Energy Issues ,
 Please see the following articles:

Sac Bee, Tues, 5/15:  "Budget plan shrinks: Davis responds to an
uncertain economy but preserves a boost in education funding"

Sac Bee, Tues, 5/15:  "PG&E goes to court for rate relief"

Sac Bee, Tues, 5/15:  "Energy Digest: PUC delays vote on rate proposals"=20

Sac Bee, Tues, 5/15:  "Dan Walters: Davis wants to preserve rosy budget,=20
let red ink rain on Legislature"

Sac Bee, Tues, 5/15:  "Daniel Weintraub: Consumer rep envisions ultimate=20
confrontation"

SD Union, Mon, 5/14:  "How will state's leaders get out of the business of=
=20
power-buying?"

SD Union (AP), Tues, 5/15:  "PUC delays decision on electricity rate hikes;
SDG&E isn't affected"

SD Union (Reuters), Tues, 5/15:  "Edison, SoCal Edison extend credit=20
facilities"

SD Union (AP), Tues, 5/15:  "PG&E, state regulators spar in bankruptcy cour=
t"

SD Union (AP), Tues, 5/15:  "California power regulators delay decision on=
=20
rate hikes"

SD Union (Reuters), Tues, 5/15:  "California faces 260 hours of blackouts,=
=20
says industry"

SD Union (Reuters), Mon, 5/14:  "AES to restart 2 retired South California=
=20
power plants"

LA Times, Tues, 5/15:  "PUC Delays Decision on Power Rate Hike"

LA Times, Tues, 5/15:  "El Paso Gas Supplier Denies Monopoly"

LA Times, Tues, 5/15:  "Labor Courted on Bush Reform Plan"

LA Times, Tues, 5/15:  "Judge Asked to Block Freeze on Power Rate"

LA Times, Tues, 5/15:  "Edison Deal Sets High Legislative Hurdle for Davis"

SF Chron, Tues, 5/15:  "PUC stalls decision on rate boost=20
ANGER: Consumer group says big business to benefit"

SF Chron, Tues, 5/15:  "NATURAL GAS: Experts says market probably fixed "

SF Chron (AP), Tues, 5/15:  "Developments in California's energy crisis"

SF Chron (AP), Tues, 5/15:  "PG&E, state regulators spar in bankruptcy cour=
t=20
"

SF Chron, Tues, 5/15:  "NATURAL GAS: Experts says market probably fixed "

SF Chron, Tues, 5/15:  "Davis forced to trim budget=20
Minor cuts, unspent funds used to cover $3.5 billion deficit "

Mercury News, Tues, 5/15:  "PUC puts off vote on rates"

Mercury News, Tues, 5/15:  "Cheney urges patience over energy costs"

Mercury News, Tues, 5/15:  "Finding: gas-price inflation possible"

OC Register, Tues, 5/15:  "Edison has loss of $617 million"

OC Register, Tues, 5/15:  "Edison shareholders feeling the heat as values=
=20
plunge"

OC Register, Tues, 5/15:  "Energy notebook:
PUC postpones decision on power rate hikes to today"

OC Register, Tues, 5/15:  "Gas supplier faces charges of price fixing"

Individual.com (Bridgenews), Tues, 5/15:  "[B] POWER UPDATE/ Calif. PUC
delays final rate hike vote to Tues"

---------------------------------------------------------------------------=
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-----------------------------------------------

Budget plan shrinks: Davis responds to an uncertain economy but preserves a=
=20
boost in education funding.=20
By John Hill
Bee Capitol Bureau
(Published May 15, 2001)=20
Gov. Gray Davis laid out his plan for coping with diminished revenues and=
=20
growing fiscal uncertainty Monday, slashing the state budget he proposed in=
=20
January while preserving much of the spending for education and public=20
safety.=20
"Every proposal I made was warranted, needed and, in some cases, long=20
overdue," Davis said. "But a budget by definition is the act of making=20
choices."=20
Davis' new proposal launches what is likely to be an intense month-and-a-ha=
lf=20
struggle over the $103 billion budget for the fiscal year that begins July =
1.=20
State revenue, which over the years has grown far more sensitive to economi=
c=20
cycles, plunged with the stock market, leaving a $4.2 billion hole in the=
=20
January budget proposal.=20
For the first time in years, the governor and the Legislature must deal wit=
h=20
shrinking expectations, and it's happening during a period of intense=20
partisan bickering over the state energy crisis.=20
The revised budget proposal counts on the sale of bonds in August to repay=
=20
the state treasury for electricity purchases, which now total more than $7=
=20
billion. Davis admitted in announcing his new plan that the assumption is=
=20
risky and once again criticized Republicans for holding up a bill that woul=
d=20
have allowed an earlier bond sale.=20
"If anything else goes wrong, like a natural disaster or some precipitous=
=20
drop in the economy, then we could be in real trouble," he said.=20
Davis' plan depends on delaying for two years a commitment to shift sales t=
ax=20
on gasoline from the state's general fund to a special fund dedicated to=20
transportation projects. The move, which would save $1.1 billion, is likely=
=20
to be opposed by Republicans, who fought for the shift.=20
Davis said his proposal would not delay transportation projects in the=20
pipeline because more money is available than is needed right now, but migh=
t=20
affect those that haven't been approved.=20
The revised budget proposal makes numerous cuts, with some one-time=20
expenditures eliminated altogether.=20
A $250 million payment to local governments to use as they see fit is gone.=
=20
So, too, is $200 million that would have rewarded cities and counties that=
=20
increased the number of housing permits they issued.=20
A $40 million pilot project for touch-screen voting got the ax, as did a=20
three-day "holiday" from sales taxes this summer, designed to give parents =
a=20
break in paying for school supplies.=20
A program to clean up California's beaches was slashed from $100 million to=
=20
$10 million. Another that would encourage the development of parkways along=
=20
rivers was cut in half, from $70 million to $35 million.=20
"Generally, if it was a new program that was not law the year before, it go=
t=20
pared back significantly and sometimes entirely," Davis said.=20
The revised proposal also calls for a 2.5 percent across-the-board cut for=
=20
state departments, except for those involved in public safety or making mon=
ey=20
for the state. That move is expected to save $50 million.=20
The governor said his revised budget preserves much of the school spending =
he=20
proposed in January.=20
"Notwithstanding the reduction in revenues, I'm not about to let our=20
commitment to education backslide," he said.=20
Still, Davis made some adjustments to his education plan. In January, he=20
proposed expanding the middle school year from 180 days to 210 days. That=
=20
proposal has been pared back to 200 days.=20
Davis also had hoped to increase rewards to schools that do well from $63 p=
er=20
student to $150, but that increase has been jettisoned.=20
On the plus side, the new proposal adds $220 million to help schools=20
performing poorly on standardized testing, and $541 million to help offset=
=20
school districts' increased spending on energy and to promote conservation.=
=20
School districts taking part in that program must commit to cutting their=
=20
energy use 10 percent.=20
Overall, the amount spent on each student would drop $6 from the $7,174=20
proposed in January.=20
Davis, however, touted a 43 percent increase in education spending since he=
=20
became governor. He invited several education leaders to the news conferenc=
e=20
announcing the revised budget, and his office released a collection of quot=
es=20
from the educators praising him for maintaining school funding.=20
Even Republicans found something to like in the Democratic governor's=20
education proposals.=20
"Certainly, if he kept education whole, we agree with that," said Assemblym=
an=20
Dave Cox, R-Sacramento, the Assembly minority leader.=20
But that was about the extent of bipartisan harmony.=20
"We simply don't think the governor is moving in a prudent direction," Cox=
=20
said.=20
He blasted the proposed budget for reducing the reserve from $1.9 billion t=
o=20
$1 billion. Republicans have advocated maintaining the reserve and adding a=
=20
special energy reserve to avoid the need for borrowing or raising electrici=
ty=20
rates again next year.=20
Davis said the $1 billion is enough. "Reserves are for rainy days," he said=
.=20
"It's starting to rain."=20
Republicans oppose Davis' plan to allow a quarter-cent sales tax increase=
=20
that was eliminated this year to go into effect again next January.=20
Cox said Republicans also would oppose the delay in shifting gasoline sales=
=20
tax to a special fund to relieve traffic congestion. He said Republicans=20
fought for the change, believing that a gasoline tax should be dedicated to=
=20
transportation projects.=20
Republican opposition to that provision, key to Davis' plan to balance the=
=20
budget, could spell trouble for the budget bill. The bill requires a=20
two-thirds vote and must garner the support of at least a handful of=20
Republicans.=20
Senate President Pro Tem John Burton, D-San Francisco, said the delay in=20
shifting gasoline sales tax money means that "program cuts don't go as deep=
=20
as they might have."=20
The revised budget preserves spending for home health care workers and=20
part-time community college workers, Burton said.=20
"But we're going to have to find more money for child care," he said.=20
In addition, Burton said, he hoped that the Legislature could find a way to=
=20
give raises to state workers.=20
He said that barring an economic rebound, next year's budget will be far=20
tougher because the state will no longer enjoy a big cushion.=20

The Bee's John Hill can be reached at (916) 326-5543 or jhill@sacbee.com.



PG&E goes to court for rate relief=20
By Claire Cooper
Bee Legal Affairs Writer
(Published May 15, 2001)=20
SAN FRANCISCO -- Pacific Gas and Electric Co. warned in bankruptcy court=20
Monday that it could be forced out of business by a March regulatory ruling=
=20
that prolonged a freeze on retail electricity rates.=20
But U.S. Bankruptcy Court Judge Dennis Montali said PG&E might still be in=
=20
financial trouble, even without the accounting change by the state Public=
=20
Utilities Commission in March. Montali expressed reservations about the=20
utility's request for an injunction to block the change.=20
The accounting question -- and the timing of the expiration of the rate=20
freeze -- centers on whether PG&E has made up its transition costs in movin=
g=20
from a regulated to an unregulated market.=20
Montali said he'll rule as soon as possible, given the importance and=20
complexity of the issue.=20
PG&E projects a loss of $12.9 billion by next March because of an imbalance=
=20
between low retail electricity rates and high wholesale rates since June.=
=20
Without relief, said PG&E lawyer Jerome Falk, the utility could be forced t=
o=20
liquidate.=20
In April, the utility filed for reorganization under Chapter 11 of the=20
Bankruptcy Code, which requires judicial authorization for most actions tha=
t=20
reduce the value of the debtor's assets. PG&E contends the PUC violated tha=
t=20
requirement by forcing it to operate under the rate freeze.=20
But the PUC contends that PG&E's real motive is to free itself from state=
=20
regulatory control.=20
"We're talking about disabling the commission" by ending its authority over=
=20
rates, PUC lawyer Walter Rieman told Montali.=20
The commission didn't need court authorization because its action --=20
technically just an accounting change -- preceded PG&E's bankruptcy filing,=
=20
Rieman argued.=20
Rieman said such a regulatory action needs no authorization and that the 11=
th=20
Amendment -- the sovereign immunity clause of the U.S. Constitution -- bars=
=20
PG&E from hauling the PUC into court.=20

The Bee's Claire Cooper can be reached at (415) 551-7701 or=20
ccooper@sacbee.com.


Energy Digest: PUC delays vote on rate proposals=20


(Published May 15, 2001)=20
People who run shops and farms, refineries and concrete plants have to wait=
=20
another day to learn how big a share they'll pay of an already approved=20
electricity rate hike.=20
The state Public Utilities Commission delayed until today its vote on at=20
least two proposals for new rate structures, and a third proposal could=20
emerge.=20
PUC President Loretta Lynch said the commission needed more time to work on=
=20
last-minute revisions, triggered by input during last week's public hearing=
s.=20
The delay came after protesters urged the commission Monday to reject any=
=20
rate increases, and instead seize power plants from new owners who have=20
raised wholesale prices under deregulation. Several called for boycotting t=
he=20
higher electric bills.=20
The new rates will apply to customers of Pacific Gas and Electric Co. and=
=20
Southern California Edison. They will vary widely by customer, but proposal=
s=20
before the commission call for average residential PG&E rate increases of 1=
5=20
percent to 17 percent, and industrial increases of about 50 percent.=20
The rate increases, which will be applied toward paying off enormous=20
wholesale power bills, will raise about an extra $4.8 billion annually for=
=20
the two utilities.=20
--Carrie Peyton=20

Edison parent has loss
Its losses still piling up from soaring wholesale power costs, the parent=
=20
company of Southern California Edison reported a $617.3 million loss and=20
scrapped its shareholder dividend payment again Monday.=20
Edison International said the loss, for the three months that ended March 3=
1,=20
amounted to $1.89 a share.=20
The Rosemead-based utility said it was canceling its common stockholder=20
dividend for the third straight quarter. It also is continuing to defer=20
payments on preferred shares.=20
--Dale Kasler



Dan Walters: Davis wants to preserve rosy budget, let red ink rain on=20
Legislature


(Published May 15, 2001)=20
Once upon a time, the grammatically incorrect "May revise" was a low-level=
=20
exercise in fine-tuning income and outgo numbers prior to passage of a stat=
e=20
budget.=20
Beginning in the late 1990s, however, the spring ritual became elevated in=
=20
importance because an exploding economy was generating billions of=20
unanticipated tax dollars, thus allowing the governor and legislators to=20
create lavish new spending programs.=20
A year ago, Gov. Gray Davis and the state legislators were looking at a $14=
=20
billion budget surplus, fueling another round of tax cuts and spending. But=
=20
the high-technology balloon has burst, the tech-oriented Nasdaq market has=
=20
tanked and Monday's budget revision, released by the Davis administration,=
=20
anticipates about a $4.2 billion reduction in revenues from what was=20
originally projected in January.=20
If it's a cold dose of reality on the revenue side of the ledger, however,=
=20
the expenditure column of the revised budget is swathed in politically=20
contrived fantasy -- and represents the beginning of a high-stakes chess ga=
me=20
pitting Davis against a Legislature dominated by fellow Democrats.=20
While the revised Davis budget for fiscal 2001-02 reduces overall general=
=20
fund spending from the January version -- with reductions principally in=20
transportation, housing and proposed tax cuts -- it boosts spending on K-12=
=20
schools and community colleges to nearly $5 billion over the minimum=20
guarantees of the California Constitution.=20
Davis said his goal was to "curb government spending but ... protect my two=
=20
highest priorities: public education and law enforcement." And to reinforce=
=20
that stance, the governor's office packed the budget news conference with=
=20
representatives of public schools, ranging from the superintendent of the L=
os=20
Angeles Unified School District to teachers union lobbyists. They played=20
their designated role in the mini-drama by publicly lauding the governor's=
=20
school money, even if privately many acknowledged that the additional schoo=
l=20
financing is far from certain.=20
The real story of this year's May budget revision is that Davis is trying t=
o=20
force the Legislature into making the spending cuts that economic reality -=
-=20
and the state energy crisis -- will probably require so that he can maintai=
n=20
his image as the champion of education going into his re-election campaign.=
=20
The new Davis budget is plainly unworkable. By maintaining education spendi=
ng=20
and cutting reserves to the bone, the spending plan makes no allowance for=
=20
further drops in revenues, even though harsh experience is that in an=20
economic slump, income tends to fall much further and faster than Departmen=
t=20
of Finance bean-counters project.=20
Furthermore, the budget assumes that the $7 billion -- and still rising -- =
in=20
general fund expenditures for electric power will be completely reimbursed=
=20
from a $13.4 billion state bond issue and that no additional money will be=
=20
needed during the high energy consumption summer months. But that, too, fli=
es=20
in the face of reasonable expectations. The governor's energy purchase plan=
s=20
are based on very optimistic conservation numbers and, most ominously, on a=
=20
declining price of electricity while the futures market indicates that pric=
es=20
may, in fact, jump by 50 percent over the next few months.=20
It's entirely possible that the entire bond issue will have been consumed b=
y=20
the time the bonds are sold in August and that the state will still be layi=
ng=20
out billions of dollars each month for juice. State legislative leaders, ev=
en=20
the most liberal ones, want to create a multibillion-dollar budget reserve=
=20
for those huge uncertainties, but with Davis taking his damn-the-torpedoes=
=20
approach, they would be the ones to cut spending, including for the schools=
,=20
to build up reserves. Or they could approve the Davis budget more or less a=
s=20
proposed and let him take the heat if, and when, the uncertainties become a=
=20
multibillion-dollar red ink shower.=20
While politicians scramble to claim credit when times are good, they scheme=
=20
to shift the blame when times turn sour, and Davis' budget is the opening=
=20
move of that finger-pointing game.=20

The Bee's Dan Walters can be reached at (916) 321-1195 or dwalters@sacbee.c=
om
.



Daniel Weintraub: Consumer rep envisions ultimate confrontation


(Published May 15, 2001)=20

Now that Gov. Gray Davis has rallied his fellow Democrats, run over the=20
Republican opposition in the Legislature and set the state on a course to=
=20
borrow $13 billion to pay for a few months of electricity purchases, there'=
s=20
probably only one person who can stop him: Harvey Rosenfield.=20
Rosenfield is the Santa Monica-based consumer advocate who tried to halt=20
California's experiment in electricity deregulation before it got started.=
=20
His 1998 ballot measure failed, and that campaign is blamed in some circles=
=20
for delaying construction of new power plants just long enough to cause the=
=20
electricity shortage that's helped send prices heavenward.=20
But if Rosenfield's last ballot initiative got the state's energy=20
establishment in a snit, the one he's contemplating now would positively pu=
sh=20
them over the edge. He is seriously considering launching a signature drive=
=20
to force a referendum on the legislation Davis just signed to authorize his=
=20
$13 billion energy bond measure.=20
That bond, to be repaid by ratepayers, is supposed to reimburse the state's=
=20
general fund for the cost of electricity the state has been buying for=20
consumers since January, when Pacific Gas & Electric and Southern Californi=
a=20
Edison ran out of money. The bond measure also will be used to delay the pa=
in=20
of the extremely high prices expected this summer. Without it, consumers=20
would immediately face another staggering rate increase, probably well into=
=20
triple digits.=20
The alternative would be a state budget in shambles. All the tax money Davi=
s=20
has spent on electricity this year already was earmarked for traditional=20
services such as education, roads and health care. A referendum that killed=
=20
the bond measure would leave a gaping hole in the budget that could only be=
=20
filled by a huge tax increase or unprecedented spending cuts.=20
Rosenfield is something of a publicity hound, and his talk of a referendum=
=20
may be just that. Collecting 750,000 signatures in less than 90 days, which=
=20
is what's required to qualify the referendum, would be a massive undertakin=
g.=20
Even Rosenfield concedes that the chances are no better than 50-50 that he=
=20
will proceed. But this is a man who has qualified two measures for the ball=
ot=20
already, including one in 1988 that brought on regulation of the California=
=20
insurance industry. You have to take him seriously.=20
The question is why he would even consider it. Why would a man who fancies=
=20
himself a friend of the ratepayer ponder a move that would force consumers =
to=20
swallow a massive rate hike, or else bankrupt the state? Because Rosenfield=
's=20
goal is to see the destruction of the entire private power system that's no=
w=20
serving California -- and raking in enormous profits for its owners.=20
And if it were up to him, he'd be willing to risk economic catastrophe to=
=20
make it happen. His theory is that the power generators will simply keep=20
raising their prices as long as the governor keeps putting more money on th=
e=20
table. It is, he says, like giving crack to an addict. Take that money away=
,=20
and the generators will kick the habit, fast.=20
"If bleeding dry the general fund is foreclosed, and politically or as a=20
matter of economics you can't raise rates that high in the state, the only=
=20
thing the governor can do is turn to the generators and say, 'I'm taking yo=
ur=20
plants.' At which point they will say, 'OK, all right, we're lowering our=
=20
prices,' or some face-saving thing will happen. The ultimate showdown betwe=
en=20
naked capitalism and populist outrage occurs." And he's convinced that=20
capitalism will blink.=20
"If the lights go off in California, and the economy goes down the tubes,=
=20
then 20 years of Republican ideology, of less government, free markets,=20
competition -- all of that goes down the tubes.=20
"All you have to do is look at history to see that when there have been=20
economic cataclysms that have decimated the economy, people want action and=
=20
they'll do anything, whether its seizing private property, or whatever. The=
re=20
will be a revolution, and I don't think the political institutions in this=
=20
country are prepared to push things to that point."=20
The Legislature already has set a Nov. 15 deadline after which the state=20
budget is supposed to be off-limits to Davis' power-buying ways. But that's=
=20
not good enough for Rosenfield. By then, he thinks, Davis will have burned=
=20
through the entire proceeds of the first bond measure and the total tab wil=
l=20
be approaching $20 billion. Rates will have to rise again to pay that bill.=
=20
Rosenfield is prescribing an economic amputation -- without anesthesia -- t=
o=20
stop a painful and dangerous infection. But he is not the only one thinking=
=20
about the doomsday scenario.=20
The power generators themselves have lately been lining up to try to cut=20
deals with the state. They have offered to take caps on their profits,=20
forgive some of the debt that's owed them, anything to keep the system=20
running without further provoking the public's ire. They know that=20
Rosenfield's kind of anger can be contagious. They want to contain it befor=
e=20
it spreads.=20

The Bee's Daniel Weintraub can be reached at (916) 321-1914 or at=20
dweintraub@sacbee.com.



How will state's leaders get out of the business of power-buying?=20



Inside Politics / ED MENDEL=20
May 14, 2001=20
SACRAMENTO -- The California electricity crisis began the big meltdown in=
=20
January when the state made the now-questionable decision to begin buying=
=20
power for utility customers.=20
The alternative, which seemed unthinkable to Gov. Gray Davis and most=20
legislators at the time, was to allow Pacific Gas and Electric and Southern=
=20
California Edison to be taken into bankruptcy.=20
A grim Davis said on the evening of Jan. 17 that he and legislative leaders=
=20
had just held a long telephone conversation with the chief executive office=
rs=20
of four big generators: Duke, Southern (now Mirant), Reliant and Dynegy.=20
"Those generators were prepared to pull down the utilities into bankruptcy=
=20
tomorrow at 12:01 p.m.," Davis told reporters. "They have agreed, if=20
legislation passes tomorrow, they will not do that. They will provide us th=
e=20
power necessary to keep the lights on."=20
Legislation authorizing the state to begin buying power for utility custome=
rs=20
was passed, and the lights stayed on. But the crisis has clearly gotten=20
worse, not better, since January.=20
PG&E took itself into bankruptcy early last month. Rolling blackouts, which=
=20
have hit many parts of the state, now are a day-to-day possibility.=20
And today, the state Public Utilities Commission is expected to decide who=
=20
will be hit hardest by a record rate increase, while the governor proposes =
a=20
revised state budget with a gaping hole.=20
The state general fund that is paying for power, more than $6 billion so fa=
r,=20
may not be repaid until late August, when a $13.4?billion bond that=20
ratepayers will pay off over 15 years is issued -- well after the new fisca=
l=20
year begins on July 1.=20
One of the main problems facing the governor and the Legislature now is=20
simply this: Having gotten themselves into the power-buying business, how d=
o=20
they get out?=20
The governor's plan to get the utilities back on their financial feet and=
=20
able to buy power by the end of next year must overcome obstacles, which se=
em=20
bigger with each passing week.=20
A key part of the plan, the state purchase of the Edison transmission syste=
m,=20
is basically a transaction intended to make state aid for the utility look=
=20
less like a bailout. The state would get something in return.=20
But Democratic legislators, who urged Davis to make the purchase, do not li=
ke=20
the agreement that the governor negotiated with Edison. Democrats in both=
=20
houses are talking about alternatives that would be less favorable to Ediso=
n.=20
If Davis is somehow able to work out a compromise acceptable to both=20
Democratic legislators and Edison, another obstacle remains: Persuading PG&=
E=20
creditors that they would be better off under an Edison-like deal than in=
=20
bankruptcy court.=20
As the state faces soaring power costs this summer, and solving complex=20
problems in the political arena looks increasingly futile, some argue that=
=20
the chance to let the utilities go bankrupt in January was a missed=20
opportunity.=20
"The credit of the utilities could have been restored by reorganizing under=
=20
the bankruptcy laws, the lights would have stayed on, and ratepayers would=
=20
actually have ended up paying less than they're going to end up paying with=
=20
all the interest-heavy borrowing you're doing now," Sen. Tom McClintock,=20
R-Northridge, said during a debate on the ratepayer bond last week.=20
But the fateful decision in January changed everything. If Edison joins PG&=
E=20
in bankruptcy now, the state may have to continue buying power for years as=
 a=20
way is worked out to pay off the utility debt.=20
Ed Mendel is Sacramento bureau chief for the Union-Tribune.=20







PUC delays decision on electricity rate hikes; SDG&E isn't affected=20



By Karen Gaudette=20
ASSOCIATED PRESS=20
May 15, 2001=20
SAN FRANCISCO -- California ratepayers from Orange County to the Oregon=20
border will have to wait at least one more day to find out how deep they'll=
=20
be expected to dig into their pockets to pay electric bills.=20
Businesses are hoping that state power regulators use that time to revise=
=20
proposed new rates they contend are too hard on commercial customers.=20
Stung by an outcry from every type of energy consumer in California in the=
=20
last few days, the state's top energy regulator said yesterday she needs mo=
re=20
time to consider feedback from residents and businesses -- each demanding=
=20
that the largest rate hikes in state history take a bigger bite from the=20
other's account.=20

In her initial proposal, Loretta Lynch, president of the Public Utilities=
=20
Commission, would have spared many residential users from the highest bills=
=20
and placed more of the burden on businesses and farms.=20
That feedback also includes Gov. Gray Davis' statement Sunday that he prefe=
rs=20
his own plan, which would distribute rate hikes more evenly among residenti=
al=20
and business customers.=20
Consumer activists worry that the PUC's one-day delay could mean bigger rat=
e=20
hikes for residential customers. The PUC is scheduled to vote this afternoo=
n.=20
San Diego Gas and Electric Co. customers would not be affected.=20
SDG&E has requested a rate hike, but the PUC has not considered it yet.=20
"Much as we hope the commission heard what the public had to say last week,=
=20
we know the voices of business and industrial customers are very, very loud=
,"=20
said Mindy Spatt, a spokeswoman for The Utility Reform Network.=20
Business groups hope the hunch is right.=20
"We can only hope that this extra time means that they're carefully=20
evaluating a plan that will perhaps be more balanced and more proportional=
=20
than what they've put forward so far," said Michelle Montague-Bruno,=20
spokeswoman for the Silicon Valley Manufacturing Group that represents 190=
=20
businesses.=20
PUC Commissioner Jeff Brown said after yesterday's meeting that he and othe=
r=20
commissioners are trying to lower proposed industrial rates, but said that'=
s=20
tricky business.=20
Commissioner Carl Wood said that today is the latest date the PUC can make=
=20
its decision and still give Pacific Gas and Electric Co. and Southern=20
California Edison Co., the state's two largest utilities, enough time to ad=
d=20
the new rates to electric bills by June 1.=20
Energy experts fear that's already too late for the price shock to spur vit=
al=20
conservation this summer and help stave off more rolling blackouts.=20
Lynch's initial proposal would raise rates anywhere from 7 percent to 61=20
percent.=20
Since it unanimously approved an increase March 27, the commission has=20
struggled to fashion specific rate hikes that will simultaneously recoup th=
e=20
billions the state has spent buying power, return the state's largest=20
utilities to solvency and trigger conservation.=20
The allocation the PUC approves will be retroactive to March 27. Charges fo=
r=20
interim power use will be spread over the next 12 months, Lynch has said.=
=20
Lynch and PUC Administrative Law Judge Christine Walwyn introduced proposal=
s=20
last week that business interests said would unfairly make them pay too muc=
h=20
of the overall rate hike -- as much as 50 percent more than they pay now=20
depending what time of day they use the electricity.=20
State law shields average residential customers from severe rate hikes on=
=20
much of their power use.=20







Edison, SoCal Edison extend credit facilities=20



REUTERS=20
May 15, 2001=20
NEW YORK, =01) Edison International said Tuesday that it and its troubled=
=20
Southern California Edison utility unit extended two 364-day bank credit=20
facilities that were scheduled to mature Monday.=20
Rosemead, Calif.-based Edison said it extended a $618 million facility, whi=
ch=20
it had fully drawn down, until June 30, while SoCal Edison extended a $200=
=20
million facility until Sept. 15.=20
Edison said it and SoCal Edison also agreed with their banks, which are led=
=20
by J.P. Morgan Chase & Co., to extend "forbearance agreements," under which=
=20
the banks agree not to act upon defaults, to June 30 for Edison and to Sept=
.=20
15 for its utility unit.=20
Edison made the disclosures Tuesday in a quarterly filing with the Securiti=
es=20
and Exchange Commission. On Monday it reported a first-quarter loss of $617=
=20
million, or $1.89 per share, including a $661 million charge for power cost=
s.=20
SoCal Edison, California's second-largest utility, and Pacific Gas & Electr=
ic=20
Co., the largest, have struggled because a rate freeze blocked them from=20
passing on their massive wholesale power costs to consumers. Pacific G&E, a=
=20
unit of San Francisco-based PG&E Corp., sought bankruptcy protection last=
=20
month.=20







PG&E, state regulators spar in bankruptcy court=20



By Michael Liedtke
ASSOCIATED PRESS=20
May 15, 2001=20
SAN FRANCISCO =01) Contending California regulators illegally seek billions=
 of=20
dollars that should be paid to its creditors, Pacific Gas and Electric Co.=
=20
urged a federal bankruptcy judge to dismantle the accounting framework=20
insulating the utility's customers from additional electricity price=20
increases.=20
Looking to guard its turf, the California Public Utilities Commission=20
portrayed its actions as legal maneuvers protected from federal government=
=20
interference under the U.S. Constitution.=20
The 2
-hour bout of arguments Monday before U.S. Bankruptcy Judge Dennis=20
Montali represented the first major legal showdown in PG&E's bankruptcy cas=
e=20
=01) the largest ever filed by a utility. After peppering attorneys from bo=
th=20
sides with tough questions, Montali took the matter under submission withou=
t=20
providing a timetable for issuing a decision.=20
The complex issue centers on arcane sections of the U.S. bankruptcy code th=
at=20
could sway the balance of power in PG&E's case and determine whether the=20
utility's 4.6 million customers =01) or more than 150,000 creditors =01) ab=
sorb the=20
costs underlying an estimated $13 billion in wholesale electricity purchase=
s=20
made from June 2000 through March 2002.=20
As part of the 1998 deregulation of California's electricity market, PG&E's=
=20
retail rates were to remain frozen through March 2002 or whenever the utili=
ty=20
pooled enough money from above-market rates and asset sales to pay for=20
unprofitable investments made during its long history as a regulated utilit=
y.=20
PG&E says it cleared the hurdle for lifting the rate freeze sometime betwee=
n=20
May 2000 and August 2000 =01) around the same time the utility's costs for=
=20
wholesale electricity began to soar far above the frozen rate charged to it=
s=20
customers. Between January 1998 and May 2000, PG&E accumulated a $2.75=20
billion operating profit from a favorable gap between its wholesale costs a=
nd=20
retail rates for electricity.=20
The utility said it could have proved its case for lifting the rate freeze=
=20
and passing on its electricity costs if the PUC hadn't adopted new accounti=
ng=20
guidelines March 27 =01) 10 days before PG&E filed for bankruptcy. Besides=
=20
changing the accounting rules governing the rate freeze, the PUC's March 27=
=20
order also authorized average price increases of up to 40 percent for=20
households and up to 52 percent for businesses.=20
PG&E says those increases =01) expected to begin showing up in June electri=
city=20
bills =01) still aren't enough to recoup its costs.=20
The accounting rules imposed by the PUC will make it virtually impossible f=
or=20
PG&E to lift the rate freeze before the end of March 2002, PG&E attorney=20
Jerome B. Falk Jr. told Montali on Monday.=20
The rate freeze dumped the utility into an $8.9 billion hole between June=
=20
2000 and February of this year and could siphon another $4 billion from PG&=
E=20
by the end of March 2002, Falk said. PG&E contends federal law prevents thi=
rd=20
parties from taking money from companies protected under bankruptcy.=20
If Montali kills the new accounting rules, Falk said, "it would be our=20
expectation that (the PUC) would do the right thing under California law" a=
nd=20
allow the utility to raise its rates even more.=20
The PUC contends Montali is prevented from ruling on the matter under an 11=
th=20
Amendment guarantee of "sovereign immunity" to state government agencies as=
=20
long as they are obeying the law.=20
"It's not an appropriate matter to litigate here," PUC attorney Walter Riem=
an=20
told Montali. "Regulation is shielded (under the Constitution), whether it'=
s=20
smart or not smart."=20






California power regulators delay decision on rate hikes=20



By Karen Gaudette
ASSOCIATED PRESS=20
May 15, 2001=20
SAN FRANCISCO =01) California ratepayers still don't know how much more the=
y'll=20
owe on next month's electric bills, and consumer activists fear the delay=
=20
could mean even higher rates for residential customers.=20
Loretta Lynch, President of the Public Utilities Commission, postponed a vo=
te=20
on proposed new rates until Tuesday afternoon, saying she needed more time =
to=20
review feedback from every type of energy consumer in California.=20
"What we're doing is fine-tuning and tweaking the proposal," Lynch said aft=
er=20
Monday's meeting. "Everybody in California is going to pay more."=20
In her initial proposal, Lynch would have spared many residential users fro=
m=20
the highest bills and placed more of the burden on businesses and farms.=20
But an outcry from businesses proclaiming that the rate hikes will doom=20
California's economy =01) followed by a Sunday statement from Gov. Gray Dav=
is=20
chiding the PUC for not allocating rates evenly over all ratepayers =01) ha=
s=20
consumer groups wondering if Davis has urged the PUC to shifting more of th=
e=20
rate hikes onto residential customers.=20
"The big industrial customers have been on a lobbying rampage the past=20
several days trying to get more of the increase placed on residential=20
customers," said Mike Florio, senior attorney with The Utility Reform=20
Network.=20
Steve Maviglio, a Davis spokesman, maintained that the PUC is an independen=
t=20
body. Three of the five commissioners, however, are Davis appointees.=20
Commissioner Jeff Brown said Monday he was looking into lessening the impac=
t=20
on businesses.=20
Business groups definitely hope the extra day translates into a lighter=20
touch.=20
"We can only hope that this extra time means that they're carefully=20
evaluating a plan that will perhaps be more balanced and more proportional=
=20
than what they've put forward so far," said Michelle Montague-Bruno,=20
spokeswoman for the Silicon Valley Manufacturing Group that represents 190=
=20
busineses.=20
Commissioner Carl Wood said Tuesday is the latest date the PUC can make its=
=20
decision and still give Pacific Gas and Electric Co. and Southern Californi=
a=20
Edison Co., the state's two largest utilities, enough time to add the new=
=20
rates to electric bills by June 1.=20
Energy experts fear that's already too late for the price shock to spur vit=
al=20
conservation this summer and help stave off some of the 30 days of rolling=
=20
blackouts predicted by managers of the state power grid.=20
Lynch's initial proposal raises rates anywhere from 7 percent to 61 percent=
 =01)=20
depending on everything from whether the customer manufactures sweatshirts,=
=20
heats a swimming pool or processes tomatoes. Nearly everyone would feel som=
e=20
pain.=20
Since it unanimously approved rate hikes March 27, the commission has=20
struggled to fashion rates that will simultaneously recoup the $5.2 billion=
=20
the state has spent buying power, return the state's largest utilities to=
=20
solvency and trigger enough conservation to help fend off some of this=20
summer's rolling blackouts.=20
The allocation the PUC approves will be retroactive to March 27. Charges fo=
r=20
interim power use will be spread over the next 12 months, Lynch has said.=
=20
Lynch and PUC Administrative Law Judge Christine Walwyn introduced proposal=
s=20
last week that business interests said would unfairly make them pay too muc=
h=20
of the overall rate hike =01) as much as 50 percent more than they pay now=
=20
depending what time of day they use the electricity.=20
Under Lynch's plan, as many as half of PG&E and SoCal Edison's 9 million=20
customers would not see their bills rise at all. She would bill residential=
=20
customers at several different levels based on how much power they use.=20
San Diego Gas and Electric Co. customers would not be affected. Neither wou=
ld=20
ratepayers who buy their electricity directly from energy wholesalers rathe=
r=20
than through utilities, such as the state's public university systems.=20
While state law shields average residential customers from severe rate hike=
s=20
on much of their power use, businesses would have to pay more for every=20
kilowatt so the state can raise around $5 billion.=20
That worries small businesses like Spretto, an Oakland restaurant that no=
=20
longer serves lunch and laid off five workers because of its growing electr=
ic=20
bill.=20
"It's horrendous," said Pamela Drake, a spokeswoman with the Oakland Allian=
ce=20
for Community Energy. "Small businesses operate within a smaller margin, ev=
en=20
successful ones, and can't afford to pay anymore."=20
Consumer activists sporting white jumpsuits emblazoned with the word=20
"Ratebusters" and other members of the public told the PUC to stop taking=
=20
public comment if it didn't plan to listen and protect residents from rate=
=20
hikes.=20
"I was raised to pay my bills and be responsible," said April Lankford of S=
an=20
Francisco. "But I have a right to my own health and safety. That's about ho=
t=20
water. That's about turning on the heat when it gets cold. I am not going t=
o=20
not pay my health insurance just to afford electricity."=20






California faces 260 hours of blackouts, says industry=20



REUTERS=20
May 15, 2001=20
WASHINGTON =01) California will have an estimated 260 hours of rotating=20
electricity blackouts this summer, more than the state or regional=20
authorities have predicted, the North American Electric Reliability Council=
=20
(NERC) said on Tuesday.=20
Texas, New England, and New York City also face the threat of summer power=
=20
outages, NERC officials said at a news conference to unveil their summer=20
outlook. The Pacific Northwest, which produces huge amounts of hydropower,=
=20
can meet its own demand this summer but will have no extra power to sell to=
=20
California because of drought conditions, NERC said.=20
"The assessment concludes that California will experience difficulties=20
meeting its projected electricity demand this summer and California=20
electricity users will experience rotating blackouts, much more so than las=
t=20
summer or this winter," said Michehl Gent, president of NERC.=20
California's "deficiencies will be more severe" than estimates by the=20
California Independent System Operator, NERC officials said. NERC said=20
curtailments of power in the state could total as much as 260 hours over th=
e=20
course of the summer, with an average curtailment of about 2,150 megawatts.=
=20
Previous estimates from the state and region estimated about 200 hours of=
=20
rotating blackouts this summer.=20
NERC is a non-profit entity formed after the 1965 blackouts in the=20
northeastern United States and promotes reliability of the nation's bulk=20
electricity systems.=20






AES to restart 2 retired South California power plants=20



REUTERS=20
May 14, 2001=20
ARLINGTON, VA =01) United States power giant AES Corp. Monday said it will=
=20
refurbish two retired gas-fired power plants in Southern California,=20
generating an additional 450 megawatts of power for electricity-strapped=20
state.=20
Arlington, Virginia-based AES said the California Energy Commission certifi=
ed=20
the company's refurbishing of units 3 and 4 at its Huntington Beach,=20
California facility about 30 miles(48 km) south of Los Angeles. Both units=
=20
were retired in 1995 before AES bought them.=20
The company said the project will bring the two power plants up-to-date,=20
replacing old boilers and installing state-of-the-art emissions controls.=
=20
"Not only will these units be on line in time to address California's urgen=
t=20
need for electricity this summer, but the modifications will make this plan=
t=20
one of the cleanest gas-fired plants in California," said Ed Blackford,=20
President of AES Huntington Beach.=20






PUC Delays Decision on Power Rate Hike=20
Energy: Panel will discuss a new plan today that would shift more of the=20
burden to residences from business.=20

By TIM REITERMAN and MARLA DICKERSON, Times Staff Writers=20

?????SAN FRANCISCO--The state's utility regulators delayed a decision Monda=
y=20
on how to structure a $5-billion electricity rate increase until today, whe=
n=20
they will take up a revised plan that is expected to shift a larger share=
=20
onto residential customers.
?????Assailed by power users and pressured by the governor, the California=
=20
Public Utilities Commission said more time was needed to assess the impact =
on=20
competing interest groups.
?????"The problem here is making sure we are allocating [the increase]=20
equitably," PUC President Loretta Lynch said after the meeting. That, she=
=20
said, is "tricky."
?????About half the residential customers of the state's two largest=20
utilities would see increases under Lynch's plan proposed last week. Bills=
=20
for Southern California Edison customers who use moderate to heavy amounts =
of=20
power would rise about 9% to 60%. Similar customers of Pacific Gas & Electr=
ic=20
Co. would experience increases of about 7% to 40%.
?????To encourage conservation, Lynch said, she favors moving more of the=
=20
overall burden of the increases to residential customers who are moderate=
=20
users of electricity. Other commissioners say they believe that such a shif=
t=20
is necessary to protect the state's business climate.
?????Consumer advocates voiced concern that the PUC may be yielding to=20
pressure from industry groups that enjoy relatively low rates but say they=
=20
are being hit unfairly with much larger percentage increases than residenti=
al=20
customers.
?????"The fear is the commission is caving in and taking [the increase] off=
=20
big [business] customers and putting it on residential users above 130% of=
=20
baseline," said Mike Florio, senior attorney for the Utility Reform Network=
.
?????The baseline amount on a bill is the minimum of electricity deemed=20
necessary for a customer and varies by region. Under state legislation, the=
re=20
is no rate increase for consumption up to 130% of baseline. Also exempted a=
re=20
low-income customers who already receive discounted electricity rates.
?????The commission passed an increase of 3 cents a kilowatt hour March 27.=
=20
In recent weeks, the panel has been conducting hearings on how to divvy up=
=20
the increase among 9 million customers of Edison and PG&E. Monday's meeting=
=20
was supposed to climax that process, paving the way for utilities to start=
=20
billing customers June 1.
?????Dozens of speakers addressed the commission, and boisterous protesters=
=20
in white coveralls repeatedly criticized the rate increase, chanting: "I=20
ain't payin' no hike, while they're getting rich from our power rates! Who=
=20
you gonna call? Rate Busters!" One had to be dragged away from the micropho=
ne.
?????To stunned surprise, Lynch later announced that the commission would n=
ot=20
vote on her rate design proposed last week or a similar one proposed by a P=
UC=20
administrative law judge.
?????Lynch revised the plan over the weekend and some commissioners said th=
ey=20
had not yet seen the changes.
?????The delay means two commissioners will be out of town when the=20
five-member panel designs the state's largest rate increase ever.=20
Commissioner Richard Bilas is undergoing a medical procedure in Mendocino=
=20
County. Commissioner Henry Duque is traveling to Texas as a director of the=
=20
National Assn. of Utilities Commissioners. They said the law permits them t=
o=20
vote by phone as long as they do it from a publicly accessible place.
?????Lynch's proposal called for average rate increases of about 20% to 50%=
=20
for various classes of customers. But officials said the proposal was being=
=20
reviewed after testimony late last week and mounting concerns among some=20
commissioners that it would hit industry and big commercial customers too=
=20
hard, potentially hurting the state's economy.
?????After his financial advisors reviewed the PUC's proposals, Gov. Gray=
=20
Davis put out a statement over the weekend saying his own proposal, includi=
ng=20
a slightly smaller rate hike, was better.
?????"My plan raises sufficient revenues to deal with the problem without=
=20
putting an undue burden on California consumers and businesses that might=
=20
hurt our economy," he said.
?????The governor's office last week asked the PUC to "come around," said=
=20
press secretary Steve Maviglio. "There are gaps between his proposal and th=
e=20
PUC's."
?????Carl Wood, one of three Davis appointees on the commission, said that =
he=20
was generally comfortable with the Lynch proposal but that "this is a big=
=20
decision, and it is not ready" for a vote.
?????Jeff Brown, another Davis appointee, said he spoke to the governor's=
=20
office recently and learned that Davis had two primary concerns about the=
=20
proposal: "No. 1 that there be sufficient price signals within the=20
residential class [to make people conserve], and that the industrials not b=
e=20
walloped and have some mitigation of the rate increase."
?????Brown said he would like to see industrial users paying less than the=
=20
50% hike in Lynch's proposal. He said that would mean residents who consume=
=20
300% of their baseline amount would have their rates rise 28% instead of=20
about 15%.
?????"I want [the proposed amount for industrial customers] to go down=20
somewhat but can't put all the burden on residentials," he said. "There are=
=20
no good answers."
?????Duque and Bilas, appointees of former Republican Gov. Pete Wilson,=20
expressed concerns that the rate proposal would further damage the economy.
?????"Industry is not getting a fair shake," Bilas said. "If you want to=20
achieve maximum conservation, you put [the increase] where demand is most=
=20
elastic. It should be placed on you and me."
?????Duque said: "I think [industrial users] are getting an undue amount."
?????Business groups have argued strongly that consumers must endure their=
=20
fair share of the pain in order to encourage conservation.
?????Carl Guardino, president and chief executive of the Silicon Valley=20
Manufacturing Group, said his group phoned Davis' staff to voice their=20
opposition to the proposed rate structure.
?????"We found a receptive audience," he said. "They saw that this [propose=
d=20
rate structure] will deeply hinder our economy."
---=20
?????Reiterman reported from San Francisco, Dickerson from Los Angeles.

Copyright 2001 Los Angeles Times=20





El Paso Gas Supplier Denies Monopoly=20
Energy: In trial-like hearing, federal panel is told company had control ov=
er=20
Southern California market.=20

By RICARDO ALONSO-ZALDIVAR, Times Staff Writer=20

?????WASHINGTON--A Texas energy conglomerate accused of driving up natural=
=20
gas prices in California might have amassed monopolistic power at times las=
t=20
year, according to opening testimony Monday before the Federal Energy=20
Regulatory Commission.
?????FERC economist Jonathan Ogur said that under certain conditions during=
=20
the past year, a subsidiary of El Paso Corp. of Houston might have controll=
ed=20
as much as 45% of the pipeline capacity for shipping gas to Southern=20
California. That share exceeds a commonly used threshold of 35%, raising=20
concern with regulators.
?????"We obviously disagree with that," said Bill Sherman, lead lawyer for =
El=20
Paso Merchant Energy, which markets natural gas. Merchant is accused by the=
=20
California Public Utilities Commission and Southern California Edison of=20
withholding supply in a bid to raise prices. It had contracted with its=20
pipeline affiliate--El Paso Natural Gas Co.--for rights to ship 1.2 billion=
=20
cubic feet of natural gas a day to California.
?????The El Paso firms say the allegations are based on a misrepresentation=
=20
of how their relationship worked. They argue that natural gas prices in=20
California have spiked much higher than elsewhere in the country because of=
=20
insatiable demand from power plants, a lack of pipeline capacity within the=
=20
state, and shortages brought on by unusual weather. High prices for natural=
=20
gas are a key component of California's soaring energy bills.
?????"We did nothing wrong," said Norma Dunn, a vice president with El Paso=
=20
Corp. "We need to look at this in context. All shippers were trying to move=
=20
as much gas as they could into the state. The problem is you can't get all=
=20
that much gas into the state."
?????The issue of market share appeared to loom large in the administrative=
=20
hearing, which has become the closest thing to a trial arising from=20
California's energy crisis. A company that controls a large portion of any=
=20
market enhances its ability to dictate prices and other conditions.
?????El Paso Merchant has argued that its market share should be computed a=
s=20
a proportion of the statewide natural gas market, in which case it would fa=
ll=20
below 20% and would not raise anti-competitive concerns.
?????But the PUC counters that, because of difficulties in shipping gas fro=
m=20
north to south within the state, El Paso's true market is limited to Southe=
rn=20
California.
?????"The question of the geographic market makes a tremendous difference i=
n=20
how El Paso Merchant's market share will be measured and the results,"=20
acknowledged Judge Curtis L. Wagner Jr. in an opening statement. "If the=20
market is Southern California and not the entire state, the figures tend to=
=20
demonstrate a rather high level of concentration in El Paso Merchant."
?????Ogur said in prepared testimony filed last week that it is "likely" th=
at=20
El Paso exercised market power in Southern California.
?????Wagner will hear the evidence and present a decision to the FERC board=
,=20
which has the authority to order El Paso to surrender any ill-gotten profit=
s.
?????During cross-examination Monday, Sherman sought to discredit the=20
testimony of Sandra Rovetti, a technical analyst with the PUC. Rovetti had=
=20
submitted testimony in which she said she studied the market in a "controll=
ed=20
experiment" and concluded that El Paso Merchant had wielded monopolistic=20
power to drive up prices.
?????But Sherman won an admission from Rovetti that she had not considered=
=20
the price impact of such factors as unusual weather and power plant outages=
.
?????The hearing is expected to last all week and a decision from Wagner is=
=20
due before June 30.

Copyright 2001 Los Angeles Times=20





Labor Courted on Bush Reform Plan=20
Politics: The meeting with union leaders prefaces today's counterproposal b=
y=20
Democrats.=20

By RICHARD SIMON and EDWIN CHEN, Times Staff Writers=20

?????WASHINGTON--The Bush administration aimed its energy policy campaign a=
t=20
an unusual constituency Monday, telling union leaders that building more=20
power plants and increasing oil and gas drilling will mean more jobs for=20
their members.
?????Vice President Dick Cheney and Labor Secretary Elaine Chao courted=20
leaders of about a dozen unions during a private White House session that=
=20
appeared designed to drive a wedge into the labor-environmental coalition=
=20
that has blocked previous pro-business initiatives.
?????"I don't think we're being used," Teamsters President James P. Hoffa=
=20
told reporters after the meeting. "Don't forget. American workers will be=
=20
solving this problem. They will be building the resources to refine and=20
generate new energy."
?????It was the latest round in an escalating public relations battle over=
=20
the comprehensive national energy policy drafted by a task force headed by=
=20
Cheney. The plan will be unveiled Thursday by President Bush.
?????Today, House Democrats plan to gather at a Washington gas station to=
=20
announce their own formula for reducing the nation's energy problems. It wi=
ll=20
call for immediate steps to address high energy prices and supply shortages=
,=20
such as asking federal regulators to investigate allegations of price gougi=
ng.
?????A group of 67 Democratic lawmakers sent Bush a letter Monday urging hi=
m=20
to pressure the Organization of Petroleum Exporting Countries to increase=
=20
world crude oil production.
?????"Notwithstanding our confidence in your Cabinet's extensive knowledge =
of=20
and experience with the petroleum industry, we remain concerned that your=
=20
administration has done little at this late date to address the coming cris=
is=20
in gasoline prices," the letter says.=20
?????Cheney reiterated his belief that there are no short-term fixes for th=
e=20
combination of factors contributing to higher gasoline prices nationwide an=
d=20
continuing shortages of electricity in California.
?????The vice president criticized Gov. Gray Davis for suggesting that the=
=20
administration's opposition to electricity price controls is tied to its=20
political support from Texas-based energy producers who are profiting off=
=20
California's troubles.
?????In the Associated Press interview, Cheney characterized appeals for=20
price controls and a federal investigation of gasoline prices as "exactly t=
he=20
kind of misguided--I'm trying to think how to state this=20
gracefully--politically motivated policies we've had in the past."=20
?????Cheney said Bush might back a reduction of the 18.4-cent-per-gallon=20
federal gasoline tax, AP reported. Opponents say such a move could threaten=
=20
highway projects funded by the tax.
?????The administration's comprehensive energy plan is expected to call for=
=20
opening more federal land to oil and gas exploration, promoting increased u=
se=20
of nuclear power and streamlining the approval process for power plants, ga=
s=20
pipelines and oil refineries.
?????In addition, the plan is expected to propose a massive upgrade of the=
=20
nation's electricity transmission system, including granting federal=20
authorities eminent domain authority to acquire private property for power=
=20
transmission lines.=20
?????Environmentalists and their Democratic allies contend the plan leans t=
oo=20
far toward the supply side. But the administration has said it will include=
=20
proposals to promote conservation, energy efficiency and use of renewable=
=20
energy sources.=20
?????White House officials disputed the notion that the meeting with union=
=20
leaders was designed to divide the labor-environmental coalition.
?????Cheney was scheduled to meet today with advocates of renewable energy=
=20
sources, such as wind and solar power.
?????Hoffa said his group was not provided with enough details of the=20
administration's energy plan to offer an immediate endorsement.
?????Mike Mathis, government affairs director of the Teamsters, said, "We'r=
e=20
going to be supportive of a program that creates jobs."

Copyright 2001 Los Angeles Times=20






Judge Asked to Block Freeze on Power Rate=20


By MAURA DOLAN, Times Legal Affairs Writer=20

?????SAN FRANCISCO--Lawyers for Pacific Gas & Electric clashed with attorne=
ys=20
for the state in federal bankruptcy court here Monday over whether the cour=
t=20
should block a state regulatory order that prolongs an electricity rate=20
freeze.
?????After three hours of arguments, U.S. Bankruptcy Judge Dennis Montali=
=20
said he will prepare a written decision. "It will be issued when I am ready=
=20
to issue it," Montali told a packed courtroom.
?????The legal battle represents PG&E's first attempt to use its bankruptcy=
=20
petition to protect itself from state regulators--the California Public=20
Utilities Commission.=20
?????PG&E has asked Montali to block a key accounting order the commissione=
rs=20
approved March 27, several days before the Northern California utility file=
d=20
for Chapter 11 bankruptcy protection.
?????The utility contends that the order illegally extended a freeze on=20
electricity rates. Lawyers for the state counter that the PUC has sovereign=
=20
immunity under the 11th Amendment, and the judge has no power to intrude on=
=20
its regulatory decision making.=20
?????Montali asked a PG&E lawyer how he could get around the protection=20
argument.
?????"Because we have commissioners who are shielded by sovereign immunity,=
=20
don't I have to find a potential ongoing violation of federal law [to=20
intervene]?" the judge asked.
?????Jerome Falk, the lawyer for PG&E, said the regulatory commission was=
=20
breaking federal law by blocking the utility's ability to use the Bankruptc=
y=20
Act's protections to reorganize.
?????Under PG&E's calculation, the rate freeze imposed by deregulation shou=
ld=20
have ended in mid-2000. The utility stands to lose $4 billion because of th=
e=20
continuation of the freeze, Falk told Montali.
?????"Don't let it get $4 billion worse," he pleaded.
?????Walter Rieman, representing the state, countered that the commissioner=
s=20
were acting in their regulatory capacity when they approved the accounting=
=20
change.
?????"Here we have rate-making and regulation in its classic and purest=20
form," Rieman told the judge.=20
?????Because of the rate freeze, the utility must buy power at a cost highe=
r=20
than the rates it charges, Falk said.
?????"Money is going out. . .," Falk said. "Assets of the estate are=20
threatened with diminution, major diminution, as a result of this order."
?????Montali asked him what would happen if he blocked the regulatory order=
.=20
Would the rate freeze immediately end?
?????Falk replied that PG&E would return to the PUC and make its case for a=
n=20
end to the freeze. "I am not asking you to set rates."=20
?????Lawyers for the state pointed out that PG&E happily accepted the rate=
=20
freeze when it allowed the utility to sell power at higher than market rate=
s.=20
In their view, PG&E wants a ruling against the rate order to give the utili=
ty=20
more leverage against the state in the future.
?????Montali questioned Rieman about what authority, if any, the Bankruptcy=
=20
Court has over the utilities commission.
?????"You want me to say that everything the commission has done or will do=
=20
is insulated," Montali said. "I don't know how I can do that, and maybe I=
=20
can't."
?????The judge asked Rieman whether the PUC could eventually approve=20
retroactive rate increases. Rieman said it was "possible" but he was not su=
re=20
retroactive hikes would be "appropriate."
?????PG&E filed for bankruptcy protection after accumulating more than $9=
=20
billion in debts since state-ordered deregulation in 1996. The case is the=
=20
third largest bankruptcy in U.S. history.

Copyright 2001 Los Angeles Times=20





Edison Deal Sets High Legislative Hurdle for Davis=20
Capitol: Rescue bill faces opposition from lawmakers and competition from=
=20
plans that include buying utility.=20

By DAN MORAIN and NANCY VOGEL, Times Staff Writers=20

?????SACRAMENTO--Gov. Gray Davis faces the toughest legislative challenge o=
f=20
his tenure as he tries to win votes for a deal he says is needed to keep=20
Southern California Edison out of bankruptcy--even as lawmakers work on=20
alternative plans.
?????Davis has tapped Sen. Richard Polanco to carry the bill, and the Los=
=20
Angeles Democrat is expected to introduce legislation implementing key part=
s=20
of the Edison deal this week. But even before hearings begin, key lawmakers=
=20
say the Davis plan has little chance of success, at least not in its curren=
t=20
form.
?????Some Democrats in the Assembly are considering the possibility that th=
e=20
effort to rescue Edison could falter, that the company could end up in=20
bankruptcy, and that the state might buy the utility, according to a summar=
y=20
of various plans prepared by Assembly Democrats.
?????The document, prepared for Assembly leaders, shows that at least some=
=20
members of the lower house are thinking about making a run at buying Edison=
's=20
Northern California counterpart, Pacific Gas & Electric, which filed for=20
bankruptcy last month.
?????"The state would assume existing secured debt . . . and would pay the=
=20
unsecured debt using a combination of the cash that has been hoarded by the=
=20
utility . . . and new cash from revenue bonds issued by the California Powe=
r=20
Authority," the document obtained by The Times says.
?????With Edison's stock price depressed, the cost to the state would be=20
perhaps $1 billion to $2 billion. PG&E's cost might be less, the document=
=20
suggests. The state would have to spend additional sums to pay off the=20
utilities' creditors.
?????"I don't know if we have even contemplated that thought," Davis=20
spokesman Steve Maviglio said of a potential bankruptcy. "We're still=20
optimistic that the Legislature will agree to the [deal] or a framework tha=
t=20
encompasses most of it."
?????Lawmakers, meanwhile, shut down their special session on energy Monday=
,=20
a necessary step so the state could sell as much as $13.4 billion in bonds =
by=20
August to pay for power purchases. Davis quickly reconvened a second specia=
l=20
session to deal with many other energy bills.

?????Measure Would Use Part of Utility Bills
?????"This is not going to be solved by the state buying the utilities," sa=
id=20
Bob Foster, the Edison executive who oversees lobbying operation. "It is ti=
me=20
to get real here. The state has a crisis on its hands. It needs to start=20
digging out."
?????The 98-page bill would authorize the state to pay $2.76 billion to buy=
=20
Edison's high voltage transmission lines, and permit the state to sell bond=
s=20
to finance the purchase. Edison would use the money to restructure and pay=
=20
down its debt, pegged at $3.5 billion.
?????Additionally, the bill would earmark part of ratepayers' monthly utili=
ty=20
bills to be used by Edison to pay off debt it incurred in 2000 and early th=
is=20
year as state regulators barred the company from charging consumers for the=
=20
full cost of record wholesale electricity prices.
?????"The state of California needs to get out of the business of buying=20
electricity," Polanco said, adding that the measure assumes Edison would ta=
ke=20
over the chore of buying power at the end of 2002 once it gains financial=
=20
stability. "My reasons for stepping up to the plate is to deal with it and=
=20
get it behind us."
?????Passage of the bill requires simple majorities in the 40-seat Senate a=
nd=20
80-seat Assembly. But Davis is having a hard time persuading fellow Democra=
ts=20
to embrace the proposal, and Republicans shudder at the prospect of the sta=
te=20
getting more deeply involved in the power business by taking over Edison's=
=20
transmission system. Some think Edison should follow PG&E into Bankruptcy=
=20
Court.

?????Some Officials Prefer Bankruptcy Option
?????"Why should we spend $3.5 billion for something the Bankruptcy Court=
=20
does for free?" Sen. Tom McClintock (R-Thousand Oaks) asked. "I don't hear=
=20
anybody voicing support for the bailout."
?????Added Sen. Martha Escutia (D-Whittier): "I haven't been given any=20
argument why bankruptcy is bad."
?????Escutia said one of Davis' top aides jokingly threatened to lock Escut=
ia=20
in a padded room until she voted for the bill. "I told her the governor wou=
ld=20
have to put me in a straitjacket, and I still wouldn't vote for it."
?????Senate President Pro Tem John Burton, the Legislature's most influenti=
al=20
Democrat, said he would prefer that Edison not file for bankruptcy, but tha=
t=20
the bankruptcy of Edison's Northern California counterpart, PG&E, has had=
=20
little day-to-day impact.
?????"Bankruptcy is not something I'm afraid of," Burton said.
?????Burton's biggest criticism of the Davis-Edison accord is that it would=
=20
allow independent power sellers, most of which are out-of-state firms, to=
=20
recoup all money owed them by Edison.
?????Burton said no deal will win passage unless the independent generators=
,=20
who have reaped significant profits selling wholesale electricity to the=20
utilities, agree to take a discount on the money they are owed. He called o=
n=20
them to accept a 30% discount, an amount that Davis embraced last week afte=
r=20
meeting with Burton and other legislators.
?????Burton's idea is one of at least four alternatives to the Davis-Edison=
=20
deal now in the works at the Capitol.
?????In the lower house, the plan with the most support is being pushed by=
=20
Assemblymen John Dutra (D-Fremont) and Joe Nation (D-San Rafael). It would=
=20
require that generators and other creditors take 25% less than they are owe=
d,=20
pushing Edison debt to $2.65 billion, from the current $3.5 billion.
?????"I have every confidence that generators and marketers will be willing=
=20
to bargain," Nation said. His plan also would require an audit by the=20
California Public Utilities Commission to determine Edison's actual debt,=
=20
something not required by Davis' plan. Additionally, the state would have a=
n=20
option to buy Edison's transmission system, rather than a commitment to=20
buying it, with the price to be reviewed by the PUC if the transaction is=
=20
completed.
?????Davis has met privately with legislators to ask for support. Davis eve=
n=20
called on executives of independent power companies to lobby lawmakers,=20
telling them that approval of the measure is the quickest way to ensure tha=
t=20
they will be paid the more than $1 billion that Edison owes them.

Copyright 2001 Los Angeles Times=20




PUC stalls decision on rate boost=20
ANGER: Consumer group says big business to benefit=20
David Lazarus, Chronicle Staff Writer
Tuesday, May 15, 2001=20
,2001 San Francisco Chronicle=20
URL: http://www.sfgate.com/cgi-bin/article.cgi?f=3D/c/a/2001/05/15/MN104029=
.DTL=20

State regulators yesterday delayed until this afternoon a vote on the most=
=20
sweeping electricity rate increase in California history so they could redu=
ce=20
the effect on heavyweight corporate customers.=20
That means residential users could end up paying an even greater share of t=
he=20
$5 billion to be raised by higher power prices.=20
Consumer activists were outraged. "It would be a travesty if the Public=20
Utilities Commission caved in to pressure from big business," said Mike=20
Florio,=20
senior attorney for The Utility Reform Network in San Francisco.=20
Under a new electricity rate formula announced last week by PUC President=
=20
Loretta Lynch, residential power customers would pay as much as 40 percent=
=20
more while industrial customers would face increases of more than 50 percen=
t=20
--=20
in some cases, as much as 75 percent during periods of peak demand.=20
The PUC needs to adopt the new rate formula before Thursday if, as intended=
,=20
Pacific Gas and Electric Co. and Southern California Edison are to impose t=
he=20
higher rates in time for customers' June bills.=20
State officials said representatives of industrial power users lobbied=20
aggressively over the weekend to convince Gov. Gray Davis that they would=
=20
bear a disproportionately large burden from the proposed rate increases.=20
The governor's office in turn spoke with Davis' most recent appointee to th=
e=20
PUC, Jeff Brown, who told The Chronicle yesterday that he could not support=
=20
Lynch's rate increase unless the effect on corporate customers is lessened.=
=20
"The question is whether these rates will have a deleterious effect on=20
business in California," he said. "I think they will."=20
Lynch scrambled last night to revise her proposal in a way that would regai=
n=20
Brown's support. The third Democratic appointee on the five-member=20
commission, Carl Wood, said he would support Lynch's current rate-increase=
=20
plan.=20
Although PUC members have been struggling for days to comprehend the highly=
=20
complex changes envisioned by Lynch's proposal for tiered rates among=20
residential and industrial power users, they gave no indication before=20
yesterday's meeting that a vote on the matter could be postponed.=20
The PUC's San Francisco meeting hall was packed for yesterday's scheduled=
=20
vote, and members of the public spent nearly two hours telling the=20
commissioners in no uncertain terms how they felt about rate increases.=20
"You are calling on consumers to bail out greedy, mismanaged companies," sa=
id=20
Medea Benjamin, head of Global Exchange, a San Francisco consumer group.=20
'RATEBUSTERS' SING OUT=20
She and more than a dozen other activists were dressed in white coveralls=
=20
identifying them as "Ratebusters," and they repeatedly interrupted the=20
meeting to sing to the tune of the "Ghostbusters" theme song.=20
"While the PUC gives our money away, who you gonna call?" they sang.=20
Benjamin was escorted from the hall by a California Highway Patrol officer=
=20
after going well past her allotted three minutes of public-comment time.=20
"Shame on you," protesters shouted at the commissioners.=20
Other speakers asked the commissioners how they could purport to represent=
=20
the public interest while at the same time raising electricity rates for th=
e=20
second time since January.=20
"You've been appointed to represent the public," said Juliette Beck of San=
=20
Francisco. "If you disregard the public's will, this is a total sham."=20
PUC members have held several public hearings on the rate increase in recen=
t=20
days. Dozens of consumers rose at each occasion to criticize higher rates a=
nd=20
call for public ownership of generating facilities in the state.=20
'PROCEDURAL ISSUES' DELAY=20
Lynch waited until all comments had been made yesterday before announcing=
=20
that a vote would be postponed until today. She blamed the delay on=20
"procedural issues" and said extra time was needed "so the commissioners ca=
n=20
fully evaluate revisions."=20
Outside the meeting hall, consumer activists derided the PUC for what they=
=20
said was an attempt to take up the question of rate increases behind closed=
=20
doors.=20
"They don't have the nerve to say all this in front of a room full of=20
people," said TURN's Florio.=20
But business leaders were hopeful that the delayed vote means their pleas f=
or=20
rate relief were heard by California officials.=20
Opposition to the rate plan has been voiced by nearly a dozen business=20
groups, including the Small Business Association and the Agricultural Energ=
y=20
Consumers Association.=20
Carl Guardino, president of the Silicon Valley Manufacturing Group, said in=
=20
an interview that commercial and industrial power users believe they were=
=20
being asked to shoulder about 80 percent of the rate increase, although the=
y=20
account for 65 percent of statewide power usage.=20
'FAIR AND PROPORTIONAL=20
"We need a rate increase," he said. "We are willing to pay our share. But=
=20
let's make it an increase that's fair and proportional to use."=20
Harvey Rosenfield, head of the Foundation for Taxpayer and Consumer Rights =
in=20
Santa Monica, scoffed at this reasoning.=20
"It was the large industrial users who demanded deregulation in the first=
=20
place," he said. "They should be forced to bear the burden of it, not=20
innocent ratepayers."=20
In any case, if the PUC bows to pressure for lower industrial rate increase=
s,=20
it will be residential customers who will make up the difference.=20
Steve Maviglio, a spokesman for the governor, said Davis is "adamantly=20
opposed" to expanding the number of residential customers who would be=20
exposed to higher rates.=20
Under the current plan, residential customers who can stay within 130 perce=
nt=20
of predetermined limits -- about half of all consumers -- would be exempt=
=20
from rate increases.=20
Maviglio said the governor instead would favor raising even higher the=20
increases for residential customers if business users succeed in avoiding=
=20
large-scale rate increases.=20
This means the average residential power bill could rise by more than 20=20
percent today -- on top of an average 10 percent increase adopted in Januar=
y.=20
Because of scheduling conflicts, three of the five PUC members will be forc=
ed=20
to vote today by telephone. Only Brown and Wood are expected to be in the=
=20
meeting hall.=20
Rate hike holdup=20
-- Delay: Industrial power users successfully argued that a state plan to=
=20
increase electricity rates would place too large a burden on them.=20
-- Rationale: "The question is whether these rates will have a deleterious=
=20
effect on business in California," said PUC commissioner Jeff Brown.=20
-- Deadline: The PUC needs to adopt the new rate formula before Thursday if=
=20
increases are to appear on June bills.=20
E-mail David Lazarus at dlazarus@sfchronicle.com.=20
,2001 San Francisco Chronicle ? Page?A - 1=20



NATURAL GAS: Experts says market probably fixed=20
Bernadette Tansey, Chronicle Staff Writer
Tuesday, May 15, 2001=20
,2001 San Francisco Chronicle=20
URL: http://www.sfgate.com/cgi-bin/article.cgi?f=3D/c/a/2001/05/15/MN220514=
.DTL=20
California's argument that a Texas energy company drove natural gas prices =
in=20
the state sky high by improperly manipulating the market won support=20
yesterday from federal regulators' main witness in an investigative hearing=
.=20
Evidence strongly indicates that El Paso Corp. inflated natural gas prices=
=20
through its dominance of the company's pipeline into Southern California, a=
=20
staff economist for the Federal Energy Regulatory Commission concluded in=
=20
written comments filed in the case.=20
The report by Jonathan Ogur, a Cornell-trained expert in market competition=
,=20
marks a departure from past findings of the federal commission that cleared=
=20
El Paso of wrongdoing.=20
"It is likely that El Paso Corp. had and exercised market power during the=
=20
contract term," Ogur said in the report. "Market power is the ability of a=
=20
seller profitably to maintain the price of a good or service above the=20
competitive level for a significant period of time."=20
EL PASO DENIES CHARGES
El Paso vigorously denies that it manipulated the gas market. It says gas=
=20
prices in the state have varied from two to 10 times more than elsewhere=20
because demand in California is high and existing pipelines and storage=20
basins are inadequate to meet it.=20
The federal commission in March rejected complaints by the California Publi=
c=20
Utilities Commission that El Paso rigged the bid for a huge block of space =
on=20
its pipeline early last year so that its own gas marketing affiliate could=
=20
take it over.=20
But the federal commission ordered further hearings before an administrativ=
e=20
law judge to determine whether El Paso then elbowed out other gas traders=
=20
that might have used the pipeline to ship cheaper gas into the state.=20
That's the accusation leveled at El Paso by the state and California's two=
=20
major utilities, Pacific Gas and Electric Co. and Southern California Ediso=
n.=20
They say the company's conduct jacked up prices for natural gas and had a=
=20
ripple effect on the electricity market, because 60 percent of power plants=
=20
in California run on gas.=20
Those higher prices have contributed significantly to the state's energy=20
problems. Natural gas prices for consumers rose sharply last winter, and=20
among PG&E's billions of dollars of debt is at least $150 million it owes t=
o=20
El Paso for gas and electricity purchases.=20
PIPELINE ACCESS CONTROLLED
PG&E once controlled the space on the El Paso pipeline, but dropped it in=
=20
1997 because it didn't need it at the time. Gas prices from the pipeline=20
started climbing in 2000, when El Paso controlled the space and, critics sa=
y,=20
limited access to it by potential competitors.=20
A report commissioned by Edison estimated that California paid an extra $3.=
 8=20
billion for natural gas alone between March 1, 2000, and this past March 31=
=20
because of El Paso's domination of the pipeline space.=20
$864 MILLION PAID TO EL PASO=20
Some $864 million of that went to El Paso, said the Brattle Group, a=20
consulting firm. The company also reaped an extra $85 million from the powe=
r=20
plants it owns, Brattle said.=20
El Paso spokeswoman Norma Dunn said yesterday that the company welcomed the=
=20
expanded inquiry before the administrative law judge.=20
"We are pleased that we will finally have the opportunity to present the=20
facts about our participation in California's natural gas markets," Dunn=20
said. "We are confident that once the facts are presented, El Paso will be=
=20
vindicated."=20
Representatives for Edison, PG&E and the state Public Utilities Commission=
=20
were unavailable for comment.=20
Ogur's conclusions are based on a complex mathematical evaluation of El=20
Paso's potential to dictate natural gas prices through its share of=20
interstate pipeline capacity into Southern California from the Southwest.=
=20
Ogur is scheduled to testify during the final session of the hearings this=
=20
week at the Federal Energy Regulatory Commission's headquarters in=20
Washington, D.C.=20
The commission's chief administrative law judge, Curtis Wagner Jr., will=20
issue an initial decision by June 30. The commission can then accept, rejec=
t=20
or modify his recommendations.=20
The commission gave Wagner broad discretion to suggest a remedy if he finds=
=20
that El Paso unfairly profited by limiting competition in California,=20
spokeswoman Tamara Young-Allen said. But she could not say whether Wagner i=
s=20
authorized to recommend the return of any illicit profits.=20
The contract for the 1.2 billion cubic feet of pipeline space controlled by=
=20
El Paso's marketing affiliate, El Paso Merchant Energy, expires May 31, whe=
n=20
the block will be shared by 30 energy companies.=20
Ogur said it is unlikely that the 30 firms will try to limit competition by=
=20
controlling access to the pipeline.=20
Energy at a glance Energy-related developments yesterday:=20
-- RATE INCREASE VOTE DELAYED=20
The California Public Utilities Commission postponed until today a decision=
=20
on how to divvy up the biggest electricity rate increase in state history.=
=20
The delay came at the urging of Gov. Gray Davis, amid lobbying by industria=
l=20
customers concerned that they will bear a disproportionate share of the=20
increase.=20
Two increase proposals are being debated; each would stick business and=20
agriculture with the brunt of the rate increases while going lighter on=20
residential users.=20
RULING DELAYED IN PG&E BANKRUPTCY
Bankruptcy Judge Dennis Montali deferred ruling on a PG&E bid challenging t=
he=20
PUC's authority to limit electricity rates.=20
COMPANY ACCUSED OF MANIPULATING GAS PRICES
A Federal Energy Regulatory Commission analyst said evidence supports=20
California's argument that El Paso Corp. helped drive up natural gas prices=
=20
by limiting the supply flowing through its Southern California pipeline.=20
HELP FOR SCHOOLS
Gov. Gray Davis set aside $541 million in the state budget to help public=
=20
schools pay soaring electricity bills. The one-time spending increase will=
=20
benefit schools that agree to cut power use by 10 percent.=20
CHENEY TALKS TOUGH
Vice President Dick Cheney dismissed as "misguided" and "politically=20
motivated" Democratic calls for energy price limits and augmenting fuel=20
supplies by dipping into the Strategic Petroleum Reserve.=20
Cheney also rebuffed Democratic calls for a federal investigation into=20
allegations of price gouging by oil and gasoline companies. He did, however=
,=20
leave open the possibility that President Bush would back a reduction of th=
e=20
federal gasoline tax.=20
E-mail Bernadette Tansey at btansey@sfchronicle.com.=20
,2001 San Francisco Chronicle ? Page?A - 1=20



Developments in California's energy crisis=20
The Associated Press
Tuesday, May 15, 2001=20
,2001 Associated Press=20
URL:=20
http://www.sfgate.com/cgi-bin/article.cgi?file=3D/news/archive/2001/05/15/s=
tate1
045EDT0137.DTL&type=3Dnews=20
(05-15) 07:45 PDT (AP) --=20
Developments in California's energy crisis:=20
TUESDAY:
* No power alerts Tuesday as electricity reserves stay above 7 percent.=20
* The Public Utilities Commission could vote on how it will allocate the=20
largest rate hikes in California history. Consumer activists fear PUC=20
President Loretta Lynch will retool her rate proposal to foist more of the=
=20
burden onto residential customers. Businesses and Gov. Gray Davis had said=
=20
both Lynch's proposal and another from a PUC law judge targeted businesses=
=20
with too much of the increase.=20
MONDAY:
* Davis releases his revised budget, reflecting the sagging economy and the=
=20
hit the state's treasury has taken from power buys.=20
* Legislators unanimously send Davis a bill giving air quality districts=20
discretion to allow industries that participate in the state's interruptibl=
e=20
program to run backup generators during blackouts to prevent damage to=20
equipment or products, even if that violates air quality standards.=20
* Legislators end their first special session on the state's energy crisis,=
=20
and Davis immediately proclaims a second special session that will take up=
=20
where the first one left off. The procedural moves triggers a 90-day clock=
=20
until the state can issue $13.4 billion in long-term bonds to repay the=20
treasury for money the state has spent to buy electricity for three=20
cash-strapped utilities.=20
* Assemblymen John Dutra, D-Fremont, and Joe Nation, D-San Rafael, offer an=
=20
alternative to Davis' proposal to purchase Southern California Edison's=20
transmission lines for $2.76 billion to help the company pay its massive=20
debt. They propose that Edison give the state a five-year option to buy the=
=20
utility's transmission lines for $1.2 billion.=20
* A $1 loaf of bread would cost $12 and a $2 half-gallon of milk $24 if the=
ir=20
prices had increased at the pace of electricity over the last year, consume=
r=20
groups say. They and Assembly Speaker Robert Hertzberg, D-Van Nuys, blame t=
he=20
Federal Energy Regulatory Commission for not reining in soaring energy=20
prices. The Assembly Energy Oversight Subcommittee releases a report=20
criticizing FERC for approving contracts it says led to exorbitant natural=
=20
gas prices. FERC holds a Washington, D.C., hearing on the natural gas marke=
t.=20
* A lawsuit by Democratic legislative leaders asking a federal judge to ord=
er=20
FERC to trim energy prices has been delayed until next week. Hertzberg and=
=20
Senate President Pro Tem John Burton, D-San Francisco, had hoped to file=20
their suit early this week.=20
* Edison International, the parent of cash-strapped utility Southern=20
California Edison, reports a $617 million first-quarter loss, or $1.89 per=
=20
share, reflecting Southern California Edison's unreimbursed $617 million co=
st=20
of buying power on the wholesale market and not being able to pass those=20
costs along to customers.=20
* U.S. Bankruptcy Judge Dennis Montali hears arguments from lawyers for bot=
h=20
Pacific Gas and Electric and the state Public Utilities Commission, but has=
=20
yet to rule whether the PUC was within its rights to force PG&E to make an=
=20
accounting change that prevents the utility from recouping its $13 billion=
=20
debt from its customers.=20
* Edison International stock closes at $11.15, up $0.94. PG&E Corp. gained=
=20
$1.22 to close at $11.80.=20
WHAT'S NEXT:
* The PUC is scheduled to vote on a final electricity rate plan Tuesday. Tw=
o=20
proposals are on the table. Each would make businesses and farms pay the=20
most, while shielding most residential customers.=20
* Davis' representatives continue negotiating with Sempra, the parent compa=
ny=20
of San Diego Gas and Electric Co., to buy the utility's transmission lines.=
=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
Edison and PG&E say they've lost nearly $14 billion since June to high=20
wholesale prices the state's electricity deregulation law bars them from=20
passing on to consumers. PG&E, saying it hasn't received the help it needs=
=20
from regulators or state lawmakers, filed for federal bankruptcy protection=
=20
April 6.=20
Electricity and natural gas suppliers, scared off by the two companies' poo=
r=20
credit ratings, are refusing to sell to them, leading the state in January =
to=20
start buying power for the utilities' nearly 9 million residential and=20
business customers. The state is also buying power for a third investor-own=
ed=20
utility, San Diego Gas & Electric, which is in better financial shape than=
=20
much larger Edison and PG&E but also struggling with high wholesale power=
=20
costs.=20
The Public Utilities Commission has approved rate increases of as much as 4=
6=20
percent to help finance the state's multibillion-dollar power buys. The PUC=
=20
plans to soon determine how those increases will be spread among utility=20
customers.=20
,2001 Associated Press ?=20



PG&E, state regulators spar in bankruptcy court=20
MICHAEL LIEDTKE, AP Business Writer
Tuesday, May 15, 2001=20
,2001 Associated Press=20
URL:=20
http://www.sfgate.com/cgi-bin/article.cgi?file=3D/news/archive/2001/05/15/s=
tate0
445EDT0110.DTL&type=3Dnews=20
(05-15) 01:45 PDT SAN FRANCISCO (AP) --=20
Contending California regulators illegally seek billions of dollars that=20
should be paid to its creditors, Pacific Gas and Electric Co. urged a feder=
al=20
bankruptcy judge to dismantle the accounting framework insulating the=20
utility's customers from additional electricity price increases.=20
Looking to guard its turf, the California Public Utilities Commission=20
portrayed its actions as legal maneuvers protected from federal government=
=20
interference under the U.S. Constitution.=20
The 21/2-hour bout of arguments Monday before U.S. Bankruptcy Judge Dennis=
=20
Montali represented the first major legal showdown in PG&E's bankruptcy cas=
e=20
-- the largest ever filed by a utility. After peppering attorneys from both=
=20
sides with tough questions, Montali took the matter under submission withou=
t=20
providing a timetable for issuing a decision.=20
The complex issue centers on arcane sections of the U.S. bankruptcy code th=
at=20
could sway the balance of power in PG&E's case and determine whether the=20
utility's 4.6 million customers -- or more than 150,000 creditors -- absorb=
=20
the costs underlying an estimated $13 billion in wholesale electricity=20
purchases made from June 2000 through March 2002.=20
As part of the 1998 deregulation of California's electricity market, PG&E's=
=20
retail rates were to remain frozen through March 2002 or whenever the utili=
ty=20
pooled enough money from above-market rates and asset sales to pay for=20
unprofitable investments made during its long history as a regulated utilit=
y.=20
PG&E says it cleared the hurdle for lifting the rate freeze sometime betwee=
n=20
May 2000 and August 2000 -- around the same time the utility's costs for=20
wholesale electricity began to soar far above the frozen rate charged to it=
s=20
customers. Between January 1998 and May 2000, PG&E accumulated a $2.75=20
billion operating profit from a favorable gap between its wholesale costs a=
nd=20
retail rates for electricity.=20
The utility said it could have proved its case for lifting the rate freeze=
=20
and passing on its electricity costs if the PUC hadn't adopted new accounti=
ng=20
guidelines March 27 -- 10 days before PG&E filed for bankruptcy. Besides=20
changing the accounting rules governing the rate freeze, the PUC's March 27=
=20
order also authorized average price increases of up to 40 percent for=20
households and up to 52 percent for businesses.=20
PG&E says those increases -- expected to begin showing up in June electrici=
ty=20
bills -- still aren't enough to recoup its costs.=20
The accounting rules imposed by the PUC will make it virtually impossible f=
or=20
PG&E to lift the rate freeze before the end of March 2002, PG&E attorney=20
Jerome B. Falk Jr. told Montali on Monday.=20
The rate freeze dumped the utility into an $8.9 billion hole between June=
=20
2000 and February of this year and could siphon another $4 billion from PG&=
E=20
by the end of March 2002, Falk said. PG&E contends federal law prevents thi=
rd=20
parties from taking money from companies protected under bankruptcy.=20
If Montali kills the new accounting rules, Falk said, "it would be our=20
expectation that (the PUC) would do the right thing under California law" a=
nd=20
allow the utility to raise its rates even more.=20
The PUC contends Montali is prevented from ruling on the matter under an 11=
th=20
Amendment guarantee of "sovereign immunity" to state government agencies as=
=20
long as they are obeying the law.=20
"It's not an appropriate matter to litigate here," PUC attorney Walter Riem=
an=20
told Montali. "Regulation is shielded (under the Constitution), whether it'=
s=20
smart or not smart."=20


NATURAL GAS: Experts says market probably fixed=20
Bernadette Tansey, Chronicle Staff Writer
Tuesday, May 15, 2001=20
,2001 San Francisco Chronicle=20
URL:=20
http://www.sfgate.com/cgi-bin/article.cgi?file=3D/chronicle/archive/2001/05=
/15/M
N220514.DTL&type=3Dnews=20
California's argument that a Texas energy company drove natural gas prices =
in=20
the state sky high by improperly manipulating the market won support=20
yesterday from federal regulators' main witness in an investigative hearing=
.=20
Evidence strongly indicates that El Paso Corp. inflated natural gas prices=
=20
through its dominance of the company's pipeline into Southern California, a=
=20
staff economist for the Federal Energy Regulatory Commission concluded in=
=20
written comments filed in the case.=20
The report by Jonathan Ogur, a Cornell-trained expert in market competition=
,=20
marks a departure from past findings of the federal commission that cleared=
=20
El Paso of wrongdoing.=20
"It is likely that El Paso Corp. had and exercised market power during the=
=20
contract term," Ogur said in the report. "Market power is the ability of a=
=20
seller profitably to maintain the price of a good or service above the=20
competitive level for a significant period of time."=20
EL PASO DENIES CHARGES
El Paso vigorously denies that it manipulated the gas market. It says gas=
=20
prices in the state have varied from two to 10 times more than elsewhere=20
because demand in California is high and existing pipelines and storage=20
basins are inadequate to meet it.=20
The federal commission in March rejected complaints by the California Publi=
c=20
Utilities Commission that El Paso rigged the bid for a huge block of space =
on=20
its pipeline early last year so that its own gas marketing affiliate could=
=20
take it over.=20
But the federal commission ordered further hearings before an administrativ=
e=20
law judge to determine whether El Paso then elbowed out other gas traders=
=20
that might have used the pipeline to ship cheaper gas into the state.=20
That's the accusation leveled at El Paso by the state and California's two=
=20
major utilities, Pacific Gas and Electric Co. and Southern California Ediso=
n.=20
They say the company's conduct jacked up prices for natural gas and had a=
=20
ripple effect on the electricity market, because 60 percent of power plants=
=20
in California run on gas.=20
Those higher prices have contributed significantly to the state's energy=20
problems. Natural gas prices for consumers rose sharply last winter, and=20
among PG&E's billions of dollars of debt is at least $150 million it owes t=
o=20
El Paso for gas and electricity purchases.=20
PIPELINE ACCESS CONTROLLED
PG&E once controlled the space on the El Paso pipeline, but dropped it in=
=20
1997 because it didn't need it at the time. Gas prices from the pipeline=20
started climbing in 2000, when El Paso controlled the space and, critics sa=
y,=20
limited access to it by potential competitors.=20
A report commissioned by Edison estimated that California paid an extra $3.=
 8=20
billion for natural gas alone between March 1, 2000, and this past March 31=
=20
because of El Paso's domination of the pipeline space.=20
$864 MILLION PAID TO EL PASO=20
Some $864 million of that went to El Paso, said the Brattle Group, a=20
consulting firm. The company also reaped an extra $85 million from the powe=
r=20
plants it owns, Brattle said.=20
El Paso spokeswoman Norma Dunn said yesterday that the company welcomed the=
=20
expanded inquiry before the administrative law judge.=20
"We are pleased that we will finally have the opportunity to present the=20
facts about our participation in California's natural gas markets," Dunn=20
said. "We are confident that once the facts are presented, El Paso will be=
=20
vindicated."=20
Representatives for Edison, PG&E and the state Public Utilities Commission=
=20
were unavailable for comment.=20
Ogur's conclusions are based on a complex mathematical evaluation of El=20
Paso's potential to dictate natural gas prices through its share of=20
interstate pipeline capacity into Southern California from the Southwest.=
=20
Ogur is scheduled to testify during the final session of the hearings this=
=20
week at the Federal Energy Regulatory Commission's headquarters in=20
Washington, D.C.=20
The commission's chief administrative law judge, Curtis Wagner Jr., will=20
issue an initial decision by June 30. The commission can then accept, rejec=
t=20
or modify his recommendations.=20
The commission gave Wagner broad discretion to suggest a remedy if he finds=
=20
that El Paso unfairly profited by limiting competition in California,=20
spokeswoman Tamara Young-Allen said. But she could not say whether Wagner i=
s=20
authorized to recommend the return of any illicit profits.=20
The contract for the 1.2 billion cubic feet of pipeline space controlled by=
=20
El Paso's marketing affiliate, El Paso Merchant Energy, expires May 31, whe=
n=20
the block will be shared by 30 energy companies.=20
Ogur said it is unlikely that the 30 firms will try to limit competition by=
=20
controlling access to the pipeline.=20
Energy at a glance Energy-related developments yesterday:=20
-- RATE INCREASE VOTE DELAYED=20
The California Public Utilities Commission postponed until today a decision=
=20
on how to divvy up the biggest electricity rate increase in state history.=
=20
The delay came at the urging of Gov. Gray Davis, amid lobbying by industria=
l=20
customers concerned that they will bear a disproportionate share of the=20
increase.=20
Two increase proposals are being debated; each would stick business and=20
agriculture with the brunt of the rate increases while going lighter on=20
residential users.=20
RULING DELAYED IN PG&E BANKRUPTCY
Bankruptcy Judge Dennis Montali deferred ruling on a PG&E bid challenging t=
he=20
PUC's authority to limit electricity rates.=20
COMPANY ACCUSED OF MANIPULATING GAS PRICES
A Federal Energy Regulatory Commission analyst said evidence supports=20
California's argument that El Paso Corp. helped drive up natural gas prices=
=20
by limiting the supply flowing through its Southern California pipeline.=20
HELP FOR SCHOOLS
Gov. Gray Davis set aside $541 million in the state budget to help public=
=20
schools pay soaring electricity bills. The one-time spending increase will=
=20
benefit schools that agree to cut power use by 10 percent.=20
CHENEY TALKS TOUGH
Vice President Dick Cheney dismissed as "misguided" and "politically=20
motivated" Democratic calls for energy price limits and augmenting fuel=20
supplies by dipping into the Strategic Petroleum Reserve.=20
Cheney also rebuffed Democratic calls for a federal investigation into=20
allegations of price gouging by oil and gasoline companies. He did, however=
,=20
leave open the possibility that President Bush would back a reduction of th=
e=20
federal gasoline tax.=20
E-mail Bernadette Tansey at btansey@sfchronicle.com.=20
,2001 San Francisco Chronicle ? Page?A - 1=20



Davis forced to trim budget=20
Minor cuts, unspent funds used to cover $3.5 billion deficit=20
Greg Lucas and Robert Salladay, Chronicle Sacramento Bureau
Tuesday, May 15, 2001=20
,2001 San Francisco Chronicle=20
URL:=20
http://www.sfgate.com/cgi-bin/article.cgi?file=3D/chronicle/archive/2001/05=
/15/M
N146580.DTL&type=3Dnews=20

Sacramento -- Blaming the tech-stock slide, Gov. Gray Davis said yesterday=
=20
that there is a $3.5 billion hole in California's coming budget that he=20
proposes filling with relatively painless cuts that spare public schools.=
=20
By squirreling away billions from the past two years, when California had=
=20
huge budget surpluses, the Democratic governor avoided having to propose de=
ep=20
whacks to existing state programs.=20
Instead, he wants to pare back one-time spending proposals, eliminating $25=
0=20
million for cities and counties, and use unspent state money approved in pa=
st=20
budgets to cushion the blow.=20
"We knew this day would come. Happily, we had the discipline to prepare for=
=20
it," Davis said in presenting his spending plan.=20
The May revision, as yesterday's event is called, is when negotiations over=
=20
the state's spending plan heat up.=20
Lawmakers are supposed to approve their version of the budget by June 15 so=
=20
Davis can review it and have it in place for the start of the new fiscal=20
year, July 1.=20
Republicans, whose votes are needed for the document to be approved, said=
=20
Davis isn't being fiscally conservative enough. They say the plan drains=20
reserves without considering that the economic downturn could last more tha=
n=20
just a year.=20
"The budget's short overall. He needs to come up with more cuts," said Sen.=
=20
Dick Ackerman, R-Fullerton, vice chairman of the Senate Budget Committee.=
=20
"The reserve is not adequate. It's not a very realistic document because it=
=20
doesn't take into account the economic downturn or the size of our energy=
=20
costs."=20
The revision is simply a look at whether the projections the governor made =
in=20
his January budget still hold true. Instead of a total budget of $104.7=20
billion outlined earlier this year, Davis now envisions a spending package =
of=20
$102.9 billion.=20
For the first two years of Davis' administration those projections were=20
wildly conservative, yielding last year a staggering $12.3 billion in=20
unexpected revenue.=20
This year, a slack stock market and a cooling state economy had the opposit=
e=20
effect -- for the first time in nearly a decade the state will take in less=
=20
revenue than it did in a previous year.=20
"The declining Nasdaq, more than anything else, is responsible for the drop=
=20
in revenue we're seeing this year," Davis said.=20
Davis predicts that the state next year will take in $5.3 billion less=20
revenue than this year.=20
However, higher-than-anticipated tax payments in April mean the state will=
=20
end the current fiscal year on June 30 with an extra $1.4 billion.=20
The governor uses that surplus and hundreds of millions of dollars in=20
transfers to winnow the next budget's shortfall to $3.5 billion.=20
He assumes a proposed bond sale this summer will erase the state's more tha=
n=20
$6 billion in emergency electricity purchases.=20
Davis said his two spending priorities are public schools and public safety=
.=20
In the face of the shortage, Davis not only gave schools what he offered in=
=20
his January spending plan -- some $1.8 billion above the minimum schools ar=
e=20
guaranteed by law -- but added $676 million.=20
Of the $676 million, $541 million is one-time money to help defray higher=
=20
power bills brought on by the state's energy crisis. That works out to abou=
t=20
$90 per student for higher energy bills, more than the schools had requeste=
d.=20
Because enrollment is higher than expected in January, per-pupil spending=
=20
fell slightly from $1,176 to $1,168. School officials throughout the state=
=20
were pleased that their budgets weren't cut, as they work to raise test=20
scores through a variety of new programs.=20
Kevin Gordon, a lobbyist for school administrators, said that if school=20
districts suddenly had to deal with funding cuts, they would be hard presse=
d=20
to continue the progress in academic achievement seen recently.=20
Davis does not cut higher education, either, giving it a 2 percent increase=
=20
over this year, as opposed to the 4 percent increase he pitched in January.=
=20
He also preserves $160 million to begin construction of a new University of=
=20
California campus in Merced but, to save money, pays for it with bonds=20
instead of cash.=20
Among the one-time items eliminated was $40 million for a three-county pilo=
t=20
project to experiment with touch-screen voting.=20
Davis also cut $350 million from the the state's housing department,=20
including $200 million in grants to cities and counties that increase their=
=20
stock of homes and apartments.=20
The governor eliminated a $37.5 million proposal to clean up toxic-waste=20
sites in urban areas and pared down to $10 million from $100 million a=20
program to clean up beaches, mainly in Southern California.=20
Davis abandoned several tax cuts he proposed in January to save $50 million=
.=20
Among the casualties was a three-day sales tax holiday in August for back-t=
o-=20
school shoppers.=20
Davis also assumes that a quarter-cent sales tax cut caused by the state=20
being so flush with cash will end next January, allowing consumers to=20
contribute $1.2 billion in additional taxes to help fill the budget hole.=
=20
The key to Davis' budget proposal is spending $5 billion of the state's $6=
=20
billion reserve.=20
That means in the fiscal year beginning July 1, the state will spend some $=
5=20
billion more than it takes in, a potentially dangerous gamble if the econom=
y=20
doesn't rebound in 2002, when Davis stands for re-election.=20
"Reserves are for rainy days," Davis said of the spending. "It's starting t=
o=20
rain."=20
Said Assembly GOP leader Dave Cox of Carmichael, "I'm very troubled because=
=20
no reserve means no room for error -- and the governor has made too many=20
errors already."=20
The revised state budget .=20
Gov. Gray Davis presented yesterday his revised budget for 2001-02, which=
=20
includes $3.5 billion in cuts over last year. The stock market decline=20
hammered the state treasury, which relies heavily on capital gains taxes. T=
he=20
document must be approved by the Legislature and signed by July. .=20
OVERVIEW
-- In the bank: $6.7 billion=20
-- New revenues: $74.8 billion=20
-- Total available: $81.5 billion=20
-- Expenditures: $79.7 billion=20
-- Balance: $1.8 billion for reserves and lawsuit payouts.=20
-- Total spending: $102.9 billion (including $3.1 billion in bond revenues)=
,=20
down from $104.7 billion January estimate. .=20
MAJOR CUTS
-- Transportation: $2.5 billion saved over two years by deferring money sen=
t=20
to Caltrans until 2007-08; no projects delayed, governor claims.=20
-- Local government: $250 million in discretionary cash eliminated and poli=
ce=20
lose $50 million in techno-=20
logy grants.=20
-- Environment: $90 million from Clean Beaches Initiative, gutting Davis'=
=20
program to clean up water reaching the ocean, and cuts of $37.5 million fro=
m=20
program to help clean up toxic industrial sites.=20
-- Housing: $348.5 million cut in proposed housing budget, including local=
=20
incentives to build more houses and apartments and help families with down=
=20
payments.=20
-- Voting: $40 million cut for a touch-screen voting trial project in three=
=20
counties.=20
-- State Library: $5.8 million cut.=20
-- Alcohol and drug programs: $34.7 million overall, including cuts in yout=
h=20
and adult treatment.=20
-- Prisons: $50.3 million reduction, mainly because there are fewer inmates=
.=20
.=20
Source: Office of Gov. Gray Davis.=20
E-mail Greg Lucas at glucas@sfchronicle.com and Robert Salladay at=20
rsalladay@sfchronicle.com.=20
,2001 San Francisco Chronicle ? Page?A - 4=20







PUC puts off vote on rates=20
Posted at 10:43 p.m. PDT Monday, May 14, 2001=20
BY VBY MICHAEL BAZELEY=20

Mercury News=20


Abruptly postponing a decision until today, state regulators on Monday bega=
n=20
revising an electricity rate proposal, with indications that businesses wou=
ld=20
get more of a break and residential customers would take a greater hit.=20
Public Utilities Commission member Jeff Brown said he asked for the changes=
=20
late Friday after hearing testimony from business groups that a huge rate=
=20
increase would hurt the state's economy. Brown said he was particularly=20
concerned by the big increases proposed for electricity rates for peak-peri=
od=20
usage.=20
``There are some people that cannot go off-peak,'' Brown said, ``and those=
=20
people will pass their costs on to consumers, or they might take their=20
business out of California. Either way, the impact on the economy will be=
=20
very high.''=20
Under the revised proposal, moderate residential users apparently will take=
 a=20
slightly bigger financial hit. At the same time, industrial users would be=
=20
less affected, and agricultural users would get a big break, with their=20
highest average increase dropping from 30 percent to 20 percent or less,=20
Brown said.=20
Brown's efforts to change the rate proposal apparently were being pushed by=
=20
Gov. Gray Davis, who appointed Brown and has taken an active interest in ho=
w=20
the $5 billion rate increase is divvied up among users.=20
Davis presented his own rate proposal to the commission a couple of weeks=
=20
ago. It gave agricultural groups and industrial users a bigger break than=
=20
plans released by the PUC last week.=20
``Our staff has been working with Mr. Brown to make the rate increase refle=
ct=20
the governor's wishes,'' said Davis spokesman Steve Maviglio.=20
Last week, the commission released two proposals for how to distribute the=
=20
increase -- one from Commission President Loretta Lynch and one from=20
Administrative Law Judge Christine Walwyn.=20
Both proposals created a tiered system for residential users, with the=20
biggest power hogs getting slapped with the highest rates. And both skewed=
=20
the rate increase against commercial and industrial users. According to one=
=20
PUC analysis, the average increase for industrial users was 50 percent, wit=
h=20
some businesses facing on-peak rate increase of 250 percent.=20
Although business groups have enjoyed disproportionately lower rates in=20
recent years, they reacted strongly to the plans, insisting the higher=20
electric rates would drive some companies to ruin and hurt the state's=20
already foundering economy.=20
Attorneys representing agricultural, industrial and big and small business=
=20
groups dominated the final rate-setting hearing Friday. And groups such as=
=20
the California Manufacturers and Technology Association urged their members=
=20
to bombard the PUC with letters.=20
The limits of relief=20
Brown said he had originally tried to bring the average increase for=20
industrial users down from 50 percent to 45 percent, but that shifted too=
=20
much of the rate increase onto residential users.=20
``So we're looking at a very little more for residential users and taking i=
t=20
down a little for industrial,'' Brown said.=20
Lynch had not released details of the revised proposals Monday night.=20
But Brown released figures that he said were being seriously considered.=20
Customers who keep their usage within 130 percent of their baseline would=
=20
still be exempt from higher rates, as required by state law.=20
Among Pacific Gas & Electric customers, moderate residential users (between=
=20
130 and 200 percent of baseline) who originally faced a 28 percent rate=20
increase would now see a 33 percent increase, Brown said. Heavier users wou=
ld=20
see the rise in their rate jump from 39 percent to 55 percent. But the=20
heaviest residential users, originally slated for a 147 percent increase,=
=20
would now see a rate increase of only 75 percent.=20
Consumer groups were not happy.=20
``This is really hitting people who are moderate users who cannot fit withi=
n=20
their baseline,'' said Michael Florio, an attorney with The Utility Reform=
=20
Network. ``It's going easy on the really exorbitant users, who you would=20
think are pretty well-off.''=20
Lynch said immediately after the meeting that she wanted to spread more of=
=20
the rate increase to other residential users ``to ensure conservation=20
incentives are at every tier.'' And indeed, some energy experts had urged t=
he=20
commission to be more aggressive with the residential rates as a way to spu=
r=20
conservation.=20
Skeptics abide=20
But one consumer advocate scoffed at the notion, arguing that higher rates=
=20
will not lead to significantly higher conservation by homeowners.=20
``It seems like big industry and the environmentalists have gotten together=
=20
to try to get people to conserve through higher rates,'' said Harry Snyder,=
=20
senior advocate at Consumers Union in San Francisco. ``But the way to=20
conserve is not through forcing it.''=20
Snyder accused the commission of doing the ``hokey-pokey, changing everythi=
ng=20
by the reaction they get.''=20
Anti-rate-increase activists dominated much of Monday's meeting, showing up=
=20
dressed as ``Ratebusters'' and frequently interrupting the meeting with=20
chants (``I ain't payin' no hikes!'').=20
All they apparently got in return were a few chuckles from the commissioner=
s=20
and stern glares from the many California Highway Patrol officers stationed=
=20
around the room.=20
The commission is scheduled to vote on the new rate plan today at 2 p.m.=20

Mercury News Staff Writer Mark Gladstone contributed to this report.=20









Cheney urges patience over energy costs=20
Published Tuesday, May 15, 2001, in the San Jose Mercury News=20
BY RON FOURNIER=20

Associated Press=20


WASHINGTON -- Vice President Dick Cheney, point man for the administration'=
s=20
new energy policy, said Monday there are no easy or quick solutions to risi=
ng=20
energy bills. He accused the Clinton administration of doing ``stupid=20
things'' like tapping the Strategic Petroleum Reserve to cope with shortage=
s.=20
In unusually blunt terms, Cheney also dismissed Democratic demands for pric=
e=20
limits and a federal investigation into allegations of price gouging by=20
gasoline companies.=20
``That's exactly the kind of misguided -- I'm trying to think how to state=
=20
this gracefully -- politically motivated policies we've had in the past,'' =
he=20
said in an interview.=20
Cheney left open the possibility of President Bush backing a reduction of t=
he=20
federal gasoline tax and spoke positively about fuel economy standards for=
=20
automobiles.=20
The overall message was one of patience.=20
``These problems did not arise overnight. They're not something that just=
=20
suddenly dropped out of the sky,'' Cheney said three days before the releas=
e=20
date of his task force's much-awaited energy report.=20
Cheney had just finished eating lunch with former House Speaker Newt Gingri=
ch=20
when he sat down in his West Wing office for the interview. The 60-year-old=
=20
heart disease patient said he had recently dropped 20 pounds.=20
His energy report will offer strategies for increasing the nation's supplie=
s=20
through expansion of nuclear power, increased domestic oil drilling and mor=
e=20
efficient movement of energy.=20
Cheney did not close the door to raising automobile gas mileage requirement=
s,=20
which have been unchanged since 1975.=20
Cheney met with several building and trade labor leaders Monday, hoping to=
=20
convince them that Bush's plan will produce thousands of jobs. ``We believe=
=20
this might be a way to start solving this problem and getting more supply,'=
'=20
Teamsters President James Hoffa said afterward.=20
Cheney criticized California Gov. Gray Davis for suggesting that the=20
administration's ties to the oil industry are affecting the report. ``It's =
an=20
effort just to try to pass the blame onto somebody else,'' Cheney said.









Finding: gas-price inflation possible=20
Published Tuesday, May 15, 2001, in the San Jose Mercury News=20
BY H. JOSEF HEBERT=20

Associated Press=20


WASHINGTON -- With partial control of a key pipeline, El Paso Corp. probabl=
y=20
wielded enough market power to inflate the cost of natural gas going into=
=20
Southern California last year, according to staff findings of a federal=20
energy agency.=20
The conclusions by a Federal Energy Regulatory Commission staff economist=
=20
came amid administrative hearings into allegations that market manipulation=
=20
by El Paso Corp. led to soaring natural gas prices in California last year.=
=20
California regulators allege that El Paso Corp., which owns a gas marketing=
=20
company as well as one of the largest pipelines connecting Southwest gas=20
fields to California, used its market power to inflate the price of gas sol=
d=20
in California last year by as much as $3.7 billion.=20
El Paso Corp., based in Houston, Texas, has denied that it overcharged=20
customers or manipulated markets. It has attributed the high cost of gas to=
=20
supply and demand and to constraints in California's distribution system.=
=20
Curtis Wagner, FERC's chief administrative law judge, began a week of=20
hearings Monday into the allegations and is expected to produce a finding b=
y=20
the end of June. The full commission will be able to either accept or rejec=
t=20
the ruling.=20
``We're confident El Paso will be completely exonerated. We did nothing=20
wrong,'' said Norma Dunn, a senior vice president of El Paso Corp., after t=
he=20
first day of the FERC hearing.=20
The allegations stem from an agreement in February 2000 in which El Paso=20
Natural Gas Co. sold to El Paso Merchant Energy, a marketing company, the=
=20
right to ship 1.2 billion cubic feet of natural gas on its pipeline from=20
Texas and New Mexico into California.=20
The deal between the two subsidiaries of El Paso Corp. accounted for about =
30=20
percent of the pipeline's capacity and about one-sixth of California's dail=
y=20
demand.=20
FERC has said there was nothing wrong with the deal itself, but ordered a=
=20
further investigation to determine whether El Paso used the capacity to=20
manipulate the market and drive up prices of natural gas going into=20
California.=20
Southern California Edison, one of California's financially struggling=20
utilities, submitted a report to FERC last week alleging that El Paso's=20
market strength resulted in $3.7 billion in added natural gas costs during =
a=20
13-month period ending last March. It said high natural gas prices added $1=
=20
billion to the cost of electricity produced by Edison's gas-fired power=20
plants alone.














Edison has loss of $617 million=20
Utility's parent takes power- buying charge, cancels dividends.=20
May 15, 2001=20

From Register news services=20
Ontario - Edison International, the owner of the state's second-largest=20
utility, had a first-quarter loss after a $661 million charge for buying=20
power at surging prices it couldn't pass on to customers.=20
The loss of $617.3 million compares with net income of $109.5 million a yea=
r=20
earlier, the company stated.=20
The loss was the result of the one-time charge of $661 million, reflecting=
=20
Southern California Edison's unreimbursed cost of buying power on the=20
wholesale market and not being able to pass the cost to consumers, the=20
company said. Without the charge, Edison International had earnings of abou=
t=20
$43 million, compared with $110 million in the same quarter last year.=20
Southern California Edison reported earnings of $62 million, compared with=
=20
$113 million a year earlier.=20
In a separate action, Edison's board of directors voted to eliminate the=20
second-quarter dividends on its common stock that would have been paid to=
=20
shareholders July 31.=20
At the company's annual stockholders meeting Monday in Ontario, shareholder=
s=20
lined up to pepper Chief Executive Officer John Bryson with questions and=
=20
comments, mostly blasting state and federal regulators but also questioning=
=20
company decisions over the past year.=20
PG&E Corp.'s Pacific Gas & Electric, the state's biggest utility, filed for=
=20
bankruptcy in April. Edison, based in Rosemead, had a $2.5 billion loss in=
=20
the 2000 fourth quarter.=20
Pacific Gas & Electric had $9 billion in debt from power- buying losses and=
=20
lost $951 million in the first quarter.=20
Bloomberg News and The Associated Press contributed to this report.












Edison shareholders feeling the heat as values plunge=20
Large numbers are at or near retirement, reflecting belief that utility=20
investments are low-risk.=20
May 15, 2001=20
By NIGEL HUNT
Reuters=20
ONTARIO - Their dreams of a modest return having been transformed into a=20
nightmare of vanishing equity, shareholders of Edison International display=
ed=20
plenty of anger and even some tears Monday, but no one seemed quite sure wh=
o=20
to blame for their misfortune.=20
"All the shareholders want is 6 percent" return on their investment, said=
=20
Robert Byrne of Los Angeles, one of about 800 who attended the annual=20
shareholders meeting here Monday.=20
Edison International, parent of near-bankrupt utility Southern California=
=20
Edison, has seen its stock value plunge and has suspended dividend payments=
=20
after running up billions of dollars of debt buying power on behalf of=20
customers at high prices in the wholesale market.=20
State regulators have prevented the utility from fully recovering those=20
costs, driving it to the brink of bankruptcy.=20
The state's largest utility, Pacific Gas & Electric Co., filed for Chapter =
11=20
bankruptcy protection last month.=20
Shareholders are heavily weighted toward those planning to retire shortly a=
nd=20
those who have already retired, as an investment in a utility has=20
traditionally rendered a small but safe return.=20
Some shareholders blamed state regulators for the crisis, others accused=20
out-of-state power companies that had profited from the high prices.=20
Edison's management also did not escape.=20
"If I was (Edison director) Warren Christopher or (Chief Executive Officer)=
=20
John Bryson, I would have put a bulletproof vest on today," said Byrne,=20
adding that the company's leadership didn't have the "moxy" to deal with th=
e=20
crisis.=20
The crisis is linked to California legislation deregulating its power=20
markets, passed in 1996 and implemented in 1998. State laws limited what th=
e=20
utilities could charge but not what they had to pay to buy power.=20
"I believe Edison certainly shares the blame. They should never have agreed=
=20
to deregulation," said shareholder Edward Boulter of Dana Point.=20
Others, however, pointed the finger elsewhere. "I blame the PUC (California=
=20
state regulators) for implementing a restructuring program which they weren=
't=20
prepared for and couldn't handle," said Jack Bosna of Fullerton, who said h=
e=20
had held the company's stock since the 1930s.=20
Bryson told shareholders the company is in the midst of "the most deeply=20
threatening crisis in its 115-year history."












Energy notebook for Tuesday, May 15=20
PUC postpones decision on power rate hikes to today.=20
May 15, 2001=20
From staff and news service reports=20
SAN FRANCISCO - The state's top energy regulator delayed until today a vote=
=20
on two proposals to raise electricity rates while it worked on details of h=
ow=20
much industrial and small business customers should pay.=20
"I regret the delay, but revisions are still being made this morning and we=
=20
will not be ready to decide this until a meeting tomorrow," said California=
=20
Public Utilities Commission President Loretta Lynch.=20
The meeting is scheduled for 2 p.m.=20
Jeffrey Brown, a commissioner and former San Francisco public defender, sai=
d=20
the PUC is "trying to reconcile some of the rate increases without=20
astronomically burdening any one customer class.''=20
"There are some potentially high percentages that businesses could get hit=
=20
with, so the question is, how do you bring it down for industrial and small=
=20
business customers?'' he said.=20
Business groups complained to the commission that the proposed rate hikes=
=20
would damage California's economy and have suggested that more of the burde=
n=20
should be shifted to consumers.=20
The two rate proposals seek to raise $5 billion this year to repay the=20
California Department of Water Resources, which is buying electricity on=20
behalf of the state. But rate increases of between 20 percent and 50 percen=
t,=20
on average, still would not close the gap between retail prices, which were=
=20
frozen by the state's 1996 deregulation law, and a tenfold leap in wholesal=
e=20
electricity prices since last May.=20
State legislators seeking alternate ways to save SCE=20
Sacramento - California legislators are proposing alternatives to Gov. Gray=
=20
Davis' plan to save Southern California Edison from bankruptcy.=20
"If we want Edison to continue as a utility serving Southern California,=20
someone has to step in," said Paul Smith, chief of staff to Democratic=20
Assemblyman John Dutra. "There's no way the current agreement gets through=
=20
this place."=20
Edison is nearly insolvent because of soaring wholesale-power rates and a=
=20
deregulated market that temporarily froze consumer prices. Edison agreed to=
=20
sell power lines to the state for $2.7 billion and the right to issue $2=20
billion in bonds in a rescue pact negotiated by Davis's advisers.=20
Reuters, Bloomberg News and Associated Press contributed to this report.












Gas supplier faces charges of price fixing=20
Hearings explore allegations that El Paso Corp. inflated rates for gas sold=
=20
in California.=20
May 15, 2001=20
By KATE BERRY
The Orange County Register=20
California's largest natural gas supplier, El Paso Corp., faced allegations=
=20
Monday in Washington and Sacramento that it wielded its market power to=20
manipulate natural gas prices in California.=20
The Federal Energy Regulatory Commission began hearings in Washington into=
=20
the allegations that El Paso, based in Houston, inflated the price of natur=
al=20
gas sold in California last year by as much as $3.7 billion.=20
In papers filed as part of the proceedings, FERC staff economist Jonathan=
=20
Ogur said it "is likely that El Paso Corp. had and exercised market power"=
=20
that allowed it to keep the price of gas "above the competitive level for a=
=20
significant period of time" last year.=20
El Paso owns four pipelines into California.=20
The gas supplier has denied allegations that it overcharged customers or=20
manipulated the market.=20
It has attributed the rise in natural gas prices to increased demand and=20
limited pipeline capacity in the state.=20
"We are confident that once the facts are presented, El Paso will be=20
vindicated," said Norma Dunn, a senior vice president at El Paso who attend=
ed=20
the Washington hearings.=20
Natural gas is the primary fuel used by electricity generating plants in=20
California. Soaring natural gas prices are part of the reason why electrici=
ty=20
costs have risen tenfold in the state since a year ago.=20
Wholesale natural gas prices rose from $3 per million British thermal units=
=20
in January 2000, to as high as $60 per million Btu in December.=20
Natural gas spot prices in California have been two to 10 times as expensiv=
e=20
as prices across the border in Arizona, trading Monday at a high of $11.25=
=20
per million Btu, compared with a high of $3.35 in Arizona, traders said.=20
The allegations against El Paso stem from a February 2000 agreement between=
=20
two of its subsidiaries.=20
In the agreement, El Paso Natural Gas sold to a marketing arm, El Paso=20
Merchant Energy, the right to ship 1.2 billion cubic feet of natural gas to=
=20
California. The deal between the two units accounted for about one-sixth of=
=20
California's daily demand for natural gas, and 30 percent of the pipeline's=
=20
capacity.=20
That contract and others El Paso signed with Dynegy Inc. and Enron Corp. pu=
t=20
the companies in a position to wield market power by giving them more=20
pipeline capacity than they needed, according to the California Public=20
Utilities Commission, which filed the allegations against El Paso with FERC=
.=20
The contracts contained profit-sharing agreements between the participants=
=20
that the CPUC alleged were "anti-competitive."=20
"Contracts that gave natural gas marketers control of vast amounts of El=20
Paso's interstate pipeline capacity helped push California's gas prices abo=
ve=20
the national average," said a report issued Monday by the California Assemb=
ly=20
energy oversight subcommittee. "By retaining more capacity, the marketers=
=20
increased its scarcity, which helped artificially inflate border prices," t=
he=20
report stated.=20
The subcommittee alleged that El Paso Natural Gas structured a February 200=
0=20
capacity auction to favor El Paso Merchant Energy.=20
El Paso called the report "a sham'' and "a charade'' and attacked the=20
report's staff for using a consulting firm hired by Southern California=20
Edison, which like the CPUC filed a complaint against El Paso with FERC.=20
All of the contracts between El Paso, its affiliates and other energy=20
companies were approved by FERC. The company has cited approval of the=20
contracts by FERC as proof that it acted legally.=20
Separate lawsuits filed on behalf of California consumers allege a broader=
=20
conspiracy theory involving El Paso.=20
The suits allege that executives of El Paso Natural Gas, and two units of=
=20
Sempra Energy - Southern California Gas, and San Diego Gas and Electric - m=
et=20
in a Phoenix hotel in 1996 and conspired to dominate the Southern Californi=
a=20
natural gas market by agreeing not to compete.=20
The Associated Press contributed to this report.







[B] POWER UPDATE/ Calif. PUC delays final rate hike vote to Tues





(BridgeNews) May 14, 2103 GMT/1703 ET

.................................................................


TOP STORIES:


California PUC delays final rate hike vote until Tuesday


San Francisco, May 14 (BridgeNews) - The California Public Utilities
Commission Monday delayed a decision on a rate hike for Pacific Gas &amp;=
=20
Electric
Co. and Southern California Edison electric utility customers until Tuesday=
.
CPUC President Loretta Lynch said she delayed a vote to review the orders
further. The CPUC meeting is scheduled to begin at 1400 PT Tuesday.

( Story .19496 )


FULL: Kerr-McGee to buy HS Resources for $1.7 bln


New York, May 14 (BridgeNews) - Kerr-McGee Corp. agreed to acquire HS
Resources Inc. for $1.7 billion, including the assumption of debt worth $45=
0
million. Kerr-McGee will pay $66 per HS Resources share in cash for 70% of =
the
purchase price and stock in the ratio of 0.9404 Kerr-McGee shares for each =
HS
Resources share for the remaining 30%. The purchase is expected to increase
Kerr-McGee's daily gas production volumes by 15% and reduce lifting costs b=
y
about 6%. The transaction is expected to add to Kerr-McGee's earnings and c=
ash
flow immediately. --Rohan J. Soares, BridgeNews

( Story .14048 )


US Press: Bush energy plan to rely on private industry


Washington, May 14 (BridgeNews) - The energy plan to be announced by the
White House on Thursday will rely mostly on the production efforts of priva=
te
industry and not government efficiency mandates to solve the U.S. energy
crunch, the Wall Street Journal reported Monday.

( Story .14039 )


.................................................................


OF INTEREST:


--AMERICAS--


US EIA: N.Y. ConEd customers may see high summer power prices


New York, May 14 (BridgeNews) - A combination of transmission congestion
around New York City, continuing high wholesale prices and electricity dema=
nd
exceeding supply in any one area could mean Consolidated Edison customers w=
ill
experience high prices this summer, according to a report released Monday b=
y
the U.S. Energy Information Agency. Out-of-state generation will be needed =
to
meet summer 2001 peak demand unless new generation is installed.

( Story .20725 )


EIA: Natgas builds must be over 9 bcf/d to hit 2.7 Tcf by Nov 1


New York, May 14 (BridgeNews) - Natural gas storage injections must average
more than 9 billion cubic feet per day during the April to October injectio=
n
season just to reach 2.7 trillion cubic feet, according to a recent report =
by
the U.S. Energy Information Administration. The report, which was prepared =
at
the request of Secretary of Energy Spencer Abraham, contains the agency's=
=20
views
on demand, production and storage trends in the natural gas industry.

( Story .18528 )


Study says natgas prices do not drive Calif. electricity prices


New York, May 14 (BridgeNews) - Natural gas prices in California do not
drive electricity prices, according to a study released by the National Gas
Supply Association (NGSA). The report, authored by a former U.S. Energy
Information Administration economist, says a study of 52 weeks of pricing d=
ata
reveals that wholesale electricity and wholesale natural gas prices appear =
to
fluctuate completely independently of each other.

( Story .19747 )


Interview: El Paso exec: Calif. energy crisis is state's fault


New York, May 14 (BridgeNews) - California officials want to shift blame





for the state's energy crisis from California's own inaction to others, wit=
h
out-of-state companies like El Paso Corp. their target, El Paso Senior Vice
President Norma Dunn told BridgeNews Monday. Dunn said Monday's Federal Ene=
rgy
Regulatory Commission hearing on natural gas issues will find El Paso has n=
ot
exercised market power to spike price for natural gas in California.

( Story .18401 )


PG&amp;E lifts flow order for Calif. natgas pipe effective Tues


New York, May 14 (BridgeNews) - Pacific Gas &amp; Electric's California Gas
Transmission (CGT) unit has lifted a system-wide operational flow order (OF=
O)
in effect since Saturday on its natural gas pipeline system effective Tuesd=
ay.
CGT forecasts natural gas flows on its pipeline to be within operating limi=
ts
Tuesday and Wednesday. Natural gas prices for next day delivery at PG&amp;E=
's
citygate were said to be stronger after the OFO was lifted.

( Story .16310 )


NRC sends inspection team to N.Y. Indian Point 3 nuclear unit


New York, May 14 (BridgeNews) - The loss of a cooling system in a
spent-fuel holding tank last week has prompted the Nuclear Regulatory
Commission to send an inspection and evaluation team to Entergy's 980-megaw=
att
Indian Point 3 nuclear unit in New York, the NRC announced Monday.

( Story .18245 )


--EUROPE--


Ukraine, Turkmenistan sign 250 bln cbm 5-year natural gas deal


Kiev, May 14 (BridgeNews) - Ukraine and Turkmenistan on Monday signed a
huge natural gas deal that is aimed at further reducing Ukraine's dependenc=
e=20
on
Russian natural gas imports over the next five years. Ukraine is set to imp=
ort
250 billion cubic meters of Turkmenian natural gas in 2002 through 2006,
President Leonid Kuchma of Ukraine and Separmurat Niyazov of Turkmenistan s=
aid
at a press conference.

( Story .12683 )


Statoil lifts Q1 net profits on higher gas, marketing earnings


Oslo, May 14 (BridgeNews) - Norway's state oil and gas producer Statoil on
Monday reported first-quarter pretax profits of 15.443 billion kroner, just
over 2 billion up on the 13.361 billion reported a year earlier. Net profit=
s
after tax and minority interests were 4.328 billion kroner against 3.613
billion. Turnover was lower however at 50.694 billion against 54.491 billio=
n.

( Story .11564 )


FULL: UK Innogy buys US Electrosynthesis for $11 mln


London, May 14 (BridgeNews) - Innogy Holdings PLC said Monday it acquired
Electrosynthesis Company Inc. for $11 million as part of its plans to devel=
op
Regenesys - its electricity storage technology. Electrosynthesis, based in
Buffalo, New York, is a commercial research and development company. --Lond=
on
stocks desk, BridgeNews

( Story .11233 )


--ASIA/PACIFIC--


Japan's TEPCO resumes operations at 1.1 mln-kw  nuclear unit


Tokyo, May 14 (BridgeNews) - Japan's leading utility firm, Tokyo Electric
Power Co. Inc. (TEPCO), resumed normal operation Saturday at its 1.1-millio=
n-
kilowatt No. 2 unit at its Fukushima Daini nuclear power plant, which has b=
een
shut since May 7 to investigate a valve snag, TEPCO said Monday.

( Story .14348 )


Japan's Chubu Electric shuts 1.14-mln-kw nuclear unit for work


Tokyo, May 14 (BridgeNews) - Japan's Chubu Electric Power Co. shut the
1.14-million-kilowatt No. 4 unit at its Hamaoka nuclear power plant on Sund=
ay
for regular annual maintenance, a company spokesman said Monday. The compan=
y
plans to resume generation at the unit in mid-June.

( Story .14107 )


.................................................................


SPOT NEWS LINKS:


Media://NewsSearch::/source=3Dmar/category=3Dn-eny/go/search


.................................................................


THE MARKETS:



US FUTURES:                           UK FUTURES





.1908  NY Natural Gas Pre-Opg         .1795  IPE Nat Gas Review




.1906  NY Natural Gas Review          .1794  IPE Nat Gas Midday



.1747  NY Natural Gas


US/CANADA CASH NATURAL GAS            UK/EUROPE CASH NATURAL GAS



60




.1894  Henry Hub natural gas          .1807  UK Spot Gas



.1884  US/Canada Spot Natural Gas


US CASH ELECTRICITY                   UK/EUROPE CASH ELECTRICITY





.8575  California PX: Next day        .1892  UK Power Index



.8576 .8577 WSCC Forwards (AM/PM)     .1889  Nordic Power Market


.8585 .8586 PJM Forwards (AM/PM)      .1890  Spanish Power Market


.8593 .8594 Cinergy Forwards (AM/PM)  .1844  UK EFA Power Market


.8597 .8598 Entergy Forwards (AM/PM)  CANADA CASH ELECTRICITY


.8601 .8602 ERCOT Forwards (AM/PM)    .5637  Canadian Power Market


.8603  New England Forwards


.8587 .8600 TVA Forwards (AM/PM)

OTHER



.1873  US Nuclear Plants Operating Status


.2029  BRIDGE CALENDAR: US POWER: Key events to watch


.2030  US Utility Deregulation Digest


.1704  US Utility M&amp;A Digest

.................................................................


SYMBOL LINKS:


Click below for adamb chart in Athena  NATURAL GAS


NYMEX - Media://Chart:NYMEX:/symbol=3DUS@NG.1


IPE - Media://Chart:IPE:/symbol=3DGB@NGP.1  NYMEX ELECTRICITY


Palo Verde electricity - Media://Chart:PaloVerde:/symbol=3DUS@VK.1


COB electricity- Media://Chart:COB:/symbol=3DUS@OW.1


Cinergy electricity - Media://Chart:Cinergy:/symbol=3DUS@CN.1


Entergy electricity - Media://Chart:Entergy:/symbol=3DUS@NT.1


PJM electricity - Media://Chart:PJM:/symbol=3DUS@QJ.1


.................................................................


BridgeNews


Send comments to gennews@bridge.com
ann.schmidt@enron.com, bryan.seyfried@enron.com, elizabeth.linnell@enron.com, 