legislate.'' Visionary or Do-Nothing? Throughout his career, Bingaman has made a practice of taking time to study an issue before acting. ``He's something of a visionary,'' said Bruce Black, a former law partner who became a federal judge in New Mexico after Bingaman recommended his nomination. ``He sees trends.'' Opponents see inaction. ``He doesn't accumulate much in the way of negatives by not doing much,'' said John Dendahl, chairman of the Republican Party of New Mexico. Bingaman is a politician who doesn't stray from party positions, Dendahl said. ``He's not a maverick. He's always been when the chips are down a straight Democratic voter.'' In 2000, Bingaman voted with the party leadership 87 percent of the time on votes in which the two parties took opposing positions, according to data compiled by Congressional Quarterly. Fundraising Success In the Senate, Bingaman's strategy has been to home in on issues that have been neglected, such as school accountability and defense research that has civilian uses, work with others, and not hog the credit. ``He wouldn't try to beat it to the front of the class,'' said Ben Alexander, a Bingaman fundraiser. That approach appears to have worked: Republicans haven't been able to budge Bingaman from his Senate seat by appealing to New Mexicans' distrust of party-line politicians. With Alexander's help, Bingaman built a campaign fund that's helped him fend off rivals. He raised $2.7 million for his 2000 re- election bid compared with his Republican challenger's $669,000. The $295,527 Bingaman got from oil and gas companies and electric utilities made him the industry's sixth-largest congressional recipient in last year's elections, according to the Center for Responsive Politics. The oil and gas industry gave $32.6 million overall last year in campaign contributions. The top contributor, Enron, a pipeline and energy-trading firm, gave $2.4 million. Exxon, the world's largest publicly traded oil company, followed with $1.4 million and BP, the third largest publicly traded oil company, donated $1.3 million, according to the Center for Responsive Politics. Comparison With Murkowski Environmentalists said Bingaman will balance conservation and production concerns better than Murkowski. ``Murkowski wants to jam through an agenda'' to boost production, said Alyssondra Campaigne, legislative director of the National Resources Defense Council. Bingaman ``tends to be more studious and thorough.'' As chairman, Murkowski has pushed a comprehensive bill that includes tax incentives to promote the use of alternative energy and opening 1.5 million acres of the 19-million acres of the Alaska refuge to oil and gas exploration. Bingaman has proposed leasing land in the Gulf of Mexico for oil production, and that concerns environmentalists. ``It would put too much at risk in coastal resources,'' the NRDC's Campaigne said. USA: TECO breaks ground on 599-MW Arkansas power plant. 06/05/2001 Reuters English News Service (C) Reuters Limited 2001. NEW YORK, June 5 (Reuters) - TECO Energy subsidiary TECO Power Services held a groundbreaking ceremony Tuesday on its 599-megawatt natural gas-fired power plant in Dell, Ark. Actual construction on the Dell Power Station began in March, the company said in a statement. One megawatt provides enough electricity for about 1,000 average homes, therefore the Dell plant will provide enough electricity for about 600,000 homes. National Energy Production Corp. (NEPCO), a subsidiary of Houston-based energy giant Enron Corp. , is building the plant. The Dell plant, along with a sister plant, the McAdams station in Kosciusko, Miss., are designed to interconnect with the Entergy transmission system. Both will sell electricity to wholesale customers in the Southeast and Midwest, TECO said. Dell is expected to begin commercial operation in the second half of 2002. Tampa, Fla.-based TECO Energy units include Tampa Electric, Peoples Gas System, TECO Transport, TECO Coal, TECO Coalbed Methane, TECO Propane Ventures and TECO Solutions. TECO Power Services have announced projects to serve customers in 18 states, spanning the southern half of the U.S. TECO Energy has ownership in nearly 11,000 megawatts, operating, under construction or in advanced stages of development worldwide. - New York Power Desk, 646 223-6074, fax 646 223-6079, e-mail Eileen.Moustakis@reuters.com. Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. Reuters to Provide Its Customers With EnronOnline Quotes 06/05/2001 Business Wire (Copyright © 2001, Business Wire) NEW YORK--(BUSINESS WIRE)--June 5, 2001--Reuters (NASDAQ: RTRSY), the global information, news and technology group, today announced the launch of a new service called "EnronOnline Real-Time Quotes." Subscribers of the service have access on their Reuters screen to real-time EnronOnline quotes for power, natural gas, crude oil and refined products, bandwidth, metals, coal, emission allowances, sea freight and weather derivatives. In addition, the quotes are archived so users can retrieve, track, view and analyze the information over time using their Reuters desktop tools. Users - including traders, analysts and others - can view bids, offers, and midpoints as well as the high, low, closing midpoint and change from the previous day. Using their Reuters tools, they can create charts, models, position reports and other analysis. Subscribers will not be able to transact on the quotes through Reuters. Phil Lynch, Reuters America Co-Chief Executive Officer, said: "With the increased volatility in energy markets and the growth in online commodities trading, the EnronOnline Real-Time Quotes service will provide a comprehensive source of market pricing for our customers." Subscriptions to EnronOnline Real-Time Quotes are available to Reuters customers globally. The service provides quotes on North American and European markets. Quotes are available in real-time during EnronOnline's market hours. In global markets such as crude oil, quotes are updated 24 hours a day, seven days a week. More information on this service is available at www.reuters.com/enrononlinequotes. Since the November, 1999 launch of EnronOnline, the world's largest commodity trading website, customers have completed over one million transactions on the site. Today, EnronOnline transacts over $3 billion daily in energy and other commodities. Note to Editors: Reuters (www.about.reuters.com) premier position as a global information, news and technology group is founded on its reputation for speed, accuracy, integrity and impartiality combined with continuous technological innovation. Reuters strength is based on its unique ability to offer customers around the world a combination of content, technology and connectivity. Reuters makes extensive use of internet technologies for the widest distribution of information and news. Around 73 million unique visitors per month access Reuters content on some 1,400 Internet websites. Reuters is the world's largest international text and television news agency with 2,500 journalists, photographers and camera operators in 190 bureaux, serving 160 countries. In 2000 the Group had revenues of (pound)3.59 billion and on 31 December 2000, the Group employed 18,082 staff in 204 cities in 100 countries. Reuters celebrates its 150th anniversary this year. Reuters and the sphere logo are the trademarks of the Reuters group of companies. EnronOnline is a trademark of Enron Corp. CONTACT: Reuters Nancy Bobrowitz / Felicia Cosby 646-223-5220 / 646-223-5223 nancy.bobrowitz@reuters.com felicia.cosby@reuters.com or Middleberg Euro RSCG Bill Ferguson / Ayesha Talwar 212-699-2742 / 212-699-2741 williamf@middleberg.com ayesha@middleberg.com 14:07 EDT JUNE 5, 2001 Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. UK: Intl bonds-Telecoms suffer despite positive market. 06/05/2001 Reuters English News Service (C) Reuters Limited 2001. LONDON, June 5 (Reuters) - European telecoms firms were hit by rumours of new issuance and profit taking in the international bond markets on Tuesday while other industries enjoyed stable prices on good market sentiment. The Reuters CorpTop index and traders had telecoms spreads - the difference between the yield on corporate and similarly dated government bonds - between two and four basis points wider on Tuesday. Industrial companies and utilities, however, traded two to three basis points tighter. The fall in telecoms bonds prices was partly caused by strong indications from investment banks that Deutsche Telekom is on the verge of launching a deal for between five and 10 billion euros. "That rumour has caused some repricing today bu we also have profit taking after a month-long rally in telecoms prices caused patly by a fall in equity volatility and partly by a feeling that the harsh part of the storm may have passed," said one London-based trader. Telecoms bonds have benefitted from a feeling among many investors that the immediate danger of credit rating downgrades and further bad news has now passed. "Telecoms is a roller coaster but maybe the twists and turns are a little more gentle than they were four months ago," said one Paris-based trader. "Also remember that many of these companies are household names and that attracts the retail market while the possibility of getting a heavier coupon on further downgrades attracts those out looking for risk," she added. A good run, however, has triggered some selling as investors look to cash in. British Telecom's 6.125 percent, February 2006 bond, for example, was trading two basis points wider on the day, traders said. Meanwhile, Deutsche Telekom's 6.125 percent July 2005 issue was trading out seven basis points by 1400 GMT. Investment banks have been in talks with the German telecom giant for several months regarding a jumbo bond issue, but Deutsche Telekom's need to make coupon repayments on outstanding bonds in June and July mean an announcement is expected soon. Bankers said they expected the bond to be entirely denominated in euros as this is where the operator can achieve the best cost of funding. Deutsche Telekom issued a $14.6 billion transaction last year which was the largest corporate bond sale ever at the time. Moody's put Deutsche Telekom's A2 long-term rating on review for a possible downgrade in March while S&P placed its A-rating on review for a downgrade in February. In the primary market insurance firm Swiss Life launched a 300 million euro, 0.50 percent exchangeable bond which can be switched for shares of HSBC Holdings or Swiss Life itself. An official from lead manager Lehman Brothers said that the bond was three times oversubscribed and that a 50 million euro greenshoe - extra bonds held by the underwriter and released if there is sufficient demand - was also sold. The bond was entirely sold to European investors and all buyers where from major financial institutions, the official said. Elsewhere in the primary market the European bank for Reconstruction and Development launched a one billion euro five-year deal. It priced at 52 basis points over the 4.625 percent May 2006 U.S. Treasury. Meanwhile, Energy giant Enron sold 10 billion yen due 2004. British supermarket chain Sainsbury announced that it plans to launch a benchmark euro bond in the near future. Deutsche Bank and HSBC will lead the transaction. Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. Natural gas generators considered to ease electricity demand, prices 06/05/2001 Associated Press Newswires Copyright 2001. The Associated Press. All Rights Reserved. EUGENE, Ore. (AP) - Natural gas generators could ease demand and prices for electricity in the southern Willamette Valley, where businesses and utilities are bracing for skyrocketing rates and power shortages. The biggest proposal is a 500-megawatt power plant that Texas energy giant Enron Corp. may build on industrial property in the Coburg area, possibly on the site where Willamette Industries runs a wood products plant. By comparison, Eugene and neighboring Springfield use a total of about 450 megawatts. The rest of the proposals are for smaller operations that mostly would be connected to local businesses and mills. "Everyone's looking for power," says Frank Lambe, general manager of the Emerald People's Utility District. Even if the Enron plant is built within Emerald's service territory, it doesn't mean the local utility would get any of the power. Enron, with revenues of more than $100 billion, typically sells power to the highest bidder. In fact, an Enron plant likely would require Emerald to buy another 10 megawatts of electricity on the open market to run the plant's lights, heating and other needs. Emerald board member Katherine Schacht, who represents the Coburg area, said she's concerned that the power from the Enron plant would go to California rather than helping meet local energy needs. She also said "there are a lot of questions that need to be asked and answered" about the plant's impact on water, air quality and other issues. The Enron plant would be similar to those now under construction in the Hermiston area and in Klamath Falls. Those plants are several stories high, emit large amounts of carbon dioxide and consume between 2,000 and 2,400 gallons of water a minute. Carbon dioxide, a greenhouse gas, isn't a regulated pollutant. Enron and the businesses considering their own generators would buy natural gas from the main north-south pipeline that runs down the Willamette Valley. The plans are only preliminary, but they illustrate growing concern about future price increases that could reach 100 percent this fall and worries that the region will suffer energy shortages for the next several years. Many businesses also see a chance to make money by generating electricity in a market with wholesale prices that have jumped over $300 a megawatt - 10 times the going rate a year ago. Enron hasn't applied for any permits for a plant in the Eugene area, nor has the company given the state an official notice that it intends to build the plant. But Enron has notified the Bonneville Power Administration, the federal power marketing agency in Portland that supplies the Northwest with half its electricity, that it is considering building the plant. If Enron does build a plant in the Eugene area, it would need a permit from the Lane Regional Air Pollution Authority to emit nitrogen oxides and any other contaminants. A large plant also would need approval from the Oregon Energy Facilities Siting Council, as well as local jurisdictions if it requires land use changes. Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. Waste Management to Start Trading Pulp and Paper (Update1) 2001-06-05 16:15 (New York) Waste Management to Start Trading Pulp and Paper (Update1) (Adds closing share price.) Houston, June 5 (Bloomberg) -- Waste Management Inc., North America's largest trash hauler, formed a pulp- and paper-trading group to help control the risk of price swings from its recycling business. The largest recycling company, Houston-based Waste Management expects trading to begin in the third quarter, the company said in a Business Wire release. It runs 190 facilities for collecting such items as paper, plastic, glass and aluminum. Trading will begin gradually as the company emphasizes management of the 4 million tons of paper it handles annually, President A. Maurice Myers said in the statement. Other companies also have begun trading in pulp and paper items such as old newspapers and corrugated containers. Enron Corp., an energy-trading and pipeline company, is applying its gas- and power-trading models to paper. It owns a newsprint mill in Garfield, New Jersey, and another in Canada. Waste Management shares rose 56 cents to $28.40. The company had sales of $12.5 billion last year. Profile: Power Play, Who's to Blame for the Energy Crisis?; Lowell Bergman, "Frontline" correspondent, Laura Holson and Joseph Kahn, The New York Times, discuss the energy crisis 06/04/2001 ABC News: Nightline © Copyright 2001, American Broadcasting Companies, Inc. All Rights Reserved. Announcer: June 4th, 2001. CHRIS BURY host: Rolling power blackouts, bankrupt utilities, skyrocketing electricity prices. Unidentified Man #1: It is the most volatile commodity in the world. BURY: Are power generators gouging consumers? Unidentified Woman #1: I think it's pretty appalling that the folks who sell us power can charge whatever they want. Mr. KENNETH L. LAY (Chairman, Enron): And every time there's a shortage or a little bit of a price spike, it is always collusion or conspiracy or something. I mean, it always makes people feel better that way. BURY: And right in the middle, a federal agency you've probably never heard of. Mr. CURTIS HEBERT (Chairman, Federal Energy Regulatory Commission): They didn't build this monopolistic system overnight, and we won't change it overnight either. BURY: Tonight, Power Play, Who's to Blame for the Energy Crisis? Announcer: From ABC News, this is NIGHTLINE. Substituting for Ted Koppel and reporting from Washington, Chris Bury. BURY: California is known as the great American incubator. From hem lines to Hula-Hoops, the Golden State gives birth to trends that often spread east. That is why so many states are paying close attention to California's troubled attempt at deregulating electricity. Last week, California Governor Gray Davis asked President Bush for help in the form of a price cap on power companies. The president said no. Now Governor Davis is threatening to sue the federal agency that regulates electricity prices. More on that later. But first, the results of a new ABC News/Washington Post poll. It suggests that President Bush is developing an energy problem. When asked what they think of the president's performance on energy, a clear majority, 58 percent, say they disapprove. That's up 15 percent since Mr. Bush released his energy plan. When asked if they think the United States is heading into an energy crisis, six in 10 Americans answer yes. TEXT: ABC News POLL The Washington Post Margin of Error +-3.0% How do you rate the president's performance on energy? June 3 May 13 Disapprove 58% 43% Do you think the US is heading into an energy crisis? Yes 61% No 36% BURY: California is already there. For months now, The New York Times and the public broadcasting program "Frontline" have teamed up to investigate. Their collaboration, "Blackout," airs tomorrow night on many PBS stations. It documents a colossal mismatch in the brand new game of buying and selling power on the open market. It's like the New York Yankees against the Toledo Mud Hens. Unidentified Woman #2: We didn't use his five because their minimum was, you know, higher than what we were willing to pay. Unidentified Man #2: I'll sell you 108 now. BURY: (VO) On one side, companies such as Enron, the Texas energy broker, trade electricity like any other commodity. A sophisticated trading operation buys and sells billions of dollars worth of energy every day. It's the largest company of its kind in the world. Unidentified Man #3: See what I'm saying? KELLY: CRS. This is Kelly. BURY: (VO) On the other side, in this converted department store in Sacramento, is California's trading team. Unidentified Man #4: This is the operations center. This is the--this is the location where we make energy purchases and fill the state of California energy requirements. BURY: (VO) Here, employees drafted from the state's water department go head-to-head with the pros from Enron and other companies. Since 1999, the cost to California has skyrocketed from $7 billion to an estimated $60 billion this year, an increase of 750 percent. And the demand for electricity, up less than 5 percent. (OC) In their documentary, reporters for The New York Times and "Frontline" address a fundamental question, who's to blame? Narrating this segment is "Frontline" correspondent Lowell Bergman. Unidentified Man #5: Our forecast reserves look like they'd be pretty thin over the peak as well. Unidentified Man #6: How much is... LOWELL BERGMAN reporting: (VO) The power industry blames the high prices on shortages brought on by California's failure to build any major power plants over the last decade, despite a booming economy. Mr. LAY: I mean, we have a supply/demand imbalance. Too much demand, too little supply in California. BERGMAN: (VO) Not everyone agrees. Consumer advocates in California accuse the generators of actually withholding supply. Ms. NETTIE HOGE (Executive Director, TURN): The idea that all of a sudden we had a supply crunch is preposterous. What happened is, all of a sudden, the new plant owners and the traders, like Mr. Lay's organization, looked at the data and figured out how to manipulate the market. As soon as that happened, the prices never went down again. If it was totally a supply problem, why would we have excess prices at 5:00 in the morning on Christmas Day when nobody but Santa is working? BERGMAN: (VO) The generators, in turn, say they shut down plants for routine winter maintenance. Mr. LAY: Every time there's a shortage or a little bit of a price spike, it's always collusion or conspiracy or something. I mean, it always makes people feel better that way. BERGMAN: But you know as well as I do that the price--it's nice for a business. Mr. LAY: Yeah. BERGMAN: You're in the business of--of making money for your shareholders. Mr. LAY: Mm-hmm. BERGMAN: Right, as a company? Mr. LAY: Yeah. BERGMAN: So you would be foolish, as you said, to turn down the kind of money you could make this past winter in California. Is--isn't there a... Mr. LAY: I--I--I think you put words in my mouth out there. BERGMAN: OK. Mr. LAY: I said we--we made some money in California. We made some money across the country and around the world. I mean, and as I tell my friends in California, Enron was doing quite well before California imploded. Unidentified Man #7: So you can't blame the Enrons. I mean, they're the guys--that's--that's what they do. They try to make as much money from the money that they get invested. You blame the regulators. BERGMAN: (VO) Across the country, tucked in an out of the way building behind Union Station in Washington, DC, sits the Federal Energy Regulatory Commission or FERC. FERC's commissioners are appointed by the president and control a $250 billion energy sector critical to America's economy. With the coming of deregulation, state control over wholesale electricity rates passed to the federal government, making FERC the final arbiter of just and reasonable rates. It's a power FERC has been reluctant to use. Curt Hebert is a protege of Senator Trent Lott, who convinced President Clinton to appoint Hebert to the FERC in 1997. In January, President Bush made him the FERC chairman, and Hebert has made no bones about where he stands on free markets. Mr. HEBERT: The rules of competition govern that economies work, that choice works. It's why we're American. We inherently like choice. It's why we left the mother country. We didn't like the rules they were setting. We wanted to make our own rules. We want our own choices and we believe that works. BERGMAN: OK, but is electricity different? Mr. HEBERT: It's a transition . It takes some time. Look, they didn't build this monopolistic system overnight, and we won't change it overnight either. Mr. WILLIAM MASSEY (FERC Commissioner): Without some effective price control this summer, I fear for the worst. BERGMAN: (VO) William Massey is a FERC commissioner, a Democrat, who has found himself in opposition to his chairman. Unidentified Man #8: Mr. Massey, what is the nub of the disagreement that you have with Mr. Hebert? Mr. MASSEY: I think what it boils down to is a philosophical disagreement about the role of my agency in ensuring just and reasonable prices. I think it's long past time for this agency to step in and--and impose a temporary time out on the markets. Mr. HEBERT: Well, that is the problem because these people are saying temporary, but they don't mean temporary. It's kind of like the temporary rent control you have in New York. It's not temporary at all. Matter of fact, you know, in Washington, DC, we don't do temporary very well, and that's a problem. BERGMAN: (VO) In fact, late last year, after six months of unrelenting high prices in California, the FERC finally did declare California's rates unjust and unreasonable, but took no action. Governor GRAY DAVIS (Governor, California): So they found these people guilty a year ago. They just haven't agreed on the sentence. BERGMAN: Well, we talked with Curt Hebert. And we got... Gov. DAVIS: Well that's, you know. BERGMAN: That's what? Gov. DAVIS: Lots of luck. BERGMAN: What do you mean, "Lot's of luck"? Gov. DAVIS: Because... BERGMAN: He's the federal--he's the guy you are turning to to give you the money. Gov. DAVIS: He is the chairman of the commission. But he has not been overly sympathetic to California. He's more of an ideologue than a problem solver. BERGMAN: Well, he's saying you just want him to give you short-term relief, price caps, which won't solve the problem. Gov. DAVIS: Problems meaning fattening the balance sheet of already enormously wealthy energy companies. BURY: How much blame do the energy companies really deserve? BERGMAN: Watch your--your heating bills, your natural gas bills, which are, to a certain extent, reflected in your electricity bill. And don't think that this couldn't happen where you are. BURY: And how much of this energy crisis did California bring upon itself? Those questions when we come back. Announcer: This is ABC News: NIGHTLINE, brought to you by... (Commercial break) BURY: Joining us from Boston, Lowell Bergman, the correspondent for tomorrow's "Frontline" broadcast. From our Los Angeles bureau, Laura Holson, a business correspondent for The New York Times, who's been covering the California energy crisis. And here in Washington, Joe Kahn, who reports on energy and economics for The New York Times. Laura, just before the break, we heard California Governor Davis blaming the energy companies and the federal regulators. How much of his argument is sinking in. In other words, whom do Californians blame for this? Ms. LAURA HOLSON (The New York Times): The interesting thing is Californians blame everybody for this ap--for what has happened with the energy crisis. They blame the governor for not responding quickly enough to a crisis that started, you know, a year ago, if you really, you know, look at when prices starting going up. They are angry at their utilities who they feel have failed them. They have often had very close kind of paternal relationships with their utilities and they feel that they've been cheated. And they are very angry with the power generators, in particular, who they feel are charging them just exorbitant amounts for energy. In particular, there was a company last week, a power generator that said it charged consumers, rather the utilities, 4,000, nearly $4,000 per megawatt hour, which is enough to light a thousand homes for one hour. And when they heard this, they were outraged. They just thought, you know, `How can this be? How can we get,' in their terms, kind of ripped off by power generators who are using them to make, you know, a lot of money. BURY: Joe Kahn we heard those poll numbers from this survey out tonight suggesting that President Bush has a bit of a public relations problem on energy. How is that going to affect the politics here in Washington? Mr. JOSEPH KAHN (The New York Times): Well, clearly the--President Bush and the White House are calculating that by the time people have to go to the polls to select a new president, a slew of new power plants will be online in California. Electricity prices, presumably, will come down quite a bit and their free market stance on this will not ultimately cost him at the polls. It's not as clear that Republicans in the Congress have the same commitment. This has already been a very turbulent time in Washington with the Democrats now in control of the Senate. I think you can expect to see a legislative initiative by the Democrats to introduce some kind of price caps in California. Some Republicans may sign on to that. Some have already indicated that they will. It's going to be a real knockdown political flight--fight in Washington over what the strategy ought to be. BURY: Lowell Bergman, talk a little bit about that free market activity that Joe just mentioned. We saw the clip from your documentary with the--the traders from Enron pitted against the--the buyers from California. And I must say, it really did look like a mismatch. BERGMAN: Well, in fact, some of the people at Enron told us that they welcome the day when PG&E and Southern California Edison, the regular utilities get back in the marketplace because they do feel like they've got them, if you will, outgunned. And--but I should point out to the audience, that when Laura was talking about this $3800 a megawatt hour, which was Duke Energy Company, the normal price, if you will, the standard price for a megawatt hour was around 40 or less. So the level of profit that we're talking about is what people are upset about. And the problem here is--is primarily that in a free market and the way that the marketplace in California is set up in particular, there's no limit to what could be--could be charged when you get close to that area of scarcity with electricity. Electricity truly is different and as Jeff Skillings says in our documentary, he's the CEO of Enron, it is the most volatile commodity in the world. BURY: Yet, at the same time, Joe, we are seeing electricity traded as if it were oil or soybeans or steel. I mean, how is electricity different? Mr. KAHN: Well, for economic reasons, it's different in a--in a couple of key respects. For one thing, it's an absolutely vital commodity. People aren't prepared to do without it. Moreover, electricity powers every other part of the economy. So, it's one of these sort of fundamental rights that we have. In fact, as far back as the New Deal, Franklin Roosevelt made clear that electricity was so important that it would be subject to federal legislation guaranteeing everybody in this country just and reasonable electricity prices. BURY: But just and reasonable electricity prices, Laura, do you want to pick up the question of well, who determines what's just and reasonable here? Ms. HOLSON: Well, it's very clear that President Bush believes that the market, you know, sets what's just and reasonable. And, you know, that has not been what Governor Davis has said at all. He believes that because this is a commodity that people, you know, believe is guaranteed that there should be some price cap on it. It's an interesting, if you will, situation when business and politics kind of intersect. Governor Davis said very early on that he did not want two things to happen in California. One is that the utilities would go bankrupt and the second was that rates would be raised for consumers. And he's in a very tight spot right now because those two things that he did not want to happen indeed have happened. And it only looks like it will get worse this summer when experts have said Californians can expect another 260 hours of blackouts. BURY: Laura, we have to take a break. But when we come back, we want to address the question of whether power companies are doing what just comes naturally to them. Back with our guests in a moment. (Commercial break) BURY: We're back with "Frontline"'s Lowell Bergman and Laura Holson and Joe Kahn of The New York Times. Joe, aren't these power companies doing exactly what they are supposed to be doing, which is maxi--maximizing profits and to get the biggest return for their shareholders? Mr. KAHN: Sure. That's their responsibility. They--they have no excuse for arbitrarily lowering the price that they could charge for electricity if the market will bear a higher price. BURY: Lowell Bergman, in your documentary, do you find any evidence that the power companies are--are gouging consumers or doing anything illegal? BERGMAN: Well, illegality, no one really has any serious evidence, although there have been lots of allegations and there's been lots of speculation about it. But we should also point out in the documentary and in The Times that some of the companies are starting to realize, it seems, that even though they are owed hundreds of millions, in some cases $500 million or more still by these bankrupt utilities, they're going to have to take a hair cut as Governor Davis describes it. They're going to have to make some bargain. And I think we may... BURY: Let me jump in there. What do you mean they're going to have to get a hair cut? BERGMAN: Well, apparently, that's Governor Davis's way of telling them that they're going to have to take less to a--less than a full dollar payment for what they are owed, and that there has to be some kind of settlement here of between the various parties, other we're not--otherwise we won't see any progress. BURY: Lowell, one of the old cliches in investigative reporting is follow the money. And much has been made of this argument that the Bush administration, accusations have been made, that the Bush administration is too cozy with the power companies and the power company regulators. What did you find in your reporting? BERGMAN: Well, we found that Vice President Cheney was very up front about it, I mean, about his relationship with Ken Lay, the head of Enron, the fact that he built a stadium for Enron when he was head of Halliburton. You know, the vice president is the first CEO of a Fortune 500 company to hold presidential office in the history of the United States. So--but they are very open and up front and balance this relationship with their friends and with the people who they feel comfortable with. BURY: Laura Holson, this idea that so many Texas companies are profiting from California's misery, as it were, I suppose Californians find that particularly infuriating. Ms. HOLSON: It's funny, in the San Francisco Bay area when I was growing up near there, there was this great rivalry between the San Francisco 49ers, which is, as we all know, a football team and the Dallas Cowboys. And that seems to be replaced, if you will, with consumers in California who look at Texas gen--at, you know, a lot of the power generators, which are based in Texas, and who they feel now are just, you know, making a lot of money off them. It's--there's always been a rivalry between those two states. And now I think it's deeply personal because it's hitting consumers, or as they believe it, it's hitting them in their pocket books. BURY: Joe Kahn, how long before these new power plants are going to be coming on line? And before they do, or in the time before they do, what--what is it that the federal government can do to help California out? Mr. KAHN: Well, it--it will probably be about 18 months before sufficient new power comes online in California to start substantially changing the supply and demand equation there. And that's a very speedy pace. That's with a very expedited permit process for new plants. The governor in California has put a lot of effort into building new plats--plants quickly. BURY: So what happens between now and then? Mr. KAHN: Well, that's the question. That's the debate. The Federal Energy Regulatory Commission has the power under the Federal Power Act, in fact some people argue it has the obligation under the Federal Power Act to ensure that just and reasonable electricity rates prevail in California at all times. It can't just selectively choose the times. And it has already found at the end of last year that rates in California are unjust and unreasonable. BURY: So what's it doing about that? Mr. KAHN: Well, it's--it's tried a variety of compromise measures so far, very limited price controls on certain kinds of electricity sales during emergency hours. So far that appears to be an insignificant contribution to reducing the overall electricity bill in California. BURY: Laura, Governor Davis is demanding wholesale price controls. President Bush has made it pretty clear that he's not going to lean that way. What options does Governor Davis have? Ms. HOLSON: You know, it's--again he's stuck in this place where it--it doesn't look like he's got any kind of real out. I mean, he can try to demand. He can demand as much as he wants from the power generators, but if the federal government doesn't step in, he really can't do anything. The interesting thing, at least I see kind of going forward, is how Californians have really adapted to a really, you know, awful situation. There's a law that's being proposed right now in California in which businesses will know months in advance whether their neighborhood is going to be impacted by a blackout so they can plan. I mean, we've almost turned into--if anybody remembers traveling through Italy during their college days, you always kind of knew when the airlines or the trains were going to go on strike because they told you a day ahead of time. And that's very much what's happening in California where they're warning people, you know, two days, an hour, you know, one day ahead of time so that they can prepare. BURY: That's a pretty dark scenario. Lowell, we just have a few seconds left, what lessons should the rest of the country take from California's crisis? BERGMAN: Well, watch your--your heating bills, your natural gas bills, which are to a certain extent reflected in your electricity bills. And don't think that this couldn't happen where you are. And I think that the industry itself is beginning to understand that the crisis in California may, in fact, impact on the future of deregulation nationally. BURY: Lowell Bergman, Laura Holson, Joe Kahn, thank you so much for joining us tonight. BERGMAN: Thank you. Mr. KAHN: Thank you. Ms. HOLSON: Thank you. BURY: When we come back, an update on a NIGHTLINE broadcast from just over a month ago. Announcer: To receive a daily e-mail about each evening's NIGHTLINE and a preview of special broadcasts, logon to the NIGHTLINE page at abcNEWS.com. (Commercial break) BURY: In May, we profiled the case of death row inmate Johnny Paul Penry, convicted of murdering the sister of a former pro football player. Today, the Supreme Court overturned Penry's death sentence. It ruled, six to three, that the jury did not have clear instructions on how to weigh his mental retardation when it sentenced him. The court will take up the broader issue, whether executing the mentally retarded is cruel and unusual punishment, in its next term. That's our report for tonight. I'm Chris Bury in Washington. For all of us here at ABC News, good night. Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved.
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