Please see the following articles:

Sac Bee, Fri, 5/25: More outage notice ordered: Davis tells utilities to give 
added warning of possible blackouts.

Sac Bee, Fri, 5/25: For seniors, the heat can kill, doctors warn

Sac Bee, Fri, 5/25: House panel debates energy price controls

SD Union, Fri, 5/25: Exec reacts hotly to California claim

SD Union, Fri, 5/25: State power regulators aim to keep more power on grid

SD Union, Fri, 5/25: Slater asks Sempra to purchase generators 

SD Union, Fri, 5/25: President will find Californians upset at his energy 
stance

SD Union, Fri, 5/25: POLL: Californians dissatisfied with government handling 
of energy crisis

SD Union, Fri, 5/25: California PUC to earmark more electricity for grid

SD Union, Fri, 5/25: Davis proposal for more diesel power draws environmental 
criticism

LA Times, Fri, 5/25: Davis Orders 3-Tiered Warnings of Blackouts

LA Times, Fri, 5/25: PUC to Reassess Rate Hikes

LA Times, Fri, 5/25:  We Aren't That Desperate (Editorial)

LA Times, Fri, 5/25: Energy Crisis as Political Payback (Editorial)

LA Times, Fri, 5/25: Energy Antics: Oh, Behave! (Editorial)

SF Chron, Fri, 5/25: An air of discontent over diesel backups 
Emissions rules ignore emergency generators

SF Chron, Fri, 5/25: Early-warning system for summer blackouts 
Media alerts, Web sites would give information 

SF Chron , Fri, 5/25: Energy crisis to cast long shadow 
A look at what energy crisis means to future 

Mercury News, Fri, 5/25: Governor vulnerable, poll shows 

Mercury News, Fri, 5/25: California power regulators aim to keep more power 
on grid 

Mercury News, Fri, 5/25: PUC reviews baseline formula for setting rates 

Mercury News, Fri, 5/25: Regulators: Companies pushed up price of power 

Mercury News, Fri, 5/25: California power regulators aim to keep more power 
on grid 

OC Register, Fri, 5/25: Long Beach obtains lien on Edison's assets 

Energy Insight, Fri, 5/25: Reliant pushes regional 'negawatt' plan


Individual.com, Fri, 5/25: Reliant Energy to lower Calif. peaking unit power 
prices

Individual.com, Fri, 5/25: Shaklee Corporation Headquarters Model for Energy 
Efficiency and Ecology Efforts; Bay Area Company Wins State Award CEO Adds 
Hybrid Gas-Electric Vehicles to Fleet

NY Times, Fri, 5/25: Power Trader Tied to Bush Finds Washington All Ears 

LA Times, Fri., 5/25: THE ENERGY CRISIS Davis Orders 3-Tiered Warnings of 
Blackouts 

SF., The Examiner, Fri., 5/25: Legislature hangs Davis out to dry 
By Nick Driver
Of The Examiner Staff 
Democratic and Republican legislators are vying to scuttle Gov. Gray Davis' 
plan to buy transmission lines from electric utilities and replace it with 
one of their own. 
The confusion in Sacramento sidelines what was an imminent deal for a San 
Diego-area utility, and throws further in doubt any future deal to purchase 
PG&E lines through bankruptcy proceedings. 
And all this is happening before President Bush arrives Tuesday to tout his 
own transmission line deal. 
A week ago, Davis finally found a term-limited senator, Richard Polanco, 
D-Los Angeles, to sponsor legislation to purchase Southern California Edison 
lines. Now, the governor's office admits that talks will not proceed until 
the Legislature agrees on how to finance the buyout of SoCal Edison's lines. 
Some Assembly Democrats have proposed an innovative alternative to the Davis 
plan, giving the state a five-year option to purchase all power lines for 
$1.2 billion. While a much lower price, the bill would also lower Edison's 
debt by forcing power marketers to accept 75 percent of the $3.5 billion owed 
them. 
Under the terms of that proposal, the state would still have to loan Edison 
money -- around $1 billion -- and would guarantee SoCal Edison's sale of a 
further $2 billion in bonds. The state would also receive a conservation 
easement on 21,000 acres of Sierra Nevada watershed land. 
As in the Davis bill, SoCal Edison would sell the state relatively low-cost 
electricity for 10 years from one of its power plants, and force parent 
company Edison International to repay $400 million in transfers. 
A Republican plan labeled "Plan R" now making its way through the halls of 
the legislature is similar to its Democratic sister, except it allows the 
state to take stock in all new plants SoCal Edison is forced to build. 
The Democratic bill's sponsors, Assemblymen John Dutra, D-Fremont; Joe 
Nation, D-San Rafael; and Joe Canciamilla, D-Pittsburg; believe they can 
persuade Edison's board of directors to approve their deal, even though it is 
not as attractive as the governor's offer. Edison refused to comment on the 
plan. 
Republicans led by Assemblyman Keith Richman, R-Northridge, were trying a 
different strategy Wednesday. The minority party's "Plan R" has not been 
introduced as official legislation, but instead floated among Republicans and 
Democrats alike to get momentum before introduction. 
Both groups say their bills represent SoCal Edison's only real alternative to 
bankruptcy, and that the beleaguered utility may soon join its northern 
neighbor, PG&E, in bankruptcy. 
So far, Edison has been able to renegotiate debts with power generators 
charging high wholesale prices. PG&E declared bankruptcy April 6. 
A governor's office staffer said the legislative impasse had diverted all 
attention away from any deal-making, but that the two sides continued to meet 
frequently. 
Another adviser, Joe Fichera, said "there are lots of moving parts" to the 
deal to purchase all of San Diego Gas and Electric's transmission lines, but 
that he continued to meet with company representatives, including an all-day 
meeting Monday. In San Diego, a spokesman for SDG&E referred all calls to the 
governor's office. 
But the sponsor of the Davis bill, Polanco, is not one of the legislature's 
power brokers, and most lawmakers said the $2.76 billion memorandum of 
understanding is now in serious jeopardy. 
A bankruptcy could lead to even greater chaos, including the threat of an 
increase in blackouts. The governor and business leaders have said the 
economy would suffer as the likelihood of blackouts and service outages 
rises. 
Legislators, policy wonks and consumer groups continue to argue over the need 
and desirability of the state owning the aging lines that snake across the 
state, especially if the bulk of them -- now owned by Pacific Gas and 
Electric Co. -- are still not for sale. 
Critics such as Senate President John Burton, D-San Francisco, one of the 
bill's strongest proponents three months ago, now say the state should not be 
in the business of replacing or upgrading dilapidated lines at a cost of 
upwards of $1 billion. 
Others see the state as the best candidate for improving a system long 
neglected by utilities. 
"State ownership of the transmission grid would be a better way to help grid 
problems such as connecting wind generators," said Joe Ito, an energy analyst 
at Lawrence Berkeley Laboratories. "It has been extremely difficult to build 
new transmission capacity over the last 10 years, especially into bottlenecks 
like San Francisco." 
Bush unveiled his Energy Plan last week, including a key plank that would 
allow the federal government to use eminent domain to purchase private land 
and build more transmission lines. Bush arrives Tuesday for talks with Davis 
on this and other solutions to the energy crisis. 
The Foundation for Taxpayer and Consumer Rights derides both presidential and 
legislative attempts to create more consumer-friendly deals, labeling them 
"Bailout Lite." 
"The sponsors want to try and trim away some of the fat," said Doug Heller, a 
spokesman for the group. "But it's all fat."
Legislature hangs Davis out to dry 

______________________________________________________________________________
__________________________



More outage notice ordered: Davis tells utilities to give added warning of 
possible blackouts.
By John Hill
Bee Capitol Bureau
(Published May 25, 2001) 
Gov. Gray Davis, invoking his emergency powers, ordered California's 
utilities Thursday to give customers more warning of rolling blackouts. 
Davis' plan calls for a 48-hour notice that power blackouts are likely to 
occur, a 24-hour notice that certain neighborhoods will probably be hit and a 
one-hour notice to those neighborhoods that the lights are about to go off. 
But the plan was short on details and left many questions unanswered. Among 
them: how customers will be notified, whether forecasts made a day or more in 
advance will lead to false alarms, and how much the governor's proposal will 
improve on what utilities already are doing. 
"If blackouts are going to occur, there's no reason to keep the public in the 
dark," Davis said at a news conference, flanked by law enforcement officials 
who bolstered his contention that notice will make the streets safer. 
The Democratic governor said his plan is meant to improve on the current 
system, in which notification has been haphazard. Utilities recently were 
given two minutes' notice by the California Independent System Operator, 
which manages the power grid, that blackouts were needed to avoid a 
systemwide collapse. 
"A two-minute warning may work for the National Football League, but it won't 
work for California consumers and the businesses of this state," Davis said. 
Davis called on the utilities, the state Public Utilities Commission, the 
Office of Emergency Services and others to come up with a plan for the 
warnings in the next few weeks. 
The board of the California Independent System Operator, which had been 
scheduled to approve a more modest blackout plan Thursday, scrapped that 
scheme in favor of the governor's. The board told its staff to report back by 
June 11. 
"We are committed to putting as much information out there as possible and 
letting people use it as they see fit," ISO spokesman Gregg Fishman said. 
ISO board members cited a report last week that power blackouts could cost 
the state's economy $21.8 billion and 135,000 jobs. Some types of businesses, 
such as high-technology companies and Central Valley food processors, have 
been clamoring for more warning to avoid losses. 
Although some have raised concerns about criminals taking advantage of power 
blackouts, Davis said warnings would help police make the streets safer by 
setting up stop signs or beefing up patrols of the darkened neighborhoods. He 
said there have been 60 to 70 traffic accidents during blackouts in 
Sacramento alone. 
"The so-called bad guys are not sitting there waiting for a blackout," Davis 
said. 
The utilities already give some warnings to customers, but say they have been 
hamstrung by a lack of notice from the Independent System Operator. The ISO, 
in turn, is at the mercy of an electrical supply and demand balance sheet 
that changes by the second. 
"The ISO is managing a very dynamic system where things can change in a 
matter of seconds," said a spokesman for Pacific Gas and Electric Co., Ron 
Low. "They could find additional power to bring into California or they could 
find they lost a resource." 
Grid operators also cautioned that the predictions will be rough guesses, not 
guarantees. 
"We can tell you Monday what we know the facts are for Wednesday, but in the 
intervening two days the facts might be different," Fishman said. 
Davis said that even if one-hour warnings have been given, the blackout will 
be called off if the ISO can find last-minute power. "Obviously, if we can 
avoid a blackout, we want to," he said. 
But the longer the warning, the more room for error. 
"To the extent that you increase the notification, you lower the 
probability," said John DiStasio, assistant general manager of customer 
services at Sacramento Municipal Utility District. 
There are also questions about the best way to let people know. 
PG&E officials told the ISO board Thursday that customers want more notice, 
but have different ideas of how best to get it. Some said e-mail notice 
wouldn't work because they're not on their computers all day. If the blackout 
is about to occur, many customers would rather be notified by pager or an 
automated phone call. Many customers would like to get notification through 
the mass media, much like they get weather news, but are uncertain where to 
go. 
PG&E now notifies large businesses and customers with medical conditions with 
automated phone calls, Low said, but the system takes 15 to 20 minutes. For 
the utility to start giving these customers an hour's notice, he said, it 
would have to get a warning from ISO well before an hour. 
"The more time in advance we receive the notice, the more customers we will 
be able to reach," he said. 
SMUD is already telling customers on its Web page whether they are next in 
line for a blackout, DiStasio said. To comply with Davis' directive, the 
utility could use the Web site to notify these customers that a blackout was 
expected within 24 hours. 
The utility also is notifying about 900 customers by pager, he said. 
But the best hope for notifying large numbers of people at the last minute, 
he said, is probably television and radio. 

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





More outage notice ordered: Davis tells utilities to give added warning of 
possible blackouts.
By John Hill
Bee Capitol Bureau
(Published May 25, 2001) 
Gov. Gray Davis, invoking his emergency powers, ordered California's 
utilities Thursday to give customers more warning of rolling blackouts. 
Davis' plan calls for a 48-hour notice that power blackouts are likely to 
occur, a 24-hour notice that certain neighborhoods will probably be hit and a 
one-hour notice to those neighborhoods that the lights are about to go off. 
But the plan was short on details and left many questions unanswered. Among 
them: how customers will be notified, whether forecasts made a day or more in 
advance will lead to false alarms, and how much the governor's proposal will 
improve on what utilities already are doing. 
"If blackouts are going to occur, there's no reason to keep the public in the 
dark," Davis said at a news conference, flanked by law enforcement officials 
who bolstered his contention that notice will make the streets safer. 
The Democratic governor said his plan is meant to improve on the current 
system, in which notification has been haphazard. Utilities recently were 
given two minutes' notice by the California Independent System Operator, 
which manages the power grid, that blackouts were needed to avoid a 
systemwide collapse. 
"A two-minute warning may work for the National Football League, but it won't 
work for California consumers and the businesses of this state," Davis said. 
Davis called on the utilities, the state Public Utilities Commission, the 
Office of Emergency Services and others to come up with a plan for the 
warnings in the next few weeks. 
The board of the California Independent System Operator, which had been 
scheduled to approve a more modest blackout plan Thursday, scrapped that 
scheme in favor of the governor's. The board told its staff to report back by 
June 11. 
"We are committed to putting as much information out there as possible and 
letting people use it as they see fit," ISO spokesman Gregg Fishman said. 
ISO board members cited a report last week that power blackouts could cost 
the state's economy $21.8 billion and 135,000 jobs. Some types of businesses, 
such as high-technology companies and Central Valley food processors, have 
been clamoring for more warning to avoid losses. 
Although some have raised concerns about criminals taking advantage of power 
blackouts, Davis said warnings would help police make the streets safer by 
setting up stop signs or beefing up patrols of the darkened neighborhoods. He 
said there have been 60 to 70 traffic accidents during blackouts in 
Sacramento alone. 
"The so-called bad guys are not sitting there waiting for a blackout," Davis 
said. 
The utilities already give some warnings to customers, but say they have been 
hamstrung by a lack of notice from the Independent System Operator. The ISO, 
in turn, is at the mercy of an electrical supply and demand balance sheet 
that changes by the second. 
"The ISO is managing a very dynamic system where things can change in a 
matter of seconds," said a spokesman for Pacific Gas and Electric Co., Ron 
Low. "They could find additional power to bring into California or they could 
find they lost a resource." 
Grid operators also cautioned that the predictions will be rough guesses, not 
guarantees. 
"We can tell you Monday what we know the facts are for Wednesday, but in the 
intervening two days the facts might be different," Fishman said. 
Davis said that even if one-hour warnings have been given, the blackout will 
be called off if the ISO can find last-minute power. "Obviously, if we can 
avoid a blackout, we want to," he said. 
But the longer the warning, the more room for error. 
"To the extent that you increase the notification, you lower the 
probability," said John DiStasio, assistant general manager of customer 
services at Sacramento Municipal Utility District. 
There are also questions about the best way to let people know. 
PG&E officials told the ISO board Thursday that customers want more notice, 
but have different ideas of how best to get it. Some said e-mail notice 
wouldn't work because they're not on their computers all day. If the blackout 
is about to occur, many customers would rather be notified by pager or an 
automated phone call. Many customers would like to get notification through 
the mass media, much like they get weather news, but are uncertain where to 
go. 
PG&E now notifies large businesses and customers with medical conditions with 
automated phone calls, Low said, but the system takes 15 to 20 minutes. For 
the utility to start giving these customers an hour's notice, he said, it 
would have to get a warning from ISO well before an hour. 
"The more time in advance we receive the notice, the more customers we will 
be able to reach," he said. 
SMUD is already telling customers on its Web page whether they are next in 
line for a blackout, DiStasio said. To comply with Davis' directive, the 
utility could use the Web site to notify these customers that a blackout was 
expected within 24 hours. 
The utility also is notifying about 900 customers by pager, he said. 
But the best hope for notifying large numbers of people at the last minute, 
he said, is probably television and radio. 

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








For seniors, the heat can kill, doctors warn
By Carrie Peyton and Nancy Weaver Teichert
Bee Staff Writers
(Published May 25, 2001) 
As summer slouches toward Sacramento amid a drumbeat of calls to conserve 
electricity, doctors and advocates for the elderly are sounding a 
counter-theme. 
Heat can kill. And most often, it kills seniors. 
Year after year, heat waves around the United States are deadlier than 
hurricanes or floods, tornadoes or earthquakes, according to the National 
Oceanic and Atmospheric Administration. 
In California, a single Los Angeles heat wave killed more than twice as many 
people as the 1906 San Francisco quake, according to research assembled by 
the state Energy Commission. 
And national weather disaster statistics show that more than two-thirds of 
those felled by the heat in recent years were age 60 or older. 
"Heat and the elderly are not a good combination," said Dr. Cheryl Phillips, 
a Sutter Medical Group geriatrician. "It's a real concern this year." 
As people age, their bodies begin to lose the ability to sense when they are 
thirsty or to bounce back quickly from dehydration, she said. 
The very people who are most vulnerable to heat also often have a tradition 
of thrift and public spiritedness that might lead them to use less 
electricity than is safe, doctors and energy officials fear. 
"Their conservation ethic was from the '40s and '50s, when we didn't have air 
conditioning as prevalent as we do now, and they were much younger. So they 
probably feel like, 'I can do this, this is important,' and they're not 
recognizing the change in their body," said Claudia Chandler of the Energy 
Commission. 
The California Department of Aging is concerned enough that it will soon 
begin a special outreach to warn seniors about the dangers of hot 
temperatures, especially when air conditioning may be low or turned off 
because of high utility bills. 
In a public education campaign aimed at the 3.6 million Californians who are 
65 or older, officials will preach conservation, preparedness for outages and 
the need for drinking eight glasses of water each day. 
Relatively simple steps can keep people safe -- if they are alert to the 
danger. 
Some are as obvious as staying out of the sun and moving less on the hottest 
days. 
Others are more arcane. People of all ages need to be aware that certain 
medications, including some anti-depressants and diuretics, can increase 
their sensitivity to heat. So can too much alcohol, too much weight, heart 
disease and other illnesses. 
Allergies and heart problems underscore Margueritte Ranney's juggling act. At 
72, she has already had to refinance her house to keep up with rising bills 
on a fixed income. She does her laundry with cold water, shuts off unneeded 
appliances and opens the door each morning to cool her home. 
But when the day's heat builds, Ranney faces a stark choice. It's "very, very 
rough," she said -- but she puts her health first. She closes up her 
two-bedroom home and turns on her evaporative cooler. 
"If I had to turn off my cooler it would be pretty bad," she said. "If I have 
to turn it off I have problems." 
People who want to cut back on air conditioning while still protecting their 
health should use portable fans at home, spray themselves with small misters, 
and take "cool breaks" to an air conditioned movie theater or store. 
And seniors, especially, should "drink lots of water. Don't wait until you're 
thirsty. Drink constantly on hot days," said Phillips. 
Two heat-moderating mechanisms weaken with age, she said, and doctors still 
don't understand precisely why. 
In some ways, the human body is like a glass of salty water. Sweat makes the 
water level drop and the salt level rise, and in young people two hormones -- 
aldosterone and angiotensin -- kick in to restore the balance. 
Those hormones are "the ones that signal to the brain, 'dang I'm thirsty,' " 
said Phillips. They also tell the kidneys to hold onto water. 
But as people age, their sensitivity to both hormones declines, making it 
easier for seniors to get seriously dehydrated. 
Then things can get even more dangerous, because older bodies don't recover 
as quickly from dehydration. The dizziness and confusion that come in later 
stages of overheating can trigger bone-breaking falls in a person who is 
already frail. 
The good news is, there isn't much danger of getting overheated during 
rolling blackouts or by setting a thermostat at 78 degrees instead of 72, 
said Phillips. 
"I'm really not so worried about the power outages. For an hour and a half, 
people will do fine," the doctor said. "I'm worried about the power bills. 
Elders on fixed incomes who have to decide between food and the power bill, 
will say 'heck, I'm turning the air conditioner off.' " 
It's a serious worry, according to Gloria Jackson of Sacramento County's 
Department of Health and Human Services. 
About three or four seniors contact her each week because they are facing a 
cutoff of their utilities for unpaid bills, said Jackson, the county's 
liaison to the Sacramento Municipal Utility District. 
Struggling to pay high energy bills on Social Security or other fixed 
incomes, the seniors end up owing from $100 to $370 in overdue bills, she 
said. A few have voluntarily had their PG&E gas service disconnected so they 
will have enough to pay SMUD for electricity. 
With incomes of about $700 a month, seniors may pay rent of $400 to $500 and 
then have to figure out how to pay for utilities, prescriptions and food. 
"Some of them are borrowing money to pay their utilities," Jackson said. 
Others have pawned jewelry. 
"I'm very worried," about the coming summer, Jackson said. 
Barbara Gillogly, coordinator of gerontology programs at American River 
College, encouraged neighbors and relatives to check regularly on older 
people who are living alone, especially when temperatures are high. 
And relatives need to be alert to the illnesses and medications that can make 
seniors especially vulnerable to heat. 
Chandler, who cared for her aging father while he had Alzheimer's and was 
taking medications, including an anti-depressant, still remembers the summer 
day nearly a decade ago that brought that lesson home to her. 
"I came home, and he was in an incredibly stressed state," she recalled. "He 
was beet red, his skin was fiery to touch and his eyes had started to glaze 
over." 
The temperature of about 100 degrees had been enough to nearly overcome her 
father, and Chandler had to help him into a wading pool to bring his body 
temperature down. 
"It was really scary. I almost lost my dad that day," she said. 

The Bee's Carrie Peyton can be reached at (916) 321-1086 or 
cpeyton@sacbee.com. 







House panel debates energy price controls
By Les Blumenthal
Bee Washington Bureau
(Published May 25, 2001) 
WASHINGTON -- The House Energy and Commerce Committee delayed consideration 
of a major energy bill Thursday as Republicans and Democrats met privately to 
explore a possible compromise placing price controls on soaring wholesale 
electric rates on the West Coast. 
The negotiations hinted at a possible watershed change in the Republicans' 
staunch opposition to price controls. An earlier effort to include such 
controls in the bill turned contentious and was defeated on a mostly partisan 
vote in subcommittee. 
But Republicans sought a compromise after President Bush announced he would 
meet with California Gov. Gray Davis during a trip to the state next week. 
Davis has advocated price controls and has been outspoken in criticizing the 
Bush administration and the Federal Energy Regulatory Commission for opposing 
them. 
The committee talks also came as the possibility of Senate passage of price 
controls brightened considerably with the decision of Sen. James Jeffords of 
Vermont to bolt the Republican Party. Jeffords' move handed the chairmanship 
of the Senate Energy and Natural Resources Committee to Sen. Jeff Bingaman, 
D-N.M., who has already included price controls in his version of an energy 
bill. 
Republicans on the House Energy Committee were optimistic a deal could be 
struck, but Democrats said the talks were in the very early stages. GOP 
members from California and other Western states were facing increased 
political pressure to negotiate. 
"We may be on the verge of a very solid, bipartisan agreement," said Rep. 
Billy Tauzin, R-La., the committee chairman. 
But Rep. Anna Eshoo, D-Atherton, said of a deal: "It's in its infancy, a 
premature baby at best. It's been a good give-and-take. Was a deal struck? 
No." 
Neither side would discuss the details of a potential compromise, though 
there were some indications it might involve imposing a so-called cost-based 
rate structure on up to 80 percent of the wholesale electricity power 
marketers sell, allowing the remaining 20 percent to be sold at competitive 
market rates. 
William Massey, one of two Democrat commissioners at the FERC, said temporary 
federal price controls are legally justified and necessary to avert "an 
impending energy-driven economic disaster on the West Coast." 
Massey has so far been overruled in his efforts to impose temporary price 
controls, but two new commissioners whose nominations are on the Senate floor 
could change the equation. 
"The question is should we ignore a tool that is in our toolbox and has been 
in our toolbox for years that we can use on a temporary basis -- let's say 
for the next 18 months -- to get prices under control," he said Wednesday. 

The Bee's Les Blumenthal can be reached at (202) 383-0008 or 
lblumenthal@mcclatchydc.com.







Exec reacts hotly to California claim
By Joe Cantlupe 
COPLEY NEWS SERVICE 
May 24, 2001 
WASHINGTON -- A top El Paso Corp. executive strongly denounced as "inaccurate 
and implausible" allegations by California officials that the Houston-based 
company willfully withheld supplying natural gas through its pipeline to 
bolster profits. 
The company official testified yesterday before a Federal Energy Regulatory 
Commission administrative law judge examining charges that the Houston-based 
conglomerate cost California billions of dollars. 
The company "did not have a financial incentive to withhold pipeline capacity 
in order to increase natural gas prices in California," said Ralph Eads, 
president of El Paso Merchant Energy, which markets natural gas on pipelines 
from Texas and New Mexico into California. 
Merchant is a division of El Paso Corp., which operates a key pipeline that 
supplies about one-sixth of California's natural gas. Eads is a corporate 
executive vice president. 
He said that although Merchant earned more than $180 million in pre-tax 
profits in selling natural gas in the past year, the company lost potentially 
hundreds of millions of dollars more by entering into long-term contracts 
under what is known as a "hedging" strategy. 
During afternoon testimony yesterday, Eads repeatedly denied suggestions by 
an attorney for the California Public Utilities Commission that the company 
kept gas capacity "out of the hands of other marketers" to drive up profits 
between November and March. 
The California PUC lawyer, Harvey Morris, suggested that Merchant failed to 
aggressively market its natural gas and knew that it would only use 50 
percent of capacity. 
Not so, said Eads. 
"We bought capacity to use it," he testified. 
In testimony filed with FERC, Eads said: "The allegations made against 
Merchant by the (California Public Utilities Commission) and supporter 
interveners are not only inaccurate, they are also implausible." 
California officials have accused El Paso Corp. and its gas marketing company 
of using its marketing muscle to drive up the price of gas sold in California 
by more than $3.7 billion. Two financially troubled state utilities -- 
Pacific Gas and Electric Co. and Southern California Edison -- have joined in 
the state's case against El Paso. 
Testimony before Judge Curtis L. Wagner Jr. is expected to continue into next 
week. Wagner plans to make a recommendation to FERC this summer. 





State power regulators aim to keep more power on grid


By Karen Gaudette
ASSOCIATED PRESS 
May 24, 2001 
SAN FRANCISCO ) California's biggest power users, from factories to farms, 
now can sign up for even more programs that offer cheaper electricity in 
exchange for less power use ) potentially cutting the state's energy-buying 
costs by lowering demand. 
The state Public Utilities Commission also decided Thursday to begin 
re-examining the calculation that determines which residential customers of 
the state's two largest utilities will see their bills rise under a recent 
record rate increase. 
Last year, voluntary blackouts by so-called interruptible customers kept as 
much as 3,000 megawatts on the state's power grid, enough electricity to 
power more than 2 million homes. 
By being first in line for blackouts or cutting use, these customers also 
help managers of the state's power grid leave more power to residents and 
services necessary for public health and safety, such as fire stations, 
hospitals and military bases. 
The PUC hopes even more customers will participate this year, meaning less 
high-priced electricity the state would have to buy to keep homes and 
businesses humming. 
"'Negawatts' are our cheapest source of power," said PUC Commissioner Richard 
Bilas. The state already has paid $6 billion to buy electricity for the 
customers of the state's three largest utilities. 
The PUC will allow big customers to sign up for more than one program to 
stretch the state's meager supply of electricity. One program promises not to 
subject the customers to rolling blackouts if they slash their power use by 
up to 15 percent while blackouts are rolling through the rest of the state. 
Another program offers customers 10 cents for every kilowatt hour they don't 
use during one of a trio of four-hour blocks between 8 a.m. and 8 p.m. 
The PUC also will re-examine how it determines baseline, a varying level of 
residential power use upon which recent record rate hikes are allocated, to 
determine if it is still accurate and fair since its last update nearly a 
decade ago. 
"It is time to conduct that review," said Commissioner Jeff Brown, adding 
that a new calculation for baseline would not be available until winter at 
earliest, long after customers begin paying the biggest rate hike in 
California history. 
Baseline is 50 percent to 60 percent of the average amount of electricity 
used by residential customers in the same climatic and geographical area. It 
provides a certain amount of electricity at the lowest price utilities 
charge. Customers are now charged progressively more when their electric use 
rises above 30 percent of their baseline. 
Ratepayers throughout the state say baselines are unfair, since they don't 
take household size or the growing number of electronic gadgets into account. 
However, while changing the baseline may spare more customers, it would also 
make remaining customers pay even more.





Slater asks Sempra to purchase generators 


May 24, 2001 
San Diego County Supervisor Pam Slater is asking Sempra Energy to provide $15 
million for the purchase of portable generators to be used during rolling 
blackouts this summer. 
Slater's request was made in a letter sent yesterday to Sempra President 
Steven Baum and comes one day after the Board of Supervisors turned down a 
similar request. 
A coalition of businesses asked supervisors Tuesday to pay for the 
generators, but supervisors rejected the request, saying the county cannot 
legally spend taxpayers' dollars on energy generation. 
Slater's letter to Baum said that Sempra does not face that restriction. She 
added: "It is incumbent upon Sempra Energy to supply enough energy for the 
San Diego region to reduce the possibility of rolling blackouts." 
A Sempra official said the company will not pay for the generators and said 
it already is spending $2 billion on power plants and natural gas pipelines 
on the West Coast to address the energy crisis





President will find Californians upset at his energy stance



By John Marelius 
UNION-TRIBUNE STAFF WRITER 
May 24, 2001 
When George W. Bush arrives in California next week for the first time as 
president, he will find a solid majority of residents who believe he is doing 
a bad job of dealing with the state's mounting energy woes. 
A new Field Poll also finds that Californians who were once willing to give 
Gov. Gray Davis the benefit of the doubt now disapprove of the way he is 
handling the crisis as well. 
The nonpartisan, statewide public opinion survey asked Californians to rate 
how 11 individuals or entities are doing on the energy front. 
The strongly negative appraisal of Bush ranks up there with out-of-state 
electricity generators, public utilities and regulatory agencies that have 
long been portrayed as the villains in the crisis. 
"It's incredible to me that Bush is rated in that league," said Mark 
DiCamillo, associate director of the Field Poll. "I think that's an ominous 
sign of the mood Californians are in vis-a-vis the federal government 
dragging its feet on providing any short-term relief." 
He said the numbers seem to signal that the Democratic portrayal of Bush as a 
captive of "big oil" and more sympathetic to corporate energy interests than 
consumers is taking hold with the public. 
"It's starting to stick," he said. "It does seem to be an issue that the 
Republican administration is vulnerable on." 
The Field Poll conducted telephone interviews with a representative sample of 
1,015 adult Californians between May 11 and Sunday. Statistically, such a 
poll is considered accurate 95 percent of the time within a margin of error 
of 3.2 percentage points. 
The poll found Californians are pessimistic about the prospects of a reliable 
supply of electricity being guaranteed anytime soon. On the average, they 
said they expected the crisis to last 18 more months, which would take it 
beyond November 2002, when Davis faces a re-election bid. 
"That's obviously something the Davis administration hopes would not play 
out," said DiCamillo. 
In January, the Field Poll showed Davis' energy efforts were favorably 
regarded by Californians. At the time, 41 percent said Davis was doing a good 
job managing the energy situation, while 31 percent critiqued his performance 
as fair and 22 percent as poor. 
Now, only 27 percent regard the governor's handling of the situation 
favorably, compared with 32 percent who rate it as fair and 38 percent as 
poor. 
Californians' appraisal of Bush's performance on the energy front is 
considerably more harsh, with 54 percent saying he is doing a poor job and 
only 22 percent saying he is doing a good job. (Bush had not yet taken office 
when the January poll was conducted.) 
Other entities ranked in order of their negative rating: Private electric 
utilities, 57 percent; out-of-state energy providers, 55 percent; Federal 
Energy Regulatory Commission, 52 percent; California Public Utilities 
Commission, 52 percent; Vice President Dick Cheney, 43 percent; state 
Legislature, 41 percent; Secretary of Energy Spencer Abraham, 37 percent; 
industrial and business energy consumers, 34 percent. 
The only entity Californians regard positively for dealing with the 
electricity problems turns out to be Californians themselves. 
Residential energy consumers were rated as doing a good job, 39 percent, to 
33 percent fair and 22 percent poor. That is almost the reverse of January 
when residential users were rated only 26 percent good, 36 percent fair and 
32 percent poor. 
"It's conservation," said DiCamillo. "The public has changed its habits since 
January. They think they're doing as good a job as can be expected, but all 
the others are just not up to it." 



POLL: Californians dissatisfied with government handling of energy crisis


May 24, 2001 
SAN FRANCISCO ) Over the past four months, Californians have developed 
increasingly negative feelings toward state and federal officials and 
agencies involved in California's energy crisis, according to a Field Poll 
released Thursday. 
A large number of those surveyed are also fearful that Pacific Gas & 
Electric's bankruptcy filing will make it more difficult for the company to 
provide service to its customers. 
Fifty-seven percent of those questioned in May by the Field Institute, a San 
Francisco-based nonpartisan polling organization, gave California's private 
electric utilities a poor rating. That's more than the 40 percent of 
respondents who rated the utilities performance as poor in January. 
The same negative feelings held true for out-of-state energy providers. 
Fifty-five percent of respondents this month rated their performance as poor, 
a noticeable increase from the 44 percent of respondents who gave them a poor 
rating in January. 
Specifically, those surveyed were asked to rate the job being done by 
officials and groups working to improve the energy situation in the state. 
The poll found that: 
) The percentage of those surveyed who gave the state Public Utilities 
Commission a poor rating rose from 42 percent in January to 52 percent in 
May. 
) 41 percent of those surveyed gave the state legislature a poor rating in 
May, as opposed 36 percent in January. 
) 38 percent gave Gov. Gray Davis a poor rating in May for his handling of 
the state's energy woes, a sharp increase from 22 percent who gave him a poor 
rating in January. 
The Federal Energy Regulatory Commission also drew negative ratings from 
respondents. In May, 52 percent said FERC was doing a poor job, as opposed to 
40 percent who gave the commission a rating of poor in January. 
Those surveyed were also asked if PG&E's bankruptcy would make it more 
difficult for the company to supply electricity to customers, and 49 percent 
said they thought it would. 
The poll, which questioned 1,015 California adults between May 11 and May 20, 
has a margin of error of plus or minus 3.2 percentage points, the institute 
said.





California PUC to earmark more electricity for grid


By Karen Gaudette
ASSOCIATED PRESS 
May 24, 2001 
SAN FRANCISCO ) State power regulators are considering expanding the menu of 
programs that offer cheaper energy to customers who voluntarily cut their 
power use. It's part of an effort to muddle through an energy-strapped summer 
in California with a meager supply of megawatts. 
The state Public Utilities Commission could also begin looking into whether 
baseline, a level of residential power use upon which recent record rate 
hikes are allocated, is accurate and fair. 
In March, the PUC released a package of so-called interruptible load 
programs, which offer discounted electric bills to factories, schools and 
other big users if they agree to be first in line for rolling blackouts. 
By cutting their use, these customers help managers of the state's power grid 
leave more power to residents and services necessary for public health and 
safety, such as fire stations, hospitals and military bases. 
Loretta Lynch, PUC president, said the commission hopes to boost 
participation by allowing customers who participated in interruptible 
programs earlier in the year to also join new programs. 
Under one such program, businesses could avoid surprise blackouts by opting 
for dimmed lights and reduced power during the duration of outages throughout 
the state. 
The PUC is also considering funding interruptible programs for the state's 
three largest investor-owned utilities as they go into effect, rather than 
forcing utilities to wait for retroactive funding a year later. 
The commission also plans to examine whether the PUC should change how 
residential customers' baselines are calculated to better reflect household 
size and a spike in electronic gadgets. 
Baseline is a certain amount of electricity guaranteed at the lowest price 
utilities charge. Customers who exceed their baselines by more than 30 
percent are subject to rate hikes. 
"I think it's clear that baselines were set too low and didn't reflect actual 
electricity usage," Lynch said. 
Mindy Spatt, spokeswoman for The Utility Reform Network, warned that 
potentially changing baseline would simply push the rate hikes onto different 
customers. 
"If you think about the rate increase as sort of a balloon, if you push on it 
someplace it's going to pop out somewhere else," Spatt said. 
Lynch said the commission would likely postpone many orders affecting various 
aspects of the natural gas industry in favor of meshing them together in a 
"comprehensive gas strategy." 
"I don't think they anticipate any problems with natural gas this summer or 
winter," Lynch said. 
A PUC investigation into whether natural gas and electricity generators and 
sellers illegally drove up prices by withholding energy during times of 
highest demands continues. 
"What we saw was a pattern of individual behavior which all tracked around 
the same time which I believe contributed to the high prices," Lynch said. 





Davis proposal for more diesel power draws environmental criticism


ASSOCIATED PRESS 
May 24, 2001 
LOS ANGELES ) California would get a little power and a lot of pollution from 
a proposal being considered by Gov. Gray Davis that would pay owners of 
backup generators to produce electricity. 
The proposal, one of several options the governor is considering, would pay 
for diesel power ) which at its dirtiest is 500 times more polluting than the 
cleanest natural gas power plants ) when electricity supplies are stretched. 
"If backup generators were to be used, it would only be as a last resort to 
avoid blackouts," said Davis spokesman Roger Salazar. "Unfortunately, we are 
in an emergency situation. Everything is on the table." 
California's persistent power shortage has led to rolling blackouts around 
the state several times this year, with more anticipated when hot summer 
weather prompts people to use air conditioning. 
If all of the state's backup generators ran full time, they would produce 
about 425 tons of nitrogen dioxide per day. That's more than nine times the 
pollution power plants produced on an average day in 1999, according to state 
Air Resources Board data. 
And the state would get only about 550 megawatts of electricity ) barely 1 
percent of the state's peak power needs ) from the backup generators. That 
would be enough to power about 550,000 homes. 
"They could have a huge negative effect on air quality," said Ellen Garvey, 
executive officer for the Bay Area Air Quality Management Agency. "It's one 
thing to run these generators during blackouts and emergency conditions, but 
using them for other purposes could be devastating." 
Business groups that support the proposal include the League of Food 
Processors, the California Manufacturers and Technology Association and San 
Diego Gas & Electric. 
"These generators could go a long way to taking some demand off the electric 
grid and putting some supply back into the power system," said Gino DiCaro, 
spokesman for the manufacturers and technology association. 
Most of the state's 17,200 backup generators are small units that run on 
diesel fuel and lack pollution controls. Some are rentals, and others can be 
found at hospitals, office buildings, sewage treatment plants and university 
labs. 
Unlike backup generators intended for home use, which are not regulated, 
industrial-sized units are limited in the number of hours they can operate. 
But since the state's power crunch began, regional air-quality regulators 
have issued emergency rules allowing them to run more frequently. 
Diesel engines produce carcinogenic soot and oxides of nitrogen ) a building 
block of asthma-inducing smog. 






Davis Orders 3-Tiered Warnings of Blackouts 


By DAN MORAIN and NANCY VOGEL, Times Staff Writers 

?????SACRAMENTO--In a significant policy change aimed at minimizing business 
and consumer disruptions, Gov. Gray Davis ordered state officials Thursday to 
enact a three-tier blackout warning system.
?????Forecasts of blackouts will be issued 48 hours beforehand, Davis said. 
General areas will be identified in warnings issued 24 hours before likely 
outages. Precise locations will be announced an hour before the power is cut, 
he said. 
?????Business executives, police and consumers have complained that the 
current warning system--in which blackouts can come with less than 10 
minutes' warning--does not give them sufficient time to save information on 
computers, shut down assembly lines, safeguard traffic intersections and 
otherwise prevent financial loss and mayhem when the power goes out.
?????In the past, state grid operators only gave short notice because they 
often found enough power at the last minute to avert blackouts. They said 
they did not want to repeatedly alarm people. Utility officials have said 
they feared that advance warning would leave neighborhoods vulnerable to 
looters and burglars.
?????But crime has not been a problem during California's six days of 
blackouts so far this year. And with experts predicting dozens of days of 
forced outages this summer, state and utility leaders say Californians are 
better off prepared.
?????"If blackouts are going to occur," Davis said, "there is no reason to 
keep the public in the dark. We all deserve as much advance notice as 
possible."
?????Utility customers will be notified through company Web sites and radio 
and television announcements. Starting with June utility bills, Southern 
California Edison customers will be given "block" numbers that allow them to 
learn through the Edison Web site, www.sce.com, if they are scheduled for 
rotating blackouts on days of short supply.
?????Under the governor's order, Edison spokesman Brian Bennett said, 
consumers can expect 24-hour warnings about general areas--Santa Monica or 
Santa Ana, for example--that might be targeted for hourlong blackouts.
?????At 60 minutes before a blackout is triggered, Bennett said, the warnings 
delivered through radio, television and the Internet will get much more 
precise. "For example," he said, "One hour before, we'll say Main Street in 
Santa Monica . . . will be affected."
?????Leaders of the agency responsible for deciding when blackouts must be 
triggered said Thursday they intend to launch the governor's order by June 
15. And if Californians redouble their conservation efforts when they hear of 
blackout warnings, they said, the governor's order will ultimately help the 
state avoid blackouts.
?????"I think we're going to save power, potentially lives; we're going to 
help save jobs and California's economy," said Carl Guardino, a member of the 
board that oversees the California Independent System Operator, which manages 
75% of the state's transmission system.
?????Davis announced his order at a news conference attended by law 
enforcement officials, including Los Angeles County Sheriff Lee Baca, who 
said he intends to unveil a more detailed plan for the county today. 
?????For some, the decision to give warning was an acknowledgment that the 
state is failing to solve the energy crisis.
?????"It obviously says we're surrendering to the electricity crisis," said 
Sen. Tom McClintock (R-Northridge. "Here we've arrived in the 21st century, 
with all the electronics, and we don't have the power to run them."
?????Utility spokesmen lauded the plan, but said that much of the 
responsibility rests with Cal-ISO, which is the only entity that has the 
ability to track supplies.
?????"If the ISO only gives us 60-minutes warning, our customers will get 
something less than 60-minutes notice," said John Nelson, spokesman for 
Pacific Gas & Electric.
?????As it works now, Cal-ISO informs utilities of pending blackouts. The 
utility, in turn, informs county offices of emergency services. Using 
computerized calling, e-mail and manual dialing, the utilities also inform 
law enforcement, major industrial users, people on life support and other 
consumers for whom electricity is vital, Nelson said.
?????Californians at large are expected to learn of the warnings through the 
media and the Cal-ISO Web site, www.caiso.com.
?????Also on Thursday, Davis met with officials of California's publicly 
owned utility districts and came away, he said, with promises that they would 
sell excess power to the state at prices significantly lower than on the spot 
market.

Copyright 2001 Los Angeles Times







PUC to Reassess Rate Hikes 
Energy: State regulators vote to reexamine baselines used to determine how 
much customers will pay for power. Consumers say allotments are too low. 

By TIM REITERMAN, Times Staff Writer 

?????SAN FRANCISCO--Nine days after structuring the largest electricity rate 
increase in California history, state regulators on Thursday launched a 
reexamination of the unpopular baselines used to determine how much each 
residential customer will pay.
?????If the indicators are revised upward, as most expect, that would grant 
some customers relief from the rate hike but could necessitate future ones to 
generate enough revenue for power purchases.
?????The energy crisis put the esoteric term "baseline" on the minds of 
millions of utility customers. During recent hearings on a $5.7-billion rate 
increase, the California Public Utilities Commission heard a chorus of 
complaints from consumers who said their baseline was unrealistically low, 
exposing them unfairly to the rate hike.
?????"The most visible and controversial issue, other than the overall 
increase ordered, was the methodology used to spread the increased revenue 
requirement to residential customers," the PUC said in voting unanimously to 
reassess baselines.
?????On March 27, the PUC approved rate increases for Southern California 
Edison and Pacific Gas & Electric Co. but exempted people in a low-income 
program and customers consuming less than 130% of their baseline, which is 
50% to 60% of average residential usage, with allowances for climate and 
season. But other customers will pay more, depending on how much their 
consumption exceeds the baseline.
?????Reassessment of the baselines, commissioners said, will not be completed 
for the summer, when new rate hikes go into full swing, but it could be done 
by winter. Public hearings are scheduled for July.
?????Several commissioners acknowledged that an upward adjustment in 
baselines would bring in less money from utility customers and could create a 
funding shortfall for future power purchases.
?????"There is no question [the baseline] is out of whack," Commissioner 
Richard Bilas said later. "But if the revenue base falls, where do you get 
the money? Another rate increase. This is the problem."
?????Thousands of consumers contacted the PUC about the last rate increase 
and hundreds complained about difficulty in achieving their baseline 
allotments, even when they worked hard to conserve.
?????Baselines have been used to chart utility bills for the past 
quarter-century, and they are periodically updated.
?????The levels vary by area and utility. They are not adjusted by household 
size. And, critics say, they do not accurately reflect power needs of homes 
with computers, VCRs and microwaves.
?????"We heard lots of customers complain it's not fair," said Mindy Spatt, 
spokeswoman for Toward Utility Rate Reform. "For example, if you have lots of 
children who do not contribute income but use electricity, you could be at a 
disadvantage."
?????Living below baseline may not be easy for many. Spatt, whose baseline 
for her San Francisco home is 258 kilowatt hours, goes so far as to dry her 
laundry on a clothesline, but was slightly above 130% of baseline in March.
?????Bilas' home in Mendocino County has a baseline of about 280 kilowatt 
hours and he says he consumes more than 500. "I don't know how anyone can 
live on the baseline," he said. But he added, "I have a hot tub I can turn 
off."

Copyright 2001 Los Angeles Times 






We Aren't That Desperate 

?????Who hasn't stood at a street corner and recoiled from the noxious, hot, 
sooty, exhaust spewing from a diesel bus or truck? As bad as that is, the 
exhaust of standby diesel-fueled electric power generators is worse. These 
smelly, noisy machines are typically used by large businesses as emergency 
power backups--in earthquakes, for instance. They have virtually no pollution 
controls and pose a health risk. 
?????Under normal circumstances these generators might almost never be used. 
But Gov. Gray Davis is considering issuing an executive order to pay owners 
of these backup generators to run them constantly during Stage 3 power 
alerts, the highest alert before rolling blackouts. This is an agonizing 
choice, but the health risk--these generators pour out nitrogen dioxide, a 
chief smog ingredient--tips the balance against them. A Davis spokesman says 
the generators, an estimated 17,200 of them statewide, would be run only as a 
last resort. But if the aim was to avert blackouts, they could be running for 
hours at a time. As The Times' Gary Polakovic reported Thursday, the 
generators are concentrated in areas, including Los Angeles, that already 
have severe air quality problems. 
?????Environmentalists are protesting, saying it would be better and more 
practical to pay companies to conserve power. The governor also has a plan to 
cut 20% from the bills of homeowners and businesses that reduce power use by 
20%. That program, if pursued aggressively and in combination with other 
incentives now being offered, would probably save as much power as the diesel 
generators could make. To use these units in an attempt to stave off 
blackouts is too desperate and could cause more harm than it prevents. 
Copyright 2001 Los Angeles Times 








Energy Crisis as Political Payback 

?????Re "All We Need Fear Is Bush's Tale of Doom," May 23: Arianna 
Huffington's analysis is perfect and, coupled with Paul Conrad's cartoon 
("OPEC oil production executive Cheney"), addresses the so-called energy 
crisis for what it really is: political payback, greed and obscene profits in 
spite of the massive windfalls the energy and oil companies continue to reap. 
?????Dan Pellow 
????? Los Angeles 

????? * 
?????The California Public Utilities Commission is releasing information it 
has known for many months about the well-orchestrated manipulation of 
California's electricity market ("PUC Allegations Detailed," May 19). To PUC 
President Loretta Lynch: You knew about this collusion months ago, so why did 
you wait so long to divulge it? To Gov. Gray Davis: Your indecisiveness in 
this matter has just about bankrupted the state; you should have used your 
eminent domain authority to take back the power plants months ago, but now 
you've run out of money (ours). To President Bush: Your loyalty to the Exxons 
and Enrons of the world will subject California's and the nation's economies 
to a great setback. The real culprit is greed. When you let the fox in the 
henhouse, do you really expect him to eat only a few chickens? 
?????Barry C. Olsan 
????? Ontario 

????? * 
?????Davis' declaration of "war" against the companies that supply our energy 
is unconscionable. What supplier would want to risk capital serving a market 
that treats him as an enemy? 
* * *
?????Beatrice W. Forbes 
????? Palos Verdes Estates 

????? * 
?????Funny that Republicans blame Bush's predecessor, Bill Clinton, for the 
nation's energy problems but not Davis' predecessor, Pete Wilson, for 
California's. 
?????Saul Davis 
????? Studio City 

????? * 
?????Gas prices are over $2 a gallon. Electricity prices are out of control. 
Natural gas is low, and the threat of rolling blackouts lurks around every 
corner, with no end in sight. Geez. I miss Bill Clinton. 
?????Brian Frieson 
????? Gardena 

????? * 
?????There is much to disagree with in the Bush energy plan, but it's hard to 
fault the concept of integrating the various transmission grids under federal 
control to more efficiently distribute power. What's troublesome, however, is 
the seemingly deliberate manner in which renewable energy sources and 
conservation are being marginalized. If the feds control a national grid, 
might they not find ways to make it most difficult for alternative power 
generators to access it? 
?????Phillip Cutler 
????? Costa Mesa 

????? * 
?????Re "Lockyer Fires Earthy Attack at Energy Exec," May 23: Rape is a 
heinous crime; it is not a legally sanctioned form of punishment. This 
distinction seems to have eluded California Atty. Gen. Bill Lockyer when he 
suggested that Enron Corp. Chairman Kenneth Lay deserved to be locked in a 
jail cell with an amorous inmate. Lockyer's comment reflects an 
all-too-common belief that people who are incarcerated deserve to be raped as 
part of their punishment. California deserves an attorney general who 
understands the difference between legal incarceration and state-sanctioned 
torture. Lockyer should resign. 
?????Robert Shannon 
????? South Pasadena 

????? * 
?????Lockyer's comment to the energy robber barons, "If we catch them, 
they're going to be prosecuted," is nothing but an empty threat. Despite all 
the evidence that the energy moguls are guilty, we all know what will happen. 
Essentially, nothing. Or at most, they'll admit to no wrongdoing, pay a small 
fine and make some innocuous statement about putting this all behind us. 
?????Trent D. Sanders 
????? La Canada 

????? * 
?????Peter H. King writes about an energy problem in 1948 (May 20). On June 
27, 1924, my mother wrote in her diary: "Electricity and service cut by 25% 
due to shortage." 
?????Sarah M. Duncan 
????? San Gabriel 

????? 
Copyright 2001 Los Angeles Times 






Energy Antics: Oh, Behave! 

?????Admit it: The only comic relief in this energy crisis has been watching 
our leaders go at suppliers and each other like pro wrestlers or Jerry 
Springer guests. 
?????In his State of the State address last January, Gov. Gray Davis accused 
the big private electric power generators of legalized highway robbery and 
threatened to seize their plants if necessary. Then he really got angry, 
calling them "the biggest snakes in the world." This past week, Atty. Gen. 
Bill Lockyer boosted the rhetoric a notch by declaring he would like to 
personally escort the chairman of Enron Corp. "to an 8-by-10 cell that he 
could share with a tattooed dude who says, 'Hi, my name is Spike, honey."' 
Meanwhile, President Bush and Vice President Dick Cheney have blamed 
California for causing its own problems with a "harebrained" deregulation 
scheme and mocked the state's power purchases and conservation programs. It's 
been fun. Now it's time for our leaders to act like adults. 
?????Davis and Bush always will have their political differences, but the 
economies of both the state and the nation are endangered by California's 
energy situation. These leaders need to work together as cooperatively as 
possible, starting next week when Bush makes his first visit to California as 
president. 
?????Davis wrote Bush Wednesday offering to meet with him during his 
California visit. Bush spokesman Ari Fleischer said the president looks 
forward to discussing energy and other issues. Good start. Let's hope the 
conversation is civil and that the civility spreads. 
?????No matter how much California has been abused by the power companies, 
and it absolutely has, the state still needs them to help solve the crisis 
caused by shortages of electric power generation this year and next. Usually, 
the biggest targets of official and public wrath are the investor-owned 
utilities such as Southern California Edison and Pacific Gas & Electric Co. 
But not this time because, in the view of the state, the utilities have been 
bled dry by the power generators' stratospheric prices. The state had to take 
over the purchase of power when the generators refused to extend any more 
credit to Edison and PG&E. Legal recourse should be pursued, but the 
threatening rhetoric needs to subside. 
?????State lawmakers are right to be upset with the White House for refusing 
to use its authority to set reasonable temporary wholesale price controls. 
And Davis is justifiably upset with Bush and with Cheney, who said the only 
solution was to build more power plants--ignoring the fact that the state is 
building 10 plants now, with five more on the way, and that the only way to 
control wholesale power rates is for Washington to cap them. 
?????If the state hadn't bought the power, the generators would have let the 
lights go out. Davis needs to deliver that message, quietly and persuasively, 
while Bush is in California. And Bush needs to listen respectfully, like an 
adult. Copyright 2001 Los Angeles Times 





An air of discontent over diesel backups 
Emissions rules ignore emergency generators 
Carolyn Said, Chronicle Staff Writer
Friday, May 25, 2001 
,2001 San Francisco Chronicle 
URL: 
http://www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2001/05/25/M
N195913.DTL&type=news 

Gov. Gray Davis said yesterday that he may ask companies to run their 
emergency generators during Stage 3 electricity alerts as a way to stave off 
blackouts. And when blackouts do occur, thousands of tractor-trailer-size 
generators will whir to life, powering elevators and lights, hospital 
equipment, even assembly lines. 
But that prospect has created major concerns. Most of those industrial- 
strength generators run on diesel oil, a highly polluting fuel. Because they 
were intended for emergency use, generators have escaped most environmental 
regulations. What's more, they are likely to be called into service on the 
hottest, smoggiest days of the year. 
"We think our air quality will be significantly worse this summer because of 
diesel generators and peaker plants," said Dan Jacobson, a legislative 
advocate with the California Public Interest Research Group in Sacramento. 
Identified as a toxic air contaminant by the state, diesel fuel spews out 
nitrogen oxides, which cause smog and acid rain. It also emits particulate 
matter -- tiny soot and dust particles that can lodge in the lungs and may 
increase cancer risk. 
Diesel generators produce as much as five times more pollution per megawatt 
hour of operation than even the oldest, dirtiest coal-fired power plants, 
according to the California Air Resources Board. They are 600 times as 
polluting as modern gas-powered plants. 
Practically every hospital, large office building and apartment complex has a 
diesel generator standing by on the roof or parking lot, in basements and 
boiler rooms. 
The air board estimates there are 11,000 diesel generators in California, 
which produce an average of 373 kilowatts, enough to power essential 
functions for a sizable building. But the number is probably much higher 
because businesses have stampeded to acquire generators over the past few 
months. 
"Generators operate in an urban setting, close to where people work and 
live," said Kenneth Lim, supervising air quality engineer for the Bay Area 
Air Quality District. "If there were widespread rolling blackouts, and these 
engines fired up all at the same time, the impact could be very significant." 
INCREASED CANCER RISK
The California Air Resources Board said that operating a one-megawatt diesel 
engine for 250 hours per year "would increase cancer risk to nearby residents 
(within one city block) by 250 in a million" -- 50 percent more than the 
existing cancer risk from exposure to ambient diesel fumes from trucks and 
buses. 
Diesel generators largely avoided air-control laws because regulators assumed 
they would be used only in case of an earthquake or other once-in-a- 
blue-moon catastrophe. 
Stage 3 alerts and blackouts are likely to be everyday occurrences this 
summer. Predictions range from 260 hours to as high as 1,100 hours of 
blackouts. 
Most blackouts and Stage 3 alerts will occur on hot days when air quality is 
already poor. 
"Our worst-case scenario would be if we get into a two-, three- or four-day 
episode where it's really hot and really stagnant," said Lucia Libretti, 
spokeswoman for the air quality district. 
"It's bad enough smogwise on those days, but when you add these dirty diesel 
backup generators to that mix, it's not going to be a pretty sight." 
This summer's predicted blackouts have brought a surge of business for 
generator companies. 
GENERATING FAST SALES
Caterpillar Inc., the leading manufacturer of big generators, said it has 
sold and rented more than 900 megawatts of portable power on the West Coast 
so far this year, enough to power almost 1 million homes. That's seven times 
as much backup power as Caterpillar provided to the region last year. The 
customers include factories, data centers, banks, utility substations and 
planned communities. 
"Everyone in the state is now claiming that they need a backup generator," 
said CalPIRG lobbyist Jacobson. "It's not just the hospitals; every business 
says they need a backup; the rich people who live in Beverly Hills say they 
need it. The door is open and everyone is trying to get one." 
Small backup generators sold at Costco and Kmart that provide enough power 
for, say, a TV, some lights and a blender run on gasoline, which emits fewer 
pollutants than diesel. 
But most business, commercial and agricultural users turn to diesel engines, 
which can handle heavier loads, kick on in 10 seconds and provide a steady 
stream of power. 
One positive about the rush to get new generators is that they pollute less 
than older models. 
"They aren't black-smoke-billowing units like you might have seen 15 or 20 
years ago," said Jim Parker, director of electric power for Caterpillar in 
Peoria, Ill. 
Diesel fumes from buses, trucks, tractors and construction equipment already 
surround us. But their emissions are regulated, unlike those from generators. 
DIRTY BUT ESSENTIAL
Allen Schaeffer, executive director of the Diesel Technology Forum, which 
promotes the use of diesel fuel, said it is important to consider the big 
picture. 
"You have to look at the full equation of increased risk to public health and 
safety from not having (generators during blackouts)," he said. "Generators 
are a very important part of keeping life going, especially essential, 
critical services in California." 
Consumer advocates and environmentalists were critical of Davis' proposal to 
turn on diesel generators when the power supply gets tight. 
"If the governor wants to do something dramatic, why not call in the National 
Guard to install solar panels? They could be put on libraries, schools, civic 
buildings in a couple of weeks," said Teri Olle, toxics program director at 
the CalPIRG. 
E-mail Carolyn Said at csaid@sfchronicle.com. 




Early-warning system for summer blackouts 
Media alerts, Web sites would give information 
Greg Lucas, Lynda Gledhill, Chronicle Sacramento Bureau
Friday, May 25, 2001 
,2001 San Francisco Chronicle 
URL: 
http://www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2001/05/25/M
N130894.DTL&type=news 
Sacramento -- Pledging to take some of the uncertainty out of summer 
blackouts, Gov. Gray Davis outlined a plan yesterday to tell "specific 
neighborhoods" about probable rotating outages an hour in advance. 
Davis' early-warning plan would also require utilities to give a 48-hour 
warning of possible blackouts. 
That would be followed by a 24-hour warning of what neighborhoods would be 
hit. Then, one hour before the actual blackout, the California Independent 
System Operator and utilities will notify the neighborhoods where power will 
probably be shut off. 
Californians wouldn't have to have their utility block numbers committed to 
memory to know if blackouts are likely to hit their home, office, or child's 
day care center under Davis' plan. 
Details still need to be worked out, but the plan envisions an outreach 
system whereby customers would be told through media alerts and other 
outreach -- including possible Web sites -- which geographic areas would be 
affected. 
Currently, only people who know which Pacific Gas and Electric Co. block they 
live or work in know if they could be subjected to blackouts, and media 
alerts come only minutes before the power goes off. 
"If blackouts are going to occur, there's no reason to keep the public in the 
dark," Davis said. 
A PG&E representative said the company hopes to have more information 
available on its Web site, as well as an 800 number people can call to learn 
what block they are in. 
"For several months, we've been looking at ways to improve our customer 
notification process," Ron Low, PG&E spokesman said. "We are looking at 
designing new programs and new ways to provide information on outages." 
Businesses and consumers favor greater warning of impending blackouts. The 
Democratic governor said such warnings would also allow law enforcement more 
time to put officers in the field, particularly at busy intersections where 
traffic lights may go dark. 
Davis said that within a few days he will issue an executive order requiring 
that utilities begin to issue the warnings. 
Administration officials said the Office of Emergency Services will work with 
the Public Utilities Commission and the utilities on the plan. 
Utilities will also be responsible for providing law enforcement agencies 
with detailed maps identifying the locations of vulnerable populations -- 
including nursing homes, schools, and high-rises -- as well as the location 
of facilities exempted from blackouts, such as hospitals. 
Within an hour of Davis' announcement, the California Independent System 
Operator board of directors approved a motion implementing the advanced 
notification system. 
Elena Schmid, vice president of corporate and strategic development for the 
ISO, told the board it is important to remember that the key term in any 
early warning system is "probable." 
The ISO data showed that blackouts would not be needed 61 percent of the time 
after a warning was given 30 minutes in advance, which was the staff 
recommendation. 
A warning given 60 minutes in advance, as was adopted by the board, would 
probably result in even more false alarms, Schmid said. 
Of the 62 hours since January that blackouts appeared likely 30 minutes out, 
they were actually called 24 times. 
In other energy-related matters yesterday, Davis: 
-- Said several municipal utilities, including the city of Palo Alto and the 
Los Angeles Department of Water and Power, have agreed to supply their excess 
power to the state at prices below spot market prices. 
Until now, the municipal utilities had been selling their power at high 
prices, leading some to say that they were gouging the state. 
"I believe the prices municipal utilities have charged the state during the 
past are unconscionable," Davis said in a statement after the meeting. "There 
was a strong commitment made from the municipal utilities to provide the 
state with excess power at lower, reasonable costs whenever possible." 
-- Threatened yesterday to sue if federal regulators don't limit the prices 
the state is being charged to buy electricity. The threat came just days 
before President Bush comes to California for the fist time to meet with 
Davis. 
Although Davis supports a lawsuit filed Tuesday by state lawmakers seeking 
the same thing, his comment was his first suggestion of a lawsuit of his own. 
E-mail the reporters at glucas@sfchronicle.com and lgledhill@sfchronicle.com.




Energy crisis to cast long shadow 
A look at what energy crisis means to future 
Mark Simon
Thursday, May 24, 2001 
,2001 San Francisco Chronicle 
URL: 
http://www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2001/05/24/M
NS121240.DTL&type=news 
What we need to do is tune in, turn off and drop out. 
Tune in to how you use energy. Turn off those things that use electricity. 
And drop out of the power grid by using alternative power sources and 
alternatives to power sources. 
That's the only thing we can do in the short term. 
In the long term, you can almost see what will be coming down the pike. 
As the state's energy problems worsen, as the state throws its surplus down a 
rathole, as our own utility bills skyrocket and as blackouts roll across the 
state, someone will write a statewide ballot initiative and get it on the 
ballot. 
It will do two things. 
First, it will undo the deregulation of the state's energy industry. It will 
try to put everything back the way it was. 
Second, it will punish the producers of power and energy. 
It will levy some new fee or tax or it will regulate the industry as a public 
utility or it will require that the state take over the industry entirely. 
Huge amounts of money will be spent against it. Opponents will outspend 
supporters by a substantial amount. 
TV ads will run constantly, predicting dire consequences if the initiative is 
approved. 
We'll be told it will be bad for business. Labor leaders will tell us that it 
will cost jobs. Experts will say it will have no effect on the problem, or 
make the problem worse. 
All of that will probably be true. 
The initiative will pass easily. 
It will pass because it will appear to address what are widely understood as 
the two main causes of the current energy crisis -- a badly bungled 
deregulation and unbelievably greedy energy producers. 
It will pass because the initiative's authors will understand that most of us 
are furious about the way this mess was created and that we're eager to take 
it out on the industry leaders we see as the leading villains. 
It will pass precisely because all the people who will tell us it shouldn't 
are the people who got us into this disaster in the first place, and we won't 
believe them. 
It's much harder to say whether the energy crisis will have more immediate 
political repercussions for some of the elected officials we might blame for 
the problem -- such as the state Legislature and Gov. Davis, who could have 
done something about this a year ago and chose not to. 
Yes, the latest polls make it clear that Californians are furious with Davis 
and the Legislature. 
But elections for office are not yes/no propositions -- you don't get to vote 
up or down on Davis. 
They are a contest between two major party candidates, which means elections 
are always a matter of comparisons -- Davis compared with his opponent. 
Someone has to come along and convince voters he or she can do the job better 
than Davis. 
There might, indeed, be such people. It's unlikely one of those people will 
appear on the ballot in 2002, however. 
The current political landscape is heavily populated with profiles in 
discouragement -- people who, fearful of losing, lack the nerve to run 
against a well-financed incumbent. 
The great irony here is that voters thought term limits would solve that 
problem -- rather than being stuck with a well-financed incumbent, we'd force 
him out of office. 
In reality, we're stuck with the well-financed incumbent until his term 
limits are up -- in six or eight years. 
That does nothing to solve the problems that might arise in those six to 
eight years. It has done nothing to embolden would-be candidates. Now, they 
just meekly wait their turn. 
And it has made a shambles of the legislative process by populating the 
Capitol with people who don't know what they're doing, only where they're 
going next. Meanwhile, the people who do know what they're doing have been 
kicked out office. 
It's no coincidence that the deregulation mess was made in a Legislature full 
of people elected during the term-limit era. 
A statewide initiative, brave candidates, ending term limits -- those are all 
things that will happen in the future. 
Right now, it's time to tune in, turn off and drop out. 
Tune in to what you are doing as an individual consumer -- cast a critical 
eye at your own habits. 
Turn off your appliances, your lights, your air conditioner and reduce your 
individual energy consumption. It's much easier than it appears. 
Energy consumption has dropped in my household by more than a third by 
switching off some lights, converting to fluorescent light bulbs, turning 
down the refrigerator and connecting some appliances to a power strip, so 
that they truly are turned off. 
Finally, drop out of the power grid. Look for other ways to power your home 
-- most notably solar power, which is readily available. 
Find other alternatives to high-consumption appliances, such as clotheslines. 
Drop out. 
They can't gouge you if they can't get to you. 
Simon can be seen 7:30 p.m. Fridays on The Chronicle's "Peninsula This Week" 
on cable Channel 26, and at other times on local access channels. You can 
reach him at (650) 299-8071, by fax at (650) 299-9208, or e-mail at 
msimon@sfchronicle.com. 








Governor vulnerable, poll shows 
Posted at 9:40 p.m. PDT Thursday, May 24, 2001 
BY HALLYE JORDAN 

Mercury News Sacramento Bureau 


SACRAMENTO -- With the energy crisis sapping his once-potent popularity, Gov. 
Gray Davis could be a one-term governor if the 2002 election were held now, 
according to a Field Poll released today. 
The survey indicates that voters, by a 10-point margin, are not inclined to 
support Davis for re-election. His approval rating, which stood at an 
impressive 60 percent in January, has plummeted to 42 percent. 
In recent weeks, Davis advisers have pooh-poohed reports of the governor's 
growing political weakness, noting that the Republicans had mustered no 
strong candidate to oppose him. But that may be changing: In a Thursday 
interview with the Mercury News, outgoing Los Angeles Mayor Richard Riordan 
said he would ``love to tackle'' the problems confronting the state, and 
promised a decision on his candidacy by the end of next month. 
The Field Poll showed Davis and Riordan running neck-and-neck in a trial 
heat. 
Poll director Mark DiCamillo said the most alarming news for Davis in the 
poll is that opposition to the governor is intense, while his support is only 
lukewarm. Just 14 percent of those polled said they were ``very inclined'' to 
re-elect him, while 32 percent said they were ``not at all inclined.'' 
Bob Mulholland, political adviser to the California Democratic Party, 
shrugged off the survey, noting that Gov. Pete Wilson overcame a 23-point 
deficit to challenger Kathleen Brown in 1993 to win by 15 points. 
Aides to Davis said they look forward once again to confounding critics of 
the governor, who lagged behind his two primary opponents for months in 1998. 
Advisers unruffled 
``We've seen this movie before,'' said Garry South, Davis' political adviser, 
about the poll. ``There nothing in there that makes me quake in my boots.'' 
The Field Poll is the latest in a string of surveys that have given 
Republicans hope for retaking the corner office they controlled for 16 years 
before 1998. 
But despite the brisk sale of bumper stickers proclaiming ``Blackouts 
2001/Gray Out 2002!,'' the GOP still faces enormous obstacles in trying to 
unseat a savvy, 30-year career politician who has amassed a $25 million 
campaign war chest for his re-election. 



?

?
Associated Press file
California Gov. Gray Davis

With Democrats claiming the bulk of statewide offices and majorities in both 
houses of the Legislature, Republicans are at a low mark in terms of 
influence. The energy deregulation bill at the root of the power problem was 
written by a Republican assemblyman and signed by former Republican Gov. Pete 
Wilson. 
And it is Republicans, polls show, that the public most closely links with 
the greedy generators and power-rich Texans they blame for skyrocketing 
electricity bills. 
``Davis couldn't have picked a better political moment to fumble,'' said 
University of California-Irvine political scientist Mark Petracca. ``Despite 
the quicksand he's in, Republicans aren't standing on solid ground either. 
They are as culpable for the mess as Democrats are and, besides that, they 
don't have a leader.'' 
To unseat an incumbent, the rule of thumb is that a party needs an issue and 
a candidate. Republicans think they have their issue now: A recent private 
poll showed that the energy crisis was the top concern of 42 percent of 
Californians surveyed. More telling was that education ranked second, but was 
only cited by 7 percent -- a huge gap and a stunning drop for the issue that 
Davis has tried to make his top priority. 
The real challenge 
The candidate part, however, is stickier. Republicans start at a disadvantage 
in a state where voters overwhelmingly approve of abortion rights, gun 
control and protecting the environment. 
And at the moment, the GOP's likeliest candidates for governor are Secretary 
of State Bill Jones, who suffers from a lack of name recognition and a poor 
track record at fundraising, and William E. Simon Jr., a wealthy Los Angeles 
businessman and philanthropist who has no political experience and ties to 
the savings and loan and oil and gas industry that could hurt. 
``Davis is extremely vulnerable, but neither of these individuals is the 
right candidate to defeat him,'' said one GOP consultant, who asked not to be 
identified. 
Indeed, the Field Poll shows Davis with double-digit leads against either 
Simon or Jones. That's why the GOP flirted earlier this year with maverick 
choices such as movie star Arnold Schwarzenegger, who ultimately said he is 
not interested. 
More recently, talk in GOP circles has turned to Riordan and former Stanford 
provost Condoleezza Rice. Many Republican insiders doubt that Rice, who 
garnered 36 percent to Davis' 45 percent in the Field Poll, would want to 
leave her position as President Bush's national security adviser. But Riordan 
may be more interested. 
Riordan `fits' 
Assemblyman Rod Pacheco, R-Riverside, said Riordan is a moderate on social 
issues, has broad name recognition, can attract voters in the state's urban 
districts and has proven leadership ability. 
``We need a new captain of the ship because this ship is heading toward the 
iceberg,'' Pacheco said. ``Dick Riordan is the only one who fits.'' 
On Thursday, Riordan told the Mercury News he will decide whether to run by 
the end of June. Although he was looking forward to retirement -- and finally 
learning to play golf -- he said his ``Irish-Catholic conscience'' and his 
wife's support of whatever he decides could motivate him to run. 
He said California is suffering major problems with education, health care 
and energy that need to be addressed. ``These are the types of crises that I 
love to tackle.'' 


Contact Hallye Jordan at hjordan@sjmercury.com or (916) 441-4602.











California power regulators aim to keep more power on grid 
Posted at 6:40 a.m. PDT Friday, May 25, 2001 
BY KAREN GAUDETTE 

Associated Press Writer 



SAN FRANCISCO (AP) -- State power regulators are busy devising ways to curb 
demand among the state's heaviest users during peak periods. 
From factories to farms, California's biggest power users are being 
encouraged to sign up for even more programs that offer cheaper electricity 
in exchange for less power use -- potentially cutting the state's 
energy-buying costs by lowering demand. 
The state Public Utilities Commission also decided Thursday to begin 
re-examining the calculation that determines which residential customers of 
the state's two largest utilities will see their bills rise under a recent 
record rate increase. 
Last year, voluntary blackouts by so-called interruptible customers kept as 
much as 3,000 megawatts on the state's power grid, enough electricity to 
power more than 2 million homes. 
By being first in line for blackouts or cutting use, these customers also 
help managers of the state's power grid leave more power to residents and 
services necessary for public health and safety, such as fire stations, 
hospitals and military bases. 
The PUC hopes even more customers will participate this year, meaning less 
high-priced electricity the state would have to buy to keep homes and 
businesses humming. 
''`Negawatts' are our cheapest source of power,'' said PUC Commissioner 
Richard Bilas. The state already has paid $6 billion to buy electricity for 
the customers of the state's three largest utilities. 
The PUC will allow big customers to sign up for more than one program to 
stretch the state's meager supply of electricity. One program promises not to 
subject the customers to rolling blackouts if they slash their power use by 
up to 15 percent while blackouts are rolling through the rest of the state. 
Another program offers customers 10 cents for every kilowatt hour they don't 
use during one of a trio of four-hour blocks between 8 a.m. and 8 p.m. 
The PUC also will re-examine how it determines baseline, a varying level of 
residential power use upon which recent record rate hikes are allocated, to 
determine if it is still accurate and fair since its last update nearly a 
decade ago. 
``It is time to conduct that review,'' said Commissioner Jeff Brown, adding 
that a new calculation for baseline would not be available until winter at 
earliest, long after customers begin paying the biggest rate hike in 
California history. 
Baseline is 50 percent to 60 percent of the average amount of electricity 
used by residential customers in the same climatic and geographical area. It 
provides a certain amount of electricity at the lowest price utilities 
charge. Customers are now charged progressively more when their electric use 
rises above 30 percent of their baseline. 
Ratepayers throughout the state say baselines are unfair, since they don't 
take household size or the growing number of electronic gadgets into account. 
However, while changing the baseline may spare more customers, it would also 
make remaining customers pay even more.










PUC reviews baseline formula for setting rates 
Posted at 11:07 p.m. PDT Thursday, May 24, 2001 
BY MICHAEL BAZELEY 

Mercury News 


SAN FRANCISCO -- Responding to complaints from across the state, energy 
regulators Thursday said they would examine whether adjustments are needed to 
the baseline levels that determine how much electricity residential users get 
at a reduced price. 
The formula behind the once obscure baseline has suddenly become crucial to 
millions of Californians. Under a new state law, customers who keep their 
electrical usage at or near the baseline levels on their bills are exempt 
from rate increases that take effect next month. 
Now that the baseline is so important, officials with the state Public 
Utilities Commission said they want to make sure it is applied as fairly as 
possible. 
``We want to move aggressively on this,'' said Commissioner Jeff Brown. 
The baseline was established two decades ago to guarantee households a 
minimum amount of electricity at the lowest possible price. It is supposed to 
represent 50 percent to 70 percent of the average customer's usage for each 
climate zone. 
The current system accounts for differences in climate and seasons, with 
residents in warmer climates given higher amounts of baseline-priced 
electricity. 
The calculation has been criticized recently for not taking into account the 
energy needs of home-based businesses or family and home size. 
PUC officials said they would probably examine several issues, including 
changing household characteristics and whether geographic boundaries should 
be redrawn. Any changes also would affect the baseline for natural gas. 
Commissioners cautioned against any heavy-handed tinkering with the baseline. 
State and utility officials already are counting on a certain amount of 
revenue from the new rate increase. Shielding too many more customers from 
the increases ultimately could saddle other residential and business users 
with higher rates, officials said. 
``This is not going to be a giveaway program,'' Brown said. 
State lawmakers also are mulling changes to the baseline law, which was 
created in 1982. 
State Sen. Jackie Speier, D-San Mateo, is carrying a bill that would order 
the PUC to take into consideration the presence of children when calculating 
a household's baseline. 
The Senate Energy Committee passed the bill Thursday on a 6-2 vote. It goes 
next to the Senate Appropriations Committee. 
Also Thursday, the PUC adopted a program that offers business customers 
dramatically cheaper electricity if they reduce usage during preset four-hour 
blocks throughout the day. That program comes on top of another program, 
adopted earlier, that exempts businesses from blackouts if they agree to 
reduce their usage by 15 percent during high-demand periods. 
The PUC postponed action on what to do about small independent power 
generators that are owed $1.5 billion from the state's two largest utilities.


Contact Michael Bazeley at mbazeley@sjmercury.com or (415) 434-1018.











Regulators: Companies pushed up price of power 
Posted at 11:07 p.m. PDT Thursday, May 24, 2001 
BRANDON 
BAILEY 

AND CHRIS 
O'BRIEN 
Mercury News 

After months of investigation, state regulators say they have evidence 
suggesting that power companies have deliberately driven up wholesale 
electricity prices. Now they must decide whether those companies have done 
anything illegal. 
State Attorney General Bill Lockyer said Thursday he believes the evidence 
``strongly suggests'' power companies acted illegally to drive up prices. He 
has said that he would love to put top energy executives in jail. 
But he and other state regulators acknowledged they are still trying to 
decide what laws may have been broken. 
``Californians universally believe we're getting ripped off, that there's 
serious price-gouging,'' Lockyer said Thursday. ``However, profit-taking can 
be legal. It depends on how you do it. And how much you do it.'' 
Lockyer said he is not ready to file charges and that it may be two months 
before he wraps up his investigation. His office, one of five state agencies 
investigating the electricity industry, along with two legislative 
committees, is mulling over options ranging from criminal charges to a civil 
lawsuit. 
``The legal issues are difficult,'' agreed Gary Cohen, chief counsel for the 
state's Public Utilities Commission, which is coordinating its investigation 
with Lockyer's office. ``Finding the right legal theory and making it stick 
is challenging.'' 
Power industry spokesmen deny any wrongdoing. 
``Reliant is participating in the market -- not manipulating the market,'' 
said a statement issued this week by Reliant Energy, which owns several 
plants in Southern California. 
But PUC President Loretta Lynch said last week that her agency has evidence 
of power plant operators cutting back their output at certain times, then 
``ramping'' production up and down in what appeared to be an effort to drive 
up prices by manipulating supplies. 
Economists with the state's Independent System Operator, meanwhile, say their 
studies show power suppliers used sophisticated bidding strategies to drive 
up prices and rake in $6 billion more last year than they would have earned 
in a truly competitive market. 
High selling prices 
After analyzing thousands of transactions in the state's wholesale markets, 
ISO experts concluded that power suppliers, including some public utilities 
as well as private companies, were able to sell electricity at prices higher 
than production and fuel costs would seem to warrant. But some anti-trust 
experts say this isn't illegal unless there's a coordinated effort by more 
than one company -- which the power industry denies. 
Other experts have noted a third type of ``gaming,'' in which power suppliers 
appeared to be taking advantage of localized bottlenecks in the state's 
transmission grid -- either by producing too much power or too little, and 
then earning a bonus when grid operators paid them to either scale back 
production or provide a little extra to help balance out supply and demand. 
In one prominent example, Oklahoma-based Williams Energy recently paid $8 
million to settle a rare enforcement proceeding brought by the Federal Energy 
Regulatory Commission after state officials accused the company of profiting 
from the shutdown of two power plants that served a local transmission area. 
Williams, however, admitted no wrongdoing. 
While industry representatives mostly blame high prices on short supplies, 
some also say there is nothing wrong with reducing their output when prices 
are low and increasing production when prices go up, as long as they meet all 
their contractual obligations to produce power. 
``That's the way the market works,'' said Gary Ackerman of the Western Power 
Trading Forum. ``We've designed a system where, every hour, power plant 
owners can make decisions about whether to produce or not produce, given 
whatever excess capacity is not committed to someone else.'' 
But some regulators, while refusing to disclose specifics, say their evidence 
suggests something more sinister. 
Some generators appear to have withheld power during Stage 1 alerts, when the 
state's reserves were extremely limited, said the PUC's Cohen. 
``For generators to withhold supply under those conditions is wrong,'' he 
said. ``And we believe it's unlawful.'' 
Straining equipment 
PUC officials say they are concerned that the ``ramping'' behavior does more 
than drive up prices in the short term. 
They also suspect it puts extra strain on old equipment, contributing to an 
abnormally high number of power plant breakdowns, which in turn has made 
supply problems worse over the past year. 
As part of its investigation, the PUC has hired former utility workers to 
help inspect power plants and review operating records. The attorney 
general's office has subpoenaed a mountain of records, including generator 
data from an industry Web site that critics believe was used by power 
companies to share competitive information. 
Investigators also have subpoenaed records of communication between control 
room operators, who directly control the output of each generating unit, and 
energy traders, who buy and sell that output for the parent company. 
While Lockyer says criminal charges are possible, some experts predict the 
state will file a civil lawsuit, in part because there is a lower standard of 
proof in civil court. 
No smoking gun 
Lawsuits alleging civil violations can bring fines and damage awards. While 
some experts say it's unlikely the state could recover anywhere near the $6 
billion in excess revenue that the ISO identified, Lockyer noted that 
anti-trust laws allow a judge to award triple damages. 
Authorities acknowledge they have no ``smoking gun'' -- a document or meeting 
in which power companies agreed to coordinate their production or sales. 
But if a company knows it can hold back power until prices rise, because it 
knows that other companies will do the same, the effect is the same as if the 
companies had explicitly agreed not to undercut each other's prices, said 
state Sen. Joe Dunn, D-Garden Grove, who is chairing a legislative 
investigating committee. 
The San Francisco city attorney's office has filed a lawsuit, joined by Santa 
Clara County, that alleges both direct collusion and violation of the state's 
unfair business law. 
``I think under either test,'' said Owen Clements, chief of special 
litigation for San Francisco, ``this is a very strong case.'' 


Mercury News staff writer Michael Bazeley contributed to this report. 



Contact Brandon Bailey at bbailey@sjmercury.com or (408) 920-5022. Contact 
Chris O'Brien at cobrien@sjmercury.com or (415) 477-2504










California power regulators aim to keep more power on grid 
Posted at 6:40 a.m. PDT Friday, May 25, 2001 
BY KAREN GAUDETTE 

Associated Press Writer 



SAN FRANCISCO (AP) -- State power regulators are busy devising ways to curb 
demand among the state's heaviest users during peak periods. 
From factories to farms, California's biggest power users are being 
encouraged to sign up for even more programs that offer cheaper electricity 
in exchange for less power use -- potentially cutting the state's 
energy-buying costs by lowering demand. 
The state Public Utilities Commission also decided Thursday to begin 
re-examining the calculation that determines which residential customers of 
the state's two largest utilities will see their bills rise under a recent 
record rate increase. 
Last year, voluntary blackouts by so-called interruptible customers kept as 
much as 3,000 megawatts on the state's power grid, enough electricity to 
power more than 2 million homes. 
By being first in line for blackouts or cutting use, these customers also 
help managers of the state's power grid leave more power to residents and 
services necessary for public health and safety, such as fire stations, 
hospitals and military bases. 
The PUC hopes even more customers will participate this year, meaning less 
high-priced electricity the state would have to buy to keep homes and 
businesses humming. 
''`Negawatts' are our cheapest source of power,'' said PUC Commissioner 
Richard Bilas. The state already has paid $6 billion to buy electricity for 
the customers of the state's three largest utilities. 
The PUC will allow big customers to sign up for more than one program to 
stretch the state's meager supply of electricity. One program promises not to 
subject the customers to rolling blackouts if they slash their power use by 
up to 15 percent while blackouts are rolling through the rest of the state. 
Another program offers customers 10 cents for every kilowatt hour they don't 
use during one of a trio of four-hour blocks between 8 a.m. and 8 p.m. 
The PUC also will re-examine how it determines baseline, a varying level of 
residential power use upon which recent record rate hikes are allocated, to 
determine if it is still accurate and fair since its last update nearly a 
decade ago. 
``It is time to conduct that review,'' said Commissioner Jeff Brown, adding 
that a new calculation for baseline would not be available until winter at 
earliest, long after customers begin paying the biggest rate hike in 
California history. 
Baseline is 50 percent to 60 percent of the average amount of electricity 
used by residential customers in the same climatic and geographical area. It 
provides a certain amount of electricity at the lowest price utilities 
charge. Customers are now charged progressively more when their electric use 
rises above 30 percent of their baseline. 
Ratepayers throughout the state say baselines are unfair, since they don't 
take household size or the growing number of electronic gadgets into account. 
However, while changing the baseline may spare more customers, it would also 
make remaining customers pay even more.













Long Beach obtains lien on Edison's assets 
The city is the fourth small supplier with an attachment on the utility. 
May 24, 2001 
By KATE BERRY
The Orange County Register 
The city of Long Beach became the fourth small power supplier to get a lien 
against the assets of Southern California Edison, a move that could push the 
utility closer to bankruptcy. 
Last week, Edison was ordered to freeze at least $9 million in bank accounts 
to cover payments owed to Long Beach for power Edison bought from the city's 
trash-to-energy plant. 
Getting a lien on the utility's assets ensures the city will be paid, even if 
the utility files for bankruptcy. 
Stephen Pickett, Edison International's general counsel, said the utility 
plans to appeal. 
Long Beach also is suing Edison International, the utility's parent company, 
for breach of contract, claiming the utility should not have transferred $4.7 
billion to its parent company over a four-year period beginning in 1996, when 
deregulation was implemented. 
"Edison International was required to honor the debts of its subsidiary,'' 
said Robert Shannon, Long Beach's city attorney. 
So far, Edison has been sued by 27 small power suppliers, known as qualifying 
facilities, or QFs. The lawsuits either seek to put a lien on the utility's 
assets to recover unpaid debts or attempt to terminate 20-year contracts to 
provide power to Edison. 
Edison owes QFs about $1 billion and is trying to combine the cases before a 
single judge in Los Angeles. 
But Long Beach differs from other power suppliers because it wants to stay in 
its contract with Edison. 
"We just want to be paid under our contract. We still want to deliver them 
power,'' said Shannon. 
As a municipality, Long Beach also did not have to post a bond to obtain a 
lien as the other QFs must. 
Ed Feo, a lawyer for wind, solar and biomass QFs, said liens on Edison's 
assets could have a domino effect. 
"Two things will accelerate a bankruptcy filing by Edison: Either the deal to 
sell its transmission lines (to the state) is going nowhere and alternatives 
are not acceptable - or if attachments are made to the company's property 
that the utility doesn't want to run the risk of losing.'' 
Three other QFs have posted bonds to obtain liens against Edison. They 
include Caithness Energy, which got a lien on Edison's 56 percent interest in 
two qualifying facilities that make up the Mohave Generating Station in 
Laughlin, Nev.; IMC Chemicals, a unit of IMC Global Inc. of Northbrook, Ill., 
and that won a $7 million lien; and Herber Geothermal Co. and Second Imperial 
Geothermal Co., which is owned by Covanta Energy Corp., a former unit of 
Ogden Corp., based in Fairfield, N.J. 










By Rick Stouffer
rstouffer@ftenergy.com
The electricity supply-demand equation is simple: Match supply to demand and 
things are dandy. Demand overwhelms supply: build more supply.

Throughout the country, but particularly in California, there is no question 
more supply is mandated*NIMBY (not in my backyard) be hanged. But what about 
the demand side of the issue? What about getting customers involved in the 
solution by allowing them to sell their excess power back into the system? 

'Negawatts' nothing new
Granted, the concept of negawatts is nothing new; it was coined roughly a 
quarter-century ago by the founder of the Boulder-based consulting firm E 
Source: Amory Lovins. Many utilities today use customer curtailment to get 
them through wattage rough spots from time to time. 

All the existing independent system operators have actively considered 
demand-side bids at one time or another, according to Richard Rudden, 
president of the consulting firm R.J. Rudden Associates in Hauppauge, N.Y. 

But what about a negawatt program serving the entire Western Interconnection? 
Rather than a supply exchange, aka an independent system operator, put in 
place a "demand exchange" where customers could make a choice: Do I produce 
widgets, run my milling machines, build product or take the power I would 
have used, bid it out and see what happens? 

Just such a demand exchange within the Western Interconnection is being 
championed by an unlikely proponent: Reliant Energy Inc. 

The Houston-based energy giant already has testified in Washington, D.C., 
concerning the proposal, has had meetings with key Western state government 
leadership and pitched its idea to trade associations and environmental 
groups. 

The scorecard: Thus far, no one has laughed, no one has walked away from the 
conversations*no one has said "no," according to Reliant's John H. Stout, 
senior vice president of asset commercialization. 

"You're taking forced, rotating outages and prioritizing the interruption, 
with the customer (that) can take the outage doing so," said Stout. 

Much of what Reliant proposes is included in Texas Republican Congressman Joe 
Barton's Electricity Emergency Assistance bill, but no big generator is 
pushing from the industry side like Reliant. 

A demand exchange
Like generators, including Reliant, bidding load into the independent system 
operator pool, a demand exchange allows retail customers to determine what 
they could spare and bid in a specific load and acceptable price. 

The negawatt dispatch clearinghouse would develop a bid stack and make it 
available throughout the Western Systems Coordinating Council (WSCC). If a 
particular system needed more power, it would contact the clearinghouse, 
which would match the least cost set of bids that could be shipped, keeping 
in mind additional transmission charges. 

Once the bids were identified, the clearinghouse would contact the customer 
and its local control area. The customer would interrupt and the host utility 
would move the curtailed megawatts onto an export schedule. 

One key to the program's success is that no one loses money. The customer 
that gave up its designated electrons would continue to pay its retail 
supplier for what it didn't actually use, and the customer would receive its 
bid price, times the megawatts curtailed, minus its regular retail charges, 
plus any payment to the transmission provider. 

"The key is it gets the incentives right at the margin," said William Hogan, 
a professor at Harvard University's John F. Kennedy School of Government. 

Another key to the Reliant-championed negawatt program is that it is not 
seasonal; it doesn't lock a potential megawatt-shedder into a long-term 
contract. 

"You can bid into the market every day," said Stout. 

"It offers a tremendous advantage in that it allows distributive decisions to 
be made, how much a customer is willing to take for an energy entitlement," 
said Richard Tabors, president of the Cambridge, Mass.-based energy 
consulting firm Tabors, Carmanis & Associates. 

As Tabors points out, customers who sell back into the market obviously are 
doing so to play the margin, to make money. But their efforts also will have 
a serious impact on the spot market price. 

"Every megawatt not consumed is a megawatt which doesn't have to be 
produced," Tabors reasoned. "That lowers the marginal cost, the spot market 
cost. It really comes down to what (specific megawatts) are worth to someone 
and not worth to me." 

Heavy users thrilled
Heavy industrial users already are thrilled with the regional negawatt 
proposal. "We think it is a well thought-out program. We feel customers have 
the right to buy power, they should have the right to sell power and ought to 
be compensated like the generators," said John Anderson, executive director 
of ELCON, the Electricity Consumers Resource Council, which represents large 
industrial users from nearly every manufacturing sector. 

Anderson favors this particular plan because it gives the customer choice*
sound familiar?*allowing it to determine when it shuts down or gives up its 
power. 

"This is voluntary. You know when you will be shut down and thus you won't 
incur any damages," said Anderson. "Many proposals tell the customer to cut 
usage, but it costs money for industrial users to just shut down. Command and 
control proposals treat everyone alike*and they're not." 

Stout said at least two vendors have expressed interest in taking part in the 
Reliant proposal, with discussions already taking place with Automated Power 
Exchange Inc. (APX). 

"We have had discussions with Reliant; we're in the business of working with 
generators," said John Melby, vice president for North American marketing for 
Santa Clara, Calif.-based APX. 

According to Melby, APX represents more than half the demand response in the 
California ISO. He said the company could utilize key computer programs and 
systems previously developed to get the region-wide negawatt program up and 
running. 

The down side
There could be a number of problems in moving forward with such a large plan. 
Consultant Tabors, for example, pointed to the White House and the Bush 
administration's seeming preoccupation with supply. 

Harvard's Hogan said having the power available when needed was key, while 
Reliant's Stout said the biggest hurdle was that many states prohibit retail 
customers from selling load back into the wholesale market. An obvious 
solution to that would be passage of the Barton bill; however, nothing is 
certain in such a divided Congress. 

Thus, Stout continues to travel the West pushing the negawatt program. 
California Gov. Gray Davis was briefed on the plan some two weeks ago when he 
called a meeting of all California's generators. 

"We thought he (Davis) generally liked the idea," Stout said. 

Next up on Reliant's hit list is S. David Freeman, former head of the Los 
Angeles Department of Water and Power and now Davis' California energy 
conservation "czar." 

"We've already raised the issue with him (Freeman), but we're looking to plug 
him in," Stout said. 



Reliant Energy to lower Calif. peaking unit power prices





New York, May 24 -(BridgeNews) - Reliant Energy said Thursday it will lower

the price of its power bids from emergency limited run time peaking units that
have environmental permit operating restrictions despite Reliant's concerns
that the state will deplete the available power of these plants too soon. The
company had received criticism for recent high bid prices from these plants.



*                    *                     *



Reliant said in a release that it initiated this move in anticipation that
local air quality control boards will lift restrictions on the run time for 
the
units.


In letters sent to the South Coast Air Quality Management District, the
Santa Barbara County Air Pollution Control District and the Ventura County Air
Pollution Control District, Reliant said it resubmitted their request for an
extension on the run time limits of its emergency peaking units.


The company said the extensions would reduce the price of bids associated
with these units from the $1500 to $1900 per megawatt hour level to $150 to
$250 per megawatt hour.


Extensions also would help increase the available supply of power during
power emergencies. Currently, the emergency peaking units are allowed to run
for only a few days per year.


"Reliant has recently been sharply criticized for bids from these plants,"
Joe Bob Perkins, president and chief operating officer of Reliant Energy
Wholesale Group said in a statement. "To show we are committed to working with
all parties, we are voluntarily reducing prices in the hopes that all the
decision makers in California understand the need to lower restrictions during
times of emergencies.


"In essence, we are doing exactly what Governor Gray Davis has suggested,"
Perkins said.  "But if restrictions are not lowered, we will run out of power
from these units very quickly."


Reliant's position has been that it has purposely bid the power from the
units in question at prices designed to discourage premature use preserve
availability for when the state is forced into emergencies because of low 
power
reserves.


Extensions from the air quality control boards would allow Reliant Energy
to operate these plants without penalty during emergency times and alleviate
the need to ration the units operating time.


But the company said it Reliant Energy intends to lower the prices of the
megawatts produced at this plant, in hopes that restrictions will be raised.


The units affected by this commitment include units at Reliant Energy's
Mandalay, Etiwanda, and Ellwood facilities.


Perkins said in his statement that the focus should be on the supply
problem, which he considers to be the root of the current power crisis in the
state.


"It is astonishing that many decision makers continue to take the focus
off of supply in the name of political finger pointing,"  Perkins said.  "As a
result, many Californians still do not believe there is a serious supply
problem."


Independent power generators have come under increasing scrutiny and are
being investigated by the state's Attorney General Bill Lockyer's office for
gaming the market. Generators are being investigated as to whether they have
shut plants for maintenance in order to spike prices during peak periods and



periods when the California Independent System Operator declares alerts when
power reserves drop below certain levels in the state.


Reliant Energy is based in Houston, Texas.  End





Shaklee Corporation Headquarters Model for Energy Efficiency and Ecology 
Efforts; Bay Area Company Wins State Award CEO Adds Hybrid Gas-Electric 
Vehicles to Fleet



PLEASANTON, Calif.--(BUSINESS WIRE)--May 24, 2001 via NewsEdge Corporation  - 
With energy
costs soaring and electric companies near bankruptcy, authorities and
businesses in California are scrambling for answers. Utilizing
endeavors that can serve as a guide for other California businesses,
one Bay Area company's creative thinking about the environment and
energy conservation has received statewide recognition and acclaim
rather than heftier electricity bills.


In a luncheon event scheduled for May 30th at the Sterling Hotel
in Sacramento, the California Council for Environmental &amp; Economic
Balance (CCEEB) will honor health and wellness company Shaklee
Corporation by presenting it with the Edmund G. "Pat" Brown Award for
its cutting edge climate change initiative designed to create genuine
environmental improvements. Working with the Climate Neutral Network
and four leading U.S. environmental organizations, Shaklee became the
first Climate Neutral Certified enterprise by completely offsetting
its greenhouse gas emissions, meaning that the company has achieved a
net zero impact on global warming. The award, named after the late
California Governor Edmund G. Pat Brown, is the highest honor bestowed
by the CCEEB.


Energy Costs Down by 1/3 at new headquarters


The new world headquarters for Shaklee located in Pleasanton,
California boasts numerous cutting edge energy-saving features and was
constructed using sustainable materials. The company's move from a San
Francisco skyscraper and converted warehouses in Hayward to a freshly
built, environmentally and energy sensitive building in November 1999
reduced Shaklee's energy consumption by more than 900,000 kilowatts of
electricity during the last calendar year resulting in approximately a
30% reduction in energy costs. Just a few of the buildings innovative
features include:


--  Under-floor air system uses gravity and the natural cooling


provided by the concrete subfloor to provide a more effective


way to heat and cool the building.


--  High performance glazing on the windows that limits the


absorption of solar heat and maximizes daylight as well as


shades that are raised or lowered automatically based upon the


solar load.


--  "Lightshelves" that bring daylight deep into the building's


interior and also work to shade the building during the


hottest parts of the day, reducing the amount of energy needed


for heating and cooling.


--  Timers that control exterior and interior lights and motion


sensors that turn on lights and equipment, and dimmers that


reduce light when natural light is sufficient.


Hybrid Gas-Electric Car Added to Shaklee Fleet


In a further environmental/conservation effort, Shaklee CEO Bob
Schults recently traded in his company SUV for a Prius. The car is the
world's first mass-produced hybrid vehicle that combines a highly
efficient gasoline engine with an electric motor. Its energy-efficient
and environmentally friendly features include an average 52 miles per
gallon in the city and an emission rate of 50 percent less carbon
dioxide than most other cars.


Schults was so pleased with his Prius that he added it as an
option to Shaklee's Bonus Car Program, one of the top 25 company-owned
commercial fleets in the country. "It's only appropriate that we made
this car a part of Shaklee's automotive fleet to encourage everyone to
become more eco-friendly," Schults said. "The U.S., not to mention the
world at large, needs it now more than ever before."


The CCEEB is not alone in recognizing Shaklee's environmental
efforts. In 2000 Shaklee has also received the Earth Day New York
Environmental Business Leadership Award, the Business Environmental
Network Award from Bay Area Action and the Peninsula Conservation
Center Foundation, and the City of Pleasanton Mayor's Commendable
Commute Awards for the highest rate of employee use of mass transit
and telecommuting.


CCEEB is a coalition of California business, labor and public
leaders who work together to advance collaborative strategies for a
sound economy and a healthy environment. CCEEB was founded almost 30
years ago by the late Governor Pat Brown because he and other key
leaders believed that new thinking was needed to effectively address
challenges facing California. As the only statewide private,
nonprofit, nonpartisan association to represent the interests of both
industry and labor, CCEEB takes pride in its ability to achieve
results by bringing creative and effective solutions to the forefront
of policy debate.


Founded in 1956, Shaklee is a global consumer products company,
recognized as an industry pioneer with a trusted name in health and
wellness. For more information, visit www.shaklee.com.



CONTACT: Shaklee |              Karin Topping, 925/924-2007 | 
ktopping@shaklee.com










Power Trader Tied to Bush Finds Washington All Ears 
By LOWELL BERGMAN and JEFF GERTH 
? 
05/25/2001 
The New York Times 
Page 1, Column 1 
c. 2001 New York Times Company 
Curtis Hebert Jr., Washington's top electricity regulator, said he had barely 
settled into his new job this year when he had an unsettling telephone 
conversation with Kenneth L. Lay, the head of the nation's largest 
electricity trader, the Enron Corporation. 
Mr. Hebert, chairman of the Federal Energy Regulatory Commission, said that 
Mr. Lay, a close friend of President Bush's, offered him a deal: If he 
changed his views on electricity deregulation, Enron would continue to 
support him in his new job. 
Mr. Hebert (pronounced A-bear) recalled that Mr. Lay prodded him to back a 
national push for retail competition in the energy business and a faster pace 
in opening up access to the electricity transmission grid to companies like 
Enron. 
Mr. Hebert said he refused the offer. ''I was offended,'' he recalled, though 
he said he knew of Mr. Lay's influence in Washington and thought the refusal 
could put his job in jeopardy. 
Asked about the conversation, Mr. Lay praised Mr. Hebert, but recalled it 
differently. ''I remember him requesting'' Enron's support at the White 
House, he said of Mr. Hebert. Mr. Lay said he had ''very possibly'' discussed 
issues relating to the commission's authority over access to the grid. 
As to Mr. Hebert's job, Mr. Lay said he told the chairman that ''the final 
decision on this was going to be the president's, certainly not ours.'' 
Though the accounts of the discussion differ, that it took place at all 
illustrates Enron's considerable influence in Washington, especially at the 
commission, the agency authorized to ensure fair prices in the nation's 
wholesale electricity and natural gas markets, Enron's main business. 
Mr. Lay has been one of Mr. Bush's largest campaign contributors, and no 
other energy company gave more money to Republican causes last year than 
Enron. 
And it appears that Mr. Hebert may soon be replaced as the commission's 
chairman, according to Vice President Dick Cheney, the Bush administration's 
point man on energy policy. 
Mr. Lay has weighed in on candidates for other commission posts, supplying 
President Bush's chief personnel adviser with a list of preferred candidates. 
One Florida utility regulator who hoped for but did not receive an 
appointment as a commissioner said he had been ''interviewed'' by Mr. Lay. 
Mr. Lay also had access to the team writing the White House's energy report, 
which embraces several initiatives and issues dear to Enron. 
The report's recommendations include finding ways to give the federal 
government more power over electricity transmission networks, a longtime goal 
of the company that was spelled out in a memorandum Mr. Lay discussed during 
a 30-minute meeting earlier this spring with Mr. Cheney. 
Mr. Cheney's report includes much of what Mr. Lay advocated during their 
meeting, documents show. Both men deny discussing commission personnel issues 
during their talk. But Mr. Lay had an unusual opportunity to make his case 
about candidates in writing and in person to Mr. Bush's personnel adviser, 
Clay Johnson. And when Mr. Bush picked nominees to fill two vacant Republican 
slots on the five-member commission, they both had the backing of Enron, as 
well as other companies. 
Mr. Lay is not shy about voicing his opinion or flexing his political muscle. 
He has transformed the Houston-based Enron from a sleepy natural-gas company 
into a $100 billion energy giant with global reach, trading electricity in 
all corners of the world and owning a multibillion-dollar power project in 
India. He has also led the push to deregulate the nation's electricity 
markets. 
Senior Bush administration officials said they welcomed Mr. Lay's input but 
did not always embrace it: President Bush backed away from curbing 
carbon-dioxide emissions, an effort supported by Enron, which had looked to 
trade emission rights as part of its energy business. 
''We'll make decisions based on what we think makes sound public policy,'' 
Mr. Cheney said in an interview, not what ''Enron thinks.'' 
The Bush-Lay bond traces back to Mr. Bush's father and involves a personal 
and philosophical affinity. Moreover, Enron and its executives gave $2.4 
million to federal candidates in the last election, more than any other 
energy company. While some of that went to Democrats, 72 percent went to 
Republicans, according to an analysis of election records by the Center for 
Responsive Politics, a nonprofit group. 
''He's for a lot of things we're for,'' said Mr. Johnson. 
But when it came to deciding on nominees for the commission, Mr. Johnson said 
that Mr. Lay's views were not that crucial. The two most important advisers, 
he said, were Andrew Lundquist, the director of Mr. Cheney's energy task 
force, and Pat Wood 3rd, the head of the Texas public utility commission. 
As governor, Mr. Bush named Mr. Wood to the utility commission. This year, 
when the White House filled the two Republican slots on the federal agency, 
Mr. Wood was the first choice, Mr. Johnson said. 
Consumer advocates and business executives praise Mr. Wood. But Mr. Lay also 
had a role in promoting him. Shortly after Mr. Bush was elected governor in 
1994, Mr. Lay sent him a letter endorsing Mr. Wood as the ''best qualified'' 
person for the Texas commission. 
In all, there are five seats on the commission, two held by Republicans, two 
by Democrats and one held by a chairman who serves at the pleasure of the 
president. Mr. Hebert, who became a commissioner in 1997, was named chairman 
by Mr. Bush in January. 
The Federal Energy Regulatory Commission's mandate to ensure fair prices in 
wholesale electricity and natural gas markets makes it crucial to sellers 
like Enron as well as consumers. 
The movement toward deregulation sometimes leaves the commission caught in a 
tug of war: power marketers like Enron are trying to break into markets and 
grids controlled by old-line utilities, which operate under state regulation. 
The commission's chairman has considerable latitude in setting its agenda. 
As part of its oversight of the wholesale electricity markets, the commission 
ordered several companies to refund what it considered excessively high 
prices this year in California. One lesser offender named in the commission's 
public filings -- $3.2 million, of a total of $125 million -- was an Enron 
subsidiary in Oregon. 
Enron owns few generating assets, but buys and sells electricity in the 
market. Many of those transactions resemble the complicated risk-shifting 
techniques used by Wall Street for financial instruments. 
Mr. Hebert, after he became chairman, initiated an examination into the 
effects those techniques have on the electricity markets. ''One of our 
problems is that we do not have the expertise to truly unravel the complex 
arbitrage activities of a company like Enron,'' he said, adding, ''we're 
trying to do it now, and we may have some results soon.'' 
William L. Massey, one of the agency's two Democratic commissioners, said he 
supported the inquiry but had not been aware of it -- an indication of the 
chairman's ability to set the commission's agenda. 
Finally, the commission is trying to speed the pace of electricity 
deregulation by opening up the nation's transmission grid, much of which is 
owned by privately owned utilities that enjoy retail monopolies. Some Enron 
officials say the commission has been moving too slowly to open the grid. 
They attribute some of the problem to utilities. But they also fault Mr. 
Hebert. 
''Hebert still has undeserved confidence in some of the vertically integrated 
companies coming to the table and dealing openly'' with transmission access 
issues, said Richard S. Shapiro, an Enron senior vice president. 
The utilities, however, maintain that they provide cheap and reliable service 
for their customers. Washington lobbyists for one Southern utility said that 
Enron was really interested in focusing on the utility's big-business 
clients, which under state regulation pay higher rates than residential 
customers. 
Since 1996, about half the states have moved to open their retail markets to 
competition, and the commission has begun to make it easier for outsiders to 
use the nation's transmission grid. But the promise of cheaper rates has been 
largely unfulfilled. So the push for more deregulation, in which Enron has 
been a leader, has slowed, especially when California's flawed program led to 
skyrocketing rates and chaotic markets. 
Mr. Hebert is a free-market conservative who favors deregulation but also 
recognizes the importance of state's rights. A former Mississippi regulator, 
he is a protege of Trent Lott, the Senate Republican leader from Mississippi. 
Mr. Hebert said Mr. Lott was instrumental in his nomination to the commission 
in 1997 by President Clinton. 
President Bush elevated Mr. Hebert to chairman on Inauguration Day, a move 
Mr. Lay said he told the White House he supported. 
Mr. Johnson, the White House personnel chief, said that Mr. Lott and Mr. 
Hebert had both been told that Mr. Hebert could remain chairman at least 
until the administration's nominees -- Mr. Wood and Nora Brownell, a 
Pennsylvania utility regulator -- are confirmed by the full Senate. The 
Senate energy committee voted earlier this week to approve the two nominees, 
after a hearing last week indicated strong support. 
It is widely expected that President Bush will name Mr. Wood to replace Mr. 
Hebert as chairman after the Senate acts. 
In an interview for a forthcoming episode of ''Frontline,'' the PBS series, 
Mr. Cheney suggested as much. ''Pat Wood's got to be the new chairman of the 
F.E.R.C., and he'll have to address'' various problems in the electricity 
markets, he said. 
Mr. Hebert said that no one had told him he was being replaced. If someone 
else is named chairman, Mr. Hebert can remain a commissioner until the end of 
his term, which expires in 2004. 
It was a few weeks after President Bush made him chairman that Mr. Hebert 
said he spoke by telephone with Mr. Lay. 
Mr. Lay told him that ''he and Enron would like to support me as chairman, 
but we would have to agree on principles'' involving the commission's role in 
expanding electricity competition, Mr. Hebert said of the conversation. 
A senior commission official who was in Mr. Hebert's office during the 
conversation said Mr. Hebert rebuffed Mr. Lay's offer of a quid pro quo. The 
official said that he heard Mr. Hebert's side of the conversation and then, 
after the call ended, learned the rest from him. 
Mr. Hebert said that he, too, backed competition but did not think the 
commission had the legal authority to tell states what to do in this area. 
Concerning the issue of opening transmission access through the creation of 
regional networks, Mr. Hebert supports a voluntary process while Enron seeks 
a faster and more compulsory system. 
Mr. Lay said that while he might have discussed issues relating to the 
commission's authority concerning access to the grid, ''there was never any 
intent'' to link that or any other issue to Mr. Hebert's job status. 
The commission is a quasijudicial agency, so decision-makers like Mr. Hebert 
must avoid private discussions about specific matters pending before the 
commission. Mr. Hebert and Mr. Lay both said that line was not crossed, but 
Mr. Hebert said he had never had such a blunt talk with an energy-industry 
executive. 
Mr. Lay added that his few recent conversations with Mr. Hebert were nothing 
special. ''We had a lot of access during the Clinton administration,'' he 
said. 
And he said that while making political contributions ''probably helps'' to 
gain access to an official, he made them ''because I'm supporting candidates 
I strongly believe in.'' 
Last June, Enron executives were asked to make voluntary donations to the 
company's political action committee. The solicitation letter noted that the 
company faced a range of governmental issues, including electricity 
deregulation. 
This year, some people who sought but did not get nominations to the 
commission said that Mr. Lay and Enron had had a role in the process. 
One was Joe Garcia, a former Florida utilities regulator and prominent 
Cuban-American activist. He said he had been ''interviewed'' by a few Enron 
officials, including Mr. Lay, who he said had not been as ''forceful or 
insistent'' as the other Enron officials. 
But in their conversation, Mr. Garcia said, Mr. Lay made clear that he would 
be visiting the White House, adding that ''everyone knew of his relationship 
and his importance.'' 
Mr. Johnson, the White House personnel chief, could not cite another company 
besides Enron that sent him a list of preferred candidates for the 
commission, but he remembered hearing the views of Tom Kuhn, who heads the 
utility industry trade group, the Edison Electric Institute. Mr. Kuhn was a 
classmate of Mr. Johnson and Mr. Bush at Yale. 
As for his conversation with Mr. Garcia, Mr. Lay said he was comfortable with 
his candidacy but ''I'm not sure what I told him about my friends at the 
White House.'' 
This article is part of a joint reporting project with the PBS series 
''Frontline,'' which will broadcast a documentary about California's energy 
crisis on June 5. 

Photos: Kenneth L. Lay, left, chairman of the country's largest energy 
trader, and Curtis Hebert Jr., chairman of the Federal Energy Regulatory 
Commission, differ in their accounts of a conversation about energy 
deregulation. (Photographs courtesy WGBH/''Frontline'')(pg. A18) 











THE ENERGY CRISIS Davis Orders 3-Tiered Warnings of Blackouts 
DAN MORAIN; NANCY VOGEL 
? 
05/25/2001 
Los Angeles Times 
Home Edition 
Page A-1 
Copyright 2001 / The Times Mirror Company 
SACRAMENTO -- In a significant policy change aimed at minimizing business and 
consumer disruptions, Gov. Gray Davis ordered state officials Thursday to 
enact a three-tier blackout warning system. 
Forecasts of blackouts will be issued 48 hours beforehand, Davis said. 
General areas will be identified in warnings issued 24 hours before likely 
outages. Precise locations will be announced an hour before the power is cut, 
he said. 
Business executives, police and consumers have complained that the current 
warning system--in which blackouts can come with less than 10 minutes' 
warning--does not give them sufficient time to save information on computers, 
shut down assembly lines, safeguard traffic intersections and otherwise 
prevent financial loss and mayhem when the power goes out. 
In the past, state grid operators only gave short notice because they often 
found enough power at the last minute to avert blackouts. They said they did 
not want to repeatedly alarm people. Utility officials have said they feared 
that advance warning would leave neighborhoods vulnerable to looters and 
burglars. 
But crime has not been a problem during California's six days of blackouts so 
far this year. And with experts predicting dozens of days of forced outages 
this summer, state and utility leaders say Californians are better off 
prepared. 
"If blackouts are going to occur," Davis said, "there is no reason to keep 
the public in the dark. We all deserve as much advance notice as possible." 
Utility customers will be notified through company Web sites and radio and 
television announcements. Starting with June utility bills, Southern 
California Edison customers will be given "block" numbers that allow them to 
learn through the Edison Web site, http://www.sce.com, if they are scheduled 
for rotating blackouts on days of short supply. 
Under the governor's order, Edison spokesman Brian Bennett said, consumers 
can expect 24-hour warnings about general areas--Santa Monica or Santa Ana, 
for example--that might be targeted for hourlong blackouts. 
At 60 minutes before a blackout is triggered, Bennett said, the warnings 
delivered through radio, television and the Internet will get much more 
precise. "For example," he said, "One hour before, we'll say Main Street in 
Santa Monica . . . will be affected." 
Leaders of the agency responsible for deciding when blackouts must be 
triggered said Thursday they intend to launch the governor's order by June 
15. And if Californians redouble their conservation efforts when they hear of 
blackout warnings, they said, the governor's order will ultimately help the 
state avoid blackouts. 
"I think we're going to save power, potentially lives; we're going to help 
save jobs and California's economy," said Carl Guardino, a member of the 
board that oversees the California Independent System Operator, which manages 
75% of the state's transmission system. 
Davis announced his order at a news conference attended by law enforcement 
officials, including Los Angeles County Sheriff Lee Baca, who said he intends 
to unveil a more detailed plan for the county today. 
For some, the decision to give warning was an acknowledgment that the state 
is failing to solve the energy crisis. 
"It obviously says we're surrendering to the electricity crisis," said Sen. 
Tom McClintock (R-Northridge. "Here we've arrived in the 21st century, with 
all the electronics, and we don't have the power to run them." 
Utility spokesmen lauded the plan, but said that much of the responsibility 
rests with Cal-ISO, which is the only entity that has the ability to track 
supplies. 
"If the ISO only gives us 60-minutes warning, our customers will get 
something less than 60-minutes notice," said John Nelson, spokesman for 
Pacific Gas & Electric. 
As it works now, Cal-ISO informs utilities of pending blackouts. The utility, 
in turn, informs county offices of emergency services. Using computerized 
calling, e-mail and manual dialing, the utilities also inform law 
enforcement, major industrial users, people on life support and other 
consumers for whom electricity is vital, Nelson said. 
Californians at large are expected to learn of the warnings through the media 
and the Cal-ISO Web site, http://www.caiso.com. 
Also on Thursday, Davis met with officials of California's publicly owned 
utility districts and came away, he said, with promises that they would sell 
excess power to the state at prices significantly lower than on the spot 
market. 






Legislature hangs Davis out to dry 
By Nick Driver
Of The Examiner Staff 
Democratic and Republican legislators are vying to scuttle Gov. Gray Davis' 
plan to buy transmission lines from electric utilities and replace it with 
one of their own. 
The confusion in Sacramento sidelines what was an imminent deal for a San 
Diego-area utility, and throws further in doubt any future deal to purchase 
PG&E lines through bankruptcy proceedings. 
And all this is happening before President Bush arrives Tuesday to tout his 
own transmission line deal. 
A week ago, Davis finally found a term-limited senator, Richard Polanco, 
D-Los Angeles, to sponsor legislation to purchase Southern California Edison 
lines. Now, the governor's office admits that talks will not proceed until 
the Legislature agrees on how to finance the buyout of SoCal Edison's lines. 
Some Assembly Democrats have proposed an innovative alternative to the Davis 
plan, giving the state a five-year option to purchase all power lines for 
$1.2 billion. While a much lower price, the bill would also lower Edison's 
debt by forcing power marketers to accept 75 percent of the $3.5 billion owed 
them. 
Under the terms of that proposal, the state would still have to loan Edison 
money -- around $1 billion -- and would guarantee SoCal Edison's sale of a 
further $2 billion in bonds. The state would also receive a conservation 
easement on 21,000 acres of Sierra Nevada watershed land. 
As in the Davis bill, SoCal Edison would sell the state relatively low-cost 
electricity for 10 years from one of its power plants, and force parent 
company Edison International to repay $400 million in transfers. 
A Republican plan labeled "Plan R" now making its way through the halls of 
the legislature is similar to its Democratic sister, except it allows the 
state to take stock in all new plants SoCal Edison is forced to build. 
The Democratic bill's sponsors, Assemblymen John Dutra, D-Fremont; Joe 
Nation, D-San Rafael; and Joe Canciamilla, D-Pittsburg; believe they can 
persuade Edison's board of directors to approve their deal, even though it is 
not as attractive as the governor's offer. Edison refused to comment on the 
plan. 
Republicans led by Assemblyman Keith Richman, R-Northridge, were trying a 
different strategy Wednesday. The minority party's "Plan R" has not been 
introduced as official legislation, but instead floated among Republicans and 
Democrats alike to get momentum before introduction. 
Both groups say their bills represent SoCal Edison's only real alternative to 
bankruptcy, and that the beleaguered utility may soon join its northern 
neighbor, PG&E, in bankruptcy. 
So far, Edison has been able to renegotiate debts with power generators 
charging high wholesale prices. PG&E declared bankruptcy April 6. 
A governor's office staffer said the legislative impasse had diverted all 
attention away from any deal-making, but that the two sides continued to meet 
frequently. 
Another adviser, Joe Fichera, said "there are lots of moving parts" to the 
deal to purchase all of San Diego Gas and Electric's transmission lines, but 
that he continued to meet with company representatives, including an all-day 
meeting Monday. In San Diego, a spokesman for SDG&E referred all calls to the 
governor's office. 
But the sponsor of the Davis bill, Polanco, is not one of the legislature's 
power brokers, and most lawmakers said the $2.76 billion memorandum of 
understanding is now in serious jeopardy. 
A bankruptcy could lead to even greater chaos, including the threat of an 
increase in blackouts. The governor and business leaders have said the 
economy would suffer as the likelihood of blackouts and service outages 
rises. 
Legislators, policy wonks and consumer groups continue to argue over the need 
and desirability of the state owning the aging lines that snake across the 
state, especially if the bulk of them -- now owned by Pacific Gas and 
Electric Co. -- are still not for sale. 
Critics such as Senate President John Burton, D-San Francisco, one of the 
bill's strongest proponents three months ago, now say the state should not be 
in the business of replacing or upgrading dilapidated lines at a cost of 
upwards of $1 billion. 
Others see the state as the best candidate for improving a system long 
neglected by utilities. 
"State ownership of the transmission grid would be a better way to help grid 
problems such as connecting wind generators," said Joe Ito, an energy analyst 
at Lawrence Berkeley Laboratories. "It has been extremely difficult to build 
new transmission capacity over the last 10 years, especially into bottlenecks 
like San Francisco." 
Bush unveiled his Energy Plan last week, including a key plank that would 
allow the federal government to use eminent domain to purchase private land 
and build more transmission lines. Bush arrives Tuesday for talks with Davis 
on this and other solutions to the energy crisis. 
The Foundation for Taxpayer and Consumer Rights derides both presidential and 
legislative attempts to create more consumer-friendly deals, labeling them 
"Bailout Lite." 
"The sponsors want to try and trim away some of the fat," said Doug Heller, a 
spokesman for the group. "But it's all fat."