Enron Mail

To:steven.kean@enron.com, richard.shapiro@enron.com, james.steffes@enron.com,kenneth.lay@enron.com, jeff.skilling@enron.com
Subject:The message is spreading
Date:Tue, 10 Jul 2001 10:27:16 -0700 (PDT)

Davis' criticism of Texas misdirected, report finds
Lynda Gledhill, Mark Martin, Chronicle Staff Writers
Tuesday, July 10, 2001
?2001 San Francisco Chronicle
URL: http://www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2001/07/10/MN48875.DTL
Sacramento -- Texas-based electricity generators have received the brunt of criticism from Gov. Gray Davis for gouging California during the power crisis, but financial information released yesterday shows the lion's share of the money went elsewhere.
Companies with headquarters in Texas garnered less than 10 percent of California's multibillion-dollar energy purchases, while public and private energy companies from Canada to Georgia to California got the rest.
The $424 million that went to Texas companies may still be more than the state should have been charged, and administration officials are attempting to get refunds from a host of companies, both in and out of Texas.
Earlier this year, Davis lambasted the Bush administration for not acting against power firms in his home state. "What's going on here, pure and simple, is unconscionable price-gouging by the big energy producers -- most of them, incidentally, located in Texas," he said in May.
Yesterday, a spokesman for the governor broadened the verbal assault, saying the Texas firms are representative of the many other out-of-state generators who have also gouged California.
"Anywhere they wear cowboy hats, they probably have handkerchiefs across their face because they are robbing us blind," said Steve Maviglio, Davis' spokesman.
The latest financial information is contained in a report by the state Department of Water Resources detailing $7.2 billion in power purchases from Jan. 17 through the end of May.
About $5.2 billion of that was spent on the spot market where power buys are made a day, hour or even a few minutes before the electricity is actually used.
Because the spot purchases are made with little notice, they are the most expensive kind of power on the market. The state was forced to step in and buy the power when the credit ratings of California's major utilities dropped as the energy crisis worsened. The crisis was caused by a series of events that forced the utilities to pay more for electricity than they could recover from customers.
The numbers released yesterday show that Texas companies weren't alone in receiving a share of the energy crisis pie. Some $1.2 billion went to Mirant, an Atlanta-based company. Mirant has refused to turn over documents subpoenaed by the state Legislature as part of its investigation into alleged market manipulation. Mirant could face contempt proceedings.
Municipal generators have also fared well during the energy crisis. Powerex,
a wholly owned power marketing subsidiary of Vancouver-based BC Hydro, received $1 billion from the state for spot market electricity.
The Los Angeles Department of Water and Power, which Davis said charged higher average spot market prices than some generators, received $331 million.
E-mail Lynda Gledhill at lgledhill@sfchronicle.com .
?2001 San Francisco Chronicle Page A - 9