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Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: Jeff Dasovich X-To: Alan Comnes, Angela Schwarz, Beverly Aden, Bill Votaw, Brenda Barreda, Carol Moffett, Cathy Corbin, Chris H Foster, Christina Liscano, Craig H Sutter, Dan Leff, Debora Whitehead, Dennis Benevides, Don Black, Douglas Huth, Edward Sacks, Eric Melvin, Erika Dupre, Evan Hughes, Fran Deltoro, Gayle W Muench, Ginger Dernehl, Gordon Savage, Harold G Buchanan, Harry Kingerski, Iris Waser, James D Steffes, James W Lewis, Jeff Messina, Jeremy Blachman, Jess Hewitt, Joe Hartsoe, Karen Denne, Kathy Bass, Kathy Dodgen, Ken Gustafson, Kevin Hughes, Leasa Lopez, Leticia Botello, Mark S Muller, Marsha Suggs, Marty Sunde, Meredith M Eggleston, Michael Etringer, Michael Mann, Michelle D Cisneros, mpalmer@enron.com, Neil Bresnan, Neil Hong, Paul Kaufman, Paula Warren, Richard L Zdunkewicz, Richard Leibert, Richard Shapiro, Rita Hennessy, Rosalinda Tijerina, Sandra McCubbin, Sarah Novosel, Scott Gahn, Scott Stoness, Sharon Dick, skean@enron.com, Tanya Leslie, Tasha Lair, Ted Murphy, Terri Greenlee, Tim Belden, Tony Spruiell, Vicki Sharp, Vladimir Gorny, Wanda Curry, William S Bradford, Kathryn Corbally, Jubran Whalan, triley@enron.com, Robert C Williams, Greg Wolfe, James Wright, Dirk vanUlden, Steve Walker, Jennifer Rudolph, wgang@enron.com, Scott Govenar <sgovenar@govadv.com<, Hedy Govenar <hgovenar@govadv.com< @ ENRON, jklauber@llgm.com, Mike D Smith, Janel Guerrero, Eric Letke, Richard B Sanders, gfergus@brobeck.com, Michael Tribolet, Robert Frank, Susan J Mara, Mercy Gil, Jennifer Thome, David Leboe, Linda Robertson, Tom Briggs, Donna Fulton X-cc: X-bcc: X-Folder: \Steven_Kean_June2001_4\Notes Folders\Discussion threads X-Origin: KEAN-S X-FileName: skean.nsf FOR IMMEDIATE RELEASE 04/11/2001 GOVERNOR GRAY DAVIS SIGNS LANDMARK ENERGY CONSERVATION PACKAGE APRIL 11, 2001 (Construction noise in background) Well, maybe they're building a power plant. Think of it that way. My friends, for the last 10 years California failed to build a single major power plant. Because of that we're facing a power shortage. Rest assured, my administration is moving at warp speed to correct the situation. Since I've been Governor we have approved 12 new plants; 7 are under construction as I speak to you, which is a record; 4 will be on line this summer; 3 next summer. By the end of 2003 this problem will correct itself. But between now and then we need everyone to do their part to conserve -- so we can get through this summer without major disruptions. The bills I'm going to sign today give incentives to consumers and businesses to do their part and reduce the energy consumption they would otherwise use by at least 10 percent. The centerpiece of these proposals are $500 million in incentives for consumers and businesses. Fifty percent rebates if you buy a new refrigerator or air conditioner. If you're a business, we'll pay for energy efficient lighting -- whether it's dimmers or occupancy sensor devices. We'll pay for the cost of the item; we'll pay for the cost of the installation. We have a series of proposals including $60 million to municipal power authorities like the Department of Water & Power, so they can augment their conservation programs. Because clearly, the cheapest megawatt this summer is the megawatt we don't have to buy. We need every consumer to do their part to help us through this difficult period. As I said, this problem will correct itself over time -- but you cannot make up for 12 years of inaction overnight. Between now and 2003 we need everyone doing their part. It is our hope that the combination of incentives in this legislation, which applies to the urban and agricultural areas, commercial and industrial, and residential, will save at least 2000 megawatts this summer. The whole purpose of these bills is to achieve conservation this summer. The money runs out if it's not spent by next March. We want a big response this summer. And if people can't get it all done this summer, we want them prepared to conserve electricity by next summer. There is also in this package $240 million for low-income people to weatherize their homes, making them more energy-efficient. So we have a range of incentives for consumers and businesses, and I'm counting on everyone to pull together as one state and do their part. With 34 million people, even though we're facing a power shortage, we are not powerless. We have the power to use less electricity, then the generators who are marking up the price by 800 percent want us to use. By using that power we will not only reduce our bills, but we will minimize the possibility of blackouts. So I thank Californians for responding to my call. Already they're saving 8 percent. I want them to get up to 10 percent so we can get through these difficult times, but help is on the way. By the end of 2003 we'll have more plants than we need. And to make electricity deregulation work, you must have more power than you need. We currently have a 20 percent deficit. By the end of 2003, early 2004 at the latest, those lines will cross and we'll have more power than we currently need. I intend to get that differential up to 15 percent. Most experts, including Alan Greenspan, say you need a 15 percent margin of capacity over demand. That forces the price down in the spot market and that gives the state leverage against the generators -- rather than generators leverage against the state. I'm very pleased the Legislature responded as quickly as it did. This is a big day. The consumers and the business in this state now have financial tools to help them conserve power. If you're a consumer we'll pay 50 percent of the cost of an energy-saving device. If you're a business, because they use 70 percent of our power, we'll pay for the whole cost and install it ourselves. We've got one goal - which is to save at least 2000 megawatts this summer in this part of our energy conservation program. Our overall goal, including my 20/20 program, which gives people a 20 percent rebate if they save 20 percent of the power they used last year is to save between 4 and 5000 megawatts this summer. These bills I'm signing today should get us at least 2000 megawatts. Let me sign the bills and then call on the legislators who helped make this possible to add their comments. Introductions They worked long and hard. This represents the most aggressive and the most expensive conservation program ever launched in America. It's designed to save megawatts this summer. Not five years from now; not seven years from now. This summer, and worst case, next summer. This is a crash program, all guns blazing. We are paying for conservation devices; we're installing them ourselves. We want to make sure that every building, every office building, every retail shop, every high-tech community, every agriculture concern, squeezes down the megawatts they use as much as is humanly possible - and still allows them to continue and make a profit. We're going to do with this measure. Let me entertain any questions you might have. Questions/Answers Question: Governor Davis, can you talk about the way this is going to be promoted. How is word about this going to get out? I see there's a provision in it, but what are people going to begin to hear about how to use these incentives? Governor: We have, as you know, a program run by the Consumer Affairs Department, which advertises ways in which people can conserve energy. They're going to reinforce the message that these incentives are here; they're available to consumers and businesses alike. And they're the most attractive incentives ever devised by a state in America. We hope to encourage people to take advantage of this program. It's not going to last forever. It disappears next March. This is a one-time opportunity to do the right thing for yourself, and the right thing for your state. So basically, through television, through lots of literature that goes out from various departments... all the information will be on our web site. We'll work through various business organizations from Chambers to -- manufacturing groups, homeowner groups. We'll take advantage of every opportunity to get the word out. Question: Is there now an enforcement element in case people maybe don't take the carrot, is there a stick? Governor: We're going to actually contact, just start going down the list starting with the largest consumers of power in this state which tend to be big businesses and say: We've got a device, we want to install, when can we come in. So we're not waiting for them to call us. This is a race against time, and we have to fight back against these generators. And the best way to fight back is to use less of their power than they want us to. That's the best weapon we have. Conservation is the best weapon we have against price gouging and blackouts. Question: Governor, regarding P.G.&E. and the bankruptcy, are you hopeful you can somehow you can reopen negotiations with them and come along? Governor: First of all, I think Southern California Edison proved that if you stay at the table... If you're responsible... If you care about the customers you're serving - good things can happen. We intend to get a similar arrangement with Sempra. An extensive meeting is occurring as I speak to you. I hope that can be done within two weeks; it may be sooner. Then we intend to inform the bankruptcy judge in San Francisco of how we we've negotiated settlements with two of the state's three utilities, in the hopes that he will order either an identical transaction, or something very similar to P.G.&E. Because P.G.&E. has chosen to go into bankruptcy, keep in mind its creditors did not force it. They chose to go into bankruptcy. That's the form through which we have to communicate. But I think if we can get two of the three utilities tied down to a similar arrangement, the bankruptcy referee will be persuaded by that, and it will lend great weight to that. Question: Governor, a lot was said about profiteers around the state today. Do you have a comment on the L.A. Times decoding the CAL ISO Study that showed the DWP was among the profiteers last year; it was number eight on a list of ten? Governor: First of all, it gives me an opportunity to thank David Freeman for helping us secure power on a long term basis. He had no leverage. He began the process February 1st. I can't imagine a more difficult assignment. He did a great job. The Department of Water & Power sold us power, which is more than I can say for generators. Yes, they had a mark-up, but we desperately needed power. They came through. They're part of this state. They realized their obligation to serve the entire state. Once they've met their constituents' need, they've shared additional power with us. I don't know how much money we currently owe the Department of Water & Power, but it's certainly over $100 billion. So they have provided us power when we needed it. I don't think they've excessively priced it, particularly when you compare them against some of the out-of-state generators. And they've been patient with us, knowing that they would eventually get their money back. And they will get their money back. So I'm not going to join the chorus of critics. Without the Department of Water & Power, we would have had more blackouts than we had. I told them that if my plan doesn't work, my fallback plan is for the Department of Water & Power to --- --- the rest of the state. Question: As a follow-up to that question, does that mean you're not going to ask FERC for a refund from DWP sales, as you have for other ---? Governor: Well no, I have to fight for my folks. I just talked to Pat Wood, who is the new nominee of President Bush, and laid out the situation. I described how we're dealing with it and went over a number of the details of the Southern California Edison transaction. I hope, and he expressed to me, interest in making sure that there were refunds. He didn't want to pre-judge the case, because he hasn't seen all the files. When I told him that we spent roughly $7 billion for power as a state in 1999; $35 billion, roughly, in 2000; and the projections are something on the order of $60 billion this year. He instinctively knew that was too much. He told me he was going to aggressively review the filings against generators, alleging that they charged us too much. So, without telling me that he's going to refund money, I know we have at least a kindred spirit when it comes to responsible pricing. Question: But the refunds would include refunds from --- the DWP...? Governor: Well it would be refunds against anyone that ISO feels overcharged us. That's a decision that FERC has to make. I'm certainly not going to undercut the ISO findings. If they feel someone overcharged us, then I'm going to support that position before FERC. Having said that, the lights would not have stayed on, on several days if DWP didn't come through with power, which is more than I can say of other generators. They just wouldn't give us power unless we paid them outrageous prices which we refuse to do. Question: On a separate issue, have talks started today with S.D.G.&E. on the transmission ---? Governor: Yes, they started at 11:30 this morning. Question: Governor, why do you think P.G.&E. went in the direction they did, whereas Edison made the opposite decision? Do you think... P.G.&E. has said that the state reneged on some of the parts of the agreement, parts of the original deal. Do you think the state had any role in that? Why the difference? Why the contrast between the two companies? Governor: I don't mean to continually cast dispersions at Pacific Gas & Electric, but I genuinely believe they are in denial. And that they are unduly greedy. To give your management and your employees a $50 million bonus hours before you dive into bankruptcy, not pushed, dive into bankruptcy, I think casts doubts on your motives. I really believe they're trying to fashion a world for them that is at least as good, if not better, than it would have been if deregulation had worked out the way they hoped when they supported it back in 1996. Southern California Edison realized that just can't happen. So they sat down with us in good faith. We came up with a fair deal. As a matter of fact, some of the Wall Street analysts, Goldman Sach being one, was little critical of that. It seems that they thought they were too generous. I don't think they were too generous. This was tough, arduous negotiating. I think both sides came away with what we need. We have long term power for 10 years, very cheap. They're basically a regulated industry for 10 years. They give us their transmission lines. They invest $3 billion in upgrading the delivery and transmission system. They give us a non- regulated utility, Sunrise, for 10 years. They pay a $2 million penalty if they don't get Sunrise up and running by August 15th. There's a whole list of things we get that I think are at least comparable value. You can't make someone come to the table. They have to want to find a solution. They decided to leave the table. If they want to come back they are welcome. My attorney presented to them a week ago yesterday, the same deal that we offered P.G.& E., altered for P.G.&E.'s circumstances. Just filled out the term sheet and handed it to them. So they were given, within one or two details that were worked out over the weekend, precisely the transaction that Southern California Edison approved. So I can't tell you why they decided not to do it. Question: In terms of the California Legislature approving the deal with Edison, what is the timetable? Governor: I'm going to take this opportunity to chat with some of my friends after this meeting. That's up to them. Obviously, we would like to move this process along as quickly as we can, consistent with an appropriate examination of the conditions by the Legislature through their normal hearing process. I don't want to give a time frame, but obviously, we want to see these ideas that we negotiated now come to fruition. And that does require timely response - not by the Legislature, but also by the Public Utilities Commission.
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