---------------------- Forwarded by John Shelk/NA/Enron on 07/12/2001 10:12 AM ---------------------------

Carin Nersesian

07/12/2001 07:47 AM

To:	John Shelk/NA/Enron@Enron, Pat Shortridge/Corp/Enron@Enron
cc:	Linda Robertson/NA/Enron@ENRON 

Subject:	Barton,Tauzin letter to Gov. Davis



Committee News Release The Committee on Energy and Commerce W.J. "Billy" Tauzin,  Chairman  Chairmen Tauzin, Barton Urge Gov. Davis To Respond Immediately to Inquiries   Washington (July 11) - House Energy and Commerce Committee Chairman Billy Tauzin (R-LA) and Energy and Air Quality Subcommittee Chairman Joe Barton (R-TX) today sent the following letter to California Governor Gray Davis:  July 11, 2001 The Honorable Gray Davis  Governor  State of California  State Capitol  Sacramento, California 95814  Dear Governor Davis:              As you know, the Energy and Commerce Committee recently considered legislation containing several targeted measures to assist California in resolving its energy supply crisis.  One of these measures was a temporary "safe harbor" provision, effective only upon the California Governor's request, to protect critical extended emergency operation of powerplants from challenges under the Clean Air Act.              During the course of six hearings the Subcommittee on Energy and Air Quality held on the California electric crisis, including two hearings on draft legislation, Members of the Committee repeatedly told California officials that these plants were vulnerable to legal challenge, even with written "agreements" for extended operation between state air officials and the powerplants.  Nevertheless, California officials testifying or providing information on behalf of your state and your citizens claimed that such a safe harbor was not necessary.              I fear events have proven that on this important matter, the concerns expressed by Members of our Committee were valid and that our interpretation of the legal jeopardy faced by California was accurate.  On June 19th, several community groups filed a lawsuit in federal court against three electric generating units in California (all located at the Potrero power plant site) alleging multiple violations of the Clean Air Act for emergency extended operation.  On the same day, the City and County of San Francisco filed formal notice that it would also pursue legal action against the three Potrero units.  All parties involved in the litigation strongly assert that the extended operation agreement between state air officials and the Potrero power plant does nothing to prevent them from pursuing all available legal remedies under federal and state law.              The legal action against the units located at the Potrero power plant claims that extended operation violates limits contained in federal air permits and seeks fines potentially amounting to millions of dollars.  Understandably, as a result of this potentially huge fine, the operator of the Potrero power plant has filed a motion with the Federal Energy Regulatory Commission to clarify that it will not be required to operate the three generating units, even during periods of electrical emergency.  Thus, the mere filing of this lawsuit could have a near-term impact of the amount of power available in California.              Perhaps even more troubling is our understanding that substantial amounts of electric power produced by peaking plants and other facilities in California could also be subject to similar legal action.  The California Independent System Operator lists 31 units representing 1,430 megawatts of peaking units which are subject to legal limits on their total hours of operation.  In addition, several new units are being brought on-line this summer without required Clean Air Act control equipment.  According to incomplete information we received from the California Air Resources Board (CARB), 37 generating units have been identified in California which may exhaust allowable annual operating hours contained in their air permits prior to this summer's peak demand period.  These units may represent up to 2% of generation, approximately the critical operating reserve shortfall of a Stage III electric emergency.              Although presented with written requests for information from the Committee on April 2, 2001, CARB could not or would not provide the Committee with precise information on units that may have been off-line due to permit limits, a projection of the number of generating units that will face permit constraints that could cause such units to be off-line, the amount of generation associated with these facilities, the possible impact of these units on system reliability, and additional information related to air emissions from facilities that will be operating under "modified" conditions.   We believe that in the face of the pending legal action, it is even more important that such information be accurately and objectively determined.              As we mentioned above, over several months in the spring and early summer of this year, the Committee sought California's support of an extremely narrow safe harbor provision to protect the extended operation of certain powerplants.  Regrettably, the Committee did not receive any support from your administration for such changes to the law, as represented by the testimony and responses attached to this letter.  Instead, witnesses representing California claimed such a legal safe harbor for emergency generation was unnecessary -- even if it could only be granted during periods of emergency and upon your personal request to the Environmental Protection Agency (EPA).               It appears now that citizen groups in California -- as well as the City and County of San Francisco -- do not believe that the actions taken by you, your state agencies and local air quality districts are legal.  The pending litigation challenges the very agreements which California previously claimed granted sufficient legal "flexibility" to keep these units running during times of emergency.  It is time, then, to reconsider this issue.              So that the Committee may understand the extent of this critical situation and respond accordingly, we would ask for your consideration of the following:  (1) We would urge you to reply fully to the Committee's earlier requests that CARB specifically identify each generating unit and power plant that is in jeopardy of exceeding limitations contained in the Clean Air Act and thus potentially subject to the citizen suit provisions of the Act.  We should have a clear idea of the power production which is at risk.  (2) In view of the fact that we have moved from the world of legal theory into the world of legal fact and several California generating units are now being sued under authorities contained in the Clean Air Act, we ask whether you will now favor creating in federal law a limited, environmentally-neutral safe harbor for these essential units which could only be effectuated upon your request to EPA.  (3) Finally, we would ask that if you support such legislation, that you work with our Committee so that we can truly try and resolve this issue in a targeted provision which helps ensure the lights stay on in California this summer.              Thank you in advance for your consideration of our requests. Sincerely, W.J. (Billy) Tauzin Chairman Energy and Commerce Committee Joe Barton  Chairman Subcommittee on Energy and Air Quality  Peter Sheffield 202.225.5735 	






Carin Nersesian
Legislative Coordinator
Enron Corp.
1775 Eye St. NW, Suite 800
Washington, DC   20006
202-466-9144 (ph.)
202-828-3372 (fax)