Energy Issues ,
 Please see the following articles:


Sac Bee, Thurs. 6/14:  Court dismisses suit alleging gasoline price-fixing

SD Union, Thurs. 6/14:  GOP vulnerability in California prompts Bush shift =
on=20
power prices

SD Union, Thurs. 6/14:  House panel rejects Democratic plan for energy pric=
e=20
caps

SD Union, Thurs. 6/14:  Plan would allow private energy companies to own gr=
id=20
rights

SD Union, Thurs. 6/14:  PUC to determine role in handling SoCal Edison deal=
=20

SD Union, Thurs. 6/14:  Customers feel pain of energy surcharges

SD Union, Thurs. 6/14:  Chula Vista to get larger peak-use power plant=20

SD Union, Thurs. 6/14:  Duke Energy drops warm-water request

LA Times, Thurs. 6/14:  Some try to con Edison=20

LA Times, Thurs. 6/14:  Federal energy panel finding itself pushed and pull=
ed=20
toward change=20

LA Times, Thurs. 6/14:  State objects to power pricing formula=20

SF Chron, Thurs. 6/14:  Refineries may keep chugging in outages: PUC looks =
to=20
grant blackout exemption=20

SF Chron, Thurs. 6/14:  FERC set to extend power caps: Government sources s=
ay=20
price controls will be round-the-clock

SF Chron, Thurs. 6/14:  Judge orders contract disclosures: State told to=20
release edited versions of energy agreements tomorrow






Court dismisses suit alleging gasoline price-fixing


Updated: June 14, 2001 - 11:35 a.m.=20
SAN FRANCISCO -- The California Supreme Court dismissed a class-action suit=
=20
Thursday alleging major oil refineries colluded to gouge consumers for=20
cleaner-burning gasoline.=20

The unanimous court said the suit did not provide enough evidence to suppor=
t=20
allegations that nine major oil companies in California conspired to limit=
=20
supply and fix prices.=20

In ruling that the case cannot go to trial, Justice Stanley Mosk said that=
=20
the 1996 suit presented evidence that the petroleum companies may have=20
possessed the motive, opportunity and means to unlawfully conspire.=20

"But that is all. That is not enough," Mosk wrote for the court.=20

The suit alleged that the state's largest refiners decided to share=20
confidential information and hold back on supplies of reformulated gasoline=
=20
after the state required refiners to make gasoline that would not create as=
=20
much pollution as previous formulas.=20

The case was granted class action status in 1997. The following year, a San=
=20
Diego County judge tossed out the case, siding with the oil companies who=
=20
said evidence was insufficient to persuade a jury.=20

Then, that judge, David Danielsen, reversed his own decision. The companies=
=20
appealed and in January 2000, an appeals court concurred with the judge's=
=20
initial decision.=20

The oil companies sued were Atlantic Richfield Co., Chevron Corp., Mobile O=
il=20
Co., 76 Products Co., Shell Oil Co., Texaco Refining and Marketing Inc.,=20
Tosco Corp., and Ultramar Inc.=20

The case is Aguilar v. Atlantic Richfield Co., S086738.

-- Associated Press=20







GOP vulnerability in California prompts Bush shift on power prices=20



By Finlay Lewis
COPLEY NEWS SERVICE=20
June 14, 2001=20
WASHINGTON =01) A lengthening list of politically endangered California=20
Republicans appears to have spurred the Bush administration into a retreat =
on=20
the state's volatile electricity pricing issue.=20
White House desire to keep Republican control of the U.S. House in next=20
year's elections will be an unspoken but clear concern when the Federal=20
Energy Regulatory Commission meets Monday to reconsider its pricing policy,=
=20
according to a wide range of analysts who have studied the situation.=20
The expected turnaround on the part of FERC and the White House is due at=
=20
least partly to complaints from embattled California House Republicans that=
=20
Democrats have gained the political high ground as voters come to believe=
=20
that out-of-state energy companies are engaged in price gouging and=20
profiteering.=20
"Republicans have come to realize that the entire pricing structure here ..=
.=20
is a potential political killer," said Tony Quinn, a Sacramento political=
=20
analyst with past ties to the GOP.=20
After months of condemning price controls, the administration gave the gree=
n=20
light to FERC to devise a plan to restrain wholesale electricity prices in=
=20
California and 10 nearby states by pegging them to the costs of the least=
=20
efficient producer in a given market.=20
This approach has already been invoked in California in energy-supply=20
emergencies. The plan before FERC would leave it in place during the summer=
=20
months in California and much of the rest of the West regardless of energy=
=20
availability.=20
While far more generous to the industry than the price-cap formula being=20
advanced by congressional Democrats and California Gov. Gray Davis, the=20
pricing mechanism likely to be embraced by FERC represents a substantial=20
retreat by the agency and the White House. Until now, both have insisted on=
=20
giving free play to market forces except in emergencies.=20
"The more savvy Republican leaders here have figured out that you can't go=
=20
down in flames for an ideological position when your constituents are being=
=20
hurt," said political scientist Sherry Bebitch Jeffe of Claremont Graduate=
=20
University.=20
With the GOP enjoying only an 11-vote margin over the Democrats in the Hous=
e,=20
Republican strategists in recent days have focused on assessments showing=
=20
that a number of Republican-held seats in California could switch hands due=
,=20
in large part, to soaring electricity prices.=20
The list includes Reps. Doug Ose of Sacramento, author of the pricing plan=
=20
now under consideration by FERC, and Rep. Steve Horn of Long Beach, a widel=
y=20
respected moderate.=20
According to some analysts, others in jeopardy are Reps. Elton Gallegly of=
=20
Simi Valley, Richard Pombo of Tracy, and Gary Miller of Diamond Bar.=20
Quinn also argued that Rep. David Dreier of San Dimas, chairman of the=20
powerful Rules Committee and a rising GOP star in the House, could face=20
energy-related problems and that Rep. Mary Bono of searingly hot Palm Sprin=
gs=20
could find herself losing some ground in her otherwise safe GOP constituenc=
y.=20
"(The California energy crisis) has all the earmarks of a classic attack=20
issue," said John R. Pitney, a political scientist at Claremont-McKenna=20
College. "You have a Republican administration headed by two people with=20
connections to the oil industry, and you have a very visible problem and a=
=20
solution that is easy and plausible =01) (Democratic) price controls."=20
Alarmed by these developments, House Majority Whip Tom DeLay of Texas this=
=20
week launched a damage-control effort by assigning a team of Republicans to=
=20
help counter Democratic attacks on the White House. The team's assignment=
=20
includes daily floor speeches defending Bush's energy policies.=20
The energy crisis is only the latest development in a trend that has=20
increased the sense of Republican congressional vulnerability in California=
.=20
Even before this spring's blackouts and stratospheric energy bills, long-te=
rm=20
demographic shifts were tilting the state in a Democratic direction.=20
Congressional redistricting also is expected to exact a toll on the=20
Republican delegation.=20
Compounding the party's troubles was the perception that Bush, having lost=
=20
California handily to Democrat Al Gore last fall, had written off the state=
=20
in terms of his expected re-election campaign in 2004.=20
Then came the loss of Republican control of the U.S. Senate, a development=
=20
that reminded GOP strategists of their tenuous position in the U.S. House.=
=20
"The administration soon discovered that California is still populated by a=
=20
large number of Republican congressmen who didn't appreciate the White=20
House's stance on the problem," said Steve Smith, head of a think tank at=
=20
Washington University in St. Louis that studies problems of politics and=20
economics.=20
Meanwhile, Democrats here appear to be betting that the pending FERC plan=
=20
will solve neither California's energy pains nor the GOP's political=20
problems.=20
House Minority Leader Richard Gephardt told reporters on Thursday that the=
=20
measure would amount to only a "kind of tweaking" of FERC's existing=20
emergency pricing order for California =01) an approach that he said has pr=
oven=20
"ineffective, overly complicated, and loaded with loopholes."=20
Gephardt added, "It still allows huge price gouging by the electric compani=
es=20
with regard to wholesale prices in California."=20




House panel rejects Democratic plan for energy price caps=20



By Alan Fram
ASSOCIATED PRESS=20
June 14, 2001=20
WASHINGTON =01) House Republicans rejected a Democratic effort Thursday to=
=20
impose federal price caps on electricity prices in the Western United State=
s=20
amid an intensifying partisan divide over energy.=20
By a near party-line 34-27 vote, the House Appropriations Committee rejecte=
d=20
a proposal by Rep. Nancy Pelosi, D-Calif., that would have required the=20
Federal Energy Regulatory Commission to tightly limit electricity rates.=20
"You've made your own bed in California," said Rep. Sonny Callahan, R-Ala.,=
=20
who chairs the panel's energy and water subcommittee.=20
Pelosi's proposed cost-based caps, which would have expired in March 2003,=
=20
would have been stricter than both the price restrictions that FERC ordered=
=20
imposed in April and limits the agency plans to approve at a special meetin=
g=20
next Monday.=20
Her proposal also would have allowed states to go to federal court to seek=
=20
refunds for overcharges since June 2000.=20
"I think Republicans don't know how much damage they did to themselves=20
today," Pelosi told reporters afterward. "They've voted in favor of the=20
gougers."=20
In a subsequent interview, she said it was as if Republicans had been "lini=
ng=20
up to drink Kool-Aid," a reference to the poisoned drink used in the 1978=
=20
Jonestown mass suicide and murder in Guyana.=20
Pelosi's amendment was among several energy proposals by Democrats that the=
=20
GOP-controlled committee shot down as it approved a $6.5 billion measure=20
providing extra money this fiscal year, mostly for the Pentagon.=20
In other largely party-line votes, the panel defeated Democratic amendments=
=20
that would have doubled the bill's money for energy assistance for the poor=
=20
to $600 million; added $125 million for hydroelectricity improvements; and=
=20
provided $350 million to support loans to improve the capacity of=20
transmission grids.=20
"It's pure demagoguery," House Majority Whip Tom DeLay, R-Texas, said in a=
=20
brief interview regarding the Democratic amendments. "If Democrats had an=
=20
energy policy, they'd have had one in the last eight years. They have no=20
credibility on this issue whatsoever. They are responsible for the energy=
=20
crunch more than anybody I know."=20
Spotlighting the high political stakes, House Minority Leader Dick Gephardt=
,=20
D-Mo., took the unusual step of issuing a written statement about the=20
committee's energy votes. He said President Bush and Republicans are=20
"committed to helping the Big Energy special interests" and accused them of=
=20
obstruction.=20
Republicans from California and other Western states voted with few=20
exceptions against the Democratic energy proposals, underlining the degree =
to=20
which the response to the region's energy crisis has become a partisan issu=
e.=20
Many in the GOP support Bush's emphasis on increasing energy production and=
=20
argue that price caps will prompt supply shortages.=20
"A lot of these are put there to try to save the governor's political=20
donkey," Rep. Randy "Duke" Cunningham, R-Calif., said, speaking in an=20
interview about the Democratic amendments.=20
California Gov. Gray Davis, a Democrat, has repeatedly demanded that the=20
federal government cap wholesale electricity prices. Bush opposes the idea.=
=20
Rep. J.C. Watts of Oklahoma, chairman of the House Republican Conference,=
=20
said Thursday at a natural gas industry luncheon, "Price caps do not addres=
s=20
the core issues of high energy prices and volatility. ... They will lead to=
=20
rationing and blackouts."=20
During the debate over the price cap amendment, DeLay placed blame for the=
=20
power crisis on California officials.=20
"This was the result of over-government regulation responding to=20
environmental extremism" and as a result limiting electricity supplies, he=
=20
said.=20
But Democrats accused the GOP of opposing action that could help suffering=
=20
Californians.=20
"If you think 'let them eat cake' is your party motto, be my guest," said=
=20
Rep. David Obey, D-Wis. "I don't think the American people will think much =
of=20
that."=20
A subcommittee of the House Energy and Commerce Committee also has rejected=
 a=20
price cap proposal similar to Pelosi's.=20
In other votes Thursday, the Appropriations panel rejected an amendment by=
=20
Rep. Nita Lowey, D-N.Y., to provide $200 million to fight AIDS overseas. An=
d=20
it voted to prod the State Department to find unspent money it could use to=
=20
help El Salvador rebuild from two devastating earthquakes that struck early=
=20
this year.=20
??

On the Net: House Appropriations Committee: www.house.gov/appropriations/=
=20
House members: www.house.gov/house/MemberWWW.html=20
Federal Energy Regulation Commission: www.ferc.gov/=20




Plan would allow private energy companies to own grid rights=20



ASSOCIATED PRESS=20
June 14, 2001=20
SACRAMENTO =01) The federal government has endorsed a plan that calls for=
=20
private energy companies to purchase the rights of a key piece of=20
California's transmission grid.=20
The plan would allow those private companies to control the flow of=20
electricity and charge transmission fees to any agency or utility wanting t=
o=20
move power on the lines.=20
The U.S. Department of Energy on Wednesday invited private energy companies=
=20
to help pay for the expansion of the transmission grid known as Path 15 =01=
) an=20
85-mile stretch of high-tension wires in the Central Valley. The wires can=
=20
move about 3,000 megawatts of power between Southern California and Silicon=
=20
Valley and San Francisco.=20
Pacific Gas & Electric owns the original lines and has been urged by state=
=20
officials to expand the grid's capacity.=20
The wires may become increasingly important this summer when rolling=20
blackouts are expected. Long-term contracts recently signed by the state an=
d=20
power wholesalers are for electricity produced in Southern California but=
=20
transported to Northern California through Path 15.=20
Gov. Gray Davis has sought to outright purchase transmission grids owned by=
=20
PG&E, Southern California Edison and San Diego Gas & Electric.=20
Several power generators said Wednesday they didn't know whether they would=
=20
pursue rights to the Path 15 grid. Expanding the grid will cost between $20=
0=20
and $300 million and take two years to complete. Companies have until July =
12=20
to express their interest to the federal government.=20
One company based in Washington, D.C., has shown interest in Southern=20
California Edison's grid. Trans-Elect executive vice president Robert L.=20
Mitchell said he plans to send a letter next week to Edison chief John Brys=
on=20
offering to buy the grid for $1.8 billion.=20




PUC to determine role in handling SoCal Edison deal=20



By Justin Pritchard
ASSOCIATED PRESS=20
June 14, 2001=20
SAN FRANCISCO =01) California's top power regulators are expected to decide=
=20
Thursday what role they should play in handling a deal where Southern=20
California Edison would sell its power lines to the state in an effort to=
=20
avoid bankruptcy.=20
The five-member California Public Utilities Commission faces a lengthy=20
agenda, but nothing will be more spotlighted than a series of proposals tha=
t=20
would begin to clear the way for approval of a deal Gov. Gray Davis struck=
=20
with Edison on April 9.=20
But before the PUC will push through the deal, its members must vote on=20
whether they have legal authority over it, said PUC President Loretta Lynch=
.=20
Davis on Wednesday warned that time is growing short for legislative action=
.=20
"I believe the patience of (Edison's) creditors is wearing very thin," he=
=20
said. "I'm beginning to see the same signs as ... with PG&E" before that=20
utility declared bankruptcy.=20
Senate leader John Burton, D-San Francisco, said the Legislature and the=20
public need to know exactly what is in the deal and would hold hearings on=
=20
the it as soon as next week.=20
Davis and Edison signed a "Memorandum of Understanding" on April 9.=20
The commission plans to address several items in that MOU at the meeting=20
Thursday, including a decision on delaying a review of how much Edison=20
charges customers for power until 2003.=20
On Wednesday, the PUC voted 5-0 to approve a version of a deal that Edison=
=20
struck with smaller generators called "qualifying facilities." It should le=
t=20
these plants keep churning out power as they look to collect more than $1=
=20
billion that PG&E and Edison owe them, Lynch said.=20
Small generators account for about one-third of the state's daily power=20
supply. But many powered down because Edison and now-bankrupt PG&E didn't p=
ay=20
for months of power they used earlier this year.=20
The commission-approved plan offers stable rates for five years to generato=
rs=20
using wind, solar, geothermal or other renewable sources. It also raises th=
e=20
rates the utilities must pay to gas-fired generators.=20
Small generators have said they will suspend their lawsuits against Edison=
=20
for 180 days if they receive back payments. Under the deal, Edison will pay=
=20
at least 15 percent of what it owes to qualifying facilities.=20
"If they pay back what they owe us, the lawsuits would be dismissed and the=
=20
claims would be settled," said Jerry Bloom, a spokesman for the California=
=20
Co-generation Council, which represents many small, natural gas-fired power=
=20
generators.=20
Wednesday's vote should also help California's power managers in their dail=
y=20
search for enough power to avert more rolling blackouts during the summer,=
=20
Lynch said.=20
She said that while the small generators could have received a higher rate=
=20
for their power by breaking their contracts and selling electricity on the=
=20
open market, the deal guarantees the state's utilities will buy the power.=
=20
"It gives them stability," Lynch said. "Having the qualifying facilities on=
=20
line this summer is so crucial."=20
In March, the PUC ordered PG&E and Edison to pay qualifying facilities for=
=20
power delivered starting in April. Since that cash began to flow, many smal=
l=20
generators have kick-started their operations, adding much needed power to=
=20
the grid.=20
Davis called the PUC approval "a substantial move forward."=20
But the qualifying facilities agreement the PUC approved Wednesday might fa=
ll=20
apart if the Legislature doesn't approve a Davis' larger rescue plan to buy=
=20
Edison's transmission lines.=20
Lynch said she hopes to resolve most outstanding matters on the Edison=20
agreement at a PUC meeting scheduled for June 28. She called the 60-day tim=
e=20
frame Davis gave to resolve the issue "arbitrary" and said the PUC is pushi=
ng=20
ahead at "an amazingly quick pace."=20
Lynch said, however, that while Edison officials have pressured regulators =
to=20
approve the deal, they have not fully cooperated during PUC hearings.=20
She said that while Edison has not cooperated with PUC requests for=20
information during hearings on the deal, the utility has pressured the PUC =
to=20
rubber stamp its agreement with Davis.=20
Edison officials objected to Lynch's assertion that the utility was less th=
an=20
forthcoming, saying any insinuation that it has not fully cooperated with a=
ll=20
of the PUC's requests and investigations is wrong and offensive.=20
??
=01)=20
On the Net:=20
www.cpuc.ca.gov/=20




Customers feel pain of energy surcharges=20



By Frank Green?
UNION-TRIBUNE STAFF WRITER=20
June 14, 2001=20
Roland Hogue is getting nickel-and-dimed to death by the energy crisis.=20
It seems that everywhere the retired General Dynamics worker shops these da=
ys=20
-- be it the diner, cleaners or florist -- he's forced to cough up a=20
surcharge to help the business defray its soaring electricity costs.=20
Such incremental charges are separate, of course, from his home utility bil=
l,=20
which has more than doubled in the last year.=20
"It's getting ridiculous," said Hogue, who was waiting yesterday afternoon =
in=20
front of the Pacific Theatres at Grossmont Center to buy a ticket -- priced=
=20
with an extra 25-cent surcharge advertised on a nearby sign. "I'm on a fixe=
d=20
income. I need every penny I can save."=20
California residents have for months endured rolling blackouts and spiking=
=20
electricity rates. Now they're increasingly paying extra energy fees at the=
=20
corner shop. And many aren't taking the drubbing in stride.=20
You can see the increased checks at Domino's -- where customers calling for=
=20
pizza delivery are warned in a recorded message that a 93-cent energy=20
surcharge will be tacked onto their bill. Or at parks like the San Diego Zo=
o=20
($1.50 extra per ticket) and hotels such as the Hyatt Regency in La Jolla (=
a=20
$3.32 per-room surcharge) and the Sheraton Harbor Island ($2.50).=20
"We didn't have a choice because our gas and electric bill has gone from=20
$4,000 a month to $10,000 a month," Bruce Ross, the manager at Boulevard=20
Cleaners & Laundry, said about the 50-cent utility surcharge the business=
=20
recently added to each customer invoice. "We could have folded our costs in=
to=20
the overall bill, but we wanted our customers to know where the money was=
=20
going."=20
The fee has been costly to Boulevard. Several customers miffed by the charg=
e=20
"have picked up their clothes and stormed out for good," Ross said.=20
A few companies have been forced to rescind their energy surcharge after=20
negative reactions from customers.=20
Taco Bell, for instance, this week reluctantly withdrew the 15-cent energy=
=20
surcharge it imposed at some of its Southern California outlets on Friday=
=20
after it was inundated with consumer complaints.=20
Taco Bell, which did not specify how many stores issued the surcharges, sai=
d=20
it had added them to offset power cost increases.=20
"Some people are getting nasty," one local Domino's clerk said about the=20
company's surcharge. "They cuss at you and hang up the phone."=20
San Diego-based Jack in the Box is among companies that have opted to raise=
=20
prices instead of imposing surcharges.=20
Primarily because of higher energy costs, the firm hiked the prices of its=
=20
Jumbo Jacks and tacos by 1.8 percent in the first quarter, and is about to=
=20
institute another round of price increases that will be "lower than before,=
"=20
spokeswoman Karen Bachmann said.=20
Increase temporary
Analysts say many businesses are choosing the surcharge over raising prices=
=20
because consumers understand that energy costs are soaring. The surcharge=
=20
also implies that the fee will be temporary.=20
"Raising prices in this very competitive environment has been tough to do f=
or=20
the last five years," said George Whalin, president of Retail Management=20
Consultants in San Marcos. "By adding a surcharge, retailers can package it=
,=20
and soften the blow."=20
Meanwhile, consumers in other parts of the country likewise are beginning t=
o=20
feel the pinch of energy surcharges, especially at hotel chains.=20
Hotel officials say the surcharges are a temporary response to the higher=
=20
costs of natural gas and electricity.=20
Hilton Hotels Corp., Wyndham International, Bass Hotels & Resorts Inc.,=20
Starwood Hotels & Resorts Worldwide Inc. and Marriott International have=20
tacked on the surcharges to guests' hotel bills in, among other places,=20
Boston, Chicago, Dallas and Miami.=20
The highest fees have been in New York City, where Marriott International=
=20
recently was charging $5 per room per night in all of its Manhattan hotels.=
=20
Charles Porter, general manager of the Sheraton Steamboat Resort in Steambo=
at=20
Springs, Colo., has so far resisted implementing a surcharge despite a 97=
=20
percent jump in natural gas prices.=20
Porter said many large groups book their rooms months and even years in=20
advance and changing the contract could lead to cancellations.=20
"We're reacting to competitive conditions that change on a daily basis,"=20
Porter said.=20
Costs jumped
Porter said his gas and electric bills for January, February and March=20
totaled $166,000, compared with $92,000 during the same period last year.=
=20
Figures for April and May are not available because the hotel is closed tho=
se=20
months.=20
"You just don't budget for that," Porter said.=20
Not only do hotels buy electricity from natural gas-powered generating=20
plants, they also use the fuel for heating, cooking and laundering tons of=
=20
linens every day.=20
Most chains have taken conservation measures, including installing=20
low-wattage light bulbs, adjusting thermostats and cutting down on exterior=
=20
lighting. Some suggest to guests who are staying multiple nights that they=
=20
not have their towels and bed linens changed each day.=20
"Right now the costs are so astronomical that we have to take other steps a=
s=20
well," and add the surcharge, said Kathy Shepard, a spokeswoman for Hilton.=
=20
So far, hotel officials report no widespread complaints.=20
"There's very little I could do -- that's what they're charging me for," sa=
id=20
Bill Bowmans of Denver, who paid a surcharge at a Residence Inn in=20
Sacramento. Bowmans travels at least three times a month as part of his job=
=20
as a network systems engineer with Avaya Communication.=20
The Associated Press contributed to this report.=20
Frank Green's e-mail address is frank.green@uniontrib.com. His phone number=
=20
is (619) 293-1233.=20
?=20


Chula Vista to get larger peak-use power plant=20



By Amy Oakes=20
UNION-TRIBUNE STAFF WRITER=20
June 14, 2001=20
The California Energy Commission yesterday approved plans for a=20
62.4-megawatt, peak-use power plant to be built in Chula Vista, despite the=
=20
city's objections.=20
Ramco Inc. will begin construction of the natural gas-fired combustion=20
turbine generator by June 25 at the company's site at 3497 Main St., said=
=20
Dale Mesple, a Ramco consultant. The location already houses a 44-megawatt,=
=20
peak-use plant. The new facility must be operational by Sept. 30, 2001,=20
according to Gov. Gray Davis' emergency procedure for siting plants.=20
This is the 10th license granted for plants that will only be used during=
=20
peak periods when power supplies are low, according to the governor's Web=
=20
site.=20
Chula Vista, having already approved plans for the company's first peak-use=
=20
plant in September, opposed the additional facility, citing increases in=20
noise and air pollution.=20
The commission, in response, directed Ramco to comply with the special=20
land-use conditions placed on the 44-megawatt plant. The larger plant must=
=20
conform to all applicable local, state and federal land-use requirements,=
=20
including general plan policies, zoning regulations and local development=
=20
standards. The commission also required Ramco to extend a planned sound wal=
l=20
completely around the facility.=20
Mesple said it will not be a problem to extend the wall, which was going to=
=20
be built on the southern side of the 3.52-acre site and to follow the=20
federal, state and local regulations applied to the first plant.=20
"I'm meeting all of the same requirements and qualifications as I would hav=
e=20
if I had applied through the city," Mesple said.=20
Councilwoman Patty Davis said it is good that Ramco will have to follow=20
previous regulations, such as a 60-decibel noise level threshhold, but she=
=20
still feels the additional plant should not be built here.=20
"Really, I feel like we've done our fair share," Davis said referring to th=
e=20
approval of the first peak-use plant and the South Bay Power Plant. "But,=
=20
with the governor's orders, we don't really have any choice."=20
The governor in February gave the commission authority to fast-track peak-u=
se=20
plants that could be operating by Sept. 30. Under his plan, proposals would=
=20
be exempt from the California Environmental Quality Act review process.=20
Mesple has said the company had not planned to expand its Chula Vista=20
facility until the governor's order that reduced a normally 18-to 24-month=
=20
process to 21 days.=20
Ramco submitted a complete application with the commission May 21. The=20
commission held a public hearing and site tour eight days later.=20
The city held its own public hearing June 1 for residents who live near the=
=20
Ramco plant. The City Council, upset over losing its land-use authority, se=
nt=20
a letter outlining its concerns to the commission.=20
?=20

Duke Energy drops warm-water request=20



By Terry Rodgers=20
UNION-TRIBUNE STAFF WRITER=20
June 14, 2001=20
Duke Energy, which operates the South Bay Power Plant, yesterday withdrew i=
ts=20
request to increase the temperature of its sea-water discharge into San Die=
go=20
Bay.=20
The firm's action averted a confrontation with environmentalists and=20
government scientists, who warned that the hotter water could ultimately ha=
rm=20
endangered birds and marine life, including green sea turtles.=20
Appearing before the San Diego Regional Water Quality Board meeting at Chul=
a=20
Vista City Hall, Duke Energy executives said they were dropping their reque=
st=20
because of a condition proposed by the board's staff.=20
The staff was willing to allow a higher temperature as long as Duke Energy=
=20
would agree to pay to fix any environmental problems arising from the=20
warm-water discharge.=20
That condition would require Duke Energy to write "a potential blank check"=
=20
by making it responsible for unknown mitigation costs, said company spokesm=
an=20
Thomas C. Williams. "No business could be expected to put itself through th=
at=20
kind of uncertainty."=20
The South Bay plant, which generates enough power for 700,000 homes, is=20
allowed to discharge coolant water that is 15 degrees warmer, over a 24-hou=
r=20
average, than the natural temperature of the bay.=20
The company had asked to increase the limit to 23 degrees.=20
Duke executives said their request was made solely to comply with an=20
executive order by Gov. Gray Davis urging power companies to generate as mu=
ch=20
electricity as possible to minimize the likelihood of rolling blackouts thi=
s=20
summer.=20
Raising the temperature limits of the plant's coolant water would have=20
enabled it to produce more power during off-peak hours.=20
The plant already operates at maximum levels during peak hours when energy =
is=20
most in demand, and that won't change, the company said.=20
Laura Hunter of the Environmental Health Coalition said: "We shouldn't be=
=20
experimenting with the bay's ecology in such a reckless way. Duke hasn't ma=
de=20
an adequate case that they need to do this."=20
?=20


Some Try to Con Edison=20
Electricity: Utilities are clamping down on power theft, dispatching sleuth=
s=20
to examine suspicious meters.=20

By MARLA DICKERSON and STUART SILVERSTEIN, Times Staff Writers=20

?????In the back of a dingy duplex in South-Central Los Angeles, utility=20
investigator John Foegen pulls two battered electric meters from their wall=
=20
sockets and smiles.
?????"Well looky here," he said with satisfaction, pointing a gloved finger=
=20
at two thick strands of red wire jammed into the guts of the utility panel.=
=20
Someone has helped himself to free electricity, using a hot-wiring techniqu=
e=20
that skirts the meter.




L.A. Department of Water and Power investigator John Foegen examines a mete=
r=20
with altered wiring. U.S. utilities lost nearly $2 billion to swindlers las=
t=20
year, according to the Edison Electric Institute.
KEN LUBAS / Los Angeles Times

?????Just how much these particular freeloaders have siphoned will take a=
=20
little sleuthing by Foegen, who works for the Los Angeles Department of Wat=
er=20
and Power. In the meantime, he carefully extracts the wire "shunts" for=20
evidence, cuts the power, locks the meters and seals the utility panel to=
=20
discourage more tampering.
?????Juice jackers. Meter beaters. Kilowatt crooks.=20
?????Call them what you will, but electricity thieves are helping themselve=
s=20
to billions of dollars in power every year--illicit activity that's expecte=
d=20
to grow as rates climb nationwide. The problem is particularly worrisome in=
=20
California, where prices are skyrocketing and many residents hail from=20
countries where filching electricity is a time-honored tradition. Using too=
ls=20
as crude as kitchen knives or as cutting edge as light sensors, energy=20
grifters are rigging meters, tapping into underground power mains,=20
piggybacking on their neighbors' lines, even registering their pets as=20
customers to game the billing system.
?????Utilities are fighting back with squads of theft investigators such as=
=20
Foegen, who use everything from fiber-optic scopes and computer analysis to=
=20
good old-fashioned shoe leather. They are battling to protect profits as we=
ll=20
as public safety; sloppy voltage smugglers have been known to burn down hom=
es=20
and electrocute themselves.
?????Discouraging electricity cons isn't easy. Even when caught, scofflaws=
=20
are rarely prosecuted. With rates rising and anger at power companies=20
growing, the industry is bracing for a long, hot summer.
?????"The higher the rates, the more the incentive," said Randy Shipley, he=
ad=20
of an Oregon firm that makes high-tech devices to snare energy bandits.=20
"Utilities are getting more sophisticated. But so are the bad guys."
?????People have been pinching electricity since the light bulb was invente=
d.=20
Theft is rampant in developing nations where creaky government utilities ar=
e=20
no match for the resourceful. In India's state of Delhi for example, nearly=
=20
half of the available power is being pilfered, according to a recent study.




White wire has been rigged to bypass meter. Voltage smugglers have been kno=
wn=20
to cause devastating fires with makeshift work.
KEN LUBAS / Los Angeles Times

?????By comparison, the Edison Electric Institute today will report that U.=
S.=20
utilities lost nearly $2 billion to swindlers last year, or less than 1% of=
=20
industry revenue. But some energy consultants say the trade group's estimat=
es=20
traditionally have been too low. They peg the losses at well beyond $5=20
billion a year.
?????The dirty little secret, they say, is that U.S. power companies for=20
decades had scant incentive to pursue crooks. Electricity was cheap and=20
companies routinely won rate hikes to cover their costs, burying theft in=
=20
catch-all categories such as "line losses," according to Lee Cordner, a=20
former Pacific Gas & Electric manager and now an energy consultant in San=
=20
Rafael, Calif.
?????"They just charge everyone else more" to make up for it, Cordner said.
?????Now that generation costs are soaring, regulators and consumer watchdo=
gs=20
are expected to take a harder look at such hidden expenses. Deregulation is=
=20
likewise expected to give power companies incentive to crack down on theft =
to=20
boost profitability.
?????U.S. utilities have formed theft-fighting associations to share=20
detection tips and notify each other when shady characters leave one servic=
e=20
territory for another. Most large utilities now have "revenue protection"=
=20
departments whose sole mission is to ferret out cheats.

?????Utilities Step Up Investigations
?????PG&E, Southern California Edison and San Diego Gas & Electric all=20
declined to talk about their crime-fighting efforts--perhaps worried about=
=20
giving customers ideas in the midst of huge rate hikes. But published repor=
ts=20
indicate that PG&E, for example, more than doubled its revenue protection=
=20
staff in the mid-1990s, putting 48 investigators on the streets after power=
=20
diversion soared to about $100 million a year.
?????DWP is looking to beef up its investigation staff, which totals six=20
people for the utility's 1.4 million meters. In 1998 the unit tracked down=
=20
nearly 1,000 scofflaws, billing them more than $3.2 million for stolen powe=
r,=20
up from $135,000 in 1988.
?????So who's stealing electricity? You name it, said Cleve Freeman, a=20
Southern California Gas Co. executive and chairman of the International=20
Utilities Revenue Protection Assn. He says perpetrators typically can be=20
classified as "the needy and the greedy."
?????They include the working poor, the unemployed and retirees for whom=20
electricity is becoming increasing unaffordable. Mobsters and marijuana=20
farmers hijack electricity to avoid suspiciously large utility bills. But=
=20
legitimate businesses and rich people do it too.
?????The DWP once nabbed an L.A. stockbroker who siphoned $9,000 worth of=
=20
juice to heat his pool and cool his luxury home. The man pleaded ignorance=
=20
and coughed up the money, according to Wayne Wohler, an assistant superviso=
r=20
with DWP's revenue security unit. But he said the high-quality job was=20
obviously the work of a professional "fixer" whose handiwork turned up in=
=20
other homes in the tony neighborhood.
?????Contractors and electricians are among the wiliest culprits because th=
ey=20
possess the skills to pilfer power relatively safely, then cover their=20
tracks. Unscrupulous builders cut their costs on construction sites by=20
illegally diverting power from nearby transmission lines. Former Midwest=20
utility employee Patrick Keener recalls an Iowa contractor who swiped enoug=
h=20
juice to construct an entire subdivision before he was discovered.
?????"He built 36 homes off one meter," said Keener, now the customer and=
=20
energy services manager for the city of Redding in Northern California. "He=
=20
got busted big time, but he was a darn good electrician."
?????Power police say the most successful thieves don't go for the home run=
,=20
because nothing grabs their attention faster than a meter that reads zero.=
=20
Wohler said he's seen clever bandits rig their meters with light sensors an=
d=20
other devices to create on-off switches that allow them to run their meters=
=20
part of the time to avoid suspicion.
?????Those who aren't mechanically inclined can always try to game the=20
billing system with false names. A utility manager who pleaded for anonymit=
y=20
said his company got burned by a customer with the moniker "U. Ben Hadd."=
=20
Others simply sign up their pets for service.
?????"How do you collect from Fido Smith?" wondered John Rilling, an energy=
=20
theft consultant in Norcross, Ga.

?????Checking Out Tips Can Be Hazardous
?????Going head-to-head with meter beaters is a daily adventure for power=
=20
cops such as Foegen of the DWP, who prowls Los Angeles armed with dog=20
repellent and the addresses of suspected crooks. Most tips come from=20
gimlet-eyed meter readers trained to spot a broken meter lock or suspicious=
=20
wiring. Others come from computer analysis of changes in customers' usage=
=20
patterns. But feuding family members and nosy neighbors are valuable=20
informants as well. Like most utilities, DWP has a hotline people can use t=
o=20
rat on suspected cheats.
?????"We get the best stuff from ex-spouses," said Foegen, cruising past=20
liquor stores and brightly painted taco stands on Washington Boulevard in a=
=20
white, electric-powered SUV.
?????His territory spans some of the poorest sections of the city, includin=
g=20
Pico-Union and South-Central Los Angeles. Most power thefts here are hack=
=20
jobs--cutlery jammed into meter dials, jumper cables hooked to overhead=20
lines, multiple dwellings wired to a single connection--which are easy to=
=20
spot but potentially lethal for power cops and hackers alike.
?????Foegen said he has defused jury-rigged connections so dangerous "I cou=
ld=20
feel the hair standing up on the back of my neck." DWP's Wohler recalls at=
=20
least three electrocutions and "countless injuries" to juice jackers and=20
their neighbors over his 25-year career. Earlier this year, shoddy wiring=
=20
from an illegal hookup sparked an early-morning row house fire in South=20
Philadelphia that killed a woman and destroyed three homes.
?????Electrocution and fires aren't the only perils. Suspected thieves jump=
ed=20
Foegen in a back alley in February, breaking his nose after he dismantled=
=20
their illegal connection. The 52-year-old was back on the job within a few=
=20
weeks undeterred. His one regret?
?????"They stole my tools," he groused.
?????While there's no substitute for a sharp eye and insulated pliers,=20
utilities increasingly are employing high-tech equipment to keep up with=20
criminals.
?????Shipley's Portland, Ore.-based H.J. Arnett Industries manufactures the=
=20
White Knight, a $3,600 "tap detector" that sends an impulse through electri=
c=20
wires to pinpoint power diversions. Then there's the auditing "check meter,=
"=20
which records discrepancies between actual power usage and what's showing u=
p=20
on a customer's meter. Utilities place the $1,500 device on nearby utility=
=20
poles and disguise them to look like a transformers or telephone equipment.=
=20
But alert crooks are getting wise to the decoys.
?????"We've had a few returned to us with bullet holes," Shipley said.
?????Massachusetts-based Optim Inc. is applying the same fiber-optic=20
technology used in medical proctoscopes to probe electrical conduit for=20
irregularities. Power cops are eavesdropping on Internet chat rooms looking=
=20
for juice-jacking braggarts. Meanwhile, investigators at the nonprofit=20
Electric Power Research Institute in Palo Alto are devising computer defens=
es=20
to block hackers from tapping into utilities' computers to lower their bill=
s.
?????Utilities also are installing automated "smart" meters that can be rea=
d=20
remotely and can alert them when someone has tampered with the device. Give=
n=20
the high price of the technology, which can cost up to three times more tha=
n=20
conventional meters, automated equipment is being phased in slowly. Thus fo=
r=20
the foreseeable future, utilities are stuck in the unenviable position of=
=20
letting the foxes guard the chicken coop.=20
?????"It's the only industry I know where the cash register . . . is on the=
=20
customer's property," said Howard Dean, a former PG&E revenue protection=20
specialist who's now an energy theft consultant in Hawaii.

?????Some Say Energy Theft Is Rarely Punished
?????He and others complain that energy theft is punished too rarely and to=
o=20
lightly to deter wrongdoers. It's a felony in California, punishable by jai=
l=20
time and heavy fines. In reality, power companies usually settle for=20
restitution, utility officials admit.=20
?????Still, they occasionally pursue small-time, serial offenders just to=
=20
send a message. Take the Rev. Ray Ector Sr., for example. The Baptist=20
minister pleaded no contest last year to five misdemeanor counts of stealin=
g=20
water and electricity from the DWP, agreeing to perform 300 hours of=20
community service and pay about $2,500 in restitution.
?????Ector now says he's too broke to pay and he remains unrepentant. A=20
gregarious 71-year-old who sports an "I Love Jesus" baseball cap, he says h=
e=20
was forced to filch utilities to provide for the recovering drug addicts wh=
o=20
reside in his homeless shelter.
?????"The Lord helps those who help themselves," said Ector, pastor of Litt=
le=20
Fellowship Missionary Baptist Church.
?????But Foegen said that spiritual dictum doesn't include helping oneself =
to=20
free power. He said Ector's "homeless shelter" is really just rental proper=
ty=20
and that some wacky wiring has been spotted at his church as well.
?????Preacher or no preacher, "I'm keeping an eye on him," Foegen said.




Federal Energy Panel Finding Itself Pushed and Pulled Toward Change=20
Power: New members take a more activist role on the electricity crisis, eve=
n=20
as political pressure mounts.=20

By RICARDO ALONSO-ZALDIVAR, Times Staff Writer=20

?????WASHINGTON--The Federal Energy Regulatory Commission is clearly heedin=
g=20
external politics as it prepares for a larger role in California's power=20
crisis, but the biggest catalyst for change may be within its walls.
?????On the outside, a new Democrat-controlled Senate and powerful=20
Republicans in the House have been clamoring for more assertive interventio=
n.
?????But inside, two pragmatists recently appointed by President Bush to=20
FERC's five-member governing board have already compromised the laissez-fai=
re=20
course that Chairman Curtis L. Hebert Jr. had set for the small, insular=20
agency.
?????FERC's new power crisis policy, to be unveiled at a special board=20
meeting Monday, is expected to move closer to the fixed price caps sought b=
y=20
California leaders. FERC's version would allow electricity prices in the We=
st=20
to move up and down significantly but with upper limits.
?????However, the plan was still a subject of intense internal debate=20
Thursday at FERC. Even after its expected approval by the FERC board, it mu=
st=20
survive additional rounds of political and technical vetting by other key=
=20
players in the power crisis.
?????As California has already learned, tinkering with power markets is no=
=20
easy task, and today's solutions can swiftly turn into tomorrow's unintende=
d=20
consequences.
?????For Hebert, 38, a proud Mississippian and avid free-market advocate,=
=20
growing impatience with FERC on Capitol Hill is not the only problem. He=20
risks losing a working majority on his own commission if the two new member=
s=20
ally themselves with dissenter William L. Massey in favor of stronger=20
intervention. That would isolate and embarrass Hebert, who is already in a=
=20
difficult spot because of persistent rumors that Bush will replace him as=
=20
chairman with newly appointed Commissioner Patrick H. Wood III.
?????"What we see here is someone who is a strong noninterventionist=20
Republican who has found himself in a position where he has to abandon that=
=20
to some extent," said James J. Hoecker, immediate past FERC chairman in the=
=20
Clinton administration. "Chairman Hebert . . . doesn't have to be a=20
weatherman to know which way the wind is blowing."
?????FERC, which functions like a national public utility commission, is=20
charged by law with assuring "just and reasonable" rates for wholesale=20
electricity. Last year, the commission made a formal finding that prices in=
=20
California were neither. But the modest "price mitigation" measures it=20
adopted were widely criticized as mere nibbling around the edges.
?????Not so, says Hebert. "I don't think there is any doubt that the=20
commission's plan is working and is bringing down prices," he told reporter=
s=20
this week. He condemned what he called "the ideology of price caps."
?????The two new FERC members, Wood and Nora M. Brownell, have not offered=
=20
ringing endorsements of FERC's actions to date. During Senate confirmation=
=20
hearings last month, they indicated they favored closer, tighter scrutiny o=
f=20
industry. Wood, past chairman of the Texas Public Utility Commission and a=
=20
confidant of the president, signaled in interviews that a return to=20
regulation would be preferable to dysfunctional markets that deprive=20
consumers of the benefits of competition.
?????"No tool is off the table, even if it's a bad tool," Wood told the PBS=
=20
program "Frontline."
?????The two newcomers sounded more like Massey, the commission's lone=20
in-house critic, than like Hebert, the market purist. In April, when the=20
commission first adopted price limits, Massey pointed out flaws that FERC n=
ow=20
seems poised to address.
?????For one, he said, the limits only applied during power emergencies. "T=
he=20
evidence is persuasive that the problem [of unfair prices] exists 24 hours =
a=20
day, seven days a week," Massey said. "I have no confidence that prices wil=
l=20
be just and reasonable during all hours."
?????Massey's view was voiced by many others as Wood prepared to assume his=
=20
new job on the panel. Wood told The Times in an interview that he heard=20
complaints from Republicans as well as Democrats.
?????Prominent among the Republicans demanding more aggressive action by FE=
RC=20
is Rep. Doug Ose of Sacramento, author of a bill calling for round-the-cloc=
k=20
price limits throughout the West.
?????Massey was no longer a voice in the wilderness.=20
?????In fact, how he votes and what he says Monday will be closely watched =
on=20
Capitol Hill and in California, particularly by Democrats looking for an=20
early signal of the plan's credibility. "His viewpoint is considered very=
=20
highly," said Howard Gantman, a spokesman for Sen. Dianne Feinstein=20
(D-Calif.).
?????As Massey's stock rose, Hebert's portfolio was in growing jeopardy.
?????The Democratic changeover in the Senate improved the prospects of pric=
e=20
cap legislation introduced by Feinstein and Sen. Gordon Smith (R-Ore.). Fix=
ed=20
price caps are anathema to Bush as well as Hebert but may prove politically=
=20
unstoppable if California electricity costs spiral out of control this summ=
er.
?????"The debate has changed from doing nothing to mitigation to doing=20
something punitive," said one FERC official who requested anonymity.=20
?????Running out of maneuvering room--and perhaps time as chairman--Hebert=
=20
decided to make a bold move. On Monday, he announced that he would convene =
a=20
special commission meeting for next Monday to strengthen FERC's "price=20
mitigation" plan for California and the West.
?????"Price mitigation appears to be a way to avoid using the words 'price=
=20
cap' or 'cost-based rate,' which some members of the Bush administration fi=
nd=20
objectionable," Feinstein said. "Frankly, I don't care what they call it as=
=20
long as they get the job done."
?????FERC sources said the options being discussed include round-the-clock=
=20
price limits throughout the West, requiring all generators in the region to=
=20
sell available power during emergencies, establishing a framework for large=
=20
power users to sell back electricity at peak times and tightening rules on=
=20
energy traders.
?????On Tuesday, leading House Republicans sent a letter to Hebert endorsin=
g=20
Ose's price-limit approach, giving Hebert some cover on the political right=
.
?????Even if a political compromise can be worked out within FERC, more=20
difficulties are bound to arise. Thorny technical problems must be addresse=
d.=20
For example: Generators have complained that FERC's current price limits=20
force them to sell some power below cost; currently, no framework exists fo=
r=20
setting price limits throughout the Western region, and FERC has no authori=
ty=20
over large public generators such as the Bonneville Power Administration.
?????Former FERC Chairman Hoecker said Hebert's gradual metamorphosis=20
resembles that of California Gov. Gray Davis, who at first swore he would n=
ot=20
accept rate increases for consumers.
?????"It's kind of creeping reform," Hoecker said. "FERC didn't do the most=
=20
aggressive thing first--just like the governor of California. Everybody is=
=20
sidling into it, incrementally, a little bit at a time."




State Objects to Power Pricing Formula=20
Energy: Air quality officials say generators can boost profits by increasin=
g=20
pollution.
By GARY POLAKOVIC and MIGUEL BUSTILLO, Times Staff Writers=20
?????SACRAMENTO--California air quality officials charged on Thursday that =
a=20
federal order to contain electricity prices is vulnerable to manipulation a=
nd=20
creates powerful incentives for energy companies to increase pollution to=
=20
boost profits.
?????The order by the Federal Energy Regulatory Commission, which took effe=
ct=20
May 29, places a limit on how much generators can charge when the state's=
=20
electricity reserves are depleted. The price is based in part on the maximu=
m=20
cost incurred by any of them to generate a megawatt of electricity.
?????State clean-air officials object to that pricing formula. In addition =
to=20
fuel and labor costs, power companies can include prices paid for air=20
pollution credits, as well as the penalties and fees assessed for producing=
=20
excessive emissions from power plants running to keep the lights on.
?????Air quality officials are concerned that may entice companies to=20
manipulate the price of the credits in order to inflate their overall base=
=20
costs, thereby raising the profit bar for everyone. The issue is crucial,=
=20
because FERC is scheduled Monday to consider expanding the price limits to=
=20
all time periods.
?????"Nobody else that we can figure out would benefit from this" but power=
=20
generators, said Barbara Baird, legal counsel for the South Coast Air Quali=
ty=20
Management District. "The power companies would all be able to recover that=
=20
cost, regardless of whether they actually incurred that cost."=20
?????Ironically, power plants no longer are required to buy and sell credit=
s=20
to exceed the standards after Gov. Gray Davis granted them special relief=
=20
earlier this year. Nonetheless, power companies, among others, continue to=
=20
actively trade the credits on the open market. That practice, air quality=
=20
officials say, is driving up the costs of the credits and making it harder=
=20
for other industries to buy them.
?????Because of increased electricity generation, the price of pollution=20
credits traded in the Los Angeles region has risen astronomically in the pa=
st=20
year. Credits that traded for about 25 cents per pound of pollution a few=
=20
years ago now fetch roughly $40 per pound.
?????Mike Scheible, deputy executive officer for the state Air Resources=20
Board, says the federal order also creates incentives for generators to use=
=20
high-polluting equipment, which is more expensive to operate, in order to=
=20
boost the amount they can charge for electricity when rate limits affect=20
pricing.
?????"It's unfair to make California ratepayers pay more for electricity to=
=20
mitigate their emissions. It doesn't pass the straight-face test for being=
=20
fair," Scheible said.
?????Since California power prices began to escalate last year, third parti=
es=20
have bought pollution credits and then sold them back to the power companie=
s=20
at a steep profit, air quality managers told state senators at a hearing=20
Thursday.=20
?????Carol Coy, deputy executive officer at the AQMD, said one company,=20
Phoenix-based Pinnacle West, reported a $412,500 air emissions credit=20
purchase on March 12, then sold the same credits March 29 for $1.1 million.
?????Company spokesman Alan Bunnell said the transaction was perfectly lega=
l=20
and not dissimilar from other trades that routinely occur in the emissions=
=20
trading market.
?????But state Sen. Joe Dunn (D-Santa Ana), chairman of the Senate select=
=20
committee inquiring into the matter, said wholesalers often blame the cost =
of=20
the credits in part for the high price of electricity. He said he is=20
concerned that there has been "a laundering of NOx [nitrogen oxide] credits=
"=20
that's driving up the cost of both the credits and electricity. Nitrogen=20
oxide is a smog-forming gas caused by fuel combustion.
?????"It actually would be beneficial for energy companies to have those=20
[smog credit] costs go higher," said state Sen. Debra Bowen (D-Marina del=
=20
Rey).
?????Air quality officials aired their objections on Thursday before Dunn's=
=20
committee, which is investigating whether companies manipulated California=
=20
power prices for greater profits after the state deregulated electricity in=
=20
1996. In recent weeks, it has begun to subpoena documents from various ener=
gy=20
companies and utilities.
?????The federal order regulating prices has been widely criticized in=20
California as full of loopholes that will allow power producers to continue=
=20
making exorbitant profits. During official power emergencies spurred by=20
shortages of electricity, it requires generators to charge prices based on =
a=20
complex formula that includes pollution mitigation costs and the price of=
=20
natural gas.
?????Air quality officials have also filed objections with FERC. The federa=
l=20
regulator has been reluctant to interfere in the energy crisis and has=20
continued to defend the free market as a solution to the state's power=20
problems, but it is under increasing pressure to act.
?????The state Senate committee, known as the Select Committee to Investiga=
te=20
Price Manipulation of the Wholesale Energy Market, was also expected to hea=
r=20
testimony Thursday from Southern California Edison. However, in a turn of=
=20
events that surprised and angered lawmakers, the utility refused to send a=
=20
witness. It also sent a letter stating it would not comply with a formal=20
request to produce documents.=20
?????"At present, our company's resources are devoted to survival," a compa=
ny=20
lawyer wrote, adding that "our law department is stretched to the limit."


Refineries may keep chugging in outages=20
PUC looks to grant blackout exemption=20
Kelly St. John, Chronicle Staff Writer
Thursday, June 14, 2001=20
,2001 San Francisco Chronicle=20
URL:=20
http://www.sfgate.com/cgi-bin/article.cgi?file=3D/chronicle/archive/2001/06=
/14/M
N58088.DTL&type=3Dnews=20
Demands by the state's oil refineries for protection from rolling blackouts=
=20
should be met, a member of the state Public Utilities Commission said=20
yesterday in releasing a draft decision to grant the exemption.=20
While the recommendation from PUC Commissioner Carl Wood still faces a full=
=20
hearing by the five-member PUC later this month, oil industry officials=20
consider it a promising development in their intense lobbying campaign to=
=20
keep refineries running.=20
"This is a very good step," said Scott Folwarkow, spokesman for the Valero=
=20
refinery in Benicia, which has no backup generators to use in blackouts. "W=
e=20
do play an essential role, and (the refinery) needs to be protected."=20
The industry has repeatedly issued warnings that gasoline prices would soar=
=20
if refineries were hit by rolling power blackouts. Power interruptions of=
=20
just an hour can send refineries out of commission for days, shrinking gas=
=20
supplies and leading to higher prices.=20
Earlier this month, San Francisco-based Chevron Corp. warned that it would=
=20
reduce gasoline production at its two California refineries unless it was=
=20
exempted from power outages.=20
Gov. Gray Davis has also urged the PUC to designate petroleum refineries as=
=20
"essential-use customers" who are exempt from blackouts because their=20
services are needed for public health and safety.=20
A Davis spokesman declined comment on the draft decision last night.=20
Skilled-nursing facilities and water agencies have joined oil refineries in=
=20
intense lobbying for the "essential-use" designation. But the PUC has a=20
limited number of exemptions it can offer to businesses.=20
By the agency's own standard, at least 40 percent of the electrical load mu=
st=20
be exposed to blackouts. Today, half of the load is already exempt, leaving=
=20
just a 10 percent margin to divide between facilities.=20
Yesterday, a PUC administrative law judge issued a companion ruling asking=
=20
energy producers, the California Energy Commission and electric utilities t=
o=20
provide additional information on fossil fuel production.=20
The PUC will consider that information, along with public comment, when it=
=20
votes on Wood's draft decision June 28.=20
"While the economic impacts caused by disruption of fossil fuel production=
=20
are potentially devastating," Wood said, "the commission must balance these=
=20
economic impacts against the potential impacts on public health and safety=
=20
asserted by applicants in our other exemption process."=20
Last January, the Bay Area got a glimpse of what can arise when refineries=
=20
are hit by power outages.=20
Pacific Gas and Electric Co. interrupted power for Kinder Morgan Energy=20
Partners, a pipeline company servicing local refineries, for four consecuti=
ve=20
days. The curtailments threatened to cause a fuel shortage at San Francisco=
=20
International Airport before politicians -- including Mayor Willie Brown --=
=20
intervened.=20
E-mail Kelly St. John at kstjohn@sfchronicle.com.=20
,2001 San Francisco Chronicle ? Page?A - 17


FERC set to extend power caps=20
Government sources say price controls will be round-the-clock=20
Carolyn Lochhead, Chronicle Washington Bureau
Thursday, June 14, 2001=20
,2001 San Francisco Chronicle=20
URL:=20
http://www.sfgate.com/cgi-bin/article.cgi?file=3D/chronicle/archive/2001/06=
/14/M
N215916.DTL&type=3Dnews=20
Washington -- Federal regulators are poised to impose round-the-clock price=
=20
restrictions on wholesale electricity sold to California, a move short of=
=20
what Democrats have urged but far stronger than what the Bush administratio=
n=20
has for months indicated it was willing to do.=20
The Federal Energy Regulatory Commission is expected Monday to extend its=
=20
April 26 order -- which limits prices generators can charge during power=20
emergencies -- to apply at all times and across the entire Western region,=
=20
sources inside the agency confirmed yesterday.=20
FERC also is expected to increase market monitoring, expand refunds for=20
overcharges by generators during power emergencies and order generators to=
=20
sell into the Western grid during power emergencies, among other things.=20
FERC Commissioner William Massey, a Democratic appointee who strongly=20
dissented from the April order because he believed it was too narrow, would=
=20
not comment on the expected action other than to say he had been urging=20
greater intervention relentlessly for some time.=20
Although power prices are plunging for the first time since the crisis bega=
n,=20
Massey said it was "too soon to declare victory."=20
"We don't know what's going to happen in the next hour or tomorrow or the=
=20
next month," Massey said. "We are certain this is a market short of power=
=20
plants. Supply and demand are not in reasonable equilibrium, and, when that=
=20
is true, prices can soar at the drop of a hat and the wealth transfer can b=
e=20
exorbitant."=20
Massey said that until supply and demand came into "reasonable balance" in=
=20
California, which he expects to occur in 18 months to two years as new powe=
r=20
plants come on line, "there has got to be 24-hours-a-day, seven-days-a-week=
=20
price mitigation in effect to protect consumers, period."=20
The expected FERC action coincides with rising political pressure on the=20
agency from Democrats and increasing numbers of Republicans to intervene mo=
re=20
forcefully in California's power market despite fierce resistance to price=
=20
controls from the Bush administration.=20
REINFORCEMENTS
That pressure ratcheted up sharply when Democrats assumed control of the=20
Senate and began scheduling legislation to order FERC to impose price caps.=
=20
The agency's move also coincides with the arrival of two new Bush appointee=
s,=20
Patrick Wood III and Nora Mead Brownell, who are widely viewed as more=20
receptive to intervention than the current chairman, Curt Hebert, a=20
Republican appointed by former President Bill Clinton and named chairman by=
=20
President Bush.=20
The agency's April order, which took effect May 26, puts a ceiling on price=
s=20
pegged to the least efficient power plant. It has been applied during two=
=20
power emergencies so far. Experts are divided on how much, if any, effect t=
he=20
order has contributed to the recent sharp drop in prices. Many factors, fro=
m=20
cool weather to increased conservation to the return of several nuclear=20
generators that were down for maintenance, are also at work.=20
Rep. Doug Ose, a Sacramento Republican who first pushed FERC to expand its=
=20
April order, said yesterday he believed the expected new action would provi=
de=20
"a pretty good middle ground" between Democrats' call for a specific maximu=
m=20
price -- or cap -- the generators can charge and the Bush administration's=
=20
opposition to price controls.=20
Rep. Darryl Issa, an Oceanside Republican, added that the agency's action w=
as=20
part of "a pattern of escalating engagement" by the administration and "a=
=20
more activist FERC."=20
'AS LONG AS IT WORKS'=20
Sen. Dianne Feinstein said the action expected Monday was likely to fall=20
short of what she wanted, although she called it "another step forward."=20
While FERC is likely to avoid using the words "price caps" to describe its=
=20
plan (it called its original order "price mitigation"), Feinstein said, "I=
=20
don't care what you call it as long as it works."=20
Feinstein, testifying yesterday at a Government Affairs Committee hearing o=
n=20
energy, said she believed the new order would still permit price manipulati=
on=20
because the caps are set at the price charged by the least- efficient --=20
therefore highest cost and most polluting -- generators.=20
Feinstein's bill to force FERC to impose price caps until 2003 is scheduled=
=20
for committee action this month. She wants firm price caps based on each=20
generator's costs, much like the regulatory regime in place before=20
California's electricity restructuring.=20
Some economists argue, however, that the type of price controls FERC is=20
expected to use more closely correspond to the price that a functioning=20
market would produce.=20
Price caps have become the nexus of the entire Washington debate over=20
California's electricity crisis. The Bush administration contends that pric=
e=20
controls would make blackouts worse by discouraging electricity sales and=
=20
investment, while Democrats, led by Feinstein and California Gov. Gray Davi=
s,=20
contend that generators are deliberately withholding power to jack up price=
s.=20
OBJECTIONS TO CONTROLS WITHER
Republicans on Capitol Hill, many of whom face re-election next year, have=
=20
shown less resistance to price controls, and that resistance melted even mo=
re=20
yesterday after a letter from several House Republicans urged FERC to=20
intervene more forcefully.=20
Still, most of the Republicans now urging greater federal regulation of=20
electricity markets hail from California. Republicans from outside the stat=
e=20
yesterday blasted Davis for mishandling the crisis and blaming the Bush=20
administration for not helping.=20
"The efforts to place the blame on the current administration or hire $30,=
=20
000 a month consultants to spin the issue . . . do not help," said Sen. Fre=
d=20
Thompson, R-Tenn., referring to two high-priced political aides Davis has=
=20
hired.=20
"Some suggest temporary price controls through 2003," Thompson said. "While=
=20
that may get us through the next election, temporary price controls have=20
rarely stayed temporary."=20
Sen. Larry Craig, an Idaho Republican, argued there were a host of reasons=
=20
for California's blackouts, from a drought in the Northwest to a shortage o=
f=20
power plant construction across the West.=20
"Leave it to politicians running scared and looking for scapegoats to=20
obfuscate this otherwise obvious reality," Craig said. "Put simply and=20
bluntly,=20
this reality does not suit the political needs of Gov. Davis and his=20
compatriots."=20
Energy at a glance=20
Energy-related developments yesterday:=20
-- PUC TELLS EDISON TO PAY 15% OF BILL OWED TO SMALL FIRMS=20
Small companies that need cash to continue generating power will be paid 15=
=20
percent of their back bills by Southern California Edison under an order=20
passed yesterday by the state Public Utilities Commission.=20
The measure is one of the remedies designed to ensure that 680 small power=
=20
plants stick with their contracts to sell electricity to California's three=
=20
cash-strapped utilities. Pacific Gas and Electric Co. has already been=20
ordered by a bankruptcy judge to pay 20 percent of its back debt to its sma=
ll=20
generators. San Diego Gas and Electric Co. had no outstanding bills.=20
The commission also opened the door to higher rates for small suppliers tha=
t=20
can prove their operating costs are not being covered by a state payment=20
formula. Others can opt for a new fixed-rate contract. All can earn higher=
=20
rates if they boost their power output.=20
DAVIS SAYS PRICES FALLING ON SPOT MARKET
Gov. Gray Davis released new figures yesterday showing that the state has=
=20
been able to secure lower prices on the spot market for electricity.=20
Davis released figures that show the average price for power on the day-=20
ahead spot market was $275 per megawatt hour Jan. 17-31. The price was $236=
=20
in February, $212 in March, $262 in April, $243 in May and $121 so far in=
=20
June.=20
Davis credits the state's long-term contracts with shrinking the amount of=
=20
power that has to purchased on the spot market. -- Chronicle staff reports=
=20
E-mail Carolyn Lochhead at clochhead@sfchronicle.com.=20
,2001 San Francisco Chronicle ? Page?A - 1=20


Judge orders contract disclosures=20
State told to release edited versions of energy agreements tomorrow=20
Bob Egelko, Chronicle Staff Writer
Thursday, June 14, 2001=20
,2001 San Francisco Chronicle=20
URL:=20
http://www.sfgate.com/cgi-bin/article.cgi?file=3D/chronicle/archive/2001/06=
/14/M
N183457.DTL&type=3Dnews=20
A day after Gov. Gray Davis agreed to release previously withheld details o=
f=20
the state's long-term energy contracts, his attorney asked for a two-week=
=20
delay. But a judge ordered the state to disclose edited versions of the=20
contracts tomorrow.=20
San Diego Superior Court Judge Linda Quinn scheduled another hearing for Ju=
ne=20
27 to decide whether more details of the long-term deals should be disclose=
d=20
and whether short-term energy contracts should be released over Davis'=20
opposition.=20
Since the state started buying power for customers of California's reeling=
=20
utilities in January, Davis has refused to make the contracts public, sayin=
g=20
disclosure would reveal the state's negotiating strategies, give power=20
sellers an advantage and drive prices up. In court documents, the governor'=
s=20
lawyers said the information should remain secret until January 2003, when=
=20
the state's current power purchasing authority expires.=20
News organizations, including The Chronicle, and eight Republican legislato=
rs=20
sued for disclosure, saying the documents were public records that would le=
t=20
Californians evaluate the spending of billions of tax dollars.=20
On Tuesday, Davis reversed course and said he was willing to make public=20
immediately the details of $42.8 billion in long-term contracts with 18=20
suppliers if the judge released the state from confidentiality agreements i=
n=20
the contracts. The governor said that market conditions had improved and th=
at=20
enough contracts had been signed that disclosure would not seriously damage=
=20
the state's bargaining position.=20
He gave reporters a few more details yesterday, acknowledging that the stat=
e=20
was locked into some long-term contracts at prices above those now availabl=
e=20
on the spot market.=20
"We were paying a lot more in January and February than we are now on the=
=20
spot market because we have dramatically shrunk the spot market, providing=
=20
reliable power for California at affordable rates," Davis said.=20
In court yesterday, however, Deputy Attorney General Timothy Muscat sought =
to=20
delay contract disclosure two weeks to give the energy sellers -- who are n=
ot=20
parties to the lawsuit -- time to comment.=20
But the judge said the state's failure to keep contracting companies abreas=
t=20
of the suit did not justify delaying disclosure. Quinn ordered the long-ter=
m=20
contracts released Friday after the state deletes details that would reveal=
=20
suppliers' trade secrets and other proprietary information.=20
Muscat said the state would edit out several categories of information he=
=20
described as technical, including energy delivery points and data on=20
suppliers' efficiency in converting natural gas to electricity. News media=
=20
lawyer Alonzo Wickers IV protested any deletions.=20
"Keeping those so-called technical issues secret thwarts the public's=20
understanding of the contracts," he said.=20
Quinn said she would consider objections to the deletions at the June 27=20
hearing. Muscat, the state's lawyer, contended secrecy was essential for=20
deal- making in the volatile short-term market.=20
"We are heading into a hot, long summer," he said. "If we have to reveal ou=
r=20
negotiation strategy . . . we are going to have blackouts."=20
Tell us what you think -- What are your suggestions for saving energy? Send=
=20
your best tips to Energy Desk, San Francisco Chronicle, 901 Mission St., Sa=
n=20
Francisco, CA 94103; or put your ideas in an energy-efficient e-mail to=20
energysaver@sfchronicle.com.=20
Correspondent Valerie Alvord contributed to this report from San Diego. /=
=20
E-mail Bob Egelko at begelko@sfchronicle.com.=20
,2001 San Francisco Chronicle ? Page?A - 17
ann.schmidt@enron.com, bryan.seyfried@enron.com, elizabeth.linnell@enron.com, 