Energy Issues ,
 Please see the following articles:

Sac Bee, Mon, 6/11:  Who'll pay billions in PG&E debt? Consumers,
taxpayers and asset sales are among the options

Sac Bee, Mon, 6/11:  Dan Walters: Record undercuts governor's message on=20
handling energy crisis

SD Union, Sun, 6/10: Plan to pay businesses not to use power OK'd=20

SD Union, Sat, 6/9: Sempra may drop project in Escondido

LA Times, Sat, 6/9:  Hackers Victimize Cal-ISO

LA Times, Sat, 6/9: State Asks Pricing Curbs on 4 Firms

LA Times, Sat, 6/9: After-School Programs Threatened

LA Times, Sat, 6/9: Drop in Gas Price Raises Questions in Probe

LA Times, Sat, 6/9: New Power Plant Proposed for Riverside County

SD Union, Sat, 6/9: ISO seeks to pull rate authority from 4 firms

SD Union, Sat, 6/9: Short-circuited by the `so-called' electricity crisis =
=20
(Editorial)

LA Times, Mon, 6/11: Ventura County Businesses Sweat Out Power Crisis

LA Times, Mon, 6/11: The State PG&E Plan to Fell Oaks Fuels Anger Energy:=
=20
The utility contends the trees pose a fire threat to power lines. Critics=
=20
claim the firm wants to cut costs

LA Times, Mon, 6/11: The State Gov. Davis Feisty About Gaining Leverage Ove=
r=20
the 'Cowboys'=20

SF Chron, Mon, 6/11: Davis adds major ally in bid for price caps / Lieberma=
n=20
invites governor to testify

SF Chron, Mon, 6/11: Bay residents tired of state crisis decrees / Conservi=
ng=20
or not, they ignore Davis

SF Chron, Mon, 6/11: Bay residents tired of state crisis decrees=20
Conserving or not, they ignore Davis

SF Chron, Mon, 6/11:  Developments in California's energy crisis

Mercury News, Mon, 6/11: Electricity traders' tech habits get scrutiny=20

Mercury News, Mon, 6/11: Davis is down, but history and politics are on his=
=20
side (Commentary)

OC Register, Mon, 6/11: Senate panel eyes price caps for power=20

OC Register, Sun, 6/10: New program will pay businesses to conserve

OC Register, Sun. 6/10: Davis' crisis management on upswing

OC Register, Sat, 6/9: Electricity notebook
Officials: Suppliers should refund excess charges

Individual.com (PRnewswire), Mon, 6/11: Calpine Announces 600-MW Inland=20
Empire Energy
Center Project Will Offer Electricity to One of California's Fastest Growin=
g=20
Regions=20

Individual.com (PRnewswire), Mon, 6/11: SDG&E Applauds Expansion of=20
Assistance For Low-Income
Customers; CPUC Changes Mean More Eligible Customers, Increased Discounts=
=20


NY Times, Mon, 6/11: California Gets a Reprieve As Natural Gas Prices Drop

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Who'll pay billions in PG&E debt? Consumers, taxpayers and asset sales are=
=20
among the options.
By Claire Cooper
Bee Legal Affairs Writer
(Published June 11, 2001)=20
A judge's decision not to meddle with electric rates has left open the=20
biggest question in the Pacific Gas and Electric Co. bankruptcy case: Who=
=20
will pay the utility's nearly $10 billion in bills?=20
Ratepayers? Last week's decision by U.S. Bankruptcy Judge Dennis Montali le=
ft=20
rate-setting to the state Public Utilities Commission. But experts aren't=
=20
ruling out PUC approval of major increases in the prices charged to PG&E's=
=20
customers.=20
Taxpayers? They'd foot the bill if the state bailed out the utility, anothe=
r=20
reportedly live option.=20
Creditors? They could, as one consumer advocate says, "cannibalize" each=20
other in competing for PG&E's assets. Though PG&E says creditors will all b=
e=20
paid in full, it hasn't said how long that will take.=20
PG&E Corp., the utility's parent? It might be forced to infuse the utility=
=20
with cash. PG&E also could sue energy wholesalers to recoup overcharges or=
=20
could sell off its own power generators to raise cash.=20
Until last week, when Montali made it known that he won't raise retail rate=
s,=20
the two major players in the bankruptcy proceedings -- the utility and the=
=20
official creditors committee -- had agreed on most matters that came up in=
=20
court, including the need for a rate increase.=20
"Now, it's going to get maybe a little uglier and less friendly," predicts=
=20
Jesse Fried, a bankruptcy law professor at the University of California,=20
Berkeley. "It looks like they're just going to have to sit down and decide=
=20
who's going to eat the loss."=20
Fried says the "right answer" should be PG&E Corp., which requested=20
deregulation of the energy market and profited from it until soaring=20
wholesale prices left the utility subsidiary with massive debt, in part=20
because retail rates were frozen.=20
Between the time deregulation was passed and the end of 2000, the utility=
=20
transferred $3.9 billion to its parent corporation before filing for=20
bankruptcy protection April 6, according to a state-ordered audit.=20
To force the corporation to repay the money, says Sacramento bankruptcy=20
lawyer W. Austin Cooper, Montali would have to conclude that the transfer=
=20
defrauded the utility's creditors.=20
Montali has the power "to pierce the corporate veil" to find the answer, sa=
ys=20
Harvey Rosenfield, president of the Foundation for Taxpayer and Consumer=20
Rights.=20
But Cooper predicted a different scenario: sale of significant portions of=
=20
PG&E assets -- such as generators or transmission lines -- to pay creditors=
=20
and repay the state for electricity it has purchased on the wholesale marke=
t.=20
At a meeting Thursday between the utility and some of its creditors, PG&E=
=20
chief financial officer Kent Harvey said the utility's hydroelectric=20
facilities are worth between $3.9 billion and $4.2 billion. James Lopes, th=
e=20
utility's bankruptcy lawyer, declared the subject of a possible sale off=20
limits at the meeting.=20
Rosenfield predicts it will remain off limits because, he says, the state=
=20
would begin talking about seizing the generators rather than risk a sale to=
=20
an out-of-state buyer.=20
He favors another option: suing the out-of-state companies that have been=
=20
charging the highest wholesale energy rates.=20
"If I were the small business that supplies pencils and paper clips to PG&E=
,=20
I would want to collect some money from the energy companies that overcharg=
ed=20
PG&E for power until the state stepped in to buy the power in the utility's=
=20
place," he said.=20
If PG&E filed an antitrust case against those companies, it could be tried =
in=20
Bankruptcy Court, according to Cooper.=20
Discussion on that subject also was ruled off limits by Lopes.=20
However, Harvey said the utility has requested a probe by the Federal Energ=
y=20
Regulatory Commission.=20
And PG&E has been providing information to state agencies probing the=20
out-of-state firms, spokesman Ron Low said.=20
Rosenfield predicts growing pressure for a state-sponsored PG&E bailout lik=
e=20
the $2.76 billion plan proposed by Gov. Gray Davis to keep Southern=20
California Edison out of bankruptcy.=20
Under the Davis proposal, the state would have spent $2.76 billion to buy=
=20
that utility's power transmission lines. But the Legislature shelved Davis'=
=20
plan, and Rosenfield warned that any such bailout would be forced to a publ=
ic=20
referendum, "along with any politicians who supported it."=20
Stanford University bankruptcy law professor Marcus Cole says the long-rang=
e=20
success of any plan for PG&E "depends entirely on the prospects for=20
profitability" -- that is, pegging retail energy rates to wholesale costs.=
=20
"PG&E is not a charity," Cole says. "It's there to provide a service. The=
=20
only way it's going to do that is if it can generate profits."=20

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



Dan Walters: Record undercuts governor's message on handling energy crisis


(Published June 11, 2001)=20
Gov. Gray Davis spoke to a small business conference in Sacramento on May 3=
0=20
and reminded attendees that "I'm a pro-business Democrat." He then launched=
=20
into a recitation of his standard pitch on the state's energy crisis -- tha=
t=20
it's being caused by "greedy energy companies" and that he's working hard t=
o=20
solve it with far-reaching conservation programs and a massive power plant=
=20
construction program.=20
"For 12 years, California did not build one major power plant," he said,=20
adding that since he became governor, 15 have been approved, 10 are under=
=20
construction, and by 2003 "we will have more capacity than demand."=20
Davis is a politician who's renowned for staying, in the jargon of politica=
l=20
consultants, "on message." And what he told the business conference about=
=20
building power plants replicated what he had said dozens of times in=20
preceding weeks. During his April 5 televised speech on the crisis, for=20
example, Davis claimed, "In the 12 years before I took office, not a single=
=20
major power plant was built in California. Not one."=20
Clearly, Davis' message to Californians is that the state wasn't building=
=20
power plants before he began his governorship in January 1999, but that he =
is=20
moving, as he often says, "at warp speed" to license and build new plants a=
nd=20
close the supply-demand gap. There are two things wrong with that message:=
=20
His account of the pre-Davis record is not accurate, and his assertion that=
=20
huge amounts of new power generation are coming soon is, to say the least,=
=20
questionable.=20
First, the past. In the 12 years prior to his becoming governor, the=20
California Energy Commission licensed 17 power plants with a generating=20
capacity of about 1,900 megawatts. Twenty-one plants totaling 3,100 megawat=
ts=20
began producing power during the period, including two considered "major" b=
y=20
the usual definition of being 300 megawatts or more: the 300-megawatt=20
Sycamore plant in Kern County and the 385-megawatt Watson cogeneration plan=
t=20
in Los Angeles County. Two more plants that started production during the=
=20
period were more than 200 megawatts.=20
After Davis became governor, but while the Energy Commission was still=20
controlled by appointees of his predecessor, Pete Wilson, the commission=20
licensed an additional 5,800 megawatts of generation, including nine major=
=20
plants.=20
Plant licensing has been speeded up in the last six months, but the total o=
f=20
plants licensed by the Davis-controlled commission is less than 4,000=20
megawatts and none of those facilities has gone into production.=20
New plants are under construction, according to progress reports prepared b=
y=20
the Energy Commission, but wheth- er all the recently licensed facilities=
=20
will be built, at least in the near future, is questionable. There is, powe=
r=20
industry sources say, an increasing reluctance by energy companies to commi=
t=20
hundreds of millions of dollars to con- struct licensed plants (about=20
$750,000 per megawatt for new facilities) while Davis continues to denounce=
=20
them as greedy exploiters and hints he may seize plants under an emergency=
=20
declaration. Another factor is uncertainty over whether the state or=20
utilities will be financially able to buy the power.=20
One hint of that attitude has already surfaced publicly. Mirant Corp.=20
announced June 1 that it was delaying construction of a 530-megawatt=20
expansion of its Contra Costa County generation complex "because of=20
uncertainty about California energy market rules." Randy Harrison, head of=
=20
Mirant's Western operations, said, "We have to be able to determine that th=
is=20
will be a viable investment before we can put a quarter of a billion dollar=
s'=20
worth of steel on the ground."=20
Work on much smaller cogeneration and "peaker" plants has begun, but many o=
f=20
the big ones apparently are being put on hold. Indeed, there's a secondary=
=20
market developing for selling licensed projects that could be built in the=
=20
future. Energy executives may be greedy, but they're not stupid and it woul=
d=20
be foolhardy to make multimillion-dollar commitments in a state that still=
=20
doesn't know where it's going in energy policy.=20

The Bee's Dan Walters can be reached at (916) 321-1195 or dwalters@sacbee.c=
om
.=20




Plan to pay businesses not to use power OK'd=20



State program in effect when reserves are low
By Jennifer Coleman=20
ASSOCIATED PRESS=20
June 10, 2001=20
SACRAMENTO -- Gov. Gray Davis signed an executive order yesterday creating =
a=20
voluntary program that will use up to $100 million in state money to pay=20
businesses not to use electricity when reserves are low.=20
Davis said that since nearly 70 percent of energy use in California is by=
=20
commercial users, the program will "help mitigate and even avoid blackouts.=
"=20
Participants, mostly large commercial users, will submit bids for reducing=
=20
their power. Grid operators will then compare those prices with the going=
=20
price for power and choose the cheapest option, said S. David Freeman, the=
=20
governor's senior energy adviser.=20
"We'd rather pay people in California to cut back than pay out-of-state=20
generators," he said.=20
The Independent System Operator, manager of the state's power grid, will=20
operate the program, and the state Department of Water Resources will back =
it=20
financially.=20
The program is the first of its kind paid for by the state. The Public=20
Utilities Commission, the Independent System Operator, and the state's=20
utilities have similar programs.=20
Kellan Fluckiger, Davis' energy adviser, said the size of the new program=
=20
would depend on how many participants the ISO can recruit.=20
The ISO releases information on bids for energy after a period of time, and=
=20
will probably treat bids for cutting power the same way, he said.=20







Sempra may drop project in Escondido=20



Dispute over power plant threatens industrial park
By Jonathan Heller=20
UNION-TRIBUNE STAFF WRITER=20
June 9, 2001=20
ESCONDIDO -- Officials of Sempra Energy Resources are considering pulling t=
he=20
plug on a planned high-tech industrial park in the city because of conflict=
s=20
with a small power plant that would be built near the park's entrance.=20
Sempra executives will meet Monday to discuss the issue, a source familiar=
=20
with the project said late yesterday. If they decide to cancel plans for th=
e=20
business park, Sempra still would move forward with its 500-megawatt plant =
on=20
the site in southwest Escondido, the source said. The 200-acre industrial=
=20
park was supposed to be built around the power plant, in the Quail Hills ar=
ea=20
of the city.=20
Without the park, Sempra would not have to go through the city's permit=20
process, since the power plant would fall under the jurisdiction of the=20
California Energy Commission. If that happened, the city would have lost no=
t=20
only the industrial park, but also the opportunity to have any say over the=
=20
Sempra project, such as setting conditions on it or requiring environmental=
=20
reviews.=20
Sempra's concern stems from a 49-megawatt plant that would be built at the=
=20
entrance to its business park by a company called CalPeak. The city no long=
er=20
has any say about that plant, however.=20
CalPeak, impatient with the city's permit process, opted to bypass the city=
=20
and go through a new expedited 21-day approval process with the state Energ=
y=20
Commission, which approved the plant this week. That angered some city=20
officials, who said their land-use authority had been usurped.=20
Sempra wanted the commission to require that the CalPeak plant be shut down=
=20
in about two years, when its business park was ready to be marketed to=20
prospective tenants, the source said. The commission did not incorporate th=
at=20
provision in its approval.=20
Officials from Sempra and some city officials fear the CalPeak plant would=
=20
not fit the upscale image envisioned for the park, and could hinder its=20
ability to attract high-end tenants.=20
On Wednesday, the City Council met in closed session to consider a court=20
challenge to the Energy Commission's approval of the CalPeak project, City=
=20
Attorney Jeffrey Epp said yesterday. "As of now I don't have any direction =
to=20
pursue litigation," Epp said.=20
Two city officials who asked not to be named said council members June Rady=
=20
and Tom D'Agosta voted in favor of suing to block the plant. Ed Gallo, Mari=
e=20
Waldron and Mayor Lori Holt Pfeiler stayed silent. The lack of a majority=
=20
meant litigation could not move forward.=20
Sempra officials in charge of developing the industrial park and power plan=
t=20
could not be reached for comment yesterday. But the source familiar with th=
e=20
project said they were disappointed that the City Council decided not to=20
challenge the CalPeak plant in court.=20
The commission did approve several city suggestions regarding landscaping f=
or=20
the CalPeak plant, and placing power lines underground, to help shield it=
=20
from the business park. But Sempra officials are not convinced that's enoug=
h.=20
"The city has basically decided to do nothing," the source said. "Obviously=
=20
that will hurt marketing efforts at the business park."=20
Pfeiler said late yesterday she was not aware of Sempra's request to the=20
commission to have the CalPeak plant shut down in two years.=20
"As far as I'm concerned the conditions Sempra and the city asked for were=
=20
met," Pfeiler said. "So Sempra should be ready to go full speed ahead on th=
e=20
industrial park. For Sempra to even think about not building the industrial=
=20
park is very frustrating to the community."=20
City officials desperately want the business park to be built. They see the=
=20
Quail Hills parcel as the last best hope to have a large, high-tech=20
industrial park in Escondido that would provide thousands of high-paying=20
jobs.=20







Hackers Victimize Cal-ISO=20

By DAN MORAIN, Times Staff Writer=20

?????SACRAMENTO--For at least 17 days at the height of the energy crisis,=
=20
hackers mounted an attack on a computer system that is integral to the=20
movement of electricity throughout California, a confidential report obtain=
ed=20
by The Times shows.
?????The hackers' success, though apparently limited, brought to light laps=
es=20
in computer security at the target of the cyber-attack, the California=20
Independent System Operator, which oversees most of the state's massive=20
electricity transmission grid.
?????Officials at Cal-ISO say that the lapses have been corrected and that=
=20
there was no threat to the grid. But others familiar with the attack say=20
hackers came close to gaining access to key parts of the system, and could=
=20
have seriously disrupted the movement of electricity across the state.
?????Democratic and Republican lawmakers were angered by the security breac=
h=20
at an entity that is such a basic part of California's power system, given=
=20
its fragility during the state's continuing energy crisis. One called the=
=20
attack "ominous."
?????An internal agency report, stamped "restricted," shows that the attack=
=20
began as early as April 25 and was not detected until May 11. The report sa=
ys=20
the main attack was routed through China Telecom from someone in Guangdong=
=20
province in China.
?????In addition to using China Telecom, hackers entered the system by usin=
g=20
Internet servers based in Santa Clara in Northern California and Tulsa,=20
Okla., the report says. James Sample, the computer security specialist at=
=20
Cal-ISO who wrote the report, said he could not tell for certain where the=
=20
attackers were located.
?????"You don't know where people are really from," Sample said. "The only=
=20
reason China stuck out is because of the recent political agenda China had=
=20
with the U.S. . . . An ambitious U.S. hacker could have posed as a Chinese=
=20
hacker."
?????The breach occurred amid heightened Sino-American tensions after the=
=20
collision between a Chinese military jet and a U.S. spy plane. In early May=
,=20
there were hundreds of publicly reported computer attacks apparently=20
originating from China. Most of those incidents involved mischief;=20
anti-American slogans were scrawled on government Web sites.
?????The attack on the Cal-ISO computer system apparently had the potential=
=20
for more serious consequences, given that the hackers managed to worm their=
=20
way into the computers at the agency's headquarters in Folsom, east of=20
Sacramento, that were linked to a system that controls the flow of=20
electricity across California. The state system is tied into the transmissi=
on=20
grid for the Western United States.
?????"This was very close to being a catastrophic breach," said a source=20
familiar with the attack and CalISO's internal investigation of the inciden=
t.
?????On May 7 and 8, as the infiltration was occurring, California suffered=
=20
widespread rolling blackouts, but Cal-ISO officials said Friday that there=
=20
was no connection between the hacking and the outages, which affected more=
=20
than 400,000 utility customers.
?????"It did not affect markets or reliability," said Stephanie McCorkle, a=
=20
spokeswoman for Cal-ISO.
?????Officials of the agency made no public acknowledgment of the attack=20
until Friday when contacted by The Times. The agency did, however, call the=
=20
FBI, which is investigating.
?????McCorkle said Cal-ISO did not make a public disclosure about the hacki=
ng=20
"because it didn't impact the reliability of any of our internal networks."
?????"It didn't have a negative consequence and would not have impacted the=
=20
public or market participants," McCorkle said.
?????After the attack was discovered, the report says, investigators found=
=20
evidence that the hackers apparently were trying to "compile" or write=20
software that might have allowed them to get past so-called firewalls=20
protecting far more sensitive parts of the computer system.
?????The attackers focused on parts of the grid agency's computer system th=
at=20
are under development. In what may have been the most significant lapse, th=
e=20
system being developed was not behind a firewall, a security element design=
ed=20
to keep out those who are not entitled to access.
?????Additionally, so-called tripwires that might have alerted agency=20
security personnel to the unauthorized entry were nonexistent. Nor were the=
re=20
logs within the system that might have identified users entering the system=
=20
as the infiltration was occurring, the report notes.
?????What's more, dozens of ports into the computer system were open, when=
=20
only a handful should have been available.
?????"All servers should be hardened regardless of their role or location i=
n=20
the network," the report says. "Only ports that are required to be open=20
should be opened; all others should be disabled."
?????Complicating the investigation, workers at Cal-ISO rebooted their=20
computers when the machines balked, apparently in response to the=20
infiltration.
?????"This action limited our ability to discover all files and activity th=
at=20
may be related to this compromise," the report says.
?????Sample, the security engineer who wrote the report, downplayed the=20
potential threat and said the attack was "something that we've been=20
anticipating."
?????"It was a compromise, not really an attack," he said.
?????State legislators were not comforted by such distinctions.
?????"That's really amazing on two counts: that there were computers not=20
behind a firewall and it took 17 days to discover," said state Sen. Debra=
=20
Bowen (D-Marina del Rey), who chairs her chamber's Energy Committee.
?????Bowen, who was informed of the breach by The Times, called it a "serio=
us=20
matter" and said she was "very concerned to learn about this from the L.A.=
=20
Times, rather than from the ISO itself." The lack of official notification,=
=20
she said, adds to her skepticism about whether the agency has been=20
forthcoming.
?????"It is embarrassing, so I can understand they would not want to talk=
=20
about it," Bowen said. "We're going to ask some questions."
?????The Independent System Operator, established in 1998 when the state=20
opened the newly deregulated electricity market to competition, is an=20
essential component of the state's electricity system.
?????The purpose of the nonprofit entity is to balance the flow of=20
electricity across the state and make last-minute power purchases to match=
=20
demand and avoid blackouts. The Legislature reconfigured the agency earlier=
=20
this year, giving Gov. Gray Davis the power to appoint the five-member boar=
d=20
that oversees it.
?????"It is troubling that it happened," said Sen. Tom McClintock (R-Thousa=
nd=20
Oaks). "It is disturbing that it took so long to be corrected. And it is=20
galling that it was not reported to the Legislature."
?????McClintock labeled as "ominous" the possibility that the attack came=
=20
from China. He said he is preparing a request for all documents related to=
=20
the breach and is considering requesting a formal legislative inquiry.
?????ISO board member Mike Florio, who represents consumers, said he had a=
=20
vague recollection that the board was informed of the attack. But he also w=
as=20
surprised to learn some of the details.
?????"We hire people to deal with this stuff," he said, "and they said they=
=20
dealt with it."

Copyright 2001 Los Angeles Times=20








State Asks Pricing Curbs on 4 Firms
Energy: Cal-ISO wants U.S. action to bar alleged gouging by power plant=20
operators. The companies deny market manipulation.=20

By NANCY VOGEL, Times Staff Writer=20

?????SACRAMENTO--State officials intensified their assault on power plant=
=20
owners in California on Friday by asking the federal government to ban four=
=20
large companies from selling power at whatever prices the market will bear.
?????Mirant Corp., Duke Energy, Dynegy Corp. and Reliant Energy--owners of=
=20
more than a dozen power plants in California--have charged excessive prices=
=20
and manipulated the state's market, the California Independent System=20
Operator in alleges formal petitions to the Federal Energy Regulatory=20
Commission.
?????Given evidence of abuse, Cal-ISO argues in its filings, federal=20
regulators cannot legally allow the companies to continue selling electrici=
ty=20
in California at market-based rates. FERC granted that privilege to the=20
companies three years ago, when California opened its power industry to=20
competition. That privilege is now coming up for renewal.
?????By refusing to renew and setting prices instead by how much it costs t=
he=20
companies to produce electricity, FERC could quickly control the high=20
wholesale electricity prices that have plagued California for the last year=
,=20
state officials say.
?????Cal-ISO, the Folsom-based agency that manages much of the state's=20
transmission grid, submitted a similar emergency motion to FERC on May 25,=
=20
urging a revocation of the rights of AES Corp. and Williams Cos. to sell=20
electricity at market rates. Together, the six companies that are the subje=
ct=20
of Cal-ISO's filings have the capacity to generate at least 17,000=20
megawatts--half of what California needs to meet peak summer demand.
?????In the flurry of petitions filed late Thursday and Friday, grid manage=
rs=20
also asked federal regulators to force the six companies to refund money th=
ey=20
have charged beyond the costs of operating their power plants since May 200=
0.=20
Cal-ISO did not specify a refund figure, but an earlier report by the agenc=
y=20
concluded that power sellers had overcharged the state by $6.7 billion=20
between May 2000 and March 2001.
?????"I'm optimistic that in one form or another we'll be able to get the=
=20
relief we're seeking," said Cal-ISO general counsel Charles Robinson. He sa=
id=20
his agency may go to court if FERC does not act by June 28.
?????Some company officials characterized the move as political.
?????"Obviously the filing is about the inference of market manipulation an=
d=20
we haven't manipulated any markets," said Thomas J. Allen, a vice president=
=20
with Mirant, which owns three power plants in the San Francisco Bay Area an=
d=20
recently signed a 19-month contract to provide the state with power.
?????"Just when we've started to work more closely with the state," he said=
,=20
"we hate to see this whole thing continue to be politicized."
?????Other generators pointed to a recent drop in wholesale power prices as=
 a=20
sign that the market works and that California suffers mostly from a gap=20
between supply and demand. Power traders say prices are easing largely=20
because of cool weather across the West and snowmelt swelling Pacific=20
Northwest rivers that drive hydroelectric generators.
?????"We're gratified that market forces are clearly at work," said Tom=20
Williams, spokesman for Duke Energy, which owns major power plants on the=
=20
central coast.
?????FERC spokeswoman Celeste Miller said the agency will not comment on th=
e=20
Cal-ISO filings.
?????To continue selling electricity at market prices, the energy companies=
=20
must show FERC that they each control less than 20% of California's market.=
=20
Critics argue that FERC's standard is too simplistic to prevent manipulatio=
n=20
of an electricity market where demand at times exceeds supply.
?????Robinson said Cal-ISO may file similar petitions with FERC to revoke t=
he=20
market-based rate authority of energy traders--who act as middlemen--and=20
out-of-state companies that sell into California.

Copyright 2001 Los Angeles Times=20







After-School Programs Threatened=20
Finance: Budget plan kills funds for a project that includes efforts to boo=
st=20
family-school ties and help single mothers keep sons out of gangs.=20

By CARLA RIVERA, Times Staff Writer=20

?????Nine-year-old Oscar Fuentes has run smack up against California's=20
slowing economy and high energy costs.
?????He and his playmates at Rosemont Elementary School in the Echo Park ar=
ea=20
of Los Angeles were told this week that the highly praised after-school=20
program in which they are enrolled will get no more money from the state to=
=20
keep it going.
?????The implications are easy enough for even a fourth-grader to understan=
d:=20
By the end of the month he may have no one to help him do his homework, and=
=20
the volunteer instructor may not come anymore to teach his friends how to=
=20
dance.
?????"We get to do fun activities and we get free snacks," said the=20
round-faced, dark-eyed Oscar, who was hard at work on math assignments afte=
r=20
school. "It's sad the program might be cut."=20
?????More than 36,000 youngsters and parents in Los Angeles, Ventura, Santa=
=20
Barbara and other counties could be affected by the demise of the Juvenile=
=20
Crime Prevention Program, begun in 1996 as a pilot project to provide=20
constructive activities for low-income children and their families.
?????About $9.7 million was included in the governor's January budget=20
proposal to keep the 12 centers operating for two more years. But in the=20
April budget revision, that funding was eliminated.
?????California's suddenly weaker financial health, affected by a combinati=
on=20
of surging energy expenses and softening revenue, is beginning to be felt=
=20
even on playgrounds, said legislators and other state officials.
?????"There had to be some hard choices," said Blanca Barna, a spokeswoman=
=20
for the California Department of Social Services. "It was important that=20
resources be focused on programs that are currently a priority." Those=20
priorities for the department include child welfare, adoptions, foster care=
=20
and independent living, she said.
?????Supporters are mounting a vigorous effort to have state funding restor=
ed=20
to juvenile program.
?????"It's a tough year," acknowledged Assemblyman Tony Cardenas (D-Sylmar)=
,=20
chairman of the Assembly Budget Committee, which is considering such a=20
restoration proposal. "The economy nationally and in the state has shifted=
=20
now. But I'm personally pushing for [the program] and trying my best to=20
protect it throughout the entire process."
?????The committee's vice chairman, Assemblyman George Runner (R-Lancaster)=
,=20
however, noted that the Legislature has already approved a separate=20
$121-million juvenile crime prevention package to be funneled through the=
=20
state Department of Corrections and that the threatened program could be=20
included in it.
?????"If other funding is available, I'd like to see why it can't be folded=
=20
in," Runner said.
?????Supporters laud the program for its focus on strengthening the=20
community. In addition to the after-school activities, it includes efforts =
to=20
improve the bonds between families and schools, help single mothers keep=20
their 10- to 14-year-old sons out of gangs, and counsel families with=20
youngsters already in the juvenile justice system.
?????In Long Beach, more than 200 people rallied at City Hall recently as t=
he=20
City Council unanimously passed a resolution urging the governor to save th=
at=20
city's program, which serves 3,000 people each year and is run by the YMCA.
?????"It has brought families together, kids, moms and dads, to take contro=
l=20
of their lives and be participants in their community," said Councilwoman=
=20
Bonnie Lowenthal.
?????She cited an example of participants drawing up a petition for a stop=
=20
sign at a dangerous intersection near a park as something "that had not=20
really occurred before in neighborhoods where so many of the families are=
=20
immigrants and non-English-speaking."
?????An independent evaluation by Philliber Research Associates of a sample=
=20
of families enrolled in the program found that it helped to significantly=
=20
decrease delinquent behavior, substance abuse, arrests and citations and=20
improve family cohesion, social adjustment and school achievement.
?????"If you start taking away programs that have proven to curb juvenile=
=20
crime just to save energy, all you're doing is moving one problem and addin=
g=20
another," said Daniel Perez, who is in charge of the Ventura County program=
,=20
run by Interface Children Family Services. Until the state cutback was=20
proposed, it was expected to receive an $800,0000 grant to maintain tutorin=
g=20
and counseling programs previously funded by the county.
?????About 450 people have been served by the Santa Paula center in the las=
t=20
three years, and many in this low-income community--victims of domestic=20
violence, single working mothers, first-time juvenile offenders and at-risk=
=20
elementary school students--depend on the free services.
?????"If this funding goes, it eliminates our whole center," Perez said.=20
"It's very disheartening."
?????Such a prospect is indeed disheartening for Ana Romero, a 28-year-old=
=20
Echo Park mother of three.
?????For three years her daughter Jamillet, 11, has been enrolled in the=20
Juvenile Crime Prevention Program at Rosemont, run by the nonprofit communi=
ty=20
group Para los Ni=0Fos, and has made steady improvement in her school score=
s=20
and her self-esteem.
?????Romero's husband, Hector, works in construction, and Romero is about t=
o=20
start a new job as a grocery store cashier. But without the after-school=20
program, she is not sure what the family will do.
?????"What my daughter learns here, she teaches to her brother and sister a=
nd=20
to me and my husband too," Romero said, waiting to pick up Jamillet from th=
e=20
Rosemont program, which runs from 2 to 6 p.m.
?????Jamillet is enthusiastic, too.
?????"I feel like a teacher for the family," the dark-eyed little girl said=
=20
proudly. "I especially like going on the field trips, and it's sad if my=20
little brother won't be able to go to the program."
---
?????Times staff writer Jenifer Ragland contributed to this story.

Copyright 2001 Los Angeles Times=20








Drop in Gas Price Raises Questions in Probe=20
Regulation: Cost has fallen 96% since May 31, stirring accusations of an=20
artificial shortage.=20

By RICARDO ALONSO-ZALDIVAR, Times Staff Writer=20

?????WASHINGTON--As the price of natural gas destined for California power=
=20
plants continued to collapse Friday, new questions were being raised about =
a=20
controversial shipping deal between two offshoots of a Texas energy=20
conglomerate.
?????State officials and utilities have complained to the Federal Energy=20
Regulatory Commission that subsidiaries of Houston-based El Paso Corp.=20
restricted gas supplies on a major pipeline system last year, creating an=
=20
artificial shortage that sent energy costs soaring. The company has=20
steadfastly denied the allegations, which are the focus of a trial-like=20
hearing stretching into its fifth week at FERC.
?????But in a development that had the courtroom abuzz Friday, the markup f=
or=20
natural gas shipped from producing basins in Texas to the Southern Californ=
ia=20
border has plunged by 96% since May 31, when the contract between the El Pa=
so=20
subsidiaries expired and about 30 competitors entered the market.
?????According to data from Natural Gas Week, the markup between Texas and =
a=20
major California-border pipeline junction served by El Paso fell from $6.32=
=20
per million British thermal units on May 31--the last day of the=20
controversial deal--to only 23 cents Friday. A million BTU is about what a=
=20
typical Southern California household consumes in five or six days.
?????That put Southern California natural gas prices in line with the rest =
of=20
the country for the first time since last July.=20
?????State officials and California utilities said the price collapse=20
bolstered their case that the El Paso companies had been exercising market=
=20
power--engaging in monopolistic behavior.
?????"You can't help but think that the market is reacting to the differenc=
e=20
between having many shippers instead of one," said Kevin Lipson, a lawyer=
=20
representing Southern California Edison in the proceedings against El Paso.=
=20
"The market knows the difference between competition and monopoly."
?????Under the deal that just expired, one subsidiary of El Paso had obtain=
ed=20
the shipping rights for up to 17% of California's daily gas consumption=20
through a pipeline system owned by another subsidiary.
?????"We don't have an 800-pound gorilla any more," said Harvey Morris, a=
=20
lawyer for the California Public Utilities Commission. "We have a chimpanze=
e."
?????But Peggy Heeg, deputy general counsel for El Paso Corp., said other=
=20
factors--such as mild weather and increased storage levels of gas in=20
California--are behind the dramatic price swing.
?????"We are glad to see prices coming down and to see some relief for=20
Californians," Heeg said. "The price movement is consistent with what we ar=
e=20
saying, which is that supply and demand are driving prices."
?????The swift reversal in prices has raised suspicions at FERC.
?????"It's not enough to convict El Paso and send them to jail, but this=20
piece of information is certainly consistent with the idea that there was=
=20
market power," said an agency official.
?????"Prices had been dropping a little, but since June 1, it's become very=
=20
noticeable," said another agency official. "Obviously, one of the reasons h=
as=20
to be that the capacity changed hands."
?????FERC's governing board can order El Paso to refund profits if it finds=
=20
that the subsidiaries tried to manipulate the California market.
?????One independent economist cautioned against a rush to judgment. "There=
=20
are a lot of things going on which in and of themselves could account for a=
=20
significant price decline," said Bruce Henning of Energy and Environmental=
=20
Analysis Inc. in Arlington, Va. "I would be unwilling to draw a causal link=
."
?????In addition to the weather and fuller storage cited by El Paso's Heeg,=
=20
increased conservation by Californians has reduced demand for electricity.=
=20
That, in turn, has dampened the market for natural gas, the fuel most=20
commonly used by the state's power plants.
?????But the industry also has come under strong political pressure in rece=
nt=20
weeks. In hearings before Congress and the California Legislature, lawmaker=
s=20
spoke out against natural gas prices that were much higher than elsewhere i=
n=20
the nation. California Atty. Gen. Bill Lockyer launched an investigation. A=
nd=20
FERC, in addition to the El Paso hearing, called an industry conference.
?????Plaintiffs' lawyers in the El Paso case say they believe the pressure=
=20
led El Paso Merchant Energy--which sells natural gas--to pass up an option =
to=20
renew its contract with El Paso Natural Gas Co., which owns the pipeline=20
system. Instead, El Paso Merchant settled for a much smaller chunk of=20
capacity on its sister company's system. El Paso says the decision was made=
=20
for business reasons, not in response to pressure from regulators.

Copyright 2001 Los Angeles Times=20






New Power Plant Proposed for Riverside County

By MITCHELL LANDSBERG, Times Staff Writer=20

?????Calpine Corp., on a breakneck pace to boost the amount of electricity =
it=20
produces in California, announced plans Friday to build a major power plant=
=20
in western Riverside County near the terminus of a hotly contested=20
transmission line.
?????The plant, the 10th the company has proposed constructing in Californi=
a,=20
would be in the unincorporated Romoland area between Hemet and Perris, and=
=20
would supply enough power for about 450,000 homes.
?????"As a California-based company, we are extremely pleased to, yet again=
,=20
move forward on a project such as this," said John King, senior vice=20
president of business development for Calpine, which is based in San Jose.=
=20
The company has been eager to distance itself from the out-of-state energy=
=20
suppliers whom Gov. Gray Davis has portrayed as public enemies for their ro=
le=20
in California's energy crisis.
?????State officials greeted the announcement somewhat warily, noting that=
=20
Calpine has announced plans before that didn't pan out. Until the company=
=20
formally applies for licensing, the California Energy Commission will reser=
ve=20
comment on the plans, spokesman Rob Schlichting said.
?????"It's basically a trial balloon," he said of the announcement.
?????Calpine officials said they intend to file an application for licensin=
g=20
with the commission in July and to begin construction of the $325-million=
=20
plant sometime in the middle of next year. They said the plant could be=20
running by 2004.
?????Greg Lamberg, Calpine's director of business development, said the=20
company has already held extensive discussions with local officials in=20
Riverside County and has encountered no community opposition.
?????"We're finding just the reverse--we're finding a tremendous level of=
=20
support in the community," Lamberg said.
?????Local officials could not immediately be reached for comment. There ha=
s=20
been substantial opposition to another electrical project in the same=20
vicinity, a proposed 500,000-volt transmission line that San Diego Gas &=20
Electric wants to build through southwestern Riverside County.
?????The line would end at Southern California Edison's Valley substation i=
n=20
Romoland. Calpine's proposed Inland Empire Energy Center would be built abo=
ut=20
half a mile from the substation, on vacant land along California 74 near=20
Interstate 215.
?????Proximity to the Edison substation--and to a nearby natural gas=20
pipeline--make the location ideal, Lamberg said. Calpine officials said the=
y=20
don't expect opposition to the SDG&E transmission line to translate into=20
opposition to their project.
?????"The reason folks are opposed to that line is that it's a means for Sa=
n=20
Diego to import power," said Calpine spokesman Kent Robertson. "What we're=
=20
doing is, we're building projects to serve the local community. We think it=
's=20
kind of an apples-and-oranges comparison."
?????The area immediately surrounding the site is industrial, and Lamberg=
=20
said the company believes the plant will not cast a large "footprint" on th=
e=20
environment. Calpine's plans call for a 600-megawatt combined cycle plant=
=20
that burns natural gas to generate electricity. Combined cycle plants, whic=
h=20
recycle their heat to make electricity a second time, are considered=20
extremely efficient and far cleaner than older, single cycle plants.
?????If the plant is licensed and built, it will help cement Calpine's=20
position as a major player in the California energy market. The company now=
=20
owns 11 mostly small, geothermal power plants in the state but has plans=20
underway for nine gas-fired plants that would add more than 5,000 megawatts=
=20
of power, enough to supply about 4 million homes. Three major plants are=20
already under construction in Northern California.
?????The Southland plant would be the third new generator in Riverside=20
County. Wisvest is building a 520-megawatt plant in Blythe, and there are=
=20
plans for a smaller, "peaker" plant in that city.

Copyright 2001 Los Angeles Times=20







NEWS=20
CALIFORNIA POWER CRISIS=20
ISO seeks to pull rate authority from 4 firms
Jennifer Coleman
?=20
06/09/2001=20
The San Diego Union-Tribune=20
1,2,6,7=20
Page A-3=20
(Copyright 2001)=20
SACRAMENTO -- Four major power suppliers to California have shown they can=
=20
control prices in the wholesale electricity market and should have to refun=
d=20
excess charges, possibly up to billions of dollars, state grid officials sa=
id=20
yesterday.=20
The Independent System Operator, keeper of the state's power grid, also ask=
ed=20
the Federal Energy Regulatory Commission to revoke the market-based rate=20
authority for four generators: Duke Energy, Mirant, Dynegy and Reliant=20
Energy.=20
ISO analysts have estimated the state was overcharged about $6.7 billion=20
between May 2000 and March 2001.=20
That includes charges by generators other than the four in these filings, a=
nd=20
ISO officials didn't have an estimate on how much they were seeking from=20
Duke, Reliant, Mirant and Dynegy.=20
In order to continue charging market-based rates, generators must prove to=
=20
FERC that they don't have what is known as market power -- the ability to=
=20
charge whatever price they want without consequence.=20
Suppliers have to have that authority renewed by FERC every three years, an=
d=20
most are up for review this summer.=20
Robinson said the companies have exhibited they have market power and the=
=20
ability to charge market-based rates should be revoked. The ISO asked FERC =
to=20
act on their request by June 28.=20
Tom Williams, spokesman for Duke Energy, said company officials were=20
reviewing the filing. Duke operates the South Bay Power Plant in Chula Vist=
a=20
for its owner, the San Diego Unified Port District, under a long-term lease=
.=20
Richard Wheatley of Reliant Energy said the ISO order was "nothing but a=20
rehashing of previous allegations that have been repeatedly rejected by=20
FERC."=20
If FERC finds the companies do have market power, they could order them to=
=20
use cost-based rates, which limit company profits to a percentage above the=
=20
costs to produce power.=20
The ISO already has made similar requests regarding two other energy=20
companies, Williams and AES.=20
If the companies are found to have charged excessive rates, FERC can order=
=20
refunds.=20
Though ISO estimates $6.7 billion has been overcharged, some of that comes=
=20
from companies not under FERC's jurisdiction, such as Canadian firms or=20
municipal districts.=20
FERC has ordered $125 million in refunds, saying it can only examine prices=
=20
for power sold during Stage 3 emergencies, when reserves drop to below 1.5=
=20
percent.







OPINION=20
CALIFORNIA POWER CRISIS | LETTERS TO THE EDITOR=20
Short-circuited by the `so-called' electricity crisis
?=20
06/09/2001=20
The San Diego Union-Tribune=20
1,2,6,7=20
Page B-9:2,7; B-7:1; B-11:6=20
(Copyright 2001)=20
Re: "Is trading an insider's game" (A-1, June 6):=20
Does anyone actually doubt that the latest so-called "energy shortage" is=
=20
anything other than a case of those in position to do so racking up profits=
=20
at the expense of those unprepared to deal with the situation?=20
With profligate usage on the one hand and unmitigated greed on the other,=
=20
this showdown has all the makings of front page and prime time news blurbs,=
=20
but little more. One shouldn't assume from the hoopla that significant=20
improvements are coming.=20
We are told that more power plants and more oil and gas are on the way,=20
presumably to remedy the sort of "shortages" we now experience. Meanwhile,=
=20
elected officials still tout the free market as the answer to all our=20
problems.=20
In fact, energy markets are anything but free as they require endless publi=
c=20
and political largess in the form of rights of way and the financing of=20
staggering sums for infrastructure. All these costs are ultimately borne by=
=20
consumers in addition to "whatever-the- market-will-bear" energy costs.=20
Natural resources, including energy, should be public domain, along with=20
education, transportation and communication. PAUL STANGELAND Encinitas=20
As a native Californian, I have said for the last 40 years that the=20
environmentalists would destroy our good life.=20
I worked hard to build two new power plants in the early '70s, one being=20
Sundesert. The power company, SDG&E, said we would be short of power in ear=
ly=20
2000, depending on the population explosion; this, plus new transmission=20
lines, were all abandoned because of lawsuits to protect "rocks and other=
=20
desert animals."=20
California has a master plan for roads and highways. Many cannot be built o=
r=20
finished because of lawsuits protecting birds, snail darters and mesa mint,=
=20
so we have daily gridlock.=20
We do not need any more environmentalists in our government. This is why we=
=20
are where we are now. We need people who have an understanding of the "big=
=20
picture." They need to make better decisions and not hold up projects that=
=20
will benefit and improve the communities of San Diego. RUTH JOHNSON=20
Clairemont=20
Your editorial, ("Nuclear comeback," May 30), is a sign of the times. Still=
,=20
nuclear power has a unique problem which prevents it from being put into ma=
ss=20
production.=20
The problem is not a technical one. Those types of problems were solved lon=
g=20
ago. Nuclear power's unique deterrent is called "what if."=20
If "what ifs" were applied to other industries, no airplane would ever fly,=
=20
no bridge would ever be built and the space program would not exist.=20
California needs more nuclear power and less "what ifs." DOUGLAS C. SMITHDE=
AL=20
San Diego=20
So our utility is at it again, asking for an 18 percent rate hike. How abou=
t=20
an 18 percent payroll cut across the board for all those overpaid SDG&E=20
overpaid executives?=20
They have to be the most overcompensated group west of Congress. I don't ow=
n=20
any of the company's stock but I'd sure raise cain if I did. AL DORSETT San=
=20
Diego=20
Jim Goldsborough's column, ("An energy plan sponsored by Enron," June 4), i=
s=20
full of misinformation.=20
California 's energy problem is blamed on Enron and the Bush administration=
.=20
The truth is, California has itself to blame, caused by passage of=20
electricity decontrol by the Democratic Legislature under the leadership of=
=20
Steve Peace.=20
Further, due to strong environmentalist influence, California has not been=
=20
able to build power plants or drill for oil or natural gas in the last 10 t=
o=20
20 years. During this time, the population has grown by 50 percent.=20
Thus, California must import 20 percent of its electricity and has a shorta=
ge=20
of natural gas. Blaming Enron and the U.S. oil industry for high oil and=20
gasoline prices also is ridiculous.=20
The United States has to import 57 percent of its oil needs, so that oil=20
prices obviously are under the control of OPEC and other foreign producers.=
=20
President Jimmy Carter canceled our nuclear power program, apparently for=
=20
environmental reasons. This is the main reason that electricity supply is=
=20
short on both the West and East coasts.=20
Goldsborough is incorrect in stating that nuclear electricity is not=20
competitive.=20
Under Gov. Gray Davis, a gas-fired, electricity -generation program is boun=
d=20
to fail due to the natural gas shortage. I predict continuing California=20
electricity blackouts for at least the next five years under the present=20
program promoted by Davis. One hopes the electorate will recognize that the=
=20
governor only is interested in the 2002 election and will defeat him.=20
President Bush and Vice President Dick Cheney are fundamentally correct in=
=20
stating that establishing price controls for California electricity purchas=
es=20
would be counter-productive. Higher electricity prices not only would=20
decrease consumption but also would make it more attractive to build more=
=20
supply. J.W. BISHIP Olivenhain=20
President Bush campaigned on a compassionate conservative platform that has=
=20
morphed into the embodiment of crass commercialism.=20
While Cheney is the presumed shadow president, it looks more and more like =
he=20
has a powerful shadow in Kenneth Lay, chairman of Enron, the marketer of=20
energy products. Not only was Lay a prime mover in developing the so-called=
=20
"Bush Energy Policy," he recently hosted a secret meeting in San Francisco.=
=20
Its purpose was to urge influential Californians to push for deregulation a=
nd=20
stop investigations that "obstruct the process."=20
Now we know Lay has interviewed, "vetted," candidates for the Federal Energ=
y=20
Regulatory Commission, a supposedly independent body whose purpose is to be=
 a=20
watchdog on energy policy. The fox is clearly guarding the chickens. And th=
is=20
scenario was arranged for, or at least permitted by, the same president who=
=20
decided that the Bar Association would no longer be involved in "vetting"=
=20
candidates for judgeships. MARILYN MILLER Carlsbad=20
Let's see if I have this correct. Gov. Davis has a plan to fix our energy=
=20
problems.=20
First, place the blame on our president not putting on price caps, which=20
would only increase energy use and blackouts.=20
Next, threaten the owners of power plants with a windfall tax or better yet=
,=20
hint that the National Guard will come and take over their plants. And the=
=20
companies must charge only what we want, which, for sure, will discourage=
=20
other companies from coming to our state and building plants to increase=20
production, that being the only real solution to the problem.=20
Well listen, Gov. Davis, I'm tired of paying so much for a pair of Levis; h=
ow=20
about a windfall tax on Mervyns or Sears, or let's just take them over and=
=20
get those prices down.=20
By the way, just a question for Democrats, Davis and Bob Filner, to name a=
=20
couple. This energy crisis did not just come about in the few months that=
=20
President Bush has been in office. What energy policy did the Clinton/Gore=
=20
team have?=20
Oh, that's right, they didn't have one for eight years, so perhaps instead =
of=20
pointing fingers, it's time to work together and get these new plants on=20
line. PHIL TORRE Mira Mesa=20
Prior to deregulation, we were all used to our electric bills which showed=
=20
our cost for electric power was from 10 to 11 cents per kilowatt hour. This=
=20
rate was roughly divided between the cost of power generation which was 2 o=
r=20
3 cents and the remaining 7 cents for transmission and distribution.=20
Distribution costs have remained the same but power generation charges are=
=20
out of this world.=20
The state power authority has paid $348, and in an extreme case, $1,900, fo=
r=20
a megawatt-hour of electricity . Those figures convert to 34 cents and $1.9=
0=20
for a kilowatth-hour for your home.=20
If journalists would start using kilowatt-hour prices when writing about ou=
r=20
power problems, I am sure the public would make stronger demands on the sta=
te=20
and federal governments to solve this problem.=20
Even President Bush would agree that $1.90 per kilowatt-hour for electric=
=20
power generation is not a fair and reasonable charge for something it took =
3=20
cents to produce. L.K. McNEIL San Diego=20
The last few months have seen a flurry of news stories about California 's=
=20
energy shortage, but almost everyone has ignored our greatest energy=20
resource. The sun delivers an average of 6 kilowatt- hours of energy per=20
square meter per day in our desert areas. And solar plants can use mirrors =
to=20
concentrate the light intensity hundreds or thousands of times. This can be=
=20
used to spin turbines or drive Sterling engines.=20
Even 1995 technology could supply every single watt of electricity that=20
California consumed in 1999, using the sunlight that falls on just a 14-mil=
e=20
square of otherwise useless desert land. Such a "combined cycle solar=20
concentrator" system can be built at less than one-third the cost of solar=
=20
photovoltaic panels, and could produce power for less than 7 cents per=20
kilowatt-hour.=20
No pollution would be released by such a system, not even thermal pollution=
,=20
so it would not contribute to global warming in any way.=20
Another advantage of solar-based power generation is that most of the power=
=20
is available when California needs it, during summer afternoons. And best o=
f=20
all, we could bankrupt all of those energy gougers. GUY GROTKE Vista=20
My thermostat is turned down to near freezing; we don't use the dishwasher,=
=20
we use low energy bulbs and do the laundry after 7 p.m. - - so I guess it's=
=20
time to ask.=20
"Ask not what I can do for the city . . . but what can the city do for me? =
It=20
can, over time, save the taxpayer a bundle. It can do as Florida and severa=
l=20
other Sun Belt states have done and install solar- powered traffic lights.=
=20
If the entire state does it, we might dispense with the need for a generato=
r=20
or two, and at the same time, hit a few Texans where it hurts most -- in th=
e=20
pocketbook.=20
Come to think of it, a few locals with stock in those companies will shed a=
=20
tear or two -- how else to explain a few of the letters I've been reading?=
=20
MICHAEL R. ALBINO San Diego=20






California ; Zones Desk=20
Ventura County Businesses Sweat Out Power Crisis
CATHERINE SAILLANT
?=20
06/11/2001=20
Los Angeles Times=20
Ventura County Edition=20
Page B-1=20
Copyright 2001 / The Times Mirror Company=20
In the rush to save kilowatts, here is what it has come down to for one of=
=20
California 's small businesses: ketchup stains are detectable under=20
energy-efficient fluorescent bulbs but butter smears are not.=20
That's what the owners of Unique Cleaners in Ventura found before switching=
=20
to a specially installed light bank that saves energy but still casts enoug=
h=20
light to find spots.=20
Susan and Suk Cho then passed the information along to other cleaners,=20
joining an informal and growing network of small-business owners who are=20
sharing ways to sweat out a summer of predicted rolling blackouts and=20
spiraling electricity prices.=20
Unable to tap options available to bigger firms, small, energy-sucking=20
cleaners, ice shops, bakeries, restaurants and the like are turning to each=
=20
other for help.=20
"I'm sure we will be sweating more, working harder and getting less=20
accomplished," said Ken Ackerman, owner of ABC Ice House in Laguna Niguel,=
=20
who plans to shut off his air conditioner. "Whether we will end up better o=
ff=20
doesn't look likely."=20
They are getting a boost from the National Federation of Independent=20
Business, which is setting up councils around the state to come up with=20
conservation solutions for small-business owners.=20
"Small businesses are operating on very narrow margins," said Martyn Hopper=
,=20
state director of the agency. "Energy is a bottom-line cost that affects=20
their ability to pay salaries and benefits and their ability to exist. So=
=20
anything they can do to shave costs will help."=20
Projections of 30-plus days of summer blackouts could cost California=20
businesses an estimated $21.8 billion, a study by a California business=20
consortium found. Paired with electricity rate hikes of about 35% for=20
small-business customers, merchants have been forced to think hard about wa=
ys=20
to conserve and prepare for hourlong outages.=20
Although industrial users of electricity are seeing even higher price=20
increases, the burden falls heavily on small businesses because they have=
=20
fewer options, said Jack Kyser, chief economist for the Los Angeles County=
=20
Economic Development Corp.=20
Big companies with facilities in another state can switch production to tha=
t=20
state and get by, Kyser said. But mom-and-pop outlets are stuck here.=20
Many merchants can't just raise prices, because of fierce competition. And=
=20
reducing costs by trimming a bloated work force does not come into play whe=
n=20
there's no bloat, Kyser said.=20
Even business owners in Los Angeles, which has its own stable source of pow=
er=20
generation, are worried. Out-of-state customers, alarmed by reports of=20
California 's crisis, are getting jumpy about Los Angeles firms' ability to=
=20
fill contracts, regardless of the facts, Kyser said.=20
All this means that small businesses are barreling into uncharted territory=
.=20
"What we are finding is that small business, no matter where it is located,=
=20
is sort of scared silly," Kyser said.=20
A Kilowatt Here, a Kilowatt There=20
Many shop owners are just now getting down to the nitty-gritty details of h=
ow=20
to shave a kilowatt here and there.=20
The first thing Susan Cho did was remove every other bank of overhead=20
fluorescent bulbs at her 4,000-square-foot cleaners in Ventura. Then, she a=
nd=20
her husband, Suk, purchased a new industrial dryer and shirt presser that=
=20
operate on less energy.=20
She turned off an illuminated sign outside and unplugged a soda machine,=20
replacing it with a water cooler. Cho's 14 employees are instructed to turn=
=20
off lights whenever they are not in use and to completely fill dryers befor=
e=20
running them.=20
"I'd walk by and there would be two or three blouses in a machine," Cho sai=
d.=20
"No more."=20
These small steps added up to big savings. Cho estimates she spends $300 to=
=20
$400 less each month on electricity than she did a year ago. She told a=20
friend who also owns a dry cleaning shop what she had done, Cho said, and=
=20
also shared tips with her Korean business association.=20
Trimming energy usage is trickier for Ackerman. The Orange County ice=20
distributor can't just turn down the temperature on his 18-by-22-foot walk-=
in=20
freezer.=20
But he does plan to turn off the air conditioning elsewhere and use=20
lower-energy fans near the freezer during summer months.=20
Ackerman also checked out the possibility of buying a gas-powered generator=
=20
to run his compressor during hot afternoons. When he learned that he would=
=20
not receive a rate break for voluntarily taking his freezer offline, he=20
dropped the plan.=20
"I'm too small of a business to fall under any of the [rate-reduction]=20
programs available," Ackerman said. "So I'll just suffer through the summer=
."=20
At Print Masters in Long Beach, Dody Lopez runs jobs on the main copier onl=
y=20
during morning and late-afternoon hours. That way, power usage--and the hea=
t=20
the energy-hungry machine generates--are idled during peak energy hours fro=
m=20
noon to 4 p.m.=20
All four copying machines are equipped with a device that switches to a=20
power-saving mode when not in use. Lights are dimmed wherever possible and=
=20
the air conditioning has been replaced by fans and fresh air from open door=
s.=20
"People are complaining about the heat, but we explain to them that we are=
=20
trying to be good citizens and trying to get through this crisis without=20
getting completely shut down," Lopez said. "Most people are understanding."=
=20
Shop Owners Cross Fingers=20
Conservation, of course, is not on the minds of everyone. Several merchants=
=20
report that they haven't given it a thought or have adopted a "whatever=20
happens, happens" approach.=20
And anger over the continuing crisis simmers, especially with those who hav=
e=20
done nothing to prepare.=20
"What can I do? Tell me what I can do," said an annoyed Vassil Perpchinkov,=
=20
owner of Guido's, an Italian restaurant in Malibu. "This problem should be=
=20
solved by those higher up--it better be."=20
Kerry Nelson, a Granada Hills print shop owner, doesn't have to worry about=
=20
blackouts. Like other businesses in Los Angeles served by the Department of=
=20
Water and Power, there is enough voltage to go around.=20
Because of that, Nelson said he has not attempted to cut back on usage.=20
Still, he has sympathy for other small-business owners.=20
"I deal with some people out there who have had some problems. I really fee=
l=20
for them," he said. "But there's nothing I can do right now except be=20
grateful that I am not facing the same thing."=20
Small business can also help itself by collecting and distributing=20
conservation information in an organized fashion, said Hopper of the Nation=
al=20
Federal of Independent Business.=20
The first of 10 local councils that will be created across the state met la=
st=20
month in West Los Angeles to talk about ways to cut energy costs, he said.=
=20
Other groups will be formed in East Los Angeles, Orange County, the=20
Ventura-Santa Barbara region, San Diego, Sacramento and the Bay Area, Hoppe=
r=20
said.=20
Suggestions at the West Los Angeles gathering ranged from adding a temporar=
y=20
energy surcharge to installing fluorescent bulbs that save energy.=20
"What business owners need right now is practical information on how to=20
reduce costs," Hopper said. "That's what these councils can offer."=20
The councils will encourage the federation's 38,000 California members to f=
an=20
out at the local level to make sure that the effect on small business is=20
taken into consideration when new energy-related laws are passed, he said.=
=20
That kind of lobbying is important amid all the commotion, Kyser said.=20
"It's going to be a very unsettling period for a lot of these small=20
businesses," he said.







California ; Metro Desk=20
The State PG&E Plan to Fell Oaks Fuels Anger Energy: The utility contends t=
he=20
trees pose a fire threat to power lines. Critics claim the firm wants to cu=
t=20
costs.
JOHN JOHNSON
?=20
06/11/2001=20
Los Angeles Times=20
Home Edition=20
Page B-6=20
Copyright 2001 / The Times Mirror Company=20
ARROYO GRANDE, Calif. -- Plans to cut down hundreds of oak trees to make su=
re=20
the power stays on this summer are generating a high-voltage protest in thi=
s=20
usually quiet retirement mecca on the Central Coast.=20
Pacific Gas & Electric Co. says it must remove trees under its power lines =
to=20
prevent fire from knocking out the Diablo Canyon nuclear plant at a time wh=
en=20
the state will need every watt it can get.=20
Critics say the utility just wants to save gardening costs.=20
"The bottom line is the dollar," said Jim Johandes, 51, whose avocado ranch=
=20
backs up to PG&E property in a rural canyon. He drove his vehicle to the to=
p=20
of a hill one day last week and parked under giant towers bearing power lin=
es=20
that carry 500,000 volts of electricity .=20
"Everything you see under these lines will be history," he said, pointing t=
o=20
a thick canopy of oaks straddling the rolling brown hills.=20
The controversy over the oaks has not helped the battered reputation of the=
=20
utility.=20
Johandes, a big, white-bearded man who owned a Whittier company that=20
installed burglar and fire alarm systems until moving to the Central Coast=
=20
eight years ago, has opened his property to demonstrators.=20
Some sign-carrying activists pressed their case before the San Luis Obispo=
=20
County Board of Supervisors last week. One supervisor, Khatchik Achadjian,=
=20
called on PG&E to put the tree-chopping project "on hold until a compromise=
=20
can be developed."=20
So far, PG&E has shown no indication of scaling back plans to begin clearin=
g=20
away undergrowth this month. Utility officials say protesters overstate the=
=20
damage, as well as the project's intent.=20
"Trees and the environment are very important to everyone, including PG&E,"=
=20
said Bill Roake, a spokesman for the company.=20
If PG&E has done anything to be ashamed of, he said, it is failing to=20
communicate effectively with the public. "We did not do a good job," Roake=
=20
said.=20
Some have accused PG&E of planning to clear-cut 15 miles of right-of-way fr=
om=20
the bluff on the coast where Diablo is located. Utility officials say fewer=
=20
than half the trees will be removed from a swath of brushland less than two=
=20
miles long between Carpenter and Price canyons. That is about 104 acres=20
altogether.=20
The goal, Roake said, is to open up the canopy so that fire cannot race alo=
ng=20
the tops of the trees and threaten the power lines.=20
"The lines are right above a very, very heavy [wood and brush] fuel load,"=
=20
said Roake. "If there is a fire, you could have lines disrupted coming out =
of=20
Diablo."=20
Diablo Canyon is PG&E's single largest producer of power. Even if the flame=
s=20
did not reach the overhead lines themselves, smoke from a fire could put=20
particulates in the air causing an arc, or crossover between adjacent lines=
.=20
Known as "phasing," that would essentially short-circuit the transmission=
=20
lines. Last year, Roake said, a small brush fire in the area knocked out th=
e=20
lines for more than six hours, though part of that problem was an unrelated=
=20
equipment failure.=20
A worst case scenario, however, could knock out Diablo Canyon for three to=
=20
four days, Roake said.=20
PG&E said the cutting is being done to satisfy the state's Independent Syst=
em=20
Operator, a nonprofit corporation whose job is to ensure the safety and=20
reliability of the state's energy grid.=20
Stephanie McCorkle, a spokeswoman, said the ISO did not order PG&E to remov=
e=20
trees. "PG&E's preference was to remove trees rather than trim them," she=
=20
said in an e-mail response to The Times.=20
Roake acknowledged that the ISO didn't tell the utility to remove the trees=
.=20
"We felt this was the best way to keep the [grid system] safe and reliable,=
"=20
he said.=20
As for allegations that PG&E is cutting down trees to save money on=20
maintenance, Roake acknowledged that safeguarding 108,000 miles of=20
transmission lines is a big job. The utility spends $138 million annually t=
o=20
trim or remove trees and brush.=20
But the tree project has nothing to do with its cash crunch, according to=
=20
PG&E. The Carpenter Canyon project was planned two years ago.=20
Johandes doesn't believe it. "They are doing it so they don't have to do=20
routine maintenance," he said.=20
PG&E has not made the argument, but conceivably could say it's not anybody'=
s=20
business what it does with vegetation on its property. Oaks are not=20
endangered. There are 11 million acres of oak woodlands in California ,=20
according to the California Oak Foundation.=20
On the other hand, the oak looms large in the California myth. "It is kind =
of=20
our signature tree," said Janet Cobb, president of the foundation.=20
The state has lost 1.5 million acres of oaks since 1945, according to Cobb.=
=20
The PG&E plan, she said, is "a travesty. I can't imagine what they're=20
thinking. Yes, some trees need to be thinned out, but this is butchering."=
=20
Roake denied that. PG&E said it is approaching the project cautiously. The=
=20
first thing that will be done when work begins next week will be mowing dow=
n=20
the grassy underbrush known as ladder fuel. That could be an ignition point=
=20
for fire. After that, dead and diseased trees will be taken out.=20
"Then we'll see what that does for the canopy," he said.







California ; Metro Desk=20
CAPITOL JOURNAL=20
The State Gov. Davis Feisty About Gaining Leverage Over the 'Cowboys'
GEORGE SKELTON
?=20
06/11/2001=20
Los Angeles Times=20
Home Edition=20
Page B-6=20
Copyright 2001 / The Times Mirror Company=20
SACRAMENTO -- The phone rang and it was the governor. "Just wanted to talk =
a=20
little bit about electricity ," he said. "I think we're on the verge of=20
breaking the exorbitant spot market. . . .=20
"Believe me, we're still in for a volatile summer. But our plans are=20
beginning to fall into place, and we finally have some leverage. The only=
=20
thing these greedy out-of-state generators respond to is leverage. . . .=20
"The point is, we're turning the corner."=20
Gov. Gray Davis was feeling good--about plunging wholesale electricity pric=
es=20
(lowest since April 2000), about conservation (Californians used 11% fewer=
=20
kilowatts last month than in May 2000), about more supply (one major Kern=
=20
County power plant is about to go online two months early) and about new po=
ll=20
numbers.=20
Davis believes his "summit" with President Bush two weeks ago in L.A.=20
burnished his image. His pollster, Paul Maslin, found that the governor's j=
ob=20
approval rating rose from 46% in early April to 52% after the Bush meeting.=
=20
The president's job rating in California , meanwhile, fell from 56% to 43%.=
=20
Bush handed Davis a microphone to shout his message: that he's building=20
plants and conserving electricity --but only federal regulators can order=
=20
price relief, and they've refused. That word finally got through to people,=
=20
the governor thinks.=20
And this was why Davis had phoned--to stress that he does have a plan, an=
=20
endgame, and it's working. Critics to the contrary.=20
"It's premature to declare victory. It's not the time to pop champagne=20
corks," he said. "But we're turning the corner."=20
Davis must have said "turning the corner" and attributed it to "leverage" 2=
0=20
times in our 30-minute conversation. And the anti-generator rhetoric rolled=
=20
naturally off his tongue, having by now become integral to his everyday=20
speech.=20
"The name of this game is leverage," he said. "If you don't have leverage=
=20
over these cowboys, they will steal you blind. They'll take every dime you=
=20
have, all the clothes you own, and be laughing all the way to the bank."=20
These cowboys, of course, are mostly Texans. Critics have protested that a=
=20
governor cannot keep calling people names and still expect to do business=
=20
with them.=20
"That's the only thing that gets their attention," Davis asserted. "They're=
=20
embarrassed as sin. The last thing they want is any attention. They're luck=
y=20
they're not in jail. I mean, this is highway robbery. . . . They've been=20
selling us back our own electrons at 800% more than we paid for them two=20
years ago at a time we're conserving. . . ."=20
A confluence of events has provided the leverage, Davis said:=20
* His administration has locked up 43% of the state's electricity needs wit=
h=20
long-term deals at reasonable prices, reducing dependence on the sky-high=
=20
spot market.=20
* California has become the nation's No. 1 electricity conserver.=20
* The U.S. Senate has turned Democrat and is pressuring federal regulators.=
=20
* Bush has named two new members to the Federal Energy Regulatory Commissio=
n=20
who, unlike the chairman, don't seem like power company toadies. Indeed, th=
e=20
FERC is probing predatory price gouging by El Paso natural gas.=20
"And then you have a governor who's quick to get in the face of greedy=20
out-of-state generators," Davis continued. "Shame them for being the highly=
=20
irresponsible citizens they are. . . . Naming names and holding people=20
accountable. Exposing their willingness to bleed California dry. . . . Taki=
ng=20
no prisoners."=20
A governor also threatening to tax windfall profits and seize power plants.=
=20
Davis recently went after municipal utilities, as well, after learning they=
=20
occasionally had been gouging the state even worse than the private=20
profiteers. The governor warned he'd seize their excess power unless they=
=20
agreed to sell it at a small profit, maybe 15%.=20
He was especially irked at the L.A. DWP, and told both Mayor Richard Riorda=
n=20
and Mayor-elect James K. Hahn.=20
"They didn't like it," Davis recalled. "They said it sounds like a threat. =
I=20
said it is a threat. You've made a fortune off us. You should be embarrasse=
d=20
to be taking advantage of the state during its time of need. We certainly=
=20
came to your aid after the 1994 earthquake."=20
I reminded Davis that critics fault him for not acting more quickly a year=
=20
ago. They complain he should have pressed for long-term contracts then and=
=20
pushed for consumer rate hikes to salvage private utilities. Does he=20
acknowledge he could have moved faster?=20
"No, I don't concede one iota," he replied. "That's just all armchair=20
quarterbacking. I mean, I've taken on the biggest challenge this state has=
=20
faced in 50 years. We're turning the corner. . . ."=20
Could be. But this summer will be a tricky corner to turn. Davis still coul=
d=20
be run down by rolling blackouts and Texas cowboys.=20







NEWS=20
Davis adds major ally in bid for price caps / Lieberman invites governor to=
=20
testify
Rick DelVecchio
?=20
06/11/2001=20
The San Francisco Chronicle=20
FINAL=20
Page A.1=20
(Copyright 2001)=20
Gov. Gray Davis picked up another powerful ally yesterday in his plea for=
=20
federal aid for California 's crippling power bills: Sen. Joseph Lieberman,=
=20
who has named Davis to go head-to-head with federal energy regulators at a=
=20
Senate hearing on the crisis.=20
Davis said yesterday he was thrilled that the Connecticut Democrat would=20
shine a light on the Federal Energy Regulatory Commission, which refuses to=
=20
fully cap wholesale electricity prices even though critics contend it has a=
=20
legal duty to prevent price gouging.=20
"I believe (FERC) is on a sit-down strike," Davis said in a joint phone=20
conference with Lieberman. "The result has been skyrocketing prices in=20
California and a recession, which does not bode well for the American=20
economy."=20
California has been looking to President Bush for help in the energy crisis=
,=20
but the White House has steadfastly refused to endorse price caps, saying=
=20
they do nothing to increase supply or promote conservation.=20
"The president will continue to work with California to address their growi=
ng=20
energy needs, but does not want to take action that will make the problem=
=20
worse, such as price controls," White House spokeswoman Anne Womack said=20
yesterday.=20
Lieberman's Governmental Affairs Committee, which he took over in the=20
partisan shift that followed Vermont Sen. Jim Jeffords' switch from=20
Republican to independent, will take up the power crisis on Wednesday with =
a=20
hearing on the effects of deregulation on the energy and natural gas=20
industries. It will hold a second session on June 20 to explore whether FER=
C=20
is doing its job to ensure reasonable energy prices.=20
Lieberman said Davis would appear on June 20 as the key witness. The event=
=20
will put Davis, a Democrat, in the same room with FERC members, three of wh=
om=20
are Republicans and two are Democrats.=20
Lieberman said Davis' appearance would enable the committee to take what he=
=20
called a balanced look at the crisis, which has been riven by partisan and=
=20
ideological differences over the federal government's role in the energy=20
markets.=20
"We have a market in California that has not really been a free market,"=20
Lieberman said. "Therefore, we have to use whatever methods we have . . . t=
o=20
get those selling electricity to act more reasonably."=20
Lieberman is the latest high-profile Washington figure to join Davis' plea=
=20
that the law demands price controls by FERC while California works on=20
long-term fixes for the flawed deregulation scheme put in place five years=
=20
ago.=20
Lieberman said he was not advocating arbitrary price caps but rather price=
=20
relief that would guarantee power producers a reasonable profit.=20
"I'm not deluding myself," he said. "This is going to be a battle."=20
He said he hoped the hearings would compel the commission to "do what the l=
aw=20
says they should be doing."=20
"Hopefully, through hearings and direct dialogue, and perhaps debate, we ca=
n=20
get the commission to fulfill its statutory responsibility," Lieberman said=
.=20
Davis said he believed the energy industry would respond to political and=
=20
legal pressure, and noted that recent price drops in California showed that=
=20
the campaign already was having an impact.=20
"The last few days of price relief is solely the result of extreme pressure=
=20
from Washington and from Sacramento," Davis said. ". . . We finally have a=
=20
little leverage, and we can't let up."=20
In an interview yesterday on NBC's "Meet the Press," Lieberman criticized t=
he=20
president's plan to generate more energy through drilling and argued that t=
he=20
nation's energy policy should center on conservation, with some production=
=20
and new technologies such as fuel cells.=20
But Republican Sen. Mitch McConnell of Kentucky said on the program that=20
conservation was not enough.=20
"Everyone knows that conservation is important," he said. "The president=20
knows that. But you can't conserve our way out of this problem."






NEWS=20
Bay residents tired of state crisis decrees / Conserving or not, they ignor=
e=20
Davis
Meredith May
?=20
06/11/2001=20
The San Francisco Chronicle=20
FINAL=20
Page A.1=20
(Copyright 2001)=20
Now that the California governor has declared victory in the energy wars,=
=20
many Bay Area residents are vowing to wear their low- watt fluorescent halo=
es=20
and continue conserving power this summer.=20
But others said there never was a war to begin with, and one of them, a=20
Berkeley psychotherapist, declared she would continue to commit that=20
California sin of all sins -- she will not unplug her hot tub.=20
Around the Bay Area, people say it doesn't matter what Gov. Gray Davis says=
=20
about turning the lights off or about power companies, they're sick of the=
=20
whole thing and just want to live their lives.=20
Some will keep the conservation changes they made so they can save more mon=
ey=20
on future energy bills, while others secretly admit they didn't change much=
=20
anyway so the latest news isn't really news.=20
Last week, the governor announced that the state had "basically won the war=
"=20
on high energy prices, after wholesale electricity prices dropped to their=
=20
lowest level in a year, and natural gas prices fell as well.=20
Davis said prices had plunged after 38 long-term power contracts signed by=
=20
the state forced power companies to compete for buyers, helping push=20
electricity prices lower.=20
Despite the dropping prices, Davis warned Californians to keep their power=
=20
use in check.=20
"I'm a new conserver now," said Nouvella Lumford of Oakland, who came to=20
Albany Bowl Friday to knock some pins with her East Bay senior citizens'=20
league, Young At Heart.=20
To save money during the energy crisis, Lumford replaced her electrical wal=
l=20
heaters with central heat and trained herself to unplug all her appliances=
=20
before she left the house.=20
Soaring energy prices meant her bill kept going up anyway, and even hit the=
=20
$500 mark. But she's going to stick to her new habits.=20
"Now if prices go down, and I continue to conserve, I might be able to save=
 a=20
little money so I can travel on the train -- I love to travel, honey!" she=
=20
said.=20
BOWLING ALLEY CONSERVES=20
While Lumford bowled under a well-lit lane, the back half of the bowling=20
alley was in the dark. When there aren't enough people to fill all the lane=
s,=20
the managers now shut down the lights to save money, said assistant manager=
=20
Debbie Fairhurst. "We also turn off the ceiling lights at night, which is=
=20
new, and we turned the air down. Customers didn't seem to mind, so why not=
=20
keep it up if it can help lower our bills?"=20
For windsurfer Brett Staib, who was getting ready to jump into the water of=
f=20
Point Isabel in Richmond, the possible end of the state's power problems is=
=20
not that exciting. His whole approach to the energy crisis was to keep=20
looking on the bright side.=20
"Rolling blackouts aren't so bad," he said. "So what if you have to stop wh=
at=20
you're doing for an hour and go take a walk?"=20
Staib's contribution to the energy crunch was to turn off his front door=20
light at night. Not much, he admitted, but he already used fluorescent bulb=
s=20
inside before the crisis because they use less power.=20
"I don't think I'll need to use much air conditioning this summer because i=
t=20
stays pretty cool around here," he said.=20
But for others who live in the land of no mercy, like Sandra Golightly of=
=20
Antioch, keeping the air conditioning off this summer is not going to happe=
n.=20
Golightly said she and her family were going to keep living like they alway=
s=20
did in a home they equipped for energy efficiency a decade before it was=20
trendy.=20
ARIZONA EXPERTISE=20
A Phoenix transplant, Golightly knows some tricks: double insulation, ceili=
ng=20
fans in every room, honeycomb blinds and wooden plantation shutters for the=
=20
windows, and timers on the heat and air conditioning.=20
"We didn't change much during the crisis because we're already doing so=20
much," she said. "We even landscaped the backyard so it would shield the=20
sun."=20
If the energy woes do indeed fade away, people will probably keep conservin=
g=20
for a little while, but eventually slip back to their old habits, Berkeley=
=20
author Elayne Savage said as she relaxed in the sunshine in Berkeley's Four=
th=20
Street shopping district.=20
"It's just like the water crisis, when we were being so good and planting=
=20
these succulent and cactus gardens," she said. "Eventually that faded away.=
"=20
But Richard Rivas of El Sobrante said he was a changed man. A drummer in a=
=20
Motown band by night, he washes delivery trucks in Oakland's warehouse=20
district by day.=20
"I stopped turning on the heat and built fires, or put on a hooded=20
sweatshirt," he said. "It's not that bad, really, and I think we all got a=
=20
little too used to being comfortable. We should all conserve this summer so=
=20
there's enough for everybody."=20





Bay residents tired of state crisis decrees=20
Conserving or not, they ignore Davis=20
Meredith May, Chronicle Staff Writer
Monday, June 11, 2001=20
,2001 San Francisco Chronicle=20
URL: http://www.sfgate.com/cgi-bin/article.cgi?f=3D/c/a/2001/06/11/MN238305=
.DTL=20
Now that the California governor has declared victory in the energy wars,=
=20
many Bay Area residents are vowing to wear their low-watt fluorescent haloe=
s=20
and continue conserving power this summer.=20
But others said there never was a war to begin with, and one of them, a=20
Berkeley psychotherapist, declared she would continue to commit that=20
California sin of all sins -- she will not unplug her hot tub.=20
Around the Bay Area, people say it doesn't matter what Gov. Gray Davis says=
=20
about turning the lights off or about power companies, they're sick of the=
=20
whole thing and just want to live their lives.=20
Some will keep the conservation changes they made so they can save more mon=
ey=20
on future energy bills, while others secretly admit they didn't change much=
=20
anyway so the latest news isn't really news.=20
Last week, the governor announced that the state had "basically won the war=
"=20
on high energy prices, after wholesale electricity prices dropped to their=
=20
lowest level in a year, and natural gas prices fell as well.=20
Davis said prices had plunged after 38 long-term power contracts signed by=
=20
the state forced power companies to compete for buyers, helping push=20
electricity prices lower.=20
Despite the dropping prices, Davis warned Californians to keep their power=
=20
use in check.=20
"I'm a new conserver now," said Nouvella Lumford of Oakland, who came to=20
Albany Bowl Friday to knock some pins with her East Bay senior citizens'=20
league, Young At Heart.=20
To save money during the energy crisis, Lumford replaced her electrical wal=
l=20
heaters with central heat and trained herself to unplug all her appliances=
=20
before she left the house.=20
Soaring energy prices meant her bill kept going up anyway, and even hit the=
=20
$500 mark. But she's going to stick to her new habits.=20
"Now if prices go down, and I continue to conserve, I might be able to save=
 a=20
little money so I can travel on the train -- I love to travel, honey!" she=
=20
said.=20
BOWLING ALLEY CONSERVES
While Lumford bowled under a well-lit lane, the back half of the bowling=20
alley was in the dark. When there aren't enough people to fill all the lane=
s,=20
the managers now shut down the lights to save money, said assistant manager=
=20
Debbie Fairhurst. "We also turn off the ceiling lights at night, which is=
=20
new, and we turned the air down. Customers didn't seem to mind, so why not=
=20
keep it up if it can help lower our bills?"=20
For windsurfer Brett Staib, who was getting ready to jump into the water of=
f=20
Point Isabel in Richmond, the possible end of the state's power problems is=
=20
not that exciting. His whole approach to the energy crisis was to keep=20
looking on the bright side.=20
"Rolling blackouts aren't so bad," he said. "So what if you have to stop wh=
at=20
you're doing for an hour and go take a walk?"=20
Staib's contribution to the energy crunch was to turn off his front door=20
light at night. Not much, he admitted, but he already used fluorescent bulb=
s=20
inside before the crisis because they use less power.=20
"I don't think I'll need to use much air conditioning this summer because i=
t=20
stays pretty cool around here," he said.=20
But for others who live in the land of no mercy, like Sandra Golightly of=
=20
Antioch, keeping the air conditioning off this summer is not going to happe=
n.=20
Golightly said she and her family were going to keep living like they alway=
s=20
did in a home they equipped for energy efficiency a decade before it was=20
trendy.=20
ARIZONA EXPERTISE
A Phoenix transplant, Golightly knows some tricks: double insulation, ceili=
ng=20
fans in every room, honeycomb blinds and wooden plantation shutters for the=
=20
windows, and timers on the heat and air conditioning.=20
"We didn't change much during the crisis because we're already doing so=20
much," she said. "We even landscaped the backyard so it would shield the=20
sun."=20
If the energy woes do indeed fade away, people will probably keep conservin=
g=20
for a little while, but eventually slip back to their old habits, Berkeley=
=20
author Elayne Savage said as she relaxed in the sunshine in Berkeley's Four=
th=20
Street shopping district.=20
"It's just like the water crisis, when we were being so good and planting=
=20
these succulent and cactus gardens," she said. "Eventually that faded away.=
"=20
But Richard Rivas of El Sobrante said he was a changed man. A drummer in a=
=20
Motown band by night, he washes delivery trucks in Oakland's warehouse=20
district by day.=20
"I stopped turning on the heat and built fires, or put on a hooded=20
sweatshirt," he said. "It's not that bad, really, and I think we all got a=
=20
little too used to being comfortable. We should all conserve this summer so=
=20
there's enough for everybody."=20
E-mail Meredith May at mmay@sfchronicle.com.=20
,2001 San Francisco Chronicle ? Page?A - 1=20



Developments in California's energy crisis=20
The Associated Press
Monday, June 11, 2001=20
,2001 Associated Press=20
URL:=20
http://www.sfgate.com/cgi-bin/article.cgi?file=3D/news/archive/2001/06/11/s=
tate1
050EDT0154.DTL=20
(06-11) 07:50 PDT (AP) --=20
Developments in California's energy crisis:=20
MONDAY:
* No power alerts as reserves stay above 7 percent.=20
SUNDAY:
* In a conference call with reporters, Gov. Gray Davis and Sen. Joseph=20
Lieberman, D-Conn., again call on the Federal Energy Regulatory Commission =
to=20
cap wholesale electricity prices.=20
* No power alerts as electricity reserves stay above 7 percent.=20
WHAT'S NEXT:
* 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 Department of Water Resources and Los Angeles Department of Water and=
=20
Power have until Monday evening to turn over documents requested by the sta=
te=20
Senate committee investigating market manipulation.=20
* A state Assembly committee considers a bill Monday that would have=20
utilities schedule blackouts up to a month ahead.=20
* The Senate Governmental Affairs Committee, which Lieberman chairs, holds=
=20
hearings June 13 and June 20 on the power crisis.=20
THE PROBLEM:
High demand, high wholesale energy costs, transmission glitches and a tight=
=20
supply worsened by scarce hydroelectric power in the Northwest and=20
maintenance at aging California power plants are all factors in California'=
s=20
electricity crisis.=20
Southern California Edison and Pacific Gas and Electric say they've lost=20
nearly $14 billion since June to high wholesale prices the state's=20
electricity deregulation law bars them from passing on to consumers. PG&E,=
=20
saying it hasn't received the help it needs from regulators or state=20
lawmakers, filed for federal bankruptcy protection April 6.=20
Electricity and natural gas suppliers, scared off by the companies' poor=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 average rate increases of 37=
=20
percent for the heaviest residential customers and 38 percent for commercia=
l=20
customers, and hikes of up to 49 percent for industrial customers and 15=20
percent or 20 percent for agricultural customers to help finance the state'=
s=20
multibillion-dollar power buys.=20
,2001 Associated Press ?=20








Electricity traders' tech habits get scrutiny=20
Posted at 10:23 p.m. PDT Sunday, June 10, 2001=20
BY JENNIFER BJORHUS=20

Mercury News=20


State officials investigating California's extraordinary energy prices are=
=20
zeroing in on how energy traders use the technology tools of their professi=
on=20
-- from e-mail and specialized software to Internet energy data sites and=
=20
online trading floors.=20
This technology may be key, they say, to helping traders acquire the intima=
te=20
knowledge needed to manipulate California's troubled energy market. With=20
minute-to-minute knowledge of market conditions, some traders went even=20
further, two lawsuits charge, illegally coordinating bids and sending=20
electricity prices to record-breaking levels.=20
The state Attorney General's Office has subpoenaed from power generators=20
software used to formulate bidding strategies, names of employees providing=
=20
computer support, communications with a prominent industry Web site and the=
=20
name of firms that handle computer networks.=20
And a state Senate committee has hired an information technology consultant=
=20
to help them look into how traders tracked patterns on the state's=20
Internet-based spot market, among other things.=20
``Once you were knowledgeable about its operations, the opportunity to game=
=20
it became pretty obvious,'' said Sen. Joe Dunn, D-Garden Grove, who chairs=
=20
the committee.=20
Anti-trust laws=20
Working together, or colluding, to fix prices is illegal and violates state=
=20
and federal anti-trust laws.=20
Sharing sensitive industry data, if it involved financial markets, would be=
=20
considered insider trading and would be treated far differently, said Anjal=
i=20
Sheffrin, head of market analysis for the Independent System Operator, whic=
h=20
manages the state's power grid.=20
The Securities and Exchange Commission polices the nation's stock markets,=
=20
but wholesale energy trading goes largely unwatched by federal regulators.=
=20
San Diego attorney Mike Aguirre agreed with Sheffrin. Aguirre is part of a=
=20
team of lawyers who have filed two lawsuits against leading power generator=
s=20
such as Dynegy, Duke Energy and Williams Energy Services.=20
``It's basically an embryonic kind of trading market that involves the=20
sharing of inside information, and the only reason they're getting away wit=
h=20
it is there's no SEC cop,'' he said.=20
Energy companies dismiss these charges as speculation.=20
``All of these `What ifs?'?'' said Dynegy spokesman Steve Stengel. ``The fa=
ct=20
of the matter is we've played by the rules, we've acted ethically, we haven=
't=20
done anything wrong.''=20
Energy companies say the way they use technology is all above board.=20
``That's something that we're proud of, that we have all of the tools to do=
=20
the best possible job in the trading,'' said Paula Hall-Collins, spokeswoma=
n=20
for Tulsa-based Williams Co.=20
Not everyone is persuaded that energy companies actually conspired to hike=
=20
prices.=20
Some public officials and energy industry players call the technology focus=
 a=20
red herring. California's energy problems are far more fundamental, they sa=
y,=20
than click-happy energy traders with spreadsheets. The now-defunct Californ=
ia=20
Power Exchange, for example, was something of a sitting duck, unable to=20
freely shop around for the best electricity prices.=20
Wealth of data=20
Other experts believe the sheer wealth of data floating around -- from rive=
r=20
flows to 30-day forecasts of power line outages -- gives traders an unfair=
=20
advantage. ``That's exactly the issue,'' said Severin Borenstein, director =
of=20
the University of California Energy Institute. ``The issue is whether all=
=20
this information is actually doing more harm to competition than benefit to=
=20
the efficiency of procuring and selling power.''=20
The best illustration of this is a somewhat legendary Web site blunder.=20
In that incident, an energy industry association called the Western Systems=
=20
Coordinating Council posted highly sensitive real-time data about=20
transmission of extra-high voltage electricity in California.=20
Alarmed that such information could be used to game the market, the state's=
=20
grid operator last October demanded that the trade group take the informati=
on=20
off the site, which it did.=20
A former energy trader who spoke to the Mercury News on the condition that =
he=20
not be identified, said: ``When you can calculate exactly what a market nee=
ds=20
and where its surplus is going to come from, then you have the ability to=
=20
essentially fix prices. It's like a linear equation. You know exactly what=
=20
the end equation is going to be.''=20
At issue are how traders employ the tools that, like the telephone and fax=
=20
machine, are standard in trading electricity: software, data Web sites and=
=20
Internet energy exchanges.=20
Dunn and other public officials acknowledge that it isn't clear how=20
technology was used in suspected abuses. And no one has turned up slam-dunk=
=20
evidence of collusion.=20
The ISO has done extensive studies that conclude traders drove up prices=20
through gaming. The high prices have cost the state at least $6.7 billion=
=20
since May 2000.=20
``Energy traders trade information among themselves,'' the ISO's Sheffrin=
=20
charged, comparing it to insider-trading. ``These traders are calling each=
=20
other up all the time.''=20
The former energy trader who talked to the Mercury News agreed energy trade=
rs=20
as a very incestuous group.=20
They talk and e-mail every day. ``Sometimes many, many, many times a day,''=
=20
he said. ``Some of them have instant messaging.'' He said he believes it=20
could amount to ``de facto collusion.''=20
But proving collusion in court is extremely difficult.=20
The sticking point, said UC's Borenstein, is showing exactly what energy=20
traders did with the information.=20
``These guys aren't actually sitting down in a room together,'' Borenstein=
=20
said. ``They sort of watched each other and said, `Well, other firms are=20
keeping capacity out and we will too.'?''=20
The former energy trader said he doubted that investigators would prove=20
collusion because traders will cover their tracks. ``They're expunging=20
hard-drive data as we speak,'' he said. ``The documents are long gone.''=20
Lawsuits=20
Two class-action lawsuits, filed on behalf of taxpayers by San Francisco an=
d=20
by Lt. Gov. Cruz Bustamante, accuse the energy companies of colluding to=20
drive up prices. Neither lawsuit clearly documents how the energy companies=
=20
engaged in secretive data-sharing.=20
The Bustamante suit, however, targets a new Internet site for wholesale=20
energy trading launched last fall by heavy-hitter energy companies such as=
=20
Duke and Reliant. The Atlanta-based Web site, IntercontinentalExchange, is=
=20
one of at least a dozen such electronic trading floors that have popped up =
on=20
the Internet in the last four years. None of these trading exchanges -- whi=
ch=20
analysts say are the wave of the future -- are regulated.=20
IntercontinentalExchange declined to comment since it is not a party to the=
=20
suit.=20
The lawsuit charges the site ``has several features that support collusive=
=20
behavior amongst market participants.''=20
One is that only approved traders have access to IntercontinentalExchange a=
nd=20
those traders can pick who they want to trade with and shut other traders=
=20
out. And more importantly, Aguirre said, the energy companies who own many =
of=20
these Web exchanges get the tremendous benefit of having a record of all th=
e=20
trades.=20
``It gives them an enormous amount of market data that no one else has acce=
ss=20
to,'' he said. ``It's a conduit for collusion.''=20


Contact Jennifer Bjorhus at jbjorhus@sjmercury.com or (408) 920-5660.=20












Davis is down, but history and politics are on his side=20
Published Monday, June 11, 2001, in the San Jose Mercury News=20
BY PHIL YOST=20
THE next time Gray Davis faces the voters is less than nine months away.=20
Before the March 5 primary election, blackouts could blight the summer,=20
generators could loot the state, utilities could sink into the ocean, and=
=20
Home Depot could run out of batteries.=20
Already, the energy crisis has made voters crabby. In the latest Field Poll=
,=20
49 percent had an unfavorable impression of Davis, as opposed to 44 percent=
=20
favorable.=20
Here, perhaps, is where the battered Republican Party, pinned against its o=
wn=20
goal line, can regain some of the ground lost in the 1998 and 2000 election=
s.=20
Perhaps Davis will even be weakened by a challenge from within his own=20
Democratic Party.=20
Don't be too hasty.=20
From January to June, the GOP's prospects undoubtedly thawed. Two candidate=
s=20
are already looking to take advantage: Bill Jones, California's secretary o=
f=20
state, and Bill Simon, a Los Angeles businessman and philanthropist.=20
But here's a bit of history discouraging for the Bills, neither of whom is=
=20
recognized by even half the voters in the state. The last California govern=
or=20
to be denied a second term by the voters was Culbert Olson, in 1943.=20
Davis will not answer to all the voters in March, only Democratic ones. Cou=
rt=20
rulings have eliminated California's short-lived blanket primaries and=20
restored the partisan contests. So he has two summers before the November=
=20
2002 election to get the power puzzle solved.=20
All the same, politics is an arena in which anything can happen. (Your hono=
r,=20
I call Jesse Ventura to the stand.) And what Republicans more and more are=
=20
hoping will happen is that Los Angeles will send to the governor's office i=
ts=20
departing mayor, Richard Riordan. Riordan says he's thinking about running.=
=20
A Field Poll in late May showed Riordan even with Davis in voter preference=
,=20
while Jones and Simon trailed by double digits. President Bush has called o=
n=20
Riordan to run. Last week, 14 Republican legislators, of the 44 in the=20
Assembly and Senate, and 16 of California's 20 Republican members of Congre=
ss=20
signed a letter urging Riordan to be a candidate.=20
Given the beaten down state of the Republican party in California, one of=
=20
Riordan's advantages for the general election is that he is thought of firs=
t=20
as the mayor of Los Angeles, and only second as a Republican. It's an=20
accurate picture. He opposed the immigrant-bashing Proposition 187. He=20
supports gay rights and is generally pro-choice. He has endorsed Democratic=
=20
Sen. Dianne Feinstein in the past.=20
Plenty of Republicans will find plenty to dislike there. But they should ge=
t=20
realistic about what sort of candidate is electable. Socially conservative=
=20
Dan Lungren, the GOP candidate in 1998, got pounded. The 2000 election=20
offered no suggestion that California voters were moving rightward.=20
Riordan, a very wealthy man, could put $30 million or more of his own money=
=20
into the campaign, which is what Davis already has collected. Yet Riordan's=
=20
performance as L.A. mayor insulates him from the charge that he is a rich m=
an=20
playing at politics.=20
Jones, who is from Fresno, has done a commendable job in his eight years as=
=20
secretary of state. But he offended many Republicans by the way in which he=
=20
switched from supporting George W. Bush to John McCain in last year's=20
presidential race. Simon has the money to make himself and his message know=
n,=20
but right now both are unknown.=20
Maybe Jones and Simon can make the cases for themselves over the summer and=
=20
fall. But Riordan would enter the race with a huge head start.=20
As for a challenger to Davis from within the party, everything depends on=
=20
this summer. Only if it is an ordeal of blackouts and staggering state=20
electricity bills is Davis in danger. The political taboo against striking =
at=20
an incumbent is powerful.=20
Further, those most likely and able to mount a palace coup -- Attorney=20
General Bill Lockyer and Treasurer Phil Angelides, to pick two -- would be=
=20
the most viable candidates to succeed Davis four years from now. Why would=
=20
they risk a suicide mission instead of waiting?=20
The first half of 2001 damaged Davis's political standing. But in politics,=
=20
being down is a long way from being out. And despite the polls, Republicans=
=20
should strategize as if they are a long way from the governor's office.=20


Phil Yost is chief editorial writer of the Mercury News.=20














Senate panel eyes price caps for power=20
Lieberman will hold hearings that will include Gov. Davis and U.S.=20
regulators.=20
June 11, 2001=20
By KATE BERRY
The Orange County Register=20
U.S. Sen. Joseph Lieberman announced Sunday that he will hold hearings=20
beginning this week on California's electricity crisis aimed at forcing=20
federal energy regulators to cap power prices in California and throughout=
=20
the West.=20
Gov. Gray Davis will testify before a Senate committee and square off with=
=20
Federal Energy Regulatory Commission members at a hearing June 20, Lieberma=
n=20
said.=20
Lieberman, who became chairman of the Senate Government Affairs Committee=
=20
last week, said he expects federal regulators to agree to impose price caps=
=20
under the auspices of a new commission chairman.But if regulators fail to=
=20
rein in prices, he is girding for a fight in a divided Congress to pass=20
legislation that protects California.=20
"This is going to be a battle, but it's a battle worth fighting," he said.=
=20
"President Bush is setting a tone here, a tone of empathy for California's=
=20
plight - but inaction."=20
Davis joined Lieberman on a conference call Sunday and repeated his mantra=
=20
that regulators of the Federal Energy Commission have failed to rein in=20
skyrocketing wholesale prices by imposing a temporary 18-month price cap.=
=20
Davis said generators could make a profit of between 30 percent and 50=20
percent even with the cap in place.=20
Davis said a temporary price cap would save the state billions. He said 16=
=20
new power plants are expected to come online by 2003, when prices are=20
expected to stabilize. Davis continued to put blame for the crisis on his=
=20
Republican predecessor, Pete Wilson, who pushed for the 1996 law that=20
deregulated wholesale - but not retail - prices in California.=20
Lieberman, D-Conn., will hold two days of hearings, beginning this week, to=
=20
determine if FERC is upholding a 1932 law that ensures wholesale electricit=
y=20
prices are "just and reasonable."=20
Lieberman said several economists will testify Wednesday at the first heari=
ng=20
on California's energy market.=20
The five members of the Federal Energy Regulatory Commission will testify a=
t=20
the second hearing June 20 and respond to questions from Davis.=20
Lieberman ascended to the chairmanship of the Senate Government Affairs=20
Committee last week, when Sen. James M. Jeffords quit the Republican Party =
to=20
become an independent, and control of the Senate switched to the Democrats.=
=20
With that change, legislation by Sen. Dianne Feinstein, D-Calif., to force=
=20
federal regulators to set price limits will now move forward, Davis said.=
=20
U.S. Senate Majority Leader Tom Daschle said Sunday that he also favors pri=
ce=20
caps to rein in skyrocketing wholesale power prices in California. Daschle,=
=20
who took over as majority leader last week, also said FERC has not lived up=
=20
to its responsibility.=20
FERC Chairman Curt Hebert and President George W. Bush are against such pri=
ce=20
caps, arguing they would discourage firms from building new power plants an=
d=20
do nothing to encourage consumers to use less electricity.=20
But Hebert is expected to be replaced shortly by Pat Wood, a Republican and=
=20
former chairman of the Texas Public Utilities Commission. Wood has said he=
=20
will come to California and work with state officials on the crisis, leadin=
g=20
some to believe he may be more likely to favor price caps than his=20
predecessor.=20
The chairmanship of the oversight committee gives Lieberman broad power to=
=20
subpoena witnesses and records while overseeing the actions of nearly every=
=20
government agency.=20
The hearings also will highlight the difference between Democrats and=20
Republicans at a time when national polls have shown Bush is vulnerable on=
=20
the energy issue.=20
"If we have to, we'll go forward with the legislation and try to force FERC=
=20
to enforce the law, if it's necessary," Lieberman said.=20
Lieberman warned that California represents 15 percent of the American=20
economy, and any major downturn in the state would have rippling effects=20
across the country.=20
The Associated Press contributed to this report.














New program will pay businesses to conserve=20
The incentives could save hundreds of megawatts, the governor's staff says.=
=20
June 10, 2001=20
By JOHN HOWARD
The Orange County Register=20
SACRAMENTO California will pay businesses to conserve if that costs less th=
an=20
buying power on the open market, under an executive order signed Saturday b=
y=20
Gov. Gray Davis.=20
The governor's staff said the new program could save hundreds of megawatts=
=20
and cost $50 million to $100 million.=20
The companies would submit bids to the state, estimating how much it costs=
=20
them to reduce their energy consumption. If those amounts are less than the=
=20
state would pay for power, the state will pay the companies instead.=20
The state "would rather pay people in California money to cut back than pay=
=20
out-of-state generators," said S. David Freeman, the governor's top energy=
=20
adviser.=20
Perhaps 500 to 900 megawatts could be saved, said Davis adviser Kellan=20
Fluckiger. He did not say whether the payments would be in cash, credits or=
=20
reductions on future bills.=20
The program will continue through this year and into 2002.=20
It also was uncertain whether information about the companies' payments wou=
ld=20
be available to the public, an issue that is the subject of a legal dispute=
.=20
Partial information about the state's energy purchases currently is being=
=20
disclosed six months after the fact.=20
The program will be administered by the Independent System Operator, the=20
private manager of the state's electricity grid. The money will come from t=
he=20
state budget through the Department of Water Resources, which has been buyi=
ng=20
power for California's credit-lacking utilities since January.=20
Thus far, the state has set aside about $8.2 billion for electricity=20
purchases.=20
A number of other business conservation programs already exist, including o=
ne=20
in which companies enjoy lower rates for agreeing in advance to cut=20
consumption during peak periods. The latest executive order enhances that=
=20
program, Freeman said. "It creates a whole new dynamic," he added.=20
Other conservation efforts include reductions in outdoor commercial lightin=
g,=20
and incentives to use energy-efficient appliances and reduce residential=20
consumption this summer by 20 percent.













Capitol Report=20
Davis' crisis management on upswing.=20
June 10, 2001=20
What electricity crisis?=20
Gray Davis' public relations juggernaut is cranked up and roaring, spinning=
=20
the governor's message that California has "basically won the war" against=
=20
tight supplies, spiraling prices and rapacious power companies. Through sou=
nd=20
bites, selective leaks and even more selective financial data, Davis is=20
driving home the message that lower electricity prices stem from the state'=
s=20
ability to lock up cheaper energy with long-term contracts.=20
This is only partly true - all good PR has a kernel of truth - but it's=20
welcome news indeed for consumers fed up with California's electricity mess=
.=20
Cooler weather, conservation, more power plants back in service after repai=
rs=20
and a drop in natural-gas prices are soothing the market. Those factors, al=
l=20
temporary, may be as important as the contracts, or even more so.=20
But it is instructive to watch the governor's newly aggressive, organized=
=20
communications strategy. For the first time since his election, the=20
governor's PR apparatus is efficient and effective. Somebody has been givin=
g=20
him good advice lately, and he seems to be taking it.=20
He's everywhere. He pops up repeatedly on network TV news programs, where h=
e=20
depicts California as the innocent victim of federal inaction. He looks=20
better on the tube than in person, although he needs to change his clothes =
-=20
that red tie and blue shirt are getting old.=20
He appears in front of power plants, announcing a new initiative amid the=
=20
roar of generation. He's more accessible, fields more questions and appears=
=20
at more editorial boards. He's gotten away from blaming former Gov. Pete=20
Wilson for the current mess. His office e-mails favorable news articles to=
=20
the press, with a tag saying "in case you missed it." There's no chance=20
anyone missed it. Reporters are getting four or five copies of the same=20
release.=20
But glossed over in the image-polishing of fearless energy crusader are the=
=20
double-digit rate hikes that hit consumers this month and the stresses=20
California's power grid is likely to face with the onset of hot weather. Th=
e=20
public relations machine hasn't quite figured out how to handle those yet.=
=20
THE WEEK TO COME=20
Fighting over money is a hallowed Capitol tradition. The question of what t=
o=20
spend, and when, is the crux of the budget battle. But this year's $102.9=
=20
billion budget war is oddly different.=20
The Legislature's budget writers are fighting over what not to spend. They=
=20
are wrangling over how much to hold back, rather than how much to commit.=
=20
The governor wants a razor-thin, $1 billion rainy-day fund, because he need=
s=20
as much cash as possible to balance the state's books. But that reserve is=
=20
too small, some on the budget committee believe, and should be doubled or=
=20
even tripled.=20
Until the reserve is established, it's hard to decide the rest of the=20
spending. That hasn't stopped the budget committee, which is pressing on ev=
en=20
though the rainy-day fund is a mystery. "This is a departure from tradition=
,"=20
said an exasperated Sen. Steve Peace, D-El Cajon.=20
He's right.














Energy notebook=20
Officials: Suppliers should refund excess charges=20
June 9, 2001=20
From Register news services=20
SACRAMENTO Four major power suppliers to California have shown they can=20
control prices in the wholesale electricity market and should have to refun=
d=20
excess charges, possibly up to billions of dollars, state grid officials sa=
id=20
Friday.=20
The Independent System Operator, keeper of the state's power grid, also ask=
ed=20
the Federal Energy Regulatory Commission to revoke the market-based rate=20
authority for four generators -- Duke Energy, Mirant, Dynegy and Reliant=20
Energy.=20
ISO analysts have estimated the state was overcharged about $6.7 billion=20
between May 2000 and March 2001. That includes charges by generators other=
=20
than the four in these filings, and ISO officials didn't have an estimate o=
n=20
how much they were seeking from Duke, Reliant, Mirant and Dynegy.=20
In order to escape charging cost-based rates, generators must prove to FERC=
=20
that they don't have market power -- the ability to charge whatever price=
=20
they want without consequence. Suppliers have to have that authority renewe=
d=20
by FERC every three years, and most are up for review this summer.=20
The ISO last month made a similar request of FERC for power sold by William=
s=20
Cos. and AES Corp.=20
Utilities may lower voltage provided to homes, firms=20
SAN FRANCISCO California utilities are considering lowering the voltage of=
=20
electricity delivered to businesses and homes in order to save megawatts.=
=20
If successful, such a program could save the state millions of dollars and=
=20
lower power demand, possibly avoiding some rolling blackouts, energy expert=
s=20
said.=20
The sticking points for state power regulators are potential damage to=20
appliances and the loss of some profit to utilities, which would sell less=
=20
electricity.=20
Home appliances, computers and other equipment are normally rated to run be=
st=20
at about 115 volts. If voltage is dropped too low - experts say lower than=
=20
110 volts - motors can overheat, damaging appliances.=20
Under the plan, the three utilities would reduce the voltage delivered to=
=20
businesses and homes from the present level of 120 volts to 118 or 116 volt=
s.=20
A drop so slight would not damage appliances and could dim some lights, but=
=20
it could cut power usage between 400 and 1,000 megawatts of electricity.=20
That's enough electricity to power up to 750,000 homes - or the equivalent =
of=20
building a new power plant.=20
Edison 'disappointed' with lack of progress on bailout=20
ROSEMEAD Southern California Edison officials are "frankly disappointed" wi=
th=20
the lack of progress state regulators have made on the utility's bailout=20
package, an Edison International executive said.=20
Friday was the deadline for the California Public Utilities Commission to a=
ct=20
on five elements of the bailout pact Edison made with Gov. Gray Davis two=
=20
months ago. The agency put some of the items on its agenda for next=20
Thursday's meeting.=20
The longer Edison goes without a financial rescue, the greater the risk tha=
t=20
creditors will lose patience and force the parent or its utility into=20
bankruptcy. Despite the commission's failure to act, Edison officials aren'=
t=20
planning to exercise their option to terminate the rescue, said Ted Craver,=
=20
Edison's chief financial officer. The governor has the same option.=20
In other news:=20
Gov. Gray Davis asked state regulators to exempt oil refineries from=20
electricity blackouts, saying the threat of power outages may lead to=20
production cuts and higher energy prices. Chevron Corp., the largest suppli=
er=20
of California's unique blend of gasoline, told Davis this week it would be=
=20
forced to reduce refinery output without guarantees of uninterrupted power,=
=20
causing fuel shortages. A drop in supplies may boost gasoline-pump prices i=
n=20
California, which already are more than $2 per gallon.=20
Calpine Corp., a U.S. electricity generator and power-plant developer, plan=
s=20
to build a $325 million power plant in southwest Riverside County able to=
=20
produce enough power to light about 450,000 California homes. The project,=
=20
Calpine's 10th major power development for the California market, is=20
scheduled to begin construction in mid-2002 and open in late 2004. The=20
proposed Inland Empire Energy Center will produce about 600 megawatts of=20
power that will go to the power grid of Southern California Edison. The=20
gas-powered plant will serve the growing suburban areas of Riverside and Sa=
n=20
Bernardino counties.=20
Bloomberg News and the Associated Press contributed to this report.=20







Calpine Announces 600-MW Inland Empire Energy Center Project Will Offer=20
Electricity to One of California's Fastest Growing Regions=20







June 11, 2001=20





Project Will Offer Electricity to One of California's Fastest Growing Regio=
ns=20
SAN JOSE, Calif., June 8 /PRNewswire/ -- Calpine Corporation (NYSE: CPN), a=
=20
leading independent power producer, announced plans to build, own, and=20
operate a 600-megawatt electric generating facility to be located in=20
southwestern Riverside County, California. The proposed Inland Empire Energ=
y=20
Center will feed directly into Southern California Edison's power grid and =
is=20
intended to serve the rapidly growing counties of Riverside and San=20
Bernardino. Construction of the $325 million facility is scheduled to begin=
=20
in mid-2002, with commercial operation targeted for late 2004.=20
The facility will use two advanced technology General Electric combustion=
=20
turbines in combined-cycle with a single steam turbine and will be fueled b=
y=20
natural gas. With its advanced emissions control system and configuration,=
=20
the Inland Empire Energy Center will be significantly cleaner and more fuel=
=20
efficient than the typical natural gas-fired power plant operating today.=
=20
"As a California-based company, we are extremely pleased to, yet again, mov=
e=20
forward on a project such as this," said Calpine's Senior Vice President of=
=20
Business Development, John King. "To date, Calpine has committed=20
approximately $6 billion to the California energy market. With this=20
industry-leading initiative to bring more than 12,000 megawatts of new=20
generation to California, we believe Calpine has taken a significant step=
=20
towards helping put an end to the 'energy crisis.'"=20
Calpine will manage all aspects of project development for the Inland Empir=
e=20
Energy Center, including engineering and design, construction, and=20
operations. The project will interconnect to the local power grid via=20
existing transmission lines adjacent to the site and will be fueled by a=20
major gas line already serving the region.=20
"This project represents a cost-effective, near-term means for the Inland=
=20
Empire to satisfy part of its power needs with locally produced electricity=
,"=20
added King. "The facility's location and design provides not only heightene=
d=20
energy independence and diversity for the region, but reliable access to th=
e=20
clean and affordable electricity we all require."=20
Construction of the Inland Empire Energy Center will require as many as 300=
=20
workers. Upon completion, 20 to 25 skilled power professionals with a=20
combined annual payroll in excess of $1 million will operate the facility. =
In=20
addition to providing a clean, affordable, and reliable source of new, loca=
l=20
power generation and a means for accelerating regional economic development=
,=20
the facility also will emerge as one of the leading sources of tax revenue=
=20
for Riverside County.=20
The Inland Empire Energy Center is Calpine's tenth announced major power=20
project being developed specifically for the California market. Already,=20
Calpine has three California projects under construction, with the Sutter a=
nd=20
Los Medanos Energy Centers scheduled to begin operation this month. The two=
=20
projects' combined 1,100-plus megawatt output represents the only large-sca=
le=20
power facilities coming online this summer in the state. The third Calpine=
=20
project under construction, the 880-megawatt Delta Energy Center, is slated=
=20
to be complete within a year. In total, Calpine has more than 8,100 megawat=
ts=20
of generation already in operation, construction, or announced development =
in=20
California.=20
Based in San Jose, Calif., Calpine Corporation is dedicated to providing=20
customers with reliable and competitively priced electricity. Calpine is=20
focused on clean, efficient, natural gas-fired generation and is the world'=
s=20
largest producer of renewable geothermal energy. Calpine has launched the=
=20
largest power development program in North America. To date, the company ha=
s=20
approximately 32,600 megawatts of base load capacity and 7,200 megawatts of=
=20
peaking capacity in operation, under construction and in announced=20
development in 29 states and Canada. The company was founded in 1984 and is=
=20
publicly traded on the New York Stock Exchange under the symbol CPN. For mo=
re=20
information about Calpine, visit its Website at www.calpine.com.=20
This news release discusses certain matters that may be considered=20
"forward-looking" statements within the meaning of Section 27A of the=20
Securities Act of 1933, as amended, and Section 21E of the Securities=20
Exchange Act of 1934, as amended, including statements regarding the intent=
,=20
belief or current expectations of Calpine Corporation ("the Company") and i=
ts=20
management. Prospective investors are cautioned that any such forward-looki=
ng=20
statements are not guarantees of future performance and involve a number of=
=20
risks and uncertainties that could materially affect actual results such as=
,=20
but not limited to, (i) changes in government regulations, including pendin=
g=20
changes in California, and anticipated deregulation of the electric energy=
=20
industry, (ii) commercial operations of new plants that may be delayed or=
=20
prevented because of various development and construction risks, such as a=
=20
failure to obtain financing and the necessary permits to operate or the=20
failure of third-party contractors to perform their contractual obligations=
,=20
(iii) cost estimates are preliminary and actual cost may be higher than=20
estimated, (iv) the assurance that the Company will develop additional=20
plants, (v) a competitor's development of a lower-cost generating gas-fired=
=20
power plant, and (vi) the risks associated with marketing and selling power=
=20
from power plants in the newly competitive energy market. Prospective=20
investors are also cautioned that the California energy environment remains=
=20
uncertain. The Company's management is working closely with a number of=20
parties to resolve the current uncertainty, while protecting the Company's=
=20
interests. Management believes that a final resolution will not have a=20
material adverse impact on the Company. Prospective investors are also=20
referred to the other risks identified from time to time in the Company's=
=20
reports and registration statements filed with the Securities and Exchange=
=20
Commission.=20
MAKE YOUR OPINION COUNT - Click Here=20
http://tbutton.prnewswire.com/prn/11690X23853586=20
SOURCE Calpine Corporation=20
CONTACT: media, Kent Robertson, 925-600-2317, or investors, Rick Barraza,=
=20
408-995-5115, ext. 1125, both of Calpine Corporation=20
Web site: http://www.calpine.com (CPN)=20









SDG&E Applauds Expansion of Assistance For Low-Income Customers; CPUC Chang=
es=20
Mean More Eligible Customers, Increased Discounts=20







June 11, 2001=20





SAN DIEGO, June 8 /PRNewswire/ via NewsEdge Corporation -=20
San Diego Gas & Electric (SDG&E) officials today applauded actions by the=
=20
California Public Utilities Commission (CPUC) to increase discounts and=20
expand eligibility standards for the limited-income utility customers to=20
participate in the California Alternate Rates for Energy (CARE) rate-discou=
nt=20
program.=20
The new standard will make an additional 70,000 customers eligible for the=
=20
program and will increase the discount on customers' bills to 20 percent fr=
om=20
15 percent. Approximately 147,000 SDG&E customers currently are enrolled in=
=20
the CARE program.=20
"We support the CPUC's actions to increase the availability of assistance=
=20
through the CARE program, because we are concerned about the impact of high=
er=20
electricity costs on our community, especially on our low-income customers,=
"=20
said Pamela J. Fair, vice president of customer services for SDG&E. "The=20
increased availability and enhanced benefit of the CARE program, in additio=
n=20
to our more aggressive outreach programs, will bring welcome financial help=
=20
to many more customers."=20
The CPUC yesterday also increased the eligibility guidelines to include=20
customers with income at or less than 175 percent of federal poverty=20
guidelines.=20
The new annual limits are:=20
Household of 1 or 2 $22,000=20
Household of 3 $25,900=20
Household of 4 $31,100=20
Each additional person Add $5,200=20
Fair said that, over the past several months, SDG&E has significantly=20
increased its outreach efforts to lower-income customers, including:=20
-- The free exchange of more than 9,000 lightbulbs for more=20
energy-efficient bulbs at some 30 events held for seniors and=20
low-income customers this year.=20
-- Increased communications to customers concerning low-income=20
assistance, including billing informational inserts, advertising, news=20
releases and kiosk displays in shopping malls.=20
-- More aggressive outreach through SDG&E's low-income energy efficiency=20
programs, which will provide free education and energy-efficiency=20
measures to an estimated 40,000 customers this year. SDG&E also=20
recently expanded its notification system concerning the availability=20
of low-income assistance to include 5,600 mobile-home-park operators.=20
-- Partnerships with community-based organizations to conduct a series of=
=20
presentations throughout the region on low-income assistance and=20
energy-efficiency programs in Spanish, Vietnamese, Laotian, Russian=20
and several Middle Eastern, African and Eastern European languages.=20
The company expects to reach an additional 30,000 customers through=20
this program in 2001, up from 20,000 last year.=20
"We want our customers in need to be aware of the help that's available to=
=20
them in the form of direct assistance, energy-efficiency upgrades and=20
flexible payment options," Fair said. "We are spreading the word about thes=
e=20
options through a broad range of channels."=20
SDG&E resumed collection activities earlier this year after a six-month=20
moratorium, and its disconnection activities are now approaching its averag=
e=20
historical levels, Fair said. For the first five months of 2001, there were=
=20
5,582 disconnections, compared to 9,290 during the same period last year an=
d=20
11,583 in the first five months of 1999. The total disconnection rate for=
=20
2001 represents less than one-half of 1 percent of SDG&E's 1.2 million=20
customers.=20
SDG&E is encouraging any customers who receive late-payment notices to call=
=20
SDG&E at (800) 411-SDGE to set up payment arrangements. SDG&E has in place =
a=20
successful program of working with customers to set up flexible payment pla=
ns=20
and to refer qualified customers to bill-assistance resources, Fair said.=
=20
San Diego Gas & Electric is a regulated utility that provides service to 3=
=20
million consumers through 1.2 million electric meters and 740,000 natural g=
as=20
meters in San Diego and southern Orange counties. SDG&E is a subsidiary of=
=20
Sempra Energy (NYSE: SRE), a Fortune 500 energy services holding company=20
based in San Diego.=20
MAKE YOUR OPINION COUNT - Click Here=20
http://tbutton.prnewswire.com/prn/11690X72482778=20
SOURCE San Diego Gas & Electric=20
CONTACT: Ed Van Herik of San Diego Gas & Electric, 877-866-2066=20
Web site: http://www.sdge.com (SRE)=20









Business/Financial Desk; Section C=20
California Gets a Reprieve As Natural Gas Prices Drop
By RICHARD A. OPPEL Jr.
?=20
06/11/2001=20
The New York Times=20
Page 2, Column 5=20
c. 2001 New York Times Company=20
DALLAS, June 10 -- The price of natural gas sold into Southern California h=
as=20
fallen sharply the last week after both the free fall in electricity prices=
=20
and the expiration of a pipeline contract held by the El Paso Corporation=
=20
that is the subject of an inquiry by federal regulators.=20
The change in prices has prompted critics of El Paso to suggest that the dr=
op=20
shows how much effect the company's contract had in keeping natural gas=20
prices high.=20
But a lawyer for the company says that while gas prices in Southern=20
California are lower than in recent months, they are mostly still higher th=
an=20
in other parts of the country. And he said the decline that has taken place=
=20
was largely because of the factors that have caused California electricity=
=20
prices to plunge unexpectedly since late last month.=20
Whatever the reason, lower gas prices, if they continue, bode well for=20
California electricity rate payers because gas is a crucial fuel for=20
generating electricity . But California officials have said the drop in gas=
=20
prices may prove short-lived, just as many experts think the state's lower=
=20
electricity prices may be temporary.=20
Analysts have said the steep run-up in gas prices that began last year was=
=20
caused by factors like soaring demand from electricity generators, a shorta=
ge=20
of pipeline capacity and market rules in California that did not require=20
companies to store enough gas for winter.=20
The California Public Utilities Commission and Southern California Edison=
=20
have also contended that El Paso used its contractual control of a large=20
amount of pipeline space into California to curtail gas flows so it could=
=20
drive prices higher. El Paso denies that, saying California is trying to ma=
ke=20
the company a scapegoat for its failed energy policies. An administrative=
=20
judge is hearing the accusations at the Federal Energy Regulatory Commissio=
n=20
in Washington.=20
The contract at issue expired May 31, and control of the pipeline space was=
=20
then transferred to 30 different companies. According to Natural Gas=20
Intelligence, an industry publication, the average price for gas in Souther=
n=20
California during ''bidweek'' -- the process in the last seven days of the=
=20
month that determines the price for much of the gas sold the next month --=
=20
was $11.70 per million British thermal units, or nearly triple the prices i=
n=20
the rest of the nation. But by late last week, daily prices for gas had=20
dropped to about $4 to some Southern California destinations.=20
''It reflects that the market's recognition that the capacity is no longer=
=20
held by one major player, and I think the market knows the difference betwe=
en=20
competition and a monopoly,'' said Kevin J. Lipson, a lawyer for Southern=
=20
California Edison. ''It reflects the benefits of competition.''=20
But, a lawyer for El Paso, William S. Scherman, said the expiration of the=
=20
contract has not affected prices.=20
''Looking at prices on a daily basis is invalid,'' Mr. Scherman said, becau=
se=20
most gas sold is priced on a month-to-month basis.=20
''Prices may be coming down because of supply and demand and other=20
conditions, but they are still showing a significant scarcity rent,'' he=20
said, meaning that the cost for transporting gas is still higher in Souther=
n=20
California than in other places.=20
ann.schmidt@enron.com, bryan.seyfried@enron.com, elizabeth.linnell@enron.com, 