Energy Issues ,
 Please see the following articles:

Sac Bee, Thurs, 7/19: Energy buyers ordered to divest=20
Sac Bee, Thurs, 7/19: Another contempt action=20
Sac Bee, Thurs, 7/19: PUC paves way for power rate increases
SD Union, Thurs, 7/19: California selling surplus power at fraction of cost=
=20
it paid=20
SD Union, Thurs, 7/19: PUC reveals plan to transfer much of watchdog role=
=20
SD Union, Thurs, 7/19: Variety of plans to help Edison find friends, foes=
=20
SD Union, Thurs, 7/19: Baja is hoping energy squeeze can spark boom=20
SD Union, Wed, 7/18: State deal lets SDG&E turn large profit=20
SD Union, Wed, 7/18: Davis: Legislature will save Edison from bankruptcy=20
LA Times, Thurs, 7/19: PUC May Cede Control Over Electricity Rates
LA Times, Thurs, 7/19: Power Firm Is Held in Contempt by State Panel
SF Chron, Thurs, 7/19: Electricity cost tops Californians' concerns=20
SURVEY: Governor now getting some credit for improving the situation=20
SF Chron, Thurs, 7/19: PG&E rebates snub longtime watt watchers=20
WHO WINS?: Reward is easier for those unaccustomed to power scrimping=20
SF Chron, Thurs, 7/19: Assembly panel OKs two bills to help Southern=20
California Edison=20
SF Chron, Thurs, 7/19: Cool weather brings California energy glut, causing=
=20
state to sell surplus power at a loss=20
SF Chron, Thurs, 7/19: Investigative arm of Congress issues demand letter f=
or=20
energy meetings=20
Mercury News, Thurs, 7/19: Poll: Legislators, Davis blamed more than seller=
s=20
Mercury News, Thurs, 7/19: Consumers to bear costs of state's power purchas=
es=20
OC Register, Thurs, 7/19: Conservation is cutting edge of power crisis  =20
(Commentary) =20
NY Times, Thurs, 7/19: California's New Problem: Sudden Surplus of Energy=
=20
---------------------------------------------------------------------------=
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------------------------------------------------------
Energy buyers ordered to divest=20
By Amy Chance
Bee Political Editor
(Published July 19, 2001)=20
The Davis administration on Wednesday told consultants buying electricity f=
or=20
the state to sell their stock holdings in energy companies immediately or=
=20
leave their jobs.=20
Nine consultants divested by a noon deadline, but critics said Gov. Gray=20
Davis acted months too late to protect the public's interest.=20
The order, issued at Davis' direction, was contained in a memo to Tom=20
Hannigan, director of the state Department of Water Resources. Legal Affair=
s=20
Secretary Barry Goode wrote that it was "imperative that you give this=20
instruction immediately" to those concerned.=20
"We expect, and have always expected, the state's consultants to uphold the=
=20
highest ethical standards," the memo states. "That standard is not met by=
=20
those who hold a financial interest in one or more energy companies while=
=20
trading on behalf of the state on energy related matters."=20
Under pressure from Secretary of State Bill Jones, a Republican who hopes t=
o=20
challenge Democrat Davis for re-election next year, the administration move=
d=20
last week to obtain statements of economic interest from the energy=20
consultants. The consultants were brought on earlier this year to help the=
=20
Department of Water Resources buy electricity on behalf of California's=20
financially strapped utilities.=20
The economic statements revealed that several consultants held stock in=20
energy generators, including Calpine Corp. and Enron. One consultant report=
ed=20
that he sold stock holdings in Edison International and Dynegy when he bega=
n=20
work for the state.=20
Administration officials initially said they would review the reports for a=
ny=20
conflicts, considering whether the consultants traded with companies in whi=
ch=20
they held stock.=20
But Goode's memo, dated Wednesday, said each of the consultants should dive=
st=20
by noon that day or "the state will sever its contract with that person." T=
he=20
notice was given to the 34 people who had disclosed their interests as=20
required, nine of whom reported a current financial interest in an energy=
=20
company, according to the administration. A governor's spokesman said all o=
f=20
them divested by the deadline.=20
State Attorney General Bill Lockyer, whom Jones had asked to investigate,=
=20
told Jones in a letter Tuesday that most of Jones' allegations, including=
=20
whether the statements of economic interest were filed on time, should be=
=20
dealt with first by the state Fair Political Practices Commission.=20
He noted that one section of applicable state law sets a high threshold for=
=20
conflict of interest: It provides that someone holding less than 3 percent =
of=20
the shares of a corporation does not have a conflict unless his or her tota=
l=20
yearly income from dividends or other payments exceeds 5 percent of his or=
=20
her annual income.=20
But he said he would review the statements to see whether a=20
conflict-of-interest investigation is warranted "in light of the legitimate=
=20
and important public interest in the employment of public servants who are=
=20
free of conflicting interests. ... "=20
Lockyer spokesman Nathan Barankin pointed out that Jones had called into=20
question the validity of state electricity contracts negotiated by the=20
buyers.=20
"What we're saying is that there's a public interest in getting to the bott=
om=20
of it as quickly as possible, so there's some certainty," he said.=20
Jones said simply selling the stock doesn't solve the problem.=20
"Just divesting themselves of the stock, or even letting them go, doesn't=
=20
change the conflict that's been inherent for the last five months," Jones=
=20
said. "If someone who has a proven conflict of interest has negotiated=20
contracts on behalf of the state, there is no contract."=20
Jones also noted that the Davis administration says an additional 20 or mor=
e=20
people it has brought on board to cope with the energy crisis have not been=
=20
required to file disclosure statements. He said Lockyer should investigate=
=20
whether the administration has abided by disclosure law in those cases.=20
"(Davis') record is not very good when you look at the fact that I had to=
=20
make the case to even get these statements of conflict of interest filed,"=
=20
Jones said. "It's up to the attorney general to be the judge, but the publi=
c=20
has to have the information."=20


The Bee's Amy Chance can be reached at (916) 326-5535 or achance@sacbee.com=
=20
<mailto:achance@sacbee.com>.=20




Another contempt action=20
By Kevin Yamamura
Bee Capitol Bureau
(Published July 19, 2001)=20
A state Senate committee held another energy generator in contempt Wednesda=
y=20
and may recommend today that Enron Corp. either pay fines or be removed fro=
m=20
California's marketplace if it continues to withhold documents.=20
Meanwhile, lawmakers in both houses spent Wednesday night debating three=20
plans to prevent Southern California Edison from going into bankruptcy,=20
though no one idea had broad support.=20
The committee's action against Reliant Energy marked the third contempt=20
finding in as many weeks by the special Senate committee investigating ener=
gy=20
market manipulation. After reaching a legal disagreement over whether trade=
=20
secrets would be protected, lawmakers voted 6-0 to push Reliant, a=20
Houston-based generator, into contempt proceedings.=20
The panel found five other generators in compliance with subpoenas after th=
ey=20
signed confidentiality agreements earlier this week and promised to ship=20
thousands of files to depositories.=20
Three weeks ago, the committee found Enron and another generator, Mirant, i=
n=20
contempt. Mirant has since cooperated and escaped the committee's finding,=
=20
but Enron filed a lawsuit in Sacramento Superior Court seeking judicial=20
intervention.=20
Despite ongoing discussions between the committee and Enron representatives=
,=20
they have reached no deal to end the lawsuit or the contempt finding.=20
Lawmakers therefore intend to issue a report today leading to a later Senat=
e=20
vote on contempt and subsequent penalties.=20
The committee was considering two possibilities late Wednesday, said its=20
chairman, Sen. Joe Dunn, D-Santa Ana. The first would impose fines that=20
compound each successive day Enron remains in contempt. The second would=20
exclude the Houston-based marketer from selling energy in California until =
it=20
hands over documents.=20
"We're reviewing the (legal) basis for such a recommendation," Dunn said.=
=20
Enron spokesman Mark Palmer said he had no response to the potential=20
penalties but stressed that his company is still discussing the contempt=20
matter with lawmakers.=20
In Reliant's case, lawmakers and the company disagreed Wednesday over wheth=
er=20
the committee's own confidentiality agreement affords enough protection of=
=20
trade secrets.=20
Reliant attorney Charles Stevens said his company would rather have a court=
=20
order to ensure that its proprietary information would be safe. But committ=
ee=20
members objected to involving the state's judicial branch, charging that it=
=20
would disrupt the separation of powers.=20
Several times during the hearing, Dunn conceded that Reliant, like Enron, m=
ay=20
ultimately resort to a lawsuit to resolve its disagreement with the=20
committee.=20
"We have not made that decision at this time," said Stevens, the Reliant=20
attorney. "We've always preferred to resolve the dispute with the committee=
=20
informally, and we continue to look for ways to do that."=20
Should Reliant work out an agreement with lawmakers by cooperating with the=
=20
document requests, the contempt vote would be purged, Dunn said.=20
The Legislature last held someone in contempt in 1929, when concrete compan=
y=20
officials did not comply with subpoenas in a price-fixing case.=20
In a vote late Wednesday, meanwhile, the Senate's energy committee voted do=
wn=20
one Edison proposal. It will be reconsidered this morning.=20
Two competing Assembly proposals to keep Edison from bankruptcy were narrow=
ly=20
approved by the Energy Costs and Availability Committee. One of the=20
proposals, by Assembly Speaker Robert Hertzberg and Assemblymen Fred Keeley=
=20
and John Dutra, is scheduled for a floor vote today.=20


The Bee's Kevin Yamamura can be reached at (916) 326-5542 or=20
kyamamura@sacbee.com <mailto:kyamamura@sacbee.com>.=20




PUC paves way for power rate increases=20
By Dale Kasler
Bee Staff Writer
(Published July 19, 2001)=20
Sparking accusations that it's abandoning its watchdog role, the Public=20
Utilities Commission took the first step Wednesday toward promising to rais=
e=20
rates as much as necessary to pay the state's electricity bills.=20
PUC President Loretta Lynch released a proposed version of the promise -- a=
=20
legally binding document known as a rate agreement. Although the agreement=
=20
doesn't say there will be more rate hikes, it does commit the PUC to raisin=
g=20
rates when requested by the state Department of Water Resources.=20
The agreement is essential to the state's plan to sell $13.4 billion in bon=
ds=20
in September to cover the water department's power purchases. The departmen=
t=20
has been buying electricity for California's three troubled investor-owned=
=20
utilities.=20
The bonds are to be repaid with money from customers of the three utilities=
.=20
Investors would shy away from buying the bonds unless the PUC adopted the=
=20
rate agreement, said Zane Mann, editor of the California Municipal Bond=20
Advisor newsletter.=20
"Everyone's been kind of waiting for it," he said of the agreement.=20
State Treasurer Phil Angelides, who is in charge of marketing the bonds, sa=
id=20
in a prepared statement Wednesday that the rate agreement "must be adopted =
so=20
that the (state's) general fund can be repaid, and to protect the state's=
=20
fiscal solvency." Angelides has been promising potential bond buyers that t=
he=20
rate agreement would be adopted.=20
The full PUC is scheduled to vote on the agreement Aug. 23.=20
It's unclear whether the agreement will lead to a rate increase any time=20
soon. The water department, which will release updated revenue requirements=
=20
this week, says it doesn't think the new numbers will generate another rate=
=20
hike beyond the 30 percent increase the PUC approved in March for Southern=
=20
California Edison and Pacific Gas and Electric Co.=20
Still, consumer advocates said the rate agreement would represent a surrend=
er=20
of the PUC's traditional job of protecting ratepayers.=20
The agreement would permit "an unaccountable state agency, riddled with=20
conflicts of interest, to unilaterally order rate hikes," said Harvey=20
Rosenfield, president of the Foundation for Taxpayer and Consumer Rights in=
=20
Santa Monica.=20
The water department has been accused of conflicts of interest because some=
=20
of its consultants and energy traders own stock in energy companies.=20
Rosenfield said the PUC should reject the rate agreement and "preserve thei=
r=20
historic role and responsibility to protect ratepayers."=20
Geoff Dryvynsyde, Lynch's legal adviser, said the "consumer groups are=20
raising some good policy issues," but the commission's hands are effectivel=
y=20
tied by legislation that put the state in the power-buying business and set=
=20
in motion the bond sale.=20
"The bonds are really driving this," he said. "The bonds need to be sold."=
=20
Nevertheless, Eric Woychik, a consumer advocate with the Oakland-based grou=
p=20
Strategy Integration, said ratepayers shouldn't be held responsible for=20
high-priced power bought by the water department.=20
"They shouldn't pay for poorly negotiated contracts and market power abuses=
,"=20
Woychik said. State officials contend they were gouged by wholesale=20
generators, while consumer groups have criticized the water department for=
=20
entering into long-term purchase contracts at prices that exceed current=20
spot-market prices. Woychik noted that the state is pursuing billions in=20
refunds from the power generators.=20
The state has committed more than $8 billion from the treasury for power=20
purchases, causing Wall Street to downgrade the state's credit rating. The=
=20
bond offering -- the largest government bond sale in U.S. history -- is=20
designed to replenish the treasury and finance future purchases.=20
Despite some uncertainty about the state's finances and the effects of the=
=20
energy crisis, the bonds should sell well, Mann said.=20
"Mutual funds have been accumulating money to buy the bonds," the newslette=
r=20
editor said.=20


The Bee's Dale Kasler can be reached at (916) 321-1066 or dkasler@sacbee.co=
m=20
<mailto:dkasler@sacbee.com>.=20





California selling surplus power at fraction of cost it paid =20


\
objattph=20
By Karen Gaudette ASSOCIATED PRESS  July 19, 2001  SAN FRANCISCO =01) Calif=
ornia=20
has begun selling power for a fraction of its purchase price as cool weathe=
r=20
creates an abundance of electricity, spending that has been criticized by=
=20
some watching the state's power crisis closely.  Power the state bought at =
an=20
average of $138 per megawatt is being sold for as little as $1, energy=20
traders say, though the price is disputed by state officials.  The state=20
acknowleges the power sales, but says the surplus represented only a blip i=
n=20
an otherwise typical scorching summer and that blackouts still could roll i=
f=20
temperatures increase again.=20
However, the surplus power selloff could encourage criticism that the state=
=20
bought too much power at too high a price in its haste to fend off rolling=
=20
blackouts and power prices 10 times higher than the year before.  "If the=
=20
price is $138 on average for a month and you have to turn around and sell a=
=20
chunk of it for a dollar, you're not going to look real good to a number of=
=20
people," said Gary Ackerman, executive director of the Western Power Tradin=
g=20
Forum in San Jose.  "I just don't think many people in California truly=20
understood what their state did when they stepped into this business." =20
Unlike natural gas, extra electricity cannot be stored away for a later day=
.=20
Since Californians haven't been running their air conditioners as often as=
=20
expected over the past week, the state hasn't needed the entire 38,000=20
megawatts it had figured it would need.  The state Department of Water=20
Resources, in charge of buying power for three financially ailing utilities=
,=20
has spent the past few months arming the state with long-term energy=20
contracts while weaning itself away from buying the highest-priced power on=
=20
the last-minute electricity market.  Those contracts, along with last month=
's=20
20 percent boost in energy conservation and the temperate weather, mean=20
there's suddenly more power than Californians can use.  Energy traders say=
=20
the state has tried to sell as much as 6,000 megawatts at one time, Ackerma=
n=20
said.  That's around 16 percent of the 38,000 megawatts the state estimated=
=20
it would use around this time of year, Ackerman said. A megawatt is enough=
=20
electricity to power roughly 750 homes.  "We know from traders who have=20
bought that it's gone as low as a dollar and last week we know it was as lo=
w=20
as $5," Ackerman said. "When a seller shows up with an enormous amount of=
=20
power for sale and the market knows it, it has a depressing effect on=20
prices."  California Energy Markets, a trade weekly, said the state sold=20
power last Thursday at $25 per megawatt =01) a price that Steve Maviglio, a=
=20
spokesman for Gov. Gray Davis, said was "much closer to reality."  The stat=
e=20
"never sold anything more than 1,000 megawatts on any single day," Maviglio=
=20
said. "(Ackerman) has no evidence" of California selling power for $1,=20
Maviglio said. "California Energy Markets is much closer to reality."  Osca=
r=20
Hidalgo, a DWR spokesman, acknowledged the state has been trying to sell as=
=20
much as 20 percent of its daily megawatts, though he would not say at what=
=20
price. That could put the state at a disadvantage in the market if=20
competitors knew how much it was paying, Hidalgo said.  "This is unusual, b=
ut=20
it was anticipated, it is typical in the power buying operation," Hidalgo=
=20
said.  "It's better than doing nothing with surplus power," Hidalgo said.=
=20
"Scheduling energy is a balancing act because you can't store the item." =
=20
Hidalgo said the state is sending some of the extra electricity up to the=
=20
Bonneville Power Administration to repay it for power it had loaned=20
California earlier this year.  "This is not a bad position for us to be in=
=20
every once in a while," Hidalgo said. "If someone were to make these=20
long-term contracts go away, we would fall off a cliff and be back where we=
=20
were in January."=20








PUC reveals plan to transfer much of watchdog role =20


\
objattph=20
By Craig D. Rose  UNION-TRIBUNE STAFF WRITER  July 19, 2001  The California=
=20
Public Utilities Commission laid out a framework yesterday for transferring=
=20
much of its watchdog role in ensuring fair electricity rates to the state=
=20
Department of Water Resources.  The controversial proposal is in response t=
o=20
legislation earlier this year that puts the water department in charge of=
=20
state power purchases. Utilities commission action is needed to ensure that=
=20
the water department has enough revenue to make the purchases and to clarif=
y=20
areas of responsibility, including oversight of power rates.  Under the dra=
ft=20
agreement made public yesterday, the commission would guarantee that=20
consumers pay enough to cover interest payments on a planned $13.4 billion=
=20
bond sale later this year. The guarantee is considered an essential element=
=20
for completing the bond sale.  The bonds' proceeds are needed to repay some=
=20
$8 billion the water department already has spent to purchase electricity a=
nd=20
to cover future payments.  California began buying electricity through the=
=20
water department earlier this year after the state's utilities were unable =
to=20
make purchases because of credit problems brought on by the state's failed=
=20
deregulation plan.  No mention was made in the draft agreement of the=20
possibility of further rate increases to cover electricity purchases. Some=
=20
observers have speculated that the current rate structure, even after two=
=20
rounds of rate increases, may not cover all costs.  On the other hand, the=
=20
draft agreement states that the water department itself will determine if t=
he=20
prices it pays for electricity meet the legal test of being just and=20
reasonable, a determination heretofore made by the utilities commission. =
=20
Under the utilities commission's procedure, the public is invited to commen=
t=20
on the draft. An administrative law judge for the commission will consider=
=20
the draft before issuing a proposed decision. A full commission vote is=20
expected Aug. 23, a deadline that would have to be met if the bond offering=
=20
is to proceed as planned later this year.  Harvey Rosenfield, president of=
=20
the Foundation for Taxpayer and Consumer Rights, said the utilities=20
commission's draft agreement would allow a "secretive agency of dubious=20
competence controlled by the governor and completely unaccountable to the=
=20
public" to unilaterally order rate increases.  "It was deregulation which g=
ot=20
us into the mess we are in today," Rosenfield said. "Now Wall Street is=20
demanding that the (utilities commission) be forced to surrender its=20
authority and legal responsibility."  He urged the commission to reject the=
=20
draft proposal.  Carl Wood, one of five members of the Public Utilities=20
Commission, said the draft agreement was driven largely by legislation=20
empowering the water department as an electricity purchaser. With a state=
=20
department buying power, Wood said, oversight shifts to the governor and th=
e=20
Legislature.  Commissioner Richard Bilas said he saw the agreement as=20
empowering the water department as "prosecutor, judge and jury" in matters =
of=20
electricity purchasing.  "The argument is that it's better off this way tha=
n=20
the way we were," Bilas said. "And that's true in the short run. But what=
=20
about in the long term?"=20







Variety of plans to help Edison find friends, foes =20


\
objattph=20
Agreement in Legislature doesn't seem likely soon By Ed Mendel  UNION-TRIBU=
NE=20
STAFF WRITER  July 19, 2001  SACRAMENTO -- Plans to aid Southern California=
=20
Edison met mixed fates in legislative committees yesterday amid opposition=
=20
from business, consumers and Edison itself, which said one of the plans wou=
ld=20
not restore its ability to borrow money.  The Senate energy committee=20
rejected a plan that is tough on Edison, but the committee plans to conside=
r=20
it again today.  In the Assembly, a committee approved two plans. One has t=
he=20
support of Democratic leaders, is viewed more favorably by Gov. Gray Davis=
=20
and has not drawn opposition from Edison. The other, crafted by the committ=
ee=20
chairman, Rod Wright, D-Los Angeles, and Republicans, is supported by=20
businesses and Edison.  Senate President Pro Tempore John Burton, D-San=20
Francisco, told an Edison official during a committee hearing that financia=
l=20
experts have told him repeatedly that bankruptcy is the logical course for=
=20
Edison.  "They keep saying they don't understand why a business in your=20
situation does not avail themselves of that," Burton said.  The Senate lead=
er=20
told the Edison official not to expect the usual legislative compromises th=
at=20
would give the utility most of what it is seeking in a rescue plan.  "I wan=
t=20
to disabuse you of the fact that somehow you are going to get some great bi=
g=20
deal at the end of the rainbow," Burton said. "Because you are not going=20
to."  The Senate and Assembly Democratic leadership plans require businesse=
s=20
to pay off most or all of Edison's debt, while also preventing businesses=
=20
from shopping around for cheaper power. Business groups oppose the plans=20
because of those provisions.  Davis is pushing for a legislative plan that=
=20
would keep Edison from joining Pacific Gas and Electric in bankruptcy. He=
=20
wants an Edison rescue plan that could become a model for getting PG&E out =
of=20
bankruptcy.  Once their financial health is restored, the utilities could=
=20
resume buying power for their customers, allowing the state to get out of t=
he=20
power-buying business it entered in January, when the utilities were crippl=
ed=20
by a failed deregulation plan and no longer able to borrow money.  But the=
=20
lengthy and sometimes emotional debates in legislative committees yesterday=
=20
made it clear that reaching an agreement on an Edison rescue plan in the ne=
xt=20
few days will not be easy.  A plan that Davis negotiated with Edison in ear=
ly=20
April found little support in the Legislature and is not being considered.=
=20
Opponents said the plan was too generous to Edison.  But the alternative=20
rescue plans prepared in the Legislature also are called too generous to=20
Edison by a consumer group, the Foundation for Consumer and Taxpayer Rights=
,=20
which is threatening to put an initiative on the ballot to repeal any Ediso=
n=20
"bailout."  Edison, on the other hand, fears that it will be saddled with t=
oo=20
much debt and placed under a regulatory system that does not assure lenders=
=20
that the utility will be able to pay costs for operating and buying equipme=
nt=20
and power.  "We don't believe this bill in its present form would restore u=
s=20
to creditworthiness," Bob Foster, an Edison vice president, told a committe=
e=20
hearing the Senate plan.  The plan by Wright and Republicans was supported =
by=20
business groups and Edison but opposed by consumers. All ratepayers would p=
ay=20
off the Edison debt and businesses would be allowed to shop for cheaper pow=
er=20
as state long-term contracts expire.  "What will come out of the mix is har=
d=20
to tell," said Steve Maviglio, Davis' press secretary. "Everyone is working=
=20
feverishly to get something passed in the next few days."=20







Baja is hoping energy squeeze can spark boom =20


\
objattph=20
New electricity, gas plants seen spurring a fresh wave of growth By Diane=
=20
Lindquist  UNION-TRIBUNE STAFF WRITER  July 19, 2001  Energy shortages in=
=20
California and Mexico are firing hopes for a new wave of industrial=20
development in Baja California, where a maquiladora slowdown has cut=20
thousands of jobs.  The power squeeze has triggered a rush to build=20
electricity and natural gas projects in Baja California.  Once those plants=
=20
are up and running, energy experts and Tijuana boosters say, the state will=
=20
be able to make an unusual pitch to global manufacturers: Come to Baja=20
California, where power is plentiful, reliable and relatively cheap.  "It's=
 a=20
new frontier for Baja California," said Institute of the Americas president=
=20
Paul Boeker, a frontier that "opens up investment opportunities that aren't=
=20
possible at the moment."  To seize the possibilities, Tijuana's Economic=20
Development Corp. is pushing the Baja California government to fund a study=
=20
to identify the United States' biggest electricity and natural gas users. =
=20
"When we saw the price of energy going up so high in California, we thought=
=20
we might be able to use this as a marketing tool," said David Mayagoitia, a=
=20
director of the development group.  The hope is that an influx of big-energ=
y=20
users, such as high-tech firms that operate clean rooms, will offset seriou=
s=20
problems in the region's sputtering maquiladora industry.  Since October,=
=20
Baja California has lost 11,700 maquiladora jobs, 4 percent of the sector's=
=20
total. In Tijuana alone, 7,600 positions have disappeared.  "I've never see=
n=20
so many large and small and medium companies narrow their operations in suc=
h=20
a short amount of time," said Deloitte & Touche accountant Mauricio Munroy.=
 =20
Maquiladora insiders like Munroy blame the U.S. economic downturn, rising=
=20
costs, a strong peso and a new Mexican regulatory regime for reining in the=
=20
operations.  Mayagoitia calls it a crisis.  "Our labor costs are going up.=
=20
We're not as competitive as other places in the world. We have to look for=
=20
other angles."  Over the past three decades, the arrival of foreign-owned=
=20
maquiladoras has pushed Baja California's population to 2.5 million and=20
transformed the state into one of the world's manufacturing hot spots. The=
=20
region now ranks as a top producer of televisions and other consumer=20
electronic products, and many other goods.  There are 1,287 factories in th=
e=20
state, employing 278,900 workers.  New operators continue to come. Since=20
October, when employment began dropping, 33 companies have established=20
factories in the state. Other companies, including Korean electronics giant=
=20
Samsung, the state's largest operator, are expanding.  But in the past nine=
=20
months, the sector's growth has dropped below its routine double-digit rate=
. =20
Some companies, such as Sanyo and Day Runner, have shut factories. Others a=
re=20
threatening to. And so many have trimmed operations that Munroy said, "I=20
don't think we can feel comfortable the industry's going to recover."  But=
=20
now, California's energy crisis and cross-border power demands could alter=
=20
that picture. A natural gas pipeline and three power plants in the works wi=
ll=20
boost the state's electricity output by 2,200 megawatts. As much as 1,500=
=20
megawatts could flow to California consumers.  Additional plants are=20
anticipated. Mexican Energy Secretary Ernesto Martens has said there's no=
=20
limit to the number that could be built in Baja California. And California=
=20
and Mexican officials are considering recruiting energy companies to start=
=20
projects in Baja California.  Meanwhile, numerous companies -- El Paso and=
=20
Phillips, Sempra, Chevron and Chiyoda among them -- have expressed interest=
=20
in building liquid natural gas facilities near Rosarito and Ensenada. The=
=20
operations would convert into vapor form liquified natural gas imported fro=
m=20
other regions for use in Mexico and the United States.  Such projects could=
=20
give Baja California billions of dollars in investment, thousands of=20
construction and operating jobs, and a reputation as an energy-abundant pla=
ce=20
to do business.  "Large energy consumers could come down here, set up=20
operations and get a big break on their utilities," Mayagoitia said. =20
Previously, such operators have shunned Baja California.  "They've always=
=20
said electricity down here is not constant. There are too many fluctuations=
=20
on the line," Mayagoitia said.  While a bigger supply would overcome that=
=20
obstacle, other challenges must be met before the region can use energy as =
a=20
marketing tool.  At a San Diego Dialogue forum on energy last week, Boeker=
=20
listed the key elements needed to attract the next wave of industrial=20
development to Baja California. As he sees it, they need at least one liqui=
d=20
natural gas import facility, to allow power generators to export to=20
California and sell directly to companies in Baja California, and to upgrad=
e=20
the cross-border gas and electricity transmission infrastructure.  Mexico=
=20
also needs to make sure its business laws and regulations, which in the pas=
t=20
have restricted the energy sector, allow corporations to get the supplies a=
nd=20
prices they need to be competitive, Mayagoitia said.  "We think if the=20
numbers make sense, and they have confidence that Mexico can deliver what=
=20
they need, then we'll have the market niche."=20








State deal lets SDG&E turn large profit =20


\
objattph=20
By Craig D. Rose  UNION-TRIBUNE STAFF WRITER  July 18, 2001  When Gov. Gray=
=20
Davis and SDG&E officials hailed an agreement last month to clear a $750=20
million debt owed to the utility, they neglected to publicize a key element=
:=20
The deal allows San Diego Gas & Electric to earn $120 million from the sale=
=20
of electricity to California.  At the time the deal was announced, SDG&E sa=
id=20
it was making a major concession by agreeing to refund $219 million in=20
profits from several disputed power contracts.  The utility also said futur=
e=20
power sales to the state from those contracts would be at a discount. SDG&E=
=20
has repeatedly asserted that it earns no profit from the acquisition and sa=
le=20
of electricity, only from its delivery to customers.=20

But in subsequent filings to the U.S. Securities and Exchange Commission,=
=20
SDG&E said it will earn $120 million from the contracts.  News of the=20
earnings brought a sharp response from Michael Shames, executive director o=
f=20
the Utility Consumers' Action Network, a San Diego-based group.  "What real=
ly=20
irks me is that the public was told SDG&E would make a $219 million=20
concession," Shames said. "It turns out that concession was less than $100=
=20
million, or less than half of what was advertised.  "What we have found is=
=20
that the deeper you dig into this deal, the worse it looks. It's beginning =
to=20
be pattern."  Casey Gwinn, the San Diego city attorney, also criticized the=
=20
belated revelation that SDG&E stands to earn substantial sums under the=20
contracts. Gwinn had said that SDG&E's customers should receive the benefit=
s=20
from the deals.  "All of this should have been disclosed," said Gwinn, who=
=20
added that it was impossible to determine the full profit SDG&E had made fr=
om=20
certain power purchase agreements.  Ed Van Herik, a spokesman for SDG&E,=20
reiterated the position yesterday that profit from the contracts belongs to=
=20
the company's shareholders. Van Herik declined to comment about terms of th=
e=20
power sales to the state.  The contracts, which were signed several years=
=20
ago, allow SDG&E to buy relatively low-priced power. The utility has made=
=20
money by reselling that power at a higher price.  The deal to clear the $75=
0=20
million debt was announced in June along with Gov. Gray Davis' plan to=20
purchase SDG&E's transmission lines for about $1 billion.  The Office of=20
Ratepayer Advocates, a watchdog agency within the California Public Utiliti=
es=20
Commission, said yesterday the purchase price for the transmission lines wa=
s=20
"clearly excessive" and said the money might be better spent acquiring or=
=20
building new power plants.  Steve Linsay, a program and project supervisor =
in=20
the Office of Ratepayer Advocates, said revelation of the $120 million in=
=20
profits SDG&E expects to earn from the sale of power heightened "pre-existi=
ng=20
concerns" about the deal to settle the $750 million account.  While the=20
transmission line deal will be considered by the Legislature, the Public=20
Utilities Commission will rule on the separate debt agreement. A spokesman=
=20
for the commission said yesterday the vote on the settlement is scheduled f=
or=20
Aug. 2, but the issue is on hold until the commission receives more=20
information from SDG&E.  The local utility says the $750 million debt=20
represents the difference between what it has paid for power and what it ha=
s=20
been allowed to collect from ratepayers since last fall, when the state=20
imposed a cap on customer payments.  Some feared the so-called=20
undercollection would become a balloon payment, payable by local customers=
=20
when the rate cap ended next year.  At a news conference last month, the=20
governor and officials of Sempra Energy -- parent company of SDG&E --=20
described an agreement to eliminate the $750 million debt.  Consumer=20
advocates raised questions about whether the proposed resolution would be a=
s=20
costly to consumers as the debt itself.  Under the state deregulation plan,=
=20
SDG&E's profit-making business is restricted to the distribution of power.=
=20
The Public Utilities Commission initially ruled that the profits from the=
=20
disputed contracts should be returned to customers but SDG&E had sought to=
=20
overturn the ruling in court.  In another key element of the deal to resolv=
e=20
the debt, SDG&E agreed to pay $100 million to end an investigation into its=
=20
power purchasing practices.  A spokesman for the governor defended the=20
agreement despite the revelation of future SDG&E profits.  "We forced them =
to=20
return about 70 percent of the profits (from the contracts)," said Steve=20
Maviglio. "And if you look at the whole picture, it is a good deal."  While=
=20
SDG&E had said it earned no money from the sale of power, other units of=20
Sempra Energy have acknowledged selling power to the state for profit. The=
=20
California Department of Water Resources said it paid Sempra some of the=20
highest prices it paid for power through the first five months of this year=
,=20
when Sempra sold $429 million worth of electricity to the state.=20








Davis: Legislature will save Edison from bankruptcy =20


\
objattph=20
Time running out for bailout bills By Ed Mendel  UNION-TRIBUNE STAFF WRITER=
 =20
July 18, 2001  SACRAMENTO -- Gov. Gray Davis, hoping for one of his biggest=
=20
legislative victories, predicted yesterday that the Legislature will send h=
im=20
a plan to keep Southern California Edison out of bankruptcy.  But the=20
governor's own plan, introduced more than three months ago, is not among tw=
o=20
Edison rescue proposals being considered in the Assembly and a different on=
e=20
is under review in the Senate. All may come up for votes in committees=20
today.  The Legislature is scheduled to leave Friday for its annual monthlo=
ng=20
summer recess. Davis suggested that he may try to keep the lawmakers at the=
=20
Capitol by calling a special session if the Edison issue is not resolved.=
=20
"We have been working with members of both houses," Davis said. "I am=20
determined to get a bill passed this week, if at all possible, to allow=20
Edison to go back into business."  The state began buying power for utility=
=20
customers in January after Edison and Pacific Gas and Electric were cripple=
d=20
by a failed deregulation plan. Davis wants the Legislature to pass an Ediso=
n=20
plan that could also be a model for PG&E, which filed for bankruptcy in ear=
ly=20
April.  "It's very important to get Edison and then PG&E creditworthy and=
=20
back in the business of buying power," Davis said, "so the administration c=
an=20
focus on the more important things it was elected to do."  But the two plan=
s=20
supported by Democratic leaders in both houses raise questions about whethe=
r=20
they would keep Edison out of bankruptcy. The plans also are opposed by=20
businesses, which would pay higher rates.  A third plan proposed by the=20
Democratic chairman of the Assembly utilities committee, Rod Wright, and by=
 a=20
Republican, Keith Richman of Northridge, is likely to draw support from=20
Edison and business groups but opposition from many legislators who say it =
is=20
too generous to Edison.  Working out a compromise by Friday will be=20
difficult. If negotiations continue during the recess, Davis would have the=
=20
option of asking legislators to return for a day to vote on any proposal th=
at=20
might emerge.  The middle of August is regarded as a deadline. A memorandum=
=20
of understanding that Davis negotiated with Edison can be waived by either=
=20
side after Aug. 15.  And the state Public Utilities Commission is scheduled=
=20
to take rate action a few days later in support of a $13.4 billion=20
power-purchasing bond that could limit options for an Edison rescue.  In th=
e=20
Senate, the governor's plan, which was criticized for being too generous to=
=20
Edison, was stripped from a bill and replaced with a tough plan that would=
=20
allow Edison to issue a $2.5 billion bond to pay off its debt.  Edison woul=
d=20
have to agree to a number of things, including selling power from its=20
generators at cost-based rates, giving the state all of the output from a n=
ew=20
power plant near Bakersfield at low rates for a decade and applying a $400=
=20
million tax refund to its back debt.  A $1 billion debt that Edison owes=20
generators, who are accused of overcharging, would be left unpaid. The Edis=
on=20
bond would be paid off not by residential customers but by businesses and=
=20
other large users, who would not be allowed to shop around for cheaper=20
power.  In the Assembly, Wright got agreement from an Edison official when =
he=20
told a hearing that a plan backed by Assembly Democratic leaders would not=
=20
keep Edison out of bankruptcy. Edison would be billed for $300 million wort=
h=20
of power purchased by the Independent System Operator and other obligations=
=20
not specificed in the bill.=20




PUC May Cede Control Over Electricity Rates
Energy: Chief says letting the state water agency set prices would ensure=
=20
that ratepayers cover costs. Others say plan would leave public unprotected=
.=20
By TIM REITERMAN and NANCY VOGEL
Times Staff Writers=20

July 19 2001

SAN FRANCISCO -- California's chief utility regulator proposed Wednesday to=
=20
provide rubber-stamp approvals of any future electricity rate increases tha=
t=20
state power buyers find necessary.

This fundamental shift in the state's regulatory structure would bypass=20
procedures that currently protect the interests of consumers.

The proposed agreement between the state Public Utilities Commission and th=
e=20
state Department of Water Resources is designed to guarantee that consumers=
=20
pay enough to cover the purchase by the state of electricity for the 27=20
million people served by three financially troubled utilities.

Consumer payments will be used to repay bonds the state plans to float late=
r=20
this year. The bonds will be used to reimburse the state treasury for money=
=20
spent on electricity. The PUC is expected to formally ratify the agreement=
=20
Aug. 23.

A spokesman for the water department said that a historic rate increase in=
=20
March is expected to cover all of the agency's costs and that no new hikes=
=20
will be necessary.

But under the terms of the proposed agreement, if that expectation proves=
=20
incorrect and future hikes are needed, the PUC promises to adjust electrici=
ty=20
rates to meet the department's need for revenue within 90 days, or 30 days =
in=20
emergency situations.

"The ruling gives carte blanche to [the department] to do whatever they wan=
t=20
to do," said Richard Bilas, a PUC member appointed by former Gov. Pete=20
Wilson. "We don't have much control over them. I am uncomfortable with it."

If approved, the agreement would shift the oversight of electricity rates=
=20
from the PUC, an independent regulatory body whose members are appointed by=
=20
the governor, to a state administrative agency that is under the governor's=
=20
direct control.

S. David Freeman, Gov. Gray Davis' chief energy advisor, said the agreement=
=20
would essentially transform the state water department into "the equivalent=
=20
of a municipal utility" that has sole discretion to raise revenue from its=
=20
customers.

The PUC would only have the authority to "make sure that our math is OK, an=
d=20
we haven't gone out and bought the Brooklyn Bridge," Freeman said.

Already, however, the state's judgment in buying power has been questioned.=
=20
The Department of Water Resources has signed long-term contracts designed t=
o=20
ensure stable supplies. But critics have charged that those contracts have=
=20
locked the state into prices that are too high. Indeed, because of cool=20
weather and reduced demand by consumers, the state--at least temporarily--i=
s=20
buying more power than California needs and has begun reselling some of it=
=20
for considerably less than it costs.

In another energy-related development, a top executive of Southern Californ=
ia=20
Edison Co., one of the three utilities that has been flirting with=20
insolvency, criticized as inadequate a state Senate bailout bill.

The bill is a thoroughly rewritten version of a highly publicized deal Davi=
s=20
and Edison officials fashioned in April to restore the company's financial=
=20
health. That deal called for the state to buy the utility's transmission=20
lines for $2.76 billion.

At a hearing of the Senate Energy Committee, Bob Foster, an Edison vice=20
president, testified that the Senate version, which is expected to be voted=
=20
on this week, would leave Edison $1 billion short of meeting its financial=
=20
needs.

The problems of Edison, Pacific Gas & Electric Co. and San Diego Gas &=20
Electric Co. triggered the need for the deal between the PUC and the water=
=20
department. That agreement was hammered out in high-pressure negotiations=
=20
that involved dozens of state officials and bonding experts. It is viewed b=
y=20
state officials and bond analysts as critical to the sale this summer of th=
e=20
$13.4-billion bond issue.

But Harvey Rosenfield, president of the Foundation for Taxpayer and Consume=
r=20
Rights in Santa Monica, said the agreement would strip away the PUC's=20
constitutional obligation to protect consumers from unreasonable rate hikes=
.

"This is a power play by the Davis administration, the energy companies and=
=20
Wall Street to eliminate any public scrutiny over their conduct and the pri=
ce=20
of electricity for the next 10 to 15 years," he said.

The agreement is the latest step in implementing emergency legislation pass=
ed=20
this year to allow the water department to buy power. The agency stepped in=
to=20
the market after the three utilities said that rates frozen under the state=
's=20
deregulation plan were preventing them from recovering their costs and were=
=20
threatening their solvency.

Assembly Bill 1X, signed into law by Davis in February, provided that the=
=20
water department would be able to recover its costs and directed the PUC to=
=20
implement an agreement to accomplish that.

The agreement also would provide assurance to Wall Street that electric rat=
es=20
would provide a reliable flow of funds that could be used to pay off the=20
bonds. The state hopes to use the bonds to create a revolving fund that wou=
ld=20
pay for $8 billion in current and future power costs.

State Treasurer Phil Angelides said the rate agreement "must be adopted so=
=20
that the general fund can be repaid, and to protect the state's fiscal=20
solvency. . . . This agreement provides the assurance that, for the term of=
=20
the bonds, the law will be honored so that bonds can be sold and bondholder=
s=20
repaid."

Equally important is the water department's projection of how much revenue=
=20
the agency needs for everything from spot market power purchases and the co=
st=20
of long-term contracts to administrative costs and debt service. That=20
detailed assessment will indicate whether the increase approved in March--a=
n=20
average hike of 3 cents per kilowatt/hour--will be enough to cover the=20
department's costs for the two-year period ending Dec. 31, 2002. Officials =
at=20
the PUC and the department said the projection could be submitted as soon a=
s=20
Friday.

"We do not anticipate that [the department] will be seeking any further=20
increase beyond the increase announced by the PUC last spring," said=20
department spokesman Oscar Hidalgo. "We're well within the 3-cent increase.=
"

The department's statement of its revenue needs has ramifications not only=
=20
for consumers, but also for utilities. Utility officials fear that their ow=
n=20
costs might not be covered after the department takes its share of the=20
revenue from monthly bills.

PG&E spokesman Ron Low said the company's lawyers are assessing the propose=
d=20
agreement but would have no comment on it until they can see the water=20
department's revenue requirement. He said the company hopes there will be=
=20
enough left "to ensure our customers are treated fairly" and to cover the=
=20
company's costs, including payments for the power it produces and purchases=
=20
through contracts.

Edison officials said they would not comment until they received more=20
information.

The proposed agreement, though not unanticipated, would reduce the role of=
=20
the PUC in one of the most pivotal chapters of the energy crisis.

Normally, the PUC holds hearings and conducts "prudency" reviews before=20
making decisions on rate increases, but the water department would not be=
=20
subject to the same procedures.

"It will not be a review where we say you were imprudent, you goofed up and=
=20
will have to eat the cost, or you badly negotiated these contracts," said=
=20
Commissioner Jeff Brown, who was part of the negotiations.

Brown said the two agencies had differences over issues such as whether the=
=20
water department's administrative costs should be covered by the rate=20
agreement and the extent of the PUC's review. But he said the overriding=20
concern was that the state's bond sale not be delayed or otherwise=20
jeopardized by uncertainty about the water department's ability to meet its=
=20
financial obligations.

"I wish we were not in this situation," he said. "But when we started doing=
=20
purchases, the state was the only credit-worthy entity. We're swimming=20
upstream."

Commissioner Bilas said that although the bond sale is highly important, he=
=20
is concerned that the water department will not be subject to governmental=
=20
checks and balances because the department head reports directly to Davis.

"If the governor believes the director of [the department] is doing a bad=
=20
job, he can be removed," Bilas said. "But it is a matter of how much faith=
=20
you have in individuals rather than faith in a system."

Commissioner Carl Wood, one of Davis' three appointees on the five-member=
=20
commission, pointed out that the PUC was set up to protect the interests of=
=20
the customers of private utility companies with a monopoly. "When a public=
=20
agency takes over [the purchase of power], things like a prudency review do=
=20
not have the same meaning," he said.

PUC President Loretta Lynch, who published the proposed agreement and=20
solicited comment on it, could not be reached Wednesday.

Her legal advisor, Geoff Dryvynsyde, said the commission has to make a publ=
ic=20
policy choice that weighs the need to sell the bonds against its own=20
authority to set rates.

"There is lots to balance here," he said. "A really important consideration=
=20
is the bond deal, and the rate agreement is important to getting that done.=
"=20
---=20
Reiterman reported from San Francisco, Vogel from Sacramento. Times staff=
=20
writer Carl Ingram contributed to this story.=20
Copyright 2001, Los Angeles Times <http://www.latimes.com>=20







IN BRIEF / SACRAMENTO
Power Firm Is Held in Contempt by State Panel
From Times Staff, Wire Reports

July 19 2001

A state Senate committee voted unanimously Wednesday to hold Texas-based=20
Reliant Energy Inc. in contempt for failing to comply with a demand to=20
produce secret business records.

Reliant is one of seven power generators under investigation by the Senate=
=20
committee for failing to obey a subpoena for documents the companies consid=
er=20
to be trade secrets or proprietary information.

Reliant attorney Charles J. Stevens said that compliance with the committee=
's=20
demands potentially would expose the company's most secret information to i=
ts=20
competitors.=20
Copyright 2001, Los Angeles Times <http://www.latimes.com>=20




Electricity cost tops Californians' concerns=20
SURVEY: Governor now getting some credit for improving the situation=20
John Wildermuth, Chronicle Political Writer=20
<mailto:jwildermuth@sfchronicle.com>
Thursday, July 19, 2001=20
,2001 San Francisco Chronicle </chronicle/info/copyright>=20
URL:=20
<http://www.sfgate.com/cgi-bin/article.cgi?f=3D/c/a/2001/07/19/MN199435.DTL=
>
=20
</cgi-bin/object.cgi?object=3D/chronicle/pictures/2001/07/19/mn_chronsurvey=
.jpg&
paper=3Dchronicle&file=3DMN199435.DTL&directory=3D/c/a/2001/07/19&type=3Dpr=
intable>=20
</cgi-bin/object.cgi?object=3D/chronicle/pictures/2001/07/19/mn_chronsurvey=
.jpg&
paper=3Dchronicle&file=3DMN199435.DTL&directory=3D/c/a/2001/07/19&type=3Dpr=
intable>
The lights have stayed on this summer, but California residents are more=20
anxious than ever about the state's energy crunch, according to a survey=20
released today.=20
"People are still very worried," said Marc Baldassare, who directed the pol=
l=20
for the Public Policy Institute of California. "They're not convinced we're=
=20
totally out of danger."=20
While a record number of residents list electricity prices as the state's t=
op=20
problem, Gov. Gray Davis seems to be getting some credit for improving a ba=
d=20
situation.=20
The poll found only 39 percent of those surveyed approve of the way Davis i=
s=20
dealing with the power problems, but that's a steady increase from the 29=
=20
percent mark he had in a similar survey two months ago.=20
"As time goes by without any significant new problems, people realize that =
an=20
effort has been made," Baldassare said. "If things aren't normal, they don'=
t=20
seem to be getting any worse."=20
More than half those surveyed list electricity prices as the state's top=20
concern, with all other worries paling by comparison. Education, the leadin=
g=20
issue just last year, was listed as the state's most important issue by onl=
y=20
9 percent of those surveyed, with jobs and the economy third with 5 percent=
.=20
"People need to realize that there's not an endless supply of power and oil=
,=20
" said Austin Eddy of San Francisco, one of those surveyed. "Maybe these=20
problems can serve as a wake-up call."=20
The poll of 2,007 Californians, conducted July 1 to July 10, has a margin o=
f=20
error of plus or minus 2 percentage points.=20
The overall news for the governor in the survey isn't good despite the uptu=
rn=20
in numbers for his attempt to ease the power crunch. Davis is still getting=
=20
his share of blame, and it is showing in his approval ratings. Only 44=20
percent like the job he is doing as governor, while 45 percent are unhappy=
=20
with his performance. That's down slightly from his 46 percent approval=20
rating in May and far below the 63 percent mark Davis had in a January=20
survey.=20
APPORTIONING THE BLAME
Those polled still give utility companies, such as Pacific Gas and Electric=
=20
Co., and former Gov. Pete Wilson and the legislators who approved utility=
=20
deregulation much of the blame for the current crisis, but they are=20
increasingly calling Davis and the current Legislature to account. The=20
percentage of people who blame Davis for the power problems jumped from 10=
=20
percent in May to 16 percent in the new survey.=20
"People are less likely to look in the past for blame and more willing to=
=20
look at the current situation," Baldassare said. "They are moving toward=20
blaming the people in charge now."=20
But Davis seems to be winning the high-stakes public relations battle he's=
=20
having with President Bush over the energy crisis. Bush saw his approval=20
rating in the state skid from 57 percent in May to 47 percent today while t=
he=20
proportion of people who disapprove of the way he's handled the power woes=
=20
jumped from 56 percent to 63 percent.=20
When asked who is more to blame for the state's electricity problems, 26=20
percent of those surveyed chose Davis to 12 percent who chose Bush.=20
But when asked who is providing better solutions to the problem, 34 percent=
=20
chose the governor compared with 8 percent who give Bush the nod.=20
BAD MARKS FOR BUSH
"The energy problem has hurt Bush," Baldassare said. "Very few people think=
=20
he's come up with good solutions."=20
Much of Bush's proposed energy plan runs contrary to California's=20
preferences. The president's program backs oil drilling in environmentally=
=20
sensitive areas, calls for the possibility of more nuclear plants and oppos=
es=20
oil price controls.=20
"I don't think Bush has his priorities straight," Eddy said. "He's not=20
concerned about finding alternative ways of doing things and changing the w=
ay=20
things are done."=20
The new poll shows 56 percent of those surveyed favoring price controls, 57=
=20
percent opposed to nuclear power plants in their region and 71 percent=20
against oil exploration in federally protected areas.=20
More than two-thirds of those surveyed, including half the Republicans,=20
believe that the environment must be protected, even if it means higher=20
prices for gas and electricity.=20
"Bush has talked about the need to increase the energy supply, but his idea=
s=20
have not gained any traction in California," Baldassare said. "A lot of=20
people here oppose a trade-off with energy and the environment."=20

CHART 1:
E-mail John Wildermuth at jwildermuth@sfchronicle.com=20
<mailto:jwildermuth@sfchronicle.com>.=20
Worried
   Top three concerns of Californians, according to a new poll:
   Electricity prices, deregulation
   56%
   Schools, education
   9%
   Jobs, economy, unemployment
   5%
   Source: Public Policy Institute of California



CHART 2:
   Approval ratings
   For the first time, a majority of state residents view the energy crunch=
=20
as=20
California's No. 1 problem, according to a Public Policy Institute of=20
California poll. At the same time, the public's view of Gov. Gray Davis'=20
handling of the energy crisis has improved since May while residents are mo=
re=20
critical of President Bush's actions than they were two months ago.
   -- Do you approve or disapprove of the way that Gray Davis is handling t=
he=20
issue of the electricity problem in California?
   May 2001=20
Approve 29%
Disapprove 60%
Don't know 11%
   July 2001=20
Approve 39%
Disapprove 51%
Don't know 10%
CHART 3
   -- Do you approve or disapprove of the way that President Bush is handli=
ng=20
the issue of the electricity problem in California?
   May 2001=20
Approve 33%
Disapprove 56%
Don't know 11%
  =20
   July 2001
Approve 28%
Disapprove 63%
Don't know 9%
   The survey of 2,007 California residents was conducted July 1-10. It has=
 a=20
margin of error of plus or minus 2 percentage points. =20
   Source: Public Policy Institute of California=20
   Chronicle Graphic

,2001 San Francisco Chronicle </chronicle/info/copyright> Page A - 1=20







PG&E rebates snub longtime watt watchers=20
WHO WINS?: Reward is easier for those unaccustomed to power scrimping=20
Joe Garofoli, Chronicle Staff Writer <mailto:jgarofoli@sfchronicle.com>
Thursday, July 19, 2001=20
,2001 San Francisco Chronicle </chronicle/info/copyright>=20
URL:=20
<http://www.sfgate.com/cgi-bin/article.cgi?f=3D/c/a/2001/07/19/MN144662.DTL=
>
If you've spent months squinting through dimly lit nights and still didn't=
=20
get a 20 percent rebate on your most recent utility bill, you're going to=
=20
hate hearing about Anne Crawford.=20
Conserving enough electricity to get a refund from Pacific Gas and Electric=
=20
Co. was "too easy" for the resident of San Francisco's Noe Valley. She mere=
ly=20
replaced a handful of high-wattage bulbs, turned off her computer, and voil=
a=20
--=20
her electricity usage dropped 29 percent over last year.=20
That makes Crawford a winner in Gov. Gray Davis' new program that cuts 20=
=20
percent off the bills of customers who reduce their usage 20 percent.=20
Crawford's payoff: $6.09, less than the average residential rebate of $10.7=
8.=20
Like most winners, Crawford endured little hardship to receive a credit on=
=20
her bill.=20
"I hear all these stories about all these heroic things people did," Crawfo=
rd=20
said, "but I didn't really do anything special."=20
If only it were that easy. Nearly a third of PG&E customers have opened the=
ir=20
bills this month to find a credit for conserving, but many of the 71 percen=
t=20
who didn't are ticked. They complain that the program rewards watt hogs who=
=20
needed to conserve instead of the conservationists who have been doing the=
=20
right thing for years.=20
But that is of little consequence to the 510,000 PG&E residential customers=
=20
who have received $5.5 million in rebates so far. (The utility is nine days=
=20
through its 21-day billing cycle.)=20
Chip Gibbons knows how he's going to spend the $4.03 burning a hole in his=
=20
pocket.=20
"It's not enough to buy a bargain movie ticket, so I think I'm going to get=
 a=20
10-pound bag of Kitty Litter," said Gibbons, who cut his electricity=20
consumption at his Castro apartment by half.=20
Gibbons' secret: "My roommate moved out."=20
NO REWARD TOO SMALL
Some rebate winners were glad to see huge conservation investments pay off.=
=20
Robyn Simonett dropped $700 on a new energy-efficient refrigerator to repla=
ce=20
the 15-year-old model in her Berkeley bungalow. That, combined with keeping=
=20
the thermostat at 62 degrees, made all those days of typing in gloves with=
=20
the fingertips removed and doing jumping jacks on the hour worth the strugg=
le=20
once she opened her PG&E bill.=20
Her cash reward: $3.=20
"I went, 'Woo-hoo, yeah,' " Simonett said. "Hey, it's something."=20
Psychically, it's good to get cash back from PG&E after months of soaring=
=20
rates, agreed Leonard Graff, winner of a $7 rebate for conservation at his=
=20
San Francisco home. And while it may look like he's in the hole after=20
spending $150 on fluorescent bulbs and a new lamp to replace a watt-sucking=
=20
torchere, "those bulbs will pay for themselves soon. I'll have them for 10=
=20
years."=20
If only Gretchen Beck had rebate cash to spend on cat box filler. She saved=
=20
19 percent -- just missing the rebate threshold. She couldn't have done muc=
h=20
more. She didn't watch TV for three months, used only the lights she needed=
,=20
turned off all the right things. Maybe if she unplugged her electric mattre=
ss=20
warmer, she might have. . . .=20
"No way," said the resident of San Francisco's Bernal Heights. "I'd unplug =
my=20
refrigerator first."=20
WATT WASTERS CASHING IN
Beck wasn't bitter about not getting a rebate. Some also-rans, however,=20
complained about the unfairness of rewarding watt hogs while overlooking=20
PG&E's good energy citizens.=20
Privately, one PG&E official said, "We tried to tell the governor's office=
=20
that when they came up with this program."=20
"It's unfair to people who have been efficient all along," said Marc Acheso=
n,=20
an Oakland resident who bundled up, bought energy-efficient bulbs and did a=
ll=20
the right things long before there was an energy crisis. The downside to=20
doing the right thing: Acheson doesn't think he'll get a rebate when his bi=
ll=20
arrives.=20
"There should be something for people like my wife and I, who won't get a=
=20
refund. But I guess this program is meeting its target: people who were=20
wasting a lot."=20
A PAT ON THE BACK
Don't look to the governor's office for a reward for longtime=20
conservationists. Davis feels they've already received one.=20
"Their reward is the years of savings they've had for doing the right thing=
,=20
" said Davis spokesman Roger Salazar. "The governor considers them the real=
=20
heroes of this crisis."=20
Being called a hero is nice, but many customers said they would prefer cold=
=20
hard cash.=20
The program had to make targets of watt hogs, as Salazar said, because that=
's=20
where the most waste was. Besides, he said, the hogs will be hit by the new=
=20
rate increases approved by the state Public Utilities Commission.=20
PG&E estimated that 65 percent of its residential customers would be paying=
=20
higher rates for their June bills. Only customers who stay within 130 perce=
nt=20
of their baselines will be immune from further rate increases.=20
For those who didn't get a rebate in this billing cycle, they'll get anothe=
r=20
shot in July, August and September usage. But Beck still won't unplug her=
=20
mattress warmer for a rebate.=20
"At this point, I'm going to say screw it," Beck said. "I'm already a low=
=20
user, and I've got more important things going on in my life."=20
E-mail Joe Garofoli at jgarofoli@sfchronicle.com=20
<mailto:jgarofoli@sfchronicle.com>.=20
,2001 San Francisco Chronicle </chronicle/info/copyright> Page A - 1=20








Assembly panel OKs two bills to help Southern California Edison=20
Lynda Gledhill, Chronicle Sacramento Bureau <mailto:lgledhill@sfchronicle.c=
om>
Thursday, July 19, 2001=20
,2001 San Francisco Chronicle </chronicle/info/copyright>=20
URL:=20
<http://www.sfgate.com/cgi-bin/article.cgi?file=3D/chronicle/archive/2001/0=
7/19/
MN186516.DTL>
Sacramento -- Two sharply contrasting plans to prevent debt-ridden Southern=
=20
California Edison from being dragged into bankruptcy cleared a key Assembly=
=20
committee last night, but a third measure stalled in the Senate.=20
The first bill approved by the Assembly Energy Cost and Availability=20
Committee calls for the state to purchase Edison's transmission lines for=
=20
$2.4 billion as a way to help the utility out of its estimated $3.5 billion=
=20
in debt.=20
The plan drew criticism from business and consumer groups, and many lawmake=
rs=20
who said other aspects of the rescue plan are too complicated wondered open=
ly=20
if it wouldn't be better to let the utility to go bankrupt.=20
But Assemblyman Fred Keeley, D-Boulder Creek, an author of the bill, said=
=20
before the 11-to-9 vote that lawmakers have to work with legislation that i=
s=20
complicated and not entirely pleasing.=20
"If this was easy, or if this was simple, we wouldn't call it a crisis," he=
=20
said. "This is far beyond a problem or a policy that we can debate and as a=
=20
consequence the solutions are neither simple or easy."=20
After a day of furious activity, the close vote -- with some Democrats=20
joining Republicans in opposition -- may spell trouble when it reaches the=
=20
floor of the Assembly.=20
The Assembly Appropriations Committee approved the plan 12 to 6 late last=
=20
night, setting up a floor vote for today.=20
The second plan that cleared the Assembly committee would be a "straight=20
bailout," said its author, Assemblyman Rod Wright, D-Los Angeles. It was=20
approved 12 to 3. The Appropriations Committee did not take up Wright's bil=
l.=20
The state would back $3.5 billion in bonds issued by the utility and then b=
e=20
repaid through a $2-a-month charge for Edison ratepayers.=20
The Edison deal is considered a linchpin to getting the state out of the=20
power-buying business, something that is costing taxpayers upward of $50=20
million a day. If Edison joins Pacific Gas and Electric Co. in Bankruptcy=
=20
Court, there is no clear way out of the electricity-buying business for the=
=20
state.=20
Gov. Gray Davis has said that he hopes any rescue plan for Edison would be=
=20
used as a model for PG&E to get out of court and back into the power-buying=
=20
business.=20
Also, a Senate committee defeated another proposal after the company said i=
t=20
would not work. The bill would let the utility issue $2.5 billion in revenu=
e=20
bonds, to be repaid by ratepayers.=20
The Senate Energy Utilities and Communications Committee's 4-to-3 vote came=
=20
as lawmakers struggle to approve some kind of rescue plan before the end of=
=20
the week, when they are scheduled to start a monthlong recess. The bill=20
needed five votes to pass and the chairwoman of the panel said another vote=
=20
would be taken today.=20
Sen. Jackie Speier, D-Hillsborough, who abstained from voting in the=20
committee, said the bill was defeated because senators weren't prepared to=
=20
send it to the floor yet.=20
"The bill does not have broad support in the Democratic caucus," said Speie=
r,=20
who opposes the bill.=20
Edison objects to the bill by Sen. Byron Sher, D-Palo Alto, because it=20
contains no way for the company to pay back the other $1 billion it owes=20
generators. Bob Foster, an Edison vice president, said the goal of a rescue=
=20
plan is to remove the state from the electricity business and restore the=
=20
utility to creditworthiness.=20
"This bill can't do that," he said in a Senate hearing.=20
Sher's proposal would also give the state a five-year option to purchase th=
e=20
transition lines and would make the largest commercial businesses pay for a=
ll=20
of the debt.=20
Business groups and consumer organizations blasted the measure.=20
"We think you should spread the cost proportionally to all ratepayers," sai=
d=20
Dominic DiMare of the California Chamber of Commerce. "This is businesses=
=20
subsidizing residents. Everyone used energy during this time period that th=
e=20
debt was accrued, and everyone should pay their share."=20
Doug Heller of the Foundation for Taxpayer and Consumer Rights said consume=
rs=20
will see the cost in the end through higher prices passed on by businesses.=
=20
But Senate leader John Burton said the proposal by Sher was the only one th=
at=20
might be approved by the Senate.=20
"It's a fair, just and equitable offer," he said. "It puts the burden on=20
those who can most afford it, and it doesn't overpay for the transmission=
=20
lines.=20
Many lawmakers say letting Edison go into bankruptcy may be better than=20
rushing through a rescue plan.=20
With each house likely to pass different versions of a rescue plan, it is=
=20
unclear if the difference will be resolved before the break, or if lawmaker=
s=20
will be called back to vote on a final plan during their vacation.=20
An agreement between Gov. Davis and Edison, which has been all but dismisse=
d=20
by lawmakers who say it is too generous to the utility, contains an Aug. 15=
=20
deadline.=20

Saving Edison=20
A comparison of three bills that attempt to rescue financially troubled=20
Southern California Edison: .=20
AB82xx by Assemblyman Fred Keeley, D-Boulder Creek (Santa Cruz) and Assembl=
y=20
Speaker Robert Hertzberg, D-Sherman Oaks (Los Angeles County)=20
TRANSMISSION LINES
Proposes spending $2.4 billion for transmission lines to help cover the=20
utility's estimated $3.5 billion in debt.=20
BACK DEBT (All of the plans allow the utility to issue bonds to repay the=
=20
debt, but each has it repaid by customers in a different way) Debt not=20
covered by the sale of transmission lines will be paid back by all ratepaye=
rs=20
for two years, then fall exclusively on the shoulders of large commercial=
=20
customers. Money raised will be placed in a trust account of an amount equa=
l=20
to 70 percent of the utility's back debt. Generators owed money can either=
=20
accept partial payment or fight the trust in court.=20
DIRECT ACCESS
Phases in the ability of consumers to bypass the utility and contract=20
directly for power. As the state's obligation to purchase power is reduced,=
=20
customers may opt for direct access during specified open enrollment period=
s,=20
to occur at least twice a year. .=20
AB83xx by Assemblyman Rod Wright, D-Los Angeles=20
TRANSMISSION LINES
No purchase of transmission lines.=20
BACK DEBT
All of the debt will be paid for by all customers with a $2-per-month charg=
e.=20
DIRECT ACCESS
Same .=20
SB78xx by Senator Byron Sher, D-Palo Alto, and Richard Polanco, D-Los Angel=
es=20
TRANSMISSION LINES
Includes a 5-year option for the state to purchase the lines for $1.2=20
billion.=20
BACK DEBT
It would only allow $2.5 billion to be paid to alternative power generators=
=20
and banks and does not deal with the $1 billion owed to generators. All of=
=20
the $2.5 billion would be paid by large commercial customers.=20
DIRECT ACCESS
Does not address the issue.=20
Chronicle Graphic=20
E-mail Lynda Gledhill at lgledhill@sfchronicle.com=20
<mailto:lgledhill@sfchronicle.com>.=20
,2001 San Francisco Chronicle </chronicle/info/copyright> Page A - 14=20








Cool weather brings California energy glut, causing state to sell surplus=
=20
power at a loss=20
KAREN GAUDETTE, Associated Press Writer
Thursday, July 19, 2001=20
,2001 Associated Press=20
URL:=20
<http://www.sfgate.com/cgi-bin/article.cgi?file=3D/news/archive/2001/07/19/=
finan
cial0358EDT0024.DTL>
(07-19) 00:58 PDT SAN FRANCISCO (AP) --=20
Unseasonably cool weather has turned the California power crisis on its hea=
d,=20
with recent energy shortages giving way to a glut that's prompted the state=
=20
to sell excess power at a loss.=20
In some cases, traders say, energy bought at an average of $138 per megawat=
t=20
is being sold for as little as $1 per megawatt.=20
State officials acknowledged selling excess power over the past week, but=
=20
disputed the prices. They said the sales are a blip during a long, hot summ=
er=20
and blackouts are still possible if the mercury soars.=20
"This is unusual, but it was anticipated, it is typical in the power buying=
=20
operation," said Oscar Hidalgo, a spokesman for the Department of Water=20
Resources, which is in charge of buying power for three financially ailing=
=20
utilities. "It's better than doing nothing with surplus power."=20
The agency has spent the past few months arming the state with long-term=20
energy contracts while weaning itself away from buying high-priced power on=
=20
the last-minute electricity market.=20
Those contracts, along with the temperate weather and a boost in energy=20
conservation, mean there's suddenly more power than Californians can use.=
=20
Hidalgo acknowledged the state has been trying to sell as much as 20 percen=
t=20
of its daily megawatts, though he would not say at what price.=20
"We know from traders who have bought that it's gone as low as a dollar and=
=20
last week we know it was as low as $5," said Gary Ackerman, executive=20
director of the Western Power Trading Forum in San Jose.=20
Unlike natural gas, extra electricity cannot be stored and used later. Sinc=
e=20
Californians haven't been running their air conditioners as often as expect=
ed=20
over the past week, the state hasn't needed the entire 38,000 megawatts it=
=20
had figured it would need. A megawatt is enough electricity to power roughl=
y=20
750 homes.=20
The surplus power sell-off could encourage criticism that the state bought=
=20
too much power at too high a price in its haste to fend off blackouts.=20
"If the price is $138 on average for a month and you have to turn around an=
d=20
sell a chunk of it for a dollar, you're not going to look real good to a=20
number of people," Ackerman said. "I just don't think many people in=20
California truly understood what their state did when they stepped into thi=
s=20
business."=20
Steve Maviglio, a spokesman for Gov. Gray Davis, said Ackerman has no=20
evidence of California selling power for $1 a megawatt. He said a=20
$25-per-megawatt price mentioned by California Energy Markets, a trade=20
weekly, was "much closer to reality."=20
Some of the extra electricity is being sent to the Bonneville Power=20
Administration, a power supplier in the Pacific Northwest, to repay it for=
=20
power it loaned California earlier this year, Hidalgo said.=20







Investigative arm of Congress issues demand letter for energy meetings=20
PETE YOST, Associated Press Writer
Thursday, July 19, 2001=20
,2001 Associated Press=20
URL:=20
<http://www.sfgate.com/cgi-bin/article.cgi?file=3D/news/archive/2001/07/19/=
natio
nal0311EDT0466.DTL>
(07-19) 00:11 PDT WASHINGTON (AP) --=20
The investigative arm of Congress demanded Wednesday that Vice President Di=
ck=20
Cheney identify all the industry leaders who helped formulate the Bush=20
administration's energy policy. Refusal could lead to a court fight.=20
The White House, which is reviewing the request, said it would work with th=
e=20
General Accounting Office to resolve the issue.=20
The GAO letter follows repeated refusals by the vice president's office to=
=20
provide names and titles of participants who met with the energy task force=
=20
chaired by Cheney.=20
Under the law, the GAO could sue if the Bush administration fails to supply=
=20
the data within 20 days.=20
This is the first demand letter ever issued by the GAO to the vice presiden=
t=20
of the United States, said Democratic Reps. John Dingell and Henry Waxman,=
=20
who directed the agency to review the task force's work nearly three months=
=20
ago.=20
The vice president's lawyer has told the GAO there were nine meetings of th=
e=20
task force and that staffers also met with many people to gather informatio=
n.=20
The result was an energy policy, announced May 17, that is aimed at=20
increasing the nation's supply of energy. It includes expanded oil and gas=
=20
drilling on public land and a rejuvenated nuclear power system.=20
White House spokeswoman Anne Womack said the letter is under review, and "w=
e=20
will continue to work with the GAO to resolve this issue."=20
The vice president's office "has continued on its course of secrecy and=20
obstinance," Dingell said in a statement.=20
"The White House should simply try telling the truth ... and stop hiding=20
information that Congress and the public have a right to see," said Waxman.=
=20
A top Cheney aide, Mary Matalin, said Waxman and Dingell should "stop wasti=
ng=20
taxpayers' money" with their confrontation with the vice president. "If the=
y=20
want to know what happened in the energy task force meetings, they need loo=
k=20
no further than the policy we sent to the Hill," she said.=20
The White House's position is that the GAO is entitled to information on th=
e=20
task force's costs, but that the congressional watchdog agency doesn't have=
=20
authority to ask for lists of those with whom the task force met.=20
Waxman is also pressing for a Justice Department investigation of Karl Rove=
=20
over the Bush political strategist's energy-related meetings.=20
The White House has acknowledged that Rove participated in meetings on the=
=20
administration's energy policy while he owned stock in energy companies suc=
h=20
as Texas-based Enron Corp. The White House has supplied no details on Rove'=
s=20
meetings.=20






Poll: Legislators, Davis blamed more than sellers=20
Posted at 10:08 p.m. PDT Wednesday, July 18, 2001=20
BY STEVE=20
JOHNSON=20
Mercury News=20

Despite months of loudly accusing electricity suppliers of price gouging an=
d=20
leaving the state in a terrible mess, Gov. Gray Davis and legislative leade=
rs=20
haven't convinced most Californians, a new poll suggests.=20
When the Public Policy Institute of California asked 2,007 adults this mont=
h=20
who was mostly responsible for the energy crisis, Davis and lawmakers were=
=20
blamed more than private power sellers.=20
Moreover, most of those surveyed said they preferred having businesses in=
=20
charge of producing and distributing electricity in California and that it=
=20
would be a bad idea for state government to take over that role.=20
``It means that the efforts to single out the power generators has really n=
ot=20
been very effective on the part of the governor or the Legislature,'' said=
=20
Mark Baldassare, who directed the non-profit research group's poll released=
=20
today. ``Californians look to a whole group of actors in this crisis as=20
playing major parts in the problem.''=20
The poll was conducted before the Mercury News reported Wednesday that the=
=20
state was selling costly surplus power at bargain prices, a move that had o=
ne=20
lawmaker calling for more details from the governor. It was one of a number=
=20
of recent instances in which state officials had to defend their own energy=
=20
dealings. And as they have done in the past, they responded by blaming=20
generators for most of the state's problems.=20
But today's poll heartened some electricity suppliers, who say they are tir=
ed=20
of the barrage of price-gouging allegations being leveled at them.=20
``Wow, maybe the public understands that this problem is a lot more complex=
,=20
which is what we've been saying all along,'' said Patrick Dorinson, of Mira=
nt=20
Corp., which has several major power plants in the Bay Area and is among th=
e=20
nation's biggest electricity suppliers. ``Maybe it also indicates that the=
=20
public is getting tired of the blame game.''=20
But some experts said the poll may simply underscore a misunderstanding abo=
ut=20
the difference between utilities and other electricity sellers.=20
Asked who ``is most to blame for the current electricity situation in=20
California,'' 22 percent picked the former governor and Legislature, 16=20
percent picked the current governor and Legislature, and 10 percent listed=
=20
power generators.=20
However, electric utilities companies were picked by 23 percent, even thoug=
h=20
they've given up much of their electricity-producing responsibilities to=20
private firms under the state's 1996 energy deregulation law.=20
Davis and other state officials have repeatedly accused private electricity=
=20
sellers of overcharging the state and helping drive Pacific Gas & Electric=
=20
Co. into bankruptcy. Still, ``most consumers don't know the difference''=20
between utilities and the firms that supply power to the utilities, said=20
Steve Maviglio, Davis' chief spokesman.=20
Even some experts hired by the energy industry say it's easy for the public=
=20
to be confused.=20
The way power is bought and sold in this deregulated energy marketplace=20
probably mystifies many, said Marty Wilson, who has polled about 6,000=20
Californians this year for Reliant Energy of Houston.=20
Nevertheless, Wilson added that his polling also finds little support for t=
he=20
notion that power suppliers are primarily to blame. About 40 percent of tho=
se=20
he has questioned attribute the state's energy problems to the 1996 law. By=
=20
contrast, the percent of people who blamed private power suppliers was less=
=20
than half that, he said, adding, ``they clearly see this as a failure of=20
government.''=20
Still, Davis isn't likely to ease up on his criticism of private power=20
suppliers. ``The governor will continue to point the finger at whoever he=
=20
sees as causing prices to rise,'' Maviglio said, ``and the No. 1 villain is=
=20
generators.''=20
S. David Freeman, Davis' chief energy adviser, reiterated that point during=
 a=20
meeting Wednesday with the Mercury News editorial board. He defended the=20
state's attacks on energy companies and credited the relentless pressure fo=
r=20
forcing federal regulators recently to consider ordering significant refund=
s=20
from the firms.=20
``We did some things right, and one of them was calling attention to the fa=
ct=20
that we were being robbed,'' Freeman said.=20
Consumers were given the least amount of blame for the state's energy=20
problems in the Public Policy Institute survey.=20
More than four out of five -- 81 percent -- said they were closely watching=
=20
news reports about the energy crisis, and 56 percent said the biggest singl=
e=20
issue facing California was the price and availability of electricity. That=
=20
was the first time in the survey's three-year history that a majority of=20
respondents had named the same issue as the most important problem.=20
Most of those questioned also said they were trying hard to conserve. ``Six=
=20
in 10 residents say they have done `a lot'' to reduce their use of=20
electricity and appliances at home during peak hours,'' the survey found.=
=20
Belief in the importance of conservation was equally strong among Democrats=
=20
and Republicans. But the survey found significant differences among ethnic=
=20
and income groups.=20
``Public support for conservation is strongest among younger, less educated=
=20
and lower-income residents,'' it concluded. Moreover, by a ratio of 25=20
percent to 16 percent, it said, ``Latinos are more likely than non-Hispanic=
=20
whites to favor conservation as the solution to today's electricity=20
problems.''=20


Mercury News Staff Writer John Wolfolk contributed to this report.=20


Contact Steve Johnson at sjohnson@sjmercury.com=20
<mailto:sjohnson@sjmercury.com> or (408) 920-5043.=20








Consumers to bear costs of state's power purchases=20
Posted at 10:30 p.m. PDT Wednesday, July 18, 2001=20
BY MICHAEL BAZELEY=20

Mercury News=20


State energy regulators have reluctantly signed away one of their most=20
fundamental consumer protection roles: the right to question and reject=20
requests for higher power rates.=20
Under a proposed rate agreement with the state Department of Water Resource=
s=20
released Wednesday, the Public Utilities Commission promises to pass all th=
e=20
state's power-buying costs directly to consumers.=20
Unlike its relationship with utilities such as Pacific Gas & Electric, the=
=20
utilities commission will not be able to audit the department's books or=20
question its expenses. And it will have just 90 days to raise rates if the=
=20
state concludes it needs more money.=20
``Previously, we had discretion to raise rates or not raise rates,'' said=
=20
Commissioner Jeff Brown. ``Here, we're in a situation where it's a bill --=
=20
pay it.''=20
The rate agreement, which the commission is expected to approve next month,=
=20
marks a sea change for the agency.=20
The commission has acted as a check against exorbitant energy rates by=20
reviewing utility costs and setting rates it deemed reasonable.=20
But now the state has stepped into the power-buying business, purchasing a=
=20
third or more of the energy used statewide. The state wants to finance its=
=20
costs with $13.4 billion in bonds but says it needs to guarantee investors=
=20
that consumers will repay them.=20
The agreement comes as no surprise. A state law passed in January says the=
=20
commission must set rates to cover the water resources agency's bills.=20
Nonetheless, some consumer groups are fuming.=20
``It is effectively a blank check for the state,'' said Doug Heller, of the=
=20
Foundation for Taxpayer and Consumer Rights. ``Any costs the state incurs -=
-=20
whether it be consultants for Gray Davis or trips to Texas -- anything they=
=20
pass on is considered just and reasonable. That's deregulation on crack.''=
=20
Under the 17-page agreement, the Department of Water Resources will=20
periodically send a ``revenue requirement'' to state utilities regulators.=
=20
The regulators will use the document to set rates within the 90-day time=20
frame.=20
If the department starts to run short of cash -- because of dramatic spikes=
=20
in the price of power, for instance -- the commission could be forced to=20
adjust rates within 30 days.=20
The commission would have minimal discretion to challenge the state's reven=
ue=20
requests, according to the agreement, beyond pointing out ``arithmetic=20
error'' or costs not related to paying off the bonds or buying power.=20
State officials said they cannot sell the bonds if investors believe the=20
commission might reject any of the state's power-buying costs.=20
At the same time, they said, officials are scrutinizing every contract they=
=20
negotiate with power generators to make sure consumers are getting the best=
=20
deal.=20
``Every contract is critiqued within our department,'' said Oscar Hidalgo,=
=20
spokesman for the water resources department. ``And a lot of the=20
administrative costs are handled the same way.''=20
Under the new arrangement, utilities would still have to justify their cost=
s=20
when asking for a rate increase, but the state would not.=20
Whether rates will need to go up again soon is not clear. The commission ha=
s=20
already voted in two big rate increases this year, one in January and anoth=
er=20
in March. The state is expected to give the commission its latest revenue=
=20
requirement Friday. State officials say that, with falling power prices, th=
ey=20
do not see a need for higher rates.=20


Contact Michael Bazeley at mbazeley@sjmercury.com=20
<mailto:mbazeley@sjmercury.com> or (415) 434-1018.=20








Conservation is cutting edge of power crisis=20
July 19, 2001=20
By Jonathan Lansner
The Orange County Register=20
The Edison bill has arrived. It was almost as exciting a mailbox event as t=
he=20
seemingly regular arrival of a sweepstakes envelope.=20
Best of all, the bill said, "You won!" Well, it really didn't say that. But=
=20
it might as well have.=20
The family's electric bill did note that we sliced our electricity use by a=
=20
third from a year ago. Whoopee!=20
Because we conserved so well, we got a 16-buck rebate. Now, for full=20
disclosure, we sort of cheated. Thanks to a remodeling job in progress, we=
=20
have no air conditioner to abuse. But we weren't the only ones cashing in o=
n=20
conservation, so to speak.=20
According to Edison, 31percent of its residential customers in June took th=
e=20
conservation bait: Cut electricity usage by 20 percent, get a state-funded =
20=20
percent rebate.=20
For the month, 287,224 families in these parts got $2.5 million in rebates =
-=20
or nearly nine bucks a household. That's state taxpayer money at work.=20
Now that sum's no grand windfall. Nor does it fully negate the year's rate=
=20
hikes. But it generates spendable cash. And it's an important conservation=
=20
message.=20
Those 287,224 families earning a June rebate saved what seems at first glan=
ce=20
to be a smidgen of the state's monthly energy usage. You know, $2.5million=
=20
looks like pocket change when headlines talk of billion-dollar deals and/or=
=20
overcharges.=20
However, consider this math: That $2.5million would buy roughly 24,000=20
megawatts of electricity, using Edison's average cost of power this year.=
=20
Believe it or not, 24,000 megawatts is more than a half-day of typical=20
statewide use. Not bad conservation by customers of just one of three major=
=20
utilities in the state.=20
Then roughly double that figure because the state handed out nearly $3milli=
on=20
in June rebates to commercial users for their savings.=20
You know, this conservation thing is more than a sound bite. One reason the=
=20
lights have stayed on this summer in California to date is that demand is=
=20
down by as much as 12 percent.=20
Sure, the weather's unseasonably pleasant, keeping many air conditioners of=
f.=20
And a painful technology slump shuttered some energy-guzzling factories.=20
Nevertheless, the populace also is well aware of the higher energy costs.=
=20
Average Joes and Janes appear very willing to play the money-saving game.=
=20
Compact fluorescent light bulbs, ceiling or attic fans, and double-pane gla=
ss=20
aren't just home-improvement hype.=20
Forget politics. Forget finger-pointing. Please remember basic economics.=
=20
Price motivates consumers to action. Discounts typically lure crowds.=20
Surcharges usually scare off buyers.=20
The fact that nearly one-third of Edison's residential customers slashed=20
energy use in the face of nearly 40 percent rate hikes and a 20 percent=20
rebate carrot clearly proves that point.=20
Whine all you want about what caused the energy mess. Blame the incompetent=
=20
Sacramento crowd. Blame the bungling utilities. Blame the shady out-of town=
=20
generators. Heck, blame L.A.'s stealthy Department of Water and Power.=20
Nevertheless, when you talk solutions, conservation is the most logical=20
choice.=20







National Desk; Section A=20
California's New Problem: Sudden Surplus of Energy=20
By JAMES STERNGOLD=20

07/19/2001=20
The New York Times=20
Page 1, Column 1=20
c. 2001 New York Times Company=20
LOS ANGELES, July 18 -- After months of warnings about power shortages and=
=20
forced blackouts, an unusually cool July and surprisingly effective=20
conservation efforts have put California in a stunning position: it has so=
=20
much electricity on its hands that it is selling its surplus into a glutted=
=20
market.=20
In fact, state officials said today, after spending much of the winter and=
=20
spring scrambling to line up new supplies of electricity at a cost of tens =
of=20
billions of dollars, the agency that is in charge of buying power has=20
actually been selling some back at a loss this week.=20
Oscar Hidalgo, the spokesman for the Department of Water Resources, which=
=20
became the state's main buyer of power after soaring wholesale prices pushe=
d=20
private utilities toward bankruptcy this year, would not provide exact=20
figures on how much the state was selling or how much money it was losing.=
=20
But the department has said it was paying on average $133 per megawatt-hour=
=20
this month, much of which it is obliged to buy whether it needs it or not,=
=20
under long-term contracts signed in recent months. By contrast, officials=
=20
say, the department at times has sold some of that power back into the mark=
et=20
at prices as low as $15 per megawatt-hour.=20
Mr. Hidalgo insisted that the surplus power could quickly vanish if=20
temperatures soar as expected in August.=20
Some consumer groups, which have bitterly criticized the state's energy=20
policies in the crisis, seized on the sales as evidence of what they said w=
as=20
a poorly thought-out plan that had left the state at the mercy of a mercile=
ss=20
market.=20
''This state agency has no expertise in trading,'' said Harvey Rosenfield, =
an=20
official at the Foundation for Taxpayer and Consumer Rights. ''It is=20
amateurish at best and sometimes incompetent, negotiating with a bunch of=
=20
M.B.A.'s whose goal is to soak California. The state was panicked into=20
leaping into this business, and it is being outwitted.''=20
But a spokesman for Gov. Gray Davis defended the state's purchases, saying=
=20
its response to an emergency has produced greater reliability and, in the=
=20
long term, a greater supply of power.=20
''Like we said all along, we're doing everything within our power to contro=
l=20
the situation and stabilize things,'' said Steve Maviglio, the governor's=
=20
spokesman. ''But the weather is not within our control. When the utilities=
=20
were in this business, they ran into this situation routinely.''=20
On Monday, for example, the high temperature in San Diego was 70 degrees,=
=20
compared with an average of 77 degrees. In San Francisco, the high was 66,=
=20
compared with an average of 72, and in Fresno it was 87, down from the=20
average of 99. That meant that air-conditioners across the state were turne=
d=20
down.=20
But officials said that the weather was not the only factor in relieving th=
e=20
sense of crisis in California and that the state's conservation program had=
=20
produced a significant reduction in demand.=20
The state energy commission has said that total demand was down 12 percent=
=20
this June from June 2000, adjusted for the weather and economic growth.=20
The conservation program provides rebates for buying certain energy-efficie=
nt=20
appliances and special discounts for large consumers that reduce their powe=
r=20
needs sharply from previous years.=20
In addition, state and federal office buildings have instituted conservatio=
n=20
measures, including turning off lights and computers at night and adjusting=
=20
thermostats.=20
Also, big rate increases, of as much as 40 percent in certain instances,=20
kicked in this June, encouraging consumers to cut electricity use further.=
=20
Some experts have warned that while a sense of crisis has helped produce th=
e=20
big reductions in demand, as soon as people feel that the emergency has=20
passed at least some will return to their old ways and demand may rise agai=
n.=20
According to the California Independent System Operator, which manages the=
=20
power system, peak demand today was expected to be 32,651 megawatts, and th=
e=20
available supply was slightly above 40,000 megawatts.=20
In January, the state suffered several power emergencies in which it was=20
forced to pay more than $1,000 a megawatt at times of critical shortages.=
=20
But even with those purchases, utilities were forced to cut power in some=
=20
places when the demand exceeded the supply. The last time the state had to=
=20
resort to blackouts was on May 8.=20
After the emergencies in the winter, the state frantically lined up power=
=20
purchases on contracts ranging from a few months to 10 years and more.=20
The state tried to put together a diverse portfolio of contracts that would=
=20
ease the shortages but not lock the government into paying too much if pric=
es=20
declined in the future. Energy experts expected some declines in prices but=
=20
not this quickly.=20
The Department of Water Resources paid an average of $243 per megawatt in=
=20
May, but the price has now dropped to $133 per megawatt on average this=20
month, some of that in the form of spot purchases and some under the=20
long-term contracts. Mr. Hidalgo said the department's sales of power back =
to=20
the market had been at $15 to $30 per megawatt.=20
Some energy traders said the state was just paying the price any market=20
participant must accept.=20
''They're not doing anything imprudent,'' said Patrick Dorinson, a spokesma=
n=20
for the Mirant Corporation, a large power generator and trader. ''They're=
=20
just finding out how the markets work. Everything is built on forecasting,=
=20
and sometimes the forecasts are wrong.''=20
Mr. Maviglio, the governor's spokesman, said the state's planning was built=
=20
on forecasts of a harsher summer and less conservation. ''The forecasts hav=
e=20
turned out to be far more conservative than the reality,'' he said.=20
Mr. Rosenfield countered: ''We've been outwitted. They goofed, and it looks=
=20
like taxpayer money is being thrown down the toilet.''=20
In May, the amount of power the state needed to buy on the so-called spot=
=20
market, which means purchases in which the electricity would be supplied=20
immediately, accounted for close to 45 percent of the total purchases.=20
Typically, longer-term contracts are at fixed prices, while spot purchases=
=20
can be enormously volatile.=20
But because of the reduced demand in July, spot purchases have made up just=
 5=20
percent or so of the Department of Water Resource's total purchases, and at=
=20
the times of lowest demand, like this week, officials have decided to get=
=20
what they can by reselling excess power.=20
''This is a normal business practice,'' Mr. Hidalgo said. ''We can buy powe=
r=20
and we can sell power. I don't think anyone would have predicted that we=20
would have found ourselves in this position in July. But we're not out of t=
he=20
woods. August could be raging hot.''=20

Photo: Cecelia Paez sorted customer bills yesterday at Southern California=
=20
Edison's office in Rosemead, Calif. After months of blackouts, the power=20
situation took an unexpected turn this month, leaving the state with a=20
surplus. (Associated Press)(pg. A20)
joseph.alamo@enron.com, bhansen@lhom.com, rob.bradley@enron.com, 