diff --git "a/FinalCleanDatabase.csv" "b/FinalCleanDatabase.csv" new file mode 100644--- /dev/null +++ "b/FinalCleanDatabase.csv" @@ -0,0 +1,1235 @@ +Subject,Body,predicted_categories,predicted_tone,Urgency +RE: NERC Statements on Impact of Security Threats on RTOs,I agree with Joe. The IOUs will point to NERC as an objective third party on these issues. ,energy infrastructure,formal,1 +RE: NERC Meeting Today,There was an all day meeting of the NERC/reliability legislation group today. I will provide a more detailed report but the group completed the process of reviewing the changes that some had suggested to shorten and streamline the NERC electric reliability organization legislation. Sarah and I asked a series of questions and made comments on our key issues and concerns. I want to give you a more complete report once I have gone back over the now final draft version. The timing being imposed by NERC is that they will circulate a clean version of the proposal tomorrow or Monday. They have asked for comments by next Thursday August 16th with an indication of whether each company/organization does or does not sign on to support it. They will then transmit the proposal and the endorsement letter to Congress and the Administration so they have it as Hill and Energy Dept. staff work on electricity drafting issues this month. I pointed out that EPSA is not due to meet internally with its members to discuss these issues until after the NERC deadline. That is not deterring NERC from moving forward with the above time frame.,energy infrastructure,formal,5 +http://www.stanford.edu/~wolak/,,other,neutral,0 +Re: Govt School Alumni,FYI -----------------,government & politics,casual,0 +Re: Data responses in SDG&E -- confidential treatment,PRIVILEGED AND CONFIDENTIAL Appropos of Agave's phone message. Steve was in this loop. The discount reports are available to anyone who wants them under the Open Records Act. TK you indicated that Agave thinks the rates were published somewhere by FERC -- I don't know whether that's true but the bottom line is that FERC has the information in its files and could publish it any time at wants we have no control over that. Let me know if you want me to talk with Agave's lawyers. -----------------,legal affairs,formal,3 +CONFIDENTIAL - Residential in CA,In the meeting today no decision was made about what to do with Enron's 16000 residential customers. Each of the contracts gives a basic 30 day out right to Enron. That being said I think that we have a short window to push for DA before any public action impacts us in Sacramento. I realize that the ultimate action (which I think is inevitable) makes it harder for our advocacy on DA but real $ are flowing out of the company. EES will give us notice when a decision is reached. Thanks Jim,other,formal,5 +Thursday Meeting on Winter Gas Prices,calendar -----------------,calendar & scheduling,casual,3 +Re: Privileged and Confidential communication to my attorneys,Felicia This is a merchant asset which we currently own 100% but plan to sell down in the coming months. It absolutely has separate HR functions from Enron -- they do not participate in Enron benefits and we are working hard to prevent any claims that we could be a joint employer with it. Thoughts? Michelle Enron North America Corp. From: Felecia Acevedo @ ENRON 11/02/2000 08:56 AM To: Michelle Cash/HOU/ECT@ECT cc: Subject: Re: Privileged and Confidential communication to my attorneys Michelle who is GSP? Are they a legal entity? Are they on our payroll? If they are we filed EEO-1's for them. Below is the criteria to file an EEO-1 report: Standard Form 100 must be filed by - A. All private employers who are: (1) subject to Title VII of the Civil Rights Act of 1964 (as amended by the Equal Employment Opportunity Act of 1972) with 100 or more employees EXCLUDING State and local governments primary and secondary school systems institutions of higher education Indian tribes and tax-exempt private membership clubs other than labor organizations OR (2) subject to Title VII who have fewer than 100 employees if the company is owned or affiliated with another company or there is centralized ownership control or management (such as central control of personnel policies and labor relations) so that the group legally constitutes a single enterprise and the entire enterprise employs a total of 100 or more employees. B. All federal contractors (private employers) who: (1) are not exempt as provided for by 41 CFR 60-1.5 (2) have 50 or more employees and (a) are prime contractors or first-tier subcontractors and have a contract subcontract or purchase order amounting to $50000 or more or (b) serve as a depository of Government funds in any amount or (c) is a financial institution which is an issuing and paying agent for U.S. Savings Bonds and Notes. All multi-establishment employers i.e. employers doing business at more than one establishment must file: (1) a report covering the principal or headquarters office (2) a separate report for each establishment employing 50 or more persons (3) a consolidated report that MUST include ALL employees by race sex and job category in establishments with 50 or more employees as well as establishments with fewer than 50 employees and (4) a list showing the name address total employment and major activity for each establishment employ-ing fewer than 50 persons must accompany the consolidated report. All forms for a multi-establishment company must be collected by the headquarters office for its establishments or by the parent corporation for its subsidiary holdings and submitted in one package. For the purposes of this report the term parent corporation refers to any corporation which owns all or the majority stock of another corporation so that the latter stands in the relation to it of a subsidiary. The OFCCP has always held that subsidiary companies that do not have direct govt contracts must comply with AAP regulations if the parent company or other subsidiary companies benefit from government contracts. Their line of thought is that the subsidiary without government contracts benefits indirectly from the contract as well. If GSP is completely free standing and they do not participate in Enron's benefits abide by our policies or procedures participate in our bonus process that may partially or wholly be funded by Enron Corp. etc. they may have some type of argement not to comply but I doubt it. If we own them over 51% I don't see a way they could not file EEO-1's and have an AAP. We do all the AAP's in Corporate so if this is a freestanding Business Unit I need to know. Thanks! Felecia Michelle Cash@ECT 11/01/2000 07:49 PM To: Felecia Acevedo/Corp/Enron@Enron cc: Subject: Privileged and Confidential communication to my attorneys Felicia Does this sound right to you? Just wanted to confirm. Thanks. Michelle -----------------,employment,formal,3 +Rice Letter,Anita Very minor changes. Thanks. Vince,other,casual,0 +Enron Wind Policy Meeting,-----------------,other,formal,5 +RE: Enron Support of a Standards Setting Organization,I have reviewed the SSO principles -- look good to me. Thanks for sending them to look at. ,other,formal,1 +RE: Dinner next week with Piotr,Czwartek mi odpowiada. Zadzwonie do Ciebie do pracy we wtorek. Wicek ,personal & social,casual,0 +Senate passes Alper/Davis Bill 30-0,-----------------,government & politics,excited,5 +Re: Mtg w/Bob Gee,I think this is a great initiative but it is critically important that any announcement of the panel makes it crystal clear that the objective of the group is to come up with standards to facilitiate competition. We will do nothing but waste time if it becomes a negotiation over competition. the best and politically easiest time to make that objective clear is in the original announcement not after the group gets underway. Can we get in touch with DOE to make sure they pick this up? Cynthia Sandherr@ENRON 07/18/2000 05:03 PM To: Jeff Brown/HOU/EES@EES cc: Stanley Horton/Corp/Enron@Enron Shelley Corman/ET&S/Enron@ENRON Joe Hartsoe/Corp/Enron@ENRON Steven J Kean/HOU/EES@EES Richard Shapiro/HOU/EES@EES James D Steffes/HOU/EES@EES Janine Migden/DUB/EES@EES Jeff Dasovich/SFO/EES@EES Subject: Re: Mtg w/Bob Gee Jeff: I have followed up with other DOE politicals who advised they will meet this Thursday with Bob Gee to finalize and approve his speech to NARUC on Monday July 24th. It is looking positive that he may be positioned to make the announcement Monday. However DOE will likely need to revisit some folks on the current Blue Ribbon Reliability Panel in order to replace some of the utility transmission-only focused members with others who focus on business practices plus add additional people to represent the internet like APX Altra and HoustonStreet.Com. (these are Steve Kean's suggestions.) Too I have been cautioned about referring to the Blue Ribbon Reliability Panel as a model since their timeline was slow but rather suggest the TVA Blue Ribbon Panel model since they were able to issue a report after only four meetings. I have asked for this issue to be brought to Secretary Richardson's attention and advised this will be done this week. I have also discussed this with John Anderson of ELCON who is supportive. Jeff Brown@EES 07/18/2000 12:45 PM To: Stanley Horton/Corp/Enron@Enron Shelley Corman/ET&S/Enron@ENRON Joe Hartsoe/Corp/Enron@ENRON Steven J Kean/HOU/EES@EES Richard Shapiro/HOU/EES@EES James D Steffes/HOU/EES@EES cc: Cynthia Sandherr/Corp/Enron@ENRON Janine Migden/DUB/EES@EES Jeff Dasovich/SFO/EES@EES Subject: Mtg w/Bob Gee Cynthia and I met with Bob Gee regarding a potential role for DOE in creating a national standards board. Bob appeared comfortable with establishing a Blue Ribbon panel similar to the reliability panel to address this issue. In fact Bob suggested that the reliability panel which includes a balance of key stakeholders could be re-tasked with this issue. We recommended that the focus of any panel should be on the structure (governance segments executive committees) and scope of the organization (retail wholesale gas electric). Bob plans to follow-up with us next week. Jeff,other,formal,3 +Shift May Empower California.htm,Thanks for taking time to call yesterday. Good luck with the Lockyer situ= ation. I truly do believe that direct and prompt interaction with Lockyer= will prove more effective for Enron than delayed or intermediated action.= As we discussed if I can be of any help with reconnaissance or as sou= nding board just let me know. =20 I have attached an article from this morning's LA Times. It provides an C= alifornia view on how the shakeup in the Senate might impact the state's e= nergy situation. Certainly by the time that President Bush visits the C= alifornia in a few days the state's two Democratic US Senators will be a = good bit more empowered. =20 Kevin 213-926-2626 =20 [IMAGE] [IMAGE][IMAGE] =09Click here to learn more! [IMAGE]=09 [IMAGE] =09Home | Discussions | Print Edition | Archives | Site Map = | Home Delivery | Advertise | Feedback | Help [IMAGE]=09 =09[IMAGE]=09 [IMAGE] [IMAGE] [IMAGE] [IMAGE] News Politics Entertainment music = movies art TV restaurants [IMAGE] Business Travel Marketplace jo= bs homes cars rentals classifieds [IMAGE] Sports Commentary Shop= ping [IMAGE] [IMAGE] [IMAGE] [IMAGE] [IMAGE] [IMAGE] A Section= [IMAGE] [IMAGE] TOP STORIES * State's Standardized Test Spurs Scatte= red Backlash * GOP Braces for Jeffords to Bolt Today * Moderates on = Outside of GOP Big Tent MORE [IMAGE] [IMAGE] [IMAGE] STORIES BY DA= TE FOR THIS SECTION 5/24 | 5/23 | 5/22 | 5/21 | 5/20 | 5/19 | 5/18 = [IMAGE] DAILY SECTIONS Front Page A Section California [= IMAGE] Business Sports Calendar [IMAGE] So. Cal. 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Living = Special Reports Sunday Opinion Tech Times Times Poll Traffic Weath= er Workplace SITE MAP [IMAGE] [IMAGE] [IMAGE] SHOP 'TIL YOUR = LAPTOP DROPS [IMAGE] [IMAGE] [IMAGE] [IMAGE] [IMAGE] Shopping [IMAGE= ] Search Products Stores [IMAGE] [IMAGE] [IMAGE] [IMAGE] = [IMAGE] [IMAGE] =09[IMAGE]=09[IMAGE] Thursday May 24 2001 | [IMAGE]Print= this story [IMAGE] [IMAGE] Shift May Empower California By RICHARD SI= MON ELIZABETH SHOGREN Times Staff Writers WASHINGTON--James M. J= effords has never mattered much to Californians. Until now. The Verm= ont senator's widely anticipated decision to abandon his fellow Republican= s and put Democrats in control of the Senate could have big implications f= or California particularly on energy and environmental policy lawmakers = and lobbyists said Wednesday. The change which Jeffords is expected= to announce today could increase political pressure on the Bush adminis= tration to respond more aggressively to California's electricity crisis t= hese insiders said. And it might force the White House to compromise= on key elements of the national energy policy it unveiled last week. In f= act the administration's proposed budget cuts for programs to promote ren= ewable energy were said to be a factor in Jeffords' decision. At th= e very least Senate observers said Sen. Dianne Feinstein (D-Calif.) is l= ikely to get the floor vote she has sought on price controls for wholesale= electricity. That doesn't necessarily mean that the administration'= s critics will be able to have everything their way. Even if the Senate ap= proves electricity price caps for example the measure would face stiff o= pposition in the GOP-dominated House--and a likely veto if it made it to t= he president's desk. Still a Democratic majority in the Senate wou= ld give Feinstein and other party members a platform to turn up the politi= cal heat on the administration and congressional Republicans on energy pol= icy. It kicks up the dust groaned one energy industry lobbyist wh= o requested anonymity. Observed Sen. John F. Kerry (D-Mass.): If P= resident Bush's hard-edged conservative approach has in fact caused the ba= lance to shift towards Democrats in the Senate it will have profound impl= ications not just for California but for the environment and our nation's= energy policy. Environmentalists seemed almost giddy as they cont= emplated the possible impact of Jeffords' decision on the policies they ca= re about. All of a sudden they said it seems less likely that oil = exploration will take place in the Arctic National Wildlife Refuge that r= ecreational snowmobiles will have free access to Yellowstone National Park= or that the administration's desire to promote nuclear power will be emb= raced by Congress. On the other hand it seems more probable that C= ongress would approve a new plan for managing a vast swath of the Sierra N= evada to protect the region's oldest trees consider legislation to restri= ct emissions of carbon dioxide from power plants and protect California fr= om a resurgence of offshore oil drilling. It's stunning how broad t= he repercussions are particularly on the environment said Gregory Wetst= one of the Natural Resources Defense Council. We're trying not to count o= ur chickens before they hatch. But it will be easier for us in our battles= at least to keep from moving backwards. For instance Jeffords is= a chief advocate of a bill that would regulate carbon dioxide from power = plants. And if events play out as expected he'll become the new chairman = of the Senate committee with jurisdiction over the issue. Another i= ssue under his purview would be the two-decade dispute over a proposed rep= ository for the nation's spent nuclear fuel at Yucca Mountain in Nevada. = Yucca Mountain is a dead turkey declared Michael Francis of the W= ilderness Society. Environmentalists had been worried that a number= of pro-development provisions would be packed into appropriation bills. B= ut with Democratic senators in charge that would become less of a threat= they said. Every wacko idea Republicans have will get a higher lev= el of scrutiny Francis said. The biggest change would be the power= of Senate Democrats to decide which bills will be considered in committee= s and which ones will make it to the floor of the Senate for votes. = As part of a new Democratic majority Feinstein and fellow California De= mocrat Barbara Boxer are likely to gain leverage with the administration o= n a number of issues considered important to the state. That transl= ates into more federal assistance for California across the board predic= ted Steve Maviglio spokesman for Gov. Gray Davis. I think it mean= s more attention to our state for sure Boxer said. Right now the pres= ident doesn't seem to give a darn. They're all looking at California as a = Democratic state. They're not interested. Feinstein who has been = unable to arrange a meeting with Bush to discuss the energy crisis may ge= t better treatment if winning Democratic support becomes more important to= the administration. She has been regarded as a bridge-builder who worked = effectively with Republicans in the past. This has not been a warm = and friendly administration she complained Wednesday. They've got peopl= e who know all the answers and don't want to listen. The White Hou= se disputed that. In fact Bush agreed Wednesday to meet with Davis during= the president's first visit to California next week. Under a Democ= ratic majority Feinstein would be in line to chair two subcommittees: the= military construction panel of the Senate Appropriations Committee and t= he technology terrorism and government information subcommittee of the Se= nate Judiciary Committee. Boxer would be in line to chair the subco= mmittee on Superfund waste control and risk assessment and the Foreign R= elations subcommittee on international operations and terrorism. Mav= iglio predicted that the effects of Jeffords' expected party defection wou= ld be felt immediately. The chairmanship of the Senate Energy and N= atural Resources Committee would be taken away from Frank H. Murkowski (R-= Alaska) who has been openly hostile to California's plight and handed = to Jeff Bingaman (D-N.M.) who supports Davis' request for electricity pri= ce controls according to Maviglio. Democrats have assailed Bush's e= nergy plan for tilting heavily toward the supply side. With Democrats in c= harge of the Senate the administration would be more likely to compromise= perhaps beefing up funding for Democrat-supported causes such as increas= ed energy assistance to low-income households and more aggressive promotio= n of conservation and renewable energy sources such as wind and solar powe= r. Search the archives of the Los Angeles Times for similar stories ab= out: United States - Politics Republican Party James M Jeffords P= olitical Party Defections California - Politics Senate (U.s.) . You = will not be charged to look for stories only to retrieve one. =09 News Politics Entertainment music movies art TV restaurants = [IMAGE] Business Travel Marketplace jobs homes cars rentals cla= ssifieds [IMAGE] Sports Commentary Shopping [IMAGE] =09[IMAGE]=09 G= et Copyright Clearance Copyright 2001 Los Angeles Times Click for permi= ssion to reprint (PRC# 1.528.2001_000043610) =09 [IMAGE] =09,government & politics,formal,3 +Presentation to faculty and students at Berkeley,Maureen -- please send Vince my California testimony and the talking point presentation for Jeff Skilling at the National Press Club. Eliz-- keep Vince on the distribution list for the documents we are generating now to repond to the California situation. ,other,formal,5 +RE: Confidential Contact data and RFI,Any nuclear specific info? Kevin Presto UBS Warburg Energy kevin.presto@ubswenergy.com Phone: 713-853-5035 Fax: 713-646-8272 ,other,formal,3 +Minutes from last Thurs CAISO Board Meeting (Sorry for the delay),CAISO BOG 10/25/01 Notes taken by G. Alan Comnes Meeting went from about 10:30 to 1 p.m. Written materials discussed at this meeting are available at www.caiso.com/bog. 1. Budget. Board approved budget which contains a significant increase in GMCs and for the first time applies GMC fees on the self provision of A/S. The motion to adopt was modified to say the Board would revisit budget if in response to Gov. Davis requests to par budgets the CAISO budget is cut. 2. Retirement plan Audit 3. Allocation of Above-MCP 487 charges. This mechanism will improve the allocation of OOM costs so that the per-MWh charges match up with actual OOM costs. Stated that penalty revenues used to lower OOM costs could come from imbalance penalties. Action. approved (?) to allow staff to make a tariff amendment on this change. 4. Winter Assessment. Presentation by staff Kahn took issue (i.e. did not even want staff report presented) that CAISO does an assessment without consulting the Power Authority CPUC and the CEC. Worried about conflicting with the other resource assessments out there and giving media ways to take shots at DWR buying practices. In the end the full presentation was not given but questions were asked about whether the assessment spells trouble or provides assurance. The answer: things are tight in some months but are expected to be ok given the level of conservative assumptions used in the analysis. Action: staff was tasked to compare this assessment with CEC's and others and come back in another month. 5. Generator maintenance program. Will use GADS data. This program is mandatory for PGA generator units. CAISO staffer represented that no other ISO has a prescriptive program like the one CAISO is proposing. Current schedule: brief FERC staff next week return to Board in November for approval make FERC filing implement in early '02. Benchmarks are based on each unit's historical performance i.e. dogs will be benchmarked against their past doggy behavior. There is no component to raise the bar on performance but a unit that falls relative to past performance would trigger further review. 6. MSC Selection Committee. MSC provides independent review of the CAISO markets for CAISO the state and FERC. Wolak is the only member left at the moment. Selection committee will be Sheffrin Wolak and Borenstein. Candidates will go to Exec. Director and the final candidates to the Board in February 2002 (!). Kahn questioned how the MSC can survive with only one member and take until February 02 to select a final members. Nonetheless the glacially paced schedule was adopted. 7. FERC RTO Seams Issues. Steve Greenleaf presented. Updated BOG on RTO week and said that the 4 RTO model took a step backward (off the table in the words of Chair Wood) in response to criticism from state PUCs on Thursday. (Is this an accurate recounting of Day 4?). ISO is engaged in interregional coordination. Mentioned CSIC group Mentions SSGWY's (?)sponsorship of a market monitoring workshop on November 16. 8. Update of CERS Settlement BEEP/AS Payment Procedure. Edison and PG&E are making progress but no agreement with CERS have been reached. SDG&E signed and the procedure was implemented at least in part with SDG&E. 9. Monthly reports: financial. 10. Monthly reports: DMA. Sheffrin. Mostly followed the briefing charts. Emphasized the following: CERS OOM purchases are generally down and are reasonably priced once purchases and sales are disaggregated. Said that suppliers are still bidding above costs. DMA files confidential reports that include info on bidding data weekly to FERC. Bids are not coming down. Intrazonal congestion is up due to new generation coming on line. That allows generators to play the dec game.,energy infrastructure,formal,2 +Energy Issues,Please see the following articles: Bay City News Wed 3/21: Blackouts Not Expected=20 Today Dow Jones Newswire Wed 3/21: Calif State Controller:General Fund Surplus = Dn=20 To $3.2B CBS.MarketWatch.com Wed 3/21: Davis says regulators will act to pay QFs Electricity providers insist they need to be paid Long Beach Press Wed 3/21: Rash power bill may need fix SF Chron Wed 3/21: PUC considers rewarding producers that sign long-term= =20 contracts Sac Bee Thurs 3/22: State claims $5.5 billion overcharge: Refunds by=20 wholesale generators sought Sac Bee Thurs 3/22: Power solution eludes Davis: Lawmakers grow edgy as= =20 crisis drags on Sac Bee Thurs. 3/22: Legislators learn some details of power contracts= San Diego Union Thurs 3/22: Federal judge orders major power wholesaler= =20 to sell to California San Diego Union Thurs. 3/22: Controller: State's power spending imperil= s=20 its financial health San Diego Union Wed 3/21: Governor says utilities must pay in advance f= or=20 some power LA Times Thurs 3/22: Energy Overcharge of $5.5 Billion Is Alleged LA Times Thurs 3/22: Power Strain Eases but Concerns Mount LA Times Thurs 3/22: Graphics: Overcharges Alleged=20 San Fran Chron Thurs 3/22: Net Complex A Dilemma For San Jose=20 SERVER FARM: Plant would tax grid San Fran Chron Thurs 3/22: Contracts Won't Meet Summer Demands=20 DETAILS: 2004 before full impact felt Mercury News Thurs 3/22: California overcharged $5.5 bln for wholesale= =20 power Orange Cty Register Thurs 3/22: Commentary: If the Power Goes Off =20 Orange Cty Register Thurs 3/22: Commentary: Socialized Electricity San Fran Chron Thurs 3/22: Bush's Energy Policy Will Backfire=20 Feinstein Warns / She wants federal price controls now Dow Jones Newswires Thurs 3/22: Reliant Still In Power Pact Talks With= =20 Calif. DWR Dow Jones Newswires Thurs 3/22: CPUC Must Address Rates In QF Repayment= =20 Order - SoCal Ed Dow Jones Newswires Thurs 3/22: Calif Small Pwr Producers To Shut Plant= s=20 If Rates Capped --- --- Blackouts Not Expected=20 Today Bay City News=20 Following two consecutive days of rolling blackouts California's power=20 picture looks much brighter today but conservation is still needed.=20 The California Independent System Operator is urging consumers to continue= =20 conservation measures during today's Stage One Electrical Emergency.=20 The conservation efforts of Californians particularly Tuesday evening we= re=20 significant and helped to reduce the duration and impact of yesterday's=20 blackouts'' according to officials. The California ISO asks customers to= =20 continue their voluntary reductions during this time of tight supply.=20 More than 11500 megawatts of in-state generation remain unavailable with= =20 power plants completing repairs and needed maintenance. However several=20 generating units returned to service today and the level of imported power= =20 has increased boosting the supply.=20 The ISO is cautiously optimistic that customer outages will be avoided=20 today'' according to officials.=20 Today's Stage One alert is in effect through midnight tonight.=20 Stage One Emergencies are declared when power reserves fall below 7 percent= .=20 Stage Two kicks in when reserves fall below 5 percent. Stage Three is=20 initiated when reserves drop to below 1.5 percent. --- Calif State Controller:General Fund Surplus Dn To $3.2B 03/21/2001 Dow Jones Energy Service (Copyright (c) 2001 Dow Jones & Company Inc.) LOS ANGELES -(Dow Jones)- California State Controller Kathleen Connell=20 Wednesday said the state's general fund surplus has dropped to $3.2 billion= =20 from $8.5 billion in January mostly because of electricity purchases made = by=20 the state's Department of Water Resources a press release said.=20 Connell also denied Gov. Gray Davis' request to transfer an additional $5.6= =20 billion from the general fund to the Special Fund for Economic Uncertaintie= s=20 the release said. Connell noted that given the rapid depletion of the general fund on power= =20 purchases the state would need to borrow $2.4 billion in order to tranfer= =20 the $5.6 billion from the general fund to the special fund.=20 We started this year with a generous budget surplus. The energy crisis has= =20 taken much of that away and this transfer on top of the electricity=20 purchases would put the fund at risk Connell said.=20 Connell called on Davis to ensure that the CDWR completes by the end of May= =20 2001 the revenue bond sales that will be used to buy power and repay the=20 general fund.=20 She also asked that the CDWR notify her of all power purchases made and=20 contracts negotiated thus far and requested that she be told within 7 days = of=20 any purchases and contracts negotiated in the future.=20 Connell also said she wanted to be told within 24 hours of any power buys= =20 that exceed $55 million and asked that the Department of Finance be directe= d=20 to prepare new general fund cash flow estimates for the next 30 and 60 days= =20 and for the end of the fiscal year.=20 The state's Department of Water Resources has been buying power since Janua= ry=20 in lieu of Edison International (EIX) utility Southern California Edison an= d=20 PG&E Corp (PCG) utility Pacific Gas and Electric Co because suppliers=20 refused to sell to the nearly-bankrupt utilities.=20 -By Jessica Berthold Dow Jones Newswires 323-658-3872=20 Gov. Davis' office said in response to Connell's comments that the state= =20 budget was solid and the economy remained strong.=20 We will be getting the money back we've paid for energy and it should have= =20 no significant effect on the state's finances from the Wall Street=20 perspective said Davis press secretary Steve Maviglio.=20 -By Jessica Berthold Dow Jones Newswires 323-658-3872=20 jessicaberthold@dowjones.com --- -------- Davis says regulators will act to pay QFs Electricity providers insist they need to be paid By Russ Britt CBS.MarketWatch.com=20 Last Update: 9:45 PM ET Mar 20 2001 LOS ANGELES (CBS.MW) - California Gov. Gray Davis said regulators will act= =20 Tuesday on a plan to guarantee that independent power generators are paid. Independent power producers provide about 30 percent of California's=20 electricity from a variety of sources including wind solar and other=20 sources. Because many of the companies known as Qualifying Facilities or= =20 QFs haven't been paid they've begun to withhold power contributing to=20 blackouts in the state Monday and Tuesday.=20 We are anxious to pay the QFs because they're falling like flies Davis= =20 said at a news conference late Tuesday. If they don't get paid the lights= =20 will go out. Davis said the state's PUC order will require the state's nearly bankrupt= =20 utilities to enter five-year contracts with the QFs at rates of 7.9 cents p= er=20 kilowatt hour or 10-year contracts for lower rates. The structure is simil= ar=20 to rates Davis claims he was able to negotiate for long-term power contract= s=20 from out-of-state generators. --- Rash power bill may need fix By Will Shuck From our Sacramento Bureau SACRAMENTO Even as lawmakers lament the slow pace of solving California's= =20 energy crisis the cost of haste has cropped up in their first major act a= =20 multibillion dollar measure that put the state in the power-buying business= .=20 AB1X the highly touted bill that put California in the power-buying=20 business may have been so rashly crafted that it will take another piece o= f=20 legislation to fix it an influential senator said Tuesday.=20 At issue is vague wording that makes it unclear when and to what extent=20 Southern California Edison and other utilities have to repay the state for= =20 buying power.=20 State Sen. Debra Bowen chairwoman of the Senate Energy Utilities and=20 Communications Committee said the bill apparently has left room for utilit= y=20 lawyers to argue that their companies needn't repay the state until they ha= ve=20 covered other costs.=20 But Bowen a Redondo Beach Democrat who represents downtown and western Lon= g=20 Beach said the legislative intent is crystal clear that the state wanted= =20 to be repaid directly for supplying about a third of the power utility=20 companies deliver to their customers.=20 We need a cleanup bill to set the matter straight she said.=20 Although AB1X illustrates the flaws that come with speed Bowen said the= =20 Legislature can't afford to delay.=20 I think we are much too slow in our response she said. But that has to = be=20 balanced against things we've done in a tearing hurry and then have had to= =20 fix later.=20 No matter what the Legislature does in the coming weeks she said Californ= ia=20 is in for a tough summer and only determined conservation efforts will put= =20 much of a dent in a precarious supply-demand equation. --- PUC considers rewarding producers that sign long-term contracts=20 Greg Lucas Lynda Gledhill Chronicle Sacramento Bureau Wednesday March 21 2001=20 2001 San Francisco Chronicle=20 Sacramento -- Some cash-strapped producers of wind solar and other=20 alternative forms of energy will get long-delayed financial relief under a= =20 proposed order by state regulators Gov. Gray Davis said yesterday evening.= =20 A proposed order by the Public Utilities Commission is designed to reward= =20 energy producers who sign long-term contracts with utilities at lower rates= .=20 Alternative energy producers that voluntarily enter such contracts which= =20 would start on April 1 would be paid within 15 days said Davis who=20 requested the order. Those that do not would have to wait until the utiliti= es=20 that buy their power return to solvency.=20 Davis blasted Pacific Gas & Electric Co. and Southern California Edison for= =20 not paying the alternative generators -- know as qualified facilities or= =20 QFs -- even though the companies have been collecting money through rates= .=20 It is wrong and irresponsible of the utilities to pocket and withhold the= =20 money designed to compensate the QFs Davis said. It's immoral and has to= =20 stop.=20 Alternative producers -- ranging from massive co-generation facilities at o= il=20 refineries to tiny biomass plants -- produce about a third of the state's= =20 supply of electricity. But many are shutting down because utilities have no= t=20 paid them since November.=20 The loss of some 3000 megawatts from tapped-out alternative energy produce= rs=20 contributed to the blackouts that snarled California yesterday and Monday= =20 according to the Independent System Operator which manages the state's pow= er=20 grid.=20 The PUC's proposed order -- which will be considered at the board's Tuesday= =20 meeting -- offers the generators a choice of agreeing to a five-year contra= ct=20 at $79 per megawatt or a 10-year deal at $69 per megawatt Davis said.=20 The order does not address the more than $1 billion already owed to the mor= e=20 than 600 alternative energy producers around the state. Davis said to favor= =20 one creditor over another in past debt could bring on bankruptcy proceeding= s=20 from other creditors.=20 The Legislature would also need to act to make the order work.=20 It is critical to keep these facilities up and online said Sen. Debra=20 Bowen D-Marina del Ray who estimates that Edison has $1.5 billion in cash= =20 on hand and PG&E $2.5 billion. The utilities owe it to the people of the= =20 state to pay them.=20 Edison said yesterday that it opposed any attempt to place alternative=20 producers ahead of their other creditors.=20 But Tom Higgins a senior vice president for Edison International which ow= es=20 alternative producers some $835 million said his company was talking to th= e=20 governor's office about possible payment structures.=20 Alternative energy producers particularly those that use high-priced natur= al=20 gas to fire their generators say that without an immediate infusion of cas= h=20 they must close their plants.=20 We've been obsessed with the health of the utilities and (have) forgotten= =20 the health of everyone else said V. John White legislative director of t= he=20 Clean Power Campaign which lobbies for alternative energy producers.=20 CalEnergy Operating Corp. which operates eight geothermal plants in the=20 Imperial Valley producing 268 megawatt hours for Edison has sued the utilit= y=20 asking to be paid and to be temporarily released from their contract with= =20 Edison which has paid them nothing since November.=20 CalEnergy has a court hearing tomorrow on its Edison contract. Edison owes= =20 the company $75 million and the debt increases by $1 million a day.=20 We've lived up to our end of the bargain but Edison hasn't. We're now not = in=20 a position to make a property tax payment on April 10 and we're the largest= =20 employer in the county said Vince Signorotti CalEnergy's property manage= r.=20 Unlike Edison PG&E is paying its creditors 15 cents on the dollar.=20 We have offered over the past five days to prepay for future power not yet= =20 delivered to keep as many of them operating as possible but the state need= s=20 to decide how its going to divvy up the limited money under the frozen=20 rates said John Nelson a PG&E spokesman.=20 The PUC's sudden attempt to recast the rates paid to alternative generators= =20 comes after several months of inaction partly a result of waiting for=20 legislative negotiations on the issue to conclude. Those negotiations=20 eventually failed to move forward.=20 --- State claims $5.5 billion overcharge: Refunds by wholesale generators sough= t By Dale Kasler Bee Staff Writer (Published March 22 2001)=20 In its boldest attempt yet to extract refunds from wholesale power=20 generators the state's grid operator accused the generators Wednesday of= =20 overcharging Californians by $5.5 billion for electricity since last May.= =20 The state's Independent System Operator which manages the state's=20 transmission grid plans to tell a federal regulatory agency today that pow= er=20 generators consistently took advantage of their stranglehold on the=20 California market to ratchet up prices.=20 The federal agency the Federal Energy Regulatory Commission recently=20 threatened to order generators to refund $134.8 million for overcharges=20 mostly covering January and February. But those refunds amounted to just a= =20 fraction of what the grid operator was seeking. The ISO which has been=20 complaining about market abuses for several months says FERC must do more.= =20 We're happy that (FERC) took this first step but we think there's a long= =20 way to go said Anjali Sheffrin the ISO's director of market analysis. A= s=20 far as I'm concerned it's been too little too late. ... The refunds they= =20 have acted on (so far) have been minimal.=20 She said the report covers five major power suppliers and 16 other power=20 importers.=20 FERC Commissioner William L. Massey said it would be improper for him to=20 comment on a report that has not yet been filed. But when told of the $5.5= =20 billion total Massey told the Los Angeles Times: That doesn't shock me in= =20 any way.=20 Prices over the past 10 months in California have greatly exceeded the=20 federal standards of just and reasonable prices and I think they have=20 exceeded the standards by possibly billions of dollars he said.=20 However most FERC critics are skeptical that the federal agency which is = a=20 strong believer in letting free markets run their course would order a=20 refund anywhere near as large as $5.5 billion -- even though it has found= =20 that California prices at times have been unjust and unreasonable.=20 The big power generators saying their charges were reasonable are disputi= ng=20 the $134.8 million refunds proposed so far and have vowed to fight the ISO'= s=20 latest effort.=20 If the ISO were to prevail the $5.5 billion in refunds could go a long way= =20 toward remedying California's energy mess.=20 They could help restore the financial health of Pacific Gas and Electric Co= .=20 and Southern California Edison which have nearly been bankrupted by the=20 prices charged by the power generators. They also could ease the strain on= =20 the state treasury which is spending billions to purchase electricity for= =20 Californians because PG&E and Edison can't.=20 Sheffrin said her department studied sales made by the power generators to= =20 ISO which makes last-minute power purchases to balance supply with demand= =20 and the California Power Exchange the now-bankrupt entity where most of=20 California's wholesale electricity was bought and sold until December.=20 She said the study made very generous allowances for natural gas expenses= =20 costly air-pollution credits and other factors including the scarcity of= =20 electricity. The result was $5.5 billion worth of charges in excess of=20 competitive costs she said.=20 In many cases the companies used their market clout to submit bids that we= re=20 way beyond their costs she said.=20 It was insufficient competition Sheffrin said. They got away with a lot= .=20 She said the refund request isn't just a shot in the dark. FERC she noted= =20 has already found that prices in the California wholesale energy market ha= ve=20 been unreasonable. We took it upon ourselves ... to show FERC how they got = to=20 be so high.=20 FERC proposed refunds totaling $124 million for January and February sales= =20 declaring that generators' prices were too high.=20 In a separate case the federal agency for the first time accused two=20 generators last week of taking plants offline to force prices up.=20 --- Power solution eludes Davis: Lawmakers grow edgy as crisis drags on=20 By Emily Bazar and Amy Chance Bee Capitol Bureau (Published March 22 2001)=20 Gov. Gray Davis likes to compare the state's energy crisis to a complicated= =20 three-cornered billiard shot.=20 But as California plunged into another round of power blackouts this week= =20 Davis has yet to line up the angle on an ultimate solution.=20 The state's short-term power bill is nearing $4.2 billion and legislators= =20 are balking at the administration's requests for additional money.=20 Getting even the least controversial pieces of the puzzle through the=20 Legislature is taking weeks longer than expected.=20 While the Democratic governor has insisted secrecy about details of his pow= er=20 purchases is necessary to protect the state's bargaining position other=20 state officials are complaining vigorously about the lack of information.= =20 And critical deals the governor hoped to reach with energy suppliers and=20 utility companies are proving difficult to close.=20 I think we all got lulled into a little complacency a few weeks ago. All= =20 these things seemed to be going along and the governor was making all thes= e=20 warm and fuzzy comments said Assemblyman John Campbell R-Irvine.=20 But it only takes one deal to go sideways and we're all blacked out he= =20 added. The governor is running around basically saying 'Trust me.' I'm no= t=20 sure he's deserving of the trust at this point.=20 Davis and his aides insist they are working around the clock on plans to=20 boost power generation encourage conservation and reach an agreement with= =20 utilities that will keep them out of bankruptcy.=20 The utility plan they say is the equivalent of a large corporate merger= =20 that simply can't be accomplished overnight. Davis notes that earlier=20 deregulation efforts might have benefitted from a little more time.=20 Although the state has reached a broad agreement in principle with Southe= rn=20 California Edison to obtain its power transmission lines in exchange for he= lp=20 paying off its debts a final detailed deal has not been reached. The=20 initial agreement with Edison was announced Feb. 23.=20 And the governor has yet to achieve a tentative agreement with Pacific Gas= =20 and Electric Co. which is driving a harder bargain over price and other=20 elements of a potential rescue plan.=20 Joseph Fichera one of several consultants receiving more than $11 million= =20 from the administration for advice on the energy crisis said many people= =20 don't realize the complexity of the deal they're brokering.=20 In their bid to achieve a public takeover of the investor-owned utilities'= =20 transmission lines he said negotiators have to pore over thousands of=20 documents related to the transmission lines alone.=20 We are doing what is normal in a transaction of this magnitude which is= =20 investigate document circulate redocument agree move forward said=20 Fichera an investment banker with Saber Partners in New York City. The=20 governor has put a 'I want this yesterday' fire under his negotiating team= .=20 The negotiator however declined to say when he expects final agreements t= o=20 be reached with the companies.=20 It could be days it could be weeks he said.=20 There were signs meanwhile of trouble brewing on another front: the giant= =20 bond sale the state must make to repay the money it has spent so far on=20 electricity and to finance future long-term contracts for energy.=20 State Treasurer Phil Angelides said Wednesday the utilities are appealing a= =20 ruling by the state Public Utilities Commission that essentially ensures th= e=20 state will be repaid a move that he said threatens to delay the sale=20 indefinitely.=20 If the utilities have decided to adopt a scorched earth policy until they= =20 get what they need and want then it will be a significant problem=20 Angelides said.=20 PG&E spokesman Ron Low said the governor is simply placing too many demands= =20 on a rate structure that doesn't compensate the utilities for their current= =20 costs.=20 Political rhetoric is not going to change the math he said.=20 In the Legislature lawmakers are growing grumpier. Most were taken by=20 surprise Monday when blackouts were ordered across the state weeks before= =20 summer temperatures were expected to set in and strain the power system.=20 I'm more worried than ever said Assemblyman Bill Leonard R-San=20 Bernardino. A lot of the elements we thought we had a handle on in January= =20 are unraveling.=20 A deal the governor said had been worked out weeks ago between the state an= d=20 more than 600 small alternative energy suppliers collapsed last week.=20 The alternative generators have not been paid by the utilities for months= =20 and state leaders attempted to bargain down the price utilities pay those= =20 generators for power.=20 But administration officials complained privately that lawmakers instead=20 sweetened the pot for the suppliers to the point that the measure no longer= =20 helped solve the overall financial situation pushing the utilities toward= =20 bankruptcy. Under a proposal announced Tuesday by Davis the Legislature=20 would authorize the PUC to require the utilities to pay the alternative=20 suppliers at prices more closely resembling the original deal.=20 But the governor ran into immediate opposition as some suppliers said said= =20 he would not pay them enough to cover their fuel costs.=20 We would go from not being paid to losing money said Hal Dittmer of=20 Wellhead Electric a Sacramento-based supplier that has been shut down for= =20 more than a month. Almost everybody who burns natural gas is going to shut= =20 down. (Davis) got it wrong.=20 Democrats outside the Davis administration meanwhile are complaining abou= t=20 the amount of money the state Department of Water Resources is spending on= =20 expensive last-minute power purchases. Within a week $4.2 billion will ha= ve=20 been committed.=20 State Sen. Steve Peace D-El Cajon chairman of the joint Legislative Budge= t=20 Committee is warning the Davis administration that he will block additiona= l=20 funds for last-minute purchases of power until the PUC makes progress=20 recovering money that already has been spent. He intends to hold a hearing = on=20 the issue this morning.=20 On Wednesday state Controller Kathleen Connell told Davis she will refuse = to=20 make a routine budget transfer he had requested saying she is concerned th= at=20 there is no outside check and balance on the money the administration is= =20 spending to buy electricity on the spot market.=20 As the statewide elected official who pays the state's bills Connell said= =20 she has yet to receive information from the Department of Water Resources= =20 about how much it is spending.=20 We really need an accounting as to the total amount of liability they have= =20 accumulated she said. I understand they're in an emergency situation ...= =20 but it begins to imperil the state's ability to manage its cash flow.=20 Meanwhile a bill to provide $1 billion for conservation programs aimed at= =20 reducing power needs this summer also has languished for several weeks in= =20 the state Senate. While Davis has focused his attention elsewhere Republic= an=20 lawmakers have opposed the measure as too expensive. Democrats argue that= =20 each two-week delay prevents the state from saving as much energy as one=20 peaker plant will produce this summer. Peaker plants are designed to help= =20 meet the peaks of electricity demand.=20 I'm the eternal optimist but we have to keep working on all fronts said= =20 Sen. Byron Sher D-Palo Alto who hopes to take his energy conservation bil= l=20 up for a vote in the Senate again today. It's a formidable challenge.=20 Bee staff writer Dale Kasler contributed to this report.=20 --- Legislators learn some details of power contracts By John Hill Bee Capitol Bureau (Published March 22 2001)=20 The veil of secrecy surrounding the state's electricity contracts lifted=20 Wednesday -- a little.=20 Gov. Gray Davis gave state legislators a report laying out some of the=20 details of long-term contracts designed to help the state pull out of its= =20 energy crisis. But the report left legislators and others clamoring for mor= e.=20 The information raises more questions said Assemblyman George Runner=20 R-Lancaster. I liken it to watching a parade through a knothole in a fence= .=20 You get to look at one float but you're not sure about what's coming up an= d=20 what you've missed.=20 Davis had previously disclosed that the state had signed or was close to=20 signing 40 long-term contracts at an average price over 10 years of $69 pe= r=20 megawatt-hour.=20 The contracts are part of the state's strategy for trying to avoid a fiscal= =20 shellacking in the energy spot market while making sure there's enough=20 electricity to avoid more blackouts.=20 Davis also previously disclosed that the contracts were for an average of= =20 about 9000 megawatts a year and that the total cost exceeded $40 billion.= =20 But Davis has resisted telling more saying the state would jeopardize its= =20 ability to get the best prices if electricity generators knew what their=20 counterparts were getting.=20 On Wednesday the governor's office released a March 15 report from S. Davi= d=20 Freeman general manager of the Los Angeles Department of Water and Power = to=20 the state Department of Water Resources. The state agency has been given th= e=20 responsibility of making power purchases and Freeman was brought in to lea= d=20 the negotiations.=20 As of March 15 the state had signed 19 contracts with seven suppliers for= =20 periods ranging from 14 months to 20 years with many for three or five=20 years the report says. Some of the contracts are for electricity to meet t= he=20 state's everyday power demand while others are only for times of peak use= =20 such as hot summer days.=20 The state had agreements in principle for an additional 25 contracts.=20 Runner said he has been told that two of these contracts have since been=20 finalized.=20 The amount of power provided reaches a peak in 2004 of more than 10000=20 megawatts. As the long-term contracts start to expire around then the stat= e=20 is hoping that demand can be met with new contracts or spot purchases at=20 prices expected to be much cheaper.=20 The report says nine more long-term contracts were under discussion.=20 Some of the contracts are with power generators while others are with=20 marketers who may get the power from a number of sources.=20 In some cases the state may supply the natural gas used to generate the=20 electricity or power costs may be pegged to the going rate for the fuel.= =20 Some suppliers can cancel if the state fails to sell bonds by a certain dat= e=20 to cover power costs or fails to maintain an investment grade credit rating= .=20 Some depend on the construction of power plants but Freeman said they were= =20 firm commitments.=20 We were pretty careful not to put a hope and a dream in the portfolio he= =20 said.=20 More contracts will have to be signed to meet summer demand and these=20 agreements will probably be more expensive the report says.=20 One item not in Freeman's report was a secret deal to relieve several major= =20 generators from having to pay for polluting the air beyond allowable limits= .=20 The long-term power contracts include language that would have the state pa= y=20 the costs of pollution credits that allow power plants to exceed their=20 permitted levels of smog-forming pollutants the governor's office confirme= d=20 Wednesday. Spokesman Steve Maviglio said that several generators are being= =20 relieved from having to pay those costs.=20 V. John White a Sierra Club lobbyist close to the negotiations said Dyneg= y=20 Inc. which has power plants in El Segundo Encina and Long Beach is one o= f=20 them. Dynegy officials did not return calls to The Bee on Wednesday.=20 Freeman said that generators were demanding hefty premiums for having to de= al=20 with air quality regulators in the summer and he figured it would be cheape= r=20 just to pay for the pollution credits.=20 In other energy-related developments:=20 With more power plants back online grid operators dropped down to a Stage = 1=20 electricity alert. The state Independent System Operator was expecting=20 supplies to gradually increase over the next few days.=20 The state Public Utilities Commission issued a revised draft decision that= =20 would impose the prices outlined Tuesday by Davis for power produced by=20 alternative energy companies -- $79 a megawatt-hour for five-year contracts= =20 or $69 a megawatt-hour for 10 years. The proposal is scheduled for a PUC vo= te=20 March 27.=20 A federal judge ruled that one of the nation's major electricity generators= =20 must continue supplying California with emergency power.=20 In imposing an injunction on Reliant Energy Services Inc. U.S. District=20 Judge Frank C. Damrell Jr. noted the rolling blackouts (that have) darkene= d=20 the California landscape and said the loss of Reliant's production poses = an=20 imminent threat.=20 Bee staff writers Carrie Peyton Chris Bowman and Denny Walsh contributed t= o=20 this report.=20 --- Federal judge orders major power wholesaler to sell to California=20 By Don Thompson ASSOCIATED PRESS=20 March 21 2001=20 SACRAMENTO =01) A federal judge issued a preliminary injunction Wednesday= =20 ordering a major electricity wholesaler to continue selling to California= =20 despite its fear that it will not get paid.=20 U.S. District Judge Frank C. Damrell Jr. said Californians were at risk of= =20 irreparable harm if Reliant Energy Services stopped selling power to the=20 Independent System Operator which oversees the state's power grid. The ISO= =20 buys last-minute power on behalf of utilities to fill gaps in supply to try= =20 to fend off blackouts.=20 Damrell dismissed Reliant's attempt to force the state Department of Water= =20 Resources to back the ISO's purchases for the state's two biggest utilities= .=20 The state has been spending about $50 million a day on power for Pacific Ga= s=20 and Electric Co. and Southern California Edison both denied credit by=20 suppliers after amassing billions of dollars in debts.=20 Controller: State's power spending imperils its financial health=20 Governor says utilities must pay in advance for some power=20 ?=20 The judge said he had no authority to force the DWR to pay for that power.= =20 Gov. Gray Davis has said the state isn't responsible for purchasing the=20 costly last-minute power ISO buys for Edison and PG&E despite a law=20 authorizing state power purchases on the utilities' behalf.=20 ISO attorney Charles Robinson said the ruling gives ISO operators a tool t= o=20 assist them in keeping the lights on in California.=20 Had the decision gone the other way one could expect other generators to= =20 simply ignore emergency orders Robinson said.=20 Damrell's preliminary injunction will remain in effect until the Federal=20 Energy Regulatory Commission rules on the matter.=20 Damrell denied the ISO's request for preliminary injunctions against three= =20 other wholesalers Dynegy AES and Williams who agreed to continue selling= =20 to the ISO pending the FERC ruling.=20 The ISO went to court in February after a federal emergency order requiring= =20 the power sales expired. The judge then issued a temporary restraining orde= r=20 requiring the sales but dropped it after the suppliers agreed to continue= =20 sales to California pending his Wednesday ruling.=20 The ISO said it would lose about 3600 megawatts if the suppliers pulled ou= t=20 enough power for about 2.7 million households. One megawatt is enough for= =20 roughly 750 homes.=20 Grid officials said Reliant's share alone is about 3000 megawatts. Reliant= =20 said the amount at issue actually is less than a fourth of that because mo= st=20 of the power is committed under long-term contracts.=20 Reliant which provides about 9 percent of the state's power worries it=20 won't get paid due to the financial troubles of PG&E and Edison.=20 PG&E and Edison say that together they have lost about $13 billion since Ju= ne=20 due to soaring wholesale electricity costs that California's 1996=20 deregulation law bars them from passing onto customers.=20 At the same time the state has faced a tight electricity supply due in pa= rt=20 to California power plant shutdowns for maintenance and to a tight=20 hydroelectric supply in the Pacific Northwest.=20 Managers of the state power grid imposed rolling blackouts across the state= =20 Monday and Tuesday as supply fell short of demand. Wednesday cooling=20 temperatures and the completion of repairs at several power plants allowed= =20 the state to avoid blackouts.=20 State Controller Kathleen Connell said Wednesday that the energy crunch als= o=20 imperils California's financial health.=20 Connell said the state's power-buying on behalf of Edison and PG&E is is=20 gutting its budget surplus. Since the state started making emergency power= =20 buys in January the surplus has fallen from $8.5 billion to about $3.2=20 billion she said.=20 Connell ordered an audit of the state's power-buying saying Davis is=20 withholding key financial information from her office and the Legislature.= =20 She is refusing a request by Davis and the Legislature to transfer $5.6=20 billion into a rainy day fund she said was set up to impress Wall Street = as=20 the state prepares to issue $10 billion in revenue bonds to cover its=20 power-buying.=20 Transferring the money would leave the state general fund $2.4 billion in= =20 debt Connell said.=20 Sandy Harrison spokesman for the state Department of Finance and Keely=20 Bosler of the Legislative Analyst's Office said such transfers are routine= =20 and required by law.=20 They put the state's budget surplus at $5.6 billion.=20 The law says she has to do it. The law does not give her the power to dema= nd=20 that kind of audit information Harrison said.=20 He said the state's budget isn't in danger because it will be repaid with t= he=20 $10 billion in long-term debt.=20 Wells Fargo & Co. chief economist Sung Won Sohn said he sees little progres= s=20 in efforts to fix the state's power problems and end state electricity=20 purchases.=20 If we're going to pour money into a bottomless pit I would worry about th= e=20 state's finances he said. At some point we're going to run out of money.= =20 The controller's criticism of fellow Democrat Davis won support from Assemb= ly=20 Republicans and Secretary of State Bill Jones a Republican considering=20 challenging Davis next year.=20 Jones said he wants to announce his own plan to solve the state's energy=20 woes but can't unless Davis releases more financial details.=20 Davis spokesman Steve Maviglio dismissed the criticism.=20 Political grandstanding doesn't generate one more kilowatt of energy for= =20 California in this time of emergency he said.=20 Maviglio said the administration has released the financial information it= =20 can without jeopardizing negotiations for long-term power contracts with=20 wholesalers.=20 --- Controller: State's power spending imperils its financial health=20 By Don Thompson ASSOCIATED PRESS=20 March 21 2001=20 SACRAMENTO =01) California's power-buying on behalf of two strapped utiliti= es is=20 gutting its budget surplus and putting the state at financial risk the sta= te=20 controller said Wednesday.=20 The surplus dropped from $8.5 billion in January when the state began buyi= ng=20 electricity for Pacific Gas and Electric Co. and Southern California Edison= =20 to $3.2 billion now Kathleen Connell estimates.=20 Connell ordered an audit of the state's power-buying saying Gov. Gray Davi= s=20 is withholding key financial information from her office and the Legislatur= e.=20 Wednesday marked the first time in three days the state avoided rolling=20 blackouts. Power grid officials credited cooling temperatures and the=20 completion of repairs at several power plants.=20 Connell said the energy crunch now imperils the state's budget as well as i= ts=20 electric grid.=20 California has been spending about $45 million a day =01) $4.2 billion so f= ar =01)=20 to buy power for Edison and PG&E both denied credit by electricity=20 wholesalers.=20 The two utilities California's largest say they are nearly $14 billion in= =20 debt due to soaring wholesale power costs the state's deregulation law bloc= ks=20 them from recovering from customers.=20 Meanwhile the state has faced high natural gas costs and a tight power=20 supply driven in part by power plant repairs in California and scarce=20 hydroelectric power in the Pacific Northwest.=20 Standard & Poor's has put the state on a credit watch due to its power=20 purchases and chastised Davis the Legislature and state regulators for not= =20 taking more aggressive steps to assure the utilities can pay their bills.= =20 On Wednesday Connell said she is refusing a request by Davis and the=20 Legislature to transfer $5.6 billion into a rainy day fund she said was s= et=20 up to impress Wall Street as the state prepares to issue $10 billion in=20 revenue bonds to cover its power-buying.=20 Transferring the money would leave the state general fund $2.4 billion in= =20 debt Connell said.=20 Sandy Harrison spokesman for the state Department of Finance and Keely=20 Bosler of the Legislative Analyst's Office said such transfers are routine= =20 and required by law.=20 They put the state's budget surplus at $5.6 billion.=20 The law says she has to do it. The law does not give her the power to dema= nd=20 that kind of audit information Harrison said.=20 He said the state's budget isn't in danger because it will be repaid with t= he=20 $10 billion in long-term debt.=20 Connell said the scope of the proposed transfer is unprecedented and amount= s=20 to a shell game that disguises the power purchases' impact on the state= =20 budget.=20 Wells Fargo & Co. chief economist Sung Won Sohn said he sees little progres= s=20 in efforts to fix the state's power problems and end state electricity=20 purchases.=20 If we're going to pour money into a bottomless pit I would worry about th= e=20 state's finances he said. At some point we're going to run out of money.= =20 The controller's criticism of fellow Democrat Davis won support from Assemb= ly=20 Republicans and Secretary of State Bill Jones a Republican considering=20 challenging Davis next year.=20 Jones said he wants to announce his own plan to solve the state's energy=20 woes but can't unless Davis releases more financial details. He said his= =20 plan may involve giving the utilities low-interest loans with their=20 transmission lines held as collateral.=20 Davis spokesman Steve Maviglio dismissed the criticism.=20 Political grandstanding doesn't generate one more kilowatt of energy for= =20 California in this time of emergency he said.=20 Maviglio said the administration has released the financial information it= =20 can without jeopardizing negotiations for long-term power contracts with=20 wholesalers.=20 --- Governor says utilities must pay in advance for some power=20 By Jennifer Coleman ASSOCIATED PRESS=20 March 21 2001=20 SACRAMENTO =01) The state's two largest utilities will be ordered to pay=20 environmentally friendly power generators in advance a move Gov. Gray Davi= s=20 hopes will bring a quick end to the power blackouts that darkened Californi= a=20 this week.=20 The statewide blackouts that stretched from San Diego to Oregon on Monday a= nd=20 Tuesday were caused in part by the failure of Southern California Edison an= d=20 Pacific Gas and Electric Co. to pay millions of dollars they owe qualifyin= g=20 facilities or QFs Davis said.=20 Such suppliers use cogeneration =01) steam from manufacturing plus natural = gas =01)=20 or solar wind and other renewable energy to generate electricity. This wee= k=20 California lost about half the power those generators normally provide.=20 Controller: State's power spending imperils its financial health=20 ?=20 Several of them said they hadn't been paid by Edison and PG&E in weeks and= =20 can't afford to keep operating their plants.=20 Davis accused the utilities of taking in money from customers while failing= =20 to pay the QFs. The state has been spending about $45 million a day since= =20 January to buy power for customers of Edison and PG&E which are so=20 credit-poor that suppliers refuse to sell to them.=20 It's wrong and irresponsible of the utilities to pocket this money and not= =20 pay the generators the governor said at a Capitol news conference Tuesday= =20 evening. They've acted irresponsibly and immorally and it has to stop.=20 PG&E called the governor's statements inappropriate and unjustified addi= ng=20 that it was negotiating a payment plan with the QFs. Edison said it is inte= nt=20 on paying creditors and working with the California Public Utilities=20 Commission to pay QFs for future power sales.=20 Controller Kathleen Connell warned Wednesday that the state's $2=20 billion-a-month power purchases are jeopardizing California's budget.=20 The state's budget surplus dropped from $8.5 billion in January when the= =20 power purchases began to $3.2 billion now Connell estimates. She blamed= =20 Davis for withholding key financial information and ordered an audit of th= e=20 state's power spending starting next week.=20 She blocked a request by the Legislature and Davis administration to transf= er=20 $5.6 billion from the state's general fund into a special rainy day fund= =20 saying that would have left the general fund $2.4 billion in debt.=20 The Legislative Analyst's Office said such transfers are routine Connell= =20 agreed but said the size of the transfer is unprecedented.=20 We started this year with a generous budget surplus Connell said. The= =20 energy crisis has taken much of that away and this transfer on top of the= =20 electricity purchases would put the fund at risk.=20 Meanwhile keepers of the state's power grid were optimistic California wou= ld=20 get through Wednesday without another day of rolling blackouts. Two plants= =20 down for repairs returned to service.=20 Several power plants that were taken down for repairs are also expected com= e=20 online by the end of the week reducing the likelihood of blackouts said J= im=20 Detmers ISO vice president.=20 Power may flow to homes and businesses but it could soon cost consumers=20 more said Assemblyman Fred Keeley one of the Legislature's leaders on=20 energy issues.=20 I think it's intellectually appropriate and honest to tell people as soon = as=20 it's apparent that a rate increase is warranted the Boulder Creek Democra= t=20 said Tuesday indicating that time had come.=20 He estimated that the state Public Utilities Commission may soon have to=20 raise rates by about 15 percent to cover the state's costs and its utilitie= s'=20 bills.=20 My sense is that people will appreciate having some certainty and being ab= le=20 to plan for it he said. They don't have to like it but I think they'll= =20 appreciate it.=20 Davis said he is confident the utilities and the state can pay their bills= =20 without further rate increases for Edison and PG&E customers.=20 In the meantime the Independent System Operator keeper of the grid is=20 counting on continued conservation by residents and businesses to avoid mor= e=20 blackouts. Conservation accounted for about 300 megawatts in savings during= =20 Tuesday's peak usage enough to power 300000 homes.=20 Roughly a half-million homes and businesses were affected by Tuesday's=20 blackouts which snarled traffic and plunged schools and businesses into=20 darkness across the state.=20 The outages began at 9:30 a.m. and continued in 90-minute waves until about= 2=20 p.m. when the ISO lifted its blackout order. They were blamed for at least= =20 one serious traffic accident.=20 Two cars collided at an intersection in the Los Angeles suburb of South El= =20 Monte where the traffic lights were out. Two people were seriously hurt sa= id=20 California Highway Patrol Officer Nick Vite.=20 In San Francisco's Chinatown souvenir shops normally bustling with visitor= s=20 were forced to shut down. Nearby irritated customers waited for a bank to= =20 reopen.=20 The blackouts like Monday's were caused by a combination of problems=20 including unseasonably warm weather reduced electricity imports from the= =20 Pacific Northwest and numerous power plants being shut down for repairs.=20 Adding to those troubles the state lost about 3100 megawatts from the QF= =20 plants.=20 Senate Energy Committee Chairwoman Debra Bowen D-Marina del Rey estimated= =20 Tuesday that Edison has amassed more than $1 billion and PG&E more than $2= =20 billion that they have not paid to generators.=20 Davis said the PUC planned to issue an order next week directing the=20 utilities to pre-pay their future QF bills.=20 PG&E said its prepayments hinge on an upcoming PUC decision on whether the= =20 utility's rates are sufficient to pay its bills and cover the state's power= =20 purchases on its behalf which amount to $4.2 billion since early January.= =20 Edison and PG&E say they have lost more than $13 billion since last June to= =20 climbing wholesale electricity prices which the state's 1996 deregulation= =20 law prevents them from passing on to ratepayers.=20 --- Energy Overcharge of $5.5 Billion Is Alleged=20 Power: Money should be refunded to taxpayers and utilities the state grid= =20 operator says citing evidence of market manipulation. Suppliers deny the= =20 accusation.=20 By TIM REITERMAN and NANCY RIVERA BROOKS Times Staff Writers=20 ?????Wholesale electricity suppliers overcharged California by about $5.5= =20 billion between May and last month and that money should be refunded to th= e=20 state's taxpayers and financially strapped utilities the state power grid= =20 operator said Wednesday. ?????Generators engaged in market manipulation and consistent patterns of= =20 bidding far above costs in the deregulated energy market the California=20 Independent System Operator found in a study of pricing data. The findings= =20 support the widespread belief that these suppliers reaped massive additiona= l=20 revenue by manipulating the market. ?????Spokesmen for the companies denied the accusation. ?????The study prepared for a filing with federal regulators today is=20 central to Cal-ISO's efforts to seek reimbursement for what it considers=20 excessive charges by electricity suppliers during the state's energy crisis= . ?????This might be the first time we told them the total impact and=20 magnitude [of the overcharging] said Anjali Sheffrin Cal-ISO's director = of=20 market analysis. We think the entire amount deserves consideration for=20 refunds. ?????Using confidential bidding data on tens of thousands of electricity=20 sales Cal-ISO found that five companies that together supply about 30% of= =20 the power delivered to customers of the state's investor-owned utilities=20 engaged in two types of behavior that tended to push up prices: ?????* They effectively withheld supplies by bidding at excessive prices= =20 even though they could have made some money selling more electricity. ?????* Less frequently they had power generation available but did not bid= =20 at all. ?????The study concluded that energy suppliers commonly offered their=20 electricity at twice their cost. For example Sheffrin said the average=20 markup in August was 100% during peak hours. ?????A spokeswoman at the Federal Energy Regulatory Commission which=20 oversees wholesale electricity pricing across the country declined to=20 comment Wednesday saying This is part of an ongoing proceeding. ?????FERC member William L. Massey who has considered previous commission= =20 actions on refunds to be inadequate said it would be improper for him to= =20 comment on a report that has not yet been filed. But when told of the=20 $5.5-billion total Massey said: That doesn't shock me in any way. ?????Prices over the past 10 months in California have greatly exceeded th= e=20 federal standards of just and reasonable prices and I think they have=20 exceeded the standards by possibly billions of dollars he said. ?????Cal-ISO which oversees grid operations and an emergency energy market= =20 previously detailed $550 million in alleged overcharges for December and=20 January and asked FERC for refunds. But the commission has proposed refunds= =20 of only a tiny fraction of that amount. ?????The study covered five major in-state power suppliers--Reliant Energy= =20 Dynegy Williams/AES Duke Energy and Mirant formerly Southern Energy--plu= s=20 16 power importers all of which deliver power to customers of Pacific Gas = &=20 Electric Co. Southern California Edison and San Diego Gas & Electric Co. ?????All [21] overcharged but some excessively and some by moderate=20 amounts Sheffrin said. ?????Cal-ISO's public filing will quantify the alleged overcharging by each= =20 company but the companies will be identified only by a number. The code wi= ll=20 be provided to FERC Sheffrin said and Cal-ISO lawyers will determine how= =20 much information about the companies will be made public. ?????State U.S. Investigations ?????California electricity markets and the companies that buy and sell pow= er=20 in the state have been the subject of several investigations by state and= =20 federal authorities since wholesale electricity prices first skyrocketed in= =20 May. ?????Electricity suppliers have repeatedly denied manipulating the Californ= ia=20 market in any way whether through above-cost bidding in spot markets or=20 through physical withholding of electricity to drive up prices. ?????Reliant Energy is cooperating with FERC's requests for more data and i= s=20 confident the commission will conclude that prices charged by Reliant were= =20 justified said Joe Bob Perkins president of the Houston-based company. ?????Perkins also bitterly disputed charges that Reliant has shut down unit= s=20 so that it can earn bigger profits on the power sold by the remaining plant= s.=20 These charges have been leveled against all of the power-plant owners in th= e=20 state. ?????Reliant Vice President John Stout said Cal-ISO's calculations typicall= y=20 don't include such fixed costs as salaries taxes and the interest on bonds= =20 they sold to finance their power plants which they acquired under terms of= =20 the state's landmark 1996 deregulation law. ?????In addition he said many high-priced power days have resulted from= =20 buyers bidding against each other for scarce supplies rather than sellers= =20 charging excessive amounts--like a house price being driven far above the= =20 listing price in a hot real estate market. ?????Williams Energy Services a trading company that markets most of the= =20 power produced by plants owned by AES also says it will be exonerated by= =20 FERC once the commission examines documentation being submitted said Paula= =20 Hill-Collins spokeswoman for the Tulsa Okla. company. ?????FERC has the obligation to investigate when these accusations are=20 made Hill-Collins said. This is just a process of justification not=20 necessarily proof of guilt. ?????Williams/AES was recently ordered by FERC to prove that it did not tak= e=20 generating units out of service last year to drive up electricity prices o= r=20 refund $10.8 million to California utilities. ?????During the period studied suppliers sold electricity in the Californi= a=20 Power Exchange to Southern California Edison PG&E and San Diego Gas &=20 Electric Co. and in a backup market for last-minute electricity operated by= =20 Cal-ISO. But sky-high prices plunged Edison and PG&E deeply into debt and= =20 most suppliers stopped selling to them in January forcing the state=20 Department of Water Resources to step in as the primary electricity buyer f= or=20 the three big utilities' 27 million customers. ?????The Cal-ISO study first summarized at an energy conference last week = at=20 UC Berkeley but not otherwise publicized concluded that the companies=20 exercised so-called market power to pump up electricity prices. ?????Severin Borenstein director of the Energy Institute at Berkeley said= =20 Cal-ISO's study is consistent with his research examining pricing practices= =20 in 2000. ?????We found several billion dollars . . . in departures from competitive= =20 pricing he said. When the market was tight this summer they were able t= o=20 push up prices and they did. ?????The early warning signs of electricity price spikes the study found= =20 appeared in May after two years of relatively stable prices of $30 to $40 p= er=20 megawatt-hour under deregulation. Prices went up during the summer dipped = in=20 September and October with lower demand then took off in November and=20 December as weather turned cold and the price of natural gas which is used= =20 to generate much of the state's electricity reached record levels. ?????There were plant outages and demand and supply became close Sheffr= in=20 said. Whatever price they bid had to be taken and market power asserted= =20 itself. ?????Cal-ISO found that $3 billion of the alleged overcharges occurred=20 between May and November. ?????On Friday federal regulators ordered six wholesale power suppliers to= =20 refund $55 million to California if they cannot justify prices charged in= =20 February. The refund was limited to power sold that month in excess of $430= =20 per megawatt-hour during Stage 3 power alerts when supplies are so tight= =20 that rolling blackouts are threatened. (One megawatt-hour is enough=20 electricity to supply 750 typical homes for an hour.) ?????The previous week FERC ordered 13 suppliers to justify or refund $69= =20 million for power sold in January at prices above $273 per megawatt-hour. ?????Massey opposed the potential refunds as too low because they were=20 limited to hours in which a Stage 3 power emergency was in place and becaus= e=20 the benchmark price set for each month was too high--combining to exempt mo= re=20 than 70000 transactions from scrutiny. ?????We're still looking for our lost wallet under the lamppost which is= =20 Stage 3 alerts said Massey one of three commissioners on the five-member= =20 board (two seats are vacant). ?????Generators have been given the free and clear he said. ?????These tinkling little refunds they have come out with recently are=20 almost a joke said Cal-ISO board member Mike Florio senior attorney at t= he=20 Utility Reform Network. ?????Resisting Price Caps ?????Cal-ISO contends that the last 10 months have proved that generators c= an=20 no longer be allowed to receive electricity prices that are dictated by wha= t=20 the market will bear. ?????FERC granted market-based rate authority on each of these suppliers'= =20 own showing that they could not manipulate prices yet their actions have= =20 shown the contrary Sheffrin said. We feel FERC needs to look at the=20 premise of allowing these generators to continue selling at market-based=20 rates. ?????The commission is responsible for ensuring just and reasonable=20 electricity rates. Although it has called California's power market=20 dysfunctional and vulnerable to manipulation the agency has resisted setti= ng=20 firm price caps sought by California's congressional delegation. ?????Chairman Curt L. Hebert Jr. strongly opposes caps while Massey wants = to=20 use caps across the West as a temporary timeout. ?????Energy Secretary Spencer Abraham in a New York news conference=20 Wednesday reiterated his opposition to electricity price caps as a way to= =20 cope with California's energy crisis. ?????If we put price caps in place there will be more blackouts and=20 they'll be worse Abraham said. ?????Cal-ISO is filing its market study as part of its comments on FERC sta= ff=20 recommendations on ways to thwart market manipulation. FERC's proposal=20 includes strict coordination of power plant outages by Cal-ISO with reporti= ng=20 of suspicious closures to FERC and generator-by-generator bid caps tied to= =20 costs. ---=20 ?????Reiterman reported from San Francisco Rivera Brooks from Los Angeles.= =20 Times staff writer Thomas S. Mulligan in New York contributed to this story= . --- --- Power Strain Eases but Concerns Mount=20 Energy: Officials say summer prices will be high and a state report shows= =20 that contracts with generators are far short of goals.=20 By DAN MORAIN and JENIFER WARREN Times Staff Writers=20 ?????SACRAMENTO--California's fragile electricity system stabilized=20 Wednesday but a Davis administration report suggested troubles ahead becau= se=20 the state could be forced to buy most of its power for the coming summer on= =20 the costly and volatile spot market. ?????After two days of statewide blackouts power plants that had been shut= =20 down were cranked up. Unseasonable heat tapered off. The operators of the= =20 statewide power grid relaxed their state of emergency. ?????But plenty of ominous signs remained. Many small producers remained sh= ut=20 down skeptical about Gov. Gray Davis' plan for utilities to pay them. ?????State Controller Kathleen Connell issued a sharp warning about the hig= h=20 cost of the state's foray into the power business and announced that she wi= ll=20 block an administration request that she transfer $5.6 billion into an=20 account that could be tapped to pay for state purchases of electricity. ?????And a report from the administration summarizing contracts between Dav= is=20 and independent power generators showed that the state has signed contracts= =20 for only 2247 megawatts of electricity significantly less than the 6000 = to=20 7000 megawatts previously claimed. ?????While there are agreements in principle for the full amount the repor= t=20 notes that generators can back out of the contracts for a variety of reason= s=20 including the state's failure to sell bonds to finance power purchased by= =20 July 1. The Legislature has approved plans to sell $10 billion in bonds bu= t=20 none have yet been issued. ?????We are exposed enormously this summer Senate Energy Committee=20 chairwoman Debra Bowen (D-Marina del Rey) said after looking at the report.= =20 We owe the people the truth about how difficult this summer is going to be= .=20 We don't have a power fairy. ?????Perhaps most significant the report suggests that the contracts fall= =20 significantly short of Davis' stated goal of buying no more than 5% of the= =20 state's summer needs on the spot electricity market where prices can be ma= ny=20 times those of long-term contracts. ?????After reading the report Frank Wolak a Stanford University economist= =20 who studies the California electricity market said the numbers suggested= =20 that the state's long-term contracts will cover less than half of what the= =20 state will need this summer. ?????We're definitely short this summer next summer and the summer of=20 2003 he said. ?????California was forced to start buying electricity in December--at a co= st=20 of $50 million a day--because producers refused to sell to Southern=20 California Edison and Pacific Gas & Electric. The two utilities amassed=20 billions of dollars in debt when prices for wholesale power soared on the= =20 spot market. ?????Vikram Budhraja a consultant retained by Davis to negotiate deals wit= h=20 generators said the report represents a work in progress. He said the=20 state may yet sign new contracts. ?????However Wolak said the contract figures confirm what he and others ha= ve=20 been dreading: that summer is going to be rife with rolling blackouts unles= s=20 serious steps to cut demand are taken immediately. ?????Wolak and other experts say large industrial customers must be switche= d=20 to real-time meters and pricing to persuade them to use the bulk of their= =20 energy at times of low demand. ?????The head of the Energy Foundation a San Francisco-based nonprofit tha= t=20 promotes sustainable sources of power made the same proposal to Davis on= =20 Wednesday. ?????The government need not ask customers to swelter in the dark this=20 summer foundation President Hal Harvey argued in a letter. ?????He also proposed a crash campaign to boost sales of efficient applianc= es=20 and lightbulbs. He said the state needs to take over the utilities' contrac= ts=20 with alternative energy providers to ensure they stay in business and sign= =20 new contracts for 1500 megawatts of new wind power--the cheapest fastest= =20 and cleanest source of new supply. ?????Davis had proposed a formula Tuesday to force private utilities to pay= =20 the alternative producers some of which have not been paid since November.= =20 But some of them warned Wednesday that Davis' plan offers them little=20 incentive to turn on their generators. ?????Alternative energy producers supply more than a quarter of the=20 electricity consumed in California. ?????Many producers generate electricity from wind sun and geothermal=20 sources. But most of them generate power using natural gas--and the cost of= =20 natural gas has been soaring. Several natural gas users said Davis' plan= =20 which caps rates won't cover their fuel costs. ?????Davis assumes that the price of natural gas will fall. But small=20 generators say they don't have sufficient purchasing power or sophisticatio= n=20 to gamble on future prices. ?????The Public Utilities Commission is expected to approve Davis' proposal= =20 next week. It offers producers two choices: 7.9 cents a kilowatt-hour if th= ey=20 agree to supply power for five years or 6.9 cents a kilowatt-hour over 10= =20 years. ?????The price of natural gas is higher than that said Marty Quinn=20 executive vice president and chief operating officer of Ridgewood Power LLC= =20 which owns three natural gas-fired co-generation plants. If we operate=20 we'll lose money. ?????Ridgewood is not operating having been cut off by gas suppliers. The= =20 company sued PG&E last month seeking overdue payments and release from its= =20 contracts with the utility. ?????A hearing is scheduled in El Centro today in another lawsuit filed by = a=20 small energy producer an Imperial Valley geothermal producer that sued=20 Edison for refusing to let it break its contract and sell on the open marke= t.=20 CalEnergy says Edison owes it about $140 million for energy sold since=20 November. ?????A company spokesman Jay Lawrence said CalEnergy was going ahead with= =20 its suit despite Davis' proposal. We've had promises before he said. ?????In other developments: ?????* A federal judge in Sacramento on Wednesday ordered Reliant Energy of= =20 Houston a major producer to continue selling power to California during= =20 emergencies despite the company's argument that it may not be fully=20 reimbursed. The order will remain in effect for 60 days or until the U.S.= =20 Federal Energy Regulatory Commission decides a related case. ?????* Connell said the state budget surplus has shrunk to $3.2 billion=20 because the state has spent roughly $2.8 billion on electricity. She=20 criticized the administration for withholding basic information about state= =20 finances and said she will begin an audit on Monday of the Department of= =20 Water Resources which is responsible for purchasing power. ?????Davis' aides said Connell took her action because the Democratic=20 governor endorsed one of Connell's foes this week in the race for Los Angel= es=20 mayor former Assembly Speaker Antonio Villaraigosa. A Connell aide scoffed= =20 at the notion. ?????* Sen. Dianne Feinstein (D-Calif.) said she never has had a response= =20 from President Bush after writing him last month for an appointment to=20 discuss the California energy crisis. ?????In a wide-ranging lunch talk with reporters in Washington she deplore= d=20 the fact that huge huge profits are being made in the California crisis= =20 and said an appropriate federal role would be to guarantee a reliable=20 source of power until the state can get nine new generators online. ---=20 ?????Times staff writers Mitchell Landsberg in Los Angeles and Robert L.=20 Jackson in Washington contributed to this report. --- --- ------------------------ --- --- ------------------------ Net Complex A Dilemma For San Jose=20 SERVER FARM: Plant would tax grid=20 David Lazarus Chronicle Staff Writer Thursday March 22 2001=20 2001 San Francisco Chronicle=20 URL:=20 /22/M N236772.DTL=20 San Jose while trying to block construction of a new power plant is set t= o=20 approve a vast computer complex that could overwhelm California's already= =20 strained power grid.=20 City officials gave preliminary approval last week to what would be the=20 world's largest server farm. The sprawling facility to handle Internet=20 traffic would drain about 150 megawatts of power from the state electricity= =20 grid.=20 If granted final authorization on April 3 the $1.2 billion project would a= dd=20 the equivalent of about 150000 homes to California's power system which w= as=20 hit this week by rolling blackouts as demand for juice outstripped availabl= e=20 supply.=20 The server-farm issue highlights a vexing dilemma for the state.=20 On the one hand Gov. Gray Davis is calling for widespread conservation to= =20 help California overcome its current troubles. On the other no one wants t= o=20 curtail growth of the high-tech industry which is an engine for economic= =20 vitality.=20 San Jose will make a lot of money from this project said Craig Breon=20 executive director of the Santa Clara Valley Audubon Society. But to not= =20 help the state out of its energy situation there's a fair amount of=20 hypocrisy going on.=20 The server farm would be owned by U.S. DataPort a San Jose data-management= =20 firm. As planned it would occupy 10 buildings on more than 170 acres in th= e=20 city's Alviso area.=20 Total projected energy use would be 180 megawatts. About 30 megawatts would= =20 be generated by a small on-site facility and the rest would have to be=20 provided by Pacific Gas and Electric Co.=20 We're confident that the DataPort project will be approved because it's ve= ry=20 important to San Jose and to the local economy said San Jose Mayor Ron=20 Gonzales.=20 But PG&E already is saying that its power cupboard is bare. The utility do= es=20 not have sufficient existing electric infrastructure to meet U.S. DataPort= 's=20 needs it said in a recent letter to San Jose officials.=20 John Mogannam U.S. DataPort's senior vice president of operations counter= ed=20 that it could take as long as five years for the server farm to grow big=20 enough to require the full 150 megawatts from the state grid.=20 Hopefully by then the whole energy crisis will pass by and we won't have= a=20 problem he said.=20 Mogannam stressed the positive aspects of the project such as its ability = to=20 handle about 15 percent of global Internet traffic the 700 jobs it would= =20 create and the $70 million over 10 years it would generate for San Jose in= =20 property and utility taxes.=20 That's why the city likes it he said.=20 Indeed San Jose officials are so enamored with such developments that they= =20 have all but turned a deaf ear to warnings that the server farm will=20 exacerbate California's already dire power shortage.=20 Andrew Crabtree the city's senior planner said the planning commission ha= d=20 barely touched the question of energy supply when it approved the server fa= rm=20 last week.=20 It wasn't incumbent on the commission to solve the state's energy-supply= =20 problems he said.=20 Rather San Jose city planners focused on the environmental ramifications o= f=20 the proposed facility including air pollution from diesel generators and t= he=20 impact on nearby wildlife.=20 How it would affect dozens of burrowing owls in the area was a key topic of= =20 discussion.=20 We all recognized that there's a power shortage Crabtree said. But we= =20 couldn't do anything about that with this project.=20 Except to make things tougher of course.=20 Server farms run 24 hours a day seven days a week. They are an aspect of t= he=20 high-tech boom that was never foreseen by energy experts and which are now= a=20 major contributor to California's surging electricity demand.=20 A server farm essentially is a large building filled with computers. Each= =20 computer handles the Web site or Internet traffic for hundreds of corporate= =20 clients that do not have the technical resources to look after such things= =20 in- house.=20 Most server farms consume between 10 and 60 megawatts of power. At 180=20 megawatts the U.S. DataPort facility is billed as the most extensive data= =20 center on the planet.=20 There won't be another this size anywhere in the world said Mogannam th= e=20 company's senior vice president. This will be the biggest.=20 With such a vast scale however comes additional concerns. For example al= l=20 that hardware will generate huge amounts of heat requiring powerful air=20 conditioners running around the clock to keep things cool.=20 Patrick Dorinson a spokesman for the Independent System Operator which=20 oversees California's electricity network said server farms had a big=20 impact on the state's tight energy supply.=20 We have an economy that's increasingly based on delivery of information = he=20 observed. We certainly need to make sure we're building adequate generatio= n=20 and transmission to get it there.=20 As it stands no major power plants have been built in California for the= =20 past 12 years while dozens of server farms have sprung up throughout the= =20 state.=20 The Yankee Group a Boston consulting firm estimates that the amount of=20 space taken up by server farms nationwide rose to 9 million square feet fro= m=20 1999 to 2000.=20 By 2003 it expects that figure to increase to 25 million square feet or= =20 enough room for more than a hundred 10-story office buildings.=20 San Francisco may be the exception. Supervisor Sophie Maxwell proposed=20 interim zoning controls last week that would require server farms to receiv= e=20 special permission from City Hall to operate.=20 San Jose for its part has no such reservations. It does however draw th= e=20 line at big fat power plants in the backyard of the city's leading corpora= te=20 citizen.=20 Gonzales is spearheading opposition to a proposed 600-megawatt generating= =20 facility in Coyote Valley because of its proximity to a residential area at= =20 the site of a planned Cisco Systems office complex.=20 There's plenty of opportunities to generate power in the city he said.= =20 This project is just in the wrong site.=20 The matter is now in the hands of the California Energy Commission which i= s=20 expected to issue a ruling by May.=20 Cisco critics say twisted the mayor's arm to fight the plant because it d= id=20 not want a generating facility in its neighborhood. The area will be home t= o=20 thousands of well-heeled tech workers.=20 It's politics said Breon at the Audubon Society. City officials are=20 making political decisions rather than good planning decisions.=20 Ted Smith executive director of the Silicon Valley Toxics Coalition a=20 grassroots organization is calling for a moratorium on construction of all= =20 new server farms in the South Bay until sufficient power can be found to ke= ep=20 them running.=20 Until they figure out how to build these things without draining the=20 electricity grid even dryer it is they shouldn't build them he said.=20 The Internet industry is creating unintended consequences that will really= =20 screw up our future Smith added. They are so busy focusing on next=20 quarter's profits that they don't stop and think about the consequences. .= =20 .=20 SOME FAST FACTS ABOUT 'SERVER FARMS' .=20 -- What are they? Server farms are facilities dedicated exclusively to=20 housing powerful computers for Internet use.=20 -- Who uses them? Companies and individuals pay server farms to maintain=20 their Web sites handle Net traffic and store vast amounts of data --=20 functions that otherwise would require extensive hardware and technical=20 support.=20 -- Why do they use them? As Internet use explodes server farms play an=20 increasingly vital role in managing data and keeping information moving.=20 -- What's the problem? Server farms drain considerable amounts of electrici= ty=20 to keep running.=20 E-mail David Lazarus at dlazarus@sfchronicle.com.=20 2001 San Francisco Chronicle ? Page?A - 1=20 --- Contracts Won't Meet Summer Demands=20 DETAILS: 2004 before full impact felt=20 Lynda Gledhill Chronicle Sacramento Bureau Thursday March 22 2001=20 2001 San Francisco Chronicle=20 URL:=20 /22/M N230640.DTL=20 Sacramento -- Long-term power contracts negotiated by the state won't cover= =20 California's entire demand for electricity until 2004 according to newly= =20 released details about the agreements.=20 The information suggests that California might have to scrounge for=20 electricity on the high-priced spot market for a couple more years even as = it=20 continues to push conservation efforts and construction of more generating= =20 plants.=20 Details of the agreements released by Gov. Gray Davis' administration show= =20 that the contracts will provide for just over a third of the state's demand= =20 for power this year. Energy secured by the contracts will grow to meet the= =20 expected demand in three years.=20 Short-term purchases of power have at least temporarily depleted the state'= s=20 budget surplus and have raised the possibility of sharp rate increases=20 sometime in the future for electricity customers.=20 Davis administration officials are banking on the hope that conservation=20 efforts and increased generating capacity will cover the shortfall along wi= th=20 purchases of electricity on the spot market.=20 We're facing an extreme challenge still this summer said Severin=20 Borenstein head of the University of California at Berkeley Energy=20 Institute. Signing contracts doesn't create more electricity.=20 The information released did not include the names of companies that the=20 state has signed contracts with or the purchase prices.=20 The sketchy details did not satisfy frustrated lawmakers who said many=20 questions remain especially how much the state will end up paying under th= e=20 terms of the contracts.=20 The fundamental question is how much is it costing the state of California= =20 to keep the lights on said Assemblyman Tony Strickland R-Thousand Oaks.= =20 What we really need is total disclosure.=20 The state started buying power in January after generators began refusing = to=20 provide electricity to the state's investor-owned utilities. Pacific Gas an= d=20 Electric Co. and Southern California Edison say they have more than $13=20 billion in past debt.=20 The state has been spending $49 million a day on power purchases since Jan.= =20 17 according to documents obtained by The Chronicle last week.=20 Those documents said the average price of the contracts across 10 years is= =20 $69 per megawatt hour including summer peak. The five-year average price i= s=20 $79 per megawatt hour.=20 According to one chart provided by the governor's office yesterday the=20 long-term contracts will fall about 35 million megawatt hours short in 2002= .=20 Based on the average price per megawatt hour the state has been paying sinc= e=20 January that could end up costing between $6.6 billion and $13 billion.=20 The law creating the state purchasing authority allowed purchases up to $10= =20 billion and extends until 2003.=20 The governor's office said 21 contracts have been signed and another 23=20 agreements that have been reached but not yet signed.=20 Several generators have said that they will not sign contracts with the sta= te=20 until the back debt by the utilities has been taken care of.=20 We have some real potential problems said Senate President Pro Tem John= =20 Burton D-San Francisco.=20 Strickland and several media outlets including The Chronicle have filed= =20 public information requests to get more information about the prices of the= =20 contracts from the administration.=20 Releasing the information would jeopardize the negotiations for future=20 contracts said Steve Maviglio Davis' spokesman.=20 Lawmakers also frustrated by the lack of information given out by the Davi= s=20 administration were not given notice that the information was coming and= =20 many said it was lost in their mail pile.=20 The cover letter was on Los Angeles Department of Water and Power letterhea= d=20 not that of the administration. The letter was written by S. David Freeman= =20 head of the Los Angeles system who was on leave for the month of February t= o=20 help the state negotiate the contracts.=20 Assemblyman George Runner R-Lancaster said the ambiguity of the=20 information raises more questions than it answers.=20 It's like watching a parade through a peephole he said. He's showing us= =20 another float but I don't know what the parade looks like.=20 Blaming the state's purchases of electricity Controller Kathleen Connell= =20 said yesterday that the state's cash on hand had fallen from $8.5 billion i= n=20 January to $3.2 billion. Connell ordered an audit of the state's power=20 buying.=20 Connell said she would block a transfer sought by the Davis administration = of=20 $5.6 billion from the general fund to the state's emergency reserve account= =20 claiming it would lead to a ''serious cash flow crisis.=20 The transfer however is not related to the energy crisis. The sum=20 represents a routine rollover of unspent money from the previous fiscal yea= r.=20 State law requires that money to be sent to a special reserve account for= =20 emergencies.=20 Davis officials acknowledged that $3.7 billion in energy purchases have had= =20 an impact on state coffers but they say the state will be repaid once bond= s=20 are issued in the coming weeks. They also said the state typically has its= =20 lowest cash reserves at this time of year. That changes in mid-April when a= =20 flood of income tax revenue pours in.=20 The transfer has nothing to do with energy purchases said Sandy Harrison= =20 a spokesman for the Department of Finance.=20 It's not helpful to ratepayers taxpayers and people who want their lights= =20 to stay on to have the issue muddied with this sort of inaccurate innuendo= =20 Harrison said.=20 In other developments yesterday:=20 -- After two days of statewide rolling blackouts power grid managers avoid= ed=20 outages. Demand was lower because of cooler temperatures around the state a= nd=20 supply increased as several power plants completed repairs.=20 -- A federal judge in Sacramento ordered a major power generator to continu= e=20 supplying power to California. Reliant Energy Services Inc. had insisted th= at=20 it should not be forced to sell to debt-heavy utilities unless the state=20 guaranteed the bills.=20 Chronicle staff writer Greg Lucas contributed to this story. / E-mail Lynda= =20 Gledhill at lgledhill@sfchronicle.com.=20 2001 San Francisco Chronicle ? Page?A - 1=20 --- --- ----------------- California overcharged $5.5 bln for wholesale power=20 SACRAMENTO Calif. (AP) -- Electricity wholesalers overcharged California= =20 $5.5 billion over the past 10 months according to a report by managers of= =20 the state's power grid.=20 The five companies among other things frequently offered electricity at= =20 prices double what it cost them to produce concludes the California=20 Independent System Operator study which was published Thursday in the Los= =20 Angeles Times.=20 ``All overcharged but some excessively and some by moderate amounts'' sai= d=20 Anjali Sheffrin the ISO's director of market analysis.=20 The Times said the ISO planned to file the study with federal regulators=20 Thursday and are demanding that the money be paid back.=20 The companies denied the allegations adding they expect the Federal Energy= =20 Regulatory Commission will determine their prices were justified.=20 The commission has recently stepped up its scrutiny of power companies'=20 behavior during California's power crisis asking suppliers to justify $124= =20 million in sales during the first two months of the year or refund the mone= y.=20 Critics claim thousands of additional questionable sales are not being=20 challenged.=20 The ISO study alleges the wholesalers manipulated the market by bidding at= =20 excessive prices effectively withholding supplies or by not bidding at al= l=20 when they had generation capability available.=20 California has been spending about $45 million a day -- $4.2 billion since= =20 January -- to purchase power for Pacific Gas and Electric Co. and Southern= =20 California Edison. Both utilities the state's largest have been cut off b= y=20 electricity wholesalers because their credit is almost worthless.=20 State Controller Kathleen Connell said Wednesday that the state's=20 power-buying is gutting its budget surplus. Since the state started making= =20 emergency power buys the surplus has fallen from $8.5 billion to about $3.= 2=20 billion she said.=20 A federal judge issued a preliminary injunction Wednesday ordering a major= =20 electricity wholesaler Reliant Energy Services to continue selling to=20 California despite its fear that it will not be paid.=20 U.S. District Judge Frank C. Damrell Jr. said Californians were at risk of= =20 irreparable harm if Reliant stopped selling power to the ISO which buys it= =20 at the last minute on behalf of utilities to bolster supplies and try to fe= nd=20 off rolling blackouts.=20 Such blackouts hit the state twice this week. On Wednesday cooling=20 temperatures and the completion of repairs at several power plants allowed= =20 the state to avoid blackouts.=20 Standard & Poor's has put the state on a credit watch due to its power=20 purchases and chastised Gov. Gray Davis the Legislature and state regulato= rs=20 for not taking more aggressive steps to make sure the utilities can pay the= ir=20 bills.=20 Edison and PG&E say they are nearly $14 billion in debt due to soaring=20 wholesale power costs. The state's deregulation law blocks them from=20 recovering the costs from customers.=20 Connell ordered an audit of the state's power-buying saying Davis is=20 withholding key financial information from her office and the Legislature.= =20 She said she would refuse to transfer $5.6 billion into a ``rainy day fund'= '=20 she said was set up to impress Wall Street as the state prepares to issue $= 10=20 billion in revenue bonds to cover its power buys. Transferring the money=20 would leave the state general fund $2.4 billion in debt Connell said.=20 She called the scope of the proposed transfer unprecedented and said it=20 amounted to a ``shell game'' that disguises the power purchases' effect on= =20 the state budget.=20 Sandy Harrison spokesman for the state Department of Finance and Keely=20 Bosler of the Legislative Analyst's Office said such transfers are routin= e=20 and required by law. They put the state's budget surplus at $5.6 billion.= =20 ``The law says she has to do it. The law does not give her the power to=20 demand that kind of audit information'' Harrison said.=20 Harrison said the state's budget isn't in danger because it will be repaid= =20 with the revenue bonds.=20 Connell's criticism of Davis a fellow Democrat won support from Assembly= =20 Republicans and Secretary of State Bill Jones a Republican who may challen= ge=20 Davis next year.=20 Jones said he wants to announce his own plan to solve the state's energy=20 woes but can't unless Davis releases more financial details.=20 Davis spokesman Steve Maviglio dismissed the criticism.=20 ``Political grandstanding doesn't generate one more kilowatt of energy for= =20 California in this time of emergency'' he said.=20 Maviglio said the administration has released the financial information it= =20 can without jeopardizing negotiations for long-term power contracts with=20 wholesalers. --- --- ---------------------------- If the power goes off=20 Thursday March 22 2001=20 For most of us rolling power blackouts are a nuisance. For some people it= =20 could mean life or death.=20 In Laguna Hills cancer patient Ruben Marquez said the blackout interrupte= d=20 and prolonged his dialysis treatment. He was unharmed the Register report= ed=20 on Monday's blackouts which hit about 1.2 million Californians including= =20 100000 Orange County homes and businesses.=20 What can people do to prevent disaster?=20 They and their families should have a backup plan Rebecca Long=20 spokesperson for the Orange County Red Cross told us.=20 The Red Cross recommends in general that you plan for this as you would fo= r=20 any disaster making sure you have battery-operated radios and flashlights.= =20 We do not recommend candles for an emergency because of the fire hazard.= =20 She recommended a Web site: www.prepare.org People with special health needs such as electric-powered respirators and= =20 oxygen machines also should register with the power company. There's a whole classification for such persons with health needs Southe= rn=20 California Edison spokesperson Clara Potes-Fellow told us. The list is for us to alert them that the power could be discontinued. The= y=20 arrange to have power through other means batteries or generators. We=20 recommend that they have a battery backup of eight hours. Therefore if the= =20 rotating outages are one hour they will have plenty. Even though the power company has such people's names she said we don't= =20 inform them in advance because we have just minutes from when the Independe= nt=20 System Operator which directs where the electrons go orders Edison to=20 implement a power outage on the grid Edison owns. By the time it took to= =20 call people the outage would be over. What's the problem at the ISO? We notify as best we can Pat Dorinson IS= O=20 director of communications told us.=20 The object is to keep the lights on. Sometimes it's just a moment's notice= =20 before a blackout. It makes [giving more notice] pretty difficult. We're= =20 looking into ways to make the system better.=20 In the meantime citizens will have to keep taking precautions. We can't help noting that free market pricing instead of politically-drive= n=20 prices would much more likely make electricity available albeit at higher= =20 prices.=20 We would expect too there would be hardship allowances donations and=20 level-pay plans to accommodate various types of needs. --- Socialized electricity=20 Thursday March 22 2001=20 Government control of state power won't add one watt for consumers' use TOM MCCLINTOCK Sen. McClintock R-Thousand Oaks represents the 19th state Senate District= =20 in the state Legislature.=20 In a city where bad ideas never die Sacramento is once again host to a=20 variety of plans for the government takeover of California's power system.= =20 The private sector it is said has done such a terrible job of providing= =20 electricity that government must now step in to save the day. Thus the=20 Legislature is awash in proposals to spend billions of dollars of public=20 money to acquire existing power facilities. Fifteen billion dollars has=20 already been authorized for this purpose and an additional $10 billion is= =20 pending in the Senate.=20 Meanwhile Gov. Davis is losing about a $1.5 billion a month day-trading in= =20 the electricity market. The irony is that after the expenditure of as much = as=20 $25 billion for public power'' not a single inch will have been added to= =20 the transmission lines nor a single watt to the generating capacity of=20 California. The root of California's crisis is a catastrophic shortage of electricity. = In=20 a shortage prices rise or blackouts occur. To reduce prices and avoid=20 blackouts the only permanent solution is to increase the supply. Merely=20 changing the ownership of existing facilities leaves Californians with=20 exactly the same shortage only billions of dollars the poorer for it.=20 Government takeover advocates argue that at least a government power=20 authority will protect consumers against price gouging and poor management.= =20 Unfortunately government power authorities don't insulate against price=20 gouging. The biggest price gouger in this entire crisis has been the Los=20 Angeles Department of Water and Power which was generating electricity for= =20 $51 per megawatt hour and selling it back to California ratepayers for as= =20 much as $1400.=20 Nor does a government takeover assure better management. Just a few years= =20 ago the LADWP was buried in $7 billion in debt. The Sacramento Municipal= =20 Utilities District was a managerial laughing stock having squandered=20 hundreds of millions of dollars for a nuclear plant it barely used. Say what you will'' the government takeover advocates reply when push= =20 came to shove the municipal utility districts of California are in great= =20 shape while the private utilities are a basket case.'' But one needs to lo= ok=20 at the reason. Ever since the state reorganized the electricity market in= =20 1996 the municipal utility districts were allowed to trade in a free marke= t=20 while the private utilities were forced to buy power exclusively in a=20 Soviet-style power exchange where the highest bid during an hour set all=20 prices. The municipal utilities were able to retain their generators. Government=20 forced the private utilities to sell theirs. The municipal utilities were= =20 able to enter into long-term contracts. Government prevented the private=20 utilities from doing the same thing. The municipal utilities were able to= =20 negotiate the lowest prices available for power. Government forced the=20 private utilities to pay the outlandish prices on the government's power=20 exchange. The municipal utilities were allowed to adjust their rates to=20 reflect the actual cost of power to consumers. Government forced the privat= e=20 utilities to sell at astronomical losses. The final argument is simply an ideological one: that power is just too=20 important to be left in private hands. Really? Food is a great deal more=20 important and private hands have kept this nation well fed for centuries.= =20 Picturing the Department of Motor Vehicles running the local supermarket=20 should sober even the most euphoric of the government takeover advocates. California's Independent System Operator is predicting a 6000-megawatt=20 shortfall this summer. When there is no electricity on the transmission=20 lines it really won't matter who owns them. During the hottest hours of th= e=20 hottest days of the year when as many as 6 million homes are without=20 electricity it may begin to dawn on most people that socialism doesn't wor= k=20 any better in California than it did in the Soviet Union. --- --- ------- NEWS=20 Bush's Energy Policy Will Backfire Feinstein Warns / She wants federal pri= ce=20 controls now Carolyn Lochhead 03/22/2001=20 The San Francisco Chronicle=20 FINAL=20 Page A.3=20 (Copyright 2001)=20 Sen. Dianne Feinstein D-Calif. warned yesterday that when blackouts=20 intensify in California this summer the pressure will intensify on the Bus= h=20 administration to explain why it rejected price controls on wholesale=20 electricity.=20 If by this summer California is as anticipated facing these blackouts a= nd=20 the federal government won't help I don't think the American people are=20 going to be very pleased Feinstein told California reporters.=20 Asked if help means the cost-based price controls Feinstein is pushing she= =20 said Right now yes.=20 Feinstein said California Democrats will begin to escalate their criticism = of=20 the administration predicting that support will build among Western senato= rs=20 for her legislation to impose price caps on wholesale electricity in exchan= ge=20 for lifting the rate cap on California consumers.=20 If it passes she said the administration is really going to have to face= =20 whether they're going to help or not help.=20 Feinstein said House Democrats from the West Coast also told her they expec= t=20 that White House inaction on price caps would help them gain seats in 2002.= =20 But she refused to speculate on the political fallout from the energy crisi= s=20 against Democrats in California .=20 Feinstein characterized Energy Secretary Spencer Abraham's adamant argument= s=20 against price controls as recalcitrant saying his statement to a Senate= =20 committee last week essentially said California 's on its own.=20 She speculated that because California is dominantly Democratic even=20 somebody like me that works across party lines is beginning to wonder if th= is=20 isn't an unnecessarily barbed stick at California .=20 White House spokesman Ken Lisaius disputed the charge saying the Bush=20 administration is doing all it can but can't control that demand is=20 outstripping supply.=20 The federal government cannot prevent blackouts but can only help at the= =20 margins in situations like this Lisaius said. The only thing that can=20 prevent blackouts is reduced demand increased supply and good weather.=20 Abraham has twice in the last week argued strongly against price controls= =20 including the cost-based ones Feinstein advocates saying they could increa= se=20 blackouts by discouraging power sales into the Western electricity grid.=20 He also said many power providers including the federal Bonneville Power= =20 Administration in the home district of Sen. Gordon Smith the Oregon=20 Republican co-sponsoring Feinstein's bill would be exempt from federal pri= ce=20 caps. Feinstein disputed that but Smith's office agreed.=20 Abraham argued that price controls would not work in part because roughly= =20 half the Western electricity market would be exempt including federal powe= r=20 marketing authorities such as Bonneville rural electric cooperatives and= =20 municipal utilities such as the Los Angeles Department of Water and Power.= =20 On another front House Republicans omitted from their budget projected=20 revenues from opening part of the Arctic National Wildlife Refuge to oil an= d=20 gas exploration.=20 A Budget Committee spokeswoman said Chairman Jim Nussle R-Iowa determined= =20 that the $1 billion in revenues from the wildlife refuge the Bush=20 administration included in its budget were not needed and that there was n= o=20 reason to put in something that controversial that some of our members don= 't=20 even like when you don't have to.=20 But Rep. Gary Miller R-Diamond Bar (Los Angeles County) said House=20 Republicans are not backing off at all from opening the wildlife refuge t= o=20 drilling. Our goal is to get it passed in the House he said saying the= =20 Budget Committee omitted the revenue projections because the drilling has n= ot=20 yet been approved.=20 PHOTO Caption: Sen. Dianne Feinstein wants to cap wholesale electricity=20 costs and end caps on con- sumer rates.=20 --- ------ Reliant Still In Power Pact Talks With Calif. DWR=20 By Christina Cheddar 03/22/2001=20 Dow Jones News Service=20 (Copyright (c) 2001 Dow Jones & Company Inc.)=20 Of DOW JONES NEWSWIRES=20 =20 (This report was originally published late Wednesday.)=20 =20 NEW YORK -(Dow Jones)- Reliant Energy Inc. (REI) remains in discussions wit= h=20 the California Department of Water Resources to sign long-term power=20 contracts.=20 However issues regarding the creditworthiness of the agency remain said J= oe=20 Bob Perkins president of Reliant's Wholesale Division.=20 We want to be part of the solution Perkins said. At the same time Relia= nt=20 is trying to protect itself from incurring additional unpaid accounts=20 receivable he said.=20 The DWR has been buying power on behalf of California 's financially troubl= ed=20 utilities. However Reliant has yet to sign a formal agreement with the=20 agency because Reliant is concerned it won't be paid.=20 During a conference call Wednesday Perkins said he couldn't comment on a= =20 lawsuit between Reliant and the California Independent System Operator=20 because he didn't know how it was progressing.=20 Further court action on the case is expected Wednesday.=20 The lawsuit stems from Reliant's desire not to be required to sell power to= =20 California if the state won't guarantee payment. The Houston energy company= =20 is concerned that it won't be paid for power being bought by the ISO on=20 behalf of Edison International's (EIX) Southern California Edison unit and= =20 PG&E Corp.'s (PCG) Pacific Gas & Electric Co. unit.=20 To date Reliant is owed some $370 million from unpaid power sales to the= =20 utilities.=20 Much of Perkins' presentation centered on how the power crisis in Californi= a=20 emerged.=20 Using data from research firm Cambridge Energy Research Associates the=20 company discussed the imbalance between California 's power demand and its= =20 power supply.=20 Looking ahead to the summer it isn't a question of whether rolling blackou= ts=20 will occur but how many and how severe Perkins said.=20 Low hydroelectric availability loss of imported power warm weather deman= d=20 growth and plant outages could lead to a worst-case scenario in California = =20 he said adding that some estimates predict California could experience 11= 00=20 hours of power outages this summer.=20 The skyrocketing power prices in the region are a reflection of the power= =20 market's imbalance he said.=20 Reliant submitted only economically sound bids for power Perkins said. H= e=20 expects the company can document why it charged the prices it did as requir= ed=20 by regulators.=20 We have been very rigorous and very disciplined in what we have submitted= =20 Perkins said.=20 He added that retail customer price increases are one way of sending a sign= al=20 to consumers to lower consumption. He cited studies that show a 20% retail= =20 price increase could reduce consumption by 2000 megawatts. A megawatt is= =20 enough power to serve roughly 1000 homes.=20 -By Christina Cheddar Dow Jones Newswires 201-938-5166=20 --- ------ CPUC Must Address Rates In QF Repayment Order - SoCal Ed 03/22/2001=20 Dow Jones Energy Service=20 (Copyright (c) 2001 Dow Jones & Company Inc.)=20 (This article was originally published Wednesday)=20 =20 LOS ANGELES -(Dow Jones)- Any order from the California Public Utilities=20 Commission requiring utilities to pay small independent generators going= =20 forward must determine how that could be done within the existing rate=20 structure a spokesman for Edison International (EIX) utility Southern=20 California Edison said Wednesday.=20 The utility was responding to a PUC proposed decision that would require=20 utilities to pay small generators called qualifying facilities $79 a=20 megawatt hour within 15 days of electricity delivery. The decision will be= =20 voted March 27 by the CPUC.=20 We're still reviewing (the decision) and should have more to say in a day = or=20 two. To the extent that the commission orders us to pay going forward of=20 course we will. But it needs to address how we will pay the QFs a SoCal= =20 Edison spokesman said.=20 SoCal Edison and PG&E Corp. (PCG) unit Pacific Gas & Electric Co. are=20 struggling under nearly $13 billion in uncollected power costs due to an=20 inability to pass high wholesale power costs to customers under a rate=20 freeze.=20 Gov. Gray Davis Tuesday blasted the utilities for not having paid their QF= =20 bills in full since December. Pacific Gas & Electric Co. has made some=20 partial payments to QFs but SoCal Edison has paid nothing. Together they= =20 owe the QFs about $1 billion but the order doesn't address that debt.=20 An Edison executive said in reaction to the governor's sharp comments tha= t=20 the company simply doesn't have the money to pay creditors.=20 The root problem here is there just isn't enough money in the current rate= =20 base to pay our bills said Edison Senior Vice President of Public Affairs= =20 Bob Foster. We understand the financial distress (the QFs) face we are=20 facing financial distress ourselves.=20 The proposed PUC order would also require the state's investor-owned=20 utilities to offer the small generators five- and 10-year contracts for pow= er=20 for $79/MWh and $69/MWh respectively.=20 The QFs may be able to live with the PUC proposal but the five- and=20 10-year contract prices may be inadequate if natural gas prices at one of t= he=20 California borders are high said Jan Smutny-Jones president of the=20 Independent Energy Producers Association. Natural gas prices into Californi= a=20 are currently higher than anywhere in the country.=20 But some say the proposed decision may not be enough to prevent the QFs fro= m=20 filing involuntary bankruptcy proceedings against the utilities for the mon= ey=20 they are still owed.=20 There's still a lot of skepticism. To say our position has changed based o= n=20 the CPUC decision or the governor's announcement is not accurate. A lot sti= ll=20 has to happen said Jay Lawrence a spokesman for a renewable creditors=20 committee.=20 -By Jessica Berthold Dow Jones Newswires 323-658-3872=20 --- ------ Calif Small Pwr Producers To Shut Plants If Rates Capped By Jason Leopold 03/22/2001=20 Dow Jones Energy Service=20 (Copyright (c) 2001 Dow Jones & Company Inc.)=20 Of DOW JONES NEWSWIRES=20 =20 (This article was originally published earlier Thursday.)=20 =20 LOS ANGELES -(Dow Jones)- Many of California 's independent power producers= =20 late Wednesday threatened to take their small power plants offline this wee= k=20 if state lawmakers pass legislation that would cap the rates the generators= =20 charge for electricity they sell directly to the state's three investor-own= ed=20 utilities.=20 At issue is a bill that would repeal a section of the state's Public=20 Utilities Code which links the 688 so-called qualifying facilities'=20 electricity rates to the monthly border price of natural gas.=20 Lawmakers however are poised to pass the legislation.=20 State regulators are then expected to approve a measure that would=20 restructure the fluctuating rates the QFs charge PG&E Corp. (PCG) unit=20 Pacific Gas & Electric Edison International (EIX) unit Southern Californi= a=20 Edison and Sempra Energy (SRE) unit San Diego Gas & Electric from $170 a= =20 megawatt-hour to $69-$79/MWh regardless of the price of natural gas.=20 Whereas each of the 688 QF contracts differed largely because natural gas= =20 prices are higher in Southern California than Northern California the sta= te=20 wants the QFs to sign a general contract with the utilities.=20 The cogeneration facilities which produce about 5400 megawatts of=20 electricity in the state said the rates are too low and they won't sign ne= w=20 supply contracts with the utilities.=20 For $79/MWh natural gas would have to be $6 per million British thermal= =20 unit at the Southern California border said Tom Lu executive director of= =20 Carson-based Watson Cogeneration Company the state's largest QF generatin= g=20 340 MW. Our current gas price at the border is $12.50.=20 Other gas-fired QFs said the state could face another round of rolling=20 blackouts if lawmakers and state regulators pass the legislation which is= =20 expected to be heard on the Senate floor Thursday and allow it to be=20 implemented by Public Utilities Commission next week.=20 Lu whose company is half-owned by BP Amoco PLC (BP) and is owed $100 milli= on=20 by SoCal Ed said the proposals by the PUC and the Legislature will only= =20 make things worse.=20 David Fogarty spokesman for Western States Petroleum Association whose=20 members supply California with more than 2000 MW said the utilities need = to=20 pay the QFs more than $1 billion for electricity that was already produced.= =20 =20 State Loses 3000 MW QF Output Due Of Financial Reasons=20 =20 The QFs represent about one-third or 9700 MW of the state's total power= =20 supply. Roughly 5400 MW are produced by natural gas-fired facilities. The= =20 rest is generated by wind solar power and biomass.=20 About 3000 MW of gas-fired and renewable QF generation is offline in=20 California because the power plant owners haven't been paid hundreds of=20 millions of dollars from cash-strapped utilities SoCal Ed and PG&E for near= ly=20 four months.=20 Several small power plant owners owed money by SoCal Ed have threatened to= =20 drag the utility into involuntary bankruptcy if the utility continues to=20 default on payments and fails to agree to supply contracts at higher rates.= =20 The defaults have left many of the renewable and gas-fired QFs unable to=20 operate their power plants because they can't afford to pay for the natural= =20 gas to run their units. Others continue to produce electricity under their= =20 contracts with the state's utilities but aren't being paid even on a forwar= d=20 basis.=20 The California Independent System Operator keeper of the state's electrici= ty=20 grid said the loss of the QF generation was the primary reason rolling=20 blackouts swept through the state Monday and Tuesday.=20 Gov. Gray Davis recognizing the potential disaster if additional QFs took= =20 their units offline held marathon meetings with key lawmakers Monday and= =20 Tuesday to try and hammer out an agreement that would get the QFs paid on a= =20 forward basis and set rates of $79/MWh and $69/MWh for five and 10 year=20 contracts. He also said he would direct the PUC to order the utilities to p= ay=20 the QFs for power they sell going forward.=20 After next week the QF problem will be behind us Davis said Tuesday. We= =20 want to get the QFs paid...the QFs are dropping like flies...and when that= =20 happens the lights go out.=20 But this just makes the problem worse said Assemblyman Dean Florez=20 D-Shafter a member of the Assembly energy committee.=20 I don't know how we are going to keep the lights on Florez said in an=20 interview. Many of these congenerators are in my district. They said if th= e=20 legislation doesn't change they are going offline. This compounds the issue= =20 of rolling blackouts especially now when we need every megawatt.=20 Davis who didn't meet with people representing the QFs said he was handin= g=20 the QF issue to the PUC because lawmakers failed to pass legislation that= =20 would have set a five-year price for natural gas and allow the QFs to sign= =20 individual contracts with the utilities. In addition SOCal Ed opposed the= =20 legislation saying the rates should be below $50/MWh.=20 Some renewable power producers said they aren't vehemently opposed to the n= ew=20 rate structure because it guarantees them a higher rate than what was=20 originally proposed.=20 =20 QFs Want Third Party Supply Contracts=20 =20 John Wood who represents the SoCal Ed Gas Fired Creditors Committee one o= f=20 a handful of groups that have formed since January to explore options on=20 getting paid by the utilities said his group of gas-fired QF creditors wan= t=20 to be released from their supply contracts and sell to third parties.=20 Under our plan we would be permitted to sell electricity to third parties= =20 (including the state Department of Water Resources) until a resolution to t= he=20 crisis can be accomplished wood said.=20 Hal Dittmer president of Sacramento-based Wellhead Electric in Sacramento= =20 which is owed $8 million by PG&E has 85 MW of gas-fired generation units= =20 offline.=20 Under the state's plan Dittmer said he risks going out of business.=20 I can't buy natural gas for what I would be paid under this decision he= =20 said. The state needs to quit kidding themselves that they don't need to= =20 raise electricity rates. All of this is being driven by an artificial=20 construct that California can avoid raising rates.=20 =20 -By Jason Leopold Dow Jones Newswires 323-658-3874=20 jason.leopold@dowjones.com=20,other,informative,3 +California Update,Please detach the attachment combine it with the articles Gavin Dillingham sent me and attach to an e-mail to Robert Zoellick and Irwin Stelzer with this message from me: Attached is some background information on the reregulation crisis in California. -----------------,other,formal,3 +Joe Hirko farewell reception,-----------------,other,casual,0 +California Power Issue,See attached WSJ article particularly the last paragraph. The message is: there has not been enough deregulation the government is still very much in the way. California is a perfect example: the market has responded to demand increases with thousands of megawatts of new generation but state and local officials have not sited them and companies like Enron are offering price protection but utilities are not allowed to take advantage. -----------------,other,critical,3 +Re: Purported Ken Lay Promise to Haley Barbour,Ken hasn't mentioned it. I'll ask next time I talk to him. Linda Robertson 07/03/2001 01:58 PM To: Steven J Kean/NA/Enron@Enron Richard Shapiro/NA/Enron@Enron cc: Pat Shortridge/Corp/Enron@Enron John Shelk/NA/Enron@Enron Subject: Purported Ken Lay Promise to Haley Barbour Pat Shortridge heard from the Executive Director of the Republican Senate Campaign Committee that Haley Barbour the new finance chair for the Committee had called Ken to request that he serve as a Finance Co-Chairman. Pat was told that Ken agreed. Have you heard of this call and did Ken agree?Thanks,government & politics,formal,3 +RE: Boston,Bill Thanks. I am forwarding the message to my son. Vince ,personal & social,casual,2 +Energy Issues,Please see the following articles: Oakland Trib Wed 3/7: Breakthrough made in rescue of PG&E Bakersfield Californian Wed 3/7: El Paso Energy closes six valley power plants Contra Costa Times Wed 3/7: Still undecided: Who'll pay DWR for electricity SF Chron Wed 3/7: State Taxpayers In Dark on Details Of Energy Deal Sac Bee Wed 3/7: Lawmakers pitch fixes for region's energy woes Orange Co. Register Wed 3/7: Power plan called wrong LA Times - Wed 3/7: Bill to Cut Some Power Prices Stalls Sac Bee Wed 3/7: PG&E could face mutiny on outages: SMUD others may balk if utility orders summer blackouts SF Chron Wed 3/7: PUC to Decide Fate Of Utility Workers PG&E Edison want to trim costs by laying off thousands cutting service San Jose Mercury Wed 3/7: Power prices could soar during the summer SF Chron Wed 3/7: Power Plant Plans Cause Conflicts East county residents blast supervisors Contra Costa Times Wed 3/7: Supervisors set search for power plant sites Sac Bee Wed 3/7: Peter Schrag: California's $90 billion infrastructure gap Contra Costa Times Wed 3/7: PG&E power plan debated at hearing SF Chron Thurs. 3/8: State OKs 'Peaker' Power Plant at SFO / Temporary generator could be sending electricity to 50000 homes by August WSJ Thurs. 3/8: Crossed Wires: Major Kinks Emerge In Gov. Davis's Plan To Power California --- State's Outlays for Electricity May Be Hard to Recover Without Rate Increases --- Betting on Long-Term Deals ------------------------ Breakthrough made in rescue of PG&E State ready to pay $7 billion for lines By Steve Geissinger SACRAMENTO BUREAU SACRAMENTO -- Signaling a breakthrough in secret energy crisis talks the Davis administration disclosed Tuesday it may announce the framework of a pact to rescue the teetering Pacific Gas and Electric Co. next week. Things are going very well said Steve Maviglio a spokesman for Gov. Gray Davis. The state appears to be poised to pay at least $7 billion -- and possibly billions more -- for PG&E's high-voltage transmission lines as part of a deal to financially renovate the north-state utility according to sources familiar with the negotiations. But consumer advocates insisted that even the $7 billion price is too much to pay. And experts warned that a deal with PG&E will be more complex than with other utilities. PG&E representatives declined comment in keeping with their policy on the talks even though the Davis administration said an announcement could come as early as next week or the following week. The new timetable for an announcement was substantially sooner than in Davis' original forecast. Until late last week PG&E was still resisting the sale of its power grid despite the fact that Davis had announced the framework of an agreement with Southern California Edison. Davis expects to soon announce a similar deal with the San Diego Gas and Electric Co. However any such deal still would need federal approval. The investor-owned utilities trapped between high wholesale costs and lower regulated retail rates amassed nearly $13 billion in debts and were unable to buy electricity this winter. With the onset of rolling blackouts the state began brokering billions of dollars in emergency short- and long-term power purchases. Davis' strategy to ease the energy price and supply crisis includes bolstering both conservation and generation while fiscally refurbishing the nearly bankrupt utilities. As part of the rescue deal the utilities would have to drop legal actions seeking dramatically higher electricity bills environmentally shield wildlands they own sell power from their generators to Californians for the next decade and secure help with their debts from their parent companies. Together with the cash infusion from the sale of their power 26000-mile power grids the utilities would be allowed to sell bonds to raise funds and use customer money to pay them off. The state would upgrade the high-voltage lines and lease them back to the utilities for operation. In a reflection of the negotiations with the three utilities a Davis administration official said the deal with PG&E is proving to be more complex than with the other firms. Though PG&E finally agreed late last week to sell its transmission grid the utility apparently wants more than the $7 billion that Davis has offered according to sources. The figure is more than twice the book amount or the value placed on the system for purposes of accounting. And that's the markup that lured Edison into an agreement to sell its smaller portion of the transmission grid for $2.8 billion. But PG&E which fears an erosion of its economic base may be asking as much as $10 billion. Due to complexities in the state's 1996 deregulation of the industry PG&E is more likely to lose revenue than Edison as a result of selling its transmission lines according to experts. Big customers might be able to bypass the utility's remaining local distribution lines thereby eroding its customer base. Therefore the utility may view bankruptcy and sale of its transmission lines to the highest bidder as a potentially attractive alternative to selling its share of the grid to the state at too low a price. ---- El Paso Energy closes six valley power plants Filed: 03/07/2001 By CHIP POWER Californian staff writer e-mail: ppower@bakersfield.com El Paso Energy citing non-payment from Pacific Gas & Electric Co. said it has shut down six cogeneration plants this week. The smaller plants produced about 175 megawatts of electricity and are located primarily in the San Joaquin Valley said company spokesman Mel Scott. A megawatt can supply power to 1000 homes. At least 10 plants have closed in the past two weeks as a result of non-payment according to the state Independent System Operator which manages most of the state's electrical distribution. The El Paso Energy plants are operated with various partners and had not been compensated for December January and February deliveries said Scott. He said he did not know the total amount due but said the plants would be closed until PG&E's credit worthiness is improved. A cogeneration plant common in oil fields simultaneously produces heat energy and electrical or mechanical power from the same fuel in the same facility. Typically it produces electricity and steam which can be deployed to enhance oil recovery. Kern County is the state's leading oil-producing county. El Paso owns or has interests in more than 40000 miles of interstate and intrastate pipeline connecting the nation's principal natural gas supply regions to the five largest consuming regions in the United States namely the Gulf Coast California the Northeast the Midwest and the Southeast. El Paso closed up 99 cents on Tuesday or 1.4 percent at $71.49. The Houston-based company's stock price has ranged between $36.31 and $75.30 in the last 52 weeks. ---- Still undecided: Who'll pay DWR for electricity By Karen Gaudette ASSOCIATED PRESS SAN FRANCISCO -- The price tag is $3.2 billion and counting for electricity bought by the state Department of Water Resources for the customers of two nearly bankrupt utilities. Pacific Gas and Electric Co. Southern California Edison and the state disagree over how the DWR eventually will be reimbursed for its purchases on the expensive last-minute power market. So do the state power regulators who have the final call over who gets the money when. Under a recent law the DWR went into the electricity-buying business to help keep the two utilities from sinking further into their $13 billion debt. The state plans to retrieve the money by selling $10 billion in revenue bonds. The utilities continue to collect ratepayer dollars on that electricity which the bill's author Assemblyman Fred Keeley D-Boulder Creek says is meant to help them begin paying down their debt. In a recent letter however DWR officials requested that the state Public Utilities Commission order that a portion of that money be diverted to the state. But after the utilities subtract the costs of generating electricity payments to environmentally friendly power plants and other expenses there is no money left from ratepayer dollars to give to the DWR without sinking further into debt PG&E spokesman Ron Low said Tuesday. If it passed along money to the DWR our undercollection would grow by about $2.4 billion by the end of the year Low said. The commission unable to agree on the best course of action left the issue untouched at its last meeting but expects to revisit the issue when it meets this morning. Commissioner Richard Bilas is proposing an alternate plan that would have the DWR set its own revenue requirements that would be passed on to ratepayers. The PUC also is expected to respond to complaints from laid-off workers and customers that layoffs by utilities to cut costs have been hurting service. Commissioner Carl Wood warned at the last meeting that failure to provide safe and reliable service could mean fines for the utilities. Representatives from electrical workers unions the PUC and the utilities were to discuss the issue Tuesday afternoon. I don't think we believe that utilities can find a way out of their problems by laying off workers said Mindy Spatt a spokeswoman with the Utility Reform Network. We think consumers deserve safe and reliable service and we think they deserve it at a reasonable price. ---- State Taxpayers In Dark on Details Of Energy Deal David Lazarus Chronicle Staff Writer Wednesday March 7 2001 2001 San Francisco Chronicle Few people would purchase a car simply because the dealer said ''Trust me it's a great deal.'' Yet Gov. Gray Davis essentially is telling Californians just that about dozens of long-term power contracts. Because of confidentiality agreements with power companies the governor has revealed only scant details about the state's multibillion-dollar contracts for electricity over the next 10 years. Gov. Davis has our money and we can't see how he's spending it said Doug Heller a spokesman for the Foundation for Taxpayer and Consumer Rights in Santa Monica. We've been locked out of the room. Neither Davis nor power companies would divulge specific details about the price duration or scope of individual contracts. Each cited secrecy clauses that the governor's office said had been desired by both sides. What consumers do know is this: -- California has signed 40 contracts and tentative accords valued at about $40 billion to secure enough power to light 9 million homes over the next decade. -- The average purchase price of each deal is $69 per megawatt hour -- well above the $30 to $40 charged by power generators before California's energy market went haywire last summer. -- If as is widely expected wholesale power prices fall in years ahead the state nevertheless will be locked into paying above-market rates for electricity. But it is not known which generator agreed to part with the most power at the cheapest level or the full range of the prices in concocting the $69 average. Moreover it is unclear how shrewdly the state negotiated with taxpayer money in securing power on behalf of cash-strapped utilities. These agreements are the bedrock of our long-term energy policy Davis said Monday in announcing the deals. The governor's office defended the murky nature of the contracts yesterday. It's a business transaction in which private corporate information is included said Steve Maviglio a spokesman for Davis. That's the kind of information that never gets revealed. While additional elements of the contracts will be publicized in coming months he said the contracts themselves will remain a secret. You'll never see all the details Maviglio said. This did not sit well with many observers. It's a breach of public trust said Daniel Bacon a San Francisco attorney specializing in business law. A public servant spending public money shouldn't be able to keep the spending secret. But Gary Ackerman executive director of the Western Power Trading Forum an energy-industry association in Menlo Park called confidentiality agreements a necessary evil in transactions like this. He explained that no power company would agree to a long-term contract if rival firms could learn the terms of the accord. The company would be losing too much of its competitive edge in the marketplace Ackerman said. At the same time he noted that secrecy allowed the buyer -- in this case California taxpayers -- to secure more favorable terms with individual sellers. A high price with one generator would not necessarily be sought by all power providers. Still the fact that public funds are being used makes confidentiality in this case a different matter than say Cisco Systems' quietly negotiating to take over yet another tech rival. The public is in a very awkward position said Michael Shames executive director of the Utility Consumers' Action Network in San Diego. It has to rely on the good word and expertise of the governor and he has yet to demonstrate that he has expertise or good word in this field. Shames likened consumers to passengers in a plane being flown by a pilot without a license to fly. But what choice do we have? he asked. I don't see many other options available right now. There's the rub. No matter how bad a deal California may have cut to help meet its energy demands the alternative -- blackouts disruptions economic catastrophe -- is far far worse. On the other hand it already appears that the new contracts will not shield Californians from the threat of daily outages this summer when demand surges. Davis said only about 60 percent of the state's summertime electricity needs so far had been met. Part of the reason is that many power companies already have contracted for their output this year. Duke Energy said this was why it would not begin its nine-year contract with California until 2002 while Williams Cos. said it would only gradually increase the amount of available wattage in its 10-year contract. Both companies meanwhile will continue to profit this summer by selling into the volatile spot market where wholesale power went for as much as $1 500 per megawatt hour last year. You can't sell all your power into long-term contracts said Paula Hall- Collins a Williams spokeswoman. You save some for the spot market. Consumer groups worry that consumers will be hammered again this summer with sky-high power prices and then get nailed down the road by contracts for above-market rates. If we could look at the terms of the deals we'd see that California is being gouged for 10 years said Heller of the Foundation for Taxpayer and Consumer Rights. But the governor doesn't want us to see that. Ackerman of the Western Power Trading Forum said the state had gotten the best rates it could under current market conditions. California went for long-term contracts when everyone else moved in as well he said. Californians are paying a price for not acting sooner. ---- Lawmakers pitch fixes for region's energy woes By David Whitney Bee Washington Bureau (Published March 7 2001) WASHINGTON -- California members of Congress pleaded for everything from wholesale price caps to extending daylight-saving time an extra hour to help the region cope this summer with its persistent electricity shortage but none of the ideas seemed to catch fire at a House hearing Tuesday. People will die in California because of this crisis Rep. Brad Sherman a Los Angeles-area Republican warned the House Energy and Commerce Committee. Sherman testified that his idea for saving lives is to extend daylight-saving time by an extra hour so that there would be more daylight at the end of the day when power consumption surges. One of the peak demand periods for electricity occurs between 5 p.m. and 8 p.m. when the sun sets and people come home from work Sherman testified. If people come home and it is light out there is less of an inclination to turn a light on. Sherman said the state Legislature has called for congressional approval for states to be given authority to extend daylight-saving time and he cited analyses by the California Energy Commission and other agencies suggesting that it could cut power consumption by 1 percent to 2 percent. Sherman who was one of about a dozen California lawmakers presenting their views on the energy squeeze drew no questions from committee leaders about what his legislation might do to everything from airline schedules to television programming if West Coast states didn't agree on the same time standard. Most of the committee's questioning was on the more popular idea proposed by several California and Western lawmakers primarily Democrats to require the Federal Energy Regulatory Commission to impose caps on wholesale electricity prices that have gone wild because of a regional power shortage. Rep. Bob Filner D-San Diego charged that the price spiral has little to do with power shortages but a lot to do with a small cartel of generators bilking ratepayers. Rep. Jay Inslee D-Wash. said he brought up the idea of regional price caps with President Bush who was initially skeptical. But Inslee said that Bush warmed to the idea after being told that protections could be built into the caps so as not to discourage construction of new power plants. Upon hearing that Inslee said Bush invited him to meet with the president's Cabinet-level task force led by Vice President Dick Cheney on a national energy strategy. But Inslee said he can't get the group to meet with him. It's very disappointing Inslee said. Tuesday's hearing was part of a series the panel is holding on the California crisis so far without any emerging consensus on what if anything Congress should do. ---- Power plan called wrong Wall Street analysts say the governor's approach to the problem avoids the issue that caused the imbalance. March 7 2001 By DON THOMPSON The Associated Press SACRAMENTO California's scramble to insulate consumers from the soaring price of electricity may add to the state's power problems this summer Wall Street analysts said Tuesday. Gov. Gray Davis' emphasis on buying utilities' transmission lines and negotiating long-term power contracts to help ease their debts skirts the deep imbalance between wholesale and market rates that led to the state's power problems in the first place they said. In the long run it doesn't solve anything said Michael Worms an industry analyst for Gerard Klauer Mattison & Co. In the long run you need to send the right price signals to consumers which will create its own conservation signals. Unfortunately customers were shielded from that in California. Davis said Monday that the state's first contracts to buy electricity for two financially struggling utilities will provide only about two-thirds of the power needed on a typical summer day forcing Californians to cut power use at least 10 percent to avoid blackouts. Since early January the state has been buying one- third of the power Southern California Edison and Pacific Gas and Electric Co. customers need. The two utilities denied credit by suppliers say they have lost nearly $14 billion due to soaring wholesale electricity prices that the state's industry-deregulation law says they cannot pass on to consumers. The keepers of the state power grid had enough electricity Tuesday to avoid declaring an electricity alert but have faced an almost-daily scramble for weeks due to a tight supply and high wholesale prices. Several wholesale and retail rate proposals are circulating. Among them: Free-market advocates such as Worms want an immediate end to the deregulation-imposed retail rate freeze on Edison and PG&E that will expire next year. Davis wants a Western price cap of $100 per megawatt hour on power generators he says have been prof iteering from California's short energy supply. The Bush administration and Federal Energy Regulatory Commission are cool to that idea. In December FERC imposed a soft cap of $150 per megawatt hour on wholesale rates in the state and required suppliers to justify any higher prices they charge. Consumer groups such as The Utility Reform Network or TURN want regulated rates for residential and small-business customers but free-market rates for large industrial customers which sought deregulation in the first place. TURN also advocates a tiered rate structure with higher rates for consumers who use more than a reasonable amount of electricity each month. Assembly Republicans say electricity and natural-gas prices will fall naturally if the state increases supply mainly by making it easier to build plants and pipelines. Right now you're sort of sitting partially with regulation and part with the free market said Paul Fremont an analyst with Jefferies & Co. Both these systems work. It's sort of that in-between system that you have in Califor nia that doesn't appear to be working. The system discourages generators from building new power plants because they aren't guaranteed a profit and it doesn't do enough to discourage power use by consumers because the price they pay doesn't reflect the true cost of power Fremont said. I don't think people here have much faith in the market and why should they? countered TURN's Mindy Spatt. I think there are probably better ways of encouraging consumers to conserve than by gouging them. Davis insists the crisis can be resolved without raising rates for Edison and PG&E customers beyond the existing rate structure. In January state regulators imposed temporary rate hikes of 7 to 15 percent on Edison and PG&E customers. The Legislature and Davis extended the increases for up to a decade to help pay back the estimated $10 billion in power buying the state expects to do for Edison and PG&E over the next several years and finance its purchase of the power lines owned by the two companies and San Diego Gas & Electric. Rates were already scheduled to increase next year for Edison and PG&E customers. Under the 1996 deregulation law the pair's ratepayers saw a 10 percent rate reduction but only until early 2002. That rate cut will likely expire as planned Davis spokesman Steve Maviglio has said. Davis wants those rates to cover not only the traditional cost of generating transporting and distributing power but the added cost of paying off the two utilities' massive debt and buying their transmission lines said Assemblyman Fred Keeley D-Boulder Creek the Assembly's chief power negotiator. Yet Davis has indirectly addressed the rate imbalance by signing legislation that will let regulators raise consumer rates if necessary Keeley said. The governor and lawmakers are in effect spreading out rate increases over a decade by using long-term revenue bonds to buy power for the nearly bankrupt utilities said Severin Borenstein director of the University of California Energy Institute. At some point we have to deal with the reality that all of the power that we buy has to be paid for by somebody - it's either going to come from taxpayers or it's going to come from ratepayers Bor enstein said. Raising rates now would get us a lot of conservation. Davis also wants financial incentives for conservation and power-plant construction in time to make a difference this summer. Our mouths were agape at the rapid timetable Keeley said. Legislators are rushing to pass those incentives by month's end he said allowing three months for consumers and suppliers to act before the heat of summer. Among bills considered Tuesday the Senate Energy Committee approved legislation to accelerate the siting of power plants. It also was considering a proposal to restructure rates for generators that use renewable energy to provide about 30 percent of the state's electricity. ---- Bill to Cut Some Power Prices Stalls Energy: Democrats balk at varying payment levels for alternative generators. By DAN MORAIN JULIE TAMAKI Times Staff Writers SACRAMENTO--Legislation aimed at cutting prices for more than a fourth of the power consumed in California stalled Tuesday as Democrats questioned why a few alternative energy generators--some of them campaign donors--stood to receive higher payments than others. Lawmakers working to unravel California's energy mess have been negotiating for weeks in an effort to cut the price paid to more than 600 generators of alternative power by more than half to below 8 cents a kilowatt-hour. Those alternative generators' contracts with utilities have shot up in recent months because of a rise in the price of natural gas. The cash-strapped corporations have suspended or made partial payments to the generators over the last few months causing many to shut down or reduce their outputs. But even as the lawmakers reached agreement that pushed the average price to near the 8-cent level per kilowatt-hour some generators would have received higher prices under the bill by state Sen. Jim Battin (R-La Quinta). Some of the generators that stood to benefit had donated to Battin's campaigns. One--Windtec Inc.--gave Battin a $20000 campaign donation in 1999. Others contributed from $3000 and $5000 last year. Battin acknowledged that he has received campaign contributions from some wind power generators but said there is no connection between the donations and the bill's provisions. It is illegal it is unethical and it's not how I do business he said. Battin noted that 25% of the state's alternative energy producers are in his district. As Democrats on the Senate Energy Committee blocked the bill Battin warned that some alternative energy producers might react to the delay by trying to force Southern California Edison and Pacific Gas & Electric into bankruptcy. We will be the cause of bankruptcy Battin said. That prompted Energy Committee Chairwoman Debra Bowen (D-Marina del Rey) to retort: I'm really tired of being threatened with bankruptcy. Alternative energy producers including those that use wind solar power biomass and other means produce 27% of the energy used in California. They sell the electricity to the utilities which in turn transmit it to retail consumers. But with the utilities facing multibillion-dollar debts the alternative energy producers under contract with Edison have not been paid since November. Scores of alternative energy producers supported the measure. Edison International and the San Francisco-based consumer group the Utility Reform Network opposed it. Michael Florio of the Utility Reform group said the deal could result in higher consumer prices an Edison representative said the same thing. Battin and Assemblyman Fred Keeley (D-Boulder Creek) worked out an arrangement with many of the generators. Keeley took the lead in the early negotiations and then turned to Battin to introduce the legislation SB 47X. Rather convoluted language would have allowed higher payments to a select few generators that produce electricity from wind and biomass. Most of California's wind suppliers for instance would have received about 6 cents per kilowatt-hour. But a handful of them about half a dozen wind farms--mostly in the Palm Springs area represented by Battin--would have received 7.8 cents. Battin contends that other wind producers receive additional payments that boost them to the same level as Windtec and others that would get the higher payments. They get the same deal Battin said of the handful of generators that would benefit from the provisions he added to the bill. In California's overall energy market the amount of money that would have flowed to the favored generators is minor. But the added prices that would have been paid to the generators would have translated to at least $19 million in the next five years to be absorbed by Southern California Edison customers according to one analysis. Also Tuesday more details were disclosed about another leg of the state's effort to escape from the energy crunch--the deals with large power generators to supply electricity to California for as long as 10 years. Those arrangements were announced by Gov. Gray Davis Monday as the bedrock of California's energy policy. But some consumer advocates warned that the deals could lock the state into excessively high-priced contracts. S. David Freeman the general manager of the Los Angeles Department of Water and Power and Davis' negotiator said that the state guarded against that by varying the time spans of its deals. About 6000 megawatts are expected to be available this summer about one-third of the energy needed by the state Freeman said. The amount of power under contract swells until more than 9000 megawatts are contracted in 2004 half of the needed amount before dipping to 8000 megawatts in 2010. What we're doing here is what everybody said had to be done Freeman said. We deliberately bought 50% so we'd have a good mix between long-term contracts which may turn out to be somewhat higher or somewhat lower than the spot market and purchases on the spot market. ---- PG&E could face mutiny on outages: SMUD others may balk if utility orders summer blackouts By Carrie Peyton Bee Staff Writer (Published March 7 2001) Sacramento's electric utility wants out of a deal that imposes rolling blackouts locally on PG&E's command. So do a lot of other utilities. They've been writing letters lobbying lawmakers and launching informal talks with Pacific Gas and Electric Co. to get off the hook before summer. Who dodges the blackout bullet is going to play out as a political hot button around the state said George Fraser head of the Northern California Power Agency a coalition of municipal utilities. In Sacramento the next volley is expected soon with the Sacramento Municipal Utility District reportedly poised to notify PG&E that it will no longer black out homes and businesses on the larger utility's command. We are absolutely trying to fight off the requirement for rolling blackouts for the Sacramento area said Linda Davis one of seven elected members of the SMUD board of directors. Saying they don't want to be dragged down by somebody else's problems two Southern California utilities have written grid operators asking to be exempted from any blackouts caused by PG&E's or Southern California Edison's financial woes. But in PG&E's view California is in an energy crisis (and) ... we're all in this together said spokesman John Nelson. The maneuvering comes amid bleak forecasts for power supplies this summer. Although Gov. Gray Davis has said conservation new power plants and moderate weather could avert blackouts officials at the Independent System Operator which runs much of California's grid expect frequent rotating outages. One consulting firm Cambridge Energy Research Associates predicts 20 hours of rolling blackouts during July and August and about 200 hours of especially intense calls for voluntary cutbacks. Before blackouts hit the jockeying over just whose lights air conditioners and assembly lines will be shut down is growing. The outcome could affect millions of people statewide. The state Public Utilities Commission is probing rolling blackout programs run by the for-profit utilities it regulates including PG&E and Edison. A PUC analysis has suggested that PG&E's program which currently exempts about 40 percent of its customers should spread the burden more broadly. For example it said 1.9 million homes and businesses are spared just because they share a circuit with a customer deemed essential. But not-for-profit utilities such as SMUD which answer to their own elected boards or city councils have other worries. Many have already lined up their power supplies for summer. Some have raised rates or are considering raising rates. Some have taken extra conservation steps. They think those preparations ought to give them leverage to ease blackout clauses in their contracts with PG&E. SMUD general manager Jan Schori is going to use every avenue ... any avenue to put pressure on including lobbying the ISO the governor and others said utility director Davis. The Northern California Power Agency a joint-powers authority that owns and operates power plants for municipal utilities has begun informal negotiations with PG&E to change blackout rules according to Fraser its top executive. It is preparing to write PG&E asking that its members be exempted from outages altogether. Failing that it wants them to face fewer outages or to be compensated for cutting off power he said. At SMUD the utility board has met in closed session to discuss exactly what it is required to do during electric emergencies under terms of the interconnection contract that links SMUD's lines to PG&E's. The contracts are being inspected with a fine-tooth comb said SMUD director Howard Posner. Schori declined to comment on any specifics. Sources indicated that the main option being considered is notifying PG&E that because of changed circumstances SMUD believes it no longer is required to routinely comply with outage requests. Other options being explored include re-negotiating existing agreements with PG&E. Posner said that ever since two days of rolling blackouts in January constituents have been asking him 'Why are we participating when we're not the problem?' And I don't have a good answer to that. Several directors said SMUD has already spent a lot of money -- and is considering 16 percent rate increases -- to ensure that it has enough electricity under contract to meet its customers' summer demands. They believe PG&E should do the same. We're almost like a David against Goliath here said board vice president Genevieve Shiroma. The huge investor-owned utilities next door have severe problems that they need to get under control. In addition SMUD plans to argue that because it can cut usage through its Peak Corps program which remotely turns off air conditioners at volunteer households it has already done its part without rotating outages director Davis said. PG&E believes the interconnection agreements that govern smaller utilities' ties to its transmission lines have benefits and burdens to both sides said Nelson. It wouldn't be fair or good policy for just one provision to be altered without taking a look at how that affects the entire contract he said. Interconnection contracts generally have clauses that require utilities to help each other out to avert greater emergencies. Sometimes reducing demand -- called load shedding -- can be the only way to stabilize the electric grid in the seconds after a major power plant or transmission line fails. It's been around in the electrical fabric forever said Jim Pope head of Silicon Valley Power Santa Clara's city-run utility. In addition to legal requirements you have a moral obligation so you don't bring the system to collapse. Like other city-run utilities Silicon Valley Power has a contract with PG&E that requires it to shed load during an electric emergency. But its contract allows it to work with big users to reduce their demand so no one has to be completely shut off. Such agreements formed long before deregulation when PG&E ran the north state's grid now are complicated by the 1997 creation of the state Independent System Operator. The ISO today runs pieces of the grid owned by PG&E Edison and San Diego Gas & Electric Co. If it believes power use is about to surge past supply potentially triggering a grid collapse across the western United States the ISO notifies the three utilities that they have to shed a certain number of megawatts. The big utilities meet that requirement two ways. They cut circuits to some of their own customers and they tell smaller connected utilities to cut a proportionate share. In Northern California about 80 percent of the outages are borne by PG&E customers and the rest by customers of SMUD and other municipal utilities and irrigation districts. In one sense we are all in this together. If SMUD were in danger of going down we would hope others would help us out said SMUD's Posner. But that's if we're in danger from circumstances beyond our control not from mismanagement or lack of financial wherewithal. It is unclear what penalties if any a utility would face for violating an interconnection agreement. In the long run the issue would be fought either in the courts or before the Federal Energy Regulatory Commission grid officials said. As a practical matter in the seconds when the risk to the grid is greatest if one utility refused to shed load the ISO would probably solve to problem by calling on PG&E Edison or others who are willing to make deeper cutbacks they said. ---- PUC to Decide Fate Of Utility Workers PG&E Edison want to trim costs by laying off thousands cutting service Bernadette Tansey Chronicle Staff Writer Wednesday March 7 2001 2001 San Francisco Chronicle State regulators are set to decide today whether debt-ridden Pacific Gas and Electric Co. and Southern California Edison can conserve cash by laying off thousands of workers and letting service standards slip. Union officials who protested the layoffs before the California Public Utilities Commission warn that if the cuts go through neighborhoods hit by power outages could stay dark for hours and more customers could face busy signals when they call about their bills. An administrative law judge agreed advising the commission in February to order the utilities to restore 725 positions already cut and block the elimination of an additional 2125 jobs. Judge John Wong said PG&E and Edison have acknowledged the layoffs will not substantially improve their shaky financial condition which arose from skyrocketing wholesale electricity costs the utilities could not pass on to consumers under a rate cap. The savings would barely make a dent Wong said in his draft decision. The two companies together claim that their debt from power purchases amounts to more than $13 billion. PG&E says it has saved $18 million from the first wave of 325 layoffs. Wong's recommendation is already running into resistance on the PUC. Commissioner Richard Bilas said the five-member panel should not be micromanaging the utilities in a time of crisis. Bilas has proposed an alternate ruling that would allow the utilities to make the cuts but provide for PUC monitoring of service in case the commission wants to step in later. We're in a situation where the utilities are not collecting the revenues they need to operate and yet we may be guilty of not letting them cut expenses where they can cut expenses Bilas said. PG&E spokesman Jon Tremayne said savings from the layoffs are helping to keep electricity running and gas flowing. It keeps cash in our accounts so we can keep doing day-to-day business Tremayne said. In addition to the 325 positions dropped so far PG&E is proposing to cut an additional 675 during the next three to six months. The cuts affect temporary and contract workers who read meters handle new service hookups and replace equipment. PG&E has no plans to eliminate permanent positions. The company is struggling to keep up with a higher workload at its call center as customers deluge the lines with inquiries about their rising bills and the effects of deregulation. Calls to PG&E ballooned from 1.3 million in January 2000 to 2.3 million in January 2001. Bilas advocates granting PG&E's request to temporarily relax standards requiring the utility to respond swiftly to customer calls and to read customers' meters once a month. PG&E wants to read meters bimonthly and send bills based on the estimated use between readings. Discrepancies could be corrected later. Wong called those measures unacceptable. He said customers need to know immediately if their efforts to conserve power are working. Wong also said the utilities' own experts have said the workforce reductions will lengthen the time required to restore power after nonemergency equipment failure. Eric Wolfe communications director for the International Brotherhood of Electrical Workers Local 1245 said some customers have already been left without power overnight because PG&E is trying to avoid the use of overtime on nonemergency power outages. It hurts a lineman to walk away from the job leaving a customer without power Wolfe said. Tremayne said PG&E is trying to minimize overtime costs but denied the company has allowed customers to go without power out of financial concerns. He said crews were pulled out when darkness and falling trees made the work too dangerous. ---- Power prices could soar during the summer Posted at 10:35 p.m. PST Tuesday March 6 2001 BY STEVE JOHNSON Mercury News Unless Gov. Gray Davis arranges significantly more long-term electricity contracts or persuades people to turn off a lot more lights California's unpredictable spot market for power could wreak havoc this summer. Even with the 40 long-term deals announced by Davis on Monday experts interviewed Tuesday said up to 43 percent of the state's daily needs may have to come from this highly volatile market in which power is bought within a day of need. That could could prove hugely expensive because some spot market energy has cost five to six times what it would under the long-term contracts. It's widely expected that consumers ultimately would have to pay that tab which could amount to billions of dollars. And because that power won't be locked up in contracts there is no guarantee it will be available when it's needed which could lead to blackouts according to a recent report to the California Independent System Operator which oversees three-fourths of the state's power grid. ``The situation in California could reach catastrophic proportions'' the report concluded adding that unless things change dramatically ``it is a virtual certainty that peak demand will go unmet during many hot summer days.'' Steven Maviglio Davis' press secretary conceded Tuesday that the spot market could be troublesome. ``It's a major concern'' he said which is why the state is trying to line up more power contracts speed up power plant construction and promote conservation. During the normally hot month of August peak daily demand for power in the Independent System Operator's territory is expected to hit about 47700 megawatts -- enough for nearly 48 million homes. The state's three main utility firms generate about 8200 megawatts and have long-term contracts from wind solar and other energy sources for about 11700 megawatts more. That totals about 20000 megawatts. Add in the 7000 megawatts of long-term power that Davis has announced for this summer and the state is still nearly 21000 megawatts short. Costly proposition If all that power has to be obtained on the spot market the price could be high. On Friday last-minute purchases on the market averaged $411 per megawatt-hour compared to about $150 per megawatt-hour for all power obtained by the Independent System Operator and $69 per megawatt-hour on average under Davis' long-term contracts. It's possible that not all 21000 megawatts would have to be purchased on the market. Assuming Davis is successful in getting people to save 10 percent -- which could prove difficult -- conservation could reduce peak demand by nearly 5000 megawatts. California also might be able to trade for another 5000 megawatts with the federal government's Bonneville Power Administration and a hydroelectric operator in British Columbia said Arthur O'Donnell editor of California Energy Markets a trade publication. Under such deals those two outfits often send that much power to California when they don't need it and California returns the same amount or more when its demand is low. But O'Donnell said it wasn't clear whether 5000 megawatts would be available this summer because ``they still haven't gotten the snowpack they need in the Pacific Northwest'' which could limit that region's generating capacity. Still falling short Even if those hydropower imports are available and conservation works as Davis hopes it's likely California would still require the spot market for 11000 megawatts to meet the August demand. That's more than 20 percent of the state's overall power needs. ``All of the surrounding states are buying probably less than 5 percent at most of their energy on the spot market'' said Frank Wolak a Stanford economist who monitors electricity prices for the Independent System Operator. He worries about how much that power could cost and is disturbed that state officials haven't adequately addressed the issue. ``No one has any idea what they are going to do and that is part of the problem'' he said. Officials at Pacific Gas & Electric Co. are particularly concerned. They fear that their company -- which is nearing bankruptcy -- could get stuck for much of the spot market purchases by the Independent System Operator which has threatened to bill the utilities for the cost. Fearing the annual bill for that power could hit $2.4 billion this year PG&E wants the tab sent to the Department of Water Resources which also is buying power on the spot market for the state. But the Department of Water Resources has objected to that idea and the matter is expected to be heard today by the California Public Utilities Commission. ``We're looking for clarity on a number of issues'' regarding how the spot market will work ``and certainly that's one of them'' said Thomas Hannigan the water agency's director. ``I don't think anybody knows the answer of who's going to pay for it'' added PG&E spokesman John Nelson. But Nettie Hoge executive director of the Utility Reform Network in San Francisco said she suspects consumers ultimately will foot the bill. The unfortunate likelihood about spot market purchases is that ``ratepayers are responsible for all of it eventually'' Hoge said. ``It's a very big problem.'' ---- Power Plant Plans Cause Conflicts East county residents blast supervisors Jason B. Johnson Chronicle Staff Writer Wednesday March 7 2001 Industry dreams of building new power plants in east Contra Costa's hills are prompting an angry reaction among residents and elected officials who say they don't want more plants. The conflict was sparked by a vote by county supervisors yesterday to aggressively explore possible sites for new power plants throughout the county. The measure by Supervisors Mark DeSaulnier and Federal Glover which passed on a 4-to-0 vote directs the county administrator and Department of Community Development to compile a report on possible sites within 45 days. Supervisor Donna Gerber abstained after criticizing the plan for potentially repeating the same mistakes that plagued the state's energy deregulation effort by not considering how much energy the state region and county will need in future years and how much power is slated to come online. Gerber said alternative power sources such as solar should also be examined. A site drawing much attention is on top of a deposit of natural gas near the Concord Naval Weapons Station off Highway 4. The owners of 70 acres of land near the station recently formed a company Golden State Power Co. to pursue construction of at least one small peaker plant and a much larger facility capable of producing 600 megawatts. The site could hold up to three small 50-megawatt peaker plants and a larger 15-acre natural gas plant said Steve Thomas managing partner with Golden State. No land use applications have been filed. Thomas said 30 acres could be kept as open space to form a buffer around the project. Both (facilities) are state of the art said Thomas. We believe that the site is ideal. But east county residents at yesterday's meeting blasted the supervisorial measure and the power plant proposal complaining that more plants could put people's health at risk. The region already is home to six power plants. We're going to get a good dose of poor air quality and (negative) health conditions from this said Concord resident Evelyn Frietas. I think we need to stop and think about what we're doing to our quality of life. Dan Torres said the home he bought in 1995 at a new Bay Point development would be alarmingly close to the proposed Golden State site. It will be dragging emissions over our home said Torres. I didn't buy a home on that hill to be surrounded by power plants. There are six power plants in operation in east Contra Costa. Pittsburg already has two power plants and two more under construction. City Council members Frank Aiello and Yvonne Beals said the Antioch-Pittsburg area has done more than its share of energy production. Aiello said Pittsburg will soon produce enough energy to power three million homes in California. When is enough enough? asked Aiello. Pittsburg has shouldered responsibility for a land-fill and two more power plants. At some point you have to say enough. Beals said that while power plants have added millions to the city's general fund the negatives of additional plants could outweigh the benefits. I don't think that Pittsburg or east county should be the dumping ground for energy for California said Beals. ---- Supervisors set search for power plant sites The board also heard from the potential developers of a 650-megawatt plant between Bay Point and Concord By Thomas Peele TIMES STAFF WRITER MARTINEZ -- Contra Costa County supervisors took tentative steps Tuesday toward allowing the construction of at least one small power plant before summer ordering that its staff identify potential sites in unincorporated areas within seven weeks. The board voted 4-0 to search for locations. Third District Supervisor Donna Gerber abstained saying her colleagues lacked a comprehensive context'' to identify sites. I think the board knows just enough to be dangerous'' she said. Gerber said the county should examine the potential for additional power plants within its borders but not investigate individual sites yet. But Fourth District Supervisor Mark DeSaulnier said the action was necessary because of the energy crisis and because of Gov. Gray Davis' call for local governments to help speed the construction of so-called peaker plants before July and August. I wouldn't do this except under an emergency DeSaulnier said after the vote. There are unusual circumstances. We're not talking about putting this in a residential area. Fifth District Supervisor Federal Glover backed DeSaulnier but said he hoped for a location outside his heavily industrialized East County district. There's a lot of concern in East County as to the number of plants he said. DeSaulnier said though that the only logical place for a small plant remains the industrial belt'' stretching along the waterfront from West County to Antioch. He declined to provide specifics but said the only other potential site outside the industrial areas was the Concord Naval Weapons Station property. But he quickly added that he believes the U.S. Department of Defense would never go for it. Also DeSaulnier said he could not rule out the county building the plant itself and entering the electricity-selling market during peak demand times. Board Chairwoman Gayle Uilkema called that idea extremely premature and unlikely. That's a very powerful decision. I do not think we are ready'' she said. The California Energy Commission listed the Equilon refinery in Martinez as one of 32 potential peaker plant sites in the state last week. Peaker plants kick in during peak usage times. Davis called for their quick construction before the height of summer and its energy demand for air conditioning. Plants that generate as much as 50000 megawatts don't need Energy Commission approval. DeSaulnier said he believed a peaker plant could be built about a month after final approval. Supervisors also heard from the potential developers of a 650-megawatt plant between Bay Point and Concord. Walnut Creek commercial real estate developer Steve Thomas announced his intentions for the site north of Highway 4 last week. Construction could take two years. Eric Hasseltine a consultant representing Thomas and what he described as a brand new company for the site the Golden State Power Co. told supervisors that if they intended to speed peaker plant construction they should do what they can to expedite the larger plant. The Thomas site could house a peaker plant until the proposed larger one goes online. A large natural gas line passes under the site. DeSaulnier seemed cautious about the larger proposal which he had described last week as a good site. Uilkema too said she knew too little about it to comment. A resident who lives near the Thomas property asked the board to build it (the larger plant) closer to where you have industrial areas. You have to carefully consider the people who live nearby said Dan Torres 39. Evelyn Freitas of Concord said she lives downwind of the proposed site. Our air quality is going to be worse then it is now she said. Gerber played on the environmental issues saying the county already ranks second statewide to Los Angeles in volume of hazardous materials and amount of electrical generation. ---- Peter Schrag: California's $90 billion infrastructure gap (Published March 7 2001) By now California's surreal energy mess has grown from a crisis to a condition. It may not be quite as permanent as say death and taxes but it's still something that could get a whole lot worse before it gets better. Until there's more realistic pricing no gubernatorial pea-under-the-shell buyout scheme will solve it. Beyond the energy crisis however and in many ways similar to it California faces a whole range of other infrastructure problems -- in transportation in water resources and sewer systems in school and university buildings -- that seem once again to be all but forgotten. The Business Roundtable has estimated the need at roughly $90 billion though no number can possibly be exact. What's certain is that after a burst of high-level investment in public facilities during the 1950s and 1960s California's annual capital investment has sunk precipitously -- from an annual $150 per capita in the 1960s according to a set of recent studies for PPIC the Public Policy Institute of California to about $30 in the 1990s. But you probably don't need to tell anyone driving Bay Area or Los Angeles freeways or looking at the ubiquitous portable classrooms those dreary brown boxes that house a fourth of our public school students. Ever since passage of Proposition 13 in 1978 we have been flying the flag of deferred maintenance. As in the state's electricity crisis however there's no way California can effectively address those problems merely by building or bonding itself out of them. In highway construction in developing water resources in finding enough university space to accommodate the Tidal Wave II of students managing demand is likely to be as crucial to any solution as new construction. In the energy market -- and in electricity particularly -- it's been a familiar principle ever since David Roe of the Environmental Defense Fund first persuaded Pacific Gas and Electric that a dollar invested in conservation may be worth as much as the same investment in new generation. But in most other sectors of California's infrastructure state and local it's a lesson still to be learned. There have been scattered attempts to encourage conservation and reduce demand -- significant reduction in water use for example through the installation of low-flow faucets and low-flush toilets some reduction in traffic by using rush-hour diamond lanes or by adjusting highway or (as in New York) bridge tolls to levels of congestion. But as pointed out by David Dowall an urban economist at Berkeley state policy-makers have not really begun to consider how demand management strategies can be applied to infrastructure service areas or how the more efficient use of facilities and more realistic pricing -- highway tolls say or parking fees -- can reduce demand for scarce infrastructure resources. In any case says Dowall in one of the PPIC reports we should pick which major projects we will build not just according to per capita estimates of how much we need but according to how much consumers are willing to pay for them. To avoid hurting the poor congestion-related highway tolls and other tariffs can be rebated on the basis of income. University fees can be means-tested. In California they also could be adjusted to encourage summer school classes and other off-peak uses rather than (as in the past) making UC summer courses more expensive. Given the political and economic uncertainties there's no way to know how far such demand management can be taken. But there's not much doubt that as Dowall and others point out the state's infrastructure planning is a jumble of uncoordinated agency agendas and wish lists. The Legislature last year passed a bill AB 1473 by Assembly Speaker Robert Hertzberg that requires the governor beginning next year to submit an annual five-year infrastructure plan for state agencies and public schools along with recommendations on how to fund it. In addition Gov. Gray Davis' infrastructure commission is expected to recommend better coordination of infrastructure and land-use planning when it issues its report this spring. That would be a start. As California State Treasurer Phil Angelides has pointed out the state desperately needs to start joint planning -- regional planning -- for housing roads and other resources to reduce the need for long commutes to preserve open space and to bring jobs to where people live and housing to where the jobs are. That would itself reduce demand for more freeway lanes and equally important improve the quality of life. At present most planning for housing roads water systems and other facilities rarely recognizes the regional impact of local decisions. In the East Bay slow-growth forces push well-intended initiatives that would force more development into Tracy or Modesto and further tax the transportation systems to Silicon Valley. In city after city there are beggar-thy-neighbor efforts to grab yet another shopping mall that produces a little extra sales tax revenue for the city that gets it and that often compounds traffic and revenue problems in adjacent communities. In higher education we divide bond proceeds evenly among UC the California State University and the community colleges even though the community colleges serve eight times as many students as UC. We plan road projects according to county not regional priorities. It is all done according to antiquated political and fiscal formulas that often no longer make sense. We don't just need better capital planning we need a whole new planning system. ---- PG&E power plan debated at hearing A PUC meeting on the utility's capacity expansion project for the Tri-Valley follows weeks of protest from officials residents Power upgrade in valley debated By Megan Long TIMES STAFF WRITER SAN FRANCISCO -- Dublin officials and the developer of a Livermore subdivision faced questions Tuesday about their opposition to alternative routes of PG&E's controversial Tri-Valley power upgrade plan -- and answered by restating their long-standing objections. Tuesday's cross-examination came during the third and likely final week of the California Public Utility Commission's evidentiary hearings on the utility's $91 million Tri-Valley 2002 Capacity Increase Project. It has followed weeks of protests of PG&E's upgrade plans by officials and residents of Livermore Pleasanton Dublin and San Ramon. And before the questioning started Dublin Vice Mayor Janet Lockhart reiterated concerns about an alternative route deemed environmentally superior that would place a substation just 1000 feet north of Interstate 580 between Tassajara and Fallon roads. She said that would undermine the results of a 15-year process to plan the eastern development of the city. It's extremely important to the residents of our community to follow a plan we worked hard to produce she said. Dublin officials favor PG&E's proposed placement of the station three miles north of the freeway away from new high-tech company offices and housing developments. Besides the Dublin substation the project calls for construction of a substation in North Livermore expansion of the Pleasanton substation and installation of 23.5 miles of new lines. In response to questions from PUC Administrative Law Judge Michelle Cooke Dublin's public works director Lee Thompson confirmed that the Lin family the owner of the property where the alternative substation would go wasn't interested in selling the land to PG&E. Cooke also asked Thompson to define a discretionary permit which is how city officials said they might treat a permit for a substation. Lee said that type of permit is one the city has the right to approve or not depending on the project's impact. Eddie Peabody Dublin's community development director testified that the zoning for the Lin property accommodates uses such as commercial business research and development and light manufacturing. It would not he said be appropriate for a power substation. He said parcels within the East Dublin area that could host a station would include those zoned for public and semi-public uses including land recently bought by Oracle and Sun Microsystems for new campuses. While Dublin officials testified that one buyer of land in that area paid $86 per square foot others suggested land prices would be inflated to help make a PG&E land buy look prohibitively expensive. An executive of Centex Homes the developer of new houses near Isabel Avenue and Concannon Boulevard objected to an alternative route that would place high-voltage transmission lines overhead along Isabel and Stanley Boulevard. David Barclay president of Centex's Northern California division said that the 80-foot to 150-foot towers would have a severe visual impact on residents of the Prima tract. Ed O'Neill a lawyer for the Kottinger Ranch Homeowners Association pointed out that existing distribution lines on 50-foot poles on Isabel already mar the view for residents. The Foley family has been ranching on land south of Pleasanton city limits for years said their attorney Kennedy Richardson. The utility's project would place overhead lines and a transmission station on rolling hills that the family envisions as one day being public open space with limited development Richardson said. Lawyers for Pleasanton Livermore Kottinger Ranch and Centex are scheduled to cross-examine a PG&E engineer today about the project's routing. That testimony should be the most controversial of the hearings. Judge Cooke is expected to recommend an alignment by July to the PUC which will make the final decision. ---- NEWS State OKs 'Peaker' Power Plant at SFO / Temporary generator could be sending electricity to 50000 homes by August Marshall Wilson 03/08/2001 The San Francisco Chronicle FINAL Page A.20 (Copyright 2001) State energy officials yesterday approved plans to build a temporary electrical plant at San Francisco International Airport that should generate enough juice to power 50000 homes by August. Meeting in Sacramento the Energy Commission voted 4-0 to give the green light to the gas-fired plant. It will operate during peak summer and winter demand to help the state avoid Stage 3 power alerts and rolling blackouts. Texas-based El Paso Merchant Energy Co. won approval under a new state law mandating speedy four-month reviews of so-called peaker plants. It was the only one of seven applications statewide to win approval. The other proposals were withdrawn for various reasons. The 51-megawatt plant formally called the United Golden Gate Power Project is scheduled to be built at the northwest corner of the airport near the United Airlines maintenance center. Within the next few weeks El Paso plans to apply to build a 571- megawatt $400 million plant in the same area company spokesman Jesse Frederick said. It would undergo a separate review by state energy officials. The small peaker plant approved yesterday is to generate electricity beginning around Aug. 1 for up to three years. After the end of three years the plant would be closed or converted to a cleaner-burning system. Under state law a temporary peaker plant is permitted to spew more air pollution than a permanent plant. El Paso's temporary plant is to be built next to a co-generation plant operated by United Airlines. It would use existing connections for natural gas and water supplies and tap into existing power transmission lines. Electricity generated by the plant would be pumped into the state's electrical grid Energy Commission spokesman Gary Fay said. It would also serve as a backup for San Francisco Airport in case of a blackout. No one spoke against the proposed plant at yesterday's commission meeting. The proposal however has been criticized by area residents and environmentalists worried about air pollution. Scott Buschman a professional photographer and San Bruno resident said yesterday it was unjust that state officials 100 miles away in Sacramento approved a Texas company's proposal to put a power plant on land owned by San Francisco. The fact that they approved it without considering the public's concerns foremost air quality is very disturbing he said. Fay said the plant complies with clean-air standards. Answering the criticism about the location of yesterday's deliberation he said three hearings and several workshops were held in communities near the airport. Copyright 2000 Dow Jones & Company Inc. All Rights Reserved. ---- Crossed Wires: Major Kinks Emerge In Gov. Davis's Plan To Power California --- State's Outlays for Electricity May Be Hard to Recover Without Rate Increases --- Betting on Long-Term Deals By Wall Street Journal staff reporters Rebecca Smith Mitchel Benson and John R. Emshwiller 03/08/2001 The Wall Street Journal A1 (Copyright (c) 2001 Dow Jones & Company Inc.) SACRAMENTO Calif. -- Earlier this year Gov. Gray Davis made what may be the biggest bet in the history of the nation's biggest state: that he could tame an out-of-control electricity market and avoid devastating blackouts without busting the state's budget antagonizing its consumers or derailing his own political career. His wager is still on the table but the assumptions that underlie it are looking increasingly shaky these days. The governor has already spent around $2 billion of public money buying hugely expensive wholesale power taking over the role formerly played by the state's near-bankrupt electric utilities. And California will probably be obliged to spend billions more before its electricity market stabilizes and those utilities are restored to some semblance of financial health. Under the governor's plan California aims to recoup the money it is using to buy electricity by issuing $10 billion in bonds. That way it would still have a healthy budget surplus to finance new spending on roads schools and other public services. But there's a potentially big obstacle to this plan. The state Legislature worried about racking up billions in new debt has put limits on the size of any bond offering. In broad terms the Legislature's action would allow the state to borrow only four times as much as it can recover annually from utility customers. Right now that doesn't appear to be much. Under the current rate structure essentially set in place by California's flawed 1996 electricity-deregulation plan consumers pay far less for power than the cost of acquiring it on the wholesale market. Preliminary estimates submitted by utilities last month to the California Public Utilities Commission show the state's share of the proceeds from electricity sales this year could be as little as $241 million -- not enough to support even $1 billion in bond sales under the Legislature's formula. That would leave the state on the hook for much of the money it has already paid for power -- not to mention the billions more Gov. Davis will need to spend. That in turn raises the prospect that California's economy and its credit rating both could deteriorate significantly. But state finance officials say that based on their own projections they will be able to extract enough money to support a $10 billion bond issue. Walking a careful line between fiscal prudence and political survival Mr. Davis and others in his administration are scrambling to come up with ways to get around the legislative restrictions without raising rates for consumers. If I wanted to raise rates I could solve this problem in 20 minutes Mr. Davis says. The governor says he believes that the state can obtain enough affordable power through long-term power-supply contracts to avoid the need for a big rate increase. The billions of dollars the state hopes to borrow would be used to help pay for power until electricity prices drop as they are expected to do when new power plants come online over the next few years. The Davis administration fears that what may be its only other option -- a big increase in retail electric rates -- could prompt angry consumer groups to seek new electricity laws through a statewide ballot initiative during next year's election. That's when Mr. Davis is expected to run for a second term as governor. But trying to save California without rate increases is forcing Mr. Davis to make some colossal gambles with the state's money. State officials estimate that in the next several months California will need to spend as much as $6 billion on power purchases -- equivalent to the state's entire fiscal surplus. Mr. Davis is also looking to spend several billion more to buy the transmission assets of three investor-owned utilities in order to restore two of them to credit-worthiness. He also has announced plans to spend several hundred million dollars more on conservation programs designed to reduce demand while new power plants are being built in the state. In order to limit the state's financial exposure in the meantime the governor and his aides have in some cases ignored state law. They have threatened appointed officials who have stood in the way. And they have sharply restricted the flow of information to the public. None of those steps is expected to do much to reduce state spending on power in the coming months. In a few weeks power usage is expected to begin a sharp seasonal rise as Californians switch on their air conditioners with the coming of warmer weather. By various estimates demand during peak periods this summer could outstrip supply by 10% or several thousand megawatts. That could produce more rolling blackouts like the ones that hit Northern California earlier this year. It is also likely to put strong upward pressure on wholesale electricity prices. Steven Zimmerman managing director of Standard & Poor's Corp. says Mr. Davis and his aides don't have a lot of time to put a cap on the state's financial exposure to the crisis. The credit-rating agency has put the state on credit watch for a possible downgrade which would affect the value of all of California's outstanding public debt. Moody's Investor Service Inc. is also concerned. It said in a recent report that the power crisis could soon seriously threaten the health of the state's economy. Mr. Davis a Democrat and career politician was dealt a bad hand when he took office in 1999. The deregulation plan that sparked the state's electricity crisis was enacted under his predecessor Republican Pete Wilson. But Mr. Davis was slow to react to early signs of trouble this past summer and alarms sounded by members of the state Legislature. By the time Mr. Davis finally sprang into action earlier this year a troublesome power-supply squeeze had escalated into a crisis. In a Jan. 17 declaration of emergency the governor designated the state Department of Water Resources to take the utilities' place as the daily buyer of huge quantities of electricity. His hope: that by making the state the dominant player in California's power sector he would ease electricity producers' concerns about getting paid and give the state enough clout to negotiate lower long-term power prices. Earlier this week Mr. Davis announced final or tentative agreements with 20 power suppliers to furnish the state with a total of 8900 megawatts for periods of as long as 20 years. But the supply situation remains extremely uncertain for this summer when demand probably will top 45000 megawatts. If the state can secure enough power under contract and push down demand through aggressive conservation it might be able to squeak through the summer season. If not it will be forced to keep buying huge amounts of costly power in the cash market. Under deregulation retail electric rates were frozen for several years while wholesale-power costs were free to fluctuate. When the plan was conceived wholesale prices were low and expected to go lower. However a combination of unexpected growth in power demand and a lack of new generating capacity helped produce a supply squeeze. Average wholesale prices more than tripled last year from 1999. And in January those prices were up 10-fold from a year earlier. By then California's two biggest investor-owned utilities -- the Pacific Gas & Electric unit of PG&E Corp. and the Southern California Edison subsidiary of Edison International -- faced imminent financial collapse. They had racked up billions of dollars in wholesale power bills they couldn't afford to pay. As generators began shying away from selling to the two utilities the Clinton administration forced them to sell power into the California market an order left in place during the first weeks of the Bush administration. Still northern California was hit by rolling blackouts on several days in early January. Since then the DWR which does some electricity trading as an adjunct to its main mission of managing the state's giant system of aqueducts and reservoirs has had to learn the ins and outs of power markets on the run. It hasn't been easy. David Mills trading-floor manager for the federal Bonneville Power Administration says the water agency has at times offered to pay $50 to $100 per megawatt hour more than the available market price. They agree to prices that make you wonder says Mr. Mills whose organization markets electricity from federal dams in the Pacific Northwest. You'd at least think they'd check to see what the prevailing price is before throwing out their offer. Mr. Mills says that to cut California some slack he occasionally has instructed his traders to sell at prices lower than the DWR had offered to pay. Ray Hart the water agency deputy director responsible for the power purchasing says he isn't aware of any cases in which the DWR has overpaid. He says his team has been extremely successful by all measures. Ultimately the DWR's trading acumen is far less important than the overall arithmetic of power supply and demand in California. With the price of natural gas that feeds many of the region's generating plants at near record levels and some suppliers reluctant to sell into the troubled California market wholesale electric prices remain stubbornly high and in recent days have again been rising. The Legislature has advanced the DWR about $3 billion from the state's general fund for power purchases. Under emergency legislation passed by the Legislature and signed by Mr. Davis on Feb. 1 the general fund is to be reimbursed from a planned bond sale later this year. But under terms of the emergency law the water agency would have to wrest $2.5 billion a year in revenue from retail electricity rates in order to sell the $10 billion worth of bonds sought by Mr. Davis. Assembly Speaker Robert Hertzberg a Southern California Democrat says the formula was created to ensure that there would be a way to repay the bonds without draining the state's coffers. We didn't want to just open our wallets he says. According to the language of the Feb. 1 law the water agency gets what's left of revenue collected from ratepayers after the utilities pay certain of their own power-supply bills and other expenses. And in their filings with the PUC last month the utilities reckoned under their worst-case scenarios that there would be only $241 million available to the DWR this year. State officials are quietly pushing the PUC to rejigger the formula so that the water department gets more money -- even though that would clash with terms of the Feb. 1 law. Robert Miyashiro deputy director of the Department of Finance says the emergency law was drafted poorly and has led people to believe the DWR only gets the leftover money. He predicts there will be cleanup legislation. At the request of the Davis administration the PUC is considering a plan to use a different revenue-sharing formula than the one in the state law. The proposed new formula was written in close consultation with Mr. Davis's Finance Department says PUC President Loretta Lynch who supports the initiative and is hoping to rush it through. The effort has drawn some opposition. Commissioner Richard Bilas at a recent PUC meeting questioned the legality of the commission attempting to change a formula set by the Legislature. PG&E is even more emphatic since the DWR's extra money could come at the utility's expense. The formula threatens to undo the very financial protections for the utilities that [the new law] attempted to provide the utility said in a recent filing with the PUC. As politicians and regulators wrestle with that issue the Davis administration has taken a step to reduce the outflow of state cash that also seems to conflict with the Feb. 1 law. It was widely assumed that the law required the DWR to buy any electricity the state needed to keep its lights on. However on many occasions the DWR has refused to buy power on the grounds that it was too expensive citing a portion of the new law that urges the agency to hold down costs. The task of covering any remaining shortfall has passed to the California Independent System Operator which manages the state's energy grid and is charged with buying power when necessary to avert shortages. However the ISO doesn't have any power-purchasing money of its own and the major parties it would normally bill are PG&E and Edison whose inability to pay their power bills was the reason the state started buying electricity in the first place. Amid criticism of its stance from generators utilities and Wall Street the DWR says it has started covering more of the utilities' electricity costs. The water agency is now buying 95% to 99% of what California needs in a given day says the agency's Mr. Hart. But increased buying only adds to the uncertainty about the eventual tab. The state's legislative analyst Elizabeth Hill recently recommended that lawmakers hold off considering more than $2 billion in state spending on items ranging from college construction to beach cleanups because of continuing questions about the financial impact of the electricity crisis. Like others Ms. Hill complains that the governor's office and state agencies haven't been forthcoming with information. Indeed the DWR refuses to say precisely how much power it is purchasing and at what prices though it has on several occasions gone back to the Legislature for more money. State officials say that data on its purchasing activities would give suppliers an advantage in continuing electricity-supply contract talks. State Controller Kathleen Connell who is running for mayor of Los Angeles in an April election recently announced plans to post state power-spending information on her department's Web site. But within 24 hours Ms. Connell suspended that plan after discussions with senior Davis administration officials. I feel very strongly that this information should be publicly released says Ms. Connell. I just don't want to do anything that would weaken the state's effectiveness in negotiating. In an effort to more tightly control events the governor obtained legislative approval to abolish the 26-member ISO board which was made up of everyone from utility executives to representatives of consumer groups. He then appointed a new five-member board. To ensure a quick transition the California attorney general threatened the old board members with fines of as much as $5000 each if they didn't immediately relinquish their positions. All did. I was offended at the heavy-handed treatment says Karen Johanson a former ISO board member. One of the first acts of the ISO's new board was to close a meeting about the electricity crisis. The former ISO board routinely held such meetings in public. ISO attorneys say the meeting was largely designed as a private briefing for new board members and that the organization is committed to keeping its deliberations as open as possible. The Wall Street Journal and other news organizations have unsuccessfully challenged the closure in Sacramento state court. Copyright 2000 Dow Jones & Company Inc. All Rights Reserved.,other,informative,3 +Re: Eurelectric conference,Houston has experienced catastrophic flooding. My flight has been cancelled. It is conceivable that I could get out tomorrow but I am wondering if I should try. I could still make the speech if we don't get more rain but given the lack of other reasons for me to go I am considering cancelling. I don't think it makes much sense for me to go for a 15 minute speech. what do you think? phone 713.621.6550,personal & social,concerned,3 +A Supportive Note,Dear Mr. Lay: I'm writing this note to you as a show of support to you during your dire times. The reason that I share this with you is my respect for you as a CEO a business leader and a person. My wife is one of your employees who routinely shares stories about you that are nothing less than inspiring. I know that during difficult times sometimes words emerge that can help people through difficult times. I believe that you are sincere man and know that you must be broken hearted but I hope that this article can help you lead a dispirted workforce to see things more clearly. My wife Shelly Pierce has worked for Enron for the past two years and like many of your employees has lost a great deal of her life savings. Of course I accept most of the blame for this for reasons related to this article. I lost my investment discipline and held out the false hope that Enron could not falter. After reading the article to her while I was out of town I believe that her spirit was a bit rejuvenated and she was ready to face the challenges that lay before you. Mr. Lay I appreciate the opportunity that you have given my wife and our family and hope that this story inspires you to regain your successes. From the USA Today Tuesday November 27 2001 page 15A. In recession face brutal facts thrive By Jim Collins A man in his early 20s recently asked me So what's a recession like? Its an entirely alien concept to him he'd grown up during the greatest economic boom in modern memory. His question drove home the fact that we haven't faced a severe protracted economic setback for nearly 2 decades leaving us terribly unpracticed at dealing with tough times. With this recession - long in coming perhaps long to stay - now officially upon us it is imperative that corporate leaders relearn a key lesson about how great companies (and great people) deal with difficult times differently from how they deal with merely good ones. That lesson is the Stockdale Paradox a peculiar psychology shown by those who emerge from tough times not just intact but stronger. Adm. Jim Stockdale was the highest-ranking U.S. military officer in the Hanoi prison camp during the Vietnam War. Tortured many times during his 8-year imprisonment Stockdale lived without any prisoner's rights no set release date and no certainty as to whether he would ever again see his family. He shouldered the burden of command while fighting an internal war against his captors and their attempts to use the prisoners for propaganda. At one point he beat himself with a stool and cut himself with a razor deliberately disfiguring himself so that he could not be put on video as an example of a well-treated prisoner. He exchanged secret intelligence information with his wife through their letters knowing that discovery would mean more torture and perhaps death. After his release Stockdale became the first three-star officer in the history of the Navy to wear both aviator wings and the Congressional Medal of Honor. You can understand then my anticipation at the prospect of spending part of an afternoon with Stockdale who happened to be at the Hoover Institute across the street from my office when I taught at Stanford. In preparation I read In Love and War the book he and his wife wrote to chronicle their experiences those 8 years. As I read the book I found myself getting depressed. It just seemed so bleak - the uncertainty of his fate the brutality of his captors. And then it dawned on me: Here I am sitting in my warm comfortable office looking out over the Stanford campus on a beautiful Saturday afternoon. I'm getting depressed reading this and I know that he gets out reunites with his family and becomes a national hero. If it feels depressing for me how on earth did he deal with it when he was actually there and did not know the end of the story? I never lost faith in the end of the story Stockdale said when I asked him. I never doubted not only that I would get out but also that I would prevail in the end and turn the experience into the defining event of my life that in retrospect I would not trade. I didn't say anything for many minutes and we continued the slow walk toward the faculty club Stockdale limping and arc-swinging his leg still stiff from repeated torture. Finally I asked Who didn't make it out? Oh that's easy he said. The optimists. The optimists? I don't understand I said completely confused. The optimists. Oh they were the ones who said 'We're going to be out by Christmas.' And Christmas would come and Christmas would go. Then they'd say 'We're going to be out by Easter.' And Easter would come and Easter would go. And then Thanksgiving and then it would be Christmas again. And they died of a broken heart. After another long pause he turned to me and said This is a very important lesson. You must never confuse faith that you will prevail in the end - which you can never afford to lose - with the need for discipline to confront the most brutal facts of your current reality whatever they might be. My conversation with Stockdale had a profound influence on me but I never really considered it a business lesson until my research team began to wrestle with the question of why some companies rise from difficulty to become great while others emerge from those exact same difficulties weakened and dispirited. We found that companies that became great embraced a corporate version of the Stockdale Paradox. Fannie Mae for example found itself in the 1982 recession losing $1M every business day with $56B in loans under water. Many analysts thought Fannie Mae which was getting 9% on its mortgage portfolio but paying 15% on the debt it issued was doomed. But CEO David Maxwell and his team never wavered in their aim to not merely survive but also to prevail as a great company. Yes they confronted the brutal fact that the interest-rate problem was not going to magically disappear (certainly not by Christmas). But they used this grim fact as a catalyst for creating an entirely new business model based on asking three central questions of greatness: What can we potentially do better than any other company in the world? What can best drive our economic engine? What best ignites the passions of our people? Instead of reacting to the recession with mindless restructuring Fannie Mae rebuilt itself based on its answers to these questions. Eventually it generated investor returns nearly eight times those of the general stock market. When asked how he dealt with the nay Sayers and the analysts who wrote Fannie Mae off Maxwell said that it was never an issue inside the company. Of course we had to stop doing a lot of stupid things but we never entertained the possibility that we would fail. We were going to use the calamity as an opportunity to remake Fannie Maw into a great company. The sad truth is that most executive teams won't respond that way to these dark days of uncertainty. Instead of using this recession as an opportunity to fundamentally rethink their business and rebuild a culture of discipline the will simply restructure lay off a bunch of people and liquidate their cultural equity. Mediocre leaders will hold out false hopes for a quick fix only to watch those hopes be swept away by events. Their companies will begin to die of a broken heart. It need not be this way. Those who lead with the Stockdale Paradox - those who retain the unwavering faith that they will find a way to prevail in the end but who also retain the discipline to confront the most brutal facts of reality - will find this an ideal time to rebuild and reinforce greatness. Used correctly this recession can be a defining time in your firm's history that in retrospect you would not trade. Used wrongly this recession will weaken your foundations and make it that much harder to become great. The choice is yours. Jim Collins the author of Good to Great operates a management-research laboratory in Boulder Colo. Regards Steve Steve Alexander Vice President North American Artemis Consulting Artemis International Solutions Corporation Office: +1 281.338.9616 Mobile: +1 281.830.7430 www.artemisintl.com,other,concerned,3 +RE: ticket,vkaminski@aol.com ,customer support,casual,0 +,Do you still expect Guinn to call Ken? If so do we have updated talking points (and background) for Ken?,business document,formal,3 +Re: JDF Gala,Thanks for the invite (and the follow up voicemail). I'd love to see the General (and you of course) but I'm going to have to pass. Thanks anyway. Sent by: Cathy Phillips@ECT To: Steven J Kean/NA/Enron@Enron cc: Subject: JDF Gala I would like to invite you and a guest to join me for the annual Juvenile Diabetes Foundation Gala to be held on May 12 2001 at the Westin Galleria. The guest speaker this year will be General Norman Schwarzkof. Please contact Cathy Phillips (X-36898) and let her know if you are interested in attending. Thank you. Mike,other,polite,3 +Enron Opportunity,any interest? ,other,casual,3 +,I just spoke with Clark Smith head of Elpaso's merchant arm. I told him that we had been hearing that El Paso was blaming Enrononline for problems in Western gas markets. He asked for some more specifics about who exactly was spreading the rumor (I told him we had heard it from 3-4 sources). He acknowledged that EOL was not the problem said he couldn't believe that it had been identified as such and said he would bring it up on his call with his Washington team this afternoon. I think he will put it to rest (except for whatever damage has already been done). I did promise to get some more specifics on who has told us that El Paso pointed to us. Can anybody give some info on that?,other,confidential,3 +Entry tax to dergulating markets,-----------------,other,neutral,3 +"Dow Jones: Enron, Bushs Biggest Contributor",,government & politics,neutral,0 +Re: CONFIDENTIAL - Residential in CA,Were you on the call yesterday---I went ballistic. And where are you now!?! The calls underway. Karen Denne 04/13/2001 12:45 PM To: Jeff Dasovich/NA/Enron@Enron cc: Subject: Re: CONFIDENTIAL - Residential in CA I get so worked up over this issue... I really think now is the time to speak up and dissent. Skilling told us at a floor meeting that as an organization we've made poor decisions in the past and he believes it's because the people who disagreed with those decisions never spoke up. So help me out! From: Jeff Dasovich on 04/13/2001 12:34 PM Sent by: Jeff Dasovich To: Karen Denne/Corp/Enron@ENRON cc: Subject: Re: CONFIDENTIAL - Residential in CA Amen.,other,disrespectful,5 +"Re: From Michael L. Kirby, Esq.",Bonnie: Please forward to Michael Kirby. I think the draft looks good. Could you also prepare a draft of the letter we discussed yesterday to convey the proposal to the committee? Bonnie Hugyez on 07/17/2001 12:34:20 AM To: cc: Subject: From Michael L. Kirby Esq. Attached is a draft Nonwaiver Agreement per our telephone conferences of yesterday after the meetings with Senator Dunn. I am available in my office for a conference call to discuss this. The information contained in this e-mail message and any accompanying documents is subject to the attorney-client privilege and/or the attorney work product rule and is confidential business information intended only for the use of the individual or entity named above. If the reader of this message is not the intended recipient or representative of the recipient you are hereby notified that any dissemination of this communication is strictly prohibited. If you have received this communication in error please notify Kathryn A. Pugh at kpugh@pkns.com and immediately delete this message from your system. - 289271_1.WPD,legal affairs,formal,3 +HIGH PRIORITY - PRs PRC Meeting,Please get available dates. I need to be there for this. -----------------,other,urgent,5 +RE: Birhtday,Kevin Thanks. I am becoming an old man. Vince ,personal & social,casual,0 +Enrons Matching Gift Program,Tim -- Cindy manages this program. Mary -- please give some thought to how we might solicit employee views on this. Cindy -- I believe we already allow matching of donations to quasi-religious organizations: religious schools for example and perhaps relief organizations like Catholic Relief Services? I think that if we want to consider extending it we should probably discuss it in a smaller group than the e-speak forum -- the Enron Foundation Board perhaps? This could become controversial though (recall the Planned Parenthood debate and the periodic attempts of shareholders to add restrictions through the proxy mechanism). -----------------,other,formal,3 +Nepal,There may be some press today about Enron's involvement in the Nepal hydro project. The government of Nepal is hopeful that we will pursue it but we are not going to. Kelly's response on press inquiries will be that we are not pursuing the project. Kelly will also be getting in touch with David Howe. I just wanted to keep you guys posted in case you are getting questions.,other,formal,3 +"Re: Humberto (Beto) Kuhn, resume",Humberto - I forwarded your resume to Barry Hunsaker who is general counsel at EOG Resources. As you may know EOG used to be Enron Oil and Gas a majority-owned Enron subsidiary. A couple of years ago Enron sold its interest in EOG and it became a stand alone company. EOG Resources has been doing very well. I don't know if they are looking for lawyers now but I think I sent your resume to the right place. Humberto Kuhn on 05/21/2001 11:17:21 AM To: cc: Subject: Humberto (Beto) Kuhn resume Dear Steve:? With sincere and advance thanks and pursuant to your recent conversation with my brother George I attach a copy of?the short version?of my resume.? I have a longer detailed version as well as numerous references that I will be pleased to furnish you.? In addition I am at your disposal at any time that?you or any others at ENRON should wish to meet with me.? Again?my thanks for your assistance and guidance. ? Kind regards ? ? Beto Kuhn Cell:? 713/ 906-8463 Res:? 713/ 467-3974 - RESUME HGKShort Form 05-01.doc,employment,formal,3 +address,JOSEPH KOOTHRAPPALLY (713) 853-6819 jkoothr@enron.com,employment,formal,0 +California Power Markets,,energy trading,neutral,0 +Portal,Attached are some late night thoughts on the portal. Most of this is focussed on the portal for opinion leaders but some of it could be applicable to the comemrcial portal as well. Could you forward this to Palmer ... for some reason my address book doesn't pull him up when I'm off the system.,other,casual,3 +Re: Mondays follow-up meeting on cost control,I am calling Rob Walls to see if he can attend. Carol Ann Brown@ENRON COMMUNICATIONS 03/30/2001 02:49 PM To: Steven J Kean/NA/Enron@ENRON cc: Subject: Monday's follow-up meeting on cost control Steve Should Jim Derrick be invited to Monday's cost control meeting? I asked Kevin and he told me to ask you. Suzanne Brown came by today and said that his name was brought up at last week's meeting. Sincerely Carol Brown Office of the Chairman Enron Broadband Services Inc. 713.853.7974 713.853.9469 - fax carol_brown@enron.net,other,formal,3 +TW Gas Sales: PRIVILEGED AND CONFIDENTIAL ATTORNEY CLIENT PRIVILEGE,In anticipation of potential litigation involving TW's operational activities please prepare an analysis for me of the reasons for TW's sale of excess natural gas at the California border. I am aware of several of these sales and have been informed that excess pressure at the border is the basic reason for them. I'd like a more specific explanation that includes the following information: 1. What are the specific pressures and volume considerations that could make it operationally necessary to sell gas at the California border? 2. What is the process that is followed to make such a determination? 3. Which individuals or groups are involved in determining whether an operational sale is necessary? 4. In what way have system operations changed since last year and how do those changes contribute to the increased frequency of such sales compared to previous years? 5. What alternatives to operational sales are considered before the decision to make a sale is reached? Thanks for your attention to this request. Please give me a call to discuss and please designate your response as Privileged and Confidential Attorney Client Privileged.,energy trading,formal,5 +BIPAC Board meeting,I wuold like to attend if my calendar is open -----------------,other,casual,3 +Re: Beta Gamma Sigma,Thanks for the invite. I would suggest Jean Ryall - who heads our Texas government/regulatory affairs team. She is certainly more familiar with the details (of which there will be many more after this legislative session and the conclusion of the pilot program). She is also a very good speaker (and can probably relate a few war stories to spice things up). From: Susan Skarness/ENRON@enronXgate on 05/04/2001 11:20 AM To: Steven J Kean/NA/Enron@Enron cc: Maureen McVicker/NA/Enron@Enron Subject: Beta Gamma Sigma Steve I am a member of Beta Gamma Sigma (BGS) the honor society for business programs accredited by AASCB - The International Association for Management Education. If you are not familiar with BGS a member must be in the upper 5% of their class as a junior and the upper 10% as a senior and in graduate school to be nominated for induction into the society. In an effort to provide additional programs and benefits to alumni members alumni chapters are being developed around the country. There are currently nine alumni chapters around the U.S. with a new one being formed in the Houston area. I am serving on a steering committee for the development of this Houston Area Alumni Chapter. Our primary reasons for starting a Houston Area Chapter include networking professional affiliations outreach to students resources learning opportunities and providing scholarships. Our initial outreach to Beta Gamma Sigma members will be through a reception/dinner to be held in October 2001. We are currently looking at either October 16 or 18. All 6200 Houston area members will be invited to participate however we expect attendance to be closer to 75-100 people. The ages experiences and business affiliation of the members will be very diverse but all will have the common thread of business excellence. The details of this event are still being finalized however at our last meeting the discussion encompassed possible speakers and topics. Overwhelmingly the team decided on Electricity Deregulation in Texas and since I work at Enron I was asked to assist in locating a dynamic speaker. Cliff Baxter suggested that you would be an ideal speaker on this topic. Are you available and willing to address this group in October? If I can provide any additional information please let me know. Thank you for your consideration Steve.,other,polite,3 +Pipeline safety legislation - update,print ,legal affairs,casual,3 +California Power Crisis Update (No. 10),We have been pulling together these weekly(sometimes more often) summaries for internal purposes. Would you find it helpful to be on the distribution list? Hope you are doing well. Look forward to touching base soon. ,other,friendly,0 +,I set up a meeting for next Friday in Washington with Ed G. and Ralph Reed starting at 7:30 am.,project management,formal,3 +Re: Congratulations,Thanks. Vince J Kaminski@ECT 01/11/2000 08:01 AM To: Richard Shapiro/HOU/EES@EES cc: Subject: Congratulations Rick I have just looked at the memo regarding promotions. Congratulations - well deserved. Vince,other,friendly,1 +Sen. Hagels ESI speech,The senator's speech is focused on the oil sector almost exclusively but it does an exceptional job of framing the importance of the issue. ,other,formal,2 +Privileged and Confidential Attorney Client Work Product,Rick Committee staff attendees included David L. Cavicke (Committee Majority Counsel) Brian McCullough (Committee Majority Professional Staff Member) Christopher Knauer (Committee Minority Investigator) and Michael Geffroy (Committee Minority Counsel). Jim ,legal affairs,formal,3 +Confidential Information and Securities Trading,To:NEMEC GERALD Email:gerald.nemec@enron.com - 7138533512 ? Enron Wholesale Services - Office of the Chairman ? From:??Mark Frevert Chairman & CEO ??????Greg Whalley President & COO ??????Mark Haedicke Managing Director & General Counsel ? Subject:??Confidential Information and Securities Trading ? Enron Wholesale Services ('EWS') maintains official Policies and Procedures Regarding Confidential Information and Securities Trading ('Policies and Procedures') which have been revised as of November 15 2000 to reflect the new EWS structure. These policies and procedures are intended to allow us simultaneously to pursue our diverse businesses and to protect confidential information our reputation for integrity and EWS and its employees from legal liability. ? You are required to become familiar with and to comply with the Policies and Procedures. The newly revised Policies and Procedures are available for your review on LegalOnline the new intranet website maintained by the Enron Wholesale Services Legal Department. Please click on the attached link to access LegalOnline: ? ? You must certify your compliance with the Policies and Procedures within two weeks of your receipt of this message. The LegalOnline site will allow you to quickly and conveniently certify your compliance on-line with your SAP Personal ID number. If you have any questions concerning the Policies or Procedures please call Lance Schuler at extension 3-5419 Mark Haedicke at extension 3-6544 Alan Aronowitz at extension 3-3214 Bob Bruce at extension 5-7780 or Donna Lowry at extension 3-1939.,other,formal,5 +SBX 6 / SBX 33,,other,neutral,0 +RE: CONFIDENTIAL Information Request for Henry Bath US,I am not aware of any. ,other,formal,0 +RE:,Aruna I shall be in London this week. Please call me on Monday next week. Best time is between 7:30 and 8:30 my time. Vince ,personal & social,casual,0 +"Department meeting conference call. 800-283-1805, in Ricks name.",Page Montovano Diane -- pay for part of an admin Ken Rice Steve Shackman -- MayaMora Weber 609 279 4094 Cal trip Leave meessage for Eliz and Karen 39504 Sheila Galloway Ralph Cavanagh (415) 777 -0220 Mike Day 415 781 0701 Meg Nollen,other,formal,3 +RE: Southern Co.s Testimony,I think a rebuttal would be in order if others agree. ,meetings & events,formal,3 +Re: Project Stanley Q&As,I think the Qs and As look good. I wouldn't bring up the California situation (eliminate the second half of A25). Eric Thode 08/22/2000 04:53 PM To: Steven J Kean/NA/Enron@Enron cc: Subject: Project Stanley Q&As Comments? -----------------,project-specific,formal,2 +Re: Fletcher School/Enron,Thaniks for the note. Christie is now organizing our university relationships so direct the communication to her. Thanks again David Merrill@ENRON_DEVELOPMENT 09/09/2000 05:59 AM To: Steven J Kean/NA/Enron@Enron cc: Subject: Fletcher School/Enron Dear Steve: Last month while at my reunion at the Fletcher School of Law and Diplomacy at Tufts University some of the school officials told me that Enron has hired about eight Fletcher graduates recently and is happy with them. The school is also happy and wants to strengthen its relationship with Enron. They had earlier this year contacted a Laura Kalmans Director of Community Development at Enron to discuss various ideas for cooperation with Enron that would strengthen our capacity in environmental matters and give the students exposure to real world issues but nothing happened and they lost contact. They asked me who they should contact to find out how to pursue this and I said I thought it might be you or someone under you. They now want to send a letter to someone at Enron on this proposal. It is OK if it is addressed to you or should I tell them another name? Please advise me how to steer them in the right direction. Many thanks. David Merrill -----------------,human resources,formal,2 +Re: Hap Boyd Promotion,I don't really have a problem with this but I thought that all VP promotions were supposed to go through our year end process. That's what I have been saying in response to the inquiries I am getting. Ken being newly back in the fold likely didn't know about the process. Kurt S Huneke@ENRON_DEVELOPMENT 12/12/99 08:31 PM To: Steven J Kean@EES cc: Subject: Hap Boyd Promotion First I heard about this. I assume it is a reward for the PTC extension. Hope it makes sense to you. -----------------,other,neutral,2 +California Lawmakers Vote to Limit Power Costs - WSJ,Look at this. Baum finally speaks up -- way too late. Can somebody tell me what SDG&E's energy rate was pre-dereg? -----------------,other,casual,3 +Re: Spoke with Jeff,I'm glad things are moving forward. I've talked with Dave briefly and will follow up with him again. Kevin Scott on 07/13/2001 10:14:01 AM Please respond to kevinscott@onlinemailbox.net To: Steve Kean cc: Subject: Spoke with Jeff Steve As planned I spoke with Jeff this morning. It was a great call. I am really excited about what is ahead. We discussed the title issue. I don't have any problems. We should go with what is the best way to enter the organization. Jeff said he was going to touch base with Dave this morning to move the process forward. I can't wait for my interviews and to join the team. Thanks for all of your help. Kevin Contact Information E-mail kevinscott@onlinemailbox.net Phone (213) 926-2626 Fax (707) 516-0019 Traditional Mail PO Box 21074 ? Los Angeles CA 90021,business document,excited,2 +Re: CA Price caps,I'm afraid we have our work cut out for us. We have been working the proces at the state and federal level in the past couple of weeks. I continue to believe (hope) Susan J Mara 08/11/2000 11:56 AM To: Steven J Kean/HOU/EES@EES cc: Subject: CA Price caps I heard you've been raising a ruckus about our activities on the price caps -- asking us to do more. Thanks. I feel as if I have been a voice in the wilderness for the past six months when I was trying to get people to pay attention to the bad things happening in CA and warning that the problems (mainly a threat of reregulation) will spread elsewhere.,other,frustrated,5 +Nigeria Contract support,Sean - is this anything we need to follow up on? ,contract management,casual,2 +Electricity Deregulation Report Card,I think I confirmed for this already but could you check and put on my calendar and put this in the meeting file. ,other,casual,3 +Enron Advertising,do we have a mechanism to survey employees? Can we do a scientific poll? -----------------,marketing & promotion,inquisitive,3 +Update on House RTO Activities,There are now two House hearnigs tomorrow not just one. In the morning there is a panel on reliability siting and incentive pricing for transmission. Jim Steffes is the EPSA witness. The RTO-related hearing originally scheduled on a separate day will be in the afternoon tomorrow. Peter Esposito of Dynegy is the expected EPSA witness. I am checking on the final list of other panelists and will advise. Finally Andy Black of Chairman Barton's staff advises that they will release draft RTO language as early as today. We expect that this draft will not be to our liking. Barton thinks FERC is moving too quickly and with too much force. We expect his proposal to set a deadline of something like 12 months for utilities to join an RTO. The key is in part whether he allows FERC to continue to decide what constitutes an acceptable RTO or whether he will try to grandfather in some fashion those RTOs that have been proposed by utilities to date.,energy trading,formal,5 +,Mike - perhaps you can help me or forward this on to someone who can. The people in my organization support all the Enron business units but many are specifically dedicated to certain business units. As a consequence we have ended up on a variety of LANs with a variety of support people. Due to the fine efforts of your team many people in my group have migrated over to the Enron Corp LAN. We are also now enjoying great support from Russell & Russell (Servat and Mitchell). As the IT guy I'm sure you are accustomed to such profuse praise. However many of the people on my team (including me) are on the EES LAN. Historically EES has supported us with the equipment we need and they too have been doing a fine job in that regard. Historically therefore we have not budgeted for IT .... a practice which will change starting next year. In the meantime when we sought to migrate the rest of my organization to the CORP LAN we were told that we would have to pay for all of our current equipment or give it back to EES. If you need me to I can explain in detail why this makes no sense.,information technology,formal,3 +WPTF Friday Crazy About U Burrito,THE FRIDAY BURRITO=20 Ben Zycher from the RAND Corporation used the following line in his talk at= =20 the WPTF General Meeting in Phoenix a few weeks ago. The story takes place = in=20 the good ol' days of the Soviet Union when Brezhnev was Premier.? Brezhnev= =20 and the rest of the Politburo one fine May Day were watching the tanks and= =20 missiles pass by the Kremlin Wall when Leonid noticed in the middle of the= =20 parade a truck carrying a group of civilians.? He turned to Dmitri Ustinov= =20 the Defense Minister and asked Who are they?? Ustinov replied Those a= re=20 our economists.? You just wouldn't believe their destructive potential.=20 This is appropriate for our time and our situation.? The economists descend= ed=20 upon us when the California market was designed but we know not from where= .?=20 Aliens?? Since weaving conspiracy theories is a popular past time in=20 Sacramento (We just know they are gouging us them bullies) I believe th= at=20 one must do the same by following the money.? I'm not talking about the=20 campaign contributions in Gray Davis' pocket. The most money has gone from= =20 power sales in California to the Canadian Province of British Columbia.? It= =20 was a plot the Canadians hatched. I mean look at Governor Davis.? He looks= =20 kind of BC-ish.? Skinny and lanky wimpy hair and a hesitation in his=20 speech. He talks their language: a mix of misspelled French (meet me at th= e=20 centre) English and Eh(?).? One night in 1996 the BC government secretl= y=20 sent us some economists by the truckload to destroy California.? The=20 utilities probably paid for the bus tickets.? I happen to know that Frank= =20 Wolak Chair of the ISO Market Surveillance Committee once lectured at a=20 University in Vancouver B.C..? What more evidence do you need?? The BC=20 Government sent us cheap hydro power sold at inflated market prices so tha= t=20 they could do what the citizens of California wanted to do with their budge= t=20 largess =01( build roads schools and hospitals. They didn't think we coul= d=20 figure out their plot but we did.? Now is the time for California to=20 counter-attack.? We'll send them some of our politicians a bipartisan grou= p=20 including a few who can add and some of our select energy thugs from the= =20 CPUC and the Blind Oversight Board.=20 Speaking of times and situations there was a time when discussing the ISO= =20 words such as communist and Nazi were only uttered by my pal Carl=20 Imparato.? We would shake our heads and chuckle at Carl's extremism.? We= =20 aren't laughing now.? The descriptors seem to arise again and again in poli= te=20 conversation by a wider circle of people.? I watch with utter amusement=20 (because the alternative is retching breakfast) at the demagoguery of the I= SO=20 Governing Board the Market Despair Team the Governor's office and some= =20 members of the California Legislature. Like an audience watching a tragedy= =20 from hell we scream aloud These people are crazy!? And indeed they are= .?=20 Mr. President is not helping us at all by continuing to wrangle over who ge= ts=20 the musical Chair at FERC =01( Bubba Curt or Bubba Patrick.? Listen to us = Mr.=20 President.? Let Bubba Curt keep the reigns for a year or two and let Bubba= =20 Patrick take a seat at the table.? We need someone with a shockproof BS=20 detector.? Someone who can honestly field a motion to dismiss the Californi= a=20 ISO.? The time is long overdue to shoot this horse in the head.=20 Not all is evil.? This week in Houston the resource capital of California= I=20 visited the trading floor folks at Dynegy before attending the WTPF Board= =20 meeting.? The coolest thing I saw besides all the neat gadgets on each=20 trader's desk was the coffee machine.? Brother Jolly Hayden showed me how = to=20 use it.? You pick the type of coffee you want.? The contents of the coffee= =20 are in a shot-glass sized plastic tub with a foil top.? I picked Venezuelan= =20 #6 Decaffeinated Waxy Crude.? The tub is placed inside the brewing machine= =20 and the start button is pushed.? Presto coffee drips from the spout into a= =20 waiting cup.? I asked Jolly How did the hot water get mixed into the grou= nd=20 beans?? He removed the tub from the machine and showed me a pin prick hole= =20 made in the foil top and another that was made at the bottom.? Is that nea= t=20 or what?=20 I would like to buy a brewing machine just like the Dynegy coffee machine= =20 but a little larger.? I would set up a booth in Sacramento on the corner o= f=20 11th and L and bark out to passing members of the Legislature Free spa= ce=20 shuttle. Come and see life on other planets.? They would jump at the chanc= e=20 to visit other planets.? I would seat them in the machine push the start= =20 button and voila.? Dripping out would be the essence of democracy.? Don't= =20 worry about the holes needed at the top and the bottom.? They are already= =20 there and quite enlarged.=20 Back to my day at Dynegy.? Trade floors might seem similar across companies= =20 but the small differences speak to the management style embraced by the cre= w=20 and its leaders.? Each electric trading desk for various parts of the=20 country is set up a little bit differently.? For example some desks have = a=20 person doing asset-backed trading but some don't.? When I arrived at 6 a.m= .=20 Houston time the Eastern desk was busy in its trade day.? The Western folk= s=20 hadn't arrived yet.? Later I sat with Randy LeForce of the Western desk.?= =20 Captain LeForce to you he told me.? He could talk big because Dave=20 Francis who sits next to Randy and hangs witty quotes from the ceiling=20 above his head (Even a blind pig could make money in this market) was on= =20 vacation.? As the pace of the trading gathered steam Randy kept an eye on= =20 all the different people working the Western trading desk.? The Captain=20 worked it like a maestro.=20 During my visit some Dynegy folks came up to me introduced themselves an= d=20 said how much they enjoyed the Friday Burrito.? I'll tell you what.? There= =20 are few things in life that give me as much satisfaction.? Complete strange= rs=20 who tell you that something you do makes them feel good well it doesn't g= et=20 any better than that.? Garrison Keillor the well-known author of Lake=20 Woebegone Days and NPR radio entertainer once said a writer should have an= =20 audience.? Not everyone in the world should be in the audience but an=20 audience nonetheless of some people.? I now know what he means.? And the=20 people I met on the trading floor felt like they knew me and shared with m= e=20 their thoughts and opinions on a lot of things.?? Often they asked me Are= =20 those California people really that crazy?=20 Since last week you might have noticed the pace at the FERC has picked up= =20 somewhat.? Last Friday the FERC issued an Order on possible refunds for=20 alleged overcharges by parties selling to the ISO last January.? That was= =20 news worthy.? Then on Wednesday the FERC issued an Order to remove barrie= rs=20 to additional electric generation in the West.? The Order admits that it=20 won't change the dire situation in the West but these are steps in the rig= ht=20 direction.? The FERC also issued on Wednesday a show-cause order to AES and= =20 Williams regarding the maintenance of RMR units that were called by the ISO= =20 in April and May of 2000.? That is a serious case that we must watch=20 closely.? Also this week the California Senate kicked off its own=20 investigation (this will be the tenth such investigation of the California= =20 markets to uncover alleged price manipulation).? The Senate Committee will= =20 have subpoena rights and if I understand it correctly they plan to subpoe= na=20 individuals.? Sounds like a Kangaroo Court and a Three-Ring Circus to me.= =20 Thursday Secretary Abraham stated in a congressional hearing that the West= =20 would certainly experience power outages this summer. Finally an LA Times= =20 reporter asked me if I had heard that a small QF company had filed for=20 seizure of SCE property to satisfy an outstanding debt.? That would be step= =20 one of the bankruptcy cha-cha.? All in all a typical week among crazy=20 people.=20 Let's see what else we can talk about.=20 Things in the People's Republic of California=20 ?@@@ PUC Updates Utility Liabilities=20 ?@@@ Be a Source for Energy Price Update=20 ?@@@ BPA Misquoted in the WSJ=20 Things FERC=20 ?@@@ Market Monitoring Proposal=20 Letters=20 Jobs and People=20 Odds & Ends (_!_)=20 =3D=3D=3D=3D=3D=3D=3D=20 Things in the People's Republic of California=20 ?@@@ PUC Updates Utility Liabilities=20 My favorite regulator the California PUC issued an Order in the Utilities= '=20 Rate Stabilization case to re-open the record on utility audits.? Although= =20 the text of the order is unremarkable the data tables bring up to date as= =20 of March 8 the outstanding liabilities of PG&E and SCE.=20 The PG&E commercial paper obligation due as of March 8 increased by $354=20 million since January 31 for a total default amount of $790 million.? QF= =20 purchases increased by $280 million for the same five-week period now=20 totaling $651 million.? The ISO payments increased $934 million now totali= ng=20 $1.5 billion and the direct access charge backs for negative PX credits=20 increased $214 million now totaling $433 million.? PG&E's total default=20 amount is now $3.3 billion excluding amounts yet to be collected from PG&E= =20 customers for DWR purchases.=20 The SCE balance is as follows: The commercial paper obligation that is due = as=20 of March 8 increased by $260 million since January 31 for a total default= =20 amount of $401 million. SCE defaulted on a significant amount of long-term= =20 debt principal and interest roughly $249 million.? QF purchase defaults=20 increased by $354 million for the same five-week period now totaling $835= =20 million.? The ISO obligations decreased $1.1 million and the direct access= =20 charge backs for negative PX credits increased $21 million now totaling $2= 5=20 million.? SCE's total default amount is now $1.7 billion excluding amounts= =20 yet to be collected from SCE customers for DWR purchases.=20 There is little question that the QFs are taking it on the chin big time.?= =20 In the last five weeks between January 31 and March 8 the defaulted=20 payments to the QF owners from both utilities has increased $630 million.?= =20 The total QF default for both utilities as of March 8 stands at $1.5=20 billion.? Does anyone wonder why 1500 MW of QF capacity has shut down in=20 California?? Without these payments being made very soon I would expect th= e=20 amount of shut down QF capacity to easily double or more.? Why would these= =20 projects produce without the promise of being paid?=20 Things in the People's Republic of California=20 ?@@@ Be a Source for Energy Price Update=20 Art O'Donnell editor and associate publisher of the well-known and widely= =20 read California Energy Market (CEM) is looking for traders willing to=20 participate in his survey in exchange for receiving an advanced copy.? The= =20 Survey is a regular feature in CEM. The information collected by Art is=20 matched against the responses of the other people he interviews and some=20 posted sources (Pricewaterhouse Coopers BPA=01s daily offerings for=20 instance).? It is written up in narrative form. The report goes out twice= =20 weekly once on Wednesday afternoon/evening via e-mail as a courtesy to the= =20 respondents (because the week is pretty much done by then) and a rewrite o= n=20 Friday that is e-mailed around 10 am posted on the newsdata.com Web site= =20 and published in the newsletter for general consumption. The Friday report= =20 also features a brief story about natural gas markets in the West=20 The WPTF Board of Directors has allowed me to publicize this offering and = to=20 explain that if your company is interested in participating the informatio= n=20 you provide to Art would be protected as confidential.? In Art's words Th= e=20 price survey is =01( unlike some attempts at creating a tradable index numb= er=20 (e.g. McGraw-Hill=01s Power Markets Week index or the Dow Jones indices) = is=20 more of a narrative about the state of the market d a pulse reading as=20 opposed to a blood pressure number or an EKG. As such I do not ask traders= =20 and schedulers for precise dollar figures or volumes associated with specif= ic=20 trades but rather questions like 'What=01s Mid-Columbia going for today?= What=20 about off-peak? How has that changed since this morning? Oh yeah why is=20 that? Anything else I should know?'=20 The WPTF Board asked Art to explain how the information he collects would b= e=20 protected since so many marketers and generators are under State data=20 subpoenas.? Art replied The Constitution of the State of California=20 provides for a blanket immunity against government intrusions for news=20 gathering from confidential sources and unpublished information something= =20 which we believe in strongly at Energy NewsData Corporation and which we ar= e=20 willing to go to jail to protect. So if for instance the Attorney General= =20 tried to subpoena me or anyone from my staff about power price information= =20 we would 1) refuse to divulge anything other than the already published=20 accounts 2) send back a copy of the Constitution 3) contact the attorneys= =20 for the Society of Professional Journalists and 4) start preparing a benef= it=20 party to raise legal fees. =20 If you would like to participate in Art's survey please e-mail him at=20 aod@newsdata.com.=20 Things in the People's Republic of California=20 ?@@@ BPA Misquoted in the WSJ=20 In last week's Burrito I referred to a Wall Street Journal article that=20 portrayed a BPA trader as admonishing the DWR for accepting bids over marke= t=20 prices.? I was surprised when I received the following e-mail from BPA's=20 David Mills.? His message to me copied a letter he sent to DWR's Ray Hart= =20 explaining what he meant as opposed to what he was quoted as saying.=20 Dear Ray:=20 ?=20 As per our telephone discussion I just wanted to reiterate a few things=20 re:the Wall Street Journal article and the quotes attributed to me.? At no= =20 time during the interview with Ms Smith did I state that I thought that=20 CDWR's offers were out of line with the prevailing market price in Californ= ia=20 or that your traders should check that price before entering the market.? T= he=20 reporter was quite interested in the price difference between California an= d=20 the MidC price here in the Northwest and when I asked I told her that=20 currently that price delta was roughly $50-$100 MWhr with MidC being lower= =20 than the CA prices.? I did not indicate to the reporter that I thought that= =20 CDWR was paying more than the California market price and was simply trying= =20 to make a comparison of price relativity between California and the=20 Northwest.? Lastly BPA has on occasion charged extra-regional entities= =20 less than the prevailing market price but has only done so to remain=20 consistent with our own pricing strategies.=20 ?=20 ?I apologize for any misconceptions or miscommunications that may have=20 resulted from this and look forward to a continuing working relationship=20 between CDWR and BPA.=20 ?=20 Things FERC=20 ?@@@ Market Monitoring Proposal=20 FERC Staff issued a report with Recommendations on Prospective Market=20 Monitoring and Mitigation for the California Wholesale Electric Power=20 Market.? WPTF members are taking this proposal very seriously and we inte= nd=20 to provide comments on March 22.? If you are interested in a copy of the=20 report go to General members are able to participate along with the Board members and=20 other general members working on our response.? We have retained the servic= es=20 of Dr. Ben Zycher of the RAND Corporation to help us draft the policy=20 issues.? He will be working with our counsel Dan Douglass of Arter & Hadde= n=20 to craft our reply.=20 In short our submission will point out the flaws in FERC's proposed=20 methodology and demonstrate the shortcomings of narrowly limiting the=20 definition of producer marginal cost to operating variable cost.? Further= =20 excluding measures of credit worthiness are an important missing variable i= n=20 the FERC analysis.? Next week I will include a short summary of our respon= se=20 in the Burrito.=20 Letters=20 I received a note from one of our legal beagles that drop me a line every n= ow=20 and then.? I don't have the facts of the case to which this person refers= =20 but I hope the sender provides us with an update if a judgement should occu= r.=20 Universal Studios wants FERC to find that Universal owes no penalty to SCE= =20 for not interrupting its interruptible load (under a CPUC rate schedule)=20 because SCE did not adhere to the FERC requirement in the Dec 15 order to= =20 schedule 95% of its load in the day ahead market ...... according to=20 Universal if SCE had done so then it would have had to provide Universal= =20 power at below its cost.? SCE didn't and Universal got interrupted and now= =20 Universal owes $$$$$$$$$$$$$.? Does anyone else know about this filing?=20 Lind Guerry veteran of the PX halcyon days wrote Hi Gary.? Hope you're= =20 having a nice day.? Just wanted to let you know that I'm really enjoying th= e=20 Burrito and am so glad you're sending it to my home email.? I really got a= =20 kick out of the Ten Reasons....? It's hard to believe that our wonderful= =20 state is in such incompetent hands isn't it?? And not only are they=20 incompetent they continue to remain so with such regularity you could=20 probably make a killing marketing their incompetence as a laxative.? Do you= =20 think if we tried to do that we'd get accused of exercising market power?= =20 Think of the power we'd wield as the holder of the largest amount of=20 incompetence!! ?=20 Lind we need a product name for the laxative idea.? Any ideas? How about= =20 Sane Away?=20 Jobs and People=20 The folks at Dynegy sent me a couple of job postings.? If your company has= =20 similar posting or job openings or if you are reader looking for a new gig= =20 drop me a line.? After all it's free.=20 Position Description:=20 Dynegy's position has responsibility for the development of transmission an= d=20 power markets in a geographic region of the U.S.? Duties are driven primari= ly=20 by federal regional and state activities to restructure and deregulate th= e=20 electric power industry and the need for industry participants to develop= =20 and implement market structures policies and regulations that promote=20 liquid and competitive transmission and power markets.? Significant activit= y=20 within a region to reshape the structure and operation of the transmission= =20 grid is resulting from FERC Order 2000 which directs the establishment of= =20 Regional Transmission Organizations. Extensive travel (40%-60% and higher = at=20 times) is highly probable. Primary goals of this position are to:1) Create= =20 more liquid and competitive transmission and power markets? 2) Maximize th= e=20 value of Dynegy's positions and assets by working closely with the trading= =20 and power groups to develop?? and implement commercial strategies that crea= te=20 and capture significant business opportunities and 3) Provide timely and= =20 accurate information market intelligence and recommendations to clients. = 4)=20 Maximize the value of Dynegy's positions and assets by working closely with= =20 the trading and power groups to develop and implement commercial strategies= =20 that create and capture significant business opportunities and=20 recommendations to clients.=20 Interested parties should contact Jolly Hayden at jjha@ngccorp.com.=20 Odds & Ends (_!_)=20 First I would like to welcome WPTF's newest general member Wellhead=20 Electric.? Hal Dittmer is the founder and president of Wellhead.? I have=20 known Hal for a couple of years first as a client for my over priced=20 consulting services and later as a friend and source of all kinds of usefu= l=20 information.? Wellhead is one of those QF owners who are owed a boatload of= =20 money.? However Hal's company is developing some new projects and he is= =20 looking for prospective power buyers.? Hence his interest in WPTF is=20 obvious. Wellhead is WPTF's 31st member.=20 Well the Dynegy gang has been a source of comfort and joy to me this week.= ?=20 They couldn't let me leave their abode without stuffing a song in my pocket= =20 that is a tribute to their creative skills.? Timely too.? Sing it to the tu= ne=20 of California Dreaming by the Mamas and the Papas.=20 ISO California=20 (to the tune of Hotel California) On a dark Western highway=20 No wind in my hair=20 No rain for the hydro=20 No NOX in the air=20 Up ahead in the distance=20 I saw a flickering sight=20 The load grew heavy and the lights grew dim=20 No relief in the night=20 So we stood in the darkness=20 Down at the Taco Bell=20 And I was thinking to myself=20 This could be Heaven or this could be Hell=20 We lit up a candle=20 No power in the Bay=20 There were voices down the corridor=20 I thought I heard them say? =01(=20 Welcome to the ISO California=20 Such a lovely place=20 Such a lovely place=20 Such a lovely face=20 Powering up for the ISO California=20 What a nice surprise=20 What a nice surprise=20 Bring your alibis? =01(=20 Its mind is policy twisted=20 Can=01t stop consumption trends=20 Got a lot of NIMBY boys=20 Cisco calls friends=20 How we sweat in the courthouse=20 Sweet summer sweat=20 Without the AC=20 We try to forget=20 So I called up the Gov=01nor=20 Please energize this line=20 He said=20 We haven=01t built a new plant here since 1969=20 Last thing I remember=20 We were running for the door=20 We had to find the passage back to the place we were before=20 Relax said Judge Damrell=20 California=01s programmed to receive=20 Go belly up any time you like=20 But your power can never leave=20 ?=20 [refrain]=20 =3D=20 Don't refrain.? Have a great weekend y'all.=20 gba=20 ?,other,casual,0 +Draft Response to CPUC OII,I have taken a stab at putting a draft response together indicating areas where we need more flesh. I will forward Tim/Mary's presentation to FERC EPSA's California Fact Sheet and the transcript from the hearing held on 8/23 and 8/24. Witness Wolak Market Surveillance Committee of ISO had some good points about rational behavior in markets with scarcity of supply. His comments were on 8/23. Please feel free to comment. Dan Douglass Arter&Hadden (818-596-2201) will be filing these comments on Enron's behalf which are due on Friday. I would suggest that Dan provide some of the legal view on whether the CPUC has adequate jurisdiction over retail rates not wholesale rates. We should shoot for final comments by 10:00 a.m. tomorrow if possible. This will allow an opportunity to discuss any last minute changes if necessary before filing. Seabron Adamson Frontier Economics (617-354-0060) will be providing additional drafting. Be sure to send any comments to these parties along with the internal list. Thanks.,energy infrastructure,formal,3 +Energy Issues,Please see the following articles: Oakland Trib Wed 3/7: Breakthrough made in rescue of PG&E Bakersfield Californian Wed 3/7: El Paso Energy closes six valley power plants Contra Costa Times Wed 3/7: Still undecided: Who'll pay DWR for electricity SF Chron Wed 3/7: State Taxpayers In Dark on Details Of Energy Deal Sac Bee Wed 3/7: Lawmakers pitch fixes for region's energy woes Orange Co. Register Wed 3/7: Power plan called wrong LA Times - Wed 3/7: Bill to Cut Some Power Prices Stalls Sac Bee Wed 3/7: PG&E could face mutiny on outages: SMUD others may balk if utility orders summer blackouts SF Chron Wed 3/7: PUC to Decide Fate Of Utility Workers PG&E Edison want to trim costs by laying off thousands cutting service San Jose Mercury Wed 3/7: Power prices could soar during the summer SF Chron Wed 3/7: Power Plant Plans Cause Conflicts East county residents blast supervisors Contra Costa Times Wed 3/7: Supervisors set search for power plant sites Sac Bee Wed 3/7: Peter Schrag: California's $90 billion infrastructure gap Contra Costa Times Wed 3/7: PG&E power plan debated at hearing SF Chron Thurs. 3/8: State OKs 'Peaker' Power Plant at SFO / Temporary generator could be sending electricity to 50000 homes by August WSJ Thurs. 3/8: Crossed Wires: Major Kinks Emerge In Gov. Davis's Plan To Power California --- State's Outlays for Electricity May Be Hard to Recover Without Rate Increases --- Betting on Long-Term Deals ------------------------ Breakthrough made in rescue of PG&E State ready to pay $7 billion for lines By Steve Geissinger SACRAMENTO BUREAU SACRAMENTO -- Signaling a breakthrough in secret energy crisis talks the Davis administration disclosed Tuesday it may announce the framework of a pact to rescue the teetering Pacific Gas and Electric Co. next week. Things are going very well said Steve Maviglio a spokesman for Gov. Gray Davis. The state appears to be poised to pay at least $7 billion -- and possibly billions more -- for PG&E's high-voltage transmission lines as part of a deal to financially renovate the north-state utility according to sources familiar with the negotiations. But consumer advocates insisted that even the $7 billion price is too much to pay. And experts warned that a deal with PG&E will be more complex than with other utilities. PG&E representatives declined comment in keeping with their policy on the talks even though the Davis administration said an announcement could come as early as next week or the following week. The new timetable for an announcement was substantially sooner than in Davis' original forecast. Until late last week PG&E was still resisting the sale of its power grid despite the fact that Davis had announced the framework of an agreement with Southern California Edison. Davis expects to soon announce a similar deal with the San Diego Gas and Electric Co. However any such deal still would need federal approval. The investor-owned utilities trapped between high wholesale costs and lower regulated retail rates amassed nearly $13 billion in debts and were unable to buy electricity this winter. With the onset of rolling blackouts the state began brokering billions of dollars in emergency short- and long-term power purchases. Davis' strategy to ease the energy price and supply crisis includes bolstering both conservation and generation while fiscally refurbishing the nearly bankrupt utilities. As part of the rescue deal the utilities would have to drop legal actions seeking dramatically higher electricity bills environmentally shield wildlands they own sell power from their generators to Californians for the next decade and secure help with their debts from their parent companies. Together with the cash infusion from the sale of their power 26000-mile power grids the utilities would be allowed to sell bonds to raise funds and use customer money to pay them off. The state would upgrade the high-voltage lines and lease them back to the utilities for operation. In a reflection of the negotiations with the three utilities a Davis administration official said the deal with PG&E is proving to be more complex than with the other firms. Though PG&E finally agreed late last week to sell its transmission grid the utility apparently wants more than the $7 billion that Davis has offered according to sources. The figure is more than twice the book amount or the value placed on the system for purposes of accounting. And that's the markup that lured Edison into an agreement to sell its smaller portion of the transmission grid for $2.8 billion. But PG&E which fears an erosion of its economic base may be asking as much as $10 billion. Due to complexities in the state's 1996 deregulation of the industry PG&E is more likely to lose revenue than Edison as a result of selling its transmission lines according to experts. Big customers might be able to bypass the utility's remaining local distribution lines thereby eroding its customer base. Therefore the utility may view bankruptcy and sale of its transmission lines to the highest bidder as a potentially attractive alternative to selling its share of the grid to the state at too low a price. ---- El Paso Energy closes six valley power plants Filed: 03/07/2001 By CHIP POWER Californian staff writer e-mail: ppower@bakersfield.com El Paso Energy citing non-payment from Pacific Gas & Electric Co. said it has shut down six cogeneration plants this week. The smaller plants produced about 175 megawatts of electricity and are located primarily in the San Joaquin Valley said company spokesman Mel Scott. A megawatt can supply power to 1000 homes. At least 10 plants have closed in the past two weeks as a result of non-payment according to the state Independent System Operator which manages most of the state's electrical distribution. The El Paso Energy plants are operated with various partners and had not been compensated for December January and February deliveries said Scott. He said he did not know the total amount due but said the plants would be closed until PG&E's credit worthiness is improved. A cogeneration plant common in oil fields simultaneously produces heat energy and electrical or mechanical power from the same fuel in the same facility. Typically it produces electricity and steam which can be deployed to enhance oil recovery. Kern County is the state's leading oil-producing county. El Paso owns or has interests in more than 40000 miles of interstate and intrastate pipeline connecting the nation's principal natural gas supply regions to the five largest consuming regions in the United States namely the Gulf Coast California the Northeast the Midwest and the Southeast. El Paso closed up 99 cents on Tuesday or 1.4 percent at $71.49. The Houston-based company's stock price has ranged between $36.31 and $75.30 in the last 52 weeks. ---- Still undecided: Who'll pay DWR for electricity By Karen Gaudette ASSOCIATED PRESS SAN FRANCISCO -- The price tag is $3.2 billion and counting for electricity bought by the state Department of Water Resources for the customers of two nearly bankrupt utilities. Pacific Gas and Electric Co. Southern California Edison and the state disagree over how the DWR eventually will be reimbursed for its purchases on the expensive last-minute power market. So do the state power regulators who have the final call over who gets the money when. Under a recent law the DWR went into the electricity-buying business to help keep the two utilities from sinking further into their $13 billion debt. The state plans to retrieve the money by selling $10 billion in revenue bonds. The utilities continue to collect ratepayer dollars on that electricity which the bill's author Assemblyman Fred Keeley D-Boulder Creek says is meant to help them begin paying down their debt. In a recent letter however DWR officials requested that the state Public Utilities Commission order that a portion of that money be diverted to the state. But after the utilities subtract the costs of generating electricity payments to environmentally friendly power plants and other expenses there is no money left from ratepayer dollars to give to the DWR without sinking further into debt PG&E spokesman Ron Low said Tuesday. If it passed along money to the DWR our undercollection would grow by about $2.4 billion by the end of the year Low said. The commission unable to agree on the best course of action left the issue untouched at its last meeting but expects to revisit the issue when it meets this morning. Commissioner Richard Bilas is proposing an alternate plan that would have the DWR set its own revenue requirements that would be passed on to ratepayers. The PUC also is expected to respond to complaints from laid-off workers and customers that layoffs by utilities to cut costs have been hurting service. Commissioner Carl Wood warned at the last meeting that failure to provide safe and reliable service could mean fines for the utilities. Representatives from electrical workers unions the PUC and the utilities were to discuss the issue Tuesday afternoon. I don't think we believe that utilities can find a way out of their problems by laying off workers said Mindy Spatt a spokeswoman with the Utility Reform Network. We think consumers deserve safe and reliable service and we think they deserve it at a reasonable price. ---- State Taxpayers In Dark on Details Of Energy Deal David Lazarus Chronicle Staff Writer Wednesday March 7 2001 2001 San Francisco Chronicle Few people would purchase a car simply because the dealer said ''Trust me it's a great deal.'' Yet Gov. Gray Davis essentially is telling Californians just that about dozens of long-term power contracts. Because of confidentiality agreements with power companies the governor has revealed only scant details about the state's multibillion-dollar contracts for electricity over the next 10 years. Gov. Davis has our money and we can't see how he's spending it said Doug Heller a spokesman for the Foundation for Taxpayer and Consumer Rights in Santa Monica. We've been locked out of the room. Neither Davis nor power companies would divulge specific details about the price duration or scope of individual contracts. Each cited secrecy clauses that the governor's office said had been desired by both sides. What consumers do know is this: -- California has signed 40 contracts and tentative accords valued at about $40 billion to secure enough power to light 9 million homes over the next decade. -- The average purchase price of each deal is $69 per megawatt hour -- well above the $30 to $40 charged by power generators before California's energy market went haywire last summer. -- If as is widely expected wholesale power prices fall in years ahead the state nevertheless will be locked into paying above-market rates for electricity. But it is not known which generator agreed to part with the most power at the cheapest level or the full range of the prices in concocting the $69 average. Moreover it is unclear how shrewdly the state negotiated with taxpayer money in securing power on behalf of cash-strapped utilities. These agreements are the bedrock of our long-term energy policy Davis said Monday in announcing the deals. The governor's office defended the murky nature of the contracts yesterday. It's a business transaction in which private corporate information is included said Steve Maviglio a spokesman for Davis. That's the kind of information that never gets revealed. While additional elements of the contracts will be publicized in coming months he said the contracts themselves will remain a secret. You'll never see all the details Maviglio said. This did not sit well with many observers. It's a breach of public trust said Daniel Bacon a San Francisco attorney specializing in business law. A public servant spending public money shouldn't be able to keep the spending secret. But Gary Ackerman executive director of the Western Power Trading Forum an energy-industry association in Menlo Park called confidentiality agreements a necessary evil in transactions like this. He explained that no power company would agree to a long-term contract if rival firms could learn the terms of the accord. The company would be losing too much of its competitive edge in the marketplace Ackerman said. At the same time he noted that secrecy allowed the buyer -- in this case California taxpayers -- to secure more favorable terms with individual sellers. A high price with one generator would not necessarily be sought by all power providers. Still the fact that public funds are being used makes confidentiality in this case a different matter than say Cisco Systems' quietly negotiating to take over yet another tech rival. The public is in a very awkward position said Michael Shames executive director of the Utility Consumers' Action Network in San Diego. It has to rely on the good word and expertise of the governor and he has yet to demonstrate that he has expertise or good word in this field. Shames likened consumers to passengers in a plane being flown by a pilot without a license to fly. But what choice do we have? he asked. I don't see many other options available right now. There's the rub. No matter how bad a deal California may have cut to help meet its energy demands the alternative -- blackouts disruptions economic catastrophe -- is far far worse. On the other hand it already appears that the new contracts will not shield Californians from the threat of daily outages this summer when demand surges. Davis said only about 60 percent of the state's summertime electricity needs so far had been met. Part of the reason is that many power companies already have contracted for their output this year. Duke Energy said this was why it would not begin its nine-year contract with California until 2002 while Williams Cos. said it would only gradually increase the amount of available wattage in its 10-year contract. Both companies meanwhile will continue to profit this summer by selling into the volatile spot market where wholesale power went for as much as $1 500 per megawatt hour last year. You can't sell all your power into long-term contracts said Paula Hall- Collins a Williams spokeswoman. You save some for the spot market. Consumer groups worry that consumers will be hammered again this summer with sky-high power prices and then get nailed down the road by contracts for above-market rates. If we could look at the terms of the deals we'd see that California is being gouged for 10 years said Heller of the Foundation for Taxpayer and Consumer Rights. But the governor doesn't want us to see that. Ackerman of the Western Power Trading Forum said the state had gotten the best rates it could under current market conditions. California went for long-term contracts when everyone else moved in as well he said. Californians are paying a price for not acting sooner. ---- Lawmakers pitch fixes for region's energy woes By David Whitney Bee Washington Bureau (Published March 7 2001) WASHINGTON -- California members of Congress pleaded for everything from wholesale price caps to extending daylight-saving time an extra hour to help the region cope this summer with its persistent electricity shortage but none of the ideas seemed to catch fire at a House hearing Tuesday. People will die in California because of this crisis Rep. Brad Sherman a Los Angeles-area Republican warned the House Energy and Commerce Committee. Sherman testified that his idea for saving lives is to extend daylight-saving time by an extra hour so that there would be more daylight at the end of the day when power consumption surges. One of the peak demand periods for electricity occurs between 5 p.m. and 8 p.m. when the sun sets and people come home from work Sherman testified. If people come home and it is light out there is less of an inclination to turn a light on. Sherman said the state Legislature has called for congressional approval for states to be given authority to extend daylight-saving time and he cited analyses by the California Energy Commission and other agencies suggesting that it could cut power consumption by 1 percent to 2 percent. Sherman who was one of about a dozen California lawmakers presenting their views on the energy squeeze drew no questions from committee leaders about what his legislation might do to everything from airline schedules to television programming if West Coast states didn't agree on the same time standard. Most of the committee's questioning was on the more popular idea proposed by several California and Western lawmakers primarily Democrats to require the Federal Energy Regulatory Commission to impose caps on wholesale electricity prices that have gone wild because of a regional power shortage. Rep. Bob Filner D-San Diego charged that the price spiral has little to do with power shortages but a lot to do with a small cartel of generators bilking ratepayers. Rep. Jay Inslee D-Wash. said he brought up the idea of regional price caps with President Bush who was initially skeptical. But Inslee said that Bush warmed to the idea after being told that protections could be built into the caps so as not to discourage construction of new power plants. Upon hearing that Inslee said Bush invited him to meet with the president's Cabinet-level task force led by Vice President Dick Cheney on a national energy strategy. But Inslee said he can't get the group to meet with him. It's very disappointing Inslee said. Tuesday's hearing was part of a series the panel is holding on the California crisis so far without any emerging consensus on what if anything Congress should do. ---- Power plan called wrong Wall Street analysts say the governor's approach to the problem avoids the issue that caused the imbalance. March 7 2001 By DON THOMPSON The Associated Press SACRAMENTO California's scramble to insulate consumers from the soaring price of electricity may add to the state's power problems this summer Wall Street analysts said Tuesday. Gov. Gray Davis' emphasis on buying utilities' transmission lines and negotiating long-term power contracts to help ease their debts skirts the deep imbalance between wholesale and market rates that led to the state's power problems in the first place they said. In the long run it doesn't solve anything said Michael Worms an industry analyst for Gerard Klauer Mattison & Co. In the long run you need to send the right price signals to consumers which will create its own conservation signals. Unfortunately customers were shielded from that in California. Davis said Monday that the state's first contracts to buy electricity for two financially struggling utilities will provide only about two-thirds of the power needed on a typical summer day forcing Californians to cut power use at least 10 percent to avoid blackouts. Since early January the state has been buying one- third of the power Southern California Edison and Pacific Gas and Electric Co. customers need. The two utilities denied credit by suppliers say they have lost nearly $14 billion due to soaring wholesale electricity prices that the state's industry-deregulation law says they cannot pass on to consumers. The keepers of the state power grid had enough electricity Tuesday to avoid declaring an electricity alert but have faced an almost-daily scramble for weeks due to a tight supply and high wholesale prices. Several wholesale and retail rate proposals are circulating. Among them: Free-market advocates such as Worms want an immediate end to the deregulation-imposed retail rate freeze on Edison and PG&E that will expire next year. Davis wants a Western price cap of $100 per megawatt hour on power generators he says have been prof iteering from California's short energy supply. The Bush administration and Federal Energy Regulatory Commission are cool to that idea. In December FERC imposed a soft cap of $150 per megawatt hour on wholesale rates in the state and required suppliers to justify any higher prices they charge. Consumer groups such as The Utility Reform Network or TURN want regulated rates for residential and small-business customers but free-market rates for large industrial customers which sought deregulation in the first place. TURN also advocates a tiered rate structure with higher rates for consumers who use more than a reasonable amount of electricity each month. Assembly Republicans say electricity and natural-gas prices will fall naturally if the state increases supply mainly by making it easier to build plants and pipelines. Right now you're sort of sitting partially with regulation and part with the free market said Paul Fremont an analyst with Jefferies & Co. Both these systems work. It's sort of that in-between system that you have in Califor nia that doesn't appear to be working. The system discourages generators from building new power plants because they aren't guaranteed a profit and it doesn't do enough to discourage power use by consumers because the price they pay doesn't reflect the true cost of power Fremont said. I don't think people here have much faith in the market and why should they? countered TURN's Mindy Spatt. I think there are probably better ways of encouraging consumers to conserve than by gouging them. Davis insists the crisis can be resolved without raising rates for Edison and PG&E customers beyond the existing rate structure. In January state regulators imposed temporary rate hikes of 7 to 15 percent on Edison and PG&E customers. The Legislature and Davis extended the increases for up to a decade to help pay back the estimated $10 billion in power buying the state expects to do for Edison and PG&E over the next several years and finance its purchase of the power lines owned by the two companies and San Diego Gas & Electric. Rates were already scheduled to increase next year for Edison and PG&E customers. Under the 1996 deregulation law the pair's ratepayers saw a 10 percent rate reduction but only until early 2002. That rate cut will likely expire as planned Davis spokesman Steve Maviglio has said. Davis wants those rates to cover not only the traditional cost of generating transporting and distributing power but the added cost of paying off the two utilities' massive debt and buying their transmission lines said Assemblyman Fred Keeley D-Boulder Creek the Assembly's chief power negotiator. Yet Davis has indirectly addressed the rate imbalance by signing legislation that will let regulators raise consumer rates if necessary Keeley said. The governor and lawmakers are in effect spreading out rate increases over a decade by using long-term revenue bonds to buy power for the nearly bankrupt utilities said Severin Borenstein director of the University of California Energy Institute. At some point we have to deal with the reality that all of the power that we buy has to be paid for by somebody - it's either going to come from taxpayers or it's going to come from ratepayers Bor enstein said. Raising rates now would get us a lot of conservation. Davis also wants financial incentives for conservation and power-plant construction in time to make a difference this summer. Our mouths were agape at the rapid timetable Keeley said. Legislators are rushing to pass those incentives by month's end he said allowing three months for consumers and suppliers to act before the heat of summer. Among bills considered Tuesday the Senate Energy Committee approved legislation to accelerate the siting of power plants. It also was considering a proposal to restructure rates for generators that use renewable energy to provide about 30 percent of the state's electricity. ---- Bill to Cut Some Power Prices Stalls Energy: Democrats balk at varying payment levels for alternative generators. By DAN MORAIN JULIE TAMAKI Times Staff Writers SACRAMENTO--Legislation aimed at cutting prices for more than a fourth of the power consumed in California stalled Tuesday as Democrats questioned why a few alternative energy generators--some of them campaign donors--stood to receive higher payments than others. Lawmakers working to unravel California's energy mess have been negotiating for weeks in an effort to cut the price paid to more than 600 generators of alternative power by more than half to below 8 cents a kilowatt-hour. Those alternative generators' contracts with utilities have shot up in recent months because of a rise in the price of natural gas. The cash-strapped corporations have suspended or made partial payments to the generators over the last few months causing many to shut down or reduce their outputs. But even as the lawmakers reached agreement that pushed the average price to near the 8-cent level per kilowatt-hour some generators would have received higher prices under the bill by state Sen. Jim Battin (R-La Quinta). Some of the generators that stood to benefit had donated to Battin's campaigns. One--Windtec Inc.--gave Battin a $20000 campaign donation in 1999. Others contributed from $3000 and $5000 last year. Battin acknowledged that he has received campaign contributions from some wind power generators but said there is no connection between the donations and the bill's provisions. It is illegal it is unethical and it's not how I do business he said. Battin noted that 25% of the state's alternative energy producers are in his district. As Democrats on the Senate Energy Committee blocked the bill Battin warned that some alternative energy producers might react to the delay by trying to force Southern California Edison and Pacific Gas & Electric into bankruptcy. We will be the cause of bankruptcy Battin said. That prompted Energy Committee Chairwoman Debra Bowen (D-Marina del Rey) to retort: I'm really tired of being threatened with bankruptcy. Alternative energy producers including those that use wind solar power biomass and other means produce 27% of the energy used in California. They sell the electricity to the utilities which in turn transmit it to retail consumers. But with the utilities facing multibillion-dollar debts the alternative energy producers under contract with Edison have not been paid since November. Scores of alternative energy producers supported the measure. Edison International and the San Francisco-based consumer group the Utility Reform Network opposed it. Michael Florio of the Utility Reform group said the deal could result in higher consumer prices an Edison representative said the same thing. Battin and Assemblyman Fred Keeley (D-Boulder Creek) worked out an arrangement with many of the generators. Keeley took the lead in the early negotiations and then turned to Battin to introduce the legislation SB 47X. Rather convoluted language would have allowed higher payments to a select few generators that produce electricity from wind and biomass. Most of California's wind suppliers for instance would have received about 6 cents per kilowatt-hour. But a handful of them about half a dozen wind farms--mostly in the Palm Springs area represented by Battin--would have received 7.8 cents. Battin contends that other wind producers receive additional payments that boost them to the same level as Windtec and others that would get the higher payments. They get the same deal Battin said of the handful of generators that would benefit from the provisions he added to the bill. In California's overall energy market the amount of money that would have flowed to the favored generators is minor. But the added prices that would have been paid to the generators would have translated to at least $19 million in the next five years to be absorbed by Southern California Edison customers according to one analysis. Also Tuesday more details were disclosed about another leg of the state's effort to escape from the energy crunch--the deals with large power generators to supply electricity to California for as long as 10 years. Those arrangements were announced by Gov. Gray Davis Monday as the bedrock of California's energy policy. But some consumer advocates warned that the deals could lock the state into excessively high-priced contracts. S. David Freeman the general manager of the Los Angeles Department of Water and Power and Davis' negotiator said that the state guarded against that by varying the time spans of its deals. About 6000 megawatts are expected to be available this summer about one-third of the energy needed by the state Freeman said. The amount of power under contract swells until more than 9000 megawatts are contracted in 2004 half of the needed amount before dipping to 8000 megawatts in 2010. What we're doing here is what everybody said had to be done Freeman said. We deliberately bought 50% so we'd have a good mix between long-term contracts which may turn out to be somewhat higher or somewhat lower than the spot market and purchases on the spot market. ---- PG&E could face mutiny on outages: SMUD others may balk if utility orders summer blackouts By Carrie Peyton Bee Staff Writer (Published March 7 2001) Sacramento's electric utility wants out of a deal that imposes rolling blackouts locally on PG&E's command. So do a lot of other utilities. They've been writing letters lobbying lawmakers and launching informal talks with Pacific Gas and Electric Co. to get off the hook before summer. Who dodges the blackout bullet is going to play out as a political hot button around the state said George Fraser head of the Northern California Power Agency a coalition of municipal utilities. In Sacramento the next volley is expected soon with the Sacramento Municipal Utility District reportedly poised to notify PG&E that it will no longer black out homes and businesses on the larger utility's command. We are absolutely trying to fight off the requirement for rolling blackouts for the Sacramento area said Linda Davis one of seven elected members of the SMUD board of directors. Saying they don't want to be dragged down by somebody else's problems two Southern California utilities have written grid operators asking to be exempted from any blackouts caused by PG&E's or Southern California Edison's financial woes. But in PG&E's view California is in an energy crisis (and) ... we're all in this together said spokesman John Nelson. The maneuvering comes amid bleak forecasts for power supplies this summer. Although Gov. Gray Davis has said conservation new power plants and moderate weather could avert blackouts officials at the Independent System Operator which runs much of California's grid expect frequent rotating outages. One consulting firm Cambridge Energy Research Associates predicts 20 hours of rolling blackouts during July and August and about 200 hours of especially intense calls for voluntary cutbacks. Before blackouts hit the jockeying over just whose lights air conditioners and assembly lines will be shut down is growing. The outcome could affect millions of people statewide. The state Public Utilities Commission is probing rolling blackout programs run by the for-profit utilities it regulates including PG&E and Edison. A PUC analysis has suggested that PG&E's program which currently exempts about 40 percent of its customers should spread the burden more broadly. For example it said 1.9 million homes and businesses are spared just because they share a circuit with a customer deemed essential. But not-for-profit utilities such as SMUD which answer to their own elected boards or city councils have other worries. Many have already lined up their power supplies for summer. Some have raised rates or are considering raising rates. Some have taken extra conservation steps. They think those preparations ought to give them leverage to ease blackout clauses in their contracts with PG&E. SMUD general manager Jan Schori is going to use every avenue ... any avenue to put pressure on including lobbying the ISO the governor and others said utility director Davis. The Northern California Power Agency a joint-powers authority that owns and operates power plants for municipal utilities has begun informal negotiations with PG&E to change blackout rules according to Fraser its top executive. It is preparing to write PG&E asking that its members be exempted from outages altogether. Failing that it wants them to face fewer outages or to be compensated for cutting off power he said. At SMUD the utility board has met in closed session to discuss exactly what it is required to do during electric emergencies under terms of the interconnection contract that links SMUD's lines to PG&E's. The contracts are being inspected with a fine-tooth comb said SMUD director Howard Posner. Schori declined to comment on any specifics. Sources indicated that the main option being considered is notifying PG&E that because of changed circumstances SMUD believes it no longer is required to routinely comply with outage requests. Other options being explored include re-negotiating existing agreements with PG&E. Posner said that ever since two days of rolling blackouts in January constituents have been asking him 'Why are we participating when we're not the problem?' And I don't have a good answer to that. Several directors said SMUD has already spent a lot of money -- and is considering 16 percent rate increases -- to ensure that it has enough electricity under contract to meet its customers' summer demands. They believe PG&E should do the same. We're almost like a David against Goliath here said board vice president Genevieve Shiroma. The huge investor-owned utilities next door have severe problems that they need to get under control. In addition SMUD plans to argue that because it can cut usage through its Peak Corps program which remotely turns off air conditioners at volunteer households it has already done its part without rotating outages director Davis said. PG&E believes the interconnection agreements that govern smaller utilities' ties to its transmission lines have benefits and burdens to both sides said Nelson. It wouldn't be fair or good policy for just one provision to be altered without taking a look at how that affects the entire contract he said. Interconnection contracts generally have clauses that require utilities to help each other out to avert greater emergencies. Sometimes reducing demand -- called load shedding -- can be the only way to stabilize the electric grid in the seconds after a major power plant or transmission line fails. It's been around in the electrical fabric forever said Jim Pope head of Silicon Valley Power Santa Clara's city-run utility. In addition to legal requirements you have a moral obligation so you don't bring the system to collapse. Like other city-run utilities Silicon Valley Power has a contract with PG&E that requires it to shed load during an electric emergency. But its contract allows it to work with big users to reduce their demand so no one has to be completely shut off. Such agreements formed long before deregulation when PG&E ran the north state's grid now are complicated by the 1997 creation of the state Independent System Operator. The ISO today runs pieces of the grid owned by PG&E Edison and San Diego Gas & Electric Co. If it believes power use is about to surge past supply potentially triggering a grid collapse across the western United States the ISO notifies the three utilities that they have to shed a certain number of megawatts. The big utilities meet that requirement two ways. They cut circuits to some of their own customers and they tell smaller connected utilities to cut a proportionate share. In Northern California about 80 percent of the outages are borne by PG&E customers and the rest by customers of SMUD and other municipal utilities and irrigation districts. In one sense we are all in this together. If SMUD were in danger of going down we would hope others would help us out said SMUD's Posner. But that's if we're in danger from circumstances beyond our control not from mismanagement or lack of financial wherewithal. It is unclear what penalties if any a utility would face for violating an interconnection agreement. In the long run the issue would be fought either in the courts or before the Federal Energy Regulatory Commission grid officials said. As a practical matter in the seconds when the risk to the grid is greatest if one utility refused to shed load the ISO would probably solve to problem by calling on PG&E Edison or others who are willing to make deeper cutbacks they said. ---- PUC to Decide Fate Of Utility Workers PG&E Edison want to trim costs by laying off thousands cutting service Bernadette Tansey Chronicle Staff Writer Wednesday March 7 2001 2001 San Francisco Chronicle State regulators are set to decide today whether debt-ridden Pacific Gas and Electric Co. and Southern California Edison can conserve cash by laying off thousands of workers and letting service standards slip. Union officials who protested the layoffs before the California Public Utilities Commission warn that if the cuts go through neighborhoods hit by power outages could stay dark for hours and more customers could face busy signals when they call about their bills. An administrative law judge agreed advising the commission in February to order the utilities to restore 725 positions already cut and block the elimination of an additional 2125 jobs. Judge John Wong said PG&E and Edison have acknowledged the layoffs will not substantially improve their shaky financial condition which arose from skyrocketing wholesale electricity costs the utilities could not pass on to consumers under a rate cap. The savings would barely make a dent Wong said in his draft decision. The two companies together claim that their debt from power purchases amounts to more than $13 billion. PG&E says it has saved $18 million from the first wave of 325 layoffs. Wong's recommendation is already running into resistance on the PUC. Commissioner Richard Bilas said the five-member panel should not be micromanaging the utilities in a time of crisis. Bilas has proposed an alternate ruling that would allow the utilities to make the cuts but provide for PUC monitoring of service in case the commission wants to step in later. We're in a situation where the utilities are not collecting the revenues they need to operate and yet we may be guilty of not letting them cut expenses where they can cut expenses Bilas said. PG&E spokesman Jon Tremayne said savings from the layoffs are helping to keep electricity running and gas flowing. It keeps cash in our accounts so we can keep doing day-to-day business Tremayne said. In addition to the 325 positions dropped so far PG&E is proposing to cut an additional 675 during the next three to six months. The cuts affect temporary and contract workers who read meters handle new service hookups and replace equipment. PG&E has no plans to eliminate permanent positions. The company is struggling to keep up with a higher workload at its call center as customers deluge the lines with inquiries about their rising bills and the effects of deregulation. Calls to PG&E ballooned from 1.3 million in January 2000 to 2.3 million in January 2001. Bilas advocates granting PG&E's request to temporarily relax standards requiring the utility to respond swiftly to customer calls and to read customers' meters once a month. PG&E wants to read meters bimonthly and send bills based on the estimated use between readings. Discrepancies could be corrected later. Wong called those measures unacceptable. He said customers need to know immediately if their efforts to conserve power are working. Wong also said the utilities' own experts have said the workforce reductions will lengthen the time required to restore power after nonemergency equipment failure. Eric Wolfe communications director for the International Brotherhood of Electrical Workers Local 1245 said some customers have already been left without power overnight because PG&E is trying to avoid the use of overtime on nonemergency power outages. It hurts a lineman to walk away from the job leaving a customer without power Wolfe said. Tremayne said PG&E is trying to minimize overtime costs but denied the company has allowed customers to go without power out of financial concerns. He said crews were pulled out when darkness and falling trees made the work too dangerous. ---- Power prices could soar during the summer Posted at 10:35 p.m. PST Tuesday March 6 2001 BY STEVE JOHNSON Mercury News Unless Gov. Gray Davis arranges significantly more long-term electricity contracts or persuades people to turn off a lot more lights California's unpredictable spot market for power could wreak havoc this summer. Even with the 40 long-term deals announced by Davis on Monday experts interviewed Tuesday said up to 43 percent of the state's daily needs may have to come from this highly volatile market in which power is bought within a day of need. That could could prove hugely expensive because some spot market energy has cost five to six times what it would under the long-term contracts. It's widely expected that consumers ultimately would have to pay that tab which could amount to billions of dollars. And because that power won't be locked up in contracts there is no guarantee it will be available when it's needed which could lead to blackouts according to a recent report to the California Independent System Operator which oversees three-fourths of the state's power grid. ``The situation in California could reach catastrophic proportions'' the report concluded adding that unless things change dramatically ``it is a virtual certainty that peak demand will go unmet during many hot summer days.'' Steven Maviglio Davis' press secretary conceded Tuesday that the spot market could be troublesome. ``It's a major concern'' he said which is why the state is trying to line up more power contracts speed up power plant construction and promote conservation. During the normally hot month of August peak daily demand for power in the Independent System Operator's territory is expected to hit about 47700 megawatts -- enough for nearly 48 million homes. The state's three main utility firms generate about 8200 megawatts and have long-term contracts from wind solar and other energy sources for about 11700 megawatts more. That totals about 20000 megawatts. Add in the 7000 megawatts of long-term power that Davis has announced for this summer and the state is still nearly 21000 megawatts short. Costly proposition If all that power has to be obtained on the spot market the price could be high. On Friday last-minute purchases on the market averaged $411 per megawatt-hour compared to about $150 per megawatt-hour for all power obtained by the Independent System Operator and $69 per megawatt-hour on average under Davis' long-term contracts. It's possible that not all 21000 megawatts would have to be purchased on the market. Assuming Davis is successful in getting people to save 10 percent -- which could prove difficult -- conservation could reduce peak demand by nearly 5000 megawatts. California also might be able to trade for another 5000 megawatts with the federal government's Bonneville Power Administration and a hydroelectric operator in British Columbia said Arthur O'Donnell editor of California Energy Markets a trade publication. Under such deals those two outfits often send that much power to California when they don't need it and California returns the same amount or more when its demand is low. But O'Donnell said it wasn't clear whether 5000 megawatts would be available this summer because ``they still haven't gotten the snowpack they need in the Pacific Northwest'' which could limit that region's generating capacity. Still falling short Even if those hydropower imports are available and conservation works as Davis hopes it's likely California would still require the spot market for 11000 megawatts to meet the August demand. That's more than 20 percent of the state's overall power needs. ``All of the surrounding states are buying probably less than 5 percent at most of their energy on the spot market'' said Frank Wolak a Stanford economist who monitors electricity prices for the Independent System Operator. He worries about how much that power could cost and is disturbed that state officials haven't adequately addressed the issue. ``No one has any idea what they are going to do and that is part of the problem'' he said. Officials at Pacific Gas & Electric Co. are particularly concerned. They fear that their company -- which is nearing bankruptcy -- could get stuck for much of the spot market purchases by the Independent System Operator which has threatened to bill the utilities for the cost. Fearing the annual bill for that power could hit $2.4 billion this year PG&E wants the tab sent to the Department of Water Resources which also is buying power on the spot market for the state. But the Department of Water Resources has objected to that idea and the matter is expected to be heard today by the California Public Utilities Commission. ``We're looking for clarity on a number of issues'' regarding how the spot market will work ``and certainly that's one of them'' said Thomas Hannigan the water agency's director. ``I don't think anybody knows the answer of who's going to pay for it'' added PG&E spokesman John Nelson. But Nettie Hoge executive director of the Utility Reform Network in San Francisco said she suspects consumers ultimately will foot the bill. The unfortunate likelihood about spot market purchases is that ``ratepayers are responsible for all of it eventually'' Hoge said. ``It's a very big problem.'' ---- Power Plant Plans Cause Conflicts East county residents blast supervisors Jason B. Johnson Chronicle Staff Writer Wednesday March 7 2001 Industry dreams of building new power plants in east Contra Costa's hills are prompting an angry reaction among residents and elected officials who say they don't want more plants. The conflict was sparked by a vote by county supervisors yesterday to aggressively explore possible sites for new power plants throughout the county. The measure by Supervisors Mark DeSaulnier and Federal Glover which passed on a 4-to-0 vote directs the county administrator and Department of Community Development to compile a report on possible sites within 45 days. Supervisor Donna Gerber abstained after criticizing the plan for potentially repeating the same mistakes that plagued the state's energy deregulation effort by not considering how much energy the state region and county will need in future years and how much power is slated to come online. Gerber said alternative power sources such as solar should also be examined. A site drawing much attention is on top of a deposit of natural gas near the Concord Naval Weapons Station off Highway 4. The owners of 70 acres of land near the station recently formed a company Golden State Power Co. to pursue construction of at least one small peaker plant and a much larger facility capable of producing 600 megawatts. The site could hold up to three small 50-megawatt peaker plants and a larger 15-acre natural gas plant said Steve Thomas managing partner with Golden State. No land use applications have been filed. Thomas said 30 acres could be kept as open space to form a buffer around the project. Both (facilities) are state of the art said Thomas. We believe that the site is ideal. But east county residents at yesterday's meeting blasted the supervisorial measure and the power plant proposal complaining that more plants could put people's health at risk. The region already is home to six power plants. We're going to get a good dose of poor air quality and (negative) health conditions from this said Concord resident Evelyn Frietas. I think we need to stop and think about what we're doing to our quality of life. Dan Torres said the home he bought in 1995 at a new Bay Point development would be alarmingly close to the proposed Golden State site. It will be dragging emissions over our home said Torres. I didn't buy a home on that hill to be surrounded by power plants. There are six power plants in operation in east Contra Costa. Pittsburg already has two power plants and two more under construction. City Council members Frank Aiello and Yvonne Beals said the Antioch-Pittsburg area has done more than its share of energy production. Aiello said Pittsburg will soon produce enough energy to power three million homes in California. When is enough enough? asked Aiello. Pittsburg has shouldered responsibility for a land-fill and two more power plants. At some point you have to say enough. Beals said that while power plants have added millions to the city's general fund the negatives of additional plants could outweigh the benefits. I don't think that Pittsburg or east county should be the dumping ground for energy for California said Beals. ---- Supervisors set search for power plant sites The board also heard from the potential developers of a 650-megawatt plant between Bay Point and Concord By Thomas Peele TIMES STAFF WRITER MARTINEZ -- Contra Costa County supervisors took tentative steps Tuesday toward allowing the construction of at least one small power plant before summer ordering that its staff identify potential sites in unincorporated areas within seven weeks. The board voted 4-0 to search for locations. Third District Supervisor Donna Gerber abstained saying her colleagues lacked a comprehensive context'' to identify sites. I think the board knows just enough to be dangerous'' she said. Gerber said the county should examine the potential for additional power plants within its borders but not investigate individual sites yet. But Fourth District Supervisor Mark DeSaulnier said the action was necessary because of the energy crisis and because of Gov. Gray Davis' call for local governments to help speed the construction of so-called peaker plants before July and August. I wouldn't do this except under an emergency DeSaulnier said after the vote. There are unusual circumstances. We're not talking about putting this in a residential area. Fifth District Supervisor Federal Glover backed DeSaulnier but said he hoped for a location outside his heavily industrialized East County district. There's a lot of concern in East County as to the number of plants he said. DeSaulnier said though that the only logical place for a small plant remains the industrial belt'' stretching along the waterfront from West County to Antioch. He declined to provide specifics but said the only other potential site outside the industrial areas was the Concord Naval Weapons Station property. But he quickly added that he believes the U.S. Department of Defense would never go for it. Also DeSaulnier said he could not rule out the county building the plant itself and entering the electricity-selling market during peak demand times. Board Chairwoman Gayle Uilkema called that idea extremely premature and unlikely. That's a very powerful decision. I do not think we are ready'' she said. The California Energy Commission listed the Equilon refinery in Martinez as one of 32 potential peaker plant sites in the state last week. Peaker plants kick in during peak usage times. Davis called for their quick construction before the height of summer and its energy demand for air conditioning. Plants that generate as much as 50000 megawatts don't need Energy Commission approval. DeSaulnier said he believed a peaker plant could be built about a month after final approval. Supervisors also heard from the potential developers of a 650-megawatt plant between Bay Point and Concord. Walnut Creek commercial real estate developer Steve Thomas announced his intentions for the site north of Highway 4 last week. Construction could take two years. Eric Hasseltine a consultant representing Thomas and what he described as a brand new company for the site the Golden State Power Co. told supervisors that if they intended to speed peaker plant construction they should do what they can to expedite the larger plant. The Thomas site could house a peaker plant until the proposed larger one goes online. A large natural gas line passes under the site. DeSaulnier seemed cautious about the larger proposal which he had described last week as a good site. Uilkema too said she knew too little about it to comment. A resident who lives near the Thomas property asked the board to build it (the larger plant) closer to where you have industrial areas. You have to carefully consider the people who live nearby said Dan Torres 39. Evelyn Freitas of Concord said she lives downwind of the proposed site. Our air quality is going to be worse then it is now she said. Gerber played on the environmental issues saying the county already ranks second statewide to Los Angeles in volume of hazardous materials and amount of electrical generation. ---- Peter Schrag: California's $90 billion infrastructure gap (Published March 7 2001) By now California's surreal energy mess has grown from a crisis to a condition. It may not be quite as permanent as say death and taxes but it's still something that could get a whole lot worse before it gets better. Until there's more realistic pricing no gubernatorial pea-under-the-shell buyout scheme will solve it. Beyond the energy crisis however and in many ways similar to it California faces a whole range of other infrastructure problems -- in transportation in water resources and sewer systems in school and university buildings -- that seem once again to be all but forgotten. The Business Roundtable has estimated the need at roughly $90 billion though no number can possibly be exact. What's certain is that after a burst of high-level investment in public facilities during the 1950s and 1960s California's annual capital investment has sunk precipitously -- from an annual $150 per capita in the 1960s according to a set of recent studies for PPIC the Public Policy Institute of California to about $30 in the 1990s. But you probably don't need to tell anyone driving Bay Area or Los Angeles freeways or looking at the ubiquitous portable classrooms those dreary brown boxes that house a fourth of our public school students. Ever since passage of Proposition 13 in 1978 we have been flying the flag of deferred maintenance. As in the state's electricity crisis however there's no way California can effectively address those problems merely by building or bonding itself out of them. In highway construction in developing water resources in finding enough university space to accommodate the Tidal Wave II of students managing demand is likely to be as crucial to any solution as new construction. In the energy market -- and in electricity particularly -- it's been a familiar principle ever since David Roe of the Environmental Defense Fund first persuaded Pacific Gas and Electric that a dollar invested in conservation may be worth as much as the same investment in new generation. But in most other sectors of California's infrastructure state and local it's a lesson still to be learned. There have been scattered attempts to encourage conservation and reduce demand -- significant reduction in water use for example through the installation of low-flow faucets and low-flush toilets some reduction in traffic by using rush-hour diamond lanes or by adjusting highway or (as in New York) bridge tolls to levels of congestion. But as pointed out by David Dowall an urban economist at Berkeley state policy-makers have not really begun to consider how demand management strategies can be applied to infrastructure service areas or how the more efficient use of facilities and more realistic pricing -- highway tolls say or parking fees -- can reduce demand for scarce infrastructure resources. In any case says Dowall in one of the PPIC reports we should pick which major projects we will build not just according to per capita estimates of how much we need but according to how much consumers are willing to pay for them. To avoid hurting the poor congestion-related highway tolls and other tariffs can be rebated on the basis of income. University fees can be means-tested. In California they also could be adjusted to encourage summer school classes and other off-peak uses rather than (as in the past) making UC summer courses more expensive. Given the political and economic uncertainties there's no way to know how far such demand management can be taken. But there's not much doubt that as Dowall and others point out the state's infrastructure planning is a jumble of uncoordinated agency agendas and wish lists. The Legislature last year passed a bill AB 1473 by Assembly Speaker Robert Hertzberg that requires the governor beginning next year to submit an annual five-year infrastructure plan for state agencies and public schools along with recommendations on how to fund it. In addition Gov. Gray Davis' infrastructure commission is expected to recommend better coordination of infrastructure and land-use planning when it issues its report this spring. That would be a start. As California State Treasurer Phil Angelides has pointed out the state desperately needs to start joint planning -- regional planning -- for housing roads and other resources to reduce the need for long commutes to preserve open space and to bring jobs to where people live and housing to where the jobs are. That would itself reduce demand for more freeway lanes and equally important improve the quality of life. At present most planning for housing roads water systems and other facilities rarely recognizes the regional impact of local decisions. In the East Bay slow-growth forces push well-intended initiatives that would force more development into Tracy or Modesto and further tax the transportation systems to Silicon Valley. In city after city there are beggar-thy-neighbor efforts to grab yet another shopping mall that produces a little extra sales tax revenue for the city that gets it and that often compounds traffic and revenue problems in adjacent communities. In higher education we divide bond proceeds evenly among UC the California State University and the community colleges even though the community colleges serve eight times as many students as UC. We plan road projects according to county not regional priorities. It is all done according to antiquated political and fiscal formulas that often no longer make sense. We don't just need better capital planning we need a whole new planning system. ---- PG&E power plan debated at hearing A PUC meeting on the utility's capacity expansion project for the Tri-Valley follows weeks of protest from officials residents Power upgrade in valley debated By Megan Long TIMES STAFF WRITER SAN FRANCISCO -- Dublin officials and the developer of a Livermore subdivision faced questions Tuesday about their opposition to alternative routes of PG&E's controversial Tri-Valley power upgrade plan -- and answered by restating their long-standing objections. Tuesday's cross-examination came during the third and likely final week of the California Public Utility Commission's evidentiary hearings on the utility's $91 million Tri-Valley 2002 Capacity Increase Project. It has followed weeks of protests of PG&E's upgrade plans by officials and residents of Livermore Pleasanton Dublin and San Ramon. And before the questioning started Dublin Vice Mayor Janet Lockhart reiterated concerns about an alternative route deemed environmentally superior that would place a substation just 1000 feet north of Interstate 580 between Tassajara and Fallon roads. She said that would undermine the results of a 15-year process to plan the eastern development of the city. It's extremely important to the residents of our community to follow a plan we worked hard to produce she said. Dublin officials favor PG&E's proposed placement of the station three miles north of the freeway away from new high-tech company offices and housing developments. Besides the Dublin substation the project calls for construction of a substation in North Livermore expansion of the Pleasanton substation and installation of 23.5 miles of new lines. In response to questions from PUC Administrative Law Judge Michelle Cooke Dublin's public works director Lee Thompson confirmed that the Lin family the owner of the property where the alternative substation would go wasn't interested in selling the land to PG&E. Cooke also asked Thompson to define a discretionary permit which is how city officials said they might treat a permit for a substation. Lee said that type of permit is one the city has the right to approve or not depending on the project's impact. Eddie Peabody Dublin's community development director testified that the zoning for the Lin property accommodates uses such as commercial business research and development and light manufacturing. It would not he said be appropriate for a power substation. He said parcels within the East Dublin area that could host a station would include those zoned for public and semi-public uses including land recently bought by Oracle and Sun Microsystems for new campuses. While Dublin officials testified that one buyer of land in that area paid $86 per square foot others suggested land prices would be inflated to help make a PG&E land buy look prohibitively expensive. An executive of Centex Homes the developer of new houses near Isabel Avenue and Concannon Boulevard objected to an alternative route that would place high-voltage transmission lines overhead along Isabel and Stanley Boulevard. David Barclay president of Centex's Northern California division said that the 80-foot to 150-foot towers would have a severe visual impact on residents of the Prima tract. Ed O'Neill a lawyer for the Kottinger Ranch Homeowners Association pointed out that existing distribution lines on 50-foot poles on Isabel already mar the view for residents. The Foley family has been ranching on land south of Pleasanton city limits for years said their attorney Kennedy Richardson. The utility's project would place overhead lines and a transmission station on rolling hills that the family envisions as one day being public open space with limited development Richardson said. Lawyers for Pleasanton Livermore Kottinger Ranch and Centex are scheduled to cross-examine a PG&E engineer today about the project's routing. That testimony should be the most controversial of the hearings. Judge Cooke is expected to recommend an alignment by July to the PUC which will make the final decision. ---- NEWS State OKs 'Peaker' Power Plant at SFO / Temporary generator could be sending electricity to 50000 homes by August Marshall Wilson 03/08/2001 The San Francisco Chronicle FINAL Page A.20 (Copyright 2001) State energy officials yesterday approved plans to build a temporary electrical plant at San Francisco International Airport that should generate enough juice to power 50000 homes by August. Meeting in Sacramento the Energy Commission voted 4-0 to give the green light to the gas-fired plant. It will operate during peak summer and winter demand to help the state avoid Stage 3 power alerts and rolling blackouts. Texas-based El Paso Merchant Energy Co. won approval under a new state law mandating speedy four-month reviews of so-called peaker plants. It was the only one of seven applications statewide to win approval. The other proposals were withdrawn for various reasons. The 51-megawatt plant formally called the United Golden Gate Power Project is scheduled to be built at the northwest corner of the airport near the United Airlines maintenance center. Within the next few weeks El Paso plans to apply to build a 571- megawatt $400 million plant in the same area company spokesman Jesse Frederick said. It would undergo a separate review by state energy officials. The small peaker plant approved yesterday is to generate electricity beginning around Aug. 1 for up to three years. After the end of three years the plant would be closed or converted to a cleaner-burning system. Under state law a temporary peaker plant is permitted to spew more air pollution than a permanent plant. El Paso's temporary plant is to be built next to a co-generation plant operated by United Airlines. It would use existing connections for natural gas and water supplies and tap into existing power transmission lines. Electricity generated by the plant would be pumped into the state's electrical grid Energy Commission spokesman Gary Fay said. It would also serve as a backup for San Francisco Airport in case of a blackout. No one spoke against the proposed plant at yesterday's commission meeting. The proposal however has been criticized by area residents and environmentalists worried about air pollution. Scott Buschman a professional photographer and San Bruno resident said yesterday it was unjust that state officials 100 miles away in Sacramento approved a Texas company's proposal to put a power plant on land owned by San Francisco. The fact that they approved it without considering the public's concerns foremost air quality is very disturbing he said. Fay said the plant complies with clean-air standards. Answering the criticism about the location of yesterday's deliberation he said three hearings and several workshops were held in communities near the airport. Copyright 2000 Dow Jones & Company Inc. All Rights Reserved. ---- Crossed Wires: Major Kinks Emerge In Gov. Davis's Plan To Power California --- State's Outlays for Electricity May Be Hard to Recover Without Rate Increases --- Betting on Long-Term Deals By Wall Street Journal staff reporters Rebecca Smith Mitchel Benson and John R. Emshwiller 03/08/2001 The Wall Street Journal A1 (Copyright (c) 2001 Dow Jones & Company Inc.) SACRAMENTO Calif. -- Earlier this year Gov. Gray Davis made what may be the biggest bet in the history of the nation's biggest state: that he could tame an out-of-control electricity market and avoid devastating blackouts without busting the state's budget antagonizing its consumers or derailing his own political career. His wager is still on the table but the assumptions that underlie it are looking increasingly shaky these days. The governor has already spent around $2 billion of public money buying hugely expensive wholesale power taking over the role formerly played by the state's near-bankrupt electric utilities. And California will probably be obliged to spend billions more before its electricity market stabilizes and those utilities are restored to some semblance of financial health. Under the governor's plan California aims to recoup the money it is using to buy electricity by issuing $10 billion in bonds. That way it would still have a healthy budget surplus to finance new spending on roads schools and other public services. But there's a potentially big obstacle to this plan. The state Legislature worried about racking up billions in new debt has put limits on the size of any bond offering. In broad terms the Legislature's action would allow the state to borrow only four times as much as it can recover annually from utility customers. Right now that doesn't appear to be much. Under the current rate structure essentially set in place by California's flawed 1996 electricity-deregulation plan consumers pay far less for power than the cost of acquiring it on the wholesale market. Preliminary estimates submitted by utilities last month to the California Public Utilities Commission show the state's share of the proceeds from electricity sales this year could be as little as $241 million -- not enough to support even $1 billion in bond sales under the Legislature's formula. That would leave the state on the hook for much of the money it has already paid for power -- not to mention the billions more Gov. Davis will need to spend. That in turn raises the prospect that California's economy and its credit rating both could deteriorate significantly. But state finance officials say that based on their own projections they will be able to extract enough money to support a $10 billion bond issue. Walking a careful line between fiscal prudence and political survival Mr. Davis and others in his administration are scrambling to come up with ways to get around the legislative restrictions without raising rates for consumers. If I wanted to raise rates I could solve this problem in 20 minutes Mr. Davis says. The governor says he believes that the state can obtain enough affordable power through long-term power-supply contracts to avoid the need for a big rate increase. The billions of dollars the state hopes to borrow would be used to help pay for power until electricity prices drop as they are expected to do when new power plants come online over the next few years. The Davis administration fears that what may be its only other option -- a big increase in retail electric rates -- could prompt angry consumer groups to seek new electricity laws through a statewide ballot initiative during next year's election. That's when Mr. Davis is expected to run for a second term as governor. But trying to save California without rate increases is forcing Mr. Davis to make some colossal gambles with the state's money. State officials estimate that in the next several months California will need to spend as much as $6 billion on power purchases -- equivalent to the state's entire fiscal surplus. Mr. Davis is also looking to spend several billion more to buy the transmission assets of three investor-owned utilities in order to restore two of them to credit-worthiness. He also has announced plans to spend several hundred million dollars more on conservation programs designed to reduce demand while new power plants are being built in the state. In order to limit the state's financial exposure in the meantime the governor and his aides have in some cases ignored state law. They have threatened appointed officials who have stood in the way. And they have sharply restricted the flow of information to the public. None of those steps is expected to do much to reduce state spending on power in the coming months. In a few weeks power usage is expected to begin a sharp seasonal rise as Californians switch on their air conditioners with the coming of warmer weather. By various estimates demand during peak periods this summer could outstrip supply by 10% or several thousand megawatts. That could produce more rolling blackouts like the ones that hit Northern California earlier this year. It is also likely to put strong upward pressure on wholesale electricity prices. Steven Zimmerman managing director of Standard & Poor's Corp. says Mr. Davis and his aides don't have a lot of time to put a cap on the state's financial exposure to the crisis. The credit-rating agency has put the state on credit watch for a possible downgrade which would affect the value of all of California's outstanding public debt. Moody's Investor Service Inc. is also concerned. It said in a recent report that the power crisis could soon seriously threaten the health of the state's economy. Mr. Davis a Democrat and career politician was dealt a bad hand when he took office in 1999. The deregulation plan that sparked the state's electricity crisis was enacted under his predecessor Republican Pete Wilson. But Mr. Davis was slow to react to early signs of trouble this past summer and alarms sounded by members of the state Legislature. By the time Mr. Davis finally sprang into action earlier this year a troublesome power-supply squeeze had escalated into a crisis. In a Jan. 17 declaration of emergency the governor designated the state Department of Water Resources to take the utilities' place as the daily buyer of huge quantities of electricity. His hope: that by making the state the dominant player in California's power sector he would ease electricity producers' concerns about getting paid and give the state enough clout to negotiate lower long-term power prices. Earlier this week Mr. Davis announced final or tentative agreements with 20 power suppliers to furnish the state with a total of 8900 megawatts for periods of as long as 20 years. But the supply situation remains extremely uncertain for this summer when demand probably will top 45000 megawatts. If the state can secure enough power under contract and push down demand through aggressive conservation it might be able to squeak through the summer season. If not it will be forced to keep buying huge amounts of costly power in the cash market. Under deregulation retail electric rates were frozen for several years while wholesale-power costs were free to fluctuate. When the plan was conceived wholesale prices were low and expected to go lower. However a combination of unexpected growth in power demand and a lack of new generating capacity helped produce a supply squeeze. Average wholesale prices more than tripled last year from 1999. And in January those prices were up 10-fold from a year earlier. By then California's two biggest investor-owned utilities -- the Pacific Gas & Electric unit of PG&E Corp. and the Southern California Edison subsidiary of Edison International -- faced imminent financial collapse. They had racked up billions of dollars in wholesale power bills they couldn't afford to pay. As generators began shying away from selling to the two utilities the Clinton administration forced them to sell power into the California market an order left in place during the first weeks of the Bush administration. Still northern California was hit by rolling blackouts on several days in early January. Since then the DWR which does some electricity trading as an adjunct to its main mission of managing the state's giant system of aqueducts and reservoirs has had to learn the ins and outs of power markets on the run. It hasn't been easy. David Mills trading-floor manager for the federal Bonneville Power Administration says the water agency has at times offered to pay $50 to $100 per megawatt hour more than the available market price. They agree to prices that make you wonder says Mr. Mills whose organization markets electricity from federal dams in the Pacific Northwest. You'd at least think they'd check to see what the prevailing price is before throwing out their offer. Mr. Mills says that to cut California some slack he occasionally has instructed his traders to sell at prices lower than the DWR had offered to pay. Ray Hart the water agency deputy director responsible for the power purchasing says he isn't aware of any cases in which the DWR has overpaid. He says his team has been extremely successful by all measures. Ultimately the DWR's trading acumen is far less important than the overall arithmetic of power supply and demand in California. With the price of natural gas that feeds many of the region's generating plants at near record levels and some suppliers reluctant to sell into the troubled California market wholesale electric prices remain stubbornly high and in recent days have again been rising. The Legislature has advanced the DWR about $3 billion from the state's general fund for power purchases. Under emergency legislation passed by the Legislature and signed by Mr. Davis on Feb. 1 the general fund is to be reimbursed from a planned bond sale later this year. But under terms of the emergency law the water agency would have to wrest $2.5 billion a year in revenue from retail electricity rates in order to sell the $10 billion worth of bonds sought by Mr. Davis. Assembly Speaker Robert Hertzberg a Southern California Democrat says the formula was created to ensure that there would be a way to repay the bonds without draining the state's coffers. We didn't want to just open our wallets he says. According to the language of the Feb. 1 law the water agency gets what's left of revenue collected from ratepayers after the utilities pay certain of their own power-supply bills and other expenses. And in their filings with the PUC last month the utilities reckoned under their worst-case scenarios that there would be only $241 million available to the DWR this year. State officials are quietly pushing the PUC to rejigger the formula so that the water department gets more money -- even though that would clash with terms of the Feb. 1 law. Robert Miyashiro deputy director of the Department of Finance says the emergency law was drafted poorly and has led people to believe the DWR only gets the leftover money. He predicts there will be cleanup legislation. At the request of the Davis administration the PUC is considering a plan to use a different revenue-sharing formula than the one in the state law. The proposed new formula was written in close consultation with Mr. Davis's Finance Department says PUC President Loretta Lynch who supports the initiative and is hoping to rush it through. The effort has drawn some opposition. Commissioner Richard Bilas at a recent PUC meeting questioned the legality of the commission attempting to change a formula set by the Legislature. PG&E is even more emphatic since the DWR's extra money could come at the utility's expense. The formula threatens to undo the very financial protections for the utilities that [the new law] attempted to provide the utility said in a recent filing with the PUC. As politicians and regulators wrestle with that issue the Davis administration has taken a step to reduce the outflow of state cash that also seems to conflict with the Feb. 1 law. It was widely assumed that the law required the DWR to buy any electricity the state needed to keep its lights on. However on many occasions the DWR has refused to buy power on the grounds that it was too expensive citing a portion of the new law that urges the agency to hold down costs. The task of covering any remaining shortfall has passed to the California Independent System Operator which manages the state's energy grid and is charged with buying power when necessary to avert shortages. However the ISO doesn't have any power-purchasing money of its own and the major parties it would normally bill are PG&E and Edison whose inability to pay their power bills was the reason the state started buying electricity in the first place. Amid criticism of its stance from generators utilities and Wall Street the DWR says it has started covering more of the utilities' electricity costs. The water agency is now buying 95% to 99% of what California needs in a given day says the agency's Mr. Hart. But increased buying only adds to the uncertainty about the eventual tab. The state's legislative analyst Elizabeth Hill recently recommended that lawmakers hold off considering more than $2 billion in state spending on items ranging from college construction to beach cleanups because of continuing questions about the financial impact of the electricity crisis. Like others Ms. Hill complains that the governor's office and state agencies haven't been forthcoming with information. Indeed the DWR refuses to say precisely how much power it is purchasing and at what prices though it has on several occasions gone back to the Legislature for more money. State officials say that data on its purchasing activities would give suppliers an advantage in continuing electricity-supply contract talks. State Controller Kathleen Connell who is running for mayor of Los Angeles in an April election recently announced plans to post state power-spending information on her department's Web site. But within 24 hours Ms. Connell suspended that plan after discussions with senior Davis administration officials. I feel very strongly that this information should be publicly released says Ms. Connell. I just don't want to do anything that would weaken the state's effectiveness in negotiating. In an effort to more tightly control events the governor obtained legislative approval to abolish the 26-member ISO board which was made up of everyone from utility executives to representatives of consumer groups. He then appointed a new five-member board. To ensure a quick transition the California attorney general threatened the old board members with fines of as much as $5000 each if they didn't immediately relinquish their positions. All did. I was offended at the heavy-handed treatment says Karen Johanson a former ISO board member. One of the first acts of the ISO's new board was to close a meeting about the electricity crisis. The former ISO board routinely held such meetings in public. ISO attorneys say the meeting was largely designed as a private briefing for new board members and that the organization is committed to keeping its deliberations as open as possible. The Wall Street Journal and other news organizations have unsuccessfully challenged the closure in Sacramento state court. Copyright 2000 Dow Jones & Company Inc. All Rights Reserved.,other,informative,3 +On Market Power in California,fyi. -----------------,other,neutral,0 +Public Policy Contacts for California,Please respond to kevinscott Jeff and Steve As you requested I have prepared a list of my preferred public policy contacts for California. It is composed of professionals from an array of public private and non-profit backgrounds. I have worked in some capacity with each of these people and most I know quite well. Please call me for further background. Kevin 213-926-2626 Attachment - Kevin Scott - Preferred Contacts - 6-20-01.doc,other,formal,3 +Can you help me?,-----------------,external affairs,friendly,3 +Liberalisation of Italys Energy Markets,Any interest? -----------------,other,casual,3 +Invitation to speak at September Pricing conference,Forward to whomever you see fit. It looks like an opportunity to explain price risk management to large customers. -----------------,other,formal,3 +UC/CSU press release,fyi -----------------,other,casual,0 +Regulatory issues memo: Revised,Additional information on the regulatory context. -----------------,legal affairs,formal,2 +Confidential Due Diligence Info - GS,There is a lot of confidential information here (in items 1and 2) Detailed monthly P&L covering all trading activity for the last three years Potential Exposure by sector (eg gas and electricity utility) Detailed monthly P&L covering all trading activity for the last three years.,other,cautious,5 +Re: Enron Mentions,It looks like we are playing a smaller role than the WSJ article indicates -- i.e. a role commensurate with our level of interest. I have talked with John several times about the relative importance of OPIC ExIm and other funding organizations in light of the change in emphasis in our business. As a result of those discussions we cut headcount and expenditures from the proposed budget for 01 and John has joined Linda Robertson's organization in the DC office (instead of being a stand alone effort). Having said that my view (based on the work John has been doing) is that we continue to have a considerable amount of work for him to do on the project finance front as a result of existing projects projects we continue to pursue and transfer issues associated with the asset sales. Do you agree? ,other,formal,3 +Request for Comments,Have you solicited comments fromo EES? -----------------,other,formal,3 +TV News Clip,Jeff At the end of last week there was a very interesting TV news story on NBC KRON Channel 4 in San Francisco. You lead the story which also includes Governor Davis President Bush. What most catches my attention are the visuals and chant of the protestors during the Enron segment. The props and signs are very TV camera friendly. For instance there is a larger then life mask of you and a mockup of a paycheck to you from the people of California. The chant rhymes with your name. From my perspective this was no simple pie in the face. This protest was very organized and sophisticated. I think it would be prudent to gain more information about who was behind it and who was behind them. I tried sending you the video file in mpeg format but at 8400k it was too large to email. To see the news clip you may double click this link After downloading the video will play on a computer that has Real Player. Kevin,media & press,inquisitive,3 +Ken Lay update,Ken left a msg for me on Sunday. He was able to return Bryson's call. Not much new: Ken got Jeff's paper will try to reach Hertzberg on Monday. Bryson gave an update (very consistent with yours on Fri) Wants us to think creatively about how to keep DWR contracts from preventing the comprehensive solution and how to address the concerns of the state treasurer. Ken tried to reach Pete Peterson (Blackstone) but did not make contact.,other,casual,2 +"Humberto (Beto) Kuhn, resume",Maureen - please forward on to Barry when you get his e-mail address. Barry - I don't know Humberto personally but looking over his resume I thought he might be a fit in your organization. -----------------,human resources,formal,2 +<> - February 2001-CR,,finance,neutral,3 +California Lawmakers Vote to Limit Power Costs - WSJ,They refer to expedited siting. What are the provisions? -----------------,other,inquisitive,3 +Reliability and Security Arguments (RTOs),This responds to Charles's voice mail and the RTO conference calls that Janel has been on where we have discussed responding to those who say the heightened interest in security is a reason NOT to do large RTOs. Jim Steffes is the EPSA witness on reliability and other issues at a Barton subcommittee hearing next Wed. Oct. 10th. While the written testimony filed for the Sept. 11 hearing that was canceled is still operative Jim's oral remarks can be whatever he wishes. Also even if he does not raise it in his opening statement the issue will no doubt come up by others or in Q&A. Thus -- any talking points need to be ready by Tuesday for this hearing. Does not have to be anything fancy or hand-out quality. Just something for Jim to consider using. Charles I do not recall any specific articles on what NERC said but Sarah Novosel said she would check since she thought there was something like what you raised in your voice mail.,energy trading,formal,5 +<> - RLB-Florida,,finance,neutral,3 +Vision Focus Groups,Rosie and Sherrie: Jeff Ken and Joe wanted to discuss the attached. Joe -- this is the same document I forwarded to you earlier. -----------------,other,casual,3 +Re: Confidential --CFTC Chair,do not circulate fyi ,other,confidential,3 +Invitation to Corporate Responsibility Task Force Meeting,Let me know when and where. -----------------,corporate governance,casual,3 +Re: FW: Surprise!!,EB 4712C Ext. 3-1586,business document,neutral,0 +Senate Investigative Committe Begins Hearings Today @ 1:30,The State Senate begins it's investigative hearings today April 18 @ 1:30 pm in Room 2040. The topic this week and next week will be to go over previous investigations into market power. Today the committee will be hearing testimony from: Frank Wolak Chairman Market Surveillance Committee CAISO. Eric Hildebrandt Manager Market Monitoring CAISO Elaine Howle State Auditor IEP will be prepared to respond to media at the hearings and will be distributing the attached materials: An outline of previous investigations into market manipulation and price gouging -- and ???their findings. ? A detailed analysis of the flaws in the CAISO reports We will keep you posted. Thanks Jean -- Jean Munoz McNally Temple Associates Inc. 916-447-8186 916-447-6326 (fx) - ISO Report An.pdf - Previous Inve.pdf,government & politics,formal,3 +CA Legislative Summary,,legal affairs,neutral,0 +Privileged and Confidential communication to my attorneys,Felicia Does this sound right to you? Just wanted to confirm. Thanks. Michelle -----------------,legal affairs,formal,3 +PARAGRAPH,Enron also announced today a restructuring of its broadband business. Conditions in the broadband industry have reduced revenue opportunities in the sector. The strategy we pursued in the broadband business will allow us to quickly restructure this business without affecting our strong earnings outlook said Skilling.,other,formal,0 +Re: Arbitration with Reliance and ONGC,Are you aware of this? -----------------,legal affairs,inquisitive,3 +Re: Per Your Request,This is a very good try. I think it comes off too defensive and too genera= l=20 (I just don't think the topic lends itself to the format). Here's what I= =20 think we should do: Jeff is filming a piece for etv about the stock price. = =20 We should perhaps use and expand upon those messages. This approach is= =20 more directed at the bottom line: why our stock price should go up. =09Sarah Palmer@ECT =0903/09/2001 03:14 PM =09=09 =09=09 To: Steven J Kean/NA/Enron@ENRON =09=09 cc: Mary Clark/Corp/Enron@ENRON =09=09 Subject: Re: Per Your Request Thanks Steve. Here's an initial draft -- I've taken a very light eBizy= =20 approach to delivering the message. Perhaps by having some fun with it we= =20 can look a little less defensive. Let me know if we're on track or pitiful= ly=20 way off. Thanks. Comparing Enron to Apples You may have noticed =01) or you may be asking why =01) industry analysts o= ften=20 compare Enron to Wall Street firms like Goldman Sachs or investment banks= =20 like Chase Manhattan. We thought it was time to sort out any confusion=20 between our businesses just in case someone asks you to explain. Here's h= ow=20 we're different from those guys: w Enron provides physical delivery of energy products to customers =01) we = are=20 not just traders. Those guys mainly act as brokers and do not participate= =20 physically. w Enron proactively seeks to reform and create markets. Those guys simply= =20 participate and compete. w Enron extends its business model into new and deregulating markets=20 enabling high growth rates. Those guys are in markets that generate less= =20 aggressive growth rates. w Enron owns physical assets that provide consistent cash flow such as our= =20 pipelines. Those guys do not have them. And if that's not enough we think our employees are so much cooler than=20 theirs. =09Steven J Kean@ENRON =0903/09/2001 01:06 PM =09=09=20 =09=09 To: Mary Clark/Corp/Enron@ENRON Sarah Palmer/HOU/ECT@ECT =09=09 cc:=20 =09=09 Subject: Per Your Request Here are the message points ,other,casual,3 +Monthly Billing - Detail Class 845 / s100061.xls,-----------------,energy services,formal,3 +Re:,I'll give 150. Enron Capital & Trade Resources Corp. From: Jeff Skilling 04/19/2001 05:18 PM Sent by: Sherri Sera To: Cliff Baxter/HOU/ECT@ECT Rick Buy/HOU/ECT Ben Glisan/HOU/ECT@ECT Steven J Kean/NA/Enron@Enron Jeffrey Sherrick/Corp/Enron Philippe A Bibi/HOU/ECT Michael Brown/NA/Enron Wade James A Hughes/ENRON_DEVELOPMENT Louise Kitchen/HOU/ECT@ECT Rebecca McDonald/ENRON_DEVELOPMENT Greg Piper/Corp/Enron John Sherriff/LON/ECT@ECT Greg Whalley/HOU/ECT@ECT Janet R Dietrich/HOU/EES@EES Mark S Muller/HOU/EES@EES Matthew Scrimshaw/LON/ECT@ECT David Cox/Enron Communications@Enron Communications Kevin Hannon/Enron Communications@Enron Communications Rod Hayslett/FGT/Enron Stan Horton/Houston/Eott@Eott Danny McCarty/ET&S/Enron@Enron cc: Subject: I know how incredibly busy you all are so I'm sure that making a pledge to Jeff for the MS150 has simply slipped your mind. Well the ride is this weekend time is running out and we need you! Enron's goal is to raise $700000 and Jeff's personal goal is to raise $50000. As of today we are a little better than half way there. Won't you consider helping him reach his goal? Thanks for your consideration. I look forward to hearing from you tomorrow... Sherri :-),external affairs,friendly,3 +Re: Spoke with Jeff,I'm glad things are moving forward. I've talked with Dave briefly and will= =20 follow up with him again. Kevin Scott on 07/13/2001 10:14:01 AM Please respond to kevinscott@onlinemailbox.net To: Steve Kean cc: =20 Subject: Spoke with Jeff Steve =20 As planned I spoke with Jeff this morning. It was a great call. I am=20 really excited about what is ahead. =20 We discussed the =01&title=018 issue. I don=01t have any problems. We sh= ould go=20 with what is the best way to enter the organization. =20 =20 Jeff said he was going to touch base with Dave this morning to move the=20 process forward. I can=01t wait for my interviews and to join the team.= =20 =20 Thanks for all of your help. =20 Kevin =20 Contact Information E-mail Phone (213) 926-2626 Fax (707) 516-0019 Traditional Mail PO Box 21074 ? Los Angeles CA 90021 =20,business document,excited,3 +Another List,fyi -----------------,other,casual,0 +Enron Mentions,,other,neutral,0 +Corporate Watch article,-----------------,media & press,neutral,0 +Re: ENE Officer Elections,We should include David Oxley -- VP of human resources. From: Kelly Johnson/ENRON@enronXgate on 07/18/2001 11:13 AM To: Steven J Kean/NA/Enron@Enron cc: Maureen McVicker/NA/Enron@Enron Subject: ENE Officer Elections Steve: Please review the attached ENE Officer list for your direct reports and approve. Thank you. Kelly M. Johnson Enron Corp. Executive Assistant Tel: (713) 853-6485 Fax: (713) 853-2534 E-Mail: kelly.johnson@enron.com,human resources,formal,3 +test,test,other,neutral,0 +Some comments on the brief,I forgot to email myself the brief to track changes but here are my changes in writing: p. 1: Para starting focusing on the latter that sentence change get creative to be innavotaive in its approach. p. 2: 1st full Paragraph Second sentence change uniting to common and there is a typo on line5 reduction n consumption. Should be of page 6: We need the RR for PG&E. Under Part VII Rate Design can we insert a sentence that our proposal unlike the others does not arbitrarily allocate costs to peak period. We told Scott we wuold insert the arbitrariness of other proposals several times in the brief. We also need ro insert discussion about relation of peak to offpeak prices as a 3:2 ratio which is not what other parties have proposed. page 8: 2. Derivation of Threshold Usage: first sentence delete between in first sentence. page 9: Second full paragraph begining Again the UDS's Second sentence sited should be cited p. 12: First full paragraph beginning A primary component Insert a sentence after the second sentence to mention again the arbitrariness of proposals allocatin costs between peak and offpeak. Second full parag beginning Enron's proposal can stick a sentence about arbitrariness in there too. And change more necessary goal in 4th sentence to more critical goal I don't have the email I sent out about what we agreed to insert with Scott so if you have a chance check it to make sure we did everything we agreed to. I am going to try to come into the office very early tomorrow and will check email again but my son has an appointment with the neurologist here in Houston at 9:20 am tomorrow and that is where I will be when you have the 9:30 call (we made this appointment months ago). But I will communicate with Harry and everyone else before then. Thanks.,business document,formal,3 +RE: Corporate Policy Committee,The memo going out on Monday discusses the corporate policy committee brief= ly=20 at the end. The corporate policy committee does the MD PRC (evaluation of= =20 MDs and promotions to MD) reviews the recommendations of the other=20 committees (which we are just now forming). Additionally the corporate=20 policy committee met to determine the membership and charters of the other= =20 committees (including the PRC committees). The corporate policy committee = is=20 comprised of the most senior executives including the Office of the=20 Chairman the leaders of the four business units and the heads of the=20 corporate functions. In addition to the specific items mentioned above th= e=20 corporate policy committee was intended to discuss and resolve the major=20 issues facing the company including issues of strategy personnel and=20 challenges facing the company. =20 The corporate policy committee has met three times so far so not much=20 history yet. Perhaps as further pronouncements issue from this august body= =20 we will make more of a point about where they came from. =09Mary Clark =0903/15/2001 05:36 PM =09=09=20 =09=09 To: Steven J Kean/NA/Enron@Enron =09=09 cc:=20 =09=09 Subject: RE: Corporate Policy Committee Steve please briefly describe what the policy committee does so we can=20 respond to this employee question. Thanks. Mary -----------------,other,informative,3 +,Vince I'll have him e-mail you a CV. I'd be happy to speak at the POWER RISK conference. Frank Professor Frank A. Wolak email: wolak@zia.stanford.edu Department of Economics Phone: 650-723-3944 (Office) Stanford University FAX: 650-725-5702 Stanford CA 94305-6072 Phone: 650-856-0109 (Home) World-Wide Web Page: Cell Phone: 650-814-0107,meetings & events,formal,3 +Summer,-----------------,other,casual,0 +Re: Charlie Baker,the price might be a bit stiff particularly in light of the following: I don't think we need the DC grass tops component. we have an effective set of messages contacts consultants and lawyers. Perhaps we could use Charlie as a fresh set of eyes on that stuff but I think that asking him to develop such an effort would be duplicative of what we have done with AAE Paxson Fleischman-Hillard Divall etc. I do think the other aspects of what he proposes would be useful however (and should be less resource intensive and at least a little less costly). Richard Shapiro@EES 08/21/2000 05:12 PM To: Steven J Kean/NA/Enron@Enron cc: Subject: Re: Charlie Baker What do you think? -----------------,government & politics,formal,3 +call phil moeller 202.589.0905,TASK ASSIGNMENT Task Priority: Task Due On: 4/16/2001 Task Start Date:,other,formal,3 +"RE: London, New York, Houston, Financial Mathematics June/July 2001",Joanna You can keep the name as is. I don't want Zimin to be blamed for the flaws of my presentation. Vince ,other,casual,1 +Suggested Approach,Please see the attached.,other,formal,2 +Re: Legal Analysis on AB 1890,What do you think he'll add? Jeff Dasovich Sent by: Jeff Dasovich 10/13/2000 11:01 AM To: skean@enron.com cc: Subject: Legal Analysis on AB 1890 I think it would be a good idea to have Ron Carroll in Watkiss' shop to do a parallel analysis to what we're going to have Mike Day do. Ron's very good and has done much work on these sortrs of issues. You comfortable with that?,legal affairs,formal,3 +"Ed Segners Staff meeting, in 50M Dining Room",Jordan Mintz 3-7897 Bob Foster 818 302 9210 Kevin Beasley 3-7807,other,formal,3 +CONFIDENTIAL - Tennessee political contributions,Barbara short of me coming up with the money it will be next to impossible to get this out of either the trading or origination group. As a significant contributor to the PAC and Enron's other adventures I don't have the room. Personally I also have difficulty making campaign contributions so closely linked to specific legislation or policy. This may not be the answer you want however I am all ears if you have any ideas on raising these funds. Regards Delainey -----------------,government & politics,cautious,3 +"Re: Board of Directors Meeting - February 13, 2001",Attached are my edits. From: Rebecca Carter on 05/24/2001 04:42 PM Sent by: Kelly Johnson To: Steven J Kean/NA/Enron@Enron cc: Subject: Board of Directors Meeting - February 13 2001 Please provide comments the attached minutes by June 1 2001. If you approve as written please let us know. Regards Rebecca CONFIDENTIALITY NOTICE The information contained in this email may be confidential and/or privileged. This email is intended to be reviewed by the individual or organization named above. If you are not the intended recipient you are hereby notified that any review dissemination or copying of this email or its attachments if any or the information contained herein is prohibited. If you have received this email in error please immediately notify the sender by return email and delete this email from your system. Thank you.,other,formal,3 +<> - General Expenses,,finance,neutral,3 +"Ed Segners Staff meeting, in 50M Dining Room",Ralph Reed--get back to him (second week of Oct),other,formal,2 +PG&E Credit Exposure,Ken will be making a call to Bob Glynn at PG&E. Please give the attached to Ken before the call. ,energy infrastructure,formal,3 +Public Report 08-01,as discussed -----------------,other,formal,2 +Re: Tariffs Approved,Congrats Ray. ... Now get FERC to do something amazing. -----------------,other,casual,3 +Commission Meetings,I will attend. -----------------,other,formal,3 +Re: Your corner on the intranet,I think you are right. I thought we were going to do both. Elizabeth Tilney@EES 06/13/2001 04:51 PM To: Steven J Kean/NA/Enron@Enron Mary Clark/Corp/Enron@ENRON Karen Denne/Corp/Enron@ENRON cc: Subject: Your corner on the intranet You know I love this idea BUT I still think we need to let Ken personally address the shots he has taken. It is just not the same to have Jeff say it is okay that the AG of California wants to put Ken in a cell with Spike! I strongly believe we need to give Ken a forum too as he has been at the center of alot of the recent noise. I still believe a video with both of them is the right way to go...The State of Enron. I think Jeff's Corner is a great idea too...can't we do both? Ok I have said this enough..I will go away quietly now and let the experts decide...Beth -----------------,other,friendly,3 +Re: Hearing,Let's take the opportunity. Cynthia Sandherr@ENRON 07/19/2000 06:32 PM To: Steven J Kean/HOU/EES@EES cc: Subject: Re: Hearing Steve: per your voicemail we do not have a date yet but should have it before Congress leaves next Friday. I'll let you know as soon as it is set. As you can see I disagree with Mark per the attached e-mail I sent him earlier today. I do not think it should be Jeff Skilling. Mark does not appear to concur with me. Perhaps I should go ahead and express our interest to testify and then we can have a conversation with the team to decide who should do it. I was just trying to not waste a chit and ask for a spot if we had no interest. We can determine who and what later. So before I ask the Committee we DO want to testify correct? -----------------,meetings & events,formal,3 +,I understand from Shelley that you are going to be seeing Commissioner Breathitt on Monday. We have been working to persuade her to vote for forceful FERC action on electricity issues. She is widely viewed as the swing vote (with Massey and Hoecker being the other two votes) needed for the Commission to take action. Attached are two documents -- one is a set of talking points for you and the second is a FERC action plan that we are floating with several of the Commissioners.,energy infrastructure,formal,5 +RE: Confidential Communication to my Attorney,so would we have an issue? ,legal affairs,cautious,5 +Translation of articles,-----------------,other,neutral,3 +Confidential Information and Securities Trading,To:JONES TANA Email:tana.jones@enron.com - 7138533399 ? Enron Wholesale Services - Office of the Chairman ? From:??Mark Frevert Chairman & CEO ??????Greg Whalley President & COO ??????Mark Haedicke Managing Director & General Counsel ? Subject:??Confidential Information and Securities Trading ? Enron Wholesale Services ('EWS') maintains official Policies and Procedures Regarding Confidential Information and Securities Trading ('Policies and Procedures') which have been revised as of November 15 2000 to reflect the new EWS structure. These policies and procedures are intended to allow us simultaneously to pursue our diverse businesses and to protect confidential information our reputation for integrity and EWS and its employees from legal liability. ? You are required to become familiar with and to comply with the Policies and Procedures. The newly revised Policies and Procedures are available for your review on LegalOnline the new intranet website maintained by the Enron Wholesale Services Legal Department. Please click on the attached link to access LegalOnline: ? ? You must certify your compliance with the Policies and Procedures within two weeks of your receipt of this message. The LegalOnline site will allow you to quickly and conveniently certify your compliance on-line with your SAP Personal ID number. If you have any questions concerning the Policies or Procedures please call Lance Schuler at extension 3-5419 Mark Haedicke at extension 3-6544 Alan Aronowitz at extension 3-3214 Bob Bruce at extension 5-7780 or Donna Lowry at extension 3-1939.,other,formal,5 +Fwd: Anti-motivational pictures.,-----------------,other,casual,0 +Re: Funky Business,I have looked it over. I think they would do a good job. Another idea: Dick Foster (advisor to Enron's Board and Senior Director at McKinsey) has a great book out: Creative Destruction. I was on a panel with him recently where he shared some of his research. He is a very good presenter he knows Enron well and his work is first rate. He might be a good addition. I have an idea on the breakout sessions. It needs some work but I'd like to talk it through with you. TERRIE JAMES@ENRON COMMUNICATIONS 07/05/2001 01:09 PM To: Steven J Kean/NA/Enron@Enron cc: Subject: Funky Business Steve Have you had a chance to look at the book Funky Business and to give any thought to having Jonas present at the Management Conference? I know you have a thousand other things on your plate not the least of which is California so I understand if the answer is no. However they've been contacted by someone else about the date so we may be forced to decide rather soon. On a related subject I'm contemplating another topic for the conference. I'd seen an article in Fortune several months ago titled Managing for the Slowdown. It talked about new challenges managers face in light of the economic downturn. (Most young managers have never experienced anything but boom times.) The article also outlines a dozen or so things companies should be thinking about now. (Use the downturn as a new opportunity to evaluate people. Overhaul your budget process. Don't stop communicating. etc.) I think it would be beneficial to address similar strategies and ideas with our managers. I'd love to get your thoughts on this idea. (Is it appropriate for Enron or am I just seeing the world through bleak-colored glasses?) Terrie James Sr. Director Corporate Communication Enron Broadband Services 713-853-7727 (phone) 713-646-8887 (fax) terrie_james@enron.net ,organization,formal,3 +<> - Rob Bradley-Mar 5-6,,finance,neutral,3 +Re: Memo to go out.,looks good Maureen McVicker 05/01/2001 05:36 PM To: Steven J Kean/NA/Enron@Enron cc: Subject: Memo to go out. Steve: FYI - this is what went out Tuesday night after a few minor changes. It was approved by Ken Jeff & Cliff. -----------------,business document,casual,3 +Monthly Billing - Detail Class 845 / s100061.xls,-----------------,energy services,formal,3 +,FYI. JDS -----------------,other,neutral,0 +Thu evening,Thanks. Confirmed Thu 8:30. Vince,project management,casual,1 +Energy Issues,Please see the following articles: Sac Bee Thurs 7/5: Many rural towns to escape blackouts utility maps sho= w Sac Bee Tues 7/3: Details emerge in power contracts SD Union Thurs 7/5: New FERC member seems attuned to state's woes SD Union Wed 7/4: Electricity price-cap tests spark allegations SD Union Wed 7/4: Renewable energy fades from picture in rush for solutio= n SD Union Wed 7/4: SDG&E spreads word of looming blackouts SD Union Wed 7/4: Two more energy whistleblowers slated to come forward SD Union Wed 7/4: Disabled PG&E employees ask state for help in getting= =20 disability checks LA Times Thurs 7/5: Powerful Judge Illuminates Energy Practices Law:=20 'Folksy' jurist 72 stuns utility executives and lawyers alike with his=20 courtroom incisiveness. SF Chron Thurs 7/5: Davis lauds California generator=20 Vote of confidence at Calpine's festival=20 SF Chron Wed 7/4: Activists stage anti-corporate march to power plant=20 SF Chron Wed 7/4: Davis asks PUC to let utilities cut voltage=20 1% savings on energy consumption predicted SF Chron Wed 7/4: Federal price limits backfire=20 Some generators withhold power rather than abide by rate caps SF Chron Wed 7/4: Two more energy whistleblowers slated to come forward Mercury News Wed 7/4: Davis seeking cheaper contracts=20 --- Many rural towns to escape blackouts utility maps show=20 By Carrie Peyton Bee Staff Writer (Published July 5 2001)=20 Huge stretches of Northern California including many rural foothill and=20 valley communities won't face rolling blackouts this summer spared by a= =20 combination of geography and circuitry.=20 Placerville and Loomis Esparto and Isleton are among the many towns that= =20 will be largely or entirely bypassed by deliberate blackouts according to= =20 new Pacific Gas and Electric Co. outage maps.=20 Such communities are served by so few circuits that each one has been=20 exempted from outages because a critical facility such as a fire station o= r=20 a water treatment plant lies along the circuit somewhere PG&E spokesman= =20 John Nelson said.=20 Both PG&E and the Sacramento Municipal Utility District have begun shedding= =20 more light on their strategies for rotating outages in the wake of a=20 governor's order requiring utilities to let people know where blackouts wil= l=20 strike next.=20 For PG&E that has meant quickly posting and then updating blackout maps on= =20 its Web site. For SMUD it has meant publicly detailing for the first time= =20 the boundaries of 78 separate rotating outage areas and listing by number= =20 which areas could be tapped next.=20 We were contemplating putting the map on the Web before the governor's=20 order but the timing coincided very well said John DiStasio SMUD's=20 assistant general manager for customer service.=20 SMUD updated its Web site www.smud.org on June 22 so that now people can= =20 click on rotating outages and then next likely locations and map to see= =20 the shape of outages to come.=20 The map replaces less-precise neighborhood names which is all SMUD supplie= d=20 until Gov. Gray Davis ordered utilities to give the public common=20 geographical boundaries grid or block numbers maps or similar identifying= =20 information about where outages will strike.=20 With six days of rolling blackouts already behind California this year and= =20 forecasts that more probably lie ahead Davis has told utilities and the=20 state Independent System Operator to give better notice of when and where= =20 blackouts might occur.=20 Grid operators and utilities have cautioned that Davis' program of two-day= =20 one-day and one-hour warnings could produce many false alarms because power= =20 supplies often come through at the last minute. There is also some wariness= =20 about outage maps which SMUD and PG&E warn could change at any time.=20 But the maps do provide insight into how each utility will roll blackouts= =20 through its territory. PG&E's maps on the Web at www.pge.com under find= =20 your outage block and then rotating outage block map have recently been= =20 updated to be searchable by zip code.=20 They show that the vast majority of El Dorado and Placer counties and much = of=20 Yolo County are in PG&E's block 50 a designation for a circuit that won'= t=20 be in line for rolling outages because someone along it is crucial to healt= h=20 or safety.=20 Police stations fire stations hospitals and airports are all deemed=20 essential customers that should keep functioning even when the state power= =20 grid is so overloaded that blackouts are needed to keep it from collapsing.= =20 In densely populated areas circuits tend to be compact leaving lots of=20 neighborhoods eligible for rolling blackouts Nelson said.=20 But in rural areas particularly remote rural areas a circuit can go on f= or=20 miles and miles Nelson said. You can have multiple communities on one=20 circuit =01( (and) virtually every community has either a police station or= a=20 fire station or a hospital or a drinking water facility.=20 That has been good news for communities like Placerville which scrambled f= or=20 traffic control earlier this year when a rolling outage took out the signal= =20 lights on Highway 50 which bisects the town of 10000.=20 That has been our biggest concern because of the amount of traffic that go= es=20 through there said City Manager John Driscoll. Placerville will be spared= =20 future outages because regulators now are protecting more hospitals from=20 blackouts and much of the rest of the town shares circuits with hospitals.= =20 We didn't ask to be exempted out but I feel very happy that we are. From = a=20 selfish standpoint it feels very nice Driscoll said.=20 The Bee's Carrie Peyton can be reached at (916) 321-1086 or=20 cpeyton@sacbee.com.=20 =20 Details emerge in power contracts By Carrie Peyton and Chris Bowman Bee Staff Writers=20 (Published July 3 2001) California's power bills for the next decade probably will exceed the=20 forecasts of Gov. Gray Davis the State Controller's Office said Monday as = it=20 released unedited versions of long-term contracts in a new jab at the=20 governor.=20 The electricity contracts which Davis' office sought in court to keep=20 secret offer a glimpse into the rapid high-stakes deals struck early in t= he=20 state's power crisis and illustrate the way deregulation's unraveling could= =20 haunt California for years to come.=20 Some show that builders of new power plants could recoup the entire cost of= =20 those plants in four years or less. Some show lucrative swaps for power=20 including one arranged the same day California was rocked by rolling=20 blackouts.=20 More than two dozen additional administrative contracts detail the price=20 California is paying its consultants to seek a way out of the power mess= =20 from tens of thousands for Davis' aides down to $51 an hour for copying and= =20 phone answering.=20 The governor's office defended its estimates of the state's future power=20 bill.=20 The 41 long-term contracts 27 consulting contracts five short-term deals= =20 and stacks of receipts and invoices released Monday by state Controller=20 Kathleen Connell may just be the start.=20 Her office hopes to provide details about how much California has already= =20 paid individual power generators in the volatile short-term or spot=20 market.=20 The deals include so many intricate pricing formulas that Connell said she= =20 couldn't immediately predict exactly how high California's hourly power cos= ts=20 would go.=20 Walter Barnes chief deputy controller of finance said the contracts=20 probably would be well in excess of the $69 a megawatt-hour that Davis on= ce=20 said would be California's average cost for contract power for the next=20 decade.=20 The contracts' prices range from $55 to $249 a megawatt-hour and most are= =20 more than the $69 Connell said.=20 The state Department of Water Resources the state's power buying arm late= r=20 revised the $69 forecast to $70 a megawatt-hour through the end of 2010 wi= th=20 the higher priced power coming first.=20 If anything those figures could decline because natural gas the fuel for= =20 most new power plants is getting cheaper DWR spokesman Oscar Hidalgo said= =20 adding that his office sticks with its forecasts.=20 We're on pretty solid ground here he said.=20 As the statewide elected official who pays California's bills Connell=20 repeatedly has criticized the governor for his electricity spending saying= =20 that she never believed the contracts should be kept secret.=20 But Davis' office blasted her for giving out details that power generators= =20 and traders could use to learn the state's negotiating positions and buying= =20 practices and said the information could boost wholesale prices within days= .=20 When they open their electric bill next time every Californian can thank= =20 Kathleen Connell for higher electricity costs Davis spokesman Steve=20 Maviglio said.=20 The long-term contracts were first released June 15 by the water resources= =20 department with power plant names performance data delivery points and=20 other details blocked out under heavy black strokes.=20 Analysts said that was the sort of data they could have used to calculate h= ow=20 much more than the production costs the state was going to be paying for th= e=20 electricity purchased on behalf of three cash-strapped investor-owned=20 utilities.=20 As analysts began sizing up some of the specifics Monday early reactions= =20 were wary.=20 This just shows when the state comes in and takes over the utility system= =20 we're just going to be in deep from all sorts of expenses and inefficiencie= s=20 that we were trying to get away from with deregulation said Arthur=20 O'Donnell who edits a trade newsletter California Energy Markets.=20 Bill Marcus a power consultant who had analyzed the edited contracts for a= =20 consumer group quickly read through the unedited versions muttering things= =20 such as offensive and they got absolutely ripped here.=20 In one swap that was negotiated on a day of rolling blackouts in March the= =20 state agreed to send Powerex the trading arm of British Columbia's=20 government utility 2* times more electricity in the spring than Powerex=20 would return in the summer.=20 Although seasonal swaps are common the 2*-to-1 ratio was a sign of panic= =20 and inexperience on the state's part he said.=20 The consultants who advise California on power deals were frenetic at the= =20 time with one staffer at the Navigant consulting firm billing for hours=20 worked that were the equivalent of 9.7 hours a day for 34 consecutive days.= =20 The power purchase terms disclosed Monday confirm many energy analysts'=20 predictions that California consumers would be paying premium prices for=20 years to cover the costs of the new plants coming on line.=20 In several of the contracts the state agreed to pay generators a 25 percen= t=20 to 30 percent annual return on their plant construction costs which could= =20 pay off the entire plant in four years or less.=20 Before deregulation utilities generally received 3 percent to 18 percent= =20 annual return on their capital investments over 30 years said Marcus a=20 veteran energy analyst whose firm JBS Energy Inc. of West Sacramento=20 represents ratepayer groups.=20 We're all going to have to pay more for power plants over the next 10 or= =20 more years because the generators are looking to pay off their plants in ha= lf=20 the time he said.=20 Beyond blackouts and price spikes this will be the long-term legacy of=20 deregulation he said. The private market needs a high rate of return on= =20 their investment.=20 Several contracts were drafted in the late winter and early spring when=20 California endured Stage 2 and Stage 3 energy alerts.=20 The unmasked terms in some of those agreements reflect the state's=20 desperation for megawatts amid fears of routine blackouts when temperatures= =20 and energy use began to rise in the summer.=20 For example the state agreed in a March 29 contract to pay Calpine $232 a= =20 megawatt-hour to supply 300 megawatts nonstop from July 1 through Sept. 30.= =20 But a more recent Calpine contract calls for about $59 a megawatt-hour=20 starting Oct. 1.=20 Time made all the difference said Jim Macias a Calpine senior vice=20 president. He said that last winter Calpine couldn't guarantee that plants= =20 under construction in Sutter County and the East Bay would be on line by=20 summer. So the company bought the power on the spot market for the state= =20 Macias said.=20 Back in the winter $232 was a good price for electricity this summer he= =20 said.=20 Calpine officials said that they made no money on the sale and even knocked= =20 15 percent off their price to maintain good relations with the state power= =20 buyers.=20 The gesture more than paid off with the signing of the 10-year contract sa= id=20 Kathleen Potter Calpine spokeswoman.=20 It was a great transaction for us Potter said. We appreciate the=20 business.=20 Proponents of free-market energy buying have said that in the long-run= =20 competitive forces would result in more-efficient less-costly power=20 generation.=20 But the contracts show that pressed for more electricity this summer and=20 fall officials resorted to buying power from some of the least-efficient= =20 plants in the state guaranteeing owners of these aging generators 10 more= =20 years of income.=20 The Bee's Carrie Peyton can be reached at (916) 321-1086 or=20 cpeyton@sacbee.com. New FERC member seems attuned to state's woes=20 Texan may become agency's next chief By Toby Eckert=20 COPLEY NEWS SERVICE=20 July 5 2001=20 WASHINGTON -- During his first weeks at the Federal Energy Regulatory=20 Commission Pat Wood has set a decidedly different tone in the agency's=20 strained relationship with California.=20 After meeting with Gov. Gray Davis last week Wood -- who was recently=20 appointed to the commission by President Bush and is widely expected to be= =20 named chairman soon -- praised the state's efforts to come to grips with it= s=20 power problems. It was a stark contrast to the almost constant criticism fr= om=20 FERC Chairman Curtis Hebert.=20 It certainly seems to me that both the political leadership and the=20 regulatory leadership of the state are committed to the kind of=20 infrastructure upgrades that are needed to really get supply and demand bac= k=20 into whack Wood said referring to power plants being built in California= .=20 The former Texas utility regulator also raised the possibility of closer=20 cooperation between FERC and state regulators including a joint effort o= n=20 inspecting power plants. State officials have accused generators of idling= =20 plants to drive up electricity costs a charge generators deny.=20 If we're kind of co-regulators with the state and in many regards we are= =20 it's helpful to work off the same set of facts so you get to conclusions mu= ch=20 more expeditiously Wood said though he was quick to add that he has not= =20 seen any evidence of intentional withholding of supply.=20 State officials hope Wood's statements signal that FERC is poised to take a= =20 more aggressive role in helping the state. If elevated to chairman Wood=20 would set FERC's agenda and shape its approach to dealing with California.= =20 The agency regulates wholesale electricity and natural gas markets which= =20 have subjected the state to skyrocketing prices.=20 Wood has brought a very good perspective to FERC said Howard Gantman a= =20 spokesman for Sen. Dianne Feinstein D-Calif. a frequent critic of the=20 commission. He seems very interested in getting to the root of the problem= =20 and finding solutions.=20 Throughout the crisis the state's relationship with FERC has been poisonou= s.=20 Davis criticized the commission for being slow to rein in electricity price= s=20 while Hebert faulted the state for crafting a bad deregulation law and=20 failing to build enough plants to keep up with demand.=20 Davis issued a guardedly conciliatory statement after his meeting in=20 Sacramento with Wood and Commissioner Nora Brownell who is also new to FER= C.=20 In a refreshing change from my past dealings over the past year with the= =20 agency these commissioners offered a problem-solving approach in resolving= =20 California's energy challenge Davis said. He added It appears that FERC= =20 may finally be poised to do its job controlling energy costs.=20 Threats criticized Despite the soothing words there is no shortage of potential flash points= =20 between Davis and FERC.=20 Wood who professes a religious zeal about competition raised concerns= =20 about a possible move by the California Public Utilities Commission to keep= =20 retail power customers from shopping around for alternative providers.=20 He also criticized threats that Davis and other California politicians have= =20 made to seize power plants and impose a windfall profits tax on power=20 sellers.=20 I think the rhetoric's still pretty hot out there. If I were a generator= =20 looking at 50 states one that's talking about a windfall profits tax and= =20 expropriation of property and all that is not a great climate Wood said.= =20 For his part Davis has questioned whether the recent price curbs imposed b= y=20 FERC in the West will be enough to tame soaring wholesale power costs that= =20 have bankrupted one utility cost the state treasury billions of dollars an= d=20 raised consumers' power bills.=20 Davis has also made it clear that he expects hefty refunds to result from t= he=20 FERC-brokered talks between the state and power providers which are in the= ir=20 second week.=20 I will be vigilant in insisting that Californians get their money back= =20 Davis said.=20 California consumer activists are taking a wait-and-see attitude toward Woo= d=20 saying they know little about him.=20 A major role My impression from afar is he seems to be more moderate said Harvey=20 Rosenfield president of the Foundation for Taxpayer and Consumer Rights in= =20 Santa Monica.=20 Once considered a bureaucratic backwater the five-member FERC has come to= =20 play a high-profile role in the California debacle and other disputes=20 involving the largely deregulated wholesale power markets.=20 The commission is charged with ensuring that just and reasonable prices= =20 prevail.=20 Bush is expected to make Wood the FERC chairman because Hebert is seen as t= oo=20 much of a lightning rod.=20 Before coming to Washington Wood who turned 39 yesterday headed the Texa= s=20 Public Utility Commission. There he oversaw the state's move toward a=20 deregulated electricity market. Like Hebert Wood is convinced that a free= =20 market will deliver cheaper power to consumers than a highly regulated one.= =20 I just think customers fare better when they have more choices Wood said= .=20 But consumer advocates and others who have worked with Wood in Texas say hi= s=20 zeal is tempered by a healthy dose of pragmatism.=20 Bottom line it's all about the customer. Y'all will hear me say that unti= l=20 you get sick of it Wood said. We want to make sure that the world we're= =20 moving to is better than the one we left.=20 Electricity price-cap tests spark allegations=20 Suppliers said to have held back industry blames ISO By Craig D. Rose and Bill Ainsworth=20 UNION-TRIBUNE STAFF WRITERS=20 July 4 2001=20 The first emergency tests of new electricity price controls have generated= =20 accusations that suppliers were withholding power and questions that the ca= ps=20 might need to be revised or scrapped.=20 And in a case of turnabout a power industry spokesman yesterday said the= =20 Independent System Operator which manages the state's electricity grid=20 might be using the federal price caps to manipulate the electricity market.= =20 This time however the charge is that the ISO is gaming to push prices=20 lower.=20 At any rate California survived its second consecutive day of power=20 emergencies without blackouts under price caps recently imposed by federal= =20 regulators but not without some bumps along the way.=20 The main culprit was hot weather that baked Western states for two days=20 forcing the ISO to issue Stage 1 and then Stage 2 alerts. Yesterday the IS= O=20 warned that rolling blackouts might hit in the afternoon.=20 But as has happened often this year the ISO bought power in the last minut= es=20 to avoid outages. The grid operator also credited conservation efforts with= =20 shaving from 2000 to 4000 megawatts of consumption. A megawatt can power= =20 about 750 homes.=20 It was a lot hotter than expected and a lot more humid said Kristina=20 Werst spokeswoman for the ISO.=20 Today state officials expect to avoid any blackouts because of the holiday= =20 which tends to decrease electricity demand Werst said.=20 The price controls ordered last month by the Federal Energy Regulatory=20 Commission set up formulas for maximum prices during emergency and=20 nonemergency periods. The FERC said the complex system was intended to=20 balance the need for lower costs with its desire to promote a power market.= =20 But questions are growing about the effectiveness of the FERC price caps.= =20 A Department of Water Resources spokesman which buys power for the state= =20 said generators withheld between 660 and 1500 megawatts of electricity=20 during a critical period earlier this week because of the price caps. That= =20 would be enough to cut electricity reserves from 7 percent to 5 percent and= =20 bump a Stage 1 alert to a Stage 2.=20 Sempra Energy Trading a marketing unit of San Diego Gas & Electric Co.'s= =20 parent corporation admitted that it ceased selling power to the state for= =20 what could have been a critical 30 minutes Monday.=20 A spokesman for the trading company said it halted sales for the half-hour= =20 because it was unsure about where the ISO would set maximum prices during t= he=20 first power emergency under the new caps.=20 When power emergencies are called under the FERC plan a new price cap is s= et=20 based on the cost of operating the least efficient most costly electric=20 generating plant. Because the identity of that plant is unknown beforehand= =20 the selling price is set retrospectively by the ISO.=20 It was unclear to the traders what the proxy price would be said Doug=20 Kline a Sempra spokesman who emphasized that the company's trading unit= =20 resells power generated by other companies. So it was unclear whether the= =20 ISO would come back later and say 'You purchased power at $70 per=20 megawatt-hour but we're only going to pay you $60.'?=20 For its part the ISO said the impact of price controls on electricity=20 supplies during emergencies is still unclear. The controls this week kept= =20 emergency prices Monday from a little over $70 per megawatt-hour to a high = of=20 about $90. FERC's nonemergency price cap has been about $92 per=20 megawatt-hour.=20 Earlier this year the average price per megawatt-hour was nearly $300.=20 Before the power crisis hit last year the price was about $30.=20 The ISO said several factors other than the price controls might have=20 contributed to tight supplies this week including plant shutdowns in other= =20 states and the regional heat wave.=20 But a spokeswoman for Nevada Power said the utility believed the price caps= =20 or confusion over their implementation had contributed to a power shortfal= l=20 that led to blackouts Monday. The utility fell about 100 megawatts short of= =20 its need as temperatures in some of its service areas hit 122 degrees.=20 Power is tight in the region said Sonya Heagen of Nevada Power. What=20 tipped it over (for southern Nevada) was several utilities decided to hold= =20 back power.=20 Gary Ackerman executive director of the Western Power Trading Forum an=20 industry group said the FERC's price-control plan fails to allow the=20 recovery of electricity transportation costs. That has the effect of keepin= g=20 electricity in the region in which it is generated rather than where it=20 might be needed most he said.=20 Ackerman said transportation costs which typically run from $2 to $8 per= =20 megawatt-hour are more significant now that overall prices have settled in= to=20 a $100 range.=20 They didn't mean as much to the suppliers when they were getting $400 per= =20 megawatt-hour Ackerman said.=20 He also said some of his members suspect the ISO made moves during power=20 alerts to artificially keep prices lower.=20 The FERC pricing regime sets nonemergency prices at 85 percent of the last= =20 full hour of a Stage 1 emergency. But this week the ISO twice went from a= =20 Stage 1 to a Stage 2 alert in less than an hour. That kept the nonemergency= =20 price cap in place at about $92 per megawatt-hour set back in May.=20 Some traders said the ISO is 'gaming the market' to keep the price lower= =20 Ackerman said. I have a few traders who think the price should be higher.= =20 The ISO rejected the charge of manipulation and said it continues to make i= ts=20 emergency declarations based on power supply and demand. The ISO also said = it=20 has not identified transportation costs as a problem under the FERC order.= =20 Other energy experts however said the FERC system of using the most=20 inefficient power plants to set emergency prices was a mistake.=20 Frank Wolak a member of the ISO's market monitoring unit and a Stanford=20 University economist said the plan invited energy companies to keep their= =20 least efficient plants in operation to ensure the highest prices.=20 But James Sweeney also a Stanford professor and energy expert said he=20 preferred the FERC plan to a rigid market price cap.=20 Consumer advocate Doug Heller of the Foundation for Taxpayer & Consumer=20 Rights said the FERC plan is too complex and urged a return to a regulated= =20 system which pays generators for their production costs plus a reasonable= =20 profit. Gov. Gray Davis supports a similar approach.=20 Arthur O'Donnell editor of California Energy Markets saw much of the=20 maneuvering this week as an industry road test of new price regime.=20 I think they were testing the boundaries O'Donnell said. This is the we= ek=20 where we test the bugs in the system.=20 Copley News Service correspondent Toby Eckert and The Associated Press=20 contributed to this report.=20 Renewable energy fades from picture in rush for solution=20 By Ed Mendel=20 UNION-TRIBUNE STAFF WRITER=20 July 4 2001=20 SACRAMENTO -- The electricity crisis is putting the squeeze on the renewabl= e=20 energy industry: the power plants that use the sun wind or underground hea= t.=20 The environmentally friendly alternative energy provides about 12 percent = of=20 the state's power. But the energy crunch and the state's effort to resolve = it=20 could end up shrinking the role of renewable energy in the coming years jus= t=20 as backers were hoping to see it expand.=20 For example:=20 ?Long-term power contracts obtained by the state to reduce costs will cover= =20 most state needs for a decade. Nearly all of the contracts are with natural= =20 gas-fired plants reducing the long-term market for new renewable plants.= =20 ?The uncertainty and lack of payment resulting from the crisis have slowed= =20 the development of renewable plants under an incentive program created as= =20 part of the state electricity deregulation plan.=20 ?Regulators are poised to prevent marketers from selling electricity=20 including green power from renewable sources directly to customers. A=20 large base of ratepayers must stay in the state program to pay off a power= =20 bond of up to $13.4 billion over 15 years. The state Public Utilities=20 Commission yesterday for the second time put off a decision whether to=20 curtail such direct access.=20 State and federal programs had been encouraging renewable energy to reduce= =20 dependency on the new wave of relatively clean and efficient natural-gas=20 power plants. The cost of electricity from those plants could go up if the= =20 demand for gas outpaces supply.=20 Renewable energy with the exception of some biomass plants also avoids th= e=20 pollution problems of power plants fueled by oil and coal -- not to mention= =20 the safety and radioactive waste-disposal problems of nuclear power.=20 A spokesman for a coalition of renewable generators and environmental group= s=20 said he thinks renewable energy has suffered during the electricity crisis= =20 because of a lack of attention not a shift in state policy.=20 I think the renewables are an unintended casualty said V. John White of= =20 the Center for Energy Efficiency and Renewable Technologies.=20 The state became a major player in the power equation in January when it=20 began buying power for debt-ridden utilities.=20 State officials say they would like to have a mix of power to spread the ri= sk=20 if something goes wrong with one source. For example soaring natural gas= =20 prices last winter were part of the reason for the high cost of electricity= .=20 In a trade-off the state scrambled to obtain long-term contracts that woul= d=20 lower the price of electricity now in exchange for prices that are expected= =20 to be above the market in the years to come.=20 The 38 contracts worth $43 billion over the next decade will help finance= =20 the construction of gas-fired power plants. About 70 percent of the power= =20 will come from plants that have not yet been built.=20 Only four of the contracts are for renewable power and their 120 megawatts= =20 is a tiny fraction of the total amount of power now under state contract. A= =20 megawatt can provide power for 750 to 1000 homes.=20 We agree the portfolio is lopsided and should be more diverse than it is= =20 Ray Hart head of the power purchasing unit in the state Department of Wate= r=20 Resources told the Senate Energy Committee last month.=20 The state has agreements in principle on an additional 19 contracts for 12= 70=20 megawatts from renewable sources. Most of the power 1172 megawatts would= =20 come from wind generation.=20 Anything could happen said Oscar Hidalgo a Water Resources spokesman. = It=20 could increase or decrease depending on what gets signed.=20 One renewable generator CalEnergy said the state rejected its offer to=20 provide 340 megawatts from a geothermal plant in the Imperial Valley for 20= =20 years at 6.9 cents per kilowatt-hour a price that is said to be the 10-yea= r=20 average of the state contracts.=20 We were astonished said Jonathan Weisgall CalEnergy vice president.=20 Hidalgo said state power purchasers don't recall the specifics of the=20 CalEnergy offer. He said the proposal may have been rejected because of its= =20 length the time of the power delivery or other reasons.=20 They may have to regroup restructure repackage and look for what we=20 want Hidalgo said.=20 Under deregulation part of monthly ratepayer bills were earmarked for a fu= nd=20 to encourage renewable energy sources. The fund provides five-year incentiv= es=20 of up to 1.5 cents per kilowatt hour.=20 The state held auctions in 1998 and again last summer that awarded $202=20 million in incentives for dozens of new small renewable plants that could= =20 produce about 1000 megawatts. The average incentive was .4 cents per=20 kilowatt hour.=20 But at this point said Marwan Masri of the California Energy Commission= =20 only plants capable of producing 180 megawatts have been completed.=20 There is the overall issue of who will buy the power said Masri and at= =20 what price and for how long.=20 A firm that specialized in marketing green power from renewable sources f= or=20 the environmentally conscious has taken a double hit from the electricity= =20 crisis.=20 Green Mountain Energy of Austin Texas. sells power to customers in a part= =20 of deregulation that is often called direct access which bypassed=20 utilities and later the state after it began buying power for utility=20 customers.=20 The firm canceled contracts with 50000 customers because the price was=20 indexed to the state Power Exchange which went bankrupt last spring after= =20 the debt-ridden utilities defaulted on their debt.=20 Green Mountain still has contracts with about 7000 customers in San Diego= =20 County who receive power under contracts at a fixed rate 8.5 cents per=20 kilowatt-hour.=20 The state Public Utilities Commission is still expected to prohibit future= =20 direct-access contracts a step directed by the legislation authorizing the= =20 state to buy power for utility customers.=20 That was the second blow to us said Rick Counihan of Green Mountain. It= =20 meant that we couldn't go out and buy a block of fixed-price power to sell = to=20 customers.=20 The ban on direct-access contracts is vigorously opposed by business groups= =20 who say that direct access would lower the cost of doing business in=20 California.=20 But supporters of the direct-access ban say that if customers bypass the=20 utilities the remaining ratepayers will be stuck with paying off a bond of= =20 up to $13.4 billion that is expected to be issued in September for power=20 costs.=20 Despite the problems some representatives of the renewable energy industry= =20 are optimistic about its potential for growth in the future.=20 A lot of the market is being served by rapidly aging power plants that=20 should be replaced said Jan Smutny-Jones of the Independent Energy=20 Producers. I think we also are going to see additional demand.=20 Moreover state government may take more steps to encourage the renewable= =20 industry.=20 The Energy Commission is proposing a goal for the incentive program that=20 would increase the amount of power coming from renewable sources to 17=20 percent of the total by 2006 up from 12 percent.=20 State Sen. Byron Sher D-Stanford has introduced a bill SB 531 that woul= d=20 set a goal of increasing the renewable share of state power to 20 percent b= y=20 2010. SDG&E spreads word of looming blackouts=20 By Jeff McDonald=20 UNION-TRIBUNE STAFF WRITER=20 July 4 2001=20 While power supplies dwindled and the likelihood of blackouts loomed San= =20 Diego Gas & Electric Co. for the first time yesterday was able to warn=20 customers in advance that they might go dark.=20 Under increasing pressure from businesses and residents SDG&E launched a n= ew=20 system to notify customers by pager and e-mail whenever the state declares= =20 supply emergencies that might lead to blackouts.=20 Some 5000 customers signed up for the warnings which ended up being false= =20 alarms by midafternoon when the Independent System Operator which manages= =20 the state's electricity grid was able to find enough megawatts to avoid th= e=20 first blackouts since May.=20 This at least gives people the opportunity to make a switch over to backup= =20 generation to power down essential equipment or to back up critical files= =20 SDG&E spokesman Ed Van Herik said.=20 It's definitely an improvement but we'll certainly look for ways to=20 increase the effectiveness of the notification process.=20 Even so the warnings from SDG&E came barely an hour before the ISO was=20 expected to issue a Stage 3 power alert meaning that demand had climbed to= =20 within 1.5 percent of available supplies. As it turned out the state never= =20 rose above a Stage 2 alert.=20 As the threat of blackouts continues to vex state power officials early=20 warnings about potential outages have become a key issue for businesses and= =20 residents who rely on uninterrupted service.=20 During blackouts earlier this year darkened traffic lights caused numerous= =20 accidents people were stranded in elevators and business owners complained= =20 of losses that could have been minimized.=20 Regular notification is a good idea said Samuel Ingersoll-Weng of the Sa= n=20 Diego Community Technology Group which works with hundreds of local=20 organizations to promote computer literacy.=20 It would be very helpful in terms of scheduling staff canceling or holdin= g=20 classes and also to protect equipment from power spikes or suddenly being= =20 shut off he said.=20 For most of the year SDG&E was telephoning a small number of such customer= s=20 on mornings they worried that demand for electricity might exceed supplies.= =20 But the problem is that when orders to pull megawatts from the grid come fr= om=20 the ISO the utility has only minutes to cut supplies and there has been=20 little time to warn people they may lose power.=20 Yesterday SDG&E was told 90 minutes ahead of time that a Stage 3 warning= =20 would likely be called at 3 p.m. The company issued the mass e-mails and=20 pages within 30 minutes.=20 Gov. Gray Davis announced plans this spring to provide neighborhoods 48-= =20 24-and 1-hour notices when blackout orders might be called. The ISO issued = no=20 such notice yesterday when it came the closest it had in weeks to ordering= =20 blackouts.=20 Ratepayers interested in signing up to be notified early of potential=20 blackouts can call the utility at (800) 411-SDGE.=20 Two more energy whistleblowers slated to come forward=20 By Don Thompson ASSOCIATED PRESS=20 July 4 2001=20 SACRAMENTO =01) Two more former workers at a San Diego-area Duke Energy pla= nt=20 are slated to talk with state investigators Thursday echoing concerns by= =20 other employees over how the plant was run when the state needed its power= =20 most.=20 However another former worker at the Chula Vista plant said he discarded= =20 perfectly good equipment three to five years ago while the plant was still= =20 owned by San Diego Gas and Electric.=20 Stuff that cost $3- to $5000 we were throwing away said Don Perkins of= =20 Alpine a mechanic at SDG&E plants for nearly 25 years.=20 That undercuts testimony from other former workers who told the Senate Sele= ct=20 Committee to Investigate Price Manipulation of the Wholesale Energy Market= =20 last month that they discarded valuable repair parts on the orders of Duke= =20 supervisors.=20 Like the other former SDG&E employees who have come forward Perkins was no= t=20 hired by Duke when it took over full operation of the plant in April. Perki= ns=20 said he is happy in retirement but like his former co-workers believes Duk= e=20 was driving up energy prices =01) which the company vehemently denies.=20 He and the three other former workers suggested Duke did not adequately=20 maintain its equipment leading to unnecessary repairs they said cut power= =20 generation and may have helped boost prices by cutting supply. That include= d=20 running a 15-megawatt jet-fuel fired turbine until it broke down.=20 We ran the heck out of the plant you bet we didresponded Duke spokesman= =20 Tom Williams. But he said the plant had fewer outages under Duke's ownershi= p=20 than while it was owned by SDG&E.=20 Duke eventually had to completely rebuild the jet-fuel fired turbine=20 Williams said.=20 It ran more last year than the previous 37 years combined because the sta= te=20 needed the power Williams said.=20 An attorney for Lt. Gov. Cruz Bustamante who is to introduce the two new= =20 whistleblowers Thursday said they will echo their co-workers complaints th= at=20 maintenance slipped once Duke took over the plant.=20 Williams dismissed the news conference as a media event and the workers'= =20 complaints as old news the company has rebutted since the earlier testimony= =20 before the committee.=20 Disabled PG&E employees ask state for help in getting disability checks=20 ASSOCIATED PRESS=20 July 4 2001=20 SAN FRANCISCO =01) After not receiving checks for work-related disabilities= for=20 months more than 200 Pacific Gas and Electric Co. employees have asked the= =20 state to take over their disability payments.=20 The employees stopped getting checks after Pacific Service Employees=20 Association sent them a letter saying it did not have enough funds. Until= =20 this year the association had paid almost all of PG&E's disability claims.= =20 PG&E said it has no legal responsibility to help the disabled workers and= =20 blames the employee association. But workers waiting for their payments=20 disagree.=20 The association and PG&E are one and the same A.J. Cavallaro an=20 electrical engineer with PG&E for 25 years who is on disability leave due t= o=20 a sleep disorder told the San Francisco Chronicle.=20 Originally created by PG&E workers to organize social events the associati= on=20 has its own board of directors and is legally separate from the utility and= =20 its parent company. The association began offering a short-term disability= =20 plan to PG&E workers in 1949.=20 Pacific Service transferred its members to the State Disability Insurance= =20 plan on Jan. 1. But about 230 PG&E workers decided to stay with the=20 association's plan after they were told they would continue to receive thei= r=20 disability checks.=20 Mike Colon the association's general manager filed an appeal with the=20 California Unemployment Insurance Appeals Board for the state to take over= =20 the group's payments.=20 Ralph Hilton chief counsel for the appeals board in Sacramento said that = if=20 the board decides the state should take over the payments checks would be= =20 issued within days of the ruling.=20 Workers may have to wait until August for the case to be heard.=20 National Desk=20 THE NATION Powerful Judge Illuminates Energy Practices Law: 'Folksy' jurist= =20 72 stuns utility executives and lawyers alike with his courtroom=20 incisiveness. RICARDO ALONSO-ZALDIVAR ?=20 07/05/2001=20 Los Angeles Times=20 Home Edition=20 Page A-12=20 Copyright 2001 / The Times Mirror Company=20 WASHINGTON -- The silver-haired judge handling federal negotiations on=20 refunds for alleged overcharges by power generators in California is often= =20 described as a Southern gentleman.=20 But Curtis L. Wagner Jr. can lose the folksy charm in a New York minute.=20 Wagner chief judge of the Federal Energy Regulatory Commission showed his= =20 knack for cutting through nonsense when he tangled with a smooth energy=20 company executive in his hearing room in May. The executive confidently=20 insisted he didn't need his boss' approval to enter into a $39-million=20 natural gas transportation deal.=20 Wagner didn't buy it.=20 I'm appalled that you're trying to pull this over my eyes intoned the=20 judge stunning a courtroom of high-priced lawyers into catatonic silence.= =20 Just answer my question . . .=20 Did you get approval . . . whether you got it after the meeting whether y= ou=20 got it the day before whether you got it in the head while you were both= =20 relieving yourselves?=20 Added Wagner owner of a 32-foot sailboat named Hizzoner: The head for= =20 non-boating people is the restroom.=20 Visibly squirming the witness acknowledged that his boss had in fact OKd= =20 the deal.=20 That kind of mettle prompted FERC's governing board to assign the overcharg= e=20 settlement case to the 72-year-old judge who likes to stay in shape by=20 attending early-morning aerobics classes in the agency's exercise room. I= =20 think Judge Wagner is the toughest tool in our toolbox said FERC=20 Commissioner Patrick H. Wood III.=20 Expectations are low that anybody can bridge the chasm between California a= nd=20 electricity generators and marketers with the state alleging it was gouged= =20 by $9 billion and the companies muttering about governmental extortion.=20 There are some very large numbers being talked about which makes it=20 unlikely that the companies would want to agree to a settlement said Kit= =20 Konolidge an electricity industry analyst with Morgan Stanley in New York.= =20 But in an interview Wagner said he feels pretty good about the chances. = I=20 never give up until the very end. With these things it looks impossible a= nd=20 then all of a sudden it comes together.=20 FERC the equivalent of a national utility commission is also dangling som= e=20 carrots in front of the parties. Along with refunds Wagner is trying to ge= t=20 a deal on long-term contracts for power and guarantees that the generators= =20 which are owed hundreds of millions of dollars will be paid.=20 The commission set a short time frame for the negotiations which are to=20 conclude Monday. If a settlement is not reachable FERC would impose its ow= n=20 solution. A mandated settlement is likely to be challenged in federal court= =20 where it could bog down for years.=20 FERC employs more than a dozen administrative law judges like Wagner to hea= r=20 disputes involving the companies it regulates. While presiding over the=20 closed-door settlement talks Wagner has traded his robes for a business=20 suit.=20 He has come down from the bench and sits at a table eye-level with more th= an=20 140 lawyers in his hearing room. There's a lot of billable hours there h= e=20 said.=20 The lawyers have been sorted into three big working groups representing=20 state agencies power sellers and energy marketers. The negotiations are=20 expected to intensify this week and participants said Wagner admonished al= l=20 sides on Friday to be ready to deal or face summary judgment from the FERC= =20 commission.=20 The judge has been variously quoted as saying that $1 billion $2 billion o= r=20 $2.5 billion might be an appropriate total refund. None of those [figures]= =20 are really attributable to me. I did make a statement--and I probably=20 shouldn't have--that it was probably less than $9 billion. Of the $9 billi= on=20 in overcharges claimed by the state only $5.4 billion is attributable to= =20 sellers within FERC's jurisdiction.=20 James J. Hoecker immediate past FERC chairman in the Clinton administratio= n=20 said that in 23 years as chief judge Wagner has built a reputation for=20 making things happen in difficult situations.=20 What is behind that is a lot of years on the bench and a certain amount of= =20 self-confidence Hoecker said. He has the ability . . . to move the parti= es=20 closer together. Sometimes that requires some fairly dramatic statements= =20 which are calculated to get people to feel the heat and get more creative= =20 about the flexibility they might have.=20 A senior FERC official said Wagner is like a pitcher who gets called from t= he=20 bullpen when the game is on the line. When things are tough we turn stuff= =20 over to Curtis said the official who asked not to be identified.=20 Wagner has had many big cases over the years on matters too arcane to garn= er=20 national attention.=20 He is handling a second major case before FERC. It involves allegations tha= t=20 Houston-based El Paso Corp. manipulated California 's natural gas market la= st=20 year thereby adding an estimated $3.7 billion to the state's energy costs.= =20 It was in that case that he grilled the executive.=20 Success in the California settlement negotiations would cap Wagner's 47th= =20 year as a government lawyer. The Tennessee native started at the Justice=20 Department on Aug. 2 1954. He got into regulatory law by representing the= =20 military in railroad disputes arising from the Korean War. After serving as= a=20 civilian lawyer for the Army for more than a decade he joined FERC's=20 predecessor agency in 1974.=20 But Wagner a widower doesn't dwell on his place in the annals of FERC. He= =20 tells agency employees he is working too many hours and missing his aerobic= s=20 classes.=20 Davis lauds California generator=20 Vote of confidence at Calpine's festival=20 Suzanne Herel Chronicle Staff Writer Thursday July 5 2001=20 2001 San Francisco Chronicle=20 URL:=20 /05/M N166801.DTL=20 Gov. Gray Davis took the stage at the San Jose America Festival yesterday a= nd=20 pledged to keep the lights on -- with the help of the Calpine energy=20 company which sponsored the fete.=20 You've heard me say some pretty tough things about out-of-state energy=20 companies trying to bleed us dry said Davis standing against the backdro= p=20 of a huge Calpine banner proclaiming Reliable Energy for a Brighter=20 Future.=20 Calpine is from California he said. They're going to make sure the ligh= ts=20 stay on.=20 Davis was a surprise guest sandwiched between musical acts Nina Storey and= =20 John Brown's Body during the daylong Fourth of July festival which feature= d=20 music food and vendors near the San Jose Airport.=20 The governor thanked the crowd of at least 1000 for joining other=20 Californians in conserving energy. Conservation surpassed the 10 percent ma= rk=20 statewide in May and June he said.=20 We could not get through the summer without you doing your part he said.= =20 Davis was introduced by Calpine chief executive Peter Cartwright -- whose= =20 multimillion-dollar stock option cash-in made news last month -- and San Jo= se=20 Mayor Ron Gonzalez who unsuccessfully opposed Calpine's planned 600-megawa= tt=20 Metcalf Energy Center in Coyote Valley.=20 In an interview after his appearance Davis countered criticism leveled at= =20 him this week by State Controller Kathleen Connell who accused him of=20 foolishly locking California into expensive long-term energy contracts.=20 You have to look at the total cost of electricity he said.=20 The state paid $109 million in May he said but that cost dropped to about= =20 $33 million last month.=20 Earlier yesterday after walking in the Redwood City Fourth of July parade= =20 Davis said that the price drop was a direct result of the long-term=20 contracts.=20 That would not have happened without the security and stability of long-= =20 term contracts he said. We did the right thing.=20 In San Jose he also said that the $15 million the state was paying=20 consultants to help negotiate power contracts was money well spent.=20 Before it was like the Yankees winning the World Series against the sandl= ot=20 baseball team he said. We're finally getting some stars on our team. = =20 E-mail Suzanne Herel at sherel@sfchronicle.com.=20 2001 San Francisco Chronicle ? Page?A - 2=20 Activists stage anti-corporate march to power plant=20 GISELE DURHAM Associated Press Writer Wednesday July 4 2001=20 2001 Associated Press=20 URL:=20 tate2 024EDT0201.DTL=20 (07-04) 17:24 PDT LONG BEACH Calif. (AP) --=20 Consumer activists rallied against rising energy prices and pledged their= =20 independence from corporate tyrants amid Fourth of July celebrations=20 Wednesday.=20 About 200 people carrying signs reading public power not corporate=20 bailout and human need not corporate greed marched two miles from a loc= al=20 park in the Los Angeles suburb to the Alamitos generating station.=20 We feel we have been gouged and bled dry said Medea Benjamin founding= =20 director of Global Exchange a San Francisco-based consumer advocacy group.= =20 We've been treated the way tyrants treat their servants.=20 The protest was a joint effort of several national and local consumer=20 activist organizations. No arrests were made although dozens of police=20 officers were out in force for crowd control.=20 Earlier this week a federal judge issued a temporary restraining order=20 preventing the city from enforcing an ordinance that could have blocked the= =20 march.=20 The law requires organizers of public protests to give 30 days notice of th= e=20 event post an insurance bond and pay for police protection at the rate of= =20 $55 per hour for each officer.=20 At the plant organizers had intended to serve officials with a notice of= =20 seizure by eminent domain declaring the facility to be public property. Bu= t=20 nobody appeared at the front gate. The demonstrators posted the notice on t= he=20 chain-link fence and staged about a 40-minute rally before dispersing.=20 The symbolic notice was meant to emphasize the groups' discontent with=20 skyrocketing power prices during the past year the use of state budget mon= ey=20 for power purchases and the activists' desire to have the state take over= =20 power plants to stabilize market prices.=20 The money they're making off of us is criminal said Loni Baker one of t= he=20 marchers. They're greed is taking money away from our kids' schools.=20 Representatives of Arlington Va.-based AES Corp. which owns the plant d= id=20 not immediately return calls seeking comment.=20 Last month the U.S. Justice Department opened an antitrust investigation= =20 into a power sales partnership between AES and Williams Energy the Tulsa= =20 Okla.-based company that sells power for AES under an exclusive marketing= =20 agreement.=20 Both companies have denied wrongdoing but in May Williams agreed to refund= =20 $8 million after the Federal Energy Regulatory Commission accused of the=20 company of temporarily closing AES plants to drive up power prices.=20 Davis asks PUC to let utilities cut voltage=20 1% savings on energy consumption predicted=20 David Perlman Chronicle Science Editor Wednesday July 4 2001=20 2001 San Francisco Chronicle=20 URL:=20 /04/M N29133.DTL=20 Gov. Gray Davis asked the Public Utilities Commission yesterday to allow=20 electric companies to lower voltage levels on power lines delivering=20 electricity to consumers this summer.=20 The move will save about 1 percent in the state's electricity consumption= =20 the equivalent of building a new 500-megawatt power plant.=20 Lowering voltages by 2.5 percent will prove barely noticeable by domestic= =20 users who might see their incandescent light bulbs dim slightly.=20 Refrigerators and electric motors such as those that run air conditioners= =20 should operate more efficiently on the lower voltages experts said.=20 The move should save consumers about 1 percent on their electricity bills= =20 according to Energy Commissioner Arthur Rosenfeld.=20 With support already promised by the state's major power companies the PUC= =20 is expected to approve the change in its voltage rules within weeks Robert= =20 Kinosian energy adviser to PUC President Loretta Lynch said at a Sacramen= to=20 press conference.=20 Similar voltage decreases have gone into effect in several other states=20 during power emergencies in recent years Rosenfeld said. But this is the= =20 first time it will occur statewide throughout an entire period of peak powe= r=20 demand.=20 PUC rules now require power companies to deliver between 114 and 126 volts = to=20 consumers all the time.=20 Less than two months ago Bill Wattenburg a maverick engineer and longtime= =20 consultant to the Lawrence Livermore National Laboratory assembled a team = to=20 test the effects on lights appliances microwave ovens and motors operatin= g=20 at voltages that were lowered by 5 percent or more.=20 At the press conference yesterday Wattenburg said those tests -- conducted= =20 with utility company senior engineers -- showed that no devices were damage= d=20 nor was their performance impaired. But cooking food on electric ranges --= =20 whether boiling water or making a roast reach a given temperature -- would= =20 take longer and consume slightly more power under any lowered voltage he= =20 said.=20 John Ballance director of network engineering at Southern California Ediso= n=20 said his company is equipped to control its voltage levels electronically a= nd=20 can lower them as soon as the PUC approves the change.=20 But Pacific Gas & Electric Co. operates differently and will have to change= =20 its voltage levels at each of its 2400 substations individually -- a task= =20 that could take several weeks Rosenfeld said.=20 This proposal may well achieve new efficiencies and reduce electric bills= =20 for California ratepayers Davis said in a statement. I urge the PUC to= =20 give it serious consideration.=20 E-mail David Perlman at dperlman@sfchronicle.com.=20 2001 San Francisco Chronicle ? Page?A - 13=20 Federal price limits backfire=20 Some generators withhold power rather than abide by rate caps=20 David Lazarus Chronicle Staff Writer Wednesday July 4 2001=20 2001 San Francisco Chronicle=20 URL:=20 /04/M N186091.DTL=20 Officials in California and Nevada after months of lobbying for federal=20 regulators to cap Western power prices warned yesterday that the newly=20 imposed limits have had the unintended consequence of increasing a threat o= f=20 blackouts in the two states.=20 The warnings were issued as California came within minutes of rolling=20 blackouts yesterday afternoon and one day after the first-ever rolling=20 blackouts in Las Vegas forced energy-hungry casinos to shut off fountains a= nd=20 reduce air conditioning.=20 The two states are asking the Federal Energy Regulatory Commission to take = a=20 closer look at the so-called price mitigation plan and come up with revisio= ns=20 that would deter power companies from withholding electricity during=20 shortages.=20 We need some clarity to this order said Oscar Hidalgo a spokesman for t= he=20 California Department of Water Resources which is spending billions of=20 dollars to keep the state's lights on.=20 Generators need to be held accountable he said.=20 The crux of the problem is that price limits kick in during shortages yet= =20 power companies say these caps force them to sell power at below-market rat= es=20 during periods of high demand.=20 Some companies have responded by holding back power rather than face the=20 expense of shipping electricity from state to state. Each mile that=20 electricity must be transmitted adds to the overall cost.=20 No one's going to pay for transmission if the cost is near the caps said= =20 Gary Ackerman executive director of the Western Power Trading Forum an=20 energy-industry association in Menlo Park.=20 Ackerman said several companies in his organization decided that there was = no=20 economic advantage to offering power in regional markets when price control= s=20 are in effect.=20 This means individual regions like California or Las Vegas could end up no= t=20 having enough Ackerman said. It increases the threat of blackouts.=20 BLACKOUT ALERT CANCELED California authorities issued a blackout alert at 1:45 p.m. yesterday when= =20 power reserves dipped to dangerously low levels. They canceled the alert=20 about an hour later after finding additional supplies.=20 Everyone in the West is fighting for megawatts said Stephanie McCorkle = a=20 spokeswoman for the California Independent System Operator which oversees= =20 the state's power network.=20 The Golden State's latest brush with lights-out conditions came a day after= =20 Nevada experienced its own rolling blackouts for the first time prompting= =20 heavy power users such as the MGM Grand and Caesars Palace to dim their=20 lights.=20 Don Soderberg chairman of the Nevada Public Utilities Commission said tha= t=20 the sudden power emergency took state authorities by surprise and that they= =20 are investigating to see what role the federal price limits may have had in= =20 exacerbating Monday's shortage.=20 We're looking very closely at this he said. There seems to be a potenti= al=20 for unintended consequences.=20 Specifically Soderberg said Nevada is focusing on operators of older less= -=20 efficient plants who would find profit margins shrinking if not vanishing= =20 under capped prices.=20 We're going to see how the caps might have played into this he said.=20 The federal ceiling in 10 Western states excluding California is about $9= 2=20 per megawatt hour. In California a 10 percent surcharge is added because o= f=20 the state's credit risk bringing the price to just over $101.=20 Ackerman at the Western Power Trading Forum said regional price controls ha= ve=20 extended California's power crisis to neighboring states.=20 California sneezed and the rest of the region caught the virus he said.= =20 'LAWYERS LOOKING FOR LOOPHOLES'=20 California and Nevada officials however said that they still have faith= =20 that price limits can stabilize Western electricity markets but that federa= l=20 regulators may have to tweak the system so that power companies cannot=20 withhold output.=20 The generators have banks of lawyers looking for loopholes (in the plan)= =20 said Hidalgo at the Department of Water Resources.=20 Unfortunately it may take some time for the regulators to revisit an issue= =20 that they took up only with the greatest reluctance. For months federal=20 regulators refused to impose price controls preferring instead to let supp= ly=20 and demand determine costs.=20 Hidalgo said that when it appeared that power companies were throttling bac= k=20 on output Monday California officials immediately dialed the hot line numb= er=20 provided by the Federal Energy Regulatory Commission in case of emergencies= .=20 No one answered he said. They were closed.=20 State officials tried again yesterday and this time were told that the=20 commission would look into the matter. They were not given a time frame for= =20 when the commission might come up with a response.=20 E-mail David Lazarus at dlazarus@sfchronicle.com.=20 2001 San Francisco Chronicle ? Page?A - 1=20 Two more energy whistleblowers slated to come forward=20 DON THOMPSON Associated Press Writer Wednesday July 4 2001=20 2001 Associated Press=20 URL:=20 tate0 336EDT0118.DTL=20 (07-04) 00:36 PDT SACRAMENTO (AP) --=20 Two more former workers at a San Diego-area Duke Energy plant are slated to= =20 talk with state investigators Thursday echoing concerns by other employees= =20 over how the plant was run when the state needed its power most.=20 However another former worker at the Chula Vista plant said he discarded= =20 perfectly good equipment three to five years ago while the plant was still= =20 owned by San Diego Gas and Electric.=20 Stuff that cost $3- to $5000 we were throwing away said Don Perkins of= =20 Alpine a mechanic at SDG&E plants for nearly 25 years.=20 That undercuts testimony from other former workers who told the Senate Sele= ct=20 Committee to Investigate Price Manipulation of the Wholesale Energy Market= =20 last month that they discarded valuable repair parts on the orders of Duke= =20 supervisors.=20 Like the other former SDG&E employees who have come forward Perkins was no= t=20 hired by Duke when it took over full operation of the plant in April. Perki= ns=20 said he is happy in retirement but like his former co-workers believes Duk= e=20 was driving up energy prices -- which the company vehemently denies.=20 He and the three other former workers suggested Duke did not adequately=20 maintain its equipment leading to unnecessary repairs they said cut power= =20 generation and may have helped boost prices by cutting supply. That include= d=20 running a 15-megawatt jet-fuel fired turbine until it broke down.=20 We ran the heck out of the plant you bet we didresponded Duke spokesman= =20 Tom Williams. But he said the plant had fewer outages under Duke's ownershi= p=20 than while it was owned by SDG&E.=20 Duke eventually had to completely rebuild the jet-fuel fired turbine=20 Williams said.=20 It ran more last year than the previous 37 years combined because the sta= te=20 needed the power Williams said.=20 An attorney for Lt. Gov. Cruz Bustamante who is to introduce the two new= =20 whistleblowers Thursday said they will echo their co-workers complaints th= at=20 maintenance slipped once Duke took over the plant.=20 Williams dismissed the news conference as a media event and the workers'= =20 complaints as old news the company has rebutted since the earlier testimony= =20 before the committee.=20 2001 Associated Press ?=20 Davis seeking cheaper contracts=20 Posted at 10:33 p.m. PDT Wednesday July 4 2001=20 BY JOHN WOOLFOLK=20 Mercury News=20 California officials are asking energy companies for better deals on the=20 state's long-term power contracts as a way to settle a dispute over billion= s=20 of dollars in electricity costs from the past year Gov. Gray Davis said=20 Wednesday.=20 In closed-door Washington D.C. settlement talks scheduled to conclude=20 Monday state officials are demanding that energy companies forgo $8.9=20 billion in bills for electricity that the state argues was overpriced.=20 But Davis during a San Jose visit Wednesday said the state would consider= =20 accepting some of that refund in the form of cheaper long-term contracts a= =20 move that could appease critics who say the $43 billion deals cost far too= =20 much.=20 The governor's comments shed light on the state's bargaining strategy in th= e=20 negotiations. Few details have emerged from the talks since the judge=20 overseeing them imposed a gag order.=20 ``We've made suggestions we've offered various ways in which people could= =20 get us $8.9 billion'' Davis said. ``We've said it doesn't have to be all= =20 cash. You can give it to us in lower contract prices than you otherwise wou= ld=20 have given to us. You can renegotiate our existing contracts and save us=20 money. However you want to do it it's just got to net out to $8.9 billion.= ''=20 It's unclear how those offers have been received by energy suppliers who= =20 have insisted their prices were fair given the uncertainty over whether the= y=20 would ever get paid. Several major companies including Duke Energy and=20 Enron say they're owed millions of dollars from the state and its major=20 utilities.=20 Paula Hall-Collins a spokeswoman for Williams Companies which signed=20 several contracts with the state in February to deliver power over the next= =20 10 years said she could not comment.=20 But one industry official said it was encouraging to see the governor show= =20 some flexibility and that the concept seems reasonable.=20 ``We take that as a positive'' said Gary Ackerman executive director of t= he=20 Western Power Trading Forum a trade association. ``If he wants to talk som= e=20 trade-off in renegotiating the contracts that doesn't seem to be totally o= ut=20 of hand. We're not going to turn away any serious offer.''=20 But Ackerman said the state needs to give a little on its refund target.=20 The $8.9 billion a figure estimated by the state's power grid analysts for= =20 sales from May 2000 to May 2001 has been widely challenged by industry=20 leaders. Even the judge overseeing the settlement talks said it's probably= =20 too high.=20 ``I don't think it serves the state of California for the state to hold fas= t=20 to a number any more than it does for my members to do the same'' Ackerma= n=20 said. ``It just doesn't get to a solution. There's got to be some give and= =20 take and we certainly haven't heard that until now from the governor.''=20 The state began buying electricity in January for its largest utilities aft= er=20 they became so saddled with debt from high power prices that energy compani= es=20 refused to sell to them. The state has spent about $8 billion since then in= =20 daily and short-term purchases.=20 The Davis administration signed $43 billion worth of electricity contracts= =20 with 18 energy suppliers for power over the next 10 years and has dozens of= =20 deals pending. The contracts are aimed at lowering the amount of power the= =20 state has to buy in daily markets where prices have soared.=20 Davis has credited the contracts with lowering the state's power costs from= =20 $100 million a day or more in May to about $33 million a day. His chief=20 energy negotiator S.?David Freeman has said he's proud of the contracts.= =20 But Davis has faced blistering criticism about the deals from Republican=20 lawmakers state Controller Kathleen Connell and consumer advocates who sa= y=20 the contracts will soak consumers with high electricity prices for many=20 years.=20 Davis initially sought contracts at prices around $55 per megawatt-hour bu= t=20 the deals signed so far average $70 per megawatt-hour.=20 That was a bargain earlier this year when daily prices averaged more than= =20 $200 per megawatt-hour. But average daily prices have since fallen to $89= =20 during peak hours and as low as $56 during low-demand periods.=20 The average daily price in 1999 was about $30 per megawatt-hour.=20 If the state and power suppliers cannot reach an agreement by Monday they= =20 can request an additional 10 days. Otherwise the judge will recommend a=20 settlement and the five-member Federal Energy Regulatory Commission will vo= te=20 on it.=20 So far the two sides still seem far apart.=20 ``It's very very difficult'' said Davis who named the state's negotiator= s=20 to the Washington talks. ``We'll see on Monday whether or not agreements ar= e=20 made. My hope is that a settlement will be reached. It's possible one will= =20 be.''=20 Contact John Woolfolk at jwoolfolk@sjmercury.com or (408) 278-3410.=20,other,informative,3 +COMPENSATION,could you look into this for me? -----------------,human resources,polite,3 +recent developments,Will we capture these accelerations in our accomplishments? -----------------,other,inquisitive,3 +Letter to Lynch from Us Describing Info ISO should release sooner,,other,unprofessional,0 +Re: Senator Dunn Hearing,Can you circulate the link to Cal TV again? Scott Govenar on 07/16/2001 01:58:41 PM Please respond to To: Ban Sharma David Leboe Eric Letke Jennifer Thome Ken Smith Bev Hansen Hedy Govenar Miyung Buster Janel Guerrero Robert Frank Mike Day Leslie Lawner Harry. Kingerski@enron. com Karen Denne Steven Kean Alan Comnes Susan J Mara Paul Kaufman Jeff Dasovich Jim Steffes Rick Shapiro cc: Subject: Senator Dunn Hearing THE SELECT COMMITTEE TO INVESTIGATE PRICE MANIPULATION OF THE WHOLESALE ENERGY MARKET WILL MEET ON WEDNESDAY JULY 18 AT 9:30 A.M. IN ROOM 3191 TO REVIEW COMPLIANCE WITH SUBPOENAS FOR DUKE DYNEGY RELIANT AES NRG AND WILLIAMS.,other,formal,5 +Lobbying Questionnaire Clarification,can you fill this out for me? ,external affairs,casual,3 +Enron Mentions - 05/03/01,ENRON PLANT HEARING PLANNED FOR TONIGHT South Florida Sun-Sentinel 05/03/01 Would buying boycott help lower California's electricity bill? Associated Press Newswires 05/03/01 INDIA: Indian banks appeal to govt to help end Enron row Reuters 05/03/01 DNC: Special Interests Write Bush Energy Policy PR Newswire 05/03/01 UK: INTERVIEW-Innogy starts trading power in mainland Europe Reuters 05/03/01 Mosaic Group posts strong first quarter results Canada NewsWire 05/03/01 European Phone Companies' Outlook Brightens: Rates of Return Bloomberg 05/03/01 UK:Corporates warm to charms of credit derivatives Reuters 05/03/01 Allegheny Energy buys three power plants Associated Press 05/03/01 Allegheny Energy Buys Midwest Capacity From Enron Unit Dow Jones 05/03/01 Allegheny Energy Supply Completes Purchase of Midwest Assets Adds 1700 MW to Growing Generation Fleet Business Wire 05/03/01 SSB Cuts Forecast For Power Profitability In 2002 Beyond Dow Jones 05/03/01 Fitch Affs Northern Border Rtg Outlook To Stable From Negative Business Wire 05/03/01 INDIA: UPDATE 1-Enron to meet govt panel over Indian project Reuters 05/03/01 India State Panel's Sat Meet With Enron Unit Postponed Dow Jones 05/03/01 EnergieKontor Secures Enron Deal For Spain Germany Projs Dow Jones 05/03/01 The Bottom Line: Scottish Power Looks To Refine Focus Dow Jones 05/03/01 LOCAL ENRON PLANT HEARING PLANNED FOR TONIGHT Staff Reports 05/03/2001 South Florida Sun-Sentinel Broward Metro 3B (Copyright 2001 by the Sun-Sentinel) Pompano Beach A town meeting will be held tonight on Enron Corp.'s power plant proposal for Pompano Beach. Called by Commissioner Kay McGinn the meeting will be open to anyone who wants to speak. The City Commission is to vote Tuesday on whether to approve a zoning variance for the project. The meeting will be held at 7 p.m. at the Pompano Beach Civic Center 1801 NE 6th St. Would buying boycott help lower California's electricity bill? By MICHAEL LIEDTKE AP Business Writer 05/03/2001 Associated Press Newswires Copyright 2001. The Associated Press. All Rights Reserved. SAN FRANCISCO (AP) - There's a limit to how much people will pay for most things in life. If the cost scares off enough buyers prices eventually fall. So what would happen if this textbook example from Economics 101 were applied to California's electricity crisis? What if the state officials struggling to maintain energy supplies simply refused to buy power above a certain price and accepted more blackouts this summer? The question would have been absurd just a few months ago and even now the notion seems surreal given the possible consequences. Inviting even more blackouts inevitably would hurt businesses and frustrate consumers threatening to further depress California's already slumping economy - the sixth largest in the world. But desperate times require drastic measures according to the economists lawmakers and activists who believe the state will be better off sitting in the dark than buying electricity at any price during a summer shortage likely to produce recurring blackouts anyway. It's better to use (blackouts) and break the (wholesale energy) cartel than simply to suffer them said Michael Shames executive director of the Utility Consumer Action Network a San Diego watchdog group. Refusing to buy enough power to keep the lights on would be like playing with fire counters Wells Fargo & Co. chief economist Sung Won Sohn. Blackouts aren't a just matter of inconvenience or being too hot or cold. They cost businesses a lot of money. Buying electricity at the last minute to meet the state's power needs already has cost the California government $5.7 billion in the past 3 1/2 months. The state energy bill for 2001 could reach $50 billion in money otherwise spent on education public safety and health care Shames said. Faced with the prospect of a significant budget deficit some lawmakers think it's time for California to take a stand against the power wholesalers - many of whom are based outside the state. This Tuesday the state Senate Energy Committee will consider authorizing the state to refuse to buy power above certain prices. Current law requires state electricity managers to avoid blackouts by buying all available power at any cost. We have been over a barrel in so many ways said Sen. Dede Alpert D-Coronado who sponsored SB73x. Maybe there's a point in the market where (we) just say no and go with the planned blackout strategy instead. Economists give the bill little chance of succeeding. It's never going to happen. It's not a viable option said University of California at Berkeley Professor Severin Borenstein one of the energy experts who have studied the idea. The business lost during blackouts would mean more layoffs in a state already skittish over the technology downturn and the looming Hollywood writers strike economists say. Other ripple effects include diminished gasoline supplies leading to even higher prices at the pump and distribution headaches that could leave store shelves bare. And some consumers - the elderly and the infirm for example need power at any price. Without electricity Manteca resident Betty Jarzemkoski said she wouldn't be able to help her ailing husband to get out of his motorized bed at home. It would be a real hardship for us said Jarzemkoski 78. I'm on a fixed income so I hope they can figure out something to bring down prices. But we need power. Despite such concerns the concept of a buyer's boycott hasn't been flatly ruled out - at least publicly - by Gov. Gray Davis as he struggles to reduce the state's staggering electricity bill. The state is spending as much as $90 million per day to meet California's electricity needs and the bleeding is sure to get worse. When the summer heat increases demand and tightens supplies California might spend more than $1 billion each week state officials estimate. Extended blackouts pose an even greater cost economists say. When Northern California suffered rolling blackouts for several hours Jan. 18-19 the economic losses totaled $2.3 billion mostly from lost profits and wages estimated the Los Angeles Economic Development Corp. Multiply that over several weeks across the entire state and it becomes apparent why it makes more sense for California to continue buying power at inflated prices even if leaves the state with deep debts and a ruined credit rating economists argue. As it is California probably won't be able to round up enough power at any price on some days this summer making some blackouts a virtual certainty. The blackouts will reduce the state's economic output by $2 billion to $16 billion according to a study released last month by the Bay Area Economic Forum. The resolve of the state's politicians and ratepayers would be sorely tested for a boycott to succeed much in the way that labor strikes boil down to whether workers or management can withstand more financial pain. Politicians aren't going to willingly turn out the lights because politicians want to get re-elected said Borenstein director of the University of California's energy institute. As soon as people start losing their jobs because the power is off the public will get tired of the blackouts real quick. Still Californians might tolerate an increase in blackouts if they understand why the state chose to pursue such a drastic course said Stanford economics Professor Frank Wolak who heads the Independent System Operator's market surveillance committee. This isn't something you could do without an enormous public relations campaign he said. The campaign would have to explain that the state had no other choice but to do this because (federal power regulators) aren't doing their job and enforcing the law against unjust and unreasonable prices. The largest out-of-state generators are in such robust financial shape that it might take weeks before they would feel such pain from a California boycott that they would be forced to lower prices. After making record profits last year power wholesalers Enron Reliant Dynegy Duke Energy Williams and Mirant and earned a combined $1.6 billion during the first three months of this year. --- On The Net: Bay Area Economic Forum report: Electric Power Research Institute: http://www.epri.com Utility Consumers' Action Network Report: INDIA: Indian banks appeal to govt to help end Enron row 05/03/2001 Reuters English News Service (C) Reuters Limited 2001. BOMBAY May 3 (Reuters) - Indian lenders to U.S. energy group Enron Corp's gas-fired power plant south of Bombay have appealed to the Indian government to help end the company's row with a state-owned electricity board over pricing and upaid bills. The board of Enron's Indian unit Dabhol Power Co (DPC) has authorised management to stop selling power to the Maharashtra State Electricity Board (MSEB) if a bitter dispute over pricing and unpaid bills cannot be resolved. In the past half year the MSEB has defaulted on bills for electricity supplied by Dabhol which operates the world's largest gas-fired plant on the west coast of India 160 kilometres (100 miles) south of Bombay. Indian financial institutions which contributed $1.4 billion towards the project in loans are pressing the government to help end the crisis a source told Reuters. We have asked the government for help. We are awaiting their reply the source who is employed with a large financial institution said. The domestic lenders to the project are Industrial Development Bank of India ICICI Ltd Industrial Finance Corporation of India Canara Bank and State Bank of India . The Dabhol Power Company (DPC) owned 65 percent by Enron last month took the major step of bailing out of the $2.9 billion power project citing non-payment of bills by the Maharashtra State Electricity Board (MSEB). The DPC board's move sparked widespread fears that India's image as a safe destination for foreign direct investment would be damaged. POWER STRUGGLE MSEB which is a state-owned utility has been a regular defaulter on payments to DPC saying that it finds the power too costly. It has also backed out on its commitment to buy more power to be produced by the project's second phase which is to begin operations later this year. Last month MSEB said it had paid Dabhol Power 1.34 billion rupees ($28.60 million) for electricity it bought in March. But the payment only partially resolves the total overdue amount of 2.26 billion rupees ($48.2 million) which Enron has been unable to collect even after invoking guarantees issued by the government of Maharashtra India's most industrialised state and the federal government. The state utility still owes Enron payments for power purchases in December and January. The Indian government has maintained that the contract must be renegotiated and has set up a committee to do so. We are concerned and would like the renegotiations to happen fast the source added. The dispute has raised fears that Enron could pull the plug on the project cease providing power to the local state electricity board and perhaps even sell the plant. The plant is good Maharashtra needs power and I am sure buyers can be found the source added. ($1=46.82 Indian rupees). DNC: Special Interests Write Bush Energy Policy 05/03/2001 PR Newswire (Copyright (c) 2001 PR Newswire) WASHINGTON May 3 /PRNewswire/ -- The Democratic National Committee issued the following today: Dick Cheney began dropping hints this week as to what the Bush energy policy will look like and it is long on oil and short on conservation. But something was missing from the coverage of Cheney's announcement: not just who benefits from the Bush plan but who's writing it as well. (Photo: ) It's hard to understate the influence big donors and high-ranking executives have with the Bush Administration. Take Tom Kuhn for example one of the energy executives who came calling when Bush was thinking about actually following through on his pledge to limit carbon dioxide levels. Kuhn a top Bush fundraiser also served on Bush's Energy Department transition advisory team and still enjoys access to the highest reaches of the Bush White House. Not surprisingly then the Big Oil Bush Administration's energy policy could not make Bush's huge donors and the special interests in the energy business any happier. Since the energy industry's problems are Bush's problems the first things on Bush's hit list are the environmental regulations that keep Big Energy in check -- and our country clean. With an energy executive running around the West Wing Bush's energy policy could be summed up as Drill anywhere anytime and keep those checks coming. The Democratic Party is committed to fighting for a balanced energy policy that keeps our country's priorities -- such as a clean environment -- in mind. To learn more about Bush's misplaced priorities and kowtows to the special interests keep reading to find out the Top Ten Paybacks To The Energy Industry and to see how you too can get on the Bush gravy train in Recipe for a Quid Pro Quo courtesy of the Democratic Party's http://www.100DaysofBush.com. BUSH'S TOP TEN PAYBACKS TO THE ENERGY INDUSTRY One of the most obvious and recurring themes of Bush's first 100 days has been the extraordinary influence the oil and gas industry has had in the new administration. Oil and gas interests are some of Bush's top campaign contributors giving more than $3 million to get Bush elected. In exchange Bush has rolled back regulations issued by the Clinton administration on such things as air conditioner efficiency as well as breaking his campaign promise to regulate carbon dioxide emissions. Bush has proposed drilling in the Arctic National Wildlife Refuge and national monuments. Bush has taken a backseat when it comes to the energy crisis California is experiencing while cutting funding for energy conservation programs. He has also repaid top donors lobbyists and industry officials with key positions throughout his administration. Here is just a sampling of how the oil gas and other energy industries have benefited in Bush's first 100 days: 2 - BUSH TAKES HANDS-OFF APPROACH TO CALIFORNIA CRISIS WHILE ENERGY COMPANIES MAKE MILLIONS Bush Did Little to Aid California in Energy Crisis Fleischer Said Crisis is a California Matter. Bush has done little to aid California in its energy crisis such as refusing to support wholesale price caps on electricity. White House spokesman Ari Fleischer said The president continues to believe that the issue is mostly a California matter dealing with the legislation that is before the state. And the leaders of California are working to address that in their own right. Fleischer also said that Bush wanted to focus on a long term national energy policy. (AAP Newsfeed 1/23/01 Wall Street Journal 1/23/01) Texas Energy Company Accused of Price Gouging to Make Money off California's Energy Crisis. The Federal Energy Regulatory Commission ordered further inquiry into allegations by California officials that El Paso Natural Gas Co. a Houston based subsidiary of El Paso Energy Co. manipulated the natural gas market by keeping supply artificially low contributing to the high price of electricity in the state. El Paso Energy was one of the Texas firms grandfathered by Bush's voluntary emissions standards in Texas. Between 1993 and 1998 El Paso Energy and El Paso Natural Gas PACs gave a total of $8000 to Bush's gubernatorial campaigns. During the 1999-2000 election cycle El Paso Energy Corp. and El Paso Natural Gas Co. gave a total of $743029 to Bush and the GOP -- $460395 to GOP in soft money $247750 to GOP candidates from its PAC and $34884 to the Bush campaign from its employees and executives. (www.opensecrets.org Los Angeles Times 3/30/01 tebb.epenergy.com Boston Globe 10/3/99) Electricity Wholesalers Reported Gigantic Earnings Surges from Energy Crisis. According to the Los Angeles Times several electricity wholesalers to California reported gigantic earnings surges for the quarter ended March 31. The following companies all contributors to Bush have earned record profits off of the energy crisis in California. (Los Angeles Times 4/18/01) COMPANY TOTAL TO BUSH COMPANY PROFIT Enron Corp. Enron is Bush's largest Enron's operating income was career patron giving at $406 million in the first least $563000 for his quarter of 2001 compared campaigns including his with $338 million in the 1978 House campaign. same period last year a 20% (San Diego Union-Tribune increase.(Los Angeles Times 2/11/01) 4/18/01) 6 - BUSH'S TRANSITION TEAMS Energy Interests Dominated Bush Transition Energy Advisory Team. Big energy and oil firms dominated the Bush transition's Energy Advisory Team having contributed $857232 to the Republican Party and Bush during the campaign. (Center for Responsive Politics www.crp.org) Almost Two-Thirds of Bush's Energy Transition Team Worked for Energy Industry. Out of the 48 members of the Bush Energy Department transition team 31 or almost two-thirds worked for the energy industry: NAME EMPLOYER Brian Bennett Southern California Edison Robert Card Kaiser Hill Steve Chancellor Black Beauty Coal Company Joe Colvin Nuclear Energy Institute Don Duncan Phillips Petroleum Company Tom Farrell Dominion Energy Gay Friedman Interstate Natural Gas Association of America Jack Gerrard National Mining Association J. Roger Hirl Occidental Chemical Corporation Hunter Hunt Hunt Power L.P. Jerry Jordan Independent Petroleum Association of America Buddy Kleemeier Kaiser Francis Oil Company Tom Kuhn Edison Electric Institute Ken Lay Enron Albee Modiano U.S. Oil and Gas Association David N. Parker American Gas Association C.J. Pete Silas Phillips Petroleum Company Gary Ellsworth USEC Inc. Buck Harless International Industries Stephanie Kroger Mayor Day Caldwell & Keeton (lobbies for companies in oil and gas industries www.mdck.com) Joe Farley Balch & Bingham (lobbying firm which focuses on managing and operating utilities of all kind www.balch.com) Bill Martin Washington Policy and Analysis (lobbying firm which represents American Gas Association www.influenceonline.net) The Honorable Howard Baker Baker Donelson Bearman Caldwell (lobbying firm dealing with energy industry www.bakerdonelson.com) Erle Nye TXU Electric and Gas Corporation Gregg Renkes The Renkes Group (lobbies for members of industry including Edison Electric Institute www.influenceonline.net) Dick Silverman S.R.P. Matt Simmons Simmons & Co. International John Tuck Baker Donelson Bearman Caldwell (lobbying firm dealing with energy industry www.bakerdonelson.com) Daniel Yergin Cambridge Energy Research Associates The Honorable Thomas C. Merritt Merritt Tool Company Inc. (Oilfield Service Business Inside F.E.R.C.'s Gas Market Report 5/5/95) John Wootten Peabody Group Coal Executive Irl Engelhardt was an Energy Advisor to the Bush-Cheney Transition gave $100000 to Inaugural Fund. Irl Engelhardt of Peabody Group Inc. served as an energy advisor on the Bush-Cheney transition. During 1999- 2000 the Peabody Group gave $250000 to the Republican National Committee and Irl Englehardt personally gave $100000 to the Bush-Cheney Inaugural fund. (Washington Post 3/25/01 www.crp.org) /CONTACT: Jenny Backus of the Democratic National Committee 202-863-8148/ 11:47 EDT UK: INTERVIEW-Innogy starts trading power in mainland Europe By Stuart Penson 05/03/2001 Reuters English News Service (C) Reuters Limited 2001. LONDON May 3 (Reuters) - British utility Innogy said on Thursday it had started trading wholesale electricity on the French-Italian border and was set to enter the German power market. We have done some wholesale trading on the Italy-France border moving power from France to Italy and we are very close to doing some in Germany said director of trading Tony West in an interview with Reuters. This year we will significantly increase our trading in (mainland) Europe we are discussing relationships with counterparties at the moment he added. Innogy is building a European power trading team at its headquarters in Swindon southern England from where it already trades the UK gas and power markets. FRANCE COULD BE KEY MARKET West said the company initially had expected the main focus of its European trading strategy to be Germany and the north west of the continent. But the early signs were that France would also play a key role particularly as Innogy had gained access to capacity in the UK-France undersea interconnector cable. France has taken me by surprise. It might be more important than we anticipated although there are clearly still issues about the speed of liberalisation said West. A core of about eight companies regularly trade power in France including TXU Europe Enron and a trading alliance between Endesa and Morgan Stanley Dean Witter according to traders. West said Innogy had so far concentrated on buying power in France not always from French companies and taking it to Italy via the cross border interconnector between the two countries. Innogy had bought some of the 400-megawatts available on the interconnector through recent auctions he said. It's easy to trade through France the cost of taking power through to the border is minuscule although buying power in France and then selling it in France is a lot more difficult said West. He said Innogy had signed grid balancing agreements with French transmission grid operator RTE. Andy Duff managing director of generation and trading added France could become become important for Innogy on a retail level as well as a trading level depending on how effectively the UK-France interconnector could be used. The European market will be driven by the operation of interconnectors and transmission services as well as exchanges said Duff. Innogy may look to trade on Germany's two power exchanges as well as that country's burgeoning over-the-counter market. The company is in the process of signing standard trading agreements for Germany based on the terms devised by the industry group the European Federation of Energy Traders (EFET). FOCUS ON TRADING NOT ASSETS Duff said Innogy's strategy in Europe was to focus on trading but not the acquisition of physical assets. We are not going to lead with assets in Europe. We will focus on trading services-type arrangements extracting value from (other companies') assets. That's the main thrust of the business he said. West said Innogy's trading in mainland Europe would expand into natural gas as opportunities emerged. The company already trades around the UK-Belgium gas interconnector. Mosaic Group posts strong first quarter results 05/03/2001 Canada NewsWire (Copyright Canada NewsWire 2001) -- Diluted Cash Earnings per Share Increases by 29% and Revenues up by 89% -- TORONTO May 3 /CNW/ - Mosaic Group Inc. (MGX:TSE) Canada's leading outsourced marketing services agency announced today that it continued its trend of strong earnings growth for the period ending March 31 2001. Posting its 18th consecutive quarter of year over year revenue growth Mosaic has also reported an average quarterly organic growth rate of 27% since 1996. Financial highlights from continuing operations(x) for this quarter include: - Revenues at $171.8 million - up 89% or $80.7 million from Q1 2000. Mosaic has consistently outpaced the growth of its peers within an industry that is clearly expanding said Mike Preston Chairman and CEO Mosaic Group Inc. We have posted 18 consecutive quarters of continued growth while adding to our blue chip client list. We are building our business by taking our clients' business farther every time we deal with them. Our organic growth comes not only from securing new client wins but from the cross-selling wins that are characteristic of a mature company able to leverage a robust and diverse range of service offerings. New Client Wins In the first quarter of 2001 Mosaic's newly acquired business unit Paradigm has secured new client business worth between $20 million and $25 million a year in revenue. Combined with new client wins from Mosaic's other business units and increases in spending from some existing clients Mosaic has made significant progress in closing its new business gap for 2001. New Power --------- During the first quarter of 2001 Paradigm signed a contract with New Power to acquire residential and commercial customers through a variety of direct response channels such as outbound telemarketing inbound telemarketing direct mail and feet on the street. New Power was formed by Enron Corp. the largest buyer and seller of electricity and natural gas in North America. Paradigm had previously provided contract marketing services to New Power. Through diligent effort Paradigm was able to expand the contract to include the performance-based customer acquisition component. /For further information: Please Contact: Clint Becker Chief Financial Officer Mosaic Group Inc. (416) 813-4275 email: Donna Cox-Davies Director of Communications Mosaic Group Inc. (416) 813-4279 Email: 16:10 ET European Phone Companies' Outlook Brightens: Rates of Return 2001-05-03 08:52 (New York) European Phone Companies' Outlook Brightens: Rates of Return London May 3 (Bloomberg) -- European telephone companies such as British Telecommunications Plc and Deutsche Telekom AG have improved their ability to pay back debt in recent weeks making their bonds a buy investors said. ``Sentiment seems to be changing'' said Anna Lees-Jones who helps manage about 28 billion pounds ($40 billion) of corporate bonds at M&G Investment Management. ``I've been building up my telecoms position all year.'' British Telecom's 10-year euro-denominated bonds sold in January yield about 214 basis points more than government debt down from a record 238 in March. Contracts that pay out if the company goes bankrupt have also fallen in the past month according to Enron Corp. which trades the derivatives. Bond yields and bankruptcy derivatives have also declined for Deutsche Telekom and Royal KPN NV after the companies said they would sell assets to pay down debt that has pushed their credit ratings to record lows and weighed on their shares. Phone companies sold $100 billion of bonds last year to finance licenses and equipment for new mobile services. British Telecom said yesterday it will sell its stakes in Japan Telecom Co. and Spain's Airtel SA to Vodafone Group for 4.8 billion pounds. British Telecom may also sell as much as 7.5 billion pounds of shares to existing investors in a so-called rights offer according to Legal & General Group Plc one of the company's shareholders. Deutsche Telekom will sell assets such as cable television and a stake in Global One and Wind SpA Chief Financial Officer Karl-Gerhard Eick said last week. KPN the biggest Dutch phone company said on March 26 it plans to raise at least 5 billion euros from asset sales to lower debt. Those plans have helped shift investors' perceptions of the companies' creditworthiness money managers said. `Drastic Measures' ``At the beginning of the year the market was assuming telecoms companies would be downgraded from single-A to triple- B'' said Peter Harvey who helps run about $8.6 billion at F&C Management. ``Drastic measures such as deeply-discounted rights issues led investors to believe they will maintain their single-A status.'' The gap or spread between British Telecom's sterling denominated bonds maturing in 2006 and U.K. five-year government bonds has narrowed 50 basis points to 109 basis points in the past month. Spreads between Deutsche Telekom's 6.125 percent five- year euro bonds and German government debt narrowed 35 basis points to 107 in April. Bankruptcy Swaps Fall Those shifts in sentiment are also reflected in Enron's bankruptcy swaps where prices have fallen in the past month said Simon Brooks a trader at Enron. Enron prices the swaps using indexes that measure the probability of bankruptcy and the likely recovery rate in that event. The price is expressed as a percentage above a benchmark interest rate such as the London interbank offered rate or Libor. British Telecom bankruptcy swaps have declined to 66 basis points from 96 on April 1 Enron said. Bankruptcy swaps on Deutsche Telekom dropped to 78 from 100 while KPN's fell to 135 from 183. Over the same period France Telecom SA's declined to 70 from 100 and Telecom Italia SpA's fell to 94 from 119. British Telecom's bond yields may fall further relative to government debt analysts said. They still offer higher yields than those of rival Vodafone Group Plc which has the same ratings though with a stable outlook. While both companies have five-year euro-denominated bonds British Telecom's offer 55 basis points more yield. The rivals also both have bonds maturing in 2004 and Vodafone's yield about 23 basis points fewer. ``If BT retains their rating their spreads should be probably 20 to 30 basis points narrower'' said Brian Venables head of credit strategy at WestLB. ``Even though it has performed extremely well this year there is much greater potential for BT's debt.'' Debt Reduction Target Both Moody's Investors Service which rates British Telecom ``A2'' and Standard & Poor's which rates it ``A'' have those ratings on watch for further cuts after trimming them four rungs last year. The company's asset sales to Vodafone are ``definitely positive in terms of the rating assessment'' said Aidan Fisher who rates British Telecom for Moody's. In combination with the proceeds of a rights sale ``that would meet the target they set themselves this year -- that's quite a lot to achieve in a 12 month period.'' British Telecom has said it wants to slash its 30 billion pounds of debt by a third and fend off further rating cuts. Before companies such as British Telecom clarified their debt-reduction plans ``the world and his wife were underweight'' telecom bonds in March said Harvey at F&C. The investment firm has since raised its holding of telecom bonds to neutral from underweight relative to its benchmark he said. Bond yields ``were trading very much out of line to the rest of the market'' said Lees-Jones at M&G. Now ``they have come in quite a bit and will come in further.'' --Tom Kohn and Alice James in the London newsroom (44-20) 7330 7929 or at tkohn@bloomberg.net with reporting by Christine Harper /zls Story illustration: {CRED } to see credit analysis on Bloomberg. {BRITEL } for BT's bonds. {DT } for Deutsche Telekom's bonds. UK:Corporates warm to charms of credit derivatives By Tom Bergin 05/03/2001 Reuters English News Service (C) Reuters Limited 2001. LONDON May 3 (Reuters) - European corporates are beginning to turn to credit derivatives among the more esoteric and complex of financial instruments to hedge the risk their debtors won't pay up market participants said on Thursday. Credit derivatives are insurance-like tools that allow users to hedge the risk of default on a debt. They are mainly used by banks hedge funds and insurance companies to hedge or gain exposure to the risk of a bond issuer defaulting. Dealers said an environment of deteriorating credit quality and a growing awareness among corporates that credit derivatives offer certain advantages over established hedging tools was behind the increasing use of the instruments. The market remains small with only around a dozen non-financial European corporates regularly using credit derivatives to manage their credit portfolio at present. But market professionals predict they will one day become as commonplace in the corporate world as other hedging tools such as interest rate swaps and currency options. We see (corporate use) as a big growth area for credit derivatives maybe the biggest says Bryan Seyfried vice-president of Enron Credit in London. Enron Credit grew out of the efforts of energy company Enron Corp. to hedge its own credit risk portfolio and now specialises in marketing credit risk management solutions to other non-financial corporates. Ralf Lierow director of credit derivatives at Siemens Financial Services in Munich said the ability to buy and sell in a liquid market means credit derivatives offer a flexibility that established tools like credit insurance and forfaiting guarantees lack. Credit derivatives were are often cheaper than the alternatives too he added. This is not a trading book thing. For us the credit default swap is another tool for credit risk management Lierow said. HELPS OPERATIONAL UNITS DO MORE BUSINESS Siemens Financial Services acts as the centralised risk portfolio management operation for companies within the Siemens electronics and industrial group. It first started using credit derivatives in July 2000. Large companies like Siemens can have hundreds of millions of dollars in receivables on their books at any time. The efficiency with which these companies manage the credit risk on their receivables has an impact on their day to day business. The advantage for the operative area is that they can offload more receivables and do more business Lierow said. Siemens uses credit default swaps the most liquid type of credit derivatives to hedge its portfolio of debtors on a constant basis. As the balance of cash owed by each name fluctuates over time the company tries to match this with default swap positions. Hence if a customer fails to pay Siemens can recoup the debt from the default swap seller. Other companies use credit derivatives less frequently. There are occasional corporate users that have secured one-off requirements for balance-sheet management aims or to strip out the credit risk of a commercial transaction said Walter Gontarek head of global credit products at RBC Dominion Securities. By hedging a country or company risk which a corporate may not be comfortable in carrying a credit derivative can facilitate a project that may otherwise be unfeasible dealers said. NOT PUT OFF BY BAD PRESS Corporates' adoption of credit derivatives is in spite of the negative publicity the instruments have received in recent years. A number of disputes over whether protection buyers could force banks to pay up on contracts have ended up in court. However traders insist that subsequent work done on contract documentation minimises the risk of such disputes in future. Nonetheless a very practical concern for corporates remains in that credit derivatives documentation was designed by bankers with sovereign and corporate bonds in mind. The International Swaps and Derivatives Association (ISDA) standard documentation for credit default swaps allows for a pay-out in relation to defaults on bond payments but not on a private debtor's failure to pay. We use the ISDA framework but we need it redrafted in specific ways to fit our needs. You cannot take a standard contract and trade on it if you want to hedge trade receivables Lierow said. These amendments add to the cost of the credit derivative. Another problem that corporates face is the complexity of credit derivatives. There is little experience of the instruments which are barely a decade old in the corporate world. Siemens had to get its expertise from the financial markets hiring Lierow from Bankgesellschaft Berlin. Clive Banks UK head of derivatives sales to buy-side clients at Schroder Salomon Smith Barney said much of the effort in marketing credit derivatives to corporates involves educating them about the products and the risks involved. It's about explaining credit risk management and what kind of volatility and cost having credit risk introduces he said. OUTLOOK PROMISING Yet some corporates are beginning to take full advantage of their new tool. Lierow said that Siemens which currently only buys credit protection planned to start acting as a default swaps seller in the coming months. He said selling would facilitate better matching of protection levels to actual exposures and would enable diversification of risk away from industry sectors where the company's activities are concentrated. You could improve the portfolio mix by buying protection on automotives and selling protection on pharmaceuticals he said. Allegheny Energy buys three power plants 05/03/2001 Associated Press Newswires Copyright 2001. The Associated Press. All Rights Reserved. HAGERSTOWN Md. (AP) - Allegheny Energy Inc. said Thursday it has purchased three power plants from Houston-based Enron Corp. The company said it issued more than 14 million shares of common stock worth $667 million to pay for the transaction. The plants are in Tennessee Indiana and Illinois. The Midwestern purchase will bring an additional 1710 megawatts on line. The company is expected to own 14000 megawatts of generating power by 2005. Allegheny also has plans to build natural gas-fired facilities in Arizona Indiana and Pennsylvania. Allegheny Energy is the parent of Allegheny Power which supplies electricity and natural gas to 3 million people in Maryland Ohio Pennsylvania Virginia and West Virginia. Allegheny Energy Buys Midwest Capacity From Enron Unit 05/03/2001 Dow Jones News Service (Copyright (c) 2001 Dow Jones & Company Inc.) HAGRSTOWN Md. -(Dow Jones)- Allegheny Energy Inc.'s (AYE) Allegheny Energy Supply Co. unit purchased 1710 megawatts of natural gas-fired merchant generating capacity in three Midwest states from Enron Corp.'s (ENE) Enron North America unit. Financial terms weren't disclosed. In a press release Thursday Allegheny said it financed the acquisition through debt and equity and expects the purchase to add to earnings in 2001 excluding transaction costs. Allegheny noted that this latest acquisition gives Allegheny Energy Supply more than 14000 MW of total generating capacity that it will own or control by 2005. Allegheny Energy Global Markets will market output from the three facilities. On April 27 Allegheny priced its public offering of 12.4 million shares at $48.25 each and said it would use the $598.3 million in gross proceeds to fund its previously reported acquisition of generating facilities located in the Midwest and for other corporate purposes. New York Stock Exchange-listed shares of Allegheny recently traded at $49.85 down 51 cents or 1% on composite volume of 306000 shares. Average daily volume is 538773 shares. Allegheny which posted an operating net of $313.7 million or $2.84 a share on revenue of $4.01 billion for the year ended Dec. 31 is an energy company. Company Web site -Karen M. Chow Dow Jones Newswires 201-938-5400 Allegheny Energy Supply Completes Purchase of Midwest Assets Adds 1700 MW to Growing Generation Fleet 05/03/2001 Business Wire (Copyright (c) 2001 Business Wire) HAGERSTOWN Md.--(BUSINESS WIRE)--May 3 2001--Allegheny Energy Inc. (NYSE: AYE) today announced that its unregulated generation subsidiary Allegheny Energy Supply Company LLC has completed the purchase of 1710 megawatts of natural gas-fired merchant generating capacity in three Midwest states from Enron North America a wholly owned subsidiary of Enron Corp. (NYSE: ENE). The acquisition gives Allegheny Energy more than 14000 MW of total generating capacity that it will own or control by 2005 and marks a significant step in the Company's strategic course toward becoming a national energy supplier. Earlier this year Allegheny Energy Supply acquired 83 MW of coal-fired generation in the Conemaugh Generating Facility near Johnstown Pa. Additionally the Company has announced plans to build a 1080-MW natural gas combined-cycle plant in La Paz County Ariz. a 630-MW natural gas combined-cycle facility near South Bend Ind. and a 540-MW natural gas fired combined-cycle generating facility in Springdale Pa. Another 220 MW of peaking capacity have already been completed in Pennsylvania. The Midwest acquisition was financed through a combination of debt and equity and will be accretive to Allegheny Energy's earnings in 2001 excluding transaction costs and other costs related to the integration. Yesterday the Company issued more than 14 million shares of common stock to facilitate the transaction. Alan J. Noia Chairman of the Board President and Chief Executive Officer of Allegheny Energy said I am pleased to announce the closing of Allegheny Energy's largest generation acquisition to date. It provides our Company with significant generation presence and capability as an energy merchant to sell electricity from efficient natural gas-fired generation facilities in more areas of the country with a growing demand for energy. Output from the three facilities will be marketed by Allegheny Energy Global Markets. These premium generating assets are designed for operation in times of peak electricity demand said Noia. Because of its national presence Allegheny Energy Global Markets will be able to market the output from these newly acquired facilities in a wide variety of ways with our portfolio of existing assets and other supply arrangements so that overall operational efficiency and shareholder value is maximized. Allegheny Energy Supply's newly acquired facilities include: the Gleason Tenn. plant (546 MW) approximately 40 miles north of Jackson Tenn. the Wheatland Ind. plant (508 MW) approximately 70 miles northeast of Evansville Ind. and the Lincoln Energy Center plant (656 MW) in Manhattan Ill. near Chicago. These assets give Allegheny Energy Supply additional generating capacity within the East Central Area Reliability region (ECAR) and initial generation sources in the Mid-America Interconnected Network (MAIN) and the Southeastern Electric Reliability Council (SERC). Salomon Smith Barney acted as financial advisor and Jones Day Reavis & Pogue acted as legal counsel for Allegheny Energy for the acquisition. CONTACT: Allegheny Energy Supply Hagerstown (Media) Janice Lantz 412/858-1630 Media Hotline: 888/233-3583 or (Investors) Greg Fries 301/665-2713 11:35 EDT MAY 3 2001 SSB Cuts Forecast For Power Profitability In 2002 Beyond 05/03/2001 Dow Jones Energy Service (Copyright (c) 2001 Dow Jones & Company Inc.) NEW YORK -(Dow Jones)- Salomon Smith Barney's utility analysts sharply cut their forecast of the profitability of generating electricity in the U.S. in 2002 and beyond because power prices are expected to drop more sharply than natural gas prices starting next year. The analysts cut the profit margin in natural gas-fired power in 2003 to $3.98 a megawatt-hour from $8.73/MWh a 54% difference from their last forecast in February. They lowered their power price index for 2002 by 1.5% and for 2003 by 7.1% Thursday in a published report. Their forecast is based on forward markets for electricity and gas. Gas prices are remaining strong for a much longer period of time while power prices drop off senior electricity industry analyst Raymond Niles said in a telephone conference with investors. As a result stock prices for power producers such as AES Corp. (AES) Mirant (MIR) Calpine Corp. (CPN) and NRG Energy (NRG) could peak this summer in advance of strong third quarter earnings reports the Salomon report says. Investors may still shy away from asset and investment-heavy power producers if realized prices begin to reflect the decreases in power prices now projected in the forward curve the report warns. After this summer the stocks of energy companies that focus more on trading will regain momentum Salomon expects. These energy merchant companies such as Enron Corp. (ENE) Williams Cos. (WMB) Duke Energy (DUK) and Dynegy (DYN) should be able to take advantage of higher trading volume and greater volatility in power markets in non-summer months according to Salomon. We expect (annual trading) volumes to grow industry-wide between 25% and 40% on average during 2001-03 as the $800 billion global energy commodity market continues to open the report predicts. The overall electricity price trend is national according to Salomon. The report titled Power Curve expects 2001 wholesale power prices to exceed last year's by 131% in the West and by 34% on average in the eastern U.S. including Texas. But since their last forecast the analysts lowered their forward price curve for next year and beyond in 10 of 11 regional power pools. Interestingly the exception to that is the New York Power Pool Niles told investors. For the remainder of this year however Salomon still expects power producers to beat substantially last year's breakthrough results. About 50% of the spike upward in western U.S. power prices the past six months has been from something we've never seen before in this industry: political and credit risk Niles said in the conference. Western merchant power suppliers are benefitting from the unholy mess in California Niles said but that won't last forever. Whenever the debate tapers off and we have a resolution in sight that premium will slowly drain out of the western markets and bring down profitability for the group Niles said. National calls for reregulation due to the California crisis could continue to hurt stock prices for the entire sector even though reregulation won't happen. Further in so far as such calls discourage investment in generating plants transmission lines and gas pipelines they could also extend the current period of extremely high earnings according to the report. In non-western states the greatest profitability from power generation for the next two years is seen in New England. -By Mark Golden Dow Jones Newswires 201-938-4604 mark.golden@dowjones.com Fitch Affs Northern Border Rtg Outlook To Stable From Negative 05/03/2001 Business Wire (Copyright (c) 2001 Business Wire) NEW YORK--(BUSINESS WIRE)--May 3 2001--Fitch has affirmed its `BBB+' senior debt rating for Northern Border Partners L.P. (NBP) and its `A-` senior debt rating for its regulated pipeline affiliate Northern Border Pipeline Co. (NBPL). The Rating Outlook for both companies is changed to Stable from Negative. The rating action was taken after a review of NBP's recent acquisitions and long-term business plan. A combination of debt and equity at NBP was used to fund the recent acquisitions of Bear Paw LLC Midwestern Gas Transmission Company and Dynegy Canada midstream assets. An additional $125-150 million of equity is expected to be sold in the coming months to pay down short-term debt and complete the permanent financing. The improvement in Rating Outlook primarily reflects NBP's demonstrated commitment to undertake conservative long-term financing and operating strategies. Future acquisitions at the partnership level are expected to be financed 50/50 debt/equity so as to maintain financial flexibility and a stable credit profile. Moreover management has shown a strong bias to minimize commodity price risk as it expands its non-regulated gas operations. For example processing contracts for Bear Paw's four processing facilities are contracted for on a percentage of proceeds basis and liquids prices have been 90% hedged by NBP through 2001 limiting downside exposure. NBPL continues to exhibit strong competitive market operating and financial characteristics that are consistent with its current `A-` rating. The company is a low-cost transporter of Canadian gas into the Midwest with costs per hundred miles of less than 4 cents per mcf. The December 2000 completion of the Alliance Pipeline has had minimal impact on Northern Border as capacity utilization approaches 100%. Pipeline capacity is 99% subscribed through mid-September 2003. Its shippers are financially strong customers with uniform take-or-pay contracts. The company has never written off a bad debt. NBPL should generate EBITDA/interest coverage of nearly 4.0 times over the next few years. Credit concerns primarily relate to NBP's changing business mix and the expectation of increased market risk associated with its growing midstream operations as compared with the stable low-risk profile of NBPL. While projected consolidated and stand alone credit measures at NBP remain relatively strong there will be less predictability in the future cash stream utilized to service debt. NBP is a publicly traded master limited partnership. Its primary holding is a 70% economic interest in NBPL a 1214-mile FERC regulated interstate pipeline transporting natural gas from the Canadian border to the upper Midwest. Enron Corp. and The Williams Companies Inc. hold a 10.0% and 3.3% stake in NBP respectively with the remainder publicly held. Enron controls an 82.5% stake in the management committee of NBP with Williams holding the remaining management allocation. CONTACT: Fitch New York Ralph Pellecchia 212/908-0586 or Hugh Welton 212/908-0746 13:58 EDT MAY 3 2001 INDIA: UPDATE 1-Enron to meet govt panel over Indian project 05/03/2001 Reuters English News Service (C) Reuters Limited 2001. NEW DELHI May 3 (Reuters) - The Indian unit of Enron Corp said on Thursday that its officials would meet members of a government panel formed to re-negotiate a troubled $2.9 billion power project in western India. But the willingness to meet the panel next week should not be construed as an offer to renegotiate the contract Dabhol Power Company (DPC) said in a statement. As a matter of courtesy we have agreed to meet with them next week the DPC statement said. Since the purpose of our meeting is to hear out the committee and understand their thoughts we will not present any proposal. DPC said it had constantly maintained that it was open to maintaining a dialogue towards resolving issues. (But) This meeting should in no manner be construed as an open offer from DPC to renegotiate the terms of the contract it added. DPC and the government of the western state of Maharashtra have been locked in a payment battle for months with the state's electricity board balking at paying Enron what it considers too high a rate for electricity. At present Maharashtra's State Electricity Board (MSEB) owes the DPC of which Enron is a 65 percent stakeholder some $48 million for power. The Maharashtra government last week announced the formation of a panel of experts to re-negotiate its contract with DPC and lower the cost of power sold to MSEB. LARGEST FOREIGN INVESTMENT The Dabhol project the single largest foreign investment in India consists of two phases the already-built 740 megawatt power plant and a 1444 MW plant that is expected to be finished this year. Last week Dabhol's board authorised the plant's managing director to issue a preliminary notice of termination of service to MSEB. The notice which has not been issued would be the first step for Enron to pull out of the project. Earlier a source familiar with the project told Reuters that Indian lenders who have provided millions of dollars to Houston-based Enron to build DPC are lobbying with the government to act quickly and end the crisis. We have asked the government for help. We are awaiting their reply the source who is employed with a large financial institution said. The domestic lenders to the project are Industrial Development Bank of India ICICI Ltd Industrial Finance Corporation of India Canara Bank and State Bank of India . If Enron pulls out of the project the source said the lenders would have no choice but to seek an alternative buyer. The plant is good Maharashtra needs power and I am sure buyers can be found the source added. India State Panel's Sat Meet With Enron Unit Postponed 05/03/2001 Dow Jones International News (Copyright (c) 2001 Dow Jones & Company Inc.) NEW DELHI -(Dow Jones)- India's Maharashtra state government's expert committee's Saturday meeting with the U.S. energy major Enron Corp.'s (ENE) Indian unit Dabhol Power Co. has been postponed until May 11 at the request of DPC a committee member told Dow Jones Newswires late Thursday. The nine-member committee has been appointed to renegotiate the Maharashtra State Electricity Board's controversial power purchase agreement with DPC. The state government has asked the committee to try to negotiate a revised agreement within a month. The negotiating committee's first meeting with the Dabhol Power Co. management scheduled for Saturday has been postponed until May 11 0530 GMT at DPC's request. They (DPC) told us they wanted some more time to prepare themselves for the meeting and we have granted their request said a committee member. The committee's goals are to lower the power tariff and allow the sale of excess power to the federal government or its utilities. A restructure of the DPC's stakeholding may also be on the agenda. -By Himendra Kumar Dow Jones Newswires 91-11-461-9427 himendra.kumar@dowjones.com EnergieKontor Secures Enron Deal For Spain Germany Projs 05/03/2001 Dow Jones Energy Service (Copyright (c) 2001 Dow Jones & Company Inc.) LONDON -(Dow Jones)- German wind farm developer EnergieKontor AG said Thursday it has signed a framework agreement with Enron Wind GmbH for deliveries of wind turbines for projects in Germany and Spain. In all Enron will deliver 200 megawatts' worth of 1.5 MW turbines for onshore projects in EnergieKontor's home market and in Spain one of its fastest-growing export markets. In addition Neuer Markt-listed EnergieKontor said it has entered into exclusive negotiations with the local authorities for permission to build up to 15 wind farms at a number of sites in the Castilla-La Mancha region. Each site would have an installed capacity of 45-50 MW making a total of 700 MW. Once we reach this stage there is about an 85-90% of the project going ahead sometimes more a spokesman told Dow Jones. EnergieKontor said it assumes that it will set up the first windfarms in Castilla-La Mancha as early as next year. -By Geoffrey T. Smith Dow Jones Newswires (+44 20) 7842 9260 -geoffrey.smith@dowjones.com The Bottom Line: Scottish Power Looks To Refine Focus By Andrea Chipman Of DOW JONES NEWSWIRES 05/03/2001 Dow Jones Energy Service (Copyright (c) 2001 Dow Jones & Company Inc.) LONDON -(Dow Jones)- After more than a year of lagging earnings investment missteps and unexpected disasters U.K. vertically-integrated utility Scottish Power (SPI) is hoping a new strategy to streamline its businesses will signal a more focused period for the company. But it's got its work cut out. While investors were cheered by news that its U.S. Utah-based Hunter power plant is back online after a six-month outage that cost the company an estimated $160 million uncertainty over its plans for its Southern Water unit and apparent ongoing commitment to loss-making telecoms venture Thus are seen as muddling group focus. It all adds up - the lack of coherent strategy quite substantial downgrades and a whole host of non-core businesses that they don't have any natural management flair or expertise in said Brian Gallagher a senior fund manager at London-based Gartmore Investment Management which has GBP3 million of Scottish Power shares in its Global Utilities Fund. We have a reasonably low opinion of the company. The company said Thursday that its pretax profit before goodwill amortization and exceptional items for the fiscal year ending March 31 fell to GBP628 million from GBP736 million a year ago. Adjusted earnings per share declined to 30.65 pence in the 2001 fiscal year from 41.22 pence in 2000. The company acknowledged profits have been hit hard by the Hunter outage competition on wholesale and retail markets in the U.K. and strict price controls on its regulated infrastructure businesses. Although the company's shares were trading at 458.5 pence after the release of Thursday's earnings results up from 441.5 pence Wednesday they are down more than 15% from 533 pence a year ago. Executives say they are restructuring the business into three targeted divisions to capitalize on its traditional strengths in generation and power supply and infrastructure and to expand its overseas activities. We've now got a trading and commercial link between generation and supply and the first thing we are doing is putting emphasis on that...on growing earnings across that value chain Scottish Power Chief Executive Ian Russell told journalists in a conference call Thursday. In the U.S. we are focused on cost cutting and on acquiring new businesses. Scottish Power's move away from a full multi-utility profile - begun last year with its partial disposal of Thus and its withdrawal from an Internet banking venture with the Royal Bank of Scotland - toward a more narrowly focused energy business mimics a trend across the industry toward greater specialization. The company is also considering selling Southern Water which would allow it to focus even more closely on its power business. Yet analysts and investors say they are looking for more details of the company's overall growth strategy from Russell who took over as chief executive last month and other managers. The toll from months of drift is evident they said. Sales Of Southern Water Thus Seen Indeed despite its efforts to chart a new road Scottish Power appears to be reluctant to acknowledge the failure of some of its non-core ventures. Russell said his company remains supportive of Thus which reported a 2000 fiscal year loss of GBP21.4 million this week and has no plans to exit its remaining 50% stake in the company. Similarly he said Scottish Power hasn't yet made a final decision to dispose of Southern Water - which has cut costs under its Scottish parent but is increasingly unable to cover its capital expenditure - although he said the company had received a number of offers from potential buyers. Although he declined to identify any of the bidders Italian energy company Enel SpA (ENI) has confirmed its interest. Industry sources said a prompt sale of the water unit looks likely with some bids already exceeding the GBP2 billion at which many analysts value the company's combined assets and debt. It's unclear they said how Southern Water or Thus would fit into Scottish Power's new image. Scottish Power sees itself as an international energy company a source familiar with the company said. In a year's time he added it would be unlikely that Southern Water and Thus would be part of the company. Revenues from the sale of the water unit would also help Scottish Power pursue its U.S. expansion without adding to its 90% gearing levels analysts and investors said. Russell declined to comment on reports Scottish Power is considering buying Enron Corp.'s Oregon-based unit Portland General but admitted the company would be a logical geographical fit with Pacificorp. Analysts said Scottish Power's plans for U.S. growth is likely to be a key part of its energy strategy. We like their U.S. strategy where they've leveraged expertise gained in the highly competitive U.K. market said Gareth Lewis-Davies head of utilities research at Lehman Brothers in London. Closer to home competition and the trend toward increased specialization in the power industry may force Scottish Power to determine whether its business strength lies in asset management or retail and generation. Strategic decisions need to be made and I'm not sure if they are going to make them in the near term or not said Andrew Wright U.K. utilities analyst at UBS Warburg in London. They are pretty much involved across the value chain and I think it remains to be seen which part of the value chain they specialize in if any. Company Web site: www.scottishpower.co.uk -By Andrea Chipman Dow Jones Newswires 44-207-842-9259 andrea.chipman@dowjones.com,other,neutral,2 +RE: Ive joined Charles River Associates,Bill Yes one of the options I am looking at. Vince ,employment,casual,0 +Privileged and Confidential - Catalytica,I've finished marking up the drafts and thought perhaps a few thoughts would give you some insight into the reasons for my revisions . Unfortunately I was engaged in discussions about the course to pursue in light of Arthur Anderson's comments until almost 10pm when I lost my typing help so not much headway was made in inputting the changes last night. My secretary is supposed to be in early ( it is now nearly 8:00 and she still isn't in ! ) and I will enlist whatever other help I can get to turn these documents around. For those not involved in the discussions last night Roger advised us that Arthur Anderson had changes to the Xonon Technology Implementation Agreement designed to make clear ENA had no primary or secondary obligations under the XTIA. The principal change suggested by AA - the deletion of the last sentence of the BOLD language in Section 2.2 - removed the obligation for ENA to pick up any obligations under the agreement owed by West LB in excess of the Cap. Note that this same change applies in the Agreement in Principle related to the purchase of turbines. XTIA Revision 4G. AA's change did not appear to address comprehensively the principle AA espoused ie clarifying ENA had no primary or secondary obligations under the agreements. After much discussion and some consideration I decided to prepare alternative markups of the XTIA - one that attempts to meet the AA directive while preserving a level of comfort for GE. I attempted this by increasing the limit on West LB's liability in Article 10 to $20 million from $9.9 million so that GE's recourse against West LB is the same as it had against West LB and ENA in the prior drafts and by obligating West LB in the default provisions to pony up for an ENA default. I also extensively modified the Section 2.2 language ( taken verbatim from the LM 6000 deal ) to eliminate the limited recourse provisions favoring West LB and in doing so made it easier to conclude that references to ENA in the agreement are references to ENA acting in an agency and not its individual capacity. This notion is still pretty vague in the revision because I did not want to create too much discomfort in GE since ENA explicitly acting in an agency capacity would mean there was no recourse against it ( since ultimate recourse would lie with the principal West LB). Roger suggested I delete the limit on ENA's liability in Article 10 to remove the implication it had any which I did ( and which means we have no upside protection if we are construed to have obligations under the XTIA. The upshot is that in my opinion the 4g revision goes as far as possible toward placating AA while still retaining a possibility of selling it to GE. The sheer number of changes required by the substance of AA's comment however is bound to be disconcerting to GE at this stage of negotiations particularly when GE's expectation was for a markup incorporating the new business terms agreed yesterday afternoon (calling for payment of the Development Funds to be completed by September 302000 with the possibility of a refund of a portion of the Development Fund Payment if the December 31 Milestone is not timely completed) and some clean ups/clarifications. Note that in both revision 4g and 4ga Section4.3 now provides that the Xonon credit created is only exercisable by CCSI on and after December 312000 so that the credit amount can reflect the deduction of any Milestone 4 refund amount paid by GE if it does not complete that Milestone on time. I think the dollar value of the credit should be adjusted downward if a portion of the Development Funds paid on September 30 are in fact refunded in December. We need to make sure to make provision in the Acquisition and Development Agreement that any Milestone 4 refund received by West LB is paid over to ENA since West LB will have been repaid its advances on September 302000. XTIA Revision 4GA . This alternate revision to the XTIA takes a minimalist approach and incorporates only the new business terms some minor clean up/clarifications and the AA change to Section 2.2 and the change to Article 10 ( to remove a cap for ENA's laibility) suggested by Roger. It seems to me it does not address meaningfully the AA admonition that ENA may not have primary or secondary liability under the XTIA if it wants to stay outside of the rigors of FAS 97-10. However it has the singular advantage of looking a lot like what GE and West LB expect to see in the revision. Option Repurchase Agreement. This revision was complicated by the possible refund of the a portion of the Development Funds by GE if it failed to complete Milestone 4 by December 312000 ( an attempt to retain some accountability for GE's performance given that it is being paid for that Milestone on September 30 to satisfy CCSI ). Because the option repurchase must occur on or before September 30 it isn't clear what will happen December 31 so its hard to figure out what to pay if the contract is not cancelled by September 30 or what the credits are worth on that date. Since CCSI is the direct recipient of the credits under the XTIA I first thought ENA could hang onto $2.1 million ( the amount formerly allocated to Milestone 4 before its payment obligation was collapsed into Milestone 3) by deducting the refund from the amount payable to CCSI on the option repurchase date and leaving CCSI to bear the risk of GE's repayment of any refund in order to make CCSI whole. If GE did meet the Milestone on time and so did not pay the refund amount directly to CCSI I thought ENA could always make CCSI whole by paying the $2.1 million in December when the refund matter was decided. That approach- subtracting the refund amount from the September 30 payment to CCSI- was decidedly unsatisfactory since the option repurchase formula could result - depending on the Milestones paid on the option repurchase date - in a negative payment to CCSI for the option. What I settled on in this draft was to go ahead and pay CCSI the amount of the premiums it has paid to September 30 plus $200000 if the turbine contract has not been cancelled on September 30. This would include repayment to CCSI on September 30 of premiums paid by CCSI under the spark spread on September 30. Assuming CCSI made all its premium payments and West LB made all of its Development Fund advances ENA would have received $9.9 million from CCSI by September 30 paid out $9.9 million plus interest to West LB by September 30 and purchased the spark spread from CCSI for $10.1 million. If the turbine contract is not cancelled but GE has to pay the refund I think the $2.1 million ought to go to West LB or its designee (ENA). If we cancel the turbine contract and do not go forward with Pastoria the dollar amount of the credits vested in CCSI and exercisable after December 312000 are equal to the Development Funds advanced less the refund amount. Since the document now reads that the $2.1 refund amount goes back to West LB or its designee if GE pays the refund and CCSI is holding a Xonon credit of only $7.8 millionit seems to me it will be necessary to pay the refund over to CCSI instead of ENA in order to make up for the fact that it paid $9.9 in premium and only received $7.8 in credit in September. This quick liquidation of $2.1 of the credit seems to be an ancillary benefit to CCSI occasioned by GE's refund. We could provide in the agreements that GE makes this payment directly to CCSI or we can continue to have the right to receive the payment from GE under the XTIA and the obligation to pay it to CCSI under the Repurchase Agreement.,other,formal,5 +slashing price caps,Hey -- you're talking about our future President! I am soooo looking forward to my next Biennial Resource Planning proceeding. -----------------,government & politics,excited,3 +Shift May Empower California.htm,Thanks for taking time to call yesterday. Good luck with the Lockyer situ= ation. I truly do believe that direct and prompt interaction with Lockyer= will prove more effective for Enron than delayed or intermediated action.= As we discussed if I can be of any help with reconnaissance or as sou= nding board just let me know. =20 I have attached an article from this morning's LA Times. It provides an C= alifornia view on how the shakeup in the Senate might impact the state's e= nergy situation. Certainly by the time that President Bush visits the C= alifornia in a few days the state's two Democratic US Senators will be a = good bit more empowered. =20 Kevin 213-926-2626 =20 [IMAGE] [IMAGE][IMAGE] =09Click here to learn more! [IMAGE]=09 [IMAGE] =09Home | Discussions | Print Edition | Archives | Site Map = | Home Delivery | Advertise | Feedback | Help [IMAGE]=09 =09[IMAGE]=09 [IMAGE] [IMAGE] [IMAGE] [IMAGE] News Politics Entertainment music = movies art TV restaurants [IMAGE] Business Travel Marketplace jo= bs homes cars rentals classifieds [IMAGE] Sports Commentary Shop= ping [IMAGE] [IMAGE] [IMAGE] [IMAGE] [IMAGE] [IMAGE] A Section= [IMAGE] [IMAGE] TOP STORIES * State's Standardized Test Spurs Scatte= red Backlash * GOP Braces for Jeffords to Bolt Today * Moderates on = Outside of GOP Big Tent MORE [IMAGE] [IMAGE] [IMAGE] STORIES BY DA= TE FOR THIS SECTION 5/24 | 5/23 | 5/22 | 5/21 | 5/20 | 5/19 | 5/18 = [IMAGE] DAILY SECTIONS Front Page A Section California [= IMAGE] Business Sports Calendar [IMAGE] So. Cal. Living EditorialsLett= ers Op/Ed WEEKLY SECTIONS Health Food [IMAGE] Tech Times [IMAG= E] Highway 1 SUNDAY SECTIONS Book Review Opinion Real Estate [IMA= GE] Calendar Magazine Travel [IMAGE] TV Times Work Place [IMAGE] [= IMAGE] [IMAGE] [IMAGE] [IMAGE] [IMAGE] Marketplace Find a home car = rental job pet merchandise boat plane or RV classifieds Pl= ace an Ad [IMAGE] [IMAGE] [IMAGE] [IMAGE] [IMAGE] [IMAGE] L.A. Times = Subscription Services Subscribe Change of Address Vacation Stops = Suspend Delivery College Discount Gift Subscriptions Mail Subscriptio= ns FAQ [IMAGE] [IMAGE] [IMAGE] [IMAGE] [IMAGE] [IMAGE] Print Ads = from the Newspaper See this week's ads [IMAGE] [IMAGE] [IMAGE] Pri= nt Edition Orange County Valley Ventura County National Communi= ty Papers [IMAGE] [IMAGE] [IMAGE] [IMAGE] Books Columnists Cross= word Education Food Health Highway Horoscope Lottery Magazine = Obituaries Reading by Real Estate Religion Science So.Cal. Living = Special Reports Sunday Opinion Tech Times Times Poll Traffic Weath= er Workplace SITE MAP [IMAGE] [IMAGE] [IMAGE] SHOP 'TIL YOUR = LAPTOP DROPS [IMAGE] [IMAGE] [IMAGE] [IMAGE] [IMAGE] Shopping [IMAGE= ] Search Products Stores [IMAGE] [IMAGE] [IMAGE] [IMAGE] = [IMAGE] [IMAGE] =09[IMAGE]=09[IMAGE] Thursday May 24 2001 | [IMAGE]Print= this story [IMAGE] [IMAGE] Shift May Empower California By RICHARD SI= MON ELIZABETH SHOGREN Times Staff Writers WASHINGTON--James M. J= effords has never mattered much to Californians. Until now. The Verm= ont senator's widely anticipated decision to abandon his fellow Republican= s and put Democrats in control of the Senate could have big implications f= or California particularly on energy and environmental policy lawmakers = and lobbyists said Wednesday. The change which Jeffords is expected= to announce today could increase political pressure on the Bush adminis= tration to respond more aggressively to California's electricity crisis t= hese insiders said. And it might force the White House to compromise= on key elements of the national energy policy it unveiled last week. In f= act the administration's proposed budget cuts for programs to promote ren= ewable energy were said to be a factor in Jeffords' decision. At th= e very least Senate observers said Sen. Dianne Feinstein (D-Calif.) is l= ikely to get the floor vote she has sought on price controls for wholesale= electricity. That doesn't necessarily mean that the administration'= s critics will be able to have everything their way. Even if the Senate ap= proves electricity price caps for example the measure would face stiff o= pposition in the GOP-dominated House--and a likely veto if it made it to t= he president's desk. Still a Democratic majority in the Senate wou= ld give Feinstein and other party members a platform to turn up the politi= cal heat on the administration and congressional Republicans on energy pol= icy. It kicks up the dust groaned one energy industry lobbyist wh= o requested anonymity. Observed Sen. John F. Kerry (D-Mass.): If P= resident Bush's hard-edged conservative approach has in fact caused the ba= lance to shift towards Democrats in the Senate it will have profound impl= ications not just for California but for the environment and our nation's= energy policy. Environmentalists seemed almost giddy as they cont= emplated the possible impact of Jeffords' decision on the policies they ca= re about. All of a sudden they said it seems less likely that oil = exploration will take place in the Arctic National Wildlife Refuge that r= ecreational snowmobiles will have free access to Yellowstone National Park= or that the administration's desire to promote nuclear power will be emb= raced by Congress. On the other hand it seems more probable that C= ongress would approve a new plan for managing a vast swath of the Sierra N= evada to protect the region's oldest trees consider legislation to restri= ct emissions of carbon dioxide from power plants and protect California fr= om a resurgence of offshore oil drilling. It's stunning how broad t= he repercussions are particularly on the environment said Gregory Wetst= one of the Natural Resources Defense Council. We're trying not to count o= ur chickens before they hatch. But it will be easier for us in our battles= at least to keep from moving backwards. For instance Jeffords is= a chief advocate of a bill that would regulate carbon dioxide from power = plants. And if events play out as expected he'll become the new chairman = of the Senate committee with jurisdiction over the issue. Another i= ssue under his purview would be the two-decade dispute over a proposed rep= ository for the nation's spent nuclear fuel at Yucca Mountain in Nevada. = Yucca Mountain is a dead turkey declared Michael Francis of the W= ilderness Society. Environmentalists had been worried that a number= of pro-development provisions would be packed into appropriation bills. B= ut with Democratic senators in charge that would become less of a threat= they said. Every wacko idea Republicans have will get a higher lev= el of scrutiny Francis said. The biggest change would be the power= of Senate Democrats to decide which bills will be considered in committee= s and which ones will make it to the floor of the Senate for votes. = As part of a new Democratic majority Feinstein and fellow California De= mocrat Barbara Boxer are likely to gain leverage with the administration o= n a number of issues considered important to the state. That transl= ates into more federal assistance for California across the board predic= ted Steve Maviglio spokesman for Gov. Gray Davis. I think it mean= s more attention to our state for sure Boxer said. Right now the pres= ident doesn't seem to give a darn. They're all looking at California as a = Democratic state. They're not interested. Feinstein who has been = unable to arrange a meeting with Bush to discuss the energy crisis may ge= t better treatment if winning Democratic support becomes more important to= the administration. She has been regarded as a bridge-builder who worked = effectively with Republicans in the past. This has not been a warm = and friendly administration she complained Wednesday. They've got peopl= e who know all the answers and don't want to listen. The White Hou= se disputed that. In fact Bush agreed Wednesday to meet with Davis during= the president's first visit to California next week. Under a Democ= ratic majority Feinstein would be in line to chair two subcommittees: the= military construction panel of the Senate Appropriations Committee and t= he technology terrorism and government information subcommittee of the Se= nate Judiciary Committee. Boxer would be in line to chair the subco= mmittee on Superfund waste control and risk assessment and the Foreign R= elations subcommittee on international operations and terrorism. Mav= iglio predicted that the effects of Jeffords' expected party defection wou= ld be felt immediately. The chairmanship of the Senate Energy and N= atural Resources Committee would be taken away from Frank H. Murkowski (R-= Alaska) who has been openly hostile to California's plight and handed = to Jeff Bingaman (D-N.M.) who supports Davis' request for electricity pri= ce controls according to Maviglio. Democrats have assailed Bush's e= nergy plan for tilting heavily toward the supply side. With Democrats in c= harge of the Senate the administration would be more likely to compromise= perhaps beefing up funding for Democrat-supported causes such as increas= ed energy assistance to low-income households and more aggressive promotio= n of conservation and renewable energy sources such as wind and solar powe= r. Search the archives of the Los Angeles Times for similar stories ab= out: United States - Politics Republican Party James M Jeffords P= olitical Party Defections California - Politics Senate (U.s.) . You = will not be charged to look for stories only to retrieve one. =09 News Politics Entertainment music movies art TV restaurants = [IMAGE] Business Travel Marketplace jobs homes cars rentals cla= ssifieds [IMAGE] Sports Commentary Shopping [IMAGE] =09[IMAGE]=09 G= et Copyright Clearance Copyright 2001 Los Angeles Times Click for permi= ssion to reprint (PRC# 1.528.2001_000043610) =09 [IMAGE] =09,government & politics,formal,3 +help with neighborhood,Please forward to Sue Walden and get her ideas. -----------------,personal & social,formal,2 +Confidential Folder to safely pass information to Arthur Andersen,We have become increasingly concerned about confidential information (dpr/position info curves validations/stress tests etc) being passed to Arthur Andersen for audit purposes over the Web to their Arthur Andersen email addresses. (necessary now they no longer have access to Enron's internal email system) Please use the folder described below when passing any info (that you would have concerns about if it was picked up by a third party) via the shared drive that has been set up for this specific purpose. Note: AA should also use the shared drive to pass info back if there are questions or the data needs updating. We should also consider the sensitivity of audit findings and special presentations if they are being distributed electronically. Please pass this note to others in your groups who have the need to pass info back and forth. Details on how to access for those who will use this method to pass info: A secured folder has been set up on the o drive under Corporate called Arthur_Andersen Please post all confidential files in this folder rather than emailing the files to their company email address. If you need access to this folder submit an eRequest through the IT Central site: Arthur Andersen will be able to retrieve these files for review with their terminal server access at the Three Allen Center location. Please contact Vanessa Schulte if you have any problems or questions Beth Apollo,other,formal,5 +Comprehensive Solution,Fax the attached word document to Jeff ASAP thanks. -----------------,business document,urgent,5 +MEMO,Please call me. -----------------,other,urgent,5 +RE:,Natasha Thanks. I left my package and all the forms in Houston. I shall be glad to fill out the form tomorrow at the conference. Vince ,meetings & events,casual,3 +Letter for Lay Signature,Rosie - please print and have signed. (Note there is a typo in the second line of the last paragraph -- does should be do). thanks ,organization,casual,2 +RE: extra books,Hi Julie Rice asked me to teach another course on energy derivatives and I plan to use the book as the main source. You can inform them that they should keep the books in stock and probably order a few more copies. I am in London right now and will stay here for a few more days. Swamped with work as usual. I was on the road for the last 2 weeks. The tropical storm unleashed the fury on my neighborhood (20 inches in one night) but we survived without major problems. The only problem I had was an overflowing swimming pool (it took 45 minutes to go from a comfortable slack to a full condition). Vince ,human resources,casual,3 +Confidential Conference Access Code Change!!!,FYI -----------------,other,casual,3 +Re: MidAmerican Draft Documents,I realize you have pushed these guys already but the attached letter would be better if not sent at all. It doesn't address the real underlying problem -- that a reliability bill on a stand alone basis doesn't fix the problem. Instead the letter implies that the reason for opposition is merely a political consideration -- ie that it may reduce Congress' appetite for action next year. If possible it would be better not to have the letter go out at all. From: Cynthia Sandherr 08/22/2000 04:29 PM To: Steven J Kean/NA/Enron@Enron Richard Shapiro/HOU/EES@EES Joe Hartsoe/Corp/Enron@ENRON dwatkiss@bracepatt.com cc: Subject: MidAmerican Draft Documents Per my first e-mail here's MidAmerican's position letter on the stand alone Reliability measure. Seems the best we can do with the utilities who have been supporting our position is to have them take a no position stance on the stand alone bill. - reliabilityonly.letter.doc,utilities,formal,3 +Chili Cook Off at Rice University,calendar ,other,casual,0 +"CA Legislative Analysts Take on Governors ""Solution""",,legal affairs,neutral,0 +"Ed Segners Staff meeting, in 50M Dining Room",Bryson?,other,casual,3 +Subscription Renewal,I want to keep my subscription current. ,other,polite,3 +,Vince I agree with you that it's a lesson people need to learn over and over again. I can't tell you how many politicians I met over the past year who really don't like markets and certainly don't understand how or why they work. These aren't just the minor leaguers in Sacramento but the big league players in Washington. I also agree that the academic community can play an important role in shaping public opinion and in explaining the logic of deregulation process. I'd like to think that is in large part what I have been trying to do. Frank,government & politics,casual,0 +Re:,Frank I am definitely interested in the resume. I can meet the candidate on campus when I visit my son. I am planning to come to Palo Alto around Thanksgiving. Also Energy and Power Risk Management (an English publication) organizes every year in Houston a POWER RISK conference (typically in May). They ask me for recommendations regarding speakers. Would you be interested in participating? Vince Frank A. Wolak on 11/13/2000 08:44:57 AM To: vkamins@enron.com cc: Subject: Vince I am writing about a student of mine who is on the job market this year. When you stopped by my office about 18 months ago you asked if I had any students that might be appropriate for your group. Although I didn't at the time now I do. This student has excellent technical skills including an M.S. in Statistics and a Ph.D. in Economics by the end of the current academic year. His dissertation research is on the investment behavior of Independent Power Producers in the US. As a result of research assistance he has done for me he knows the California market very well and is familiar with the other ISOs. I think he would be an excellent match for you. The only problem is that he will probably have many other options available. However I definitely think he's worth a look. If you'd like him to send you a CV please let me know. Thanks. Frank Wolak Professor Frank A. Wolak email: wolak@zia.stanford.edu Department of Economics Phone: 650-723-3944 (Office) Stanford University FAX: 650-725-5702 Stanford CA 94305-6072 Phone: 650-856-0109 (Home) World-Wide Web Page: Cell Phone: 650-814-0107,employment,formal,3 +,Please get me Pat Wood's phone number and post a reminder on my calendar to call him ASAP,phone communication,formal,3 +Re: Confidential Agreement,Jennifer: Here is the latest CA for Jerry to review. Please send him this e-mail asap. Thanks! Ben Rogers,other,formal,3 +Joe & Bill,Claif Briefing tomorrow US GEN market power Linda Breathitt Jordan Mintz 3-7897 Allegretti,other,formal,3 +"Ross Malme, in your office.",Sue Mara Lance McCarthy 37141,employment,formal,5 +Re: Public Report 09-20,Thanks. Please keep me on the list for the more detailed management report as well. Leonardo Pacheco 09/21/2000 05:36 PM To: Steven J Kean/NA/Enron@Enron cc: Subject: Public Report 09-20 -----------------,employment,formal,2 +Re: You Can Put A Stake in Their Hearts but They Never Die,Dr. Bowring has a PHD in economics and is a bright guy. He is the Market= =20 Monitoring Unit in PJM. While he says he generally believes that shortage= =20 is not necessarily market power he sometimes has to be reminded of that= =20 principal. Prior to PJM Joe was with the NJ Public Advocate where he did= =20 not endear himself to the regulated utilities. Since leaving the Advocate= =20 and working for PJM I think Joe has been somewhat more open to market=20 solutions and is generally cooperative in working with members to achieve= =20 market solutions to issues rather than unilaterally initiating rule changes= . =20 I find Joe easy to work with and as previously stated generally open to= =20 discussion in resolving issues and is not necessarily predisposed to a=20 solution. =20 =09Joe Hartsoe =0903/15/2001 08:36 AM =09=09=20 =09=09 To: Tom Hoatson/NA/Enron@Enron =09=09 cc:=20 =09=09 Subject: Re: You Can Put A Stake in Their Hearts but They Never Die Tom -- Is there anything you can tell them about Joe. See below. Joe ,other,formal,1 +journalists in California sent by Ruhrgas,,media & press,neutral,0 +Legislative Status Report Week Ending 4/20,,legal affairs,formal,0 +"Ed Segners Staff meeting, in 50M Dining Room",Ross Malme -- 7587 Anthony D -- 6235,other,formal,3 +Speech to the British Institute of Energy Economists,I agree with Mark's points. While we have advocated our merger with PGE (which did not concentrate market power) we have intervened in opposition to most others. Moreover there is some hope that the German government will take the opportunity to use the proposed utility merger to force greater open access. We will likely encourage that action and may oppose the merger otherwise. Most mergers in this industry are defensive not procompetitive and in my view deserve no credit for convergence innovation or liberlization. -----------------,other,formal,2 +Customs issue,Got a voicemail from Rob Walls. They are (have been) looking into it.,other,casual,2 +Dan Allegrettis CT restructuring school in Houston -,You are invited to join them for lunch. 1:00 - 2:00,other,casual,3 +RE: Confidential Communication to my Attorney,who knows. I can't imagine that a customer would somehow owe insurance to the provider's employees. Michelle ,legal affairs,critical,3 +Re: Polaroid agreement,sounds good but i couldn't open the file. could you send hard copy Kelly Kimberly@ENRON COMMUNICATIONS 10/10/2000 11:41 PM To: Michael Terraso/OTS/Enron@ENRON Lauren Goldblatt/NY/ECT@ECT Steven J Kean/NA/Enron@ENRON cc: Subject: Polaroid agreement Wow! We are making a little progress it looks like! (Steve when Mike and I met with Francis for the first time he told us we had to agree that we'd never use WWF's name related to this initiative if they participated with EES) ,other,excited,3 +Re: RESPONSE NEEDED,No charges. I think we should refer these to Carrie Robert and ask her to run down the people in the organization most likely to have an interest. In this case I would get in touch with Andy Fastow Ben Glissan or someone in the finance group in London. That way we can make a better determination about the value of the relationship make sure those who are interested in pitching them on doing bus. with Enron can be involved. Or we can make a determination to decline. I think we decide who we want to let in then do it for free rather than charging. MARY CLARK @ ENRON 04/17/2001 08:58 AM To: Elizabeth Tilney/HOU/EES@EES cc: Cindy Olson/Corp/Enron@ENRON@EES Steven J Kean/NA/Enron@Enron@EES Karen Denne/Corp/Enron@ENRON@EES Subject: Re: RESPONSE NEEDED I'm not in favor of charging a fee that takes the goodwill out of it. I'm open to discussion on how often we host these meetings however. Elizabeth Tilney@EES 04/17/2001 08:29 AM To: Cindy Olson/Corp/Enron@ENRON Steven J Kean/NA/Enron@Enron cc: Karen Denne/Corp/Enron@ENRON Mary Clark/Corp/Enron@ENRON Subject: RESPONSE NEEDED I believe that Cindy and I can keep doing these and there is certainly a goodwill element here...and maybe that is the way to handle it. OR we might want to think about formalizing this say once a quarter and sending out invitations and maybe charging for this????I think there are pros and cons on all sides of the charging issue.....maybe we should get together and discuss? Beth -----------------,other,formal,3 +<> - JS3/15/01,,finance,neutral,3 +,Attached is the information on talent moves within Enron. The numbers are for Enron's domestic workforce only. The bottom line is that the EBS and EES redeployment figures are not unusual for Enron: We moved over 3000 employees last year (about 25% of our domestic workforce). Most of these moves are attributable new business startups (eg EGM ENW and EIM) and normal course of business transfers within the company. The formal redeployment process makes up only a small fraction of the total moves in the company. -----------------,other,formal,1 +Observations on the Hearings this Week,We're in the process of developing a strategy to take us through the next few months. But while the (otherwise perishable) thoughts are still fresh in my mind from the hearings on Monday and Tuesday I wanted to throw out some observations for discussion in the days/weeks ahead. OBSERVATION--The pressure to finger somebody for price gouging is increasing. The administration is hell bent on finding a fall guy. The price spikes pose real political risks for Davis and he and his folks need and want an easy way out. His press release following the hearing renewed the call for refunds. On my panel Loretta Lynch asked Reliant and Duke to supply her with the details of the contracts they cut to sell their power forward to marketers. And Carl Wood's remarks were extreme. At the Barton hearing a liberal democrat (Filner) and a conservative Republican (Hunter) locked arms in calling for refunds. Bilbray joined the gouging band wagon. The utilities repeatedly called on FERC to do a real investigation with hearings testimony data discovery---the works. On the positive side the FERC commissioners lauded Wolak his analysis and his remarks on the panel. Wolak said somewhat emphatically that the nature of California's market structure makes it impossible to single out a single participant as the culprit. He also stated that just everyone's just acting in their own self-interest responding to the screwed incentives embedded in the structure. IMPLICATION--It seems prudent for Enron to understand better its risks of getting fingered. In the best case the clamoring for a refund subsides. In which case the only cost to Enron is the internal cost incurred to understand better the risks of getting fingered. In the medium case investigations find that Enron (like others) played by the rules but the rules stunk and Enron profited at the expense of California consumers.,other,informative,3 +Re: ECI Release,Typo in second paragraph .. should be companies not company Karen Denne@ENRON 01/05/2000 01:52 PM To: Steven J Kean/HOU/EES@EES Mark Palmer/Corp/Enron@ENRON Mark Koenig/Corp/Enron@ENRON Paula Rieker/Corp/Enron@ENRON Peter Berger/Corp/Enron@ENRON cc: Gil Melman/Enron Communications@Enron Communications Claudia Johnson/Enron Communications@Enron Communications Subject: ECI Release The attached release announcing Enron Communications' investment in Avici and our addition of their routers to our network is scheduled to be issued on Thursday. As background ECI has invested $5 million in Avici. If you have any comments or questions please let me know by 10 a.m. Thursday. Thank you. kd,other,formal,3 +RE: Kissinger,I'm envious. See you when you get back From: Rebecca McDonald/ENRON@enronXgate on 05/15/2001 08:21 AM To: Steven J Kean/NA/Enron@Enron cc: Subject: RE: Kissinger We're going to be two ships passing here. I leave town on Friday and return to the office on Wednesday morning. How about I give you a call when I get back. I am only in a few days and then I am heading to DC for my son's college graduation exercises. ( I know exactly what you are thinking - Lordy she's old!!) Talk to you then okay? Rebecca ,personal & social,casual,3 +CalPX Told To Release Confidential Trade Data To ..,CalPX Told To Release Confidential Trade Data To State 09/22/2000 Dow Jones Energy Service (Copyright (c) 2000 Dow Jones&Company Inc.) LOS ANGELES -(Dow Jones)- California's Electricity Oversight Board has ordered the state's Power Exchange to hand over confidential information to the board regarding the trading activities of utilities generation companies and other market participants who traded power at the exchange since June according to a copy of a subpoena obtained by Dow Jones Newswires. The subpoena marks the first time the state will gain access and learn how each company traded power in the day-of day-ahead and block forward markets. Moreover the EOB subpoena requests the CalPX release the names of the participants who traded power at the exchange since June to better understand how and why the participants conduct business in the various markets at the exchange. The CalPX has until Wednesday to hand over aggregate supply and demand curves individual firm bid dates final schedules for each firm by generating unit injection point and take out point from June 1 through September and continue supplying trading data through Nov. 1. In addition the subpoena requests block forward trade positions by firm for June July August and September and that this information continue to be supplied through October and November. The subpoena is part of the state's ongoing investigation into California's troubled deregulated electricity market which has resulted in high wholesale power prices in San Diego landmark legislative action and accusations of collusion price gouging and market power. Gov. Gray Davis ordered an investigation in June when power prices soared to near record levels and rolling blackouts wreaked havoc in the Bay Area. The CalPX said it will comply with the EOB request and that a subpoena to access the confidential information is required according to the rules of the exchange. But the EOB will be required to protect the confidentiality of each trade it gains insight into as well as the identities of the participants who traded. If the trading activities of a company or other participant is leaked or becomes public it could have a devastating affect on the company and the EOB would be held liable according to the CalPX. The CalPX said it must notify each and every participant who traded power in its various markets to alert them of the EOB subpoena. -By Jason Leopold Dow Jones Newswires 323-658-3874 jason.leopold@dowjones.com Folder Name: Utilities Electric: Retail Wheeling Relevance Score on Scale of 100: 53 To review or revise your folder visit Dow Jones CustomClips or contact Dow Jones Customer Service by e-mail at custom.news@bis.dowjones.com or by phone at 800-369-7466. (Outside the U.S. and Canada call 609-452-1511 or contact your local sales representative.) Copyright (c) 2000 Dow Jones & Company Inc. All Rights Reserved,utilities,neutral,5 +ENA-Government Affairs Meeting,calendar -----------------,calendar & scheduling,casual,3 +Re: trip to Houston,I'd like to get about 30 minutes with Mark just to catch up. Mark Schroeder@ECT 07/27/2000 07:47 AM To: Elizabeth Linnell/HOU/EES@EES Richard Shapiro/HOU/EES@EES Steven J Kean/HOU/EES@EES cc: Maureen McVicker/HOU/EES@EES Beverley Ashcroft/LON/ECT@ECT Subject: trip to Houston I expect to be in Houston next Monday from 1300 until Tuesday around 1500. If any of you wish to meet please have Maureen work with Beverley toput something in the diary. Elizabeth - if you do not mind I think if we just sit down for a few hours this will be the best way to assure that Iget you timely and accurate budget info so can we book something? thanks mcs,personal & social,formal,3 +GM - private and confidential - attorney/client privilege,As I mentioned at the Mgmt meeting yesterday 8-9 MTM plus 5 million likely 13-14 million worst case. I have accrued this amount below the line at present and will await further meetings before taking any other actions. Because of our presence in Spain and our role with GM Vitol Veba and KPC are meeting with Chris this week as they would like us to continue to supply to them in Spain. We would also like to do this as it continues to give us the outlet we wanted when we entered the GM deal but with better partners. It also allows us to make money while we sort through the GM situation. -----------------,finance,formal,3 +"Board of Directors Meeting - August 14, 2001",calendar and meeting file -----------------,calendar & scheduling,formal,3 +RE: Wade Cline,Sandeep Thanks. Any resolution to Krishna's problem yet? Vince ,project-specific,casual,3 +Your June 21 Trip,calendar -----------------,calendar & scheduling,casual,3 +Re: Cayote II PROJECT,Please respond and copy me. -----------------,project management,formal,3 +Thank you to exec recruiter,prepare for my siganture. cc Lisa -----------------,human resources,casual,2 +"HERE ARE MY SLIDES, I ASKED TIM TO SEND A SET OF HIS BY E MAIL TOO",-----------------,other,casual,3 +Follow Up On California Information,Just following up on the Monday conference call discussion yesterday with Rick and others about nailing down the numbers and documentation so we can feed the Hill information on the mistakes Governor Davis made last year and this year on power supply contracts. As I understand it there are two aspects of this: 1. The offer of Enron and others last year to sell power to California utilities for 5 cents per kw. Failure to accept these offers resulted in higher power costs in the range of $15 billion as I recall from yesterday's call. 2. The long term contracts that California signed this year after taking actions and making statements that drove up the forward price curves are now under water to the tune of $20 billion. On both counts we will be pressed for assumptions and documentation to pursue these arguments which parallel the comments made by senior management in Capitol Hill meeting last week. We will work on back up on this end but we would greatly appreciate your assistance in this regard as well. With Congress out of session starting COB on Thursday we will need information pulled together by tomorrow COB to get the final product in the hands of congressional types and others who can use it on a timely basis. Thanks.,utilities,formal,5 +Re: Dinner Plans,I get in too late tonight but maybe dinner or drinks on Thurs? Linda Robertson 06/19/2001 06:39 PM To: Steven J Kean/NA/Enron@Enron cc: Subject: Dinner Plans You are here Wed and Thur nights. Do you have plans? Do you want to do something with some of the DC staff?,personal & social,casual,3 +Re:,help is on the way. We are going to establish some senior executive oversight as well as an executive director (probably someone who came through the program). Charlene is going to be moving into a commercial role (which was the original plan when she was brought into the organization). I'd be happy to talk to you in more detail when I get back to Houston. Jeffrey A Shankman@ECT 02/26/2001 10:21 AM To: Jeff Skilling/Corp/Enron@ENRON Steven J Kean/NA/Enron@Enron cc: Subject: Hi guys. I wanted to let you know that I am extremely concerned about the Associate/Analyst program so much so that I feel all the work I have done and all the time I have spent on the program has had little impact outside Wharton/Penn recruiting. In fact we won't get more than 1 associate from Wharton this year for a variety of internal and external reasons. This program has brought incredible talent into the organization but we have lost a lot of momentum over the last two years. In as much as I would like to continue to support the program I can't in its current form and don't have time to fix what I thought we had been addressing. The entire program is disfunctional and the commercial teams are not lending support to the program. I'd be very happy to spend a few minutes of your time (rather than blather on in an email) to give you both my overview of the program and suggest changes and improvements. You know you have my support but the current state of affairs down there has gotten me to my rope's end with the program.,other,concerned,5 +California Update--0717.01,fyi -----------------,other,casual,0 +Davis Energy Advisors Draw SEC Attention.htm,Scrutiny of Davis and crew is taking hold. The state controller Kathleen= Connell also has a well written op-ed critical of Davis in today's LA Ti= mes. =20 Kevin 213-926-2626 =20 [IMAGE]Los Angeles Times - latimes.com =09[IMAGE] [IMAGE]=09 [IMAGE] [IMAGE] =09Home | Subscribe | Register | Site Map | Ar= chives | Print Edition | Advertise | Feedback | Help [IMAGE]=09 Marketplace jobs * cars * homes * rentals [IMAGE] Arts and Enter= tainment Movies Music TV Dining print edition [IMAGE] Fro= nt Page Inside A California Business Sports So Cal Living Calendar = Editorials Op-Ed [IMAGE] [IMAGE] Weekly [IMAGE] Health Food Tech T= imes Highway 1 Workplace [IMAGE] [IMAGE] Sunday [IMAGE] Books Calen= dar Magazine Opinion Real Estate Travel TV Times [IMAGE] [IMAGE] [I= MAGE] [IMAGE] [IMAGE] The World [IMAGE] [IMAGE] [IMAGE] The Natio= n [IMAGE] [IMAGE] [IMAGE] California [IMAGE] [IMAGE] [IMAGE] Busi= ness [IMAGE] [IMAGE] [IMAGE] Politics [IMAGE] [IMAGE] [IMAGE] Spo= rts [IMAGE] [IMAGE] [IMAGE] Technology [IMAGE] [IMAGE] [IMAGE] Tr= avel [IMAGE] [IMAGE] [IMAGE] Editorials Op-Ed [IMAGE] Sections [I= MAGE] Books Columnists Education Food Health Highway 1 Obituaries = Real Estate Religion Science So. Cal. Living Sunday Opinion Tech Time= s Times Poll Workplace/Jobs [IMAGE] [IMAGE] Editions [IMAGE] Print E= dition National Wireless [IMAGE] Extras [IMAGE] Crossword Horoscop= e Lottery Traffic Weather Multimedia [IMAGE] [IMAGE] [IMAGE] Feat= ures [IMAGE] [IMAGE] [IMAGE] SITE MAP [IMAGE] [IMAGE] Subscripti= on Services Subscribe Change of Address Vacation Stops Suspend Delive= ry College Discount Gift Subscriptions Mail Subscriptions FAQ [IMAG= E] [IMAGE] [IMAGE] [IMAGE] [IMAGE] Classifieds jobs homes cars re= ntals Print Ads Shopping Advertising Supplements [IMAGE] [IMAGE] LA= Times Initiatives [IMAGE] Times in Education Reading by 9 Times-Mirro= r Foundation Events [IMAGE] [IMAGE] =09[IMAGE]=09[IMAGE] July 31 2001= [IMAGE] Talk about it [IMAGE] E-mail story [IMAGE] Print THE STATE= Davis' Energy Advisors Draw SEC Attention *Probe: Under review is the pos= sible use of inside information to buy power company stocks. GOP rival of = governor requested the inquiry. [IMAGE] [IMAGE] Times Headline= s * Latinos Assured Water Is OK * Car Dealer Not Bound by Ad Error = Court Rules * Suspect in Simi Valley Serial Rapes Arrested * New LAPD= Radios Get Negative Reviews * 2 Shot to Death 1 at Home by Stray Bulle= t more > [IMAGE] [IMAGE] Subscribe By WALTER HAMILTON JEFFE= RY L. RABIN and DARYL KELLEY TIMES STAFF WRITERS The Securities and Exch= ange Commission has launched a preliminary inquiry into whether energy con= sultants advising Gov. Gray Davis used inside information to trade stocks = of power companies doing business with the state a source with knowledge = of the matter said Monday. The federal agency began its review late last = week the source said in response to a request from California Secretary = of State Bill Jones. A Republican rival of Davis Jones charged that stock= trading by consultants may have violated federal laws barring buying and = selling based on information not available to the public. On Friday top = aides to the governor disclosed that five consultants had been fired for = possible conflicts of interest between their official positions and their = personal finances. As news of the SEC inquiry spread through the capital M= onday Davis officials were confronted by a flurry of questions about who = in the administration owns energy stocks. Financial disclosure records fi= led by the governor's spokesman Steve Maviglio show that he owns between= $10000 and $100000 in a Texas company he and his boss have accused of m= aking obscene profits while California has been on its knees. Maviglio= said he bought the shares in Houston-based Enron Corp. in 1996. It's no= t a crime to own energy stock Maviglio said. He also owns 300 shares of= San Jose-based Calpine Corp. which has the largest share of the $43 bill= ion in long-term state power contracts. Maviglio placed the order for the= stock on May 31 one day after San Jose's mayor dropped his opposition to= a controversial Calpine plant favored by the governor and others. Under t= he terms of Maviglio's purchase the transaction was completed about three= weeks later when the stock reached $40 a share a value of $12000. It ha= s since fallen in value. I viewed it as a good long-term investment M= aviglio said adding that he purchased the shares for his retirement accou= nt based on publicly available information. The Davis administration has = spared Calpine the kind of fierce criticisms that it has leveled at other = electricity suppliers such as Enron. But California's grid operator has i= dentified the company as one of many energy merchants to overcharge the st= ate millions of dollars. The fired consultants also owned shares in Calpi= ne ranging in value from several thousand dollars to more than $100000 = records show. Another top Davis administration official legal affairs s= ecretary Barry Goode disclosed in his economic interest statement that he= recently held between $100000 and $1 million in another out-of-state com= pany accused of multimillion-dollar price gouging. In a statement Goode = said he sold his stock in Williams Co's. a month after he began working fo= r the governor in February. Goode said the shares were supposed to be sold= before he went on the state payroll but his broker failed to do so. In = light of the recent disclosures Secretary of State Jones said the governo= r must do more to ensure the public that its interest comes first. The g= overnor should direct all of his staff to immediately file updated conflic= t of interest statements that reflect current holdings and any activity si= nce their last statement of economic interest was filed said Jones who = is seeking the GOP nomination for governor. Word of the SEC's entry into = California's energy problems comes as the governor faces harsh criticism f= rom lawmakers and others for the quick and broad hiring of highly paid pri= vate consultants to guide him through the crisis. In his written request = to the SEC Jones said that recently filed disclosure documents showed tha= t at least one consultant bought and sold shares of two energy companies w= ithin the same month raising a red flag about the possibility of inside= r trading. State law prohibits officials from participating in decisions= involving their personal financial interests. The five consultants fired= last week were among 11 named in Jones' letter delivered to the San Fran= cisco office of the SEC last Wednesday. It was not clear which individuals= are the focus of the SEC's inquiry or whether the agency's review would = result in any charges. Two of the former traders said Monday that they ha= d not been contacted by federal investigators and knew nothing of an inqui= ry into possible insider trading. But William Mead fired Thursday said = it is no mystery why so many of his colleagues owned Calpine stock. Mead = said he bought it 2 1/2 years ago and made so much money he recommended it= to his colleagues last year while they all still worked for the now-defu= nct California Power Exchange in Alhambra. Calpine power was not traded on= that exchange so there was no conflict of interest he said. Mead and = three other energy traders--hired by the state in February and March--were= terminated by the Davis administration for allegedly buying power for the= state from Calpine while owning the company's stock. Fired traders Herman= Leung Peggy Cheng and Constantine Louie did not list the date of their C= alpine purchases on financial statements that the state required to be fil= ed only two weeks ago. But I'm sure they bought it while they were still= at the power exchange because that's when we discussed it Mead said. = It was kind of like a hobby. I'm sure it wasn't done with the intent to ma= nipulate. Former trader Elaine Griffin who also owned Calpine stock and= resigned two weeks ago to take another job said she didn't know she owne= d energy securities until she checked with her financial advisor July 13 = just before leaving her state job. Griffin said she and her husband own a= bout $10000 worth of Calpine stock in individual retirement accounts mana= ged by their advisor who bought the stock Feb. 1 without their knowledge= she said after research found it to be a good investment. I kind of fe= el like we've been used for political reasons Griffin said. We would ha= ve disclosed anything right at first but they never asked. As a trader= Griffin said she occasionally bought Calpine power for the state but on= ly at market prices. Meanwhile two Democratic political consultants who= helped Davis polish his image after the ongoing energy crisis caused his = poll numbers to plummet have agreed to accept no payment for their work a= s part of an out-of-court settlement of a taxpayer lawsuit. Tom Hiltachk= a lawyer for conservative anti-tax activist Lewis Uhler said the settlem= ent was reached last Friday after negotiations with lawyers for communicat= ions consultants Mark Fabiani and Chris Lehane. Now they will not receiv= e one red cent said Hiltachk. Very simply Mr. Fabiani and Mr. Lehane ha= ve agreed to cease all activities for the governor to accept no payments = for their services and to basically get out of the consulting business wit= h the governor. As his part of the agreement Hiltachk said Uhler with= drew his lawsuit Monday morning. Uhler had filed a lawsuit against the tw= o consultants and Controller Kathleen Connell in June contending that they= should not receive any payments because of a conflict of interest. The tw= o men also did consulting work for financially troubled Southern Californi= a Edison which was seeking help from Davis and the Legislature. Connell= a former Los Angeles mayoral candidate who has been at odds with Davis si= nce he endorsed an opponent had held up the payments pending the outcome = of the lawsuit. Under an agreement with Davis the men were to have been = paid $30000 a month for six months. Fabiani and Lehane could not be reac= hed for comment. * Times staff writers Nancy Vogel and Virginia Ellis i= n Sacramento and Robert J. Lopez in Los Angeles contributed to this story.= For information about reprinting this article go to http://www.lats.co= m/rights/register.htm =09[IMAGE]=09 a d v e r t i s i n g Subscribe NO= W and SAVE on your home delivery subscription! [IMAGE]Cool down rooms w= ithout touching the thermostat A floor lamp that spreads sunshine all = over a room Bring the power of the digital revolution to your fingert= ips Private DVD theater puts a floating 6-foot screen right before you= r eyes! It?s time to put all of your photos onto your computer NASA = research creates smart bed sleep surface [IMAGE] =09 =09[IMAGE] Copyright 2001 Los Angeles Times By visiting this site y= ou are agreeing to our Terms of Service . Powered by Genuity =09,government & politics,neutral,3 +RE: ticket,Wincenty J Kaminski 10 Snowbird Place The Woodlands TX 77381 WT 472179 Wincenty Kaminski ,other,neutral,0 +"RE: 1. London, June 28 - 29; 2. Houston, July 16 - 17",Ehud Sorry for the delay in replying to your message. I was on the road a lot. I am in London right now and plan to attend the conference. I am leaving on Saturday morning for Houston. I have asked Shirley to get tickets for one of the evening you mentioned. I should know by Thursday if the tickets are available. Vince ,personal & social,casual,3 +"RE: London, New York, Houston, Financial Mathematics June/July 2001",Thanks The same to you. Vince ,human resources,polite,0 +RE: Sara Woody and Elena Chilkina,Anne For the time being it's fine. She will soon become an associate. Vince ,human resources,casual,0 +Enron Mentions,See last story attached. Congratulations it looks like you are shaking th= ings up in typical Enron fashion. -----------------,other,sarcasm,5 +Re: FW: fact sheet- latest draft,I think it's a good document and carves out some solid policy ground for Bush. I think the electricity section needs some additions though. There is not a lot that the current administration can do about siting new plants and power lines -- its largely a state and local decision. Further the problem has been less about government failing to provide adequate incentives to utilities than it has been about a failure of the current commission to opening the grid on a nondiscriminatory basis. Once utilities are in the open access transmission business they will look for ways to invest in the grid and stop getting in the way of independent power producers who want to connect to the grid. The answer is open access so power can get from where it is to where it is needed. This has been clear for a long time yet the current administration (and its appointees on FERC) have yet to use their authority to make this happen. The result: spiking prices and reliability problems. Hunt Hunter L 09/27/2000 11:25 AM To: 'skean@enron.com' cc: Subject: FW: fact sheet- latest draft -,other,formal,3 +Call to Bob Glynn,Per our discussion this morning below is a summary of items to discuss with Glynn: Adding Enron's negative CTC claim to the list of claims: PGE's filing included a list of top twenty creditors. Our negative CTC claim was apparently not taken into account in compiling that list. The list is nonbinding however. PG&E will be required to file schedules of creditors on April 20. Our negative CTC claim should be on Schedule F (for unsecured claims). You may want to remind Glynn of your previous conversations and state our expectation that the negative CTC claim will appear (preferably as uncontested) in the April 20 filing. (Note: if PG&E does not include the claim we have an opportunity to file a proof of claim and ultimately the court determines the validity of the claim). Including Enron on the Creditors' Committee: PG&E may have the opportunity to influence representation on the creditors' committees. There are several reasons to suggest to Glynn that we be included: 1) we are a big creditor 2) we could be helpful in crafting a broader solution and 3) we are one of the real parties in interest behind the PX and ISO (who were listed as significant creditors but are really just passthroughs for the suppliers ... and PG&E likely would not want to have those political bodies serving on the creditors committee anyway).,finance,formal,3 +"Lay, Palmer and isakoff", Palmer,other,casual,0 +PRIVILEGED AND CONFIDENTIAL - Scott Jones Draft,Attached is the draft testimony of Scott Jones. Comments should be received no later than 3:00 PM EST on Sunday August 26. All comments and suggestions need to be in writing and can be faxed (not E-mailed) to Dan Watkiss at 202-857-2131. Also if your suggestion is a proposed addition please write out the exact language you would propose we incorporate into the testimony and where you would place the addition. Donald A. Kaplan Esq. Preston Gates Ellis & Rouvelas Meeds LLP Suite 500 1735 New York Avenue N.W. Washington D.C. 20006 Ph: (202) 662-8466 Fax: (202) 331-1024 donk@prestongates.com (See attached file: TFG SJones Draft 8-25-01.doc)(See attached file: Exhibit STJ-6.xls)(See attached file: Exhibit STJ-3.xls)(See attached file: Exhibit STJ-4.xls)(See attached file: Exhibit STJ-5.xls)(See attached file: Exhibit STJ-2.doc) CONFIDENTIALITY NOTE: This email message is intended solely for the individual or individuals named above. It may contain confidential attorney-client privileged information and/or attorney work product. If the reader of this message is not the intended recipient you are requested not to read copy or distribute it or any of the information it contains. Please delete it immediately and notify the sender by return email or by telephone. Thank you. <> <> <> <> <> <> - TFG SJones Draft 8-25-01.doc - Exhibit STJ-6.xls - Exhibit STJ-3.xls - Exhibit STJ-4.xls - Exhibit STJ-5.xls - Exhibit STJ-2.doc,legal affairs,formal,5 +Request for Confidential Information by the CPUC,,other,neutral,5 +Declined: Mtg w/Vince Kaminski,Eydie I shall be out on Monday July 9. What about the following Tuesday? Vince,meetings & events,casual,3 +Confidential re: McConville--Indemnity,David As we discussed Mark Haedicke and I discussed the possibility of providing Kevin McConville with some sort of indemnity in order to make sure that he remains available and cooperative during the pendency of the NSM case and other litigation matters. We could agree to enter into a Consulting Services Agreement with Kevin. The terms of that Agreement would include: 1. He agrees to be available and cooperative with Enron and its counsel regarding litigation matters. He will agree to meet with counsel prepare for testimony review documents testify and provide other assistance as needed. 2. Through February 1 2001 Kevin would not be directly compensated for this cooperation/testimony (because he is to be receiving his salary pursuant to the terms of his employment agreement). After Feb.1 2001 he will be paid a rate of $125 per hour for his services in this regard. 3. Enron would agree to indemnify Kevin for his conduct taken in the ordinary course and scope of his employment with Enron up to the last date of his employment with Enron. Excluded from this indemnity would be allegations or claims based upon the following: -- any conduct that is outside the course and scope of Kevin's employment -- any conduct violating policies of Enron or ENA -- Kevin's intentional acts -- Kevin's gross negligence -- Kevin's reckless conduct -- conduct that is in violation of any law statute regulation or other legal obligation or -- the commission of an unlawful or illegal act. 4. Kevin would invoice Enron for time spent in performing the services after 2/1/01. The invoice would be paid within 30 days of receipt. In addition all related expenses would be reimbursed throughout the term of the agreement. Let me know if you have any questions or require additional information. I am available to participate in your call with him if you would like me to attend. Michelle,legal affairs,formal,3 +Re: new contract,My copy shows long term comp on the exhibit under Grant Award. And yes the date will be revised. Mark Schroeder@ECT 04/14/2000 03:31 AM To: Steven J Kean/HOU/EES@EES Mark Frevert/LON/ECT@ECT cc: Subject: new contract The contract Mark gave me to review yesterday only covers monthly salary. I had expected there to be some discussion/reference to long-term comp plan. Mark had mentioned that what he gave me did not deal with certain non-compete payments owed to me in 2000 so I am not looking for that but I did think he had said that there was something in the doucment re:long-term which I cannot find. Please advise if I am missing something. I will withhold other comments for now except to note that the draft was dated 13 March and had a 14 day period before expiry (now passed) and will assume that that is an irrelevancy. Look forward to hearing from one of you. mcs,contract management,formal,3 +Flatscreens approval,I approve. ,other,formal,0 +Re: Ken Lay/ Jeff Skilling visits,I spoke with Jeff and he is not going to be available for the speech on the 26th. Do we pass or is there an alternative? Can we get done what we need to get done with Ken's visit the following week? Nicholas O'Day 08/31/2000 06:01 AM To: Steven J Kean/NA/Enron@Enron Rosalee Fleming/Corp/Enron@ENRON cc: John Mark Schroeder/LON/ECT@ECT Joseph P Hirl/AP/ENRON@ENRON Mika Watanabe/AP/Enron Takashi Kimura/AP/Enron@Enron Subject: Ken Lay/ Jeff Skilling visits Ken Lay Visit. Following discussions with the Prime Minister's office and a quick check with venues 31 October is firming up as the preferred date for a meeting with the Prime Minister and an office opening by the PM. Jeff Skilling Visit. The Nikkei and the Tokyo University have now made the decision to invite Mr Skilling to give the key note address at the symposium on 26 November in Tokyo. As mentioned the symposium is the most prestigious conference on IT in Japan. While the conference itself receives significant media attention the President of Nikkei has offered to interview Mr Skilling. This honour is usually reserved for Heads of State. The interview will be featured on the front page of the Nikkei and picked up by other major media services. kind regards Nicholas O'Day 08/29/2000 07:43 PM To: Steven J Kean/HOU/EES@EES Rosalee Fleming/Corp/Enron@ENRON cc: John Mark Schroeder/LON/ECT@ECT Joseph P Hirl/AP/ENRON@ENRON Mika Watanabe/AP/Enron Takashi Kimura/AP/Enron Subject: Re: Ken Lay meeting with Japanese Prime Minister Ken Lay Visit. Balancing the need to push out the arrangement of high level meetings as far as possible with the desire to have a meeting with Prime Minister Mori prior to the US Presidential election the week commencing 30 October would be the optimum time for a visit by Mr Lay. PM Mori is generally available in that week. We will get a preferred time from the PM's chief secretary first thing tomorrow morning Tokyo time. Jeff Skilling Visit. The boards of Nikkei and Tokyo University Institute of Advanced Studies have yet to make a decision on the key note speaker for the one day invitation only seminar to be held on 26 October. As mentioned the boards will choose between the chairman of Cisco and Jeff Skilling. The conference is focused on the IT revolution and an invitation only event for approximately 600 of Japan's corporate leaders. The speaking panel and topics for discussion will be developed around the key note speaker. If Mr Skilling were to give the key note speech it is likely that key senior Government Ministers would be asked to present at the seminar. Following the Prime Minister's commitment at the Okinawa summit of US$15billion expenditure in the region on IT infrastructure and education Japan's focus on e-commerce is almost reaching fever pitch. There will be significant interest in the conference from senior levels of Government and the business community. Further as you would expect with the involvement of the Nikkei there is typically significant media coverage associated with the key note speaker's presentation. kind regards,other,formal,5 +Re:,Please send Pam Benson the information for Joe on where to send the check who to make it out to etc -----------------,finance,formal,3 +Oklahoma legislators will be in Houston this afternoon.,You speak at 3:00,other,formal,5 +,attached is a copy of my california testimony. The proceeding was somewhat productive but turned into a witch hunt at a couple of points. Our view on this is: the problem is fairly straightforward (demand increases and new supplies are inhibited so prices go up and shortages ensue ... sound familiar?) and the solutions are straightforward (site the power plants suppliers are begging to build let the utilities hedge outside the exchange and finish the job of opening the interstate grid so power can get from where it is to where it is needed). What it comes down to at this point is FERC is the only entity with the authority to start fixing this problem now: Congress isn't going to get anything done this year and the California legislature is (thankfully) out of session now. Our political leaders need to give FERC the room they need to act. Good luck on your speech and give me a call sometime.,other,confident,3 +RE: PRC reviewers,Steve No problem. I shall spend Friday working on reviews. Vince ,other,casual,3 +RE; Luntz Focus Groups,-----------------,marketing & promotion,neutral,3 +Re: Andrew Lundquist,Your assessment makes perfect sense to me. What do you think about having Nels make the call to Lundquist just to find out what his status is what he might look for when his current assignment is over etc. (obviously without identifying us -- presumably Nels would have reason to talk to him anyway in the normal course of business)? I am not wedded to the idea but am inclined toward at least getting the information unless you see a problem. Linda Robertson 03/13/2001 02:16 PM To: Steven J Kean/NA/Enron@Enron Richard Shapiro/NA/Enron@Enron cc: Subject: Andrew Lundquist I got your message about Andrew. He would be an excellent catch. However I see a couple of significant problems. My guess is that Andrew is too senior for this position particularly after having chaired the Cheney task force. Also I would not anticipate that he would be available for several months if then. We should fill this position immediately. We are already missing opportunities because this position is vacant. As for our search using Korn Ferry I have narrowed the field to two very good candidates. I am setting up time for Rick to interview these candidates next Monday. The first candidate is Drew Maloney with Rep. Tom Delay's office. Drew would give us enormous visibility in House Republican leadership circles seems trustworthy and capable of learning most of the substance of the energy portfolio. Drew has strong networking skills which I think would nicely fit with Tom's strategic and technical skills. The second candidate is John Shelk whom I have known for nearly 15 years. John was the lead Republican staff on the House Energy and Commerce Committee under Norm Lent. John left the Committee in 1992. Since then John has worked in the financial services and gaming industries where he has enhanced his political and Republican networking skills. John in very short order would have extremely strong technical skills atlhough he has been away from the industry for eight years. I believe both candidates bring different but very strong talents to the job. I have a second opening for an enviromental advocate. I am discussing with Rick the possibility of whether we could redirect one of these candidates (probably John) to that slot. That said please let me know if I should have Nels pursue Andrew.,other,formal,3 +Confidential & Proprietaty - Udated PanNat Value,Mark: Per my voice mail. Jeff ,other,formal,3 +Weekly Regulatory and Government Affairs Report,print first attachment only ,energy infrastructure,formal,2 +Re: Philippe,Yes Phillippe left to join a firm in New York -- I don't know who. Christopher Culberson on 06/26/2001 02:42:53 PM To: skean@enron.com cc: Subject: Philippe Steven I hear Philippe is leaving for Putnam any truth to this? I've been unable to contact him directly. Thanks in advance. Best Regards Chris M. Culberson cmculbe@us.ibm.com (281) 556-8104,human resources,formal,3 +Re: Western Governors update,Thanks for the update. The Western Governors remain the best avenue we have for preventing price caps and California's attempts to secede from the grid. We need to keep pushing information to them regarding these issues. Attached is some text I have been using for correspondence with policy makers regarding California issues. Feel free to use it. Susan M Landwehr 03/02/2001 05:09 PM To: Steven J Kean/NA/Enron@Enron John cc: Subject: Re: Western Governors update Gentlemen--FYI--here's an update on what we've been doing lately with the Governors. I'll include you guys on future e mails. ,other,formal,3 +Re: news/updates,I am attaching the FERC order and staff recommendations. The order provides for $69 million in potential refunds (either pay up or provide cost justification). Enron was not named as one of the 13 overcharging parties but PGE was ($3.18 million). It's not over yet though. The order deals only with Jan 01 and promises further orders regarding Dec 00 and benchmark prices through April 01. The prices used to determine refunds were fairly high ($273/mwh based on gas prices emissions costs and an assumed heat rate of over 16000). With respect to sales to California we have concluded at least one short term sale and have talked with Cal Dept of Water Resources about longer term deals but we were still struggling with credit issues last I heard. I'm copying Jeff Dasovich because I'm sure he has more up to date information. Mark Schroeder@ECT 03/11/2001 02:11 PM To: Richard Shapiro/NA/Enron@Enron Steven J Kean/NA/Enron@Enron cc: Subject: news/updates In the press I saw two news stories that I wondered if we (Enron) had any role/hand in and what was the offical spin in both cases. 1) The FERC Order requiring something like 55-65 million dollars in refunds by generators (or did it include traders) for overcharging in California in December if I recall my facts/news stories correctly and 2) the reports of 40 companies entering into 10-year contracts with California (touted by Davis). Was Enron a contracting party? Do we think this is a good solution (I think I know the answer but defer to your lead on this so we stay on your message)? thanks mcs,energy infrastructure,formal,3 +Re: Security Assessment Report,I appreciate you pressing this issue. You should both be aware that Unocal(?) has been sued by the families of four employees who were shot in Pakistan a couple of years ago. Their claim is that the company did not provide adequate security and ignored official warnings of trouble in the region. To: Gabriel cc: David Frank Shawn Elaine Bill Donovan/EPSC/HOU/ECT@ECT Melinda Winkler@ECT Steven J Kean/HOU/EES@EES Subject: Re: Security Assessment Report Gabriel et al: Looks like the risks to Enron travelers to (and employees in) Colombia have increased. This is another indication that a 'travel policy' for travelers to Colombia should be in effect. What happened to the one we were discussing earlier? The steps outlined there would go a long way in improving the security of our travelers. Control Risks' report discusses responses to the media - be sure you have the approval of Enron's media people before making any response. The report also recommends suspending bidding on new projects - probably not viable advice but reinforces the importance that additional security measures be built into all new projects from day one. Now that our name is in front of the Colombian public we could see retaliation for various acts not all of which we have control over. Recent US Government actions such as extraditing criminals to the US for trial and training Colombian anti-drug troops have done little to endear American businesses to the Colombian public who see such actions as interfering with Colombia's right to govern themselves. These actions have significantly raised the risk of all American companies and their employees in Colombia. A meeting I had about two years ago with David Beddow of Control Risks in Bogota indicated that we could see some changes in the methods of attack in urban areas by FARC/ELN. With an elevated risk level we should begin thinking about these threats. FARC seldom uses the car bomb method of attack because it generates little interest among the domestic or international media. FARC plans on using letter bombs mailed to select targets i.e. head of an American-owned corporation who may have an office in Bogota. This method will generate headlines in the press and generate a fear of FARC among businessmen who may be targets. Control Risks' reported timetable for this change in FARC's tactics was to be three to five years but now that our risk is higher the timetable may well be moved up. On a related note - did you employ the security person we recommended? Please let me know how I can help you. Regards Mike Hicks Gabriel 12/05/99 08:15 PM To: David Frank Shawn cc: Michael Hicks@ECT Elaine Subject: Security Assessment Report FYI please find attached the Security Assessment Report carried out by Control Risk . Please let me have your feed back .GSS -----------------,energy infrastructure,concerned,5 +Upcoming Advisory Council Meeting,I'm looking forward to your discussion regarding the reregulation threat at the next meeting. Below are some of my observations: While it's premature to say we have an energy crisis we are witnessing the triple threat of high summer gasoline prices spiking electricity prices and high natural gas prices for the upcoming heating season (I'll send along some of the data). There is at least the potential for this to become a prominent national political issue: Gore has focussed relentlessly on Bush's ties to big oil (which includes us by the way though we produce nary a drop) and Congressional republicans have blamed the current administration for failing to have a coherent energy policy (though at least so far the dominant characteristic of the administration's policy has been a republicanesque reliance on the market). Notwithstanding the issue's potential to become political fodder and its prominence in the popular press many Americans seem blissfully ignorant at least on the electricity issue. We did some focus group testing recently in Southern California -- a mere 15 minutes from the epicenter of the San Diego price quakes -- and most people knew nothing about it. So while the issue has the potential for political traction it may not have caught on yet (except in places like San Diego and New York city. The reaction in California has been to call for government intervention in electricity markets. Investigations of out of state price gougers and profiteers have been undertaken and wholesale and retail price caps have been put in place. They have not worked -- at least in wholesale markets. Suppliers are deciding to site plants elsewhere and when prices are high elsewhere in the West power flows out of California to those other markets. Ironically though I can't explain it in classical economic terms the setting of rate caps in wholesale markets has had the effect of pulling prices up to the capped levels in offpeak times when there is more than enough supply. For the most part though the caps and the other political reactions have been somewhat muted: policy makers have been reluctant to throw the deregulation plan out and start over and the retail price caps have been relatively narrow ... so far. Outside of California the authors of other states' deregulation plans have distinguished their proposals from California's. Regulators and legislators from such diverse places as Connecticut Texas and Alberta have gone out of their way to defend their plans and explain why California won't happen here. For the most part then the reaction to California has been positive from Enron's perspective in states that have already deregulated. There does remain some threat that aspects of the state plans (e.g. utility plant divestiture) may be postponed or cancelled. The story is a bit more grim in states that were considering deregulation but have not gone forward with their plans: I think it's off the agenda in most places. The fact that most of the major markets (about 70% of total electric revenue) are already deregulated/deregulating is a blessing in that regard. At the federal level there has been a combination of the burn the village in order to save it approach -- allow some price caps to remove the pressure to reverse the whole deregulation program -- and a more positive call for comprehensive reform. All in all I believe we're OK so far and we need to look at this as an opportunity: business is booming we sell protection from price volatility and the need for such protection is now plastered over the front pages of major newspapers. On the public policy front we need to convert the controversy into productive action. Our target has been FERC -- they are somewhat removed from the white hot rhetoric in California and they are a single commissioner's vote away from taking action to further open the market. Enron's response: Initially we hoped to feed information into industry groups and let them carry the message our concern was that Enron -- a company which was in and out of the residential market in Cal. -- would not make the most attractive champion for the open market message. We hoped that the new generators in Cal would take up the mantle. It's fair to say that they fumbled the ball: they are now locked in a pitched battle with the utilities over price caps and fall all to easily into the out of state profiteer label .... standing between Aunt Millie and rate relief. They were also extremely slow out of the blocks with a more productive message. We are now working the issue directly. We are working the issue on a number of levels: 1) PR - we have good contacts in the press and have talked to numerous reporters and editorial writers. As time goes on the information and reporting has gotten somewhat better. 2) Govt relations - we have been pushing for power plant siting legislation in California (the market wants to build capacity but the government won't let it). This may be the best environment we'll ever see for streamlining the permitting process. Also in typical Enron fashion we put a deal on the table. We offered to sell power to the local utility at a price which would enable them to lock in stable rates for their customers at below current rates. Our offer was followed by nine others and we tried to make something of the fact that the market was offering better solutions than California politicians. SDG&E dropped the ball unfortunately. Instead of seizing the opportunity they ended up going along with a government granted rate discount which will cause them to accrue a massive deferral account. At the federal level we are contacting members the DOE and FERC. Here we are making a push for FERC action to finish leveling the playing field in wholesale markets so power can get from where it is to where its needed. Additionally we are developing a prepackaged system (including software) for nondiscriminatory open access (to take away any lingering excuses or delays). 3) Overall messaging -- we have been working with a well known political pollster to check our messages for their resonance at the grassroots level. As we hone these messages we will be using them in the fora we are currently working. Overall we have more opportunity than risk in the current environment but capitalizing on those opportunities continues to be a long shot. An intersting rhetorical challenge for us is this: much of the problem in power markets is blamed on high upstream fuel prices particularly natural gas. The gas market is open and structured pretty much the way we are advocating for electricity so how can we maintain that the problem in power markets is an absence of open markets when the most open commodity market on the planet (natural gas) is producing such outsized prices? The answer is somewhat complicated and therefore a bit unsatisfactory in the current debate: gas prices are still lower in real terms than they were pre-deregulation long term prices are also lower than historical levels ( the curve is backwardated (sp?) meaning that prices in later years are lower than today so you can buy gas for 3 years at a price lower than current spot prices) and the economy is booming and driving up demand for basic inputs (this begs the question: why didn't the market react sooner and avoid the spike?). When all else fails a big part of the problem can be blamed on OPEC. We haven't had this thrown at us yet but we are trying to anticipate it and have answers at the ready. This is just the tip of the iceberg. The issue is a great example of the intersection of our business interests with public policy debates and should promote a lively discussion when we get together. Let me know if there is anything else you need.,other,formal,3 +,Tony Pryor (GPG legal) asked if we have any credentials/tickets left for die hard democrats in the company. I know Tony will understand if they are already spoken for but if we have some left that would go unused we have a volunteer. How's it going? Are you partied out yet?,personal & social,casual,0 +Re: CONFIDENTIAL - Residential in CA,I like the idea particularly if we can time any decision to turn the customers back so it falls after the failure to get some action out of Sacto (instead of after our earnings release). The only problem I see is that we would need a decision from the top that we're not going to turn the customers back if we get direct access (so we can end the debate). I don't think it helps us if we get lucky get direct access back then make a decision to return customers to the utility. Karen Denne@ENRON 04/13/2001 10:30 AM To: James D Steffes/NA/Enron@Enron cc: Jeff Dasovich/NA/Enron@Enron Paul Kaufman/PDX/ECT@ECT Sandra McCubbin/NA/Enron@Enron Richard Shapiro/NA/Enron@Enron Janel Guerrero/Corp/Enron@Enron Mark Palmer/Corp/Enron@ENRON Susan J Mara/NA/Enron@ENRON Peggy Mahoney/HOU/EES@EES Harry Kingerski/NA/Enron@Enron Dan Leff/HOU/EES@EES Subject: Re: CONFIDENTIAL - Residential in CA Before any decision is made I think we really need to weigh in with EES on the ramifications (both PR and legislative) of turning back 16000 residential customers. I strongly believe that the public hit we will take will be far greater than our actual out-of-pocket losses. We will be crucified by the public media consumer groups legislators governor attorney general etc. and this action will reaffirm our reputation of packing up and leaving when it's not in our interest. The impact of this action would be exacerbated since it is on the heels of UC/CSU. I would also argue that this hurts our national dereg efforts. If we're advocating that competition and choice benefits consumers and then we turn around and pull out of a market and abandon customers when we're not profiting we'll kill any chances we have of ever serving retail customers in California -- or in any other state. We look foolish advocating for direct access when we're not willing to serve our existing -- let alone future customers What about a preemptive strike that engages these 16000 customers to weigh in on direct access -- i.e. a letter that says Enron may be forced to cancel its contract -- call/write/send the enclosed postcard to your legislator and tell them you want to keep your right to choose your energy service provider. Our credibility is on the line. Before we take this action we need to be cognizant of all the long-range strategic implications and we need to seriously weigh the negative impact this will have on our corporate reputation on our legislative abilities and on our commercial success going forward. kd James D Steffes 04/12/2001 09:05 PM To: Jeff Dasovich/NA/Enron@Enron Paul Kaufman/PDX/ECT@ECT Sandra McCubbin/NA/Enron@Enron Richard Shapiro/NA/Enron@Enron Janel Guerrero/Corp/Enron@Enron Mark Palmer/Corp/Enron@ENRON Karen Denne/Corp/Enron@ENRON Susan J Mara/NA/Enron Peggy Mahoney/HOU/EES@EES Harry Kingerski/NA/Enron@Enron cc: Dan Leff/HOU/EES@EES Subject: CONFIDENTIAL - Residential in CA In the meeting today no decision was made about what to do with Enron's 16000 residential customers. Each of the contracts gives a basic 30 day out right to Enron. That being said I think that we have a short window to push for DA before any public action impacts us in Sacramento. I realize that the ultimate action (which I think is inevitable) makes it harder for our advocacy on DA but real $ are flowing out of the company. EES will give us notice when a decision is reached. Thanks Jim,other,formal,5 +Re: Astros,Yes please. From: Elizabeth Linnell on 05/16/2001 12:02 PM To: Steven J Kean/NA/Enron@Enron cc: Subject: Astros I noticed that several groups within your overall organization charged tickets or our suite to their cost centers this month. I know of the business purpose for a couple but not all. Let me know if you're interested in this info and I'll get more data from Greg.,finance,formal,3 +Request from Bob Frank,,other,neutral,0 +Enron Mentions,How important is this fight to us now (see attached article on ExIm)? ,other,inquisitive,3 +Re: USG overtures on Dabhol,Thanks for the update. From: John Hardy@ENRON_DEVELOPMENT on 05/10/2001 09:48 AM To: Rebecca McDonald/Enron@EnronXGate cc: Ben Glisan@ECT Steven J Kean/NA/Enron@Enron Rob Walls/ENRON@enronXgate Subject: USG overtures on Dabhol Rebecca At a meeting yesterday at OPIC on Trakya another of our problem projects Dabhol was raised. A representative from the White House transition team joined the conversation. I was asked the terms under which we were prepared to negotiate and I told them at a minimum upon a commitment by the Indian authorities to serious negotiations which would include full compliance with the terms of the contracts and progress in the reform of the MSEB. I made clear that we do not see the Godbole Committee as the basis for such a discussion. I think the USG wants to be on record politically encouraging the Indian Govt. to engage in discussions all parties consider to be meaningful in hopes of working things out before it is too late even while through OPIC and EXIM it is supporting the move towards PNT. The administration may be concerned that without such a diplomatic overture on its part it could be concluded that the USG has politically taken a position on the project. In Trakya for example the USG has been quite proactive in pressing the Turkish govt on the payments issue and even in discussing the payment concerns with the IMF so that the payments issues for the BOTs (two of the four in Turkey are US sponsored) are taken into account as the IMF program moves forward. So I anticipate that the USG will shortly be meeting with the Indian ambassador here and the US Charge in Delhiwill likely be directed to make the rounds and meet with senior government officals on the project. I wanted you to be aware of this also any guidance you can provide would be helpful. Thanks John,government & politics,formal,3 +Re: Job Titles and Job Banding,Thanks for your message. I do think we need to talk this through. In the meantime though let's not make anymore VPs until this is resolved. As I said in my original message I am not looking to undo what has been done but to make sure we don't do it again unless the process is followed. I understand that there are significant title differences across the regions we operate. In fact one of the people in my organization who did not make VP is Dennis Vegas who has done an extraordinary job in Latin America. Notwithstanding his regional focus (and the significance of a VP title in his region) he was put through the company wide process and he David Haug and I submit everyone else on the Exec Comm understood that every new VP would go through the same process regardless of regional assignment (with the exception of certain joint venture companies). But I maintain that we need some consistency in the VP title in particular -- i.e. that it remain an Enron-wide title granted only through the PRC process. Though I don't personally feel this way for many people in the organization the VP title means something separate from the compensation structure it implies something like making partner in a legal or consulting firm. Making that cut should not vary based on where you live or what region you support. I also understand the point about needing a certain title for external purposes. In my organization we are dealing with very title-conscious elected officials and media. I can make the case for every one of my directors and senior directors that they would be more effective externally if they carried a more senior title regardless of any change in compensation. As an executive committee we elected to make such an exception only for legacy title holders -- i.e. people who had previously made VP outside the process. Everyone in my organization To: Cindy Olson@ENRON Steven J Kean@EES cc: Sanjay Subject: Job Titles and Job Banding From reading the e-mails on the issue regarding Regional Vice President at Enron India it sounds like there will be more discussion on this issue. I know that issues like this generally come up at the Enron ExCom level. There are a few issues that need to be kept in mind and although Cindy and I have discussed these in the past I have not had an opportunity to pursue them further (but would be happy to help out on this). I have noticed these not only in India but also in the other international settings where I have worked for Enron during the past several years. 1. International job titles and domestic job titles do not correlate. For example in India the title Director implies a very senior person within the organization (well above VP) whereas in the Enron domestic world it is a position below VP. Managing Director within Enron is below the most senior levels but in India a MD is the Ken Lay equivalent. For this reason I cannot use Managing Director in my title or on my business card although this is my title for Enron Houston purposes. 2. Job titles are much more important in an international setting than in a domestic setting. For example in Houston we have people at the director (and probably manager) level who lead deal teams and bring deals to successful closing. In an international setting particularly India to get to the decision-makers in your counterpart organization an officer title of VP or above is very often required. To a certain degree this is form over substance but that's what works over here. 3. To solve some of these problems Enron should consider doing what some other international companies have done (and I think Cindy and her team may already be working on this). A job banding study should be done and based on responsibilities everyone globally should be placed in a band. It would not be a title band of VP or director or manager but rather a band with a non-title classification. I hate to suggest a band with numbers such as 1 through 15 because that sounds way too much like the government but something like that would work. Once this is done communication is made to employees that the band is what is key in determining their compensation and level within the organization. Then the business units can rely on their particular market dynamics or on what their competition is doing to determine job titles. Thus if the Global Origination group needs to have a title of Senior Trader and EECC needs a title of Project Leader and Enron India needs a Regional Vice President all can be accomplished while keeping these same people at a consistent level for global Enron purposes. I will be happy to discuss this further with any of you. Plus I will volunteer to participate in finding a solution that works for all of Enron while taking into account the specifc business unit and/or global function needs. Wade,employment,formal,3 +Re: Opinion Elite Survey,Have we made this available to the Cheney team? From: Mark Palmer on 04/25/2001 04:02 PM To: Richard Shapiro/NA/Enron@Enron Steven J Kean/NA/Enron@Enron Linda Robertson/NA/Enron@ENRON Karen Denne/Corp/Enron@ENRON Joe Hartsoe/Corp/Enron@ENRON cc: Subject: Opinion Elite Survey Here's the Opinion Elite file. It looks very strong for our open access argument. Suggest we update the WH. Any other uses? I have the verbatims and cross tabs. We'll send a sanitized version (although there's not much I wouldn't want everybody to see) to some of the interviewees who requested it. Mark ,other,formal,3 +"RE: the summary report, I am sorry.",Thanks Vince ,business document,polite,0 +,Nick Lampson called and asked for a contribution. I committed to one without knowing about his vote on PNTR. I will keep my word by making an individual contribution but will also communicate to him that in my capacity as Enron PAC chair i cannot authorize the PAC to make a contribution as a result of that vote. Sorry I jumped the gun.,government & politics,polite,3 +<> - JS5/8/2001,-----------------,finance,formal,3 +California Power Crisis Update (No. 10),We have been pulling together these weekly(sometimes more often) summaries for internal purposes. Would you find it helpful to be on the distribution list? Hope you are doing well. Look forward to touching base soon. ,other,friendly,0 +Re: BLM/Forest Service Right-of-Way Update,Preliminary congratulations!. Looks like a good plan. Keep me posted. Stephen D Burns@ENRON 07/19/2000 01:47 AM To: Richard Shapiro/HOU/EES@EES James D Steffes/HOU/EES@EES cc: Scott Bolton/Enron Communications@Enron Communications Joe Hillings/Corp/Enron@ENRON Chris Long/Corp/Enron@ENRON (bcc: Steven J Kean/HOU/EES) Subject: BLM/Forest Service Right-of-Way Update The Senate voted on the Interior Appropriations Bill late yesterday. Our amendment passed which prevents either BLM or the Forest Service from enacting new fiber optic federal lands rights-of-way policies. The BLM made a last ditch effort to defeat this in the Senate but we had reached key Senators and staff and they got nowhere. Action now moves to Conference which for us means a focus on the House Conference members. Scott and I will spend the next 2 days meeting with the key Republicans in the House. We've already recruited the important Democrats. Interior Approps Subcommittee Chairman Regula remains opposed at least publicly but we think we can get other Members to swing him. We trust he'll come up with a sensible face saving compromise on his own eg formally beginning a review process with his Subcommittee having oversight -- at this point our language literally forbids BLM or Forest Service from even meeting to discuss the issue. We continue though on several other fronts: 1. We have the New Dems writing OMB on the issue and several Senators and Congressmen writing BLM and USFS 2. We've increased the pressure on the White House and are letting them know through very senior back door channels that in our opinion BLM/Forest Service have not gotten the message. Our position is that we'll be satisfied that they've changed their evil ways when the new assessment on the Mt. Hood EBS build is retracted. 3. We're preparing both Senate and House authorizing Committees for the longer-term issue next session. We have no trouble finding champtions eager to own the issue 4. We're engaging the Western Caucus for same 5. Our adhoc coalition continues to grow in numbers and clout with over 20 companies and associations now actively engaged. Enron chairs this initiative with a tangible side benefit being much increased visibility and stature as a serious communications player. 6. Scott is successfully engaging state and local officials to weigh in from the end-user perspective BLM is on the retreat and has asked for a meeting which we've refused. We don't think they've given up though and it's likely an issue of pride at this point. So until the Approps process concludes we're continuing with the full court press. Steve,government & politics,confident,5 +Hold for EES budget meeting.,You speak at 1:10 Central time.,finance,formal,3 +Re: Merger on FERCs Agenda,Wow! Was this expected? Sarah Novosel@ENRON 07/19/2000 03:52 PM To: Fullenweider Keith cc: J Mark Metts/HOU/ECT@ECT Mitchell Taylor/Corp/Enron@ENRON Ann Ballard/Corp/Enron@ENRON Steven J Kean/HOU/EES@EES 'rshapir@enron.com' Joe Hartsoe/Corp/Enron@ENRON Tim Belden/HOU/ECT@ECT Mary Hain/HOU/ECT@ECT Paul Kaufman/PDX/ECT@ECT Adam jrutkows@llgm.com 'mmelnyk@llgm.com' 'sbehrend@llgm.com' 'mike@tonkon.com' JAY DUDLEY/ENRON Pamela Lesh/ENRON Subject: Merger on FERC's Agenda The Sierra/PGE merger is on FERC's agenda for FERC's July 26 meeting. Please call me if you have any questions. We'll keep you posted. Sarah Fullenweider Keith on 11/29/99 06:12:51 PM To: J Mark Metts/HOU/ECT@ECT Mitchell Taylor/Corp/Enron@ENRON Ann Ballard/Corp/Enron@ENRON Steven J Kean/HOU/EES@EES 'rshapir@enron.com' Sarah Novosel/Corp/Enron@ENRON Joe Hartsoe/Corp/Enron@ENRON Tim Belden/HOU/ECT@ECT cc: Paul Kaufman/PDX/ECT@ECT McWilliams Douglas E. Wenner Adam Bruner Becky Decker John 'jrutkows@llgm.com' 'mmelnyk@llgm.com' 'jklauber@llgm.com' 'sbehrend@llgm.com' 'mike@tonkon.com' Subject: FW: Granite Update Attached is an update memo from Paul Kaufman on state issues. ,finance,formal,3 +RE: ENE Officer Elections,No. We have reallocated some of the responsibilities but Cindy has a significant part of the HR organization and continues to manage Community Relations so her title is accurate. Thanks From: Kelly Johnson/ENRON@enronXgate on 07/19/2001 01:06 PM To: Steven J Kean/NA/Enron@Enron cc: Subject: RE: ENE Officer Elections Thanks Steve. Do we need to change Cindy Olson's title? Let me know. ,human resources,formal,2 +RE: Technical Corner for today,Sam We can use a piece written by Rakesh on liquidity. I shall ask him to send it to you. Vince ,other,formal,2 +RE: Luntz Focus Groups (1 of 4),We don't have revised versions yet. when we do we will probably only want to put some (not all) of the documents on the intranet. Gavin Dillingham@ENRON_DEVELOPMENT 08/24/2000 02:06 PM To: Steven J Kean/NA/Enron@Enron cc: Subject: RE: Luntz Focus Groups (1 of 4) Have we received the newly revised principles facts and statements for the Luntz Focus Groups? I was hoping to place these on the California power issue database. Thanks Gavin -----------------,other,formal,3 +Re: FW: Draft of Organizational Announcement,I'm not sure yet. I think we are going to be sending two memos -- one that I am working on and on that Andy is working on. It looks to me like the message below fits better into Andy's memo. I don't think they will be combined into one but I'll know more tomorrow. From: Sherri Sera/ENRON@enronXgate on 06/11/2001 04:51 PM To: Steven J Kean/NA/Enron@Enron cc: Subject: FW: Draft of Organizational Announcement Steve Kevin Garland sent this to me hoping to get Jeff's approval to send it out from the office of the chairman. Would it make sense to incorporate it into the memo you're working on? Please advise. Thanks SRS ,business document,formal,2 +thank you,fyi ,other,casual,0 +Re: AGA,What have they done for us? Terence H Thorn@ENRON_DEVELOPMENT 10/03/2000 08:30 AM To: Steven J Kean/NA/Enron@Enron cc: Subject: AGA Steve I need your help. Twice in the last three months I have run into the Chairman of AGA who has taken my head off for Enron not renewing its AGA dues. I understand that the dues had been paid by Stan Horton who had decided that the pipeline group with INGAA representing it had no need for and received no benefit from the membership. I guess a few years back when AGA kicked the pipelines out they renegotiated the dues into some type of sub membership for around 85K. AGA approached the gas marketing team and talked to Mike Roberts about renewing the membership and maintaining relations with his customers and later to Jeff Shankman who passed them off to some other person and never got back to them as promised. This is a heads up to tell you that Bob Catell of Brooklyn Union fame- one of Enron's oldest customers and friends will be calling Lay. It seems to me that pro rating the dues among ENA and EGM and maybe GPG might be a solution. Anyhow I promised to pass on the complaint. Thanks.,other,casual,3 +Re: Our Will,no objection Robert Kean on 04/30/2001 10:00:52 AM Please respond to To: Phil Kean \(E-mail\) Doug & Karen Reiman \(E-mail\) Kathy Wedig \(E-mail\) Steve & Melissa Kean \(E-mail\) cc: Diane Kean \(E-mail 3\) Subject: Our Will Phil Karen Kathy Steve Diane and I are finally getting a will written. I would like to ask all of you if you have any objections to being named in the will as executors OR executing an Advanced Health Care Directive. An AHCD is document inwhich Diane and I will state what our wishes are regarding life support. I have attached a sample copy for review. If anyone objects please reply to me in the next 10-14 days. We will be meeting with the lawyer sometime around the 15th or 16th. Rob - Advance Health Care Directive.pdf,legal affairs,casual,3 +Sandy Fain,Randy Rich in town,personal & social,casual,0 +Re: DRAFT - AA PRC MEMO,Looks fine to me. I have not cross checked the lists but I assume you have included everyone who was designated to serve on the PRCs per the original memo (in addition to the new bus unit additions) Billy Lemmons 04/30/2001 06:41 PM To: Steven J Kean/NA/Enron@Enron John Sherriff/LON/ECT@ECT cc: Ted C Bland/Enron@EnronXGate Teresa Bosien/Enron@EnronXGate Subject: DRAFT - AA PRC MEMO Attached is a draft memo (including attachments) outlining the modifications we discussed last week. We can communicate changes by email or I'll be happy to arrange a short conference call. If possible I would like to distribute this by Wednesday or Thursday of this week. After the four of us reach consensus I suggest we preview Cindy (and maybe the HR heads) prior to distributing. You will note that based on conversations I had with Skilling last week (where he emphasized his desire that we have one program rather than a fractured program by business unit) I have added a review of the business unit distributions to the final meeting where we discuss the top perfomers. I've also added Janet Dietrich (tent.) and another EES person (tbd) to the AA Committee since they have a large group of AAs and no representation on the committee. Please let me know if you have any questions or comments and thanks for your help. Ted and Terry did all the hard work. Regards Billy Click Print Preview or print a hard copy - it's easier to read. We do not have the Europe groups included. Should probably include or note in the memo itself that info is forthcoming.,other,formal,3 +Digital Power Demand: JP Morgan Report,Please post the JP MOrgan doc. on our site ,other,formal,3 +Town Hall Los Angeles,mo - calendar Rob - fyi upcoming speech -----------------,other,casual,0 +RESUME,-----------------,other,neutral,0 +AW: Houston-Frankfurt,Another bit of background re Frankfurt (see below). I would be a little bi= t=20 more insistent on German Consulate support than Herr Sturm suggests=20 (otherwise this could become a black hole for your time). -----------------,personal & social,formal,2 +Rice Team Mtg.,-----------------,project-specific,casual,3 +Confidential Contact data and RFI,Kevin I just got the attached e-mail returned with your new address. Let me know if this one makes it thru Fred Confidential Kevin I know you are quite busy but I wonder if you could get your lead trader to look the following forecast for NEEPOOL. This may result in you getting the lead for a large block of the power so be conservative but have enough in there so it is a win win if you know what I mean. Have him fill in what he can. The client will be looking long 10 year with maybe a series of 2 and 5 year deals. Should be putting out around 500 to 700 Mwe. Do not disclose the plant eh ? Call me at 864-370-0217 or 864-235-5607 or mobile 864-275-3193 Thanks Fred,other,casual,3 +"Regulatory Roundtable, in 49C2",PFI -- Clement TVA 2024672778 Christa Donahue Cong BURR NC 202 383 2260 Maya Weber Mcgraw Hill Martin Wenzel,legal affairs,formal,3 +RE: INVITATION,Molly Thanks. I shall join you. I assume it's Ninfa's on West Dallas. Vince ,personal & social,casual,2 +RE: CONFIDENTIAL - Disclosure Schedules,Attached please find a draft of the financial schedules prepared by Enron Corp. Please call or email me if you have questions. Mike McGown <> - Summer financials sent to V&E 8_2_00.doc,finance,formal,5 +,I have opened a new Lotus file California - working group where I am keeping the contact information but I am assuming you have picked everybody up already. If in doubt check out the file. thanks,other,casual,0 +Confidential - Job Description,FYI...I'll keep you informed. dave -----------------,other,casual,2 +UC/CSU press release,fyi -----------------,other,casual,0 +Re: Enrons PaineWebber Service,Thanks for getting on top of this. Please get the word out to the HR team leaders as soon as you know more. From: Aaron Brown/ENRON@enronXgate on 07/13/2001 11:36 AM To: Steven J Kean/NA/Enron@Enron Mary Joyce/ENRON@enronXgate cc: Subject: Enron's PaineWebber Service Rocky Emery the Dowd family Kim Bowden and another 15 or so employees of UBSPaineWebber (our stock tracking provider...options restricted stock etc) left yesterday evening without any warning. They went to 1st Union. I've set up a meeting at 2pm today for us to go over to UBSPW and make sure they understand the special needs of Enron and to make sure our service will not be affected. I am reviewing the contract in place between PW and Enron to understand the affects of this move by Emery and his staff on the agreement. Also I'm going to see about getting 2 providers of the stock tracking service from the following list: (in case this happens again we'll have a solid back-up immediately) UBSPaineWEbber (our current provider) 1st Union (where Rocky Emery went) Solomon Smith Barney (way ahead of the competition from a technology standpoint...and has done the two provider thing before) Prudential (another option with internal connections) let me know if you think I should include any others or would like to discuss. Thanks Aaron,human resources,urgent,5 +Enron Expatriates in India,John Brindle David Cromley and others in the Corporate Business Controls group (formerly part of EBS) have been working over the last several weeks to make sure that we can get our people out of Dabhol if there are threats to their safety. While no plan is perfectly reliable (particularly during monsoon season) we believe that we are as ready as we can be. -----------------,safety & emergency,concerned,5 +Re: Interview Request,Thanks for the referral. We definitely want to get our story out to these guys. Just for future reference Meredith Phillipp is handling New Media for us. Thanks Janel Guerrero@ENRON 07/19/2000 05:52 PM To: Steven J Kean/HOU/EES@EES Mark Palmer/Corp/Enron@ENRON cc: Subject: Interview Request Hi guys. My friend Polly Traylor is an editor at the Industry Standard in San Francisco. One of her colleagues -- Michelle Rafter -- sent me the email below requesting an interview for an Enron story she is working on. I have not spoken with this writer and am forwarding it to you for follow up. Hope all is well. Call me if you have any questions. -----------------,media & press,formal,3 +Idea,If you think this is worth pursuing get in touch with Christie. -----------------,other,casual,2 +PRIVILEGED & CONFIDENTIAL ATTORNEY-CLIENT COMMUNICATION,For you to add the wire instructions which are in my out box. Mark ,legal affairs,formal,5 +EFET paper on acceleration of energy liberalisation in the EU,Please forward to public affairs group. -----------------,other,formal,2 +Re: Daily Update / Legislative Update - 8/23/00,-----------------,other,formal,3 +Expertfinder - The Power of Who,FYI - this email will go out to employees tonight. The Enron Corporate Policy Committee introduces Expertfinder. Expertfinder allows you to locate people within the Enron community by organization structure skills reporting relationships languages school attended and prior work experience. Expertfinder is a secured HR application that is available upon completion of your Certificate of Compliance. Expertfinder can be accessed on the Enron Intranet by typing the following URL at the Internet Explorer command line and Log In using the HRGIS Id provided below: https://hrglobal.enron.com Your HRGIS Id: Your Password: Date of Birth (Format YYYYMMDD) *Current users of the Global Launch Zone will maintain the same password. If you don't remember your password click on Forgot ID/Password below the Log In button. Should you have any questions regarding access or data issues in Expertfinder contact the HRGIM Line (HR Global Information Management) at 713-853-5666. Expertfinder is only as good as the data provided. Does your personal data need updating? Go to eHRonline.enron.com or (Eastern Hemisphere only) to update your data today. Or contact your HR Generalist for business unit related updates.,human resources,formal,3 +Re: Job candidates for Enron,Thanks for the note. I am forwarding it on to our analyst and associate recruiting program leaders. We may have already filled the summer spots (we also cut down the number a bit this year to ensure a higher quality experience) but we will be out looking for a large number of permanent hires in the Fall. Severin Borenstein 03/31/2001 06:00 PM To: Steve Kean cc: James Bushnell Subject: Job candidates for Enron Dear Steve: Jim Bushnell and I are teaching a course called Energy Market Strategies and Policies this semester. The course is cross-listed between the Haas School of Business and the Energy & Resources Group at UC Berkeley. The syllabus for the course is attached. We have 43 graduate students in the course most pursuing a masters degree in business or energy & resources though there are also a few PhD students. These are very smart students -- many of whom already have experience in the energy industries -- and we believe the course puts them in a position to immediately contribute to any energy-related organization that they would join. Many of these students are interested in either summer or permanent employment starting as early as May. If Enron has openings that you would like to advertise to these students please send me the job description (or the URL for it)and I can forward it to the class list. Jim and I think this is a very strong class and many of the students are interested in making a career in either the business or the public policy side of the energy industry. We're hoping to provide the connections to help make sure they find the best job matches possible. Sincerely Severin Severin Borenstein E.T. Grether Professor of Business Administration and Public Policy Director Haas School of Business U.C. Energy Institute University of California 2539 Channing Way Berkeley CA 94720-1900 Berkeley CA 94720-5180 (p) 510-642-3689 (p) 510-642-5145 (f) 707-885-2508 http://www.ucei.org Email: borenste@haas.berkeley.edu WWW: - EnergyMarketsSyllabus.pdf,human resources,formal,3 +Re: Proposed Ad for the Ontario Market,looks good. Rosie you may want to include this in ken's file for the toronto trip Eric Thode 03/16/2001 08:56 AM To: Steven J Kean/NA/Enron@Enron cc: Subject: Proposed Ad for the Ontario Market I sent this to Rick Shapiro and Mark Palmer as well. This is an ad created for use in the Ontario market and would include the logos of the signatory companies (rather than individual signatures).Aleck Dadson worked with GPC on its creation. It is part of the total plan which includes Ken Lay's visit to Toronto April 4 to meet with media and government leaders. Give me your thoughts. Eric -----------------,marketing & promotion,formal,3 +,BY MARK GOLDEN A DOW JONES NEWSWIRES COLUMN NEW YORK (DOW JONES)--THE CALIFORNIA SENATE IN SACRAMENTO PASSED A WINDFALL-PROFITS TAX ON SALES OF ELECTRICITY INTO THE STATE'S WHOLESALE ELECTRICITY MARKET MONDAY AFTERNOON AT 4:50 P.M. PDT. AT ALMOST EXACTLY THE SAME TIME CALIFORNIA INDEPENDENT SYSTEM OPERATOR INITIATED ROLLING BLACKOUTS FOR THE FIRST TIME SINCE MARCH. COINCIDENCE? PROBABLY BUT THE CONNECTION SHOULDN'T BE IGNORED. THE POLICY DECISIONS THAT HAVE BEEN ADOPTED IN CALIFORNIA TO DATE HAVE ACCELERATED AN ALREADY SERIOUS MARKET COLLAPSE SAID A HARVARD UNIVERSITY STUDY OF CALIFORNIA'S ENERGY CRISIS LATE LAST MONTH. THIS WEEK'S WINDFALL-PROFITS TAX BILL IS THE LATEST BLUNT INSTRUMENT WIELDED WITH POTENTIALLY DISASTROUS RESULTS. GOV. GRAY DAVIS WANTED IT AS A STICK WHEN (CONT) MEETING WITH EXECUTIVES FROM THE STATE'S MERCHANT POWER COMPANIES WEDNESDAY. THE MANEUVER WAS LESS THAN ADROIT AND THE GENERATORS WEREN'T IMPRESSED. AFTER THE MEETING WITH DAVIS RELIANT ENERGY'S (REI) JOHN STOUT SAID THAT IF THE TAX WERE IMPLEMENTED IN CALIFORNIA IT WOULD INSTANTLY BLACK OUT ALL THE GENERATION IN THE STATE. THE STATE'S LEADERS MIGHT KEEP IN MIND WHO WIELDS THE BIGGER STICK AT THIS POINT. CALIFORNIA SET UP A MARKET IN WHICH SELLERS HAVE BEEN ABLE TO CHARGE VERY HIGH PRICES FOR ELECTRICITY SINCE SUPPLIES STARTED GETTING TIGHT A YEAR AGO. SELLERS SAY THEY HAVE PLAYED BY THE RULES THEY WERE GIVEN AND NOBODY HAS PROVED OTHERWISE WITH THE ONE EXCEPTION OF A FINE PAID BY WILLIAMS COMPANIES (WMB) FOR ONE PARTICULAR INSTANCE OF VIOLATING A CONTRACT. IT'S LIKE SOMEBODY INVENTED A NEW GAME INVITED YOU OVER TO PLAY AND THEN CHANGED THE RULES A COUPLE OF TIMES IN THE MIDDLE OF THE GAME. THEN AFTER YOU BEAT THEM THEY INSIST YOU CHEATED SAID ONE WESTERN ENERGY TRADER. ALMOST EVERY ATTEMPT BY THE BUY SIDE - THE UTILITIES THE ISO AND NOW THE (CONT) STATE TREASURY - TO LOWER PRICES HAS RESULTED IN HIGHER PRICES OR BLACKOUTS OR BOTH. THE WINDFALL-PROFITS TAX IDEA IS THE MOST RECENT EXAMPLE BUT THOSE WHO INSIST ON PRICE CAPS SHOULD KEEP THIS IN MIND: THE ISO HAS HAD PRICE CAPS SINCE IT BEGAN OPERATION MORE THAN THREE YEARS AGO. OBVIOUSLY PRICE CAPS HAVEN'T WORKED JUST AS THEY HAVE NEVER WORKED EXCEPT DURING WARTIME. IN FACT PRICE CAPS HAVE BEEN A QUESTIONABLE MEDICINE PRESCRIBED FOR THE WRONG DISEASE. AT BEST PRICE CAPS MIGHT RESTRICT PRICE SPIKES. CALIFORNIA'S PROBLEM IS PERPETUAL HIGH PRICES. IT CAN'T AFFORD THE GOING RATE AT NIGHTTIME LET ALONE THE HIGHER MARKET PRICES DURING THE AFTERNOONS IN A HEATWAVE. CALIFORNIA MUST FIGURE OUT HOW TO PLAY BETTER THE GAME IT INVENTED. THE INSANELY COMPLICATED COMPUTER-BASED PURCHASING OF POWER ENDED A FEW MONTHS AGO AFTER THE CALIFORNIA POWER EXCHANGE WAS CLOSED DOWN BY FEDERAL REGULATORS AND THE ISO LOST ITS FINANCIAL ABILITY TO BUY POWER. THE MATCH BETWEEN THE PROGRAMS AND THE ENERGY TRADERS WASN'T EXACTLY IBM'S BIG BLUE VERSUS GARRY KASPAROV. ALMOST EVERYONE IN THE MARKET AGREES THAT THE UTILITIES' HUMAN TRADERS COULD (CONT) HAVE BOUGHT NEEDED POWER FOR BILLIONS OF DOLLARS LESS THAN THE PROGRAMS THAT THE UTILITIES WERE REQUIRED TO USE BY STATE LAW. SINCE THE DEMISE OF PROGRAMMED PURCHASING THE COMPUTERS HAVE BEEN REPLACED BY HUMANS BUT WITHOUT MUCH BETTER RESULTS. THE TEAM ASSEMBLED TO BUY TENS OF MILLIONS OF DOLLARS WORTH OF SPOT POWER EVERY DAY CONSISTS MOSTLY OF FORMER EMPLOYEES OF THE POWER EXCHANGE AND ISO AS WELL AS EXPENSIVE CONSULTANTS WITH NO ENERGY TRADING EXPERIENCE. ONE OF THE LEADERS OF THE TRADING TEAM FOR EXAMPLE IS A FORMER PUBLIC RELATIONS DIRECTOR FOR THE POWER EXCHANGE WITH NO TRADING EXPERIENCE PRIOR TO THE CURRENT JOB. AS ONE ISO EMPLOYEE WAS WONT TO SAY: IT'S LIKE WATCHING A FOOTBALL GAME BETWEEN NOTRE DAME AND ST. MARY'S SCHOOL FOR UNWED MOTHERS. AND THE SIGNING OF TENS OF BILLIONS OF DOLLARS OF FIVE- AND 10-YEAR CONTRACTS IS BEING EXECUTED MAINLY BY FORMER EXECUTIVES OF SOUTHERN CALIFORNIA EDISON - PEOPLE THAT LEFT THE UTILITY YEARS AGO TO BECOME CONSULTANTS AND ALSO DON'T HAVE TRADING EXPERIENCE. GOOD IDEAS MEANWHILE HAVE LANGUISHED. (CONT) WE ARE GOING TO INSTALL METERS IN EVERY MAJOR COMMERCIAL CONCERN IN THE STATE THIS SUMMER AND GO TO REAL-TIME PRICING DAVIS TOLD WALL STREET ANALYSTS ON FEB. 28. THAT PROPOSAL WAS GREETED BY MANY OBSERVERS AS THE MOST CONSTRUCTIVE IDEA FROM THE GOVERNOR'S OFFICE TO DATE. WHAT HAS HAPPENED TO REAL-TIME PRICING FOR CALIFORNIA'S BIG BUSINESSES SINCE THEN? NOTHING. THE PROBLEM IS THAT EVERYBODY IN CALIFORNIA IS 'SPECIAL' SAID STANFORD ECONOMIST AND CALIFORNIA ISO CONSULTANT FRANK WOLAK. EVERY INDUSTRY FROM OIL REFINERS TO INTERNET SERVER FARMS HAS HAD LOBBYISTS IN SACRAMENTO SUCCESSFULLY SECURING EXCEPTIONS TO THE RULE. MY POINT HAS BEEN THAT IF WHAT THEY DO IS SO VALUABLE THEN THEY SHOULD BE ABLE TO HANDLE THE HIGHER PRICES. BUSINESSES WITH ABOUT 10000 MEGAWATTS OF LOAD HAVE REAL-TIME METERS. EVERY ONE OF THEM SHOULD BE GETTING MARKET PRICES SAID WOLAK. (CONT) ONE OF THE GREATEST ADVANTAGES THAT SELLERS OF ELECTRICITY TO CALIFORNIA HAVE HAD IS THAT CONSUMERS HAVE FIXED PRICES SO DEMAND IS INFLEXIBLE. SELLERS KNOW EXACTLY HOW MUCH ELECTRICITY THE UTILITIES MUST BUY BASED ON TEMPERATURES AND THE TIME OF DAY WOLAK SAYS AND THEY SIMPLY SUPPLY THE MARKET JUST ENOUGH POWER AT HIGH MARGINAL PRICES. REDUCING OVERALL CONSUMPTION THROUGH HIGHER RATES WILL HELP THE STATE SOME BUT MAKING 25% OF DEMAND FLEXIBLE BASED ON PRICE WOULD GIVE THE STATE A FIGHTING CHANCE IN THE MARKET ACCORDING TO WOLAK. BUT THAT APPARENTLY IS TOO COMPLICATED OR POLITICALLY DIFFICULT. PRICE CAPS A WINDFALL-PROFITS TAX AND POLITICAL PATRONAGE JOBS FOR BUYING BILLIONS OF DOLLARS OF POWER MAY NOT SAVE THE STATE FROM BANKRUPTCY BUT THEY ARE EASIER TO SELL - OR SLIP THROUGH - IN SACRAMENTO. -BY MARK GOLDEN DOW JONES NEWSWIRES 201-938-4604 MARK.GOLDEN@DOWJONES.COM,other,informative,5 +Re: FW: expertfinder - The Power of Who,I would'nt have it introduced by the corporate policy committee. I would say Enron is introducing or there is a new tool available to you. I am anxious to see how this goes over it's a great tool. From: Karen Moore/ENRON@enronXgate on 04/16/2001 05:34 PM To: Karen Denne/Corp/Enron@ENRON Steven J Kean/NA/Enron@Enron cc: Andrea Yowman/Corp/Enron@ENRON Subject: FW: expertfinder - The Power of Who Karen and Steve Could you take a quick peek at this and let me know if you have any thoughts or concerns? Thanks Karen ,business document,casual,3 +Re:,Palmisano left a couple of months ago to start his own business. Jeff Keeler (in our DC office) is covering John's issues. To: Steven J Kean/HOU/EES@EES cc: Subject: Thanks for the call this morning. The convention sounds interesting. On another note I was wondering is John Palmisano still works here? for you? I got a call from a conference organizer about an emissions meeting in Cologne Ger. and I think he has spoken at this gathering. I'll forward the email to you and to the emissions/coal group as well to determine our interest. Regards. Jeff,energy services,formal,2 +Tax Review of California Assembly Bill No. 128,fyi -----------------,finance,casual,0 +,test,other,casual,0 +"EnronOnline Management Report for August 1, 2000",more detailed information -----------------,other,inquisitive,3 +Camisea,fyi -----------------,other,casual,0 +Re: EPMI protests AEPs continuation of MBRs,Isn't our primary problem with AEP's internal merchant function rather than with the marketing affiliate (I realize we have problems with the affiliate too)? Can we protest continued market based rate authority for AEP until they have surrendered native load priority? Christi L Nicolay@ECT 09/25/2000 09:16 AM To: David W Delainey/HOU/ECT@ECT Ben Jacoby/HOU/ECT@ECT Ozzie Pagan/HOU/ECT@ECT Janet R Dietrich/HOU/ECT@ECT Dennis Benevides/HOU/EES@EES Raymond Bowen/HOU/ECT@ECT cc: James D Steffes/HOU/EES@EES Richard Shapiro/HOU/EES@EES Joe Hartsoe/Corp/Enron@Enron Steven J Kean/NA/Enron@Enron Subject: EPMI protests AEP's continuation of MBRs On 9/21 EPMI filed a protest (Below) against AEP/CSW's 3 year update request to continue market based rates for power marketing. The filing includes examples of discriminatory behavior on OASIS (for ATCs etc.) that potentially benefitted AEP's marketing side. EPMI has already protested Entergy's request for continuation of MBRs earlier this year and plans to protest other large utility-based power marketer MBR filings this fall. Let me know if you would like the list. Thanks. -----------------,other,formal,3 +"Lous $50,000",Lou -- you may be maxed out on Franks now. Don't write a check for the August fundraiser until you have talked to Eliz Labanowski -----------------,finance,casual,5 +Re: Interesting Idea for Enron?,Interesting idea but hard to see any near term benefit. I would decline. Amy Lee@ENRON 08/02/2000 09:30 PM To: Steven J Kean/HOU/EES@EES cc: Stacy Walker/Enron Communications@Enron Communications Subject: Interesting Idea for Enron? Steve - Cindy and I discussed this and we agree there is no interest to move forward from a Community Relations/HR standpoint. We wanted to pass this along to you to see if you had any interest. Thanks! amy -----------------,other,formal,1 +Curve Validation,-----------------,other,formal,3 +"Presidential Gala, May 22nd",Stay in touch with linda ro the recommendation. -----------------,personal & social,casual,2 +Re:,Thanks. Look forward to seeing you. Sorry I left Jimmy off the note I know he must be doing a good job. John Ambler@ENRON_DEVELOPMENT 03/23/2001 10:11 AM To: Steven J Kean/NA/Enron@ENRON cc: Maureen McVicker/NA/Enron@Enron Subject: Re: Steve Thanks for sending this note to Wade. I'm certain that the NYT story is infinitely better because of Wade's involvement. It was a team effort but you should know that Jimmy Mogal also was very involved. Of course Wade wants to avoid damaging the company and your note helps to keep him up for these risky/must do requests. Along these line I'd like to be able to give you a brief update on activities and issues. I'll check with Maureen about scheduling 15-20 minutes. John From: Steven J Kean@ENRON on 03/20/2001 09:06 AM To: Wade cc: Johan John Subject: I just saw the NYT article. Nice job. It's nicely positioned as an issue about India's resolve to encourage foreign investment and live up to contracts.,business document,friendly,1 +,FYI. From today's Post. Davis seems to continue to put distance between himself and the contracts. Best Jeff Financial California Changes Stance on Refunds Two Sides Far Apart In Energy Talks Peter Behr 07/06/2001 The Washington Post FINAL Page E01 Copyright 2001 The Washington Post Co. All Rights Reserved California officials have abruptly shifted tactics in their attempt to recover billions of dollars in alleged overcharges for electricity saying they may reduce their demands for huge refunds if generators renegotiate $43 billion in long-term electricity contracts that the state signed this year. Gov. Gray Davis (D) said part of the $8.9 billion in refunds the state is seeking could be offset by reductions in energy prices in the long-term contracts whose costs have become a growing political embarrassment for Davis. We've made suggestions we've offered various ways in which people could get us $8.9 billion Davis told the San Jose Mercury News in a report yesterday. You can renegotiate our existing contracts and save us money. However you want to do it it's just got to net out close to $8.9 billion. The new offer was introduced this week into the closed negotiations over a California settlement being conducted in Washington by Federal Energy Regulatory Commission Judge Curtis L. Wagner Jr. according to sources close to the negotiations. Yesterday Wagner said he may issue his own preliminary finding today on the amount of overcharges if California officials and the generators cannot reach a compromise. What I'm trying to do is get people in a settlement mood Wagner told reporters. In the event we're unable to do that [Friday] at some point I may offer a preliminary assessment. The settlement conference is set to conclude on Monday. Wagner FERC's chief administrative judge has been trying to push both sides toward a compromise that would resolve the huge energy pricing controversy. Mountainous energy prices have bankrupted California 's largest utility drained billions of dollars out of the state treasury and put Davis at sword's point with generators that help keep the state's lights on. Last Friday Wagner rebuked Davis's chief representative Michael Kahn chairman of California Independent Grid Operator -- the state's power grid manager -- indicating that the state's demand for nearly $9 billion in refunds from power generators and marketers was too high sources said. Wagner's settlement conference which has involved more than 100 lawyers for all sides is closed to the public and media. Wagner complained last month that Kahn was following a political agenda and his lack of independence in the negotiations was such a joke that the parties might as well wear clown suits according to a Dow Jones report confirmed by sources close to the talks. But he has also criticized the generators and power marketers led by Reliant Energy Inc. Williams Energy Services Duke Energy and Southern Co. for failing to make serious settlement offers these sources said. The suppliers have offered to refund $600 million provided the state is able to call off various California lawsuits demanding far larger refunds sources said. Wagner's leverage is his ability to propose his own refund figure to FERC's commissioners. FERC has tentatively called for $124 million in refunds but now is taking a harder line on preventing a new escalation of California 's electricity prices this summer and is likely to be receptive to a higher refund figure some energy analysts believe. Davis's tactical change offering to make the long-term contracts part of an overall settlement comes amid growing criticism of what the state will have to pay for energy under those deals. California 's energy calamity stemmed in large part from its failed deregulation plan which relied heavily on short-term power purchases at volatile spot market prices. When energy costs shot upward last summer so did the state's electricity bills. In response Davis's aide S. David Freeman and his staff began negotiating long-term power contacts with suppliers. The $43 billion in deals signed so far would require the state to pay about $70 per hour for a megawatt of power for a large part of the electricity it will need over the next 10 years. That's well under the average of $250 per megawatt-hour that the state was paying at the beginning of this year but above current power prices -- and considerably higher than what electricity may cost in the next decade energy analysts say. A new agreement to lower those contract prices could relieve political pressure on Davis and focus settlement negotiations away from the state's controversial demand for the $8.9 billion refund. Davis will argue that reducing future power charges that his administration negotiated should count as a refund because the deals were reached under commercial duress according to sources close to Wagner's negotiations. Industry supporters say Davis's refund figure is impossible to justify. There's no benchmark for what a fair and reasonable price should be said Michael Zenger California director of Cambridge Energy Research Associates. The state's advocates counter that if FERC enforced a just and reasonable standard for power prices based on operating costs and a generous profit the overcharges by all sellers could easily reach the $9 billion figure. It's not rocket science but it does require the regulators to regulate said Frank Wolak a Stanford University economist who heads an oversight committee for the California grid. Those polar-opposite views have left both sides in Wagner's conference room billions of dollars apart as the talks approached their final weekend sources said.,other,informative,3 +<> - RS050901,-----------------,finance,formal,3 +Confidential Information and Securities Trading,I couldn't open link. I s this something new for me to sign or have I already complied? -----------------,other,casual,3 +Re: Gray Davis meeting,I think the meeting is on Wednesday but if you can be there (Sacremento I expect) you should. As I mentioned in my voicemail I think the meeting will not be particularly substantive more likely it is a photo op for the governor to show how tough he is on the pirate generators. Based on your message below should we still plan to send somebody? I still think we should if we can manage the legal risk. Mike: would you be able to attend as well? From: Richard B Sanders@ECT on 05/06/2001 10:45 AM To: Steven J Kean/NA/Enron@Enron cc: Subject: Gray Davis meeting As I indicated in my VM I will be in LA early Tues morning. Would you like to talk about the isuues before your meeting--or would you like me to go? ,meetings & events,formal,3 +Report On EPSA Legislative Affairs Committee Meeting,The EPSA leg. affairs cmt. met today during the fall meeting. The speakers were Howard Useem Republican counsel to the Senate Energy Committee and Jimmy Glotfelty senior policy advisory to the Secretary of Energy. Useem said Senate Energy Committee Republicans were meeting later this morning to finalize their energy proposal. (We later learned that they opted against including any electricity provisions not even the PURPA PUHCA and reliability issues that Howard thought might be included when he spoke before the senators met this is good news since it makes it less likely that anti-FERC provisions will be added.) (Howard said now is the best time to legislative on electricity because the Supreme Court has not yet acted on the bundling/unbundling issue.) On RTOs in some what of a surprise Useem said that there is general support among Senate Republicans for RTOs including consolidating them into a few RTOs of large scope (surprising since this is not what we have heard in meetings with individual Senate offices). While he said that he also said that support is stronger in the abstract than in specifics. He said the biggest opposition was coming from very vocal state regulators (EPSA staff did a good job of pointing to state regulators mainly in the Midwest who support larger RTOs). Most importantly Howard said none of the senators on his committee take a not over my dead body approach to RTOs. Jimmy Glotfelty explained to several EPSA members who asked questions just why it is that the Administration wants Congress to be silent on RTOs. He said while they would prefer a sentence or two affirming FERC's authority they do not believe this is what would come out of the legislative process. They are not willing to run that risk. He stressed that the president wants to include other electricity issues. He said they were very close to an agreement with Western governors on regional transmission siting. Jimmy further said that the Administration also wants silence on incentive rates another issue where FERC can act now. They continue to talk to Barton and his staff in an attempt to get them to back away from the restrictive approach to RTOs in the Barton discussion draft. (He said Pat Wood spent several hours with Barton and other House committee staff yesterday.) Of concern Jimmy said something like could be 4 RTOs could be 8 RTOs what is important is getting standard design. He also said DOE will make sure that PMAs are included in RTOs.,other,informative,3 +Jim Noles Named CEO of Enron Wind,Congratulations! -----------------,other,celebratory,0 +Enron Expatriates in India,John Brindle David Cromley and others in the Corporate Business Controls group (formerly part of EBS) have been working over the last several weeks to make sure that we can get our people out of Dabhol if there are threats to their safety. While no plan is perfectly reliable (particularly during monsoon season) we believe that we are as ready as we can be. -----------------,safety & emergency,concerned,5 +Re: FW: Follow up -- Council of Energy Advisors,I doubt that this is worth the trouble (i.e. running it through a conflict of interest check ensuring no liability for actions taken on the advice etc). From: Sherri Sera/ENRON@enronXgate on 06/21/2001 10:13 AM To: Steven J Kean/NA/Enron@Enron cc: Joannie Williamson/ENRON@enronXgate Subject: FW: Follow up -- Council of Energy Advisors Steve we have no record of receiving the original invitation but is this anything you would recommend? Please advise. Thanks SRS ,business document,critical,3 +LEAK,-----------------,other,urgent,5 +AG letter - privileged and confidential: request for legal advice.,The letter looks good. A couple of comments for your consideration: On page three we describe the change to the definition of Public Utility an= d then argue that we don't fit into it. Would it be worth explaining why t= hat makes sense? Specifically the New Jersey restructuring law like most= efforts of its kind in other markets is designed to separate the competit= ive from monopoly elements of the power (and gas) businesses. Economic reg= ulation would then be restricted to the remaining monopoly elements of the = business (eg distribution). The competitive market can not be solely relie= d upon to regulate the behavior of monopoly asset owners such as distrib= ution utilities. Therefore regulators continue to be called upon to set p= ricing and other terms of service. What those regulators decide matters a = great deal to those monopoly utilities and it consequently makes sense for = lawmakers to be concerned about attempts by such entities to use campaign c= ontributions to tacitly influence decision makers. The same public policie= s simply do not apply to that portion of the market which is competitive. = The generation and sales business has a competitive structure (i.e. relativ= ely low barriers to entry multiple competitors etc.). These components of= the power and gas business can be regulated by the market with respect t= o rates and terms of service. They do not require economic regulation any = more than grocery stores department stores appliance sellers or other re= tailers (who presumably are not prohibited from making contributions. Com= petition and markets discipline behavior and establish competitive prices a= nd terms of service. Because regulators don't set the prices and terms of = service for such sellers there is no reason to be concerned about campaign= contribuitions from such organizations. Indeed the legislation and the = legislative history clearly conform to this underlying policy rationale. As a former practicing lawyer I certainly understand the value of pleading= in the alternative. But I question how certain of our arguments woud be = perceived by the public if they ever came to light (which these documents h= ave a habit of doing).. . I can just see the press seizing on Enron's clai= m of ignorance or mistake or the fact that we pled for the favorable exer= cise of prosecutorial discretion. I suggest that we add whatever we feel= is necessary to the very solid looking intent argument not make specific = reference to ignorance or mistake and not plead for the favorable esxerc= ise of PD. If we feel we need to write about this last item perhaps we co= uld suggest that it would be a waste of the public's resources to pursue a = claim under such circumstances.,legal affairs,formal,3 +Re: pipeline aftermath,In case you had not heard Lou Pai has done some fundraising for Franks and both he and his(Lou's) sister know him fairly well. Keep it in mind if at some point we need to get in to see him. From: Jeffrey Keeler 08/23/2000 03:44 PM To: Clayton Seigle/HOU/ECT@ECT cc: Steven J Kean/NA/Enron@Enron Richard Shapiro/HOU/EES@EES Michael Terraso/OTS/Enron@ENRON David L Johnson/OTS/Enron@ENRON Shelley Corman/ET&S/Enron@ENRON Joe Hillings/Corp/Enron@ENRON Cynthia Sandherr/Corp/Enron@ENRON Allison Navin/Corp/Enron@ENRON Subject: Re: pipeline aftermath Clayton: Here are some preliminary answers to your questions (and I have copied GPG and Government Affairs folks as well to share this information): 1) I am currently assessing the situation regarding pipeline safety legislation. This week has been very quiet on Capitol Hill as all of the members are back in the states on August recess running for re-election and it is a big vacation week for staff...but here's what I am hearing: As you may or may not know we have been been very active this year trying to temper pipeline safety legislation that was fairly reactionary in the wake of last summer's liquid pipeline accident in Bellingham WA. SENATE: In June Senators John McCain (R-AZ) and Slade Gorton (R-WA) led the charge to pass a pipeline safety bill (S. 2438) out of the Senate Commerce Committee and that bill is awaiting floor action in the Senate. Because of the hasty way in which S. 2438 was drafted and passed there was a realization by both Republicans and Democrats in the Senate that the bill could not make it to the floor for a vote until some serious changes were made -- mostly things that were deal breakers for industry. Enron and El Paso were leading the charge and we had a number of Senators backing our efforts to negotiate changes including Majority Leader Trent Lott (R-MS) Kay Bailey Hutchison (R-TX) John Breaux (D-LA) and Sam Brownback (R-KS). From what I've learned since the accident these Senators are not changing their strategy and are still asking for the same improvements. Fortunately most of the changes we were looking to make were fairly technical and not the types of things that would be seriously compromised by the accident. Industy was already in the position of having to accept a number of things they never would have if not for he Bellingham incident...the El Paso incident just reinforces those. The biggest potential effect I see from the El Paso accident is an increased effort to pass something before the Congress adjourns in early October. The New Mexico Senators are already calling for a floor vote on the McCain/Gorton legislation and I there will certainly be greater pressure on leaders to wrap up negotiations get agreement from all sides on a bill and move it unanimously through a vote on the Senate floor. HOUSE: The House is moving a bit more slowly but again I'd expect the El Paso situation to expedite things somewhat. There were several bills introduced in the House that were not moving anywhere including an identical copy of the McCain legislation introduced by Rep. Bob Franks (R-NJ). Franks is now anxious to move legislation as he is running for Senate and would love to take credit for helping out on an issue of national visibility. Before the accident House Tranportation Committee leaders on both the Democrat and Republican side were working on a consensus bill that they could introduce in early September and move quickly through the Committee and to the House floor. I'm told that negotiations on that legislation are moving forward and a draft bill will be produced shortly. Unlike our experience in the Senate we have had significant input into the bill in advance and expect something that we can live with -- and something more reasonable than the McCain bill. With that said there may be an effort to expand the bill in a few areas because of the El Paso accident so we'll have to see what kind of hand we're dealt in the next few weeks. Overall I'd expect pipeline safety legislation to be given higher priority when Congress returns after Labor Day. In the absence of this accident I would have given it slim odds of passing in the few short weeks until adjournment with appropriations bills taking up most of Congress' precious time. Now there will be greater pressure to come to consensus and move bills through by an expedited process so that everyone running for election in November can show that they've done something about this terrible tragedy. With that said there's still not that much time to get legislation through so I'd say that there's still a chance it may not get done this year. If I had to attach a number to it I'd say that the El Paso accident improves the chances of legislation going all the way to probably 50-60%. 2) Gas supply to California: I'll have to do some more checking in this area and get back to you. All I've heard so far is that the safety questions that remain may slow the speed of restarting flow on the line notwithstanding that El Paso thinks it can have things running again fairly quickly. I'm sure the power crunch in California will put some counter-pressure on but I just don't have good intelligence on this yet. With all this said I'm on vacation this week and parts of next week finishing up some leave I've taken for the birth of our new baby daughter so I may not have an additional report for you until early to mid next week. If you have questions please respond by e-mail or leave a message on my voice mail at 202-466-9157. Regards Jeff Keeler From: Cynthia Sandherr 08/23/2000 09:48 AM Sent by: Allison Navin To: Clayton Seigle/HOU/ECT@ECT cc: Jeffrey Keeler/Corp/Enron@ENRON Cynthia Sandherr/Corp/Enron@ENRON Subject: Re: pipeline aftermath Jeff Keeler in our office handles pipeline safety issues and I am copying him on this e-mail so that he may reply to you directly. Also Cynthia is out of the office through the end of the week but will be reachable tomorrow and Friday. Thanks. Allison Clayton Seigle@ECT 08/22/2000 06:29 PM To: Cynthia Sandherr/Corp/Enron@ENRON cc: Subject: pipeline aftermath Hi Cynthia: The commercial officers here are very concerned with the El Paso pipeline explosion in New Mexico. We would love to get some input from your group on the following questions if possible: 1. What is the status of pipeline safety legislation on the Hill and what is the outlook for action between now and the end of the year? 2. What are people from California saying about the added pressure on gas supplies and what are people from New Mexico saying about restarting the flow of gas while safety questions remain? These questions come straight from the top and any information you could provide would be very helpful. Please write me back or call and let me know if/when you think we might be able to get some initial answers. Thanks very much! Clay,other,formal,3 +,I love you. Call me.,personal & social,casual,0 +Granite Update,What are our chances of final approval at FERC at the JUly meeting. Jeff still thinks this is a third quarter close. Do we have any chance of making that happen? -----------------,project-specific,urgent,5 +RE: Neptune -- merchant transmission,Ed I am sure I shall screw up sooner or later (given my aging brain and amount of work). This guy will have to change his name to Ed Krapels to stay employed. Vince ,project-specific,casual,0 +Re: Daily Update / Legislative Update - 8/23/00,It's hard to formulate a position without more of the specifics but I think our message should generally be: We support providing immediate rate relief to small residential customers. We believe that relief is best provided by giving San Diego the ability to procure power on a fixed price basis from the market. San Diego has offers in front of it now those should be evaluated and the legislature and the commission should give San Diego the flexibility to accept one or more of them. This is sounder than running huge deferrals (deficits) to be later recovered from consumers. Rate relief should be accompanied by real reform. Rate caps have bad long term consequences: they cause shortages. Combining short-medium term rate relief with expedited siting of new facilities will address the near term problem while laying the proper groundwork for a long term solution. Bruno Gaillard@EES 08/24/2000 11:08 AM To: Edward Hamb/HOU/EES@EES Jennifer Rudolph/HOU/EES@EES Chris Hendrix/HOU/EES@EES Greg Cordell/HOU/EES@EES Harold G Buchanan/HOU/EES@EES Martin Wenzel/SFO/HOU/EES@EES Douglas Condon/SFO/EES@EES James M Wood/HOU/EES@EES Gary Mirich/HOU/EES@EES Dennis Benevides/HOU/EES@EES Roger Yang/SFO/EES@EES David Parquet@ECT mday@gmssr.com SF Directors Paul Kaufman/PDX/ECT@ECT Marcie Milner/Corp/Enron@ENRON Mary Hain@Enron Harry Kingerski/HOU/EES@EES James D Steffes/HOU/EES@EES Richard Shapiro/HOU/EES@EES Peggy Mahoney/HOU/EES@EES Karen Denne@Enron Mark Palmer/Corp/Enron@ENRON Steven J Kean/NA/Enron@Enron Christopher F Calger/PDX/ECT@ECT cc: Subject: Daily Update / Legislative Update - 8/23/00 This email reflects today's events in Sacramento. The information provided is subject to change because of constant flux. However it is important for us to provide this information for feedback and to caution as to new regulations that may affect some deals in the making . Governor Davis Assembly Women Susan Davis and Senator Alpert had a press conference. They will introduce a rate/bill stabilization plan for SDG&E and an expediting siting bill. There is no language as of yet. Although there is no specific language the following elements may be included: The stabilization plan will be applicable to residential and probably commercial customers in SDG&E The bill cap may be set at $68 for residential. The cap will be in place until the end of 2002 There will be language on expediting siting for generation plants Sam Wehn and Sandra McCubbin have been talking with the CEC executive director and several legislators about the siting portion of the bill. Any comments as to the bill cap proposal?,other,formal,3 +Revised Enron Comments on NERC Bill,Attached is revised draft of Enron comments on the NERC bill. The helpful editorial revisions came from Charles and Sarah.,energy infrastructure,formal,3 +,calendar -----------------,calendar & scheduling,casual,0 +"Re: From Michael L. Kirby, Esq.",Bonnie: Please forward to Michael Kirby. I think the draft looks good. Could you also prepare a draft of the letter we discussed yesterday to convey the proposal to the committee? Bonnie Hugyez on 07/17/2001 12:34:20 AM To: cc: Subject: From Michael L. Kirby Esq. Attached is a draft Nonwaiver Agreement per our telephone conferences of yesterday after the meetings with Senator Dunn. I am available in my office for a conference call to discuss this. The information contained in this e-mail message and any accompanying documents is subject to the attorney-client privilege and/or the attorney work product rule and is confidential business information intended only for the use of the individual or entity named above. If the reader of this message is not the intended recipient or representative of the recipient you are hereby notified that any dissemination of this communication is strictly prohibited. If you have received this communication in error please notify Kathryn A. Pugh at kpugh@pkns.com and immediately delete this message from your system. - 289271_1.WPD,legal affairs,formal,3 +Re: request to CERA,Your understanding was correct. In light of recent changes in the California regulatory environment (eg the recent rate order) I don't think it makes sense for us to distribute the document at this time so you can ignore the request. Thanks Peter Augustini 03/29/2001 06:18 PM To: 'skean@enron.com' cc: David Gibbons Subject: request to CERA Steve: Thanks for your note sorry I missed you. From your message I think there may be some miscommunication between your PR guys and us. We understood that your PR people wanted to reprint the Op-ed and redistribute it to as-yet-undetermined people along with various Enron material. They also wanted to post it on Enron's public web site. But your message seemed to indicate you just want to post the op-ed on your intranet - for educational use only for your internal folks. If this is correct we would have no problem with it. In fact we have posted the op-ed on the CERA web page - which is theoretically available to every Enron employee for internal use only. If you want you could just post a link to the CERA web site so your people could get direct access to all our research on the topic. If I misunderstood you and you do want to redistribute the piece to third-parties -- that is a much bigger issue because it involves our intellectual property and branding issues. Obviously we would need to talk some more about this. I hope this helps. On a somewhat-related note we are also getting sucked more and more into the California vortex and being asked to help in areas that are not our traditional business such as expert witness testimony and policy issues. While we are not afraid to take a point of view (as you know!) we must maintain a neutral and independent posture. This is sometimes a difficult path to navigate but we are exploring two areas that may also interest Enron: 1. We have examined Joskow and FERC's analysis on the price gouging issue and we believe there are several major flaws in their methodologies. We are considering how best to broadcast our assessment without impinging on our core business or becoming an expert witness. We think a workshop similar to the Monday event at CERAWeek could work where we would present our findings and issue a report. 2. We are also looking into the economic impact of power outages in the West - especially linked to the overall fragile state of the US economy. This would be a collaborative effort with a major economic forecasting firm or university. Again the reults would go to our clients but could be released to a wider audience and a workshop might help highlight the release. Please let us know if either topic would be of interest to Enron. We would need to raise funding from various clients to help underwrite the effort but the work would be CERA's independent research and we would stand fully behind it. Hope all is well. ...Peter .,other,formal,3 +Public Policy Contacts for California,Jeff and Steve ? As you requested I have prepared a list of my preferred public policy contacts?for California.? It is composed of professionals from an array of public private and non-profit backgrounds.? I have worked in some capacity with?each of these people?and most I know quite well.? ? Please call me for further background. ? Kevin 213-926-2626 ? Attachment - Kevin Scott - Preferred Contacts - 6-20-01.doc,other,formal,3 +Re: California Power Issues Database,Add Mona Petrochko peggy mahoney and Rob Bradley Gavin Dillingham@ENRON_DEVELOPMENT 08/25/2000 04:55 PM To: joe Hartsoe@ENRON Sandra McCubbin@EES Susan Mara@EES Paul Kaufman@ECT Karen Denne@ENRON Jeff Dasovich@EES Mark Palmer@ENRON James D Steffes@EES Richard Shapiro@EES Elizabeth Linnell@EES Jeannie Mandelker@ECT Steven J Kean/NA/Enron@Enron Mark A Schroeder@ENRON Peter Styles@ECT cc: Subject: California Power Issues Database We have developed an intranet site/database for information tracking purposes for the California Power Issue. The intranet site will be placed on the home.enron.com webpage by Tuesday morning for all Enron employees to access. However today this comprehensive database is available to you for your California Power Issue needs. The database has been populated with the latest information that I have received concerning this topic and has been broken down in three categories: California Power Issues National Power Issues and Secured Documents. It has then been broken down further into subcategories. The secured documents sections will only be accessible to those that are receiving this e-mail. Please let me know if you believe others should have access to this information. The secured document section contains all the information that I have received that Luntz Consulting has helped us develop i.e. principals statements speeches and facts as well as talking points and other statements developed internally. These documents can be easily switched to open access to all Enron employees if you believe that these documents should not be restricted. To access the intranet site you must be logged on to the network and then go to this link: (It is best if you copy this link and paste it in your internet Explorer or Netscape browser.) Once you are at this site you will be able to access all articles and information that I have collected/received concerning the California Power Issue. You can navigate the site by using the links on the left hand side of the screen. While navigating this site keep in mind that the actual interface will be changed before we go live on Tuesday morning. To access the secured documents click on secured documents and type in your user name which is the same as if you are logging onto the network and then type in your password which is the same as if you are logging onto the network. However if you have difficulties entering this site you will need to change your Lotus internet password. Which is very simple to do and which you will need to do regardless if you decide to use this site or not it is all part of the current computer migration. To change your internet password go to this link and then hit the edit person key. Go to the last field that says internet password and type in whatever password you would like preferably your current network login password. (In the internet password section you will see a bunch of numbers and letters delete those and enter your new network password.) There are still some bugs that will be worked out by Tuesday but I thought since this is such a fast moving issue it was best to get this tool out so it could be used when needed. If you have any questions please call me at 713-853-4382. Thanks Gavin,other,formal,5 +Meet with Skilling in his office. Project,Balboa and PGE filing - Cancelled for the time being - per Vanessa Bob - They'll call us when he gets back,meetings & events,casual,0 +SMethodist Presentation,,other,neutral,0 +Re: So you will know . . .,Thanks I hope we get there soon. Mary Clark 09/26/2000 01:55 PM To: Steven J Kean/NA/Enron@Enron cc: Karen Denne/Corp/Enron@ENRON Mark Palmer/Corp/Enron@ENRON Subject: So you will know . . . Steve I'm leading a team with Beth Tilney that will roll out communications to employees worldwide after our stock price closes at $100. We will keep you posted on our plans as they materialize. Mary,other,excited,3 +Re: Information for Jeff Skilling from Kevin Scott,Confirming 1:00 p.m. meeting on June 12 at the Venetian Resort in Las Vegas. Thanks Joannie Williamson 713-345-7774 Kevin Scott on 04/25/2001 04:46:18 PM Please respond to To: Jeff Skilling cc: Sherri Sera Subject: Information for Jeff Skilling from Kevin Scott April 25 2001 Dear Jeff Thank you for setting aside time to meet with me. I have attached my resume to help bring you up to date on my career. As you will see I have been providing advisory services since 1995. During these years I have done some of my best work. I am proud of the service that I have rendered as an independent consultant. Now I feel it is time to move to a new chapter in my career. I look forward to sitting down with you to think through ways to apply my experience intellect and energies to new professional challenges. I respect you tremendously and wherever the next part of my career may lie I know that my search and choice will benefit significantly from your perspective. Finally I am attaching the recommendation to HBS that you wrote in 1981. I found it during a profoundly challenging period in my life. Your historic words of support helped me keep fighting and successfully moving forward. If you would like to reach me before our meeting please call (213) 926-2626 or email kevinscott@onlinemailbox.net . Thank you again. Sincerely [IMAGE] Kevin Attachments (2) - image001.png - image002.gif - Resume of Kevin Scott.doc - Skilling HBS Recommendation.doc,employment,formal,3 +Re: FERCs marketing affiliate conference,I heard you were a big hit. Leslie Lawner 03/20/2001 08:45 AM To: James D Steffes/NA/Enron@Enron Shelley Corman/Enron@EnronXGate Rebecca W Cantrell/HOU/ECT@ECT cc: Richard Shapiro/NA/Enron@Enron Harry Kingerski/NA/Enron@Enron Steven J Kean/NA/Enron@Enron Subject: FERC's marketing affiliate conference Becky and I attended FERC's gas marketing affiliate conference last week. Non-affiliated competitors continue to build straw men and describe abuses with no real evidence to back them up (the funny money argument and capacity hoarding are two examples. The funny money argument assumes marketing affiliates will bid above market rates for capacity because they excess payment is going to the corporate bottom line. Hoarding capacity to drive up price may be an issue but it is not a marketing affiliate issue as anyone can do it). FERC staff did not seem terribly sympathetic to the points made but at least one FERC staffer seemed to believe that one solution would be to require the pipelines to offer capacity in smaller blocks to let smaller entities put together bids. FERC also indicated they were in fact auditing compliance but in a non-public way. There were some concerns voiced which I agree with and there is an opportunity to file additional comments on Apr. 30. I would like to put the following in these comments: Evidence of affiliate abuse/preference is just not there. The best folks can do is make up stuff. We welcome FERC monitoring if that is needed to bring confidence to the marketplace that abuse is not occurring. But the issue is really whether we do have a crisis of confidence or merely a bunch of disgruntled competitors who are just seeking to neutralize the affiliated competitors). The FERC rules and the information reported (with a caveat) under those rules are adequate for detection and enforcement and deterrence. That said the definition of marketing affiliate should be expanded to include affiliated electric generators who are siting plants along affiliate pipelines. The pipeline 637 reporting and internet systems should allow users to download and manipulate transportation related data which is not currently the case. We also need to address a deal on Northern where ENA took capacity at a discount albeit after other parties had an opportunity to match our bid. This was a deal brought up in the conference. Let me know how this sounds. Thanks.,energy infrastructure,formal,3 +Re: White House Talking Points and Abraham Mtg with EPSA,Linda - as we discussed adding a sentence on open access is key. Also I would delete the sentence about the transmission system not being designed for the way it's being used today. Richard Shapiro 04/02/2001 04:23 AM To: Linda Robertson/NA/Enron cc: Steven J Kean/NA/Enron@Enron Mark Palmer/Corp/Enron@ENRON Joe Hartsoe/Corp/Enron Subject: Re: White House Talking Points and Abraham Mtg with EPSA It would be nice to get a one sentence mention made of open access just to show they care....I say this in part because of Scott Miller's e-mail pleading for more focus on this issue. Thanks. Linda Robertson 03/30/2001 12:31 PM To: Steven J Kean/NA/Enron@Enron Richard Shapiro/NA/Enron@Enron Mark Palmer/Corp/Enron@ENRON cc: Subject: White House Talking Points and Abraham Mtg with EPSA 1. I am faxing to you a bootleg copy of the draft talking points Ed received this morning at the White House energy messaging meeting. These are very close hold. Ed asked that we not circulate these to anyone. Ed asked us to give him feedback of any concerns we have with the talking points (he will be giving them comments). After glancing at the TPs the obvious missing point is open access. However I am not sure we should be alarmed about that. There really isn't any policy in the TPs. This is a typical WH message document. Let me know if you think it is imperative to insert open access. Also Ed would like to position us as the coalition leader of the White House outreach effort. Any thoughts? 2. I am faxing to you EPSA's summary of the generators meeting with Secretary Abraham. I am glad I did not attend this meeting. As you will see from the summary there were three parts to the meeting: a) an exchange of policy views both long and short term b) discussion of how to maximize generator output in Calif and c) a request that industry participate in a DOE reliability group. I don't see any follow up for Enron outside of our normal course of activities and independent interchange with DOE officials. Let me know if you have additional thoughts.,other,formal,3 +Re: Translation - Nikkan Kogyo 5/21 (Enron Mentioned),I think we need to keep the pressure on. I liked the way our basic message= =20 was evolving over the course of last week. As you pointed out the Japanes= e=20 utilities view us as just another annoying US company who is going to come= =20 in bang its head against the wall for a few months and then leave. We nee= d=20 to continue to reinforce the message that not only are we not going away w= e=20 are starting other businesses here to keep us going while we continue to=20 agitate for reform in the electricity sector. Nicholas O'Day 05/21/2001 04:37 AM To: Mark Palmer/Corp/Enron@ENRON Jackie Gentle/LON/ECT@ECT Vance=20 Meyer/NA/Enron@ENRON cc: Steven J Kean/NA/Enron@Enron John Sherriff/LON/ECT@ECT Mika=20 Watanabe/AP/Enron@Enron=20 Subject: Translation - Nikkan Kogyo 5/21 (Enron Mentioned) To date reports on Enron's role in California have been limited to a repri= nt=20 of a Sacramento Bee article appearing in the Denki Shimbun - a limited=20 circulation publication sponsored by the Japanese utilities. Last Friday Mr= =20 Ohta President of Chubu Electric and Chairman of the Federation of Electri= c=20 Power Companies made some uninformed comments at a regular energy press cl= ub=20 briefing about Enron's commitment to its Californian customers . Ohta will = be=20 retiring from both positions in two weeks.=20 In the past both Chubu Electric and the Federation of Electric Power=20 Companies have distanced themselves from Mr Ohta's public comments which ar= e=20 generally considered to be ultra conservative and unsupported by facts. As = a=20 result we have tended to ignore his comments. However on this occasion I= =20 think we need to set the record straight on Enron's role in California. I= =20 would welcome your thoughts on whether we should let the comments pass or= =20 respond. Over the past few months we have received various statements from Houston= =20 (for both internal and external consumption) explaining Enron's role in=20 California. Most recently (May 10) we received from Peggy Mahoney (via Vanc= e)=20 an EES statement dated 1 February entitled Media Statement about EES=20 Resourcing California Customers. It would be helpful if there is a=20 comprehensive statement that has recently been put together that we could= =20 distribute here. If not we can put something together here tomorrow and=20 email it across to you for approval with the aim of getting something out= =20 Wednesday. As an aside we had a record 3766 visitors to the EJ website last Friday= =20 the day the Brattle paper appeared on the website. kind regards =20 -----------------,other,formal,3 +Job well done,,other,casual,0 +,Congratulations on your appointment by Fox. That's great news. I continue to be impressed by the way Fox is handling things. Let me know what I can do to help. As you know we are looking for a replacement for the unreplaceable Ricardo Charvel. I know you and he have discussed some possibilities. Rick Shapiro has met several candidates and will be bringing two to Houston in the next week or so. Dr. Kean continues to improve her golf game while I slave away at Enron to cover the greens fees. Let me know when you are coming to town next.,other,friendly,0 +Re:,Restructuring Today quotes Jeff at length on retail vs wholesale price caps. He does talk about protecting small customers with retail caps and highlights the more destructive nature of wholesale caps. If you need a copy let me know. kmagruder@newpower.com on 09/09/2000 11:39:55 AM To: Steven.J.Kean@enron.com cc: rshapiro@enron.com glockhart@newpower.com mmanly@newpower.com Subject: Re: Thanks Steve. The message we received was that Jeff had said he'd take retail price caps to avoid wholesale price caps. I know the press and listeners will distort things so I take the reports with a grain of salt. We just hope that you and Dasovich will find a way if asked to stress the right way to take care of small customers - enhance competition and create a robust retail market. I know we all want the same result. We just hope that with our roadshow beginning next week Gene doesn't have to explain away any other perceived Enron slams on retail competition. P. S. I can't think of two better spokesmen for the cause of competition than you and Dasovich. Steven J Kean@ENRON 09/08/2000 06:03 PM Sent by: Steven J Kean@ENRON To: kmagrude@enron.com cc: Richard Shapiro/HOU/EES@EES Subject: Got your message. I'm testifying at the Congressional hearing and Dasovich is covering FERC. I think Jeff's comments were taken out of context. He said policymakers do need to take care of small customers whose bills are tripling. Frankly we'd get slaughtered if we said anything else. But he also said there is a right way and a wrong way to do it. Enron and others had provided a market based answer by offering a fixed price deal to SDG&E (which would have enabled them to cap rates to those who had not switched. California elected instead to cap rates and deficit spend (ie create a deferral account). I don't think we can stand for anything that doesn't protect the small customers but we can continue to emphasize the market based solutions. One of the messages in my testimony will be: customers should be encouraged to choose. Those who did are doing fine.,other,formal,3 +Andy Zipper,Andy Zipper,other,neutral,0 +RE: Meeting with Debra- Rice Professor,Anne I shall brief you on the meeting. Vince ,meetings & events,formal,3 +Meet with Ralph Reed in EB49c5,With Rick Mark Lou and possibly Hillings,other,casual,3 +RE: Dates for Emerson Meeting,I think I can recommend that the time be set aside but it would be helpful if we pointed out to Emerson that it must be clear that there is a clear opportunity for Enron before we schedule the meeting. Maybe you could use this to get some progress on a bundled outsource deal. Nate Ellis@EES 02/28/2001 03:05 PM To: Marty Sunde/HOU/EES@EES Jeremy Blachman/HOU/EES@EES Michael Mann/HOU/EES@EES Troy Henry/HOU/EES@EES cc: Martin Wenzel/SFO/HOU/EES@EES Micah Hatten/HOU/EES@EES Joannie Williamson/Corp/Enron@ENRON Sherri Sera/Corp/Enron@ENRON Steven J Kean/NA/Enron@Enron Subject: RE: Dates for Emerson Meeting Gentlemen: Situation: Emerson is aggressively seeking at least a three hour time slot for a meeting with Jeff Skilling in April or May 2001. Mr. Skilling's office is hesitant to allocate more than two hours without your recommendation. Emerson is being persistent. The key players from Emerson are David Farr newly appointed CEO and James Berges President and effectively the leader of Emerson's strategic development effort. It is anticipated that both would attend the meeting. Emerson execs want to (i) get to know Mr. Skilling and other senior management (ii) discuss mutual business opportunities and (iii) hold a discussion about the transformation of Enron from a pipeline company to its current form. The last point has to do with Emerson's continuing self-transformation effort and how Enron achieved its transformation. I need your advice and recommendation. Please respond by e-mail or telephone (x5-4040). Background: Emerson initiated this latest round of contact with Enron in November 2000 when Mike Train and Mark Proudfoot both Emerson VPs of Corporate Development visited the Enron building hosted by Steve Kean. I met them at that time. Since that initial meeting Emerson has aggressively pursued a business joint venture as preferred supplier with Martin Wenzel and the distributed power business I believe with promising results. My sense is that Emerson is uniquely positioned as EES' partner in that business. I am waiting to receive an update from Martin. Emerson is also interested in becoming a preferred supplier for EES's DSM business. While we generally support that idea we are pressing Emerson to reciprocate by becoming a customer of our bundled outsource business. Emerson is highly decentralized and our efforts to date have been unsuccessful. I want to use the meeting as an opportunity to press Emerson to consider a proposal from EES's bundled outsource business. Please let me know your recommendation on this matter. Thanks Nate -----------------,other,formal,3 +Re: Meeting w/Sempra,sounds good. I think we should not talk about the conversations with the governor . . . I'd rather not prompt them to go to the gov (presumably to object to the gov talking to us without talking to them at the same time). Jeff Dasovich Sent by: Jeff Dasovich 10/11/2000 02:54 PM To: Richard Shapiro/NA/Enron@Enron skean@enron.com Sandra McCubbin/SFO/EES@EES Paul Kaufman/PDX/ECT@ECT James D Steffes/NA/Enron@Enron Harry Kingerski/NA/Enron@Enron Susan J Mara/SFO/EES@EES Mona L Petrochko/SFO/EES@EES mpalmer@enron.com Karen Denne/Corp/Enron@ENRON cc: Subject: Meeting w/Sempra FYI. Recently Chris Calger has asked me to set up a meeting with Sempra. ENA's seeking deals with the two big CA gas IOUs (PG&E and SoCalGas) that would give ENA access to their assets. In short ENA wants to offer a complete outsource deal for the IOUs' core gas load (i.e. rez and small commercial customers). ENA would take responsibility for providing service for delivery at the city gate and in return would manage all of core's assets (upstream of the city gate). We're meeting with Sempra's Chief Regulatory Office (Bill Reed) and Sempra's CFO next Thursday to discuss. Given the fact that Sempra's primarily focused on electricity the plan is to lead off the meeting with a couple of electricity solutions as a bridge to the gas offer. For electricity the plan has two pieces: 1) a commodity offer that beats the 6.5 cent cap (i.e. nothing fancy) and 2) Deal Bench services with the intent of establishing a procurement mechanism for SDG&E that the California PUC could pre-approve (thereby eliminating some of the immense regulatory risk SDG&E now faces). Wanted to run this by folks to gauge reactions. We'll distribute the slides we're putting together as soon as they're drafted--hopefully by COB Friday. Best Jeff,other,formal,3 +Re: Electricity Issues,Thanks. We are preparing a memo (John has seen it) to go out to each of our offices telling them about this incident (and the related ones that occurred the same day) and including some tips on how to handle such confrontations in the future. John_Presley@enron.net on 05/23/2001 02:14:25 PM To: SKean@enron.com Mark.Palmer@enron.com cc: John_Brindle@enron.net David_Cromley@enron.net Subject: Electricity Issues Steve/Mark I have looked into the demonstration by the ACORN group which occurred on 5/21 at our New York Office (780 3rd Ave). I believe you are well aware of the incident as the office there immediately contacted Mark Palmers group. I will respond to the building management to discuss security issues and to gain a better understanding of the security posture of the facility. If you have any questions or require further follow-up please let me know. - John P. John Presley Business Controls Enron Corp (EB4646) Ext. 58208 ,utilities,formal,3 +EES QBR - in 30c1,Lunch will be served at 11:30 QBR starts at 12:00.,other,casual,3 +Im Leaving Enron,Congratulations on your new position! This all came up rather suddenly at least as far as I can tell. If you have any interest I would like to talk to you sometime. ,personal & social,polite,3 +Re: followup to telephone conversation of 3-7-01,Excerpts by email are fine. Also as I mentioned I am very impressed with your background and accomplishments but I would like to have you meet a couple of other people in my group before making a final offer. Thanks and stay warm! Kim Amy 03/09/2001 08:44 AM To: 'skean@enron.com' cc: Subject: followup to telephone conversation of 3-7-01 Dear Mr. Kean: Thank you for your call. I am looking forward to working for you. I will be available as of June 1 2001. I will have the writing samples and resume ready for you on Monday March 1 2001. Should I fax it to you? Also my dissertation is quite lengthy. Would you like for me to forward you one chapter or just a couple pages? As discussed I will be available to come down to Houston between March 30 and April 6 2001. More snow (as in 6 inches) is expected today and tomorrow. I'm only 5'6. Pretty soon I will be buried in it since it's snow upon snow. HELP!! I look forward to seeing you again. Regards Amy,other,friendly,3 +GREAT NEWS ****FERC Order on Morgan Stanley Complaint Against ISO,See below. This would have presented a bigger problem than price caps. -----------------,other,excited,3 +,Ken Lay spoke with several California CEOs this morning and urged them to get personally involved in pushing for a comprehensive set of reforms. Three expressed willingness to help. Scott McNealy (Sun): contact person - Piper Cole (piper.cole@sun.com) scott.mcnealy@engeng.sun.com. Mcnealy wants by close of business today a cheat sheet of the talking points to use with politicians (the 8 or 10 elements of the solution) with the expected comeback he may hear from the political leaders and our response to that comeback. He says he hasn't spent time working on issues in Sacremento so we may also want to include a list of suggested contacts. Kevin Sharer (Amgen): contact person - Sarah Jensen VP of Engineering and Operations (805.447.6785) ksharer@amgen.com. Sharer wants the same information as McNealy and he and McNealy both indicated their willingness to call a meeting of other California CEOs. Sharer will also be having breakfast with Hertzberg one week from today. Robert Day (Trust Co of the West): said that he is very close to the mayor of Los Angeles. He urged Ken to call the mayor (mentioning Day). Ken would like some talking points for that call. Jeff - please put these items together.,other,formal,5 +DRAFT Comments on Barton RTO Draft,Attached for review and comment is a draft set of talking points on the Barton RTO discussion draft. I went through the testimony at the recent hearing and parsed the legislative language of the discussion draft. You will see that the talking points are designed to respond to two basic points being raised by our opponents: (1) that FERC is rushing and being heavy-handed and (2) that the only interests involved are those of the transmitting utilities (i.e. no mention of discrimination as being what RTOs will remedy). Please let me have your thoughts in the next few days. Once Capitol Hill is up and running again we will distribute the final talking points to our consultants and to members/staff of the Barton Subcommittee as we continue our efforts against the discussion draft's treatment of RTOs.,other,formal,3 +Re:,Frank Thanks. I have given your name to the employee Energy and Power Risk Management magazine who organizes Power2001 Conference in Houston (May of 2001). Vince Frank A. Wolak on 11/28/2000 09:04:42 AM To: Vince.J.Kaminski@enron.com cc: Subject: Vince Sorry about the delay in responding. It's the end of the quarter and I'm teaching 3 courses so things are very busy plus I had to work on a response to the FERC Proposed Order for California. Here is my student's CV. Please let me know if you need more information. Frank Wolak - jmyan_cv_new1.pdf,other,polite,2 +Re: Telephone Interview with The Enron Corp. Research Group,Marshall: Thanks for responding so quickly. I have scheduled the following intervie= w: Wednesday December 6 - 1:00 PM Houston time. It will last approximately 1 hour. We will call you at (605) 497-4045 unless otherwise instructed. If you have any questions please feel free to contact me at 713/853-5290. Best regards Shirley Crenshaw Jingming 'Marshall' Yan on 11/28/2000 12:59:55 PM To: Shirley.Crenshaw@enron.com cc: Vince.J.Kaminski@enron.com=20 Subject: Re: Telephone Interview with The Enron Corp. Research Group Ms. Crenshaw Thank you very much for the message. I am very interested in the opportunity to talk to personnel from the Research Group at Enron. Between the two days you suggest I prefer Wednesday 12/6. Considering the two-hour time difference between California and Texas 11:00 am Pacific time (1:00 pm your time) seems to be a good slot. However I am open most of the day on 12/6 so if some other time slot is prefered on your end please let me know. Thanks again. I look forward to talking to you and your colleagues. Jingming On Tue 28 Nov 2000 Shirley.Crenshaw@enron.com wrote: > Good afternoon Jingming: > > Professor Wolak forwarded your resume to the Research Group and > they would like to conduct a telephone interview with you sometime next > week at your convenience. The best days would be Tuesday 12/5 or > Wednesday 12/6. > > Please let me know which day and what time would be best for you and > they will call you. Let me know the telephone number that you wish to be > contacted at. > > The interviewers would be: > > Vince Kaminski Managing Director and Head of Research > Vasant Shanbhogue Vice President Research > Lance Cunningham Manager Research > Alex Huang Manager Research > > Look forward to hearing from you. > > Best regards > > Shirley Crenshaw > Administrative Coordinator > Enron Research Group. > 713-853-5290 > > > Jingming Marshall Yan jmyan@leland.stanford.edu Department of Economics (650)497-4045 (H) Stanford University (650)725-8914 (O) Stanford CA 94305 358C Economics Bldg If one seeks to act virtuously and attain it then what is there to repine about? -- Confucius _?OO??OOo? ?T=15xO-?? -- =14??,other,formal,3 +RE: Request Submitted: Access Request for maureen.raymond@enron.com,I cannot access the system to approve the request. I get a message that the page is not available on-line. Vince Kaminski ,other,urgent,3 +CONFIDENTIAL BUSINESS PROPOSAL,And another..... ,other,formal,3 +RE:,Frank Thanks for your message. What about a meeting on Tuesday September the 4th. We could meet at your office let's say at 4 p.m. We would be delighted if you could join us for dinner later in the evening on the same day. Vince ,meetings & events,friendly,3 +Test,testing,other,casual,0 +Re: eBiz article on Bush energy plan,Looks good to me. I'm glad you had the chance to work with Linda. Jeannie Mandelker@ECT 05/23/2001 03:31 PM To: Karen Denne/Corp/Enron@ENRON Linda Robertson/NA/Enron@ENRON Steven J Kean/NA/Enron@Enron cc: Subject: eBiz article on Bush energy plan Linda thanks for making time for me today. This is the eBiz article we'd like to run Friday. I need your comments by noon tomorrow. You can e-mail them back or reach me at 3-6305. Thanks Jeannie,other,formal,3 +Stella Chan /Project Summer transfers,How are we handling these now? Last time I talked to Jeff we weren't going to lift the restrictions until next week (assuming we do lift the restrictions). Any word? -----------------,project management,casual,3 +<> - Robert L Bradley Jr,-----------------,finance,formal,3 +Energy Issues,Please see the following articles: AP Wires Thurs 3/22: Report: Power wholesalers overcharged California $5.= 5=20 billion Dow Jones Newswires Thurs 3/22: Reliant To Appeal Fed Judge Ruling To Sel= l=20 Pwr To Calif Sac Bee Thurs 3/22: Federal judge orders major power wholesaler to sell t= o=20 California San Jose Mercury News Thurs 3/22: State falling short on pacts that provi= de=20 low-cost energy Contra Costa Times Thurs 3/22: Crisis saps state surplus Sac Bee. Fri 3/23: Bill to pay small energy firms stalls Sac Bee Fri. 3/23: House panel ends energy hearings -- will it step in? Sac Bee Fri 3/23: Dan Walters: Crisis deepens: politicos panic San Diego Union Fri. 3/23: Report says power wholesalers overcharged=20 state $6 billion San Diego Union Fri 3/23: Disappearing state surplus sparks alarm San Diego Union Fri. 3/23: Outages darken economic outlook in state so= me=20 say San Diego Union Fri. 3/23: Out-of-state generators question power=20 regulators' authority San Diego Union Fri. 3/23: Allegheny Energy makes big California=20 connection LA Times Fri 3/23: Judge Frees Small Firm From Edison Contract SF Chron Fri 3/23: Lodi Defies Order for Blackouts=20 Utility tells PG&E to 'pay the bills' SF Chron Fri 3/23: Coming Down to the Wire=20 State legislators battle over alternative energy bills SF Chron Fri 3/23: Grid Operators Push to Prevent Overcharging=20 They say regulators must be aggressive to stop billing abuses=20 Mercury News Fri. 3/23: State's bill for energy could double this year Mercury News Fri. 3/23: Plan for alternate power plants stalls --- --- Report: Power wholesalers overcharged California $5.5 billion=20 DON THOMPSON Associated Press Writer Thursday March 22 2001=20 2001 Associated Press=20 (03-22) 11:41 PST SACRAMENTO Calif. (AP) -- Electricity wholesalers have= =20 overcharged California more than $5 billion since May by manipulating the= =20 energy market according to a report prepared for power grid managers.=20 The Independent System Operator will file the findings with federal=20 regulators and ask for a refund ISO spokesman Patrick Dorinson said.=20 The state auditor also said Thursday that the state's 1996 deregulation law= =20 encouraged both buyers and sellers of electricity to ``manipulate wholesale= =20 prices to their advantage'' by underestimating supply and demand.=20 The auditor's report lays out what it calls ``a complex combination'' of=20 deficiencies and misjudgments it says led to the state's power problems.=20 According to the ISO report five in-state power suppliers and 16 importers= =20 frequently offered electricity at prices higher than it cost them to produc= e=20 -- effectively withholding supplies -- or didn't bid at all when they were= =20 able to generate power.=20 ISO Director of Market Analysis Anjali Sheffrin presented the findings at a= =20 conference in Berkeley last week.=20 The companies have denied overcharging California and have said they expect= =20 the Federal Energy Regulatory Commission will determine their prices were= =20 justified.=20 The commission has recently stepped up scrutiny of power companies' behavio= r=20 during California's power crisis asking suppliers to justify $124 million = in=20 sales during the first two months of the year or refund the money. Critics= =20 claim thousands of additional questionable sales are not being challenged.= =20 California has been spending about $45 million a day -- $4.2 billion since= =20 January -- to purchase power for Pacific Gas and Electric Co. and Southern= =20 California Edison. Both utilities the state's largest have been cut off b= y=20 electricity wholesalers because their credit is almost worthless.=20 Edison and PG&E say they are nearly $14 billion in debt due to soaring=20 wholesale power costs. The state's deregulation law blocks them from=20 recovering the costs from customers.=20 State Controller Kathleen Connell said Wednesday that the state's=20 power-buying is gutting its budget surplus.=20 Since the state started making emergency power buys the surplus has fallen= =20 from $8.5 billion to about $3.2 billion she said.=20 Connell ordered an audit of the power buys saying Gov. Gray Davis is=20 withholding key financial information from her office and the Legislature.= =20 She said she would refuse to transfer $5.6 billion into a ``rainy day fund'= '=20 she said was set up to impress Wall Street as the state prepares to issue $= 10=20 billion in revenue bonds to cover its power buys.=20 Transferring the money would leave the state general fund $2.4 billion in= =20 debt Connell said.=20 Sandy Harrison spokesman for the state Department of Finance and Keely=20 Bosler of the Legislative Analyst's Office said such transfers are routin= e=20 and required by law.=20 ``The law says she has to do it. The law does not give her the power to=20 demand that kind of audit information'' Harrison said.=20 Davis spokesman Steve Maviglio said the administration has released the=20 financial information it can without jeopardizing negotiations for long-ter= m=20 power contracts with wholesalers.=20 Also Wednesday a federal judge ordered a major wholesaler Reliant Energy= =20 Services to continue selling power to California despite its fear that it= =20 will not be paid.=20 The ISO buys power from companies like Reliant on behalf of utilities in=20 attempts to fend off rolling blackouts like those that hit the state this= =20 week and during two days in January.=20 --- Reliant To Appeal Fed Judge Ruling To Sell Pwr To Calif 03/22/2001 Dow Jones Energy Service (Copyright (c) 2001 Dow Jones & Company Inc.) LOS ANGELES -(Dow Jones)- Reliant Energy Inc. (REI) said Thursday it will= =20 immediately file with the 9th Circuit Court of Appeals in San Francisco in= =20 response to a federal judge's ruling late Wednesday that the company contin= ue=20 selling power to California regardless of whether it is paid.=20 U.S. District Court Judge Frank Damrell granted California's Independent=20 System Operator which makes last minute power purchases in the spot market= =20 a preliminary injunction against Reliant saying Californians were at risk = of=20 irreparable harm if Reliant stopped selling power to the state. The ISO manager of the state's electricity grid said the judge's ruling= =20 will allow the agency to keep the lights on in California.=20 Reliant which is owed more than $300 million from the state's cash-strappe= d=20 utilities supplies California with about 3000 megawatts of electricity fr= om=20 power plants it owns in the state.=20 Reliant spokesman Richard Wheatley said the state Department of Water=20 Resources the agency that buys California's bulk power needs on behalf of= =20 PG&E Corp. (PCG) unit Pacific Gas & Electric Edison International (EIX) un= it=20 Southern California Edison and Sempra Energy (SRE) unit San Diego Gas &=20 Electric should back the ISO's last minute power purchases.=20 In a filing with the Securities and Commission Reliant said it is owed $10= 8=20 million by the DWR for last minute power purchases the ISO made during the= =20 six weeks prior to the agreement Reliant made with the DWR.=20 Damrell dismissed Reliant's claim saying he does not have the authority to= =20 force the DWR to pay for that power.=20 We're going to immediately appeal Judge Damrell's order Wheatley said.= =20 Clearly the judge understands the implications of his order. We are requir= ed=20 to do business with creditworthy entities. Unfortuantely the judge did not= =20 force the ISO to post a surety bond which would allowed us to do business= =20 with the ISO.=20 Gov. Gray Davis has said the state is not responsible for the last minute= =20 power purchases the ISO makes despite a law passed authorizing the DWR to= =20 buy power on behalf of the utilities.=20 Wheatley added that the company will also seek relief on the issue at the= =20 Federal Energy Regulatory Commission. Damrell's ruling remains in effect=20 until the Federal Energy Regulatory Commission rules on the matter.=20 Separately Wheatley said a short-term power supply contract that Reliant= =20 signed with the DWR expired Monday and the DWR has not renewed the contract= .=20 A spokesman for the DWR would not comment on the issue.=20 -By Jason Leopold Dow Jones Newswires 323-658-3874=20 jason.leopold@dowjones.com --- --- ----------------------- Federal judge orders major power wholesaler to sell to California Updated: March 21 2001 - 8:23 p.m.=20 A federal judge issued a preliminary injunction Wednesday ordering a major= =20 electricity wholesaler to continue selling to California despite its fear= =20 that it will not get paid.=20 U.S. District Judge Frank C. Damrell Jr. said Californians were at risk of= =20 irreparable harm if Reliant Energy Services stopped selling power to the=20 Independent System Operator which oversees the state's power grid. The ISO= =20 buys last-minute power on behalf of utilities to fill gaps in supply to try= =20 to fend off blackouts.=20 Damrell dismissed Reliant's attempt to force the state Department of Water= =20 Resources to back the ISO's purchases for the state's two biggest utilities= .=20 The state has been spending about $50 million a day on power for Pacific Ga= s=20 and Electric Co. and Southern California Edison both denied credit by=20 suppliers after amassing billions of dollars in debts. The judge said he had no authority to force the DWR to pay for that power.= =20 Gov. Gray Davis has said the state isn't responsible for purchasing the=20 costly last-minute power ISO buys for Edison and PG&E despite a law=20 authorizing state power purchases on the utilities' behalf.=20 ISO attorney Charles Robinson said the ruling gives ISO operators a tool t= o=20 assist them in keeping the lights on in California.=20 Had the decision gone the other way one could expect other generators to= =20 simply ignore emergency orders Robinson said.=20 Damrell's preliminary injunction will remain in effect until the Federal=20 Energy Regulatory Commission rules on the matter.=20 Damrell denied the ISO's request for preliminary injunctions against three= =20 other wholesalers Dynegy AES and Williams who agreed to continue selling= =20 to the ISO pending the FERC ruling.=20 Spokesmen for Reliant Dynegy AES and Williams were out of the office=20 Wednesday night and didn't immediately return calls from The Associated Pre= ss=20 seeking comment on the ruling.=20 The ISO went to court in February after a federal emergency order requiring= =20 the power sales expired. The judge then issued a temporary restraining orde= r=20 requiring the sales but dropped it after the suppliers agreed to continue= =20 sales to California pending his Wednesday ruling.=20 The ISO said it would lose about 3600 megawatts if the suppliers pulled ou= t=20 enough power for about 2.7 million households. One megawatt is enough for= =20 roughly 750 homes.=20 Grid officials said Reliant's share alone is about 3000 megawatts. Reliant= =20 said the amount at issue actually is less than a fourth of that because mo= st=20 of the power is committed under long-term contracts.=20 Reliant which provides about 9 percent of the state's power worries it=20 won't get paid due to the financial troubles of PG&E and Edison.=20 PG&E and Edison say that together they have lost about $13 billion since Ju= ne=20 due to soaring wholesale electricity costs that California's 1996=20 deregulation law bars them from passing onto customers.=20 At the same time the state has faced a tight electricity supply due in pa= rt=20 to California power plant shutdowns for maintenance and to a tight=20 hydroelectric supply in the Pacific Northwest.=20 Managers of the state power grid imposed rolling blackouts across the state= =20 Monday and Tuesday as supply fell short of demand. Wednesday cooling=20 temperatures and the completion of repairs at several power plants allowed= =20 the state to avoid blackouts. State Controller Kathleen Connell said Wednesday that the energy crunch als= o=20 imperils California's financial health. Connell said the state's power-buying on behalf of Edison and PG&E is is=20 gutting its budget surplus. Since the state started making emergency power= =20 buys in January the surplus has fallen from $8.5 billion to about $3.2=20 billion she said.=20 Connell ordered an audit of the state's power-buying saying Davis is=20 withholding key financial information from her office and the Legislature.= =20 She is refusing a request by Davis and the Legislature to transfer $5.6=20 billion into a rainy day fund she said was set up to impress Wall Street = as=20 the state prepares to issue $10 billion in revenue bonds to cover its=20 power-buying.=20 Transferring the money would leave the state general fund $2.4 billion in= =20 debt Connell said.=20 Sandy Harrison spokesman for the state Department of Finance and Keely=20 Bosler of the Legislative Analyst's Office said such transfers are routine= =20 and required by law.=20 They put the state's budget surplus at $5.6 billion.=20 The law says she has to do it. The law does not give her the power to dema= nd=20 that kind of audit information Harrison said.=20 He said the state's budget isn't in danger because it will be repaid with t= he=20 $10 billion in long-term debt.=20 Wells Fargo & Co. chief economist Sung Won Sohn said he sees little progres= s=20 in efforts to fix the state's power problems and end state electricity=20 purchases.=20 If we're going to pour money into a bottomless pit I would worry about th= e=20 state's finances he said. At some point we're going to run out of money.= The controller's criticism of fellow Democrat Davis won support from Assemb= ly=20 Republicans and Secretary of State Bill Jones a Republican considering=20 challenging Davis next year.=20 Jones said he wants to announce his own plan to solve the state's energy=20 woes but can't unless Davis releases more financial details.=20 Davis spokesman Steve Maviglio dismissed the criticism. Political grandstanding doesn't generate one more kilowatt of energy for= =20 California in this time of emergency he said.=20 Maviglio said the administration has released the financial information it= =20 can without jeopardizing negotiations for long-term power contracts with=20 wholesalers.=20 Also Wednesday a report by Davis' chief power negotiator appears to show= =20 that as much as 75 percent of the state's power purchases will have to be o= n=20 the expensive short-term market this summer said Sen. Debra Bowen D-Marin= a=20 del Rey chairwoman of the Senate Energy Committee.=20 The prices may be phenomenol she said particularly given predicted=20 hydroelectric shortages due to drought in the Pacific Northwest.=20 The report by David Freeman who is negotiating the state's long-term power= =20 contracts shows California has finalized 19 contracts and has 25 agreement= s=20 in principle. Freeman said DWR is continuing to negotiate other contracts. Bowen said FERC should impose short-term price caps or let generators to=20 charge enough to make a reasonable profit or we could be subject to enormo= us=20 price-gouging this summer.=20 -- Associated Press --- State falling short on pacts that provide low-cost energy=20 Published Thursday March 22 2001 in the San Jose Mercury News=20 BY CHRIS O'BRIEN AND JOHN WOOLFOLK=20 Mercury News=20 The state has signed low-cost contracts for just a third of the energy it= =20 needs this year raising the prospect that California could be forced to bu= y=20 much of its electricity this summer on the expensive spot market.=20 A spokesman for Gov. Gray Davis conceded Wednesday that the state will be i= n=20 trouble without more contracts but insisted California will meet its needs= =20 through conservation and additional long-term deals for cheap electricity.= =20 The state according to a report released Wednesday has fallen far short o= f=20 the governor's goal of filling almost all its electricity needs through suc= h=20 deals. In fact the state has lined up contracts for about half the amount= =20 Davis had projected earlier this month.=20 If the state has to rely heavily on the volatile spot market where the pri= ce=20 of electricity this summer could reach five times the state's contract pric= e=20 pressure could mount to raise the cap on the electricity rates consumers pa= y.=20 But Steven Maviglio the governor's spokesman said ``The governor has sai= d=20 he's committed to work this in the existing rate structure so that's the= =20 plan.''=20 In the report sent to state lawmakers the state Department of Water=20 Resources indicated that it had secured just more than 20 million=20 megawatt-hours for this year leaving it far short of the 60 million=20 megawatt-hours needed.=20 ``This is just a progress report'' Maviglio said. ``They did all this in= =20 three weeks which is pretty amazing when you think about it and we have a= =20 lot more to do.''=20 The state got into the power buying business in January supplying it to th= e=20 state's nearly bankrupt utilities.=20 The state negotiated long-term contracts with generators to supply that pow= er=20 at a reduced rate. Based on the report the state will pay an average of $6= 8=20 per megawatt-hour over the next 10 years -- significantly less than in=20 December when prices spiked higher than $300 per megawatt-hour but not as l= ow=20 as the $55 Davis hoped to reach.=20 Most of this power however won't be delivered until 2004. From 2004 to=20 2006 the Department of Water Resources estimates it has enough power unde= r=20 contract. Until then the amount falls short.=20 In 2001 it appears the state has about one-third of the power it needs. Th= e=20 gap closes to about half in 2002 and two-thirds in 2003.=20 At a news conference in Los Angeles two weeks ago Davis said the state wou= ld=20 have to buy only 30 to 45 percent of the power it needs this summer on the= =20 open market.=20 At the time critics said with only two-thirds of the power under contract= a=20 rate increase was almost inevitable. Even Davis' chief negotiator S. David= =20 Freeman offered a bleak assessment for the summer saying that all availab= le=20 electricity has already been sold.=20 ``We'll be subject to extremely high prices'' said Frank Wolak a Stanford= =20 professor who sits on a market committee for the Independent System Operato= r=20 the agency that runs the state power grid.=20 Wolak said there are two main hopes for avoiding a price increase this=20 summer: Federal officials could cap the wholesale price a step they've=20 resisted or Californians can conserve an unprecedented amount of power. --- --- ----------------------- Crisis saps state surplus POWER CRISIS=20 Controller moves to block a transfer of funds saying the $8.5 billion=20 surplus has been cut more than half since January=20 By Mike Taugher TIMES STAFF WRITER=20 The energy crisis has bled California's once-touted budget surplus by more= =20 than half since taxpayers began buying electricity two months ago leading = a=20 top state finance official Wednesday to order an audit of the power purchas= es=20 and block Gov. Gray Davis' plan to transfer funds into a reserve account.= =20 A booming economy last year produced a budget surplus that totaled $8.5=20 billion in January. But that figure now stands at about $3.2 billion=20 according to Controller Kathleen Connell.=20 We started this year with a generous budget surplus Connell said in a=20 statement announcing her decision to block what Davis administration=20 officials described as a routine transfer of surplus money. The energy=20 crisis has taken much of that away and this transfer on top of the=20 electricity purchases would put the fund at risk.=20 Meanwhile the Davis administration released a report by David Freeman the= =20 governor's chief negotiator on power purchases on the progress of executin= g=20 long-term agreements meant to stabilize the power buys.=20 According to the report only about 40 percent of the electricity needed fr= om=20 the open market this year has been lined up. That means the state could be= =20 forced to continue buying a substantial amount of power on the highly=20 expensive spot market and further drain its coffers.=20 And a key regulatory panel is scheduled next week to issue a ruling that=20 would determine how quickly state funds will be replenished when it decides= =20 what portion of electric bill payments should be allocated to the state=20 treasury a decision that could include a rate increase to fully repay=20 taxpayers without further crippling the state's two largest electric=20 utilities.=20 The Public Utilities Commission also will consider whether it will force th= e=20 utilities to pay alternative energy producers whose shutdowns this week=20 contributed to blackouts.=20 Connell's action underscores a growing nervousness over the sheer volume of= =20 money that is being poured into energy buys despite the fact that state=20 officials plan to replenish the treasury with up to $10 billion in loans th= at=20 will be repaid by electricity consumers.=20 The state has committed to spending $4.2 billion to date to keep lights on= =20 since taxpayers were forced in mid-January to take over electricity buys fr= om=20 the financially crippled utilities Pacific Gas & Electric Co. and Southern= =20 California Edison. Tax money is going out at a clip of about $50 million a= =20 day.=20 High prices already have brought PG&E and Edison to the brink of bankruptcy= =20 and now the state's surplus is at risk according to Connell.=20 In addition to requesting an audit and announcing her intention to delay th= e=20 transfer to the reserve account Connell said she wanted the administration= =20 to send her office more information about the electricity purchases.=20 Davis' representatives questioned Connell's authority in trying to block th= e=20 funds transfer which they called a routine accounting procedure and accus= ed=20 her of making political hay.=20 It is not helpful to the taxpayers or ratepayers or the people who just wa= nt=20 to keep the lights on it isn't helpful to have the situation muddied like= =20 this said Sandy Harrison a Finance Department spokesperson. We're sorry= =20 it came up in this manner.=20 Connell and the administration have butted heads in recent weeks. The=20 controller wants to post details of the state's electricity purchases on he= r=20 Web site a plan that have been delayed under pressure from Davis because o= f=20 the governor's concerns that releasing those details will allow power=20 generators and traders to sell at higher prices.=20 Harrison said administration officials believe Connell lacks the authority= =20 either to block the funds transfer to a reserve account or to audit the sta= te=20 water resources department.=20 Two days of widespread blackouts this week show how vulnerable the power gr= id=20 is to financial glitches. Although several factors combined to produce the= =20 blackouts state power officials say the outages could have been avoided if= =20 the utilities were paying their bills to alternative energy producers.=20 Many of those producers including clean-burning natural gas power plants= =20 wind solar and geothermal energy developers shut down enough production t= o=20 spell the difference between grid reliability and blackouts Monday and=20 Tuesday.=20 Davis called the utilities' failure to pay bills to those producers known = as=20 qualifying facilities immoral. The QFs were either unable to buy gas fro= m=20 their suppliers or were frustrated with the utilities' failure to pay them.= =20 The utilities hoarded billions of dollars since November without paying an= y=20 money out said Davis spokesman Steve Maviglio. They've got the money --= =20 we're pulling the trigger to make them pay it.=20 The utilities however say they are doing all they can to conserve enough= =20 cash to continue operating. Together they owe the QFs about $1.5 billion.= =20 Next week the PUC is scheduled to consider whether to force the utilities = to=20 heed Davis' demand to pay the QFs and it might also decide how much of=20 ratepayers' bill payments will be used to refund taxpayers for power buys.= =20 PG&E says that under a formula proposed by the administration the water=20 resources department would receive about 40 percent of the money collected= =20 from ratepayers for power purchases.=20 The rest of that money about $240 million would have to be divided among= =20 QFs existing power contracts operating PG&E's nuclear and hydroelectric= =20 plants and what hour-by-hour purchases the utility still must make on the= =20 spot market according to PG&E spokesman John Nelson.=20 There isn't enough to do that he said.=20 That is making it increasingly likely that electric bills will be hiked=20 according to a growing chorus of officials and experts.=20 Unless rates are raised Nelson said the only entity that can absorb a lac= k=20 of payment or a partial payment is the state treasury. Cutting off any othe= rs=20 will lead to electricity becoming unavailable and more blackouts he said.= =20 If they do it under existing rates -- given that the existing pool of mone= y=20 is not enough -- who doesn't get paid or who gets a partial payment? Nelso= n=20 said. What's the only entity left with wiggle room? The state.=20 Rate hikes are also a sticking point in negotiations to bail out the=20 utilities through purchase of their transmission lines and other assets=20 Maviglio said.=20 They want rate increases of significant magnitude and we're not going=20 there he said.=20 WE CAN TRIM STORY HERE IF NECESSARY BUT KEEP TAGLINES AT BOTTOM=20 About one-third the electricity needed by the customers of California's thr= ee=20 major utility companies is produced by the companies themselves one-third= =20 comes from alternative producers who use environmentally friendly technique= s=20 and one-third is bought on the open market.=20 The state stepped in to buy the one-third needed from the open market after= =20 the utility companies ran out of cash and credit in January to make the=20 purchases themselves.=20 But that electricity has proven to be enormously expensive and Davis has= =20 planned to lower those prices by committing to long-term purchases.=20 Freeman's report on the progress of those long-term purchases dated March = 15=20 but released this week said the state has finalized 19 contracts with seve= n=20 suppliers and reached 25 additional agreements.=20 Mike Taugher covers the environment and energy. Reach him at 925-943-8324 o= r=20 mtaugher@cctimes.com.=20 Staff writer Andrew LaMar contributed to this story. --- --- ----------------------- Bill to pay small energy firms stalls By Kevin Yamamura Dale Kasler and Jim Sanders Bee Staff Writers (Published March 23 2001)=20 A quickly melded proposal that would assure payments for alternative energy= =20 suppliers whose money woes contributed to power blackouts this week stalled= =20 Thursday in a divided Legislature.=20 The state Senate passed the bill AB 8x but with Republicans balking it w= as=20 rejected in the Assembly along party lines. Assembly leaders said they may= =20 try again today.=20 For most of Thursday lawmakers scrutinized legislation they had overhauled= =20 the night before to include Gov. Gray Davis' plan to force utilities to pay= =20 solar wind and small gas-fired suppliers. Such providers called qualifie= d=20 facilities or QFs provide more than 20 percent of California's=20 electricity and their shutdowns were partly to blame for rolling blackouts= =20 Monday and Tuesday.=20 Under the Democratic governor's plan the state Public Utilities Commission= =20 would determine prices at which alternative generators may sell power but= =20 legislation is needed to authorize the PUC action.=20 Lawmakers faced time pressures Thursday. They wanted to pass the bill quick= ly=20 so the PUC could act next week and legislators could embark Monday on an=20 annual three-day lobbying trip in Washington D.C.=20 Assembly Speaker Robert Hertzberg D-Sherman Oaks said the Republicans'=20 rejection of AB 8x could jeopardize more than $4 billion the state has spen= t=20 or allocated for electricity during the energy crisis.=20 Hertzberg said producers of alternative energy which are owed more than $1= =20 billion have threatened to drag debt-ridden utilities into involuntary=20 bankruptcy if the Legislature failed to pass the measure.=20 They said it and I believe it Hertzberg said. If such bankruptcies occu= r=20 he added the state with its multibillion-dollar debt would become just=20 another creditor in a pile of creditors.=20 But Assembly Republican leader Bill Campbell of Villa Park said the=20 finger-pointing is unfair. Passage of AB 8x would not necessarily prevent= =20 bankruptcies he said.=20 One alternative energy provider won a crucial court ruling Thursday that=20 staved off at least for a while threats by some creditors to haul one or= =20 both big utilities into bankruptcy court for nonpayment of bills.=20 CalEnergy Co. Inc. won the right to sell its geothermal power which was=20 contracted to Southern California Edison on the open market. CalEnergy sai= d=20 it is owed $45 million by Edison.=20 If the Imperial County judge hadn't ruled in CalEnergy's favor the company= =20 and seven other QFs were fully prepared to file an involuntary bankruptcy= =20 petition against Edison this morning said David Sokol chief executive of= =20 CalEnergy's parent MidAmerican Energy Holdings Co. of Des Moines Iowa.=20 That is currently off the table.=20 An involuntary bankruptcy proceeding would take California's energy crisis= =20 into uncharted territory although a bankruptcy judge would have the leeway= =20 to reject the filing.=20 Freed from its contract with Edison CalEnergy will move to sell its=20 electricity to people who will pay for it Sokol said.=20 Besides calming the bankruptcy movement temporarily the ruling also could= =20 prompt other alternative energy providers -- hundreds of which have shut do= wn=20 because of nonpayment by Edison and Pacific Gas and Electric Co. -- to foll= ow=20 CalEnergy's example and find other buyers for their electricity said Gary= =20 Ackerman of the Western Power Trading Forum an association of generators.= =20 Assembly Republicans said they felt the Senate's decision to package three= =20 important energy issues into a single bill was an attempt to ramrod=20 legislation through both houses.=20 We have to stand and say no Campbell said during floor debate.=20 Besides determining alternative generator payments the bill would change a= n=20 earlier law by capping the value of bonds the state may sell for power=20 purchases at $10 billion. It also would extend to large businesses an=20 existing rate cap in the San Diego Gas and Electric Co. service area.=20 And it would earmark a portion of rates paid by utility customers to fund t= he=20 state's ongoing power purchases. Within a week the state will have spent= =20 $4.2 billion on power since January.=20 Without the bill some legislators fear Pacific Gas and Electric and=20 Southern California Edison would be reimbursed before the state.=20 They have got (some) gall to go to the PUC and say they're going to go to= =20 court to keep our money -- to keep our money to pay off their creditors= =20 said Senate President Pro Tem John Burton D-San Francisco.=20 Most of the bill's controversy however centered on how the PUC would trea= t=20 gas-fired alternative generators.=20 The commission issued a revised draft decision Wednesday that would impose= =20 prices for qualifying facilities at $79 a megawatt-hour for five-year=20 contracts or $69 a megawatt-hour for 10 years.=20 But those producers that use natural gas -- representing about two-thirds o= f=20 the alternative energy providers in California -- spent Thursday arguing th= at=20 Davis' plan to rescue them would all but guarantee that they would go out o= f=20 business instead.=20 The plan -- ordering Edison and PG&E to pay them a fixed price for their=20 power -- would set rates well below the cost of natural gas they said.=20 Democratic lawmakers tried to assure such producers that the PUC would set= =20 prices that make business sense even obtaining a letter to that effect fro= m=20 Loretta Lynch who heads the commission.=20 Davis has vowed to fine Edison and PG&E if they don't pay alternative=20 producers for future deliveries. But Sokol said his company isn't convinced= =20 that Edison will pay.=20 Calling Edison a confrontive in-your-face nasty organization Sokol sai= d=20 the utility was sitting on $2 billion and not paying its bills. Edison i= n=20 a Securities and Exchange Commission filing Thursday said its debts outwei= gh=20 its cash reserves by $722 million.=20 The Senate sent the Assembly two other bills that deal specifically with=20 supply and demand. The first SB 5x would spend about $1 billion on energy= =20 conservation and low-income assistance programs. The other SB 28x would= =20 streamline siting procedures for power plant construction.=20 In separate energy-related matters Thursday the Assembly approved:=20 AB 21x which would allow businesses industries or other electrical=20 customers to negotiate private contracts with energy providers.=20 Nine energy bills designed to generate or save 665 megawatts of electricity= =20 -- including 345 megawatts this summer. One megawatt is enough electricity = to=20 light about 1000 homes.=20 The state put power emergencies behind it after dropping out of a Stage 1= =20 alert late Wednesday. The California Independent System Operator which=20 manages the state's power transmission grid was predicting no further aler= ts=20 this week. It expected cooling temperatures and a regular dropoff in=20 electricity use on Fridays to lessen demand at the same time that more pow= er=20 plants were returning to service.=20 Bee staff writer Carrie Peyton contributed to this report.=20 --- House panel ends energy hearings -- will it step in? By David Whitney Bee Washington Bureau (Published March 23 2001)=20 WASHINGTON -- A key House panel wrapped up a series of hearings on the=20 California electricity crisis Thursday and now will decide whether to come = to=20 the state's aid with legislation.=20 But the panel's Texas chairman made clear that West Coast price controls=20 won't be on the table.=20 Caps will not be in anything I am submitting said Rep. Joe Barton=20 chairman of the House Energy and Commerce Committee's energy and air qualit= y=20 subcommittee.=20 Some form of federal controls to hold down escalating wholesale prices this= =20 summer because of power shortages has been the most frequent appeal of=20 witnesses who testified before the panel during roughly 30 hours of hearing= s=20 over five days.=20 Such controls have been sought by the governors of California Oregon and= =20 Washington. As power shortages are forecast for other regions states like= =20 New York also have appealed for temporary price controls to halt gouging.= =20 But the Federal Energy Regulatory Commission which is responsible for=20 enforcing reasonable wholesale rates under the Federal Power Act has refus= ed=20 to impose them and the Bush administration is bolstering that decision by= =20 opposing any legislation that would compel such action.=20 Barton in a brief hallway interview declined to say what other legislativ= e=20 remedies he might propose to address the worsening California situation.=20 He said he expects to submit a list of ideas to the White House today and= =20 after receiving comment on it sit down with other committee Republicans an= d=20 Democrats next week to see if any legislation is in order.=20 If we are going to do anything to help California or the West this summer= =20 we have to make it law within the next month or six weeks Barton said.=20 Even the panel's senior Democrat Virginia Rep. Rick Boucher was urging a= =20 careful and deliberate approach to the California crisis which he said w= as=20 largely of the state's own making.=20 There are steps Congress might take to provide some help to the West such = as=20 more money for conservation and relaxed federal regulation of air quality= =20 standards. That would permit older more polluting generators to operate=20 through a long hot summer when electricity demand could exceed supply by= =20 about 3000 megawatts roughly the amount needed to power 3 million homes.= =20 But Alan Lloyd chairman of the California Air Resources Board said power= =20 production already is being maximized without sacrificing air quality.=20 Simply put no essential electricity generation has been curtailed due to= =20 air emission limitations he said. California's programs to protect publi= c=20 health are not major factors in the electricity shortages experienced to=20 date.=20 The concern is that as shortages turn into more rolling blackouts wholesal= e=20 prices will jump even higher and steadily bleed the economies of California= =20 and the West Coast.=20 William L. Massey the lone member of the energy regulatory commission who= =20 supports price controls said at a Tuesday hearing that without them the We= st=20 Coast faces economic catastrophe this summer.=20 It was evident from the comments of some Republicans that they think their= =20 party could capitalize politically from a difficult summer.=20 If they had a bad summer it could show up in the polls said Rep. Charli= e=20 Norwood R-Ga. And sometimes that's not a bad idea.=20 One of the most dramatic exchanges during the weeklong hearings came Thursd= ay=20 with S. David Freeman the former general manager of the Sacramento Municip= al=20 Utility District who now heads the Los Angeles Department of Water and Powe= r.=20 He recently was named Gov. Gray Davis' chief negotiator with power generato= rs=20 for long-term contracts to stabilize future deliveries.=20 Don't feel sorry for California Freeman said. We're going to come out o= f=20 this stronger than ever.=20 But Freeman said it will be a year or two before all the fixes are in place= =20 and in the meantime the region desperately needs Congress' help to force th= e=20 FERC into controlling wholesale prices which witnesses said are likely to= =20 rise from $7 billion last year to as much as $70 billion or more this year.= =20 We recognize that the current administration and various legislators have= =20 their own opinion as to the California situation Freeman said. But my=20 personal plea is that if the federal government is not going to help us th= e=20 least it should do is refrain from legislation that attempts to tell us wha= t=20 to do.=20 Barton perked up at that idea.=20 Leave California alone huh? Barton said. That might be a good motto.= =20 --- --------------------- Dan Walters: Crisis deepens: politicos panic (Published March 23 2001)=20 That choking sound you hear is California's political class shifting into= =20 near-panic mode as it realizes that the energy crisis is on the verge of=20 becoming a full-scale meltdown with utilities forced into bankruptcy and= =20 consumers hammered by severe and prolonged power blackouts and soaring=20 electricity bills.=20 The Legislature which had been content to allow Gov. Gray Davis to handle= =20 the crisis on his own suddenly came to life Thursday jolted by this week'= s=20 unexpected rolling blackouts and threats by creditors to force the utilitie= s=20 into bankruptcy court. Lawmakers quickly fashioned a basketful of legislati= on=20 aimed -- or so they hope -- at increasing power supplies promoting=20 conservation and relieving the financial pressure on utilities and=20 electricity generators. But it may be too little too late -- and Davis and= =20 other politicians are already pointing fingers of blame aware that a=20 political price will be paid if the apocalypse strikes.=20 While Davis chants his mantra that he inherited a fatally flawed utility=20 deregulation scheme from predecessor Pete Wilson Republicans are blaming= =20 Davis for moving too slowly after the crisis first surfaced last summer an= d=20 even some of Davis' fellow Democrats are distancing themselves from the=20 governor.=20 Deregulation was a product of a Republican governor a Republican author a= nd=20 a Republican PUC (Public Utilities Commission) that was unduly impatient= =20 Davis said at one point this week as the Capitol buzzed with private=20 negotiations and public posturing.=20 A day later however state Controller Kathleen Connell a Democrat issued= a=20 warning that Davis' power purchases running at $50 million a day had=20 already drawn down state budget reserves by nearly two-thirds and she=20 refused to authorize additional transfers. It was a direct shot by Connell = at=20 Davis an old rival and came just a day after the governor had endorsed a= =20 Connell foe Antonio Villaraigosa in the duel for mayor of Los Angeles.=20 Other Democrats didn't join Connell's direct challenge to Davis but there= =20 is nevertheless a growing concern among Democratic legislators that the= =20 power purchases are costing many billions of dollars more than the governor= =20 had projected and could place the state budget in jeopardy. They're nervous= =20 because Davis has refused to reveal even to legislators exactly how much= =20 power the state is buying each day and how much it is paying.=20 From the few details that have been disclosed it's clear that the state is= =20 spending about $1.5 billion a month which would wipe out the state's=20 reserves by midsummer. It's also becoming increasingly clear that Davis=20 probably can't make good on his promise to avoid major consumer rate=20 increases unless the state is willing to plunge deeply and semi-permanentl= y=20 into debt to underwrite wholesale costs or unless federal authorities orde= r=20 huge refunds from power suppliers.=20 Rates in areas served by private utilities have risen only slightly while t= he=20 costs first to utilities and later to the state soared. Data from the=20 administration and utilities when collated indicate that the state is in= =20 line to collect just 20 cents for every dollar it's spending on power=20 purchases and the gap will increase as summer heat drives up demand.=20 Privately some economists say that private utility rates will have to rise= =20 33 percent to 50 percent to cover costs of current power supplies plus=20 utilities' past debts to generators and the state's purchase of the=20 utilities' transmission system if that deal is made final.=20 It's ultimately going to break down and the ratepayer is going to pay for= =20 it one way or the other Republican Sen. Jim Battin said during one of=20 Thursday's many committee hearings on utility legislation. No one disagreed= =20 with him.=20 DAN WALTERS' column appears daily except Saturday. Mail: P.O. Box 15779= =20 Sacramento CA 95852 phone (916) 321-1195 fax: (781) 846-8350 E-mail: dwalters@sacbee.com Recent columns: --- Report says power wholesalers overcharged state $6 billion=20 By Don Thompson ASSOCIATED PRESS=20 March 22 2001=20 SACRAMENTO =01) Electricity wholesalers have overcharged California more th= an=20 $6.2 billion by manipulating the energy market according to a report by an= =20 economist working for power grid managers.=20 The Independent System Operator planned to file the findings with federal= =20 regulators Thursday and ask for a refund said ISO spokesman Patrick=20 Dorinson.=20 In a related development the state auditor said Thursday that the state's= =20 1996 deregulation law encouraged both buyers and sellers of electricity to= =20 manipulate wholesale prices to their advantage by underestimating both=20 supply and demand.=20 Disappearing state surplus sparks alarm=20 Outages darken economic outlook in state some say=20 Out-of-state generators question power regulators' authority=20 Allegheny Energy makes big California connection=20 Enron stock slides despite earnings reassurance=20 California's electricity crisis at-a-glance=20 ?=20 The auditor's report lays out what it calls a complex combination of=20 deficiencies and misjudgments it says led to the state's power problems.=20 The ISO's filing came a day after the state controller complained that a=20 relentless energy crisis is jeopardizing California's financial future.=20 Since May the companies manipulated the market by bidding at excessive=20 prices effectively withholding supplies or by not bidding at all when they= =20 had generation capability available according to the ISO study.=20 ISO Director of Market Analysis Anjali Sheffrin presented the findings at a= n=20 energy conference at the University of California Berkeley last week.=20 The companies have denied overcharging California and have said they expect= =20 the Federal Energy Regulatory Commission will determine their prices were= =20 justified.=20 In a burst of activity after weeks of delay both houses of the Legislature= =20 approved bills Thursday designed to ease the energy crisis.=20 The state Senate approved measures to encourage energy conservation and spe= ed=20 up power plant construction.=20 Topping that the Assembly sent the Senate 14 energy-related bills includi= ng=20 $455 million in loans and grants to encourage energy efficiency and=20 conservation and alternative energy projects by this summer.=20 One of the Assembly bills would require new energy plants approved by the= =20 state to sell their power within California before they offer it to other= =20 states.=20 The (California) Energy Commission says for every day we delay this bill= =20 there are 20 megawatts that could be saved that we're not saving said sta= te=20 Sen. Byron Sher D-Stanford as senators voted 28-10 to send his conservati= on=20 measure to the Assembly.=20 Senators also approved another Sher bill speeding up the siting of power=20 plants. It went to the Assembly on a 37-1 vote.=20 Meanwhile a federal judge issued a preliminary injunction Wednesday orderi= ng=20 one of the companies named in the ISO filing Reliant Energy Services to= =20 continue selling to California despite its fear that it will not be paid.= =20 U.S. District Judge Frank C. Damrell Jr. said Californians were at risk of= =20 irreparable harm if Reliant stopped selling power to the ISO which buys at= =20 the last minute on behalf of utilities to bolster supplies and try to fend= =20 off blackouts.=20 Such blackouts struck the state twice this week shutting off power to=20 hundreds of thousands of people from San Diego to Oregon snarling traffic= =20 and shutting down businesses.=20 The state remained free of any power alerts Thursday morning as power=20 reserves stayed above 7 percent.=20 Damrell dismissed Reliant's attempt to force the state Department of Water= =20 Resources to back the ISO's purchases for the state's two biggest utilities= =20 Southern California Edison and Pacific Gas and Electric Co.=20 The judge said he had no authority to force the DWR to pay for that power.= =20 The utilities have been denied credit after amassing billions of dollars in= =20 debt paying high prices for power that the state's energy deregulation law= =20 prevents them from passing on to consumers.=20 Gov. Gray Davis has said the state isn't responsible for purchasing the=20 costly last-minute power the ISO buys for Edison and PG&E despite a law=20 authorizing state power purchases on the utilities' behalf.=20 ISO attorney Charles Robinson said the ruling gives ISO operators a tool t= o=20 assist them in keeping the lights on in California.=20 Had the decision gone the other way one could expect other generators to= =20 simply ignore emergency orders Robinson said.=20 Damrell's preliminary injunction will remain in effect until the Federal=20 Energy Regulatory Commission rules on the matter.=20 In another development Wednesday state Controller Kathleen Connell=20 complained that the energy crunch is imperiling California's financial=20 health.=20 Connell said the state's power buying on behalf of Edison and PG&E is gutti= ng=20 its budget surplus. Since the state started making emergency power buys in= =20 January the surplus has fallen from $8.5 billion to about $3.2 billion sh= e=20 said.=20 Connell ordered an audit of the state's power buying saying Davis is=20 withholding key financial information from her office and the Legislature.= =20 She is also refusing a request by Davis and the Legislature to transfer $5.= 6=20 billion into a rainy day fund she said was set up to impress Wall Street = as=20 the state prepares to issue $10 billion in revenue bonds to cover its power= =20 buying.=20 Transferring the money would leave the state general fund $2.4 billion in= =20 debt Connell said.=20 Sandy Harrison spokesman for the state Department of Finance and Keely=20 Bosler of the Legislative Analyst's Office said such transfers are routine= =20 and required by law.=20 They put the state's budget surplus at $5.6 billion.=20 Davis spokesman Steve Maviglio dismissed the criticism.=20 Political grandstanding doesn't generate one more kilowatt of energy for= =20 California in this time of emergency he said.=20 Connell is a candidate for mayor of Los Angeles in next month's election.= =20 The ISO study meanwhile covered five major in-state power suppliers =01)= =20 Reliant Dynegy Williams/AES Duke Energy and Mirant as well as 16 power= =20 importers. All deliver power to customers of Edison PG&E and San Diego Gas= &=20 Electric Co. the state's three largest investor-owned utilities.=20 All overcharged but some excessively and some by moderate amounts said= =20 ISO's Sheffrin.=20 According to the report the overcharging took place beginning last May wh= en=20 the energy crisis began and continued through last month.=20 During that time according to the report energy suppliers commonly offere= d=20 their electricity at twice the amount it cost them to produce.=20 FERC member William L. Massey said he wasn't shocked to hear the amount=20 overcharged added up to more than $5 billion.=20 Prices over the past 10 months in California have greatly exceeded the=20 federal standards of just and reasonable prices and I think they have=20 exceeded the standards by possibly billions of dollars he said.=20 Chuck Griffin spokesman for Atlanta-based Mirant said the company would=20 justify their charges to FERC officials.=20 I think we're missing sometimes just how basic the problem is in Californi= a.=20 Supply and demand are out of whack and some basic rules of economics kick i= n=20 when that happens he said.=20 --- ------------- Disappearing state surplus sparks alarm=20 Controller puts hold on transfer of $5.6 billion to reserve funds By Karen Kucher and Ed Mendel=20 UNION-TRIBUNE STAFF WRITERS=20 March 22 2001=20 The state's general fund surplus has dropped to $3.2 billion from $8.5=20 billion since January largely because California's power purchases are=20 devouring the money state controller Kathleen Connell said yesterday.=20 Connell said she wants to see more documentation about state power spending= =20 before approving the transfer of $5.6 billion from the general fund to a=20 special reserve fund requested by Gov. Gray Davis.=20 Connell said the state would have to borrow $2.4 billion to cover the=20 transfer.=20 Report says power wholesalers overcharged California $5.5 billion=20 Outages darken economic outlook in state some say=20 Out-of-state generators question power regulators' authority=20 Allegheny Energy makes big California connection=20 Enron stock slides despite earnings reassurance=20 California's electricity crisis at-a-glance=20 ?=20 We started this year with a generous budget surplus. The energy crisis has= =20 taken much of that away and this transfer on top of the electricity=20 purchases would put the (general) fund at risk Connell said in a statemen= t.=20 Her action came on a day when state power supplies improved. After two days= =20 of forced outages this week no rolling blackouts were ordered yesterday.= =20 Several power plants came back on line and imports from the Pacific Northwe= st=20 provided enough electricity to meet demand yesterday said Stephanie=20 McCorkle a spokeswoman with the California Independent System Operator=20 which manages most of the state's power grid.=20 Gradually more (electricity) generation comes on every day McCorkle said= .=20 By Monday we should see somewhere around 2200 megawatts back in service= =20 that was not on this Monday. That's if no other generation falls off.=20 Meanwhile Connell's move took some by surprise.=20 A spokesman for the state Department of Finance said Connell is denying a= =20 routine transfer that is required by law. It was just a routine accounting= =20 measure that we didn't anticipate becoming controversial Sandy Harrison= =20 said.=20 Connell announced the denial of the transfer a day after Davis endorsed one= =20 of her opponents former Assembly Speaker Antonio Villaraigosa in the race= =20 for Los Angeles mayor.=20 Connell who monitors California's cash flow said she was deeply concerne= d=20 about putting the state's general fund in a deficit situation in light of t= he=20 energy crisis.=20 About two months ago the state began spending about $50 million a day to b= uy=20 power after Pacific Gas and Electric and Southern California Edison nearly= =20 went bankrupt. It is also purchasing power for customers of San Diego Gas a= nd=20 Electric.=20 The Davis administration said earlier this week it soon will begin spending= =20 an additional $500 million on power purchases bringing the total to $4.2= =20 billion.=20 As that staggering sum continues to grow the state won a court battle with= =20 an electricity supplier yesterday. A federal judge in Sacramento sided with= =20 the state and ordered the wholesaler to continue selling to California=20 despite its fear that it will not get paid.=20 Judge Frank C. Damrell Jr. said Californians were at risk of irreparable ha= rm=20 if Reliant Energy Services stopped selling power to the Independent System= =20 Operator. The ISO acquires last-minute power on behalf of utilities to fill= =20 gaps in supply to try to fend off blackouts.=20 Damrell dismissed Reliant's attempt to force the state Department of Water= =20 Resources to back the ISO's purchases for the state's two biggest utilities= .=20 The judge said he had no authority to force the DWR to pay for the power.= =20 Davis has said the state isn't responsible for purchasing the costly=20 last-minute power the ISO buys for Edison and PG&E despite a law authorizi= ng=20 state power purchases on the utilities' behalf.=20 Meanwhile those who manage the power grid say the forecast for power=20 supplies this week looks good although conditions can change quickly.=20 ISO managers continue to stress the importance of conservation. Utility=20 customers across the state conserved about 900 megawatts of power Tuesday= =20 which kept blackouts from being ordered that night.=20 As the power crisis worsened this week ISO managers wished aloud that they= =20 still could rely on business customers to shut down in exchange for lower= =20 energy rates.=20 Such interruptible customers saved as much as 2100 megawatts last spring= =20 a figure that dropped to about 1700 last summer and 1400 at the end of th= e=20 year. But in January the state Public Utilities Commission told utilities= =20 they could no longer impose fines on business customers who refuse to shut= =20 down when asked.=20 ISO managers realize the program was harming businesses with frequent=20 interruptions of service -- but they still miss having that option McCorkl= e=20 said.=20 It would have made an enormous difference but at the same time we=20 understand the impact it was having on businesses McCorkle said. --- -------------- Outages darken economic outlook in state some say=20 By Dean Calbreath? UNION-TRIBUNE STAFF WRITER=20 March 22 2001=20 Until this week the San Diego Regional Chamber of Commerce was predicting= =20 that the county was well-insulated from the growing threat of economic=20 recession.=20 But that was before the lights went out in the chamber's downtown=20 headquarters Monday.=20 Working by window light in his darkened office chamber economist Kelly=20 Cunningham rapidly erased his previous projections for 3.5 percent growth f= or=20 San Diego County. Cunningham now feels the local economy could fall into a= =20 recession thanks to its shaky supply of energy.=20 Report says power wholesalers overcharged California $5.5 billion=20 Disappearing state surplus sparks alarm=20 Out-of-state generators question power regulators' authority=20 Allegheny Energy makes big California connection=20 Enron stock slides despite earnings reassurance=20 California's electricity crisis at-a-glance=20 ?=20 Blackouts are very disruptive to the economy Cunningham said. A busines= s=20 can absorb rising energy prices by cutting costs or raising its own prices.= =20 But an energy shutoff is much less predictable. It cuts into productivity.= =20 Those sentiments are being echoed throughout California as business leader= s=20 and economists worry that rolling blackouts will darken the state's=20 previously glowing economy.=20 At the University of California Los Angeles for instance leading financia= l=20 theorists will meet April 4 to discuss the question Can California grow in= =20 the dark? Although the topic was chosen before the recent string of power= =20 outages the blackouts have given the issue new urgency.=20 These blackouts are not just a single episode said UCLA economist Tom=20 Lieser. They are a bridge to what will happen this summer. If we don't fal= l=20 into a recession in the second half of the year we will fall pretty close.= =20 Tapan Munroe an economist formerly with Pacific Gas and Electric this wee= k=20 crossed out his projection for 2 percent statewide growth. After blackouts= =20 rolled toward his consulting offices in the Bay Area city of Moraga Munroe= =20 decided the state will be lucky if it manages zero growth.=20 I'm a pretty optimistic guy by nature but this has been sobering Munroe= =20 said. On Tuesday one restaurant alone in San Francisco lost $20000.=20 Multiply that by all of the businesses that lost power in the state and=20 you've got a serious problem.=20 Two days of blackouts in San Diego County have hurt businesses large and=20 small. Among the industries under threat is the local biotechnology sector= =20 which requires a steady supply of electricity to power areas of laboratorie= s=20 that must remain temperature-controlled and sterile.=20 Continued blackouts could have a huge impact not only in dollars but=20 multiple millions of dollars said Tom Oster vice president of operations= =20 for BioCom the leading trade organization for the more than 200 biotechs i= n=20 San Diego County.=20 Idun Pharmaceuticals a biotech near La Jolla Village Drive that has 67=20 employees had its power cut for about 40 minutes Tuesday. Though the compa= ny=20 has a back-up generator some segments of its laboratories and lab equipmen= t=20 were not supported by it. Chemists also had to turn off some sensitive lab= =20 equipment to avoid the possibility of a damaging power surge once the=20 blackout was over.=20 We're not in a position as a small company to back up the whole facility= =20 said Steven Mento Idun's chief executive. We haven't done a survey yet to= =20 determine whether we had losses either in experiments or equipment damaged= =20 -- but we're hoping because the blackout was so short that damage will be= =20 minimal.=20 Mento said rolling blackouts coupled with continuing high energy costs=20 could cripple many small biotechs -- and even take a bite out of bigger mo= re=20 established companies.=20 We generate new compounds in controlled environments on a daily basis and= =20 when power goes off you can lose samples because of contamination and other= =20 issues Mento said. We are fortunate that our losses would be in having t= o=20 repeat an experiment -- but this could be really critical for companies wit= h=20 drug manufacturing and issues of quality control.=20 The wireless firms along Sorrento Valley have not been immune from blackout= s.=20 The lights went out at Qualcomm early this week although executives declin= ed=20 to comment about the impact.=20 No blackouts hit the big shipbuilding operations on the waterfront this wee= k.=20 But the National Steel and Shipbuilding Co. -- one of San Diego's largest= =20 employers -- already experienced a voluntary loss of power this year its= =20 first since World War II. Since the shipyard does not have its own power=20 supply NASSCO executives fear the effect of unplanned outages.=20 Our average payroll totals half a million dollars a day said NASSCO=20 spokesman Jim Scott. When you have a day's work disrupted that can be=20 pretty serious. We're currently in discussions about the possibility of=20 buying from independent power suppliers or setting up a power plant of our= =20 own.=20 Small businesses which constitute the bulk of employment in San Diego=20 County were hurt by disruptions as well -- costing them vital revenue at a= =20 time when their power bills have skyrocketed.=20 At Fantastic Sam's a hair salon in Chula Vista Angelica Alcala estimated= =20 that business dropped 60 percent when the blackouts hit Tuesday. Among othe= r=20 things Alcala had to alter her planned haircuts because she was relying on= =20 scissors instead of electric clippers.=20 At the Family Fun Center in El Cajon the management gave vouchers or refun= ds=20 to the 15 or so video-game players who were in the midst of killing aliens = or=20 fighting ninja warriors as the power went down.=20 Papa John's Pizza estimates that it may have lost several thousand dollars = in=20 business after six stores were blacked out Monday and four others lost powe= r=20 Tuesday. Brian Mills who runs 23 Papa John's stores in the county said hi= s=20 main concern was shutting down the computers so they would not be damaged b= y=20 a power surge when the electricity was restored.=20 Paul Ecke III a member of the West Coast advisory panel for the Federal=20 Reserve said the potential impact of the energy crisis is worse than any= =20 downturn in the stock market.=20 Ecke who runs the Paul Ecke Ranch flower operation in Encinitas said the= =20 crisis could be particularly harmful for the state's agricultural sector= =20 since farmers need electricity to pump water and natural gas to heat=20 greenhouses.=20 What I'm really worried about is the energy thing is going to cast a shado= w=20 on California he said. If you're a business person thinking about moving= =20 to California right now you're probably not going to do it because you're= =20 not sure you're going to have your lights on this summer.=20 Besides the disruption to businesses the energy crisis is also hurting the= =20 pocketbooks of hourly workers who have been sent home during the crisis.=20 Under state law employers are free to send hourly workers home without pay= =20 during such emergencies although salaried workers must still be paid.=20 Susan Kemp an attorney with the California Chamber of Commerce said there= =20 are ways of minimizing the impact on hourly workers.=20 You have to look at what time it is when the blackout occurs and how long= =20 you think it's going to last Kemp said. If it's around a meal time you= =20 might send the workers out for a longer meal period if you think it's going= =20 to be an hour or hour and a half delay.=20 But the potential for losing wages doesn't sit well with the hourly workers= .=20 When you get sent home early and lose your wages you have even less money= =20 to pay your inflated energy bills said an hourly worker who was sent home= =20 during Monday's blackout.=20 --- ---------- Out-of-state generators question power regulators' authority=20 By Karen Gaudette ASSOCIATED PRESS=20 March 22 2001=20 SAN FRANCISCO =01) At least three major out-of-state electricity generators= are=20 challenging the authority of the California Public Utilities Commission to= =20 investigate whether they deliberately reduced power supplies to drive up=20 prices.=20 The PUC has asked for power plant maintenance records as it tries to=20 determine whether Duke Energy Dynegy Inc. Mirant Corp. and other=20 wholesalers have manipulated the energy market at California's expense.=20 At issue is who ultimately controls oversight of in-state plants that provi= de=20 most of California's electricity. The plants once owned by the state's=20 largest utilities were sold off as part of the state's 1996 attempt at=20 deregulation.=20 Report says power wholesalers overcharged California $5.5 billion=20 Disappearing state surplus sparks alarm=20 Outages darken economic outlook in state some say=20 Allegheny Energy makes big California connection=20 Enron stock slides despite earnings reassurance=20 California's electricity crisis at-a-glance=20 ?=20 PUC President Loretta Lynch said the public deserves to know whether=20 generators have unnecessarily taken plants off-line to create artificial=20 shortages forcing the utilities and now state bureaucrats to buy much high= er=20 priced power on the spot energy market.=20 What I do know is we have historically high levels of outages across the= =20 board Lynch told The Associated Press. Dynegy and Duke have been fightin= g=20 the PUC in the PUC's quest to obtain documents about these outages.=20 The PUC has the authority to regulate facilities within its borders she=20 added. It doesn't matter where the headquarters of the company is.=20 Duke based in North Carolina says it does matter =01) and that since it a= nd=20 other wholesalers aren't headquartered in California the PUC can't require= =20 it to turn over the maintenance records.=20 We have not given them proprietary information because they do not regulat= e=20 us said Duke's spokesman Tom Williams.=20 Dynegy did not return calls for comment Wednesday.=20 The PUC also faces a new challenge in the legislature. A bill sponsored by= =20 Assemblywoman Carole Migden D-San Francisco which would have granted the= =20 PUC greater inspection authority over out-of-state generators was amended= =20 this month to grant the authority to Independent System Operator instead.= =20 The ISO has managed the delivery of energy through most of the state's powe= r=20 grid but historically has done little regulating and has had no policing=20 authority.=20 This board created during the state's 1996 attempt at deregulation was=20 redesigned in January. Now it has a five-member board appointed by Davis= =20 replacing a 26-member ISO board composed of utility executives marketers= =20 power plant owners and others.=20 The latest version of Migden's bill requires wholesalers to report monthly = to=20 the ISO about any plants that are off-line or working at reduced capacity= =20 and gives the ISO power to audit these reports.=20 But because the ISO board historically has made key decisions behind closed= =20 doors and is exempt from certain open-government regulations government=20 watchdogs are outraged by the switch.=20 The PUC's been no friend of ratepayers but at least under the constitutio= n=20 and state law they're required to conduct their process in the open and the= =20 public can intervene said Harvey Rosenfield of the Foundation for Taxpaye= r=20 and Consumer Rights.=20 Davis ordered last month that the ISO take the lead among state agencies to= =20 ensure adequate energy supplies. Alan LoFaso an aide to Migden said the= =20 amendment follows Davis' lead.=20 Both LoFaso and the governor's spokesman Steve Maviglio downplayed the=20 change. I don't know if we have a preference as to which state agency get= s=20 the authority to continue the probe Maviglio said.=20 The challenge by Duke Energy Houston-based Dynegy Inc. and Mirant Corp. of= =20 Atlanta came in filings March 12 asking for a rehearing of the PUC's Februa= ry=20 resolution reasserting its legal authority to examine the books accounts= =20 memoranda contracts and records of generators selling energy to utilities= =20 already subject to PUC regulation.=20 Those utilities include Pacific Gas and Electric Co. and Southern Californi= a=20 Edison Co. which have been nearly bankrupted buying power from wholesalers= =20 as well as the financially troubled San Diego Gas and Electric -- Allegheny Energy makes big California connection=20 ASSOCIATED PRESS=20 March 22 2001=20 HAGERSTOWN Md. =01) Allegheny Energy Inc. said Thursday it has agreed to s= ell=20 $4.5 billion worth of power to California's electricity-purchasing agency= =20 over the next 10 years.=20 The company said the contract call for Allegheny to provide up to 1000=20 megawatts that the Hagerstown-based company has secured from western=20 generating plants through its new energy trading division Allegheny Energy= =20 Global Markets =01) formerly Merrill Lynch Global Energy Markets.=20 This is a win-win for both the state of California and Allegheny Energy. I= t=20 provides a long-term source of fixed-price energy and should help to=20 stabilize prices in California said Michael P. Morrell president of the= =20 Allegheny Energy Supply division.=20 --- ----------- Judge Frees Small Firm From Edison Contract=20 By KEN ELLINGWOOD and DAN MORAIN Times Staff Writers=20 ?????EL CENTRO--California's balance of electrical power shifted slightly= =20 Thursday when an Imperial County judge temporarily freed a small geothermal= =20 energy producer from its contract with Southern California Edison allowing= =20 it to sell power on the open market. ?????The ruling by Superior Court Judge Donal B. Donnelly could lead to a= =20 mass exodus by hundreds of small energy producers that have been selling=20 power to the state's financially troubled utilities for months without=20 getting paid. ?????At the same time it may have staved off plans by a group of the small= =20 generators to send Edison into involuntary bankruptcy as early as today. ?????In Sacramento energy legislation pushed by Gov. Gray Davis passed in= =20 the state Senate but foundered in the Assembly. The measure was intended to= =20 ensure that the state gets repaid for the electricity that it has been buyi= ng=20 on behalf of Edison and Pacific Gas & Electric which say they lack the cas= h=20 and credit to purchase power. The bill also was supposed to guarantee that= =20 the small alternative energy producers--which together provide nearly a=20 third of the state's power--get paid. But Assembly Republicans opposed it= =20 saying it hadn't been given sufficient scrutiny. ?????The impact of the small producers was made clear in Imperial County= =20 where Edison's failure to pay CalEnergy the county's biggest property=20 taxpayer had outsize implications. CalEnergy had put county officials on= =20 notice that it was about to miss a $3.8-million property tax payment. The= =20 uncertainty had prompted the tiny Calipatria Unified School District to=20 postpone a bond issue for badly needed school repairs. ?????Among CalEnergy Chairman David Sokol's first acts after the judge's=20 ruling Thursday was to promise Imperial County Supervisor Wally J. Leimgrub= er=20 that the company would pay its property taxes on time. ?????That is great news Leimgruber said. ?????Within hours of its court victory CalEnergy had stopped transmitting= =20 geothermal power to Edison and begun selling it to El Paso Energy a=20 marketing company that purchased the energy at prevailing rates and resold = it=20 on the spot market. ?????Some of the more than 700 other small energy producers in the state sa= id=20 they were considering similar action against Edison and Pacific Gas &=20 Electric. ?????We absolutely need the right to sell to third parties said Dean=20 Vanech president of Delta Power a New Jersey company that owns five small= =20 gas-fired plants in California and is owed tens of millions of dollars by= =20 Edison. ?????Sokol praised the Imperial County judge and said his company simply=20 wanted the authority to sell its power to a credit-worthy company that in= =20 fact pays for the power. ?????An Edison spokesman said the company was disappointed with the ruling= =20 but sympathized with CalEnergy and other small producers because=20 California's power crisis has placed [them] in financial distress just as= =20 it has placed utilities in financial distress. ?????Edison expressed concern that the ruling would prompt CalEnergy and=20 other small producers to sell their power out of state. Sokol said CalEnerg= y=20 had specifically told El Paso Energy that it hoped its power would remain i= n=20 California but if someone wants to pay a higher price out of state we=20 can't stop them. ?????Sokol said that Edison still owes CalEnergy $140 million and that the= =20 company--along with seven other small producers--had been prepared to file = a=20 petition in federal bankruptcy court in Los Angeles today forcing the utili= ty=20 into involuntary bankruptcy. He said his company no longer intends to do so= =20 and he believed--but wasn't certain--that the other companies would shelve= =20 their plans. ?????Edison filed papers Thursday with the federal Securities and Exchange= =20 Commission showing that it owed $840 million to various small electricity= =20 producers many of which rely on renewable energy sources such as geotherma= l=20 steam solar energy or wind. ?????The alternative energy producers--and utilities--strenuously objected = to=20 the legislation considered in Sacramento on Thursday. The bill spelling ou= t=20 how the utilities are to pay the state and the small producers passed the= =20 Senate on a 27-9 vote the exact two-thirds margin required. But it stalled= =20 in the Assembly on a 46-23 party-line vote well short of two-thirds. ?????When I was a citizen back in Lancaster I heard these stories about= =20 pieces of legislation that were cooked up late at night that . . . were cu= t=20 and pasted together and were rammed through by the Legislature Assemblyma= n=20 George Runner (R-Lancaster) said. That's exactly what we have before us. ?????The alternative electricity generators including oil companies warne= d=20 that they would lose money under the Davis proposal while representatives = of=20 Edison and PG&E which have amassed billions in debt in the worsening energ= y=20 crisis said the legislation would push them deeper into the hole. ?????There isn't enough money Edison attorney Ann Cohn testified at a=20 Senate hearing on the bill Thursday. It is a very simple question: Dollars= =20 going out cannot be greater than dollars coming in. ?????The bill AB 8X combined several proposals. First it sought to clari= fy=20 earlier legislation by spelling out that Edison and PG&E must pay the state= =20 all money collected from consumers for electricity that the state has been= =20 buying. ?????Additionally the bill would turn over to the California Public=20 Utilities Commission the thorny issue of how much to pay alternative energy= =20 producers for their electricity. ?????Wind solar and geothermal producers might agree to the prices offered= =20 by the administration. But most of the alternative energy producers=20 including Chevron and British Petroleum use natural gas to generate=20 electricity through cogeneration a process of creating steam for both=20 electric generation and heat. With natural gas prices high they contend= =20 they would lose money at the prices Davis is offering. ---=20 ?????Ellingwood reported from El Centro Morain from Sacramento. Times staf= f=20 writers Mitchell Landsberg in Los Angeles and Jenifer Warren Nancy Vogel a= nd=20 Carl Ingram in Sacramento contributed to this story. --- ------------------- Lodi Defies Order for Blackouts=20 Utility tells PG&E to 'pay the bills'=20 Alan Gathright Chronicle Staff Writer Friday March 23 2001=20 2001 San Francisco Chronicle=20 URL:=20 /23/M N171303.DTL=20 Let history show that the rebellion against rolling blackouts started when= =20 the Central Valley town of Lodi defied PG&E and refused to unplug its=20 customers this week.=20 Like several cities that own their own utilities Lodi saw the energy crunc= h=20 looming last fall and spent millions for long-term power contracts in an=20 attempt to avoid blackouts.=20 Now Lodi and a Northern California municipal utility cooperative that=20 includes Palo Alto Santa Clara and Alameda are telling Pacific Gas and=20 Electric Co. that it's unfair to force their customers to endure blackouts= =20 triggered by the near-bankrupt utility's failure to pay its debts.=20 The problem is not paying bills so pay the bills said Alan Vallow=20 director of the utility serving Lodi's 58000 residents. I won't arbitrari= ly=20 screw my customers . . . so 5000 PG&E customers can turn on their lights= =20 somewhere else.=20 When PG&E relayed an order from state power regulators Monday and Tuesday f= or=20 Lodi to black out some of its customers a strategy intended to keep the=20 West's power grid from collapsing Lodi said no.=20 So far other cities in the Northern California Power Agency say they will= =20 continue to participate in rotating outages.=20 But in a letter last Friday to PG&E members of the agency and four other= =20 utility districts including Sacramento's warned they didn't believe long-= =20 standing agreements that allow them to use PG&E transmission lines to conne= ct=20 to the grid obliged them to endure rolling blackouts because of PG&E's=20 failure to pay its power obligations.=20 They say the agreements require them to reduce power demand only in respons= e=20 to natural disasters or malfunctions damaging power lines or plants.=20 The agencies asked for a meeting with PG&E President Gordon Smith before=20 anticipated summer blackouts hit to develop a more rational program for= =20 allocation of risks associated with (power demand) load shedding before you= =20 call on us to participate in load shedding again.=20 REFUSING TO SHARE BURDEN PG&E officials accused Lodi of selfishly refusing to share the burden of th= e=20 statewide energy crisis.=20 It is regrettable that after reaping the benefits of the (power grid)=20 interconnection contract for many years Lodi is suddenly unwilling to bear= =20 their share of the burden of the statewide energy crisis said PG&E=20 spokesman Ron Low. When cities like Lodi do not follow the (state=20 Independent System Operator's) order to curtail power it hurts all of=20 California and jeopardizes the entire power grid.=20 Low also disagreed with accusations that this week's blackouts were trigger= ed=20 by PG&E's failure to pay its bills noting that the ISO stated that 12000= =20 megawatts of power were offline because of plant maintenance.=20 But ISO spokeswoman Lisa Szot confirmed assertions by the municipal utiliti= es=20 that power generators had kept an additional 3000 megawatts offline becaus= e=20 they feared PG&E couldn't pay.=20 Lodi's Vallow said he was legally obliged to serve city customers. Lodi=20 residents are facing rate increases of as much as 15 percent under a power= =20 contract that the city secured in hopes of avoiding blackouts. The contract= =20 required Lodi to pay a $10 million premium above its typical $23 million=20 annual energy bill.=20 'THAT'S NOT FAIR'=20 I've been hearing (PG&E say) 'Gee that's not fair. Where's the equity if= =20 everybody is doing rolling blackouts and you're not?' Vallow said. Well= I=20 put my customers at financial risk to the tune of $10 million. And if they'= re=20 not going to get to use that power they paid for then by God give us that= =20 money back.=20 Vallow said he was willing to sell PG&E some of Lodi's power surplus knowi= ng=20 Lodi might not be paid.=20 But I'm not willing to turn off 5000 customers so 5000 customers=20 somewhere else can turn their lights on Vallow said. The objective here= =20 people is to keep as many lights on as possible.=20 Other city-owned utilities while annoyed with the rolling blackouts aren'= t=20 going as far as Lodi.=20 WEATHERING BLACKOUTS I certainly understand the frustrations of utilities like Lodi and actuall= y=20 share those frustrations in many cases said John Roukema assistant=20 director of Santa Clara's utility.=20 But he stressed that his agency had been able to weather blackouts without= =20 hurting residents or small business because 17 major industrial power user= s=20 had agreed to curtail demand during energy alerts.=20 The prudent thing to do at this time is to continue to do our share and=20 participate in rolling blackouts because a single problem could cause a=20 catastrophic failure in the statewide system Roukema said.=20 In Alameda residents endured blackouts this week despite the fact that cit= y=20 has secured reliable power supplies said Matt McCabe spokesman for Alamed= a=20 Power & Telecom.=20 It was in the best of interests of Alamedans to maintain the stability and= =20 integrity of the grid he said. Now if it becomes evident that the syste= m=20 is being jeopardized for financial reasons then we should not have to=20 subject Alamedans to rolling blackouts.=20 In Palo Alto which also had blackouts this week utility officials told th= e=20 City Council they were expecting a 30 to 40 percent rate hike this spring t= o=20 pay new contracts guaranteeing a stable power supply said Councilman Bern= =20 Beecham. The city hopes to avoid giving customers the double whammy of rate= =20 boosts and more blackouts with a program that gets industrial users to cut= =20 demand voluntarily during alerts.=20 When there's not enough generating capacity in the state to protect the=20 integrity of the grid that is in fact everybody's problem Beecham said= =20 but that doesn't mean Palo Alto is willing to endure blackouts to prop up= =20 PG&E's ailing finances.=20 We need to have some very frank discussions with PG&E about mutual=20 obligations Beecham said.=20 Energy Tips=20 With Californians facing electricity and natural gas shortages PG&E has=20 several tips to help conserve both:=20 -- Set the furnace thermostat at 68 degrees or lower health permitting.=20 -- Wash only full loads in a dishwasher. If operating instructions allow= =20 turn dishwasher off before the drying cycle and let dishes dry naturally.= =20 -- Use low-wattage or fluorescent lights.=20 -- Fix defective plumbing and dripping faucets which waste water and=20 increase the gas or electric bill for heating the water.=20 -- Plug gaps around pipes ducts fans and vents that go through walls=20 ceilings and floors.=20 -- Keep furnaces clean and clean or replace the filter regularly.=20 -- Turn heaters down when using a fireplace and close the damper when not= =20 using the fireplace.=20 -- On sunny days open drapes on windows facing south and let the sun shine= =20 in. At night close the drapes to retain indoor heat.=20 Source: www.pge.com=20 E-mail Alan Gathright at 2001 San Francisco Chronicle ? Page?A - 1=20 --- Coming Down to the Wire=20 State legislators battle over alternative energy bills=20 Greg Lucas Robert Salladay Chronicle Sacramento Bureau Friday March 23 2001=20 2001 San Francisco Chronicle=20 URL:=20 /23/M N113351.DTL=20 Sacramento -- After several weeks of slow to no progress in attacking the= =20 state's energy mess the Legislature erupted yesterday into a frenzy of=20 energy activity.=20 The sudden action on a series of energy bills -- including one to let=20 businesses buy power directly from generators -- stemmed initially from the= =20 fear of bad publicity lawmakers might receive for a planned three-day junke= t=20 next week to Washington D.C.=20 When a key bill bogged down in the Assembly late yesterday Speaker Bob=20 Hertzberg D-Sherman Oaks announced the trip was canceled.=20 Another reason for the flurry of action was recognition that time is runnin= g=20 out.=20 Several alternative energy producers -- like wind farms and biomass plants = -=20 - said they were one day away from forcing the state's two biggest utilitie= s=20 into bankruptcy because they were owed more than $1 billion.=20 The Legislature's action and a court ruling that could free alternative=20 producers from unpaid contracts.=20 This is triage members of the Senate said Sen. Jim Costa D-Fresno. Th= is=20 is crisis activity we're engaged in.=20 The Senate approved a bill aimed at helping state regulators get cash to so= me=20 alternative energy producers. Most of them have been paid little or nothing= =20 since November by the utilities they sell electricity to.=20 Senators passed a bill to help the Public Utilities Commission order=20 utilities to pay solar wind and other alternative energy producers who sig= n=20 lower-priced contracts with the utilities.=20 The bill failed in the Assembly because of GOP opposition fanned in part b= y=20 price concerns by the oil industry a major co-generation producer. The=20 Assembly is set to meet again today to try again pass the bill which the P= UC=20 needs to issue its final order.=20 The PUC's proposed order offers the first hint of financial relief for=20 hundreds of alternative energy producers known as ''qualified facilities = in=20 the energy industry who have been paid just pennies on the dollar by cash-= =20 strapped Pacific Gas & Electric and Southern California Edison.=20 Lack of payments has caused many alternative generators to shutter their=20 operations.=20 The PUC's proposal which will be considered at the commission's meeting=20 Tuesday offers generators a choice of agreeing to a five-year contract at= =20 $79 per megawatt or a 10-year deal at $69 per megawatt Davis said. The goi= ng=20 rate now is about $150 a megawatt hour.=20 The order does not address money already owed to the more than 600=20 alternative energy producers.=20 Under the order utilities would have to pay any generator who signed the n= ew=20 contracts within two weeks.=20 But PG&E said it might not be able to afford do that.=20 Operators of co-generation facilities say the contracts contemplated by the= =20 PUC don't cover their cost of producing energy because the sale price no=20 longer would be pegged to the the price of natural gas.=20 In a significant court decision affecting generators one geothermal energy= =20 supplier in Imperial County won a lawsuit yesterday against Edison allowing= =20 the company to escape a contract requiring it to sell electricity to the=20 utility.=20 A superior court judge said CalEnergy operator of the geothermal plant=20 could suspend deliveries to Edison and sell the 268 megawatt hours it=20 generated on the open market.=20 CalEnergy is owed $75 million by the utility.=20 The court victory may ease mounting pressure from some qualified facilities= =20 including CalEnergy to drive one or both of the utilities into involuntary= =20 bankruptcy.=20 The Assembly and Senate meanwhile rushed through a series of bills aimed = at=20 increasing energy conservation and rushing the building of new power plant= s.=20 Most significant for bigger residential and commercial utility customers is= a=20 measure passed by the Assembly to allow energy customers to buy power=20 directly from generators.=20 That right was eliminated in January when the state began buying power for= =20 the cash-strapped utilities.=20 The bill approved unanimously yesterday would impose a yet to be determined= =20 exit fee on customers who leave the power grid to help cover the state's=20 financial exposure.=20 Tell Us What You Think=20 Can you save 20 percent on your energy use? Gov. Gray Davis' administration= =20 is offering rebates for Californians who save on power starting in June an= d=20 if you've got a strategy for conserving The Chronicle wants to hear it.=20 We'll be writing about the hardest-working energy savers in a future story.= =20 To get involved write to the Energy Desk San Francisco Chronicle 901=20 Mission St. San Francisco CA 94103 or e-mail energysaver@sfchronicle.com= .=20 E-mail the reporters at glucas@sfchronicle.com and bsalladay@sfchronicle.co= m.=20 2001 San Francisco Chronicle ? Page?A - 14=20 --- State's bill for energy could double this year=20 Posted at 9:34 p.m. PST Thursday March 22 2001=20 BY=20 STEVE=20 JOHNSON=20 AND=20 JOHN=20 Warning that California is imperiled by the prices it is paying for=20 electricity a report Thursday said the state's annual power tab could wind= =20 up being 10 times what it was two years ago.=20 At the current rate of spending the report estimated that the total=20 electricity bill in California this year could hit $70 billion which is mo= re=20 than twice what it was last year and about 10 times what was paid in 1999 a= nd=20 1998.=20 ``The California electricity market has gone from being `dysfunctional' to= =20 precipitating a crisis'' according to the report from the Independent Syst= em=20 Operator.=20 It added that the price being charged ``threatens any semblance of just and= =20 reasonable consumer rates the financial viability of California's=20 investor-owned utilities the financial stability of California of its=20 neighboring states and of the nation.''=20 While power suppliers denied any wrongdoing the report said the state=20 appears to have been hit with ``excess'' charges totaling $6.87 billion sin= ce=20 May based on an assessment of the typical operating costs of power plant= =20 owners. Out of that total $6.2 billion appeared to be excessive charges=20 during times when power was not in particularly short supply the agency=20 said.=20 The cost of power has become a growing concern now that the state has stepp= ed=20 in to buy it on behalf of Pacific Gas & Electric Co. and Southern Californi= a=20 Edison which claim to be so strapped for cash that they are on the verge o= f=20 bankruptcy.=20 In making public the report which was sent to the Federal Energy Regulator= y=20 Commission officials at the Independent System Operator were careful not t= o=20 accuse any power companies of price gouging. While the prices appeared to b= e=20 unreasonable they said the state needs to learn more about the specific= =20 operating costs of power plant operators before they could determine whethe= r=20 California was cheated.=20 The officials said they were considering asking the federal agency which= =20 oversees power wholesalers to order the suppliers to make refunds. In the= =20 past two weeks the federal agency has warned a number of suppliers that th= ey=20 may have to refund $135 million in apparent overcharges during January and= =20 February.=20 But many experts question whether the federal agency is serious about=20 demanding such refunds so California officials also are reviewing the=20 possibility of suing the suppliers or seeking criminal charges against some= =20 of them. ``We're working very closely with a number of agencies to review t= he=20 information we currently have to determine what remedies may be available'= '=20 said Charles Robinson the Independent System Operator's general counsel.= =20 The report's suspicions were partly bolstered by another study made public= =20 Thursday by the state auditor. It said California's market structure=20 encouraged bidding gamesmanship by both utilities and power sellers ``in an= =20 effort to manipulate wholesale prices to their advantage.'' But it stopped= =20 short of accusing power generators of profiting illegally.=20 ``There's clearly some evidence of market abuse'' said state Auditor Elain= e=20 Howle. Even so she added ``that's not to say it's anything illegal. We=20 hired consultants they looked at some of the bidding and they weren't=20 comfortable going that far.''=20 Although no power companies were named in either report officials with=20 several suppliers insisted they have done nothing wrong.=20 ``We've conducted our business legally and ethically'' said Richard=20 Wheatley spokesman for Reliant Energy which runs five major California=20 power plants. ``The ISO report appears to be nothing more than just another= =20 attempt to put blame at someone else's doorstep when there's been very=20 little action out of Sacramento to resolve the problems in the California= =20 marketplace.''=20 Duke Energy spokesman Jeremy Dreier said the company which runs plants in= =20 Moss Landing and Morro Bay sold most of its power last year and this year = in=20 relatively low-cost long-term contracts and was among the first to offer= =20 such deals to the state. He added that Duke increased production from its= =20 aging plants to meet surging demand.=20 ``The fact that we were among the first to bring long-term contracts to the= =20 table speaks volumes about how we're trying to serve this market'' Dreier= =20 said.=20 John Sousa of Dynegy Inc. which co-owns three major California plants add= ed=20 that ``given the market conditions the rates we charged were just and=20 reasonable.''=20 --- Plan for alternate power plants stalls=20 Posted at 10:03 p.m. PST Thursday March 22 2001=20 BY DION NISSENBAUM AND JENNIFER BJORHUS=20 Mercury News=20 SACRAMENTO -- The state's prospects for plugging a critical electricity gap= =20 dimmed Thursday when the state Assembly rejected a rescue plan for=20 alternative power companies and a state judge ruled that one such firm coul= d=20 stop selling energy in California.=20 Both actions threaten the plan Gov. Gray Davis announced just Tuesday to ke= ep=20 these companies running and stave off more blackouts. With the state's=20 troubled utilities failing to pay for their electricity many alternative= =20 energy plants have been shutting down.=20 The dual blows came on a day when tempers flared in the Capitol as lawmaker= s=20 jarred by back-to-back blackouts launched bipartisan attacks on Pacific Gas= &=20 Electric Co. and Southern California Edison which aren't paying wind sola= r=20 biomass geothermal and small gas-fired plants for their electricity.=20 After Republicans shot down the measure meant to keep alternative energy=20 companies in business Assembly Speaker Robert Hertzberg D-Van Nuys warne= d=20 that the restless companies might act on their threat to force the utilitie= s=20 into bankruptcy.=20 ``They said it and I understood them to mean it'' he said.=20 The failure overshadowed a burst of action in Sacramento where lawmakers=20 approved a host of other measures. The Senate approved two key bills: one= =20 that would spend more than $1 billion to encourage Californians to conserve= =20 energy and one that would make it easier to build power plants. The Assembl= y=20 approved 14 incremental bills.=20 Six votes short=20 But the Assembly fell six votes short of passing a hastily prepared bill=20 meant to help prop up the nearly 700 alternative energy companies many of= =20 which are now idle.=20 Those closings sapped California of energy this week and helped cause two= =20 days of rolling blackouts -- the first since January.=20 In response Davis and lawmakers cobbled together a plan to set new lower= =20 rates for alternative power and to fine the utilities if they refuse to pay= =20 these companies which supply up to a third of the state's power.=20 But Republicans refused to back the measure and said it contained too many= =20 complex parts that needed more time to analyze.=20 ``Everyone in this room knows that this piece of legislation has not had a= =20 good look'' said Assemblyman George Runner R-Lancaster.=20 Assemblyman Fred Keeley D-Santa Cruz castigated the Republicans and=20 implored them to accept an imperfect solution.=20 ``Ladies and gentlemen: Welcome to the NFL'' he said. ``Welcome to the wor= ld=20 where large complex issues don't have a simple solution.''=20 Approval is needed before state regulators at the Public Utilities Commissi= on=20 can vote on the fine points of the plan. That was supposed to happen Tuesda= y.=20 Much of the criticism focused on concerns raised by power plants that use= =20 natural gas to produce energy. Administrators from those plants said the=20 Davis price caps would make it impossible for them to break even.=20 The derailment came hours after the measure narrowly won approval in the=20 state Senate.=20 Hertzberg plans to search for a compromise today and canceled plans for the= =20 Assembly's annual trip to Washington.=20 Thursday's actions were highlighted by angry attacks on the utilities by=20 frustrated lawmakers.=20 ``I hope they do go bankrupt'' shouted Senate President pro tem John Burto= n=20 D-San Francisco during a debate on the energy crisis. ``Let them go belly= =20 up. I don't care any more.''=20 Legal decision adds twist=20 The legislative failure was compounded by a legal decision in Southern=20 California that further complicated the picture.=20 A Superior Court judge in Imperial County cleared the way for CalEnergy=20 Operating Corp. to break its contract with Edison and sell its 268 megawatt= s=20 of power on the open market. The judge concluded that Edison had breached i= ts=20 contract by failing to pay CalEnergy since November.=20 That ruling could pave the way for hundreds of others to follow suit and=20 drain off power California needs to prevent blackouts.=20 ``It's not good'' said V. John White director of the Center for Energy=20 Efficiency and Renewable Technologies. ``This is potentially going to chang= e=20 the dynamics of the situation and probably not for the better.''=20 Jan Smutny-Jones executive director of the Independent Energy Producers=20 Association said it was unclear whether other companies would sue.=20 ``I think this is a very significant development'' he said. ``We're sort o= f=20 at a period where the industry's reaching the end of the rope.''=20 The ruling did have one silver lining: CalEnergy Chairman David Sokol said= =20 his company and seven others had planned to force Edison into bankruptcy if= =20 they lost in court.=20 But he also warned ``You stick a sharp stick in enough people's eyes and= =20 they get pretty tired of it.''=20 The situation with generators supplying PG&E isn't as dire since the compan= y=20 has been making partial payments.=20 Kent Burton senior vice president for Covanta Energy Corp. in New Jersey= =20 said ``They've tried to be responsive.''=20 Mercury News Staff Writer Mark Gladstone contributed to this report. Contac= t=20 Dion Nissenbaum at dnissenbaum@sjmercury.com or (916) 441-4603 or Jennifer= =20 Bjorhus at jbjorhus@sjmercury.com or (408) 920-5660.,other,urgent,5 +Request for Confidential Information by the US GAO,,other,cautious,5 +Enrons natural gas policy positions,coule you get Jeannie copies of the slides or other write ups you have on this. Jeannie -- I don't know how far it is prudent to take a position on this as a co. It has already become a key battleground (garnering some discussion in the Gore-Lieberman debate). I think we stay away from it as a co. but we at least ought to put the information in front of anyone we are asking to do an oped so that they can make a reasoned judgement. ,other,formal,3 +Re: Questions for Executive Business Review- URGENT,I share your perceptions of Jose though I don't have as much contact as you do. I know also from some recent discussions with Rick (who has also had a fair amount of contact with Jose) that he has very positive views on Jose's work. I think we should make a concerted effort to get the feedback and have a good discussion about Jose at year end to ensure that he is properly ranked. James M Bannantine@ENRON_DEVELOPMENT 10/03/2000 07:13 PM To: Steven J Kean@EES cc: Subject: Re: Questions for Executive Business Review- URGENT -----------------,other,formal,5 +CONFIDENTIAL - ATTORNEY WORK CLIENT PRIVILEGE ASSERTED,Paul -- Can we have a phone call with our Reg team on Friday to make sure that everything is a-ok? I want one final run through. If yes please let me know by phone and I'll ask Linda Noske to set up the call. Also I owe you a call on Sue / Jeff. Are you in Thurs? Jim ,legal affairs,casual,3 +Report on Senate Energy Hearing Today,Earlier today the Senate Energy Committee held the first of two days of hearings on Chairman Bingaman's white paper on electricity and the electricity provisions of other pending bills. The hearings will continue tomorrow with all of the five FERC commissioners as witnesses plus private sector witnesses. Today's hearing went well from our perpective with support for Super RTOs and general support for expanding the grid both physically and from an access view point voiced by Senators and witnesses. Sen. Craig Thomas even said four RTOs were too many -- there should be one national RTO to run a national grid. Today's witnesses represented the Dept. of Energy EPSA EEI NRECA APPA IBEW union Alliance to Save Energy ELCON NERC NARUC NASUCA and the State of New Mexico. We will provide a more detailed analysis after completing a review of the lengthy written testimony but a summary of the DOE testimony and the first panel of private sector witnesses follows. 1. DOE said they are working on electricity legislative language. Should be done soon. Chairman Bingaman said they needed to get it done in time for the Committee to consider it when the Committee takes up electricity as early as the second week in September. Deputy Sec. Blake implied that their proposal was or would soon be shared with other Administration agencies for review. 2. In response to questions Blake said that legislative action on jurisdiction questions (fed v. state) would be useful but he stressed that they view any new legislation as clarifying that FERC has authority they feel already exists. He said that while states have an important role to play Congress must recongize the interstate character of the market and the need for open access to the interstate grid. (In response to a question Blake later said that FERC had largely addressed the access issue or would do so.) 3. On reliability he was given a chance to say that DOE supports th NERC consensus language but instead repeated that the Administration favors enforceable reliability standards but wants to work with the Committee on the exact language. I took this as confirmation of what we have heard informally from DOE in terms of key players there not being enamored of the NERC consensus approach at least as it exists in its old long form. 4. Sens. Craig and Cantwell pushed Blake on why the Administration has not fully supported BPA's request for a debt limit increase to finance expansion of the BPA grid. Blake said they support the BPA expansion projects but that OMB feels BPA has enough borrowing authority through 2003. This did not sit well with Craig and Cantwell. I spoke with Sen. Craig in the hall following up on a conversation I had with him the other evening about BPA and he stressed that he is committed to getting BPA the debt limit it needs. As you know commercial has asked us to help BPA given matters pending between Enron and BPA. 5. On the first private sector panel even John Rowe the Co-CEO of Exelon and past EEI chairman (testifying for his company and EEI) said several times that there should be strong RTOs that each cover a wide idea. He said his board voted yesterday to sell its transmission assets IF a strong independent operator could be found. Rowe also said that RTOs should be encouraged (implying not mandatory?). The APPA witness was strong on RTOs saying that all entities will be part of RTOs even without legislation. NRECA said that co-ops would oppose federal jurisdiction over them and that they favor voluntary RTOs. EPSA made the usual case for competition open access RTOs etc.,other,informative,3 +Draft letter to Paul Joskow for Ken Lay,I think this letter looks fine. For the hororarium I suggest we use whatever we paid Kudlow for his participation (I believe Ken also entered into a consulting contract with Kudlow but I'm referring only to the one-time payment for the advisory council meeting he attended). -----------------,other,formal,2 +Economic Espionage Act Presentation - August 15th,calendar -- FYI -----------------,calendar & scheduling,casual,0 +Re: Price Cap Media--DRAFT,I agree that we need to add our customer contacts to the list. This gives them a great opportunity to look smart -- we went to the market and got price protection. On the messages we need to include Mark's top three: 1) price caps cause shortages (Rob Bradley: let's put some historical examples together) Mona L Petrochko 07/18/2000 01:26 PM To: Jeff Dasovich/SFO/EES@EES cc: James D Steffes/HOU/EES@EES Steven J Kean/HOU/EES@EES Mark Palmer@EES Richard Shapiro/HOU/EES@EES Paul Kaufman@EES Peggy Mahoney/HOU/EES@EES Karen Denne/Corp/Enron@Enron Jeff Brown/HOU/EES@EES Susan J Mara/SFO/EES@EES Sandra McCubbin/SFO/EES@EES Subject: Re: Price Cap Media--DRAFT I have a couple of suggestions on parts of the draft. Media Action: In addition to doing behind the scenes editorial board meetings and the like I would suggest that we get our coalition lined up and ready to release statements for certain key events which are likely to occur over the next several weeks such as: 1. SDG&E's selection of the winning bid to their RFP. Even if Enron isn't selected as the winning bid the coalition should trumpet the market-based solution and the enormous market response to SDG&E's RFP. 2. The Commission vote on UCAN's Emergency Motion. We should be prepared to issue a statement whether the Cmmn votes with us or against us. With us the market can and did provide reasonable expedient solutions to SDG&E's customers and protection from price spikes. Against us despite the overwhelming market response the Cmmn chose to ignore the market solutions and impose more regulation. 3. Potential for ARM members to surface a Provider of Last Resort proposal within the next couple of weeks. 4. ISO Bd. Mtg-keep up pressure against reducing price caps. Coalition Members: Agree that those groups listed should be contacted although the CMA CRA CIU CLECA have been luke-warm in their advocacy. I would add our customers (UC/CSU (especially the San Diego branch) PacTel etc.) NewEnergy has indicated that Kroger/Ralph's grocery stores San Diego-based would give testimonials. I could solicit the members of ARM to identify a key customer contacts for interviews. We could check with our lobbyists and see who they would recommend (wine growers dairy industry etc.) We should also consider the water agencies and the rural counties and the City of Pittsburg. While the immediate message is responding to San Diego's situation this latter group of potential coalition members would go to the larger message (keeping benefits of competitive markets) from a state-wide perspective. What about the City of Pittsburg? Jeff Dasovich on 07/18/2000 10:07:00 AM To: James D Steffes/HOU/EES@EES Steve Kean Mark Palmer Richard Shapiro/HOU/EES@EES Paul Kaufman@EES Peggy Mahoney/HOU/EES@EES Karen Denne/Corp/Enron@Enron Jeff Brown/HOU/EES@EES Mona L Petrochko/SFO/EES@EES Susan J Mara/SFO/EES@EES Sandra McCubbin/SFO/EES@EES cc: Subject: Price Cap Media--DRAFT Here's a draft. Given sense of urgency I tried to develop a target for folks to shoot at rather than The Perfect One-pager. So please fire at will. In particular need PR to fill in Media Approaches and Key Message Points. Best Jeff,other,formal,3 +,http://www.ssrn.com/,other,neutral,0 +May 15 conference,Joe -- could you see if someone at FERC -- Hebert or Madden might be available -- or suggest a suitable alternative? ,meetings & events,formal,3 +,You probably saw the announcement that Mike Mcconnell is now CEO of Enron Global Markets. EGM will be focussing on a number of new and existing markets (including coal LNG crude and products interest rates agricultural commodities equities weather etc). One of the markets Mike's group is actively considering is transport capacity. I mentioned your work in the area. He is anxious to see it and meet with you after he has had a chance to review it.,other,excited,5 +Report on Calif. Electricity Price Spikes by CPUC and EOB,As we discussed. -----------------,utilities,formal,2 +Re: Privileged and Confidential Communication to my Attorney,Hoyt If GSP LLC would assume the liability at the time of return why would it risk bringing them back for light duty work? Why not wait until they are fully released particularly if one of them is going to sue under workers comp scheme? Also Hoyt you need to be careful about revealing conversations with GSP counsel to MG -- I noticed you had cc'd someone from Media General in the prior email. We don't want to waive any privileges. Michelle HThomas@gspcorp.com on 11/15/2000 06:10:00 PM To: peter.del.vecchio@enron.com david.howe@enron.com cc: michelle.cash@enron.com LFaucheaux@media-general.com MParker@gspcorp.com Subject: Privileged and Confidential Communication to my Attorney Peter we have two long-term worker's comp cases whose accidents happened before Enron bought GSP. We would like to bring them back to do light-duty work to get them in the swing of working again and also to get some adminstrative work done. I am concerned that bringing these employees back to work on light duty will cause these cases to become an Enron liability rather than an MG liability. I discussed this with Pat McCarthy the labor and employment law attorney we are using in NJ and he said that the liability would typically not transfer to GSP just because we brought them back . . . it would still be an MG liability UNLESS THE EMPLOYEE HURT HIMSELF AGAIN. In which case GSP owns it. However Pat said that a lot of what determines the ownership of the worker's comp cases is written into the purchase and sale agreement. He said that there may be language that addresses an employee's return to work from worker's comp. I know that we have an ongoing dispute about worker's comp with MG at this point. What would be your recommendation on bringing these employees back to work? As a bit of additional info one of the two employees seems eager to come back . . . the other one does not. An employee told me that the second employee actually has a lawsuit filed against MG/old GSP about his injury.,other,formal,5 +House Energy Committee Passes First Energy Package,Late this morning the House Energy and Commerce Committee adoped the committee print as amended of an energy package that addresses conservation clean coal renewables hydro nuclear and boutique fuels. The vote was 50 to 5 to report the bill. Other committees -- Ways and Means Science and Resources -- also moved their energy bills this week. Thus the House is on track to consider a merged package before the start of the August Recess on August 3rd. As to electricity during the several days of debate this week both Chairmen Tauzin and Barton reaffirmed their intention to next move to electricity issues. Mr. Barton's staff advised me this morning that the subcommittee he chairs will hold a hearing on Friday July 20th on all electricity issues other than transmission. While Mr. Barton has publicly held out hope of marking up an electricity bill this month sources on and off the committee do not see this timetable as realistic. On the Senate side the majority staff is working on an electricity white paper that may be circulated for comment next week. Below is a recap of action on amendments of interest to Enron: 1. Last night on a largely partisan vote (with Democrats Hall Green and John voting with the Republicans) the Committee rejected an amendment by Rep. Jane Harman (D-CA) (that was to have been offered by Rep. Anna Eshoo (D-CA)) that would have retroactively amended the FERC refund date and essentially ordered refunds regardless of amounts owed to power sellers. 2. First thing this morning the Committee again on a largely partisan basis (with Democrats Hall Green John and Towns) rejected a Waxman amendment to impose cost-of-service rates on all power in the West (other than generation added after 1/1/01). (Originally Mr. Waxman was going to offer amendment to impose cost-of-service rates only on those who do not supply all available power during an emergency but he ended up offering basically what he had pursued in subcommittee on the old Californa Only bill.) 3. The Committee adopted an amendment by Rep. Shadegg to amend the Natural Gas Act to make it clear that a natural gas transportation facility shall not be added to the National Register of Historic Places until FERC has abandoned the facility. Apparently there have been some instances of old pipelines being considered as historic places under federal law. The House Resources Committee added a similar amendment to its package yesterday. 4. By voice vote the Committee rejected a Waxman Amendment to require the president to propose and implement a plan to bring U.S. greenhouse gases down to 1990 levels. There was strong opposition voiced by many Republicans and Democrats to this amendment. 5. By mixed vote of 24 to 29 the Committee defeated a Waxman Amendment to set cost and performance goals for renewables including wind power and authorize federal funds to assist with commercial project costs (up to 50 percent).,other,informative,3 +Restructuring (Confidential Communications),At the right time it would be helpful to discuss what we may want to consider as Core Assets (unrelated to trading activities) for purposes of emerging from bankruptcy as a going concern. As you know we are in the process of organizing and formatting in an asset matrix the assets/businesses we currently own (or otherwise have an interest in) that may be potentially for sale separating out potential core assets will be instructive as part of this process. Please let me know your thoughts/suggestions over the next few weeks. Thanks. Jordan,other,formal,3 +FERC Presentation on California/West Wholesale Market,Per our discussion ,other,casual,3 +Wolaks report,Joe Attached find the report you requested. Alan - Governor Davis offered a highly discounted forward contract ($45-50/MWh) at the FERC settlement conference today. As usual California is trying to get its refund with or without FERC requiring it. Alan - Tim and Joe will likely need your assistance with this settlement negotiation.,other,formal,5 +Re: Nov. 13 UC summit conference on electricity,I've got a few too many speeches coming up. You are probably in the best position to address this crowd (time for the student to teach the teacher) but I'd understand if you think it would be awkward (the we should just decline). Jeff Dasovich 10/05/2000 01:23 PM To: Tim Belden/HOU/ECT@ECT skean@enron.com cc: Subject: Re: Nov. 13 UC summit conference on electricity Steve: Let me know if you'd like to discuss. I like Tim's idea re: maybe you should take the slot. But in my view definitely not Skilling. I think you saw my thoughts about this conference in a previous email exchange with Schroeder re: Littlechild. Also they're breaking my arms and legs about sponsoring ($3-5K range). I had a thought that maybe EBS could stream the conference as an in-kind contribution---the PR that EBS gets out of streaming might outweigh the cost of providing gratis. I had only raised it as a thought though and am surprised to see it turn up in print. Tim and I had both had Lee as a professor and I've been talking him about this conference alot and have no problem delivering whatever the news is. In fact I had already told them that they shouldn't count on us for this one but that we're always interested in working together. Best Jeff Tim Belden@ECT 10/05/2000 01:00 PM To: Jeff Dasovich/NA/Enron@Enron Steven J Kean/NA/Enron@Enron cc: Subject: Nov. 13 UC summit conference on electricity Jeff I sent this e-mail to Kean last night. I am fine with your recommendation for Skilling to pass on this event. Do you want to deliver the news to Lee. Do we want to offer you Steve Kean or me as an alternative? Personally I would like to attend but don't have much interest in speaking (assuming that they would allow low lifes like you or me to speak). Your call on all of this. Call bob Badeer with questions about the BEEP as I am heading out of town in a couple of hours. Tim: I've worked hard with these guys to try to make this conference the best that it could be but it ain't quite there. So I'd rather keep our powder dry and use Skilling at another time. Not top-shelf enough in my view. If you want to discuss further let me know. Also one question: Is the BEEP stack the constrained supply curve post-adjustment bids? I have that right? -----------------,meetings & events,formal,3 +Re: organizational announcement,I talked with Ken yesterday. He would like to keep David on until May 15 to finish up some things he is working on for Ken. Enron Capital & Trade Resources Corp. From: Sherri Sera 04/09/2001 08:45 PM To: Steven J Kean/NA/Enron@Enron cc: Subject: Re: organizational announcement Just out of curiosity did this ever get resolved? Apologies if I'm being too bold! SRS From: Steven J Kean on 03/14/2001 07:33 AM To: Sherri Sera/Corp/Enron@ENRON cc: Subject: Re: organizational announcement Ken was meeting with him the day before yesterday. I'm just waiting to hear back. Sherri Sera 03/13/2001 10:07 PM To: Steven J Kean/NA/Enron@Enron cc: Subject: organizational announcement Just saw the memo about Sanjay Diomedes and Jim. Guess David Haug is still around? SRS,other,casual,3 +Re: Senate passes Alper/Davis Bill 30-0,what does the siting bill provide for? Mona L Petrochko@EES 08/29/2000 04:38 PM To: Douglas Condon/SFO/EES@EES Martin Wenzel/SFO/HOU/EES@EES James M Wood/HOU/EES@EES Dennis Benevides/HOU/EES@EES Greg Cordell Roger Yang Edward Hamb/HOU/EES@EES Peggy Mahoney/HOU/EES@EES Karen Denne@Enron Mark Palmer/Corp/Enron@ENRON cc: James D Steffes/HOU/EES@EES West GA Richard Shapiro/HOU/EES@EES Steven J Kean/NA/Enron@Enron Mary Hain@Enron Subject: Senate passes Alper/Davis Bill 30-0 AB 265 passed through the Senate a few minutes ago. It now must go to the Assembly where there is still a lot of uncertainty about what changes the Assembly will want to the bill. We still haven't seen the latest republican language. Also AB 265 is double joined to AB 970 controversial siting bill. To the extent one or the other fails they both fail. AB 265 (Davis/Alpert) has: 1. a 6.5 cent/kWh energy rate cap through 2002 with potential extension through 2003. 2. Applicable to residential small commercial (up to 100 kW) 3. Opt-in provision for large industrial/agricultural customers at 6.5 cents with an annual true-up 4. Use of revenues from utility generation assets (including PPA) to offset undercollections. 5. Reasonableness review for San Diego G&E Will update with more information as available. No news about SCE.,legal affairs,informative,3 +US Visit for GoodCorporation,,personal & social,neutral,0 +Special Comp Committee Meeting Notice - May 1st,calendar -----------------,calendar & scheduling,formal,5 +Re: Barton Bill,Thanks for the explanation. I agree though I may not have explained the context adequately to Ken. Linda Robertson 05/11/2001 04:32 PM To: Steven J Kean/NA/Enron@Enron cc: Subject: Barton Bill You seemed troubled by the call to Barton. This bill may or may not be subsumed by the comprehensive energy bill that Congress undertakes this summer. Both bills have a very difficult if not nearly impossible path ahead given that the Democrats are in no mood for compromise. The call to Barton was to: a) repair relationships (and with the Wall Street Journal calling Barton about his troubled past with Enron repair is needed) b) proclaim victory even of a limited nature (something I think Enron has not done much of) c) build a further bond with Barton so we would have more input at full Committee (something we will need given the chances that this will go off the track are real) and d) allow Enron to get significant credit for the defeat of price caps. I hear from lots of DC sources that we have not had any success in the House Energy and Commerce Committee. Numerous folks at the markup noted in private conversations that this was Enron's first real role in the Committee. Thus even though this is a very limited bill the call made sense. I do not think that this means we should call the White House to push the bill with them. The bill itself still has lots of obstacles and many potential threats ahead.,government & politics,formal,3 +IEP News 5/29,Today's IEP news ... Los Angeles Times May 27 2001 Sunday Home Edition Page 7 615 words ????The State ?Who Let the Hot Dogs Out? Rhapsodic Lawmakers Legislature: ????Speaking frankly officials have used the wiener as an easily digestible ????metaphor for the state's energy crisis. JULIE TAMAKI MIGUEL BUSTILLO ????TIMES STAFF WRITERS SACRAMENTO (Quotes Smutny on behalf of IEP) The San Francisco Chronicle MAY 26 2001 SATURDAY FINAL EDITION NEWS ????Pg. A1 835 words Davis asks U.S. to limit firms' prices ???RATE SWINGS: ????Governor argues 2 generators manipulated market Lynda Gledhill Sacramento (Quotes ??????? ???Smutny on ?behalf of IEP) The Wall Street Journal Power Drain: The U.S. Energy Crisis California Officials Say State Will ?? ???Enter A Recession Without Energy Price Caps By JOHN R. EMSHWILLER Staff Reporter of THE ?? ???WALL STREET JOURNAL AP Online May 29 2001 Tuesday 9:11 AM Eastern Time Domestic ????non-Washington general news item 770 words AP Top News at 9:10 a.m. EDT ????Tuesday May 29 2001 JEROME MINERVA The Dallas Morning News May 29 2001 Tuesday DOMESTIC NEWS K7523 1046 ????words Bush begins visit in hostile California By G. Robert Hillman Los Angeles Times May 29 2001 Tuesday Home Edition Page 1 1178 words ????Governor to Stress Price Caps to Bush Power: In a meeting today with the ????president Davis will present a letter from economists backing cost controls ????and demand federal assistance. DAN MORAIN JAMES GERSTENZANG TIMES STAFF ????WRITERS Los Angeles Times May 29 2001 Tuesday Home Edition Page 1 1541 words ????THE ENERGY CRISIS Kern County Basks in Role as State's Blackout-Buster ????Electricity: Six new plants will bolster its status as energy center. ????MITCHELL LANDSBERG TIMES STAFF WRITER McKITTRICK Calif. The New York Times May 29 2001 Tuesday Late Edition - Final Section A ????Page 12 Column 1 National Desk 1078 words For Crucial California Trip ????Bush Calibrates How Best to Handle State's Energy Crisis By DAVID E. SANGER ???? LOS ANGELES May 28 The Orange County Register May 29 2001 Tuesday DOMESTIC NEWS K7500 ????825 words California's power crisis generating lots of heat By John Howard The San Francisco Chronicle MAY 29 2001 TUESDAY FINAL EDITION NEWS ????Pg. A1 1291 words Crisis no sweat to some offices ???Many offices keep ????cool in crisis ???Air conditioners blast in state's energy centers Steve ????Rubenstein The San Francisco Chronicle MAY 29 2001 TUESDAY FINAL EDITION NEWS ????Pg. A1 1238 words Bush facing Davis' heat over energy ???In first visit ????to state as president he'll hear governor's plea for help Carla Marinucci ????Lynda Gledhill USA TODAY May 29 2001 Tuesday FIRST EDITION NEWS Pg. 3A 426 words ????Davis to urge Bush to back electricity price cap Laurence McQuillan LOS ????ANGELES The Washington Post May 29 2001 Tuesday Final Edition A SECTION Pg. ????A02 639 words Energy Chief Moves To Aid California Transmission Plan ????Precedes Bush Visit Mike Allen Washington Post Staff Writer LOS ANGELES ????May 28 The Washington Post May 29 2001 Tuesday Final Edition A SECTION Pg. ????A03 1936 words It's Still Dawn for Solar Power in L.A. Despite City ????Subsidies Homeowners Hesitate to Install Expensive Alternative Energy ????Source William Booth Washington Post Staff Writer LOS ANGELES The Washington Times May 29 2001 Tuesday Final Edition PART A NATION ????INSIDE POLITICS Pg. A6 1264 words Greg Pierce THE WASHINGTON TIMES The Washington Times May 29 2001 Tuesday Final Edition PART A NATION ????Pg. A4 809 words Bush faces tough sell on visit to California ?Davis ????likely to be rebuffed on price caps Joseph Curl THE WASHINGTON TIMES LOS ????ANGELES Chicago Tribune May 29 2001 Tuesday NORTH SPORTS FINAL EDITION News ????Pg. 6 ZONE: N 514 words Bush backs WW II project From Tribune news ????services. LOS ANGELES The Associated Press May 29 2001 Tuesday BC cycle 7:55 AM Eastern Time ???? Domestic News 604 words Bush announcing low-income aid but no price ????caps By SCOTT LINDLAW Associated Press Writer LOS ANGELES The Associated Press State & Local Wire May 29 2001 Tuesday BC cycle ????7:31 AM Eastern Time State and Regional 594 words Stakes are high for ????Davis meeting with Bush By GARY GENTILE AP Business Writer LOS ANGELES ABC NEWS WORLD NEWS NOW (2:00 AM ET) May 28 2001 Monday 447 words ????PRESIDENT BUSH VISITS CALIFORNIA WHERE POLITICIANS ARE CRITICAL OF HIS LACK ????OF ACTION FOR THEIR ENERGY CRISIS DEREK McGINTY JOSH GERSTEIN Los Angeles Times May 27 2001 Sunday ?Home Edition SECTION: California Part 2 Page 7 Metro Desk LENGTH: 615 words HEADLINE: The State Who Let the Hot Dogs Out? Rhapsodic Lawmakers Legislature: Speaking frankly officials have used the wiener as an easily digestible metaphor for the state's energy crisis. BYLINE: JULIE TAMAKI MIGUEL BUSTILLO TIMES STAFF WRITERS DATELINE: SACRAMENTO BODY: ??Every crisis has its symbol. ??Watergate had Deep Throat. The S&L scandal had Charles Keating. O.J. did--or didn't--have a bloody glove. ??Here in the Capitol the hot dog has become an unlikely metaphor for the state's energy crisis. ??In packed news conferences and heated Assembly floor debates lawmakers from both parties have evoked images of the ordinary dog to help explain an extraordinary mess. ??The genesis of this statehouse trend is difficult to determine. Assemblyman Fred Keeley appears to be the first to have tossed the hot dog into the political fire. ??During a crucial Assembly discussion in January the Boulder Creek Democrat recited the lyrics to a familiar Oscar Mayer jingle as a way of admitting that a controversial bill to have the state buy electricity to avoid blackouts was unpalatable but necessary. ??It's the dog kids love to bite said Keeley of the jingle. Well this is the bill people love to hate. ??A bizarre partisan hot dog duel ensued. Assemblyman John Campbell (R-Irvine) responded by likening the unpredictable financial consequences of the Keeley legislation to biting recklessly into mystery meat. ??Before I bite into it I see what's on the outside but I can't see the inside Campbell said. If nobody can tell me what's on the inside it may be bitter it may be bad it may make me sick. ??Assemblywoman Carole Migden (D-San Francisco) angrily fired back wanting to know why Campbell a professed hot dog eater was suddenly so critical of its unknown contents. ??It's OK to eat a hot dog that's full of animal bones and hair Migden said. That's a hot dog that's OK with you but this kind of hot dog isn't. ??Yet it was Senate leader John Burton who made it the key ingredient in a Capitol catch phrase. ??Burton described a plan to purchase the electrical power grid from the state's private utilities as a fair swap saying: I give you a dollar you give me a hot dog. ??The sound-bite quickly took on a life of its own. With the cost of the energy crisis growing faster than the price of ballpark franks critics doubted the public's appetite for a multibillion-dollar hot dog. ??Do you really want a hot dog? That is the question said Jan Smutny-Jones executive director of the Independent Energy Producers a trade group for power generators. ??Not content to let a dog lie in its bun lawmakers such as Assemblyman Bill Leonard (R-San Bernardino) kept the hot dog in public discourse. ??When Pacific Gas & Electric Co. filed for bankruptcy protection Leonard was one of a chorus of legislators who questioned the merits of purchasing the remaining portion of the power lines calling it not even half a hot dog. ??Added Assemblyman Bill Campbell (R-Villa Park): It's like paying Mercedes prices for a broken down hot dog cart. ??In recent weeks the hot dog rhetoric appeared to have gone cold. Then Assemblyman Juan Vargas (D-San Diego) revived it. ??After enduring hours of testimony on details of the deal to purchase Edison's power lines Vargas said his opinion of the dollar-equals-hot-dog deal had diminished. ??They're trying to charge us for a hot dog Vargas said of the utility but it looks like we're only going to be getting a wienie. ??Reliant Vice President John Stout also recently weighed in with his own hot dog analogy as he tried to explain why his company's income had jumped so much during the crisis. ??If you have a hot dog stand and you go out and buy five to six more hot dog stands Stout said referring to his company's purchase of power plants then naturally you would expect the operating income to go up. ??Alas the dog days of summer have yet to begin. LOAD-DATE: May 27 2001 of 4 DOCUMENTS ?????????????????Copyright 2001 The Chronicle Publishing Co. ?????????????????????????The San Francisco Chronicle ????????????????????MAY 26 2001 SATURDAY FINAL EDITION SECTION: NEWS Pg. A1 LENGTH: 835 words HEADLINE: Davis asks U.S. to limit firms' prices RATE SWINGS: Governor argues 2 generators manipulated market SOURCE: Chronicle Sacramento Bureau BYLINE: Lynda Gledhill DATELINE: Sacramento BODY: Gov. Gray Davis pursued a new strategy yesterday to control wholesale electricity costs by demanding that federal regulators ban two generators from selling power in California at market rates arguing that they have manipulated the market to their advantage. ???Meanwhile the Davis administration lambasted a federal plan to implement temporary price controls scheduled to go into effect Tuesday. State officials said the measures would do nothing to tame California's out-of-control costs for electricity. ???Davis whose calls for broader price limits on wholesale electricity have been rejected repeatedly by the Federal Energy Regulatory Commission is scheduled to meet with President Bush next week to ask Washington to do more to help California. ???Federal regulators said that prices were 'unjust and unreasonable' nearly nine months ago but they have been AWOL ever since Davis said in a statement. ???The California Independent System Operator managers of the state's electrical grid asked energy regulators yesterday to revoke the authority they have given Williams Energy and AES Inc. to sell power at market-based rates. Instead the Davis administration wants the companies to be forced to sell at cost-plus rates which would ensure a reasonable but limited profit. ???Market-based rate authority is not an entitlement the ISO said in a filing with federal regulators. ???The ISO asked regulators to act by June 15 saying that any delay places California consumers and the state's economy at extreme peril. ???Similar filings against other companies such as Mirant Duke and Reliant are being considered said Charles Robinson general counsel for the ISO. ???Robinson said the ISO has a well developed record of price manipulation by the two companies. He said information previously given to federal regulators proved the prices charged to California were excessive. ???'GRANDSTANDING' ACCUSATION ???Aaron Thomas a spokesman for Virginia-based AES said the administration is grandstanding. ???This is akin to the rhetoric the governor has used for the past several months he said. We are well below the index FERC uses to establish concerns about market power. ???As to this rhetoric about these companies abusing the marketplace -- check the facts. We lost money last year Thomas said. ???A spokeswoman for Williams said the company would not comment because it had not seen the filing. ???Earlier this month Oklahoma-based Williams agreed to pay $8 million to settle charges with FERC that the company was purposely withholding electricity from California's power market. The company admitted no wrongdoing and officials said a full hearing would have cleared the company. ???If the regulatory commission denies the state's requests or doesn't act in the time frame we believe is necessary to prevent harm the state can appeal to a circuit court Robinson said. ???BUSH VISIT POSTURING CHARGE ???Jan Smutny-Jones head of the Independent Energy Producers Association said the move is posturing by Davis ahead of Bush's visit. ???This is an interesting welcome mat for President Bush he said. Do we want a dialogue or a diatribe? ???In advance of Bush's visit Vice President Dick Cheney said yesterday that nothing more can be done to help solve California's power problems this summer. ???He also rejected price controls saying that previous efforts have contributed to a supply shortage. ???A spokesman for Davis rejected that notion and denied that the timing of yesterday's announcements were connected to the Bush-Davis meeting. ???Davis aides expressed hope that Bush's two new FERC commissioners Pat Wood III a close Bush ally expected to take over the chairmanship of the board and Nora Mead Brownell a state utility regulator in Pennsylvania would hear California's pleas. The two new commissioners were confirmed yesterday by the U.S. Senate. ???Among the things Davis wants changed is the regulatory commission temporary price relief plan scheduled to take effect Tuesday. ???The regulators would limit wholesale prices during power alerts in California when reserves drop below 7 percent of available capacity. ???Many state officials believe that doesn't go far enough. The state Assembly in documents to be filed Tuesday said price controls should cover all hours -- not just power emergencies. ???And there is a chance the controls will be in effect for just a few days. Under the regulatory commission plan the state and the three investor-owned utilities must file a proposal to join a regional transmission organization by June 1. If they do not to do so the price controls disappear. ???Davis administration officials expect to file another response dealing with the regional transmission organization by Friday Robinson said. The Assembly filing rejects joining such an organization which federal officials favor as a means to better manage and improve grid capacity in the West. E-mail Lynda Gledhill at lgledhill@sfchronicle.com. GRAPHIC: PHOTO Vice President Dick Cheney said nothing more can be done to help solve California's power problems. / New York Times LOAD-DATE: May 26 2001 May 29 2001 Power Drain: The U.S. Energy Crisis California Officials Say State Will Enter A Recession Without Energy Price Caps By JOHN R. EMSHWILLER Staff Reporter of THE WALL STREET JOURNAL On the eve of a meeting Tuesday between President George Bush and California Gov. Gray Davis top advisers to the governor said the state could be pushed into recession unless the federal government imposes temporary price caps to contain soaring wholesale electricity costs. President Bush has consistently opposed price caps. The governor's team called a Memorial Day news conference to highlight what they saw as the dangers to the economy of the state and possibly the nation from the tens of billions of dollars being spent this year to purchase electricity. The governor's aides estimated that statewide wholesale electricity purchases this year could hit $50 billion compared with about $7 billion in 1999. Some estimates for this year's power expenditures are even higher. If California were a separate nation an energy shock of that magnitude would be expected to cause a significant recession said Alan Blinder a former vice chairman of the Federal Reserve at the conference. While being part of a broader national economy could somewhat mitigate the impact the higher power costs are a recipe for stagflation in California added Mr. Blinder. Stagflation refers to stagnant economic conditions and inflation -- a condition that struck the nation when energy prices soared in the 1970s. Though the advisers painted perhaps the dreariest outlook yet to come from the governor's office they said that the Davis plan for financing the state's electricity purchases remains intact. As reported the state plans to sell about $12.5 billion in bonds later this year. The state has been purchasing electricity since January when its failed utility-deregulation plan left California's two biggest utilities financially unable to continue buying power. If price caps were instituted the state might have to borrow less money than anticipated or at least face a decreased danger of having to borrow more if the power situation gets worse said Joseph Fichera chief executive of New York-based Saber Partners LLC and an adviser to Mr. Davis. The governor plans to press his case for price caps over the next six to 18 months as supplies are increased with new power plants due to come into operation the advisers said. However Mr. Bush and other federal officials have repeatedly said that they believe price caps would be counterproductive and discourage the building of new power plants. Write to John R. Emshwiller at john.emshwiller@wsj.com1 Copyright 2001 Associated Press AP Online ?????????????????May 29 2001 Tuesday 9:11 AM Eastern Time SECTION: Domestic non-Washington general news item LENGTH: 770 words HEADLINE: ?AP Top News at 9:10 a.m. EDT Tuesday May 29 2001 BYLINE: JEROME MINERVA BODY: ??NATO Won't Back U.S. Missile Plan ??BUDAPEST Hungary (AP) ??NATO's top policy-making body stopped short of endorsing the Bush administration's plan for a national missile defense today preparing to offer only to ''continue substantive consultations'' with Washington. The North Atlantic Council does not portray the possibility of missile attack as a common threat faced by allies as the Bush administration had hoped it said in a statement. Secretary of State Colin Powell had hoped to persuade skeptical NATO allies to be more supportive of U.S. missile defense plans. ??Pakistan Accepts India Offer to Talk ??ISLAMABAD Pakistan (AP) ??Pakistani military ruler Gen. Pervez Musharraf today accepted India's offer to hold peace talks on the disputed Kashmir region and other issues. ''I accept your invitation ... to visit India with great pleasure'' Musharraf said in a letter to Indian Prime Minister Atal Bihari Vajpayee. ''We wish to see a stable prosperous India at peace with its neighbors.'' Musharraf's letter came four days after Vajpayee broke a two-year lull in high-level talks between the two rival nuclear powers by inviting the Pakistani leader to India. ??Consumers' Spending Incomes Rise ??WASHINGTON (AP) ??Consumers spent on services in April but cut back on cars and other big-ticket items. Incomes also rose. The Commerce Department reported today that consumer spending rose by 0.4 percent in April following a 0.2 percent increase the month before. April's rise marked the biggest increase since January. Consumer spending accounts for two-thirds of all economic activity and has been a main pillar propping up the country's fragile economy. Personal incomes rose 0.3 percent. ??Bush Won't Cap Electricity Prices ??LOS ANGELES (AP) ??President Bush says he won't force down soaring electricity prices that have cost California nearly $8 billion since January. The Republican president and embattled Democratic Gov. Gray Davis arranged a meeting today to talk about the state's energy crisis but there was no indication they would break their stalemate. Bush opposes price limits on wholesale electricity that utilities buy arguing they do nothing to address supply-and-demand issues at the heart of the crisis. ??Tornado Injures 18 in Colorado ??ELLICOTT Colo. (AP) ??Dozens of residents of a sparsely populated town in southern Colorado spent the night in a church after a tornado crushed trailer homes sprayed hail and injured 18 people. ''We just hit the floor in the living room and covered the kids and the tornado hit'' said Trish Davidson whose mobile home was lifted into the air and dropped 10 feet from its foundation. Davidson and about 30 other people spent last night in the basement of a church. Power was out to the church and much of the surrounding area. ??Israeli Motorist Killed ??JERUSALEM (AP) ??An Israeli motorist was killed in a West Bank drive-by shooting today as Israeli and Palestinian officials after two rounds of U.S. mediation spoke of resuming security talks aimed at reducing the violence. The motorist died of head wounds shortly after he was shot on by Palestinian gunmen from a passing car near the West Bank city of Nablus the army said. Two Israeli settlers were shot and injured one seriously in another West Bank ambush last night. ??Record-Breaking DJ Still on Air ??JERSEY CITY N.J. (AP) ??Now you can't get disc jockey Glenn Jones off the air. As of 6:30 a.m. EDT today the DJ had been talking for about 93 hours easily shattering the record for the longest continuous radio broadcast. And he was still talking. ''It's been a test of wills a test of determination'' Jones said. ''The first day was the hardest but we're still going strong.'' Jones said he wanted to remain on the air until he hit the 100-hour mark which would be about 1 p.m. EDT and would then decide whether to continue. ??Nikkei Adds 36 Points ??TOKYO (AP) ??Tokyo stocks rose moderately today in light trading following holidays in the United States and Britain. The Nikkei Stock Average gained 36.12 points to close at 13773.89. ??Agassi Capriati Open With Wins ??PARIS (AP) ??Andre Agassi and Jennifer Capriati began their bids for a second consecutive Grand Slam title winning in straight sets today on the second day of the French Open. Agassi who won the French Open in 1999 beat Sweden's Thomas Johansson 6-2 6-3 7-6 (5). Capriati seeded fourth overcame seven double faults in defeating France's Emilie Loit 6-2 7-5. Both Agassi and Capriati won Australian Open titles earlier this year. LOAD-DATE: May 29 2001 of 98 DOCUMENTS ??????????????Copyright 2001 Knight Ridder/Tribune News Service ???????????????????????Knight Ridder/Tribune News Service Dallas Morning News 29 2001 Tuesday SECTION: DOMESTIC NEWS KR-ACC-NO: ?K7523 LENGTH: 1046 words HEADLINE: Bush begins visit in hostile California BYLINE: By G. Robert Hillman BODY: ??LOS ANGELES _ President Bush landed in hostile territory Monday night beginning his first presidential visit to California amid a pressing energy crisis that he says he cannot ease in the short term. ??We welcome him to California said California Gov. Gray Davis a Democrat who has waged a long-distance war with the Republican president over the high cost and short supply of electricity in the nation's most populous state. ??I hope he has an opportunity to talk firsthand to some of the people who are adversely impacted by the very high rates we're paying for electricity. ??But the president's carefully scrubbed schedule for the next two days provides little time for such an opportunity although he will confer privately with business leaders to discuss high-tech solutions to the state's energy problems. ??Arriving on a cross-country flight that touched down in Arizona for a Memorial Day tribute Bush headed off to prepare for an early-morning stop Tuesday to promote energy conservation at the Marine Corps' Camp Pendleton and a luncheon address to the Los Angeles World Affairs Council. ??On Wednesday he'll visit Sequoia National Park near Fresno Calif. to launch a new drive to clean up and fix up national parks. ??He'll also meet privately Tuesday afternoon with Davis in what the Los Angeles Times characterized as a peace summit. But no major shifts in policy are expected. White House aides suggest that the meeting will be a success if the governor even temporarily tempers his sometimes-harsh words for the administration. ??The president's focus is going to be on solving problems. He's not interested in finger-pointing White House press secretary Ari Fleischer said. ??Whether people agree or disagree with the specifics of his energy plan I think most Americans and most Californians are very pleased to see a president who is leading and taking action in addressing the issue head on. ??However recent public opinion polls show the president and the governor taking hits for the energy crisis in California. ??The Field Poll finished a week ago found that 54 percent of those surveyed believed Bush had handled the energy problems poorly with Davis faring somewhat better at 38 percent. The margin of error for the 1015 California interviews was 3.2 percentage points. ??An earlier survey by the Public Policy Institute of California found Davis' job approval rating plummeting from 63 percent in January to 46 percent in May as the state's energy troubles escalated. Bush's overall approval rating was higher at 57 percent but still just as many of those surveyed gave him low marks for his handling of energy issues. That margin of error for 2001 interviews was 2 percentage points. ??In short political analyst Sherry Bebitch Jeffe said Bush's visit to the state _ in his 19th week as president after already visiting more than half the other states _ is long overdue. ??His not responding or not being perceived to respond to the short-term needs of California has allowed Davis' arguments to resonate _ that the federal government is uncaring is insensitive Jeffe said. ??In his national energy policy unveiled nearly two weeks ago Bush offered a series of mostly long-term recommendations to conserve energy find more of it and substantially upgrade and expand the nation's oil refineries and transmission systems for natural gas and electricity. ??Davis complaining that Texas energy companies in particular are gouging Californians has urged Bush to embrace price controls for wholesale electricity but the president has steadfastly refused. Vice President Dick Cheney who oversaw development of the White House energy policy emphasized as recently as Friday that there's no quick fix on the way for California. ??Long term the answer is to build more power plants and that's exactly what they're doing Cheney told the U.S. Chamber of Commerce. But they're not going to have enough new capacity online this summer to avoid blackouts. ??So the energy woes continue to fester in California. It's not just electricity and rolling blackouts. Gasoline prices of $2-and-more-a-gallon have become commonplace as well. ??The gas bothers me more than the electric said Tait Kmentt who runs a legal process serving business in Irvine Calif. Gas prices are killing me. ??At $2.25-a-gallon for premium gasoline he says it costs him more than $40 to fill up his new Mercedes _ with no relief in sight. ??A newcomer to the state Kmentt voted for Bush last fall and said he's glad the president is finally visiting California. But Kmentt cautioned This will be a big test to see how concerned he is. ??Kmentt said he understands the state's energy troubles are a huge problem that can't be fixed overnight and right now he's blaming the power companies for the high price of electricity. ??I just think the public is being lied to he said. ??Still this is not good news for Bush who has been increasingly portrayed by Democrats as a Texas oilman still beholden to the industry. California which he lost last fall to Al Gore by 12 percentage points has become increasingly a political headache. ??Where his predecessor Bill Clinton seemed politically and personally comfortable Bush is not suggests Jeffe a senior scholar in the School of Policy Planning and Development at the University of Southern California. ??An ego cannot be buoyed by losing the state by 12 points she said. We are the state that was responsible for giving Al Gore his popular vote victory. ??With the Senate now headed for Democratic control Jeffe said Bush's visit to California _ and others that will surely follow _ are essential to help Republicans hold their base in the House. ??If the energy crisis persists in California further punishing its economy the ripple effects will certainly spread she said. ??George Bush remembers the influence of the economy on the career of an incumbent president Jeffe said pointing to Bush's father who was defeated by Clinton during an economic slump in 1992. ??It took a while she said but people are beginning to get angry. ??(c) 2001 The Dallas Morning News. ??Visit The Dallas Morning News on the World Wide Web at http://www.dallasnews.com/ JOURNAL-CODE: DA LOAD-DATE: May 29 2001 of 98 DOCUMENTS 2001 / Los Angeles Times Angeles Times ??????????????????????May 29 2001 Tuesday ?Home Edition SECTION: California Part 2 Page 1 Metro Desk LENGTH: 1178 words HEADLINE: Governor to Stress Price Caps to Bush Power: In a meeting today with the president Davis will present a letter from economists backing cost controls and demand federal assistance. BYLINE: DAN MORAIN JAMES GERSTENZANG TIMES STAFF WRITERS BODY: ??Gov. Gray Davis will present a letter to President Bush today from top economists advocating wholesale electricity price controls warning Monday that a failure by Bush to help California solve its energy crisis could signal to other regions that he may ignore their pleas. ??Bush making his first trip to California has set aside 20 minutes this afternoon to meet with Davis in Century City. In an interview with The Times the Democratic governor vowed to repeat his request that the federal government move to cap wholesale power prices. Failure to act swiftly threatens the state and national economy Davis said. ??I want him to understand Davis said that if California has to pay 700 times more for electricity in 2001 than it did just two years ago it could well drag our economy into a recession and could conceivably trigger a national recession. That is not good for anyone. ??In the letter 10 economists including Cornell professor emeritus Alfred Kahn a major proponent of airline deregulation told of their deep concern about the failure of the Federal Energy Regulatory Commission to stabilize wholesale electricity prices in California. The economists faxed the letter to the White House on Friday afternoon and provided the governor with a copy to present to Bush today. ??FERC's failure to act now will have dire consequences for the state of California and will set back potentially fatally the diffusion of competitive electricity markets across the country the economists led by Frank Wolak of Stanford University wrote. Moreover this negative experience with electricity restructuring could delay or reverse current efforts to introduce competition into other formerly regulated industries. ??Davis called the letter very significant validation of what we've been saying: The marketplace is not working and FERC has an obligation to act. ??We're not pleading for relief we're entitled to it Davis said. ??Bush and Vice President Dick Cheney repeatedly have said such controls never work. In California caps might worsen the situation by limiting supply they have argued resulting in more blackouts this summer when demand for electricity is highest. ??The Bush-Davis meeting has had all the buildup of the political equivalent of a title fight: On one side the Democratic governor of the nation's most populous state which Bush lost by more than 1 million votes in November. On the other the new president coming off a roller coaster week of political defeat (the shift in control of the Senate) and victory (passage of his tax-cut plan) whose work in the Texas oil industry gives him a special history in the topic at hand. ??From afar Davis has battled the Bush administration's energy policy. But said Dan Bartlett one of the president's chief communications advisors The president has some interesting views on this topic as well with some experience himself. ??Bush's Energy secretary Spencer Abraham took steps Monday to increase electricity transmission capacity in California. He ordered the Western Area Power Administration a division of the Energy Department that is responsible for marketing electricity from federal water projects in 15 Western states to finish its planning for extra transmission capacity. ??At issue is so-called Path 15 an 84-mile stretch of power lines with insufficient capacity to carry the necessary load between Southern California and the northern part of the state especially during peak hours. The central question is whether financing is available for a new transmission line. ??Davis lauded the action but said the president needs to do more. ??If I have any advice to him of a political nature it is take a chapter out of President Clinton's book. ?? [Clinton] was very attentive to California and as a result did better in 1996 than he did in '92. People felt he was here for us when we needed help. We need help. ??Davis said that on a recent trip to Chicago officials there worried that if Bush won't offer California some relief he may not offer us relief in a catastrophe. ??Among the facts and figures Davis intends to show the president is a chart showing that California paid $1.2 billion for electricity in the first quarter of 1999 $1.8 billion for the same period last year and as much as $10.3 billion for electricity in the first three months of this year--at a time when conservation efforts had been taking hold and demand was down. ??I hope the president will be as stunned as I am said Davis who is watching as the state spends more than $55 million a day to buy electricity that private utilities can no longer afford. ??Davis said that though he is trying to speed construction of power plants encourage conservation and return the private utilities to financial stability the federal government has control over wholesale power prices. ??Therein lies the final piece of this puzzle Davis said. If it falls into place we're on the way to putting this issue behind us. If it doesn't fall into place it could create real economic havoc here and across the country. ??Davis said that if Bush refuses to impose price controls he should find some way to help us consistent with his own belief. ??Turning a deaf ear not only won't be well received here Davis said. It likely won't be received well elsewhere. ??The state's energy crisis has posed a ticklish dilemma for Bush's busy travel schedulers: Had he visited earlier it would have been awkward not to focus on energy issues. But until 11 days ago when a task force led by Cheney produced energy proposals there would have been little Bush could say. ??Karen Hughes the president's counselor made it clear that regardless of the pressure Bush will not yield on price caps. ??We want to help. The president is very concerned about the energy situation and blackouts she said. But limiting the wholesale price of energy would only discourage its production Hughes said. ??California is the 30th state Bush has visited since taking office Jan. 20. His staff said the delay had to do not with energy issues but with politics and geography. ??With the administration focused in its first months on winning approval of the tax cut the president's travels were largely dictated by that effort his aides said. ??Besides the president confided recently even with Air Force One at the ready it just takes too long to fly from Washington to California. ??Still Hughes said the president is not ignoring California. Condoleezza Rice the president's national security advisor and a former Californian sits next to Hughes every morning at the daily meeting of the White House senior staff she said. ??What's more the president has many friends in California Hughes said adding: Ernie has a home in California these days. Ernie is the Bush family cat that is living with a friend in Brentwood while the First Family lives in the White House. ??* ??Times Staff Writer Massie Ritsch contributed to this story. LOAD-DATE: May 29 2001 of 98 DOCUMENTS 2001 / Los Angeles Times Angeles Times ??????????????????????May 29 2001 Tuesday ?Home Edition SECTION: Part A Part 1 Page 1 Metro Desk LENGTH: 1541 words HEADLINE: THE ENERGY CRISIS Kern County Basks in Role as State's Blackout-Buster Electricity: Six new plants will bolster its status as energy center. BYLINE: MITCHELL LANDSBERG TIMES STAFF WRITER DATELINE: McKITTRICK Calif. BODY: ??You could think of this as California's own little slice of west Texas. ??Here in the scruffy brown hills of western Kern County oil rigs grow more easily than trees pickups are more common than cars and chicken fried steak is the most popular dish at Mike and Annie's McKittrick Hotel. ??The hotel--which no longer offers lodging just food and drink and plenty of it--is bustling these days with the roustabout energy of a Lone Star construction camp. Just down the road a mammoth electrical power plant is rising out of the sagebrush its generators housed in four boxy buildings the size of airplane hangars. ??It is one of six new major gas-fired power plants expected to be built in Kern County over the next several years an electrical construction boom unmatched anywhere in California. Kern which already has a large surplus of electricity is cementing its place as California's energy capital assuming far more than its share of the burden in recharging the state's drained power supplies. ??Over the next several years the county will add nearly 5000 megawatts of power to the statewide grid. That is more than California now imports on average from out-of-state suppliers. It's enough to supply about five counties the size of Kern which fills the dusty southern rim of the San Joaquin Valley and has a population of 662000. ??In some parts of the state a proposal to build a new power plant is a call to throw up the barricades. In recent months intense community opposition has forced developers to pull back proposals to build major plants in South Gate and San Jose although Gov. Gray Davis has tried to revive plans for the San Jose plant. ??You don't hear a lot of not-in-my-backyard talk in Kern County. ??There should be power plants in everybody's backyard said Paul Gipe chairman of the Kern chapter of the Sierra Club which did not oppose any of the new plants. If people are concerned about having too many power plants they should think twice when they flip on the light switch. ??New natural gas-fired power plants Gipe reasoned are relatively clean and will not add significantly to the county's serious air pollution problems. Ideally he said they will allow the state to close some older dirtier plants that cause considerably more environmental damage. ??If environmentalists don't oppose the plants it's not too much of a leap to guess that some people might be positively thrilled about them. ??Just try for instance asking somebody in Taft an oil center south of McKittrick. It's more money coming into Kern County--that's the way I look at it said Pamela Dunlap who runs a downtown thrift shop. ??An Economy Rooted in the Oil Industry ??She stood in the twilight outside her shop on a street that embodies many of the most attractive attributes of small town Americana--with one small difference. Where some towns might have statues of their founders or war heroes in prominent public places Taft has erected small oil rigs and other pieces of drilling machinery a reminder of its economic roots. ??That Kern County has stepped up as California's blackout-buster is perhaps not surprising. ??To begin with there's geography. Kern stands astride California's major north-south electrical transmission lines at precisely the spot at which they divide between the service areas of Pacific Gas & Electric which serves Northern California and Southern California Edison. That spot can be pinpointed as the Midway substation a vast jungle of humming wires transformers and circuit breakers that lies a short distance west of Interstate 5 in the town of Buttonwillow. ??Already massive new circuit-breakers--they look like Frankenstein helmets sprouting 5-foot-long sparkplugs--are being erected at Midway to handle the power from two major plants that will be revving up in the coming months: PG&E National Energy's La Paloma plant the one near McKittrick and Edison Mission Energy's Sunrise plant just south of Taft. ??The county is served by two major natural gas pipelines which will be tapped to run the plants. In fact Kern contains the state's largest known reservoirs of natural gas. ??Another of Kern's geographic advantages? ??You look around and you'll see there aren't a lot of people living around here observed Stephen Whaley who is overseeing construction of the Sunrise plant. In the surrounding hills an orchard of oil rigs bobbed in the morning haze. Dirt roads cut crudely across the landscape bisecting a crisscross of steam pipes fuel lines and electrical wires. ??This area is all about oil Whaley said. Casting a glance at the modular 560-megawatt plant rising behind him he added with a wry smile You know I guess you could look at this from the road and you could make the argument that it improves the looks. ??The Sunrise plant a relatively simple single-cycle plant is expected to fire up 320 megawatts of its total output by Aug. 1 a scant nine months after construction began. The other plants--more complex and efficient dual-cycle operations--will be opening over the next several years assuming all receive final approval. ??The lack of major opposition to the plants is of course another reason developers see Kern County as a good place to build. The county has long had a more intimate relationship with energy--oil gas electricity--than most places. To people here the link between a natural gas well and a lightbulb or an oil derrick and a gas pedal is neither theoretical nor especially threatening. They're comfortable with energy. ??Kern produces more crude oil than any other county in the United States outside Alaska. Property taxes from oil companies have helped build handsome new schools in Bakersfield the county seat and largest city. The companies' big payrolls have helped populate elegant subdivisions with names that sound vaguely Houstonian: Seven Oaks River Oaks Landmark Estates. ??Which brings us to the Texas connection. ??It's hard to overlook it in a county that runs on oil and cotton and boasts a country music scene to rival Austin's. Conversations in the finer Bakersfield restaurants are filled with references to trips to Texas of colleagues in Midland and Odessa. A Bakersfield radio station was running a contest recently: The winners would be flown to a bull riding championship in Houston. ??Until December 1999 American Airlines offered direct jet service between Bakersfield and Dallas. It stopped after Occidental Petroleum moved its headquarters from Bakersfield to Houston. ??This is a county where President Bush received more support in the November election than he did in Texas his home state. But then Bush already had a Bakersfield connection: He lived there briefly as a child when his father former President George Bush worked in the Kern oil fields. ??You look at the topography around Bakersfield and the county's morals and ethics--that predominantly conservative attitude that we have around here--and you look at the oil and you could be in Midland said John Allen the general manager of Occidental of Elk Hills which is developing a power plant in tandem with Sempra Energy of San Diego. ??A lot of people in Kern County will tell you they don't mind being an energy farm for the state. It's a living after all. ??It's good to be working at home said Joe Ryan a Bakersfield pipe welder who has spent years on the road seeking the heavy construction work that seemed to have vanished in his hometown. Now he's working at the La Paloma plant a 1048-megawatt behemoth that will come online in phases beginning in December. ??About 800 people are at work on the plant and several hundred more will be employed in the coming months. And after that plant is done there will be others to build. ??This is a good job here I tell you what said Ryan 47 who has been banking his overtime on six 10-hour days a week--sometimes more. ??County Sees Itself as 'Part of the Solution' ??But there are some signs of simmering resentment especially among county leadership. After all if every other county produced just half the electricity that Kern generates California wouldn't have an energy crisis. And people in Kern County are getting hit with the same spring-loaded electricity bills the same rolling blackouts as everybody else. ??I think the people of California are either going to be part of the solution or part of the problem said Assemblyman Roy Ashburn (R-Bakersfield). And in Kern County we have a long history of being part of the solution especially when it comes to energy issues. ??Elsewhere in the state Ashburn sees a lot of arrogance--people who enjoy the benefits of a very high quality of life enjoy the benefits of electric power for jobs and for their personal life but with an exclusivity that it's someone else's problem to create that for them. We don't have that attitude in Kern County. ??Power Buildup in Kern County ??Six new major gas-fired power plants are expected to be built in Kern County over the next several years making the county the power capital of the state. ??* ??RELATED STORY ??Letter to Bush: Gov. Davis will ask for wholesale energy price caps. B1 GRAPHIC: PHOTO: Tom Romesberg general manager of La Paloma plant being built in Kern County stands next to the unit's cooling tower. PHOTOGRAPHER: AL SEIB / Los Angeles Times PHOTO: From rigs and pipelines like these near Taft Kern pumps more crude oil than any other county in the U.S. outside Alaska. With several gas-fired power plants coming online in the next several years the county will solidify its place as California's energy capital. PHOTOGRAPHER: AL SEIB / Los Angeles Times GRAPHIC: Power Buildup in Kern County Los Angeles Times LOAD-DATE: May 29 2001 of 98 DOCUMENTS ??????????????????Copyright 2001 The New York Times Company New York Times ?????????????????May 29 2001 Tuesday Late Edition - Final SECTION: Section A Page 12 Column 1 National Desk LENGTH: 1078 words HEADLINE: For Crucial California Trip Bush Calibrates How Best to Handle State's Energy Crisis BYLINE: ?By DAVID E. SANGER DATELINE: LOS ANGELES May 28 BODY: ??Days after he suffered the biggest political setback of his four-month-old presidency and then won the tax cut that he staked his campaign upon President Bush traveled tonight to California carefully calibrating how to deal with the state's energy crisis. ??After Memorial Day celebrations in Washington and Mesa Ariz. Mr. Bush began his first visit as president to the most populous state which he lost by roughly 12 percentage points in November's election. The visit seems likely to showcase the clash between two very different energy strategies and political strategies. ???Mr. Bush will meet briefly on Tuesday with Gov. Gray Davis who will insist as he did again today that the federal government impose price caps on wholesale electric power. ??The White House says Mr. Bush will refuse again. He will argue that such caps would only discourage increased production of electric power. We think that's a mistake Vice President Dick Cheney said on Friday talking about why he rejected those options when he prepared the energy policy the administration made public 10 days ago. ??But Mr. Bush knows that how he handles the California energy crisis could prove critical to his political fortunes especially now that his party's loss of control in the Senate seems bound to slow or derail passage of major elements of his energy plan. ??Moreover the president can no longer argue that the best cure for high energy prices is a tax cut because that is now legislative history. As one of his aides said this weekend after Congress approved the $1.35 trillion tax cut that will be phased in over the next 10 years we will have to turn now to the other arguments. ??Most of those arguments involve urging the rest of the country not to follow California in a partial deregulation of the market with disastrous results. ??Repeatedly Mr. Bush has chastised California's politicians and by implication Mr. Davis himself for ignoring politically unpalatable choices to avert the state's power-generating crisis. Ten days ago standing in front of a hydroelectric plant in Pennsylvania Mr. Bush used the state as Exhibit A for his argument about what happens when population rises when over-regulation freezes the construction of new power plants and the stringing of new transmission lines and when politicians fail to plan for the long term. ??The problems in California shows that you cannot conserve your way to energy independence Mr. Bush said then. ??At the same time his aides were pointing to polls showing Mr. Davis's approval ratings plunging. They did not mention that Mr. Bush's ratings in the state were hardly any better. A series of recent polls show that roughly two-thirds of Californians believe Mr. Bush should be doing far more to help the state though it is unclear exactly what kind of help they have in mind. ??So Mr. Bush's aides have been struggling for days to choreograph the two-day visit here trying to find ways to differ with Mr. Davis without seeming callous about the problem or in conflict with the state. ??The betting is that Mr. Bush will focus on long-term solutions in contrast to Mr. Davis's call for the quicker fix of price caps. ??The effort started today. Energy Secretary Spencer Abraham issued an order of chiefly symbolic importance saying his department would move quickly to determine whether investors were interested in financing and co-owning a new transmission line that could bring more power to the state. ??The level of interest will be a factor in the decision to build the line later this year the Energy Department said. It said that it would proceed with studies of how the land could be acquired by eminent domain if necessary and that it would speed ahead with environmental reviews. ??But Mr. Abraham left wide open the question of whether Washington would go ahead with the project even if no private financing was available. ??The Bush administration is taking a leadership role in addressing a long-neglected problem in California's electricity transmission system Mr. Abraham said. California's electricity problems developed over a period of years and cannot be solved overnight. However we can move now on actions that will help avert the same types of problems from recurring year after year. ??The statement was clearly intended as a prelude to the meeting with Mr. Davis which will be closed to the press. So will a meeting with energy entrepreneurs. (Mr. Bush passed on Mr. Davis's suggestion of a forum with small-business owners and residents who have seen the lights go out.) ??Few expect Mr. Bush or Mr. Davis to change his mind about energy caps after their meeting. ??But for Mr. Bush it will not all be tough love. On Tuesday morning Mr. Bush is scheduled to travel to Camp Pendleton to repeat his call for the military and other federal users of power in California to flip off their switches whenever possible. But given his own comments and Mr. Cheney's about the limited utility of conservation that order could strike some Californians as a little hollow. ??Later he will give a trade speech in Los Angeles underscoring the message that if California hopes to remain the world's greatest exporter of high technology -- if it were a nation California would be the world's sixth-largest economy -- it must find new ways to produce and deliver electricity. ??Already leading Silicon Valley companies are threatening to build their next-generation chip fabrication plants elsewhere probably in Texas which has a surplus of generating capacity a move that would further undermine Mr. Davis's stewardship. ??In fact Mr. Bush's Texas roots will never be far from the political battlefield here. Mr. Davis has accused Texas energy companies of profiteering at California's expense. To press the case he has hired two political operatives from the Clinton White House Marc D. Fabiani and Chris Lehane who are being paid tens of thousands of dollars a month to make the case for price caps. ??California's attorney general Bill Lockyer also a Democrat suggested to The Wall Street Journal last week that some time in jail would be the best way to deal with one of Mr. Bush's biggest supporters -- Kenneth Lay who heads the Enron Corporation and has sought to influence the selection of members of the Federal Energy Regulatory Commission. ??The comments may have been partly facetious but they were not interpreted that way here. ??http://www.nytimes.com LOAD-DATE: May 29 2001 of 98 DOCUMENTS ??????????????Copyright 2001 Knight Ridder/Tribune News Service ???????????????????????Knight Ridder/Tribune News Service ??????????????????????????The Orange County Register 29 2001 Tuesday SECTION: DOMESTIC NEWS KR-ACC-NO: ?K7500 LENGTH: 825 words HEADLINE: California's power crisis generating lots of heat BYLINE: By John Howard BODY: ??SACRAMENTO Calif. _ Detectives would seem to be tripping over each other to discover who did what to whom and why in California's energy crisis. ??While electricity may be scarce investigations are plentiful. A dozen major probes are afoot many overlap and more loom. The atmosphere is heated the rhetoric strong. State federal and local investigators along with court officers financial experts and special investigators are poring over thousands of pages of documents from government agencies and private companies. ??At the top of the swarming heap is the $10 million investigation mounted by the state Attorney General's Office to answer the core question: Did a handful of power sellers fix prices to bilk Californians of billions of dollars? ??But it's not just the government that is busy. The companies themselves _ which have categorically denied any wrongdoing _ are overwhelmed by the scrutiny. ??We are supplying reams and reams of documents. ... It is a distraction from our day-to-day work there's no question said Tom Williams of North Carolina-based Duke Energy which operates several power plants in California. It affects our employees and their families this barrage of innuendo. I don't know what more we can do. ??Accompanying the investigations are at least a half-dozen lawsuits against the companies by individuals. Like the probes the suits contend the companies improperly manipulated the market. Legislative leaders meanwhile have sued the federal government contending it has failed to protect consumers from price-gouging. ??This all permeates our business in so many ways said Gary Ackerman of the Western States Power Forum a group that represents power sellers and buyers in the West. It even affects my ability to talk to the newspapers because we're afraid statements may turn up later and be used as evidence. We're not sure what we're dealing with whether a suit or even a grand jury if the (attorney general) decides to take criminal action as he said he might. ??The state's top prosecutor said that indeed criminal charges are a possibility. ??There is an investigation under way that involves potential criminal conduct said Sandra Michioku a spokeswoman for Attorney General Bill Lockyer. It could be at least eight weeks before that probe is completed she said. ??Other investigating agencies include the Federal Energy Regulatory Commission the California Public Utilities Commission the city attorneys' offices in Long Beach Los Angeles and San Francisco California's grid manager the Independent System Operator the obscure Electricity Oversight Board which oversees the ISO and the state Senate and Assembly. ??The state has even considered asking two more federal agencies the Department of Energy and the Federal Trade Commission to get into the act. Some offices are conducting multiple investigations. In the case of at least two agencies the PUC and the Attorney General's Office the investigations are being at least partly coordinated. Some agencies are examining the same issues. The PUC the attorney general and ISO for example all are looking at whether power plants were shut down to drive up demand and prices. ??There is a lot of overlap and there probably are problems of coordination said Nettie Hoge of The Utility Reform Network of San Francisco a grass-roots watchdog group. ??With so many agencies trying to extract information Hoge said even those who have done no wrong are concerned about talking freely because of the greater likelihood that proprietary information will leak to competitors. ??Others feel the overlap is beneficial. ??When you're up against an industry as wealthy and powerful as the energy industry it's probably better to double-team them said Doug Heller of the Foundation for Taxpayer and Consumer Rights. ??Hoge believes that if any investigation is going to produce results it will be Lockyer's because the governor has thrown all the resources that way. ??Investigators have requested mountains of paperwork. Transaction and maintenance documents market reports financial records even e-mails _ all have been sought. ??Martin Wilson a spokesman for Texas-based Reliant contends the intensity of the probes could have negative long-term effect on California's business climate. ??There is a climate of instability and uncertainty that makes companies rethink their decisions about investments (in California) he said. ??But for consumer groups the goal of all these investigations is straightforward. ??Certainly we're really hopeful that these investigations will lead to refunds for customers said TURN's Mindy Spatz. There is a widespread belief among people who follow these issues that widespread gaming and manipulation has occurred in the market. ??(c) 2001 The Orange County Register (Santa Ana Calif.). ??Visit the Register on the World Wide Web at http://www.ocregister.com/ JOURNAL-CODE: OC LOAD-DATE: May 29 2001 of 98 DOCUMENTS ?????????????????Copyright 2001 The Chronicle Publishing Co. ?????????????????????????The San Francisco Chronicle ?????????????????????MAY 29 2001 TUESDAY FINAL EDITION SECTION: NEWS Pg. A1 LENGTH: 1291 words HEADLINE: Crisis no sweat to some offices Many offices keep cool in crisis Air conditioners blast in state's energy centers SOURCE: Chronicle Staff Writer BYLINE: Steve Rubenstein BODY: Some very cool places to be during the dog days of spring and summer turn out to be the places with their fingers on California's air conditioning switch. ???If only the entire state could cram itself into the cavernous control room in Folsom of the Independent Systems Operator where the air is a comfortable 69 degrees and receptionists wear sweaters at high noon -- when it's upwards of 90 degrees outside. ???Or the Pacific Gas and Electric Co. lobby in downtown San Francisco where the air is an even chillier 65 degrees which admittedly isn't much of a bounty considering it's usually that cool outside anyway. ???Other cool places to be are the state Capitol where legislators who promulgate energy edicts hang out and the headquarters of the state Public Utilities Commission where bureaucrats who promulgate energy edicts hang out. ???Armed with a high-tech digital thermometer The Chronicle made the rounds of the energy crisis poohbahs to make sure they are practicing what they are preaching. ???Some were some weren't. Those that weren't blamed it all on that most familiar of modern scapegoats the computer. ???Computers must be kept cool -- in the 60s for big mainframes and a bit more for the smaller units most folks use though some can go into the 80s without hiccuping. So generally people who work alongside the computers get to keep cool by association although it's the computer that counts. ???The ISO headquarters located in an industrial park 20 miles east of Sacramento is a delightfully cool and comfortable place when the outside temperature soars into the 90s and 100s. ???The reception area the only room accessible to the outraged public is a fairly stiff 76 degrees -- only two degrees cooler than the 78 degrees recommended by President Bush and the federal energy crisis czars and czarinas. ???But take a step past the lobby security doors and the temperature plummets. In the main hallway the temperature is 73 degrees. And in the control room where two dozen engineers and technicians sit at consoles and monitor the flow of California electricity on a giant diagram of state power lines so they can order blackouts for everyone else -- the temperature is 69 degrees. ???NO SWEATING AT ISO ???Some managers do not take off their sports coats and jackets. ???We want these people to be comfortable explained Tony Capasso facilities manager for the ISO complex. We don't want these people sweating bullets in the middle of a crisis. ???Inside the state Capitol where legislators and the governor preach compliance with federal guidelines calling for 78-degree thermostats the temperature dips into the high 60s. The coolest spots are the press briefing room and the treasurer's old office. ???GOVERNOR'S OFFICE ???The governor's suite is in the mid-70s apparently because folks are often coming by with thermometers and it wouldn't do not to set an example. Press secretary Steve Maviglio said Governor Gray Davis is a practice-what-he-preaches kind of guy who keeps corridors dark shades drawn air conditioners idle. His personal secretary works in short sleeves with a cheap plastic fan humming nearby. ???It's so dark in the hall that we're always bumping into things said one aide. ???Even so the temperature in the governor's suite of offices is three degrees cooler than the 78 degrees recommended by President Bush -- not the first time the two men have failed to agree. ???THE LEGISLATURE ???The Assembly chamber is 71 degrees while the Senate chamber -- with 40 fewer legislators spewing forth -- is 73 degrees. But the Senate chamber has a southern exposure one Capitol guide explained. ???Hot air from the people sitting inside has nothing to do with it he said. ???In San Francisco the temperature inside cavernous City Hall dips in spots to the mid-60s. College student Jasmine Westbrook who dropped by with her art class on a project to sketch the interior of the building was doing her sketching while wearing a windbreaker to keep warm. ???I want to stay comfortable she said. It think it's supposed to be hotter in here isn't it? ???The mayor's office at 73 degrees was eight degrees warmer than another office down the hall even without the mayor sitting in it. ???63 AT THE PUC ???At the headquarters of the state Public Utilities Commission which is supposed to be keeping an eye on the self-declared bankruptcy of the utility that mails out the bills the lobby temperature is 63 degrees. ???Chief engineer David Omosheyin eyeing The Chronicle's thermometer nervously insisted the 63-degree reading was caused by the lobby's proximity to the front door where the outside temperature at the moment was in the low 60s. He invited the thermometer to visit the upper floors where the temperature was 70. ???As for San Francisco's federal buildings: Bush would probably not frown. ???His orders appeared to be followed during The Chronicle's visits so much so that it was actually hotter inside than out. Though that wouldn't be hard considering it was in the low 60s outside. And the places measured happened to be courtrooms and tax offices where the body heat from anxiety alone could probably melt the paint some days. ???San Franciscans Omosheyin said are losing their perspective when it comes to things like electricity energy alerts and rolling blackouts. In his native country of Nigeria he said the electricity runs sporadically if at all. ???There the power can go off for a week he said. The world goes on. Here people take a lot of things for granted and electricity is one of them. ???As for the offices of the places that report on such matters they fared about the same. ???The Walnut Creek bureau of The Chronicle where the sun sizzles into the 90s with regularity in the summer is kept at 67 degrees because of all the computers. The main newsroom of The Chronicle is kept at 71 degrees because of all the computers. But the reception room was 71 degrees too and there aren't any computers there not a one. ???Some offices keeping their cool Place ????Outside ?temperature Control Room California Independent Systems Operator (Folsom) ?????????????????69 ??????90 Governor's office Capitol (Sacramento) ???75 ??????94 Press briefing room Capitol (Sacramento) ?68 ??????94 Caltrans headquarters (Sacramento) ????????70 ??????94 Chronicle bureau newsroom (Walnut Creek) ??67 ??????90 Mayor's Office San Francisco City Hall ???73 ??????63 Calif. Public Utilities Commission lobby (San Francisco) ???????????????????????????63 ??????63 State Building (San Francisco) ????????????69 ??????63 Courtroom 19th floor Federal Building (San Francisco) ???????????????????????????70 ??????63 Lobby Pacific Gas and Electric headquarters (San Francisco) ??????????????65 ??????65 IRS office Federal Building (San Francisco) ???????????????????????????69 ??????63 Main newsroom San Francisco Chronicle (San Francisco) ???71 ??????64 ???E-mail Steve Rubenstein at srubenstein@sfchronicle.com. GRAPHIC: PHOTO (2):CHART: SEE END OF TEXT (1) It's too warm for jackets in the chief clerk's office in the state Capitol building in Sacramento. (2) Jane Malison of Millbrae needed a fan while touring a warm section of the state Capitol but other parts of the building are kept below 70 degrees. / Photos by Kat Wade/The Chronicle LOAD-DATE: May 29 2001 of 98 DOCUMENTS ?????????????????Copyright 2001 The Chronicle Publishing Co. ?????????????????????????The San Francisco Chronicle ?????????????????????MAY 29 2001 TUESDAY FINAL EDITION SECTION: NEWS Pg. A1 LENGTH: 1238 words HEADLINE: Bush facing Davis' heat over energy In first visit to state as president he'll hear governor's plea for help SOURCE: Chronicle Political Writers BYLINE: Carla Marinucci Lynda Gledhill BODY: President Bush wasn't on California soil for more than five minutes yesterday when he was drawn into his first debate on the state's power crunch. ???Rep. Brad Sherman a Democrat from Thousand Oaks who met Air Force One on the tarmac at Los Angeles International Airport along with a group of high school students wasted no time button-holing the president for what appeared to be an animated conversation. ???I brought up . . . the idea that after his meeting with our governor I hoped he would be in favor of wholesale regulation (of energy prices) Sherman said later. He disagreed with me. ???Sherman -- who two weeks ago suggested that the headline to the president's national energy policy should be Bush to California: Drop Dead -- didn't seem optimistic yesterday about Bush's 48-hour visit to the state. I think that the president's policies show either a lack of understanding of what's really going on in California or a lack of concern he said. ???That vignette underscored some of the challenges facing Bush who arrived in California as protesters geared up and Democratic Gov. Gray Davis prepared to press him for federal action on the state's power troubles. ???Besides Sherman Bush was greeted by a crowd of cheering Republicans including Secretary of State Bill Jones and Los Angeles Mayor Richard Riordan the former a declared GOP candidate for governor in 2002 the latter a rumored one. ???But today Bush will sit down with the present governor who lately has been blistering in his criticism of the president. ???The last time I looked California was still part of the United States of America Davis told reporters this weekend. We have contributed disproportionately to the economic growth of this country. There's no reason why a president should not respond to a legitimate request from the chief executive of the largest state in the union. ???In his first visit to California since just before the election Bush plans to emphasize the energy crisis -- but will focus on it through the lens of his own energy plan. ???ENERGY SECRETARY ACTS ???Just hours before the president landed Energy Secretary Spencer Abraham ordered a speedup in planning to relieve a notoriously overloaded electricity transmission line in California. ???Abraham's holiday action was timed to provide a bit of positive news for Bush to announce in California. He ordered the Western Area Power Administration a 15-state marketing arm of the Energy Department to complete planning and seek outside financing to reduce the transmission bottleneck on California's Path 15 which connects the northern and southern parts of the state. ???This morning Bush will visit the Marine Corps base at Camp Pendleton near San Diego to underscore his conservation order for a 10 percent cut in energy usage in federal buildings and military facilities. ???In Los Angeles he will deliver a wide-ranging talk before the World Affairs Council and lead a discussion among business leaders about technological advances in energy conservation. ???Then he will head to Fresno and Sequoia National Park to press his initiative to improve national parks. Along the way protesters have vowed to provide a vocal commentary on Bush's energy and environmental policies. ???But the real drama of the trip will no doubt be the sit-down between Bush and Davis today. The governor pushed for a lengthy open meeting with Bush that would include testimony from officials and consumers affected by the energy crisis. Bush's camp announced Friday the meeting would be 20 to 30 minutes -- in private. ???Davis plans to outline steps the state has taken to alleviate the energy crisis and what it wants the federal government to do -- including implementing price caps on the wholesale cost of energy cost-based pricing and the possibility of ordering refunds. ???DAVIS THREATENING SUIT ???The governor has said he will consider suing the Federal Energy Regulatory Commission -- the agency charged with overseeing energy prices -- if it does not impose temporary price caps. ???And the state Legislature has already filed a suit saying the commission has failed to stop what it has determined are unjust and unreasonable prices. ???With California's energy woes worsening and a summer of rolling blackouts predicted the Bush-Davis session holds potentially deep political pitfalls for both leaders both of whom are suffering in state polls as a result of their handling of the energy crisis. ???Bush needs to demonstrate his concern for California a state that gave a 12-point margin of victory to Al Gore in the presidential election. ???But even as Bush adviser Karen Hughes told state reporters this week that the president had arrived to show he cares Vice President Dick Cheney again chastised state officials for delaying their response to the energy crisis because all of the action was potentially unpleasant. ???And Cheney signaled that the administration would resist long-term price caps saying We think that's a mistake. ???Such talk drew fire from Davis' senior political adviser Garry South who charged that Cheney's words demonstrated insensitivity to California's troubles and only underscored the perception of an all-oil all-the-time ticket. ???Davis whose campaign for re-election next year will depend on his handling of the crisis has stepped up his criticism of Bush and profit-hungry energy firms particularly those from Texas in recent weeks. ???And yesterday signaling no letup Davis' supporters made an unusual holiday conference call to again press his case for federal action. They argued that without immediate intervention from the Bush administration the economy of California -- and potentially the entire nation -- was at risk. ???'THIS ENORMOUS SHOCK' ???We have this enormous shock in prices that needs to be addressed and not ignored said Joseph Fichero head of Sabre Partners and a consultant to Davis. ???Alan Blinder a Princeton economist and former vice chairman of the Federal Reserve warned that energy woes in California alone would take almost a half a percent of the gross domestic product off of the national economy. ???Blinder and others argue that short-term relief -- for about 6 to 12 months -- is necessary while new power plants are being built. ???Most times and most places I agree price caps are not the long-run solution but they can be part of a short-term solution Blinder said. There really is a case for temporary price caps to shield consumers and the California and national economy from the full force of the energy shock. ???Limited new price caps approved by the Federal Energy Regulatory Commission on the sale of wholesale electricity begin today in California. But the temporary caps which go into effect when the electricity reserves dip below 7.5 percent have been lambasted by Davis as ineffective and inadequate. ???Political analysts say Bush's resistence on the issue could cost him in California -- and elsewhere. ???(California) is probably an area where he is criticized more than any other region in the country said Mark DiCamillo director of the statewide Field Poll. Californians are looking to Bush for some relief -- and to the extent they don't get it Bush may be in some jeopardy here.Chronicle news services contributed to this report. / E-mail the writers at cmarinucci@sfchronicle.com and lgledhill@sfchronicle.com. GRAPHIC: PHOTO (2) (1) Rep. Brad Sherman (left) D-Thousand Oaks buttonholed President Bush as he arrived at Los Angeles International Airport to discuss the state's energy crisis. (2) President Bush signed autographs for students from El Camino High School at Los Angeles airport. Bush is to meet with Gov. Davis today. / Photos by Carlos Avila Gonzalez/The Chronicle LOAD-DATE: May 29 2001 of 98 DOCUMENTS 2001 Gannett Company Inc. TODAY ?????????????????????May 29 2001 Tuesday FIRST EDITION SECTION: NEWS Pg. 3A LENGTH: 426 words HEADLINE: Davis to urge Bush to back electricity price cap BYLINE: Laurence McQuillan DATELINE: LOS ANGELES BODY: LOS ANGELES -- California Gov. Gray Davis will urge President Bush today to back a 2-year cap on electricity costs as the best way to keep his power-starved state -- and possibly the U.S. economy -- from sinking into recession. ???The Democratic governor and Republican president who have been sparring from afar over energy policy will meet here to discuss their differences. The White House has said repeatedly that it opposes price caps as a way to deal with energy shortages in California. ??In an interview with USA TODAY Davis said a limit on wholesale electricity costs is needed while the state attempts to build 15 new power plants. He said that would still allow a 30% profit margin. ??While the president didn't create this problem he is uniquely situated to solve it Davis said. I'll make clear that he has an opportunity to relieve the pain and give California the breathing space to put more plants online. ???Bush making his first visit to California as president unveiled a long-term energy policy this month that calls for increased production and to a lesser extent conservation. The president will promote conservation steps being taken by the federal government during a visit today to the Marine Corps base at Camp Pendleton. ??The president believes that imposing price caps will only make the problem worse White House spokesman Dan Bartlett said. ??Davis whose popularity has plummeted as Californians cope with blackouts to offset electricity shortages said his state's problems could hurt all Americans if they are not dealt with quickly. I'm asking for some form of relief that reduces the outrageous prices we're currently bearing he said. Without that relief lots of people will lose their businesses and California could well be dragged into a recession. Since we're about one-eighth of the national economy that doesn't bode well for America. ???The California Public Utilities Commission has announced rate increases of up to 50% for businesses and 37% for homes. ??Bush has sidestepped California after losing the state by 12 percentage points to Democrat Al Gore last year in the presidential election. But with Democrats targeting several GOP House members in next year's elections Republicans must go on the offensive or risk losing control of the closely divided House of Representatives. ??Davis a possible presidential candidate in 2004 said he wants to avoid rancor with Bush: I'm saying 'Look we got into this in a bipartisan way. We should get out of it in a bipartisan way.' LOAD-DATE: May 29 2001 of 98 DOCUMENTS 2001 The Washington Post Washington Post ?????????????????????May 29 2001 Tuesday Final Edition SECTION: A SECTION Pg. A02 LENGTH: 639 words HEADLINE: Energy Chief Moves To Aid California Transmission Plan Precedes Bush Visit BYLINE: Mike Allen Washington Post Staff Writer DATELINE: LOS ANGELES May 28 BODY: ???President Bush landed at ground zero of the nation's energy worries tonight hours after Energy Secretary Spencer Abraham speeded up planning to relieve a notoriously overloaded electricity transmission line through California. ???Abraham's holiday action was timed to provide a bit of news for Bush to announce during his first presidential trip to California where he is to hold a politically charged private meeting with Gov. Gray Davis (D) on Tuesday. Bush's aides said he will pledge to cooperate with California but will stick to his position that no action by the federal government can prevent the rolling blackouts expected this summer. ???Abraham ordered the Western Area Power Administration a 15-state marketing arm of his department to complete planning and seek outside financing for an increase in transmission capacity that he said would be a big step in the right direction and a big step forward for Californians. ???California's electricity problems developed over a period of years and cannot be solved overnight Abraham said in a news release. However we can move now on actions that will help avert the same types of problems from recurring year after year. Today's action is designed to reduce the bottleneck on California's Path 15 which connects the northern and southern parts of the state. ???Davis who is seeking reelection next year has seen his poll ratings plummet as electricity prices soared utilities hit dire financial straits and homes and businesses were surprised with blackouts. ???Bush has taken several steps to try to encourage additional power generation in the state but has maintained since before he took office that California's problems were created here -- through a troubled effort at electricity deregulation and public opposition to construction of additional power plants -- and would have to be solved here. ???Davis plans to use the meeting to lobby Bush once again to endorse a cap by the Federal Energy Regulatory Commission on the wholesale price of electricity. Again and again the administration has said it will not take that step. ???This administration does not and will not support energy price controls Bush told a business audience in March. Price controls do not increase supply and they do not encourage conservation. Price controls contributed to the gas lines of the 1970s. And the United States will not repeat the mistake again. ???Davis energy advisers told reporters on a conference call today that without the cap California energy costs could be $ 50 billion higher this year than two years ago. Alan S. Blinder the Princeton University economist and former Federal Reserve Bank vice chairman said on the call that California's energy crisis should be enough to get the attention of policymakers in Washington. ???The visit by Bush who flew here after making a Memorial Day speech at a fighter aircraft museum in Mesa Ariz. is being carefully managed to avoid contact with the general public. After speaking to military families at Camp Pendleton on Tuesday morning he plans to address a luncheon meeting of the Los Angeles World Affairs Council which has sold out of tickets at $ 75 for members or $ 85 for guests. ???Afterward Bush will hold a closed-door session with business people and then meet with Davis for 20 minutes. As Bush departs Davis plans to make an immediate statement for cameras. ???Although Bush says he has taken more than a dozen steps to help California Davis says price caps are essential and has said he may sue the federal government in an effort to get them if Bush does not go along. ???He has been helpful on a number of small matters and I appreciate his assistance Davis said during a telephone interview on Friday. But the big enchilada is the price of electricity. LOAD-DATE: May 29 2001 of 98 DOCUMENTS 2001 The Washington Post Washington Post ?????????????????????May 29 2001 Tuesday Final Edition SECTION: A SECTION Pg. A03 LENGTH: 1936 words HEADLINE: It's Still Dawn for Solar Power in L.A. Despite City Subsidies Homeowners Hesitate to Install Expensive Alternative Energy Source BYLINE: William Booth Washington Post Staff Writer DATELINE: LOS ANGELES BODY: ???One year ago this city announced its intent to become the Solar Capital of the World with 100000 roofs covered with solar electric panels by the end of the decade an audacious goal to transform the homes of this smoggy but sunny metropolis into miniature power plants. ???To fulfill what is perhaps the nation's most ambitious solar campaign the Los Angeles Department of Water and Power began offering substantial buy down subsidies that would reimburse rate payers for half the price of each new solar energy system. For the average home a photovoltaic package costs between $ 10000 and $ 20000 parts and labor included before the rebate. ???How many have been installed? ???At last count about 40. ???That leaves only 99960 rooftops to go. ???The Bush administration and especially Vice President Cheney architect of its energy plan have been criticized for skepticism regarding alternative energy sources. But a close examination of the Los Angeles solar experiment and a review of similar programs suggest the former oilmen in the White House have a point: Solar at least has not proven ready for prime time. ???For all of Los Angeles's good intentions and for all of solar's many positive attributes the problems of harnessing its power remain. Some of those challenges are economic and some technological others are more mundane but often ignored such as finding a qualified contractor a homeowner can trust to drill dozens of holes in the roofs to mount the things. ???In a reprise of the 1980s solar again is hot. The price of photovoltaics is dropping and interest is growing. Other states such as New York Arizona Florida and Washington are moving to join California in major efforts to wire homes to draw power from the sun. ???But as many Americans are beginning to understand the delivery of energy is like a complex interconnected assembly line and the devil lurks in the details. ???The Los Angeles experiment tells the story shared by other locales. In L.A. for example the city's lone solar panel manufacturer has not been able to supply enough systems to meet demand. ???The systems too are often oversold by solar proponents. In the real world most do not pay for themselves in a few years as some advocates claim but take 20 years or more to return their initial cost in the form of reduced utility bills. ???Nor are the systems maintenance-free: At a minimum the rooftop panels must be routinely cleaned of pollution dust and leaves. ???They cannot be installed efficiently on homes without shade-free south-facing roofs the shadow from a neighbor's palm tree can frustrate the system's photovoltaic cells. ???Nor will the most common systems allow buyers to live off the grid unless they want to purchase a large bank of batteries. Even with the batteries homeowners probably would not be able to run their washing machines and air conditioners at the same time. ???It is not an economic proposition at this point conceded Terry Peterson a solar expert at Electric Power Research Institute in Palo Alto Calif. But one day Peterson predicts 100 years from now solar energy will provide a substantial percentage of the world's energy needs. In a decade or two the cost of solar will likely be competitive with other energy sources such as natural gas nuclear or coal. ???But now? It is still a luxury item. Like buying a swimming pool Peterson said. ???I really like the idea of running my house with solar power said Andrew Chin a potential customer in Los Angeles who has been researching a purchase. But they're still pretty expensive even with the rebates and so I gotta ask myself what am I doing this for his conscience or his wallet. I'm thinking I might wait until they work the kinks out. ???The most knowledgeable and experienced solar contractor in Los Angeles is probably Graham Owen the founder owner and single full-time employee of Go Solar Co. ???His installation of a one-kilowatt solar electric system on a home in the San Fernando Valley was the first to be awarded a rebate by the Los Angeles power department in March. ???How many systems has he installed as part of the rebate program? Three. ???But Owen is a true believer and over the next year he plans to cover hundreds of roofs with solar panels. On his shelf Owen still has an unreturned library book The Coming Age of Solar Energy published in 1963 and checked out from his high school in Lennox Hills Ill. in 1979. I guess we're still stuck in the coming age of solar energy he said smiling. He recalled that the buzz about solar water heaters in the 1980s led to disappointment with shoddy workmanship and less than spectacular energy savings. ???Until recently there has been little widespread interest in solar electric power. Since 1998 the California Energy Commission has been pushing its own program to encourage homeowners to erect photovoltaic panels on their roofs offering to subsidize about one-third of the cost. ???Across a state with a population of about 35 million only 450 solar energy systems have been installed on homes. ???Then the California energy crisis struck with its power interruptions and steep rate increases and the phone calls began to overwhelm Owen's voice mail. ???On days with rolling blackouts? I get a hundred calls maybe more Owen says. His Web site www.solarexpert.com is now receiving 3000 hits a day. Customers are begging him to do jobs. ???The Los Angeles power department reports a similar surge in interest since the energy crisis began six months ago. Customer demand has shot through the roof says Angelina Galiteva executive director for strategic planning at the Department of Water and Power. She estimates that her department receives 1000 calls on some days about its solar subsidy program. ???Yet while the reliability and cost of solar electric technologies continue to improve solar power today accounts for only a sliver of the national pie chart of energy production -- less than 1 percent. The country produces about 300 megawatts of electricity with solar -- about the same amount produced by a single mid-sized traditional power plant. ???The current trend for photovoltaics is not to erect large centralized solar farms in the desert an experiment that withered in the 1980s but to pursue distributed generation or individual units on scattered rooftops. ???The problem has consistently been the cost of the solar panels which has been too steep to justify them except for customers who are committed environmentalists or techies who like the elegance of the systems. ???Los Angeles began its solar experiment after Sacramento legislators mandated that utilities spend about 3 percent of their revenue on efficiency conservation and renewable energy. For solar the power department committed $ 75 million over the next five years -- enough to subsidize panels on 7500 homes. ???The power department will pay $ 5 for each watt of solar installed on a residence or business. Homeowners typically purchase a one-kilowatt or two- kilowatt (1000 or 2000 watts respectively) solar electric system meaning that the municipal utility would pay between $ 5000 and $ 10000 of the cost up front -- an enticing tax-free offer. ???For many years I wanted to do solar but it was so expensive said LaWanda Geary in the San Fernando Valley who in April had Owen install 32 panels for a two-kilowatt system on her sunny roof. The rebate really got me going. I don't know many times when the government offers to pay half of anything. ???The systems that are eligible for rebates must be tied into a utility's electric power grid meaning that during the day when the sun is shining the panels are adding a stream of electrons used by the home to run its lights and appliances. ???If there is a surplus of solar power that electricity goes back into the power lines and is passed along to a neighbor and the electric meter at the house actually runs backward. Homeowners however are not selling their excess electricity -- they're giving it away to the utility company. ???On cloudy days and at night the home is not being powered by solar energy but getting its electricity the traditional way from the power lines. ???Calculations on savings vary. A two-kilowatt solar system can supply an average-sized home with 20 to 80 percent of its electrical needs depending on how many lights appliances and air conditioners are running and how efficient they are. ???After the subsidy and depending on how the system is paid for (in cash or with borrowed funds) a solar system can pay for itself in as little as six years and as much as 36 years. Owen assumes about 20 years. ???Potential solar clients moreover often mistakenly assume that going with the sun will take them off the grid which is not possible without a large bank of batteries that costs several thousand dollars more. Because the solar panels are still wired to the power grid if there is a blackout the power in a solar house goes off just like everyone else's. If uninterrupted power is needed Owen suggests a diesel generator. ???Galiteva does cite one real advantage of solar: It reduces the electricity that must be purchased from power companies and protects to some degree a solar home from the full brunt of upwardly spiraling rate increases. Unfortunately for solar enthusiasts the L.A. Department of Water and Power which was not deregulated along with the three other major utilities in California has perhaps the cheapest and most stable supply of electricity in the state making the economic argument harder to make. ???To receive the full $ 5 per watt subsidy the L.A. Department of Water and Power requires a homeowner to purchase solar panels from a manufacturer based in the city. The idea is not only to become the solar capital of the world but also to encourage local growth of an emerging industry and create jobs. ???One hitch is that no solar panel makers were located in Los Angeles. ???After lengthy negotiations Siemens Solar Industries based in Camarillo Calif. an hour's drive to the north announced in February that it would open a solar panel manufacturing plant in Los Angeles. But it is not a complete facility: The L.A. plant does only some final assembly and then the units must be returned to Camarillo for final testing and shipping. ???Tina Nickerson a spokeswoman for Siemens Solar estimates her company has sold a couple dozen to L.A. homeowners for the rebate program. But she too reports that the interest from consumers is sometimes overwhelming and that supply has been a problem. Most U.S.-manufactured units are shipped overseas to places such as Germany Japan and Scandinavia which have had generous subsidies in place for years. ???LaWanda Geary had to call Siemens herself to push them to deliver panels for her house -- and she was eligible for the rebate because of a stopgap compromise that allows to Siemens to ship solar panels from Camarillo until its L.A. plant is fully operational. ???Everyone involved concedes there have been bottlenecks. Siemens now says it has enough panels to begin to meet demand and Owen and the city are hoping things will sort themselves out especially if more solar manufacturers are drawn to Los Angeles. But proponents worry about what will happen when the subsidies run out. ???Selling solar is now the easy part Owen says. I could sell a hundred a week. It's getting them up on the roof that's the hard part. LOAD-DATE: May 29 2001 of 98 DOCUMENTS ????????????????Copyright 2001 News World Communications Inc. Washington Times ?????????????????????May 29 2001 Tuesday Final Edition SECTION: PART A NATION INSIDE POLITICS Pg. A6 LENGTH: 1264 words BYLINE: Greg Pierce THE WASHINGTON TIMES BODY: ??TAKING YOUR MEDICINE ??Oakland Mayor Jerry Brown who was once governor of California likens current Gov. ?Gray Davis' handling of the electricity crisis to his own bungling of the medfly crisis. ??Here's an analogy to the medfly crisis Mr. ?Brown said in an interview with the Los Angeles Times' Douglas Foster. ?When I first heard about the medfly I said 'Well it's just a few flies maybe they'll go away. ?Maybe they won't keep reproducing.' And the winter came and they stopped reproducing. ?And then somewhere around February or March I learned about something called 'spring emergence.' As the ground got warmer the larvae turned into flies and more medflies started appearing. It got out of hand and ultimately I had to order malathion spraying. ?It would have been better had I taken forceful action at the first notice of the medfly. ??Mr. ?Foster asked: Are you saying that the governor missed opportunities to act early in the same way? ??Mr. ?Brown replied: There's an analogy there. ?I didn't want to spray because I knew the people in Santa Clara County didn't want to have helicopters spraying malathion over their homes. ?It didn't sound good. ?As governor I wouldn't have wanted to see rate increases either. ?But sometimes you have to take your medicine early. ?It's less bitter than if you postpone it. ??Mr. ?Davis served as Mr. ?Brown's chief of staff when the latter Democrat was governor. ??ENERGETIC CRITICISM ??President Bush's energy plan already under fire from Democrats and environmentalists is dismissed by National Review the conservative magazine as so much political posturing. ??The hyperbolic attacks on the Bush plan by environmentalists (as an attempt to poison the air and kill the caribou) shouldn't trick conservatives into an exaggerated sense of its merit the magazine says in an editorial in its current issue dated June 11. ??The basic thrust of the administration's thinking on energy is sound: a growing economy requires more energy which in turn entails more production. But the Bush plan itself is a political document meant to placate corporate interests environmentalists and everyone in between and so is festooned with an embarrassment of subsidies and incentives that will at best prove an irrelevance. ??As Jerry Taylor of the Cato Institute writes in this issue the phantom energy crisis is already healing itself. ?Power plants are being built at a rate that outpaces Dick Cheney's benchmark of one plant a week. Altogether almost 100000 new daily megawatts of electrcity capacity are scheduled to be available nationwide by next year. ?This is twice the amount of electricity that California now uses on an average day. ?While Cheney has been sitting with his advisers around a White House conference table investors and entrepreneurs have been digging building and refining his energy problem into oblivion. ?By the time all the Bush plan's tax credits have kicked in there may well be an energy glut. ?All of this is thanks to the most efficient energy plan known to man: market pricing. ??WRONG ON BOTH COUNTS ??The buzz in the media after Sen. ?James Jeffords' switch put Democrats in control of the Senate was that President Bush must change his ways. ?He has to become more moderate. ?Why? ?Because only that will prevent more Republican defections and it's the president's one hope for getting his agenda through Congress. ?This is wrong on both counts Fred Barnes writes in the Weekly Standard. ??Bush and GOP congressional leaders bent over backwards to accommodate Jeffords and liberal Democrats on education the senator's top priority. Jeffords bolted anyway. ?On taxes Bush stuck with his conservative tax cut until nearly the end when he compromised just enough to assure passage. Jeffords voted with him Mr. ?Barnes said. ??The truth about the impact of Jeffords' move is that no political earthquake has occurred. ?The Senate is ideologically unchanged. ?The swing votes in the Senate including John McCain are important but they already were. ?There's no clear path to victory for the Bush agenda after taxes and education but that was always true. ?To pass a patients' bill of rights a prescription-drug benefit or missile defense a bipartisan coalition of some sort will be essential. ??Yes there's one big change with Democrats taking over: judges. ?Bush will have a harder time getting conservative nominees through a Senate Judiciary Committee run by Patrick Leahy perhaps the most partisan Democrat on Capitol Hill. ?One more downbeat side effect: Jeffords' announcement overshadowed Bush's tax-cut victory denying him any political momentum he might have gotten from it. ??INCOHERENT REBEL ??Before liberals put James Jeffords on Mount Rushmore can we please stop and note how he's already betrayed Democrats and his own avowed principles by deciding that his defection won't take effect until after President Bush's wrongheaded tax cut has been signed into law? syndicated columnist Matthew Miller writes. ??Any traitor (I mean 'man of conscience') worth his salt shoves the knife in to the hilt - otherwise what's the point? ?Machiavellis throughout history have wisely advised that when you move against the king you'd better finish him off Mr. ?Miller said. ??Yet Jeffords took pains to make sure his switch wouldn't derail the centerpiece of Bush's agenda the very agenda that inspired Jeffords' move and which Jeffords had the power to stop via his action. ??We are dealing in other words with a deeply incoherent rebel. ?This would be a private matter for Jeffords to sort out with his therapist were not his cowardice in this moment of 'courage' so consequential for the country. ??THE LONELY VERMONTER ??In the final analysis Vermont Sen. ?James M. ?Jeffords was out of step with his party making his departure appropriate if politically inconvenient. ?Those who argue that it was the party out of step with Jeffords some political analysts are saying are those who wish the Republicans no good. UPI political analyst Peter Roff writes. ??The conservative low-tax minimal-government Republican Party enjoys national parity with the Democrats something the Northeastern liberal GOP could not achieve. ?Jeffords is in that regard these observers say out of step with victory. ?One GOP consultant went so far as to say 'If the Republicans were doing better in New England Jeffords would not have been so lonely. ?Why is it that the people from states where the GOP usually doesn't win think they can tell the rest of us how to run the party and what we all should believe? ?It doesn't make sense.' (spade) ??There are those in the GOP who regret the loss of the majority that Jeffords' defection brings but very few if any are mourning the loss of the lonely Vermonter Mr. ?Roff said. ??LAST WORDS ??Brill's Content asked PR pros how they would handle Vice President Richard B. Cheney's heart problems. ??It's inconceivable that Mr. ?Cheney can put in the kind of time we're led to believe he is without putting himself at risk one public relations man John Scanlon told the magazine. ?My recipe for controlling the situation would be photo-ops access to his schedule and a couple of exclusive articles. ?He's got to convince people he's fit for the job. ??Unfortunately Mr. ?Scanlon did not live to see his quote in the magazine's June issue the New York Post reports. ?He died of a heart attack. ??* Greg Pierce can be reached at 202/636-3285 or by e-mail at gpierce@washingtontimes.com. LOAD-DATE: May 29 2001 of 98 DOCUMENTS ????????????????Copyright 2001 News World Communications Inc. Washington Times ?????????????????????May 29 2001 Tuesday Final Edition SECTION: PART A NATION Pg. A4 LENGTH: 809 words HEADLINE: Bush faces tough sell on visit to California Davis likely to be rebuffed on price caps BYLINE: Joseph Curl THE WASHINGTON TIMES DATELINE: LOS ANGELES BODY: ??LOS ANGELES - Twenty minutes - that's how long Gov. ?Gray Davis who has accused the Bush administration of ignoring California's energy crisis will have to sway President Bush in a meeting today to consider imposing federal price caps on wholesale power prices. ??His plea likely will fall on deaf ears. ??That's simply not going to happen said one senior Bush official. Both Mr. Bush and Vice President Richard B. ?Cheney who on Friday again blamed the state government of California for the energy crunch oppose cap measures. ??In his first visit to California since the presidential election where he lost the state to former Vice President Al Gore by 54 percent to 41 percent Mr. Bush hopes to sell his national energy policy to a vocal group of opponents. But the hue and cry has been muted of late since residents have battled rolling blackouts and sky-high gasoline prices. ??A new poll released Friday shows 59 percent of Californians many of whom have been longtime foes of nuclear energy now believe the non-polluting energy source may be the way to solve the state's problems. ??Mr. ?Davis' popularity has plummeted. ?The Democrat facing re-election next year and often mentioned as a presidential candidate is viewed as having poor job performance by 60 percent of Californians according to a survey by the Public Policy Institute of California. ??In a small gesture to California Energy Secretary Spencer Abraham yesterday announced plans to increase transmission capacity in California which he said would be a big step in easing rolling power blackouts. ??Abraham ordered the Western Area Power Administration - an Energy Department arm responsible for marketing electricity from federal water projects in 15 Western states - to wrap up planning for building extra transmission capacity. ??The governor has repeatedly blamed Mr. ?Bush who took office four months ago for the energy crunch in California. ?He points the finger of blame far outside the state's boundaries primarily at Washington and Mr. Bush's home state. ??The people that have dropped the ball are the federal government Mr. Davis said last week. ?They need to reimpose a price cap because we're being obscenely gouged by price gougers out of Texas and the Southwest. ?. . . There's a massive transfer of wealth going on from ordinary citizens in California to Texas. ??Mr. ?Davis has also charged that utility companies are withholding power in order to drive up prices a claim the Federal Energy Regulatory Commission has investigated and dismissed. ??Mr. ?Bush and Mr. ?Cheney have often pointed out that California is second only to Rhode Island in conservation efforts but the state is on the brink of an energy supply collapse. ??Still despite the state's failure to build new power plants Mr. Davis says California is entitled to a federal bailout approved by Mr. Bush. ??I'm going to keep asking him to do it because we're part of America. The state the last three years has led American economic growth. ?. . . We're doing everything we can out here he said. ??In the Democratic response to the president's weekly radio address Mr. Davis accused the president a former oil man of being concerned only with the petroleum magnates. ??With all due respect I urge you to stand up to your friends in the energy business and exercise the federal government's exclusive responsibility to ensure that energy prices are reasonable he said. ??Many analysts however blame the state's deregulation scheme and failure to construct adequate electrical generating capacity. ?The price wholesale power providers can charge utilities is not capped but the fee those companies can charge users is capped - resulting in massive debt for providers. ??The state was slow to respond to increased demand the analysts say even though the state is building 10 new power plants four of which will come on line this summer. ??In his national energy policy Mr. ?Bush lays out 105 proposals that focus on increasing domestic supply improving the nation's ability to move energy between regions and increased conservation. ?But the policy is geared more toward long-term solutions - such as decreasing America's reliance on foreign oil - than short-term relief for Californians and motorists nationwide. ??Mr. ?Cheney who heads the president's energy task force and said Friday that California knew for more than a year about the impending energy shortage has promoted nuclear power as essential to America's energy needs. ?He said that at least some of the 65 power plants that need to be built annually to meet future electricity demand ought to be nuclear. ??A poll by the Field Institute last week found many Californians now agree. Although nuclear energy produces 20 percent of the nation's energy California has just two nuclear plants. GRAPHIC: Photo Gov. ?Gray Davis LOAD-DATE: May 29 2001 of 98 DOCUMENTS ????????????????????Copyright 2001 Chicago Tribune Company Tribune ???????????????May 29 2001 Tuesday NORTH SPORTS FINAL EDITION SECTION: News Pg. 6 ZONE: N LENGTH: 514 words HEADLINE: Bush backs WW II project BYLINE: From Tribune news services. DATELINE: LOS ANGELES BODY: ??President Bush promised World War II veterans a Washington memorial that will stand for the ages and paid Memorial Day tribute to America's fallen soldiers before embarking on a three-day West Coast swing to try to ease his political problems in California. ??Bush landed at ground zero of the nation's energy worries Monday night hours after Energy Secretary Spencer Abraham speeded up planning to relieve a notoriously overloaded electricity transmission line through California. ? ??Abraham's action was timed to provide a bit of news for Bush to announce during his first presidential trip to California where he is to hold a politically charged private meeting with Democratic Gov. Gray Davis on Tuesday. Bush's aides said he will pledge to cooperate with California but will stick to his position that no action by the federal government can prevent the rolling blackouts that are expected this summer. ??Abraham ordered the Western Area Power Administration a 15-state marketing arm of his department to complete planning and seek outside financing for an increase in transmission capacity that he said would be a big step in the right direction and a big step forward for Californians. ??California's electricity problems developed over a period of years and cannot be solved overnight Abraham said in a news release. However we can move now on actions that will help avert the same types of problems from recurring year after year. Monday's action is designed to reduce the bottleneck on California's Path 15 which connects the northern and southern parts of the state. ??Davis who is seeking re-election next year has seen his poll ratings plummet as electricity prices soared utilities hit dire financial straits and homes and businesses were surprised with blackouts. ??For most of Monday however Bush focused on U.S. veterans and the solemn ceremonies in two states honoring those who never returned from America's wars. ??Their losses can be marked but not measured Bush said at the traditional Memorial Day ceremonies at Arlington National Cemetery in Virginia. We can never measure the full value of what was gained in their sacrifice. We live it every day in the comforts of peace and the gifts of freedom. ??Bush also laid a wreath at the Tomb of the Unknowns. ??Later he traveled to Mesa Ariz. to pay tribute to veterans at the Champlin Fighter Aircraft Museum. He asked the crowd to observe a nationwide moment of silence at 3 p.m. Arizona time. ??Any foe who might challenge our national resolve will be repeating the grave error of defeated adversaries the president said. ??Bush opened the day at the White House where he signed legislation to construct a World War II monument on the National Mall a setting criticized by some. Bush said the monument between the Washington Monument and Lincoln Memorial will stand for the ages. ??I will make sure the monument gets built the president told an audience of veterans in the yellow-curtained East Room among them former Sen. Bob Dole (R-Kan.) who has supported the memorial. ??. GRAPHIC: PHOTOPHOTO (color): President Bush and Maj. Gen. James T. Jackson attend Monday's wreath-laying at Arlington National Cemetery's Tomb of the Unknowns. AP photo by Ron Edmonds. LOAD-DATE: May 29 2001 of 98 DOCUMENTS Associated Press The materials in the AP file were compiled by The Associated Press. ?These materials may not be republished without the express written consent of The Associated Press. ???????????????????????May 29 2001 Tuesday BC cycle AM Eastern Time SECTION: Domestic News LENGTH: 604 words HEADLINE: Bush announcing low-income aid but no price caps BYLINE: By SCOTT LINDLAW Associated Press Writer DATELINE: LOS ANGELES BODY: ??President Bush traveled across the country to deliver news Gov. Gray Davis doesn't want to hear: He won't force down soaring electricity prices that have cost California nearly $8 billion since January. ??The Republican president and the embattled Democratic governor arranged a 20-meeting Tuesday to talk about California's energy crisis but there was no indication they would break their stalemate. ??Bush opposes price limits on wholesale electricity that utilities buy arguing they do nothing to address supply-and-demand issues at the heart of the crisis. ??Davis contends federal energy regulators are ignoring their mandate to ensure just and fair electricity prices. ??With no sign of a break in the deadlock each side maneuvered for maximum advantage from Bush's first full day in California as president. ??Davis in an interview Tuesday on ABC's Good Morning America defended his record on licensing more power plants. ??We've licensed 15 plants. Ten are under construction four will be online this summer four next summer and by the end of 2003 we will have built our way out of this problem. But between now and then we are getting gouged unbelievably Davis said. ??The Bush administration timed positive energy announcements to coincide with the president's visit. ??At the Marine Corps base at Camp Pendleton Bush was announcing the expansion of a program that provides federal money to help low-income residents pay for power. ??Bush was proposing $150 million in addition to $300 million already budgeted for a component of the Low Income Home Energy Assistance Program to provide special help to cash-strapped residents of California and certain Midwest areas such as Chicago a senior administration aide said. ??Bush was also reminding state residents of his order that military facilities in the state cut peak-hour usage by 10 percent. ??To alleviate an electricity bottleneck on a crucial south-north transmission path the Department of Energy announced that the Western Area Power Authority will try to raise money from a variety of private and public entities to finance a crucial additional lines. ??The Bush administration is taking a leadership role in addressing a long-neglected problem in California's electricity transmission system said Energy Secretary Spencer Abraham. California's electricity problems developed over a period of years and cannot be solved overnight. However we can move now on actions that will help avert the same types of problems from recurring year after year. ??Davis had a letter for Bush from top economists who maintain price caps are justified and necessary. ??Aides to the governor expressed amazement that Bush would travel all the way to California with no major announcement in hand and predicted Davis would respond with polite rage. ??Mindful of the national stage he commanded Davis planned a news conference to air his grievances. And he convened a panel of families he said have been victimized by the energy crisis in the same hotel where Bush was staying. ??Davis wants Bush to pressure the Federal Energy Regulatory Commission to impose stiff price caps. ??Tuesday limited caps ordered last month by FERC go into effect in California but only when electricity reserves fall below 7.5 percent in the state - a step Davis called inadequate. ??Protesters planned demonstrations in Los Angeles and at Camp Pendleton in San Diego County. ??Bush also arranged a speech on energy and trade to the Los Angeles World Affairs Council and planned to president over a closed-door energy round-table discussion. GRAPHIC: AP Photos DSM106 KDJ102 LOAD-DATE: May 29 2001 of 98 DOCUMENTS ???????????????????The Associated Press State & Local Wire The materials in the AP file were compiled by The Associated Press. ?These materials may not be republished without the express written consent of The Associated Press. ???????????????????????May 29 2001 Tuesday BC cycle AM Eastern Time SECTION: State and Regional LENGTH: 594 words HEADLINE: Stakes are high for Davis meeting with Bush BYLINE: By GARY GENTILE AP Business Writer DATELINE: LOS ANGELES BODY: ??With California facing a summer of outages Gov. Gray Davis was to meet President Bush to press for a federal cap on energy prices. ??But Davis wasn't expected to win any concessions during the 20-minute Tuesday meeting where he's expected to point to Texas energy makers. ??Davis has appeared on national news programs attacking Bush for opposing price controls on wholesale electricity and suggesting the president has ignored price-gouging by Texas-based electricity generators. ??The president did not create this problem but he is uniquely situated to solve it Davis said Monday. What I'm going to ask him to do with all respect is to enforce federal law. The money that leaves this state goes directly to energy companies in Texas and the Southwest. ??If Bush refuses to administer price controls as expected Davis can use that as ammunition in his sparring with the administration. ??Bush has blamed California officials for the state's power woes and said price controls won't solve shortages. Instead they said Bush plans to stress his efforts to conserve energy in federal buildings and will bring one or two new initiatives to the table. ??One of them commits the federal government to helping organize a consortium to build more power lines for the state. ??Energy Secretary Spencer Abraham directed the Western Area Power Administration a federal agency to take the first steps to clear the way for building more transmission capacity between southern and northern California. That would help relieve a transmission bottleneck in the central part of the state. ??While this will not help this summer Abraham said in a statement the line improvements when completed will help avert the same types of problems from recurring year after year. ??The stakes of the meeting are high for both politicians. ??Davis who has been mentioned as a Democratic challenger to Bush in 2004 wants federal help to solve an energy crunch that threatens rolling outages this summer and has cost state taxpayers nearly $8 million since January - the price of buying power for two cash-starved private utilities. And his plan to rescue one of those companies reportedly is faltering. ??Leaders of both the state Senate and Assembly oppose a $3 billion-plus plan to bail out Southern California Edison by buying its power lines the Los Angeles Times reported Monday. ??Bush meanwhile needs to mend fences in vote-heavy California. The Republican president lost badly here in November and polls show most Californians dislike his handling of their energy crisis. ??Bush's Tuesday agenda was heavy on energy issues. At the Marine Corps base at Camp Pendleton near San Diego Bush was to highlight his order that federal agencies and installations cut back energy use. Then it was on to Los Angeles to discuss his energy plan in a speech to the Los Angeles World Affairs Council. ??Bush was confronted by the issue virtually as he stepped off the plane Monday in Los Angeles. Rep. Brad Sherman D-Los Angeles escorted the Academic Decathlon national championship team from El Camino Real High School in Woodland Hills to meet Bush. He told the president California needs regulation of electric generators. ??The president seems to believe just by instinct that rate regulation reduces supply and also by instinct that all those in the energy industry are fair people who are not trying to game the system Sherman said. Anyone who studies the facts in California knows that power is being withheld in order to drive up the price. LOAD-DATE: May 29 2001 of 98 DOCUMENTS ????????????????Copyright 2001 Burrelle's Information Services NEWS ??????????????????????SHOW: WORLD NEWS NOW (2:00 AM ET) 28 2001 Monday TYPE: Newscast LENGTH: 447 words HEADLINE: PRESIDENT BUSH VISITS CALIFORNIA WHERE POLITICIANS ARE CRITICAL OF HIS LACK OF ACTION FOR THEIR ENERGY CRISIS ANCHORS: DEREK McGINTY REPORTERS: JOSH GERSTEIN BODY: ??DEREK McGINTY co-anchor: ??When Air Force One touches down in California today it will mark President Bush's first visit to the Golden State since taking office. Now that fact has not been lost on Governor Gray Davis who has accused the president of ignoring his state's power crisis. ?As ABC's Josh Gerstein tells us Mr. Bush's visit could have major ramifications for his presidency and his party. ??JOSH GERSTEIN reporting: ??(VO) Since taking office President Bush has visited 28 states but until this week he had not found time on his schedule to visit the nation's most populous state California. ??Mr. DAN SCHNUR (GOP Political Consultant): Because the state is going through such extraordinary times right now because of the energy crisis his absence has been much more noticeable and the discussion about it's been much more heightened. ??GERSTEIN: (VO) Democrats have begun an aggressive effort to paint the president and other Republicans as obstacles to resolving the energy crisis. ??Offscreen Voice: (From TV Commercial) President Bush has offered no relief to hard-pressed rate payers. ??Text: ??The President...believe(s) that the issue is mostly a California matter... ??GERSTEIN: (VO) On Tuesday Mr. Bush meets with California Governor Gray Davis. ?He and other Democrats want the federal government to impose caps on wholesale prices for electricity. ??Representative ANNA ESHOO (Democrat California): Our people are hurting. We're bleeding in the sand. ?We need a tourniquet and the president is the one that can do this. ??GERSTEIN: (VO) During his trip President Bush plans to highlight the federal government's conservation efforts but aides say he will not endorse price caps. ??Mr. TUCKER ESKEW (Director White House Media Affairs): The president believes that capping wholesale prices would do nothing to lower demand or increase supply the two fundamental solutions to any energy problem such as this. ??GERSTEIN: Holding the line against price caps may have political costs. Most analysts give Mr. Bush little chance of winning California in 2004 but Republican congressmen there face re-election next year. ?So far five of them have endorsed some kind of limit on electricity pricing. ??Representative RANDY CUNNINGHAM (Republican California): We're in an extreme emergency right now. ?It takes extreme measures. ??Unidentified Woman: We are in rolling blackouts. ??GERSTEIN: (VO) While electricity may be in very short supply in California this summer the president and politicians of all stripes are likely to find there's more than enough voter anger to go around. ?Josh Gerstein ABC News the White House. LOAD-DATE: May 29 2001,other,formal,1 +TX Legislative Materials,-----------------,legal affairs,neutral,3 +Protecting Confidential Information,The exciting cocktail of credit derivatives and Enron Online raises significant novel legal risks for Enron. As most of you will by now know probably the most significant risk would arise in a situation where Enron has confidential information about a reference entity and wrongfully uses that information in pricing the credit derivative on that entity. This could well result in legal proceeding against Enron. In practice an allegation of misuse of confidential information can be very difficult indeed to defend without adequate procedures in place to safeguard that information. In fact Enron's credit trading will as you know rely strictly on publicly available financial information and will not involve the use of confidential information unless the reference entity has specifically consented. Nevertheless to avoid the appearance of impropriety we are taking additional steps to consider confidentiality agreements we have in place with potential reference entities before deciding whether or not we will quote prices on such entities. Against this background is the ever-present risk of insider dealing. This crime - which in the UK carries a maximum prison sentence of 7 years and an unlimited fine - is committed where a person (or member of their family etc) deals in the securities (shares bonds or derivatives on them) of a listed company on the basis of unpublished (confidential) price-sensitive information. We do not expect at this time to deal in publicly traded bonds as part of EnronCredit.com but insider dealing is relevant to the conduct of Enron staff and could affect other parts of our business. In addition SFA rules in the UK require the safeguarding of confidential information the misuse of which is a serious disciplinary matter. In order to ensure the success of this new business and that confidential information is not misused either by Enron or its staff we are now introducing important new policies and procedures in Europe and in the US. These procedures have been drawn up specifically for your credit trading group by lawyers in London Houston and New York and are attached. Please familiarise yourself and any future member of the group with these procedures. Once you have read and understood the attached procedures each one of you is required to confirm this to me in writing (or by note mail). Please note that similar procedures have been distributed to the key business heads in Europe who may have confidential information about reference entities (similar procedures are being disrtibuted to US business heads). This requires them to safeguard confidential information and to abide by the Restriced List procedure described below. Nevertheless you should treat your group as being within a Chinese Wall and see it as your personal responsibility not to solicit or accept from anyone in Enron information about reference entities which may be confidential. Thank you for your co-operation in implementing these important new procedures. I look forward to receiving your confirmation mentioned above (which is also described in the procedures). Best regards Paul,other,formal,5 +RE: Confidential A&A PRC Results,Hi got your message. We will have it to you before 4pm. ,other,formal,3 +WPTF Friday Deliver Unto Us A Burrito,THE FRIDAY BURRITO ...more fun than a fortune cookie and at least as accurate. =01&Are those folks smoking crack?=018 he asked in an outrage. My friend = Ol=01 Dave in Houston has trouble understanding the workings of our power business here in California. In fact so do I. Yesterday=01s Joint Senate/Assembly Committee on Energy and Natural Resources did nothing to improve either Dave=01s or my understanding of the national embarrassment California is perpetrating with electricity deregulation. =01&The next thing you know they will be taking property and forcing utilities to build power plants and transmission=018 he mused between sips of Dixie longneck beer and chomps of jalapeno peppers. =01&Come to think of it Dave they did say something about that. Yeah=018 I recalled =01&Senator Peace was expounding on his favorite idea which is forcing the ISO or the utilities to build peakers and not let the market build them. I can=01t remember if that was before or after he suggested to EOB Chairman Kahn that the ISO and the PX should be folded into State agencies under the direction of the Electric Oversight Board.=018 I know what you are thinking right now. The next thing you know California will have regulated retail rates. That recipe should be out of the PUC=01s oven sometime next week. =01&Well the power marketers are jigging the system bidding up to the ISO=01s bid cap. There is no way you can tell me that a generator planned to make $750/MWH in its pro forma=018 Dave added. =01&So you agree with Herr (Hair) Peace! You don=01t believe in markets=018 I retorted. = =01&Oh I believe in them but I remember when I was short on a 300 MW trade and without any notice or advanced warning the price in the Midwest market went against me=018 Dave recalled. =01&I called everyone who I tra= ded with and they had nothing. I finally called XXXXX and I asked what will it cost for 50 MW?=018 =01&Why didn=01t you ask for 300?=018 I wondered. =01&I didn=01t want to= show him my position. You get hosed when you show the buyer your position. Ask for 50 first=018 Dave chided. =01&What happened?=018 =01&Oh they offered to sell for $150/MWH. I said I= =01d take it and then said I needed another fifty. He asked $300. I took that and he priced the next 50 MW at $600=018 lamented Dave. =01&He just wanted to see how far he could push me. That=01s what I mean when I say the traders are jigging it.=018 =01&But Dave you old communist your forgetting the trading function is what mitigates the risk. The traders are the in between people who guess at the price. Sometimes they guess right and sometimes they guess wrong. But the damage or the reward is on their book not passed on to the ultimate consumer. It has nothing to do with the marginal cost of a generating plant.=018 And there you have it. Put in a price cap and the traders have a target for which to shoot. I can=01t prove the following yet but I=01l= l wager with any of you that as the price cap level dips down the average trading price climbs even as the so-called =01&dysfunctional=018 price spik= es are eliminated. Consumers get hosed and the fundamental economic principle is upheld which is one can never be made better off with the imposition of an additional constraint. I feel better already. Here is what is on our short agenda this week. >>> Things in the Mailbag >>> Things in the People=01s Republic of California @@@ The ISO Replies to the EOB Report @@@ Reflections on a Day of Senate Hearings @@@ PUC Issues OII on Functioning of Wholesale Market >>> Odds & Ends (_!_) >>> Things in the Mailbag It has been awhile since we put the mail feedbag on and had a munch. Here is what my friends have been writing me. FPL Energy=01s Steve Ponder was only too quick to tell me =01&Please Gary= no more whining about your computer. How old are you?? Is this the year you get the AARP letter??? A very depressing moment. Do you really not know how to spell Morro Bay??? Please let us know what is going on with your son's hockey team?? Don't forget the cigars for Moron??? Bay!!!!=018 It is good to have friends like Steve. They make the pain of separation so much easier. And Steve when you FPL guys get that Entergy merger sorted out in a dozen years or so you let us know. I want to participate in the name selection for the new entity. How about Fentergy PLus? Next from the PX=01s Mark Hoppe who writes =01&As you've heard from others I don't know quite how you manage to knock out all this material each week. The burrito is informative humorous and usually contains a sprinkle of irony tragedy (ISO Drama). Though you are usually neutral regarding the PX you are not unduly negative which I appreciate. I think we do a pretty good job over here and so often people in the industry forget the amount effort and challenge it took the PX to successfully open this market.=018 Thanks Mark. I just want you to know that my ability to write this stuff every week is not constrained by the facts or evidence. I have learned from watching Herr (Hair?) Peace that as long as you can talk (write too) fast and have conviction in your statements regardless of how groundless they may be you will have a willing and eager audience. A few weeks ago I received from the PX=01s Jennifer Sherwood a note which she wants you to know are her opinions not necessarily the PX=01s. It=01s okay Jennifer. I paid Georgeyesterday the $20 I owed him for that sham Rose Bowl bet (remember? Stanford lost) and your opinions are cool with us. =01&Just curious - has anyone been comparing high unleaded prices to high CA electricity prices? What I mean is we are up in arms about how we should protect the unfortunate San Diego consumer who can't afford to keep the AC on. But what about the inflated unleaded gas prices the whole country has seen over the last few months? No effort is made by the government to shield the consumer from how much it costs to fill their gas tank. No mention is made of those who can't afford to drive to the grocery store because they can't afford the extra 15 or 20 cents a gallon. The costs are passed along to the consumer without pause. Granted there are differences between the unleaded market and the electricity market in terms of demand-side responsiveness but then again is it that much different to say =01+I can't drive today because gas is too expensive=01 vs. =01+I can't turn up the AC today because it's too expensive.=01=018 Finally from one of our [secret] Washington readers and I am not telling who I received the following: =01&I ... broke down and listened to the [ISO Governing Board] discussion and vote. Ugh! I too noted that the speak fast was applied to everyone but Herr Peace. My goodness what a mess we have. I loved Jerry's picture in USA Today -- it spoke volumes. My sources at FERC tell me though that we should keep an eye out for {FERC Chairman] Hoecker to do something really ... [Censored] ... for political reasons. Given no Commission meetings til September the only way to act is by unanimous consent so I would hope he can't do all that much.=018 >>> Things in the People=01s Republic of California @@@ The ISO Replies to the EOB Report Several of you people commented to me that the ISO=01s reply to the PUC/EOB report was very good. I decided to excerpt the best sections of it for the Burrito. The full document can be found on the ISO=01s website. =01&... the [PUC/EOB] Report asserts that the suspected activities of certain generators on June 13 created frequency instability leading to the Bay Area blackouts the following day. In fact the events of June 13 and June 14 were completely independent of one another. The voltage instability on June 14 was caused by system conditions on that day alone -- exceptionally high loads insufficient generation in the specific local area and transmission constraints that prevented the import of generation from outside the area. =01&The Report states that the ISO =01&never tried=018 to call upon consume= rs to reduce demand in order to avoid the Bay Area blackouts. In fact the ISO had in place on June 14 a number of demand response programs designed to reduce load including the Summer 2000 Demand Response Program under which customers have agreed through a prior solicitation to curtail energy use in exchange for a fee =01&The Report makes a number of assertions concerning the prices paid by =01+purchasers=01 of energy as a result of the recent price spikes (e.g. $= 1.2 billion in the month of June alone). These assertions leave one with the mistaken impression that these prices reflect amounts actually paid by the UDCs and/or passed through to customers. However in determining the total cost of energy one must determine the impact of any forward contracts entered into by the UDCs in advance of the wholesale energy markets. These contracts which are designed to =01&lock-in=018 a specific price in advance of real-time or near real-time market activities are specifically designed to mitigate the impact of price volatility and are standard in all commodities markets. We have reason to believe that some of the UDCs were substantially hedged during the period of the recent price spikes. =01&In a similar vein the reports asserts that California =01&might well= =018 have saved $110 million dollars had a $250 price cap been in place in May and June. This assertion assumes that all energy purchases would have been made at or below the $250 bid cap. In fact during times of peak demand when all of the state=01s generation has been exhausted the ISO competes with neighboring regions for available generation. In order to secure the necessary power the ISO must purchase on a bilateral basis this energy from resources located outside of the ISO=01s control area. =01&The Report asserts that California power markets =01&are not now competitive=018 and implies erroneously in our view that this is the normal state of affairs. It is not. The Market Surveillance Committee has noted that =01&market power in the California energy market appears to arise primarily during periods of peak demand=018 and warned that demand growth would increase the incidence of market power during the summer of 2000. =01&The Report asserts that the ISO is answerable only to a self-interested board and not to the citizens of California. This simply is not the case. The ISO is subject to the provisions of the Federal Power Act and to the rules and regulations of FERC which dictate in part that wholesale energy rates must be just and reasonable and in the public interest. The ISO further operates under a detailed tariff reviewed and approved by FERC. Every change to our market design and virtually every aspect of the ISO=01s business is subject to review and scrutiny by FERC. The FERC process provides substantial opportunities for input by the state agencies and such agencies have in fact been active participants in the FERC proceedings. =01&The Report asserts that California supply conditions have been affected by restructuring and that somehow the restructuring choices have made California more vulnerable to supply shortages. This assertion is unfounded. Significant load growth in California and neighboring states coupled with a lack of significant infrastructure investment in both generation and transmission have caused this vulnerability. Restructuring has increased proposed power plant applications many fold. Only by immediate and sustained attention to streamlining approval and siting processes for both of these critical infrastructure elements will this significant shortage be addressed.=018 >>> Things in the People=01s Republic of California @@@ Reflections on a Day of Senate Hearings If you want to imagine a scary sight imagine then twelve California legislators gathering together in one hearing room to rectify the wrongs of electric restructuring. Also imagine as if you are in the Twilight Zone witnesses that are slow on their feet and reckless in their facts. Then you get a glimpse of what yesterday=01s Joint Senate/Assembly hearing was like. It started over two hours late. The Senate was busy congratulating one of their own who is term-limited out next session and they wanted to heap on the glory. That said the show began with CEC Commissioner Bill Keese. Mr. Keese has one story and regardless how well he tells it and he does it is always the same story. It is the heat storm story. One can imagine in the heat storm story a lead character who is a single-mom call her Lady-Bird Bowen who travels across an angry land with her precocious pre-teen child Stevie Wonderboy. They are searching for electric power plants in the dessert which by the grace of God have been shipped to other countries which have more liberal returns on investment. Being the first speaker Mr. Keese took at least half the heat (storm) of the day. The rage of the Energy Fuhrer was palpable. Last week San Diegans shed 350 MW of load last week to save the entire system and did not receive one penny of compensation (I=01m not making that up ... He said it). He is sick of hearing about demand management as being a solution for the problem over the last five years and he is about done listening. People in San Diego are depressed by the sudden price hikes. Yikes! Keese did mention that the California reserve margin has sunk to 7% but in neighboring Arizona the reserve margin is -1% or -2%!! Mr. Keese correctly pointed out that electric power is not solely a California problem it is a regional problem. One member of the Committee asked what the legislature could do to speed up the power plant siting and construction process? Keese referred to Governor Gray Davis=01 Executive Order issued last week to which the CEC plans to respond soon date uncertain that lays out a 6 month permitting time line. The six months are enough if the applicant has the land secured zoning okayed transmission access and air offsets. Hmmmmmm. That alone might take six months before you get to the CEC. The next panel included Mr. Kahn of the EOB and Ms. Lynch. I went too hard on her last week calling her Let=01s Do Lynch. That was a 0.8 TPC. Sorry. I promise to be nicer starting now. The Energy Fuhrer instructed Ms. Lynch to use her authority to order SDG&E to divert the pass through of funds from the customers to the PX until the dysfunction of the market is cured. Put it in an escrow account. Ms Lynch promised to review this option at her August 21 PUC Meeting where she will enact SDG&E rate caps (told you). The star of the day I thought was FERC General Counsel Doug Smith. Mr. Smith comes to Sacramento. Isn=01t that a switch? Mr. Smith came in place of Mr. Hoecker thank the Lord. Mr. Smith put into FERC-eese what these 12 legislators could not get through their heads any other way. The 12 angry legislators were looking for a way for FERC to declare the wholesale market as non-competitive and then ask the generators to give back the money they over collected. When can we do that? Mr. Smith answered as only a FERC attorney can answer. There is a process. It takes time. You must have evidence. FERC uses a three-part criteria for assessing whether or not market based rates are allowable. It=01s based on market concentration and dominance not the existence of high prices. You would have to sue FERC in federal court and the best you could hope for is for FERC to reconsider its decision upon remand from the US Court of Appeals. Slowly the wind came out of the sails of the gang of 12. They were stumped. Herr (Hair?) Peace screamed couldn=01t you Mr. Smith of FERC today use your authority to declare the markets non-competitive that generators who had market based rates have exercised market power and retro-actively implement a $250 rate cap across the Western region? Like a wheezing accordion Mr. Smith played back and forth the familiar strains of music like a solo street musician on the corner. Back and forth: the process the process the process. There have been times in the past I hated the process at FERC. Today I have a renewed respect for what process affords me and you ... Freedom from the tyranny of a mob. For the remainder of the hearing they focused on remedies that could be undertaken by the PUC. >>> Things in the People=01s Republic of California @@@ PUC Issues OII on Functioning of Wholesale Market Well the official title is =01&Order Instituting Investigation into the Functioning of the Wholesale Electric Market and Associated Impact on Retail Electric Rates in the Services Territory of San Diego Gas & Electric Company=018. I like my title better. This Order or OII was issued at the last business meeting of the Commission on August 3. It calls for an investigation of the wholesale markets responses from the three UDCs and a pre-hearing conference in San Diego on August 29 at the San Diego Convention Center. Here are the questions the PUC wishes us to address: =01=07 What bill payment options should be provided to assist residential a= nd small commercial customers? (What does this have to do with the functioning of the wholesale market?) =01=07 Should SDG&E be authorized to participate in bilateral contracts or other supply procurement activities? How should the Commission assess reasonableness? Are SDG&E=01s purchasing activities serving its customers on just and reasonable terms? =01=07 What is SDG&E=01s obligation to minimize energy costs for its curre= nt customers? =01=07 How should the Commission Attorney General EOB ISO and PX coordinate to investigate wholesale market events behaviors and irregularities? How should state/federal concerns be addressed? =01=07 What are the causes of the price increases? Are anticompeititve practices causing some of the price increases? Are there mechanisms the Commission can employ to make ratepayers whole? >>> Odds & Ends (_!_) As promised last week I have a message from our event coordinator Barb Ennis regarding the upcoming WPTF General Meeting on October 5 and 6. Listen up! She writes: Hi Folks...... Well it is almost that time again....WPTF's October General Meeting will be held at the Inn at Morro Bay Sixty State Park Road Morro Bay California 93442. Their phone numbers are: 800-321-9566 or 805 772-5651. The dates are October 5th and 6th Thursday and Friday. The Inn at Morro Bay will also honor the same room prices if you choose to also stay WednesdayFriday or Saturday. We have blocked 24 rooms for October 5th. Which range in prices: Petite Room with Queen Bed $89. (16 rooms) Pool and Garden View with King Bed and Private Hot Tub $152. (4 rooms) View of Bay rooms with two (2) Double Beds $152. (4 rooms) All these rooms are on a First come basis. SHUTTLE Information: The San Luis Obispo Airport is about 25 to 30 minutes by shuttle NOTE: FOG CAN BE THICK AT THIS AIRPORT..FLY IN THE AFTERNOON ....... Ride-On Shuttle (805) 541-8747 Rates Door to Door are $22.00 per person for the 1st person and ONLY $2.00 per person afterwards....SO if some planning can be done on the Airline Arrival times through Barb and one person books the Shuttle for a Group....the cost is substantially lower. Now for(e) our Golfers....Tee times have been booked for Thursday October 5th starting at 8.07am 8.15am and 8.22am (space for 12 Golfers)..Sorry for the early morning start. The Golf Course has a Group going out from 8.30 am until 11.30am. The Golf Course is across the Inn at Morro Bay and your contact at the Course is Pat (805) 471-4360. For folks that may want to tour Hearst Castle is located only 30 minutes from the Inn at Morro Bay. Within walking distance of the Inn is a Natural History Museum a marina with kayak and canoe rentals. Shopping and dining along the Embarcadero and some great hiking. World class wineries and tasting rooms numbering over 40 are located within a short drive from the Inn. If you choose to drive it is 3-hours from San Jose American Eagle Skywest and United Express all serve the local Airport in San Luis Obispo. Duke Energy is willing to conduct a Plant Tour (A woman=01s only plant tour will be led by Duke=01s Carolyn Baker) if some may wish to do so. The sooner we can do the booking the better. So bring the Family and we are looking forward to seeing you at WPTF's General Meeting. Agenda for October General Meeting Thursday October 5 3:30 pm - 5:30 pm All Member=01s Meeting 7:00 pm - Dinner Reception (We are still working on the details) Friday October 6 9:00 am Opening Remarks and Program Irene Moosen - Distributed Generation Case at the PUC Bill Freddo - Confessions of a Merchant Plant Operator in New England ISO Dr.Frank Wolak - Topic of his choice Open Session - Everyone Gets a Chance to Speak Lunch provided at Noon. The object of humor notwithstanding and seeing how the flow of new material has slowed a bit my wife provided this week=01s laughter. She didn=01t have to attend the Senate hearing. Subject: The Brilliance of Women There were 11 people hanging onto a rope that came down from a helicopter. Ten were men and one was a woman. They all decided that one person should get off because if they didn't the rope would break and everyone would die. No one could decide who should go so finally the Woman gave a really touching speech saying how she would give up her life to save the others because women were used to giving up things for their husbands and children and giving in to men. All of the men started clapping. Have a great weekend y=01all [applause] gba,other,casual,3 +RE: Dates for Emerson Meeting,I'm suggesting that we make progress on it before we agree to a CEO summit Nate Ellis@EES 03/02/2001 02:01 PM To: Steven J Kean/NA/Enron@ENRON cc: Subject: RE: Dates for Emerson Meeting Agreed. It's great that these guys want to sell us product but what's in it for Enron? I'm already pushing that point with Emerson and will continue to do so. I definitely want to bring it up at the CEO summit. Thanks for your input Steve. Nate From: Steven J Kean@ENRON on 03/02/2001 01:16 PM To: Nate Ellis/HOU/EES@EES cc: Subject: RE: Dates for Emerson Meeting I think I can recommend that the time be set aside but it would be helpful if we pointed out to Emerson that it must be clear that there is a clear opportunity for Enron before we schedule the meeting. Maybe you could use this to get some progress on a bundled outsource deal. Nate Ellis@EES 02/28/2001 03:05 PM To: Marty Sunde/HOU/EES@EES Jeremy Blachman/HOU/EES@EES Michael Mann/HOU/EES@EES Troy Henry/HOU/EES@EES cc: Martin Wenzel/SFO/HOU/EES@EES Micah Hatten/HOU/EES@EES Joannie Williamson/Corp/Enron@ENRON Sherri Sera/Corp/Enron@ENRON Steven J Kean/NA/Enron@Enron Subject: RE: Dates for Emerson Meeting Gentlemen: Situation: Emerson is aggressively seeking at least a three hour time slot for a meeting with Jeff Skilling in April or May 2001. Mr. Skilling's office is hesitant to allocate more than two hours without your recommendation. Emerson is being persistent. The key players from Emerson are David Farr newly appointed CEO and James Berges President and effectively the leader of Emerson's strategic development effort. It is anticipated that both would attend the meeting. Emerson execs want to (i) get to know Mr. Skilling and other senior management (ii) discuss mutual business opportunities and (iii) hold a discussion about the transformation of Enron from a pipeline company to its current form. The last point has to do with Emerson's continuing self-transformation effort and how Enron achieved its transformation. I need your advice and recommendation. Please respond by e-mail or telephone (x5-4040). Background: Emerson initiated this latest round of contact with Enron in November 2000 when Mike Train and Mark Proudfoot both Emerson VPs of Corporate Development visited the Enron building hosted by Steve Kean. I met them at that time. Since that initial meeting Emerson has aggressively pursued a business joint venture as preferred supplier with Martin Wenzel and the distributed power business I believe with promising results. My sense is that Emerson is uniquely positioned as EES' partner in that business. I am waiting to receive an update from Martin. Emerson is also interested in becoming a preferred supplier for EES's DSM business. While we generally support that idea we are pressing Emerson to reciprocate by becoming a customer of our bundled outsource business. Emerson is highly decentralized and our efforts to date have been unsuccessful. I want to use the meeting as an opportunity to press Emerson to consider a proposal from EES's bundled outsource business. Please let me know your recommendation on this matter. Thanks Nate -----------------,other,formal,3 +RE: Eeegads...,I'll be there as will Sandi McCubbin. Are you interested in going? I thought not. ,meetings & events,casual,0 +Re: NARUC Summer Committee Meeting,Is Jeff available? -----------------,other,formal,3 +RE: CONFIDENTIAL Information Request for Henry Bath US,I do not have any of this information -- Cathy is the Metals plan the same as Enron domestic? If so then I would suggest that Chris Rahaim participate in this process. Feel free to work with me on it but I just don't have any data. Thanks. Michelle ,other,formal,3 +California Power Crisis Update (No. 10),We have been pulling together these weekly(sometimes more often) summaries for internal purposes. Would you find it helpful to be on the distribution list? Hope you are doing well. Look forward to touching base soon. ,other,friendly,0 +RE: reply,Michael It looks like we have sponsorship. Jeff Dasovich at Enron (GSPP ~'90) thinks he can get commitments from his company and others. He's excited about the idea. Severin Borenstein of Haas and UCEI and Frank Wolak at Stanford are very interested. When you return from vacation could we have a conference call with you me Jeff and whoever at the school might be involved to proceed with the plan? We were thinking perhaps a one day session in October with dinner the evening prior with a few panels featuring widely varying points of view. We'll need to figure out how to get press attention among other things if/when we talk. Enjoy your vacation. Thanks. Rob > ,other,formal,5 +Re: Advisory board meeting,While the more-open gas market may have more tools available than in electric markets market solutions have been proposed as an alternative to legislated rate caps in the hard hit San Diego market. Gavin -- please send Irwin copies of the articles on the offers made in San Diego. Stelzer@aol.com on 08/25/2000 03:14:04 PM To: skean@enron.com cc: Subject: Advisory board meeting The WSJ report of 8-23 on the power/price situation in Con Ed's territory contains the following: And the tools to hedge prices such as those that exist in other commodities markets aren't fully developed yet for th fledgling deregulated electricity industry. That might be worthy of comment in my talk. Anything I should see on the subject?,other,formal,3 +Follow up for Ken,Rep Scott McGinnis (colo) told Ken that he would like to be briefed on the California and broader energy situation so that he can speak out on the issue. Also don't forget that we need to go see your buddy Newt!,other,casual,3 +California Power Markets,,energy trading,neutral,0 +CONFIDENTIAL - Disclosure Schedules,> Attached please find copies of the following schedules and annexes to the > Purchase and Sale Agreement: > > 1) the Master Parent Disclosure Letter > > 2) the schedules for India > > 3) the schedules for EGEP > > 4) the schedules for APACHI and > > 5) Annex G listing the contracts that have been excluded for > confidentiality reasons. > > Please note that the schedules for the SoCal assets will follow shortly > under a separate cover. In addition we plan to circulate copies of the > CALME and Wind schedules tomorrow. > > If you have any questions or any problems opening any of the attachments > please do not hesitate to contact either Gray Sasser at (713)758-3425 or > Donnie Roark at (713)758-3374. > > > > > > <> <> > <> <> < > > > +++++++++++++++++++++++ > CONFIDENTIALITY NOTICE > +++++++++++++++++++++++ > The information in this email may be confidential and/or privileged. This > email is intended to be reviewed by only the individual or organization > named above. If you are not the intended recipient or an authorized > representative of the intended recipient you are hereby notified that any > review dissemination or copying of this email and its attachments if > any or the information contained herein is prohibited. If you have > received this email in error please immediately notify the sender by > return email and delete this email from your system. Thank You > > - WORD v1 Summer Disclosure Letter.DOC - 00 India Schedules.DOC - 285641_1.DOC - Lightning-Schedules3.wpd - Annex G -- Excluded Information Based on Confidentiality Requirements.DOC,other,formal,3 +House Energy Committee Passes First Energy Package,Late this morning the House Energy and Commerce Committee adoped the committee print as amended of an energy package that addresses conservation clean coal renewables hydro nuclear and boutique fuels. The vote was 50 to 5 to report the bill. Other committees -- Ways and Means Science and Resources -- also moved their energy bills this week. Thus the House is on track to consider a merged package before the start of the August Recess on August 3rd. As to electricity during the several days of debate this week both Chairmen Tauzin and Barton reaffirmed their intention to next move to electricity issues. Mr. Barton's staff advised me this morning that the subcommittee he chairs will hold a hearing on Friday July 20th on all electricity issues other than transmission. While Mr. Barton has publicly held out hope of marking up an electricity bill this month sources on and off the committee do not see this timetable as realistic. On the Senate side the majority staff is working on an electricity white paper that may be circulated for comment next week. Below is a recap of action on amendments of interest to Enron: 1. Last night on a largely partisan vote (with Democrats Hall Green and John voting with the Republicans) the Committee rejected an amendment by Rep. Jane Harman (D-CA) (that was to have been offered by Rep. Anna Eshoo (D-CA)) that would have retroactively amended the FERC refund date and essentially ordered refunds regardless of amounts owed to power sellers. 2. First thing this morning the Committee again on a largely partisan basis (with Democrats Hall Green John and Towns) rejected a Waxman amendment to impose cost-of-service rates on all power in the West (other than generation added after 1/1/01). (Originally Mr. Waxman was going to offer amendment to impose cost-of-service rates only on those who do not supply all available power during an emergency but he ended up offering basically what he had pursued in subcommittee on the old Californa Only bill.) 3. The Committee adopted an amendment by Rep. Shadegg to amend the Natural Gas Act to make it clear that a natural gas transportation facility shall not be added to the National Register of Historic Places until FERC has abandoned the facility. Apparently there have been some instances of old pipelines being considered as historic places under federal law. The House Resources Committee added a similar amendment to its package yesterday. 4. By voice vote the Committee rejected a Waxman Amendment to require the president to propose and implement a plan to bring U.S. greenhouse gases down to 1990 levels. There was strong opposition voiced by many Republicans and Democrats to this amendment. 5. By mixed vote of 24 to 29 the Committee defeated a Waxman Amendment to set cost and performance goals for renewables including wind power and authorize federal funds to assist with commercial project costs (up to 50 percent).,other,informative,3 +PRIVILEGED AND CONFIDENTIAL ATTORNEY CLIENT COMMUNICATION,Jeff & Sue -- We need to discuss at 9am your time (as well as other things). Jim ,legal affairs,formal,5 +Re: EES Video,I am interested but it's probably more important that Jeff Dasovich and Sandi Mccubbin (in our SF office) know so that they can keep the politicos informed (and keep them from doing something stupid). Thanks Enron Energy Services From: Harold G Buchanan 08/03/2000 07:53 PM To: Steven J Kean/HOU/EES@EES cc: Kim Frumkin/HOU/EES@EES James M Wood/HOU/EES@EES Martin Wenzel/SFO/HOU/EES@EES Subject: EES Video Steve - I just saw your video and it is great - I think it will be released Wednesday on our web site and will be available to a very large group - Your comments will put the issues in SD in perspective. We have a team of six now calling the market in SD. If you'd like us to review our market plan in SD with you let me know. Thanks again for your time.,other,excited,3 +Enron Mentions - 09/17/01,What Now? --- Solutions Solutions: How California might get out of the mess it's in The Wall Street Journal 09/17/01 What Now? --- Looking to Washington: What can the feds do to make deregulation a less bumpy process? The Wall Street Journal 09/17/01 What Happened? --- Lessons From Across the Seas: Deregulation is working pretty well in Britain But it has taken a long time The Wall Street Journal 09/17/01 What Now? --- On Second Thought: In the wake of California's power problems many states are taking a wait-and-see approach to deregulation The Wall Street Journal 09/17/01 German Deal for U.S. Water Utility The New York Times 09/17/01 Germany's RWE Agrees to Buy American Water Works for $4.6 Billion Plus Debt Dow Jones Business News 09/17/01 INDIA: UPDATE 1-Enron's Dabhol says needs cash to pay lenders. Reuters English News Service 09/17/01 UK: INTERVIEW-Screen trading enhances metals market. Reuters English News Service 09/17/01 French Electricity Bourse To Run Tests Before Launch Dow Jones Energy Service 09/17/01 RWE to Buy American Water Works for $7.6 Billion (Update6) Bloomberg 09/17/01 Enron India Unit Serves Second Notice to Cancel Power Contract Blomberg 09/17/01 Energy (A Special Report) What Now? --- Solutions Solutions: How California might get out of the mess it's in By Jason Leopold 09/17/2001 The Wall Street Journal R14 (Copyright (c) 2001 Dow Jones & Company Inc.) Just about everyone has an opinion about how to solve California's energy problems. From building more power plants to capping prices to doing away with deregulation federal regulators consumer advocates economists and energy companies all have weighed in with plans for ending the electricity shortages and financial distress that have troubled the state over the past year. Here is a look at what some say California should do now: LEVEL THE PLAYING FIELD For many the solution to California's energy woes is to increase the supply of power in the state by building more power plants. A greater supply from more sources would bring wholesale prices down. And two California economists Severin Borenstein at the University of California's Energy Institute in Berkeley and Peter Navarro at the University of California at Irvine argue that the impact would be particularly pronounced in areas where electricity generators now have monopoly or near-monopoly power. We need to build more power plants in close proximity to the ones where companies have market power says Mr. Borenstein. The problem the economists say is that some areas of the state have only one power plant so the energy suppliers can manipulate the price by reducing output at a certain plant when demand is high in order to boost prices. California does get some power from generators in the Northwest and Canada. But because demand is so great in the state and throughout the entire region and supply is limited what is brought in doesn't make much of a dent. The economists add that because suppliers including Williams Co. Duke Energy Mirant Corp. and Enron Corp. have this freedom to charge whatever the market will bear they can take unfair advantage of consumers. For instance in Carlsbad a community in San Diego only one power plant owned by Duke Energy provides electricity to utilities in that area. The company has no competition so it has the ability to set the price for its power according to state Sen. Joseph Dunn a Democrat from Santa Ana who has set up a Senate committee to investigate manipulation in the wholesale power market. If you need electricity and there's only one place to buy it and everyone wants it you're going to pay through the nose says Frank Wolak an economics professor at Stanford University and the director of a power-market monitoring committee which monitors the wholesale electricity market to identify anticompetitive behavior. Is this fair? No. Something must be done about it. Duke Energy spokesman Tom Williams says the company denies that it has ever done this and rejects allegations that it has manipulated the price of electricity. Spokespeople for the other companies also deny such allegations saying prices have surged because demand has outstripped supply. Partly to prevent possible abuse of market power by suppliers the Independent System Operator which runs California's grid contracted with energy companies to have them operate some power plants as reliability must-run units. In return for a fixed annual payment from the state the companies agreed to make these plants available at a moment's notice to balance supply and demand. Electricity from the plants was priced based on the price of natural gas and other variable operating costs. In 1999 the ISO canceled two-thirds of the RMR contracts because the units were rarely called upon due to a steady supply of power in the state and the expense of the contracts to the state. When power prices surged in 2000 however the ISO didn't use the remaining contracts to help keep supply in balance and power costs down. An ISO spokesman says the agency doesn't have a reason to explain why the RMR contracts weren't utilized. He declined to comment further. CAP PRICES While many including Gov. Davis see more power plants as a long-term solution to the state's energy woes they advocate capping the prices of energy sold on the spot market as an interim solution to keep the market stable while the plants are being constructed. In the short term we need price caps Gov. Davis has said to state legislators. That means that [power generators] get all their costs back and a 40% or 50% profit which in this economy is pretty darn good. Robert Glynn chief executive officer of PG&E Corp. unit Pacific Gas & Electric which sold some of its generating plants during deregulation adds that price caps will keep wholesale prices low while new power plants are built. For more than a year the governor had urged the Federal Energy Regulatory Commission to place a temporary cap on electricity sold in the spot market saying the move would save the state's consumers billions of dollars on their energy bills while new power plants are being built. In May after many months of rejecting the idea the agency imposed an initial cap on prices in California during emergencies. In June it extended the cap to other Western states and established that it would remain in effect at all times. Wholesale electricity prices at first fell in response to the caps but surged again during a spate of hot weather in early July. FERC has been forced to make a number of adjustments to the cap as a result. These price caps however will expire in September 2002. Gov. Davis believes the caps need to stay in effect longer -- for three years -- to allow for the construction of new plants. RESTORE CREDIT-WORTHINESS Rebuilding a financial base for utilities is key to putting California's power market back on track. One way to do this some experts say is to let the utilities sell bonds to help them pay off debts and recoup the billions of dollars they've lost buying power at prices they couldn't afford. This would then allow the utilities to get investment-grade ratings. All California has to do is to ensure the utilities are credit-worthy again via the bond sale says John Bryson president and chief executive officer of Edison International the Rosemead Calif. parent of Southern California Edison Co. So far the California Assembly and Senate have proposed that Southern California Edison sell $2.9 billion in revenue bonds backed by a surcharge tacked onto the bills of the state's largest businesses to pay off its commercial paper holders and alternative-power producers such as wind and solar generators. The utility has a contract with the alternative-power producers and the price it pays for power is fixed. But the utility has defaulted on those payments. The state believes that Edison International needs to help rescue its struggling utility. A $400 million tax rebate that Edison International is expected to receive from the federal government also could be applied to help the utility out of its financial crisis. The state needs to provide some stability to Edison so we can get back in the power business again says Mr. Bryson. It's a pretty straightforward solution. While utilities still continue to deliver electricity to consumers the state has had to step in to buy the power on their behalf. Energy companies are currently refusing to sell power to the utilities fearing they won't get paid because the utilities have defaulted on prior payments and have no credit. California's 1996 deregulation law uncapped wholesale power prices but froze the rate the utilities could charge consumers. When wholesale prices surged in both the spot and day-ahead markets running well above what the utilities could charge customers the utilities couldn't do anything about it because the state deregulation law didn't allow them to sign long-term supply contracts. Restoring the utilities' credit-worthiness however may not be as quick as Mr. Bryson makes it sound given the huge sums that Southern California Edison and Pacific Gas & Electric owe the energy companies that sold them electricity. Pacific Gas & Electric filed for bankruptcy-court protection in April and is trying to write a reorganization plan in just six months pay off all of its creditors in full and return to the power business says the company's Mr. Glynn. CONSERVE ENERGY A massive conservation effort that busts the energy cartel by reducing demand and thus lowering the price of wholesale power is the only way to save the state in the short term says Harvey Rosenfield who heads the Foundation for Taxpayer and Consumer Rights a consumer-advocacy group in Santa Monica Calif. Only if demand falls so greatly that members of the energy cartel are forced to break ranks and lower prices will conservation solve the short-term problem. Gov. Davis says Californians already are conserving at a record rate. For example in July Californians boosted conservation efforts during the day by 11% compared with the same time last year. Conservation efforts have been suggested from the use of halogen light bulbs to running washing machines in the evening to setting the thermostat at 78 degrees. REREGULATE Nettie Hoge executive director of the Utility Reform Network a consumer-advocacy group based in San Francisco believes the state should return to the days when utilities monopolized the power market. Back then she says power supplies were abundant and prices preset. It was working just fine back then Ms. Hoge says. It's not until we opened this state up to so-called competition that everything started to go in the toilet. Look at us now: We're like a Third World country. We can barely keep the lights on. She says regulation would let consumers know what the price of electricity is and that price would stay the same regardless of fluctuations in supply and demand. California wouldn't be held hostage by out-of-state energy companies that not only control the price of electricity but also control the supply Ms. Hoge says. But some experts say that under federal law it might be impossible for states to reclaim authority over power plants that fall under the jurisdiction of the federal government. And it would cost billions of dollars to construct new government-owned generators or buy back with public funds old utility plants. LEAVE MARKETS ALONE Others believe that California's electricity markets should be left alone to evolve and become more competitive. The state should resist putting in constraints like price caps a number of Wall Street firms have advised the state. Merrill Lynch & Co. Credit Suisse First Boston and Goldman Sachs & Co. are among companies that helped the state and its utilities try to come up with financial solutions earlier this year to help ease the energy problem. None of the plans were implemented however. The state needs to get out of power business says Richard Cortwright an energy analyst at Standard & Poor's Corp. The goal of any new plan should be to eliminate what's left of regulation says Susan Abbott an executive director at Moody's Investor Service Inc. State regulators restricted the utilities from signing forward contracts [locking in power supply at a fixed price] they capped retail rates and never encouraged retail choice says Ms. Abbott. That's the antithesis of a competitive market. Until the state understands competition this energy crisis will just continue to fester for years to come. --- Mr. Leopold is chief of the Los Angeles bureau for Dow Jones Newswires. Copyright ? 2000 Dow Jones & Company Inc. All Rights Reserved. Energy (A Special Report) What Now? --- Looking to Washington: What can the feds do to make deregulation a less bumpy process? By Vasugi V. Ganeshananthan 09/17/2001 The Wall Street Journal R13 (Copyright (c) 2001 Dow Jones & Company Inc.) WASHINGTON -- Before California's energy problems began support was building for congressional action on national electricity deregulation. But this year says Sen. Frank H. Murkowski a longtime proponent support for deregulation is not there in my opinion. Still even without a comprehensive package the federal government could take some crucial partial steps toward more-open power markets. Some in Congress have backed measures that would lead to restructuring as opposed to deregulation. That could involve such steps as settling more authority on the Federal Energy Regulatory Commission to ensure reliability and access to the transmission grid. Another target for Congress will be the remaining antiquated laws and regulations designed for the days of monopolies when each utility had its own borders. The aim is to fix troubled wholesale markets to set the stage for states to elect to deregulate at the retail level. I think it would be in the industry's best interest for this Congress to deal with some of the issues that have been hanging out there for some time says Rick Shapiro managing director of local and governmental affairs at Enron Corp. the Houston-based energy giant. In Congress so far this year several bills have been introduced. The energy bill the House passed in early August offered some modest measures to foster competition such as tax breaks to utilities joining regional transmission organizations or RTOs which FERC has asked energy companies to create to operate the power grid. Rep. Joe Barton a Texas Republican and chairman of the House Energy and Air Quality Subcommittee plans to introduce even more restructuring legislation this fall. His bill may address reliability transmission and incentives for building power plants among other issues. And Sen. Jeff Bingaman of New Mexico chairman of the Senate Energy and Natural Resources Committee has plans for a bill of his own: His main point is to enhance FERC's authority to address power-market problems like reliability and fair access to the grid. But among other issues he is making the latest of several pushes over the past few years to repeal the Public Utility Holding Company Act of 1935 which was designed to prevent large national companies from dominating the industry. Though Congress in 1992 passed the Energy Policy Act permitting competition among wholesale electricity suppliers the 1935 law still limits certain investments by utility holding companies. And many say it impedes competition. Sen. Bingaman also wants to repeal the parts of 1978's Public Utility Regulatory Policies Act that mandate the use of renewable energy though he has said he still supports promoting renewable energy. Of course there are longstanding thorny issues that make federal action on energy markets a tough sell. While some Democrats like Mr. Bingaman are interested in the topic the party in general is less in favor of deregulation than are Republican lawmakers. Thus the recent Democratic takeover of the Senate is widely considered a setback. And while some regions strongly favor change others don't. For instance many Western states -- including Washington whose Democratic Sen. Maria Cantwell is a member of the Senate Energy and Natural Resources Committee -- are feeling the ill effects of deregulation in California and are thus leery. Naysayers point to what they say was FERC inaction regarding inadequate power supplies and controversial pricing auctions. From California's perspective FERC failed miserably by doing nothing for month after month after month says Rep. Henry Waxman a Democrat from California. I fear we might make the same mistake at the national level that California made at the state level. But deregulation advocates think nationwide deregulation is inevitable. Would you like to be in an airport where there is one airline from here to Atlanta? Or an airport where there are three airlines including a low-cost option? says Marc Yacker director of government and public affairs for the Electricity Consumers Resource Council a Washington D.C. group of large industrial electricity users. If regulated states see that residents in Pennsylvania and Texas have a well-functioning electricity system . . . they will change. Here are some of the main issues currently being hashed out in Washington: -- WHOLESALE MARKETS: Before any serious discussion of consumer deregulation can take place Mr. Bingaman thinks wholesale markets need to be fixed. Among his main points: clarification of FERC and state jurisdiction. A recent white paper from him outlining his planned legislation calls for Congress to clarify that FERC is the ultimate authority over all transmission issues with the power to overrule states. The paper adds Legislation should affirm FERC's authority to order utilities to join regional transmission organizations. Such powers the thinking goes would allow FERC to ensure that power transmission is fair and that access is free of any favoritism among affiliated utilities. And that would go a long way toward fixing wholesale markets and paving the way for retail deregulation should individual states choose to participate. To leave electricity legislation for another day would be to ensure that the problems faced now in the West will be replicated across the country he wrote in the paper. -- FEDERAL AUTHORITY: The extent to which a federal entity should have authority over power markets is a contentious issue. Mr. Bingaman desires far-reaching powers for FERC. And power suppliers favor having federal regulators hold sway over transmission issues. Eugene Peters of the Electric Power Supply Association a Washington D.C. trade group for competitive power producers says FERC has a role here in that they can essentially create a national template. Democratic Sen. Dianne Feinstein of California has also said she will push to get more authority for FERC in order to ensure that all power prices are reasonable -- for instance by assessing civil penalties to power suppliers who engage in unfair pricing. But some in the energy industry say FERC already has plenty of authority -- it's just that the commissioners haven't exercised it properly. Opponents of extending FERC's role fear a tangle of federal bureaucracy reaching a local level. I think that if FERC exercises the authority that I believe that they have in many of these areas legislation is not necessary says Dave Penn executive vice president of American Public Power Association a trade group of public utilities based in Washington D.C. FERC itself isn't arguing strenuously for more authority. Chairman Pat Wood says additional affirmations of authority would probably save the agency time in court later. And he says he wouldn't mind having the ability to assess penalties on utilities that fail to provide reliable service. But he adds While I welcome any authority they want to give us what we've got in the statute now is plenty good enough. -- TRANSMISSION: Transmission is an industrywide beef it's widely acknowledged that with electricity now being sold over greater distances the current system is overtaxed risking bottlenecks and reliability problems. So the nation needs more lines. But who decides where to put them? Plus with the same people selling power and running transmission lines there's a natural inclination for those controlling the transmission lines to want to sell their own electricity first. FERC has ordered the industry to institute RTOs to run the transmission system to ensure fair access to transmission lines no matter who owns them. Sen. Bingaman's proposals would affirm that power for FERC. And Mr. Wood says the RTOs can also handle siting of new transmission lines. But many states are unhappy with FERC's strategies. Some fearing federal interference with the states' authority over siting are taking steps to form their own multistate councils that would ensure regional cooperation while leaving control in state hands. And Maryland the District of Columbia and Virginia are requesting a rehearing of a FERC order that they join RTOs saying that federal regulators are moving with undue haste even in areas where transmission isn't a problem. -- INTERCONNECTION: In a competitive system the growing number of new electricity generators must be able to connect to the power grid. But the interconnection of new generators with the old utilities that own the grid's transmission lines can raise two kinds of problems. On the technical side newer generators can have different types of systems with different generating capacities raising concerns of overloads and other problems. On the competitive side utilities can make it difficult for new generators to connect to the grid. So many in the industry are calling for uniform technical standards to allow equal access to the grid -- once a generator meets the standards a utility would have no basis to deny a hookup -- and to ensure that interconnection doesn't risk the safety and reliability of the system. As we've moved into deregulation there are more entities that want to connect to the system says Ken Rose a senior economist at the National Regulatory Research Institute at Ohio State University. There must be some means he says to ensure that access for all these new players remains fair. FERC's Mr. Wood says interconnection is a top priority for the agency. He has officially asked utilities to file their interconnection rules and FERC will issue a policy on interconnection this fall. Chris Mele legislative director of the National Association of Regulatory Utility Commissioners in Washington D.C. says that interconnection rules need to be flexible. NARUC supports Congress requiring the establishment of national interconnection and power-quality standards that would be developed and adapted by an appropriate technical-standards organization says Mr. Mele. However the states need to have the flexibility to adapt these rules or to adapt their own rules. --- Ms. Ganeshananthan is a staff reporter in The Wall Street Journal's Washington bureau. Copyright ? 2000 Dow Jones & Company Inc. All Rights Reserved. Energy (A Special Report) What Happened? --- Lessons From Across the Seas: Deregulation is working pretty well in Britain But it has taken a long time By Geoffrey T. Smith 09/17/2001 The Wall Street Journal R9 (Copyright (c) 2001 Dow Jones & Company Inc.) LONDON -- For all those who just can't understand why electricity deregulation is worth bothering with: Look abroad. It has to be admitted that Europe's deregulation experience looks better than the U.S.'s largely because of the relative starting positions. Europe is the 300-pound couch potato who feels more of a difference after a month in the gym than the guy who is already quite fit. For decades the European electricity industry was run by engineers patronized by politicians. The result: a hugely overbuilt system with rows of underused power plants and legions of unnecessary staff paid for by sky-high regulated rates. Deregulation is starting to put an end to all that. Electricity prices have fallen in most European markets especially in Germany since a European Union deregulation directive took effect in 1999. And in the United Kingdom deregulation has gone further than in most of Europe. Electricity prices are down by around a third for families and businesses and there are few problems with supply. But there is a catch -- an important one for an American public already weary of the pain of deregulation: In Britain it has taken more than a decade to make deregulation start to work. Britain started out with a few advantages that places such as California don't have. Its policy is in the hands of a single central government committed to deregulation while U.S. state and federal regulators often disagree on what needs to be done. It started out owning the whole energy business and could carve it up as it pleased. As it deregulated it didn't have to face the problem of exploding demand due to Silicon Valley and rapid population growth. And Britain unlike California started from a position of significant oversupply and for years was liberal in allowing still more plants to be built because they would be fueled by cheaper and cleaner North Sea natural gas instead of coal. Despite all this British electricity deregulation has had its share of false starts. For 10 years up until 1998 the whole process seemed to be bringing little in the way of concrete gains. For much of the decade the government was a timid pioneer relying on the blunt policy instrument of price controls to bring prices down when its fancy new market models didn't work. But Britain was also willing to try different approaches if its first choice failed -- perhaps a lesson for the U.S. Like California Britain set up a wholesale pool for day-to-day power purchases Britain scrapped the pool when it failed to bring prices down. Britain also allowed power buyers and sellers the crucial freedom to lock in their prices for months ahead insulating them from the price zigzags that have crippled California's two largest investor-owned utilities and sent the biggest PG&E Corp.'s Pacific Gas & Electric Co. unit into Chapter 11 bankruptcy proceedings. The U.K. has got the balance about right but competition has been a long time in coming says Richard Lewis U.K. managing director of Enron Corp. Houston. The seeds were sown in 1988 when then-Prime Minister Margaret Thatcher decided to extend her free-market ideology to the electricity sector. The British government had a clear idea what it wanted to do. New laws were passed. Deregulation began. By contrast Germany's federal government which started the process at the end of 1998 has had to negotiate electricity deregulation with two other tiers of government and more than 800 electricity companies. Britain split the electricity sector into three parts: power generators completely separate regional suppliers and National Grid PLC to which it gave ownership and control of the country's high-voltage power lines. By separating the grid from the companies that actually sell and produce electricity this structure ensured that no seller could keep others out of the market. The government sold majority stakes in all 12 English and Welsh regional electricity suppliers to the public in December 1990. Six months later it had sold 60% each of National Power PLC and Powergen PLC giving to those two companies almost all the coal-fired power plants in England and Wales. The sale of nuclear generator British Energy PLC followed in 1996. Managers across the sector started cutting cut costs agressively especially for labor. With privatization the design of new plants was increasingly influenced by economic factors such as natural gas's cost advantage over coal rather than political ones. Back in 1988 Britain's old Central Electricity Generating Board had wanted to build expensive new coal plants and nuclear reactors despite the presence of vast untapped natural-gas reserves right on the U.K.'s doorstep in the North Sea. But thanks to privatization almost all the new power plants built in the next 10 years were gas-fired. In fact so many were built that the government slapped a moratorium on new plants in order to cushion if not stop the decline of the domestic coal industry. The moratorium was lifted last November. In the early 1990s a model evolved in which the companies that distributed power to homes and businesses -- known as regional suppliers -- were allowed to charge a specified amount for getting the power to the customer if a company could find a way to do it for less it got to pocket most of the difference. Customers got lower bills and the companies' shareholders were happy -- a little too happy in fact as the public started to resent the fat cat bosses who were seen as skimming off fat profits for little improvement in service. Deregulation really got going in 1994 when the government allowed industry to shop around for its power. A year later it gave up its rights to veto foreign takeovers of suppliers starting a wave of U.S.-led takeovers. But within a few years most of the U.S. firms had either sold or said they intended to although Dallas's TXU Corp. stayed and thrived. For much of the 1990s it wasn't market forces that brought British electricity prices down. Almost all of the cuts in prices to consumers came from [our] price controls on monopolies says Steve Smith head of trading arrangements at the Office of Gas and Electricity Markets the regulator that has implemented government policy under one name or another since 1990. Most of a household's bill comes from the cost of running the distribution network not from producing the power. It was this distribution part of the business that bore the brunt of the price controls. The failure to bring down the price of power itself threatened to provoke a crisis in 1998 when the government finally extended competition to the household and small-business sectors. Nine years after the Electricity Act got the ball rolling the market for customers was 100% open. But something still had to be done about the power generators' prices which weren't falling as expected. In theory British power generators had had to bid into a wholesale pool each day since 1990 telling the National Grid at what price each plant could supply power. The Grid would then buy as much power as needed from each plant starting with the cheapest. But the pool didn't work. There were too few players in it. The generators' prices to resellers -- the regional suppliers -- stayed stubbornly flat. Accusations of market manipulation abounded but could rarely be made to stick. The answer was NETA -- the New Electricity Trading Arrangements which were the centerpiece of last year's Utilities Act. Under the new rules which took effect March 27 electricity has become as close as it is ever likely to be to being a market like any other. Producers consumers and intermediaries now all trade electricity directly with each other up to 3 1/2 hours before they have to deliver or use it -- rather than buying power through an intermediary pool that buys from the generators. The grid operator still manages the physical flow of electricity but intrudes only inasmuch as buyers and sellers have to notify it how much they intend to put into or take out of the grid at each half-hour of the day. NETA has galvanized competition. Prices for electricity have fallen 15% since March according to British regulator Ofgem and they continue to fall. But it's not a question of forcing prices down -- more of allowing the market to set the price of power. More than 7.8 million customers have switched suppliers since 1998. And the Electricity Association a trade group for companies in the electricity business reckons that households can cut almost GBP 30 ($43) or about 12% off their annual bills by switching. At last deregulation is working. NETA has definitely been the right framework to foster competition says Brian Count the new chief executive of Innogy PLC a power generator and supplier that is one of two companies created last year by the breakup of the generation company National Power. But even as the free-marketers lean back and congratulate themselves on a job well done storm clouds gather on the horizon. The Labour government re-elected in June has ordered the U.K.'s first national energy policy review in 20 years. The government is signaling that it wants more control over future investment decisions. The nuclear industry and renewable sources such as wind power look likely to benefit as the British government tries to reduce greenhouse-gas emissions. As Britain's own natural-gas reserves run out in the middle of this decade it will become like the rest of Europe -- uneasily dependent on countries such as Algeria and Russia for supplies. Hence the support for nuclear power. The industry accepts all this but Innogy's Mr. Count speaks for many when he says: For goodness' sake don't let us now get dragged back to central planning and regulation. --- Mr. Smith is an assistant news editor for Dow Jones Newswires in London. Copyright ? 2000 Dow Jones & Company Inc. All Rights Reserved. Energy (A Special Report) What Now? --- On Second Thought: In the wake of California's power problems many states are taking a wait-and-see approach to deregulation By Eileen O'Grady 09/17/2001 The Wall Street Journal R13 (Copyright (c) 2001 Dow Jones & Company Inc.) California's energy crisis has a lot of people wondering whether it's really such a good idea to let consumers shop for electricity. No one wants to repeat California's mistakes. So while 12 states and the District of Columbia already offer residential and commercial energy consumers a choice of providers and a handful are pressing ahead with plans to fully deregulate next year some 20 others are either delaying deregulation plans or taking a hard look at whether they ought to move toward competition. And no state has started a new deregulation effort since California's blackouts and price spikes were first reported. But while the fervor for deregulation definitely has cooled not all of the blame can be laid at California's doorstep. Indeed in virtually all of the states that deregulated before California's troubles began -- particularly in Pennsylvania Massachusetts and New Jersey -- consumers have seen for themselves that many of the new entries in the power market haven't delivered on one of the new system's key promises: lower prices. Texas Michigan and Virginia are expected to stick to their plans to open their electricity markets fully next year. But industry sources agree that a lot more states would be about to do the same if California's electricity troubles hadn't given them second thoughts. The advance of retail competition has definitely stalled says Ken Rose a senior economist at the National Regulatory Research Institute at Ohio State University in Columbus a research arm of a national trade group for state utility regulators. The question is whether it reverses Mr. Rose adds. You would expect bumps in the road maybe a slow start but for the past year and a half it's not been going in the right direction. While no state has repealed an electricity-deregulation law in the wake of California's troubles seven states have altered their deregulation laws mostly to delay the start of consumer choice by a few months or a few years -- until state regulators and legislators can see how deregulation plays out elsewhere. Oklahoma one of those states pushed its shopping start date back to 2004 or later from July 1 2002 worried that deregulation might jeopardize its below-average electric rates. California has slowed down the restructuring effort but hasn't stopped it says Oklahoma state Sen. Kevin Easley a Democrat and an early supporter of deregulation. Long term we think it's still a positive thing for Oklahoma. As a major producer of natural gas Oklahoma has attracted a large number of new power plants that run on natural gas. Deregulation its local supporters say thus could help the state create new jobs by encouraging more local power plants that export electricity adding value to the state's natural resources. Nevada where electricity demand is growing dramatically used an emergency measure in April to delay the start of consumer choice for a third time. The measure also froze electricity rates until early next year and placed a moratorium on utility sales of power-generating plants. That effectively undid a customer-choice law passed in 1997 although the state will allow some large customers to shop for power next year. Wisconsin has no deregulation law but its utilities were beginning to propose ways to divide their power-generation assets in order to create a competitive market. When California's problems emerged however Wisconsin Public Service Corp. a unit of WPS Resources Corp. Green Bay withdrew a proposal that would have urged state regulators to allow the company to transfer some of its power plants to a separate company -- a first step toward deregulation. Wisconsin has been set back by California says Larry Weyers chairman of Wisconsin Public Service. Any talk of deregulation is met with a lot of opposition and anything seen as changing the system is dead on arrival. Our plan could have been successful but attitudes became cautious. So much for the states that got cold feet. How are the pioneers faring? Not very well. Most electricity customers in fully deregulated states have seen few competitive options. Figures from regulators indicate that after an initial burst of consumer interest new energy providers in New Jersey New York Massachusetts and Pennsylvania have seen significant reductions in numbers of customers. When New Jersey started letting consumers shop in 1999 about 2.2% of residential consumers switched to a new provider. Now only 1.1% are still buying electricity from a company other than their incumbent utility. Even Pennsylvania which was seen as the biggest deregulation success is beginning to look more ordinary says Mr. Rose the regulatory economist. Some electricity retailers that pulled out of the state blamed a climate of fear arising from California's troubles. But rising wholesale power prices have taken their toll as well says state consumer advocate Irwin Popowsky. In 1998 Pennsylvania residential customers had a choice of at least 30 alternative power providers. Today there are fewer than 10. The reason: The new entries proved unable to compete with the lower capped rates offered by the incumbent utilities industry sources say. Initially Pennsylvania's biggest utility Peco Energy Co. a unit of Chicago-based Exelon Corp. lost 44% of its industrial customers and 30% of its commercial clients to new suppliers according to data published by the state consumer advocate's office in July 2000. One year later however many of those customers had returned to Peco leaving the utility with a loss of only 4.7% of its industrial customers and 5% of its commercial clients. For residential power customers the story's the same: Around the state initially about 10% selected a new supplier before California's problems erupted. Today six of the state's seven original power companies have regained residential customers as competing suppliers leave the market and savings offered by those remaining shrink Mr. Popowsky says. The number of residential customers being served by new suppliers dropped to 574661 as of late June 2001 down 18% from March. It's a price issue says Sharon Reishus associate director at Cambridge Energy Research Associates Cambridge Mass. Though wholesale power prices have fallen since the first part of the year they remain unpredictable she says. A competing provider might be able to make profits say 10 months of the year but could still get killed in the spot market if prices spike Ms. Reishus says. One of the biggest new competitors in Pennsylvania is New Power Co. a subsidiary of NewPower Holdings Inc. Purchase N.Y. New Power bid for and won 250000 Peco Energy customers around the time of Peco's 1999 merger with Unicom Corp. to become Exelon. But New Power's plans extend well beyond the borders of Pennsylvania. It has plans to sell natural gas and electricity to residential consumers and businesses around the U.S. We have seen some volatility in the Pennsylvania market due to the rise in wholesale prices says H. Eugene Lockhart president and chief executive officer of New Power. But he adds we remain committed to serving our customers there and hope to step up our marketing efforts in the near future. But Houston-based Shell Energy Services a unit of Royal Dutch/Shell Group's Shell Oil Co. cited the slowing pace of retail access around the country for its recent decision to drop out of the hunt for new electric customers in Texas and Ohio -- even before markets in those states are fully open. Shell Energy Services had already signed up 40000 residential customers in Texas and 30000 in Ohio but officials said that given the slow progress of deregulation it was unlikely the company would reach the size needed to be profitable in a reasonable length of time. The prospects for selling power to residential customers remain difficult but the opportunity for marketing to business is brighter. Small businesses are seen as key for electricity suppliers seeking new customers says Scott Gahn managing director of commodity management at Enron Corp.'s Enron Energy Services unit which markets power to business. Each month that goes by we're adding gas and power customers in Maine Massachusetts New York New Jersey Illinois Ohio and Texas Mr. Gahn says. He even goes so far as to say that California's impact on deregulation hasn't been all bad. For energy markets in many states he says the California crisis has gotten the issue [of being able to choose your own provider] onto their radar screen in a way that you'd have to pay an advertising agency to do. State officials in Texas Michigan and Virginia where consumers will start shopping next year vow not to repeat California's mistakes. Everyone asks me will we have California's problems? says Tom Noel chief executive of the Electric Reliability Council of Texas which runs the state's power grid. No we won't have their problems but we will have some of our own. The Texas electricity market is very different from that of California. Texas has a copious supply of electricity thanks to extensive construction of power plants powered by natural gas which also is in plentiful supply locally. One reason California got into trouble: Its utilities had to import a lot of electricity and high-priced natural gas to meet the state's growing demand for power. Texas has attracted about two dozen companies to compete for consumers' business through a 1999 deregulation law that carved existing utilities into separate generating transmission and retail units. It has been running a customer-choice pilot program ahead of its Jan. 1 2002 debut of full deregulation. We're in this for the long haul says New Power's Mr. Lockhart. With the opening of the market in Texas there will be a national example of getting it right -- saving consumers money and giving them choices to help manage their energy use. --- Ms. O'Grady is a reporter for Dow Jones Newswires in Houston. Copyright ? 2000 Dow Jones & Company Inc. All Rights Reserved. Business/Financial Desk Section C German Deal for U.S. Water Utility By ANDREW ROSS SORKIN 09/17/2001 The New York Times Page 6 Column 3 c. 2001 New York Times Company In the first deal in the United States since the terrorist attacks of last week American Water Works of Voorhees N.J. has agreed to be sold to RWE a German utility for more than $5 billion executives close to the transaction said yesterday. The deal which is expected to be announced today before the markets open will be a crucial test of investor confidence in mergers and acquisitions in the wake of the calamity. One executive said the transaction was being announced now partly as an effort to demonstrate the resolve of businesses worldwide. ''We discussed holding off for obvious reasons'' the executive said. ''But we decided that we should press ahead. The markets need to know that business will continue as usual. And by that I mean business -- the commerce of life -- will not stop in the face of terrorism.'' For RWE the deal represents its latest effort to expand through acquisitions. Last year RWE acquired Thames Water of Britain and the E'town Corporation of New Jersey. American Water Works the largest publicly traded water utility in the nation with annual revenue of $1.4 billion has been acquisitive itself. It recently announced an agreement to buy the Azurix North America Corporation the water utility of the Enron Corporation and is about to complete a deal to buy the water assets of the Citizens Communications Company of Stamford Conn. Spokesmen for American Water Works and RWE could not be reached for comment last night. Copyright ? 2000 Dow Jones & Company Inc. All Rights Reserved. Germany's RWE Agrees to Buy American Water Works for $4.6 Billion Plus Debt 09/17/2001 Dow Jones Business News (Copyright (c) 2001 Dow Jones & Company Inc.) ESSEN Germany -- German utility RWE AG said it has agreed to buy American Water Works Co. the largest publicly traded water utility in the U.S. for $4.6 billion plus $3 billion in debt in attempt to expand internationally. RWE said it would offer $46 per outstanding share of American Water Works a 37% premium to American Water Works' share price in the past 30 days. The offer values American Water Works (AWK) at a total $7.6 billion as RWE will offer $4.6 billion for the shares and assume $3 billion in debt it said. Discussions between RWE and American Water had broken down late last month. When the transaction is complete RWE plans to bundle American Water Works which has a market capitalization of $3.3 billion with its Thames Water operations in the U.K. RWE said. RWE is looking to expand internationally to close the gap with competing global utility firms Vivendi SA and Suez SA both larger in size by market capitalization. Last year RWE bought Thames Water PLC of Britain and also acquired E'town Corp. of New Jersey. American Water Works Voorhees N.J. is an aggressive buyer in its own right. It recently announced the purchase of Azurix North America Corp. the North American water-services division of Houston's Enron Corp. for $141.5 million including $8.3 million of debt and tax savings of $13 million for an enterprise value of $136.8 million. It scrapped a planned acquisition of water utility SJW Corp. San Jose California earlier this year after repeated regulatory delays. And it is expected to complete soon a nearly two-year-old deal to buy the water and waste-water assets of Citizens Communications Co. Stamford Connecticut. RWE said shareholders representing 24% of American Water shares have already entered binding agreements to support the transaction. In addition to providing us with a top position in the U.S. the acquisition of American Water will further establish RWE as a global leader in the position of water services RWE Chief Executive Dietmar Kuhnt said in a statement. The development of RWE's world-class water business in turn will provide greater balance to our core utility portfolio and allow us to deliver enhanced growth and shareholder value he added. The deal is expected to be completed within 18 months to two years. The transaction will require shareholder and cartel authority approval. RWE's supervisory board and the board of American Water Works have approved the offer. Copyright (c) 2001 Dow Jones & Company Inc. All Rights Reserved Copyright ? 2000 Dow Jones & Company Inc. All Rights Reserved. INDIA: UPDATE 1-Enron's Dabhol says needs cash to pay lenders. By Sriram Ramakrishnan 09/17/2001 Reuters English News Service (C) Reuters Limited 2001. BOMBAY Sept 17 (Reuters) - U.S. energy firm Enron Corp's Dabhol Power Co said on Monday it has sought urgent funding from its foreign lenders to repay interest on past loans and preserve a $2.9 billion power plant that is lying idle. Dabhol which is 65 percent owned by Houston-based Enron said monthly interest payments to its lenders have to be made in September but it does not have enough cash. It has about 25 foreign lenders which include ABN AMRO Citibank US Exim and Bank of America. The company has funds in its account to make certain payments and anticipates that some of those will be made. It has requested disbursement from banks towards the rest the spokesman told Reuters. He did not disclose details of the interest payments nor the cash it wants. The project has been funded 70 percent by debt. Dabhol has not been earning any income after its sole customer the Maharashtra State Electricity Board (MSEB) in May stopped buying any more power from its plant citing high tariffs. MSEB was buying the entire output from the plant's first phase of 740 MW and had committed to buy the second phase output of 1444 MW when it was ready. Following the cancellation foreign and local lenders stopped disbursals of around $400 million forcing complete stoppage of work on the second phase. They have also declined to provide funds to preserve expensive equipment from being damaged by natural elements. Without funds for preserving the facility the physical assets will begin to deteriorate almost immediately which in turn will further add to the overall cost of completion the spokesman added. Dabhol now wants at least a portion of this $400 million amount disbursed to help it meet its interest payments and take care of the plant. The development is likely to put further pressure on India's federal government to solve the contentious dispute which has affected the country's efforts to attract foreign investment in the power sector. Three foreign power companies have already pulled out including French giant Electricite de France . Analysts believe that a quick solution to the problem is key to restoring investor confidence. UGLY SPAT Once considered the showpiece of India's liberalisation programme the Dabhol project is now being dubbed an example of political and bureaucratic bungling. Enron has announced its decision to sell its equity in the project to the federal government or any other company. It says MSEB is yet to pay bills worth $185 million. On Monday Dabhol further upped the ante by slapping MSEB with two preliminary notices of termination. One is for not paying bills for the months of June and July and the other for MSEB's decision in May to cancel the power purchase agreement the contract that governs the state board's purchase of power from Dabhol. This is the third such notice from Dabhol. In May it served the first notice for non-payment of bills for December and January. The two fresh notices are a body blow for MSEB analysts said as it means the state utility could end up fighting three separate arbitration battles. According to the power purchase agreement all disputes will have to be settled by the International Court of Arbitration in London. As per this agreement serving preliminary notice is followed by a six-month cooling off period. If the dispute is not settled by then Dabhol can issue a final notice and the dispute automatically goes for arbitration. The six-month period for the first notice which was issued in May ends in November. If there is no settlement by then MSEB will have to answer Dabhol's charges of non-payment of bills for December and January. The same procedure will be followed in the case of the other two notices. But efforts to solve the issue so far through arbitration have been delayed by domestic litigation. MSEB wants the dispute to be heard by local courts while Dabhol is pressing for arbitration in London. The Bombay high court which began hearing this dispute on Monday is expected to give a final verdict soon. ($1=48.83 Indian rupees). Copyright ? 2000 Dow Jones & Company Inc. All Rights Reserved. UK: INTERVIEW-Screen trading enhances metals market. By Martin Hayes 09/17/2001 Reuters English News Service (C) Reuters Limited 2001. LONDON Sept 17 (Reuters) - The emergence of electronic screen systems alongside existing open-outcry and telephone markets has enhanced trading in base metals Paul Shuman LME desk manager at Cargill Investor Services (CIS) said. From our perspective because we are brokers and do not run a proprietary position we are bound and always will be to try and get the best price for our customers. The more platforms there are for us to trade on the better for our customers Shuman told Reuters. The London Metal Exchange (LME) the world's leading non-ferrous metals market introduced an automated trading system (ATS) known as Select in February and unveiled a more sophisticated phase last week. The LME's system joined rival platforms managed by Spectron Metals and Enron Online part of Enron Corp. These systems have improved market liquidity and increased price transparency throughout the day Shuman said. Instead of being restricted to the ring and the telephone market where you have to ring around you have instant access to bids and offers all through the day. Now when we give our customers a market we can do that on the basis of the best bid and offer on the screen. From our company's perspective it has been very helpful he said. Spreads between bids and offers have narrowed and access to the market has become faster. It is certainly a tighter market a quicker market and probably a more liquid market he said. SCREENS NOT PARAMOUNT However the LME's ATS is not designed to replace open-outcry on the 124-year-old exchange. Rather it will complement the current mix of inter-office phone trading and open-outcry. Screens do not replace the ability to talk to one another he said. There are instances when customers needs to transact a highly complex multi-legged carry or spread trade and it is unlikely that any system will be able to replicate that. You phone up another broker and say what you want to do. You either have to do it face-to-face or on the phone - you cannot do it on the screen - speed is important. He said there may well be a fall-off in volume at one or other of the current platforms but the screens and the telephone market are likely to run in tandem while the LME plans to continue open-outcry ring trading as well. For the customers they are going to get the best of all worlds he added. LME SCREENS GAINING ACCEPTANCE On the screens the dust has still to settle between the rivals but there are signs that LME Select is being used more by the market. In the last few weeks Select has done better as more people have become used to it and it (Select) is free whereas some others are not Shuman said. And now the Select system is much more capable after the release of the second more sophisticated phase. It is very ambitious and it will be interesting to see how it works he said. The second release incorporates a unique request-for-quote function. This allows traders to direct enquiries such as market size and depth to as many or as few respondents as required and whether or not to be anonymous. It also covers all the LME's contracts - the initial release was confined to the basic cash three months and cash-to-threes spread contracts. It is going to take a while for Select Two to become the tool for the industry. But Cargill is in favour of anything that allows us to give a better service to our customers Shuman said. Copyright ? 2000 Dow Jones & Company Inc. All Rights Reserved. French Electricity Bourse To Run Tests Before Launch 09/17/2001 Dow Jones Energy Service (Copyright (c) 2001 Dow Jones & Company Inc.) PARIS -(Dow Jones)- French electricity bourse Powernext SA took one step closer to its imminent launch with the announcement Monday that it will host a series of simulations from Sept. 25. Powernext will stage three sets of simulations the first from Sept. 25 to Sept. 27 the second on Oct. 2-4 and the third on Oct. 9-11 Powernext said in a press statement. Close to 20 companies will participate in the tests including electricity suppliers traders the exchange's investors industrial consumers and traders. TXU Europe Energy Trading and Enron will be among the participants. The exchange is also holding seminars this week for participants to get acquainted with the ElWeb electronic trading system also currently used by Nord Pool in the Nordic region the market model and Clearnet the exchange's financial guarantor. Jean-Francois Conil-Lacoste Powernext's director-general said the exchange is still on track for its official launch later this autumn although a date hasn't been set yet. Euronext Paris SA and HGRT a financial holding for European electricity grid operators hold 34% and 17% of Powernext respectively. Currently Electricite de France (F.EDF) is the sole shareholder in HGRT although the long-range plan envisions Dutch grid operator TenneT and Belgian counterpart Elia as potential investors. Powernext aims to expand its activities in the Benelux region dovetailing newly created Euronext formed through a merger of the Paris Brussels and Amsterdam stock exchanges. Powernext will also announce later this autumn the addition of new investors. Currently the remaining 49% is divvied up among French banks BNP Paribas (F.BNP) and Societe Generale (F.SGF) plus state-owned EDF oil giant TotalFinaElf (TOT) and Belgian utility Electrabel (B.ELE) which each hold 9.8%. These stakes will fall to 5.0% with the entry of the new investors the threshold necessary to hold one seat on the board of directors. The exchange plans to initially offer physical electricity in hourly blocks for delivery the next day. Separately EDF Trading the London-based trading joint venture of EDF with commodities trader Louis Dreyfus will start trading in the French wholesale market Oct. 1. EDF's Director of Client Services Loic Caperan said last week. EDF Trading is barred by the European Union Competition Authority from trading in the French retail market. The trading arm isn't allowed to assist EDF to structure contracts for France's energy-intensive industrial consumers the group eligible to choose suppliers representing about one-third of domestic power consumption. But the entry of EDF Trading into the wholesale market is viewed by some traders as crucial to injecting necessary liquidity for electricity trading to flourish in France. The pace of power market deregulation is slowly starting to pick up in France. Powernext is the second project to launch this autumn aimed at kick-starting trading. Last week EDF auctioned options on close to 1200 megawatts of local power production. As the E.U.'s second-largest power market which shares its borders with five countries and is connected to the U.K. via an under-water electricity interconnector France is key to the eventual formation of a pan-European traded market. -By Sarah Wachter Dow Jones Newswires 331-4017-1740 sarah.wachter@dowjones.com -0- 17/09/01 09-56G Copyright ? 2000 Dow Jones & Company Inc. All Rights Reserved. RWE to Buy American Water Works for $7.6 Billion (Update6) 2001-09-17 07:02 (New York) RWE to Buy American Water Works for $7.6 Billion (Update6) (Adds where American Water is based in second paragraph moves stock drop to seventh adds context in third paragraph.) Essen Germany Sept. 17 (Bloomberg) -- RWE AG Europe's No. 4 power company agreed to buy American Water Works Inc. the biggest publicly traded U.S. water utility for $7.6 billion in cash and assumed debt in a bid to catch up with larger rivals. RWE is offering $46 in cash per share 35 percent more than last Monday's close for the Vorhees New Jersey-based company. Germany's RWE will assume $3 billion of American Water's debt said Chief Financial Officer Klaus Sturany on a conference call. The purchase will add more than 10 million U.S. customers to RWE's water unit and further reduce its reliance on the German electricity market. It will also help RWE narrow the gap to Suez SA and Vivendi Environnement SA a year after Chief Executive Dietmar Kuhnt spent $9.8 billion on Thames Water Plc of the U.K. ``RWE has said it wants to expand in water and this is another step in that direction'' said Ulf Moritzen who helps manage 100 million euros ($93 million) at Nordinvest. ``In the current situation it makes sense to buy a defensive business.'' The planned purchase isn't cheap. Including debt RWE will pay about 5.4 times sales for the U.S. company compared with 4.9 times sales for Thames Water. In the U.S. buyers paid about 4 times sales for the 15-plus takeovers in the country's water industry over the past two years according to Bloomberg data. Stock Drops Including pending acquisitions by the U.S. company the price will rise to about $8.4 billion by closing said Sturany. RWE will sell an unspecified amount of new bonds to finance the purchase he said without giving a time frame. RWE shares fell as much as 2.27 euros or 5.5 percent to 38.90 euros in Frankfurt. They've declined 17 percent this year. American Water shares closed at $34.12 last Monday the last day U.S. markets were open before the terrorist attacks. The acquisition is the biggest announced since terrorists attacked the World Trade Center and the Pentagon last Tuesday. Sturany said the companies reached an agreement last week though they decided to delay the announcement because of the disaster. ``We have enormous confidence in the U.S. economy'' Sturany said. ``Despite the enormity of the events we expect the U.S. market to prevail.'' He said the contract with American Water doesn't include any special clauses related to the attack. After the purchase which may take as long as two years to complete the Essen Germany-based company will have 56 million water customers worldwide according to spokesman Bill McAndrews. Suez and Vivendi each serve more than 100 million people. More Purchases Sturany said American Water which will become a unit of Thames Water will expand further in the U.S. by using the German company's ``strong balance sheet.'' The Thames Water purchase last year gave RWE New Jersey-based utility E'town Corp. RWE said the new acquisition will make it the largest water company in the U.S. the world's biggest single market. American Water has customers in 23 U.S. states the German company said. The U.S. market with more than 54000 local utilities is ``ripe'' for consolidation he said. RWE today said the latest purchase will help boost earnings before goodwill in the first year after completion. The company had sales of $1.35 billion last year and employs 5000 people throughout the U.S. RWE's total debt will rise to about 8 billion euros ($7.4 billion) after the purchase Sturany said. RWE's debt-to- equity ratio was about 2.8 before the purchase compared with 41 times for Vivendi Environnement according to Bloomberg data. The yield on RWE's outstanding 6.5 percent 20-year bond rose 0.1659 or 0.2 percent to 100.0455 after the announcement. RWE in April sold 3.46 billion euros worth of bonds to help pay for Thames Water including 350 million pounds in 20-year bonds. RWE has an ``Aa3'' rating from Moodys' Investors Service and a ``AA-'' rating from rival agency Standard & Poor's. Merrill Lynch & Co. and Morgan Stanley Dean Witter advised RWE on the U.S. purchase. Goldman Sachs advised American Water. RWE said 24 percent of American Water's shareholders are already backing its takeover offer which has also been approved by the German and the U.S. companies boards of directors. Enron India Unit Serves Second Notice to Cancel Power Contract 2001-09-17 08:50 (New York) Mumbai Sept. 17 (Bloomberg) -- Dabhol Power Co. Enron Corp.'s Indian unit said it has served a second notice on the state-owned Maharashtra State Electricity Board stating that it will start proceedings to cancel its power supply contract because its waiting to be paid past dues. Enron owns 65 percent of Dabhol Power Co. which runs the $3 billion power plant India's biggest foreign investment. It is owed $64 million by the Maharashtra State Electricity Board its sole customer in unpaid bills for 9 months. The board in May stopped buying power saying it's too expensive. ``Little progress has so far been made on reaching a fair and reasonable solution'' to the payments dispute the company said in a statement. Enron on May 19 issued the first notice to cancel the power supply contract with the board. It began looking to sell its stake in the project after the negotiation panel failed to get other buyers for its power. Eight Indian states said they would buy electricity but at less than half the price charged by Dabhol. Enron said it has invested $875 million in the project and is ready to sell to the government its stake at cost.,other,neutral,2 +,I am having lunch on Monday with Michael Isikoff a newsweek investigative reporter. He is doing yet another Ken Lay/Enron political influence story. One of the things he wants to talk about though -- and I think this is a good sign -- is Enron's climate change policy and how it compares to the administration's. What I need from you as soon as possible is a timeline (what the Administration said when -- doesn't have to be down to the day) the Administrations position and our position (and how they differ). Borrow heavily from existing materials.,government & politics,formal,5 +"Re: FERC course on for Thurs, July 26, 1-4 p.m.",Great news. With respect to the Commissoners I think it makes sense to go back through Ellen and ask if she could set up meetings with a few commissioners ater the staff briefing. wgramm on 07/17/2001 03:23:19 PM Please respond to To: Jerry Ellig Steve Kean cc: Susan Dudley Subject: FERC course on for Thurs July 26 1-4 p.m. Susan got it done -- it'll be Thursday July 26 1-4 p.m. at FERC (a room on the 3rd floor?). Susan has talked with Bill Albrecht. He'll probably be coming in on Wed. p.m. Steve any ideas about a Commissioner strategy? (invite them to attend if the FERC folks agree ask the FERC folks to do the inviting ask the FERC folks to help set up meetings afterwards or a follow on if they like what we do and think it useful for Commissioners try to do a walkaround -- that is offer to have Jerry Bill Susan visit commissioners individually Friday a.m. after the course or Thursday a.m. before the course?) Wendy Wendy Gramm Regulatory Studies Program Mercatus Center George Mason University 703-993-4884,energy infrastructure,formal,3 +Moving foward at a good clip,Steve Good news. As you indicated would happen Kalen Pieper called me mid-week. We had a very good conversation about EES and Dave Delainey's leadership. She explored my views about doing business with government. Shortly thereafter Dave's office called to invite me to Houston on Thursday July 26. Kay Chapman explained that Dave's schedule would keep him out of pocket until August 16. In order to move forward Janet Dietrich will be meeting with me when I go to Houston next Thursday. (I must confess that after all the great things I have heard about the man I do look forward to meeting Dave himself.) Is there a time next week that I can speak with you by phone to fine-tune my thinking / preparation for Thursday's meeting with Janet? Thank you for your all of your help. I am pleased and appreciative that things are moving forward at a good clip. Kevin Contact Information E-mail kevinscott@onlinemailbox.net Phone (213) 926-2626 Fax (707) 516-0019 Traditional Mail PO Box 21074 ?Los Angeles CA 90021,other,confident,3 +Re: Enron Mentions,Thanks for the note. Jim Hughes asked the same question you did. Here is my (and John's) response. ,other,formal,1 +Enron Comments on NERC Legislation,Attached below are the Enron comments submitted to NERC and the other parties involved in the NERC-led discussions on reliability legislation. The comments indicate that Enron does not support the final version on which comments were requested by today. The comments as submitted were reviewed by Jim Sarah and Charles and reflect their suggested changes. Thanks to them for their assistance.,energy infrastructure,formal,3 +RE: Risk 2001 Australia,Philip Please try Frank Wolak from Stanford University. He is the best expert on California right now. Vince ,other,formal,3 +Re: MEC,Start with Joe hillings in DC To: Steven J Kean/HOU/EES@EES cc: Subject: MEC Steve What are your thoughts on public subsidies/tax breaks for MEC? Who should I contact to discuss the possibilites for some tax advantages on new facilities? Thanks Mark,other,formal,3 +"EES Staff Meeting, in 746",Ralph Reed--get back to him (second week of Oct) Paul Carrier 202-586-5659 Phil Sharp 617-495-1363 496-6335 617- 495 1364 Slides for QBR re project Balboa,other,formal,3 +RE: Thanks for your time this morning.,Aruna No address was attached. Vince ,employment,polite,0 +Re: Alhamds Presentations,Offer him the job. Rob Bradley@ENRON 07/25/2000 12:40 PM To: Steven J Kean/HOU/EES@EES cc: Andrew Miles/HOU/EES@EES Subject: Alhamd's Presentations FYI--go to the Internet Strategy one for what you need. I am pretty sure he will work out with me and Jeff--you can pull the trigger and hire him with my concurrence if you feel comfortable enough. - Rob -----------------,other,formal,3 +Re: ENE Officer Elections,We should include David Oxley -- VP of human resources. From: Kelly Johnson/ENRON@enronXgate on 07/18/2001 11:13 AM To: Steven J Kean/NA/Enron@Enron cc: Maureen McVicker/NA/Enron@Enron Subject: ENE Officer Elections Steve: Please review the attached ENE Officer list for your direct reports and approve. Thank you. Kelly M. Johnson Enron Corp. Executive Assistant Tel: (713) 853-6485 Fax: (713) 853-2534 E-Mail: kelly.johnson@enron.com,human resources,formal,3 +RE: DPC - strictly confidential and privileged,In the three years I have been here I am unaware of an ENA/ECT bad faith claim against any insurance company. Anyone else? If so please contact Michelle. ,other,formal,3 +Re: DRAFT EDITORIAL: Enron is Committed to Floridas Energy Future,I think it starts off a bit too hot. I would pull up some of the arguments you make about the need for additional supply and the importance of electricity to our way of life. I'd then go into a discussion of the debacle in the West (and how they are now playing catchup - with loud polluting diesel generators ... as was reported today). Then I'd go into how our plants in Florida represent a very reasonable inobtrusive solution for Florida. From: Eric Thode/ENRON@enronXgate on 05/24/2001 09:07 AM To: Steven J Kean/NA/Enron@Enron Mark Palmer/Corp/Enron@ENRON Karen Denne/Corp/Enron@ENRON cc: Subject: DRAFT EDITORIAL: Enron is Committed to Florida's Energy Future In support of of our three power plant proposals in South Florida I have written an editorial for distribution to South Florida newspapers including the Sun Sentinel and Miami Herald. Additionally we would distribute it to a number of small city papers including the Pompano Pelican Deerfield Times Pompano Times Deerfield Observer etc. Needless to say no decision has been made regarding releasing it. I would like your input on the subject. If we decide to proceed our goal would be placement during the first week in June leading up to the next round of Commission hearings which are scheduled for June 6 8 and 12. Please provide comments to me at your earliest convenience. If you have any questions please call me at ext. 3-9053. Thanks. Eric,other,formal,3 +Energy Issues,Firsst article attached refers to the 1946 Nebraska case I mentioned to you= =20 in DC ,other,casual,2 +EGEP Sale Announcement,print ,other,casual,3 +Speaking Engagement,MARC Conference per Iowa Commissioner Emmett George 8:30 Sue Landwehr will meet you at the hotel for breakfast 10:30 - 12:00 Power Supply and Transmission Lunch at 12:00 at conference Irene Baeg 515-281-8644 Afternoon fly to DC,other,casual,5 +Confidential - Calif Peaking Plant,Phil-- Enron is currently evaluating the possibility of installing an NGL peaking facility with appurtenant storage and rail facilities near Needles California. Ideally the plant would inject / vaporize normal butane at the rate of 18750 gallons per hour into a high pressure natural gas transmission system. Current gas pipeline specs are as follows: Operating pressure - 850 - 1000 psig worst case 750 normal range 800-900 Gas Volume - 650000 - 750000 MMBtu/day Expected normal butane (GPA spec) requirement - 450000 gallons/day (18750 gal/ per hour) My questions are: 1) Is anyone currently using butanes for peaking service and if so where? 2) Do we need to blend with air (how much) or can we inject straight normal butane? 3) At what line pressure point do the butanes re-liquefy further downstream of the injection point as the pipeline pressure falls? 4) Is this peaking plant configuration feasible and if so at what price (ball park here don't go way out of your way)? (If it's not what would your suggestion be for a design). I will fax you the normal butane specs as soon as I get them (please email back your fax number). As always we're on a pretty tight time frame. After you've had a chance to review the above I'd like to get together and discuss this with you. I can meet you in Ohio if it fits your schedule better just let me know. Thanks for the help and I look forward to talking with you soon. Kevin Hyatt 713-853-5559 kevin.hyatt@enron.com,other,formal,5 +Re: Presentation at ETS HR Employee Meeting,Thanks. I was glad to do it and would do it again... next time my computer will work. I benefitted a great deal from what I heard from the group especially regarding the PRC. Roger Sumlin 03/23/2001 09:34 AM To: Steven J Kean/NA/Enron@Enron cc: Gary P Smith/OTS/Enron@ENRON Wilson Barbee/HR/Corp/Enron@ENRON Brian Schaffer/Corp/Enron@ENRON Ann Vaughn/HR/Corp/Enron@ENRON Fran Fagan/OTS/Enron@ENRON Subject: Presentation at ETS HR Employee Meeting Steve . . . FYI -- we conducted a post-event survey on opinions about the HR employee meeting held last month and the HR management team thought you should know that participants rated your presentation very high. When asked what should be kept the same next time participants commented as follows about your presentation: I think a presentation from Corporate HR is of great value. Keep the presentations by the officers . . . to talk about the business. I liked having other people from ETS/Enron there to better understand the big picture and where Enron is going. Continue to bring in invited guests to keep the group apprised of Corporate activities. I liked the opportunity to hear both Stan and Steve--the field staff don't get as many opportunities to hear from corporate management. Visits by Steve Kean and Stan Horton. Their perspectives are very good . . . Clearly your participation provided much value to the group and we appreciate very much your taking the time to come meet with us and share information. You should expect that we'll be asking you to come back again! Regards - Roger,human resources,friendly,3 +Re: RGA request,Just a heads up ... Ken may get a call from Gov Gilmore regarding the Republican Governors' Association. Below are Sue Landwehr's recommendations (with which I concur). Let me know if he calls and let us know if you need any additional information. ,other,formal,3 +,Portland General called. They have heard that Defazio is going to propose in a press release that the state of Oregon should buy PGE.,utilities,neutral,3 +Re: Job Description Revised,I'm afraide this leaves too much room to manuever. Having duties related to setting legislative affairs strategy and developing a plan for contacts on the Hill will give Cynthia the idea that she can run all aspects of those duties not just those related specifically to her substantive area. I think it is also worth covering the heavy emphasis on teamwork and supporting rather than directing others in the organization. Richard Shapiro 08/02/2000 04:17 PM To: Gwendolyn Petteway/HR/Corp/Enron@ENRON cc: Steven J Kean/HOU/EES@EES Subject: Re: Job Description Revised Good to go. Gwendolyn Petteway@ENRON 08/02/2000 04:07 PM To: Richard Shapiro/HOU/EES@EES cc: Subject: Job Description Revised See attached email with revised job description for Cynthia Sandherr. -----------------,human resources,formal,3 +Re: Thanks & Questions,I enjoyed talking with you the other day and am happy to answer your questions: both the Texas position and the Washington DC position report to Rick Shapiro. From a government affairs standpoint I've divided the world between Rick's group (the Americas) and Mark Schroeder's group (Europe and Asia). Both Rick and Mark report to me. Joe Allen continues as part of the Texas legislative team working for the head of that group (formerly Kathleen Magruder). Terry Thorn has taken a commercial position in Enron and no longer works on government affairs issues for the company (except to the extent we call on various executives to help from time-to-time). Untermeyer Chase on 08/31/2000 04:53:09 PM To: 'skean@enron.com' cc: Subject: Thanks & Questions STEVE: I very much appreciate your call the day before yesterday and your asking if I would like to compete to succeed Joe Hillings as head of Enron's Washington office. Although until that moment I hadn't thought of returning to Washington except to serve again in national office I would be pleased to talk further about this opportunity with you or your recruiter. In recalling our conversation I realize that twice you asked if I had any questions and if I had been quick to take advantage of your offer I would have asked how government relations are handled at Enron. To whom does Joe Hillings report: to you or to Terry Thorne? You mentioned a woman who currently has responsibility for government relations in Texas and some neighboring states but is leaving for another job at Enron to whom does she report? Then there is Joe Allen whom I have known since our days in the Legislature doesn't he (also) handle Texas affairs? I am sorry I didn't ask you all this on Tuesday. Whatever the answers it's clear that government relations are much more central to the work of Enron than at Compaq which is why it would be a very exciting place to work. Thanks again for your call your courtesy and your indulgence with this tardy line of questioning. With best wishes CHASE. CHASE UNTERMEYER Director of Government Affairs Compaq Computer Corporation P.O. Box 692000-110706 Houston Texas 77269-2000 Tel: (281) 518-1093 Fax: (281) 518-1106 chase.untermeyer@compaq.com,other,formal,3 +Fwd: Decision 00-08-037 (Signed 8/21/00),-----------------,legal affairs,neutral,0 +EPSA Meeting On RTO Legislation,We had a positive result in the EPSA Legislative Affairs Committee meeting yesterday afternoon. The EPSA staff draft of a letter to Barton on his RTO discussion proposal will be significantly strengthened and EPSA staff will start by incorporating the comments I sent over earlier in the week. The original draft said the Barton RTO language only needed technical corrections. EPSA staff reiterated that some member co. or cos. think Barton's draft could have been worse. My reply was this logic was like saying we should be grateful he shot us in the head instead of hanging us -- one method may be more humane but either way we are dead (OK the analogy may be too rough -- but it made the point.) (I subsequently confirmed that Reliant is the soft member -- their rep. told me they support the discussion draft although they wouldn't object if it is strengthened.) A stronger EPSA letter with more specific reasons why we oppose the Barton discussion draft will be circulated among EPSA members today or Monday with the goal of sending the letter first thing Tuesday when Congress returns. Some wanted a general letter requesting a meeting and deferring specific comments until the meeting. I pointed out that Barton is speaking to subcommittee members right now and that we needed to copy them on a more detailed letter ASAP so they hear from us before Barton gets to them. We will make the same contacts ourselves. In fact we have already started. Spoke to Reps. Chip Pickering and Rep. Greg Walden both subcommittee Republicans this week (did same with staff to Rep. John Shimkus). Key task when House staff return to work on Tuesday will be finding out where Ranking Member Rick Boucher is on the Barton RTO draft. Barton implied at a conference earlier this week that he and Boucher are in agreement on RTOs.,other,formal,5 +Washington DC - Council of the Great City Schools,2:00 - 5:00 Secretary Reilly will speak just before you.,human resources,formal,3 +RE: Dinner,Steve I am in London this week. Let's connect when you come back. Vince ,personal & social,casual,0 +,I got a voicemail response from Jeff - he is fine with me substituting for him on the Japan trip.,personal & social,casual,2 +FERC investigation,Have we suggested to FERC staff that they force the ISO and PX to open the blackbox to show how they determine dispatch? In addtion if you are not on the distribution list for Belden's memo on utility behavior in California this summer I will forward it to you. It suggests some other areas FERC ought to be looking into.,energy infrastructure,formal,3 +Revised Merger Release & Q&A,fyi ,other,casual,0 +Western Interstate Energy Board,Committee on Regional Electric Power Cooperation in Tempe AZ,other,formal,3 +Re: NewPower Withdrawal Notes,How about inserting the attached (after the explanation about the relationship between New Power and Enron)? Binky Davidson@EES 03/15/2001 05:35 PM To: Steven J Kean/NA/Enron@Enron cc: Subject: NewPower Withdrawal Notes Mark Muller sends the attached for your information and comments.,other,formal,3 +Recap of House Action Last Night on Energy Package,Late last night the House on a 240-189 vote passed as amended H.R. 4 -- the Securing Amerca's Future Energy (SAFE) Act of 2001. Here is what happened on the three amendments of interest to Enron: 1. The House overwhelmingly defeated (154 to 274) a Waxman Amendment (D-CA) to impose cost of service rates on wholesale sales of electricity in the WSCC for 18 months. Only three House Republicans supported the amendment (all from California -- Gallegly Issa and Hunter) 57 Democrats opposed the Waxman Amendment including all of the Texas Democrats EXCEPT Frost Hinojosa Rodriguez and Doggett (these four SUPPORTED the Waxman Amendment). Thus our collective lobbying efforts in recent months focusing on California Republicans Texas Democrats and other moderate Democrats worked out in the end. 2. The House also overwhelmingly defeated the Cox Amendment (R-CA) to grant California a waiver of the Clean Air Act's oxygenate requirement for reformulated gasoline. The vote was 125 to 300 (44 Republicans 80 Democrats and 1 independent voted for the amendment 173 Republicans 126 Democrats and 1 independent) voted against it. 3. The House also defeated the Green Amendment (D-TX) to repeal the Natural Gas Act's Hinshaw Exemption as it applies to California's intrastate natural gas pipelines. The vote was 154 to 275 (123 Republicans and 31 Democrats voted for it while 95 Republicans 178 Democrats and 2 independents voted against the amendment). Please call or e-mail with comments or questions. The Senate Energy Committee is starting its work this week on an energy package with consideration of an R&D title (other issues will be taken up in September including electricity). The House Energy and Commerce Committee will now turn to electricity issues with staff drafting during the August Recess hearings in September and votes on legislation in September or early October.,other,informative,3 +Re: Video for Management Conference,I'd love to but I'll be in London Marge Nadasky@ECT 10/11/2000 12:01 PM To: Robert Horton/HOU/ECT@ECT Mark Frevert/NA/Enron@Enron Andrew S Fastow/HOU/ECT@ECT Ken Rice/Enron Communications@Enron Communications Kevin Hannon/Enron Communications@Enron Communications Karen S Owens@ees@EES Thomas E White/HOU/EES@EES John Sherriff/LON/ECT@ECT Steven J Kean/NA/Enron@Enron Mark Koenig/Corp/Enron@ENRON Cliff Baxter/HOU/ECT@ECT Cindy Olson/Corp/Enron@ENRON cc: Cindy Stark/Corp/Enron@ENRON Karen Owens/HOU/EES@EES Bridget Maronge/HOU/ECT@ECT Maureen McVicker/NA/Enron@Enron Dorothy Dalton/Enron Communications@Enron Communications Carol Ann Brown/Enron Communications@Enron Communications Jennifer Burns/HOU/ECT@ECT Susan Skarness/HOU/ECT@ECT Joannie Williamson/Corp/Enron@ENRON Judy G Smith/HOU/EES@EES Bobbie Power/Corp/Enron@ENRON Subject: Video for Management Conference You recently received an e-mail from Terrie James regarding a video we are working on for the upcoming Management Conference. We have been able to lock in a date and time to do this taping on Thursday October 19th from 4-6 p.m. We are still working on the location for this taping but plan on this taking place in close proximity to the Enron Building. Can you please let me know if you will be available to participate in this group session? If not we will be following up with some individual taping the week of the 23rd. If you have questions feel free to contact Terrie James on Ext. 37727 or myself on Ext. 36631. Marge Nadasky,other,formal,3 +Re: Video Tape,I'll send it back on Tuesday. Jose Bestard@ENRON_DEVELOPMENT 02/18/2000 08:02 PM To: Steven J Kean/HOU/EES@EES cc: Maureen McVicker/HOU/EES@EES Subject: Video Tape Steve. Did you get a chance to look at the video tape I gave you? I would like to have it back to show it in Brazil Thanks Jose,other,polite,3 +RE:,Anne Thanks. I shall join. Vince ,meetings & events,casual,1 +WSP: Market Ripe for Manipulation...,Cc list suppressed... Public opinion is the pendulum that swings law...dsg August 4 2000 Deregulation Leaves Electricity Market Ripe for Manipulation by Power Firms By REBECCA SMITH and JOHN J. FIALKA Staff Reporters of THE WALL STREET JOURNAL It's a market ripe for manipulation: surging demand for an indispensable commodity weak oversight and a chaotic new set of rules amid a transition from heavy regulation to open competition. This is the state of the U.S. electricity business in the summer of 2000. And sure enough there's growing evidence that some power companies are finding lucrative ways to exploit the system -- at consumers' expense. The tactics include manipulating wholesale electricity auctions taking juice from transmission systems when suppliers aren't supposed to and denying weaker competitors access to transmission lines. None of this is illegal and much of it might be considered basic competition. But as an electricity shortage plunges sweltering California into an energy crisis and fears of even worse shortages rattle the Northeast the practices of power suppliers face more scrutiny than ever. (See related article.) Steamy Conditions A hot summer day last year shows one kind of manipulation. On July 28 1999 wholesale electricity prices in the Middle Atlantic states hit $935 per megawatt hour. That was seven times what it costs to generate power at the most expensive plant in the region. An analysis of trading data from that day shows that PECO Energy Corp. and PPL Corp. the old Philadelphia Electric Co. and Pennsylvania Power & Light made the most of steamy conditions. In the region's power market deregulated in 1997 a new corporation called PJM Interconnection LLC runs the transmission system once operated piecemeal by eight utilities. It also operates a daily electricity auction that sorts the hourly bids of 540 generating plants. The cheapest plants are called on first but when the weather is hot and demand is acute higher offers are taken as well. To attract as many bidders as possible the highest bid each hour sets the price for the entire market for that hour. Grid and Bear It Rise in average wholesale electricity prices at key transmission-interconnection points for the month of May from 1997 to 2000. TRANSMISSION-INTERCONNECTION POINT % CHANGE 1997-2000 Texas +293% +216 Tennessee Valley Authority +165 California-Oregon border +162 New York-West +138 Chicago area +130 New England +117 New York-East +101 Upper Midwest +99 Florida +89 Mid-Atlantic region +80* *Includes only years 1999-2000 Source: Federal Energy Regulatory Commission RDI Power What PECO and PPL did was offer much of their output at low prices so that the majority of their plants would be called into service. But knowing demand was so high they offered power from their tiniest plants at vastly higher bids in a way that often set the peak price for a number of hours. Consumers that day ended up paying millions of extra dollars for power. Cases like this show that during the transition to deregulation there's a good argument the system has broken down says William Massey a commissioner at the Federal Energy Regulatory Agency. FERC which polices the nation's bulk power markets began the deregulation movement in 1996. It wasn't supposed to be this way. In the old days utilities generated electricity and delivered it to customers in exclusive territories. To protect consumers from gouging rates were regulated. But while supply had to be able to meet peak demand at all times demand varied widely within regions between regions and from one season to another. The result was tremendous reliability but also inefficiency and waste. Deregulation now under way in half the country and functioning nationally at the wholesale level allows new players -- some affiliated with utilities some not -- to build power plants and sell electricity. Prices are supposed to be set by competitive markets. Risks are borne by investors not ratepayers. At the same time utilities are surrendering control of long-haul transmission lines to new nonprofit operators like the one in the Middle Atlantic region which are supposed to ensure fair access to the grid -- the multistate system of high voltage lines. Under this new regime energy prices should have dropped as companies raced to compete with one another. But the massive U.S. energy infrastructure wasn't designed to serve as the backbone of a free market. On hot summer days when there's little or no surplus electricity in the nation's most populous regions generators can charge prices far in excess of their production costs and be confident they'll get tapped for service by grid operators who must keep the lights on at any cost. Utility holding companies that still control transmission lines have an added advantage: They can effectively lock out cheaper competitors. California Cuts Price Cap for Electricity Once Again (Aug. 2)Price Cap Is Set for Electricity That Is Sold in New England (July 27)PPL KeySpan Say Earnings Surpassed Wall Street Targets (July 27)Energy Trading Internet Operations Help Enron's Net Income Jump 30% (July 25)PG&E Posts 36% Rise in Net to $248 Million (July 21) The new regional grid operators called independent system operators or ISOs eventually will be in charge of preventing manipulation. But as nongovernmental organizations they won't have basic investigative tools like subpoena powers or the ability to impose significant penalties. FERC which does have those powers rarely uses them preferring to let the market discipline itself. A Strange Drop Sometimes it's difficult to know what constitutes an abuse of the market. In July 1999 engineers noticed that a substantial amount of power was being taken from the grid for which there was no explanation. They contacted the North American Electric Reliability Council the industry group charged by Congress with overseeing the grid since the late 1960s. After a lengthy investigation NERC determined that Cinergy Corp. a utility holding company had surreptitiously taken enough power over a three-day period about 9600 megawatt hours to light a small city for a month. Cincinnati-based Cinergy had underestimated power demands. Rather than buy electricity on the open market at ferociously high prices or cut power to Cincinnati it quietly borrowed power from the system when demand was peaking and later replaced it in the cool of the night when demand wasn't so high. James E. Rogers Cinergy's chief executive received a letter from A.R. Garfield the chairman of NERC's regional power-coordination center accusing his company of showing blatant disregard for the rules and of using the grid as a supplemental resource without regard to the reliability or integrity of the system. But Cinergy paid no fine. That's because it runs its own transmission control area and is trusted to enforce NERC's voluntary rules even when it is the violator. Smaller utilities in Cinergy's area by contrast face contractual penalties of as much as $35000 per megawatt for unilaterally borrowing from the grid a practice known as leaning on the ties. Dancing on the Edge? Mr. Garfield is still steamed about Cinergy's actions which he said removed part of the system's essential reserve needed to avoid cascading blackouts or a chain of uncontrollable outages that could darken whole sectors of the country. How fair is it that someone can dance on the edge like that and get away with it? he asks. Mr. Rogers points to old rules that permit utilities to temporarily borrow small amounts of power during emergencies. We were very careful to make sure when we leaned on the ties ... we didn't bring the whole system down he says. Nevertheless he concedes in a competitive world those rules need to be changed. The region's regulators have since gone to FERC for authority to charge borrowers for the market value of the electricity they take off the grid. Leaning on the ties is only one way fair competition is being frustrated on the country's transmission system a vast web of connections that resembles the nation's highway system before the construction of the interstates. While there are plenty of routes to get electricity from outlying power plants directly to big cities there are relatively few routes connecting regions. That makes it possible for some big companies to shut out competitors. A Snag in Transmission St. Louis-based Aquila Energy hit that snag when it tried to use a transmission corridor owned by New Orleans-based Entergy Corp. to move electricity to a buyer in East Texas. Entergy granted the request initially but then it canceled saying it didn't have sufficient space on its lines. Aquila didn't buy it. After analyzing transmission-capacity data the company argued to FERC that Entergy did have enough space on its lines and so was in effect breaking a rule that required it to provide transmission-line access when possible. Without access to Entergy's lines Aquila was forced to compensate the buyer and lost nearly $300000 on the deal. From whom did the Texas customer end up buying the power? A unit of Entergy -- and for a higher price than it would have paid Aquila. FERC said Entergy had been within its rights to restrict access in this case because it had transmission problems. But FERC found that Entergy on other occasions had hoarded transmission capacity that should have been made available to the market. Entergy declines to comment. Such scenarios are costly for consumers and they are among the reasons the electricity industry is enjoying flush times. In the second quarter just ended companies ranging from AES Corp. in Arlington Va. to Enron Corp. in Houston reported huge profit increases some as much as 50%. To be sure a lot of those profits are coming from extraordinary demand growth and a pickup in energy trading. But Sean Murphy president of Southern Energy New England a unit of Southern Cos. Atlanta Ga. worries that the industry has gotten too greedy and risks retribution. Pigs get fat but hogs get slaughtered he says. Tremendous Volatility New federal data show that average wholesale power prices have more than doubled at 14 of 17 key pricing points across the country in the past three years. By May of this year prices had risen across a broad range -- by 89% in Florida for example and by 294% in Texas. But even these increases mask the tremendous volatility that has struck all the major wholesale markets during the past year. In the case of the Midwest where prices in July 1999 hit $9000 per megawatt hour it was as if a $1.89 gallon of gas suddenly sold for $567. Prices like these have prompted growing calls for investigations into whether electric companies are gouging their customers. Some consumer groups lukewarm to deregulation in the first place now are agitating for re-regulation. Residential electricity bills have doubled in San Diego which is notable because it's the first city in the nation to be served by a utility that's buying all of its energy on the competitive market. Politicians are sounding the alarm in the Pacific Northwest. There wholesale prices peaked at a record $1300 per megawatt hour during the last week in June. Energy-intensive industries like mines and aluminum smelters are cutting back on production and temporarily laying off workers. We may be seeing too much opportunism in the market says Montana Gov. Marc Racicot. Demands by Mr. Racicot and his counterpart in Washington Gary Locke were instrumental in prompting FERC to open a national investigation in late July into possible market abuses. A Six-Month Lag One big premise on which deregulation rests is that a free flow of information will let markets police themselves and operate efficiently. But a key tool for market monitoring the data on utility Web sites used to book transmission orders is often unreliable. There's a six-month lag on the release of bidding data which are coded to mask the identities of bidders. What's more the four FERC-controlled ISOs operating in California the Middle Atlantic states New England and New York don't have the authority to compel market participants to give them internal documents like bilateral contracts and other information they don't want to hand over. Without such documents there's a lot more looking than finding says Bill Museler chief executive of the New York ISO. Even if the ISOs do find something problematic there isn't much they can do about it. The tariffs contracts and bylaws under which they operate generally prohibit them from releasing company-specific data and so exposing wrongdoers. And with the exception of California the ISOs' own board meetings are closed to the public. The reality is confidentiality rules protect the guilty says Frank Wolak a professor of economics at Stanford University and chairman of the California ISO's Market Surveillance Committee. And there are no codes of conduct to instill a sense of fair play. That can be a huge problem on hot days. In California an independent exchange runs a daily forward auction in which it tries to match the next day's anticipated demand to bids by generators. But this summer generators often have offered less power than they know will be needed so that they can submit higher bids later when the ISO is forced to pay stiffer prices for emergency power. On occasion ISO engineers have had just 40 minutes to frantically phone around and nail down suppliers knowing that if they fail they could be forced to begin rolling blackouts. The bidding strategy while legal undermines reliability and forces the ISO to do some real gymnastics says Kellan Fluckiger chief operations officer for the California ISO. Generators say they aren't to blame for the mad scramble. Utilities buying power for their customers often order less power than they really need for fear that a big order will drive up the overall market price to prohibitive levels. The only real recourse available to the ISOs is to rewrite the rules governing their local markets. But FERC is reluctant to let them meddle too often because generators are investing billions of dollars based on existing market rules. There's another reason too says Ron Rattey a veteran FERC economist who in June wrote a 10-page internal memo criticizing the agency for not doing more to ferret out unfair conduct. Every single ISO has identified strategic abuses he says. And every time the ISOs make adjustments to the rules the market participants find new ways around them. Write to Rebecca Smith at rebecca.smith@wsj.com and John J. Fialka at john.fialka@wsj.com,energy trading,informative,3 +Congressman Ose loved your letter to Sen. Dunn,-----------------,government & politics,polite,3 +HR Functional - Mid-Year 2001 PRC,-----------------,human resources,formal,3 +Re: First Cut at High Tech Messages,Looks good. I think you implicitly say this but I think you should make it more explicit: The continued growth of the new economy is threatened by our electricity infrastructure more than anything else. The high tech industry requires market driven solutions to reliability and pricing not the old style command and control regulated monopoly approach. Let's start getting the word out! Jeff Dasovich Sent by: Jeff Dasovich 09/26/2000 02:06 PM To: skean@enron.com Richard Shapiro/HOU/EES@EES Sue Nord/NA/Enron@Enron Margaret Carson/Corp/Enron@ENRON Rob Bradley/Corp/Enron@ENRON mpalmer@enron.com Karen Denne/Corp/Enron@ENRON Sarah Novosel/Corp/Enron@ENRON James D Steffes/NA/Enron@Enron cc: Subject: First Cut at High Tech Messages Attached is a first rough cut. Work continues but wanted to distribute for feedback. All is welcome and appreciated.,other,excited,3 +European Trip Report 22-30 Jan 2000,Is Catherine working on environmental policy related to sustainability or is she working on greenhouse gas transactions . . . or both? -----------------,personal & social,inquisitive,3 +Re: EBR Mtg and Pre-Mtgs.,You should plan to be there. Michael Terraso 09/22/2000 06:12 PM To: Steven Kean cc: Subject: EBR Mtg and Pre-Mtgs. Steve am I not to attend the meeting with Lay and Skilling on Oct 4? Mike -----------------,other,casual,3 +Talking Points For Rep. Barton On Tauzin RTO Letter,Linda requested some background and talking points on the pending RTO letter from Chairman Tauzin to FERC that is sitting on Chairman Barton's desk TODAY for his decision whether to co-sign the letter. While we have not seen the text we are told that it is anti-RTO and may go so far as to state or imply that FERC does not have authority to do what is doing with RTOs. (We know this is the view of one of Chairman Tauzin's counsels who formerly worked for Southern Co.). Chairman Tauzin has been contacted by Entergy and the Louisiana Public Service Commission to send the letter. I spoke to Chairman Barton's staff Andy Black this afternoon and relayed our concerns. The Barton Subcommittee is now expected to mark up an electricity bill in December (per a Republican Member meeting held this morning). ACTION ITEM: Call Rep. Joe Barton (202/225-2002) TALKING POINTS: 1. Should start with something about the Dynegy/Enron transaction (it will be strange if Mr. Lay or Steve calls Chairman Barton and does not start the conversation with some reference to the transaction). 2. Mentioning the transaction naturally leads into the importance of competitive wholesale markets for power both for consumers and for the largely Texas-based marketing trading and merchant power industries. 3. We understand that Chairman Barton has been approached by Chairman Tauzin about a letter to FERC on the RTO issue. We know Chairman Barton is well aware of Enron's strong support for FERC's RTO initiatives. We respect Chairman Barton's interest in seeing to it that Congress does not abdicate its responsibility to make energy policy. 4. If as we have been lead to believe the letter states or implies that FERC does not have authority to act in the RTO arena this will be seen as a potentially destabilizing development since FERC is so far down the road of creating RTOs. 5. While we understand some in Congress and elsewhere were concerned that FERC was moving too fast as of the last FERC meeting earlier this month that is no longer true even if it ever was true. While we think RTOs should be created sooner rather than later FERC is listening to state regulators and others who had concerns. 6. A letter from congressional leaders questioning FERC's authority goes too far in the direction of those who oppose any RTOs. Furthermore it is wrong as a matter of law. The D.C. Circuit held in the gas cases and in the power cases on Order 888 that FERC has authority to address systemic discrimination which is in large part what the RTOs are all about -- a remedy for discrimination.,other,formal,5 +RE: Refund Cases Timelines--Confidential Atty Client Work Product,The prehearing conference in the CA case was an interesting proceeding. It= became very apparent that the ISO was primarily responsible for the delay = in producing data. The parties complained that they had not received what = the ISO had promised. The PX complained that they had received NO reliable= data from ISO (it was riddled with errors) and that they were at the same = point as at the beginning of the entire proceeding. The PX needs the ISO d= ata in order to commence generating the data that the PX itself needs to pr= oduce. In any event the new delayed schedule is a positive development. = It is noteworthy that we were able to group consideration of refunds issue= s and offsets to refunds on the same date- October 26 (previously refund te= stimony was considered first and testimony related to possible offsets to = refunds was considered on a subsequent date). This is very positive since = it reduces the chance that the proceeding will be only about refunds and th= at the offsets issue will be marginalized. Ray Alvarez ,other,formal,3 +Re: Telephone Interview with The Enron Corp. Research Group,Ms. Crenshaw Thank you very much for the message. I am very interested in the opportunity to talk to personnel from the Research Group at Enron. Between the two days you suggest I prefer Wednesday 12/6. Considering the two-hour time difference between California and Texas 11:00 am Pacific time (1:00 pm your time) seems to be a good slot. However I am open most of the day on 12/6 so if some other time slot is prefered on your end please let me know. Thanks again. I look forward to talking to you and your colleagues. Jingming On Tue 28 Nov 2000 Shirley.Crenshaw@enron.com wrote: > Good afternoon Jingming: > > Professor Wolak forwarded your resume to the Research Group and > they would like to conduct a telephone interview with you sometime next > week at your convenience. The best days would be Tuesday 12/5 or > Wednesday 12/6. > > Please let me know which day and what time would be best for you and > they will call you. Let me know the telephone number that you wish to be > contacted at. > > The interviewers would be: > > Vince Kaminski Managing Director and Head of Research > Vasant Shanbhogue Vice President Research > Lance Cunningham Manager Research > Alex Huang Manager Research > > Look forward to hearing from you. > > Best regards > > Shirley Crenshaw > Administrative Coordinator > Enron Research Group. > 713-853-5290 > > > Jingming Marshall Yan jmyan@leland.stanford.edu Department of Economics (650)497-4045 (H) Stanford University (650)725-8914 (O) Stanford CA 94305 358C Economics Bldg If one seeks to act virtuously and attain it then what is there to repine about? -- Confucius _?OO??OOo? ?T=15xO-?? -- =14??,employment,polite,3 +Draft of California Contact List,Please respond to kevinscott Steve This is a draft of the contact list I promised you. There are still some typos in it. I will clean them up and get send you a draft in the morning that is ready for circulation. This list is made up of people that I know and trust. By an large I have excluded sitting pubic officials. In cases where a given organization has several useful contacts with similar knowledge I have listed just one person for now. Give me a call at your convenience and we can discuss this in great detail. Kevin 213-926-2626 - Kevin Scott - Key Contacts - Draft.doc,other,formal,3 +RE: ticket,6011 3000 5062 8237 12/02 ,other,neutral,0 +confidential (client-attorney),-----------------,other,confidential,5 +One more thing...,Please handle -----------------,other,casual,3 +Energy Issues,See natural gas price article below. Our buddy Paul Carpenter has turned o= n=20 us (not to mention that he seems to be talking nonsense). How about giving= =20 him a call? -----------------,other,casual,3 +Re: Request Confidential Information by FERC,Thanks. I'm on top of it. Christian Yoder 09/11/2000 08:06 AM To: Richard B Sanders/HOU/ECT@ECT Elizabeth Sager/HOU/ECT@ECT cc: Mary Hain/HOU/ECT@ECT Tim Belden/HOU/ECT@ECT Subject: Request Confidential Information by FERC Since Mary has been handling the ISO investigation I am assuming she is the point person for this one too. ---cgy -----------------,energy infrastructure,formal,3 +CFTC Reauthorization,Please go ahead with preparation of the talking points. I'll give Ken a heads up. -----------------,legal affairs,formal,3 +RE: Have you seen this?,Yes Thanks a lot. Vince ,other,casual,0 +"Texas energy exec says, I told you",Jeff FYI ?From the Contra Costa Times (East San Francisco Bay Area) Kevin Published Friday June 22 2001 Texas energy exec says 'I told you' POWER CRISIS ? Enron's Skilling gets pied before his speech blaming lawmakers but says he understands Californians' anger By Rick Jurgens TIMES STAFF WRITER SAN FRANCISCO -- A Texas energy executive who said his warnings were ignored by regulators who restructured California's electricity industry came to the Bay Area on Thursday to say in effect I told you so. Jeffrey Skilling chief executive of Houston-based Enron Corp. said that California wouldn't be in its current mess if regulators had followed his advice in 1994 and 1995. Regulators erred by forcing wholesale electricity transactions into the spot market so that deals could more easily be monitored Skilling said in a speech to about 100 people at the Commonwealth Club of California. They created a flawed marketplace in the name of regulatory expediency. Enron is a broker that buys and sells contracts to deliver power. Such bilateral transactions shouldn't have been banned Skilling said. Skilling said that's what he said six years ago. I probably made a pest of myself (in the restructuring hearings called by regulators) because I told them they were doing it wrong he said. They finally told me to keep quiet. On Thursday night it was Skilling's turn to be pestered. A woman threw a chocolate pie into his face before the event began. Police said Francine Cavanaugh of Oakland was arrested on suspicion of battery and released. Skilling tried to ignore protesters but said he understood why Californians facing blackouts and rising power costs were angry. He even had kind words for Gov. Gray Davis who he said was dealt a very difficult hand. Skilling became Enron's chief executive in February replacing company founder Kenneth Lay an early proponent of electricity deregulation who is close to President Bush. Enron a global energy giant with roots in the natural gas industry owns some power plants but its influence in the electricity industry reflects the rapid growth of its energy trading operation. Enron's only California generators are small wind facilities. However the company has developed power plants. Enron initiated two 750-megawatt projects that were sold to Calpine Corp. including a Pittsburg plant due to go online next month. Enron has announced plans to seek regulators' approval for a 750-megawatt power plant in Roseville in Placer County. During the first three months of 2001 Enron posted a huge jump in revenue to $50.1 billion from $13.1 billion a year ago but a much smaller gain in net income to $425 million from $338 million. Skilling himself cashed an $850000 paycheck and got a $5.6 million bonus last year. But the energy crisis has taken its toll on Enron's stock price and on Skilling who owned or held options to buy 1.9 million shares of Enron common stock at the time of the company's February proxy filing. At Thursday's closing price of $44.05 a share the stock was down more than 50 percent from its 52-week high of $90.75 in August. That proved that Enron wasn't the villain in California Skilling said. This thing in California has been bad for everybody he said. If we had anything to do with this we're the stupidest people in the world. Contact Information E-mail kevinscott@onlinemailbox.net Phone (213) 926-2626 Fax (707) 516-0019 Traditional Mail PO Box 21074 ?Los Angeles CA 90021,other,neutral,3 +Re: Fwd: DRAFT RELEASE,Minor changes shown on the attached (gotta get the big guy's title right). Lisa Connolly@EES 05/06/2001 08:17 AM To: Steven J Kean/NA/Enron@Enron Maureen McVicker/NA/Enron@Enron cc: Subject: Fwd: DRAFT RELEASE Please see attached press release with Skilling quote in red and on top of second page. The press conference is scheduled for 3:30pm on Monday May 7. The City will need our comment by 10am Monday morning. Thanks Lisa X54840 cell - 713-569-9563. -----------------,other,formal,5 +RE: Test Message,Shirley Please send me my SAP #. I need it to approve the expense report. Vince ,finance,casual,3 +RE: P+ pricing/hedging,Zimin I shall be in California on Thu. Vince ,other,casual,0 +,I mentioned the need to call Gramm in the exec committee meeting today and Ken is willing to do it. The talking points ISDA sent looked fairly generic. Given Ken's relationship and the fact that he has talked to Gramm previously on the subject what should we ask Ken to cover? I'd like to give him a background document and talking points like we did last time. I will send it by fax to you Chris and would appreciate it if you could update it as appropriate.,other,formal,3 +Re: Hi Daddy,I love you baby. Study hard. Kean_Nora on 05/04/2001 01:09:47 PM To: 'skean@enron.com' cc: Subject: Hi Daddy Hi Daddy. I love you!! - Nora,personal & social,casual,0 +Re: Mark Freverts column for ENAs Exchange Magazine,I think it looks fine will defer to Jeff's edits. Jeannie Mandelker@ECT 09/21/2000 05:05 PM To: Steven J Kean/NA/Enron@Enron Jeff Dasovich/SFO/EES@EES Yvette Parker/Corp/Enron@ENRON cc: Subject: Mark Frevert's column for ENA's Exchange Magazine Steve this is the column I mentioned to you Monday. We do a column under Mark's name for ENA's customer magazine Exchange. This month's topic is California. I'd like you to read it and see if we are getting the message right. Jeff please let me know if there are errors. Once we get your comments we'll show it to Mark. Thanks Jeannie,business document,formal,3 +"Re: RTO Orders - Grid South, SE Trans, SPP and Entergy",I'm still a junkie .... please email copies of the orders.,energy trading,casual,3 +RE: Trip to California,Liz Greg: Frank Wolak from Stanford will be back in the office on Tuesday August 7. I hope to set up a meeting with him and then to finalize the meeting with Prediction Co. I shall be shooting for August 23 - 24 in view of Greg's trip on the 15th and 16th. I left a message for Norman Packard telling him that I should be able to get back to him regarding the trip to Santa Fe by Tuesday this week. The first draft of the non-disclosure agreement will be ready by Tuesday or Wednesday. Have a good trip. Vince ,personal & social,formal,3 +Energy Issues,Please see the following articles: Oakland Trib Wed 3/7: Breakthrough made in rescue of PG&E Bakersfield Californian Wed 3/7: El Paso Energy closes six valley power plants Contra Costa Times Wed 3/7: Still undecided: Who'll pay DWR for electricity SF Chron Wed 3/7: State Taxpayers In Dark on Details Of Energy Deal Sac Bee Wed 3/7: Lawmakers pitch fixes for region's energy woes Orange Co. Register Wed 3/7: Power plan called wrong LA Times - Wed 3/7: Bill to Cut Some Power Prices Stalls Sac Bee Wed 3/7: PG&E could face mutiny on outages: SMUD others may balk if utility orders summer blackouts SF Chron Wed 3/7: PUC to Decide Fate Of Utility Workers PG&E Edison want to trim costs by laying off thousands cutting service San Jose Mercury Wed 3/7: Power prices could soar during the summer SF Chron Wed 3/7: Power Plant Plans Cause Conflicts East county residents blast supervisors Contra Costa Times Wed 3/7: Supervisors set search for power plant sites Sac Bee Wed 3/7: Peter Schrag: California's $90 billion infrastructure gap Contra Costa Times Wed 3/7: PG&E power plan debated at hearing SF Chron Thurs. 3/8: State OKs 'Peaker' Power Plant at SFO / Temporary generator could be sending electricity to 50000 homes by August WSJ Thurs. 3/8: Crossed Wires: Major Kinks Emerge In Gov. Davis's Plan To Power California --- State's Outlays for Electricity May Be Hard to Recover Without Rate Increases --- Betting on Long-Term Deals ------------------------ Breakthrough made in rescue of PG&E State ready to pay $7 billion for lines By Steve Geissinger SACRAMENTO BUREAU SACRAMENTO -- Signaling a breakthrough in secret energy crisis talks the Davis administration disclosed Tuesday it may announce the framework of a pact to rescue the teetering Pacific Gas and Electric Co. next week. Things are going very well said Steve Maviglio a spokesman for Gov. Gray Davis. The state appears to be poised to pay at least $7 billion -- and possibly billions more -- for PG&E's high-voltage transmission lines as part of a deal to financially renovate the north-state utility according to sources familiar with the negotiations. But consumer advocates insisted that even the $7 billion price is too much to pay. And experts warned that a deal with PG&E will be more complex than with other utilities. PG&E representatives declined comment in keeping with their policy on the talks even though the Davis administration said an announcement could come as early as next week or the following week. The new timetable for an announcement was substantially sooner than in Davis' original forecast. Until late last week PG&E was still resisting the sale of its power grid despite the fact that Davis had announced the framework of an agreement with Southern California Edison. Davis expects to soon announce a similar deal with the San Diego Gas and Electric Co. However any such deal still would need federal approval. The investor-owned utilities trapped between high wholesale costs and lower regulated retail rates amassed nearly $13 billion in debts and were unable to buy electricity this winter. With the onset of rolling blackouts the state began brokering billions of dollars in emergency short- and long-term power purchases. Davis' strategy to ease the energy price and supply crisis includes bolstering both conservation and generation while fiscally refurbishing the nearly bankrupt utilities. As part of the rescue deal the utilities would have to drop legal actions seeking dramatically higher electricity bills environmentally shield wildlands they own sell power from their generators to Californians for the next decade and secure help with their debts from their parent companies. Together with the cash infusion from the sale of their power 26000-mile power grids the utilities would be allowed to sell bonds to raise funds and use customer money to pay them off. The state would upgrade the high-voltage lines and lease them back to the utilities for operation. In a reflection of the negotiations with the three utilities a Davis administration official said the deal with PG&E is proving to be more complex than with the other firms. Though PG&E finally agreed late last week to sell its transmission grid the utility apparently wants more than the $7 billion that Davis has offered according to sources. The figure is more than twice the book amount or the value placed on the system for purposes of accounting. And that's the markup that lured Edison into an agreement to sell its smaller portion of the transmission grid for $2.8 billion. But PG&E which fears an erosion of its economic base may be asking as much as $10 billion. Due to complexities in the state's 1996 deregulation of the industry PG&E is more likely to lose revenue than Edison as a result of selling its transmission lines according to experts. Big customers might be able to bypass the utility's remaining local distribution lines thereby eroding its customer base. Therefore the utility may view bankruptcy and sale of its transmission lines to the highest bidder as a potentially attractive alternative to selling its share of the grid to the state at too low a price. ---- El Paso Energy closes six valley power plants Filed: 03/07/2001 By CHIP POWER Californian staff writer e-mail: ppower@bakersfield.com El Paso Energy citing non-payment from Pacific Gas & Electric Co. said it has shut down six cogeneration plants this week. The smaller plants produced about 175 megawatts of electricity and are located primarily in the San Joaquin Valley said company spokesman Mel Scott. A megawatt can supply power to 1000 homes. At least 10 plants have closed in the past two weeks as a result of non-payment according to the state Independent System Operator which manages most of the state's electrical distribution. The El Paso Energy plants are operated with various partners and had not been compensated for December January and February deliveries said Scott. He said he did not know the total amount due but said the plants would be closed until PG&E's credit worthiness is improved. A cogeneration plant common in oil fields simultaneously produces heat energy and electrical or mechanical power from the same fuel in the same facility. Typically it produces electricity and steam which can be deployed to enhance oil recovery. Kern County is the state's leading oil-producing county. El Paso owns or has interests in more than 40000 miles of interstate and intrastate pipeline connecting the nation's principal natural gas supply regions to the five largest consuming regions in the United States namely the Gulf Coast California the Northeast the Midwest and the Southeast. El Paso closed up 99 cents on Tuesday or 1.4 percent at $71.49. The Houston-based company's stock price has ranged between $36.31 and $75.30 in the last 52 weeks. ---- Still undecided: Who'll pay DWR for electricity By Karen Gaudette ASSOCIATED PRESS SAN FRANCISCO -- The price tag is $3.2 billion and counting for electricity bought by the state Department of Water Resources for the customers of two nearly bankrupt utilities. Pacific Gas and Electric Co. Southern California Edison and the state disagree over how the DWR eventually will be reimbursed for its purchases on the expensive last-minute power market. So do the state power regulators who have the final call over who gets the money when. Under a recent law the DWR went into the electricity-buying business to help keep the two utilities from sinking further into their $13 billion debt. The state plans to retrieve the money by selling $10 billion in revenue bonds. The utilities continue to collect ratepayer dollars on that electricity which the bill's author Assemblyman Fred Keeley D-Boulder Creek says is meant to help them begin paying down their debt. In a recent letter however DWR officials requested that the state Public Utilities Commission order that a portion of that money be diverted to the state. But after the utilities subtract the costs of generating electricity payments to environmentally friendly power plants and other expenses there is no money left from ratepayer dollars to give to the DWR without sinking further into debt PG&E spokesman Ron Low said Tuesday. If it passed along money to the DWR our undercollection would grow by about $2.4 billion by the end of the year Low said. The commission unable to agree on the best course of action left the issue untouched at its last meeting but expects to revisit the issue when it meets this morning. Commissioner Richard Bilas is proposing an alternate plan that would have the DWR set its own revenue requirements that would be passed on to ratepayers. The PUC also is expected to respond to complaints from laid-off workers and customers that layoffs by utilities to cut costs have been hurting service. Commissioner Carl Wood warned at the last meeting that failure to provide safe and reliable service could mean fines for the utilities. Representatives from electrical workers unions the PUC and the utilities were to discuss the issue Tuesday afternoon. I don't think we believe that utilities can find a way out of their problems by laying off workers said Mindy Spatt a spokeswoman with the Utility Reform Network. We think consumers deserve safe and reliable service and we think they deserve it at a reasonable price. ---- State Taxpayers In Dark on Details Of Energy Deal David Lazarus Chronicle Staff Writer Wednesday March 7 2001 2001 San Francisco Chronicle Few people would purchase a car simply because the dealer said ''Trust me it's a great deal.'' Yet Gov. Gray Davis essentially is telling Californians just that about dozens of long-term power contracts. Because of confidentiality agreements with power companies the governor has revealed only scant details about the state's multibillion-dollar contracts for electricity over the next 10 years. Gov. Davis has our money and we can't see how he's spending it said Doug Heller a spokesman for the Foundation for Taxpayer and Consumer Rights in Santa Monica. We've been locked out of the room. Neither Davis nor power companies would divulge specific details about the price duration or scope of individual contracts. Each cited secrecy clauses that the governor's office said had been desired by both sides. What consumers do know is this: -- California has signed 40 contracts and tentative accords valued at about $40 billion to secure enough power to light 9 million homes over the next decade. -- The average purchase price of each deal is $69 per megawatt hour -- well above the $30 to $40 charged by power generators before California's energy market went haywire last summer. -- If as is widely expected wholesale power prices fall in years ahead the state nevertheless will be locked into paying above-market rates for electricity. But it is not known which generator agreed to part with the most power at the cheapest level or the full range of the prices in concocting the $69 average. Moreover it is unclear how shrewdly the state negotiated with taxpayer money in securing power on behalf of cash-strapped utilities. These agreements are the bedrock of our long-term energy policy Davis said Monday in announcing the deals. The governor's office defended the murky nature of the contracts yesterday. It's a business transaction in which private corporate information is included said Steve Maviglio a spokesman for Davis. That's the kind of information that never gets revealed. While additional elements of the contracts will be publicized in coming months he said the contracts themselves will remain a secret. You'll never see all the details Maviglio said. This did not sit well with many observers. It's a breach of public trust said Daniel Bacon a San Francisco attorney specializing in business law. A public servant spending public money shouldn't be able to keep the spending secret. But Gary Ackerman executive director of the Western Power Trading Forum an energy-industry association in Menlo Park called confidentiality agreements a necessary evil in transactions like this. He explained that no power company would agree to a long-term contract if rival firms could learn the terms of the accord. The company would be losing too much of its competitive edge in the marketplace Ackerman said. At the same time he noted that secrecy allowed the buyer -- in this case California taxpayers -- to secure more favorable terms with individual sellers. A high price with one generator would not necessarily be sought by all power providers. Still the fact that public funds are being used makes confidentiality in this case a different matter than say Cisco Systems' quietly negotiating to take over yet another tech rival. The public is in a very awkward position said Michael Shames executive director of the Utility Consumers' Action Network in San Diego. It has to rely on the good word and expertise of the governor and he has yet to demonstrate that he has expertise or good word in this field. Shames likened consumers to passengers in a plane being flown by a pilot without a license to fly. But what choice do we have? he asked. I don't see many other options available right now. There's the rub. No matter how bad a deal California may have cut to help meet its energy demands the alternative -- blackouts disruptions economic catastrophe -- is far far worse. On the other hand it already appears that the new contracts will not shield Californians from the threat of daily outages this summer when demand surges. Davis said only about 60 percent of the state's summertime electricity needs so far had been met. Part of the reason is that many power companies already have contracted for their output this year. Duke Energy said this was why it would not begin its nine-year contract with California until 2002 while Williams Cos. said it would only gradually increase the amount of available wattage in its 10-year contract. Both companies meanwhile will continue to profit this summer by selling into the volatile spot market where wholesale power went for as much as $1 500 per megawatt hour last year. You can't sell all your power into long-term contracts said Paula Hall- Collins a Williams spokeswoman. You save some for the spot market. Consumer groups worry that consumers will be hammered again this summer with sky-high power prices and then get nailed down the road by contracts for above-market rates. If we could look at the terms of the deals we'd see that California is being gouged for 10 years said Heller of the Foundation for Taxpayer and Consumer Rights. But the governor doesn't want us to see that. Ackerman of the Western Power Trading Forum said the state had gotten the best rates it could under current market conditions. California went for long-term contracts when everyone else moved in as well he said. Californians are paying a price for not acting sooner. ---- Lawmakers pitch fixes for region's energy woes By David Whitney Bee Washington Bureau (Published March 7 2001) WASHINGTON -- California members of Congress pleaded for everything from wholesale price caps to extending daylight-saving time an extra hour to help the region cope this summer with its persistent electricity shortage but none of the ideas seemed to catch fire at a House hearing Tuesday. People will die in California because of this crisis Rep. Brad Sherman a Los Angeles-area Republican warned the House Energy and Commerce Committee. Sherman testified that his idea for saving lives is to extend daylight-saving time by an extra hour so that there would be more daylight at the end of the day when power consumption surges. One of the peak demand periods for electricity occurs between 5 p.m. and 8 p.m. when the sun sets and people come home from work Sherman testified. If people come home and it is light out there is less of an inclination to turn a light on. Sherman said the state Legislature has called for congressional approval for states to be given authority to extend daylight-saving time and he cited analyses by the California Energy Commission and other agencies suggesting that it could cut power consumption by 1 percent to 2 percent. Sherman who was one of about a dozen California lawmakers presenting their views on the energy squeeze drew no questions from committee leaders about what his legislation might do to everything from airline schedules to television programming if West Coast states didn't agree on the same time standard. Most of the committee's questioning was on the more popular idea proposed by several California and Western lawmakers primarily Democrats to require the Federal Energy Regulatory Commission to impose caps on wholesale electricity prices that have gone wild because of a regional power shortage. Rep. Bob Filner D-San Diego charged that the price spiral has little to do with power shortages but a lot to do with a small cartel of generators bilking ratepayers. Rep. Jay Inslee D-Wash. said he brought up the idea of regional price caps with President Bush who was initially skeptical. But Inslee said that Bush warmed to the idea after being told that protections could be built into the caps so as not to discourage construction of new power plants. Upon hearing that Inslee said Bush invited him to meet with the president's Cabinet-level task force led by Vice President Dick Cheney on a national energy strategy. But Inslee said he can't get the group to meet with him. It's very disappointing Inslee said. Tuesday's hearing was part of a series the panel is holding on the California crisis so far without any emerging consensus on what if anything Congress should do. ---- Power plan called wrong Wall Street analysts say the governor's approach to the problem avoids the issue that caused the imbalance. March 7 2001 By DON THOMPSON The Associated Press SACRAMENTO California's scramble to insulate consumers from the soaring price of electricity may add to the state's power problems this summer Wall Street analysts said Tuesday. Gov. Gray Davis' emphasis on buying utilities' transmission lines and negotiating long-term power contracts to help ease their debts skirts the deep imbalance between wholesale and market rates that led to the state's power problems in the first place they said. In the long run it doesn't solve anything said Michael Worms an industry analyst for Gerard Klauer Mattison & Co. In the long run you need to send the right price signals to consumers which will create its own conservation signals. Unfortunately customers were shielded from that in California. Davis said Monday that the state's first contracts to buy electricity for two financially struggling utilities will provide only about two-thirds of the power needed on a typical summer day forcing Californians to cut power use at least 10 percent to avoid blackouts. Since early January the state has been buying one- third of the power Southern California Edison and Pacific Gas and Electric Co. customers need. The two utilities denied credit by suppliers say they have lost nearly $14 billion due to soaring wholesale electricity prices that the state's industry-deregulation law says they cannot pass on to consumers. The keepers of the state power grid had enough electricity Tuesday to avoid declaring an electricity alert but have faced an almost-daily scramble for weeks due to a tight supply and high wholesale prices. Several wholesale and retail rate proposals are circulating. Among them: Free-market advocates such as Worms want an immediate end to the deregulation-imposed retail rate freeze on Edison and PG&E that will expire next year. Davis wants a Western price cap of $100 per megawatt hour on power generators he says have been prof iteering from California's short energy supply. The Bush administration and Federal Energy Regulatory Commission are cool to that idea. In December FERC imposed a soft cap of $150 per megawatt hour on wholesale rates in the state and required suppliers to justify any higher prices they charge. Consumer groups such as The Utility Reform Network or TURN want regulated rates for residential and small-business customers but free-market rates for large industrial customers which sought deregulation in the first place. TURN also advocates a tiered rate structure with higher rates for consumers who use more than a reasonable amount of electricity each month. Assembly Republicans say electricity and natural-gas prices will fall naturally if the state increases supply mainly by making it easier to build plants and pipelines. Right now you're sort of sitting partially with regulation and part with the free market said Paul Fremont an analyst with Jefferies & Co. Both these systems work. It's sort of that in-between system that you have in Califor nia that doesn't appear to be working. The system discourages generators from building new power plants because they aren't guaranteed a profit and it doesn't do enough to discourage power use by consumers because the price they pay doesn't reflect the true cost of power Fremont said. I don't think people here have much faith in the market and why should they? countered TURN's Mindy Spatt. I think there are probably better ways of encouraging consumers to conserve than by gouging them. Davis insists the crisis can be resolved without raising rates for Edison and PG&E customers beyond the existing rate structure. In January state regulators imposed temporary rate hikes of 7 to 15 percent on Edison and PG&E customers. The Legislature and Davis extended the increases for up to a decade to help pay back the estimated $10 billion in power buying the state expects to do for Edison and PG&E over the next several years and finance its purchase of the power lines owned by the two companies and San Diego Gas & Electric. Rates were already scheduled to increase next year for Edison and PG&E customers. Under the 1996 deregulation law the pair's ratepayers saw a 10 percent rate reduction but only until early 2002. That rate cut will likely expire as planned Davis spokesman Steve Maviglio has said. Davis wants those rates to cover not only the traditional cost of generating transporting and distributing power but the added cost of paying off the two utilities' massive debt and buying their transmission lines said Assemblyman Fred Keeley D-Boulder Creek the Assembly's chief power negotiator. Yet Davis has indirectly addressed the rate imbalance by signing legislation that will let regulators raise consumer rates if necessary Keeley said. The governor and lawmakers are in effect spreading out rate increases over a decade by using long-term revenue bonds to buy power for the nearly bankrupt utilities said Severin Borenstein director of the University of California Energy Institute. At some point we have to deal with the reality that all of the power that we buy has to be paid for by somebody - it's either going to come from taxpayers or it's going to come from ratepayers Bor enstein said. Raising rates now would get us a lot of conservation. Davis also wants financial incentives for conservation and power-plant construction in time to make a difference this summer. Our mouths were agape at the rapid timetable Keeley said. Legislators are rushing to pass those incentives by month's end he said allowing three months for consumers and suppliers to act before the heat of summer. Among bills considered Tuesday the Senate Energy Committee approved legislation to accelerate the siting of power plants. It also was considering a proposal to restructure rates for generators that use renewable energy to provide about 30 percent of the state's electricity. ---- Bill to Cut Some Power Prices Stalls Energy: Democrats balk at varying payment levels for alternative generators. By DAN MORAIN JULIE TAMAKI Times Staff Writers SACRAMENTO--Legislation aimed at cutting prices for more than a fourth of the power consumed in California stalled Tuesday as Democrats questioned why a few alternative energy generators--some of them campaign donors--stood to receive higher payments than others. Lawmakers working to unravel California's energy mess have been negotiating for weeks in an effort to cut the price paid to more than 600 generators of alternative power by more than half to below 8 cents a kilowatt-hour. Those alternative generators' contracts with utilities have shot up in recent months because of a rise in the price of natural gas. The cash-strapped corporations have suspended or made partial payments to the generators over the last few months causing many to shut down or reduce their outputs. But even as the lawmakers reached agreement that pushed the average price to near the 8-cent level per kilowatt-hour some generators would have received higher prices under the bill by state Sen. Jim Battin (R-La Quinta). Some of the generators that stood to benefit had donated to Battin's campaigns. One--Windtec Inc.--gave Battin a $20000 campaign donation in 1999. Others contributed from $3000 and $5000 last year. Battin acknowledged that he has received campaign contributions from some wind power generators but said there is no connection between the donations and the bill's provisions. It is illegal it is unethical and it's not how I do business he said. Battin noted that 25% of the state's alternative energy producers are in his district. As Democrats on the Senate Energy Committee blocked the bill Battin warned that some alternative energy producers might react to the delay by trying to force Southern California Edison and Pacific Gas & Electric into bankruptcy. We will be the cause of bankruptcy Battin said. That prompted Energy Committee Chairwoman Debra Bowen (D-Marina del Rey) to retort: I'm really tired of being threatened with bankruptcy. Alternative energy producers including those that use wind solar power biomass and other means produce 27% of the energy used in California. They sell the electricity to the utilities which in turn transmit it to retail consumers. But with the utilities facing multibillion-dollar debts the alternative energy producers under contract with Edison have not been paid since November. Scores of alternative energy producers supported the measure. Edison International and the San Francisco-based consumer group the Utility Reform Network opposed it. Michael Florio of the Utility Reform group said the deal could result in higher consumer prices an Edison representative said the same thing. Battin and Assemblyman Fred Keeley (D-Boulder Creek) worked out an arrangement with many of the generators. Keeley took the lead in the early negotiations and then turned to Battin to introduce the legislation SB 47X. Rather convoluted language would have allowed higher payments to a select few generators that produce electricity from wind and biomass. Most of California's wind suppliers for instance would have received about 6 cents per kilowatt-hour. But a handful of them about half a dozen wind farms--mostly in the Palm Springs area represented by Battin--would have received 7.8 cents. Battin contends that other wind producers receive additional payments that boost them to the same level as Windtec and others that would get the higher payments. They get the same deal Battin said of the handful of generators that would benefit from the provisions he added to the bill. In California's overall energy market the amount of money that would have flowed to the favored generators is minor. But the added prices that would have been paid to the generators would have translated to at least $19 million in the next five years to be absorbed by Southern California Edison customers according to one analysis. Also Tuesday more details were disclosed about another leg of the state's effort to escape from the energy crunch--the deals with large power generators to supply electricity to California for as long as 10 years. Those arrangements were announced by Gov. Gray Davis Monday as the bedrock of California's energy policy. But some consumer advocates warned that the deals could lock the state into excessively high-priced contracts. S. David Freeman the general manager of the Los Angeles Department of Water and Power and Davis' negotiator said that the state guarded against that by varying the time spans of its deals. About 6000 megawatts are expected to be available this summer about one-third of the energy needed by the state Freeman said. The amount of power under contract swells until more than 9000 megawatts are contracted in 2004 half of the needed amount before dipping to 8000 megawatts in 2010. What we're doing here is what everybody said had to be done Freeman said. We deliberately bought 50% so we'd have a good mix between long-term contracts which may turn out to be somewhat higher or somewhat lower than the spot market and purchases on the spot market. ---- PG&E could face mutiny on outages: SMUD others may balk if utility orders summer blackouts By Carrie Peyton Bee Staff Writer (Published March 7 2001) Sacramento's electric utility wants out of a deal that imposes rolling blackouts locally on PG&E's command. So do a lot of other utilities. They've been writing letters lobbying lawmakers and launching informal talks with Pacific Gas and Electric Co. to get off the hook before summer. Who dodges the blackout bullet is going to play out as a political hot button around the state said George Fraser head of the Northern California Power Agency a coalition of municipal utilities. In Sacramento the next volley is expected soon with the Sacramento Municipal Utility District reportedly poised to notify PG&E that it will no longer black out homes and businesses on the larger utility's command. We are absolutely trying to fight off the requirement for rolling blackouts for the Sacramento area said Linda Davis one of seven elected members of the SMUD board of directors. Saying they don't want to be dragged down by somebody else's problems two Southern California utilities have written grid operators asking to be exempted from any blackouts caused by PG&E's or Southern California Edison's financial woes. But in PG&E's view California is in an energy crisis (and) ... we're all in this together said spokesman John Nelson. The maneuvering comes amid bleak forecasts for power supplies this summer. Although Gov. Gray Davis has said conservation new power plants and moderate weather could avert blackouts officials at the Independent System Operator which runs much of California's grid expect frequent rotating outages. One consulting firm Cambridge Energy Research Associates predicts 20 hours of rolling blackouts during July and August and about 200 hours of especially intense calls for voluntary cutbacks. Before blackouts hit the jockeying over just whose lights air conditioners and assembly lines will be shut down is growing. The outcome could affect millions of people statewide. The state Public Utilities Commission is probing rolling blackout programs run by the for-profit utilities it regulates including PG&E and Edison. A PUC analysis has suggested that PG&E's program which currently exempts about 40 percent of its customers should spread the burden more broadly. For example it said 1.9 million homes and businesses are spared just because they share a circuit with a customer deemed essential. But not-for-profit utilities such as SMUD which answer to their own elected boards or city councils have other worries. Many have already lined up their power supplies for summer. Some have raised rates or are considering raising rates. Some have taken extra conservation steps. They think those preparations ought to give them leverage to ease blackout clauses in their contracts with PG&E. SMUD general manager Jan Schori is going to use every avenue ... any avenue to put pressure on including lobbying the ISO the governor and others said utility director Davis. The Northern California Power Agency a joint-powers authority that owns and operates power plants for municipal utilities has begun informal negotiations with PG&E to change blackout rules according to Fraser its top executive. It is preparing to write PG&E asking that its members be exempted from outages altogether. Failing that it wants them to face fewer outages or to be compensated for cutting off power he said. At SMUD the utility board has met in closed session to discuss exactly what it is required to do during electric emergencies under terms of the interconnection contract that links SMUD's lines to PG&E's. The contracts are being inspected with a fine-tooth comb said SMUD director Howard Posner. Schori declined to comment on any specifics. Sources indicated that the main option being considered is notifying PG&E that because of changed circumstances SMUD believes it no longer is required to routinely comply with outage requests. Other options being explored include re-negotiating existing agreements with PG&E. Posner said that ever since two days of rolling blackouts in January constituents have been asking him 'Why are we participating when we're not the problem?' And I don't have a good answer to that. Several directors said SMUD has already spent a lot of money -- and is considering 16 percent rate increases -- to ensure that it has enough electricity under contract to meet its customers' summer demands. They believe PG&E should do the same. We're almost like a David against Goliath here said board vice president Genevieve Shiroma. The huge investor-owned utilities next door have severe problems that they need to get under control. In addition SMUD plans to argue that because it can cut usage through its Peak Corps program which remotely turns off air conditioners at volunteer households it has already done its part without rotating outages director Davis said. PG&E believes the interconnection agreements that govern smaller utilities' ties to its transmission lines have benefits and burdens to both sides said Nelson. It wouldn't be fair or good policy for just one provision to be altered without taking a look at how that affects the entire contract he said. Interconnection contracts generally have clauses that require utilities to help each other out to avert greater emergencies. Sometimes reducing demand -- called load shedding -- can be the only way to stabilize the electric grid in the seconds after a major power plant or transmission line fails. It's been around in the electrical fabric forever said Jim Pope head of Silicon Valley Power Santa Clara's city-run utility. In addition to legal requirements you have a moral obligation so you don't bring the system to collapse. Like other city-run utilities Silicon Valley Power has a contract with PG&E that requires it to shed load during an electric emergency. But its contract allows it to work with big users to reduce their demand so no one has to be completely shut off. Such agreements formed long before deregulation when PG&E ran the north state's grid now are complicated by the 1997 creation of the state Independent System Operator. The ISO today runs pieces of the grid owned by PG&E Edison and San Diego Gas & Electric Co. If it believes power use is about to surge past supply potentially triggering a grid collapse across the western United States the ISO notifies the three utilities that they have to shed a certain number of megawatts. The big utilities meet that requirement two ways. They cut circuits to some of their own customers and they tell smaller connected utilities to cut a proportionate share. In Northern California about 80 percent of the outages are borne by PG&E customers and the rest by customers of SMUD and other municipal utilities and irrigation districts. In one sense we are all in this together. If SMUD were in danger of going down we would hope others would help us out said SMUD's Posner. But that's if we're in danger from circumstances beyond our control not from mismanagement or lack of financial wherewithal. It is unclear what penalties if any a utility would face for violating an interconnection agreement. In the long run the issue would be fought either in the courts or before the Federal Energy Regulatory Commission grid officials said. As a practical matter in the seconds when the risk to the grid is greatest if one utility refused to shed load the ISO would probably solve to problem by calling on PG&E Edison or others who are willing to make deeper cutbacks they said. ---- PUC to Decide Fate Of Utility Workers PG&E Edison want to trim costs by laying off thousands cutting service Bernadette Tansey Chronicle Staff Writer Wednesday March 7 2001 2001 San Francisco Chronicle State regulators are set to decide today whether debt-ridden Pacific Gas and Electric Co. and Southern California Edison can conserve cash by laying off thousands of workers and letting service standards slip. Union officials who protested the layoffs before the California Public Utilities Commission warn that if the cuts go through neighborhoods hit by power outages could stay dark for hours and more customers could face busy signals when they call about their bills. An administrative law judge agreed advising the commission in February to order the utilities to restore 725 positions already cut and block the elimination of an additional 2125 jobs. Judge John Wong said PG&E and Edison have acknowledged the layoffs will not substantially improve their shaky financial condition which arose from skyrocketing wholesale electricity costs the utilities could not pass on to consumers under a rate cap. The savings would barely make a dent Wong said in his draft decision. The two companies together claim that their debt from power purchases amounts to more than $13 billion. PG&E says it has saved $18 million from the first wave of 325 layoffs. Wong's recommendation is already running into resistance on the PUC. Commissioner Richard Bilas said the five-member panel should not be micromanaging the utilities in a time of crisis. Bilas has proposed an alternate ruling that would allow the utilities to make the cuts but provide for PUC monitoring of service in case the commission wants to step in later. We're in a situation where the utilities are not collecting the revenues they need to operate and yet we may be guilty of not letting them cut expenses where they can cut expenses Bilas said. PG&E spokesman Jon Tremayne said savings from the layoffs are helping to keep electricity running and gas flowing. It keeps cash in our accounts so we can keep doing day-to-day business Tremayne said. In addition to the 325 positions dropped so far PG&E is proposing to cut an additional 675 during the next three to six months. The cuts affect temporary and contract workers who read meters handle new service hookups and replace equipment. PG&E has no plans to eliminate permanent positions. The company is struggling to keep up with a higher workload at its call center as customers deluge the lines with inquiries about their rising bills and the effects of deregulation. Calls to PG&E ballooned from 1.3 million in January 2000 to 2.3 million in January 2001. Bilas advocates granting PG&E's request to temporarily relax standards requiring the utility to respond swiftly to customer calls and to read customers' meters once a month. PG&E wants to read meters bimonthly and send bills based on the estimated use between readings. Discrepancies could be corrected later. Wong called those measures unacceptable. He said customers need to know immediately if their efforts to conserve power are working. Wong also said the utilities' own experts have said the workforce reductions will lengthen the time required to restore power after nonemergency equipment failure. Eric Wolfe communications director for the International Brotherhood of Electrical Workers Local 1245 said some customers have already been left without power overnight because PG&E is trying to avoid the use of overtime on nonemergency power outages. It hurts a lineman to walk away from the job leaving a customer without power Wolfe said. Tremayne said PG&E is trying to minimize overtime costs but denied the company has allowed customers to go without power out of financial concerns. He said crews were pulled out when darkness and falling trees made the work too dangerous. ---- Power prices could soar during the summer Posted at 10:35 p.m. PST Tuesday March 6 2001 BY STEVE JOHNSON Mercury News Unless Gov. Gray Davis arranges significantly more long-term electricity contracts or persuades people to turn off a lot more lights California's unpredictable spot market for power could wreak havoc this summer. Even with the 40 long-term deals announced by Davis on Monday experts interviewed Tuesday said up to 43 percent of the state's daily needs may have to come from this highly volatile market in which power is bought within a day of need. That could could prove hugely expensive because some spot market energy has cost five to six times what it would under the long-term contracts. It's widely expected that consumers ultimately would have to pay that tab which could amount to billions of dollars. And because that power won't be locked up in contracts there is no guarantee it will be available when it's needed which could lead to blackouts according to a recent report to the California Independent System Operator which oversees three-fourths of the state's power grid. ``The situation in California could reach catastrophic proportions'' the report concluded adding that unless things change dramatically ``it is a virtual certainty that peak demand will go unmet during many hot summer days.'' Steven Maviglio Davis' press secretary conceded Tuesday that the spot market could be troublesome. ``It's a major concern'' he said which is why the state is trying to line up more power contracts speed up power plant construction and promote conservation. During the normally hot month of August peak daily demand for power in the Independent System Operator's territory is expected to hit about 47700 megawatts -- enough for nearly 48 million homes. The state's three main utility firms generate about 8200 megawatts and have long-term contracts from wind solar and other energy sources for about 11700 megawatts more. That totals about 20000 megawatts. Add in the 7000 megawatts of long-term power that Davis has announced for this summer and the state is still nearly 21000 megawatts short. Costly proposition If all that power has to be obtained on the spot market the price could be high. On Friday last-minute purchases on the market averaged $411 per megawatt-hour compared to about $150 per megawatt-hour for all power obtained by the Independent System Operator and $69 per megawatt-hour on average under Davis' long-term contracts. It's possible that not all 21000 megawatts would have to be purchased on the market. Assuming Davis is successful in getting people to save 10 percent -- which could prove difficult -- conservation could reduce peak demand by nearly 5000 megawatts. California also might be able to trade for another 5000 megawatts with the federal government's Bonneville Power Administration and a hydroelectric operator in British Columbia said Arthur O'Donnell editor of California Energy Markets a trade publication. Under such deals those two outfits often send that much power to California when they don't need it and California returns the same amount or more when its demand is low. But O'Donnell said it wasn't clear whether 5000 megawatts would be available this summer because ``they still haven't gotten the snowpack they need in the Pacific Northwest'' which could limit that region's generating capacity. Still falling short Even if those hydropower imports are available and conservation works as Davis hopes it's likely California would still require the spot market for 11000 megawatts to meet the August demand. That's more than 20 percent of the state's overall power needs. ``All of the surrounding states are buying probably less than 5 percent at most of their energy on the spot market'' said Frank Wolak a Stanford economist who monitors electricity prices for the Independent System Operator. He worries about how much that power could cost and is disturbed that state officials haven't adequately addressed the issue. ``No one has any idea what they are going to do and that is part of the problem'' he said. Officials at Pacific Gas & Electric Co. are particularly concerned. They fear that their company -- which is nearing bankruptcy -- could get stuck for much of the spot market purchases by the Independent System Operator which has threatened to bill the utilities for the cost. Fearing the annual bill for that power could hit $2.4 billion this year PG&E wants the tab sent to the Department of Water Resources which also is buying power on the spot market for the state. But the Department of Water Resources has objected to that idea and the matter is expected to be heard today by the California Public Utilities Commission. ``We're looking for clarity on a number of issues'' regarding how the spot market will work ``and certainly that's one of them'' said Thomas Hannigan the water agency's director. ``I don't think anybody knows the answer of who's going to pay for it'' added PG&E spokesman John Nelson. But Nettie Hoge executive director of the Utility Reform Network in San Francisco said she suspects consumers ultimately will foot the bill. The unfortunate likelihood about spot market purchases is that ``ratepayers are responsible for all of it eventually'' Hoge said. ``It's a very big problem.'' ---- Power Plant Plans Cause Conflicts East county residents blast supervisors Jason B. Johnson Chronicle Staff Writer Wednesday March 7 2001 Industry dreams of building new power plants in east Contra Costa's hills are prompting an angry reaction among residents and elected officials who say they don't want more plants. The conflict was sparked by a vote by county supervisors yesterday to aggressively explore possible sites for new power plants throughout the county. The measure by Supervisors Mark DeSaulnier and Federal Glover which passed on a 4-to-0 vote directs the county administrator and Department of Community Development to compile a report on possible sites within 45 days. Supervisor Donna Gerber abstained after criticizing the plan for potentially repeating the same mistakes that plagued the state's energy deregulation effort by not considering how much energy the state region and county will need in future years and how much power is slated to come online. Gerber said alternative power sources such as solar should also be examined. A site drawing much attention is on top of a deposit of natural gas near the Concord Naval Weapons Station off Highway 4. The owners of 70 acres of land near the station recently formed a company Golden State Power Co. to pursue construction of at least one small peaker plant and a much larger facility capable of producing 600 megawatts. The site could hold up to three small 50-megawatt peaker plants and a larger 15-acre natural gas plant said Steve Thomas managing partner with Golden State. No land use applications have been filed. Thomas said 30 acres could be kept as open space to form a buffer around the project. Both (facilities) are state of the art said Thomas. We believe that the site is ideal. But east county residents at yesterday's meeting blasted the supervisorial measure and the power plant proposal complaining that more plants could put people's health at risk. The region already is home to six power plants. We're going to get a good dose of poor air quality and (negative) health conditions from this said Concord resident Evelyn Frietas. I think we need to stop and think about what we're doing to our quality of life. Dan Torres said the home he bought in 1995 at a new Bay Point development would be alarmingly close to the proposed Golden State site. It will be dragging emissions over our home said Torres. I didn't buy a home on that hill to be surrounded by power plants. There are six power plants in operation in east Contra Costa. Pittsburg already has two power plants and two more under construction. City Council members Frank Aiello and Yvonne Beals said the Antioch-Pittsburg area has done more than its share of energy production. Aiello said Pittsburg will soon produce enough energy to power three million homes in California. When is enough enough? asked Aiello. Pittsburg has shouldered responsibility for a land-fill and two more power plants. At some point you have to say enough. Beals said that while power plants have added millions to the city's general fund the negatives of additional plants could outweigh the benefits. I don't think that Pittsburg or east county should be the dumping ground for energy for California said Beals. ---- Supervisors set search for power plant sites The board also heard from the potential developers of a 650-megawatt plant between Bay Point and Concord By Thomas Peele TIMES STAFF WRITER MARTINEZ -- Contra Costa County supervisors took tentative steps Tuesday toward allowing the construction of at least one small power plant before summer ordering that its staff identify potential sites in unincorporated areas within seven weeks. The board voted 4-0 to search for locations. Third District Supervisor Donna Gerber abstained saying her colleagues lacked a comprehensive context'' to identify sites. I think the board knows just enough to be dangerous'' she said. Gerber said the county should examine the potential for additional power plants within its borders but not investigate individual sites yet. But Fourth District Supervisor Mark DeSaulnier said the action was necessary because of the energy crisis and because of Gov. Gray Davis' call for local governments to help speed the construction of so-called peaker plants before July and August. I wouldn't do this except under an emergency DeSaulnier said after the vote. There are unusual circumstances. We're not talking about putting this in a residential area. Fifth District Supervisor Federal Glover backed DeSaulnier but said he hoped for a location outside his heavily industrialized East County district. There's a lot of concern in East County as to the number of plants he said. DeSaulnier said though that the only logical place for a small plant remains the industrial belt'' stretching along the waterfront from West County to Antioch. He declined to provide specifics but said the only other potential site outside the industrial areas was the Concord Naval Weapons Station property. But he quickly added that he believes the U.S. Department of Defense would never go for it. Also DeSaulnier said he could not rule out the county building the plant itself and entering the electricity-selling market during peak demand times. Board Chairwoman Gayle Uilkema called that idea extremely premature and unlikely. That's a very powerful decision. I do not think we are ready'' she said. The California Energy Commission listed the Equilon refinery in Martinez as one of 32 potential peaker plant sites in the state last week. Peaker plants kick in during peak usage times. Davis called for their quick construction before the height of summer and its energy demand for air conditioning. Plants that generate as much as 50000 megawatts don't need Energy Commission approval. DeSaulnier said he believed a peaker plant could be built about a month after final approval. Supervisors also heard from the potential developers of a 650-megawatt plant between Bay Point and Concord. Walnut Creek commercial real estate developer Steve Thomas announced his intentions for the site north of Highway 4 last week. Construction could take two years. Eric Hasseltine a consultant representing Thomas and what he described as a brand new company for the site the Golden State Power Co. told supervisors that if they intended to speed peaker plant construction they should do what they can to expedite the larger plant. The Thomas site could house a peaker plant until the proposed larger one goes online. A large natural gas line passes under the site. DeSaulnier seemed cautious about the larger proposal which he had described last week as a good site. Uilkema too said she knew too little about it to comment. A resident who lives near the Thomas property asked the board to build it (the larger plant) closer to where you have industrial areas. You have to carefully consider the people who live nearby said Dan Torres 39. Evelyn Freitas of Concord said she lives downwind of the proposed site. Our air quality is going to be worse then it is now she said. Gerber played on the environmental issues saying the county already ranks second statewide to Los Angeles in volume of hazardous materials and amount of electrical generation. ---- Peter Schrag: California's $90 billion infrastructure gap (Published March 7 2001) By now California's surreal energy mess has grown from a crisis to a condition. It may not be quite as permanent as say death and taxes but it's still something that could get a whole lot worse before it gets better. Until there's more realistic pricing no gubernatorial pea-under-the-shell buyout scheme will solve it. Beyond the energy crisis however and in many ways similar to it California faces a whole range of other infrastructure problems -- in transportation in water resources and sewer systems in school and university buildings -- that seem once again to be all but forgotten. The Business Roundtable has estimated the need at roughly $90 billion though no number can possibly be exact. What's certain is that after a burst of high-level investment in public facilities during the 1950s and 1960s California's annual capital investment has sunk precipitously -- from an annual $150 per capita in the 1960s according to a set of recent studies for PPIC the Public Policy Institute of California to about $30 in the 1990s. But you probably don't need to tell anyone driving Bay Area or Los Angeles freeways or looking at the ubiquitous portable classrooms those dreary brown boxes that house a fourth of our public school students. Ever since passage of Proposition 13 in 1978 we have been flying the flag of deferred maintenance. As in the state's electricity crisis however there's no way California can effectively address those problems merely by building or bonding itself out of them. In highway construction in developing water resources in finding enough university space to accommodate the Tidal Wave II of students managing demand is likely to be as crucial to any solution as new construction. In the energy market -- and in electricity particularly -- it's been a familiar principle ever since David Roe of the Environmental Defense Fund first persuaded Pacific Gas and Electric that a dollar invested in conservation may be worth as much as the same investment in new generation. But in most other sectors of California's infrastructure state and local it's a lesson still to be learned. There have been scattered attempts to encourage conservation and reduce demand -- significant reduction in water use for example through the installation of low-flow faucets and low-flush toilets some reduction in traffic by using rush-hour diamond lanes or by adjusting highway or (as in New York) bridge tolls to levels of congestion. But as pointed out by David Dowall an urban economist at Berkeley state policy-makers have not really begun to consider how demand management strategies can be applied to infrastructure service areas or how the more efficient use of facilities and more realistic pricing -- highway tolls say or parking fees -- can reduce demand for scarce infrastructure resources. In any case says Dowall in one of the PPIC reports we should pick which major projects we will build not just according to per capita estimates of how much we need but according to how much consumers are willing to pay for them. To avoid hurting the poor congestion-related highway tolls and other tariffs can be rebated on the basis of income. University fees can be means-tested. In California they also could be adjusted to encourage summer school classes and other off-peak uses rather than (as in the past) making UC summer courses more expensive. Given the political and economic uncertainties there's no way to know how far such demand management can be taken. But there's not much doubt that as Dowall and others point out the state's infrastructure planning is a jumble of uncoordinated agency agendas and wish lists. The Legislature last year passed a bill AB 1473 by Assembly Speaker Robert Hertzberg that requires the governor beginning next year to submit an annual five-year infrastructure plan for state agencies and public schools along with recommendations on how to fund it. In addition Gov. Gray Davis' infrastructure commission is expected to recommend better coordination of infrastructure and land-use planning when it issues its report this spring. That would be a start. As California State Treasurer Phil Angelides has pointed out the state desperately needs to start joint planning -- regional planning -- for housing roads and other resources to reduce the need for long commutes to preserve open space and to bring jobs to where people live and housing to where the jobs are. That would itself reduce demand for more freeway lanes and equally important improve the quality of life. At present most planning for housing roads water systems and other facilities rarely recognizes the regional impact of local decisions. In the East Bay slow-growth forces push well-intended initiatives that would force more development into Tracy or Modesto and further tax the transportation systems to Silicon Valley. In city after city there are beggar-thy-neighbor efforts to grab yet another shopping mall that produces a little extra sales tax revenue for the city that gets it and that often compounds traffic and revenue problems in adjacent communities. In higher education we divide bond proceeds evenly among UC the California State University and the community colleges even though the community colleges serve eight times as many students as UC. We plan road projects according to county not regional priorities. It is all done according to antiquated political and fiscal formulas that often no longer make sense. We don't just need better capital planning we need a whole new planning system. ---- PG&E power plan debated at hearing A PUC meeting on the utility's capacity expansion project for the Tri-Valley follows weeks of protest from officials residents Power upgrade in valley debated By Megan Long TIMES STAFF WRITER SAN FRANCISCO -- Dublin officials and the developer of a Livermore subdivision faced questions Tuesday about their opposition to alternative routes of PG&E's controversial Tri-Valley power upgrade plan -- and answered by restating their long-standing objections. Tuesday's cross-examination came during the third and likely final week of the California Public Utility Commission's evidentiary hearings on the utility's $91 million Tri-Valley 2002 Capacity Increase Project. It has followed weeks of protests of PG&E's upgrade plans by officials and residents of Livermore Pleasanton Dublin and San Ramon. And before the questioning started Dublin Vice Mayor Janet Lockhart reiterated concerns about an alternative route deemed environmentally superior that would place a substation just 1000 feet north of Interstate 580 between Tassajara and Fallon roads. She said that would undermine the results of a 15-year process to plan the eastern development of the city. It's extremely important to the residents of our community to follow a plan we worked hard to produce she said. Dublin officials favor PG&E's proposed placement of the station three miles north of the freeway away from new high-tech company offices and housing developments. Besides the Dublin substation the project calls for construction of a substation in North Livermore expansion of the Pleasanton substation and installation of 23.5 miles of new lines. In response to questions from PUC Administrative Law Judge Michelle Cooke Dublin's public works director Lee Thompson confirmed that the Lin family the owner of the property where the alternative substation would go wasn't interested in selling the land to PG&E. Cooke also asked Thompson to define a discretionary permit which is how city officials said they might treat a permit for a substation. Lee said that type of permit is one the city has the right to approve or not depending on the project's impact. Eddie Peabody Dublin's community development director testified that the zoning for the Lin property accommodates uses such as commercial business research and development and light manufacturing. It would not he said be appropriate for a power substation. He said parcels within the East Dublin area that could host a station would include those zoned for public and semi-public uses including land recently bought by Oracle and Sun Microsystems for new campuses. While Dublin officials testified that one buyer of land in that area paid $86 per square foot others suggested land prices would be inflated to help make a PG&E land buy look prohibitively expensive. An executive of Centex Homes the developer of new houses near Isabel Avenue and Concannon Boulevard objected to an alternative route that would place high-voltage transmission lines overhead along Isabel and Stanley Boulevard. David Barclay president of Centex's Northern California division said that the 80-foot to 150-foot towers would have a severe visual impact on residents of the Prima tract. Ed O'Neill a lawyer for the Kottinger Ranch Homeowners Association pointed out that existing distribution lines on 50-foot poles on Isabel already mar the view for residents. The Foley family has been ranching on land south of Pleasanton city limits for years said their attorney Kennedy Richardson. The utility's project would place overhead lines and a transmission station on rolling hills that the family envisions as one day being public open space with limited development Richardson said. Lawyers for Pleasanton Livermore Kottinger Ranch and Centex are scheduled to cross-examine a PG&E engineer today about the project's routing. That testimony should be the most controversial of the hearings. Judge Cooke is expected to recommend an alignment by July to the PUC which will make the final decision. ---- NEWS State OKs 'Peaker' Power Plant at SFO / Temporary generator could be sending electricity to 50000 homes by August Marshall Wilson 03/08/2001 The San Francisco Chronicle FINAL Page A.20 (Copyright 2001) State energy officials yesterday approved plans to build a temporary electrical plant at San Francisco International Airport that should generate enough juice to power 50000 homes by August. Meeting in Sacramento the Energy Commission voted 4-0 to give the green light to the gas-fired plant. It will operate during peak summer and winter demand to help the state avoid Stage 3 power alerts and rolling blackouts. Texas-based El Paso Merchant Energy Co. won approval under a new state law mandating speedy four-month reviews of so-called peaker plants. It was the only one of seven applications statewide to win approval. The other proposals were withdrawn for various reasons. The 51-megawatt plant formally called the United Golden Gate Power Project is scheduled to be built at the northwest corner of the airport near the United Airlines maintenance center. Within the next few weeks El Paso plans to apply to build a 571- megawatt $400 million plant in the same area company spokesman Jesse Frederick said. It would undergo a separate review by state energy officials. The small peaker plant approved yesterday is to generate electricity beginning around Aug. 1 for up to three years. After the end of three years the plant would be closed or converted to a cleaner-burning system. Under state law a temporary peaker plant is permitted to spew more air pollution than a permanent plant. El Paso's temporary plant is to be built next to a co-generation plant operated by United Airlines. It would use existing connections for natural gas and water supplies and tap into existing power transmission lines. Electricity generated by the plant would be pumped into the state's electrical grid Energy Commission spokesman Gary Fay said. It would also serve as a backup for San Francisco Airport in case of a blackout. No one spoke against the proposed plant at yesterday's commission meeting. The proposal however has been criticized by area residents and environmentalists worried about air pollution. Scott Buschman a professional photographer and San Bruno resident said yesterday it was unjust that state officials 100 miles away in Sacramento approved a Texas company's proposal to put a power plant on land owned by San Francisco. The fact that they approved it without considering the public's concerns foremost air quality is very disturbing he said. Fay said the plant complies with clean-air standards. Answering the criticism about the location of yesterday's deliberation he said three hearings and several workshops were held in communities near the airport. Copyright 2000 Dow Jones & Company Inc. All Rights Reserved. ---- Crossed Wires: Major Kinks Emerge In Gov. Davis's Plan To Power California --- State's Outlays for Electricity May Be Hard to Recover Without Rate Increases --- Betting on Long-Term Deals By Wall Street Journal staff reporters Rebecca Smith Mitchel Benson and John R. Emshwiller 03/08/2001 The Wall Street Journal A1 (Copyright (c) 2001 Dow Jones & Company Inc.) SACRAMENTO Calif. -- Earlier this year Gov. Gray Davis made what may be the biggest bet in the history of the nation's biggest state: that he could tame an out-of-control electricity market and avoid devastating blackouts without busting the state's budget antagonizing its consumers or derailing his own political career. His wager is still on the table but the assumptions that underlie it are looking increasingly shaky these days. The governor has already spent around $2 billion of public money buying hugely expensive wholesale power taking over the role formerly played by the state's near-bankrupt electric utilities. And California will probably be obliged to spend billions more before its electricity market stabilizes and those utilities are restored to some semblance of financial health. Under the governor's plan California aims to recoup the money it is using to buy electricity by issuing $10 billion in bonds. That way it would still have a healthy budget surplus to finance new spending on roads schools and other public services. But there's a potentially big obstacle to this plan. The state Legislature worried about racking up billions in new debt has put limits on the size of any bond offering. In broad terms the Legislature's action would allow the state to borrow only four times as much as it can recover annually from utility customers. Right now that doesn't appear to be much. Under the current rate structure essentially set in place by California's flawed 1996 electricity-deregulation plan consumers pay far less for power than the cost of acquiring it on the wholesale market. Preliminary estimates submitted by utilities last month to the California Public Utilities Commission show the state's share of the proceeds from electricity sales this year could be as little as $241 million -- not enough to support even $1 billion in bond sales under the Legislature's formula. That would leave the state on the hook for much of the money it has already paid for power -- not to mention the billions more Gov. Davis will need to spend. That in turn raises the prospect that California's economy and its credit rating both could deteriorate significantly. But state finance officials say that based on their own projections they will be able to extract enough money to support a $10 billion bond issue. Walking a careful line between fiscal prudence and political survival Mr. Davis and others in his administration are scrambling to come up with ways to get around the legislative restrictions without raising rates for consumers. If I wanted to raise rates I could solve this problem in 20 minutes Mr. Davis says. The governor says he believes that the state can obtain enough affordable power through long-term power-supply contracts to avoid the need for a big rate increase. The billions of dollars the state hopes to borrow would be used to help pay for power until electricity prices drop as they are expected to do when new power plants come online over the next few years. The Davis administration fears that what may be its only other option -- a big increase in retail electric rates -- could prompt angry consumer groups to seek new electricity laws through a statewide ballot initiative during next year's election. That's when Mr. Davis is expected to run for a second term as governor. But trying to save California without rate increases is forcing Mr. Davis to make some colossal gambles with the state's money. State officials estimate that in the next several months California will need to spend as much as $6 billion on power purchases -- equivalent to the state's entire fiscal surplus. Mr. Davis is also looking to spend several billion more to buy the transmission assets of three investor-owned utilities in order to restore two of them to credit-worthiness. He also has announced plans to spend several hundred million dollars more on conservation programs designed to reduce demand while new power plants are being built in the state. In order to limit the state's financial exposure in the meantime the governor and his aides have in some cases ignored state law. They have threatened appointed officials who have stood in the way. And they have sharply restricted the flow of information to the public. None of those steps is expected to do much to reduce state spending on power in the coming months. In a few weeks power usage is expected to begin a sharp seasonal rise as Californians switch on their air conditioners with the coming of warmer weather. By various estimates demand during peak periods this summer could outstrip supply by 10% or several thousand megawatts. That could produce more rolling blackouts like the ones that hit Northern California earlier this year. It is also likely to put strong upward pressure on wholesale electricity prices. Steven Zimmerman managing director of Standard & Poor's Corp. says Mr. Davis and his aides don't have a lot of time to put a cap on the state's financial exposure to the crisis. The credit-rating agency has put the state on credit watch for a possible downgrade which would affect the value of all of California's outstanding public debt. Moody's Investor Service Inc. is also concerned. It said in a recent report that the power crisis could soon seriously threaten the health of the state's economy. Mr. Davis a Democrat and career politician was dealt a bad hand when he took office in 1999. The deregulation plan that sparked the state's electricity crisis was enacted under his predecessor Republican Pete Wilson. But Mr. Davis was slow to react to early signs of trouble this past summer and alarms sounded by members of the state Legislature. By the time Mr. Davis finally sprang into action earlier this year a troublesome power-supply squeeze had escalated into a crisis. In a Jan. 17 declaration of emergency the governor designated the state Department of Water Resources to take the utilities' place as the daily buyer of huge quantities of electricity. His hope: that by making the state the dominant player in California's power sector he would ease electricity producers' concerns about getting paid and give the state enough clout to negotiate lower long-term power prices. Earlier this week Mr. Davis announced final or tentative agreements with 20 power suppliers to furnish the state with a total of 8900 megawatts for periods of as long as 20 years. But the supply situation remains extremely uncertain for this summer when demand probably will top 45000 megawatts. If the state can secure enough power under contract and push down demand through aggressive conservation it might be able to squeak through the summer season. If not it will be forced to keep buying huge amounts of costly power in the cash market. Under deregulation retail electric rates were frozen for several years while wholesale-power costs were free to fluctuate. When the plan was conceived wholesale prices were low and expected to go lower. However a combination of unexpected growth in power demand and a lack of new generating capacity helped produce a supply squeeze. Average wholesale prices more than tripled last year from 1999. And in January those prices were up 10-fold from a year earlier. By then California's two biggest investor-owned utilities -- the Pacific Gas & Electric unit of PG&E Corp. and the Southern California Edison subsidiary of Edison International -- faced imminent financial collapse. They had racked up billions of dollars in wholesale power bills they couldn't afford to pay. As generators began shying away from selling to the two utilities the Clinton administration forced them to sell power into the California market an order left in place during the first weeks of the Bush administration. Still northern California was hit by rolling blackouts on several days in early January. Since then the DWR which does some electricity trading as an adjunct to its main mission of managing the state's giant system of aqueducts and reservoirs has had to learn the ins and outs of power markets on the run. It hasn't been easy. David Mills trading-floor manager for the federal Bonneville Power Administration says the water agency has at times offered to pay $50 to $100 per megawatt hour more than the available market price. They agree to prices that make you wonder says Mr. Mills whose organization markets electricity from federal dams in the Pacific Northwest. You'd at least think they'd check to see what the prevailing price is before throwing out their offer. Mr. Mills says that to cut California some slack he occasionally has instructed his traders to sell at prices lower than the DWR had offered to pay. Ray Hart the water agency deputy director responsible for the power purchasing says he isn't aware of any cases in which the DWR has overpaid. He says his team has been extremely successful by all measures. Ultimately the DWR's trading acumen is far less important than the overall arithmetic of power supply and demand in California. With the price of natural gas that feeds many of the region's generating plants at near record levels and some suppliers reluctant to sell into the troubled California market wholesale electric prices remain stubbornly high and in recent days have again been rising. The Legislature has advanced the DWR about $3 billion from the state's general fund for power purchases. Under emergency legislation passed by the Legislature and signed by Mr. Davis on Feb. 1 the general fund is to be reimbursed from a planned bond sale later this year. But under terms of the emergency law the water agency would have to wrest $2.5 billion a year in revenue from retail electricity rates in order to sell the $10 billion worth of bonds sought by Mr. Davis. Assembly Speaker Robert Hertzberg a Southern California Democrat says the formula was created to ensure that there would be a way to repay the bonds without draining the state's coffers. We didn't want to just open our wallets he says. According to the language of the Feb. 1 law the water agency gets what's left of revenue collected from ratepayers after the utilities pay certain of their own power-supply bills and other expenses. And in their filings with the PUC last month the utilities reckoned under their worst-case scenarios that there would be only $241 million available to the DWR this year. State officials are quietly pushing the PUC to rejigger the formula so that the water department gets more money -- even though that would clash with terms of the Feb. 1 law. Robert Miyashiro deputy director of the Department of Finance says the emergency law was drafted poorly and has led people to believe the DWR only gets the leftover money. He predicts there will be cleanup legislation. At the request of the Davis administration the PUC is considering a plan to use a different revenue-sharing formula than the one in the state law. The proposed new formula was written in close consultation with Mr. Davis's Finance Department says PUC President Loretta Lynch who supports the initiative and is hoping to rush it through. The effort has drawn some opposition. Commissioner Richard Bilas at a recent PUC meeting questioned the legality of the commission attempting to change a formula set by the Legislature. PG&E is even more emphatic since the DWR's extra money could come at the utility's expense. The formula threatens to undo the very financial protections for the utilities that [the new law] attempted to provide the utility said in a recent filing with the PUC. As politicians and regulators wrestle with that issue the Davis administration has taken a step to reduce the outflow of state cash that also seems to conflict with the Feb. 1 law. It was widely assumed that the law required the DWR to buy any electricity the state needed to keep its lights on. However on many occasions the DWR has refused to buy power on the grounds that it was too expensive citing a portion of the new law that urges the agency to hold down costs. The task of covering any remaining shortfall has passed to the California Independent System Operator which manages the state's energy grid and is charged with buying power when necessary to avert shortages. However the ISO doesn't have any power-purchasing money of its own and the major parties it would normally bill are PG&E and Edison whose inability to pay their power bills was the reason the state started buying electricity in the first place. Amid criticism of its stance from generators utilities and Wall Street the DWR says it has started covering more of the utilities' electricity costs. The water agency is now buying 95% to 99% of what California needs in a given day says the agency's Mr. Hart. But increased buying only adds to the uncertainty about the eventual tab. The state's legislative analyst Elizabeth Hill recently recommended that lawmakers hold off considering more than $2 billion in state spending on items ranging from college construction to beach cleanups because of continuing questions about the financial impact of the electricity crisis. Like others Ms. Hill complains that the governor's office and state agencies haven't been forthcoming with information. Indeed the DWR refuses to say precisely how much power it is purchasing and at what prices though it has on several occasions gone back to the Legislature for more money. State officials say that data on its purchasing activities would give suppliers an advantage in continuing electricity-supply contract talks. State Controller Kathleen Connell who is running for mayor of Los Angeles in an April election recently announced plans to post state power-spending information on her department's Web site. But within 24 hours Ms. Connell suspended that plan after discussions with senior Davis administration officials. I feel very strongly that this information should be publicly released says Ms. Connell. I just don't want to do anything that would weaken the state's effectiveness in negotiating. In an effort to more tightly control events the governor obtained legislative approval to abolish the 26-member ISO board which was made up of everyone from utility executives to representatives of consumer groups. He then appointed a new five-member board. To ensure a quick transition the California attorney general threatened the old board members with fines of as much as $5000 each if they didn't immediately relinquish their positions. All did. I was offended at the heavy-handed treatment says Karen Johanson a former ISO board member. One of the first acts of the ISO's new board was to close a meeting about the electricity crisis. The former ISO board routinely held such meetings in public. ISO attorneys say the meeting was largely designed as a private briefing for new board members and that the organization is committed to keeping its deliberations as open as possible. The Wall Street Journal and other news organizations have unsuccessfully challenged the closure in Sacramento state court. Copyright 2000 Dow Jones & Company Inc. All Rights Reserved.,other,informative,3 +RE: Gine Project- Briefing book sections DRAFT,I agree. I am almost through it -- and while there are improvements per our suggestions from the first draft -- there are both substantive and format problems -- i.e. it does not read very well in places aside from substance. Will fax Amr my comments on the text and leave with DC colleagues as I will be up in the Senate on RTOs this afternoon. Thanks. ,project management,formal,3 +Re: Public Policy Contacts for California,I kept your contact list but now I can't find the CV you sent. Would you mind resending? Kevin Scott on 06/20/2001 02:02:00 PM Please respond to kevinscott@onlinemailbox.net To: Steve Kean Jeff Skilling cc: Subject: Public Policy Contacts for California Jeff and Steve ? As you requested I have prepared a list of my preferred public policy contacts?for California.? It is composed of professionals from an array of public private and non-profit backgrounds.? I have worked in some capacity with?each of these people?and most I know quite well.? ? Please call me for further background. ? Kevin 213-926-2626 ? Attachment - Kevin Scott - Preferred Contacts - 6-20-01.doc,business document,formal,3 +Short Biography for Highlands Forum XVII Meeting,Please update my bio to include Human Resources and add some boilerplate on Enron. -----------------,other,formal,3 +,Okay so I didn't know what a DRIP is but now that I do I'm sending this to you. -----------------,other,casual,0 +Confidential Information and Securities Trading,Please respond to ANDREW - 7138536278 Enron Wholesale Services - Office of the Chairman From: Mark Frevert Chairman & CEO Greg Whalley President & COO Mark Haedicke Managing Director & General Counsel Subject: Confidential Information and Securities Trading Enron Wholesale Services ('EWS') maintains official Policies and Procedures Regarding Confidential Information and Securities Trading ('Policies and Procedures') which have been revised as of November 15 2000 to reflect the new EWS structure. These policies and procedures are intended to allow us simultaneously to pursue our diverse businesses and to protect confidential information our reputation for integrity and EWS and its employees from legal liability. You are required to become familiar with and to comply with the Policies and Procedures. The newly revised Policies and Procedures are available for your review on LegalOnline the new intranet website maintained by the Enron Wholesale Services Legal Department. Please click on the attached link to access LegalOnline: You must certify your compliance with the Policies and Procedures within two weeks of your receipt of this message. The LegalOnline site will allow you to quickly and conveniently certify your compliance on-line with your SAP Personal ID number. If you have any questions concerning the Policies or Procedures please call Lance Schuler at extension 3-5419 Mark Haedicke at extension 3-6544 Alan Aronowitz at extension 3-3214 Bob Bruce at extension 5-7780 or Donna Lowry at extension 3-1939.,other,formal,5 +Transatlantic meetings,fyi -----------------,other,casual,0 +Confidential Information and Securities Trading,To:HAEDICKE MARK - 7138536544 ? Enron Wholesale Services - Office of the Chairman ? From:??Mark Frevert Chairman & CEO ??????Greg Whalley President & COO ??????Mark Haedicke Managing Director & General Counsel ? Subject:??Confidential Information and Securities Trading ? Enron Wholesale Services ('EWS') maintains official Policies and Procedures Regarding Confidential Information and Securities Trading ('Policies and Procedures') which have been revised as of November 15 2000 to reflect the new EWS structure. These policies and procedures are intended to allow us simultaneously to pursue our diverse businesses and to protect confidential information our reputation for integrity and EWS and its employees from legal liability. ? You are required to become familiar with and to comply with the Policies and Procedures. The newly revised Policies and Procedures are available for your review on LegalOnline the new intranet website maintained by the Enron Wholesale Services Legal Department. Please click on the attached link to access LegalOnline: ? ? You must certify your compliance with the Policies and Procedures within two weeks of your receipt of this message. The LegalOnline site will allow you to quickly and conveniently certify your compliance on-line with your SAP Personal ID number. If you have any questions concerning the Policies or Procedures please call Lance Schuler at extension 3-5419 Mark Haedicke at extension 3-6544 Alan Aronowitz at extension 3-3214 Bob Bruce at extension 5-7780 or Donna Lowry at extension 3-1939.,other,formal,5 +Lockyer Fires Earthy Attack at Energy Exec,Jeff =20 FYI - Strong and colorful words from a powerful man. =20 Given Lockyer's abilities position and and ambition I would advise build= ing bridges and mending fences while this is still at the taunting stage. = He wants your attention. Knowing him I'd say that a direct and friendly= call from you or Ken today followed by a meeting would go a long way. =20 Kevin 213-926-2626 =20 =20 [IMAGE] [IMAGE] [IMAGE] [IMAGE] News Politics Entertainment music = movies art TV restaurants [IMAGE] Business Travel Marketplace jo= bs homes cars rentals classifieds [IMAGE] Sports Commentary Shop= ping [IMAGE] [IMAGE] [IMAGE] [IMAGE] [IMAGE] [IMAGE] California= [IMAGE] [IMAGE] TOP STORIES * Bishop Asked to Quit for Defying Churc= h * Wide-Ranging Debate Reveals Much Accord * Limit on New Sea Wall= s Urged MORE [IMAGE] [IMAGE] [IMAGE] STORIES BY DATE FOR THIS SECT= ION 5/23 | 5/22 | 5/21 | 5/20 | 5/19 | 5/18 | 5/17 [IMAGE] = DAILY SECTIONS Front Page A Section California [IMAGE] Business = Sports Calendar [IMAGE] So. Cal. Living EditorialsLetters Op/Ed W= EEKLY SECTIONS Health Food [IMAGE] Tech Times [IMAGE] Highway 1 = SUNDAY SECTIONS Book Review Opinion Real Estate [IMAGE] Calendar Mag= azine Travel [IMAGE] TV Times Work Place [IMAGE] [IMAGE] [IMAGE] [= IMAGE] [IMAGE] [IMAGE] Marketplace Find a home car rental job = pet merchandise boat plane or RV classifieds Place an Ad [IMAG= E] [IMAGE] [IMAGE] [IMAGE] [IMAGE] [IMAGE] L.A. Times Subscription Ser= vices Subscribe Change of Address Vacation Stops Suspend Delivery = College Discount Gift Subscriptions Mail Subscriptions FAQ [IMAG= E] [IMAGE] [IMAGE] [IMAGE] [IMAGE] [IMAGE] Print Ads from the Newspape= r See this week's ads [IMAGE] [IMAGE] [IMAGE] Print Edition Oran= ge County Valley Ventura County National Community Papers [IMAG= E] [IMAGE] [IMAGE] [IMAGE] Books Columnists Crossword Education = Food Health Highway Horoscope Lottery Magazine Obituaries Readi= ng by Real Estate Religion Science So.Cal. Living Special Report= s Sunday Opinion Tech Times Times Poll Traffic Weather Workplace SI= TE MAP [IMAGE] [IMAGE] [IMAGE] SHOP 'TIL YOUR LAPTOP DROPS [IMA= GE] [IMAGE] [IMAGE] [IMAGE] [IMAGE] Shopping [IMAGE] Search Prod= ucts Stores [IMAGE] [IMAGE] [IMAGE] [IMAGE] [IMAGE] [IMAGE] = =09[IMAGE]=09[IMAGE] Wednesday May 23 2001 | [IMAGE]Print this story [I= MAGE] Lockyer Fires Earthy Attack at Energy Exec By JENIFER WARREN Ti= mes Staff Writer SACRAMENTO--In a dramatic escalation of energy cr= isis rhetoric California Atty. Gen. Bill Lockyer this week suggested the = chairman of a Houston-based power company should be locked in a prison cel= l with an amorous tattooed inmate named Spike. Lockyer who is inve= stigating whether energy firms have manipulated prices on the wholesale el= ectricity market made the comment in an interview with the Wall Street Jo= urnal that appeared Tuesday. I would love to personally escort [En= ron Corp. Chairman Kenneth] Lay to an 8-by-10 cell that he could share wit= h a tattooed dude who says 'Hi my name is Spike honey' Lockyer said. = Enron spokesman Mark Palmer called the comment counterproductive rh= etoric that does not merit a response. But other industry repres= entatives denounced the remark as outrageous especially because neither= Lockyer's office nor any investigative panel has filed charges against En= ron or other companies. You'd expect that the state's chief legal c= ounsel would file charges first and make public statements second said G= ary Ackerman of the Western Power Trading Forum an association of energy = producers and traders. We're very disappointed with his choice of words = which don't exactly fit the profile of his office. In an interview = Tuesday Lockyer said he decided to ratchet up the commentary to put [e= nergy companies] on notice that we are not afraid of them and have the w= ill to prosecute. What I'm trying to do is let these economic buc= caneers understand that if we catch them they're going to be prosecuted= Lockyer said. Just because they're multimillionaires and run big corpora= tions it doesn't provide them with immunity. The attorney general = is investigating whether power company officials tried to maximize profits= through illegal manipulation of prices on the wholesale energy market. S= everal panels including a state Senate committee and the California Publi= c Utilities Commission are conducting similar probes. On Tuesday L= ockyer announced that three power companies have agreed to turn over docum= ents subpoenaed months ago by his investigators. The attorney general went= to court to obtain the documents after the companies failed to meet a Mar= ch 19 deadline to hand them over. Lockyer said the forthcoming docu= ments would help his office as it sifts through mountains of evidence in s= earch of possible violations of antitrust or unfair business practice laws= . Evidence is accumulating that certainly infers illegal activity= Lockyer said. But we need to make sure it's compelling and clear enough = that you can convince a jury. Lockyer said he singled out Enron's = chairman because the Houston company is the world's largest energy trader. = At least one observer found Lockyer's comments refreshingly candid.= Harry Snyder a senior advocate of Consumers Union said Let Lockyer be= Lockyer. * * * Times staff writer Dan Morain contributed to this s= tory. Search the archives of the Los Angeles Times for similar stories = about: Bill Lockyer Enron Corp Kenneth L Lay Utilitiy Rates En= ergy - California Utilities - California Electricity . You will not = be charged to look for stories only to retrieve one. =09 News Politics Entertainment music movies art TV restaurants = [IMAGE] Business Travel Marketplace jobs homes cars rentals cla= ssifieds [IMAGE] Sports Commentary Shopping [IMAGE] =09[IMAGE]=09 G= et Copyright Clearance Copyright 2001 Los Angeles Times Click for permi= ssion to reprint (PRC# 1.528.2001_000043205) =09 [IMAGE] =09,media & press,casual,3 +"Barton,Tauzin letter to Gov. Davis",-----------------,government & politics,neutral,3 +"Re: FERC course on for Thurs, July 26, 1-4 p.m.",Great news. With respect to the Commissoners I think it makes sense to go back through Ellen and ask if she could set up meetings with a few commissioners ater the staff briefing. wgramm on 07/17/2001 03:23:19 PM Please respond to To: Jerry Ellig Steve Kean cc: Susan Dudley Subject: FERC course on for Thurs July 26 1-4 p.m. Susan got it done -- it'll be Thursday July 26 1-4 p.m. at FERC (a room on the 3rd floor?). Susan has talked with Bill Albrecht. He'll probably be coming in on Wed. p.m. Steve any ideas about a Commissioner strategy? (invite them to attend if the FERC folks agree ask the FERC folks to do the inviting ask the FERC folks to help set up meetings afterwards or a follow on if they like what we do and think it useful for Commissioners try to do a walkaround -- that is offer to have Jerry Bill Susan visit commissioners individually Friday a.m. after the course or Thursday a.m. before the course?) Wendy Wendy Gramm Regulatory Studies Program Mercatus Center George Mason University 703-993-4884,energy infrastructure,formal,3 +Bloomberg story,Any follow up questions or India press about the bloomeberg story I sent you yesterday?,media & press,formal,3 +Confidential issues,As requested I investigated potential government approvals or potential political interventions if India assets/investments are sold. My understanding from the India CFO (in response to my query about approvals necessary for any sell-down like we are working on for Dabhol) is that it depends to whom we sell. If we sell to an Indian company then the Reserve Bank of India (RBI) must approve taking dollars out of India. If a sale is made outside India no Indian approvals are necessary. There are however many other approvals that would need to be obtained -- specifically from lenders and counterparties pursuant to project documents. I have not analyzed these financial-related approvals.,other,formal,3 +Re: executives,Jeff Shankman (COO of Enron Global Markets) is interested in going and would like to see the schedule. I told him you would send it to him. Jeff can also help us get our message across on the problems in California's power markets (Dasovich can fill you in). Also John ( Woody) Wodraska managing director of Azurix is interested in attending. Please get in touch with him. I haven't heard from Stan yet. Susan M Landwehr 08/07/2000 10:26 PM To: Richard Shapiro/HOU/EES@EES cc: Elizabeth Linnell/HOU/EES@EES Steven J Kean/HOU/EES@EES Joe Hillings/Corp/Enron@Enron Carolyn Cooney/Corp/Enron@Enron Subject: executives Rick--just a reminder that I am not aware of anyone from the executive ranks that are interested in attending the democrat convention at this point. I believe that you and Steve Kean had asked the question about both conventions to those folks but I wanted to make sure that we had covered the bases. Stan Horton is the president of INGAA this year and they are having an event on Sunday the 13th but I have not been made aware of whether he will be attending and whether he would be interested in partcipating in any of Enron's other events.,other,formal,3 +Something to shoot at--California,-----------------,other,casual,0 +Confidential Memo For Thursday Meeting,,other,formal,3 +Re: VP Candidate Greg Shea,OK by me. From: John J on 04/30/2001 11:30 AM Sent by: Kimberly Hillis/ENRON@enronXgate To: Wade Joannie Williamson/Corp/Enron@ENRON Cliff Baxter/ENRON@enronXgate James A Hughes/ENRON@enronXgate Steven J Kean/NA/Enron@Enron Mike McConnell/HOU/ECT@ECT Rebecca McDonald/ENRON@enronXgate Mark Metts/Enron@EnronXGate Stephanie Harris/ENRON@enronXgate Maureen McVicker/NA/Enron@Enron Loretta Brelsford/ENRON@enronXgate Dolores Fisher/Enron@EnronXGate Sherri Sera/Corp/Enron@ENRON Jana L Connie Blackwood/ENRON@enronXgate Mrudula Cliff Baxter/ENRON@enronXgate Mark Frevert/ENRON@enronXgate Nicki Daw/ENRON@enronXgate Lucy Marshall/Enron Communications@Enron Communications Kathy McMahon/NA/Enron@Enron Jeremy Blachman/HOU/EES@EES Philippe A Bibi/ENRON@enronXgate Raymond Bowen/ENRON@enronXgate Michael R Brown/LON/ECT@ECT Harold G Buchanan/HOU/EES@EES Rick Buy/ENRON@enronXgate Richard Causey/Corp/Enron@ENRON David Cox/Enron Communications@Enron Communications David W Delainey/HOU/EES@EES James Derrick/ENRON@enronXgate Steve Elliott/Enron Communications@Enron Communications Andrew S Fastow/ENRON@enronXgate Ben Glisan/HOU/ECT@ECT Kevin Hannon/Enron Communications@Enron Communications Rod Hayslett/ENRON@enronXgate Stanley Horton/Corp/Enron@Enron Louise Kitchen/HOU/ECT@ECT Mark Koenig/Corp/Enron@ENRON Kenneth Lay/Corp/Enron@ENRON Dan Leff/HOU/EES@EES Danny McCarty/ET&S/Enron@Enron Jeffrey McMahon/ENRON@enronXgate Mark S Muller/HOU/EES@EES Cindy Olson/Corp/Enron@ENRON Lou L Pai/HOU/EES@EES Ken Rice/Enron Communications@Enron Communications Matthew Scrimshaw/LON/ECT@ECT Jeffrey A Shankman/ENRON@enronXgate Jeffrey Sherrick/ENRON@enronXgate John Sherriff/LON/ECT@ECT Jeff Skilling/Corp/Enron@ENRON Marty Sunde/HOU/EES@EES Greg Whalley/HOU/ECT@ECT Thomas E White/HOU/EES@EES G G Garcia/ENRON@enronXgate Susan Skarness/ENRON@enronXgate Karen K Heathman/ENRON@enronXgate Sharron Westbrook/Corp/Enron@ENRON Kay Chapman/HOU/EES@EES Bridget Maronge/ENRON@enronXgate Inez Dauterive/HOU/ECT@ECT Carol Ann Brown/Enron Communications@Enron Communications Cindy Stark/Corp/Enron@ENRON Rosalee Fleming/Corp/Enron@ENRON Tori L Wells/HOU/ECT@ECT Cathy Phillips/HOU/ECT@ECT Sue Ford/ENRON@enronXgate Karen Owens/HOU/EES@EES Dorothy Dalton/Enron Communications@Enron Communications Mercedes Estrada/Enron Communications@Enron Communications Christina Grow/ENRON@enronXgate Lauren Urquhart/LON/ECT@ECT Laura Taylor/ENRON@enronxgate Judy G Smith/HOU/EES@EES Suzanne Danz/Corp/Enron@ENRON Peggy McCurley/ENRON@enronXgate Marsha Schiller/ENRON@enronXgate Tammie Schoppe/HOU/ECT@ECT Kimberly Hillis/ENRON@enronXgate Jennifer Burns/ENRON@enronXgate Sharon Dick/HOU/EES@EES Beverly Aden/HOU/EES@EES Kathy Dodgen/HOU/EES@EES Leah Rijo/Enron Communications@Enron Communications Kathy Campos/ENRON@enronXgate Julie Armstrong/Corp/Enron@ENRON Kelly Johnson/Corp/Enron@ENRON Rebecca Carter/Corp/Enron@ENRON cc: Subject: VP Candidate Greg Shea I would like to pursue an offer to Mr. Shea prior to the next Executive Committee meeting on May 7 2001. Please forward your comments or questions by Tuesday May 1 2001 so that I can extend the offer by Wednesday May 2 2001. You will find attached the recommendation letter and his resume. Regards John Lavorato Tammie Schoppe on behalf of John Lavorato.,other,formal,5 +[Second Delivery: WPTF Friday Amen Burrito],Sorry about this gang but my new computer messed up the e-mail list. It's 4 am and I think I have fixed it. Maybe. Bear with me if you are getting this for the second time this morning. gba X-Mozilla-Status2: 00000000 Message-ID: <398A81DA.E883D290@idt.net> Date: Fri 04 Aug 2000 01:42:26 -0700 From: Gary Ackerman Reply-To: foothi19@idt.net Organization: Foothill Services X-Mailer: Mozilla 4.74C-CCK-MCD {C-UDP EBM-APPLE} (Macintosh U PPC) MIME-Version: 1.0 To: webmaster Subject: WPTF Friday Amen Burrito Content-Type: multipart/alternative THE FRIDAY BURRITO ...more fun than a fortune cookie and at least as accurate. Everyone is getting into the act. When I started this gig I was the only guy in town writing to folks like you about the power industry in California. I wrote about what?s new what?s happening and all the important stuff. This week Governor Gray Davis decided to write his own Burrito. His epistle got more press than mine but why is he muscling in on my turf? Not to be outdone PUC President Loretta Lynch released a report which looks into every facet of California?s power business. No stone left unturned. I?m telling you there isn?t enough room in this business for all of us. They need to clear out. With people like Herr (Hair?) Peace Governor I?m-Not Mr.-Rogers Davis and Let?s Do Lynch who needs a Friday Burrito? They re-define our reality each week with mind-numbing aplomb. For example starting in early June the PX was ordered to compete for business against other Qualified Trading Vehicles. Then two weeks later the Energy F_hrer legislated that idea to an early death which kept the status quo for at least one year. This week the PUC approved 5-year bilateral deals for PG&E and SCE thereby opening the PX to competition and emasculating the PX?s Block Forward Market. Zip bam boom. I can?t wait to see what next week will bring. I hear Senator Bowen is holding Committee hearings on re regulating the industry and the Governor?s new Energy Security Council will meet to decide six things: What?s for lunch? Who will sit at the head of the table? Does anyone have good seats for next week?s Democratic convention? Is there anyone we haven?t indicted yet in the power industry? Who will crank up the air conditioning in this room? It?s getting too warm. Then they will collect data from innocent businesses under subpoena ignore the facts and publish a report. It makes one want to take a deep breath and inhale the scented fumes of democracy. You know I can?t think about where to begin so let?s start somewhere. >>> Things on the Island of California @@@ Is there anyone left at SDG&E with a brain? @@@ The PUC issues its scathing report @@@ The ISO invokes $250 price caps. Duh! >>> Things at the throne of FERC @@@ Amen for the Morgan Stanley Order >>> Odds and Ends (_!_) >>> Things on the Island of California @@@ Is there anyone left at SDG&E with a brain? Well the answer very clearly is no. I have been astounded by repeated attempts of SDG&E?s most senior people to ape humans but instead they mimic apes. Consider the following. First they waltz their default customers into the summer with little of no protection from price spikes in the wholesale market. Forgivable in that it is human to err. The prices skyrocket in June and they start looking for who to blame. _Must be them damn independent generatorsO say their managers. Gary Cotton informs the ISO Governing Board that hedging SDG&E?s position in the Block Forward Market wouldn?t have made any difference. There?s one nobel laureate who missed his prime. Next under pressure they ask for help from suppliers and anyone else who will assist the utility and their customers. Nine offers show up at their table and they can?t choose any of them. Again Mr Cotton tells his fellow ISO Governing Board members that these things take time and we don?t to rush since there are many legislative barriers and well the surfing was good this week so why spoil it? Now they are in a panic because the Energy F_hrer is visiting old ladies living in trailer parks advising them not to pay their SDG&E electricity bill and to continue to operate their air conditioners. SDG&E puts a full page ad in the local newspaper telling everyone that SDG&E is doing everything it can to lower their electric bills including asking the ISO for a $250 price cap but the public can help by calling the ISO [address and phone number provided in the ad] and urging them to lower the cap. I always thought the location of the ISO was a State secret for security reasons. No secrets in San Diego. But we are not done. No sir we are not. Those buffalo heads who run that company decide they will win a gold star on their collective foreheads and implement one of the four resolutions passed by the Electric Oversight Board. The one they pick is to petition FERC on an expedited basis to cap at $250 the price at which sellers may bid energy or ancillary services into the ISO and the PX. The primary reason is that Western power markets are not workably competitive. In other words they want FERC to set a max price on what generators can sell in addition to the price limit at which the ISO can buy! What I find most astounding about this double talk is that SDG&E continues to collect tons of money from the sales of regulatory must run energy into the PX. These are sales from their stranded assets. Their grief hasn?t abated their greed. So to recap SDG&E missed the boat on price hedging failed to win consumer confidence in public meetings asked for help from suppliers and did nothing in response then filed at FERC to cap the sale price because the wholesale market into which they sell (over-priced?) energy is not workably competitive. Too much time in the direct sun light. >>> Things on the Island of California @@@ The PUC issues its scathing report The PUC report released yesterday is a gem with which I have not spent enough time. I only read the Executive Summary and that only because our counsel Dan Douglass forwarded me a copy. Let me pick out some of the gems in President Lets Do Lynch?s burrito. I would recommend reading the whole text if you have time and if you seek perverse entertainment. _California is experiencing major problems with electricity supply and pricing caused by policies and procedures adopted over the past ten years. _ Since June wholesale prices for electrical power in California have increased on average 270% over the same period in 1999 resulting in over $1 billion in excess payments for electricity. _Hot weather aging power plant and transmission infrastructure and dysfunctional bidding behavior in the wholesale power markets combined to drive prices up ... _Because of serious market defects and tight supply of electricity purchasers of California power will likely pay billions more in electricity costs this year. Moreover these price increases do not necessarily fund new investments in electricity supply or delivery reliability - they may flow solely to power producer profit margins. _Despite the Electricity Oversight Board's legislative mandate to oversee those institutions we have been unable to obtain [bid] data. Nevertheless ... we believe enough evidence of questionable behavior exists that the Attorney General should conduct an investigation into these statewide market practices coordinating with other State agencies including the PUC and the EOB. Such an investigation would provide the factual foundation that California policy makers and regulators need to recover any illegally obtained profits. _A momentous consequence of California's attempt to create a market in electricity is that the federal government now regulates California's electric system. Washington D.C. now controls pricing decisions directly at the wholesale level and indirectly at the retail level and to the extent that supply incentives are correlated to prices Washington D.C. now affects California's ability to attract new investment in power plants. _Past administrations' willingness to cede the State's authority to the federal government combined with the legislative creation of two non-public supervisory organizations that have no duty to protect the public or consider the retail customer. The Independent System Operator (ISO) and the Power Exchange (PX) the nonprofit private corporations that operate the State's transmission system and control wholesale pricing policies are governed by boards whose members can have serious conflicts of interest. Some of these board members or their companies financially benefit from higher prices in electricity markets. Neither of these private organizations is accountable to the State or its consumers .... _Despite the federalization and the fragmentation of the State's electric services the State of California should protect its businesses and consumers from cartel pricing collusive behavior inadequate power plant maintenance and lack of market planning for adequate electricity supplies. _California consumers and businesses deserve to know in advance - as San Diegans did not this summer - how and when the price of an essential service like electricity will double. California is now largely constrained by federal mandates from providing comprehensive retail price relief as long as wholesale prices remain so high. If California tried to re-impose a price freeze in San Diego now federal regulators would likely prevent that action. ... Short-term price relief however cannot resolve market gaming or fundamental wholesale pricing problems controlled by federal regulators. _We have been precluded from obtaining the data necessary to know if the ISO and PX failed to detect manipulation and gaming on several fronts. We do not know how market players acted in price offering and bidding and scheduling. The FERC has just announced an inquiry into national pricing and energy market issues. California should not wait for national findings before it investigates California market practices. We recommend that the California Attorney General immediately subpoena relevant records and data to determine the pricing and offering behavior of market participants the actions of the ISO and its board members and the actions of generators in supplying California's energy needs. _Ten Actions to Consider or Act Upon to Prevent Current Electricity Problems From Spreading in 2001: ... 2. Create a California Energy Council modeled on the National Security Council to unify State action to resolve energy problems and to perform integrated energy planning 3. Ask FERC for extended wholesale price cap authority to moderate California wholesale market pricing 4. Ask FERC to recognize the defects in the California and western regional markets and find that no competitive market exists in California power markets ... 8. Eliminate potential conflicts of interest in ISO/PX stakeholder boards 9. Improve California's ability to obtain ISO and generator data and enhance the State's enforcement capability for power plant maintenance price manipulation and generation gaming consistent with protection of proprietary business information 10. Provide the EOB with effective enforcement ability and additional oversight authority for the ISO and PX. _Ten Issues to Consider or Act Upon Within the Next Six Months: ... 4. Streamline state power plant siting procedures consistent with environmental requirements and prioritize applications to advance clean BACT+ power plant proposals. 5. Institute use-it -or- lose-it permitting power plant licensing and emissions credits rules to ensure power plants get built ... 8. Reform PX pricing protocols and structures to lower wholesale and retail prices and reduce excess profitsO I told you I don?t need to write a Burrito anymore. The Democrats in Sacramento are doing that for me. Welcome comrade. >>> Things on the Island of California @@@ The ISO invokes $250 price caps. Duh! It is really hard to describe the drama of an ISO Governing Board meeting especially when our favorite topic arises. It seems the only time the Board becomes animated is when one of three issues are on the agenda: price caps FTRs and priorities for software enhancements. Otherwise its pretty much hum-drum. %Round and %round we went once again. A few more forced votes tipped the scale in favor of the cap. There were 15 yes votes which included a forced yes vote from our friend Jerry Toenyes by order of Secretary of Energy Mr. Richardson. [Jerry did you realize that the last letters of your name could be re-arranged to spell _NO ET YESO? Kind of a french thing.] I?m sorry about that vote Jerry. You still go in my book as one of the brave and bold for standing up to that sort of intimidation for so long. Your picture in the SF Chron said it all. The brave souls who stood tall and voted NO included David Parquet (Enron) Jan Smutny-Jones (IEP) Barbara Barkovich (CLECA) Caolyn Kehrein (CMA) Dan Kirshner (EDF) and Stacy Roscoe (Procter & Gamble). Now I must admit that Dynegy?s Greg Blue did help by voting a Texas No spelled _A-B-S-T-A-I-NO. I have instructed Dynegy trader Dave Francis in Houston to work with Greg to correct that problem. We?re going to work things out. The Energy F_hrer addressed the Board again. I didn?t mind that I only had a few brief very brief moments to address the Board and Herr (Hair?) Peace got over 20 minutes. That didn?t bother me at all. He did more damage to himself in 20 than I could do in 2. He blasted away at everyone who opposed him. He pined about Camden quitting the Board. He said he knew how prices and markets work that it isn?t the way those academic egg-head FERC-loving economists tell you who pray to the gods of competition. He lambasted WAPA for withholding generation to protect fish and wildlife (what was that all about?). He predicted that on Thursday?s PUC meeting he and all the other powerful Democrats Republicans and angry citizens of San Diego would demand that the PUC impose a rate cap on retail electric rates in San Diego that are just and reasonable (it didn?t happen). And on and on and on. This man is very delusional. He believes that Steve and only Steve Peace can save the world. He believes that political will trumps judicial quasi-judicial or independent Board actions. This man makes relevant all the abstract musings of the philosopher Friedrich Nietzsche (1844-1900) ... The will to power the ?bermensch the transvaluation of values etc. But we are getting under (uber?) his skin with the help of the press. Wednesday afternoon I called Commissioner Dick Bilas to see if he thought whether the next day?s PUC meeting was going to be a roll over. Dick said he got a call from Peace and that Peace said he would not come to the meeting. Apparently Peace had received a lot of press and all of it bad. That?s the thin line of freedom which keeps tyranny at least one step away from our front door. >>> Things at the throne of FERC @@@ Amen for the Morgan Stanley Order And now the good news. You deserve this. FERC gave the California market a little wiggle room last Friday. FERC issued a last minute reply to the complaint by Morgan Stanley Capital Group relating to the ISO?s intent to lower the price cap. FERC denied the complaint but they didn?t waste time with an Order to simply deny a complaint. FERC danced on the head of the ISO and pulled the bite out of the price cap. Here are some excerpts: _We accepted this [Amendment 21] not because it was a cap on sellers? prices but because it would promote order and transparency in the market by clearly telling sellers of the maximum price the ISO was willing to pay and allowing sellers to make informed economic choices on whether to sell in the ISO market or to sell elsewhere... _ ... The ISO has no more or less ability to procure capacity and energy than any other buyer of these services ... If the ISO is unable to elicit sufficient supplies at or below its announced purchase price ceiling (because generators are free to sell elsewhere if they choose) it will have to raise its purchase price to the level necessary to meet its needs. ... Therefore an increase in out-of-market (OOM) calls for generation may be necessary to maintain system reliability. Because the current payment for OOM is not subject to a maximum purchase price the resulting overall payments may be higher. _To the extent the ... ISO Board resolution contemplates implementing a directive that generators must bid their capacity into the ISO markets under any circumstances (e.g. when system load exceeds 38000 MW) such a requirement is not permitted by our ... Order and the ISO tariff. ... Future implementation of the ISO Board resolution with regard to a requirement to sell would require significant revisions to the ISO market rules. Such market changes could not become effective absent a corresponding amendment to the ISO tariff which would have to be filed under section 205 of the FPA.O Well. What do you think about that? Just wait. Here is what the sleeping bear Commissioner Hebert said in his concurring remarks: _Getting to the bottom of the problem in my view requires us to begin a proceeding to rescind our approval of the ISO as the operator of the California grid. The record supports such a move. ... A memorandum to the ISO from a stakeholder who resigned from the governing board eloquently brings to our attention repeated attempts to undermine the independence of the ISO. The memorandum also thoughtfully outlines consequences to the markets of a return to %command and control.? _Because these allegations come from a non-market participant especially should we take heed. We must also take notice of the public pressure on the Board to compromise its independence.O Amen brother amen. >>> Odds and Ends (_!_) As you can imagine this week like an endless string of weeks before this has been interminable. I get about three phone calls a day from press reporters very little of which ever sees print. My shtick is just too complex for casual readers. But I do notice that the reporters are asking better questions. The public is becoming more savvy. The information flow is moving in our favor and will disarm the forces of evil in about 10 years. I have other problems on my mind. I am working on a new computer system. Really it?s just an upgrade of an older computer that is a bit faster than the laptop I tried to upgrade very unsuccessfully. As a result of the all the new hardware and software I purchased my office looks like a war zone with an odd mix of PUC service copies computer documentation and diskettes laying all around. Quite a mess. Prepare for the future. Our next general meeting is scheduled for Thursday and Friday October 5 and 6 at Moro Bay. Barb Ennis will prepare a blurb for us in next week?s Burrito about room reservations timing golf etc. Our guest speakers will include MSC Chairman Professor Frank Wolak who will talk on the subject of his choice Ms. Irene Moosen of Grueneich Resource Advocates who will make a presentation on the distributed generation case before the PUC and William Freddo of PG&E National Energy Group who will give us some education on operating a power plant inside the New England ISO. Now for your daily bread provided this week by Dan Douglass. Last week we had a joke about Catholics. This week it?s agnostics. ===================== An atheist was taking a walk thru the woods admiring all that the accident of evolution had created. What majestic trees! What powerful rivers! What beautiful animals! he said to himself. As he was walking alongside the river he heard a rustling in the bushes behind him. As he turned to look he saw a 7 foot grizzly bear charging towards him. He ran as fast as he could up the path. He looked over his shoulder and saw that the bear was closing in on him. He tried to run even faster so scared that tears were coming to his eyes. His heart was pumping frantically as he tried to run even faster but he tripped and fell on the ground. He rolled over to pick himself up and saw the bear right on top of him raising its paw to kill him. At that instant he cried out Oh my God! And time stopped. The bear froze. The forest was silent. The river even stopped flowing. A bright light shone upon the man and a voice out of the sky said You deny my existence all these years teach others I don't exist and even credit my creation to a cosmic accident and now do you expect me to help you out of this predicament? Am I to count you as a believer? The atheist ever so proud looked into the light and said It would be rather hypocritical to ask to be counted as a believer after all these years but could you make the bear a believer? Very well said the voice. And the light went out the river flowed the sounds of the forest continued and the bear brought both paws together bowed his head and said Lord I thank you for this food which I am about to receive. ================== Amen. And have a great weekend. Oh and thanks to all of you who sent me happy birthday wishes. It was very much appreciated. KSB gba - att1.htm,other,casual,0 +RE: Refund Cases Timelines--Confidential Atty Client Work Product,The DC Team (Linda Robertson Ray Alvarez) attended and reported on today's prehearing conference in the California case. The schedule has moved back about a full month mostly due to the time required by PX and CAISO to produce mitigated market clearing prices and to re-run settlements based on those revised prices. Testimony by Enron on what it is owed is now not due until October 26. In addition to adopting this schedule the ALJ reported that the FERC likely not rule on petitions for rehearing of the July 25 order until October 15 2001. A revised schedule is attached. (To see how it has changed you can toggle Track Changes | Hightlight on Screen on and off) The PNW case is moving along on schedule changes attached are corrections rather than actual changes to the schedule. Notably in today's case Seattle and Tacoma waived all cross on TFG witnesses including Enron's. Alan Comnes ,other,formal,3 +"RE: Star Wars Event - Monday, 6/11/01",Thanks I will attend. Vince ,other,casual,1 +RE: ticket,Pani Urszulo Czy to jest Air France? Vince ,personal & social,casual,0 +,Please put on my calendar and call to confirm my attendance. thanks -----------------,calendar & scheduling,casual,3 +Re: Organizational Changes,Mary -- see attached Stacy Guidroz@ENRON_DEVELOPMENT 09/22/99 09:36 PM To: Steven J Kean@EES cc: Subject: Organizational Changes The following is a message from Sanjay Bhatnagar: Organizational changes in India (South Asia) Region which includes India Bangladesh and Sri Lanka. The team is lead by Sanjay Bhatnagar CEO. Wade Cline has joined the team as the Chief Operating Officer. Other management appointments include: (1) Bobby Farris will lead all development efforts in the region (2) Raj Thapar will lead the M&A efforts (3) Bangladesh will continue to be managed by David Howe who will report in to Bobby Farris (4) P. Sreekumar leads up the accounting function as Chief Accounting Officer assisted by Carol Hoes in Houston (5) Neil McGregor heads up the Dabhol Power Company as its President and reports directly into Sanjay and Wade (6) Communication is currently being lead by Sanjay (7) Ranabir Dutt leads the Finance Team,other,formal,3 +Re: Follow Up On California Information,Alan and I spoke about point #2 on the comparison benchmark. At this point we may be able to just say it is based on a comparison of the contracts with today's forward market and gloss over the exact forward curve we used. Of course if there is a way to come up with a similar number using publicly available data (or if we are willing to provide our numbers if pressed) then all the better. In the mean time should I hold off on using the $13.8 billion number until I hear back from you about the conversation with Steve? Also do I understand correctly from Alan that the $13.8 billion figure is NOT comparing the long term contracts California signed with recent spot market prices but rather is a comparison of the contracts to our present forward pricing curves? From you e-mail it is the latter I take it. As to point #1 on the deal last year we just need a similar back of the envelope calculation on what California could have saved had California taken us up on the offers we and others made. Any guidance on where to get that would be most helpful.,other,formal,3 +RE: Report for Prof. Duffie,Amitava Let's talk about it on Monday. Vince ,business document,casual,3 +EES Associate and Analyst Mid-year 2001 PRC - SAVE THE DATE,-----------------,other,formal,0 +Ross Perots EMS company,We can create significant mutual benefit by partnering with a firm which is focussed on developing IT systems for bulk power systems: We need to take our deregulation model to the next level of detail by having IT solutions which will support our view of how the market ought to work. The IT firm would benefit from our access to the policy makers (domestic and international) whose decisions will make the IT firm's systems either successful or obsolete. Call me if you would like to discuss. -----------------,other,formal,3 +Enrons Global Asset Management Conference,I think you or someone in your group should cover this. The attendees are operations focussed and may be interested in issues such as siting interconnection and environmental issues. Also from a more macro perspective what kinds of demands the new industry structure may place on operators -- the importance of flexibility in asset operations (ie the premium the market will place on quick response) or the challenges of different scheduling regimes between the gas and power markets. -----------------,other,formal,3 +Re: Senator Dunn Hearing,Can you circulate the link to Cal TV again? Scott Govenar on 07/16/2001 01:58:41 PM Please respond to To: Ban Sharma David Leboe Eric Letke Jennifer Thome Ken Smith Bev Hansen Hedy Govenar Miyung Buster Janel Guerrero Robert Frank Mike Day Leslie Lawner Harry. Kingerski@enron. com Karen Denne Steven Kean Alan Comnes Susan J Mara Paul Kaufman Jeff Dasovich Jim Steffes Rick Shapiro cc: Subject: Senator Dunn Hearing THE SELECT COMMITTEE TO INVESTIGATE PRICE MANIPULATION OF THE WHOLESALE ENERGY MARKET WILL MEET ON WEDNESDAY JULY 18 AT 9:30 A.M. IN ROOM 3191 TO REVIEW COMPLIANCE WITH SUBPOENAS FOR DUKE DYNEGY RELIANT AES NRG AND WILLIAMS.,other,formal,5 +Angle Master Invention,,other,neutral,0 +<> - JB 004,-----------------,finance,formal,3 +"Speak to DFSC - Sharon Murphy, per Gary von Fischer, in 49C1",Moved to 11:00 per Larry Trybus Please address issues in 889 OASIS in addition to deregulation material You will have an hour to speak,other,formal,3 +CONFIDENTIAL (The Manifesto),To: Ad Hoc Committee Dear Colleague Several of you have pointed out that the Manifesto is a bit long. We will endeavor to shorten it somewhat which will be possible as there is some duplication however more importantly we plan to add an executive summary which will be the editorial link version that most will read. I hope to get that out by 5:00 PM today. Thanks David David J. Teece Director Institute of Management Innovation and Organization F402 Haas School of Business #1930 University of California Berkeley Berkeley CA 94720-1930 Phone: (510) 642-1075 Fax: (510) 642-2826,other,formal,3 +Enron Mentions,California Adopts Variable Pricing Raising Ire of Generators Traders The Wall Street Journal 10/30/00 Enron Offers Cash To Help Azurix Take Itself Private The Wall Street Journal 10/30/00 Companies: U.S. Companies The Wall Street Journal Europe 10/30/00 Wessex switch likely The Times of London 10/28/00 Enron water unit could go private under loan plan Houston Chronicle 10/28/00 Quietly Bush's team talks about transition Plenty of folks in Austin would love to follow Bush to D.C. Austin American-Statesman 10/28/00 Dynegy: Calif Price Caps Will Compromise Elec Reliability Dow Jones Energy Service 10/28/00 SEC Filing Shows 3rd Parties Contacted Enron About Azurix Dow Jones News Service 10/27/00 Enron offers to buy out Azurix Financial Times October 27 2000 California Adopts Variable Pricing Raising Ire of Generators Traders By Rebecca Smith Staff Reporter of The Wall Street Journal 10/30/2000 The Wall Street Journal A4 (Copyright (c) 2000 Dow Jones & Company Inc.) LOS ANGELES -- In the latest attempt to fix California's troubled deregulated energy market officials adopted a unique variable-pricing plan that already is being criticized by power generators and traders as unworkable and praised by utilities and consumers as much needed protection against gouging. Under the plan adopted late last week by the governing board of the California Independent System Operator or ISO a quasipublic agency responsible for maintaining electricity reliability in the state the cap on wholesale power will be reset hourly from about $65 per megawatt hour at low-demand times to no more than $250 an hour at periods of high demand. It was the third time this year that officials effectively lowered the price cap on wholesale electricity in a bid to contain -- so far unsuccessfully -- soaring total power costs. The move underscores the chaotic atmosphere prevailing in California's power market after a two-year-old experiment in deregulation has come undone. In other deregulated markets such as New York and New England prices are capped at $1000 per megawatt hour which are intended to be low enough to prevent market abuse but high enough to give generators incentive to build new plants. California's system was supposed to work the same way. But because utilities in California divested themselves of the bulk of their plants but weren't allowed to lock in fixed-price supply contracts unlike in the other markets merchant generators have had much greater sway over prices here on the spot market where most power trades. During the first nine months of the year the average price of wholesale electricity was $90 per megawatt hour in California triple the price of a year earlier. Even on cool days in October the price generally has remained above $100 per megawatt hour. California utilities have lost money on those power purchases because their customers' rates are frozen at $54 to $65 per megawatt hour far lower than the average price utilities have had to pay for that power. The deficits exceeded $5 billion in the June-to-September period. California utilities buy the power used by their customers from the state-sanctioned auctions administered by the ISO and a sister organization the California Power Exchange. In New York and New England by comparison less than 20% of power is purchased from the spot markets because utilities there were able to sign the fixed-price contracts which California utilities weren't allowed to do. The price-cap decision passed last week by a vote of 13 to 10 primarily with support from utilities and board members representing consumer interests. It was pushed aggressively by Pacific Gas & Electric Co. and Southern California Edison the state's two big investor-owned utilities that have gotten caught in the price-spike vise this year. Some ISO members say they had no choice but to support the measure to ratchet down price caps. We're going after the windfall profits said S. David Freeman general manager of the Los Angeles Department of Water and Power who voted for the measure. What we've got now is a market accustomed to ripping off the consumer. This can't be allowed to go on. But other experts said the hasty measure may make California's problems even worse. The short-term regulatory fix is always to fix prices said Pam Prairie director of the Institute of Public Utilities at Michigan State University in East Lansing. But there's a real danger you'll set prices too low and make your supply problems even worse. Other economists agreed. At best this is poorly administered cost-based regulation said Frank Wolak an economics professor at Stanford University who sits on an independent market-monitoring committee at the ISO. At worst it creates all sorts of perverse market incentives. For example it may increase the problem of megawatt laundering on hot days in which in-state generators sell power to out-of-state customers who then sell it back into the state effectively bypassing the cap. Likewise it could encourage generators to build new plants outside of California rather than where they are needed near its major cities also to avoid the cap. In the end it could increase stresses to the state's already overburdened transmission system. In fact the decision already has brought to a halt the state's forward electricity market which allows wholesale customers to sign contracts for power they will use in the future. The market had been trading as much as 1000 contracts a week. On Friday there was practically no activity. This decision shows the height of lunacy said Rick Shapiro a managing director at Enron Corp. the giant Houston-based energy trader. Mr. Shapiro said Enron and other generators will file appeals at the Federal Energy Regulatory Commission asking that the new pricing formula be rescinded. It is possible the FERC may throw out the pricing formula anyway. It is expected to issue a major order on Nov. 1 directing changes in California's market structure. That order will include its determination of the effectiveness of price caps. It also is expected to judge the merits of the governance structure at the ISO which has lately been marked by infighting. Recently consumer groups have charged that the ISO board has put the business interests of its members ahead of members' fiduciary duty to California residents. The most recent price-cap measure was approved over the objections of executives at the ISO whose job it will be to implement the formula. ISO Chief Executive Terry Winter said the measure is flawed because it doesn't take into account the amount of power available to the California market. Mr. Winter fears the caps will place the state at a disadvantage relative to neighboring states with no price caps. About 11 states are electrically interconnected in the West meaning power can be moved between them and chase the highest prices. We keep getting accused of making our market too complicated Mr. Winter said. Then along comes this proposal with caps that would adjust repeatedly throughout the day depending on demand. Copyright 2000 Dow Jones & Company Inc. All Rights Reserved. Enron Offers Cash To Help Azurix Take Itself Private By Rebecca Smith Staff Reporter of The Wall Street Journal 10/30/2000 The Wall Street Journal A12 (Copyright (c) 2000 Dow Jones & Company Inc.) Enron Corp. offered to lend Azurix Corp. an Enron spinoff $275 million so that it could take itself private. Enron which has been frustrated with the global water company's performance suggested Friday that public shareholders receive a cash offer of $7 a share for their Azurix stock. While nearly double the stock's value prior to the offer the suggested price nevertheless was far below the $19 at which Azurix made its debut in 1999. An Azurix spokeswoman said the board on which Enron has seats had not yet decided how to treat the Enron offer. An Enron spokesman said that taking the company private would give us more opportunity to directly affect our investment. In 4 p.m. New York Stock Exchange composite trading Friday Azurix soared $3 to $6.56 in heavy trading. Azurix had hoped to create a splash by doing to the water business what Enron had done to the energy business -- increase competition and provide trading skills capable of creating new financial products out of old commodities. But Azurix stumbled nearly from the outset. Deregulation of the water business and government privatizations of water systems on which it was counting were slow to come crimping growth opportunities and profit. And Enron accustomed to higher faster returns grew impatient with the capital-intensive water business. The company's first chief executive Rebecca Mark a onetime head of Enron's international division resigned in the summer with the agreement of Enron executives who said it was time for new leadership. The incoming chief executive John Garrison said he would look for buyers for some of the company's businesses he was unavailable to comment Friday. Ms. Mark was believed to be considering making an offer for some of those businesses herself. She declined a request for an interview. In its letter to Azurix officers Enron said the water company received four offers from prospective suitors after Ms. Mark's departure the best of which came from an unidentified bidder who offered $7 a share and went through a lengthy due-diligence process before backing down apparently spooked by Azurix's cash flow capital structure tax considerations and some securities litigation. In its proposal letter made public Friday Enron said it concluded that there is no other buyer willing to pay the $7 and so proceeded with its own offer. But Enron said it won't try to limit Azurix's ability to negotiate a better deal with others should they come forward. Finally Enron noted that Azurix had considered various partial or full-liquidation alternatives but said they didn't seem likely to produce more than $7 a share. Copyright 2000 Dow Jones & Company Inc. All Rights Reserved. Companies: U.S. Companies 10/30/2000 The Wall Street Journal Europe 5 (Copyright (c) 2000 Dow Jones & Company Inc.) Enron Offers Loan to Azurix Enron Corp. offered to lend Azurix Corp. an Enron spinoff $275 million (327.6 million euros) so that it could take itself private. Enron which has been frustrated with the global water company's performance suggested Friday that public shareholders receive a cash offer of $7 a share for their Azurix stock. While nearly double the stock's value prior to the offer the suggested price nevertheless was far below the $19 at which Azurix made its debut in 1999. (Staff) Copyright 2000 Dow Jones & Company Inc. All Rights Reserved. Business Wessex switch likely Adam Jones in New York 10/28/2000 The Times of London News International 2W 64 (Copyright Times Newspapers Ltd 2000) Wessex Water's American parent company is likely to be taken private after a disastrous 14-month spell as a quoted company. Wessex which provides water services to the South of England was bought by Azurix in 1998 for Pounds 1.6 billion. Azurix wanted to use Wessex's expertise in privatised water supply to build a global business. However since listing at $19 a share in June last year Azurix stock has gone into freefall closing at less than $4 earlier this week. Azurix slumped because it drastically misjudged the number of privatisation opportunities. It emerged last night that Enron the Texan energy and trading company that is Azurix's biggest shareholder has taken the unusual step of offering to lend Azurix $275 million (Pounds 190 million) to buy its publicly held shares thereby taking it private. The Enron proposal would value Azurix at about $800 million or $7 per share - 63 per cent less than the IPO price. Enron would control Azurix and Wessex Water if it went private. Copyright 2000 Dow Jones & Company Inc. All Rights Reserved. BUSINESS Enron water unit could go private under loan plan NELSON ANTOSH Staff 10/28/2000 Houston Chronicle 3 STAR 1 (Copyright 2000) Enron offered Friday to lend Azurix its struggling water affiliate about $275 million so Azurix can go private by purchasing 38.6 million shares that are publicly traded. The deal would have Azurix buying back its stock at $7 per share about double what the shares were trading for Thursday. That's a big comedown for Azurix shares which sold for $19 each when the Houston company went public in June 1999. The maneuver technically can be called a take-under said analyst Carol Coale of Prudential Securities in Houston. She also described it as Enron's least painful solution for what to do with the venture that never lived up its ambitious plans. Nothing about Azurix has been positive for Enron in my view said Coale. This is a solution to a problem. Azurix spokeswoman Diane Bazelides said its board is studying Enron's proposal. She added that it was too early to comment on the offer because the proposal's structure had not been outlined. Enron imposed no deadline for a decision by Azurix but reserved the right to withdraw the offer if Azurix's position with prospective customers and employees deteriorated. One of Enron's conditions is that Azurix not sell any major assets before the buyout. The deal would not change Enron's large stake in Azurix said Palmer. It owns a third while the other third is owned by the Atlantic Water Trust in which Enron owns a 50 percent voting interest. The proposal's advantages include giving public shareholders a premium to the market price said Enron spokesman Mark Palmer. The common stock of Azurix zoomed Friday on the news gaining $3 to close at $6.56 on the New York Stock Exchange. Becoming a private company would give Azurix management greater flexibility in restructuring. Coale said it would reduce Azurix's general and administrative costs helping it to bid against lower- cost foreign competition particularly two big French companies. Azurix's high cost structure has been its primary problem she said. Azurix has been looking at cost and strategies ever since it got a new president and chief executive on Aug. 25 said Bazelides. That was the date that Rebecca Mark resigned as Azurix's high-profile chairman and chief executive. Enron and Azurix have been looking at strategic alternatives for nine months J. Mark Meets Enron's executive vice president for corporate development said in a letter filed with the Securities and Exchange Commission. One alternative was selling the company he said. That didn't work out because the offers from three companies didn't exceed $4 per share. The fourth potential buyer said it would consider offering $7 per share said Meets. But that suitor backed out citing reasons like cash flow complexity of the capital structure tax considerations and pending securities litigation. We are obviously quite disappointed by this most recent turn of events Meets said in the letter. However we strongly believe that there is no other buyer willing to pay the $7 per share initially proposed (but later withdrawn) by the fourth bidder. Copyright 2000 Dow Jones & Company Inc. All Rights Reserved. Quietly Bush's team talks about transition Plenty of folks in Austin would love to follow Bush to D.C. Ken Herman American-Statesman Capitol Bureau Chief 10/28/2000 Austin American-Statesman A1 (Copyright 2000) Not long ago at a glossy wooden table in a Texas Capitol office two of Gov. George W. Bush's high-level appointees discussed one of the key issues in state government these days. It involved the relative merits of White House posts that could be available to the two appointees if Bush becomes president. Asked this week whether it's a common topic around the Capitol one of the appointees gestured to the anteroom of his office and made a motion indicating that even the midlevel folks have Washington on their minds. Near the banks of the Colorado Potomac Fever is a near-epidemic. And though it is political faux pas to be too open about doing White House transition planning before Election Day be assured it is going on at Bush headquarters where top officials are cognizant of the fine line between looking too confident now and looking too unprepared later. The candidate himself -- as well as his top aides -- steers clear of transition talk. When asked who might wind up in his Cabinet Bush looks backward instead of forward saying that his selection of Dick Cheney as his running mate should offer a glimpse of the kind of people who would wind up in his administration. The transition work such that it is is under the aegis of longtime Bush friend and aide Clay Johnson who began as head of the gubernatorial appointments office and now serves as chief of staff. Johnson said nobody has been interviewed for any Washington post but he has compiled a file of folks who are interested in serving in a Bush administration. Johnson also has been reading up on previous transitions -- ones that went well and ones that didn't. His preliminary conclusion is that the outgoing administrations are generally helpful and supportive even if they were ousted by the incoming administration. It's the incoming administrations that can make the mistakes he said. There is no shortage of think tanks that have think-tanked the topic. Back in August the Heritage Foundation based in Washington issued a transition handbook titled The Keys to a Successful Presidency. Though we really don't expect either campaign to talk about it (and would discourage them from doing so) the message here is it's time to start planning for a possible presidential transition quietly well behind the scenes but with the understanding that the preparation done during the next 70 or so days and the work done in the 70 or so days that follow (between the election and the inauguration) will very well determine the initial success or failure of the next administration Herbert Berkowitz a foundation vice president said in releasing the study. All indications are that the Bush team has been following the advice with Johnson at the helm. Johnson cautions against expectations that a Bush administration would be overloaded with Texans. It's the United States of America not the United States of Texas he said. Despite that caveat there is no shortage of Texans who are considered shoo-ins to fill some of the thousands of slots Bush could offer if he wins. Johnson confirms that he is very interested in a Washington job. Early speculation among Bush aides makes Johnson a potential leading contender for head of personnel at the White House. Karen Hughes Bush's communications director since his 1994 gubernatorial campaign is expected to become Bush's press secretary if he wins the White House. Karl Rove Bush's longtime political guru also will be on board though he could wind up with an out-of- the-White-House post perhaps at the Republican National Committee. Not as certain is the potential future for Joe Allbaugh who is part of the iron triangle of top advisers -- along with Rove and Hughes -- who have been on board with Bush since the 1994 campaign. Allbaugh serves as manager of the presidential campaign and previously served as chief of staff in the governor's office. Capitol speculation indicates Allbaugh could decide to skip a White House post possibly in favor of a lobbying job if he is not tapped as chief of staff. That post could go to Don Evans a longtime Bush friend who headed the megasuccessful fund-raising effort for the presidential campaign. However not everyone has Potomac Fever. For example Terral Smith Bush's legislative director said he will stay in Austin to lobby. In addition to the speculation about appointees the approaching election has sparked talk about when Bush might leave office if he wins. Under the U.S. Constitution he could remain governor until he has to become president on Jan. 20. Much more likely however is that Bush would leave office sooner than that perhaps as soon as two or three weeks after the Nov. 7 election if he wins. That could cause a housing problem for Bush whose main residence is the Governor's Mansion which comes as a free perk of the job. The Bushes have a home under construction at their ranch in Crawford near Waco. The ranch also has a smaller house in which the Bushes now spend weekends. Not out of the question is that Bush could work out an arrangement with Lt. Gov. Rick Perry who would become governor if Bush resigns to remain in the Governor's Mansion for several weeks after he leaves office. If the race among Texas senators to replace Perry as lieutenant governor complicates the timing of the resignation Bush could stay in the governor's office a little longer but no later than the first week of January. After all he will want to give Perry time to bask in his gubernatorial inauguration before the Legislature convenes Jan. 9. No matter when Bush resigns confidantes believe he might use his Crawford ranch for interviews with potential top-level appointees including Cabinet members. You may contact Ken Herman at kherman@statesman.com or 445-1718. Washington buzz A look at Bush allies expected to get appointments in a Bush administration: * Texas Secretary of State Elton Bomer * State Rep. Tom Craddick R-Midland * Public Safety Commission Chairman Jim Francis of Dallas * Texas Railroad Commissioner Tony Garza* Texas Supreme Court Justice Al Gonzales * Former Dallas ISD board President Sandy Kress * Kenneth Lay of Houston chief executive officer of Enron * Ralph Marquez of Texas City member of the Texas Natural Resource Conservation Commission * Vance McMahan of Austin a policy adviser in the governor's office * Harriet Miers of Dallas Bush's personal lawyer and former appointee to the Texas Lottery Commission * Pat Oxford Houston lawyer and member of the University of Texas System Board of Regents * Pat Wood of Austin chairman of the Texas Public Utility Commission * Margaret La Montagne the governor's education adviser Copyright 2000 Dow Jones & Company Inc. All Rights Reserved. Dynegy: Calif Price Caps Will Compromise Elec Reliability 10/27/2000 Dow Jones Energy Service (Copyright (c) 2000 Dow Jones & Company Inc.) LOS ANGELES -(Dow Jones)- A Dynegy executive said Friday that the California Independent System Operator's plan to impose hourly price caps on the wholesale power market will compromise reliability by forcing generators to sell electricity out of state. If the ISO says it will not buy above a certain price and generators cannot operate below that price then we have no choice but to find other markets to participate in said Dynegy senior vice president of marketing and trading asset management Lynn Lednicky. That may lead to the ISO not finding the power it needs at a price it wants to pay. The ISO plans to construct hourly price caps each month based on forecast load natural gas prices and generation unit efficiency. The caps will take effect Nov. 3 or soon therafter. Dynegy Inc. (DYN) sent a letter to the Federal Energy Regulatory Commission asking it to address reliability consequences of the price caps before Nov. 3. Dynegy specifically requested that FERC discuss the issue at its Nov. 1 meeting when it will release a report on California's electricity problems. Enron Corp. (ENE) and Southern Company (SO) share Dynegy's concerns about reliability and plan to petition FERC about the issue said a trader listening in to a conference call between the three companies. -By Jessica Berthold Dow Jones Newswires 323-658-3872 jessica.berthold@dowjones.com Copyright 2000 Dow Jones & Company Inc. All Rights Reserved. SEC Filing Shows 3rd Parties Contacted Enron About Azurix By Christopher C. Williams 10/27/2000 Dow Jones News Service (Copyright (c) 2000 Dow Jones & Company Inc.) Of DOW JONES NEWSWIRES New York -(Dow Jones)- Shares of Azurix Corp. (AZX) jumped 84% in heavy trading Friday after parent Enron Corp. (ENE) proposed to take the company private in a $7-a-share buyout. Filings with the Securities and Exchange Commission showed that Enron made the proposal after not being satisfied with offers it had received from four third parties for its stake in Azurix. In a letter to two members of Azurix's board Enron said three potential buyers were unlikely to be willing to pay more than the then-current market price of approximately $4 a share. Enron said a fourth potential buyer indicated it would consider a $7-a-share offer but it said that proposal was recently withdrawn. The reasons given by the bidder included pro forma cash flows the complexity of the capital structure tax considerations and the currently pending securities litigation the letter said. Mark Palmer a spokesman for Houston-based Enron declined to say whether Enron was entertaining current third-party interests or was in any talks with other parties regarding its Azurix stake. In New York Stock Exchange composite trading Azurix ended Friday up $3 to $6.56 on 2.8 million shares compared with average daily volume of 239000 shares. Enron was up $1.38 or 1.8% to $78.88 on 1.6 million shares compared with its daily average turnover of 2.4 million. In the SEC filing Enron saying it's familiar with Azurix's various partial and full liquidation alternatives said its buyout proposal is conditioned upon Azurix not selling any significant assets prior to the buyout. Although we agree that such plans may result in greater value to Azurix's shareholders than the maintenance of the status quo we believe that these options almost certainly will not result on a present value in a greater return to Azurix's shareholders than $7 a share the letter said. Enron also said its buyout proposal doesn't include any breakup fees or other deal protection devices. This frees Azurix's board to pursue an acquisition that might provide greater value to shareholders. Daine Bazelides a spokeswoman for Azurix declined to say whether Azurix is now entertaining offers for the company. She did however confirm the information contained in Enron's filing. The historical information in the filing is factually correct she told Dow Jones Newswires. She said she doesn't know when Azurix board will respond to Enron's proposal. In the filing Enron didn't set a deadline but warned that Azurix's position with customers and employees may deteriorate further. We must therefore reserve the right to withdraw our proposal at any time Enron's letter said. In the letter Enron pointed out that Azurix had retained two internationally recognized investment bankers early this year to evaluate strategic alternatives which included the potential sale of the company to unrelated third parties. Enron said it strongly believes there isn't another buyer willing to pay $7 a share for Enron's indirect interest in Azurix. We believe it is in Azurix's best interest as well as the best interest of its shareholders and employees if Azurix were no longer a publicly traded company Enron said. -By Christopher C. Williams Dow Jones Newswires 201-938-5219 Copyright 2000 Dow Jones & Company Inc. All Rights Reserved. Enron offers to buy out Azurix Financial Times By Hillary Durgin in Houston Published: October 27 2000 23:31GMT | Last Updated: October 27 2000 23:36GMT Enron the Houston-based energy and trading group said on Friday it had offered up to $275m in funding to take Azurix private at a buy-out price of $7 per share. The specific structure of Enron's proposal has yet to be determined Enron said. Azurix said its board would now consider the proposal. The timing of any decision was unclear. Enron owns directly and indirectly about 66 per cent of Azurix the troubled Houston water company whose main asset is UK-based Wessex Water. The buyout offer is the latest development in a history of problems at Azurix which was spun off from Enron and taken public at an offering price of $19 per share. But a combination of poor market timing competitive industry conditions and empty promises by the company on Wall Street took their toll on the company whose shares have since plummeted and have been trading most recently around the $3-per-share range. In August Rebecca Mark Azurix chief executive officer resigned both from Azurix and from the board at Enron. Enron's offer came after four unnamed parties approached Enron about buying its stake in Azurix. While three of the four were unwilling to pay more than the then market price of about $4 per share a fourth party who was considering offering $7 per share (before accounting for any dilution for stock options) later declined to pursue the transaction Enron said in Friday's letter to Azurix outlining the buyout proposal. We strongly believe that our proposal is fair to Azurix's public stockholders the letter stated. Our proposed transaction would permit Azurix's stockholders to receive on a timely basis a cash payment for their shares that is significantly above the price at which those shares have traded in several months. Analysts that follow Azurix and had valued the shares at between $6 and $8 per shares said the offer was fair. Analysts that follow Enron said that Azurix's business strategy had proved to be a failure and was characteristic of the hard asset approach that Enron has gradually distanced itself from. Enron's shares closed at $78.88 up $1.38 on Friday. Azurix's shares rose $3 to close at $6.56.,other,neutral,3 +Re: REVISION - New HR Rep for Public Affairs and Administration,Please do send it out. Thanks for the kind words. I know you know how I feel about your work and I have shared that view widely. I have enjoyed working with you I always valued your insights your responsiveness and your work ehtic. I wish you all the best in your new role. Gwendolyn Petteway@ENRON 07/24/2000 02:47 PM To: Steven J Kean/HOU/EES@EES cc: Subject: REVISION - New HR Rep for Public Affairs and Administration Arquella's last day is Wed. 7/26. -----------------,human resources,formal,3 +Re: FW: Request for PR2 Access,OK From: Jo Ann Hill/ENRON@enronXgate on 07/18/2001 04:31 PM To: Steven J Kean/NA/Enron@Enron cc: Kathryn Schultea/ENRON@enronXgate Mary Joyce/ENRON@enronXgate Subject: FW: Request for PR2 Access Steve -- For your approval. As some additional information regarding the request Kathy Diane Taylor and I met with Deana Taylor this afternoon to understand what each person's role was and the specific access needed. For the interim we are recommending that the HR View Basic Data & Org ENTP and View Payroll and Time ENTP role be granted to each of the individuals listed below. Until January 1 this function was performed in the Payroll Department and at that time was transitioned to Karen and Deana's group. The people listed below actually transferred from the Payroll Department. For the long term we are going to look at creating a specific role for this group that would let them access only those data elements needed. I've spoken with Mary Joyce by phone and she has approved so I am requesting your approval as well. These people have basically been prevented from being able to reconcile any of the net pay accounts etc. for the past week. Please let me know if you will approve or if you need any additional information. Thanks. Jo Ann ,human resources,formal,3 +"IEP in the News, and other headlines",San Jose Mercury News April 19 2001 Thursday SJ-POWER 593 words ????Testimony Indicates California Electricity Market Was Troubled in 1998 By ????Brandon Bailey (Quotes Smutny on behalf of IEP) The Associated Press State & Local Wire April 19 2001 Thursday BC cycle ???? 9:55 AM Eastern Time State and Regional 930 words Developments in ????California's energy crisis By The Associated Press (Quotes Smutny on behalf of IEP) The Associated Press State & Local Wire April 19 2001 Thursday BC cycle ???? 9:32 AM Eastern Time State and Regional 820 words Legislators probe ????possible power natural gas collusion By DON THOMPSON Associated Press ????Writer SACRAMENTO (Quotes Smutny on behalf of IEP) The Associated Press State & Local Wire April 18 2001 Wednesday BC ????cycle State and Regional 833 words Legislators probe possible power ????natural gas collusion By DON THOMPSON Associated Press Writer SACRAMENTO ???(Quotes Smutny on behalf of IEP) The Associated Press State & Local Wire April 18 2001 Wednesday BC ????cycle State and Regional 841 words Developments in California's energy ????crisis By The Associated Press (Quotes Smutny on behalf of IEP) Power bloc blasts seizure idea Producers say talk of bold action fuels crisis ???????By Steve Geissinger SACRAMENTO BUREAU ?-- Oakland Tribune (Quotes Smutny on behalf of IEP) Copley News Service April 19 2001 Thursday State and regional 780 ????words Windfall-profits tax gets Davis' backing Bill Ainsworth SACRAMENTO Los Angeles Times April 19 2001 Thursday Home Edition Page 3 772 ????words CAPITOL JOURNAL ?CALIFORNIA AND THE WEST ??Price Caps Don't Fit in ????Cheney's Head for Figures GEORGE SKELTON SACRAMENTO Los Angeles Times April 19 2001 Thursday Home Edition Page 3 1373 ????words CALIFORNIA AND THE WEST ??DAVIS BACKS SILICON VALLEY POWER PROJECT ????ENERGY: GOVERNOR URGES QUICK APPROVAL OF SAN JOSE PLANT DESPITE OPPOSITION ????BY CITY AND A POWERFUL FIRM. JENIFER WARREN and TERENCE MONMANEY TIMES ????STAFF WRITERS SACRAMENTO The Orange County Register April 19 2001 Thursday STATE AND REGIONAL ????NEWS K7970 275 words Ex-energy chief leery of state buying power lines ????By Kate Berry The San Francisco Chronicle APRIL 19 2001 THURSDAY FINAL EDITION ????NEWS Pg. A18 585 words Alameda public utility rents four backup ????generators ???Extra electricity will be used during summer rolling ????blackouts Matthew Yi Alameda The San Francisco Chronicle APRIL 19 2001 THURSDAY FINAL EDITION ????NEWS Pg. A3 845 words Davis' gouging claims disputed ???Officials say ????no link between PG&E bankruptcy high prices David Lazarus The San Francisco Chronicle APRIL 19 2001 THURSDAY FINAL EDITION ????NEWS Pg. A3 888 words Davis backs San Jose power plant ???He also ????acknowledges bailout for Edison will be uphill fight Lynda Gledhill ????Sacramento The Vancouver Sun April 19 2001 Thursday 731 words B.C. Hydro's credit ????to California firms exceeded 1999 guidelines David Baines The Associated Press State & Local Wire April 18 2001 Wednesday BC ????cycle Business News 348 words Williams again target of overcharging ????allegations from federal regulators TULSA Okla. The Associated Press State & Local Wire April 18 2001 Wednesday BC ????cycle State and Regional 332 words Governor congressman to fight ????proposals for national power deregulation policy By MARGERY BECK ????Associated Press Writer LINCOLN Neb. San Jose Mercury News April 18 2001 Wednesday SJ-POWER-PLANT 1038 ????words California Governor May Back Energy Firm's Proposed Power Plant Scripps Howard News Service April 18 2001 Wednesday DOMESTIC NEWS 588 ????words Davis says Edison agreement may need altering EMILY BAZAR and KEVIN ????YAMAMURA SACRAMENTO Calif. San Jose Mercury News April 19 2001 Thursday KR-ACC-NO: SJ-POWER LENGTH: 593 words HEADLINE: Testimony Indicates California Electricity Market Was Troubled in 1998 BYLINE: By Brandon Bailey BODY: ??SACRAMENTO Calif.--California's electricity market was showing signs of trouble as far back as 1998 the year that it was officially opened to competition members of a special legislative investigating committee were told Wednesday. ??Abnormal price spikes -- far higher than what should have occurred in a competitive market -- were showing up in August 1998 the committee was told by Frank Wolak a Stanford economist and top advisor to the California Independent System Operator which runs the state's transmission grid. ??Appearing on the first day of hearings called by a state Senate select committee to investigate alleged wholesale energy price manipulation Wolak testified that the ISO's economic advisors repeatedly found signs that power suppliers were able to influence prices over the last three years -- even before wholesale prices soared skyhigh last summer. ??By controlling even a relatively small portion of power supply just enough to make a difference in whether the state could meet consumers' needs Wolak said generators have been able to charge prices far higher than their costs. ??All told the ISO has estimated power suppliers collected more than $ 6 billion in unjustified profits last year. ??In his opinion Wolak added that violates the terms by which federal regulators allowed the suppliers to enter the state's newly deregulated market when it opened in 1998. ??The ISO is now filing petitions with the Federal Energy Regulatory Commission asking that agency to revoke the generators' right to charge unregulated prices. ??But Wolak repeatedly told the committee that he had no evidence that the suppliers acted in collusion or that they had violated any federal anti-trust laws. ??When state Senator Joe Dunn D-Garden Grove pressed him on the point Wolak insisted I can't say yes I can't say no. There's a lot of things that certainly look puzzling. It's hard without further information and analysis to say definitively but there's lots of things to seem to be worth looking into. ??Dunn a former consumer attorney is leading the Legislature's efforts to answer a question that a host of other state and federal officials have also posed: have California's electricity prices been the result of any illegal or unethical acts? ??Power suppliers and their representatives have repeatedly said the answer is no. They say their prices are the result of short supplies and natural market swings. ??Eleven investigations into California's electricity market have been conducted or are currently under way said a statement issued Wednesday by Jan Smutny-Jones executive director of the Independent Energy Producers Association. Not one has found or proven any wrongdoing by generators. ??Dunn however said Wednesday's testimony was only the start of what he promised would be a vigorous investigation. He said the committee has already asked several power companies for records and other information and he hinted that subpoenas may be issued in the coming weeks. ??We will try to figure out how to stop these high prices if they are unjustified Dunn said at the beginning of the hearing. ??We're not going to be looking for ways to finance these payments he added. The state is now paying $ 70 million a day to buy power for California consumers after major utilities wracked up billions in debts while buying power on the open market in recent months. ??----- ??To see more of the San Jose Mercury News or to subscribe to the newspaper go to http://www.sjmercury.com JOURNAL-CODE: SJ LOAD-DATE: April 19 2001 of 5 DOCUMENTS ???????????????????The Associated Press State & Local Wire The materials in the AP file were compiled by The Associated Press. ?These materials may not be republished without the express written consent of The Associated Press. ??????????????????????April 19 2001 Thursday BC cycle AM Eastern Time SECTION: State and Regional LENGTH: 930 words HEADLINE: Developments in California's energy crisis BYLINE: By The Associated Press BODY: ??Developments in California's energy crisis: ??THURSDAY: ??- The state remains free of power alerts as reserves stay above 7 percent. ??- Gov. Gray Davis meets with 25 members of the California congressional delegation at the Los Angeles International Airport to discuss the state's power crisis. ??- An Assembly committee continues hearings on the natural gas supply and possible price manipulation. ??-The Public Utilities Commission meets in San Francisco to decide whether to investigate if a key bloc of independent generators are purposely keeping their plants offline. ??WEDNESDAY: ??- Unchecked free-market forces drove up the price of natural gas to Southern California Edison by about $750 million over the last year an industry consultant tells the Assembly Electricity Oversight Subcommittee. ??Meanwhile the Senate's Select Committee to Investigate Price Manipulation of the Wholesale Energy Market begins investigating whether electric generators artificially inflated power prices. ??An industry spokesman predicts the investigations will uncover nothing illegal. ??- The state offers financial backing to Houston-based Dynegy which worried it would not be paid for power generated at its plants in California. Dynegy agrees to sell 300 megawatts of power from 17 small turbine generators in Carlsbad after receiving an offer from the California Department of Water Resources. ??- Gov. Gray Davis urges state regulators to approve the construction of a controversial 600-megawatt power plant in south San Jose to provide electricity to roughly 450000 homes in the Silicon Valley. ??- The Democratic governor lobbies Senate Democrats to support his plan to pay $2.7 billion for the transmission lines owned by Southern California Edison. ??State spending on electricity has jumped by more than 50 percent since Pacific Gas and Electric Corp. declared bankruptcy April 6 thanks in part of surcharges tacked on by power generators worried they won't be repaid Davis said. ??- The Senate Appropriations Committee sends the full Senate a bill creating a public power authority that would loan out up to $5 billion to build or buy power plants that would be required to sell electricity to consumers at low rates. ??- An Assembly committee advances a bill ending the exemption under which utility lobbyists do not have to follow the same reporting requirements as do other lobbyists. The bill now goes to the Assembly Appropriations Committee. ??- A Pacific Gas and Electric Corp. shareholder sues the company claiming it misled shareholders by forecasting annual profits for two quarters last year when the suit says the company knew it was incurring losses. ??-Public Utilities Commission President Loretta Lynch issues a statement late Wednesday saying inaction by the Federal Energy Regulatory Commission forced Southern Caifornia Edison Co. to take a large write-off of debt. The company should not have to shoulder these liabilities and neither should its customers Lynch says. ??- Edison International's stock closes at $11.40 down 48 cents while stock in PG&E's parent closes up 14 cents at $9.04. ??- The state remains free of power alerts as reserves stay above 7 percent. ??WHAT'S NEXT: ??- The Assembly's Energy Oversight Subcommittee plans to resume hearings Thursday in its inquiry into California's highest-in-the-nation natural gas prices with testimony from gas companies. ??- Davis' representatives continue negotiating with Sempra the parent company of San Diego Gas and Electric Co. to buy the utility's transmission lines. Davis says he expects to have an agreement within two weeks. ??- The state Public Utilities Commission will decide Thursday whether to investigate why a key block of power generators is staying off-line despite regulators' order last month that they start getting paid by the state's utilities. Independent Energy Producers Executive Director Jan Smutny-Jones says the generators can't afford to operate because they are still owed more than a billion dollars and because the PUC's rates don't cover their operating costs. ??PUC President Loretta Lynch also wants the commission to decide Thursday to investigate whether PG&E's April 6 bankruptcy protection filing is enough of a threat to the PUC's regulatory authority to prompt more PUC involvement in the bankruptcy proceedings. ??THE PROBLEM: ??High demand high wholesale energy costs transmission glitches and a tight supply worsened by scarce hydroelectric power in the Northwest and maintenance at aging California power plants are all factors in California's electricity crisis. ??Edison and PG&E say they've lost nearly $14 billion since June to high wholesale prices that the state's electricity deregulation law bars them from passing on to consumers. PG&E saying it hasn't received the help it needs from regulators or state lawmakers filed for federal bankruptcy protection April 6. ??Electricity and natural gas suppliers scared off by the two companies' poor credit ratings are refusing to sell to them leading the state in January to start buying power for the utilities' nearly 9 million residential and business customers. The state is also buying power for a third investor-owned utility San Diego Gas & Electric which is in better financial shape than much larger Edison and PG&E but also struggling with high wholesale power costs. ??The Public Utilities Commission has raised rates up to 46 percent to help finance the state's multibillion-dollar power-buying. LOAD-DATE: April 19 2001 of 5 DOCUMENTS ???????????????????The Associated Press State & Local Wire The materials in the AP file were compiled by The Associated Press. ?These materials may not be republished without the express written consent of The Associated Press. ??????????????????????April 19 2001 Thursday BC cycle AM Eastern Time SECTION: State and Regional LENGTH: 820 words HEADLINE: Legislators probe possible power natural gas collusion BYLINE: By DON THOMPSON Associated Press Writer DATELINE: SACRAMENTO BODY: ??Southern California Edison was charged about $750 million more this year for natural gas because of unchecked free-market forces an industry consultant testified. ??Paul Carpenter told the Assembly Electricity Oversight Subcommittee on Wednesday the price spikes came after the El Paso Natural Gas Co. contracted first with Dynegy and later with its own marketing affiliate El Paso Merchant Energy to control the pipeline capacity. ??Officials with El Paso and other natural gas suppliers are expected to testify Thursday that they did not illegally manipulate the market. ??The California Public Utilities Commission estimated a year ago that overcharges by the companies that control natural gas flow drove up prices by $ 100 million a year to California gas and electricity customers. ??But PUC attorney Harvey Morris said that was before last summer's price spikes which he blamed on natural gas suppliers using a monopoly to game the system. ??It's way worse than we could possibly have imagined Morris said after testifying before the subcommittee. It's obviously way higher than $100 million. ??Natural gas rates at the California border generally tracked national prices until November when they spiked as high as 11 times higher than the price of natural gas elsewhere in the nation Carpenter said. ??I have never seen gas prices like this anywhere in the world said Carpenter who has been studying the energy market for 20 years for Cambridge Mass.-based consultant The Brattle Group. The Brattle Group was hired by Edison to study the natural gas market. ??The committee is one of two legislative committees exploring whether illegal market manipulation in the electricity and natural gas markets has driven up California's energy costs. ??This is a market that is plagued by the exercise of market power Frank Wolak chairman of the California Independent System Operator's Market Surveillance Committee told the Senate Select Committee to Investigate Price Manipulation of the Wholesale Energy Market. The ISO runs the state's power grid. ??However there is no law against me saying 'I'm not going to sell to you' Wolak said. Market manipulation only becomes illegal when there is collusion Wolak said and such evidence is hard to find. ??Electricity generators and natural gas suppliers say a severe supply and demand imbalance - not market manipulation - has led to higher prices. ??Everybody's busy doing investigations. They're not interested in solving the problem said Independent Energy Producers Executive Director Jan Smutny-Jones. ??Investigations are wasting everybody's time Smutny-Jones said adding that previous probes and lawsuits have uncovered no wrongdoing. He said the state's power problems came because state regulators denied utilities the chance to sign long-term energy contracts when they had the chance. ??People have been playing by the rules Smutny-Jones said. ??But the Senate committee's first witnesses are ISO officials who authored studies that claim the state paid more than $6 billion too much for power last year. ??Committee chair Joseph Dunn D-Garden Grove also has slated state Auditor Elaine Howell who last month blamed buyers and sellers for skyrocketing electricity costs. Dunn also has scheduled future testimony from state federal academic and private investigators studying the power market. ??He invited five major generators to attend the committee's second hearing next week. All five - Reliant Dynegy Williams Energy Duke Energy and Mirant - say they are eager to cooperate and clear their names Dunn said. ??Dunn asked the five for a total of 86 specific documents. If the companies feel they cannot provide documents because of legal or confidentiality concerns Dunn said he will subpoena them. ??Smutny-Jones said investigators appear to be growing desperate to blame the state's natural gas and electricity price hikes on illegal market manipulation instead of natural market forces. ??He cited Attorney General Bill Lockyer's announcement last week that any informant who helped prove wrongdoing would be entitled to a percentage of the state's recovery he estimated could range from $50 million to hundreds of millions of dollars. ??If the state's offering a $50 million reward they haven't found anything Smutny-Jones said. I don't think you're going to find the fact that anybody did anything criminal here. ??Assemblywoman Jenny Oropeza D-Long Beach said she believes otherwise after Wednesday's testimony: I think it is very clear there was some price manipulation going on. ??But Assemblyman John Campbell R-Irvine isn't sure there was anything illegal. ??There clearly are market forces at work that's evident Campbell said. Whether you make the jump to market manipulation ... I haven't seen conclusive evidence that leads me to make that jump. LOAD-DATE: April 19 2001 of 5 DOCUMENTS ???????????????????The Associated Press State & Local Wire The materials in the AP file were compiled by The Associated Press. ?These materials may not be republished without the express written consent of The Associated Press. ?????????????????????April 18 2001 Wednesday BC cycle SECTION: State and Regional LENGTH: 833 words HEADLINE: Legislators probe possible power natural gas collusion BYLINE: By DON THOMPSON Associated Press Writer DATELINE: SACRAMENTO BODY: ??Unchecked free-market forces drove up the price of natural gas to Southern California Edison by about $750 million over the last year an industry consultant testified Wednesday. ??Paul Carpenter told the Assembly Electricity Oversight Subcommittee the price spikes came after the El Paso Natural Gas Co. contracted first with Dynegy and later with its own marketing affiliate El Paso Merchant Energy to control the pipeline capacity. ??The California Public Utilities Commission estimated a year ago that overcharges by the companies that control natural gas flow drove up prices by $ 100 million a year to California gas and electricity customers. ??But PUC attorney Harvey Morris said that was before last summer's price spikes which he blamed on natural gas suppliers using a monopoly to game the system. ??It's way worse than we could possibly have imagined Morris said after testifying before the subcommittee. It's obviously way higher than $100 million. ??Natural gas rates at the California border generally tracked national prices until November when they spiked as high as 11 times higher than the price of natural gas elsewhere in the nation Carpenter said. ??I have never seen gas prices like this anywhere in the world said Carpenter who has been studying the energy market for 20 years for Cambridge Mass.-based consultant The Brattle Group. The Brattle Group was hired by Edison to study the natural gas market. ??Officials with El Paso and other natural gas suppliers have denied illegally manipulating the market. They are scheduled to testify Thursday. El Paso officials did not return telephone calls for comment Wednesday. ??The committee is one of two legislative committees exploring whether illegal market manipulation in the electricity and natural gas markets has driven up California's energy costs. ??This is a market that is plagued by the exercise of market power Frank Wolak chairman of the California Independent System Operator's Market Surveillance Committee told the Senate Select Committee to Investigate Price Manipulation of the Wholesale Energy Market. The ISO runs the state's power grid. ??However there is no law against me saying 'I'm not going to sell to you' Wolak said. Market manipulation only becomes illegal when there is collusion Wolak said and such evidence is hard to find. ??Electricity generators and natural gas suppliers say a severe supply and demand imbalance - not market manipulation - has led to higher prices. ??Everybody's busy doing investigations. They're not interested in solving the problem said Independent Energy Producers Executive Director Jan Smutny-Jones. ??Investigations are wasting everybody's time Smutny-Jones said adding that previous probes and lawsuits have uncovered no wrongdoing. He said the state's power problems came because state regulators denied utilities the chance to sign long-term energy contracts when they had the chance. ??People have been playing by the rules Smutny-Jones said. ??But the Senate committee's first witnesses are ISO officials who authored studies that claim the state paid more than $6 billion too much for power last year. ??Committee chair Joseph Dunn D-Garden Grove also has slated state Auditor Elaine Howell who last month blamed buyers and sellers for skyrocketing electricity costs. Dunn also has scheduled future testimony from state federal academic and private investigators studying the power market. ??He invited five major generators to attend the committee's second hearing next week. All five - Reliant Dynegy Williams Energy Duke Energy and Mirant - say they are eager to cooperate and clear their names Dunn said. ??Dunn asked the five for a total of 86 specific documents. If the companies feel they cannot provide documents because of legal or confidentiality concerns Dunn said he will subpoena them. ??Smutny-Jones said investigators appear to be growing desperate to blame the state's natural gas and electricity price hikes on illegal market manipulation instead of natural market forces. ??He cited Attorney General Bill Lockyer's announcement last week that any informant who helped prove wrongdoing would be entitled to a percentage of the state's recovery he estimated could range from $50 million to hundreds of millions of dollars. ??If the state's offering a $50 million reward they haven't found anything Smutny-Jones said. I don't think you're going to find the fact that anybody did anything criminal here. ??Assemblywoman Jenny Oropeza D-Long Beach said she believes otherwise after Wednesday's testimony: I think it is very clear there was some price manipulation going on. ??But Assemblyman John Campbell R-Irvine isn't sure there was anything illegal. ??There clearly are market forces at work that's evident Campbell said. Whether you make the jump to market manipulation ... I haven't seen conclusive evidence that leads me to make that jump. LOAD-DATE: April 19 2001 of 5 DOCUMENTS ???????????????????The Associated Press State & Local Wire The materials in the AP file were compiled by The Associated Press. ?These materials may not be republished without the express written consent of The Associated Press. ?????????????????????April 18 2001 Wednesday BC cycle SECTION: State and Regional LENGTH: 841 words HEADLINE: Developments in California's energy crisis BYLINE: By The Associated Press BODY: ??Developments in California's energy crisis: ??WEDNESDAY: ??- Unchecked free-market forces drove up the price of natural gas to Southern California Edison by about $750 million over the last year an industry consultant tells the Assembly Electricity Oversight Subcommittee. ??Meanwhile the Senate's Select Committee to Investigate Price Manipulation of the Wholesale Energy Market begins investigating whether electric generators artificially inflated power prices. ??An industry spokesman predicts the investigations will uncover nothing illegal. ??- The state offers financial backing to Houston-based Dynegy which worried it would not be paid for power generated at its plants in California. Dynegy agrees to sell 300 megawatts of power from 17 small turbine generators in Carlsbad after receiving an offer from the California Department of Water Resources. ??- Gov. Gray Davis urges state regulators to approve the construction of a controversial 600-megawatt power plant in south San Jose to provide electricity to roughly 450000 homes in the Silicon Valley. ??- The Democratic governor lobbies Senate Democrats to support his plan to pay $2.7 billion for the transmission lines owned by Southern California Edison. ??State spending on electricity has jumped by more than 50 percent since Pacific Gas and Electric Corp. declared bankruptcy April 6 thanks in part of surcharges tacked on by power generators worried they won't be repaid Davis said. ??- The Senate Appropriations Committee sends the full Senate a bill creating a public power authority that would loan out up to $5 billion to build or buy power plants that would be required to sell electricity to consumers at low rates. ??- An Assembly committee advances a bill ending the exemption under which utility lobbyists do not have to follow the same reporting requirements as do other lobbyists. The bill now goes to the Assembly Appropriations Committee. ??- A Pacific Gas and Electric Corp. shareholder sues the company claiming it misled shareholders by forecasting annual profits for two quarters last year when the suit says the company knew it was incurring losses. ??-Public Utilities Commission President Loretta Lynch issues a statement late Wednesday saying inaction by the Federal Energy Regulatory Commission forced Southern Caifornia Edison Co. to take a large write-off of debt. The company should not have to shoulder these liabilities and neither should its customers Lynch says. ??- Edison International's stock closes at $11.40 down 48 cents while stock in PG&E's parent closes up 14 cents at $9.04. ??- The state remains free of power alerts as reserves stay above 7 percent. ??WHAT'S NEXT: ??- The Assembly's Energy Oversight Subcommittee plans to resume hearings Thursday in its inquiry into California's highest-in-the-nation natural gas prices with testimony from gas companies. ??- Davis' representatives continue negotiating with Sempra the parent company of San Diego Gas and Electric Co. to buy the utility's transmission lines. Davis says he expects to have an agreement within two weeks. ??- The state Public Utilities Commission will decide Thursday whether to investigate why a key block of power generators is staying off-line despite regulators' order last month that they start getting paid by the state's utilities. Independent Energy Producers Executive Director Jan Smutny-Jones says the generators can't afford to operate because they are still owed more than a billion dollars and because the PUC's rates don't cover their operating costs. ??PUC President Loretta Lynch also wants the commission to decide Thursday to investigate whether PG&E's April 6 bankruptcy protection filing is enough of a threat to the PUC's regulatory authority to prompt more PUC involvement in the bankruptcy proceedings. ??THE PROBLEM: ??High demand high wholesale energy costs transmission glitches and a tight supply worsened by scarce hydroelectric power in the Northwest and maintenance at aging California power plants are all factors in California's electricity crisis. ??Edison and PG&E say they've lost nearly $14 billion since June to high wholesale prices that the state's electricity deregulation law bars them from passing on to consumers. PG&E saying it hasn't received the help it needs from regulators or state lawmakers filed for federal bankruptcy protection April 6. ??Electricity and natural gas suppliers scared off by the two companies' poor credit ratings are refusing to sell to them leading the state in January to start buying power for the utilities' nearly 9 million residential and business customers. The state is also buying power for a third investor-owned utility San Diego Gas & Electric which is in better financial shape than much larger Edison and PG&E but also struggling with high wholesale power costs. ??The Public Utilities Commission has raised rates up to 46 percent to help finance the state's multibillion-dollar power-buying. LOAD-DATE: April 19 2001 Power bloc blasts seizure idea Producers say talk of bold action fuels crisis By Steve Geissinger SACRAMENTO BUREAU ?-- Oakland Tribune SACRAMENTO -- Outraged by a report in The Oakland Tribune that some lawmakers asked the governor to seize high-priced power contracts a key industry group Tuesday warned the Davis administration and Legislature that such action would worsen the energy crisis. We're publicly saying . . . this kind of rhetoric will have dire consequences on both the reliability and cost of power in California for years to come said Jan Smutny-Jones executive director of the Independent Energy Producers Association. It is the kind of rhetoric one would expect in Indonesia or the Philippines not the sixth largest economy on the planet he said in a teleconference. At the same time Davis administration officials confirmed that seizing contracts of allegedly profiteering brokers is the most likely last-ditch move if options continue to narrow ahead of the previously discussed concepts of seizing California power plants owned by out-of-state firms or passing a windfall profits tax. Davis spokesman Steve Maviglio pointed out the governor already seized power contracts on which California's investor-owned utilities were defaulting in early February. The state trying to buy its way out of the energy crisis with no clear end in sight lost a substantial measure of control over electricity prices and supplies to the courts with the recent bankruptcy filing by the Pacific Gas and Electric Co. Gov. Gray Davis a Democrat employed hard-sell tactics Tuesday in an effort to convince reluctant Democrats that their failure to embrace his plan to financially rescue teetering Southern California Edison could plunge that utility into bankruptcy as well. While most Republicans are flatly opposed to the plan as misguided Democrats who hold a majority in the Legislature worry it's a public bailout of an investor-owned utility and would hand the state control over only Edison's south-state piece of the strategic high-voltage transmission grid in California. Soaring wholesale power costs have financially shattered utilities forcing the state into runaway multibillion-dollar spending that helps keep the lights on but threatens the state budget. The manager of the state's power grid has accused generators and marketers of overcharging Californians more than $6 billion in recent months. Assembly Speaker Robert Hertzberg D-Van Nuys said Monday that members of both legislative houses were interested in seizure of California power plants' contracts with brokers who sell to customers within or outside the state. Sen. Don Perata D-Oakland an outspoken critic of the Davis administration's handling of the crisis said some lawmakers had asked the governor to use emergency or eminent domain powers to seize the overpriced contracts and were awaiting Davis' answer this week. Supporters of the move said seizure would allow the state to control where the power is sold and decrease price markups by eliminating the middleman. But myriad questions remain unanswered including regulatory and interstate commerce issues as well as any state reimbursement of the brokers. Any move to seize power contracts would be overturned by the courts said Gary Ackerman executive director of the Western Power Trading Forum. Instead of trying to do what's legally within their reach they go to extreme measures that are on their very face unlawful and unconstitutional Ackerman said. Moreover industry officials said seizure would not only chill industry investment in California's power system and lead to higher power costs but would be ironic since California has shunned lower-cost long-term contracts industry officials said. It would create a very unstable political regulatory environment Smutny-Jones said. It would have extremely adverse consequences for California in the long term. Even so the talk has worried the industry. Smutny-Jones said his clients are very very troubled by this sudden turn in rhetoric. I assume when senior members of the Legislature make pronouncements about potentially seizing contracts it's designed to get our attention and we obviously take those things seriously he said. The Independent Energy Producers group is in the process of contacting the Davis administration and lawmakers said Smutny-Jones. You'll hear more about this. Copyright 2001 Copley News Service Copley News Service April 19 2001 Thursday SECTION: State and regional LENGTH: 780 words HEADLINE: Windfall-profits tax gets Davis' backing BYLINE: Bill Ainsworth DATELINE: SACRAMENTO BODY: ??Federal regulators' failure to stop what they described as anti-competitive practices in the natural-gas industry added $750 million to Southern California Edison's cost of electricity a consultant estimated yesterday. ??The consultant Paul Carpenter of the Brattle Group spoke to an Assembly subcommittee investigating why California pays the highest natural-gas prices in the nation. Natural gas is a critical part of the electricity crisis because most of the state's generating plants run on natural gas. ??Natural-gas prices have soared throughout the nation but the bench mark price paid at California's border has been double that paid at other bench mark locations throughout the nation for months according to figures released by the Assembly Subcommittee on Energy Oversight. ??Next week Carpenter plans to testify at hearings in Washington D.C. on behalf of Southern California Edison and the California Public Utilities Commission which are asking federal regulators to intervene. ??The giant utility and the state regulatory body contend that a sweetheart deal between El Paso Natural Gas and El Paso Merchant Energy gave the sister companies enough market power to artificially raise the price of natural gas that flows into Southern California from Texas. ??El Paso owns the major pipeline bringing natural gas from fields in New Mexico and Texas to Southern California. El Paso Merchant Energy is an unregulated sister company. ??Carpenter called the prices paid in Southern California ''simply unprecedented'' in the United States. He estimated that the sister companies manipulated the market enough to add $2.60 to the price of a million British thermal units of gas. ??In addition he said El Paso Merchant Energy owns part of 20 smaller power plants ''qualifying facilities'' that get paid based on the price of natural gas in California. The higher natural-gas prices increase the company's revenues Carpenter said. ??El Paso company officials are expected to testify in front of the Assembly subcommittee today but in proceedings before the federal regulators they have denied any sweetheart deal. ??In a report they commissioned the company blamed the higher natural-gas prices in Southern California on increased demand and constraints on pipeline capacity. ??Gov. Gray Davis meanwhile gave his strongest endorsement yet to a windfall-profits tax on generators as a Senate committee chaired by Joseph Dunn D-Laguna Niguel began a series of hearings to probe possible price gouging by generators. ??''I believe the Legislature would be well within its prerogative to insist that generators receive an appropriate reduction whether it's 20 percent or any other number the Legislature hit upon'' Davis said. ??Senate Democrats Davis said will form a special committee to help work on his plan for the state purchase of the transmission system of Southern California Edison for $2.76 billion in exchange for state aid in paying off the utilities' debt. ??The governor said he told Senate Democrats a number of whom are skeptical of the plan that Edison's parent firm has agreed to back a $3 billion upgrade of the neighborhood distribution system retained by Edison and to return a $400 million tax refund to the utility. ??At the natural-gas hearing yesterday state officials said that after El Paso Merchant Energy bought a significant part of the pipeline capacity from its sister company it withheld natural gas to drive prices up. ??''Marketers have gamed the system and figured out how to hoard capacity and undermine competition'' said Harvey Morris an attorney for the California Public Utilities Commission. ??State regulators want the Federal Energy Regulatory Commission which regulates natural gas to open the market to more competitors. ??But the commission has repeatedly rejected similar complaints in the past. On March 28 FERC ruled that the affiliates did not arrange a sweetheart deal. ??''The fact that El Paso Merchant controls a large volume of capacity does not in and of itself render the El Paso contracts unjust unreasonable or unduly discriminatory'' FERC ruled. ??In other cases involving natural gas federal regulators acknowledged that certain contract provisions allowed anti-competitive behavior but they approved those contracts anyway. ??Lawmakers said they were puzzled by the federal regulators' lack of action. ??''It baffles me that we've found the problem anti-competitive behavior and market gaming but there's no cure because federal regulators won't take action'' said Assemblyman Juan Vargas D-San Diego. Staff writer Ed Mendel contributed to this report. LOAD-DATE: April 19 2001 of 63 DOCUMENTS 2001 / Los Angeles Times Angeles Times ????????????????????April 19 2001 Thursday Home Edition SECTION: Part A Part 1 Page 3 Metro Desk LENGTH: 772 words HEADLINE: CAPITOL JOURNAL CALIFORNIA AND THE WEST Price Caps Don't Fit in Cheney's Head for Figures BYLINE: GEORGE SKELTON DATELINE: SACRAMENTO BODY: ??Want price caps on wholesale electricity to staunch the bleeding of billions from California? Not going to happen Vice President Dick Cheney insists. Don't waste your energy thinking about it. ??Frankly California is looked on by many folks as a classic example of the kinds of problems that arise when you do use price caps Cheney said in a telephone interview Wednesday. ??The vice president was referring to another type of price cap--the infamous state cap on consumer rates that has left the private utilities billions short of enough revenue to pay their gouging wholesalers. What political leaders in California and the Northwest are pleading for from the Federal Energy Regulatory Commission is a regional cap on wholesale prices. ??Early last year a megawatt-hour was selling wholesale in California for $ 30. By year's end it had risen to an average $ 300 according to state officials. At peak prices have soared to $ 1500. Meanwhile demand increased last year by less than 4%. In fact demand last month was 9% less than in March 2000. ??This is the sorry news for ratepayers/ taxpayers: Californians paid $ 7.4 billion for electricity in 1999. This year the tab--without price caps--is projected at $ 70 billion. Gov. Gray Davis disclosed Tuesday that his administration has been shelling out $ 73 million a day to buy electricity for the pauper utilities. ??The profits of power producers--many of them Texans and Bush backers--have risen 400%-500%-600%. ??* ??But none of this budges the Bush administration. ??Price caps Cheney declares may provide short-term political relief for the politicians. But they don't do anything to deal with the basic fundamental problem. That problem is supply he says price caps discourage investment in new power plants and encourage consumption. ??Counters Garry South Davis' political strategist: The notion by free market zanies that you have to let profits rise 500%-600% is ludicrous. Reasonable profits can be made without bankrupting the system. They're just trying to protect the profits of their friends in the energy business. ??In truth California is building power plants as fast as it can. But not enough new megawatts apparently will be online by summer to prevent blackouts--and the bleeding of billions more into the pockets of out-of-state profiteers. ??How about a temporary price cap? ??Six months? Six years? Cheney replies. Once politicians can no longer resist the temptation to go with price caps they usually are unable to ever muster the courage to end them . . . ??I don't see that as a possibility . . . Any package you can wrap it in any fancy rhetoric you can prop it up with it does not solve the problem. ??* ??The White House clearly understands it has a problem in California--a political problem. A problem with a Democratic-dominated state that voted overwhelmingly for Al Gore. And now a problem with that mythical headline--Bush to California: Drop Dead--which seems to be getting bigger each day. ??There have been several recent California: Drop Dead stories. One was in Sunday's New York Times--Bush Devoting Scanty Attention to California. Tuesday the Sacramento Bee reported that when Cheney met with Northwest members of Congress to discuss West Coast energy he barred Californians from the room. ??Cheney flatly denies it. ??But Sen. Dianne Feinstein (D-Calif.) says she has had trouble making contact with the Bush White House. She has sent two letters to President Bush asking for a meeting on energy. The first time she got back a form letter with her name misspelled. On the second try she got a group meeting with Cheney. ??It was very disappointing she says. He spoke about letting the free market work and drilling in Alaska . That's not going to help California in the short-term. We need price caps until we're able to fix this very broken market. . . ??There seems no interest in really wanting to understand the California situation. ??I asked Cheney whether he sensed an anti-California bias across the country? No more than there's an anti-Texas bias he replied. I wouldn't get paranoid about it. ??The fact is California is one of the leading states in the nation. Often a trendsetter. . . . Well we hope not to emulate your energy policy. Hopefully we'll learn from that. ??His message to California: There's no reason not to be optimistic. The energy crunch obviously is a significant problem. . . . But it too will pass. ??While learning from California the Bush White House also might take a refresher course in the free market Hoover administration. LOAD-DATE: April 19 2001 of 63 DOCUMENTS 2001 / Los Angeles Times Angeles Times ????????????????????April 19 2001 Thursday Home Edition SECTION: Part A Part 1 Page 3 Metro Desk LENGTH: 1373 words HEADLINE: CALIFORNIA AND THE WEST DAVIS BACKS SILICON VALLEY POWER PROJECT ENERGY: GOVERNOR URGES QUICK APPROVAL OF SAN JOSE PLANT DESPITE OPPOSITION BY CITY AND A POWERFUL FIRM. BYLINE: JENIFER WARREN and TERENCE MONMANEY TIMES STAFF WRITERS DATELINE: SACRAMENTO BODY: ??Attempting to show that no region in California is safe from sacrifice Gov. Gray Davis on Wednesday called for quick state approval of a controversial power plant proposed for the Silicon Valley. ??The governor's action locks him in combat with the San Jose City Council which has unanimously rejected the plant and Cisco Systems the computer networking giant that wants to build its worldwide headquarters on adjacent land. ??In praising the proposed plant as a model of low-polluting efficiency Davis said all regions of California must share the pain as the state expands its power supply--a key step toward ending blackouts and reducing sky-high electricity prices. ??If approved the plant would be the 14th licensed by the California Energy Commission since Davis took office. The 13th--a 510-megawatt plant near San Diego--was approved unanimously by the commission Wednesday with little controversy. ??Rushing to expand the state's overtaxed energy supply the governor has recently cut in half the approval times for the licensing of some plants. Six are under construction according to Davis and three are scheduled to begin operation this summer. A fourth--the AES Corp. generator in Huntington Beach that is due to be restarted --could add more megawatts to the supply this summer. ??V. John White an energy consultant in Sacramento said the governor's newly active role as an advocate for power plants was a necessary step given the urgency of the supply shortage. ??It's very rare and I wouldn't want him to short-circuit the commission's review process White said. But I think he's trying to reassure folks we're doing everything we can and not just sitting around in our hot tubs. ??Davis urged the Energy Commission--a five-member panel dominated by his appointees--to stop talking about the project and grant it a license. If the commission does so it will mark only the third time the panel has usurped a local government's authority over zoning. ??We are all in this together Davis said flanked by a forest of electric transformers near the Capitol. We are one state and we all have to make the sacrifices necessary to make up for the mistakes of the last 12 years when no major power plants were built. ??The governor said the plant's developers Calpine Corp. and Bechtel Enterprises Holdings Inc. have made numerous concessions to San Jose officials including an agreement to sell power exclusively in the region. ??He added that the $ 300-million plant--expected to supply about 450000 homes--will be equipped with state-of-the-art systems that make it one of the cleanest plants to go up in the nation. ??The commission's staff has recommended licensing the project and some analysts said the governor's intervention--said to be unprecedented--should fuel momentum for approval. ??Commissioner Robert Laurie--one of two members who held evidentiary hearings on the project and is preparing a recommendation for the full commission--would not comment on the plant's prospects. But Laurie an appointee of former Gov. Pete Wilson insisted that the project would receive an impartial review. ??I know the importance of independent decision-making he said. ??San Jose officials say the Calpine project conflicts with the aesthetics of its site in a bucolic valley 15 miles south of downtown. On Wednesday Mayor Ron Gonzales urged the Energy Commission to give serious attention to the city's concerns about the plant's potential impact on residents and the environment. ??As the project has been designed and proposed to operate . . . it would present an unfair burden to our community the mayor said. ??A spokeswoman for the Calpine/Bechtel partnership disagreed and characterized the plant as key to restoring energy stability in the Silicon Valley a region heavily dependent on imported power. ??This is the only project in the pipeline that can help Silicon Valley out of its predicament in the near future said the spokeswoman Lisa Poelle. ??She expressed hope that the governor's comments which cap numerous meetings between the partnership staff and Davis aides would encourage San Jose to soften its stance on the project. ??The 600-megawatt plant is proposed for a swath of open space currently leased to a rancher and occupied by grazing cattle. A preliminary ruling by Laurie and the other commissioner scrutinizing the project is expected by June. The full commission would take a final vote about a month later and if a license were granted the plant would begin operations sometime in 2003. ??From the beginning the plant has been dogged by opposition and the Energy Commission has held more than 20 hearings--an unusually large number--on its fate. ??On Wednesday a spokesman for its heftiest foe San Jose-based Cisco said the company still has serious concerns about health and safety issues. ??Cisco has strongly opposed the plant because the company wants to build a $ 1.3-billion headquarters for 20000 employees nearby. In the past Cisco officials have threatened to relocate to another state if the power plant is built. ??Company spokesman Steve Langdon said the firm's plans to build an industrial campus were not scuttled by the announcement Monday that it is cutting 8500 workers from its payroll because of slumping sales of its Internet networking equipment. ??But he suggested that the plans were flexible enough to be scaled down for a smaller work force and that the campus may not house the company's headquarters. ??It doesn't all get built at once he said. We will build and occupy the site over time in phases as needed. ??Another leading opponent of the power plant argued Wednesday that the Energy Commission lacks authority to override San Jose officials and license the project. The Santa Teresa Citizen Action Group launched by homeowners near the site says the commission may only take such a step if a better plant site hasn't been identified. ??The group charges that the commission is aware of other available sites including one in an industrial part of the East Bay area and lists eight other reasons the plant should not be built among them the noise and emissions it would produce. ??The local Sierra Club chapter however has endorsed the plant largely on grounds that it would run cleaner than existing plants in the area. By offsetting emissions from those older plants the new project would actually reduce air pollution said Kurt Newick of the Sierra Club's Loma Prieta chapter. ??On another front Davis continued to lobby legislators for support for his plan to rescue Southern California Edison from bankruptcy through purchase of the utility's transmission grid. ??Emerging from lunch with state Senate Democrats who are openly wary of the deal Davis said he'd made progress to bridge some of the gaps. It was the governor's third meeting in two days with lawmakers of both parties. ??Some of the toughest skeptics are members of his own party in the Senate. Many fear that the deal Davis struck with Edison will hand the utility too much at the expense of ratepayers and some say bankruptcy might be a better option for the state's second-largest private utility. Pacific Gas & Electric Co. filed for bankruptcy April 6. ??To assuage concerns Davis proposed that a special Senate committee be named to meet with his energy advisors as the administration and Edison finalize details of the deal before it goes to the Legislature for approval. ??Senate leader John Burton (D-San Francisco) who has called the Edison agreement problematic said he may appoint such a committee but continued to suggest that an Edison bankruptcy might be acceptable. ??Many of the Fortune 100 companies have gone into Chapter 11 bankruptcy and it ain't like the end of the world for anybody Burton said. ??* ??Times staff writer Carl Ingram contributed to this story. ??Powering Up California ??Power plant projects recently licensed by the California Energy Commission and when they are expected to go online: ??* ??* Two of four turbines are expected to go online in December 2001 the other two are expected to go online in March 2002. ??Source: California Energy Commission GRAPHIC: PHOTO: (2 photos) Gov. Gray Davis urges California Energy Commission to approve Metcalf Energy Center a 600-megawatt power plant planned for San Jose. Demonstrators greet Davis on his way to news conference in Sacramento. PHOTOGRAPHER: Associated Press PHOTO: (2 photos) Gov. Gray Davis urges California Energy Commission to approve Metcalf Energy Center a 600-megawatt power plant planned for San Jose. Demonstrators greet Davis on his way to news conference in Sacramento. ?PHOTOGRAPHER: ROBERT DURELL / Los Angeles Times GRAPHIC: Powering Up California Los Angeles Times LOAD-DATE: April 19 2001 of 63 DOCUMENTS ??????????????Copyright 2001 Knight Ridder/Tribune News Service ???????????????????????Knight Ridder/Tribune News Service ??????????????????????????The Orange County Register 19 2001 Thursday SECTION: STATE AND REGIONAL NEWS KR-ACC-NO: ?K7970 LENGTH: 275 words HEADLINE: Ex-energy chief leery of state buying power lines BYLINE: By Kate Berry BODY: ??ONTARIO Calif. _ Former Energy Secretary Bill Richardson said Wednesday that he is uncomfortable with the state's $2.76 billion purchase of the transmission lines of Southern California Edison because it would derail future plans to fully deregulate the state's electricity market. ??I'm leery of a state purchase Richardson said at an economic conference in Ontario adding that the jury is still out on a plan by Gov. Gray Davis to keep Edison out of bankruptcy. ??He called for a rescue of Pacific Gas and Electric the San Francisco utility that filed for bankruptcy two weeks ago. ??In a half-hour speech Richardson admonished the Bush administration for failing to take a more active role in the California crisis. He backs a one-year regional price cap to calm the volatile wholesale market. ??In the Clinton administration California was gold he said. With the new administration it's another ballgame. ??Richardson also pushed for a bipartisan energy bill with Democratic themes including energy-efficiency standards conservation and environmental regulations. ??We need an energy policy for this country that embraces both parties' proposals he said. ??Energy Secretary Spencer Abraham has sparred with Richardson by trying to rescind new energy-efficiency standards for air conditioners that were approved in the last 30 days of the Clinton administration. ??ARCHIVE PHOTOS available from NewsCom-PressLink: ??Richardson. ??KRT CALIFORNIA is a premium service of Knight Ridder/Tribune ??(c) 2001 The Orange County Register (Santa Ana Calif.). ??Visit the Register on the World Wide Web at http://www.ocregister.com/ JOURNAL-CODE: OC LOAD-DATE: April 19 2001 of 63 DOCUMENTS ?????????????????Copyright 2001 The Chronicle Publishing Co. ?????????????????????????The San Francisco Chronicle ???????????????????APRIL 19 2001 THURSDAY FINAL EDITION SECTION: NEWS Pg. A18 LENGTH: 585 words HEADLINE: Alameda public utility rents four backup generators Extra electricity will be used during summer rolling blackouts SOURCE: Chronicle Staff Writer BYLINE: Matthew Yi DATELINE: Alameda BODY: Alameda's public utility announced yesterday that it is leasing four portable diesel electrical generators to avoid the one woe of the state's energy crisis they haven't been able to duck so far -- rolling blackouts. ???The utility's move to provide a backup source of electricity for its customers is part of a trend among city-owned utilities to gear up for expected power shortages during the dog days of summer. ???Healdsburg Santa Clara and Palo Alto -- all with their own electric grids -- are also initiating their own energy backup plans. ???The generators would kick in only during severe energy shortages when rolling blackouts are on the horizon. ???In Alameda four generators -- each the size of a tractor trailer -- arrived last week and are ready to be fired up Alameda Mayor Ralph Appezzato said yesterday. ???We're going to be the masters of our destiny he said. ???Alameda Power and Telecom is one of about 30 municipal utilities in California that opted not to deregulate with the rest of the state four years ago. Consequently its customers' power rates are expected to be stable this year while Pacific Gas and Electric Co. customers face huge rate increases. ???But municipal utilities such as Alameda's are still part of the statewide power grid which is managed by the Independent System Operator and are subject to rolling blackouts like everybody else when the state's energy reserves dip below 1.5 percent. ???Each of Alameda's four diesel generators will produce 1.5 megawatts of power. Each megawatt can light up 1000 homes utility officials say. ???The units leased at a total cost of $68000 a month through the end of the year are parked at Alameda Point. ???Their cost will be paid through the municipal utility's reserve fund and customers' power bills won't be affected said Junona Jonas the utility's general manager. ???I think in the long run we'll see more supply in the state but until that happens there will be communities that'll have to take these short-term drastic measures Jonas said. ???The utility's spokesman Matthew McCabe said the diesel exhaust from the generators won't be an environmental factor. ???Our environmental record is extremely important to us McCabe said. The diesel generators are only for emergency backup. . . . Besides these things are clean -- it's not like standing next to a diesel bus. ???The city is also getting help from the U.S. Maritime Administration which operates more than a dozen ships at the former Navy station in Alameda. When the juice is low those ships will unplug from the port and use onboard generators Jonas said. ???In the North Bay Healdsburg officials are waiting for the arrival of two diesel generators. Combined they are expected to produce 3.5 megawatts of power which can account for about 20 percent of the city's expected summer peak load said Bill Duarte city utility director. ???We're taking matters into our own hands he said. ???Farther south both Santa Clara and Palo Alto are considering leasing portable generators officials said. ???Bill Reichmann senior electric utility engineer at Santa Clara's Silicon Valley Power said the utility is planning to lease eight generators operating them in the southeastern end of town near the San Jose International Airport. ???Palo Alto's municipal utility also has recommended that the City Council approve renting two generators starting next month said spokeswoman Rima Johnson.E-mail Matthew Yi at myi@sfchronicle.com. LOAD-DATE: April 19 2001 of 63 DOCUMENTS ?????????????????Copyright 2001 The Chronicle Publishing Co. ?????????????????????????The San Francisco Chronicle ???????????????????APRIL 19 2001 THURSDAY FINAL EDITION SECTION: NEWS Pg. A3 LENGTH: 845 words HEADLINE: Davis' gouging claims disputed Officials say no link between PG&E bankruptcy high prices SOURCE: Chronicle Staff Writer BYLINE: David Lazarus BODY: Officials on the front lines of California's energy mess yesterday challenged Gov. Gray Davis' assertion that the state is being gouged by power companies because of PG&E's bankruptcy filing. ???Such dissent from the governor's own subordinates could make it harder for Davis to gain support for his energy measures in the state Legislature. ???Despite Davis' latest claims the Department of Water Resources which is spending about $70 million a day buying power said there is no evidence linking recent price increases to Pacific Gas and Electric Co. filing for bankruptcy protection on April 6. ???It is a seller's market said Viju Patel executive manager of the Department of Water Resources' power systems department. The power companies do not need an excuse to raise prices. ???Critics say Davis' penchant for secrecy on energy issues has come back to haunt him at a time when he needs all the allies he can find. ???People aren't taking his words at face value said Michael Shames executive director of the Utility Consumers' Action Network in San Diego. ???Republican lawmakers -- and even some Democrats -- have challenged a number of the governor's initiatives including a multibillion-dollar bailout scheme for Southern California Edison. ???Nevertheless Davis reiterated his belief yesterday that recent electricity price increases are an aberration driven by the bankruptcy of PG&E. ???He said California's spending on power jumped 40 percent in the week following PG&E's bankruptcy filing because generators say they face a greater risk of not being paid. ???Nothing else in the equation has changed said Steve Maviglio a spokesman for the governor. Everything is the same except the bankruptcy. ???However power companies were quick to challenge this assertion. They insisted that PG&E's bankruptcy actually was seen as a positive development by those in the energy business. ???If anything PG&E provides some solace for traders because the bankruptcy provides an organized mechanism for recovery of payments said Gary Ackerman executive director of the Western Power Trading Forum a Menlo Park energy-industry association. ???On the other hand he acknowledged that power companies are becoming increasingly wary of the state of California's creditworthiness as an energy buyer. ???The Department of Water Resources already has spent nearly $5 billion buying electricity and has yet to recoup a dime from ratepayers. State regulators are still trying to come up with a way to apportion the limited revenues from power rates among the various parties in California's energy picture. ???Rating agency Fitch Inc. said yesterday it may cut the state's credit rating because of questions surrounding recovery of energy costs. ???People are keeping an eye on things Ackerman said. They're watching how California finances things. ???If a premium on electricity sales to the state exists he said it probably has been in place since the beginning of the year well before PG&E's current woes. ???UCAN's Shames agreed. He said power companies added a risk premium to their California power sales late last year when it looked like the state's energy troubles were worsening. ???PG&E's bankruptcy may have increased the uncertainty Shames said but we've been paying a risk premium for months now. ???Richard Wheatley a spokesman for Reliant Energy in Houston insisted that his company's traders are not using questions about PG&E's or California's financial solvency as a fresh excuse for higher prices. ???I haven't seen any evidence of it he said. ???Mark Palmer a spokesman for Houston's Enron Corp. laid blame for recent price increases on low rainfall throughout the West which has cut output at hydroelectric facilities as well as on California's chronic power shortage. ???It's not that there's a premium on prices he said. It's just supply and demand. ???That said Palmer acknowledged that California's firm insistance on blackouts being avoided at all costs leaves the state vulnerable to virtually any price generators choose to demand. ???This means prices will be used to allocate a scarce resource he said. There's no other way it could work. ???Bottom line for consumers: It's going to be a long hot summer and electricity prices will soar even higher as demand surges. ???And despite the best efforts of state officials a daily threat of blackouts remains a virtual certainty as California's beleaguered power grid is stretched to the breaking point. ???At the Department of Water Resources' command center in a Sacramento shopping mall the state's team of electricity traders has moved onto a new high-tech trading floor where they negotiate power deals each day from the crack of dawn. ???The department's Patel said daily blackouts may be averted this summer after consumers see skyrocketing power prices reflected in their bills. ???People will respond to these prices and they are going to conserve like never before Patel predicted.E-mail David Lazarus at dlazarus@sfchronicle.com. GRAPHIC: PHOTO Gov. Gray Davis urged the California Energy Commission to approve construction of the proposed 600-megawatt power plant. / Associated Press LOAD-DATE: April 19 2001 of 63 DOCUMENTS ?????????????????Copyright 2001 The Chronicle Publishing Co. ?????????????????????????The San Francisco Chronicle ???????????????????APRIL 19 2001 THURSDAY FINAL EDITION SECTION: NEWS Pg. A3 LENGTH: 888 words HEADLINE: Davis backs San Jose power plant He also acknowledges bailout for Edison will be uphill fight SOURCE: Chronicle Sacramento Bureau BYLINE: Lynda Gledhill DATELINE: Sacramento BODY: Gov. Gray Davis urged the state Energy Commission yesterday to approve a controversial power plant in San Jose saying California needs every megawatt it can harness. ???Davis' recommendation runs counter to the wishes of the San Jose City Council and Mayor Ron Gonzales who have come out against the 600-megawatt Metcalf Energy Center in south San Jose's Coyote Valley. It also puts the governor at odds with one of his political allies Cisco Systems chief John Chambers whose company opposes the plant because it would be built near the tech firm's proposed new campus. ???Davis' announcement came the same day he all but admitted he lacks the support he needs in the state Senate for the deal he reached with Southern California Edison to restore the utility to financial health. Davis has portrayed that deal and construction of new power plants as essential to making California's energy market functional again. ???I think when we have an opportunity to put more power on line we should seize it Davis said. I believe we spend too much time talking about Metcalf. It's time to start building it. ???The Energy Commission has been reviewing the proposal by Calpine Corp. and Bechtel Enterprises Inc. for months. The commission's staff recommended in October that the plant be built and a final decision is expected by summer. If it is approved the plant could come on line next year and provide enough electricity for 600000 homes. ???None of the five commissioners could be reached yesterday. Three are Democrats appointed by Davis and two are Republicans appointed by former Gov. Pete Wilson. ???Gonzales and the rest of the City Council rejected the Metcalf plant in November. Until yesterday Davis had sat on the sidelines as the energy crisis deepened and a long line of state and federal officials including four of the five Assembly members from Silicon Valley urged the commission to overturn the council's vote. ???Some neighborhood groups oppose the plant along with computer networking giant Cisco which hopes to build a 20000-worker campus on a neighboring parcel. Cisco chief Chambers donated $50000 to Davis in the first six months of last year. ???Cisco's reaction yesterday was restrained. ???We have great respect for the governor and respect his decision said Cisco spokesman Steve Langdon. ???However Langdon added: We still have serious concerns about health and safety issues related to the proposed power plant. ???Some neighbors were much angrier. ???He's trying to act like he's the big bad tough governor and he's spineless said Issa Ajlouny who lives in the Santa Teresa neighborhood less than a mile from the proposed plant. He knows the approval process isn't working in his favor so he's trying to come out and act like a hero to the state of California. But he's nothing but backstabbing the city of San Jose on the environmental issues. ???Supporters of the plant see the 14 acres of former junkyard as the perfect site -- right next to Pacific Gas and Electric Co.'s largest substation in the South Bay close to major transmission lines and shielded from its neighbors by a 350-foot hill. ???But a housing development is also nearby and residents fear the power plant will belch pollutants in an area already suffering from some of the worst air quality in the Bay Area. ???Mayor Gonzales continued to express his concern yesterday. ???I would support clean power plants that will help us achieve greater energy self-sufficiency for San Jose residents and business Gonzales said. As the Metcalf project has been designed and proposed to operate however it would present an unfair burden on our community. ???That's not what Davis said however calling Metcalf one of the cleanest most efficient plants in the country. ???Davis praised the efforts of Calpine/Bechtel to work with the local community and said he was especially pleased that the venture had agreed to commit all the power to the local region. ???The Silicon Valley is obviously the engine driving our economy but they are very dependent on outside power Davis said. ???Also in Sacramento yesterday after an hourlong session with Senate Democrats -- the toughest legislative sell for Davis' proposed Edison deal -- the governor all but admitted his plan could not win enough votes for Senate approval. ???I think he knew there weren't enough votes going in said Sen. Don Perata D-Oakland. But there may be a way of perfecting a deal people can at least think of supporting. ???Senate Democrats have openly opposed Edison's deal saying the only beneficiaries are Edison shareholders and power generators who would be paid every cent owed them by the utility -- at the expense of customers who would pay more to erase Edison's debt. ???Unlike his meeting with Assembly Democrats after which Davis said he was encouraged the governor said yesterday he wanted the Senate to appoint a special committee to iron out differences over the Edison deal. ???Senate President Pro Tem John Burton D-San Francisco said he was not aware a committee was being set up. He said he favored an up-or-down vote on Davis' current proposal.Chronicle staff writers Greg Lucas Alan Gathright and Maria Alicia Gaura contributed to this report. / E-mail Lynda Gledhill at lgledhill@sfchronicle.com. GRAPHIC: PHOTO Gov. Gray Davis urged the California Energy Commission to approve construction of the proposed 600-megawatt power plant. / Associated Press LOAD-DATE: April 19 2001 of 63 DOCUMENTS 2001 Pacific Press Ltd. Vancouver Sun ????????????????????April 19 2001 Thursday FINAL EDITION SECTION: BUSINESS Pg. F1 / Front LENGTH: 731 words HEADLINE: B.C. Hydro's credit to California firms exceeded 1999 guidelines BYLINE: David Baines SOURCE: Vancouver Sun BODY: ??A confidential document issued in late 1999 shows that B.C. Hydro's power-trading subsidiary Powerex set a credit limit of $100 million US for its California customers. ??However by the end of 2000 Powerex had extended three times that amount of credit to those customers -- the California Independent System Operator and the California Power Exchange. With the California Power Exchange and Cal-ISO's major customer Pacific Gas & Electric under Chapter 11 bankruptcy protection repayment of this debt is now in doubt. ??Powerex spokesman Wayne Cousins noted that the document obtained by The Vancouver Sun which is marked strictly confidential was issued in November 1999. ??That's an old copy of our risk-management policy he said in an interview Wednesday. ??Credit limits have changed since then based on careful assessment of several factors including market conditions risks maintaining long-standing relationships and helping California meet its electricity needs to prevent crisis situations. ??Temporary revisions were only implemented after very diligent review incorporating the best market intelligence available our own due diligence and on-going dialogue with appropriate market participants. ??He refused to say when the credit limits for Cal-ISO and the California Power Exchange were increased. ??That type of information is confidential. You have a copy that I assume was leaked in some way but this is commercially confidential information. ??He said the increase in credit limits helped B.C. Hydro achieve record net income of about $1 billion during the year ending March 31. This figures does not include any write-downs that may occur if Powerex determines that any of its customer accounts are not collectible. ??Cousins however was insistent that all debts will be collected: We continue to pursue monies owing and we expect to be paid for electricity we have sold. ??He noted that Powerex suspended trades to all California entities on Dec. 8 unless those trades were fully secured by creditworthy customers. ??By that time Cal-ISO and California had racked up an unpaid bill of about $ 300 million US or $475 million Cdn -- about half the net income that Hydro has tentatively reported for the year ending March 31. ??The confidential document states that Powerex's policies and procedures are designed to control the risk of financial loss due to changes in market prices or volatility and the risk that a counterparty (customer) in a commodity transaction defaults on delivery and/or settlement. ??It states that the amount of credit to be advanced to any customer depends on its credit rating. An AAA customer for example may be granted credit to a maximum of $20 million. ??Cal-ISO and California Power Exchange are not utilities they are power pools. They purchase power from Powerex and other suppliers and re-sell it to utilities such as Pacific Gas & Electric and Southern California Edison. ??The pools are not rated but are assigned specific credit limits. As of November 1999 Cal-ISO had a credit limit of $40 million US and the California Power Exchange $60 million US. ??The risk-management document notes that the credit-worthiness of these pools depends on that of its suppliers. ??The Powerex credit-risk manager and the treasury manager are responsible for initially evaluating and then monitoring the credit-authorization policies and credit limits for each power pool in which Powerex trades the document states. Significant alterations in the credit policies of a power pool will trigger a mandatory reappraisal of the power-pool credit limit. ??California has been caught in a power vice in recent months. The problem dates back to 1996 when the state developed a plan to deregulate the electricity business. Competition was supposed to lower rates below a price cap that had been imposed. ??However dry conditions cut the ability to generate hydro-electric power and a surge in the state's economy created unprecedented demand for electricity. Prices soared. ??The result was that the California utilities paid record prices for power but weren't allowed to pass along the full cost to consumers. ??Pacific Gas & Electric and Southern California Edison the state's two biggest utilities now owe about $12 billion. ??dbaines@pacpress.southam.ca TYPE: Business LOAD-DATE: April 19 2001 of 63 DOCUMENTS ???????????????????The Associated Press State & Local Wire The materials in the AP file were compiled by The Associated Press. ?These materials may not be republished without the express written consent of The Associated Press. ?????????????????????April 18 2001 Wednesday BC cycle SECTION: Business News LENGTH: 348 words HEADLINE: Williams again target of overcharging allegations from federal regulators DATELINE: TULSA Okla. BODY: ??Federal regulators are once against targeting Williams for allegedly overcharging Californians for electricity. ??The Tulsa-based energy company was cited in a notice this week from the Federal Energy Regulatory Commission for allegedly overcharging California customers $25574 in March. ??Two other companies were also cited in the notice from federal regulators Monday. ??Dynegy Power Marketing Inc. of Houston was cited for overcharging California customers $469662 while Mirant California LLC of Atlanta was cited for overcharges of $92620. ??The commission told Williams and the other two companies to either refund the money or justify their prices which exceeded a price of $300 per megawatt hour that was set by the Federal Energy Regulatory Commission because of the California's electricity shortage. ??Williams also was accused of excessive charges of $8 million in January and $ 21.6 million in February for a total of $29.6 million. ??Williams spokeswoman Paula Hall-Collins said while the overpricing allegations against Williams in March were not as significant as in the other months the process of justifying them will be the same as in previous months. ??They determine the price that they feel is fair and justifiable and then we come back and say why we charged what we did she said. ??Hall-Collins said federal regulators haven't said whether they are satisfied with how Williams justified its alleged overcharges from previous months. ??Also in March the commission accused Williams and AES Southland of generating less power to drive up electricity prices in May and June 2000 resulting in alleged overcharging of $10.8 million. ??Williams denies overcharging for electricity it provides. ??In other news Williams Express Inc. a unit of Williams announced Tuesday it was selling 198 MAPCO Express convenience stores to Israel-based Delek Group for $147 million. Most of the stores are in Tennessee and executives expect to close the deal by the end of May. ??Williams will keep 29 MAPCO stores in Alaska. LOAD-DATE: April 19 2001 of 63 DOCUMENTS ???????????????????The Associated Press State & Local Wire The materials in the AP file were compiled by The Associated Press. ?These materials may not be republished without the express written consent of The Associated Press. ?????????????????????April 18 2001 Wednesday BC cycle SECTION: State and Regional LENGTH: 332 words HEADLINE: Governor congressman to fight proposals for national power deregulation policy BYLINE: By MARGERY BECK Associated Press Writer DATELINE: LINCOLN Neb. BODY: ??Gov. Mike Johanns and Rep. Lee Terry R-Neb. said Wednesday they will be working to make sure national leaders understand Nebraska's stance on a national energy policy. ??Nebraska's unique status as the only 100 percent public power state in the nation and its reliance on the corn-based fuel additive ethanol make the state's input in the development of national energy policy important Johanns said. ??Public power has worked very well for Nebraska consumers by providing low cost electricity he said adding that the deregulated state of California has suffered through weeks of rolling blackouts. We are committed to protecting public power in this environment of deregulation. ??Terry said he has talked at length to the staff of Vice President Dick Cheney who has been tapped to come up with a national energy policy draft. That draft will end up before the House Energy and Commerce Committee on which Terry serves. ??There will be a discussion about a national deregulation policy Terry said. ??A national deregulation policy would threaten Nebraska's public power system Terry and Johanns said. Terry said he plans to push for a states' rights exemption to any such policy. ??It is absolutely necessary that Nebraska have a voice in that discussion Terry said. ??Terry said he also has pleaded with the Bush administration not to grant a request from California to wave the Clean Air Act's gasoline oxygen requirement. ??Such a move is considered a death knell to ethanol a clean-air fuel additive because other states would be expected to follow suit in requesting - and receiving - similar waivers thereby destroying ethanol's market. ??They did not telegraph their position on the waiver Terry said of White House which is expected to decide on California's request this spring. ??Other energy concerns Nebraska leaders hope to address are rising heating costs and gasoline prices which are expected to top $2 a gallon in Nebraska this summer. LOAD-DATE: April 19 2001 of 63 DOCUMENTS ??????????????Copyright 2001 Knight Ridder/Tribune Business News 2001 San Jose Mercury News Jose Mercury News 18 2001 Wednesday KR-ACC-NO: SJ-POWER-PLANT LENGTH: 1038 words HEADLINE: California Governor May Back Energy Firm's Proposed Power Plant BODY: ??Under intense pressure to increase California's energy supply Gov. Gray Davis is expected to announce today his support for Calpine Corp.'s proposed South San Jose power plant -- a move that could ensure the state's most controversial power project is built. ??Davis said for months that he would not interfere in the environmental review of the proposed 600-megawatt power plant. But a source close to the governor said Davis has decided to use Calpine's Coyote Valley project to send a signal that California is ready to build more power plants and is open to business. ??San Jose has strenuously opposed the power plant. But Davis' decision to urge the California Energy Commission to approve it would likely hold sway with the agency which has authority over where plants are located but has almost never overridden local opposition. ??The commission -- three of whose five members were appointed by Davis -- is expected to complete its environmental review and make a decision early this summer. ??A spokesman for the governor declined to confirm the endorsement. But late Tuesday the governor scheduled a press conference for this morning to make an important energy generation announcement. ??San Jose Mayor Ron Gonzales declined to comment. But another of the plant's leading opponents pledged to keep fighting what would be the South Bay's largest power plant. ??An endorsement from Davis would cap a stunning turnaround for the project. ??Five months ago Calpine's Metcalf Energy Center was unanimously rejected by the San Jose City Council which decided that the power plant would be incompatible with the city's plans to develop high-tech campuses in North Coyote Valley. ??Some Calpine officials even considered giving up plans to build the power plant. ??But as California's energy woes intensified the Metcalf plant increasingly became a poster child for the need for more power generation to reduce the skyrocketing cost of electricity and avoid rolling blackouts. Silicon Valley one of the state's largest electricity consumers produces only a fraction of the energy it uses. ??Despite fierce opposition from local residents concerned about the environmental effects of a large power plant a steady stream of state and local organizations lined up behind the project including the Silicon Valley Manufacturing Group the San Jose Silicon Valley Chamber of Commerce and the local chapters of the Sierra Club and American Lung Association. ??The California Assembly voted unanimously in February to urge the energy commission to override San Jose and license the power plant. ??And top officials and attorneys at the energy commission have been working for months to ensure that the project wins approval a Mercury News investigation of the commission's environmental review of the project showed. The officials undermined negative environmental assessments of the Metcalf site and silenced commission analysts who said other sites would be better. ??The energy commissioners are weighing the staff's recommendation to approve the plant. ??Commissioner Robert A. Laurie who oversaw hearings on the project insisted at one hearing two months ago that the commission would complete an independent review. ??Although Davis has stressed his efforts to speed construction of new power plants the governor insisted he would not take a position on the project. ??The governor has repeatedly said he wants the process to play out Davis press secretary Steve Maviglio said last week. The governor believes the energy commission should complete its review. ??But there have been growing signs that Davis would throw his weight behind Calpine's project. ??A senior energy commission official said aides to the governor have been calling the commission for months to urge quick approval of the Metcalf plant. The governor's press secretary said no calls have been made. ??When Davis was looking for a backdrop to hold a press conference earlier this year to announce his plans to speed up approval of new power plants he chose Calpine's new plant in Sutter. ??The company also has actively campaigned for the governor's support. ??Earlier this year Calpine offered to sell the state cheaper power from the plant if it is approved. ??When Calpine and its development partner Bechtel Enterprises were looking for a lobbyist in Sacramento the companies turned to Platinum Advisors whose president Darius Anderson was finance chairman of Davis' 1998 gubernatorial campaign. ??The San Jose-based company gave the governor $ 19000 last year according to state campaign finance reports. ??Maviglio said the governor's ties to Calpine are no different from his relationship with Cisco Systems CEO John Chambers who has opposed the power plant. Campaign finance reports show Chambers gave Davis $ 50000 last year. ??Calpine officials said Tuesday they did not know of the governor's impending announcement. But they said they were not surprised. We've been working with the governor on a number of issues said project manager Ken Abreu. Metcalf is just one of them. ??Meanwhile Calpine's opponents in San Jose City Hall and in the neighborhood nearest the proposed power plant appear more isolated than at any time since the contentious debate over the Metcalf site began more than two years ago. ??Mayor Gonzales refused to comment on Davis' planned announcement. I don't respond to rumors said the mayor who has helped lead opposition to Metcalf. I have not heard anything. If he makes a statement I'll respond. ??But one of Calpine's fiercest local opponents said the nearby Santa Teresa neighborhood will continue to fight. We have a strong case said longtime South San Jose resident Issa Ajlouny. And we will win. ??The Mercury News strives to avoid use of unnamed sources. When unnamed sources are used because information cannot otherwise be obtained the newspaper generally requires more than one source to confirm the information. ??By Noam Levey and Mark Gladstone. Mike Zapler of the Mercury News contributed to this report. ??----- ??To see more of the San Jose Mercury News or to subscribe to the newspaper go to http://www.sjmercury.com JOURNAL-CODE: SJ LOAD-DATE: April 19 2001 of 63 DOCUMENTS 2001 Scripps Howard Inc. Howard News Service 18 2001 Wednesday SECTION: DOMESTIC NEWS LENGTH: 588 words HEADLINE: Davis says Edison agreement may need altering SOURCE: Scripps-McClatchy Western Service BYLINE: EMILY BAZAR and KEVIN YAMAMURA DATELINE: SACRAMENTO Calif. BODY: ??Gov. Gray Davis indicated Wednesday that he may need to alter the agreement to purchase Southern California Edison's transmission lines if he wants legislators to approve the deal. ??Though the Democratic governor declined to discuss particulars he said he asked Senate leaders to appoint a special committee dedicated to resolving disagreements between the administration and lawmakers. ??Many provisions of the memorandum of understanding the document that lays out the terms of the Edison deal must be approved by the Legislature and the state Public Utilities Commission. ??There is a determination to try and solve this problem whether or not it means amending the MOU or trying a slightly different approach Davis said after meeting with Senate Democrats. ??A spokesman for the utility declined to comment on the governor's statements. ??Davis announced the Edison agreement April 9 just three days after Pacific Gas & Electric Co. unexpectedly cut off transmission line negotiations with the governor and filed for bankruptcy protection. ??The deal would require the state to pay $2.76 billion for Edison's transmission lines or 2.3 times book value. In addition a portion of consumer electricity rates would be dedicated to paying off the remainder of the utility's debt estimated at about $5 billion. ??Both Edison and PG&E stockpiled massive debt when wholesale electricity prices soared. Price caps prevented them from passing along the entire cost of electricity to consumers. ??Since the Edison deal was announced however legislators have been critical of certain provisions suggesting that California consumers will receive little in return for relieving the utility of billions of dollars in debt. ??It's clear that the deal as is could well be problematic said Senate President Pro Tem John Burton D-San Francisco. This has to do with what's in the bill what's in it for the people of the state. ??Lawmakers initially believed they would have little ability to change the agreement and referred to it as a take it or leave it deal. ??In fact the memorandum of understanding itself says the deal can be nullified in the event any law is passed adopted or repealed ... (which) would materially impede or frustrate the ability of the Parties to effectuate all of the elements of the plan as a package. ??But in his meeting with Senate Democrats Davis indicated he may be willing to compromise. His goal he said is to keep Edison from following PG&E into bankruptcy. ??We still have some work to do Davis said. I think the appointment of a special Senate committee assuming that happens will let us work through the detail in an appropriate fashion. ??Burton said he has not decided whether to appoint a committee. ??Other senators came out of the meeting guardedly optimistic that they could compromise with the governor. ??It was obvious that there were concerns from members said Sen. Don Perata D-Alameda. He is open and ready to have the proposal perfected as it moves through the legislative process. ??Sen. Jackie Speier D-Hillsborough said she hopes to amend the deal to ensure power generators are penalized for over-charging the utilities and the state for electricity. ??The way it's presently crafted (generators) are being rewarded she said. They are getting a premium for selling electricity at a higher premium than ever conceived of by humankind. ??(Contact Emily Bazar and Kevin Yamamura of the Sacramento Bee in California at http://www.sacbee.com.) LOAD-DATE: April 19 2001 ???,other,formal,3 +Re: Daily Research reports,I would like to see research from all of these sources on areas of interest to enron -- energy and broadband North America and Europe. Thanks Henry Emery on 07/19/2001 12:03:17 PM To: undisclosed-recipients: cc: Subject: Daily Research reports Attached are two research reports that I can send to you on a daily basis. One of our many benefits here at our new location is the availability of various research sources. The two reports I have attached are from : The First Union Securities Equity Marketing Group and Merrill Lynch We also have access to Goldman Sachs research and CS First Boston Research. Please let me know if you would like me to continue sending these reports on a daily basis or if you have any particular companies that you are interested in hearing about. Sincerely Hank Emery - Spotlight071801.pdf.pdf - smith.pdf.pdf,other,formal,3 +Re: Dinner Plans,I get in too late tonight but maybe dinner or drinks on Thurs? Linda Robertson 06/19/2001 06:39 PM To: Steven J Kean/NA/Enron@Enron cc: Subject: Dinner Plans You are here Wed and Thur nights. Do you have plans? Do you want to do something with some of the DC staff?,personal & social,casual,3 +,We handed the Oped to DeLay's staff at lunch. I think we're finished for now.,other,casual,0 +Ackerman to talk to Wolak,Gary has been seeing Frank Wolak all over the place on the media scene. I asked him to ask Frank to do something POSITIVE and under the state's own control and push DA. Gary is also speaking to a bunch of CEOs (with Anjali of the ISO and Carl Wood) and he said he would carry our message to them as well. Sue Mara Enron Corp. Tel: (415) 782-7802 Fax:(415) 782-7854,media & press,casual,3 +"Board of Directors Meeting - August 14, 2001",calendar and meeting file -----------------,calendar & scheduling,formal,3 +Re: Wolak report,Sue: I'm so impressed that you know how to put the link on the email. I can't figure out how to do that and I think that looks much more high tech than attaching a silly old report. Thanks for the link. We can take it from here. Sarah Susan J Mara 12/22/2000 11:31 AM To: Sarah Novosel/Corp/Enron@ENRON Donna Fulton/Corp/Enron@ENRON cc: Jeff Dasovich/NA/Enron@Enron Subject: Wolak report Call me computer illiterate. I could not figure out how to download the report off the web site so here's the link.,information technology,friendly,1 +Time Magazine - Enron Plays the Pipes....,this is fantastic!! -----------------,media & press,excited,0 +Re: Ken Lay/ Jeff Skilling visits,No I had the right date from our previous communications. Nicholas O'Day 08/31/2000 09:25 PM To: Steven J Kean/NA/Enron@Enron cc: Maureen McVicker/HOU/EES@EES Subject: Ken Lay/ Jeff Skilling visits I have noticed a fairly significant typo in the note below. The correct date for the key note address is 26 October as set out in my first note. Did that impact on the issue of availability? -----------------,other,formal,3 +Re: Bahamas LNG,I think it would be a good idea to get together. I would include Eric Thode as he has been living through the PR battles on a daily basis. James D Steffes 05/30/2001 08:31 PM To: Steven J Kean/NA/Enron@Enron cc: Richard Shapiro/NA/Enron@Enron Michael Terraso/OTS/Enron@ENRON Kelly Kimberly/Enron Communications@Enron Communications Subject: Bahamas LNG Steve -- In a discussion today with Mike Kelly etc. it was apparent that the Public Affairs team viewed the Bahamas LNG transaction quite cautiously. Given the recent issues power plant development has had in Florida (big political fights that are going the wrong way) I was wondering if it made sense to bring together a meeting of all of Public Affairs and the deal team to analyze the implications of our development plans. My primary worry is that P/L under water could have severe ecological implications that are not being internalized into the transaction. I would like to try and arrange a meeting to (1) ensure Public Affairs coordination and (2) understand the deal impacts better. Please advise if I'm worrying for no good reason. Jim,other,formal,3 +Re: Confidential --CFTC Chair,Hi Steve Folks love Newsome and I think he's very nice and appears to be very free market. Spears the other Republican appointee is not at all free market in my view. I would not like this to mentioned anywhere else but I have found that the farm reps on the Commission may sound deregulatory but are not and have been really troublesome without a good free market person on board. And there are no truly free market persons on board at the Commission (every single other agricultural rep that I worked with on the Commission were trouble even though they claimed to be deregulatory -- and they were far worse before I got there and after I left.) I visited with Newsome a day before Inauguration and I was appalled at what they were planning to do concerning agency structure -- that would have elevated the regulatory lawyers and diminished the role of the economists at the agency. Misguided and showed to me a lack of understanding of how organizational structures can affect what comes out of an agency. I am often at odds with the industry view regarding CFTC issues. I don't think the futures exchanges who have a lot of power necessarily are pro-competition and many of the non-exchange folks who lobby on CFTC issues are Washington or New York (Democrat - which is why they want to involve Ken at this level) lawyers who do not understand markets and who are more interested in being able to claim influence or impact. The CFTC is in awful shape -- the quality of staff is horrendous and the Commission is relying on some of the worst people for their policy work (same folks that Brooksley Born used same folks who have advocated more regulation of the OTC market for years). Many quality folks do not want the job as Chairman because it's been such a backwater. I am looking for some good folks. Have at least one person who would be good at that job. And it's not Newsome. Please do not share this information with the usual folks as they hate me anyway (I'm too free market and have argued against their fixes). Sorry for this scathing review but this is an important appointment. Wendy,other,confidential,5 +Dinner with Craig Goodman - Cancelled,202-333-3288,personal & social,casual,0 +Confidential - ENhome Program,The purpose of this message is to provide key areas (specifically IT Suppor= t=20 and Purchasing Organizations which might receive questions about the new=20 ENhome program) with preliminary information about the ENhome program as we= ll=20 as a standard message to deliver. The goal is to communicate a consistent= =20 message to all of our employees. Please keep in mind that changes are stil= l=20 being made at this time so your discretion is welcomed until the internal= =20 communication has been distributed. At the same time please inform the=20 appropriate individuals within your area that you believe might receive=20 questions. What is ENhome? An OTC approved program that will provide eligible employee= s=20 (active regular full-time and part-time employees whose business units ele= ct=20 to participate) at home with high-end internet devices broadband internet= =20 connection (where commercially available) and an employee-centric portal fo= r=20 personal use.=20 Attached to this message are three documents concerning this new program. = =20 These documents are: ENhome PowerPoint Presentation - High-level presentation provided to all of= =20 the Business Unit=01s Human Resource Departments describing the program. = =20 ENhome Draft of Internal Communications =01) This is a draft of the interna= l=20 communication that will be sent to eligible employees. I will send you the= =20 final copy when it has been approved. ENhome Q&A Draft =01) This is a draft of the Q&A document in case you may= =20 encounter these questions. Please review this document and if you feel the= re=20 are additional questions that need to be addressed let me know and I will= =20 work to get these answered. This program is scheduled to be announced to all eligible Enron employees a= t=20 either the end of this week or early next week. Remember that these=20 attachments are drafts and may be changed. As soon as I receive final=20 copies I will forward them to you. =20 Questions regarding the message from the Office of the Chairman concerning = =01&A=20 Computer for You and Your Family=018 should be responded to as: This program is being sponsored by Enron=01s Office of the Chairman and w= ill=20 be coordinated by Corporate Human Resources. The Global Information=20 Technology unit of Enron Net Works and Global Strategic Sourcing are workin= g=20 in conjunction with Corporate Human Resources to support this endeavor. =20 Details about this program are still being finalized and will be communicat= ed=20 as they become available. An eSpeak session will be scheduled in the near= =20 future where you will have an opportunity to ask questions. If you have any additional questions regarding this program or the=20 communications that will be released please feel free to contact me at=20 713-853-7947. Thanks Susan,other,formal,3 +"Weekly Retail Meeting, EB 27C1",John Anderson PTC/NERC Brad Petzold Power Nav -- John Henry (202) 466-0547,other,formal,3 +RE: Moving foward at a good clip,Call at 5:00 today (3:00 your time) if you can. ,project management,casual,3 +Meeting Notice - California Document Production Issues,calendar -----------------,other,casual,3 +Charts from Terry Thorn,-----------------,other,neutral,3 +GENERATOR ORGANIZATION,-----------------,other,neutral,0 +<> - JB 005,-----------------,finance,formal,3 +Re: Draft Organizational Announcement about Japan,Suggested changes are highlighted below. John Sherriff@ECT 04/24/2001 12:55 AM To: (713) 529-7757 Ken Rice/Enron Communications Kevin Hannon/Enron Communications Mark Frevert/NA/Enron Greg Whalley/HOU/ECT Mike McConnell/HOU/ECT@ECT Steven J Kean/NA/Enron@Enron Mark Palmer/Corp/Enron@ENRON Joseph P Hirl/AP/ENRON@ENRON Jeremy Thirsk/AP/Enron@ENRON Morten E Pettersen/AP/Enron@Enron Nicholas O'Day/AP/Enron@Enron Jackie Gentle/LON/ECT Richard Shapiro/NA/Enron@Enron Jeffrey McMahon/HOU/ECT Jeffrey A Shankman/Enron@EnronXGate Raymond Bowen/enron@enronxgate Joe Gold/LON/ECT@ECT Bryan Seyfried/LON/ECT@ECT Jeff Kinneman/HOU/ECT Rebecca McDonald/ENRON_DEVELOPMENT Carey Brian Stanley/EU/Enron Michael R Brown/LON/ECT Mark Evans/Legal/LON/ECT Fernley Dyson/LON/ECT Ted Murphy/LON/ECT@ECT Rick Buy/HOU/ECT Richard Causey/Corp/Enron Mark E Haedicke/HOU/ECT@ECT Drew C Lynch/LON/ECT David Oxley/HOU/ECT@ECT John J Lavorato/Enron@EnronXGate lkitchen@enron.co.uk cc: Subject: Draft Organizational Announcement about Japan May I please have your comments if any on this draft by close of business Wednesday. We hope to have agreed on the Q&A's by then and to send it out the announcement on Thursday. John To be sent to: All Enron Europe all employees in Japan all Global Markets and all VPs and up around the company Enron has established several wholesale businesses in Japan in the last year including Metals Power Plant Development (via our investment in EnCom) Coal LNG & Weather. We see significant opportunities in each of these businesses and we will continue to expand our presence in Japan in order to capture these opportunities. However while Japan continues to make progress towards a liberalized electricity market significant barriers to power trading remain under the current interim market structure. Until further tangible steps are taken to improve third party access for electricity in Japan we will suspend our power marketing efforts and focus on the significant opportunities that currently exist in our other wholesale businesses. [Any statement regarding our existing power sales commitment?] Once the necessary regulatory changes have been completed we expect to aggressively pursue Enron's traditional position as the leading buyer and seller of electricity in every deregulated market. We are making a number of organization changes in order to better align our resources with the opportunities in the Japanese market. [deleted text] Joe Hirl our President of Enron Japan will move to the Global Markets group and lead a team that will focus on developing all our Global Markets opportunities in Japan especially Weather Oil LNG Coal and Shipping. We expect to continue our general recruiting of Japanese nationals and as President of Enron Japan Joe will continue to provide the overall business leadership to both recruiting and the Analyst and Associate program in Japan. The Finance origination team headed by Jeremy Thirsk will continue to report to Joe and also move to Global Markets. Our power trading group led by Morton Erik Pettersen will transition into other roles around Enron. The Equity/FX/Interest rate team which is a part of Global Markets has two employees in the Tokyo office today and they expect to expand their efforts throughout the year. The EnCom group which is our power plant development business (with minority partners) and headed by Carey Sloan will continue its efforts in developing power plants in Japan. We are pleased with the progress we are making on a number of sites and EnCom will continue to report to the Enron Europe Office of the Chairman. Our Metals team headed by Kazunari Sugimoto will continue to report through Enron Metals in London. By May we expect Enron Credit to have two to three employees in Tokyo pursing the Credit Derivative business. These employees remain in Enron Credit a part of Enron Europe. EBS has two employees headed by Jim Weisser and this team expects to expand by year end. The Industrial Markets team also expects to have two employees in the Tokyo office in the next couple of months. In the last seven months the commercial support services for Japan have been transitioned to London for support and this is not changing. Jane McBride heads the legal team and will continue to functionally report to Mark Evans General Counsel in London. The RAC function will continue to report to Ted Murphy head of RAC for Enron Europe. The Risk Management and Accounting team is headed by Jan-Erland Bekeng will continue to functionally report to Fernley Dyson in London. The IT HR Tax and real estate teams will also continue to functionally report to London. Nick O'Day who heads the Public Affairs group (Government & Regulatory Affairs and the Public Relations) in Japan will report to the Enron Europe Office of the Chair with a Public Relations functional reporting to Jackie Gentle in London and a Government Affairs functional reporting to Rick Shapiro in Houston. We anticipate that his team's efforts will be primarily directed to supporting the EnCom power plant development team but they will also continue to provide support for Global Markets EBS & Industrial Markets. We have already made considerable progress in breaking into the Japanese markets across a wide range of Enron businesses and we anticipate that this will provide significant profit growth for years to come. Through these current changes we can demonstrate our ability to be flexible and target our resources where they will realise the most immediate value for the company.,other,formal,3 +Energy Issues,Firsst article attached refers to the 1946 Nebraska case I mentioned to you= =20 in DC ,other,casual,2 +RE: ticket,Another question. What about a Continental flight to Amsterdam and from Amsterdam to Warsaw? I can also fly Continental through Rome or London as long as I don't have to change airports. Vince ,personal & social,casual,3 +Re: CPUC Subpoena - Conference call TODAY!,I won't be on the call but will fax my comments to you this am Twanda Sweet@ECT 10/06/2000 09:51 AM To: Steven J Kean/NA/Enron@Enron James D Steffes/NA/Enron@Enron Richard Shapiro/NA/Enron@Enron Mary Hain/HOU/ECT@ECT Jeff Dasovich/NA/Enron@Enron msmith1@enron.com david_aamodt@pgn.com mday@gmssr.com Mark Palmer/Corp/Enron@ENRON Mark E Haedicke/HOU/ECT@ECT gfergus@brobeck.com cc: Subject: CPUC Subpoena - Conference call TODAY! Please be advised that there will be a conference call today at 11:30a.m. central standard time to discuss the draft response to CPUC. The dial in number is 800-998-2462 (passcode 4672956). If you have any questions please call me at 713-853-5587. Thanks. Richard Twanda Sweet Enron North America Corp. EB3821 (713) 853-9402,energy infrastructure,formal,5 +<> - General Expenses,,finance,neutral,3 +Request Confidential Information by FERC,We will be asking for confidential treatment unless and until the FERC requires similar information to be released by all market participants. -----------------,energy infrastructure,formal,3 +Confidential Information and Securities Trading,To:CASH MICHELLE Email:michelle.cash@enron.com - 7138536401 Enron Wholesale Services - Office of the Chairman From: Mark Frevert Chairman & CEO Mark Haedicke Managing Director & General Counsel Subject: Confidential Information and Securities Trading To keep pace with the fluid and fast-changing demands of our equity trading activities Enron Wholesale Services (EWS) has recently revised its official Policies and Procedures Regarding Confidential Information and Securities Trading (Policies and Procedures). These revisions reflect two major developments: (1) our equity trading activities have been extended into the United Kingdom and (2) in an effort to streamline the information flow process the Review Team will play a more centralized role so that the role of the Resource Group is no longer necessary.You are required to become familiar with and to comply with the Policies and Procedures. The newly revised Policies and Procedures are available for your review on LegalOnline the new intranet website maintained by the Enron Wholesale Services Legal Department. Please click on the attached link to access LegalOnline: If you have already certified compliance with the Policies and Procedures during the 2001 calendar year you need not re-certify at this time although you are still required to to review and become familiar with the revised Policies and Procedures. If you have not certified compliance with the Policies and Procedures during the 2001 calendar year then you must do so within two weeks of your receipt of this message. The LegalOnline site will allow you to quickly and conveniently certify your compliance on-line with your SAP Personal ID number. If you have any questions concerning the Policies or Procedures please call Bob Bruce at extension 5-7780 or Donna Lowry at extension 3-1939.,legal affairs,formal,3 +Energy Issues,,other,neutral,0 +Assoc PRC (4 Seasons),Hartsoe: PJM HoganSPP WSCCHebertdemocratic nominee ACA Andy Rotherham AAE membership (703)875-0764 Gordon Weil page Maureen Joe Allen Dave Marquart Richard Tabors,government & politics,casual,0 +Privileged & Confidential -- Verification,,other,neutral,5 +Fantastic Article in wash post on Refunds,- California Changes Stance on Refunds Two Sides Far Apart In Energy Talks By Peter Behr Washington Post Staff Writer Friday July 6 2001 Page E01 California officials have abruptly shifted tactics in their attempt to recover billions of dollars in alleged overcharges for electricity saying they may reduce their demands for huge refunds if generators renegotiate $43 billion in long-term electricity contracts that the state signed this year. Gov. Gray Davis (D) said part of the $8.9 billion in refunds the state is seeking could be offset by reductions in energy prices in the long-term contracts whose costs have become a growing political embarrassment for Davis. We've made suggestions we've offered various ways in which people could get us $8.9 billion Davis told the San Jose Mercury News in a report yesterday. You can renegotiate our existing contracts and save us money. However you want to do it it's just got to net out close to $8.9 billion. The new offer was introduced this week into the closed negotiations over a California settlement being conducted in Washington by Federal Energy Regulatory Commission Judge Curtis L. Wagner Jr. according to sources close to the negotiations. Yesterday Wagner said he may issue his own preliminary finding today on the amount of overcharges if California officials and the generators cannot reach a compromise. What I'm trying to do is get people in a settlement mood Wagner told reporters. In the event we're unable to do that [Friday] at some point I may offer a preliminary assessment. The settlement conference is set to conclude on Monday. Wagner FERC's chief administrative judge has been trying to push both sides toward a compromise that would resolve the huge energy pricing controversy. Mountainous energy prices have bankrupted California's largest utility drained billions of dollars out of the state treasury and put Davis at sword's point with generators that help keep the state's lights on. Last Friday Wagner rebuked Davis's chief representative Michael Kahn chairman of California Independent Grid Operator -- the state's power grid manager -- indicating that the state's demand for nearly $9 billion in refunds from power generators and marketers was too high sources said. Wagner's settlement conference which has involved more than 100 lawyers for all sides is closed to the public and media. Wagner complained last month that Kahn was following a political agenda and his lack of independence in the negotiations was such a joke that the parties might as well wear clown suits according to a Dow Jones report confirmed by sources close to the talks. But he has also criticized the generators and power marketers led by Reliant Energy Inc. Williams Energy Services Duke Energy and Southern Co. for failing to make serious settlement offers these sources said. The suppliers have offered to refund $600 million provided the state is able to call off various California lawsuits demanding far larger refunds sources said. Wagner's leverage is his ability to propose his own refund figure to FERC's commissioners. FERC has tentatively called for $124 million in refunds but now is taking a harder line on preventing a new escalation of California's electricity prices this summer and is likely to be receptive to a higher refund figure some energy analysts believe. Davis's tactical change offering to make the long-term contracts part of an overall settlement comes amid growing criticism of what the state will have to pay for energy under those deals. California's energy calamity stemmed in large part from its failed deregulation plan which relied heavily on short-term power purchases at volatile spot market prices. When energy costs shot upward last summer so did the state's electricity bills. In response Davis's aide S. David Freeman and his staff began negotiating long-term power contacts with suppliers. The $43 billion in deals signed so far would require the state to pay about $70 per hour for a megawatt of power for a large part of the electricity it will need over the next 10 years. That's well under the average of $250 per megawatt-hour that the state was paying at the beginning of this year but above current power prices -- and considerably higher than what electricity may cost in the next decade energy analysts say. A new agreement to lower those contract prices could relieve political pressure on Davis and focus settlement negotiations away from the state's controversial demand for the $8.9 billion refund. Davis will argue that reducing future power charges that his administration negotiated should count as a refund because the deals were reached under commercial duress according to sources close to Wagner's negotiations. Industry supporters say Davis's refund figure is impossible to justify. There's no benchmark for what a fair and reasonable price should be said Michael Zenger California director of Cambridge Energy Research Associates. The state's advocates counter that if FERC enforced a just and reasonable standard for power prices based on operating costs and a generous profit the overcharges by all sellers could easily reach the $9 billion figure. It's not rocket science but it does require the regulators to regulate said Frank Wolak a Stanford University economist who heads an oversight committee for the California grid. Those polar-opposite views have left both sides in Wagner's conference room billions of dollars apart as the talks approached their final weekend sources said. 2001 The Washington Post Company,other,informative,3 +Southeast RTO: Southerns Load,The Barton discussion draft says that FERC's hands would be tied and that they would have to approve a proposed RTO as to size and scope if the proposed RTO owns or has operational control over transmission facilities that serve at least 40000 MW of load. Southern's CEO testified in Congress recently that their load is over 35000. I assume the 40000 MW minimum would permit the SeTrans proposal to meet the proposed statutory minimum since it is Southern plus a few munis as I understand it. Is this correct? Who would know how many RTOs there would be if each were just over the 40000 MW minimum? I assume it is much more than 4-5 RTOs -- if so this is a good contrast to use in our Hill efforts. Thanks.,other,inquisitive,3 +Re: Confidential Attorney Client Privilege - Attorney Work Product,The letter looks fine. Eric H's letter was addressed to market participants. Can we get EPSA or WPTF to file this letter? Alan C. Mary Hain 01/25/2001 04:58 PM To: Christian Yoder/HOU/ECT@ECT steve.c.hall@enron.com Richard Sanders James D Steffes/NA/Enron@Enron Joe Hartsoe@Enron Sarah Novosel/Corp/Enron@ENRON James E Keller/HOU/EES@EES Mike D Smith/HOU/EES@EES Harry Kingerski/NA/Enron@Enron Dennis Benevides/HOU/EES@EES Tim Belden/HOU/ECT@ECT Robert Badeer/HOU/ECT@ECT Jeff Richter/HOU/ECT@ECT gfergus@brobeck.com Alan Comnes/PDX/ECT@ECT Richard Shapiro Roger Yang/SFO/EES@EES Greg Wolfe@ECT Chris H Foster/HOU/ECT@ECT Steven J Kean/NA/Enron@Enron Richard Shapiro cc: Subject: Confidential Attorney Client Privilege - Attorney Work Product I have drafted the attached letter denying the Cal ISO's request to send it (and the EOB) EPMI and EES' cost information for transactions over the FERC's cost cap. Since I believe we are on very firm ground my initial inclination was to send no response to the ISO's letter so there would be nothing to quote in the press. However I drafted this letter at Alan's suggestion for purposes of discussion. We should decide whether to send a letter before distributing this draft more widely in-house to discuss how to parse the message.,legal affairs,formal,3 +RE: Joao Neves,Rita I have postponed all the hiring decisions till late August - early September. We can revisit Joao's case at this point. We shall have better information about the space in the new building we can count on and the time of the move. We appreciate Joao interest in Enron. Vince Kaminski ,other,formal,2 +Summary of Administration Comments on Bingaman Bill,I have read through the 19 pages of Administration comments on the Bingaman draft electricity bill released last month. Here are the main items in a quick bullet format so you have the flavor of them. Delete provision on federal jurisdiction over bundled/unbundled (they don't offer a reason). We of course agree for tactical reasons. Add a provision to authorize FERC to order wheeling in States that open retail markets. Add a provision to allow FERC to issue wheeling orders on its own motion based on an informal hearing rather than an adjudicatory hearing as under current law. Make it clear that the Federal Power Act does not affect the authority of a State to require retail competition (the comments say some utilities have tried to argue that the FPA prohibits states). The provision giving FERC power to order RTO participation should be deleted. The comments raise drafting question. The changes to the FERC merger review sections of the FPA should be limited. FERC lite should be extended only to state municipal utilities and cooperatives not the Federal utilities. The FERC should authority over the Federal transmission systems equivalent to FERC authority over public utilities (with special BPA rules). No need to legislate on market-based rates (we oppose the Bingaman language anyway so this is helpful). Interconnection language should be limited to transmission facilities not local distribution. No objection to streamlined reliability provision (this is good for us). Remedial measures for market power should be deleted. Administration to provide legislative language on federal transmission siting provisions which they want to retain. Not convinced there is a need for market transparency rules because FERC and DOE already have enough authority. Administration supports even tougher criminal penalties. Recordkeeping under PUHCA repeal should be clarified. Federal purchase requirement for renewable energy should be deleted. No objection to real-time pricing standard. Net metering should be limited to small residential renewable facilities. Do not support federal renewable portfolio standard (but could clarify state authority to adopt same).,other,formal,3 +Energy Issues,,other,neutral,0 +RE: Invitation,Deniese Thanks for the invitation. I shall join you. Vince ,personal & social,polite,2 +Enron Japan Office Opening Ceremony,I would like to do this but I have a speaking engagement the next day -- do the time zones work out so that I can do both or do I need to find a sub for the nov 1 speech? ,other,casual,3 +FERC/SEC Update,please print ,energy infrastructure,casual,3 +RE: Chairmans Speech,Re-read your reply. Just wondering what it means to possibly add a provision which I understand is a may -- dealing with FERC's authority to change existing RTOs. Depending on what that means it could seriously hamstring FERC's efforts for a 4-5 RTO model as sought and we support by not letting FERC change existing RTOs (particularly if that includes pending but not approved) to change. For example would the language under consideration block a Northeast RTO of PJM NY and NE since PJM is existing and NY has filed? What would be the rationale for such a serious limitation on FERC's authority? Thanks. ,energy infrastructure,inquisitive,5 +Jeff on CNN,fyi -- further distribute this message as you see fit. -----------------,media & press,casual,2 +Welcome New Associates - Reception,calendar -----------------,other,friendly,3 +Industry News: Charges of Gouging as Power Costs Skyrocket,fyi -----------------,other,neutral,0 +Re: CA Price caps,Oops. My computer sent the message before I was finished. I continue to hope that there is more opportunity than risk in this for us. Price volatility is in the news like never before and our main product is price risk management. I know that the inquiries are up I hope EES and ENA can get some sales out of it. More utilities have been approaching TNPC EES and ENA about taking over their merchant functions. On the policy side we are working the issue on both a state and federal level. Whether this country does anything meaningful to deal with the current crisis comes donw to one person ... Linda Breathitt. Ken Lay spoke with Secy Richardson and Sen Schumer about proposing rulemaking initiatives to FERC. We are working the RTO process hard elsewhere in the country and coming up with messages to arm our remaining allies around the country. THis is the biggest time for us on this issue since the very beginnings in California and New Hampshire. In the current panic however we will be decimated if we are associated only with a move to keep price caps from going into effect (I saw your message to Mona). I am going to read the comments next but I start off thinking we need to avoid running headlong into the price cap movement we may be better off trying to co-opt the movement to get broader reform. Hang in there. Susan J Mara 08/11/2000 11:56 AM To: Steven J Kean/HOU/EES@EES cc: Subject: CA Price caps I heard you've been raising a ruckus about our activities on the price caps -- asking us to do more. Thanks. I feel as if I have been a voice in the wilderness for the past six months when I was trying to get people to pay attention to the bad things happening in CA and warning that the problems (mainly a threat of reregulation) will spread elsewhere.,other,urgent,5 +Greetings from London,Hello Darrell I am in London this week looking among other things at our CreditDesk.com operation. I was trying to access your expert report from your web site but it's password protected. Can you send me a copy? Vince,other,polite,3 +Re: Confidential - Rob Stewart,Shanna I'm supportive of the raise to $150k. I think he is doing a good job and has a lot of value. He didn't fair well during the ranking due to lack of big $ or closure but maybe this will send him a good message. Thanks m,human resources,friendly,2 +,I love you. Call me.,personal & social,casual,0 +Additional Lobbying Efforts,FYI. I think they should try to get in to see Lundquist but I don't think we need to participate in this. We have been focussed on nation-wide issues when we have had the opportunity to meet with Lundquist and I don't think we should use our limited shots here. -----------------,external affairs,formal,2 +Ken Lay Mention At NRSC Reception Last Night,Last night I attended the National Republican Senatorial Committee's reception at Senator Frist's home in DC. (Frist is the NRSC chairman this cycle.) Enron including Jeff and Linda had been invited to the reception the purpose of which was to introduce ex-RNC chairman Haley Barbour as the NRSC's National Finance Chairman. Present were over a dozen Republican senators including Minority Leader Lott Whip Nickles and Sens. Kay Bailey Hutchison Bunning (KY) Fitzgerald (IL) Cochran (MS) Inhofe (OK) Bond (MO) Crapo (ID) Voinovich (OH) Allen (VA) and Chafee (RI). The news from our perspective is that Haley Barbour singled out Ken Lay for praise as the first person to step to the plate and agree to help with their new Majority Makers program. This is the effort that Barbour will head up to raise $21 million for this election cycle by concentrating on events outside DC that would target businesses and business leaders without a DC presence. Barbour said that Ken had agreed to organize and chair a Houston fundraiser to raise $1 million toward the $21 million total. Ken was the first name he mentioned. The only others were the DeVos family in Michigan and Julie Finley a major GOP fundraiser based in DC. Needless to say I was suddenly quite popular after Haley made his remarks to the assembled group. Haley said he looked forward to working with us on this project. As you know from a previous e-mail Pat Shortridge had earlier seen our mutual friend Mitch Bainwol the executive director of the NRSC who had told Pat at lunch last week that Haley had spoken with Ken but last night was the first I had heard a dollar figure -- and a big one at that -- linked to the effort. While it was not stated I assume from the location and size of the event's goal that the President would be involved (but this is only an educated assumption on my part). Later I saw Karen Hughes of the White House staff but I do not think she was present when Haley made his comments.,government & politics,casual,3 +Composition of unsecured creditors committee,-----------------,finance,neutral,3 +"RE: 1. London, June 28 - 29; 2. Houston, July 16 - 17",Shirley No problem. Vince ,other,casual,0 +RE: Hope youre staying dry!,Kate Not yet. I will know sometimes in August - September. Vince ,personal & social,casual,0 +Op Ed satire,Can one of you forward to Ed or whoever you feel appropriate? -----------------,other,casual,2 +,Attached are my comments on the Bliley amendment to the Largent amendment.,legal affairs,formal,3 +,Skilling will be speaking at the National Press Club next week. He'll give an overview of Enron's business talk about what's going on in power markets and what should be done to fix the current problems. California will get covered as well. Other than what we have already discussed is there anything Jeff should know or address in his remarks?,other,casual,3 +CAISO Notice - Congestion Reform Proposal - Apendix B,Market Participants: As part of the Congestion Management Reform Proposal the ISO has posted Appendix B Locational Price Dispersion Study on the ISO web site at . Please be aware that the file is very large (the Word version is 5.1 mb and the PDF version is somewhat smaller at 4.3 mb) so it will take a while to download. Byron Woertz Director Client Relations,energy infrastructure,formal,3 +Re: California Update 07.18.01,These are useful updates. Please include Whalley Lavorato Parquet Dietrich Delainey Kitchens Haedicke Sanders Kirby Sharp Leff Calger Belden etc on future updates. Thanks From: Jeff Dasovich on 07/18/2001 08:18 PM Sent by: Jeff Dasovich To: Richard Shapiro/NA/Enron@Enron skean@enron.com Susan J Mara/NA/Enron@ENRON Harry Kingerski/Enron@EnronXGate James D Steffes/NA/Enron@Enron Linda Robertson/NA/Enron@ENRON Susan M Landwehr/Enron@EnronXGate mpalmer@enron.com Karen Denne/Enron@EnronXGate Janel Guerrero/Enron@EnronXGate Paul Kaufman/Enron@EnronXGate cc: Subject: California Update 07.18.01 The Senate the Assembly and the Governor are either poised to engage in very difficult negotiations or the three are about to crash and burn and Edison's going to be left dangling. In the Senate: The Senate bill 78XX is with about 90% likelihood going to be voted out of the Senate tonight---without a vote having taking place in any committee. Burton announced during one of the two informational hearings that this is it despite the view of just about everyone who appeared before the committees the bill likely won't prevent Edison from going bankrupt. The key features of the bill are: Banks and QFs get paid in full. Edison shareholders would be responsible for debts owed to suppliers No direct access. There are conflicting reports about whether the Senate will take up the bill tomorrow de-linking the bonds from the DWR contracts and whether the Republicans will go along with it. In the Assembly: The Committee is hearing the Wright and Hertzberg bills as we speak with Hertzberg's the likely winner. That bill now provides for Direct Access under certain conditions (the amendments describing the conditions were faxed today). We're attempting to get the July 12 date changed to the effective date of the bill or later. The Assembly likely won't vote the Hertzberg bill out until tomorrow at the earliest. The Problem: The Assembly and Senate bills are diametrically opposed in the way each approaches the problem---in short the bills are two ships passing in the night. The Democratic leaders (Governor Hertzberg Burton) aren't talking and Burton hasn't expressed any interest in talking---to anybody. The likely outcome given the circumstances: Burton says he's done what he needs to do (i.e. passed out a fair bill) the Assembly and Senate can't agree they finish the budget time runs out they leave Friday and Edison's left twisting. That said there's still a chance that the Governor could call Burton and sit down with Burton and Hertzberg and work something out by Friday or begin talking and postpone the recess until they get it worked out. But given Burton the chance of that happening seems very slim. In short little has changed since yesterday. Best Jeff,other,informative,3 +Fwd: Successful purchase of NBER Paper,Return-Path: Received: from rly-xd03.mx.aol.com (rly-xd03.mail.aol.com [172.20.105.168]) by air-xd05.mail.aol.com (v77.14) with ESMTP Sun 10 Dec 2000 10:57:06 -0500 Received: from zeus.ssrn.com (zeus.ssrn.com [38.202.236.235]) by rly-xd03.mx.aol.com (v77.27) with ESMTP Sun 10 Dec 2000 10:56:51 -0500 Received: from ssrn.com ([38.202.236.235]) by zeus.ssrn.com (Post.Office MTA v3.5.3 release 223 ID# 0-61092U100L2S100V35) with SMTP id com Sun 10 Dec 2000 10:56:50 -0500 Subject: Successful purchase of NBER Paper Date: Sun 10 Dec 2000 10:56:49 -0500 From: Gregory_Gordon@ssrn.com (Gregory_Gordon) To: CC: Message-ID: X-Mailer: Unknown Dear Wincenty Kaminski: Thank you for your purchase at Social Science Research Network. Your credit card has been charged $ 5.00. This charge will appear on your statement as Social Science Electronic Publishing our parent company. The confirmation number for this transaction is NBER_103397 and a summary of your order is below. If you have any questions about this charge please email Mailto:NBERSupport@ssrn.com for assistance. If you have any comments or suggestions about how SSRN can improve this service please let me know at Thank you Gregory Gordon President ORDER INFORMATION Diagnosing Market Power in California's Restructured Wholesale Electricity Market NBER Collection Borenstein / Bushnell / Wolak BILLING INFORMATION Wincenty Kaminski 1400 Smith Houston TX 77002 USA 713 853 3848,other,formal,0 +RE: Ricardo Charvel,-----------------,other,neutral,0 +FINAL,Attached is the final letter. Please note - there was a small change at the top of page 2.,business document,formal,3 +Supreme court brief,Good brief. I have noted a few comments and questions throughout the text. Ignore my universal change to the word transmissions.,legal affairs,formal,2 +Re: Senate Banking Hearing,Thanks Chris. Rick - see the witness list below in case you want to try to get some points through to these witnesses. Chris Long 09/25/2000 04:14 PM To: Steven J Kean/NA/Enron@Enron Joe Hillings/Corp/Enron@ENRON cc: Amy Fabian/Corp/Enron@ENRON Maureen McVicker/NA/Enron@Enron Cynthia Sandherr/Corp/Enron@ENRON Subject: Senate Banking Hearing Steve: I got the copy of the letter on independent auditor from Ken Lay to SEC Chairman Levitt. I suggest we transmit the letter to the Senate Banking Subcommittee on Securities in preparation for their hearing noted below. I will prepare a cover letter for transmission. Let me know if this acceptable. -----------------,government & politics,formal,3 +CA load growth,,other,neutral,0 +,I just saw the NYT article. Nice job. It's nicely positioned as an issue about India's resolve to encourage foreign investment and live up to contracts.,media & press,formal,0 +<> - JB 002,-----------------,finance,formal,3 +,Please send regrets ,other,polite,0 +Energy Issues,Please see the following articles: Sac Bee Wed 7/11: Mediator talked of a bigger refund: He reportedly suggested a $4.5 billion deal midway through the failed talks Sac Bee Wed 7/11: Davis repeats threat to sue FERC to get full refund Sac Bee Wed 7/11: Dan Walters: Davis plays in a virtual world while the= =20 energy reality continues=20 Sac Bee Wed 7/11: Energy Digest: Ratepayer panel shot down again Sac Bee Wed 7/11: Missing megawatts: Conservation saving state from=20 blackouts (Editorial) SD Union Wed 7/11: Governor tells FERC to be fair and then some SD Union Wed 7/11: Calpine says deal with state close on alleged overchar= ges SD Union Wed 7/11: Judge refuses to let ratepayers form official committe= e=20 in utility bankruptcy case LA Times Wed 7/11: Judge Bars Ratepayers Panel From PG&E Case SF Chron Wed 7/11: Developments in California's energy crisis SF Chron Wed 7/11: Enron Corp. sues to block Senate from forcing document= =20 release SF Chron Wed 7/11: Governor threatens to sue utilities for refunds=20 Davis says California won't settle for $1 billion SF Chron Wed 7/11: News briefs on the California power crisis Mercury News Wed 7/11: White House bends under energy conservation pressu= re=20 Mercury News Wed 7/11: Davis ups the voltage (Editorial) OC Register Wed 7/11: Lights go out on Davis' power show (Commentary) --- Mediator talked of a bigger refund: He reportedly suggested a $4.5 billion= =20 deal midway through the failed talks. By David Whitney Bee Washington Bureau (Published July 11 2001)=20 WASHINGTON -- Midway through the negotiations between California and power= =20 sellers to settle the myriad issues arising out of the state's energy crisi= s=20 the mediator told California's negotiating team that he thought a deal wort= h=20 more than $4.5 billion would be appropriate -- a much higher figure than he= =20 suggested after the talks ended Monday.=20 Whether the statement by Curtis Wagner the chief administrative law judge= =20 for the Federal Energy Regulatory Commission was a negotiating ploy or a= =20 reflection of his evolving beliefs is not clear.=20 Before the settlement talks began two weeks earlier Wagner said he thought= =20 Gov. Gray Davis' demand for $8.9 billion in refunds was too high and that a= =20 settlement probably would be in the range of $2 billion to $2.5 billion.=20 The disclosure that Wagner had contemplated a much higher figure midway=20 through the negotiations suggests the state had more support than the judge= =20 let on Monday when he said after the talks foundered that he thought a deal= =20 should involve hundreds of millions maybe a billion dollars.=20 While the state wants $8.9 billion $3 billion of that was for overcharges= =20 during the five months preceding last October and are beyond FERC's scope o= f=20 review. Even as a starting point then the $4.5 billion mentioned by Wagner= =20 represented 75 percent of the money the state was demanding for alleged pri= ce=20 gouging between October and May.=20 The judge's $4.5 billion figure divided between cash payments and savings= =20 from long-term power contracts was confirmed by three sources who asked to= =20 be identified only as close to the negotiations because participants had= =20 been required to sign confidentiality statements.=20 The sources gave virtually identical accounts of a July 2 meeting with Wagn= er=20 in which the judge also dismissed as inadequate a $670 million settlement= =20 offer made by power generators and marketers.=20 By Monday the settlement offer had risen to $716 million. But the state=20 refused to back off its $8.9 billion demand and there never was any seriou= s=20 back-and-forth negotiations during the 15-day period the regulatory=20 commission had given Wagner to craft a deal.=20 As a consequence of the failed talks Wagner said Monday that within a week= =20 he will send the five-member commission his recommendations on how it might= =20 approach an order refunding power overcharges.=20 Among Wagner's suggestions is that the commission convene a hearing before = a=20 different administrative judge to take testimony from generators marketers= =20 and the state on how to arrive at a fair settlement.=20 The options sketchily outlined by Wagner on Monday included limiting the ti= me=20 when refunds are allowed -- something that could reduce state claims by abo= ut=20 one-third -- and changing the way power plant costs are calculated to a=20 formula more favored by generators.=20 It is not clear whether Wagner who moved from one negotiating team to=20 another during his two-week quest for a deal ever raised the $4.5 billion= =20 settlement figure to the power marketers and generators.=20 Joel Newton who represented Dynegy Power Duke Energy Reliant Energy=20 Williams-AES and Mirant in the talks said Tuesday he was bound by the=20 confidentiality pledge to keep silent on the internal negotiations.=20 Wagner also is refusing all media calls.=20 According to the account of the negotiations confirmed by sources Tuesday= =20 Wagner was angry at the snail's pace of progress after the first week of th= e=20 talks.=20 On Friday June 29 Wagner called everyone into his hearing room and scolde= d=20 them. He condemned the California team saying they all ought to wear clow= n=20 suits because they were in the pocket of Davis and refused to show any= =20 independence.=20 He then turned to the generators and said that after a week of talks nothi= ng=20 had been heard from them. He told them he wanted them to produce real=20 numbers and hard numbers over the weekend and that if they didn't he wou= ld=20 -- and you're not going to like it.=20 Wagner's admonition apparently moved no one toward a deal. On Monday in th= e=20 meeting with the California delegation one source quoted Wagner as saying= =20 the settlement number he received from the generators and marketers is so= =20 low I can't even present it to you.=20 I'm not happy with the figures they're not adequate others quoted the= =20 judge as saying.=20 At that point the sources said Wagner said he was thinking of a settlemen= t=20 of $2.5 billion in cash $2 billion in long-term contract savings and other= =20 money from out-of-state investor-owned utilities and even the federal=20 Bonneville Power Administration which markets power from dams in the=20 Northwest.=20 But as the clock wound down on the negotiations nothing much happened unti= l=20 Friday and Saturday when the California team met with the five largest pow= er=20 generators.=20 It was at those meetings that the generators offered $510 million in refund= s=20 to settle their disputes with the state. But the money would have gone to= =20 reduce the tab for what they were owed by the state and California utilitie= s=20 and it was loaded with conditions including the state dropping all of its= =20 investigations and lawsuits.=20 Wagner declared the talks over Monday saying he was unable to bring the=20 parties together.=20 The Bee's David Whitney can be reached at (202) 383-0004 or=20 dwhitney@mcclatchydc.com. Davis repeats threat to sue FERC to get full refund=20 By Emily Bazar Bee Capitol Bureau=20 (Published July 11 2001)=20 Gov. Gray Davis shot words of caution at federal regulators Tuesday warnin= g=20 that he will sue them if they order power companies to refund anything less= =20 than the $8.9 billion he and other state officials have demanded.=20 The Democratic governor also lobbed threats at state legislators suggestin= g=20 that he may call a special session to prevent them from embarking upon a=20 monthlong summer break next week.=20 Instead of vacationing Davis said lawmakers must work to approve an=20 agreement between the state and Southern California Edison that would save= =20 the utility from bankruptcy.=20 Though the governor has indicated previously that the state may take the=20 Federal Energy Regulatory Commission to court his announcement Tuesday mad= e=20 it clear he intends to follow through.=20 Settlement talks with power generators to determine how much if any the= =20 companies overcharged California for electricity concluded Monday with no= =20 resolution.=20 Now the decision rests with the FERC's governing board and Davis said the= =20 state won't back away from the $8.9 billion figure it demanded during talks= .=20 You order what you think is fair Davis said during a news conference wit= h=20 the state's top negotiators. We'll take what you order and we'll see you = in=20 court.=20 Davis acknowledged that a legal battle could drag out for months or years.= =20 He added that he believes the disagreement -- or even a protracted court=20 battle -- will not affect a tentative agreement between the state and Ediso= n.=20 Under terms of the deal money to pay off the utility's debt would come fro= m=20 a state purchase of its transmission lines and from a portion of consumers'= =20 electricity rates.=20 According to the agreement the Legislature must approve the deal by Aug. 1= 5=20 and Davis said he intends to hold lawmakers to that date.=20 Davis said the deadline is important because creditor committees will=20 scrutinize the Legislature's every move to determine whether to force Ediso= n=20 into bankruptcy court rather than await a political deal.=20 Legislators are scheduled to leave for summer recess July 20 and return Aug= .=20 20.=20 Davis threatened to use his executive powers to force lawmakers to remain i= n=20 Sacramento and work on the Edison agreement if necessary.=20 The Bee's Emily Bazar can be reached at (916) 326-5540 or ebazar@sacbee.com= . Dan Walters: Davis plays in a virtual world while the energy reality contin= ues (Published July 11 2001)=20 California still has a very real and very severe energy crisis to wit:=20 The state is still running up massive debts as it pays more for power than = it=20 can recover from ratepayers and is having trouble borrowing billions of=20 dollars to cover the debt.=20 There is a strong possibility perhaps a probability that when summer's he= at=20 truly descends there will be severe power blackouts as air conditioners=20 demand more juice than California can generate or buy.=20 One major utility Pacific Gas and Electric has filed for bankruptcy=20 protection and a second Southern California Edison is on the brink of=20 joining it.=20 There is however a virtual energy crisis consisting of political spin=20 media leaks and made-for-television buzz words -- and it is rapidly becomin= g=20 dominant while the real situation fades into the background.=20 This week's comic opera proceedings before a Federal Energy Regulatory=20 Commission administrative judge in Washington had little to do with reality= =20 and everything to do with the virtual version.=20 Gov. Gray Davis and other officials demanded $8.9 billion in refunds from t= he=20 generators and brokers who have been selling California power for the past= =20 year alleging that California is in Davis' words being gouged and rippe= d=20 off. But the number itself was more or less plucked out of thin air -- an= =20 arithmetic exercise by the state power grid's traffic controller not intend= ed=20 for a refund proceeding. And while Judge Curtis Wagner saw it as unrealisti= c=20 Davis and other state officials insisted on its validity.=20 There are refunds due that total hundreds of millions of dollars and maybe= a=20 billion dollars Wagner said as a final negotiating session collapsed. But= =20 that's a far cry from the $8.9 billion that Davis insists is due. If you= =20 think California is going to settle for $1 billion in refunds we will see= =20 you in court Davis said Tuesday.=20 Why is Davis being so belligerent? Because it's good politics. Ever since h= e=20 began berating out-of-state generators and accusing them of ripping off=20 California Davis' approval ratings have been climbing. If he settled for= =20 substantially less -- the power generators probably would agree to a couple= =20 of billion dollars to rid themselves of the matter -- Davis would be=20 embarrassed. Politically he's served by continuing to portray himself as= =20 fighting for California and against the out-of-state generators.=20 That it's more political construct than reality is indicated by another eve= nt=20 this week Davis' release of state power purchase data from early in the ye= ar=20 -- numbers that were made public only because a judge told him he had to do= =20 it.=20 Davis and his minions have been accusing Texas-based generators and power= =20 brokers of particularly egregious price gouging -- clearly playing on=20 Californians' instinctive mistrust of anything Texan and implying that Texa= n=20 George W. Bush is a co-conspirator. But the power purchase records -- which= =20 were released only to journalists willing to pay a stiff fee -- indicate th= at=20 less than 10 percent of California's power purchase dollars were going to= =20 Texas and the private sellers in general charged the state less than such= =20 publicly owned utilities as the Los Angeles Department of Water and Power.= =20 The clearly adverse position being taken by FERC and the purchase data that= =20 undercut his jingoistic sloganeering are not however deterring Davis from= =20 continuing to operate at least for public consumption in the melodramatic= =20 virtual world.=20 One cannot however ignore reality forever. The likelihood of a=20 pro-generator decision from FERC means that there will be no easy out for= =20 Davis or for his pending deal to prevent Southern California Edison from= =20 slipping into bankruptcy court. The Legislature has refused to act on the= =20 Edison rescue plan while it awaited an indication of whether the utility's= =20 debts would be slimmed down by FERC.=20 This week's farcical events make it more likely that the Edison deal will= =20 stall out permanently in the Legislature and its creditors will force the= =20 utility into bankruptcy court later this summer. That's part of that nasty= =20 old reality that cannot simply be wished away.=20 The Bee's Dan Walters can be reached at (916) 321-1195 or dwalters@sacbee.c= om . Energy Digest: Ratepayer panel shot down again (Published July 11 2001)=20 SAN FRANCISCO -- U.S. Bankruptcy Judge Dennis Montali on Tuesday reaffirmed= =20 his earlier decision to disband a ratepayers committee that would have give= n=20 consumers an official voice in the Pacific Gas and Electric Co. bankruptcy= =20 case.=20 The judge said bankruptcy court isn't the right forum for refunding rates o= r=20 settling potential future claims.=20 He eliminated erroneous statements from the opinion he originally issued=20 seven weeks ago. U.S. bankruptcy trustee Linda Ekstrom Stanley who had mov= ed=20 for reconsideration called the new version a very careful decision but d= id=20 not rule out an appeal.=20 Stanley on May 4 appointed an official committee of ratepayers to represent= =20 PG&E customers saying they might be forced to pay for the utility's massiv= e=20 losses.=20 --Claire Cooper Missing megawatts: Conservation saving state from blackouts (Published July 11 2001)=20 A public that doesn't believe that California's electricity crisis is genui= ne=20 is nonetheless acting as if it is. Experts are revising down scary=20 predictions of rolling blackout after rolling blackout as Californians have= =20 opted to conserve rather than consume.=20 During June Californians cut back on electricity use by roughly 4750=20 megawatts when it mattered the most on hot afternoons. Those decisions=20 shaved about 12 percent from the expected demand. That's equivalent to the= =20 output of nine or 10 medium-size power plants. Last June grid operators ha= d=20 to call six shortage alerts. This June which was hotter they called none.= =20 For a state that's been derided as selfish and wasteful that's nothing sho= rt=20 of amazing.=20 Some of what Californians are doing now to conserve isn't likely to become= =20 habit in the long run. Businesses may want to turn back on all the banks of= =20 lights. Homeowners may decide that 82 degrees is the right temperature when= =20 power is short but too warm when California's supply emergency is over.=20 Yet there's a huge potential payoff into the future if some of these change= s=20 become permanent. It's encouraging that the most effective forms of=20 conservation -- switching to more energy-efficient appliances or=20 manufacturing techniques -- have yet to be implemented on a large scale.=20 Subsidies for these programs have yet to translate into changes in business= es=20 and in homes that will lower demand even further.=20 For a while this spring some attempted to diminish the role of conservatio= n.=20 Conservation is a personal virtue said Vice President Dick Cheney. But= =20 Californians know it's become both a personal and public necessity. The=20 public may have thought the electricity shortage was an illusion but=20 everyone knew that the higher electricity bills that began arriving in June= =20 were real. And so was the risk that the lights would go out on hot days.=20 Yes the state needs more supply to catch up with the growth in demand. Yet= =20 long after the crisis is over there will be plenty of potential on the=20 efficiency side of the equation as well to protect the quality of life and= =20 reduce the high electricity costs that will likely plague the state for yea= rs. Governor tells FERC to be fair and then some=20 Davis firm on demand for $8.9 billion refund By Ed Mendel=20 UNION-TRIBUNE STAFF WRITER=20 July 11 2001=20 SACRAMENTO -- Gov. Gray Davis had a tough message for federal regulators=20 yesterday after the failure of settlement talks in California's bid to get = an=20 $8.9 billion refund from electricity suppliers: See you in court.=20 The governor said California will seek a full $8.9 billion refund for=20 electricity overcharges even if federal regulators award the maximum refun= d=20 of $5.4 billion allowed under their guidelines.=20 Our message is just order what you are going to order Davis said of the= =20 Federal Energy Regulatory Commission. We believe you should order $8.9=20 billion. But you order what you think is fair. We will take what you order= =20 then we will see you in court.=20 Davis joined by his negotiating team made the remarks at a news conferenc= e=20 a day after two weeks of closed-door talks with suppliers in Washington=20 failed to reach an agreement.=20 An administrative law judge made a recommendation to the regulatory=20 commission that Davis' top negotiator Michael Kahn chairman of the=20 California Independent System Operator expects to result in a refund of mo= re=20 than $1 billion.=20 Davis said that a revealing decision will be made by the commission which = he=20 hopes has embarked on a new path with the appointment by President Bush o= f=20 two new members Pat Wood of Texas and Nora Brownell of Pennsylvania.=20 Are they on the side of consumers as the federal power act envisions them= =20 being Davis asked or are they just there to do the industry's bidding = as=20 they have so often in the past?=20 Kahn said rules adopted by FERC cut off the refund period at last October= =20 trimming $3 billion from the $8.9 billion overcharge claimed by California= =20 dating to May 2000.=20 He said FERC has no jurisdiction over municipal utilities such as the Los= =20 Angeles Department of Water and Power that sold power to the state. The=20 municipal districts overcharged the state by about $600 million according = to=20 Kahn.=20 As a result he said the maximum refund that FERC could order for Californ= ia=20 is about $5.4 billion.=20 We made it clear to everyone that if we did not settle for $8.9 billion w= e=20 would seek redress in court for the remainder of the money above $5.4=20 billion Kahn said.=20 Calpine of San Jose and several other generators have expressed interest in= =20 the state's offer to negotiate one-on-one with the state while the federal= =20 regulators consider their decision Kahn said. Calpine says deal with state close on alleged overcharges=20 By Don Thompson ASSOCIATED PRESS=20 July 10 2001=20 SACRAMENTO =01) Calpine Corp. said Tuesday it is near agreement with Califo= rnia=20 officials over money the state says the company overcharged for electricity= .=20 That would make it the first company to settle a part of the $8.9 billion t= he=20 state wants in negotiations before the Federal Energy Regulatory Commission= .=20 However San Jose-based Calpine has offered far less than the $236 million= =20 the state claims it is owed.=20 We obviously disagree with that number because we disagree with some of t= he=20 assumptions used for the estimate said Calpine spokesman Bill Highlander.= =20 We don't think it's anywhere near that. We think it's a low number.=20 He wouldn't specify the company's counteroffer but noted new FERC figures= =20 showing the company did $29 million in business with the state in the first= =20 five months of this year.=20 The California Independent System Operator estimated the company owed more = in=20 overcharges than it had in total sales for the period from May 2000 to May= =20 2001 a financial impossibility Highlander said.=20 The ISO essentially multiplied what Calpine was able to produce by the amou= nt=20 it charged for electricity Highlander said without taking into account ho= w=20 much electricity the company actually sold.=20 ISO spokesman Michael Bustamante defended the projections by the state's gr= id=20 operator estimates he said were validated during two weeks of FERC=20 negotiations that ended Monday. The ISO took the methodology adopted by the= =20 federal regulator in a June 19 order capping electricity rates then worked= =20 backward to May 2000 to reach its estimate Bustamante said.=20 Generators and state negotiators were unable to reach a settlement during t= he=20 two weeks of talks overseen by FERC chief administrative law judge Curtis L= .=20 Wagner leaving Wagner to make his own recommendation to the commission.=20 Wagner said Monday the state may be owed perhaps $1 billion in overcharges= =20 but said that could be offset by money the generators are owed for the powe= r=20 they sold into the state.=20 California officials believe generators owe about $4 billion in refunds usi= ng=20 the June 19 order that Wagner adopted as his benchmark even given Wagner's= =20 determination that the commission can only consider overcharges after Oct. = 2.=20 At one point during negotiations Wagner told California officials he thoug= ht=20 an appropriate settlement should top $4.5 billion according to one=20 negotiator who spoke on condition he not be named. Wagner suggested=20 generators could pay $2.5 billion in cash and $2 billion in long-term=20 electricity contracts at cheaper rates the source said.=20 That was very different from the $670 million in refunds Wagner privately= =20 said generators were offering. For instance the source said while Reliant= =20 Energy on Monday offered $50 million in refunds California believes=20 Reliant's share of overcharges is closer to $1 billion.=20 Jan Smutny-Jones executive director of the Independent Energy Producers= =20 applauded the possibility that some generators will settle with the state= =20 without waiting for a FERC decision and likely protracted court battle.=20 We need to solve this problem and move on Smutny-Jones said.=20 ?? =01) Associated Press writer Mark Sherman contributed to this story from=20 Washington D.C.=20 Judge refuses to let ratepayers form official committee in utility bankrupt= cy=20 case=20 ASSOCIATED PRESS=20 July 10 2001=20 SAN FRANCISCO =01) The federal judge overseeing Pacific Gas and Electric Co= .'s=20 bankruptcy case ruled Tuesday the utility's ratepayers cannot form an=20 official committee to represent their interests.=20 Ratepayer advocates had sought such recognition to ensure the utility would= =20 not raise rates further as a way of paying off its debts.=20 But U.S. Bankruptcy Judge Dennis Montali agreed with PG&E and the official= =20 creditors committee and rejected the idea for the second time in two months= .=20 Montali suggested instead that ratepayers organize an informal committee to= =20 bring their concerns to the court and said the ratepayers also could bring= =20 matters before the state Public Utilities Commission.=20 A separate committee of ratepayers would have been able to vote on the fina= l=20 reorganization of the company a plan that could affect power service and= =20 rates.=20 PG&E filed for Chapter 11 bankruptcy April 6 and owes billions of dollars = to=20 more than 50000 creditors. It was brought down in part by California's= =20 botched experiment with deregulation.=20 Judge Bars Ratepayers Panel From PG&E Case Power: Customers are not creditors in the utility's bankruptcy ruling says= .=20 Action does not preclude refunds for consumers. TIM REITERMAN TIMES STAFF WRITER July 11 2001 SAN FRANCISCO -- A federal judge Tuesday reaffirmed his decision to bar a= =20 ratepayers committee from Pacific Gas & Electric Co.'s bankruptcy case and= =20 denounced the committee's attorney for suggesting that the action could=20 prevent PG&E customers from receiving refunds for excessive energy charges. Judge Dennis Montali ruled against a U.S. trustee and the ratepayers=20 committee in deciding that ratepayers as a group had no claims and were not= =20 creditors when PG&E filed for bankruptcy on April 6. But Montali criticized misguided remarks by a committee attorney on July = 5=20 and news media accounts that followed the hearing. The judge said the repor= ts=20 left the misconception that by disallowing a ratepayers committee he would= =20 reject all claims of ratepayers and they could lose out on future refunds. The judge and PG&E officials emphasized that there are no matters involving= =20 PG&E customer refunds before the state Public Utilities Commission. State officials are seeking about $9 billion in refunds however from the= =20 Federal Energy Regulatory Commission for alleged overcharges to Californian= s=20 by energy companies since last year. The distribution of any ratepayer refunds would be decided by the PUC and= =20 customers would be paid whether or not they filed Bankruptcy Court claims b= y=20 a Sept. 5 deadline the judge and PG&E attorneys said. The judge took the highly unusual step of directing PG&E and U.S. Trustee= =20 Linda Ekstrom Stanley to consider remedies to allay any confusion among=20 PG&E's 5.5 million customers. He suggested publishing clarifications in newspapers that carried the=20 erroneous information in PG&E customer bills and on Web sites. Stanley had formed a ratepayers committee of business government and=20 consumer representatives saying they will be affected by PG&E's Chapter 11= =20 reorganization. But Montali decided that ratepayers do not qualify as creditors under=20 bankruptcy law and are not entitled to official status that allows them to= =20 participate in the bankruptcy and receive funding from PG&E. Stanley said she has not yet decided whether to appeal the ruling to federa= l=20 district court.=20 Copyright 2001 Los Angeles Times=20 Developments in California's energy crisis=20 The Associated Press Wednesday July 11 2001=20 2001 Associated Press=20 URL:=20 tate1 036EDT0129.DTL=20 (07-11) 07:36 PDT (AP) --=20 Developments in California's energy crisis:=20 WEDNESDAY=3D * No power alerts Wednesday as electricity reserves stay above 7 percent.= =20 TUESDAY=3D * U.S. Bankruptcy Judge Dennis Montali again agreed with PG&E and the=20 official creditors committee saying such a committee of Pacific Gas and=20 Electric Co. ratepayers has no legal standing in bankruptcy court. Ratepaye= r=20 advocates had sought the recognition to ensure the utility would not raise= =20 rates further as a way of paying off its debts.=20 * PG&E has agreed to pay $4.1 million in tax penalties to 49 counties where= =20 the utility owns property. The utility already paid $41.2 million in overdu= e=20 property taxes in May -- the additional amount covers a 10 percent fee for= =20 paying those taxes late.=20 * Calpine Corporation says it is near agreement with California officials= =20 over money the state says the company overcharged for electricity. That wou= ld=20 make it the first company to settle a portion of the $8.9 billion dollars t= he=20 state is seeking in proceedings before the Federal Energy Regulatory=20 Commission. But the San Jose-based company is offering much less than the= =20 $236 million dollars the state claims it is owed.=20 * No power alerts Tuesday as electricity reserves stay above 7 percent.=20 * Shares of Edison International closed at $14.05 up 5 cents. PG&E Corp.= =20 drop 55 cents to close at $13.55. Sempra Energy the parent company of San= =20 Diego Gas & Electric Co. closed at $27.67 up 15 cents.=20 WHAT'S NEXT=3D * The Senate committee investigating possible price manipulation in=20 California's energy market meets Wednesday. The committee will vote on=20 contempt citations against generators Mirant and Enron which failed to=20 comply with subpoenas for documents. The committee will meet again July 18 = to=20 consider compliance by six other suppliers that have until Tuesday to turn= =20 over documents.=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 Southern California Edison and Pacific Gas and Electric say they've lost=20 nearly $14 billion since June 2000 to high wholesale prices the state's=20 electricity deregulation law bars them from passing on to consumers. PG&E= =20 saying it hasn't received the help it needs from regulators or state=20 lawmakers filed for federal bankruptcy protection April 6. Electricity and= =20 natural gas suppliers scared off by the companies' poor credit ratings ar= e=20 refusing to sell to them leading the state in January to start buying powe= r=20 for the utilities' nearly 9 million residential and business customers. The= =20 state is also buying power for a third investor-owned utility San Diego Ga= s=20 & Electric which is in better financial shape than much larger Edison and= =20 PG&E but is also struggling with high wholesale power 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 Track the state's blackout warnings on the Web at=20 2001 Associated Press ?=20 Enron Corp. sues to block Senate from forcing document release=20 DON THOMPSON Associated Press Writer Wednesday July 11 2001=20 2001 Associated Press=20 URL:=20 tate1 212EDT0141.DTL=20 (07-11) 09:12 PDT SACRAMENTO (AP) --=20 Enron Corp. is suing state officials to stop a Senate subpoena of its=20 financial records in a dispute over alleged overcharges for its electricity= =20 sales to California.=20 They've sent two things to Texas -- our money and these documents and the= y=20 saying we can't get either one back said Laurence Drivon special legal= =20 counsel to the Senate Select Committee to Investigate Market Manipulation.= =20 The suit came hours before the committee will consider asking the full Sena= te=20 to cite the Houston-based company for contempt Wednesday. The other subject= =20 of possible sanctions Atlanta-based Mirant Inc. appears to be cooperating= =20 Drivon said.=20 Committee chairman Joe Dunn a Santa Ana Democrat said the committee's=20 investigation will continue despite Enron's pure act of intimidation. We'r= e=20 not going to back down.=20 Enron's suit said the company's financial papers are outside the committee'= s=20 jurisdiction because most of its operations and paperwork are outside=20 California.=20 That shouldn't matter Drivon said citing last year's successful of=20 out-of-state documents during the investigation into the activities of form= er=20 Insurance Commissioner Chuck Quackenbush. Previous investigations have=20 included documents subpoenaed from other nations he said.=20 Companies doing business in California cannot claim immunity from its laws = or=20 oversight Drivon and Dunn said. Houston-based Reliant Energy made the same= =20 argument but then agreed to turn over 1800 documents.=20 2001 Associated Press ?=20 Governor threatens to sue utilities for refunds=20 Davis says California won't settle for $1 billion=20 Mark Martin Chronicle Staff Writer Wednesday July 11 2001=20 2001 San Francisco Chronicle=20 URL:=20 /11/M N139275.DTL=20 Sacramento -- One day after a federal judge rebuked California's claim that= =20 energy generators owe the state $8.9 billion Gov. Gray Davis all but vowed= =20 to sue the companies to recoup the money.=20 If you think California will settle for $1 billion in refunds we'll see y= ou=20 in court Davis said yesterday.=20 Continuing his heated rhetoric on the energy crisis Davis blasted the ener= gy=20 companies for being inflexible during a 14-day negotiation session in=20 Washington D.C. that ended Monday. Both the state and power generators=20 argue each is owed money as a result of California's dysfunctional=20 electricity market.=20 Federal Energy Regulatory Commission chief administrative law Judge Curtis = L.=20 Wagner ended the talks by saying the state was owed far less than it claime= d=20 but the FERC's governing board will make a final decision on who owes what = to=20 whom in the coming months.=20 Yesterday Davis made it clear he wouldn't accept a FERC decision that=20 strayed far from the state's calculations that power companies overcharged= =20 California nearly $9 billion.=20 The ball is in the FERC's court he said. They must step up and provide= =20 the refunds we've asked for.=20 While Davis said California officials had gone to Washington prepared to=20 discuss ways to reach a settlement including renegotiating long-term=20 contracts to buy power an energy industry official faulted the state for i= ts=20 unwillingness to compromise.=20 Generators put forward an offer even though they believe no refunds are owe= d=20 said Jan Smutny-Jones executive director of the Independent Energy=20 Producers.=20 Smutny-Jones said the state needed to stop thinking it would get the $8.9= =20 billion.=20 It's clear from the way the issue was characterized by the judge that $9= =20 billion is not something the state is going to see any time in the near=20 future he added. It is not based in reality.=20 Davis also took heat from Republicans yesterday.=20 He desperately needs that refund so he can renegotiate the dreadful=20 contracts he has entered into said Rob Stutzman a consultant for the=20 California Republican Party. He's sitting at the poker table with very few= =20 chips.=20 In other energy news yesterday a judge refused to let a committee represen= t=20 the public in the Pacific Gas & Electric Co. bankruptcy case and said a=20 consumer lawyer's irresponsible position at a hearing last week could=20 mislead PG&E customers into filing needless refund claims with the court.= =20 U.S. Bankruptcy Judge Dennis Montali said any refunds owed to customers wer= e=20 unrelated to the bankruptcy case and would be determined by regulators.=20 At the hearing Thursday attorney KaarenThomas argued that unless a committ= ee=20 represented customers' interests PG&E could try to bar all refund claims= =20 that weren't filed by Sept. 5.=20 Montali ruled in May that the committee was not authorized by federal=20 bankruptcy law and reaffirmed his ruling yesterday.=20 Chronicle staff writers Lynda Gledhill and Robert Egelko contributed to thi= s=20 report.=20 E-mail Mark Martin at 2001 San Francisco Chronicle ? Page?A - 3=20 News briefs on the California power crisis=20 The Associated Press Wednesday July 11 2001=20 2001 Associated Press=20 URL:=20 tate0 738EDT0118.DTL=20 (07-11) 04:38 PDT SAN JOSE Calif. (AP) --=20 Energy supplier Calpine Corp. has reached a deal to purchase 236 billion=20 cubic feet of natural gas in Texas and New Mexico for $355 million plus=20 assumption of nearly $50 million of debt.=20 Company officials made the announcement Tuesday and said the purchase will= =20 increase its natural gas reserves.=20 This transaction meets our desire to own and operate production in a=20 strategic basin said Cathy Piece Calpine's director of land and=20 acquisitions. These assets significantly strengthen our reserve base and= =20 will help fuel our growing Western power program.=20 The San Jose-based company has agreed to purchase 35 wells in New Mexico th= at=20 produce 6 million cubic feet of gas per day from The Bayless Companies. The= =20 second transaction involves the acquisition of a majority interest of Micha= el=20 Petroleum of Houston. The Texas company produces about 43 million cubic fee= t=20 of gas per day.=20 Calpine officials said the agreements will allow them to meet their future= =20 capacity demands for both natural gas and electricity. The company wants to= =20 generate more than 70000 megawatts of electricity by the end of 2005 and= =20 have natural gas reserves of 6.7 trillion cubic feet.=20 LOS ANGELES (AP) -- Newly elected Mayor James Hahn has postponed selling th= e=20 city's surplus power to the state so he can examine how it will impact=20 ratepayers.=20 Hahn's predecessor Richard Riordan said last month the city's Department = of=20 Water and Power would sell its extra electricity -- about 500 megawatts a= =20 day_ to the state at cost between July and September.=20 The contract was supposed to have been signed last week.=20 Steve Maviglio a spokesman for Gov. Gray Davis said Tuesday that the stat= e=20 is ready to sign the contract.=20 We're ready to sign he said. Like most negotiations that aren't final= =20 things go back and forth. The new (Hahn) administration wants to review the= =20 document before it.=20 Davis had threatened to seize surplus power from municipal utilities which= =20 haven't been subjected to the California energy crisis because he claimed= =20 they were gouging the state.=20 TEMECULA Calif. (AP) -- State officials said they are studying alternative= =20 routes for a power transmission line proposed by San Diego Gas and Electric= =20 Co.=20 The utility wants to run a 500000-volt power line through southwestern=20 Riverside County connecting its power grid with Southern California Edison'= s.=20 The cost of the project is estimated at $271 million and must be approved b= y=20 the state's Public Utilities Commission.=20 But state officials listed alternative routes in papers released at a publi= c=20 hearing Tuesday. Some of the other ideas include putting the transmission= =20 line around the edges of an Indian reservation or running a route through t= he=20 Cleveland National Forest.=20 Once a final selection is made the information will be given to PUC=20 commissioners who will either approve or deny the project.=20 Many residents who live in the path of the proposed transmission line don't= =20 want the project. An attorney representing several groups that oppose SDG&E= 's=20 plans said there was no mention of alternative routes in environmental=20 documents submitted by the company.=20 Looking at the various route segments offered by SDG&E as alternatives is= =20 like trying to arrange the deck chairs on the Titanic said attorney Mark= =20 Mihaly.=20 2001 Associated Press ?=20 White House bends under energy conservation pressure=20 Posted at 6:25 a.m. PDT Wednesday July 11 2001=20 BY H. JOSEF HEBERT=20 Associated Press Writer=20 WASHINGTON (AP) -- Under pressure to include more conservation measures tha= t=20 reduce energy use congressional Republicans are moving toward a compromise= =20 to increase fuel efficiency requirements for sport utility vehicles as part= =20 of an energy package.=20 Key House GOP lawmakers said Tuesday they expect some increase in fuel=20 economy requirements especially for SUVs in energy legislation working it= s=20 way through the House. Democrats who have a majority in the Senate also= =20 favor requiring improved motor vehicle fuel efficiency.=20 At the same time the Bush administration signaled its willingness Tuesday = to=20 begin a rule-changing process that would allow the first increase in 25 yea= rs=20 in the federal corporate automobile fuel economy or CAFE standard.=20 Transportation Secretary Norman Mineta asked Congress to lift immediately a= =20 six-year prohibition that bans the department from consideration of fuel=20 economy increases. Lawmakers already agreed this year not to extend the ban= =20 beyond September but Mineta said he wants to start examining possible=20 changes right away.=20 CAFE standards which mandate fuel economy requirements for vehicle fleets= =20 have not been increased since their introduction in 1975. That year's law= =20 spurred by energy shortages in the early 1970s required passengers cars to= =20 meet a fleet average of at least 27.5 miles per gallon. Light trucks -- a= =20 category that includes SUVs vans and pickups -- have to meet a 20.7 mpg=20 fleet average.=20 With the widespread popularity of SUVs and vans in recent years many=20 environmentalists have argued that the lower truck standard has compromised= =20 the intent of the 1975 law. SUVs and vans comprise more than 40 percent of= =20 the passenger vehicles on the road today.=20 As three committees began crafting energy legislation lawmakers were=20 searching for a bipartisan compromise to increase fuel economy requirements= =20 for motor vehicles. Some increase in the CAFE requirement was virtually=20 assured several GOP lawmakers said although disagreements remain on how= =20 much of an increase whether it should apply to automobiles as well as SUVs= =20 vans and small trucks and the timetable for phasing in new requirements.= =20 Energy legislation that the House Energy and Commerce Committee was taking = up=20 later Wednesday contains no fuel economy provision.=20 But Rep. Billy Tauzin R-La. the committee chairman said discussions were= =20 under way to work out a compromise on a fuel economy proposal. He said he= =20 expects an amendment on CAFE to be added to the bill either during=20 deliberations in his committee or on the House floor.=20 Rep. Joe Barton R-Texas chairman of the subcommittee drafting the energy= =20 package saw a good chance the truck standards will be raised and said the= =20 automobile standard might be increased as well. Other GOP sources who talke= d=20 about the private discussions on condition of not being identified by name= =20 said a likely outcome is that the truck standard will be increased three or= =20 four mpg and the auto standard left alone.=20 Momentum for some CAFE increase has been growing in recent weeks as GOP=20 lawmakers came under increasing pressure to come up with additional=20 conservation proposals to those proposed in the White House's energy policy= .=20 It largely focuses on production with few specific measures to dramaticall= y=20 curb energy demand.=20 Democrats have pressed for tougher automobile fuel economy standards.=20 Automakers have fought attempts to increase the standards. They say such=20 government edicts limit consumer choice and force manufacturers to build=20 smaller cars that customers don't want. Supporters of increased fuel econom= y=20 argue that new technologies are available to increase fuel efficiency witho= ut=20 decreasing vehicle size.=20 President Bush's energy blueprint would consider CAFE increases but not=20 before a National Academy of Sciences report is issued probably this month= =20 on impact of the standard on energy savings safety and auto industry=20 competition. Davis ups the voltage=20 Published Wednesday July 11 2001 in the San Jose Mercury News=20 Vow to sue for refunds may be a bluff but he should keep pushing FERC=20 THE strategic choice facing Gov. Gray Davis in the struggle over electricit= y=20 price refunds has come down to three questions: When do you negotiate when= =20 do you demand and when do you bluff?=20 Negotiations are over Davis declared Tuesday. He demanded that the Federal= =20 Energy Regulatory Commission order refunds now. ``The case is nearly a year= =20 old'' he said. ``They have to decide which side they're on.''=20 Probably no one but Davis knew to what extent he was bluffing when he also= =20 said ``If you think California is going to settle for $1 billion in refund= s=20 we will see you in court.''=20 A FERC administrative judge said Monday that the amount due the state may b= e=20 around $1 billion or perhaps nothing at all when counter-claims against t= he=20 state are subtracted.=20 Energy experts are divided about whether the state would win a suit to=20 overturn a decision by a federal commission. The federal courts have some= =20 limited jurisdiction according to University of California Energy Institut= e=20 director Severin Borenstein but that a court would reverse a commission in= a=20 case like this is ``extremely unlikely.''=20 Frank Wolak a Stanford economist had the opposite view when asked whethe= r=20 the state has a good chance of winning: ``I think so. It happens all the=20 time.''=20 At a Sacramento press conference Davis continued to insist that there have= =20 been overcharges of $8.9 billion. But other state officials conceded that= =20 only $5.4 billion of that is actually on the table in the FERC proceedings.= =20 Davis said he'll take what he can get there and sue for the rest.=20 The state argues that because FERC has determined that wholesale prices hav= e=20 not met the Federal Power Act's requirement to be ``just and reasonable''= =20 refunds are in order. But the commission has not defined what portion=20 exceeded ``just and reasonable.''=20 Throughout his press conference Davis used the prospect of litigation like= a=20 goad to spur the federal regulators into action. But if you listened=20 carefully he also indicated he'll give them more time to consider the case= .=20 Considering the iffy odds of winning in court we suggest he keep goading t= he=20 federal commissioners -- while giving them all the time they need. Wednesday July 11 2001=20 Lights go out on Davis' power show=20 Three new developments show that some economic reality finally is being=20 applied to California's electricity crisis:=20 First The nation's chief energy judge said Monday that California is owed= =20 maybe $1 billion in refunds from power generators a fraction of the $8.9= =20 billion demanded by Gov. Gray Davis reported the Register yesterday. Even= =20 that $1 billion amount might be balanced by the amount the state still owes= =20 the power producers.=20 To suggest workable and market-oriented solutions to the California=20 electricity crisis. Judge Curtis Wagner's recommendation will be taken up by the Federal Energy= =20 Regulatory Commission which is being petitioned for the money by the state= =20 of California.=20 Because the judge's words will bolster FERC's apparent desire not to grant= =20 the refunds the state probably will go to court where the matter could = be=20 stuck for years. In the long term this may indicate that competitive electricity has a=20 future even in California but not thanks to the state Robert Michaels a= =20 professor of economics at Cal State Fullerton told us. He's referring to t= he=20 state's botched 1996 deregulation effort which has been made worse by Go= v.=20 Gray Davis and other officials since the crisis began a year ago. FERC since the 1980s favors competition within the parameters of politica= l=20 reality Mr. Michaels added. Now we're at square one: The industry doesn'= t=20 owe $9 billion to California. As this process continues he said another= =20 positive aspect will be that a lot of facts will get aired. We'll see what= =20 has been happening in the markets in which power is bought and sold. Second light already is shining on one area: This crisis was not Made in= =20 Texas'' by cronies of President Bush as Gov. Davis and other Democrats hav= e=20 been contending.=20 In May the governor attacked the president for ignoring the greed of thes= e=20 Texas energy companies such as Reliant and Dynergy. In fact according to information on state power contracts the governor=20 finally released Monday Texas companies were way down on the list of=20 producers.=20 In roughly the first five months of the year the state shelled out $1.2= =20 billion to Atlanta-based Mirant the most any company was paid for=20 electricity followed by $1 billion to Powerex the marketing arm of BC Hyd= ro=20 in British Columbia [in Canada]. It also paid $331 million to the Los Angel= es=20 Department of Water and Power reported the San Jose Mercury News. Only about 10 percent of our state's power during this period came from=20 companies with headquarters in Texas. Third and finally a new study by the Cato Institute shows what should be= =20 done next:=20 lAbolish retail rate caps allowing prices to be set by the market.=20 This would be a better system than the present one where the state buys th= e=20 electricity and passes much of the cost along through the state budget (pai= d=20 by taxpayers) and bonds paid for by long-term electricity price increases.= =20 Higher immediate prices would encourage conservation and production leadin= g=20 in time to lower prices. lMove to real-time pricing so people shift activities such as washing to=20 off-peak hours.=20 lAbolish the Independent System Operator which moves electrons around.=20 Give this function back to the utilities who did it far better before=20 deregulation. Gov. Davis should set the pace by ending his Clintonian bla= me=20 shifting and embracing these realistic solutions.=20,other,informative,1 +Confidential Question,Dear Ken I'm not sure quite were to turn but was hoping you could assist me. I would like to keep this confidential especially regarding the New York Office. As my request has nothing to do with the people in this office or the group they are wonderful I've been with Enron since '97 and I relocated up to Connecticut to work with the New Power Company when I thought that the Enron employees would stay Enron employees. Afterwards of course we all were changed to NewPower employees. After a couple of months I made the move back to Enron and went to the New York office and work with the Enron Metals group here at 53rd street. (It was never my intention to leave Enron) Since the bombing I feel very displaced and my husband and I would really like to come back to Houston and was wondering if you could help me. I was on the trading floor working with Dave Delainey's group when he was in ENA and also was the Exec Secretary/Coordinator with the MWB group in George Warsoff's group. I would appreciate it very much if you were able to assist/guide me. Sincerely Teri Teri Connor-Smith Admin Coordinator Enron Metals & Commodities Corp tsmith3@enron.com (212)715-5601,personal & social,concerned,3 +Re: Gas Controllers Association speaker (California Energy Crisis),I can do it but have to be at the airport before 2:00 for a flight to NY. Sherri Sera 03/14/2001 04:17 PM To: Steven J Kean/NA/Enron@Enron cc: Maureen McVicker/NA/Enron@Enron Mary Poorman/NA/Enron@Enron Subject: Gas Controller's Association speaker (California Energy Crisis) Steve Jeff will be in Boston on this date doing 1:1s following 1Q earnings release. Is this something you would be interested in/available to do? If not who would you recommend sending it to? Thanks SRS -----------------,other,formal,3 +,Attached are FERC reports,energy infrastructure,formal,3 +RE: Patent attorney,Larry Thanks ,legal affairs,polite,0 +RE: Rice,Nelson I don't see any problems with #1. For number 2 mention that the paper was written when you were a studentt at Rice. Vince ,other,casual,1 +Inventory of Skills Confidential Inquiry: Joe Jamail,VERY CONFIDENTIAL The following member has asked for help from the Inventory of Skills (IOS). You have been identified as one of the few members who has the skill to assist in this area. You may or may not have completed an IOS enrollment form. All information gathered for IOS is done on a confidential basis and will remain confidential. This member has no knowledge regarding who has been contacted. If you choose to help the necessary information follows so that you may contact this member directly. If you cannot assist this member please contact them or IOS. IOS asks that you please respond within 72 hours of receiving this request. Thank you Brenda Worley IOS does not evaluate the validity of any request. Name: Ted L. Dub Snider Jr. Chapter: Lone Star-Dallas Phone: 501-401-7601 Fax: 501-401-7628 Email: dsnider@connect.com Other: * Indicated preferred method of contact. My company has been severely damaged by $50 billion (revenues)Texas based company 1) refusal to pay monies owed under a contract. 2) misrepresenting information used to calculate amounts owed under the contract 3) appears to have instigated an FBI investigation of our company regarding a pending civil and regulatory dispute. I am looking for an introduction to Joe Jamail by someone who knows him. We need an attorney with the courage confidence and track record to successfully pursue our claim against a powerful adversary. Thank You.,other,confidential,5 +California Power Markets,-----------------,energy trading,neutral,0 +,fyi -----------------,other,casual,0 +Customers,You may want to forward this to your customers. -----------------,other,formal,3 +Feedback from KL/JS CA Memo,Perhaps we should consider putting something together on India? ,other,casual,2 +California Pricing,For the call with Davis this am..... ,other,casual,3 +Re: India And The WTO Services Negotiation,fyi -----------------,other,casual,0 +Enrons policy on Libya,I assume we avoid Libya completely. The question though may be how we proceed if we are doing business with someone who has activities in Libya. Your views please. ,government & politics,cautious,3 +RE: Next Corporate Policy Committee Offsite,I think wholesale will be well covered. Enron Capital & Trade Resources Corp. From: Sherri Sera 04/26/2001 02:51 PM To: Steven J Kean/NA/Enron@Enron cc: Subject: RE: Next Corporate Policy Committee Offsite How much of an issue is this? So far Mark is the only one that has responded with a conflict. Please advise. Thanks SRS -----------------,other,formal,3 +Re: confidential employee information-dutch quigley,thx Jeanie Slone 12/19/2000 04:51 PM To: John Arnold/HOU/ECT@ECT cc: Subject: confidential employee information-dutch quigley Dutch requested a meeting with me today and I gave him the scoop on the promotion. I will follow-up with him after our meeting the first week of Jan. He was ok with everything. let me know if you need anything else. -----------------,human resources,casual,1 +Confidential & Proprietary - PanNat Valuation Update (7.24.01),Jeff As requested below find the updated valuation assuming the contract is amended beginning September 1 2001 based on July 23 2001 curves Let me know if you have any questions. Eric ,finance,formal,3 +Carin Energy Rumor,-----------------,other,neutral,3 +RE: Test Message,Mike Thanks for your message. The meeting on Tuesday at 7 is confirmed. Vince ,other,friendly,2 +Re: HP -- confidential internal document,Good plan. I agree re SJ. She is on the ball. mh Patrick Tucker 12/14/00 04:28 PM To: Matt Harris/Enron Communications@Enron Communications cc: Dale Clark/Enron Communications@Enron Communications Subject: Re: HP -- confidential internal document I agree. Sarah-Joy and I had a detailed follow-on conversation today about this topic and we're in agreement as to how things can move forward. I'd definitely like to have Bill rejoin our conversation with our new overall commercial contact at HP whose name Greg Pyle and Bill Lovejoy will supply in the very near future. I understand that Peter Goebel was quite clear with HP in today's meetings regarding the imminent nature of his wireless decision the breadth of vendors with whom he could conceivably do business and the fact that the wireless deal and the Enron sell side are inextricably linked. Sarah-Joy mentioned that Gerry has not been present in the more recent conversations which we're taking to indicate that Bill and Greg understand that his focus was different than ours. Sarah-Joy has brought immense focus and organization to this process. I have certainly found her involvement invaluable. Patrick Matt Harris 12/14/00 10:51 AM To: Sarah-Joy Hunter/NA/Enron@ENRON cc: Dale Clark/Enron Communications@Enron Communications Jennifer Medcalf/NA/Enron@Enron Patrick Tucker/Enron Communications@Enron Communications Peter Goebel/NA/Enron@Enron Subject: Re: HP -- confidential internal document This is an excellent update. Thanks for putting this together. Dale/Patrick - lets regroup on how we want to move this onward. Seems like SJ's suggestion of our spending more time with Bill Dwyer is a good one. Thanks Matt Sarah-Joy Hunter@ENRON 12/12/00 02:42 PM To: Matt Harris/Enron Communications@Enron Communications cc: Patrick Tucker/Enron Communications@Enron Communications Peter Goebel/NA/Enron@Enron Dale Clark/Enron Communications@Enron Communications Jennifer Medcalf/NA/Enron@Enron Subject: HP -- confidential internal document Matt: As GSS Business Development transitions the HP relationship for broadband to your team there are several issues I wanted to clarify in terms of how the relationship has been developed and who the contacts have been to date. Additionally I outlined the discussion points/action items from this morning's meeting you held with Jennifer Medcalf and myself. Per your request the HP presentation complete with a listing of HP's business partners was e-mailed to you this morning. HP contacts to date: Bill Lovejoy Western Gulf Area Sales Manager Houston TX #(713)-439-5587 (Gerry Cashiola's boss) Gerry Cashiola sales representative Houston TX #(713)-439-5555 (To date HP person coordinating the relationship--seeking a short term play) Greg Pyle Solution Control Manager Southeast Region Austin TX (#(512)-257-5735 (Pyle has been playing the business developer role but continues to defer leadership of the process to Gerry Cashiola) Daniel Morgridge Manager of Internet - E-Services long term alliances Austin TX #(512)-257-5736 (Interested in E-services/wireless longer term alliances) Bill Dwyer Chief Architect e-Services Solutions Cupertino CA #(408)-447-5240 (To date clearly the most knowledgeable person on HP's business propositions strong technical financial background to craft value propositions. Gerry Cashiola and Greg Pyle deferred to his judgement in the 11/16th meeting) Matt On November 10th GSS Business Development took HP through a tour of Enron's trading floor the gas control center and the peaking power plant unit center on the trading floor. This tour was one meeting amongst several held in October and November to provide HP a full overview of Enron's products and services and introduce them to appropriate contacts at Enron (EBS GSS buy side -- Peter Goebel). On November 16th GSS Business Development Patrick Tucker and Dale Clark outlined 3 possible EBS/HP focus areas -- connectivity storage and wireless. Three EBS action items were defined in that meeting: 1) HP was to provide an HP contact on connectivity (to date Gerry Cashiola has stalled on providing this). Sarah-Joy will continue to pursue this information and get a sense from Gerry Cashiola of what he means by short term opportunity. What is HP's time horizon for short term? 2) EBS and GSS/BD was to facilitate a conference call on Storage with Ravi to explore size and potential scope of opportunity (completed 12/8) 3) GSS/BD was to facilitate a conference call with Peter Goebel GSS IT Sourcing Portfolio Leader (set for 12/14) In conversations with you Jennifer Medcalf and myself this morning several decisions on forward-looking strategy with HP/EBS were confirmed: Gerry Cashiola has been unable to take control of the process. More importantly despite numerous visits to Enron in which he has had overviews of Enron's products and services met with Peter Goebel and his team on the GSS buy side and participated in an Experience Enron tour Gerry has been unable to define an HP business proposition. The coordination between Cashiola (short term initiative) Morgridge (long term 12-24 months) has remained unorganized. These initiatives need to be developed separately. Clearly the conversations with HP need to be elevated to a more senior level so EBS can work with HP decision makers who can move the relationship forward at a strategic level. As the relationship is developed at this strategic level shorter term opportunities will crop up along the way. But Gerry's short term plans will not be the focus of the EBS/HP relationship rather a by-product. To facilitate this process of elevating the relationship Jennifer Medcalf and I are following up with Bill Lovejoy and Greg Pyle. Lovejoy's boss is Dan Sytsma VP of HP's America's Central Region. In the conference call Thursday 12/14 with Peter Goebel and HP regarding wireless initiatives Peter will support the GSS/BD push for the HP/EBS initiative by reiterating the following two points: a) Enron is already an HP customer the onus is on HP to move forward on the process of building a strategic relationship (IBM and Lexmark are only some of the HP competitors who could push them out of the running) b) HP's ability to bring the right people to the table will influence HP's business relationship process with Enron Patrick Tucker and Dale Clark could build their relationship with Bill Dwyer Chief Architect e-Services Solutions (met at the meeting 11/16) in the near term. Perhaps plan a visit to Cupertino California to see Dwyer in person. We look forward to continuing close collaboration with your team on this and other opportunities. Sarah-Joy Hunter Enron Corporation Global Strategic Sourcing - Business Development #(713)-345-6541,other,formal,3 +Energy Issues,Please see the following articles: AP Wires Thurs 3/22: Report: Power wholesalers overcharged California $5.= 5=20 billion Dow Jones Newswires Thurs 3/22: Reliant To Appeal Fed Judge Ruling To Sel= l=20 Pwr To Calif Sac Bee Thurs 3/22: Federal judge orders major power wholesaler to sell t= o=20 California San Jose Mercury News Thurs 3/22: State falling short on pacts that provi= de=20 low-cost energy Contra Costa Times Thurs 3/22: Crisis saps state surplus Sac Bee. Fri 3/23: Bill to pay small energy firms stalls Sac Bee Fri. 3/23: House panel ends energy hearings -- will it step in? Sac Bee Fri 3/23: Dan Walters: Crisis deepens: politicos panic San Diego Union Fri. 3/23: Report says power wholesalers overcharged=20 state $6 billion San Diego Union Fri 3/23: Disappearing state surplus sparks alarm San Diego Union Fri. 3/23: Outages darken economic outlook in state so= me=20 say San Diego Union Fri. 3/23: Out-of-state generators question power=20 regulators' authority San Diego Union Fri. 3/23: Allegheny Energy makes big California=20 connection LA Times Fri 3/23: Judge Frees Small Firm From Edison Contract SF Chron Fri 3/23: Lodi Defies Order for Blackouts=20 Utility tells PG&E to 'pay the bills' SF Chron Fri 3/23: Coming Down to the Wire=20 State legislators battle over alternative energy bills SF Chron Fri 3/23: Grid Operators Push to Prevent Overcharging=20 They say regulators must be aggressive to stop billing abuses=20 Mercury News Fri. 3/23: State's bill for energy could double this year Mercury News Fri. 3/23: Plan for alternate power plants stalls --- --- Report: Power wholesalers overcharged California $5.5 billion=20 DON THOMPSON Associated Press Writer Thursday March 22 2001=20 2001 Associated Press=20 (03-22) 11:41 PST SACRAMENTO Calif. (AP) -- Electricity wholesalers have= =20 overcharged California more than $5 billion since May by manipulating the= =20 energy market according to a report prepared for power grid managers.=20 The Independent System Operator will file the findings with federal=20 regulators and ask for a refund ISO spokesman Patrick Dorinson said.=20 The state auditor also said Thursday that the state's 1996 deregulation law= =20 encouraged both buyers and sellers of electricity to ``manipulate wholesale= =20 prices to their advantage'' by underestimating supply and demand.=20 The auditor's report lays out what it calls ``a complex combination'' of=20 deficiencies and misjudgments it says led to the state's power problems.=20 According to the ISO report five in-state power suppliers and 16 importers= =20 frequently offered electricity at prices higher than it cost them to produc= e=20 -- effectively withholding supplies -- or didn't bid at all when they were= =20 able to generate power.=20 ISO Director of Market Analysis Anjali Sheffrin presented the findings at a= =20 conference in Berkeley last week.=20 The companies have denied overcharging California and have said they expect= =20 the Federal Energy Regulatory Commission will determine their prices were= =20 justified.=20 The commission has recently stepped up scrutiny of power companies' behavio= r=20 during California's power crisis asking suppliers to justify $124 million = in=20 sales during the first two months of the year or refund the money. Critics= =20 claim thousands of additional questionable sales are not being challenged.= =20 California has been spending about $45 million a day -- $4.2 billion since= =20 January -- to purchase power for Pacific Gas and Electric Co. and Southern= =20 California Edison. Both utilities the state's largest have been cut off b= y=20 electricity wholesalers because their credit is almost worthless.=20 Edison and PG&E say they are nearly $14 billion in debt due to soaring=20 wholesale power costs. The state's deregulation law blocks them from=20 recovering the costs from customers.=20 State Controller Kathleen Connell said Wednesday that the state's=20 power-buying is gutting its budget surplus.=20 Since the state started making emergency power buys the surplus has fallen= =20 from $8.5 billion to about $3.2 billion she said.=20 Connell ordered an audit of the power buys saying Gov. Gray Davis is=20 withholding key financial information from her office and the Legislature.= =20 She said she would refuse to transfer $5.6 billion into a ``rainy day fund'= '=20 she said was set up to impress Wall Street as the state prepares to issue $= 10=20 billion in revenue bonds to cover its power buys.=20 Transferring the money would leave the state general fund $2.4 billion in= =20 debt Connell said.=20 Sandy Harrison spokesman for the state Department of Finance and Keely=20 Bosler of the Legislative Analyst's Office said such transfers are routin= e=20 and required by law.=20 ``The law says she has to do it. The law does not give her the power to=20 demand that kind of audit information'' Harrison said.=20 Davis spokesman Steve Maviglio said the administration has released the=20 financial information it can without jeopardizing negotiations for long-ter= m=20 power contracts with wholesalers.=20 Also Wednesday a federal judge ordered a major wholesaler Reliant Energy= =20 Services to continue selling power to California despite its fear that it= =20 will not be paid.=20 The ISO buys power from companies like Reliant on behalf of utilities in=20 attempts to fend off rolling blackouts like those that hit the state this= =20 week and during two days in January.=20 --- Reliant To Appeal Fed Judge Ruling To Sell Pwr To Calif 03/22/2001 Dow Jones Energy Service (Copyright (c) 2001 Dow Jones & Company Inc.) LOS ANGELES -(Dow Jones)- Reliant Energy Inc. (REI) said Thursday it will= =20 immediately file with the 9th Circuit Court of Appeals in San Francisco in= =20 response to a federal judge's ruling late Wednesday that the company contin= ue=20 selling power to California regardless of whether it is paid.=20 U.S. District Court Judge Frank Damrell granted California's Independent=20 System Operator which makes last minute power purchases in the spot market= =20 a preliminary injunction against Reliant saying Californians were at risk = of=20 irreparable harm if Reliant stopped selling power to the state. The ISO manager of the state's electricity grid said the judge's ruling= =20 will allow the agency to keep the lights on in California.=20 Reliant which is owed more than $300 million from the state's cash-strappe= d=20 utilities supplies California with about 3000 megawatts of electricity fr= om=20 power plants it owns in the state.=20 Reliant spokesman Richard Wheatley said the state Department of Water=20 Resources the agency that buys California's bulk power needs on behalf of= =20 PG&E Corp. (PCG) unit Pacific Gas & Electric Edison International (EIX) un= it=20 Southern California Edison and Sempra Energy (SRE) unit San Diego Gas &=20 Electric should back the ISO's last minute power purchases.=20 In a filing with the Securities and Commission Reliant said it is owed $10= 8=20 million by the DWR for last minute power purchases the ISO made during the= =20 six weeks prior to the agreement Reliant made with the DWR.=20 Damrell dismissed Reliant's claim saying he does not have the authority to= =20 force the DWR to pay for that power.=20 We're going to immediately appeal Judge Damrell's order Wheatley said.= =20 Clearly the judge understands the implications of his order. We are requir= ed=20 to do business with creditworthy entities. Unfortuantely the judge did not= =20 force the ISO to post a surety bond which would allowed us to do business= =20 with the ISO.=20 Gov. Gray Davis has said the state is not responsible for the last minute= =20 power purchases the ISO makes despite a law passed authorizing the DWR to= =20 buy power on behalf of the utilities.=20 Wheatley added that the company will also seek relief on the issue at the= =20 Federal Energy Regulatory Commission. Damrell's ruling remains in effect=20 until the Federal Energy Regulatory Commission rules on the matter.=20 Separately Wheatley said a short-term power supply contract that Reliant= =20 signed with the DWR expired Monday and the DWR has not renewed the contract= .=20 A spokesman for the DWR would not comment on the issue.=20 -By Jason Leopold Dow Jones Newswires 323-658-3874=20 jason.leopold@dowjones.com --- --- ----------------------- Federal judge orders major power wholesaler to sell to California Updated: March 21 2001 - 8:23 p.m.=20 A federal judge issued a preliminary injunction Wednesday ordering a major= =20 electricity wholesaler to continue selling to California despite its fear= =20 that it will not get paid.=20 U.S. District Judge Frank C. Damrell Jr. said Californians were at risk of= =20 irreparable harm if Reliant Energy Services stopped selling power to the=20 Independent System Operator which oversees the state's power grid. The ISO= =20 buys last-minute power on behalf of utilities to fill gaps in supply to try= =20 to fend off blackouts.=20 Damrell dismissed Reliant's attempt to force the state Department of Water= =20 Resources to back the ISO's purchases for the state's two biggest utilities= .=20 The state has been spending about $50 million a day on power for Pacific Ga= s=20 and Electric Co. and Southern California Edison both denied credit by=20 suppliers after amassing billions of dollars in debts. The judge said he had no authority to force the DWR to pay for that power.= =20 Gov. Gray Davis has said the state isn't responsible for purchasing the=20 costly last-minute power ISO buys for Edison and PG&E despite a law=20 authorizing state power purchases on the utilities' behalf.=20 ISO attorney Charles Robinson said the ruling gives ISO operators a tool t= o=20 assist them in keeping the lights on in California.=20 Had the decision gone the other way one could expect other generators to= =20 simply ignore emergency orders Robinson said.=20 Damrell's preliminary injunction will remain in effect until the Federal=20 Energy Regulatory Commission rules on the matter.=20 Damrell denied the ISO's request for preliminary injunctions against three= =20 other wholesalers Dynegy AES and Williams who agreed to continue selling= =20 to the ISO pending the FERC ruling.=20 Spokesmen for Reliant Dynegy AES and Williams were out of the office=20 Wednesday night and didn't immediately return calls from The Associated Pre= ss=20 seeking comment on the ruling.=20 The ISO went to court in February after a federal emergency order requiring= =20 the power sales expired. The judge then issued a temporary restraining orde= r=20 requiring the sales but dropped it after the suppliers agreed to continue= =20 sales to California pending his Wednesday ruling.=20 The ISO said it would lose about 3600 megawatts if the suppliers pulled ou= t=20 enough power for about 2.7 million households. One megawatt is enough for= =20 roughly 750 homes.=20 Grid officials said Reliant's share alone is about 3000 megawatts. Reliant= =20 said the amount at issue actually is less than a fourth of that because mo= st=20 of the power is committed under long-term contracts.=20 Reliant which provides about 9 percent of the state's power worries it=20 won't get paid due to the financial troubles of PG&E and Edison.=20 PG&E and Edison say that together they have lost about $13 billion since Ju= ne=20 due to soaring wholesale electricity costs that California's 1996=20 deregulation law bars them from passing onto customers.=20 At the same time the state has faced a tight electricity supply due in pa= rt=20 to California power plant shutdowns for maintenance and to a tight=20 hydroelectric supply in the Pacific Northwest.=20 Managers of the state power grid imposed rolling blackouts across the state= =20 Monday and Tuesday as supply fell short of demand. Wednesday cooling=20 temperatures and the completion of repairs at several power plants allowed= =20 the state to avoid blackouts. State Controller Kathleen Connell said Wednesday that the energy crunch als= o=20 imperils California's financial health. Connell said the state's power-buying on behalf of Edison and PG&E is is=20 gutting its budget surplus. Since the state started making emergency power= =20 buys in January the surplus has fallen from $8.5 billion to about $3.2=20 billion she said.=20 Connell ordered an audit of the state's power-buying saying Davis is=20 withholding key financial information from her office and the Legislature.= =20 She is refusing a request by Davis and the Legislature to transfer $5.6=20 billion into a rainy day fund she said was set up to impress Wall Street = as=20 the state prepares to issue $10 billion in revenue bonds to cover its=20 power-buying.=20 Transferring the money would leave the state general fund $2.4 billion in= =20 debt Connell said.=20 Sandy Harrison spokesman for the state Department of Finance and Keely=20 Bosler of the Legislative Analyst's Office said such transfers are routine= =20 and required by law.=20 They put the state's budget surplus at $5.6 billion.=20 The law says she has to do it. The law does not give her the power to dema= nd=20 that kind of audit information Harrison said.=20 He said the state's budget isn't in danger because it will be repaid with t= he=20 $10 billion in long-term debt.=20 Wells Fargo & Co. chief economist Sung Won Sohn said he sees little progres= s=20 in efforts to fix the state's power problems and end state electricity=20 purchases.=20 If we're going to pour money into a bottomless pit I would worry about th= e=20 state's finances he said. At some point we're going to run out of money.= The controller's criticism of fellow Democrat Davis won support from Assemb= ly=20 Republicans and Secretary of State Bill Jones a Republican considering=20 challenging Davis next year.=20 Jones said he wants to announce his own plan to solve the state's energy=20 woes but can't unless Davis releases more financial details.=20 Davis spokesman Steve Maviglio dismissed the criticism. Political grandstanding doesn't generate one more kilowatt of energy for= =20 California in this time of emergency he said.=20 Maviglio said the administration has released the financial information it= =20 can without jeopardizing negotiations for long-term power contracts with=20 wholesalers.=20 Also Wednesday a report by Davis' chief power negotiator appears to show= =20 that as much as 75 percent of the state's power purchases will have to be o= n=20 the expensive short-term market this summer said Sen. Debra Bowen D-Marin= a=20 del Rey chairwoman of the Senate Energy Committee.=20 The prices may be phenomenol she said particularly given predicted=20 hydroelectric shortages due to drought in the Pacific Northwest.=20 The report by David Freeman who is negotiating the state's long-term power= =20 contracts shows California has finalized 19 contracts and has 25 agreement= s=20 in principle. Freeman said DWR is continuing to negotiate other contracts. Bowen said FERC should impose short-term price caps or let generators to=20 charge enough to make a reasonable profit or we could be subject to enormo= us=20 price-gouging this summer.=20 -- Associated Press --- State falling short on pacts that provide low-cost energy=20 Published Thursday March 22 2001 in the San Jose Mercury News=20 BY CHRIS O'BRIEN AND JOHN WOOLFOLK=20 Mercury News=20 The state has signed low-cost contracts for just a third of the energy it= =20 needs this year raising the prospect that California could be forced to bu= y=20 much of its electricity this summer on the expensive spot market.=20 A spokesman for Gov. Gray Davis conceded Wednesday that the state will be i= n=20 trouble without more contracts but insisted California will meet its needs= =20 through conservation and additional long-term deals for cheap electricity.= =20 The state according to a report released Wednesday has fallen far short o= f=20 the governor's goal of filling almost all its electricity needs through suc= h=20 deals. In fact the state has lined up contracts for about half the amount= =20 Davis had projected earlier this month.=20 If the state has to rely heavily on the volatile spot market where the pri= ce=20 of electricity this summer could reach five times the state's contract pric= e=20 pressure could mount to raise the cap on the electricity rates consumers pa= y.=20 But Steven Maviglio the governor's spokesman said ``The governor has sai= d=20 he's committed to work this in the existing rate structure so that's the= =20 plan.''=20 In the report sent to state lawmakers the state Department of Water=20 Resources indicated that it had secured just more than 20 million=20 megawatt-hours for this year leaving it far short of the 60 million=20 megawatt-hours needed.=20 ``This is just a progress report'' Maviglio said. ``They did all this in= =20 three weeks which is pretty amazing when you think about it and we have a= =20 lot more to do.''=20 The state got into the power buying business in January supplying it to th= e=20 state's nearly bankrupt utilities.=20 The state negotiated long-term contracts with generators to supply that pow= er=20 at a reduced rate. Based on the report the state will pay an average of $6= 8=20 per megawatt-hour over the next 10 years -- significantly less than in=20 December when prices spiked higher than $300 per megawatt-hour but not as l= ow=20 as the $55 Davis hoped to reach.=20 Most of this power however won't be delivered until 2004. From 2004 to=20 2006 the Department of Water Resources estimates it has enough power unde= r=20 contract. Until then the amount falls short.=20 In 2001 it appears the state has about one-third of the power it needs. Th= e=20 gap closes to about half in 2002 and two-thirds in 2003.=20 At a news conference in Los Angeles two weeks ago Davis said the state wou= ld=20 have to buy only 30 to 45 percent of the power it needs this summer on the= =20 open market.=20 At the time critics said with only two-thirds of the power under contract= a=20 rate increase was almost inevitable. Even Davis' chief negotiator S. David= =20 Freeman offered a bleak assessment for the summer saying that all availab= le=20 electricity has already been sold.=20 ``We'll be subject to extremely high prices'' said Frank Wolak a Stanford= =20 professor who sits on a market committee for the Independent System Operato= r=20 the agency that runs the state power grid.=20 Wolak said there are two main hopes for avoiding a price increase this=20 summer: Federal officials could cap the wholesale price a step they've=20 resisted or Californians can conserve an unprecedented amount of power. --- --- ----------------------- Crisis saps state surplus POWER CRISIS=20 Controller moves to block a transfer of funds saying the $8.5 billion=20 surplus has been cut more than half since January=20 By Mike Taugher TIMES STAFF WRITER=20 The energy crisis has bled California's once-touted budget surplus by more= =20 than half since taxpayers began buying electricity two months ago leading = a=20 top state finance official Wednesday to order an audit of the power purchas= es=20 and block Gov. Gray Davis' plan to transfer funds into a reserve account.= =20 A booming economy last year produced a budget surplus that totaled $8.5=20 billion in January. But that figure now stands at about $3.2 billion=20 according to Controller Kathleen Connell.=20 We started this year with a generous budget surplus Connell said in a=20 statement announcing her decision to block what Davis administration=20 officials described as a routine transfer of surplus money. The energy=20 crisis has taken much of that away and this transfer on top of the=20 electricity purchases would put the fund at risk.=20 Meanwhile the Davis administration released a report by David Freeman the= =20 governor's chief negotiator on power purchases on the progress of executin= g=20 long-term agreements meant to stabilize the power buys.=20 According to the report only about 40 percent of the electricity needed fr= om=20 the open market this year has been lined up. That means the state could be= =20 forced to continue buying a substantial amount of power on the highly=20 expensive spot market and further drain its coffers.=20 And a key regulatory panel is scheduled next week to issue a ruling that=20 would determine how quickly state funds will be replenished when it decides= =20 what portion of electric bill payments should be allocated to the state=20 treasury a decision that could include a rate increase to fully repay=20 taxpayers without further crippling the state's two largest electric=20 utilities.=20 The Public Utilities Commission also will consider whether it will force th= e=20 utilities to pay alternative energy producers whose shutdowns this week=20 contributed to blackouts.=20 Connell's action underscores a growing nervousness over the sheer volume of= =20 money that is being poured into energy buys despite the fact that state=20 officials plan to replenish the treasury with up to $10 billion in loans th= at=20 will be repaid by electricity consumers.=20 The state has committed to spending $4.2 billion to date to keep lights on= =20 since taxpayers were forced in mid-January to take over electricity buys fr= om=20 the financially crippled utilities Pacific Gas & Electric Co. and Southern= =20 California Edison. Tax money is going out at a clip of about $50 million a= =20 day.=20 High prices already have brought PG&E and Edison to the brink of bankruptcy= =20 and now the state's surplus is at risk according to Connell.=20 In addition to requesting an audit and announcing her intention to delay th= e=20 transfer to the reserve account Connell said she wanted the administration= =20 to send her office more information about the electricity purchases.=20 Davis' representatives questioned Connell's authority in trying to block th= e=20 funds transfer which they called a routine accounting procedure and accus= ed=20 her of making political hay.=20 It is not helpful to the taxpayers or ratepayers or the people who just wa= nt=20 to keep the lights on it isn't helpful to have the situation muddied like= =20 this said Sandy Harrison a Finance Department spokesperson. We're sorry= =20 it came up in this manner.=20 Connell and the administration have butted heads in recent weeks. The=20 controller wants to post details of the state's electricity purchases on he= r=20 Web site a plan that have been delayed under pressure from Davis because o= f=20 the governor's concerns that releasing those details will allow power=20 generators and traders to sell at higher prices.=20 Harrison said administration officials believe Connell lacks the authority= =20 either to block the funds transfer to a reserve account or to audit the sta= te=20 water resources department.=20 Two days of widespread blackouts this week show how vulnerable the power gr= id=20 is to financial glitches. Although several factors combined to produce the= =20 blackouts state power officials say the outages could have been avoided if= =20 the utilities were paying their bills to alternative energy producers.=20 Many of those producers including clean-burning natural gas power plants= =20 wind solar and geothermal energy developers shut down enough production t= o=20 spell the difference between grid reliability and blackouts Monday and=20 Tuesday.=20 Davis called the utilities' failure to pay bills to those producers known = as=20 qualifying facilities immoral. The QFs were either unable to buy gas fro= m=20 their suppliers or were frustrated with the utilities' failure to pay them.= =20 The utilities hoarded billions of dollars since November without paying an= y=20 money out said Davis spokesman Steve Maviglio. They've got the money --= =20 we're pulling the trigger to make them pay it.=20 The utilities however say they are doing all they can to conserve enough= =20 cash to continue operating. Together they owe the QFs about $1.5 billion.= =20 Next week the PUC is scheduled to consider whether to force the utilities = to=20 heed Davis' demand to pay the QFs and it might also decide how much of=20 ratepayers' bill payments will be used to refund taxpayers for power buys.= =20 PG&E says that under a formula proposed by the administration the water=20 resources department would receive about 40 percent of the money collected= =20 from ratepayers for power purchases.=20 The rest of that money about $240 million would have to be divided among= =20 QFs existing power contracts operating PG&E's nuclear and hydroelectric= =20 plants and what hour-by-hour purchases the utility still must make on the= =20 spot market according to PG&E spokesman John Nelson.=20 There isn't enough to do that he said.=20 That is making it increasingly likely that electric bills will be hiked=20 according to a growing chorus of officials and experts.=20 Unless rates are raised Nelson said the only entity that can absorb a lac= k=20 of payment or a partial payment is the state treasury. Cutting off any othe= rs=20 will lead to electricity becoming unavailable and more blackouts he said.= =20 If they do it under existing rates -- given that the existing pool of mone= y=20 is not enough -- who doesn't get paid or who gets a partial payment? Nelso= n=20 said. What's the only entity left with wiggle room? The state.=20 Rate hikes are also a sticking point in negotiations to bail out the=20 utilities through purchase of their transmission lines and other assets=20 Maviglio said.=20 They want rate increases of significant magnitude and we're not going=20 there he said.=20 WE CAN TRIM STORY HERE IF NECESSARY BUT KEEP TAGLINES AT BOTTOM=20 About one-third the electricity needed by the customers of California's thr= ee=20 major utility companies is produced by the companies themselves one-third= =20 comes from alternative producers who use environmentally friendly technique= s=20 and one-third is bought on the open market.=20 The state stepped in to buy the one-third needed from the open market after= =20 the utility companies ran out of cash and credit in January to make the=20 purchases themselves.=20 But that electricity has proven to be enormously expensive and Davis has= =20 planned to lower those prices by committing to long-term purchases.=20 Freeman's report on the progress of those long-term purchases dated March = 15=20 but released this week said the state has finalized 19 contracts with seve= n=20 suppliers and reached 25 additional agreements.=20 Mike Taugher covers the environment and energy. Reach him at 925-943-8324 o= r=20 mtaugher@cctimes.com.=20 Staff writer Andrew LaMar contributed to this story. --- --- ----------------------- Bill to pay small energy firms stalls By Kevin Yamamura Dale Kasler and Jim Sanders Bee Staff Writers (Published March 23 2001)=20 A quickly melded proposal that would assure payments for alternative energy= =20 suppliers whose money woes contributed to power blackouts this week stalled= =20 Thursday in a divided Legislature.=20 The state Senate passed the bill AB 8x but with Republicans balking it w= as=20 rejected in the Assembly along party lines. Assembly leaders said they may= =20 try again today.=20 For most of Thursday lawmakers scrutinized legislation they had overhauled= =20 the night before to include Gov. Gray Davis' plan to force utilities to pay= =20 solar wind and small gas-fired suppliers. Such providers called qualifie= d=20 facilities or QFs provide more than 20 percent of California's=20 electricity and their shutdowns were partly to blame for rolling blackouts= =20 Monday and Tuesday.=20 Under the Democratic governor's plan the state Public Utilities Commission= =20 would determine prices at which alternative generators may sell power but= =20 legislation is needed to authorize the PUC action.=20 Lawmakers faced time pressures Thursday. They wanted to pass the bill quick= ly=20 so the PUC could act next week and legislators could embark Monday on an=20 annual three-day lobbying trip in Washington D.C.=20 Assembly Speaker Robert Hertzberg D-Sherman Oaks said the Republicans'=20 rejection of AB 8x could jeopardize more than $4 billion the state has spen= t=20 or allocated for electricity during the energy crisis.=20 Hertzberg said producers of alternative energy which are owed more than $1= =20 billion have threatened to drag debt-ridden utilities into involuntary=20 bankruptcy if the Legislature failed to pass the measure.=20 They said it and I believe it Hertzberg said. If such bankruptcies occu= r=20 he added the state with its multibillion-dollar debt would become just=20 another creditor in a pile of creditors.=20 But Assembly Republican leader Bill Campbell of Villa Park said the=20 finger-pointing is unfair. Passage of AB 8x would not necessarily prevent= =20 bankruptcies he said.=20 One alternative energy provider won a crucial court ruling Thursday that=20 staved off at least for a while threats by some creditors to haul one or= =20 both big utilities into bankruptcy court for nonpayment of bills.=20 CalEnergy Co. Inc. won the right to sell its geothermal power which was=20 contracted to Southern California Edison on the open market. CalEnergy sai= d=20 it is owed $45 million by Edison.=20 If the Imperial County judge hadn't ruled in CalEnergy's favor the company= =20 and seven other QFs were fully prepared to file an involuntary bankruptcy= =20 petition against Edison this morning said David Sokol chief executive of= =20 CalEnergy's parent MidAmerican Energy Holdings Co. of Des Moines Iowa.=20 That is currently off the table.=20 An involuntary bankruptcy proceeding would take California's energy crisis= =20 into uncharted territory although a bankruptcy judge would have the leeway= =20 to reject the filing.=20 Freed from its contract with Edison CalEnergy will move to sell its=20 electricity to people who will pay for it Sokol said.=20 Besides calming the bankruptcy movement temporarily the ruling also could= =20 prompt other alternative energy providers -- hundreds of which have shut do= wn=20 because of nonpayment by Edison and Pacific Gas and Electric Co. -- to foll= ow=20 CalEnergy's example and find other buyers for their electricity said Gary= =20 Ackerman of the Western Power Trading Forum an association of generators.= =20 Assembly Republicans said they felt the Senate's decision to package three= =20 important energy issues into a single bill was an attempt to ramrod=20 legislation through both houses.=20 We have to stand and say no Campbell said during floor debate.=20 Besides determining alternative generator payments the bill would change a= n=20 earlier law by capping the value of bonds the state may sell for power=20 purchases at $10 billion. It also would extend to large businesses an=20 existing rate cap in the San Diego Gas and Electric Co. service area.=20 And it would earmark a portion of rates paid by utility customers to fund t= he=20 state's ongoing power purchases. Within a week the state will have spent= =20 $4.2 billion on power since January.=20 Without the bill some legislators fear Pacific Gas and Electric and=20 Southern California Edison would be reimbursed before the state.=20 They have got (some) gall to go to the PUC and say they're going to go to= =20 court to keep our money -- to keep our money to pay off their creditors= =20 said Senate President Pro Tem John Burton D-San Francisco.=20 Most of the bill's controversy however centered on how the PUC would trea= t=20 gas-fired alternative generators.=20 The commission issued a revised draft decision Wednesday that would impose= =20 prices for qualifying facilities at $79 a megawatt-hour for five-year=20 contracts or $69 a megawatt-hour for 10 years.=20 But those producers that use natural gas -- representing about two-thirds o= f=20 the alternative energy providers in California -- spent Thursday arguing th= at=20 Davis' plan to rescue them would all but guarantee that they would go out o= f=20 business instead.=20 The plan -- ordering Edison and PG&E to pay them a fixed price for their=20 power -- would set rates well below the cost of natural gas they said.=20 Democratic lawmakers tried to assure such producers that the PUC would set= =20 prices that make business sense even obtaining a letter to that effect fro= m=20 Loretta Lynch who heads the commission.=20 Davis has vowed to fine Edison and PG&E if they don't pay alternative=20 producers for future deliveries. But Sokol said his company isn't convinced= =20 that Edison will pay.=20 Calling Edison a confrontive in-your-face nasty organization Sokol sai= d=20 the utility was sitting on $2 billion and not paying its bills. Edison i= n=20 a Securities and Exchange Commission filing Thursday said its debts outwei= gh=20 its cash reserves by $722 million.=20 The Senate sent the Assembly two other bills that deal specifically with=20 supply and demand. The first SB 5x would spend about $1 billion on energy= =20 conservation and low-income assistance programs. The other SB 28x would= =20 streamline siting procedures for power plant construction.=20 In separate energy-related matters Thursday the Assembly approved:=20 AB 21x which would allow businesses industries or other electrical=20 customers to negotiate private contracts with energy providers.=20 Nine energy bills designed to generate or save 665 megawatts of electricity= =20 -- including 345 megawatts this summer. One megawatt is enough electricity = to=20 light about 1000 homes.=20 The state put power emergencies behind it after dropping out of a Stage 1= =20 alert late Wednesday. The California Independent System Operator which=20 manages the state's power transmission grid was predicting no further aler= ts=20 this week. It expected cooling temperatures and a regular dropoff in=20 electricity use on Fridays to lessen demand at the same time that more pow= er=20 plants were returning to service.=20 Bee staff writer Carrie Peyton contributed to this report.=20 --- House panel ends energy hearings -- will it step in? By David Whitney Bee Washington Bureau (Published March 23 2001)=20 WASHINGTON -- A key House panel wrapped up a series of hearings on the=20 California electricity crisis Thursday and now will decide whether to come = to=20 the state's aid with legislation.=20 But the panel's Texas chairman made clear that West Coast price controls=20 won't be on the table.=20 Caps will not be in anything I am submitting said Rep. Joe Barton=20 chairman of the House Energy and Commerce Committee's energy and air qualit= y=20 subcommittee.=20 Some form of federal controls to hold down escalating wholesale prices this= =20 summer because of power shortages has been the most frequent appeal of=20 witnesses who testified before the panel during roughly 30 hours of hearing= s=20 over five days.=20 Such controls have been sought by the governors of California Oregon and= =20 Washington. As power shortages are forecast for other regions states like= =20 New York also have appealed for temporary price controls to halt gouging.= =20 But the Federal Energy Regulatory Commission which is responsible for=20 enforcing reasonable wholesale rates under the Federal Power Act has refus= ed=20 to impose them and the Bush administration is bolstering that decision by= =20 opposing any legislation that would compel such action.=20 Barton in a brief hallway interview declined to say what other legislativ= e=20 remedies he might propose to address the worsening California situation.=20 He said he expects to submit a list of ideas to the White House today and= =20 after receiving comment on it sit down with other committee Republicans an= d=20 Democrats next week to see if any legislation is in order.=20 If we are going to do anything to help California or the West this summer= =20 we have to make it law within the next month or six weeks Barton said.=20 Even the panel's senior Democrat Virginia Rep. Rick Boucher was urging a= =20 careful and deliberate approach to the California crisis which he said w= as=20 largely of the state's own making.=20 There are steps Congress might take to provide some help to the West such = as=20 more money for conservation and relaxed federal regulation of air quality= =20 standards. That would permit older more polluting generators to operate=20 through a long hot summer when electricity demand could exceed supply by= =20 about 3000 megawatts roughly the amount needed to power 3 million homes.= =20 But Alan Lloyd chairman of the California Air Resources Board said power= =20 production already is being maximized without sacrificing air quality.=20 Simply put no essential electricity generation has been curtailed due to= =20 air emission limitations he said. California's programs to protect publi= c=20 health are not major factors in the electricity shortages experienced to=20 date.=20 The concern is that as shortages turn into more rolling blackouts wholesal= e=20 prices will jump even higher and steadily bleed the economies of California= =20 and the West Coast.=20 William L. Massey the lone member of the energy regulatory commission who= =20 supports price controls said at a Tuesday hearing that without them the We= st=20 Coast faces economic catastrophe this summer.=20 It was evident from the comments of some Republicans that they think their= =20 party could capitalize politically from a difficult summer.=20 If they had a bad summer it could show up in the polls said Rep. Charli= e=20 Norwood R-Ga. And sometimes that's not a bad idea.=20 One of the most dramatic exchanges during the weeklong hearings came Thursd= ay=20 with S. David Freeman the former general manager of the Sacramento Municip= al=20 Utility District who now heads the Los Angeles Department of Water and Powe= r.=20 He recently was named Gov. Gray Davis' chief negotiator with power generato= rs=20 for long-term contracts to stabilize future deliveries.=20 Don't feel sorry for California Freeman said. We're going to come out o= f=20 this stronger than ever.=20 But Freeman said it will be a year or two before all the fixes are in place= =20 and in the meantime the region desperately needs Congress' help to force th= e=20 FERC into controlling wholesale prices which witnesses said are likely to= =20 rise from $7 billion last year to as much as $70 billion or more this year.= =20 We recognize that the current administration and various legislators have= =20 their own opinion as to the California situation Freeman said. But my=20 personal plea is that if the federal government is not going to help us th= e=20 least it should do is refrain from legislation that attempts to tell us wha= t=20 to do.=20 Barton perked up at that idea.=20 Leave California alone huh? Barton said. That might be a good motto.= =20 --- --------------------- Dan Walters: Crisis deepens: politicos panic (Published March 23 2001)=20 That choking sound you hear is California's political class shifting into= =20 near-panic mode as it realizes that the energy crisis is on the verge of=20 becoming a full-scale meltdown with utilities forced into bankruptcy and= =20 consumers hammered by severe and prolonged power blackouts and soaring=20 electricity bills.=20 The Legislature which had been content to allow Gov. Gray Davis to handle= =20 the crisis on his own suddenly came to life Thursday jolted by this week'= s=20 unexpected rolling blackouts and threats by creditors to force the utilitie= s=20 into bankruptcy court. Lawmakers quickly fashioned a basketful of legislati= on=20 aimed -- or so they hope -- at increasing power supplies promoting=20 conservation and relieving the financial pressure on utilities and=20 electricity generators. But it may be too little too late -- and Davis and= =20 other politicians are already pointing fingers of blame aware that a=20 political price will be paid if the apocalypse strikes.=20 While Davis chants his mantra that he inherited a fatally flawed utility=20 deregulation scheme from predecessor Pete Wilson Republicans are blaming= =20 Davis for moving too slowly after the crisis first surfaced last summer an= d=20 even some of Davis' fellow Democrats are distancing themselves from the=20 governor.=20 Deregulation was a product of a Republican governor a Republican author a= nd=20 a Republican PUC (Public Utilities Commission) that was unduly impatient= =20 Davis said at one point this week as the Capitol buzzed with private=20 negotiations and public posturing.=20 A day later however state Controller Kathleen Connell a Democrat issued= a=20 warning that Davis' power purchases running at $50 million a day had=20 already drawn down state budget reserves by nearly two-thirds and she=20 refused to authorize additional transfers. It was a direct shot by Connell = at=20 Davis an old rival and came just a day after the governor had endorsed a= =20 Connell foe Antonio Villaraigosa in the duel for mayor of Los Angeles.=20 Other Democrats didn't join Connell's direct challenge to Davis but there= =20 is nevertheless a growing concern among Democratic legislators that the= =20 power purchases are costing many billions of dollars more than the governor= =20 had projected and could place the state budget in jeopardy. They're nervous= =20 because Davis has refused to reveal even to legislators exactly how much= =20 power the state is buying each day and how much it is paying.=20 From the few details that have been disclosed it's clear that the state is= =20 spending about $1.5 billion a month which would wipe out the state's=20 reserves by midsummer. It's also becoming increasingly clear that Davis=20 probably can't make good on his promise to avoid major consumer rate=20 increases unless the state is willing to plunge deeply and semi-permanentl= y=20 into debt to underwrite wholesale costs or unless federal authorities orde= r=20 huge refunds from power suppliers.=20 Rates in areas served by private utilities have risen only slightly while t= he=20 costs first to utilities and later to the state soared. Data from the=20 administration and utilities when collated indicate that the state is in= =20 line to collect just 20 cents for every dollar it's spending on power=20 purchases and the gap will increase as summer heat drives up demand.=20 Privately some economists say that private utility rates will have to rise= =20 33 percent to 50 percent to cover costs of current power supplies plus=20 utilities' past debts to generators and the state's purchase of the=20 utilities' transmission system if that deal is made final.=20 It's ultimately going to break down and the ratepayer is going to pay for= =20 it one way or the other Republican Sen. Jim Battin said during one of=20 Thursday's many committee hearings on utility legislation. No one disagreed= =20 with him.=20 DAN WALTERS' column appears daily except Saturday. Mail: P.O. Box 15779= =20 Sacramento CA 95852 phone (916) 321-1195 fax: (781) 846-8350 E-mail: dwalters@sacbee.com Recent columns: --- Report says power wholesalers overcharged state $6 billion=20 By Don Thompson ASSOCIATED PRESS=20 March 22 2001=20 SACRAMENTO =01) Electricity wholesalers have overcharged California more th= an=20 $6.2 billion by manipulating the energy market according to a report by an= =20 economist working for power grid managers.=20 The Independent System Operator planned to file the findings with federal= =20 regulators Thursday and ask for a refund said ISO spokesman Patrick=20 Dorinson.=20 In a related development the state auditor said Thursday that the state's= =20 1996 deregulation law encouraged both buyers and sellers of electricity to= =20 manipulate wholesale prices to their advantage by underestimating both=20 supply and demand.=20 Disappearing state surplus sparks alarm=20 Outages darken economic outlook in state some say=20 Out-of-state generators question power regulators' authority=20 Allegheny Energy makes big California connection=20 Enron stock slides despite earnings reassurance=20 California's electricity crisis at-a-glance=20 ?=20 The auditor's report lays out what it calls a complex combination of=20 deficiencies and misjudgments it says led to the state's power problems.=20 The ISO's filing came a day after the state controller complained that a=20 relentless energy crisis is jeopardizing California's financial future.=20 Since May the companies manipulated the market by bidding at excessive=20 prices effectively withholding supplies or by not bidding at all when they= =20 had generation capability available according to the ISO study.=20 ISO Director of Market Analysis Anjali Sheffrin presented the findings at a= n=20 energy conference at the University of California Berkeley last week.=20 The companies have denied overcharging California and have said they expect= =20 the Federal Energy Regulatory Commission will determine their prices were= =20 justified.=20 In a burst of activity after weeks of delay both houses of the Legislature= =20 approved bills Thursday designed to ease the energy crisis.=20 The state Senate approved measures to encourage energy conservation and spe= ed=20 up power plant construction.=20 Topping that the Assembly sent the Senate 14 energy-related bills includi= ng=20 $455 million in loans and grants to encourage energy efficiency and=20 conservation and alternative energy projects by this summer.=20 One of the Assembly bills would require new energy plants approved by the= =20 state to sell their power within California before they offer it to other= =20 states.=20 The (California) Energy Commission says for every day we delay this bill= =20 there are 20 megawatts that could be saved that we're not saving said sta= te=20 Sen. Byron Sher D-Stanford as senators voted 28-10 to send his conservati= on=20 measure to the Assembly.=20 Senators also approved another Sher bill speeding up the siting of power=20 plants. It went to the Assembly on a 37-1 vote.=20 Meanwhile a federal judge issued a preliminary injunction Wednesday orderi= ng=20 one of the companies named in the ISO filing Reliant Energy Services to= =20 continue selling to California despite its fear that it will not be paid.= =20 U.S. District Judge Frank C. Damrell Jr. said Californians were at risk of= =20 irreparable harm if Reliant stopped selling power to the ISO which buys at= =20 the last minute on behalf of utilities to bolster supplies and try to fend= =20 off blackouts.=20 Such blackouts struck the state twice this week shutting off power to=20 hundreds of thousands of people from San Diego to Oregon snarling traffic= =20 and shutting down businesses.=20 The state remained free of any power alerts Thursday morning as power=20 reserves stayed above 7 percent.=20 Damrell dismissed Reliant's attempt to force the state Department of Water= =20 Resources to back the ISO's purchases for the state's two biggest utilities= =20 Southern California Edison and Pacific Gas and Electric Co.=20 The judge said he had no authority to force the DWR to pay for that power.= =20 The utilities have been denied credit after amassing billions of dollars in= =20 debt paying high prices for power that the state's energy deregulation law= =20 prevents them from passing on to consumers.=20 Gov. Gray Davis has said the state isn't responsible for purchasing the=20 costly last-minute power the ISO buys for Edison and PG&E despite a law=20 authorizing state power purchases on the utilities' behalf.=20 ISO attorney Charles Robinson said the ruling gives ISO operators a tool t= o=20 assist them in keeping the lights on in California.=20 Had the decision gone the other way one could expect other generators to= =20 simply ignore emergency orders Robinson said.=20 Damrell's preliminary injunction will remain in effect until the Federal=20 Energy Regulatory Commission rules on the matter.=20 In another development Wednesday state Controller Kathleen Connell=20 complained that the energy crunch is imperiling California's financial=20 health.=20 Connell said the state's power buying on behalf of Edison and PG&E is gutti= ng=20 its budget surplus. Since the state started making emergency power buys in= =20 January the surplus has fallen from $8.5 billion to about $3.2 billion sh= e=20 said.=20 Connell ordered an audit of the state's power buying saying Davis is=20 withholding key financial information from her office and the Legislature.= =20 She is also refusing a request by Davis and the Legislature to transfer $5.= 6=20 billion into a rainy day fund she said was set up to impress Wall Street = as=20 the state prepares to issue $10 billion in revenue bonds to cover its power= =20 buying.=20 Transferring the money would leave the state general fund $2.4 billion in= =20 debt Connell said.=20 Sandy Harrison spokesman for the state Department of Finance and Keely=20 Bosler of the Legislative Analyst's Office said such transfers are routine= =20 and required by law.=20 They put the state's budget surplus at $5.6 billion.=20 Davis spokesman Steve Maviglio dismissed the criticism.=20 Political grandstanding doesn't generate one more kilowatt of energy for= =20 California in this time of emergency he said.=20 Connell is a candidate for mayor of Los Angeles in next month's election.= =20 The ISO study meanwhile covered five major in-state power suppliers =01)= =20 Reliant Dynegy Williams/AES Duke Energy and Mirant as well as 16 power= =20 importers. All deliver power to customers of Edison PG&E and San Diego Gas= &=20 Electric Co. the state's three largest investor-owned utilities.=20 All overcharged but some excessively and some by moderate amounts said= =20 ISO's Sheffrin.=20 According to the report the overcharging took place beginning last May wh= en=20 the energy crisis began and continued through last month.=20 During that time according to the report energy suppliers commonly offere= d=20 their electricity at twice the amount it cost them to produce.=20 FERC member William L. Massey said he wasn't shocked to hear the amount=20 overcharged added up to more than $5 billion.=20 Prices over the past 10 months in California have greatly exceeded the=20 federal standards of just and reasonable prices and I think they have=20 exceeded the standards by possibly billions of dollars he said.=20 Chuck Griffin spokesman for Atlanta-based Mirant said the company would=20 justify their charges to FERC officials.=20 I think we're missing sometimes just how basic the problem is in Californi= a.=20 Supply and demand are out of whack and some basic rules of economics kick i= n=20 when that happens he said.=20 --- ------------- Disappearing state surplus sparks alarm=20 Controller puts hold on transfer of $5.6 billion to reserve funds By Karen Kucher and Ed Mendel=20 UNION-TRIBUNE STAFF WRITERS=20 March 22 2001=20 The state's general fund surplus has dropped to $3.2 billion from $8.5=20 billion since January largely because California's power purchases are=20 devouring the money state controller Kathleen Connell said yesterday.=20 Connell said she wants to see more documentation about state power spending= =20 before approving the transfer of $5.6 billion from the general fund to a=20 special reserve fund requested by Gov. Gray Davis.=20 Connell said the state would have to borrow $2.4 billion to cover the=20 transfer.=20 Report says power wholesalers overcharged California $5.5 billion=20 Outages darken economic outlook in state some say=20 Out-of-state generators question power regulators' authority=20 Allegheny Energy makes big California connection=20 Enron stock slides despite earnings reassurance=20 California's electricity crisis at-a-glance=20 ?=20 We started this year with a generous budget surplus. The energy crisis has= =20 taken much of that away and this transfer on top of the electricity=20 purchases would put the (general) fund at risk Connell said in a statemen= t.=20 Her action came on a day when state power supplies improved. After two days= =20 of forced outages this week no rolling blackouts were ordered yesterday.= =20 Several power plants came back on line and imports from the Pacific Northwe= st=20 provided enough electricity to meet demand yesterday said Stephanie=20 McCorkle a spokeswoman with the California Independent System Operator=20 which manages most of the state's power grid.=20 Gradually more (electricity) generation comes on every day McCorkle said= .=20 By Monday we should see somewhere around 2200 megawatts back in service= =20 that was not on this Monday. That's if no other generation falls off.=20 Meanwhile Connell's move took some by surprise.=20 A spokesman for the state Department of Finance said Connell is denying a= =20 routine transfer that is required by law. It was just a routine accounting= =20 measure that we didn't anticipate becoming controversial Sandy Harrison= =20 said.=20 Connell announced the denial of the transfer a day after Davis endorsed one= =20 of her opponents former Assembly Speaker Antonio Villaraigosa in the race= =20 for Los Angeles mayor.=20 Connell who monitors California's cash flow said she was deeply concerne= d=20 about putting the state's general fund in a deficit situation in light of t= he=20 energy crisis.=20 About two months ago the state began spending about $50 million a day to b= uy=20 power after Pacific Gas and Electric and Southern California Edison nearly= =20 went bankrupt. It is also purchasing power for customers of San Diego Gas a= nd=20 Electric.=20 The Davis administration said earlier this week it soon will begin spending= =20 an additional $500 million on power purchases bringing the total to $4.2= =20 billion.=20 As that staggering sum continues to grow the state won a court battle with= =20 an electricity supplier yesterday. A federal judge in Sacramento sided with= =20 the state and ordered the wholesaler to continue selling to California=20 despite its fear that it will not get paid.=20 Judge Frank C. Damrell Jr. said Californians were at risk of irreparable ha= rm=20 if Reliant Energy Services stopped selling power to the Independent System= =20 Operator. The ISO acquires last-minute power on behalf of utilities to fill= =20 gaps in supply to try to fend off blackouts.=20 Damrell dismissed Reliant's attempt to force the state Department of Water= =20 Resources to back the ISO's purchases for the state's two biggest utilities= .=20 The judge said he had no authority to force the DWR to pay for the power.= =20 Davis has said the state isn't responsible for purchasing the costly=20 last-minute power the ISO buys for Edison and PG&E despite a law authorizi= ng=20 state power purchases on the utilities' behalf.=20 Meanwhile those who manage the power grid say the forecast for power=20 supplies this week looks good although conditions can change quickly.=20 ISO managers continue to stress the importance of conservation. Utility=20 customers across the state conserved about 900 megawatts of power Tuesday= =20 which kept blackouts from being ordered that night.=20 As the power crisis worsened this week ISO managers wished aloud that they= =20 still could rely on business customers to shut down in exchange for lower= =20 energy rates.=20 Such interruptible customers saved as much as 2100 megawatts last spring= =20 a figure that dropped to about 1700 last summer and 1400 at the end of th= e=20 year. But in January the state Public Utilities Commission told utilities= =20 they could no longer impose fines on business customers who refuse to shut= =20 down when asked.=20 ISO managers realize the program was harming businesses with frequent=20 interruptions of service -- but they still miss having that option McCorkl= e=20 said.=20 It would have made an enormous difference but at the same time we=20 understand the impact it was having on businesses McCorkle said. --- -------------- Outages darken economic outlook in state some say=20 By Dean Calbreath? UNION-TRIBUNE STAFF WRITER=20 March 22 2001=20 Until this week the San Diego Regional Chamber of Commerce was predicting= =20 that the county was well-insulated from the growing threat of economic=20 recession.=20 But that was before the lights went out in the chamber's downtown=20 headquarters Monday.=20 Working by window light in his darkened office chamber economist Kelly=20 Cunningham rapidly erased his previous projections for 3.5 percent growth f= or=20 San Diego County. Cunningham now feels the local economy could fall into a= =20 recession thanks to its shaky supply of energy.=20 Report says power wholesalers overcharged California $5.5 billion=20 Disappearing state surplus sparks alarm=20 Out-of-state generators question power regulators' authority=20 Allegheny Energy makes big California connection=20 Enron stock slides despite earnings reassurance=20 California's electricity crisis at-a-glance=20 ?=20 Blackouts are very disruptive to the economy Cunningham said. A busines= s=20 can absorb rising energy prices by cutting costs or raising its own prices.= =20 But an energy shutoff is much less predictable. It cuts into productivity.= =20 Those sentiments are being echoed throughout California as business leader= s=20 and economists worry that rolling blackouts will darken the state's=20 previously glowing economy.=20 At the University of California Los Angeles for instance leading financia= l=20 theorists will meet April 4 to discuss the question Can California grow in= =20 the dark? Although the topic was chosen before the recent string of power= =20 outages the blackouts have given the issue new urgency.=20 These blackouts are not just a single episode said UCLA economist Tom=20 Lieser. They are a bridge to what will happen this summer. If we don't fal= l=20 into a recession in the second half of the year we will fall pretty close.= =20 Tapan Munroe an economist formerly with Pacific Gas and Electric this wee= k=20 crossed out his projection for 2 percent statewide growth. After blackouts= =20 rolled toward his consulting offices in the Bay Area city of Moraga Munroe= =20 decided the state will be lucky if it manages zero growth.=20 I'm a pretty optimistic guy by nature but this has been sobering Munroe= =20 said. On Tuesday one restaurant alone in San Francisco lost $20000.=20 Multiply that by all of the businesses that lost power in the state and=20 you've got a serious problem.=20 Two days of blackouts in San Diego County have hurt businesses large and=20 small. Among the industries under threat is the local biotechnology sector= =20 which requires a steady supply of electricity to power areas of laboratorie= s=20 that must remain temperature-controlled and sterile.=20 Continued blackouts could have a huge impact not only in dollars but=20 multiple millions of dollars said Tom Oster vice president of operations= =20 for BioCom the leading trade organization for the more than 200 biotechs i= n=20 San Diego County.=20 Idun Pharmaceuticals a biotech near La Jolla Village Drive that has 67=20 employees had its power cut for about 40 minutes Tuesday. Though the compa= ny=20 has a back-up generator some segments of its laboratories and lab equipmen= t=20 were not supported by it. Chemists also had to turn off some sensitive lab= =20 equipment to avoid the possibility of a damaging power surge once the=20 blackout was over.=20 We're not in a position as a small company to back up the whole facility= =20 said Steven Mento Idun's chief executive. We haven't done a survey yet to= =20 determine whether we had losses either in experiments or equipment damaged= =20 -- but we're hoping because the blackout was so short that damage will be= =20 minimal.=20 Mento said rolling blackouts coupled with continuing high energy costs=20 could cripple many small biotechs -- and even take a bite out of bigger mo= re=20 established companies.=20 We generate new compounds in controlled environments on a daily basis and= =20 when power goes off you can lose samples because of contamination and other= =20 issues Mento said. We are fortunate that our losses would be in having t= o=20 repeat an experiment -- but this could be really critical for companies wit= h=20 drug manufacturing and issues of quality control.=20 The wireless firms along Sorrento Valley have not been immune from blackout= s.=20 The lights went out at Qualcomm early this week although executives declin= ed=20 to comment about the impact.=20 No blackouts hit the big shipbuilding operations on the waterfront this wee= k.=20 But the National Steel and Shipbuilding Co. -- one of San Diego's largest= =20 employers -- already experienced a voluntary loss of power this year its= =20 first since World War II. Since the shipyard does not have its own power=20 supply NASSCO executives fear the effect of unplanned outages.=20 Our average payroll totals half a million dollars a day said NASSCO=20 spokesman Jim Scott. When you have a day's work disrupted that can be=20 pretty serious. We're currently in discussions about the possibility of=20 buying from independent power suppliers or setting up a power plant of our= =20 own.=20 Small businesses which constitute the bulk of employment in San Diego=20 County were hurt by disruptions as well -- costing them vital revenue at a= =20 time when their power bills have skyrocketed.=20 At Fantastic Sam's a hair salon in Chula Vista Angelica Alcala estimated= =20 that business dropped 60 percent when the blackouts hit Tuesday. Among othe= r=20 things Alcala had to alter her planned haircuts because she was relying on= =20 scissors instead of electric clippers.=20 At the Family Fun Center in El Cajon the management gave vouchers or refun= ds=20 to the 15 or so video-game players who were in the midst of killing aliens = or=20 fighting ninja warriors as the power went down.=20 Papa John's Pizza estimates that it may have lost several thousand dollars = in=20 business after six stores were blacked out Monday and four others lost powe= r=20 Tuesday. Brian Mills who runs 23 Papa John's stores in the county said hi= s=20 main concern was shutting down the computers so they would not be damaged b= y=20 a power surge when the electricity was restored.=20 Paul Ecke III a member of the West Coast advisory panel for the Federal=20 Reserve said the potential impact of the energy crisis is worse than any= =20 downturn in the stock market.=20 Ecke who runs the Paul Ecke Ranch flower operation in Encinitas said the= =20 crisis could be particularly harmful for the state's agricultural sector= =20 since farmers need electricity to pump water and natural gas to heat=20 greenhouses.=20 What I'm really worried about is the energy thing is going to cast a shado= w=20 on California he said. If you're a business person thinking about moving= =20 to California right now you're probably not going to do it because you're= =20 not sure you're going to have your lights on this summer.=20 Besides the disruption to businesses the energy crisis is also hurting the= =20 pocketbooks of hourly workers who have been sent home during the crisis.=20 Under state law employers are free to send hourly workers home without pay= =20 during such emergencies although salaried workers must still be paid.=20 Susan Kemp an attorney with the California Chamber of Commerce said there= =20 are ways of minimizing the impact on hourly workers.=20 You have to look at what time it is when the blackout occurs and how long= =20 you think it's going to last Kemp said. If it's around a meal time you= =20 might send the workers out for a longer meal period if you think it's going= =20 to be an hour or hour and a half delay.=20 But the potential for losing wages doesn't sit well with the hourly workers= .=20 When you get sent home early and lose your wages you have even less money= =20 to pay your inflated energy bills said an hourly worker who was sent home= =20 during Monday's blackout.=20 --- ---------- Out-of-state generators question power regulators' authority=20 By Karen Gaudette ASSOCIATED PRESS=20 March 22 2001=20 SAN FRANCISCO =01) At least three major out-of-state electricity generators= are=20 challenging the authority of the California Public Utilities Commission to= =20 investigate whether they deliberately reduced power supplies to drive up=20 prices.=20 The PUC has asked for power plant maintenance records as it tries to=20 determine whether Duke Energy Dynegy Inc. Mirant Corp. and other=20 wholesalers have manipulated the energy market at California's expense.=20 At issue is who ultimately controls oversight of in-state plants that provi= de=20 most of California's electricity. The plants once owned by the state's=20 largest utilities were sold off as part of the state's 1996 attempt at=20 deregulation.=20 Report says power wholesalers overcharged California $5.5 billion=20 Disappearing state surplus sparks alarm=20 Outages darken economic outlook in state some say=20 Allegheny Energy makes big California connection=20 Enron stock slides despite earnings reassurance=20 California's electricity crisis at-a-glance=20 ?=20 PUC President Loretta Lynch said the public deserves to know whether=20 generators have unnecessarily taken plants off-line to create artificial=20 shortages forcing the utilities and now state bureaucrats to buy much high= er=20 priced power on the spot energy market.=20 What I do know is we have historically high levels of outages across the= =20 board Lynch told The Associated Press. Dynegy and Duke have been fightin= g=20 the PUC in the PUC's quest to obtain documents about these outages.=20 The PUC has the authority to regulate facilities within its borders she=20 added. It doesn't matter where the headquarters of the company is.=20 Duke based in North Carolina says it does matter =01) and that since it a= nd=20 other wholesalers aren't headquartered in California the PUC can't require= =20 it to turn over the maintenance records.=20 We have not given them proprietary information because they do not regulat= e=20 us said Duke's spokesman Tom Williams.=20 Dynegy did not return calls for comment Wednesday.=20 The PUC also faces a new challenge in the legislature. A bill sponsored by= =20 Assemblywoman Carole Migden D-San Francisco which would have granted the= =20 PUC greater inspection authority over out-of-state generators was amended= =20 this month to grant the authority to Independent System Operator instead.= =20 The ISO has managed the delivery of energy through most of the state's powe= r=20 grid but historically has done little regulating and has had no policing=20 authority.=20 This board created during the state's 1996 attempt at deregulation was=20 redesigned in January. Now it has a five-member board appointed by Davis= =20 replacing a 26-member ISO board composed of utility executives marketers= =20 power plant owners and others.=20 The latest version of Migden's bill requires wholesalers to report monthly = to=20 the ISO about any plants that are off-line or working at reduced capacity= =20 and gives the ISO power to audit these reports.=20 But because the ISO board historically has made key decisions behind closed= =20 doors and is exempt from certain open-government regulations government=20 watchdogs are outraged by the switch.=20 The PUC's been no friend of ratepayers but at least under the constitutio= n=20 and state law they're required to conduct their process in the open and the= =20 public can intervene said Harvey Rosenfield of the Foundation for Taxpaye= r=20 and Consumer Rights.=20 Davis ordered last month that the ISO take the lead among state agencies to= =20 ensure adequate energy supplies. Alan LoFaso an aide to Migden said the= =20 amendment follows Davis' lead.=20 Both LoFaso and the governor's spokesman Steve Maviglio downplayed the=20 change. I don't know if we have a preference as to which state agency get= s=20 the authority to continue the probe Maviglio said.=20 The challenge by Duke Energy Houston-based Dynegy Inc. and Mirant Corp. of= =20 Atlanta came in filings March 12 asking for a rehearing of the PUC's Februa= ry=20 resolution reasserting its legal authority to examine the books accounts= =20 memoranda contracts and records of generators selling energy to utilities= =20 already subject to PUC regulation.=20 Those utilities include Pacific Gas and Electric Co. and Southern Californi= a=20 Edison Co. which have been nearly bankrupted buying power from wholesalers= =20 as well as the financially troubled San Diego Gas and Electric -- Allegheny Energy makes big California connection=20 ASSOCIATED PRESS=20 March 22 2001=20 HAGERSTOWN Md. =01) Allegheny Energy Inc. said Thursday it has agreed to s= ell=20 $4.5 billion worth of power to California's electricity-purchasing agency= =20 over the next 10 years.=20 The company said the contract call for Allegheny to provide up to 1000=20 megawatts that the Hagerstown-based company has secured from western=20 generating plants through its new energy trading division Allegheny Energy= =20 Global Markets =01) formerly Merrill Lynch Global Energy Markets.=20 This is a win-win for both the state of California and Allegheny Energy. I= t=20 provides a long-term source of fixed-price energy and should help to=20 stabilize prices in California said Michael P. Morrell president of the= =20 Allegheny Energy Supply division.=20 --- ----------- Judge Frees Small Firm From Edison Contract=20 By KEN ELLINGWOOD and DAN MORAIN Times Staff Writers=20 ?????EL CENTRO--California's balance of electrical power shifted slightly= =20 Thursday when an Imperial County judge temporarily freed a small geothermal= =20 energy producer from its contract with Southern California Edison allowing= =20 it to sell power on the open market. ?????The ruling by Superior Court Judge Donal B. Donnelly could lead to a= =20 mass exodus by hundreds of small energy producers that have been selling=20 power to the state's financially troubled utilities for months without=20 getting paid. ?????At the same time it may have staved off plans by a group of the small= =20 generators to send Edison into involuntary bankruptcy as early as today. ?????In Sacramento energy legislation pushed by Gov. Gray Davis passed in= =20 the state Senate but foundered in the Assembly. The measure was intended to= =20 ensure that the state gets repaid for the electricity that it has been buyi= ng=20 on behalf of Edison and Pacific Gas & Electric which say they lack the cas= h=20 and credit to purchase power. The bill also was supposed to guarantee that= =20 the small alternative energy producers--which together provide nearly a=20 third of the state's power--get paid. But Assembly Republicans opposed it= =20 saying it hadn't been given sufficient scrutiny. ?????The impact of the small producers was made clear in Imperial County= =20 where Edison's failure to pay CalEnergy the county's biggest property=20 taxpayer had outsize implications. CalEnergy had put county officials on= =20 notice that it was about to miss a $3.8-million property tax payment. The= =20 uncertainty had prompted the tiny Calipatria Unified School District to=20 postpone a bond issue for badly needed school repairs. ?????Among CalEnergy Chairman David Sokol's first acts after the judge's=20 ruling Thursday was to promise Imperial County Supervisor Wally J. Leimgrub= er=20 that the company would pay its property taxes on time. ?????That is great news Leimgruber said. ?????Within hours of its court victory CalEnergy had stopped transmitting= =20 geothermal power to Edison and begun selling it to El Paso Energy a=20 marketing company that purchased the energy at prevailing rates and resold = it=20 on the spot market. ?????Some of the more than 700 other small energy producers in the state sa= id=20 they were considering similar action against Edison and Pacific Gas &=20 Electric. ?????We absolutely need the right to sell to third parties said Dean=20 Vanech president of Delta Power a New Jersey company that owns five small= =20 gas-fired plants in California and is owed tens of millions of dollars by= =20 Edison. ?????Sokol praised the Imperial County judge and said his company simply=20 wanted the authority to sell its power to a credit-worthy company that in= =20 fact pays for the power. ?????An Edison spokesman said the company was disappointed with the ruling= =20 but sympathized with CalEnergy and other small producers because=20 California's power crisis has placed [them] in financial distress just as= =20 it has placed utilities in financial distress. ?????Edison expressed concern that the ruling would prompt CalEnergy and=20 other small producers to sell their power out of state. Sokol said CalEnerg= y=20 had specifically told El Paso Energy that it hoped its power would remain i= n=20 California but if someone wants to pay a higher price out of state we=20 can't stop them. ?????Sokol said that Edison still owes CalEnergy $140 million and that the= =20 company--along with seven other small producers--had been prepared to file = a=20 petition in federal bankruptcy court in Los Angeles today forcing the utili= ty=20 into involuntary bankruptcy. He said his company no longer intends to do so= =20 and he believed--but wasn't certain--that the other companies would shelve= =20 their plans. ?????Edison filed papers Thursday with the federal Securities and Exchange= =20 Commission showing that it owed $840 million to various small electricity= =20 producers many of which rely on renewable energy sources such as geotherma= l=20 steam solar energy or wind. ?????The alternative energy producers--and utilities--strenuously objected = to=20 the legislation considered in Sacramento on Thursday. The bill spelling ou= t=20 how the utilities are to pay the state and the small producers passed the= =20 Senate on a 27-9 vote the exact two-thirds margin required. But it stalled= =20 in the Assembly on a 46-23 party-line vote well short of two-thirds. ?????When I was a citizen back in Lancaster I heard these stories about= =20 pieces of legislation that were cooked up late at night that . . . were cu= t=20 and pasted together and were rammed through by the Legislature Assemblyma= n=20 George Runner (R-Lancaster) said. That's exactly what we have before us. ?????The alternative electricity generators including oil companies warne= d=20 that they would lose money under the Davis proposal while representatives = of=20 Edison and PG&E which have amassed billions in debt in the worsening energ= y=20 crisis said the legislation would push them deeper into the hole. ?????There isn't enough money Edison attorney Ann Cohn testified at a=20 Senate hearing on the bill Thursday. It is a very simple question: Dollars= =20 going out cannot be greater than dollars coming in. ?????The bill AB 8X combined several proposals. First it sought to clari= fy=20 earlier legislation by spelling out that Edison and PG&E must pay the state= =20 all money collected from consumers for electricity that the state has been= =20 buying. ?????Additionally the bill would turn over to the California Public=20 Utilities Commission the thorny issue of how much to pay alternative energy= =20 producers for their electricity. ?????Wind solar and geothermal producers might agree to the prices offered= =20 by the administration. But most of the alternative energy producers=20 including Chevron and British Petroleum use natural gas to generate=20 electricity through cogeneration a process of creating steam for both=20 electric generation and heat. With natural gas prices high they contend= =20 they would lose money at the prices Davis is offering. ---=20 ?????Ellingwood reported from El Centro Morain from Sacramento. Times staf= f=20 writers Mitchell Landsberg in Los Angeles and Jenifer Warren Nancy Vogel a= nd=20 Carl Ingram in Sacramento contributed to this story. --- ------------------- Lodi Defies Order for Blackouts=20 Utility tells PG&E to 'pay the bills'=20 Alan Gathright Chronicle Staff Writer Friday March 23 2001=20 2001 San Francisco Chronicle=20 URL:=20 /23/M N171303.DTL=20 Let history show that the rebellion against rolling blackouts started when= =20 the Central Valley town of Lodi defied PG&E and refused to unplug its=20 customers this week.=20 Like several cities that own their own utilities Lodi saw the energy crunc= h=20 looming last fall and spent millions for long-term power contracts in an=20 attempt to avoid blackouts.=20 Now Lodi and a Northern California municipal utility cooperative that=20 includes Palo Alto Santa Clara and Alameda are telling Pacific Gas and=20 Electric Co. that it's unfair to force their customers to endure blackouts= =20 triggered by the near-bankrupt utility's failure to pay its debts.=20 The problem is not paying bills so pay the bills said Alan Vallow=20 director of the utility serving Lodi's 58000 residents. I won't arbitrari= ly=20 screw my customers . . . so 5000 PG&E customers can turn on their lights= =20 somewhere else.=20 When PG&E relayed an order from state power regulators Monday and Tuesday f= or=20 Lodi to black out some of its customers a strategy intended to keep the=20 West's power grid from collapsing Lodi said no.=20 So far other cities in the Northern California Power Agency say they will= =20 continue to participate in rotating outages.=20 But in a letter last Friday to PG&E members of the agency and four other= =20 utility districts including Sacramento's warned they didn't believe long-= =20 standing agreements that allow them to use PG&E transmission lines to conne= ct=20 to the grid obliged them to endure rolling blackouts because of PG&E's=20 failure to pay its power obligations.=20 They say the agreements require them to reduce power demand only in respons= e=20 to natural disasters or malfunctions damaging power lines or plants.=20 The agencies asked for a meeting with PG&E President Gordon Smith before=20 anticipated summer blackouts hit to develop a more rational program for= =20 allocation of risks associated with (power demand) load shedding before you= =20 call on us to participate in load shedding again.=20 REFUSING TO SHARE BURDEN PG&E officials accused Lodi of selfishly refusing to share the burden of th= e=20 statewide energy crisis.=20 It is regrettable that after reaping the benefits of the (power grid)=20 interconnection contract for many years Lodi is suddenly unwilling to bear= =20 their share of the burden of the statewide energy crisis said PG&E=20 spokesman Ron Low. When cities like Lodi do not follow the (state=20 Independent System Operator's) order to curtail power it hurts all of=20 California and jeopardizes the entire power grid.=20 Low also disagreed with accusations that this week's blackouts were trigger= ed=20 by PG&E's failure to pay its bills noting that the ISO stated that 12000= =20 megawatts of power were offline because of plant maintenance.=20 But ISO spokeswoman Lisa Szot confirmed assertions by the municipal utiliti= es=20 that power generators had kept an additional 3000 megawatts offline becaus= e=20 they feared PG&E couldn't pay.=20 Lodi's Vallow said he was legally obliged to serve city customers. Lodi=20 residents are facing rate increases of as much as 15 percent under a power= =20 contract that the city secured in hopes of avoiding blackouts. The contract= =20 required Lodi to pay a $10 million premium above its typical $23 million=20 annual energy bill.=20 'THAT'S NOT FAIR'=20 I've been hearing (PG&E say) 'Gee that's not fair. Where's the equity if= =20 everybody is doing rolling blackouts and you're not?' Vallow said. Well= I=20 put my customers at financial risk to the tune of $10 million. And if they'= re=20 not going to get to use that power they paid for then by God give us that= =20 money back.=20 Vallow said he was willing to sell PG&E some of Lodi's power surplus knowi= ng=20 Lodi might not be paid.=20 But I'm not willing to turn off 5000 customers so 5000 customers=20 somewhere else can turn their lights on Vallow said. The objective here= =20 people is to keep as many lights on as possible.=20 Other city-owned utilities while annoyed with the rolling blackouts aren'= t=20 going as far as Lodi.=20 WEATHERING BLACKOUTS I certainly understand the frustrations of utilities like Lodi and actuall= y=20 share those frustrations in many cases said John Roukema assistant=20 director of Santa Clara's utility.=20 But he stressed that his agency had been able to weather blackouts without= =20 hurting residents or small business because 17 major industrial power user= s=20 had agreed to curtail demand during energy alerts.=20 The prudent thing to do at this time is to continue to do our share and=20 participate in rolling blackouts because a single problem could cause a=20 catastrophic failure in the statewide system Roukema said.=20 In Alameda residents endured blackouts this week despite the fact that cit= y=20 has secured reliable power supplies said Matt McCabe spokesman for Alamed= a=20 Power & Telecom.=20 It was in the best of interests of Alamedans to maintain the stability and= =20 integrity of the grid he said. Now if it becomes evident that the syste= m=20 is being jeopardized for financial reasons then we should not have to=20 subject Alamedans to rolling blackouts.=20 In Palo Alto which also had blackouts this week utility officials told th= e=20 City Council they were expecting a 30 to 40 percent rate hike this spring t= o=20 pay new contracts guaranteeing a stable power supply said Councilman Bern= =20 Beecham. The city hopes to avoid giving customers the double whammy of rate= =20 boosts and more blackouts with a program that gets industrial users to cut= =20 demand voluntarily during alerts.=20 When there's not enough generating capacity in the state to protect the=20 integrity of the grid that is in fact everybody's problem Beecham said= =20 but that doesn't mean Palo Alto is willing to endure blackouts to prop up= =20 PG&E's ailing finances.=20 We need to have some very frank discussions with PG&E about mutual=20 obligations Beecham said.=20 Energy Tips=20 With Californians facing electricity and natural gas shortages PG&E has=20 several tips to help conserve both:=20 -- Set the furnace thermostat at 68 degrees or lower health permitting.=20 -- Wash only full loads in a dishwasher. If operating instructions allow= =20 turn dishwasher off before the drying cycle and let dishes dry naturally.= =20 -- Use low-wattage or fluorescent lights.=20 -- Fix defective plumbing and dripping faucets which waste water and=20 increase the gas or electric bill for heating the water.=20 -- Plug gaps around pipes ducts fans and vents that go through walls=20 ceilings and floors.=20 -- Keep furnaces clean and clean or replace the filter regularly.=20 -- Turn heaters down when using a fireplace and close the damper when not= =20 using the fireplace.=20 -- On sunny days open drapes on windows facing south and let the sun shine= =20 in. At night close the drapes to retain indoor heat.=20 Source: www.pge.com=20 E-mail Alan Gathright at 2001 San Francisco Chronicle ? Page?A - 1=20 --- Coming Down to the Wire=20 State legislators battle over alternative energy bills=20 Greg Lucas Robert Salladay Chronicle Sacramento Bureau Friday March 23 2001=20 2001 San Francisco Chronicle=20 URL:=20 /23/M N113351.DTL=20 Sacramento -- After several weeks of slow to no progress in attacking the= =20 state's energy mess the Legislature erupted yesterday into a frenzy of=20 energy activity.=20 The sudden action on a series of energy bills -- including one to let=20 businesses buy power directly from generators -- stemmed initially from the= =20 fear of bad publicity lawmakers might receive for a planned three-day junke= t=20 next week to Washington D.C.=20 When a key bill bogged down in the Assembly late yesterday Speaker Bob=20 Hertzberg D-Sherman Oaks announced the trip was canceled.=20 Another reason for the flurry of action was recognition that time is runnin= g=20 out.=20 Several alternative energy producers -- like wind farms and biomass plants = -=20 - said they were one day away from forcing the state's two biggest utilitie= s=20 into bankruptcy because they were owed more than $1 billion.=20 The Legislature's action and a court ruling that could free alternative=20 producers from unpaid contracts.=20 This is triage members of the Senate said Sen. Jim Costa D-Fresno. Th= is=20 is crisis activity we're engaged in.=20 The Senate approved a bill aimed at helping state regulators get cash to so= me=20 alternative energy producers. Most of them have been paid little or nothing= =20 since November by the utilities they sell electricity to.=20 Senators passed a bill to help the Public Utilities Commission order=20 utilities to pay solar wind and other alternative energy producers who sig= n=20 lower-priced contracts with the utilities.=20 The bill failed in the Assembly because of GOP opposition fanned in part b= y=20 price concerns by the oil industry a major co-generation producer. The=20 Assembly is set to meet again today to try again pass the bill which the P= UC=20 needs to issue its final order.=20 The PUC's proposed order offers the first hint of financial relief for=20 hundreds of alternative energy producers known as ''qualified facilities = in=20 the energy industry who have been paid just pennies on the dollar by cash-= =20 strapped Pacific Gas & Electric and Southern California Edison.=20 Lack of payments has caused many alternative generators to shutter their=20 operations.=20 The PUC's proposal which will be considered at the commission's meeting=20 Tuesday offers generators a choice of agreeing to a five-year contract at= =20 $79 per megawatt or a 10-year deal at $69 per megawatt Davis said. The goi= ng=20 rate now is about $150 a megawatt hour.=20 The order does not address money already owed to the more than 600=20 alternative energy producers.=20 Under the order utilities would have to pay any generator who signed the n= ew=20 contracts within two weeks.=20 But PG&E said it might not be able to afford do that.=20 Operators of co-generation facilities say the contracts contemplated by the= =20 PUC don't cover their cost of producing energy because the sale price no=20 longer would be pegged to the the price of natural gas.=20 In a significant court decision affecting generators one geothermal energy= =20 supplier in Imperial County won a lawsuit yesterday against Edison allowing= =20 the company to escape a contract requiring it to sell electricity to the=20 utility.=20 A superior court judge said CalEnergy operator of the geothermal plant=20 could suspend deliveries to Edison and sell the 268 megawatt hours it=20 generated on the open market.=20 CalEnergy is owed $75 million by the utility.=20 The court victory may ease mounting pressure from some qualified facilities= =20 including CalEnergy to drive one or both of the utilities into involuntary= =20 bankruptcy.=20 The Assembly and Senate meanwhile rushed through a series of bills aimed = at=20 increasing energy conservation and rushing the building of new power plant= s.=20 Most significant for bigger residential and commercial utility customers is= a=20 measure passed by the Assembly to allow energy customers to buy power=20 directly from generators.=20 That right was eliminated in January when the state began buying power for= =20 the cash-strapped utilities.=20 The bill approved unanimously yesterday would impose a yet to be determined= =20 exit fee on customers who leave the power grid to help cover the state's=20 financial exposure.=20 Tell Us What You Think=20 Can you save 20 percent on your energy use? Gov. Gray Davis' administration= =20 is offering rebates for Californians who save on power starting in June an= d=20 if you've got a strategy for conserving The Chronicle wants to hear it.=20 We'll be writing about the hardest-working energy savers in a future story.= =20 To get involved write to the Energy Desk San Francisco Chronicle 901=20 Mission St. San Francisco CA 94103 or e-mail energysaver@sfchronicle.com= .=20 E-mail the reporters at glucas@sfchronicle.com and bsalladay@sfchronicle.co= m.=20 2001 San Francisco Chronicle ? Page?A - 14=20 --- State's bill for energy could double this year=20 Posted at 9:34 p.m. PST Thursday March 22 2001=20 BY=20 STEVE=20 JOHNSON=20 AND=20 JOHN=20 Warning that California is imperiled by the prices it is paying for=20 electricity a report Thursday said the state's annual power tab could wind= =20 up being 10 times what it was two years ago.=20 At the current rate of spending the report estimated that the total=20 electricity bill in California this year could hit $70 billion which is mo= re=20 than twice what it was last year and about 10 times what was paid in 1999 a= nd=20 1998.=20 ``The California electricity market has gone from being `dysfunctional' to= =20 precipitating a crisis'' according to the report from the Independent Syst= em=20 Operator.=20 It added that the price being charged ``threatens any semblance of just and= =20 reasonable consumer rates the financial viability of California's=20 investor-owned utilities the financial stability of California of its=20 neighboring states and of the nation.''=20 While power suppliers denied any wrongdoing the report said the state=20 appears to have been hit with ``excess'' charges totaling $6.87 billion sin= ce=20 May based on an assessment of the typical operating costs of power plant= =20 owners. Out of that total $6.2 billion appeared to be excessive charges=20 during times when power was not in particularly short supply the agency=20 said.=20 The cost of power has become a growing concern now that the state has stepp= ed=20 in to buy it on behalf of Pacific Gas & Electric Co. and Southern Californi= a=20 Edison which claim to be so strapped for cash that they are on the verge o= f=20 bankruptcy.=20 In making public the report which was sent to the Federal Energy Regulator= y=20 Commission officials at the Independent System Operator were careful not t= o=20 accuse any power companies of price gouging. While the prices appeared to b= e=20 unreasonable they said the state needs to learn more about the specific= =20 operating costs of power plant operators before they could determine whethe= r=20 California was cheated.=20 The officials said they were considering asking the federal agency which= =20 oversees power wholesalers to order the suppliers to make refunds. In the= =20 past two weeks the federal agency has warned a number of suppliers that th= ey=20 may have to refund $135 million in apparent overcharges during January and= =20 February.=20 But many experts question whether the federal agency is serious about=20 demanding such refunds so California officials also are reviewing the=20 possibility of suing the suppliers or seeking criminal charges against some= =20 of them. ``We're working very closely with a number of agencies to review t= he=20 information we currently have to determine what remedies may be available'= '=20 said Charles Robinson the Independent System Operator's general counsel.= =20 The report's suspicions were partly bolstered by another study made public= =20 Thursday by the state auditor. It said California's market structure=20 encouraged bidding gamesmanship by both utilities and power sellers ``in an= =20 effort to manipulate wholesale prices to their advantage.'' But it stopped= =20 short of accusing power generators of profiting illegally.=20 ``There's clearly some evidence of market abuse'' said state Auditor Elain= e=20 Howle. Even so she added ``that's not to say it's anything illegal. We=20 hired consultants they looked at some of the bidding and they weren't=20 comfortable going that far.''=20 Although no power companies were named in either report officials with=20 several suppliers insisted they have done nothing wrong.=20 ``We've conducted our business legally and ethically'' said Richard=20 Wheatley spokesman for Reliant Energy which runs five major California=20 power plants. ``The ISO report appears to be nothing more than just another= =20 attempt to put blame at someone else's doorstep when there's been very=20 little action out of Sacramento to resolve the problems in the California= =20 marketplace.''=20 Duke Energy spokesman Jeremy Dreier said the company which runs plants in= =20 Moss Landing and Morro Bay sold most of its power last year and this year = in=20 relatively low-cost long-term contracts and was among the first to offer= =20 such deals to the state. He added that Duke increased production from its= =20 aging plants to meet surging demand.=20 ``The fact that we were among the first to bring long-term contracts to the= =20 table speaks volumes about how we're trying to serve this market'' Dreier= =20 said.=20 John Sousa of Dynegy Inc. which co-owns three major California plants add= ed=20 that ``given the market conditions the rates we charged were just and=20 reasonable.''=20 --- Plan for alternate power plants stalls=20 Posted at 10:03 p.m. PST Thursday March 22 2001=20 BY DION NISSENBAUM AND JENNIFER BJORHUS=20 Mercury News=20 SACRAMENTO -- The state's prospects for plugging a critical electricity gap= =20 dimmed Thursday when the state Assembly rejected a rescue plan for=20 alternative power companies and a state judge ruled that one such firm coul= d=20 stop selling energy in California.=20 Both actions threaten the plan Gov. Gray Davis announced just Tuesday to ke= ep=20 these companies running and stave off more blackouts. With the state's=20 troubled utilities failing to pay for their electricity many alternative= =20 energy plants have been shutting down.=20 The dual blows came on a day when tempers flared in the Capitol as lawmaker= s=20 jarred by back-to-back blackouts launched bipartisan attacks on Pacific Gas= &=20 Electric Co. and Southern California Edison which aren't paying wind sola= r=20 biomass geothermal and small gas-fired plants for their electricity.=20 After Republicans shot down the measure meant to keep alternative energy=20 companies in business Assembly Speaker Robert Hertzberg D-Van Nuys warne= d=20 that the restless companies might act on their threat to force the utilitie= s=20 into bankruptcy.=20 ``They said it and I understood them to mean it'' he said.=20 The failure overshadowed a burst of action in Sacramento where lawmakers=20 approved a host of other measures. The Senate approved two key bills: one= =20 that would spend more than $1 billion to encourage Californians to conserve= =20 energy and one that would make it easier to build power plants. The Assembl= y=20 approved 14 incremental bills.=20 Six votes short=20 But the Assembly fell six votes short of passing a hastily prepared bill=20 meant to help prop up the nearly 700 alternative energy companies many of= =20 which are now idle.=20 Those closings sapped California of energy this week and helped cause two= =20 days of rolling blackouts -- the first since January.=20 In response Davis and lawmakers cobbled together a plan to set new lower= =20 rates for alternative power and to fine the utilities if they refuse to pay= =20 these companies which supply up to a third of the state's power.=20 But Republicans refused to back the measure and said it contained too many= =20 complex parts that needed more time to analyze.=20 ``Everyone in this room knows that this piece of legislation has not had a= =20 good look'' said Assemblyman George Runner R-Lancaster.=20 Assemblyman Fred Keeley D-Santa Cruz castigated the Republicans and=20 implored them to accept an imperfect solution.=20 ``Ladies and gentlemen: Welcome to the NFL'' he said. ``Welcome to the wor= ld=20 where large complex issues don't have a simple solution.''=20 Approval is needed before state regulators at the Public Utilities Commissi= on=20 can vote on the fine points of the plan. That was supposed to happen Tuesda= y.=20 Much of the criticism focused on concerns raised by power plants that use= =20 natural gas to produce energy. Administrators from those plants said the=20 Davis price caps would make it impossible for them to break even.=20 The derailment came hours after the measure narrowly won approval in the=20 state Senate.=20 Hertzberg plans to search for a compromise today and canceled plans for the= =20 Assembly's annual trip to Washington.=20 Thursday's actions were highlighted by angry attacks on the utilities by=20 frustrated lawmakers.=20 ``I hope they do go bankrupt'' shouted Senate President pro tem John Burto= n=20 D-San Francisco during a debate on the energy crisis. ``Let them go belly= =20 up. I don't care any more.''=20 Legal decision adds twist=20 The legislative failure was compounded by a legal decision in Southern=20 California that further complicated the picture.=20 A Superior Court judge in Imperial County cleared the way for CalEnergy=20 Operating Corp. to break its contract with Edison and sell its 268 megawatt= s=20 of power on the open market. The judge concluded that Edison had breached i= ts=20 contract by failing to pay CalEnergy since November.=20 That ruling could pave the way for hundreds of others to follow suit and=20 drain off power California needs to prevent blackouts.=20 ``It's not good'' said V. John White director of the Center for Energy=20 Efficiency and Renewable Technologies. ``This is potentially going to chang= e=20 the dynamics of the situation and probably not for the better.''=20 Jan Smutny-Jones executive director of the Independent Energy Producers=20 Association said it was unclear whether other companies would sue.=20 ``I think this is a very significant development'' he said. ``We're sort o= f=20 at a period where the industry's reaching the end of the rope.''=20 The ruling did have one silver lining: CalEnergy Chairman David Sokol said= =20 his company and seven others had planned to force Edison into bankruptcy if= =20 they lost in court.=20 But he also warned ``You stick a sharp stick in enough people's eyes and= =20 they get pretty tired of it.''=20 The situation with generators supplying PG&E isn't as dire since the compan= y=20 has been making partial payments.=20 Kent Burton senior vice president for Covanta Energy Corp. in New Jersey= =20 said ``They've tried to be responsive.''=20 Mercury News Staff Writer Mark Gladstone contributed to this report. Contac= t=20 Dion Nissenbaum at dnissenbaum@sjmercury.com or (916) 441-4603 or Jennifer= =20 Bjorhus at jbjorhus@sjmercury.com or (408) 920-5660.,other,urgent,5 +Re: Dereg Articles,yes Mark Palmer@ENRON 09/26/2000 08:51 AM To: Steven J Kean@EES James D Steffes/NA/Enron@Enron cc: Subject: Dereg Articles Should we ask the guy that did the deal with Champion Paper to write a response? ,other,casual,3 +Re: Contribution to Sacramento Womens Campaign Fund,Let's process this request. I think it's justified. -----------------,government & politics,formal,3 +Re: Return of Confidential Materials,Jeff. I have no docs on this transaction. Thus have nothing to destroy. Michelle ,legal affairs,casual,1 +,Joe - there is no announcement today. I tried to leave you a voicemail but apparently the system is down there. Before we can offer an outside person a VP position the Executive Committee must sign off. We are going to be going through that process in a few minutes. Then we begin the offer extension and negotiations. The person we are recommending is Linda Robertson one of the two people I mentioned to you before. Please guard the information carefully. Last time we talked when the list had been narrowed to two DeLay's office called with the exact two names and started pushing us to hire a Republican. As you know we interviewed candidates of both political affiliations and just settled on the best person. Ken told DeLay's office that's how we do things and Ken is comfortable (actually enthused) about the choice. When some external announcement is done you will be involved and your considerable contributions will be prominently mentioned.,other,confidential,3 +RE: Confidential - Decision tree on projects,We will discuss at the next Staff meeting. Thanks for bringing it up. Any= feedback from the floor meeting yesterday would be appreciated. ,project management,formal,3 +Re: NEW DRAFT OF ENRON STATEMENT,I know we are holding for a later filing but I have attached further comments anyway. The document is still too rough to send out. We need to take the opportunity as soon as possible to get a hard hitting thoroughly researched and carefully written document in front of the Commissioners. California's reaction to the Judge's recommendation is likely to give FERC (especially the new commissioners) a feel for how irrational the California politicians can be. We will have a limited opportunity to take advantage of that realization. We need to hit it hard in the pleading our conversations at the Commission the Hill and the media. Linda Robertson 07/09/2001 09:58 AM To: James D Steffes/NA/Enron@Enron cc: Alan Comnes/Enron@EnronXGate Carole Hodge/ETOL/EU/Enron@ETOL dwatkiss@bracepatt.com Jeff Dasovich/NA/Enron@ENRON Richard B Sanders/Enron@EnronXGate Richard Shapiro/NA/Enron@ENRON Robert Frank/NA/Enron@ENRON Sarah Novosel/Corp/Enron@ENRON Steven J Kean/NA/Enron@ENRON Susan J Mara/NA/Enron@ENRON Subject: Re: NEW DRAFT OF ENRON STATEMENT Let me emphasize that these comments are to be filed COB TODAY. James D Steffes 07/09/2001 10:50 AM To: Robert Frank/NA/Enron@Enron Steven J Kean/NA/Enron@Enron Richard Shapiro/NA/Enron@Enron Linda Robertson/NA/Enron@ENRON Sarah Novosel/Corp/Enron@ENRON Carole Hodge/ETOL/EU/Enron@ETOL Richard B Sanders/Enron@EnronXGate dwatkiss@bracepatt.com Alan Comnes/Enron@EnronXGate Susan J Mara/NA/Enron Jeff Dasovich/NA/Enron@Enron cc: Subject: NEW DRAFT OF ENRON STATEMENT HERE IS THE MOST RECENT STATEMENT WITH STEVE'S COMMENTS. Jim,other,urgent,5 +,Here it is,other,casual,0 +Re: October London meeting,Attached is a draft of the Agenda we discussed. Irwin - I show Joskow on here but he has already declined (his wife is having surgery right before our meeting date). We may want to consider someone like Seabron Adamson (Frontier Economics) or perhaps someone else.,other,formal,3 +Re: call to Sen Kinder,Nice work Kerry and Barb. I think we should do the follow up work on setting a follow up meeting with the Senator. Ken left it open whether he would be available when the Sen is in Houston so we have made no commitment in that regard. Janine Migden 04/27/2001 08:32 AM To: Steven J Kean/NA/Enron@Enron cc: James D Steffes/NA/Enron@Enron Richard Shapiro/NA/Enron@Enron Susan M Landwehr/NA/Enron@Enron Kerry Stroup/NA/Enron@Enron Barbara A Hueter/NA/Enron@Enron Subject: Re: call to Sen Kinder Thanks Steve. That's great news. Just as an FYI the memo that Ken worked from was prepared by Kerry Stroup and Barbara Hueter who are the leads on Missouri. As a follow-up will Sen. Kinder be contacting Ken Lay directly or should Kerry and Barbara contact Sen. Kinder's office as the date gets closer to make arrangements? Please advise. Thanks Janine Steven J Kean 04/26/2001 08:07 PM To: Susan M Landwehr/NA/Enron@Enron Janine Migden/NA/Enron@Enron cc: Richard Shapiro/NA/Enron@Enron James D Steffes/NA/Enron@Enron Subject: call to Sen Kinder Ken talked to Sen Kinder. He made the points you had prepared. Kinder agreed to shelve the legislation for this session. He said he had been hearing from several others including Proctor and Gamble (which has a big facility in his district) that the legislation was not going to help competition develop in the state. He expressed willingness to work with us on a better package and also expressed interest in coming to Enron's offices. He is going to be in San Antonio in August and would like to come to Houston around that time.,government & politics,formal,3 +RE: Cal PUC Subpoenas - confidential attorney client communicatio n,Mike Richard and Gary: What I was suggesting was that we would produce the limited items that we are proposing under the terms of the existing protective order (which are inadequate but we are not giving up any of the crown jewels at this point) while conditioning our production on two points first that we reserve the right to seek stronger protection in the order (a la Williams' motion) for any subsequent materials we do agree to produce or which are compelled to be produced and two that the materials we are currently producing which are entitled to confidentiality (the trading data at a minimum) shall be subject to the most stringent protective order which the Commission issues in this proceeding i.e. we get the benefit of any additional protections Williams can secure. I only suggest this so we can stay out of the limelight by not being one of the bad guy generators who are actively taking on the protective order when we know that at least four generators are producing nothing until their motion is resolved and one marketer (Coral/Shell Energy) has refused to produce transactional data and has objected to most of the document request. I have also recently learned that Calpine has gotten an extension until Oct. 13 and will try to delay and hold off producing much data. I will get getting a copy of Coral's objections to the commission shortly. Mike Day ,legal affairs,formal,3 +REMOVE,What do you think? If you think this would be useful go ahead and order it. ,other,casual,3 +Confidential for Dan Watkiss,Jim If you are able to provide this to Dan for the meeting I would appreciate it. He may not want to circulate it to the group. It is intended as a work product for attorney. This e-mail and the attachments were prepared at the request of counsel. <> Jan Paul Acton Vice President Charles River Associates 1201 F St. NW Suite 700 Washington DC 20004-1204 Voice: (202) 662 3902 Fax: (202) 662 3910 ***** This electronic message contains information from the consulting firm of Charles River Associates Inc. which may be confidential or privileged. The information is intended for the use of the individual or entity named above. If you are not the intended recipient be aware that any disclosure copying distribution or use of the contents of this information is prohibited. If you have received this electronic transmission in error please notify us by telephone (617 425-3582) or by e-mail (postmaster@crai.com) immediately. ***** - NOTES FOR DISCUSSION.doc,other,confidential,5 +Re: New Computer for Handling Stock Awards,Do what you need to do the system has to work. The only question I have is: why doesn't IT just take care of this without a charge? This is not an extraordinary item or special request. This ought to be something IT simply takes care of without us having to get involved or pay extra. Am I missing something? From: Aaron Brown/ENRON@enronXgate on 04/16/2001 09:41 AM To: Steven J Kean/NA/Enron@Enron Mary Joyce/ENRON@enronXgate cc: Subject: New Computer for Handling Stock Awards Steve The IT group put it like this...Justification: Current Server is PL1850 and has reached it's capacity and is non-redundant. That means that our current system: (1) has a slow processor (2) is nearly out of memory for stock award administration (3) doesn't have a real-time back up in case the hard drives fails (4) needs to be upgraded The IT group has quoted about $19000 for a new system that brings this server up to Enron's current server standards and takes care of the above issues. Let me know if this expense is a problem and whether you need to be involved with these types of decisions in the future. Thanks Aaron,information technology,frustrated,3 +Re: Politics and Enron,The plan was to hit the issue twice -- once in the short format of Ebiz and at greater length in the longer format of the October issue of Enron Business. Please let Paul know. -----------------,government & politics,formal,2 +"RE: Jamaica forecast for JMD and inflation, dated 6/25/01",Gwyn Thanks for this msg and other updates. Vince ,other,casual,0 +Re: Daily Update/ Legislative activity - 08/24/00,I agree that we should not be opposing rate caps for small customers and schools but I think we should be pounding on the fact that market participants have been putting offers in front of sdge and that allowing the market to provide this solution is superior to legislated caps that require the creation of huge deferrals (and more problems in the future). Can we make that argument work? Mona L Petrochko 08/24/2000 09:45 PM To: Bruno Gaillard/SFO/EES@EES cc: West GA Edward Hamb/HOU/EES@EES Jennifer Rudolph/HOU/EES@EES Chris Hendrix/HOU/EES@EES Greg Cordell/HOU/EES@EES Harold G Buchanan/HOU/EES@EES Martin Wenzel/SFO/HOU/EES@EES Douglas Condon/SFO/EES@EES James M Wood/HOU/EES@EES Gary Mirich/HOU/EES@EES Dennis Benevides/HOU/EES@EES Roger Yang/SFO/EES@EES David Parquet@ECT mday@gmssr.com Paul Kaufman/PDX/ECT@ECT Marcie Milner/Corp/Enron@ENRON Mary Hain@Enron Harry Kingerski/HOU/EES@EES James D Steffes/HOU/EES@EES Richard Shapiro/HOU/EES@EES Peggy Mahoney/HOU/EES@EES Karen Denne@Enron Mark Palmer/Corp/Enron@ENRON Steven J Kean/NA/Enron@Enron Tim Belden/HOU/ECT@ECT Subject: Re: Daily Update/ Legislative activity - 08/24/00 I attended Cmmr. Wood's two-day hearing on Wholesale Markets which concluded today (8/24) in San Diego. Three Commissioner's were present (Wood Lynch and Neeper) with Duque and Bilas participating by phone. Administrative Law Judge Wetzel was present and a transcript was taken. The quasi-legislative hearing was the beginning of a record developed for the investigation into the workings of wholesale/retail markets. This session focused on Wholesale markets. There will be subsequent sessions on retail issues market structure and other related issues in the future. My conclusion from this session is that Wood is looking for support for increasing regulatory intervention in the market. Dan Larcamp Director of the Office of markets Tariffs and Rates FERC was present. He relayed FERC's concern of this matter and a desire to hold hearings in San Diego. He also relayed that Hoecker held a press conference announcing the opening of a 206 investigative proceeding into the operation of the wholesale markets in California which carried with it refund authority. The format of the hearing was to respond to pre-filed questions developed by Wood/Lynch. Each member of the panel would respond to the questions and any questions posed by the Commissioners the Judge or the CPUC Attorney. No questions were posed by members of the audience. Yesterday's panel of academics were comprised of: 1. Dr. Timothy Duane-UC Berkley 2. Dr. William Hogan-Harvard 3. Dr. Frank Wolak-Stanford (ISO Market Surveillance Committee) 4. David Marcus-Energy Consultant for the Coaltion of Utility Employees 5. Dr. Gene Coyle 6. Dr. Jean-Michel Glachant Universite Paris I Pantheon Sorbonne The panel was asked to speak as individuals and not on behalf of any institutions they may represent. While the purpose of the panel seemed to be to determine that market power was being exercised and that prices were too high and therefore not just and reasonable the panelist stopped short of blaming generators and market participants in behaving illegally. The concensus generally was that market power did exist at various times but the mere existence did not constitute bad behavior. None with the exception of Dr. Wolak who is in the process of doing a study using recent data as part of his role for the Market Surveillance Committee had done a study. There was some discussion though not much of the monopsony power of the utilities. I think ultimately the group conceded that scarcity of supply amplified concerns about the exercise of market power as even the increase in gas costs did not fully explain the recent spikes. Wolak believes that encourage utilities to enter into forward purchases will reduce the exercise of real-time market power. Hogan seemed to be there with Sempra's interests in mind. He continued to promote expansion of the ISO's abilities to dispatch load as well as maintain system reliability. There was alot of discussion about forward purchase ability for utilities so as to be less subject to volatile market prices. The concerns were also discussed about the appropriateness of a distribution utility making purchasing decisions on behalf of its customers. This included discussion of separation of these functions and the default provider role. Most everyone agreed that rolling back to a regulated market was not feasible without raising other major and serious concerns however there seemed to be support for some interim measures where cost-of-service regulation may be a good idea and that was during peak periods. All agreed that a demand response and price signals are important in the long-run although not to the extent currently experienced in San Diego. Today's panel included representatives from SDG&E SCE and PG&E TURN UCAN and ORA. While yesterday's panel maintained objectivity as to whether or not generators were exercising market power to the detriment of the system today's panel made no bones about the generators being to blame. SCE/PG&E indicated their need for relief for recovery of market costs in excess of the rate freeze. SDG&E was still on the hot seat for their inaction in hedging any of their supply. SDG&E brought up their failed PBR proposal and ORA and UCAN thought that that may be one way to incent the utility to be more responsible with their purchases. UCAN discussed the Governor's direction and the potential for putting rate caps into affect for residential and small commercial. He mentioned that C&I customers are experience difficulties as well. TURN raised the need for cost-based bid caps and cost-based peaking contracts. Mike Florio TURN urged against any further divestitute of assets and alleged market concentration on those assets that had been divested. In fact TURN urged the Commission to seek legislation to clarify the Commission's authority to order retention of assets. Neeper urged that part of the solution should be changing the current requirement to use the PX as the only authorized exchange although TURN disagreed. Bruno Gaillard 08/24/2000 06:09 PM To: SF Directors Edward Hamb/HOU/EES@EES Jennifer Rudolph/HOU/EES@EES Chris Hendrix/HOU/EES@EES Greg Cordell/HOU/EES@EES Harold G Buchanan/HOU/EES@EES Martin Wenzel/SFO/HOU/EES@EES Douglas Condon/SFO/EES@EES James M Wood/HOU/EES@EES Gary Mirich/HOU/EES@EES Dennis Benevides/HOU/EES@EES Roger Yang/SFO/EES@EES David Parquet@ECT mday@gmssr.com Paul Kaufman/PDX/ECT@ECT Marcie Milner/Corp/Enron@ENRON Mary Hain@Enron Harry Kingerski/HOU/EES@EES James D Steffes/HOU/EES@EES Richard Shapiro/HOU/EES@EES Peggy Mahoney/HOU/EES@EES Karen Denne@Enron Mark Palmer/Corp/Enron@ENRON Steven J Kean/NA/Enron@Enron Tim Belden/HOU/ECT@ECT cc: Subject: Daily Update/ Legislative activity - 08/24/00 Siting related bills 1. Good new - The Williamson Act passed the Senate 34-1 It should be heard at the assembly Saturday or Monday if it is not redirected to a Committee hearing. 2. There was a long meeting with Ducheny with regards to AB 970. The enviro's boycotted they want to draft a bill with Keeley. Labor was obstructionist - they wanted to gut all the expediting siting language with regards to all facilities except for the peaking plants. Rate Cap related bills 1. The Edison Language on Rate Stabilization may not go anywhere. Edison has not found an author because of the efforts of Enron and others lobbying against it. Furthermore there are signs that Gov. Davis opposes it. 2. The Governor's office has issued a proposed language for a rate cap bill. The language however is not available as of yet. It may be released today or tomorrow. SDG&E has shown concerns over the content of the bill. They seem to think that it is worse than initially proposed by the Governor in his press release. The bill includes retroactive rate caps through 6/1/00. The rate cap could reflect Wood's rate cap proposal (6.5 cts cap on the energy component The bill does not specify who or how the costs associated with the cap will be recovered. (The reasoning is that UDCs will be more cautious in their procurement if there is uncertainty on who is responsible for the costs.) All of this is speculative. We hope to see the actual language soon. 3. Enron has been working with the Republican leadership to promote a rate cap proposal similar to the amended language we have proposed for AB2290. The bill focuses only on SDG&E customers and our major principals are the following. The Interim Rate Cap should be limited to residential and small commercial customers plus specific institutions that have a significant public role such as schools and hospitals. The Interim Rate Cap should be limited to the period ending December 31 2001. The Interim Rate Cap must be structured so that any undercollection is eventually recovered from the same customers who benefit from the lower rates provided by the rate cap.,other,formal,3 +RE: o:\Research access list,Sandeep This is the list of the groups that have access to Research directory. Martin compiled this list. Please review it and let's talk about the recommendations regarding changes and restrictions we have to make. Vince ,other,formal,3 +Data request,Eliz- can you handle? -----------------,other,casual,3 +confidential employee information,Oxley asked that I send you a few bullets on Tom Martin. Please see below and let me know if you need further info. Feedback from two exit interviews from voluntary terminations in regard to Tom is as follows: was treated as inferior by my manager was lied to and insulted by my supervisor Tom berates employees in front of others and blames underlings for his mistakes. Additionally he second guessed every position I put on sold me out of positions (which turned out good) and used all our allocated VAR for his own benefit. Tom has a reputation for not representing employees well in the end of year review process. I found this to be the case as well. Tom is difficult to communicate with Additionally we had an incident w/ an employee when Tom offered her an employment agreement. She felt that she was being forced to sign the agreement When she declined the agreement and turned in resignation she said that Tom said he would make it difficult for her to leave She said that she felt threatened by Tom Her boy friend called Tom and threatened him As a result Legal asked Tom not to have further contact with the employee.,human resources,formal,5 +Confidential - May 2001 HR At A Glance,Attached is the May 2001 At A Glance report. A couple of additions this month which include a section on Capital Expenditures with Pay Backs and some analysis of the recent new hire survey that we set up. Please call if you have any questions. DCL,human resources,formal,3 +How should this be handled - rather touchy,Is this someone in the analyst/associate program? -----------------,human resources,formal,2 +novak column,More indications that the power angle may be fruitful ,other,casual,0 +Fenosa and Enron to Invest $550 Million in Dominican Republic,,other,neutral,0 +Re:,I just checked with Jeff and Ken. They are both out of the office that day. Sorry it didn't work out. gilbert whitaker 03/06/2001 07:14 PM To: skean@enron.com cc: Subject: Steve - With respect to CK Prahalad's visit to Rice. As you know we are having a breakfast for the business community the morning of March 19 and he gives the Neuhas Lecture on Campus at 9:45 am. Following the lunch there is a lunch with Mrs. Neuhas the donor of the fund and faculty. That should be over by 1:15. He has a date from two to five at Enron with Yeager (Steve or Scott). He would like to meet with Ken or Jeff sometime that afternoon if at all possible. Thanks for your help. gil,project management,formal,3 +Tom DeLay CA Aug Dinner & Golf event,Jeff I spoke to Joannie this afternoon and asked for your e-mail to send this invitation. Here is the initial information on the event. We are expecting additional members of Congress to attend both events. If you have any questions or comment please let me know. I have attached a word doc. as well: Tom DeLay / ARMPAC Guest Speaker - David Horowitz Four Seasons Aviara - Dinner & Golf Tournament The event will take place: Wednesday August 15 Four Seasons Aviara (Northern San Diego CA) Golf Lunch will start at 11am Tee times at 12:15pm An informal reception afterwards Limited to 40 people Cost is $5k per person Dinner Reception 6 to 6:45pm Dinner 7 to 8:30pm Speakers Tom DeLay and David Horowitz $1500 per person $2500 per couple There are four levels of sponsorship: $100K $50k $25k and $15k. Contribution levels will also transfer from the dinner and/or Golf Tournament to the ARMPAC contributor sponsorship program. Bill Gowan Election Day Consulting LLC 1947 Camino Vida Roble suite 104 Carlsbad CA 92009 760 929.1203 electiondayconsulting.com - Aug 15 Golf dinner.doc,personal & social,formal,3 +"LOGISTICAL INFORMATION FOR THE MAY 22-23, 2001 FORUM",meeting folder -----------------,other,formal,3 +,Several employees have asked about the exercise policy on stock options. Specifically they want to know what the exercise policy is on i) termination eg as a result of the prc process ii) voluntary departure iii) retirement or iv)resignation and to what extent do the rules vary across plans: i) AESOP LTIP deferred bonus etc. The main focus is on the length of time to exercise. I am concerned that there may be some odd incentives in the structure -- eg are severed employees allowed more time to exercise than employees who just leave voluntarily ( ie if you want to have a full three years to exercise options are you better off becoming a performance issue and getting severed than you would be if you simply left the company?,other,formal,3 +Fw: Confidential - Decision tree on projects,Fyi ,project management,neutral,0 +Ken Lays email to Sen. Brulte,,other,unprofessional,0 +Re: CI at EBS,Thanks for the message. Rita Hartfield@ENRON COMMUNICATIONS 07/17/2000 02:52 PM To: Steven J Kean/HOU/EES@EES cc: Anthony Mends/Enron Communications@Enron Communications Subject: CI at EBS Steve I have heard through the grapevine that Amy Oberg has relayed to you that EBS will not be doing competitive intelligence and that you were dismayed to hear this. Amy is correct in the fact that EBS is not likely to buy the software Strategy that provides a strategic top-down focus on competitive intelligence. However EBS is doing tactical competitive analysis and market research. We are providing the business units with the information that they need to make intelligent decisions at the business unit level. Amy's view is that competitive intelligence (CI) belongs at the corporate level and that CI should drive the strategic direction of the company. You and I both know this is not the way Enron operates. I hope this e:mail does not sound negative but I did want you to know that EBS is providing information and intelligence to its business units -- it is just not in the context that Amy thinks it should be in. If you have any questions please let me know. Rita Hartfield Phone: 713-853-5854 Cell: 713-304-5428 Fax: 713-646-8861 rita_hartfield@enron.net,market research,formal,3 +Board presentations,,other,neutral,0 +Re: CONFIDENTIAL - Residential in CA,Jim / Karen - Thank you. We are not going to pull the trigger to turn back these customers without a full review and the agreement of all appropriate teams at Enron. Thanks - Dan Karen Denne@ENRON 04/13/2001 12:30 PM To: James D Steffes/NA/Enron@Enron cc: Jeff Dasovich/NA/Enron@Enron Paul Kaufman/PDX/ECT@ECT Sandra McCubbin/NA/Enron@Enron Richard Shapiro/NA/Enron@Enron Janel Guerrero/Corp/Enron@Enron Mark Palmer/Corp/Enron@ENRON Susan J Mara/NA/Enron@ENRON Peggy Mahoney/HOU/EES@EES Harry Kingerski/NA/Enron@Enron Dan Leff/HOU/EES@EES Subject: Re: CONFIDENTIAL - Residential in CA Before any decision is made I think we really need to weigh in with EES on the ramifications (both PR and legislative) of turning back 16000 residential customers. I strongly believe that the public hit we will take will be far greater than our actual out-of-pocket losses. We will be crucified by the public media consumer groups legislators governor attorney general etc. and this action will reaffirm our reputation of packing up and leaving when it's not in our interest. The impact of this action would be exacerbated since it is on the heels of UC/CSU. I would also argue that this hurts our national dereg efforts. If we're advocating that competition and choice benefits consumers and then we turn around and pull out of a market and abandon customers when we're not profiting we'll kill any chances we have of ever serving retail customers in California -- or in any other state. We look foolish advocating for direct access when we're not willing to serve our existing -- let alone future customers What about a preemptive strike that engages these 16000 customers to weigh in on direct access -- i.e. a letter that says Enron may be forced to cancel its contract -- call/write/send the enclosed postcard to your legislator and tell them you want to keep your right to choose your energy service provider. Our credibility is on the line. Before we take this action we need to be cognizant of all the long-range strategic implications and we need to seriously weigh the negative impact this will have on our corporate reputation on our legislative abilities and on our commercial success going forward. kd James D Steffes 04/12/2001 09:05 PM To: Jeff Dasovich/NA/Enron@Enron Paul Kaufman/PDX/ECT@ECT Sandra McCubbin/NA/Enron@Enron Richard Shapiro/NA/Enron@Enron Janel Guerrero/Corp/Enron@Enron Mark Palmer/Corp/Enron@ENRON Karen Denne/Corp/Enron@ENRON Susan J Mara/NA/Enron Peggy Mahoney/HOU/EES@EES Harry Kingerski/NA/Enron@Enron cc: Dan Leff/HOU/EES@EES Subject: CONFIDENTIAL - Residential in CA In the meeting today no decision was made about what to do with Enron's 16000 residential customers. Each of the contracts gives a basic 30 day out right to Enron. That being said I think that we have a short window to push for DA before any public action impacts us in Sacramento. I realize that the ultimate action (which I think is inevitable) makes it harder for our advocacy on DA but real $ are flowing out of the company. EES will give us notice when a decision is reached. Thanks Jim,other,formal,5 +Meeting to discuss U of H,-----------------,other,casual,3 +,FYI ,other,casual,0 +Confidential Stuff,Here it is,other,casual,3 +CONFIDENTIAL AND LEGALLY PRIVILEGED,CONFIDENTIAL AND LEGALLY PRIVILEGED Vicki Many thanks for your assistance yesterday. Clinton Energy Management Services Inc. because it holds a current power marketing certificate is an entity which we would like to move to being a direct subsidiary of Enron Corp. to take effect today. This is considered to be an essential part of restructuring to meet our current and future needs. While the day to day control will remain where it is and all the efforts assign contracts and other work should progress as planned since the value to Enron Corp. is the power marketing certificate nothing should be done to jeopardize this. In addition we will be changing the charter and will need copies of the existing charter to effect those changes required. Please call me if you need to discuss this further. Kind regards Marcus,other,formal,5 +Re: DRAFT - PRC Follow Up Memo,Looks fine to me. Maureen - please keep on file From: Billy Lemmons/ENRON@enronXgate on 06/13/2001 07:08 AM To: Stanley Horton/ENRON@enronXgate Steven J Kean/NA/Enron@Enron cc: Ted C Bland/ENRON@enronXgate Teresa Bosien/ENRON@enronXgate Subject: DRAFT - PRC Follow Up Memo Stan and Steve Below is a short email that I suggest we send as a follow up to each PRC meeting. Please adjust as you feel appropriate and I'll ask Terry Bosien to provide your assistant with a list of attendees after each meeting for distribution. I'm traveling today but will be back in the office Thursday. If you'd like to discuss my asst Maxine (x33499) knows how to reach me or you can contact Ted or Terry. Regards Billy ___________________ Thank you for participating in the [EES] Analyst & Associate PRC meeting [last Friday]. The Western Hemisphere final PRC meeting for Analysts & Associates is set for July 18. The purpose of this meeting will be to review the collective ranking distributions and to discuss the performance of individuals in categories 1 and 5. A subset of those who participated in [Friday's] meeting will be selected to participate on July 18. After the July 18 meeting you will receive the ok to provide feedback to those you represented. If you are not the direct supervisor of those you represented it is critically important that you work with the supervisor to insure consistent and clear feedback and ownership of the ranking results. If you have any questions please feel free to contact Terry Bosien (x35230). Thank you again for your contributions to this important process.,business document,formal,3 +Comp Committee Meeting - April 30th,calendar -----------------,calendar & scheduling,casual,3 +FCEL,fyi - there has been some concern that this deal was being put together without Connecticut authorities knowing the full extent of our interest in FCEL. ,other,cautious,3 +Re: Pension Reform Bill,I think it's a good idea but we will need a different summary ... either limit the summary to a couple of key points or provide an explanation in layman's terms of the practical effect of each of the changes. Cindy Olson 04/26/2001 01:46 PM To: Steven J Kean/NA/Enron@Enron cc: Subject: Pension Reform Bill Steve what do you think????? -----------------,other,formal,3 +Peer Group Mapping,I saw your e-mail response. Did it go to Oxley too? -----------------,business document,casual,2 +RE: Eeegads...,hey when are you scheduled to go in for your attitude labotomy? Paul Kaufman/ENRON@enronXgate 05/10/2001 01:51 PM To: Jeff Dasovich/NA/Enron@Enron Susan M Landwehr/NA/Enron@Enron cc: Subject: RE: Eeegads... I'll be there as will Sandi McCubbin. Are you interested in going? I thought not. ,business document,critical,5 +Confidential Information and Securities Trading,I need to get the form to show compliance but I cannot get it online--I cannot remember all my passwords. Can you get this form for me? Thx. ,other,friendly,3 +RE: VACATION,Kevin Enjoy your vacation. Vince ,personal & social,casual,0 +Energy Issues,Firsst article attached refers to the 1946 Nebraska case I mentioned to you= =20 in DC ,other,casual,2 +Confidential Folder to safely pass information to Arthur Andersen,Please read and follow below: Thanks -----------------,other,casual,5 +Report on POWER Conference,I attended the U.C. Berkeley POWER (Program on Workable Energy Regulation) Conference on March 16. Here is a brief report on the relevant parts. Notably the Lieff Cabreser duo of Bill Bernstein and Barry Himmelstein were there listening carefully. The program consisted of the presentation of 8 economic studies followed by comments from two discussants followed by audience questions/comments. The following is a list of the papers and the discussants who presented with slides taken from the website of the U.C. Energy Institute You can click on this to see the slides in PDF format. The papers in green are not particularly relevant for our purposes and I won't say more about them beyond the note in brackets. The presenter's name is in bold. Bidding Asymmetries in Multi-Unit Auctions: Implications of Bid Function Equilibria in the British Spot Market for Electricity by Greg Crawford Duke University Joe Crespo NERA and Helen Tauchen University of North Carolina Pricing and Firm Conduct in California's Deregulated Electricity Market by Steve Puller UC Berkeley Discussion by Anjali Sheffrin California Independent System Operator Identification and Estimation of Cost Functions Using Observed Bid Data: An Application to Electricity Markets by Frank Wolak Stanford University [A paper about economic tools to study power markets.] Forward Contracts and the Curse of Market Power by Jeffrey Lien University of Maryland The Impact of Retail Rate Deregulation on Electricity Consumption in San Diego by James Bushnell and Erin Mansur UC Berkeley [This looks at whether consumption declined with price increases. Not much.] Consumption and Home Energy Costs: How Prevalent is the 'Heat or Eat' Decision? by Julie Berry Cullen University of Michigan Leora Friedberg University of Virginia and Catherin Wolfram UC Berkeley [A macro study on how consumers change overall spending patterns when they have to shell out more $$ for power.] A Quantitative Analysis of Pricing Behavior in California's Wholesale Electricity Market During Summer 2000 by Paul Joskow MIT and Edward Kahn Analysis Group Electricity Restructuring and the Cost of Pollution Reduction by Dallas Burtraw Karen Palmer Ranjit Bharvirkar and Anthony Paul Resources for the Future Before I discuss the specific papers and presenters one big picture point needs to be made. There was an unchallenged consensus at this conference that the generators have exercised market power to the tune of billions of dollars. The focus was on how and how much not whether. The good news is that I heard no evidence supporting any collusion theory the thought was that generators are making independent output and pricing decisions knowing they could influence the market price given the auction rules and the completely inelastic demand. On the other hand I would have to say that the economic work on the tacit collusion hypothesis in incomplete at best. The bad news is that the scale of potential overcharges is pretty staggering -- >$5 billion. The plaintiffs will be able to put together quite a damage study. Crespo Bidding Asymmetries in UK: This is a marginally relevant paper examining whether bidders in the UK electricity auction markets behaved in a leader-follower mode i.e. asymmetrically. Crespo's model shows that in a uniform price-setting auction with clearing price rules a price setter will emerge and take all prices above marginal cost. Thus above marginal cost pricing does not require coordination. Crespo (from NERA) appeared knowledgeable but is not an inspiring speaker. His paper also got roughed up a bit in the audience questioning segment. Puller Pricing and Firm Conduct in California's Deregulated Electricity Market: This is a very relevant paper as it tries to determine whether market power (presumably) exercised in California was static or dynamic meaning the product of individual firm decisionmaking (static) or tacit collusion (dynamic). The period studied was 4/98 to 12/99. Puller found evidence of static market power consistent with so-called Cournot pricing. This theory posits that in an oligopoly firms will take their rivals' observed price/output decisions as a given and decide how to maximize profitability given that behavior. He then tried to determine whether any dynamic games were occurring meaning a game where firms recognize their interdependence and try to follow a supergame trigger strategy in which firms try to induce favorable responses from rivals. It's quite complicated how he goes about this but fundamentally he tries to correlate observed output decisions with how a firm at that time might have expected a change in its behavior to affect its future share of the market. With this methodology Puller finds what he called weak evidence of forward-looking dynamic pricing for a brief time in 1998 but not otherwise. My impression was that the evidence for 1998 was very weak and the logic used to arrive at this conclusion was also weak. Puller then went at this a second time with a theory that attempts to determine what a firm's supply function would look like if it was exercising static and dynamic market power and then comparing this to an estimate of that firm's actual supply function. I found this even more speculative than the first theory. Nonetheless the results are basically the same: evidence of static but not dynamic market power. Puller took a lot of heat for the methodology of this paper during the questioning segment. He's not a dynamic speaker and does not appear to me to be a strong expert candidate. Anjali Sheffrin's commentary was very important. She is the Director of Market Analysis for CAISO. After general comments on Crespo and Puller she launched in to a discussion of whether their models explained the California experience. This turned out to be a preview of the CAISO FERC filing of last week in which they allege $5.5 billion in market power-related overcharges from May 200 to Feb. 2001. That filing and Sheffrin's report follow. They are essential reading. Sheffrin maintains that it was the absence of imports during this period that left the market power of the California generators unchecked. This permitted the in-state generators to engage in either economic or physical withholding of power. (Economic withholding is bidding a higher-than-needed supply curve physical withholding is cutting output at the plant.) Her study was intended to (1) Identify individual firms engaging in market power activity and (2) Analyze how each firms' actions set market clearing prices. She utilized full bidding data in CA ISO real time market for each hour between May and Nov 2000 defined and categorized bidding patterns and identified economic or physical withholding and then calculated bid-cost mark-up and a monopoly rent. She found what she claimed was strong evidence of both types of withholding but that economic withholding is the dominant bidding pattern used by the five large California generators. While Sheffrin's study does not name names it claims that most of the five in-state suppliers and many of the [16] large importers displayed bidding patterns which were consistent with the exercise of market power. Bernstein and Himmelstein were positively gleeful during this presentation. On the question of collusion Sheffrin's study is not terribly illuminating. She maintains that the dominant bidding pattern is consistent with two characteristics of a supply function equilibrium model of oligopolist pricing. I take that to mean Cournot which is a static non-collusive model. However when you read her study you'll see the picture is not entirely clear. Lien The Curse of Market Power: This is only marginally relevant for us as its thesis is that forward-looking supply contracts are better for both producers and society. Everyone seemed to agree -- and were confused why we needed a paper to prove it. Lien (U. Md.) is young and not expert material. Joskow and Kahn: (paper) (Kahn's slides). I'm sure many of you have already read this everyone should. Prepared for SoCal Edison it contends that 4 in-state generators (Reliant Dynegy AES/Williams and Southern/Mirant) exercised market power by withholding capacity during the summer or 2000. J&K use publicly available data on loads market prices and generation to (a) quantify combined effects of market fundamentals on market prices (b) calculate price gap (difference between actual prices and competitive market benchmarks) (c) account for quantify effects of ISO's ancillary services requirements and forced outages and then (d) calculate the output gap for high priced hours meaning the difference between observed and maximum profitable levels of generation. They conclude that prices were far in excess of the competitive benchmark and that the 4 in-state generators could have produced more power at competitive prices but chose not to. Hence market power was exercised. Kahn the Analysis Group economist who presented is a very colorful and rather undisciplined advocate of his position. He threw around allegations of conspiracy rather casually but mostly to be funny. I couldn't tell whether he believed his study proved that I don't think it even speaks to it. But Bernstein and Himmelstein applauded him when he finished grinning ear to ear. Severin Borenstein UC Berkeley and the conference director was supposed to comment on J&K but hardly did. He said that the generators would have been stupid not to exercise market power given the supply/demand conditions and the market rules and argued that permitting long term contracts and requiring real-time residential pricing were the solutions to all of this. Borenstein was the best expert material I saw at this conference and the fact he took a pass on the details of the J&K paper is puzzling to me. It made me wonder whether he already has a horse in this race or perhaps is trying to stay above it all. Hope this is useful. Regards Dan Daniel M. Wall Latham & Watkins 505 Montgomery Street Suite 1900 San Francisco CA 94111-2562 Direct: (415) 395-8240 Main: (415) 391-0600 Fax: (415) 395-8095 dan.wall@lw.com This email may contain material that is confidential privileged and/or attorney work product for the sole use of the intended recipient. Any review reliance or distribution by others or forwarding without express permission is strictly prohibited. If you are not the intended recipient please contact the sender and delete all copies. - 2001032214541122276.pdf.pdf - 2001032214585222924.pdf.pdf,other,formal,3 +Department Meeting,depelschen children's home dinner,organization,casual,3 +Fwd: IS TRADING AN INSIDERS GAME?,Enclosed is an article in this morning's San Diego Union written by one of their reporters that I know. As indicated it focuses on Enron. Of particular interest are the comments by Senator Dunn which are at odds with his statements to the Sacramento lobbyists that he has no idea what Enron does. The information contained in this e-mail message and any accompanying documents is subject to the attorney-client privilege and/or the attorney work product rule and is confidential business information intended only for the use of the individual or entity named above. If the reader of this message is not the intended recipient or representative of the recipient you are hereby notified that any dissemination of this communication is strictly prohibited. If you have received this communication in error please notify the Systems Administrator at admin@pkns.com and immediately delete this message from your system. Content-Transfer-Encoding: quoted-printable Date: Wed 06 Jun 2001 08:53:28 -0700 From: Cindy Frederick To: Michael Kirby Subject: IS TRADING AN INSIDER'S GAME? Mime-Version: 1.0 Content-Type: text/plain charset=us-ascii Content-Disposition: inline IS TRADING AN INSIDER'S GAME? Buying selling of electricity is a growth business but some say deck is stacked against consumers By Craig D. Rose STAFF WRITER June 6 2001 While Californians decry deregulation's failure to deliver a competitive market electricity wholesalers have quietly developed a vast and rapidly growing business of buying and selling power among themselves. The deals take place on high-tech trading floors in Houston and elsewhere around the country as well as on Internet-based trading systems. Some experts say this electricity trading is a key mechanism for raising consumer power prices yet it's largely unregulated. Electricity trading is like buying stock -- when you have ability to change the stock price said Frank Wolak a Stanford University economics professor and member of the state grid operator's market surveillance group. Energy companies say the buying and selling of contracts to deliver power provides risk management allowing plant owners to presell their electricity lock in prices and avoid fluctuations. The rough and tumble of the free market they add is the most efficient means of allocating a resource like electricity. But industry critics say trading is far from a competitive market paradigm. In their view it's a means of communication -- a way for energy insiders to collude and raise prices under the guise of competition. To be sure the trading arms of major energy companies have emerged as stars in an industry where profit surges of 300 percent or 400 percent are not uncommon. The transactions shrouded in secrecy can leave ownership of a critical commodity in unknown hands. Consider the case of power generated by AES Corp.'s California plants. In 1998 AES made a bold move. Immediately after purchasing power plants that gave it control of 10 percent of the state's electric generating capacity the company sold the output from its plants for the next 20 years to Williams Cos. Williams did not sit on this treasure trove of electrons. The Tulsa Okla. company soon sold 80 percent of what it bought. It is difficult to say who owns that power now. Some might be owned by Sempra Trading a sister company of SDG&E. Or some could be owned by Enron Corp. the nation's biggest electricity trader. A spokeswoman for Williams conceded that Williams itself may have repurchased some of the electricity it sold earlier. But trading companies closely guard their positions. This much can be said with certainty: Electricity that AES sold for less than 5 cents per kilowatt-hour to Williams changed hands perhaps 10 times in the wholesale market and emerged at times in recent months with a price tag for consumers that was 300 percent higher. Williams' trading profits increased by 523 percent in the first quarter this year. Advance sales All this buying and selling creates curious confluences. In their attempt to deflect criticism over high prices generating companies such as Duke Energy -- operator of the South Bay Power Plant in Chula and others in the state -- frequently note that they sell most of their electricity far in advance. But they acknowledge less often that their trading units may also be buying power which could boost the company's electricity inventory. Duke was the fourth biggest electricity trader last year and cited its trading activity as a prime contributor to its wholesale business profits which soared 324 percent in the first quarter to $348 million. It is a company's power traders who frequently direct plant operators to increase or decrease the generation of power in response to market conditions. Energy companies have little option but to turn to trading for profits. One of the better kept secrets of electrical deregulation and its promise of competition is that there is remarkably little competition in the production side of the business. For one thing electricity is a commodity power from one company is indistinguishable from that generated by others. More important nearly all modern plants generate power from turbines built by a handful of manufacturers. The result? Modern plants owned by different companies produce power at nearly identical cost. The cost of power produced by modern plants is all within a mil (one-thousandth of a dollar) said Michael Peevey an adviser to Gov. Gray Davis and former president of Southern California Edison. So the extraction of profit in the electricity business relies much more on trading. Traders' profits rise when prices are volatile -- plunging or even better rising sharply. Little regulation But despite the obvious temptation to manipulate the market the burgeoning electricity trading business has remained largely unregulated. The Federal Energy Regulatory Commission does require quarterly filings from energy traders but these often provide incomplete information or at least little that has been of concern to FERC. In fact although the trading of electricity grew more than a hundredfold from 1996 to 2000 FERC has taken no major enforcement action against a trader. After the onset of the California crisis last year FERC has acted once. That was against Williams which agreed to pay $8 million without admitting guilt to resolve an allegation that it withheld supply to pump up prices. FERC's record of enforcement in the area of power trading stands in contrast to a long list of enforcement actions within other markets taken by the Securities Exchange Commission and the Commodity Futures Trading Commission. FERC has recently added staff to its market oversight operations. But William Massey a FERC commissioner says the agency's effort is still inadequate. Electricity can be flipped stripped and chopped up Massey said. It's an extraordinarily complicated market. The sophisticated marketers and traders have simply moved past us. We're kind of horse and buggy in our approach and they're out there in rocket ships flying around ... The problem is that sophisticated traders don't necessarily produce reasonable prices. They produce profits. Before deregulation electricity trading was a low-key affair. Regulated utilities dealt power back and forth on a reciprocal basis to fill electricity shortfalls in their control areas. There was little trading for profit until the mid-1990s after federal legislation and FERC rulings opened the market. Major traders include large energy companies sister companies of California's major utilities and Wall Street firms. Market volatility In many ways the trading of power is similar to that of other commodities. But there are important differences. Because it cannot be stored and its use is so fundamental the price of electricity is the most volatile of all. When supplies are tight a single supplier can rapidly raise prices to budget-busting levels as evidenced by Duke Energy's recent admission that it charged California nearly $4000 for a megawatt-hour of power a quantity that probably sold hours earlier for one-tenth of that sum or less. Wolak the Stanford economist and state Sen. Joseph Dunn D-Garden Grove who is investigating the state power market say trading allows companies to collude under the guise of competition. Instead of wringing out lowest costs the wholesale trading market serves to raise prices they say. As I trade to you and you trade to me we communicate to each other what price we would like to get said Wolak. It's not collusive. It's just communicating price. Mark Palmer a spokesman for Enron the nation's biggest power trader said California's problem is not the result of trading. It's a result of shortages Palmer said. Underscoring its emphasis on trading Enron's new headquarters tower in downtown Houston rises from a six-story block of new trading floors including expanded space for electricity trading. Enron also pioneered trading in cyberspace and its Enron Online site claims to be the most active computer-based trading market. The Houston company argues that consumers won't fully benefit from power trading and deregulation until they have greater choice in choosing their power supplier. And the company says FERC has not done enough to open access to transmission lines which would allow traders to move power around the country. To that end Enron has lobbied hard for President Bush's plan for a national electricity grid. Palmer says the notion that the price of electricity rises each time it is traded is mistaken. The market is always looking for the real price of a commodity Palmer said. Dunn the California state senator says his investigation found a different function for trading. At a time when supply barely meets or falls short of demand he noted companies with electricity to sell have to worry only about how high to set their price. The trader is a pawn in the generator's game to drive up prices said Dunn. Trading develops a level of trust. You my alleged competitor will bid in the same patterns and I will respond not in a competitive pattern but in a complimentary pattern. The state senator said his investigation found evidence that on several days energy companies appeared to test their ability to drive prices up without being undercut by competitors. This ability to drive up prices without competitive consequence is a key test of market power the technical term for manipulation or price fixing. But Dunn also conceded that antitrust violations can be hard to prove in court. He suggested that even if the trading behavior falls short of antitrust violations it remains anti-competitive and devastating for the California economy. To Harry Trebing a utility industry expert and professor emeritus at Michigan State University wholesale electricity trading is reminiscent of what took place in the 1920s and early '30s. Back then utility companies created complex networks of holding companies that traded stock among themselves driving up prices in the process. Undoing that scheme was a focus of President Franklin Roosevelt's administration. Congress ended up barring national power companies and tightening regulation of utilities in an effort to counteract their tendency to create markets that work only for insiders. The broad goals of trading are the same Trebing said. The goal is to maximize profits through raising prices.,other,confidential,3 +Governor Davis Power Grab,per my voicemail -----------------,government & politics,casual,3 +meeting,-----------------,other,neutral,3 +RE: Application for Financial Engineer,Shriram We have suspended hiring for the next few months till we shall sort our physical space problem (we have no space left in our old building). Please feel free to contact me again in September. Vince Kaminski ,other,formal,0 +<> - April American Express,-----------------,finance,formal,3 +RE: Risk 2001 Australia,Philip Frank's E-mail: wolak@zia.stanford.edu Vince ,other,casual,0 +Confidential,fyi -----------------,other,casual,0 +HP -- confidential internal document,Matt: As GSS Business Development transitions the HP relationship for broadband to your team there are several issues I wanted to clarify in terms of how the relationship has been developed and who the contacts have been to date. Additionally I outlined the discussion points/action items from this morning's meeting you held with Jennifer Medcalf and myself. Per your request the HP presentation complete with a listing of HP's business partners was e-mailed to you this morning. HP contacts to date: Bill Lovejoy Western Gulf Area Sales Manager Houston TX #(713)-439-5587 (Gerry Cashiola's boss) Gerry Cashiola sales representative Houston TX #(713)-439-5555 (To date HP person coordinating the relationship--seeking a short term play) Greg Pyle Solution Control Manager Southeast Region Austin TX (#(512)-257-5735 (Pyle has been playing the business developer role but continues to defer leadership of the process to Gerry Cashiola) Daniel Morgridge Manager of Internet - E-Services long term alliances Austin TX #(512)-257-5736 (Interested in E-services/wireless longer term alliances) Bill Dwyer Chief Architect e-Services Solutions Cupertino CA #(408)-447-5240 (To date clearly the most knowledgeable person on HP's business propositions strong technical financial background to craft value propositions. Gerry Cashiola and Greg Pyle deferred to his judgement in the 11/16th meeting) Matt On November 10th GSS Business Development took HP through a tour of Enron's trading floor the gas control center and the peaking power plant unit center on the trading floor. This tour was one meeting amongst several held in October and November to provide HP a full overview of Enron's products and services and introduce them to appropriate contacts at Enron (EBS GSS buy side -- Peter Goebel). On November 16th GSS Business Development Patrick Tucker and Dale Clark outlined 3 possible EBS/HP focus areas -- connectivity storage and wireless. Three EBS action items were defined in that meeting: 1) HP was to provide an HP contact on connectivity (to date Gerry Cashiola has stalled on providing this). Sarah-Joy will continue to pursue this information and get a sense from Gerry Cashiola of what he means by short term opportunity. What is HP's time horizon for short term? 2) EBS and GSS/BD was to facilitate a conference call on Storage with Ravi to explore size and potential scope of opportunity (completed 12/8) 3) GSS/BD was to facilitate a conference call with Peter Goebel GSS IT Sourcing Portfolio Leader (set for 12/14) In conversations with you Jennifer Medcalf and myself this morning several decisions on forward-looking strategy with HP/EBS were confirmed: Gerry Cashiola has been unable to take control of the process. More importantly despite numerous visits to Enron in which he has had overviews of Enron's products and services met with Peter Goebel and his team on the GSS buy side and participated in an Experience Enron tour Gerry has been unable to define an HP business proposition. The coordination between Cashiola (short term initiative) Morgridge (long term 12-24 months) has remained unorganized. These initiatives need to be developed separately. Clearly the conversations with HP need to be elevated to a more senior level so EBS can work with HP decision makers who can move the relationship forward at a strategic level. As the relationship is developed at this strategic level shorter term opportunities will crop up along the way. But Gerry's short term plans will not be the focus of the EBS/HP relationship rather a by-product. To facilitate this process of elevating the relationship Jennifer Medcalf and I are following up with Bill Lovejoy and Greg Pyle. Lovejoy's boss is Dan Sytsma VP of HP's America's Central Region. In the conference call Thursday 12/14 with Peter Goebel and HP regarding wireless initiatives Peter will support the GSS/BD push for the HP/EBS initiative by reiterating the following two points: a) Enron is already an HP customer the onus is on HP to move forward on the process of building a strategic relationship (IBM and Lexmark are only some of the HP competitors who could push them out of the running) b) HP's ability to bring the right people to the table will influence HP's business relationship process with Enron Patrick Tucker and Dale Clark could build their relationship with Bill Dwyer Chief Architect e-Services Solutions (met at the meeting 11/16) in the near term. Perhaps plan a visit to Cupertino California to see Dwyer in person. We look forward to continuing close collaboration with your team on this and other opportunities. Sarah-Joy Hunter Enron Corporation Global Strategic Sourcing - Business Development #(713)-345-6541,other,formal,5 +RE: Schoenemann Resume,Presly Greetings from London. I picked up your resume from here and forwarded it to our corporate recruiter. Vince ,human resources,polite,3 +EBS/Blockbuster Local Media,Strong work Laura! -----------------,media & press,excited,0 +<> - May2001ExpenseReport,-----------------,finance,formal,3 +One more for Mark Metts,Am I taking care of you or what?? -----------------,personal & social,casual,0 +Deadline Today -- Draft Enron Comments on NERC Bill,Attached are suggested comments on the draft NERC bill for which we were asked to provide comments by today. You will see that the response is a firm but polite -- no thanks. While I doubt NERC assumes that silence means support by their deadline today I would like to get something to them by COB if at all possible. (I will be on vacation tomorrow in any event). With apologies for the short turn around please call or e-mail your comments or OK this afternoon. John,energy infrastructure,urgent,5 +Energy Issues,Please see the following articles: AP Wires Thurs 3/22: Report: Power wholesalers overcharged California $5.= 5=20 billion Dow Jones Newswires Thurs 3/22: Reliant To Appeal Fed Judge Ruling To Sel= l=20 Pwr To Calif Sac Bee Thurs 3/22: Federal judge orders major power wholesaler to sell t= o=20 California San Jose Mercury News Thurs 3/22: State falling short on pacts that provi= de=20 low-cost energy Contra Costa Times Thurs 3/22: Crisis saps state surplus Sac Bee. Fri 3/23: Bill to pay small energy firms stalls Sac Bee Fri. 3/23: House panel ends energy hearings -- will it step in? Sac Bee Fri 3/23: Dan Walters: Crisis deepens: politicos panic San Diego Union Fri. 3/23: Report says power wholesalers overcharged=20 state $6 billion San Diego Union Fri 3/23: Disappearing state surplus sparks alarm San Diego Union Fri. 3/23: Outages darken economic outlook in state so= me=20 say San Diego Union Fri. 3/23: Out-of-state generators question power=20 regulators' authority San Diego Union Fri. 3/23: Allegheny Energy makes big California=20 connection LA Times Fri 3/23: Judge Frees Small Firm From Edison Contract SF Chron Fri 3/23: Lodi Defies Order for Blackouts=20 Utility tells PG&E to 'pay the bills' SF Chron Fri 3/23: Coming Down to the Wire=20 State legislators battle over alternative energy bills SF Chron Fri 3/23: Grid Operators Push to Prevent Overcharging=20 They say regulators must be aggressive to stop billing abuses=20 Mercury News Fri. 3/23: State's bill for energy could double this year Mercury News Fri. 3/23: Plan for alternate power plants stalls --- --- Report: Power wholesalers overcharged California $5.5 billion=20 DON THOMPSON Associated Press Writer Thursday March 22 2001=20 2001 Associated Press=20 (03-22) 11:41 PST SACRAMENTO Calif. (AP) -- Electricity wholesalers have= =20 overcharged California more than $5 billion since May by manipulating the= =20 energy market according to a report prepared for power grid managers.=20 The Independent System Operator will file the findings with federal=20 regulators and ask for a refund ISO spokesman Patrick Dorinson said.=20 The state auditor also said Thursday that the state's 1996 deregulation law= =20 encouraged both buyers and sellers of electricity to ``manipulate wholesale= =20 prices to their advantage'' by underestimating supply and demand.=20 The auditor's report lays out what it calls ``a complex combination'' of=20 deficiencies and misjudgments it says led to the state's power problems.=20 According to the ISO report five in-state power suppliers and 16 importers= =20 frequently offered electricity at prices higher than it cost them to produc= e=20 -- effectively withholding supplies -- or didn't bid at all when they were= =20 able to generate power.=20 ISO Director of Market Analysis Anjali Sheffrin presented the findings at a= =20 conference in Berkeley last week.=20 The companies have denied overcharging California and have said they expect= =20 the Federal Energy Regulatory Commission will determine their prices were= =20 justified.=20 The commission has recently stepped up scrutiny of power companies' behavio= r=20 during California's power crisis asking suppliers to justify $124 million = in=20 sales during the first two months of the year or refund the money. Critics= =20 claim thousands of additional questionable sales are not being challenged.= =20 California has been spending about $45 million a day -- $4.2 billion since= =20 January -- to purchase power for Pacific Gas and Electric Co. and Southern= =20 California Edison. Both utilities the state's largest have been cut off b= y=20 electricity wholesalers because their credit is almost worthless.=20 Edison and PG&E say they are nearly $14 billion in debt due to soaring=20 wholesale power costs. The state's deregulation law blocks them from=20 recovering the costs from customers.=20 State Controller Kathleen Connell said Wednesday that the state's=20 power-buying is gutting its budget surplus.=20 Since the state started making emergency power buys the surplus has fallen= =20 from $8.5 billion to about $3.2 billion she said.=20 Connell ordered an audit of the power buys saying Gov. Gray Davis is=20 withholding key financial information from her office and the Legislature.= =20 She said she would refuse to transfer $5.6 billion into a ``rainy day fund'= '=20 she said was set up to impress Wall Street as the state prepares to issue $= 10=20 billion in revenue bonds to cover its power buys.=20 Transferring the money would leave the state general fund $2.4 billion in= =20 debt Connell said.=20 Sandy Harrison spokesman for the state Department of Finance and Keely=20 Bosler of the Legislative Analyst's Office said such transfers are routin= e=20 and required by law.=20 ``The law says she has to do it. The law does not give her the power to=20 demand that kind of audit information'' Harrison said.=20 Davis spokesman Steve Maviglio said the administration has released the=20 financial information it can without jeopardizing negotiations for long-ter= m=20 power contracts with wholesalers.=20 Also Wednesday a federal judge ordered a major wholesaler Reliant Energy= =20 Services to continue selling power to California despite its fear that it= =20 will not be paid.=20 The ISO buys power from companies like Reliant on behalf of utilities in=20 attempts to fend off rolling blackouts like those that hit the state this= =20 week and during two days in January.=20 --- Reliant To Appeal Fed Judge Ruling To Sell Pwr To Calif 03/22/2001 Dow Jones Energy Service (Copyright (c) 2001 Dow Jones & Company Inc.) LOS ANGELES -(Dow Jones)- Reliant Energy Inc. (REI) said Thursday it will= =20 immediately file with the 9th Circuit Court of Appeals in San Francisco in= =20 response to a federal judge's ruling late Wednesday that the company contin= ue=20 selling power to California regardless of whether it is paid.=20 U.S. District Court Judge Frank Damrell granted California's Independent=20 System Operator which makes last minute power purchases in the spot market= =20 a preliminary injunction against Reliant saying Californians were at risk = of=20 irreparable harm if Reliant stopped selling power to the state. The ISO manager of the state's electricity grid said the judge's ruling= =20 will allow the agency to keep the lights on in California.=20 Reliant which is owed more than $300 million from the state's cash-strappe= d=20 utilities supplies California with about 3000 megawatts of electricity fr= om=20 power plants it owns in the state.=20 Reliant spokesman Richard Wheatley said the state Department of Water=20 Resources the agency that buys California's bulk power needs on behalf of= =20 PG&E Corp. (PCG) unit Pacific Gas & Electric Edison International (EIX) un= it=20 Southern California Edison and Sempra Energy (SRE) unit San Diego Gas &=20 Electric should back the ISO's last minute power purchases.=20 In a filing with the Securities and Commission Reliant said it is owed $10= 8=20 million by the DWR for last minute power purchases the ISO made during the= =20 six weeks prior to the agreement Reliant made with the DWR.=20 Damrell dismissed Reliant's claim saying he does not have the authority to= =20 force the DWR to pay for that power.=20 We're going to immediately appeal Judge Damrell's order Wheatley said.= =20 Clearly the judge understands the implications of his order. We are requir= ed=20 to do business with creditworthy entities. Unfortuantely the judge did not= =20 force the ISO to post a surety bond which would allowed us to do business= =20 with the ISO.=20 Gov. Gray Davis has said the state is not responsible for the last minute= =20 power purchases the ISO makes despite a law passed authorizing the DWR to= =20 buy power on behalf of the utilities.=20 Wheatley added that the company will also seek relief on the issue at the= =20 Federal Energy Regulatory Commission. Damrell's ruling remains in effect=20 until the Federal Energy Regulatory Commission rules on the matter.=20 Separately Wheatley said a short-term power supply contract that Reliant= =20 signed with the DWR expired Monday and the DWR has not renewed the contract= .=20 A spokesman for the DWR would not comment on the issue.=20 -By Jason Leopold Dow Jones Newswires 323-658-3874=20 jason.leopold@dowjones.com --- --- ----------------------- Federal judge orders major power wholesaler to sell to California Updated: March 21 2001 - 8:23 p.m.=20 A federal judge issued a preliminary injunction Wednesday ordering a major= =20 electricity wholesaler to continue selling to California despite its fear= =20 that it will not get paid.=20 U.S. District Judge Frank C. Damrell Jr. said Californians were at risk of= =20 irreparable harm if Reliant Energy Services stopped selling power to the=20 Independent System Operator which oversees the state's power grid. The ISO= =20 buys last-minute power on behalf of utilities to fill gaps in supply to try= =20 to fend off blackouts.=20 Damrell dismissed Reliant's attempt to force the state Department of Water= =20 Resources to back the ISO's purchases for the state's two biggest utilities= .=20 The state has been spending about $50 million a day on power for Pacific Ga= s=20 and Electric Co. and Southern California Edison both denied credit by=20 suppliers after amassing billions of dollars in debts. The judge said he had no authority to force the DWR to pay for that power.= =20 Gov. Gray Davis has said the state isn't responsible for purchasing the=20 costly last-minute power ISO buys for Edison and PG&E despite a law=20 authorizing state power purchases on the utilities' behalf.=20 ISO attorney Charles Robinson said the ruling gives ISO operators a tool t= o=20 assist them in keeping the lights on in California.=20 Had the decision gone the other way one could expect other generators to= =20 simply ignore emergency orders Robinson said.=20 Damrell's preliminary injunction will remain in effect until the Federal=20 Energy Regulatory Commission rules on the matter.=20 Damrell denied the ISO's request for preliminary injunctions against three= =20 other wholesalers Dynegy AES and Williams who agreed to continue selling= =20 to the ISO pending the FERC ruling.=20 Spokesmen for Reliant Dynegy AES and Williams were out of the office=20 Wednesday night and didn't immediately return calls from The Associated Pre= ss=20 seeking comment on the ruling.=20 The ISO went to court in February after a federal emergency order requiring= =20 the power sales expired. The judge then issued a temporary restraining orde= r=20 requiring the sales but dropped it after the suppliers agreed to continue= =20 sales to California pending his Wednesday ruling.=20 The ISO said it would lose about 3600 megawatts if the suppliers pulled ou= t=20 enough power for about 2.7 million households. One megawatt is enough for= =20 roughly 750 homes.=20 Grid officials said Reliant's share alone is about 3000 megawatts. Reliant= =20 said the amount at issue actually is less than a fourth of that because mo= st=20 of the power is committed under long-term contracts.=20 Reliant which provides about 9 percent of the state's power worries it=20 won't get paid due to the financial troubles of PG&E and Edison.=20 PG&E and Edison say that together they have lost about $13 billion since Ju= ne=20 due to soaring wholesale electricity costs that California's 1996=20 deregulation law bars them from passing onto customers.=20 At the same time the state has faced a tight electricity supply due in pa= rt=20 to California power plant shutdowns for maintenance and to a tight=20 hydroelectric supply in the Pacific Northwest.=20 Managers of the state power grid imposed rolling blackouts across the state= =20 Monday and Tuesday as supply fell short of demand. Wednesday cooling=20 temperatures and the completion of repairs at several power plants allowed= =20 the state to avoid blackouts. State Controller Kathleen Connell said Wednesday that the energy crunch als= o=20 imperils California's financial health. Connell said the state's power-buying on behalf of Edison and PG&E is is=20 gutting its budget surplus. Since the state started making emergency power= =20 buys in January the surplus has fallen from $8.5 billion to about $3.2=20 billion she said.=20 Connell ordered an audit of the state's power-buying saying Davis is=20 withholding key financial information from her office and the Legislature.= =20 She is refusing a request by Davis and the Legislature to transfer $5.6=20 billion into a rainy day fund she said was set up to impress Wall Street = as=20 the state prepares to issue $10 billion in revenue bonds to cover its=20 power-buying.=20 Transferring the money would leave the state general fund $2.4 billion in= =20 debt Connell said.=20 Sandy Harrison spokesman for the state Department of Finance and Keely=20 Bosler of the Legislative Analyst's Office said such transfers are routine= =20 and required by law.=20 They put the state's budget surplus at $5.6 billion.=20 The law says she has to do it. The law does not give her the power to dema= nd=20 that kind of audit information Harrison said.=20 He said the state's budget isn't in danger because it will be repaid with t= he=20 $10 billion in long-term debt.=20 Wells Fargo & Co. chief economist Sung Won Sohn said he sees little progres= s=20 in efforts to fix the state's power problems and end state electricity=20 purchases.=20 If we're going to pour money into a bottomless pit I would worry about th= e=20 state's finances he said. At some point we're going to run out of money.= The controller's criticism of fellow Democrat Davis won support from Assemb= ly=20 Republicans and Secretary of State Bill Jones a Republican considering=20 challenging Davis next year.=20 Jones said he wants to announce his own plan to solve the state's energy=20 woes but can't unless Davis releases more financial details.=20 Davis spokesman Steve Maviglio dismissed the criticism. Political grandstanding doesn't generate one more kilowatt of energy for= =20 California in this time of emergency he said.=20 Maviglio said the administration has released the financial information it= =20 can without jeopardizing negotiations for long-term power contracts with=20 wholesalers.=20 Also Wednesday a report by Davis' chief power negotiator appears to show= =20 that as much as 75 percent of the state's power purchases will have to be o= n=20 the expensive short-term market this summer said Sen. Debra Bowen D-Marin= a=20 del Rey chairwoman of the Senate Energy Committee.=20 The prices may be phenomenol she said particularly given predicted=20 hydroelectric shortages due to drought in the Pacific Northwest.=20 The report by David Freeman who is negotiating the state's long-term power= =20 contracts shows California has finalized 19 contracts and has 25 agreement= s=20 in principle. Freeman said DWR is continuing to negotiate other contracts. Bowen said FERC should impose short-term price caps or let generators to=20 charge enough to make a reasonable profit or we could be subject to enormo= us=20 price-gouging this summer.=20 -- Associated Press --- State falling short on pacts that provide low-cost energy=20 Published Thursday March 22 2001 in the San Jose Mercury News=20 BY CHRIS O'BRIEN AND JOHN WOOLFOLK=20 Mercury News=20 The state has signed low-cost contracts for just a third of the energy it= =20 needs this year raising the prospect that California could be forced to bu= y=20 much of its electricity this summer on the expensive spot market.=20 A spokesman for Gov. Gray Davis conceded Wednesday that the state will be i= n=20 trouble without more contracts but insisted California will meet its needs= =20 through conservation and additional long-term deals for cheap electricity.= =20 The state according to a report released Wednesday has fallen far short o= f=20 the governor's goal of filling almost all its electricity needs through suc= h=20 deals. In fact the state has lined up contracts for about half the amount= =20 Davis had projected earlier this month.=20 If the state has to rely heavily on the volatile spot market where the pri= ce=20 of electricity this summer could reach five times the state's contract pric= e=20 pressure could mount to raise the cap on the electricity rates consumers pa= y.=20 But Steven Maviglio the governor's spokesman said ``The governor has sai= d=20 he's committed to work this in the existing rate structure so that's the= =20 plan.''=20 In the report sent to state lawmakers the state Department of Water=20 Resources indicated that it had secured just more than 20 million=20 megawatt-hours for this year leaving it far short of the 60 million=20 megawatt-hours needed.=20 ``This is just a progress report'' Maviglio said. ``They did all this in= =20 three weeks which is pretty amazing when you think about it and we have a= =20 lot more to do.''=20 The state got into the power buying business in January supplying it to th= e=20 state's nearly bankrupt utilities.=20 The state negotiated long-term contracts with generators to supply that pow= er=20 at a reduced rate. Based on the report the state will pay an average of $6= 8=20 per megawatt-hour over the next 10 years -- significantly less than in=20 December when prices spiked higher than $300 per megawatt-hour but not as l= ow=20 as the $55 Davis hoped to reach.=20 Most of this power however won't be delivered until 2004. From 2004 to=20 2006 the Department of Water Resources estimates it has enough power unde= r=20 contract. Until then the amount falls short.=20 In 2001 it appears the state has about one-third of the power it needs. Th= e=20 gap closes to about half in 2002 and two-thirds in 2003.=20 At a news conference in Los Angeles two weeks ago Davis said the state wou= ld=20 have to buy only 30 to 45 percent of the power it needs this summer on the= =20 open market.=20 At the time critics said with only two-thirds of the power under contract= a=20 rate increase was almost inevitable. Even Davis' chief negotiator S. David= =20 Freeman offered a bleak assessment for the summer saying that all availab= le=20 electricity has already been sold.=20 ``We'll be subject to extremely high prices'' said Frank Wolak a Stanford= =20 professor who sits on a market committee for the Independent System Operato= r=20 the agency that runs the state power grid.=20 Wolak said there are two main hopes for avoiding a price increase this=20 summer: Federal officials could cap the wholesale price a step they've=20 resisted or Californians can conserve an unprecedented amount of power. --- --- ----------------------- Crisis saps state surplus POWER CRISIS=20 Controller moves to block a transfer of funds saying the $8.5 billion=20 surplus has been cut more than half since January=20 By Mike Taugher TIMES STAFF WRITER=20 The energy crisis has bled California's once-touted budget surplus by more= =20 than half since taxpayers began buying electricity two months ago leading = a=20 top state finance official Wednesday to order an audit of the power purchas= es=20 and block Gov. Gray Davis' plan to transfer funds into a reserve account.= =20 A booming economy last year produced a budget surplus that totaled $8.5=20 billion in January. But that figure now stands at about $3.2 billion=20 according to Controller Kathleen Connell.=20 We started this year with a generous budget surplus Connell said in a=20 statement announcing her decision to block what Davis administration=20 officials described as a routine transfer of surplus money. The energy=20 crisis has taken much of that away and this transfer on top of the=20 electricity purchases would put the fund at risk.=20 Meanwhile the Davis administration released a report by David Freeman the= =20 governor's chief negotiator on power purchases on the progress of executin= g=20 long-term agreements meant to stabilize the power buys.=20 According to the report only about 40 percent of the electricity needed fr= om=20 the open market this year has been lined up. That means the state could be= =20 forced to continue buying a substantial amount of power on the highly=20 expensive spot market and further drain its coffers.=20 And a key regulatory panel is scheduled next week to issue a ruling that=20 would determine how quickly state funds will be replenished when it decides= =20 what portion of electric bill payments should be allocated to the state=20 treasury a decision that could include a rate increase to fully repay=20 taxpayers without further crippling the state's two largest electric=20 utilities.=20 The Public Utilities Commission also will consider whether it will force th= e=20 utilities to pay alternative energy producers whose shutdowns this week=20 contributed to blackouts.=20 Connell's action underscores a growing nervousness over the sheer volume of= =20 money that is being poured into energy buys despite the fact that state=20 officials plan to replenish the treasury with up to $10 billion in loans th= at=20 will be repaid by electricity consumers.=20 The state has committed to spending $4.2 billion to date to keep lights on= =20 since taxpayers were forced in mid-January to take over electricity buys fr= om=20 the financially crippled utilities Pacific Gas & Electric Co. and Southern= =20 California Edison. Tax money is going out at a clip of about $50 million a= =20 day.=20 High prices already have brought PG&E and Edison to the brink of bankruptcy= =20 and now the state's surplus is at risk according to Connell.=20 In addition to requesting an audit and announcing her intention to delay th= e=20 transfer to the reserve account Connell said she wanted the administration= =20 to send her office more information about the electricity purchases.=20 Davis' representatives questioned Connell's authority in trying to block th= e=20 funds transfer which they called a routine accounting procedure and accus= ed=20 her of making political hay.=20 It is not helpful to the taxpayers or ratepayers or the people who just wa= nt=20 to keep the lights on it isn't helpful to have the situation muddied like= =20 this said Sandy Harrison a Finance Department spokesperson. We're sorry= =20 it came up in this manner.=20 Connell and the administration have butted heads in recent weeks. The=20 controller wants to post details of the state's electricity purchases on he= r=20 Web site a plan that have been delayed under pressure from Davis because o= f=20 the governor's concerns that releasing those details will allow power=20 generators and traders to sell at higher prices.=20 Harrison said administration officials believe Connell lacks the authority= =20 either to block the funds transfer to a reserve account or to audit the sta= te=20 water resources department.=20 Two days of widespread blackouts this week show how vulnerable the power gr= id=20 is to financial glitches. Although several factors combined to produce the= =20 blackouts state power officials say the outages could have been avoided if= =20 the utilities were paying their bills to alternative energy producers.=20 Many of those producers including clean-burning natural gas power plants= =20 wind solar and geothermal energy developers shut down enough production t= o=20 spell the difference between grid reliability and blackouts Monday and=20 Tuesday.=20 Davis called the utilities' failure to pay bills to those producers known = as=20 qualifying facilities immoral. The QFs were either unable to buy gas fro= m=20 their suppliers or were frustrated with the utilities' failure to pay them.= =20 The utilities hoarded billions of dollars since November without paying an= y=20 money out said Davis spokesman Steve Maviglio. They've got the money --= =20 we're pulling the trigger to make them pay it.=20 The utilities however say they are doing all they can to conserve enough= =20 cash to continue operating. Together they owe the QFs about $1.5 billion.= =20 Next week the PUC is scheduled to consider whether to force the utilities = to=20 heed Davis' demand to pay the QFs and it might also decide how much of=20 ratepayers' bill payments will be used to refund taxpayers for power buys.= =20 PG&E says that under a formula proposed by the administration the water=20 resources department would receive about 40 percent of the money collected= =20 from ratepayers for power purchases.=20 The rest of that money about $240 million would have to be divided among= =20 QFs existing power contracts operating PG&E's nuclear and hydroelectric= =20 plants and what hour-by-hour purchases the utility still must make on the= =20 spot market according to PG&E spokesman John Nelson.=20 There isn't enough to do that he said.=20 That is making it increasingly likely that electric bills will be hiked=20 according to a growing chorus of officials and experts.=20 Unless rates are raised Nelson said the only entity that can absorb a lac= k=20 of payment or a partial payment is the state treasury. Cutting off any othe= rs=20 will lead to electricity becoming unavailable and more blackouts he said.= =20 If they do it under existing rates -- given that the existing pool of mone= y=20 is not enough -- who doesn't get paid or who gets a partial payment? Nelso= n=20 said. What's the only entity left with wiggle room? The state.=20 Rate hikes are also a sticking point in negotiations to bail out the=20 utilities through purchase of their transmission lines and other assets=20 Maviglio said.=20 They want rate increases of significant magnitude and we're not going=20 there he said.=20 WE CAN TRIM STORY HERE IF NECESSARY BUT KEEP TAGLINES AT BOTTOM=20 About one-third the electricity needed by the customers of California's thr= ee=20 major utility companies is produced by the companies themselves one-third= =20 comes from alternative producers who use environmentally friendly technique= s=20 and one-third is bought on the open market.=20 The state stepped in to buy the one-third needed from the open market after= =20 the utility companies ran out of cash and credit in January to make the=20 purchases themselves.=20 But that electricity has proven to be enormously expensive and Davis has= =20 planned to lower those prices by committing to long-term purchases.=20 Freeman's report on the progress of those long-term purchases dated March = 15=20 but released this week said the state has finalized 19 contracts with seve= n=20 suppliers and reached 25 additional agreements.=20 Mike Taugher covers the environment and energy. Reach him at 925-943-8324 o= r=20 mtaugher@cctimes.com.=20 Staff writer Andrew LaMar contributed to this story. --- --- ----------------------- Bill to pay small energy firms stalls By Kevin Yamamura Dale Kasler and Jim Sanders Bee Staff Writers (Published March 23 2001)=20 A quickly melded proposal that would assure payments for alternative energy= =20 suppliers whose money woes contributed to power blackouts this week stalled= =20 Thursday in a divided Legislature.=20 The state Senate passed the bill AB 8x but with Republicans balking it w= as=20 rejected in the Assembly along party lines. Assembly leaders said they may= =20 try again today.=20 For most of Thursday lawmakers scrutinized legislation they had overhauled= =20 the night before to include Gov. Gray Davis' plan to force utilities to pay= =20 solar wind and small gas-fired suppliers. Such providers called qualifie= d=20 facilities or QFs provide more than 20 percent of California's=20 electricity and their shutdowns were partly to blame for rolling blackouts= =20 Monday and Tuesday.=20 Under the Democratic governor's plan the state Public Utilities Commission= =20 would determine prices at which alternative generators may sell power but= =20 legislation is needed to authorize the PUC action.=20 Lawmakers faced time pressures Thursday. They wanted to pass the bill quick= ly=20 so the PUC could act next week and legislators could embark Monday on an=20 annual three-day lobbying trip in Washington D.C.=20 Assembly Speaker Robert Hertzberg D-Sherman Oaks said the Republicans'=20 rejection of AB 8x could jeopardize more than $4 billion the state has spen= t=20 or allocated for electricity during the energy crisis.=20 Hertzberg said producers of alternative energy which are owed more than $1= =20 billion have threatened to drag debt-ridden utilities into involuntary=20 bankruptcy if the Legislature failed to pass the measure.=20 They said it and I believe it Hertzberg said. If such bankruptcies occu= r=20 he added the state with its multibillion-dollar debt would become just=20 another creditor in a pile of creditors.=20 But Assembly Republican leader Bill Campbell of Villa Park said the=20 finger-pointing is unfair. Passage of AB 8x would not necessarily prevent= =20 bankruptcies he said.=20 One alternative energy provider won a crucial court ruling Thursday that=20 staved off at least for a while threats by some creditors to haul one or= =20 both big utilities into bankruptcy court for nonpayment of bills.=20 CalEnergy Co. Inc. won the right to sell its geothermal power which was=20 contracted to Southern California Edison on the open market. CalEnergy sai= d=20 it is owed $45 million by Edison.=20 If the Imperial County judge hadn't ruled in CalEnergy's favor the company= =20 and seven other QFs were fully prepared to file an involuntary bankruptcy= =20 petition against Edison this morning said David Sokol chief executive of= =20 CalEnergy's parent MidAmerican Energy Holdings Co. of Des Moines Iowa.=20 That is currently off the table.=20 An involuntary bankruptcy proceeding would take California's energy crisis= =20 into uncharted territory although a bankruptcy judge would have the leeway= =20 to reject the filing.=20 Freed from its contract with Edison CalEnergy will move to sell its=20 electricity to people who will pay for it Sokol said.=20 Besides calming the bankruptcy movement temporarily the ruling also could= =20 prompt other alternative energy providers -- hundreds of which have shut do= wn=20 because of nonpayment by Edison and Pacific Gas and Electric Co. -- to foll= ow=20 CalEnergy's example and find other buyers for their electricity said Gary= =20 Ackerman of the Western Power Trading Forum an association of generators.= =20 Assembly Republicans said they felt the Senate's decision to package three= =20 important energy issues into a single bill was an attempt to ramrod=20 legislation through both houses.=20 We have to stand and say no Campbell said during floor debate.=20 Besides determining alternative generator payments the bill would change a= n=20 earlier law by capping the value of bonds the state may sell for power=20 purchases at $10 billion. It also would extend to large businesses an=20 existing rate cap in the San Diego Gas and Electric Co. service area.=20 And it would earmark a portion of rates paid by utility customers to fund t= he=20 state's ongoing power purchases. Within a week the state will have spent= =20 $4.2 billion on power since January.=20 Without the bill some legislators fear Pacific Gas and Electric and=20 Southern California Edison would be reimbursed before the state.=20 They have got (some) gall to go to the PUC and say they're going to go to= =20 court to keep our money -- to keep our money to pay off their creditors= =20 said Senate President Pro Tem John Burton D-San Francisco.=20 Most of the bill's controversy however centered on how the PUC would trea= t=20 gas-fired alternative generators.=20 The commission issued a revised draft decision Wednesday that would impose= =20 prices for qualifying facilities at $79 a megawatt-hour for five-year=20 contracts or $69 a megawatt-hour for 10 years.=20 But those producers that use natural gas -- representing about two-thirds o= f=20 the alternative energy providers in California -- spent Thursday arguing th= at=20 Davis' plan to rescue them would all but guarantee that they would go out o= f=20 business instead.=20 The plan -- ordering Edison and PG&E to pay them a fixed price for their=20 power -- would set rates well below the cost of natural gas they said.=20 Democratic lawmakers tried to assure such producers that the PUC would set= =20 prices that make business sense even obtaining a letter to that effect fro= m=20 Loretta Lynch who heads the commission.=20 Davis has vowed to fine Edison and PG&E if they don't pay alternative=20 producers for future deliveries. But Sokol said his company isn't convinced= =20 that Edison will pay.=20 Calling Edison a confrontive in-your-face nasty organization Sokol sai= d=20 the utility was sitting on $2 billion and not paying its bills. Edison i= n=20 a Securities and Exchange Commission filing Thursday said its debts outwei= gh=20 its cash reserves by $722 million.=20 The Senate sent the Assembly two other bills that deal specifically with=20 supply and demand. The first SB 5x would spend about $1 billion on energy= =20 conservation and low-income assistance programs. The other SB 28x would= =20 streamline siting procedures for power plant construction.=20 In separate energy-related matters Thursday the Assembly approved:=20 AB 21x which would allow businesses industries or other electrical=20 customers to negotiate private contracts with energy providers.=20 Nine energy bills designed to generate or save 665 megawatts of electricity= =20 -- including 345 megawatts this summer. One megawatt is enough electricity = to=20 light about 1000 homes.=20 The state put power emergencies behind it after dropping out of a Stage 1= =20 alert late Wednesday. The California Independent System Operator which=20 manages the state's power transmission grid was predicting no further aler= ts=20 this week. It expected cooling temperatures and a regular dropoff in=20 electricity use on Fridays to lessen demand at the same time that more pow= er=20 plants were returning to service.=20 Bee staff writer Carrie Peyton contributed to this report.=20 --- House panel ends energy hearings -- will it step in? By David Whitney Bee Washington Bureau (Published March 23 2001)=20 WASHINGTON -- A key House panel wrapped up a series of hearings on the=20 California electricity crisis Thursday and now will decide whether to come = to=20 the state's aid with legislation.=20 But the panel's Texas chairman made clear that West Coast price controls=20 won't be on the table.=20 Caps will not be in anything I am submitting said Rep. Joe Barton=20 chairman of the House Energy and Commerce Committee's energy and air qualit= y=20 subcommittee.=20 Some form of federal controls to hold down escalating wholesale prices this= =20 summer because of power shortages has been the most frequent appeal of=20 witnesses who testified before the panel during roughly 30 hours of hearing= s=20 over five days.=20 Such controls have been sought by the governors of California Oregon and= =20 Washington. As power shortages are forecast for other regions states like= =20 New York also have appealed for temporary price controls to halt gouging.= =20 But the Federal Energy Regulatory Commission which is responsible for=20 enforcing reasonable wholesale rates under the Federal Power Act has refus= ed=20 to impose them and the Bush administration is bolstering that decision by= =20 opposing any legislation that would compel such action.=20 Barton in a brief hallway interview declined to say what other legislativ= e=20 remedies he might propose to address the worsening California situation.=20 He said he expects to submit a list of ideas to the White House today and= =20 after receiving comment on it sit down with other committee Republicans an= d=20 Democrats next week to see if any legislation is in order.=20 If we are going to do anything to help California or the West this summer= =20 we have to make it law within the next month or six weeks Barton said.=20 Even the panel's senior Democrat Virginia Rep. Rick Boucher was urging a= =20 careful and deliberate approach to the California crisis which he said w= as=20 largely of the state's own making.=20 There are steps Congress might take to provide some help to the West such = as=20 more money for conservation and relaxed federal regulation of air quality= =20 standards. That would permit older more polluting generators to operate=20 through a long hot summer when electricity demand could exceed supply by= =20 about 3000 megawatts roughly the amount needed to power 3 million homes.= =20 But Alan Lloyd chairman of the California Air Resources Board said power= =20 production already is being maximized without sacrificing air quality.=20 Simply put no essential electricity generation has been curtailed due to= =20 air emission limitations he said. California's programs to protect publi= c=20 health are not major factors in the electricity shortages experienced to=20 date.=20 The concern is that as shortages turn into more rolling blackouts wholesal= e=20 prices will jump even higher and steadily bleed the economies of California= =20 and the West Coast.=20 William L. Massey the lone member of the energy regulatory commission who= =20 supports price controls said at a Tuesday hearing that without them the We= st=20 Coast faces economic catastrophe this summer.=20 It was evident from the comments of some Republicans that they think their= =20 party could capitalize politically from a difficult summer.=20 If they had a bad summer it could show up in the polls said Rep. Charli= e=20 Norwood R-Ga. And sometimes that's not a bad idea.=20 One of the most dramatic exchanges during the weeklong hearings came Thursd= ay=20 with S. David Freeman the former general manager of the Sacramento Municip= al=20 Utility District who now heads the Los Angeles Department of Water and Powe= r.=20 He recently was named Gov. Gray Davis' chief negotiator with power generato= rs=20 for long-term contracts to stabilize future deliveries.=20 Don't feel sorry for California Freeman said. We're going to come out o= f=20 this stronger than ever.=20 But Freeman said it will be a year or two before all the fixes are in place= =20 and in the meantime the region desperately needs Congress' help to force th= e=20 FERC into controlling wholesale prices which witnesses said are likely to= =20 rise from $7 billion last year to as much as $70 billion or more this year.= =20 We recognize that the current administration and various legislators have= =20 their own opinion as to the California situation Freeman said. But my=20 personal plea is that if the federal government is not going to help us th= e=20 least it should do is refrain from legislation that attempts to tell us wha= t=20 to do.=20 Barton perked up at that idea.=20 Leave California alone huh? Barton said. That might be a good motto.= =20 --- --------------------- Dan Walters: Crisis deepens: politicos panic (Published March 23 2001)=20 That choking sound you hear is California's political class shifting into= =20 near-panic mode as it realizes that the energy crisis is on the verge of=20 becoming a full-scale meltdown with utilities forced into bankruptcy and= =20 consumers hammered by severe and prolonged power blackouts and soaring=20 electricity bills.=20 The Legislature which had been content to allow Gov. Gray Davis to handle= =20 the crisis on his own suddenly came to life Thursday jolted by this week'= s=20 unexpected rolling blackouts and threats by creditors to force the utilitie= s=20 into bankruptcy court. Lawmakers quickly fashioned a basketful of legislati= on=20 aimed -- or so they hope -- at increasing power supplies promoting=20 conservation and relieving the financial pressure on utilities and=20 electricity generators. But it may be too little too late -- and Davis and= =20 other politicians are already pointing fingers of blame aware that a=20 political price will be paid if the apocalypse strikes.=20 While Davis chants his mantra that he inherited a fatally flawed utility=20 deregulation scheme from predecessor Pete Wilson Republicans are blaming= =20 Davis for moving too slowly after the crisis first surfaced last summer an= d=20 even some of Davis' fellow Democrats are distancing themselves from the=20 governor.=20 Deregulation was a product of a Republican governor a Republican author a= nd=20 a Republican PUC (Public Utilities Commission) that was unduly impatient= =20 Davis said at one point this week as the Capitol buzzed with private=20 negotiations and public posturing.=20 A day later however state Controller Kathleen Connell a Democrat issued= a=20 warning that Davis' power purchases running at $50 million a day had=20 already drawn down state budget reserves by nearly two-thirds and she=20 refused to authorize additional transfers. It was a direct shot by Connell = at=20 Davis an old rival and came just a day after the governor had endorsed a= =20 Connell foe Antonio Villaraigosa in the duel for mayor of Los Angeles.=20 Other Democrats didn't join Connell's direct challenge to Davis but there= =20 is nevertheless a growing concern among Democratic legislators that the= =20 power purchases are costing many billions of dollars more than the governor= =20 had projected and could place the state budget in jeopardy. They're nervous= =20 because Davis has refused to reveal even to legislators exactly how much= =20 power the state is buying each day and how much it is paying.=20 From the few details that have been disclosed it's clear that the state is= =20 spending about $1.5 billion a month which would wipe out the state's=20 reserves by midsummer. It's also becoming increasingly clear that Davis=20 probably can't make good on his promise to avoid major consumer rate=20 increases unless the state is willing to plunge deeply and semi-permanentl= y=20 into debt to underwrite wholesale costs or unless federal authorities orde= r=20 huge refunds from power suppliers.=20 Rates in areas served by private utilities have risen only slightly while t= he=20 costs first to utilities and later to the state soared. Data from the=20 administration and utilities when collated indicate that the state is in= =20 line to collect just 20 cents for every dollar it's spending on power=20 purchases and the gap will increase as summer heat drives up demand.=20 Privately some economists say that private utility rates will have to rise= =20 33 percent to 50 percent to cover costs of current power supplies plus=20 utilities' past debts to generators and the state's purchase of the=20 utilities' transmission system if that deal is made final.=20 It's ultimately going to break down and the ratepayer is going to pay for= =20 it one way or the other Republican Sen. Jim Battin said during one of=20 Thursday's many committee hearings on utility legislation. No one disagreed= =20 with him.=20 DAN WALTERS' column appears daily except Saturday. Mail: P.O. Box 15779= =20 Sacramento CA 95852 phone (916) 321-1195 fax: (781) 846-8350 E-mail: dwalters@sacbee.com Recent columns: --- Report says power wholesalers overcharged state $6 billion=20 By Don Thompson ASSOCIATED PRESS=20 March 22 2001=20 SACRAMENTO =01) Electricity wholesalers have overcharged California more th= an=20 $6.2 billion by manipulating the energy market according to a report by an= =20 economist working for power grid managers.=20 The Independent System Operator planned to file the findings with federal= =20 regulators Thursday and ask for a refund said ISO spokesman Patrick=20 Dorinson.=20 In a related development the state auditor said Thursday that the state's= =20 1996 deregulation law encouraged both buyers and sellers of electricity to= =20 manipulate wholesale prices to their advantage by underestimating both=20 supply and demand.=20 Disappearing state surplus sparks alarm=20 Outages darken economic outlook in state some say=20 Out-of-state generators question power regulators' authority=20 Allegheny Energy makes big California connection=20 Enron stock slides despite earnings reassurance=20 California's electricity crisis at-a-glance=20 ?=20 The auditor's report lays out what it calls a complex combination of=20 deficiencies and misjudgments it says led to the state's power problems.=20 The ISO's filing came a day after the state controller complained that a=20 relentless energy crisis is jeopardizing California's financial future.=20 Since May the companies manipulated the market by bidding at excessive=20 prices effectively withholding supplies or by not bidding at all when they= =20 had generation capability available according to the ISO study.=20 ISO Director of Market Analysis Anjali Sheffrin presented the findings at a= n=20 energy conference at the University of California Berkeley last week.=20 The companies have denied overcharging California and have said they expect= =20 the Federal Energy Regulatory Commission will determine their prices were= =20 justified.=20 In a burst of activity after weeks of delay both houses of the Legislature= =20 approved bills Thursday designed to ease the energy crisis.=20 The state Senate approved measures to encourage energy conservation and spe= ed=20 up power plant construction.=20 Topping that the Assembly sent the Senate 14 energy-related bills includi= ng=20 $455 million in loans and grants to encourage energy efficiency and=20 conservation and alternative energy projects by this summer.=20 One of the Assembly bills would require new energy plants approved by the= =20 state to sell their power within California before they offer it to other= =20 states.=20 The (California) Energy Commission says for every day we delay this bill= =20 there are 20 megawatts that could be saved that we're not saving said sta= te=20 Sen. Byron Sher D-Stanford as senators voted 28-10 to send his conservati= on=20 measure to the Assembly.=20 Senators also approved another Sher bill speeding up the siting of power=20 plants. It went to the Assembly on a 37-1 vote.=20 Meanwhile a federal judge issued a preliminary injunction Wednesday orderi= ng=20 one of the companies named in the ISO filing Reliant Energy Services to= =20 continue selling to California despite its fear that it will not be paid.= =20 U.S. District Judge Frank C. Damrell Jr. said Californians were at risk of= =20 irreparable harm if Reliant stopped selling power to the ISO which buys at= =20 the last minute on behalf of utilities to bolster supplies and try to fend= =20 off blackouts.=20 Such blackouts struck the state twice this week shutting off power to=20 hundreds of thousands of people from San Diego to Oregon snarling traffic= =20 and shutting down businesses.=20 The state remained free of any power alerts Thursday morning as power=20 reserves stayed above 7 percent.=20 Damrell dismissed Reliant's attempt to force the state Department of Water= =20 Resources to back the ISO's purchases for the state's two biggest utilities= =20 Southern California Edison and Pacific Gas and Electric Co.=20 The judge said he had no authority to force the DWR to pay for that power.= =20 The utilities have been denied credit after amassing billions of dollars in= =20 debt paying high prices for power that the state's energy deregulation law= =20 prevents them from passing on to consumers.=20 Gov. Gray Davis has said the state isn't responsible for purchasing the=20 costly last-minute power the ISO buys for Edison and PG&E despite a law=20 authorizing state power purchases on the utilities' behalf.=20 ISO attorney Charles Robinson said the ruling gives ISO operators a tool t= o=20 assist them in keeping the lights on in California.=20 Had the decision gone the other way one could expect other generators to= =20 simply ignore emergency orders Robinson said.=20 Damrell's preliminary injunction will remain in effect until the Federal=20 Energy Regulatory Commission rules on the matter.=20 In another development Wednesday state Controller Kathleen Connell=20 complained that the energy crunch is imperiling California's financial=20 health.=20 Connell said the state's power buying on behalf of Edison and PG&E is gutti= ng=20 its budget surplus. Since the state started making emergency power buys in= =20 January the surplus has fallen from $8.5 billion to about $3.2 billion sh= e=20 said.=20 Connell ordered an audit of the state's power buying saying Davis is=20 withholding key financial information from her office and the Legislature.= =20 She is also refusing a request by Davis and the Legislature to transfer $5.= 6=20 billion into a rainy day fund she said was set up to impress Wall Street = as=20 the state prepares to issue $10 billion in revenue bonds to cover its power= =20 buying.=20 Transferring the money would leave the state general fund $2.4 billion in= =20 debt Connell said.=20 Sandy Harrison spokesman for the state Department of Finance and Keely=20 Bosler of the Legislative Analyst's Office said such transfers are routine= =20 and required by law.=20 They put the state's budget surplus at $5.6 billion.=20 Davis spokesman Steve Maviglio dismissed the criticism.=20 Political grandstanding doesn't generate one more kilowatt of energy for= =20 California in this time of emergency he said.=20 Connell is a candidate for mayor of Los Angeles in next month's election.= =20 The ISO study meanwhile covered five major in-state power suppliers =01)= =20 Reliant Dynegy Williams/AES Duke Energy and Mirant as well as 16 power= =20 importers. All deliver power to customers of Edison PG&E and San Diego Gas= &=20 Electric Co. the state's three largest investor-owned utilities.=20 All overcharged but some excessively and some by moderate amounts said= =20 ISO's Sheffrin.=20 According to the report the overcharging took place beginning last May wh= en=20 the energy crisis began and continued through last month.=20 During that time according to the report energy suppliers commonly offere= d=20 their electricity at twice the amount it cost them to produce.=20 FERC member William L. Massey said he wasn't shocked to hear the amount=20 overcharged added up to more than $5 billion.=20 Prices over the past 10 months in California have greatly exceeded the=20 federal standards of just and reasonable prices and I think they have=20 exceeded the standards by possibly billions of dollars he said.=20 Chuck Griffin spokesman for Atlanta-based Mirant said the company would=20 justify their charges to FERC officials.=20 I think we're missing sometimes just how basic the problem is in Californi= a.=20 Supply and demand are out of whack and some basic rules of economics kick i= n=20 when that happens he said.=20 --- ------------- Disappearing state surplus sparks alarm=20 Controller puts hold on transfer of $5.6 billion to reserve funds By Karen Kucher and Ed Mendel=20 UNION-TRIBUNE STAFF WRITERS=20 March 22 2001=20 The state's general fund surplus has dropped to $3.2 billion from $8.5=20 billion since January largely because California's power purchases are=20 devouring the money state controller Kathleen Connell said yesterday.=20 Connell said she wants to see more documentation about state power spending= =20 before approving the transfer of $5.6 billion from the general fund to a=20 special reserve fund requested by Gov. Gray Davis.=20 Connell said the state would have to borrow $2.4 billion to cover the=20 transfer.=20 Report says power wholesalers overcharged California $5.5 billion=20 Outages darken economic outlook in state some say=20 Out-of-state generators question power regulators' authority=20 Allegheny Energy makes big California connection=20 Enron stock slides despite earnings reassurance=20 California's electricity crisis at-a-glance=20 ?=20 We started this year with a generous budget surplus. The energy crisis has= =20 taken much of that away and this transfer on top of the electricity=20 purchases would put the (general) fund at risk Connell said in a statemen= t.=20 Her action came on a day when state power supplies improved. After two days= =20 of forced outages this week no rolling blackouts were ordered yesterday.= =20 Several power plants came back on line and imports from the Pacific Northwe= st=20 provided enough electricity to meet demand yesterday said Stephanie=20 McCorkle a spokeswoman with the California Independent System Operator=20 which manages most of the state's power grid.=20 Gradually more (electricity) generation comes on every day McCorkle said= .=20 By Monday we should see somewhere around 2200 megawatts back in service= =20 that was not on this Monday. That's if no other generation falls off.=20 Meanwhile Connell's move took some by surprise.=20 A spokesman for the state Department of Finance said Connell is denying a= =20 routine transfer that is required by law. It was just a routine accounting= =20 measure that we didn't anticipate becoming controversial Sandy Harrison= =20 said.=20 Connell announced the denial of the transfer a day after Davis endorsed one= =20 of her opponents former Assembly Speaker Antonio Villaraigosa in the race= =20 for Los Angeles mayor.=20 Connell who monitors California's cash flow said she was deeply concerne= d=20 about putting the state's general fund in a deficit situation in light of t= he=20 energy crisis.=20 About two months ago the state began spending about $50 million a day to b= uy=20 power after Pacific Gas and Electric and Southern California Edison nearly= =20 went bankrupt. It is also purchasing power for customers of San Diego Gas a= nd=20 Electric.=20 The Davis administration said earlier this week it soon will begin spending= =20 an additional $500 million on power purchases bringing the total to $4.2= =20 billion.=20 As that staggering sum continues to grow the state won a court battle with= =20 an electricity supplier yesterday. A federal judge in Sacramento sided with= =20 the state and ordered the wholesaler to continue selling to California=20 despite its fear that it will not get paid.=20 Judge Frank C. Damrell Jr. said Californians were at risk of irreparable ha= rm=20 if Reliant Energy Services stopped selling power to the Independent System= =20 Operator. The ISO acquires last-minute power on behalf of utilities to fill= =20 gaps in supply to try to fend off blackouts.=20 Damrell dismissed Reliant's attempt to force the state Department of Water= =20 Resources to back the ISO's purchases for the state's two biggest utilities= .=20 The judge said he had no authority to force the DWR to pay for the power.= =20 Davis has said the state isn't responsible for purchasing the costly=20 last-minute power the ISO buys for Edison and PG&E despite a law authorizi= ng=20 state power purchases on the utilities' behalf.=20 Meanwhile those who manage the power grid say the forecast for power=20 supplies this week looks good although conditions can change quickly.=20 ISO managers continue to stress the importance of conservation. Utility=20 customers across the state conserved about 900 megawatts of power Tuesday= =20 which kept blackouts from being ordered that night.=20 As the power crisis worsened this week ISO managers wished aloud that they= =20 still could rely on business customers to shut down in exchange for lower= =20 energy rates.=20 Such interruptible customers saved as much as 2100 megawatts last spring= =20 a figure that dropped to about 1700 last summer and 1400 at the end of th= e=20 year. But in January the state Public Utilities Commission told utilities= =20 they could no longer impose fines on business customers who refuse to shut= =20 down when asked.=20 ISO managers realize the program was harming businesses with frequent=20 interruptions of service -- but they still miss having that option McCorkl= e=20 said.=20 It would have made an enormous difference but at the same time we=20 understand the impact it was having on businesses McCorkle said. --- -------------- Outages darken economic outlook in state some say=20 By Dean Calbreath? UNION-TRIBUNE STAFF WRITER=20 March 22 2001=20 Until this week the San Diego Regional Chamber of Commerce was predicting= =20 that the county was well-insulated from the growing threat of economic=20 recession.=20 But that was before the lights went out in the chamber's downtown=20 headquarters Monday.=20 Working by window light in his darkened office chamber economist Kelly=20 Cunningham rapidly erased his previous projections for 3.5 percent growth f= or=20 San Diego County. Cunningham now feels the local economy could fall into a= =20 recession thanks to its shaky supply of energy.=20 Report says power wholesalers overcharged California $5.5 billion=20 Disappearing state surplus sparks alarm=20 Out-of-state generators question power regulators' authority=20 Allegheny Energy makes big California connection=20 Enron stock slides despite earnings reassurance=20 California's electricity crisis at-a-glance=20 ?=20 Blackouts are very disruptive to the economy Cunningham said. A busines= s=20 can absorb rising energy prices by cutting costs or raising its own prices.= =20 But an energy shutoff is much less predictable. It cuts into productivity.= =20 Those sentiments are being echoed throughout California as business leader= s=20 and economists worry that rolling blackouts will darken the state's=20 previously glowing economy.=20 At the University of California Los Angeles for instance leading financia= l=20 theorists will meet April 4 to discuss the question Can California grow in= =20 the dark? Although the topic was chosen before the recent string of power= =20 outages the blackouts have given the issue new urgency.=20 These blackouts are not just a single episode said UCLA economist Tom=20 Lieser. They are a bridge to what will happen this summer. If we don't fal= l=20 into a recession in the second half of the year we will fall pretty close.= =20 Tapan Munroe an economist formerly with Pacific Gas and Electric this wee= k=20 crossed out his projection for 2 percent statewide growth. After blackouts= =20 rolled toward his consulting offices in the Bay Area city of Moraga Munroe= =20 decided the state will be lucky if it manages zero growth.=20 I'm a pretty optimistic guy by nature but this has been sobering Munroe= =20 said. On Tuesday one restaurant alone in San Francisco lost $20000.=20 Multiply that by all of the businesses that lost power in the state and=20 you've got a serious problem.=20 Two days of blackouts in San Diego County have hurt businesses large and=20 small. Among the industries under threat is the local biotechnology sector= =20 which requires a steady supply of electricity to power areas of laboratorie= s=20 that must remain temperature-controlled and sterile.=20 Continued blackouts could have a huge impact not only in dollars but=20 multiple millions of dollars said Tom Oster vice president of operations= =20 for BioCom the leading trade organization for the more than 200 biotechs i= n=20 San Diego County.=20 Idun Pharmaceuticals a biotech near La Jolla Village Drive that has 67=20 employees had its power cut for about 40 minutes Tuesday. Though the compa= ny=20 has a back-up generator some segments of its laboratories and lab equipmen= t=20 were not supported by it. Chemists also had to turn off some sensitive lab= =20 equipment to avoid the possibility of a damaging power surge once the=20 blackout was over.=20 We're not in a position as a small company to back up the whole facility= =20 said Steven Mento Idun's chief executive. We haven't done a survey yet to= =20 determine whether we had losses either in experiments or equipment damaged= =20 -- but we're hoping because the blackout was so short that damage will be= =20 minimal.=20 Mento said rolling blackouts coupled with continuing high energy costs=20 could cripple many small biotechs -- and even take a bite out of bigger mo= re=20 established companies.=20 We generate new compounds in controlled environments on a daily basis and= =20 when power goes off you can lose samples because of contamination and other= =20 issues Mento said. We are fortunate that our losses would be in having t= o=20 repeat an experiment -- but this could be really critical for companies wit= h=20 drug manufacturing and issues of quality control.=20 The wireless firms along Sorrento Valley have not been immune from blackout= s.=20 The lights went out at Qualcomm early this week although executives declin= ed=20 to comment about the impact.=20 No blackouts hit the big shipbuilding operations on the waterfront this wee= k.=20 But the National Steel and Shipbuilding Co. -- one of San Diego's largest= =20 employers -- already experienced a voluntary loss of power this year its= =20 first since World War II. Since the shipyard does not have its own power=20 supply NASSCO executives fear the effect of unplanned outages.=20 Our average payroll totals half a million dollars a day said NASSCO=20 spokesman Jim Scott. When you have a day's work disrupted that can be=20 pretty serious. We're currently in discussions about the possibility of=20 buying from independent power suppliers or setting up a power plant of our= =20 own.=20 Small businesses which constitute the bulk of employment in San Diego=20 County were hurt by disruptions as well -- costing them vital revenue at a= =20 time when their power bills have skyrocketed.=20 At Fantastic Sam's a hair salon in Chula Vista Angelica Alcala estimated= =20 that business dropped 60 percent when the blackouts hit Tuesday. Among othe= r=20 things Alcala had to alter her planned haircuts because she was relying on= =20 scissors instead of electric clippers.=20 At the Family Fun Center in El Cajon the management gave vouchers or refun= ds=20 to the 15 or so video-game players who were in the midst of killing aliens = or=20 fighting ninja warriors as the power went down.=20 Papa John's Pizza estimates that it may have lost several thousand dollars = in=20 business after six stores were blacked out Monday and four others lost powe= r=20 Tuesday. Brian Mills who runs 23 Papa John's stores in the county said hi= s=20 main concern was shutting down the computers so they would not be damaged b= y=20 a power surge when the electricity was restored.=20 Paul Ecke III a member of the West Coast advisory panel for the Federal=20 Reserve said the potential impact of the energy crisis is worse than any= =20 downturn in the stock market.=20 Ecke who runs the Paul Ecke Ranch flower operation in Encinitas said the= =20 crisis could be particularly harmful for the state's agricultural sector= =20 since farmers need electricity to pump water and natural gas to heat=20 greenhouses.=20 What I'm really worried about is the energy thing is going to cast a shado= w=20 on California he said. If you're a business person thinking about moving= =20 to California right now you're probably not going to do it because you're= =20 not sure you're going to have your lights on this summer.=20 Besides the disruption to businesses the energy crisis is also hurting the= =20 pocketbooks of hourly workers who have been sent home during the crisis.=20 Under state law employers are free to send hourly workers home without pay= =20 during such emergencies although salaried workers must still be paid.=20 Susan Kemp an attorney with the California Chamber of Commerce said there= =20 are ways of minimizing the impact on hourly workers.=20 You have to look at what time it is when the blackout occurs and how long= =20 you think it's going to last Kemp said. If it's around a meal time you= =20 might send the workers out for a longer meal period if you think it's going= =20 to be an hour or hour and a half delay.=20 But the potential for losing wages doesn't sit well with the hourly workers= .=20 When you get sent home early and lose your wages you have even less money= =20 to pay your inflated energy bills said an hourly worker who was sent home= =20 during Monday's blackout.=20 --- ---------- Out-of-state generators question power regulators' authority=20 By Karen Gaudette ASSOCIATED PRESS=20 March 22 2001=20 SAN FRANCISCO =01) At least three major out-of-state electricity generators= are=20 challenging the authority of the California Public Utilities Commission to= =20 investigate whether they deliberately reduced power supplies to drive up=20 prices.=20 The PUC has asked for power plant maintenance records as it tries to=20 determine whether Duke Energy Dynegy Inc. Mirant Corp. and other=20 wholesalers have manipulated the energy market at California's expense.=20 At issue is who ultimately controls oversight of in-state plants that provi= de=20 most of California's electricity. The plants once owned by the state's=20 largest utilities were sold off as part of the state's 1996 attempt at=20 deregulation.=20 Report says power wholesalers overcharged California $5.5 billion=20 Disappearing state surplus sparks alarm=20 Outages darken economic outlook in state some say=20 Allegheny Energy makes big California connection=20 Enron stock slides despite earnings reassurance=20 California's electricity crisis at-a-glance=20 ?=20 PUC President Loretta Lynch said the public deserves to know whether=20 generators have unnecessarily taken plants off-line to create artificial=20 shortages forcing the utilities and now state bureaucrats to buy much high= er=20 priced power on the spot energy market.=20 What I do know is we have historically high levels of outages across the= =20 board Lynch told The Associated Press. Dynegy and Duke have been fightin= g=20 the PUC in the PUC's quest to obtain documents about these outages.=20 The PUC has the authority to regulate facilities within its borders she=20 added. It doesn't matter where the headquarters of the company is.=20 Duke based in North Carolina says it does matter =01) and that since it a= nd=20 other wholesalers aren't headquartered in California the PUC can't require= =20 it to turn over the maintenance records.=20 We have not given them proprietary information because they do not regulat= e=20 us said Duke's spokesman Tom Williams.=20 Dynegy did not return calls for comment Wednesday.=20 The PUC also faces a new challenge in the legislature. A bill sponsored by= =20 Assemblywoman Carole Migden D-San Francisco which would have granted the= =20 PUC greater inspection authority over out-of-state generators was amended= =20 this month to grant the authority to Independent System Operator instead.= =20 The ISO has managed the delivery of energy through most of the state's powe= r=20 grid but historically has done little regulating and has had no policing=20 authority.=20 This board created during the state's 1996 attempt at deregulation was=20 redesigned in January. Now it has a five-member board appointed by Davis= =20 replacing a 26-member ISO board composed of utility executives marketers= =20 power plant owners and others.=20 The latest version of Migden's bill requires wholesalers to report monthly = to=20 the ISO about any plants that are off-line or working at reduced capacity= =20 and gives the ISO power to audit these reports.=20 But because the ISO board historically has made key decisions behind closed= =20 doors and is exempt from certain open-government regulations government=20 watchdogs are outraged by the switch.=20 The PUC's been no friend of ratepayers but at least under the constitutio= n=20 and state law they're required to conduct their process in the open and the= =20 public can intervene said Harvey Rosenfield of the Foundation for Taxpaye= r=20 and Consumer Rights.=20 Davis ordered last month that the ISO take the lead among state agencies to= =20 ensure adequate energy supplies. Alan LoFaso an aide to Migden said the= =20 amendment follows Davis' lead.=20 Both LoFaso and the governor's spokesman Steve Maviglio downplayed the=20 change. I don't know if we have a preference as to which state agency get= s=20 the authority to continue the probe Maviglio said.=20 The challenge by Duke Energy Houston-based Dynegy Inc. and Mirant Corp. of= =20 Atlanta came in filings March 12 asking for a rehearing of the PUC's Februa= ry=20 resolution reasserting its legal authority to examine the books accounts= =20 memoranda contracts and records of generators selling energy to utilities= =20 already subject to PUC regulation.=20 Those utilities include Pacific Gas and Electric Co. and Southern Californi= a=20 Edison Co. which have been nearly bankrupted buying power from wholesalers= =20 as well as the financially troubled San Diego Gas and Electric -- Allegheny Energy makes big California connection=20 ASSOCIATED PRESS=20 March 22 2001=20 HAGERSTOWN Md. =01) Allegheny Energy Inc. said Thursday it has agreed to s= ell=20 $4.5 billion worth of power to California's electricity-purchasing agency= =20 over the next 10 years.=20 The company said the contract call for Allegheny to provide up to 1000=20 megawatts that the Hagerstown-based company has secured from western=20 generating plants through its new energy trading division Allegheny Energy= =20 Global Markets =01) formerly Merrill Lynch Global Energy Markets.=20 This is a win-win for both the state of California and Allegheny Energy. I= t=20 provides a long-term source of fixed-price energy and should help to=20 stabilize prices in California said Michael P. Morrell president of the= =20 Allegheny Energy Supply division.=20 --- ----------- Judge Frees Small Firm From Edison Contract=20 By KEN ELLINGWOOD and DAN MORAIN Times Staff Writers=20 ?????EL CENTRO--California's balance of electrical power shifted slightly= =20 Thursday when an Imperial County judge temporarily freed a small geothermal= =20 energy producer from its contract with Southern California Edison allowing= =20 it to sell power on the open market. ?????The ruling by Superior Court Judge Donal B. Donnelly could lead to a= =20 mass exodus by hundreds of small energy producers that have been selling=20 power to the state's financially troubled utilities for months without=20 getting paid. ?????At the same time it may have staved off plans by a group of the small= =20 generators to send Edison into involuntary bankruptcy as early as today. ?????In Sacramento energy legislation pushed by Gov. Gray Davis passed in= =20 the state Senate but foundered in the Assembly. The measure was intended to= =20 ensure that the state gets repaid for the electricity that it has been buyi= ng=20 on behalf of Edison and Pacific Gas & Electric which say they lack the cas= h=20 and credit to purchase power. The bill also was supposed to guarantee that= =20 the small alternative energy producers--which together provide nearly a=20 third of the state's power--get paid. But Assembly Republicans opposed it= =20 saying it hadn't been given sufficient scrutiny. ?????The impact of the small producers was made clear in Imperial County= =20 where Edison's failure to pay CalEnergy the county's biggest property=20 taxpayer had outsize implications. CalEnergy had put county officials on= =20 notice that it was about to miss a $3.8-million property tax payment. The= =20 uncertainty had prompted the tiny Calipatria Unified School District to=20 postpone a bond issue for badly needed school repairs. ?????Among CalEnergy Chairman David Sokol's first acts after the judge's=20 ruling Thursday was to promise Imperial County Supervisor Wally J. Leimgrub= er=20 that the company would pay its property taxes on time. ?????That is great news Leimgruber said. ?????Within hours of its court victory CalEnergy had stopped transmitting= =20 geothermal power to Edison and begun selling it to El Paso Energy a=20 marketing company that purchased the energy at prevailing rates and resold = it=20 on the spot market. ?????Some of the more than 700 other small energy producers in the state sa= id=20 they were considering similar action against Edison and Pacific Gas &=20 Electric. ?????We absolutely need the right to sell to third parties said Dean=20 Vanech president of Delta Power a New Jersey company that owns five small= =20 gas-fired plants in California and is owed tens of millions of dollars by= =20 Edison. ?????Sokol praised the Imperial County judge and said his company simply=20 wanted the authority to sell its power to a credit-worthy company that in= =20 fact pays for the power. ?????An Edison spokesman said the company was disappointed with the ruling= =20 but sympathized with CalEnergy and other small producers because=20 California's power crisis has placed [them] in financial distress just as= =20 it has placed utilities in financial distress. ?????Edison expressed concern that the ruling would prompt CalEnergy and=20 other small producers to sell their power out of state. Sokol said CalEnerg= y=20 had specifically told El Paso Energy that it hoped its power would remain i= n=20 California but if someone wants to pay a higher price out of state we=20 can't stop them. ?????Sokol said that Edison still owes CalEnergy $140 million and that the= =20 company--along with seven other small producers--had been prepared to file = a=20 petition in federal bankruptcy court in Los Angeles today forcing the utili= ty=20 into involuntary bankruptcy. He said his company no longer intends to do so= =20 and he believed--but wasn't certain--that the other companies would shelve= =20 their plans. ?????Edison filed papers Thursday with the federal Securities and Exchange= =20 Commission showing that it owed $840 million to various small electricity= =20 producers many of which rely on renewable energy sources such as geotherma= l=20 steam solar energy or wind. ?????The alternative energy producers--and utilities--strenuously objected = to=20 the legislation considered in Sacramento on Thursday. The bill spelling ou= t=20 how the utilities are to pay the state and the small producers passed the= =20 Senate on a 27-9 vote the exact two-thirds margin required. But it stalled= =20 in the Assembly on a 46-23 party-line vote well short of two-thirds. ?????When I was a citizen back in Lancaster I heard these stories about= =20 pieces of legislation that were cooked up late at night that . . . were cu= t=20 and pasted together and were rammed through by the Legislature Assemblyma= n=20 George Runner (R-Lancaster) said. That's exactly what we have before us. ?????The alternative electricity generators including oil companies warne= d=20 that they would lose money under the Davis proposal while representatives = of=20 Edison and PG&E which have amassed billions in debt in the worsening energ= y=20 crisis said the legislation would push them deeper into the hole. ?????There isn't enough money Edison attorney Ann Cohn testified at a=20 Senate hearing on the bill Thursday. It is a very simple question: Dollars= =20 going out cannot be greater than dollars coming in. ?????The bill AB 8X combined several proposals. First it sought to clari= fy=20 earlier legislation by spelling out that Edison and PG&E must pay the state= =20 all money collected from consumers for electricity that the state has been= =20 buying. ?????Additionally the bill would turn over to the California Public=20 Utilities Commission the thorny issue of how much to pay alternative energy= =20 producers for their electricity. ?????Wind solar and geothermal producers might agree to the prices offered= =20 by the administration. But most of the alternative energy producers=20 including Chevron and British Petroleum use natural gas to generate=20 electricity through cogeneration a process of creating steam for both=20 electric generation and heat. With natural gas prices high they contend= =20 they would lose money at the prices Davis is offering. ---=20 ?????Ellingwood reported from El Centro Morain from Sacramento. Times staf= f=20 writers Mitchell Landsberg in Los Angeles and Jenifer Warren Nancy Vogel a= nd=20 Carl Ingram in Sacramento contributed to this story. --- ------------------- Lodi Defies Order for Blackouts=20 Utility tells PG&E to 'pay the bills'=20 Alan Gathright Chronicle Staff Writer Friday March 23 2001=20 2001 San Francisco Chronicle=20 URL:=20 /23/M N171303.DTL=20 Let history show that the rebellion against rolling blackouts started when= =20 the Central Valley town of Lodi defied PG&E and refused to unplug its=20 customers this week.=20 Like several cities that own their own utilities Lodi saw the energy crunc= h=20 looming last fall and spent millions for long-term power contracts in an=20 attempt to avoid blackouts.=20 Now Lodi and a Northern California municipal utility cooperative that=20 includes Palo Alto Santa Clara and Alameda are telling Pacific Gas and=20 Electric Co. that it's unfair to force their customers to endure blackouts= =20 triggered by the near-bankrupt utility's failure to pay its debts.=20 The problem is not paying bills so pay the bills said Alan Vallow=20 director of the utility serving Lodi's 58000 residents. I won't arbitrari= ly=20 screw my customers . . . so 5000 PG&E customers can turn on their lights= =20 somewhere else.=20 When PG&E relayed an order from state power regulators Monday and Tuesday f= or=20 Lodi to black out some of its customers a strategy intended to keep the=20 West's power grid from collapsing Lodi said no.=20 So far other cities in the Northern California Power Agency say they will= =20 continue to participate in rotating outages.=20 But in a letter last Friday to PG&E members of the agency and four other= =20 utility districts including Sacramento's warned they didn't believe long-= =20 standing agreements that allow them to use PG&E transmission lines to conne= ct=20 to the grid obliged them to endure rolling blackouts because of PG&E's=20 failure to pay its power obligations.=20 They say the agreements require them to reduce power demand only in respons= e=20 to natural disasters or malfunctions damaging power lines or plants.=20 The agencies asked for a meeting with PG&E President Gordon Smith before=20 anticipated summer blackouts hit to develop a more rational program for= =20 allocation of risks associated with (power demand) load shedding before you= =20 call on us to participate in load shedding again.=20 REFUSING TO SHARE BURDEN PG&E officials accused Lodi of selfishly refusing to share the burden of th= e=20 statewide energy crisis.=20 It is regrettable that after reaping the benefits of the (power grid)=20 interconnection contract for many years Lodi is suddenly unwilling to bear= =20 their share of the burden of the statewide energy crisis said PG&E=20 spokesman Ron Low. When cities like Lodi do not follow the (state=20 Independent System Operator's) order to curtail power it hurts all of=20 California and jeopardizes the entire power grid.=20 Low also disagreed with accusations that this week's blackouts were trigger= ed=20 by PG&E's failure to pay its bills noting that the ISO stated that 12000= =20 megawatts of power were offline because of plant maintenance.=20 But ISO spokeswoman Lisa Szot confirmed assertions by the municipal utiliti= es=20 that power generators had kept an additional 3000 megawatts offline becaus= e=20 they feared PG&E couldn't pay.=20 Lodi's Vallow said he was legally obliged to serve city customers. Lodi=20 residents are facing rate increases of as much as 15 percent under a power= =20 contract that the city secured in hopes of avoiding blackouts. The contract= =20 required Lodi to pay a $10 million premium above its typical $23 million=20 annual energy bill.=20 'THAT'S NOT FAIR'=20 I've been hearing (PG&E say) 'Gee that's not fair. Where's the equity if= =20 everybody is doing rolling blackouts and you're not?' Vallow said. Well= I=20 put my customers at financial risk to the tune of $10 million. And if they'= re=20 not going to get to use that power they paid for then by God give us that= =20 money back.=20 Vallow said he was willing to sell PG&E some of Lodi's power surplus knowi= ng=20 Lodi might not be paid.=20 But I'm not willing to turn off 5000 customers so 5000 customers=20 somewhere else can turn their lights on Vallow said. The objective here= =20 people is to keep as many lights on as possible.=20 Other city-owned utilities while annoyed with the rolling blackouts aren'= t=20 going as far as Lodi.=20 WEATHERING BLACKOUTS I certainly understand the frustrations of utilities like Lodi and actuall= y=20 share those frustrations in many cases said John Roukema assistant=20 director of Santa Clara's utility.=20 But he stressed that his agency had been able to weather blackouts without= =20 hurting residents or small business because 17 major industrial power user= s=20 had agreed to curtail demand during energy alerts.=20 The prudent thing to do at this time is to continue to do our share and=20 participate in rolling blackouts because a single problem could cause a=20 catastrophic failure in the statewide system Roukema said.=20 In Alameda residents endured blackouts this week despite the fact that cit= y=20 has secured reliable power supplies said Matt McCabe spokesman for Alamed= a=20 Power & Telecom.=20 It was in the best of interests of Alamedans to maintain the stability and= =20 integrity of the grid he said. Now if it becomes evident that the syste= m=20 is being jeopardized for financial reasons then we should not have to=20 subject Alamedans to rolling blackouts.=20 In Palo Alto which also had blackouts this week utility officials told th= e=20 City Council they were expecting a 30 to 40 percent rate hike this spring t= o=20 pay new contracts guaranteeing a stable power supply said Councilman Bern= =20 Beecham. The city hopes to avoid giving customers the double whammy of rate= =20 boosts and more blackouts with a program that gets industrial users to cut= =20 demand voluntarily during alerts.=20 When there's not enough generating capacity in the state to protect the=20 integrity of the grid that is in fact everybody's problem Beecham said= =20 but that doesn't mean Palo Alto is willing to endure blackouts to prop up= =20 PG&E's ailing finances.=20 We need to have some very frank discussions with PG&E about mutual=20 obligations Beecham said.=20 Energy Tips=20 With Californians facing electricity and natural gas shortages PG&E has=20 several tips to help conserve both:=20 -- Set the furnace thermostat at 68 degrees or lower health permitting.=20 -- Wash only full loads in a dishwasher. If operating instructions allow= =20 turn dishwasher off before the drying cycle and let dishes dry naturally.= =20 -- Use low-wattage or fluorescent lights.=20 -- Fix defective plumbing and dripping faucets which waste water and=20 increase the gas or electric bill for heating the water.=20 -- Plug gaps around pipes ducts fans and vents that go through walls=20 ceilings and floors.=20 -- Keep furnaces clean and clean or replace the filter regularly.=20 -- Turn heaters down when using a fireplace and close the damper when not= =20 using the fireplace.=20 -- On sunny days open drapes on windows facing south and let the sun shine= =20 in. At night close the drapes to retain indoor heat.=20 Source: www.pge.com=20 E-mail Alan Gathright at 2001 San Francisco Chronicle ? Page?A - 1=20 --- Coming Down to the Wire=20 State legislators battle over alternative energy bills=20 Greg Lucas Robert Salladay Chronicle Sacramento Bureau Friday March 23 2001=20 2001 San Francisco Chronicle=20 URL:=20 /23/M N113351.DTL=20 Sacramento -- After several weeks of slow to no progress in attacking the= =20 state's energy mess the Legislature erupted yesterday into a frenzy of=20 energy activity.=20 The sudden action on a series of energy bills -- including one to let=20 businesses buy power directly from generators -- stemmed initially from the= =20 fear of bad publicity lawmakers might receive for a planned three-day junke= t=20 next week to Washington D.C.=20 When a key bill bogged down in the Assembly late yesterday Speaker Bob=20 Hertzberg D-Sherman Oaks announced the trip was canceled.=20 Another reason for the flurry of action was recognition that time is runnin= g=20 out.=20 Several alternative energy producers -- like wind farms and biomass plants = -=20 - said they were one day away from forcing the state's two biggest utilitie= s=20 into bankruptcy because they were owed more than $1 billion.=20 The Legislature's action and a court ruling that could free alternative=20 producers from unpaid contracts.=20 This is triage members of the Senate said Sen. Jim Costa D-Fresno. Th= is=20 is crisis activity we're engaged in.=20 The Senate approved a bill aimed at helping state regulators get cash to so= me=20 alternative energy producers. Most of them have been paid little or nothing= =20 since November by the utilities they sell electricity to.=20 Senators passed a bill to help the Public Utilities Commission order=20 utilities to pay solar wind and other alternative energy producers who sig= n=20 lower-priced contracts with the utilities.=20 The bill failed in the Assembly because of GOP opposition fanned in part b= y=20 price concerns by the oil industry a major co-generation producer. The=20 Assembly is set to meet again today to try again pass the bill which the P= UC=20 needs to issue its final order.=20 The PUC's proposed order offers the first hint of financial relief for=20 hundreds of alternative energy producers known as ''qualified facilities = in=20 the energy industry who have been paid just pennies on the dollar by cash-= =20 strapped Pacific Gas & Electric and Southern California Edison.=20 Lack of payments has caused many alternative generators to shutter their=20 operations.=20 The PUC's proposal which will be considered at the commission's meeting=20 Tuesday offers generators a choice of agreeing to a five-year contract at= =20 $79 per megawatt or a 10-year deal at $69 per megawatt Davis said. The goi= ng=20 rate now is about $150 a megawatt hour.=20 The order does not address money already owed to the more than 600=20 alternative energy producers.=20 Under the order utilities would have to pay any generator who signed the n= ew=20 contracts within two weeks.=20 But PG&E said it might not be able to afford do that.=20 Operators of co-generation facilities say the contracts contemplated by the= =20 PUC don't cover their cost of producing energy because the sale price no=20 longer would be pegged to the the price of natural gas.=20 In a significant court decision affecting generators one geothermal energy= =20 supplier in Imperial County won a lawsuit yesterday against Edison allowing= =20 the company to escape a contract requiring it to sell electricity to the=20 utility.=20 A superior court judge said CalEnergy operator of the geothermal plant=20 could suspend deliveries to Edison and sell the 268 megawatt hours it=20 generated on the open market.=20 CalEnergy is owed $75 million by the utility.=20 The court victory may ease mounting pressure from some qualified facilities= =20 including CalEnergy to drive one or both of the utilities into involuntary= =20 bankruptcy.=20 The Assembly and Senate meanwhile rushed through a series of bills aimed = at=20 increasing energy conservation and rushing the building of new power plant= s.=20 Most significant for bigger residential and commercial utility customers is= a=20 measure passed by the Assembly to allow energy customers to buy power=20 directly from generators.=20 That right was eliminated in January when the state began buying power for= =20 the cash-strapped utilities.=20 The bill approved unanimously yesterday would impose a yet to be determined= =20 exit fee on customers who leave the power grid to help cover the state's=20 financial exposure.=20 Tell Us What You Think=20 Can you save 20 percent on your energy use? Gov. Gray Davis' administration= =20 is offering rebates for Californians who save on power starting in June an= d=20 if you've got a strategy for conserving The Chronicle wants to hear it.=20 We'll be writing about the hardest-working energy savers in a future story.= =20 To get involved write to the Energy Desk San Francisco Chronicle 901=20 Mission St. San Francisco CA 94103 or e-mail energysaver@sfchronicle.com= .=20 E-mail the reporters at glucas@sfchronicle.com and bsalladay@sfchronicle.co= m.=20 2001 San Francisco Chronicle ? Page?A - 14=20 --- State's bill for energy could double this year=20 Posted at 9:34 p.m. PST Thursday March 22 2001=20 BY=20 STEVE=20 JOHNSON=20 AND=20 JOHN=20 Warning that California is imperiled by the prices it is paying for=20 electricity a report Thursday said the state's annual power tab could wind= =20 up being 10 times what it was two years ago.=20 At the current rate of spending the report estimated that the total=20 electricity bill in California this year could hit $70 billion which is mo= re=20 than twice what it was last year and about 10 times what was paid in 1999 a= nd=20 1998.=20 ``The California electricity market has gone from being `dysfunctional' to= =20 precipitating a crisis'' according to the report from the Independent Syst= em=20 Operator.=20 It added that the price being charged ``threatens any semblance of just and= =20 reasonable consumer rates the financial viability of California's=20 investor-owned utilities the financial stability of California of its=20 neighboring states and of the nation.''=20 While power suppliers denied any wrongdoing the report said the state=20 appears to have been hit with ``excess'' charges totaling $6.87 billion sin= ce=20 May based on an assessment of the typical operating costs of power plant= =20 owners. Out of that total $6.2 billion appeared to be excessive charges=20 during times when power was not in particularly short supply the agency=20 said.=20 The cost of power has become a growing concern now that the state has stepp= ed=20 in to buy it on behalf of Pacific Gas & Electric Co. and Southern Californi= a=20 Edison which claim to be so strapped for cash that they are on the verge o= f=20 bankruptcy.=20 In making public the report which was sent to the Federal Energy Regulator= y=20 Commission officials at the Independent System Operator were careful not t= o=20 accuse any power companies of price gouging. While the prices appeared to b= e=20 unreasonable they said the state needs to learn more about the specific= =20 operating costs of power plant operators before they could determine whethe= r=20 California was cheated.=20 The officials said they were considering asking the federal agency which= =20 oversees power wholesalers to order the suppliers to make refunds. In the= =20 past two weeks the federal agency has warned a number of suppliers that th= ey=20 may have to refund $135 million in apparent overcharges during January and= =20 February.=20 But many experts question whether the federal agency is serious about=20 demanding such refunds so California officials also are reviewing the=20 possibility of suing the suppliers or seeking criminal charges against some= =20 of them. ``We're working very closely with a number of agencies to review t= he=20 information we currently have to determine what remedies may be available'= '=20 said Charles Robinson the Independent System Operator's general counsel.= =20 The report's suspicions were partly bolstered by another study made public= =20 Thursday by the state auditor. It said California's market structure=20 encouraged bidding gamesmanship by both utilities and power sellers ``in an= =20 effort to manipulate wholesale prices to their advantage.'' But it stopped= =20 short of accusing power generators of profiting illegally.=20 ``There's clearly some evidence of market abuse'' said state Auditor Elain= e=20 Howle. Even so she added ``that's not to say it's anything illegal. We=20 hired consultants they looked at some of the bidding and they weren't=20 comfortable going that far.''=20 Although no power companies were named in either report officials with=20 several suppliers insisted they have done nothing wrong.=20 ``We've conducted our business legally and ethically'' said Richard=20 Wheatley spokesman for Reliant Energy which runs five major California=20 power plants. ``The ISO report appears to be nothing more than just another= =20 attempt to put blame at someone else's doorstep when there's been very=20 little action out of Sacramento to resolve the problems in the California= =20 marketplace.''=20 Duke Energy spokesman Jeremy Dreier said the company which runs plants in= =20 Moss Landing and Morro Bay sold most of its power last year and this year = in=20 relatively low-cost long-term contracts and was among the first to offer= =20 such deals to the state. He added that Duke increased production from its= =20 aging plants to meet surging demand.=20 ``The fact that we were among the first to bring long-term contracts to the= =20 table speaks volumes about how we're trying to serve this market'' Dreier= =20 said.=20 John Sousa of Dynegy Inc. which co-owns three major California plants add= ed=20 that ``given the market conditions the rates we charged were just and=20 reasonable.''=20 --- Plan for alternate power plants stalls=20 Posted at 10:03 p.m. PST Thursday March 22 2001=20 BY DION NISSENBAUM AND JENNIFER BJORHUS=20 Mercury News=20 SACRAMENTO -- The state's prospects for plugging a critical electricity gap= =20 dimmed Thursday when the state Assembly rejected a rescue plan for=20 alternative power companies and a state judge ruled that one such firm coul= d=20 stop selling energy in California.=20 Both actions threaten the plan Gov. Gray Davis announced just Tuesday to ke= ep=20 these companies running and stave off more blackouts. With the state's=20 troubled utilities failing to pay for their electricity many alternative= =20 energy plants have been shutting down.=20 The dual blows came on a day when tempers flared in the Capitol as lawmaker= s=20 jarred by back-to-back blackouts launched bipartisan attacks on Pacific Gas= &=20 Electric Co. and Southern California Edison which aren't paying wind sola= r=20 biomass geothermal and small gas-fired plants for their electricity.=20 After Republicans shot down the measure meant to keep alternative energy=20 companies in business Assembly Speaker Robert Hertzberg D-Van Nuys warne= d=20 that the restless companies might act on their threat to force the utilitie= s=20 into bankruptcy.=20 ``They said it and I understood them to mean it'' he said.=20 The failure overshadowed a burst of action in Sacramento where lawmakers=20 approved a host of other measures. The Senate approved two key bills: one= =20 that would spend more than $1 billion to encourage Californians to conserve= =20 energy and one that would make it easier to build power plants. The Assembl= y=20 approved 14 incremental bills.=20 Six votes short=20 But the Assembly fell six votes short of passing a hastily prepared bill=20 meant to help prop up the nearly 700 alternative energy companies many of= =20 which are now idle.=20 Those closings sapped California of energy this week and helped cause two= =20 days of rolling blackouts -- the first since January.=20 In response Davis and lawmakers cobbled together a plan to set new lower= =20 rates for alternative power and to fine the utilities if they refuse to pay= =20 these companies which supply up to a third of the state's power.=20 But Republicans refused to back the measure and said it contained too many= =20 complex parts that needed more time to analyze.=20 ``Everyone in this room knows that this piece of legislation has not had a= =20 good look'' said Assemblyman George Runner R-Lancaster.=20 Assemblyman Fred Keeley D-Santa Cruz castigated the Republicans and=20 implored them to accept an imperfect solution.=20 ``Ladies and gentlemen: Welcome to the NFL'' he said. ``Welcome to the wor= ld=20 where large complex issues don't have a simple solution.''=20 Approval is needed before state regulators at the Public Utilities Commissi= on=20 can vote on the fine points of the plan. That was supposed to happen Tuesda= y.=20 Much of the criticism focused on concerns raised by power plants that use= =20 natural gas to produce energy. Administrators from those plants said the=20 Davis price caps would make it impossible for them to break even.=20 The derailment came hours after the measure narrowly won approval in the=20 state Senate.=20 Hertzberg plans to search for a compromise today and canceled plans for the= =20 Assembly's annual trip to Washington.=20 Thursday's actions were highlighted by angry attacks on the utilities by=20 frustrated lawmakers.=20 ``I hope they do go bankrupt'' shouted Senate President pro tem John Burto= n=20 D-San Francisco during a debate on the energy crisis. ``Let them go belly= =20 up. I don't care any more.''=20 Legal decision adds twist=20 The legislative failure was compounded by a legal decision in Southern=20 California that further complicated the picture.=20 A Superior Court judge in Imperial County cleared the way for CalEnergy=20 Operating Corp. to break its contract with Edison and sell its 268 megawatt= s=20 of power on the open market. The judge concluded that Edison had breached i= ts=20 contract by failing to pay CalEnergy since November.=20 That ruling could pave the way for hundreds of others to follow suit and=20 drain off power California needs to prevent blackouts.=20 ``It's not good'' said V. John White director of the Center for Energy=20 Efficiency and Renewable Technologies. ``This is potentially going to chang= e=20 the dynamics of the situation and probably not for the better.''=20 Jan Smutny-Jones executive director of the Independent Energy Producers=20 Association said it was unclear whether other companies would sue.=20 ``I think this is a very significant development'' he said. ``We're sort o= f=20 at a period where the industry's reaching the end of the rope.''=20 The ruling did have one silver lining: CalEnergy Chairman David Sokol said= =20 his company and seven others had planned to force Edison into bankruptcy if= =20 they lost in court.=20 But he also warned ``You stick a sharp stick in enough people's eyes and= =20 they get pretty tired of it.''=20 The situation with generators supplying PG&E isn't as dire since the compan= y=20 has been making partial payments.=20 Kent Burton senior vice president for Covanta Energy Corp. in New Jersey= =20 said ``They've tried to be responsive.''=20 Mercury News Staff Writer Mark Gladstone contributed to this report. Contac= t=20 Dion Nissenbaum at dnissenbaum@sjmercury.com or (916) 441-4603 or Jennifer= =20 Bjorhus at jbjorhus@sjmercury.com or (408) 920-5660.,other,urgent,5 +Re: Confidential - Notes from Portland Visit,David I will have this re-reviewed by Oregon counsel but it was scrubbed about 18-24 months ago as being enforceable. Thanks. Michelle,legal affairs,formal,3 +RE: EPSA/EEI on Reliability,Charles -- Thanks for the reply. Your thoughts on the EEI draft in terms of details would be helpful. As I read it we still have the problems with the EEI draft that we had with the NERC draft on which it is based -- deference regional rules variances regional reliability entities regional advisory boards limits on FERC authority etc. etc. It would also be helpful to have input on whether the plans for EISB could go forward if legislation like the EEI bill were enacted into law. It would seem not since the SRO would focus only on reliability as defined by how the bill defines what matters are subjects for an organization standard. ,other,formal,3 +Re: All-Employee Meeting Report,We have got to do better at this. IR did a webcast of the annual meeting that from all reports had a minimum of glitches. Can we use the same technology? Courtney Votaw 03/13/2001 09:10 AM To: Steven J Kean/NA/Enron@Enron Mark Palmer/Corp/Enron@ENRON Karen Denne/Corp/Enron@ENRON cc: Mary Clark/Corp/Enron@ENRON Erin Rice/Corp/Enron@Enron Subject: All-Employee Meeting Report I have attached a success report of the streaming communications vehicles we used for the All Employee meeting on Feb. 21 2001. The report includes information about the following: Video Teleconference Audio and Video quality Viewing employees IP-TV Statistics Successes of the locations streamed Video Requests Quantity by location and group To improve access and increase the employee's viewing experience at future meetings we are working with the IP-TV technical team to find solutions to the problems that occurred in February. From the employee feedback we received we will plan to send slides in advance to the video teleconference locations. Please let me know if you have any questions regarding this report. Thanks Courtney,information technology,formal,3 +Government Affairs off-site presentations June 2000,-----------------,other,formal,3 +Governor Ridge might call Ken Lay today,FYI. These are the items I left Ken a voicemail about. -----------------,government & politics,casual,3 +Re: ken lay tour,I have advised against Ken or Jeff attending the generators meeting: Ken is still willing to make time avail on the 3d to meet with the gov. From: Susan M Landwehr on 04/29/2001 05:04 PM To: Richard Shapiro/NA/Enron@Enron Janel Guerrero/Corp/Enron@Enron Jeff Dasovich/NA/Enron@Enron Maureen McVicker/NA/Enron@Enron Steven J Kean/NA/Enron@Enron Paul Kaufman/PDX/ECT@ECT cc: Subject: Re: ken lay tour All--here's some thoughts on the RGA related events. We currently have Ken scheduled to participate in an energy roundtable discussion on the afternoon of the 2nd with at least four governors attending that session--Kempthorne Hull Geringer and Ridge. (Engler and Rowland are also attending the overall event but they will be in a healthcare breakout session). Kaufman and I thought that it would be particularly helpful for Arizona Gov Hull and Idaho Gov Kempthorne to hear Ken's remarks and have a chance to talk with him. I have also been working with Rosalee to schedule an early evening (6:00-7:00pm) meeting that night with Exelon co CEO John Rowe. John Rowe will be in California for some investor meetings and well as attending some sections of the RGA events. I have told my counterpart at Rowe's office that we would confirm Ken's availability on Monday morning. If you do decide that Ken should attend the Davis meeting in Sacremento that day instead we will just reconfigure a bit. Paul and I will cover the RGA events and I will cancel the John Rowe get together. I would also want to talk about having Mr. Lay reach out to Hull and Kempthorne via phone sometime in the near future. Same with Rowe. Rosalee Fleming 04/27/2001 07:12 PM To: Janel Guerrero/Corp/Enron@Enron cc: Maureen McVicker/NA/Enron@Enron Jeff Dasovich/NA/Enron@Enron Richard Shapiro/NA/Enron@Enron Paul Kaufman/PDX/ECT@ECT Steven J Kean/NA/Enron@Enron Sherri Sera/Corp/Enron@ENRON Susan M Landwehr/NA/Enron@Enron Subject: Re: ken lay tour I received a return call from Lelanie in Governor Davis' office this evening. She said the Governor wanted to invite Ken Lay and Jeff Skilling to a meeting the Governor is having at 2:00 p.m. in Sacramento on May 2 with a lot of CEOs. I still pressed for a one on one meeting on May 3 in Sacramento but she told me the Governor wanted to have the one meeting all at once and his schedule was very tight on Thursday May 3. I transferred her to Sherri and called Ken. Ken wanted me to try to get more specific information which she shared that it is with generators - Sempra Williams CalPine Duke Dynegy and Reliant. She also said since the Governor has worked with Ken she thought he might prefer that he attend. Ken said to let you all know and be thinking whether we even want to do it. He said one thought might be that he'd do that meeting and maybe Jeff could do the one in L.A. on May 2. Talk to you Monday. Rosie Janel Guerrero 04/27/2001 02:39 PM To: Rosalee Fleming/Corp/Enron@ENRON Maureen McVicker/NA/Enron@Enron Jeff Dasovich/NA/Enron@Enron cc: Richard Shapiro/NA/Enron@Enron Paul Kaufman/PDX/ECT@ECT Subject: ken lay tour Just so we're all on the same page......Dasovich will arrive in Houston on Monday (mid-day) and will travel with Dr. Lay beginning on Wednesday (to Austin) and then on to LAX Sacramento etc. Steve said there really isn't time to have a pre-briefing so any questions that Ken has will have to be addressed enroute to CA. Rosalee....we're giving Steve the briefing book today so he can review over the weekend and we'll have a final copy to Ken before he departs next week.,project management,formal,3 +<> - May - Env Strat,-----------------,finance,neutral,3 +,Calif briefing,other,casual,3 +Thank you,thanks for your help in preparing for the Texas hearing. I think Texas legislators are viewing the California experience in the proper context and I think I was at least marginally articulate on the emissions issues as well. thanks again.,other,celebratory,0 +Re: Press Clipping - Germany (Enron Mention),The quotes are accurate but I did not say California does not have a supply problem. Mark Schroeder@ECT 03/19/2001 06:04 AM To: Steven J Kean/NA/Enron@Enron cc: Jackie Gentle/LON/ECT@ECT Alex Parsons/EU/Enron@Enron Subject: Press Clipping - Germany (Enron Mention) Steve - FYI and presumably they misquoted you on the problem (at least in California) not being a function of indaequate capacity (it is one of the root causes we have been pointing to over here among others). mcs -----------------,other,formal,2 +Fwd: FW:,Return-path: From: VKaminski@aol.com Full-name: VKaminski Message-ID: Date: Tue 13 Nov 2001 21:03:34 EST Subject: Fwd: FW: To: VKaminski@aol.com MIME-Version: 1.0 Content-Type: multipart/mixed X-Mailer: AOL 6.0 for Windows US sub 10539 Return-path: From: VKaminski@aol.com Full-name: VKaminski Message-ID: Date: Sun 11 Nov 2001 02:56:49 EST Subject: Fwd: FW: To: VKaminski@aol.com MIME-Version: 1.0 Content-Type: multipart/mixed X-Mailer: AOL 6.0 for Windows US sub 10539 Content-Transfer-Encoding: quoted-printable Return-Path: Received: from rly-xf05.mx.aol.com (rly-xf05.mail.aol.com [172.20.105.229]) by air-xf01.mail.aol.com (v81.9) with ESMTP id MAILINXF110-1019180521 Fri 19 Oct 2001 18:05:21 -0400 Received: from postmaster.enron.com (outbound5.enron.com [192.152.140.9]) by rly-xf05.mx.aol.com (v80.21) with ESMTP id MAILRELAYINXF57-1019180459 Fri 19 Oct 2001 18:04:59 -0400 Received: from corp.enron.com [192.168.110.110]) by postmaster.enron.com with ESMTP id f9JM4w304754 for Fri 19 Oct 2001 17:04:58 -0500 (CDT) Received: from nahou-mscnx04p.corp.enron.com (unverified) by corp.enron.com (Content Technologies SMTPRS 4.2.1) with SMTP id for Fri 19 Oct 2001 17:04:58 -0500 Received: from NAHOU-MSMBX03V.corp.enron.com ([192.168.110.40]) by nahou-mscnx04p.corp.enron.com with Microsoft SMTPSVC(5.0.2195.2966) Fri 19 Oct 2001 17:04:58 -0500 X-MimeOLE: Produced By Microsoft Exchange V6.0.4712.0 content-class: urn:content-classes:message MIME-Version: 1.0 Content-Type: text/plain charset=iso-8859-1 Subject: FW: Date: Fri 19 Oct 2001 16:34:52 -0500 Message-ID: X-MS-Has-Attach: X-MS-TNEF-Correlator: Thread-Topic: Thread-Index: From: Kaminski Vince J To: Lin Martin Cc: X-OriginalArrivalTime: 19 Oct 2001 22:04:58.0864 (UTC) FILETIME=[17D6F700:01C158EA] X-Mailer: Unknown (No Version) Martin Lance What do you think? Vince > ,business document,casual,0 +Re: Confidential - Mike Miller,Elspeth do we want to do a new agreement or simply assume the obligations in the old one? If the former I'd do a new agreement. If the latter I believe I simply can do an assignment agreement once I receive a copy of the current agreement. It also depends on the language in the old one and whether we believe it protects ENA. So we'd have to look at it. Sharon do you have the file on this person? If so let me know and I will have someone come and pick it up. Thanks. Michelle Elspeth Inglis@ENRON on 04/14/2000 04:56:09 PM To: Michelle Cash/HOU/ECT@ECT cc: Subject: Confidential - Mike Miller Michelle when rolling over an employment contract from another Enron entity is it re-issued with same details but under ENA's name? thanks Elspeth -----------------,employment,formal,3 +RE: Thu evening,Thanks. Confirmed. Vince ,personal & social,casual,0 +examples of auction processes that worked,Jeff Skilling proposed a solution to Gov Davis to solve the supply and pricing problems in the California market. In summary the proposal would have a neutral party conduct an auction wherein the utilities would seek bids for 5-10 year packages of power from suppliers. The gov asked if anyone had successfully conducted such an auction in the industry already. I need your help to identify and describe any such examples (European or North American) by mid day Monday. Jeff and I will have a follow up call with the governor on Monday. Thanks,other,formal,3 +Privileged and Confidential -- website,FYI the attached article and story is disturbing and surprising about Southern Company. It also raises an issue that we could face if we are not careful. The article discusses internal diversity studies which the plaintiffs are using as evidence to support their claims. The company claims that the studies were done by people who did not know how to conduct the appropriate analyses under the relevant legal standards. I have this concern here as well when we have people running analyses that do not factor in the legal standards and instead try to interpret data themselves. I would like to talk about how to manage that. Let me know who you think should be included in such a meeting and I'll set something up. Thanks. Michelle ,legal affairs,formal,3 +,I talked to Hettie today. It's unlikely that we are going to find time for Jeff and the Governor to talk (because of the Governor's schedule). We'll try to set something up later. In the meantime the Governor should just sign the bill. Of course Hettie had already communicated this the Gov's office acknowledged that the message was recieved but did not make a specific commitment.,government & politics,casual,3 +http://www.vaionline.it/,http://www.vaionline.it/,other,neutral,0 +Re:,The conversation was very positive (Glynn did not know anything about it at first but looked into it and called Ken back Friday evening). Glynn said they were including the amount owed in their negotiations over the price for the transmission assets and said they intended to pay all of their debts including this one as soon as they get paid. He said that this weekk would be focussed on finalizing a deal for SCE given the threat of bankruptcy the discussions would then turn to PG&E. Jeff Dasovich Sent by: Jeff Dasovich 03/14/2001 07:03 PM To: skean@enron.com cc: Subject: Steve: Jim mentioned that Ken Lay was trying to talk to Glynn today about getting the PX credit issue resolved. Any progress made? Best Jeff,other,formal,3 +Some funnies,-----------------,other,casual,0 +Confidential Attorney Client Privilege - Attorney Work Product,I have drafted the attached letter denying the Cal ISO's request to send it (and the EOB) EPMI and EES' cost information for transactions over the FERC's cost cap. Since I believe we are on very firm ground my initial inclination was to send no response to the ISO's letter so there would be nothing to quote in the press. However I drafted this letter at Alan's suggestion for purposes of discussion. We should decide whether to send a letter before distributing this draft more widely in-house to discuss how to parse the message.,legal affairs,formal,3 +Re: DRAFT Slides for Sempra Meeting,I think the presentation looks good. In the meeting itself I think you should go heavy on the argument that it makes no sense for Sempra shareholders to be in a commodity market as a regulated entity -- the heads they win tails you lose argument. Jeff Dasovich Sent by: Jeff Dasovich 10/13/2000 06:11 PM To: skean@enron.com Richard Shapiro/NA/Enron@Enron James D Steffes/NA/Enron@Enron Sandra McCubbin/SFO/EES@EES Mona L Petrochko/SFO/EES@EES Susan J Mara/SFO/EES@EES Paul Kaufman/PDX/ECT@ECT cc: Subject: DRAFT Slides for Sempra Meeting Attached for your review is a rough cut at slides we're preparing for the meeting with Sempra next Thursday. Thoughts and comments are appreciated. Please disregard korny title.,other,formal,3 +Re: Wyden Bankruptcy Amendment,The amendment was defeated Jeff Dasovich Sent by: Jeff Dasovich 03/14/2001 11:11 AM To: James D Steffes/NA/Enron@Enron Chip Schneider/Enron@EnronXGate Linda Robertson/NA/Enron@ENRON Richard Shapiro/NA/Enron@Enron skean@enron.com cc: Subject: Wyden Bankruptcy Amendment ,finance,formal,3 +Re: Tax Valuations for YR2000,Congratulations! Gary Fitch@ENRON on 07/27/2000 12:02:47 PM To: Bill Donovan/EPSC/HOU/ECT@ECT cc: Steven J Kean/HOU/EES@EES Subject: Tax Valuations for YR2000 Bill we hit a home run this morning with HCAD. They have agreed to take my reduced valuation on the Enron fleet. A reduction of $16079000 in taxable value. This results in savings of $482375. That's not all our allocation based on records for operations outside of the state of Texas resulted in additional savings of $1559638. Total savings to our 2000 budget will be $2042013.,finance,excited,0 +Legislative Status Report Week Ending 4/20,Date: 4/20/01 To: Jan Smutny-Jones Steven Kelly Katie Kaplan Cc: IEP Board of Directors From: Julee Malinowski-Ball Edson + Modisette RE: Legislative Status Report Week Ending 4/20 RECENT EVENTS: -- IEP with the help of Chris Ellison has been at the negotiating table mos= t of the week dealing with the most recent amendments to SB 28x. SB 28x (Sher/Battin) makes various changes to the siting process including many IEP-sponsored proposals. As you will recall two new provisions were added to the bill at the last minute before going to the Assembly Floor dealing with both retrofit schedules and environmental dispatch of generating facilities. Per the direction from IEP member companies IEP has decided not to negotiate on the environmental dispatch issue. If the provision remained in the bill IEP would continue to push the Republicans to hold their opposed position. We were however given the authority to negotiate on the retrofit issue as long as we were only talking about facilities that already have retrofit requirements. I will be faxing out the agreed upon language which in essence says the ARB shall set a schedule for the completion of any mandated retrofits. It does not expand the authority of the air districts and ARB to mandate retrofits under existing law. The schedule would require completion of the retrofits by July 1 2004 or such later date as the ISO determines is necessary to maintain reliability. With these amendments including some clean-up language SB 28x will be voted-on on the Assembly floor on Monday and go to the Senate for concurrence on Tuesday. The final version will include the following IEP-sponsored proposals: ? Conforming the timing of offsets for power plants to Clean Air Act requirements ? Substituting CEQA-style hearings for the trial-like proceedings of the CE= C ? Streamlining the permit process for the modernization of existing power plant sites ? Giving consideration to the positive environmental impacts of a proposed project. ? Improving the timeliness and coordination of state and local agency review. ? Extending the current deadlines for the expedited review process established in AB 970. Since SB 28x is only a first step in making changes to the siting process IEP member should now be thinking about what is next. IEP proposals still on the table include: ? Permitting local agencies to make zoning changes or other decisions for power plants contingent upon CEC CEQA Compliance ? Giving deference to other state and regional agencies ? Easing the threshold for override of local land use requirements. ? Making the ISO responsible for determining interconnection requirements -- Bad news on the =01&California First=018 issue quickly followed the good= news. The CEC staff analysis which said the State can't require builders of new power plants to sell electricity here even as a trade-off for expedited permitting was countered by another staff analysis that says the state can= . Both documents cannot be obtained due to attorney-client privilege. This issue is coming to a head next week with a decision pending by the CEC to include a California First clause on the approval of an expedited AES power plant project. AB 60x (Hertzberg) which ties to the siting process the requirement that a developer enter into a contract to sell power to specified California entities is still poised to be heard in the Senate Energy committee. IEP members company lobbyist should continue to lobby against this measure regardless of the CEC=01s decision on AES although our arguments are definitely strengthened if the addition of the clause at the CEC is denied. -- IEP has finalized negotiations with Senator Burton=01s office on amendm= ents attempting to solve our problem with the eminent domain provision in SB 6x (Burton) which is the State Power Authority measure. Attached is a copy o= f the bill in PDF form. The agreed upon language which clarifies that the Authority=01s purpose is to supplement existing generation activities can= be found on pages 6-7 (Section 3310) 13 (Section 3341.1) and 16-17 (Section3352). Considering the inflammatory remarks made by Senator Burton in the press lately regarding seizing generation assets this was most likely the best we could get. -- The first of Senator Dunn=01s hearings with the Senate Select Committee= to Investigate Price Manipulation of the Wholesale Market occurred this week. This week and next week=01s topics will be to go over previous investigati= ons into market power. The committee heard or will be hearing testimony from: Frank Wolak Chairman Market Surveillance Committee CAISO Eric Hildebrandt Manager Market Monitoring CAISO and Elaine Howle State Auditor. -- The Assembly Electricity Oversight Subcommittee met this week and focused on the issue of natural gas collusion. Testifying before the committee were representatives from Dynegy and El Paso commenting on the rise of natural gas prices and whether illegal market manipulation and collusion occurred. The subcommittee plans on putting together a package o= f bills related to natural gas issues which would be the culmination of the committee=01s hearings over the last two months. This package will be up = for consideration first by the whole special Assembly Energy committee. -- Governor Davis came out this week supporting the construction of the Calpine Metcalf Energy Center the 600-megawatt power plant proposed for th= e San Jose region. The Governor urged the CEC to approve the plant siting so that construction can begin. -- Two long-term contracting bills are scheduled for hearings next week. IEP counsel is currently reviewing AB 57 (Wright) and SB 997 (Morrow) and will comment on their provisions as soon as possible. -- Attached is the most recent legislative tracking reports both the special session and regular session. Please let me know if you need copies of any of these bills. UPCOMING EVENTS: MONDAY April 23rd Assembly Utilities and Commerce Committee AB 57 (Wright) =01) long-term contracting reasonableness review TUESDAY April 24th Senate Energy Committee SB 997 (Morrow) =01) long-term contracting reasonableness review WEDNESDAY April 25th Assembly Appropriations Committee AB 62x (Cohn) =01) California First AB 63x (Florez) =01) Sale of Kern Power Plant THURSDAY April 26th Select Committee to Investigate Price Manipulation of the Wholesale Market Informational hearing on the overview of investigations studies and reports regarding the energy crisis. MONDAY April 30th Senate Appropriations Committee SB 1x (Soto) =01) excess profits tax Assembly Revenue and Taxation Committee AB 128x (Corbett) =01) excess profits tax ON THE ASSEMBLY FLOOR SB 6x (Burton) =01) State Power Authority SB 28x (Sher/Battin) =01) siting --end-- Julee Malinowski-Ball Senior Associate Edson + Modisette 916-552-7070 FAX-552-7075 jmball@ns.net - 2001 Tracking Report.doc - 2001 Tracking Report.special session.doc -,legal affairs,formal,5 +Re: Canary Wharf - Update for Executive Committee,Maybe we should knock down the walls of those cavernous offices on the top= =20 floor. Mark Frevert@ENRON 07/24/2000 06:17 AM To: Steven J Kean/HOU/EES@EES Cindy Olson/Corp/Enron@ENRON Mark=20 Palmer/Corp/Enron@ENRON Mark Koenig/Corp/Enron@ENRON cc: =20 Subject: Canary Wharf - Update for Executive Committee Just a quick update on our real estate escapades. Regards . Mark -----------------,other,casual,0 +RE: Confidential Concern,Sharon I suggest that we ask Valeria Hope to investigate the fact situation here and report back to us jointly. What do you think? Michelle ,other,formal,3 +Re: NEW DRAFT OF ENRON STATEMENT,As discussed. -----------------,other,formal,3 +Andre LeGAllo,Any problem? please advise Don. -----------------,other,casual,3 +<> - March 2001,,finance,neutral,3 +Confidential Information and Securities Trading,I couldn't open link. I s this something new for me to sign or have I already complied? -----------------,other,casual,3 +Revised list of PRC Reps,Make sure this is consistent with the lists we put in the memo. thanks ,human resources,formal,3 +EPSA/EEI on Reliability,This follows up on Rick's inquiry late last week on the talks between EPSA and EEI on reliability. Yesterday I spoke with Mark Bennett and Donn Salvosa of the EPSA staff. Mark did the talking. The upshot is that EPSA and EEI are meeting to see if they can't agree on reliability legislation. EEI is working off of the NERC draft and has sent a version to EPSA dated 9/14 (see attached) that was the basis for last Thursday's meeting. EPSA is now doing some drafting of its own. I need to read the 9/14 draft but the fact that they are working off of the old NERC language is of considerable concern. EPSA staff emphasizes the value of having EEI off the NERC reservation (which is good in terms of showing that there is NERC consensus) but I think EPSA staff may be too flexible in how they are approaching it. I reminded them of our position and concerns and of Jim's prepared statement on EPSA's behalf filed for the Sept. 11 Barton hearing. EPSA staff claims that other EPSA members are OK with them embarking on this project. It is not clear if this effort will succeed. EPSA staff said EEI's board insists on having engineers do reliability which is objectionable to EPSA. EPSA staff seems to think that some type of reliablity SRO is inevitable and that it is wise to get the best one they can. I will check with some other EPSA members.,other,formal,3 +Urgent!!! FLSA legislation is on the fast track,Joe - could you or someone in the office get in touch with Michelle? Thanks ,other,urgent,5 +i2 Bandwidth Management Agreement Press Release,fyi ,other,neutral,0 +Risk Matrix,FYI. I had started an informal discussion group to work on political/regulatory risk.. I included Jane Jim Bouillian and Scott Gahn. Jane sent me the atached as an example of how her group approaches issues in the acquisition context. -----------------,other,neutral,0 +Re: Next Draft of Letter to Dunn,I think this is an excellent letter. I agree with Sue's comments and have included her changes on Page 3. All changes have been marked in this version.,other,formal,2 +Regulatory Policy Committee,-----------------,legal affairs,formal,3 +Draft of California Contact List,Steve ? This is a draft of the contact list I promised you.? There are still some typos in it.? I will clean them up and get send you a draft in the morning that is ready for circulation. ? This list is made?up of?people that I know?and trust.? By an large I have excluded sitting pubic officials.? In cases where a given organization has several useful contacts with similar knowledge I have listed just one person for now. ? Give me a call at your convenience and we can discuss this in great detail. ? Kevin 213-926-2626 - Kevin Scott - Key Contacts - Draft.doc,other,casual,3 +Confidential Inquiry,Steve I hope this email finds you well. ?Don't know if you remember me exactly however I worked at Enron for 4 years working closely with the Associate/Analyst Program under Charlene Jackson. ?I had to spread my wings a bit and flew to Reliant Energy to further enhance my career. As a former Enron employee I know Enron-candidate material! ?I would like to submit confidentially of course a resume on AJ McCormac. ?AJ is currently the Executive Director for Workforce Planning (HR) here at Reliant. ?She is very interested in opportunities at Enron and has the right stuff to compliment your strategic direction and objectives for Human Resources. ?I am confident that after just a few minutes with AJ you will quickly recognize her superior expertise. Realizing how expensive executive search firms can be advice from a Enron fan is free. Thank you for your time and consideration. ?If you would like to contact her directly here at Reliant her number 713-207-7162. Ginger Gamble 713-207-8824 (See attached file: AJ Confidential Resume 9-21-00.doc) (See attached file: AJ Confidential Resume 9-21-00.doc) - AJ Confidential Resume 9-21-00.doc,human resources,friendly,3 +Re: CONFIDENTIAL - Residential in CA,Before any decision is made I think we really need to weigh in with EES on the ramifications (both PR and legislative) of turning back 16000 residential customers. I strongly believe that the public hit we will take will be far greater than our actual out-of-pocket losses. We will be crucified by the public media consumer groups legislators governor attorney general etc. and this action will reaffirm our reputation of packing up and leaving when it's not in our interest. The impact of this action would be exacerbated since it is on the heels of UC/CSU. I would also argue that this hurts our national dereg efforts. If we're advocating that competition and choice benefits consumers and then we turn around and pull out of a market and abandon customers when we're not profiting we'll kill any chances we have of ever serving retail customers in California -- or in any other state. We look foolish advocating for direct access when we're not willing to serve our existing -- let alone future customers What about a preemptive strike that engages these 16000 customers to weigh in on direct access -- i.e. a letter that says Enron may be forced to cancel its contract -- call/write/send the enclosed postcard to your legislator and tell them you want to keep your right to choose your energy service provider. Our credibility is on the line. Before we take this action we need to be cognizant of all the long-range strategic implications and we need to seriously weigh the negative impact this will have on our corporate reputation on our legislative abilities and on our commercial success going forward. kd James D Steffes 04/12/2001 09:05 PM To: Jeff Dasovich/NA/Enron@Enron Paul Kaufman/PDX/ECT@ECT Sandra McCubbin/NA/Enron@Enron Richard Shapiro/NA/Enron@Enron Janel Guerrero/Corp/Enron@Enron Mark Palmer/Corp/Enron@ENRON Karen Denne/Corp/Enron@ENRON Susan J Mara/NA/Enron Peggy Mahoney/HOU/EES@EES Harry Kingerski/NA/Enron@Enron cc: Dan Leff/HOU/EES@EES Subject: CONFIDENTIAL - Residential in CA In the meeting today no decision was made about what to do with Enron's 16000 residential customers. Each of the contracts gives a basic 30 day out right to Enron. That being said I think that we have a short window to push for DA before any public action impacts us in Sacramento. I realize that the ultimate action (which I think is inevitable) makes it harder for our advocacy on DA but real $ are flowing out of the company. EES will give us notice when a decision is reached. Thanks Jim,other,urgent,5 +GREAT NEWS ****FERC Order on Morgan Stanley Complaint Against ISO,See below. this is one of the issues that concerned us more than price caps because it could limit our ability to move power to other markets in the west. In addition if you get questions from the analysts on reregulation or price caps it is worth pointing out that the high prices prevailing in many markets help our retail sales pitch to end use customers and create opportunities for our wholesale price risk management services . . . even a $250 price cap is 5-10 times what large customers are accustomed to paying. -----------------,other,confident,3 +Draft - Background and Q&A for CA residential customers,Please send any comments directly to Peggy. -----------------,utilities,formal,2 +Re: Trade Mission,Terry was acting with full coordination from Jose. The problem was this: Daly insisted someone speak on behalf of the group to the press (and designated Terry to be the one) Terry did not have the updated information that we were about to meet with the government officials and deliver a slightly different message (i.e. that we needed to know if the government planned to really open Petrobras or not -- the implication being that we would work within either decision but we needed to know one way or the other) Terry was simply not in possession of this information and no one had given it to him (probably because they had no reason to assume that Terry would be thrust in front of the press) moreover it's hard to see how Terry could have taken such a position publicly anyway. By my eyes Terry did the best he could and we had an unavoidable communications bust. I know the Southern cone team is moving to make it right but I see absolutely no reason to come don on anyone about this. Richard Shapiro 02/17/2000 09:47 PM To: Steven J Kean/HOU/EES@EES cc: Subject: Re: Trade Mission What was the outcome? Steven J Kean 02/17/2000 08:13 AM To: Richard Shapiro/HOU/EES cc: Subject: Re: Trade Mission FYI. I will call Terry and get in touch with Jim/Diomedes -----------------,business document,formal,3 +<> - JB 003,-----------------,finance,formal,3 +IEP News 4/20,AP Online April 20 2001 Friday 7:57 AM Eastern Time Financial pages ????238 words Power Co. Executives Lose Bonuses LOS ANGELES Contra Costa Times April 20 2001 Friday STATE AND REGIONAL NEWS K560 ????460 words Energy officials accused of manipulating natural gas market ????defend actions By Andrew La Mar Los Angeles Times April 20 2001 Friday Home Edition Page 3 715 words ???? CALIFORNIA AND THE WEST ??A U-TURN ON CAR TAX REBATES ??LEGISLATION: ????STARTING JULY 1 FEE REDUCTION WILL BE FIGURED DIRECTLY INTO VEHICLE ????REGISTRATION BILLS NOT REFUNDED BY MAIL. CARL INGRAM TIMES STAFF WRITER ????SACRAMENTO Los Angeles Times April 20 2001 Friday Home Edition Page 3 453 words ???? CALIFORNIA AND THE WEST ??LOCKYER ASKS JUDGE TO ORDER FIRMS TO RELEASE ????RECORDS ROBERT J. LOPEZ and RICH CONNELL TIMES STAFF WRITERS Los Angeles Times April 20 2001 Friday Home Edition Page 3 1426 ????words CALIFORNIA AND THE WEST ??LEGISLATORS UNITE OVER ENERGY PRICE ISSUE ????POWER: BIPARTISAN CONGRESSIONAL DELEGATION CALLED TOGETHER BY DAVIS SAYS U. ????S. MUST STEP IN TO PROTECT STATE FROM MANIPULATION BY SUPPLIERS. MITCHELL ????LANDSBERG and MIGUEL BUSTILLO TIMES STAFF WRITERS The Orange County Register April 20 2001 Friday STATE AND REGIONAL NEWS ???? K497 846 words Federal energy commission considers price fix for state ????energy market By Dena Bunis San Jose Mercury News April 20 2001 Friday STATE AND REGIONAL NEWS ????K512 696 words In response to power woes rating agencies have California ????on credit watch By Jennifer Bjorhus San Jose Mercury News April 20 2001 Friday STATE AND REGIONAL NEWS ????K520 1069 words Issues still remain on what power consumers will ????eventually pay By John Woolfolk and Michael Bazeley The San Francisco Chronicle APRIL 20 2001 FRIDAY FINAL EDITION NEWS ????Pg. A4 765 words Edison pushes lawmakers to accept deal David Lazarus The Associated Press State & Local Wire April 20 2001 Friday BC cycle ????7:04 AM Eastern Time State and Regional 438 words Most Edison executives ????going without bonuses By GARY GENTILE AP Business Writer LOS ANGELES The Associated Press State & Local Wire April 19 2001 Thursday BC cycle ???? State and Regional 901 words Top political aide discusses Bush's low-key ????style By RON FOURNIER AP White House Correspondent WASHINGTON The Associated Press State & Local Wire April 19 2001 Thursday BC cycle ???? State and Regional 727 words Utility commission staff says parent ????company profiting from energy sales BOISE Idaho The Associated Press State & Local Wire April 19 2001 Thursday BC cycle ???? State and Regional 820 words Legislators probe possible power natural ????gas collusion By DON THOMPSON Associated Press Writer SACRAMENTO Copyright 2001 Associated Press AP Online April 20 2001 Friday 7:57 AM Eastern Time SECTION: Financial pages LENGTH: 238 words HEADLINE: ?Power Co. Executives Lose Bonuses DATELINE: LOS ANGELES BODY: ???Senior executives at Southern California Edison and its parent company went without hundreds of thousands of dollars in bonuses in 2000 because of California's power crisis. ??Edison International's chairman and chief executive John Bryson was paid $950000 in 2000 compared with salary and bonus totaling $2.16 million in 1999. ??Stephen Frank the chairman and chief executive at Southern California Edison was paid $617000 in 2000 compared with salary and bonus totaling $1.3 million in 1999 according to the company's proxy statement filed with the Securities and Exchange Commission. ??The company also said Thursday it would not award merit increases to executives in 2001 because of the continuing crisis. ??In a similar statement released Tuesday Pacific Gas and Electric Corp. revealed it also withheld bonuses for its top two executives although they did receive raises. ??Edison and PG&E say they have lost nearly $14 billion since June to high wholesale prices that the state's electricity deregulation law bars them from passing on to consumers. PG&E saying it hasn't received the help it needs from regulators or state lawmakers filed for federal bankruptcy protection April 6. ??Edison is continuing to work with state officials and its ??reditors. ?????(PROFILE ?????(CO:Southern California Edison Co. TS:SCE) ?????(CO:Pacific Gas and Electric TS:PCG IG:ELC) ?????) LOAD-DATE: April 20 2001 of 78 DOCUMENTS ??????????????Copyright 2001 Knight Ridder/Tribune News Service ???????????????????????Knight Ridder/Tribune News Service Costa Times 20 2001 Friday SECTION: STATE AND REGIONAL NEWS KR-ACC-NO: ?K560 LENGTH: 460 words HEADLINE: Energy officials accused of manipulating natural gas market defend actions BYLINE: By Andres LaMar BODY: ??SACRAMENTO _ Energy officials who are accused of manipulating California's market for natural gas defended their actions on Thursday and attributed the state's skyrocketing gas prices to increased demand the weather and other factors. ??The explanation however drew skepticism from lawmakers in the wake of expert testimony alleging that one Texas firm El Paso Natural Gas Co. had engineered a classic case of monopoly power by controlling the pipeline that delivers gas to the state. ??At the outset of the Thursday's hearing Assemblyman Darrell Steinberg D-Sacramento noted the huge run-up in the cost of natural gas which went from $6.6 billion for the entire year of 1999 to $12.3 billion for sales in 2000 and to $7.9 billion for the first three months of this year. ??Steinberg zeroed in on the difference between California and other parts of the country. From March 2000 to February 2001 natural gas prices have risen 489 percent compared to a 266 percent increase in New Mexico and a 247 percent jump in Chicago. ??Steinberg asked Ralph Eads the president of an El Paso Natural Gas Co. subsidiary for an explanation. ??The 275 percent difference you say is attributable completely to constraints on the pipeline and demand? Steinberg asked. ??Yes Eads replied. Eads said the state's energy crisis which led power plants to run harder and longer dramatically increased demand for natural gas over the summer and a winter with temperatures about 15 percent cooler than the year before exacerbated the problem. ??In another twist to California's deregulation nightmare El Paso officials said they gained greater control of the pipeline after the Pacific Gas & Electric Co. relinquished the capacity four years ago. At that time PG&E's movement of the gas and the prices it could charge were regulated by the Public Utilities Commission. ??In other developments at the Capitol on Thursday lawmakers called on the federal government to re- regulate natural gas sales at the California border and U.S. Sen. Joe Lieberman D-Conn. said federal regulators should impose price caps on California's wholesale electricity market. ??The Assembly held considerable debate on the resolution asking for re-regulation with Democrats accusing President George W. Bush of doing nothing to come to the aid of California and Republicans defending the administration. ??I'm learning an interesting lesson that all the problems of the world started after Jan. 21 and the inauguration of the new president said Assemblyman Bill Leonard R-San Bernardino. ??KRT CALIFORNIA is a premium service of Knight Ridder/Tribune ??(c) 2001 Contra Costa Times (Walnut Creek Calif.). ??Visit the Contra Costa Times on the Web at http://www.cctimes.com/ JOURNAL-CODE: CC LOAD-DATE: April 20 2001 of 78 DOCUMENTS 2001 / Los Angeles Times Angeles Times ?????????????????????April 20 2001 Friday Home Edition SECTION: Part A Part 1 Page 3 Metro Desk LENGTH: 715 words HEADLINE: CALIFORNIA AND THE WEST A U-TURN ON CAR TAX REBATES LEGISLATION: STARTING JULY 1 FEE REDUCTION WILL BE FIGURED DIRECTLY INTO VEHICLE REGISTRATION BILLS NOT REFUNDED BY MAIL. BYLINE: CARL INGRAM TIMES STAFF WRITER DATELINE: SACRAMENTO BODY: ??Gov. Gray Davis and the Legislature spun a U-turn Thursday and scrapped a costly program that requires motorists to first pay their car tax and then get a rebate in the mail. ??Starting July 1 the state Department of Motor Vehicles will send owners of approximately 26 million vehicles registration renewal bills already reduced by the amount of the vehicle license fee rebates. ??On a unanimous roll call the Senate voted final approval and sent to Davis an urgency bill SB 52 that repealed the rebate program which the governor had previously fought for and defended. ??In addition to abolishing the rebates the legislation reduces by 67.5% the amount motorists must pay for the upcoming year the level that lawmakers and former Gov. Pete Wilson envisioned in 1998 when they began cutting the fee. It had been about 2% of a vehicle's market value. ??Davis immediately signed the repeal bill saying only that the new law will expedite relief to taxpayers and greatly reduce administrative costs. ??The governor's muted observation contrasted with his effusive support of the rebates last year when he said Californians don't appreciate the fact that they're getting a rebate unless they see it in their hands. ??At the time Davis and the Legislature had the choice of simply cutting the car tax which voters might not notice or sending checks in the mail which Davis felt would have a greater impact. ??The rebates which began Jan. 1 were scheduled to continue through 2002 when Davis intends to run for reelection. In 2003 the license fee was to have fallen permanently with no more rebates. ??The whole rebate scheme was good only through the next gubernatorial election cycle said Sen. Tom McClintock (R-Thousand Oaks) who supported reductions in the license fee but opposed the rebates. ??Until July 1 the DMV will continue to bill motorists for the full amount of their license fee which includes a 35% reduction from last year. ??Then we return to you an additional 32.5% rebate making a total reduction of 67.5% said DMV spokesman Bill Branch. Starting with license renewals on July 1 the DMV bills will include the full tax cut. ??A Senate analysis of the repeal bill noted that the current awkward system . . . effectively requires taxpayers to overpay their vehicle license fee and then await a rebate check from the state--a system that is at best difficult to explain. ??But as the California economy tightened the state's budget surplus shrank and taxpayers shelled out approximately $ 50 million a day to buy electricity the costs of the rebate program threatened to become a political embarrassment to Davis. ??Projected administrative and postage costs of the rebate program alone were estimated at $ 22 million this year and another $ 22 million or so next year. ??Last year state Sen. Joe Dunn (D-Santa Ana) and McClintock sought to eliminate the rebates and give drivers their full tax cuts when they register their vehicles. Under pressure from Davis the bill failed. ??It was killed behind the scenes at the insistence of the governor McClintock said Thursday. He didn't want it on his desk. ??This year Dunn launched a similar bill but his name was struck from it as the lead author in the Assembly and the name of Sen. Wes Chesbro (D-Arcata) was substituted. ??In a speech Thursday Sen. Ross Johnson (R-Irvine) suggested that Davis' performance on the issue in an earlier time and a more just society would have resulted in his public flogging by representatives of taxpayers. ??The repeal bill was passed 78 to 0 by the Assembly on Monday and sent to Davis by the Senate on a 34-0 vote Thursday. ??If the rebates were to be abolished the bill had to pass this week in order to take effect July 1 said Branch the DMV spokesman. This is because motorists must be advised 60 days in advance that their registration renewals are due. ??We have to reprogram all the computers. We have to print new bills and mail them by May 1 for the July 1 expiration he said. It will be a little tight but we will still make it. ??Branch said that since the Jan. 1 start of rebates checks totaling $ 454 million have been sent to 7.4 million vehicle owners at an extra administrative cost of $ 9.4 million. LOAD-DATE: April 20 2001 of 78 DOCUMENTS 2001 / Los Angeles Times Angeles Times ?????????????????????April 20 2001 Friday Home Edition SECTION: Part A Part 1 Page 3 Metro Desk LENGTH: 453 words HEADLINE: CALIFORNIA AND THE WEST LOCKYER ASKS JUDGE TO ORDER FIRMS TO RELEASE RECORDS BYLINE: ROBERT J. LOPEZ and RICH CONNELL TIMES STAFF WRITERS BODY: ??California Atty. Gen. Bill Lockyer ratcheting up his investigation of possible civil and criminal violations by the state's power suppliers is asking a San Francisco judge to order two firms to hand over confidential records. ??In a motion filed Thursday in Superior Court Lockyer said Reliant Energy and Mirant Corp. have failed to comply with subpoenas for documents that were to be produced by March 19. ??Amid soaring electricity costs and rolling blackouts the attorney general launched an investigation of possible manipulation of wholesale electricity prices that have skyrocketed to record levels and have financially crippled the state's major utilities. ??Dozens of other public and private power suppliers are complying with the subpoenas. ??But in an interview Lockyer accused Reliant and Mirant of stonewalling investigators so they can keep enjoying these exorbitant profits and prices for as long as possible. ??Ultimately the companies will have to honor the subpoenas he said. I'm going to pit bull them he said. This is one we win. ??Both companies say they have done nothing wrong and played by the rules of California's flawed electricity deregulation plan. ??A spokesman for Houston-based Reliant said Thursday the firm is seeking court action of its own to ensure that sensitive business information will not be shared with other public agencies or its competitors. ??Last week Reliant asked a Los Angeles Superior Court judge to clarify the attorney general's obligation to keep proprietary information confidential. ??We're glad to cooperate with his investigation to the extent we can said Reliant spokesman Richard Wheatley. But we have not received sufficient assurances that Lockyer would keep the data confidential. ??Lockyer called Reliant's court filing frivolous and propagandistic and insisted that adequate safeguards are in place. He reserves the right under state law to share information with other government agencies aiding in his investigation but has said he will keep sensitive business information from being made public. ??Atlanta-based Mirant demanded and received similar guarantees of confidentiality Lockyer said. Mirant did not return phones calls Thursday. ??Lockyer did not discuss details of the probe or the kinds of information he's seeking. But based on the investigation so far he said it's beginning to get interesting. ??Other records indicate that the attorney general has sought 91 categories of information about the power merchants' activities. They include the operation of power plants trading information that may have been shared by private power suppliers and bidding strategies in the California market. LOAD-DATE: April 20 2001 of 78 DOCUMENTS 2001 / Los Angeles Times Angeles Times ?????????????????????April 20 2001 Friday Home Edition SECTION: Part A Part 1 Page 3 Metro Desk LENGTH: 1426 words HEADLINE: CALIFORNIA AND THE WEST LEGISLATORS UNITE OVER ENERGY PRICE ISSUE ?POWER: BIPARTISAN CONGRESSIONAL DELEGATION CALLED TOGETHER BY DAVIS SAYS U. S. MUST STEP IN TO PROTECT STATE FROM MANIPULATION BY SUPPLIERS. BYLINE: MITCHELL LANDSBERG and MIGUEL BUSTILLO TIMES STAFF WRITERS BODY: ??This may be the surest sign yet of the depth of California's energy crisis: A bipartisan cross-section of the state's congressional delegation brought together Thursday by Gov. Gray Davis not only agreed about the severity of the problem but also about the need for swift federal intervention. ??This meeting did not have the word 'Democrat' or 'Republican' used once Rep. Darrell E. Issa (R-Vista) said of the unusual spirit of cooperation at the meeting near Los Angeles International airport. ??Members of both parties said the Federal Energy Regulatory Commission must slash wholesale electricity prices so California utilities can once again afford to buy power. Since January the state government has been buying electricity on their behalf as skyrocketing wholesale prices put Pacific Gas & Electric Co. and Southern California Edison billions of dollars into debt and many power suppliers refused to sell to them PG&E has since filed for Chapter 11 bankruptcy protection. ??Although the Bush administration has said repeatedly that it is strongly opposed to price caps and FERC has refused to grant them California Republicans at the energy meeting said they are optimistic that the administration will agree to some other form of price regulation. They brushed aside the notion that such regulations might conflict with their ideological belief in a free market. ??This is not a free-enterprise situation Rep. Duncan Hunter (R-Alpine) said after the meeting. In fact it's just the opposite. ??Specifically citing the huge disparity between natural gas prices charged to California and those charged in other Western states he said California clearly has been the victim of unreasonably high energy costs. Under federal law the FERC must regulate the prices of companies if it finds they are exerting market power to drive prices to unreasonable levels. ??Executives from two Texas energy companies meeting with legislators in Sacramento denied Thursday that they had caused natural gas prices in California to artificially skyrocket by hoarding access to a critical pipeline into the state. ??After the extraordinary meeting in Los Los Angeles Rep. Brad Sherman (D-Sherman Oaks) said the biggest disagreement between California Democrats and Republicans appeared to be their relative faith--or lack thereof--in the ability of President Bush and his administration to help California. There has been much speculation that Bush who lost California in November has no political motive to help the state. ??We Democrats said Sherman hope very much that our skepticism is proven wrong. ??Davis--who sat flanked by Democratic U.S. Sen. Dianne Feinstein and the governor's newly appointed chief energy advisor S. David Freeman--said he used the meeting mainly to discuss the importance of conservation by Californians this summer and to ask the congressional delegation to pitch in. Five Republicans and more than a dozen Democrats attended the gathering. ??Feinstein said Thursday that she has asked for a third time to meet with Bush to discuss the energy situation. Meeting with Times reporters and editors Wednesday she described a recent meeting with Vice President Dick Cheney in which she said he ignored her appeal for federal assistance. ??Feinstein has been among those critical of natural gas companies saying they appear to have constricted access to a California-bound pipeline to run up prices. ??The Brattle Group a respected consulting firm alleged Wednesday before an Assembly committee that Dynegy Inc. and El Paso Natural Gas Co. had manipulated the market by charging so much for the rights to their pipeline capacity that they had in effect withheld access to it. ??That action the experts said directly forced companies trying to deliver gas to California to look for alternatives clogging other pipelines and causing a surge in prices. ??The explanation El Paso executives said was simple: Demand for gas soared in California because generators that use gas to make electricity increased production last year in response to the energy crisis. ??We're not withholding capacity--no one is said El Paso Merchant Energy President Ralph Eads. With these prices you want to sell every molecule. ??In other developments Thursday: ??* The agreement between Davis and Edison International to return its ailing utility arm to financial health is in deep trouble and could be rejected by legislators the Standard & Poor's credit rating agency said in a note to clients citing legislative and other sources. A rejection of the deal would be a humiliating setback for the governor S&P said. ??The agreement calls for among other things the sale of Edison's transmission grid to the state for $ 2.76 billion and the sale of $ 2 billion in bonds--both designed to pay off the utility's huge electricity debt. Edison agreed to several constraints including the sale of electricity to the state at prices tied to the cost of producing power. ??Since they returned Monday from a two-week recess state legislators have been sharply critical of the Edison agreement and have indicated a desire to tinker with aspects of the deal. Some lawmakers have said publicly that a bankruptcy protection filing by Edison like that of PG&E might not be such a dire outcome. ??But a senior Edison executive said it is way too early to give up on passage of the proposal which legislators have not yet seen in official form. ??There is an education process to do here the executive said of the highly detailed 38-page document. The legislators should be asking questions. That is appropriate. ??* The Public Utilities Commission voted to investigate whether alternative energy providers violated contractual agreements by withholding supplies from PG&E and Edison which owe them hundreds of millions of dollars. ??The action Commissioner Carl W. Wood said was prompted in part by lawsuits some providers have filed seeking release from their contracts with the cash-starved utilities. The producers of solar wind and geothermal energy account for more than 25% of California's electricity supply. ??The question is whether we will be able to rely on them in the long hot days of summer Wood said. ??Jack Raudy of the Renewable Energy Creditors Committee said the PUC needs to address the $ 700 million the producers are owed. All we have gotten is rhetoric from the governor the PUC and the utilities he said. ??* An $ 850-million plan to entice Californians to conserve precious megawatts appears to be running into roadblocks compounding predictions by state officials of tighter than expected energy supplies in May and June. ??Davis signed the conservation spending package last week earmarking $ 242 million of the new funds for the Public Utilities Commission to distribute to the state's investor-owned utilities to support existing conservation programs. ??But Barbara Hale director of the PUC's Division of Strategic Planning said Thursday that since Pacific Gas & Electric Co. filed for bankruptcy protection April 6 the utility has stopped releasing conservation funds. ??Hale testifying before a state Senate committee said PG&E's decision--coupled with the threat that Southern California Edison could follow a similar route to U.S. Bankruptcy Court--has complicated her agency's efforts. ??PG&E spokeswoman Staci Homrig said her company plans to petition the Bankruptcy Court to have the conservation funds designated as a trust and separated from assets tied up in the bankruptcy proceedings. She said if the court denies the request PG&E would ask to be permitted to pay the expenses anyway. The process she added could take about a month--too long in the view of some legislators given increasingly gloomy energy forecasts for late spring and early summer. ??Deputy Director Bob Therkelsen of the California Energy Commission said his agency had been counting on a number of small power producers to bolster their output during that period. But he said some producers did not purchase the necessary equipment because PG&E and Edison have failed to pay them in full for earlier electricity deliveries. ??It's not a huge amount he said of the anticipated production shortfall but every little bit helps. ??* ??Landsberg reported from Los Angeles Bustillo from Sacramento. Times staff writers Nancy Rivera Brooks in Los Angeles Carl Ingram and Julie Tamaki in Sacramento and Tim Reiterman in San Francisco contributed to this story. LOAD-DATE: April 20 2001 of 78 DOCUMENTS ??????????????Copyright 2001 Knight Ridder/Tribune News Service ???????????????????????Knight Ridder/Tribune News Service ??????????????????????????The Orange County Register 20 2001 Friday SECTION: STATE AND REGIONAL NEWS KR-ACC-NO: ?K497 LENGTH: 846 words HEADLINE: Federal energy commission considers price fix for state energy market BYLINE: By Dena Bunis BODY: ??WASHINGTON _ Californians who see federal re-regulation of the state's crisis-bound energy market as an answer to the impending summer emergency better look for some other solution. ??Even the short-term price fix that the Federal Energy Regulatory Commission may consider at its Wednesday meeting might be too little too late. ??Lobbyists lawmakers and other FERC-watchers say they have seen a slight shift in recent weeks among commission staff and at least one member. There is some willingness they say to consider some price controls even though the Bush administration is adamantly opposed to such measures. ??Many are looking to see if President Bush's choices for the two vacancies on FERC will provide a margin for change. ??But the commission's basic philosophy that open unregulated markets are best is not likely to change soon members say. ??I've been championing a revamping of FERC's antiquated standards for determining market-based rates Commissioner Richard Massey said Thursday. But with no success. My agency is not on the verge of turning on a dime on this market-based pricing. ??The standards are a joke Massey added because the commission never turns down requests for such pricing authority. More than 600 power sellers have been given that authority he said. ??For a power company to be allowed to charge whatever the market will bear it must show FERC for example that it doesn't have the power to manipulate the market and drive prices up. ??Any seller that can't pass our screen needs to fire their consultants and lawyers Massey said. ??While the overall philosophy remains consistent FERC staff has proposed to the commission that a Stage 3 electricity emergency in California should trigger cost-based rates a form of price controls. Such triggers would be in place for one year under the staff proposal. ??The commission may decide Wednesday whether to accept that proposal. It has to make some decision by May 1 on how the market will be monitored from now on. ??The theory behind controlling prices in Stage 3 says a FERC staff report is that during such an emergency generators have the greatest opportunity to manipulate the market and drive prices up. ??But generators have that power during Stage 2 and Stage 1 emergencies says Les Starck Southern California Edison Co.'s manager of federal regulatory affairs. Price caps during Stage 3 might avert the rolling blackouts associated with that level of crisis but they wouldn't do anything to stop generators from jacking up prices the rest of the time he said. ??It is not clear how long it would take for such price controls to take effect should the commission go along with the staff recommendation. ??We're close because summer is approaching Commissioner Linda Breathitt said Thursday. Breathitt who had firmly opposed any form of price controls said in an interview last month that given the worsening crisis in California she was open to considering some short-term measures. ??It's important to me that we address the summer Breathitt said but said she wasn't able to predict what the commission would do Wednesday. ??Even if an order is approved Massey said there could be delays while the power sellers file their costs with regulators and disputes over those filings are handled. ??Sen. Dianne Feinstein said Thursday such a move by the commission would be better than having no controls at all. There's no question that we're going to be in a Stage 3 emergency. ??Feinstein D-Calif. and other Western lawmakers have been urging FERC to step in sooner and with price controls that extend beyond just the emergency period. ??Waiting for Stage 3 to intervene is putting the whole grid at risk said Roger Hamilton a member of Oregon's Public Utility Commission. We have a real stability problem when you cut it that close. ??Feinstein says the future could well rest with the new commissioners particularly Patrick Wood the head of the Texas PUC who many believe will replace Curt Heber as FERC chairman if he is confirmed by the Senate. ??Even if Massey and Breathitt agree on broader price controls as chairman Heber could block consideration of such a move. It's unclear what stance Wood would take as chairman. ??The thing that deeply concerns me about Pat Wood is that he's from Texas Feinstein said. What's reassuring is that it appears from my personal discussion with him is that he appears to be pragmatic. ??But once again timing could be a problem. ??Bush has said he intends to nominate Wood and Nora Brownell a member of the Pennsylvania PUC but has not formally sent their nominations to the Senate. ??The Federal Energy Regulatory Commission is of vital importance right now and to let the time go on without filling the spots makes no sense Feinstein said. Please please please President Bush process your nominees. ??KRT CALIFORNIA is a premium service of Knight Ridder/Tribune ??(c) 2001 The Orange County Register (Santa Ana Calif.). ??Visit the Register on the World Wide Web at http://www.ocregister.com/ JOURNAL-CODE: OC LOAD-DATE: April 20 2001 of 78 DOCUMENTS ??????????????Copyright 2001 Knight Ridder/Tribune News Service ???????????????????????Knight Ridder/Tribune News Service Jose Mercury News 20 2001 Friday SECTION: STATE AND REGIONAL NEWS KR-ACC-NO: ?K512 LENGTH: 696 words HEADLINE: In response to power woes rating agencies have California on credit watch BYLINE: By Jennifer Bjorhus BODY: ??SAN JOSE Calif. _ All three of the nation's influential judges of credit risk now have California on credit watch saying they are deeply concerned about the economic impact of the state's power crisis. ??The Fitch credit rating agency made it unanimous Wednesday when it warned that the thickening electricity quagmire as well as lower than expected tax revenues in February and March could spell broader risk for the state's budget. ??The announcement is a signal that Fitch too may downgrade its ratings on California's nearly $30 billion in public debt a move which could cost taxpayers millions. ??The announcement comes as state lawmakers mull a bailout plan for Southern California Edison Pacific Gas & Electric Co. sits in bankruptcy and state officials bleed through the state's general fund as they purchase expensive electricity for consumers. Earlier this week Gov. Gray Davis announced that the average daily bill for electricity purchases has risen from $45.8 million a day in the last week of March to $73 million a day. ??Moody's Investors Service and Standard & Poor's have already issued their own credit warnings although none of the three agencies has actually downgraded the state's very good double-A credit rating. ??Bond ratings are important yardsticks that bankers and investors use to price municipal and corporate bonds. A downgrade would force California to offer bondbuyers higher interest rates going forward costing taxpayers. ??The state was last at a lower A rating back in 1994. ??Moody's changed California's Aa2 general obligation bond rating outlook from stable to negative on April 6 the day Pacific Gas & Electric Co. filed for bankruptcy. Standard & Poor's has had the state's AA rating outlook at negative since January when the state began buying electricity for the utilities. ??The deciding factor for Fitch said Fitch vice chairman Claire Cohen was the disagreement over how the money from the new electricity rate hike will be spent. ??The California Public Utilities Commission ruled in late March that money generated by higher electricity bills should go first to pay the state Department of Water Resources which has been buying electricity for the utilities. Pacific Gas & Electric Co. has argued that if the state is paid first there won't be any money left for it. ??The utility is formally challenging the PUC decision and the move threatens to hold up the estimated $12 billion to $14 billion of bonds the Department of Water Resources plans to issue to buy more electricity. ??With that being appealed you don't have a clean authorization Cohen said. It signals to me that it could delay the financing process. ??A second concern is that the state isn't collecting as much in taxes as expected Cohen said. Tax collections for both February and March were below forecast. The amount of personal income tax the state collected in those months fell short by $455 million or 14% less than expected. ??Cohen said she made her decision before hearing that the state's power costs now exceed $70 million a day. Cohen and David Hitchcock the California analyst for Standard & Poors agreed those rising costs are a definite concern. ??It doesn't take much of a change in economic growth to make some of these projected fund balances disappear and so we're very worried about what the current economic activity is particularly in Northern California with some of the problems with the high tech area Hitchcock told analysts and investors last week in a conference call. ??State treasurer Phillip Angelides was traveling Thursday and couldn't be reached for comment. Other economy-watchers expressed concern. ??Sandy Harrison assistant director of the state Dept. of Finance said the move reinforced the importance of solving the current power problems soon. ??It's important to note that the rating hasn't been lowered yet and does remain very strong he said. ??KRT CALIFORNIA is a premium service of Knight Ridder/Tribune ??(c) 2001 San Jose Mercury News (San Jose Calif.). ??Visit Mercury Center the World Wide Web site of the Mercury News at http://www.sjmercury.com/ JOURNAL-CODE: SJ LOAD-DATE: April 20 2001 of 78 DOCUMENTS ??????????????Copyright 2001 Knight Ridder/Tribune News Service ???????????????????????Knight Ridder/Tribune News Service Jose Mercury News 20 2001 Friday SECTION: STATE AND REGIONAL NEWS KR-ACC-NO: ?K520 LENGTH: 1069 words HEADLINE: Issues still remain on what power consumers will eventually pay BYLINE: By John Woolfolk and Michael Bazeley BODY: ??SAN JOSE Calif. _ State regulators last month announced an electric rate increase that would average a whopping three cents per kilowatt hour hit bills beginning in May and punish power pigs while sparing energy misers. ??Now much of that is up in the air. ??Higher rates are surely coming _ but not before June. Exactly which consumers and businesses will pay how much is uncertain as regulators rush to forge a rate structure from a tangle of more than 20 proposals. ??Their task has been complicated immeasurably by Gov. Gray Davis' decision to weigh in with a competing rate plan and Pacific Gas & Electric's move into bankruptcy court. ??Little details are moving billions of dollars around said Nettie Hoge of consumer advocate group TURN. ??All the proposals assume a tiered structure that forces the heaviest users of energy to pay the most. But key details yet to be decided mean consumers could see their average rates go up anywhere from 7 percent to 30 percent or more. ??Among them: ??_How much of an overall increase? The Public Utilities Commission approved a 3-cent per kilowatt hour increase last month which would boost utility revenue $4.8 million. Gov. Gray Davis' hike _ left vague in Davis' April 5 television address _ averages 2.8 cents for PG&E customers but only 2.3 cents for customers of Southern California Edison. ??_What regions of the state will pay? The commission agreed to raise rates only for Pacific Gas & Electric and Southern California Edison but Davis would include the additional 1.2 million San Diego Gas & Electric customers. ??_Should heavier users of electricity subsidize those who are exempt from the new rate increase? If so those users will find themselves paying much more than any of the average increase figures being tossed about. ??_How will utilities bill customers retroactively for the increase? At the time of the PUC vote on March 27 commissioner said their increase would take effect immediately. ??Various plans are being presented this week to an administrative law judge working for the commission. The judge is expected to recommend a rate structure to the PUC on May 4. Public hearings would follow May 7-11 and the commission would vote on a plan May 14 condensing to a few weeks a process that normally lasts nearly a year. ??Each of the major proposals before the commission assumes that residential customers using less than 130 percent of their baseline would be exempt from higher rates. That's mandated under a new law that allows the state to buy power. Customers already pay higher rates for exceeding their baseline which is the average basic level of use for each region of the state. ??Each major proposal also sets new tiers with progressively higher rates for medium use at 130 to 200 percent of baseline and heavy use over 200 percent of that level. ??But that's where the similarities end. ??The first distinction among the leading plans comes in the form of an assumption: How many residential customers will avoid any increase because they don't exceed 130 percent of their baseline? Davis says more than half commissioners say a little under half and PG&E says less than a third. ??The second difference among the plans is a real difference: What happens to everyone else? ??Under the plan by utilities commission President Loretta Lynch medium PG&E users would see average bills rise 9 percent and heavy users would see bills increase 36 percent. ??Davis' plan says medium PG&E users would see average bills rise 11 percent while heavy users would pay 37 percent more. But the average total bill increase for PG&E residential customers including those who are exempt would be 20 percent under his plan and 24 percent under Lynch's according to a statement on the governor's web site. ??Business customers would see proportionately greater increases averaging 30 percent under Lynch's proposal and 26 percent under Davis'. ??The most consumer-friendly of the various proposals comes from consumer-rights group TURN. They suggest an overall average residential increase of just 7.5 percent. ??TURN's plan assumes utilities cannot charge other customers more to make up for the energy misers shielded from rate increases under state law. ??PG&E disagrees with that interpretation. The utility wants other residential users to make up for any lost revenue from exempted customers through higher rates. Under the utility's plan residential customers would see an average rate hike of nearly 30 percent. ??The proposal these folks are pushing rips the heart out of that law said Matthew Freedman staff attorney for TURN. ??Another issue affecting consumers is how the utilities can bill for electricity used in April and May before the final plan is approved. ??Utility officials have objected to making the rate structure retroactive. Instead to recoup the revenue they are proposing a flat surcharge that everyone would pay regardless of how much they use. ??Edison proposes a higher surcharge added to bills for a shorter period of time _ in this case June through August. PG&E officials are suggesting a smaller surcharge that would be spread out over 12 months. ??It'll probably be something closer to the PG&E proposal Paul Clanon the commission's director of energy issues. ??All the rate increase proposals stem from a commonly understood problem: California's current frozen rates don't generate enough money to cover the wholesale price of power. The PUC raised rates 10 percent _ or 1 cent per kilowatt hour _ in January in an attempt to help but that turned out to be far from enough. ??In March the Commission approved an additional 3-cent increase. But Davis followed quickly with an alternative proposal. The next day PG&E filed for bankruptcy raising the specter that a federal judge could order even higher rates. ??Although the PUC has sole authority to raise rates under state law Davis' proposal has complicated an already complex process. The governor appointed three of the five members of the commission and his appointees seem inclined to show him deference. But Davis has been slow in filing the details of his plan which has made it hard for the PUC to proceed. ??KRT CALIFORNIA is a premium service of Knight Ridder/Tribune ??(c) 2001 San Jose Mercury News (San Jose Calif.). ??Visit Mercury Center the World Wide Web site of the Mercury News at http://www.sjmercury.com/ JOURNAL-CODE: SJ LOAD-DATE: April 20 2001 of 78 DOCUMENTS ?????????????????Copyright 2001 The Chronicle Publishing Co. ?????????????????????????The San Francisco Chronicle ????????????????????APRIL 20 2001 FRIDAY FINAL EDITION SECTION: NEWS Pg. A4 LENGTH: 765 words HEADLINE: Edison pushes lawmakers to accept deal SOURCE: Chronicle Staff Writer BYLINE: David Lazarus BODY: Although lawmakers are skeptical of the state's multibillion-dollar deal to acquire the power lines of Southern California Edison the head of the utility's parent company warned yesterday that failure to approve the accord could lead to a long and costly bankruptcy. ???But John Bryson chief executive of Edison International told The Chronicle that he thought legislators would want to do the right thing by approving the multibillion-dollar agreement and preventing Edison from following Pacific Gas and Electric Co. into bankruptcy court. ???Bankruptcy for California's two largest utilities could have severe consequences for consumers. Financial analysts said a worsening of the state's energy mess would increase the possibility of higher electricity rates. ???Nevertheless lawmakers are unlikely to accept the Edison deal -- at least not in its present form. ???We are going to go through this thing extensively said state Senate President Pro Tem John Burton D-San Francisco. There are a lot of concerns about the valuation. ???Still he said legislative backing for the accord remains possible as long as Edison is open to amending some of the terms. ???The Edison people are smart enough to know that the Legislature is going to have its say Burton said. ???Indeed sources familiar with the matter said Edison expected a certain amount of tinkering with the deal and would not resist efforts to reach common ground with lawmakers. ???The Assembly members do not view bankruptcy as a favorable alternative said Assemblyman Herb Wesson D-Los Angeles. There will be a big effort to try and work something out. ???Edison's Bryson seems eager at this point to present himself and his company as reasonable business partners who are willing to negotiate in good faith. ???This contrasts sharply with the state's relations with PG&E which turned acrimonious after PG&E blindsided the governor with its bankruptcy filing. Each side blamed the other for the collapse of earlier negotiations. ???We made the decision at an early stage that this was a massive problem for the state and that the best course was to find a practical solution that would allow us to get on with operating our power system Bryson said. ???Bankruptcy he said is absolutely a last resort. It's a long and costly process. ???It is also the last thing Wall Street wants to see. On Wednesday rating agency Fitch Inc. joined Standard & Poor's and Moody's Investor Service in warning that California's credit rating could be lowered because of the state's energy mess. ???The state may be forced to issue junk bonds said Carol Coale an energy-industry analyst at Prudential Securities in New York. This could lead to a surcharge on electricity bills to guarantee the bonds. ???Bryson not surprisingly defended Edison's agreement with the governor as a prudent alternative to bankruptcy. ???This is a very good deal for the state he said. It is not a bailout. Edison gives up a lot to make all this possible. ???Southern California Edison will sell its power lines to the state for $2.8 billion. It also will provide low-cost power to California for 10 years and drop a federal lawsuit seeking full recovery of nearly $5 billion in past debt. ???Critics say the state is paying far too much for Edison's transmission system -- more than two times book value -- and that the power lines are of little use unless PG&E's grid also can be acquired. ???It's a multibillion-dollar ratepayer bailout of Edison said Doug Heller a spokesman for the Foundation for Taxpayer and Consumer Rights in Santa Monica. Edison gets off scot-free. ???Under the most likely scenario lawmakers will seek to reduce the amount paid for Edison's power lines and to increase the role of the California Public Utilities Commission in regulating the utility. ???They also will try to come up with a workable contingency plan for the state if PG&E remains adamant in its refusal to sell off its part of the power grid. ???The deal on the table is still salvageable said Michael Shames executive director of the Utility Consumers' Action Network in San Diego. But Edison needs to understand that what it got from the governor is only a framework not set in stone. ???For his part Bryson signaled that plenty of room existed for give and take on the issue. ???We're just at the initial stage he said. We always have accepted the notion that Edison is a California regulated utility and is subject to the laws of the Public Utilities Commission.E-mail David Lazarus at dlazarus@sfchronicle.com. GRAPHIC: PHOTO Gov. Gray Davis (left) and John Bryson chairman of Edison International announced a transmission line deal on April 9. Bryson said Edison may go into bankruptcy if the deal isn't approved. LOAD-DATE: April 20 2001 of 78 DOCUMENTS ???????????????????The Associated Press State & Local Wire The materials in the AP file were compiled by The Associated Press. ?These materials may not be republished without the express written consent of The Associated Press. ???????????????????????April 20 2001 Friday BC cycle AM Eastern Time SECTION: State and Regional LENGTH: 438 words HEADLINE: Most Edison executives going without bonuses BYLINE: By GARY GENTILE AP Business Writer DATELINE: LOS ANGELES BODY: ??Senior executives at Edison International and its subsidiary Southern California Edison went without hundreds of thousands of dollars in bonuses in 2000 because of California's power crisis. ??Edison International's chairman and chief executive John Bryson was paid $ 950000 in 2000 compared with salary and bonus totaling $2.16 million in 1999. ??Stephen Frank the chairman and chief executive at Southern California Edison was paid $617000 in 2000 compared with salary and bonus totaling $1.3 million in 1999 according to the company's proxy statement filed with the Securities and Exchange Commission. ??The company also said Thursday it would not award merit increases to executives in 2001 because of the continuing crisis. ??In a similar proxy statement released Tuesday Pacific Gas and Electric Corp. revealed it also withheld bonuses for its top two executives although they did receive raises. ??Edison and PG&E say they've lost nearly $14 billion since June to high wholesale prices that the state's electricity deregulation law bars them from passing on to consumers. PG&E saying it hasn't received the help it needs from regulators or state lawmakers filed for federal bankruptcy protection April 6. ??Edison is continuing to work with state officials and its creditors. ??The utility said its board of directors decided to withhold bonuses to all but two key executives because the financial effects of the energy crisis have overshadowed all other aspects of company and individual performance. ??The two executives who did get bonuses earned them for their roles in preserving the viability of the companies during the crisis and for retention purposes Edison said. ??Ted Craver senior vice president chief financial officer and treasurer at Edison International was paid $375000 in 2000 and received a $100000 bonus. His total compensation in 1999 was $652100. ??Harold Ray executive vice president at Southern California Edison received a salary of $390000 in 2000 and a bonus of $50000. His cash compensation in 1999 was $818400. ??PG&E paid Chairman Robert D. Glynn Jr. $945086 in salary and benefits during 2000 a 58 percent decrease from $2.26 million in the prior year according to the company's proxy statement. ??Glynn 57 received a 12.5 percent increase in his base salary but didn't get a bonus. ??Gordon R. Smith who runs Pacific Gas and Electric received a 14.5 percent raise in his base salary to $630000 but didn't receive a bonus. In 1999 Smith's compensation package totaled $1.1 million. LOAD-DATE: April 20 2001 of 78 DOCUMENTS ???????????????????The Associated Press State & Local Wire The materials in the AP file were compiled by The Associated Press. ?These materials may not be republished without the express written consent of The Associated Press. ??????????????????????April 19 2001 Thursday BC cycle SECTION: State and Regional LENGTH: 901 words HEADLINE: Top political aide discusses Bush's low-key style BYLINE: By RON FOURNIER AP White House Correspondent DATELINE: WASHINGTON BODY: ??When 24 members of a Navy spy plane crew returned to the United States after 11-days in Chinese custody President Bush was noticeably absent from their homecoming ceremonies. ??He also kept a low profile as the Senate shrank his tax-cut plan by $400 billion and had little to say about riots in Cincinnati this month. ??Such is the silent style of the new president says Bush's top political strategist Karl Rove. ??Every administration is marked in contrast to its predecessor. The previous administration felt compelled to dominate the evening news every day and the president said 'I'm focused on getting the job done' Rove said Wednesday in an Associated Press interview. ??Running a low-key presidency sets Bush apart from former President Clinton but the style has its critics. ??Some lawmakers including members of his own party said Bush could have saved more of his $1.6 trillion tax-cut plan if he had personally lobbied more lawmakers. ??Bush issued a statement expressing sympathy with police and protesters in Cincinnati but ran the risk of looking detached. ??And Rove acknowledged that there was some discussion in the White House about Bush attending the U.S. crew's homecoming to reap the public relations reward for freeing the crew. ??But the president vetoed the idea according to Rove who quoted Bush as saying I want it to be about them and I don't want to go through the discombobulation that it would require of them and their families for me to show up. ??It is not hard to imagine Clinton commanding center stage during city riots a budget battle or an international crisis but Rove said We intended to have a smaller profile than the previous administration. ??Bush's attitude is that he's not going to be measured by whether or not he gets on the evening news but on whether or not he gets progress Rove said during the 45-minute interview. ??He sat at a polished wood conference table in his West Wing office his hands folded over a memo he had discretely turned upside down. Newspapers and a Starbucks coffee mug littered his desktop. Framed photos and artwork were propped against a chair still awaiting hanging on his 89th day in the White House. ??A painting of a Texas landscape decorated one wall allowing Bush's political strategist of eight years to go on vacation whenever I'm on the phone. ??Rove is on the telephone a lot these days crafting strategies to pass the White House legislative agenda maintain GOP control of Congress in 2002 and position the president for a re-election bid in 2004. ??Bush narrowly won the White House without California's 54 electoral votes and Rove said the president could win re-election without the state but it's always nicer to carry the Golden State. ??He said the state's electricity shortage will not hurt Bush's chances in 2004 adding that the administration has done virtually everything Gov. Gray Davis has requested. ??He suggested that the state caused its own problems by not building enough power plants and failing to follow the lead of other states such as Bush's Texas to establish sound energy policies before a crisis struck. ??This has got a very human dimension to it Rove said. It's one thing to talk about power supplies. It's another thing when you talk about how it affects their jobs how it's affecting their livelihoods how it's affecting the safety of their communities and the health of their families. This is a tough issue and it ought to be a wake up call for the entire country. ??A White House task force headed by Vice President Dick Cheney is working on recommendations to address both short-term problems of soaring electricity and natural gas prices and longer-term energy supply problems focusing on producing more domestic oil and gas and building more electric power plants. ??Rove said the administration will soon unveil new conservation measures aimed at helping California ease its shortages. ??He said Bush and his political team are bringing House Republicans from politically competitive states to the White House where they discuss their districts' needs and often gain local media attention. ??Bush also plans to attend fund-raisers for House and Senate campaign committees helping the party gear up for 2002 midterm elections in which control of Congress is at stake. ??Rove also said: ??-Bush will not seek broad authority to negotiate trade treaties anytime soon allowing time to make the legislation more attractive to Democrats. You can only put so much into that pipe and we've stuffed it he said of Bush's crowded legislative agenda. The fast track authority is key to Bush's plans for a free trade zone stretching from Canada to Chile. That proposal is the focus of the three-day Summit of the Americas beginning Friday in Quebec City. ??-Americans will support Bush's environmental policies despite criticism of his decision to overturn some initiatives of the final days of the Clinton administration. Rove stopped short of accusing Clinton of setting Bush up for political troubles. I'm not certain I see a conspiracy there. I do think it's interesting that Clinton waited until the last moment to act. ??-Bush has not wavered since the campaign in his view that states should be able to opt out of minimum wage increases passed by Congress. We are not all one single labor market Rove said. GRAPHIC: AP Photo WX109 LOAD-DATE: April 20 2001 of 78 DOCUMENTS ???????????????????The Associated Press State & Local Wire The materials in the AP file were compiled by The Associated Press. ?These materials may not be republished without the express written consent of The Associated Press. ??????????????????????April 19 2001 Thursday BC cycle SECTION: State and Regional LENGTH: 727 words HEADLINE: Utility commission staff says parent company profiting from energy sales DATELINE: BOISE Idaho BODY: ??IDACORP made $66 million in profits in the past year by buying electricity on the spot market and reselling it for a higher price to its subsidiary Idaho Power Co. the staff for state utility regulators contends. ??The Idaho Public Utilities Commission staff said such profits should not come at the expense of Idaho Power ratepayers facing staggering electrical bills. ??In a report to commissioners posted on the agency's Internet site Wednesday the staff recommended Idaho Power's proposed increases for residential and commercial customers be cut by about half. ??Idaho Power seeks rate increases over the coming year totaling $227.4 million. The regulatory staff recommends a $108.7 million increase. For residential customers a requested 34-percent hike would be reduced to 16 percent. ??This is not a final decision said Jeff Beaman a spokesman for IDACORP and Idaho Power. In many cases the commissioners disagree with the staff. ??The report noted there was nothing illegal about the transactions between Idaho Power and its sister company Idaho Energy Systems. To change that the staff urged commissioners to create a mechanism that forces Idaho Power to buy electricity at the same price Idaho Energy Systems pays for it. ??The report said Idaho Energy Systems an unregulated subsidiary of IDACORP repeatedly purchased electricity on the wholesale market and then sold it to Idaho Power for a profit. ??Idaho Power officials contend the recommended policy change could financially cripple the company. It already spent $161 million buying power on the open market and cannot recover the money unless the coming year's rate is increased. ??The failure to recoup these funds could lead to liquidity problems Beaman said and that will hurt not only the company but our customers as well. ??But IDACORP paid all of its salaried staff - including Idaho Power employees - a 15-percent bonus at the end of the last fiscal year because the company had achieved record profits of $139.9 million 53 percent over the year before. ??Beaman said incentive payments have no impact on the rate request. ??Charging the higher rate between the two subsidiaries was the result of a commission order tying the price that Idaho Energy charges for wholesale electricity to the Mid-Columbia Index. The index has been pegged at unrealistic levels since the energy crisis erupted in California and fluctuates constantly. ??We are confident that the transactions were performed within the letter and spirit of the law and have not been at the expense of ratepayers Beaman said. ??Commission spokesman Gene Fadness said commissioners cannot comment on a case before them but their ultimate decision can be appealed to the Idaho Supreme Court. ??The Public Utilities Commission staff also recommended: ??- Deferring $66.1 million of Idaho Power's rate request without interest until answers are available about the company's electricity deals. ??- Deferring another $45.8 million of the request until next year when the commissioners would allow Idaho Power to collect 5-percent interest. That part of the hike was earmarked for wholesale power purchases this year - purchases that the staff believes will be much more expensive next year. ??- Cutting another $10.3 million from the increase request contending it was an error by Idaho Power's Risk Management Committee that the company planned on passing on to ratepayers. ??- Implementing a low-interest loan program to encourage energy conservation by Idaho Power customers. ??- A two-year phase-in of any rate increase ultimately approved that is substantially over 20 percent. ??- Changing residential rates to a three-tiered system to encourage savings. ??Homeowners would pay 5.52 cents per kilowatt-hour for the first 800 kwh used 6.12 cents per kwh for use between 800 kwh and 2000 kwh and 7.48 cents per kwh for use over 2000 kwh. The current residential rate of 5.2 cents per kwh. ??The staff report also took Idaho Power to task saying it was warned of the possibility of spiraling prices and power shortages as far back as 1995. ??But the company contends it did not want to build generating plants during the past decade because with electricity deregulation looming nobody knew what independent power facilities were being considered. LOAD-DATE: April 20 2001 of 78 DOCUMENTS ???????????????????The Associated Press State & Local Wire The materials in the AP file were compiled by The Associated Press. ?These materials may not be republished without the express written consent of The Associated Press. ??????????????????????April 19 2001 Thursday BC cycle SECTION: State and Regional LENGTH: 820 words HEADLINE: Legislators probe possible power natural gas collusion BYLINE: By DON THOMPSON Associated Press Writer DATELINE: SACRAMENTO BODY: ??Southern California Edison was charged about $750 million more this year for natural gas because of unchecked free-market forces an industry consultant testified. ??Paul Carpenter told the Assembly Electricity Oversight Subcommittee on Wednesday the price spikes came after the El Paso Natural Gas Co. contracted first with Dynegy and later with its own marketing affiliate El Paso Merchant Energy to control the pipeline capacity. ??Officials with El Paso and other natural gas suppliers are expected to testify Thursday that they did not illegally manipulate the market. ??The California Public Utilities Commission estimated a year ago that overcharges by the companies that control natural gas flow drove up prices by $ 100 million a year to California gas and electricity customers. ??But PUC attorney Harvey Morris said that was before last summer's price spikes which he blamed on natural gas suppliers using a monopoly to game the system. ??It's way worse than we could possibly have imagined Morris said after testifying before the subcommittee. It's obviously way higher than $100 million. ??Natural gas rates at the California border generally tracked national prices until November when they spiked as high as 11 times higher than the price of natural gas elsewhere in the nation Carpenter said. ??I have never seen gas prices like this anywhere in the world said Carpenter who has been studying the energy market for 20 years for Cambridge Mass.-based consultant The Brattle Group. The Brattle Group was hired by Edison to study the natural gas market. ??The committee is one of two legislative committees exploring whether illegal market manipulation in the electricity and natural gas markets has driven up California's energy costs. ??This is a market that is plagued by the exercise of market power Frank Wolak chairman of the California Independent System Operator's Market Surveillance Committee told the Senate Select Committee to Investigate Price Manipulation of the Wholesale Energy Market. The ISO runs the state's power grid. ??However there is no law against me saying 'I'm not going to sell to you' Wolak said. Market manipulation only becomes illegal when there is collusion Wolak said and such evidence is hard to find. ??Electricity generators and natural gas suppliers say a severe supply and demand imbalance - not market manipulation - has led to higher prices. ??Everybody's busy doing investigations. They're not interested in solving the problem said Independent Energy Producers Executive Director Jan Smutny-Jones. ??Investigations are wasting everybody's time Smutny-Jones said adding that previous probes and lawsuits have uncovered no wrongdoing. He said the state's power problems came because state regulators denied utilities the chance to sign long-term energy contracts when they had the chance. ??People have been playing by the rules Smutny-Jones said. ??But the Senate committee's first witnesses are ISO officials who authored studies that claim the state paid more than $6 billion too much for power last year. ??Committee chair Joseph Dunn D-Garden Grove also has slated state Auditor Elaine Howell who last month blamed buyers and sellers for skyrocketing electricity costs. Dunn also has scheduled future testimony from state federal academic and private investigators studying the power market. ??He invited five major generators to attend the committee's second hearing next week. All five - Reliant Dynegy Williams Energy Duke Energy and Mirant - say they are eager to cooperate and clear their names Dunn said. ??Dunn asked the five for a total of 86 specific documents. If the companies feel they cannot provide documents because of legal or confidentiality concerns Dunn said he will subpoena them. ??Smutny-Jones said investigators appear to be growing desperate to blame the state's natural gas and electricity price hikes on illegal market manipulation instead of natural market forces. ??He cited Attorney General Bill Lockyer's announcement last week that any informant who helped prove wrongdoing would be entitled to a percentage of the state's recovery he estimated could range from $50 million to hundreds of millions of dollars. ??If the state's offering a $50 million reward they haven't found anything Smutny-Jones said. I don't think you're going to find the fact that anybody did anything criminal here. ??Assemblywoman Jenny Oropeza D-Long Beach said she believes otherwise after Wednesday's testimony: I think it is very clear there was some price manipulation going on. ??But Assemblyman John Campbell R-Irvine isn't sure there was anything illegal. ??There clearly are market forces at work that's evident Campbell said. Whether you make the jump to market manipulation ... I haven't seen conclusive evidence that leads me to make that jump. LOAD-DATE: April 20 2001,other,informative,2 +RE: Market Stack,Eric I shall be glad to talk to you about it. The first three days of the next week would work for me. Vince ,other,polite,3 +Demand buy-down proposal,The e-copy. -----------------,other,formal,3 +RE:,Liz It's in Stanford. We can stay at the Stanford Inn Hotel Tuesday night and leave early in the morning for Santa Fe on Wednesday. I am still waiting for Prediction to confirm their meeting on Wednesday. Vince ,personal & social,casual,3 +Presentation to faculty and students at Berkeley,FYI. I am sending Vince some materials we have used ,human resources,casual,0 +Confidential - May 2001 HR At A Glance,Attached is the May 2001 At A Glance report. A couple of additions this month which include a section on Capital Expenditures with Pay Backs and some analysis of the recent new hire survey that we set up. Please call if you have any questions. DCL,human resources,formal,3 +Re: Next policy committee meeting,We may be able to handle this specific issue outside the policy committee but I think it would be a good idea to set the next one anyway. I'm sure we'll have something we'll need to talk about. From: Sherri Sera/ENRON@enronXgate on 06/12/2001 01:17 PM To: Steven J Kean/NA/Enron@Enron cc: Subject: Next policy committee meeting Steve given yesterday's conversation toward the end of the executive committee - i.e. countries ENE will do business in - do you think we should try to set up another policy committee meeting? Jeff's schedule is pretty ugly for the rest of this month and early July but could probably do something mid-July. I'm not sure what Ken Lay's schedule looks like though. Please advise. Thanks SRS,government & politics,formal,3 +New Congressional Report on California,Ray Alvarez brought to my attention today a news item indicating that the Congressional Budget Office released a report earlier this week entitled Causes and Lessons of the California Electricity Crisis. The 30+ page report is available on the home page of the CBO's web site at www.cbo.gov. I have quickly read through the summary and it is largely favorable. For example the summary says: Much of the blame for California's electricity crisis attaches to the state's restructuring plan -- but not to its objective electricity deregulation. (...) But deregulation itself did not fail rather it was never achieved. The restructuring plan did not remove sufficient barriers on both the supply and demand sides of the market to allow competition to work -- in part because it was not designed to. Even without restructuring California's electric utilities would have faced a difficult challenge in meeting the demand for power and holding down prices in 2000. Consequently wholesale electricity prices were higher than they probably would have been in either a traditionally regulated market or a more fully deregulated market. Long-term solutions to California's electricity problems will most likely require three changes: removing barriers to the addition of generating capacity eliminating bottlenecks in the electricity transmission system and removing regulatory restrictions on the sale of power throughout the broad western market. On the negative side the report summary does state that some generators may also have withheld supplies at certain times to boost prices even more and the plan's auction system for the spot market appears to have created strong incentives for suppliers to bid strategically in a way that raised wholesale prices.,other,informative,3 +Legislative Update -- Two Track In The Senate and House Update,We face two parallel tracks in the Senate in the coming weeks between now and the start of the congressional recess for one week on June 29th. In the Senate Energy and Natural Resources Committee we will be facing efforts by pro-price caps forces who will use the committee bully pulpit to pressure FERC into more action. This effort is led by incoming chairman Bingaman with support from Majority Leader Daschle. They are saying they will consider acting on the Feinstein-Smith price cap legislation unless FERC takes unspecified additional action by the end of this month. The new track in the Senate will be in the Governmental Affairs Committee chaired by Sen. Lieberman (D-CT). While this committee does not have the legislative jurisdiction over energy that the Energy Committee does in terms of moving legislation the Governmental Affairs Committee has broad oversight and investigatory jurisdiction over all federal agencies including FERC. New chairman Lieberman held his first press conference as chairman today and said addressing high energy prices would be a priority. In that vein the committee is expected to hold a hearing on June 13 featuring some of the economists who wrote a letter in favor of price caps last month. We are checking with the Republican staff to make sure that the anti-price cap economists (the majority of the discipline of course) will also testify. We also brief committee members and staff with our arguments against price caps and the latest publicly available market data. On June 20 the committee will hold a hearing on whether FERC has properly exercised its duties under the Federal Power Act to make sure that wholesale power rates are just and reasonable. We are going to meet with the committee majority staff but we presently expect this hearing to have political witnesses (i.e. elected officials possibly including Gov. Davis). We must keep in mind that Sen. Feinstein had earlier written to Chairman Lieberman asking for a hearing on the California energy situation including relationships between FERC and those it regulates (citing the NY Times article involving Enron and Chairman Hebert). There is at present no indicationi that either hearing will address this matter. We are as you might imagine paying close attention to this situation. Over in the House Energy and Commerce Chairman Tauzin has said he will write to FERC asking them to extend the April 26 price mitigation order to the entire west and to extend it to 24/7. He also asks FERC to see if it can implement negawatts demand reduction administratively. We are in the process of obtaining a copy of the letter which has not yet been made public. Also in the House we expect congressional committees to begin marking up portions of the President's energy legislation and related topics as the month unfolds.,other,informative,5 +Re: Chorety Crisis,Thanks for the update. Congratulations on your progress. Keith Miceli@ENRON 07/24/2000 04:18 PM To: Steven J Kean@EES Mark Palmer/Corp/Enron@ENRON Karen.Denne@enron.com cc: Karen.Denne@enron.com Subject: Re: Chorety Crisis Steve and Mark: I arrived in the US on Saturday with a good feeling about what appears to be a successful resolution of the Chorety crisis. Under Steve Hopper's leadership the Chorety spill became a non-issue by Friday. During the crisis I collaborated with my counterpart from Shell/London Michael Megarry in developing a Key Messages and Internal Q&As document (attached). At the daily meeting/conference call there was an Operations Report from the site an analysis of the day's newspaper articles (which I handled) and discussions on how to respond to media that were reporting or airing inaccurate information that was damaging Transredes' image. I also developed a Stakeholders Action Plan (attached) for the Incident Commander to use in organizing and monitoring team member actions taken in response to stakeholder concerns. The Plan was updated daily by the Transredes PR Office and given to team members prior to every meeting/conference call. The Stakeholder Report is intended to complement the Operations Report. I also want to acknowledge the support of Karen and Dennis during the early stages of the crisis. It was extremely helpful. Regards Keith,other,formal,3 +WSJ: PG&Es Huge losses...,Eliz -- I need your group to put together a search which captures the comments of PG&E and Edison officials in trade press anlyst reports and speeches which would be inconsistent with the idea that they can now recover their shortfall. In other words when they were trying to get AB 1890 passed when they were fighting Proposition 9 when they floated their rate reduction bonds and when they talked to analysts and rating agencies I'm sure they assumed that they would live under the rate freeze and take the risk of stranded cost recovery whithin the statutory deadline. ,energy infrastructure,formal,3 +Strengthening Enron as it grows,Jeff I have prepared the attached chart for you. It captures the ideas we discussed last week. Please call when you have a chance. I look forward to talking with you. Kevin 213-926-2626 - STRENGTHENING ENRON AS IT GROWS.doc,other,formal,3 +CONFIDENTIAL Personnel issue,Michelle/Lizsette I was wondering if circumstances with Jonathan Lane (the contract Help desk person whom I mentioned to you a week or so ago) have been resolved? When we last spoke I mentioned that he went to Valeria Hope's group. I am not sure of the outcome of that visit but I will tell you that his negative attitude and general dissatisfaction on the team is becoming disruptive to the other help desk members. He is away from his desk often (having meetings which may be interviews for other positions) he has shared with the other team members his perceptions of management and his issues with us. If and when I can do so I would like to terminate him. I won't until I hear from you all and we are documenting discussions as you requested. I hope this can end soon though because this is causing real problems here. Gina,human resources,formal,5 +RE: Governors Generator Phone calls,You should also check my folder California - working group -----------------,other,casual,2 +ABX1 70 Further Nail in Generators Coffin -- Absurdity in CA,test ,other,casual,0 +TW Gas Sales: PRIVILEGED AND CONFIDENTIAL ATTORNEY CLIENT PRIVILEGE,In anticipation of potential litigation involving TW's operational activities please prepare an analysis for me of the reasons for TW's sale of excess natural gas at the California border. I am aware of several of these sales and have been informed that excess pressure at the border is the basic reason for them. I'd like a more specific explanation that includes the following information: 1. What are the specific pressures and volume considerations that could make it operationally necessary to sell gas at the California border? 2. What is the process that is followed to make such a determination? 3. Which individuals or groups are involved in determining whether an operational sale is necessary? 4. In what way have system operations changed since last year and how do those changes contribute to the increased frequency of such sales compared to previous years? 5. What alternatives to operational sales are considered before the decision to make a sale is reached? Thanks for your attention to this request. Please give me a call to discuss and please designate your response as Privileged and Confidential Attorney Client Privileged.,energy trading,formal,5 +Re: Advisory council meeting,fyi -----------------,meetings & events,casual,0 +Re: Philippe,Yes Phillippe left to join a firm in New York -- I don't know who. Christopher Culberson on 06/26/2001 02:42:53 PM To: skean@enron.com cc: Subject: Philippe Steven I hear Philippe is leaving for Putnam any truth to this? I've been unable to contact him directly. Thanks in advance. Best Regards Chris M. Culberson cmculbe@us.ibm.com (281) 556-8104,human resources,formal,3 +Fw: Tagging issue at NERC Security Subcommittee tomorrow,,energy infrastructure,neutral,0 +,I got a voicemail fro Ken. He would be happy to meet with Freeman. He is willing to work on other times but suggested the following After 3:00 on May 2nd (right after Ken's speech to the RGA) or late the day before or in the morning of the second (to do this though he would have to cancel his speech to the Texas Governor's business council but he is willing to do this if necessary) His least preferred alternative in this general time frame would be early morning on the third. Jeff -- could you coordinate with Rosie to get the time and place nailed down?,other,formal,3 +Multi-talented Recruit,,other,neutral,0 +Red Herring Article,Hap -- could you provide a response and get it to Meredith. I'd like to correct this. ,other,formal,3 +potential media calls,-----------------,media & press,formal,3 +FTC Staff Report on Electricity Restructuring,Yesterday the Federal Trade Commission issued a staff report on electricity restructuring issues. It is an update of the July 2000 report done at the request of House Energy Chairman Tauzin and Subcommittee Chairman Barton. They requested the report be updated. A summary of the report and the full 80+ page text is on the FTC web site at www.ftc.gov on the upper left side of the home page. I read the summary and will read the balance. So far so good. It basically says that even states that have opened up to retail competition are in transition with a hybrid of regulation and competition thus the expected benefits of competition have not yet emerged. However the report states that nothing to date indicates that competition once the transition period is over will not produce additional benefits for consumers. The report's major conclusion is that competitive wholesale markets are important to achieving effective competition in retail markets. The summary includes something that sounds promising on RTO policy saying And as wholesale and retail markets become regional governing policies and jurisdictional approaches also must move in that direction for wholesale and retail competition to be successful.,utilities,informative,3 +Re: Comments on Judge Wagners Proposed Recommendation,My comments are attached. I think the pleading is well written but as you'll see from my comments I believe we should be incorporating more of the arguments from the previous pleading. Ray Alvarez 07/09/2001 07:14 PM To: James D Steffes/NA/Enron@Enron cc: Jeffrey T Hodge/Enron@EnronXGate Robert C Williams/Enron@EnronXGate Steven J Kean/NA/Enron@Enron Richard Shapiro/NA/Enron@Enron Linda Robertson/NA/Enron@ENRON Alan Comnes/Enron@EnronXGate Jeff Dasovich/NA/Enron@Enron Susan J Mara/NA/Enron@ENRON Robert Frank/NA/Enron@Enron Sarah Novosel/Corp/Enron@ENRON dwatkiss@bracepatt.com Subject: Comments on Judge Wagner's Proposed Recommendation As you may be aware the Chief Judge informed the parties to the settlement proceeding this afternoon that he intends to recommend to the Commission that it employ the June 19 rate methodology for the refund period from October 2 forward. Attached are draft comments that Sarah Novosel and I propose to submit to the Judge and his legal staff tomorrow. While we would like to convince the Judge that the June 19 methodology is not appropriate we also provide a fallback approach. Please review the comments (they are only 4 pages) and send your comments to us. We plan to submit the comments tomorrow. Thanks Ray and Sarah,legal affairs,formal,3 +Energy Issues,Please see the following articles: Sac Bee Fri 7/6: Two more say Duke withheld power: The company says it was responding to the state grid operator Sac Bee Fri 7/6: Lockyer seeks SEC investigation of PG&E's financial transfers LA Times Fri 7/6: California State Seeks SEC Probe of PG&E Transfers LA Times Fri 7/6: THE NATION Little Progress on Energy Rebate Judge Hints SF Chron Fri 7/6: Davis energy team denied pay State controller says work for Edison is a conflict of interest SF Chron Fri 7/6: Ex-staff speaks out against Duke Two more charge prices manipulated SF Chron Fri 7/6: Vallejo to produce its own energy Conservation generators expected to make city self-sufficient Mercury News Fri 7/6: SEC asked to see if PG&E Corp. violated law with subsidiary Mercury News Fri 7/6: Judge may speed up electricity refund talks Mercury News Fri 7/6: Davis keeps state addicted to fossil fuels (Commentary) Chicago Trib Fri 7/6: Economics fuels power solution in California Price relief gains political support Wash. Post Fri 7/6: California Changes Stance on Refunds Two Sides Far Apart In Energy Talks WSJ Fri 7/6: U.S. Hearing Officer May Impose Pact To End California Power-Overcharge Case Two more say Duke withheld power: The company says it was responding to the state grid operator. By Kevin Yamamura Bee Capitol Bureau (Published July 6 2001) Two more former workers from a Duke Energy power plant came forward Thursday to bolster recent claims by colleagues that the power generator withheld production to drive up prices. But Duke attributed witness accounts of fluctuating generation to instructions from the state's transmission-grid operator. Richard J. Connors an auxiliary operator and E. Robert Edwards an electrician said generation units at Duke's Chula Vista plant sat idle during emergency periods for no apparent reason. Three of their former co-workers -- two mechanics and a control room operator -- told lawmakers two weeks ago that Duke had disposed of new parts and varied its production. While that testimony drew significant attention it was countered Monday by a report released by the state's Independent System Operator that showed the ISO had in fact ordered Duke's up-and-down output Jan. 16-18. On Thursday the Charlotte N.C.-based company leaned on the ISO report in its defense. The ISO could have dispatched those units at will said Duke spokesman Tom Williams referring to unused equipment. But Lt. Gov. Cruz Bustamante who has filed a lawsuit against generators contended that the ISO had based its orders on Duke's dubious bidding history. These ISO orders came only after Duke had continuously manipulated the market with price-gouging schemes forcing the ISO to regulate production Bustamante said. Connors and Edwards each worked more than 20 years at the South Bay plant in Chula Vista. For most of that time the plant was owned by San Diego Gas & Electric. Two years ago Duke purchased South Bay and retained Connors and Edwards under state-mandated agreements that ended in April. Edwards said that during power blackouts in January he saw a 225-megawatt unit off-line. Other units he said were operating far below capacity. Our No. 1 priority in life was to make money Edwards said. Williams rebutted the claims as observations from those who did not have the complete picture. It's dead on dead true that there are times when that plant is not running at full capacity and there is a Stage 3 Williams said. There may be blackouts in San Francisco. But the reason why it's not running is because the power can't move up Path 15 (a north-south bottleneck). Bustamante however maintained that Duke has continued to manipulate the market calling Connors and Edwards the tip of the iceberg in the price-gouging investigation. State Sen. Joe Dunn D-Santa Ana chairman of the Senate committee investigating price manipulation said Connors and Edwards may testify before lawmakers after further evaluation. Dunn added that his committee has talked to potential whistleblowers from other power generators who said they have seen production decreases and suspicious activities. It is undetermined whether they will testify he said. The Bee's Kevin Yamamura can be reached at (916) 326-5542 or kyamamura@sacbee.com. Lockyer seeks SEC investigation of PG&E's financial transfers By Ed Fletcher Bee Capitol Bureau (Published July 6 2001) State Attorney General Bill Lockyer on Thursday asked the federal Securities and Exchange Commission to scrutinize financial transfers made to PG&E Corp. from its subsidiary that has filed for bankruptcy protection. SEC scrutiny is essential to protect the public interest ratepayers and the people of the state of California Lockyer said in a prepared statement. Charges that PG&E Corp. hastened the bankruptcy filing of Pacific Gas and Electric Co. have been made before responded Greg Pruett a vice president of PG&E Corp. That is an issue that has been investigated multiple times by the Public Utilities Commission earlier this year by an Assembly oversight committee and in each of these audits there has been no conclusion that the transfers were inappropriate or that they were injurious to PG&E Co. Pruett said. In its filing with the SEC the attorney general's office said that without meaningful review by the SEC it cannot be determined what impact the transfer of assets ... may have on the financial condition of the bankrupt utility. An SEC spokesman said the commission has yet to examine the petition. Among other concerns raised by Lockyer's office is the transfer of more than $4 billion from 1997 to 1999 to PG&E Corp. from PG&E Co. The majority of the $4 billion came from the sales of PG&E power plants as was required by deregulation. The bulk of the money went to pay debt that was incurred to actually build those plants Pruett said. The rest of the transfers were to pay stockholder dividends he said. PG&E filed for Chapter 11 bankruptcy protection in April after having run up $6.6 billion in debt. The Bee's Ed Fletcher can be reached at (916) 326-5548 or efletcher@sacbee.com. Business Financial Desk California State Seeks SEC Probe of PG&E Transfers NANCY RIVERA BROOKS ? 07/06/2001 Los Angeles Times Home Edition Page C-2 Copyright 2001 / The Times Mirror Company California Atty. Gen. Bill Lockyer on Thursday asked the Securities and Exchange Commission to investigate PG&E Corp. for potential abuses of its responsibilities as a utility holding company. At issue is a series of transactions over the last several years in which PG&E Corp. transferred funds from its utility Pacific Gas & Electric Co. which now is operating under Bankruptcy Court protection. The money--more than $4 billion since 1997--flowed to the parent company and to unregulated sister companies of the utilities. The transfers have been scrutinized by the California Public Utilities Commission and the state Legislature with no finding of wrongdoing said PG&E Corp. spokesman Greg S. Pruett. The SEC currently exempts PG&E from almost all requirements of the Public Utility Holding Company Act because the San Francisco utility operates primarily within California . That law regulates transactions between holding companies and their utility subsidiaries. Lockyer wants the SEC to withdraw PG&E's exemption citing $13 billion in PG&E assets outside of California . All the primary evils addressed by PUHCA are relevant to PG&E Corp. Lockyer's petition to the SEC stated. In Bankruptcy Court on Thursday PG&E said it is close to reaching an agreement with Calpine Corp. to pay more than $267 million it owes the San Jose-based power generator and to preserve contracts for 453 megawatts of relatively cheap electricity . In all PG&E buys about 2600 megawatts of electricity from nearly 25 alternative generators which are seeking repayment and release from their contracts through Bankruptcy Court. National Desk THE NATION Little Progress on Energy Rebate Judge Hints RICARDO ALONSO-ZALDIVAR ? 07/06/2001 Los Angeles Times Home Edition Page A-30 Copyright 2001 / The Times Mirror Company WASHINGTON -- The federal mediator seeking a settlement for billions of dollars in alleged electricity overcharges in California signaled Thursday that the talks are in trouble and analysts said hope for a deal seems to be fading. Curtis L. Wagner Jr. chief judge of the Federal Energy Regulatory Commission said he may issue a report on the closed-door talks as early as today if he sees no progress. The judge will perhaps issue a preliminary assessment of the talks said Tamara Young-Allen a spokeswoman for FERC. He will do this only if he feels the talks aren't moving along as he sees fit. Originally a preliminary report from the judge was not part of the plan. Wagner had previously said all sides would labor in private through the weekend to try to get a deal by Monday's midnight deadline. If that failed the judge said he would take seven days to craft a proposed settlement for FERC's governing board. Kit Konolige a power industry analyst with Morgan Stanley in New York said Wagner's announcement on Thursday amounted to a judicial distress signal. The judge wouldn't say something like this if the parties were close to a settlement said Konolige. I suppose he may be trying to jump-start things but I think most people believed the sides were so far apart going into the talks that it seemed like a long way to go to reach a settlement. Although Wagner has imposed a gag order on participants several people with knowledge of the negotiations said Thursday that major power generators and California officials have not budged from dug-in positions since the talks began last week. They also said the judge is extremely frustrated with the state and with several large power suppliers. California is demanding $9 billion in refunds. According to sources the generators have offered less than $1 billion. And some major power sellers are insisting they do not owe anything. Many experts say California has little hope of obtaining the $9 billion since only $5.4 billion of that is attributable to sellers under FERC's jurisdiction. On the other hand it seems clear from statements by FERC commissioners that the board is prepared to extract significant refunds from generators. Wagner is said to be probing for a compromise figure between $1 billion and $9 billion. It could take the form of a mix of cash payments and discounts on long-term contracts for power. FERC's governing board ordered Wagner to hold the talks to see if a compromise could be struck on three big issues: refunds guarantees that generators will be paid and ways to shift more of the state's power purchases to long-term contracts. The board also made clear that it would impose its own settlement if the state and power sellers were unable to come to an agreement. Wagner said Thursday that if he issues a preliminary report today he will give all the parties a chance to respond publicly on Monday. Such a report might embarrass some of the key players since Wagner is known for his plain-spoken conclusions. The judge would then prepare a settlement recommendation for the FERC board by July 16. However he also said he is willing to work through the weekend to reach a settlement if it appears within striking distance. The talks are in a large hearing room on the second floor of the FERC building near Washington's Union Station. Access is strictly controlled and special badges have been issued to the more than 140 lawyers participating. Some people with knowledge of the negotiations said Wagner's threat to issue a report may be a bid to see if one of the parties will make a move. It was like a shot across the bow said one source. * RELATED STORIES Energy savers: College students help businesses cut waste. B1 SEC probe: The state urges a review of PG&E fund transfers. C2 'No' vote: Reliant Energy workers reject union representation. C2 Davis energy team denied pay State controller says work for Edison is a conflict of interest Robert Salladay Chronicle Sacramento Bureau Friday July 6 2001 2001 San Francisco Chronicle URL: N198197.DTL Sacramento -- State Controller Kathleen Connell is refusing to pay two former Clinton- Gore campaign operatives hired by Gov. Gray Davis even though one of the consultants dropped his Southern California Edison contract amid conflict-of- interest allegations. Mark Fabiani and Chris Lehane were collectively known as the Masters of Disaster for their work in the Clinton White House during various federal investigations. They also worked for Vice President Al Gore during the 2000 presidential campaign. Because of their work for Davis Connell says the contract Fabiani and Lehane signed with Edison is a conflict of interest under state ethics rules. Davis is negotiating with Edison on a bailout for the utility. Late last week at the bottom of a press release Davis announced that Fabiani was no longer a communications consultant because his work had been successfully implemented. Lehane on the other hand has dropped his contract with Edison and signed a new agreement with Davis. Lehane's new contract includes reimbursement for travel and meal expenses which he didn't have before and requires him to work a maximum of 66 hours a month at $150 an hour. His total payments are capped at $76000 for work from June 26 to Nov. 20 2001. In his release Davis said Lehane would be paid the same amount as former communications director Phil Trounstine about $9900 a month. But Connell like Davis a Democrat said Trounstine undoubtedly worked more than 66 hours in a month for his $9990. We don't intend to be paying it Connell said of the contract for both men. They represented Southern California Edison. You have to have a singular relationship with the state of California and not show a conflict. Previously the Davis administration said there was no conflict because Edison and Davis wanted the same things out of their negotiations. Earlier this week Davis spokesman Steve Maviglio said attorneys had different opinions over whether the two consultants had violated ethics rules. Davis spokeswoman Hilary McLean said the governor had signed an executive order allowing him to enter into consulting contracts with anyone he believed could help him solve the state's energy crisis. She said Lehane had been working full-time on public policy even though his contract caps his salary. The National Tax-Limitation Committee a Sacramento group that mostly monitors legislation sued last month alleging that Fabiani and Lehane were violating the state Political Reform Act because of the Edison contract. In a recently filed disclosure statement Fabiani also listed more than $10 000 worth of consulting work for Cisco Systems another company that frequently brings issues before state authorities including Davis. The state Fair Political Practices Commission also is looking into a complaint filed by GOP Secretary of State Bill Jones that Fabiani and Lehane violated state ethics rules. E-mail Robert Salladay at rsalladay@sfchronicle.com. 2001 San Francisco Chronicle ? Page?A - 3 Ex-staff speaks out against Duke Two more charge prices manipulated Robert Salladay Chronicle Sacramento Bureau Friday July 6 2001 2001 San Francisco Chronicle URL: N122949.DTL Sacramento -- Two more former employees at Duke Energy's Chula Vista power plant came forward yesterday with allegations that the company manipulated the energy market to drive up prices although they offered no hard proof and little new information. Their accusations bring to five the number of Duke plant workers who say they observed suspicious behavior including the disappearance of parts needed for repairs the idling of generators for no apparent reason and continual stopping and starting that critics of Duke suspect was designed to withhold power and artificially increase prices. E. Robert Edwards a 50-year-old electrician related one conversation with a Duke foreman sometime in January that prompted suspicion. I asked the foreman why Unit 4 wasn't running Edwards said yesterday at a press conference. We had a 225-megawatt generator sitting there and he just shrugged his shoulders and said 'I really can't tell you. I'm not privy to that information.' State lawmakers have been focusing on whether Duke manipulated prices during three days in January when the company at one point offered a single megawatt of power for a record-shattering $3880. Duke says it was following orders from the Independent System Operator which runs the state's power grid when it repeatedly turned its generators on and off during those three days. An ISO memo recently released by Duke confirms the company's contention it was under orders. But January logs from the ISO and the generators don't offer an explanation for every allegation of price manipulation since Duke has refused to release a detailed list of the prices it offered and paid during that period. The two workers who came forward yesterday Edwards and 46-year-old Richard J. Connors both worked more than 20 years in the business. They left the South Bay Plant in Chula Vista in April two years after Duke purchased it from San Diego Gas & Electric as part of deregulation. SOME SHIFTS UNPOPULAR It is true units were taken offline mostly on the weekends for whatever reason said Connors a former auxiliary operator. It got to the point as an operator that you were dreading working swing shifts on Sunday or graveyard Monday morning because you knew you were going to be running around putting units back online. Edwards said he had seen a company warehouse eventually emptied of parts that are used to repair broken generators although he didn't know where the parts went. Forcing a longer wait for repair parts was designed to dry up the power supply and push prices higher lawmakers and other investigators suspect. Edwards however admitted the warehouse was being cleaned out even when SDG&E ran the plant. Duke contends the workers weren't familiar with Duke's inventory system and couldn't possibly know why parts were being moved. Duke and other energy companies are facing scrutiny by two legislative committees a 19-member Sacramento County grand jury state Attorney General Bill Lockyer the California Public Utilities Commission and federal regulators. BUSTAMANTE ALSO SUING Lt. Gov. Cruz Bustamante who introduced Edwards and Connors yesterday also is suing a variety of generators in state court for alleged price manipulation and bad business practices. He said Edwards and Connors reiterated what we've know all along -- Duke has been gouging California consumers through its use and abuse of the South Bay Plant. Duke offers a variety of defenses for its actions during the three days in January and throughout the energy crisis. Tom Williams a spokesman for Duke said Edwards and Connors had offered nothing new yesterday. Beyond the ISO's 37 separate orders to stop and start generators during the three days in January Williams said state air regulations required the company to shut the plant at certain times because it was running out of emissions credits that limit the amount of air pollution it can put out. Duke which controls about 5 percent of the state energy market also contends the state's power transmission lines can't always handle an increase in load. Yes it's true there are times when that plant is not running at full capacity and there is a Stage Three (alert) and there may be blackouts in San Francisco Williams said. The reason why it's not running is the power cannot move up Path 15 the transmission line bottleneck near Los Banos. E-mail Robert Salladay at rsalladay@sfchronicle.com. 2001 San Francisco Chronicle ? Page?A - 3 Vallejo to produce its own energy Conservation generators expected to make city self-sufficient Jason B. Johnson Chronicle Staff Writer Friday July 6 2001 2001 San Francisco Chronicle URL: N138966.DTL Vallejo leaders looking to escape mounting gas and electric bills are planning to build enough new power generators that the city government will be self-sufficient when it comes to energy. City officials said they believe that Vallejo is the first city in the nation to take such an approach. This is going to be a showplace said Scott Sossen the chief executive officer of Edge Capital Group a funding agency based in Orange County. Edge will be supervising the work along with O'Hara Energy Corp. of Nevada. The plan comes at a time when the city expects to see its energy costs double next year if it continues buying its power from PG&E. It couldn't be more timely said Mayor Tony Intintoli. Vallejo leaders are in the process of contracting with private business to build new wind solar and microturbine generators. Construction of a one- megawatt solar generator could start within 30 to 60 days. Conservation is also part of the plan and energy-efficiency improvements are already under way at Vallejo City Hall and the fire and police stations. City officials hope to add enough sources of power generation to make all city offices -- which consume about 10 megawatts a year -- self-sufficient by the end of the year. The Vallejo City Council gave tentative approval to the project late last month and will continue its discussions on the plan next week. Vallejo taxpayers won't have to pay any money in advance because Edge will finance the project's first $50 million in capital costs. In return a portion of the city's projected financial savings will be shared with the Edge and O'Hara. This is a fairly sizable project said Kevin Chambers the chief executive officer at O'Hara. Energy-efficient capital is difficult to find because it is such a new field. O'Hara is installing high-tech energy management systems at all city-owned property to reduce energy consumption. Final sites for the construction of new wind solar and microturbine generators have not been chosen. In recent years the energy bill for Vallejo city government has averaged between $2 million and $3 million per year. That includes the police and fire departments City Hall and water-pumping stations. Vallejo is part of a group of 50 local governments in Northern California that pooled their resources to buy electricity and natural gas keeping prices down. But the group's current contract expires Dec. 30. As a result the city expects its energy bill to double next year from 9.2 cents per kilowatt hour to 20 cents per kilowatt hour. It's been very positive what we've been doing and it hasn't cost us anything said City Manager David Martinez. We're going to be very optimistic that this is going to be a good thing for the city. City officials hope to eventually extend the plan to Vallejo's 4500 businesses and 37000 households. E-mail Jason B. Johnson at jbjohnson@sfchronicle.com. 2001 San Francisco Chronicle ? Page?A - 23 SEC asked to see if PG&E Corp. violated law with subsidiary Published Friday July 6 2001 in the San Jose Mercury News BY JENNIFER BJORHUS Mercury News California Attorney General Bill Lockyer asked the federal Securities and Exchange Commission on Thursday to step in to investigate whether PG&E Corp. violated federal law in taking billions of dollars from its bankrupt subsidiary. ``SEC scrutiny is essential to protect the public interest ratepayers and the people of the state of California'' Lockyer said in a statement. More than $4 billion flowed from the Pacific Gas & Electric utility to parent PG&E Corp. from 1997 to 1999 according to Lockyer's petition representing nearly 70 percent of the cash that flowed to the parent company during that period. PG&E Corp. spent $2.7 billion to buy back its stock $1.5 billion to pay dividends to shareholders and invested $800 million in its other subsidiaries according to the petition filed Thursday in Washington. Those figures are similar to figures from a state-ordered independent audit of PG&E Corp.'s finances released in late January. By moving assets from the utility to other businesses the company potentially harmed the utility and violated the federal Public Utility Holding Company Act in several ways according to the petition. The SEC is the nation's top cop for publicly held companies. But the commission has not reviewed PG&E Corp.'s asset movements saying the company is exempt from scrutiny under the Public Utility Holding Company Act because it's mainly a California operation and such intrastate operations are exempt. The attorney general's office argues that PG&E Corp. with more than $13 billion of its assets outside the state can no longer claim it is primarily an intrastate company. The SEC should step in it argues. The petition surprised PG&E Corp. officials who said they had no idea the attorney general's office had an issue with the company's exemption from the federal law said company spokesman Greg Pruett. Pruett said PG&E Corp.'s actions were appropriate because the federal utility law only applies if a company has one or more of the following activities in several states: electric transmission and distribution gas distribution or utility-owned generation. ``We have none of those things except in California'' Pruett said adding that the National Energy Group a PG&E Corp. affiliate ``has natural gas transmission but no distribution.'' ``The power plants that NEG owns or operates are not part of a utility and thus aren't regulated by PUCHA and it has an energy-trading arm that is also not regulated by PUCHA'' he said. The petition further asks the SEC to order PG&E Corp. to cooperate fully with the California Public Utilities Commission. The state commission is investigating whether PG&E Corp.'s corporate structure and its relationship with its bankrupt utility violate state utility regulations. The petition states it expects a response from the SEC within 60 days. But SEC spokesman John Heine said there's no statutory deadline for a response. He said he had not seen the petition and could not comment. Contact Jennifer Bjorhus at jbjorhus@sjmercury.com or (408) 920-5660. Judge may speed up electricity refund talks Published Friday July 6 2001 in the San Jose Mercury News BY RICARDO ALONSO-ZALDIVAR Los Angeles Times WASHINGTON -- A federal mediator seeking a settlement for billions of dollars in alleged electricity overcharges in California signaled Thursday that the talks are in trouble. Curtis L. Wagner Jr. chief judge of the Federal Energy Regulatory Commission said he may issue a report on the closed-door talks as early as today if progress is not made. ``The judge will perhaps issue a preliminary assessment of the talks'' said Tamara Young-Allen a FERC spokeswoman. ``He will do this only if he feels the talks aren't moving along as he sees fit.'' Wagner had previously said all sides would labor in private through the weekend to try to get a deal by the deadline of Monday at midnight. If that failed the judge said he would take seven days to craft a proposed settlement for FERC's governing board. California is demanding $9 billion in refunds. According to sources the generators have offered less than $1 billion. Wagner is said to be probing for a compromise figure that could take the form of a mix of cash payments and discounts on long-term contracts for power. Davis keeps state addicted to fossil fuels Published Friday July 6 2001 in the San Jose Mercury News BY JOE COSTELLO BEFORE this year's energy ``crisis'' Gray Davis wanted to be known as the education governor. However Davis and his advisers' energy teachings have revealed alarming failures setting back state energy policy not one or two years but one or two decades. While George W. Bush proposed an energy policy tied to fossil fuels disproportionate building of centralized generation plants too little energy efficiency lowering environmental standards and increased global warming emissions Davis enacted it. First Davis has tied the state for the next decade or longer to contracts with facilities that are exclusively fossil fuel generation. Second he has encouraged an unprecedented surge in the building of new centralized fossil fuel plants. Finally he has pushed the lowering of environmental standards to increase production from the dirtiest fossil fuel facilities. The state's new energy purchasing department has spent zero on renewable generation. David Freeman the governor's energy czar giving lip service to alternatives has negotiated close to $50 billion in long-term contracts with fossil fuel generators. By comparison the governor has authorized investment of only $13 million in expanding solar generation. Photovoltaic cells produce electricity directly from the sun's energy offering a clean efficient solution to the state's future peak energy demand. While the governor talks a lot about energy efficiency the state's funding of demand programs is about 1 percent of the funding for supply. Most egregious the vast majority of state energy efficiency money is funneled back to the utilities. While environmentalists deride the Bush administration proposals in California organizations such as the Natural Resources Defense Council actively support Davis' fossil fuel energy policy. The Davis energy policy has stuck California with the same old electric system for at least the next decade. Money has literally been burned instead of invested in innovation and creation of a cleaner and more efficient system. The best hedge against price spikes is a diversity of fuel sources unfortunately California's electric system is now tied to an even greater degree to fossil fuels. After binding the state economy to the past the Davis end game is logical. Davis and his energy advisers want to spend tens of billions of dollars for the utilities' restoration -- the very companies that for so long stifled industry innovation and remain most responsible for California's energy fiasco. There is still an opportunity to make the best out of a bad situation. Instead of bailing out the utilities they should be dismantled and sold off. A combination of a dozen or so local government and publicly owned companies should be created with a goal of innovating the industry. An auction could be held that would sell customer blocks and with it the state's long-term contracts. Choice should be reinstated with the lifting of the suspension on direct access to alternative suppliers. Instead of moving the state to the next level of energy development the education governor's remedial energy teachings will force California to repeat its energy lessons. Joe Costello is an energy and communications consultant based in Larkspur. Business Economics fuels power solution in California Price relief gains political support Robert Gibbons BridgeNews ? 07/06/2001 Chicago Tribune North Sports Final N Page 3 (Copyright 2001 by the Chicago Tribune) Political pressure coming from the U.S. Congress and politicians from Western states seems to have influenced the approach to the power crisis despite opposition to price caps in the Bush administration. The Federal Energy Regulatory Commission in June expanded price mitigation measures on wholesale electricity sales in California during periods when blackouts are possible. The measures encourage generators to sell power into the state to prevent emergency alerts from being declared which trigger price caps. The move came with support growing in Congress especially among representatives of Western states on both sides of the aisle for legislation that would have capped wholesale prices in the region. The macroeconomic force may have been the difference between the $7 billion cost of power for California in 1999 and its rise to approximately $27 billion in 2000. The cost is estimated to reach between $50 billion and $70 billion in 2001. With that kind of money at stake suddenly the concern becomes less a question of who is responsible for the problem but rather how it can be solved quickly to prevent harsh political consequences. California Atty. Gen. Bill Lockyer has conducted an investigation into the actions of power generators and offered multimillion dollar rewards to whistleblowers to provide evidence of price manipulation by independent power generators. The state is seeking refunds of $8.9 billion the amount it estimates independent power generators overcharged California 's troubled utilities. The U.S. General Accounting Office has released a report criticizing the FERC for not finding evidence of power generators using plant outages to drive up prices in California . FERC's [February] study was not thorough enough to support its overall conclusion that audited companies were not physically withholding electricity supply to influence prices the GAO found. Of the major independent power generators and marketers like Reliant Energy Dynegy Duke Energy and Enron only Williams and its CEO Keith Bailey came out in April in favor of some sort of short- term price relief for California . The political dynamic out there is much more Draconian than what we're proposing Bailey told analysts in April defending Williams' position supporting some limited short-term price mitigation. What he was worried about was California Gov. Gray Davis using eminent domain powers to take over power plants and the state setting up a public power authority to build state-owned plants. Financial California Changes Stance on Refunds Two Sides Far Apart In Energy Talks Peter Behr ? 07/06/2001 The Washington Post FINAL Page E01 Copyright 2001 The Washington Post Co. All Rights Reserved California officials have abruptly shifted tactics in their attempt to recover billions of dollars in alleged overcharges for electricity saying they may reduce their demands for huge refunds if generators renegotiate $43 billion in long-term electricity contracts that the state signed this year. Gov. Gray Davis (D) said part of the $8.9 billion in refunds the state is seeking could be offset by reductions in energy prices in the long-term contracts whose costs have become a growing political embarrassment for Davis. We've made suggestions we've offered various ways in which people could get us $8.9 billion Davis told the San Jose Mercury News in a report yesterday. You can renegotiate our existing contracts and save us money. However you want to do it it's just got to net out close to $8.9 billion. The new offer was introduced this week into the closed negotiations over a California settlement being conducted in Washington by Federal Energy Regulatory Commission Judge Curtis L. Wagner Jr. according to sources close to the negotiations. Yesterday Wagner said he may issue his own preliminary finding today on the amount of overcharges if California officials and the generators cannot reach a compromise. What I'm trying to do is get people in a settlement mood Wagner told reporters. In the event we're unable to do that [Friday] at some point I may offer a preliminary assessment. The settlement conference is set to conclude on Monday. Wagner FERC's chief administrative judge has been trying to push both sides toward a compromise that would resolve the huge energy pricing controversy. Mountainous energy prices have bankrupted California 's largest utility drained billions of dollars out of the state treasury and put Davis at sword's point with generators that help keep the state's lights on. Last Friday Wagner rebuked Davis's chief representative Michael Kahn chairman of California Independent Grid Operator -- the state's power grid manager -- indicating that the state's demand for nearly $9 billion in refunds from power generators and marketers was too high sources said. Wagner's settlement conference which has involved more than 100 lawyers for all sides is closed to the public and media. Wagner complained last month that Kahn was following a political agenda and his lack of independence in the negotiations was such a joke that the parties might as well wear clown suits according to a Dow Jones report confirmed by sources close to the talks. But he has also criticized the generators and power marketers led by Reliant Energy Inc. Williams Energy Services Duke Energy and Southern Co. for failing to make serious settlement offers these sources said. The suppliers have offered to refund $600 million provided the state is able to call off various California lawsuits demanding far larger refunds sources said. Wagner's leverage is his ability to propose his own refund figure to FERC's commissioners. FERC has tentatively called for $124 million in refunds but now is taking a harder line on preventing a new escalation of California 's electricity prices this summer and is likely to be receptive to a higher refund figure some energy analysts believe. Davis's tactical change offering to make the long-term contracts part of an overall settlement comes amid growing criticism of what the state will have to pay for energy under those deals. California 's energy calamity stemmed in large part from its failed deregulation plan which relied heavily on short-term power purchases at volatile spot market prices. When energy costs shot upward last summer so did the state's electricity bills. In response Davis's aide S. David Freeman and his staff began negotiating long-term power contacts with suppliers. The $43 billion in deals signed so far would require the state to pay about $70 per hour for a megawatt of power for a large part of the electricity it will need over the next 10 years. That's well under the average of $250 per megawatt-hour that the state was paying at the beginning of this year but above current power prices -- and considerably higher than what electricity may cost in the next decade energy analysts say. A new agreement to lower those contract prices could relieve political pressure on Davis and focus settlement negotiations away from the state's controversial demand for the $8.9 billion refund. Davis will argue that reducing future power charges that his administration negotiated should count as a refund because the deals were reached under commercial duress according to sources close to Wagner's negotiations. Industry supporters say Davis's refund figure is impossible to justify. There's no benchmark for what a fair and reasonable price should be said Michael Zenger California director of Cambridge Energy Research Associates. The state's advocates counter that if FERC enforced a just and reasonable standard for power prices based on operating costs and a generous profit the overcharges by all sellers could easily reach the $9 billion figure. It's not rocket science but it does require the regulators to regulate said Frank Wolak a Stanford University economist who heads an oversight committee for the California grid. Those polar-opposite views have left both sides in Wagner's conference room billions of dollars apart as the talks approached their final weekend sources said. http://www.washingtonpost.com Contact: http://www.washingtonpost.com Politics & Policy U.S. Hearing Officer May Impose Pact To End California Power-Overcharge Case By Richard B. Schmitt ? 07/06/2001 The Wall Street Journal Page A10 (Copyright (c) 2001 Dow Jones & Company Inc.) WASHINGTON -- With settlement talks apparently stalled a federal hearing officer said he may propose his own solution to settle billions in alleged electricity overcharges tied to the California power crisis. Curtis L. Wagner Jr. said he was still optimistic California officials and several power companies could come to terms on $8.9 billion in disputed electricity charges the state has incurred over the past year. Absent more-meaningful progress he said he would offer his own preliminary assessment and recommendation as soon as today. In that event Mr. Wagner also said he would convene a hearing Monday where the two sides would be given the chance to comment on his plans. Mr. Wagner has previously indicated he feels California is due some refunds but far less than the total the state claims. California is also indebted to the power companies for billions in previous deliveries those debts could at least partially offset any refunds. Mr. Wagner has also said long-term contracts that would insulate the state from the sort of price shocks it has experienced over the past year could be part of any resolution. An administrative-law judge with the Federal Energy Regulatory Commission Mr. Wagner was named by the panel two weeks ago to broker a peace of the overcharge dispute. Commission officials have given the parties until Monday to reach an agreement behind closed doors. After that absent a settlement the commission has ordered Mr. Wagner to report back with his findings and recommendations within a week. At that point the commission has said it will impose a settlement of its own liking. The overcharge issue has been a flash point in the California debacle with the state's governor Gray Davis calling the energy companies pirates and marauders. The industry considers itself a scapegoat for a bungled state deregulation effort.,other,formal,3 +Re: Hendricks,I think we should let people in the legislature know about this and see if one or more of them can get their hands on it. From: Richard B Sanders@ECT on 05/06/2001 10:40 AM To: James D Steffes/NA/Enron@Enron Steven J Kean/NA/Enron@Enron Richard Shapiro/NA/Enron@Enron Jeff Dasovich/NA/Enron@Enron Sandra McCubbin/NA/Enron@Enron cc: Subject: Hendricks Any thoughts? ,legal affairs,confidential,5 +Energy Issues,Firsst article attached refers to the 1946 Nebraska case I mentioned to you= =20 in DC ,other,casual,2 +Fw: CONFIDENTIAL AND PRIVILEGED ATTORNEY-CLIENT COMMUNICATION,The CAISO recently filed Amendment 30 which would provide the CAISO with the authority to engage in forward contracts/purchasing etc. to meet reliability requirements. This filing is in response to the language in the FERC San Diego Order which suggested that the FERC believes the CAISO should have this authority. Clearly this raises issues about the role of the CAISO in the forward markets as a policy matter but FERC is likely to approved this authority anyway. The CAISO Board is addressing this matter as part of its Comprehensive Market Reform Project. The CAISO Board at the September 7 meeting deferred the issues of the 2-day ahead market (as well as the policy matter of the CAISO buying forward) until the October meeting. However later during Executive Session the CAISO Board apparently approved Amendment 30. At this point in time IEP is not planning on responding to Amendment 30. This position is primarily driven by limited funds in the Restructuring/Transmission Task Force account and given the forces aligned in support taking this issue up seem problematic. Please let me know if anyone differs with this assessment and would like to see IEP comment (recognizing that funds would be required to accomplish this). ----- Original Message ----- From: Andy Brown To: Steven Kelly (E-mail) Katie Kaplan (E-mail) Cc: Douglas Kerner Chris Ellison Eric Janssen Sent: Monday September 18 2000 3:55 PM Subject: CONFIDENTIAL AND PRIVILEGED ATTORNEY-CLIENT COMMUNICATION > Attached is a memo which briefly describes CAISO's Amendment 30 and a > potential response approach for IEP. The filing will be due October 2 > which effectively means that we must decide what IEP wants to say by the > 27th if the final draft is to be circulated to interested membership > before filing. ABB > > - 000918_IEP_mmo_CAISO_AM30.doc,other,formal,3 +job applicant,any interest? ,other,casual,3 +Confidential Agreement,This follows up on your voice mail message regarding the status of the Confidentiality Agreement in light of renewed discussions between the two companies. Attached is the latest draft of the Confidentiality Agreement which was transmitted to you on May 13. Please call me with any comments or questions. <> - Confidential AGrement with Enron which was sent to Ben Rogers on 51200 - this version is a clean version accepting all blacklined changes from 59437v3.DOC,legal affairs,formal,5 +Re: Trains - Light rail,Mary- Ken has been asked by Mayor Brown to chair the fundraising effort to get voter approval on a light rail referendum in Houston. My guess is that he will decline given the other demands on his schedule but I don't know that for sure. I think our respnse Mary Clark@ENRON 04/13/99 02:21 PM To: Steven J Kean/HOU/EES@EES Joe Allen/Corp/Enron@Enron cc: Mark Palmer/Corp/Enron@Enron Subject: Trains - Light rail Steve/Joe: Mark suggested that I contact you to provide a response to this employee's question (see below) to Ken and Jeff about trains and light rail. Please draft a response and send it to me. I will format it and send it to Ken and Jeff for their review. Thanks. Mary Clark -----------------,other,formal,3 +Re: Fellow referred to me by Ken Lay,It was not mentioned to me. I'm copying rosie and vanessa to find out if this was a simple referral (in which case you should keep the work to a minimum -- return the call but don't get distracted from your other efforts) or whether Ken is especially interested in this and wants us to follow through. Jeff Dasovich Sent by: Jeff Dasovich 03/12/2001 03:54 PM To: skean@enron.com cc: Subject: Fellow referred to me by Ken Lay Just got a call from a fellow named Jame Edgerly at the Enterprise Zone Inc. He told me that Ken Lay (through Ken's secretary Vanessa) referred me to him. He is very interested in getting us to help him work with the Legislature to establish an Enterprise Zone energy tariff to encourage investment in California's Enterprice Zones. Before I launch on the effort just wanted to check in and see if this rings a bell with you. Thanks. Best Jeff,other,formal,3 +possible RTP conference,-----------------,other,neutral,3 +RE: Marketing Plan & Meetings,Sandeep This looks great. I would talk to all the heads of structuring desks including the right persons (Zimin Krishna Vasant) in the conversations. Also please talk to Andrea Reed and ask who are good targets in the EIM organization. We can talk about other targets when I get back. Vince ,marketing & promotion,formal,3 +"Ed Segners Staff meeting, in 50M Dining Room",PGE meeting -- identify alternatives Tom Hagen @ CSW Shockley would be avail on thurs or Fri or Lay,other,formal,3 +Re: Meeting Request - July 25th,Yes. Maureen - please schedule. From: Michael on 07/06/2001 03:05 AM GDT To: Steven J Kean/NA/Enron@Enron cc: Maureen McVicker/NA/Enron@Enron Subject: Meeting Request - July 25th Steve - I'll be in Houston July 23-26 and would like to get together to bring you up to date on the latest developments in Japan regarding EBS and EGM as well as energy markets. Would you have half an hour on the morning of Wednesday the 25th? Thanks Mike,meetings & events,formal,3 +Thu evening,Piotr I can pick up my E-mail messages from here. You can E-mail me with the place and location for tonight. Vince,personal & social,casual,3 +Materials from Energy & Power Risk Conference,For your information: Vince Kaminski passed on to me the following California-related presentations delivered at a recent conference he attended (Energy and Power Risk Management 5/14-5/15 Houston). Please let me know if you would like a copy of any of these: *Roach Craig (Boston Pacific Company Inc.) Price Caps: An Apparent Short-Term Solution That Creates Long-Term Problems (hard copy only) *Wolak Frank (Department of Economics Stanford Chairman Market Surveillance Ctte. CAISO) 1. What Went Wrong with California's Re-Structured Electricity Market (and How to Fix It) 2. How to Make Competitive Electricity Markets Benefit Consumers (hard copy only) *Yeres David (Partner Clifford Chance Rogers & Wells LLP) Wholesale Power Sales: A Marketplace Under Scrutiny (hard copy only) Jennifer,other,formal,3 +Re: Government Affairs Meeting,Go ahead. From: Elizabeth Linnell on 04/25/2001 04:53 PM To: Steven J Kean/NA/Enron@Enron cc: Subject: Government Affairs Meeting Do you mind if the professionals in my group attend? 5 people (assuming they all want to go - Margo Miyung Linda Lynnette and Earlene) each at $190 for airfare $380 for two hotel nights plus shuttle services and misc expenses. I'm always encouraging my group to interact with Rick's group as Gov't Affairs is our primary customer base. I'm not planning to attend the meeting. Thanks! ,other,formal,5 +EES,Please set up some time with Linda. -----------------,project management,casual,3 +"Ed Segners Staff meeting, in 50M Dining Room",Reminder Craig Gannett meeting with Senator Gorton Henry Hubbard -- 207 397 5091 Steve Montovano 800 650 9084 Greg Piper Carol Dillon 503-464-8536 Kathleen -- Providence Gas (Mike McCall) Linda Clemmons -- MIT forum at MIT,other,formal,3 +keans presentation,,business document,casual,0 +Todays Senate Hearing,The Senate Governmental Affairs Committee held an unusually long hearing today (9:30 am to 4:30 pm) on FERC's responses to the California situation and other related energy issues. The star witness was Gov. Davis. Others were Govs. Martz of Montana and Hoeven of North Dakota against price caps Sens. Murkowski Murray and Cantwell Washington State's attorney general Oregon's PUC chairman and the five FERC commissioners. Once Davis left after several hours of testimony and two rounds of questions most of the press and audience left. Enron was mentioned several times as follows: 1. Sen. Thompson the Ranking Republican mentioned Lockyer's Spike comments in the context of asking Gov. Davis about why business would make new investments in the state when on top of the regulatory uncertainty there is the broader political hostility expressed in this way by state officials. Davis had two chances to disavow Lockyer and did not. (Thompson gave him a second chance when he basically repeated the question and made specific reference again to Spike asking Davis if FERC acted this week because of the AG's Spike comments.) The first time Davis said that the people he represents are mad they want him to fight back this is rough business the industry people are used to a wildcatter's environment things occassionally get out of hand and we are not going to take it. On the second instance he said that the state was building new power plants and investment was not being diminished. 2. Sen. Bennett (R-UT) did an excellent job questioning Gov. Davis about his handling of the situation using quotes from California newspapers to make the case that Davis was slow to act. He also argued that the state had done a bad job as a power purchaser contrasting the state's recent 8-year contract with Constellation for power at $150 peak and $59 off-peak with Enron's willingness last year to sell them power for five years at $50. The Republicans also pressed Davis on why he attacks out-of-state generators but is not nearly as vocal about California munis who charged even more. Davis said they should make refunds too. 3. While not saying Enron by name Gov. Davis did make a comment about companies with trading floors that compete with the New York Stock Exchange with meteorologists and very talented people who might have the ability to find loopholes in the new order. He said this in answer to a question about what FERC needed to do now that the new order was issued and he said watch out for manipulation by those subject to the order. 4. Sen. Thompson pressed Washington State AG Gregoire about why she appeared to be investigating out-of-state suppliers even though they had a small percentage of the market in her state with lots of document requests and other investigative action while not doing the same to others. During that exchange either Thompson or the AG (I think it was the AG) said Enron had over $1 billion in sales to Washington State. Enron was not on the list of companies Thompson or the AG said were subject to her information demands. She said she would be expanding her inquiry though. Highlights and Analysis 1. As started at yesterday's Senate Energy hearing the mantra from the Western Democrats was: we want our money back. Chairman Lieberman and others pressed FERC about how California could get refunds and the same in other Western states particularly Oregon and Washington. Chairman Hebert said that the settlement conference process would allow all parties to raise all issues including refunds in California and outside California. He said that the conference could include issues that the commission could not act on itself including refunds not otherwise allowed under the Federal Power Act. Chairman Lieberman vowed to keep the committee active in overseeing FERC's activities in implementing the new order particularly as it relates to refunds. While he acknowledged that new legislation could not apply to pending cases he seemed inclined to pursue legislation to repeal the 60 day delay in the Federal Power Act relating to refunds. 2. Commissioner Wood spoke of the need to increase the penalities and enforcement tools available to the commission including the ability to order short suspensions of authority for regulated entities to transact business treble damages and other administrative penalties. There was also discussion among the committee and commissioners about beefing up FERC's market monitoring capabilities so that it acted more like the SEC FCC and FTC than it has in the past. 3. The Democrats on the committee and among the witnesses said that FERC's latest order is a step in the right direction. None of them called for legislative action on price caps as proposed by Sens. Feinstein and Smith. Sen. Murkowski had done a good job of taking the wind out of the legislated price cap sails by saying at the start of the hearing when he testified that the bill's sponsors had pulled back from swift action when they spoke at yesterday's hearing. Davis did say the still thinks that cost-based rates are better but he said the new order is some price relief and that it corrected the mistakes in the April order. 4. There was some discussion of natural gas again. Davis said that FERC should now turn its attention to natural gas. He said that El Paso controlled too much of the capacity until recently. He called on FERC to enforce laws against price manipulation. (Note: we have had several back channel reports that the Lieberman committee intends to look into the El Paso and Williams cases now at FERC about alleged affiliate issues.) 5. There was some discussion of the termination of the new FERC order. Lieberman pressed several witnesses about whether Sept. 2002 is too soon. Davis said it was and that they needed at least until the end of 2002 if not more time and that order should apply until California has enough new generation in place. Hebert did not back down when pressed by Lieberman later in the hearing saying there needs to be a deadline to get action on new supplies however he and the others basically said they would revisit the issue if events warrant. 6. Several times Sen. Lieberman and others said they generally support deregulation but that the effort to get more states to do so will never happen if the price situation is not brought under control and public confidence restored. 7. Gov. Davis did throw a few kind words toward Pres. Bush and Pat Wood saying that each was open to doing more about the high cost of natural gas to California including the possible reimposition of rate regulation of transportation to California. He said he liked Pat Wood and he noted that FERC did not take serious price mitigation action until the two new Bush appointees were on the commission. 8. Lieberman asked the Washington State AG whether the Justice Dept. or the FTC were doing anything to address high energy prices. She said not to her knowledge even though she has asked them to do so. We can expect a Lieberman et al request for Justice and FTC involvement going forward I suspect. 9. While Chairman Lieberman's tone and closing comments were in the nature of his normal thoughtful tone it is clear that he and others see this as a major issue for them to ride. He commended FERC at the end of the hearing for doing their best but pledged he would stay involved closing the session with a smile and the words see you soon.,other,informative,3 +Re: Skilling Get Davis Straightened Out?,I'm still waiting for Davis' office to call. The plan currently is for me to talk to him when and if he calls. Sandi has been in touch with the governor's office. By the way thanks for the summary of the California proceedings. I talked to Hebert yesterday and he was duly impressed with your remarks ... I had to remind him that you worked on the right answers for California not the abomination that's in place today. Jeff Dasovich@EES 09/13/2000 06:48 PM To: Steven J Kean/NA/Enron@Enron cc: Subject: Skilling Get Davis Straightened Out?,other,formal,3 +Skillings office,Skilling,organization,casual,0 +United India - strictly confidential and privileged,Bruce this memo is dealing with the merits of litigation v arbitration to resolve DPC's DSU claim for the first set of rotor problems. Recall that we tried to negotiate a settlement with insurers for some time and then UI served DPC with a notice of arbitration because of the threat of a bad faith claim. I think I summarized it earlier for you but essentially we now have the choice of pursuing litigation in London against insurers since United India has now sued us in London Court (in addition to arbitration because they figured out a little late that under the policy only quantum may be arbitrated and they don't want to admit liability). Our option before was only to sue them in India which really isn't an option which is why we agreed to arbitration. Basically UI can't decide what it wants to do but this memo from Linklaters sets forth DPC's options which Justin Ken Blades and I discussed regarding the pros and cons of litigation v arbitration. It's a complex mess and I'll be glad to sit down and explain it to you (or not) but we are basically writing to UI's counsel to try and determine what their position is and then we'll decide whether to litigate or arbitrate. Part of this relates to the adjuster's agreement with Ken as to the quantum owed upon a determination of liability. This is all very strange but nothing regarding India or DPC surprises me anymore. We'll talk about it when you have time but I just want you to know I'm taking care of this--let me know how involved you want to be (or not...). Just FYI mb -----------------,legal affairs,formal,5 +Re: organizational announcement,Ken was meeting with him the day before yesterday. I'm just waiting to hear back. Sherri Sera 03/13/2001 10:07 PM To: Steven J Kean/NA/Enron@Enron cc: Subject: organizational announcement Just saw the memo about Sanjay Diomedes and Jim. Guess David Haug is still around? SRS,other,casual,2 +RE: Next NERC Reliability Meeting on Legislation -- August 9th,I don't know that NERC has given up on Enron. The timing of next week's meeting to resolve the legislation reflects the legislative realities that the committees of jurisdiction in Congress will take up the realibility legislation along with other electricity issues as early as the second week of September. In fact congressional staff in the Senate and House are drafting legislative language on electricity issues during the August recess. They have pressed the coalition for a final work product. I gathered that at least some of what Jeff'spresentation to the NERC board would be about concerns matters beyond the legislation as such but since they go to the NERC board's operation and independence may go to our comfort level with NERC as the standards setting organization. Given the issues and concerns that have been addressed and communicated to NERC and our preference for the PJM model (as Jeff told John Q. Anderson in the conference call) I think NERC got the information it wanted to get out of the call even though it didn't like the answers: i.e. whether Sarah and I have been faithfully representing Enron's position whether Enron supports an SRO type organization and whether there is anything they can do to get us on board. Perhaps we should have another conference call early next week so that Sarah and I have our guidance from everyone going into the August 9th meeting. For one thing we need to determine if we are in any position to provide detailed comments on the shortened NERC version at the August 9th meeting or whether we do not wish to engage them on what specific changes it would take to get us on board. My sense is that since we have to deal with the players in the room on other issues our overall position will be strengthened if we have some specific comments to make to explain our decision not to support NERC's version even the shortened one. Don't get me wrong -- we have plenty of good reasons not to I just wasn't sure how engaged we wanted to be in identifying changes that would bring us on board since I gather our opposition is more fundamental (no Western deference budget concerns independence issues etc.). From: Charles Yeung/ENRON@enronXgate on 08/03/2001 11:57 AM To: John Shelk/NA/Enron@Enron Richard Shapiro/ENRON@enronXgate James D Steffes/ENRON@enronXgate cc: Linda Robertson/NA/Enron@ENRON Sarah Novosel/Corp/Enron@ENRON Subject: RE: Next NERC Reliability Meeting on Legislation -- August 9th John We are concerned how this meeting impacts what transpired between John Q Anderson and Jeff Skilling on the conference call on Thursday. David Cook was on the call as well and we do not understand the sudden urgency for NERC to reach closure. Has NERC given up on Enron? As we understand it John Q Anderson agreed to give Jeff an opportunity to present present before the NERC Board some ke y issues for Enron before trying to finalize any NERC legislation proposal. Does this meeting next week preclude that presentation from occurring? Or will there be willingness to alter the language significantly enough to appease the Enron concerns next week? Charles Yeung ,energy infrastructure,formal,5 +The Prediction Company,Greg I scheduled a meeting with Norman Packard from the Prediction Company in Houston July the 30th 9:00 a.m. Liz blocked out a few hours for the meeting. Vince,other,formal,3 +Energy Issues,,other,neutral,0 +Re: Comments on Judge Wagners Proposed Recommendation,My comments are attached. I think the pleading is well written but as you'll see from my comments I believe we should be incorporating more of the arguments from the previous pleading. Ray Alvarez 07/09/2001 07:14 PM To: James D Steffes/NA/Enron@Enron cc: Jeffrey T Hodge/Enron@EnronXGate Robert C Williams/Enron@EnronXGate Steven J Kean/NA/Enron@Enron Richard Shapiro/NA/Enron@Enron Linda Robertson/NA/Enron@ENRON Alan Comnes/Enron@EnronXGate Jeff Dasovich/NA/Enron@Enron Susan J Mara/NA/Enron@ENRON Robert Frank/NA/Enron@Enron Sarah Novosel/Corp/Enron@ENRON dwatkiss@bracepatt.com Subject: Comments on Judge Wagner's Proposed Recommendation As you may be aware the Chief Judge informed the parties to the settlement proceeding this afternoon that he intends to recommend to the Commission that it employ the June 19 rate methodology for the refund period from October 2 forward. Attached are draft comments that Sarah Novosel and I propose to submit to the Judge and his legal staff tomorrow. While we would like to convince the Judge that the June 19 methodology is not appropriate we also provide a fallback approach. Please review the comments (they are only 4 pages) and send your comments to us. We plan to submit the comments tomorrow. Thanks Ray and Sarah ,legal affairs,formal,3 +Energy Issues,Firsst article attached refers to the 1946 Nebraska case I mentioned to you= =20 in DC ,other,casual,2 +California Power Crisis,Attached is the document I mentioned. You will get a separate e-mail from Karen Denne which will include the invitation and the invited for the Thursday meeting. My contact information: Steven J Kean EVP and Chief of Staff Enron Corp 713.853.1586 skean@enron.com pager: 888.906.9761 Asst Maureen McVicker 713.853.1808 I will be in Japan most of next week but my office can reach me. Thanks,other,formal,3 +Re: Gov Geringer meeting,I'd prefer to skip. How big of a problem would that be? From: Susan M Landwehr on 05/14/2001 03:09 PM To: Steven J Kean/NA/Enron@Enron Richard Shapiro/NA/Enron@Enron cc: Maureen McVicker/NA/Enron@Enron Ginger Dernehl/NA/Enron@Enron Paul Kaufman/PDX/ECT@ECT Subject: Gov Geringer meeting Steve/RIck ---as you may be aware Governor Geringer personally asked Ken Lay to come to the kick off meeting of the Wyoming Energy Task Force a group that was created by legislative mandate last month. The meeting is on May 30th in Cheyenne. Mr. Lay told the Governor that he would not be able to make it on that date but promised that a senior Enron exectutive would be there. I spoke with Governor Geringer's staff person again this past week and was hoping that Paul Kaufman could be the senior executive but no such luck (unless you give Paul a huge new title!). In talking with Maureen I understand that you have a previous conflict Steve but I am hoping that you can review your calendar to see if you could make an adjustment in order to meet the request of the Governor. Your speech would be in the morning--I've been told about 9 o clock or so---which would allow for you to leave by noonish. I,government & politics,polite,5 +Re: Bill Massey,Probably not. Let's communicate Breathitt's interest to Bone and stay out of it for now. Richard Shapiro 08/16/2000 08:42 AM To: Steven J Kean/HOU/EES@EES cc: Joe Hartsoe/Corp/Enron@ENRON James D Steffes/HOU/EES@EES Subject: Re: Bill Massey Is this the right time to weigh ? Steven J Kean 08/16/2000 06:56 AM To: Joe Hartsoe/Corp/Enron@ENRON cc: Richard Shapiro/HOU/EES@EES James D Steffes/HOU/EES@EES Subject: Re: Bill Massey I believe we should back Massey as well. Who do we weigh in with now? Joe Hartsoe@ENRON 08/15/2000 08:27 AM To: Steven J Kean/HOU/EES@EES Richard Shapiro/HOU/EES@EES James D Steffes/HOU/EES@EES cc: Subject: Bill Massey Steve/Rick/Jim --- Talked to John Anderson yesterday. He had just gotten off the phone with Massey. Massey believes Linda B. is spending time at the White House lobbying to be Chair. Have we decided whether to back either and if so which? I would prefer backing Massey. Thoughts? JOE 202.466.9150 -----------------,other,formal,3 +Re: 2- SURVEY/INFORMATION EMAIL - 7/19/01,Subject: 2- SURVEY/INFORMATION EMAIL - 7/19/01 Current Notes User: To ensure that you experience a successful migration from Notes to Outlook it is necessary to gather individual user information prior to your date of migration. Please take a few minutes to completely fill out the following survey. Double Click on document to put it in Edit mode. When you finish click Close select Save Changes Only click O.K then re-open the e-mail and click on the 'Reply With History' button then hit 'Send' Your survey will automatically be sent to the Outlook 2000 Migration Mailbox. Thank you. Outlook 2000 Migration Team Full Name: Steven J. Kean Login ID: skean Extension: 3-1586 Office Location: EB 4712C What type of computer do you have? (Desktop Laptop Both) Laptop Do you have a PDA? If yes what type do you have: (None IPAQ Palm Pilot Jornada) None Do you have permission to access anyone's Email/Calendar? No If yes who? Does anyone have permission to access your Email/Calendar? If yes who? Yes - Maureen McVicker Ginger Dernehl Linda Noske Are you responsible for updating anyone else's address book? If yes who? No Is anyone else responsible for updating your address book? If yes who? Yes - Maureen McVicker Do you have access to a shared calendar? If yes which shared calendar? No Do you have any Distribution Groups that Messaging maintains for you (for mass mailings)? If yes please list here: No Please list all Notes databases applications that you currently use: Project Tracking In our efforts to plan the exact date/time of your migration we also will need to know: What are your normal work hours? From: 7:00 am To: 7:00 pm Will you be out of the office in the near future for vacation leave etc? No If so when? From (MM/DD/YY): To (MM/DD/YY):,email management,formal,3 +Fw: Comments of Wolak,kaminski ,other,casual,0 +RE: Neptune -- merchant transmission,Ed I am still here. Kaminski is a very popular Polish name. My next stage in life when it happens is a small cottage close to a beach not another corporate job. Vince ,personal & social,casual,0 +Dinner w/Prof. Frank Wolak & Vince Kaminski,Tel. 650.833.1000,personal & social,casual,0 +Fwd:,-----------------,business document,neutral,0 +Energy Issues,,other,neutral,0 +"Lynn Church - EPSA, in your office.",(per Tim Brown 202-789-7200),employment,formal,5 +,Shirley Can you please arrange a phone interview: Alex Lance Vasant and myself. Vince -----------------,project management,formal,3 +"Final Colorado Springs, CO Itinerary",-----------------,personal & social,casual,3 +"Re: LA: Getting Mack and Kean together, as discussed",I won't be going. Let's look for an alternate. I'd be happy to come to DC. Stephen D Burns@ENRON 07/31/2000 10:53 AM To: Steven J Kean/HOU/EES@EES cc: Subject: LA: Getting Mack and Kean together as discussed Mack McLarty and his people would like to get together with you in Los Angeles during the Dem convention to discuss our Southern Cone issues strategies etc. Will you be there on the Monday? Steve -----------------,meetings & events,formal,3 +IEP News 4/20,AP Online April 20 2001 Friday 7:57 AM Eastern Time Financial pages ????238 words Power Co. Executives Lose Bonuses LOS ANGELES Contra Costa Times April 20 2001 Friday STATE AND REGIONAL NEWS K560 ????460 words Energy officials accused of manipulating natural gas market ????defend actions By Andrew La Mar Los Angeles Times April 20 2001 Friday Home Edition Page 3 715 words ???? CALIFORNIA AND THE WEST ??A U-TURN ON CAR TAX REBATES ??LEGISLATION: ????STARTING JULY 1 FEE REDUCTION WILL BE FIGURED DIRECTLY INTO VEHICLE ????REGISTRATION BILLS NOT REFUNDED BY MAIL. CARL INGRAM TIMES STAFF WRITER ????SACRAMENTO Los Angeles Times April 20 2001 Friday Home Edition Page 3 453 words ???? CALIFORNIA AND THE WEST ??LOCKYER ASKS JUDGE TO ORDER FIRMS TO RELEASE ????RECORDS ROBERT J. LOPEZ and RICH CONNELL TIMES STAFF WRITERS Los Angeles Times April 20 2001 Friday Home Edition Page 3 1426 ????words CALIFORNIA AND THE WEST ??LEGISLATORS UNITE OVER ENERGY PRICE ISSUE ????POWER: BIPARTISAN CONGRESSIONAL DELEGATION CALLED TOGETHER BY DAVIS SAYS U. ????S. MUST STEP IN TO PROTECT STATE FROM MANIPULATION BY SUPPLIERS. MITCHELL ????LANDSBERG and MIGUEL BUSTILLO TIMES STAFF WRITERS The Orange County Register April 20 2001 Friday STATE AND REGIONAL NEWS ???? K497 846 words Federal energy commission considers price fix for state ????energy market By Dena Bunis San Jose Mercury News April 20 2001 Friday STATE AND REGIONAL NEWS ????K512 696 words In response to power woes rating agencies have California ????on credit watch By Jennifer Bjorhus San Jose Mercury News April 20 2001 Friday STATE AND REGIONAL NEWS ????K520 1069 words Issues still remain on what power consumers will ????eventually pay By John Woolfolk and Michael Bazeley The San Francisco Chronicle APRIL 20 2001 FRIDAY FINAL EDITION NEWS ????Pg. A4 765 words Edison pushes lawmakers to accept deal David Lazarus The Associated Press State & Local Wire April 20 2001 Friday BC cycle ????7:04 AM Eastern Time State and Regional 438 words Most Edison executives ????going without bonuses By GARY GENTILE AP Business Writer LOS ANGELES The Associated Press State & Local Wire April 19 2001 Thursday BC cycle ???? State and Regional 901 words Top political aide discusses Bush's low-key ????style By RON FOURNIER AP White House Correspondent WASHINGTON The Associated Press State & Local Wire April 19 2001 Thursday BC cycle ???? State and Regional 727 words Utility commission staff says parent ????company profiting from energy sales BOISE Idaho The Associated Press State & Local Wire April 19 2001 Thursday BC cycle ???? State and Regional 820 words Legislators probe possible power natural ????gas collusion By DON THOMPSON Associated Press Writer SACRAMENTO Copyright 2001 Associated Press AP Online April 20 2001 Friday 7:57 AM Eastern Time SECTION: Financial pages LENGTH: 238 words HEADLINE: ?Power Co. Executives Lose Bonuses DATELINE: LOS ANGELES BODY: ???Senior executives at Southern California Edison and its parent company went without hundreds of thousands of dollars in bonuses in 2000 because of California's power crisis. ??Edison International's chairman and chief executive John Bryson was paid $950000 in 2000 compared with salary and bonus totaling $2.16 million in 1999. ??Stephen Frank the chairman and chief executive at Southern California Edison was paid $617000 in 2000 compared with salary and bonus totaling $1.3 million in 1999 according to the company's proxy statement filed with the Securities and Exchange Commission. ??The company also said Thursday it would not award merit increases to executives in 2001 because of the continuing crisis. ??In a similar statement released Tuesday Pacific Gas and Electric Corp. revealed it also withheld bonuses for its top two executives although they did receive raises. ??Edison and PG&E say they have lost nearly $14 billion since June to high wholesale prices that the state's electricity deregulation law bars them from passing on to consumers. PG&E saying it hasn't received the help it needs from regulators or state lawmakers filed for federal bankruptcy protection April 6. ??Edison is continuing to work with state officials and its ??reditors. ?????(PROFILE ?????(CO:Southern California Edison Co. TS:SCE) ?????(CO:Pacific Gas and Electric TS:PCG IG:ELC) ?????) LOAD-DATE: April 20 2001 of 78 DOCUMENTS ??????????????Copyright 2001 Knight Ridder/Tribune News Service ???????????????????????Knight Ridder/Tribune News Service Costa Times 20 2001 Friday SECTION: STATE AND REGIONAL NEWS KR-ACC-NO: ?K560 LENGTH: 460 words HEADLINE: Energy officials accused of manipulating natural gas market defend actions BYLINE: By Andres LaMar BODY: ??SACRAMENTO _ Energy officials who are accused of manipulating California's market for natural gas defended their actions on Thursday and attributed the state's skyrocketing gas prices to increased demand the weather and other factors. ??The explanation however drew skepticism from lawmakers in the wake of expert testimony alleging that one Texas firm El Paso Natural Gas Co. had engineered a classic case of monopoly power by controlling the pipeline that delivers gas to the state. ??At the outset of the Thursday's hearing Assemblyman Darrell Steinberg D-Sacramento noted the huge run-up in the cost of natural gas which went from $6.6 billion for the entire year of 1999 to $12.3 billion for sales in 2000 and to $7.9 billion for the first three months of this year. ??Steinberg zeroed in on the difference between California and other parts of the country. From March 2000 to February 2001 natural gas prices have risen 489 percent compared to a 266 percent increase in New Mexico and a 247 percent jump in Chicago. ??Steinberg asked Ralph Eads the president of an El Paso Natural Gas Co. subsidiary for an explanation. ??The 275 percent difference you say is attributable completely to constraints on the pipeline and demand? Steinberg asked. ??Yes Eads replied. Eads said the state's energy crisis which led power plants to run harder and longer dramatically increased demand for natural gas over the summer and a winter with temperatures about 15 percent cooler than the year before exacerbated the problem. ??In another twist to California's deregulation nightmare El Paso officials said they gained greater control of the pipeline after the Pacific Gas & Electric Co. relinquished the capacity four years ago. At that time PG&E's movement of the gas and the prices it could charge were regulated by the Public Utilities Commission. ??In other developments at the Capitol on Thursday lawmakers called on the federal government to re- regulate natural gas sales at the California border and U.S. Sen. Joe Lieberman D-Conn. said federal regulators should impose price caps on California's wholesale electricity market. ??The Assembly held considerable debate on the resolution asking for re-regulation with Democrats accusing President George W. Bush of doing nothing to come to the aid of California and Republicans defending the administration. ??I'm learning an interesting lesson that all the problems of the world started after Jan. 21 and the inauguration of the new president said Assemblyman Bill Leonard R-San Bernardino. ??KRT CALIFORNIA is a premium service of Knight Ridder/Tribune ??(c) 2001 Contra Costa Times (Walnut Creek Calif.). ??Visit the Contra Costa Times on the Web at http://www.cctimes.com/ JOURNAL-CODE: CC LOAD-DATE: April 20 2001 of 78 DOCUMENTS 2001 / Los Angeles Times Angeles Times ?????????????????????April 20 2001 Friday Home Edition SECTION: Part A Part 1 Page 3 Metro Desk LENGTH: 715 words HEADLINE: CALIFORNIA AND THE WEST A U-TURN ON CAR TAX REBATES LEGISLATION: STARTING JULY 1 FEE REDUCTION WILL BE FIGURED DIRECTLY INTO VEHICLE REGISTRATION BILLS NOT REFUNDED BY MAIL. BYLINE: CARL INGRAM TIMES STAFF WRITER DATELINE: SACRAMENTO BODY: ??Gov. Gray Davis and the Legislature spun a U-turn Thursday and scrapped a costly program that requires motorists to first pay their car tax and then get a rebate in the mail. ??Starting July 1 the state Department of Motor Vehicles will send owners of approximately 26 million vehicles registration renewal bills already reduced by the amount of the vehicle license fee rebates. ??On a unanimous roll call the Senate voted final approval and sent to Davis an urgency bill SB 52 that repealed the rebate program which the governor had previously fought for and defended. ??In addition to abolishing the rebates the legislation reduces by 67.5% the amount motorists must pay for the upcoming year the level that lawmakers and former Gov. Pete Wilson envisioned in 1998 when they began cutting the fee. It had been about 2% of a vehicle's market value. ??Davis immediately signed the repeal bill saying only that the new law will expedite relief to taxpayers and greatly reduce administrative costs. ??The governor's muted observation contrasted with his effusive support of the rebates last year when he said Californians don't appreciate the fact that they're getting a rebate unless they see it in their hands. ??At the time Davis and the Legislature had the choice of simply cutting the car tax which voters might not notice or sending checks in the mail which Davis felt would have a greater impact. ??The rebates which began Jan. 1 were scheduled to continue through 2002 when Davis intends to run for reelection. In 2003 the license fee was to have fallen permanently with no more rebates. ??The whole rebate scheme was good only through the next gubernatorial election cycle said Sen. Tom McClintock (R-Thousand Oaks) who supported reductions in the license fee but opposed the rebates. ??Until July 1 the DMV will continue to bill motorists for the full amount of their license fee which includes a 35% reduction from last year. ??Then we return to you an additional 32.5% rebate making a total reduction of 67.5% said DMV spokesman Bill Branch. Starting with license renewals on July 1 the DMV bills will include the full tax cut. ??A Senate analysis of the repeal bill noted that the current awkward system . . . effectively requires taxpayers to overpay their vehicle license fee and then await a rebate check from the state--a system that is at best difficult to explain. ??But as the California economy tightened the state's budget surplus shrank and taxpayers shelled out approximately $ 50 million a day to buy electricity the costs of the rebate program threatened to become a political embarrassment to Davis. ??Projected administrative and postage costs of the rebate program alone were estimated at $ 22 million this year and another $ 22 million or so next year. ??Last year state Sen. Joe Dunn (D-Santa Ana) and McClintock sought to eliminate the rebates and give drivers their full tax cuts when they register their vehicles. Under pressure from Davis the bill failed. ??It was killed behind the scenes at the insistence of the governor McClintock said Thursday. He didn't want it on his desk. ??This year Dunn launched a similar bill but his name was struck from it as the lead author in the Assembly and the name of Sen. Wes Chesbro (D-Arcata) was substituted. ??In a speech Thursday Sen. Ross Johnson (R-Irvine) suggested that Davis' performance on the issue in an earlier time and a more just society would have resulted in his public flogging by representatives of taxpayers. ??The repeal bill was passed 78 to 0 by the Assembly on Monday and sent to Davis by the Senate on a 34-0 vote Thursday. ??If the rebates were to be abolished the bill had to pass this week in order to take effect July 1 said Branch the DMV spokesman. This is because motorists must be advised 60 days in advance that their registration renewals are due. ??We have to reprogram all the computers. We have to print new bills and mail them by May 1 for the July 1 expiration he said. It will be a little tight but we will still make it. ??Branch said that since the Jan. 1 start of rebates checks totaling $ 454 million have been sent to 7.4 million vehicle owners at an extra administrative cost of $ 9.4 million. LOAD-DATE: April 20 2001 of 78 DOCUMENTS 2001 / Los Angeles Times Angeles Times ?????????????????????April 20 2001 Friday Home Edition SECTION: Part A Part 1 Page 3 Metro Desk LENGTH: 453 words HEADLINE: CALIFORNIA AND THE WEST LOCKYER ASKS JUDGE TO ORDER FIRMS TO RELEASE RECORDS BYLINE: ROBERT J. LOPEZ and RICH CONNELL TIMES STAFF WRITERS BODY: ??California Atty. Gen. Bill Lockyer ratcheting up his investigation of possible civil and criminal violations by the state's power suppliers is asking a San Francisco judge to order two firms to hand over confidential records. ??In a motion filed Thursday in Superior Court Lockyer said Reliant Energy and Mirant Corp. have failed to comply with subpoenas for documents that were to be produced by March 19. ??Amid soaring electricity costs and rolling blackouts the attorney general launched an investigation of possible manipulation of wholesale electricity prices that have skyrocketed to record levels and have financially crippled the state's major utilities. ??Dozens of other public and private power suppliers are complying with the subpoenas. ??But in an interview Lockyer accused Reliant and Mirant of stonewalling investigators so they can keep enjoying these exorbitant profits and prices for as long as possible. ??Ultimately the companies will have to honor the subpoenas he said. I'm going to pit bull them he said. This is one we win. ??Both companies say they have done nothing wrong and played by the rules of California's flawed electricity deregulation plan. ??A spokesman for Houston-based Reliant said Thursday the firm is seeking court action of its own to ensure that sensitive business information will not be shared with other public agencies or its competitors. ??Last week Reliant asked a Los Angeles Superior Court judge to clarify the attorney general's obligation to keep proprietary information confidential. ??We're glad to cooperate with his investigation to the extent we can said Reliant spokesman Richard Wheatley. But we have not received sufficient assurances that Lockyer would keep the data confidential. ??Lockyer called Reliant's court filing frivolous and propagandistic and insisted that adequate safeguards are in place. He reserves the right under state law to share information with other government agencies aiding in his investigation but has said he will keep sensitive business information from being made public. ??Atlanta-based Mirant demanded and received similar guarantees of confidentiality Lockyer said. Mirant did not return phones calls Thursday. ??Lockyer did not discuss details of the probe or the kinds of information he's seeking. But based on the investigation so far he said it's beginning to get interesting. ??Other records indicate that the attorney general has sought 91 categories of information about the power merchants' activities. They include the operation of power plants trading information that may have been shared by private power suppliers and bidding strategies in the California market. LOAD-DATE: April 20 2001 of 78 DOCUMENTS 2001 / Los Angeles Times Angeles Times ?????????????????????April 20 2001 Friday Home Edition SECTION: Part A Part 1 Page 3 Metro Desk LENGTH: 1426 words HEADLINE: CALIFORNIA AND THE WEST LEGISLATORS UNITE OVER ENERGY PRICE ISSUE ?POWER: BIPARTISAN CONGRESSIONAL DELEGATION CALLED TOGETHER BY DAVIS SAYS U. S. MUST STEP IN TO PROTECT STATE FROM MANIPULATION BY SUPPLIERS. BYLINE: MITCHELL LANDSBERG and MIGUEL BUSTILLO TIMES STAFF WRITERS BODY: ??This may be the surest sign yet of the depth of California's energy crisis: A bipartisan cross-section of the state's congressional delegation brought together Thursday by Gov. Gray Davis not only agreed about the severity of the problem but also about the need for swift federal intervention. ??This meeting did not have the word 'Democrat' or 'Republican' used once Rep. Darrell E. Issa (R-Vista) said of the unusual spirit of cooperation at the meeting near Los Angeles International airport. ??Members of both parties said the Federal Energy Regulatory Commission must slash wholesale electricity prices so California utilities can once again afford to buy power. Since January the state government has been buying electricity on their behalf as skyrocketing wholesale prices put Pacific Gas & Electric Co. and Southern California Edison billions of dollars into debt and many power suppliers refused to sell to them PG&E has since filed for Chapter 11 bankruptcy protection. ??Although the Bush administration has said repeatedly that it is strongly opposed to price caps and FERC has refused to grant them California Republicans at the energy meeting said they are optimistic that the administration will agree to some other form of price regulation. They brushed aside the notion that such regulations might conflict with their ideological belief in a free market. ??This is not a free-enterprise situation Rep. Duncan Hunter (R-Alpine) said after the meeting. In fact it's just the opposite. ??Specifically citing the huge disparity between natural gas prices charged to California and those charged in other Western states he said California clearly has been the victim of unreasonably high energy costs. Under federal law the FERC must regulate the prices of companies if it finds they are exerting market power to drive prices to unreasonable levels. ??Executives from two Texas energy companies meeting with legislators in Sacramento denied Thursday that they had caused natural gas prices in California to artificially skyrocket by hoarding access to a critical pipeline into the state. ??After the extraordinary meeting in Los Los Angeles Rep. Brad Sherman (D-Sherman Oaks) said the biggest disagreement between California Democrats and Republicans appeared to be their relative faith--or lack thereof--in the ability of President Bush and his administration to help California. There has been much speculation that Bush who lost California in November has no political motive to help the state. ??We Democrats said Sherman hope very much that our skepticism is proven wrong. ??Davis--who sat flanked by Democratic U.S. Sen. Dianne Feinstein and the governor's newly appointed chief energy advisor S. David Freeman--said he used the meeting mainly to discuss the importance of conservation by Californians this summer and to ask the congressional delegation to pitch in. Five Republicans and more than a dozen Democrats attended the gathering. ??Feinstein said Thursday that she has asked for a third time to meet with Bush to discuss the energy situation. Meeting with Times reporters and editors Wednesday she described a recent meeting with Vice President Dick Cheney in which she said he ignored her appeal for federal assistance. ??Feinstein has been among those critical of natural gas companies saying they appear to have constricted access to a California-bound pipeline to run up prices. ??The Brattle Group a respected consulting firm alleged Wednesday before an Assembly committee that Dynegy Inc. and El Paso Natural Gas Co. had manipulated the market by charging so much for the rights to their pipeline capacity that they had in effect withheld access to it. ??That action the experts said directly forced companies trying to deliver gas to California to look for alternatives clogging other pipelines and causing a surge in prices. ??The explanation El Paso executives said was simple: Demand for gas soared in California because generators that use gas to make electricity increased production last year in response to the energy crisis. ??We're not withholding capacity--no one is said El Paso Merchant Energy President Ralph Eads. With these prices you want to sell every molecule. ??In other developments Thursday: ??* The agreement between Davis and Edison International to return its ailing utility arm to financial health is in deep trouble and could be rejected by legislators the Standard & Poor's credit rating agency said in a note to clients citing legislative and other sources. A rejection of the deal would be a humiliating setback for the governor S&P said. ??The agreement calls for among other things the sale of Edison's transmission grid to the state for $ 2.76 billion and the sale of $ 2 billion in bonds--both designed to pay off the utility's huge electricity debt. Edison agreed to several constraints including the sale of electricity to the state at prices tied to the cost of producing power. ??Since they returned Monday from a two-week recess state legislators have been sharply critical of the Edison agreement and have indicated a desire to tinker with aspects of the deal. Some lawmakers have said publicly that a bankruptcy protection filing by Edison like that of PG&E might not be such a dire outcome. ??But a senior Edison executive said it is way too early to give up on passage of the proposal which legislators have not yet seen in official form. ??There is an education process to do here the executive said of the highly detailed 38-page document. The legislators should be asking questions. That is appropriate. ??* The Public Utilities Commission voted to investigate whether alternative energy providers violated contractual agreements by withholding supplies from PG&E and Edison which owe them hundreds of millions of dollars. ??The action Commissioner Carl W. Wood said was prompted in part by lawsuits some providers have filed seeking release from their contracts with the cash-starved utilities. The producers of solar wind and geothermal energy account for more than 25% of California's electricity supply. ??The question is whether we will be able to rely on them in the long hot days of summer Wood said. ??Jack Raudy of the Renewable Energy Creditors Committee said the PUC needs to address the $ 700 million the producers are owed. All we have gotten is rhetoric from the governor the PUC and the utilities he said. ??* An $ 850-million plan to entice Californians to conserve precious megawatts appears to be running into roadblocks compounding predictions by state officials of tighter than expected energy supplies in May and June. ??Davis signed the conservation spending package last week earmarking $ 242 million of the new funds for the Public Utilities Commission to distribute to the state's investor-owned utilities to support existing conservation programs. ??But Barbara Hale director of the PUC's Division of Strategic Planning said Thursday that since Pacific Gas & Electric Co. filed for bankruptcy protection April 6 the utility has stopped releasing conservation funds. ??Hale testifying before a state Senate committee said PG&E's decision--coupled with the threat that Southern California Edison could follow a similar route to U.S. Bankruptcy Court--has complicated her agency's efforts. ??PG&E spokeswoman Staci Homrig said her company plans to petition the Bankruptcy Court to have the conservation funds designated as a trust and separated from assets tied up in the bankruptcy proceedings. She said if the court denies the request PG&E would ask to be permitted to pay the expenses anyway. The process she added could take about a month--too long in the view of some legislators given increasingly gloomy energy forecasts for late spring and early summer. ??Deputy Director Bob Therkelsen of the California Energy Commission said his agency had been counting on a number of small power producers to bolster their output during that period. But he said some producers did not purchase the necessary equipment because PG&E and Edison have failed to pay them in full for earlier electricity deliveries. ??It's not a huge amount he said of the anticipated production shortfall but every little bit helps. ??* ??Landsberg reported from Los Angeles Bustillo from Sacramento. Times staff writers Nancy Rivera Brooks in Los Angeles Carl Ingram and Julie Tamaki in Sacramento and Tim Reiterman in San Francisco contributed to this story. LOAD-DATE: April 20 2001 of 78 DOCUMENTS ??????????????Copyright 2001 Knight Ridder/Tribune News Service ???????????????????????Knight Ridder/Tribune News Service ??????????????????????????The Orange County Register 20 2001 Friday SECTION: STATE AND REGIONAL NEWS KR-ACC-NO: ?K497 LENGTH: 846 words HEADLINE: Federal energy commission considers price fix for state energy market BYLINE: By Dena Bunis BODY: ??WASHINGTON _ Californians who see federal re-regulation of the state's crisis-bound energy market as an answer to the impending summer emergency better look for some other solution. ??Even the short-term price fix that the Federal Energy Regulatory Commission may consider at its Wednesday meeting might be too little too late. ??Lobbyists lawmakers and other FERC-watchers say they have seen a slight shift in recent weeks among commission staff and at least one member. There is some willingness they say to consider some price controls even though the Bush administration is adamantly opposed to such measures. ??Many are looking to see if President Bush's choices for the two vacancies on FERC will provide a margin for change. ??But the commission's basic philosophy that open unregulated markets are best is not likely to change soon members say. ??I've been championing a revamping of FERC's antiquated standards for determining market-based rates Commissioner Richard Massey said Thursday. But with no success. My agency is not on the verge of turning on a dime on this market-based pricing. ??The standards are a joke Massey added because the commission never turns down requests for such pricing authority. More than 600 power sellers have been given that authority he said. ??For a power company to be allowed to charge whatever the market will bear it must show FERC for example that it doesn't have the power to manipulate the market and drive prices up. ??Any seller that can't pass our screen needs to fire their consultants and lawyers Massey said. ??While the overall philosophy remains consistent FERC staff has proposed to the commission that a Stage 3 electricity emergency in California should trigger cost-based rates a form of price controls. Such triggers would be in place for one year under the staff proposal. ??The commission may decide Wednesday whether to accept that proposal. It has to make some decision by May 1 on how the market will be monitored from now on. ??The theory behind controlling prices in Stage 3 says a FERC staff report is that during such an emergency generators have the greatest opportunity to manipulate the market and drive prices up. ??But generators have that power during Stage 2 and Stage 1 emergencies says Les Starck Southern California Edison Co.'s manager of federal regulatory affairs. Price caps during Stage 3 might avert the rolling blackouts associated with that level of crisis but they wouldn't do anything to stop generators from jacking up prices the rest of the time he said. ??It is not clear how long it would take for such price controls to take effect should the commission go along with the staff recommendation. ??We're close because summer is approaching Commissioner Linda Breathitt said Thursday. Breathitt who had firmly opposed any form of price controls said in an interview last month that given the worsening crisis in California she was open to considering some short-term measures. ??It's important to me that we address the summer Breathitt said but said she wasn't able to predict what the commission would do Wednesday. ??Even if an order is approved Massey said there could be delays while the power sellers file their costs with regulators and disputes over those filings are handled. ??Sen. Dianne Feinstein said Thursday such a move by the commission would be better than having no controls at all. There's no question that we're going to be in a Stage 3 emergency. ??Feinstein D-Calif. and other Western lawmakers have been urging FERC to step in sooner and with price controls that extend beyond just the emergency period. ??Waiting for Stage 3 to intervene is putting the whole grid at risk said Roger Hamilton a member of Oregon's Public Utility Commission. We have a real stability problem when you cut it that close. ??Feinstein says the future could well rest with the new commissioners particularly Patrick Wood the head of the Texas PUC who many believe will replace Curt Heber as FERC chairman if he is confirmed by the Senate. ??Even if Massey and Breathitt agree on broader price controls as chairman Heber could block consideration of such a move. It's unclear what stance Wood would take as chairman. ??The thing that deeply concerns me about Pat Wood is that he's from Texas Feinstein said. What's reassuring is that it appears from my personal discussion with him is that he appears to be pragmatic. ??But once again timing could be a problem. ??Bush has said he intends to nominate Wood and Nora Brownell a member of the Pennsylvania PUC but has not formally sent their nominations to the Senate. ??The Federal Energy Regulatory Commission is of vital importance right now and to let the time go on without filling the spots makes no sense Feinstein said. Please please please President Bush process your nominees. ??KRT CALIFORNIA is a premium service of Knight Ridder/Tribune ??(c) 2001 The Orange County Register (Santa Ana Calif.). ??Visit the Register on the World Wide Web at http://www.ocregister.com/ JOURNAL-CODE: OC LOAD-DATE: April 20 2001 of 78 DOCUMENTS ??????????????Copyright 2001 Knight Ridder/Tribune News Service ???????????????????????Knight Ridder/Tribune News Service Jose Mercury News 20 2001 Friday SECTION: STATE AND REGIONAL NEWS KR-ACC-NO: ?K512 LENGTH: 696 words HEADLINE: In response to power woes rating agencies have California on credit watch BYLINE: By Jennifer Bjorhus BODY: ??SAN JOSE Calif. _ All three of the nation's influential judges of credit risk now have California on credit watch saying they are deeply concerned about the economic impact of the state's power crisis. ??The Fitch credit rating agency made it unanimous Wednesday when it warned that the thickening electricity quagmire as well as lower than expected tax revenues in February and March could spell broader risk for the state's budget. ??The announcement is a signal that Fitch too may downgrade its ratings on California's nearly $30 billion in public debt a move which could cost taxpayers millions. ??The announcement comes as state lawmakers mull a bailout plan for Southern California Edison Pacific Gas & Electric Co. sits in bankruptcy and state officials bleed through the state's general fund as they purchase expensive electricity for consumers. Earlier this week Gov. Gray Davis announced that the average daily bill for electricity purchases has risen from $45.8 million a day in the last week of March to $73 million a day. ??Moody's Investors Service and Standard & Poor's have already issued their own credit warnings although none of the three agencies has actually downgraded the state's very good double-A credit rating. ??Bond ratings are important yardsticks that bankers and investors use to price municipal and corporate bonds. A downgrade would force California to offer bondbuyers higher interest rates going forward costing taxpayers. ??The state was last at a lower A rating back in 1994. ??Moody's changed California's Aa2 general obligation bond rating outlook from stable to negative on April 6 the day Pacific Gas & Electric Co. filed for bankruptcy. Standard & Poor's has had the state's AA rating outlook at negative since January when the state began buying electricity for the utilities. ??The deciding factor for Fitch said Fitch vice chairman Claire Cohen was the disagreement over how the money from the new electricity rate hike will be spent. ??The California Public Utilities Commission ruled in late March that money generated by higher electricity bills should go first to pay the state Department of Water Resources which has been buying electricity for the utilities. Pacific Gas & Electric Co. has argued that if the state is paid first there won't be any money left for it. ??The utility is formally challenging the PUC decision and the move threatens to hold up the estimated $12 billion to $14 billion of bonds the Department of Water Resources plans to issue to buy more electricity. ??With that being appealed you don't have a clean authorization Cohen said. It signals to me that it could delay the financing process. ??A second concern is that the state isn't collecting as much in taxes as expected Cohen said. Tax collections for both February and March were below forecast. The amount of personal income tax the state collected in those months fell short by $455 million or 14% less than expected. ??Cohen said she made her decision before hearing that the state's power costs now exceed $70 million a day. Cohen and David Hitchcock the California analyst for Standard & Poors agreed those rising costs are a definite concern. ??It doesn't take much of a change in economic growth to make some of these projected fund balances disappear and so we're very worried about what the current economic activity is particularly in Northern California with some of the problems with the high tech area Hitchcock told analysts and investors last week in a conference call. ??State treasurer Phillip Angelides was traveling Thursday and couldn't be reached for comment. Other economy-watchers expressed concern. ??Sandy Harrison assistant director of the state Dept. of Finance said the move reinforced the importance of solving the current power problems soon. ??It's important to note that the rating hasn't been lowered yet and does remain very strong he said. ??KRT CALIFORNIA is a premium service of Knight Ridder/Tribune ??(c) 2001 San Jose Mercury News (San Jose Calif.). ??Visit Mercury Center the World Wide Web site of the Mercury News at http://www.sjmercury.com/ JOURNAL-CODE: SJ LOAD-DATE: April 20 2001 of 78 DOCUMENTS ??????????????Copyright 2001 Knight Ridder/Tribune News Service ???????????????????????Knight Ridder/Tribune News Service Jose Mercury News 20 2001 Friday SECTION: STATE AND REGIONAL NEWS KR-ACC-NO: ?K520 LENGTH: 1069 words HEADLINE: Issues still remain on what power consumers will eventually pay BYLINE: By John Woolfolk and Michael Bazeley BODY: ??SAN JOSE Calif. _ State regulators last month announced an electric rate increase that would average a whopping three cents per kilowatt hour hit bills beginning in May and punish power pigs while sparing energy misers. ??Now much of that is up in the air. ??Higher rates are surely coming _ but not before June. Exactly which consumers and businesses will pay how much is uncertain as regulators rush to forge a rate structure from a tangle of more than 20 proposals. ??Their task has been complicated immeasurably by Gov. Gray Davis' decision to weigh in with a competing rate plan and Pacific Gas & Electric's move into bankruptcy court. ??Little details are moving billions of dollars around said Nettie Hoge of consumer advocate group TURN. ??All the proposals assume a tiered structure that forces the heaviest users of energy to pay the most. But key details yet to be decided mean consumers could see their average rates go up anywhere from 7 percent to 30 percent or more. ??Among them: ??_How much of an overall increase? The Public Utilities Commission approved a 3-cent per kilowatt hour increase last month which would boost utility revenue $4.8 million. Gov. Gray Davis' hike _ left vague in Davis' April 5 television address _ averages 2.8 cents for PG&E customers but only 2.3 cents for customers of Southern California Edison. ??_What regions of the state will pay? The commission agreed to raise rates only for Pacific Gas & Electric and Southern California Edison but Davis would include the additional 1.2 million San Diego Gas & Electric customers. ??_Should heavier users of electricity subsidize those who are exempt from the new rate increase? If so those users will find themselves paying much more than any of the average increase figures being tossed about. ??_How will utilities bill customers retroactively for the increase? At the time of the PUC vote on March 27 commissioner said their increase would take effect immediately. ??Various plans are being presented this week to an administrative law judge working for the commission. The judge is expected to recommend a rate structure to the PUC on May 4. Public hearings would follow May 7-11 and the commission would vote on a plan May 14 condensing to a few weeks a process that normally lasts nearly a year. ??Each of the major proposals before the commission assumes that residential customers using less than 130 percent of their baseline would be exempt from higher rates. That's mandated under a new law that allows the state to buy power. Customers already pay higher rates for exceeding their baseline which is the average basic level of use for each region of the state. ??Each major proposal also sets new tiers with progressively higher rates for medium use at 130 to 200 percent of baseline and heavy use over 200 percent of that level. ??But that's where the similarities end. ??The first distinction among the leading plans comes in the form of an assumption: How many residential customers will avoid any increase because they don't exceed 130 percent of their baseline? Davis says more than half commissioners say a little under half and PG&E says less than a third. ??The second difference among the plans is a real difference: What happens to everyone else? ??Under the plan by utilities commission President Loretta Lynch medium PG&E users would see average bills rise 9 percent and heavy users would see bills increase 36 percent. ??Davis' plan says medium PG&E users would see average bills rise 11 percent while heavy users would pay 37 percent more. But the average total bill increase for PG&E residential customers including those who are exempt would be 20 percent under his plan and 24 percent under Lynch's according to a statement on the governor's web site. ??Business customers would see proportionately greater increases averaging 30 percent under Lynch's proposal and 26 percent under Davis'. ??The most consumer-friendly of the various proposals comes from consumer-rights group TURN. They suggest an overall average residential increase of just 7.5 percent. ??TURN's plan assumes utilities cannot charge other customers more to make up for the energy misers shielded from rate increases under state law. ??PG&E disagrees with that interpretation. The utility wants other residential users to make up for any lost revenue from exempted customers through higher rates. Under the utility's plan residential customers would see an average rate hike of nearly 30 percent. ??The proposal these folks are pushing rips the heart out of that law said Matthew Freedman staff attorney for TURN. ??Another issue affecting consumers is how the utilities can bill for electricity used in April and May before the final plan is approved. ??Utility officials have objected to making the rate structure retroactive. Instead to recoup the revenue they are proposing a flat surcharge that everyone would pay regardless of how much they use. ??Edison proposes a higher surcharge added to bills for a shorter period of time _ in this case June through August. PG&E officials are suggesting a smaller surcharge that would be spread out over 12 months. ??It'll probably be something closer to the PG&E proposal Paul Clanon the commission's director of energy issues. ??All the rate increase proposals stem from a commonly understood problem: California's current frozen rates don't generate enough money to cover the wholesale price of power. The PUC raised rates 10 percent _ or 1 cent per kilowatt hour _ in January in an attempt to help but that turned out to be far from enough. ??In March the Commission approved an additional 3-cent increase. But Davis followed quickly with an alternative proposal. The next day PG&E filed for bankruptcy raising the specter that a federal judge could order even higher rates. ??Although the PUC has sole authority to raise rates under state law Davis' proposal has complicated an already complex process. The governor appointed three of the five members of the commission and his appointees seem inclined to show him deference. But Davis has been slow in filing the details of his plan which has made it hard for the PUC to proceed. ??KRT CALIFORNIA is a premium service of Knight Ridder/Tribune ??(c) 2001 San Jose Mercury News (San Jose Calif.). ??Visit Mercury Center the World Wide Web site of the Mercury News at http://www.sjmercury.com/ JOURNAL-CODE: SJ LOAD-DATE: April 20 2001 of 78 DOCUMENTS ?????????????????Copyright 2001 The Chronicle Publishing Co. ?????????????????????????The San Francisco Chronicle ????????????????????APRIL 20 2001 FRIDAY FINAL EDITION SECTION: NEWS Pg. A4 LENGTH: 765 words HEADLINE: Edison pushes lawmakers to accept deal SOURCE: Chronicle Staff Writer BYLINE: David Lazarus BODY: Although lawmakers are skeptical of the state's multibillion-dollar deal to acquire the power lines of Southern California Edison the head of the utility's parent company warned yesterday that failure to approve the accord could lead to a long and costly bankruptcy. ???But John Bryson chief executive of Edison International told The Chronicle that he thought legislators would want to do the right thing by approving the multibillion-dollar agreement and preventing Edison from following Pacific Gas and Electric Co. into bankruptcy court. ???Bankruptcy for California's two largest utilities could have severe consequences for consumers. Financial analysts said a worsening of the state's energy mess would increase the possibility of higher electricity rates. ???Nevertheless lawmakers are unlikely to accept the Edison deal -- at least not in its present form. ???We are going to go through this thing extensively said state Senate President Pro Tem John Burton D-San Francisco. There are a lot of concerns about the valuation. ???Still he said legislative backing for the accord remains possible as long as Edison is open to amending some of the terms. ???The Edison people are smart enough to know that the Legislature is going to have its say Burton said. ???Indeed sources familiar with the matter said Edison expected a certain amount of tinkering with the deal and would not resist efforts to reach common ground with lawmakers. ???The Assembly members do not view bankruptcy as a favorable alternative said Assemblyman Herb Wesson D-Los Angeles. There will be a big effort to try and work something out. ???Edison's Bryson seems eager at this point to present himself and his company as reasonable business partners who are willing to negotiate in good faith. ???This contrasts sharply with the state's relations with PG&E which turned acrimonious after PG&E blindsided the governor with its bankruptcy filing. Each side blamed the other for the collapse of earlier negotiations. ???We made the decision at an early stage that this was a massive problem for the state and that the best course was to find a practical solution that would allow us to get on with operating our power system Bryson said. ???Bankruptcy he said is absolutely a last resort. It's a long and costly process. ???It is also the last thing Wall Street wants to see. On Wednesday rating agency Fitch Inc. joined Standard & Poor's and Moody's Investor Service in warning that California's credit rating could be lowered because of the state's energy mess. ???The state may be forced to issue junk bonds said Carol Coale an energy-industry analyst at Prudential Securities in New York. This could lead to a surcharge on electricity bills to guarantee the bonds. ???Bryson not surprisingly defended Edison's agreement with the governor as a prudent alternative to bankruptcy. ???This is a very good deal for the state he said. It is not a bailout. Edison gives up a lot to make all this possible. ???Southern California Edison will sell its power lines to the state for $2.8 billion. It also will provide low-cost power to California for 10 years and drop a federal lawsuit seeking full recovery of nearly $5 billion in past debt. ???Critics say the state is paying far too much for Edison's transmission system -- more than two times book value -- and that the power lines are of little use unless PG&E's grid also can be acquired. ???It's a multibillion-dollar ratepayer bailout of Edison said Doug Heller a spokesman for the Foundation for Taxpayer and Consumer Rights in Santa Monica. Edison gets off scot-free. ???Under the most likely scenario lawmakers will seek to reduce the amount paid for Edison's power lines and to increase the role of the California Public Utilities Commission in regulating the utility. ???They also will try to come up with a workable contingency plan for the state if PG&E remains adamant in its refusal to sell off its part of the power grid. ???The deal on the table is still salvageable said Michael Shames executive director of the Utility Consumers' Action Network in San Diego. But Edison needs to understand that what it got from the governor is only a framework not set in stone. ???For his part Bryson signaled that plenty of room existed for give and take on the issue. ???We're just at the initial stage he said. We always have accepted the notion that Edison is a California regulated utility and is subject to the laws of the Public Utilities Commission.E-mail David Lazarus at dlazarus@sfchronicle.com. GRAPHIC: PHOTO Gov. Gray Davis (left) and John Bryson chairman of Edison International announced a transmission line deal on April 9. Bryson said Edison may go into bankruptcy if the deal isn't approved. LOAD-DATE: April 20 2001 of 78 DOCUMENTS ???????????????????The Associated Press State & Local Wire The materials in the AP file were compiled by The Associated Press. ?These materials may not be republished without the express written consent of The Associated Press. ???????????????????????April 20 2001 Friday BC cycle AM Eastern Time SECTION: State and Regional LENGTH: 438 words HEADLINE: Most Edison executives going without bonuses BYLINE: By GARY GENTILE AP Business Writer DATELINE: LOS ANGELES BODY: ??Senior executives at Edison International and its subsidiary Southern California Edison went without hundreds of thousands of dollars in bonuses in 2000 because of California's power crisis. ??Edison International's chairman and chief executive John Bryson was paid $ 950000 in 2000 compared with salary and bonus totaling $2.16 million in 1999. ??Stephen Frank the chairman and chief executive at Southern California Edison was paid $617000 in 2000 compared with salary and bonus totaling $1.3 million in 1999 according to the company's proxy statement filed with the Securities and Exchange Commission. ??The company also said Thursday it would not award merit increases to executives in 2001 because of the continuing crisis. ??In a similar proxy statement released Tuesday Pacific Gas and Electric Corp. revealed it also withheld bonuses for its top two executives although they did receive raises. ??Edison and PG&E say they've lost nearly $14 billion since June to high wholesale prices that the state's electricity deregulation law bars them from passing on to consumers. PG&E saying it hasn't received the help it needs from regulators or state lawmakers filed for federal bankruptcy protection April 6. ??Edison is continuing to work with state officials and its creditors. ??The utility said its board of directors decided to withhold bonuses to all but two key executives because the financial effects of the energy crisis have overshadowed all other aspects of company and individual performance. ??The two executives who did get bonuses earned them for their roles in preserving the viability of the companies during the crisis and for retention purposes Edison said. ??Ted Craver senior vice president chief financial officer and treasurer at Edison International was paid $375000 in 2000 and received a $100000 bonus. His total compensation in 1999 was $652100. ??Harold Ray executive vice president at Southern California Edison received a salary of $390000 in 2000 and a bonus of $50000. His cash compensation in 1999 was $818400. ??PG&E paid Chairman Robert D. Glynn Jr. $945086 in salary and benefits during 2000 a 58 percent decrease from $2.26 million in the prior year according to the company's proxy statement. ??Glynn 57 received a 12.5 percent increase in his base salary but didn't get a bonus. ??Gordon R. Smith who runs Pacific Gas and Electric received a 14.5 percent raise in his base salary to $630000 but didn't receive a bonus. In 1999 Smith's compensation package totaled $1.1 million. LOAD-DATE: April 20 2001 of 78 DOCUMENTS ???????????????????The Associated Press State & Local Wire The materials in the AP file were compiled by The Associated Press. ?These materials may not be republished without the express written consent of The Associated Press. ??????????????????????April 19 2001 Thursday BC cycle SECTION: State and Regional LENGTH: 901 words HEADLINE: Top political aide discusses Bush's low-key style BYLINE: By RON FOURNIER AP White House Correspondent DATELINE: WASHINGTON BODY: ??When 24 members of a Navy spy plane crew returned to the United States after 11-days in Chinese custody President Bush was noticeably absent from their homecoming ceremonies. ??He also kept a low profile as the Senate shrank his tax-cut plan by $400 billion and had little to say about riots in Cincinnati this month. ??Such is the silent style of the new president says Bush's top political strategist Karl Rove. ??Every administration is marked in contrast to its predecessor. The previous administration felt compelled to dominate the evening news every day and the president said 'I'm focused on getting the job done' Rove said Wednesday in an Associated Press interview. ??Running a low-key presidency sets Bush apart from former President Clinton but the style has its critics. ??Some lawmakers including members of his own party said Bush could have saved more of his $1.6 trillion tax-cut plan if he had personally lobbied more lawmakers. ??Bush issued a statement expressing sympathy with police and protesters in Cincinnati but ran the risk of looking detached. ??And Rove acknowledged that there was some discussion in the White House about Bush attending the U.S. crew's homecoming to reap the public relations reward for freeing the crew. ??But the president vetoed the idea according to Rove who quoted Bush as saying I want it to be about them and I don't want to go through the discombobulation that it would require of them and their families for me to show up. ??It is not hard to imagine Clinton commanding center stage during city riots a budget battle or an international crisis but Rove said We intended to have a smaller profile than the previous administration. ??Bush's attitude is that he's not going to be measured by whether or not he gets on the evening news but on whether or not he gets progress Rove said during the 45-minute interview. ??He sat at a polished wood conference table in his West Wing office his hands folded over a memo he had discretely turned upside down. Newspapers and a Starbucks coffee mug littered his desktop. Framed photos and artwork were propped against a chair still awaiting hanging on his 89th day in the White House. ??A painting of a Texas landscape decorated one wall allowing Bush's political strategist of eight years to go on vacation whenever I'm on the phone. ??Rove is on the telephone a lot these days crafting strategies to pass the White House legislative agenda maintain GOP control of Congress in 2002 and position the president for a re-election bid in 2004. ??Bush narrowly won the White House without California's 54 electoral votes and Rove said the president could win re-election without the state but it's always nicer to carry the Golden State. ??He said the state's electricity shortage will not hurt Bush's chances in 2004 adding that the administration has done virtually everything Gov. Gray Davis has requested. ??He suggested that the state caused its own problems by not building enough power plants and failing to follow the lead of other states such as Bush's Texas to establish sound energy policies before a crisis struck. ??This has got a very human dimension to it Rove said. It's one thing to talk about power supplies. It's another thing when you talk about how it affects their jobs how it's affecting their livelihoods how it's affecting the safety of their communities and the health of their families. This is a tough issue and it ought to be a wake up call for the entire country. ??A White House task force headed by Vice President Dick Cheney is working on recommendations to address both short-term problems of soaring electricity and natural gas prices and longer-term energy supply problems focusing on producing more domestic oil and gas and building more electric power plants. ??Rove said the administration will soon unveil new conservation measures aimed at helping California ease its shortages. ??He said Bush and his political team are bringing House Republicans from politically competitive states to the White House where they discuss their districts' needs and often gain local media attention. ??Bush also plans to attend fund-raisers for House and Senate campaign committees helping the party gear up for 2002 midterm elections in which control of Congress is at stake. ??Rove also said: ??-Bush will not seek broad authority to negotiate trade treaties anytime soon allowing time to make the legislation more attractive to Democrats. You can only put so much into that pipe and we've stuffed it he said of Bush's crowded legislative agenda. The fast track authority is key to Bush's plans for a free trade zone stretching from Canada to Chile. That proposal is the focus of the three-day Summit of the Americas beginning Friday in Quebec City. ??-Americans will support Bush's environmental policies despite criticism of his decision to overturn some initiatives of the final days of the Clinton administration. Rove stopped short of accusing Clinton of setting Bush up for political troubles. I'm not certain I see a conspiracy there. I do think it's interesting that Clinton waited until the last moment to act. ??-Bush has not wavered since the campaign in his view that states should be able to opt out of minimum wage increases passed by Congress. We are not all one single labor market Rove said. GRAPHIC: AP Photo WX109 LOAD-DATE: April 20 2001 of 78 DOCUMENTS ???????????????????The Associated Press State & Local Wire The materials in the AP file were compiled by The Associated Press. ?These materials may not be republished without the express written consent of The Associated Press. ??????????????????????April 19 2001 Thursday BC cycle SECTION: State and Regional LENGTH: 727 words HEADLINE: Utility commission staff says parent company profiting from energy sales DATELINE: BOISE Idaho BODY: ??IDACORP made $66 million in profits in the past year by buying electricity on the spot market and reselling it for a higher price to its subsidiary Idaho Power Co. the staff for state utility regulators contends. ??The Idaho Public Utilities Commission staff said such profits should not come at the expense of Idaho Power ratepayers facing staggering electrical bills. ??In a report to commissioners posted on the agency's Internet site Wednesday the staff recommended Idaho Power's proposed increases for residential and commercial customers be cut by about half. ??Idaho Power seeks rate increases over the coming year totaling $227.4 million. The regulatory staff recommends a $108.7 million increase. For residential customers a requested 34-percent hike would be reduced to 16 percent. ??This is not a final decision said Jeff Beaman a spokesman for IDACORP and Idaho Power. In many cases the commissioners disagree with the staff. ??The report noted there was nothing illegal about the transactions between Idaho Power and its sister company Idaho Energy Systems. To change that the staff urged commissioners to create a mechanism that forces Idaho Power to buy electricity at the same price Idaho Energy Systems pays for it. ??The report said Idaho Energy Systems an unregulated subsidiary of IDACORP repeatedly purchased electricity on the wholesale market and then sold it to Idaho Power for a profit. ??Idaho Power officials contend the recommended policy change could financially cripple the company. It already spent $161 million buying power on the open market and cannot recover the money unless the coming year's rate is increased. ??The failure to recoup these funds could lead to liquidity problems Beaman said and that will hurt not only the company but our customers as well. ??But IDACORP paid all of its salaried staff - including Idaho Power employees - a 15-percent bonus at the end of the last fiscal year because the company had achieved record profits of $139.9 million 53 percent over the year before. ??Beaman said incentive payments have no impact on the rate request. ??Charging the higher rate between the two subsidiaries was the result of a commission order tying the price that Idaho Energy charges for wholesale electricity to the Mid-Columbia Index. The index has been pegged at unrealistic levels since the energy crisis erupted in California and fluctuates constantly. ??We are confident that the transactions were performed within the letter and spirit of the law and have not been at the expense of ratepayers Beaman said. ??Commission spokesman Gene Fadness said commissioners cannot comment on a case before them but their ultimate decision can be appealed to the Idaho Supreme Court. ??The Public Utilities Commission staff also recommended: ??- Deferring $66.1 million of Idaho Power's rate request without interest until answers are available about the company's electricity deals. ??- Deferring another $45.8 million of the request until next year when the commissioners would allow Idaho Power to collect 5-percent interest. That part of the hike was earmarked for wholesale power purchases this year - purchases that the staff believes will be much more expensive next year. ??- Cutting another $10.3 million from the increase request contending it was an error by Idaho Power's Risk Management Committee that the company planned on passing on to ratepayers. ??- Implementing a low-interest loan program to encourage energy conservation by Idaho Power customers. ??- A two-year phase-in of any rate increase ultimately approved that is substantially over 20 percent. ??- Changing residential rates to a three-tiered system to encourage savings. ??Homeowners would pay 5.52 cents per kilowatt-hour for the first 800 kwh used 6.12 cents per kwh for use between 800 kwh and 2000 kwh and 7.48 cents per kwh for use over 2000 kwh. The current residential rate of 5.2 cents per kwh. ??The staff report also took Idaho Power to task saying it was warned of the possibility of spiraling prices and power shortages as far back as 1995. ??But the company contends it did not want to build generating plants during the past decade because with electricity deregulation looming nobody knew what independent power facilities were being considered. LOAD-DATE: April 20 2001 of 78 DOCUMENTS ???????????????????The Associated Press State & Local Wire The materials in the AP file were compiled by The Associated Press. ?These materials may not be republished without the express written consent of The Associated Press. ??????????????????????April 19 2001 Thursday BC cycle SECTION: State and Regional LENGTH: 820 words HEADLINE: Legislators probe possible power natural gas collusion BYLINE: By DON THOMPSON Associated Press Writer DATELINE: SACRAMENTO BODY: ??Southern California Edison was charged about $750 million more this year for natural gas because of unchecked free-market forces an industry consultant testified. ??Paul Carpenter told the Assembly Electricity Oversight Subcommittee on Wednesday the price spikes came after the El Paso Natural Gas Co. contracted first with Dynegy and later with its own marketing affiliate El Paso Merchant Energy to control the pipeline capacity. ??Officials with El Paso and other natural gas suppliers are expected to testify Thursday that they did not illegally manipulate the market. ??The California Public Utilities Commission estimated a year ago that overcharges by the companies that control natural gas flow drove up prices by $ 100 million a year to California gas and electricity customers. ??But PUC attorney Harvey Morris said that was before last summer's price spikes which he blamed on natural gas suppliers using a monopoly to game the system. ??It's way worse than we could possibly have imagined Morris said after testifying before the subcommittee. It's obviously way higher than $100 million. ??Natural gas rates at the California border generally tracked national prices until November when they spiked as high as 11 times higher than the price of natural gas elsewhere in the nation Carpenter said. ??I have never seen gas prices like this anywhere in the world said Carpenter who has been studying the energy market for 20 years for Cambridge Mass.-based consultant The Brattle Group. The Brattle Group was hired by Edison to study the natural gas market. ??The committee is one of two legislative committees exploring whether illegal market manipulation in the electricity and natural gas markets has driven up California's energy costs. ??This is a market that is plagued by the exercise of market power Frank Wolak chairman of the California Independent System Operator's Market Surveillance Committee told the Senate Select Committee to Investigate Price Manipulation of the Wholesale Energy Market. The ISO runs the state's power grid. ??However there is no law against me saying 'I'm not going to sell to you' Wolak said. Market manipulation only becomes illegal when there is collusion Wolak said and such evidence is hard to find. ??Electricity generators and natural gas suppliers say a severe supply and demand imbalance - not market manipulation - has led to higher prices. ??Everybody's busy doing investigations. They're not interested in solving the problem said Independent Energy Producers Executive Director Jan Smutny-Jones. ??Investigations are wasting everybody's time Smutny-Jones said adding that previous probes and lawsuits have uncovered no wrongdoing. He said the state's power problems came because state regulators denied utilities the chance to sign long-term energy contracts when they had the chance. ??People have been playing by the rules Smutny-Jones said. ??But the Senate committee's first witnesses are ISO officials who authored studies that claim the state paid more than $6 billion too much for power last year. ??Committee chair Joseph Dunn D-Garden Grove also has slated state Auditor Elaine Howell who last month blamed buyers and sellers for skyrocketing electricity costs. Dunn also has scheduled future testimony from state federal academic and private investigators studying the power market. ??He invited five major generators to attend the committee's second hearing next week. All five - Reliant Dynegy Williams Energy Duke Energy and Mirant - say they are eager to cooperate and clear their names Dunn said. ??Dunn asked the five for a total of 86 specific documents. If the companies feel they cannot provide documents because of legal or confidentiality concerns Dunn said he will subpoena them. ??Smutny-Jones said investigators appear to be growing desperate to blame the state's natural gas and electricity price hikes on illegal market manipulation instead of natural market forces. ??He cited Attorney General Bill Lockyer's announcement last week that any informant who helped prove wrongdoing would be entitled to a percentage of the state's recovery he estimated could range from $50 million to hundreds of millions of dollars. ??If the state's offering a $50 million reward they haven't found anything Smutny-Jones said. I don't think you're going to find the fact that anybody did anything criminal here. ??Assemblywoman Jenny Oropeza D-Long Beach said she believes otherwise after Wednesday's testimony: I think it is very clear there was some price manipulation going on. ??But Assemblyman John Campbell R-Irvine isn't sure there was anything illegal. ??There clearly are market forces at work that's evident Campbell said. Whether you make the jump to market manipulation ... I haven't seen conclusive evidence that leads me to make that jump. LOAD-DATE: April 20 2001,other,informative,2 +Re: California Update p.2; 5/29/01,Thanks. Talked to Rob. He's going to find out timing and cost to do a bigger American Ass. of Economist number on Wolak & Co. while I work the manifesto gang. Best Jeff,other,casual,3 +Calypso Tribal Letters,,other,neutral,0 +Re: Confidential Draft - David Pope,Tara You are right -- those changes were not included. For Vice President level employees corporate comp.does not promote guaranteed performance bonuses. The request that he be able to get out of his employment contract if he is not promoted also is not something that we can do otherwise it will undermine the enforceability of our non-competes across the board. I spoke with David Oxley on both of those points and he concurred that these changes could not be made. Michelle Tara Rozen 04/05/2000 12:23 PM To: Twanda Sweet/HOU/ECT@ECT cc: Nigel Sellens/LON/ECT@ECT Michelle Cash/HOU/ECT@ECT Subject: Re: Confidential Draft - David Pope Thanks for this Twanda I have two comments 1)I cannot find the exception clause which indicates that David Pope can resign if he doesn't make MD as described in previous email. Am I missing this or can we not put this in? 2)Danny McCarty wanted guaranteed bonus for 2000 rather than performance target bonus as per email. Is this possible? Thanks Tara,employment,formal,3 +Re: my work situation,This is an issue we have long struggled with. We have conducted several comprehensive reviews in the past and on an ongoing basis we go through a resource allocation process which enables subjective criteria to be considered in the prioritization and resource allocation process. I think the project is a good idea. Your sources would be John Jim Steffes and Rick Shapiro (for the RCR or resource commitment process). Doug Schuler on 05/01/2001 10:59:10 AM To: skean@enron.com cc: Subject: my work situation Dear Steve Jim and Rick: I just wanted to give you a quick update on my situation at Rice and to inquire as to a future project with your group at Enron. First I apologize for my prolonged recent absences. I have had two long-standing academic projects: one was due 4/19 (it was on final review - a paper about corporate political strategy - and just was accepted for publication at our top academic journal) and another is due 5/31. The 5/31 paper was commissioned long ago but is a key paper in a June conference (topic is methods to study corporate political activities and the public affairs function). In order to get it done properly I need to forego any work at Enron until later in the month. A project of interest to me at Enron - and I hope one that you also have interest - is assessing the effectiveness of governmental affairs. John told me that he conducted such a study for the group last year. One of the methodological challenges is to calculate the benefits that government affairs brings - especially in a system where for example on the legislative side much of the work of government affairs is to block legislation at very early stages. I suspect that govt. affairs needs to justify its existence for internal budgets at Enron and thus the benefits of the function are important to quantify. I'd like to review any of the previous work and make suggestions as necessary. At some point let me know how you would like to proceed. Otherwise I hope all is well with you all. Cordially Doug Doug Schuler Rice University Jesse H. Jones Graduate School of Management P.O. Box 1892 Houston TX 77251-1892 (713) 285-5472 tel. (713) 285-5251 fax. schuler@rice.edu,other,formal,3 +Transatlantic meetings,fyi -----------------,other,casual,0 +Re: Ken Lay meeting with Japanese Prime Minister,Rosie -- please check Ken's calendar. This would be a great one to do if we can squeeze it in. Nick -- congrats on what looks like a great new opportunity to make progress. I am in all week and would love to talk to you and Joe. If we can't otherwise make schedules work call me at home after hours Houston time (713-621-6550). Nicholas O'Day 08/27/2000 10:49 PM To: Steven J Kean/NA/Enron@Enron cc: Subject: Ken Lay meeting with Japanese Prime Minister -----------------,calendar & scheduling,formal,3 +"Virginia Manufacturers Association Seminar -- June 19, 2001",Steve - take a look at this and contact the sponsor with a yes or no. Thanks -----------------,other,formal,3 +Re: Wyoming Energy Commission subject,I'll be happy to accomodate. I can take you through Enron's view of how markets overall are evolving and how we approach those markets. I'd also like to spend some time reviewing interstate transmission policy and how it affects Western energy markets. Steve Reynolds on 05/23/2001 09:40:11 AM To: cc: Subject: Wyoming Energy Commission subject Steve it was great to meet you and hear your remarks yesterday. For the speaking engagement next Wednesday I would like you to focus upon the Enron strategic model of virtual integration of market forces in the evolution of energy development. Wyoming represents a huge material resource base and the commission is charged with the development and promotion of such. But the Governor's message is that we cannot see ourselves as producers and exporters in the traditional sense. We will continue to have the status of a colony if we do not recognize the new dynamics of how these market places are evolving. If you set the stage with a presentation of Enron strategy then we will discuss how a state with its agencies and auathority can play a role in this evolution. I have set your time for 45 minutes which can include a short Qand A period. But your message can be as succint as you can make it and get the point across. You may have to present the Enron case a number of different ways but the Governor will give you latitude to make the point. You will be welcome to participate in a following panel which will address role playing by the state and the commission. Plan to join us for lunch. If you need more detail let me know. Thanks! Stephen,other,formal,3 +Re: A&M - Bush Library Foundation & School of Public Policy,Let's talk. While there is always some value in these things it is ususally quite small and consumes more valuable resources in trying to capture the benefit than the benefit itself. From: Michael B Rosen@ECT on 07/13/2001 08:44 AM To: Steven J Kean/NA/Enron@Enron cc: Subject: A&M - Bush Library Foundation & School of Public Policy Steve- We have been approached by the Texas A&M/George Bush Presidential Library Foundation and School of Public Policy to endow additional funds. Enron had made an original contribution to the library foundation back in 1998 totaling $250K over five years. I am working with Community Relations and A/A Recruiting to evaluate the latest request and to discuss where Enron may have interest or find leverage for our Government Affairs Recruiting or PR efforts. The Foundation is willing to work with us to establish whatever type of program(s) and/or participatory involvement we would like. We have discussed an Enron speaker series classroom lectures advisory committee seats and the likes. I have already had a chance to run this by Rick Shapiro and Rob Bradley. Although Rick was noncommittal regarding his team's time for speaking or lecturing he seemed supportive of the effort. Rob has already been participating in some speaking opportunities there and supported expanded efforts. What are your thoughts on contribution levels (another $250K was suggested by CR) and any specific program or relationship opportunities regarding the Library Center or School of Public Policy. Please grab me for quick conversation when you have time. Thanks. Mike,human resources,formal,3 +Re: 2002 Budgets - Here we go! with attachment,Will you be filling out mine? From: Elizabeth Linnell on 06/12/2001 12:53 PM To: Steven J Kean/NA/Enron@Enron Richard Shapiro/NA/Enron@Enron Aleck Dadson/TOR/ECT@ECT Michael Terraso/OTS/Enron@ENRON Marc Phillips/OTS/Enron@ENRON Henry Jeffrey Keeler/Corp/Enron@ENRON Susan Mark Palmer/Corp/Enron@ENRON Dennis Kelly Kimberly@Enron Communications Christie Patrick/HOU/ECT@ECT John cc: Subject: 2002 Budgets - Here we go! with attachment Sorry! ,finance,casual,3 +Eeegads...,Don't know how I got on the list but just got my invitation to the Western Conference of PUCs meeting June 3-6 where the guest speakers are Frank Wolak and Gary Locke. Oh dear.... Best Jeff,other,casual,0 +EES Organizational Announcement,Congratulations! -----------------,other,celebratory,0 +Memo Re State Processes for Takeover of Transmission,,energy infrastructure,formal,3 +Task Force conf call -- 9:30,202-287-1321,other,formal,5 +Public Policy Contacts for California,Jeff and Steve As you requested I have prepared a list of my preferred public policy contacts for California. It is composed of professionals from an array of public private and non-profit backgrounds. I have worked in some capacity with each of these people and most I know quite well. Please call me for further background. Kevin 213-926-2626 Attachment - Kevin Scott - Preferred Contacts - 6-20-01.doc,other,formal,3 +Re: Daily Research reports,I would like to see research from all of these sources on areas of interest to enron -- energy and broadband North America and Europe. Thanks Henry Emery on 07/19/2001 12:03:17 PM To: undisclosed-recipients: cc: Subject: Daily Research reports Attached are two research reports that I can send to you on a daily basis. One of our many benefits here at our new location is the availability of various research sources. The two reports I have attached are from : The First Union Securities Equity Marketing Group and Merrill Lynch We also have access to Goldman Sachs research and CS First Boston Research. Please let me know if you would like me to continue sending these reports on a daily basis or if you have any particular companies that you are interested in hearing about. Sincerely Hank Emery - Spotlight071801.pdf.pdf - smith.pdf.pdf,other,formal,3 +Re: Draft New Power press release,In the second paragraph we should delete the partnership statement. I think it's more effective to refer to the New Power Company's risk management capabilities (as provided by Enron if necessary). That's the basis for the ability to guarantee savings (not economies of scale). I am also concerned that the current statement implies that Enron is taking the risk on the commodity price guarantees. Peggy Mahoney@EES 08/24/2000 01:15 PM To: Mark Koenig/Corp/Enron@ENRON Mark Palmer/Corp/Enron@ENRON Steven J Kean/NA/Enron@Enron Cedric Burgher/Corp/Enron@ENRON Paula Rieker/Corp/Enron@ENRON Mike Kerns/Western Region/The Bentley Company@Exchange Karen Denne/Corp/Enron@ENRON Karen S Owens@ees@EES Elizabeth Tilney/HOU/EES@EES cc: Subject: Draft New Power press release See draft release below. I have made some suggestions. Let me know what you think by Friday at 10:00am. Peggy -----------------,other,formal,3 +Re: Invitation to address UTILITIES 2001,Decline is ok. Enron Capital & Trade Resources Corp. From: Sherri Sera 05/09/2001 11:04 AM To: Ursula Brenner/NA/Enron@Enron cc: Steven J Kean/NA/Enron@Enron Subject: Re: Invitation to address UTILITIES 2001 I had originally declined this invitation but decided to run it by you after closer review. He could be there if he chooses to and if you think he should. Please advise. SRS -----------------,other,formal,2 +Re: Joe Hirko Fortune interview,Looks good. Some of his questions suggest he's going to include a fair amount of industry reaction -- which could be a mixed bag some are clearly threatened by efficiencies in bw markets. Looks like it will be a really good story. He definitely appears to be excited by it.,media & press,excited,3 +Advisory council meeting,See last question. ,other,casual,0 +"Antitrust meeting with Rick, Lara, and Vicki Sharp, in teamroom.",Cynthia -- regulator to speak on same day as Shaheen Tom Delainey,other,casual,3 +More great press!,Did you see Peggy Noonan's article? Shapiro and I are getting misty eyed. -----------------,media & press,excited,0 +Call to Bob Glynn,Per our discussion this morning below is a summary of items to discuss with Glynn: Adding Enron's negative CTC claim to the list of claims: PGE's filing included a list of top twenty creditors. Our negative CTC claim was apparently not taken into account in compiling that list. The list is nonbinding however. PG&E will be required to file schedules of creditors on April 20. Our negative CTC claim should be on Schedule F (for unsecured claims). You may want to remind Glynn of your previous conversations and state our expectation that the negative CTC claim will appear (preferably as uncontested) in the April 20 filing. (Note: if PG&E does not include the claim we have an opportunity to file a proof of claim and ultimately the court determines the validity of the claim). Including Enron on the Creditors' Committee: PG&E may have the opportunity to influence representation on the creditors' committees. There are several reasons to suggest to Glynn that we be included: 1) we are a big creditor 2) we could be helpful in crafting a broader solution and 3) we are one of the real parties in interest behind the PX and ISO (who were listed as significant creditors but are really just passthroughs for the suppliers ... and PG&E likely would not want to have those political bodies serving on the creditors committee anyway).,finance,formal,3 +Re: Confidential Agreement,Jerry: Here is the latest CA with everyone's changes. I feel that this is pretty close to the best we can offer in terms of the stand-still and non-solicitation agreements. Enron usually does not get into stand-still agreements so doing this one was a big step for Enron. Look forward to talking to you tomorrow morning. Thanks for your patience. Again this is a draft copy for discussions purposes only. Regards Ben,legal affairs,formal,3 +-- Joe and/or Rick,Call Montano or Day Presentation to ECT presentation to MIT group Texas file cal file,other,formal,3 +More great press!,I can hardly believe Peggy Noonan wrote this. I'm a sucker for blatant heart string pulling. I love it. I'm misty. -----------------,media & press,excited,0 +Re: CPUC Request for Confidential Information,I understand that we may have no choice in the matter but having wtinessed Loretta Lynch's inability to define market power when asked to do so by Joe Barton last Monday and having heard Carl Wood declare war on capitalism at FERC's hearing on Tuesday and knowing that the likes of Harvey Morse (PUC FERC attorney) who has never come down on the side of no market power here in any analysis is heading up the PUC investigation and seeing Gov Davis' press releases demanding refunds from the faceless out-of-state suppliers I'm well maybe a little nervous about them getting their paws on our data. Jeff,energy infrastructure,concerned,5 +Commodity Futures Act - Talking Points,please print ,other,casual,3 +RE: Compliance Agreement,What's this about? Could you e-mail Dave and I with the background any effect on us etc.? Why was Dave on this distribution? ,other,inquisitive,3 +Meet with Commissioner Ebert in Biloxi,Fly to DC from Biloxi,personal & social,urgent,5 +"Department meeting conference call. 800-283-1805, in Ricks name.",Gordon Weil Dave Marquart Richard Tabors,other,formal,3 +Two Requests re: May 22-23 Forum,I already responded to this. Print for my meeting file. -----------------,other,formal,0 +Background and Message Points,Attached is Jeff's backgrounder in the event you call Hertzberg. -----------------,other,formal,2 +Most of West in the Same Power Jam as California,,other,neutral,3 +Re: CONFIDENTIAL - Residential in CA,I get so worked up over this issue... I really think now is the time to speak up and dissent. Skilling told us at a floor meeting that as an organization we've made poor decisions in the past and he believes it's because the people who disagreed with those decisions never spoke up. So help me out! From: Jeff Dasovich on 04/13/2001 12:34 PM Sent by: Jeff Dasovich To: Karen Denne/Corp/Enron@ENRON cc: Subject: Re: CONFIDENTIAL - Residential in CA Amen.,organization,excited,3 +RE: Market Stack,Eric July works for me. Vince ,energy infrastructure,casual,0 +Re: Details - follow up (back),Thanks for handling. Let me know if it begins to interfere unduly with your new responsibilities. Mark Schroeder@ECT 04/12/2001 04:23 AM To: Mike cc: Jo Ann Hill/Corp/Enron@ENRON Steven J Kean/NA/Enron@Enron Subject: Re: Details - follow up (back) Thanks. I am seeing a few things through to conclusion and I expect this situation to be one unless Steve prefers to handle it differently. I think it is a matter of either him or me and I think this is one item I can keep off of his plate. thanks mcs Mike Dahlke@ENRON_DEVELOPMENT 11/04/2001 14:41 To: Mark Schroeder/LON/ECT@ECT cc: Subject: Re: Details - follow up (back) Mark Congratulations on your new assignment. It has been a long time since I have dealt with Coal but the business desperately needed new ideas and approaches when I knew it. Good luck! Yes I did meet with JoAnn last Friday. As required by the agreement she gave me I have retained counsel and the proposal is being reviewed by my attorney. In light of the announced change I am wondering if questions and comments should still be addressed to you? Please advise. Mike D.,other,formal,3 +Gary von Fischer,10:45 meet with Cliff Baxter,project management,casual,3 +,I still need to talk to you about our public message in India. I am on my way to Calgary tonight. My hotel number is 403-266-7331. Thanks.,personal & social,casual,3 +Confidential -Strategic Question,Today's strong gas prices have opened a new window of opportunity for a pipeline to move Wyoming gas into the Ventura market and downstream. Currently Trailblazer is conducting an open season to expand its facilities for service between Wyoming and Gage County Nebraska. A number of our contacts in the Powder River (including ENA) are making decisions on Trailblazer capacity right now. When we invested in the Bighorn gas gathering project in December of 1999 we viewed a connection between Bighorn and Northern Border Pipeline (250miles) as a strategic advantage to be exploited in the future. Strong gas prices and the ramp of Powder River production are accelerating the feasibility of making a pipeline out of the Northern Powder River Basin a reality. While connecting the Powder River Basin to NBPL using an intrastate pipeline through Montana remains a real possibility it also carries with it the negative baggage of NBPL being fully contracted through 2003 (and possibly beyond) with Canadian gas and a potential for Alaskan gas. In the short term this presents us with some problems getting shippers to sign up for transport on the new Montana intrastate. I would like you to think about the following concept . A new interstate pipeline named NBP-Dakota extending from the Recluse Wyoming area to Ventura Iowa and going into service in November of 2003. A tentative design and cost would be 24 diameter 1435 MAOP 480 miles with capex of approximately $270 million. Initial flow would be 300 mmcfd with expansion capability up to 490 mmcfd and an initial rate of just under 50 cents per mcf Recluse to Ventura. At today's Ventura price of $4.22 this could leave Powder River producers a margin of more than $2.00 an mcf. Using August 1999 Ventura pricing of $2.64 the margin would be 64 cents. If we can build the pipeline at the cost projected (NPNG has used Fort Union's actual construction costs for a 24 inch 1440psi system - Enron Engineering would not even be in the same cost universe) NBP Dakota would be more competitive than sending the gas to NBPL via the Montana intrastate. I am of the opinion that future looping the Trailblazer system would come in as 3rd place to the other 2 routes. NBP Dakota would need to get started with an open season this fall to allow for a 2003 in-service date. THE QUESTION I need your opinion about using NBP Dakota for this opportunity rather than feeding more gas into NBPL in the northern Montana area. Strategically are we willing to let NBPL carry the possible risk of decontracting after 2003 without support from the Powder River Basin ? For what it may be worth I believe NBPL can handle that risk successfully without the Powder River volumes. I need to know your views on this as the Montana intrastate topic is coming up for discussion at the Bighorn Management Committee meeting later this summer.,other,formal,5 +Energy Issues,Please see the following articles: Bay City News Wed 3/21: Blackouts Not Expected=20 Today Dow Jones Newswire Wed 3/21: Calif State Controller:General Fund Surplus = Dn=20 To $3.2B CBS.MarketWatch.com Wed 3/21: Davis says regulators will act to pay QFs Electricity providers insist they need to be paid Long Beach Press Wed 3/21: Rash power bill may need fix SF Chron Wed 3/21: PUC considers rewarding producers that sign long-term= =20 contracts Sac Bee Thurs 3/22: State claims $5.5 billion overcharge: Refunds by=20 wholesale generators sought Sac Bee Thurs 3/22: Power solution eludes Davis: Lawmakers grow edgy as= =20 crisis drags on Sac Bee Thurs. 3/22: Legislators learn some details of power contracts= San Diego Union Thurs 3/22: Federal judge orders major power wholesaler= =20 to sell to California San Diego Union Thurs. 3/22: Controller: State's power spending imperil= s=20 its financial health San Diego Union Wed 3/21: Governor says utilities must pay in advance f= or=20 some power LA Times Thurs 3/22: Energy Overcharge of $5.5 Billion Is Alleged LA Times Thurs 3/22: Power Strain Eases but Concerns Mount LA Times Thurs 3/22: Graphics: Overcharges Alleged=20 San Fran Chron Thurs 3/22: Net Complex A Dilemma For San Jose=20 SERVER FARM: Plant would tax grid San Fran Chron Thurs 3/22: Contracts Won't Meet Summer Demands=20 DETAILS: 2004 before full impact felt Mercury News Thurs 3/22: California overcharged $5.5 bln for wholesale= =20 power Orange Cty Register Thurs 3/22: Commentary: If the Power Goes Off =20 Orange Cty Register Thurs 3/22: Commentary: Socialized Electricity San Fran Chron Thurs 3/22: Bush's Energy Policy Will Backfire=20 Feinstein Warns / She wants federal price controls now Dow Jones Newswires Thurs 3/22: Reliant Still In Power Pact Talks With= =20 Calif. DWR Dow Jones Newswires Thurs 3/22: CPUC Must Address Rates In QF Repayment= =20 Order - SoCal Ed Dow Jones Newswires Thurs 3/22: Calif Small Pwr Producers To Shut Plant= s=20 If Rates Capped --- --- Blackouts Not Expected=20 Today Bay City News=20 Following two consecutive days of rolling blackouts California's power=20 picture looks much brighter today but conservation is still needed.=20 The California Independent System Operator is urging consumers to continue= =20 conservation measures during today's Stage One Electrical Emergency.=20 The conservation efforts of Californians particularly Tuesday evening we= re=20 significant and helped to reduce the duration and impact of yesterday's=20 blackouts'' according to officials. The California ISO asks customers to= =20 continue their voluntary reductions during this time of tight supply.=20 More than 11500 megawatts of in-state generation remain unavailable with= =20 power plants completing repairs and needed maintenance. However several=20 generating units returned to service today and the level of imported power= =20 has increased boosting the supply.=20 The ISO is cautiously optimistic that customer outages will be avoided=20 today'' according to officials.=20 Today's Stage One alert is in effect through midnight tonight.=20 Stage One Emergencies are declared when power reserves fall below 7 percent= .=20 Stage Two kicks in when reserves fall below 5 percent. Stage Three is=20 initiated when reserves drop to below 1.5 percent. --- Calif State Controller:General Fund Surplus Dn To $3.2B 03/21/2001 Dow Jones Energy Service (Copyright (c) 2001 Dow Jones & Company Inc.) LOS ANGELES -(Dow Jones)- California State Controller Kathleen Connell=20 Wednesday said the state's general fund surplus has dropped to $3.2 billion= =20 from $8.5 billion in January mostly because of electricity purchases made = by=20 the state's Department of Water Resources a press release said.=20 Connell also denied Gov. Gray Davis' request to transfer an additional $5.6= =20 billion from the general fund to the Special Fund for Economic Uncertaintie= s=20 the release said. Connell noted that given the rapid depletion of the general fund on power= =20 purchases the state would need to borrow $2.4 billion in order to tranfer= =20 the $5.6 billion from the general fund to the special fund.=20 We started this year with a generous budget surplus. The energy crisis has= =20 taken much of that away and this transfer on top of the electricity=20 purchases would put the fund at risk Connell said.=20 Connell called on Davis to ensure that the CDWR completes by the end of May= =20 2001 the revenue bond sales that will be used to buy power and repay the=20 general fund.=20 She also asked that the CDWR notify her of all power purchases made and=20 contracts negotiated thus far and requested that she be told within 7 days = of=20 any purchases and contracts negotiated in the future.=20 Connell also said she wanted to be told within 24 hours of any power buys= =20 that exceed $55 million and asked that the Department of Finance be directe= d=20 to prepare new general fund cash flow estimates for the next 30 and 60 days= =20 and for the end of the fiscal year.=20 The state's Department of Water Resources has been buying power since Janua= ry=20 in lieu of Edison International (EIX) utility Southern California Edison an= d=20 PG&E Corp (PCG) utility Pacific Gas and Electric Co because suppliers=20 refused to sell to the nearly-bankrupt utilities.=20 -By Jessica Berthold Dow Jones Newswires 323-658-3872=20 Gov. Davis' office said in response to Connell's comments that the state= =20 budget was solid and the economy remained strong.=20 We will be getting the money back we've paid for energy and it should have= =20 no significant effect on the state's finances from the Wall Street=20 perspective said Davis press secretary Steve Maviglio.=20 -By Jessica Berthold Dow Jones Newswires 323-658-3872=20 jessicaberthold@dowjones.com --- -------- Davis says regulators will act to pay QFs Electricity providers insist they need to be paid By Russ Britt CBS.MarketWatch.com=20 Last Update: 9:45 PM ET Mar 20 2001 LOS ANGELES (CBS.MW) - California Gov. Gray Davis said regulators will act= =20 Tuesday on a plan to guarantee that independent power generators are paid. Independent power producers provide about 30 percent of California's=20 electricity from a variety of sources including wind solar and other=20 sources. Because many of the companies known as Qualifying Facilities or= =20 QFs haven't been paid they've begun to withhold power contributing to=20 blackouts in the state Monday and Tuesday.=20 We are anxious to pay the QFs because they're falling like flies Davis= =20 said at a news conference late Tuesday. If they don't get paid the lights= =20 will go out. Davis said the state's PUC order will require the state's nearly bankrupt= =20 utilities to enter five-year contracts with the QFs at rates of 7.9 cents p= er=20 kilowatt hour or 10-year contracts for lower rates. The structure is simil= ar=20 to rates Davis claims he was able to negotiate for long-term power contract= s=20 from out-of-state generators. --- Rash power bill may need fix By Will Shuck From our Sacramento Bureau SACRAMENTO Even as lawmakers lament the slow pace of solving California's= =20 energy crisis the cost of haste has cropped up in their first major act a= =20 multibillion dollar measure that put the state in the power-buying business= .=20 AB1X the highly touted bill that put California in the power-buying=20 business may have been so rashly crafted that it will take another piece o= f=20 legislation to fix it an influential senator said Tuesday.=20 At issue is vague wording that makes it unclear when and to what extent=20 Southern California Edison and other utilities have to repay the state for= =20 buying power.=20 State Sen. Debra Bowen chairwoman of the Senate Energy Utilities and=20 Communications Committee said the bill apparently has left room for utilit= y=20 lawyers to argue that their companies needn't repay the state until they ha= ve=20 covered other costs.=20 But Bowen a Redondo Beach Democrat who represents downtown and western Lon= g=20 Beach said the legislative intent is crystal clear that the state wanted= =20 to be repaid directly for supplying about a third of the power utility=20 companies deliver to their customers.=20 We need a cleanup bill to set the matter straight she said.=20 Although AB1X illustrates the flaws that come with speed Bowen said the= =20 Legislature can't afford to delay.=20 I think we are much too slow in our response she said. But that has to = be=20 balanced against things we've done in a tearing hurry and then have had to= =20 fix later.=20 No matter what the Legislature does in the coming weeks she said Californ= ia=20 is in for a tough summer and only determined conservation efforts will put= =20 much of a dent in a precarious supply-demand equation. --- PUC considers rewarding producers that sign long-term contracts=20 Greg Lucas Lynda Gledhill Chronicle Sacramento Bureau Wednesday March 21 2001=20 2001 San Francisco Chronicle=20 Sacramento -- Some cash-strapped producers of wind solar and other=20 alternative forms of energy will get long-delayed financial relief under a= =20 proposed order by state regulators Gov. Gray Davis said yesterday evening.= =20 A proposed order by the Public Utilities Commission is designed to reward= =20 energy producers who sign long-term contracts with utilities at lower rates= .=20 Alternative energy producers that voluntarily enter such contracts which= =20 would start on April 1 would be paid within 15 days said Davis who=20 requested the order. Those that do not would have to wait until the utiliti= es=20 that buy their power return to solvency.=20 Davis blasted Pacific Gas & Electric Co. and Southern California Edison for= =20 not paying the alternative generators -- know as qualified facilities or= =20 QFs -- even though the companies have been collecting money through rates= .=20 It is wrong and irresponsible of the utilities to pocket and withhold the= =20 money designed to compensate the QFs Davis said. It's immoral and has to= =20 stop.=20 Alternative producers -- ranging from massive co-generation facilities at o= il=20 refineries to tiny biomass plants -- produce about a third of the state's= =20 supply of electricity. But many are shutting down because utilities have no= t=20 paid them since November.=20 The loss of some 3000 megawatts from tapped-out alternative energy produce= rs=20 contributed to the blackouts that snarled California yesterday and Monday= =20 according to the Independent System Operator which manages the state's pow= er=20 grid.=20 The PUC's proposed order -- which will be considered at the board's Tuesday= =20 meeting -- offers the generators a choice of agreeing to a five-year contra= ct=20 at $79 per megawatt or a 10-year deal at $69 per megawatt Davis said.=20 The order does not address the more than $1 billion already owed to the mor= e=20 than 600 alternative energy producers around the state. Davis said to favor= =20 one creditor over another in past debt could bring on bankruptcy proceeding= s=20 from other creditors.=20 The Legislature would also need to act to make the order work.=20 It is critical to keep these facilities up and online said Sen. Debra=20 Bowen D-Marina del Ray who estimates that Edison has $1.5 billion in cash= =20 on hand and PG&E $2.5 billion. The utilities owe it to the people of the= =20 state to pay them.=20 Edison said yesterday that it opposed any attempt to place alternative=20 producers ahead of their other creditors.=20 But Tom Higgins a senior vice president for Edison International which ow= es=20 alternative producers some $835 million said his company was talking to th= e=20 governor's office about possible payment structures.=20 Alternative energy producers particularly those that use high-priced natur= al=20 gas to fire their generators say that without an immediate infusion of cas= h=20 they must close their plants.=20 We've been obsessed with the health of the utilities and (have) forgotten= =20 the health of everyone else said V. John White legislative director of t= he=20 Clean Power Campaign which lobbies for alternative energy producers.=20 CalEnergy Operating Corp. which operates eight geothermal plants in the=20 Imperial Valley producing 268 megawatt hours for Edison has sued the utilit= y=20 asking to be paid and to be temporarily released from their contract with= =20 Edison which has paid them nothing since November.=20 CalEnergy has a court hearing tomorrow on its Edison contract. Edison owes= =20 the company $75 million and the debt increases by $1 million a day.=20 We've lived up to our end of the bargain but Edison hasn't. We're now not = in=20 a position to make a property tax payment on April 10 and we're the largest= =20 employer in the county said Vince Signorotti CalEnergy's property manage= r.=20 Unlike Edison PG&E is paying its creditors 15 cents on the dollar.=20 We have offered over the past five days to prepay for future power not yet= =20 delivered to keep as many of them operating as possible but the state need= s=20 to decide how its going to divvy up the limited money under the frozen=20 rates said John Nelson a PG&E spokesman.=20 The PUC's sudden attempt to recast the rates paid to alternative generators= =20 comes after several months of inaction partly a result of waiting for=20 legislative negotiations on the issue to conclude. Those negotiations=20 eventually failed to move forward.=20 --- State claims $5.5 billion overcharge: Refunds by wholesale generators sough= t By Dale Kasler Bee Staff Writer (Published March 22 2001)=20 In its boldest attempt yet to extract refunds from wholesale power=20 generators the state's grid operator accused the generators Wednesday of= =20 overcharging Californians by $5.5 billion for electricity since last May.= =20 The state's Independent System Operator which manages the state's=20 transmission grid plans to tell a federal regulatory agency today that pow= er=20 generators consistently took advantage of their stranglehold on the=20 California market to ratchet up prices.=20 The federal agency the Federal Energy Regulatory Commission recently=20 threatened to order generators to refund $134.8 million for overcharges=20 mostly covering January and February. But those refunds amounted to just a= =20 fraction of what the grid operator was seeking. The ISO which has been=20 complaining about market abuses for several months says FERC must do more.= =20 We're happy that (FERC) took this first step but we think there's a long= =20 way to go said Anjali Sheffrin the ISO's director of market analysis. A= s=20 far as I'm concerned it's been too little too late. ... The refunds they= =20 have acted on (so far) have been minimal.=20 She said the report covers five major power suppliers and 16 other power=20 importers.=20 FERC Commissioner William L. Massey said it would be improper for him to=20 comment on a report that has not yet been filed. But when told of the $5.5= =20 billion total Massey told the Los Angeles Times: That doesn't shock me in= =20 any way.=20 Prices over the past 10 months in California have greatly exceeded the=20 federal standards of just and reasonable prices and I think they have=20 exceeded the standards by possibly billions of dollars he said.=20 However most FERC critics are skeptical that the federal agency which is = a=20 strong believer in letting free markets run their course would order a=20 refund anywhere near as large as $5.5 billion -- even though it has found= =20 that California prices at times have been unjust and unreasonable.=20 The big power generators saying their charges were reasonable are disputi= ng=20 the $134.8 million refunds proposed so far and have vowed to fight the ISO'= s=20 latest effort.=20 If the ISO were to prevail the $5.5 billion in refunds could go a long way= =20 toward remedying California's energy mess.=20 They could help restore the financial health of Pacific Gas and Electric Co= .=20 and Southern California Edison which have nearly been bankrupted by the=20 prices charged by the power generators. They also could ease the strain on= =20 the state treasury which is spending billions to purchase electricity for= =20 Californians because PG&E and Edison can't.=20 Sheffrin said her department studied sales made by the power generators to= =20 ISO which makes last-minute power purchases to balance supply with demand= =20 and the California Power Exchange the now-bankrupt entity where most of=20 California's wholesale electricity was bought and sold until December.=20 She said the study made very generous allowances for natural gas expenses= =20 costly air-pollution credits and other factors including the scarcity of= =20 electricity. The result was $5.5 billion worth of charges in excess of=20 competitive costs she said.=20 In many cases the companies used their market clout to submit bids that we= re=20 way beyond their costs she said.=20 It was insufficient competition Sheffrin said. They got away with a lot= .=20 She said the refund request isn't just a shot in the dark. FERC she noted= =20 has already found that prices in the California wholesale energy market ha= ve=20 been unreasonable. We took it upon ourselves ... to show FERC how they got = to=20 be so high.=20 FERC proposed refunds totaling $124 million for January and February sales= =20 declaring that generators' prices were too high.=20 In a separate case the federal agency for the first time accused two=20 generators last week of taking plants offline to force prices up.=20 --- Power solution eludes Davis: Lawmakers grow edgy as crisis drags on=20 By Emily Bazar and Amy Chance Bee Capitol Bureau (Published March 22 2001)=20 Gov. Gray Davis likes to compare the state's energy crisis to a complicated= =20 three-cornered billiard shot.=20 But as California plunged into another round of power blackouts this week= =20 Davis has yet to line up the angle on an ultimate solution.=20 The state's short-term power bill is nearing $4.2 billion and legislators= =20 are balking at the administration's requests for additional money.=20 Getting even the least controversial pieces of the puzzle through the=20 Legislature is taking weeks longer than expected.=20 While the Democratic governor has insisted secrecy about details of his pow= er=20 purchases is necessary to protect the state's bargaining position other=20 state officials are complaining vigorously about the lack of information.= =20 And critical deals the governor hoped to reach with energy suppliers and=20 utility companies are proving difficult to close.=20 I think we all got lulled into a little complacency a few weeks ago. All= =20 these things seemed to be going along and the governor was making all thes= e=20 warm and fuzzy comments said Assemblyman John Campbell R-Irvine.=20 But it only takes one deal to go sideways and we're all blacked out he= =20 added. The governor is running around basically saying 'Trust me.' I'm no= t=20 sure he's deserving of the trust at this point.=20 Davis and his aides insist they are working around the clock on plans to=20 boost power generation encourage conservation and reach an agreement with= =20 utilities that will keep them out of bankruptcy.=20 The utility plan they say is the equivalent of a large corporate merger= =20 that simply can't be accomplished overnight. Davis notes that earlier=20 deregulation efforts might have benefitted from a little more time.=20 Although the state has reached a broad agreement in principle with Southe= rn=20 California Edison to obtain its power transmission lines in exchange for he= lp=20 paying off its debts a final detailed deal has not been reached. The=20 initial agreement with Edison was announced Feb. 23.=20 And the governor has yet to achieve a tentative agreement with Pacific Gas= =20 and Electric Co. which is driving a harder bargain over price and other=20 elements of a potential rescue plan.=20 Joseph Fichera one of several consultants receiving more than $11 million= =20 from the administration for advice on the energy crisis said many people= =20 don't realize the complexity of the deal they're brokering.=20 In their bid to achieve a public takeover of the investor-owned utilities'= =20 transmission lines he said negotiators have to pore over thousands of=20 documents related to the transmission lines alone.=20 We are doing what is normal in a transaction of this magnitude which is= =20 investigate document circulate redocument agree move forward said=20 Fichera an investment banker with Saber Partners in New York City. The=20 governor has put a 'I want this yesterday' fire under his negotiating team= .=20 The negotiator however declined to say when he expects final agreements t= o=20 be reached with the companies.=20 It could be days it could be weeks he said.=20 There were signs meanwhile of trouble brewing on another front: the giant= =20 bond sale the state must make to repay the money it has spent so far on=20 electricity and to finance future long-term contracts for energy.=20 State Treasurer Phil Angelides said Wednesday the utilities are appealing a= =20 ruling by the state Public Utilities Commission that essentially ensures th= e=20 state will be repaid a move that he said threatens to delay the sale=20 indefinitely.=20 If the utilities have decided to adopt a scorched earth policy until they= =20 get what they need and want then it will be a significant problem=20 Angelides said.=20 PG&E spokesman Ron Low said the governor is simply placing too many demands= =20 on a rate structure that doesn't compensate the utilities for their current= =20 costs.=20 Political rhetoric is not going to change the math he said.=20 In the Legislature lawmakers are growing grumpier. Most were taken by=20 surprise Monday when blackouts were ordered across the state weeks before= =20 summer temperatures were expected to set in and strain the power system.=20 I'm more worried than ever said Assemblyman Bill Leonard R-San=20 Bernardino. A lot of the elements we thought we had a handle on in January= =20 are unraveling.=20 A deal the governor said had been worked out weeks ago between the state an= d=20 more than 600 small alternative energy suppliers collapsed last week.=20 The alternative generators have not been paid by the utilities for months= =20 and state leaders attempted to bargain down the price utilities pay those= =20 generators for power.=20 But administration officials complained privately that lawmakers instead=20 sweetened the pot for the suppliers to the point that the measure no longer= =20 helped solve the overall financial situation pushing the utilities toward= =20 bankruptcy. Under a proposal announced Tuesday by Davis the Legislature=20 would authorize the PUC to require the utilities to pay the alternative=20 suppliers at prices more closely resembling the original deal.=20 But the governor ran into immediate opposition as some suppliers said said= =20 he would not pay them enough to cover their fuel costs.=20 We would go from not being paid to losing money said Hal Dittmer of=20 Wellhead Electric a Sacramento-based supplier that has been shut down for= =20 more than a month. Almost everybody who burns natural gas is going to shut= =20 down. (Davis) got it wrong.=20 Democrats outside the Davis administration meanwhile are complaining abou= t=20 the amount of money the state Department of Water Resources is spending on= =20 expensive last-minute power purchases. Within a week $4.2 billion will ha= ve=20 been committed.=20 State Sen. Steve Peace D-El Cajon chairman of the joint Legislative Budge= t=20 Committee is warning the Davis administration that he will block additiona= l=20 funds for last-minute purchases of power until the PUC makes progress=20 recovering money that already has been spent. He intends to hold a hearing = on=20 the issue this morning.=20 On Wednesday state Controller Kathleen Connell told Davis she will refuse = to=20 make a routine budget transfer he had requested saying she is concerned th= at=20 there is no outside check and balance on the money the administration is= =20 spending to buy electricity on the spot market.=20 As the statewide elected official who pays the state's bills Connell said= =20 she has yet to receive information from the Department of Water Resources= =20 about how much it is spending.=20 We really need an accounting as to the total amount of liability they have= =20 accumulated she said. I understand they're in an emergency situation ...= =20 but it begins to imperil the state's ability to manage its cash flow.=20 Meanwhile a bill to provide $1 billion for conservation programs aimed at= =20 reducing power needs this summer also has languished for several weeks in= =20 the state Senate. While Davis has focused his attention elsewhere Republic= an=20 lawmakers have opposed the measure as too expensive. Democrats argue that= =20 each two-week delay prevents the state from saving as much energy as one=20 peaker plant will produce this summer. Peaker plants are designed to help= =20 meet the peaks of electricity demand.=20 I'm the eternal optimist but we have to keep working on all fronts said= =20 Sen. Byron Sher D-Palo Alto who hopes to take his energy conservation bil= l=20 up for a vote in the Senate again today. It's a formidable challenge.=20 Bee staff writer Dale Kasler contributed to this report.=20 --- Legislators learn some details of power contracts By John Hill Bee Capitol Bureau (Published March 22 2001)=20 The veil of secrecy surrounding the state's electricity contracts lifted=20 Wednesday -- a little.=20 Gov. Gray Davis gave state legislators a report laying out some of the=20 details of long-term contracts designed to help the state pull out of its= =20 energy crisis. But the report left legislators and others clamoring for mor= e.=20 The information raises more questions said Assemblyman George Runner=20 R-Lancaster. I liken it to watching a parade through a knothole in a fence= .=20 You get to look at one float but you're not sure about what's coming up an= d=20 what you've missed.=20 Davis had previously disclosed that the state had signed or was close to=20 signing 40 long-term contracts at an average price over 10 years of $69 pe= r=20 megawatt-hour.=20 The contracts are part of the state's strategy for trying to avoid a fiscal= =20 shellacking in the energy spot market while making sure there's enough=20 electricity to avoid more blackouts.=20 Davis also previously disclosed that the contracts were for an average of= =20 about 9000 megawatts a year and that the total cost exceeded $40 billion.= =20 But Davis has resisted telling more saying the state would jeopardize its= =20 ability to get the best prices if electricity generators knew what their=20 counterparts were getting.=20 On Wednesday the governor's office released a March 15 report from S. Davi= d=20 Freeman general manager of the Los Angeles Department of Water and Power = to=20 the state Department of Water Resources. The state agency has been given th= e=20 responsibility of making power purchases and Freeman was brought in to lea= d=20 the negotiations.=20 As of March 15 the state had signed 19 contracts with seven suppliers for= =20 periods ranging from 14 months to 20 years with many for three or five=20 years the report says. Some of the contracts are for electricity to meet t= he=20 state's everyday power demand while others are only for times of peak use= =20 such as hot summer days.=20 The state had agreements in principle for an additional 25 contracts.=20 Runner said he has been told that two of these contracts have since been=20 finalized.=20 The amount of power provided reaches a peak in 2004 of more than 10000=20 megawatts. As the long-term contracts start to expire around then the stat= e=20 is hoping that demand can be met with new contracts or spot purchases at=20 prices expected to be much cheaper.=20 The report says nine more long-term contracts were under discussion.=20 Some of the contracts are with power generators while others are with=20 marketers who may get the power from a number of sources.=20 In some cases the state may supply the natural gas used to generate the=20 electricity or power costs may be pegged to the going rate for the fuel.= =20 Some suppliers can cancel if the state fails to sell bonds by a certain dat= e=20 to cover power costs or fails to maintain an investment grade credit rating= .=20 Some depend on the construction of power plants but Freeman said they were= =20 firm commitments.=20 We were pretty careful not to put a hope and a dream in the portfolio he= =20 said.=20 More contracts will have to be signed to meet summer demand and these=20 agreements will probably be more expensive the report says.=20 One item not in Freeman's report was a secret deal to relieve several major= =20 generators from having to pay for polluting the air beyond allowable limits= .=20 The long-term power contracts include language that would have the state pa= y=20 the costs of pollution credits that allow power plants to exceed their=20 permitted levels of smog-forming pollutants the governor's office confirme= d=20 Wednesday. Spokesman Steve Maviglio said that several generators are being= =20 relieved from having to pay those costs.=20 V. John White a Sierra Club lobbyist close to the negotiations said Dyneg= y=20 Inc. which has power plants in El Segundo Encina and Long Beach is one o= f=20 them. Dynegy officials did not return calls to The Bee on Wednesday.=20 Freeman said that generators were demanding hefty premiums for having to de= al=20 with air quality regulators in the summer and he figured it would be cheape= r=20 just to pay for the pollution credits.=20 In other energy-related developments:=20 With more power plants back online grid operators dropped down to a Stage = 1=20 electricity alert. The state Independent System Operator was expecting=20 supplies to gradually increase over the next few days.=20 The state Public Utilities Commission issued a revised draft decision that= =20 would impose the prices outlined Tuesday by Davis for power produced by=20 alternative energy companies -- $79 a megawatt-hour for five-year contracts= =20 or $69 a megawatt-hour for 10 years. The proposal is scheduled for a PUC vo= te=20 March 27.=20 A federal judge ruled that one of the nation's major electricity generators= =20 must continue supplying California with emergency power.=20 In imposing an injunction on Reliant Energy Services Inc. U.S. District=20 Judge Frank C. Damrell Jr. noted the rolling blackouts (that have) darkene= d=20 the California landscape and said the loss of Reliant's production poses = an=20 imminent threat.=20 Bee staff writers Carrie Peyton Chris Bowman and Denny Walsh contributed t= o=20 this report.=20 --- Federal judge orders major power wholesaler to sell to California=20 By Don Thompson ASSOCIATED PRESS=20 March 21 2001=20 SACRAMENTO =01) A federal judge issued a preliminary injunction Wednesday= =20 ordering a major electricity wholesaler to continue selling to California= =20 despite its fear that it will not get paid.=20 U.S. District Judge Frank C. Damrell Jr. said Californians were at risk of= =20 irreparable harm if Reliant Energy Services stopped selling power to the=20 Independent System Operator which oversees the state's power grid. The ISO= =20 buys last-minute power on behalf of utilities to fill gaps in supply to try= =20 to fend off blackouts.=20 Damrell dismissed Reliant's attempt to force the state Department of Water= =20 Resources to back the ISO's purchases for the state's two biggest utilities= .=20 The state has been spending about $50 million a day on power for Pacific Ga= s=20 and Electric Co. and Southern California Edison both denied credit by=20 suppliers after amassing billions of dollars in debts.=20 Controller: State's power spending imperils its financial health=20 Governor says utilities must pay in advance for some power=20 ?=20 The judge said he had no authority to force the DWR to pay for that power.= =20 Gov. Gray Davis has said the state isn't responsible for purchasing the=20 costly last-minute power ISO buys for Edison and PG&E despite a law=20 authorizing state power purchases on the utilities' behalf.=20 ISO attorney Charles Robinson said the ruling gives ISO operators a tool t= o=20 assist them in keeping the lights on in California.=20 Had the decision gone the other way one could expect other generators to= =20 simply ignore emergency orders Robinson said.=20 Damrell's preliminary injunction will remain in effect until the Federal=20 Energy Regulatory Commission rules on the matter.=20 Damrell denied the ISO's request for preliminary injunctions against three= =20 other wholesalers Dynegy AES and Williams who agreed to continue selling= =20 to the ISO pending the FERC ruling.=20 The ISO went to court in February after a federal emergency order requiring= =20 the power sales expired. The judge then issued a temporary restraining orde= r=20 requiring the sales but dropped it after the suppliers agreed to continue= =20 sales to California pending his Wednesday ruling.=20 The ISO said it would lose about 3600 megawatts if the suppliers pulled ou= t=20 enough power for about 2.7 million households. One megawatt is enough for= =20 roughly 750 homes.=20 Grid officials said Reliant's share alone is about 3000 megawatts. Reliant= =20 said the amount at issue actually is less than a fourth of that because mo= st=20 of the power is committed under long-term contracts.=20 Reliant which provides about 9 percent of the state's power worries it=20 won't get paid due to the financial troubles of PG&E and Edison.=20 PG&E and Edison say that together they have lost about $13 billion since Ju= ne=20 due to soaring wholesale electricity costs that California's 1996=20 deregulation law bars them from passing onto customers.=20 At the same time the state has faced a tight electricity supply due in pa= rt=20 to California power plant shutdowns for maintenance and to a tight=20 hydroelectric supply in the Pacific Northwest.=20 Managers of the state power grid imposed rolling blackouts across the state= =20 Monday and Tuesday as supply fell short of demand. Wednesday cooling=20 temperatures and the completion of repairs at several power plants allowed= =20 the state to avoid blackouts.=20 State Controller Kathleen Connell said Wednesday that the energy crunch als= o=20 imperils California's financial health.=20 Connell said the state's power-buying on behalf of Edison and PG&E is is=20 gutting its budget surplus. Since the state started making emergency power= =20 buys in January the surplus has fallen from $8.5 billion to about $3.2=20 billion she said.=20 Connell ordered an audit of the state's power-buying saying Davis is=20 withholding key financial information from her office and the Legislature.= =20 She is refusing a request by Davis and the Legislature to transfer $5.6=20 billion into a rainy day fund she said was set up to impress Wall Street = as=20 the state prepares to issue $10 billion in revenue bonds to cover its=20 power-buying.=20 Transferring the money would leave the state general fund $2.4 billion in= =20 debt Connell said.=20 Sandy Harrison spokesman for the state Department of Finance and Keely=20 Bosler of the Legislative Analyst's Office said such transfers are routine= =20 and required by law.=20 They put the state's budget surplus at $5.6 billion.=20 The law says she has to do it. The law does not give her the power to dema= nd=20 that kind of audit information Harrison said.=20 He said the state's budget isn't in danger because it will be repaid with t= he=20 $10 billion in long-term debt.=20 Wells Fargo & Co. chief economist Sung Won Sohn said he sees little progres= s=20 in efforts to fix the state's power problems and end state electricity=20 purchases.=20 If we're going to pour money into a bottomless pit I would worry about th= e=20 state's finances he said. At some point we're going to run out of money.= =20 The controller's criticism of fellow Democrat Davis won support from Assemb= ly=20 Republicans and Secretary of State Bill Jones a Republican considering=20 challenging Davis next year.=20 Jones said he wants to announce his own plan to solve the state's energy=20 woes but can't unless Davis releases more financial details.=20 Davis spokesman Steve Maviglio dismissed the criticism.=20 Political grandstanding doesn't generate one more kilowatt of energy for= =20 California in this time of emergency he said.=20 Maviglio said the administration has released the financial information it= =20 can without jeopardizing negotiations for long-term power contracts with=20 wholesalers.=20 --- Controller: State's power spending imperils its financial health=20 By Don Thompson ASSOCIATED PRESS=20 March 21 2001=20 SACRAMENTO =01) California's power-buying on behalf of two strapped utiliti= es is=20 gutting its budget surplus and putting the state at financial risk the sta= te=20 controller said Wednesday.=20 The surplus dropped from $8.5 billion in January when the state began buyi= ng=20 electricity for Pacific Gas and Electric Co. and Southern California Edison= =20 to $3.2 billion now Kathleen Connell estimates.=20 Connell ordered an audit of the state's power-buying saying Gov. Gray Davi= s=20 is withholding key financial information from her office and the Legislatur= e.=20 Wednesday marked the first time in three days the state avoided rolling=20 blackouts. Power grid officials credited cooling temperatures and the=20 completion of repairs at several power plants.=20 Connell said the energy crunch now imperils the state's budget as well as i= ts=20 electric grid.=20 California has been spending about $45 million a day =01) $4.2 billion so f= ar =01)=20 to buy power for Edison and PG&E both denied credit by electricity=20 wholesalers.=20 The two utilities California's largest say they are nearly $14 billion in= =20 debt due to soaring wholesale power costs the state's deregulation law bloc= ks=20 them from recovering from customers.=20 Meanwhile the state has faced high natural gas costs and a tight power=20 supply driven in part by power plant repairs in California and scarce=20 hydroelectric power in the Pacific Northwest.=20 Standard & Poor's has put the state on a credit watch due to its power=20 purchases and chastised Davis the Legislature and state regulators for not= =20 taking more aggressive steps to assure the utilities can pay their bills.= =20 On Wednesday Connell said she is refusing a request by Davis and the=20 Legislature to transfer $5.6 billion into a rainy day fund she said was s= et=20 up to impress Wall Street as the state prepares to issue $10 billion in=20 revenue bonds to cover its power-buying.=20 Transferring the money would leave the state general fund $2.4 billion in= =20 debt Connell said.=20 Sandy Harrison spokesman for the state Department of Finance and Keely=20 Bosler of the Legislative Analyst's Office said such transfers are routine= =20 and required by law.=20 They put the state's budget surplus at $5.6 billion.=20 The law says she has to do it. The law does not give her the power to dema= nd=20 that kind of audit information Harrison said.=20 He said the state's budget isn't in danger because it will be repaid with t= he=20 $10 billion in long-term debt.=20 Connell said the scope of the proposed transfer is unprecedented and amount= s=20 to a shell game that disguises the power purchases' impact on the state= =20 budget.=20 Wells Fargo & Co. chief economist Sung Won Sohn said he sees little progres= s=20 in efforts to fix the state's power problems and end state electricity=20 purchases.=20 If we're going to pour money into a bottomless pit I would worry about th= e=20 state's finances he said. At some point we're going to run out of money.= =20 The controller's criticism of fellow Democrat Davis won support from Assemb= ly=20 Republicans and Secretary of State Bill Jones a Republican considering=20 challenging Davis next year.=20 Jones said he wants to announce his own plan to solve the state's energy=20 woes but can't unless Davis releases more financial details. He said his= =20 plan may involve giving the utilities low-interest loans with their=20 transmission lines held as collateral.=20 Davis spokesman Steve Maviglio dismissed the criticism.=20 Political grandstanding doesn't generate one more kilowatt of energy for= =20 California in this time of emergency he said.=20 Maviglio said the administration has released the financial information it= =20 can without jeopardizing negotiations for long-term power contracts with=20 wholesalers.=20 --- Governor says utilities must pay in advance for some power=20 By Jennifer Coleman ASSOCIATED PRESS=20 March 21 2001=20 SACRAMENTO =01) The state's two largest utilities will be ordered to pay=20 environmentally friendly power generators in advance a move Gov. Gray Davi= s=20 hopes will bring a quick end to the power blackouts that darkened Californi= a=20 this week.=20 The statewide blackouts that stretched from San Diego to Oregon on Monday a= nd=20 Tuesday were caused in part by the failure of Southern California Edison an= d=20 Pacific Gas and Electric Co. to pay millions of dollars they owe qualifyin= g=20 facilities or QFs Davis said.=20 Such suppliers use cogeneration =01) steam from manufacturing plus natural = gas =01)=20 or solar wind and other renewable energy to generate electricity. This wee= k=20 California lost about half the power those generators normally provide.=20 Controller: State's power spending imperils its financial health=20 ?=20 Several of them said they hadn't been paid by Edison and PG&E in weeks and= =20 can't afford to keep operating their plants.=20 Davis accused the utilities of taking in money from customers while failing= =20 to pay the QFs. The state has been spending about $45 million a day since= =20 January to buy power for customers of Edison and PG&E which are so=20 credit-poor that suppliers refuse to sell to them.=20 It's wrong and irresponsible of the utilities to pocket this money and not= =20 pay the generators the governor said at a Capitol news conference Tuesday= =20 evening. They've acted irresponsibly and immorally and it has to stop.=20 PG&E called the governor's statements inappropriate and unjustified addi= ng=20 that it was negotiating a payment plan with the QFs. Edison said it is inte= nt=20 on paying creditors and working with the California Public Utilities=20 Commission to pay QFs for future power sales.=20 Controller Kathleen Connell warned Wednesday that the state's $2=20 billion-a-month power purchases are jeopardizing California's budget.=20 The state's budget surplus dropped from $8.5 billion in January when the= =20 power purchases began to $3.2 billion now Connell estimates. She blamed= =20 Davis for withholding key financial information and ordered an audit of th= e=20 state's power spending starting next week.=20 She blocked a request by the Legislature and Davis administration to transf= er=20 $5.6 billion from the state's general fund into a special rainy day fund= =20 saying that would have left the general fund $2.4 billion in debt.=20 The Legislative Analyst's Office said such transfers are routine Connell= =20 agreed but said the size of the transfer is unprecedented.=20 We started this year with a generous budget surplus Connell said. The= =20 energy crisis has taken much of that away and this transfer on top of the= =20 electricity purchases would put the fund at risk.=20 Meanwhile keepers of the state's power grid were optimistic California wou= ld=20 get through Wednesday without another day of rolling blackouts. Two plants= =20 down for repairs returned to service.=20 Several power plants that were taken down for repairs are also expected com= e=20 online by the end of the week reducing the likelihood of blackouts said J= im=20 Detmers ISO vice president.=20 Power may flow to homes and businesses but it could soon cost consumers=20 more said Assemblyman Fred Keeley one of the Legislature's leaders on=20 energy issues.=20 I think it's intellectually appropriate and honest to tell people as soon = as=20 it's apparent that a rate increase is warranted the Boulder Creek Democra= t=20 said Tuesday indicating that time had come.=20 He estimated that the state Public Utilities Commission may soon have to=20 raise rates by about 15 percent to cover the state's costs and its utilitie= s'=20 bills.=20 My sense is that people will appreciate having some certainty and being ab= le=20 to plan for it he said. They don't have to like it but I think they'll= =20 appreciate it.=20 Davis said he is confident the utilities and the state can pay their bills= =20 without further rate increases for Edison and PG&E customers.=20 In the meantime the Independent System Operator keeper of the grid is=20 counting on continued conservation by residents and businesses to avoid mor= e=20 blackouts. Conservation accounted for about 300 megawatts in savings during= =20 Tuesday's peak usage enough to power 300000 homes.=20 Roughly a half-million homes and businesses were affected by Tuesday's=20 blackouts which snarled traffic and plunged schools and businesses into=20 darkness across the state.=20 The outages began at 9:30 a.m. and continued in 90-minute waves until about= 2=20 p.m. when the ISO lifted its blackout order. They were blamed for at least= =20 one serious traffic accident.=20 Two cars collided at an intersection in the Los Angeles suburb of South El= =20 Monte where the traffic lights were out. Two people were seriously hurt sa= id=20 California Highway Patrol Officer Nick Vite.=20 In San Francisco's Chinatown souvenir shops normally bustling with visitor= s=20 were forced to shut down. Nearby irritated customers waited for a bank to= =20 reopen.=20 The blackouts like Monday's were caused by a combination of problems=20 including unseasonably warm weather reduced electricity imports from the= =20 Pacific Northwest and numerous power plants being shut down for repairs.=20 Adding to those troubles the state lost about 3100 megawatts from the QF= =20 plants.=20 Senate Energy Committee Chairwoman Debra Bowen D-Marina del Rey estimated= =20 Tuesday that Edison has amassed more than $1 billion and PG&E more than $2= =20 billion that they have not paid to generators.=20 Davis said the PUC planned to issue an order next week directing the=20 utilities to pre-pay their future QF bills.=20 PG&E said its prepayments hinge on an upcoming PUC decision on whether the= =20 utility's rates are sufficient to pay its bills and cover the state's power= =20 purchases on its behalf which amount to $4.2 billion since early January.= =20 Edison and PG&E say they have lost more than $13 billion since last June to= =20 climbing wholesale electricity prices which the state's 1996 deregulation= =20 law prevents them from passing on to ratepayers.=20 --- Energy Overcharge of $5.5 Billion Is Alleged=20 Power: Money should be refunded to taxpayers and utilities the state grid= =20 operator says citing evidence of market manipulation. Suppliers deny the= =20 accusation.=20 By TIM REITERMAN and NANCY RIVERA BROOKS Times Staff Writers=20 ?????Wholesale electricity suppliers overcharged California by about $5.5= =20 billion between May and last month and that money should be refunded to th= e=20 state's taxpayers and financially strapped utilities the state power grid= =20 operator said Wednesday. ?????Generators engaged in market manipulation and consistent patterns of= =20 bidding far above costs in the deregulated energy market the California=20 Independent System Operator found in a study of pricing data. The findings= =20 support the widespread belief that these suppliers reaped massive additiona= l=20 revenue by manipulating the market. ?????Spokesmen for the companies denied the accusation. ?????The study prepared for a filing with federal regulators today is=20 central to Cal-ISO's efforts to seek reimbursement for what it considers=20 excessive charges by electricity suppliers during the state's energy crisis= . ?????This might be the first time we told them the total impact and=20 magnitude [of the overcharging] said Anjali Sheffrin Cal-ISO's director = of=20 market analysis. We think the entire amount deserves consideration for=20 refunds. ?????Using confidential bidding data on tens of thousands of electricity=20 sales Cal-ISO found that five companies that together supply about 30% of= =20 the power delivered to customers of the state's investor-owned utilities=20 engaged in two types of behavior that tended to push up prices: ?????* They effectively withheld supplies by bidding at excessive prices= =20 even though they could have made some money selling more electricity. ?????* Less frequently they had power generation available but did not bid= =20 at all. ?????The study concluded that energy suppliers commonly offered their=20 electricity at twice their cost. For example Sheffrin said the average=20 markup in August was 100% during peak hours. ?????A spokeswoman at the Federal Energy Regulatory Commission which=20 oversees wholesale electricity pricing across the country declined to=20 comment Wednesday saying This is part of an ongoing proceeding. ?????FERC member William L. Massey who has considered previous commission= =20 actions on refunds to be inadequate said it would be improper for him to= =20 comment on a report that has not yet been filed. But when told of the=20 $5.5-billion total Massey said: That doesn't shock me in any way. ?????Prices over the past 10 months in California have greatly exceeded th= e=20 federal standards of just and reasonable prices and I think they have=20 exceeded the standards by possibly billions of dollars he said. ?????Cal-ISO which oversees grid operations and an emergency energy market= =20 previously detailed $550 million in alleged overcharges for December and=20 January and asked FERC for refunds. But the commission has proposed refunds= =20 of only a tiny fraction of that amount. ?????The study covered five major in-state power suppliers--Reliant Energy= =20 Dynegy Williams/AES Duke Energy and Mirant formerly Southern Energy--plu= s=20 16 power importers all of which deliver power to customers of Pacific Gas = &=20 Electric Co. Southern California Edison and San Diego Gas & Electric Co. ?????All [21] overcharged but some excessively and some by moderate=20 amounts Sheffrin said. ?????Cal-ISO's public filing will quantify the alleged overcharging by each= =20 company but the companies will be identified only by a number. The code wi= ll=20 be provided to FERC Sheffrin said and Cal-ISO lawyers will determine how= =20 much information about the companies will be made public. ?????State U.S. Investigations ?????California electricity markets and the companies that buy and sell pow= er=20 in the state have been the subject of several investigations by state and= =20 federal authorities since wholesale electricity prices first skyrocketed in= =20 May. ?????Electricity suppliers have repeatedly denied manipulating the Californ= ia=20 market in any way whether through above-cost bidding in spot markets or=20 through physical withholding of electricity to drive up prices. ?????Reliant Energy is cooperating with FERC's requests for more data and i= s=20 confident the commission will conclude that prices charged by Reliant were= =20 justified said Joe Bob Perkins president of the Houston-based company. ?????Perkins also bitterly disputed charges that Reliant has shut down unit= s=20 so that it can earn bigger profits on the power sold by the remaining plant= s.=20 These charges have been leveled against all of the power-plant owners in th= e=20 state. ?????Reliant Vice President John Stout said Cal-ISO's calculations typicall= y=20 don't include such fixed costs as salaries taxes and the interest on bonds= =20 they sold to finance their power plants which they acquired under terms of= =20 the state's landmark 1996 deregulation law. ?????In addition he said many high-priced power days have resulted from= =20 buyers bidding against each other for scarce supplies rather than sellers= =20 charging excessive amounts--like a house price being driven far above the= =20 listing price in a hot real estate market. ?????Williams Energy Services a trading company that markets most of the= =20 power produced by plants owned by AES also says it will be exonerated by= =20 FERC once the commission examines documentation being submitted said Paula= =20 Hill-Collins spokeswoman for the Tulsa Okla. company. ?????FERC has the obligation to investigate when these accusations are=20 made Hill-Collins said. This is just a process of justification not=20 necessarily proof of guilt. ?????Williams/AES was recently ordered by FERC to prove that it did not tak= e=20 generating units out of service last year to drive up electricity prices o= r=20 refund $10.8 million to California utilities. ?????During the period studied suppliers sold electricity in the Californi= a=20 Power Exchange to Southern California Edison PG&E and San Diego Gas &=20 Electric Co. and in a backup market for last-minute electricity operated by= =20 Cal-ISO. But sky-high prices plunged Edison and PG&E deeply into debt and= =20 most suppliers stopped selling to them in January forcing the state=20 Department of Water Resources to step in as the primary electricity buyer f= or=20 the three big utilities' 27 million customers. ?????The Cal-ISO study first summarized at an energy conference last week = at=20 UC Berkeley but not otherwise publicized concluded that the companies=20 exercised so-called market power to pump up electricity prices. ?????Severin Borenstein director of the Energy Institute at Berkeley said= =20 Cal-ISO's study is consistent with his research examining pricing practices= =20 in 2000. ?????We found several billion dollars . . . in departures from competitive= =20 pricing he said. When the market was tight this summer they were able t= o=20 push up prices and they did. ?????The early warning signs of electricity price spikes the study found= =20 appeared in May after two years of relatively stable prices of $30 to $40 p= er=20 megawatt-hour under deregulation. Prices went up during the summer dipped = in=20 September and October with lower demand then took off in November and=20 December as weather turned cold and the price of natural gas which is used= =20 to generate much of the state's electricity reached record levels. ?????There were plant outages and demand and supply became close Sheffr= in=20 said. Whatever price they bid had to be taken and market power asserted= =20 itself. ?????Cal-ISO found that $3 billion of the alleged overcharges occurred=20 between May and November. ?????On Friday federal regulators ordered six wholesale power suppliers to= =20 refund $55 million to California if they cannot justify prices charged in= =20 February. The refund was limited to power sold that month in excess of $430= =20 per megawatt-hour during Stage 3 power alerts when supplies are so tight= =20 that rolling blackouts are threatened. (One megawatt-hour is enough=20 electricity to supply 750 typical homes for an hour.) ?????The previous week FERC ordered 13 suppliers to justify or refund $69= =20 million for power sold in January at prices above $273 per megawatt-hour. ?????Massey opposed the potential refunds as too low because they were=20 limited to hours in which a Stage 3 power emergency was in place and becaus= e=20 the benchmark price set for each month was too high--combining to exempt mo= re=20 than 70000 transactions from scrutiny. ?????We're still looking for our lost wallet under the lamppost which is= =20 Stage 3 alerts said Massey one of three commissioners on the five-member= =20 board (two seats are vacant). ?????Generators have been given the free and clear he said. ?????These tinkling little refunds they have come out with recently are=20 almost a joke said Cal-ISO board member Mike Florio senior attorney at t= he=20 Utility Reform Network. ?????Resisting Price Caps ?????Cal-ISO contends that the last 10 months have proved that generators c= an=20 no longer be allowed to receive electricity prices that are dictated by wha= t=20 the market will bear. ?????FERC granted market-based rate authority on each of these suppliers'= =20 own showing that they could not manipulate prices yet their actions have= =20 shown the contrary Sheffrin said. We feel FERC needs to look at the=20 premise of allowing these generators to continue selling at market-based=20 rates. ?????The commission is responsible for ensuring just and reasonable=20 electricity rates. Although it has called California's power market=20 dysfunctional and vulnerable to manipulation the agency has resisted setti= ng=20 firm price caps sought by California's congressional delegation. ?????Chairman Curt L. Hebert Jr. strongly opposes caps while Massey wants = to=20 use caps across the West as a temporary timeout. ?????Energy Secretary Spencer Abraham in a New York news conference=20 Wednesday reiterated his opposition to electricity price caps as a way to= =20 cope with California's energy crisis. ?????If we put price caps in place there will be more blackouts and=20 they'll be worse Abraham said. ?????Cal-ISO is filing its market study as part of its comments on FERC sta= ff=20 recommendations on ways to thwart market manipulation. FERC's proposal=20 includes strict coordination of power plant outages by Cal-ISO with reporti= ng=20 of suspicious closures to FERC and generator-by-generator bid caps tied to= =20 costs. ---=20 ?????Reiterman reported from San Francisco Rivera Brooks from Los Angeles.= =20 Times staff writer Thomas S. Mulligan in New York contributed to this story= . --- --- Power Strain Eases but Concerns Mount=20 Energy: Officials say summer prices will be high and a state report shows= =20 that contracts with generators are far short of goals.=20 By DAN MORAIN and JENIFER WARREN Times Staff Writers=20 ?????SACRAMENTO--California's fragile electricity system stabilized=20 Wednesday but a Davis administration report suggested troubles ahead becau= se=20 the state could be forced to buy most of its power for the coming summer on= =20 the costly and volatile spot market. ?????After two days of statewide blackouts power plants that had been shut= =20 down were cranked up. Unseasonable heat tapered off. The operators of the= =20 statewide power grid relaxed their state of emergency. ?????But plenty of ominous signs remained. Many small producers remained sh= ut=20 down skeptical about Gov. Gray Davis' plan for utilities to pay them. ?????State Controller Kathleen Connell issued a sharp warning about the hig= h=20 cost of the state's foray into the power business and announced that she wi= ll=20 block an administration request that she transfer $5.6 billion into an=20 account that could be tapped to pay for state purchases of electricity. ?????And a report from the administration summarizing contracts between Dav= is=20 and independent power generators showed that the state has signed contracts= =20 for only 2247 megawatts of electricity significantly less than the 6000 = to=20 7000 megawatts previously claimed. ?????While there are agreements in principle for the full amount the repor= t=20 notes that generators can back out of the contracts for a variety of reason= s=20 including the state's failure to sell bonds to finance power purchased by= =20 July 1. The Legislature has approved plans to sell $10 billion in bonds bu= t=20 none have yet been issued. ?????We are exposed enormously this summer Senate Energy Committee=20 chairwoman Debra Bowen (D-Marina del Rey) said after looking at the report.= =20 We owe the people the truth about how difficult this summer is going to be= .=20 We don't have a power fairy. ?????Perhaps most significant the report suggests that the contracts fall= =20 significantly short of Davis' stated goal of buying no more than 5% of the= =20 state's summer needs on the spot electricity market where prices can be ma= ny=20 times those of long-term contracts. ?????After reading the report Frank Wolak a Stanford University economist= =20 who studies the California electricity market said the numbers suggested= =20 that the state's long-term contracts will cover less than half of what the= =20 state will need this summer. ?????We're definitely short this summer next summer and the summer of=20 2003 he said. ?????California was forced to start buying electricity in December--at a co= st=20 of $50 million a day--because producers refused to sell to Southern=20 California Edison and Pacific Gas & Electric. The two utilities amassed=20 billions of dollars in debt when prices for wholesale power soared on the= =20 spot market. ?????Vikram Budhraja a consultant retained by Davis to negotiate deals wit= h=20 generators said the report represents a work in progress. He said the=20 state may yet sign new contracts. ?????However Wolak said the contract figures confirm what he and others ha= ve=20 been dreading: that summer is going to be rife with rolling blackouts unles= s=20 serious steps to cut demand are taken immediately. ?????Wolak and other experts say large industrial customers must be switche= d=20 to real-time meters and pricing to persuade them to use the bulk of their= =20 energy at times of low demand. ?????The head of the Energy Foundation a San Francisco-based nonprofit tha= t=20 promotes sustainable sources of power made the same proposal to Davis on= =20 Wednesday. ?????The government need not ask customers to swelter in the dark this=20 summer foundation President Hal Harvey argued in a letter. ?????He also proposed a crash campaign to boost sales of efficient applianc= es=20 and lightbulbs. He said the state needs to take over the utilities' contrac= ts=20 with alternative energy providers to ensure they stay in business and sign= =20 new contracts for 1500 megawatts of new wind power--the cheapest fastest= =20 and cleanest source of new supply. ?????Davis had proposed a formula Tuesday to force private utilities to pay= =20 the alternative producers some of which have not been paid since November.= =20 But some of them warned Wednesday that Davis' plan offers them little=20 incentive to turn on their generators. ?????Alternative energy producers supply more than a quarter of the=20 electricity consumed in California. ?????Many producers generate electricity from wind sun and geothermal=20 sources. But most of them generate power using natural gas--and the cost of= =20 natural gas has been soaring. Several natural gas users said Davis' plan= =20 which caps rates won't cover their fuel costs. ?????Davis assumes that the price of natural gas will fall. But small=20 generators say they don't have sufficient purchasing power or sophisticatio= n=20 to gamble on future prices. ?????The Public Utilities Commission is expected to approve Davis' proposal= =20 next week. It offers producers two choices: 7.9 cents a kilowatt-hour if th= ey=20 agree to supply power for five years or 6.9 cents a kilowatt-hour over 10= =20 years. ?????The price of natural gas is higher than that said Marty Quinn=20 executive vice president and chief operating officer of Ridgewood Power LLC= =20 which owns three natural gas-fired co-generation plants. If we operate=20 we'll lose money. ?????Ridgewood is not operating having been cut off by gas suppliers. The= =20 company sued PG&E last month seeking overdue payments and release from its= =20 contracts with the utility. ?????A hearing is scheduled in El Centro today in another lawsuit filed by = a=20 small energy producer an Imperial Valley geothermal producer that sued=20 Edison for refusing to let it break its contract and sell on the open marke= t.=20 CalEnergy says Edison owes it about $140 million for energy sold since=20 November. ?????A company spokesman Jay Lawrence said CalEnergy was going ahead with= =20 its suit despite Davis' proposal. We've had promises before he said. ?????In other developments: ?????* A federal judge in Sacramento on Wednesday ordered Reliant Energy of= =20 Houston a major producer to continue selling power to California during= =20 emergencies despite the company's argument that it may not be fully=20 reimbursed. The order will remain in effect for 60 days or until the U.S.= =20 Federal Energy Regulatory Commission decides a related case. ?????* Connell said the state budget surplus has shrunk to $3.2 billion=20 because the state has spent roughly $2.8 billion on electricity. She=20 criticized the administration for withholding basic information about state= =20 finances and said she will begin an audit on Monday of the Department of= =20 Water Resources which is responsible for purchasing power. ?????Davis' aides said Connell took her action because the Democratic=20 governor endorsed one of Connell's foes this week in the race for Los Angel= es=20 mayor former Assembly Speaker Antonio Villaraigosa. A Connell aide scoffed= =20 at the notion. ?????* Sen. Dianne Feinstein (D-Calif.) said she never has had a response= =20 from President Bush after writing him last month for an appointment to=20 discuss the California energy crisis. ?????In a wide-ranging lunch talk with reporters in Washington she deplore= d=20 the fact that huge huge profits are being made in the California crisis= =20 and said an appropriate federal role would be to guarantee a reliable=20 source of power until the state can get nine new generators online. ---=20 ?????Times staff writers Mitchell Landsberg in Los Angeles and Robert L.=20 Jackson in Washington contributed to this report. --- --- ------------------------ --- --- ------------------------ Net Complex A Dilemma For San Jose=20 SERVER FARM: Plant would tax grid=20 David Lazarus Chronicle Staff Writer Thursday March 22 2001=20 2001 San Francisco Chronicle=20 URL:=20 /22/M N236772.DTL=20 San Jose while trying to block construction of a new power plant is set t= o=20 approve a vast computer complex that could overwhelm California's already= =20 strained power grid.=20 City officials gave preliminary approval last week to what would be the=20 world's largest server farm. The sprawling facility to handle Internet=20 traffic would drain about 150 megawatts of power from the state electricity= =20 grid.=20 If granted final authorization on April 3 the $1.2 billion project would a= dd=20 the equivalent of about 150000 homes to California's power system which w= as=20 hit this week by rolling blackouts as demand for juice outstripped availabl= e=20 supply.=20 The server-farm issue highlights a vexing dilemma for the state.=20 On the one hand Gov. Gray Davis is calling for widespread conservation to= =20 help California overcome its current troubles. On the other no one wants t= o=20 curtail growth of the high-tech industry which is an engine for economic= =20 vitality.=20 San Jose will make a lot of money from this project said Craig Breon=20 executive director of the Santa Clara Valley Audubon Society. But to not= =20 help the state out of its energy situation there's a fair amount of=20 hypocrisy going on.=20 The server farm would be owned by U.S. DataPort a San Jose data-management= =20 firm. As planned it would occupy 10 buildings on more than 170 acres in th= e=20 city's Alviso area.=20 Total projected energy use would be 180 megawatts. About 30 megawatts would= =20 be generated by a small on-site facility and the rest would have to be=20 provided by Pacific Gas and Electric Co.=20 We're confident that the DataPort project will be approved because it's ve= ry=20 important to San Jose and to the local economy said San Jose Mayor Ron=20 Gonzales.=20 But PG&E already is saying that its power cupboard is bare. The utility do= es=20 not have sufficient existing electric infrastructure to meet U.S. DataPort= 's=20 needs it said in a recent letter to San Jose officials.=20 John Mogannam U.S. DataPort's senior vice president of operations counter= ed=20 that it could take as long as five years for the server farm to grow big=20 enough to require the full 150 megawatts from the state grid.=20 Hopefully by then the whole energy crisis will pass by and we won't have= a=20 problem he said.=20 Mogannam stressed the positive aspects of the project such as its ability = to=20 handle about 15 percent of global Internet traffic the 700 jobs it would= =20 create and the $70 million over 10 years it would generate for San Jose in= =20 property and utility taxes.=20 That's why the city likes it he said.=20 Indeed San Jose officials are so enamored with such developments that they= =20 have all but turned a deaf ear to warnings that the server farm will=20 exacerbate California's already dire power shortage.=20 Andrew Crabtree the city's senior planner said the planning commission ha= d=20 barely touched the question of energy supply when it approved the server fa= rm=20 last week.=20 It wasn't incumbent on the commission to solve the state's energy-supply= =20 problems he said.=20 Rather San Jose city planners focused on the environmental ramifications o= f=20 the proposed facility including air pollution from diesel generators and t= he=20 impact on nearby wildlife.=20 How it would affect dozens of burrowing owls in the area was a key topic of= =20 discussion.=20 We all recognized that there's a power shortage Crabtree said. But we= =20 couldn't do anything about that with this project.=20 Except to make things tougher of course.=20 Server farms run 24 hours a day seven days a week. They are an aspect of t= he=20 high-tech boom that was never foreseen by energy experts and which are now= a=20 major contributor to California's surging electricity demand.=20 A server farm essentially is a large building filled with computers. Each= =20 computer handles the Web site or Internet traffic for hundreds of corporate= =20 clients that do not have the technical resources to look after such things= =20 in- house.=20 Most server farms consume between 10 and 60 megawatts of power. At 180=20 megawatts the U.S. DataPort facility is billed as the most extensive data= =20 center on the planet.=20 There won't be another this size anywhere in the world said Mogannam th= e=20 company's senior vice president. This will be the biggest.=20 With such a vast scale however comes additional concerns. For example al= l=20 that hardware will generate huge amounts of heat requiring powerful air=20 conditioners running around the clock to keep things cool.=20 Patrick Dorinson a spokesman for the Independent System Operator which=20 oversees California's electricity network said server farms had a big=20 impact on the state's tight energy supply.=20 We have an economy that's increasingly based on delivery of information = he=20 observed. We certainly need to make sure we're building adequate generatio= n=20 and transmission to get it there.=20 As it stands no major power plants have been built in California for the= =20 past 12 years while dozens of server farms have sprung up throughout the= =20 state.=20 The Yankee Group a Boston consulting firm estimates that the amount of=20 space taken up by server farms nationwide rose to 9 million square feet fro= m=20 1999 to 2000.=20 By 2003 it expects that figure to increase to 25 million square feet or= =20 enough room for more than a hundred 10-story office buildings.=20 San Francisco may be the exception. Supervisor Sophie Maxwell proposed=20 interim zoning controls last week that would require server farms to receiv= e=20 special permission from City Hall to operate.=20 San Jose for its part has no such reservations. It does however draw th= e=20 line at big fat power plants in the backyard of the city's leading corpora= te=20 citizen.=20 Gonzales is spearheading opposition to a proposed 600-megawatt generating= =20 facility in Coyote Valley because of its proximity to a residential area at= =20 the site of a planned Cisco Systems office complex.=20 There's plenty of opportunities to generate power in the city he said.= =20 This project is just in the wrong site.=20 The matter is now in the hands of the California Energy Commission which i= s=20 expected to issue a ruling by May.=20 Cisco critics say twisted the mayor's arm to fight the plant because it d= id=20 not want a generating facility in its neighborhood. The area will be home t= o=20 thousands of well-heeled tech workers.=20 It's politics said Breon at the Audubon Society. City officials are=20 making political decisions rather than good planning decisions.=20 Ted Smith executive director of the Silicon Valley Toxics Coalition a=20 grassroots organization is calling for a moratorium on construction of all= =20 new server farms in the South Bay until sufficient power can be found to ke= ep=20 them running.=20 Until they figure out how to build these things without draining the=20 electricity grid even dryer it is they shouldn't build them he said.=20 The Internet industry is creating unintended consequences that will really= =20 screw up our future Smith added. They are so busy focusing on next=20 quarter's profits that they don't stop and think about the consequences. .= =20 .=20 SOME FAST FACTS ABOUT 'SERVER FARMS' .=20 -- What are they? Server farms are facilities dedicated exclusively to=20 housing powerful computers for Internet use.=20 -- Who uses them? Companies and individuals pay server farms to maintain=20 their Web sites handle Net traffic and store vast amounts of data --=20 functions that otherwise would require extensive hardware and technical=20 support.=20 -- Why do they use them? As Internet use explodes server farms play an=20 increasingly vital role in managing data and keeping information moving.=20 -- What's the problem? Server farms drain considerable amounts of electrici= ty=20 to keep running.=20 E-mail David Lazarus at dlazarus@sfchronicle.com.=20 2001 San Francisco Chronicle ? Page?A - 1=20 --- Contracts Won't Meet Summer Demands=20 DETAILS: 2004 before full impact felt=20 Lynda Gledhill Chronicle Sacramento Bureau Thursday March 22 2001=20 2001 San Francisco Chronicle=20 URL:=20 /22/M N230640.DTL=20 Sacramento -- Long-term power contracts negotiated by the state won't cover= =20 California's entire demand for electricity until 2004 according to newly= =20 released details about the agreements.=20 The information suggests that California might have to scrounge for=20 electricity on the high-priced spot market for a couple more years even as = it=20 continues to push conservation efforts and construction of more generating= =20 plants.=20 Details of the agreements released by Gov. Gray Davis' administration show= =20 that the contracts will provide for just over a third of the state's demand= =20 for power this year. Energy secured by the contracts will grow to meet the= =20 expected demand in three years.=20 Short-term purchases of power have at least temporarily depleted the state'= s=20 budget surplus and have raised the possibility of sharp rate increases=20 sometime in the future for electricity customers.=20 Davis administration officials are banking on the hope that conservation=20 efforts and increased generating capacity will cover the shortfall along wi= th=20 purchases of electricity on the spot market.=20 We're facing an extreme challenge still this summer said Severin=20 Borenstein head of the University of California at Berkeley Energy=20 Institute. Signing contracts doesn't create more electricity.=20 The information released did not include the names of companies that the=20 state has signed contracts with or the purchase prices.=20 The sketchy details did not satisfy frustrated lawmakers who said many=20 questions remain especially how much the state will end up paying under th= e=20 terms of the contracts.=20 The fundamental question is how much is it costing the state of California= =20 to keep the lights on said Assemblyman Tony Strickland R-Thousand Oaks.= =20 What we really need is total disclosure.=20 The state started buying power in January after generators began refusing = to=20 provide electricity to the state's investor-owned utilities. Pacific Gas an= d=20 Electric Co. and Southern California Edison say they have more than $13=20 billion in past debt.=20 The state has been spending $49 million a day on power purchases since Jan.= =20 17 according to documents obtained by The Chronicle last week.=20 Those documents said the average price of the contracts across 10 years is= =20 $69 per megawatt hour including summer peak. The five-year average price i= s=20 $79 per megawatt hour.=20 According to one chart provided by the governor's office yesterday the=20 long-term contracts will fall about 35 million megawatt hours short in 2002= .=20 Based on the average price per megawatt hour the state has been paying sinc= e=20 January that could end up costing between $6.6 billion and $13 billion.=20 The law creating the state purchasing authority allowed purchases up to $10= =20 billion and extends until 2003.=20 The governor's office said 21 contracts have been signed and another 23=20 agreements that have been reached but not yet signed.=20 Several generators have said that they will not sign contracts with the sta= te=20 until the back debt by the utilities has been taken care of.=20 We have some real potential problems said Senate President Pro Tem John= =20 Burton D-San Francisco.=20 Strickland and several media outlets including The Chronicle have filed= =20 public information requests to get more information about the prices of the= =20 contracts from the administration.=20 Releasing the information would jeopardize the negotiations for future=20 contracts said Steve Maviglio Davis' spokesman.=20 Lawmakers also frustrated by the lack of information given out by the Davi= s=20 administration were not given notice that the information was coming and= =20 many said it was lost in their mail pile.=20 The cover letter was on Los Angeles Department of Water and Power letterhea= d=20 not that of the administration. The letter was written by S. David Freeman= =20 head of the Los Angeles system who was on leave for the month of February t= o=20 help the state negotiate the contracts.=20 Assemblyman George Runner R-Lancaster said the ambiguity of the=20 information raises more questions than it answers.=20 It's like watching a parade through a peephole he said. He's showing us= =20 another float but I don't know what the parade looks like.=20 Blaming the state's purchases of electricity Controller Kathleen Connell= =20 said yesterday that the state's cash on hand had fallen from $8.5 billion i= n=20 January to $3.2 billion. Connell ordered an audit of the state's power=20 buying.=20 Connell said she would block a transfer sought by the Davis administration = of=20 $5.6 billion from the general fund to the state's emergency reserve account= =20 claiming it would lead to a ''serious cash flow crisis.=20 The transfer however is not related to the energy crisis. The sum=20 represents a routine rollover of unspent money from the previous fiscal yea= r.=20 State law requires that money to be sent to a special reserve account for= =20 emergencies.=20 Davis officials acknowledged that $3.7 billion in energy purchases have had= =20 an impact on state coffers but they say the state will be repaid once bond= s=20 are issued in the coming weeks. They also said the state typically has its= =20 lowest cash reserves at this time of year. That changes in mid-April when a= =20 flood of income tax revenue pours in.=20 The transfer has nothing to do with energy purchases said Sandy Harrison= =20 a spokesman for the Department of Finance.=20 It's not helpful to ratepayers taxpayers and people who want their lights= =20 to stay on to have the issue muddied with this sort of inaccurate innuendo= =20 Harrison said.=20 In other developments yesterday:=20 -- After two days of statewide rolling blackouts power grid managers avoid= ed=20 outages. Demand was lower because of cooler temperatures around the state a= nd=20 supply increased as several power plants completed repairs.=20 -- A federal judge in Sacramento ordered a major power generator to continu= e=20 supplying power to California. Reliant Energy Services Inc. had insisted th= at=20 it should not be forced to sell to debt-heavy utilities unless the state=20 guaranteed the bills.=20 Chronicle staff writer Greg Lucas contributed to this story. / E-mail Lynda= =20 Gledhill at lgledhill@sfchronicle.com.=20 2001 San Francisco Chronicle ? Page?A - 1=20 --- --- ----------------- California overcharged $5.5 bln for wholesale power=20 SACRAMENTO Calif. (AP) -- Electricity wholesalers overcharged California= =20 $5.5 billion over the past 10 months according to a report by managers of= =20 the state's power grid.=20 The five companies among other things frequently offered electricity at= =20 prices double what it cost them to produce concludes the California=20 Independent System Operator study which was published Thursday in the Los= =20 Angeles Times.=20 ``All overcharged but some excessively and some by moderate amounts'' sai= d=20 Anjali Sheffrin the ISO's director of market analysis.=20 The Times said the ISO planned to file the study with federal regulators=20 Thursday and are demanding that the money be paid back.=20 The companies denied the allegations adding they expect the Federal Energy= =20 Regulatory Commission will determine their prices were justified.=20 The commission has recently stepped up its scrutiny of power companies'=20 behavior during California's power crisis asking suppliers to justify $124= =20 million in sales during the first two months of the year or refund the mone= y.=20 Critics claim thousands of additional questionable sales are not being=20 challenged.=20 The ISO study alleges the wholesalers manipulated the market by bidding at= =20 excessive prices effectively withholding supplies or by not bidding at al= l=20 when they had generation capability available.=20 California has been spending about $45 million a day -- $4.2 billion since= =20 January -- to purchase power for Pacific Gas and Electric Co. and Southern= =20 California Edison. Both utilities the state's largest have been cut off b= y=20 electricity wholesalers because their credit is almost worthless.=20 State Controller Kathleen Connell said Wednesday that the state's=20 power-buying is gutting its budget surplus. Since the state started making= =20 emergency power buys the surplus has fallen from $8.5 billion to about $3.= 2=20 billion she said.=20 A federal judge issued a preliminary injunction Wednesday ordering a major= =20 electricity wholesaler Reliant Energy Services to continue selling to=20 California despite its fear that it will not be paid.=20 U.S. District Judge Frank C. Damrell Jr. said Californians were at risk of= =20 irreparable harm if Reliant stopped selling power to the ISO which buys it= =20 at the last minute on behalf of utilities to bolster supplies and try to fe= nd=20 off rolling blackouts.=20 Such blackouts hit the state twice this week. On Wednesday cooling=20 temperatures and the completion of repairs at several power plants allowed= =20 the state to avoid blackouts.=20 Standard & Poor's has put the state on a credit watch due to its power=20 purchases and chastised Gov. Gray Davis the Legislature and state regulato= rs=20 for not taking more aggressive steps to make sure the utilities can pay the= ir=20 bills.=20 Edison and PG&E say they are nearly $14 billion in debt due to soaring=20 wholesale power costs. The state's deregulation law blocks them from=20 recovering the costs from customers.=20 Connell ordered an audit of the state's power-buying saying Davis is=20 withholding key financial information from her office and the Legislature.= =20 She said she would refuse to transfer $5.6 billion into a ``rainy day fund'= '=20 she said was set up to impress Wall Street as the state prepares to issue $= 10=20 billion in revenue bonds to cover its power buys. Transferring the money=20 would leave the state general fund $2.4 billion in debt Connell said.=20 She called the scope of the proposed transfer unprecedented and said it=20 amounted to a ``shell game'' that disguises the power purchases' effect on= =20 the state budget.=20 Sandy Harrison spokesman for the state Department of Finance and Keely=20 Bosler of the Legislative Analyst's Office said such transfers are routin= e=20 and required by law. They put the state's budget surplus at $5.6 billion.= =20 ``The law says she has to do it. The law does not give her the power to=20 demand that kind of audit information'' Harrison said.=20 Harrison said the state's budget isn't in danger because it will be repaid= =20 with the revenue bonds.=20 Connell's criticism of Davis a fellow Democrat won support from Assembly= =20 Republicans and Secretary of State Bill Jones a Republican who may challen= ge=20 Davis next year.=20 Jones said he wants to announce his own plan to solve the state's energy=20 woes but can't unless Davis releases more financial details.=20 Davis spokesman Steve Maviglio dismissed the criticism.=20 ``Political grandstanding doesn't generate one more kilowatt of energy for= =20 California in this time of emergency'' he said.=20 Maviglio said the administration has released the financial information it= =20 can without jeopardizing negotiations for long-term power contracts with=20 wholesalers. --- --- ---------------------------- If the power goes off=20 Thursday March 22 2001=20 For most of us rolling power blackouts are a nuisance. For some people it= =20 could mean life or death.=20 In Laguna Hills cancer patient Ruben Marquez said the blackout interrupte= d=20 and prolonged his dialysis treatment. He was unharmed the Register report= ed=20 on Monday's blackouts which hit about 1.2 million Californians including= =20 100000 Orange County homes and businesses.=20 What can people do to prevent disaster?=20 They and their families should have a backup plan Rebecca Long=20 spokesperson for the Orange County Red Cross told us.=20 The Red Cross recommends in general that you plan for this as you would fo= r=20 any disaster making sure you have battery-operated radios and flashlights.= =20 We do not recommend candles for an emergency because of the fire hazard.= =20 She recommended a Web site: www.prepare.org People with special health needs such as electric-powered respirators and= =20 oxygen machines also should register with the power company. There's a whole classification for such persons with health needs Southe= rn=20 California Edison spokesperson Clara Potes-Fellow told us. The list is for us to alert them that the power could be discontinued. The= y=20 arrange to have power through other means batteries or generators. We=20 recommend that they have a battery backup of eight hours. Therefore if the= =20 rotating outages are one hour they will have plenty. Even though the power company has such people's names she said we don't= =20 inform them in advance because we have just minutes from when the Independe= nt=20 System Operator which directs where the electrons go orders Edison to=20 implement a power outage on the grid Edison owns. By the time it took to= =20 call people the outage would be over. What's the problem at the ISO? We notify as best we can Pat Dorinson IS= O=20 director of communications told us.=20 The object is to keep the lights on. Sometimes it's just a moment's notice= =20 before a blackout. It makes [giving more notice] pretty difficult. We're= =20 looking into ways to make the system better.=20 In the meantime citizens will have to keep taking precautions. We can't help noting that free market pricing instead of politically-drive= n=20 prices would much more likely make electricity available albeit at higher= =20 prices.=20 We would expect too there would be hardship allowances donations and=20 level-pay plans to accommodate various types of needs. --- Socialized electricity=20 Thursday March 22 2001=20 Government control of state power won't add one watt for consumers' use TOM MCCLINTOCK Sen. McClintock R-Thousand Oaks represents the 19th state Senate District= =20 in the state Legislature.=20 In a city where bad ideas never die Sacramento is once again host to a=20 variety of plans for the government takeover of California's power system.= =20 The private sector it is said has done such a terrible job of providing= =20 electricity that government must now step in to save the day. Thus the=20 Legislature is awash in proposals to spend billions of dollars of public=20 money to acquire existing power facilities. Fifteen billion dollars has=20 already been authorized for this purpose and an additional $10 billion is= =20 pending in the Senate.=20 Meanwhile Gov. Davis is losing about a $1.5 billion a month day-trading in= =20 the electricity market. The irony is that after the expenditure of as much = as=20 $25 billion for public power'' not a single inch will have been added to= =20 the transmission lines nor a single watt to the generating capacity of=20 California. The root of California's crisis is a catastrophic shortage of electricity. = In=20 a shortage prices rise or blackouts occur. To reduce prices and avoid=20 blackouts the only permanent solution is to increase the supply. Merely=20 changing the ownership of existing facilities leaves Californians with=20 exactly the same shortage only billions of dollars the poorer for it.=20 Government takeover advocates argue that at least a government power=20 authority will protect consumers against price gouging and poor management.= =20 Unfortunately government power authorities don't insulate against price=20 gouging. The biggest price gouger in this entire crisis has been the Los=20 Angeles Department of Water and Power which was generating electricity for= =20 $51 per megawatt hour and selling it back to California ratepayers for as= =20 much as $1400.=20 Nor does a government takeover assure better management. Just a few years= =20 ago the LADWP was buried in $7 billion in debt. The Sacramento Municipal= =20 Utilities District was a managerial laughing stock having squandered=20 hundreds of millions of dollars for a nuclear plant it barely used. Say what you will'' the government takeover advocates reply when push= =20 came to shove the municipal utility districts of California are in great= =20 shape while the private utilities are a basket case.'' But one needs to lo= ok=20 at the reason. Ever since the state reorganized the electricity market in= =20 1996 the municipal utility districts were allowed to trade in a free marke= t=20 while the private utilities were forced to buy power exclusively in a=20 Soviet-style power exchange where the highest bid during an hour set all=20 prices. The municipal utilities were able to retain their generators. Government=20 forced the private utilities to sell theirs. The municipal utilities were= =20 able to enter into long-term contracts. Government prevented the private=20 utilities from doing the same thing. The municipal utilities were able to= =20 negotiate the lowest prices available for power. Government forced the=20 private utilities to pay the outlandish prices on the government's power=20 exchange. The municipal utilities were allowed to adjust their rates to=20 reflect the actual cost of power to consumers. Government forced the privat= e=20 utilities to sell at astronomical losses. The final argument is simply an ideological one: that power is just too=20 important to be left in private hands. Really? Food is a great deal more=20 important and private hands have kept this nation well fed for centuries.= =20 Picturing the Department of Motor Vehicles running the local supermarket=20 should sober even the most euphoric of the government takeover advocates. California's Independent System Operator is predicting a 6000-megawatt=20 shortfall this summer. When there is no electricity on the transmission=20 lines it really won't matter who owns them. During the hottest hours of th= e=20 hottest days of the year when as many as 6 million homes are without=20 electricity it may begin to dawn on most people that socialism doesn't wor= k=20 any better in California than it did in the Soviet Union. --- --- ------- NEWS=20 Bush's Energy Policy Will Backfire Feinstein Warns / She wants federal pri= ce=20 controls now Carolyn Lochhead 03/22/2001=20 The San Francisco Chronicle=20 FINAL=20 Page A.3=20 (Copyright 2001)=20 Sen. Dianne Feinstein D-Calif. warned yesterday that when blackouts=20 intensify in California this summer the pressure will intensify on the Bus= h=20 administration to explain why it rejected price controls on wholesale=20 electricity.=20 If by this summer California is as anticipated facing these blackouts a= nd=20 the federal government won't help I don't think the American people are=20 going to be very pleased Feinstein told California reporters.=20 Asked if help means the cost-based price controls Feinstein is pushing she= =20 said Right now yes.=20 Feinstein said California Democrats will begin to escalate their criticism = of=20 the administration predicting that support will build among Western senato= rs=20 for her legislation to impose price caps on wholesale electricity in exchan= ge=20 for lifting the rate cap on California consumers.=20 If it passes she said the administration is really going to have to face= =20 whether they're going to help or not help.=20 Feinstein said House Democrats from the West Coast also told her they expec= t=20 that White House inaction on price caps would help them gain seats in 2002.= =20 But she refused to speculate on the political fallout from the energy crisi= s=20 against Democrats in California .=20 Feinstein characterized Energy Secretary Spencer Abraham's adamant argument= s=20 against price controls as recalcitrant saying his statement to a Senate= =20 committee last week essentially said California 's on its own.=20 She speculated that because California is dominantly Democratic even=20 somebody like me that works across party lines is beginning to wonder if th= is=20 isn't an unnecessarily barbed stick at California .=20 White House spokesman Ken Lisaius disputed the charge saying the Bush=20 administration is doing all it can but can't control that demand is=20 outstripping supply.=20 The federal government cannot prevent blackouts but can only help at the= =20 margins in situations like this Lisaius said. The only thing that can=20 prevent blackouts is reduced demand increased supply and good weather.=20 Abraham has twice in the last week argued strongly against price controls= =20 including the cost-based ones Feinstein advocates saying they could increa= se=20 blackouts by discouraging power sales into the Western electricity grid.=20 He also said many power providers including the federal Bonneville Power= =20 Administration in the home district of Sen. Gordon Smith the Oregon=20 Republican co-sponsoring Feinstein's bill would be exempt from federal pri= ce=20 caps. Feinstein disputed that but Smith's office agreed.=20 Abraham argued that price controls would not work in part because roughly= =20 half the Western electricity market would be exempt including federal powe= r=20 marketing authorities such as Bonneville rural electric cooperatives and= =20 municipal utilities such as the Los Angeles Department of Water and Power.= =20 On another front House Republicans omitted from their budget projected=20 revenues from opening part of the Arctic National Wildlife Refuge to oil an= d=20 gas exploration.=20 A Budget Committee spokeswoman said Chairman Jim Nussle R-Iowa determined= =20 that the $1 billion in revenues from the wildlife refuge the Bush=20 administration included in its budget were not needed and that there was n= o=20 reason to put in something that controversial that some of our members don= 't=20 even like when you don't have to.=20 But Rep. Gary Miller R-Diamond Bar (Los Angeles County) said House=20 Republicans are not backing off at all from opening the wildlife refuge t= o=20 drilling. Our goal is to get it passed in the House he said saying the= =20 Budget Committee omitted the revenue projections because the drilling has n= ot=20 yet been approved.=20 PHOTO Caption: Sen. Dianne Feinstein wants to cap wholesale electricity=20 costs and end caps on con- sumer rates.=20 --- ------ Reliant Still In Power Pact Talks With Calif. DWR=20 By Christina Cheddar 03/22/2001=20 Dow Jones News Service=20 (Copyright (c) 2001 Dow Jones & Company Inc.)=20 Of DOW JONES NEWSWIRES=20 =20 (This report was originally published late Wednesday.)=20 =20 NEW YORK -(Dow Jones)- Reliant Energy Inc. (REI) remains in discussions wit= h=20 the California Department of Water Resources to sign long-term power=20 contracts.=20 However issues regarding the creditworthiness of the agency remain said J= oe=20 Bob Perkins president of Reliant's Wholesale Division.=20 We want to be part of the solution Perkins said. At the same time Relia= nt=20 is trying to protect itself from incurring additional unpaid accounts=20 receivable he said.=20 The DWR has been buying power on behalf of California 's financially troubl= ed=20 utilities. However Reliant has yet to sign a formal agreement with the=20 agency because Reliant is concerned it won't be paid.=20 During a conference call Wednesday Perkins said he couldn't comment on a= =20 lawsuit between Reliant and the California Independent System Operator=20 because he didn't know how it was progressing.=20 Further court action on the case is expected Wednesday.=20 The lawsuit stems from Reliant's desire not to be required to sell power to= =20 California if the state won't guarantee payment. The Houston energy company= =20 is concerned that it won't be paid for power being bought by the ISO on=20 behalf of Edison International's (EIX) Southern California Edison unit and= =20 PG&E Corp.'s (PCG) Pacific Gas & Electric Co. unit.=20 To date Reliant is owed some $370 million from unpaid power sales to the= =20 utilities.=20 Much of Perkins' presentation centered on how the power crisis in Californi= a=20 emerged.=20 Using data from research firm Cambridge Energy Research Associates the=20 company discussed the imbalance between California 's power demand and its= =20 power supply.=20 Looking ahead to the summer it isn't a question of whether rolling blackou= ts=20 will occur but how many and how severe Perkins said.=20 Low hydroelectric availability loss of imported power warm weather deman= d=20 growth and plant outages could lead to a worst-case scenario in California = =20 he said adding that some estimates predict California could experience 11= 00=20 hours of power outages this summer.=20 The skyrocketing power prices in the region are a reflection of the power= =20 market's imbalance he said.=20 Reliant submitted only economically sound bids for power Perkins said. H= e=20 expects the company can document why it charged the prices it did as requir= ed=20 by regulators.=20 We have been very rigorous and very disciplined in what we have submitted= =20 Perkins said.=20 He added that retail customer price increases are one way of sending a sign= al=20 to consumers to lower consumption. He cited studies that show a 20% retail= =20 price increase could reduce consumption by 2000 megawatts. A megawatt is= =20 enough power to serve roughly 1000 homes.=20 -By Christina Cheddar Dow Jones Newswires 201-938-5166=20 --- ------ CPUC Must Address Rates In QF Repayment Order - SoCal Ed 03/22/2001=20 Dow Jones Energy Service=20 (Copyright (c) 2001 Dow Jones & Company Inc.)=20 (This article was originally published Wednesday)=20 =20 LOS ANGELES -(Dow Jones)- Any order from the California Public Utilities=20 Commission requiring utilities to pay small independent generators going= =20 forward must determine how that could be done within the existing rate=20 structure a spokesman for Edison International (EIX) utility Southern=20 California Edison said Wednesday.=20 The utility was responding to a PUC proposed decision that would require=20 utilities to pay small generators called qualifying facilities $79 a=20 megawatt hour within 15 days of electricity delivery. The decision will be= =20 voted March 27 by the CPUC.=20 We're still reviewing (the decision) and should have more to say in a day = or=20 two. To the extent that the commission orders us to pay going forward of=20 course we will. But it needs to address how we will pay the QFs a SoCal= =20 Edison spokesman said.=20 SoCal Edison and PG&E Corp. (PCG) unit Pacific Gas & Electric Co. are=20 struggling under nearly $13 billion in uncollected power costs due to an=20 inability to pass high wholesale power costs to customers under a rate=20 freeze.=20 Gov. Gray Davis Tuesday blasted the utilities for not having paid their QF= =20 bills in full since December. Pacific Gas & Electric Co. has made some=20 partial payments to QFs but SoCal Edison has paid nothing. Together they= =20 owe the QFs about $1 billion but the order doesn't address that debt.=20 An Edison executive said in reaction to the governor's sharp comments tha= t=20 the company simply doesn't have the money to pay creditors.=20 The root problem here is there just isn't enough money in the current rate= =20 base to pay our bills said Edison Senior Vice President of Public Affairs= =20 Bob Foster. We understand the financial distress (the QFs) face we are=20 facing financial distress ourselves.=20 The proposed PUC order would also require the state's investor-owned=20 utilities to offer the small generators five- and 10-year contracts for pow= er=20 for $79/MWh and $69/MWh respectively.=20 The QFs may be able to live with the PUC proposal but the five- and=20 10-year contract prices may be inadequate if natural gas prices at one of t= he=20 California borders are high said Jan Smutny-Jones president of the=20 Independent Energy Producers Association. Natural gas prices into Californi= a=20 are currently higher than anywhere in the country.=20 But some say the proposed decision may not be enough to prevent the QFs fro= m=20 filing involuntary bankruptcy proceedings against the utilities for the mon= ey=20 they are still owed.=20 There's still a lot of skepticism. To say our position has changed based o= n=20 the CPUC decision or the governor's announcement is not accurate. A lot sti= ll=20 has to happen said Jay Lawrence a spokesman for a renewable creditors=20 committee.=20 -By Jessica Berthold Dow Jones Newswires 323-658-3872=20 --- ------ Calif Small Pwr Producers To Shut Plants If Rates Capped By Jason Leopold 03/22/2001=20 Dow Jones Energy Service=20 (Copyright (c) 2001 Dow Jones & Company Inc.)=20 Of DOW JONES NEWSWIRES=20 =20 (This article was originally published earlier Thursday.)=20 =20 LOS ANGELES -(Dow Jones)- Many of California 's independent power producers= =20 late Wednesday threatened to take their small power plants offline this wee= k=20 if state lawmakers pass legislation that would cap the rates the generators= =20 charge for electricity they sell directly to the state's three investor-own= ed=20 utilities.=20 At issue is a bill that would repeal a section of the state's Public=20 Utilities Code which links the 688 so-called qualifying facilities'=20 electricity rates to the monthly border price of natural gas.=20 Lawmakers however are poised to pass the legislation.=20 State regulators are then expected to approve a measure that would=20 restructure the fluctuating rates the QFs charge PG&E Corp. (PCG) unit=20 Pacific Gas & Electric Edison International (EIX) unit Southern Californi= a=20 Edison and Sempra Energy (SRE) unit San Diego Gas & Electric from $170 a= =20 megawatt-hour to $69-$79/MWh regardless of the price of natural gas.=20 Whereas each of the 688 QF contracts differed largely because natural gas= =20 prices are higher in Southern California than Northern California the sta= te=20 wants the QFs to sign a general contract with the utilities.=20 The cogeneration facilities which produce about 5400 megawatts of=20 electricity in the state said the rates are too low and they won't sign ne= w=20 supply contracts with the utilities.=20 For $79/MWh natural gas would have to be $6 per million British thermal= =20 unit at the Southern California border said Tom Lu executive director of= =20 Carson-based Watson Cogeneration Company the state's largest QF generatin= g=20 340 MW. Our current gas price at the border is $12.50.=20 Other gas-fired QFs said the state could face another round of rolling=20 blackouts if lawmakers and state regulators pass the legislation which is= =20 expected to be heard on the Senate floor Thursday and allow it to be=20 implemented by Public Utilities Commission next week.=20 Lu whose company is half-owned by BP Amoco PLC (BP) and is owed $100 milli= on=20 by SoCal Ed said the proposals by the PUC and the Legislature will only= =20 make things worse.=20 David Fogarty spokesman for Western States Petroleum Association whose=20 members supply California with more than 2000 MW said the utilities need = to=20 pay the QFs more than $1 billion for electricity that was already produced.= =20 =20 State Loses 3000 MW QF Output Due Of Financial Reasons=20 =20 The QFs represent about one-third or 9700 MW of the state's total power= =20 supply. Roughly 5400 MW are produced by natural gas-fired facilities. The= =20 rest is generated by wind solar power and biomass.=20 About 3000 MW of gas-fired and renewable QF generation is offline in=20 California because the power plant owners haven't been paid hundreds of=20 millions of dollars from cash-strapped utilities SoCal Ed and PG&E for near= ly=20 four months.=20 Several small power plant owners owed money by SoCal Ed have threatened to= =20 drag the utility into involuntary bankruptcy if the utility continues to=20 default on payments and fails to agree to supply contracts at higher rates.= =20 The defaults have left many of the renewable and gas-fired QFs unable to=20 operate their power plants because they can't afford to pay for the natural= =20 gas to run their units. Others continue to produce electricity under their= =20 contracts with the state's utilities but aren't being paid even on a forwar= d=20 basis.=20 The California Independent System Operator keeper of the state's electrici= ty=20 grid said the loss of the QF generation was the primary reason rolling=20 blackouts swept through the state Monday and Tuesday.=20 Gov. Gray Davis recognizing the potential disaster if additional QFs took= =20 their units offline held marathon meetings with key lawmakers Monday and= =20 Tuesday to try and hammer out an agreement that would get the QFs paid on a= =20 forward basis and set rates of $79/MWh and $69/MWh for five and 10 year=20 contracts. He also said he would direct the PUC to order the utilities to p= ay=20 the QFs for power they sell going forward.=20 After next week the QF problem will be behind us Davis said Tuesday. We= =20 want to get the QFs paid...the QFs are dropping like flies...and when that= =20 happens the lights go out.=20 But this just makes the problem worse said Assemblyman Dean Florez=20 D-Shafter a member of the Assembly energy committee.=20 I don't know how we are going to keep the lights on Florez said in an=20 interview. Many of these congenerators are in my district. They said if th= e=20 legislation doesn't change they are going offline. This compounds the issue= =20 of rolling blackouts especially now when we need every megawatt.=20 Davis who didn't meet with people representing the QFs said he was handin= g=20 the QF issue to the PUC because lawmakers failed to pass legislation that= =20 would have set a five-year price for natural gas and allow the QFs to sign= =20 individual contracts with the utilities. In addition SOCal Ed opposed the= =20 legislation saying the rates should be below $50/MWh.=20 Some renewable power producers said they aren't vehemently opposed to the n= ew=20 rate structure because it guarantees them a higher rate than what was=20 originally proposed.=20 =20 QFs Want Third Party Supply Contracts=20 =20 John Wood who represents the SoCal Ed Gas Fired Creditors Committee one o= f=20 a handful of groups that have formed since January to explore options on=20 getting paid by the utilities said his group of gas-fired QF creditors wan= t=20 to be released from their supply contracts and sell to third parties.=20 Under our plan we would be permitted to sell electricity to third parties= =20 (including the state Department of Water Resources) until a resolution to t= he=20 crisis can be accomplished wood said.=20 Hal Dittmer president of Sacramento-based Wellhead Electric in Sacramento= =20 which is owed $8 million by PG&E has 85 MW of gas-fired generation units= =20 offline.=20 Under the state's plan Dittmer said he risks going out of business.=20 I can't buy natural gas for what I would be paid under this decision he= =20 said. The state needs to quit kidding themselves that they don't need to= =20 raise electricity rates. All of this is being driven by an artificial=20 construct that California can avoid raising rates.=20 =20 -By Jason Leopold Dow Jones Newswires 323-658-3874=20 jason.leopold@dowjones.com=20,other,informative,3 +Andy Fastow,Response to Tarpey on Schnitzer/Tierney (303)575-6491 Thorn--Linda Breathitt Mont Hoyt Set up meeting with Dan Richard Rick and maureen,other,formal,3 +Draft Post-Labor Day Legislative Plan On RTOs,Attached for your review and any comments is a draft legislative action plan of initial steps to be taken on RTOs when Congress returns next week. We will also be sending this draft plan to our lobbying consultants for their input and discussion at our meeting/conference call next Tuesday afternoon. As always your input is much appreciated. John,energy trading,formal,5 +Fwd:,,other,neutral,0 +Follow up for Ken,Rep Scott McGinnis (colo) told Ken that he would like to be briefed on the California and broader energy situation so that he can speak out on the issue. Also don't forget that we need to go see your buddy Newt!,other,casual,3 +Re: FW: EEO Letter,Sorry for the delay (I had major e-mail problems). The memo looks good let's get it out. From: Sandra Lighthill/ENRON@enronXgate on 06/21/2001 05:43 PM To: Steven J Kean/NA/Enron@Enron cc: Rick Johnson/ENRON@enronXgate Subject: FW: EEO Letter Steve As you know we have developed a memo to be signed by Ken Lay and Jeff Skilling reaffirming our EEO Harassment Prevention and Fair Treatment policies for 2001. The final version is attached for your review and if acceptable to obtain the needed signatures. The memo has been reviewed by Cindy the Legal Department and the OLER group. Once signatures have been obtained return the signed memo to me so that our group can begin the distribution and posting of the memo to all US employees. Please call me at x37921 if you have any questions. The signed memo can be sent to me at EB1669c. Thank you for your assistance in this matter. Regards Sandra,other,formal,3 +Confidential Information and Securities Trading,To:KAMINSKI WINCENTY Email:vkamins@enron.com - 7138533848 ? Enron Wholesale Services - Office of the Chairman ? From:??Mark Frevert Chairman & CEO ??????Greg Whalley President & COO ??????Mark Haedicke Managing Director & General Counsel ? Subject:??Confidential Information and Securities Trading ? Enron Wholesale Services ('EWS') maintains official Policies and Procedures Regarding Confidential Information and Securities Trading ('Policies and Procedures') which have been revised as of November 15 2000 to reflect the new EWS structure. These policies and procedures are intended to allow us simultaneously to pursue our diverse businesses and to protect confidential information our reputation for integrity and EWS and its employees from legal liability. ? You are required to become familiar with and to comply with the Policies and Procedures. The newly revised Policies and Procedures are available for your review on LegalOnline the new intranet website maintained by the Enron Wholesale Services Legal Department. Please click on the attached link to access LegalOnline: ? ? You must certify your compliance with the Policies and Procedures within two weeks of your receipt of this message. The LegalOnline site will allow you to quickly and conveniently certify your compliance on-line with your SAP Personal ID number. If you have any questions concerning the Policies or Procedures please call Lance Schuler at extension 3-5419 Mark Haedicke at extension 3-6544 Alan Aronowitz at extension 3-3214 Bob Bruce at extension 5-7780 or Donna Lowry at extension 3-1939.,other,formal,5 +Californias dim bulbs,You may have seen this when it first came out a while back ... but it's worth a rerun. -----------------,other,casual,0 +Re: Confidential -- Terry Thorn,Shanna talk with Rick but he will be working until June or July then he will retire and be available as a consultant to us. m Shanna Funkhouser@ENRON 02/08/2001 10:09 AM To: Mike McConnell/HOU/ECT@ECT cc: Rick Subject: Confidential -- Terry Thorn Mike I wanted to let you know that Cindy Skinner passed the information she gathered on Terry to me. Please let me know what the status is with his termination ie timing etc. so that I may start the process. Thanks Shanna X59386,other,formal,5 +Energy Issues,Please see the following articles: Oakland Trib Wed 3/7: Breakthrough made in rescue of PG&E Bakersfield Californian Wed 3/7: El Paso Energy closes six valley power plants Contra Costa Times Wed 3/7: Still undecided: Who'll pay DWR for electricity SF Chron Wed 3/7: State Taxpayers In Dark on Details Of Energy Deal Sac Bee Wed 3/7: Lawmakers pitch fixes for region's energy woes Orange Co. Register Wed 3/7: Power plan called wrong LA Times - Wed 3/7: Bill to Cut Some Power Prices Stalls Sac Bee Wed 3/7: PG&E could face mutiny on outages: SMUD others may balk if utility orders summer blackouts SF Chron Wed 3/7: PUC to Decide Fate Of Utility Workers PG&E Edison want to trim costs by laying off thousands cutting service San Jose Mercury Wed 3/7: Power prices could soar during the summer SF Chron Wed 3/7: Power Plant Plans Cause Conflicts East county residents blast supervisors Contra Costa Times Wed 3/7: Supervisors set search for power plant sites Sac Bee Wed 3/7: Peter Schrag: California's $90 billion infrastructure gap Contra Costa Times Wed 3/7: PG&E power plan debated at hearing SF Chron Thurs. 3/8: State OKs 'Peaker' Power Plant at SFO / Temporary generator could be sending electricity to 50000 homes by August WSJ Thurs. 3/8: Crossed Wires: Major Kinks Emerge In Gov. Davis's Plan To Power California --- State's Outlays for Electricity May Be Hard to Recover Without Rate Increases --- Betting on Long-Term Deals ------------------------ Breakthrough made in rescue of PG&E State ready to pay $7 billion for lines By Steve Geissinger SACRAMENTO BUREAU SACRAMENTO -- Signaling a breakthrough in secret energy crisis talks the Davis administration disclosed Tuesday it may announce the framework of a pact to rescue the teetering Pacific Gas and Electric Co. next week. Things are going very well said Steve Maviglio a spokesman for Gov. Gray Davis. The state appears to be poised to pay at least $7 billion -- and possibly billions more -- for PG&E's high-voltage transmission lines as part of a deal to financially renovate the north-state utility according to sources familiar with the negotiations. But consumer advocates insisted that even the $7 billion price is too much to pay. And experts warned that a deal with PG&E will be more complex than with other utilities. PG&E representatives declined comment in keeping with their policy on the talks even though the Davis administration said an announcement could come as early as next week or the following week. The new timetable for an announcement was substantially sooner than in Davis' original forecast. Until late last week PG&E was still resisting the sale of its power grid despite the fact that Davis had announced the framework of an agreement with Southern California Edison. Davis expects to soon announce a similar deal with the San Diego Gas and Electric Co. However any such deal still would need federal approval. The investor-owned utilities trapped between high wholesale costs and lower regulated retail rates amassed nearly $13 billion in debts and were unable to buy electricity this winter. With the onset of rolling blackouts the state began brokering billions of dollars in emergency short- and long-term power purchases. Davis' strategy to ease the energy price and supply crisis includes bolstering both conservation and generation while fiscally refurbishing the nearly bankrupt utilities. As part of the rescue deal the utilities would have to drop legal actions seeking dramatically higher electricity bills environmentally shield wildlands they own sell power from their generators to Californians for the next decade and secure help with their debts from their parent companies. Together with the cash infusion from the sale of their power 26000-mile power grids the utilities would be allowed to sell bonds to raise funds and use customer money to pay them off. The state would upgrade the high-voltage lines and lease them back to the utilities for operation. In a reflection of the negotiations with the three utilities a Davis administration official said the deal with PG&E is proving to be more complex than with the other firms. Though PG&E finally agreed late last week to sell its transmission grid the utility apparently wants more than the $7 billion that Davis has offered according to sources. The figure is more than twice the book amount or the value placed on the system for purposes of accounting. And that's the markup that lured Edison into an agreement to sell its smaller portion of the transmission grid for $2.8 billion. But PG&E which fears an erosion of its economic base may be asking as much as $10 billion. Due to complexities in the state's 1996 deregulation of the industry PG&E is more likely to lose revenue than Edison as a result of selling its transmission lines according to experts. Big customers might be able to bypass the utility's remaining local distribution lines thereby eroding its customer base. Therefore the utility may view bankruptcy and sale of its transmission lines to the highest bidder as a potentially attractive alternative to selling its share of the grid to the state at too low a price. ---- El Paso Energy closes six valley power plants Filed: 03/07/2001 By CHIP POWER Californian staff writer e-mail: ppower@bakersfield.com El Paso Energy citing non-payment from Pacific Gas & Electric Co. said it has shut down six cogeneration plants this week. The smaller plants produced about 175 megawatts of electricity and are located primarily in the San Joaquin Valley said company spokesman Mel Scott. A megawatt can supply power to 1000 homes. At least 10 plants have closed in the past two weeks as a result of non-payment according to the state Independent System Operator which manages most of the state's electrical distribution. The El Paso Energy plants are operated with various partners and had not been compensated for December January and February deliveries said Scott. He said he did not know the total amount due but said the plants would be closed until PG&E's credit worthiness is improved. A cogeneration plant common in oil fields simultaneously produces heat energy and electrical or mechanical power from the same fuel in the same facility. Typically it produces electricity and steam which can be deployed to enhance oil recovery. Kern County is the state's leading oil-producing county. El Paso owns or has interests in more than 40000 miles of interstate and intrastate pipeline connecting the nation's principal natural gas supply regions to the five largest consuming regions in the United States namely the Gulf Coast California the Northeast the Midwest and the Southeast. El Paso closed up 99 cents on Tuesday or 1.4 percent at $71.49. The Houston-based company's stock price has ranged between $36.31 and $75.30 in the last 52 weeks. ---- Still undecided: Who'll pay DWR for electricity By Karen Gaudette ASSOCIATED PRESS SAN FRANCISCO -- The price tag is $3.2 billion and counting for electricity bought by the state Department of Water Resources for the customers of two nearly bankrupt utilities. Pacific Gas and Electric Co. Southern California Edison and the state disagree over how the DWR eventually will be reimbursed for its purchases on the expensive last-minute power market. So do the state power regulators who have the final call over who gets the money when. Under a recent law the DWR went into the electricity-buying business to help keep the two utilities from sinking further into their $13 billion debt. The state plans to retrieve the money by selling $10 billion in revenue bonds. The utilities continue to collect ratepayer dollars on that electricity which the bill's author Assemblyman Fred Keeley D-Boulder Creek says is meant to help them begin paying down their debt. In a recent letter however DWR officials requested that the state Public Utilities Commission order that a portion of that money be diverted to the state. But after the utilities subtract the costs of generating electricity payments to environmentally friendly power plants and other expenses there is no money left from ratepayer dollars to give to the DWR without sinking further into debt PG&E spokesman Ron Low said Tuesday. If it passed along money to the DWR our undercollection would grow by about $2.4 billion by the end of the year Low said. The commission unable to agree on the best course of action left the issue untouched at its last meeting but expects to revisit the issue when it meets this morning. Commissioner Richard Bilas is proposing an alternate plan that would have the DWR set its own revenue requirements that would be passed on to ratepayers. The PUC also is expected to respond to complaints from laid-off workers and customers that layoffs by utilities to cut costs have been hurting service. Commissioner Carl Wood warned at the last meeting that failure to provide safe and reliable service could mean fines for the utilities. Representatives from electrical workers unions the PUC and the utilities were to discuss the issue Tuesday afternoon. I don't think we believe that utilities can find a way out of their problems by laying off workers said Mindy Spatt a spokeswoman with the Utility Reform Network. We think consumers deserve safe and reliable service and we think they deserve it at a reasonable price. ---- State Taxpayers In Dark on Details Of Energy Deal David Lazarus Chronicle Staff Writer Wednesday March 7 2001 2001 San Francisco Chronicle Few people would purchase a car simply because the dealer said ''Trust me it's a great deal.'' Yet Gov. Gray Davis essentially is telling Californians just that about dozens of long-term power contracts. Because of confidentiality agreements with power companies the governor has revealed only scant details about the state's multibillion-dollar contracts for electricity over the next 10 years. Gov. Davis has our money and we can't see how he's spending it said Doug Heller a spokesman for the Foundation for Taxpayer and Consumer Rights in Santa Monica. We've been locked out of the room. Neither Davis nor power companies would divulge specific details about the price duration or scope of individual contracts. Each cited secrecy clauses that the governor's office said had been desired by both sides. What consumers do know is this: -- California has signed 40 contracts and tentative accords valued at about $40 billion to secure enough power to light 9 million homes over the next decade. -- The average purchase price of each deal is $69 per megawatt hour -- well above the $30 to $40 charged by power generators before California's energy market went haywire last summer. -- If as is widely expected wholesale power prices fall in years ahead the state nevertheless will be locked into paying above-market rates for electricity. But it is not known which generator agreed to part with the most power at the cheapest level or the full range of the prices in concocting the $69 average. Moreover it is unclear how shrewdly the state negotiated with taxpayer money in securing power on behalf of cash-strapped utilities. These agreements are the bedrock of our long-term energy policy Davis said Monday in announcing the deals. The governor's office defended the murky nature of the contracts yesterday. It's a business transaction in which private corporate information is included said Steve Maviglio a spokesman for Davis. That's the kind of information that never gets revealed. While additional elements of the contracts will be publicized in coming months he said the contracts themselves will remain a secret. You'll never see all the details Maviglio said. This did not sit well with many observers. It's a breach of public trust said Daniel Bacon a San Francisco attorney specializing in business law. A public servant spending public money shouldn't be able to keep the spending secret. But Gary Ackerman executive director of the Western Power Trading Forum an energy-industry association in Menlo Park called confidentiality agreements a necessary evil in transactions like this. He explained that no power company would agree to a long-term contract if rival firms could learn the terms of the accord. The company would be losing too much of its competitive edge in the marketplace Ackerman said. At the same time he noted that secrecy allowed the buyer -- in this case California taxpayers -- to secure more favorable terms with individual sellers. A high price with one generator would not necessarily be sought by all power providers. Still the fact that public funds are being used makes confidentiality in this case a different matter than say Cisco Systems' quietly negotiating to take over yet another tech rival. The public is in a very awkward position said Michael Shames executive director of the Utility Consumers' Action Network in San Diego. It has to rely on the good word and expertise of the governor and he has yet to demonstrate that he has expertise or good word in this field. Shames likened consumers to passengers in a plane being flown by a pilot without a license to fly. But what choice do we have? he asked. I don't see many other options available right now. There's the rub. No matter how bad a deal California may have cut to help meet its energy demands the alternative -- blackouts disruptions economic catastrophe -- is far far worse. On the other hand it already appears that the new contracts will not shield Californians from the threat of daily outages this summer when demand surges. Davis said only about 60 percent of the state's summertime electricity needs so far had been met. Part of the reason is that many power companies already have contracted for their output this year. Duke Energy said this was why it would not begin its nine-year contract with California until 2002 while Williams Cos. said it would only gradually increase the amount of available wattage in its 10-year contract. Both companies meanwhile will continue to profit this summer by selling into the volatile spot market where wholesale power went for as much as $1 500 per megawatt hour last year. You can't sell all your power into long-term contracts said Paula Hall- Collins a Williams spokeswoman. You save some for the spot market. Consumer groups worry that consumers will be hammered again this summer with sky-high power prices and then get nailed down the road by contracts for above-market rates. If we could look at the terms of the deals we'd see that California is being gouged for 10 years said Heller of the Foundation for Taxpayer and Consumer Rights. But the governor doesn't want us to see that. Ackerman of the Western Power Trading Forum said the state had gotten the best rates it could under current market conditions. California went for long-term contracts when everyone else moved in as well he said. Californians are paying a price for not acting sooner. ---- Lawmakers pitch fixes for region's energy woes By David Whitney Bee Washington Bureau (Published March 7 2001) WASHINGTON -- California members of Congress pleaded for everything from wholesale price caps to extending daylight-saving time an extra hour to help the region cope this summer with its persistent electricity shortage but none of the ideas seemed to catch fire at a House hearing Tuesday. People will die in California because of this crisis Rep. Brad Sherman a Los Angeles-area Republican warned the House Energy and Commerce Committee. Sherman testified that his idea for saving lives is to extend daylight-saving time by an extra hour so that there would be more daylight at the end of the day when power consumption surges. One of the peak demand periods for electricity occurs between 5 p.m. and 8 p.m. when the sun sets and people come home from work Sherman testified. If people come home and it is light out there is less of an inclination to turn a light on. Sherman said the state Legislature has called for congressional approval for states to be given authority to extend daylight-saving time and he cited analyses by the California Energy Commission and other agencies suggesting that it could cut power consumption by 1 percent to 2 percent. Sherman who was one of about a dozen California lawmakers presenting their views on the energy squeeze drew no questions from committee leaders about what his legislation might do to everything from airline schedules to television programming if West Coast states didn't agree on the same time standard. Most of the committee's questioning was on the more popular idea proposed by several California and Western lawmakers primarily Democrats to require the Federal Energy Regulatory Commission to impose caps on wholesale electricity prices that have gone wild because of a regional power shortage. Rep. Bob Filner D-San Diego charged that the price spiral has little to do with power shortages but a lot to do with a small cartel of generators bilking ratepayers. Rep. Jay Inslee D-Wash. said he brought up the idea of regional price caps with President Bush who was initially skeptical. But Inslee said that Bush warmed to the idea after being told that protections could be built into the caps so as not to discourage construction of new power plants. Upon hearing that Inslee said Bush invited him to meet with the president's Cabinet-level task force led by Vice President Dick Cheney on a national energy strategy. But Inslee said he can't get the group to meet with him. It's very disappointing Inslee said. Tuesday's hearing was part of a series the panel is holding on the California crisis so far without any emerging consensus on what if anything Congress should do. ---- Power plan called wrong Wall Street analysts say the governor's approach to the problem avoids the issue that caused the imbalance. March 7 2001 By DON THOMPSON The Associated Press SACRAMENTO California's scramble to insulate consumers from the soaring price of electricity may add to the state's power problems this summer Wall Street analysts said Tuesday. Gov. Gray Davis' emphasis on buying utilities' transmission lines and negotiating long-term power contracts to help ease their debts skirts the deep imbalance between wholesale and market rates that led to the state's power problems in the first place they said. In the long run it doesn't solve anything said Michael Worms an industry analyst for Gerard Klauer Mattison & Co. In the long run you need to send the right price signals to consumers which will create its own conservation signals. Unfortunately customers were shielded from that in California. Davis said Monday that the state's first contracts to buy electricity for two financially struggling utilities will provide only about two-thirds of the power needed on a typical summer day forcing Californians to cut power use at least 10 percent to avoid blackouts. Since early January the state has been buying one- third of the power Southern California Edison and Pacific Gas and Electric Co. customers need. The two utilities denied credit by suppliers say they have lost nearly $14 billion due to soaring wholesale electricity prices that the state's industry-deregulation law says they cannot pass on to consumers. The keepers of the state power grid had enough electricity Tuesday to avoid declaring an electricity alert but have faced an almost-daily scramble for weeks due to a tight supply and high wholesale prices. Several wholesale and retail rate proposals are circulating. Among them: Free-market advocates such as Worms want an immediate end to the deregulation-imposed retail rate freeze on Edison and PG&E that will expire next year. Davis wants a Western price cap of $100 per megawatt hour on power generators he says have been prof iteering from California's short energy supply. The Bush administration and Federal Energy Regulatory Commission are cool to that idea. In December FERC imposed a soft cap of $150 per megawatt hour on wholesale rates in the state and required suppliers to justify any higher prices they charge. Consumer groups such as The Utility Reform Network or TURN want regulated rates for residential and small-business customers but free-market rates for large industrial customers which sought deregulation in the first place. TURN also advocates a tiered rate structure with higher rates for consumers who use more than a reasonable amount of electricity each month. Assembly Republicans say electricity and natural-gas prices will fall naturally if the state increases supply mainly by making it easier to build plants and pipelines. Right now you're sort of sitting partially with regulation and part with the free market said Paul Fremont an analyst with Jefferies & Co. Both these systems work. It's sort of that in-between system that you have in Califor nia that doesn't appear to be working. The system discourages generators from building new power plants because they aren't guaranteed a profit and it doesn't do enough to discourage power use by consumers because the price they pay doesn't reflect the true cost of power Fremont said. I don't think people here have much faith in the market and why should they? countered TURN's Mindy Spatt. I think there are probably better ways of encouraging consumers to conserve than by gouging them. Davis insists the crisis can be resolved without raising rates for Edison and PG&E customers beyond the existing rate structure. In January state regulators imposed temporary rate hikes of 7 to 15 percent on Edison and PG&E customers. The Legislature and Davis extended the increases for up to a decade to help pay back the estimated $10 billion in power buying the state expects to do for Edison and PG&E over the next several years and finance its purchase of the power lines owned by the two companies and San Diego Gas & Electric. Rates were already scheduled to increase next year for Edison and PG&E customers. Under the 1996 deregulation law the pair's ratepayers saw a 10 percent rate reduction but only until early 2002. That rate cut will likely expire as planned Davis spokesman Steve Maviglio has said. Davis wants those rates to cover not only the traditional cost of generating transporting and distributing power but the added cost of paying off the two utilities' massive debt and buying their transmission lines said Assemblyman Fred Keeley D-Boulder Creek the Assembly's chief power negotiator. Yet Davis has indirectly addressed the rate imbalance by signing legislation that will let regulators raise consumer rates if necessary Keeley said. The governor and lawmakers are in effect spreading out rate increases over a decade by using long-term revenue bonds to buy power for the nearly bankrupt utilities said Severin Borenstein director of the University of California Energy Institute. At some point we have to deal with the reality that all of the power that we buy has to be paid for by somebody - it's either going to come from taxpayers or it's going to come from ratepayers Bor enstein said. Raising rates now would get us a lot of conservation. Davis also wants financial incentives for conservation and power-plant construction in time to make a difference this summer. Our mouths were agape at the rapid timetable Keeley said. Legislators are rushing to pass those incentives by month's end he said allowing three months for consumers and suppliers to act before the heat of summer. Among bills considered Tuesday the Senate Energy Committee approved legislation to accelerate the siting of power plants. It also was considering a proposal to restructure rates for generators that use renewable energy to provide about 30 percent of the state's electricity. ---- Bill to Cut Some Power Prices Stalls Energy: Democrats balk at varying payment levels for alternative generators. By DAN MORAIN JULIE TAMAKI Times Staff Writers SACRAMENTO--Legislation aimed at cutting prices for more than a fourth of the power consumed in California stalled Tuesday as Democrats questioned why a few alternative energy generators--some of them campaign donors--stood to receive higher payments than others. Lawmakers working to unravel California's energy mess have been negotiating for weeks in an effort to cut the price paid to more than 600 generators of alternative power by more than half to below 8 cents a kilowatt-hour. Those alternative generators' contracts with utilities have shot up in recent months because of a rise in the price of natural gas. The cash-strapped corporations have suspended or made partial payments to the generators over the last few months causing many to shut down or reduce their outputs. But even as the lawmakers reached agreement that pushed the average price to near the 8-cent level per kilowatt-hour some generators would have received higher prices under the bill by state Sen. Jim Battin (R-La Quinta). Some of the generators that stood to benefit had donated to Battin's campaigns. One--Windtec Inc.--gave Battin a $20000 campaign donation in 1999. Others contributed from $3000 and $5000 last year. Battin acknowledged that he has received campaign contributions from some wind power generators but said there is no connection between the donations and the bill's provisions. It is illegal it is unethical and it's not how I do business he said. Battin noted that 25% of the state's alternative energy producers are in his district. As Democrats on the Senate Energy Committee blocked the bill Battin warned that some alternative energy producers might react to the delay by trying to force Southern California Edison and Pacific Gas & Electric into bankruptcy. We will be the cause of bankruptcy Battin said. That prompted Energy Committee Chairwoman Debra Bowen (D-Marina del Rey) to retort: I'm really tired of being threatened with bankruptcy. Alternative energy producers including those that use wind solar power biomass and other means produce 27% of the energy used in California. They sell the electricity to the utilities which in turn transmit it to retail consumers. But with the utilities facing multibillion-dollar debts the alternative energy producers under contract with Edison have not been paid since November. Scores of alternative energy producers supported the measure. Edison International and the San Francisco-based consumer group the Utility Reform Network opposed it. Michael Florio of the Utility Reform group said the deal could result in higher consumer prices an Edison representative said the same thing. Battin and Assemblyman Fred Keeley (D-Boulder Creek) worked out an arrangement with many of the generators. Keeley took the lead in the early negotiations and then turned to Battin to introduce the legislation SB 47X. Rather convoluted language would have allowed higher payments to a select few generators that produce electricity from wind and biomass. Most of California's wind suppliers for instance would have received about 6 cents per kilowatt-hour. But a handful of them about half a dozen wind farms--mostly in the Palm Springs area represented by Battin--would have received 7.8 cents. Battin contends that other wind producers receive additional payments that boost them to the same level as Windtec and others that would get the higher payments. They get the same deal Battin said of the handful of generators that would benefit from the provisions he added to the bill. In California's overall energy market the amount of money that would have flowed to the favored generators is minor. But the added prices that would have been paid to the generators would have translated to at least $19 million in the next five years to be absorbed by Southern California Edison customers according to one analysis. Also Tuesday more details were disclosed about another leg of the state's effort to escape from the energy crunch--the deals with large power generators to supply electricity to California for as long as 10 years. Those arrangements were announced by Gov. Gray Davis Monday as the bedrock of California's energy policy. But some consumer advocates warned that the deals could lock the state into excessively high-priced contracts. S. David Freeman the general manager of the Los Angeles Department of Water and Power and Davis' negotiator said that the state guarded against that by varying the time spans of its deals. About 6000 megawatts are expected to be available this summer about one-third of the energy needed by the state Freeman said. The amount of power under contract swells until more than 9000 megawatts are contracted in 2004 half of the needed amount before dipping to 8000 megawatts in 2010. What we're doing here is what everybody said had to be done Freeman said. We deliberately bought 50% so we'd have a good mix between long-term contracts which may turn out to be somewhat higher or somewhat lower than the spot market and purchases on the spot market. ---- PG&E could face mutiny on outages: SMUD others may balk if utility orders summer blackouts By Carrie Peyton Bee Staff Writer (Published March 7 2001) Sacramento's electric utility wants out of a deal that imposes rolling blackouts locally on PG&E's command. So do a lot of other utilities. They've been writing letters lobbying lawmakers and launching informal talks with Pacific Gas and Electric Co. to get off the hook before summer. Who dodges the blackout bullet is going to play out as a political hot button around the state said George Fraser head of the Northern California Power Agency a coalition of municipal utilities. In Sacramento the next volley is expected soon with the Sacramento Municipal Utility District reportedly poised to notify PG&E that it will no longer black out homes and businesses on the larger utility's command. We are absolutely trying to fight off the requirement for rolling blackouts for the Sacramento area said Linda Davis one of seven elected members of the SMUD board of directors. Saying they don't want to be dragged down by somebody else's problems two Southern California utilities have written grid operators asking to be exempted from any blackouts caused by PG&E's or Southern California Edison's financial woes. But in PG&E's view California is in an energy crisis (and) ... we're all in this together said spokesman John Nelson. The maneuvering comes amid bleak forecasts for power supplies this summer. Although Gov. Gray Davis has said conservation new power plants and moderate weather could avert blackouts officials at the Independent System Operator which runs much of California's grid expect frequent rotating outages. One consulting firm Cambridge Energy Research Associates predicts 20 hours of rolling blackouts during July and August and about 200 hours of especially intense calls for voluntary cutbacks. Before blackouts hit the jockeying over just whose lights air conditioners and assembly lines will be shut down is growing. The outcome could affect millions of people statewide. The state Public Utilities Commission is probing rolling blackout programs run by the for-profit utilities it regulates including PG&E and Edison. A PUC analysis has suggested that PG&E's program which currently exempts about 40 percent of its customers should spread the burden more broadly. For example it said 1.9 million homes and businesses are spared just because they share a circuit with a customer deemed essential. But not-for-profit utilities such as SMUD which answer to their own elected boards or city councils have other worries. Many have already lined up their power supplies for summer. Some have raised rates or are considering raising rates. Some have taken extra conservation steps. They think those preparations ought to give them leverage to ease blackout clauses in their contracts with PG&E. SMUD general manager Jan Schori is going to use every avenue ... any avenue to put pressure on including lobbying the ISO the governor and others said utility director Davis. The Northern California Power Agency a joint-powers authority that owns and operates power plants for municipal utilities has begun informal negotiations with PG&E to change blackout rules according to Fraser its top executive. It is preparing to write PG&E asking that its members be exempted from outages altogether. Failing that it wants them to face fewer outages or to be compensated for cutting off power he said. At SMUD the utility board has met in closed session to discuss exactly what it is required to do during electric emergencies under terms of the interconnection contract that links SMUD's lines to PG&E's. The contracts are being inspected with a fine-tooth comb said SMUD director Howard Posner. Schori declined to comment on any specifics. Sources indicated that the main option being considered is notifying PG&E that because of changed circumstances SMUD believes it no longer is required to routinely comply with outage requests. Other options being explored include re-negotiating existing agreements with PG&E. Posner said that ever since two days of rolling blackouts in January constituents have been asking him 'Why are we participating when we're not the problem?' And I don't have a good answer to that. Several directors said SMUD has already spent a lot of money -- and is considering 16 percent rate increases -- to ensure that it has enough electricity under contract to meet its customers' summer demands. They believe PG&E should do the same. We're almost like a David against Goliath here said board vice president Genevieve Shiroma. The huge investor-owned utilities next door have severe problems that they need to get under control. In addition SMUD plans to argue that because it can cut usage through its Peak Corps program which remotely turns off air conditioners at volunteer households it has already done its part without rotating outages director Davis said. PG&E believes the interconnection agreements that govern smaller utilities' ties to its transmission lines have benefits and burdens to both sides said Nelson. It wouldn't be fair or good policy for just one provision to be altered without taking a look at how that affects the entire contract he said. Interconnection contracts generally have clauses that require utilities to help each other out to avert greater emergencies. Sometimes reducing demand -- called load shedding -- can be the only way to stabilize the electric grid in the seconds after a major power plant or transmission line fails. It's been around in the electrical fabric forever said Jim Pope head of Silicon Valley Power Santa Clara's city-run utility. In addition to legal requirements you have a moral obligation so you don't bring the system to collapse. Like other city-run utilities Silicon Valley Power has a contract with PG&E that requires it to shed load during an electric emergency. But its contract allows it to work with big users to reduce their demand so no one has to be completely shut off. Such agreements formed long before deregulation when PG&E ran the north state's grid now are complicated by the 1997 creation of the state Independent System Operator. The ISO today runs pieces of the grid owned by PG&E Edison and San Diego Gas & Electric Co. If it believes power use is about to surge past supply potentially triggering a grid collapse across the western United States the ISO notifies the three utilities that they have to shed a certain number of megawatts. The big utilities meet that requirement two ways. They cut circuits to some of their own customers and they tell smaller connected utilities to cut a proportionate share. In Northern California about 80 percent of the outages are borne by PG&E customers and the rest by customers of SMUD and other municipal utilities and irrigation districts. In one sense we are all in this together. If SMUD were in danger of going down we would hope others would help us out said SMUD's Posner. But that's if we're in danger from circumstances beyond our control not from mismanagement or lack of financial wherewithal. It is unclear what penalties if any a utility would face for violating an interconnection agreement. In the long run the issue would be fought either in the courts or before the Federal Energy Regulatory Commission grid officials said. As a practical matter in the seconds when the risk to the grid is greatest if one utility refused to shed load the ISO would probably solve to problem by calling on PG&E Edison or others who are willing to make deeper cutbacks they said. ---- PUC to Decide Fate Of Utility Workers PG&E Edison want to trim costs by laying off thousands cutting service Bernadette Tansey Chronicle Staff Writer Wednesday March 7 2001 2001 San Francisco Chronicle State regulators are set to decide today whether debt-ridden Pacific Gas and Electric Co. and Southern California Edison can conserve cash by laying off thousands of workers and letting service standards slip. Union officials who protested the layoffs before the California Public Utilities Commission warn that if the cuts go through neighborhoods hit by power outages could stay dark for hours and more customers could face busy signals when they call about their bills. An administrative law judge agreed advising the commission in February to order the utilities to restore 725 positions already cut and block the elimination of an additional 2125 jobs. Judge John Wong said PG&E and Edison have acknowledged the layoffs will not substantially improve their shaky financial condition which arose from skyrocketing wholesale electricity costs the utilities could not pass on to consumers under a rate cap. The savings would barely make a dent Wong said in his draft decision. The two companies together claim that their debt from power purchases amounts to more than $13 billion. PG&E says it has saved $18 million from the first wave of 325 layoffs. Wong's recommendation is already running into resistance on the PUC. Commissioner Richard Bilas said the five-member panel should not be micromanaging the utilities in a time of crisis. Bilas has proposed an alternate ruling that would allow the utilities to make the cuts but provide for PUC monitoring of service in case the commission wants to step in later. We're in a situation where the utilities are not collecting the revenues they need to operate and yet we may be guilty of not letting them cut expenses where they can cut expenses Bilas said. PG&E spokesman Jon Tremayne said savings from the layoffs are helping to keep electricity running and gas flowing. It keeps cash in our accounts so we can keep doing day-to-day business Tremayne said. In addition to the 325 positions dropped so far PG&E is proposing to cut an additional 675 during the next three to six months. The cuts affect temporary and contract workers who read meters handle new service hookups and replace equipment. PG&E has no plans to eliminate permanent positions. The company is struggling to keep up with a higher workload at its call center as customers deluge the lines with inquiries about their rising bills and the effects of deregulation. Calls to PG&E ballooned from 1.3 million in January 2000 to 2.3 million in January 2001. Bilas advocates granting PG&E's request to temporarily relax standards requiring the utility to respond swiftly to customer calls and to read customers' meters once a month. PG&E wants to read meters bimonthly and send bills based on the estimated use between readings. Discrepancies could be corrected later. Wong called those measures unacceptable. He said customers need to know immediately if their efforts to conserve power are working. Wong also said the utilities' own experts have said the workforce reductions will lengthen the time required to restore power after nonemergency equipment failure. Eric Wolfe communications director for the International Brotherhood of Electrical Workers Local 1245 said some customers have already been left without power overnight because PG&E is trying to avoid the use of overtime on nonemergency power outages. It hurts a lineman to walk away from the job leaving a customer without power Wolfe said. Tremayne said PG&E is trying to minimize overtime costs but denied the company has allowed customers to go without power out of financial concerns. He said crews were pulled out when darkness and falling trees made the work too dangerous. ---- Power prices could soar during the summer Posted at 10:35 p.m. PST Tuesday March 6 2001 BY STEVE JOHNSON Mercury News Unless Gov. Gray Davis arranges significantly more long-term electricity contracts or persuades people to turn off a lot more lights California's unpredictable spot market for power could wreak havoc this summer. Even with the 40 long-term deals announced by Davis on Monday experts interviewed Tuesday said up to 43 percent of the state's daily needs may have to come from this highly volatile market in which power is bought within a day of need. That could could prove hugely expensive because some spot market energy has cost five to six times what it would under the long-term contracts. It's widely expected that consumers ultimately would have to pay that tab which could amount to billions of dollars. And because that power won't be locked up in contracts there is no guarantee it will be available when it's needed which could lead to blackouts according to a recent report to the California Independent System Operator which oversees three-fourths of the state's power grid. ``The situation in California could reach catastrophic proportions'' the report concluded adding that unless things change dramatically ``it is a virtual certainty that peak demand will go unmet during many hot summer days.'' Steven Maviglio Davis' press secretary conceded Tuesday that the spot market could be troublesome. ``It's a major concern'' he said which is why the state is trying to line up more power contracts speed up power plant construction and promote conservation. During the normally hot month of August peak daily demand for power in the Independent System Operator's territory is expected to hit about 47700 megawatts -- enough for nearly 48 million homes. The state's three main utility firms generate about 8200 megawatts and have long-term contracts from wind solar and other energy sources for about 11700 megawatts more. That totals about 20000 megawatts. Add in the 7000 megawatts of long-term power that Davis has announced for this summer and the state is still nearly 21000 megawatts short. Costly proposition If all that power has to be obtained on the spot market the price could be high. On Friday last-minute purchases on the market averaged $411 per megawatt-hour compared to about $150 per megawatt-hour for all power obtained by the Independent System Operator and $69 per megawatt-hour on average under Davis' long-term contracts. It's possible that not all 21000 megawatts would have to be purchased on the market. Assuming Davis is successful in getting people to save 10 percent -- which could prove difficult -- conservation could reduce peak demand by nearly 5000 megawatts. California also might be able to trade for another 5000 megawatts with the federal government's Bonneville Power Administration and a hydroelectric operator in British Columbia said Arthur O'Donnell editor of California Energy Markets a trade publication. Under such deals those two outfits often send that much power to California when they don't need it and California returns the same amount or more when its demand is low. But O'Donnell said it wasn't clear whether 5000 megawatts would be available this summer because ``they still haven't gotten the snowpack they need in the Pacific Northwest'' which could limit that region's generating capacity. Still falling short Even if those hydropower imports are available and conservation works as Davis hopes it's likely California would still require the spot market for 11000 megawatts to meet the August demand. That's more than 20 percent of the state's overall power needs. ``All of the surrounding states are buying probably less than 5 percent at most of their energy on the spot market'' said Frank Wolak a Stanford economist who monitors electricity prices for the Independent System Operator. He worries about how much that power could cost and is disturbed that state officials haven't adequately addressed the issue. ``No one has any idea what they are going to do and that is part of the problem'' he said. Officials at Pacific Gas & Electric Co. are particularly concerned. They fear that their company -- which is nearing bankruptcy -- could get stuck for much of the spot market purchases by the Independent System Operator which has threatened to bill the utilities for the cost. Fearing the annual bill for that power could hit $2.4 billion this year PG&E wants the tab sent to the Department of Water Resources which also is buying power on the spot market for the state. But the Department of Water Resources has objected to that idea and the matter is expected to be heard today by the California Public Utilities Commission. ``We're looking for clarity on a number of issues'' regarding how the spot market will work ``and certainly that's one of them'' said Thomas Hannigan the water agency's director. ``I don't think anybody knows the answer of who's going to pay for it'' added PG&E spokesman John Nelson. But Nettie Hoge executive director of the Utility Reform Network in San Francisco said she suspects consumers ultimately will foot the bill. The unfortunate likelihood about spot market purchases is that ``ratepayers are responsible for all of it eventually'' Hoge said. ``It's a very big problem.'' ---- Power Plant Plans Cause Conflicts East county residents blast supervisors Jason B. Johnson Chronicle Staff Writer Wednesday March 7 2001 Industry dreams of building new power plants in east Contra Costa's hills are prompting an angry reaction among residents and elected officials who say they don't want more plants. The conflict was sparked by a vote by county supervisors yesterday to aggressively explore possible sites for new power plants throughout the county. The measure by Supervisors Mark DeSaulnier and Federal Glover which passed on a 4-to-0 vote directs the county administrator and Department of Community Development to compile a report on possible sites within 45 days. Supervisor Donna Gerber abstained after criticizing the plan for potentially repeating the same mistakes that plagued the state's energy deregulation effort by not considering how much energy the state region and county will need in future years and how much power is slated to come online. Gerber said alternative power sources such as solar should also be examined. A site drawing much attention is on top of a deposit of natural gas near the Concord Naval Weapons Station off Highway 4. The owners of 70 acres of land near the station recently formed a company Golden State Power Co. to pursue construction of at least one small peaker plant and a much larger facility capable of producing 600 megawatts. The site could hold up to three small 50-megawatt peaker plants and a larger 15-acre natural gas plant said Steve Thomas managing partner with Golden State. No land use applications have been filed. Thomas said 30 acres could be kept as open space to form a buffer around the project. Both (facilities) are state of the art said Thomas. We believe that the site is ideal. But east county residents at yesterday's meeting blasted the supervisorial measure and the power plant proposal complaining that more plants could put people's health at risk. The region already is home to six power plants. We're going to get a good dose of poor air quality and (negative) health conditions from this said Concord resident Evelyn Frietas. I think we need to stop and think about what we're doing to our quality of life. Dan Torres said the home he bought in 1995 at a new Bay Point development would be alarmingly close to the proposed Golden State site. It will be dragging emissions over our home said Torres. I didn't buy a home on that hill to be surrounded by power plants. There are six power plants in operation in east Contra Costa. Pittsburg already has two power plants and two more under construction. City Council members Frank Aiello and Yvonne Beals said the Antioch-Pittsburg area has done more than its share of energy production. Aiello said Pittsburg will soon produce enough energy to power three million homes in California. When is enough enough? asked Aiello. Pittsburg has shouldered responsibility for a land-fill and two more power plants. At some point you have to say enough. Beals said that while power plants have added millions to the city's general fund the negatives of additional plants could outweigh the benefits. I don't think that Pittsburg or east county should be the dumping ground for energy for California said Beals. ---- Supervisors set search for power plant sites The board also heard from the potential developers of a 650-megawatt plant between Bay Point and Concord By Thomas Peele TIMES STAFF WRITER MARTINEZ -- Contra Costa County supervisors took tentative steps Tuesday toward allowing the construction of at least one small power plant before summer ordering that its staff identify potential sites in unincorporated areas within seven weeks. The board voted 4-0 to search for locations. Third District Supervisor Donna Gerber abstained saying her colleagues lacked a comprehensive context'' to identify sites. I think the board knows just enough to be dangerous'' she said. Gerber said the county should examine the potential for additional power plants within its borders but not investigate individual sites yet. But Fourth District Supervisor Mark DeSaulnier said the action was necessary because of the energy crisis and because of Gov. Gray Davis' call for local governments to help speed the construction of so-called peaker plants before July and August. I wouldn't do this except under an emergency DeSaulnier said after the vote. There are unusual circumstances. We're not talking about putting this in a residential area. Fifth District Supervisor Federal Glover backed DeSaulnier but said he hoped for a location outside his heavily industrialized East County district. There's a lot of concern in East County as to the number of plants he said. DeSaulnier said though that the only logical place for a small plant remains the industrial belt'' stretching along the waterfront from West County to Antioch. He declined to provide specifics but said the only other potential site outside the industrial areas was the Concord Naval Weapons Station property. But he quickly added that he believes the U.S. Department of Defense would never go for it. Also DeSaulnier said he could not rule out the county building the plant itself and entering the electricity-selling market during peak demand times. Board Chairwoman Gayle Uilkema called that idea extremely premature and unlikely. That's a very powerful decision. I do not think we are ready'' she said. The California Energy Commission listed the Equilon refinery in Martinez as one of 32 potential peaker plant sites in the state last week. Peaker plants kick in during peak usage times. Davis called for their quick construction before the height of summer and its energy demand for air conditioning. Plants that generate as much as 50000 megawatts don't need Energy Commission approval. DeSaulnier said he believed a peaker plant could be built about a month after final approval. Supervisors also heard from the potential developers of a 650-megawatt plant between Bay Point and Concord. Walnut Creek commercial real estate developer Steve Thomas announced his intentions for the site north of Highway 4 last week. Construction could take two years. Eric Hasseltine a consultant representing Thomas and what he described as a brand new company for the site the Golden State Power Co. told supervisors that if they intended to speed peaker plant construction they should do what they can to expedite the larger plant. The Thomas site could house a peaker plant until the proposed larger one goes online. A large natural gas line passes under the site. DeSaulnier seemed cautious about the larger proposal which he had described last week as a good site. Uilkema too said she knew too little about it to comment. A resident who lives near the Thomas property asked the board to build it (the larger plant) closer to where you have industrial areas. You have to carefully consider the people who live nearby said Dan Torres 39. Evelyn Freitas of Concord said she lives downwind of the proposed site. Our air quality is going to be worse then it is now she said. Gerber played on the environmental issues saying the county already ranks second statewide to Los Angeles in volume of hazardous materials and amount of electrical generation. ---- Peter Schrag: California's $90 billion infrastructure gap (Published March 7 2001) By now California's surreal energy mess has grown from a crisis to a condition. It may not be quite as permanent as say death and taxes but it's still something that could get a whole lot worse before it gets better. Until there's more realistic pricing no gubernatorial pea-under-the-shell buyout scheme will solve it. Beyond the energy crisis however and in many ways similar to it California faces a whole range of other infrastructure problems -- in transportation in water resources and sewer systems in school and university buildings -- that seem once again to be all but forgotten. The Business Roundtable has estimated the need at roughly $90 billion though no number can possibly be exact. What's certain is that after a burst of high-level investment in public facilities during the 1950s and 1960s California's annual capital investment has sunk precipitously -- from an annual $150 per capita in the 1960s according to a set of recent studies for PPIC the Public Policy Institute of California to about $30 in the 1990s. But you probably don't need to tell anyone driving Bay Area or Los Angeles freeways or looking at the ubiquitous portable classrooms those dreary brown boxes that house a fourth of our public school students. Ever since passage of Proposition 13 in 1978 we have been flying the flag of deferred maintenance. As in the state's electricity crisis however there's no way California can effectively address those problems merely by building or bonding itself out of them. In highway construction in developing water resources in finding enough university space to accommodate the Tidal Wave II of students managing demand is likely to be as crucial to any solution as new construction. In the energy market -- and in electricity particularly -- it's been a familiar principle ever since David Roe of the Environmental Defense Fund first persuaded Pacific Gas and Electric that a dollar invested in conservation may be worth as much as the same investment in new generation. But in most other sectors of California's infrastructure state and local it's a lesson still to be learned. There have been scattered attempts to encourage conservation and reduce demand -- significant reduction in water use for example through the installation of low-flow faucets and low-flush toilets some reduction in traffic by using rush-hour diamond lanes or by adjusting highway or (as in New York) bridge tolls to levels of congestion. But as pointed out by David Dowall an urban economist at Berkeley state policy-makers have not really begun to consider how demand management strategies can be applied to infrastructure service areas or how the more efficient use of facilities and more realistic pricing -- highway tolls say or parking fees -- can reduce demand for scarce infrastructure resources. In any case says Dowall in one of the PPIC reports we should pick which major projects we will build not just according to per capita estimates of how much we need but according to how much consumers are willing to pay for them. To avoid hurting the poor congestion-related highway tolls and other tariffs can be rebated on the basis of income. University fees can be means-tested. In California they also could be adjusted to encourage summer school classes and other off-peak uses rather than (as in the past) making UC summer courses more expensive. Given the political and economic uncertainties there's no way to know how far such demand management can be taken. But there's not much doubt that as Dowall and others point out the state's infrastructure planning is a jumble of uncoordinated agency agendas and wish lists. The Legislature last year passed a bill AB 1473 by Assembly Speaker Robert Hertzberg that requires the governor beginning next year to submit an annual five-year infrastructure plan for state agencies and public schools along with recommendations on how to fund it. In addition Gov. Gray Davis' infrastructure commission is expected to recommend better coordination of infrastructure and land-use planning when it issues its report this spring. That would be a start. As California State Treasurer Phil Angelides has pointed out the state desperately needs to start joint planning -- regional planning -- for housing roads and other resources to reduce the need for long commutes to preserve open space and to bring jobs to where people live and housing to where the jobs are. That would itself reduce demand for more freeway lanes and equally important improve the quality of life. At present most planning for housing roads water systems and other facilities rarely recognizes the regional impact of local decisions. In the East Bay slow-growth forces push well-intended initiatives that would force more development into Tracy or Modesto and further tax the transportation systems to Silicon Valley. In city after city there are beggar-thy-neighbor efforts to grab yet another shopping mall that produces a little extra sales tax revenue for the city that gets it and that often compounds traffic and revenue problems in adjacent communities. In higher education we divide bond proceeds evenly among UC the California State University and the community colleges even though the community colleges serve eight times as many students as UC. We plan road projects according to county not regional priorities. It is all done according to antiquated political and fiscal formulas that often no longer make sense. We don't just need better capital planning we need a whole new planning system. ---- PG&E power plan debated at hearing A PUC meeting on the utility's capacity expansion project for the Tri-Valley follows weeks of protest from officials residents Power upgrade in valley debated By Megan Long TIMES STAFF WRITER SAN FRANCISCO -- Dublin officials and the developer of a Livermore subdivision faced questions Tuesday about their opposition to alternative routes of PG&E's controversial Tri-Valley power upgrade plan -- and answered by restating their long-standing objections. Tuesday's cross-examination came during the third and likely final week of the California Public Utility Commission's evidentiary hearings on the utility's $91 million Tri-Valley 2002 Capacity Increase Project. It has followed weeks of protests of PG&E's upgrade plans by officials and residents of Livermore Pleasanton Dublin and San Ramon. And before the questioning started Dublin Vice Mayor Janet Lockhart reiterated concerns about an alternative route deemed environmentally superior that would place a substation just 1000 feet north of Interstate 580 between Tassajara and Fallon roads. She said that would undermine the results of a 15-year process to plan the eastern development of the city. It's extremely important to the residents of our community to follow a plan we worked hard to produce she said. Dublin officials favor PG&E's proposed placement of the station three miles north of the freeway away from new high-tech company offices and housing developments. Besides the Dublin substation the project calls for construction of a substation in North Livermore expansion of the Pleasanton substation and installation of 23.5 miles of new lines. In response to questions from PUC Administrative Law Judge Michelle Cooke Dublin's public works director Lee Thompson confirmed that the Lin family the owner of the property where the alternative substation would go wasn't interested in selling the land to PG&E. Cooke also asked Thompson to define a discretionary permit which is how city officials said they might treat a permit for a substation. Lee said that type of permit is one the city has the right to approve or not depending on the project's impact. Eddie Peabody Dublin's community development director testified that the zoning for the Lin property accommodates uses such as commercial business research and development and light manufacturing. It would not he said be appropriate for a power substation. He said parcels within the East Dublin area that could host a station would include those zoned for public and semi-public uses including land recently bought by Oracle and Sun Microsystems for new campuses. While Dublin officials testified that one buyer of land in that area paid $86 per square foot others suggested land prices would be inflated to help make a PG&E land buy look prohibitively expensive. An executive of Centex Homes the developer of new houses near Isabel Avenue and Concannon Boulevard objected to an alternative route that would place high-voltage transmission lines overhead along Isabel and Stanley Boulevard. David Barclay president of Centex's Northern California division said that the 80-foot to 150-foot towers would have a severe visual impact on residents of the Prima tract. Ed O'Neill a lawyer for the Kottinger Ranch Homeowners Association pointed out that existing distribution lines on 50-foot poles on Isabel already mar the view for residents. The Foley family has been ranching on land south of Pleasanton city limits for years said their attorney Kennedy Richardson. The utility's project would place overhead lines and a transmission station on rolling hills that the family envisions as one day being public open space with limited development Richardson said. Lawyers for Pleasanton Livermore Kottinger Ranch and Centex are scheduled to cross-examine a PG&E engineer today about the project's routing. That testimony should be the most controversial of the hearings. Judge Cooke is expected to recommend an alignment by July to the PUC which will make the final decision. ---- NEWS State OKs 'Peaker' Power Plant at SFO / Temporary generator could be sending electricity to 50000 homes by August Marshall Wilson 03/08/2001 The San Francisco Chronicle FINAL Page A.20 (Copyright 2001) State energy officials yesterday approved plans to build a temporary electrical plant at San Francisco International Airport that should generate enough juice to power 50000 homes by August. Meeting in Sacramento the Energy Commission voted 4-0 to give the green light to the gas-fired plant. It will operate during peak summer and winter demand to help the state avoid Stage 3 power alerts and rolling blackouts. Texas-based El Paso Merchant Energy Co. won approval under a new state law mandating speedy four-month reviews of so-called peaker plants. It was the only one of seven applications statewide to win approval. The other proposals were withdrawn for various reasons. The 51-megawatt plant formally called the United Golden Gate Power Project is scheduled to be built at the northwest corner of the airport near the United Airlines maintenance center. Within the next few weeks El Paso plans to apply to build a 571- megawatt $400 million plant in the same area company spokesman Jesse Frederick said. It would undergo a separate review by state energy officials. The small peaker plant approved yesterday is to generate electricity beginning around Aug. 1 for up to three years. After the end of three years the plant would be closed or converted to a cleaner-burning system. Under state law a temporary peaker plant is permitted to spew more air pollution than a permanent plant. El Paso's temporary plant is to be built next to a co-generation plant operated by United Airlines. It would use existing connections for natural gas and water supplies and tap into existing power transmission lines. Electricity generated by the plant would be pumped into the state's electrical grid Energy Commission spokesman Gary Fay said. It would also serve as a backup for San Francisco Airport in case of a blackout. No one spoke against the proposed plant at yesterday's commission meeting. The proposal however has been criticized by area residents and environmentalists worried about air pollution. Scott Buschman a professional photographer and San Bruno resident said yesterday it was unjust that state officials 100 miles away in Sacramento approved a Texas company's proposal to put a power plant on land owned by San Francisco. The fact that they approved it without considering the public's concerns foremost air quality is very disturbing he said. Fay said the plant complies with clean-air standards. Answering the criticism about the location of yesterday's deliberation he said three hearings and several workshops were held in communities near the airport. Copyright 2000 Dow Jones & Company Inc. All Rights Reserved. ---- Crossed Wires: Major Kinks Emerge In Gov. Davis's Plan To Power California --- State's Outlays for Electricity May Be Hard to Recover Without Rate Increases --- Betting on Long-Term Deals By Wall Street Journal staff reporters Rebecca Smith Mitchel Benson and John R. Emshwiller 03/08/2001 The Wall Street Journal A1 (Copyright (c) 2001 Dow Jones & Company Inc.) SACRAMENTO Calif. -- Earlier this year Gov. Gray Davis made what may be the biggest bet in the history of the nation's biggest state: that he could tame an out-of-control electricity market and avoid devastating blackouts without busting the state's budget antagonizing its consumers or derailing his own political career. His wager is still on the table but the assumptions that underlie it are looking increasingly shaky these days. The governor has already spent around $2 billion of public money buying hugely expensive wholesale power taking over the role formerly played by the state's near-bankrupt electric utilities. And California will probably be obliged to spend billions more before its electricity market stabilizes and those utilities are restored to some semblance of financial health. Under the governor's plan California aims to recoup the money it is using to buy electricity by issuing $10 billion in bonds. That way it would still have a healthy budget surplus to finance new spending on roads schools and other public services. But there's a potentially big obstacle to this plan. The state Legislature worried about racking up billions in new debt has put limits on the size of any bond offering. In broad terms the Legislature's action would allow the state to borrow only four times as much as it can recover annually from utility customers. Right now that doesn't appear to be much. Under the current rate structure essentially set in place by California's flawed 1996 electricity-deregulation plan consumers pay far less for power than the cost of acquiring it on the wholesale market. Preliminary estimates submitted by utilities last month to the California Public Utilities Commission show the state's share of the proceeds from electricity sales this year could be as little as $241 million -- not enough to support even $1 billion in bond sales under the Legislature's formula. That would leave the state on the hook for much of the money it has already paid for power -- not to mention the billions more Gov. Davis will need to spend. That in turn raises the prospect that California's economy and its credit rating both could deteriorate significantly. But state finance officials say that based on their own projections they will be able to extract enough money to support a $10 billion bond issue. Walking a careful line between fiscal prudence and political survival Mr. Davis and others in his administration are scrambling to come up with ways to get around the legislative restrictions without raising rates for consumers. If I wanted to raise rates I could solve this problem in 20 minutes Mr. Davis says. The governor says he believes that the state can obtain enough affordable power through long-term power-supply contracts to avoid the need for a big rate increase. The billions of dollars the state hopes to borrow would be used to help pay for power until electricity prices drop as they are expected to do when new power plants come online over the next few years. The Davis administration fears that what may be its only other option -- a big increase in retail electric rates -- could prompt angry consumer groups to seek new electricity laws through a statewide ballot initiative during next year's election. That's when Mr. Davis is expected to run for a second term as governor. But trying to save California without rate increases is forcing Mr. Davis to make some colossal gambles with the state's money. State officials estimate that in the next several months California will need to spend as much as $6 billion on power purchases -- equivalent to the state's entire fiscal surplus. Mr. Davis is also looking to spend several billion more to buy the transmission assets of three investor-owned utilities in order to restore two of them to credit-worthiness. He also has announced plans to spend several hundred million dollars more on conservation programs designed to reduce demand while new power plants are being built in the state. In order to limit the state's financial exposure in the meantime the governor and his aides have in some cases ignored state law. They have threatened appointed officials who have stood in the way. And they have sharply restricted the flow of information to the public. None of those steps is expected to do much to reduce state spending on power in the coming months. In a few weeks power usage is expected to begin a sharp seasonal rise as Californians switch on their air conditioners with the coming of warmer weather. By various estimates demand during peak periods this summer could outstrip supply by 10% or several thousand megawatts. That could produce more rolling blackouts like the ones that hit Northern California earlier this year. It is also likely to put strong upward pressure on wholesale electricity prices. Steven Zimmerman managing director of Standard & Poor's Corp. says Mr. Davis and his aides don't have a lot of time to put a cap on the state's financial exposure to the crisis. The credit-rating agency has put the state on credit watch for a possible downgrade which would affect the value of all of California's outstanding public debt. Moody's Investor Service Inc. is also concerned. It said in a recent report that the power crisis could soon seriously threaten the health of the state's economy. Mr. Davis a Democrat and career politician was dealt a bad hand when he took office in 1999. The deregulation plan that sparked the state's electricity crisis was enacted under his predecessor Republican Pete Wilson. But Mr. Davis was slow to react to early signs of trouble this past summer and alarms sounded by members of the state Legislature. By the time Mr. Davis finally sprang into action earlier this year a troublesome power-supply squeeze had escalated into a crisis. In a Jan. 17 declaration of emergency the governor designated the state Department of Water Resources to take the utilities' place as the daily buyer of huge quantities of electricity. His hope: that by making the state the dominant player in California's power sector he would ease electricity producers' concerns about getting paid and give the state enough clout to negotiate lower long-term power prices. Earlier this week Mr. Davis announced final or tentative agreements with 20 power suppliers to furnish the state with a total of 8900 megawatts for periods of as long as 20 years. But the supply situation remains extremely uncertain for this summer when demand probably will top 45000 megawatts. If the state can secure enough power under contract and push down demand through aggressive conservation it might be able to squeak through the summer season. If not it will be forced to keep buying huge amounts of costly power in the cash market. Under deregulation retail electric rates were frozen for several years while wholesale-power costs were free to fluctuate. When the plan was conceived wholesale prices were low and expected to go lower. However a combination of unexpected growth in power demand and a lack of new generating capacity helped produce a supply squeeze. Average wholesale prices more than tripled last year from 1999. And in January those prices were up 10-fold from a year earlier. By then California's two biggest investor-owned utilities -- the Pacific Gas & Electric unit of PG&E Corp. and the Southern California Edison subsidiary of Edison International -- faced imminent financial collapse. They had racked up billions of dollars in wholesale power bills they couldn't afford to pay. As generators began shying away from selling to the two utilities the Clinton administration forced them to sell power into the California market an order left in place during the first weeks of the Bush administration. Still northern California was hit by rolling blackouts on several days in early January. Since then the DWR which does some electricity trading as an adjunct to its main mission of managing the state's giant system of aqueducts and reservoirs has had to learn the ins and outs of power markets on the run. It hasn't been easy. David Mills trading-floor manager for the federal Bonneville Power Administration says the water agency has at times offered to pay $50 to $100 per megawatt hour more than the available market price. They agree to prices that make you wonder says Mr. Mills whose organization markets electricity from federal dams in the Pacific Northwest. You'd at least think they'd check to see what the prevailing price is before throwing out their offer. Mr. Mills says that to cut California some slack he occasionally has instructed his traders to sell at prices lower than the DWR had offered to pay. Ray Hart the water agency deputy director responsible for the power purchasing says he isn't aware of any cases in which the DWR has overpaid. He says his team has been extremely successful by all measures. Ultimately the DWR's trading acumen is far less important than the overall arithmetic of power supply and demand in California. With the price of natural gas that feeds many of the region's generating plants at near record levels and some suppliers reluctant to sell into the troubled California market wholesale electric prices remain stubbornly high and in recent days have again been rising. The Legislature has advanced the DWR about $3 billion from the state's general fund for power purchases. Under emergency legislation passed by the Legislature and signed by Mr. Davis on Feb. 1 the general fund is to be reimbursed from a planned bond sale later this year. But under terms of the emergency law the water agency would have to wrest $2.5 billion a year in revenue from retail electricity rates in order to sell the $10 billion worth of bonds sought by Mr. Davis. Assembly Speaker Robert Hertzberg a Southern California Democrat says the formula was created to ensure that there would be a way to repay the bonds without draining the state's coffers. We didn't want to just open our wallets he says. According to the language of the Feb. 1 law the water agency gets what's left of revenue collected from ratepayers after the utilities pay certain of their own power-supply bills and other expenses. And in their filings with the PUC last month the utilities reckoned under their worst-case scenarios that there would be only $241 million available to the DWR this year. State officials are quietly pushing the PUC to rejigger the formula so that the water department gets more money -- even though that would clash with terms of the Feb. 1 law. Robert Miyashiro deputy director of the Department of Finance says the emergency law was drafted poorly and has led people to believe the DWR only gets the leftover money. He predicts there will be cleanup legislation. At the request of the Davis administration the PUC is considering a plan to use a different revenue-sharing formula than the one in the state law. The proposed new formula was written in close consultation with Mr. Davis's Finance Department says PUC President Loretta Lynch who supports the initiative and is hoping to rush it through. The effort has drawn some opposition. Commissioner Richard Bilas at a recent PUC meeting questioned the legality of the commission attempting to change a formula set by the Legislature. PG&E is even more emphatic since the DWR's extra money could come at the utility's expense. The formula threatens to undo the very financial protections for the utilities that [the new law] attempted to provide the utility said in a recent filing with the PUC. As politicians and regulators wrestle with that issue the Davis administration has taken a step to reduce the outflow of state cash that also seems to conflict with the Feb. 1 law. It was widely assumed that the law required the DWR to buy any electricity the state needed to keep its lights on. However on many occasions the DWR has refused to buy power on the grounds that it was too expensive citing a portion of the new law that urges the agency to hold down costs. The task of covering any remaining shortfall has passed to the California Independent System Operator which manages the state's energy grid and is charged with buying power when necessary to avert shortages. However the ISO doesn't have any power-purchasing money of its own and the major parties it would normally bill are PG&E and Edison whose inability to pay their power bills was the reason the state started buying electricity in the first place. Amid criticism of its stance from generators utilities and Wall Street the DWR says it has started covering more of the utilities' electricity costs. The water agency is now buying 95% to 99% of what California needs in a given day says the agency's Mr. Hart. But increased buying only adds to the uncertainty about the eventual tab. The state's legislative analyst Elizabeth Hill recently recommended that lawmakers hold off considering more than $2 billion in state spending on items ranging from college construction to beach cleanups because of continuing questions about the financial impact of the electricity crisis. Like others Ms. Hill complains that the governor's office and state agencies haven't been forthcoming with information. Indeed the DWR refuses to say precisely how much power it is purchasing and at what prices though it has on several occasions gone back to the Legislature for more money. State officials say that data on its purchasing activities would give suppliers an advantage in continuing electricity-supply contract talks. State Controller Kathleen Connell who is running for mayor of Los Angeles in an April election recently announced plans to post state power-spending information on her department's Web site. But within 24 hours Ms. Connell suspended that plan after discussions with senior Davis administration officials. I feel very strongly that this information should be publicly released says Ms. Connell. I just don't want to do anything that would weaken the state's effectiveness in negotiating. In an effort to more tightly control events the governor obtained legislative approval to abolish the 26-member ISO board which was made up of everyone from utility executives to representatives of consumer groups. He then appointed a new five-member board. To ensure a quick transition the California attorney general threatened the old board members with fines of as much as $5000 each if they didn't immediately relinquish their positions. All did. I was offended at the heavy-handed treatment says Karen Johanson a former ISO board member. One of the first acts of the ISO's new board was to close a meeting about the electricity crisis. The former ISO board routinely held such meetings in public. ISO attorneys say the meeting was largely designed as a private briefing for new board members and that the organization is committed to keeping its deliberations as open as possible. The Wall Street Journal and other news organizations have unsuccessfully challenged the closure in Sacramento state court. Copyright 2000 Dow Jones & Company Inc. All Rights Reserved.,other,informative,3 +L.A. Confidential has been received.,[IMAGE] Qwiklist(9) MyAccount Rental History Shipping List We have received L.A. Confidential(1997) on 12/31/2001 We will be processing your QwikList selections and will send the next available dvd on your QwikList. You will receive another email when it ships. Thank You! [IMAGE] L.A. Confidential(1997) Home | Customer Service | Rental Details,other,friendly,0 +"Compensation Resource Group, Inc.s Publications",-----------------,media & press,neutral,0 +Fwd: IS TRADING AN INSIDERS GAME?,The attached article appeared in today's San Diego Union. I now have the official transcript from the Senate hearing of May 18 if you need that. If you are scheduling a conf call for tomorrow can you do it after 12 your time as I am flying to San Francisco and will then be in the Brobeck offices. Thanks The information contained in this e-mail message and any accompanying documents is subject to the attorney-client privilege and/or the attorney work product rule and is confidential business information intended only for the use of the individual or entity named above. If the reader of this message is not the intended recipient or representative of the recipient you are hereby notified that any dissemination of this communication is strictly prohibited. If you have received this communication in error please notify the Systems Administrator at admin@pkns.com and immediately delete this message from your system. Content-Transfer-Encoding: quoted-printable Date: Wed 06 Jun 2001 08:53:28 -0700 From: Cindy Frederick To: Michael Kirby Subject: IS TRADING AN INSIDER'S GAME? Mime-Version: 1.0 Content-Type: text/plain charset=us-ascii Content-Disposition: inline IS TRADING AN INSIDER'S GAME? Buying selling of electricity is a growth business but some say deck is stacked against consumers By Craig D. Rose STAFF WRITER June 6 2001 While Californians decry deregulation's failure to deliver a competitive market electricity wholesalers have quietly developed a vast and rapidly growing business of buying and selling power among themselves. The deals take place on high-tech trading floors in Houston and elsewhere around the country as well as on Internet-based trading systems. Some experts say this electricity trading is a key mechanism for raising consumer power prices yet it's largely unregulated. Electricity trading is like buying stock -- when you have ability to change the stock price said Frank Wolak a Stanford University economics professor and member of the state grid operator's market surveillance group. Energy companies say the buying and selling of contracts to deliver power provides risk management allowing plant owners to presell their electricity lock in prices and avoid fluctuations. The rough and tumble of the free market they add is the most efficient means of allocating a resource like electricity. But industry critics say trading is far from a competitive market paradigm. In their view it's a means of communication -- a way for energy insiders to collude and raise prices under the guise of competition. To be sure the trading arms of major energy companies have emerged as stars in an industry where profit surges of 300 percent or 400 percent are not uncommon. The transactions shrouded in secrecy can leave ownership of a critical commodity in unknown hands. Consider the case of power generated by AES Corp.'s California plants. In 1998 AES made a bold move. Immediately after purchasing power plants that gave it control of 10 percent of the state's electric generating capacity the company sold the output from its plants for the next 20 years to Williams Cos. Williams did not sit on this treasure trove of electrons. The Tulsa Okla. company soon sold 80 percent of what it bought. It is difficult to say who owns that power now. Some might be owned by Sempra Trading a sister company of SDG&E. Or some could be owned by Enron Corp. the nation's biggest electricity trader. A spokeswoman for Williams conceded that Williams itself may have repurchased some of the electricity it sold earlier. But trading companies closely guard their positions. This much can be said with certainty: Electricity that AES sold for less than 5 cents per kilowatt-hour to Williams changed hands perhaps 10 times in the wholesale market and emerged at times in recent months with a price tag for consumers that was 300 percent higher. Williams' trading profits increased by 523 percent in the first quarter this year. Advance sales All this buying and selling creates curious confluences. In their attempt to deflect criticism over high prices generating companies such as Duke Energy -- operator of the South Bay Power Plant in Chula and others in the state -- frequently note that they sell most of their electricity far in advance. But they acknowledge less often that their trading units may also be buying power which could boost the company's electricity inventory. Duke was the fourth biggest electricity trader last year and cited its trading activity as a prime contributor to its wholesale business profits which soared 324 percent in the first quarter to $348 million. It is a company's power traders who frequently direct plant operators to increase or decrease the generation of power in response to market conditions. Energy companies have little option but to turn to trading for profits. One of the better kept secrets of electrical deregulation and its promise of competition is that there is remarkably little competition in the production side of the business. For one thing electricity is a commodity power from one company is indistinguishable from that generated by others. More important nearly all modern plants generate power from turbines built by a handful of manufacturers. The result? Modern plants owned by different companies produce power at nearly identical cost. The cost of power produced by modern plants is all within a mil (one-thousandth of a dollar) said Michael Peevey an adviser to Gov. Gray Davis and former president of Southern California Edison. So the extraction of profit in the electricity business relies much more on trading. Traders' profits rise when prices are volatile -- plunging or even better rising sharply. Little regulation But despite the obvious temptation to manipulate the market the burgeoning electricity trading business has remained largely unregulated. The Federal Energy Regulatory Commission does require quarterly filings from energy traders but these often provide incomplete information or at least little that has been of concern to FERC. In fact although the trading of electricity grew more than a hundredfold from 1996 to 2000 FERC has taken no major enforcement action against a trader. After the onset of the California crisis last year FERC has acted once. That was against Williams which agreed to pay $8 million without admitting guilt to resolve an allegation that it withheld supply to pump up prices. FERC's record of enforcement in the area of power trading stands in contrast to a long list of enforcement actions within other markets taken by the Securities Exchange Commission and the Commodity Futures Trading Commission. FERC has recently added staff to its market oversight operations. But William Massey a FERC commissioner says the agency's effort is still inadequate. Electricity can be flipped stripped and chopped up Massey said. It's an extraordinarily complicated market. The sophisticated marketers and traders have simply moved past us. We're kind of horse and buggy in our approach and they're out there in rocket ships flying around ... The problem is that sophisticated traders don't necessarily produce reasonable prices. They produce profits. Before deregulation electricity trading was a low-key affair. Regulated utilities dealt power back and forth on a reciprocal basis to fill electricity shortfalls in their control areas. There was little trading for profit until the mid-1990s after federal legislation and FERC rulings opened the market. Major traders include large energy companies sister companies of California's major utilities and Wall Street firms. Market volatility In many ways the trading of power is similar to that of other commodities. But there are important differences. Because it cannot be stored and its use is so fundamental the price of electricity is the most volatile of all. When supplies are tight a single supplier can rapidly raise prices to budget-busting levels as evidenced by Duke Energy's recent admission that it charged California nearly $4000 for a megawatt-hour of power a quantity that probably sold hours earlier for one-tenth of that sum or less. Wolak the Stanford economist and state Sen. Joseph Dunn D-Garden Grove who is investigating the state power market say trading allows companies to collude under the guise of competition. Instead of wringing out lowest costs the wholesale trading market serves to raise prices they say. As I trade to you and you trade to me we communicate to each other what price we would like to get said Wolak. It's not collusive. It's just communicating price. Mark Palmer a spokesman for Enron the nation's biggest power trader said California's problem is not the result of trading. It's a result of shortages Palmer said. Underscoring its emphasis on trading Enron's new headquarters tower in downtown Houston rises from a six-story block of new trading floors including expanded space for electricity trading. Enron also pioneered trading in cyberspace and its Enron Online site claims to be the most active computer-based trading market. The Houston company argues that consumers won't fully benefit from power trading and deregulation until they have greater choice in choosing their power supplier. And the company says FERC has not done enough to open access to transmission lines which would allow traders to move power around the country. To that end Enron has lobbied hard for President Bush's plan for a national electricity grid. Palmer says the notion that the price of electricity rises each time it is traded is mistaken. The market is always looking for the real price of a commodity Palmer said. Dunn the California state senator says his investigation found a different function for trading. At a time when supply barely meets or falls short of demand he noted companies with electricity to sell have to worry only about how high to set their price. The trader is a pawn in the generator's game to drive up prices said Dunn. Trading develops a level of trust. You my alleged competitor will bid in the same patterns and I will respond not in a competitive pattern but in a complimentary pattern. The state senator said his investigation found evidence that on several days energy companies appeared to test their ability to drive prices up without being undercut by competitors. This ability to drive up prices without competitive consequence is a key test of market power the technical term for manipulation or price fixing. But Dunn also conceded that antitrust violations can be hard to prove in court. He suggested that even if the trading behavior falls short of antitrust violations it remains anti-competitive and devastating for the California economy. To Harry Trebing a utility industry expert and professor emeritus at Michigan State University wholesale electricity trading is reminiscent of what took place in the 1920s and early '30s. Back then utility companies created complex networks of holding companies that traded stock among themselves driving up prices in the process. Undoing that scheme was a focus of President Franklin Roosevelt's administration. Congress ended up barring national power companies and tightening regulation of utilities in an effort to counteract their tendency to create markets that work only for insiders. The broad goals of trading are the same Trebing said. The goal is to maximize profits through raising prices.,energy trading,formal,3 +Re: EOL,Is this it? I thought we had heard it from 3 or 4 sources. Enron Capital & Trade Resources Corp. From: Rebecca W Cantrell @ ECT 05/24/2001 11:30 AM To: Steven J Kean/NA/Enron@ENRON cc: Leslie Lawner/NA/Enron@Enron Christi L Nicolay/HOU/ECT@ECT Joe Hartsoe/Corp/Enron@ENRON Linda Robertson/NA/Enron@ENRON James D Steffes/NA/Enron@Enron Richard Shapiro/NA/Enron@Enron Subject: Re: EOL The attorney for SoCal Edison mentioned it to Randy Rich when they were discussing the data request that SoCal Edison sent ENA/EES in the CPUC complaint proceeding. However it has not been brought up in any of the testimony filed in the case nor raised at the hearing. Steven J Kean@ENRON 05/23/2001 05:34 PM To: Leslie Lawner/NA/Enron@Enron Christi L Nicolay/HOU/ECT@ECT Rebecca W Cantrell/HOU/ECT@ECT Joe Hartsoe/Corp/Enron@ENRON Linda Robertson/NA/Enron@ENRON James D Steffes/NA/Enron@Enron Richard Shapiro/NA/Enron@Enron cc: Subject: I just spoke with Clark Smith head of Elpaso's merchant arm. I told him that we had been hearing that El Paso was blaming Enrononline for problems in Western gas markets. He asked for some more specifics about who exactly was spreading the rumor (I told him we had heard it from 3-4 sources). He acknowledged that EOL was not the problem said he couldn't believe that it had been identified as such and said he would bring it up on his call with his Washington team this afternoon. I think he will put it to rest (except for whatever damage has already been done). I did promise to get some more specifics on who has told us that El Paso pointed to us. Can anybody give some info on that?,other,inquisitive,3 +RE: Risk 2001 Australia,Thanks Vince - I'll give him a try. ,other,casual,1 +Executive Committee List - Updates,,organization,neutral,3 +Re: Lay-Fox meeting,No contact Rosalee Fleming (ken's assistant). I let her know that you would be preparing the briefing. Ricardo Charvel@ENRON 08/03/2000 08:30 PM To: Steve Kean Richard Shapiro/HOU/EES@EES cc: Subject: Lay-Fox meeting Do we have an estimated deadline for presenting the info to Ken Lay? Please let me know. Ricardo,meetings & events,formal,3 +Natural Gas in the 21st Century: The Shape of Things to Come,Ken Lay speaking and James J. Hoecker,other,informative,0 +Re: Update -- Project 100,It's fine with me. Mary Clark 09/27/2000 11:23 AM To: Steven J Kean/NA/Enron@Enron cc: Subject: Update -- Project 100 Steve our theme for the stock celebration is Oh The Places You'll Go which is the title of a Dr. Seuss book. Everyone on the team loves this idea because the messages in the book represent Enron thinking and culture. In case you aren't familiar with the book Beth Tilney has a copy. Our plan is to give every employee a book which will have a note of appreciation on the inside cover from Ken Jeff and Joe. We are contacting Random House (who will contact the Seuss estate) to see if we can purchase 20000 copies and to get permission to use some of the copy in our internal communication materials. The per unit cost is considerably lower due to the volume. We think employees will like this idea. What do you think? Mary,project management,excited,3 +Re: Rice Happy Hour,Steve will be in a Managing Director PRC that day - not sure if he will be out in time for a 5:30 event. Maureen From: Lexi Elliott/ENRON@enronXgate on 06/21/2001 01:39 PM To: Steven J Kean/NA/Enron@Enron cc: Subject: Rice Happy Hour Steve: I am considering scheduling a Rice team/intern happy hour on July 24 (5:30 - 7:00). Would you be available on this date or should I try to reschedule? Thank you! lexi 3-4585,personal & social,casual,3 +Greening the Enron Building Mtg,fyi ,other,casual,0 +Fwd: Enron Corporation,Neither Ken nor Jeff are available. It would probably be better for one of you to speak anyway. Any interest? -----------------,other,casual,3 +TACT Conference Speaker Request,This looks like a run-of-the-mill conference except that the guest list is fairly senior. Any interest? If not let Amy know. -----------------,other,casual,2 +Re: California Update 07.18.01,These are useful updates. Please include Whalley Lavorato Parquet Dietrich Delainey Kitchens Haedicke Sanders Kirby Sharp Leff Calger Belden etc on future updates. Thanks From: Jeff Dasovich on 07/18/2001 08:18 PM Sent by: Jeff Dasovich To: Richard Shapiro/NA/Enron@Enron skean@enron.com Susan J Mara/NA/Enron@ENRON Harry Kingerski/Enron@EnronXGate James D Steffes/NA/Enron@Enron Linda Robertson/NA/Enron@ENRON Susan M Landwehr/Enron@EnronXGate mpalmer@enron.com Karen Denne/Enron@EnronXGate Janel Guerrero/Enron@EnronXGate Paul Kaufman/Enron@EnronXGate cc: Subject: California Update 07.18.01 The Senate the Assembly and the Governor are either poised to engage in very difficult negotiations or the three are about to crash and burn and Edison's going to be left dangling. In the Senate: The Senate bill 78XX is with about 90% likelihood going to be voted out of the Senate tonight---without a vote having taking place in any committee. Burton announced during one of the two informational hearings that this is it despite the view of just about everyone who appeared before the committees the bill likely won't prevent Edison from going bankrupt. The key features of the bill are: Banks and QFs get paid in full. Edison shareholders would be responsible for debts owed to suppliers No direct access. There are conflicting reports about whether the Senate will take up the bill tomorrow de-linking the bonds from the DWR contracts and whether the Republicans will go along with it. In the Assembly: The Committee is hearing the Wright and Hertzberg bills as we speak with Hertzberg's the likely winner. That bill now provides for Direct Access under certain conditions (the amendments describing the conditions were faxed today). We're attempting to get the July 12 date changed to the effective date of the bill or later. The Assembly likely won't vote the Hertzberg bill out until tomorrow at the earliest. The Problem: The Assembly and Senate bills are diametrically opposed in the way each approaches the problem---in short the bills are two ships passing in the night. The Democratic leaders (Governor Hertzberg Burton) aren't talking and Burton hasn't expressed any interest in talking---to anybody. The likely outcome given the circumstances: Burton says he's done what he needs to do (i.e. passed out a fair bill) the Assembly and Senate can't agree they finish the budget time runs out they leave Friday and Edison's left twisting. That said there's still a chance that the Governor could call Burton and sit down with Burton and Hertzberg and work something out by Friday or begin talking and postpone the recess until they get it worked out. But given Burton the chance of that happening seems very slim. In short little has changed since yesterday. Best Jeff,other,informative,3 +"re: On Workplace Sleeves, Few Political Hearts",The PAC did not give the money. PAC contributions to federal candidates are limited. The money was a combination of individual contributions Ken solicited and soft money donations to the Republican Party. 09/12/2000 10:33 AM Erin Rice Erin Rice Erin Rice 09/12/2000 10:33 AM 09/12/2000 10:33 AM To: Steven J Kean/NA/Enron@Enron Elizabeth Linnell/NA/Enron@Enron cc: Subject: re: On Workplace Sleeves Few Political Hearts I think I understand why people get confused now. See below in blue..... I know you mean the Enron PAC has contributed more than $615k to the Bush campaign (right?) but it reads like Enron Corp gave money directly to Bush. It's a complicated issue -- which I am hoping to simplify with my story! I'm going to use the second quote below in the article. ,government & politics,formal,3 +AG letter - privileged and confidential: request for legal advice.,The letter looks good. A couple of comments for your consideration: On page three we describe the change to the definition of Public Utility and then argue that we don't fit into it. Would it be worth explaining why that makes sense? Specifically the New Jersey restructuring law like most efforts of its kind in other markets is designed to separate the competitive from monopoly elements of the power (and gas) businesses. Economic regulation would then be restricted to the remaining monopoly elements of the business (eg distribution). The competitive market can not be solely relied upon to regulate the behavior of monopoly asset owners such as distribution utilities. Therefore regulators continue to be called upon to set pricing and other terms of service. What those regulators decide matters a great deal to those monopoly utilities and it consequently makes sense for lawmakers to be concerned about attempts by such entities to use campaign contributions to tacitly influence decision makers. The same public policies simply do not apply to that portion of the market which is competitive. The generation and sales business has a competitive structure (i.e. relatively low barriers to entry multiple competitors etc.). These components of the power and gas business can be regulated by the market with respect to rates and terms of service. They do not require economic regulation any more than grocery stores department stores appliance sellers or other retailers (who presumably are not prohibited from making contributions. Competition and markets discipline behavior and establish competitive prices and terms of service. Because regulators don't set the prices and terms of service for such sellers there is no reason to be concerned about campaign contribuitions from such organizations. Indeed the legislation and the legislative history clearly conform to this underlying policy rationale. As a former practicing lawyer I certainly understand the value of pleading in the alternative. But I question how certain of our arguments woud be perceived by the public if they ever came to light (which these documents have a habit of doing).. . I can just see the press seizing on Enron's claim of ignorance or mistake or the fact that we pled for the favorable exercise of prosecutorial discretion. I suggest that we add whatever we feel is necessary to the very solid looking intent argument not make specific reference to ignorance or mistake and not plead for the favorable esxercise of PD. If we feel we need to write about this last item perhaps we could suggest that it would be a waste of the public's resources to pursue a claim under such circumstances.,legal affairs,formal,5 +Re: Corporate Allocations April 2001,Is this a 2001 question? If so it seems to me we shouldn't bother with it. If this is a 2002 question then lets discuss -----------------,other,casual,3 +NEWS FLASH ON THIS MORNINGS SENATE HEARING,This morning all 5 FERC commissioners testified before the Senate Energy Committee on yesterday's order and on the pending Feinstein/Smith legislation to impose cost-of-service rates on wholesale power. Highlights and analysis are as follows: 1. Sen. Feinstein the chief sponsor of Senate price cap legislation called FERC's order a giant step forward and said she is very grateful for what the commission did. Senators Gordon Smith and Barbara Boxer agreed. Sen. Feinstein said that she and Sen. Smith would now recommend to Chairman Bingaman that next week's mark up of their price control bill be postponed for the time being pending how the order plays out in practice. Chairman Bingaman said he would follow their advice and cancel next week's mark up. (Responding to a question each of the five commissioners said that Congress should NOT act to pass Smith/Feinstein at least at this time -- this included Comr. Massey who has favored legislation in the absence of stronger action by the commission.) 2. However it is very important to point out that House Democrats in California and elsewhere out West have not been as supportive of FERC's order as have the Senators. House Democrats are still expected to attempt to offer a price control amendment to the supplemental appropriations bill when it comes before the House later this week. Of course the reaction of the Senate may undercut the House Democrats's argument at least at this time. Furthermore should prices go up and the FERC order is seen as not working price control advocates including Sens. Feinstein Smith and Boxer will no doubt pick up where they left off. 3. It will be very interesting to see how Senator Lieberman and Gov. Davis react to the FERC order at the Senate Governmental Affairs Committee hearing tomorrow morning. While this committee does NOT have legislative jurisdiction over the Feinstein/Smith legislation this hearing will be well covered by the news media. Sen. Lieberman is a cosponsor of the Feinstein/Smith legislation. 4. In my view the political and public pressure will now shift in large part -- at least for the time being -- from the legislative price cap proposals to the settlement conference process that the FERC order will set motion. There was a clear drum beat at the hearing from the western senators particularly Feinstein Boxer and Cantwell (WA) for refunds either out of the settlement conference or ordered by FERC. In essence they are pressing to have the price mitigation formula in the new order applied to power sales that took place prior to the issuance of the order. 5. Another sense of the poltiical flavor is that Sen. Schumer (D-NY) while expressing his continued support for deregulatioin and competition pressed FERC general counsel Kevin Madden (by this point the commissioners left for the RTO conference) about why the order applied only to the WSCC and did not apply nationwide. Madden at least tried to distinguish the New York and California markets but then said that Con Ed has filed pleadings with FERC to extend price mitigation to New York and he could not say any more about the matter. 6. Ranking Republican Frank Murkowski said he had received a letter today from four western governors -- those from Arizona North Dakota Utah and Wyoming -- saying that since FERC has acted there is no need for Congress to pursue price control legislation. There were a series of questions and comments on details and technical aspects of the orders. I will do an e-mail on these items later today. Please advise if you have any questions or comments.,other,informative,3 +Rick Shapiro Presentation (Updated),-----------------,business document,formal,3 +enron advisory council,Forgive me if I have forgotten but had you suggested a topic for our next advisory council meeting?,other,polite,3 +Re: ELECTRICITY TRADED VOLUMES since 1994,I think he was looking to make a sector-wide point. For example how much of the total market moved to wholesale traded volumes? He wants to make the point that even a nontraded commodity - ie electricity in 1994 - can rapidly progress to a traded market - as electricity did between 94 and 00. Margaret Carson 09/21/2000 04:25 PM To: Steven J Kean/NA/Enron@Enron cc: Subject: ELECTRICITY TRADED VOLUMES since 1994 Steve I provided Andy West with this and the 35 percent a year growth was compelling Marg. -----------------,utilities,informative,2 +draft organization announcement.,Attached is the draft. It combines all three announcements into one with a common format. It reflects a just the facts approach. Let me know if you have changes (or answers to the questions in the text).,organization,formal,3 +Re: New Cost Memo,See my revisions (and one question). Let's revise and circulate. Karen Denne 06/06/2001 05:57 PM To: Steven J Kean/NA/Enron@Enron cc: Subject: New Cost Memo,other,formal,3 +RE: ENE Officer Elections,No. We have reallocated some of the responsibilities but Cindy has a significant part of the HR organization and continues to manage Community Relations so her title is accurate. Thanks From: Kelly Johnson/ENRON@enronXgate on 07/19/2001 01:06 PM To: Steven J Kean/NA/Enron@Enron cc: Subject: RE: ENE Officer Elections Thanks Steve. Do we need to change Cindy Olson's title? Let me know. ,human resources,formal,2 +Suzanne Brown in your office.,Hartsoe-Commissions order on 75 O888 compl programs Maya WeberGordon Weil Dave Marquart Richard Tabors,legal affairs,urgent,5 +Re: FW: Confidential A&A PRC Results,I had not seen it yet. Do you have my other employees rankings? Since they reccomend that the PRC Representative be involved in providing feedback would you like to do that next week when you are here? Mark Barry Tycholiz/ENRON@enronXgate 08/02/2001 10:18 AM To: Mark Whitt/NA/Enron@Enron cc: Subject: FW: Confidential A&A PRC Results I assume you received this information already and I know that we have not discussed Tyrell being ranked here. The #1 spot was tightly held by only a few people ( in the americas and as such everyone was moved down... Although the forced ranking creates problems at time I am satisfied that Ty's ranking is appropriate... let's discuss BT ,other,formal,3 +Re: HP -- confidential internal document,Jennifer Thank-you for stepping in on this and guiding the process! -----------------,other,polite,0 +Possible Enron Visit to Tulane Univ. Late March or April,,other,neutral,0 +Re: Video Screens in EB Elevator Cabs,Please add Terrie to the meeting with Beth Bill Palmer et al -----------------,other,formal,2 +draft organization announcement.,Attached is the draft. It combines all three announcements into one with a common format. It reflects a just the facts approach. Let me know if you have changes (or answers to the questions in the text).,organization,formal,3 +RE: Trip to California,Frank Sorry for a delay in responding to your message. As you can imagine after Jeff Skilling's resignation Greg Whalley will be tied up in a few additional stock analysts' presentations. We are still planning trips to California and New Mexico that we would like to combine and would like very much to meet and exchange opinions with you. Please advise me about your availability during the next 2 - 3 weeks. Hopefully we can reconcile our schedules and meet soon. Vince ,personal & social,polite,3 +Re: Political Contributions,Please add Linda Robertson (Head of our DC office) to this list if that's ok. Sally Keepers 05/04/2001 03:04 PM To: Steven J Kean/NA/Enron@Enron Elizabeth Labanowski/EPSC/HOU/ECT Carolyn Cooney/Corp/Enron@ENRON cc: Subject: Political Contributions Attached is final list for 2000,government & politics,formal,3 +<> - May 2001,-----------------,finance,formal,3 +RE: Test Message,Shirley Approved. Vince ,other,casual,0 +Alberta PPA,ditto -- nice work Rob. Your insights on project stanley are also much appreciated. -----------------,other,casual,0 +Re: Enron Advertising,Let's ask Jeff Hines(?) our opinion research guy to put a few short questions together and send it out. We may also want to include a link so people can view the commercials again before answering. Also I was talking with Beth Tilney today about our website (and the fact that every business unit now feels free to go do their own thing). We thought it would be a good idea to add this topic to the brand conference (perhaps as part of an existing segment). -----------------,marketing & promotion,formal,3 +Revised INGAA Itinerary,FYI - itinerary. -----------------,other,formal,0 +Comments of Wolak,Wolak makes some good points. In ERCOT Enron is in support of nodal pricing. I would not go so far as to say we are pushing for PJM's implementation however but for a market with nodal prices (and unilateral bids - aka unbalanced schedules congestion reflect by price differentials etc). I was unaware PJM had such great power to alter bids. This is something we don't want and something for which I am not aware we have advocated. Perhaps in Enron's promotion of locational prices it has been retold as PJM-style locational prices. Given that PJM is the most commonly cited example of locational prices it does not surprise me to have the sloppiness in discussions that could lead to the rumors. Martin ,other,formal,2 +Re: Fellow referred to me by Ken Lay,yes Jeff Dasovich Sent by: Jeff Dasovich 03/13/2001 12:10 PM To: skean@enron.com cc: Subject: Re: Fellow referred to me by Ken Lay Steve: Based on the note from Rosalee and if you agree I'm going to assign low priority to the issue. Jeff Rosalee Fleming 03/13/2001 08:46 AM To: Steven J Kean/NA/Enron@Enron Jeff Dasovich/NA/Enron@Enron cc: Vanessa Groscrand/Corp/Enron@ENRON Subject: Re: Fellow referred to me by Ken Lay Hi Steve and Jeff - This was a cold call to Ken that Vanessa took while we were in Exec. Comm. meeting. She had asked Ginger who to refer him to as it was CA. and she mentioned Jeff. Please only call if there is any interest. Rosie From: Steven J Kean on 03/12/2001 04:46 PM To: Jeff Dasovich/NA/Enron@Enron cc: Vanessa Groscrand/Corp/Enron@ENRON Rosalee Fleming/Corp/Enron@ENRON Subject: Re: Fellow referred to me by Ken Lay It was not mentioned to me. I'm copying rosie and vanessa to find out if this was a simple referral (in which case you should keep the work to a minimum -- return the call but don't get distracted from your other efforts) or whether Ken is especially interested in this and wants us to follow through. Jeff Dasovich Sent by: Jeff Dasovich 03/12/2001 03:54 PM To: skean@enron.com cc: Subject: Fellow referred to me by Ken Lay Just got a call from a fellow named Jame Edgerly at the Enterprise Zone Inc. He told me that Ken Lay (through Ken's secretary Vanessa) referred me to him. He is very interested in getting us to help him work with the Legislature to establish an Enterprise Zone energy tariff to encourage investment in California's Enterprice Zones. Before I launch on the effort just wanted to check in and see if this rings a bell with you. Thanks. Best Jeff,other,formal,2 +"Department meeting conference call. 800-283-1805, in Ricks name.",Paul Jacarty Andy Keleman Jack Heath Jeff Brockmeyer 1-800-348-4825 2760 -- Andy Fastow Janine Migden,other,formal,3 +Re: Houston 1996 - 2001,I am so sorry. You guys gave him a really good life. Robert Kean on 07/07/2001 01:48:08 PM Please respond to To: Pat Hilleman \(E-mail\) Greg Smith \(E-mail\) Greg Smith \(E-mail 2\) Colin Lamb \(E-mail\) Maggie Kean \(E-mail\) Nora Kean \(E-mail\) Nora Kean \(E-mail 2\) Sann & Evelyn Gossum \(E-mail\) Doug & Karen Reiman \(E-mail\) Jean Kean \(E-mail\) Kathy Wedig \(E-mail\) Melissa Kean \(E-mail\) Phil Kean \(E-mail\) Steve & Melissa Kean \(E-mail\) cc: Subject: Houston 1996 - 2001 Houston died today after a long battle with Auto Immune Hemolytic Anemia. Rest in peace. Rob Kean,other,concerned,5 +Legislative Status Report Week Ending 2/23,,legal affairs,formal,0 +Summary of Todays FERC Order,This morning the FERC had its meeting to discuss events in California and = =20 the FERC=01s response to them. The following is a summary of the remarks o= f=20 the four Commissioners and the major points of what has been ordered:=20 ? Major features ? 1.? Proposes to replace ISO and PX boards with independent non-stakeholde= r=20 boards. 2.? Continued significant role for the presidents of PX/ISO who should be= =20 made voting members. 3.? Elimination of mandated buy-sell requirement for the IOUs (although no= =20 explanation as to whether this requires CPUC action). Over-reliance on spo= t=20 markets has been problematical. 4.? As an independent exchange the PX will be free to design the products= =20 desired by the market. 5.? The proposed price modification measure will be a temporary measure.= =20 Single price for all offers below $150. However no bid above $150 will se= t=20 the price for all generators. A seller can bid anything it wants. Allowing = =20 generators to receive their as-bid price will allow high-cost generators to= =20 participate in the market. However the generator will be required to=20 provide confidential reports to FERC explaining the necessity for bids ove= r=20 $150 through 12/31/02. 6.? The order requires forward scheduling of 95% of an scheduling =20 coordinator=01s schedule with a penalty applied for deviations which exce= ed 5%=20 As an incentive the proceeds of the penalties go to the schedulers who=20 comply with the tolerance band. 7.? Rejects the purchase price caps proposed by the ISO. The order would= =20 eliminate the ISO=01s price cap authority. 8.? Beginning 1/1/01 the prospect of refunds will be available. =20 ? Commissioner Hebert ? Due to a technical problem when I called in I heard only part of his =20 remarks. He announced that he will have a separate concurrence in the order= =20 but is troubled by some of its features. The $150 cap is questionable=20 whether described as a Soft cap or as a hard cap. His concern is that it will clearly discourage new investment in generatio= n.=20 He therefore recommended that the $150 cap should be escalated on a regula= r=20 basis (perhaps every six months) until it reaches at least $250.=20 ? He points out that the ISO and PX are required to make RTO filings to FERC = =20 on 1/16/01. These filings should address the major aspects of the Order=20 issued today.=20 ? Hebert also questioned the issue of refunds alleging that it was =20 disingenuous to suggests that refunds were a possible remedy.=20 ? Commissioner Breathitt=20 ? Breathitt announced almost all of the foregoing major points of the orderT= he=20 order is based on a market approach. In choosing our market-based approac= h=20 it is our goal to guide the markets to self-correct and not re-institute= =20 command and control regulation.? We have all worked too hard too long t= o=20 have this result. ? Commissioner Massey ? Sixty-five years ago the Congress decreed that prices had to be just and = =20 reasonable.? There is no exception for market-based approaches. He will =20 concur as the order does find that prices have been unjust and=20 unreasonable. The order does insure that prices should return to being jus= t=20 and reasonable. Cited Frank Wolak as proposing there ought to be an 18-24= =20 month forward product designed which the CPUC will years ago federal law= =20 dictated that prices had to be just and reasonable. The $150 is a soft cap and allows a generator to bid above it but if it= =20 does it will not set the price which other generators receive. He invites = =20 comments on this issue.=20 With regard to retroactive refunds the Office of the General Counsel has= =20 prepared a legal memorandum which concludes that the FERC probably does not= =20 have authority to order refunds retroactively for any date before October 2= =20 2000. Invites comments on this issue.=20 California needs new generation and transmission and the siting authority= =20 belongs to the state. California must do its part to ensure that customers= =20 do in fact benefit from competitive markets that ensure just and=20 reasonable prices.=20 He is not yet confident that the Commission has taken all necessary steps.= =20 ? Chairman Hoecker ? He strongly supports the order.=20 Comments are due in three weeks. This is no time to pull punches. He cited= =20 the San Diego hearings as indicating that California markets were? out o= f=20 synch with the needs of the digital economy.? For FERC regulators who are= =20 used to corporate struggles among utilities and other large companies th= is=20 was a real eye-opener.=20 Average citizens had no warning this was going to happen and they had no= =20 competitive alternatives. It was unfair to them and there is plenty of = =20 responsibility for this meltdown to go around.=20 If I was a senior citizen in San Diego living on a fixed income or a sma= ll=20 business owner living on a small profit margin or a school administrator = =20 dealing with a tight budget the doubling of my bill would make me want my= =20 money back or to at least ensure that this won=01t happen again in the= =20 future. Many who expected this order expected a lynching and the transfer of lar= ge=20 amounts of money. They want us to round up the bad guys who manipulated th= e=20 market and order the disgorgement of their ill-gotten gains. As our legal= =20 opinion indicates that=01s not going to happen.? Today=01s order offer= s a=20 thoughtful way back to a rational basis for buying and selling power in th= e=20 West. We are not ignoring actual or undue discrimination or actual abuses of =20 market power. The order makes better market monitoring going forward a =20 fundamental part of FERC=01s proposal.? If evidence of such behavior is = =20 brought forward FERC will act on that information. However we can=01t d= elay =20 work on a market fix while searching for the culpable parties.=20 Hoecker believes that strong federal action is both warranted and =20 important at this moment.? The bulk power grid must be made to work =20 efficiently across the entire West.=20 Competition is at risk make no mistake about that. In view of the =20 California experience several states are reconsidering or shelving plans t= o =20 implement competition.? Legislators will want to retain the possibility of= =20 returning to the old days of vertically-integrated utilities.? The =20 California experience has been instructive but not helpful=01(to the=20 meandering implementation of competition throughout the nation.=20 The state=01s markets have not been mistakenly federalized as alleged b= y=20 some. The markets are regional. California=01s access to interstate power = =20 supplies is critical as was made evident by recent events. If we do things= =20 right California will not be a federal enclave designed to satisfy our=20 market predilections it will be a workable and competitive market that=20 benefits consumers.=20 This is a strong order. It needs to be a strong order. We expect to have = a=20 strong order in December and the public needs it.=20 A copy of these notes are attached if you need to distribute them to anyon= e=20 in your organizations. - November 1 2000 Meeting Notes.doc,energy infrastructure,formal,5 +Pre-Election Discounts!,Any interest? ,other,casual,3 +Re:,Thanks anyway. no need to do anything right now. enjoy your vacation. Jeffrey Keeler 06/18/2001 01:10 PM To: Steven J Kean/NA/Enron@Enron cc: Subject: Re: Sorry I missed this on Friday -- was on vacation end of last week and rest of this week. If its not too late I'll have Lisa pull some things together quickly. Also my wife Marietta knows Isikoff well....they worked together on a number of things when she was at Court TV in Washington. Let me know what I can do to help. Jeffrey Keeler Director Environmental Strategies Enron Washington DC office - (202) 466-9157 Cell Phone (203) 464-1541,other,friendly,1 +ATTORNEY/CLIENT COMMUNICATION//////CONFIDENTIAL and Privileged,Article II of the NONCOMPETITION AGREEMENT entered in connection with the sale of HPL to AEP (which closed as of June 12001) provides: ENA [for 3 months post-close] will not solicit negotiate or enter into any contract agreement or arrangement for the purchase of natural gas on the HPL Pipeline from any Person which is a supplier or producer of natural gas connected to the HPL Facilities provided however nothing herein shall be construed or interpreted as prohibiting ENA from entering into any such contract agreement or arrangement which is less than one month in duration and involves or is related to an Enron Online transaction. This is not the most clearly drafted provision as it was the subject of much negotiation....and was significantly narrowed from the original scope proposed by AEP. Thus please consult with me prior to entering into any solicitation agreement or arrangement which might arguably be covered by our limited covenant not to compete on the supply side for 3 months. There are many aspects of the post-close transition which will require cooperation between Enron and AEP/HPL and thus it behoves us to carefully weigh the risks and rewards of stepping too close to or over the line. Furtheralthough a technical reading of the non-competition agreement only applies to ENA no ENA UPSTREAM deals which would violate this covenant if there were to be done as ENA should be done without clearance from Brian Redmond and me. Please communicate this restriction to those who report to you and have need to be aware of this limited restriction. Sincerely BNG Dan J Hyvl 06/07/2001 04:59 PM To: Barbara N Gray/HOU/ECT@ECT cc: Jeffrey T Hodge/HOU/ECT@ECT Subject: ONEOK Energy Marketing and Trading Company Barbara This appears to be supply deal for deliveries at Katy that would be subject to the 90 day non-compete. Sandi is in the process of getting me a copy of the non-compete so that I can determine if this deal is covered. Do you have any thoughts. ,legal affairs,formal,5 +Re: CPUC Postpones action on Direct Access Until Mid-August,Please add Dave Delainey John Lavorato and Louise Kitchens to updates with significant news like this one (they may already get them ... I didn't read through all the names). Susan J Mara 07/03/2001 12:35 PM To: Alan Comnes/PDX/ECT@ECT Angela Schwarz/HOU/EES@EES Beverly Aden/HOU/EES@EES Brenda Barreda/HOU/EES@EES Carol Moffett/HOU/EES@EES Cathy Corbin/HOU/EES@EES Chris H Foster/HOU/ECT@ECT Christina Liscano/HOU/EES@EES Christopher F Calger/PDX/ECT@ECT Craig H Sutter/HOU/EES@EES Dan Leff/HOU/EES@EES Debora Whitehead/HOU/EES@EES Dennis Benevides/HOU/EES@EES Don Black/HOU/EES@EES Douglas Huth/HOU/EES@EES Edward Sacks/Corp/Enron@ENRON Eric Melvin/HOU/EES@EES Erika Dupre/HOU/EES@EES Evan Hughes/HOU/EES@EES Fran Deltoro/HOU/EES@EES Gayle W Muench/HOU/EES@EES Ginger Dernehl/NA/Enron@ENRON Gordon Savage/HOU/EES@EES Harold G Buchanan/HOU/EES@EES Harry Kingerski/NA/Enron@ENRON James D Steffes/NA/Enron@ENRON James W Lewis/HOU/EES@EES James Wright/Western Region/The Bentley Company@Exchange Jeff Messina/HOU/EES@EES Jeremy Blachman/HOU/EES@EES Jess Hewitt/HOU/EES@EES Joe Hartsoe/Corp/Enron@ENRON Karen Denne/Corp/Enron@ENRON Kathy Bass/HOU/EES@EES Kathy Dodgen/HOU/EES@EES Ken Gustafson/HOU/EES@EES Kevin Hughes/HOU/EES@EES Leasa Lopez/HOU/EES@EES Leticia Botello/HOU/EES@EES Mark S Muller/HOU/EES@EES Marsha Suggs/HOU/EES@EES Marty Sunde/HOU/EES@EES Meredith M Eggleston/HOU/EES@EES Michael Etringer/HOU/ECT@ECT Michael Mann/HOU/EES@EES Michelle D Cisneros/HOU/ECT@ECT mpalmer@enron.com Neil Bresnan/HOU/EES@EES Neil Hong/HOU/EES@EES Paul Kaufman/PDX/ECT@ECT Richard L Zdunkewicz/HOU/EES@EES Richard Leibert/HOU/EES@EES Richard Shapiro/NA/Enron@ENRON Rita Hennessy/NA/Enron@ENRON Robert Badeer/HOU/ECT@ECT Rosalinda Tijerina/HOU/EES@EES Sarah Novosel/Corp/Enron@ENRON Scott Gahn/HOU/EES@EES Scott Stoness/HOU/EES@EES Sharon Dick/HOU/EES@EES skean@enron.com Susan J Mara/NA/Enron@ENRON Tanya Leslie/HOU/EES@EES Tasha Lair/HOU/EES@EES Ted Murphy/HOU/ECT@ECT Terri Greenlee/NA/Enron@ENRON Tim Belden/HOU/ECT@ECT Tony Spruiell/HOU/EES@EES Vicki Sharp/HOU/EES@EES Vladimir Gorny/HOU/ECT@ECT Wanda Curry/HOU/EES@EES William S Bradford/HOU/ECT@ECT Jubran Whalan/HOU/EES@EES Richard B Sanders/HOU/ECT@ECT Robert C dwatkiss@bracepatt.com rcarroll@bracepatt.com Donna Fulton/Corp/Enron@ENRON gfergus@brobeck.com Bruno Gaillard/EU/Enron@Enron Linda Robertson/NA/Enron@ENRON Ren Lazure/Western Region/The Bentley Company@Exchange Michael Tribolet/Corp/Enron@Enron Phillip K Allen/HOU/ECT@ECT Christian Yoder/HOU/ECT@ECT jklauber@llgm.com Tamara Johnson/HOU/EES@EES Greg Wolfe/HOU/ECT@ECT Jeff Dasovich/NA/Enron@Enron Dirk vanUlden/Western Region/The Bentley Company@Exchange Steve Walker/SFO/EES@EES James Wright/Western Region/The Bentley Company@Exchange Mike D Smith/HOU/EES@EES Richard Shapiro/NA/Enron@Enron Leslie Lawner/NA/Enron@Enron Robert Steve Walton/HOU/ECT@ECT psmith3@enron.com mjackso7@enron.com Janel Guerrero/Corp/Enron@Enron Mark Fillinger/SF/ECT@ECT Jennifer Rudolph/HOU/EES@EES Martin Wenzel/SFO/HOU/EES@EES wgang@enron.com Joseph Alamo/NA/Enron@Enron Ray Alvarez/NA/Enron@ENRON David Leboe/Enron@EnronXGate Jay Zoellner/Western Region/The Bentley Company@Exchange Fatimata Liamidi/HOU/EES@EES Sonia Perez/HOU/EES@EES Chris Holmes/HOU/EES@EES Venkatesh Mani/Western Region/The Bentley Company@Exchange Richard Crevelt/Western Region/The Bentley Company@Exchange Dave Perrino/SF/ECT@ECT Malcolm Adkins/HOU/EES@EES Kevin Keeney/HOU/EES@EES Chris Stokley/ENRON@enronXgate Steve C Hall/ENRON@enronXgate Tracy Ngo/Enron@EnronXGate triley@enron.com cc: Subject: CPUC Postpones action on Direct Access Until Mid-August The vote to suspend direct access has been postponed. This is a positive sign that the legislature is making progress on a comprehensive solution. Sue Mara Enron Corp. Tel: (415) 782-7802 Fax:(415) 782-7854 ,other,formal,2 +RTO Question,For those who attended the FERC meeting yesterday can anyone elaborate on the reference in the Energy Daily article today that said Pat Wood remarked at the meeting that the Barton RTO language is balanced and that he likes it. I am working on our own and helping EPSA with their comments on the Barton language which is as we know a retrenchment from current law and FERC's plans on RTOs. But if Pat Wood likes it and thinks it is balanced that undercuts our position. Since the trade press is not always accurate I thought I would first check with those of you who were there. Thanks.,other,inquisitive,3 +FWD: News Article,At the end of the article there is a presidential straw poll. It shows Bush with only a 6 point lead among oil and gas industry executives and analysts. ,media & press,neutral,0 +Re: FW: Request for PR2 Access,OK From: Jo Ann Hill/ENRON@enronXgate on 07/18/2001 04:31 PM To: Steven J Kean/NA/Enron@Enron cc: Kathryn Schultea/ENRON@enronXgate Mary Joyce/ENRON@enronXgate Subject: FW: Request for PR2 Access Steve -- For your approval. As some additional information regarding the request Kathy Diane Taylor and I met with Deana Taylor this afternoon to understand what each person's role was and the specific access needed. For the interim we are recommending that the HR View Basic Data & Org ENTP and View Payroll and Time ENTP role be granted to each of the individuals listed below. Until January 1 this function was performed in the Payroll Department and at that time was transitioned to Karen and Deana's group. The people listed below actually transferred from the Payroll Department. For the long term we are going to look at creating a specific role for this group that would let them access only those data elements needed. I've spoken with Mary Joyce by phone and she has approved so I am requesting your approval as well. These people have basically been prevented from being able to reconcile any of the net pay accounts etc. for the past week. Please let me know if you will approve or if you need any additional information. Thanks. Jo Ann ,human resources,formal,3 +Confidential - Decision tree on projects,Something for us to talk about during our next staff meeting. There are three projects which have significant cash flow problems and thus= difficulties in meeting debt obligations: these are: SECLP Panama and Gaz= a. In the past as I suppose we have done in Dabhol we have taken the pos= ition that we would not inject cash into these companies and would be prepa= red to face a default and possible acceleration of the loans. SECLP has be= en the biggest issue/problem. Panama is much less (a few million of floati= ng of our receivables from the company) would be sufficient to meet the cas= h crunch in April of this year. Note that in Panama the debt is fully gu= aranteed by the government and is non-recoursed to the operating company B= LM. In the past we have discussed letting the debt default which would c= ause the bank to potentially seek complete payment and acceleration from th= e GoPanama. The reason: the vast majority of BLM's problems stem from acti= ons taken by the regulator that have effectively amended our PPA's with pri= vate parties those actions resulted in significant loss of revenues which= although today have stopped or have been limited have left a mark on th= e company's liquidity position. =20 Now the question is: come April of 2002 should any of our actions in Panam= a or decisions related thereto (which we would have otherwise taken or made= ) be affected in any way by either the proposed merger or an effort by Enro= n to preserve efforts to re-establish investor/creditor confidence? The sa= me could go for SECLP and Gaza. This is simply an overall guidance question. Let's take it up during our= staff meeting next week if that's ok with you. Many thanks Mariella,other,formal,3 +"Invitation to the EUROFORUM Conference ""Emissions Trading""",-----------------,other,formal,3 +RE: Confidential - Decision tree on projects,2 meetings on monday 8 & 9:30 and 2 on friday 9 & 10. ,other,formal,3 +Re: UC-CSU-Enron press release,Is there an alternative quote we could use instead of the reference to stabilizing in the California market? I think I know what we mean but most outside readers would see the situation as unstable. Perhaps we could reference the continued availability of direct access or renewed interest in Enron's offerings? To: Marty Sunde/HOU/EES@EES Janet R Dietrich/HOU/EES@EES Elizabeth Tilney/HOU/EES@EES Peggy Mahoney/HOU/EES@EES Vicki Sharp/HOU/EES@EES Robert C Williams/Enron@EnronXGate Steven J Kean/NA/Enron@Enron Karen Denne/Corp/Enron@ENRON Mark Palmer/Corp/Enron@ENRON James D Steffes/HOU/EES@EES Evan Hughes/HOU/EES@EES cc: Subject: UC-CSU-Enron press release Attached is a draft of the UC-CSU-Enron press release concerning the settlement agreement. Please review and let me know of any revisions or suggestions. We would like for this to go out tomorrow if possible. We're still waiting for a quote from CSU. I'll make sure you see that as well. Thank you. Max,other,formal,3 +Confidential Information and Securities Trading,To:KITCHEN LOUISE - +1 713 853 3488 Enron Wholesale Services - Office of the Chairman From: Mark Frevert Chairman & CEO Mark Haedicke Managing Director & General Counsel Subject: Confidential Information and Securities Trading To keep pace with the fluid and fast-changing demands of our equity trading activities Enron Wholesale Services (EWS) has recently revised its official Policies and Procedures Regarding Confidential Information and Securities Trading (Policies and Procedures). These revisions reflect two major developments: (1) our equity trading activities have been extended into the United Kingdom and (2) in an effort to streamline the information flow process the Review Team will play a more centralized role so that the role of the Resource Group is no longer necessary.You are required to become familiar with and to comply with the Policies and Procedures. The newly revised Policies and Procedures are available for your review on LegalOnline the new intranet website maintained by the Enron Wholesale Services Legal Department. Please click on the attached link to access LegalOnline: If you have already certified compliance with the Policies and Procedures during the 2001 calendar year you need not re-certify at this time although you are still required to to review and become familiar with the revised Policies and Procedures. If you have not certified compliance with the Policies and Procedures during the 2001 calendar year then you must do so within two weeks of your receipt of this message. The LegalOnline site will allow you to quickly and conveniently certify your compliance on-line with your SAP Personal ID number. If you have any questions concerning the Policies or Procedures please call Bob Bruce at extension 5-7780 or Donna Lowry at extension 3-1939.,legal affairs,formal,3 +Re: CONFIDENTIAL AND LEGALLY PRIVILEGED,Marcus David roland will be point person on this. I assuming you are getting bankruptcy etc advise and there will be consideration etc. corporate formalities will be followed etc. From: Marcus Nettelton/ENRON@enronXgate on 10/31/2001 11:29 AM To: Vicki Sharp/HOU/EES@EES cc: Mark E Haedicke/Enron@EnronXGate Subject: CONFIDENTIAL AND LEGALLY PRIVILEGED CONFIDENTIAL AND LEGALLY PRIVILEGED Vicki Many thanks for your assistance yesterday. Clinton Energy Management Services Inc. because it holds a current power marketing certificate is an entity which we would like to move to being a direct subsidiary of Enron Corp. to take effect today. This is considered to be an essential part of restructuring to meet our current and future needs. While the day to day control will remain where it is and all the efforts assign contracts and other work should progress as planned since the value to Enron Corp. is the power marketing certificate nothing should be done to jeopardize this. In addition we will be changing the charter and will need copies of the existing charter to effect those changes required. Please call me if you need to discuss this further. Kind regards Marcus,legal affairs,formal,5 +CATS House of Lords Appeal,fyi -----------------,other,casual,0 +FERC comments,Please coordinate with PGE on the comments. -----------------,energy infrastructure,formal,3 +Re: Will Hixon - UT Candidate,I don't see a fit Lexi Elliott 02/28/2001 02:39 PM To: Steven J Kean/NA/Enron@Enron cc: Maureen McVicker/NA/Enron@Enron Chris Harman/Enron Communications@Enron Communications Subject: Will Hixon - UT Candidate Steve: Per my voicemail message to you I have forwarded Will's resume for your consideration. Thank you! lexi -----------------,human resources,formal,3 +Re: California Power Markets,Thanks for the analysis. We understand that McKinsey may be helping the Governor develop a demand buy down program. Is this true?,other,inquisitive,3 +Re: European Trip Report 22-30 Jan 2000,FYI -----------------,personal & social,casual,0 +Console Tape Recordings,fyi -----------------,other,casual,0 +Re: Draft Letter to FERC by Consumer Groups,Looks good. How about a point about the need to connect new generation=20 quickly. =09Sarah Novosel =0909/26/2000 09:55 PM =09=09=20 =09=09 To: skean@enron.com Richard Shapiro/HOU/EES@EES Sue Nord/NA/Enron@= Enron=20 Margaret Carson/Corp/Enron@ENRON Rob Bradley/Corp/Enron@ENRON=20 mpalmer@enron.com Karen Denne/Corp/Enron@ENRON Jeff=20 Dasovich/NA/Enron@Enron James D Steffes/NA/Enron@Enron =09=09 cc:=20 =09=09 Subject: Draft Letter to FERC by Consumer Groups Below is my first rough draft of a letter that could be sent from consumers= =20 to FERC Chairman Hoecker. Due to technical difficulties I could not attac= h=20 the letter in a separate document so I copied the letter and have reprinte= d=20 it below. Having never been involved in this type of letter writing campaign this wa= s=20 a bit of a stab in the dark for me so I welcome everyone's comments. I am= =20 also working on a letter that could be sent by senior management or CEOs of= =20 high tech firms but I wanted to get your feedback on this format before I= =20 went forward on the high tech letter. Let me know if you have any questions or comments. Sarah September 26 2000 The Honorable James Hoecker Federal Energy Regulatory Commission 888 First Street N.E. Washington D.C. Re: Electric Power Industry Reform Dear Chairman Hoecker: We are consumers or represent consumers of electric power. We write to urg= e=20 you and your colleagues to take the initiative to address the intolerable= =20 shortages and extreme price volatility that have become all too common in t= he=20 electric power industry. It is imperative that the Federal Energy Regulato= ry=20 Commission proceed expeditiously with the reforms needed to support a=20 competitive and efficient power supply industry to ensure a reliable supply= =20 of power at the lowest possible cost to consumers. There are many actions you and your colleagues should take to ensure that t= he=20 power supply in the U.S. remains sufficient and is available at reasonable= =20 prices. For example you and your colleagues should remove roadblocks in t= he=20 nation=01s electricity gird. Under the current system FERC regulations a= llow=20 many companies that own transmission systems to restrict access to their=20 transmission lines by competing electricity suppliers. The result of this= =20 policy is shortages blackouts and skyrocketing prices. Like the interstat= e=20 highway system FERC should allow electricity to move from one state to=20 another just as freely as motorists do. All electricity suppliers should= =20 have the same access to the transmission lines in order to transport power = to=20 where it is most needed. FERC should also discourage electricity suppliers=01 reliance on spot and= =20 short-term electricity markets for power supply. Instead FERC should urge= =20 suppliers to purchase a portion of their power needs under long-term=20 contracts. Locking in electricity costs at fixed prices protects consumers= =20 from unexpected price swings that can be financially devastating. We strongly urge you and your colleagues to seize the initiative on these= =20 reforms. Consumers deserve a power supply industry that is both more=20 reliable and economical.=20 Very truly yours,other,formal,3 +Re: External Advisory Council,Having worked on the Enron Advisory council process I have one observation: consider having some or all of these individuals as guest speakers rather than formal memebers. You can still have them review information do their homework and tailor their remarks to Enron specifics. Also you should definitely include Paul Portney at Resources for the Future. He sits on the Enron Advisory Council and knows the company well. Kelly Kimberly@ENRON COMMUNICATIONS Sent by: Stacy Walker@ENRON COMMUNICATIONS 03/01/2001 02:27 PM To: Brian Stanley/EU/Enron@Enron Dan Bruce/Enron@EnronXGate Dave Schafer/NA/Enron@ENRON Eddie Clay/EFS/EES@EES Elyse Kalmans/Corp/Enron@ENRON Gene Humphrey/Enron@EnronXGate George Wasaff/Enron@EnronXGate Gregory Adams/Corp/Enron@ENRON Hap Boyd/EWC/Enron@Enron James A Jean Mrha/NA/Enron@ENRON Jimmy Mariella Miguel Padron/NA/Enron@ENRON Mark Schroeder/LON/ECT@ECT Michael Terraso/OTS/Enron@Enron Mitchell Taylor/Enron@EnronXGate Paula Rieker/Corp/Enron@Enron Rick Buy/Enron@EnronXGate Rob Walls/ENRON@enronXgate Shelley Corman/Enron@EnronXGate Steven J Kean/NA/Enron@ENRON Tim DeSpain/HOU/ECT@ECT Vicki Sharp/HOU/EES@EES cc: Nicola Blancke/EU/Enron@Enron Mary Lisa Costello/NA/Enron@Enron Barbara Zulie Flores/Corp/Enron@ENRON Bert Frazier/Enron@EnronXGate Karina Prizont/Enron@EnronXGate Dortha Gray/GPGFIN/Enron@Enron Connie Melissa Jones/NA/Enron@ENRON Leena Isabel Beverley Ashcroft/LON/ECT@ECT Laura Glenn/OTS/Enron@ENRON Karen E Campos/NA/Enron@ENRON Rosario Boling/Enron@EnronXGate Laura Valencia/Corp/Enron@ENRON Karen K Heathman/Enron@EnronXGate Debra Hicks/Enron@EnronXGate Ruth Mann/Enron@EnronXGate Maureen McVicker/NA/Enron@ENRON Marion Sczykutowicz/HOU/ECT@ECT Leasa Lopez/HOU/EES@EES Lauren Iannarone/NY/ECT@ECT Catherine McKalip-Thompson/Enron Communications@Enron Communications Susan Subject: External Advisory Council As we discussed at the last Corporate Responsibility task force meeting one activity that we have underway is recruiting an external advisory council. This council will be comprised of global experts on environmental and social issues from non-governmental organizations and potentially other businesses to advise us on trends and issues in this area. An outline of the advisory council structure along with categories of experts and proposed names is attached below. We expect to convene meetings with this group twice a year inviting the Enron executive committee and board of directors as well as the Corporate Responsibility task force to engage in a dialogue. We plan to present a slate of possible candidates to Ken Lay and Jeff Skilling later this month and would appreciate your input and any ideas by March 16. Thanks for your consideration.,corporate governance,formal,3 +,FYI. From today's Post. Davis seems to continue to put distance between himself and the contracts. Best Jeff Financial California Changes Stance on Refunds Two Sides Far Apart In Energy Talks Peter Behr ? 07/06/2001 The Washington Post FINAL Page E01 Copyright 2001 The Washington Post Co. All Rights Reserved California officials have abruptly shifted tactics in their attempt to recover billions of dollars in alleged overcharges for electricity saying they may reduce their demands for huge refunds if generators renegotiate $43 billion in long-term electricity contracts that the state signed this year. Gov. Gray Davis (D) said part of the $8.9 billion in refunds the state is seeking could be offset by reductions in energy prices in the long-term contracts whose costs have become a growing political embarrassment for Davis. We've made suggestions we've offered various ways in which people could get us $8.9 billion Davis told the San Jose Mercury News in a report yesterday. You can renegotiate our existing contracts and save us money. However you want to do it it's just got to net out close to $8.9 billion. The new offer was introduced this week into the closed negotiations over a California settlement being conducted in Washington by Federal Energy Regulatory Commission Judge Curtis L. Wagner Jr. according to sources close to the negotiations. Yesterday Wagner said he may issue his own preliminary finding today on the amount of overcharges if California officials and the generators cannot reach a compromise. What I'm trying to do is get people in a settlement mood Wagner told reporters. In the event we're unable to do that [Friday] at some point I may offer a preliminary assessment. The settlement conference is set to conclude on Monday. Wagner FERC's chief administrative judge has been trying to push both sides toward a compromise that would resolve the huge energy pricing controversy. Mountainous energy prices have bankrupted California 's largest utility drained billions of dollars out of the state treasury and put Davis at sword's point with generators that help keep the state's lights on. Last Friday Wagner rebuked Davis's chief representative Michael Kahn chairman of California Independent Grid Operator -- the state's power grid manager -- indicating that the state's demand for nearly $9 billion in refunds from power generators and marketers was too high sources said. Wagner's settlement conference which has involved more than 100 lawyers for all sides is closed to the public and media. Wagner complained last month that Kahn was following a political agenda and his lack of independence in the negotiations was such a joke that the parties might as well wear clown suits according to a Dow Jones report confirmed by sources close to the talks. But he has also criticized the generators and power marketers led by Reliant Energy Inc. Williams Energy Services Duke Energy and Southern Co. for failing to make serious settlement offers these sources said. The suppliers have offered to refund $600 million provided the state is able to call off various California lawsuits demanding far larger refunds sources said. Wagner's leverage is his ability to propose his own refund figure to FERC's commissioners. FERC has tentatively called for $124 million in refunds but now is taking a harder line on preventing a new escalation of California 's electricity prices this summer and is likely to be receptive to a higher refund figure some energy analysts believe. Davis's tactical change offering to make the long-term contracts part of an overall settlement comes amid growing criticism of what the state will have to pay for energy under those deals. California 's energy calamity stemmed in large part from its failed deregulation plan which relied heavily on short-term power purchases at volatile spot market prices. When energy costs shot upward last summer so did the state's electricity bills. In response Davis's aide S. David Freeman and his staff began negotiating long-term power contacts with suppliers. The $43 billion in deals signed so far would require the state to pay about $70 per hour for a megawatt of power for a large part of the electricity it will need over the next 10 years. That's well under the average of $250 per megawatt-hour that the state was paying at the beginning of this year but above current power prices -- and considerably higher than what electricity may cost in the next decade energy analysts say. A new agreement to lower those contract prices could relieve political pressure on Davis and focus settlement negotiations away from the state's controversial demand for the $8.9 billion refund. Davis will argue that reducing future power charges that his administration negotiated should count as a refund because the deals were reached under commercial duress according to sources close to Wagner's negotiations. Industry supporters say Davis's refund figure is impossible to justify. There's no benchmark for what a fair and reasonable price should be said Michael Zenger California director of Cambridge Energy Research Associates. The state's advocates counter that if FERC enforced a just and reasonable standard for power prices based on operating costs and a generous profit the overcharges by all sellers could easily reach the $9 billion figure. It's not rocket science but it does require the regulators to regulate said Frank Wolak a Stanford University economist who heads an oversight committee for the California grid. Those polar-opposite views have left both sides in Wagner's conference room billions of dollars apart as the talks approached their final weekend sources said.,other,informative,3 +Re: FW: Follow up -- Council of Energy Advisors,I doubt that this is worth the trouble (i.e. running it through a conflict of interest check ensuring no liability for actions taken on the advice etc). From: Sherri Sera/ENRON@enronXgate on 06/21/2001 10:13 AM To: Steven J Kean/NA/Enron@Enron cc: Joannie Williamson/ENRON@enronXgate Subject: FW: Follow up -- Council of Energy Advisors Steve we have no record of receiving the original invitation but is this anything you would recommend? Please advise. Thanks SRS ,business document,critical,3 +<> - General Expenses,,finance,neutral,3 +Re: Houston 1996 - 2001,I am so sorry. You guys gave him a really good life. Robert Kean on 07/07/2001 01:48:08 PM Please respond to To: Pat Hilleman \(E-mail\) Greg Smith \(E-mail\) Greg Smith \(E-mail 2\) Colin Lamb \(E-mail\) Maggie Kean \(E-mail\) Nora Kean \(E-mail\) Nora Kean \(E-mail 2\) Sann & Evelyn Gossum \(E-mail\) Doug & Karen Reiman \(E-mail\) Jean Kean \(E-mail\) Kathy Wedig \(E-mail\) Melissa Kean \(E-mail\) Phil Kean \(E-mail\) Steve & Melissa Kean \(E-mail\) cc: Subject: Houston 1996 - 2001 Houston died today after a long battle with Auto Immune Hemolytic Anemia. Rest in peace. Rob Kean,other,concerned,5 +,fyi -----------------,other,casual,0 +,Vince I am writing about a student of mine who is on the job market this year. When you stopped by my office about 18 months ago you asked if I had any students that might be appropriate for your group. Although I didn't at the time now I do. This student has excellent technical skills including an M.S. in Statistics and a Ph.D. in Economics by the end of the current academic year. His dissertation research is on the investment behavior of Independent Power Producers in the US. As a result of research assistance he has done for me he knows the California market very well and is familiar with the other ISOs. I think he would be an excellent match for you. The only problem is that he will probably have many other options available. However I definitely think he's worth a look. If you'd like him to send you a CV please let me know. Thanks. Frank Wolak Professor Frank A. Wolak email: wolak@zia.stanford.edu Department of Economics Phone: 650-723-3944 (Office) Stanford University FAX: 650-725-5702 Stanford CA 94305-6072 Phone: 650-856-0109 (Home) World-Wide Web Page: Cell Phone: 650-814-0107,education & training,formal,3 +,Attached is my testimony.,other,formal,3 +California CTC meeting in EB791 - Maureen Palmer,Also invited Lou Pai Dave Duran Dave Parquet Sean Holmes John Henderson Marty Sunde Jim Fallon,other,formal,3 +Stelzer remarks at advisory board meeting,-----------------,other,neutral,3 +RE: Confidential Contact data and RFI,I'll get back with you on this within a couple of days. Do you want an indicative bid for 7x24 bus-bar energy (2 5 and 10 years). We would not bid on the entire 1000 MW - maybe 150-200 MW. thanks for the info. Kevin Presto UBS Warburg Energy kevin.presto@ubswenergy.com Phone: 713-853-5035 Fax: 713-646-8272 ,other,formal,3 +RE: New document in PSerc Document Archive archive,Dennis Thanks. I have seen some of the papers you mentioned but missed one about discriminative auctions. Vince Kaminski ,other,polite,2 +Confidential Information and Securities Trading,To:NEMEC GERALD Email:gerald.nemec@enron.com - 7138533512 ? Enron Wholesale Services - Office of the Chairman ? From:??Mark Frevert Chairman & CEO ??????Greg Whalley President & COO ??????Mark Haedicke Managing Director & General Counsel ? Subject:??Confidential Information and Securities Trading ? Enron Wholesale Services ('EWS') maintains official Policies and Procedures Regarding Confidential Information and Securities Trading ('Policies and Procedures') which have been revised as of November 15 2000 to reflect the new EWS structure. These policies and procedures are intended to allow us simultaneously to pursue our diverse businesses and to protect confidential information our reputation for integrity and EWS and its employees from legal liability. ? You are required to become familiar with and to comply with the Policies and Procedures. The newly revised Policies and Procedures are available for your review on LegalOnline the new intranet website maintained by the Enron Wholesale Services Legal Department. Please click on the attached link to access LegalOnline: ? ? You must certify your compliance with the Policies and Procedures within two weeks of your receipt of this message. The LegalOnline site will allow you to quickly and conveniently certify your compliance on-line with your SAP Personal ID number. If you have any questions concerning the Policies or Procedures please call Lance Schuler at extension 3-5419 Mark Haedicke at extension 3-6544 Alan Aronowitz at extension 3-3214 Bob Bruce at extension 5-7780 or Donna Lowry at extension 3-1939.,other,formal,5 +Schedule for the Schedules,fyi -----------------,project management,casual,0 +Re: Confidential Employee Information/Lenhart,I also need to know the base salaries of Jay Reitmeyer and Monique Sanchez. They are doing the same job as Matt.,other,formal,3 +Re: Wimbledon update,Yes you are. Mark Palmer@ENRON 07/17/2000 09:32 AM To: Steven J Kean/HOU/EES@EES cc: Subject: Wimbledon update I left Hannon a message that we PAID for the attention we got from Wimbledon. It came out of the advertising budget. We did Kevin a favor by trying to leverage our media budget to create new business for EBS. Am I looking at this the right way? Mark -----------------,marketing & promotion,casual,3 +RE:,Frank Thanks for your message. We are confirming a meeting in your office at 4:00 p.m. Tuesday next week. What about a dinner at 7:00? Vince ,project management,friendly,3 +<> - RS032901,,finance,neutral,3 +<> - 041601LC,-----------------,finance,formal,3 +Bingaman Draft On Transparency -- Amendment Ideas,Last night Linda and I spent a fairly long time with Leon Lowery Chairman Bingaman's chief electricity advisor to discuss our concerns with the transparency and market-based rate language -- while at the same time commending the transmission access language in the draft and strategizing how to support the chairman in that regard. We made progress on transparency less so on market-based rates. On transparency Leon understands our concerns. In a nutshell he seemed amenable to amending the langauge to avoid the result of having to divulge transaction-specific trade-specific information. We persuaded Leon that was the impact of the initial language although he initially said details would be left to FERC. We persuaded him that if any data is to be provided it MUST be only in aggregate form. We also impressed on him that if as he said the intent is to leave details to FERC -- then more of the details should be left to FERC not set by statute. Leon strongly advised that we seek to craft language consistent with the above exchange that makes as few changes to the draft as needed to make the necessary corrections. This will make it easier for Leon to navigate the internal waters of the staff. (Sam Fowler th chief counsel is a drafting stickler). Others should obviously weigh in and review this but to facilitate internal comments (we need to get back to Leon today) here is my take on what he has in mind. Under new sec. 218(b) (to be added to the FPA by bill sec. 413) (pg. 13) under information required we would rewrite paragraph 2 as follows: (2) each broker exchange or other market-making entity that matches offers to sell and offers to buy wholesale electric energy in interstate commerce to provide aggregate statistical information about its sales of electric energy at wholesale in interstate commerce. The effect of the language change is drop the reference to sale prices of each sale of electric energy. By leaving it as aggregate statistical information this should give FERC maximum flexibility to permit indexes etc. As to the timely basis of information release (subsection (c)) the alternatives sent yesterday would require this to be done on the Internet after the end of the trading day. If we can restrict this to aggregate data question arises whether we want to concede that this would be done daily. That suggests the data to be collected would be more than we would want I think. Here is a take on how we might suggest a revision to that language to give FERC more leeway: (c) TIMELY BASIS -- The Commission shall require the information required under subsection (b) to be posted on the Internet and updated as frequently as practicable and appropriate. The change is to add appropriate so that FERC can consider other than whether posting is practicable. The use of appropriate is what came to mind -- perhaps there is some other word or phrase like consistent with ... or promote competition or some way of saying there are policy considerations other than practicability. There should be some valid purpose established before data is released. I would argue that the (d) language on commercially sensitive information goes only to exempting from disclosure not when disclosure is appropriate. Please let me have your thoughts although the tragedy in NYC and DC now underway will probably make this not a day to transact such business on the Hill. Will provide a further report on market-based rates. In sum Leon was not as sympathetic on this issue but asked for our ideas and further arguments. We sense Leon personally feels strongly about moving the FPA to some linkage to competitive markets. His argument is that market participants can be doing everything by the book and the result can still be uncompetitive markets. We pushed that penalizing us is not the answer -- nor is increasing regulatory uncertainty about deals doing to help keep prices down. Leon clearly does not intend this language to punish Enron -- but others who we might all agree have done things that are not in keeping with competitive markets.,other,formal,3 +Re: 2001 budget,I do support the change. Let me know what I can do to help. You are correct: this is the way we handle regulatory counsel in other regions particularly the US. What Derrick and I have agreed with regard to counsel selection is: gov't/reg affairs picks the counsel we want to use and he retains a veto which has rarely if ever been exercised. Once we have retained counsel we will use that counsel on other regulatory projects unless the legal department starts to have a problem with the firm (eg because they represent someone against us in litigation). Again I don't recall this ever being an issue. It seems to work: outside counsel gets the message that we will look dimly on any firm that squares off against us and we select the most qualified counsel on our issues. Mark Schroeder@ECT 09/01/2000 06:18 AM To: Steven J Kean/NA/Enron@Enron cc: Subject: 2001 budget You should be receiving today a copy of my draft budget proposed for Enron Europe for 2001. I understand from Nick that they are doing their own budget for Enron Japan which I will see only after the fact. MOST IMPORTANTLY you will see that I am budgetting to pay a substantial sum for legal fees. I will be proposing to John Sherriff Michael Brown (our new COO and former General Counsel which will make my proposal doubly problematic) and to Mark Evans (current General Counsel) that I pay/manage our outside regulatory counsel. We can discuss (rather than do a lengthy e-mail) but having this function managed by Legal (and Houston/Jim Derrick rejecting our choice of counsel in important cases) is increasingly a problem. I believe this will mirror what you do in the USA e.g. Dan Watkiss and hope that I can count on your support for this change. thansk mcs,finance,formal,3 +Re: Last FINAL version,Has this gone to Ken yet. If not please send. Maureen McVicker 06/21/2001 02:55 PM To: Lora Sullivan/Corp/Enron@ENRON Steven J Kean/NA/Enron@Enron Jeff Dasovich/NA/Enron@Enron cc: Subject: Last FINAL version Lora: This is the new Final version. The difference from the earlier version is - a few slides were taken out and the order of the remaining slides were rearranged. Please get a copy of this new Final to Ken Lay. Thanks. ,other,formal,3 +california energy prices,Summary of what we discussed the other night: Background: power -- power prices have moved above $1000/mwh in the Northwest and are showing $600-700 for the first quarter of 01 forward prices in California have also moved well above the soft cap of $150. Sellers are exporting power from California to the Northwest. gas -- balance of the month gas in California was trading at $26-27 with Jan trading at $19 feb at $12-14 and Summer at $8. The Cal gas and power utilities remain unhedged (price caps are in place for retail power and utilities continue to buy power from the ISO and PX while gas utilities we believe are primarily buying at spot prices even under their long term deals). The power utilities will continue to book large deferrals and gas utilities will be passing costs through a month or two after incurring them. The impact of the gas price increases will begin showing up in Jan billings to consumers. curtailment rules (gas): More work to be done here but it appears that gas utilities will curtail deliveries in the following order: interruptible first (with some priority for cogens) firm service (with utilities alternating or rolling between generation load and nongeneration load) and core customers last. Curtailment rules apparently allow the utilities to confiscate gas sold to direct access customers,other,informative,3 +RE: CONFIDENTIAL - DO NOT DISTRIBUTE,Steve looks ok. Although I always thought I built Canada. I guess not eh. Lavo. ,personal & social,casual,0 +Penn. conference call,Set up meeting re Mt. St. Helens for next week,other,formal,3 +"Regulatory Roundtable, in 49C2",6:00 Photographer,legal affairs,casual,2 +"Barton,Tauzin letter to Gov. Davis",-----------------,government & politics,neutral,3 +CA PWR ISSUE,-----------------,other,neutral,5 +RE: CONFIDENTIAL Personnel issue,Lizzette. Would you mind getting with Diane on the isue of online harassment prevention training? We have been looking into that form of delivering training. Diane has info from Littler on its proposed training. I think that the costs may be high but I would like your evaluation of The product. Would you mind taking the lead on this? Obviously this is not an issue with huge time sensitivity. Thanks. Michelle ,human resources,formal,2 +Sen. Hagels ESI speech,attached is Sen. Hagel's energy speech. He focusses on oil primarily but also does a nice job of framing the importance of sound energy policy to our continued economic growth. ,other,formal,2 +Re: India Help,Thanks so much for your message. Your communications are always complete firm clear and polite. I am sorry that perhaps the most critical aspect of your efforts -- security-- has been so confused by our end. I understand from John Brindle that the confusion generated by our end has not kept you from accomplishing a great deal of the work anyway. I have asked John to lead the effort to the extent you need him. John and his team are very experienced and have been in contact with and coordination with the London office. Mike Hicks is a good hand but for the most part all I have asked him to do is be in a position to identify outside resources skilled in the area in question. It is a bit too much to ask Mike to be hands on for all of Enron's corporate security needs. A little background I'll bore you with: after Andre Legallo (formerly VP of Security for Enron) left we did not replace his function. Most of the operating companies had their own security and business controls groups. When Andre left we reduced the corporate function to a default provider role -- if a business unit had a need it was not otherwise meeting Mike Hicks (as well as an outside consulting firm) would help identify competent resources in the area. With the reorganization of EBS I have inherited the very competent and experienced team they had assembled (led by John Brindle). John identified some concerns regarding India mid last week. I urged him to get in touch with Rebecca he did. It was clear after further inquiries by John that the India team had already addressed many if not all of the concerns and much of the remaining work involved implementation. John volunteered to send some people over to help and I said OK. He had already been in touch with the London team and Mike Hicks (who I have asked to return to Houston). The last thing you need right now is confusion caused by a group saying we're from corporate and we're here to help. If you don't need any help or if the situation gets anything other than significantly better let me know. To: Steven J Kean/NA/Enron@Enron cc: Rebecca McDonald/Enron@EnronXGate James A Hughes/Enron@EnronXGate Subject: India Help Steve As you are well aware we are facing a lot of things happening fast in India. We are using several parts of your team and are very pleased with most. I want to mention a couple of areas HR and Security. 1. HR: I heard that some folks in Houston had raised concerns about the quality of the India HR team and their preparedness. The HR team is doing an outstanding job and I wanted you to hear that from me. Once we realized we had a major issue on our hand and I received clearance from Rebecca and Jim to bring some HR folks into the loop HR had someone on a plane within 20 hours of my first call. We have always had great HR support through Drew Lynch and Bob Sparger helping our team led by Sandip Malik and this time Scott Gilchrist has joined in and helped as well. But the two workhorses have been Bob and Sandip. Bob got on a plane immediately and came over and he and Sandip have been working around the clock so that we are much better prepared now than we were just a couple of days back. We really relied heavily on HR and Drew had his team there for us. 2. PR: top notch team of John Ambler and Johan Zaayman working with and supporting Jimmy Mogal on the ground. Johan and Jimmy have been a strong team on the ground and John has provided leadership and all coordination with Houston. Great efforts and productive work. 3. Security: This area has not worked as well and if you ever want feedback on our one-time experience with this group I will provide it. I don't have any idea who is in charge from Enron's perspective here. There are 2 groups headed this way. Mike Hicks will arrive Thursday night and Mike has informed us that he will be leading all security efforts. Jim Rountree is apparently travelling with Mike and Don Hawkins sent me an e-mail earlier today telling me that Don has instructed Jim that Jim is in charge of coordinating our security. John Brindle has sent me an e-mail saying that you have asked him to coordinate and help in the ongoing efforts and John is sending 3 people over arriving Saturday night. First we are very happy to have the help but I just hope that Mike Jim and John know which of the three are in charge. If you could just let me know who you want to be in charge we will coordinate with that person. On a side note the people who have really been helpful were brought in through Drew Lynch of Europe HR. They are Jim Roth and Dave Lawler both of whom work for John Sherriff. They had a great attitude were willing to work day and night and were planning on coming to coordinate until Mike decided he would come. At Mike's earlier suggestion we engaged Hill & Associates to help on security. Because I was having to meet with them 3 to 4 times per day I asked Jane Wilson to help coordinate all our security efforts. Jane has done a fantastic job in an impossibly short time frame. The tasks she has been overseeing include coordinating with Hill & Associates removing (in a lowkey yet rush manner) over 400 boxes of files and documents and getting them through customs and to Europe removing 2 container truck loads of files from the Dabhol site and getting them out of the country and overseeing a complete security check and file removal of all our electronic files from servers desktops and laptops. In addition she has coordinated security for all expats and families as well as worked with EOGIL expats and Anthony Duenner of EBS Asia. Again we appreciate all the help. Wade,other,formal,3 +Re: Weekly Notes,We are discontinuing the executive car wash. You Steve and I should talk. From: Bill Donovan@ECT on 05/17/2001 03:29 PM To: Steven J Kean/NA/Enron@Enron Maureen McVicker/NA/Enron@Enron cc: Subject: Weekly Notes Steve - I will be taking this Friday the 18th off on vacation. Here are notes for your staff meeting. Buyer/Seller have executed Offer Letter on Falcon EX ($32750000 price). Aircraft goes to pre-purchase inspection this weekend. Close is no later than June 6th. All indications are that buyer is very motivated to complete the deal. Enron Center South (ECS) Project remains solidly on track. We are 10 weeks out on initial occupancy with Level 3 occupancy (EGM moves Aug. 3rd). Levels 4 (EIM ENW & Credit.Com) occupies two weeks later (Aug. 17). Level 5 (Power) occupies two weeks after (Aug. 31st - Labor Day weekend). Level 6 (Gas) occupies two weeks after (Sept. 14th). Level 7 (Executive) and the 1st floor public spaces occupies year end. Level 2 (Cafeteria) opens Nov. Found a Law firm interested in Azurix's present space in Three Allen Center (3 floors). Goal is cut deal and have them in by year end. Enron Broadband indicates an intent to remain on their present ECN floors (Levels 44 and 45) plus backfill balance of operations into Wholesale's vacated trading floors. This splits them into two elevator banks and becomes problematic for ETS - who wants continuous floors ECN Levels 39 through 46. We are seeking subtenants for Broadband's Portland office space. They plan to vacate the Riverplace building by Oct. Negotiating new food service contract with Sedexo Marriott to add ECS cafeteria. Total compensation will be based on 3% fee on gross revenue - only on individual sales of $2 or more (promote greater # of meals served) and bonus based on sharing of net operating income with Enron. Global Sourcing is participating with us in negotiations. Need to decide if Executive Car Care program is going to be continued (30 executives participate with employee paying $70 per month and business units subsidizing $275 per month). Decision needed because new Garage will require $60K in improvements to get set up for car washing. Present lease on remote car washing facility (@ $5k per month) expired and we are on month to month holdover. We are two weeks out to close on Beltway 8 land deal ($1.7 purchase price). Real estate being acquired for construction of new $18 mill. Data Center and Disaster Recovery Facility. Phillipe and I meet with Frevert next week to get approvals. - Bill,other,formal,3 +Request Confidential Information by FERC,To All California Power Exchange Participants: Notice is hereby provided pursuant to Section 19.3.4 of the California Power Exchange Tariff that the staff of the Federal Energy Regulatory Commission (FERC) as part of its investigation of California markets has requested information that my be confidential under Section 19.3.2 of the Tariff. Such information consists of participant specific schedules and bids. The FERC staff has requested the California Power Exchange to provide such information no later than 24 business hours after the date of this notice. If you desire to assert a claim of privilege or confidentiality pursuant to FERC's regulations or other legal authority the California Power Exchange will include your written assertion of that claim together with its submittal to the FERC staff provided that it is timely received. Your written statement should be directed to FERC and delivered to: Karen Koyano California Power Exchange 1000 S. Fremont Avenue Building A-9 W Fifth Floor Alhambra CA 91801 626.537.3173 facsimile Information must be received no later than Tuesday September 12 2000 9:00 A.M. PDT to be included with any information delivered to the FERC staff. You are also free to take any other legal action you may deem appropriate in the circumstances of this investigation. Thank you.,energy infrastructure,formal,5 +"Energy Antics Oh, Behave!.htm",Jeff =20 Today's LA Times editorial revived the Lockyer quote. It is remarkable (a= nd troubling for Enron) that Lockyer's political peers / rivals have not t= aken him to task for his outrageous remark nor have the major newspapers= . In Today's editorial the usually conservative LA Times refers to Locky= er as having boosted the rhetoric a notch. (I'd hate to witness two or = three notches.) =20 This lack of criticism could foreshadow a contagious attitude that powerfu= l Enron is in fact the one to blame (facts be damned). Given Enron's high= profile policy and fundraising ties to the Bush administration and Govern= or Gray Davis' war with President Bush and Texas energy companies there c= ould be more turbulence ahead. Fasten your seatbelts and be on the ready= . =20 Kevin 213-926-2626 =20 [IMAGE] [IMAGE][IMAGE] =09[IMAGE] [IMAGE]=09 [IMAGE] =09Home | Discussions | Print Edition | Archives | Site Map = | Home Delivery | Advertise | Feedback | Help [IMAGE]=09 =09[IMAGE]=09 [IMAGE] [IMAGE] [IMAGE] [IMAGE] News Politics Entertainment music = movies art TV restaurants [IMAGE] Business Travel Marketplace jo= bs homes cars rentals classifieds [IMAGE] Sports Commentary Shop= ping [IMAGE] [IMAGE] [IMAGE] [IMAGE] [IMAGE] [IMAGE] Editorials= Letters Op-Ed [IMAGE] [IMAGE] TOP STORIES * We Aren't That Despera= te * Energy Crisis as Political Payback * Hand-Held Cell Phones Dr= iving Don't Mix MORE [IMAGE] [IMAGE] [IMAGE] STORIES BY DATE FOR TH= IS SECTION 5/25 | 5/24 | 5/23 | 5/22 | 5/21 | 5/19 [IMAGE] = DAILY SECTIONS Front Page A Section California [IMAGE] Business = Sports Calendar [IMAGE] So. Cal. Living EditorialsLetters Op/Ed W= EEKLY SECTIONS Health Food [IMAGE] Tech Times [IMAGE] Highway 1 = SUNDAY SECTIONS Book Review Opinion Real Estate [IMAGE] Calendar Mag= azine Travel [IMAGE] TV Times Work Place [IMAGE] [IMAGE] [IMAGE] [= IMAGE] [IMAGE] [IMAGE] Marketplace Find a home car rental job = pet merchandise boat plane or RV classifieds Place an Ad [IMAG= E] [IMAGE] [IMAGE] [IMAGE] [IMAGE] [IMAGE] L.A. Times Subscription Ser= vices Subscribe Change of Address Vacation Stops Suspend Delivery = College Discount Gift Subscriptions Mail Subscriptions FAQ [IMAG= E] [IMAGE] [IMAGE] [IMAGE] [IMAGE] [IMAGE] Print Ads from the Newspape= r See this week's ads [IMAGE] [IMAGE] [IMAGE] Print Edition Oran= ge County Valley Ventura County National Community Papers [IMAG= E] [IMAGE] [IMAGE] [IMAGE] Books Columnists Crossword Education = Food Health Highway Horoscope Lottery Magazine Obituaries Readi= ng by Real Estate Religion Science So.Cal. Living Special Report= s Sunday Opinion Tech Times Times Poll Traffic Weather Workplace SI= TE MAP [IMAGE] [IMAGE] [IMAGE] SHOP 'TIL YOUR LAPTOP DROPS [IMA= GE] [IMAGE] [IMAGE] [IMAGE] [IMAGE] Shopping [IMAGE] Search Prod= ucts Stores [IMAGE] [IMAGE] [IMAGE] [IMAGE] [IMAGE] [IMAGE] = =09[IMAGE]=09[IMAGE] Friday May 25 2001 | [IMAGE]Print this story [IMAGE= ] [IMAGE] Energy Antics: Oh Behave! Admit it: The only comic re= lief in this energy crisis has been watching our leaders go at suppliers a= nd each other like pro wrestlers or Jerry Springer guests. In his St= ate of the State address last January Gov. Gray Davis accused the big pri= vate electric power generators of legalized highway robbery and threatened= to seize their plants if necessary. Then he really got angry calling the= m the biggest snakes in the world. This past week Atty. Gen. Bill Locky= er boosted the rhetoric a notch by declaring he would like to personally e= scort the chairman of Enron Corp. to an 8-by-10 cell that he could share = with a tattooed dude who says 'Hi my name is Spike honey.' Meanwhile = President Bush and Vice President Dick Cheney have blamed California for c= ausing its own problems with a harebrained deregulation scheme and mocke= d the state's power purchases and conservation programs. It's been fun. No= w it's time for our leaders to act like adults. Davis and Bush alwa= ys will have their political differences but the economies of both the st= ate and the nation are endangered by California's energy situation. These = leaders need to work together as cooperatively as possible starting next = week when Bush makes his first visit to California as president. Da= vis wrote Bush Wednesday offering to meet with him during his California v= isit. Bush spokesman Ari Fleischer said the president looks forward to dis= cussing energy and other issues. Good start. Let's hope the conversation i= s civil and that the civility spreads. No matter how much California= has been abused by the power companies and it absolutely has the state = still needs them to help solve the crisis caused by shortages of electric = power generation this year and next. Usually the biggest targets of offi= cial and public wrath are the investor-owned utilities such as Southern Ca= lifornia Edison and Pacific Gas & Electric Co. But not this time because = in the view of the state the utilities have been bled dry by the power ge= nerators' stratospheric prices. The state had to take over the purchase of= power when the generators refused to extend any more credit to Edison and= PG&E. Legal recourse should be pursued but the threatening rhetoric need= s to subside. State lawmakers are right to be upset with the White = House for refusing to use its authority to set reasonable temporary wholes= ale price controls. And Davis is justifiably upset with Bush and with Chen= ey who said the only solution was to build more power plants--ignoring th= e fact that the state is building 10 plants now with five more on the way= and that the only way to control wholesale power rates is for Washington= to cap them. If the state hadn't bought the power the generators w= ould have let the lights go out. Davis needs to deliver that message quie= tly and persuasively while Bush is in California. And Bush needs to liste= n respectfully like an adult. [IMAGE]Search the archives of the Los A= ngeles Times for similar stories. You will not be charged to look for stor= ies only to retrieve one. =09 News Politics Entertainment music movies art TV restaurants = [IMAGE] Business Travel Marketplace jobs homes cars rentals cla= ssifieds [IMAGE] Sports Commentary Shopping [IMAGE] =09[IMAGE]=09 = Copyright ? 2001 Los Angeles Times=09 Software Videos/DVD's Music and Other Free Stuff!!! =09,other,casual,3 +Transredes spill,Do we have someone who works for us now who was at Transredes when the government owned it and could help us do a comparison between our respective environmental records? It seems to me that even though we are having our share of problems we have probably had fewer problems than the government did and have probably been more responsive and thorough in our clean up efforts. Obviously we would need to be judicious about how we used such information (we don't want to aggravate the government) but having such an analysis may be helpful in showing the progress made and in discouraging overly punitive action by the government. What do you think?,other,formal,3 +Re: Executive Committee Recommendation - VP Candidate - Rick Fehl,OK by me. Ken Rice@ENRON COMMUNICATIONS 05/01/2001 03:48 PM To: Cliff Baxter/HOU/ECT Rick Buy/HOU/ECT Richard Causey/Corp/Enron@Enron James Derrick/Corp/Enron Andrew S Fastow/HOU/ECT Ben Glisan/HOU/ECT@ECT Steven J Kean/NA/Enron@ENRON Mark Koenig/Corp/Enron@ENRON Kenneth Lay/Corp/Enron@ENRON Mark Metts/NA/Enron Cindy Olson/Corp/Enron@ENRON Lou L Pai/HOU/EES@EES Jeffrey Sherrick/Corp/Enron Jeff Skilling/Corp/Enron@Enron Philippe A Bibi/HOU/ECT Raymond Bowen/HOU/ECT Michael R Brown/LON/ECT@ECT Wade Mark Frevert/NA/Enron James A Hughes/ENRON_DEVELOPMENT Louise Kitchen/HOU/ECT@ECT John J Lavorato/Corp/Enron Mike McConnell/HOU/ECT@ECT Rebecca McDonald/ENRON_DEVELOPMENT Jeffrey McMahon/HOU/ECT Greg Piper/Corp/Enron Jeffrey A Shankman/HOU/ECT John Sherriff/LON/ECT@ECT Greg Whalley/HOU/ECT@ECT Jeremy Blachman/HOU/EES@EES Harold G Buchanan/HOU/EES@EES David W Delainey/HOU/EES@EES Janet R Dietrich/HOU/EES@EES Dan Leff/HOU/EES@EES Mark S Muller/HOU/EES@EES Matthew Scrimshaw/LON/ECT@ECT Marty Sunde/HOU/EES@EES Thomas E White/HOU/EES@EES David Cox/Enron Communications@Enron Communications Steve Elliott/Enron Communications@Enron Communications Jim Fallon/Enron Communications@Enron Communications Kevin Hannon/Enron Communications@Enron Communications Rod Hayslett/FGT/Enron Stanley Horton/Corp/Enron@ENRON Danny McCarty/ET&S/Enron@Enron cc: Carol Ann Brown/Enron Communications@Enron Communications Dorothy Dalton/Enron Communications@Enron Communications Subject: Executive Committee Recommendation - VP Candidate - Rick Fehl Executive Committee: We would like to pursue an offer to Rick Fehl prior to the next Executive Committee meeting on May 7 2001. Please forward your comments or questions as soon as possible. You will find attached the recommendation letter and his resume. Regards Ken Rice & Kevin Hannon,other,formal,5 +"EES Staff Meeting, in 791",houston Bryson? 3-6424 -- Peggy Menchaca Kathleen Leslie Lawner - gas choice Fumo3 (48111220) Peco 15 ( 39235 Lauren Cox 9416377899,other,casual,3 +Security question,Dear guys Having been out of the office for a couple of days I've found myself the victim of theft (again). This time my desk drawer key has been stolen from its hiding place under my telephone. I *always* lock my drawers and keep the key in the same place but on arriving in the office today I found the drawers unlocked and the key missing. Although there's nothing sensitive on or around my desk I'm concerned about the security implications of someone sniffing around the office in this manner. I also found the papers on my desk extensively reshuffled last week. Last year in our old office I had my only two real options books stolen from among the many and varied books on my desk. That couldn't have been a random theft and I fear this isn't either. I can't understand who'd be so interested in a Research guy's belongings! Can we ask security to check their surveillance footage for any suspicious activity around my desk? Cheers Steve,energy infrastructure,concerned,3 +"IEP in the News, and other headlines",San Jose Mercury News April 19 2001 Thursday SJ-POWER 593 words ????Testimony Indicates California Electricity Market Was Troubled in 1998 By ????Brandon Bailey (Quotes Smutny on behalf of IEP) The Associated Press State & Local Wire April 19 2001 Thursday BC cycle ???? 9:55 AM Eastern Time State and Regional 930 words Developments in ????California's energy crisis By The Associated Press (Quotes Smutny on behalf of IEP) The Associated Press State & Local Wire April 19 2001 Thursday BC cycle ???? 9:32 AM Eastern Time State and Regional 820 words Legislators probe ????possible power natural gas collusion By DON THOMPSON Associated Press ????Writer SACRAMENTO (Quotes Smutny on behalf of IEP) The Associated Press State & Local Wire April 18 2001 Wednesday BC ????cycle State and Regional 833 words Legislators probe possible power ????natural gas collusion By DON THOMPSON Associated Press Writer SACRAMENTO ???(Quotes Smutny on behalf of IEP) The Associated Press State & Local Wire April 18 2001 Wednesday BC ????cycle State and Regional 841 words Developments in California's energy ????crisis By The Associated Press (Quotes Smutny on behalf of IEP) Power bloc blasts seizure idea Producers say talk of bold action fuels crisis ???????By Steve Geissinger SACRAMENTO BUREAU ?-- Oakland Tribune (Quotes Smutny on behalf of IEP) Copley News Service April 19 2001 Thursday State and regional 780 ????words Windfall-profits tax gets Davis' backing Bill Ainsworth SACRAMENTO Los Angeles Times April 19 2001 Thursday Home Edition Page 3 772 ????words CAPITOL JOURNAL ?CALIFORNIA AND THE WEST ??Price Caps Don't Fit in ????Cheney's Head for Figures GEORGE SKELTON SACRAMENTO Los Angeles Times April 19 2001 Thursday Home Edition Page 3 1373 ????words CALIFORNIA AND THE WEST ??DAVIS BACKS SILICON VALLEY POWER PROJECT ????ENERGY: GOVERNOR URGES QUICK APPROVAL OF SAN JOSE PLANT DESPITE OPPOSITION ????BY CITY AND A POWERFUL FIRM. JENIFER WARREN and TERENCE MONMANEY TIMES ????STAFF WRITERS SACRAMENTO The Orange County Register April 19 2001 Thursday STATE AND REGIONAL ????NEWS K7970 275 words Ex-energy chief leery of state buying power lines ????By Kate Berry The San Francisco Chronicle APRIL 19 2001 THURSDAY FINAL EDITION ????NEWS Pg. A18 585 words Alameda public utility rents four backup ????generators ???Extra electricity will be used during summer rolling ????blackouts Matthew Yi Alameda The San Francisco Chronicle APRIL 19 2001 THURSDAY FINAL EDITION ????NEWS Pg. A3 845 words Davis' gouging claims disputed ???Officials say ????no link between PG&E bankruptcy high prices David Lazarus The San Francisco Chronicle APRIL 19 2001 THURSDAY FINAL EDITION ????NEWS Pg. A3 888 words Davis backs San Jose power plant ???He also ????acknowledges bailout for Edison will be uphill fight Lynda Gledhill ????Sacramento The Vancouver Sun April 19 2001 Thursday 731 words B.C. Hydro's credit ????to California firms exceeded 1999 guidelines David Baines The Associated Press State & Local Wire April 18 2001 Wednesday BC ????cycle Business News 348 words Williams again target of overcharging ????allegations from federal regulators TULSA Okla. The Associated Press State & Local Wire April 18 2001 Wednesday BC ????cycle State and Regional 332 words Governor congressman to fight ????proposals for national power deregulation policy By MARGERY BECK ????Associated Press Writer LINCOLN Neb. San Jose Mercury News April 18 2001 Wednesday SJ-POWER-PLANT 1038 ????words California Governor May Back Energy Firm's Proposed Power Plant Scripps Howard News Service April 18 2001 Wednesday DOMESTIC NEWS 588 ????words Davis says Edison agreement may need altering EMILY BAZAR and KEVIN ????YAMAMURA SACRAMENTO Calif. San Jose Mercury News April 19 2001 Thursday KR-ACC-NO: SJ-POWER LENGTH: 593 words HEADLINE: Testimony Indicates California Electricity Market Was Troubled in 1998 BYLINE: By Brandon Bailey BODY: ??SACRAMENTO Calif.--California's electricity market was showing signs of trouble as far back as 1998 the year that it was officially opened to competition members of a special legislative investigating committee were told Wednesday. ??Abnormal price spikes -- far higher than what should have occurred in a competitive market -- were showing up in August 1998 the committee was told by Frank Wolak a Stanford economist and top advisor to the California Independent System Operator which runs the state's transmission grid. ??Appearing on the first day of hearings called by a state Senate select committee to investigate alleged wholesale energy price manipulation Wolak testified that the ISO's economic advisors repeatedly found signs that power suppliers were able to influence prices over the last three years -- even before wholesale prices soared skyhigh last summer. ??By controlling even a relatively small portion of power supply just enough to make a difference in whether the state could meet consumers' needs Wolak said generators have been able to charge prices far higher than their costs. ??All told the ISO has estimated power suppliers collected more than $ 6 billion in unjustified profits last year. ??In his opinion Wolak added that violates the terms by which federal regulators allowed the suppliers to enter the state's newly deregulated market when it opened in 1998. ??The ISO is now filing petitions with the Federal Energy Regulatory Commission asking that agency to revoke the generators' right to charge unregulated prices. ??But Wolak repeatedly told the committee that he had no evidence that the suppliers acted in collusion or that they had violated any federal anti-trust laws. ??When state Senator Joe Dunn D-Garden Grove pressed him on the point Wolak insisted I can't say yes I can't say no. There's a lot of things that certainly look puzzling. It's hard without further information and analysis to say definitively but there's lots of things to seem to be worth looking into. ??Dunn a former consumer attorney is leading the Legislature's efforts to answer a question that a host of other state and federal officials have also posed: have California's electricity prices been the result of any illegal or unethical acts? ??Power suppliers and their representatives have repeatedly said the answer is no. They say their prices are the result of short supplies and natural market swings. ??Eleven investigations into California's electricity market have been conducted or are currently under way said a statement issued Wednesday by Jan Smutny-Jones executive director of the Independent Energy Producers Association. Not one has found or proven any wrongdoing by generators. ??Dunn however said Wednesday's testimony was only the start of what he promised would be a vigorous investigation. He said the committee has already asked several power companies for records and other information and he hinted that subpoenas may be issued in the coming weeks. ??We will try to figure out how to stop these high prices if they are unjustified Dunn said at the beginning of the hearing. ??We're not going to be looking for ways to finance these payments he added. The state is now paying $ 70 million a day to buy power for California consumers after major utilities wracked up billions in debts while buying power on the open market in recent months. ??----- ??To see more of the San Jose Mercury News or to subscribe to the newspaper go to http://www.sjmercury.com JOURNAL-CODE: SJ LOAD-DATE: April 19 2001 of 5 DOCUMENTS ???????????????????The Associated Press State & Local Wire The materials in the AP file were compiled by The Associated Press. ?These materials may not be republished without the express written consent of The Associated Press. ??????????????????????April 19 2001 Thursday BC cycle AM Eastern Time SECTION: State and Regional LENGTH: 930 words HEADLINE: Developments in California's energy crisis BYLINE: By The Associated Press BODY: ??Developments in California's energy crisis: ??THURSDAY: ??- The state remains free of power alerts as reserves stay above 7 percent. ??- Gov. Gray Davis meets with 25 members of the California congressional delegation at the Los Angeles International Airport to discuss the state's power crisis. ??- An Assembly committee continues hearings on the natural gas supply and possible price manipulation. ??-The Public Utilities Commission meets in San Francisco to decide whether to investigate if a key bloc of independent generators are purposely keeping their plants offline. ??WEDNESDAY: ??- Unchecked free-market forces drove up the price of natural gas to Southern California Edison by about $750 million over the last year an industry consultant tells the Assembly Electricity Oversight Subcommittee. ??Meanwhile the Senate's Select Committee to Investigate Price Manipulation of the Wholesale Energy Market begins investigating whether electric generators artificially inflated power prices. ??An industry spokesman predicts the investigations will uncover nothing illegal. ??- The state offers financial backing to Houston-based Dynegy which worried it would not be paid for power generated at its plants in California. Dynegy agrees to sell 300 megawatts of power from 17 small turbine generators in Carlsbad after receiving an offer from the California Department of Water Resources. ??- Gov. Gray Davis urges state regulators to approve the construction of a controversial 600-megawatt power plant in south San Jose to provide electricity to roughly 450000 homes in the Silicon Valley. ??- The Democratic governor lobbies Senate Democrats to support his plan to pay $2.7 billion for the transmission lines owned by Southern California Edison. ??State spending on electricity has jumped by more than 50 percent since Pacific Gas and Electric Corp. declared bankruptcy April 6 thanks in part of surcharges tacked on by power generators worried they won't be repaid Davis said. ??- The Senate Appropriations Committee sends the full Senate a bill creating a public power authority that would loan out up to $5 billion to build or buy power plants that would be required to sell electricity to consumers at low rates. ??- An Assembly committee advances a bill ending the exemption under which utility lobbyists do not have to follow the same reporting requirements as do other lobbyists. The bill now goes to the Assembly Appropriations Committee. ??- A Pacific Gas and Electric Corp. shareholder sues the company claiming it misled shareholders by forecasting annual profits for two quarters last year when the suit says the company knew it was incurring losses. ??-Public Utilities Commission President Loretta Lynch issues a statement late Wednesday saying inaction by the Federal Energy Regulatory Commission forced Southern Caifornia Edison Co. to take a large write-off of debt. The company should not have to shoulder these liabilities and neither should its customers Lynch says. ??- Edison International's stock closes at $11.40 down 48 cents while stock in PG&E's parent closes up 14 cents at $9.04. ??- The state remains free of power alerts as reserves stay above 7 percent. ??WHAT'S NEXT: ??- The Assembly's Energy Oversight Subcommittee plans to resume hearings Thursday in its inquiry into California's highest-in-the-nation natural gas prices with testimony from gas companies. ??- Davis' representatives continue negotiating with Sempra the parent company of San Diego Gas and Electric Co. to buy the utility's transmission lines. Davis says he expects to have an agreement within two weeks. ??- The state Public Utilities Commission will decide Thursday whether to investigate why a key block of power generators is staying off-line despite regulators' order last month that they start getting paid by the state's utilities. Independent Energy Producers Executive Director Jan Smutny-Jones says the generators can't afford to operate because they are still owed more than a billion dollars and because the PUC's rates don't cover their operating costs. ??PUC President Loretta Lynch also wants the commission to decide Thursday to investigate whether PG&E's April 6 bankruptcy protection filing is enough of a threat to the PUC's regulatory authority to prompt more PUC involvement in the bankruptcy proceedings. ??THE PROBLEM: ??High demand high wholesale energy costs transmission glitches and a tight supply worsened by scarce hydroelectric power in the Northwest and maintenance at aging California power plants are all factors in California's electricity crisis. ??Edison and PG&E say they've lost nearly $14 billion since June to high wholesale prices that the state's electricity deregulation law bars them from passing on to consumers. PG&E saying it hasn't received the help it needs from regulators or state lawmakers filed for federal bankruptcy protection April 6. ??Electricity and natural gas suppliers scared off by the two companies' poor credit ratings are refusing to sell to them leading the state in January to start buying power for the utilities' nearly 9 million residential and business customers. The state is also buying power for a third investor-owned utility San Diego Gas & Electric which is in better financial shape than much larger Edison and PG&E but also struggling with high wholesale power costs. ??The Public Utilities Commission has raised rates up to 46 percent to help finance the state's multibillion-dollar power-buying. LOAD-DATE: April 19 2001 of 5 DOCUMENTS ???????????????????The Associated Press State & Local Wire The materials in the AP file were compiled by The Associated Press. ?These materials may not be republished without the express written consent of The Associated Press. ??????????????????????April 19 2001 Thursday BC cycle AM Eastern Time SECTION: State and Regional LENGTH: 820 words HEADLINE: Legislators probe possible power natural gas collusion BYLINE: By DON THOMPSON Associated Press Writer DATELINE: SACRAMENTO BODY: ??Southern California Edison was charged about $750 million more this year for natural gas because of unchecked free-market forces an industry consultant testified. ??Paul Carpenter told the Assembly Electricity Oversight Subcommittee on Wednesday the price spikes came after the El Paso Natural Gas Co. contracted first with Dynegy and later with its own marketing affiliate El Paso Merchant Energy to control the pipeline capacity. ??Officials with El Paso and other natural gas suppliers are expected to testify Thursday that they did not illegally manipulate the market. ??The California Public Utilities Commission estimated a year ago that overcharges by the companies that control natural gas flow drove up prices by $ 100 million a year to California gas and electricity customers. ??But PUC attorney Harvey Morris said that was before last summer's price spikes which he blamed on natural gas suppliers using a monopoly to game the system. ??It's way worse than we could possibly have imagined Morris said after testifying before the subcommittee. It's obviously way higher than $100 million. ??Natural gas rates at the California border generally tracked national prices until November when they spiked as high as 11 times higher than the price of natural gas elsewhere in the nation Carpenter said. ??I have never seen gas prices like this anywhere in the world said Carpenter who has been studying the energy market for 20 years for Cambridge Mass.-based consultant The Brattle Group. The Brattle Group was hired by Edison to study the natural gas market. ??The committee is one of two legislative committees exploring whether illegal market manipulation in the electricity and natural gas markets has driven up California's energy costs. ??This is a market that is plagued by the exercise of market power Frank Wolak chairman of the California Independent System Operator's Market Surveillance Committee told the Senate Select Committee to Investigate Price Manipulation of the Wholesale Energy Market. The ISO runs the state's power grid. ??However there is no law against me saying 'I'm not going to sell to you' Wolak said. Market manipulation only becomes illegal when there is collusion Wolak said and such evidence is hard to find. ??Electricity generators and natural gas suppliers say a severe supply and demand imbalance - not market manipulation - has led to higher prices. ??Everybody's busy doing investigations. They're not interested in solving the problem said Independent Energy Producers Executive Director Jan Smutny-Jones. ??Investigations are wasting everybody's time Smutny-Jones said adding that previous probes and lawsuits have uncovered no wrongdoing. He said the state's power problems came because state regulators denied utilities the chance to sign long-term energy contracts when they had the chance. ??People have been playing by the rules Smutny-Jones said. ??But the Senate committee's first witnesses are ISO officials who authored studies that claim the state paid more than $6 billion too much for power last year. ??Committee chair Joseph Dunn D-Garden Grove also has slated state Auditor Elaine Howell who last month blamed buyers and sellers for skyrocketing electricity costs. Dunn also has scheduled future testimony from state federal academic and private investigators studying the power market. ??He invited five major generators to attend the committee's second hearing next week. All five - Reliant Dynegy Williams Energy Duke Energy and Mirant - say they are eager to cooperate and clear their names Dunn said. ??Dunn asked the five for a total of 86 specific documents. If the companies feel they cannot provide documents because of legal or confidentiality concerns Dunn said he will subpoena them. ??Smutny-Jones said investigators appear to be growing desperate to blame the state's natural gas and electricity price hikes on illegal market manipulation instead of natural market forces. ??He cited Attorney General Bill Lockyer's announcement last week that any informant who helped prove wrongdoing would be entitled to a percentage of the state's recovery he estimated could range from $50 million to hundreds of millions of dollars. ??If the state's offering a $50 million reward they haven't found anything Smutny-Jones said. I don't think you're going to find the fact that anybody did anything criminal here. ??Assemblywoman Jenny Oropeza D-Long Beach said she believes otherwise after Wednesday's testimony: I think it is very clear there was some price manipulation going on. ??But Assemblyman John Campbell R-Irvine isn't sure there was anything illegal. ??There clearly are market forces at work that's evident Campbell said. Whether you make the jump to market manipulation ... I haven't seen conclusive evidence that leads me to make that jump. LOAD-DATE: April 19 2001 of 5 DOCUMENTS ???????????????????The Associated Press State & Local Wire The materials in the AP file were compiled by The Associated Press. ?These materials may not be republished without the express written consent of The Associated Press. ?????????????????????April 18 2001 Wednesday BC cycle SECTION: State and Regional LENGTH: 833 words HEADLINE: Legislators probe possible power natural gas collusion BYLINE: By DON THOMPSON Associated Press Writer DATELINE: SACRAMENTO BODY: ??Unchecked free-market forces drove up the price of natural gas to Southern California Edison by about $750 million over the last year an industry consultant testified Wednesday. ??Paul Carpenter told the Assembly Electricity Oversight Subcommittee the price spikes came after the El Paso Natural Gas Co. contracted first with Dynegy and later with its own marketing affiliate El Paso Merchant Energy to control the pipeline capacity. ??The California Public Utilities Commission estimated a year ago that overcharges by the companies that control natural gas flow drove up prices by $ 100 million a year to California gas and electricity customers. ??But PUC attorney Harvey Morris said that was before last summer's price spikes which he blamed on natural gas suppliers using a monopoly to game the system. ??It's way worse than we could possibly have imagined Morris said after testifying before the subcommittee. It's obviously way higher than $100 million. ??Natural gas rates at the California border generally tracked national prices until November when they spiked as high as 11 times higher than the price of natural gas elsewhere in the nation Carpenter said. ??I have never seen gas prices like this anywhere in the world said Carpenter who has been studying the energy market for 20 years for Cambridge Mass.-based consultant The Brattle Group. The Brattle Group was hired by Edison to study the natural gas market. ??Officials with El Paso and other natural gas suppliers have denied illegally manipulating the market. They are scheduled to testify Thursday. El Paso officials did not return telephone calls for comment Wednesday. ??The committee is one of two legislative committees exploring whether illegal market manipulation in the electricity and natural gas markets has driven up California's energy costs. ??This is a market that is plagued by the exercise of market power Frank Wolak chairman of the California Independent System Operator's Market Surveillance Committee told the Senate Select Committee to Investigate Price Manipulation of the Wholesale Energy Market. The ISO runs the state's power grid. ??However there is no law against me saying 'I'm not going to sell to you' Wolak said. Market manipulation only becomes illegal when there is collusion Wolak said and such evidence is hard to find. ??Electricity generators and natural gas suppliers say a severe supply and demand imbalance - not market manipulation - has led to higher prices. ??Everybody's busy doing investigations. They're not interested in solving the problem said Independent Energy Producers Executive Director Jan Smutny-Jones. ??Investigations are wasting everybody's time Smutny-Jones said adding that previous probes and lawsuits have uncovered no wrongdoing. He said the state's power problems came because state regulators denied utilities the chance to sign long-term energy contracts when they had the chance. ??People have been playing by the rules Smutny-Jones said. ??But the Senate committee's first witnesses are ISO officials who authored studies that claim the state paid more than $6 billion too much for power last year. ??Committee chair Joseph Dunn D-Garden Grove also has slated state Auditor Elaine Howell who last month blamed buyers and sellers for skyrocketing electricity costs. Dunn also has scheduled future testimony from state federal academic and private investigators studying the power market. ??He invited five major generators to attend the committee's second hearing next week. All five - Reliant Dynegy Williams Energy Duke Energy and Mirant - say they are eager to cooperate and clear their names Dunn said. ??Dunn asked the five for a total of 86 specific documents. If the companies feel they cannot provide documents because of legal or confidentiality concerns Dunn said he will subpoena them. ??Smutny-Jones said investigators appear to be growing desperate to blame the state's natural gas and electricity price hikes on illegal market manipulation instead of natural market forces. ??He cited Attorney General Bill Lockyer's announcement last week that any informant who helped prove wrongdoing would be entitled to a percentage of the state's recovery he estimated could range from $50 million to hundreds of millions of dollars. ??If the state's offering a $50 million reward they haven't found anything Smutny-Jones said. I don't think you're going to find the fact that anybody did anything criminal here. ??Assemblywoman Jenny Oropeza D-Long Beach said she believes otherwise after Wednesday's testimony: I think it is very clear there was some price manipulation going on. ??But Assemblyman John Campbell R-Irvine isn't sure there was anything illegal. ??There clearly are market forces at work that's evident Campbell said. Whether you make the jump to market manipulation ... I haven't seen conclusive evidence that leads me to make that jump. LOAD-DATE: April 19 2001 of 5 DOCUMENTS ???????????????????The Associated Press State & Local Wire The materials in the AP file were compiled by The Associated Press. ?These materials may not be republished without the express written consent of The Associated Press. ?????????????????????April 18 2001 Wednesday BC cycle SECTION: State and Regional LENGTH: 841 words HEADLINE: Developments in California's energy crisis BYLINE: By The Associated Press BODY: ??Developments in California's energy crisis: ??WEDNESDAY: ??- Unchecked free-market forces drove up the price of natural gas to Southern California Edison by about $750 million over the last year an industry consultant tells the Assembly Electricity Oversight Subcommittee. ??Meanwhile the Senate's Select Committee to Investigate Price Manipulation of the Wholesale Energy Market begins investigating whether electric generators artificially inflated power prices. ??An industry spokesman predicts the investigations will uncover nothing illegal. ??- The state offers financial backing to Houston-based Dynegy which worried it would not be paid for power generated at its plants in California. Dynegy agrees to sell 300 megawatts of power from 17 small turbine generators in Carlsbad after receiving an offer from the California Department of Water Resources. ??- Gov. Gray Davis urges state regulators to approve the construction of a controversial 600-megawatt power plant in south San Jose to provide electricity to roughly 450000 homes in the Silicon Valley. ??- The Democratic governor lobbies Senate Democrats to support his plan to pay $2.7 billion for the transmission lines owned by Southern California Edison. ??State spending on electricity has jumped by more than 50 percent since Pacific Gas and Electric Corp. declared bankruptcy April 6 thanks in part of surcharges tacked on by power generators worried they won't be repaid Davis said. ??- The Senate Appropriations Committee sends the full Senate a bill creating a public power authority that would loan out up to $5 billion to build or buy power plants that would be required to sell electricity to consumers at low rates. ??- An Assembly committee advances a bill ending the exemption under which utility lobbyists do not have to follow the same reporting requirements as do other lobbyists. The bill now goes to the Assembly Appropriations Committee. ??- A Pacific Gas and Electric Corp. shareholder sues the company claiming it misled shareholders by forecasting annual profits for two quarters last year when the suit says the company knew it was incurring losses. ??-Public Utilities Commission President Loretta Lynch issues a statement late Wednesday saying inaction by the Federal Energy Regulatory Commission forced Southern Caifornia Edison Co. to take a large write-off of debt. The company should not have to shoulder these liabilities and neither should its customers Lynch says. ??- Edison International's stock closes at $11.40 down 48 cents while stock in PG&E's parent closes up 14 cents at $9.04. ??- The state remains free of power alerts as reserves stay above 7 percent. ??WHAT'S NEXT: ??- The Assembly's Energy Oversight Subcommittee plans to resume hearings Thursday in its inquiry into California's highest-in-the-nation natural gas prices with testimony from gas companies. ??- Davis' representatives continue negotiating with Sempra the parent company of San Diego Gas and Electric Co. to buy the utility's transmission lines. Davis says he expects to have an agreement within two weeks. ??- The state Public Utilities Commission will decide Thursday whether to investigate why a key block of power generators is staying off-line despite regulators' order last month that they start getting paid by the state's utilities. Independent Energy Producers Executive Director Jan Smutny-Jones says the generators can't afford to operate because they are still owed more than a billion dollars and because the PUC's rates don't cover their operating costs. ??PUC President Loretta Lynch also wants the commission to decide Thursday to investigate whether PG&E's April 6 bankruptcy protection filing is enough of a threat to the PUC's regulatory authority to prompt more PUC involvement in the bankruptcy proceedings. ??THE PROBLEM: ??High demand high wholesale energy costs transmission glitches and a tight supply worsened by scarce hydroelectric power in the Northwest and maintenance at aging California power plants are all factors in California's electricity crisis. ??Edison and PG&E say they've lost nearly $14 billion since June to high wholesale prices that the state's electricity deregulation law bars them from passing on to consumers. PG&E saying it hasn't received the help it needs from regulators or state lawmakers filed for federal bankruptcy protection April 6. ??Electricity and natural gas suppliers scared off by the two companies' poor credit ratings are refusing to sell to them leading the state in January to start buying power for the utilities' nearly 9 million residential and business customers. The state is also buying power for a third investor-owned utility San Diego Gas & Electric which is in better financial shape than much larger Edison and PG&E but also struggling with high wholesale power costs. ??The Public Utilities Commission has raised rates up to 46 percent to help finance the state's multibillion-dollar power-buying. LOAD-DATE: April 19 2001 Power bloc blasts seizure idea Producers say talk of bold action fuels crisis By Steve Geissinger SACRAMENTO BUREAU ?-- Oakland Tribune SACRAMENTO -- Outraged by a report in The Oakland Tribune that some lawmakers asked the governor to seize high-priced power contracts a key industry group Tuesday warned the Davis administration and Legislature that such action would worsen the energy crisis. We're publicly saying . . . this kind of rhetoric will have dire consequences on both the reliability and cost of power in California for years to come said Jan Smutny-Jones executive director of the Independent Energy Producers Association. It is the kind of rhetoric one would expect in Indonesia or the Philippines not the sixth largest economy on the planet he said in a teleconference. At the same time Davis administration officials confirmed that seizing contracts of allegedly profiteering brokers is the most likely last-ditch move if options continue to narrow ahead of the previously discussed concepts of seizing California power plants owned by out-of-state firms or passing a windfall profits tax. Davis spokesman Steve Maviglio pointed out the governor already seized power contracts on which California's investor-owned utilities were defaulting in early February. The state trying to buy its way out of the energy crisis with no clear end in sight lost a substantial measure of control over electricity prices and supplies to the courts with the recent bankruptcy filing by the Pacific Gas and Electric Co. Gov. Gray Davis a Democrat employed hard-sell tactics Tuesday in an effort to convince reluctant Democrats that their failure to embrace his plan to financially rescue teetering Southern California Edison could plunge that utility into bankruptcy as well. While most Republicans are flatly opposed to the plan as misguided Democrats who hold a majority in the Legislature worry it's a public bailout of an investor-owned utility and would hand the state control over only Edison's south-state piece of the strategic high-voltage transmission grid in California. Soaring wholesale power costs have financially shattered utilities forcing the state into runaway multibillion-dollar spending that helps keep the lights on but threatens the state budget. The manager of the state's power grid has accused generators and marketers of overcharging Californians more than $6 billion in recent months. Assembly Speaker Robert Hertzberg D-Van Nuys said Monday that members of both legislative houses were interested in seizure of California power plants' contracts with brokers who sell to customers within or outside the state. Sen. Don Perata D-Oakland an outspoken critic of the Davis administration's handling of the crisis said some lawmakers had asked the governor to use emergency or eminent domain powers to seize the overpriced contracts and were awaiting Davis' answer this week. Supporters of the move said seizure would allow the state to control where the power is sold and decrease price markups by eliminating the middleman. But myriad questions remain unanswered including regulatory and interstate commerce issues as well as any state reimbursement of the brokers. Any move to seize power contracts would be overturned by the courts said Gary Ackerman executive director of the Western Power Trading Forum. Instead of trying to do what's legally within their reach they go to extreme measures that are on their very face unlawful and unconstitutional Ackerman said. Moreover industry officials said seizure would not only chill industry investment in California's power system and lead to higher power costs but would be ironic since California has shunned lower-cost long-term contracts industry officials said. It would create a very unstable political regulatory environment Smutny-Jones said. It would have extremely adverse consequences for California in the long term. Even so the talk has worried the industry. Smutny-Jones said his clients are very very troubled by this sudden turn in rhetoric. I assume when senior members of the Legislature make pronouncements about potentially seizing contracts it's designed to get our attention and we obviously take those things seriously he said. The Independent Energy Producers group is in the process of contacting the Davis administration and lawmakers said Smutny-Jones. You'll hear more about this. Copyright 2001 Copley News Service Copley News Service April 19 2001 Thursday SECTION: State and regional LENGTH: 780 words HEADLINE: Windfall-profits tax gets Davis' backing BYLINE: Bill Ainsworth DATELINE: SACRAMENTO BODY: ??Federal regulators' failure to stop what they described as anti-competitive practices in the natural-gas industry added $750 million to Southern California Edison's cost of electricity a consultant estimated yesterday. ??The consultant Paul Carpenter of the Brattle Group spoke to an Assembly subcommittee investigating why California pays the highest natural-gas prices in the nation. Natural gas is a critical part of the electricity crisis because most of the state's generating plants run on natural gas. ??Natural-gas prices have soared throughout the nation but the bench mark price paid at California's border has been double that paid at other bench mark locations throughout the nation for months according to figures released by the Assembly Subcommittee on Energy Oversight. ??Next week Carpenter plans to testify at hearings in Washington D.C. on behalf of Southern California Edison and the California Public Utilities Commission which are asking federal regulators to intervene. ??The giant utility and the state regulatory body contend that a sweetheart deal between El Paso Natural Gas and El Paso Merchant Energy gave the sister companies enough market power to artificially raise the price of natural gas that flows into Southern California from Texas. ??El Paso owns the major pipeline bringing natural gas from fields in New Mexico and Texas to Southern California. El Paso Merchant Energy is an unregulated sister company. ??Carpenter called the prices paid in Southern California ''simply unprecedented'' in the United States. He estimated that the sister companies manipulated the market enough to add $2.60 to the price of a million British thermal units of gas. ??In addition he said El Paso Merchant Energy owns part of 20 smaller power plants ''qualifying facilities'' that get paid based on the price of natural gas in California. The higher natural-gas prices increase the company's revenues Carpenter said. ??El Paso company officials are expected to testify in front of the Assembly subcommittee today but in proceedings before the federal regulators they have denied any sweetheart deal. ??In a report they commissioned the company blamed the higher natural-gas prices in Southern California on increased demand and constraints on pipeline capacity. ??Gov. Gray Davis meanwhile gave his strongest endorsement yet to a windfall-profits tax on generators as a Senate committee chaired by Joseph Dunn D-Laguna Niguel began a series of hearings to probe possible price gouging by generators. ??''I believe the Legislature would be well within its prerogative to insist that generators receive an appropriate reduction whether it's 20 percent or any other number the Legislature hit upon'' Davis said. ??Senate Democrats Davis said will form a special committee to help work on his plan for the state purchase of the transmission system of Southern California Edison for $2.76 billion in exchange for state aid in paying off the utilities' debt. ??The governor said he told Senate Democrats a number of whom are skeptical of the plan that Edison's parent firm has agreed to back a $3 billion upgrade of the neighborhood distribution system retained by Edison and to return a $400 million tax refund to the utility. ??At the natural-gas hearing yesterday state officials said that after El Paso Merchant Energy bought a significant part of the pipeline capacity from its sister company it withheld natural gas to drive prices up. ??''Marketers have gamed the system and figured out how to hoard capacity and undermine competition'' said Harvey Morris an attorney for the California Public Utilities Commission. ??State regulators want the Federal Energy Regulatory Commission which regulates natural gas to open the market to more competitors. ??But the commission has repeatedly rejected similar complaints in the past. On March 28 FERC ruled that the affiliates did not arrange a sweetheart deal. ??''The fact that El Paso Merchant controls a large volume of capacity does not in and of itself render the El Paso contracts unjust unreasonable or unduly discriminatory'' FERC ruled. ??In other cases involving natural gas federal regulators acknowledged that certain contract provisions allowed anti-competitive behavior but they approved those contracts anyway. ??Lawmakers said they were puzzled by the federal regulators' lack of action. ??''It baffles me that we've found the problem anti-competitive behavior and market gaming but there's no cure because federal regulators won't take action'' said Assemblyman Juan Vargas D-San Diego. Staff writer Ed Mendel contributed to this report. LOAD-DATE: April 19 2001 of 63 DOCUMENTS 2001 / Los Angeles Times Angeles Times ????????????????????April 19 2001 Thursday Home Edition SECTION: Part A Part 1 Page 3 Metro Desk LENGTH: 772 words HEADLINE: CAPITOL JOURNAL CALIFORNIA AND THE WEST Price Caps Don't Fit in Cheney's Head for Figures BYLINE: GEORGE SKELTON DATELINE: SACRAMENTO BODY: ??Want price caps on wholesale electricity to staunch the bleeding of billions from California? Not going to happen Vice President Dick Cheney insists. Don't waste your energy thinking about it. ??Frankly California is looked on by many folks as a classic example of the kinds of problems that arise when you do use price caps Cheney said in a telephone interview Wednesday. ??The vice president was referring to another type of price cap--the infamous state cap on consumer rates that has left the private utilities billions short of enough revenue to pay their gouging wholesalers. What political leaders in California and the Northwest are pleading for from the Federal Energy Regulatory Commission is a regional cap on wholesale prices. ??Early last year a megawatt-hour was selling wholesale in California for $ 30. By year's end it had risen to an average $ 300 according to state officials. At peak prices have soared to $ 1500. Meanwhile demand increased last year by less than 4%. In fact demand last month was 9% less than in March 2000. ??This is the sorry news for ratepayers/ taxpayers: Californians paid $ 7.4 billion for electricity in 1999. This year the tab--without price caps--is projected at $ 70 billion. Gov. Gray Davis disclosed Tuesday that his administration has been shelling out $ 73 million a day to buy electricity for the pauper utilities. ??The profits of power producers--many of them Texans and Bush backers--have risen 400%-500%-600%. ??* ??But none of this budges the Bush administration. ??Price caps Cheney declares may provide short-term political relief for the politicians. But they don't do anything to deal with the basic fundamental problem. That problem is supply he says price caps discourage investment in new power plants and encourage consumption. ??Counters Garry South Davis' political strategist: The notion by free market zanies that you have to let profits rise 500%-600% is ludicrous. Reasonable profits can be made without bankrupting the system. They're just trying to protect the profits of their friends in the energy business. ??In truth California is building power plants as fast as it can. But not enough new megawatts apparently will be online by summer to prevent blackouts--and the bleeding of billions more into the pockets of out-of-state profiteers. ??How about a temporary price cap? ??Six months? Six years? Cheney replies. Once politicians can no longer resist the temptation to go with price caps they usually are unable to ever muster the courage to end them . . . ??I don't see that as a possibility . . . Any package you can wrap it in any fancy rhetoric you can prop it up with it does not solve the problem. ??* ??The White House clearly understands it has a problem in California--a political problem. A problem with a Democratic-dominated state that voted overwhelmingly for Al Gore. And now a problem with that mythical headline--Bush to California: Drop Dead--which seems to be getting bigger each day. ??There have been several recent California: Drop Dead stories. One was in Sunday's New York Times--Bush Devoting Scanty Attention to California. Tuesday the Sacramento Bee reported that when Cheney met with Northwest members of Congress to discuss West Coast energy he barred Californians from the room. ??Cheney flatly denies it. ??But Sen. Dianne Feinstein (D-Calif.) says she has had trouble making contact with the Bush White House. She has sent two letters to President Bush asking for a meeting on energy. The first time she got back a form letter with her name misspelled. On the second try she got a group meeting with Cheney. ??It was very disappointing she says. He spoke about letting the free market work and drilling in Alaska . That's not going to help California in the short-term. We need price caps until we're able to fix this very broken market. . . ??There seems no interest in really wanting to understand the California situation. ??I asked Cheney whether he sensed an anti-California bias across the country? No more than there's an anti-Texas bias he replied. I wouldn't get paranoid about it. ??The fact is California is one of the leading states in the nation. Often a trendsetter. . . . Well we hope not to emulate your energy policy. Hopefully we'll learn from that. ??His message to California: There's no reason not to be optimistic. The energy crunch obviously is a significant problem. . . . But it too will pass. ??While learning from California the Bush White House also might take a refresher course in the free market Hoover administration. LOAD-DATE: April 19 2001 of 63 DOCUMENTS 2001 / Los Angeles Times Angeles Times ????????????????????April 19 2001 Thursday Home Edition SECTION: Part A Part 1 Page 3 Metro Desk LENGTH: 1373 words HEADLINE: CALIFORNIA AND THE WEST DAVIS BACKS SILICON VALLEY POWER PROJECT ENERGY: GOVERNOR URGES QUICK APPROVAL OF SAN JOSE PLANT DESPITE OPPOSITION BY CITY AND A POWERFUL FIRM. BYLINE: JENIFER WARREN and TERENCE MONMANEY TIMES STAFF WRITERS DATELINE: SACRAMENTO BODY: ??Attempting to show that no region in California is safe from sacrifice Gov. Gray Davis on Wednesday called for quick state approval of a controversial power plant proposed for the Silicon Valley. ??The governor's action locks him in combat with the San Jose City Council which has unanimously rejected the plant and Cisco Systems the computer networking giant that wants to build its worldwide headquarters on adjacent land. ??In praising the proposed plant as a model of low-polluting efficiency Davis said all regions of California must share the pain as the state expands its power supply--a key step toward ending blackouts and reducing sky-high electricity prices. ??If approved the plant would be the 14th licensed by the California Energy Commission since Davis took office. The 13th--a 510-megawatt plant near San Diego--was approved unanimously by the commission Wednesday with little controversy. ??Rushing to expand the state's overtaxed energy supply the governor has recently cut in half the approval times for the licensing of some plants. Six are under construction according to Davis and three are scheduled to begin operation this summer. A fourth--the AES Corp. generator in Huntington Beach that is due to be restarted --could add more megawatts to the supply this summer. ??V. John White an energy consultant in Sacramento said the governor's newly active role as an advocate for power plants was a necessary step given the urgency of the supply shortage. ??It's very rare and I wouldn't want him to short-circuit the commission's review process White said. But I think he's trying to reassure folks we're doing everything we can and not just sitting around in our hot tubs. ??Davis urged the Energy Commission--a five-member panel dominated by his appointees--to stop talking about the project and grant it a license. If the commission does so it will mark only the third time the panel has usurped a local government's authority over zoning. ??We are all in this together Davis said flanked by a forest of electric transformers near the Capitol. We are one state and we all have to make the sacrifices necessary to make up for the mistakes of the last 12 years when no major power plants were built. ??The governor said the plant's developers Calpine Corp. and Bechtel Enterprises Holdings Inc. have made numerous concessions to San Jose officials including an agreement to sell power exclusively in the region. ??He added that the $ 300-million plant--expected to supply about 450000 homes--will be equipped with state-of-the-art systems that make it one of the cleanest plants to go up in the nation. ??The commission's staff has recommended licensing the project and some analysts said the governor's intervention--said to be unprecedented--should fuel momentum for approval. ??Commissioner Robert Laurie--one of two members who held evidentiary hearings on the project and is preparing a recommendation for the full commission--would not comment on the plant's prospects. But Laurie an appointee of former Gov. Pete Wilson insisted that the project would receive an impartial review. ??I know the importance of independent decision-making he said. ??San Jose officials say the Calpine project conflicts with the aesthetics of its site in a bucolic valley 15 miles south of downtown. On Wednesday Mayor Ron Gonzales urged the Energy Commission to give serious attention to the city's concerns about the plant's potential impact on residents and the environment. ??As the project has been designed and proposed to operate . . . it would present an unfair burden to our community the mayor said. ??A spokeswoman for the Calpine/Bechtel partnership disagreed and characterized the plant as key to restoring energy stability in the Silicon Valley a region heavily dependent on imported power. ??This is the only project in the pipeline that can help Silicon Valley out of its predicament in the near future said the spokeswoman Lisa Poelle. ??She expressed hope that the governor's comments which cap numerous meetings between the partnership staff and Davis aides would encourage San Jose to soften its stance on the project. ??The 600-megawatt plant is proposed for a swath of open space currently leased to a rancher and occupied by grazing cattle. A preliminary ruling by Laurie and the other commissioner scrutinizing the project is expected by June. The full commission would take a final vote about a month later and if a license were granted the plant would begin operations sometime in 2003. ??From the beginning the plant has been dogged by opposition and the Energy Commission has held more than 20 hearings--an unusually large number--on its fate. ??On Wednesday a spokesman for its heftiest foe San Jose-based Cisco said the company still has serious concerns about health and safety issues. ??Cisco has strongly opposed the plant because the company wants to build a $ 1.3-billion headquarters for 20000 employees nearby. In the past Cisco officials have threatened to relocate to another state if the power plant is built. ??Company spokesman Steve Langdon said the firm's plans to build an industrial campus were not scuttled by the announcement Monday that it is cutting 8500 workers from its payroll because of slumping sales of its Internet networking equipment. ??But he suggested that the plans were flexible enough to be scaled down for a smaller work force and that the campus may not house the company's headquarters. ??It doesn't all get built at once he said. We will build and occupy the site over time in phases as needed. ??Another leading opponent of the power plant argued Wednesday that the Energy Commission lacks authority to override San Jose officials and license the project. The Santa Teresa Citizen Action Group launched by homeowners near the site says the commission may only take such a step if a better plant site hasn't been identified. ??The group charges that the commission is aware of other available sites including one in an industrial part of the East Bay area and lists eight other reasons the plant should not be built among them the noise and emissions it would produce. ??The local Sierra Club chapter however has endorsed the plant largely on grounds that it would run cleaner than existing plants in the area. By offsetting emissions from those older plants the new project would actually reduce air pollution said Kurt Newick of the Sierra Club's Loma Prieta chapter. ??On another front Davis continued to lobby legislators for support for his plan to rescue Southern California Edison from bankruptcy through purchase of the utility's transmission grid. ??Emerging from lunch with state Senate Democrats who are openly wary of the deal Davis said he'd made progress to bridge some of the gaps. It was the governor's third meeting in two days with lawmakers of both parties. ??Some of the toughest skeptics are members of his own party in the Senate. Many fear that the deal Davis struck with Edison will hand the utility too much at the expense of ratepayers and some say bankruptcy might be a better option for the state's second-largest private utility. Pacific Gas & Electric Co. filed for bankruptcy April 6. ??To assuage concerns Davis proposed that a special Senate committee be named to meet with his energy advisors as the administration and Edison finalize details of the deal before it goes to the Legislature for approval. ??Senate leader John Burton (D-San Francisco) who has called the Edison agreement problematic said he may appoint such a committee but continued to suggest that an Edison bankruptcy might be acceptable. ??Many of the Fortune 100 companies have gone into Chapter 11 bankruptcy and it ain't like the end of the world for anybody Burton said. ??* ??Times staff writer Carl Ingram contributed to this story. ??Powering Up California ??Power plant projects recently licensed by the California Energy Commission and when they are expected to go online: ??* ??* Two of four turbines are expected to go online in December 2001 the other two are expected to go online in March 2002. ??Source: California Energy Commission GRAPHIC: PHOTO: (2 photos) Gov. Gray Davis urges California Energy Commission to approve Metcalf Energy Center a 600-megawatt power plant planned for San Jose. Demonstrators greet Davis on his way to news conference in Sacramento. PHOTOGRAPHER: Associated Press PHOTO: (2 photos) Gov. Gray Davis urges California Energy Commission to approve Metcalf Energy Center a 600-megawatt power plant planned for San Jose. Demonstrators greet Davis on his way to news conference in Sacramento. ?PHOTOGRAPHER: ROBERT DURELL / Los Angeles Times GRAPHIC: Powering Up California Los Angeles Times LOAD-DATE: April 19 2001 of 63 DOCUMENTS ??????????????Copyright 2001 Knight Ridder/Tribune News Service ???????????????????????Knight Ridder/Tribune News Service ??????????????????????????The Orange County Register 19 2001 Thursday SECTION: STATE AND REGIONAL NEWS KR-ACC-NO: ?K7970 LENGTH: 275 words HEADLINE: Ex-energy chief leery of state buying power lines BYLINE: By Kate Berry BODY: ??ONTARIO Calif. _ Former Energy Secretary Bill Richardson said Wednesday that he is uncomfortable with the state's $2.76 billion purchase of the transmission lines of Southern California Edison because it would derail future plans to fully deregulate the state's electricity market. ??I'm leery of a state purchase Richardson said at an economic conference in Ontario adding that the jury is still out on a plan by Gov. Gray Davis to keep Edison out of bankruptcy. ??He called for a rescue of Pacific Gas and Electric the San Francisco utility that filed for bankruptcy two weeks ago. ??In a half-hour speech Richardson admonished the Bush administration for failing to take a more active role in the California crisis. He backs a one-year regional price cap to calm the volatile wholesale market. ??In the Clinton administration California was gold he said. With the new administration it's another ballgame. ??Richardson also pushed for a bipartisan energy bill with Democratic themes including energy-efficiency standards conservation and environmental regulations. ??We need an energy policy for this country that embraces both parties' proposals he said. ??Energy Secretary Spencer Abraham has sparred with Richardson by trying to rescind new energy-efficiency standards for air conditioners that were approved in the last 30 days of the Clinton administration. ??ARCHIVE PHOTOS available from NewsCom-PressLink: ??Richardson. ??KRT CALIFORNIA is a premium service of Knight Ridder/Tribune ??(c) 2001 The Orange County Register (Santa Ana Calif.). ??Visit the Register on the World Wide Web at http://www.ocregister.com/ JOURNAL-CODE: OC LOAD-DATE: April 19 2001 of 63 DOCUMENTS ?????????????????Copyright 2001 The Chronicle Publishing Co. ?????????????????????????The San Francisco Chronicle ???????????????????APRIL 19 2001 THURSDAY FINAL EDITION SECTION: NEWS Pg. A18 LENGTH: 585 words HEADLINE: Alameda public utility rents four backup generators Extra electricity will be used during summer rolling blackouts SOURCE: Chronicle Staff Writer BYLINE: Matthew Yi DATELINE: Alameda BODY: Alameda's public utility announced yesterday that it is leasing four portable diesel electrical generators to avoid the one woe of the state's energy crisis they haven't been able to duck so far -- rolling blackouts. ???The utility's move to provide a backup source of electricity for its customers is part of a trend among city-owned utilities to gear up for expected power shortages during the dog days of summer. ???Healdsburg Santa Clara and Palo Alto -- all with their own electric grids -- are also initiating their own energy backup plans. ???The generators would kick in only during severe energy shortages when rolling blackouts are on the horizon. ???In Alameda four generators -- each the size of a tractor trailer -- arrived last week and are ready to be fired up Alameda Mayor Ralph Appezzato said yesterday. ???We're going to be the masters of our destiny he said. ???Alameda Power and Telecom is one of about 30 municipal utilities in California that opted not to deregulate with the rest of the state four years ago. Consequently its customers' power rates are expected to be stable this year while Pacific Gas and Electric Co. customers face huge rate increases. ???But municipal utilities such as Alameda's are still part of the statewide power grid which is managed by the Independent System Operator and are subject to rolling blackouts like everybody else when the state's energy reserves dip below 1.5 percent. ???Each of Alameda's four diesel generators will produce 1.5 megawatts of power. Each megawatt can light up 1000 homes utility officials say. ???The units leased at a total cost of $68000 a month through the end of the year are parked at Alameda Point. ???Their cost will be paid through the municipal utility's reserve fund and customers' power bills won't be affected said Junona Jonas the utility's general manager. ???I think in the long run we'll see more supply in the state but until that happens there will be communities that'll have to take these short-term drastic measures Jonas said. ???The utility's spokesman Matthew McCabe said the diesel exhaust from the generators won't be an environmental factor. ???Our environmental record is extremely important to us McCabe said. The diesel generators are only for emergency backup. . . . Besides these things are clean -- it's not like standing next to a diesel bus. ???The city is also getting help from the U.S. Maritime Administration which operates more than a dozen ships at the former Navy station in Alameda. When the juice is low those ships will unplug from the port and use onboard generators Jonas said. ???In the North Bay Healdsburg officials are waiting for the arrival of two diesel generators. Combined they are expected to produce 3.5 megawatts of power which can account for about 20 percent of the city's expected summer peak load said Bill Duarte city utility director. ???We're taking matters into our own hands he said. ???Farther south both Santa Clara and Palo Alto are considering leasing portable generators officials said. ???Bill Reichmann senior electric utility engineer at Santa Clara's Silicon Valley Power said the utility is planning to lease eight generators operating them in the southeastern end of town near the San Jose International Airport. ???Palo Alto's municipal utility also has recommended that the City Council approve renting two generators starting next month said spokeswoman Rima Johnson.E-mail Matthew Yi at myi@sfchronicle.com. LOAD-DATE: April 19 2001 of 63 DOCUMENTS ?????????????????Copyright 2001 The Chronicle Publishing Co. ?????????????????????????The San Francisco Chronicle ???????????????????APRIL 19 2001 THURSDAY FINAL EDITION SECTION: NEWS Pg. A3 LENGTH: 845 words HEADLINE: Davis' gouging claims disputed Officials say no link between PG&E bankruptcy high prices SOURCE: Chronicle Staff Writer BYLINE: David Lazarus BODY: Officials on the front lines of California's energy mess yesterday challenged Gov. Gray Davis' assertion that the state is being gouged by power companies because of PG&E's bankruptcy filing. ???Such dissent from the governor's own subordinates could make it harder for Davis to gain support for his energy measures in the state Legislature. ???Despite Davis' latest claims the Department of Water Resources which is spending about $70 million a day buying power said there is no evidence linking recent price increases to Pacific Gas and Electric Co. filing for bankruptcy protection on April 6. ???It is a seller's market said Viju Patel executive manager of the Department of Water Resources' power systems department. The power companies do not need an excuse to raise prices. ???Critics say Davis' penchant for secrecy on energy issues has come back to haunt him at a time when he needs all the allies he can find. ???People aren't taking his words at face value said Michael Shames executive director of the Utility Consumers' Action Network in San Diego. ???Republican lawmakers -- and even some Democrats -- have challenged a number of the governor's initiatives including a multibillion-dollar bailout scheme for Southern California Edison. ???Nevertheless Davis reiterated his belief yesterday that recent electricity price increases are an aberration driven by the bankruptcy of PG&E. ???He said California's spending on power jumped 40 percent in the week following PG&E's bankruptcy filing because generators say they face a greater risk of not being paid. ???Nothing else in the equation has changed said Steve Maviglio a spokesman for the governor. Everything is the same except the bankruptcy. ???However power companies were quick to challenge this assertion. They insisted that PG&E's bankruptcy actually was seen as a positive development by those in the energy business. ???If anything PG&E provides some solace for traders because the bankruptcy provides an organized mechanism for recovery of payments said Gary Ackerman executive director of the Western Power Trading Forum a Menlo Park energy-industry association. ???On the other hand he acknowledged that power companies are becoming increasingly wary of the state of California's creditworthiness as an energy buyer. ???The Department of Water Resources already has spent nearly $5 billion buying electricity and has yet to recoup a dime from ratepayers. State regulators are still trying to come up with a way to apportion the limited revenues from power rates among the various parties in California's energy picture. ???Rating agency Fitch Inc. said yesterday it may cut the state's credit rating because of questions surrounding recovery of energy costs. ???People are keeping an eye on things Ackerman said. They're watching how California finances things. ???If a premium on electricity sales to the state exists he said it probably has been in place since the beginning of the year well before PG&E's current woes. ???UCAN's Shames agreed. He said power companies added a risk premium to their California power sales late last year when it looked like the state's energy troubles were worsening. ???PG&E's bankruptcy may have increased the uncertainty Shames said but we've been paying a risk premium for months now. ???Richard Wheatley a spokesman for Reliant Energy in Houston insisted that his company's traders are not using questions about PG&E's or California's financial solvency as a fresh excuse for higher prices. ???I haven't seen any evidence of it he said. ???Mark Palmer a spokesman for Houston's Enron Corp. laid blame for recent price increases on low rainfall throughout the West which has cut output at hydroelectric facilities as well as on California's chronic power shortage. ???It's not that there's a premium on prices he said. It's just supply and demand. ???That said Palmer acknowledged that California's firm insistance on blackouts being avoided at all costs leaves the state vulnerable to virtually any price generators choose to demand. ???This means prices will be used to allocate a scarce resource he said. There's no other way it could work. ???Bottom line for consumers: It's going to be a long hot summer and electricity prices will soar even higher as demand surges. ???And despite the best efforts of state officials a daily threat of blackouts remains a virtual certainty as California's beleaguered power grid is stretched to the breaking point. ???At the Department of Water Resources' command center in a Sacramento shopping mall the state's team of electricity traders has moved onto a new high-tech trading floor where they negotiate power deals each day from the crack of dawn. ???The department's Patel said daily blackouts may be averted this summer after consumers see skyrocketing power prices reflected in their bills. ???People will respond to these prices and they are going to conserve like never before Patel predicted.E-mail David Lazarus at dlazarus@sfchronicle.com. GRAPHIC: PHOTO Gov. Gray Davis urged the California Energy Commission to approve construction of the proposed 600-megawatt power plant. / Associated Press LOAD-DATE: April 19 2001 of 63 DOCUMENTS ?????????????????Copyright 2001 The Chronicle Publishing Co. ?????????????????????????The San Francisco Chronicle ???????????????????APRIL 19 2001 THURSDAY FINAL EDITION SECTION: NEWS Pg. A3 LENGTH: 888 words HEADLINE: Davis backs San Jose power plant He also acknowledges bailout for Edison will be uphill fight SOURCE: Chronicle Sacramento Bureau BYLINE: Lynda Gledhill DATELINE: Sacramento BODY: Gov. Gray Davis urged the state Energy Commission yesterday to approve a controversial power plant in San Jose saying California needs every megawatt it can harness. ???Davis' recommendation runs counter to the wishes of the San Jose City Council and Mayor Ron Gonzales who have come out against the 600-megawatt Metcalf Energy Center in south San Jose's Coyote Valley. It also puts the governor at odds with one of his political allies Cisco Systems chief John Chambers whose company opposes the plant because it would be built near the tech firm's proposed new campus. ???Davis' announcement came the same day he all but admitted he lacks the support he needs in the state Senate for the deal he reached with Southern California Edison to restore the utility to financial health. Davis has portrayed that deal and construction of new power plants as essential to making California's energy market functional again. ???I think when we have an opportunity to put more power on line we should seize it Davis said. I believe we spend too much time talking about Metcalf. It's time to start building it. ???The Energy Commission has been reviewing the proposal by Calpine Corp. and Bechtel Enterprises Inc. for months. The commission's staff recommended in October that the plant be built and a final decision is expected by summer. If it is approved the plant could come on line next year and provide enough electricity for 600000 homes. ???None of the five commissioners could be reached yesterday. Three are Democrats appointed by Davis and two are Republicans appointed by former Gov. Pete Wilson. ???Gonzales and the rest of the City Council rejected the Metcalf plant in November. Until yesterday Davis had sat on the sidelines as the energy crisis deepened and a long line of state and federal officials including four of the five Assembly members from Silicon Valley urged the commission to overturn the council's vote. ???Some neighborhood groups oppose the plant along with computer networking giant Cisco which hopes to build a 20000-worker campus on a neighboring parcel. Cisco chief Chambers donated $50000 to Davis in the first six months of last year. ???Cisco's reaction yesterday was restrained. ???We have great respect for the governor and respect his decision said Cisco spokesman Steve Langdon. ???However Langdon added: We still have serious concerns about health and safety issues related to the proposed power plant. ???Some neighbors were much angrier. ???He's trying to act like he's the big bad tough governor and he's spineless said Issa Ajlouny who lives in the Santa Teresa neighborhood less than a mile from the proposed plant. He knows the approval process isn't working in his favor so he's trying to come out and act like a hero to the state of California. But he's nothing but backstabbing the city of San Jose on the environmental issues. ???Supporters of the plant see the 14 acres of former junkyard as the perfect site -- right next to Pacific Gas and Electric Co.'s largest substation in the South Bay close to major transmission lines and shielded from its neighbors by a 350-foot hill. ???But a housing development is also nearby and residents fear the power plant will belch pollutants in an area already suffering from some of the worst air quality in the Bay Area. ???Mayor Gonzales continued to express his concern yesterday. ???I would support clean power plants that will help us achieve greater energy self-sufficiency for San Jose residents and business Gonzales said. As the Metcalf project has been designed and proposed to operate however it would present an unfair burden on our community. ???That's not what Davis said however calling Metcalf one of the cleanest most efficient plants in the country. ???Davis praised the efforts of Calpine/Bechtel to work with the local community and said he was especially pleased that the venture had agreed to commit all the power to the local region. ???The Silicon Valley is obviously the engine driving our economy but they are very dependent on outside power Davis said. ???Also in Sacramento yesterday after an hourlong session with Senate Democrats -- the toughest legislative sell for Davis' proposed Edison deal -- the governor all but admitted his plan could not win enough votes for Senate approval. ???I think he knew there weren't enough votes going in said Sen. Don Perata D-Oakland. But there may be a way of perfecting a deal people can at least think of supporting. ???Senate Democrats have openly opposed Edison's deal saying the only beneficiaries are Edison shareholders and power generators who would be paid every cent owed them by the utility -- at the expense of customers who would pay more to erase Edison's debt. ???Unlike his meeting with Assembly Democrats after which Davis said he was encouraged the governor said yesterday he wanted the Senate to appoint a special committee to iron out differences over the Edison deal. ???Senate President Pro Tem John Burton D-San Francisco said he was not aware a committee was being set up. He said he favored an up-or-down vote on Davis' current proposal.Chronicle staff writers Greg Lucas Alan Gathright and Maria Alicia Gaura contributed to this report. / E-mail Lynda Gledhill at lgledhill@sfchronicle.com. GRAPHIC: PHOTO Gov. Gray Davis urged the California Energy Commission to approve construction of the proposed 600-megawatt power plant. / Associated Press LOAD-DATE: April 19 2001 of 63 DOCUMENTS 2001 Pacific Press Ltd. Vancouver Sun ????????????????????April 19 2001 Thursday FINAL EDITION SECTION: BUSINESS Pg. F1 / Front LENGTH: 731 words HEADLINE: B.C. Hydro's credit to California firms exceeded 1999 guidelines BYLINE: David Baines SOURCE: Vancouver Sun BODY: ??A confidential document issued in late 1999 shows that B.C. Hydro's power-trading subsidiary Powerex set a credit limit of $100 million US for its California customers. ??However by the end of 2000 Powerex had extended three times that amount of credit to those customers -- the California Independent System Operator and the California Power Exchange. With the California Power Exchange and Cal-ISO's major customer Pacific Gas & Electric under Chapter 11 bankruptcy protection repayment of this debt is now in doubt. ??Powerex spokesman Wayne Cousins noted that the document obtained by The Vancouver Sun which is marked strictly confidential was issued in November 1999. ??That's an old copy of our risk-management policy he said in an interview Wednesday. ??Credit limits have changed since then based on careful assessment of several factors including market conditions risks maintaining long-standing relationships and helping California meet its electricity needs to prevent crisis situations. ??Temporary revisions were only implemented after very diligent review incorporating the best market intelligence available our own due diligence and on-going dialogue with appropriate market participants. ??He refused to say when the credit limits for Cal-ISO and the California Power Exchange were increased. ??That type of information is confidential. You have a copy that I assume was leaked in some way but this is commercially confidential information. ??He said the increase in credit limits helped B.C. Hydro achieve record net income of about $1 billion during the year ending March 31. This figures does not include any write-downs that may occur if Powerex determines that any of its customer accounts are not collectible. ??Cousins however was insistent that all debts will be collected: We continue to pursue monies owing and we expect to be paid for electricity we have sold. ??He noted that Powerex suspended trades to all California entities on Dec. 8 unless those trades were fully secured by creditworthy customers. ??By that time Cal-ISO and California had racked up an unpaid bill of about $ 300 million US or $475 million Cdn -- about half the net income that Hydro has tentatively reported for the year ending March 31. ??The confidential document states that Powerex's policies and procedures are designed to control the risk of financial loss due to changes in market prices or volatility and the risk that a counterparty (customer) in a commodity transaction defaults on delivery and/or settlement. ??It states that the amount of credit to be advanced to any customer depends on its credit rating. An AAA customer for example may be granted credit to a maximum of $20 million. ??Cal-ISO and California Power Exchange are not utilities they are power pools. They purchase power from Powerex and other suppliers and re-sell it to utilities such as Pacific Gas & Electric and Southern California Edison. ??The pools are not rated but are assigned specific credit limits. As of November 1999 Cal-ISO had a credit limit of $40 million US and the California Power Exchange $60 million US. ??The risk-management document notes that the credit-worthiness of these pools depends on that of its suppliers. ??The Powerex credit-risk manager and the treasury manager are responsible for initially evaluating and then monitoring the credit-authorization policies and credit limits for each power pool in which Powerex trades the document states. Significant alterations in the credit policies of a power pool will trigger a mandatory reappraisal of the power-pool credit limit. ??California has been caught in a power vice in recent months. The problem dates back to 1996 when the state developed a plan to deregulate the electricity business. Competition was supposed to lower rates below a price cap that had been imposed. ??However dry conditions cut the ability to generate hydro-electric power and a surge in the state's economy created unprecedented demand for electricity. Prices soared. ??The result was that the California utilities paid record prices for power but weren't allowed to pass along the full cost to consumers. ??Pacific Gas & Electric and Southern California Edison the state's two biggest utilities now owe about $12 billion. ??dbaines@pacpress.southam.ca TYPE: Business LOAD-DATE: April 19 2001 of 63 DOCUMENTS ???????????????????The Associated Press State & Local Wire The materials in the AP file were compiled by The Associated Press. ?These materials may not be republished without the express written consent of The Associated Press. ?????????????????????April 18 2001 Wednesday BC cycle SECTION: Business News LENGTH: 348 words HEADLINE: Williams again target of overcharging allegations from federal regulators DATELINE: TULSA Okla. BODY: ??Federal regulators are once against targeting Williams for allegedly overcharging Californians for electricity. ??The Tulsa-based energy company was cited in a notice this week from the Federal Energy Regulatory Commission for allegedly overcharging California customers $25574 in March. ??Two other companies were also cited in the notice from federal regulators Monday. ??Dynegy Power Marketing Inc. of Houston was cited for overcharging California customers $469662 while Mirant California LLC of Atlanta was cited for overcharges of $92620. ??The commission told Williams and the other two companies to either refund the money or justify their prices which exceeded a price of $300 per megawatt hour that was set by the Federal Energy Regulatory Commission because of the California's electricity shortage. ??Williams also was accused of excessive charges of $8 million in January and $ 21.6 million in February for a total of $29.6 million. ??Williams spokeswoman Paula Hall-Collins said while the overpricing allegations against Williams in March were not as significant as in the other months the process of justifying them will be the same as in previous months. ??They determine the price that they feel is fair and justifiable and then we come back and say why we charged what we did she said. ??Hall-Collins said federal regulators haven't said whether they are satisfied with how Williams justified its alleged overcharges from previous months. ??Also in March the commission accused Williams and AES Southland of generating less power to drive up electricity prices in May and June 2000 resulting in alleged overcharging of $10.8 million. ??Williams denies overcharging for electricity it provides. ??In other news Williams Express Inc. a unit of Williams announced Tuesday it was selling 198 MAPCO Express convenience stores to Israel-based Delek Group for $147 million. Most of the stores are in Tennessee and executives expect to close the deal by the end of May. ??Williams will keep 29 MAPCO stores in Alaska. LOAD-DATE: April 19 2001 of 63 DOCUMENTS ???????????????????The Associated Press State & Local Wire The materials in the AP file were compiled by The Associated Press. ?These materials may not be republished without the express written consent of The Associated Press. ?????????????????????April 18 2001 Wednesday BC cycle SECTION: State and Regional LENGTH: 332 words HEADLINE: Governor congressman to fight proposals for national power deregulation policy BYLINE: By MARGERY BECK Associated Press Writer DATELINE: LINCOLN Neb. BODY: ??Gov. Mike Johanns and Rep. Lee Terry R-Neb. said Wednesday they will be working to make sure national leaders understand Nebraska's stance on a national energy policy. ??Nebraska's unique status as the only 100 percent public power state in the nation and its reliance on the corn-based fuel additive ethanol make the state's input in the development of national energy policy important Johanns said. ??Public power has worked very well for Nebraska consumers by providing low cost electricity he said adding that the deregulated state of California has suffered through weeks of rolling blackouts. We are committed to protecting public power in this environment of deregulation. ??Terry said he has talked at length to the staff of Vice President Dick Cheney who has been tapped to come up with a national energy policy draft. That draft will end up before the House Energy and Commerce Committee on which Terry serves. ??There will be a discussion about a national deregulation policy Terry said. ??A national deregulation policy would threaten Nebraska's public power system Terry and Johanns said. Terry said he plans to push for a states' rights exemption to any such policy. ??It is absolutely necessary that Nebraska have a voice in that discussion Terry said. ??Terry said he also has pleaded with the Bush administration not to grant a request from California to wave the Clean Air Act's gasoline oxygen requirement. ??Such a move is considered a death knell to ethanol a clean-air fuel additive because other states would be expected to follow suit in requesting - and receiving - similar waivers thereby destroying ethanol's market. ??They did not telegraph their position on the waiver Terry said of White House which is expected to decide on California's request this spring. ??Other energy concerns Nebraska leaders hope to address are rising heating costs and gasoline prices which are expected to top $2 a gallon in Nebraska this summer. LOAD-DATE: April 19 2001 of 63 DOCUMENTS ??????????????Copyright 2001 Knight Ridder/Tribune Business News 2001 San Jose Mercury News Jose Mercury News 18 2001 Wednesday KR-ACC-NO: SJ-POWER-PLANT LENGTH: 1038 words HEADLINE: California Governor May Back Energy Firm's Proposed Power Plant BODY: ??Under intense pressure to increase California's energy supply Gov. Gray Davis is expected to announce today his support for Calpine Corp.'s proposed South San Jose power plant -- a move that could ensure the state's most controversial power project is built. ??Davis said for months that he would not interfere in the environmental review of the proposed 600-megawatt power plant. But a source close to the governor said Davis has decided to use Calpine's Coyote Valley project to send a signal that California is ready to build more power plants and is open to business. ??San Jose has strenuously opposed the power plant. But Davis' decision to urge the California Energy Commission to approve it would likely hold sway with the agency which has authority over where plants are located but has almost never overridden local opposition. ??The commission -- three of whose five members were appointed by Davis -- is expected to complete its environmental review and make a decision early this summer. ??A spokesman for the governor declined to confirm the endorsement. But late Tuesday the governor scheduled a press conference for this morning to make an important energy generation announcement. ??San Jose Mayor Ron Gonzales declined to comment. But another of the plant's leading opponents pledged to keep fighting what would be the South Bay's largest power plant. ??An endorsement from Davis would cap a stunning turnaround for the project. ??Five months ago Calpine's Metcalf Energy Center was unanimously rejected by the San Jose City Council which decided that the power plant would be incompatible with the city's plans to develop high-tech campuses in North Coyote Valley. ??Some Calpine officials even considered giving up plans to build the power plant. ??But as California's energy woes intensified the Metcalf plant increasingly became a poster child for the need for more power generation to reduce the skyrocketing cost of electricity and avoid rolling blackouts. Silicon Valley one of the state's largest electricity consumers produces only a fraction of the energy it uses. ??Despite fierce opposition from local residents concerned about the environmental effects of a large power plant a steady stream of state and local organizations lined up behind the project including the Silicon Valley Manufacturing Group the San Jose Silicon Valley Chamber of Commerce and the local chapters of the Sierra Club and American Lung Association. ??The California Assembly voted unanimously in February to urge the energy commission to override San Jose and license the power plant. ??And top officials and attorneys at the energy commission have been working for months to ensure that the project wins approval a Mercury News investigation of the commission's environmental review of the project showed. The officials undermined negative environmental assessments of the Metcalf site and silenced commission analysts who said other sites would be better. ??The energy commissioners are weighing the staff's recommendation to approve the plant. ??Commissioner Robert A. Laurie who oversaw hearings on the project insisted at one hearing two months ago that the commission would complete an independent review. ??Although Davis has stressed his efforts to speed construction of new power plants the governor insisted he would not take a position on the project. ??The governor has repeatedly said he wants the process to play out Davis press secretary Steve Maviglio said last week. The governor believes the energy commission should complete its review. ??But there have been growing signs that Davis would throw his weight behind Calpine's project. ??A senior energy commission official said aides to the governor have been calling the commission for months to urge quick approval of the Metcalf plant. The governor's press secretary said no calls have been made. ??When Davis was looking for a backdrop to hold a press conference earlier this year to announce his plans to speed up approval of new power plants he chose Calpine's new plant in Sutter. ??The company also has actively campaigned for the governor's support. ??Earlier this year Calpine offered to sell the state cheaper power from the plant if it is approved. ??When Calpine and its development partner Bechtel Enterprises were looking for a lobbyist in Sacramento the companies turned to Platinum Advisors whose president Darius Anderson was finance chairman of Davis' 1998 gubernatorial campaign. ??The San Jose-based company gave the governor $ 19000 last year according to state campaign finance reports. ??Maviglio said the governor's ties to Calpine are no different from his relationship with Cisco Systems CEO John Chambers who has opposed the power plant. Campaign finance reports show Chambers gave Davis $ 50000 last year. ??Calpine officials said Tuesday they did not know of the governor's impending announcement. But they said they were not surprised. We've been working with the governor on a number of issues said project manager Ken Abreu. Metcalf is just one of them. ??Meanwhile Calpine's opponents in San Jose City Hall and in the neighborhood nearest the proposed power plant appear more isolated than at any time since the contentious debate over the Metcalf site began more than two years ago. ??Mayor Gonzales refused to comment on Davis' planned announcement. I don't respond to rumors said the mayor who has helped lead opposition to Metcalf. I have not heard anything. If he makes a statement I'll respond. ??But one of Calpine's fiercest local opponents said the nearby Santa Teresa neighborhood will continue to fight. We have a strong case said longtime South San Jose resident Issa Ajlouny. And we will win. ??The Mercury News strives to avoid use of unnamed sources. When unnamed sources are used because information cannot otherwise be obtained the newspaper generally requires more than one source to confirm the information. ??By Noam Levey and Mark Gladstone. Mike Zapler of the Mercury News contributed to this report. ??----- ??To see more of the San Jose Mercury News or to subscribe to the newspaper go to http://www.sjmercury.com JOURNAL-CODE: SJ LOAD-DATE: April 19 2001 of 63 DOCUMENTS 2001 Scripps Howard Inc. Howard News Service 18 2001 Wednesday SECTION: DOMESTIC NEWS LENGTH: 588 words HEADLINE: Davis says Edison agreement may need altering SOURCE: Scripps-McClatchy Western Service BYLINE: EMILY BAZAR and KEVIN YAMAMURA DATELINE: SACRAMENTO Calif. BODY: ??Gov. Gray Davis indicated Wednesday that he may need to alter the agreement to purchase Southern California Edison's transmission lines if he wants legislators to approve the deal. ??Though the Democratic governor declined to discuss particulars he said he asked Senate leaders to appoint a special committee dedicated to resolving disagreements between the administration and lawmakers. ??Many provisions of the memorandum of understanding the document that lays out the terms of the Edison deal must be approved by the Legislature and the state Public Utilities Commission. ??There is a determination to try and solve this problem whether or not it means amending the MOU or trying a slightly different approach Davis said after meeting with Senate Democrats. ??A spokesman for the utility declined to comment on the governor's statements. ??Davis announced the Edison agreement April 9 just three days after Pacific Gas & Electric Co. unexpectedly cut off transmission line negotiations with the governor and filed for bankruptcy protection. ??The deal would require the state to pay $2.76 billion for Edison's transmission lines or 2.3 times book value. In addition a portion of consumer electricity rates would be dedicated to paying off the remainder of the utility's debt estimated at about $5 billion. ??Both Edison and PG&E stockpiled massive debt when wholesale electricity prices soared. Price caps prevented them from passing along the entire cost of electricity to consumers. ??Since the Edison deal was announced however legislators have been critical of certain provisions suggesting that California consumers will receive little in return for relieving the utility of billions of dollars in debt. ??It's clear that the deal as is could well be problematic said Senate President Pro Tem John Burton D-San Francisco. This has to do with what's in the bill what's in it for the people of the state. ??Lawmakers initially believed they would have little ability to change the agreement and referred to it as a take it or leave it deal. ??In fact the memorandum of understanding itself says the deal can be nullified in the event any law is passed adopted or repealed ... (which) would materially impede or frustrate the ability of the Parties to effectuate all of the elements of the plan as a package. ??But in his meeting with Senate Democrats Davis indicated he may be willing to compromise. His goal he said is to keep Edison from following PG&E into bankruptcy. ??We still have some work to do Davis said. I think the appointment of a special Senate committee assuming that happens will let us work through the detail in an appropriate fashion. ??Burton said he has not decided whether to appoint a committee. ??Other senators came out of the meeting guardedly optimistic that they could compromise with the governor. ??It was obvious that there were concerns from members said Sen. Don Perata D-Alameda. He is open and ready to have the proposal perfected as it moves through the legislative process. ??Sen. Jackie Speier D-Hillsborough said she hopes to amend the deal to ensure power generators are penalized for over-charging the utilities and the state for electricity. ??The way it's presently crafted (generators) are being rewarded she said. They are getting a premium for selling electricity at a higher premium than ever conceived of by humankind. ??(Contact Emily Bazar and Kevin Yamamura of the Sacramento Bee in California at http://www.sacbee.com.) LOAD-DATE: April 19 2001 ???,other,formal,3 +"Re: ""The"" Bullet",looks good Richard Shapiro 05/01/2001 06:39 PM To: Steven J Kean/NA/Enron@Enron cc: Subject: The Bullet Let's discuss. -----------------,other,casual,3 +Energy Issues,Please see the following articles: Sac Bee Thurs 7/5: Many rural towns to escape blackouts utility maps sho= w Sac Bee Tues 7/3: Details emerge in power contracts SD Union Thurs 7/5: New FERC member seems attuned to state's woes SD Union Wed 7/4: Electricity price-cap tests spark allegations SD Union Wed 7/4: Renewable energy fades from picture in rush for solutio= n SD Union Wed 7/4: SDG&E spreads word of looming blackouts SD Union Wed 7/4: Two more energy whistleblowers slated to come forward SD Union Wed 7/4: Disabled PG&E employees ask state for help in getting= =20 disability checks LA Times Thurs 7/5: Powerful Judge Illuminates Energy Practices Law:=20 'Folksy' jurist 72 stuns utility executives and lawyers alike with his=20 courtroom incisiveness. SF Chron Thurs 7/5: Davis lauds California generator=20 Vote of confidence at Calpine's festival=20 SF Chron Wed 7/4: Activists stage anti-corporate march to power plant=20 SF Chron Wed 7/4: Davis asks PUC to let utilities cut voltage=20 1% savings on energy consumption predicted SF Chron Wed 7/4: Federal price limits backfire=20 Some generators withhold power rather than abide by rate caps SF Chron Wed 7/4: Two more energy whistleblowers slated to come forward Mercury News Wed 7/4: Davis seeking cheaper contracts=20 --- Many rural towns to escape blackouts utility maps show=20 By Carrie Peyton Bee Staff Writer (Published July 5 2001)=20 Huge stretches of Northern California including many rural foothill and=20 valley communities won't face rolling blackouts this summer spared by a= =20 combination of geography and circuitry.=20 Placerville and Loomis Esparto and Isleton are among the many towns that= =20 will be largely or entirely bypassed by deliberate blackouts according to= =20 new Pacific Gas and Electric Co. outage maps.=20 Such communities are served by so few circuits that each one has been=20 exempted from outages because a critical facility such as a fire station o= r=20 a water treatment plant lies along the circuit somewhere PG&E spokesman= =20 John Nelson said.=20 Both PG&E and the Sacramento Municipal Utility District have begun shedding= =20 more light on their strategies for rotating outages in the wake of a=20 governor's order requiring utilities to let people know where blackouts wil= l=20 strike next.=20 For PG&E that has meant quickly posting and then updating blackout maps on= =20 its Web site. For SMUD it has meant publicly detailing for the first time= =20 the boundaries of 78 separate rotating outage areas and listing by number= =20 which areas could be tapped next.=20 We were contemplating putting the map on the Web before the governor's=20 order but the timing coincided very well said John DiStasio SMUD's=20 assistant general manager for customer service.=20 SMUD updated its Web site www.smud.org on June 22 so that now people can= =20 click on rotating outages and then next likely locations and map to see= =20 the shape of outages to come.=20 The map replaces less-precise neighborhood names which is all SMUD supplie= d=20 until Gov. Gray Davis ordered utilities to give the public common=20 geographical boundaries grid or block numbers maps or similar identifying= =20 information about where outages will strike.=20 With six days of rolling blackouts already behind California this year and= =20 forecasts that more probably lie ahead Davis has told utilities and the=20 state Independent System Operator to give better notice of when and where= =20 blackouts might occur.=20 Grid operators and utilities have cautioned that Davis' program of two-day= =20 one-day and one-hour warnings could produce many false alarms because power= =20 supplies often come through at the last minute. There is also some wariness= =20 about outage maps which SMUD and PG&E warn could change at any time.=20 But the maps do provide insight into how each utility will roll blackouts= =20 through its territory. PG&E's maps on the Web at www.pge.com under find= =20 your outage block and then rotating outage block map have recently been= =20 updated to be searchable by zip code.=20 They show that the vast majority of El Dorado and Placer counties and much = of=20 Yolo County are in PG&E's block 50 a designation for a circuit that won'= t=20 be in line for rolling outages because someone along it is crucial to healt= h=20 or safety.=20 Police stations fire stations hospitals and airports are all deemed=20 essential customers that should keep functioning even when the state power= =20 grid is so overloaded that blackouts are needed to keep it from collapsing.= =20 In densely populated areas circuits tend to be compact leaving lots of=20 neighborhoods eligible for rolling blackouts Nelson said.=20 But in rural areas particularly remote rural areas a circuit can go on f= or=20 miles and miles Nelson said. You can have multiple communities on one=20 circuit =01( (and) virtually every community has either a police station or= a=20 fire station or a hospital or a drinking water facility.=20 That has been good news for communities like Placerville which scrambled f= or=20 traffic control earlier this year when a rolling outage took out the signal= =20 lights on Highway 50 which bisects the town of 10000.=20 That has been our biggest concern because of the amount of traffic that go= es=20 through there said City Manager John Driscoll. Placerville will be spared= =20 future outages because regulators now are protecting more hospitals from=20 blackouts and much of the rest of the town shares circuits with hospitals.= =20 We didn't ask to be exempted out but I feel very happy that we are. From = a=20 selfish standpoint it feels very nice Driscoll said.=20 The Bee's Carrie Peyton can be reached at (916) 321-1086 or=20 cpeyton@sacbee.com.=20 =20 Details emerge in power contracts By Carrie Peyton and Chris Bowman Bee Staff Writers=20 (Published July 3 2001) California's power bills for the next decade probably will exceed the=20 forecasts of Gov. Gray Davis the State Controller's Office said Monday as = it=20 released unedited versions of long-term contracts in a new jab at the=20 governor.=20 The electricity contracts which Davis' office sought in court to keep=20 secret offer a glimpse into the rapid high-stakes deals struck early in t= he=20 state's power crisis and illustrate the way deregulation's unraveling could= =20 haunt California for years to come.=20 Some show that builders of new power plants could recoup the entire cost of= =20 those plants in four years or less. Some show lucrative swaps for power=20 including one arranged the same day California was rocked by rolling=20 blackouts.=20 More than two dozen additional administrative contracts detail the price=20 California is paying its consultants to seek a way out of the power mess= =20 from tens of thousands for Davis' aides down to $51 an hour for copying and= =20 phone answering.=20 The governor's office defended its estimates of the state's future power=20 bill.=20 The 41 long-term contracts 27 consulting contracts five short-term deals= =20 and stacks of receipts and invoices released Monday by state Controller=20 Kathleen Connell may just be the start.=20 Her office hopes to provide details about how much California has already= =20 paid individual power generators in the volatile short-term or spot=20 market.=20 The deals include so many intricate pricing formulas that Connell said she= =20 couldn't immediately predict exactly how high California's hourly power cos= ts=20 would go.=20 Walter Barnes chief deputy controller of finance said the contracts=20 probably would be well in excess of the $69 a megawatt-hour that Davis on= ce=20 said would be California's average cost for contract power for the next=20 decade.=20 The contracts' prices range from $55 to $249 a megawatt-hour and most are= =20 more than the $69 Connell said.=20 The state Department of Water Resources the state's power buying arm late= r=20 revised the $69 forecast to $70 a megawatt-hour through the end of 2010 wi= th=20 the higher priced power coming first.=20 If anything those figures could decline because natural gas the fuel for= =20 most new power plants is getting cheaper DWR spokesman Oscar Hidalgo said= =20 adding that his office sticks with its forecasts.=20 We're on pretty solid ground here he said.=20 As the statewide elected official who pays California's bills Connell=20 repeatedly has criticized the governor for his electricity spending saying= =20 that she never believed the contracts should be kept secret.=20 But Davis' office blasted her for giving out details that power generators= =20 and traders could use to learn the state's negotiating positions and buying= =20 practices and said the information could boost wholesale prices within days= .=20 When they open their electric bill next time every Californian can thank= =20 Kathleen Connell for higher electricity costs Davis spokesman Steve=20 Maviglio said.=20 The long-term contracts were first released June 15 by the water resources= =20 department with power plant names performance data delivery points and=20 other details blocked out under heavy black strokes.=20 Analysts said that was the sort of data they could have used to calculate h= ow=20 much more than the production costs the state was going to be paying for th= e=20 electricity purchased on behalf of three cash-strapped investor-owned=20 utilities.=20 As analysts began sizing up some of the specifics Monday early reactions= =20 were wary.=20 This just shows when the state comes in and takes over the utility system= =20 we're just going to be in deep from all sorts of expenses and inefficiencie= s=20 that we were trying to get away from with deregulation said Arthur=20 O'Donnell who edits a trade newsletter California Energy Markets.=20 Bill Marcus a power consultant who had analyzed the edited contracts for a= =20 consumer group quickly read through the unedited versions muttering things= =20 such as offensive and they got absolutely ripped here.=20 In one swap that was negotiated on a day of rolling blackouts in March the= =20 state agreed to send Powerex the trading arm of British Columbia's=20 government utility 2* times more electricity in the spring than Powerex=20 would return in the summer.=20 Although seasonal swaps are common the 2*-to-1 ratio was a sign of panic= =20 and inexperience on the state's part he said.=20 The consultants who advise California on power deals were frenetic at the= =20 time with one staffer at the Navigant consulting firm billing for hours=20 worked that were the equivalent of 9.7 hours a day for 34 consecutive days.= =20 The power purchase terms disclosed Monday confirm many energy analysts'=20 predictions that California consumers would be paying premium prices for=20 years to cover the costs of the new plants coming on line.=20 In several of the contracts the state agreed to pay generators a 25 percen= t=20 to 30 percent annual return on their plant construction costs which could= =20 pay off the entire plant in four years or less.=20 Before deregulation utilities generally received 3 percent to 18 percent= =20 annual return on their capital investments over 30 years said Marcus a=20 veteran energy analyst whose firm JBS Energy Inc. of West Sacramento=20 represents ratepayer groups.=20 We're all going to have to pay more for power plants over the next 10 or= =20 more years because the generators are looking to pay off their plants in ha= lf=20 the time he said.=20 Beyond blackouts and price spikes this will be the long-term legacy of=20 deregulation he said. The private market needs a high rate of return on= =20 their investment.=20 Several contracts were drafted in the late winter and early spring when=20 California endured Stage 2 and Stage 3 energy alerts.=20 The unmasked terms in some of those agreements reflect the state's=20 desperation for megawatts amid fears of routine blackouts when temperatures= =20 and energy use began to rise in the summer.=20 For example the state agreed in a March 29 contract to pay Calpine $232 a= =20 megawatt-hour to supply 300 megawatts nonstop from July 1 through Sept. 30.= =20 But a more recent Calpine contract calls for about $59 a megawatt-hour=20 starting Oct. 1.=20 Time made all the difference said Jim Macias a Calpine senior vice=20 president. He said that last winter Calpine couldn't guarantee that plants= =20 under construction in Sutter County and the East Bay would be on line by=20 summer. So the company bought the power on the spot market for the state= =20 Macias said.=20 Back in the winter $232 was a good price for electricity this summer he= =20 said.=20 Calpine officials said that they made no money on the sale and even knocked= =20 15 percent off their price to maintain good relations with the state power= =20 buyers.=20 The gesture more than paid off with the signing of the 10-year contract sa= id=20 Kathleen Potter Calpine spokeswoman.=20 It was a great transaction for us Potter said. We appreciate the=20 business.=20 Proponents of free-market energy buying have said that in the long-run= =20 competitive forces would result in more-efficient less-costly power=20 generation.=20 But the contracts show that pressed for more electricity this summer and=20 fall officials resorted to buying power from some of the least-efficient= =20 plants in the state guaranteeing owners of these aging generators 10 more= =20 years of income.=20 The Bee's Carrie Peyton can be reached at (916) 321-1086 or=20 cpeyton@sacbee.com. New FERC member seems attuned to state's woes=20 Texan may become agency's next chief By Toby Eckert=20 COPLEY NEWS SERVICE=20 July 5 2001=20 WASHINGTON -- During his first weeks at the Federal Energy Regulatory=20 Commission Pat Wood has set a decidedly different tone in the agency's=20 strained relationship with California.=20 After meeting with Gov. Gray Davis last week Wood -- who was recently=20 appointed to the commission by President Bush and is widely expected to be= =20 named chairman soon -- praised the state's efforts to come to grips with it= s=20 power problems. It was a stark contrast to the almost constant criticism fr= om=20 FERC Chairman Curtis Hebert.=20 It certainly seems to me that both the political leadership and the=20 regulatory leadership of the state are committed to the kind of=20 infrastructure upgrades that are needed to really get supply and demand bac= k=20 into whack Wood said referring to power plants being built in California= .=20 The former Texas utility regulator also raised the possibility of closer=20 cooperation between FERC and state regulators including a joint effort o= n=20 inspecting power plants. State officials have accused generators of idling= =20 plants to drive up electricity costs a charge generators deny.=20 If we're kind of co-regulators with the state and in many regards we are= =20 it's helpful to work off the same set of facts so you get to conclusions mu= ch=20 more expeditiously Wood said though he was quick to add that he has not= =20 seen any evidence of intentional withholding of supply.=20 State officials hope Wood's statements signal that FERC is poised to take a= =20 more aggressive role in helping the state. If elevated to chairman Wood=20 would set FERC's agenda and shape its approach to dealing with California.= =20 The agency regulates wholesale electricity and natural gas markets which= =20 have subjected the state to skyrocketing prices.=20 Wood has brought a very good perspective to FERC said Howard Gantman a= =20 spokesman for Sen. Dianne Feinstein D-Calif. a frequent critic of the=20 commission. He seems very interested in getting to the root of the problem= =20 and finding solutions.=20 Throughout the crisis the state's relationship with FERC has been poisonou= s.=20 Davis criticized the commission for being slow to rein in electricity price= s=20 while Hebert faulted the state for crafting a bad deregulation law and=20 failing to build enough plants to keep up with demand.=20 Davis issued a guardedly conciliatory statement after his meeting in=20 Sacramento with Wood and Commissioner Nora Brownell who is also new to FER= C.=20 In a refreshing change from my past dealings over the past year with the= =20 agency these commissioners offered a problem-solving approach in resolving= =20 California's energy challenge Davis said. He added It appears that FERC= =20 may finally be poised to do its job controlling energy costs.=20 Threats criticized Despite the soothing words there is no shortage of potential flash points= =20 between Davis and FERC.=20 Wood who professes a religious zeal about competition raised concerns= =20 about a possible move by the California Public Utilities Commission to keep= =20 retail power customers from shopping around for alternative providers.=20 He also criticized threats that Davis and other California politicians have= =20 made to seize power plants and impose a windfall profits tax on power=20 sellers.=20 I think the rhetoric's still pretty hot out there. If I were a generator= =20 looking at 50 states one that's talking about a windfall profits tax and= =20 expropriation of property and all that is not a great climate Wood said.= =20 For his part Davis has questioned whether the recent price curbs imposed b= y=20 FERC in the West will be enough to tame soaring wholesale power costs that= =20 have bankrupted one utility cost the state treasury billions of dollars an= d=20 raised consumers' power bills.=20 Davis has also made it clear that he expects hefty refunds to result from t= he=20 FERC-brokered talks between the state and power providers which are in the= ir=20 second week.=20 I will be vigilant in insisting that Californians get their money back= =20 Davis said.=20 California consumer activists are taking a wait-and-see attitude toward Woo= d=20 saying they know little about him.=20 A major role My impression from afar is he seems to be more moderate said Harvey=20 Rosenfield president of the Foundation for Taxpayer and Consumer Rights in= =20 Santa Monica.=20 Once considered a bureaucratic backwater the five-member FERC has come to= =20 play a high-profile role in the California debacle and other disputes=20 involving the largely deregulated wholesale power markets.=20 The commission is charged with ensuring that just and reasonable prices= =20 prevail.=20 Bush is expected to make Wood the FERC chairman because Hebert is seen as t= oo=20 much of a lightning rod.=20 Before coming to Washington Wood who turned 39 yesterday headed the Texa= s=20 Public Utility Commission. There he oversaw the state's move toward a=20 deregulated electricity market. Like Hebert Wood is convinced that a free= =20 market will deliver cheaper power to consumers than a highly regulated one.= =20 I just think customers fare better when they have more choices Wood said= .=20 But consumer advocates and others who have worked with Wood in Texas say hi= s=20 zeal is tempered by a healthy dose of pragmatism.=20 Bottom line it's all about the customer. Y'all will hear me say that unti= l=20 you get sick of it Wood said. We want to make sure that the world we're= =20 moving to is better than the one we left.=20 Electricity price-cap tests spark allegations=20 Suppliers said to have held back industry blames ISO By Craig D. Rose and Bill Ainsworth=20 UNION-TRIBUNE STAFF WRITERS=20 July 4 2001=20 The first emergency tests of new electricity price controls have generated= =20 accusations that suppliers were withholding power and questions that the ca= ps=20 might need to be revised or scrapped.=20 And in a case of turnabout a power industry spokesman yesterday said the= =20 Independent System Operator which manages the state's electricity grid=20 might be using the federal price caps to manipulate the electricity market.= =20 This time however the charge is that the ISO is gaming to push prices=20 lower.=20 At any rate California survived its second consecutive day of power=20 emergencies without blackouts under price caps recently imposed by federal= =20 regulators but not without some bumps along the way.=20 The main culprit was hot weather that baked Western states for two days=20 forcing the ISO to issue Stage 1 and then Stage 2 alerts. Yesterday the IS= O=20 warned that rolling blackouts might hit in the afternoon.=20 But as has happened often this year the ISO bought power in the last minut= es=20 to avoid outages. The grid operator also credited conservation efforts with= =20 shaving from 2000 to 4000 megawatts of consumption. A megawatt can power= =20 about 750 homes.=20 It was a lot hotter than expected and a lot more humid said Kristina=20 Werst spokeswoman for the ISO.=20 Today state officials expect to avoid any blackouts because of the holiday= =20 which tends to decrease electricity demand Werst said.=20 The price controls ordered last month by the Federal Energy Regulatory=20 Commission set up formulas for maximum prices during emergency and=20 nonemergency periods. The FERC said the complex system was intended to=20 balance the need for lower costs with its desire to promote a power market.= =20 But questions are growing about the effectiveness of the FERC price caps.= =20 A Department of Water Resources spokesman which buys power for the state= =20 said generators withheld between 660 and 1500 megawatts of electricity=20 during a critical period earlier this week because of the price caps. That= =20 would be enough to cut electricity reserves from 7 percent to 5 percent and= =20 bump a Stage 1 alert to a Stage 2.=20 Sempra Energy Trading a marketing unit of San Diego Gas & Electric Co.'s= =20 parent corporation admitted that it ceased selling power to the state for= =20 what could have been a critical 30 minutes Monday.=20 A spokesman for the trading company said it halted sales for the half-hour= =20 because it was unsure about where the ISO would set maximum prices during t= he=20 first power emergency under the new caps.=20 When power emergencies are called under the FERC plan a new price cap is s= et=20 based on the cost of operating the least efficient most costly electric=20 generating plant. Because the identity of that plant is unknown beforehand= =20 the selling price is set retrospectively by the ISO.=20 It was unclear to the traders what the proxy price would be said Doug=20 Kline a Sempra spokesman who emphasized that the company's trading unit= =20 resells power generated by other companies. So it was unclear whether the= =20 ISO would come back later and say 'You purchased power at $70 per=20 megawatt-hour but we're only going to pay you $60.'?=20 For its part the ISO said the impact of price controls on electricity=20 supplies during emergencies is still unclear. The controls this week kept= =20 emergency prices Monday from a little over $70 per megawatt-hour to a high = of=20 about $90. FERC's nonemergency price cap has been about $92 per=20 megawatt-hour.=20 Earlier this year the average price per megawatt-hour was nearly $300.=20 Before the power crisis hit last year the price was about $30.=20 The ISO said several factors other than the price controls might have=20 contributed to tight supplies this week including plant shutdowns in other= =20 states and the regional heat wave.=20 But a spokeswoman for Nevada Power said the utility believed the price caps= =20 or confusion over their implementation had contributed to a power shortfal= l=20 that led to blackouts Monday. The utility fell about 100 megawatts short of= =20 its need as temperatures in some of its service areas hit 122 degrees.=20 Power is tight in the region said Sonya Heagen of Nevada Power. What=20 tipped it over (for southern Nevada) was several utilities decided to hold= =20 back power.=20 Gary Ackerman executive director of the Western Power Trading Forum an=20 industry group said the FERC's price-control plan fails to allow the=20 recovery of electricity transportation costs. That has the effect of keepin= g=20 electricity in the region in which it is generated rather than where it=20 might be needed most he said.=20 Ackerman said transportation costs which typically run from $2 to $8 per= =20 megawatt-hour are more significant now that overall prices have settled in= to=20 a $100 range.=20 They didn't mean as much to the suppliers when they were getting $400 per= =20 megawatt-hour Ackerman said.=20 He also said some of his members suspect the ISO made moves during power=20 alerts to artificially keep prices lower.=20 The FERC pricing regime sets nonemergency prices at 85 percent of the last= =20 full hour of a Stage 1 emergency. But this week the ISO twice went from a= =20 Stage 1 to a Stage 2 alert in less than an hour. That kept the nonemergency= =20 price cap in place at about $92 per megawatt-hour set back in May.=20 Some traders said the ISO is 'gaming the market' to keep the price lower= =20 Ackerman said. I have a few traders who think the price should be higher.= =20 The ISO rejected the charge of manipulation and said it continues to make i= ts=20 emergency declarations based on power supply and demand. The ISO also said = it=20 has not identified transportation costs as a problem under the FERC order.= =20 Other energy experts however said the FERC system of using the most=20 inefficient power plants to set emergency prices was a mistake.=20 Frank Wolak a member of the ISO's market monitoring unit and a Stanford=20 University economist said the plan invited energy companies to keep their= =20 least efficient plants in operation to ensure the highest prices.=20 But James Sweeney also a Stanford professor and energy expert said he=20 preferred the FERC plan to a rigid market price cap.=20 Consumer advocate Doug Heller of the Foundation for Taxpayer & Consumer=20 Rights said the FERC plan is too complex and urged a return to a regulated= =20 system which pays generators for their production costs plus a reasonable= =20 profit. Gov. Gray Davis supports a similar approach.=20 Arthur O'Donnell editor of California Energy Markets saw much of the=20 maneuvering this week as an industry road test of new price regime.=20 I think they were testing the boundaries O'Donnell said. This is the we= ek=20 where we test the bugs in the system.=20 Copley News Service correspondent Toby Eckert and The Associated Press=20 contributed to this report.=20 Renewable energy fades from picture in rush for solution=20 By Ed Mendel=20 UNION-TRIBUNE STAFF WRITER=20 July 4 2001=20 SACRAMENTO -- The electricity crisis is putting the squeeze on the renewabl= e=20 energy industry: the power plants that use the sun wind or underground hea= t.=20 The environmentally friendly alternative energy provides about 12 percent = of=20 the state's power. But the energy crunch and the state's effort to resolve = it=20 could end up shrinking the role of renewable energy in the coming years jus= t=20 as backers were hoping to see it expand.=20 For example:=20 ?Long-term power contracts obtained by the state to reduce costs will cover= =20 most state needs for a decade. Nearly all of the contracts are with natural= =20 gas-fired plants reducing the long-term market for new renewable plants.= =20 ?The uncertainty and lack of payment resulting from the crisis have slowed= =20 the development of renewable plants under an incentive program created as= =20 part of the state electricity deregulation plan.=20 ?Regulators are poised to prevent marketers from selling electricity=20 including green power from renewable sources directly to customers. A=20 large base of ratepayers must stay in the state program to pay off a power= =20 bond of up to $13.4 billion over 15 years. The state Public Utilities=20 Commission yesterday for the second time put off a decision whether to=20 curtail such direct access.=20 State and federal programs had been encouraging renewable energy to reduce= =20 dependency on the new wave of relatively clean and efficient natural-gas=20 power plants. The cost of electricity from those plants could go up if the= =20 demand for gas outpaces supply.=20 Renewable energy with the exception of some biomass plants also avoids th= e=20 pollution problems of power plants fueled by oil and coal -- not to mention= =20 the safety and radioactive waste-disposal problems of nuclear power.=20 A spokesman for a coalition of renewable generators and environmental group= s=20 said he thinks renewable energy has suffered during the electricity crisis= =20 because of a lack of attention not a shift in state policy.=20 I think the renewables are an unintended casualty said V. John White of= =20 the Center for Energy Efficiency and Renewable Technologies.=20 The state became a major player in the power equation in January when it=20 began buying power for debt-ridden utilities.=20 State officials say they would like to have a mix of power to spread the ri= sk=20 if something goes wrong with one source. For example soaring natural gas= =20 prices last winter were part of the reason for the high cost of electricity= .=20 In a trade-off the state scrambled to obtain long-term contracts that woul= d=20 lower the price of electricity now in exchange for prices that are expected= =20 to be above the market in the years to come.=20 The 38 contracts worth $43 billion over the next decade will help finance= =20 the construction of gas-fired power plants. About 70 percent of the power= =20 will come from plants that have not yet been built.=20 Only four of the contracts are for renewable power and their 120 megawatts= =20 is a tiny fraction of the total amount of power now under state contract. A= =20 megawatt can provide power for 750 to 1000 homes.=20 We agree the portfolio is lopsided and should be more diverse than it is= =20 Ray Hart head of the power purchasing unit in the state Department of Wate= r=20 Resources told the Senate Energy Committee last month.=20 The state has agreements in principle on an additional 19 contracts for 12= 70=20 megawatts from renewable sources. Most of the power 1172 megawatts would= =20 come from wind generation.=20 Anything could happen said Oscar Hidalgo a Water Resources spokesman. = It=20 could increase or decrease depending on what gets signed.=20 One renewable generator CalEnergy said the state rejected its offer to=20 provide 340 megawatts from a geothermal plant in the Imperial Valley for 20= =20 years at 6.9 cents per kilowatt-hour a price that is said to be the 10-yea= r=20 average of the state contracts.=20 We were astonished said Jonathan Weisgall CalEnergy vice president.=20 Hidalgo said state power purchasers don't recall the specifics of the=20 CalEnergy offer. He said the proposal may have been rejected because of its= =20 length the time of the power delivery or other reasons.=20 They may have to regroup restructure repackage and look for what we=20 want Hidalgo said.=20 Under deregulation part of monthly ratepayer bills were earmarked for a fu= nd=20 to encourage renewable energy sources. The fund provides five-year incentiv= es=20 of up to 1.5 cents per kilowatt hour.=20 The state held auctions in 1998 and again last summer that awarded $202=20 million in incentives for dozens of new small renewable plants that could= =20 produce about 1000 megawatts. The average incentive was .4 cents per=20 kilowatt hour.=20 But at this point said Marwan Masri of the California Energy Commission= =20 only plants capable of producing 180 megawatts have been completed.=20 There is the overall issue of who will buy the power said Masri and at= =20 what price and for how long.=20 A firm that specialized in marketing green power from renewable sources f= or=20 the environmentally conscious has taken a double hit from the electricity= =20 crisis.=20 Green Mountain Energy of Austin Texas. sells power to customers in a part= =20 of deregulation that is often called direct access which bypassed=20 utilities and later the state after it began buying power for utility=20 customers.=20 The firm canceled contracts with 50000 customers because the price was=20 indexed to the state Power Exchange which went bankrupt last spring after= =20 the debt-ridden utilities defaulted on their debt.=20 Green Mountain still has contracts with about 7000 customers in San Diego= =20 County who receive power under contracts at a fixed rate 8.5 cents per=20 kilowatt-hour.=20 The state Public Utilities Commission is still expected to prohibit future= =20 direct-access contracts a step directed by the legislation authorizing the= =20 state to buy power for utility customers.=20 That was the second blow to us said Rick Counihan of Green Mountain. It= =20 meant that we couldn't go out and buy a block of fixed-price power to sell = to=20 customers.=20 The ban on direct-access contracts is vigorously opposed by business groups= =20 who say that direct access would lower the cost of doing business in=20 California.=20 But supporters of the direct-access ban say that if customers bypass the=20 utilities the remaining ratepayers will be stuck with paying off a bond of= =20 up to $13.4 billion that is expected to be issued in September for power=20 costs.=20 Despite the problems some representatives of the renewable energy industry= =20 are optimistic about its potential for growth in the future.=20 A lot of the market is being served by rapidly aging power plants that=20 should be replaced said Jan Smutny-Jones of the Independent Energy=20 Producers. I think we also are going to see additional demand.=20 Moreover state government may take more steps to encourage the renewable= =20 industry.=20 The Energy Commission is proposing a goal for the incentive program that=20 would increase the amount of power coming from renewable sources to 17=20 percent of the total by 2006 up from 12 percent.=20 State Sen. Byron Sher D-Stanford has introduced a bill SB 531 that woul= d=20 set a goal of increasing the renewable share of state power to 20 percent b= y=20 2010. SDG&E spreads word of looming blackouts=20 By Jeff McDonald=20 UNION-TRIBUNE STAFF WRITER=20 July 4 2001=20 While power supplies dwindled and the likelihood of blackouts loomed San= =20 Diego Gas & Electric Co. for the first time yesterday was able to warn=20 customers in advance that they might go dark.=20 Under increasing pressure from businesses and residents SDG&E launched a n= ew=20 system to notify customers by pager and e-mail whenever the state declares= =20 supply emergencies that might lead to blackouts.=20 Some 5000 customers signed up for the warnings which ended up being false= =20 alarms by midafternoon when the Independent System Operator which manages= =20 the state's electricity grid was able to find enough megawatts to avoid th= e=20 first blackouts since May.=20 This at least gives people the opportunity to make a switch over to backup= =20 generation to power down essential equipment or to back up critical files= =20 SDG&E spokesman Ed Van Herik said.=20 It's definitely an improvement but we'll certainly look for ways to=20 increase the effectiveness of the notification process.=20 Even so the warnings from SDG&E came barely an hour before the ISO was=20 expected to issue a Stage 3 power alert meaning that demand had climbed to= =20 within 1.5 percent of available supplies. As it turned out the state never= =20 rose above a Stage 2 alert.=20 As the threat of blackouts continues to vex state power officials early=20 warnings about potential outages have become a key issue for businesses and= =20 residents who rely on uninterrupted service.=20 During blackouts earlier this year darkened traffic lights caused numerous= =20 accidents people were stranded in elevators and business owners complained= =20 of losses that could have been minimized.=20 Regular notification is a good idea said Samuel Ingersoll-Weng of the Sa= n=20 Diego Community Technology Group which works with hundreds of local=20 organizations to promote computer literacy.=20 It would be very helpful in terms of scheduling staff canceling or holdin= g=20 classes and also to protect equipment from power spikes or suddenly being= =20 shut off he said.=20 For most of the year SDG&E was telephoning a small number of such customer= s=20 on mornings they worried that demand for electricity might exceed supplies.= =20 But the problem is that when orders to pull megawatts from the grid come fr= om=20 the ISO the utility has only minutes to cut supplies and there has been=20 little time to warn people they may lose power.=20 Yesterday SDG&E was told 90 minutes ahead of time that a Stage 3 warning= =20 would likely be called at 3 p.m. The company issued the mass e-mails and=20 pages within 30 minutes.=20 Gov. Gray Davis announced plans this spring to provide neighborhoods 48-= =20 24-and 1-hour notices when blackout orders might be called. The ISO issued = no=20 such notice yesterday when it came the closest it had in weeks to ordering= =20 blackouts.=20 Ratepayers interested in signing up to be notified early of potential=20 blackouts can call the utility at (800) 411-SDGE.=20 Two more energy whistleblowers slated to come forward=20 By Don Thompson ASSOCIATED PRESS=20 July 4 2001=20 SACRAMENTO =01) Two more former workers at a San Diego-area Duke Energy pla= nt=20 are slated to talk with state investigators Thursday echoing concerns by= =20 other employees over how the plant was run when the state needed its power= =20 most.=20 However another former worker at the Chula Vista plant said he discarded= =20 perfectly good equipment three to five years ago while the plant was still= =20 owned by San Diego Gas and Electric.=20 Stuff that cost $3- to $5000 we were throwing away said Don Perkins of= =20 Alpine a mechanic at SDG&E plants for nearly 25 years.=20 That undercuts testimony from other former workers who told the Senate Sele= ct=20 Committee to Investigate Price Manipulation of the Wholesale Energy Market= =20 last month that they discarded valuable repair parts on the orders of Duke= =20 supervisors.=20 Like the other former SDG&E employees who have come forward Perkins was no= t=20 hired by Duke when it took over full operation of the plant in April. Perki= ns=20 said he is happy in retirement but like his former co-workers believes Duk= e=20 was driving up energy prices =01) which the company vehemently denies.=20 He and the three other former workers suggested Duke did not adequately=20 maintain its equipment leading to unnecessary repairs they said cut power= =20 generation and may have helped boost prices by cutting supply. That include= d=20 running a 15-megawatt jet-fuel fired turbine until it broke down.=20 We ran the heck out of the plant you bet we didresponded Duke spokesman= =20 Tom Williams. But he said the plant had fewer outages under Duke's ownershi= p=20 than while it was owned by SDG&E.=20 Duke eventually had to completely rebuild the jet-fuel fired turbine=20 Williams said.=20 It ran more last year than the previous 37 years combined because the sta= te=20 needed the power Williams said.=20 An attorney for Lt. Gov. Cruz Bustamante who is to introduce the two new= =20 whistleblowers Thursday said they will echo their co-workers complaints th= at=20 maintenance slipped once Duke took over the plant.=20 Williams dismissed the news conference as a media event and the workers'= =20 complaints as old news the company has rebutted since the earlier testimony= =20 before the committee.=20 Disabled PG&E employees ask state for help in getting disability checks=20 ASSOCIATED PRESS=20 July 4 2001=20 SAN FRANCISCO =01) After not receiving checks for work-related disabilities= for=20 months more than 200 Pacific Gas and Electric Co. employees have asked the= =20 state to take over their disability payments.=20 The employees stopped getting checks after Pacific Service Employees=20 Association sent them a letter saying it did not have enough funds. Until= =20 this year the association had paid almost all of PG&E's disability claims.= =20 PG&E said it has no legal responsibility to help the disabled workers and= =20 blames the employee association. But workers waiting for their payments=20 disagree.=20 The association and PG&E are one and the same A.J. Cavallaro an=20 electrical engineer with PG&E for 25 years who is on disability leave due t= o=20 a sleep disorder told the San Francisco Chronicle.=20 Originally created by PG&E workers to organize social events the associati= on=20 has its own board of directors and is legally separate from the utility and= =20 its parent company. The association began offering a short-term disability= =20 plan to PG&E workers in 1949.=20 Pacific Service transferred its members to the State Disability Insurance= =20 plan on Jan. 1. But about 230 PG&E workers decided to stay with the=20 association's plan after they were told they would continue to receive thei= r=20 disability checks.=20 Mike Colon the association's general manager filed an appeal with the=20 California Unemployment Insurance Appeals Board for the state to take over= =20 the group's payments.=20 Ralph Hilton chief counsel for the appeals board in Sacramento said that = if=20 the board decides the state should take over the payments checks would be= =20 issued within days of the ruling.=20 Workers may have to wait until August for the case to be heard.=20 National Desk=20 THE NATION Powerful Judge Illuminates Energy Practices Law: 'Folksy' jurist= =20 72 stuns utility executives and lawyers alike with his courtroom=20 incisiveness. RICARDO ALONSO-ZALDIVAR ?=20 07/05/2001=20 Los Angeles Times=20 Home Edition=20 Page A-12=20 Copyright 2001 / The Times Mirror Company=20 WASHINGTON -- The silver-haired judge handling federal negotiations on=20 refunds for alleged overcharges by power generators in California is often= =20 described as a Southern gentleman.=20 But Curtis L. Wagner Jr. can lose the folksy charm in a New York minute.=20 Wagner chief judge of the Federal Energy Regulatory Commission showed his= =20 knack for cutting through nonsense when he tangled with a smooth energy=20 company executive in his hearing room in May. The executive confidently=20 insisted he didn't need his boss' approval to enter into a $39-million=20 natural gas transportation deal.=20 Wagner didn't buy it.=20 I'm appalled that you're trying to pull this over my eyes intoned the=20 judge stunning a courtroom of high-priced lawyers into catatonic silence.= =20 Just answer my question . . .=20 Did you get approval . . . whether you got it after the meeting whether y= ou=20 got it the day before whether you got it in the head while you were both= =20 relieving yourselves?=20 Added Wagner owner of a 32-foot sailboat named Hizzoner: The head for= =20 non-boating people is the restroom.=20 Visibly squirming the witness acknowledged that his boss had in fact OKd= =20 the deal.=20 That kind of mettle prompted FERC's governing board to assign the overcharg= e=20 settlement case to the 72-year-old judge who likes to stay in shape by=20 attending early-morning aerobics classes in the agency's exercise room. I= =20 think Judge Wagner is the toughest tool in our toolbox said FERC=20 Commissioner Patrick H. Wood III.=20 Expectations are low that anybody can bridge the chasm between California a= nd=20 electricity generators and marketers with the state alleging it was gouged= =20 by $9 billion and the companies muttering about governmental extortion.=20 There are some very large numbers being talked about which makes it=20 unlikely that the companies would want to agree to a settlement said Kit= =20 Konolidge an electricity industry analyst with Morgan Stanley in New York.= =20 But in an interview Wagner said he feels pretty good about the chances. = I=20 never give up until the very end. With these things it looks impossible a= nd=20 then all of a sudden it comes together.=20 FERC the equivalent of a national utility commission is also dangling som= e=20 carrots in front of the parties. Along with refunds Wagner is trying to ge= t=20 a deal on long-term contracts for power and guarantees that the generators= =20 which are owed hundreds of millions of dollars will be paid.=20 The commission set a short time frame for the negotiations which are to=20 conclude Monday. If a settlement is not reachable FERC would impose its ow= n=20 solution. A mandated settlement is likely to be challenged in federal court= =20 where it could bog down for years.=20 FERC employs more than a dozen administrative law judges like Wagner to hea= r=20 disputes involving the companies it regulates. While presiding over the=20 closed-door settlement talks Wagner has traded his robes for a business=20 suit.=20 He has come down from the bench and sits at a table eye-level with more th= an=20 140 lawyers in his hearing room. There's a lot of billable hours there h= e=20 said.=20 The lawyers have been sorted into three big working groups representing=20 state agencies power sellers and energy marketers. The negotiations are=20 expected to intensify this week and participants said Wagner admonished al= l=20 sides on Friday to be ready to deal or face summary judgment from the FERC= =20 commission.=20 The judge has been variously quoted as saying that $1 billion $2 billion o= r=20 $2.5 billion might be an appropriate total refund. None of those [figures]= =20 are really attributable to me. I did make a statement--and I probably=20 shouldn't have--that it was probably less than $9 billion. Of the $9 billi= on=20 in overcharges claimed by the state only $5.4 billion is attributable to= =20 sellers within FERC's jurisdiction.=20 James J. Hoecker immediate past FERC chairman in the Clinton administratio= n=20 said that in 23 years as chief judge Wagner has built a reputation for=20 making things happen in difficult situations.=20 What is behind that is a lot of years on the bench and a certain amount of= =20 self-confidence Hoecker said. He has the ability . . . to move the parti= es=20 closer together. Sometimes that requires some fairly dramatic statements= =20 which are calculated to get people to feel the heat and get more creative= =20 about the flexibility they might have.=20 A senior FERC official said Wagner is like a pitcher who gets called from t= he=20 bullpen when the game is on the line. When things are tough we turn stuff= =20 over to Curtis said the official who asked not to be identified.=20 Wagner has had many big cases over the years on matters too arcane to garn= er=20 national attention.=20 He is handling a second major case before FERC. It involves allegations tha= t=20 Houston-based El Paso Corp. manipulated California 's natural gas market la= st=20 year thereby adding an estimated $3.7 billion to the state's energy costs.= =20 It was in that case that he grilled the executive.=20 Success in the California settlement negotiations would cap Wagner's 47th= =20 year as a government lawyer. The Tennessee native started at the Justice=20 Department on Aug. 2 1954. He got into regulatory law by representing the= =20 military in railroad disputes arising from the Korean War. After serving as= a=20 civilian lawyer for the Army for more than a decade he joined FERC's=20 predecessor agency in 1974.=20 But Wagner a widower doesn't dwell on his place in the annals of FERC. He= =20 tells agency employees he is working too many hours and missing his aerobic= s=20 classes.=20 Davis lauds California generator=20 Vote of confidence at Calpine's festival=20 Suzanne Herel Chronicle Staff Writer Thursday July 5 2001=20 2001 San Francisco Chronicle=20 URL:=20 /05/M N166801.DTL=20 Gov. Gray Davis took the stage at the San Jose America Festival yesterday a= nd=20 pledged to keep the lights on -- with the help of the Calpine energy=20 company which sponsored the fete.=20 You've heard me say some pretty tough things about out-of-state energy=20 companies trying to bleed us dry said Davis standing against the backdro= p=20 of a huge Calpine banner proclaiming Reliable Energy for a Brighter=20 Future.=20 Calpine is from California he said. They're going to make sure the ligh= ts=20 stay on.=20 Davis was a surprise guest sandwiched between musical acts Nina Storey and= =20 John Brown's Body during the daylong Fourth of July festival which feature= d=20 music food and vendors near the San Jose Airport.=20 The governor thanked the crowd of at least 1000 for joining other=20 Californians in conserving energy. Conservation surpassed the 10 percent ma= rk=20 statewide in May and June he said.=20 We could not get through the summer without you doing your part he said.= =20 Davis was introduced by Calpine chief executive Peter Cartwright -- whose= =20 multimillion-dollar stock option cash-in made news last month -- and San Jo= se=20 Mayor Ron Gonzalez who unsuccessfully opposed Calpine's planned 600-megawa= tt=20 Metcalf Energy Center in Coyote Valley.=20 In an interview after his appearance Davis countered criticism leveled at= =20 him this week by State Controller Kathleen Connell who accused him of=20 foolishly locking California into expensive long-term energy contracts.=20 You have to look at the total cost of electricity he said.=20 The state paid $109 million in May he said but that cost dropped to about= =20 $33 million last month.=20 Earlier yesterday after walking in the Redwood City Fourth of July parade= =20 Davis said that the price drop was a direct result of the long-term=20 contracts.=20 That would not have happened without the security and stability of long-= =20 term contracts he said. We did the right thing.=20 In San Jose he also said that the $15 million the state was paying=20 consultants to help negotiate power contracts was money well spent.=20 Before it was like the Yankees winning the World Series against the sandl= ot=20 baseball team he said. We're finally getting some stars on our team. = =20 E-mail Suzanne Herel at sherel@sfchronicle.com.=20 2001 San Francisco Chronicle ? Page?A - 2=20 Activists stage anti-corporate march to power plant=20 GISELE DURHAM Associated Press Writer Wednesday July 4 2001=20 2001 Associated Press=20 URL:=20 tate2 024EDT0201.DTL=20 (07-04) 17:24 PDT LONG BEACH Calif. (AP) --=20 Consumer activists rallied against rising energy prices and pledged their= =20 independence from corporate tyrants amid Fourth of July celebrations=20 Wednesday.=20 About 200 people carrying signs reading public power not corporate=20 bailout and human need not corporate greed marched two miles from a loc= al=20 park in the Los Angeles suburb to the Alamitos generating station.=20 We feel we have been gouged and bled dry said Medea Benjamin founding= =20 director of Global Exchange a San Francisco-based consumer advocacy group.= =20 We've been treated the way tyrants treat their servants.=20 The protest was a joint effort of several national and local consumer=20 activist organizations. No arrests were made although dozens of police=20 officers were out in force for crowd control.=20 Earlier this week a federal judge issued a temporary restraining order=20 preventing the city from enforcing an ordinance that could have blocked the= =20 march.=20 The law requires organizers of public protests to give 30 days notice of th= e=20 event post an insurance bond and pay for police protection at the rate of= =20 $55 per hour for each officer.=20 At the plant organizers had intended to serve officials with a notice of= =20 seizure by eminent domain declaring the facility to be public property. Bu= t=20 nobody appeared at the front gate. The demonstrators posted the notice on t= he=20 chain-link fence and staged about a 40-minute rally before dispersing.=20 The symbolic notice was meant to emphasize the groups' discontent with=20 skyrocketing power prices during the past year the use of state budget mon= ey=20 for power purchases and the activists' desire to have the state take over= =20 power plants to stabilize market prices.=20 The money they're making off of us is criminal said Loni Baker one of t= he=20 marchers. They're greed is taking money away from our kids' schools.=20 Representatives of Arlington Va.-based AES Corp. which owns the plant d= id=20 not immediately return calls seeking comment.=20 Last month the U.S. Justice Department opened an antitrust investigation= =20 into a power sales partnership between AES and Williams Energy the Tulsa= =20 Okla.-based company that sells power for AES under an exclusive marketing= =20 agreement.=20 Both companies have denied wrongdoing but in May Williams agreed to refund= =20 $8 million after the Federal Energy Regulatory Commission accused of the=20 company of temporarily closing AES plants to drive up power prices.=20 Davis asks PUC to let utilities cut voltage=20 1% savings on energy consumption predicted=20 David Perlman Chronicle Science Editor Wednesday July 4 2001=20 2001 San Francisco Chronicle=20 URL:=20 /04/M N29133.DTL=20 Gov. Gray Davis asked the Public Utilities Commission yesterday to allow=20 electric companies to lower voltage levels on power lines delivering=20 electricity to consumers this summer.=20 The move will save about 1 percent in the state's electricity consumption= =20 the equivalent of building a new 500-megawatt power plant.=20 Lowering voltages by 2.5 percent will prove barely noticeable by domestic= =20 users who might see their incandescent light bulbs dim slightly.=20 Refrigerators and electric motors such as those that run air conditioners= =20 should operate more efficiently on the lower voltages experts said.=20 The move should save consumers about 1 percent on their electricity bills= =20 according to Energy Commissioner Arthur Rosenfeld.=20 With support already promised by the state's major power companies the PUC= =20 is expected to approve the change in its voltage rules within weeks Robert= =20 Kinosian energy adviser to PUC President Loretta Lynch said at a Sacramen= to=20 press conference.=20 Similar voltage decreases have gone into effect in several other states=20 during power emergencies in recent years Rosenfeld said. But this is the= =20 first time it will occur statewide throughout an entire period of peak powe= r=20 demand.=20 PUC rules now require power companies to deliver between 114 and 126 volts = to=20 consumers all the time.=20 Less than two months ago Bill Wattenburg a maverick engineer and longtime= =20 consultant to the Lawrence Livermore National Laboratory assembled a team = to=20 test the effects on lights appliances microwave ovens and motors operatin= g=20 at voltages that were lowered by 5 percent or more.=20 At the press conference yesterday Wattenburg said those tests -- conducted= =20 with utility company senior engineers -- showed that no devices were damage= d=20 nor was their performance impaired. But cooking food on electric ranges --= =20 whether boiling water or making a roast reach a given temperature -- would= =20 take longer and consume slightly more power under any lowered voltage he= =20 said.=20 John Ballance director of network engineering at Southern California Ediso= n=20 said his company is equipped to control its voltage levels electronically a= nd=20 can lower them as soon as the PUC approves the change.=20 But Pacific Gas & Electric Co. operates differently and will have to change= =20 its voltage levels at each of its 2400 substations individually -- a task= =20 that could take several weeks Rosenfeld said.=20 This proposal may well achieve new efficiencies and reduce electric bills= =20 for California ratepayers Davis said in a statement. I urge the PUC to= =20 give it serious consideration.=20 E-mail David Perlman at dperlman@sfchronicle.com.=20 2001 San Francisco Chronicle ? Page?A - 13=20 Federal price limits backfire=20 Some generators withhold power rather than abide by rate caps=20 David Lazarus Chronicle Staff Writer Wednesday July 4 2001=20 2001 San Francisco Chronicle=20 URL:=20 /04/M N186091.DTL=20 Officials in California and Nevada after months of lobbying for federal=20 regulators to cap Western power prices warned yesterday that the newly=20 imposed limits have had the unintended consequence of increasing a threat o= f=20 blackouts in the two states.=20 The warnings were issued as California came within minutes of rolling=20 blackouts yesterday afternoon and one day after the first-ever rolling=20 blackouts in Las Vegas forced energy-hungry casinos to shut off fountains a= nd=20 reduce air conditioning.=20 The two states are asking the Federal Energy Regulatory Commission to take = a=20 closer look at the so-called price mitigation plan and come up with revisio= ns=20 that would deter power companies from withholding electricity during=20 shortages.=20 We need some clarity to this order said Oscar Hidalgo a spokesman for t= he=20 California Department of Water Resources which is spending billions of=20 dollars to keep the state's lights on.=20 Generators need to be held accountable he said.=20 The crux of the problem is that price limits kick in during shortages yet= =20 power companies say these caps force them to sell power at below-market rat= es=20 during periods of high demand.=20 Some companies have responded by holding back power rather than face the=20 expense of shipping electricity from state to state. Each mile that=20 electricity must be transmitted adds to the overall cost.=20 No one's going to pay for transmission if the cost is near the caps said= =20 Gary Ackerman executive director of the Western Power Trading Forum an=20 energy-industry association in Menlo Park.=20 Ackerman said several companies in his organization decided that there was = no=20 economic advantage to offering power in regional markets when price control= s=20 are in effect.=20 This means individual regions like California or Las Vegas could end up no= t=20 having enough Ackerman said. It increases the threat of blackouts.=20 BLACKOUT ALERT CANCELED California authorities issued a blackout alert at 1:45 p.m. yesterday when= =20 power reserves dipped to dangerously low levels. They canceled the alert=20 about an hour later after finding additional supplies.=20 Everyone in the West is fighting for megawatts said Stephanie McCorkle = a=20 spokeswoman for the California Independent System Operator which oversees= =20 the state's power network.=20 The Golden State's latest brush with lights-out conditions came a day after= =20 Nevada experienced its own rolling blackouts for the first time prompting= =20 heavy power users such as the MGM Grand and Caesars Palace to dim their=20 lights.=20 Don Soderberg chairman of the Nevada Public Utilities Commission said tha= t=20 the sudden power emergency took state authorities by surprise and that they= =20 are investigating to see what role the federal price limits may have had in= =20 exacerbating Monday's shortage.=20 We're looking very closely at this he said. There seems to be a potenti= al=20 for unintended consequences.=20 Specifically Soderberg said Nevada is focusing on operators of older less= -=20 efficient plants who would find profit margins shrinking if not vanishing= =20 under capped prices.=20 We're going to see how the caps might have played into this he said.=20 The federal ceiling in 10 Western states excluding California is about $9= 2=20 per megawatt hour. In California a 10 percent surcharge is added because o= f=20 the state's credit risk bringing the price to just over $101.=20 Ackerman at the Western Power Trading Forum said regional price controls ha= ve=20 extended California's power crisis to neighboring states.=20 California sneezed and the rest of the region caught the virus he said.= =20 'LAWYERS LOOKING FOR LOOPHOLES'=20 California and Nevada officials however said that they still have faith= =20 that price limits can stabilize Western electricity markets but that federa= l=20 regulators may have to tweak the system so that power companies cannot=20 withhold output.=20 The generators have banks of lawyers looking for loopholes (in the plan)= =20 said Hidalgo at the Department of Water Resources.=20 Unfortunately it may take some time for the regulators to revisit an issue= =20 that they took up only with the greatest reluctance. For months federal=20 regulators refused to impose price controls preferring instead to let supp= ly=20 and demand determine costs.=20 Hidalgo said that when it appeared that power companies were throttling bac= k=20 on output Monday California officials immediately dialed the hot line numb= er=20 provided by the Federal Energy Regulatory Commission in case of emergencies= .=20 No one answered he said. They were closed.=20 State officials tried again yesterday and this time were told that the=20 commission would look into the matter. They were not given a time frame for= =20 when the commission might come up with a response.=20 E-mail David Lazarus at dlazarus@sfchronicle.com.=20 2001 San Francisco Chronicle ? Page?A - 1=20 Two more energy whistleblowers slated to come forward=20 DON THOMPSON Associated Press Writer Wednesday July 4 2001=20 2001 Associated Press=20 URL:=20 tate0 336EDT0118.DTL=20 (07-04) 00:36 PDT SACRAMENTO (AP) --=20 Two more former workers at a San Diego-area Duke Energy plant are slated to= =20 talk with state investigators Thursday echoing concerns by other employees= =20 over how the plant was run when the state needed its power most.=20 However another former worker at the Chula Vista plant said he discarded= =20 perfectly good equipment three to five years ago while the plant was still= =20 owned by San Diego Gas and Electric.=20 Stuff that cost $3- to $5000 we were throwing away said Don Perkins of= =20 Alpine a mechanic at SDG&E plants for nearly 25 years.=20 That undercuts testimony from other former workers who told the Senate Sele= ct=20 Committee to Investigate Price Manipulation of the Wholesale Energy Market= =20 last month that they discarded valuable repair parts on the orders of Duke= =20 supervisors.=20 Like the other former SDG&E employees who have come forward Perkins was no= t=20 hired by Duke when it took over full operation of the plant in April. Perki= ns=20 said he is happy in retirement but like his former co-workers believes Duk= e=20 was driving up energy prices -- which the company vehemently denies.=20 He and the three other former workers suggested Duke did not adequately=20 maintain its equipment leading to unnecessary repairs they said cut power= =20 generation and may have helped boost prices by cutting supply. That include= d=20 running a 15-megawatt jet-fuel fired turbine until it broke down.=20 We ran the heck out of the plant you bet we didresponded Duke spokesman= =20 Tom Williams. But he said the plant had fewer outages under Duke's ownershi= p=20 than while it was owned by SDG&E.=20 Duke eventually had to completely rebuild the jet-fuel fired turbine=20 Williams said.=20 It ran more last year than the previous 37 years combined because the sta= te=20 needed the power Williams said.=20 An attorney for Lt. Gov. Cruz Bustamante who is to introduce the two new= =20 whistleblowers Thursday said they will echo their co-workers complaints th= at=20 maintenance slipped once Duke took over the plant.=20 Williams dismissed the news conference as a media event and the workers'= =20 complaints as old news the company has rebutted since the earlier testimony= =20 before the committee.=20 2001 Associated Press ?=20 Davis seeking cheaper contracts=20 Posted at 10:33 p.m. PDT Wednesday July 4 2001=20 BY JOHN WOOLFOLK=20 Mercury News=20 California officials are asking energy companies for better deals on the=20 state's long-term power contracts as a way to settle a dispute over billion= s=20 of dollars in electricity costs from the past year Gov. Gray Davis said=20 Wednesday.=20 In closed-door Washington D.C. settlement talks scheduled to conclude=20 Monday state officials are demanding that energy companies forgo $8.9=20 billion in bills for electricity that the state argues was overpriced.=20 But Davis during a San Jose visit Wednesday said the state would consider= =20 accepting some of that refund in the form of cheaper long-term contracts a= =20 move that could appease critics who say the $43 billion deals cost far too= =20 much.=20 The governor's comments shed light on the state's bargaining strategy in th= e=20 negotiations. Few details have emerged from the talks since the judge=20 overseeing them imposed a gag order.=20 ``We've made suggestions we've offered various ways in which people could= =20 get us $8.9 billion'' Davis said. ``We've said it doesn't have to be all= =20 cash. You can give it to us in lower contract prices than you otherwise wou= ld=20 have given to us. You can renegotiate our existing contracts and save us=20 money. However you want to do it it's just got to net out to $8.9 billion.= ''=20 It's unclear how those offers have been received by energy suppliers who= =20 have insisted their prices were fair given the uncertainty over whether the= y=20 would ever get paid. Several major companies including Duke Energy and=20 Enron say they're owed millions of dollars from the state and its major=20 utilities.=20 Paula Hall-Collins a spokeswoman for Williams Companies which signed=20 several contracts with the state in February to deliver power over the next= =20 10 years said she could not comment.=20 But one industry official said it was encouraging to see the governor show= =20 some flexibility and that the concept seems reasonable.=20 ``We take that as a positive'' said Gary Ackerman executive director of t= he=20 Western Power Trading Forum a trade association. ``If he wants to talk som= e=20 trade-off in renegotiating the contracts that doesn't seem to be totally o= ut=20 of hand. We're not going to turn away any serious offer.''=20 But Ackerman said the state needs to give a little on its refund target.=20 The $8.9 billion a figure estimated by the state's power grid analysts for= =20 sales from May 2000 to May 2001 has been widely challenged by industry=20 leaders. Even the judge overseeing the settlement talks said it's probably= =20 too high.=20 ``I don't think it serves the state of California for the state to hold fas= t=20 to a number any more than it does for my members to do the same'' Ackerma= n=20 said. ``It just doesn't get to a solution. There's got to be some give and= =20 take and we certainly haven't heard that until now from the governor.''=20 The state began buying electricity in January for its largest utilities aft= er=20 they became so saddled with debt from high power prices that energy compani= es=20 refused to sell to them. The state has spent about $8 billion since then in= =20 daily and short-term purchases.=20 The Davis administration signed $43 billion worth of electricity contracts= =20 with 18 energy suppliers for power over the next 10 years and has dozens of= =20 deals pending. The contracts are aimed at lowering the amount of power the= =20 state has to buy in daily markets where prices have soared.=20 Davis has credited the contracts with lowering the state's power costs from= =20 $100 million a day or more in May to about $33 million a day. His chief=20 energy negotiator S.?David Freeman has said he's proud of the contracts.= =20 But Davis has faced blistering criticism about the deals from Republican=20 lawmakers state Controller Kathleen Connell and consumer advocates who sa= y=20 the contracts will soak consumers with high electricity prices for many=20 years.=20 Davis initially sought contracts at prices around $55 per megawatt-hour bu= t=20 the deals signed so far average $70 per megawatt-hour.=20 That was a bargain earlier this year when daily prices averaged more than= =20 $200 per megawatt-hour. But average daily prices have since fallen to $89= =20 during peak hours and as low as $56 during low-demand periods.=20 The average daily price in 1999 was about $30 per megawatt-hour.=20 If the state and power suppliers cannot reach an agreement by Monday they= =20 can request an additional 10 days. Otherwise the judge will recommend a=20 settlement and the five-member Federal Energy Regulatory Commission will vo= te=20 on it.=20 So far the two sides still seem far apart.=20 ``It's very very difficult'' said Davis who named the state's negotiator= s=20 to the Washington talks. ``We'll see on Monday whether or not agreements ar= e=20 made. My hope is that a settlement will be reached. It's possible one will= =20 be.''=20 Contact John Woolfolk at jwoolfolk@sjmercury.com or (408) 278-3410.=20,other,informative,3 +RE: Catch Up,Joe Here it is david_cox@enron.net karen.owens@enron.com Gail evidently left Enron. Haven't seen her in ages. BTW P. Bibi resigned. Vince ,personal & social,casual,0 +Lunch Break - You are speaking in 50M Dining Room.,Per Mary Clark x37325,project management,casual,3 +RE: 2001 Electric Market Forecasting Conference,Lee Thanks for your message. I am currently in London and shall contact you on my return to the States next week. I plan to attend your conference. Vince ,other,polite,3 +Refund Cases Timelines--Confidential Atty Client Work Product,Tim Per your request. Everybody else: please forward corrections/updates to me. Thanks Alan Comnes,legal affairs,formal,3 +Possible letter to Eddington at BA,Looks good to me. -----------------,other,formal,0 +Re: testimony,Here it is. Peggy Mahoney@EES 09/12/2000 11:19 AM To: Karen Denne/Corp/Enron@ENRON Mark Palmer/Corp/Enron@ENRON Steven J Kean/NA/Enron@Enron cc: Subject: testimony Can I plez have a copy of Steve's testimony from yesterday in San Diego? Thanks Peggy,meetings & events,polite,3 +RE: ENE candlestick chart,Greetings from London. What do you think about P TX DVN? Vince ,other,casual,3 +<> - RS041001,-----------------,finance,formal,3 +possible RTP conference,Dear Mr. Kaminski: Thank you for talking with me about a possible RTP conference. I would like to include some discussions of what has been learned in other industries. As I indicated Frank Wolak suggested that I contact you. In discussing power markets with Frank and other colleagues at Stanford and EPRI it seems quite evident that real-time pricing for retail customers is the forgotten resource in more efficient power markets. There seems to be a lot of confusion about what RTP means and it also seems that many researchers need to address some practical but important problems. I was asked whether a group like Stanford's EMF might explore this topic and give it the visibility that would have it considered more seriously by policymakers. Frank thought that you might be someone who could help me structure a useful approach and who might also see whether Enron could become a major sponsor. I was hoping that this issue was sufficiently important to Enron that the company might consider providing $25000. As you may appreciate it requires some thought and effort to make sure that the product of the conference is widely circulated among key government groups. I would be very interested in hearing from you if you can provide ideas and recommendations for people (perhaps yourself or a colleague) to participate. I would also appreciate any consideration by Enron of providing funding for this effort. Thank you Hill Huntington - retail notes.rtf Hillard G. Huntington EMF - an international forum on energy and environmental markets Voice: (650) 723-1050 408 Terman Center Fax: (650) 725-5362 Stanford University Email: hillh@stanford.edu Stanford CA 94305-4026 EMF Website:,other,formal,3 +Enron Advisory Council Meeting,I have also received regrets from Horton but confirmation from Metts -----------------,other,formal,3 +Barton substitute amendment,Attached is from Andy Black of Congressman Barton's staff. This is the bill language and summary of changes to H.R. 1647 the Barton bill that will be marked up on Thursday that the chairman will offer by way of changes to the original bill text. -----------------,legal affairs,formal,5 +Thu evening,Jody Thanks. Confirmed 8:30 Thu. Vince,project management,casual,1 +President Clinton Press Release,-----------------,government & politics,official,5 +Re: news/updates,As to whether long term contracting by Cal. is a good idea the answer is somewhat mixed. We were one of the early parties pointing out the problems with total reliance on the spot market and encouraging more forward contracting. Given the utilities' precarious financial position there were two options: 1) outsource the default provider obligation to the market (this is what we prefer but there was no political support for it) or 2) have the state put its credit behind the purchases. California is pursuing the latter with CDWR prucahsing the utilities' requirements. In the short term we have criticized the state's plan because it contemplates state takeover of the grid state participation in power plant financing construction and ownership and they have not made it clear that CDWR really has the money to pay for all the purchases. I am attaching text I have used as the base for a number of communications with policymakers. Mark Schroeder@ECT 03/11/2001 02:11 PM To: Richard Shapiro/NA/Enron@Enron Steven J Kean/NA/Enron@Enron cc: Subject: news/updates In the press I saw two news stories that I wondered if we (Enron) had any role/hand in and what was the offical spin in both cases. 1) The FERC Order requiring something like 55-65 million dollars in refunds by generators (or did it include traders) for overcharging in California in December if I recall my facts/news stories correctly and 2) the reports of 40 companies entering into 10-year contracts with California (touted by Davis). Was Enron a contracting party? Do we think this is a good solution (I think I know the answer but defer to your lead on this so we stay on your message)? thanks mcs,other,formal,3 +Privileged/Confidential -- Microsoft Lawsuit,FYI particularly the part about the performance management system. Let's see what kind of data we can get about the Microsoft evaluation system to find the differences. Thanks. Michelle -----------------,legal affairs,formal,3 +Re: United Way,I think the message Christi prepared is great. Check with her one last time and then let it go. -----------------,other,confident,2 +Privileged & Confidential -- Verification,,other,neutral,5 +"Re: H&M Roses, Inc",ok Janel Guerrero 03/13/2001 08:04 PM To: Steven J Kean/NA/Enron@Enron cc: Subject: H&M Roses Inc Steve....unless you think it's a potential problem I'd like to include the CA flower grower in our list of businesses to target with ken's letter. (You handed me the letter from H&M Roses Inc today). Let me know. thanks.,other,casual,0 +Re: You Can Put A Stake in Their Hearts but They Never Die,Here's the proposal to form the Team. Note that the complete team list includes: =01&The MRT will be led by Philippe Auclair and will include Market Partic= ipant=20 Advisor (MPA) Eric Woychik Market Assessment Advisor (MAA) Steven Stoft and any others= =20 appointed by the Board.=20 =01&The Market Design Group may be comprised of a number of national expert= s on=20 energy market structure and regulation and to be used as needed by the MRT. Sever= in=20 Borenstein Joe Bowering (PJM=01s Market Monitor) William Hogan Paul Joskow and Fra= nk=20 Wolak have all expressed their willingness to assist the ISO Board through the Market Repa= ir=20 Team.=018 Does anybody have a read on Bowering from PJM? Alan Comnes Susan J Mara@ENRON 03/13/2001 03:06 PM To: Richard Shapiro/NA/Enron@Enron James D Steffes/NA/Enron@Enron Joe=20 Hartsoe/Corp/Enron@ENRON Jeff Dasovich/NA/Enron@Enron Sandra=20 McCubbin/NA/Enron@Enron Alan Comnes/PDX/ECT@ECT Tim Belden/HOU/ECT@ECT= =20 Mary Hain/HOU/ECT@ECT Steven J Kean/NA/Enron@Enron Steve=20 Walton/HOU/ECT@ECT Christi L Nicolay/HOU/ECT@ECT cc: =20 Subject: You Can Put A Stake in Their Hearts but They Never Die Gang Just heard from someone at the ISO that the ISO Board is shoving a new mark= et=20 approach down the staff's throat. Rising from the almost dead ... This Market Repair Committee is supported by Eric Woychik advisor to Boa= rd=20 Member Florio. The Committee members are Joskow Hogan PJM people et=20 cetera et cetera. There will be something posted on the ISO's web site=20 shortly. It will be approved at the Board meeting Thursday. I'll be there. Sue Mara Enron Corp. Tel: (415) 782-7802 Fax:(415) 782-7854,other,casual,3 +Follow up,,other,neutral,0 +,Got your message. I'm testifying at the Congressional hearing and Dasovich is covering FERC. I think Jeff's comments were taken out of context. He said policymakers do need to take care of small customers whose bills are tripling. Frankly we'd get slaughtered if we said anything else. But he also said there is a right way and a wrong way to do it. Enron and others had provided a market based answer by offering a fixed price deal to SDG&E (which would have enabled them to cap rates to those who had not switched. California elected instead to cap rates and deficit spend (ie create a deferral account). I don't think we can stand for anything that doesn't protect the small customers but we can continue to emphasize the market based solutions. One of the messages in my testimony will be: customers should be encouraged to choose. Those who did are doing fine.,other,formal,3 +Re: TALKING POINTS UC/CSU,Please post on internal site ,other,formal,2 +Re:Energy Bar conference,When we talked about me speaking at the conference in Nov. Enron's management conference had not yet been scheduled. Now it has and of course it conflicts... it also conflicts out just about every other senior person at Enron. I will take care of finding a substitute but wanted your thoughts on a couple of candidates: how about Seabron Adamson Richard Tabors or Scott Magrane(sp?). The latter is at Goldman Sachs and last time I talked to him was working on Transcos. Let me know what you think and let me know who you were working with at FEBA so I can take care of the problem. Thanks,other,casual,3 +"Lou Pais staff meeting, 25C3.",Maggie's Birthday party tonight Bill Hogan (617) 495-1317,personal & social,casual,0 +Chairman Tauzin on Negawatts,Today's Washington Post contains a favorable comment on negawatts attributed to House Energy & Commerce Committee Chairman Tauzin following efforts we made yesterday with the Chairman and his staff both directly and via our consultants. The Post article reads In the coming months Tauzin said Congress will take steps to allow consumers to sell power back to their local energy grids. We of course will continue to push for a version of this concept that keeps this process open to multiple buyers and sellers not just the local utility. The article dovetails with information directly from Chairman Tauzin and Chairman Barton that they will continue to push our demand buydown proposal although we are working with them to shore up support on the committee in the face of opposition from the usual suspects.,other,confident,3 +MOU With India Oil Corp.,fyi -----------------,other,casual,0 +Re:,At the bottom of the string is Stacy's phone number ,other,casual,0 +"EPSA Fall Membership Meeting, October 24-25,2000",calendar and meeting file ,calendar & scheduling,formal,3 +2000 dividends,,finance,neutral,0 +Re:,I would just say Jeff is pres and ceo not refer to him as Ken's replacement. Nicholas O'Day 03/08/2001 08:58 PM To: Steven J Kean/NA/Enron cc: Subject: Steve we briefly discussed last Tuesday the possibility of using Mr Lay's contact with the Chairman of Toyota Mr Okuda to assist us in securing a senior executive from Toyota to speak at the May 15 conference in Tokyo. We agreed that I should draft a letter for Jeff Skilling to send to Mr Okuda. I have had a rethink and believe that as a matter of courtesy (Japanese style) it would be preferable in the first instance if the contact with Mr Okuda is done from chairman to chairman. Mr Lay's letter will serve as an introduction to Jeff Skilling and will also permit Enron Japan to follow up directly with Mr Okuda's staff in Japan. We can then draft a letter for Jeff Skilling to confirm arrangements. I attach a draft letter for that purpose. If the revised approach is in order I will liaise on the matter with Rosalee and Sherri with a copy to you. kind regards,other,formal,3 +Confidential Agreement,Here is the latest copy. Once you may the changes I am going to run it by Mark Metts and send it over to CINergy. I am trying to get this sogned today so I can head down to Florida to meet up with Don and company. Thanks Ben -----------------,other,casual,3 +Re: bilateral request,No. Any idea how these guys are finding out where Jeff is going? Enron Capital & Trade Resources Corp. From: Joannie Williamson 04/03/2001 03:58 PM To: Steven J Kean/NA/Enron@Enron cc: Subject: bilateral request Should I try to accommodate this request? Thanks Joannie -----------------,other,cautious,3 +Re: NEW DRAFT OF ENRON STATEMENT,I know we are holding for a later filing but I have attached further comments anyway. The document is still too rough to send out. We need to take the opportunity as soon as possible to get a hard hitting thoroughly researched and carefully written document in front of the Commissioners. California's reaction to the Judge's recommendation is likely to give FERC (especially the new commissioners) a feel for how irrational the California politicians can be. We will have a limited opportunity to take advantage of that realization. We need to hit it hard in the pleading our conversations at the Commission the Hill and the media. Linda Robertson 07/09/2001 09:58 AM To: James D Steffes/NA/Enron@Enron cc: Alan Comnes/Enron@EnronXGate Carole Hodge/ETOL/EU/Enron@ETOL dwatkiss@bracepatt.com Jeff Dasovich/NA/Enron@ENRON Richard B Sanders/Enron@EnronXGate Richard Shapiro/NA/Enron@ENRON Robert Frank/NA/Enron@ENRON Sarah Novosel/Corp/Enron@ENRON Steven J Kean/NA/Enron@ENRON Susan J Mara/NA/Enron@ENRON Subject: Re: NEW DRAFT OF ENRON STATEMENT Let me emphasize that these comments are to be filed COB TODAY. James D Steffes 07/09/2001 10:50 AM To: Robert Frank/NA/Enron@Enron Steven J Kean/NA/Enron@Enron Richard Shapiro/NA/Enron@Enron Linda Robertson/NA/Enron@ENRON Sarah Novosel/Corp/Enron@ENRON Carole Hodge/ETOL/EU/Enron@ETOL Richard B Sanders/Enron@EnronXGate dwatkiss@bracepatt.com Alan Comnes/Enron@EnronXGate Susan J Mara/NA/Enron Jeff Dasovich/NA/Enron@Enron cc: Subject: NEW DRAFT OF ENRON STATEMENT HERE IS THE MOST RECENT STATEMENT WITH STEVE'S COMMENTS. Jim ,other,urgent,5 +Re: EGM presentaion and update,Thanks for the updated presentation. It helps me a great deal to keep up with you guys. Send more as you do them.,other,friendly,0 +"Re: Kenneth Lay, Chairman Enron",Thanks. Yes I did know about the conference. Ken has a copy of the study and made reference to it several times during our visits to Sac. a couple of weeks ago. It's nice to occasionally see some rational thinking in California. I look forward to catching up with you when I get back to town. on 05/16/2001 09:27:00 AM To: skean@enron.com cc: Suzanne_Nimocks@mckinsey.com Subject: Re: Kenneth Lay Chairman Enron ,other,formal,1 +Wyoming Energy Commission subject,Could you please put together a combined presentation : Enron's strategy and the need for open access on the transmission system? -----------------,other,formal,3 +Re: Press release,Looks ok Peggy Mahoney@EES 08/25/2000 01:24 PM To: Mark Palmer/Corp/Enron@ENRON Steven J Kean/NA/Enron@Enron Cedric Burgher/Corp/Enron@ENRON cc: Subject: Press release New version. I think all suggested changes were made. Let me know soon!! Peggy -----------------,business document,formal,3 +Re: Telephone Interview with The Enron Corp. Research Group,Martin: Lance will be out of town on the 6th of December and he suggested that you interview Jingming (Marshall) in his place (it is a telephone=20 interview). =20 Can you do that? Thanks! Shirley -----------------,other,polite,3 +SDG&E,-----------------,utilities,neutral,0 +"Talking Points re ""reregulation"" in California",-----------------,legal affairs,formal,3 +,Joe asked me to get in touch with you regarding Indian media reports/inquiries on possible sale or sell down of Dabhol and to discuss a possible statement in the event we get additional inquiries. Give me a call - 713-853-1586 home: 713-621-6550 pager: 888-906-9761.,media & press,formal,3 +Thank you all very much for your support - NOT!,I genuinely believed in Enron and the Values of the company You demonstrated that that trust was misplaced and worth nothing I particularly like your adherance to the core values - you respected us you communicated brilliantly with us your fucking us over was excellent your integrity was without question You load of bastards - you screwed us all and got fat on the profits of our sweat I hope that the board and upper management rot in jail and never see the light of day again - apart from when you are exercising in the open prison yard in your shackles Just Another Fucked Over Ex-Employee Get your FREE download of MSN Explorer at,employment,disrespectful,5 +Enron Mentions,See last story attached. Congratulations it looks like you are shaking things up in typical Enron fashion. -----------------,other,critical,3 +Re:,These are good fixes. I still think it's important for our security people to be able to recognize all of our senior executives and make sure their guests get where they are going quickly. To: Steven J Kean/HOU/EES@EES cc: Susan Skarness/HOU/ECT@ECT Subject: Follow-up Steve - Following up on our conversation Friday we have advised Cliff Baxter's Assistant that effective immediately Cliff and his quests can pass through Security on the Plaza without showing his access card or requiring his quests to sign in or identify themselves. All he needs to do is approach the front Reception Desks and asking for entry. The receptionists will recognise Cliff by sight and ensure that he and his quests pass through - without delay - by lifting the adjacent rope. We are asking Cliff to use his badge at the card readers as per standard procedure when he is entering the building by himself. We are also refining procedures and upgrading our IT systems/data base @ the Reception Desk to make it easier on a visitor of any employee. For example if you call down to the Plaza Reception Desk and advise that a visitor is expected the receptionist will have a pass prepared so as to eliminate the sign in process. The guest simply has to exchange their business card for the visitor pass. Or if an employee shows their access card at the Reception Desk and asks that their guest gain entry that guest can get a badge without signing in. Again we ask that the guest exchange their business card for a visitor pass. We are working on installing a new data base @ the Desk that will pull up a digitised photo of the employee (duplicate of what's on their badge) on the screen. This will allow employees to get a temporary access badge without showing other ID and will speed process. Finally we are testing a small proximity access card which is designed to be a duplicate back-up for executives. It is sized to fit on a key chain and works with our standard card readers. - Bill,energy infrastructure,formal,3 +Re: Crisis Management at Enron,Contact Mike Terraso (who heads the environmental function) and Mike Hicks (who oversees corporate security). Jason Sokolov@ECT 10/11/2000 08:46 AM To: Steven J Kean/NA/Enron@Enron cc: Subject: Crisis Management at Enron Steven I have not spoken to you in a while! How are things going? I have a question for you. I am enrolled in a Corporate Crisis MGMT class at Rice and my assignment for the up-coming Tuesday is to evaluate the crisis system (if there is one) at Enron. Do you happen to know anything about Crisis Management in our company? Let me know at your earliest convenience.. Jason Sokolov,other,friendly,3 +Re: CONFIDENTIAL - Residential in CA,Amen.,other,casual,1 +to cheer up the day,-----------------,other,casual,0 +Re: Highlands Forum Wrap-up,Thank you. I enjoyed the discussion very much. The DoD has significant challenges but if the group participating in the meeting was any indication they have some first rate people working on those challenges. If I can be of further assistance do not hesitate to call. Dick O'Neill on 07/02/2001 11:27:16 AM Please respond to To: cc: Subject: Highlands Forum Wrap-up Dear Steve: just a brief note to say thank you again for your excellent presentation at last week's Highlands Forum. I believe that your remarks along with those of Goran Lindahl Dick Foster and Phil Condit of Boeing have caused a significant stir in the preparation for the congressionally mandated Quadrennial Defense Review and the Secretary's transformation planning. I also can tell you that the feedback from participants regarding your briefing has been terrific. We are reviewing all the material this week to begin the process of re-creating the session on the Secretary's webpage for the Forum and I will be going over the video and audio clips for posting. Recognizing that your slides were proprietary it would be most valuable if we could post as much of your powerpoint briefing as possible--whatever you feel comfortable with sharing. Whatever that turns out to be if your staff could email that to me I will make sure that only that and not the original that you sent to me gets posted. I am not sure where the senior leadership of the DoD will be going in the coming months however I know that the discussion of your experience at Enron and the experiences of your panel mates will have an influence. A more formal letter of thanks will be forthcoming but for now thank you again for joining us and helping to make this a memorable and most important Highlands Forum. Best regards Dick Dick O'Neill The Highlands Group http://www.highlandsgroup.net 301-469-7400 301-469-5878 fax,other,formal,3 +RTO Legal Question,I am working on an analysis of the details of the Barton draft RTO language. While it is highly objectionable and our goal is to kill it to do so we need to respond to requests to be specific about why we don't like it. One of the more objectionable provisions says that FERC can't change the scope governance etc. of any RTO that has been approved under Order 2000 prior to enactment of the legislation. If this applies to PJM the legislation would stop the Northeast-wide RTO in its tracks since several of you and PJM's Phil Harris testified last week that FERC has approved PJM. By contrast committee staff and the section-by-section they distributed on the RTO legislative proposal say that to date FERC has NOT approved any RTOs under Order 2000. They say that the legislative language would not apply to any RTO as of this date because FERC approvals of PJM Cal ISO and NePool have been approved under the ISO principles of Order 888. Your thoughts on the above would be helpful. Either way I think we can argue that the provision shows why the Barton proposal is a retrenchment rather than an advancement on RTOs. If it does not apply to PJM and the others as they contend there is no good reason to include it other than to freeze the process at FERC merely by having the legislation pending on the Hill much less enacted into law.,other,formal,3 +RE: risk 2001 follow up,Peter Look forward to meeting you in Houston. Vince ,meetings & events,friendly,3 +RE: CONFIDENTIAL Personnel issue,I've got a call into Valeria. --Lizzette ,human resources,casual,3 +Customers,You may want to forward this to your customers. -----------------,other,formal,3 +Re: Draft NPC Report,,other,neutral,0 +Contact Steve Kean,Feel free to call me at 713.853.1586. -----------------,other,friendly,0 +"Bob Iveson and Karl Stahlkopf (EPRI), in your office. - Confirmed",cc:Mail to Bruce Stram and Tim Vail sent 6/23. Tim Vail is confirmed Bruce will be here until 10:00.,other,formal,3 +California Power Issues Database,One more -- Nick O'Day in Tokyo -----------------,other,casual,0 +Re: VOICE MAIL,I got the message and will handle. Tahnks Steven J Kean 03/01/2000 11:37 AM Sent by: Maureen McVicker To: Steven J Kean/HOU/EES@EES cc: Subject: VOICE MAIL Joe Sutton called and wants to discuss how the vision groups are going. Have they taken place what are the plans now? He thinks you should report it to the Exec Committee the next time you meet but Joe wants to see the report first. I have attached below the response Mary Clark sent to you regarding the meetings (in case you want to forward it). I did not forward this to Joe. I wanted to check with you first. Also Joe said he spoke with Ken Lay regarding the Annual Report - Ken's concern about the cover and the Chairman's Award is the fact that the winner is not pictured on the cover. The runner ups are there but not the winner and he thinks the winner should also be in the picture. EMAIL FROM MARY CLARK: Steve I've attached the results of the focus groups as per my notes from the meetings. Let me know if you need anything else.,other,formal,3 +Message from Clark C. Smith,include on the distribution list and send out note about the Monday meeting. -----------------,other,formal,2 +Re: Revised Electricity Emergency Authorities Memo,This is a thorough and helpful analysis. But have we considered the broader emergency powers the president might have (i.e. beyond the clean air act waivers requested by a governor)? It would seem that the importance of the defense business in California the large number of military facilities the public safety hazards of widespread blackouts etc. ought to trigger some broader authority. Richard Shapiro 05/21/2001 05:26 PM To: Steven J Kean/NA/Enron@Enron cc: Subject: Revised Electricity Emergency Authorities Memo FYI -----------------,safety & emergency,formal,3 +Re: CFTC call to Gramm,Not yet. May not be until sept 5 as ken is on vacation. but there is a chance that ken will try to reach him in the meantime. I'll let you know when I hear. From: Chris Long 08/21/2000 03:22 PM Sent by: Amy Fabian To: Steven J Kean/NA/Enron@Enron cc: Subject: CFTC call to Gramm Steve - Missed you in LA last week. Thanks for working with Ken on the CFTC talking points. Do you know if the call between Ken and Sen. Gramm occured and if there was any follow up needed. Thanks - Chris,other,formal,3 +<> - General Expenses,-----------------,finance,formal,3 +Message points,please print ,other,casual,2 +PDF Attachment-Request for Confidential Information by the GAO,A PDF version of the original letter is attached below. To All California Power Exchange Participants: Notice is hereby provided pursuant to Section 19.3.4 of the California Power Exchange Tariff that the United States General Accounting Office (GAO) as part of the ongoing investigation of California markets has requested the same information to be provided to the Federal Energy Regulatory Commission (FERC). Such information may be confidential under Section 19.3.2 of the Tariff. The manner in which the GAO will treat such confidential information is outlined in the attached letter. The GAO states that it has authority under 31 U.S.C. 717 to evaluate programs or activities of the Federal Government in this case deregulation of the electricity markets initiated by FERC. The GAO has requested the California Power Exchange to provide such information no later than Thursday October 5 2000. If you desire to assert a claim of privilege or confidentiality pursuant to legal authority the California Power Exchange will include your written assertion of that claim together with its submittal to the GAO provided that it is timely received. Your written statement should be directed to the GAO as follows: Mr. Jim Wells Director Energy Resources and Science Issues United States General Accounting Office Washington DC 20548 You may deliver your statement to the California Power Exchange as follows: Karen Koyano California Power Exchange 1000 S. Fremont Avenue Unit 20 Alhambra CA 91801 626.537.3173 facsimile Any written statement must be received by Ms. Koyano no later than Wednesday October 4 2000 5:00 p.m. Pacific Daylight Time to be included with any information delivered to the GAO. You are also free to take any other legal action you may deem appropriate in the circumstances of this investigation. Thank you. (See attached file: GAO Letter 9-22-00.pdf) - GAO Letter 9-22-00.pdf,other,formal,5 +CONFIDENTIAL BUSINESS PROPOSAL,And another..... ,other,formal,3 +Summary of $ at Risk for Customs,Please see attached. Rob perhaps while in London you could stop by Mark's desk to discuss. ,finance,formal,3 +Re: i2 Bandwidth Management Agreement Press Release,looks good Meredith Philipp 10/13/2000 09:30 AM To: Kenneth Lay/Corp/Enron@ENRON Jeff Skilling/Corp/Enron@ENRON Joseph W cc: Rosalee Fleming/Corp/Enron@ENRON Sherri Sera/Corp/Enron@ENRON Pam Mark Palmer/Corp/Enron@ENRON Steven J Kean/NA/Enron@Enron Subject: i2 Bandwidth Management Agreement Press Release Attached is a draft news release announcing Enron's bandwidth management agreement with i2. EBS is planning to issue this release on Monday Oct. 16 prior to Enron's earnings release on Tuesday Oct. 17. Please review and let me know if you have any comments by end of day today Friday Oct. 13. Thank you. Meredith Philipp,other,formal,5 +Re: Information for Jeff Skilling from Kevin Scott,Confirming 1:00 p.m. meeting on June 12 at the Venetian Resort in Las Vegas. Thanks Joannie Williamson 713-345-7774 Kevin Scott on 04/25/2001 04:46:18 PM Please respond to To: Jeff Skilling cc: Sherri Sera Subject: Information for Jeff Skilling from Kevin Scott ? ? ? ? ? April 25 2001 ? ? ? Dear Jeff ? Thank you for setting aside time to meet with me.? I have attached my resume to help bring you up to date on my career.? ? As you will see I have been providing advisory services since 1995.?? During these years I have done some of my best work.? I am proud of the service that I have rendered as an independent consultant.? ? Now I feel it is time to move to a new chapter in my career.? I look forward to sitting down with you to think through ways to apply my experience intellect and energies to new professional challenges.? I respect you tremendously and wherever the next part of my career may lie I know that my search and choice will benefit significantly from your perspective. ? Finally I am attaching the recommendation to HBS that you wrote in 1981.? I found it during a profoundly challenging period in my life.? Your historic words of support helped me keep fighting and successfully moving forward. ? If you would like to reach me before our meeting please call (213) 926-2626 or email Thank you again. ? Sincerely ? [IMAGE] ? Kevin ? ? Attachments (2) - image001.png - image002.gif - Resume of Kevin Scott.doc - Skilling HBS Recommendation.doc,employment,formal,3 +Enron Mentions,California Blame Game Yields No Score --- Probes Reveal Little Evidence Suppliers Acted Illegally The Wall Street Journal 05/22/01 Enron Unit Moves to End India Contract For Power The New York Times 05/22/01 The State GOP Criticizes Davis' Choice of PR Aides Capitol: Legislative leaders call the pair political operatives who are too partisan to represent the state during energy crisis. Los Angeles Times 05/22/01 BUSINESS DIGEST The New York Times 05/22/01 World Watch The Wall Street Journal 05/22/01 IN BRIEF / ENERGY Enron Withdraws from Qatar Project Los Angeles Times 05/22/01 INDIA: UPDATE 1-Indian state spurred by Enron reopens power deals. Reuters English News Service 05/22/01 INDIA: India utility may slap 4bln rupee fine on Enron unit. Reuters English News Service 05/22/01 IXEurope creates a Storm in colocation M2 Presswire 05/22/01 Power corrupts... The Economic Times 05/22/01 The Godbole findings Business Standard 05/22/01 SMARTMONEY.COM: Power Grab Dow Jones News Service 05/22/01 Malaysian LNG Sales to India Threatened by Enron Power Dispute Bloomberg 05/22/01 LEADER: India unplugged Financial Times May 22 2001 Enron pulls out of venture drilling in Qatar's waters Houston Chronicle 05/22/01 Enron exploring commodity trading Houston Chronicle 05/22/01 Plains Resources Gets New Officers Houston Chronicle 05/22/01 Economy California Blame Game Yields No Score --- Probes Reveal Little Evidence Suppliers Acted Illegally By John R. Emshwiller Staff Reporter of The Wall Street Journal 05/22/2001 The Wall Street Journal A2 (Copyright (c) 2001 Dow Jones & Company Inc.) LOS ANGELES -- California may be struggling to keep its lights on but one thing there is no shortage of is accusations over who is to blame for an electricity crisis that has sent power prices skyrocketing. In recent days top California officials have stepped up their rhetoric against a handful of merchant power companies many of them Texas-based that supply the state with much of its juice. Gov. Gray Davis says companies such as Reliant Energy Inc. of Houston have engaged in unconscionable price gouging. Loretta Lynch president of the California Public Utilities Commission and a Davis appointee proclaims that a cartel of electricity producers has created artificial shortages. Lt. Gov. Cruz Bustamante is backing a bill that would make energy price fixing a felony and as a private citizen he is suing several major power producers in Los Angeles state court. About half a dozen investigations are being conducted by entities ranging from state legislative committees to the California attorney general's office. So far these probes -- some of which have been under way for months -- haven't yet yielded either civil or criminal charges. While the energy suppliers are generating unconscionable profits the question remains whether they are illegal profits says California Attorney General Bill Lockyer who has offered rewards of as much as hundreds of millions of dollars for information about lawbreaking in the energy business. Mr. Lockyer says he believes his office will eventually file civil charges against suppliers. He would very much like to add criminal counts. I would love to personally escort [Enron Corp. Chairman Kenneth] Lay to an 8 x 10 cell that he could share with a tattooed dude who says `Hi my name is Spike honey' adds Mr. Lockyer. Houston-based Enron is a major energy-trading company. Like other such firms Enron has denied wrongdoing in the California market. Mark Palmer Enron's vice president for corporate communications said Mr. Lockyer's comment about Mr. Lay is so counterproductive that it doesn't merit a response. Investigators and academics say there is abundant evidence that individual firms have been exercising market power. This term is used to denote efforts to influence wholesale-electricity prices such as by withholding supplies. The California Independent System Operator or ISO which manages the state's electric transmission grid estimates that by exercising market power suppliers may have added about $6.8 billion to the cost of electricity in the state since early last year. A single firm exercising such power isn't necessarily illegal says Severin Borenstein director of the University of California Energy Institute. If a company is a large supplier in the state and you're not exercising market power you are not doing your job on behalf of shareholders he says. Mr. Borenstein and others say that there are steps that should be taken against suppliers. They note that under federal power law the Federal Energy Regulatory Commission can order refunds for wholesale prices that are above just and reasonable levels. So far FERC has tentatively ordered California suppliers to make tens of millions of dollars of such refunds as part of that agency's ongoing inquiry into the California market. Critics of the suppliers and FERC say the refunds should be in the billions of dollars. The power industry not surprisingly says there is nothing to accusations of price manipulation or collusion. Executives point to a botched state-utility-deregulation plan that relies heavily on volatile spot-market purchases. Suppliers note that over the past decade California didn't build enough new power plants to keep up with demand growth. The allegations of manipulation are a lot of sound and fury and they won't produce anything says Gary Ackerman executive director of the Western Power Trading Forum an industry trade group. Power generators also point to sharp increases in some of their costs particularly natural gas which is a major power-plant fuel. This rise in natural-gas prices also has set off a flurry of investigations over possible manipulation. One such case involving El Paso Corp. Houston is the subject of probes by federal and state officials. El Paso denies any wrongdoing. While power-industry officials say they have been cooperating with the investigations law-enforcement officials say they have hit some roadblocks. For instance Mr. Lockyer's office has gone to San Francisco state court to enforce subpoenas against Reliant Houston-based Dynegy Inc. and Southern Co. and Mirant Corp. both of Atlanta after the companies resisted turning over certain business documents they deemed confidential. Investigators have zeroed in on the increased frequency with which plants are going out of service for unscheduled outages. At times several thousand fewer megawatts of capacity are available than a year ago. A thousand megawatts can power about one million homes. Generators say that this increased forced outage rate shows that tight supplies over the past year have required them to run plants some of them more than 40 years old for long periods without routine maintenance. This combination has produced more breakdowns. Plants have been running flat out says Tom Williams a spokesman for Duke Energy Co. Charlotte N.C. which says that its California power plants produced 50% more electricity in 2000 than in 1999. At the same time during periods of lower demand the number of unplanned outages often seems to rise enough to keep supplies tight says Frank Wolak a Stanford University professor and chairman of the ISO's market surveillance committee. Clearly something is going on here. However he and others say that it is almost impossible to tell why a particular pipe failed or whether such a failure was a legitimate reason to reduce output. Some of the most intriguing evidence to date about forced outages surfaced in a federal case. FERC officials said an investigation had raised questions about whether two major power companies had taken plants out of service in order to reap higher electricity prices. The charges against AES Corp. Arlington Va. which owns the plants and Williams Cos. Tulsa Okla. which markets their output asserted that those actions allowed the companies to reap an extra $10.8 million in revenue. In one instance according to case filings a Williams employee indicated to AES officials that his firm wouldn't financially penalize AES for extending an outage at one plant. This conversation which was voluntarily divulged by Williams could be an indication of collusion. Williams and AES settled the case without admitting any wrongdoing by paying back $8 million to the ISO and by taking certain other measures. A Williams spokeswoman says the employee who talked to AES was counseled not to enter into any conversations of that nature in the future. Another issue raised by the FERC case touched on maintenance procedures. According to the filings AES stopped doing a certain procedure to keep its plant's cooling system from getting clogged. The clogging of the system was cited as a reason for one of the forced outages. Mark Woodruff president of the AES unit that operates the plant in question says the company substituted what it felt was an equally effective maintenance procedure. If someone was looking to keep supplies tight and prices high changes in maintenance procedures would be an easy way to ensure that plants particularly old ones have frequent forced outages says a senior utility-industry executive. By restricting maintenance resources he says an operator can simply allow a plant to take itself out of service. --- Journal Link: What is California doing to alleviate the energy crisis? See a video report of California State Treasurer Philip Angelides discussing the state's plans in the online Journal at WSJ.com/JournalLinks. --- Investigations Aplenty In the year since California's energy deregulation plan began resulting in higher prices and even blackouts a flurry of investigations has gotten under way. Here are the main ones: AGENCY: Federal Energy Regulatory Commission INVESTIGATION: Whether generators are charging more than just and reasonable rates as demanded by the Federal Power Act whether El Paso Corp. used its position as a major natural-gas supplier to the state to illegally drive up the price of fuel used to generate electricity. AGENCY: California Public Utilities Commission and the State Attorney General INVESTIGATION: Whether generators and power traders have acted illegally through collusion or other means to artificially inflate electricity prices. AGENCY: PUC and California Independent System Operator INVESTIGATION: Whether generation plants were shut down for spurious reasons in order to create supply shortages and thus to raise electricity prices. AGENCY: California Electricity Oversight Board INVESTIGATION: Whether patterns of bidding and pricing in California's electricity auction indicate collusive or otherwise illegal behavior. Sources: state and federal agencies Copyright 2000 Dow Jones & Company Inc. All Rights Reserved. Business/Financial Desk Section W Enron Unit Moves to End India Contract For Power By SARITHA RAI 05/22/2001 The New York Times Page 1 Column 6 c. 2001 New York Times Company BANGALORE India May 21 -- Fed up with its main customer's refusal to pay its bills the Enron Corporation's Indian power-generating venture served formal notice on Saturday that it would terminate its power supply contract and pull out. The move by the Dabhol Power Company 65 percent owned by Enron starts the clock ticking on a six-month notice period before the contract is voided during which negotiations to settle the dispute are expected. The $2.9 billion Dabhol project represents the largest single foreign investment in India. Separately Enron said today that it was withdrawing from a pipeline project in Qatar which would have supplied some gas to Dabhol. The company said that the two steps were unrelated. The Dabhol project has been the subject of a series of wrangles between the company and the governments of India and of the western Indian state of Maharashtra. The state-owned utility company that contracted to buy power from the Dabhol plant has defaulted on some $64 million in unpaid power bills and has accused Dabhol of charging too much. Dabhol said it was left with little choice but to issue the termination notice after both governments failed to honor their contractual commitments to buy and pay for its output. But in a statement issued over the weekend Dabhol said it was ''still open to constructive discussion on the solutions.'' The company said a ''lasting and feasible solution'' to the dispute would require that the two governments either honor their obligations to buy Dabhol's power or find other creditworthy buyers to take the power instead. The first phase of the project now generates 740 megawatts of power and the second phase adding another 1444 megawatts of capacity is scheduled to go on line next month. Under the contract the termination that Enron has set in motion would oblige the federal and state governments to pay damages to Enron and the lenders that financed the project possibly as much as $500 million -- the value of a year's output of power plus the project's $300 million in debt -- if it is shut down. Copyright 2000 Dow Jones & Company Inc. All Rights Reserved. California Metro Desk The State GOP Criticizes Davis' Choice of PR Aides Capitol: Legislative leaders call the pair political operatives who are too partisan to represent the state during energy crisis. DAN MORAIN TIMES STAFF WRITER 05/22/2001 Los Angeles Times Home Edition B-8 Copyright 2001 / The Times Mirror Company SACRAMENTO -- Republican legislative leaders Monday blasted Gov. Gray Davis' decision to spend $30000 a month in taxpayer money to retain communications consultants known for their highly partisan work. Labeling consultants Mark Fabiani and Chris Lehane as cut-throat Senate GOP leader Jim Brulte of Rancho Cucamonga and Assembly Republican leader Dave Cox of Fair Oaks said in a letter to Davis that the hiring undermines the assertions you have made both publicly and privately throughout this crisis. Davis announced Friday that he retained the duo and that the state will pay them a combined $30000 a month for at least the next six months. We're not going to support the hiring of political hacks on government payroll Brulte said in an interview. Lehane and Fabiani are very talented. The issue is which payroll is appropriate. . . . These are political opposition research attack dogs. If the governor wants them he ought to pay for them with his $30-million political war chest. Some consumer advocates also criticized the move citing the consultants' work on behalf of Southern California Edison. In their private consulting business Fabiani and Lehane are working to win over public and political support for Davis' $3.5-billion plan to rescue Edison from its financial difficulties. Legislation embodying aspects of the deal is pending in Sacramento. On Monday Brulte and Cox also complained about the consultants' dual role. California taxpayers should not be asked to finance political consultants or individuals who have a vested business interest with the state the letter said. Fabiani and Lehane had worked in the Clinton administration and in Vice President Al Gore's presidential campaign where they gained a reputation as attack-oriented operatives. Lehane on Monday defended the governor's decision to use tax money to pay their fees saying government often hires outside experts and that he and Fabiani will serve as communications advisors to help the governor fight against these generators. The Republicans Lehane added ought to be spending time writing letters to George W. Bush to get him to stop the Texas generators from gouging California. . . . That is the real issue here. Davis meanwhile returned to California on Monday after a weekend of fund-raisers. He was in Texas on Saturday for a Dallas event that had been scheduled for April 11. It was postponed when Pacific Gas & Electric filed for bankruptcy protection. There is a very large fund-raising base for Democrats in Texas Davis' campaign strategist Garry South said of the state that is home to some of the generators that Davis has criticized. Davis traveled to Chicago for another fund-raiser Sunday then met Monday with city officials to discuss how Chicago deals with electrical blackouts. After blackouts crippled downtown Chicago in the summer of 1999 Mayor Richard M. Daley demanded that the city's electricity provider Commonwealth Edison give advance notice of power cuts. Customers now sometimes receive warnings two or three days in advance. Davis emerged from the meeting saying the utilities have got to tell us in advance when they're going to have a planned blackout. It was not however readily apparent how Chicago's solutions would translate to California because its electrical problems are vastly different. Rather than suffering a shortage of electricity throughout the grid like California Chicago has the more microcosmic ills of an aging system--an obsolete transformer going down for example leaving several city blocks in the dark until workers can fix it. * Times staff writer Eric Slater contributed to this story. PHOTO: Protester Barbara King shakes a light bulb outside Sacramento office of a lobbyist for energy producer Enron near the Capitol. PHOTOGRAPHER: ROBERT DURELL / Los Angeles Times Copyright 2000 Dow Jones & Company Inc. All Rights Reserved. Business/Financial Desk Section C BUSINESS DIGEST 05/22/2001 The New York Times Page 1 Column 1 c. 2001 New York Times Company Enron Moves to End India Contract Fed up with its main customer's refusal to pay its bills Enron's Indian power-generating venture said that it would terminate its power supply contract. [World Business Section W.] Copyright 2000 Dow Jones & Company Inc. All Rights Reserved. International World Watch Compiled by David I. Oyama 05/22/2001 The Wall Street Journal A18 (Copyright (c) 2001 Dow Jones & Company Inc.) EUROPE/MIDEAST Insurer Storebrand Favors Sampo's Bid Over Den Norske Norway's largest insurer Storebrand became the center of a bidding war between Finnish financial-services company Sampo and Norway's Den Norske Bank with Storebrand favoring Sampo. Sampo's offer values Storebrand at 20.8 billion Norwegian kroner ($2.3 billion) compared with DnB's 17.6 billion kroner bid as the Nordic region's top financial companies battle for position in a consolidating sector. Sampo and Storebrand in a joint Helsinki news conference said they were confident their deal would succeed. Sampo's cash-and-stock offer valued at 75 kroner a share represents a 31% premium to Storebrand's average share price during the past month and was backed by Storebrand's management. DnB wouldn't say whether it would alter its bid. One cannot count on that its chairman said. HypoVereinsbank Results Disappoint Bayerische Hypo- und Vereinsbank Germany's second-largest bank known as HypoVereinsbank said first-quarter pretax profit rose 25% from a year earlier to 770 million euros ($678 million) below analysts' consensus forecast of 795 million euros. Profit rose 63% to 468 million euros earnings and pretax profit were both helped by one-time gains of 454 million euros. Operating profit fell 59% in the retail-banking division to 98 million euros and was down 43% in the international-markets division to 184 million euros. HypoVereinsbank said tough market conditions world-wide reduced regular commission and interest income. Enron Pulls Out of Emirates Gas Project U.S. energy company Enron has decided to pull out of the multibillion-dollar Dolphin natural-gas project selling its 24.5% stake to the United Arab Emirates Offsets Group or UOG according to Dolphin Energy's managing director Ahmed Al-Sayigh. He didn't specify the reason for Enron's withdrawal or the value of Enron's stake. The Dolphin project agreement reached two years ago by UOG and Qatar Petroleum aims to bring two billion cubic feet a day of natural gas from Qatar's offshore North Field in the Persian Gulf to Abu Dhabi and onward to Dubai. Enron and France's TotalFinaElf each held a 24.5% stake with UOG owning the remaining 51%. Mr. Sayigh said UOG will hold discussions with other companies on a possible sale of Enron's original stake. Richard Bergester manager for Enron Middle East said that having contributed to the project's initial stages Enron now feels it can't add any more. He didn't elaborate. A TotalFinaElf official said it is interested in a greater stake in Dolphin. Marc Rich Gains Control of Swiss Firm Marc Rich the former U.S. fugitive given a controversial pardon by President Clinton effectively pulled off a management coup at Swiss real-estate company Feldschloesschen-Huerlimann Holding by thwarting its merger plans with Swiss Prime Site and forcing the board to quit. Feldschloesschen's ousted chairman Robert Jeker said Marc Rich Group now had control of the company. Mr. Rich himself is not on the board but he controls more than 10% of the votes in Feldschloesschen. ASIA/PACIFIC BRIEFLY: -- Bass Hotels & Resorts a unit of Britain's Bass said it will buy the Regent Hotel Hong Kong for $346 million from Hong Kong's New World Development. -- Indian lenders said they want the Indian government to intervene after U.S. energy company Enron's threat to walk out of its Dabhol Power unit's huge project in Maharashtra state put their loans in jeopardy. Domestic lenders have lent $1.4 billion out of the project's total $2.9 billion cost. -- Australian Prime Minister John Howard caved in to intense pressure over the collapse of HIH Insurance announcing a royal commission into the company's failure and setting aside over 500 million Australian dollars ($265 million) to assist victims of the Australian insurer's collapse. -- Japan's trade surplus shrank at a faster-than-expected pace in April narrowing 42% from a year earlier to 665.9 billion yen ($5.39 billion) as reduced foreign demand weighed on the country's economy. Copyright 2000 Dow Jones & Company Inc. All Rights Reserved. Business Financial Desk IN BRIEF / ENERGY Enron Withdraws from Qatar Project Bloomberg News 05/22/2001 Los Angeles Times Home Edition C-2 Copyright 2001 / The Times Mirror Company Enron Corp. pulled out of a $2-billion pipeline project to export gas from Qatar as it became increasingly likely that an Indian power-sales agreement will collapse. The company said the move is not related to a filing by its 65%-owned Dabhol Power Co. to India's Maharashtra state's electricity board to stop supplying power because it's owed about $63.9 million by the board. Copyright 2000 Dow Jones & Company Inc. All Rights Reserved. INDIA: UPDATE 1-Indian state spurred by Enron reopens power deals. By Narayanan Madhavan 05/22/2001 Reuters English News Service (C) Reuters Limited 2001. BANGALORE India May 22 (Reuters) - India's technology state of Karnataka spurred by a payments row involving U.S. power developer Enron Corp in a neighbouring province has reopened sealed power purchase deals with 11 private firms. The southern state's government has told independent power producers (IPPs) which are yet to start generation that they need to make their tariffs more competitive officials said. Now it (electricity) cannot be at any cost V.P. Baligar chairman and managing director of the Karnataka State Power Transmission Corp Ltd (KPTCL) the state's monopoly power distributor told Reuters in an interview late on Monday. The move comes on the heels of the bitter wrangle in Maharashtra state involving Dabhol Power Co 65-percent owned by Houston-based Enron. Dabhol issued a preliminary notice on Saturday to end a contract to sell power to the Maharashtra State Electricity Board. The step came after Maharashtra ceased payments saying Dabhol's tariffs were too high. The $2.9-billion project which is 90-percent complete was first billed as a showcase of India's decade-old reform programme but now is regarded by critics as a symbol of policy bungling. Enron is a lesson for all of us Baligar said. Karnataka also said it would not provide financial assurances in the form of escrow cover and government loan guarantees which the firms wanted to help sweeten lending rates. We're trying to tell them your tariff has to be competitive Baligar said but added that the state was open to negotiations. You have to have the final capability so you can implement the project without any guarantee or escrow. SIGNED DEALS Five years ago the state signed power purchase deals with 14 private firms. Three of them are already generating power at rates higher than the state would now like to pay. They will continue to get these rates but the 11 unbuilt units face an uncertain future. The 11 plants involve 2000 megawatts (MW) of capacity half of which would be supplied by the Mangalore Power Co (MPC) from which U.S.-based Cogentrix exited in 1999 citing litigation and delays in government approval. China Light & Power now owns the company in which India's Tata group is expected to take 30 percent. MPC Managing Director V.P. Sharma told Reuters that his firm's project would not be hit by the demand for lower tariffs because it was based on coal unlike the Enron project based on naphtha. Our cost is the lowest cost approved (and) coal prices have fallen (since the agreement) Sharma told Reuters from Bombay. Company officials say the project is also looking forward to a federal guarantee to help it move forward. Baligar said the government's intention was to weed out those who are not serious. Those who are serious can sit with us and sort out their problems he said. Power tariffs vary depending upon foreign exchange rates and the type and prices of fuels. Three projects which are already generating power get about 3.0 to 4.0 rupees (6.4 to 8.5 U.S. cents) per unit. The 11 uninstalled plants had comparable rates but MPC says falling coal prices helped its competitiveness. One generating firm Jindal Tractabel which uses coal and gas gets about 2.60 rupees. Its purchase agreement was not among the 14 and is awaiting regulatory approval. The state wants the Jindal rate to be the benchmark for reopened agreements. If private firms cut capital costs and work out long-term fuel supplies they will be able to cut rates Baligar said. The state says it needs 4000 MW of new capacity over 10 years and 2500 MW over five years. State-run utilities are in a position to meet five-year needs at low rates Baligar said. Asked if Karnataka could face litigation over the reopening of the contracts Baligar had legally strong arguments. ( $1 = 46.9 rupees). Copyright 2000 Dow Jones & Company Inc. All Rights Reserved. INDIA: India utility may slap 4bln rupee fine on Enron unit. 05/22/2001 Reuters English News Service (C) Reuters Limited 2001. BOMBAY May 22 (Reuters) - An Indian utility is planning to impose a second penalty of four billion rupees ($85 million) on Enron's local unit barely a week after the U.S. energy giant took its first step to pull out of the embattled project. A senior official at the Maharashtra State Electricity Board (MSEB) said on Tuesday the fine on Dabhol Power Company (DPC) was for not meeting capacity targets within a stipulated period. We will do this as soon as the bill for May is received next month the official told Reuters. DPC officials declined to comment on the matter. Earlier this year MSEB had imposed a similar penalty on DPC - which DPC has not paid - saying its plant could not be ramped up to full capacity within three hours from a cold start. Enron and MSEB have been battling for six months over payment defaults and last week DPC owned 65 percent by Enron issued a preliminary notice to terminate a power purchase agreement - widely seen as a move that would lead to a pull out. According to DPC it is owed $48 million by MSEB. A top government official told Reuters in Delhi on Monday the federal government is optimistic Houston-based Enron and the Maharashtra state will resolve their wrangle. The agreement signed between MSEB and DPC in 1995 stipulates that if Dabhol's plant cannot achieve 100 percent capacity within three hours from restart MSEB is entitled to impose a penalty. The MSEB official said the plant had failed to fulfil this condition in February and March considered peak periods for power demand by the utility. DPC is building a $2.9 billion 2184 MW plant of which the first phase of 740 MW began operations in May 1999. Enron is India's largest foreign investor. ($1=47.0 Indian rupees). Copyright 2000 Dow Jones & Company Inc. All Rights Reserved. IXEurope creates a Storm in colocation 05/22/2001 M2 Presswire Copyright 2001 M2 Communications Ltd. All Rights Reserved. IXEurope a leading pan-European provider of Internet infrastructure and hosting services today announces that it has signed a deal with Storm Telecommunications Limited (Storm) the international optical switched service provider with an intelligent optical backbone network built in the UK France Germany the Netherlands Denmark Sweden and Norway. Over the coming months Storm's network will also be operational in the USA Switzerland Italy and Austria. Under the agreement Storm will locate its optical switching equipment at IXEurope's flagship datacentres in London and Frankfurt with plans to use other IXDatacentres across Europe for colocation of its equipment to support its European and North American metro access rollout. Storm is the tenth carrier to enter the London city IXDatacentre meaning that IXEurope's customers (including other carriers) will benefit from the services that Storm offers. This illustrates the advantages that IXEurope's carrier-neutral status brings -connectivity cost-effective choice and flexibility. Guy Willner CEO of IXEurope commenting on the deal said: We are pleased to support Storm's IP network rollout. It will naturally interlink with the new gigabit ethernet service we are offering across our pan-European network of IXDataCentres. Mark Stewart senior vice president business development of Storm said We chose IXEurope as one of our colocation partners because of its extensive pan-European presence and the strategic location of its datacentres. IXEurope has ensured that its datacentres are located where there is an abundance of network and provides a choice of carriers which allows us great flexibility. IXEurope will also provide us with the ability to expand over an agreed time scale. IXEurope which now has eight operational datacentres across Europe has recently signed contracts to provide colocation and managed services to Hewlett Packard Enron Broadband Services (EBS) and The Data Company. IXEurope has just been awarded the ISO9002 quality assured certification for the second consecutive year showing its commitment to quality across its European operations. IXEurope IXEurope provides neutral colocation and facilities management services to corporate internet and telecoms organisations allowing them speedier access to market and the freedom to focus on their core business. IXDatacentres are present across Europe in all major business centres including London Paris Frankfurt Zurich Nice Dusseldorf Milan and Barcelona. IXEurope is an ISO9002 Quality Certified Company and a founding member of the Colocation and Hosting Association. IXEurope's funders include Bank of America JPMorgan and European Acquisition Capital. For more information please visit the website at www.ixeurope.com About Storm Telecommunications Storm Telecommunications Limited wholly owned and group operating company of Storm Investments Limited is the first OSP (optical-switched service provider). Storm provides voice bandwidth and IP services and had revenues of GBP52m in 2000. Storm's intelligent mesh network is operational in the UK France Germany Norway Sweden Denmark and the Netherlands shortly reaching the USA Italy Austria and Switzerland. In February 2000 Storm's management completed an MBO backed by investment affiliates of Soros Private Equity Partners and further backing by investment affiliates of Merrill Lynch & Co came in May 2000. Storm's intelligent optical network is in prime position to meet the e-business challenges of 2001 and beyond. For more information please visit HTTP:\\WWW.STORMTEL.COM. ((M2 Communications Ltd disclaims all liability for information provided within M2 PressWIRE. Data prepared by named party/parties. Further information on M2 PressWIRE can be obtained at http://www.presswire.net on the world wide web. Inquiries to info@m2.com)). CONTACT: Victoria Dickson Citigate Technology Tel: +44 (0)207 950 2982 e-mail: Chris Moseley/Vidushi Patel Miller Shandwick Technologies Tel: +44 (0)20 7282 2844 e-mail: cmoseley@miller.shandwick.com e-mail: vpatel@miller.shandwick.com Russell Poole General Manager UK IXEurope e-mail: russell.poole@ixeurope.com Helen O'Hanlon PR Manager Storm Telecommunications e-mail: H.O'Hanlon@stormtel.com Copyright 2000 Dow Jones & Company Inc. All Rights Reserved. Power corrupts... 05/22/2001 The Economic Times Copyright (C) 2001 The Economic Times Source: World Reporter (TM) APROPOS of Enrons notice to the government of Maharashtra Mumbai should act pragmatically instead of indulging in heroics and rhetoric. It should set its own house in order improve MSEBs functioning and quickly privatise. If it fails to do these its threat to Enron will also be taken as just another case of demanding kickbacks. IT is sad really that Enron had to issue its pre-termination notice. We should now ask whether MSEB would be able to construct such a project in record time. Corruption is rampant in MSEB. They may say Enron power is not needed but you cannot even get a new connection easily. Interruptions are commonplace in rural areas (sometimes up to four times a week). Power thefts are commonplace too. Each day on average we pay MSEB about Rs 6 per unit for commercial connections. But most people would be willing to pay Rs 7 or so if they got clean uninterrupted power. We have seen for example the vast cost overruns of many of the official water management projects. These overruns go up to 20 times with delays stretching up to 10 years with no guarantee no results even then. All told the government is sending very wrong signals to the international community by raking up the Enron controversy. It should set its own house in order. THE new state ministries are too big in size West Bengals in particular. It has allotted one minister just to deal with fire brigades. The expenditure in lakhs it entails could exceed the total number of fire tenders under the department. Despite that it needed 7 complete days to control a recent fire (with private tankers requisitioned to help over and above the ones owned by the corporation and municipalities). We need more fire tenders not ministers or those who are associated with the big boss. Also we need a new minister plus a full-fledged department to examine corrupt practices in local government and also in the central government offices located in states. Meanwhile was the Sarkaria Commissions recommendation to restrict the size of the ministry to within 10 per cent of the size of the Assembly advanced only to be flouted? We should call a stop to such commissions as not even 10 per cent of their purpose is served they too entail huge establishments which are maintained year after year at taxpayer expense. SINCE 1993 I have been familiar with the political social and business scenarios in the US and so I feel reasonably qualified to make some observations on US immigration policy by Sudhir Shah. Shahs statistics are not totally accurate but they depict the `global picture. The Indian immigrants (a million plus now) are in many respects a class apart. Their education levels are far higher than those of other immigrants many of whom are just a grade above our rag-pickers (they are the cherry and berry pickers on US farms). I have not come across a single uneducated Indian in the US since 1983. Even in asset-formation Indians (even Pakistanis) are leagues ahead of the other immigrants. B T Dasture Mumbai - Copyright 2000 Dow Jones & Company Inc. All Rights Reserved. The Godbole findings Our Editorial 05/22/2001 Business Standard 15 Copyright (c) Business Standard The Godbole committee's first report submitted on 10 April is an eye-opener to what can only be called a massive scandal. It leaves several players MSEB successive Maharashtra governments the Kirit Parikh re-negotiation exercise the Central Electricity Authority and other players in New Delhi with no clothes on. MSEB claimed that it had negotiated a tariff that was lower than would result from applying the central government's standard formula. But this was patently fraudulent because the comparison was based on wrong numbers incorrect technical parameters and unequal assumptions (one rupee-dollar rate for the Dabhol tariff another for calculating the government formula) all of it designed to establish what was not true. Asked in court why there had been no competitive bidding the answer (believe it or not) was that MSEB was not competent to handle competitive bidding. But it was so wonderfully capable of handling direct tariff negotiations that it eventually gave Dabhol a higher tariff than Enron had initially sought before the negotiations began! That's only for starters. There is much more in the Godbole report. On the basis of a passing comment in an FIPB meeting that the project's costs were broadly in line with other similar projects the power secretary in New Delhi tells the Central Electricity Authority that the CEA's techno-economic clearance is not required though this is statutorily mandated. The CEA agrees to this untenable proposition but later issues a vaguely worded clearance on the basis of a meeting whose minutes were not made available to the Godbole committee. The re-gasification project that was made part of the power project had a capacity to handle 5 million tonnes though Dabhol itself needed only 2.1 million tonnes. A port facility had similar excess capacity. Yet the entire cost of these facilities was loaded on to Dabhol along with the full cost of the 20-year gas supply contract. Thus as the Godbole committee observes what should have been a variable cost was converted to part of the fixed cost which MSEB would have to service through a capacity charge whether any power or gas was bought or not. Even the power requirements of Maharashtra were mis-calculated in order to over-ride a warning from the World Bank that the Dabhol power would not be needed. This was done by assuming that industrial demand for power would grow overnight at twice the earlier rate and that MSEB itself would overnight see a dramatic worsening of its operating parameters. There is still more in the report but the point should be obvious. What the report shows is that the Dabhol contract can be subjected to legal test (as in fact two members of the Godbole committee recommend) on the grounds that it was improperly handled and violative of law and common sense. If a favourable judicial decision becomes possible that should help mitigate the costs of winding up a truly scandalous project. For reasons that are not clear MSEB and the Maharashtra government have chosen not to go down this route. Perhaps they have greater and continuing faith in the re-negotiation process. Copyright 2000 Dow Jones & Company Inc. All Rights Reserved. SMARTMONEY.COM: Power Grab By Elizabeth Harris 05/21/2001 Dow Jones News Service (Copyright (c) 2001 Dow Jones & Company Inc.) NEW YORK -(Dow Jones)- Feeling squeezed by rising electricity bills and shrinking investment returns? Consider investing in utilities which posted solid gains amid the recent bear-market carnage. But plugging into this volatile sector is risky business as anyone who piled in this year based on energy's surge in 2000 can testify. After returning 7.28% last year as demand for power outstripped supply the average utilities fund is so far down 1% through May 18 according to the fund research firm Morningstar. Though the sector's prospects remain attractive such volatility is par for the course says Mark Beckwith portfolio manager of the Vanguard Utilities Income fund (VGSUX). Utilities and funds that focus on the sector no longer perform like bonds delivering most of the gains via relatively predictable dividend yields. Instead the industry has greater growth prospects (and the correspondingly higher potential for losses) tied to the fluctuating demand for power. Already high prices for natural gas and electricity have created incentives for producers to boost supplies. And the stodgy local monopolies that once dominated the industry must now reckon with a bevy of independent producers distributors and traders. Even telecom companies are now considered fair game offering managers of sector funds fresh choices alongside greater risk. The classification of a utility has changed Beckwith says. At the same time the crisis gripping electricity-starved California is showing other states the pitfalls to avoid as they deregulate their grids. The outlook for wiser deregulation is very much with us says Bill Reaves a manager of the Strong American Utilities fund (SAMUX). The crisis out west has also spurred construction of new power plants from New York to Florida he adds. Managers also count on continued political support from the former oilmen in the White House who are determined to boost domestic output. With such inducements in mind we screened Morningstar's database looking for no-load utilities portfolios with one-year returns of at least 1% and three-year annualized returns of 5% or more. We also sought funds with initial investment minimums no higher than $3000 and expense ratios below the category's average. Strong American Utilities Bill Reaves co-manager of the Strong American Utilities fund characterizes the $290 million portfolio's positions as real utilities. We try to concentrate in the electric and natural-gas area Reaves says. We try to concentrate in holdings and companies where we see good growth. Last year that meant scaling back significantly from telecom stocks in part because of a deteriorating outlook. Right now electric utilities represent 44.5% of the fund - and Dominion Resources (D) is the largest position. Energy ranging from gas utilities to integrated oil and gas companies has also been a significant holding at 24.2%. Reaves and the rest of the portfolio management team are also very sensitive to valuations. The portfolio consists of 40 stocks but the managers can devote up to 75% of the fund's assets to the 16 to 18 companies seen as the best bargains. This cautious approach has stood the fund well at a time when some of its competitors got hit by telecoms' travails. The Strong portfolio rose 27.33% in 2000 and is up 2.42% so far this year contributing to a 15.18% three-year record. Reaves expects the good times to last with industry earnings growth on the order of 8% to 10% coupled with dividends of about 5% over the next three to five years. Demand is likely to keep on being strong...and the value of the service is going to be appreciated a great deal more Reaves says. For example the electric utilities' average price-to-earnings ratio for 2002 is about 12 - roughly a 50% discount to the Standard & Poor's 500 index. The minimum investment is $2500 and the portfolio bears a 1% expense ratio. Vanguard Utilities Income We won't be moving with the Nasdaq says portfolio manager Beckwith of the Vanguard Utilities Income fund he runs. Beckwith invests a relatively small 17% slice of the $900 million fund in telecom stocks. As with the other funds in this screen such caution paid off last year when the fund gained 18.7%. That turned the tables on 1999 when the technology boom consigned Vanguard Utilities to the rear echelon of its peer group. Annualized over three years the portfolio has returned 9.33% trailing the average utilities' fund's 10.53%. Here too the emphasis is on attractive valuations. Beckwith also has a mandate to invest at least 95% of the portfolio in dividend-paying utilities (last year all assets had to be invested in such stocks.) I'm going to get as much growth as I can without taking on too much risk Beckwith says. Right now Beckwith has 61% of his assets in defensive electric utilities such as Dominion Resources or the FPL Group (FPL). The portfolio is down 2.65% so far this year but Beckwith too is counting on continued strong demand for electricity. Earnings momentum will be very good for the group at least over the next year he says. His main concern is that high energy prices could encourage conservation eventually depressing demand. The investment threshold is $3000 and the expense ratio is a slim 0.38%. American Gas Index fund This concentrated portfolio rises and falls with the gas industry's prospects. Strong natural-gas prices boosted the American Gas Index fund's (GASFX) return last year to a 55.86% far above the sector's average. That more than offset the 3.71% drop in 1999. Annualized over three years the roughly $300 million fund has gained 15.82%. Like other index portfolios the fund doesn't make stock picks instead it owns 73 members of the American Gas Association representing much of the gas distribution and transmission industry in most U.S. regions. Stocks are weighted by market-cap and by the portion of a company's assets involved in natural gas. Top holdings include Williams Companies (WMB) Enron (ENE) and Duke Energy (DUK). The initial investment is $2500 and expenses are 0.85%. For more information and analysis of companies and mutual funds visit SmartMoney.com at http://www.smartmoney.com/ Copyright 2000 Dow Jones & Company Inc. All Rights Reserved. Malaysian LNG Sales to India Threatened by Enron Power Dispute 2001-05-22 06:32 (New York) Malaysian LNG Sales to India Threatened by Enron Power Dispute Kuala Lumpur May 22 (Bloomberg) -- Malaysia LNG Tiga Sdn. may have to find new buyers for as much as 2.6 million metric tons a year of liquefied natural gas if Dabhol Power Co. carries through termination of electricity supplies to India's Maharashtra State Electricity Board. MLNG Tiga has an agreement to deliver a maximum 2.6 million tons a year of LNG each year to an import terminal Enron is building to feed the Dabhol power plant. Saturday Dabhol Power 65 percent owned by Enron Corp. of the U.S. started a procedure to end its power supply contract to the electricity board its sole customer which owes over 3 billion Indian rupees ($64 million) in unpaid power bills. ``It is our hope that matters in India would be resolved'' said Azman Ibrahim spokesman for state-owned Petroliam Nasional Bhd. which owns 60 percent of MLNG Tiga. ``If they do not work out we would have to find or make alternative arrangements.'' MLNG Tiga is constructing Malaysia's third gas export facility which will raise the country's LNG capacity to 23 million tons from about 16 million tons in 2000. If Dabhol goes through with cancellation of its power supply contract MLNG Tiga would have to find buyers for more than a third of the 6.8 million tons it is adding to Malaysia's output capacity. Other partners in MLNG Tiga are the Sarawak state government with a 10 percent share Royal Dutch/Shell Group's unit Shell Gas BV with 15 percent Nippon Oil LNG (Netherlands) BV with 10 percent and Diamond Gas Netherlands BV with 5 percent. The plant is due to be completed at the end of 2002 with commercial production due to begin in 2003. India's federal and state governments may have to pay Dabhol Power Co. more than 170 billion rupees ($3.6 billion) if the Enron Corp. unit cancels its 2184 megawatt power venture. LEADER: India unplugged Financial Times May 22 2001 The latest threat from Enron the US energy group to pull out of its Dabhol power plant venture near Bombay illustrates both the shambolic nature of India's electricity system and the wider risks of investing in the country. The project had serious drawbacks. But unless energy companies can expect a commercial return they will not invest in badly needed new infrastructure. Unless contracts are honoured few foreign companies will consider India as a place to do business. The Maharashtra state electricity board the Dabhol plant's only customer is refusing to pay its bills arguing that the tariffs are unjustifiably inflated. Prices are certainly high. The plant fuelled by expensive naphtha is running way below capacity due to unexpectedly low demand further increasing unit costs. More difficult to judge is whether this is within the terms of the contract since Enron is keeping the details confidential. The argument over unit costs though is in any case less relevant than it might seem as most of India's state electricity boards including Maharashtra's operate at a large loss. Many consumers pay highly subsidised rates. Many pay nothing. Bills go uncollected. Half of Delhi's electricity output is stolen mostly to power middle-class air conditioners rather than light bulbs for the poor. Bankrupt state utilities are then periodically bailed out to the detriment of spending on health and education. India's state authorities urgently need to introduce a common minimum tariff and a more targeted form of subsidy. This may be unpopular but the central government's offer of Dollars 5.6bn raised via a bond issue to pay off the electricity boards' debts should sweeten the pill. A new pricing regime is only the first step. Electricity generation transmission and distribution should be unbundled and privatised. Contracts should be awarded through competition not by arrangement with the relevant political party. This would require much more transparency than many of India's politicians have been ready to concede. Enron's difficulties over the Dabhol plant the largest foreign investment in India have persuaded other western companies to withdraw from similar projects. This will hardly help the country to overcome the power shortages that hinder economic development. But the effect will reverberate well beyond the energy sector. India receives a pitifully small slice of the world's foreign direct investment. Infrastructure weaknesses are certainly one factor. But as important is the readiness of Indian politicians to manipulate foreign business for their own ends. Copyright: The Financial Times Limited May 22 2001 Houston Chronicle Enron pulls out of venture drilling in Qatar's waters By LAURA GOLDBERG Copyright 2001 Houston Chronicle Enron Corp. is pulling out of a large natural gas project off Qatar the company said Monday. Plans for the Dolphin project called for Houston-based Enron to work with Elf a subsidiary of France's TotalFinaElf and the United Arab Emirates Offsets Group to develop and pipe natural gas from a block of the Qatar North Field. More than a year ago those involved with the project said it could end up requiring investments of up to $10 billion over six or seven years. Enron said Monday it was transferring its 24.5 percent stake in the project to the United Arab Emirates Offsets Group which said in a news release it had started negotiating with other international players to become stakeholders. With the transfer United Arab Emirates Offsets Group will own 75.5 percent of Dolphin. Terms of the deal weren't released. Enron pulled out for a couple reasons including that it believes there are better places to invest its money said Alex Parsons a company spokesman in London. The project doesn't necessarily fit with Enron's current focus. It is emphasizing businesses such as marketing and trading in wholesale markets such as those for natural gas electricity and broadband. Enron said it would consider future ventures with the United Arab Emirates Offsets Group that were in line with our core business activities. M. Carol Coale an energy analyst with Prudential Securities in Houston said Enron's move is consistent with its exit strategy from international assets that generate low returns. May 22 2001 Houston Chronicle Enron exploring commodity trading Copyright 2001 Houston Chronicle News Services NEW YORK -- Houston-based Enron Corp. the nation's largest natural gas and electricity trading house is looking to continue its expansion into industries beyond energy with a move into the cocoa coffee and sugar businesses industry sources said Monday. Enron has had conversations and interviews with members of the commodity trade in recent weeks using a London-based recruitment firm to help them the sources said. They are definitely interested in getting into the business. Enron has been looking for physical traders. They have some internal people and are looking for lieutenants with experience a cocoa trader said. A representative of Enron's public relations department would only say that the firm is constantly investigating different markets and opportunities. There is always a lot of speculation about what we are doing Habiba Bayi of Enron said Monday. May 22 2001 Houston Chronicle Local and state Plains Resources gets new officers Former executives of Enron and Kinder Morgan are among those chosen for a new slate of officers at Plains Resources an oil and gas exploration and production company that had been sharing management with Plains All American Pipeline. They are filling vacancies created by people who went over to the pipeline side said spokeswoman Carolyn Tice. John T. Raymond who was vice president of corporate development at Kinder Morgan and Kinder Morgan Energy Partners was appointed executive vice president and chief operating officer of Plains Resources. Jere Overdyke Jr. formerly managing director of Enron Global Markets was named executive vice president and chief financial officer. Timothy Stephens formerly chairman president and chief executive of Abacan Resource Corp. was named general counsel and executive vice president-administration.,other,informative,3 +Re: ISO Market Stabilization Plan,-----------------,other,neutral,3 +Re: 40th Birthday,Thank you...I think jane.m.tholt@enron.com on 06/15/2001 11:36:01 AM To: skean@enron.com cc: Subject: 40th Birthday Hello! jane.m.tholt@enron.com has just sent you an Egreetings.com card! To view your greeting simply click on this pickup window link: If your e-mail doesn't recognize the above address as a link simply copy and paste it in your browser address window. If you need further help visit our Help pages at Your Friends at Egreetings.com,other,casual,0 +confidential ee info,Attached is the spreadsheet for the Houston Commercial Admins. Those in white are slated to recieve offers first. Those in red will only recieve offers if someone on the primary list declines. Please make sure you and the other desk heads are comfortable with the list as it is. I will be at the Houstonian today but Amy Fitzpatrick will be here and can assist you if you need to have a meeting to discuss. Thanks.,other,formal,3 +Re: part time/reduced hour employees,ok Cindy Olson 05/08/2001 11:48 AM To: Steven J Kean/NA/Enron@Enron cc: Subject: part time/reduced hour employees Steve I think we have consensus on how we would like the part ttime people handled in the PRS process for mid year.....okay. -----------------,human resources,casual,1 +Re: ACTION ALERT -- ELECTRONIC MONITORING,I am going to copy Phillippe Bibi (Chief Technology Officer) and Cindy Olson (EVP-HR). Please put someone in touch with Chris. Thanks From: Chris Long 09/12/2000 04:09 PM To: Steven J Kean/NA/Enron@Enron Maureen McVicker/NA/Enron@Enron cc: Subject: ACTION ALERT -- ELECTRONIC MONITORING Steve - Can you please direct me who in Houston should be notified about this legislation...my guess is someone in HR. Thanks - Chris -----------------,legal affairs,formal,3 +Re: FERC INVESTIGATION IN CA - What should they be looking for?,-----------------,energy infrastructure,inquisitive,3 +RE: UBS deal,Marilyn Yes please call Shirley (3-5290) to setup a meeting. Vince ,other,formal,3 +Moday meeting,Dan Joe and Charles: Let's meet in the hallway 15 minutes before to discuss strategy. Joe we can share a cab. thanks. -----------------,meetings & events,casual,3 +Re: Notice,Please call before you leave and please send me your contact information when you have it for your new job. thanks Jane Wilson@ENRON_DEVELOPMENT 05/30/2001 07:31 AM To: Wade Neil Steven J Kean/NA/Enron@Enron cc: Richard Shapiro@Enron Sue Nord@Enron Anthony Duenner@ENRON COMMUNICATIONS Rebecca McDonald/Enron@EnronXGate Sandip Bob Sparger/Corp/Enron@Enron Scott Subject: Notice After almost 13 years with Enron I've decided to pursue other opportunities outside of the company. While the problems in India remain challenging and I have enjoyed my tenure here the job I've been offered is really too good to pass up. Thus please consider this e:mail as formal notice of my intention to resign from the company effective close of business June 16 2001.,other,formal,3 +RE: RTO Week -- Summary of Standards and Practices Panel,Getting more information in this person and getting him to contact Congress= is very important. He is in the district of House Chief Deputy Whip Roy B= lunt (R-MO) who is Cong. DeLay's right-hand man in the leadership. He als= o serves on the Barton Subcommittee. While Linda Pat and I had breakfast = with him next week and he will be in Houston for next month he and his st= aff stress that he is close to public power in his district which includes= Springfield MO. Did he have a prepared statement at the RTO Week hearing= ? ,government & politics,urgent,5 +"FERC, meeting starts at 10:00 a.m.",Jeff Skilling and Mr. Lay are not going so company plane is not reserved. Bill Butler is going will stay at the Willard,energy infrastructure,casual,3 +LEAK,-----------------,other,urgent,5 +Re: CONFIDENTIAL (The Manifesto),great idea.,other,excited,2 +Re: Jolles,I would hold off for now. I think based on our discussion that Ira might be a fit for my organization or EES. Unfortunately I am heading out of town with my family on the 12th (unfortunate for meeting with Ira not unfortunate for me) and EES has new leadership who is trying to assess the state of things before making new senior level hires. So let's wait a bit. Thanks Stelzer@aol.com 03/30/2001 09:58 AM To: skean@enron.com cc: Subject: Jolles Help -- pls help me to unscramble my calendar. We had discussed Ira Jolles now a vp and general counsel of GPU due to resign when its merger is completed and the execs move to some God foresaken place in Ohio or some such state. Ira is smart innovatived honorable very knowledgeable about Pa. Nj NY and Ferc regulation. In short like no other utility executive I have met. He would be perfect for Enron perhaps operating out of one of your offices in one of the states I have mentioned. You said that you would set up meetings with the appropriate people in Houston and I propose April 12 -- I would stay over after our meeting and do the introductions. PLS let me know that this is ok.,other,casual,3 +interim emergency approaches.DOC--sent on behalf of Adam Wenner,What about the show cause order route? -----------------,safety & emergency,formal,3 +,Vince I've been hearing rumors that Enron has decided to endorse the nodal pricing model as implemented in PJM. I just wanted to warn you that I'm not sure this is in Enron's long-term interest at all. Let me explain why. Feel free to give me a call if you'd like to talk more about this. First let me say that I firmly believe in locational pricing and specifically pricing congestion. However the way that PJM implements nodal pricing is to eliminate as much price volatility and reduce the transparency of the market. Specifically the PJM tariff gives the ISO the ability to mitigate to cost plus a %10 adder the bids of any market participant that the ISO deems is out of merit in one of the three zones in region. (The fact that a nodal market is talking about zones should give you cause for alarm.) Then the ISO takes this mitigated bid and re-runs its price-setting software to compute new nodal prices. The way I have (somewhat unfairly) decribed this price-setting process is that the PJM ISO decides what prices it would like for a given day and mitigates bids until it gets them. This is not a transparent market nor one where it makes any sense to buy the risk management services that Enron provides. The only price volatility you have to worry about in the PJM market is that kind that comes about if they need imports into their control area to meet demand. Under these circumstances you need to pay the imports whatever is necessary to get them to come to your market. However bear in mind FERC's desire to make a large RTO on the East Coast. This will effectively mean little imports to the East Coast RTO so all bids can be mitigated at the discretion of the ISO. Paying market-clearing prices to cost-of-service mitigated bids is just paying too much to eliminate price volatility. It effectively kills off the development of risk management at the wholesale and retail level. Power marketing becomes much less profitable because retailers know you can always buy at cost-mitigated prices. In short the PJM model is not market. It is just an alternative form of regulation that is politically attractive because it reduces price volatility but it is not good for consumers or traders because they just get a higher cost form of regulation than traditional cost-of-service regulation. You pay market-clearing prices to cost-of-service mitigated bids but under regulation you could just pay cost-of-service prices and eliminate the infra-marginal profits to low cost generators. As we discussed during our dinner I think the two biggest sources of benefits from re-structuring will come from getting the demand-side involved in the market and from more efficient risk management. A necessary condition for both of these to occur is prices that reflect actual conditions in the market (including the extent of market power exercised). Masking these signals dulls any incentive for market participants to make the investment necessary to management. The PJM model is just way to have a market in name without achieving any significant benefits to consumers or energy traders. Frank,other,concerned,5 +RE: Thu evening,Thanks. Confirmed. Vince ,personal & social,casual,0 +Comments On Draft RTO Letter On Barton Proposal,Following up on last night's e-mail here are some specific suggestions to strengthen the draft EPSA letter on the Barton RTO draft. The second paragraph and the first few bullets after it should be rewritten as follows to make it clear that the current legislative proposal on RTOs is far off the mark as opposed to being fixed by technical corrections as the draft letter now states: You have identified RTOs as critical to the development of a well-functioning transmission system and we wholeheartedly agree. We commend you for including all transmission-owning utilities in the RTO provisions and for requiring that transmission be conducted on an open-access basis. However to accomplish the RTO and transmission goals we share it is essential that any legislation on RTOs not slow down the process already underway at FERC. Unfortunately the discussion draft as issued on October 9th does not meet this test. Specifically the proposal Establishes a lengthy and cumbersome process that will delay the formation of RTOs by imposing procedural requirements that advantage those who oppose properly functioning RTOs including evidentiary hearings and court appeals review under standards of judicial review not normally applicable to Federal Power Act cases. Removes the ability of the Federal Energy Regulatory Commission (FERC) to deal with an evolving marketplace by statutorily freezing market and operational structures in place as of date of enactment regardless of changed circumstances. [rest of the bullets as in the draft letter] We appreciate the opportunity to offer these suggestions to strengthen the draft letter. Please call with any questions or comments before the Legislative Affairs Committee meeting tomorrow. Thanks. John,other,formal,5 +Re: Stand-alone Reliability Legislation,I believe it is timely to discuss this again and I agree with Cynthia that stand alone legislation does nothing to address the essential transmission structural issues. I am open minded on the issue if someone can make a compelling case to support stand alone legislation BUT my gut reaction is that it would be a serious mistake. Congress would happily put off dealing with this issue for years if it passes reliability only legislation. I think the legislation itself makes little or no progress on our issues and may even set us back on making progress at FERC and in other fora. I realize that if this gets going it may be hard to stop but it would be such a cynically ineffective approach to the real reliability problems that we should help whomever we can to put a stop to it. If it gets through committee I have no confidence in this Congress to actually amend it into something better and broader so again I have difficulty seeing why we should go that route. I look forward to the discussion. Cynthia Sandherr@ENRON 07/17/2000 02:20 PM To: Joe Hartsoe/Corp/Enron@ENRON I cc: Richard Shapiro/HOU/EES@EES Steven J Kean/HOU/EES@EES dwatkiss@bracepatt.com cingebretson@bracepatt.com Joe Hillings/Corp/Enron@ENRON ed@buckham.com Jeff Brown/HOU/EES@EES Subject: Re: Stand-alone Reliability Legislation Joe: thanks. Allison is arranging a brief (thirty minutes) Conference Call for sometime tomorrow so we can assure that we are all on the same page on this issue. Although we had supported the policy agreement we had been on record to oppose for political reasons the bill's movement on a stand-alone basis since policing the grid does nothing to address the essential transmission structural changes the market is crying to have addressed in order to provide reliability. However given Jeff Brown's efforts the political need for inoculation and other political developments it is timely to once again discuss Enron's position. I look forward to our call sometime tomorrow. Cynthia Joe Hartsoe 07/17/2000 03:09 PM To: Richard Shapiro/HOU/EES@EES Cynthia Sandherr/Corp/Enron@ENRON cc: Subject: Stand-alone Reliability Legislation FYI. Thoughts? JOE -----------------,other,formal,3 +SRP Change in Business Practice at Palo Verde,,other,neutral,3 +CONFIDENTIAL - DO NOT DISTRIBUTE,CONFIDENTIAL - DO NOT DISTRIBUTE Steve Kean would like your comments on this email as soon as possible. Thanks.,other,urgent,5 +Re: Tokyo Presentation 15 May,The presentation looks fine but consider adding this idea in a few slides: the continuation of a regulated structure poses considerable risk for utilities. California's utilities were pushed to the brink of or into bankruptcy because of a regualtory regime which allocated price risk to them. All parties are better off in a system where the regulated enterprise is limited to natural monopoly functions and all other acitivities are conducted in a marketplace. Also did we cover the shortcomings of the Japanese market sufficiently?,business document,formal,3 +Senate Energy Hearing Today,The Senate Energy Committee held an oversight hearing today on siting impediments to energy infrastructure. The four witnesses were Jerry Halvorsen of INGAA William Nugent of Maine for NARUC David Cook general counsel of NERC and Stan Szwed vp-transmission of FirstEnergy Corp. The hearing was well attended by committee Republicans but only Sen. Bingaman and Sen. Landrieu on the Democratic side and then only briefly. Highlights NARUC's Nugent urged the Committee to move swiftly to confirm Wood and Brownell to FERC noting their confirmation hearing is tomorrow. Consensus that energy infrastructure is not able to keep up with projected energy demand both gas and electric. Surprising willingness (even among western Republican senators who are normally pro-states rights pro-private property rights) that Congress should at least seriously consider if not implement some form of federal authority over power transmission siting. Specifics were not nailed down with some senators expressing more support for treating electric like FERC already has power over natural gas while others were inclined more toward a FERC back stop or last resort authority when state decisionmaking breaks down. The drift was certainly toward some enhanced federal role. NERC released is Summer Assessment today that is more pessimistic than California ISO on the extent of expected rolling blackouts and shortages this summer. NERC seees a capacity shortage in the Pacific Northwest this winter. While NY/NE is adequate this summer Cook says it bears watching because of bouts of high heat in the region and a high level of unplanned outages that often occur in the region in the summer. Chairman Murkowski engaged in a series of questions with INGAA's Halvorsen designed to lay the blame for the natural gas capacity problem to California and corresponding high price levels on the actions of LDCs in California not supporting expansion of interstate pipelines. Halvorsen's testimony includes a chart of specific cases where LDCs intervened. In his verbal testimony Halvorsen singled out Sempra as a source of opposition including Sempra filings against expansions by Transwestern and Kern River. Chairman Murkowski got Halvorsen to say that the actions of the California LDCs and the intrastate nature of all gas pipelines in California effectively denied California consumers the benefit of open access for natural gas. Murkowski implied he would entertain a change in the Natural Gas Act as it relates to the status of interstate pipelines going in to California. Sen. Domenici joined the increasing chorus of members of Congress raising questions about why natural gas prices are low at the wellhead for his producers in New Mexico but so high into California. He asked the panel who is making the money in the differential but none of the witnesses wanted to tackle the question. This is just one more indication of the growing interest in the natural gas aspects of the California situation.,other,informative,3 +,There were several items in the mail pouch that you needed a response form me on. Here are the responses: Marchris forwarded a request to attend a conference on Aug 19 and 20. I think the original invite when to Ken and Jeff. I will attend subject to them getting some reasonable response rate from the commissioners they invited and provided that I get a speaking or similar participation opportunity. SMU professor and student asking for Astros tickets - yes CERA conference on July 10-12 in Scotland -- decline,meetings & events,formal,3 +Re: FW: Dadisms,George Herbert Hoover Bush. Robert Kean on 07/07/2001 10:13:19 AM Please respond to To: Alan Kean \(E-mail\) 'Doug & Karen Reiman \(E-mail\)' Kathy Wedig \(E-mail\) Melissa Kean \(E-mail\) Phil Kean \(E-mail\) 'Steve & Melissa Kean \(E-mail\)' cc: Diane Kean \(E-mail 2\) Subject: FW: Dadisms Dadisms 1. Run for the roundhouse Nellie he'll never corner you there. 2. Slick as catshit and twice as nasty. 3. Like shit through a goose. 4. Yeah that's right keep fiddlin' with that you'll break it 5. Ho! Ho! she cried in excess wild and waved her wooden leg on high! 6. On accounta the war. 7. They'll have to shoot him on judgement day. 8. Then of course there are the names: Katy Devie My Little Mochawk Phil Jofus and Bubba 9. Choke ass (referring to peanut butter) 10. If it tastes good there are no calories 11. Didn't know you were in town (as driver passes on the right etc.) 12. Like a couple of cub bears (meaning Rob and Phil) 13. Washington D.C. District or Corruption 14. Have some onions for defense 15. He won't have the guts to do THAT again (when a bug hits the windshield) 16. Saps goin' up the tree 17. Big Al 18. Douglas Doorite 19. Must be a storm comin' the kids are actin' up 20. Constipate (concentrate) 21. Like being in hell with your back broke 22. gourd cover (hat) 23. mitts dogs paws (hands or feet) 24. you're too young 25. Worthington (when we asked him where something was or where he was going) 26. overhose (blue jeans) 27. excruciating pain! (when we squeezed his hand) 28. That's a hell of a note 29. meat wagon (ambulance) 30. drappies (drapes) 31. grappies (grapes) 32. Whoa horsie! Just cuz you only got 3 legs. (when he was putting on the brakes in the car) 33. Jeana Jeana corpastina I'm in love with you 34. I love you anyway 35. Scuse my boardin' house reach. 36. Come on out and let me lay a wheel on ya! (in traffic) 37. Sit down and start passin' (at meal time) 38. That's a bit of all right. 39. Here guard this with your life (when he handed something to us at a store) 40. SOL (shit out of luck) 41. I'll tell ya when your're 21. 42. fernilla dawberry shocoletta (vanilla strawberry chocolate) 43. straighten up now. 44. Pardon me soldier. (when he burped) 45. I'm going to assume the position of a soldier. (when he was going to lay on the couch for a nap) 46. horses doovers 47. lemon meringoo pie 48. solft 49. go ahead see if it bends (when someone pulled out in front of him) 50. Ioway State 51. Cedar Rapids Cedar Rapids come on down. Hotel Roosevelt center of town. 52. A hundred dogs going wild in the tobacco field. Does your cigarette taste difference? (a quote from the one Russian guy in Cascade) 53. Cut her loose and let her wander. 54. Get your dogs under the table. 55. Shit! cried the queen and a thousand loyal subjects strained their bowels. 56. Who's side are you on?! The power company? (when we left lights on) 57. That makes it soggy and hard to light 58. Full as a tick 59. A treat instead of a treatment 60. Intermittent Power,other,casual,0 +"Bush IT National Steering Committee, Invitation",,information technology,formal,3 +Confidential communications,J.C. asked that I send you the following message: In light of rumors that investigations into Enron's financial difficulties may be launched or expanded including investigations by the civil plaintiffs or by the FBI on behalf of the SEC or Congress we believe it prudent to advise you that if anyone contacts you and seeks to question you (even someone with a badge and an authoritative demeanor) don't answer their questions. Refer them to us for the purpose of arranging an interview. Second if you know of any individuals who you believe might be interviewed in connection with these investigations please call us so we can discuss how such information should be forwarded to the appropriate people. Please call if you have any questions. This e-mail and any attached files may be confidential and subject to attorney/client privilege. If you received it in error please immediately notify the sender by return e-mail or by calling (713)654-7600.,legal affairs,urgent,5 +Trip to Santa Fe & California,Liz Frank Wolak can meet Greg and me in his office and for dinner Thursday night August 16 at Stanford. Can Greg fly to San Francisco or San Jose from his Asset Tour trip in late afternoon on that day? If Greg can get a co plane to go San Francisco on Thursday we could fly together to Santa Fe on Friday morning August 17. Norman Packard can meet us on that day. I could go to San Francisco Thursday morning on a commercial flight. Vince,personal & social,casual,3 +Re: FW: Dadisms,George Herbert Hoover Bush. Robert Kean on 07/07/2001 10:13:19 AM Please respond to To: Alan Kean \(E-mail\) 'Doug & Karen Reiman \(E-mail\)' Kathy Wedig \(E-mail\) Melissa Kean \(E-mail\) Phil Kean \(E-mail\) 'Steve & Melissa Kean \(E-mail\)' cc: Diane Kean \(E-mail 2\) Subject: FW: Dadisms Dadisms 1. Run for the roundhouse Nellie he'll never corner you there. 2. Slick as catshit and twice as nasty. 3. Like shit through a goose. 4. Yeah that's right keep fiddlin' with that you'll break it 5. Ho! Ho! she cried in excess wild and waved her wooden leg on high! 6. On accounta the war. 7. They'll have to shoot him on judgement day. 8. Then of course there are the names: Katy Devie My Little Mochawk Phil Jofus and Bubba 9. Choke ass (referring to peanut butter) 10. If it tastes good there are no calories 11. Didn't know you were in town (as driver passes on the right etc.) 12. Like a couple of cub bears (meaning Rob and Phil) 13. Washington D.C. District or Corruption 14. Have some onions for defense 15. He won't have the guts to do THAT again (when a bug hits the windshield) 16. Saps goin' up the tree 17. Big Al 18. Douglas Doorite 19. Must be a storm comin' the kids are actin' up 20. Constipate (concentrate) 21. Like being in hell with your back broke 22. gourd cover (hat) 23. mitts dogs paws (hands or feet) 24. you're too young 25. Worthington (when we asked him where something was or where he was going) 26. overhose (blue jeans) 27. excruciating pain! (when we squeezed his hand) 28. That's a hell of a note 29. meat wagon (ambulance) 30. drappies (drapes) 31. grappies (grapes) 32. Whoa horsie! Just cuz you only got 3 legs. (when he was putting on the brakes in the car) 33. Jeana Jeana corpastina I'm in love with you 34. I love you anyway 35. Scuse my boardin' house reach. 36. Come on out and let me lay a wheel on ya! (in traffic) 37. Sit down and start passin' (at meal time) 38. That's a bit of all right. 39. Here guard this with your life (when he handed something to us at a store) 40. SOL (shit out of luck) 41. I'll tell ya when your're 21. 42. fernilla dawberry shocoletta (vanilla strawberry chocolate) 43. straighten up now. 44. Pardon me soldier. (when he burped) 45. I'm going to assume the position of a soldier. (when he was going to lay on the couch for a nap) 46. horses doovers 47. lemon meringoo pie 48. solft 49. go ahead see if it bends (when someone pulled out in front of him) 50. Ioway State 51. Cedar Rapids Cedar Rapids come on down. Hotel Roosevelt center of town. 52. A hundred dogs going wild in the tobacco field. Does your cigarette taste difference? (a quote from the one Russian guy in Cascade) 53. Cut her loose and let her wander. 54. Get your dogs under the table. 55. Shit! cried the queen and a thousand loyal subjects strained their bowels. 56. Who's side are you on?! The power company? (when we left lights on) 57. That makes it soggy and hard to light 58. Full as a tick 59. A treat instead of a treatment 60. Intermittent Power,other,casual,0 +RE: Vacation Time,Maureen No problem. Vince ,other,casual,0 +Re: FERC INVESTIGATION IN CA - What should they be looking for?,Looks like you got this earlier. I think it has new relevance in light of FERC's announced investigation. ------------,energy infrastructure,inquisitive,3 +Re: Starwood Draft,A bit lengthy but I think it looks fine. Peggy Mahoney@EES 08/30/2000 12:41 PM To: Mark Palmer/Corp/Enron@ENRON Steven J Kean/NA/Enron@Enron Mark Koenig/Corp/Enron@ENRON Paula Rieker/Corp/Enron@ENRON Cedric Burgher/Corp/Enron@ENRON Elizabeth Tilney/HOU/EES@EES Harold G Buchanan/HOU/EES@EES Jeremy Blachman/HOU/EES@EES Mark S Muller/HOU/EES@EES Kevin Hughes/HOU/EES@EES Dan Leff/HOU/EES@EES NotesAdmin/EES@EES Marty Sunde/HOU/EES@EES Vicki Sharp/HOU/EES@EES Bill Rapp/HOU/EES@EES Rob Rice/HOU/EES@EES Wendy Raleigh/HOU/EES@EES cc: Karen S Owens@ees@EES Thomas E White/HOU/EES@EES Subject: Starwood Draft Attached is a draft of the Starwood press release with our initial changes in red. Please review and let me know your thoughts by end of day Thursday Aug 31. It is clear that Starwood has several agendas with this release and after talking with them they would prefer not to cut any of their messages. Scheduled release date is Tuesday Sept 5. Please feel free to call me to discuss. Also - I've attached a map of all their US owned franchised and leased property locations. 87 of the properties are owned and there are approx. 400 total in the US.,other,formal,3 +Re: Ken Lay Statement to Employees on Bush CO2 Policy,The revised statement looks good to me. Catherine McKalip-Thompson@ENRON COMMUNICATIONS 03/23/2001 12:30 PM To: Rob Bradley/Corp/Enron@Enron Jeffrey Keeler/Corp/Enron@ENRON cc: Ann M Schmidt/Corp/Enron@Enron Lauren Iannarone/NY/ECT@ECT@ENRON Michael Terraso/OTS/Enron@Enron Steven J Kean/NA/Enron@Enron Subject: Re: Ken Lay Statement to Employees on Bush CO2 Policy Rob After reviewing both Lauren's and Jeff's comments I have little to add. I would however replace the last part of Jeff's sentence in the first paragraph with and there is a need to take a comprehensive look at strategies for reducing CO2 emissions more broadly in ways that make economic and environmental sense to avoid mentioning the Kyoto Protocol directly. And I'd like to reiterate Lauren's suggestion that the article should direct employees to our climate change policy statement in last year's EHS Report and that Lay encourages them to research and reflect on the issue and communicate their thoughts. Thanks Catherine Catherine McKalip-Thompson Manager Environmental Responsibility Enron Corp. 101 California Street Suite 1950 San Francisco CA 94111 Tel: 415.782.7842 Fax: 415.782.7854 Jeffrey Keeler@ENRON 03/23/01 08:35 AM To: Rob Bradley/Corp/Enron@ENRON cc: Ann M Schmidt/Corp/Enron@Enron Lauren Iannarone/NY/ECT@ECT Michael Terraso/OTS/Enron@Enron Steven J Kean/NA/Enron@Enron Catherine McKalip-Thompson/Enron Communications@Enron Communications Subject: Re: Ken Lay Statement to Employees on Bush CO2 Policy Rob: Here are my edits below in bold. Sorry to re-write so much -- but I believe this is consistent with Steve's conversation with Ken and with the media interviews he has given to date as well as our advocacy on multipollutant and climate change. Jeff Jeffrey Keeler Director Environmental Strategies Enron Washington DC office - (202) 466-9157 Cell Phone (203) 464-1541 Rob Bradley 03/23/2001 10:14 AM To: Jeffrey Keeler/Corp/Enron cc: Michael Terraso/OTS/Enron@ENRON Steven J Kean/NA/Enron@Enron Lauren Iannarone/NY/ECT@ECT Ann M Schmidt/Corp/Enron@ENRON Subject: Ken Lay Statement to Employees on Bush CO2 Policy (KEELER EDITS) Here is my draft for Ken in response to Ann's eBiz request. Comments welcome The President after a good deal of study and soul searching decided not to support mandatory controls on carbon dioxide (CO2) emissions from power plants as part of a multipollutant clean air strategy. His decision was based on some very important factors -- the nation's energy markets are experiencing unprecedented supply and price challenges that any CO2 mandate could exacerbate and U.S. regulation of CO2 in the near-term could be ill-advised because the Kyoto protocol on global treatment of greenhouse gas emissions is unworkable in its current form. I was somewhat concerned that the message sent by the Bush administration would polarize the debate over how the U.S. should treat CO2 emissions in the long term as his statement did provoke a very negative anti-environment reaction by many concerned individuals and organizations. Because this is an important issue to all parties on all sides of the debate I believe that the administration should convene an ongoing process to carefully examine global climate change and all the long-term economic scientific and social impacts of action regulate CO2 emissions. The President's position on CO2 notwithstanding Enron continue to be a private sector leader in offering real solutions towards reducing greenhouse gas emissions in a rapidly expanding energy market. We are well-positioned through our experience with low-carbon fuels for electric generation (natural gas and wind in particular) our focus on new power generation and tecnologies our leadership position in promoting efficiency through Enron Energy Services' energy outsourcing business and our expertise in emissions trading and risk management. A multipollutant appraoch to reducing power plant emissions makes a lot of sense from and environmental and energy policy standpoint. Enron will continue to work with the Bush administration and Congress toward structuring a program that can achieve environmental goals while providing incentives to build cleaner more efficient generation promoting a broad mix of fuels and tecnologies and giving industry the flexibility and economic incentives to make reductions in a market-based cost-effective way. If we're able to make meaningful reductions in 3 pollutants -- NOx SO2 and mercury -- and we do it in a way that promotes efficiency and new technology we'll make progress on CO2 whether it is regulated or not. In the meantime I will remain active in the global climate change debate to position Enron as a constructive player in the public policy arena and as an industry leader in promoting market-driven solutions to the world's energy and environmental problems. ,other,informative,3 +California Power Crisis Update (No. 10),We have been pulling together these weekly(sometimes more often) summaries for internal purposes. Would you find it helpful to be on the distribution list? Hope you are doing well. Look forward to touching base soon. ,other,formal,3 +IEP News 5/29,Today's IEP news ... Los Angeles Times May 27 2001 Sunday Home Edition Page 7 615 words ????The State ?Who Let the Hot Dogs Out? Rhapsodic Lawmakers Legislature: ????Speaking frankly officials have used the wiener as an easily digestible ????metaphor for the state's energy crisis. JULIE TAMAKI MIGUEL BUSTILLO ????TIMES STAFF WRITERS SACRAMENTO (Quotes Smutny on behalf of IEP) The San Francisco Chronicle MAY 26 2001 SATURDAY FINAL EDITION NEWS ????Pg. A1 835 words Davis asks U.S. to limit firms' prices ???RATE SWINGS: ????Governor argues 2 generators manipulated market Lynda Gledhill Sacramento (Quotes ??????? ???Smutny on ?behalf of IEP) The Wall Street Journal Power Drain: The U.S. Energy Crisis California Officials Say State Will ?? ???Enter A Recession Without Energy Price Caps By JOHN R. EMSHWILLER Staff Reporter of THE ?? ???WALL STREET JOURNAL AP Online May 29 2001 Tuesday 9:11 AM Eastern Time Domestic ????non-Washington general news item 770 words AP Top News at 9:10 a.m. EDT ????Tuesday May 29 2001 JEROME MINERVA The Dallas Morning News May 29 2001 Tuesday DOMESTIC NEWS K7523 1046 ????words Bush begins visit in hostile California By G. Robert Hillman Los Angeles Times May 29 2001 Tuesday Home Edition Page 1 1178 words ????Governor to Stress Price Caps to Bush Power: In a meeting today with the ????president Davis will present a letter from economists backing cost controls ????and demand federal assistance. DAN MORAIN JAMES GERSTENZANG TIMES STAFF ????WRITERS Los Angeles Times May 29 2001 Tuesday Home Edition Page 1 1541 words ????THE ENERGY CRISIS Kern County Basks in Role as State's Blackout-Buster ????Electricity: Six new plants will bolster its status as energy center. ????MITCHELL LANDSBERG TIMES STAFF WRITER McKITTRICK Calif. The New York Times May 29 2001 Tuesday Late Edition - Final Section A ????Page 12 Column 1 National Desk 1078 words For Crucial California Trip ????Bush Calibrates How Best to Handle State's Energy Crisis By DAVID E. SANGER ???? LOS ANGELES May 28 The Orange County Register May 29 2001 Tuesday DOMESTIC NEWS K7500 ????825 words California's power crisis generating lots of heat By John Howard The San Francisco Chronicle MAY 29 2001 TUESDAY FINAL EDITION NEWS ????Pg. A1 1291 words Crisis no sweat to some offices ???Many offices keep ????cool in crisis ???Air conditioners blast in state's energy centers Steve ????Rubenstein The San Francisco Chronicle MAY 29 2001 TUESDAY FINAL EDITION NEWS ????Pg. A1 1238 words Bush facing Davis' heat over energy ???In first visit ????to state as president he'll hear governor's plea for help Carla Marinucci ????Lynda Gledhill USA TODAY May 29 2001 Tuesday FIRST EDITION NEWS Pg. 3A 426 words ????Davis to urge Bush to back electricity price cap Laurence McQuillan LOS ????ANGELES The Washington Post May 29 2001 Tuesday Final Edition A SECTION Pg. ????A02 639 words Energy Chief Moves To Aid California Transmission Plan ????Precedes Bush Visit Mike Allen Washington Post Staff Writer LOS ANGELES ????May 28 The Washington Post May 29 2001 Tuesday Final Edition A SECTION Pg. ????A03 1936 words It's Still Dawn for Solar Power in L.A. Despite City ????Subsidies Homeowners Hesitate to Install Expensive Alternative Energy ????Source William Booth Washington Post Staff Writer LOS ANGELES The Washington Times May 29 2001 Tuesday Final Edition PART A NATION ????INSIDE POLITICS Pg. A6 1264 words Greg Pierce THE WASHINGTON TIMES The Washington Times May 29 2001 Tuesday Final Edition PART A NATION ????Pg. A4 809 words Bush faces tough sell on visit to California ?Davis ????likely to be rebuffed on price caps Joseph Curl THE WASHINGTON TIMES LOS ????ANGELES Chicago Tribune May 29 2001 Tuesday NORTH SPORTS FINAL EDITION News ????Pg. 6 ZONE: N 514 words Bush backs WW II project From Tribune news ????services. LOS ANGELES The Associated Press May 29 2001 Tuesday BC cycle 7:55 AM Eastern Time ???? Domestic News 604 words Bush announcing low-income aid but no price ????caps By SCOTT LINDLAW Associated Press Writer LOS ANGELES The Associated Press State & Local Wire May 29 2001 Tuesday BC cycle ????7:31 AM Eastern Time State and Regional 594 words Stakes are high for ????Davis meeting with Bush By GARY GENTILE AP Business Writer LOS ANGELES ABC NEWS WORLD NEWS NOW (2:00 AM ET) May 28 2001 Monday 447 words ????PRESIDENT BUSH VISITS CALIFORNIA WHERE POLITICIANS ARE CRITICAL OF HIS LACK ????OF ACTION FOR THEIR ENERGY CRISIS DEREK McGINTY JOSH GERSTEIN Los Angeles Times May 27 2001 Sunday ?Home Edition SECTION: California Part 2 Page 7 Metro Desk LENGTH: 615 words HEADLINE: The State Who Let the Hot Dogs Out? Rhapsodic Lawmakers Legislature: Speaking frankly officials have used the wiener as an easily digestible metaphor for the state's energy crisis. BYLINE: JULIE TAMAKI MIGUEL BUSTILLO TIMES STAFF WRITERS DATELINE: SACRAMENTO BODY: ??Every crisis has its symbol. ??Watergate had Deep Throat. The S&L scandal had Charles Keating. O.J. did--or didn't--have a bloody glove. ??Here in the Capitol the hot dog has become an unlikely metaphor for the state's energy crisis. ??In packed news conferences and heated Assembly floor debates lawmakers from both parties have evoked images of the ordinary dog to help explain an extraordinary mess. ??The genesis of this statehouse trend is difficult to determine. Assemblyman Fred Keeley appears to be the first to have tossed the hot dog into the political fire. ??During a crucial Assembly discussion in January the Boulder Creek Democrat recited the lyrics to a familiar Oscar Mayer jingle as a way of admitting that a controversial bill to have the state buy electricity to avoid blackouts was unpalatable but necessary. ??It's the dog kids love to bite said Keeley of the jingle. Well this is the bill people love to hate. ??A bizarre partisan hot dog duel ensued. Assemblyman John Campbell (R-Irvine) responded by likening the unpredictable financial consequences of the Keeley legislation to biting recklessly into mystery meat. ??Before I bite into it I see what's on the outside but I can't see the inside Campbell said. If nobody can tell me what's on the inside it may be bitter it may be bad it may make me sick. ??Assemblywoman Carole Migden (D-San Francisco) angrily fired back wanting to know why Campbell a professed hot dog eater was suddenly so critical of its unknown contents. ??It's OK to eat a hot dog that's full of animal bones and hair Migden said. That's a hot dog that's OK with you but this kind of hot dog isn't. ??Yet it was Senate leader John Burton who made it the key ingredient in a Capitol catch phrase. ??Burton described a plan to purchase the electrical power grid from the state's private utilities as a fair swap saying: I give you a dollar you give me a hot dog. ??The sound-bite quickly took on a life of its own. With the cost of the energy crisis growing faster than the price of ballpark franks critics doubted the public's appetite for a multibillion-dollar hot dog. ??Do you really want a hot dog? That is the question said Jan Smutny-Jones executive director of the Independent Energy Producers a trade group for power generators. ??Not content to let a dog lie in its bun lawmakers such as Assemblyman Bill Leonard (R-San Bernardino) kept the hot dog in public discourse. ??When Pacific Gas & Electric Co. filed for bankruptcy protection Leonard was one of a chorus of legislators who questioned the merits of purchasing the remaining portion of the power lines calling it not even half a hot dog. ??Added Assemblyman Bill Campbell (R-Villa Park): It's like paying Mercedes prices for a broken down hot dog cart. ??In recent weeks the hot dog rhetoric appeared to have gone cold. Then Assemblyman Juan Vargas (D-San Diego) revived it. ??After enduring hours of testimony on details of the deal to purchase Edison's power lines Vargas said his opinion of the dollar-equals-hot-dog deal had diminished. ??They're trying to charge us for a hot dog Vargas said of the utility but it looks like we're only going to be getting a wienie. ??Reliant Vice President John Stout also recently weighed in with his own hot dog analogy as he tried to explain why his company's income had jumped so much during the crisis. ??If you have a hot dog stand and you go out and buy five to six more hot dog stands Stout said referring to his company's purchase of power plants then naturally you would expect the operating income to go up. ??Alas the dog days of summer have yet to begin. LOAD-DATE: May 27 2001 of 4 DOCUMENTS ?????????????????Copyright 2001 The Chronicle Publishing Co. ?????????????????????????The San Francisco Chronicle ????????????????????MAY 26 2001 SATURDAY FINAL EDITION SECTION: NEWS Pg. A1 LENGTH: 835 words HEADLINE: Davis asks U.S. to limit firms' prices RATE SWINGS: Governor argues 2 generators manipulated market SOURCE: Chronicle Sacramento Bureau BYLINE: Lynda Gledhill DATELINE: Sacramento BODY: Gov. Gray Davis pursued a new strategy yesterday to control wholesale electricity costs by demanding that federal regulators ban two generators from selling power in California at market rates arguing that they have manipulated the market to their advantage. ???Meanwhile the Davis administration lambasted a federal plan to implement temporary price controls scheduled to go into effect Tuesday. State officials said the measures would do nothing to tame California's out-of-control costs for electricity. ???Davis whose calls for broader price limits on wholesale electricity have been rejected repeatedly by the Federal Energy Regulatory Commission is scheduled to meet with President Bush next week to ask Washington to do more to help California. ???Federal regulators said that prices were 'unjust and unreasonable' nearly nine months ago but they have been AWOL ever since Davis said in a statement. ???The California Independent System Operator managers of the state's electrical grid asked energy regulators yesterday to revoke the authority they have given Williams Energy and AES Inc. to sell power at market-based rates. Instead the Davis administration wants the companies to be forced to sell at cost-plus rates which would ensure a reasonable but limited profit. ???Market-based rate authority is not an entitlement the ISO said in a filing with federal regulators. ???The ISO asked regulators to act by June 15 saying that any delay places California consumers and the state's economy at extreme peril. ???Similar filings against other companies such as Mirant Duke and Reliant are being considered said Charles Robinson general counsel for the ISO. ???Robinson said the ISO has a well developed record of price manipulation by the two companies. He said information previously given to federal regulators proved the prices charged to California were excessive. ???'GRANDSTANDING' ACCUSATION ???Aaron Thomas a spokesman for Virginia-based AES said the administration is grandstanding. ???This is akin to the rhetoric the governor has used for the past several months he said. We are well below the index FERC uses to establish concerns about market power. ???As to this rhetoric about these companies abusing the marketplace -- check the facts. We lost money last year Thomas said. ???A spokeswoman for Williams said the company would not comment because it had not seen the filing. ???Earlier this month Oklahoma-based Williams agreed to pay $8 million to settle charges with FERC that the company was purposely withholding electricity from California's power market. The company admitted no wrongdoing and officials said a full hearing would have cleared the company. ???If the regulatory commission denies the state's requests or doesn't act in the time frame we believe is necessary to prevent harm the state can appeal to a circuit court Robinson said. ???BUSH VISIT POSTURING CHARGE ???Jan Smutny-Jones head of the Independent Energy Producers Association said the move is posturing by Davis ahead of Bush's visit. ???This is an interesting welcome mat for President Bush he said. Do we want a dialogue or a diatribe? ???In advance of Bush's visit Vice President Dick Cheney said yesterday that nothing more can be done to help solve California's power problems this summer. ???He also rejected price controls saying that previous efforts have contributed to a supply shortage. ???A spokesman for Davis rejected that notion and denied that the timing of yesterday's announcements were connected to the Bush-Davis meeting. ???Davis aides expressed hope that Bush's two new FERC commissioners Pat Wood III a close Bush ally expected to take over the chairmanship of the board and Nora Mead Brownell a state utility regulator in Pennsylvania would hear California's pleas. The two new commissioners were confirmed yesterday by the U.S. Senate. ???Among the things Davis wants changed is the regulatory commission temporary price relief plan scheduled to take effect Tuesday. ???The regulators would limit wholesale prices during power alerts in California when reserves drop below 7 percent of available capacity. ???Many state officials believe that doesn't go far enough. The state Assembly in documents to be filed Tuesday said price controls should cover all hours -- not just power emergencies. ???And there is a chance the controls will be in effect for just a few days. Under the regulatory commission plan the state and the three investor-owned utilities must file a proposal to join a regional transmission organization by June 1. If they do not to do so the price controls disappear. ???Davis administration officials expect to file another response dealing with the regional transmission organization by Friday Robinson said. The Assembly filing rejects joining such an organization which federal officials favor as a means to better manage and improve grid capacity in the West. E-mail Lynda Gledhill at lgledhill@sfchronicle.com. GRAPHIC: PHOTO Vice President Dick Cheney said nothing more can be done to help solve California's power problems. / New York Times LOAD-DATE: May 26 2001 May 29 2001 Power Drain: The U.S. Energy Crisis California Officials Say State Will Enter A Recession Without Energy Price Caps By JOHN R. EMSHWILLER Staff Reporter of THE WALL STREET JOURNAL On the eve of a meeting Tuesday between President George Bush and California Gov. Gray Davis top advisers to the governor said the state could be pushed into recession unless the federal government imposes temporary price caps to contain soaring wholesale electricity costs. President Bush has consistently opposed price caps. The governor's team called a Memorial Day news conference to highlight what they saw as the dangers to the economy of the state and possibly the nation from the tens of billions of dollars being spent this year to purchase electricity. The governor's aides estimated that statewide wholesale electricity purchases this year could hit $50 billion compared with about $7 billion in 1999. Some estimates for this year's power expenditures are even higher. If California were a separate nation an energy shock of that magnitude would be expected to cause a significant recession said Alan Blinder a former vice chairman of the Federal Reserve at the conference. While being part of a broader national economy could somewhat mitigate the impact the higher power costs are a recipe for stagflation in California added Mr. Blinder. Stagflation refers to stagnant economic conditions and inflation -- a condition that struck the nation when energy prices soared in the 1970s. Though the advisers painted perhaps the dreariest outlook yet to come from the governor's office they said that the Davis plan for financing the state's electricity purchases remains intact. As reported the state plans to sell about $12.5 billion in bonds later this year. The state has been purchasing electricity since January when its failed utility-deregulation plan left California's two biggest utilities financially unable to continue buying power. If price caps were instituted the state might have to borrow less money than anticipated or at least face a decreased danger of having to borrow more if the power situation gets worse said Joseph Fichera chief executive of New York-based Saber Partners LLC and an adviser to Mr. Davis. The governor plans to press his case for price caps over the next six to 18 months as supplies are increased with new power plants due to come into operation the advisers said. However Mr. Bush and other federal officials have repeatedly said that they believe price caps would be counterproductive and discourage the building of new power plants. Write to John R. Emshwiller at john.emshwiller@wsj.com1 Copyright 2001 Associated Press AP Online ?????????????????May 29 2001 Tuesday 9:11 AM Eastern Time SECTION: Domestic non-Washington general news item LENGTH: 770 words HEADLINE: ?AP Top News at 9:10 a.m. EDT Tuesday May 29 2001 BYLINE: JEROME MINERVA BODY: ??NATO Won't Back U.S. Missile Plan ??BUDAPEST Hungary (AP) ??NATO's top policy-making body stopped short of endorsing the Bush administration's plan for a national missile defense today preparing to offer only to ''continue substantive consultations'' with Washington. The North Atlantic Council does not portray the possibility of missile attack as a common threat faced by allies as the Bush administration had hoped it said in a statement. Secretary of State Colin Powell had hoped to persuade skeptical NATO allies to be more supportive of U.S. missile defense plans. ??Pakistan Accepts India Offer to Talk ??ISLAMABAD Pakistan (AP) ??Pakistani military ruler Gen. Pervez Musharraf today accepted India's offer to hold peace talks on the disputed Kashmir region and other issues. ''I accept your invitation ... to visit India with great pleasure'' Musharraf said in a letter to Indian Prime Minister Atal Bihari Vajpayee. ''We wish to see a stable prosperous India at peace with its neighbors.'' Musharraf's letter came four days after Vajpayee broke a two-year lull in high-level talks between the two rival nuclear powers by inviting the Pakistani leader to India. ??Consumers' Spending Incomes Rise ??WASHINGTON (AP) ??Consumers spent on services in April but cut back on cars and other big-ticket items. Incomes also rose. The Commerce Department reported today that consumer spending rose by 0.4 percent in April following a 0.2 percent increase the month before. April's rise marked the biggest increase since January. Consumer spending accounts for two-thirds of all economic activity and has been a main pillar propping up the country's fragile economy. Personal incomes rose 0.3 percent. ??Bush Won't Cap Electricity Prices ??LOS ANGELES (AP) ??President Bush says he won't force down soaring electricity prices that have cost California nearly $8 billion since January. The Republican president and embattled Democratic Gov. Gray Davis arranged a meeting today to talk about the state's energy crisis but there was no indication they would break their stalemate. Bush opposes price limits on wholesale electricity that utilities buy arguing they do nothing to address supply-and-demand issues at the heart of the crisis. ??Tornado Injures 18 in Colorado ??ELLICOTT Colo. (AP) ??Dozens of residents of a sparsely populated town in southern Colorado spent the night in a church after a tornado crushed trailer homes sprayed hail and injured 18 people. ''We just hit the floor in the living room and covered the kids and the tornado hit'' said Trish Davidson whose mobile home was lifted into the air and dropped 10 feet from its foundation. Davidson and about 30 other people spent last night in the basement of a church. Power was out to the church and much of the surrounding area. ??Israeli Motorist Killed ??JERUSALEM (AP) ??An Israeli motorist was killed in a West Bank drive-by shooting today as Israeli and Palestinian officials after two rounds of U.S. mediation spoke of resuming security talks aimed at reducing the violence. The motorist died of head wounds shortly after he was shot on by Palestinian gunmen from a passing car near the West Bank city of Nablus the army said. Two Israeli settlers were shot and injured one seriously in another West Bank ambush last night. ??Record-Breaking DJ Still on Air ??JERSEY CITY N.J. (AP) ??Now you can't get disc jockey Glenn Jones off the air. As of 6:30 a.m. EDT today the DJ had been talking for about 93 hours easily shattering the record for the longest continuous radio broadcast. And he was still talking. ''It's been a test of wills a test of determination'' Jones said. ''The first day was the hardest but we're still going strong.'' Jones said he wanted to remain on the air until he hit the 100-hour mark which would be about 1 p.m. EDT and would then decide whether to continue. ??Nikkei Adds 36 Points ??TOKYO (AP) ??Tokyo stocks rose moderately today in light trading following holidays in the United States and Britain. The Nikkei Stock Average gained 36.12 points to close at 13773.89. ??Agassi Capriati Open With Wins ??PARIS (AP) ??Andre Agassi and Jennifer Capriati began their bids for a second consecutive Grand Slam title winning in straight sets today on the second day of the French Open. Agassi who won the French Open in 1999 beat Sweden's Thomas Johansson 6-2 6-3 7-6 (5). Capriati seeded fourth overcame seven double faults in defeating France's Emilie Loit 6-2 7-5. Both Agassi and Capriati won Australian Open titles earlier this year. LOAD-DATE: May 29 2001 of 98 DOCUMENTS ??????????????Copyright 2001 Knight Ridder/Tribune News Service ???????????????????????Knight Ridder/Tribune News Service Dallas Morning News 29 2001 Tuesday SECTION: DOMESTIC NEWS KR-ACC-NO: ?K7523 LENGTH: 1046 words HEADLINE: Bush begins visit in hostile California BYLINE: By G. Robert Hillman BODY: ??LOS ANGELES _ President Bush landed in hostile territory Monday night beginning his first presidential visit to California amid a pressing energy crisis that he says he cannot ease in the short term. ??We welcome him to California said California Gov. Gray Davis a Democrat who has waged a long-distance war with the Republican president over the high cost and short supply of electricity in the nation's most populous state. ??I hope he has an opportunity to talk firsthand to some of the people who are adversely impacted by the very high rates we're paying for electricity. ??But the president's carefully scrubbed schedule for the next two days provides little time for such an opportunity although he will confer privately with business leaders to discuss high-tech solutions to the state's energy problems. ??Arriving on a cross-country flight that touched down in Arizona for a Memorial Day tribute Bush headed off to prepare for an early-morning stop Tuesday to promote energy conservation at the Marine Corps' Camp Pendleton and a luncheon address to the Los Angeles World Affairs Council. ??On Wednesday he'll visit Sequoia National Park near Fresno Calif. to launch a new drive to clean up and fix up national parks. ??He'll also meet privately Tuesday afternoon with Davis in what the Los Angeles Times characterized as a peace summit. But no major shifts in policy are expected. White House aides suggest that the meeting will be a success if the governor even temporarily tempers his sometimes-harsh words for the administration. ??The president's focus is going to be on solving problems. He's not interested in finger-pointing White House press secretary Ari Fleischer said. ??Whether people agree or disagree with the specifics of his energy plan I think most Americans and most Californians are very pleased to see a president who is leading and taking action in addressing the issue head on. ??However recent public opinion polls show the president and the governor taking hits for the energy crisis in California. ??The Field Poll finished a week ago found that 54 percent of those surveyed believed Bush had handled the energy problems poorly with Davis faring somewhat better at 38 percent. The margin of error for the 1015 California interviews was 3.2 percentage points. ??An earlier survey by the Public Policy Institute of California found Davis' job approval rating plummeting from 63 percent in January to 46 percent in May as the state's energy troubles escalated. Bush's overall approval rating was higher at 57 percent but still just as many of those surveyed gave him low marks for his handling of energy issues. That margin of error for 2001 interviews was 2 percentage points. ??In short political analyst Sherry Bebitch Jeffe said Bush's visit to the state _ in his 19th week as president after already visiting more than half the other states _ is long overdue. ??His not responding or not being perceived to respond to the short-term needs of California has allowed Davis' arguments to resonate _ that the federal government is uncaring is insensitive Jeffe said. ??In his national energy policy unveiled nearly two weeks ago Bush offered a series of mostly long-term recommendations to conserve energy find more of it and substantially upgrade and expand the nation's oil refineries and transmission systems for natural gas and electricity. ??Davis complaining that Texas energy companies in particular are gouging Californians has urged Bush to embrace price controls for wholesale electricity but the president has steadfastly refused. Vice President Dick Cheney who oversaw development of the White House energy policy emphasized as recently as Friday that there's no quick fix on the way for California. ??Long term the answer is to build more power plants and that's exactly what they're doing Cheney told the U.S. Chamber of Commerce. But they're not going to have enough new capacity online this summer to avoid blackouts. ??So the energy woes continue to fester in California. It's not just electricity and rolling blackouts. Gasoline prices of $2-and-more-a-gallon have become commonplace as well. ??The gas bothers me more than the electric said Tait Kmentt who runs a legal process serving business in Irvine Calif. Gas prices are killing me. ??At $2.25-a-gallon for premium gasoline he says it costs him more than $40 to fill up his new Mercedes _ with no relief in sight. ??A newcomer to the state Kmentt voted for Bush last fall and said he's glad the president is finally visiting California. But Kmentt cautioned This will be a big test to see how concerned he is. ??Kmentt said he understands the state's energy troubles are a huge problem that can't be fixed overnight and right now he's blaming the power companies for the high price of electricity. ??I just think the public is being lied to he said. ??Still this is not good news for Bush who has been increasingly portrayed by Democrats as a Texas oilman still beholden to the industry. California which he lost last fall to Al Gore by 12 percentage points has become increasingly a political headache. ??Where his predecessor Bill Clinton seemed politically and personally comfortable Bush is not suggests Jeffe a senior scholar in the School of Policy Planning and Development at the University of Southern California. ??An ego cannot be buoyed by losing the state by 12 points she said. We are the state that was responsible for giving Al Gore his popular vote victory. ??With the Senate now headed for Democratic control Jeffe said Bush's visit to California _ and others that will surely follow _ are essential to help Republicans hold their base in the House. ??If the energy crisis persists in California further punishing its economy the ripple effects will certainly spread she said. ??George Bush remembers the influence of the economy on the career of an incumbent president Jeffe said pointing to Bush's father who was defeated by Clinton during an economic slump in 1992. ??It took a while she said but people are beginning to get angry. ??(c) 2001 The Dallas Morning News. ??Visit The Dallas Morning News on the World Wide Web at http://www.dallasnews.com/ JOURNAL-CODE: DA LOAD-DATE: May 29 2001 of 98 DOCUMENTS 2001 / Los Angeles Times Angeles Times ??????????????????????May 29 2001 Tuesday ?Home Edition SECTION: California Part 2 Page 1 Metro Desk LENGTH: 1178 words HEADLINE: Governor to Stress Price Caps to Bush Power: In a meeting today with the president Davis will present a letter from economists backing cost controls and demand federal assistance. BYLINE: DAN MORAIN JAMES GERSTENZANG TIMES STAFF WRITERS BODY: ??Gov. Gray Davis will present a letter to President Bush today from top economists advocating wholesale electricity price controls warning Monday that a failure by Bush to help California solve its energy crisis could signal to other regions that he may ignore their pleas. ??Bush making his first trip to California has set aside 20 minutes this afternoon to meet with Davis in Century City. In an interview with The Times the Democratic governor vowed to repeat his request that the federal government move to cap wholesale power prices. Failure to act swiftly threatens the state and national economy Davis said. ??I want him to understand Davis said that if California has to pay 700 times more for electricity in 2001 than it did just two years ago it could well drag our economy into a recession and could conceivably trigger a national recession. That is not good for anyone. ??In the letter 10 economists including Cornell professor emeritus Alfred Kahn a major proponent of airline deregulation told of their deep concern about the failure of the Federal Energy Regulatory Commission to stabilize wholesale electricity prices in California. The economists faxed the letter to the White House on Friday afternoon and provided the governor with a copy to present to Bush today. ??FERC's failure to act now will have dire consequences for the state of California and will set back potentially fatally the diffusion of competitive electricity markets across the country the economists led by Frank Wolak of Stanford University wrote. Moreover this negative experience with electricity restructuring could delay or reverse current efforts to introduce competition into other formerly regulated industries. ??Davis called the letter very significant validation of what we've been saying: The marketplace is not working and FERC has an obligation to act. ??We're not pleading for relief we're entitled to it Davis said. ??Bush and Vice President Dick Cheney repeatedly have said such controls never work. In California caps might worsen the situation by limiting supply they have argued resulting in more blackouts this summer when demand for electricity is highest. ??The Bush-Davis meeting has had all the buildup of the political equivalent of a title fight: On one side the Democratic governor of the nation's most populous state which Bush lost by more than 1 million votes in November. On the other the new president coming off a roller coaster week of political defeat (the shift in control of the Senate) and victory (passage of his tax-cut plan) whose work in the Texas oil industry gives him a special history in the topic at hand. ??From afar Davis has battled the Bush administration's energy policy. But said Dan Bartlett one of the president's chief communications advisors The president has some interesting views on this topic as well with some experience himself. ??Bush's Energy secretary Spencer Abraham took steps Monday to increase electricity transmission capacity in California. He ordered the Western Area Power Administration a division of the Energy Department that is responsible for marketing electricity from federal water projects in 15 Western states to finish its planning for extra transmission capacity. ??At issue is so-called Path 15 an 84-mile stretch of power lines with insufficient capacity to carry the necessary load between Southern California and the northern part of the state especially during peak hours. The central question is whether financing is available for a new transmission line. ??Davis lauded the action but said the president needs to do more. ??If I have any advice to him of a political nature it is take a chapter out of President Clinton's book. ?? [Clinton] was very attentive to California and as a result did better in 1996 than he did in '92. People felt he was here for us when we needed help. We need help. ??Davis said that on a recent trip to Chicago officials there worried that if Bush won't offer California some relief he may not offer us relief in a catastrophe. ??Among the facts and figures Davis intends to show the president is a chart showing that California paid $1.2 billion for electricity in the first quarter of 1999 $1.8 billion for the same period last year and as much as $10.3 billion for electricity in the first three months of this year--at a time when conservation efforts had been taking hold and demand was down. ??I hope the president will be as stunned as I am said Davis who is watching as the state spends more than $55 million a day to buy electricity that private utilities can no longer afford. ??Davis said that though he is trying to speed construction of power plants encourage conservation and return the private utilities to financial stability the federal government has control over wholesale power prices. ??Therein lies the final piece of this puzzle Davis said. If it falls into place we're on the way to putting this issue behind us. If it doesn't fall into place it could create real economic havoc here and across the country. ??Davis said that if Bush refuses to impose price controls he should find some way to help us consistent with his own belief. ??Turning a deaf ear not only won't be well received here Davis said. It likely won't be received well elsewhere. ??The state's energy crisis has posed a ticklish dilemma for Bush's busy travel schedulers: Had he visited earlier it would have been awkward not to focus on energy issues. But until 11 days ago when a task force led by Cheney produced energy proposals there would have been little Bush could say. ??Karen Hughes the president's counselor made it clear that regardless of the pressure Bush will not yield on price caps. ??We want to help. The president is very concerned about the energy situation and blackouts she said. But limiting the wholesale price of energy would only discourage its production Hughes said. ??California is the 30th state Bush has visited since taking office Jan. 20. His staff said the delay had to do not with energy issues but with politics and geography. ??With the administration focused in its first months on winning approval of the tax cut the president's travels were largely dictated by that effort his aides said. ??Besides the president confided recently even with Air Force One at the ready it just takes too long to fly from Washington to California. ??Still Hughes said the president is not ignoring California. Condoleezza Rice the president's national security advisor and a former Californian sits next to Hughes every morning at the daily meeting of the White House senior staff she said. ??What's more the president has many friends in California Hughes said adding: Ernie has a home in California these days. Ernie is the Bush family cat that is living with a friend in Brentwood while the First Family lives in the White House. ??* ??Times Staff Writer Massie Ritsch contributed to this story. LOAD-DATE: May 29 2001 of 98 DOCUMENTS 2001 / Los Angeles Times Angeles Times ??????????????????????May 29 2001 Tuesday ?Home Edition SECTION: Part A Part 1 Page 1 Metro Desk LENGTH: 1541 words HEADLINE: THE ENERGY CRISIS Kern County Basks in Role as State's Blackout-Buster Electricity: Six new plants will bolster its status as energy center. BYLINE: MITCHELL LANDSBERG TIMES STAFF WRITER DATELINE: McKITTRICK Calif. BODY: ??You could think of this as California's own little slice of west Texas. ??Here in the scruffy brown hills of western Kern County oil rigs grow more easily than trees pickups are more common than cars and chicken fried steak is the most popular dish at Mike and Annie's McKittrick Hotel. ??The hotel--which no longer offers lodging just food and drink and plenty of it--is bustling these days with the roustabout energy of a Lone Star construction camp. Just down the road a mammoth electrical power plant is rising out of the sagebrush its generators housed in four boxy buildings the size of airplane hangars. ??It is one of six new major gas-fired power plants expected to be built in Kern County over the next several years an electrical construction boom unmatched anywhere in California. Kern which already has a large surplus of electricity is cementing its place as California's energy capital assuming far more than its share of the burden in recharging the state's drained power supplies. ??Over the next several years the county will add nearly 5000 megawatts of power to the statewide grid. That is more than California now imports on average from out-of-state suppliers. It's enough to supply about five counties the size of Kern which fills the dusty southern rim of the San Joaquin Valley and has a population of 662000. ??In some parts of the state a proposal to build a new power plant is a call to throw up the barricades. In recent months intense community opposition has forced developers to pull back proposals to build major plants in South Gate and San Jose although Gov. Gray Davis has tried to revive plans for the San Jose plant. ??You don't hear a lot of not-in-my-backyard talk in Kern County. ??There should be power plants in everybody's backyard said Paul Gipe chairman of the Kern chapter of the Sierra Club which did not oppose any of the new plants. If people are concerned about having too many power plants they should think twice when they flip on the light switch. ??New natural gas-fired power plants Gipe reasoned are relatively clean and will not add significantly to the county's serious air pollution problems. Ideally he said they will allow the state to close some older dirtier plants that cause considerably more environmental damage. ??If environmentalists don't oppose the plants it's not too much of a leap to guess that some people might be positively thrilled about them. ??Just try for instance asking somebody in Taft an oil center south of McKittrick. It's more money coming into Kern County--that's the way I look at it said Pamela Dunlap who runs a downtown thrift shop. ??An Economy Rooted in the Oil Industry ??She stood in the twilight outside her shop on a street that embodies many of the most attractive attributes of small town Americana--with one small difference. Where some towns might have statues of their founders or war heroes in prominent public places Taft has erected small oil rigs and other pieces of drilling machinery a reminder of its economic roots. ??That Kern County has stepped up as California's blackout-buster is perhaps not surprising. ??To begin with there's geography. Kern stands astride California's major north-south electrical transmission lines at precisely the spot at which they divide between the service areas of Pacific Gas & Electric which serves Northern California and Southern California Edison. That spot can be pinpointed as the Midway substation a vast jungle of humming wires transformers and circuit breakers that lies a short distance west of Interstate 5 in the town of Buttonwillow. ??Already massive new circuit-breakers--they look like Frankenstein helmets sprouting 5-foot-long sparkplugs--are being erected at Midway to handle the power from two major plants that will be revving up in the coming months: PG&E National Energy's La Paloma plant the one near McKittrick and Edison Mission Energy's Sunrise plant just south of Taft. ??The county is served by two major natural gas pipelines which will be tapped to run the plants. In fact Kern contains the state's largest known reservoirs of natural gas. ??Another of Kern's geographic advantages? ??You look around and you'll see there aren't a lot of people living around here observed Stephen Whaley who is overseeing construction of the Sunrise plant. In the surrounding hills an orchard of oil rigs bobbed in the morning haze. Dirt roads cut crudely across the landscape bisecting a crisscross of steam pipes fuel lines and electrical wires. ??This area is all about oil Whaley said. Casting a glance at the modular 560-megawatt plant rising behind him he added with a wry smile You know I guess you could look at this from the road and you could make the argument that it improves the looks. ??The Sunrise plant a relatively simple single-cycle plant is expected to fire up 320 megawatts of its total output by Aug. 1 a scant nine months after construction began. The other plants--more complex and efficient dual-cycle operations--will be opening over the next several years assuming all receive final approval. ??The lack of major opposition to the plants is of course another reason developers see Kern County as a good place to build. The county has long had a more intimate relationship with energy--oil gas electricity--than most places. To people here the link between a natural gas well and a lightbulb or an oil derrick and a gas pedal is neither theoretical nor especially threatening. They're comfortable with energy. ??Kern produces more crude oil than any other county in the United States outside Alaska. Property taxes from oil companies have helped build handsome new schools in Bakersfield the county seat and largest city. The companies' big payrolls have helped populate elegant subdivisions with names that sound vaguely Houstonian: Seven Oaks River Oaks Landmark Estates. ??Which brings us to the Texas connection. ??It's hard to overlook it in a county that runs on oil and cotton and boasts a country music scene to rival Austin's. Conversations in the finer Bakersfield restaurants are filled with references to trips to Texas of colleagues in Midland and Odessa. A Bakersfield radio station was running a contest recently: The winners would be flown to a bull riding championship in Houston. ??Until December 1999 American Airlines offered direct jet service between Bakersfield and Dallas. It stopped after Occidental Petroleum moved its headquarters from Bakersfield to Houston. ??This is a county where President Bush received more support in the November election than he did in Texas his home state. But then Bush already had a Bakersfield connection: He lived there briefly as a child when his father former President George Bush worked in the Kern oil fields. ??You look at the topography around Bakersfield and the county's morals and ethics--that predominantly conservative attitude that we have around here--and you look at the oil and you could be in Midland said John Allen the general manager of Occidental of Elk Hills which is developing a power plant in tandem with Sempra Energy of San Diego. ??A lot of people in Kern County will tell you they don't mind being an energy farm for the state. It's a living after all. ??It's good to be working at home said Joe Ryan a Bakersfield pipe welder who has spent years on the road seeking the heavy construction work that seemed to have vanished in his hometown. Now he's working at the La Paloma plant a 1048-megawatt behemoth that will come online in phases beginning in December. ??About 800 people are at work on the plant and several hundred more will be employed in the coming months. And after that plant is done there will be others to build. ??This is a good job here I tell you what said Ryan 47 who has been banking his overtime on six 10-hour days a week--sometimes more. ??County Sees Itself as 'Part of the Solution' ??But there are some signs of simmering resentment especially among county leadership. After all if every other county produced just half the electricity that Kern generates California wouldn't have an energy crisis. And people in Kern County are getting hit with the same spring-loaded electricity bills the same rolling blackouts as everybody else. ??I think the people of California are either going to be part of the solution or part of the problem said Assemblyman Roy Ashburn (R-Bakersfield). And in Kern County we have a long history of being part of the solution especially when it comes to energy issues. ??Elsewhere in the state Ashburn sees a lot of arrogance--people who enjoy the benefits of a very high quality of life enjoy the benefits of electric power for jobs and for their personal life but with an exclusivity that it's someone else's problem to create that for them. We don't have that attitude in Kern County. ??Power Buildup in Kern County ??Six new major gas-fired power plants are expected to be built in Kern County over the next several years making the county the power capital of the state. ??* ??RELATED STORY ??Letter to Bush: Gov. Davis will ask for wholesale energy price caps. B1 GRAPHIC: PHOTO: Tom Romesberg general manager of La Paloma plant being built in Kern County stands next to the unit's cooling tower. PHOTOGRAPHER: AL SEIB / Los Angeles Times PHOTO: From rigs and pipelines like these near Taft Kern pumps more crude oil than any other county in the U.S. outside Alaska. With several gas-fired power plants coming online in the next several years the county will solidify its place as California's energy capital. PHOTOGRAPHER: AL SEIB / Los Angeles Times GRAPHIC: Power Buildup in Kern County Los Angeles Times LOAD-DATE: May 29 2001 of 98 DOCUMENTS ??????????????????Copyright 2001 The New York Times Company New York Times ?????????????????May 29 2001 Tuesday Late Edition - Final SECTION: Section A Page 12 Column 1 National Desk LENGTH: 1078 words HEADLINE: For Crucial California Trip Bush Calibrates How Best to Handle State's Energy Crisis BYLINE: ?By DAVID E. SANGER DATELINE: LOS ANGELES May 28 BODY: ??Days after he suffered the biggest political setback of his four-month-old presidency and then won the tax cut that he staked his campaign upon President Bush traveled tonight to California carefully calibrating how to deal with the state's energy crisis. ??After Memorial Day celebrations in Washington and Mesa Ariz. Mr. Bush began his first visit as president to the most populous state which he lost by roughly 12 percentage points in November's election. The visit seems likely to showcase the clash between two very different energy strategies and political strategies. ???Mr. Bush will meet briefly on Tuesday with Gov. Gray Davis who will insist as he did again today that the federal government impose price caps on wholesale electric power. ??The White House says Mr. Bush will refuse again. He will argue that such caps would only discourage increased production of electric power. We think that's a mistake Vice President Dick Cheney said on Friday talking about why he rejected those options when he prepared the energy policy the administration made public 10 days ago. ??But Mr. Bush knows that how he handles the California energy crisis could prove critical to his political fortunes especially now that his party's loss of control in the Senate seems bound to slow or derail passage of major elements of his energy plan. ??Moreover the president can no longer argue that the best cure for high energy prices is a tax cut because that is now legislative history. As one of his aides said this weekend after Congress approved the $1.35 trillion tax cut that will be phased in over the next 10 years we will have to turn now to the other arguments. ??Most of those arguments involve urging the rest of the country not to follow California in a partial deregulation of the market with disastrous results. ??Repeatedly Mr. Bush has chastised California's politicians and by implication Mr. Davis himself for ignoring politically unpalatable choices to avert the state's power-generating crisis. Ten days ago standing in front of a hydroelectric plant in Pennsylvania Mr. Bush used the state as Exhibit A for his argument about what happens when population rises when over-regulation freezes the construction of new power plants and the stringing of new transmission lines and when politicians fail to plan for the long term. ??The problems in California shows that you cannot conserve your way to energy independence Mr. Bush said then. ??At the same time his aides were pointing to polls showing Mr. Davis's approval ratings plunging. They did not mention that Mr. Bush's ratings in the state were hardly any better. A series of recent polls show that roughly two-thirds of Californians believe Mr. Bush should be doing far more to help the state though it is unclear exactly what kind of help they have in mind. ??So Mr. Bush's aides have been struggling for days to choreograph the two-day visit here trying to find ways to differ with Mr. Davis without seeming callous about the problem or in conflict with the state. ??The betting is that Mr. Bush will focus on long-term solutions in contrast to Mr. Davis's call for the quicker fix of price caps. ??The effort started today. Energy Secretary Spencer Abraham issued an order of chiefly symbolic importance saying his department would move quickly to determine whether investors were interested in financing and co-owning a new transmission line that could bring more power to the state. ??The level of interest will be a factor in the decision to build the line later this year the Energy Department said. It said that it would proceed with studies of how the land could be acquired by eminent domain if necessary and that it would speed ahead with environmental reviews. ??But Mr. Abraham left wide open the question of whether Washington would go ahead with the project even if no private financing was available. ??The Bush administration is taking a leadership role in addressing a long-neglected problem in California's electricity transmission system Mr. Abraham said. California's electricity problems developed over a period of years and cannot be solved overnight. However we can move now on actions that will help avert the same types of problems from recurring year after year. ??The statement was clearly intended as a prelude to the meeting with Mr. Davis which will be closed to the press. So will a meeting with energy entrepreneurs. (Mr. Bush passed on Mr. Davis's suggestion of a forum with small-business owners and residents who have seen the lights go out.) ??Few expect Mr. Bush or Mr. Davis to change his mind about energy caps after their meeting. ??But for Mr. Bush it will not all be tough love. On Tuesday morning Mr. Bush is scheduled to travel to Camp Pendleton to repeat his call for the military and other federal users of power in California to flip off their switches whenever possible. But given his own comments and Mr. Cheney's about the limited utility of conservation that order could strike some Californians as a little hollow. ??Later he will give a trade speech in Los Angeles underscoring the message that if California hopes to remain the world's greatest exporter of high technology -- if it were a nation California would be the world's sixth-largest economy -- it must find new ways to produce and deliver electricity. ??Already leading Silicon Valley companies are threatening to build their next-generation chip fabrication plants elsewhere probably in Texas which has a surplus of generating capacity a move that would further undermine Mr. Davis's stewardship. ??In fact Mr. Bush's Texas roots will never be far from the political battlefield here. Mr. Davis has accused Texas energy companies of profiteering at California's expense. To press the case he has hired two political operatives from the Clinton White House Marc D. Fabiani and Chris Lehane who are being paid tens of thousands of dollars a month to make the case for price caps. ??California's attorney general Bill Lockyer also a Democrat suggested to The Wall Street Journal last week that some time in jail would be the best way to deal with one of Mr. Bush's biggest supporters -- Kenneth Lay who heads the Enron Corporation and has sought to influence the selection of members of the Federal Energy Regulatory Commission. ??The comments may have been partly facetious but they were not interpreted that way here. ??http://www.nytimes.com LOAD-DATE: May 29 2001 of 98 DOCUMENTS ??????????????Copyright 2001 Knight Ridder/Tribune News Service ???????????????????????Knight Ridder/Tribune News Service ??????????????????????????The Orange County Register 29 2001 Tuesday SECTION: DOMESTIC NEWS KR-ACC-NO: ?K7500 LENGTH: 825 words HEADLINE: California's power crisis generating lots of heat BYLINE: By John Howard BODY: ??SACRAMENTO Calif. _ Detectives would seem to be tripping over each other to discover who did what to whom and why in California's energy crisis. ??While electricity may be scarce investigations are plentiful. A dozen major probes are afoot many overlap and more loom. The atmosphere is heated the rhetoric strong. State federal and local investigators along with court officers financial experts and special investigators are poring over thousands of pages of documents from government agencies and private companies. ??At the top of the swarming heap is the $10 million investigation mounted by the state Attorney General's Office to answer the core question: Did a handful of power sellers fix prices to bilk Californians of billions of dollars? ??But it's not just the government that is busy. The companies themselves _ which have categorically denied any wrongdoing _ are overwhelmed by the scrutiny. ??We are supplying reams and reams of documents. ... It is a distraction from our day-to-day work there's no question said Tom Williams of North Carolina-based Duke Energy which operates several power plants in California. It affects our employees and their families this barrage of innuendo. I don't know what more we can do. ??Accompanying the investigations are at least a half-dozen lawsuits against the companies by individuals. Like the probes the suits contend the companies improperly manipulated the market. Legislative leaders meanwhile have sued the federal government contending it has failed to protect consumers from price-gouging. ??This all permeates our business in so many ways said Gary Ackerman of the Western States Power Forum a group that represents power sellers and buyers in the West. It even affects my ability to talk to the newspapers because we're afraid statements may turn up later and be used as evidence. We're not sure what we're dealing with whether a suit or even a grand jury if the (attorney general) decides to take criminal action as he said he might. ??The state's top prosecutor said that indeed criminal charges are a possibility. ??There is an investigation under way that involves potential criminal conduct said Sandra Michioku a spokeswoman for Attorney General Bill Lockyer. It could be at least eight weeks before that probe is completed she said. ??Other investigating agencies include the Federal Energy Regulatory Commission the California Public Utilities Commission the city attorneys' offices in Long Beach Los Angeles and San Francisco California's grid manager the Independent System Operator the obscure Electricity Oversight Board which oversees the ISO and the state Senate and Assembly. ??The state has even considered asking two more federal agencies the Department of Energy and the Federal Trade Commission to get into the act. Some offices are conducting multiple investigations. In the case of at least two agencies the PUC and the Attorney General's Office the investigations are being at least partly coordinated. Some agencies are examining the same issues. The PUC the attorney general and ISO for example all are looking at whether power plants were shut down to drive up demand and prices. ??There is a lot of overlap and there probably are problems of coordination said Nettie Hoge of The Utility Reform Network of San Francisco a grass-roots watchdog group. ??With so many agencies trying to extract information Hoge said even those who have done no wrong are concerned about talking freely because of the greater likelihood that proprietary information will leak to competitors. ??Others feel the overlap is beneficial. ??When you're up against an industry as wealthy and powerful as the energy industry it's probably better to double-team them said Doug Heller of the Foundation for Taxpayer and Consumer Rights. ??Hoge believes that if any investigation is going to produce results it will be Lockyer's because the governor has thrown all the resources that way. ??Investigators have requested mountains of paperwork. Transaction and maintenance documents market reports financial records even e-mails _ all have been sought. ??Martin Wilson a spokesman for Texas-based Reliant contends the intensity of the probes could have negative long-term effect on California's business climate. ??There is a climate of instability and uncertainty that makes companies rethink their decisions about investments (in California) he said. ??But for consumer groups the goal of all these investigations is straightforward. ??Certainly we're really hopeful that these investigations will lead to refunds for customers said TURN's Mindy Spatz. There is a widespread belief among people who follow these issues that widespread gaming and manipulation has occurred in the market. ??(c) 2001 The Orange County Register (Santa Ana Calif.). ??Visit the Register on the World Wide Web at http://www.ocregister.com/ JOURNAL-CODE: OC LOAD-DATE: May 29 2001 of 98 DOCUMENTS ?????????????????Copyright 2001 The Chronicle Publishing Co. ?????????????????????????The San Francisco Chronicle ?????????????????????MAY 29 2001 TUESDAY FINAL EDITION SECTION: NEWS Pg. A1 LENGTH: 1291 words HEADLINE: Crisis no sweat to some offices Many offices keep cool in crisis Air conditioners blast in state's energy centers SOURCE: Chronicle Staff Writer BYLINE: Steve Rubenstein BODY: Some very cool places to be during the dog days of spring and summer turn out to be the places with their fingers on California's air conditioning switch. ???If only the entire state could cram itself into the cavernous control room in Folsom of the Independent Systems Operator where the air is a comfortable 69 degrees and receptionists wear sweaters at high noon -- when it's upwards of 90 degrees outside. ???Or the Pacific Gas and Electric Co. lobby in downtown San Francisco where the air is an even chillier 65 degrees which admittedly isn't much of a bounty considering it's usually that cool outside anyway. ???Other cool places to be are the state Capitol where legislators who promulgate energy edicts hang out and the headquarters of the state Public Utilities Commission where bureaucrats who promulgate energy edicts hang out. ???Armed with a high-tech digital thermometer The Chronicle made the rounds of the energy crisis poohbahs to make sure they are practicing what they are preaching. ???Some were some weren't. Those that weren't blamed it all on that most familiar of modern scapegoats the computer. ???Computers must be kept cool -- in the 60s for big mainframes and a bit more for the smaller units most folks use though some can go into the 80s without hiccuping. So generally people who work alongside the computers get to keep cool by association although it's the computer that counts. ???The ISO headquarters located in an industrial park 20 miles east of Sacramento is a delightfully cool and comfortable place when the outside temperature soars into the 90s and 100s. ???The reception area the only room accessible to the outraged public is a fairly stiff 76 degrees -- only two degrees cooler than the 78 degrees recommended by President Bush and the federal energy crisis czars and czarinas. ???But take a step past the lobby security doors and the temperature plummets. In the main hallway the temperature is 73 degrees. And in the control room where two dozen engineers and technicians sit at consoles and monitor the flow of California electricity on a giant diagram of state power lines so they can order blackouts for everyone else -- the temperature is 69 degrees. ???NO SWEATING AT ISO ???Some managers do not take off their sports coats and jackets. ???We want these people to be comfortable explained Tony Capasso facilities manager for the ISO complex. We don't want these people sweating bullets in the middle of a crisis. ???Inside the state Capitol where legislators and the governor preach compliance with federal guidelines calling for 78-degree thermostats the temperature dips into the high 60s. The coolest spots are the press briefing room and the treasurer's old office. ???GOVERNOR'S OFFICE ???The governor's suite is in the mid-70s apparently because folks are often coming by with thermometers and it wouldn't do not to set an example. Press secretary Steve Maviglio said Governor Gray Davis is a practice-what-he-preaches kind of guy who keeps corridors dark shades drawn air conditioners idle. His personal secretary works in short sleeves with a cheap plastic fan humming nearby. ???It's so dark in the hall that we're always bumping into things said one aide. ???Even so the temperature in the governor's suite of offices is three degrees cooler than the 78 degrees recommended by President Bush -- not the first time the two men have failed to agree. ???THE LEGISLATURE ???The Assembly chamber is 71 degrees while the Senate chamber -- with 40 fewer legislators spewing forth -- is 73 degrees. But the Senate chamber has a southern exposure one Capitol guide explained. ???Hot air from the people sitting inside has nothing to do with it he said. ???In San Francisco the temperature inside cavernous City Hall dips in spots to the mid-60s. College student Jasmine Westbrook who dropped by with her art class on a project to sketch the interior of the building was doing her sketching while wearing a windbreaker to keep warm. ???I want to stay comfortable she said. It think it's supposed to be hotter in here isn't it? ???The mayor's office at 73 degrees was eight degrees warmer than another office down the hall even without the mayor sitting in it. ???63 AT THE PUC ???At the headquarters of the state Public Utilities Commission which is supposed to be keeping an eye on the self-declared bankruptcy of the utility that mails out the bills the lobby temperature is 63 degrees. ???Chief engineer David Omosheyin eyeing The Chronicle's thermometer nervously insisted the 63-degree reading was caused by the lobby's proximity to the front door where the outside temperature at the moment was in the low 60s. He invited the thermometer to visit the upper floors where the temperature was 70. ???As for San Francisco's federal buildings: Bush would probably not frown. ???His orders appeared to be followed during The Chronicle's visits so much so that it was actually hotter inside than out. Though that wouldn't be hard considering it was in the low 60s outside. And the places measured happened to be courtrooms and tax offices where the body heat from anxiety alone could probably melt the paint some days. ???San Franciscans Omosheyin said are losing their perspective when it comes to things like electricity energy alerts and rolling blackouts. In his native country of Nigeria he said the electricity runs sporadically if at all. ???There the power can go off for a week he said. The world goes on. Here people take a lot of things for granted and electricity is one of them. ???As for the offices of the places that report on such matters they fared about the same. ???The Walnut Creek bureau of The Chronicle where the sun sizzles into the 90s with regularity in the summer is kept at 67 degrees because of all the computers. The main newsroom of The Chronicle is kept at 71 degrees because of all the computers. But the reception room was 71 degrees too and there aren't any computers there not a one. ???Some offices keeping their cool Place ????Outside ?temperature Control Room California Independent Systems Operator (Folsom) ?????????????????69 ??????90 Governor's office Capitol (Sacramento) ???75 ??????94 Press briefing room Capitol (Sacramento) ?68 ??????94 Caltrans headquarters (Sacramento) ????????70 ??????94 Chronicle bureau newsroom (Walnut Creek) ??67 ??????90 Mayor's Office San Francisco City Hall ???73 ??????63 Calif. Public Utilities Commission lobby (San Francisco) ???????????????????????????63 ??????63 State Building (San Francisco) ????????????69 ??????63 Courtroom 19th floor Federal Building (San Francisco) ???????????????????????????70 ??????63 Lobby Pacific Gas and Electric headquarters (San Francisco) ??????????????65 ??????65 IRS office Federal Building (San Francisco) ???????????????????????????69 ??????63 Main newsroom San Francisco Chronicle (San Francisco) ???71 ??????64 ???E-mail Steve Rubenstein at srubenstein@sfchronicle.com. GRAPHIC: PHOTO (2):CHART: SEE END OF TEXT (1) It's too warm for jackets in the chief clerk's office in the state Capitol building in Sacramento. (2) Jane Malison of Millbrae needed a fan while touring a warm section of the state Capitol but other parts of the building are kept below 70 degrees. / Photos by Kat Wade/The Chronicle LOAD-DATE: May 29 2001 of 98 DOCUMENTS ?????????????????Copyright 2001 The Chronicle Publishing Co. ?????????????????????????The San Francisco Chronicle ?????????????????????MAY 29 2001 TUESDAY FINAL EDITION SECTION: NEWS Pg. A1 LENGTH: 1238 words HEADLINE: Bush facing Davis' heat over energy In first visit to state as president he'll hear governor's plea for help SOURCE: Chronicle Political Writers BYLINE: Carla Marinucci Lynda Gledhill BODY: President Bush wasn't on California soil for more than five minutes yesterday when he was drawn into his first debate on the state's power crunch. ???Rep. Brad Sherman a Democrat from Thousand Oaks who met Air Force One on the tarmac at Los Angeles International Airport along with a group of high school students wasted no time button-holing the president for what appeared to be an animated conversation. ???I brought up . . . the idea that after his meeting with our governor I hoped he would be in favor of wholesale regulation (of energy prices) Sherman said later. He disagreed with me. ???Sherman -- who two weeks ago suggested that the headline to the president's national energy policy should be Bush to California: Drop Dead -- didn't seem optimistic yesterday about Bush's 48-hour visit to the state. I think that the president's policies show either a lack of understanding of what's really going on in California or a lack of concern he said. ???That vignette underscored some of the challenges facing Bush who arrived in California as protesters geared up and Democratic Gov. Gray Davis prepared to press him for federal action on the state's power troubles. ???Besides Sherman Bush was greeted by a crowd of cheering Republicans including Secretary of State Bill Jones and Los Angeles Mayor Richard Riordan the former a declared GOP candidate for governor in 2002 the latter a rumored one. ???But today Bush will sit down with the present governor who lately has been blistering in his criticism of the president. ???The last time I looked California was still part of the United States of America Davis told reporters this weekend. We have contributed disproportionately to the economic growth of this country. There's no reason why a president should not respond to a legitimate request from the chief executive of the largest state in the union. ???In his first visit to California since just before the election Bush plans to emphasize the energy crisis -- but will focus on it through the lens of his own energy plan. ???ENERGY SECRETARY ACTS ???Just hours before the president landed Energy Secretary Spencer Abraham ordered a speedup in planning to relieve a notoriously overloaded electricity transmission line in California. ???Abraham's holiday action was timed to provide a bit of positive news for Bush to announce in California. He ordered the Western Area Power Administration a 15-state marketing arm of the Energy Department to complete planning and seek outside financing to reduce the transmission bottleneck on California's Path 15 which connects the northern and southern parts of the state. ???This morning Bush will visit the Marine Corps base at Camp Pendleton near San Diego to underscore his conservation order for a 10 percent cut in energy usage in federal buildings and military facilities. ???In Los Angeles he will deliver a wide-ranging talk before the World Affairs Council and lead a discussion among business leaders about technological advances in energy conservation. ???Then he will head to Fresno and Sequoia National Park to press his initiative to improve national parks. Along the way protesters have vowed to provide a vocal commentary on Bush's energy and environmental policies. ???But the real drama of the trip will no doubt be the sit-down between Bush and Davis today. The governor pushed for a lengthy open meeting with Bush that would include testimony from officials and consumers affected by the energy crisis. Bush's camp announced Friday the meeting would be 20 to 30 minutes -- in private. ???Davis plans to outline steps the state has taken to alleviate the energy crisis and what it wants the federal government to do -- including implementing price caps on the wholesale cost of energy cost-based pricing and the possibility of ordering refunds. ???DAVIS THREATENING SUIT ???The governor has said he will consider suing the Federal Energy Regulatory Commission -- the agency charged with overseeing energy prices -- if it does not impose temporary price caps. ???And the state Legislature has already filed a suit saying the commission has failed to stop what it has determined are unjust and unreasonable prices. ???With California's energy woes worsening and a summer of rolling blackouts predicted the Bush-Davis session holds potentially deep political pitfalls for both leaders both of whom are suffering in state polls as a result of their handling of the energy crisis. ???Bush needs to demonstrate his concern for California a state that gave a 12-point margin of victory to Al Gore in the presidential election. ???But even as Bush adviser Karen Hughes told state reporters this week that the president had arrived to show he cares Vice President Dick Cheney again chastised state officials for delaying their response to the energy crisis because all of the action was potentially unpleasant. ???And Cheney signaled that the administration would resist long-term price caps saying We think that's a mistake. ???Such talk drew fire from Davis' senior political adviser Garry South who charged that Cheney's words demonstrated insensitivity to California's troubles and only underscored the perception of an all-oil all-the-time ticket. ???Davis whose campaign for re-election next year will depend on his handling of the crisis has stepped up his criticism of Bush and profit-hungry energy firms particularly those from Texas in recent weeks. ???And yesterday signaling no letup Davis' supporters made an unusual holiday conference call to again press his case for federal action. They argued that without immediate intervention from the Bush administration the economy of California -- and potentially the entire nation -- was at risk. ???'THIS ENORMOUS SHOCK' ???We have this enormous shock in prices that needs to be addressed and not ignored said Joseph Fichero head of Sabre Partners and a consultant to Davis. ???Alan Blinder a Princeton economist and former vice chairman of the Federal Reserve warned that energy woes in California alone would take almost a half a percent of the gross domestic product off of the national economy. ???Blinder and others argue that short-term relief -- for about 6 to 12 months -- is necessary while new power plants are being built. ???Most times and most places I agree price caps are not the long-run solution but they can be part of a short-term solution Blinder said. There really is a case for temporary price caps to shield consumers and the California and national economy from the full force of the energy shock. ???Limited new price caps approved by the Federal Energy Regulatory Commission on the sale of wholesale electricity begin today in California. But the temporary caps which go into effect when the electricity reserves dip below 7.5 percent have been lambasted by Davis as ineffective and inadequate. ???Political analysts say Bush's resistence on the issue could cost him in California -- and elsewhere. ???(California) is probably an area where he is criticized more than any other region in the country said Mark DiCamillo director of the statewide Field Poll. Californians are looking to Bush for some relief -- and to the extent they don't get it Bush may be in some jeopardy here.Chronicle news services contributed to this report. / E-mail the writers at cmarinucci@sfchronicle.com and lgledhill@sfchronicle.com. GRAPHIC: PHOTO (2) (1) Rep. Brad Sherman (left) D-Thousand Oaks buttonholed President Bush as he arrived at Los Angeles International Airport to discuss the state's energy crisis. (2) President Bush signed autographs for students from El Camino High School at Los Angeles airport. Bush is to meet with Gov. Davis today. / Photos by Carlos Avila Gonzalez/The Chronicle LOAD-DATE: May 29 2001 of 98 DOCUMENTS 2001 Gannett Company Inc. TODAY ?????????????????????May 29 2001 Tuesday FIRST EDITION SECTION: NEWS Pg. 3A LENGTH: 426 words HEADLINE: Davis to urge Bush to back electricity price cap BYLINE: Laurence McQuillan DATELINE: LOS ANGELES BODY: LOS ANGELES -- California Gov. Gray Davis will urge President Bush today to back a 2-year cap on electricity costs as the best way to keep his power-starved state -- and possibly the U.S. economy -- from sinking into recession. ???The Democratic governor and Republican president who have been sparring from afar over energy policy will meet here to discuss their differences. The White House has said repeatedly that it opposes price caps as a way to deal with energy shortages in California. ??In an interview with USA TODAY Davis said a limit on wholesale electricity costs is needed while the state attempts to build 15 new power plants. He said that would still allow a 30% profit margin. ??While the president didn't create this problem he is uniquely situated to solve it Davis said. I'll make clear that he has an opportunity to relieve the pain and give California the breathing space to put more plants online. ???Bush making his first visit to California as president unveiled a long-term energy policy this month that calls for increased production and to a lesser extent conservation. The president will promote conservation steps being taken by the federal government during a visit today to the Marine Corps base at Camp Pendleton. ??The president believes that imposing price caps will only make the problem worse White House spokesman Dan Bartlett said. ??Davis whose popularity has plummeted as Californians cope with blackouts to offset electricity shortages said his state's problems could hurt all Americans if they are not dealt with quickly. I'm asking for some form of relief that reduces the outrageous prices we're currently bearing he said. Without that relief lots of people will lose their businesses and California could well be dragged into a recession. Since we're about one-eighth of the national economy that doesn't bode well for America. ???The California Public Utilities Commission has announced rate increases of up to 50% for businesses and 37% for homes. ??Bush has sidestepped California after losing the state by 12 percentage points to Democrat Al Gore last year in the presidential election. But with Democrats targeting several GOP House members in next year's elections Republicans must go on the offensive or risk losing control of the closely divided House of Representatives. ??Davis a possible presidential candidate in 2004 said he wants to avoid rancor with Bush: I'm saying 'Look we got into this in a bipartisan way. We should get out of it in a bipartisan way.' LOAD-DATE: May 29 2001 of 98 DOCUMENTS 2001 The Washington Post Washington Post ?????????????????????May 29 2001 Tuesday Final Edition SECTION: A SECTION Pg. A02 LENGTH: 639 words HEADLINE: Energy Chief Moves To Aid California Transmission Plan Precedes Bush Visit BYLINE: Mike Allen Washington Post Staff Writer DATELINE: LOS ANGELES May 28 BODY: ???President Bush landed at ground zero of the nation's energy worries tonight hours after Energy Secretary Spencer Abraham speeded up planning to relieve a notoriously overloaded electricity transmission line through California. ???Abraham's holiday action was timed to provide a bit of news for Bush to announce during his first presidential trip to California where he is to hold a politically charged private meeting with Gov. Gray Davis (D) on Tuesday. Bush's aides said he will pledge to cooperate with California but will stick to his position that no action by the federal government can prevent the rolling blackouts expected this summer. ???Abraham ordered the Western Area Power Administration a 15-state marketing arm of his department to complete planning and seek outside financing for an increase in transmission capacity that he said would be a big step in the right direction and a big step forward for Californians. ???California's electricity problems developed over a period of years and cannot be solved overnight Abraham said in a news release. However we can move now on actions that will help avert the same types of problems from recurring year after year. Today's action is designed to reduce the bottleneck on California's Path 15 which connects the northern and southern parts of the state. ???Davis who is seeking reelection next year has seen his poll ratings plummet as electricity prices soared utilities hit dire financial straits and homes and businesses were surprised with blackouts. ???Bush has taken several steps to try to encourage additional power generation in the state but has maintained since before he took office that California's problems were created here -- through a troubled effort at electricity deregulation and public opposition to construction of additional power plants -- and would have to be solved here. ???Davis plans to use the meeting to lobby Bush once again to endorse a cap by the Federal Energy Regulatory Commission on the wholesale price of electricity. Again and again the administration has said it will not take that step. ???This administration does not and will not support energy price controls Bush told a business audience in March. Price controls do not increase supply and they do not encourage conservation. Price controls contributed to the gas lines of the 1970s. And the United States will not repeat the mistake again. ???Davis energy advisers told reporters on a conference call today that without the cap California energy costs could be $ 50 billion higher this year than two years ago. Alan S. Blinder the Princeton University economist and former Federal Reserve Bank vice chairman said on the call that California's energy crisis should be enough to get the attention of policymakers in Washington. ???The visit by Bush who flew here after making a Memorial Day speech at a fighter aircraft museum in Mesa Ariz. is being carefully managed to avoid contact with the general public. After speaking to military families at Camp Pendleton on Tuesday morning he plans to address a luncheon meeting of the Los Angeles World Affairs Council which has sold out of tickets at $ 75 for members or $ 85 for guests. ???Afterward Bush will hold a closed-door session with business people and then meet with Davis for 20 minutes. As Bush departs Davis plans to make an immediate statement for cameras. ???Although Bush says he has taken more than a dozen steps to help California Davis says price caps are essential and has said he may sue the federal government in an effort to get them if Bush does not go along. ???He has been helpful on a number of small matters and I appreciate his assistance Davis said during a telephone interview on Friday. But the big enchilada is the price of electricity. LOAD-DATE: May 29 2001 of 98 DOCUMENTS 2001 The Washington Post Washington Post ?????????????????????May 29 2001 Tuesday Final Edition SECTION: A SECTION Pg. A03 LENGTH: 1936 words HEADLINE: It's Still Dawn for Solar Power in L.A. Despite City Subsidies Homeowners Hesitate to Install Expensive Alternative Energy Source BYLINE: William Booth Washington Post Staff Writer DATELINE: LOS ANGELES BODY: ???One year ago this city announced its intent to become the Solar Capital of the World with 100000 roofs covered with solar electric panels by the end of the decade an audacious goal to transform the homes of this smoggy but sunny metropolis into miniature power plants. ???To fulfill what is perhaps the nation's most ambitious solar campaign the Los Angeles Department of Water and Power began offering substantial buy down subsidies that would reimburse rate payers for half the price of each new solar energy system. For the average home a photovoltaic package costs between $ 10000 and $ 20000 parts and labor included before the rebate. ???How many have been installed? ???At last count about 40. ???That leaves only 99960 rooftops to go. ???The Bush administration and especially Vice President Cheney architect of its energy plan have been criticized for skepticism regarding alternative energy sources. But a close examination of the Los Angeles solar experiment and a review of similar programs suggest the former oilmen in the White House have a point: Solar at least has not proven ready for prime time. ???For all of Los Angeles's good intentions and for all of solar's many positive attributes the problems of harnessing its power remain. Some of those challenges are economic and some technological others are more mundane but often ignored such as finding a qualified contractor a homeowner can trust to drill dozens of holes in the roofs to mount the things. ???In a reprise of the 1980s solar again is hot. The price of photovoltaics is dropping and interest is growing. Other states such as New York Arizona Florida and Washington are moving to join California in major efforts to wire homes to draw power from the sun. ???But as many Americans are beginning to understand the delivery of energy is like a complex interconnected assembly line and the devil lurks in the details. ???The Los Angeles experiment tells the story shared by other locales. In L.A. for example the city's lone solar panel manufacturer has not been able to supply enough systems to meet demand. ???The systems too are often oversold by solar proponents. In the real world most do not pay for themselves in a few years as some advocates claim but take 20 years or more to return their initial cost in the form of reduced utility bills. ???Nor are the systems maintenance-free: At a minimum the rooftop panels must be routinely cleaned of pollution dust and leaves. ???They cannot be installed efficiently on homes without shade-free south-facing roofs the shadow from a neighbor's palm tree can frustrate the system's photovoltaic cells. ???Nor will the most common systems allow buyers to live off the grid unless they want to purchase a large bank of batteries. Even with the batteries homeowners probably would not be able to run their washing machines and air conditioners at the same time. ???It is not an economic proposition at this point conceded Terry Peterson a solar expert at Electric Power Research Institute in Palo Alto Calif. But one day Peterson predicts 100 years from now solar energy will provide a substantial percentage of the world's energy needs. In a decade or two the cost of solar will likely be competitive with other energy sources such as natural gas nuclear or coal. ???But now? It is still a luxury item. Like buying a swimming pool Peterson said. ???I really like the idea of running my house with solar power said Andrew Chin a potential customer in Los Angeles who has been researching a purchase. But they're still pretty expensive even with the rebates and so I gotta ask myself what am I doing this for his conscience or his wallet. I'm thinking I might wait until they work the kinks out. ???The most knowledgeable and experienced solar contractor in Los Angeles is probably Graham Owen the founder owner and single full-time employee of Go Solar Co. ???His installation of a one-kilowatt solar electric system on a home in the San Fernando Valley was the first to be awarded a rebate by the Los Angeles power department in March. ???How many systems has he installed as part of the rebate program? Three. ???But Owen is a true believer and over the next year he plans to cover hundreds of roofs with solar panels. On his shelf Owen still has an unreturned library book The Coming Age of Solar Energy published in 1963 and checked out from his high school in Lennox Hills Ill. in 1979. I guess we're still stuck in the coming age of solar energy he said smiling. He recalled that the buzz about solar water heaters in the 1980s led to disappointment with shoddy workmanship and less than spectacular energy savings. ???Until recently there has been little widespread interest in solar electric power. Since 1998 the California Energy Commission has been pushing its own program to encourage homeowners to erect photovoltaic panels on their roofs offering to subsidize about one-third of the cost. ???Across a state with a population of about 35 million only 450 solar energy systems have been installed on homes. ???Then the California energy crisis struck with its power interruptions and steep rate increases and the phone calls began to overwhelm Owen's voice mail. ???On days with rolling blackouts? I get a hundred calls maybe more Owen says. His Web site www.solarexpert.com is now receiving 3000 hits a day. Customers are begging him to do jobs. ???The Los Angeles power department reports a similar surge in interest since the energy crisis began six months ago. Customer demand has shot through the roof says Angelina Galiteva executive director for strategic planning at the Department of Water and Power. She estimates that her department receives 1000 calls on some days about its solar subsidy program. ???Yet while the reliability and cost of solar electric technologies continue to improve solar power today accounts for only a sliver of the national pie chart of energy production -- less than 1 percent. The country produces about 300 megawatts of electricity with solar -- about the same amount produced by a single mid-sized traditional power plant. ???The current trend for photovoltaics is not to erect large centralized solar farms in the desert an experiment that withered in the 1980s but to pursue distributed generation or individual units on scattered rooftops. ???The problem has consistently been the cost of the solar panels which has been too steep to justify them except for customers who are committed environmentalists or techies who like the elegance of the systems. ???Los Angeles began its solar experiment after Sacramento legislators mandated that utilities spend about 3 percent of their revenue on efficiency conservation and renewable energy. For solar the power department committed $ 75 million over the next five years -- enough to subsidize panels on 7500 homes. ???The power department will pay $ 5 for each watt of solar installed on a residence or business. Homeowners typically purchase a one-kilowatt or two- kilowatt (1000 or 2000 watts respectively) solar electric system meaning that the municipal utility would pay between $ 5000 and $ 10000 of the cost up front -- an enticing tax-free offer. ???For many years I wanted to do solar but it was so expensive said LaWanda Geary in the San Fernando Valley who in April had Owen install 32 panels for a two-kilowatt system on her sunny roof. The rebate really got me going. I don't know many times when the government offers to pay half of anything. ???The systems that are eligible for rebates must be tied into a utility's electric power grid meaning that during the day when the sun is shining the panels are adding a stream of electrons used by the home to run its lights and appliances. ???If there is a surplus of solar power that electricity goes back into the power lines and is passed along to a neighbor and the electric meter at the house actually runs backward. Homeowners however are not selling their excess electricity -- they're giving it away to the utility company. ???On cloudy days and at night the home is not being powered by solar energy but getting its electricity the traditional way from the power lines. ???Calculations on savings vary. A two-kilowatt solar system can supply an average-sized home with 20 to 80 percent of its electrical needs depending on how many lights appliances and air conditioners are running and how efficient they are. ???After the subsidy and depending on how the system is paid for (in cash or with borrowed funds) a solar system can pay for itself in as little as six years and as much as 36 years. Owen assumes about 20 years. ???Potential solar clients moreover often mistakenly assume that going with the sun will take them off the grid which is not possible without a large bank of batteries that costs several thousand dollars more. Because the solar panels are still wired to the power grid if there is a blackout the power in a solar house goes off just like everyone else's. If uninterrupted power is needed Owen suggests a diesel generator. ???Galiteva does cite one real advantage of solar: It reduces the electricity that must be purchased from power companies and protects to some degree a solar home from the full brunt of upwardly spiraling rate increases. Unfortunately for solar enthusiasts the L.A. Department of Water and Power which was not deregulated along with the three other major utilities in California has perhaps the cheapest and most stable supply of electricity in the state making the economic argument harder to make. ???To receive the full $ 5 per watt subsidy the L.A. Department of Water and Power requires a homeowner to purchase solar panels from a manufacturer based in the city. The idea is not only to become the solar capital of the world but also to encourage local growth of an emerging industry and create jobs. ???One hitch is that no solar panel makers were located in Los Angeles. ???After lengthy negotiations Siemens Solar Industries based in Camarillo Calif. an hour's drive to the north announced in February that it would open a solar panel manufacturing plant in Los Angeles. But it is not a complete facility: The L.A. plant does only some final assembly and then the units must be returned to Camarillo for final testing and shipping. ???Tina Nickerson a spokeswoman for Siemens Solar estimates her company has sold a couple dozen to L.A. homeowners for the rebate program. But she too reports that the interest from consumers is sometimes overwhelming and that supply has been a problem. Most U.S.-manufactured units are shipped overseas to places such as Germany Japan and Scandinavia which have had generous subsidies in place for years. ???LaWanda Geary had to call Siemens herself to push them to deliver panels for her house -- and she was eligible for the rebate because of a stopgap compromise that allows to Siemens to ship solar panels from Camarillo until its L.A. plant is fully operational. ???Everyone involved concedes there have been bottlenecks. Siemens now says it has enough panels to begin to meet demand and Owen and the city are hoping things will sort themselves out especially if more solar manufacturers are drawn to Los Angeles. But proponents worry about what will happen when the subsidies run out. ???Selling solar is now the easy part Owen says. I could sell a hundred a week. It's getting them up on the roof that's the hard part. LOAD-DATE: May 29 2001 of 98 DOCUMENTS ????????????????Copyright 2001 News World Communications Inc. Washington Times ?????????????????????May 29 2001 Tuesday Final Edition SECTION: PART A NATION INSIDE POLITICS Pg. A6 LENGTH: 1264 words BYLINE: Greg Pierce THE WASHINGTON TIMES BODY: ??TAKING YOUR MEDICINE ??Oakland Mayor Jerry Brown who was once governor of California likens current Gov. ?Gray Davis' handling of the electricity crisis to his own bungling of the medfly crisis. ??Here's an analogy to the medfly crisis Mr. ?Brown said in an interview with the Los Angeles Times' Douglas Foster. ?When I first heard about the medfly I said 'Well it's just a few flies maybe they'll go away. ?Maybe they won't keep reproducing.' And the winter came and they stopped reproducing. ?And then somewhere around February or March I learned about something called 'spring emergence.' As the ground got warmer the larvae turned into flies and more medflies started appearing. It got out of hand and ultimately I had to order malathion spraying. ?It would have been better had I taken forceful action at the first notice of the medfly. ??Mr. ?Foster asked: Are you saying that the governor missed opportunities to act early in the same way? ??Mr. ?Brown replied: There's an analogy there. ?I didn't want to spray because I knew the people in Santa Clara County didn't want to have helicopters spraying malathion over their homes. ?It didn't sound good. ?As governor I wouldn't have wanted to see rate increases either. ?But sometimes you have to take your medicine early. ?It's less bitter than if you postpone it. ??Mr. ?Davis served as Mr. ?Brown's chief of staff when the latter Democrat was governor. ??ENERGETIC CRITICISM ??President Bush's energy plan already under fire from Democrats and environmentalists is dismissed by National Review the conservative magazine as so much political posturing. ??The hyperbolic attacks on the Bush plan by environmentalists (as an attempt to poison the air and kill the caribou) shouldn't trick conservatives into an exaggerated sense of its merit the magazine says in an editorial in its current issue dated June 11. ??The basic thrust of the administration's thinking on energy is sound: a growing economy requires more energy which in turn entails more production. But the Bush plan itself is a political document meant to placate corporate interests environmentalists and everyone in between and so is festooned with an embarrassment of subsidies and incentives that will at best prove an irrelevance. ??As Jerry Taylor of the Cato Institute writes in this issue the phantom energy crisis is already healing itself. ?Power plants are being built at a rate that outpaces Dick Cheney's benchmark of one plant a week. Altogether almost 100000 new daily megawatts of electrcity capacity are scheduled to be available nationwide by next year. ?This is twice the amount of electricity that California now uses on an average day. ?While Cheney has been sitting with his advisers around a White House conference table investors and entrepreneurs have been digging building and refining his energy problem into oblivion. ?By the time all the Bush plan's tax credits have kicked in there may well be an energy glut. ?All of this is thanks to the most efficient energy plan known to man: market pricing. ??WRONG ON BOTH COUNTS ??The buzz in the media after Sen. ?James Jeffords' switch put Democrats in control of the Senate was that President Bush must change his ways. ?He has to become more moderate. ?Why? ?Because only that will prevent more Republican defections and it's the president's one hope for getting his agenda through Congress. ?This is wrong on both counts Fred Barnes writes in the Weekly Standard. ??Bush and GOP congressional leaders bent over backwards to accommodate Jeffords and liberal Democrats on education the senator's top priority. Jeffords bolted anyway. ?On taxes Bush stuck with his conservative tax cut until nearly the end when he compromised just enough to assure passage. Jeffords voted with him Mr. ?Barnes said. ??The truth about the impact of Jeffords' move is that no political earthquake has occurred. ?The Senate is ideologically unchanged. ?The swing votes in the Senate including John McCain are important but they already were. ?There's no clear path to victory for the Bush agenda after taxes and education but that was always true. ?To pass a patients' bill of rights a prescription-drug benefit or missile defense a bipartisan coalition of some sort will be essential. ??Yes there's one big change with Democrats taking over: judges. ?Bush will have a harder time getting conservative nominees through a Senate Judiciary Committee run by Patrick Leahy perhaps the most partisan Democrat on Capitol Hill. ?One more downbeat side effect: Jeffords' announcement overshadowed Bush's tax-cut victory denying him any political momentum he might have gotten from it. ??INCOHERENT REBEL ??Before liberals put James Jeffords on Mount Rushmore can we please stop and note how he's already betrayed Democrats and his own avowed principles by deciding that his defection won't take effect until after President Bush's wrongheaded tax cut has been signed into law? syndicated columnist Matthew Miller writes. ??Any traitor (I mean 'man of conscience') worth his salt shoves the knife in to the hilt - otherwise what's the point? ?Machiavellis throughout history have wisely advised that when you move against the king you'd better finish him off Mr. ?Miller said. ??Yet Jeffords took pains to make sure his switch wouldn't derail the centerpiece of Bush's agenda the very agenda that inspired Jeffords' move and which Jeffords had the power to stop via his action. ??We are dealing in other words with a deeply incoherent rebel. ?This would be a private matter for Jeffords to sort out with his therapist were not his cowardice in this moment of 'courage' so consequential for the country. ??THE LONELY VERMONTER ??In the final analysis Vermont Sen. ?James M. ?Jeffords was out of step with his party making his departure appropriate if politically inconvenient. ?Those who argue that it was the party out of step with Jeffords some political analysts are saying are those who wish the Republicans no good. UPI political analyst Peter Roff writes. ??The conservative low-tax minimal-government Republican Party enjoys national parity with the Democrats something the Northeastern liberal GOP could not achieve. ?Jeffords is in that regard these observers say out of step with victory. ?One GOP consultant went so far as to say 'If the Republicans were doing better in New England Jeffords would not have been so lonely. ?Why is it that the people from states where the GOP usually doesn't win think they can tell the rest of us how to run the party and what we all should believe? ?It doesn't make sense.' (spade) ??There are those in the GOP who regret the loss of the majority that Jeffords' defection brings but very few if any are mourning the loss of the lonely Vermonter Mr. ?Roff said. ??LAST WORDS ??Brill's Content asked PR pros how they would handle Vice President Richard B. Cheney's heart problems. ??It's inconceivable that Mr. ?Cheney can put in the kind of time we're led to believe he is without putting himself at risk one public relations man John Scanlon told the magazine. ?My recipe for controlling the situation would be photo-ops access to his schedule and a couple of exclusive articles. ?He's got to convince people he's fit for the job. ??Unfortunately Mr. ?Scanlon did not live to see his quote in the magazine's June issue the New York Post reports. ?He died of a heart attack. ??* Greg Pierce can be reached at 202/636-3285 or by e-mail at gpierce@washingtontimes.com. LOAD-DATE: May 29 2001 of 98 DOCUMENTS ????????????????Copyright 2001 News World Communications Inc. Washington Times ?????????????????????May 29 2001 Tuesday Final Edition SECTION: PART A NATION Pg. A4 LENGTH: 809 words HEADLINE: Bush faces tough sell on visit to California Davis likely to be rebuffed on price caps BYLINE: Joseph Curl THE WASHINGTON TIMES DATELINE: LOS ANGELES BODY: ??LOS ANGELES - Twenty minutes - that's how long Gov. ?Gray Davis who has accused the Bush administration of ignoring California's energy crisis will have to sway President Bush in a meeting today to consider imposing federal price caps on wholesale power prices. ??His plea likely will fall on deaf ears. ??That's simply not going to happen said one senior Bush official. Both Mr. Bush and Vice President Richard B. ?Cheney who on Friday again blamed the state government of California for the energy crunch oppose cap measures. ??In his first visit to California since the presidential election where he lost the state to former Vice President Al Gore by 54 percent to 41 percent Mr. Bush hopes to sell his national energy policy to a vocal group of opponents. But the hue and cry has been muted of late since residents have battled rolling blackouts and sky-high gasoline prices. ??A new poll released Friday shows 59 percent of Californians many of whom have been longtime foes of nuclear energy now believe the non-polluting energy source may be the way to solve the state's problems. ??Mr. ?Davis' popularity has plummeted. ?The Democrat facing re-election next year and often mentioned as a presidential candidate is viewed as having poor job performance by 60 percent of Californians according to a survey by the Public Policy Institute of California. ??In a small gesture to California Energy Secretary Spencer Abraham yesterday announced plans to increase transmission capacity in California which he said would be a big step in easing rolling power blackouts. ??Abraham ordered the Western Area Power Administration - an Energy Department arm responsible for marketing electricity from federal water projects in 15 Western states - to wrap up planning for building extra transmission capacity. ??The governor has repeatedly blamed Mr. ?Bush who took office four months ago for the energy crunch in California. ?He points the finger of blame far outside the state's boundaries primarily at Washington and Mr. Bush's home state. ??The people that have dropped the ball are the federal government Mr. Davis said last week. ?They need to reimpose a price cap because we're being obscenely gouged by price gougers out of Texas and the Southwest. ?. . . There's a massive transfer of wealth going on from ordinary citizens in California to Texas. ??Mr. ?Davis has also charged that utility companies are withholding power in order to drive up prices a claim the Federal Energy Regulatory Commission has investigated and dismissed. ??Mr. ?Bush and Mr. ?Cheney have often pointed out that California is second only to Rhode Island in conservation efforts but the state is on the brink of an energy supply collapse. ??Still despite the state's failure to build new power plants Mr. Davis says California is entitled to a federal bailout approved by Mr. Bush. ??I'm going to keep asking him to do it because we're part of America. The state the last three years has led American economic growth. ?. . . We're doing everything we can out here he said. ??In the Democratic response to the president's weekly radio address Mr. Davis accused the president a former oil man of being concerned only with the petroleum magnates. ??With all due respect I urge you to stand up to your friends in the energy business and exercise the federal government's exclusive responsibility to ensure that energy prices are reasonable he said. ??Many analysts however blame the state's deregulation scheme and failure to construct adequate electrical generating capacity. ?The price wholesale power providers can charge utilities is not capped but the fee those companies can charge users is capped - resulting in massive debt for providers. ??The state was slow to respond to increased demand the analysts say even though the state is building 10 new power plants four of which will come on line this summer. ??In his national energy policy Mr. ?Bush lays out 105 proposals that focus on increasing domestic supply improving the nation's ability to move energy between regions and increased conservation. ?But the policy is geared more toward long-term solutions - such as decreasing America's reliance on foreign oil - than short-term relief for Californians and motorists nationwide. ??Mr. ?Cheney who heads the president's energy task force and said Friday that California knew for more than a year about the impending energy shortage has promoted nuclear power as essential to America's energy needs. ?He said that at least some of the 65 power plants that need to be built annually to meet future electricity demand ought to be nuclear. ??A poll by the Field Institute last week found many Californians now agree. Although nuclear energy produces 20 percent of the nation's energy California has just two nuclear plants. GRAPHIC: Photo Gov. ?Gray Davis LOAD-DATE: May 29 2001 of 98 DOCUMENTS ????????????????????Copyright 2001 Chicago Tribune Company Tribune ???????????????May 29 2001 Tuesday NORTH SPORTS FINAL EDITION SECTION: News Pg. 6 ZONE: N LENGTH: 514 words HEADLINE: Bush backs WW II project BYLINE: From Tribune news services. DATELINE: LOS ANGELES BODY: ??President Bush promised World War II veterans a Washington memorial that will stand for the ages and paid Memorial Day tribute to America's fallen soldiers before embarking on a three-day West Coast swing to try to ease his political problems in California. ??Bush landed at ground zero of the nation's energy worries Monday night hours after Energy Secretary Spencer Abraham speeded up planning to relieve a notoriously overloaded electricity transmission line through California. ? ??Abraham's action was timed to provide a bit of news for Bush to announce during his first presidential trip to California where he is to hold a politically charged private meeting with Democratic Gov. Gray Davis on Tuesday. Bush's aides said he will pledge to cooperate with California but will stick to his position that no action by the federal government can prevent the rolling blackouts that are expected this summer. ??Abraham ordered the Western Area Power Administration a 15-state marketing arm of his department to complete planning and seek outside financing for an increase in transmission capacity that he said would be a big step in the right direction and a big step forward for Californians. ??California's electricity problems developed over a period of years and cannot be solved overnight Abraham said in a news release. However we can move now on actions that will help avert the same types of problems from recurring year after year. Monday's action is designed to reduce the bottleneck on California's Path 15 which connects the northern and southern parts of the state. ??Davis who is seeking re-election next year has seen his poll ratings plummet as electricity prices soared utilities hit dire financial straits and homes and businesses were surprised with blackouts. ??For most of Monday however Bush focused on U.S. veterans and the solemn ceremonies in two states honoring those who never returned from America's wars. ??Their losses can be marked but not measured Bush said at the traditional Memorial Day ceremonies at Arlington National Cemetery in Virginia. We can never measure the full value of what was gained in their sacrifice. We live it every day in the comforts of peace and the gifts of freedom. ??Bush also laid a wreath at the Tomb of the Unknowns. ??Later he traveled to Mesa Ariz. to pay tribute to veterans at the Champlin Fighter Aircraft Museum. He asked the crowd to observe a nationwide moment of silence at 3 p.m. Arizona time. ??Any foe who might challenge our national resolve will be repeating the grave error of defeated adversaries the president said. ??Bush opened the day at the White House where he signed legislation to construct a World War II monument on the National Mall a setting criticized by some. Bush said the monument between the Washington Monument and Lincoln Memorial will stand for the ages. ??I will make sure the monument gets built the president told an audience of veterans in the yellow-curtained East Room among them former Sen. Bob Dole (R-Kan.) who has supported the memorial. ??. GRAPHIC: PHOTOPHOTO (color): President Bush and Maj. Gen. James T. Jackson attend Monday's wreath-laying at Arlington National Cemetery's Tomb of the Unknowns. AP photo by Ron Edmonds. LOAD-DATE: May 29 2001 of 98 DOCUMENTS Associated Press The materials in the AP file were compiled by The Associated Press. ?These materials may not be republished without the express written consent of The Associated Press. ???????????????????????May 29 2001 Tuesday BC cycle AM Eastern Time SECTION: Domestic News LENGTH: 604 words HEADLINE: Bush announcing low-income aid but no price caps BYLINE: By SCOTT LINDLAW Associated Press Writer DATELINE: LOS ANGELES BODY: ??President Bush traveled across the country to deliver news Gov. Gray Davis doesn't want to hear: He won't force down soaring electricity prices that have cost California nearly $8 billion since January. ??The Republican president and the embattled Democratic governor arranged a 20-meeting Tuesday to talk about California's energy crisis but there was no indication they would break their stalemate. ??Bush opposes price limits on wholesale electricity that utilities buy arguing they do nothing to address supply-and-demand issues at the heart of the crisis. ??Davis contends federal energy regulators are ignoring their mandate to ensure just and fair electricity prices. ??With no sign of a break in the deadlock each side maneuvered for maximum advantage from Bush's first full day in California as president. ??Davis in an interview Tuesday on ABC's Good Morning America defended his record on licensing more power plants. ??We've licensed 15 plants. Ten are under construction four will be online this summer four next summer and by the end of 2003 we will have built our way out of this problem. But between now and then we are getting gouged unbelievably Davis said. ??The Bush administration timed positive energy announcements to coincide with the president's visit. ??At the Marine Corps base at Camp Pendleton Bush was announcing the expansion of a program that provides federal money to help low-income residents pay for power. ??Bush was proposing $150 million in addition to $300 million already budgeted for a component of the Low Income Home Energy Assistance Program to provide special help to cash-strapped residents of California and certain Midwest areas such as Chicago a senior administration aide said. ??Bush was also reminding state residents of his order that military facilities in the state cut peak-hour usage by 10 percent. ??To alleviate an electricity bottleneck on a crucial south-north transmission path the Department of Energy announced that the Western Area Power Authority will try to raise money from a variety of private and public entities to finance a crucial additional lines. ??The Bush administration is taking a leadership role in addressing a long-neglected problem in California's electricity transmission system said Energy Secretary Spencer Abraham. California's electricity problems developed over a period of years and cannot be solved overnight. However we can move now on actions that will help avert the same types of problems from recurring year after year. ??Davis had a letter for Bush from top economists who maintain price caps are justified and necessary. ??Aides to the governor expressed amazement that Bush would travel all the way to California with no major announcement in hand and predicted Davis would respond with polite rage. ??Mindful of the national stage he commanded Davis planned a news conference to air his grievances. And he convened a panel of families he said have been victimized by the energy crisis in the same hotel where Bush was staying. ??Davis wants Bush to pressure the Federal Energy Regulatory Commission to impose stiff price caps. ??Tuesday limited caps ordered last month by FERC go into effect in California but only when electricity reserves fall below 7.5 percent in the state - a step Davis called inadequate. ??Protesters planned demonstrations in Los Angeles and at Camp Pendleton in San Diego County. ??Bush also arranged a speech on energy and trade to the Los Angeles World Affairs Council and planned to president over a closed-door energy round-table discussion. GRAPHIC: AP Photos DSM106 KDJ102 LOAD-DATE: May 29 2001 of 98 DOCUMENTS ???????????????????The Associated Press State & Local Wire The materials in the AP file were compiled by The Associated Press. ?These materials may not be republished without the express written consent of The Associated Press. ???????????????????????May 29 2001 Tuesday BC cycle AM Eastern Time SECTION: State and Regional LENGTH: 594 words HEADLINE: Stakes are high for Davis meeting with Bush BYLINE: By GARY GENTILE AP Business Writer DATELINE: LOS ANGELES BODY: ??With California facing a summer of outages Gov. Gray Davis was to meet President Bush to press for a federal cap on energy prices. ??But Davis wasn't expected to win any concessions during the 20-minute Tuesday meeting where he's expected to point to Texas energy makers. ??Davis has appeared on national news programs attacking Bush for opposing price controls on wholesale electricity and suggesting the president has ignored price-gouging by Texas-based electricity generators. ??The president did not create this problem but he is uniquely situated to solve it Davis said Monday. What I'm going to ask him to do with all respect is to enforce federal law. The money that leaves this state goes directly to energy companies in Texas and the Southwest. ??If Bush refuses to administer price controls as expected Davis can use that as ammunition in his sparring with the administration. ??Bush has blamed California officials for the state's power woes and said price controls won't solve shortages. Instead they said Bush plans to stress his efforts to conserve energy in federal buildings and will bring one or two new initiatives to the table. ??One of them commits the federal government to helping organize a consortium to build more power lines for the state. ??Energy Secretary Spencer Abraham directed the Western Area Power Administration a federal agency to take the first steps to clear the way for building more transmission capacity between southern and northern California. That would help relieve a transmission bottleneck in the central part of the state. ??While this will not help this summer Abraham said in a statement the line improvements when completed will help avert the same types of problems from recurring year after year. ??The stakes of the meeting are high for both politicians. ??Davis who has been mentioned as a Democratic challenger to Bush in 2004 wants federal help to solve an energy crunch that threatens rolling outages this summer and has cost state taxpayers nearly $8 million since January - the price of buying power for two cash-starved private utilities. And his plan to rescue one of those companies reportedly is faltering. ??Leaders of both the state Senate and Assembly oppose a $3 billion-plus plan to bail out Southern California Edison by buying its power lines the Los Angeles Times reported Monday. ??Bush meanwhile needs to mend fences in vote-heavy California. The Republican president lost badly here in November and polls show most Californians dislike his handling of their energy crisis. ??Bush's Tuesday agenda was heavy on energy issues. At the Marine Corps base at Camp Pendleton near San Diego Bush was to highlight his order that federal agencies and installations cut back energy use. Then it was on to Los Angeles to discuss his energy plan in a speech to the Los Angeles World Affairs Council. ??Bush was confronted by the issue virtually as he stepped off the plane Monday in Los Angeles. Rep. Brad Sherman D-Los Angeles escorted the Academic Decathlon national championship team from El Camino Real High School in Woodland Hills to meet Bush. He told the president California needs regulation of electric generators. ??The president seems to believe just by instinct that rate regulation reduces supply and also by instinct that all those in the energy industry are fair people who are not trying to game the system Sherman said. Anyone who studies the facts in California knows that power is being withheld in order to drive up the price. LOAD-DATE: May 29 2001 of 98 DOCUMENTS ????????????????Copyright 2001 Burrelle's Information Services NEWS ??????????????????????SHOW: WORLD NEWS NOW (2:00 AM ET) 28 2001 Monday TYPE: Newscast LENGTH: 447 words HEADLINE: PRESIDENT BUSH VISITS CALIFORNIA WHERE POLITICIANS ARE CRITICAL OF HIS LACK OF ACTION FOR THEIR ENERGY CRISIS ANCHORS: DEREK McGINTY REPORTERS: JOSH GERSTEIN BODY: ??DEREK McGINTY co-anchor: ??When Air Force One touches down in California today it will mark President Bush's first visit to the Golden State since taking office. Now that fact has not been lost on Governor Gray Davis who has accused the president of ignoring his state's power crisis. ?As ABC's Josh Gerstein tells us Mr. Bush's visit could have major ramifications for his presidency and his party. ??JOSH GERSTEIN reporting: ??(VO) Since taking office President Bush has visited 28 states but until this week he had not found time on his schedule to visit the nation's most populous state California. ??Mr. DAN SCHNUR (GOP Political Consultant): Because the state is going through such extraordinary times right now because of the energy crisis his absence has been much more noticeable and the discussion about it's been much more heightened. ??GERSTEIN: (VO) Democrats have begun an aggressive effort to paint the president and other Republicans as obstacles to resolving the energy crisis. ??Offscreen Voice: (From TV Commercial) President Bush has offered no relief to hard-pressed rate payers. ??Text: ??The President...believe(s) that the issue is mostly a California matter... ??GERSTEIN: (VO) On Tuesday Mr. Bush meets with California Governor Gray Davis. ?He and other Democrats want the federal government to impose caps on wholesale prices for electricity. ??Representative ANNA ESHOO (Democrat California): Our people are hurting. We're bleeding in the sand. ?We need a tourniquet and the president is the one that can do this. ??GERSTEIN: (VO) During his trip President Bush plans to highlight the federal government's conservation efforts but aides say he will not endorse price caps. ??Mr. TUCKER ESKEW (Director White House Media Affairs): The president believes that capping wholesale prices would do nothing to lower demand or increase supply the two fundamental solutions to any energy problem such as this. ??GERSTEIN: Holding the line against price caps may have political costs. Most analysts give Mr. Bush little chance of winning California in 2004 but Republican congressmen there face re-election next year. ?So far five of them have endorsed some kind of limit on electricity pricing. ??Representative RANDY CUNNINGHAM (Republican California): We're in an extreme emergency right now. ?It takes extreme measures. ??Unidentified Woman: We are in rolling blackouts. ??GERSTEIN: (VO) While electricity may be in very short supply in California this summer the president and politicians of all stripes are likely to find there's more than enough voter anger to go around. ?Josh Gerstein ABC News the White House. LOAD-DATE: May 29 2001,other,friendly,0 +"In DC with Ken Lay per Desiree, CEO luncheon with Secty Rubin",Desiree will schedule other appointments as well Cynthia will attend in your place.,other,formal,1 +Re: Rich Products,looks good Peggy Mahoney 07/24/2000 06:20 PM To: Mark Palmer/Corp/Enron@ENRON Steven J Kean/HOU/EES@EES Karen Denne/Corp/Enron@ENRON Cedric Burgher/Corp/Enron@ENRON Mark Koenig/Corp/Enron@ENRON Paula Rieker/Corp/Enron@ENRON Jeremy Blachman/HOU/EES@EES Harold G Buchanan/HOU/EES@EES Karen S Owens@ees@EES Kevin Hughes/HOU/EES@EES Mark S Muller/HOU/EES@EES Vicki Sharp/HOU/EES@EES Marty Sunde/HOU/EES@EES Dan Leff/HOU/EES@EES Elizabeth Tilney/HOU/EES@EES Dave S Laipple/DUB/EES@EES James E Keller/HOU/EES@EES cc: Subject: Rich Products Please review the attached draft news release about our agreement with Rich Products and let me know if you have any comments by 5pm Tuesday July 25. We are scheduled to release on Wednesday July 26. If you have any questions please call me at x57034. Rich Products is a major US food manufacturer headquartered in Buffalo NY. The company ranked #122 in Forbes Private 500 and has sales around $1.5 billion. Rich Products is owned and operated by the founding Rich family. Products manufactured include frozen meats bakery products and non-dairy creamers.,other,formal,3 +Re: Project Stanley,Please revise the document as Aleck's changes indicate. With respect to the alternative responses shown near the end of the document leave both alternatives in. -----------------,other,formal,3 +Re: release draft,revisions From: Mark Palmer on 06/07/2001 01:46 PM To: Paula Rieker/Corp/Enron@Enron James A Hughes/Enron@EnronXGate David Leboe/Enron@EnronXGate Andrew S Fastow/Enron@EnronXGate Steven J Kean/NA/Enron@Enron Karen Denne/Corp/Enron@ENRON cc: Subject: release draft Please get back to me ASAP. Mark Palmer 34738,project management,formal,3 +Update Day 1 Second Session FERC CA Settlement,In the Room Conference attended by all in-state generators a few munies the IOUs and a few others. One attorney from CPUC but on phone. Barbara Barkovich attended for CA Large Consumers. Nader sent someone. No other consumers. One other ESP -- Strategic Energy (only operates in San Diego). Judge reports that only 6 offers have been submitted to FERC for sales to the IOUs (note Enron submitted one of the offers). The offers total 2000 MW. The prices are quite divergent. He expresses concern at the little offered. Generators suggest that more could be offered if FERC could be more flexible on terms (FERC required 24/7 offers). IOUs and others press judge to seek offers from others not present (e.g. BPA other marketers SW utilities) but judge does not offer to do so. Barkovich says can't throw large customers into non-core market now. Everyone agrees that we are all looking for a blended wholesale rate (part existing gen part OFs part forward contract and part spot) that meshes with the IOUs' ability to recover the costs in rates -- so tied to CPUC rate increase. Discussion of CPUC PD -- not enough Enron able to take low profile. SDG&E suggested terminating the settlement talks at FERC saying nothing could be achieved. Not much happens until 4:30 pm when judge blows up -- judge directed epithets at SDG&E and SCE. SCE had refused to cooperate from the beginning. Out of the Room Separate talks between PG&E and SDG&E and some of the generators. Late in the day Judge meets with IOUs. Parties agree informally that forum does not work well given lack of CPUC involvement but some believe that FERC is only hope for a workable resolution. Next Steps -- The Judge Speaks Judge asked everyone to consider how to Share the Pain for Thursday's meeting and said not to expect any win:win scenario. His view is that FERC is better than the CA legislature or bankruptcy court. His focus will be on Wolak proposal to share the pain as submitted in 12/1/00 comments to FERC -- forces all sellers to CA to sell most of its supply (either generation or marketer offers) as cost-based rates in forward contracts or lose ability to sell at market-based rates. Generators oppose this I believe. Enron planning to continue low profile but to discuss options with ENA.,business document,urgent,5 +"Part 4, revised",,other,formal,3 +Madera Ranch Press Release,Heads up. This is not to be discussed in advance out side of Enron but you guys need to know. If there are ways we can be helpful call Carolyn Green to discuss. -----------------,other,neutral,3 +CNN Link Update,I think this is a good idea. We may want to think about CNBC as well. Brandon -- any technical obstacles? Margaret/Cindy -- how does the link work? does it go straight to the clip or do users have to navigate within CNN's site? -----------------,other,confidential,5 +Senate Energy Markup Cancelled,The Senate Energy Committee's meeting to consider and vote on Chairman Bingaman's electricity restructuring legislation and amendments to that proposal -- originally scheduled for tomorrow -- has been CANCELLED. No new date has been announced. Given the tragic events yesterday at present we expect congressional activity to be suspended following today's sessions until into next week. We will keep you posted on further details as they become available.,media & press,formal,3 +RE: confidential ee info,Mark Can you email me or fax me any written documentation we have give to Heidi in regard to performance. I have her reviews but thought we did some other written documentation. Let me know. Thanks. ,other,formal,5 +Re:,Mark has some editorial changes to the letter if there is still time ,other,formal,3 +Fwd: The Answer!,enjoy! -----------------,other,casual, +"Final Colorado Springs, CO Itinerary",-----------------,personal & social,casual,0 +test message,Testing Notes capabilities of your Enron home computer.,other,casual,3 +Digital Power Demand: JP Morgan Report,See if there is anythiing of use in here for your high tech group messages. ,information technology,casual,0 +California Update--0717.01,fyi -----------------,other,casual,2 +<> - April-01 AMEX,-----------------,finance,neutral,0 +Re: washington contacts,I talked with Scott Tholan and he immediately understood your concerns. I don't think there is anything else you need to do right now. Let me know though if there are requests for information you consider inappropriate. From: Cynthia Sandherr 09/14/2000 11:53 AM To: Steven J Kean/NA/Enron@Enron cc: Joe Hillings/Corp/Enron@ENRON Richard Shapiro/HOU/EES@EES Chris Long/Corp/Enron@ENRON Subject: washington contacts Steve: As discussed I spoke with Clay and raised the points we discussed. Thus I'm a bit surprised to receive this cover type memo. To be clear with you as I was with Clay (he repeated back my message verbatim so I feel he understood the issue) the issue is not maintaining excellent relationships rather the issue is inappropriate requests for insider information. By the way the Administration meeting which set off the problem Clay stated he doesn't remember where that information came from. I have followed up with DOE and the Hill as discussed. Please let me know if we need to do anything further. thanks. -----------------,other,formal,3 +West Virginia Settlement,-----------------,legal affairs,neutral,1 +Barton Subcommittee Approves California Bill; Price Caps Defeated,The Energy and Air Quality Subcommittee meet for almost six hours today and approved an amended version of H.R. 1647 Chairman Barton's emergency legislation to aid California by a 17-13 party line vote. The full Energy and Commerce Committee may take it up as early as next week (probably Thursday May 17th). The Subcommittee DEFEATED an amendment by Rep. Waxman (D-CA) to impose wholesale price caps for 18 months. The amendment was defeated 12-20 with all Republicans voting against including the three from California and Rep. Greg Walden (R-OR) who while seen as the last to decide to oppose the price cap amendment was the most forceful and articulate in opposition to the amendment. Also voting NO were Democratic Reps. Ralph Hall (D-TX) and Chris John (D-TX) with which we had met in recent days. The final vote tracked our whip count going into the meeting. Rep. Albert Wynn (D-MD) offered and withdrew an amendment to delete the negawatts provision. There was bipartisan criticism that while the concept made sense there were potential problems in terms of possible games playing including end users being able to sell power while not actualy reducing their normal power levels. Another member said that electric coops that are required to sell at cost could have customers then go out and resell that power and make a lot of money. Several Members said businesses could shut down put workers out of work and become energy marketers and make more money. Chairman Barton made a forceful defense of negawatts. While the amendment to strike was deleted we will need to respond to these criticisms and shore this up before full committee next week. There will be another attempt to delete at full committee unless these concerns are addressed in an amended version. Ranking Democrat Rick Boucher (D-VA) offered and withdrew an amendment to reinstate FERC maximum prices for the secondary transmission market thus reversing the Feb. 2000 FERC order. This woudl last for 18 months. Chairman Barton said he agreed with Boucher that there is a problem with what appear to be high gas transmission rates to California but he disagrees with the proposed remedy. He pledged to work with Boucher before Full Committee mark-up. We are obtaining a copy of this amendment and should analyze it ASAP for its potential impact on Enron operations. Rep. Ed Markey (D-MA) offered and withdrew an amendment to impose a series of new tests to be administered by FERC all with the goal of discouraging spot market transactions or at least what he would define as excessive use of the spot market and at the same time encourage deep bilateral mechanisms. The mechanisms included a market balance test that would say only sellers with a commitment to the long term market could sell in the spot market at unregulated rates and spot market circuit breakers that would be triggered when reserves are low in a given market. Chairman Barton said he likes the concept of a spot market circuit breaker but felt that the amendment was too complicated to be evaluated today. We will also pursue an analysis of this amendment since it will likely be offered again in some form. Mr. Markey also offered and withdrew a net metering proposal that would establish federal interconnection standards for individual consumers who would want to use fuel cells and other renewable technology to put power onto the system. It was interesting that those who opposed negawatts spoke favorably of net metering even though they are complementary. The subcommittee by voice vote adopted a Walden Amendment to strike the section of the bill that would have required an RTO if 10 of the western governors approved it. The debate was pro-RTO but the rationale for deleting the provision is that one is already being formed and Members from those states did not want to upset the work already under way. A series of other amendments on other matters were offered and withdrawn none of which relate to our activities.,other,informative,3 +Confidential Information and Securities Trading,To:SALISBURY HOLDEN - 503-464-3835 Enron Wholesale Services - Office of the Chairman From: Mark Frevert Chairman & CEO Mark Haedicke Managing Director & General Counsel Subject: Confidential Information and Securities Trading To keep pace with the fluid and fast-changing demands of our equity trading activities Enron Wholesale Services (EWS) has recently revised its official Policies and Procedures Regarding Confidential Information and Securities Trading (Policies and Procedures). These revisions reflect two major developments: (1) our equity trading activities have been extended into the United Kingdom and (2) in an effort to streamline the information flow process the Review Team will play a more centralized role so that the role of the Resource Group is no longer necessary.You are required to become familiar with and to comply with the Policies and Procedures. The newly revised Policies and Procedures are available for your review on LegalOnline the new intranet website maintained by the Enron Wholesale Services Legal Department. Please click on the attached link to access LegalOnline: If you have already certified compliance with the Policies and Procedures during the 2001 calendar year you need not re-certify at this time although you are still required to to review and become familiar with the revised Policies and Procedures. If you have not certified compliance with the Policies and Procedures during the 2001 calendar year then you must do so within two weeks of your receipt of this message. The LegalOnline site will allow you to quickly and conveniently certify your compliance on-line with your SAP Personal ID number. If you have any questions concerning the Policies or Procedures please call Bob Bruce at extension 5-7780 or Donna Lowry at extension 3-1939.,legal affairs,formal,3 +Re: PRC MEMO from Skilling,I think the memo needs some additional work. I have made a number of suggestion (highlighted on the attached). From: Karen Moore/ENRON@enronXgate on 04/30/2001 07:56 AM To: Cindy Olson/Corp/Enron@ENRON Steven J Kean/NA/Enron@Enron Karen Denne/Corp/Enron@ENRON Michelle Cash/HOU/ECT@ECT David Oxley/ENRON@enronXgate Andrea Yowman/Corp/Enron@ENRON Gina Corteselli/ENRON@enronXgate Robert K Jones/NA/Enron@Enron cc: Subject: PRC MEMO from Skilling Attached is a draft of the PRC memo to go out from Jeff at the end of this week for your review. Karen Denne Michelle Cash and Gina Corteselli have reviewed the document and their comments/edits/suggestions have been made accordingly. Please have your responses to me no later than COB Wednesday May 2 2001. Thanks Karen,other,formal,5 +Re: NASCAR Craftsman Truck Series Proposal,Thank you for the information. Unfortunately we are not interested at this time. Lorna Clark on 05/16/2001 08:59:39 PM To: Steve Kean cc: Subject: NASCAR Craftsman Truck Series Proposal Steve: Approximately 3 weeks ago we sent you a Sponsorship proposal for Ware Racing. We are curious if you've had the time to look our package over. We have tried unsuccessfully to reach you by phone and understand that you are very busy. If you have time would you please contact us reguarding this matter. You can reach us by phone or fax at (905) 680-1568 or on the net at dlpits@yahoo.com. We look forward to hearing from you. Thank-you Dave/Lorna Clark Allied Motorsports (representing WARE Racing) Do You Yahoo!? Yahoo! Auctions - buy the things you want at great prices http://auctions.yahoo.com/,other,polite but firm,3 +Re: Enron and the Energy Services Issue Before The WTO,I need you to run these items by Rick. I take full responsibility for approving the hiring of the Hills firm (and I look forward to meeting with you and Carla as we discussed) but remain hopeful we can use their services for something other than WTO. In the wake of Seattle and as I have come to understand better what the WTO can and cannot do for us on the energy services front I have come to the view that our talent and money would be better spent on other activities. My inclination is to do the bare minimum necessary to keep the machine going. If we have specifically committed to certain things then let's follow through. If there are things we can avoid let's avoid them. Specifically with respect to Fischer going to Geneva Why not have him available by phone at all hours to provide assistance and mage that known to USG instead of underwriting additional travel. With respect to the Hills firm can we use the retained time to help with the specific strategies we are now working out for the regions? These are the kinds of things we need to consider. Joe Hillings@ENRON 04/19/2000 04:13 AM To: Steven J Kean/HOU/EES@EES cc: Subject: Enron and the Energy Services Issue Before The WTO Steve: This is a brief extension of our conversation yesterday afternoon putting in print some of the upcoming dates and possible committments for your consideration and decision. We have no exit strategy at this time and in order to follow your general instructions to withdraw gradually (I'm not quite certain that is possible at this stage) you need to know the following. The April meeting at the WTO in Geneva (Committee on Specific Committments) spent considerable time discussing how energy services would be considered in the WTO GATS (General Agreement on Trade and Services) . The USTR raised the issue tabled the issue and guided the discussion. We did not send anyone to that session. As planned for several months we issued the Rachel Thompson study which is completing its basic distribution now. There has already been considerable interest in the study and I fully expect it to generate discussion in the days ahead. I have sent you the correspondence from the Japanese Ministry. Tonight I am hosting a small dinner for the top staff person for the leading Japanese business organization affiliated with the CSI organization. He raised the issue of Japan's industry feeling energy services was going too fast too soon when Ken addressed the WTO Ministerial Forum last December in Seattle. Now he has told Bob Vastine president of CSI that he was told later by his collegues that his statement was a misstatement. We'll hear more tonight. Later today the ESC Executive Committee is meeting with the DOE to discuss how they can support energy services for the USTR who has lacked technical advisers since Donna Bobbich and Russ Profozich left DOE earlier this year. DOE has appointed a group to help USTR and this is an orientation meeting held at their request. Next week I have scheduled the first ESC full meeting since January to update members (now 50 since Schlumberger joined on Friday) on developments which is essentially a report by USTR Carol Balassa who is the responsible official handling energy services. She has given a couple of us a debriefing on what happened at the WTO meeting and a request to prepare more detailed information for the May 10 meeting in Geneva where she tells us that energy services will be even more involved in the discussion. We should have Bob Fisher go to that meeting to be of assistance. This is a decision point for you. We have made some other committments which are also decision points although the Helsinki meeting on June 18th has been agreed upon based on my feelings that when I discussed it (the SCO/FSN Showcase Europe) in Houston with you and Rick you raised no objection which I took as agreeing that it should go forward. We have done this meeting annually where I have brought in someone from Enron companies to brief them and host them for dinner. These are the commercial people in the US embassies throughout Europe and the former Soviet Union. They are important points of contact for our commercial people. This year they want to have energy services in the WTO and as we would like them to exist in their territory. A few members of the ESC Executive Committee will do the former and Peter Styles the later. I have organized the dinner. Following that meeting is one that EC Trade staffer Uta Klinkers wants the ESC Executive Committee to put on in Brussels which is a joint meeting she is organizing with European energy industry representatives. This is a dialogue on energy services. The EU is an important player in the WTO and Uta who recently met with the ESC Executive Committee in Washington is quite supportive of liberalized energy services. At the EC she reports directly to Commissioner Pascal Lamy. Rick's memo this week suggested we have Peter Styles do this briefing. Peter is not an American and is not affiliated with the ESC. Therefore unless we participate Europe's energy industry is not talking with US industry. If this is what you want then I should tell Uta that we are unable to do the meeting. The last meeting is the presentation by Ken Lay at the OECD Forum 2000 on June 26 which I engineered with Doug Worth Secretary General of the BIAC (Business Industry Affairs Committee) to the OECD. This is a major world conference and Ken is addressing e-commerce and services. Doug an American and former head of the Washington IBM office wants to have Ken meet with OECD Commissioners in a smaller meeting to discuss trends for the future. I had planned to be there with Ken for the day day and a half he will be in Paris. I introduced our company to the OECD several years ago and it has become increasingly involved in issues of interest to us. Well these are the near-term items that require your fine hand if we are to proceed. A dramatic drop off at this time will have its effects and no one is likely to pick up our leadership. There is growing support for what has been accomplished and the USG plus others are now hooked on the energy services agenda. I cannot easily see an exit strategy that can do anything but cause criticism at this point. This is definately a longer term committment that I thought we had made when approval was given to hire the Hills firm. However if you want to exit other than pulling back from the Brussels meeting I think the other meetings are firm committements at this point. These are some thoughts for your consideration and decision. Joe,other,formal,3 +Fwd:,FYI. ,business document,neutral,5 +New York with Mark Koenig.,Joanie is booking a dinner in NY for this night. 9:00 shuttle to DC,personal & social,casual,0 +RE: GISB Approves Strawman 2.1,When appropriate GISB should do some kind of press release and congressional outreach so that policymakers are aware of this significant development. We have made reference to the process of turning GISB into EISB as we have discussed the reliability issue but the board vote is another reason for them to do some outreach on their own as well. ,project-specific,formal,3 +Washington DC to meet with Jefferds,Lunch - still outstanding (No mci guy) 2:30- Chris Perkins Senator Jefferds office (R-VT) Senate Building Room 728 Hart Malcolm and Cynthia will attend she also invited Mike Marvin Business Council 3:30 - Rick Kessler Congressman Pallone Democrate from New Jersey 420 Cannon Malcolm can also attend 4:00 - Elise Jones Congresswoman Furse (D-OR) 316 Cannon Malcolm can go to this MCI we'll try to do on May 1st.,other,formal,3 +"PGE/Commercial Support Group Meeting, 32C1",Per Geoff Roberts,other,formal,3 +RE: Help for Krishnarao Pinnamaneni,Wade Thanks for your help. Krishna advised me of the conversation he had with you. Vince ,other,polite,3 +<> - AMEX - 02/02/01,,finance,neutral,2 +Out of the office,Gretchen Bates/Mitchell Rosen (shared Marketing) 800-989-4427 Jim Coffey PEx use by marketers(312)407-7835 Move Hebert meeting from 15th,other,formal,3 +YOUR MARCH 25 SLIDES OF SPEECH TO PUBLIC UTILITIES Conference,Never mind ... I found 'em. -----------------,other,casual,0 +RE: Confidential Concern,Valeria is looking into it. Michelle ,other,formal,0 +Re: Rick Buy Status,Rick -- I'm so sorry to hear about this but I'm glad the outlook is good. Let me know if there is anything I can do to help. From: Karen K Heathman/ENRON@enronXgate on 07/17/2001 02:38 PM To: Richard Causey/ENRON@enronXgate Andrew S Fastow/ENRON@enronXgate Ben Glisan/HOU/ECT@ECT Jeffrey McMahon/ENRON@enronXgate Raymond Bowen/ENRON@enronXgate Mark Koenig/ENRON@enronXgate Rebecca Carter/ENRON@enronXgate Mark Frevert/ENRON@enronXgate Greg Whalley/ENRON@enronXgate David W Delainey/HOU/EES@EES Steven J Kean/NA/Enron@Enron John J Lavorato/ENRON@enronXgate John Sherriff/ENRON@EUEnronXGate Stanley Horton/ENRON@enronXgate cc: Subject: Rick Buy Status Sent this out to my direct reports but I wanted you to be aware as well. Rick Buy ,business document,formal,2 +Project California,I agree with Rick. I know Jose is tied up on current business but his input will be important. To date we have been relying on legal analysis of required approvals etc. That information is essential but it is as you know about 10% of the issue. The far more critical considerations are how is the government likely to react on a political level and what can we do about it. I think our government affairs people are in the best position to make these assessments. -----------------,project management,formal,3 +Tax Review of California Assembly Bill No. 128,please forward to Vicky Sharp. -----------------,finance,formal,3 +Confidential (sic)...chew immediately after reading (sic).,You have to love the availability of beautiful lasses for viewing. Things are interesting. Enron is moving right along and we will find out about who I am working for on Friday (our auction should be completed then). Not too much else is new. My place continues to get better (as I slowly furnish it) but Portland continues to be the little sister to Seattle. A couple new bars in town suggest she might be getting closer to puberty but definitely not the woman about town that Seattle is. Morgan told me you may no longer be with Steph? Is this true? (And I hope you are the only one reading this if it is not). If that is the case well we can see what we can do about it. As always I have no plans the next couple weekends so give me a shout (still have my cell phone at 503-887-3449) if you want to take a trip on down. Your always welcome to crash on my couch...(sorry its all I have I got rid of the futon). Hope youre doing well. Word. ,personal & social,casual,2 +Re: HP -- confidential internal document,This is an excellent update. Thanks for putting this together. Dale/Patrick - lets regroup on how we want to move this onward. Seems like SJ's suggestion of our spending more time with Bill Dwyer is a good one. Thanks Matt Sarah-Joy Hunter@ENRON 12/12/00 02:42 PM To: Matt Harris/Enron Communications@Enron Communications cc: Patrick Tucker/Enron Communications@Enron Communications Peter Goebel/NA/Enron@Enron Dale Clark/Enron Communications@Enron Communications Jennifer Medcalf/NA/Enron@Enron Subject: HP -- confidential internal document Matt: As GSS Business Development transitions the HP relationship for broadband to your team there are several issues I wanted to clarify in terms of how the relationship has been developed and who the contacts have been to date. Additionally I outlined the discussion points/action items from this morning's meeting you held with Jennifer Medcalf and myself. Per your request the HP presentation complete with a listing of HP's business partners was e-mailed to you this morning. HP contacts to date: Bill Lovejoy Western Gulf Area Sales Manager Houston TX #(713)-439-5587 (Gerry Cashiola's boss) Gerry Cashiola sales representative Houston TX #(713)-439-5555 (To date HP person coordinating the relationship--seeking a short term play) Greg Pyle Solution Control Manager Southeast Region Austin TX (#(512)-257-5735 (Pyle has been playing the business developer role but continues to defer leadership of the process to Gerry Cashiola) Daniel Morgridge Manager of Internet - E-Services long term alliances Austin TX #(512)-257-5736 (Interested in E-services/wireless longer term alliances) Bill Dwyer Chief Architect e-Services Solutions Cupertino CA #(408)-447-5240 (To date clearly the most knowledgeable person on HP's business propositions strong technical financial background to craft value propositions. Gerry Cashiola and Greg Pyle deferred to his judgement in the 11/16th meeting) Matt On November 10th GSS Business Development took HP through a tour of Enron's trading floor the gas control center and the peaking power plant unit center on the trading floor. This tour was one meeting amongst several held in October and November to provide HP a full overview of Enron's products and services and introduce them to appropriate contacts at Enron (EBS GSS buy side -- Peter Goebel). On November 16th GSS Business Development Patrick Tucker and Dale Clark outlined 3 possible EBS/HP focus areas -- connectivity storage and wireless. Three EBS action items were defined in that meeting: 1) HP was to provide an HP contact on connectivity (to date Gerry Cashiola has stalled on providing this). Sarah-Joy will continue to pursue this information and get a sense from Gerry Cashiola of what he means by short term opportunity. What is HP's time horizon for short term? 2) EBS and GSS/BD was to facilitate a conference call on Storage with Ravi to explore size and potential scope of opportunity (completed 12/8) 3) GSS/BD was to facilitate a conference call with Peter Goebel GSS IT Sourcing Portfolio Leader (set for 12/14) In conversations with you Jennifer Medcalf and myself this morning several decisions on forward-looking strategy with HP/EBS were confirmed: Gerry Cashiola has been unable to take control of the process. More importantly despite numerous visits to Enron in which he has had overviews of Enron's products and services met with Peter Goebel and his team on the GSS buy side and participated in an Experience Enron tour Gerry has been unable to define an HP business proposition. The coordination between Cashiola (short term initiative) Morgridge (long term 12-24 months) has remained unorganized. These initiatives need to be developed separately. Clearly the conversations with HP need to be elevated to a more senior level so EBS can work with HP decision makers who can move the relationship forward at a strategic level. As the relationship is developed at this strategic level shorter term opportunities will crop up along the way. But Gerry's short term plans will not be the focus of the EBS/HP relationship rather a by-product. To facilitate this process of elevating the relationship Jennifer Medcalf and I are following up with Bill Lovejoy and Greg Pyle. Lovejoy's boss is Dan Sytsma VP of HP's America's Central Region. In the conference call Thursday 12/14 with Peter Goebel and HP regarding wireless initiatives Peter will support the GSS/BD push for the HP/EBS initiative by reiterating the following two points: a) Enron is already an HP customer the onus is on HP to move forward on the process of building a strategic relationship (IBM and Lexmark are only some of the HP competitors who could push them out of the running) b) HP's ability to bring the right people to the table will influence HP's business relationship process with Enron Patrick Tucker and Dale Clark could build their relationship with Bill Dwyer Chief Architect e-Services Solutions (met at the meeting 11/16) in the near term. Perhaps plan a visit to Cupertino California to see Dwyer in person. We look forward to continuing close collaboration with your team on this and other opportunities. Sarah-Joy Hunter Enron Corporation Global Strategic Sourcing - Business Development #(713)-345-6541,other,formal,0 +Re: Distribution,There is also a california update call (used to be daily now weekly). Marcia Linton (Jim Steffes' assistant) can give you the call in information and add you to the distribution list. ,energy services,formal,5 +Merger News Articles,A full list of news articles will be distributed on Monday but here is som= e of the initial coverage. Business/Financial Desk Section A Rival to Buy Enron Top Energy Trader After Financial Fall By ALEX BERENSON and ANDREW ROSS SORKIN 11/10/2001 The New York Times=20 Page 1 Column 2 c. 2001 New York Times Company=20 With its stock plunging and its finances in doubt the world's largest ener= gy trader the Enron Corporation agreed to be acquired yesterday by the ri= val Dynegy Inc. for about $9 billion in stock and the assumption of $13 bil= lion in debt.=20 The deal is an extraordinary turnabout for Enron a Houston-based company t= hat had been a driving force behind electricity deregulation nationwide. Its chairman Kenneth L. Lay a big contributor to the Republican Party pr= ovided political influence while its former chief executive Jeffrey K. Sk= illing helped create markets for the trading of electricity and natural ga= s. But last winter when California's effort to deregulate the electricity = market led to soaring power prices and rolling blackouts Enron was the sub= ject of much criticism and political anger.=20 Recent disclosures of discrepancies in Enron's financial statements and an = investigation by the Securities and Exchange Commission caused the shares t= o plunge this week to their lowest level in a decade. As other companies be= came wary of doing business with it Enron -- also facing a potential cash = squeeze -- apparently had little choice but to find a buyer and a deal was= hastily cobbled together this week.=20 For critics who had complained about Enron's market power and its dominance= the combination poses additional concerns. Dynegy's acquisition of Enron = will be reviewed by state and federal agencies led by the Justice Departme= nt and the Federal Energy Regulatory Commission. Analysts said today that t= hey expected scrutiny of the combined companies' holdings in California wh= ere Dynegy owns power-generating plants and Enron accounts for much of the = trading of natural gas -- fuel for the state's electric power plants.=20 Buying Enron at a deep discount -- it has lost $60 billion in market value = this year -- could make Dynegy the dominant trader of electricity and natur= al gas. But the agreement carries big risks as well. Along with Enron's gas= pipelines and high-technology trading floor Dynegy will take on Enron's s= ubstantial debt and a web of complex transactions that Enron has spun over = the last decade.=20 In addition to the $13 billion in debt that Enron carries on its books it = has guaranteed at least $4 billion in off-balance sheet loans and the hidd= en debt could total as much as $10 billion said Carol Coale a stock analy= st with Prudential Securities.=20 Charles L. Watson Dynegy's chairman and chief executive said yesterday th= at Dynegy could sort through Enron's tangled finances. ''We know the compan= y well'' Mr. Watson said. ''It's not like we just started fresh. I'm confi= dent that it's as solid as we thought it was.''=20 The new company will combine Enron's 25000-mile natural gas pipeline syste= m with the large number of power plants that Dynegy owns worldwide as well= as Illinois Power a Dynegy subsidiary that serves 650000 customers in Il= linois. But its most important asset will be its trading desk. It will be t= he largest energy trader in the nation trading more than twice as much pow= er and natural gas as its closest competitors.=20 Mr. Watson said the company did not expect to sell significant properties a= nd that the deal should pass regulatory scrutiny. ''There's really not a lo= t of overlap in assets'' he said.=20 Mr. Watson and Steve Bergstrom Dynegy's president will hold those positio= ns in the new company which will be called Dynegy and remain in Houston. M= r. Lay who created Enron in the mid-1980's will not have any role in the = combined company's daily operations. He has been asked to join its board bu= t has not provided an answer. ''The last three weeks haven't been a lot of = fun'' he said.=20 In a statement announcing the agreement yesterday afternoon Mr. Watson sai= d he was confident that the merger would produce a strong new company. ''En= ron is the ideal strategic partner for Dynegy'' Mr. Watson said. ''We will= keep a strong balance sheet and straightforward financial structure as key= priorities.''=20 To shore up Enron's finances Dynegy will immediately put $1.5 billion into= Enron through ChevronTexaco the giant oil company which already owns 27 = percent of Dynegy. Another billion dollars will be injected once the deal i= s completed.=20 Investors appeared comfortable yesterday that Dynegy could make the deal wo= rk. After falling $3 to $33 on Wednesday when the companies first said t= hey were in discussions Dynegy rose $5.76 on Thursday and yesterday to clo= se the week at $38.76.=20 ''On paper it works'' Ms. Coale of Prudential said. ''The combined compan= y would be the leading trader the market leader in most of their businesse= s.'' Ms. Coale who has a sell rating on Enron and a buy rating on Dynegy = said she planned to keep her buy rating on Dynegy.=20 As it works to have the deal approved Dynegy will have to persuade Enron's= traders to stay with the combined company. The pain of the stock's 90 perc= ent plunge this year will not be equally shared. Some Enron employees have = held onto their shares and seen their retirement accounts eviscerated. Mean= while Mr. Lay Mr. Skilling and other former and current executives sold h= undreds of millions of dollars in Enron stock in 2000 and this year.=20 The companies also have very different corporate cultures. Dynegy emphasize= s teamwork while Enron is more competitive said Ehud Ronn director of th= e Center for Energy Finance Education and Research at the University of Tex= as. Even before the merger was announced Enron had lost some of its employ= ees to other energy trading companies Mr. Ronn said.=20 Some investors and analysts say that the problems with Enron's finances may= extend beyond the partnerships that have been the subject of Wall Street's= scrutiny the last month. James Chanos a short-seller who has been one of = Enron's most vocal critics said there was increasing evidence that Enron's= energy trading operations were not as profitable as the company had said. = ''There appears to be a culture at Enron of aggressively booking profits an= d deferring or obscuring losses'' Mr. Chanos said.=20 On Thursday Enron said in a filing with the S.E.C that it had overstated i= ts earnings by almost $600 million over the last five years. Mr. Chanos sai= d more restatements were possible noting that the filing disclosed partner= ships had been used to hedge almost $1 billion in losses in 2000 and this y= ear. So far the losses from those partnerships remain off Enron's financia= l statements Mr. Chanos said.=20 Enron's stock had been under pressure for most of this year as the company= ran up large losses with failed efforts to expand outside its core trading= operation. In August Mr. Skilling resigned as chief executive and Mr. La= y resumed control of daily operations.=20 Still the company appeared financially sound until last month when it dis= closed that its shareholders' equity a measure of the company's value dro= pped by $1.2 billion because of deals disclosed only hazily in its financia= l statements. The announcement unnerved investors who wondered whether Enr= on had found ways to inflate its profits and move debt off its balance shee= t and led the S.E.C. to begin an investigation.=20 Mr. Lay tried to reassure investors that Enron's finances were in order and= that its businesses remained strong. But the last three weeks have brought= a series of damaging revelations about partnerships that Enron formed with= some of its top executives including its former chief financial officer = Andrew S. Fastow.=20 With questions mounting the major credit-rating agencies began to downgrad= e Enron's debt putting additional pressure on the company. If Enron's debt= rating falls below investment grade it would be forced to repay $3.3 bill= ion in loans that it had guaranteed.=20 To strengthen its balance sheet and bolster its stock Enron turned to big = investors like Warren E. Buffett in search of billions of dollars of financ= ing. When the financing did not quickly appear its stock fell further.=20 By this week some major energy traders were refusing to extend credit to E= nron worrying that the company would be unable to make good on its contrac= ts. The Mirant Corporation an Atlanta-based power plant owner and electric= ity trader sharply curtailed its trading with Enron this week. ''We're tra= ding with them on a very limited basis'' said James Peters a Mirant spoke= sman. ''It's not business as usual.''=20 On Wednesday Enron's stock fell as low as $7 a share its lowest level in = more than a decade. That day news of the Enron and Dynegy talks leaked out= .=20 By late Wednesday the boards of the two companies had tentatively agreed t= o a deal. But Dynegy refused to go ahead until it learned whether Enron's c= redit rating would remain investment grade and was comfortable with the eff= ect of the deal on its own rating. The deal moved forward yesterday after D= ynegy was assured Enron's debt was not in danger of being lowered to junk s= tatus soon after the deal was announced according to company officials.=20 Dynegy and Enron had provided Standard & Poor's and Moody's Investors Servi= ce the main credit agencies with statements showing them what a combined = company might look like and asked the ratings agencies for an expedited rev= iew of the transaction Mr. Watson said.=20 Under the deal Enron shareholders will receive 0.2685 share of Dynegy stoc= k for each Enron share or $9.80 based on Dynegy's closing price on Thursda= y. Enron's stock gained 22 cents yesterday to $8.63.=20 ''I never thought our stock price would be at this level'' Mr. Lay said ye= sterday.=20 Enron's shareholders will own only 36 percent of the combined company and = Dynegy will name at least 11 members of the company's 14-member board.=20 If the deal falls apart Enron or Dynegy will have to pay a breakup fee of = $350 million.=20 To protect Dynegy's and ChevronTexaco's cash infusion the money will go to= an Enron unit that owns the Northern Natural Gas Pipeline. If the merger i= s not completed Dynegy will have the right to buy the unit.=20 An army of bankers and lawyers advised the companies. Lehman Brothers Inc. = acted as financial adviser and Baker Botts and Akin Gump Strauss Hauer &= Feld acted as counsel for Dynegy. J. P. Morgan & Company and Salomon Smith= Barney acted as financial advisers for Enron and Vinson & Elkins and Weil= Gotshal & Manges acted as the company's counsel. Pillsbury Winthrop served= as counsel to ChevronTexaco. Chart: ''A Marriage of Strength and Weakness'' A merger of Enron and Dynegy= would bring together two of the country's biggest energy companies -- and = save Enron from potential collapse. Graph tracks the weekly closes of Enron= shares from 1999 through 2001. Top North American gas marketers SALES OF = BILLION CUBIC FEET PER DAY* Enron: 24.6 Reliant: 13.2 Duke Energy: 12.8 BP:= 12.3 Mirant: 11.8 Dynegy: 10.9 Top North American power marketers SALES O= F MILLION MEGAWATT HOURS* Enron: 212.5 American Electric Power: 134.5 Duke = Energy: 118.1 Reliant Resources: 86.1 PG&E National Energy Group: 73.2 Dyne= gy: 70.1 *Figures are for the 2nd quarter of 2001. (Sources: Bloomberg Fina= ncial Markets Simmons & Co. Natural Gas Week)(pg. C2) Dynegy Enron Merger Deal Worth Almost $25 Billion Melita Marie Garza 11/10/2001 KRTBN Knight-Ridder Tribune Business News: Chicago Tribune - Illinois=20 Copyright (C) 2001 KRTBN Knight Ridder Tribune Business News Source: World= Reporter (TM)=20 Enron Corp. the nation's biggest power trader was taken over by its small= er more conservative rival Dynegy Inc. in a merger deal valued at nearly = $25 billion company officials announced Friday.=20 The combined company will be called Dynegy Inc. and will be headed by Chuck= Watson Dynegy's chairman and chief executive. If it wins regulatory and s= hareholder approval the deal would propel Dynegy the sixth-largest U.S. p= ower trader to the No. 1 position with more than 30 percent of the market= . The Houston-based competitors are new-breed energy companies formed to cap= italize on wholesale power marketing and trading with Dynegy emphasizing i= ts own power generation capabilities.=20 Enron meanwhile has been laid low in recent weeks by soured transactions = with energy partnerships run by one of its former executives and by a serie= s of revelations about questionable accounting practices. Enron this week w= as forced to restate its earnings over the past five years -- revising them= downward by 20 percent or $586 million -- and has seen its stock price pl= unge more than 80 percent in the past three weeks.=20 Both Enron and Dynegy have extensive business dealings in Illinois one of = the first states to begin deregulating its electric power industry among o= ther things Dynegy owns Illinois Power a Downstate utility.=20 The new Dynegy would become one of the largest companies in the world with= revenues exceeding $200 billion and assets of roughly $90 billion company= officials said. By comparison ExxonMobil the nation's largest company r= eported revenues of $232.7 billion in 2000.=20 We needed to do something to strengthen our balance sheet and get the inve= stor community focused on the core energy business said Kenneth Lay Enro= n's chairman and chief executive. We looked at several alternatives this = was in the best interests of our employees and shareholders.=20 Lay said he would not have a role in running the new company but was consi= dering a request to serve on the newly combined board.=20 Watson Dynegy's chairman said the merger compact included escape clauses = for Dynegy. But I wouldn't be standing here if I expected to see that (us= ed). I really believe the value degradation in Enron had nothing to do with= their core business. We looked under the hood it is just as strong as we = thought it was.=20 Still Watson acknowledged the possibility that more problems may surface a= t Enron. I don't think anybody can absolutely unequivocally say there's no= thing (more) there he said.=20 Dynegy's stock price closed higher Friday rising $2.26 or 6.2 percent to= $38.76. Enron's stock was down 33 cents or 3.7 percent at $8.63 a share.= =20 Together the companies have natural gas sales of about 40 billion cubic fe= et per day through the third quarter of 2001 and power sales exceeding 500 = million megawatt hours through the third quarter of 2001. In addition the = new Dynegy's delivery network will include more than 22000 megawatts of ge= nerating capacity and 25000 miles of interstate pipelines. In Enron Dyneg= y is taking on a company saddled with a heavy debt load and a credit rating= that has been downgraded to near junk bond status and is under the cloud o= f a Securities and Exchange Commission investigation.=20 Under the stock for stock swap portion of the deal valued at $8.846 billio= n Dynegy is paying about $10.41 a share for the 850 million outstanding En= ron shares. Dynegy would pay .2685 shares of its stock for each share of En= ron.=20 In addition Dynegy agreed to provide $1.5 billion infusion in cash to help= stabilize its much larger competitor and assume an estimated $15 billion i= n debt.=20 Just Thursday Enron reported that its debt was an estimated $12.9 billion p= ending completion of financial statements dated Sept. 30. A day later the c= ompany's accounting of its debt jumped $2 billion.=20 Dynegy's current shareholders including Chevron Texaco Corp. will end up = owning 64 percent of the new company. Chevron Texaco said it would invest a= n additional $2.5 billion in Dynegy.=20 Enron's stockholders will own about 36 percent of the combined company's st= ock at closing which is anticipated for the third quarter of 2002.=20 In Illinois in addition to Illinois Power Dynegy owns a Chicago area elec= tricity peaker plant and is a partner with Nicor Inc. in Nicor Energy an = unregulated natural gas utility in the Chicago area.=20 Enron's subsidiary Enron Energy Services has a high-profile contract to p= rovide 60 percent of Chicago city government's electricity. It also has con= tracts to provide electricity to Quaker Oats Co. and the University of Chic= ago among others.=20 In addition to Watson other top Dynegy management will remain in place in = the new company. Steve Bergstrom president of Dynegy Inc. and Rob Doty c= hief financial officer of Dynegy Inc. will retain those positions in the c= ombined company. Enron's current president and chief operating officer Gre= g Whalley will become an executive vice president of the new Dynegy. The b= oard of directors of the combined company will be comprised of 14 members. = Dynegy's 11 designees will include three from ChevronTexaco. Enron will hav= e the right to designate a minimum of three board members. Business/Financial Desk Section C Regulators Struggle With a Marketplace Created by Enron By JEFF GERTH with RICHARD A. OPPEL Jr. 11/10/2001 The New York Times=20 Page 1 Column 2 c. 2001 New York Times Company=20 WASHINGTON Nov. 9 -- For years the Enron Corporation used its political m= uscle to build the markets in which it thrived pushing relentlessly on Cap= itol Hill and in bureaucratic backwaters to deregulate the nation's natural= gas and electricity businesses.=20 Its achievement as one Enron executive said today in creating a ''regulat= ory black hole'' fit nicely with what he called the company's ''core manage= ment philosophy which was to be the first mover into a market and to make = money in the initial chaos and lack of transparency.'' Now Wall Street's dissatisfaction with Enron's secretive ways has delivere= d the company into the arms of its much smaller Houston rival Dynegy Inc.= in a deal worth about $9 billion in stock and the assumption of $13 billio= n in debt. The combination of the two companies energy experts and lawmake= rs said today poses a novel set of challenges for regulators still struggl= ing to grasp the complexities of the marketplace that Enron invented.=20 ''We're in a supersonic-speed era of electronic trading with a horse-and-bu= ggy-era regulatory system to protect consumers'' said Representative Edwar= d J. Markey a Massachusetts Democrat who has devised legislation to close = the regulatory gap.=20 Dynegy's acquisition of Enron is expected to be reviewed by numerous state = and federal agencies led by the Justice Department the Federal Trade Comm= ission and the Federal Energy Regulatory Commission.=20 Analysts said today that sharp scrutiny would be given to the combined comp= anies' holdings in California where Dynegy owns generating plants and Enro= n controls a large part of the market for trading natural gas -- the fuel f= or a big share of the state's electric power plants.=20 ''Dynegy would now have a greater ability to take the dominant position in = gas and raise the price of electricity'' said Frank Wolak a professor of = economics at Stanford University.=20 Mr. Wolak a consultant to the Justice Department on a 1999 antitrust case = that led to limits on another merger of electricity and natural gas compani= es in Southern California said he was skeptical that regulators were up to= the task of reviewing today's deal.=20 The transaction ''is something the Department of Justice needs to look at = and they are going to have a hard time looking at'' Mr. Wolak said. ''And = it's beyond the ability of the F.E.R.C. to look at.''=20 Pat Wood -- named chairman of the federal energy commission earlier this ye= ar with the backing of Kenneth L. Lay the chairman of Enron -- acknowledge= d in an interview today that the agency had ''a long way to go'' in matchin= g the sophistication of the companies it regulates.=20 But he said that the commission had made great strides in grappling with th= e new risk management techniques pioneered by Enron Dynegy and other energ= y companies. It is hiring more experts he said adopting more restrictive = rules on how much ''market power'' one party can control and requiring more= disclosure of certain energy transactions.=20 In an interview this evening Charles L. Watson the chairman of Dynegy sa= id he did not believe that regulators reviewing the deal with Enron would r= equire the sale of any assets. ''We haven't really identified any pitfalls = that require any sort of asset divestiture'' he said. ''There's not really= any overlap.''=20 A senior executive at one of Enron's largest energy-trading rivals disagree= d. ''I don't think this deal gets through unscathed'' he said today. ''I'm= sure the Justice Department and the F.T.C. will look closely at the pretty= substantial concentration of market power these companies will have in the= energy-trading area.''=20 Enron is mainly a trader of natural gas and electricity -- indeed the bigg= est player in both those markets -- and it also owns a network of gas pipel= ines. Dynegy processes and sells natural gas and generates and sells electr= icity. Each company owns a local electric utility too: Dynegy owns Illinoi= s Power in Decatur Ill. while Enron owns Portland General Electric in Por= tland Ore. but last month announced plans to sell it to another Oregon ut= ility.=20 For a decade as it transformed itself from a gas pipeline operator into th= e nation's biggest energy trader Enron enjoyed unalloyed lobbying success = in Washington and the enthusiastic backing of Wall Street.=20 In the early months of the Bush administration Mr. Lay -- whose company wa= s one of the biggest financial backers of George W. Bush's presidential cam= paign -- played a prominent and some said unusual role in helping the Whi= te House pick nominees to the federal energy commission. Enron executives m= et with Vice President Dick Cheney whose energy task force backed many of = the deregulatory initiatives pushed by Mr. Lay.=20 Now ''the company has become a pariah'' an Enron executive said today. ''= The Bush administration doesn't want to have anything to do with us.''=20 The problems began with the energy crisis in California where Enron's outs= poken defense of deregulation even more than its electricity trading activ= ities made the company a favorite whipping boy of politicians and consumer= advocates. In the financial markets meanwhile Enron's confusing disclosu= res tolerated when its stock was soaring drew disdain as the calming of t= he energy storms in California and other parts of the country beat the shar= es down starting last spring.=20 ''Enron fell victim to their own inconsistencies on transparency'' Mr. Wol= ak said. As California officials sought to understand why energy prices had= soared out of control he said Enron's ''view was that we want everybody'= s data but if you want ours get a subpoena.''=20 Energy executives and regulators said that sort of arrogance had long marke= d Enron's attitude about government oversight.=20 Electricity sales had for decades been the job of local utility companies = operating as monopolies and selling power at regulated rates within their s= ervice areas. A few entrepreneurs led by Mr. Lay conceived a different mo= del in which power could be sold by generators or middlemen to big corporat= e users or utilities in faraway regions at whatever price the market would= bear.=20 In the early 1990's Congress -- under heavy lobbying by Enron -- passed le= gislation that began to open up electricity sales to marketers. Before long= Enron became one of the first companies to receive government approval to= sell electricity at market rates. The market for interstate sales of natur= al gas had been freed up a few years earlier and critics complained that t= raders like Enron were gleaning their profits by stoking volatility in gas = prices.=20 In the mid-1990's independent gas producers backed legislation in Congress= to allow the creation of a co-operative marketing organization which the= y hoped would have helped stabilize prices.=20 Raymond Plank the chairman of the Apache Corporation a gas producer based= in Houston said that the big gas marketing and trading companies includi= ng Enron successfully lobbied to kill the plan leaving prices as volatile= as ever.=20 ''It was a great concept'' Mr. Plank said. ''We could have headed off the = problems we have today.''=20 Enron's final lobbying success came last year. With a strong push from the = company's lobbyists Congress passed futures trading legislation that exemp= ted Internet energy trading platforms like EnronOnline the industry leader= from oversight by the Commodity Futures Trading Commission. Enron takes t= he other side of trades on its exchange. In traditional markets like the Ne= w York Mercantile Exchange which remain subject to oversight the exchange= acts as a middleman between buyers and sellers.=20 Under Mr. Watson Dynegy has been less of a pathbreaker than Enron and tho= ugh California politicians denounced it too as a profiteer during the ene= rgy crisis most analysts say it has been less aggressive than Enron in bot= h its business practices and its lobbying.=20 Indeed the rival energy-trading executive today predicted ''a huge culture= clash'' as the Houston neighbors merge. ''Blood will flow in Houston over = the integration of the trading operation'' he said.=20 But regulators may find Dynegy easier to deal with.=20 Earlier this year the federal energy commission asked for comments on whet= her it should tighten scrutiny of dealings between natural gas pipelines an= d energy-trading shops owned by the same company.=20 Enron wondered what all the bother was. ''Would stricter rules prevent real= affiliate abuse that current rules do not'' it wrote in a regulatory fili= ng ''or would they instead merely restrict the activities of some of the m= ore successful participants in the marketplace?''=20 Dynegy by contrast painted a grim picture and invited regulators to crack= down. ''Abuses abound'' it said ''because of financial windfalls diffic= ulty of detection lengthy investigations and increased complexity of the m= arket.'' =20 Report on Business: Canadian Dynegy to buy troubled rival Enron Reuter News Agency 11/10/2001 The Globe and Mail=20 Metro B4 All material Copyright (c) Bell Globemedia Publishing Inc. and its licenso= rs. All rights reserved.=20 NEW YORK -- Energy provider Dynegy Inc. agreed yesterday to acquire fast-si= nking rival Enron Corp. for $9.5-billion (U.S.) signalling the demise of a= company that just months ago was one of Wall Street's highest fliers.=20 Terms of the transaction call for Dynegy to swap 0.2685 shares of its own s= tock for each Enron share the companies said. That would value Houston-bas= ed Enron at $10.41 a share including convertible stock a premium of 21 pe= r cent over yesterday's closing price of $8.63. ChevronTexaco Corp. which owns a 27-per-cent stake in Dynegy has agreed t= o infuse $1.5-billion immediately into Enron to support it until the deal c= loses. With its market-making capabilities earnings power and proven stra= tegic approach to wholesale markets Enron is the ideal strategic partner= said Dynegy chairman and chief executive officer Chuck Watson.=20 Enron the United States' largest energy trader has been struggling to ove= rcome a plummeting stock price and credit rating in the past month followin= g disclosures of deals being investigated by the U.S. Securities and Exchan= ge Commission for possible conflict of interest. =20 Financial Desk The Nation Smaller Rival to Acquire Teetering Enron Power: Energy giant tha= t pressed for deregulation in California is on the brink of collapse. NANCY RIVERA BROOKS THOMAS S. MULLIGAN NANCY VOGEL TIMES STAFF WRITERS 11/10/2001 Los Angeles Times=20 Home Edition A-1 Copyright 2001 / The Times Mirror Company=20 Enron Corp. the once-highflying energy giant whose aggressive efforts to p= rofit from California's energy deregulation made it a target of consumer an= d political backlash on Friday agreed to be saved from possible financial = collapse through a proposed acquisition by rival Dynegy Inc.=20 The roughly $7.7-billion deal is a stunning plot twist for Houston-based En= ron which was vilified in California as it was being glorified on Wall Str= eet. In only the last month a series of disturbing financial revelations p= ushed to the edge of ruin this once-powerful company whose top executives = had lectured California on its energy foibles and who influenced the direct= ion of national energy policy. Enron muscled its way to the top of the energy heap using aggressive and i= n the end financially suspect strategies that proved its undoing.=20 Now the company that late last year had a market value of $63 billion is w= orth one-tenth that and has agreed to be swallowed by a cross-town competit= or one-quarter its size. Enron's proud and influential chairman and chief e= xecutive Kenneth L. Lay who became a focus of bitter attacks by Californi= a politicians and regulators would lose his job as would many others at E= nron.=20 Even the name would disappear. The combined company would be called Dynegy = Inc. if the deal receives all the necessary regulatory and shareholder appr= ovals.=20 California officials took no joy in Enron's fate Friday though there was p= erhaps some sense of retribution from its many critics in the state.=20 This is basically a rogue corporation said Sen. Steve Peace (D-El Cajon)= an outspoken critic of Enron for years who dealt with the company as he c= haired the committee that hammered out the legislative portion of Californi= a's landmark electricity deregulation plan in 1996. It has from the beginn= ing been a rogue corporation which answered in its mind to a higher law--a = fundamental belief that there are laws of economics that supersede the law = of the land.=20 A Failed Experiment=20 Steve Maviglio spokesman for Gov. Gray Davis said that although Enron was= never a major force in California's doomed electricity market it was outs= poken in support of deregulation.=20 In a sense their experiment was much like California's experiment--a fail= ure he said.=20 Said Harvey Rosenfield president of the Foundation for Taxpayer and Consum= er Rights in Santa Monica: Nothing could better illustrate the disaster of= deregulation than the fact that one of its biggest proponents which reape= d the reward of deregulation is suffering the consequences.=20 Enron is the world's largest energy trader handling one of four energy dea= ls in the United States through its online trading operation EnronOnline. = Since it reported a surprising third-quarter loss on Oct. 16 partly tied t= o shadowy investment vehicles Enron has endured a huge loss of investor co= nfidence which brought on a massive cash crunch and some shrinkage of its = trading business.=20 Under the deal announced Friday Dynegy invited in two weeks ago after Enr= on fell short in its efforts to line up new financing would immediately he= lp Enron by pouring $1.5 billion in cash into the company. The money would = be provided by ChevronTexaco Corp. the San Francisco oil company that owns= nearly 27% of Dynegy.=20 Enron shareholders would get 0.2685 Dynegy share for each Enron share whic= h values the company at about $7.7 billion based on Friday's stock close. D= ynegy shares surged $2.26 to close at $38.76 per share on the New York Stoc= k Exchange Enron added 22 cents to close at $8.63 per share still off 89%= year to date.=20 If the deal closes in six to nine months as the parties expect Dynegy and= ChevronTexaco would invest $1 billion additionally in the combined company= .=20 This is just a financial bonanza really for both companies said Charles = L. Watson Dynegy chairman and chief executive who will head the combined = company. Watson said the merger would immediately add to Dynegy's earnings.= =20 Even so the repercussions of Enron's fall from grace could be far-reaching= . Coming on the heels of California's energy crisis Enron's troubles may s= low the country's march toward energy deregulation which Lay and Enron cha= mpioned for years as a potential boon to consumers and the economy in gener= al.=20 But the deal announced Friday will prevent an even worse outcome energy ex= perts said: the threatened collapse of Enron which would clog up for a tim= e the business of buying and selling electricity natural gas and oil. That= could interfere with delivery of energy around the country they said.=20 This is an encouraging development for the energy industry said Stephen = Baum chairman of Sempra Energy the San Diego-based parent of Southern Cal= ifornia Gas and San Diego Gas & Electric. The Enron-Dynegy combination wil= l create a credit-worthy counter-party which will help preserve order in th= e marketplace. It also will reinforce confidence in the energy trading busi= ness going forward.=20 But some in the industry are less pleased.=20 Raymond Plank chairman of Apache Corp. a Houston-based natural gas explor= ation and development firm said he is considering a motion to the Federal = Trade Commission against the proposed merger.=20 There are issues of concentration in a combination of the largest energy t= rader Enron and the fifth-largest Dynegy Plank said. California shoul= d be particularly concerned because Dynegy owns power plants there and Enro= n has pipelines and other interests.=20 Troubles Mount as Stock Plunges=20 The swagger that was Enron is long gone. Consider:=20 * Enron's brash chief executive Jeffrey K. Skilling touted only months ag= o as one of the young stars of American business abruptly resigned in Augu= st citing personal reasons. Enron's stock already had fallen from its high= of nearly $90 per share as investments in water and telecommunications tur= ned sour a fact that contributed to Skilling's departure.=20 * The Securities and Exchange Commission has launched an investigation of E= nron's controversial dealings with a number of limited partnerships some o= rganized and run by Enron managers including Enron Chief Financial Officer= Andrew S. Fastow who was ousted last month.=20 * In an extraordinary confession Thursday Enron announced that it had over= stated profit by $586 million or 20% during the last five years. The earl= ier financial statements reported to Wall Street and the investing public = Enron said should not be relied upon.=20 * The company also fired its treasurer and a corporate lawyer both of whom= it said were investors in one of the limited partnerships. Yet some analys= ts questioned whether even in its admission of accounting trickery Enron = wasn't still holding something back.=20 * Credit-rating agencies which already have downgraded Enron's bonds to ba= rely above junk status continue to pore over Enron's books. Analysts hav= e said a further downgrade to the level of junk or below investment grade= could precipitate a crisis akin to a run on a bank and threaten Enron's su= rvival while the merger is pending.=20 With its stock crumbling and trading partners leery about its ability to pa= y its debts Enron was forced to walk hat in hand down Houston's Energy All= ey to negotiate a saving takeover by Dynegy the rival once jokingly dismis= sed as Enron Lite.=20 In the trading markets where Enron still holds a leading but increasingly v= ulnerable position other players already are stepping up to grab a bigger = share of the business. Even if Enron's trading operation survives more or l= ess intact under the wing of a Dynegy or some other company experts said = it may never regain its former level of dominance.=20 Enron has been a very innovative shop willing to spend considerably to es= tablish new markets said analyst Andre Meade of Commerzbank Securities in= New York. If that culture is not kept everyone loses.=20 Skilling and mentor Lay had worked for a decade to create both a new kind o= f company and a new set of markets for it to play.=20 In large part they succeeded. Enron transformed itself from a traditional = gas pipeline company into a high-tech global trader of everything from elec= tricity to pollution credits to aluminum. The company's overarching strateg= y was to pare its physical assets to the minimum to get the maximum profit = bang from its intellectual capital: the ranks of MBAs and PhDs that filled = its Houston trading floor.=20 Rather than maintain its own expensive gas fields and power plants--which i= t relegated to stodgy utilities and oil companies--Enron would handle every= thing by contract relying on a network of suppliers to obtain store and d= eliver the goods while the company focused on squeezing out the best price.= =20 Dynegy in contrast has invested in such energy assets including three po= wer plants in Southern California. It uses those assets to back its trading= operation which is much smaller than Enron's.=20 Enron pulled off a migration from the dirty extreme of the oil patch the= asset-intensive domain of drillers and explorers to the clean end wher= e all the deals are done on a computer screen. It also was a migration from= lower profit margins and lower risk to high margins and high risk.=20 Shannon B. Burchett chief executive of Risk Limited Corp. an energy-orien= ted strategic-management consultancy in Dallas compared Enron to the inves= tment bank Salomon Bros. where he used to work in the former PhiBro commod= ities unit.=20 Enron Burchett said embodies a Wall Street culture that happens to be in= Houston.=20 Wall Street certainly got it or thought it did.=20 Accounting Rules Pushed to the Limit=20 At Enron's zenith last year when its stock peaked near $90 a share and it = was pushing into esoteric markets for weather derivatives and fiber-optic b= andwidth Enron seemed to be a one-company wave of the future.=20 Enron's aggressiveness brainpower and willingness to back radical new idea= s with serious capital helped it acquire an aura that in some ways was its = undoing analysts said.=20 Investors accorded Enron's stock a price-to-earnings valuation that was con= sistently higher than those of its peers reflecting the view that its cutt= ing-edge business model could consistently deliver faster-growing profit th= an its competitors.=20 To keep profits arcing ever upward to justify the outsize valuation Enron = began pushing the accounting rules as hard as it pushed competitors in the = trading arena. It acknowledged as much in its statement Thursday conceding= that the operations of three of the limited partnerships should have been = consolidated with Enron's own financial statements instead of being held se= parate.=20 By raising capital and running deals through the limited partnerships Enro= n could keep large amounts of debt and certain volatile assets off its own = balance sheet while simultaneously booking profit from the partnerships' t= ransactions analyst Meade said.=20 Deals Backed by Costly Guarantees=20 One risky aspect of some of Enron's deals through the partnerships was what= Meade called a double-trigger guarantee under which Enron would pledge = a cash payout if either its bond rating fell below investment grade or its = stock declined below a certain price.=20 The guarantees must have seemed a cheap way to sweeten a deal when Enron's = stock was flying high but they came back to haunt the company later when = it had to pay cash to make good on its obligations Meade said.=20 Other energy-trading companies use similar devices but Enron carried it to= an extreme and disclosed too little detail to make the process understanda= ble to investors he said.=20 Enron's magic like that of the Internet-stock phenomenon had never been e= asy to understand in the first place. The company had a reputation among an= alysts for providing scanty financial detail and hard-to-grasp explanations= of some of its dealings.=20 But as long as the reported profit kept climbing Enron kept getting the be= nefit of the doubt.=20 M. Carol Coale a respected Houston-based analyst for Prudential Securities= ruefully recalled a time last winter when she told Enron she could find = no positive catalyst for the stock and was considering downgrading her inv= estment opinion.=20 Skilling telephoned Coale and asked her to hold off promising her that the= re was unspecified good news on the horizon that would justify her faith.= =20 I believed him Coale said last week in an interview in Houston. She held= her rating steady at that time but has since downgraded Enron to an outrig= ht sell.=20 Instead of Skilling's promised good news questions mounted during the spri= ng and Enron's stock continued a steady decline. Coale and other analysts = were troubled that a large proportion of Enron's earnings seemed to come no= t from its core trading operations but from unusual transactions involving = the company's own stock or that of affiliates.=20 In California Enron played a key role as chief cheerleader for electricity= deregulation and a key energy middleman in the state. As wholesale electri= city prices soared and the state plunged into its energy crisis late last y= ear Enron and other out-of-state electricity generators and traders became= favorite targets of California politicians and regulators who said the co= mpanies were manipulating the market and charging too much for power.=20 But significantly California was not a directly successful territory for E= nron.=20 Markets in water did not develop as Enron subsidiary Azurix envisioned. And= Enron's plans for selling electricity to retail customers were deferred ev= en as deregulation took effect in 1998 because the state's deregulation for= mulas didn't allow room for retail competition.=20 Lay complained about California frequently and met with the governor to try= to influence the state's moves to repair its energy problems. In an interv= iew in his Houston office in January--overlooking Enron's new headquarters = building which is still under construction as the company's name disappear= s--Lay said he and other Enron executives had objected to the way Californi= a regulation was set up.=20 We objected more vehemently than anyone. We opposed the concept of the poo= l he said referring to the now-defunct California Power Exchange in whi= ch most of the state's power was bought and sold in an hourly market. What= competitive market in the world has a pool? We don't buy our groceries thr= ough a centralized PX.=20 Enron also backed away from building a small power plant in California last= year when the state imposed price caps.=20 One of the loudest complaints by Davis and other California officials was t= hat generators of electricity were playing games to get higher prices.=20 They criticized Enron severely too even though it was not a major generat= or because the level of its worldwide trading operations--buying and selli= ng contracts worth billions of dollars in electric power every day--gave En= ron immense sway over pricing and supplies of electricity. They also believ= e that Enron and Lay helped play a part in the reluctance of federal regula= tors for several months to place restraints on the California marketplace.= =20 CEO's Future Role Uncertain=20 Millions of people in California businesses lost money because this rogue = company succeeded in controlling the government of the United States said= state Sen. Peace one of the architects of the state's deregulation plan.= =20 Ken Lay was a mystic Peace said. Whatever he said had to make sense bec= ause he was Ken Lay. It was hero worship.=20 Many of the people working as economists at the Federal Energy Regulatory = Commission worshiped Ken Lay. As a consequence the things Enron promoted a= nd pushed for were never challenged intellectually and otherwise.=20 Lay who has been asked to sit on the board of the combined company said F= riday that he had not yet decided whether to accept.=20 He described his time building Enron as a very long ride. It's been a very= good ride for the most part.=20 I have to say the last few weeks have not been very much fun he said.=20 *=20 Rivera Brooks reported from Los Angeles and Mulligan from Houston and New Y= ork. Times staff writer James Flanigan in Los Angeles contributed to this r= eport.=20 *=20 RELATED STORY=20 Fallen CEO: Enron's Lay is a brilliant man defeated by arrogance associate= s say. A22=20 RELATED STORY=20 Energy crisis: Power firms have seen their fortunes dim in recent months. S= unday Business C1 PHOTO: Dynegy Chairman and Chief Executive Charles L. Watson right announ= ces the merger with Enron Chairman Kenneth L. Lay. PHOTOGRAPHER: Associ= ated Press PHOTO: This is just a financial bonanza really for both compan= ies says Charles L. Watson Dynegy chairman and chief executive. PHOTO= GRAPHER: Associated Press Dynegy to buy Enron Associated Press 11/10/2001 Deseret News=20 D07 Copyright (c) 2001 Deseret News Publishing Co.=20 HOUSTON -- Energy marketer Dynegy Inc. announced Friday that it will buy it= s much larger rival the once mighty but now troubled Enron Corp. for $8 b= illion in stock. Dynegy also will assume a hefty $15 billion in Enron debt.= =20 The announcement came after Enron's stock price plummeted about 80 percent = over the past three weeks because of concerns that the company wasn't revea= ling serious financial problems to shareholders. Under the deal ChevronTexaco Corp. which owns more than a quarter of Dyne= gy would quickly provide about $1.5 billion. ChevronTexaco also would cont= ribute an additional $1 billion upon completion of the deal the companies = said.=20 With its market-making capabilities earnings power and proven strategic a= pproach to wholesale markets Enron is the ideal strategic partner for Dyne= gy Dynegy chairman and chief executive officer Chuck Watson said in annou= ncing the purchase.=20 Watson made it clear that he would not tolerate the sort of financial pract= ices that prompted explosive disclosures by Enron this week -- including an= admission that more than half a billion dollars in debt had been kept off = the company's books.=20 As a combined company we will focus on leveraging our core skill sets and= as always we will keep a strong balance sheet and straightforward financ= ial structure as key priorities Watson said.=20 Enron is the country's top buyer and seller of natural gas and the No. 1 w= holesale power marketer. The company operates a 25000-mile gas pipeline sy= stem and also markets and trades metals paper coal chemicals and fiber-= optic bandwidth.=20 Dynegy controls nearly 15000 megawatts of power generating capacity throug= h investments in power projects and sells the energy in wholesale markets = and through utilities.=20 At a news conference Watson said company officials who negotiated the deal= came away convinced that Enron was worth buying despite its recent trouble= s.=20 We looked under the hood . . . it's just as strong as it ever was Watson= said.=20 Under the terms of the deal Enron shareholders will receive .2685 Dynegy s= hare for each share of Enron common stock valuing each Enron share at $10.= 41. Enron has about 775 million common shares said spokeswoman Karen Denne= .=20 That represents a 21 percent premium above Enron's closing price of $8.63 F= riday on the New York Stock Exchange -- but still just a fraction of their = 52-week high of $84.87. Dynegy's shares climbed $2.26 or 6 percent to clo= se at $38.76 on the NYSE.=20 In after hours trading on the NYSE Enron shares shot up 15.6 percent or $= 1.35 to $9.98. Dynegy shares were unchanged.=20 Dynegy's stockholders will own approximately 64 percent of the new company= with Enron's stockholders holding the remainder.=20 The boards of both companies have unanimously approved the transaction whi= ch is expected to close next summer. The deal is expected to save the combi= ned company between $400 million and $500 million annually because of conti= nued elimination of non-core Enron holdings and lower operating costs.=20 Watson will remain as chairman and chief executive of the combined company= which will retain the Dynegy Inc. name. Steve Bergstrom will remain as pre= sident of Dynegy.=20 Enron chairman and chief executive Kenneth L. Lay will no longer have a rol= e in day-to-day management of the company but has been offered a seat on t= he combined company's board and will help shepherd the merger through.=20 I am personally committed to working with Chuck Watson Steve Bergstrom an= d their colleagues in the months ahead to accomplish the merger and to buil= d a solid foundation for future value creation Lay said.=20 Dynegy said that Greg Whalley the current president and chief operating of= ficer of Enron will become an executive vice president of the new Dynegy. = He said the merger sets the best course for Enron.=20 Few of the options we considered for our core business going forward provi= ded us with the earning potential and immediate synergies that a merger wit= h Dynegy could deliver Whalley said. Together with Enron's recently anno= unced bank commitments this cash infusion gives Enron immediate liquidity= which we believe will enable the company to maintain its investment grade = credit rating.=20 The merger was announced a day after Enron acknowledged it overstated earni= ngs by about 20 percent over the past four years and kept large amounts of = debt off its balance sheets through business partnerships now under investi= gation by the Securities and Exchange Commission.=20 Analysts said the merger rescues Enron but leaves Dynegy in uncharted terr= itory -- with the outcome of the SEC investigation completely unknown. The= re is still a shroud hanging over Enron that now moves over to Dynegy sai= d Carol Coale an analyst with Prudential Securities. Business Dynegy Enron OK $25 billion deal New company would rank among largest Melita Marie Garza Tribune staff reporter 11/10/2001 Chicago Tribune=20 North Final N 1 (Copyright 2001 by the Chicago Tribune)=20 Enron Corp. the nation's biggest power trader was taken over by its small= er more conservative rival Dynegy Inc. in a merger deal valued at nearly= $25 billion company officials announced Friday.=20 The combined company would retain the Dynegy name and would be headed by Ch= uck Watson Dynegy's chairman and chief executive. If it wins regulatory an= d shareholder approval the deal would propel Dynegy the sixth-largest U.S= . power trader to the No. 1 position with more than 30 percent of the mar= ket. The Houston-based rivals are new-breed energy companies formed to capitali= ze on wholesale power marketing and trading with Dynegy emphasizing its ow= n power generation capabilities.=20 Enron meanwhile has been laid low in recent weeks by soured transactions = with energy partnerships run by one of its former executives and by a serie= s of revelations about questionable accounting practices. Enron this week w= as forced to restate its earnings over the past five years--revising them d= ownward by 20 percent or $586 million --and has seen its stock price plung= e more than 80 percent in the past three weeks.=20 Both Enron and Dynegy have extensive business dealings in Illinois one of = the first states to begin deregulating its electric power industry among o= ther things Dynegy owns Illinois Power a downstate utility.=20 The new Dynegy would be one of the largest companies in the world with rev= enues exceeding $200 billion and assets of roughly $90 billion company off= icials said. By comparison ExxonMobil Corp. the nation's largest company= reported revenues of $232.7 billion in 2000.=20 We needed to do something to strengthen our balance sheet and get the inve= stor community focused on the core energy business said Kenneth Lay Enro= n's chairman and CEO. We looked at several alternatives this was in the b= est interests of our employees and shareholders.=20 Lay said he would not have a role in running the new company but was consid= ering a request to serve on the newly combined board.=20 Watson said the merger agreement included escape clauses for Dynegy but I= wouldn't be standing here if I expected to see that [used]. I really belie= ve the value degradation in Enron had nothing to do with their core busines= s. We looked under the hood it is just as strong as we thought it was.=20 Still Watson acknowledged the possibility that more problems may surface a= t Enron. I don't think anybody can absolutely unequivocally say there's no= thing [more] there he said.=20 Dynegy's stock price closed higher Friday rising $2.26 or 6.2 percent to= $38.76. Enron's stock was up 22 cents or 2.6 percent at $8.63 a share.= =20 Through the third quarter of 2001 the companies together have natural gas = sales of about 40 billion cubic feet per day and power sales exceeding 500 = million megawatt hours. In addition the new Dynegy's delivery network woul= d include more than 22000 megawatts of generating capacity and 25000 mile= s of interstate pipelines.=20 In Enron Dynegy is taking on a company saddled with a heavy debt load a c= redit rating that has been downgraded to near junk bond status and which is= under the cloud of a Securities and Exchange Commission investigation.=20 Big premium=20 Under the stock-for-stock-swap portion of the deal valued at $8.846 billio= n Dynegy is paying the equivalent of $10.41 a share for the 850 million ou= tstanding Enron shares a 24 percent premium. Dynegy would pay .2685 shares= of its stock for each share of Enron.=20 In addition Dynegy agreed to provide a $1.5 billion cash infusion to help = stabilize its larger competitor and to assume an estimated $15 billion in d= ebt.=20 On Thursday Enron reported that its debt was an estimated $12.9 billion pen= ding completion of financial statements dated Sept. 30. A day later the com= pany's accounting of its debt jumped $2 billion.=20 Dynegy's current shareholders including Chevron Texaco Corp. will end up = owning 64 percent of the new company. Chevron Texaco said it would invest a= n additional $2.5 billion in Dynegy.=20 Enron's stockholders would own about 36 percent of the combined company's s= tock at closing which is anticipated in the third quarter of 2002.=20 Chicago-area operations=20 In Illinois in addition to Illinois Power Dynegy owns a Chicago- area ele= ctricity peaker plant and is a partner with Nicor Inc. in Nicor Energy an = unregulated natural gas utility in the Chicago market.=20 Enron's subsidiary Enron Energy Services has a high-profile contract to p= rovide 60 percent of Chicago's city government's electricity. It also has c= ontracts to provide power to Quaker Oats Co. and the University of Chicago= among others.=20 In addition to Watson other top Dynegy management would remain in place in= the new company. President Steve Bergstrom and Rob Doty chief financial o= fficer would retain those positions in the combined company. Enron's presi= dent and chief operating officer Greg Whalley would become an executive v= ice president.=20 The board of directors of the combined company would have 14 members. Dyneg= y's 11 designees would include three from ChevronTexaco. Enron would have t= he right to designate a minimum of three board members. Financial Enron Accepts $8 Billion Buyout Offer From Dynegy Energy Giant Was Forced = to Negotiating Table After Disclosing That It Had Overstated Earnings Peter Behr Washington Post Staff Writer 11/10/2001 The Washington Post=20 FINAL E01 Copyright 2001 The Washington Post Co. All Rights Reserved=20 Embattled Enron Corp. yesterday accepted a buyout offer valued at about $8 = billion from crosstown rival Dynegy Inc. If the deal is completed it would= end Houston-based Enron's reign as the leader in the huge energy trading m= arkets that set the prices of power and natural gas in the nation.=20 Its cash dwindling and its credit rating hammered Enron was forced to the = negotiating table after its recent disclosures that its obligations to a co= mplex web of partnerships involving company officials had caused the tradin= g powerhouse to overstate its earnings and obscure its total debt obligatio= ns. Four top Enron officials have resigned or been replaced since July and= once Dynegy takes control Enron's chairman and chief executive Kenneth L= ay will also leave the company. Lay said yesterday that he had not decided= whether to accept Dynegy's offer to serve on the combined company's board. It's been a good ride for a long time Lay said in a conference call last= night. The last three weeks haven't been a whole lot of fun.=20 The final deal was announced after the close of stock trading. Enron's shar= es -- which had fallen from $33 to $8 after the disclosures -- ended the da= y slightly higher at $8.63. Dynegy's stock closed at $38.76 up $2.26.=20 Dynegy offered all stock for the Enron shares so the total value of the de= al will fluctuate with Dynegy's stock price. Dynegy also said it would assu= me about $13 billion in Enron debt bringing the total value of the transac= tion to around $21 billion.=20 Dynegy's rescue of Enron will begin with an immediate cash infusion of $1.5= billion which will be supplied by ChevronTexaco Corp. a major Dynegy sto= ckholder. ChevronTexaco will invest another $1 billion in Dynegy after the = acquisition has passed regulatory review and is completed which executives= said they expect will take six to nine months as Enron tries to unscramble= the complex partnerships that are now under investigation by the Securitie= s and Exchange Commission.=20 The takeover agreement gives Dynegy an escape clause permitting it to cance= l the purchase if Enron winds up with heavy regulatory fines or legal judgm= ents from shareholder suits tied to its handling of the partnerships.=20 Chuck Watson Dynegy's chairman and chief executive said in the conference= call that a close scrutiny over the past two weeks of Enron's financial co= ndition convinced him that the company's trading and pipeline businesses we= re solid. We looked under the hood and guess what? It looked just as stro= ng as we thought it was. Watson said he did not think more damaging disclo= sures were forthcoming from Enron.=20 Until the partnership mess Enron was the nation's dominant energy trader = and it had front-door political connections to the White House. Lay its lo= ngtime chairman raised more then $100000 for the presidential election ca= mpaign of his friend George W. Bush. Enron rode the growth of energy tradin= g markets beginning in the mid-1990s as first natural gas and then electr= ic power sales were deregulated at the wholesale level. Its revenues leaped= from $9.2 billion in 1995 to $100.8 billion last year.=20 During those heady times the Houston company could choose which questions = to answer about its dealings with related partnerships and its Byzantine bo= okkeeping.=20 It was always very difficult to get information said Louis B. Gagliardi= an analyst with John S. Herold Inc. They would always rebuff you.=20 Until this fall the muscular company seemed too big to stumble said inves= tment manager David Coxe with Harris Insight Equity Fund in Chicago.=20 Coxe bought 78000 shares of Enron at $40 a share in August after wrestlin= g with the decision for months he said. Then Jeffrey Skilling Enron's chi= ef executive and strategic mastermind unexpectedly resigned. The stock wh= ich had been as high as $90 in August 2000 pitched downward.=20 Enron seemed so indispensable to the nation's energy markets that I though= t it inconceivable it could implode Coxe said. That's how I got sucked i= n.=20 Enron's fall is classic hubris Coxe said: a Greek tragedy striking someo= ne who chose to defy the gods -- in this case the rules of the system.= =20 Among the rules that Enron now acknowledges it didn't follow were the accou= nting standards that applied to the complex partnerships it created. The pu= rpose of the partnerships Enron said was to reduce the risks of investmen= ts in Internet transmission systems and to sell power plants and other asse= ts it no longer wanted.=20 The accounting errors were described in a 20-page SEC filing Enron made Thu= rsday. The errors resulted in a $1.2 billion reduction in the value of shar= eholders' equity. The company also said it had overstated its earnings by $= 586 million since 1997.=20 Enron created partnerships that would buy major assets -- such as a power p= lant -- that Enron wanted to sell or in other cases assets such as fiber-= optic cable networks that Enron intended to run but did not want to have on= its balance sheet.=20 The partnerships had outside investors but the general partner of two of t= hem was Enron's own chief financial officer Andrew Fastow. He earned $30 m= illion in fees from managing two of the largest partnerships according to = the SEC document.=20 Enron added to the capital of these partnerships by pledging its stock or = securities convertible into stock. Some of those stock transactions should = have been counted as loans resulting in the $1.2 billion drop in sharehold= er equity Enron now says.=20 Investors are asking why Enron's auditor Arthur Andersen LLP did not insi= st that these transactions be handled that way in the first place. Enron's = SEC filing mentions but does not explain some proposed audit adjustments = over the past four years that were overruled.=20 Even though as Enron now acknowledges it created an information barrier = masking critical information and violating standard accounting rules many = financial analysts who were recommending the stock to investors were not pu= shing hard enough to punch through that barrier some analysts acknowledge.= =20 It was so complicated that everybody was afraid to raise their hands and s= ay 'I don't understand it' Gagliardi said.=20 The questions are now coming from a new committee reporting to Enron's boa= rd that will investigate how the company's financial reporting was handled= from the SEC and eventually from teams of lawyers representing aggrieve= d shareholders.=20 Lay indicated yesterday he had not been aware until recently that Enron emp= loyees other than Fastow had profited from the partnership activity. Enron = directors had approved Fastow's management of the partnerships but Fastow = quit the partnerships in July and was then replaced as chief financial offi= cer.=20 Enron this week fired Treasurer Ben Glisan and Kristina Mourdant an Enron = division lawyer who it said had invested in partnerships that were tied to= one of the major partnerships headed by Fastow. The Enron report to the SE= C describes a central role in these transactions played by Michael J. Koppe= r an associate of Fastow who left Enron in July to take over Fastow's fina= ncial interests in the partnership the company said.=20 Enron will hold a conference call next week to discuss what it has uncovere= d about outside partnership investments. http://www.washingtonpost.com Financial Desk The Nation NEWS ANALYSIS A Visionary Fallen From Grace JAMES FLANIGAN TIMES STAFF WRITER 11/10/2001 Los Angeles Times=20 Home Edition A-22 Copyright 2001 / The Times Mirror Company=20 A year ago Enron Corp. Chairman Kenneth L. Lay was on top of the energy wo= rld. As a leading fund-raiser contributor and energy advisor to the Bush a= dministration he played a key role in shaping the new president's energy p= olicy. As head of the world's largest energy trading company he had an eno= rmous influence on the price of energy in California and across the nation.= Enron's highflying stock helped him cash out $123 million in stock options= last year alone.=20 On Friday with Enron being saved from financial collapse by agreeing to be= acquired by rival Dynegy Inc. Lay's career and reputation are in shambles= . Under the merger he will be stripped of a management job. His integrity = is tattered with Enron's controversial financial dealings under federal in= vestigation. Enron investors and employees are chagrined and outraged becau= se the company's stock lost 80% of its value in recent weeks. The rapid rise and fall of Lay 58 is a story of how a brilliant man with = innovative ideas and a grand scheme to transform the world's energy markets= was overcome with arrogance associates and critics say. Under Lay Enron = stretched the limits of the law and took risks that nearly caused its finan= cial collapse they say. That in turn could have resulted in a widespread d= isruption in energy supplies.=20 Enron's behavior casts doubt on the integrity of our financial markets. It= is a very serious matter said Edward R. Muller an energy investor and f= ormer president of Edison International's Mission Energy subsidiary.=20 Nobody denies he's smart but it's a question of integrity said Raymond = Plank chief executive of Apache Corp. and an associate of Lay's in Houston= 's vibrant oil and gas industry.=20 Lay and longtime partner Jeffrey K. Skilling who served briefly as Enron's= chief executive before resigning abruptly in August rose to prominence in= the last decade through the use of innovative financial techniques designe= d to exploit a reduction in government regulation of energy.=20 Lay transformed world energy industries through his vision of new market-d= riven ways to finance natural gas and electricity production and transmissi= on.=20 The financial markets that Lay and his Enron associates created had an enor= mous effect on California's disastrous experiment in electricity deregulati= on. Critics say his influence was excessive and misguided.=20 Ken Lay was a mystic said state Sen. Steve Peace (D-El Cajon) an outspo= ken critic of Enron. Whatever he said had to make sense because he was Ken= Lay. It was hero worship. Many of the people working as economists at the = Federal Energy Regulatory Commission worshiped Ken Lay. As a consequence t= he things Enron promoted and pushed for were never challenged intellectual= ly and otherwise.=20 Lay who has a doctorate in economics had modest beginnings as the son of = a poor country preacher who did farm labor on the side to raise money for h= is children's education. In the Navy in the late 1960s Lay was assigned to= the Defense Department because of his economic acumen. He allocated Penta= gon dollars more efficiently in purchasing for the military said Mark Pal= mer chief spokesman for Enron.=20 Lay worked for Exxon and other energy firms in the 1970s amid soaring oil = prices gasoline shortages and still-regulated natural gas. He headed Houst= on Natural Gas a predecessor firm of Enron in the 1980s as falling prices= for oil and natural gas presented grave problems for Houston's energy indu= stries.=20 When the federal government allowed pipelines to carry the gas of any produ= cer Lay turned Enron into a foremost firm in the new deregulated industry= . Still Enron almost went bankrupt in the late 1980s with natural gas in = oversupply and prices falling.=20 It was then that Skilling a McKinsey & Co. consultant suggested to Lay th= at the firm trade long-term contracts for gas promising to deliver the com= modity to customers at fixed prices buying and selling contracts of varyin= g maturities the way mortgage companies deal with mortgages in Skilling'= s words.=20 The innovation started Enron's rapid growth and rise to prominence as the e= mbodiment of a new kind of energy company. In the 1990s the federal govern= ment called for deregulation of electricity.=20 Lay saw opportunities. He and Skilling created a market for contracts in el= ectricity in 1994 and by 1996 Enron was the world's leading firm doing suc= h business.=20 Lay's central idea was that by creating a market of millions of buyers and= sellers constantly taking positions power supplies could be allocated eff= iciently and prices lowered. Lay liked to lecture in an avuncular way abo= ut the new economics of energy trading.=20 Technology is changing and there's a lot more value in flexibility and op= tionality. Just about in every industry you can make them a lot more effic= ient when you have more optionality Lay said in an interview in January i= n his Houston offices overlooking the sparkling new Enron headquarters buil= ding which still is under construction.=20 As Enron's business profile grew so did Lay's political influence. He serv= ed as an energy advisor to both Bush administrations and headed Texas fund-= raising for George W. Bush's presidential campaign. Lay raised $100000 for= the Bush-Cheney campaign and with his wife Linda Lay contributed anothe= r $100000 to help finance the inaugural gala this year.=20 As the administration prepared its energy plan Lay gained national stature= as a preacher of market economics applied to electricity.=20 There's no way you can centralize a command-control environment and make t= he best decisions to have an efficient low-cost reliable electricity indu= stry Lay said.=20 His sermon was intended for California which suffered sharply higher price= s for electricity last winter to the point that private utilities fell int= o or near bankruptcy and the state budget incurred a cost of $12 billion w= hich Sacramento now is trying to recover through the sale of revenue bonds.= =20 Because Enron trading billions of dollars a day in power contracts worldwi= de had an immense effect on electricity prices Lay's preaching grated on = state officials. Driven to intemperance state Atty. Gen. Bill Lockyer said= in May that he'd like to escort Lay to a prison cell.=20 But more than economic philosophy was behind Lay's goading of California. T= he state's debacle gave energy deregulation a bad name and chilled deregula= tion moves by many other states.=20 That in turn reduced growth prospects for Enron. The promise of continued g= rowth in deregulation had helped make Enron a Wall Street darling. Its stoc= k price at one point nearly $90 a share versus less than $10 now pushed u= p the value of Enron stock options held by almost all employees but owned = in great amounts by Lay Skilling and other company officers.=20 Lay cashed in last year converting options for a gain of $123 million whi= le Skilling gained $62 million by converting his options. As they cashed in= Enron was encountering other problems. Attempts to set up trading markets= in water and broadband Internet transmission were floundering. A major pow= er plant venture in India was in grave economic and political trouble.=20 But in the last month Enron revealed that it had reduced the firm's equity= value by more than $1 billion due to write-offs in a hitherto hidden partn= ership.=20 Revelations then cascaded. The firm had 33 such partnerships which had bil= lions of dollars in debt for which Enron was liable. Lay and Skilling piled= up debt in hidden partnerships analysts explain because the firm needed = huge amounts of debt to support its greatly expanding levels of trading in = electricity natural gas and other commodities.=20 But the firm could not support such debt and still retain its credit rating= growth rate and high stock price. After weeks of gamely protesting that t= he business was sound and that he personally took offense at investment ana= lysts' suggestions of impropriety Lay fell silent.=20 *=20 Times staff writer Nancy Vogel in Sacramento contributed to this report. PHOTO: With the takeover of his once-soaring firm Enron chief Kenneth Lay'= s career is in tatters. PHOTOGRAPHER: Reuters Business Struggling Enron agrees to takeover by smaller rival Dynegy One-time energy= giant and Southern Co. often scrapped over access to markets MATTHEW C. QUINN STAFF 11/10/2001 The Atlanta Journal - Constitution=20 Home F.1 (Copyright The Atlanta Journal and Constitution - 2001)=20 Energy giant Enron Corp. capitulated to a mounting financial crisis Friday = and agreed to be taken over by a smaller competitor. But Atlanta-based Sout= hern Co. was not gloating at the misfortunes of its vanquished rival.=20 It wasn't easy. For years the two companies were locked in a struggle over access to elect= ricity markets. Enron pushed for competition and deregulation while Southe= rn resisted to protect its dominance in the fast-growing Southeast.=20 Sometimes the battle got nasty.=20 If Thomas Alva Edison came back from the dead and called Southern Co. to g= et some electricity he'd find that nothing has changed Jeffrey Skilling= then Enron's president said in November 1997. These guys are living in a= n industry that was created 100 years ago and they want to keep it that wa= y.=20 Fast forward four years.=20 Southern Co. has split itself in two retaining its regulated Southeastern = utility business and spinning off its own unregulated power generation and = energy trading arm Mirant Corp. Southern reported net income of $1 billion= for the first nine months of this year and Mirant's profits were $538 mil= lion. Southern's shares are up 19 percent this year. Mirant's have declined= 7 percent.=20 Enron on the other hand lost 90 percent of its stock market value this ye= ar alone and this past week restated earnings for the past 4 1/2 years red= ucing profit by more than $500 million.=20 Skilling was named chief executive in February but abruptly resigned after = six months. This week he was subpoenaed to testify in a Securities and Exch= ange Commission probe of the Texas company's questionable relationships wit= h outside partnerships.=20 Houston-based Dynegy Corp. a crosstown rival said late Friday it will buy= Enron --- once valued at $69 billion --- for $7.8 billion in stock.=20 Enron will be wrapped into a new Dynegy managed by top Dynegy executives.= That suggested even the name Enron --- synonymous with innovation in recen= t years in the utility industry --- will go by the wayside.=20 Southern spokesman Todd Terrell declined to comment earlier in the day on E= nron's problems.=20 A.W. Bill' Dahlberg who retired as Southern's chief executive in April an= d is now Mirant's board chairman said he regretted Enron's troubles.=20 They were a rival and got credit for doing a lot of innovative things in o= ur industry Dahlberg said. You always like to win the competition becaus= e you do well not because somebody else does badly.=20 Enron was a pioneer in the wholesale trading of electricity and natural gas= and has been widely imitated from Mirant's sprawling energy trading floo= r at Perimeter Center to an energy management subsidiary launched this year= by AGL Resources parent of Atlanta Gas Light Co.=20 As the largest U.S. energy trading firm Enron's tentacles run deep. It was= active at the Public Service Commission in 1998 when rules for Georgia's n= atural gas deregulation were written only to opt out of becoming a gas mar= keter itself. But New Power Co. which is 45 percent owned by Enron became= Georgia's newest marketer this year.=20 A Dynegy-Enron combination will create a $200 billion-a-year enterprise tha= t will dwarf Mirant in both the electricity and natural gas sectors.=20 Dynegy and Mirant are considered more stable than was Enron because they re= ly more on their own power plants for electricity and less on trading for p= ower produced by others. And Dynegy is no stranger to Georgia. It is a mino= rity partner with AGL Resources in Georgia Natural Gas Services the state'= s No. 1 gas marketer.=20 But the partners have been at odds for months.=20 AGL sued Dynegy in July alleging it earned millions of dollars at the exp= ense of the marketing company that it supplies with natural gas.=20 Dynegy's counterclaim accused AGL among other things of scheming to shift= the partnership's gas supply deal to AGL's own subsidiary Houston-based S= equent Energy Management.=20 Dynegy in May started up a 500 megawatt natural gas-fired power plant in He= ard County despite opposition from nearby residents. Dynegy is also a major= buyer of electricity produced at Southern Co.'s new power plant in Jackson= County.=20 They're a big customer a partner and a competitor --- all of those things= said Southern's Terrell. Graphic POWER POWERHOUSE A merger of Enron Corp. and Dynegy Corp. would cre= ate an energy powerhouse. Atlanta-based Mirant Corp. would be far behind b= ased on second-quarter figures. Top 20 North American Gas Marketers 2nd qu= arter 2001 Billions of cubic feet a day 1..= .Enron...................... 24.6 13.2 3...= Duke Energy................ 12.8 5...M= 7...Aq= uila Energy.............. 10.3 9...El = Paso......................9.2 10. American Electric Power......8.5 ........= ................ Top 10 North American Power Marketers 2nd quarter 2001 Co= of megawatt hours 1...Enron..........= ............212.5 2...American Electric Power....134.5 3...Duke Energy.....= ...........118.1 4...Reliant Resources.......... 86.1 5...PG&E National Ene= rgy Grp... 73.2 7...Mirant............= ..........69.7 9. Williams............= ........ 63.4 10. Exelon Power Team.......... 52.5 Source: Natural Gas Week BUSINESS Dynegy to Acquire Troubled Enron / Energy giants in $7.8B stock deal COMBINED NEWS SERVICES 11/10/2001 Newsday=20 ALL EDITIONS A16 (Copyright Newsday Inc. 2001)=20 Houston - Energy marketer Dynegy Inc. announced Friday it will buy much lar= ger rival Enron Corp. for $7.8 billion in stock.=20 The announcement came after Enron's stock plummeted about 80 percent in the= past three weeks over concerns that the company wasn't revealing serious f= inancial problems to shareholders. Dynegy is taking out a competitor acquiring some attractive assets and t= hey're doing it at an incredible price said Joseph Correnti an analyst a= t Wayne Hummer Investments.=20 The two Houston-based companies began negotiations a week ago as it became = apparent Enron needed cash to stay in business. Dynegy which is 26-percent= owned by ChevronTexaco Corp. agreed to the deal after Moody's Investors S= ervice maintained an investment-grade rating on Enron eliminating a stumbl= ing block in negotiations.=20 The combined company will have annual revenue of more than $200 billion ra= nking it as one of the nation's 10 largest. It will have more than 22000 m= egawatts of electric generating capacity and 25000 miles of natural gas pi= peline.=20 On Thursday Enron acknowledged it overstated earnings by about 20 percent = over the past four years and kept large amounts of debt off its balance she= et through business partnerships now under investigation by the Securities = and Exchange Commission. Enron said financial statements from 1997 through = the first half of 2001 should not be relied upon.=20 Revised statements reduced Enron's profits for those years by $586 million = and increased its debt by $628 million.=20 During its recent turmoil Enron fired chief financial officer Andrew Fasto= w who ran some of the partnerships under investigation by the SEC.=20 Dynegy chief executive Charles Watson will head the combined company.=20 The terms of the deal value each Enron share at $10.41 based on Friday's c= losing stock prices. That represents a 21-percent premium above Enron's clo= sing price of $8.63. Dynegy's shares closed at $38.76 up 6 percent.=20 It was not immediately clear what role Enron chairman and chief executive K= enneth L. Lay would have in the new company.=20 While Watson has led a diversified company that put as much emphasis on bui= lding power plants as on energy trading Lay focused on the wholesale tradi= ng of natural gas and electricity. He had expanded Enron in the 1980s from = a natural gas pipeline into the most formidable competitor in the business = of energy trading which was created by deregulation of energy markets in t= he United States and Europe. Dynegy announces $8 billion deal to buy larger rival Enron By JUAN A. LOZANO Associated Press Writer 11/09/2001 Associated Press Newswires=20 Copyright 2001. The Associated Press. All Rights Reserved.=20 HOUSTON (AP) - Energy marketer Dynegy Inc. announced Friday that it will bu= y its much larger rival the once mighty but now troubled Enron Corp. for = $8 billion in stock. Dynegy also will assume a hefty $15 billion in Enron d= ebt.=20 The announcement came after Enron's stock price plummeted about 80 percent = over the past three weeks because of concerns that the company wasn't revea= ling serious financial problems to shareholders. Under the deal ChevronTexaco Corp. which owns more than a quarter of Dyne= gy would quickly provide about $1.5 billion. ChevronTexaco also would cont= ribute an additional $1 billion upon completion of the deal the companies = said.=20 With its market-making capabilities earnings power and proven strategic a= pproach to wholesale markets Enron is the ideal strategic partner for Dyne= gy Dynegy chairman and chief executive officer Chuck Watson said in annou= ncing the purchase.=20 Watson made it clear that he would not tolerate the sort of financial pract= ices that prompted explosive disclosures by Enron this week - including an = admission that more than half a billion dollars in debt had been kept off t= he company's books.=20 As a combined company we will focus on leveraging our core skill sets and= as always we will keep a strong balance sheet and straightforward financ= ial structure as key priorities Watson said.=20 Enron is the country's top buyer and seller of natural gas and the No. 1 w= holesale power marketer. The company operates a 25000-mile gas pipeline sy= stem and also markets and trades metals paper coal chemicals and fiber= -optic bandwidth.=20 Dynegy controls nearly 15000 megawatts of power generating capacity throug= h investments in power projects and sells the energy in wholesale markets = and through utilities.=20 At a news conference Watson said company officials who negotiated the deal= came away convinced that Enron was worth buying despite its recent trouble= s.=20 We looked under the hood and guess what it's just as strong as we though= t it was Watson said.=20 Under the terms of the deal Enron shareholders will receive .2685 Dynegy s= hare for each share of Enron common stock valuing each Enron share at $10.= 41. Enron has about 775 million common shares said spokeswoman Karen Denne= .=20 That represents a 21 percent premium above Enron's closing price of $8.63 F= riday on the New York Stock Exchange - but still just a fraction of their 5= 2-week high of $84.87. Dynegy's shares climbed $2.26 or 6 percent to clos= e at $38.76 on the NYSE.=20 In after hours trading on the NYSE Enron shares shot up 15.6 percent or $= 1.35 to $9.98. Dynegy shares were unchanged.=20 Dynegy's stockholders will own approximately 64 percent of the new company= with Enron's stockholders holding the remainder.=20 The boards of both companies have unanimously approved the transaction whi= ch is expected to close next summer. The deal is expected to save the combi= ned company between $400 and $500 million annually because of continued eli= mination of non-core Enron holdings and lower operating costs. Watson sai= d it was too soon to say if the deal would result in job cuts. Enron has ab= out 20000 employees while Dynegy's work force is about 6000.=20 Watson will remain as chairman and chief executive of the combined company= which will retain the Dynegy Inc. name. Dynegy's Steve Bergstrom will cont= inue as president.=20 Enron chairman and chief executive Kenneth L. Lay will no longer have a rol= e in day-to-day management of the company but has been offered a seat on t= he combined company's board and will help shepherd the merger through.=20 Dynegy said that Greg Whalley the current president and chief operating of= ficer of Enron will become an executive vice president of the new Dynegy. = He said the merger sets the best course for Enron.=20 Few of the options we considered for our core business going forward provi= ded us with the earning potential and immediate synergies that a merger wit= h Dynegy could deliver Whalley said. Together with Enron's recently anno= unced bank commitments this cash infusion gives Enron immediate liquidity= which we believe will enable the company to maintain its investment grade = credit rating.=20 The merger was announced a day after Enron acknowledged it overstated earni= ngs by about 20 percent over the past four years and kept large amounts of = debt off its balance sheets through business partnerships now under investi= gation by the Securities and Exchange Commission.=20 Analysts said the merger rescues Enron but leaves Dynegy in uncharted terr= itory - with the outcome of the SEC investigation completely unknown. Ther= e is still a shroud hanging over Enron that now moves over to Dynegy said= Carol Coale an analyst with Prudential Securities.=20 Early Friday Moody's Investors Service downgraded Enron's debt ratings to = one level above junk bond status and said the company's long-term debt rati= ngs remain under review for further downgrade.=20 In an SEC filing Enron said financial statements from 1997 through the fir= st half of 2001 should not be relied upon and that outside businesses run= by Enron officials during that period should have been included in the com= pany's earnings reports.=20 The revised statements reduced Enron's profits for those years by $586 mill= ion from $2.89 billion to $2.31 billion. The revisions also increased the = company's debt each of the four years reaching $10.86 billion - $628 milli= on more than previously reported - by the end of 2000.=20 Keeping the debt off its balance sheets likely ensured Enron could maintain= a strong credit rating to support expansion of its core businesses - whole= sale trading of natural gas and electricity.=20 But the company's stock price started dropping 10 months ago when its high-= speed Internet unit foundered and Enron had trouble collecting money from p= ower customers in India.=20 The stock price began to free fall after Enron announced a $618 million thi= rd quarter loss and news of the SEC investigation surfaced.=20 Enron responded by firing its chief financial officer and scrambled to get = cash and increase credit lines in an attempt to regain investor confidence= but investors dumped Enron shares and sent its stock plummeting.=20 The ousted chief financial officer Andrew Fastow ran some of the partners= hips under investigation by the SEC.=20 Jeff Skilling Enron's former chief executive who left in August has been = called to testify before the SEC although it's unclear when.=20 ---=20 On the Net:=20 http://www.enron.com=20 http://www.dynegy.com AP Graphic DYNEGY ENRON Copyright ? 2000 Dow Jones & Company Inc. All Rights Reserved. =20,other,formal,2 +Re: Telephone Interview with The Enron Corp. Research Group,Since several of you will be out on the 6th we have moved the telephone interview for Marshall Yan to Tuesday the 5th at 1:00 pm. Thanks! Shirley -----------------,project management,formal,3 +Monthly Billing - Detail Class 845 / s100105.xls,-----------------,energy services,formal,5 +Confidential Memo For Thursday Meeting,Richard and Elizabeth At Christian's suggestion I am sending a memo I prepared summarizing some of the more exotic strategies used by our traders. Christian has reviewed the memorandum and believes that it will assist you both in preparing for our Thursday meeting. Between now and Thursday Christian and I are going to analyze the ISO tariff to determine if the tariff prohibits any of these strategies. Steve,other,formal,3 +SDG&E,-----------------,utilities,neutral,3 +CA Supply Realities,,utilities,neutral,0 +Energy Issues,See natural gas price article below. Our buddy Paul Carpenter has turned o= n=20 us (not to mention that he seems to be talking nonsense). How about giving= =20 him a call? -----------------,other,casual,0 +Confidential Memo For Thursday Meeting,,other,formal,3 +"SPEC SR PUBLIC RELATIONS, Job Code #0000109017",Molly Do you know who has posted this ad: SPEC SR PUBLIC RELATIONS Job Code #0000109017. I have a friend who is looking for a position who seems to have the perfect skills for this job. Vince,other,casual,3 +Re: Thank You,Tim I enjoyed meeting with you too. As I mentioned I thought your answers were thoughtful well stated and accurate. In our line of work it helps to triangulate using others' insights and I found yours particularly useful. Richards Tim J (CORP) on 08/02/2000 09:01:46 AM To: 'rshapiro@enron.com' 'skean@enron.com' cc: 'Kelshaw Lisbeth' Subject: Thank You Dear Steve and Rick Thank you very much for inviting me to Houston yesterday to discuss Enron's Federal Government Affairs position. Your vision of the role for the Enron Washington office fits closely with my views on what a best-in-class Washington operation should offer and it was helpful to learn more about Enron and its business units. Enron is clearly an exciting place to work and the fact that public policy is so vital to the company's future makes the Washington position particularly attractive. It was a real pleasure to meet you yesterday and I look forward to hearing from you again. Sincerely Tim Richards Timothy J. Richards GE International Law & Policy 1299 Pennsylvania Avenue NW 1100W Washington DC 20004 Phone: 202-637-4407 Home: 202-882-3385 Fax: 202-637-4300,other,polite,3 +RE: Schoenemann Resume,Molly Thanks. I am in London this week but I can pick up my messages from here. Vince ,human resources,casual,0 +Re: Meeting Request - July 25th,Yes. Maureen - please schedule. From: Michael on 07/06/2001 03:05 AM GDT To: Steven J Kean/NA/Enron@Enron cc: Maureen McVicker/NA/Enron@Enron=20 Subject: Meeting Request - July 25th Steve -=20 I=01ll be in Houston July 23-26 and would like to get together to bring yo= u up=20 to date on the latest developments in Japan regarding EBS and EGM as well= =20 as=01 energy markets.=01 Would you=01 have half an hour on the morning o= f Wednesday=20 the 25th? Thanks Mike,employment,formal,3 +Re: Wabash Valley called re: AEP filing,let's bring him in Christi L Nicolay@ECT 10/02/2000 12:29 PM To: James D Steffes/NA/Enron@Enron Jeff Brown/NA/Enron@Enron Janine Migden/DUB/EES@EES Joe Hartsoe/Corp/Enron@Enron Sarah Novosel/Corp/Enron@Enron Donna Fulton/Corp/Enron@ENRON Richard Shapiro/HOU/EES@EES Kerry Stroup/DUB/EES@EES Steven J Kean/NA/Enron@Enron cc: Subject: Wabash Valley called re: AEP filing Don Morton general counsel of Wabash Valley Power Association a co-op in AEP's area called me about Enron's protest of AEP's market based rates filing. Wabash has filed an appeal in the DC Circuit of AEP/CSW merger (its brief is due 11/20). He thinks FERC is out of control and not carrying on its duties. Wabash is also preparing a protest of the Alliance compliance filing (due this Friday 10/6) on the following grounds: Filing is really a continuation of pancaking Does not want FERC to approve on a conditional basis (expecting Alliance to be a true RTO)--Wabash thinks that Alliance simply creates a larger profit center for AEP's transmission system Mr. Morton also had some specific OASIS problem examples that happened to Wabash that involved preferential treatment for AEP. I told him to call or email Scott Miller for the investigation. Mr. Morton and Wabash CEO Ed Martin would like to come to Houston to visit with Enron about our concerns and about the possibility of making some joint filings. His number is 317-481-2815. Please let me know if I should set something up or if someone else would like to talk with him directly.,other,formal,3 +Privileged and Confidential -- Performance Bonus Language,David You asked me to provide my opinion about the employment agreement provisions relating to target bonus amounts that are based on performance. The bonus language contained in the majority of the agreements with a target bonus is as follows: Provided that Enron meets its earnings targets and provided that Employee is rated within the top 25% of the performance criteria under Enron's annual performance rating system or its equivalent for the calendar year in question Employee's annual bonus amounts under the Plan for calendar years 2001 2002 and 2003 (payable in 2002 2003 and 2004 respectively) shall be based on an annual bonus target of $_____________. This language does not address a person's performance as compared to one's peers but instead looks at the number of performance criteria and requires that a person be in the top 25% of those criteria. Thus if there are only 3 rating categories (i.e. 1 2 3 distributed as 10-80-10) then only the people in the top category would be within the top 25/33% of the rating criteria. Given the huge change in our process however there is an argument that the above language cannot be applied to the current scheme and that instead we should look at the top 25% of the peer group instead of performance criteria even though that was not the intent of the provision when it was drafted. As a result I would suggest that the middle category be divided further into either 2 or 3 subcategories (i.e. 2A 2B or 2C). That way persons who fall out in categories 1 or 2A would be eligible for the target bonus. If there is a decision not to break down the middle 80 further then it would be useful to look at those employees with a bonus target that we think is too high. For those employees a more conservative approach may be to evaluate them on a scale that is more subdivided than the 10-80-10 breakdown and to document that they fell out in the bottom 75% of the categories under that process. Of course it goes without saying that we should ensure consistent treatment based on race sex national origin age etc. in this process. Please let me know if you have any questions.,other,formal,3 +,calendar -----------------,calendar & scheduling,casual,3 +Boise --,You speak at 10:05 a.m. Boise time DOE conference call at 3:00 p.m. Eastern time 1:00 Boise time. Paul Carrier will follow up with details.,other,formal,0 +Re:,Yes From: Jeff Dasovich on 04/19/2001 03:45 PM Sent by: Jeff Dasovich To: Steven J Kean/NA/Enron@Enron cc: Subject: Re: Make sense for me to attend the meeting? Steven J Kean 04/19/2001 12:31 PM To: Jeff Dasovich/NA/Enron@Enron Susan M Landwehr/NA/Enron@Enron cc: Richard Shapiro/NA/Enron@Enron James D Steffes/NA/Enron@Enron Rosalee Fleming/Corp/Enron@ENRON Sandra McCubbin/NA/Enron@Enron Janel Guerrero/Corp/Enron@Enron Paul Kaufman/PDX/ECT@ECT Subject: I got a voicemail fro Ken. He would be happy to meet with Freeman. He is willing to work on other times but suggested the following After 3:00 on May 2nd (right after Ken's speech to the RGA) or late the day before or in the morning of the second (to do this though he would have to cancel his speech to the Texas Governor's business council but he is willing to do this if necessary) His least preferred alternative in this general time frame would be early morning on the third. Jeff -- could you coordinate with Rosie to get the time and place nailed down?,project management,formal,3 +Re: California Amendments DEFEATED!,Congrats Linda Robertson 07/19/2001 09:44 AM To: Steven J Kean/NA/Enron@Enron Richard Shapiro/NA/Enron@Enron James D Steffes/NA/Enron@Enron mark s palmer/enron@enronXgate@Enron cc: Subject: California Amendments DEFEATED! John Shelk will provide a more thorough report in a later Email but I just wanted you to know that the Waxman price cap amendment was just defeated in full Committee markup and the Eshoo refund amendment was defeated. Both by sizable margins.,government & politics,excited,3 +Re: Last FINAL version,Has this gone to Ken yet. If not please send. Maureen McVicker 06/21/2001 02:55 PM To: Lora Sullivan/Corp/Enron@ENRON Steven J Kean/NA/Enron@Enron Jeff Dasovich/NA/Enron@Enron cc: Subject: Last FINAL version Lora: This is the new Final version. The difference from the earlier version is - a few slides were taken out and the order of the remaining slides were rearranged. Please get a copy of this new Final to Ken Lay. Thanks. ,other,formal,3 +BABC-Houston Newsletter,Please handle -----------------,other,formal,3 +Re: WeatherNet,I think this is a very interesting idea. Please get with Bill D. and make sure he gets a description of what we would need to do to physically accomodate the station and make sure he's comfortable with it before we go ahead. Laura Schwartz 03/05/2001 12:52 PM To: Cindy Olson/Corp/Enron@ENRON cc: Steven J Kean/NA/Enron@Enron Karen Denne/Corp/Enron@ENRON Elyse Kalmans/Corp/Enron@ENRON Subject: WeatherNet As part of our agreement with the Channel 2 WeatherNet program we were given the option to have a weather station at the Enron building. This would be an additional $5000 on top of our commitment. I brought the idea to Gary Taylor and Todd Kimberlain in weather and they thought it would be a great idea to serve as the weather tracking spot in downtown Houston. They have agreed to pay the $5K for the equipment and installation. So now in addition to Channel 2 mentioning WetherNet brought to you by Enron everytime they talk about the weather in downtown Houston they will mention the current temp. at the Enron building. If you have any questions please call me at ext. 34535. Laura,other,excited,3 +NAES/ Regulatory Meeting in 29C2.,Joe Hartsoe to handle.,other,formal,3 +Re: Revised DeLay op ed,I've made some changes (shown in bold). Bracketed text indicates a deletion . Jeannie Mandelker@ECT 08/18/2000 05:34 PM To: Steven J Kean/NA/Enron@Enron Cynthia Sandherr/Corp/Enron@ENRON Richard Shapiro/HOU/EES@EES Jeff Dasovich/SFO/EES@EES cc: Mark Palmer/Corp/Enron@ENRON Karen Denne/Corp/Enron@ENRON Subject: Revised DeLay op ed Steve -- great guidance. Cynthia -- hope we're in time. Jeff -- the fifth paragraph has some supply/demand figures for the early part of this week that I heard but can't track down the written source. Any suggestions? Please review and don't hesitate to call me this weekend. Best bet is home number -- 914-736-9504 or cell phone -- 914-318-1568. Jeannie,business document,formal,2 +,I would like to nominate Dr. Stig Faltinsen from Enron Europe as my guest at the London Understanding and Applying Financial Mathematics to Energy Derivatives conference London June 28-29. Vince,other,formal,3 +Confidential - Mid Year Overview,Please review the attachment and let me know if you have any changes. The final document will provide a starting place for the year end review process.,other,formal,3 +Re: FW: Jim Bannantine on eSpeak - March 23,Kelly raised this concern too. The system is set up so that questions do not appear unless we let them -- i.e. we can screen questions and answer only those we choose. Even with that feature though I think we should skip this one (or just reschedule for a later date). I'll contact Jim by separate e-mail. J Mark Metts@ENRON 03/21/2000 04:29 AM To: Steven J Kean/HOU/EES@EES cc: Subject: FW: Jim Bannantine on eSpeak - March 23 Can we get this killed or redirected? This seems very dangerous. -----------------,business document,cautious,3 +RE: CONFIDENTIAL Personnel issue,just a reminder we already have on line training re sex harassment. i'll take a look at all. --Lizzette ,human resources,formal,3 +California Power Crisis Update (No. 10),We have been pulling together these weekly(sometimes more often) summaries for internal purposes. Would you find it helpful to be on the distribution list? Hope you are doing well. Look forward to touching base soon. ,other,friendly,3 +Re: Two Requests re: May 22-23 Forum,I will need an LCD projector and a computer (or connections for my computer) so that I can show the presentation. Thanks. Heidi VanGenderen on 04/24/2001 04:16:43 PM Please respond to To: cc: Subject: Two Requests re: May 22-23 Forum Greetings: Thank you for joining us for the May 22-23 2001 Forum on Securing the Energy Future of the Western United States here in Denver. If you require any audio visual aids for your presentations (overhead projector LCD etc.) please respond to this e-mail ASAP. Please remember that you will be asked to remain within the time limits outlined in the memo to speakers/discussants from Marshall Kaplan and David Olsen. We are compiling a series of articles on western state power problems and possible options to overcome problems for distribution to all Forum participants. We welcome your submission of any recent article or articles or their citations and/or web page references that you have found interesting and useful. These might address subjects such as power challenges alternate policies with respect to supply and demand management financing power related infrastructure use of innovative technology with respect to energy management and efficiency or the convergence of power environmental and carbon emission reduction policies. If you have an article or articles to submit for inclusion in the Forum Notebook please convey it electronically by responding to this e-mail or fax or mail it as noted in the signature concluding this message by no later than May 4th. If you are intending to write out your remarks to the Forum we would also welcome receiving those in advance of the Forum for inclusion in the materials provided to participants. Please feel free to contact us with any questions or comments. Thanks for your attention to these requests. We look forward to seeing you at the Forum on May 22nd. Sincerely Heidi VanGenderen Senior Associate Wirth Chair in Environmental and Community Development Policy Institute for Policy Research and Implementation University of Colorado-Denver 1445 Market Street Suite 350 Denver CO 80202-1727 Tel - 303-820-5676 Fax - 303-534-8774 Marshall Kaplan Tel - 303-820-5605,other,formal,0 +Request for Confidential Information by the CPUC,Per your request. -----------------,other,formal,3 +,-----------------,other,neutral,3 +Re: Unbelievable!,keep sending the message board quotes. Sometimes when I open them I have trouble locating the specific quote (other times I'm taken right to it). Do you imbed the URLs differently?,business document,casual,0 +Re: Associations,No special requirements but it's good to keep track of in case we want a point of contact. Thanks John Wack@EES 09/22/2000 05:05 PM To: Steven J Kean/NA/Enron@Enron cc: Marty Sunde/HOU/EES@EES Samuel Harrell/HOU/EES@EES Subject: Associations Steve a recent hire within my group of Risk Management Samuel Harrell is on two energy associations. They are the Association of Energy Services Professionals International (AESP) and the American Association of Blacks in Energy (AABE). Sam is a member of good standing in both and has recently been nominated to join the Board of Directors for the AESP. I was not sure if Enron had any special requirements concerning registration of employees in associations or not. If I need to do anything specific I would appreciate your guidance. Hopefully this will work as the needed notice. Thanks,other,formal,2 +Re: Kissinger,Sorry I got overwhelmed by California. I have not talked to Ken yet and will be in Japan until Friday. Perhaps we can hook up then? From: Rebecca McDonald/ENRON@enronXgate on 05/11/2001 02:46 PM To: Steven J Kean/NA/Enron@Enron cc: Subject: Kissinger Steve We never closed the loop on Kissinger. If you are around next week why don't we talk and resolve what we want to do so that I can proceed? Does that work for you? Rebecca,other,casual,2 +Re: FW: RTO/market power discussion document,In the underscored language added to the RTO section I would insert access to between the words planning and maintenance. Cynthia Sandherr@ENRON 07/20/2000 06:22 AM To: Steven J Kean/HOU/EES@EES Joe Hartsoe/Corp/Enron@ENRON dwatkiss@bracepatt.com cingebretson@bracepatt.com cc: Subject: FW: RTO/market power discussion document -----------------,other,formal,3 +Re: Demonstration Procedure,Looks good nice work. Let's get it out Vance Meyer 06/11/2001 01:02 PM To: Steven J Kean/NA/Enron@Enron Mark Palmer/Corp/Enron@ENRON cc: Subject: Demonstration Procedure This is the demonstration procedure for Enron offices. It has been reviewed by Security Legal and at least 3 PR folks. Provided you have no issues I recommend that we put it out from Mark's machine with a tip-on note to 1) officers 2) PR people 3) security people. Vance,other,formal,3 +Re: Confidential information,FYI Leslie ,other,casual,3 +"Re: RTO Orders - Grid South, SE Trans, SPP and Entergy",I'm still a junkie .... please email copies of the orders.,energy trading,casual,0 +<> - Elizabeth Linnell,-----------------,finance,formal,3 +Re: EnronOnline Market Descriptions,Per my voicemail. -----------------,business document,formal,3 +[Second Delivery: WPTF Friday Amen Burrito],Sorry about this gang but my new computer messed up the e-mail list. It's 4 am and I think I have fixed it. Maybe. Bear with me if you are getting this for the second time this morning. gba X-Mozilla-Status2: 00000000 Message-ID: <398A81DA.E883D290@idt.net> Date: Fri 04 Aug 2000 01:42:26 -0700 From: Gary Ackerman Reply-To: foothi19@idt.net Organization: Foothill Services X-Mailer: Mozilla 4.74C-CCK-MCD {C-UDP EBM-APPLE} (Macintosh U PPC) MIME-Version: 1.0 To: webmaster Subject: WPTF Friday Amen Burrito Content-Type: multipart/alternative=20 ?=20 THE FRIDAY BURRITO=20 ...more fun than a fortune cookie and at least as accurate.=20 Everyone is getting into the act.? When I started this gig I was the only= =20 guy in town writing to folks like you about the power industry in=20 California.? I wrote about what=01s new what=01s happening and all the= =20 important stuff.? This week Governor Gray Davis decided to write his own= =20 Burrito.? His epistle got more press than mine but why is he muscling in o= n=20 my turf?? Not to be outdone PUC President Loretta Lynch released a report= =20 which looks into every facet of California=01s power business.? No stone l= eft=20 unturned. I=01m telling you there isn=01t enough room in this business f= or all=20 of us.? They need to clear out.=20 With people like Herr (Hair?) Peace Governor I=01m-Not Mr.-Rogers Davis a= nd=20 Let=01s Do Lynch who needs a Friday Burrito?? They re-define our reality = each=20 week with mind-numbing aplomb.? For example starting in early June the PX= =20 was ordered to compete for business against other Qualified Trading=20 Vehicles.? Then two weeks later the Energy F_hrer legislated that idea to= =20 an early death which kept the status quo for at least one year.? This week= =20 the PUC approved 5-year bilateral deals for PG&E and SCE thereby opening t= he=20 PX to competition and emasculating the PX=01s Block Forward Market. Zip = bam=20 boom.=20 I can=01t wait to see what next week will bring.? I hear Senator Bowen is= =20 holding Committee hearings on re regulating the industry and the Governor= =01s=20 new Energy Security Council will meet to decide six things:=20 What=01s for lunch?=20 Who will sit at the head of the table?=20 Does anyone have good seats for next week=01s Democratic convention?=20 Is there anyone we haven=01t indicted yet in the power industry?=20 Who will crank up the air conditioning in this room?? It=01s getting too w= arm.=20 Then they will collect data from innocent businesses under subpoena ignor= e=20 the facts and publish a report.? It makes one want to take a deep breath= =20 and inhale the scented fumes of democracy.=20 You know I can=01t think about where to begin so let=01s start somewher= e.=20 Things on the Island of California=20 ?@@@ Is there anyone left at SDG&E with a brain?=20 ?@@@ The PUC issues its scathing report=20 ?@@@ The ISO invokes $250 price caps.? Duh!=20 Things at the throne of FERC=20 ?@@@ Amen for the Morgan Stanley Order=20 Odds and Ends (_!_)=20 Things on the Island of California=20 ?@@@ Is there anyone left at SDG&E with a brain?=20 Well the answer very clearly is no.? I have been astounded by repeated=20 attempts of SDG&E=01s most senior people to ape humans but instead they m= imic=20 apes.=20 Consider the following.? First they waltz their default customers into the= =20 summer with little of no protection from price spikes in the wholesale=20 market.? Forgivable in that it is human to err.? The prices skyrocket in=20 June and they start looking for who to blame.? =01&Must be them damn=20 independent generators=018 say their managers.? Gary Cotton informs the IS= O=20 Governing Board that hedging SDG&E=01s position in the Block Forward Marke= t=20 wouldn=01t have made any difference.? There=01s one nobel laureate who mi= ssed his=20 prime.=20 Next under pressure they ask for help from suppliers and anyone else who= =20 will assist the utility and their customers.? Nine offers show up at their= =20 table and they can=01t choose any of them.? Again Mr Cotton tells his fe= llow=20 ISO Governing Board members that these things take time and we don=01t to= rush=20 since there are many legislative barriers and well the surfing was good= =20 this week so why spoil it?=20 Now they are in a panic because the Energy F_hrer is visiting old ladies=20 living in trailer parks advising them not to pay their SDG&E electricity= =20 bill and to continue to operate their air conditioners.? SDG&E puts a full= =20 page ad in the local newspaper telling everyone that SDG&E is doing=20 everything it can to lower their electric bills including asking the ISO f= or=20 a $250 price cap but the public can help by calling the ISO [address and= =20 phone number provided in the ad] and urging them to lower the cap.? I alway= s=20 thought the location of the ISO was a State secret for security reasons.? N= o=20 secrets in San Diego.=20 But we are not done.? No sir we are not.? Those buffalo heads who run that= =20 company decide they will win a gold star on their collective foreheads and= =20 implement one of the four resolutions passed by the Electric Oversight=20 Board.? The one they pick is to petition FERC on an expedited basis to cap = at=20 $250 the price at which sellers may bid energy or ancillary services into= =20 the ISO and the PX.? The primary reason is that Western power markets are n= ot=20 workably competitive.? In other words they want FERC to set a max price on= =20 what generators can sell in addition to the price limit at which the ISO ca= n=20 buy!=20 What I find most astounding about this double talk is that SDG&E continues = to=20 collect tons of money from the sales of regulatory must run energy into the= =20 PX.?? These are sales from their stranded assets.? Their grief hasn=01t ab= ated=20 their greed.=20 So to recap SDG&E missed the boat on price hedging failed to win consume= r=20 confidence in public meetings asked for help from suppliers and did nothin= g=20 in response then filed at FERC to cap the sale price because the wholesale= =20 market into which they sell (over-priced?) energy is not workably=20 competitive.? Too much time in the direct sun light.=20 Things on the Island of California=20 ?@@@ The PUC issues its scathing report=20 The PUC report released yesterday is a gem with which I have not spent enou= gh=20 time.? I only read the Executive Summary and that only because our counsel= =20 Dan Douglass forwarded me a copy. Let me pick out some of the gems in=20 President Lets Do Lynch=01s burrito.? I would recommend reading the whole = text=20 if you have time and if you seek perverse entertainment.=20 =01&California is experiencing major problems with electricity supply and= =20 pricing caused by policies and procedures adopted over the past ten years.= =20 =01& Since June wholesale prices for electrical power in California have= =20 increased on average 270% over the same period in 1999 resulting in over $= 1=20 billion in excess?? payments for electricity.=20 =01&Hot weather aging power plant and transmission infrastructure and=20 dysfunctional bidding behavior in the wholesale power markets combined to= =20 drive prices up ...=20 =01&Because of serious market defects and tight supply of electricity=20 purchasers of California power will likely pay billions more in electricity= =20 costs this year. Moreover these price increases do not necessarily fund ne= w=20 investments in electricity supply or delivery reliability - they may flow= =20 solely to power producer profit margins.=20 =01&Despite the Electricity Oversight Board's legislative mandate to overse= e=20 those institutions we have been unable to obtain [bid] data. Nevertheless= =20 ... we believe enough evidence of questionable behavior exists that the= =20 Attorney General should conduct an investigation into these statewide marke= t=20 practices coordinating with other State agencies including the PUC and th= e=20 EOB. Such an investigation would provide the factual foundation that=20 California policy makers and regulators need to recover any illegally=20 obtained profits.=20 =01&A momentous consequence of California's attempt to create a market in= =20 electricity is that the federal government now regulates California's=20 electric system. Washington D.C. now controls pricing decisions directly at= =20 the wholesale level and indirectly at the retail level and to the extent= =20 that supply incentives are correlated to prices Washington D.C. now affec= ts=20 California's ability to attract new investment in power plants.=20 =01&Past administrations' willingness to cede the State's authority to the= =20 federal government combined with the legislative creation of two non-public= =20 supervisory organizations that have no duty to protect the public or consid= er=20 the retail customer. The Independent System Operator (ISO) and the Power= =20 Exchange (PX) the nonprofit private corporations that operate the State's= =20 transmission system and control wholesale pricing policies are governed by= =20 boards whose members can have serious conflicts of interest. Some of these= =20 board members or their companies financially benefit from higher prices in= =20 electricity markets. Neither of these private organizations is accountable = to=20 the State or its consumers ....=20 ?=20 =01&Despite the federalization and the fragmentation of the State's electri= c=20 services the State of California should protect its businesses and consume= rs=20 from cartel pricing collusive behavior inadequate power plant maintenance= =20 and lack of market planning for adequate electricity supplies.=20 =01&California consumers and businesses deserve to know in advance - as San= =20 Diegans did not this summer - how and when the price of an essential servic= e=20 like electricity will double. California is now largely constrained by=20 federal mandates from providing comprehensive retail price relief as long a= s=20 wholesale prices remain so high. If California tried to re-impose a price= =20 freeze in San Diego now federal regulators would likely prevent that=20 action.? ... Short-term price relief however cannot resolve market gaming= =20 or fundamental wholesale pricing problems controlled by federal regulators.= =20 ?=01&We have been precluded from obtaining the data necessary to know if th= e ISO=20 and PX failed to detect manipulation and gaming on several fronts. We do no= t=20 know how market players acted in price offering and bidding and scheduling.= =20 The FERC has just announced an inquiry into national pricing and energy=20 market issues. California should not wait for national findings before it= =20 investigates California market practices. We recommend that the California= =20 Attorney General immediately subpoena relevant records and data to determin= e=20 the pricing and offering behavior of market participants the actions of th= e=20 ISO and its board members and the actions of generators in supplying=20 California's energy needs.=20 =01&Ten Actions to Consider or Act Upon to Prevent Current Electricity Prob= lems=20 From Spreading in 2001: ...=20 ?=20 ? 2. Create a California Energy Council modeled on the National Security= =20 Council to unify State action to resolve energy problems and to perform=20 integrated energy planning=20 3. Ask FERC for extended wholesale price cap authority to moderate Californ= ia=20 wholesale market pricing=20 4. Ask FERC to recognize the defects in the California and western regional= =20 markets and find that no competitive market exists in California power=20 markets=20 ?...=20 ? ?8. Eliminate potential conflicts of interest in ISO/PX stakeholder board= s=20 9. Improve California's ability to obtain ISO and generator data and enhanc= e=20 the State's enforcement capability for power plant maintenance price=20 manipulation and generation gaming consistent with protection of proprieta= ry=20 business information=20 10. Provide the EOB with effective enforcement ability and additional=20 oversight authority for the ISO and PX. =01&Ten Issues to Consider or Act Upon Within the Next Six Months: ...=20 ? 4. Streamline state power plant siting procedures consistent with=20 environmental requirements and prioritize applications to advance clean= =20 BACT+ power plant proposals.=20 5. Institute use-it -or- lose-it permitting power plant licensing and=20 emissions credits rules to ensure power plants get built=20 ...=20 ?8. Reform PX pricing protocols and structures to lower wholesale and retai= l=20 prices and reduce excess profits=018 I told you I don=01t need to write a Burrito anymore.? The Democrats in=20 Sacramento are doing that for me.? Welcome comrade.=20 Things on the Island of California=20 ?@@@ The ISO invokes $250 price caps.? Duh!=20 It is really hard to describe the drama of an ISO Governing Board meeting= =20 especially when our favorite topic arises.? It seems the only time the Boar= d=20 becomes animated is when one of three issues are on the agenda: price caps= =20 FTRs and priorities for software enhancements. Otherwise its pretty much= =20 hum-drum.=20 =01+Round and =01+round we went once again.? A few more forced votes tippe= d the=20 scale in favor of the cap.? There were 15 yes votes which included a force= d=20 yes vote from our friend Jerry Toenyes by order of Secretary of Energy Mr.= =20 Richardson. [Jerry did you realize that the last letters of your name coul= d=20 be re-arranged to spell =01&NO ET YES=018?? Kind of a french thing.] I=01m= sorry=20 about that vote Jerry.? You still go in my book as one of the brave and bo= ld=20 for standing up to that sort of intimidation for so long.? Your picture in= =20 the SF Chron said it all.=20 The brave souls who stood tall and voted NO included David Parquet (Enron)= =20 Jan Smutny-Jones (IEP) Barbara Barkovich (CLECA) Caolyn Kehrein (CMA) Da= n=20 Kirshner (EDF) and Stacy Roscoe (Procter & Gamble).? Now I must admit tha= t=20 Dynegy=01s Greg Blue did help by voting a Texas No spelled =01&A-B-S-T-A-= I-N=018.??=20 I have instructed Dynegy trader Dave Francis in Houston to work with Greg t= o=20 correct that problem.? We=01re going to work things out.=20 The Energy F_hrer addressed the Board again.? I didn=01t mind that I only= had=20 a few brief very brief moments to address the Board and Herr (Hair?) Peac= e=20 got over 20 minutes.? That didn=01t bother me at all.? He did more damage = to=20 himself in 20 than I could do in 2.? He blasted away at everyone who oppose= d=20 him.? He pined about Camden quitting the Board.? He said he knew how prices= =20 and markets work that it isn=01t the way those academic egg-head FERC-lo= ving=20 economists tell you who pray to the gods of competition.? He lambasted WAPA= =20 for withholding generation to protect fish and wildlife (what was that all= =20 about?).? He predicted that on Thursday=01s PUC meeting he and all the oth= er=20 powerful Democrats Republicans and angry citizens of San Diego would deman= d=20 that the PUC impose a rate cap on retail electric rates in San Diego that a= re=20 just and reasonable (it didn=01t happen).? And on and on and on.? This man= is=20 very delusional. He believes that Steve and only Steve Peace can save the= =20 world.? He believes that political will trumps judicial quasi-judicial or= =20 independent Board actions.? This man makes relevant all the abstract musing= s=20 of the philosopher Friedrich Nietzsche (1844-1900) ... The will to power t= he=20 ?bermensch the transvaluation of values etc.=20 But we are getting under (uber?) his skin with the help of the press.?=20 Wednesday afternoon I called Commissioner Dick Bilas to see if he thought= =20 whether the next day=01s PUC meeting was going to be a roll over. Dick sai= d he=20 got a call from Peace and that Peace said he would not come to the meeting= .?=20 Apparently Peace had received a lot of press and all of it bad.=20 That=01s the thin line of freedom which keeps tyranny at least one step aw= ay=20 from our front door.=20 ?>>> Things at the throne of FERC=20 ?@@@ Amen for the Morgan Stanley Order=20 And now the good news.? You deserve this.? FERC gave the California market= a=20 little wiggle room last Friday.? FERC issued a last minute reply to the=20 complaint by Morgan Stanley Capital Group relating to the ISO=01s intent t= o=20 lower the price cap.? FERC denied the complaint but they didn=01t waste t= ime=20 with an Order to simply deny a complaint.? FERC danced on the head of the I= SO=20 and pulled the bite out of the price cap.=20 Here are some excerpts:=20 =01&We accepted this [Amendment 21] not because it was a cap on sellers=01= prices=20 but because it would promote order and transparency in the market by clearl= y=20 telling sellers of the maximum price the ISO was willing to pay and allowin= g=20 sellers to make informed economic choices on whether to sell in the ISO=20 market or to sell elsewhere...=20 =01& ... The ISO has no more or less ability to procure capacity and energy= than=20 any other buyer of these services ... If the ISO is unable to elicit=20 sufficient supplies at or below its announced purchase price ceiling (becau= se=20 generators are free to sell elsewhere if they choose) it will have to rais= e=20 its purchase price to the level necessary to meet its needs. ... Therefore= =20 an increase in out-of-market (OOM) calls for generation may be necessary to= =20 maintain system reliability.? Because the current payment for OOM is not=20 subject to a maximum purchase price the resulting overall payments may be= =20 higher.=20 =01&To the extent the ... ISO Board resolution contemplates implementing a= =20 directive that generators must bid their capacity into the ISO markets unde= r=20 any circumstances (e.g. when system load exceeds 38000 MW) such a=20 requirement is not permitted by our ... Order and the ISO tariff. ... Futur= e=20 implementation of the ISO Board resolution with regard to a requirement to= =20 sell would require significant revisions to the ISO market rules.? Such=20 market changes could not become effective absent a corresponding amendment = to=20 the ISO tariff which would have to be filed under section 205 of the FPA.= =018=20 Well. What do you think about that?=20 Just wait.? Here is what the sleeping bear Commissioner Hebert said in his= =20 concurring remarks:=20 =01&Getting to the bottom of the problem in my view requires us to begin = a=20 proceeding to rescind our approval of the ISO as the operator of the=20 California grid.? The record supports such a move. ... A memorandum to the= =20 ISO from a stakeholder who resigned from the governing board eloquently=20 brings to our attention repeated attempts to undermine the independence of= =20 the ISO. The memorandum also thoughtfully outlines consequences to the=20 markets of a return to =01+command and control.=01=20 =01&Because these allegations come from a non-market participant especiall= y=20 should we take heed.? We must also take notice of the public pressure on th= e=20 Board to compromise its independence.=018=20 Amen brother amen.=20 Odds and Ends (_!_)=20 As you can imagine this week like an endless string of weeks before this= =20 has been interminable.? I get about three phone calls a day from press=20 reporters very little of which ever sees print.? My shtick is just too=20 complex for casual readers.? But I do notice that the reporters are asking= =20 better questions.? The public is becoming more savvy.? The information flow= =20 is moving in our favor and will disarm the forces of evil in about 10=20 years.=20 I have other problems on my mind.? I am working on a new computer system.?= =20 Really it=01s just an upgrade of an older computer that is a bit faster t= han=20 the laptop I tried to upgrade very unsuccessfully.? As a result of the all= =20 the new hardware and software I purchased my office looks like a war zone= =20 with an odd mix of PUC service copies computer documentation and diskette= s=20 laying all around. Quite a mess.=20 Prepare for the future.? Our next general meeting is scheduled for Thursday= =20 and Friday October 5 and 6 at Moro Bay.? Barb Ennis will prepare a blurb f= or=20 us in next week=01s Burrito about room reservations timing golf etc.? O= ur=20 guest speakers will include MSC Chairman Professor Frank Wolak who will tal= k=20 on the subject of his choice Ms. Irene Moosen of Grueneich Resource=20 Advocates who will make a presentation on the distributed generation case= =20 before the PUC and William Freddo of PG&E National Energy Group who will= =20 give us some education on operating a power plant inside the New England IS= O.=20 Now for your daily bread provided this week by Dan Douglass.? Last week we= =20 had a joke about Catholics.? This week it=01s agnostics.=20 An atheist was taking a walk thru the woods admiring all that the accident= ?=20 of evolution had created.? What majestic trees!? What powerful rivers! Wha= t?=20 beautiful animals!? he said to himself.=20 As he was walking alongside the river he heard a rustling in the bushes?=20 behind him.? As he turned to look he saw a 7 foot grizzly bear charging?= =20 towards him. He ran as fast as he could up the path.? He looked over his?= =20 shoulder and saw that the bear was closing in on him.? He tried to run even= ?=20 faster so scared that tears were coming to his eyes. His heart was pumping= ?=20 frantically as he tried to run even faster but he tripped and fell on the?= =20 ground.? He rolled over to pick himself up and saw the bear right on top of= ?=20 him raising its paw to kill him.=20 At that instant he cried out Oh my God! And time stopped. The bear froze.= ?=20 The forest was silent.? The river even stopped flowing.? A bright light=20 shone? upon the man and a voice out of the sky said You deny my existenc= e=20 all? these years teach others I don't exist and even credit my creation to= =20 a? cosmic accident and now do you expect me to help you out of this?=20 predicament?? Am I to count you as a believer?=20 The atheist ever so proud looked into the light and said It would be=20 rather hypocritical to ask to be counted as a believer after all these=20 years? but could you make the bear a believer?=20 Very well said the voice. And the light went out the river flowed the?= =20 sounds of the forest continued and the bear brought both paws together?= =20 bowed his head and said Lord I thank you for this food which I am about= ?=20 to receive.=20 Amen.? And have a great weekend.? Oh and thanks to all of you who sent me= =20 happy birthday wishes.? It was very much appreciated.=20 KSB=20 gba,other,casual,3 +Comparable Worth Legislation,This is an issue we need to stay on top of. Felicia: could you please put= =20 some background together for everyone on the list? ,legal affairs,formal,0 +Re: ISO Market Stabilization Plan,Thanks for taking the lead on this. Note Tim's question about handicapping the liklihood of approval. Prices will move in the West based on these odds. We need to have a better view than anyone else. Ray Alvarez 04/13/2001 01:19 PM To: James D Steffes/NA/Enron@Enron cc: Tim Belden/HOU/ECT@ECT Joe Hartsoe/Corp/Enron@ENRON Steven J Kean/NA/Enron@Enron Alan Comnes/PDX/ECT@ECT Steve Walton/HOU/ECT@ECT Susan J Mara/NA/Enron@ENRON Subject: Re: ISO Market Stabilization Plan Tim although there's always a chance my impression is that the FERC won't buy the ban on exports as this would appear to run afoul of the Commerce Clause and certainly goes counter to everything that FERC hopes to accomplish with their own Order 888 and 2000 initiatives. I am less certain about the direction FERC will go on pricing since even the staff has recognized stumbling blocks in their own recommendation and offers possible variants. The ISO has not submitted revised tariff sheets for approval yet so it is unlikely they would try to implement their own plan in the near term. If they try to do so without FERC approval possible legal avenues might include the filing of a complaint at FERC asking for fast track processing (this fast is measured in weeks not days) and/or seeking injunctive relief in court (faster) which can be hard to obtain but not impossible depending entirely on the circumstances. Will keep you posted if I learn anything new on this. Ray James D Steffes 04/12/2001 11:21 PM To: Tim Belden/HOU/ECT@ECT cc: Joe Hartsoe/Corp/Enron@ENRON Ray Alvarez/NA/Enron@ENRON Steven J Kean/NA/Enron@Enron Alan Comnes/PDX/ECT@ECT Steve Walton/HOU/ECT@ECT Susan J Mara/NA/Enron Subject: Re: ISO Market Stabilization Plan Ray -- Can you please take the lead in responding to Tim re: FERC v. state actions? Sue -- Any info on whether the ISO would do this unilaterally? Jim To: Joe Hartsoe/Corp/Enron@ENRON James D Steffes/NA/Enron@Enron Ray Alvarez/NA/Enron@ENRON Steven J Kean/NA/Enron@Enron Alan Comnes/PDX/ECT@ECT Steve Walton/HOU/ECT@ECT Susan J Mara/NA/Enron@ENRON cc: Subject: ISO Market Stabilization Plan The recent plan filed at FERC is horrible. The two most aggregious parts are the cost based standing bids and the ban on exports. I know that we are commenting on this proposal. I am also looking for intellegence on whether the ISO proposal has any chance of getting approved by FERC. If it is not approved by FERC what can the Californians do? California has ignored FERC before. If they attempt to unilaterally implement changes what is the likelihood that the Feds step in to intervene? If you hear anything on this matter please keep me posted. The proposed plan will have a huge impact on the California market and we need as much advance notice as possible.,other,formal,3 +Re: PRC cluster descriptors - draft,I think this is a fine attempt but I continue to believe that a pure relative ranking offers the most flexibility and is more like the way the process works in practice. A separate list of desired behaviors criteria etc can be used to guide discussion but I believe the ranking itself should remain purely relative. Gina Corteselli 09/14/2000 06:04 PM To: Cindy Olson/Corp/Enron@ENRON David Oxley/HOU/ECT@ECT Steven J Kean/NA/Enron@Enron cc: Michelle Cash/HOU/ECT@ECT Subject: PRC cluster descriptors - draft All Aattached are a draft of the PRC cluster descriptors which we discussed several weeks back. I has sent a first draft to Michelle and Dick and both had some suggestions which I have tried to incorporate. I am still awaiting Dick and Michelle's impressions of the below but also look forward to your impressions and input. Likewise I would appreciate your input on whether or not we need to change the ratings on the feedback forms to numerical ratings 1-5 to mimic the clusters. look forward to hearing from you Many thanks Gina -----------------,other,formal,3 +NAES meeting in Barton Creek in Austin,[Dan Sponseller 412 355 8650 -- called Brian Barrington] Laura Houston x3366 is contact 9:30 - 10:00 Regulatory Update gas and electricity positions that we've taken initiatives and events that they should be aware of retail perspective if there is something they should know about Audience is Amanda's team approx. 100 people. Can use overheads or slides. We need to let Sheila Hatten know what you'll use.,other,formal,3 +Re: Dereg Articles,Looks good Mark Palmer 09/27/2000 02:09 PM To: Steven J Kean/NA/Enron@Enron cc: Subject: Re: Dereg Articles Here's the draft that Allegretti is sending. ,other,formal,3 +RE: Bingaman reliability draft language,It is important to point out that under the Bingaman reliability language FERC has total discretion as to whether to adopt a NERC standard. Charles does make a good point about the deference language. As written FERC has discretion to defer to NERC or an RTO to monitor and enforce compliance. At a minimum that language should be expanded to include another entity like an EISB. Similarly the language should probably be tweaked to allow FERC to adopt standards of an organization other than NERC. ,other,formal,3 +Confidential - Resume for Andy Blanchard,Attached is a resume for a gentleman who has relocated as a trailing expat spouse to Houston who we are looking to find a suitable position somewhere in Enron. I know that one or two of you have already seen his resume and at the time didn't necessarily have a role for him. I would be very grateful if you could take another look and see if anything has now changed. By way of background he was previously working with Eastern in the UK in a back office capacity looking at their approach to the UK Gas regulatory framework known as the Network code. He has done a little consulting work since relocating to Houston in the online area. His references are very good. He is available with immigration clearance as a local hire probably at Senior Specialist level. As an additional incentive I would be prepared to underwrite his costs in the event you decided in the first 6 months that his performance did not meet your expectations (Obviously - I am highly confident this will not be the case!).,human resources,formal,3 +CONFIDENTIAL - CA Customer Letter,Here is the note we sent to our CA customers this weekend to extend with Evergreen. Jim -----------------,energy services,formal,3 +RE: FERC rulemaking on Generator Interconnection,Jim -- The quick answer to your question on the Barton bill is that yes it does = appear to address this tax issue involving interconnections at least in pa= rt. There is language in Title VIII on various tax issues. One of them ex= ludes from gross income certain amounts received by electric utilities spe= cifically including connection fees. In the example in the e-mail the iss= ue was not fees paid directly but assets paid for by the generator that ar= e then transferred to the utility. Will check on that angle. In any event Title VIII (while in the Barton bill) is not in the jurisdict= ion of Barton's subcommittee. Instead the tax title would have to go thro= ugh the Ways and Means Committee. There were some energy tax provisions in= the House-passed energy bill last August. Chris and I will consult tomorr= ow to see if this issue was included in that bill. Aside from the tax issue Barton bill would require the type of interconnec= tion rulemaking that FERC is now conducting (both for connections to local = distribution and to transmission). In each case the cost of interconnecti= on would have to be comparable to what the utility charges others similarly= situated. I will go back to double check but off the top of my head I re= call that the Bingaman draft specifically socializes the costs of interco= nnection. John ,other,formal,3 +Re: PJM Stip,Can we also get something in the stip that limits the market making activity or at least promises a reexamination of the scope of the market making activity after some period of time. Also can we strengthen the language to give us something beyond simply a right to file -- which is a right we have anyway. James D Steffes 03/16/2001 03:34 PM To: Steven J Kean/NA/Enron@Enron Richard Shapiro/NA/Enron@Enron cc: Joe Hartsoe/Corp/Enron@ENRON Sarah Novosel/Corp/Enron@ENRON Subject: PJM Stip Attached is the proposed Stip to allow PJM to move forward as an RTO. In the Stip we argue that PJM should be approved by FERC but condition our acceptance on a FERC process to unify the Northeast markets. My only comment is to delete the final WHEREAS paragraph on congestion management. While our ability to later stop PJM from being an RTO is limited I believe that this gives us the ability to drive a consolidation of the Northeast markets - which is one of the goals of the East Power desk. In addition I think that the overall direction of PJM in commercializing its software is a good activity for our interest - even if we don't want everything in their package. Sarah is out until Monday when we need to get back with PJM. Jim ,other,formal,3 +Re: HPL Closing,fyi - Jade Eaton is one of Lara's contacts at DOJ ,legal affairs,neutral,3 +RE: DRAFT Comments on Barton RTO Draft,I tried to make it clear that we were not ourselves moving off of 4/5 RTOs -- and I will try to make that clearer. I was just trying to take advantage of what Wood and others said to show that they are not the heavy-handed regulators that Barton and others on the Hill are painting. In other words I wouldn't have asked them to say what they did -- but once said we might as well get some mileage out of it. ,energy trading,casual,0 +Expense Reports Awaiting Your Approval,-----------------,finance,formal,2 +Enron legislative package,,legal affairs,neutral,3 +Re: A&M - Bush Library Foundation & School of Public Policy,Let's talk. While there is always some value in these things it is ususally quite small and consumes more valuable resources in trying to capture the benefit than the benefit itself. From: Michael B Rosen@ECT on 07/13/2001 08:44 AM To: Steven J Kean/NA/Enron@Enron cc: Subject: A&M - Bush Library Foundation & School of Public Policy Steve- We have been approached by the Texas A&M/George Bush Presidential Library Foundation and School of Public Policy to endow additional funds. Enron had made an original contribution to the library foundation back in 1998 totaling $250K over five years. I am working with Community Relations and A/A Recruiting to evaluate the latest request and to discuss where Enron may have interest or find leverage for our Government Affairs Recruiting or PR efforts. The Foundation is willing to work with us to establish whatever type of program(s) and/or participatory involvement we would like. We have discussed an Enron speaker series classroom lectures advisory committee seats and the likes. I have already had a chance to run this by Rick Shapiro and Rob Bradley. Although Rick was noncommittal regarding his team's time for speaking or lecturing he seemed supportive of the effort. Rob has already been participating in some speaking opportunities there and supported expanded efforts. What are your thoughts on contribution levels (another $250K was suggested by CR) and any specific program or relationship opportunities regarding the Library Center or School of Public Policy. Please grab me for quick conversation when you have time. Thanks. Mike,human resources,formal,0 +Re: EBR - Public Affairs - Nov. 6,I may need to spend some time with you in advance but you don't have to plan on coming here. Mark Schroeder@ECT 10/15/2000 06:32 PM To: Maureen McVicker/NA/Enron@ENRON cc: Steven J Kean/NA/Enron@Enron Beverley Ashcroft/LON/ECT@ECT Subject: Re: EBR - Public Affairs - Nov. 6 trust my non-attendance is okay with Steve. If not please so advise or if he wants my participation by conference call that could be arranged. thanks mcs Maureen McVicker@ENRON 12/10/2000 09:52 To: Richard Shapiro/NA/Enron@Enron Mark Palmer/Corp/Enron@ENRON James D Steffes/NA/Enron@Enron Mark Schroeder/LON/ECT@ECT Michael Terraso/OTS/Enron@ENRON Elizabeth Linnell/NA/Enron@Enron John David W Delainey/HOU/ECT@ECT Rosalee Fleming/Corp/Enron@ENRON Sherri Sera/Corp/Enron@ENRON Katherine Brown/Corp/Enron@ENRON cc: Ginger Dernehl/NA/Enron@Enron Cindy Derecskey/Corp/Enron@Enron Marcia A Linton/NA/Enron@Enron Beverley Ashcroft/LON/ECT@ECT Laura Glenn/OTS/Enron@ENRON Helen Kay Chapman/HOU/ECT@ECT Subject: EBR - Public Affairs - Nov. 6 The EBR (Executive Business Review) for Public Affairs has been rescheduled: The new date is: DATE: Monday Nov. 6 TIME: 8:30 A.M. (block 2 hours on your sched just in case) PLACE: EB 50M03 ATTENDEES: Dave Delainey (if schedule permits) John Hardy Steve Kean Ken Lay Elizabeth Linnell Mark Palmer Mark Schroeder (will not be attending) Rick Shapiro Jeff Skilling Jim Steffes Mike Terraso,project management,formal,3 +RE: Catch Up,BTW = By the way. Putnam in Boston. it's official. Vince ,personal & social,casual,3 +Re: Contact,Contact Dave Parquet and Jeff Dasovich in our San Fran. office. Dave has worked on Enron's proposals to San Diego and Jeff has been supporting him from a gov't/reg affairs standpoint. From: Michael Kenneally@ENRON COMMUNICATIONS on 09/08/2000 10:51 AM To: Steven J Kean/NA/Enron@ENRON cc: Subject: Re: Contact Steve: Chris Holmes recommended I contact you concerning the attached inquiry. I recently met with a federal representative from San Diego who had asked if I could send him any information on Enron's ability to hedge energy prices. After a summer of rolling brown outs and soaring prices he is looking for ways to avoid the scenario in the future. Could you recommend the best avenue for responding to this request? I appreciate you assistance in this matter. Regards Michael x 35868 ,other,formal,0 +Energy Issues,See natural gas price article below. Our buddy Paul Carpenter has turned o= n=20 us (not to mention that he seems to be talking nonsense). How about giving= =20 him a call? -----------------,other,casual,3 +Re: Confidential Contact data and RFI,Kevin I had the Capacity forecast column units mislabeled Here is the revised one. If you want just have your NEEPOOL lead type over our forecast and re-send to us. We will not let this get out of our shop and we will get you in on a block to buy. Thanks again Fred ----- Original Message ----- From: Presto Kevin M. To: Fred W. Giffels Sent: Tuesday February 12 2002 8:07 AM Subject: RE: Confidential Contact data and RFI Any nuclear specific info? Kevin Presto UBS Warburg Energy kevin.presto@ubswenergy.com Phone: 713-853-5035 Fax: 713-646-8272 ,other,formal,3 +Re: Management Conference - Save the Date,looks fine From: Terrie James/ENRON@enronXgate on 07/19/2001 04:31 PM To: Steven J Kean/NA/Enron@Enron Cindy Olson/ENRON@enronXgate cc: Sherri Sera/ENRON@enronXgate Marge Nadasky/ENRON@enronXgate Subject: Management Conference - Save the Date Steve and Cindy Attached is the electronic Save the Date memo for the Management Conference. We are preparing to send it out next week. Please let me know if you have any comments or concerns on the e-mail. As for distribution we've worked with HR on the distribution list for VPs but will circle back with David Oxley's team to ensure we have the most up-to-date list. Since some VPs in redeployment will most likely find positions within Enron by November I don't plan to exclude them from the distribution ... unlike United Way where we are not soliciting employees in redeployment for a contribution. I look forward to any feedback. Terrie James Senior Director Public Relations Enron Broadband Services (ph) 713.853.7727 (fax) 713.646.3248 terrie.james@enron.com,organization,formal,3 +Presentation to faculty and students at Berkeley,,human resources,casual,2 +Re: Rich Products,Looks good. Peggy Mahoney 07/24/2000 06:20 PM To: Mark Palmer/Corp/Enron@ENRON Steven J Kean/HOU/EES@EES Karen Denne/Corp/Enron@ENRON Cedric Burgher/Corp/Enron@ENRON Mark Koenig/Corp/Enron@ENRON Paula Rieker/Corp/Enron@ENRON Jeremy Blachman/HOU/EES@EES Harold G Buchanan/HOU/EES@EES Karen S Owens@ees@EES Kevin Hughes/HOU/EES@EES Mark S Muller/HOU/EES@EES Vicki Sharp/HOU/EES@EES Marty Sunde/HOU/EES@EES Dan Leff/HOU/EES@EES Elizabeth Tilney/HOU/EES@EES Dave S Laipple/DUB/EES@EES James E Keller/HOU/EES@EES cc: Subject: Rich Products Please review the attached draft news release about our agreement with Rich Products and let me know if you have any comments by 5pm Tuesday July 25. We are scheduled to release on Wednesday July 26. If you have any questions please call me at x57034. Rich Products is a major US food manufacturer headquartered in Buffalo NY. The company ranked #122 in Forbes Private 500 and has sales around $1.5 billion. Rich Products is owned and operated by the founding Rich family. Products manufactured include frozen meats bakery products and non-dairy creamers.,other,formal,0 +California,Please send the economist piece around. -----------------,other,formal,3 +Update Day 1 Second Session FERC CA Settlement,,energy infrastructure,neutral,2 +California Public Affairs Strategy,To make sure that Enron is not missing any opportunities to make our points on competition we need to develop some key message points and facts. My understanding is that the key story line is that COMPETITION IS WORKING AND SHOULD BE PUSHED FORWARD. We need to be able to give examples of what is happening - deregulation customers are winning. For example our CSU customers are just fine even with higher energy markets. I think that are some key questions that we need to consider when we put these together: Who is the audience? My answer - California policymakers key stakeholders FERC federal government. Can we use this in the FERC Investigation on Markets? My answer - we have to California is too big and important not realize that California will play a role in FERC's discussions. What is the timing of message? My answer - Wherever and whenever needs to be coordinated. This CA legislative process (next 2.5 weeks) may be a possibility. FERC Investigation. Taking the story nationally is good if we have the facts from CA. Who will deliver the message? My answer - Everyone on the Enron team needs to have the same message all of the time. We can't let any opportunity pass us by. Do we demonize the utilities? My answer - if necessary we just need to make sure that we have as many facts to prove our points if we do attack. How do we prove that rolling back to regulation is ridiculous? My answer - retain LEGC to develop the hypothetical of what would have happened? NEEDS TO BE DISCUSSED INTERNALLY - LEGC MAY NOT BE THAT FRIENDLY. Next Steps: Jeff Dasovich needs to put out first cut based on our earlier notes and any incremental information from our analysis teams (e.g. TCA McNally / Temple). Thanks Jim,other,formal,3 +MEMO,-----------------,other,formal,3 +Confidential Folder to safely pass information to Arthur Andersen,We have become increasingly concerned about confidential information (dpr/position info curves validations/stress tests etc) being passed to Arthur Andersen for audit purposes over the Web to their Arthur Andersen email addresses. (necessary now they no longer have access to Enron's internal email system) Please use the folder described below when passing any info (that you would have concerns about if it was picked up by a third party) via the shared drive that has been set up for this specific purpose. Note: AA should also use the shared drive to pass info back if there are questions or the data needs updating. We should also consider the sensitivity of audit findings and special presentations if they are being distributed electronically. Please pass this note to others in your groups who have the need to pass info back and forth. Details on how to access for those who will use this method to pass info: A secured folder has been set up on the o drive under Corporate called Arthur_Andersen Please post all confidential files in this folder rather than emailing the files to their company email address. If you need access to this folder submit an eRequest through the IT Central site: Arthur Andersen will be able to retrieve these files for review with their terminal server access at the Three Allen Center location. Please contact Vanessa Schulte if you have any problems or questions Beth Apollo,other,formal,0 +Re: Doctoral studies,My message was sent before I finished it. I think it would be interesting to focus your attention on this interplay -- what policy changes have meant to companies (ie the winners and losers) and how explicit companies are about how government policy drives their business strategy in these industries. I also think it would be fascinating to compare regulators' visions for the industry they are restructuring with the reality after the fact. I believe you would find some similarities but also some substantial and interesting differences. Good luck with your studies. My best regards to Mike I learned a great deal working for him. Rob Wilson@ENRON 07/24/2000 04:44 PM To: Steven J Kean/HOU/EES@EES cc: Mike McGowan/ET&S/Enron@ENRON Subject: Doctoral studies Steve Vince Kaminski suggested I contact you I'm the Gov't Affairs rep for NNG in Omaha and begin a doctoral studies program this fall at NU. I plan a research emphasis in regulatory politics specific to energy and telecom market convergence and the public interest. I'd welcome any advice or suggestions you have regarding other potential area's of research based on your professional experience in the public policy arena. I appreciate any guidance I'm in the earliest stages of forming my advisory committee and curriculum of study. My supervisor Mike McGowan sends his regards.,human resources,formal,5 +RE: Update - Jeff Skilling Conference Call with John Q Anderson,Thanks to Jim and Charles for the reports on the NERC conference call earlier today. Aside from whatever is done directly with NERC on details of their internal operations to respond to our concerns (i.e. Jeff's presentation to their board and the list of issues Charles had) the NERC/PJM drafting process will continue in DC in coming weeks. In addition Congressional staff are likely to be drafting electricity legislation including a reliability title during the August Recess that will start at the end of this week (i.e. we will likely be asked to comment on reliability legislation before any meetings with the NERC board are completed). I will analyze the shortened NERC and PJM Revised versions and share some thoughts based on our objectives.,energy infrastructure,formal,3 +Re: job applicant,yes lyoho@enron.com 09/26/2000 09:03 AM To: Steven.J.Kean@enron.com cc: Subject: Re: job applicant Steve -- Yes I am interested in talking to him. Should I contact Eric? Thanks for passing this along. Lisa From: Steven J Kean@ENRON on 09/24/2000 05:37 PM Sent by: Steven J Kean@ENRON To: Lisa Yoho/HOU/EES@EES cc: Subject: job applicant any interest? ,other,formal,5 +"ECT Strategy Meeting, per Julie Armstrong",At the Four Seasons Hotel - Livingston Room,other,formal,3 +Steffes Testimony To House Committee Today,Attached is Jim's prepared statement filed last night for today's House Energy and Air Quality Subcommittee (Chairman Barton) hearing on reliability transmission incentives and siting issues. You will see we use the opportunity to make a plug for large RTOs as well. Jim will actually deliver a five minute oral summary. He is appearing as the EPSA witness in his capacity as chairman of the EPSA Regulatory Affairs Committee. There will be ten witnesses on the panel. Others will represent EEI NARUC APPA LPPC NRECA NERC (David Cook) ELCON Consumers for Fair Competition and GF Energy. We will provide a report following the hearing.,other,formal,3 +"Lou Pais staff meeting, 25C3.",Hartsoe: PJM HoganSPP WSCCHebertdemocratic nominee ACA Andy Rotherham AAE membership (703)875-0764 Gordon Weil page Maureen,other,casual,3 +Re: PJM RTO Order,Great summary. I think the two main issues you raise are the right ones b= ut I have one other thought we should discuss internally. Do we want to cr= eate a set of incentives for the management of PJM that would entitle manag= ement to incentive compensation to the extent they meet certain goals -- eg= relieving congestion on the grid increasing throughput across the transmi= ssion system expediting interconnection (measured in terms of actual inter= connections not just applications approved) etc. This way we could create= an organization that would have the incentive to make a workable and open = transmission system. From:=09Sarah Novosel on 07/13/2001 07:57 AM To:=09Kevin M Presto/Enron@EnronXGate Mark Dana Davis/HOU/ECT@ECT Jeff Ad= er/HOU/EES@EES Edward D Baughman/Enron@EnronXGate Joe Gordon/Enron@EnronX= Gate Janelle Scheuer/Enron@EnronXGate mbrown9@enron.com Mark Bernstein/H= OU/EES@EES John Llodra/Enron@EnronXGate W David Duran/Enron@EnronXGate G= eorge Wood/Enron@EnronXGate Dave Perrino/SF/ECT@ECT Paul J Broderick/Enro= n@EnronXGate Jason Thompkins/Enron@EnronXGate Mason Hamlin/Enron@EnronXGa= te Robert Stalford/Enron@EnronXGate Tom May/Enron@EnronXGate Gautam Gupt= a/Enron@EnronXGate Narsimha Misra/Enron@EnronXGate Steve Montovano/NA/Enr= on@Enron Garrett Tripp/Enron@EnronXGate Berney C Aucoin/Enron@EnronXGate= Jason Thompkins/Enron@EnronXGate Rob Wheeler/Enron@EnronXGate Rogers Her= ndon/Enron@EnronXGate Jim Meyn/Enron@EnronXGate Aleck Dadson/Enron@EnronX= Gate Daniel Allegretti/Enron@EnronXGate Pearce W Hammond/HOU/EES@EES Don= na Fulton/Corp/Enron@ENRON Howard Fromer/NA/Enron@Enron Kathleen Sullivan= /NA/Enron@ENRON Tom Hoatson/Enron@EnronXGate Thane Twiggs/Enron@EnronXGat= e Sarah Novosel/Corp/Enron@ENRON Christi L Nicolay/HOU/ECT@ECT James D S= teffes/NA/Enron@Enron Linda Robertson/NA/Enron@ENRON Richard Shapiro/NA/E= nron@Enron Steven J Kean/NA/Enron@Enron Charles Decker/HOU/EES@EES Nick = Politis/Enron@EnronXGate sscott3@enron.com Aleck Dadson/Enron@EnronXGate= Lloyd Will/Enron@EnronXGate Ray Alvarez/NA/Enron@ENRON Susan M Landwehr/= NA/Enron@Enron Charles Yeung/HOU/ECT@ECT Andy Rodriquez/Enron@EnronXGate= John J Lavorato/Enron@EnronXGate Louise Kitchen/Enron@EnronXGate Greg Wh= alley/Enron@EnronXGate susan.j.mara@enron.com Jeff Dasovich/NA/Enron@Enro= n Karen Denne/Enron@EnronXGate mpalmer@enron.com Alan Comnes/Enron@Enron= XGate Tom Briggs/NA/Enron@Enron John Shelk/NA/Enron@Enron Pat Shortridge= /Corp/Enron@Enron Chris Long/Corp/Enron@ENRON Mike Roan/ENRON@enronXgate= Kerry Stroup/NA/Enron@Enron Janine Migden/Enron@EnronXGate Dave Mangskau= /Corp/Enron@ENRON cc:=09=20 Subject:=09PJM RTO Order Attached is a summary of the PJM RTO order. While it is somewhat lengthy = the order has a lot of good information in it that I wanted to share with t= he group particularly the Commission's statements regarding the existing c= onfiguration of the northeast and the need to expand it. We are working on summaries of the New York and New England RTO orders and = will have those out shortly. If you would like copies of the orders just = let us know. We expect the mediation proceeding to begin within the next week. We will = keep you updated. Sarah =20,other,formal,0 +Tammy Hopkins - Resume,,human resources,neutral,3 +RE: OH Energy Summit -- Summary of comments,Barbara-- Very helpful and encouraging report. Sounds like the Gov. and the Consumers Counsel are with us on RTOs. Would they be willing to write their own letters I assume separately to the Ohio congressional delegation? There are several Ohio members on the House Energy and Commerce Committee. Is the Consumers Counsel a Democrat (that would help since there are three Ohio Democrats on the committee -- Brown Strickland and Sawyer?). Even if he is a Republican support from within the state would help a great deal. Thanks. John ,other,formal,0 +RE: SMS conference,Ian My secretary contacted SMS. I was surprised that they want to charge me for the conference. Typically the speakers are invited to attend without incurring the cost of a conference. The is the first invitation to speak I received combined with a request to pay for the privilege. Vince ,other,surprised,3 +FERC Tech. Conference on CA Natural Gas Transportation- 5/24,calendar fyi -----------------,calendar & scheduling,casual,3 +RE: Confidential - GSS Organization Value to ETS,Will do. ,other,formal,0 +Latest Documents,-----------------,other,neutral,2 +CONFIDENTIAL Attached file,This is the negative CTC claim. Transmission and other charges we owe have been set off ie this is a net amount and the gross CTC is much larger- on the order of $900MM. Decision to use or not is not final in Enron keep confidential. The potential witness would be Wanda Curry. Thanks Ray -----------------,legal affairs,formal,3 +Re: FW: Confidential - GSS Organization Value to ETS,I agree with Morris ,other,formal,5 +RE: CONFIDENTIAL Personnel issue,Great. That is exactly what I would like you to do. Michelle ,human resources,polite,1 +HELP!!!,Linda - I haven't heard of these guys. Do you know them? -----------------,other,inquisitive,3 +Re: ORG CHART,I do not. Enron Energy Services From: Deborah DeFforge 07/18/2000 08:34 AM Phone No: 713.853.9474 713.646.2621 - Facsimile EB1293 To: Steven J Kean/HOU/EES@EES Richard Shapiro/HOU/EES@EES cc: Subject: ORG CHART Do either of you have an updated org chart depicting EES ENA and EBS? Thank you! d2,organization,formal,3 +Power of Communication Program,More info. -----------------,business document,inquisitive,3 +UC-CSU-Enron press release,I know we got a lot of grief on the Hill when we had our fight with UC/CSU. Now we have settled and this release will go out (with some modification) today. -----------------,other,formal,2 +"Report on ""Anti-RTO Bill"" and on Andy Black Meeting",This note is to report on two electricity legislative developments: the Aug. 2nd introduction of an anti-RTO bill (or at least anti-mandatory RTOs) and on a meeting I had yesterday afternoon with Andy Black the policy coordinator for Chairman Joe Barton on the House Energy and Air Quality Subcommittee to discuss their intentions with respect to electricity legislation this Fall. 1. H.R. 2814 (Reps. Tom Sawyer (D-OH) and Richard Burr (R-NC)) On Aug. 2nd (the last day Congress was in session before the August Recess) the above named members of the House Energy and Air Quality Subcommittee introduced H.R. 2814 the Interstate Transmission Act. The legislation is bad because among other things it requires FERC to establish transmission pricing policies that provide incentives for voluntary participation and formation of RTOs with language prohibiting policies that have the effect of forcing transmitting utilities to join RTOs. Also objectionable is that the bill would limit pancaking but at the same time require FERC to establish a reasonable transition mechanism or period for additive charges. The legislation prohibits FERC from conditioning any order upon a transmitting utility being required to transfer operational control of jurisdictional facilities to an ISO or RTO. The bill would require that participating transmitting utilities must approve the form structure and operating entity of any RTO. In addition to the RTO language the bill has the old version of the NERC reliability legislation in it. The bill also has a PUHCA exemption for RTOs repeals Federal Power Act sec. 203 on the disposition of property and includes the tax changes that IOUs seek for transfers of property to an independent transmission company. Barbara Hueter advises that First Energy has its hq in Rep. Sawyer's district. Rep. Burr is from North Carolina so perhaps Duke had its utility hat on in working with him. I am checking into where Duke is on this issue. Rep. Burr is the Vice Chairman of the House Energy and Commerce Committee and close to Chairman Tauzin -- so his support for this legislation is significant (see Andy Black comment below). 2. Andy Black Meeting Andy is meeting with various trade associations this month to discuss electricity legislation. He is only meeting with a few companies on a one-on-one basis -- Enron Reliant Dynegy and TXU. His timing is to have a legislative draft for Chairman Barton to review when Congress returns after Labor Day. If Chairman Barton approves or makes changes the draft will be circulated to members of the subcommittee and the public for further comment. The intent is to mark up an electricity bill this Fall so that if the Senate acts on electricity in its comprehensive energy bill the issue will be ripe for consideration in a House-Senate conference committee. Here is a run down of my comments and Andy's comments on specific issues. a. RTOs Chairman Barton supports RTOs. At a minimum the draft will affirm FERC's authority as the commissioners have requested. Andy is considering going beyond that to mandate RTO participation. Not sure he can hold that position in the subcommittee. He is looking to Enron and others to help them explain and build support for RTOs. Informed him of our initial informal coalition steps. However Andy asked me to look at sec. 3 of the Sawyer-Burr referenced above which I realized after the meeting is the part that deals with incentive rates and negotiated rates to expand transmission and voluntary RTOs. I have a call in to Andy to reconcile these statements since the Sawyer-Burr bill is based on voluntary RTOs. Hopefully he is thinking of using the incentive and negotiated rate language and NOT the objectionable voluntary RTO aspects. I will strongly encourage him to do the right thing in that regard. b. PUHCA The draft will use the Pickering bill (H.R. 1101). Told Andy about our concerns with the record keeping provisions of that bill. Will send him our legislative language to clarify these provisions so that they do not open up all of Enron's records -- even those unrelated to transactions with a regulated utility affiliate. c. PURPA Prospective repeal. On back up power they are thinking of requiring that rates for back up power be just and reasonable until there is retail competition in the state. d. Interconnection They have received a proposal from Trigen that Andy says we will like. I am contacting EPSA to get the details. e. Net Metering They are likely to include the Inslee bill to require net metering. I explained our concern that the bill's mandate applies to all retail energy suppliers -- including EES -- even though this should only apply to utilities with an obligation to serve that it does not make sense to mandate it on service providers like EES (per Jim's helpful comments yesterday). I need to get more information to Andy. f. Transmission Jurisdiction Thankfully Andy is NOT going to use those portions of the bill as reported by subcommittee in the last Congress that gave use heart burn on jurisdiction. Specifically the draft will not say FERC does not have jurisdiction over the transportation component of a bundled retail sale -- the draft will not get into the bundled/unbundled issue at all. The draft will bring munis co-ops and PMAs under the FERC umbrella for transmission jurisdiction purposes. g. Siting On siting Andy is thinking of some type of mechanism that would give a State one year before federal eminent domain attaches. h. Reliability On a negative note Andy intends to use the latest NERC reliability language because NERC's version has strong support among the Members of the subcommittee and no other alternative has emerged with political support (i.e. not PJM). I explained our concerns. He said our best bet is for DoE or FERC to come forward to seek something other than the NERC version. He said Members eyes glaze over on reliability with everything else on the plate. i. Negawatts I raised the absence of negawatts on his issue list. He said he is open to considering it again but that there was left over political baggage and unresolved issues from when this was attempted during consideration of the California bill earlier this summer. Your questions and comments on the any of the above are most welcome.,other,formal,5 +Ashoks all-day staff meeting today.,Eric (713) 464 1955 Steve Williams PGE information for Boise,other,formal,5 +Kari Dohn 916.445.0114,TASK ASSIGNMENT Task Priority: 2 Task Due On: Task Start Date:,other,formal,3 +Rick to Cover,LTV Steel's Northern Ohio Energy Conference in Cleveland Ohio You will be on a panel with reps from Centerior Ohio Edison Cinergy Audience will be between 400-500 ppl Per Terrie James,other,excited,2 +Re: Funky Business,Follow up to previous message: I would not have managing for the slow down on the agenda. I don't think it is as relevant to our business as it is to many others. TERRIE JAMES@ENRON COMMUNICATIONS 07/05/2001 01:09 PM To: Steven J Kean/NA/Enron@Enron cc: Subject: Funky Business Steve Have you had a chance to look at the book Funky Business and to give any thought to having Jonas present at the Management Conference? I know you have a thousand other things on your plate not the least of which is California so I understand if the answer is no. However they've been contacted by someone else about the date so we may be forced to decide rather soon. On a related subject I'm contemplating another topic for the conference. I'd seen an article in Fortune several months ago titled Managing for the Slowdown. It talked about new challenges managers face in light of the economic downturn. (Most young managers have never experienced anything but boom times.) The article also outlines a dozen or so things companies should be thinking about now. (Use the downturn as a new opportunity to evaluate people. Overhaul your budget process. Don't stop communicating. etc.) I think it would be beneficial to address similar strategies and ideas with our managers. I'd love to get your thoughts on this idea. (Is it appropriate for Enron or am I just seeing the world through bleak-colored glasses?) Terrie James Sr. Director Corporate Communication Enron Broadband Services 713-853-7727 (phone) 713-646-8887 (fax) terrie_james@enron.net ,organization,formal,3 +"Re: FW: Meeting with Mayor Willie L. Brown, Jr.",I think it would be a good idea for them to talk but I wouldn't want Jeff to go to California right now. Maybe they could meet outside the state (if for example brown is going to be in DC or New York) or by phone. From: Joannie Williamson/ENRON@enronXgate on 07/13/2001 08:36 AM To: Steven J Kean/NA/Enron@Enron Richard Shapiro/NA/Enron@Enron cc: Subject: FW: Meeting with Mayor Willie L. Brown Jr. Wanted you to be aware that Mayor Brown is inviting Jeff to meet with him either in San Francisco or elsewhere. Please advise but I know that Jeff would probably not travel to California. Mark Koenig and Andy Fastow will discuss meeting with Mayor Brown on the CalPERS issue. Thanks Joannie ,other,cautious,3 +Re: Privileged & Confidential -- Verification,Thanks for your help. Linda J Noske 09/18/2000 05:52 PM To: Richard B Sanders/HOU/ECT@ECT cc: Subject: Re: Privileged & Confidential -- Verification Richard I got the fax confirmation back that it went through. I put it in your in-box since you were with the interviewee. Linda Richard B Sanders 18/09/00 05:32 PM To: Linda J Noske/HOU/ECT@ECT cc: Subject: Privileged & Confidential -- Verification ,email management,formal,3 +<> - General Expenses,-----------------,finance,formal,1 +Re: FW: Possible co-sponsorships,Though I had a somewhat different notion when I initially raised the idea of co-sponsorship I agree with Lee's observations and think that we should proceed the way he suggests. gramlr@pjm.com on 08/29/2000 04:06:56 PM To: amosher@appanet.org hcameron@uclink.berkeley.edu lfried@uclink.berkeley.edu jeff.dasovich@enron.com cc: Subject: FW: Possible co-sponsorships All Lee asked me to forward this. I'm still awaiting additional suggestions from anyone on speakers. I guess Lee's e-mail changes things. If the business school wants to go forward with a conference anyway then it may be a bad idea to have a separate one. Jeff has said he likes the idea of coordinating. Bill and Allen what do you think? I will chime in that Carl Shapiro is very much a big wig as a former chief economist at DOJ. As for the Frank Wolak suggestion Frank is a Stanford economist who is an outstanding analyst and has published probably more than anyone else on electricity market design performance regarding the UK Australia and California. He speaks a mile a minute though and his understanding of policy and politics is a bit naive. I should note that ICF will not be able to contribute. I heard from Michael Berg this morning. So he will not be participating in our discussions either. My opinion is let's do whatever is best for the school. One positive outcome of this would be stronger relationships with some of the University's top notch economic policy faculty. Overshadowing is possible. Lee does Dean Nacht have a view on joint sponsorship? Rob > ,other,formal,3 +,Sorry I had saved your list for the Europe AA PRC and didn't include them in my draft of the memo. I am sending another version shortly that has that information included. I don't think I need anything more from you unless you have other comments on the memo. Thanks,other,friendly,3 +Enron projects with OPIC financing,OPIC information. -----------------,finance,formal,0 +call to Sen Kinder,Ken talked to Sen Kinder. He made the points you had prepared. Kinder agreed to shelve the legislation for this session. He said he had been hearing from several others including Proctor and Gamble (which has a big facility in his district) that the legislation was not going to help competition develop in the state. He expressed willingness to work with us on a better package and also expressed interest in coming to Enron's offices. He is going to be in San Antonio in August and would like to come to Houston around that time.,government & politics,formal,3 +Form 4 Reminder for April,do I need to do anything? I believe the only transaction I had was related to a set of shares which were released to me earlier in the year. Some of the shares were sold at that time to pay the income tax on the distribution. We discussed this before and my recollection is I did not have to make a filing. Could you confirm by e-mail? -----------------,finance,polite,3 +Notice of CPUC gas infrastructure workshop,fyi ,other,casual,2 +New MSC Committee Report,All: I just downloaded the attached from the ISO's website. It is dated 12/1/00= . =20 To boil it down the MSC comes down against soft caps and recommends the= =20 get market-based rates in return for selling forward proposal that the IS= O=20 staff is pushing. Forward contracts would need to at rates that=20 approximate competitive prices. Based on my quick read that does not mea= n=20 market prices it means somthing more akin to cost of service. MSC also=20 wants there to be a penalty on generators for underscheduling. They also= =20 claim there proposal will not exacerbate reliability problems. I would be interested in people's opinion if Enron should be responding to= =20 this report. Given the date of the report I am not sure if/how the ISO=20 would file this at the FERC. G. Alan Comnes (GAC) Here's the list of recommendations from the report. (1) The PX =01&must-buy=018 requirement would become a =01&must-schedule=01= 8 requirement.=20 IOUs would be required to schedule all forward energy through the PX but would = be=20 free to purchase it from any source. (2) California generators and entities that sell to any California purchase= r=20 (not limited to the PX and ISO) could continue to be eligible for market-based rates (and would= =20 be free of refund obligations) only if they offer a substantial portion of their sales= =20 in the form of two-year contracts at rates that approximate competitive prices. The detail= s=20 of such a proposal are outlined in this report. The volume offered by sellers in the= =20 aggregate would be sufficient to cover the all three IOUs=01 residential and small= =20 commercial customer load using an average load profile for weekdays and weekends for= =20 each month. (3) Any market participant that does not offer these two-year=20 market-power-mitigation forward contracts would be subject to cost-of-service rates for all of thei= r=20 sales of energy and ancillary services into the California market for at least the two-year= =20 market power mitigation period. (4) The CPUC would be encouraged to set a default rate for IOU residential= =20 and small commercial customers based on projected wholesale energy costs under the=20 2-year contracts described above. (5) The under-scheduling penalty should be even-handed. The MSC recommends = a=20 real-time trading charge that is applicable both to load and generation and more=20 important does not distinguish between instructed and uninstructed deviations from schedul= e.,other,formal,0 +PanNat Value - Confidential and Proprietary,Jeff Per your request below is the value of the deal based on MID prices as of Friday June 28. We have also estimated the Bid/Offer costs at $30 million based upon several quotes we received last year. Let me know if you have any questions. Regards Eric ,other,formal,3 +"Re: Sen. Murkowski to Address USAEE Conference, Sept. 25",Cynthia get back to Jeff on this. It doesn't look like a high priority to me but I will absolutely defer to your judgment. -----------------,meetings & events,formal,3 +Duke release and news conference,-----------------,other,neutral,2 +"PGE/Commercial Support Group Meeting, 32C1",Per Geoff Roberts,other,formal,5 +Congressman Ose loved your letter to Sen. Dunn,-----------------,government & politics,polite,3 +Re: Two Governors Press Releases--More Courage from the Capitol,Preempt me please! Jeff Dasovich@EES 09/13/2000 06:22 PM To: Mary Hain/HOU/ECT@ECT Joe Hartsoe/Corp/Enron@ENRON Cynthia Sandherr/Corp/Enron@ENRON Sarah Novosel/Corp/Enron@ENRON Paul Kaufman/PDX/ECT@ECT Sandra McCubbin/SFO/EES@EES Mona L Petrochko/SFO/EES@EES Susan J Mara/SFO/EES@EES James D Steffes/HOU/EES@EES mpalmer@enron.com Karen Denne/Corp/Enron@ENRON Richard Shapiro/HOU/EES@EES Steven J Kean/NA/Enron@Enron cc: Subject: Two Governor's Press Releases--More Courage from the Capitol -----------------,business document,urgent,3 +Ken Lays Meeting with Fox,Jon -- Ricardo Charvel is pulling together the briefing for Ken so please share the EBS activities/ agenda with him. Thanks -----------------,other,formal,3 +NewPower Withdrawal Notes,,other,neutral,3 +EEI Conference Series on RTOs and Markets: Mark Your Calendars,Should we (or ESCA) start looking for opportunities like this now to get the word out? -----------------,other,formal,0 +Re:,I'll give 150. Enron Capital & Trade Resources Corp. From: Jeff Skilling 04/19/2001 05:18 PM Sent by: Sherri Sera To: Cliff Baxter/HOU/ECT@ECT Rick Buy/HOU/ECT Ben Glisan/HOU/ECT@ECT Steven J Kean/NA/Enron@Enron Jeffrey Sherrick/Corp/Enron Philippe A Bibi/HOU/ECT Michael Brown/NA/Enron Wade James A Hughes/ENRON_DEVELOPMENT Louise Kitchen/HOU/ECT@ECT Rebecca McDonald/ENRON_DEVELOPMENT Greg Piper/Corp/Enron John Sherriff/LON/ECT@ECT Greg Whalley/HOU/ECT@ECT Janet R Dietrich/HOU/EES@EES Mark S Muller/HOU/EES@EES Matthew Scrimshaw/LON/ECT@ECT David Cox/Enron Communications@Enron Communications Kevin Hannon/Enron Communications@Enron Communications Rod Hayslett/FGT/Enron Stan Horton/Houston/Eott@Eott Danny McCarty/ET&S/Enron@Enron cc: Subject: I know how incredibly busy you all are so I'm sure that making a pledge to Jeff for the MS150 has simply slipped your mind. Well the ride is this weekend time is running out and we need you! Enron's goal is to raise $700000 and Jeff's personal goal is to raise $50000. As of today we are a little better than half way there. Won't you consider helping him reach his goal? Thanks for your consideration. I look forward to hearing from you tomorrow... Sherri :-),external affairs,friendly,3 +Confidential Information and Securities Trading,To:GRIFFITH JOHN Email:john.griffith@enron.com - 713-853-6247 ? Enron Wholesale Services - Office of the Chairman ? From:??Mark Frevert Chairman & CEO ??????Greg Whalley President & COO ??????Mark Haedicke Managing Director & General Counsel ? Subject:??Confidential Information and Securities Trading ? Enron Wholesale Services ('EWS') maintains official Policies and Procedures Regarding Confidential Information and Securities Trading ('Policies and Procedures') which have been revised as of November 15 2000 to reflect the new EWS structure. These policies and procedures are intended to allow us simultaneously to pursue our diverse businesses and to protect confidential information our reputation for integrity and EWS and its employees from legal liability. ? You are required to become familiar with and to comply with the Policies and Procedures. The newly revised Policies and Procedures are available for your review on LegalOnline the new intranet website maintained by the Enron Wholesale Services Legal Department. Please click on the attached link to access LegalOnline: ? ? You must certify your compliance with the Policies and Procedures within two weeks of your receipt of this message. The LegalOnline site will allow you to quickly and conveniently certify your compliance on-line with your SAP Personal ID number. If you have any questions concerning the Policies or Procedures please call Lance Schuler at extension 3-5419 Mark Haedicke at extension 3-6544 Alan Aronowitz at extension 3-3214 Bob Bruce at extension 5-7780 or Donna Lowry at extension 3-1939.,other,formal,3 +Barton Talking Points,Here are Barton talking points per our conversation last night. We will separately send a favorable Washington Post article on FERC's meeting yesterday as it relates to RTOs.,other,formal,5 +Portal,Attached are some late night thoughts on the portal. Most of this is focussed on the portal for opinion leaders but some of it could be applicable to the comemrcial portal as well. Could you forward this to Palmer ... for some reason my address book doesn't pull him up when I'm off the system.,other,casual,2 +More Than Words,Dear Jeff There aren't any corporate speak words that can express what I feel so I will use plain English: I am thrilled that I will be working for you at Enron. I look forward to helping you and your team continue to transform Enron into the number one company in the world and into the best company in the world. I have sent my bio to Steve Kean and will send him my list of my preferred California contacts. By mid-week I will send you a cleaned-up version of the suggestions I outlined in our meeting. I look forward to the next steps. It is an honor to be working with you again. I pledge to you my very best. Sincerely [IMAGE] Contact Information E-mail kevinscott@onlinemailbox.net Phone (213) 926-2626 Fax (707) 516-0019 Traditional Mail PO Box 21074 ?Los Angeles CA 90021 - image001.png - image002.gif,employment,excited,3 +Confidential - Voicemail Messages,These were the messages in your voicemail: 1. 10/18/01 - Margaret Allen ....needed your advice on whether her sister should take job with Cal-Pine or Kinder Morgan 2. 10/19/01 - Adrianne Engler ....regarding candidantes that you were suppose to phone interview. (you have sent her an email since this) 3. 10/23/01 - Bob Shults(X3-0397)....they met with Nymex last week and are getting ready send the proposal ont eh document you saw last week. He wants to make sure that you are okay with this and dont have any issues.,other,formal,0 +Depart 1:05/Arrive 2:41,Meet with Commissioner Ebert in Biloxi - Confirmed 7/1/97 Contact is Paige - 601-436-4833,personal & social,formal,3 +Re: Houston City Officials Reception - July 31st,We don't know yet. He has been invited and we expect most will show up but we won't know until they do. Enron Energy Services From: Karen Owens 07/20/2000 09:04 AM To: Steven J Kean/HOU/EES@EES cc: Subject: Re: Houston City Officials Reception - July 31st Is Gordon Quan attending?,other,neutral,3 +fyi,Please send to the distribution list -----------------,other,formal,3 +NYTimes.com Article: The Real Wolf,Please respond to vkaminskiThis article from NYTimes.com has been sent to you by vkaminski@aol.com. /-------------------- advertisement -----------------------\ Looking for better IT solutions? Toshiba is uniting digital mobile and network innovations in a bold new vision of Information Technology for today and tomorrow. Take a closer look at life in the new Digital Age. And imagine how good IT can be. Visit Toshiba.com for more details. The Real Wolf RECKONINGS By PAUL KRUGMAN ecently I received a letter from an economist I respect chiding me for my Naderite columns on the California energy crisis. He just didn't believe that market manipulation by power companies could possibly be an important issue it sounded too much to him like the sort of thing one hears from knee-jerk leftists who blame greedy capitalists for every problem be it third-world poverty or high apartment rents. The left has cried Wolf! so many times that sensible people have learned to discount such claims. But now a bona fide wolf has arrived whose predatory behavior is doing terrible damage to our most populous state - and nobody will believe it. True California would be heading for a summer of power shortages even if it had never deregulated. And even if there was workable competition in the wholesale electricity market prices in that market would spike during periods of peak demand transferring billions of dollars from either taxpayers or consumers to the generators. But the evidence is now overwhelming that there isn't workable competition in California's power market and that the actions of generators gaming the system have greatly magnified the crisis. The key fact is that California has somehow remained in a state of more or less continuous power shortage and very high wholesale prices regardless of the level of demand. A rash of outages has kept the electricity market conveniently - and very profitably - short of supply even during periods of low demand when there ought to be lots of excess capacity. As Frank Wolak the Stanford economist who also advises the state's power grid has pointed out an outage at a power plant is a lot like an employee calling in sick. You can't tell directly whether he is really sick or has chosen to take the day off for other reasons but you can look for circumstantial evidence. And such evidence has convinced Mr. Wolak that generators use forced outages strategically to withhold capacity from the market - a view shared by a growing number of other researchers. Which brings us to the latest move by the Federal Energy Regulatory Commission. On Wednesday the commission apparently decided to offer California some relief and put new price caps in place on the California electricity market. I say apparently because the more you look at the plan the less likely it seems to be any help at all. Indeed the measure was passed on a 2-to-1 vote with William Massey - the one commissioner who has been sympathetic to calls for price controls - voting against it on the grounds that it would be ineffectual. What's wrong with FERC's plan? First it caps prices only in emergency conditions - ignoring the fact that electricity prices have stayed at hard- to-explain levels even when there is no emergency. In effect the plan is laid out as if the electricity market were really competitive in spite of all the evidence that it is not. Second even those emergency price caps are full of loopholes offering extensive opportunities for what Mr. Wolak calls megawatt laundering - selling power to affiliated companies that for one reason or another are exempted from the price controls (for example the controls do not apply to imports from neighboring states) then selling it back into the California market. Severin Borenstein of the University of California Energy Institute adds that because the allowed price depends on the cost of generation at the least efficient plant generators will have a clear incentive to produce inefficiently: I predict we will find some plants we never heard of before that are suddenly operating again and they will be pretty inefficient. The general verdict seems to be that this is not a serious plan. There are serious proposals to mitigate the crisis out there - indeed last fall Mr. Wolak submitted a proposal that was well received by other experts - but FERC has ignored all of them. The charitable interpretation is that FERC still doesn't get it that it just can't bring itself to believe that this time the wolf is real. The uncharitable interpretation is that last week's action was meant to fail. The Medley Report an online newsletter calls the FERC plan a grand exercise in posturing without substance . . . a very clever temporary move by the Bush administration to deflect any political fallout from the looming disaster. Whatever the explanation the plain fact is that FERC and the administration have yet to offer California any significant relief. Visit NYTimes.com for complete access to the most authoritative news coverage on the Web updated throughout the day. Become a member today! It's free! http://www.nytimes.com?eta HOW TO ADVERTISE For information on advertising in e-mail newsletters or other creative advertising opportunities with The New York Times on the Web please contact Alyson Racer at alyson@nytimes.com or visit our online media kit at http://www.nytimes.com/adinfo For general information about NYTimes.com write to help@nytimes.com. Copyright 2001 The New York Times Company,media & press,informative,0 +Re: Annual Meeting Q&A,Currently an announcement is scheduled for mid may so there may be more public information available then. In the meantime I would answer the question as follows: Enron will continue to focus its attention on the commercial light manufacturing and industrial end user markets. Enron continues to explore opportunities to serve the residential market and we believe that the market presents opportunities that were not available even a couple of years ago (for example the rising acceptance of online purchasing by consumers presents low cost customer acquisition and account management possibilities that didn't exist when Enron last moved into residential markets). We believe however that the residential market opportunity is best pursued through a separate entity outside of Enron Mary Clark@ENRON 04/20/2000 02:31 PM To: Steven J Kean/HOU/EES@EES Maureen McVicker/HOU/EES@EES cc: Subject: Annual Meeting Q&A Steve we need to include a potential question in the Q&A document that addresses if Enron will get back into the residential business (i.e. Resco). Could you provide an answer to this question. I need by end of biz Monday. Thanks. Mary,other,formal,3 +Re: Lay/Skilling Talking Points for Bush Admin Meetings and Calls,To add to what Rick said I would add that effective DSM requires that price signals be sent to customers AND customers have the ability to repond -- even Mr. I See Market Power Under Every Bush Dr. Frank Wolak has as one of his key solutions -- competitive retail markets. Sue Mara Enron Corp. Tel: (415) 782-7802 Fax:(415) 782-7854 Richard Shapiro 04/04/2001 11:07 AM To: Linda Robertson/NA/Enron@ENRON cc: Steven J Kean/NA/Enron@Enron Joe Hartsoe/Corp/Enron@ENRON Tom Briggs/NA/Enron@Enron James D Steffes/NA/Enron@Enron Paul Kaufman/PDX/ECT@ECT Janine Migden/NA/Enron@Enron Jean Ryall/NA/Enron@ENRON Aleck Dadson/TOR/ECT@ECT Ricardo Charvel/NA/Enron@Enron Jeff Dasovich/NA/Enron@Enron Susan J Mara/NA/Enron@ENRON Jose Steve Montovano/NA/Enron@Enron Subject: Re: Lay/Skilling Talking Points for Bush Admin Meetings and Calls I think these are quite good...the missing piece I would argue that we need to include is a talking point on the need for FERC to focus significant resources on the identification and elimination of market power in electricity markets and the need to encourage the development of distributed generation and more effective demand - side response mechanisms partly in response to market power concerns. This is a huge issue in getting wholesale electricity markets to work effectively i.e to create discernable consumer welfare benefits.... and we ( Enron ) need to talk about this this issue and concern and talk about it frequently and w/ the same passion we talk about the need for open markets. Linda Robertson 04/04/2001 12:09 PM To: Steven J Kean/NA/Enron@Enron cc: Richard Shapiro/NA/Enron@Enron Joe Hartsoe/Corp/Enron@ENRON Tom Briggs/NA/Enron@Enron Subject: Lay/Skilling Talking Points for Bush Admin Meetings and Calls Steve per our conversation yesterday in Houston what do you think of these TPs? To be used by both Ken and Jeff in conversations and meetings with the Bush Administration. - Skilling Talking Points.doc,other,formal,3 +Senate May Mark Up Electricity Title Next Week,I have received confirmation from Senate staff that the Senate Democrats on the Energy Committee met this morning and tentatively decided to go along with Chairman Bingaman's desire to move up the mark up of the electricity title from later this month as earlier expected to next Thursday Sept. 13. They are not sure they can do it all in one day. Acting on 9/13 as desired now depends on the reaction of the committee's Republicans. Not sure they will cooperate with moving quickly. I am on my way to the Senate for an RTO meeting and expect to obtain a copy of the draft electricity language implementing the Bingaman White Paper the language was just distributed to committee members this afternoon but I understand that Bingaman's staff had worked on it behind the scenes with Comr. Massey. Will advise once I have it hand. John,other,formal,3 +Mid Year PRC Meetings,for meeting file -----------------,other,formal,5 +RE: Meeting with Debra,Anne That's great. The meeting is at 3:00 in or area on th 19th. Vince ,meetings & events,formal,3 +Follow-up from Meeting with Andy Black,Jim -- Please see attached from EPSA on their meeting today with Andy Black Chairman Barton's chief energy adviser. I have my own one-on-one with Andy at 4 pm tomorrow. Would you have a minute to read the EPSA memo and a list that Andy sent me (which I will forward separately) and we could chat about these issues tomorrow before the 4pm -- just so I have everything in perspective going into the meeting? I am open to any time tomorrow except 10 am (EDT). Please let me know. Thanks. -----------------,meetings & events,formal,3 +"RE: Hi,",Jinbaek Great I look forward to working with you. Please call me during the next few days (713) 853 3848 and we can chat about the projects. Please contact Molly Magee to talk about the first day orientation program. Her E-mail address is molly.magee@enron.com and her phone number is (713) 853-4804. Vince ,other,friendly,3 +Congressional Hearing in S.D. on the 11th,Could you work with Allison to get the needed information to cathy. -----------------,other,formal,3 +Black Mesa Pipeline Co,fyi -----------------,other,casual,3 +Confidential Information and Securities Trading,To:TAYLOR MARK Email:mark.taylor@enron.com - 7138537459 Enron Wholesale Services - Office of the Chairman From: Mark Frevert Chairman & CEO Mark Haedicke Managing Director & General Counsel Subject: Confidential Information and Securities Trading To keep pace with the fluid and fast-changing demands of our equity trading activities Enron Wholesale Services (EWS) has recently revised its official Policies and Procedures Regarding Confidential Information and Securities Trading (Policies and Procedures). These revisions reflect two major developments: (1) our equity trading activities have been extended into the United Kingdom and (2) in an effort to streamline the information flow process the Review Team will play a more centralized role so that the role of the Resource Group is no longer necessary.You are required to become familiar with and to comply with the Policies and Procedures. The newly revised Policies and Procedures are available for your review on LegalOnline the new intranet website maintained by the Enron Wholesale Services Legal Department. Please click on the attached link to access LegalOnline: If you have already certified compliance with the Policies and Procedures during the 2001 calendar year you need not re-certify at this time although you are still required to to review and become familiar with the revised Policies and Procedures. If you have not certified compliance with the Policies and Procedures during the 2001 calendar year then you must do so within two weeks of your receipt of this message. The LegalOnline site will allow you to quickly and conveniently certify your compliance on-line with your SAP Personal ID number. If you have any questions concerning the Policies or Procedures please call Bob Bruce at extension 5-7780 or Donna Lowry at extension 3-1939.,legal affairs,formal,0 +RTO Meeting With Chairman Barton,Late yesterday afternoon EPSA's legislative affairs committee (about 10 of us) met with Chairman Barton and staff to discuss his draft RTO language. Meeting lasted 45 minutes. Interestingly no one was there from either Reliant or El Paso. We had what the diplomats would call a frank exchange of views. Can't say we moved Barton very much if at all except we did have a chance to go over the staff to point out specific flaws in the draft even based on his view of how RTOs should come about (I gave several very specific examples like the 40000 MW provision and other limits on FERC discretion on size and scope as well as procedural rights for transmission owners but not the rest of us etc.). Chairman Barton's fundamental view is that Congress not FERC should determine how RTOs come about. And that the market and the industry should determine how RTOs are shaped etc. not FERC. He bristled at one point and said he had more faith in us than he had in FERC or we had in ourselves to determine how RTOs come about going so far as to saying that under his draft they would be our RTOs -- meaning those of us present. I pointed out this is wrong because under his draft the transmission owners particularly those least likely to join up would have all the leverage. I said that the basic flaw in the draft is that it assumes there are only two parties to the transaction -- FERC and transmission owners -- forgetting the rest of us including consumers. He said we could become transmission owners if we wanted to!!! On the 40000 MW size minimum he said many experts had advised them this is the correct number. We said that putting a number in to the statute ran counter to his oft-stated desire for a fair process to produce RTOs driven by market forces not regulators. The two elements of good news -- Barton reconfirmed that a markup this year is very unlikely AND he expressed that he would not spend too much time on electricity next year if it started to crowd out other issues like Clean Air Act Amendments and nuclear waste legislation. This suggests a strategy possibility in terms of running out the clock. He said he has the votes by a wide margin to report the RTO draft but will entertain some changes. He said the only reason he has not marked up the bill is that the Sept. 11th terrorist attacks have taken attention away from the issue and subcommittee members are not engaged on the issue. He said those of us who support could roll the dice with them but that there are things that only Congress can do -- like getting all transmission owners into RTOs -- and that these statutory changes are so important that we should not oppose the draft.,other,informative,3 +"FERC ""Linda Breathitt"" Strategy Contact",Zausner is kind of a mixed bag. I think he's strong intellectually and has some influence but I don't trust him to keep our strategy and contacts confidential. ,energy infrastructure,cautious,3 +Greening the Enron Building Mtg,,other,casual,3 +Re: The Governors Natural Gas Summit: Responding to the Challenge,Yes thanks. Lay is going to be giving the keynote. It may be a hard story to assemble: the gas market is deregulated and structured pretty much the way we would like to see it done in both gas and power markets yet we still have high prices. It's a bit of a stretch to blame it all on OPEC. I'm interested in any views you may have. David Haug@ENRON_DEVELOPMENT 09/01/2000 10:30 PM To: Steven J Kean/NA/Enron@Enron cc: Subject: The Governors' Natural Gas Summit: Responding to the Challenge I assume you are involved in this but just in case... - - -DLH -----------------,other,formal,0 +"EES Staff Meeting, in 791 - per Julies cc:Mail on 9/5",EES Budget meeting ?,other,casual,3 +Energy Issues,Please see the following articles: Sac Bee Fri 7/27: Hopes dim for a quick Edison deal SD Union Fri 7/27: Sempra's trading unit generates a windfall LA Times Fri 7/27: Smog Rules May Be Eased LA Times Fri 7/27: Federal Caps Didn't Deter Higher Prices SF Chron Fri 7/27: Calpine profits double on skyrocketing sales Escalating power prices inspire plant building program SF Chron Fri 7/27: Generators continue to set high electricity prices SF Chron Fri 7/27: THE ENERGY CRUNCH Environmental suit against power plant Expansion called danger to slough OC Register Fri 7/27: Let's make a real deal with Edison (Editorial) LA Times Fri 7/27: California Sempra Continues Improved Results LA Times Fri 7/27: California Calpine Doubles Earnings Beats Forecasts Energy: San Jose-based company credits higher electricity prices in California and sales from new plants LA Times Fri 7/27: Cap No Bar to Higher Prices Power: Cal-ISO study says suppliers continued to charge as much as five times more than the U.S.-imposed limits WSJ Fri 7/27: Calpine Net Soars On Added Plants Sempra Profit Rises Hopes dim for a quick Edison deal By Kevin Yamamura Bee Capitol Bureau (Published July 27 2001) The Assembly will not return this week to consider a plan to save California's second-largest utility from bankruptcy all but ending hopes that legislation would reach Gov. Gray Davis by a mid-August deadline. A group of legislators and Davis staffers has worked this week on an agreement that would restore Southern California Edison's credit and relieve the state of having to purchase energy for the utility. Assembly leaders who convened the group set an ambitious schedule that would have led to a vote today had they reached consensus and been able to recall enough of the 80 Assembly members from summer recess destinations. But the newly formed plan which would issue $2.9 billion in consumer-backed bonds in exchange for several Edison concessions remains too rough for a vote said Paul Hefner a spokesman for Assembly Speaker Robert Hertzberg D-Sherman Oaks. Hefner was quick to note that Hertzberg has the Assembly on call for the scheduled monthlong break and is prepared to ask members to return if a deal comes in the next three weeks. But staff and lawmakers said earlier that organizing a mass return after today would prove nearly impossible because Assembly members are expected to travel throughout the state and beyond. Davis set an Aug. 15 deadline in his original Edison deal and recently said he could call a special session forcing legislators to return if they do not authorize a plan by then. His spokesman Steven Maviglio said Thursday the governor is not ruling out that idea but is waiting to see what comes of further legislative discussions. It's pretty clear that everyone's working pretty hard to form a consensus but they're just not there Maviglio said. The governor is optimistic about the Aug. 15 date. Even so Edison does not expect a solution by then. Company officials stated earlier this week that they would wait for a political deal at least until lawmakers return Aug. 20. The Bee's Kevin Yamamura can be reached at (916) 326-5542 or kyamamura@sacbee.com Sempra's trading unit generates a windfall \ objattph By Craig D. Rose UNION-TRIBUNE STAFF WRITER July 27 2001 Sempra Energy the parent company of SDG&E reported a 25 percent surge in profit to $137 million last quarter but said yesterday it lost money on the sale of electricity under a long-term contract to California. On the other hand Sempra said its largest source of profits was its energy trading unit a middleman that earned $69 million during the quarter buying and selling energy produced by others. The results underscore the transformation of relatively simple utility companies into diversified energy holding companies that have learned to profit in new ways from the deregulation of electricity and the turmoil in energy markets. The surprising announcement -- that a company lost money selling power during California's run-up in electricity prices -- was explained by Sempra as an intentional consequence of the long-term contract it signed with the state to provide power. Stephen Baum chairman and chief executive officer of Sempra said the company agreed to provide a steep discount to California during the summer months but would recoup the losses later in the 10-year deal. California sought long-term electricity purchase contracts so it could reduce its purchases in daily and near-term power markets where prices reached record levels. Critics say Gov. Gray Davis rushed into long-term deals because of concerns about getting through next year's election. They also say the contracts will saddle customers with higher costs for years. The governor has acknowledged that long-term contracts might cause consumers to pay relatively high prices for electricity in later years but he maintains it is a fair price to pay for lowering prices that were devastating the state economy. Michael Shames executive director of the Utility Consumers' Action Network in San Diego said the steep discount Sempra provided to the state on power this summer raised questions about the governor's proposal to help San Diego Gas & Electric Co. clear a debt of $750 million. SDG&E says it is owed that money for power purchases on behalf of its customers. In a media conference last month Davis said the agreement would eliminate the threat of a possible balloon payment for consumers who he said might have faced the so-called balancing account debt as early as next year. Shames says the proposal which took the form of a memorandum of understanding or MOU is costly for consumers and a bonanza for Sempra. He said the relatively cheap power provided by Sempra this summer makes the MOU sound like more of a hidden payback to Sempra than a real relief plan for local ratepayers. Shames said he will release an analysis of the state's Sempra plan next week. The state Public Utilities Commission is expected to rule on the plan in August. A Sempra spokesman said there is no connection between discount power and the tentative agreement to clear the $750 million debt. Doug Kline the Sempra spokesman said the power contract with the state was signed in early May and the agreement on the balancing account was reached in mid-June. Sempra Energy Trading meanwhile said only 10 percent of its $69 million profit was earned from sales of energy in the western region which includes California. The trading operation earned $40 million in profit during the comparable period last year. California's Independent System Operator which manages most of the state power grid and other investigators have said trading and bidding strategies were tools used by energy companies to raise prices during the California power crisis. Though Sempra earned money on trading its wholesale power generating business lost $9 million during the quarter. Baum said the discounts on electricity provided the state were the prime cause of the loss for Sempra Energy Resources but added that a plant outage also contributed. Sempra Energy Resources which co-owns a generating plant near Las Vegas with Reliant Energy earned $2 million during the second quarter last year. Baum added that Sempra's long-term contract with the state -- under which it will provide up to 1900 megawatts -- has allowed its wholesale business to pre-sell about half the power it expects to generate from the Nevada plant which will be expanded and three generating facilities it expects to build. Profits at SDG&E slipped to $37 million during the quarter ended June 30 down from $40 million last year according to Sempra. SDG&E whose business is restricted to delivering gas and electricity said it provided increased customer service during the crisis which lowered profits. Wall Street analysts generally applauded Sempra's results noting that the company was ahead of its plan to generate at least a third of its profits from its newer businesses by 2003. They're really two years ahead of schedule for their non-utility businesses said Brian Youngberg an analyst with Edward Jones & Co. Bud Leedom a San Diego-based analyst with Wells Fargo Van Kasper said Sempra's move into energy trading now seems shrewd. We never dreamed they were setting themselves for a windfall like this Leedom said. Investors pushed Sempra shares up 17 cents yesterday to close at $25.49 in trading on The New York Stock Exchange. Bloomberg news service contributed to this report. Smog Rules May Be Eased Power plants: EPA proposes a sweeping change in how utilities' emissions are curbed a flexible approach favored by the industry. By GARY POLAKOVIC and ELIZABETH SHOGREN Times Staff Writers July 27 2001 WASHINGTON -- U.S. Environmental Protection Agency Administrator Christie Whitman proposed sweeping changes Thursday in the regulation of power plant pollution that would replace five of the government's toughest programs with a single flexible approach favored by utilities. Whitman outlined a plan for cleaning up major components of power plant smog that represents a significant departure from the EPA's traditional regulatory dictums. She called for a major expansion of pollution credit trading which up to now has had varying success. Under the new plan the EPA would scrap some of the most stringent measures devised by the agency to deal with power plant emissions. One provision to be set aside aims to cut harmful mercury emissions another is meant to reduce emissions from Midwestern power plants by 85% another is designed to restore visibility at national parks. Especially unpopular with industry one measure known as new source review requires the installation of advanced pollution controls whenever power plants are expanded or modified. It too would be phased out. New source review is certainly one of those regulatory aspects that would no longer be necessary Whitman told Sen. George Voinovich (R-Ohio) at the hearing by the Environment and Public Works Committee. All of those [programs] could be aligned into one regulatory process that she said would work better than existing rules. Whitman's comments offer the first peek into the administration's plans for cleaning some of the dirtiest polluters left in the nation. Debate over the administration's clean-air approach has shifted to Congress as it considers whether to revise the national Clean Air Act. The magnitude of the proposed revisions caught environmentalists by surprise but buoyed industry representatives who say existing controls are costly and inefficient. She has raised an appalling prospect of junking virtually every rule and strategy to deal with emissions of electric companies in return for some vague industry-sought plan for an emissions trading scheme said Frank O'Donnell executive director of the Clean Air Trust an environmental advocacy group. If they go forward with this it means a wholesale fight over the Clean Air Act in Congress. After the hearing Whitman stressed that the overall goal is to clean the air more efficiently than current rules do. Although the administration has not yet released a so-called multipollutant cleanup strategy Whitman contended that collapsing several regulations into one far-reaching approach would be easier for regulators and industry to manage. What we're looking for is targets under this legislation that significantly clean up the air beyond what our current regulatory statutory requirements would do Whitman said. She added that new source review for example could potentially be no longer necessary if you have the right kind of targets set in a multi-emissions bill. We have to wait and see where the targets are set. Utilities have lobbied Vice President Dick Cheney's energy task force to prevent the EPA from aggressively enforcing the new source review regulation. Industry and administration officials say the provision is onerous and prevents plant upgrades although EPA officials say it is a key tool for forcing dirty old plants to cut emissions by up to 95%. During the Clinton administration federal officials charged that 32 coal-fired power plants in several Southern and Midwestern states ignored a requirement that companies install advanced emission controls when their plants were upgraded. The government reached settlement with three utilities but a provision in the Bush administration's energy plan stalled those enforcement actions pending a review of power plant controls. C. Boyden Gray attorney for the Electric Reliability Coordinating Council and former White House counsel for the first President Bush in the 1980s praised the administration's proposal. He said major utility companies he represents including Southern Co. Duke Energy Co. and the Tennessee Valley Authority could clean up with greater flexibility and less cost under the plan outlined by Whitman. To put everything in a market-incentives basis is a great step. It would be a real breakthrough and a plus for the business community Gray said. For example Gray said EPA has four separate measures to control nitrogen oxides from power plant combustion including programs to cut acid rain ozone and haze. Another program scheduled to take effect in May 2004 requires power plants in 19 states to cut summer emissions by 1 million tons annually. He said those programs can be confusing and costly and could easily be replaced by a credit-trading program run largely by power companies. Under the program being considered by the Bush administration an emission limit could be established at hundreds of power plants followed by annual reductions in mercury a toxic metal as well as smog-forming nitrogen and sulfur oxides. However a provision to reduce carbon dioxide a gas implicated in global warming was dropped under industry pressure. Power companies that reduce beyond their limits could sell emission credits which represent a pound of pollution to companies that exceed their limits. Although industry and free-market advocates favor such programs they are not without controversy. The record of market-driven programs is mixed. On the one hand the nation's acid rain program uses marketable permits and is widely credited with cutting sulfur oxides at less cost. On the other hand the world's first market-driven program to tackle urban smog has not worked in Los Angeles where nearly 400 power companies and manufacturers failed to achieve significant cleanup for the nearly eight years the program has been in effect. Further many environmental groups are wary of market-driven programs because by design they preclude active government intervention. Critics say such programs could potentially limit public review of power plant operations allow emissions to concentrate in poor communities and slow efforts to cut haze in national parks downwind from plants that elect to buy pollution credits instead of cleaning up. The Bush administration's power plant strategy was aired before the Senate Environment and Public Works Committee which is chaired by Sen. James M. Jeffords (I-Vt.) whose dramatic departure from the GOP threw control of the Senate to the Democrats. Jeffords is proposing legislation different from the administration's approach that would control four power plant pollutants including the greenhouse gas carbon dioxide an approach rejected by the Bush administration. Prospects appear to be increasing that Congress will pass one or more measures designed to reduce carbon dioxide emissions a belated response to this week's decision by more than 180 countries to deal with the problem without the involvement of the United States. Indeed in recent weeks several members in the GOP-led House and Democratic Senate have voted on bills with the intention of disassociating themselves from President Bush's environmental policies before the next election. Among the votes the House struck down a provision supported by the Bush administration that could hinder progress on global climate change policy. The Senate banned new coal mining and oil and gas drilling in national monuments. Other recent rebuffs included rejections of administration initiatives on such issues as the Endangered Species Act hard-rock mining regulations and offshore drilling for oil and gas. Copyright 2001 Los Angeles Times Federal Caps Didn't Deter Higher Prices Power: Cal-ISO study says suppliers continued to charge as much as five times more than the imposed limits. By NANCY VOGEL TIMES STAFF WRITER July 27 2001 SACRAMENTO -- After federal regulators limited wholesale electricity prices last month big private sellers of power in California continued to ask as much as five times more for electricity than the federal cap according to a confidential study by state grid operators. The analysis by the California Independent System Operator covers only the first week after the caps were imposed June 20. Cal-ISO has submitted the data to federal regulators for potential investigation. The report is a summary of what Cal-ISO calls possible anti-competitive behavior by Duke Energy Williams Cos. Mirant Corp. Reliant Energy and Dynegy Corp. In a truly competitive market we would expect these suppliers to bid very close to their actual operating cost said Greg Cook senior policy analyst with Cal-ISO's Department of Market Analysis. The state did not necessarily purchase any power at the high prices being demanded. Instead the significance of the bids is that they show how California could find itself paying exorbitant prices for electricity again if hot weather returns and conservation slackens said Frank Wolak a Stanford University economist who studies the California electricity market. The bottom line is that the generators are putting out these bids in expectation of high demand he said. If weather all of a sudden gets really hot from Southern to Northern California the bids submitted by generators could be very costly to California. Cal-ISO calculated the cost of production for each company based on the efficiency of its power plants and estimates of what each paid for natural gas to fuel the plants. The average cost for the five was $105 per megawatt-hour which closely matches the federal price limit in California which now stands at $101 per megawatt-hour. According to the power bidding procedures companies that bid at or below their cost of production often still get paid a higher price allowing them to make a substantial profit. On average four of the five companies submitted bids either slightly below or slightly above their cost of production. But with the exception of Atlanta-based Mirant each company at times submitted bids that were substantially higher. Houston-based Reliant for example bid as much as $540 per megawatt-hour more than five times its estimated cost. Overall Reliant's average bid was close to costs according to the analysis. Cal-ISO identified companies by code in its report. Sources familiar with the study identified the companies for The Times. The Cal-ISO report singled out Supplier 5 identified by sources as Charlotte N.C.-based Duke Energy saying the company continues to bid significantly in excess of its operating costs. Duke owns two large power plants on the central coast. It marked up its bids an average of 88% beyond its cost to produce electricity according to the analysis. For example it cost Duke $85 to $121 to generate a megawatt-hour of electricity in the time period studied the report shows but the company offered to sell a megawatt-hour from $149 to $195. Duke spokesman Tom Williams on Thursday said The use of the data in some cases doesn't appear to add up and in all cases appears to be selective and could easily be misunderstood. Duke sells nearly the entire output of its power plants under long-term contracts and not on the spot market which the Cal-ISO report studied he noted. Reliant spokesman Richard Wheatley said We're looking at the data and we question whether or not it is correct. A combination of cool weather heavy conservation the start-up of new power plants and recently signed long-term power contracts that guarantee supplies have eased the state's electricity crisis in recent weeks. Market prices that as recently as May averaged $271 per megawatt-hour have dropped to less than $100 per megawatt-hour. The more abundant power supplies have freed grid operators to ignore higher-priced bids. But they will have to consider paying such prices to avoid blackouts if supplies tighten Wolak said. Such a scenario would test the effectiveness of the Federal Energy Regulatory Commission order issued June 19 he said. The bids of the five companies analyzed were offers of sales to Cal-ISO a Folsom-based agency that manages the electrical transmission grid serving 75% of California. Cal-ISO buys power on short notice to smooth the flow on the state's electrical freeway and avert blackouts. As California's fledgling market began to go haywire last fall Cal-ISO workers struggled to purchase as much as 30% of the state's power demand with just hours to spare. Since then the market has stabilized and Cal-ISO's purchases now amount to roughly 5% of the electricity California consumes. RELATED STORY Power profits: Power plant operator Calpine said its quarterly profit more than doubled. C2 Copyright 2001 Los Angeles Times Calpine profits double on skyrocketing sales Escalating power prices inspire plant building program Carolyn Said Chronicle Staff Writer Friday July 27 2001 2001 San Francisco Chronicle URL: BU234287.DTL> Fueled by high electricity prices power generator Calpine Corp. reported strong second-quarter results yesterday. Calpine of San Jose said profit for the quarter ended June 30 almost doubled to $107.7 million (32 cents per share) from $59.5 million (20 cents) during the year-ago quarter. Revenue almost quadrupled to $1.61 billion from $417.2 million a year ago. Excluding charges related to the acquisition of Canada's Encal Energy Calpine's net income was $132.2 million (39 cents) well above the 31 cents per share predicted by analysts according to Thomson Financial/First Call. Calpine is on an ambitious path to expand its roster of generating plants. By the end of 2005 it expects to have 75000 megawatts in operation in the United States including 12000 megawatts in California. A megawatt is about enough power for 1000 homes. The company which generates 2428 megawatts in California this summer opened the state's first two major power plants in a decade. The new plants in Yuba City (Sutter County) and Pittsburg generate 547 and 555 megawatts respectively. Combined with a new plant in Arizona that sells power to California Calpine's new facilities helped the state stave off threatened blackouts this summer Chief Executive Officer Peter Cartwright said. Calpine is building the 847-megawatt Delta Energy Center in Pittsburg scheduled to open in May and a 750-megawatt plant in Kern County due in June 2003. It is also awaiting an August decision by the California Energy Commission on its proposed 600-megawatt Metcalf Energy Center in San Jose. California is a very good market for us said Bill Highlander a Calpine spokesman. The pricing in California has benefited Calpine. However he said the company was not one of the traders that focused on making top dollar in California's volatile spot market because its business model concentrated on selling electricity through long-term contracts. During the past few months Calpine signed 10-year and 20-year contracts with the state for as much as 2500 megawatts at prices ranging from $58.60 to $73 per megawatt hour. With most of its plants fired by natural gas Calpine wants to control about a quarter of the gas it uses Highlander said. Its April purchase of Encal Energy for $1.77 billion more than doubled its gas reserves to about 1. 7 trillion cubic feet equivalent according to Hoover's Online. Calpine's stock closed up $1.08 at $36.89 yesterday. E-mail Carolyn Said at csaid@sfchronicle.com 2001 San Francisco Chronicle Page B - 1 Generators continue to set high electricity prices Friday July 27 2001 2001 Associated Press URL: 0359EDT0121.DTL> (07-27) 00:59 PDT LOS ANGELES (AP) -- Power wholesalers continued to demand higher prices for energy despite federal regulation that capped electricity rates according to a confidential report by the California Independent System Operator. In one case an energy company charged as much as five times more for electricity than the federal cap which were imposed June 20. State grid operators have given the study to federal regulators for a possible investigation the Los Angeles Times reported Friday. Five companies were identified by code in the report and sources familiar with the study named the wholesalers for the Times. They include Duke Energy Dynegy Corp. Mirant Corp. Reliant Corp. and Williams Cos. The average price charged by the five power companies was $105 per megawatt-hour which closely matches the federal price limit in California set at $101 per megawatt-hour. Four of the five companies submitted bids either just below or just above their cost of production. Houston-based Reliant however asked as much as $540 per megawatt-hour in some cases. Overall the company's average bid was close to costs the report said. The state wasn't required to purchase power at the rates set by wholesalers but the bids reflect a potential repeat of charging exorbitant electricity prices if temperatures soar and conservation dwindles said Frank Wolak a Stanford University economist who studies the California electricity market. The bottom line is that the generators are putting out these bids in expectation of high demand he said. If weather all of a sudden gets really hot from Southern to Northern California the bids submitted by generators could be very costly to California. The Cal-ISO report singled out Duke Energy noting it continues to bid significantly in excess of its operating costs. The report shows the company's cost to produce electricity was between $85 and $121 but it offered to sell a megawatt-hour from $149 to $195. Cal-ISO calculated the cost of production for each company based on the efficiency of its power plants and estimates what each paid for natural gas to fuel the plants. The use of the data in some cases doesn't appear to add up and in all cases appears to be selective and could easily be misunderstood said Duke spokesman Tom Williams. 2001 Associated Press THE ENERGY CRUNCH Environmental suit against power plant Expansion called danger to slough Christian Berthelsen Scott Winokur Chronicle Staff Writers Friday July 27 2001 2001 San Francisco Chronicle URL: MN236840.DTL> An environmental group filed suit yesterday to overturn a permit granted to Duke Energy Co. to expand a major power plant south of Santa Cruz. Saying the permit was illegally awarded the suit warns that the resulting project will damage the ecologically important Elkorn Slough. Voices of the Wetlands accuses the board that awarded the permit of violating federal law by not requiring Duke to use the best possible technology to minimize impacts on the environment around the Moss Landing power plant. If plans to expand the plant proceed without change the group said it would kill off critical organisms at the bottom of the food chain. The suit filed in Monterey County against the California State Water Resources Control Board and the regional board that serves the central coast seeks a court order to return the case to the regional water district so that more environmentally sensitive cooling technology can be ordered for use at the plant. State officials said yesterday that the issues raised in the suit were considered and rejected during the initial permit approval process last year and again during the appeal process this year. The case comes amid enormous pressure on state officials in light of California's energy crisis to rapidly accelerate power plant approvals and expand the amount of power generation available. Against this backdrop the state water board on June 21 essentially rejected environmental groups' appeal that had sought to overturn the district board's decision approving the Moss Landing expansion permit. On another front board members of the California Energy Commission took testimony earlier this week on a proposal to curtail public review of plant project proposals with one board member Robert A. Laurie acknowledging in an interview that he believed in some cases it posed one of the most time- consuming aspects of project approval. A recommendation is expected within the next month. Duke of Charlotte N.C. bought the Moss Landing plant from Pacific Gas & Electric Co. in 1998 when the Northern California utility sold off many of its facilities to prepare for deregulation of the energy market. The plant was built in 1950 using a cooling system technology that sucks water out of the Elkorn Slough and Monterey Bay to cool generating turbines before spitting the water out into the Pacific Ocean. The group says wildlife conditions and sea otter population have improved markedly since PG&E mothballed many of the generating units at Moss Landing in 1995. But Duke now is proposing to resurrect parts of the cooling system in a major expansion that will make Moss Landing the state's largest power plant after its completion next summer. With an output of 2538 megawatts the plant when completed is expected to account for 30 percent of all new electricity generated in California next year serving about 2.5 million households in the Monterey Santa Cruz and southern Santa Clara County areas including San Jose. Regional water quality board officials declined comment yesterday citing the pending litigation. But in public documents filed yesterday water officials said cooling alternatives had been considered and rejected. The documents did not elaborate on why they were not mandated. Duke had acknowledged during the process that more ecologically sensitive technologies were available but at prohibitive costs of $20 million to $50 million more. Deborah Sivas an attorney for the Earthjustice Environmental Law Clinic which filed the suit on behalf of Voices of the Wetlands considered the best technology alternatives mandatory not optional. She said the board had not considered alternative approaches in reaching its conclusions. E-mail the writers at swinokur@sfchronicle.com and cberthelsen@sfchronicle.com 2001 San Francisco Chronicle Page A - 3 Let's make a real deal with Edison July 27 2001 By JONATHAN LANSNER The Orange County Register When any government official tries to play business executive it's time to get nervous. Take the Edison bail out as evidence. At its essence the deal works like this: Taxpayers give the utility a big pile of cash the state gets some old rickety transmission lines in return. Don't be fooled: The power bounty is basically a political ploy. The state doesn't need to control electric distribution. What politicos need is a face-saving trade as evidence that this is a business deal - not a government handout. The state probably should just write the check and eat its losses. But if bureaucrats wanted real remuneration from this bail out California would eye some juicy Edison assets. As a public service I'll list a few. Now for argument's sake I won't differentiate between the utility and its parent company Edison International. Hey lawyers built those walls between the two. Let 'em figure out how to take 'em down. For starters you'd figure an energy-strapped state would like some regional power plants no? Like the San Onofre facility. However it might be laughable to see Sacramento-types defending their future handling of the local nuclear plant. OK if that's a tad too dicey for the state how about a coal-fired plant in Nevada? Heck Edison had a buyer at half a billion bucks before the state oddly quashed that deal. Maybe the state could grab it from Edison -- then flip it to pay off electricity-related debts. Of course buying one of the out-of-town power plants that Edison's sister company in Irvine has acquired might be educational for Sacramento. Owning a plant in Illinois or Pennsylvania or possibly New Zealand might show state honchos how easy - or not - it is to rig supply and prices. Alternatively the state could demand a small entity called Edison Capital. Basically it's a bank. One specialty: the politically correct field of affordable-housing lending. A good fit for bureaucrats. Speaking of money there's the Edison pension plan. Governments are really good at running retirement benefits. Heck California already has a huge one. There's got to be some economies of scale - real cash savings - in merging the Edison plan with some state pension fund. Do note that Edison's plan might be overfunded by about $400 million. You can bet though that the state would never have the nerve to play 1980s corporate raider: profiting by grabbing some of a company's overfunded retirement kitty. Finally there's Edison International Field in Anaheim. Stadium naming-rights contracts must have some value since corporations always seem to fight over these promotional gimmicks. (The utility's parent company paid $50 million in 1997 for two decades of free publicity.) Imagine the buzz the state could get out of the huge sign age on a nationally renowned stadium. Plus maybe the Angels could be good corporate citizens and tie into this deal. It's possible they'd allow a slight change in the team name to better emphasize the state's role in the ballpark. So how does California Angels sound to you? Business Financial Desk California Sempra Continues Improved Results NANCY RIVERA BROOKS 07/27/2001 Los Angeles Times Home Edition Page C-2 Copyright 2001 / The Times Mirror Company Sempra Energy on Thursday reported another quarter of higher earnings and revenue a sharp contrast to California 's bigger and beleaguered investor-owned utilities. Although California 's electricity crisis has pushed Southern California Edison and Pacific Gas & Electricity into insolvency--and PG&E into U.S. Bankruptcy Court--the parent of San Diego Gas & Electric and Southern California Gas continues to post improved results on the strength of its non-utility businesses. Net income for the period ended June 30 rose 25% to $137 million or 66 cents a share up $25 million or 55 cents earned a year ago the San Diego-based utility holding company said. Revenue jumped 40% to $2.1 billion. Pretax operating income rose 24% to $291 million. Sempra's earnings came in just ahead of the 65-cent average estimate of analysts surveyed by First Call/Thomson Financial. Our strong second-quarter performance is primarily the result of our efforts to accelerate growth through new businesses Stephen L. Baum Sempra's chairman chief executive and president told analysts in a conference call. Sempra is in a vastly different position than Edison International and PG&E Corp. because its electric utility arm was able to avoid the deep financial woes afflicting their respective Southern California Edison and Pacific Gas & Electric utilities. SDG&E was first to sell its power plants two years ago and thus was freed from a rate freeze. That in turn allowed the utility to pass along to customers the soaring costs of electricity beginning last summer. The state Legislature eventually rolled back and capped the rates for SDG&E customers but promised the utility it would be allowed to recover those losses. Edison and PG&E however continued to accumulate staggering debts because their retail rate freezes remained in place. In contrast Sempra is solvent with $1.5 billion in cash and $1 billion in available credit Baum said. The performance of its utilities was lackluster with Southern California Gas earning $47 million unchanged from the second quarter of 2000 and SDG&E earning $37 million down from $40 million in the year-ago period. But Sempra's unregulated businesses--including energy trading power plant construction and operation international electricity operations and energy services--turned in an overall strong performance contributing 39% of the parent company's earnings. Sempra's trading unit provided most of that profit contributing $69 million to second-quarter net income compared with $40 million in the same quarter last year. Sempra's stock gained 17 cents to close at $25.49 on the New York Stock Exchange. Business Financial Desk California Calpine Doubles Earnings Beats Forecasts Energy: San Jose-based company credits higher electricity prices in California and sales from new plants. 07/27/2001 Los Angeles Times Home Edition Page C-2 Copyright 2001 / The Times Mirror Company Calpine Corp. one of the biggest U.S. power-plant builders said Thursday that second-quarter earnings more than doubled beating estimates because of higher electricity prices in California and sales from new plants. Profit from operations rose to $132.2 million or 39 cents a share from net income of $59.5 million or 20 cents a year earlier. Revenue almost quadrupled to $1.61 billion. San Jose-based Calpine opened plants in the U.S. with a combined capacity of 1545 megawatts--enough to light 1.5 million average homes--and benefited from existing plants in California . Calpine has insulated itself from rising fuel costs by buying natural-gas fields to supply its plants. Given the strategy they have chosen they're following through quite well said Andre Meade an analyst at Commerzbank Capital Markets Co. They are growing from a small base and adding a lot of plants so we'd expect high growth. Profit topped the 31-cent average estimate of analysts surveyed by First Call/Thomson Financial. Calpine said it expects to earn $2 a share this year. The average First Call forecast was $1.92 with a range of $1.80 to $2.04. Calpine's shares rose $1.08 or 3% to close at $36.89 on the New York Stock Exchange. The shares had fallen 21% this year amid concern that generators might have to give back some of the profit they made selling power in California during the last year. In addition cooler-than-normal weather and conservation efforts recently reduced power prices in the state. Calpine runs or is building natural gas plants in 29 U.S. states and Canada that produce more than 30000 megawatts of power. The company plans to more than double capacity to 70000 megawatts by the end of 2005. Calpine this month opened the $350-million Sutter plant California 's first major generator in more than a decade. The company is building 11 plants to run during times of peak demand in the state and getting permits for four more James Macias who oversees Calpine's West Coast power plants said in a conference call with analysts and investors. Separately Arlington Va.-based AES Corp. a power producer that supplies California and operates in 27 countries said second-quarter profit fell 20% because of losses tied to currency fluctuations and the sale of a U.S. electricity retailer. Net income fell to $112 million or 21 cents a share from $140 million or 28 cents a year earlier. Sales rose 26% to $2.21 billion. California Metro Desk Cap No Bar to Higher Prices Power: Cal-ISO study says suppliers continued to charge as much as five times more than the U.S.-imposed limits. NANCY VOGEL 07/27/2001 Los Angeles Times Ventura County Edition Page B-1 Copyright 2001 / The Times Mirror Company SACRAMENTO -- After federal regulators limited wholesale electricity prices last month big private sellers of power in California continued to ask as much as five times more for electricity than the federal cap according to a confidential study by state grid operators. The analysis by the California Independent System Operator covers only the first week after the caps were imposed June 20. Cal-ISO has submitted the data to federal regulators for potential investigation. The report is a summary of what Cal-ISO calls possible anti-competitive behavior by Duke Energy Williams Cos. Mirant Corp. Reliant Energy and Dynegy Corp. In a truly competitive market we would expect these suppliers to bid very close to their actual operating cost said Greg Cook senior policy analyst with Cal-ISO's Department of Market Analysis. The state did not necessarily purchase any power at the high prices being demanded. Instead the significance of the bids is that they show how California could find itself paying exorbitant prices for electricity again if hot weather returns and conservation slackens said Frank Wolak a Stanford University economist who studies the California electricity market. The bottom line is that the generators are putting out these bids in expectation of high demand he said. If weather all of a sudden gets really hot from Southern to Northern California the bids submitted by generators could be very costly to California . Cal-ISO calculated the cost of production for each company based on the efficiency of its power plants and estimates of what each paid for natural gas to fuel the plants. The average cost for the five was $105 per megawatt-hour which closely matches the federal price limit in California which now stands at $101 per megawatt-hour. According to the power bidding procedures companies that bid at or below their cost of production often still get paid a higher price allowing them to make a substantial profit. On average four of the five companies submitted bids either slightly below or slightly above their cost of production. But with the exception of Atlanta-based Mirant each company at times submitted bids that were substantially higher. Houston-based Reliant for example bid as much as $540 per megawatt-hour more than five times its estimated cost. Overall Reliant's average bid was close to costs according to the analysis. Cal-ISO identified companies by code in its report. Sources familiar with the study identified the companies for The Times. The Cal-ISO report singled out Supplier 5 identified by sources as Charlotte N.C.-based Duke Energy saying the company continues to bid significantly in excess of its operating costs. Duke owns two large power plants on the central coast. It marked up its bids an average of 88% beyond its cost to produce electricity according to the analysis. For example it cost Duke $85 to $121 to generate a megawatt-hour of electricity in the time period studied the report shows but the company's bids ranged from $149 to $195 per megawatt-hour. Duke spokesman Tom Williams on Thursday said The use of the data in some cases doesn't appear to add up and in all cases appears to be selective and could easily be misunderstood. Duke sells nearly the entire output of its power plants under long-term contracts and not on the spot market which the Cal-ISO report studied he noted. Calpine Net Soars On Added Plants Sempra Profit Rises By Rebecca Smith 07/27/2001 The Wall Street Journal Page B4 (Copyright (c) 2001 Dow Jones & Company Inc.) Calpine Corp. reported net income nearly doubled in the second quarter reflecting the independent power producer's aggressive plant-building program. Meanwhile the parent of a San Diego utility said profit rose 25%. Calpine of San Jose Calif. said net was $107.7 million or 32 cents a share up from $59.5 million or 20 cents a share a year earlier. The latest results which were in line with analysts' expectations included a special charge of seven cents a share related to Calpine's purchase of Encal Energy Ltd. a natural-gas company. Revenue grew even more strongly soaring to $1.61 billion from $417.2 million. Separately Sempra Energy parent of electric utility San Diego Gas & Electric reported profit rose to $137 million from $110 million a year earlier. Revenue jumped 40% to $2.1 billion from $1.5 billion. Sempra Chairman Steve Baum attributed the growth which stands in marked contrast to the financial woes of California 's other electric-utility-owning energy companies to Sempra's unregulated operations. Calpine's profit increased despite paying substantially more for natural gas to fuel its plants. It spent an average of $4.80 per million British Thermal Units for natural gas up from $3.31 a year before. At the same time Calpine's revenue per megawatt hour of electricity sold also rose to $71.03 in the latest period from $64.80 a year earlier. At Sempra Mr. Baum said profit from Sempra's biggest utility unit San Diego Gas & Electric fell 7.5% to $37 million from $40 million. Results were flat at its gas-distribution company Southern California Gas Co. Sempra Energy Trading was the big profit center generating half its total profit or $69 million compared with $40 million a year earlier. Mr. Baum said Sempra's stock which trades at a low price/earnings multiple of 10 still is being affected negatively by the California situation. He also said the company made less money in spot-power markets than in prior quarters but nevertheless intends to invest $2 billion in new power plants. In 4 p.m. New York Stock Exchange composite trading Calpine shares rose $1.08 to $36.89 while Sempra climbed 17 cents to $25.49.,other,informative,3 +Re: PLEASE READ & RESPOND,Yes. Contact either Gia or John and get the ball rolling. Thanks Michael Terraso 08/18/2000 04:20 PM To: Steven Kean cc: Maureen McVicker=20 Subject: PLEASE READ & RESPOND Steve I received this note from Jeff Keeler who is on the government affai= rs=20 distribution list. Would you also want the EHS groups to work with Gia or= =20 John in developing value added documentation for this year's budget process= ? =20 Mike -----------------,finance,formal,3 +Re: Houston,I'm checking. Melissa loves talking about Houston real estate (one of the many quirks I love her for). I'll find out when she can do it. Ricardo Charvel 03/12/2001 01:00 PM To: Steven J Kean/NA/Enron@Enron cc: Subject: Houston Steve As you might have expected Elsa already had a to do list a budget information on schools etc. I really did not have to discuss about moving to Houston. The conversation was more around when and how. On Friday I have to be in Houston for an EBS meeting on Mexico. I am planning to arrive there on Thursday morning to talk to Rick to Dan Reck and to Shawn Cumberland. I also need to find out about relocation and visas etc. I am writing you to thank you for your generosity in your advice and for helping me and encouraging me in making this important decision. I am also wirting because I am taking your word on Melissa's knowledge of the real estate market inside the loop. Elsa is coming with me on Thursday morning and we would like to see if it is possible for us to meet with Melissa on Thursday Friday or Saturday for advice and orientation. (Of course you would be welcome to the real estate working session!!) Please let me know. Thanks again Ricardo,other,friendly,3 +Confidential Information and Securities Trading,To:WILLIAMS WILLIAM Email:bwillia5@enron.com - 503-464-3730 Enron Wholesale Services - Office of the Chairman From: Mark Frevert Chairman & CEO Mark Haedicke Managing Director & General Counsel Subject: Confidential Information and Securities Trading To keep pace with the fluid and fast-changing demands of our equity trading activities Enron Wholesale Services (EWS) has recently revised its official Policies and Procedures Regarding Confidential Information and Securities Trading (Policies and Procedures). These revisions reflect two major developments: (1) our equity trading activities have been extended into the United Kingdom and (2) in an effort to streamline the information flow process the Review Team will play a more centralized role so that the role of the Resource Group is no longer necessary.You are required to become familiar with and to comply with the Policies and Procedures. The newly revised Policies and Procedures are available for your review on LegalOnline the new intranet website maintained by the Enron Wholesale Services Legal Department. Please click on the attached link to access LegalOnline: If you have already certified compliance with the Policies and Procedures during the 2001 calendar year you need not re-certify at this time although you are still required to to review and become familiar with the revised Policies and Procedures. If you have not certified compliance with the Policies and Procedures during the 2001 calendar year then you must do so within two weeks of your receipt of this message. The LegalOnline site will allow you to quickly and conveniently certify your compliance on-line with your SAP Personal ID number. If you have any questions concerning the Policies or Procedures please call Bob Bruce at extension 5-7780 or Donna Lowry at extension 3-1939.,legal affairs,formal,3 +"Ed Segners Staff meeting, in 50M Dining Room",John Stauffacher?,other,inquisitive,5 +,Jeff wouldn't be able to leave until late the 23d or early on the 24th and would need to be back by late on the 27th,project management,casual,0 +Meeting Notice - California Document Production Issues,calendar -----------------,other,casual,3 +Re: Tax Valuations for YR2000,FYI -----------------,finance,neutral,3 +EGEP Sale Announcement,Please make sure that nothing goes out internally or externally without the approval of Cliff Baxter or Mark Metts. We need to continue our usual vetting process through both PR and IR but need also to add Cliff and Mark. In getting the OK from Cliff and Mark we must have no OKs by default -- ie because we haven't received comments or a response on time. If anybody needs help getting to Cliff or Mark then Mark Palmer Karen Denne or I can help. Thanks ,other,cautious,0 +Re: Stock Options,Sorry for the delay. I have asked the question and should have an answer in a day or two. . . . don't do anything rash in the meantime. Jane M Tholt@ECT 05/07/2001 12:15 PM To: Steven J Kean/NA/Enron@Enron cc: Subject: Stock Options Hi Steve. I know you are extremely busy but I was just wondering if you found out about whether the 3 year period apllies to all options or just the ones in that program. Question 2) does the 3 year time frame apply to only options that are vested at the time of departure or does it apply also to options which vest over the 3 year time frame. I look forward to hearing from you. Thank you.,other,polite,3 +Re: Senator Feinstein,yes Linda Robertson 03/01/2001 07:47 AM To: Steven J Kean/NA/Enron@Enron Richard Shapiro/NA/Enron@Enron cc: Subject: Senator Feinstein Apologized that she could not meet with Steve yesterday. She would like to have this meeting. She asked that we schedule this for your next trip to DC. I think we should do this meeting soon. Do you want me to get on her calendar and then build a day of meetings around her meeting? Or wait until you are otherwise back in town?,government & politics,formal,3 +Re: Computers,Tell him we are sending his note on to the appropriate person. MARY CLARK 04/03/2001 03:23 PM To: Steven J Kean/NA/Enron@Enron cc: Maureen McVicker/NA/Enron@Enron Subject: Computers Steve I need your help in responding to this question. Mary -----------------,business document,formal,5 +RE: Natural Resources and Energy MBA students,Barry Thanks for your message. I am forwarding it with my recommendation to Billy Lemmons who is in charge of our analyst/associate program. Vince ,human resources,formal,2 +RE: Catch Up,Joe I could not find the issue. I think I have dumped all the copies of the publication. I am in London next week. Vince ,personal & social,casual,2 +Request for Confidential Information by the GAO,We need another request for confidentiality. Please call me. -----------------,other,urgent,3 +Washington DC,pena - 1:30 Spurling @11:15 and D'Amato @12:00 11:15 D'Amato 12:00 Sperling 1:30 Pena meeting - Tentative 3:30 Janel Guerrero Flying up on company plane.,personal & social,casual,5 +TW Gas Sales: PRIVILEGED AND CONFIDENTIAL ATTORNEY CLIENT PRIVILEGE,Julia and Steve--here are some questions I've sent to Darrell on the TW Cal. border line pack sales. I'd like him to pull in the right people to get me the answers so we will be prepared if we need to explain these events. Darrell--I thought I'd better let your bosses know that I've been putting more stuff on your already full plate. Thanks all. DF -----------------,energy trading,formal,3 +Re: DRAFT response to Greenpeace Kyoto letter,I think Mike should sign Peter Styles@ECT 04/20/2001 04:57 AM To: Jeffrey Keeler/Corp/Enron@ENRON cc: Michael Terraso/OTS/Enron@ENRON Steven J Kean/NA/Enron@Enron Richard Shapiro/NA/Enron@Enron Mark Palmer/Corp/Enron@ENRON Jackie Gentle/LON/ECT@ECT Kate Bauer/EU/Enron@Enron Paul Hennemeyer/LON/ECT@ECT Doug Wood/LON/ECT@ECT Kelly Kimberly/Enron Communications@Enron Communications@ENRON Catherine McKalip-Thompson/Enron Communications@Enron Communications@ENRON Lauren Iannarone/NY/ECT@ECT Rob Bradley/Corp/Enron@ENRON Mary Schoen/NA/Enron@Enron Stacey Bolton/NA/Enron@Enron Lisa Linda Robertson/NA/Enron@ENRON Nailia Dindarova/LON/ECT@ECT Subject: Re: DRAFT response to Greenpeace Kyoto letter Jeff: Following our conference call yesterday Nailia and I will send you a European Government Affairs mark-up later today. We'll try to incorporate any views expressed by Paul Hennemeyer and Doug Wood too. Jeffrey Keeler@ENRON 19/04/2001 22:00 To: Michael Terraso/OTS/Enron@ENRON Steven J Kean/NA/Enron@Enron Richard Shapiro/NA/Enron@Enron Mark Palmer/Corp/Enron@ENRON Jackie Gentle/LON/ECT@ECT Kate Bauer/EU/Enron@Enron Paul Hennemeyer/LON/ECT@ECT Doug Wood/LON/ECT@ECT Peter Styles/LON/ECT@ECT Kelly Kimberly/Enron Communications@Enron Communications Catherine McKalip-Thompson/Enron Communications@Enron Communications Lauren Iannarone/NY/ECT@ECT Rob Bradley/Corp/Enron@ENRON cc: Mary Schoen/NA/Enron@Enron Stacey Bolton/NA/Enron@Enron Lisa Jacobson/ENRON@enronXgate Linda Robertson/NA/Enron@ENRON Subject: DRAFT response to Greenpeace Kyoto letter Attached is a first draft of a response to Greenpeace's April 5 letter to Jeff Skilling asking for Enron's answers to some specific questions on the Kyoto Protocol and climate change. Similar letters were delivered by Greenpeace Europe in native languages to Enron's offices in the UK Netherlands Spain and Belgium. I have attached a copy of one of the letters below. All the questions are the same in each. I have drafted a response with the goals of: 1) Being responsive to Greenpeace without being defensive or without greenwashing. We have an already-published public statement on climate change and a very positive solution-oriented story to tell with many facts and accomplishments to back up our statements. I think our letter can land in the stack that they consider positive responses and not in the stack of non-responses or we don't care responses. 2) Steering away from directly answering the no-win questions about Kyoto. I think we can respond to the letter in a way that provides meaningful answers to the general themes of the letter. I have discussed this with many of you already but I strongly feel that we should not get dragged down into debates over what we like/dislike support/oppose about Kyoto....we'll quickly get into questions we can't now answer and may never be able to answer. I'd prefer it if we rise above the politics of the issue and look solution-oriented by saying counties and companies should continue to be engaged in this important issue. 3) Developing corporate-wide messages that we can use in multiple applications -- arming our PR and govt. affairs advocates with a tight script to use in their efforts responding to shareholder inquiries and annual meeting Q&A Ken Lay or other executive speeches and presentations something for our Corporate Responsibility annual report. Sorry for the long preamble but climate change has become a very sensitive issue of late and our message/strategy needs to be very coordinated and we need to have one clear set of statements that everyone in the company can understand and use. With that said I also believe that these messages should be used very carefully as the subject matter is complex and straying too far from the basics can be dangerous. We should designate one or two clear spokespeople that can answer any follow up to the Greenpeace letter by press or policymakers and really stick to the boundaries of what's in our response letter. There is also the issue of customizing responses from the European offices using this letter as a template and adding a few examples of Enron good deeds in the local areas. I am not opposed to doing so but would again appreciate being able to review these responses before they go. Please let me know if you have other views. I would like to send our response by early next week maybe even Monday 4/23 if we can turn it around that fast. Thank you for your input and assistance and I look forward to your reply. Jeff Jeffrey Keeler Director Environmental Strategies Enron Washington DC office - (202) 466-9157 Cell Phone (203) 464-1541,other,formal,3 +RE: Confidential information,Nanette: Changes are made. I'll have the attached document signed and faxed to you tonight. You can fax your executed document back to me at (713) 646-3490. Thanks Leslie Hansen Nanette Crist 11/20/2000 03:38 PM To: 'Leslie.Hansen@enron.com' cc: Subject: RE: Confidential information Leslie--A few nits. Prebon Energy Inc. in the first sentence should not have a comma. Clause (a) in the carve-out as to what constitutes Confidential Information should start that is or becomes... I would put as demonstrable by the receiving party in parens at the end of clause (c). That's it. If you want to have the agreement signed and faxed to me at 201-557-5973 I'll have George sign it tonight or in the morning before the call and send it back to you. Thanks. ,legal affairs,formal,3 +Barton Staff Meeting,Yesterday I spent about 45 minutes with the three key energy staff to the H= ouse Energy and Commerce Committee -- Andy Black (for Barton) and Sean Cunn= ingham and Jason Bentley (the energy counsels to the full committee). We m= et at my request to discuss Barton RTO draft. (The group EPSA meeting with= Chairman Barton that was to have been yesterday afternoon has been resched= uled for next Tuesday.) =20 Key points from the meeting -- =20 1. They do not expect the Barton Subcommittee to mark up the electricity l= egislation this year. Time is running out and Members of the subcommittee = are not focused on the issue. Instead they plan to continue working on th= e issue at the staff level. Probably will be another draft version circula= ted and then a version will be introduced by Barton as a formal bill by the= end of the year. The earliest they see any kind of vote is late Jan. or ea= rly February. =20 2. Barton feels strongly that FERC should not be the tail wagging the do= g on RTO policy. =20 3. On particulars of the bill they are clearly reconsidering the 40000 = MW minimum threshold for the size of an RTO. They are getting pulled in bo= th directions they say and are inclined to drop the 40000 MW number -- p= ossibly leaving it to FERC to set a number. They conceded that the mechani= cs of the draft make it unlikely that the 18 month deadline for all trans= mission owners to get into an approved RTO would stick. They consciously c= hanged the normal judicial standard of review for FERC actions from arbitr= ary and capricious to preponderance of the evidence because they think o= therwise the courts will rubber stamp FERC. Spent a lot of time on how the= draft would aid and abet the recalcitrant utilities and that the overall n= ature of the draft assumes there are only two parties to this -- FERC and t= he transmission owners -- while the rest of those truly affected -- from us= to others -- are left out. Sean said we could still intervene but I said= that was the truly pro forma aspect of their process since FERC's hands an= d our's would be tied by the rights given to transmission owners to drag = their feet. =20 Bottom line -- FERC has a window until next Spring without likely congressi= onal interference at least not of the formal legislative variety to both= move on RTOs and improve its relations with Congress. FERC staff has been= pushing the committee staff on concerns similar to our concerns.,other,informative,3 +RE: RTO Question,On this same subject of Chairman Wood I am told that he met with Rep. Doug Ose (energy subcommittee chairman of the Government Reform Committee) and Ose's energy advisory board on Wednesday of this week and said similar things. He made a big deal out of a Big Mac analogy -- saying that whether you ordered one in Portland Oregon or Portland Maine the product is the same. With RTOs he supposedly said this meant if the rules are standardized the number of RTOs becomes less important. Those in the room including EPSA staff came away with the impression that Wood is backing away from only 4 RTOs based on this and other comments. Ditto on a 12/15/01 deadline. On the positive side he did say that he had been consulted on the Administration's comments on the Bingaman bill and agreed that legislation without RTO language or bundled/unbundled is OK. He understands the high risk that Congress would go the wrong way on these issues. ,energy trading,informative,3 +UC-CSU-Enron press release,I know we got a lot of grief on the Hill when we had our fight with UC/CSU. Now we have settled and this release will go out (with some modification) today. -----------------,other,formal,3 +Re: Confidential - Executive Committee Assistants,Shanna I certainly believe that Jennifer is better than Kim. Jeff is certainly the appropriate judge but she is very young and has a lot yet to learn. This comment is not meant as a cut down at all. John's questionable judgement shouldn't just be trumped however. My thoughts m Shanna Funkhouser@ENRON 01/30/2001 07:44 PM To: Mike McConnell/HOU/ECT@ECT Jeffrey A Shankman/HOU/ECT@ECT cc: Subject: Confidential - Executive Committee Assistants Mike and Jeff I wanted to let you know that Kim Hillis is being promoted from Sr. Admin to Executive Assistant. Cathy Phillips Nicki Daw and Kay Chapman are also Executive Assistants. Please let me know if we need to re-visit a promotion for Jennifer and whether it should be considered now mid year or at a later time. Thanks Shanna,human resources,confidential,5 +<> - March 2001 AMEX,-----------------,finance,neutral,3 +RE: PERSONAL AND CONFIDENTIAL COMPENSATION INFORMATION,Thanks for the information. It would be helpful if you would send the detailed worksheet that you mentioned. I am surprised to hear that the only restricted shares left are the ones granted this January. I have always elected to defer any distributions of restricted stock. I believe I selected the minimum amount required to be kept in enron stock (50%). Are you saying that all the previous grants have fully vested and been distributed to my deferral account? Thank you for looking into this issue. Phillip,human resources,polite,3 +Request for Confidential Information by the GAO,To All California Power Exchange Participants: Notice is hereby provided pursuant to Section 19.3.4 of the California Power Exchange Tariff that the United States General Accounting Office (GAO) as part of the ongoing investigation of California markets has requested the same information to be provided to the Federal Energy Regulatory Commission (FERC). Such information may be confidential under Section 19.3.2 of the Tariff. The manner in which the GAO will treat such confidential information is outlined in the attached letter. The GAO states that it has authority under 31 U.S.C. 717 to evaluate programs or activities of the Federal Government in this case deregulation of the electricity markets initiated by FERC. The GAO has requested the California Power Exchange to provide such information no later than Thursday October 5 2000. If you desire to assert a claim of privilege or confidentiality pursuant to legal authority the California Power Exchange will include your written assertion of that claim together with its submittal to the GAO provided that it is timely received. Your written statement should be directed to the GAO as follows: Mr. Jim Wells Director Energy Resources and Science Issues United States General Accounting Office Washington DC 20548 You may deliver your statement to the California Power Exchange as follows: Karen Koyano California Power Exchange 1000 S. Fremont Avenue Unit 20 Alhambra CA 91801 626.537.3173 facsimile Any written statement must be received by Ms. Koyano no later than Wednesday October 4 2000 5:00 p.m. Pacific Daylight Time to be included with any information delivered to the GAO. You are also free to take any other legal action you may deem appropriate in the circumstances of this investigation. Thank you. (See attached file: GAO Letter 9-22-00.doc) - GAO Letter 9-22-00.doc,other,formal,3 +RE: Dynegy/Enron Point of Contact,=09Are there any plans for either Enron or Dynegy (or both) to initiate inf= ormation dissemination to Capitol Hill as is usually =09done in these situations? This is what I have experienced when on the H= ill and when representing companies either =09being acquired or doing the merger/acquisition. Our friends on the Hill= will wonder where we and they have been =09particularly if as is likely we may need them later on. Better to get= in with them on the ground floor. I know there is a =09lot going on but it would be beneficial to the merger approval process = to at least have informal contacts starting this week =09before they leave for Thanksgiving. =09Thanks for the conference calls to keep us up to date and for being cand= id in doing so. =09John ,other,formal,5 +Re: Revised Merger Release & Q&A,looks ok to me Karen Denne 03/13/2001 11:54 AM To: Mark Metts/Enron@EnronXGate Steven J Kean/NA/Enron@Enron cc: Subject: Revised Merger Release & Q&A fyi... -----------------,finance,neutral,3 +Confidential Employee Info,-Larry Jester(mid yr-superior and yr end-strong)-Reports to D. Gilbert-Smith .Real time trader great job looking for career advancement possibilities -Keller Mayeaux (mid yr-strong and yr end-satisfactory)-He was disgruntled at yr end and as a result he asked to get out of agreement and leave Enron now he w/d like to stay at Enron. Jester is preferable to Mayeaux. Other groups are recruiting Jester.,human resources,confidential,2 +Re: California Amendments DEFEATED!,Congrats Linda Robertson 07/19/2001 09:44 AM To: Steven J Kean/NA/Enron@Enron Richard Shapiro/NA/Enron@Enron James D Steffes/NA/Enron@Enron mark s palmer/enron@enronXgate@Enron cc: Subject: California Amendments DEFEATED! John Shelk will provide a more thorough report in a later Email but I just wanted you to know that the Waxman price cap amendment was just defeated in full Committee markup and the Eshoo refund amendment was defeated. Both by sizable margins.,government & politics,excited,3 +Re: Daily Update/ Legislative activity - 08/24/00,I attended Cmmr. Wood's two-day hearing on Wholesale Markets which concluded today (8/24) in San Diego. Three Commissioner's were present (Wood Lynch and Neeper) with Duque and Bilas participating by phone. Administrative Law Judge Wetzel was present and a transcript was taken. The quasi-legislative hearing was the beginning of a record developed for the investigation into the workings of wholesale/retail markets. This session focused on Wholesale markets. There will be subsequent sessions on retail issues market structure and other related issues in the future. My conclusion from this session is that Wood is looking for support for increasing regulatory intervention in the market. Dan Larcamp Director of the Office of markets Tariffs and Rates FERC was present. He relayed FERC's concern of this matter and a desire to hold hearings in San Diego. He also relayed that Hoecker held a press conference announcing the opening of a 206 investigative proceeding into the operation of the wholesale markets in California which carried with it refund authority. The format of the hearing was to respond to pre-filed questions developed by Wood/Lynch. Each member of the panel would respond to the questions and any questions posed by the Commissioners the Judge or the CPUC Attorney. No questions were posed by members of the audience. Yesterday's panel of academics were comprised of: 1. Dr. Timothy Duane-UC Berkley 2. Dr. William Hogan-Harvard 3. Dr. Frank Wolak-Stanford (ISO Market Surveillance Committee) 4. David Marcus-Energy Consultant for the Coaltion of Utility Employees 5. Dr. Gene Coyle 6. Dr. Jean-Michel Glachant Universite Paris I Pantheon Sorbonne The panel was asked to speak as individuals and not on behalf of any institutions they may represent. While the purpose of the panel seemed to be to determine that market power was being exercised and that prices were too high and therefore not just and reasonable the panelist stopped short of blaming generators and market participants in behaving illegally. The concensus generally was that market power did exist at various times but the mere existence did not constitute bad behavior. None with the exception of Dr. Wolak who is in the process of doing a study using recent data as part of his role for the Market Surveillance Committee had done a study. There was some discussion though not much of the monopsony power of the utilities. I think ultimately the group conceded that scarcity of supply amplified concerns about the exercise of market power as even the increase in gas costs did not fully explain the recent spikes. Wolak believes that encourage utilities to enter into forward purchases will reduce the exercise of real-time market power. Hogan seemed to be there with Sempra's interests in mind. He continued to promote expansion of the ISO's abilities to dispatch load as well as maintain system reliability. There was alot of discussion about forward purchase ability for utilities so as to be less subject to volatile market prices. The concerns were also discussed about the appropriateness of a distribution utility making purchasing decisions on behalf of its customers. This included discussion of separation of these functions and the default provider role. Most everyone agreed that rolling back to a regulated market was not feasible without raising other major and serious concerns however there seemed to be support for some interim measures where cost-of-service regulation may be a good idea and that was during peak periods. All agreed that a demand response and price signals are important in the long-run although not to the extent currently experienced in San Diego. Today's panel included representatives from SDG&E SCE and PG&E TURN UCAN and ORA. While yesterday's panel maintained objectivity as to whether or not generators were exercising market power to the detriment of the system today's panel made no bones about the generators being to blame. SCE/PG&E indicated their need for relief for recovery of market costs in excess of the rate freeze. SDG&E was still on the hot seat for their inaction in hedging any of their supply. SDG&E brought up their failed PBR proposal and ORA and UCAN thought that that may be one way to incent the utility to be more responsible with their purchases. UCAN discussed the Governor's direction and the potential for putting rate caps into affect for residential and small commercial. He mentioned that C&I customers are experience difficulties as well. TURN raised the need for cost-based bid caps and cost-based peaking contracts. Mike Florio TURN urged against any further divestitute of assets and alleged market concentration on those assets that had been divested. In fact TURN urged the Commission to seek legislation to clarify the Commission's authority to order retention of assets. Neeper urged that part of the solution should be changing the current requirement to use the PX as the only authorized exchange although TURN disagreed. Bruno Gaillard 08/24/2000 06:09 PM To: SF Directors Edward Hamb/HOU/EES@EES Jennifer Rudolph/HOU/EES@EES Chris Hendrix/HOU/EES@EES Greg Cordell/HOU/EES@EES Harold G Buchanan/HOU/EES@EES Martin Wenzel/SFO/HOU/EES@EES Douglas Condon/SFO/EES@EES James M Wood/HOU/EES@EES Gary Mirich/HOU/EES@EES Dennis Benevides/HOU/EES@EES Roger Yang/SFO/EES@EES David Parquet@ECT mday@gmssr.com Paul Kaufman/PDX/ECT@ECT Marcie Milner/Corp/Enron@ENRON Mary Hain@Enron Harry Kingerski/HOU/EES@EES James D Steffes/HOU/EES@EES Richard Shapiro/HOU/EES@EES Peggy Mahoney/HOU/EES@EES Karen Denne@Enron Mark Palmer/Corp/Enron@ENRON Steven J Kean/NA/Enron@Enron Tim Belden/HOU/ECT@ECT cc: Subject: Daily Update/ Legislative activity - 08/24/00 Siting related bills 1. Good new - The Williamson Act passed the Senate 34-1 It should be heard at the assembly Saturday or Monday if it is not redirected to a Committee hearing. 2. There was a long meeting with Ducheny with regards to AB 970. The enviro's boycotted they want to draft a bill with Keeley. Labor was obstructionist - they wanted to gut all the expediting siting language with regards to all facilities except for the peaking plants. Rate Cap related bills 1. The Edison Language on Rate Stabilization may not go anywhere. Edison has not found an author because of the efforts of Enron and others lobbying against it. Furthermore there are signs that Gov. Davis opposes it. 2. The Governor's office has issued a proposed language for a rate cap bill. The language however is not available as of yet. It may be released today or tomorrow. SDG&E has shown concerns over the content of the bill. They seem to think that it is worse than initially proposed by the Governor in his press release. The bill includes retroactive rate caps through 6/1/00. The rate cap could reflect Wood's rate cap proposal (6.5 cts cap on the energy component The bill does not specify who or how the costs associated with the cap will be recovered. (The reasoning is that UDCs will be more cautious in their procurement if there is uncertainty on who is responsible for the costs.) All of this is speculative. We hope to see the actual language soon. 3. Enron has been working with the Republican leadership to promote a rate cap proposal similar to the amended language we have proposed for AB2290. The bill focuses only on SDG&E customers and our major principals are the following. The Interim Rate Cap should be limited to residential and small commercial customers plus specific institutions that have a significant public role such as schools and hospitals. The Interim Rate Cap should be limited to the period ending December 31 2001. The Interim Rate Cap must be structured so that any undercollection is eventually recovered from the same customers who benefit from the lower rates provided by the rate cap.,other,formal,3 +Re: NEW DRAFT OF ENRON STATEMENT,As discussed. -----------------,other,formal,3 +Energy Issues,,other,neutral,3 +Re:,On the advice of my much esteemed spouse I would like to express great interest in this group. Thanks Gilbert R. Whitaker Jr. on 02/18/2000 04:09:37 PM To: skean@enron.com cc: Subject: Steve - I made a mistake in my earlier email. Our Council of Overseers does not yet have a written charter. However it really is a key advisory group to the Jones School. gil,business document,polite,0 +"Dow Jones: Enron, Bushs Biggest Contributor",,government & politics,neutral,0 +Confidential SNAP Special Report,Confidential Rika I spoke to Kevin the other day and we discussed the attached special report. Please read over and call me to review. There was already a problem today a TMI Fred - Update 011016.xls,other,urgent,0 +"RE: 1. London, June 28 - 29; 2. Houston, July 16 - 17",Shirley Just Zimin and Vasant if they are free. Vince ,other,casual,5 +Re: 2000 eSpeak Schedule,Looks like a full slate you're off to a great start. Maureen -- please put times and locations on my calendar as an fyi. Sarah Palmer@ECT 01/05/2000 02:24 PM To: Steven J Kean/HOU/EES@EES cc: Mark Palmer/Corp/Enron@ENRON Marie Hejka/Corp/Enron@ENRON Subject: 2000 eSpeak Schedule Steve: Attached are the eSpeak events currently scheduled for 2000. Please review at your convenience. Have a great day! The eThink Team,project management,formal,2 +Youre On!,fyi -----------------,other,casual,3 +Talking Points For Rep. Barton On Tauzin RTO Letter,Linda requested some background and talking points on the pending RTO letter from Chairman Tauzin to FERC that is sitting on Chairman Barton's desk TODAY for his decision whether to co-sign the letter. While we have not seen the text we are told that it is anti-RTO and may go so far as to state or imply that FERC does not have authority to do what is doing with RTOs. (We know this is the view of one of Chairman Tauzin's counsels who formerly worked for Southern Co.). Chairman Tauzin has been contacted by Entergy and the Louisiana Public Service Commission to send the letter. I spoke to Chairman Barton's staff Andy Black this afternoon and relayed our concerns. The Barton Subcommittee is now expected to mark up an electricity bill in December (per a Republican Member meeting held this morning). ACTION ITEM: Call Rep. Joe Barton (202/225-2002) TALKING POINTS: 1. Should start with something about the Dynegy/Enron transaction (it will be strange if Mr. Lay or Steve calls Chairman Barton and does not start the conversation with some reference to the transaction). 2. Mentioning the transaction naturally leads into the importance of competitive wholesale markets for power both for consumers and for the largely Texas-based marketing trading and merchant power industries. 3. We understand that Chairman Barton has been approached by Chairman Tauzin about a letter to FERC on the RTO issue. We know Chairman Barton is well aware of Enron's strong support for FERC's RTO initiatives. We respect Chairman Barton's interest in seeing to it that Congress does not abdicate its responsibility to make energy policy. 4. If as we have been lead to believe the letter states or implies that FERC does not have authority to act in the RTO arena this will be seen as a potentially destabilizing development since FERC is so far down the road of creating RTOs. 5. While we understand some in Congress and elsewhere were concerned that FERC was moving too fast as of the last FERC meeting earlier this month that is no longer true even if it ever was true. While we think RTOs should be created sooner rather than later FERC is listening to state regulators and others who had concerns. 6. A letter from congressional leaders questioning FERC's authority goes too far in the direction of those who oppose any RTOs. Furthermore it is wrong as a matter of law. The D.C. Circuit held in the gas cases and in the power cases on Order 888 that FERC has authority to address systemic discrimination which is in large part what the RTOs are all about -- a remedy for iscrimination.,other,formal,0 +,Just received a voicemail from Stan. He knows Mike he does not have any spots for him right now. My suspicion is that the EES discussions are not ultimately going to yield fruit. We are probably going to have to discuss what's next.,other,casual,5 +How about lunch?,A typical utility luncheon. -----------------,other,casual,3 +Re: EBS Article for eBiz,See attached From: Karen Denne/ENRON@enronXgate on 07/12/2001 08:33 PM To: Jim Fallon/Enron Communications@Enron Communications Ken Rice/Enron Communications@Enron Communications cc: Mark Palmer/ENRON@enronXgate Steven J Kean/NA/Enron@Enron Kelly Kimberly/Enron Communications@Enron Communications Subject: EBS Article for eBiz Jim and Ken -- Attached is an article for eBiz (our biweekly online newsletter) which we are scheduled to launch at 7:30 a.m. Friday. Kelly Kimberly has reviewed it but has asked that you view the article as well. Since only EBS employees received your memo about the restructuring -- and the rest of the employees did not receive any communication -- it is extremely important to provide information through this vehicle. Please let me know of your approval or if you have any questions. Thank you. Karen x39757,business document,formal,0 +DOE Task Force Meeting - Plymouth MA- Not going,Bob Silvanik -- Council of State Governments annual meeting in Dec 8 (CEO panel including Skilling and Hydro Qubecs Kayee? Panel runs 10:45 - 12:15. (606)244-8250,other,casual,5 +PRIVILEGED AND CONFIDENTIAL - Christopher Stelzer Draft,Attached is the draft testimony of Christopher Stelzer on behalf of Avista Energy. If possible we would appreciate comments no later than 3:00 PM EST on Sunday August 26. Comments can be faxed to my attention at 202/338-2416 or emailed to cfr@vnf.com or gdb@vnf.com (Gary Bachman). Thank you. Cheryl Feik Ryan Van Ness Feldman P.C. 1050 Thomas Jefferson Street NW Washington DC 20007 202/298-1845 cfr@vnf.com This email message is intended solely for the individual or individuals named above. It may contain confidential attorney-client privileged information and/or attorney work product. If the reader of this message is not the intended recipient you are requested not to read copy or distribute it or any of the information it contains. Please delete it immediately and notify the sender by return email or by telephone. Thank you. - 107177_1.DOC,legal affairs,formal,3 +Energy Issues,Please see the following articles: Oakland Trib Wed 3/7: Breakthrough made in rescue of PG&E Bakersfield Californian Wed 3/7: El Paso Energy closes six valley power plants Contra Costa Times Wed 3/7: Still undecided: Who'll pay DWR for electricity SF Chron Wed 3/7: State Taxpayers In Dark on Details Of Energy Deal Sac Bee Wed 3/7: Lawmakers pitch fixes for region's energy woes Orange Co. Register Wed 3/7: Power plan called wrong LA Times - Wed 3/7: Bill to Cut Some Power Prices Stalls Sac Bee Wed 3/7: PG&E could face mutiny on outages: SMUD others may balk if utility orders summer blackouts SF Chron Wed 3/7: PUC to Decide Fate Of Utility Workers PG&E Edison want to trim costs by laying off thousands cutting service San Jose Mercury Wed 3/7: Power prices could soar during the summer SF Chron Wed 3/7: Power Plant Plans Cause Conflicts East county residents blast supervisors Contra Costa Times Wed 3/7: Supervisors set search for power plant sites Sac Bee Wed 3/7: Peter Schrag: California's $90 billion infrastructure gap Contra Costa Times Wed 3/7: PG&E power plan debated at hearing SF Chron Thurs. 3/8: State OKs 'Peaker' Power Plant at SFO / Temporary generator could be sending electricity to 50000 homes by August WSJ Thurs. 3/8: Crossed Wires: Major Kinks Emerge In Gov. Davis's Plan To Power California --- State's Outlays for Electricity May Be Hard to Recover Without Rate Increases --- Betting on Long-Term Deals ------------------------ Breakthrough made in rescue of PG&E State ready to pay $7 billion for lines By Steve Geissinger SACRAMENTO BUREAU SACRAMENTO -- Signaling a breakthrough in secret energy crisis talks the Davis administration disclosed Tuesday it may announce the framework of a pact to rescue the teetering Pacific Gas and Electric Co. next week. Things are going very well said Steve Maviglio a spokesman for Gov. Gray Davis. The state appears to be poised to pay at least $7 billion -- and possibly billions more -- for PG&E's high-voltage transmission lines as part of a deal to financially renovate the north-state utility according to sources familiar with the negotiations. But consumer advocates insisted that even the $7 billion price is too much to pay. And experts warned that a deal with PG&E will be more complex than with other utilities. PG&E representatives declined comment in keeping with their policy on the talks even though the Davis administration said an announcement could come as early as next week or the following week. The new timetable for an announcement was substantially sooner than in Davis' original forecast. Until late last week PG&E was still resisting the sale of its power grid despite the fact that Davis had announced the framework of an agreement with Southern California Edison. Davis expects to soon announce a similar deal with the San Diego Gas and Electric Co. However any such deal still would need federal approval. The investor-owned utilities trapped between high wholesale costs and lower regulated retail rates amassed nearly $13 billion in debts and were unable to buy electricity this winter. With the onset of rolling blackouts the state began brokering billions of dollars in emergency short- and long-term power purchases. Davis' strategy to ease the energy price and supply crisis includes bolstering both conservation and generation while fiscally refurbishing the nearly bankrupt utilities. As part of the rescue deal the utilities would have to drop legal actions seeking dramatically higher electricity bills environmentally shield wildlands they own sell power from their generators to Californians for the next decade and secure help with their debts from their parent companies. Together with the cash infusion from the sale of their power 26000-mile power grids the utilities would be allowed to sell bonds to raise funds and use customer money to pay them off. The state would upgrade the high-voltage lines and lease them back to the utilities for operation. In a reflection of the negotiations with the three utilities a Davis administration official said the deal with PG&E is proving to be more complex than with the other firms. Though PG&E finally agreed late last week to sell its transmission grid the utility apparently wants more than the $7 billion that Davis has offered according to sources. The figure is more than twice the book amount or the value placed on the system for purposes of accounting. And that's the markup that lured Edison into an agreement to sell its smaller portion of the transmission grid for $2.8 billion. But PG&E which fears an erosion of its economic base may be asking as much as $10 billion. Due to complexities in the state's 1996 deregulation of the industry PG&E is more likely to lose revenue than Edison as a result of selling its transmission lines according to experts. Big customers might be able to bypass the utility's remaining local distribution lines thereby eroding its customer base. Therefore the utility may view bankruptcy and sale of its transmission lines to the highest bidder as a potentially attractive alternative to selling its share of the grid to the state at too low a price. ---- El Paso Energy closes six valley power plants Filed: 03/07/2001 By CHIP POWER Californian staff writer e-mail: ppower@bakersfield.com El Paso Energy citing non-payment from Pacific Gas & Electric Co. said it has shut down six cogeneration plants this week. The smaller plants produced about 175 megawatts of electricity and are located primarily in the San Joaquin Valley said company spokesman Mel Scott. A megawatt can supply power to 1000 homes. At least 10 plants have closed in the past two weeks as a result of non-payment according to the state Independent System Operator which manages most of the state's electrical distribution. The El Paso Energy plants are operated with various partners and had not been compensated for December January and February deliveries said Scott. He said he did not know the total amount due but said the plants would be closed until PG&E's credit worthiness is improved. A cogeneration plant common in oil fields simultaneously produces heat energy and electrical or mechanical power from the same fuel in the same facility. Typically it produces electricity and steam which can be deployed to enhance oil recovery. Kern County is the state's leading oil-producing county. El Paso owns or has interests in more than 40000 miles of interstate and intrastate pipeline connecting the nation's principal natural gas supply regions to the five largest consuming regions in the United States namely the Gulf Coast California the Northeast the Midwest and the Southeast. El Paso closed up 99 cents on Tuesday or 1.4 percent at $71.49. The Houston-based company's stock price has ranged between $36.31 and $75.30 in the last 52 weeks. ---- Still undecided: Who'll pay DWR for electricity By Karen Gaudette ASSOCIATED PRESS SAN FRANCISCO -- The price tag is $3.2 billion and counting for electricity bought by the state Department of Water Resources for the customers of two nearly bankrupt utilities. Pacific Gas and Electric Co. Southern California Edison and the state disagree over how the DWR eventually will be reimbursed for its purchases on the expensive last-minute power market. So do the state power regulators who have the final call over who gets the money when. Under a recent law the DWR went into the electricity-buying business to help keep the two utilities from sinking further into their $13 billion debt. The state plans to retrieve the money by selling $10 billion in revenue bonds. The utilities continue to collect ratepayer dollars on that electricity which the bill's author Assemblyman Fred Keeley D-Boulder Creek says is meant to help them begin paying down their debt. In a recent letter however DWR officials requested that the state Public Utilities Commission order that a portion of that money be diverted to the state. But after the utilities subtract the costs of generating electricity payments to environmentally friendly power plants and other expenses there is no money left from ratepayer dollars to give to the DWR without sinking further into debt PG&E spokesman Ron Low said Tuesday. If it passed along money to the DWR our undercollection would grow by about $2.4 billion by the end of the year Low said. The commission unable to agree on the best course of action left the issue untouched at its last meeting but expects to revisit the issue when it meets this morning. Commissioner Richard Bilas is proposing an alternate plan that would have the DWR set its own revenue requirements that would be passed on to ratepayers. The PUC also is expected to respond to complaints from laid-off workers and customers that layoffs by utilities to cut costs have been hurting service. Commissioner Carl Wood warned at the last meeting that failure to provide safe and reliable service could mean fines for the utilities. Representatives from electrical workers unions the PUC and the utilities were to discuss the issue Tuesday afternoon. I don't think we believe that utilities can find a way out of their problems by laying off workers said Mindy Spatt a spokeswoman with the Utility Reform Network. We think consumers deserve safe and reliable service and we think they deserve it at a reasonable price. ---- State Taxpayers In Dark on Details Of Energy Deal David Lazarus Chronicle Staff Writer Wednesday March 7 2001 2001 San Francisco Chronicle Few people would purchase a car simply because the dealer said ''Trust me it's a great deal.'' Yet Gov. Gray Davis essentially is telling Californians just that about dozens of long-term power contracts. Because of confidentiality agreements with power companies the governor has revealed only scant details about the state's multibillion-dollar contracts for electricity over the next 10 years. Gov. Davis has our money and we can't see how he's spending it said Doug Heller a spokesman for the Foundation for Taxpayer and Consumer Rights in Santa Monica. We've been locked out of the room. Neither Davis nor power companies would divulge specific details about the price duration or scope of individual contracts. Each cited secrecy clauses that the governor's office said had been desired by both sides. What consumers do know is this: -- California has signed 40 contracts and tentative accords valued at about $40 billion to secure enough power to light 9 million homes over the next decade. -- The average purchase price of each deal is $69 per megawatt hour -- well above the $30 to $40 charged by power generators before California's energy market went haywire last summer. -- If as is widely expected wholesale power prices fall in years ahead the state nevertheless will be locked into paying above-market rates for electricity. But it is not known which generator agreed to part with the most power at the cheapest level or the full range of the prices in concocting the $69 average. Moreover it is unclear how shrewdly the state negotiated with taxpayer money in securing power on behalf of cash-strapped utilities. These agreements are the bedrock of our long-term energy policy Davis said Monday in announcing the deals. The governor's office defended the murky nature of the contracts yesterday. It's a business transaction in which private corporate information is included said Steve Maviglio a spokesman for Davis. That's the kind of information that never gets revealed. While additional elements of the contracts will be publicized in coming months he said the contracts themselves will remain a secret. You'll never see all the details Maviglio said. This did not sit well with many observers. It's a breach of public trust said Daniel Bacon a San Francisco attorney specializing in business law. A public servant spending public money shouldn't be able to keep the spending secret. But Gary Ackerman executive director of the Western Power Trading Forum an energy-industry association in Menlo Park called confidentiality agreements a necessary evil in transactions like this. He explained that no power company would agree to a long-term contract if rival firms could learn the terms of the accord. The company would be losing too much of its competitive edge in the marketplace Ackerman said. At the same time he noted that secrecy allowed the buyer -- in this case California taxpayers -- to secure more favorable terms with individual sellers. A high price with one generator would not necessarily be sought by all power providers. Still the fact that public funds are being used makes confidentiality in this case a different matter than say Cisco Systems' quietly negotiating to take over yet another tech rival. The public is in a very awkward position said Michael Shames executive director of the Utility Consumers' Action Network in San Diego. It has to rely on the good word and expertise of the governor and he has yet to demonstrate that he has expertise or good word in this field. Shames likened consumers to passengers in a plane being flown by a pilot without a license to fly. But what choice do we have? he asked. I don't see many other options available right now. There's the rub. No matter how bad a deal California may have cut to help meet its energy demands the alternative -- blackouts disruptions economic catastrophe -- is far far worse. On the other hand it already appears that the new contracts will not shield Californians from the threat of daily outages this summer when demand surges. Davis said only about 60 percent of the state's summertime electricity needs so far had been met. Part of the reason is that many power companies already have contracted for their output this year. Duke Energy said this was why it would not begin its nine-year contract with California until 2002 while Williams Cos. said it would only gradually increase the amount of available wattage in its 10-year contract. Both companies meanwhile will continue to profit this summer by selling into the volatile spot market where wholesale power went for as much as $1 500 per megawatt hour last year. You can't sell all your power into long-term contracts said Paula Hall- Collins a Williams spokeswoman. You save some for the spot market. Consumer groups worry that consumers will be hammered again this summer with sky-high power prices and then get nailed down the road by contracts for above-market rates. If we could look at the terms of the deals we'd see that California is being gouged for 10 years said Heller of the Foundation for Taxpayer and Consumer Rights. But the governor doesn't want us to see that. Ackerman of the Western Power Trading Forum said the state had gotten the best rates it could under current market conditions. California went for long-term contracts when everyone else moved in as well he said. Californians are paying a price for not acting sooner. ---- Lawmakers pitch fixes for region's energy woes By David Whitney Bee Washington Bureau (Published March 7 2001) WASHINGTON -- California members of Congress pleaded for everything from wholesale price caps to extending daylight-saving time an extra hour to help the region cope this summer with its persistent electricity shortage but none of the ideas seemed to catch fire at a House hearing Tuesday. People will die in California because of this crisis Rep. Brad Sherman a Los Angeles-area Republican warned the House Energy and Commerce Committee. Sherman testified that his idea for saving lives is to extend daylight-saving time by an extra hour so that there would be more daylight at the end of the day when power consumption surges. One of the peak demand periods for electricity occurs between 5 p.m. and 8 p.m. when the sun sets and people come home from work Sherman testified. If people come home and it is light out there is less of an inclination to turn a light on. Sherman said the state Legislature has called for congressional approval for states to be given authority to extend daylight-saving time and he cited analyses by the California Energy Commission and other agencies suggesting that it could cut power consumption by 1 percent to 2 percent. Sherman who was one of about a dozen California lawmakers presenting their views on the energy squeeze drew no questions from committee leaders about what his legislation might do to everything from airline schedules to television programming if West Coast states didn't agree on the same time standard. Most of the committee's questioning was on the more popular idea proposed by several California and Western lawmakers primarily Democrats to require the Federal Energy Regulatory Commission to impose caps on wholesale electricity prices that have gone wild because of a regional power shortage. Rep. Bob Filner D-San Diego charged that the price spiral has little to do with power shortages but a lot to do with a small cartel of generators bilking ratepayers. Rep. Jay Inslee D-Wash. said he brought up the idea of regional price caps with President Bush who was initially skeptical. But Inslee said that Bush warmed to the idea after being told that protections could be built into the caps so as not to discourage construction of new power plants. Upon hearing that Inslee said Bush invited him to meet with the president's Cabinet-level task force led by Vice President Dick Cheney on a national energy strategy. But Inslee said he can't get the group to meet with him. It's very disappointing Inslee said. Tuesday's hearing was part of a series the panel is holding on the California crisis so far without any emerging consensus on what if anything Congress should do. ---- Power plan called wrong Wall Street analysts say the governor's approach to the problem avoids the issue that caused the imbalance. March 7 2001 By DON THOMPSON The Associated Press SACRAMENTO California's scramble to insulate consumers from the soaring price of electricity may add to the state's power problems this summer Wall Street analysts said Tuesday. Gov. Gray Davis' emphasis on buying utilities' transmission lines and negotiating long-term power contracts to help ease their debts skirts the deep imbalance between wholesale and market rates that led to the state's power problems in the first place they said. In the long run it doesn't solve anything said Michael Worms an industry analyst for Gerard Klauer Mattison & Co. In the long run you need to send the right price signals to consumers which will create its own conservation signals. Unfortunately customers were shielded from that in California. Davis said Monday that the state's first contracts to buy electricity for two financially struggling utilities will provide only about two-thirds of the power needed on a typical summer day forcing Californians to cut power use at least 10 percent to avoid blackouts. Since early January the state has been buying one- third of the power Southern California Edison and Pacific Gas and Electric Co. customers need. The two utilities denied credit by suppliers say they have lost nearly $14 billion due to soaring wholesale electricity prices that the state's industry-deregulation law says they cannot pass on to consumers. The keepers of the state power grid had enough electricity Tuesday to avoid declaring an electricity alert but have faced an almost-daily scramble for weeks due to a tight supply and high wholesale prices. Several wholesale and retail rate proposals are circulating. Among them: Free-market advocates such as Worms want an immediate end to the deregulation-imposed retail rate freeze on Edison and PG&E that will expire next year. Davis wants a Western price cap of $100 per megawatt hour on power generators he says have been prof iteering from California's short energy supply. The Bush administration and Federal Energy Regulatory Commission are cool to that idea. In December FERC imposed a soft cap of $150 per megawatt hour on wholesale rates in the state and required suppliers to justify any higher prices they charge. Consumer groups such as The Utility Reform Network or TURN want regulated rates for residential and small-business customers but free-market rates for large industrial customers which sought deregulation in the first place. TURN also advocates a tiered rate structure with higher rates for consumers who use more than a reasonable amount of electricity each month. Assembly Republicans say electricity and natural-gas prices will fall naturally if the state increases supply mainly by making it easier to build plants and pipelines. Right now you're sort of sitting partially with regulation and part with the free market said Paul Fremont an analyst with Jefferies & Co. Both these systems work. It's sort of that in-between system that you have in Califor nia that doesn't appear to be working. The system discourages generators from building new power plants because they aren't guaranteed a profit and it doesn't do enough to discourage power use by consumers because the price they pay doesn't reflect the true cost of power Fremont said. I don't think people here have much faith in the market and why should they? countered TURN's Mindy Spatt. I think there are probably better ways of encouraging consumers to conserve than by gouging them. Davis insists the crisis can be resolved without raising rates for Edison and PG&E customers beyond the existing rate structure. In January state regulators imposed temporary rate hikes of 7 to 15 percent on Edison and PG&E customers. The Legislature and Davis extended the increases for up to a decade to help pay back the estimated $10 billion in power buying the state expects to do for Edison and PG&E over the next several years and finance its purchase of the power lines owned by the two companies and San Diego Gas & Electric. Rates were already scheduled to increase next year for Edison and PG&E customers. Under the 1996 deregulation law the pair's ratepayers saw a 10 percent rate reduction but only until early 2002. That rate cut will likely expire as planned Davis spokesman Steve Maviglio has said. Davis wants those rates to cover not only the traditional cost of generating transporting and distributing power but the added cost of paying off the two utilities' massive debt and buying their transmission lines said Assemblyman Fred Keeley D-Boulder Creek the Assembly's chief power negotiator. Yet Davis has indirectly addressed the rate imbalance by signing legislation that will let regulators raise consumer rates if necessary Keeley said. The governor and lawmakers are in effect spreading out rate increases over a decade by using long-term revenue bonds to buy power for the nearly bankrupt utilities said Severin Borenstein director of the University of California Energy Institute. At some point we have to deal with the reality that all of the power that we buy has to be paid for by somebody - it's either going to come from taxpayers or it's going to come from ratepayers Bor enstein said. Raising rates now would get us a lot of conservation. Davis also wants financial incentives for conservation and power-plant construction in time to make a difference this summer. Our mouths were agape at the rapid timetable Keeley said. Legislators are rushing to pass those incentives by month's end he said allowing three months for consumers and suppliers to act before the heat of summer. Among bills considered Tuesday the Senate Energy Committee approved legislation to accelerate the siting of power plants. It also was considering a proposal to restructure rates for generators that use renewable energy to provide about 30 percent of the state's electricity. ---- Bill to Cut Some Power Prices Stalls Energy: Democrats balk at varying payment levels for alternative generators. By DAN MORAIN JULIE TAMAKI Times Staff Writers SACRAMENTO--Legislation aimed at cutting prices for more than a fourth of the power consumed in California stalled Tuesday as Democrats questioned why a few alternative energy generators--some of them campaign donors--stood to receive higher payments than others. Lawmakers working to unravel California's energy mess have been negotiating for weeks in an effort to cut the price paid to more than 600 generators of alternative power by more than half to below 8 cents a kilowatt-hour. Those alternative generators' contracts with utilities have shot up in recent months because of a rise in the price of natural gas. The cash-strapped corporations have suspended or made partial payments to the generators over the last few months causing many to shut down or reduce their outputs. But even as the lawmakers reached agreement that pushed the average price to near the 8-cent level per kilowatt-hour some generators would have received higher prices under the bill by state Sen. Jim Battin (R-La Quinta). Some of the generators that stood to benefit had donated to Battin's campaigns. One--Windtec Inc.--gave Battin a $20000 campaign donation in 1999. Others contributed from $3000 and $5000 last year. Battin acknowledged that he has received campaign contributions from some wind power generators but said there is no connection between the donations and the bill's provisions. It is illegal it is unethical and it's not how I do business he said. Battin noted that 25% of the state's alternative energy producers are in his district. As Democrats on the Senate Energy Committee blocked the bill Battin warned that some alternative energy producers might react to the delay by trying to force Southern California Edison and Pacific Gas & Electric into bankruptcy. We will be the cause of bankruptcy Battin said. That prompted Energy Committee Chairwoman Debra Bowen (D-Marina del Rey) to retort: I'm really tired of being threatened with bankruptcy. Alternative energy producers including those that use wind solar power biomass and other means produce 27% of the energy used in California. They sell the electricity to the utilities which in turn transmit it to retail consumers. But with the utilities facing multibillion-dollar debts the alternative energy producers under contract with Edison have not been paid since November. Scores of alternative energy producers supported the measure. Edison International and the San Francisco-based consumer group the Utility Reform Network opposed it. Michael Florio of the Utility Reform group said the deal could result in higher consumer prices an Edison representative said the same thing. Battin and Assemblyman Fred Keeley (D-Boulder Creek) worked out an arrangement with many of the generators. Keeley took the lead in the early negotiations and then turned to Battin to introduce the legislation SB 47X. Rather convoluted language would have allowed higher payments to a select few generators that produce electricity from wind and biomass. Most of California's wind suppliers for instance would have received about 6 cents per kilowatt-hour. But a handful of them about half a dozen wind farms--mostly in the Palm Springs area represented by Battin--would have received 7.8 cents. Battin contends that other wind producers receive additional payments that boost them to the same level as Windtec and others that would get the higher payments. They get the same deal Battin said of the handful of generators that would benefit from the provisions he added to the bill. In California's overall energy market the amount of money that would have flowed to the favored generators is minor. But the added prices that would have been paid to the generators would have translated to at least $19 million in the next five years to be absorbed by Southern California Edison customers according to one analysis. Also Tuesday more details were disclosed about another leg of the state's effort to escape from the energy crunch--the deals with large power generators to supply electricity to California for as long as 10 years. Those arrangements were announced by Gov. Gray Davis Monday as the bedrock of California's energy policy. But some consumer advocates warned that the deals could lock the state into excessively high-priced contracts. S. David Freeman the general manager of the Los Angeles Department of Water and Power and Davis' negotiator said that the state guarded against that by varying the time spans of its deals. About 6000 megawatts are expected to be available this summer about one-third of the energy needed by the state Freeman said. The amount of power under contract swells until more than 9000 megawatts are contracted in 2004 half of the needed amount before dipping to 8000 megawatts in 2010. What we're doing here is what everybody said had to be done Freeman said. We deliberately bought 50% so we'd have a good mix between long-term contracts which may turn out to be somewhat higher or somewhat lower than the spot market and purchases on the spot market. ---- PG&E could face mutiny on outages: SMUD others may balk if utility orders summer blackouts By Carrie Peyton Bee Staff Writer (Published March 7 2001) Sacramento's electric utility wants out of a deal that imposes rolling blackouts locally on PG&E's command. So do a lot of other utilities. They've been writing letters lobbying lawmakers and launching informal talks with Pacific Gas and Electric Co. to get off the hook before summer. Who dodges the blackout bullet is going to play out as a political hot button around the state said George Fraser head of the Northern California Power Agency a coalition of municipal utilities. In Sacramento the next volley is expected soon with the Sacramento Municipal Utility District reportedly poised to notify PG&E that it will no longer black out homes and businesses on the larger utility's command. We are absolutely trying to fight off the requirement for rolling blackouts for the Sacramento area said Linda Davis one of seven elected members of the SMUD board of directors. Saying they don't want to be dragged down by somebody else's problems two Southern California utilities have written grid operators asking to be exempted from any blackouts caused by PG&E's or Southern California Edison's financial woes. But in PG&E's view California is in an energy crisis (and) ... we're all in this together said spokesman John Nelson. The maneuvering comes amid bleak forecasts for power supplies this summer. Although Gov. Gray Davis has said conservation new power plants and moderate weather could avert blackouts officials at the Independent System Operator which runs much of California's grid expect frequent rotating outages. One consulting firm Cambridge Energy Research Associates predicts 20 hours of rolling blackouts during July and August and about 200 hours of especially intense calls for voluntary cutbacks. Before blackouts hit the jockeying over just whose lights air conditioners and assembly lines will be shut down is growing. The outcome could affect millions of people statewide. The state Public Utilities Commission is probing rolling blackout programs run by the for-profit utilities it regulates including PG&E and Edison. A PUC analysis has suggested that PG&E's program which currently exempts about 40 percent of its customers should spread the burden more broadly. For example it said 1.9 million homes and businesses are spared just because they share a circuit with a customer deemed essential. But not-for-profit utilities such as SMUD which answer to their own elected boards or city councils have other worries. Many have already lined up their power supplies for summer. Some have raised rates or are considering raising rates. Some have taken extra conservation steps. They think those preparations ought to give them leverage to ease blackout clauses in their contracts with PG&E. SMUD general manager Jan Schori is going to use every avenue ... any avenue to put pressure on including lobbying the ISO the governor and others said utility director Davis. The Northern California Power Agency a joint-powers authority that owns and operates power plants for municipal utilities has begun informal negotiations with PG&E to change blackout rules according to Fraser its top executive. It is preparing to write PG&E asking that its members be exempted from outages altogether. Failing that it wants them to face fewer outages or to be compensated for cutting off power he said. At SMUD the utility board has met in closed session to discuss exactly what it is required to do during electric emergencies under terms of the interconnection contract that links SMUD's lines to PG&E's. The contracts are being inspected with a fine-tooth comb said SMUD director Howard Posner. Schori declined to comment on any specifics. Sources indicated that the main option being considered is notifying PG&E that because of changed circumstances SMUD believes it no longer is required to routinely comply with outage requests. Other options being explored include re-negotiating existing agreements with PG&E. Posner said that ever since two days of rolling blackouts in January constituents have been asking him 'Why are we participating when we're not the problem?' And I don't have a good answer to that. Several directors said SMUD has already spent a lot of money -- and is considering 16 percent rate increases -- to ensure that it has enough electricity under contract to meet its customers' summer demands. They believe PG&E should do the same. We're almost like a David against Goliath here said board vice president Genevieve Shiroma. The huge investor-owned utilities next door have severe problems that they need to get under control. In addition SMUD plans to argue that because it can cut usage through its Peak Corps program which remotely turns off air conditioners at volunteer households it has already done its part without rotating outages director Davis said. PG&E believes the interconnection agreements that govern smaller utilities' ties to its transmission lines have benefits and burdens to both sides said Nelson. It wouldn't be fair or good policy for just one provision to be altered without taking a look at how that affects the entire contract he said. Interconnection contracts generally have clauses that require utilities to help each other out to avert greater emergencies. Sometimes reducing demand -- called load shedding -- can be the only way to stabilize the electric grid in the seconds after a major power plant or transmission line fails. It's been around in the electrical fabric forever said Jim Pope head of Silicon Valley Power Santa Clara's city-run utility. In addition to legal requirements you have a moral obligation so you don't bring the system to collapse. Like other city-run utilities Silicon Valley Power has a contract with PG&E that requires it to shed load during an electric emergency. But its contract allows it to work with big users to reduce their demand so no one has to be completely shut off. Such agreements formed long before deregulation when PG&E ran the north state's grid now are complicated by the 1997 creation of the state Independent System Operator. The ISO today runs pieces of the grid owned by PG&E Edison and San Diego Gas & Electric Co. If it believes power use is about to surge past supply potentially triggering a grid collapse across the western United States the ISO notifies the three utilities that they have to shed a certain number of megawatts. The big utilities meet that requirement two ways. They cut circuits to some of their own customers and they tell smaller connected utilities to cut a proportionate share. In Northern California about 80 percent of the outages are borne by PG&E customers and the rest by customers of SMUD and other municipal utilities and irrigation districts. In one sense we are all in this together. If SMUD were in danger of going down we would hope others would help us out said SMUD's Posner. But that's if we're in danger from circumstances beyond our control not from mismanagement or lack of financial wherewithal. It is unclear what penalties if any a utility would face for violating an interconnection agreement. In the long run the issue would be fought either in the courts or before the Federal Energy Regulatory Commission grid officials said. As a practical matter in the seconds when the risk to the grid is greatest if one utility refused to shed load the ISO would probably solve to problem by calling on PG&E Edison or others who are willing to make deeper cutbacks they said. ---- PUC to Decide Fate Of Utility Workers PG&E Edison want to trim costs by laying off thousands cutting service Bernadette Tansey Chronicle Staff Writer Wednesday March 7 2001 2001 San Francisco Chronicle State regulators are set to decide today whether debt-ridden Pacific Gas and Electric Co. and Southern California Edison can conserve cash by laying off thousands of workers and letting service standards slip. Union officials who protested the layoffs before the California Public Utilities Commission warn that if the cuts go through neighborhoods hit by power outages could stay dark for hours and more customers could face busy signals when they call about their bills. An administrative law judge agreed advising the commission in February to order the utilities to restore 725 positions already cut and block the elimination of an additional 2125 jobs. Judge John Wong said PG&E and Edison have acknowledged the layoffs will not substantially improve their shaky financial condition which arose from skyrocketing wholesale electricity costs the utilities could not pass on to consumers under a rate cap. The savings would barely make a dent Wong said in his draft decision. The two companies together claim that their debt from power purchases amounts to more than $13 billion. PG&E says it has saved $18 million from the first wave of 325 layoffs. Wong's recommendation is already running into resistance on the PUC. Commissioner Richard Bilas said the five-member panel should not be micromanaging the utilities in a time of crisis. Bilas has proposed an alternate ruling that would allow the utilities to make the cuts but provide for PUC monitoring of service in case the commission wants to step in later. We're in a situation where the utilities are not collecting the revenues they need to operate and yet we may be guilty of not letting them cut expenses where they can cut expenses Bilas said. PG&E spokesman Jon Tremayne said savings from the layoffs are helping to keep electricity running and gas flowing. It keeps cash in our accounts so we can keep doing day-to-day business Tremayne said. In addition to the 325 positions dropped so far PG&E is proposing to cut an additional 675 during the next three to six months. The cuts affect temporary and contract workers who read meters handle new service hookups and replace equipment. PG&E has no plans to eliminate permanent positions. The company is struggling to keep up with a higher workload at its call center as customers deluge the lines with inquiries about their rising bills and the effects of deregulation. Calls to PG&E ballooned from 1.3 million in January 2000 to 2.3 million in January 2001. Bilas advocates granting PG&E's request to temporarily relax standards requiring the utility to respond swiftly to customer calls and to read customers' meters once a month. PG&E wants to read meters bimonthly and send bills based on the estimated use between readings. Discrepancies could be corrected later. Wong called those measures unacceptable. He said customers need to know immediately if their efforts to conserve power are working. Wong also said the utilities' own experts have said the workforce reductions will lengthen the time required to restore power after nonemergency equipment failure. Eric Wolfe communications director for the International Brotherhood of Electrical Workers Local 1245 said some customers have already been left without power overnight because PG&E is trying to avoid the use of overtime on nonemergency power outages. It hurts a lineman to walk away from the job leaving a customer without power Wolfe said. Tremayne said PG&E is trying to minimize overtime costs but denied the company has allowed customers to go without power out of financial concerns. He said crews were pulled out when darkness and falling trees made the work too dangerous. ---- Power prices could soar during the summer Posted at 10:35 p.m. PST Tuesday March 6 2001 BY STEVE JOHNSON Mercury News Unless Gov. Gray Davis arranges significantly more long-term electricity contracts or persuades people to turn off a lot more lights California's unpredictable spot market for power could wreak havoc this summer. Even with the 40 long-term deals announced by Davis on Monday experts interviewed Tuesday said up to 43 percent of the state's daily needs may have to come from this highly volatile market in which power is bought within a day of need. That could could prove hugely expensive because some spot market energy has cost five to six times what it would under the long-term contracts. It's widely expected that consumers ultimately would have to pay that tab which could amount to billions of dollars. And because that power won't be locked up in contracts there is no guarantee it will be available when it's needed which could lead to blackouts according to a recent report to the California Independent System Operator which oversees three-fourths of the state's power grid. ``The situation in California could reach catastrophic proportions'' the report concluded adding that unless things change dramatically ``it is a virtual certainty that peak demand will go unmet during many hot summer days.'' Steven Maviglio Davis' press secretary conceded Tuesday that the spot market could be troublesome. ``It's a major concern'' he said which is why the state is trying to line up more power contracts speed up power plant construction and promote conservation. During the normally hot month of August peak daily demand for power in the Independent System Operator's territory is expected to hit about 47700 megawatts -- enough for nearly 48 million homes. The state's three main utility firms generate about 8200 megawatts and have long-term contracts from wind solar and other energy sources for about 11700 megawatts more. That totals about 20000 megawatts. Add in the 7000 megawatts of long-term power that Davis has announced for this summer and the state is still nearly 21000 megawatts short. Costly proposition If all that power has to be obtained on the spot market the price could be high. On Friday last-minute purchases on the market averaged $411 per megawatt-hour compared to about $150 per megawatt-hour for all power obtained by the Independent System Operator and $69 per megawatt-hour on average under Davis' long-term contracts. It's possible that not all 21000 megawatts would have to be purchased on the market. Assuming Davis is successful in getting people to save 10 percent -- which could prove difficult -- conservation could reduce peak demand by nearly 5000 megawatts. California also might be able to trade for another 5000 megawatts with the federal government's Bonneville Power Administration and a hydroelectric operator in British Columbia said Arthur O'Donnell editor of California Energy Markets a trade publication. Under such deals those two outfits often send that much power to California when they don't need it and California returns the same amount or more when its demand is low. But O'Donnell said it wasn't clear whether 5000 megawatts would be available this summer because ``they still haven't gotten the snowpack they need in the Pacific Northwest'' which could limit that region's generating capacity. Still falling short Even if those hydropower imports are available and conservation works as Davis hopes it's likely California would still require the spot market for 11000 megawatts to meet the August demand. That's more than 20 percent of the state's overall power needs. ``All of the surrounding states are buying probably less than 5 percent at most of their energy on the spot market'' said Frank Wolak a Stanford economist who monitors electricity prices for the Independent System Operator. He worries about how much that power could cost and is disturbed that state officials haven't adequately addressed the issue. ``No one has any idea what they are going to do and that is part of the problem'' he said. Officials at Pacific Gas & Electric Co. are particularly concerned. They fear that their company -- which is nearing bankruptcy -- could get stuck for much of the spot market purchases by the Independent System Operator which has threatened to bill the utilities for the cost. Fearing the annual bill for that power could hit $2.4 billion this year PG&E wants the tab sent to the Department of Water Resources which also is buying power on the spot market for the state. But the Department of Water Resources has objected to that idea and the matter is expected to be heard today by the California Public Utilities Commission. ``We're looking for clarity on a number of issues'' regarding how the spot market will work ``and certainly that's one of them'' said Thomas Hannigan the water agency's director. ``I don't think anybody knows the answer of who's going to pay for it'' added PG&E spokesman John Nelson. But Nettie Hoge executive director of the Utility Reform Network in San Francisco said she suspects consumers ultimately will foot the bill. The unfortunate likelihood about spot market purchases is that ``ratepayers are responsible for all of it eventually'' Hoge said. ``It's a very big problem.'' ---- Power Plant Plans Cause Conflicts East county residents blast supervisors Jason B. Johnson Chronicle Staff Writer Wednesday March 7 2001 Industry dreams of building new power plants in east Contra Costa's hills are prompting an angry reaction among residents and elected officials who say they don't want more plants. The conflict was sparked by a vote by county supervisors yesterday to aggressively explore possible sites for new power plants throughout the county. The measure by Supervisors Mark DeSaulnier and Federal Glover which passed on a 4-to-0 vote directs the county administrator and Department of Community Development to compile a report on possible sites within 45 days. Supervisor Donna Gerber abstained after criticizing the plan for potentially repeating the same mistakes that plagued the state's energy deregulation effort by not considering how much energy the state region and county will need in future years and how much power is slated to come online. Gerber said alternative power sources such as solar should also be examined. A site drawing much attention is on top of a deposit of natural gas near the Concord Naval Weapons Station off Highway 4. The owners of 70 acres of land near the station recently formed a company Golden State Power Co. to pursue construction of at least one small peaker plant and a much larger facility capable of producing 600 megawatts. The site could hold up to three small 50-megawatt peaker plants and a larger 15-acre natural gas plant said Steve Thomas managing partner with Golden State. No land use applications have been filed. Thomas said 30 acres could be kept as open space to form a buffer around the project. Both (facilities) are state of the art said Thomas. We believe that the site is ideal. But east county residents at yesterday's meeting blasted the supervisorial measure and the power plant proposal complaining that more plants could put people's health at risk. The region already is home to six power plants. We're going to get a good dose of poor air quality and (negative) health conditions from this said Concord resident Evelyn Frietas. I think we need to stop and think about what we're doing to our quality of life. Dan Torres said the home he bought in 1995 at a new Bay Point development would be alarmingly close to the proposed Golden State site. It will be dragging emissions over our home said Torres. I didn't buy a home on that hill to be surrounded by power plants. There are six power plants in operation in east Contra Costa. Pittsburg already has two power plants and two more under construction. City Council members Frank Aiello and Yvonne Beals said the Antioch-Pittsburg area has done more than its share of energy production. Aiello said Pittsburg will soon produce enough energy to power three million homes in California. When is enough enough? asked Aiello. Pittsburg has shouldered responsibility for a land-fill and two more power plants. At some point you have to say enough. Beals said that while power plants have added millions to the city's general fund the negatives of additional plants could outweigh the benefits. I don't think that Pittsburg or east county should be the dumping ground for energy for California said Beals. ---- Supervisors set search for power plant sites The board also heard from the potential developers of a 650-megawatt plant between Bay Point and Concord By Thomas Peele TIMES STAFF WRITER MARTINEZ -- Contra Costa County supervisors took tentative steps Tuesday toward allowing the construction of at least one small power plant before summer ordering that its staff identify potential sites in unincorporated areas within seven weeks. The board voted 4-0 to search for locations. Third District Supervisor Donna Gerber abstained saying her colleagues lacked a comprehensive context'' to identify sites. I think the board knows just enough to be dangerous'' she said. Gerber said the county should examine the potential for additional power plants within its borders but not investigate individual sites yet. But Fourth District Supervisor Mark DeSaulnier said the action was necessary because of the energy crisis and because of Gov. Gray Davis' call for local governments to help speed the construction of so-called peaker plants before July and August. I wouldn't do this except under an emergency DeSaulnier said after the vote. There are unusual circumstances. We're not talking about putting this in a residential area. Fifth District Supervisor Federal Glover backed DeSaulnier but said he hoped for a location outside his heavily industrialized East County district. There's a lot of concern in East County as to the number of plants he said. DeSaulnier said though that the only logical place for a small plant remains the industrial belt'' stretching along the waterfront from West County to Antioch. He declined to provide specifics but said the only other potential site outside the industrial areas was the Concord Naval Weapons Station property. But he quickly added that he believes the U.S. Department of Defense would never go for it. Also DeSaulnier said he could not rule out the county building the plant itself and entering the electricity-selling market during peak demand times. Board Chairwoman Gayle Uilkema called that idea extremely premature and unlikely. That's a very powerful decision. I do not think we are ready'' she said. The California Energy Commission listed the Equilon refinery in Martinez as one of 32 potential peaker plant sites in the state last week. Peaker plants kick in during peak usage times. Davis called for their quick construction before the height of summer and its energy demand for air conditioning. Plants that generate as much as 50000 megawatts don't need Energy Commission approval. DeSaulnier said he believed a peaker plant could be built about a month after final approval. Supervisors also heard from the potential developers of a 650-megawatt plant between Bay Point and Concord. Walnut Creek commercial real estate developer Steve Thomas announced his intentions for the site north of Highway 4 last week. Construction could take two years. Eric Hasseltine a consultant representing Thomas and what he described as a brand new company for the site the Golden State Power Co. told supervisors that if they intended to speed peaker plant construction they should do what they can to expedite the larger plant. The Thomas site could house a peaker plant until the proposed larger one goes online. A large natural gas line passes under the site. DeSaulnier seemed cautious about the larger proposal which he had described last week as a good site. Uilkema too said she knew too little about it to comment. A resident who lives near the Thomas property asked the board to build it (the larger plant) closer to where you have industrial areas. You have to carefully consider the people who live nearby said Dan Torres 39. Evelyn Freitas of Concord said she lives downwind of the proposed site. Our air quality is going to be worse then it is now she said. Gerber played on the environmental issues saying the county already ranks second statewide to Los Angeles in volume of hazardous materials and amount of electrical generation. ---- Peter Schrag: California's $90 billion infrastructure gap (Published March 7 2001) By now California's surreal energy mess has grown from a crisis to a condition. It may not be quite as permanent as say death and taxes but it's still something that could get a whole lot worse before it gets better. Until there's more realistic pricing no gubernatorial pea-under-the-shell buyout scheme will solve it. Beyond the energy crisis however and in many ways similar to it California faces a whole range of other infrastructure problems -- in transportation in water resources and sewer systems in school and university buildings -- that seem once again to be all but forgotten. The Business Roundtable has estimated the need at roughly $90 billion though no number can possibly be exact. What's certain is that after a burst of high-level investment in public facilities during the 1950s and 1960s California's annual capital investment has sunk precipitously -- from an annual $150 per capita in the 1960s according to a set of recent studies for PPIC the Public Policy Institute of California to about $30 in the 1990s. But you probably don't need to tell anyone driving Bay Area or Los Angeles freeways or looking at the ubiquitous portable classrooms those dreary brown boxes that house a fourth of our public school students. Ever since passage of Proposition 13 in 1978 we have been flying the flag of deferred maintenance. As in the state's electricity crisis however there's no way California can effectively address those problems merely by building or bonding itself out of them. In highway construction in developing water resources in finding enough university space to accommodate the Tidal Wave II of students managing demand is likely to be as crucial to any solution as new construction. In the energy market -- and in electricity particularly -- it's been a familiar principle ever since David Roe of the Environmental Defense Fund first persuaded Pacific Gas and Electric that a dollar invested in conservation may be worth as much as the same investment in new generation. But in most other sectors of California's infrastructure state and local it's a lesson still to be learned. There have been scattered attempts to encourage conservation and reduce demand -- significant reduction in water use for example through the installation of low-flow faucets and low-flush toilets some reduction in traffic by using rush-hour diamond lanes or by adjusting highway or (as in New York) bridge tolls to levels of congestion. But as pointed out by David Dowall an urban economist at Berkeley state policy-makers have not really begun to consider how demand management strategies can be applied to infrastructure service areas or how the more efficient use of facilities and more realistic pricing -- highway tolls say or parking fees -- can reduce demand for scarce infrastructure resources. In any case says Dowall in one of the PPIC reports we should pick which major projects we will build not just according to per capita estimates of how much we need but according to how much consumers are willing to pay for them. To avoid hurting the poor congestion-related highway tolls and other tariffs can be rebated on the basis of income. University fees can be means-tested. In California they also could be adjusted to encourage summer school classes and other off-peak uses rather than (as in the past) making UC summer courses more expensive. Given the political and economic uncertainties there's no way to know how far such demand management can be taken. But there's not much doubt that as Dowall and others point out the state's infrastructure planning is a jumble of uncoordinated agency agendas and wish lists. The Legislature last year passed a bill AB 1473 by Assembly Speaker Robert Hertzberg that requires the governor beginning next year to submit an annual five-year infrastructure plan for state agencies and public schools along with recommendations on how to fund it. In addition Gov. Gray Davis' infrastructure commission is expected to recommend better coordination of infrastructure and land-use planning when it issues its report this spring. That would be a start. As California State Treasurer Phil Angelides has pointed out the state desperately needs to start joint planning -- regional planning -- for housing roads and other resources to reduce the need for long commutes to preserve open space and to bring jobs to where people live and housing to where the jobs are. That would itself reduce demand for more freeway lanes and equally important improve the quality of life. At present most planning for housing roads water systems and other facilities rarely recognizes the regional impact of local decisions. In the East Bay slow-growth forces push well-intended initiatives that would force more development into Tracy or Modesto and further tax the transportation systems to Silicon Valley. In city after city there are beggar-thy-neighbor efforts to grab yet another shopping mall that produces a little extra sales tax revenue for the city that gets it and that often compounds traffic and revenue problems in adjacent communities. In higher education we divide bond proceeds evenly among UC the California State University and the community colleges even though the community colleges serve eight times as many students as UC. We plan road projects according to county not regional priorities. It is all done according to antiquated political and fiscal formulas that often no longer make sense. We don't just need better capital planning we need a whole new planning system. ---- PG&E power plan debated at hearing A PUC meeting on the utility's capacity expansion project for the Tri-Valley follows weeks of protest from officials residents Power upgrade in valley debated By Megan Long TIMES STAFF WRITER SAN FRANCISCO -- Dublin officials and the developer of a Livermore subdivision faced questions Tuesday about their opposition to alternative routes of PG&E's controversial Tri-Valley power upgrade plan -- and answered by restating their long-standing objections. Tuesday's cross-examination came during the third and likely final week of the California Public Utility Commission's evidentiary hearings on the utility's $91 million Tri-Valley 2002 Capacity Increase Project. It has followed weeks of protests of PG&E's upgrade plans by officials and residents of Livermore Pleasanton Dublin and San Ramon. And before the questioning started Dublin Vice Mayor Janet Lockhart reiterated concerns about an alternative route deemed environmentally superior that would place a substation just 1000 feet north of Interstate 580 between Tassajara and Fallon roads. She said that would undermine the results of a 15-year process to plan the eastern development of the city. It's extremely important to the residents of our community to follow a plan we worked hard to produce she said. Dublin officials favor PG&E's proposed placement of the station three miles north of the freeway away from new high-tech company offices and housing developments. Besides the Dublin substation the project calls for construction of a substation in North Livermore expansion of the Pleasanton substation and installation of 23.5 miles of new lines. In response to questions from PUC Administrative Law Judge Michelle Cooke Dublin's public works director Lee Thompson confirmed that the Lin family the owner of the property where the alternative substation would go wasn't interested in selling the land to PG&E. Cooke also asked Thompson to define a discretionary permit which is how city officials said they might treat a permit for a substation. Lee said that type of permit is one the city has the right to approve or not depending on the project's impact. Eddie Peabody Dublin's community development director testified that the zoning for the Lin property accommodates uses such as commercial business research and development and light manufacturing. It would not he said be appropriate for a power substation. He said parcels within the East Dublin area that could host a station would include those zoned for public and semi-public uses including land recently bought by Oracle and Sun Microsystems for new campuses. While Dublin officials testified that one buyer of land in that area paid $86 per square foot others suggested land prices would be inflated to help make a PG&E land buy look prohibitively expensive. An executive of Centex Homes the developer of new houses near Isabel Avenue and Concannon Boulevard objected to an alternative route that would place high-voltage transmission lines overhead along Isabel and Stanley Boulevard. David Barclay president of Centex's Northern California division said that the 80-foot to 150-foot towers would have a severe visual impact on residents of the Prima tract. Ed O'Neill a lawyer for the Kottinger Ranch Homeowners Association pointed out that existing distribution lines on 50-foot poles on Isabel already mar the view for residents. The Foley family has been ranching on land south of Pleasanton city limits for years said their attorney Kennedy Richardson. The utility's project would place overhead lines and a transmission station on rolling hills that the family envisions as one day being public open space with limited development Richardson said. Lawyers for Pleasanton Livermore Kottinger Ranch and Centex are scheduled to cross-examine a PG&E engineer today about the project's routing. That testimony should be the most controversial of the hearings. Judge Cooke is expected to recommend an alignment by July to the PUC which will make the final decision. ---- NEWS State OKs 'Peaker' Power Plant at SFO / Temporary generator could be sending electricity to 50000 homes by August Marshall Wilson 03/08/2001 The San Francisco Chronicle FINAL Page A.20 (Copyright 2001) State energy officials yesterday approved plans to build a temporary electrical plant at San Francisco International Airport that should generate enough juice to power 50000 homes by August. Meeting in Sacramento the Energy Commission voted 4-0 to give the green light to the gas-fired plant. It will operate during peak summer and winter demand to help the state avoid Stage 3 power alerts and rolling blackouts. Texas-based El Paso Merchant Energy Co. won approval under a new state law mandating speedy four-month reviews of so-called peaker plants. It was the only one of seven applications statewide to win approval. The other proposals were withdrawn for various reasons. The 51-megawatt plant formally called the United Golden Gate Power Project is scheduled to be built at the northwest corner of the airport near the United Airlines maintenance center. Within the next few weeks El Paso plans to apply to build a 571- megawatt $400 million plant in the same area company spokesman Jesse Frederick said. It would undergo a separate review by state energy officials. The small peaker plant approved yesterday is to generate electricity beginning around Aug. 1 for up to three years. After the end of three years the plant would be closed or converted to a cleaner-burning system. Under state law a temporary peaker plant is permitted to spew more air pollution than a permanent plant. El Paso's temporary plant is to be built next to a co-generation plant operated by United Airlines. It would use existing connections for natural gas and water supplies and tap into existing power transmission lines. Electricity generated by the plant would be pumped into the state's electrical grid Energy Commission spokesman Gary Fay said. It would also serve as a backup for San Francisco Airport in case of a blackout. No one spoke against the proposed plant at yesterday's commission meeting. The proposal however has been criticized by area residents and environmentalists worried about air pollution. Scott Buschman a professional photographer and San Bruno resident said yesterday it was unjust that state officials 100 miles away in Sacramento approved a Texas company's proposal to put a power plant on land owned by San Francisco. The fact that they approved it without considering the public's concerns foremost air quality is very disturbing he said. Fay said the plant complies with clean-air standards. Answering the criticism about the location of yesterday's deliberation he said three hearings and several workshops were held in communities near the airport. Copyright 2000 Dow Jones & Company Inc. All Rights Reserved. ---- Crossed Wires: Major Kinks Emerge In Gov. Davis's Plan To Power California --- State's Outlays for Electricity May Be Hard to Recover Without Rate Increases --- Betting on Long-Term Deals By Wall Street Journal staff reporters Rebecca Smith Mitchel Benson and John R. Emshwiller 03/08/2001 The Wall Street Journal A1 (Copyright (c) 2001 Dow Jones & Company Inc.) SACRAMENTO Calif. -- Earlier this year Gov. Gray Davis made what may be the biggest bet in the history of the nation's biggest state: that he could tame an out-of-control electricity market and avoid devastating blackouts without busting the state's budget antagonizing its consumers or derailing his own political career. His wager is still on the table but the assumptions that underlie it are looking increasingly shaky these days. The governor has already spent around $2 billion of public money buying hugely expensive wholesale power taking over the role formerly played by the state's near-bankrupt electric utilities. And California will probably be obliged to spend billions more before its electricity market stabilizes and those utilities are restored to some semblance of financial health. Under the governor's plan California aims to recoup the money it is using to buy electricity by issuing $10 billion in bonds. That way it would still have a healthy budget surplus to finance new spending on roads schools and other public services. But there's a potentially big obstacle to this plan. The state Legislature worried about racking up billions in new debt has put limits on the size of any bond offering. In broad terms the Legislature's action would allow the state to borrow only four times as much as it can recover annually from utility customers. Right now that doesn't appear to be much. Under the current rate structure essentially set in place by California's flawed 1996 electricity-deregulation plan consumers pay far less for power than the cost of acquiring it on the wholesale market. Preliminary estimates submitted by utilities last month to the California Public Utilities Commission show the state's share of the proceeds from electricity sales this year could be as little as $241 million -- not enough to support even $1 billion in bond sales under the Legislature's formula. That would leave the state on the hook for much of the money it has already paid for power -- not to mention the billions more Gov. Davis will need to spend. That in turn raises the prospect that California's economy and its credit rating both could deteriorate significantly. But state finance officials say that based on their own projections they will be able to extract enough money to support a $10 billion bond issue. Walking a careful line between fiscal prudence and political survival Mr. Davis and others in his administration are scrambling to come up with ways to get around the legislative restrictions without raising rates for consumers. If I wanted to raise rates I could solve this problem in 20 minutes Mr. Davis says. The governor says he believes that the state can obtain enough affordable power through long-term power-supply contracts to avoid the need for a big rate increase. The billions of dollars the state hopes to borrow would be used to help pay for power until electricity prices drop as they are expected to do when new power plants come online over the next few years. The Davis administration fears that what may be its only other option -- a big increase in retail electric rates -- could prompt angry consumer groups to seek new electricity laws through a statewide ballot initiative during next year's election. That's when Mr. Davis is expected to run for a second term as governor. But trying to save California without rate increases is forcing Mr. Davis to make some colossal gambles with the state's money. State officials estimate that in the next several months California will need to spend as much as $6 billion on power purchases -- equivalent to the state's entire fiscal surplus. Mr. Davis is also looking to spend several billion more to buy the transmission assets of three investor-owned utilities in order to restore two of them to credit-worthiness. He also has announced plans to spend several hundred million dollars more on conservation programs designed to reduce demand while new power plants are being built in the state. In order to limit the state's financial exposure in the meantime the governor and his aides have in some cases ignored state law. They have threatened appointed officials who have stood in the way. And they have sharply restricted the flow of information to the public. None of those steps is expected to do much to reduce state spending on power in the coming months. In a few weeks power usage is expected to begin a sharp seasonal rise as Californians switch on their air conditioners with the coming of warmer weather. By various estimates demand during peak periods this summer could outstrip supply by 10% or several thousand megawatts. That could produce more rolling blackouts like the ones that hit Northern California earlier this year. It is also likely to put strong upward pressure on wholesale electricity prices. Steven Zimmerman managing director of Standard & Poor's Corp. says Mr. Davis and his aides don't have a lot of time to put a cap on the state's financial exposure to the crisis. The credit-rating agency has put the state on credit watch for a possible downgrade which would affect the value of all of California's outstanding public debt. Moody's Investor Service Inc. is also concerned. It said in a recent report that the power crisis could soon seriously threaten the health of the state's economy. Mr. Davis a Democrat and career politician was dealt a bad hand when he took office in 1999. The deregulation plan that sparked the state's electricity crisis was enacted under his predecessor Republican Pete Wilson. But Mr. Davis was slow to react to early signs of trouble this past summer and alarms sounded by members of the state Legislature. By the time Mr. Davis finally sprang into action earlier this year a troublesome power-supply squeeze had escalated into a crisis. In a Jan. 17 declaration of emergency the governor designated the state Department of Water Resources to take the utilities' place as the daily buyer of huge quantities of electricity. His hope: that by making the state the dominant player in California's power sector he would ease electricity producers' concerns about getting paid and give the state enough clout to negotiate lower long-term power prices. Earlier this week Mr. Davis announced final or tentative agreements with 20 power suppliers to furnish the state with a total of 8900 megawatts for periods of as long as 20 years. But the supply situation remains extremely uncertain for this summer when demand probably will top 45000 megawatts. If the state can secure enough power under contract and push down demand through aggressive conservation it might be able to squeak through the summer season. If not it will be forced to keep buying huge amounts of costly power in the cash market. Under deregulation retail electric rates were frozen for several years while wholesale-power costs were free to fluctuate. When the plan was conceived wholesale prices were low and expected to go lower. However a combination of unexpected growth in power demand and a lack of new generating capacity helped produce a supply squeeze. Average wholesale prices more than tripled last year from 1999. And in January those prices were up 10-fold from a year earlier. By then California's two biggest investor-owned utilities -- the Pacific Gas & Electric unit of PG&E Corp. and the Southern California Edison subsidiary of Edison International -- faced imminent financial collapse. They had racked up billions of dollars in wholesale power bills they couldn't afford to pay. As generators began shying away from selling to the two utilities the Clinton administration forced them to sell power into the California market an order left in place during the first weeks of the Bush administration. Still northern California was hit by rolling blackouts on several days in early January. Since then the DWR which does some electricity trading as an adjunct to its main mission of managing the state's giant system of aqueducts and reservoirs has had to learn the ins and outs of power markets on the run. It hasn't been easy. David Mills trading-floor manager for the federal Bonneville Power Administration says the water agency has at times offered to pay $50 to $100 per megawatt hour more than the available market price. They agree to prices that make you wonder says Mr. Mills whose organization markets electricity from federal dams in the Pacific Northwest. You'd at least think they'd check to see what the prevailing price is before throwing out their offer. Mr. Mills says that to cut California some slack he occasionally has instructed his traders to sell at prices lower than the DWR had offered to pay. Ray Hart the water agency deputy director responsible for the power purchasing says he isn't aware of any cases in which the DWR has overpaid. He says his team has been extremely successful by all measures. Ultimately the DWR's trading acumen is far less important than the overall arithmetic of power supply and demand in California. With the price of natural gas that feeds many of the region's generating plants at near record levels and some suppliers reluctant to sell into the troubled California market wholesale electric prices remain stubbornly high and in recent days have again been rising. The Legislature has advanced the DWR about $3 billion from the state's general fund for power purchases. Under emergency legislation passed by the Legislature and signed by Mr. Davis on Feb. 1 the general fund is to be reimbursed from a planned bond sale later this year. But under terms of the emergency law the water agency would have to wrest $2.5 billion a year in revenue from retail electricity rates in order to sell the $10 billion worth of bonds sought by Mr. Davis. Assembly Speaker Robert Hertzberg a Southern California Democrat says the formula was created to ensure that there would be a way to repay the bonds without draining the state's coffers. We didn't want to just open our wallets he says. According to the language of the Feb. 1 law the water agency gets what's left of revenue collected from ratepayers after the utilities pay certain of their own power-supply bills and other expenses. And in their filings with the PUC last month the utilities reckoned under their worst-case scenarios that there would be only $241 million available to the DWR this year. State officials are quietly pushing the PUC to rejigger the formula so that the water department gets more money -- even though that would clash with terms of the Feb. 1 law. Robert Miyashiro deputy director of the Department of Finance says the emergency law was drafted poorly and has led people to believe the DWR only gets the leftover money. He predicts there will be cleanup legislation. At the request of the Davis administration the PUC is considering a plan to use a different revenue-sharing formula than the one in the state law. The proposed new formula was written in close consultation with Mr. Davis's Finance Department says PUC President Loretta Lynch who supports the initiative and is hoping to rush it through. The effort has drawn some opposition. Commissioner Richard Bilas at a recent PUC meeting questioned the legality of the commission attempting to change a formula set by the Legislature. PG&E is even more emphatic since the DWR's extra money could come at the utility's expense. The formula threatens to undo the very financial protections for the utilities that [the new law] attempted to provide the utility said in a recent filing with the PUC. As politicians and regulators wrestle with that issue the Davis administration has taken a step to reduce the outflow of state cash that also seems to conflict with the Feb. 1 law. It was widely assumed that the law required the DWR to buy any electricity the state needed to keep its lights on. However on many occasions the DWR has refused to buy power on the grounds that it was too expensive citing a portion of the new law that urges the agency to hold down costs. The task of covering any remaining shortfall has passed to the California Independent System Operator which manages the state's energy grid and is charged with buying power when necessary to avert shortages. However the ISO doesn't have any power-purchasing money of its own and the major parties it would normally bill are PG&E and Edison whose inability to pay their power bills was the reason the state started buying electricity in the first place. Amid criticism of its stance from generators utilities and Wall Street the DWR says it has started covering more of the utilities' electricity costs. The water agency is now buying 95% to 99% of what California needs in a given day says the agency's Mr. Hart. But increased buying only adds to the uncertainty about the eventual tab. The state's legislative analyst Elizabeth Hill recently recommended that lawmakers hold off considering more than $2 billion in state spending on items ranging from college construction to beach cleanups because of continuing questions about the financial impact of the electricity crisis. Like others Ms. Hill complains that the governor's office and state agencies haven't been forthcoming with information. Indeed the DWR refuses to say precisely how much power it is purchasing and at what prices though it has on several occasions gone back to the Legislature for more money. State officials say that data on its purchasing activities would give suppliers an advantage in continuing electricity-supply contract talks. State Controller Kathleen Connell who is running for mayor of Los Angeles in an April election recently announced plans to post state power-spending information on her department's Web site. But within 24 hours Ms. Connell suspended that plan after discussions with senior Davis administration officials. I feel very strongly that this information should be publicly released says Ms. Connell. I just don't want to do anything that would weaken the state's effectiveness in negotiating. In an effort to more tightly control events the governor obtained legislative approval to abolish the 26-member ISO board which was made up of everyone from utility executives to representatives of consumer groups. He then appointed a new five-member board. To ensure a quick transition the California attorney general threatened the old board members with fines of as much as $5000 each if they didn't immediately relinquish their positions. All did. I was offended at the heavy-handed treatment says Karen Johanson a former ISO board member. One of the first acts of the ISO's new board was to close a meeting about the electricity crisis. The former ISO board routinely held such meetings in public. ISO attorneys say the meeting was largely designed as a private briefing for new board members and that the organization is committed to keeping its deliberations as open as possible. The Wall Street Journal and other news organizations have unsuccessfully challenged the closure in Sacramento state court. Copyright 2000 Dow Jones & Company Inc. All Rights Reserved.,other,informative,5 +Re: Confidential - Don Black,I'm fine with it. m,other,casual,3 +Re: Confidential - Lavos Trading Program,You missed logistics as a rotaion. Also - Let's leave out where they graduate to. This might be an issue with the AA program if we say that they are going to re-enter the program.,energy trading,formal,0 +"The ""Dark"" Side of Popular Culture",Jeff I thought you might find this of interest. Who would have guessed that the California power crisis and Gray Davis could be so funny. Kevin Los Angeles Daily News Friday June 22 2001 'Tonight Show' pokes fun at power crisis By Fred Shuster Staff Writer BURBANK -- Jay Leno pulled the plug on his late-night chat show Thursday doing his part for the state's energy crisis but viewers weren't left in the dark. Flashlights mining helmets and multicolor glow sticks helped to illuminate the set for the show dubbed a one-time-only The Tonight Show Unplugged which Leno said saved enough electricity to light a house for a month. [IMAGE] The unplugged edition of The Tonight Show with Jay Leno pokes fun at the California power crisis(Reed Saxon / A.P.) Call it NBC's Can't See TV. This is not some cheap rating ploy. ... If this works they're gonna make us do this every night Leno joked as part of his opening monologue. The nationally broadcast show featuring a comic interlude with California Gov. Gray Davis utilized just a small amount of electricity to run the cameras Leno said before the show began. Actually in Burbank where the taping took place at NBC Studios the city owns the power company and residents and businesses have not been hit by rolling blackouts as in other areas. The city made $5 million in profit in May after racking up $60 million in excess power sales. But Leno said not using studio lights TV monitors amplifiers and other power sources Thursday saved enough electricity to light a four-bedroom house for a month. Members of the house band wore miner's helmets with group leader Kevin Eubanks strumming an acoustic guitar rather than his regular electric instrument. The stage was lit by candles torches and flashlight beams trained on Leno. Members of the studio audience used the gear to help brighten the set. This is real goofy Leno said before taping got under way. We'll see what happens. Guests included Arsenio Hall Gilbert Gottfried a trainer of nocturnal animals and a Hawaiian fire dancer -- and a brief visit from the governor. Exuding whatever is the direct opposite of charisma Davis had a brief exchange with Leno drawing laughs with the line This is the first time Gray Davis and (the word) electricity have ever appeared in the same sentence. Leno's staff wore glasses with small lights attached and audience prompter Bob Perlow held a hand-scrawled applause sign aloft throughout the show instead of switching on the usual electric model. While there was little energy in play there was no shortage of laughs. Leno joked that President George W. Bush told Davis not to worry because I've been operating in the dark for years. Those in the studio said Leno's nocturnal transmission added excitement to the program. It was cool said Lillie Harrell 17 a tourist from Hammond La. The crowd got really involved. I guess it shows you don't really need all those lights. Added Jose Tano 21 a Burbank resident and student at the University of California Los Angeles It was a good idea and a great way to make a point. The local power company might not have made out very well but the studio audience didn't end up empty-handed. Each received a fluorescent lantern and pack of batteries as they left the studio. Contact Information E-mail kevinscott@onlinemailbox.net Phone (213) 926-2626 Fax (707) 516-0019 Traditional Mail PO Box 21074 ?Los Angeles CA 90021 - image001.jpg - image001.jpg,other,casual,3 +Emissions Strategy Meeting,calendar - fyi -----------------,calendar & scheduling,casual,3 +Re: Additions to Working Groups,yes -- just make sure the working group leaders know. Maureen McVicker 12/30/99 02:56 PM To: Steven J Kean/HOU/EES@EES cc: Subject: Additions to Working Groups SK - STILL OK TO KEEP ADDING PEOPLE? mm -----------------,other,casual,0 +Confidential --CFTC Chair,what do you think? ,legal affairs,casual,2 +Re: Question For All-Employee Meeting,I don't know. Can we get someone in IT to respond? Mary Clark 09/26/2000 05:42 PM To: Steven J Kean/NA/Enron@Enron cc: Subject: Re: Question For All-Employee Meeting Steve I believe the answer is that we don't mandate a specific format for dates for all locations but rather use what is done locally -- just like this employee's recollection. Do you agree? Mary -----------------,business document,formal,3 +Enron Mentions,See first item below ,other,casual,2 +Re: Management Conference - Save the Date,looks fine From: Terrie James/ENRON@enronXgate on 07/19/2001 04:31 PM To: Steven J Kean/NA/Enron@Enron Cindy Olson/ENRON@enronXgate cc: Sherri Sera/ENRON@enronXgate Marge Nadasky/ENRON@enronXgate Subject: Management Conference - Save the Date Steve and Cindy Attached is the electronic Save the Date memo for the Management Conference. We are preparing to send it out next week. Please let me know if you have any comments or concerns on the e-mail. As for distribution we've worked with HR on the distribution list for VPs but will circle back with David Oxley's team to ensure we have the most up-to-date list. Since some VPs in redeployment will most likely find positions within Enron by November I don't plan to exclude them from the distribution ... unlike United Way where we are not soliciting employees in redeployment for a contribution. I look forward to any feedback. Terrie James Senior Director Public Relations Enron Broadband Services (ph) 713.853.7727 (fax) 713.646.3248 terrie.james@enron.com,organization,formal,3 +FINAL,Attached is the final letter. Please note - there was a small change at the top of page 2.,business document,formal,2 +White House To Support FERC Action Today,Fyi - price cap events of the week. -----------------,other,casual,3 +Re: Letter to Bob Houck,The letter looks fine. Set it up as your letter to Ken Lay was forwarded to me for response and have Jeff B sign. Thanks Marcia A Linton 09/20/2000 04:04 PM To: Steven J Kean/NA/Enron@Enron Maureen McVicker/NA/Enron@Enron cc: Subject: Letter to Bob Houck Here is the draft letter to Bob Houck from Ken Lay that Jeff Brown asked me to forward to you.,other,formal,3 +FYI,Let's add this to our daily distribution. -----------------,other,formal,2 +,,,,0