IEP News 5/10 ,
 IEP News 5/10Today's IEP news...for more headlines please visit 
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Jean


AP Online, May 10, 2001; Thursday, 7:25 AM, Eastern Time, Domestic,
????non-Washington, general news item, 630 words, Californians Fear High
????Electric Bills, SETH HETTENA, SAN DIEGO

AP Online, May 10, 2001; Thursday, 2:21 AM, Eastern Time, Domestic,
????non-Washington, general news item, 678 words, California Blackout Season
????Begins, JENNIFER COLEMAN, SACRAMENTO, Calif.

?Copley News Service, May 10, 2001, Thursday, State and regional, 1162 words
????, Davis asks generators to 'share pain', Ed Mendel, SACRAMENTO

Los Angeles Times, May 10, 2001 Thursday, Home Edition, Page 1, 1331 words,
????Bush Energy Stance Begins to Worry Some in GOP, GREG MILLER, RICHARD 
SIMON,
????TIMES STAFF WRITERS, WASHINGTON

Los Angeles Times, May 10, 2001 Thursday, Home Edition, Page 1, 1630 words,
????Rate Hikes Up to 60% Proposed by PUC Chief; Power: Lynch says about half 
the
????residential customers of Edison, PG&E would escape increases. Her plan 
draws
????fire from all sides., TIM REITERMAN, NANCY RIVERA BROOKS, TIMES STAFF
????WRITERS, SAN FRANCISCO

Los Angeles Times, May 10, 2001 Thursday, Home Edition, Page 8, 798 words,
????The State; ; Governor Asks Generators to Take Less Than They're Owed;
????Power: Meeting with firms, Davis says that settling for 70% of debt would
????help Edison stay solvent. One executive bristles., DAN MORAIN, TIMES STAFF
????WRITER, SACRAMENTO

Los Angeles Times, May 10, 2001 Thursday, Home Edition, Page 8, 784 words,
????The State; ; Time to Give Some of the Power Players a Haircut, GEORGE
????SKELTON, SACRAMENTO

Los Angeles Times, May 10, 2001 Thursday, Home Edition, Page 1, 989 words,
????Davis Faces Budget Cuts, Report Says; Finance: The state surplus shrinks 
by
????$3.4 billion as tech-firm troubles reduce tax revenue. Meanwhile, spending
????on the energy crisis mounts., JULIE TAMAKI MIGUEL BUSTILLO, CARL INGRAM,
????TIMES STAFF WRITERS, SACRAMENTO

The New York Times, May 10, 2001, Thursday, Late Edition - Final, Section
????A; Page 30; Column 2; National Desk, 250 words, California Seeks Power 
Debt
????Relief, AP, SACRAMENTO, May 9

The San Francisco Chronicle, MAY 10, 2001, THURSDAY,, FINAL EDITION, NEWS;,
????Pg. A1, 1101 words, Power bills set to skyrocket for heavy users;
????Graduated rate increase would take effect in June, David Lazarus

The San Francisco Chronicle, MAY 10, 2001, THURSDAY,, FINAL EDITION, NEWS;,
????Pg. A10, 826 words, Generators silent on Davis plan; ???He offers lower
????compensation to stave off Edison bankruptcy, Lynda Gledhill, Sacramento

The Associated Press State & Local Wire, May 10, 2001, Thursday, BC cycle,
????9:48 AM Eastern Time, State and Regional, 807 words, Developments in
????California's energy crisis, By The Associated Press

The Associated Press, May 10, 2001, Thursday, BC cycle, 7:02 AM Eastern
????Time, Domestic News, 605 words, For many Californians, fear of high
????electricity bills is a bigger threat than blackouts, By SETH HETTENA,
????Associated Press Writer, SAN DIEGO

The Associated Press State & Local Wire, May 10, 2001, Thursday, BC cycle,
????3:43 AM Eastern Time, State and Regional, 467 words, PG&E says fewer small
????power plants offline, By KAREN GAUDETTE, Associated Press Writer, SAN
????FRANCISCO






Copyright 2001 Associated Press

AP Online

?????????????????May 10, 2001; Thursday 7:25 AM, Eastern Time

SECTION: Domestic, non-Washington, general news item

LENGTH: 630 words

HEADLINE: ?Californians Fear High Electric Bills

BYLINE: SETH HETTENA


DATELINE: SAN DIEGO

BODY:

???Ray Marquez wonders whether he'll have to cut back on food or gas in order
to pay his electricity bill.

??The 34-year-old Orange County maintenance man usually pays $80 a month for
power during summer months. Now, he's trying to figure out how to pay an
electricity bill that could push $130 come June 1.

??''Since I got married and had children, you know, I've been dealing with
balancing bills,'' he said Wednesday. ''But if I now have to pay more for
electricity, I'm not going to have money for gas or food for the kids.''

??As Californians coped with rolling blackouts that darkened thousands of
businesses and homes Monday and Tuesday, many struggled with an even bigger
worry: how to pay for soaring energy costs.

??In March, the state Public Utilities Commission approved the biggest rate
increase in California history, up to 46 percent for customers of Southern
California Edison and Pacific Gas & Electric. Those rate hikes start hitting
customers in next month's bill.

??Gailen Kyle, who raises alfalfa on 1,600 acres in the Mojave Desert, says a
40 percent increase would put his farm out of business.

??''It would end us,'' the third-generation farmer said. ''Everybody here that
farms alfalfa would be out of business.''

??Kyle, 46, said he has to pump water nearly around the clock from wells
drilled 310 feet below his farm near Lancaster. A small increase in the price 
of
energy a few months ago added $80,000 to the $400,000 annual bill he was 
already
paying.

??To save money, Kyle agreed to become an ''interruptible'' customer, meaning
he voluntarily allows his power to be shut off during statewide electricity
shortages in exchange for reduced rates. So far this year, his power has been
cut 26 times.

??Even before the state utilities commission raised rates, residents were
paying 26 percent more for electricity than the nationwide average, according 
to
federal statistics. Only customers in New England, New York, Alaska and Hawaii
pay more.

??One of the problems is that the wholesale cost of electricity has risen
sharply over the past year but under California's 1996 deregulation law the
state's largest utilities, PG&E and SoCal Edison, have been prevented from
passing their costs to customers. In April, PG&E declared bankruptcy.

??The West isn't just facing spiraling costs and a shortage of supplies,
however. Its transmission system is fragmented and overworked and would take
years to improve, power officials told the region's governors Wednesday.

??''There is no immediate solution,'' said Idaho Gov. Dirk Kempthorne, one of
four governors participating in a six-hour, round-table meeting with industry
representatives.

??The Western Governors Association was told there is no established method 
for
paying for transmission upgrades, and market and regulatory barriers stand in
the way. It's not even clear where new power lines are most needed.

??The group, which included the governors of Utah, Idaho, Montana and Wyoming,
has given energy experts until July 15 to recommend ways to eliminate
bottlenecks.

??Meanwhile Californians, who've already weathered six days of rolling
blackouts this year, fear they'll soon be paying more for less service.

??The Independent System Operator, which runs the state's power grid, has
forecast more than 30 days of blackouts this summer due to severe shortages of
electric supply.

??Dee Ann Hendirx, 53, of San Francisco, has stocked up on candles and
battery-operated clocks.

??''I hate to say this but it's getting to be a way of life in California,''
she said.


??___


??On the Net:

??Western Governors Association: http://www.westgov.org
 


?????(PROFILE


?????(CO:Southern California Edison Co.; TS:SCE;)


?????(CO:Pacific Gas and Electric; TS:PCG; IG:ELC;)


?????)


LOAD-DATE: May 10, 2001

??????????????????????????????5 of 110 DOCUMENTS

???????????????????????Copyright 2001 Associated Press

??????????????????????????????????AP Online

?????????????????May 10, 2001; Thursday 2:21 AM, Eastern Time

SECTION: Domestic, non-Washington, general news item

LENGTH: 678 words

HEADLINE: ?California Blackout Season Begins

BYLINE: JENNIFER COLEMAN


DATELINE: SACRAMENTO, Calif.

BODY:

???California's newest season blackout season is here, and it arrived earlier
than expected.

??State officials had anticipated a crunch in June, when air conditioners are
cranked up for summer weather. But already, California has been hit with
back-to-back blackouts on Monday and Tuesday, and the operators of the state's
power grid barely scraped together enough energy to avoid blackouts Wednesday.

??''We're definitely in blackout season,'' said Michael Shames, executive
director of the Utility Consumer Action Network. ''Right now, there's almost a
disbelieving frustration that is going to elevate quickly to downright 
irritable
if we go through a summer of this.''

??Grid officials expected fewer problems Thursday, when temperatures were
expected to cool slightly and a large power plant was to return to service.

??Hot weather, a high number of power plants down for maintenance and little
power available from other states led to rolling blackouts this week that
affected hundreds of thousands of customers.

??Experts expect a long, hot summer of similar drills calls for conservation,
followed by blackouts. California has had six days of rolling blackouts so far
this year, and state regulators are forecasting at least 30 more this summer.

??For consumers, the early start of the season has created a mixture of
resignation and exasperation.

??''The first day we have a hot day we have an energy crisis,'' said San
Francisco resident Dee Ann Hendrix. ''I hate to say this, but it's getting to 
be
a way of life in California.''

??Fe Burian, 46, who moved to San Francisco from the Philippines, said the
blackouts had not affected her yet, ''but I come from a Third World country 
so I
know how it is.''

??It has been a year since consumers in San Diego got the first dose of
shortages and higher costs. Since then, Gov. Gray Davis and other leaders have
tried to deal with the crisis with mixed results.

??The state has spent $4.7 billion since January to buy power for its two
largest cash-strapped utilities. On Wednesday, the Legislature approved the 
sale
of $13.4 billion in revenue bonds to buy electricity. 

??Last month, the state Public Utilities Commission approved the biggest rate
increase in California history: up to 46 percent for customers of Southern
California Edison and Pacific Gas & Electric. 

??Under a plan proposed Wednesday by PUC President Loretta Lynch, the increase
would be structured so that residential customers who use the most 
electricity 
would face average rate hikes of 35 percent 40 percent, while industrial users
could face increases of 50 percent or more.

??In February, Davis streamlined the permit process for new power plants and
created an ambitious conservation program to head off summer blackouts.

??But the governor's plan to have 5,000 megawatts of new power online by
midsummer is unrealistic, said Michael Zenker, director of Cambridge Energy
Research Associates, an energy consulting firm.

??''There's no basis in fact in that number. We expect between 750 to 1,000 
new
megawatts,'' he said. A megawatt is roughly enough power for 750 homes.

??Zenker's organization predicted several months ago that the state would see
200 days of severe shortages this summer and 20 days of blackouts. But since
then, the forecast has gotten bleaker because drought in the Northwest is
expected to reduce output from hydroelectric plants.

??''Any sort of warm weather will be enough to push us into blackouts,'' 
Zenker
said.

??As for conservation, it will make blackouts shorter and less severe, Shames
said, ''but it won't stop the blackouts from happening.''

??Meanwhile, a judge said Wednesday that PG&E can continue paying its natural
gas suppliers, even as other creditors wait to recoup billions of dollars from
the utility.

??The decision allows PG&E, which last month filed for Chapter 11 bankruptcy
protection, to buy gas that it sells to homes and

??usinesses.

?????(PROFILE


?????(CO:Southern California Edison Co.; TS:SCE;)


?????(CO:Pacific Gas and Electric; TS:PCG; IG:ELC;)


?????)


LOAD-DATE: May 10, 2001

?????????????????????????????14 of 110 DOCUMENTS

??????????????????????Copyright 2001 Copley News Service

?????????????????????????????Copley News Service

????????????????????????????May 10, 2001, Thursday

SECTION: State and regional

LENGTH: 1162 words

HEADLINE: Davis asks generators to 'share pain'

BYLINE: Ed Mendel

DATELINE: SACRAMENTO

BODY:

??Gov. Gray Davis met yesterday with power generators he has accused of
price-gouging and asked them to ''share in the pain'' of California's 
electricity crisis by settling for 70 percent of what they are owed by
utilities.

??The governor said he told the generators that a key part of his rescue plan
for utilities, the purchase of the Southern California Edison transmission
system by the state, might not be approved by legislators if payments to
generators are not reduced.

??Davis said he warned the generators that if Edison is forced to join Pacific
Gas and Electric in bankruptcy, the generators would probably not be paid for
three or four years and might receive even less than 70 percent of what they 
are
owed as the judge distributes payments to creditors.

??''They could just do the math,'' said Davis, ''and see the value of having a
certain amount of money this year can be higher in many cases than what you 
can
expect to get out of the bankruptcy.''

??Davis said he told the generators to be prepared to negotiate with
legislators in the next few days. He said he believes that generators 
understand
that they must reduce the amount of their current claims.

??''I think they understand they have to share in the pain,'' Davis said.
''They have to share in the solution.''

??Davis said that of the $3.5 billion that Edison owes, about $1.1 billion to
$1.2 billion is owed to generators. He said he did not have similar figures 
for
PG&E. One of the generator executives who attended the nearly four-hour 
meeting
in the governor's office did not immediately dismiss the suggestion that
generators be paid less than they are owed.

??''I wouldn't say it's completely off the table,'' said Randy Harrison, chief
executive officer of Mirant. ''I think anything that's part of a long-term
comprehensive solution might be something we could discuss at some point.''

??But another generator executive who attended the meeting disagreed with the
governor's assessment that generators at the meeting understood that they must
reduce the amount of their claims.

??''At this point we feel like we played by the rules,'' said John Stout,
Reliant senior vice president.

??It was revealed last week that Duke Energy offered a plan to provide the
state more power and to settle for less than what it was owed if all lawsuits
and investigations into price-gouging were dropped. Davis rejected the offer.

??''We are not dropping any lawsuits,'' Davis said he told generators. ''We 
are
not dropping any investigations. Quite the contrary, we are pursuing all those
to the hilt.''

??Legislators have proposed seizing the power plants of generators and 
imposing
criminal penalties for price-gouging. The Senate approved a bill this week 
that
could impose a 100 percent tax on any generator revenue of more than $80 per
megawatt hours. The state estimates that it will pay an average of $346 per
megawatt hour for power purchased on the spot market during the second quarter
of this year.

??Davis suggested a windfall-profit tax goes against his instincts, but he has
not ruled it out.

??''It would cause blackouts,'' warned Reliant's Stout.

??The meeting in the governor's office yesterday was attended by the chief
executive officers of Mirant, Enron, Edison Mission Energy, Calpine and
Williams.

??Also attending were executives from Reliant, PG&E's National Energy Group,
Duke, AES and El Paso Natural Gas. Executives from Sempra and Dynegy
participated by telephone.

??Davis said the main topic was a discussion of ways to help California meet
its energy needs this summer. He said there was an agreement to publicize the
results of power-plant inspections in response to accusations that plants are
being taken off line to drive up electricity prices.

??Stout said there was a suggestion that the state sell electricity to the
Northwest during off-peak hours to reduce the drain on hydroelectric 
facilities
there and produce revenue for California. 

??Davis said some of the suggestions from generators were ''blue-sky'' ideas.
''I have no idea if they have merit,'' he said.

??Earlier in the day, the state Senate sent Davis a bill authorizing $13.4
billion in bonds to repay the state general fund for power purchases, which
total more than $6 billion so far.

??But because Republicans refused to provide the votes needed to allow the 
bill
to take effect immediately, a special session on energy will be ended
prematurely Monday to allow the bond measure to take effect 90 days later in
August.

??Senate President Pro Tempore John Burton, D-San Francisco, said that a new
special session will be called and steps will be taken to return dozens of
stranded bills to their positions in the legislative process, avoiding the 
need
to repeat hearings and votes.

??The state began buying power for utility customers in January after PG&E and
Edison, whose rates were frozen by deregulation as wholesale power costs 
soared,
ran up a $13 billion debt and could no longer borrow.

??Davis urged Republicans to reconsider their vote and approve a bond sale
before the new fiscal year begins July 1. If the state general fund is not
repaid, he said that funding may have to be reduced for ''transportation,
hospitals, schools, the environment, law enforcement and other important''
programs.

??Assembly Republicans, who wanted to reduce the size of the bonds by not
repaying the general fund for $6.5 billion worth of power, said yesterday that
the new state budget should include a $4 billion reserve for power purchases.

??The Assembly GOP point man on the budget, George Runner of Lancaster, said 
he
fears that the situation is deteriorating and that California may have to
consider rationing the amount of electricity. 

??''I believe we are coming very closely to this line that we are no longer
dealing with conservation issues we are dealing with rationing,'' Runner said.

??In other action yesterday:

???Legislation that would allow San Diego County to form its own municipal
utility district cleared a key hurdle after the bill's author, Assemblyman 
Mark
Wyland, R-Escondido, agreed to require voter approval for any new district.

??The bill, which has bipartisan support from the San Diego delegation, would
require majority approval before a district could be formed. Current law
requires a two-thirds vote.

???Loretta Lynch, chairwoman of the California Public Utilities, said she 
hopes
to spare 50 percent of residential power users from any increases under the
pending rate hikes for PG&E and Edison.

??The hikes, which amount to about 3 cents per kilowatt hour and raise about 
$5
billion annually to cover power costs, will be formally approved Monday by the
commission. Lynch's proposal, which she released yesterday, is one of several
for allocating the increase and calls for heavier electricity users to pay 
more
than moderate users.

??SDG&E's request for a rate hike will be considered later.

Staff writer Craig D. Rose contributed to this report.



LOAD-DATE: May 10, 2001

?????????????????????????????18 of 110 DOCUMENTS

??????????????????????Copyright 2001 / Los Angeles Times

??????????????????????????????Los Angeles Times

?????????????????????May 10, 2001 Thursday ?Home Edition

SECTION: Part A; Part 1; Page 1; Metro Desk

LENGTH: 1331 words

HEADLINE: Bush Energy Stance Begins to Worry Some in GOP

BYLINE: GREG MILLER, RICHARD SIMON, TIMES STAFF WRITERS

DATELINE: WASHINGTON

BODY:

??As power shortages and price spikes spread beyond California, congressional
Republicans are beginning to worry that the Bush administration's reluctance 
to
offer much immediate relief could hurt the party in the 2002 elections.

??A national energy plan to be unveiled by the White House next week will 
focus
on long-term strategies. But with California and other states bracing for a
summer of electricity turmoil and gasoline prices surging across the country,
some GOP lawmakers are pressing for short-term solutions.

??"The White House has been taking a look at the big picture," said a GOP
leadership aide in the House. "But they're going to be around in four years. 
We
might not have members around in two years if we don't show we care."

??That sentiment is being voiced by a rising number of GOP lawmakers. "We're 
in
a crisis situation, which is only going to get worse if we don't act very
aggressively," Rep. Elton Gallegly (R-Simi Valley) said Wednesday. Gallegly is
one of four congressional Republicans from California to break with the
administration by supporting temporary price controls on wholesale 
electricity.

??The rising anxiety, which has begun spreading beyond the California 
delegation, underscores how much has changed since the state declared its 
first
Stage 3 power emergency in December. At that time, Congress' response was
largely: That's Gov. Gray Davis' problem.

??Not anymore.

??Thirty-nine Stage 3 alerts later, a House committee today will take up a
GOP-drafted emergency bill that would, among other things, allow Davis to
temporarily waive certain emission standards for power plants during an
emergency and provide federal aid to relieve a notorious bottleneck in the
California power grid.

??But some GOP lawmakers say the legislation doesn't go far enough, and plan 
to
offer amendments containing their own ideas. Rep. Mary Bono (R-Palm Springs)
plans to push for $100 million in energy assistance to low-income households 
and
for a directive to federal facilities in the West to cut energy use by 20%.

??"House leaders recognize that they could lose the House in California if
there's not an action plan that members can campaign on," said Scott Reed, a 
GOP
strategist.

??As lawmakers search for ways to provide immediate relief, the White House
continues to cite California's troubles as evidence of the need to upgrade an
aging, overburdened electricity transmission system.

??Responding to reports that the administration would propose legislation to
give the federal government eminent domain authority in siting power lines,
White House press secretary Ari Fleischer said Bush wants to ensure that the
distribution infrastructure can move electricity from regions with surpluses 
to
regions that need more power.

??"That's one of the reasons that California is going through the difficulties
it's going through," Fleischer said. "There is energy available in other parts
of the country, but it can't be shipped to California as easily as you would
hope, because of infrastructure problems."

??Fleischer took exception to a front-page story in The Times reporting that
Bush, in a speech delivered Tuesday, "offered no hint of what his 
administration
might do" to help California avert a possible economic downturn caused by 
power
blackouts.

??Though the president did not specifically mention possible actions in the
speech, Fleischer said Bush last week "announced a series of steps, including
conservation," to help California get through an energy crisis this summer.

??He said that the Pentagon is reducing its energy needs within California by
10% and that all other federal agencies, at Bush's direction, are reviewing
their energy consumption patterns.

??Environmentalists already have begun blasting the administration's energy
plan--even before its details are made public--for what they characterize as a
failure to emphasize energy efficiency and investments in renewable fuels.

??Activists Say Crisis Isn't Real

??At a Wednesday news briefing, a coalition of environmental advocates
disagreed with the administration's assertion that the country is experiencing
an energy "crisis," and accused it of crafting a plan designed to boost the
profits of key campaign contributors.

??"We cannot drill our way out of this situation," said Dan Becker of the
Sierra Club. He and others argued that conserving fuel--with cars that use 
less
gasoline and appliances that use less electricity, for example--is the best 
way
to avoid energy shortages in the short term.

??So far, it is not clear whether the energy crisis will work to either 
party's
advantage. Many on Capitol Hill are bracing for an election year that could be
brutal for incumbents of both parties if voters who endure high energy bills
this summer vent their frustration in the voting booth next year.

??Some House Republicans acknowledged that they have been pushing the White
House to appear more engaged in finding near-term solutions.

??When House Republicans met with Cheney last week, "they urged him and all 
the
administration to at least make it clear that a lot of effort is going into
finding a way to solve the problem," said Jim Specht, a spokesman for Rep. 
Jerry
Lewis (R-Redlands), leader of the California GOP delegation.

??Though some Republicans have offered ideas to address the immediate problem,
it is not clear whether any will receive congressional approval.

??Indeed, the emergency assistance bill being taken up today by the House
energy subcommittee faces trouble, although it was drafted by the panel's
chairman, Rep. Joe Barton (R-Texas).

??Barton stripped out a number of provisions opposed by environmentalists. But
Democrats plan to seek a vote on capping wholesale electricity prices, a
proposal most Republicans oppose. Democrats also plan to introduce an 
amendment
to target natural gas prices.

??House Minority Leader Richard Gephardt (D-Mo.) said the bill "fails
miserably" to address California's problems. "During the campaign, President
Bush promised a sensible energy policy," Gephardt said. "In recent weeks,
however, the president has responded to the gathering crisis by throwing up 
his
hands and saying there's nothing we can do, there's no way to give people
immediate relief from blackouts and sky-high increases of price of gasoline at
the pump."

??Lawmakers of both parties acknowledge that they are hearing a rising chorus
of constituent complaints about the energy price spikes and supply shortages.

??Rep. Chris Cox (R-Newport Beach) was caught in a blackout during a tour of a
computer chip factory in his district. "They said it cost them $1 million if 
the
power goes off even for five minutes," said Cox, who nonetheless opposes price
controls.

??Cox said he is worried about how the California electricity crisis might
affect the national economy. He said that when he asks business owners about
expanding in California, "they just look at you like you're nuts. They don't
consider California an option because of this uncertainty."

??"People come up to you and want you to help solve the problem," said Rep.
George Radanovich (R-Mariposa).

??He has explained that there is little the federal government can do in the
short term.

??"Californians want somebody to do something," said John J. Pitney Jr.,
associate professor of government at Claremont McKenna College. "When people 
are
in a mood like that, politicians get nervous thinking that they're the ones 
who
might get blamed."

??Said Reed, the GOP strategist: "Every incumbent in California is vulnerable
in the next election, in both parties. This is an issue that is not 
ideological.
It's about action and solving a short-term problem. "Politics have taken over
this issue, like it or not," he said. "They may have been raging in California
for the last three or four months. It's now a national political issue."

??*

??Times staff writers James Gerstenzang, Edwin Chen, Elizabeth Shogren and
Ricardo Alonso-Zaldivar contributed to this story.

GRAPHIC: PHOTO: U.S. Rep. Mary Bono, left, and Gov. Gray Davis discuss meeting
with executives of power-generating companies. Bono plans to seek $100 million
to help poor people pay energy bills. PHOTOGRAPHER: Associated Press

LOAD-DATE: May 10, 2001

?????????????????????????????19 of 110 DOCUMENTS

??????????????????????Copyright 2001 / Los Angeles Times

??????????????????????????????Los Angeles Times

?????????????????????May 10, 2001 Thursday ?Home Edition

SECTION: Part A; Part 1; Page 1; Metro Desk

LENGTH: 1630 words

HEADLINE: Rate Hikes Up to 60% Proposed by PUC Chief;
Power: Lynch says about half the residential customers of Edison, PG&E would
escape increases. Her plan draws fire from all sides.

BYLINE: TIM REITERMAN, NANCY RIVERA BROOKS, TIMES STAFF WRITERS

DATELINE: SAN FRANCISCO

BODY:

??About 4 million California residential electricity customers will face
increases in their monthly bills of up to about 60% under a proposal unveiled
Wednesday by the state's chief utility regulator. Interest groups on all sides
promptly condemned the plan as too hard on either consumers or businesses.

??The proposal by California Public Utilities Commission President Loretta
Lynch would increase the bills of roughly half of Southern California Edison's
residential customers, who consume medium to heavy amounts, by $8 to $93 a
month. Pacific Gas & Electric Co. customers would be hit with hikes of $6 to 
$87
a month.

??About half of the residential customers of the state's two biggest public
utilities would see no increase under the proposal if they continued to 
consume
energy at their current pace.

??Lynch said she could not guarantee that more rate increases would not be
necessary. "Even these astronomical average rates may prove inadequate," she
said, noting that wholesale electricity prices are still high and 
unpredictable.
??The rate hike, Lynch said at a news conference, is necessary because 
"federal
regulators have failed to follow federal laws to ensure just and reasonable
prices."

??The deepening energy crisis compelled Lynch to release her proposal after
public hearings on the rate increase already had begun. Lynch said that she
wished her proposal had been ready sooner, but that at least some of the
remaining public hearings will have the benefit of reviewing it.

??PUC passage of the essential elements of Lynch's plan seems likely.

??Along with two of her colleagues on the five-member commission, Lynch was
appointed by Gov. Gray Davis, and they often vote as a bloc. Lynch said,
however, that testimony later this week from utilities, the public and other
interested parties could prompt modifications.

??Structuring the $5-billion rate increase is an important but politically
sensitive step in California's attempt to restore stability to the delivery of
power to 9 million customers of two financially troubled utilities while
protecting the state budget.

??The PUC has tried to design rates that would encourage conservation without
damaging business. Competing interest groups, ranging from consumer advocates 
to
large manufacturers, have been jockeying for advantage for weeks.

??The PUC approved a rate increase of 3 cents per kilowatt-hour March 27 to
help pay the state's mounting power tab, which now exceeds $5 billion. This
week, the commission is conducting statewide hearings on how the pain should 
be
shared among millions of residents and businesses. On Monday the panel is set 
to
vote on Lynch's plan and a similar one by a PUC administrative law judge.

??Neither proposal appeared to please anyone.

??"The PUC says everyone should share the pain, but we think the fair share of
the pain for residential consumers should be zero," said Mindy Spatt,
spokeswoman for the Utility Reform Network, a San Francisco consumer group. 
"It
should be paid by commercial and industrial customers who wanted and still 
want
deregulation."

??Consumer activist Harvey Rosenfield said regulators should go after power
generators and their hefty profits rather than ratepayers.

??"Rate increases are not the answer, and this is not going to be the end of
them," said Rosenfield, president of the Foundation for Taxpayer and Consumer
Rights in Santa Monica. "This is like organized crime: The more you give them,
the more they want."

??Commercial and industrial customers would see increases of up to 50%, and
agricultural interests would face increases of 23% to 30% under Lynch's
proposal.

??Business interests contend that the rate hikes hit them much harder than
residential users.

??Calling the proposal "a death knell for the California economy," Jack M.
Stewart of the California Manufacturers and Technology Assn. estimated that
industrial customers would see their power rates increase an average of 53%. 
And
the pain of the rate hikes will be compounded by blackouts this summer, which
the group contends will cost California businesses $21.8 billion in lost
productivity.

??"For most large manufacturers, energy is a large piece of their operating
costs," Stewart said. "If you add 53% to that, it's going to severely hamper
their ability to do business."

??Unlike residential customers, the business customers are not grouped into
tiers based on their amount of usage. Lynch said there was insufficient time 
to
establish a tiering system for nonresidential customers by June 1, when the 
rate
hikes will start showing up on bills.

??An earlier proposal by Lynch had attempted to narrow the gap between
residential rates and the lower rates paid by nonresidential customers. But 
the
commission president said that goal could not be immediately achieved without
seriously damaging the state's economy.

??To protect the largest users from gigantic rate increases, Lynch's proposal
caps the maximum bill increase at 300% for most customers and 250% for
agricultural customers.

??"While we understand bill limiters may have some troubling conservation
impacts, at some point, price signals are unbearable for customers. Bill
limiters will protect customers from unanticipated extraordinary bill 
impacts,"
Lynch wrote.

??In recent weeks, the commission has received about 20 plans for structuring
the rate increase, including one from Davis, who had proposed a slightly 
smaller
overall rate increase. Lynch said her plan incorporates a number of features 
of
the governor's plan, including a tiered structure that would punish heavy 
users
and reward those who conserve.

??Under state legislation, there is no rate increase for consumption up to 
130%
of baseline, the amount deemed the minimum needed by a customer in a given 
area
and noted on ratepayer bills. Also exempted are low-income customers who 
already
receive discounted electricity rates.

??Edison and PG&E said they could not assess how the PUC proposals would 
affect
their customers because the commission had not provided details to the 
utilities
as of late Wednesday.

??But PG&E has disputed the commission's claim that half of customers would 
not
be affected by the increase, noting that only 32% of PG&E customers never
exceeded 130% of baseline usage in the last year.

??Industrial and commercial customers complained that the plan should not
exempt such a large group of residential customers, in any event. A rate
increase for these users--based on the PUC's estimate that the group will
constitute about half of residential customers--could generate an extra $1
billion.

??If the PUC insists on exempting so many, the $1-billion shortfall should be
covered solely by other residential users, businesses say.

??Under Lynch's plan the burden of paying that amount would be split equally
among commercial, industrial and nonexempt residential customers.

??If covering the shortfall were not shared by the three groups, Lynch said,
some residential customers would suffer a 100% increase in their bills.

??The proposal calls for a pilot program, including one that would let federal
agencies based in California "experiment with their own market rate policies."

??Lynch challenged federal agencies to try to live with "real time," or 
hourly,
prices in the volatile wholesale marketplace--a slap at officials of the 
Federal
Energy Regulatory Commission who favor a free wholesale market over price 
caps.
Use of real-time pricing requires installing a special meter.

??"'It would be great if the federal users respond to price signals enough 
that
prices come down," Lynch said, adding that she was skeptical that would happen
in today's dysfunctional market.

??A FERC spokeswoman declined to comment on Lynch's proposal.

??During the third day of PUC hearings, about 200 people gathered at Fullerton
College. Seventy people testified, most venting their anger at elected 
officials
and utility companies, whom they blame for the state's flawed deregulation 
plan.

??"I am opposed to any rate increase for residences and small business,"
testified Ruth Shapin, a Santa Ana attorney. "This crisis was created by
politicians. PG&E and SCE have transferred billions of dollars to their parent
companies. Let them bail themselves out, not the ratepayers."

??Others said the baselines might be unfair because the commission had not
taken into consideration home size, the number of occupants and the location.

??"It's going to be hard for many people to stay below the 130% baseline," 
said
Sylvia Hartman of Lakewood. "Some customers could easily go 400% over the
baseline."

??*

??Reiterman reported from San Francisco, Rivera Brooks from Los Angeles. Times
staff writer Dan Weikel in Fullerton contributed to this story.



??Rate Hike Proposal

??A proposal by California Public Utilities Commission President Loretta Lynch
charges the highest rates to residential customers who use the most 
electricity.
The standard for measuring use is a customer's baseline, which is considered 
the
minimum amount of electricity needed. Under state law, consumption up to 130% 
of
baseline is exempt from the rate increase. The following shows the projected
monthly bill increase for various levels of electricity use:

??Southern California Edison



??Usage level ????% increase ?Cost increase
Baseline ???????????0% ???????????$0
200% of baseline ????9% ???????????$8
300% of baseline ??43% ??????????$45
400% of baseline ???61% ??????????$93


??*

??Pacific Gas & Electric 

??Usage level % increase Cost increase



??Baseline ???????????0% ???????????$0
200% of baseline ???7% ???????????$6
300% of baseline ??15% ??????????$24
400% of baseline ??40% ??????????$87


??Source: California Public Utilities Commission

GRAPHIC: PHOTO: Elisabeth Charion is among about 70 people testifying at a PUC
hearing Wednesday in Fullerton, most venting their anger at elected officials
and utility companies, whom they blame for the crisis. PHOTOGRAPHER: IRFAN 
KHAN
/ Los Angeles Times GRAPHIC-TABLE: Rate Hike Proposal, Los Angeles Times

LOAD-DATE: May 10, 2001

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??????????????????????Copyright 2001 / Los Angeles Times

??????????????????????????????Los Angeles Times

?????????????????????May 10, 2001 Thursday ?Home Edition

SECTION: California; Part 2; Page 8; Metro Desk

LENGTH: 798 words

HEADLINE: The State;
;
Governor Asks Generators to Take Less Than They're Owed;
Power: Meeting with firms, Davis says that settling for 70% of debt would help
Edison stay solvent. One executive bristles.

BYLINE: DAN MORAIN, TIMES STAFF WRITER

DATELINE: SACRAMENTO

BODY:

??After spending months bashing independent power generators, Gov. Gray Davis 
on Wednesday called on them to take 30% less than the $1.2 billion they are 
owed
by Southern California Edison.

??"The Legislature [is] going to insist on a reduction," Davis said after a
meeting in his office with representatives of a dozen power generating
companies. Davis said he told them that "70% this year was more valuable to 
them
than whatever they get two or three years down the line" if Edison is forced
into bankruptcy.

??Davis urged generators to help California extricate itself from a summer of
rolling blackouts by selling every available electron to the state.

??He held out the possibility that he might sign legislation imposing a
windfall profits tax on generators if they fail to help out this summer.

??"My attitude on that would depend a lot on whether they showed good faith 
and
cooperated throughout this process," Davis said, emerging after a four-hour,
closed-door meeting with the generators.

??The Democratic governor issued an invitation last week to the chief 
executive
officers of power generating and marketing companies including Enron, 
Reliant, 
Duke Energy and others to meet with him in Sacramento. But most of the
executives who attended were a few pay grades below CEO.

??Davis said he urged that the executives press lawmakers to approve the deal
he struck with Edison in which the state would give the ailing utility an
infusion of cash by buying its transmission system for $2.76 billion. Edison
would use the money to restructure its debt and pay its creditors.

??Davis said lawmakers will not approve the deal unless the independent power
generators take less than they are owed.

??He noted that the state and the power generators have "a collective interest
in seeing that this summer has as few disruptions as possible." If California 
is
hit with repeated blackouts, Davis has said, other states will delay or end
efforts to deregulate their electricity markets.

??Executives, who braved taunts from a few protesters wearing pig masks and
carrying a small but loudly squealing pig, characterized the meeting as
businesslike. But at least some generators are less than enthusiastic about
taking less than they are owed.

??"I have a real concern about the notion that we should give back some of the
money we made," said John Stout, a senior vice president of the Houston-based
Reliant Energy, which says it is owed $300 million by Southern California 
Edison
and Pacific Gas & Electric. 

??Stout said that much of the money Reliant made in California is being
reinvested in power plant construction--although he added that the company has
no generators under construction in California. 

??"Political uncertainty has put a huge risk factor on investment in
California," Stout said.

??Randy Harrison, an executive with Mirant, based in Atlanta, said the issue 
of
a so-called "haircut" was discussed, though not in detail. Harrison said it is
"not completely off the table." But he added that his company is not
profiteering. Nor has it withheld electricity in any attempt to manipulate
wholesale energy prices.

??"Our people are working 24 hours a day and we are spending millions of
dollars to try and keep our power plants up and running," Harrison said.

??The meeting was aimed at opening communication with the generators. But 
Davis
aides said the governor also wanted to bring attention to companies that he
believes are at least partly responsible for California's energy crisis.

??The meeting occurred as polls show that voters are increasingly angry about
the energy crisis and as lawmakers, fearful that the energy crisis will wreck
California's economy, sharpen their attacks on power generators.

??Legislators have introduced bills to impose a windfall profits tax on
generators and make it a felony to manipulate electricity markets. Lt. Gov. 
Cruz
Bustamante and Assemblywoman Barbara Matthews (D-Tracy) sued several 
generators
last week. Atty. Gen. Bill Lockyer is investigating whether generators 
violated
antitrust and other laws as wholesale prices soared to record heights, 
hobbling
Edison and helping push PG&E into bankruptcy.

??Voters are not sure who is to blame, but they are convinced that "whoever is
taking our money is taking way too much," said Democratic political consultant
Richie Ross.

??"They want to find this deregulation's Charles Keating," Ross said, 
referring
to a central figure in the 1980s savings and loan debacle.

??Still, as much as Davis and others demonize generators, the state needs 
them,
some officials say.

??"We don't have enough power without them," said Assembly Energy Committee
Chairman Roderick Wright (D-Los Angeles). "There needs to be an adult 
discussion
to see what can be worked out."

GRAPHIC: PHOTO: CHP Officer Stacey Brashares holds a pig taken from protesters
outside the Capitol, where Gov. Gray Davis was meeting with executives of 
power
generating companies. Masks worn by the protesters carry the names of some of
the companies. PHOTOGRAPHER: ROBERT DURELL / Los Angeles Times PHOTO: Gov. 
Gray
Davis, after a meeting in his office with representatives of a dozen power
generating companies. PHOTOGRAPHER: Associated Press

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??????????????????????Copyright 2001 / Los Angeles Times

??????????????????????????????Los Angeles Times

?????????????????????May 10, 2001 Thursday ?Home Edition

SECTION: California; Part 2; Page 8; Metro Desk

LENGTH: 784 words

HEADLINE: The State;
;
Time to Give Some of the Power Players a Haircut

BYLINE: GEORGE SKELTON

DATELINE: SACRAMENTO

BODY:

??Gray and the Grid. Sounds like an old rock group. And it's slipping fast on
the Capitol charts.

??Same with MOU. That's not a rapper, but it's making about as much sense to
most legislators.

??MOU--Memo of Understanding--is the complex deal Gov. Gray Davis cut with
Southern California Edison last month to rescue the utility from bankruptcy. 
The
key provision is Davis' offer to buy Edison's high-voltage lines--its 
grid--for
$2.76 billion.

??Of that, $1.5 billion would go to Edison's creditors, the electricity
suppliers the utility has stiffed. Edison customers would kick in another $2
billion to pay off the total debt, estimated at $3.5 billion.

??The state would repair and expand the clogged grid--for less money than
Edison could--and collect transmission fees to pay for the lines. It also 
would
be in better position to possibly buy bankrupt PG&E's lines and ultimately 
place
the entire California grid under public ownership.

??Problem is, this deal must be approved by the Legislature. And the governor
can't even find a lawmaker willing to sponsor the bill.

??Politicians have looked at polls and seen that voters regard private
utilities as the No. 1 villain in this energy mugging. They're leery of
supporting anything that might smack of a public bailout for Edison.

??"It's seen as a gift," Senate leader John Burton (D-San Francisco) says of
the MOU.

??The Davis deal seems DOA. So both legislative houses are drafting
alternatives.

??Most Democrats--who own Sacramento--think the creditors should "take a
haircut." That's Capitol jargon for discounting the debt.

??Burton figures that a 30% haircut will be necessary for any Edison deal.
That's justified, he and others say, because the creditors--mainly 
out-of-state
power companies--have been gouging the utilities anyway.

??On Wednesday, Davis agreed. He proposed a 30% haircut in a meeting with
stunned power generators, who had little response.

??There must be shared pain, Davis and Burton assert. Shared by creditors,
Edison's parent company, the utility itself and ratepayers. Under the MOU, 
only
ratepayers suffer pain.

??The liberal Senate leader was an early advocate of acquiring the grid. And 
he
still is. But he asserts this MOU isn't needed for that. Perhaps the grid can 
be
picked up as a separate ticket.

??Across the Capitol, freshman Assemblywoman Jackie Goldberg (D-Los
Angeles)--the former L.A. council member--has been meeting with a small group
that is looking for alternatives to the Davis deal.

??"It's uncertain whether we can pass the MOU in its current form," she says.
"But nobody wants to leave this hanging in limbo."

??Among the options, she says, is acquiring the grid without paying for it.
Edison would just shift title. That way there'd be no legislative haggling 
over
price.

??But the state would take care of the utility's debts after creditor 
haircuts.
Good trims.

??"There's no definition of gouging that wouldn't be appropriate here,"
Goldberg says.

??"Maybe the governor could have moved faster. There are a lot of shouldas,
wouldas. But when I get angry, I get angry at FERC and the price gougers."

??FERC and the Price Gougers--at the very bottom of the Capitol charts.

??Burton and Assembly Speaker Bob Hertzberg (D-Sherman Oaks) announced plans
Monday to sue the Federal Energy Regulatory Commission. They want to force 
FERC
to protect California consumers against the gougers. Obey the law and make 
sure
the power pirates charge only "just and reasonable" prices. Return unfair
profits. Set wholesale price caps.

??"This case is about old people in convalescent homes, which are not exempt
from blackouts," said the legislators' veteran trial attorney, Joseph 
Cotchett.
"We're talking about health and welfare. People on life support machines. This
is not about swimming pool heaters."

??It's a longshot suit--two legislative leaders suing the federal government.
There's a doctrine about separation of powers. But the action illustrates
Sacramento's current frustration.

??On Wednesday, there was a new group: Gray and the Generators.

??The governor invited in the gougers for some frank talk in his office.
Earlier, he had accused them of "just satisfying their greed and sucking money
out of the state."

??They weren't in the mood for a Capitol haircut.

??But one power official confided that many do wish FERC would be more
aggressive--set hard rules, order refunds if justified and just handle it. The
state Capitol wouldn't be so overheated and there'd be less pressure on the
generators if the Feds did their job.

??In that regard, Californians now are beginning to discover another group:
Bush and the Blackouts.

??The boos are becoming more raucous.

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??????????????????????Copyright 2001 / Los Angeles Times

??????????????????????????????Los Angeles Times

?????????????????????May 10, 2001 Thursday ?Home Edition

SECTION: California; Part 2; Page 1; Metro Desk

LENGTH: 989 words

HEADLINE: Davis Faces Budget Cuts, Report Says;
Finance: The state surplus shrinks by $3.4 billion as tech-firm troubles 
reduce
tax revenue. Meanwhile, spending on the energy crisis mounts.

BYLINE: JULIE TAMAKI MIGUEL BUSTILLO, CARL INGRAM, TIMES STAFF WRITERS

DATELINE: SACRAMENTO

BODY:

??The suffering of California's high-tech firms is taking its toll on the
fortunes of state government, according to the nonpartisan legislative 
analyst,
who said Wednesday that the state budget surplus has shrunk by $3.4 billion.

??To keep the budget out of the red, Gov. Gray Davis will have to slash his
state spending plan, an unpleasant prospect for those who rely on state 
services
and a politically dicey task for a governor facing reelection next year. Among
the areas that could be hit are anticipated transportation projects and a
program to extend health insurance to poor people.

??Elizabeth Hill's grim update on the state's financial outlook complicates an
already difficult situation for state officials trying to pay for services 
amid
an extraordinarily expensive energy crisis. More than $6 billion has been
drained from California coffers to pay for energy purchases. Hill's assessment
of the state economy and its effect on the budget does not take that money 
into
account because it assumes that a bond issue, approved Wednesday, will repay 
the
state's general fund.

??Should that fall through, her budget estimates would grow more dire.

??Hill's office previously estimated an $8-billion state surplus over this 
year
and next. But California has been particularly hard-hit by the struggles of 
the
state's high-tech firms, which in recent years had fueled huge state tax
receipts as employees cashed out stock options, said Brad Williams, senior
economist for Hill's office.

??"This shouldn't be too terribly surprising given the negative developments 
in
the economy and the negative developments in the stock market," Williams said.
"The economic picture has changed significantly since January."

??In a letter to lawmakers, Hill said onetime and ongoing spending cuts will 
be
needed to stave off a deficit that would occur if the governor's spending plan
were put in place. Under that plan, money would be spent faster than it would
come in, according to Hill's projections.

??At the rate of spending contemplated by the governor's current budget
proposal, the deficit would hit $1.5 billion in the 2001-02 budget year and 
rise
to $6 billion by 2002-03, Hill predicted. To avoid running into the red, Hill
floated the possibility of $2.5 billion in onetime cuts in the next budget and
an annual reduction of $1.7 billion through the 2002-03 fiscal year.

??Department of Finance spokesman Sandy Harrison said the Davis administration
would not comment on Hill's projection Wednesday, adding only that the 
governor
would account for updated revenue estimates Monday when he releases his 
revised
spending plan.

??But lawmakers are reacting with alarm and are vowing to cut whatever 
programs
are expendable to avoid what some consider the worst alternative: a tax
increase.

??"That's the last thing we want to do," said Assembly Budget Committee
Chairman Tony Cardenas (D-Sylmar). "It has crossed our minds. We do not like 
the
fact that it has crossed our minds."

??Senate Budget Committee Chairman Steve Peace (D-El Cajon) said the nearly $
5-billion shortfall that Hill predicts for the 2001-02 fiscal year is
optimistic. He believes revenue actually could sink as much as $20 billion.

??Peace said Hill appears to be projecting that revenue will begin to rebound
toward the end of the year, but he predicted a continued decline as the 
economic
downturn manifesting itself on Wall Street trickles down to Main Street.

??"I think we are in for a huge problem and that assumes no impact from the
energy stuff," Peace said.

??Though legislators appear most determined to avoid a tax increase, cutting
services would represent a political challenge.

??Peace suggested that up to $2 billion could be saved by delaying certain
onetime transportation programs that have yet to get off the ground. He warned
that a proposed expansion of the Healthy Families program, which provides 
health
insurance to low-income Californians, could be in jeopardy.

??Education funding in the upcoming budget year probably will still rise over
the previous year, but fall short of the level contemplated by Davis in 
January
by about half a billion dollars, Peace predicted.

??Davis' $1.45-billion, three-year plan to extend the middle school year has
faced substantial opposition in the Legislature and may be rejected, which 
would
relieve the need to cut other programs.

??Without question, the biggest cloud hanging over the budget is whether the
general fund will be repaid for billions of dollars in energy purchases--a
possibility that is quickly dismissed in Hill's analysis.

??To avoid blackouts, California has been buying massive quantities of
electricity since January because the state's private utilities had become too
burdened with debt to continue making purchases on the expensive wholesale 
power
market.

??Davis had planned to reimburse the budget with proceeds from a record $
12.5-billion bond sale and that utility ratepayers would then pay off the 
bonds.
But the sale has been delayed until August at the earliest, leaving a gaping
hole in state coffers as lawmakers plan the budget.

??Cardenas said it is likely that legislators will be forced to craft a
two-tiered budget this year, one that assumes a bond sale is completed and one
that prepares for the possibility it is not.

??There are other uncertainties as well. Consumer activists say they are
considering challenging the bond issue with a ballot measure--a threat that
could further undermine confidence about the bond issue, and California's
financial health, on Wall Street. California's credit rating has already been
lowered by one credit rating agency because of concerns over repayment of the
state budget.

??If the bond issue does not go through, "then we have to make cuts
everywhere," Cardenas said. "Everything is up for grabs."

??*

??Times staff writer Dan Morain contributed to this story.

GRAPHIC: PHOTO: Elizabeth Hill, the state's legislative analyst, previously 
had
estimated an $8-billion state surplus over this year and next. PHOTOGRAPHER:
ROBERT DURELL / Los Angeles Times

LOAD-DATE: May 10, 2001

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??????????????????Copyright 2001 The New York Times Company

??????????????????????????????The New York Times

?????????????????May 10, 2001, Thursday, Late Edition - Final

SECTION: Section A; Page 30; Column 2; National Desk

LENGTH: 250 words

HEADLINE: California Seeks Power Debt Relief

BYLINE: ?AP

DATELINE: SACRAMENTO, May 9

BODY:

??Gov. Gray Davis asked power generators today to accept a 30 percent cut in
money they are owed by Southern California Edison, the state's second largest
utility, to help keep it afloat.

??The California governor's request came after two days of rolling blackouts
caused by high temperatures and scarce electricity. Grid operators avoided
blackouts today after temperatures dropped slightly.

???Officials at the Independent System Operator, which manages the state's
electricity grid, said that supplies would still be tight on Thursday, but 
that
slightly cooler weather would help them meet demand.

??Southern California Edison owes generators more than $1.1 billion, but they
are unlikely to see their money for years if it declares bankruptcy, Mr. Davis
said he told 12 electricity and natural gas producers.

??"I think they understand they have to share in the pain," the governor said.
"They have to share in the solution. I believe they are willing to take some
reduction in the amount of money they are currently claiming."

??So far no one is volunteering to forgive the debts.

??Southern California air regulators are close to slashing their market-based
system for controlling power plant pollution. The move is intended to allow
large power plants to operate at full capacity without facing stiff fines as
they try to meet demand.

??The change was promoted by an executive order from Governor Davis requiring
air districts to let large generators run at the greatest capacity.




??http://www.nytimes.com
 
LOAD-DATE: May 10, 2001

?????????????????????????????27 of 110 DOCUMENTS

?????????????????Copyright 2001 The Chronicle Publishing Co.

?????????????????????????The San Francisco Chronicle

????????????????????MAY 10, 2001, THURSDAY, FINAL EDITION

SECTION: NEWS; Pg. A1

LENGTH: 1101 words

HEADLINE: Power bills set to skyrocket for heavy users;

Graduated rate increase would take effect in June

SOURCE: Chronicle Staff Writer

BYLINE: David Lazarus

BODY:
As state regulators outlined plans to raise residential electricity bills by 
as
much as 40 percent, the head of the Public Utilities Commission warned 
yesterday
that power rates could soar even higher.

???The PUC, which adopted an increase in March, is scheduled to approve 
details
of the new rates in San Francisco on Monday. Consumers will see the higher 
rates
in their June utility bills.

???State regulators say nearly half of all consumers will see no change in
their power bills. The remainder will experience rate increases ranging from 3
percent to more than 50 percent, depending on the type of customer and the
amount of power used.

???The increases would be added to an average 10 percent increase adopted in
January.

???PUC President Loretta Lynch suggested that rates could rise yet again if
wholesale electricity prices continue to surge this summer.

???"If the sellers decide to turn up the heat and raise prices, we'll have to
look again at the numbers," she said.

???INCREASE WILL CONTRIBUTE LITTLE

???The proposed rate increase would bring in about $5 billion annually -- a
fraction of the estimated $65 billion California will spend this year 
purchasing
power on behalf of the state's cash-strapped utilities.

???Lynch said she expects the remainder to be made up by issuing bonds. The
state Senate yesterday approved $13.4 billion in bonds to help cover
California's power costs.

???However, those bonds would not be released until August, by which time
California's energy tab would be billions of dollars higher.

???"There's huge cause for concern that this latest rate increase is a down
payment rather than anything close to a final installment," said Bob
Finkelstein, staff attorney for The Utility Reform Network in San Francisco.

???The PUC's Lynch stressed that while California's new rate structure would
place a greater burden on the state's heaviest power users, the increases are
intended to spread the pain among all consumers.

???"Energy is expensive for every hour of every day for every customer," she
said.

???LINING UP TO GET PAID

???That includes the state Department of Water Resources, which is spending
about $70 million a day to keep California's lights on.

???While the PUC is moving to have more money collected from consumers to pay
California's power bills, it has yet to address the thorny question of how the
proceeds will be distributed among the various parties lined up for
compensation.

???The Water Resources Department wants all rate-related revenues to first
replenish state coffers, while Pacific Gas and Electric Co. and Southern
California Edison Co. insist that they be paid as well for their own expenses.

???The utilities' costs include payments to small power generators that can no
longer afford natural gas to run their plants. The recent closure of hundreds 
of
such facilities is a key reason California is experiencing blackouts this 
week.

???Although PG&E said yesterday that most of the smaller generators with which
it does business are now back online, it is not yet clear whether the utility
will be able to keep paying for their power.

???"It appears that everything (from the rate increase) is going to DWR (the
Water Resources Department)," said John Nelson, a PG&E spokesman.

???Lynch said the PUC will take up the matter of apportioning funds at an
unspecified future date.

???CONSERVATIVE USE PAYS

???For the moment, state regulators have their hands full digesting two
competing -- and highly complex -- proposals for how rates should be increased
next week.

???One proposal was submitted by an administrative law judge working with the
PUC and the other by Lynch. Commissioners will choose between them on Monday.

???The two proposals are largely identical. Under both, residential customers
who can keep electricity usage within 130 percent of predetermined limits 
would
experience no rate increase.

???The "baseline usage" figure -- included near the bottom of PG&E bills --
represents the minimal amount of power consumers require. It includes a number
of variables, such as climate, time of year and type of fuel used.

???The PUC said about half of all utility customers statewide historically 
stay
within 130 percent of baseline limits.

???Heavy residential users whose electricity usage tops 400 percent of 
baseline
figures would see power bills rise by as much as 40 percent. Heavy commercial
and industrial users would see bills rise by more than 50 percent.

???The average increase for all PG&E residential customers would be about 16
percent, the PUC said, although this number is skewed by the addition of all
those customers whose bills would remain unchanged.

???Harvey Rosenfield, head of the Foundation for Taxpayer and Consumer Rights
in Santa Monica, questioned whether these rate increases will be sufficient to
motivate greater conservation among consumers and thus ease California's 
energy
woes.

???He called instead for the state's political leaders to seize generating
plants from out-of-state power companies and impose a special tax on the
companies' "windfall" profits.

???"Unless our elected officials take action, this is just the beginning of 
our
rate increases," Rosenfield warned.

???FEDERAL BUILDINGS IN SIGHTS

???One of the main differences between the two rate-increase proposals is
Lynch's inclusion of a "real-time pricing program" for federal agencies.

???If enacted, she said, federal buildings in California would be fully 
exposed
to the volatile wholesale power market and would pay whatever California pays 
to
keep the lights on throughout the day.

???Lynch denied that this is an effort on the part of California officials to
drive home to federal authorities the impact of sky-high wholesale 
electricity 
prices.

???"It's just an experiment," she said.

???While California officials have called on federal regulators and the Bush
administration to assist the state by capping wholesale power prices, 
Washington
has provided only limited relief to date.

???The Utility Reform Network's Finkelstein complained that the proposed rate
increases place a severe burden on residential customers when commercial and
industrial users account for the greater percentage of power consumption.

???"It was the commercial and industrial customers who were clamoring for
deregulation," he said. "You didn't hear any calls for deregulation from
residential customers."

???Lynch said she was aware that residential users are being asked to carry a
high proportion of the load but said efforts to force industrial users to pay
higher rates ran into political opposition.E-mail David Lazarus at
dlazarus@sfchronicle.com.

GRAPHIC: PHOTO, Associated Presshi,16p9,x hintro Going up: PUC President 
Loretta
Lynch and the rest of the Public Utilities Commission are expected to approve
increases in electricity rates Monday. The average monthly increase for
residential users: Baseline $0 (0%); 200% of baseline $6 (7%); 300% of 
baseline
$24 (15%); 400 % of baseline $87 (40%)

LOAD-DATE: May 10, 2001

?????????????????????????????28 of 110 DOCUMENTS

?????????????????Copyright 2001 The Chronicle Publishing Co.

?????????????????????????The San Francisco Chronicle

????????????????????MAY 10, 2001, THURSDAY, FINAL EDITION

SECTION: NEWS; Pg. A10

LENGTH: 826 words

HEADLINE: Generators silent on Davis plan;

He offers lower compensation to stave off Edison bankruptcy

SOURCE: Chronicle Sacramento Bureau

BYLINE: Lynda Gledhill

DATELINE: Sacramento

BODY:
Gov. Gray Davis, who has portrayed power generators as greedy villains in the
state's power crisis, met face-to-face with industry officials yesterday,
calling on them to forgive some of the debt racked up by an insolvent utility.

???In a three-hour meeting described as "businesslike," Davis said generators
will have to accept 70 cents on the dollar of past debt as part of a solution
designed to prevent Southern California Edison Co. from going bankrupt.

???At least one of the companies flatly rejected the idea after the meeting,
putting the deal in jeopardy.

???If the two sides are not able to reach an agreement, Southern California 
Edison would probably follow Pacific Gas & Electric Co. into bankruptcy court,
where creditors face a lengthy and uncertain resolution to recovering debts.

???Davis has run into legislative opposition to the original terms of the
agreement he brokered with Southern California Edison, which includes the
state's purchase of the utility's transmission lines as a way to help it 
regain
financial stability.

???But the governor said he now believes that the deal can win passage in the
Legislature if the generators "take a haircut."

???"I indicated that passage of the (agreement) that we signed with Edison
would only work if they agreed to reduce the amount of money they claim the
utilities owe them," he said.

???Edison owes generators, including municipal utilities, between $1.1 billion
and $1.2 billion, Davis said. He said he agreed that talks would also take 
place
with municipal utilities about taking less money on the dollar.

???Most of the generators refused to comment on the proposal, but a
representative of Reliant Energy dismissed the suggestion.

???"That's simply an unreasonable number to start with," said John Stout,
senior vice president of Reliant, who said that 67 cents on every dollar the
company receives goes to pay the fuel bill, which doesn't include personnel 
and
maintenance of facilities.

???"It doesn't get any supply built," Stout said of the idea. "I would much
rather get that 100 cents on the dollar" to invest in new generation.

???The generators, who have reaped huge profits in the past year, said the 
main
thrust of the meeting was on short-term issues, such as lining up more power 
for
the summer.

???Davis asked which companies were not yet selling to the state and said he
would work to get the Department of Water Resources to sign agreements with
them.

???He also asked the generators to support the Edison deal, reportedly asking
them to try to win GOP support for it.

???Davis agreed to a proposal from the companies to form permanent working
groups to deal with the crisis.

???A handful of protesters led by former Senate candidate Medea Benjamin
condemned Davis for meeting with the companies. Dressed as pigs, with the 
names
of the companies on their masks, the five protesters brought a small live pig
into the Capitol, where it proceeded to defecate outside the governor's office
before the group was escorted out of the building.

???Lawmakers have insisted that the generators must take a cut in the money
they are owed as part of any deal ending the energy crisis.

???Senate President Pro Tem John Burton, D-San Francisco, said earlier in the
day that at least a 30 percent "haircut" would be necessary before he would
allow any deal to be approved.

???"What we have here is a problem caused by the unfettered greed of 
generators
that has brought capitalism to a new low," Burton said.

???He said if the generators don't agree to some kind of cut, they will find
themselves in bankruptcy court.

???Earlier in the day, the Senate approved a bill that allows the state
treasurer to issue $13.4 billion in bonds. The money, which will eventually be
repaid by ratepayers, will be used to replace the funds that have drained out 
of
the state's general fund since January to buy electricity and pay for future
power purchases.

???The state has spent about $6 billion so far -- money, Democrats argue, that
has to be replaced in order to fund other state services.

???"Where do those revenues go?" asked Sen. Sheila Kuehl, D-Santa Monica,
during the floor debate. "They create child care slots, pay in-home support
services and provide medical benefits for the poor."

???But Republicans said the state's budget should take some of the hit, 
instead
of pushing it all off on ratepayers.

???Sen. Tom McClintock, R-Northridge, said the average ratepayer will see a $
2,000 increase on their utilities bills over the next 15 years to pay for the
bond.

???The final vote was 23 to 15. Because not enough Republicans supported the
measure in either the Assembly or Senate to make the bill an urgency measure,
the law will not take effect until 90 days after the end of the special 
session.
Davis will sign the bill today.

??-----------------------------------

??Chronicle staff writer Greg Lucas contributed to this report.E-mail Lynda
Gledhill at lgledhill@sfchronicle.com.

GRAPHIC: PHOTO, Gov. Gray Davis (left) and his energy adviser, David Freeman
(second from left), met with power suppliers. / Associated Press

LOAD-DATE: May 10, 2001

?????????????????????????????31 of 110 DOCUMENTS

???????????????????The Associated Press State & Local Wire

The materials in the AP file were compiled by The Associated Press. ?These
materials may not be republished without the express written consent of The
Associated Press.

???????????????????????May 10, 2001, Thursday, BC cycle

?????????????????????????????9:48 AM Eastern Time

SECTION: State and Regional

LENGTH: 807 words

HEADLINE: Developments in California's energy crisis

BYLINE: By The Associated Press

BODY:

??Developments in California's energy crisis:

??THURSDAY:

??- Grid operators say cooler temperatures will help them meet California's 
electricity demands. Officials at the Independent System Operator say supplies
are tight, but they don't expect blackouts.

??- The PUC holds a public hearing on the proposed rate structure in
Sacramento.

??- Gov. Gray Davis is scheduled to sign a bill authorizing $13.4 billion in
revenue bonds to pay for power for customers of the state's three largest
utilities. The bonds will repay the state general fund for $6.7 billion
authorized for power buys since January and will finance future electricity
purchases.

??WEDNESDAY:

??- After a difficult afternoon, grid operators are able to avoid blackouts
after temperatures drop slightly.

??- The Public Utilities Commission releases recommendations for rate
increases, sparing about 9 million customers of Pacific Gas and Electric Co. 
and
Southern California Edison, but socking residential customers who don't cut 
back
with a 40 percent hike. PUC president Loretta Lynch says the plan is designed 
to
encourage conservation and provides $5 billion more to help pay the state for
the $6.7 billion it has spent so far providing electricity for the customers 
of
PG&E and Edison.

??- The state Senate approves a bill authorizing $13.4 billion in bonds for
power buys, sending the bill to the governor.

??- The governor meets with the CEOs of several major energy suppliers to
discuss the money they're owed by the state's two largest utilities, the 
state's
creditworthiness and how wholesalers can help the state during the energy
crisis. Davis says he won't be discussing any of the investigations into price
manipulation in the wholesale market.

??- A consortium of business interests releases a study saying continued
blackouts this summer could cost the state $21.8 billion in losses from sales,
wages and production.

??- PG&E says only eight of the 300 small power plants in its territory are
still shut down for payment reasons. All eight are natural gas-fired plants 
that
deliver a combined 109 megawatts of electricity, enough to power about 80,000
homes. Owners of these plants say they haven't been fully paid for millions of
dollars in past power deliveries and that they would operate at a loss if they
resume full operations.

??- PG&E asks U.S. Bankruptcy Judge Dennis Montali to void the appointment of 
a
committee representing ratepayers. The utility says that such a committee 
isn't
allowed under bankruptcy law and that the state attorney general can represent
ratepayers in the bankruptcy process.

??Montali also says PG&E can use hundreds of millions of dollars in payments
from customers to buy gas, which the utility in turn sells to homes and
businesses. That came as other creditors wait to recoup billions of dollars 
from
the bankrupt utility. Montali rules that creditors lining up to collect from
PG&E cannot use any money they secure to sue the utility's largest creditor, 
The
Bank of New York.

??- A major electricity generator starts an ad campaign that offers to sell
power to the state for 2 cents per kilowatt hour - as long as the state 
provides
the natural gas to produce the power. Reliant Energy says the ads are 
necessary
because their offer is being ignored by power buyers. Another energy producer,
Mirant, has also kicked off a media campaign.

??WHAT'S NEXT:

??- Davis' representatives continue negotiating with Sempra, the parent 
company
of San Diego Gas and Electric Co., to buy the utility's transmission lines.

??THE PROBLEM:

??High demand, high wholesale energy costs, transmission glitches and a tight
supply worsened by scarce hydroelectric power in the Northwest and maintenance
at aging California power plants are all factors in California's electricity 
crisis.

??Edison and PG&E say they've lost nearly $14 billion since June to high
wholesale prices the state's electricity deregulation law bars them from 
passing
on to consumers. PG&E, saying it hasn't received the help it needs from
regulators or state lawmakers, filed for federal bankruptcy protection April 
6.

??Electricity and natural gas suppliers, scared off by the two companies' poor
credit ratings, are refusing to sell to them, leading the state in January to
start buying power for the utilities' nearly 9 million residential and 
business
customers. The state is also buying power for a third investor-owned utility,
San Diego Gas & Electric, which is in better financial shape than much larger
Edison and PG&E but also struggling with high wholesale power costs.

??The Public Utilities Commission has approved rate increases of as much as 46
percent on average to help finance the state's multibillion-dollar power buys.
The PUC is still determining how those increases will be spread among utility
customers.

LOAD-DATE: May 10, 2001

?????????????????????????????32 of 110 DOCUMENTS

?????????????????????????????The Associated Press

The materials in the AP file were compiled by The Associated Press. ?These
materials may not be republished without the express written consent of The
Associated Press.

???????????????????????May 10, 2001, Thursday, BC cycle

?????????????????????????????7:02 AM Eastern Time

SECTION: Domestic News

LENGTH: 605 words

HEADLINE: For many Californians, fear of high electricity bills is a bigger
threat than blackouts

BYLINE: By SETH HETTENA, Associated Press Writer

DATELINE: SAN DIEGO

BODY:

??Ray Marquez wonders whether he'll have to cut back on food or gas in order 
to
pay his electricity bill.

??The 34-year-old Orange County maintenance man usually pays $80 a month for
power during summer months. Now, he's trying to figure out how to pay an
electricity bill that could push $130 come June 1.

??"Since I got married and had children, you know, I've been dealing with
balancing bills," he said Wednesday. "But if I now have to pay more for
electricity, I'm not going to have money for gas or food for the kids."

??As Californians coped with rolling blackouts that darkened thousands of
businesses and homes Monday and Tuesday, many struggled with an even bigger
worry: how to pay for soaring energy costs.

??In March, the state Public Utilities Commission approved the biggest rate
increase in California history, up to 46 percent for customers of Southern
California Edison and Pacific Gas & Electric. Those rate hikes start hitting
customers in next month's bill.

??Gailen Kyle, who raises alfalfa on 1,600 acres in the Mojave Desert, says a
40 percent increase would put his farm out of business.

??"It would end us," the third-generation farmer said. "Everybody here that
farms alfalfa would be out of business."

??Kyle, 46, said he has to pump water nearly around the clock from wells
drilled 310 feet below his farm near Lancaster. A small increase in the price 
of
energy a few months ago added $80,000 to the $400,000 annual bill he was 
already
paying.

??To save money, Kyle agreed to become an "interruptible" customer, meaning he
voluntarily allows his power to be shut off during statewide electricity
shortages in exchange for reduced rates. So far this year, his power has been
cut 26 times.

??Even before the state utilities commission raised rates, residents were
paying 26 percent more for electricity than the nationwide average, according 
to
federal statistics. Only customers in New England, New York, Alaska and Hawaii
pay more.

??One of the problems is that the wholesale cost of electricity has risen
sharply over the past year but under California's 1996 deregulation law the
state's largest utilities, PG&E and SoCal Edison, have been prevented from
passing their costs to customers. In April, PG&E declared bankruptcy.

??The West isn't just facing spiraling costs and a shortage of supplies,
however. Its transmission system is fragmented and overworked and would take
years to improve, power officials told the region's governors Wednesday.

??"There is no immediate solution," said Idaho Gov. Dirk Kempthorne, one of
four governors participating in a six-hour, round-table meeting with industry
representatives.

??The Western Governors Association was told there is no established method 
for
paying for transmission upgrades, and market and regulatory barriers stand in
the way. It's not even clear where new power lines are most needed.

??The group, which included the governors of Utah, Idaho, Montana and Wyoming,
has given energy experts until July 15 to recommend ways to eliminate
bottlenecks.

??Meanwhile Californians, who've already weathered six days of rolling
blackouts this year, fear they'll soon be paying more for less service.

??The Independent System Operator, which runs the state's power grid, has
forecast more than 30 days of blackouts this summer due to severe shortages of
electric supply.

??Dee Ann Hendirx, 53, of San Francisco, has stocked up on candles and
battery-operated clocks.

??"I hate to say this but it's getting to be a way of life in California," she
said.


??On the Net:

??Western Governors Association: http://www.westgov.org
 
GRAPHIC: AP Photos SLC801-04

LOAD-DATE: May 10, 2001

?????????????????????????????33 of 110 DOCUMENTS

???????????????????The Associated Press State & Local Wire

The materials in the AP file were compiled by The Associated Press. ?These
materials may not be republished without the express written consent of The
Associated Press.

???????????????????????May 10, 2001, Thursday, BC cycle

?????????????????????????????3:43 AM Eastern Time

SECTION: State and Regional

LENGTH: 467 words

HEADLINE: PG&E says fewer small power plants offline

BYLINE: By KAREN GAUDETTE, Associated Press Writer

DATELINE: SAN FRANCISCO

BODY:

??Only eight of the 300 small power plants in Pacific Gas and Electric Co.'s
territory remain shut down for payment reasons, the struggling utility says.
That means more vital megawatts have come back online that could help prevent
rolling blackouts.

??But operators of those so-called qualifying facilities say that's because
they're required to run their plants during periods of high demand to get 
paid,
not because of a change of heart over millions of dollars owed to them for 
past
electricity deliveries.

??"What I believe will start happening is you will see QFs operate for a
minimal amount of time during peak times in order to get their capacity
payments," said Jan Smutney-Jones, executive director of the Independent 
Energy
Producers. "They won't be fully available to California."

??All eight of the plants in PG&E's territory are natural gas-fired plants 
that
deliver a combined 109 megawatts of electricity, enough to power about 80,000
homes.

??Lorie O'Donley, a spokeswoman with the Independent System Operator, which
manages California's electric grid, said that more of so-called qualifying
facilities had indeed come back online throughout the state.

??"Right now we have 1,400 megawatts offline statewide," O'Donley said, though
she didn't yet know how many QFs were offline in PG&E's territory and in other
territories.

??QFs harness solar, biomass, geothermal or wind power, as well as natural 
gas,
to generate environmentally friendly electricity, and provide electricity to 
the
state's investor-owned utilities under contract.

??QFs contribute about 6,000 megawatts to the state's power grid, O'Donley
said. A few weeks ago, around 3,000 megawatts were offline. Many plants were
shut down in protest for not getting paid millions of dollars for past
electricity deliveries. That lack of power contributed to rolling blackouts
which swept the state.

??The past debt, as well as a new pricing system ordered by the Public
Utilities Commission, would force QFs to operate at a loss if they start
producing power at full capacity, said Smutney-Jones.

??The new PUC price structure ties how much they can charge for their
electricity to the price of natural gas coming in at the Oregon border, where
natural gas is cheaper. However, many plants can only ship and buy their gas 
at
the Topock border in the south, where prices are much higher.

??"I don't think we're anywhere near out of the woods with respect to the QF
issue," Smutney-Jones said.

??PG&E and Southern California Edison Co. have paid for QF electricity 
delivered since April under order by the PUC. However, PG&E had made partial
payments on deliveries since last year, while SoCal Edison had paid nothing. 
San
Diego Gas and Electric Co. says it never fell behind on its payments.

??---

??http://www.pge.com
 
LOAD-DATE: May 10, 2001
abb@eslawfirm.com, andybrwn@earthlink.net, cabaker@duke-energy.com, 