----- Forwarded by Jeff Dasovich/NA/Enron on 02/05/2001 10:26 AM -----

	"Daniel Douglass" <Douglass@ArterHadden.com>
	02/04/2001 01:22 PM
		 
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		 Subject: Commentary From Tomorrow's Electricity Daily

Commentary: The Ongoing California Saga
In the continuing electrical soap opera in California, the role of villain 
has been seized by the executive branch of the state government, 
specifically, Gov. Gray Davis and his hand-picked head of the California 
Public Utilities Commission, Loretta Lynch. Neither Davis nor Lynch are 
contributing to solving the crisis, in either the short or the long run. They 
are making things worse.
Their chief response to the electric catastrophe has been a search for 
demons: the power generators and marketers, the federal government, the 
utilities themselves, anybody but the politicians or the regulators. They 
have mightily resisted measures that are clearly necessary to right the 
sinking ship, including rate increases.
Columnist Dan Waters in the Sacramento Bee recently did a political scorecard 
of California politicians. On Davis, he wrote, "A poll indicates that nearly 
two-thirds of Californians believe the governor has performed poorly on the 
crisis, and while some of the negative feeling may simply reflect their own 
anxiety, much of it is well founded. Davis is essentially a passive, reactive 
and self-protective politician, and his tendencies served him - and the store 
- poorly when the crisis first arose last summer. Rather than recognize the 
peril and spend some political capital, Davis played for time, hoping that 
conditions would improve on their own and/or the federal government would 
come to his rescue with price-cap orders and other actions. But he 
miscalculated on both." 
Of Lynch, Waters said, "Legislators from both parties are ready to lynch the 
president of the state Public Utilities Commission for, they say, 
consistently refusing to cooperate and feeding them blatantly false accounts. 
Lynch, her critics say, appears to be more interested in protecting the PUC's 
sorry reputation on utility regulation - its decrees caused many of the 
problems - than in solving the crisis and may have misled Davis, who 
appointed her. Southern California Edison took the extraordinary step of 
issuing a highly detailed critique that stopped just short of accusing Lynch 
of lying, and the legislature's chief auditor is ready to sue her to obtain 
information on the PUC's role."
Both Davis and Lynch seem to have an information problem. I'm reminded of an 
old Shoe cartoon by the late Jeff MacNelly, in which a heavy-set politician 
stands at a podium in a news conference and makes the accusation, "You in the 
media are playin' fast and loose with the facts." One of the stogie-smoking 
hacks responds, "How's that? What did we do to the facts?" The politician 
replies, "You printed the dang things!"
Davis demonstrated his rather loose, Clintonian, connection with the truth 
late last month when he proudly announced that bids for long-term electricity 
supply in response to the state's solicitation had come in an at "weighted 
average" of $69/MWh. Some kind of weighting. The $69 price, it turns out, 
didn't include high-priced bids for peaking power. Nor would the governor or 
his lackeys tell us what the average was if the peak bids were included.
Lynch has been beating on, and berating, SCE and PG&E for their insistence 
that they need financial relief and the ability to pass costs on to their 
customers. The most outrageous act from Lynch was the 2-1decision by the CPUC 
to issue restraining orders forbidding the two utilities from withdrawing 
from their obligation to serve. She billed the move as a way to prevent 
unilateral blackouts imposed by the utilities.
But both companies already had told the CPUC they had no intention of cutting 
off service to customers. Calling the action "an abuse of power," SCE CEO 
John Bryson said the order is "an insult to the ethic of the 13,000 employees 
of SCE who have worked to keep the lights on for their customers. In fact, 
SCE has borrowed billions of dollars, which threatens the company's solvency, 
through 8
 months of inaction and delay by the CPUC, in order to continue to 
serve its customers."
Commissioner Henry Duque, who voted against the measure, cleared exposed the 
move as gratuitous utility-bashing. "The obligation to serve is already in 
California law," he said. "I fear that the order would simply poison the 
atmosphere between government and the utilities, thereby making 
communications even more difficult in this time of crisis. In my view, it may 
even make a bankruptcy filing more likely."