Please see the following articles:

Sac Bee, Thurs, 5/17:  "Bush: Plan spells relief on energy "

Sac Bee, Thurs, 5/17:  "FERC nominees open to rate caps "

Sac Bee, Thurs, 5/17:  "Powerful new law for state: The public authority
could seize private plants and market bonds for projects."

Sac Bee, Thurs, 5/17:  "Shareholders of PG&E vent their frustration "

SD Union (AP), Thurs, 5/17:  "Governor signs power authority bill"

SD Union (AP), Wed, 5/16:  "California lawmakers seek Pacific Northwest
energy cartel"

SD Union (AP), Thurs, 5/17: "Bankruptcy judge allows PG&E to pay
property taxes"

LA Times, Thurs, 5/17:  "Calif. Businesses Swallow Rate Hikes Amid
Slowing Economy"

LA Times, Thurs, 5/17:  "Davis Turns Up the Heat on Supplier"

LA Times, Thurs, 5/17:  "FERC Issues Power Ruling"

LA Times, Thurs, 5/17:  "Shareholders Lay Blame on PG&E Managers,Davis"

LA Times, Thurs, 5/17:  "A Swiftian Solution to the Energy Crisis"    
(Commentary)

SF Chron (AP), Thurs, 5/17:  "California electric rates jump to second 
highest in country"

SF Chron (AP), Thurs, 5/17:  "Bay Area News Roundup 
Local news all the time"

SF Chron, Thurs, 5/17:  "California jolted by string of dreary economic news 
"

SF Chron, Thurs, 5/17:  "Scheduled blackout plan gaining favor 
LIMITING PRICES: 3-state buyers' cartel with Northwest could create leverage"

SF Chron, Thurs, 5/17: "Airport accuses Texas firm of gouging 
SFO to build plant with Hetch Hetchy"

SF Chron, Thurs, 5/17:  "Judge orders PG&E to pay overdue taxes to counties 
S.F. still must dip into cash reserves for energy bills"

SF Chron, Thurs, 5/17:  "PG&E Corp. accused of gouging in East 
Boston company wants federal energy regulators to intervene"

SF Chron, Thurs, 5/17:  "Nuclear, fossil fuels at heart of Bush plan 
SWEETENER: $6.3 billion in tax credits for solar and renewable power "

SF Chron, Thurs, 5/17:  "Public power booster gets a top job at S.F. PUC "

SF Chron, Thurs, 5/17:  "Subpoenaed documents withheld 
Power companies say no to Lockyer "

SF Chron, Thurs, 5/17:  "Green lobby hopes Bush plan offers them more in 
final form"

SF Chron, Thurs, 5/17:  "PG&E's shareholders steadfast 
Despite fiscal misery, meeting gives thumbs up to chairman "

Mercury News, Thurs, 5/17:  "Bush's national energy blueprint won't help 
California"

Mercury News, Thurs, 5/17:  "Cogeneration will get presidential spotlight"

Mercury News, Thurs, 5/17:  "Conservation lab test begins"    (Editorial) 

 
Mercury News, Thurs, 5/17:  "Backups for energy"

OC Register, Thurs, 5/17:  "2 FERC nominees pledge gas inquiry"

OC Register, Thurs, 5/17:  "Illuminating alternatives"

OC Register, Thurs, 5/17:  "Bush offers varied plan for energy"

OC Register, Thurs, 5/17:  "Energy Notebook:
FERC won't let small generators out of state contracts -- yet"

Individual.com (AP), Thurs, 5/17:  "Calif. Enters Wholesale Business"

Individual.com (Bridgenews), Thurs, 5/17:  "[B] POWER UPDATE/ Bush calls
on FTC to investigate price gouging complaints"

Individual.com (AP), Thurs, 5/17:  "GOP Promises Energy Package Push"

Individual.com (AP), Thurs, 5/17:  "Covanta Energy to Provide California
With 500 Megawatts of New Power"

Energy Insight, Thurs, 5/17:  "Northeast could have overbuilding"

WSJ, Thurs, 5/17:  "Gas Pain: Nation Wants Energy, And Drillers Find it
in People's Back Yards"

NY Times, Thurs, 5/17:  "IN ENERGY PLAN, BUSH URGES NEW DRILLING, 
CONSERVATION AND NUCLEAR POWER REVIEW"

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Bush: Plan spells relief on energy 
By James Rosen
Bee Washington Bureau
(Published May 17, 2001) 
WASHINGTON -- President Bush gave an upbeat preview Wednesday of the energy 
plan he will formally unveil today, saying it will give Americans relief from 
high gasoline and power prices -- and show the world how the United States 
solves tough problems. 
Bush gave the plan rave reviews after he and his Cabinet received a briefing 
on it from Vice President Dick Cheney and the energy task force he headed 
during nearly four months of closed-door meetings. 
"My plan helps people in the short term and long term by expediting energy 
development," Bush said as he waved a copy of the blue-covered report. "This 
isn't just a report that's going to gather dust. This is an action plan 
because this is an action administration." 
Bush planned to fly to the Midwest this morning and promote the energy plan's 
release at an alternative energy plant in St. Paul, Minn., and a meeting of 
business leaders in Nevada, Iowa. 
"This is an extensive report," Bush told reporters after the Cabinet meeting. 
"It provides over 100 proposals to diversify and increase the supply of 
energy, innovative proposals to encourage conservation and ways to make sure 
that we get energy from producer to consumer." 
Bush vehemently denied claims by California Gov. Gray Davis and congressional 
Democrats that he has been indifferent to the state's plight as it endured 
rolling blackouts and energy price spikes. Bush ticked off steps his 
administration has taken to help California, including moves to expedite 
permits for new power plants and authorizing rebates to power consumers. 
"We're deeply concerned about the state of California, as we are with the 
rest of the nation, but we haven't had an energy policy," he said. 
"Interestingly enough, this is the first comprehensive energy policy probably 
ever -- certainly in a long time." 
Bush's robust defense of his reaction to the country's potential energy 
crisis reflects how much the issue has heightened the political stakes for 
him. Escalating gasoline prices, the California blackouts and a sagging 
economy have transformed his effort to forge a national energy plan into an 
early test of his leadership. 
Rhetorically, Bush and his Democratic adversaries agree the United States 
needs a balanced energy policy that combines increased production of oil, 
natural gas and other fossil fuels with conservation, development of 
alternative energy sources and creation of more efficient automobiles and 
appliances. 
But Democrats believe that Bush and Cheney are relying too much on energy 
production at the expense of environmental protection, while the president 
and vice president oppose mainly Democratic calls to tap the Strategic 
Petroleum Reserve and impose temporary price controls on energy wholesalers. 
Davis on Wednesday again called for price caps. 
"What's going on here, pure and simple, is unconscionable price gouging and 
market manipulation by the big energy producers and marketers -- most of 
them, incidentally, located in Texas," Davis said. 
But Bush was unrelenting. "Price controls do not increase supply, nor do they 
affect demand," he said. 
The eventual verdict on Bush's energy program may play a big role in deciding 
which party will control Congress after next year's elections and whether 
Bush himself will encounter re-election turbulence in 2004. 
Bush has raised the political stakes by urging Congress to pass his $1.35 
trillion tax-cut package to help Americans cover their energy costs. That 
challenge prompted Democratic Rep. Jay Inslee of Washington state to brand 
the tax plan "a money-laundering scheme for Big Oil." 
Tom Daschle of South Dakota, Democratic leader of the Senate, criticized Bush 
for excluding congressional leaders from the work of the task force. White 
House spokesmen say the task force met with 130 representatives from a wide 
range of groups -- including oil companies, other energy providers and 
environmentalists -- but they have refused to release a list of participants. 
As described in broad outline by Bush and Cheney in the days before its 
release, the energy plan will emphasize long-term expansion of the country's 
power supply over short-term fixes for current shortages. 
The plan will recommend that Congress, various government agencies and Bush 
use legislation, regulatory reforms and executive orders to spur the 
construction of more oil refineries and power plants, and increase production 
of nuclear and coal-fired energy. 
The Cheney task force, according to briefings for interest groups and 
congressional offices, suggests paying for its initiatives through a 
combination of tax incentives, direct government funding and market-driven 
investments by oil companies and other energy producers. 
Democratic lawmakers and allied environmental activists have seized upon the 
plan's focus on production -- including oil and gas exploration in Alaska's 
Arctic National Wildlife Refuge and other protected areas -- to question 
Bush's commitment to conservation and his ties to Big Oil. 
Trying to pre-empt the Bush-Cheney plan, Democratic lawmakers released an 
energy program of their own Tuesday. In a clear bid to highlight the recent 
gasoline price spike, House Minority Leader Dick Gephardt of Missouri and 
other Democrats unveiled their package at a gas station in Washington. 
The Democratic alternative calls for temporary price controls, a ban on 
energy development in natural refuges and tapping the petroleum reserve set 
up after the 1970s oil crisis. The proposal would give Americans as much as 
$4,000 in tax credits for buying energy-efficient homes and cars, and it 
would offer businesses tax incentives to invest in technologies or vehicles 
that boost fuel efficiency. 

The Bee's James Rosen can be reached at (202) 383-0014 or 
jrosen@mcclatchydc.com.


FERC nominees open to rate caps 

Bee Washington Bureau
(Published May 17, 2001) 
WASHINGTON -- President Bush's two nominees to the Federal Energy Regulatory 
Commission said at their Senate confirmation hearing Wednesday that more 
needs to be done to remedy California's "dysfunctional" energy market, and 
they didn't rule out controls on wholesale rates. 
But Patrick Wood III, the chairman of the Texas Public Utility Commission, 
and Pennsylvania Utility Commissioner Nora Mead Brownell also said that 
re-regulating wholesale prices based on the cost of production is a complex 
process that might take too long to be of any help. 
"It is no small task," said Wood, who is considered Bush's choice to replace 
Curt Hebert Jr. as commission chairman later this year. Hebert is a firm 
price control opponent. 
Sen. Dianne Feinstein, D-Calif., said their testimony has restored her 
optimism that federal regulators may act to stem skyrocketing wholesale rates 
that during last week's power shortages hit $1,900 a megawatt-hour. 
"I was encouraged," Feinstein said. "The market is broken in California and I 
think they understand that. If they know all this and they are pragmatists, 
then we have a chance." 
The commission is split 2-1 against price controls. If Wood and Brownell 
align themselves with the commission's lone price-controls advocate, William 
Massey, some form of temporary price re-regulation could pass. 
But confirmation hearings are not the typical venue for nominees to part 
company with the position of the president selecting them, and Bush and his 
administration so far haven't budged in their opposition to price controls.


Powerful new law for state: The public authority could seize private plants 
and market bonds for projects.
By Jim Sanders
Bee Capitol Bureau
(Published May 17, 2001) 
Arming itself for battle, California took steps Wednesday that could lead to 
construction of public power plants, seizure of private ones and creation of 
a buyers cartel that would opt for additional blackouts rather than pay 
exorbitant prices. 
Faced with no control over wholesale prices and no ability to simply stop 
buying electricity, supporters said drastic measures may be needed to avoid 
the possibility of economic disaster to the state's budget until the market 
can stabilize in 18 months to two years. 
The Public Power Authority signed into law Wednesday by Gov. Gray Davis could 
market up to $5 billion in bonds for new projects. It also would have the 
power to operate plants and, if necessary, seize private facilities using 
eminent domain or emergency powers. 
"California is in a war with energy companies who will use any tactic 
possible to manipulate the market and drive up prices," Davis said. "To me, 
there is strong evidence that people are manipulating the market and 
withholding power to drive up prices." 
But critics say pouring billions of public money into new power plants or 
threatening electricity generators will do little to increase energy supplies 
this summer and could prompt private companies not to invest in badly needed 
plants far into the future. 
"Every dollar we spend on public energy projects is a dollar not spent on 
fixing schools and fixing traffic congestion," said Assemblyman Tony 
Strickland, R-Thousand Oaks. "We need to get the state out of the power 
business." 
Threats and accusations are getting increasingly heated as the state, after 
spending more than $7 billion on electricity, continues to struggle with 
prospects of rising costs and increasing power blackouts this summer. 
"Calling people pirates and gougers is a nice way of spinning the problem 
away from Sacramento, but we have to work our way through this (energy 
crisis), and calling people names doesn't help," said Jan Smutny-Jones, 
executive director of Independent Energy Producers, an association of 
wholesale generators. 
The newly approved power authority, expected to be created in about three 
months, will be governed by a five-member board comprising state Treasurer 
Phil Angelides and four gubernatorial appointees. 
Legislation to create the power authority was pushed by Senate President Pro 
Tem John Burton, D-San Francisco, and sponsored by Angelides. 
Building public power plants will help California "regain control of its own 
energy destiny," Angelides said. 
Davis also promised Wednesday to consider, if approved by legislators, a 
resolution to create a buyers cartel with Oregon and Washington. A cartel 
would set a reasonable price for electricity and risk blackouts, if 
necessary, rather than pay exorbitant prices. 
Davis said Californians spent more than 400 percent in additional costs for 
electricity last year than they did in 1999 -- and costs are continuing to 
rise. 
"We're at the mercy of forces that show no mercy," Davis said, adding that he 
is willing to take drastic measures if generators don't do everything in 
their power to cut costs and increase supply this summer. "I'm not ruling 
anything in; I'm not ruling anything out." 
Assemblymen Paul Koretz, D-West Hollywood, and Fred Keeley, D-Boulder Creek, 
proposed the resolution to create a buyers cartel. 
California would create such a cartel only if Washington and Oregon 
participated, and neither state has committed. 
Strickland said a cartel could backfire by resulting in additional blackouts, 
huge business losses and increased crime as neighborhoods go dark. 
Smutny-Jones said high electricity prices stemmed from market forces ranging 
from drought conditions in the Pacific Northwest to high prices for natural 
gas needed to run power plants. 
"There's a presumption that you have the Wizard of Oz behind the curtain, 
playing with prices," he said. "That's not what is going on." 

The Bee's Jim Sanders can be reached at (916) 326-5538 or jsanders@sacbee.com
.


Shareholders of PG&E vent their frustration 
By Dale Kasler
Bee Staff Writer
(Published May 17, 2001) 
SAN FRANCISCO -- Their investments devastated by Pacific Gas and Electric 
Co.'s financial mess, shareholders of the utility's parent brought their 
tales of woe to the company's annual meeting Wednesday, peppering the chief 
executive with questions about what went wrong. 
Although many were supportive of PG&E Corp. CEO Robert D. Glynn Jr., choosing 
to blame Gov. Gray Davis and other state policy-makers for the utility's 
problems, others focused on PG&E's role in California's deregulation fiasco. 
"All of you should have been fired for incompetence," Orinda retiree and 
longtime shareholder Clyde Vaughn told Glynn during the question-and-answer 
period. He said PG&E's executives became "infatuated with the fairy tale of 
deregulation" and "joyfully sold all of us down the river." 
Glynn, facing several hundred shareholders during a two-hour meeting in San 
Francisco's cavernous Masonic Auditorium, defended the company's decision to 
put the utility into Chapter 11 bankruptcy protection and laid most of the 
blame for the company's problems on Davis and the Public Utilities 
Commission. 
"No one wanted this thing to happen," Glynn said after Vaughn spoke from the 
audience. He pledged to "rebuild the value of this company." 
Glynn appeared to have the support of most shareholders. They applauded when 
he explained PG&E's decision to back away from negotiations to sell its 
transmission grid to the state as part of a rescue package, saying: "We're 
not interested in selling any of our utility assets." 
But he also had to contend with shouts from the audience and barbed questions 
about even such mundane matters as the appointment of Deloitte & Touche as 
the company's accounting firm. 
A few booed a fellow shareholder, Bob Orser of Oakland, for defending top 
management's decision to forgo their traditional end-of-year bonuses as a 
cost-cutting measure. 
And three protesters from Global Exchange, the San Francisco community 
activist group, were dragged out of the meeting before it ended and before 
their leader, Medea Benjamin, had a chance to ask a question. 
Afterward, Benjamin said she had been prevented from entering the hall 
because, even though she had shareholder credentials, she didn't have an 
identification card. She said she was arrested for trespassing, allowed to go 
free on her own recognizance, and then returned to the hall after picking up 
her I.D. card. She said Glynn deliberately cut the meeting off rather than 
take a question from her. 
Utility stocks are traditionally so safe and sound that they're commonly 
referred to as widow-and-orphan investments, and the companies' annual 
meetings are usually tame affairs. But amid California's unprecedented energy 
crisis, shareholders of PG&E and Edison International -- parent of 
California's other fallen utility, Southern California Edison -- have seen 
their dividends scrapped and their share prices fall by more than half in the 
past year. 
PG&E shares closed Wednesday at $11, down 55 cents. 
Particularly hard hit have been many PG&E employees and retirees, who sank 
much of their savings into the company's stock. The downfall of PG&E has 
meant "a serious shortfall in my income," said retiree Ken Lewetzow, 69, of 
Saratoga. 
Lewetzow said bankruptcy protection made sense for the utility. "Our dear 
governor was running us into the ground," he said in an interview outside the 
hall. 
Shareholder Richard Collins called on Glynn to do a better job of 
communicating with the public, saying, "If the general public does not 
support PG&E, and it does not now, I'm afraid it may go under." 
A current employee and shareholder, Jim Findley, told Glynn that the 
company's board of directors is too insular to cope with the company's 
problems. 
"Get some people (on the board) with some dirt under their fingernails," said 
Findley, a mechanic in the natural gas division in San Rafael. "What you've 
been doing isn't exactly successful." 
Several in the audience applauded. 
Glynn responded, "The rank and file people of PG&E make it what it is." 

The Bee's Dale Kasler can be reached at (916) 321-1066 or dkasler@sacbee.com.




Governor signs power authority bill 



By Jennifer Coleman
ASSOCIATED PRESS 
May 16, 2001 
SACRAMENTO ) California will no longer be held captive by energy suppliers 
charging high prices for power, Gov. Gray Davis said Wednesday as he 
officially put California into the electricity wholesale business. 
By signing a bill by Senate Leader John Burton, Davis created the California 
Consumer Power and Conservation Financing Authority ) a new state agency that 
can issue up to $5 billion in revenue bonds to build, purchase, lease or 
operate power plants. 
Plants financed by the authority will provide cost-based electricity to 
California consumers, Davis said, which will help stabilize the state's 
volatile energy market. 
The power authority is modeled after one in New York, which has 10 power 
plants, 1,400 miles of transmission lines and produces about 25 percent of 
the state's power. Nebraska also has a power authority, which created a 
market in which residents pay 22 percent less than the national average, 
Burton said. 
An increase in the number of power plant down for repairs this year "is 
strong evidence that people are manipulating the market by withholding power 
to drive up prices," Davis said. 
"The only way we can fight back against this type of price gouging and 
manipulation is to build more plants," he said at the bill signing ceremony 
in front of a Sacramento Municipal Utility District power plant. 
Having a public power authority will "supplement not supplant" private energy 
sources, Davis said. 
"In a deregulated world, the only way you can guarantee reliable affordable 
power is to build it yourself if private companies won't do it," he said. 
The bill gives the power authority the power of eminent domain, but Burton, 
D-San Francisco, said if the state were to seize any power plants he would 
prefer that it would be by using the governor's emergency power, because that 
process is quicker. 
"Sooner or later the state has got to let these buccaneers know that we're 
not going to tolerate what they're doing to us," Burton said. "The only thing 
these exploiters understand is possibly a little counterterrorism." 
Few Republicans in the Legislature supported the bill, saying the state 
shouldn't get further into the power business. They also warned that it could 
discourage private companies from building plants. 
The bill was sponsored by state treasurer Philip Angelides, who conceded that 
it won't save California from blackouts this summer but will help stabilize 
the energy markets as more generators are built. 
"This legislation will help ensure that California is never again held 
hostage by an unregulated private energy market run amok," Angelides said at 
a news conference in Los Angeles before speaking at a Town Hall event. 
The treasurer said the bill is the "beginning of the end for deregulation ... 
which has proven to be a disaster." 
He repeatedly blamed the crisis on out-of-state power generators. 
"There is a tremendous drain on California because of generators' prices," he 
said. "And that drain is heading straight to the heart of Texas." 
Other key lawmakers urged Davis Wednesday to join with the governors of 
Washington and Oregon to set a limit on the price the states would pay for 
power this summer, creating a "buyers' cartel." 
The states should set their own price ceiling on electricity in light of 
federal regulators' refusal to set region-wide caps, said Fred Keeley, 
D-Boulder Creek, the Assembly's point man on energy. 
The states would refuse to pay, under any circumstances, more than a 
predetermined price that would give electricity generators a "reasonable" 
profit, under a resolution sponsored by the nine Democrats. 
If generators refused to lower their prices, that would mean almost certain 
blackouts in California this summer, said Assemblyman Paul Koretz, D-West 
Hollywood, the measure's author. 
But those will happen anyway, by all accounts, and the price cap would let 
the state better predict and manage the outages, he said. 
The resolution proposes that caps be installed for two years, until enough 
power plants can be built to allow the market to function naturally. 
The state has been buying power for the customers of three major utilities 
since mid-January. The utilities' credit was cut off after they amassed debts 
of more than $14 billion dollars due to high wholesale electricity prices 
that they were unable to pass on to customers. 






California lawmakers seek Pacific Northwest energy cartel 



By Don Thompson
ASSOCIATED PRESS 
May 16, 2001 
SACRAMENTO ) California should form a "buyers' cartel" with Oregon and 
Washington to rein in soaring energy prices, nine Assembly Democrats said 
Wednesday. 
The states should set their own price ceiling on electricity in light of 
federal regulators' refusal to set region-wide caps, said Fred Keeley, a 
Democrat who is the Assembly's point man on energy. 
The states would refuse to pay, under any circumstances, more than a 
predetermined price that would give electricity generators a "reasonable" 
profit, under a resolution sponsored by the nine Democrats. 
That would mean almost certain blackouts in California this summer, said 
Democratic Assemblyman Paul Koretz, the measure's author. But those will 
happen anyway, by all accounts, and the price cap would let the state better 
predict and manage the outages, he and Keeley said. 
Caps would "give these power generators a dose of their own medicine," Koretz 
said. "They've been gouging us at every opportunity ) most of us believe by 
price manipulation ) making obscene profits at our expense." 
It would be far better for the Federal Energy Regulatory Commission to set 
Western price caps, Keeley said. 
He and Assembly Speaker Robert Hertzberg, also a Democrat, are asking FERC to 
reconsider last month's limited caps that Keeley and other Democratic 
officials say could actually drive up power prices under some circumstances, 
but are insufficient to control prices at other times. 
However, Keeley doubted FERC and the Bush administration will reverse their 
opposition to caps that they believe would hinder the development of a free 
energy market. In that light, Keeley said California must find another way to 
cap skyrocketing electricity prices itself, or bankrupt its budget and 
economy. 
The strategy won't work without Washington and Oregon, however, Keeley said, 
but the three acting together can effectively set energy prices throughout 
the 11 Western states. 
The Pacific Northwest states are vulnerable this summer as well, due to dry 
conditions there, said Lenny Goldberg of San Diego-based Utility Consumers' 
Action Network. The group first suggested the strategy a month ago. 
"At some point it's going to take some drastic action to deal with this 
crisis and get us through the summer," Goldberg said. 
Keeley and Koretz said they believe it would be easier for Gov. Gray Davis to 
negotiate caps with other states if he has the backing of the Legislature. 
Similar efforts have been discussed within the Davis administration, said 
spokesman Steve Maviglio, but Davis had no immediate reaction. 
The lawmakers dismissed generators' objections that capping power prices 
would prompt them to sell their electricity for higher prices to other 
states, or dissuade generators from building more power plants in California. 
California is too large a market for the power producers to ignore, they 
said. 
If generators refused to sell electricity because of the caps, the state 
could respond by seizing the plants themselves, said Koretz and Goldberg, 
though Keeley had reservations. 
The resolution proposes that caps be installed for two years, until enough 
power plants can be built to allow the market to function naturally. 
The state has been buying power for the customers of three major utilities 
since mid-January. The utilities' credit was cut off after they amassed debts 
of more than $14 billion dollars due to high wholesale electricity prices 
that they were unable to pass on to customers. 





Bankruptcy judge allows PG&E to pay property taxes 



By Karen Gaudette
ASSOCIATED PRESS 
May 16, 2001 
SAN FRANCISCO ) Forty-nine California counties soon will receive roughly $41 
million in late property taxes due from bankrupt Pacific Gas and Electric Co. 
U.S. Bankruptcy Judge Dennis Montali approved a request from the utility 
Wednesday to pay the counties for taxes owed before it filed for bankruptcy 
on April 6. 
"Somebody's going to have to tell me why I should hold 49 counties of 
California hostage for taxes that are due and owing," Montali told other 
creditors, who wanted the payment postponed until the court determines how 
much PG&E will pay everyone to whom it owes money. 
Montali also allowed the utility to spend around $260 million to fund 
energy-efficiency programs approved before April 6 that could help 
Californians arm themselves with vital megawatts in the state's battle 
against rolling blackouts. 
The utility owes the taxes to 49 Northern and Central California counties for 
the period from Jan. 1 to April 5. The taxes will be used for schools, fire 
districts, police and transportation costs. 
The taxes were listed as past debts because they were due before the utility 
filed for Chapter 11 protection. Under federal bankruptcy law, the filing 
halted the collection of past debts ) meaning Montali had to approve the 
payment. 
PG&E already paid the 49 counties a separate $37 million for property taxes 
due for the period from April 6 to June 30. Those taxes were considered new 
debts, so they could be paid without Montali's permission. 
Montali said the utility and counties had his permission to negotiate with 
each other over about $8 million in late fees. If a county chooses to sue 
PG&E, however, it risks losing that money when Montali decides who among 
PG&E's 150,000-plus creditors will be paid. 
More than 100 protesters gathered outside the court demanding low-income 
ratepayers be represented at future court hearings, waving handmade signs 
that said: "Bankruptcy court does not protect the poor." 
Inside, John Gamboa, executive director of the Greenlining Institute, told 
Montali that businesses are disproportionately represented at the 
proceedings. 
"Our concern is simple. No one represents the poor, disabled, minorities and 
seniors in the most important bankruptcy case in history," Gamboa said. 
On Friday, Montali will be asked to decide whether a committee of nine 
ratepayer groups ) including Consumers Union and industry groups representing 
small businesses and agriculture ) can continue to take part in the 
proceedings. Montali said bankruptcy law restricts him from deciding who 
serves on a creditors committee, but said a federal bankruptcy trustee could 
add the groups. 
PG&E argues that bankruptcy law does not allow such a committee, and that the 
state Attorney General can represent ratepayer interests in the bankruptcy 
process. 
The state has hesitated to become involved in the bankruptcy process for fear 
it will lose the right to regulate PG&E. 
The utility already has challenged the authority of the Public Utilities 
Commission, asking Montali to exempt the utility from having to make 
accounting changes that would prevent it from collecting much of its $9 
billion debt from ratepayers. 





Calif. Businesses Swallow Rate Hikes Amid Slowing Economy 

By STUART SILVERSTEIN and MARLA DICKERSON, Times Staff Writers 


?????The $5.7-billion increase in power prices that will begin showing up in 
utility bills next month will hurt both business and consumers, siphoning off 
spending that otherwise could have helped pump up a slowing state economy, 
economists said Wednesday.
?????But analysts also sounded a positive note: If the higher power costs 
spur enough conservation to hold down rolling blackouts this summer, they 
could minimize long-term damage to the state's economy.
?????Rate increases "are part of the solution," said Stephen Levy, director 
of the Palo Alto-based Center for Continuing Study of the California Economy. 
"It goes under the heading of things that aren't pleasant, and that do 
subtract from growth, but aren't debilitating. 
?????"If we ran huge blackouts this summer, it would be much more disruptive 
for the economy and for our quality of life," Levy said.
?????California's $27-billion agriculture industry, already struggling, was 
spared the full brunt of the increases approved Tuesday by the state Public 
Utilities Commission. Others industries contend they deserve a similar break, 
saying business can't cut back as easily as consumers.
?????"We're just kind of stuck," said Young Su Han, owner of Azteca Market in 
Santa Ana, a small grocery and meat store.
?????"We'd like to conserve, but we can't really cut down our electricity 
because the meats will go bad and the drinks will be warm."
?????Both business groups and consumer activists say their constituents are 
bearing an unfair share of the burden. Consumers say they never sought 
deregulation and are now being asked to bail out a failed scheme cooked up by 
business interests.
?????Industry leaders counter that residential users are being sheltered from 
the full impact of cost increases, which may come back to bite them if 
companies are forced to raise prices or lay off workers. 
?????Of the $5.7 billion the new rates will raise, $4.6 billion will come 
from business, agriculture and street-lighting customers and $1.1 billion 
from residential rate payers.
?????Carl Guardino, head of the Silicon Valley Manufacturing Group, whose 
members include Cisco Systems, Hewlett-Packard Co. and Intel Corp., contends 
that most businesses already pay much more attention to conservation than 
households. He said the increases won't encourage conservation by consumers, 
who could do the most to help prevent blackouts.
?????Some business owners say they already are stepping up conservation and 
otherwise are cutting costs to cope with electricity charges, along with 
rising wages and workers compensation insurance premiums. 
?????The Charlie's Trio Cafe restaurant chain, based in Alhambra, has started 
cutting back employees' hours. It also recently increased prices for the 
first time in two years, meaning that customers will have less to spend 
elsewhere.
?????"This increase isn't going to kill me," said Michael Fata, a co-owner of 
the chain, but he expressed concern that higher costs "are pushing the 
customers away." " 
?????Economists say that sort of pattern, in which rising energy costs ripple 
through the economy, has lead to serious downturns several times since the 
1970s. Edward E. Leamer, director of the UCLA Anderson Business Forecast, 
noted that increases in crude oil prices preceded national economic downturns 
in the mid-1970s, early 1980s and even, less dramatically, at the beginning 
of the 1990s.
?????"The argument can be made that higher energy prices are really important 
drivers" of the economy, he said.
?????Still, Leamer said the economy is much less dependent on energy today 
than it was at the time of past oil-price-related downturns.
?????The effect is particularly limited in California, some economists say, 
because the state is the second-lowest user of electricity per capita among 
the 50 states. For all types of energy, California is the fourth-lowest user.
?????Though he has yet to reach a final conclusion on whether electricity 
rate hikes will severely hurt California, Leamer said, his impression is that 
"higher energy costs by themselves don't have that big of an effect. But the 
[blackouts] are another story."
?????For many businesses, the reliability of electricity service is far more 
important than the cost of power. 
?????At Lily's Florist in Monterey Park, owner Robert Yuan figures that his 
electricity bill will rise from $500 to about $750 a month. Yuan doesn't have 
many opportunities to conserve because he needs to keep his flowers chilled.
?????"If we don't keep them refrigerated, they'll die," he said. "That's 
losing even more money."
?????Yuan, 46, said he can handle the extra $250 a month in utility costs. 
He's more worried that customers hit with higher utility bills of their own 
or caught up in other economic problems will buy fewer flowers.
?????Yuan's concerns are widely shared. Business recruiters who have 
descended on California since the waves of rolling blackouts began last 
summer said reliability, rather than rate hikes, has emerged as the hot topic 
among companies that have expressed an interest in relocating.
?????"Fears of interruption are the big concern we're hearing," said Alex 
Fischer, economic development chief for the state of Tennessee who recently 
led a massive recruiting mission to Southern California. "Downtime and lost 
production are huge expenses," compared with rate increases.
?????To avoid sudden outages, companies such as Ontario furniture 
manufacturer Oakwood Interiors have adjusted work schedules to avoid peak 
periods when rolling blackouts are most likely to occur.
?????Chief Executive Nick Lanphier said workers who used to start their shift 
in the afternoon are now reporting at 8 p.m. and working through the night. 
That has solved one problem but created others.
?????"The workers don't like it and productivity is way down," he said.
?????Utility customers such as Lanphier will be hit with a double whammy: 
They not only will pay the higher rates, but they also must pay the portion 
of the rate increase that was retroactive to March 27. That portion will be 
spread out in electric bills over the next year.
?????Lanphier said the big jump in electricity costs would be manageable in 
isolation. But over the last year he has also been hit with huge jumps in 
other operating costs, including workers compensation, health insurance and 
wages. Meanwhile, he said he is being undercut by cheap foreign imports, 
hindering his ability to raise prices enough to cover the increase in costs.
?????Officials representing the state's agriculture industry, which received 
the smallest rate increases, called the decision by the California Public 
Utilities Commission fair. They said the industry's circumstances and 
precarious economic condition, as its costs have risen and its products' 
prices have fallen, justified further concessions.
?????"Agriculture is experiencing its third tough year in a row," said Hank 
Giclas, vice president of Western Growers, a produce industry trade group. 
"[The caps] are a positive recognition of the fact that agriculture is unique 
and experiencing difficult times, but it doesn't go as far as we would have 
liked it to go." 
?????Farm users are less able than other commercial customers to cut back on 
energy and adopt conservation techniques, officials say, especially during 
peak growing seasons. In fact, because of this year's drought conditions, 
many are using more energy to pump ground water.
?????The higher energy costs come as California is beginning to experience a 
rise in its unemployment rate and a sharp decline in employment growth, two 
major economic barometers. Last week the state reported that unemployment 
rose to 4.8% in April, still low by historic standards, but up from a 32-year 
low of 4.5% in February. What's more, in the first four months of this year, 
California has added jobs at less than one-third the pace of 2000.
?????Jack Kyser, chief economist for the Los Angeles County Economic 
Development Corp., is counting on no more than a one-year slowdown for 
California. That's partly based on his assumption that Californians will 
adapt quickly to the energy crunch.
--- 
?????Times staff writers Marc Ballon, Sarah Hale, Melinda Fulmer and Nancy 
Rivera Brooks contributed to this report.

Copyright 2001 Los Angeles Times 






Davis Turns Up the Heat on Supplier 
Power: Reliant Energy says escalating rhetoric might be leading toward 
seizure of a plant. 

By DAN MORAIN and NANCY VOGEL, Times Staff Writers 

?????SACRAMENTO--After months of broadly vilifying California's energy 
suppliers, Gov. Gray Davis has launched a new offensive, taking aim at a 
single firm: Houston-based Reliant Energy, whose executives believe the 
governor may be building a case to confiscate the company's power plants.
?????Intensifying his assault, Davis on Wednesday called Reliant 
"obstructionist." He warned that actions taken by Reliant and other 
independent generators this summer will determine whether he signs a windfall 
profits tax bill or, in the extreme, commandeers the electricity produced by 
a plant or seizes the facility itself.
?????"I've made clear to the generators that they can influence my decision," 
Davis said in an interview. "We have a very tough summer ahead of us. We need 
their full cooperation. . . . I reserve the right to do what is in the 
state's best interest. I think it is fair to say that Reliant is not off to a 
good start."
?????Earlier in the day, after signing a bill creating a power authority in 
California, the governor warned electricity suppliers: "If they don't want to 
see their plants seized, they should make sure their plants are up and 
running this summer."
?????The increasingly hostile barbs have grabbed Reliant's attention. Some 
executives believe they are being set up by the administration--for what, 
they're not sure. But the company is reviewing contingency plans, ranging 
from what plant operators should do if their facilities are picketed and who 
they should call if state officials show up unannounced.
?????"We would hope," Reliant spokesman Richard Wheatley said, "that 
draconian measures and political rhetoric and finger-pointing would not be 
pursued. But there is a history of confiscatory actions, including seizure of 
power contracts with other companies."
?????Earlier this year, Davis used his emergency authority to seize long-term 
power contracts that Southern California Edison and Pacific Gas & Electric 
had signed with power sellers. Those contracts were about to be auctioned by 
California's power market to reimburse generators owed money by the hobbled 
utilities.
?????By seizing the contracts--estimated to be worth nearly $1 billion--Davis 
was able to ensure that power would be sold to California at relatively low 
prices, rather than resold on the costlier spot market. Under his emergency 
authority, Davis could use the same tactic to seize power plants, or the 
power produced by the facilities.
?????But such an act would pose huge risks. Perhaps most troublesome, other 
private companies might react by pulling investments out of California or, in 
the case of out-of-state generators, stop sales here.
?????Still, as the power crisis worsens and public frustration grows, calls 
for the governor to seize power plants have become more intense.
?????"Sooner or later," Senate President Pro Tem John Burton said Wednesday, 
"we've got to let these buccaneers know that we're not going to tolerate what 
they're doing to us. The only thing these exploiters would understand is 
possibly a little counterterrorism."
?????Reliant got involved in California's deregulated market in 1998, buying 
five power plants from Edison for $292 million. Combined, the plants are 
capable of supplying 3,700 megawatts of electricity, enough to serve 2.8 
million homes.
?????In the first quarter of 2001, Reliant's wholesale energy sales increased 
by 171%, producing income of $216 million, compared to a loss of $22 million 
for the same period last year.
?????Reliant is not alone in making huge money off California's deregulation 
debacle. Also profiting have been Duke Energy, Williams Cos., Mirant Corp. 
and Dynegy Inc.--all based outside California.
?????In the past, Davis has used an assortment of inflammatory terms to 
broad-brush the generators. He recently called them "the biggest snakes on 
the planet Earth."
?????But Reliant in particular has drawn the governor's wrath for allegedly 
being more recalcitrant than the others in working with the administration.
?????"They just want to bleed us dry," Davis said in his interview with The 
Times. "I'm not saying they're unique in that capacity. But they are uniquely 
obstructionist."
?????Davis said that, among other things, Reliant has opposed court and 
federal orders that it sell power to the state and recently refused to 
forgive a portion of the hundreds of millions of dollars it is owed by 
California's utilities.
?????Reliant also informed Davis that it is asking higher prices in part 
because it added a credit charge, essentially questioning the state's 
credit-worthiness.
?????Last Thursday, the governor decided to go public--to "name names," in 
the words of his chief political strategist, Garry South.
?????"The reason these generators have gotten away with murder is because 
people in California don't know who they are," South said. "They aren't 
household names. . . . People are not familiar with their names, their logo, 
or what they do."
?????Breaching confidentiality surrounding the state's power purchases, Davis 
announced at a press conference that the state paid $2,000 per megawatt-hour 
to avert blackouts last week, and named Reliant as the seller.
?????The price--actually $1,900 per megawatt-hour--was five times recent 
market prices.
?????The governor continued his attack on ABC's Sunday morning news show, 
"This Week." He again cited the amount Reliant had charged but this time put 
a partisan spin on it.
?????"That is obscene," Davis said of the price. "No one can defend that. The 
company is named Reliant. It's in Texas. It's a big buddy of President Bush 
and Vice President Cheney, and they can't just sit back there and say, 'Hey, 
it ain't our problem.' "
?????Reliant is a major political player nationally, particularly in the 
Republican Party, giving more than $250,000 to various national GOP 
committees last year. Steve Letbetter, Reliant's chief executive, was one of 
President Bush's so-called "pioneers"--donors who committed that they would 
raise at least $100,000 for his presidential campaign.
?????Like most independent power generators, Reliant has become a more 
significant player in Sacramento, contributing $52,900 to state lawmakers 
last year--including $10,000 to Davis last May--and spending $106,000 on 
lobbying, plus $40,000 so far this year.
?????Reliant spokesman Wheatley said that despite the governor's invective, 
his company is committed to seeking solutions to California's problems and 
that it has "operated legally and ethically."
?????"Regardless of what happens," Wheatley said, "we're going to make every 
effort to keep our contacts with the state on a high plane, despite the 
political rhetoric, despite the name-calling and despite all the allegations 
that have been made." 
?????In fact, Reliant executives wonder whether the state is playing fairly 
itself, possibly paying the record $1,900 a megawatt hour to give the 
governor ammunition against the company.
?????Reliant Vice President John Stout said he never expected the state to 
pay that amount. He said the company bid exceptionally high in the hopes that 
it would not have to run one of its so-called peaker plants, which the 
company uses for reserve power.
?????Reliant prefers to use it as a backup in case one of its main power 
plants breaks down. That allows the company to avoid buying high-priced 
replacement power on the open market in order to fulfill its obligations to 
the agency that manages most of California's transmission grid.
?????But grid operators at the California Independent System Operator 
concluded that they needed extra power to stabilize the grid and avoid 
blackouts, and state power buyers agreed to pay Reliant's asking price.
?????Stout questions whether that was the lowest bid available or whether it 
was deliberately chosen.
?????Oscar Hidalgo, spokesman for the power-buying branch of the state 
Department of Water Resources, said there was nothing political about the 
purchase.
?????"It was a split-second decision made on the real-time market to fill 
some voids we were having in our power supply at the time," Hidalgo said. 
"The intent was very clear: to keep the lights on."

Copyright 2001 Los Angeles Times 





FERC Issues Power Ruling 
Energy: Agency says order will help some firms bring electricity to market. 
Davis says it will hurt state. 

By MEGAN GARVEY, Times Staff Writer 

?????WASHINGTON--An order issued Wednesday by federal regulators may make it 
easier for California's alternative energy generators--considered a crucial 
component of the battle against blackouts--to bring their electricity to the 
market this summer.
?????The Federal Energy Regulatory Commission order, which came a day after 
Gov. Gray Davis asked the commission to "stay its hand" on matters relating 
to electricity producers known as "qualifying facilities," or QFs, granted 
parts of the emergency relief sought by the cash-strapped facilities.
?????The commission said the action was "designed to ensure the maximum 
amount of QF power will be available to the California market this summer." 
An industry group predicted this week that the state will face 260 hours of 
electrical blackouts this summer, a situation federal regulators say their 
provisions could help alleviate.
?????But the move was greeted angrily by Davis, who has been holding his own 
negotiations with the QFs and said the effect of FERC's order is to expedite 
the sale of QF power "on the outrageously expensive spot market.
?????"I want to send a simple message to FERC: Read the Hippocratic oath: 
First, do no harm," Davis said.
?????Nearly 700 alternative energy producers provide California with about 
one-fourth of the power it uses. But many of those companies have reduced 
their output or taken their plants offline in recent months as utilities have 
failed to pay their bills.
?????The nonpayment and an inability to get their electricity to market have 
caused California producers of solar, wind and biomass energy and smaller 
gas-fired generators to cut production by as much as 3,000 megawatts a day. 
The companies estimate they are owed more than $1.5 billion by Pacific Gas & 
Electric, which has filed for bankruptcy, and Southern California Edison.
?????"Clearly, we want to make sure the QFs get paid, but we also don't want 
them to be going to the open market to get paid 10, 20 times the contract 
rate," said Davis spokesman Steve Maviglio.
?????The governor's concern, he said, was that any action by FERC might harm 
ongoing discussions between his office and the alternative energy generators, 
who have been meeting for a week to hammer out an agreement to get them back 
online by summer.
?????The FERC action ensured that QFs have the right to sell excess 
power--electricity they generate above their contractual obligations with 
utilities--to third-party purchasers, such as traders, who could sell it to 
the highest bidder.
?????FERC also said that if QFs could persuade a court to release them from 
contractual obligations to the utilities, they could sell all their power to 
such third parties.
?????Davis vowed to ask state Atty. Gen. Bill Lockyer to "intervene in every 
state court case where a QF attempts to get out of its contractual 
obligation."
?????Federal regulators declined to void long-term contracts between the 
state's alternative power generators and utilities, despite the fact that the 
QFs haven't been fully paid since November.
?????Federal regulators also took steps to increase the power supply in 
Western states in the next few months by removing obstacles to rapid 
completion of pipeline projects. 
?????In another matter, FERC declined to order refunds for high prices paid 
for power in California in April. The commission said that because Stage 3 
emergencies were not called that month, no potential refunds are called for, 
citing that was the condition set in an earlier order issued by federal 
regulators.
?????Although California officials have said the state has been overcharged 
$6 billion for electricity since the crisis began, federal officials have 
instructed generators to refund only about $124 million or explain why the 
higher prices were justified.
?????The issue of price-gouging continues to be a point of contention between 
federal regulators, who have said time and again they do not believe price 
caps are the answer, and California officials, who say the state needs relief.

Copyright 2001 Los Angeles Times 





Shareholders Lay Blame on PG&E Managers, Davis 
Energy: Investors at company's annual meeting grew contentious over its 
recent bankruptcy filing. 

By JOSEPH MENN, Times Staff Writer 

?????SAN FRANCISCO--Angry PG&E Corp. shareholders vented their frustration 
during the company's annual meeting Wednesday, blaming management for a 
bankruptcy filing that could wipe out their investments.
?????Dozens of retired company employees and other stockholders cheered at 
calls for the resignation of Chief Executive Robert Glynn at the contentious 
meeting in a Nob Hill auditorium as police barriers kept activists at a 
distance outside.
?????While many of the hundreds who attended described themselves as company 
loyalists furious at bungling by Sacramento lawmakers and Gov. Gray Davis, 
others said PG&E bore responsibility for backing the state's 1996 attempt at 
electricity deregulation.
?????"The PG&E management, infatuated with the fairy tale of deregulation, 
joyfully sold us down the river," shareholder Clyde Vaughn said to applause. 
"The very top managers who led us into this mess were recently given 
multihundred thousand dollar raises. The truth of the matter is you all 
should have been fired for incompetence."
?????Profit taken in by PG&E's utility unit, Pacific Gas & Electric Co., 
after 1996 was sent to the parent company, which is not in bankruptcy. PG&E's 
stock fell 55 cents to $11 Wednesday on the New York Stock Exchange, down 
from more than $30 in September.
?????As at virtually all annual meetings of public companies, the actual 
balance of power was never in doubt. The company's nominees for director ran 
unopposed, and management's proposals for enlarging a stock-based incentive 
plan and other measures passed by a 5-to-1 ratio.
?????But Glynn was careful to avoid seeming arrogant, professing 
disappointment with the past year's performance and treating most of his 
sometimes voluble critics with respect. 
?????"No one wanted this to happen," Glynn said of the bankruptcy filing.
?????Certainly not the shareholders, many of whom had regarded PG&E shares as 
among their safest investments.
?????"They shouldn't have filed," said E.C. Nielsen, 84, adding that much of 
her income had been from PG&E holdings. "I've lived through two depressions. 
You don't give up."
?????Of those that spoke against the management, a 28-year rank-and-file 
employee got the warmest response from the crowd for suggesting that 
perception had become more important than reality at PG&E and that regular 
workers should be appointed to the board.
?????"Put someone up there that can get you away from a policy of plausible 
deniability," mechanic Jim Findley said. "Someone with dirt under their 
fingernails." 
?????In his opening remarks and in answering questions from the floor, Glynn 
accused Davis, state regulators and others for the mess now threatening to 
cut power to California homes and businesses on a routine basis this summer.
?????At its core, the problem is that the prices Pacific Gas & Electric could 
charge for electricity were capped by the state, while the wholesale prices 
it paid for electricity were not. Those prices rose much higher than 
envisioned when the deregulation plan was approved, and the utility's 
attempts to win approval to charge more were rebuffed.
?????"If the state had approved the comprehensive rate stabilization plan we 
filed last November, Pacific Gas & Electric would still be credit worthy and 
not in Chapter 11" as the third-largest U.S. bankruptcy, Glynn said. The 
filing six weeks ago listed $18 billion in liabilities.
?????He said a last-ditch plan to sell the company's transmission lines to 
the state fell apart when Davis' negotiators backed off earlier commitments. 
He said that the idea could be revived in bankruptcy court.
?????"We are not seeking a rescue, a bailout or a handout from the state or 
anyone else," Glynn said. "We are simply asking the state to follow the law, 
which allows us to recover wholesale power costs in retail rates."
?????Pacific Gas & Electric intends to file a proposed reorganization plan to 
pay creditors and begin moving out of bankruptcy court by August, he said. In 
the meantime, more power plants are being built.
?????Glynn said the company will fight to recover the multibillion-dollar hit 
it has taken because of the skewed prices, in part from electricity suppliers 
that federal regulators say overcharged. If the government doesn't sue those 
firms, he said, other interested parties, including consumer groups, will.
?????A few shareholder activists at the meeting proposed a raft of measures, 
including steps to increase the size of the board. One such reform measure 
passed, recommending that the board allow a majority of shareholders to 
approve any takeover even if company directors object.
?????The leader of a consumer and human rights activist group said she was 
initially barred from the meeting despite having proxies carrying the right 
to vote on behalf of four shareholders.
?????Medea Benjamin of Global Exchange later reentered and shouted criticism 
of the company as the two-hour meeting ended before she and others were 
recognized to speak. She was removed by security guards and charged with 
trespassing.
?????As shareholders left, PG&E staffers handed out miniature flashlights 
bearing the company's logo.
?????A spokesman said the trinkets were a tradition predating the energy 
crisis and weren't intended either as commentary or as tools to cope with 
rolling blackouts.

Copyright 2001 Los Angeles Times 





Thursday, May 17, 2001 
A Swiftian Solution to the Energy Crisis 
By PAUL JOSEPHSON


?????Some skeptics criticize the plans of the Bush administration to ignore 
conservation, start drilling for oil in pristine parks and renew nuclear 
reactor construction with a program so aggressive it would put the Russians 
and the French to shame. I think these plans don't go far enough, especially 
concerning nuclear power. 
?????With the right mix of geography, hubris and uranium, we can be energy 
self-sufficient and forget about conservation entirely. 
?????Over the next 10 years, let's build hundreds of 1,000-megawatt nuclear 
power stations in Wyoming. This would end our dependence on foreign oil once 
and for all. 
?????Building so many simultaneously would lower capital and labor costs and, 
in 10 years, make serial production of reactors possible. Wyoming has a high 
unemployment level, so construction of scores of reactors will provide 
thousands of jobs. It also has plenty of open space, so it's a win-win 
situation. 
?????Some critics worry that nuclear power will remain costly, even if we gut 
the ability of the Nuclear Regulatory Commission to set the highest safety 
standards in the world. They point out that most reactors have reached the 
end of the operating lives, have never ran as efficiently or cheaply as 
promised and will soon be decommissioned. They claim that old reactors, with 
the spent fuel that has accumulated since the 1960s, have created a 
multibillion dollar clean-up and waste disposal problem that will have to be 
left for another administration to solve. And they obsess about the 
difficulty of providing workable evacuation plans in the event of an 
accident. 
?????But, hey, we've come a long way since Three Mile Island. Anyway, Wyoming 
is sparsely populated, so there would be only minor health risks in the event 
of an accident, and mostly to coyotes, wolves and bears. 
?????Just imagine: Given the population densities and geology of Wyoming, we 
could even site nuclear fuel fabrication and waste storage facilities in the 
same spot. Let's create National Nuclear Park, bringing technology and nature 
together in a way that satisfies conservationists, tourists and 
businesspeople alike. A triple-win situation! 
?????The North Platte, Green and Bighorn rivers would provide more than 
enough water to cool the reactors, and for the dry seasons we could build 
huge holding reservoirs for winter runoff. Granted, effluent cooling water 
from the stations would raise river water temperatures several degrees, 
endangering flora and fauna. But if the tundra of Alaska can take the risk, 
so can the Rattlesnake Hills of Wyoming. 
?????We can call them hot springs! Ichthyologists could study which fish and 
game to introduce in the warmer waters, making Wyoming a year-round 
wonderland for sportsmen. 
?????And why worry about how to get electricity from Wyoming to California 
and New York? It's a heck of a lot easier to transmit electricity from Casper 
to the Bronx than to pipe and tank oil from the Arctic Circle to refineries 
in the lower 48. And no need to worry about how to finance all this; 
President Bush's alternative energy research budget was cut to the bone, so a 
few billion dollars for superconductivity research is up for grabs. 
?????A major objection to nuclear power has been the siting of stations on 
coastal waters from Seabrook, N.H., to Diablo Canyon, Calif., not far from 
big cities in states that have largely voted for Democratic candidates. So 
let's give the states that tend to vote Republican the opportunity to have 
nuclear power stations, too. 
?????A nuclear Wyoming could also calm those critics from the Northeast and 
Midwest states who are upset about the Western states' federal subsidies for 
mineral and grazing rights, the construction of logging roads, etc., etc. 
Given Wyoming's willingness to produce electricity for the nation--and why 
wouldn't it?--these other states could no longer point to the fact that some 
states take in more in federal moneys than they pay in taxes. 
?????But why stop at a nuclear Wyoming? We could build 50 reactors in west 
Texas. Since our president and vice president are so committed to a new 
energy policy, they should have no objections to offering the services of the 
states where they have made their careers and livelihoods. Talk about a 
compassionate energy policy! 
?????There's no need to worry our heads about such nonsense as a carbon tax 
that discourages profligate use of fuel in gas-guzzling vehicles, or 
investing in research on renewables and conservation. We can solve everything 
by making Wyoming our nation's "nuclear state." 
- - -

Paul Josephson Teaches History at Colby College in Maine.

Copyright 2001 Los Angeles Times 




California electric rates jump to second highest in country 
KAREN GAUDETTE, Associated Press Writer
Thursday, May 17, 2001 
,2001 Associated Press 
URL: 
http://www.sfgate.com/cgi-bin/article.cgi?file=/news/archive/2001/05/17/state0
322EDT0106.DTL&type=news 
(05-17) 00:22 PDT SAN FRANCISCO (AP) -- 
Customers of the state's two largest utilities will need to dig a little 
deeper to pay next month's bill now that California is looking to make back 
some of the $6 billion it has spent to keep the lights on. 
Under the plan approved Tuesday by the state Public Utilities Commission in a 
3-2 vote, the heaviest residential users of Pacific Gas and Electric Co. and 
Southern California Edison Co. will see their overall monthly bills increase 
by 37 percent, to about $85 or $71 more a month respectively. 
Other households that use minimal amounts of energy won't see an increase at 
all, the PUC said. 
The PUC's commissioners warned the latest rate, the largest in California 
history, could be followed by more increases this summer. 
"We have not solved the problem today," said PUC commissioner Richard Bilas 
who voted against the allocation. "When you look down the road we're going to 
have to go through this exercise again sometime in the next three months." 
Juan Ungo, one of dozens of low-income ratepayers protesting outside a PG&E 
bankruptcy hearing in San Francisco Wednesday, said the allocations will 
worsen his family's power bill. Soaring natural gas prices and an earlier 
rate hike already made it jump from $50 a month to $120 a month. 
"Somebody has to fight for the plight of the poor people," Ungo said. 
Businesses say somebody needs to fight for them as well, before higher power 
costs drive them to layoff workers, go bankrupt or leave the state. 
Without all residential customers getting socked in the wallet, businesses 
fear there won't be enough incentive to conserve. 
"Are we going to have a double whammy here? Are we going to have no blackouts 
and higher rates?" asked Michelle Mortague-Bruno, spokeswoman for the 
190-member Silicon Valley Manufacturers Association. 
The plan, a revised rate design from PUC President Loretta Lynch, allocates a 
3-cent rate increase the PUC approved March 27. 
The increase raises residential rates to an average of 15.6 cents per 
kilowatt, just behind the nation's highest rate of 16.4 cents in Hawaii. On 
monthly bills, that translates to an average of $4 to $85 more per month, 
depending on usage amount. 
The 3 cents, plus a 1-cent rate increase from January, was spread over the 9 
million customers of PG&E and Southern California Edison Co. in dramatically 
different ways. 
Industrial rates rise by no more than 49 percent, and agricultural rates are 
also capped at either 15 or 20 percent depending on when the power is used 
each day. Commercial rates aren't capped, and amount to roughly 38 percent 
more on average, the PUC said. 
The increase is for any energy use above 130 percent of "baseline," and 
amount designed to provide for much of the needs of a typical household, but 
varying according to seasonal temperatures. 
The PUC said about half of all residential households won't go above that 130 
percent line, meaning they will not see a rate increase. 
To encourage conservation, a tiered system makes above-baseline energy use 
progressively more costly. Residential customers using more than 300 percent 
above their baseline will pay up to 80 percent more for that additional 
electricity. 
Nonresidential customers must pay more for every kilowatt, and computer chip 
makers to hospitals to fruit growers say it's unfair. 
"This is probably the worst economic calamity the state has ever seen," said 
David Marshall, chief financial officer at Gregg Industries' iron foundry in 
El Monte. 
Marshall expects Tuesday's increases to cost Gregg at least $1 million this 
year. 
The rate hikes are retroactive to March 27, though those retroactive charges 
will be spread over a 12-month period. 
Low-income customers who sign up for the California Alternate Rates for 
Electricity program are exempt, as are customers who need electricity to run 
life-sustaining medical equipment. 
The increases will not affect San Diego Gas and Electric Co. or Californians 
who buy electricity directly from energy wholesalers. 

Bay Area News Roundup 
Local news all the time 
Bay City News Report
Thursday, May 17, 2001 
,2001 Associated Press 
URL: 
http://www.sfgate.com/cgi-bin/article.cgi?file=/news/archive/2001/05/17/roundu
p.DTL&type=news 
(05-17) 06:00 PST -- A federal bankruptcy judge in San Francisco has ordered 
Pacific Gas and Electric Co. to pay $41.2 million in overdue property taxes 
to 49 counties in the state. 
U.S. Bankruptcy Judge Dennis Montali on Wednesday turned down the utility's 
proposal to pay the taxes only to counties that agreed to forgo late payment 
fees and penalties. 
The judge told PG&E lawyers, "Somebody is going to have to tell me why I have 
to hold California counties hostage for debts that you owe." 
He instructed to the utility to pay the taxes -- which were due on April 10 
-- in full within five days. The judge said PG&E and the counties could 
negotiate later about whether the utility must pay penalties, which include a 
10 percent delinquent penalty plus 1.5 percent per month in interest. 
The taxes accrued between Jan. 1 and April 5, the day before PG&E filed its 
petition for Chapter 11 bankruptcy court protection. Because the filing of 
the petition suspended previous debts, PG&E needed court authorization to pay 
them. 
A group of 16 counties -- including Alameda, San Francisco, Santa Clara and 
Sonoma counties in the Bay area -- opposed PG&E's plan to pay only counties 
that waived the penalties. 
San Francisco City Attorney Louise Renne said after the hearing, "The ruling 
recognizes that counties are PG&E's highest priority creditors and should not 
have to give up any part of their legitimate claims." San Francisco is owed 
about $3 million, she said. 
The Board of Regents of the University of California has voted unanimously to 
alter its stance on race-based admissions, rescinding a 1995 ban on the 
practice. 
Many regents described yesterday's vote as bringing back the "welcome mat" 
for minority students. 
"This is a great day for the students of California ... and for the people of 
California in general," said Regent Odessa Johnson. "I wore black today 
because I hoped I was coming to a funeral." 
The funeral was for two resolutions adopted by the regents in 1995, which the 
resolution superceded. The first, SP-1, banned the consideration of race or 
gender in the student admissions process, effectively countering UC's 
affirmative action policy at the time. The second, SP-2, banned the same 
considerations with regards to hiring and contracting through the UC system. 
Both of those resolutions were bolstered the following year by state 
Proposition 209, which outlawed race- and gender-based considerations at all 
state agencies. But yesterday's vote overturned those resolutions. 
But it is unclear, in light of Prop. 209, how far beyond mere gesture the 
resolution goes. As they spoke, a small army of student protesters chanted 
from outside the UC San Francisco conference room. The protesters, estimated 
at 150 to 250 in number and hailing from every UC campus, erupted in cheers 
after the vote was tallied. 
A packed San Francisco Opera House listened last night as the Dalai Lama 
encouraged the wealthy to close the gap between rich and poor and everyone to 
nurture strong values in an age when religion is losing influence. 
The spiritual and political leader made little mention of the Chinese who 
occupy Tibet, except to say they don't treat other people as brothers. Hatred 
and ill feelings towards others are nothing more than blind energy, he said, 
and hurt the hater just as much as the hated. 
"Basically we are all human beings," he said. "On that level, we are all 
brothers." 
All people want to have a happy life, he said, and that life should be a 
basic right for everyone. People of the world need to minimize their negative 
potential and understand that communication between people and nations is 
easier with an open heart. Anger is an unreliable source of energy, he said, 
causes suspicion in marriages and creates between friends. 
Even though religion appears to be losing its influence in modern times, he 
said it still has the power to help humanity. People need to sh a set of 
values that include caring, compassion for others and a sense of community if 
they want to make the world a better place. ern society, he told an audience 
that included actress Sharon Stone, continues to widen the gap between the 
rich and the poor of the It is up to wealthy people with their greater 
influence, he said, to initiate change. 
"We need to address this issue," he said. 
St. Mary's College students angry about what they said was lenient treatment 
of an alleged student rapist have called an end to their hunger strike, 
according to a spokesman for the Moraga school. 
"At two o'clock this morning all issues were resolved, and the last tent was 
removed at 6:30 a.m.," St. Mary's spokesman Clifford Williams said on 
Wednesday. 
Between 12 and 20 students pitched tents on the lawn in front of the quiet 
campus's central chapel building on Monday. 
They charged that administrators had failed to enforce a proclaimed policy of 
"zero tolerance" for campus sexual assaults when they reversed a disciplinary 
board's determination that a male student was responsible for the rape of a 
female student and should be expelled. Administrators decided instead to 
suspend the student from campus activities. 
An economist with the Federal Reserve Bank of San Francisco says the nation's 
longest running economic expansion is not headed for recession, but Tuesday's 
interest rate cut was made to avoid one. which measures the value of a 
nation's output of goods and services, increased by 2 percent from the first 
of January through the end of March. A recession is declared when the GDP 
decreases for six consecutive months, he said, but that hasn't happened since 
1990. 
"This is still a record expansion," Zimmerman said. "The economy is not in a 
recession." 
But voting members of the Federal Reserve felt other economic indicators, 
such as high layoffs and low orders for new products, indicate a downturn so 
they took their action. 
Cutting the interest rate, which the Federal Reserve did on Tuesday by 0.05 
percent, is seen as a stimulant to the nation's economy, Zimmerman said. 
Teachers in Pittsburg have just voted to approve a new contract, moving 
toward the end of a 31-month stalemate with the school district over salary, 
benefits and teacher quality. 
A spokesman for the teachers' union said the contract extends an 8 pay raise 
to preschool teachers and those at the Children's Center and also grants a 
one-time 1 percent bonus to all teachers with 
1 percent set for next year if certain funding is available. It also creates 
a peer assistance and review program in which teachers help each other 
improve student learning and a catastrophic leave bank rmits staff to donate 
sick time to those who need it, among other benefits. 
The 485 members of the Pittsburg Education Association were invited to vote 
Wednesday afternoon. The agreement, which must win approval again on May 23 
when the Pittsburg Unified School District board considers it, settles 
salaries and working conditions for a three-year period that ends next year. 
"I personally think that we're on the brink of harmony," Pittsburg Unified 
School District Interim Superintendent Jack Gyves said earlier "I hope 
nothing goes sideways between now and the two votes. If we can break this 
logjam ... I think some very good things will happen." 
Pittsburg Education Association leaders hailed the tentative agreement and 
praised district officials for bringing "closure" to the long negotiating 
process, which included a five-day strike by teachers 1n June, 2000. 
JoanneStanley0425a05/17/01 
Updated: (05-17) 06:00 PST 
Retransmission without the express written consent of Bay City News, Inc. is 
prohibited. The Bay City News roundup is only available on this site on the 
day of publication. It is not archived. 
,2001 Associated Press ? 



California jolted by string of dreary economic news 
ALEXA HAUSSLER, Associated Press Writer
Thursday, May 17, 2001 
,2001 Associated Press 
URL: 
http://www.sfgate.com/cgi-bin/article.cgi?file=/news/archive/2001/05/17/nation
al0515EDT0463.DTL&type=news 
(05-17) 02:15 PDT SACRAMENTO (AP) -- 
For two years, California has enjoyed a soaring economy and boom-year 
budgets, but no more. The state has been jolted by a costly power crisis and 
three straight days of bleak economic news. 
The tumultuous week has included a record rate hike, a warning of a massive 
shortfall, downgrading of the state's already poor credit and cuts of more 
than $3 billion from the governor's budget. 
And the bad news comes as California braces for summer power outages that 
could further disrupt the economy. 
"We are being hit with these reduced financial estimates just when we are 
facing a critical need for more resources to get us through the power supply 
problems this summer," said Tom Leiser, senior economist at the University of 
California Los Angeles' School of Management. "The timing is pretty bad." 
On Wednesday, Legislative Analyst Elizabeth Hill warned that California faces 
a $4 billion budget shortfall in 2002-03 unless legislators trim Gov. Gray 
Davis' already-revised $102.9 billion budget. 
"It will be much more difficult to correct a $4 billion problem if they don't 
start today," Hill told reporters. 
Davis slashed $3.2 billion from his proposed budget Monday, blaming a 
plunging stock market and a faltering economy reliant on income taxes and 
stock gains from high-tech workers. 
State power regulators had more bad news Tuesday, boosting rates by up to 80 
percent for some customers in what was the largest increase in California 
history. 
In response, Moody's Investors Service downgraded California's credit rating 
Wednesday, citing the energy crisis' stubborn drain on the state's finances. 
Standard & Poors already rates California's credit among the worst in the 
nation -- equal to Hawaii and slightly better than Louisiana. 
Davis' latest budget plan assumes the state will be repaid by mid-August for 
at least $6.7 billion in power buys. However, no one outside of the Davis 
administration knows how much the state is paying for power, and if the 
prices go too high, California could run out of money before the bond 
revenues can replenish the treasury, analysts said. 
Despite the dire predictions, finance department officials say California is 
in better shape than it was during the recession of the early 1990s, when 
then-Gov. Pete Wilson was scraping to make up for a $14 billion budget 
shortfall. 
"We've simply seen the end of a boom that was created by a soaring stock 
market," said Sandy Harrison, spokesman for the state Department of Finance. 
The Assembly and Senate must still approve a final budget for the next fiscal 
year, which begins July 1. 
Until then, Davis will face an aggressive cadre of Republican legislators who 
on Wednesday blamed him for fobbing off all of the tough budget choices on 
legislators. 
Assemblyman George Runner, a Republican, said Davis has "abdicated his 
responsibility to produce a responsible budget." 


Scheduled blackout plan gaining favor 
LIMITING PRICES: 3-state buyers' cartel with Northwest could create leverage 
Lynda Gledhill, Chronicle Sacramento Bureau
Thursday, May 17, 2001 
,2001 San Francisco Chronicle 
URL: 
http://www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2001/05/17/M
N88959.DTL&type=news 
More blackouts but no ransom payments for energy gougers -- that's a deal 
looking increasingly attractive to California lawmakers and consumer 
advocates. 
The idea, which has attracted the support of some key lawmakers and the 
cautious interest of Gov. Gray Davis, is for the state to set a firm ceiling 
on what it will pay power producers for electricity this summer -- and not 
one dime more. 
The trade-off would be certain blackouts, possibly more than if the state 
continues to pay any price electricity sellers demand. 
Some advocates of the idea think that California could minimize the number of 
blackout hours and gain a measure of control over the energy crisis by 
scheduling service interruptions. 
"We need to stop this game of electricity chicken," said Michael Shames, 
director of the Utility Consumers' Action Network, which first proposed the 
idea. "We are likely to see blackouts this summer; we should use them to our 
advantage rather than be victimized by them." 
The plan calls for creating a "buyers' cartel" of California, Oregon and 
Washington. Essentially, the states would decide at what price they were 
willing to buy power and refuse to purchase once it tops that level. 
The state has spent $6 billion on energy purchases since January, and at one 
point during last week's power shortage was spending $1,900 per megawatt hour 
-- more than 10 times what Davis has planned on for this summer. That kind of 
spending cannot go on, Democratic Assemblyman Fred Keeley of Boulder Creek 
said yesterday. 
"The question is, can we sustain the level of spending we have and have the 
state maintain economic stability? I believe the answer is no," said Keeley, 
the lower house's main figure on energy policy and author of the bill that 
put the state in the power-buying business. 
"To get this problem solved, we have to think in bold terms," said Keeley, 
who introduced a resolution along with fellow Democratic Assemblyman Paul 
Koretz of West Hollywood that urged Davis to form a cartel. 
THREE STATES ARE BETTER THAN ONE
Davis said last week that "my bias would be to keep the lights on at any 
price." But yesterday, the governor said a temporary price limit is 
"certainly a matter we've talked about and considered at some length. The 
next step will be to see how the governors of Oregon and Washington respond 
to it." 
A spokesman for Gov. Gary Locke of Washington said the matter is being 
considered. Calls to the office of Oregon Gov. John Kitzhaber were not 
returned. 
The idea has appeal among some consumers who believe, as many state officials 
do, that California is being gouged for electricity. 
"I can see if our bills were $20 or $30 more, but this is ridiculous," said 
Kimberly Chambers, an 18-year-old fashion design student from Oakland. 
"Whatever it takes, I don't think we should have to pay for more." 
But Yunah Kim, 36, who moved to the Bay Area from New York a month ago, said 
blackouts should not even be considered. 
"The infrastructure of government is coming apart, and it's the basic service 
government is able to provide," she said. "Businesses are not going to put up 
with that. It's very shortsighted. We just have to pay until there's a 
solution." 
Severin Borenstein, director of the University of California Energy Institute 
in Berkeley, said blackouts might be worse than supporters of price limits 
believe. 
"I think they (power companies) would call our bluff," and sell their 
electricity elsewhere, Borenstein said. "I don't think the state has the 
ability to credibly commit to paying no more than 'X.' That would be a very 
controversial decision." 
Legislation is already in the works to give Davis the ability to enter into a 
West Coast buyers cartel. A bill sponsored by state Sen. Dede Alpert, D- 
Coronado, would allow the Independent System Operator to refuse to buy power 
if it is too expensive. 
The maximum the state would pay would be set by a formula, based on such 
things as the cost of natural gas. A reasonable profit for power producers 
would be built in, supporters said. 
LOOKING FOR SOME CONTROL
Alpert said everyone wants to avoid blackouts, but that seems unlikely. 
"Everybody I talked to -- once you establish that there will be blackouts -- 
both businesses and residents say, let's have control," Alpert said. 
The California Manufacturers and Technology Association, which commissioned a 
recent report that said unplanned blackouts could cost the state economy $21. 
8 billion and 135,000 jobs, is considering whether scheduled interruptions 
would be less harmful. 
"The problem if we do (scheduled blackouts) is that we may have an inordinate 
amount of blackouts," said Gino DeCaro, a spokesman for the group. 
NO EASY TASK
The ISO, which runs the state's power grid, is scheduled to issue a report 
tomorrow on how scheduled blackouts might work. 
Sen. Debra Bowen, D-Marina del Ray, said that planning blackouts is not as 
easy as it sounds. 
"The difficulty is a pragmatic one -- the circuits are not wired to deal with 
choices like we are having to make," said Bowen, who has been holding 
hearings on how the state might better manage blackouts. 
"Maybe we should be paying people to turn off their fuse box," Bowen said. 
Chronicle staff writer Marsha Ginsburg contributed to this report. / E-mail 
Lynda Gledhill at lgledhill@sfchronicle.com. 
,2001 San Francisco Chronicle ? Page?A - 1 



Airport accuses Texas firm of gouging 
SFO to build plant with Hetch Hetchy 
Alan Gathright, Chronicle Staff Writer
Thursday, May 17, 2001 
,2001 San Francisco Chronicle 
URL: 
http://www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2001/05/17/M
N7566.DTL&type=news 
San Francisco -- San Francisco International Airport officials angrily 
accused a Texas energy firm yesterday of an 11th-hour attempt to price gouge 
the airport in a deal for a 51-megawatt "peaker" plant needed to avoid summer 
blackouts. 
Instead, airport officials said they will work with the city-owned Hetch 
Hetchy Water and Power agency to fast-track development of its own gas-fired 
peaker plant, said airport spokesman Ron Wilson. The goal will be to build a 
permanent 571-megawatt plant that could power 571,000 homes. 
An irate Wilson said the airport broke off negotiations with El Paso Merchant 
Energy Co. after the Houston firm allegedly jacked up the cost of the deal. 
An original agreement to supply power to the airport was approved by the 
airport commission March 20. The day before it was to be voted on, El Paso 
indicated that it was going to need more money -- and the airport said the 
numbers being discussed were untenable. 
"They wanted to get into our pockets so deep that we're not even dealing with 
them anymore," Wilson said. The terms of the rejected agreement were not 
immediately available yesterday. 
"DOLLAR SIGNS FLASHING" 
"The dollar signs are flashing in their eyes and they don't care whether 
you've got power or not as long as they can make their money," Wilson said. 
An official of the Texas firm's parent company, El Paso Corp., expressed 
surprise at the San Francisco airport's decision to break off negotiations 
and denied any charges that the supplier tried to shake down the airport. 
"As far as we're concerned, we're still negotiating on the project with them 
and we'd love to do it," said Norma Dunn, an El Paso senior vice president. 
"All of the talk of changing the deal, of course, is not true. We're still 
very much willing to sit down and work this out." 
California regulators are also accusing El Paso Merchant Energy of trying to 
drive up natural gas prices by restricting access to the company pipeline 
into Southern California. 
The SFO plant was scheduled to go online in August. 
Airport officials said yesterday that the airport now plans to begin 
assembling 10 one-megawatt plants that could be running by June 1 to help 
keep airport terminals cool when the summer power crunch arrives. 
SEVERAL SCENARIOS
Because the California Energy Commission has already licensed the El Paso 
peaker plant, SFO could quickly take over the project under several 
scenarios, said Claudia Chandler, the CEC's assistant executive director. 
The fastest way is for El Paso to voluntarily transfer the plant license to 
SFO, which could have the peaker plant running by late July, she said. 
If El Paso won't cooperate, SFO could seek its own license under a 21-day 
approval process that Gov. Gray Davis ordered in February to speed 
development of the temporary plants. 
Given the 21-day approval, SFO could have the plant running by September. To 
speed approval, Chandler said, the airport would have to keep the location, 
size and type of plant similar to the El Paso proposal. 
If there are substantial changes, SFO could seek a seven-day license 
amendment. 
"Even if SFO was unsuccessful in negotiating with El Paso to transfer the 
license, if they filed their application right now . . . that puppy would go 
through the licensing process quite rapidly," Chandler said. 'We're very 
focused on getting new generation online to meet this summer's electricity 
demand. Every megawatt that we can bring online counts." 
E-mail Alan Gathright at agathright@sfchronicle.com. 
,2001 San Francisco Chronicle ? Page?A - 15 



Judge orders PG&E to pay overdue taxes to counties 
S.F. still must dip into cash reserves for energy bills 
Rachel Gordon, Jason B. Johnson, Chronicle Staff Writers
Thursday, May 17, 2001 
,2001 San Francisco Chronicle 
URL: 
http://www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2001/05/17/M
N238828.DTL&type=news 
San Francisco -- Bay Area governments, strapped by rising energy costs, 
received a bit of a boost yesterday when a federal bankruptcy judge ordered 
the Pacific Gas and Electric Co. to pay their outstanding property taxes, but 
the overall energy outlook still appears bleak. 
Rising energy bills in San Francisco, for example, forced a Board of 
Supervisors panel yesterday to dip $4 million into the city's reserves, set 
aside for everything from hospital laundry service to heat at the jails. 
A Bankruptcy Court judge in San Francisco ordered PG&E to pay $41 million in 
overdue property taxes the utility owes California counties. 
The utility's taxes were due April 10. It's still unclear whether PG&E will 
have to pay roughly $8 million in penalty fees to 49 counties. 
"Money like that is welcome," said Napa County Treasurer-Tax Collector Marcia 
Humphrey, whose county is owed $262,364 in property taxes and another $26,000 
in penalties. 
While yesterday's decision helps, Bay Area cities and counties are struggling 
to balance higher energy costs with the other demands on their budgets. 
For example, Alameda County spent $1.4 million on natural gas during the last 
fiscal year and expects to spend $2.3 million during the current fiscal year, 
which ends June 30. Next year, the natural gas budget will jump to $2.7 
million, said Matthew Muniz, energy program manager for Alameda County. 
Alameda County had budgeted $6.8 million for electricity costs, Muniz said, 
but that may balloon to $12.3 million in the worst case scenario. The 
additional money has been set aside in a contingency fund so services 
shouldn't be affected. 
Santa Clara County faces a similar situation. 
"The (power) budget is going to be bigger this year, that's for sure. But how 
much bigger, we don't know yet," said Kevin Carruth, Santa Clara County's 
director of the General Services Agency. 
In San Francisco, operations supported by the general fund -- among them 
recreation centers, the hospital and health clinics, police stations, 
firehouses, the animal shelter and the jails -- originally were allocated 
$10. 5 million for energy costs. Now the bills are projected to jump to 
nearly $17 million -- a 61 percent increase. 
Some departments plan to absorb all or part of the costs; others needed a 
special handout, totaling $4 million, which the Board of Supervisors Finance 
Committee approved yesterday. Operations that don't rely on the general fund, 
such as Muni and the airport, are expected to overspend their power budgets 
by another $5 million, bringing the citywide energy deficit to $11 million. 
"It's a strain on the budget, but it's not a budget buster," said City 
Controller Ed Harrington. 
As power costs have jumped, the city has fattened its coffers with an extra 
$5 million in user utility tax revenue levied on commercial power customers. 
And Tuesday's electricity rate increase approved by the state Public 
Utilities Commission may mean even more money for San Francisco. The city's 
Hetch Hetchy power agency, which generates and sells electricity, will be 
able to charge more because its rates are tied to those charged by PG&E. 
Meanwhile, government leaders are looking for creative ways to combat the 
energy crunch. 
San Francisco Board of Supervisors President Tom Ammiano yesterday presented 
an ambitious proposal to install a network of energy-producing panels on 
rooftops in San Francisco's sunny neighborhoods. Ammiano predicted that in 
seven to 10 years the project could produce up to 50 megawatts of 
electricity, meeting about 5 percent of the city's energy needs. 
Ammiano's idea calls for a private-public partnership. He hopes the project, 
which would require at least 140,000 acres of solar modules, would be large 
enough to result in lower costs to buy and maintain the equipment. 
At the same time, government officials are scrambling to conserve energy now. 
San Francisco Mayor Willie Brown ordered a 10 percent reduction of power use 
this year, with more decreases called for next year. 
Tell us what you think -- Can you save 20 percent on your energy usage? Gov. 
Gray Davis' administration is offering rebates to Californians who save on 
power starting in June, and if you have a strategy for conserving, The 
Chronicle wants to hear it. We'll be writing about the hardest-working energy 
savers in a future story. To get involved, write to the Energy Desk, San 
Francisco Chronicle, 901 Mission St., San Francisco CA 94103; or 
e-mailenergysaver@sfchronicle.com. 
E-mail the writers at rgordon@sfchronicle.com and jbjohnson@sfchronicle.com. 
,2001 San Francisco Chronicle ? Page?A - 13 



PG&E Corp. accused of gouging in East 
Boston company wants federal energy regulators to intervene 
David Lazarus, Chronicle Staff Writer
Thursday, May 17, 2001 
,2001 San Francisco Chronicle 
URL: 
http://www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2001/05/17/M
N235086.DTL&type=news 
San Francisco -- San Francisco's PG&E Corp., which complains about being 
gouged by out-of- state power generators, is itself gouging consumers in the 
Boston area, Massachusetts' largest investor-owned utility has charged. 
Nstar, owner of Boston Edison Co. and Cambridge Electric Co., asked federal 
regulators this week to prevent PG&E Corp. and Sithe Energies Inc. from 
increasing electricity prices during power shortages. 
"With two local companies controlling almost 90 percent of supply, they have 
the ability to corner the market and dictate excessive prices that we and our 
customers believe are unjust and unreasonable," said Paul Vaitkus, Nstar's 
vice president of energy supply. 
Peter Meier, associate general counsel for PG&E Corp.'s National Energy 
Group, denied yesterday that his company's plants have overcharged Boston 
consumers. 
"We're not exercising market power," he said. "We charge rates that bring us 
a fair and reasonable return." 
PG&E Corp. owns 21 power plants in the New England area, mostly hydroelectric 
facilities. Sithe Energies, based in New York, holds stakes in 27 North 
American plants, primarily in New York and Massachusetts. 
Nstar's Vaitkus said power prices routinely soar whenever regional 
transmission lines become overburdened and local utilities are forced to buy 
power from PG&E Corp.'s and Sithe's generating facilities. 
'CONGESTION CHARGES' 
He said Boston area consumers were forced to pay about $70 million in 
"transmission congestion charges" last year, and he called upon the Federal 
Energy Regulatory Commission to limit PG&E Corp.'s and Sithe's prices to "out 
of pocket expenses." 
"We are asking FERC to do what they have recently done in California and 
prevent generators from charging excessive prices to energy companies and 
their customers when the market is not workably competitive," Vaitkus said. 
In fact, the regulatory commission has provided only limited relief to 
California and has steadfastly refused to place a limits on runaway wholesale 
power rates, which drove PG&E Corp.'s utility subsidiary, Pacific Gas and 
Electric Co., into bankruptcy. 
PG&E Corp.'s Meier said there is no reason for the regulatory commission to 
act against his company in New England. 
"We don't increase our prices above fair return during periods of 
congestion," he said. 
PG&E CORP. AND POLLUTION
But Lori Ehrlich, a Boston environmental activist, countered that it is 
impossible for Massachusetts residents to take PG&E Corp. at its word. 
"They've polluted our local environment, lied to us and played every trick in 
the book," she said. "There is arrogance at the heart of this company." 
Emissions from two of PG&E Corp.'s coal-fired plants were linked by the 
Harvard School of Public Health last year to illnesses and premature deaths 
in the region. 
Ehrlich's organization, HealthLink, began a statewide campaign in 
Massachusetts yesterday to educate citizens about toxic emissions from coal- 
fired power plants. 
"Eighty dump trucks of coal waste per day are currently carted away from PG&E 
Corp.'s two coal-burning power plants in Salem and Somerset," she said. 
In Nstar's case, the company asked federal authorities to order PG&E Corp. 
and Sithe to refund customers for past overcharges and to limit what the two 
companies can charge during shortages. 
"We have an obligation to our customers to monitor the market and bring to 
the attention of regulators market inefficiencies and imperfections," Vaitkus 
said. 
E-mail David Lazarus at dlazarus@sfchronicle.com. 
,2001 San Francisco Chronicle ? Page?A - 14 


Nuclear, fossil fuels at heart of Bush plan 
SWEETENER: $6.3 billion in tax credits for solar and renewable power 
Carolyn Lochhead, Chronicle Washington Bureau
Thursday, May 17, 2001 
,2001 San Francisco Chronicle 
URL: 
http://www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2001/05/17/M
N233180.DTL&type=news 
Washington -- The Bush administration, warning that the nation faces its most 
serious energy crisis since the 1973 oil embargo, last night released 
highlights of a long-awaited national energy plan that relies on increasing 
supplies of energy. 
As expected, the plan proposes to increase production of fossil fuels and 
nuclear power, in many cases by easing regulatory barriers, while sweetening 
the deal with $6.3 billion in new tax credits for "green energy" fuels such 
as solar and biomass. 
While declaring that years of "neglect" have created the problem, the 
administration's report on the plan insists that technology, not austerity, 
offers a way out. 
"Our prosperity and way of life are sustained by energy use," the report 
says. 
Speaking briefly to reporters, President Bush called the plan "a very 
optimistic look at America," but one that is "tough, in that it lays out the 
problems." 
The 163-page plan cites California's blackouts in its second paragraph, 
saying they "demonstrate the problem of neglecting energy supply." But as to 
immediate remedies, the plan says, "unfortunately, there are no short-term 
solutions to long-term neglect." 
"We're going to solve this problem," Bush said early yesterday before the 
report's release. "This isn't just a report that's going to gather dust." 
Reacting to charges that he is offering no immediate relief on gasoline 
prices and is captive to the energy industry, Bush also promised that his 
administration would "make sure that nobody in American gets illegally 
overcharged" for gasoline and that federal electricity regulators would 
monitor prices "to make sure they are fair and reasonable." 
Bush also said he has worked with California officials to expedite power 
plant permitting and is "deeply concerned" about the state. 
"The quicker supply gets on, the easier it's going to be for the consumers in 
the state of California," Bush said. 
White House officials said Bush will issue two executive orders next week 
that would direct federal agencies to speed permitting of energy facilities 
and require studies of the energy impact of regulatory actions. 
As the administration has said in interviews and statements the past month, 
the report focuses on increasing supplies of traditional fossil fuels and 
nuclear power, with a heavy stress on updating the nation's electricity grid 
and other energy infrastructure. 
A senior administration described the grid as a relic of the 1950s that 
balkanizes the country into isolated power islands, preventing transmission 
from areas of ample supply to areas of shortages. 
In an attempt to mitigate rising gasoline prices, the report also orders an 
Environmental Protection Agency review of "boutique" gasoline formulas that 
various states require to control air pollution. The aim is to standardize 
fuel blends so that regions are less dependent on single refineries. 
In a pre-emptive strike, Democrats attacked the plan as ineffective hours 
before the highlights were released. 
"The president seems almost totally indifferent" to California's blackouts, 
said House minority leader Richard Gephardt, D-Mo. 
The report calls for easing regulations that inhibit new electricity 
transmission lines and gas pipelines, including calling for federal 
condemnation of private property to build power lines. 
It stresses increased use of coal as the nation's "most abundant fuel source" 
and recommends revisiting nuclear power, encouraging expansion of existing 
plants and easier licensing for new nuclear technologies. 
DRILLING ON PUBLIC LANDS
And it calls for a thorough review of all public lands to open areas for 
potential oil and gas exploration, including a recommendation that 8 percent 
of the Arctic National Wildlife Refuge be opened to oil and gas exploration. 
Administration officials said there are no plans to challenge the current 
moratoriums on new oil leasing off the coasts of California or Florida. 
But the policy also makes a pitch for renewable fuels and conservation. The 
report calls for applying new technologies to conservation, including a $4 
billion tax credit for hybrid automobiles that run on both gasoline and 
electricity, including fuel cells. 
It would expand tax credits for biomass, and create a 15 percent tax credit, 
up to $2,000, for consumers who install solar energy panels in their homes. 
Yet while renewables "provide hope for America's future," the report says, 
they currently meet just 2 percent of U.S. energy needs. 
"The day they fulfill the bulk of our needs is still years away," the report 
said. "Until that day comes, we must continue meeting the nation's energy 
requirements by the means available to us." 
The plan also insists that technology can help Americans have more energy and 
a cleaner environment at the same time. 
Americans want to conserve energy, the report says, but the "best way of 
meeting this goal is to increase energy efficiency by applying new 
technology." 
FUEL-EFFICIENCY STANDARDS
The plan dodges any recommendation on raising auto fuel-efficiency standards, 
a glaring omission for environmentalists. Sens. Dianne Feinstein, D- Calif., 
and Olympia Snowe, R-Maine, want higher standards for light trucks, including 
SUVs, saying that could cut oil imports by 10 percent. 
However, a senior administration official also said that Energy Secretary 
Spencer Abraham has been directed to revisit proposed cuts in research into 
solar, wind, biomass and other renewable fuels. Abraham slashed the programs 
in Bush's budget, and the official said much of that spending may be 
restored. 
Bush plans to showcase the full report in a speech in St. Paul, Minn. today, 
at a high-tech utility using efficient new "heat and power" systems and 
biomass fuels as a backdrop. 
Of the plan's 105 recommendations, the administration touts 42 of them as 
encouraging alternative fuels, conservation and environmental protection, 
while saying 35 focus on increasing energy supply and modernizing the 
transmission infrastructure. 
SUPPORT FOR RENEWABLES
A new USA Today/CNN/Gallup poll showed why the administration has been 
suddenly stressing renewables. 
Taken last week, the poll showed 91 percent support for investments in solar, 
wind and other renewable sources, and more than 80 percent support for 
mandating new energy efficiency standards in appliances, buildings and cars. 
Twenty items in the report, including the unpopular proposal to drill in the 
Arctic refuge, require congressional action. Senate majority leader Trent 
Lott, R-Miss., said he would like to have a comprehensive energy bill passed 
by July 4. 
Bush energy plan 
Among recommendations in President Bush's energy plan: 
Production: Ease restrictions on oil and gas development on public lands; 
open a portion of the Arctic National Wildlife Refuge in Alaska to drilling; 
ease permit process for refinery expansion and construction. 
Power plants: Give government authority to take property through eminent 
domain for power lines; ease regulatory barriers, including clean air rules, 
to make plants more efficient. 
Other areas: Give tax breaks for purchase of nuclear plants; continue tax 
credits for wind energy generation. 
Conservation: Give tax credit for purchase of high-mileage, hybrid gas- 
electric vehicles. 
Source: Associated Press 
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E-mail Carolyn Lochhead at clochhead@sfchronicle.com. 
,2001 San Francisco Chronicle ? Page?A - 1 



Public power booster gets a top job at S.F. PUC 
Edward Epstein, Chronicle Staff Writer
Thursday, May 17, 2001 
,2001 San Francisco Chronicle 
URL: 
http://www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2001/05/17/M
N225696.DTL&type=news 
San Francisco -- Mayor Willie Brown has hired a longtime advocate of public 
power associated with David Freeman, Gov. Gray Davis' top electricity 
adviser, to help increase San Francisco's independence from PG&E. 
Brown's hiring of Edward Smeloff, a former elected board member at the 
Sacramento Municipal Utility District, for a top post at the city Public 
Utilities Commission is another step in the mayor's attempt to create a 
regional power authority -- and give the city greater energy security. Such 
an agency could build power plants and enter into long-term electricity 
contracts. 
"I can't think of a bigger challenge than coming back to California and 
helping San Francisco get through this summer, encourage conservation and 
then put together a long-term plan so San Francisco becomes invulnerable in 
its power supply," said Smeloff, who now lives in New York. He will start 
work on June 4 as the city PUC's assistant general manager for power policy, 
planning and resource development. 
Smeloff, whose hiring will be announced today, was an elected board member at 
Sacramento's public utility from 1987 to 1997. The utility, which almost went 
bust in the 1980s because of problems with its Rancho Seco nuclear power 
plant, hired Freeman as its general manager in 1990. 
Freeman later went on to head the Los Angeles Department of Water and Power 
and now is the state's chief power buyer. 
After leaving Sacramento, Smeloff moved to New York, where he is executive 
director of the Pace University Law School energy project. 
Brown's hiring of Smeloff still leaves open the top job at the San Francisco 
PUC. The agency has been headed by temporary general managers since Anson 
Moran retired in January 2000 and Brown and the PUC continue to look at 
candidates. 
There has been grumbling at City Hall that Brown's inability to find a new 
PUC boss has undercut his own goal of raising public power production. 
Mayoral spokesman P. J. Johnston said the mayor considers "Smeloff's hiring a 
big step toward improving San Francisco's position in regards to public 
power." 
Smeloff's appointment comes while the city's electricity future is in flux. 
Hammered by the state power crisis, voters in November could face as many as 
three electricity-related ballot measures. 
One measure, proposed by longtime public power advocates, would create a 
municipal utilities district in the city with an elected board, much like the 
one in Sacramento. A second, pushed by Supervisors Gavin Newsom and Tony 
Hall, would create a city power authority. A third, backed by Supervisor Mark 
Leno, calls for selling as much as $125 million in bonds to install 
solar-generating facilities on city property. 
Smeloff said the existing PUC, which generates power through the Hetch Hetchy 
hydroelectric dams, is going in the right direction by pursuing an agreement 
with Palo Alto and the city of Santa Clara to form an alliance of Bay Area 
public power agencies. The accord could lead to joint purchases of power, in 
search of lower costs, and maybe to the construction of new power plants. 
E-mail Edward Epstein at eepstein@sfchronicle.com. 
,2001 San Francisco Chronicle ? Page?A - 13 



Subpoenaed documents withheld 
Power companies say no to Lockyer 
Robert Salladay, Chronicle Sacramento Bureau
Thursday, May 17, 2001 
,2001 San Francisco Chronicle 
URL: 
http://www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2001/05/17/M
N191789.DTL&type=news 
Sacramento -- Three power companies under investigation by Attorney General 
Bill Lockyer for allegedly gouging California consumers and manipulating the 
energy market have refused to hand over key documents to the state. 
A May 25 court hearing in San Francisco has been set to resolve the dispute 
between Lockyer and the three companies based in Texas and Georgia. Although 
some documents have been turned over, Reliant, Mirant and Dynegy have refused 
to disclose internal company information since it was subpoenaed by Lockyer's 
office Feb. 15. 
According to copies of the subpoenas, Lockyer is looking for evidence that 
the power companies, among other things, withheld energy or shut down plants 
for "maintenance" in order to squeeze supply and drive up prices. 
Lockyer has asked for at least 91 separate types of documents, from personnel 
and maintenance records to computer programs and e-mails. 
In court filings, the power companies have objected almost line by line to 
Lockyer's request, calling many of the requests "vague, ambiguous and 
unintelligible." In other cases they object to sharing personnel information 
and even computer programs because, as Mirant wrote in its response, 
"software licenses do not allow them to distribute copies of software." 
But the power companies also object to handing over confidential information 
about their business to government attorneys at the same time the companies 
are negotiating with other government officials over selling power to the 
state. 
"We have never said we didn't want to cooperate with the attorney general," 
said Chuck Griffin with Mirant Energy. Griffin said some boxes of information 
were sent to Lockyer yesterday while others are being kept until 
confidentiality concerns can be addressed. 
Because of the dire financial situation at PG&E and Southern California 
Edison, the state Department of Water Resources has taken over responsibility 
for negotiating long-term contracts with power suppliers and is buying power 
on the spot market to keep the state running. 
In its April filing with the court, Lockyer's office promised to keep 
critical documents away from "government agencies (the Department of Water 
Resources) that have acted as Reliant's competitors in the market or with 
whom Reliant is negotiating electricity contracts." 
Richard Wheatley, a spokesman for Houston-based Reliant Energy, said he 
couldn't comment much beyond the court documents except to say, "We can't be 
assured that the information would in fact be kept confidential within the 
attorney general's office." 
E-mail Robert Salladay at rsalladay@sfchronicle.com 
,2001 San Francisco Chronicle ? Page?A - 14 



Green lobby hopes Bush plan offers them more in final form 
Carolyn Lochhead, Chronicle Washington Bureau
Thursday, May 17, 2001 
,2001 San Francisco Chronicle 
URL: 
http://www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2001/05/17/M
N187253.DTL&type=news 
Washington -- As President Bush prepares to release his energy plan today, 
the solar, biomass and other "green" energy industries are cautiously 
optimistic about what it will contain. 
Despite the advance thrashing Bush has taken for his pro-nuclear, pro- 
drilling approach, producers of renewable fuels are expecting a host of tax 
credits to make their products more competitive with fossil fuels. 
Still, alternative-fuel lobbyists briefed on the report by Vice President 
Dick Cheney said the plan will be quite vague. They were told to expect no 
numeric goals on how much of U.S. energy needs should be supplied by 
renewables or any other source, and few specific legislative guidelines. 
"I expect the biggest thing this plan will do is give representatives who 
care about clean energy the cover to do what they want to do," said Katherine 
Hamilton, co-director of the American Bioenergy Association. 
Indeed, despite nearly four months' work by a top-level multiagency task 
force headed by Cheney, the report is expected to leave most of the messy 
details of a new energy policy to Congress. 
As a result, it may ignite a free-for-all on Capitol Hill, sending lobbyists 
for every imaginable fuel source and efficiency scheme scrambling for some of 
the action. 
Among its few specifics, the report is expected to call for bigger tax 
credits for biomass and a 15 percent tax credit, up to $2,000, for consumers 
who install solar energy panels in their homes. 
"If we could get tax credits -- and the Cheney plan is going to have tax 
credits to expand biomass to use crop residues -- it will become cost 
effective," Hamilton said. 
The administration has often said that U.S. energy needs would require large 
investments in new power plants -- 1,300 of them over the next 20 years - - 
and more fossil fuels, including coal, oil and natural gas, along with a 
fresh look at nuclear power. The statements have sent environmental groups 
into an uproar, and the administration has been working to counter its 
pro-oil image. 
Cheney told renewable-fuels lobbyists that almost all the report's financial 
incentives will be for energy efficiency and renewables, not fossil fuels. 
But reliance on fossil fuels and nuclear power will still be the thrust of 
the report, giving short-shrift to conservation and renewables, advocates 
said. 
"There are going to be some things we're going to support," said Carol 
Werner, executive director of the Environmental and Energy Study Institute, a 
nonprofit policy group. "We're just very concerned that the balance is going 
to be tilted in the other direction." 
Ironically, while Bush is best known as an oil industry veteran, his Texas 
ranch house has incorporated state-of-the art energy-efficiency features, 
including a geothermal heat pump. 
"He's done a great job with their house," Werner said. The question, green- 
energy advocates say, is whether he will try to extend those ideas elsewhere. 
One of the most glaring deficiencies for environmentalists is what they 
believe to be the report's failure to recommend raising auto fuel-efficiency 
standards. Sen. Dianne Feinstein, D-Calif., and Olympia Snowe, R-Maine, want 
higher standards for SUVs, saying that could cut oil imports by 10 percent. 
Automakers are opposed, and the administration wants to wait for a National 
Academy of Sciences report due in June. 
Among other things, the report is expected to: 
-- Recommend making it easier for businesses or consumers who generate their 
own electricity, say by solar panels, to sell it into the grid. It will not 
advocate requiring utilities to buy a specific percentage of renewable power. 
-- Encourage development of geothermal plants on federal lands and ease 
permitting for renewable-fuel plants. 
-- Encourage locating power plants on brownfields, which are abandoned 
industrial sites where redevelopment is hindered by environmental 
contamination. 
-- Advocate hydrogen and fusion research. 
Despite all the attention, the Bush plan may serve chiefly as a starting 
point for Congress. 
"My prediction is that it will be a little of this, and a little of that, and 
probably more tax credits than make sense because everybody likes them," said 
Paul Portney, president of Resources for the Future, a Washington think tank. 
The one thing no politician wants, however, is for increased prices to 
dictate conservation and increased supply. High prices are only now making 
some renewable sources competitive with fossil fuels. 
"To economists, letting the price rise is the solution," Portney said. "To 
elected representatives, having the price go up is the problem." 
Although Bush is declaring a U.S. "energy crisis" that requires a big supply 
push, Portney predicted that three to five years from now, "the next energy 
crisis is going to be too much capacity and depressed prices for oil, gas and 
possibly even electricity." 
High prices have already sent energy profits soaring and stirred a boom in 
natural gas drilling and power plant construction. High prices and the 
economic slowdown are expected to soften demand. 
Boom and bust cycles typify the energy industry. 
E-mail Carolyn Lochhead at clochhead@sfchronicle.com. 
,2001 San Francisco Chronicle ? Page?A - 15 



PG&E's shareholders steadfast 
Despite fiscal misery, meeting gives thumbs up to chairman 
David Lazarus, Chronicle Staff Writer
Thursday, May 17, 2001 
,2001 San Francisco Chronicle 
URL: 
http://www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2001/05/17/M
N185567.DTL&type=news 

San Francisco -- PG&E Corp. Chairman Robert Glynn, who has become one of the 
poster boys for California's ever-worsening energy troubles, was at last 
among friends yesterday. 
The company's annual shareholder meeting in San Francisco was, more than 
anything else, an affirmation from PG&E's legion of gray-haired stockholders 
-- 
many of whom have held the company's shares for decades -- that they will 
stick with Glynn come hell or high water. 
Or the bankruptcy of PG&E's flat-broke utility subsidiary. 
Shareholder John Monahan rose at the meeting to tell Glynn, "You're doing a 
great job." 
He and others appeared encouraged by PG&E's repeated declarations in recent 
weeks that things aren't as bad as they seem. 
"Chapter 11 is not a destination," Glynn told the roughly 500, mostly elderly 
shareholders gathered at the Masonic Auditorium on Nob Hill. "It's not a 
place we want to stay. It's a portal through which we're moving to restore 
Pacific Gas and Electric to full financial health." 
The audience applauded enthusiastically. 
"There are many challenges in the future," Glynn said. "But there's also a 
very solid foundation on which to build." 
More applause. 
PG&E's shareholder meeting came just one day after state regulators adopted 
the largest rate increase in California history, resulting in bills rising by 
37 percent for some of the utility's residential customers. 
No one in the auditorium held this against the company. Nor was there much 
resentment over the utility having filed for Chapter 11 protection. 
Similarly, few shareholders said they were perturbed by the company's 
decision last month to write off nearly $7 billion in debt or to forgo 
dividend payments. 
"The company is doing all right," said 84-year-old C.J. Megas. "It's the damn 
politicians." 
This was a common refrain among PG&E shareholders: Things would be fine if 
only Gov. Gray Davis and state regulators would stop meddling and allow PG&E 
to get on with its business. 
"I'll hold on to my shares," said Robin Sparks, 60. "I can support this 
company. It's the politicians that are ruining things." 
Never mind that PG&E's stock closed yesterday at $11.14, or less than half 
the level of last year's annual meeting. 
Consumer advocate Medea Benjamin tried to stir things up by gaining access to 
the meeting and calling for the resignation of Glynn and other board members. 
"Where is your responsibility?" she shouted while being hustled from the 
auditorium by security guards. 
"Give my regards to Gray Davis," one shareholder shot back amid hearty 
laughter from the crowd. 
Of course, some actual business also got done. Shareholders approved all the 
procedural motions that management supported and voted down everything 
management opposed. 
PG&E was so confident of the company's ability to choreograph the meeting 
that, at dress rehearsal on Monday, it was deemed unnecessary to have Glynn 
field mock questions to prepare for a possible drubbing from irate 
stockholders. 
By and large, Glynn stuck to the same script he has been reading from since 
PG&E filed for bankruptcy on April 6. 
Chapter 11 was necessary, he said, because the company was left with no other 
recourse after regulators passed a series of "negative decisions" affecting 
the utility and bailout talks with the governor collapsed. 
State officials, Wall Street investors and many of PG&E's own customers may 
be biting their fingernails awaiting some resolution to the company's 
financial problems. 
But most individual PG&E shareholders are prepared to let things run their 
course, and they don't seem to mind very much how long this might take -- or 
how bad things may worsen before California's energy woes are over. 
"You know," said Alec Willis, 65, "one of the best things that could have 
happened for California would be if Southern California Edison had declared 
bankruptcy right after PG&E." 
He nodded to himself. 
"Maybe that would have gotten the attention of Sacramento," Willis said. 
E-mail David Lazarus at dlazarus@sfchronicle.com. 
,2001 San Francisco Chronicle ? Page?A - 14 







Bush's national energy bluepring won't help California 
Posted at 11:16 p.m. PDT Wednesday, May 16, 2001 
JIM 
PUZZANGHERA 
Mercury News Washington Bureau 


WASHINGTON -- President Bush will unveil a national energy plan today that 
offers little help for California this summer but tries to shield the rest of 
the nation from the same debilitating blackouts in the future with more oil 
and natural-gas drilling and greater use of coal and nuclear power. 
In previewing the plan Wednesday, Bush and White House officials emphasized 
that conservation and improving energy efficiency through high technology are 
significant parts in meeting the nation's growing energy needs and reducing 
dependence on foreign oil. Of the plan's 105 proposals -- most already made 
public -- 42 deal with conservation, development of alternative fuels and 
environmental protection. 
A senior administration official said Wednesday that the only item in the 
plan that could help California this summer is a planned presidential order 
to have federal agencies expedite permit approvals for new power plants 
nationwide. But Bush already ordered those quicker reviews for California 
earlier this year. The other specific California proposal would direct the 
secretary of energy to look into helping the state improve the current 
transmission bottleneck between Northern and Southern California. 
``Unfortunately, there are no short-term solutions to long-term neglect,'' 
the Bush plan says of California's crisis. 
More broadly, the White House believes the proposals to increase supply and 
improve electricity and natural-gas distribution are the keys to helping 
California and the rest of the country deal with energy problems. The 
163-page proposal says the United States is facing ``the most serious energy 
shortage since the oil embargoes of the 1970s.'' 
Bush on Wednesday directed two federal regulatory agencies to monitor 
electricity prices in the state and elsewhere and ``make sure that nobody in 
America gets illegally charged.'' 
But the state's problem is largely its own to solve, Bush administration 
officials have repeatedly said. 
California Gov. Gray Davis has been pleading with federal regulators to 
temporarily cap the price of wholesale electricity throughout the West to 
give the state time to get new power plants on line. But Bush on Wednesday 
reiterated his opposition to those controls. 
That angered Davis and other California Democrats. 
``Without just and reasonable prices for power, the crisis here in California 
and the West inevitably will spill over and damage the already-sluggish 
national economy,'' Davis said. ``Mr. President, runaway energy prices are 
not just a California problem. With all due respect, I once again urge you to 
stand up to your friends in the energy business and exercise the federal 
government's responsibility to ensure energy prices are just and 
reasonable.'' 
Long-term proposals 
Instead of price controls for California or elsewhere, the White House is 
focusing on long-term energy proposals that may not even get passed by 
Congress, let alone be producing results, by the height of California's 
summer. 
For example, drilling in Alaska's Arctic National Wildlife Refuge, which Bush 
is asking Congress to allow, is not expected to produce any oil for at least 
five to 10 years. The supply is estimated at 6 billion barrels, enough to 
satisfy total U.S. demand for only nine months. 
Bush and Vice President Dick Cheney have said several times since taking 
office that the administration believes that the main way to solve the 
problem is to increase the nation's energy supplies. 
That stance, backed by most Republicans and the energy industry that Bush and 
Cheney both once worked for, puts the administration at odds with most 
Democrats and the environmental movement. The plan's release officially 
ignites one of the largest political battles in years. 
``It provides over 100 proposals to diversify and increase the supply of 
energy, innovative proposals to encourage conservation and ways to make sure 
that we get energy from producer to consumer,'' Bush said Wednesday after 
receiving the plan from the high-level administration task force headed by 
Cheney that drafted it over the past three months. 
But Carl Pope, executive director of the Sierra Club, said the 
administration's conservation proposals don't change the fact that the White 
House plan overall is bad for the environment and the nation. 
``There's a Texas saying that the president apparently is very fond of, which 
goes, `You can put your boots in the oven, but it doesn't make them 
biscuits,'?'' Pope said. ``When they start claiming this plan is about clean 
energy, about progressive technology, about energy efficiency, they're 
putting their boots in the oven. I'd rather bake biscuits.'' 
Highlights of plans 
Among the highlights released by the White House last night are: 
?Require that all major federal regulatory actions take into account the 
impact on energy supplies, distribution and use, including decisions made 
about federal lands. 
?Encourage the expansion of nuclear-power plants, and study whether 
reprocessed nuclear waste can be used to generate power. The technology, 
abandoned in the United States 30 years ago but used elsewhere, produces 
weapons-grade plutonium that can lead to national security risks. 
?Spend $3 billion over 10 years on programs to assist low-income people with 
heating and electric bills as well as to prepare their homes for cold 
weather. 
?Spend an additional $2 billion over 10 years on research into burning coal 
more cleanly. 
?Spend $4 billion over 10 years on tax credits for consumers who purchase 
hybrid electric-gasoline vehicles or vehicles powered by new hydrogen fuel 
cells. 
``It's tough in that it lays out the problems,'' Bush continued. ``It's a 
direct assessment of neglect, but this great nation of ours, because of our 
technology, our attitude, our adherence to free enterprise, our willingness 
to conserve, we're going to solve this problem.'' 
The vast majority of the proposals -- 85 -- can be acted on by Bush and 
federal agencies, and 20 require congressional approval. 
While serving as the poster child for a potential national energy crisis, 
California gets little assistance in the Bush plan as it faces a summer of 
soaring prices and predictions of extensive rolling blackouts. Bush noted the 
administration had worked with Davis to expedite federal review of state 
power plant proposals. 
``So the quicker supply gets on, the easier it's going to be for the 
consumers of the state of California. We're deeply concerned about the state 
of California, as we are with the rest of the nation,'' said Bush, who will 
be traveling to Southern California later this month in his first trip to the 
state since last fall. ``But we haven't had an energy policy. Interestingly 
enough, this is the first comprehensive energy policy probably ever, 
certainly in a long time.'' 
Former President Jimmy Carter had the last major energy program during his 
administration in the midst of the energy crisis of the late 1970s. But 
unlike Carter's proposals, which in part sought government mandates to 
increase supply and urged Americans to conserve, Bush emphasizes free-market 
solutions. 
No lifestyle changes 
The plan's message for Americans is that high-tech advances in energy 
efficiency, coupled with increased energy supplies, will allow them to avoid 
sacrificing their way of life to solve the energy problem. 
The plan's conservation proposals come after Cheney infuriated 
environmentalists when he belittled conservation in a major energy speech 
last month. ``Conservation may be a sign of personal virtue, but it is not a 
sufficient basis for a sound comprehensive energy policy,'' Cheney said. 
Democrats and environmental groups have charged that Bush's plan simply does 
the bidding of large oil and energy companies. Bush received $2.8 million in 
campaign contributions during his presidential bid from the energy and 
natural-resources industry, according to the Center for Responsive Politics. 
``For big oil and other suppliers, the Bush energy plan is a dream come 
true,'' said Sen. Dianne Feinstein, D-Calif. ``But clearly among those most 
left out by the plan are the people and businesses of California who have 
been under siege by electricity and natural-gas marketers bent on gouging 
every cent they can from a broken energy market that the Bush administration 
has refused to try to fix.'' 
But Bush said he's optimistic his plan will solve the nation's energy 
problems. ``I think this is a country that is going to show the rest of the 
world how to deal wisely with energy,'' he said. 











Cogeneration will get presidential spotlight 
Posted at 11:21 p.m. PDT Wednesday, May 16, 2001 
BY SETH BORENSTEIN 

Mercury News Washington Bureau 


WASHINGTON -- President Bush and environmental groups agree on at least one 
part of his energy plan. Both want to promote a kind of utility plant that 
produces both electricity and heat or air conditioning and operates twice as 
efficiently as existing power plants. 
Bush will spotlight the process, called combined heating and power, or 
cogeneration, today in St. Paul, Minn., when he unveils his energy policy at 
the city's downtown heating-and-cooling plant, which soon will be making 
electricity, too. 
Two-thirds of the potential energy in the coal, oil or natural gas burned in 
conventional electric power plants escapes as waste heat or pollution. In a 
cogeneration plant, the waste heat is used to warm buildings or run air 
conditioners. 
``We use two fires when we could use one,'' said Tom Casten, president of 
Private Power LLC, a Chicago-area combined heat company, and the chair of the 
International Cogeneration Alliance, based in Brussels, Belgium. 
U.S. cogeneration has been growing in recent years, but it isn't as popular 
as it is in Europe, Casten said. The United States gets 7 to 9 percent of its 
power from cogeneration plants, he said. Mainly, heavy industries, college 
campuses and downtown sections of older cities such as New York and 
Philadelphia use it. 
Denmark gets 59 percent of its electricity from cogeneration; the Netherlands 
gets 42 percent. Finland hasn't built a new central power plant in 20 years 
and China in the past decade hooked up a system to heat 55 million families 
through cogeneration plants, Casten said. 
``There's an incredible amount we can do which we're not doing,'' Casten 
said. ``If we operated at the efficiency of the Netherlands or Finland we'd 
save $77 billion a year.'' 
To move in that direction, the Bush administration's new energy policy will 
include two provisions. One would speed up depreciation under the tax code 
for cogeneration equipment. The other would rewrite environmental regulations 
in ways that would make cogeneration easier. 
The Bush plan also will try to improve relations between cogeneration 
companies and conventional power companies. They are split over two issues: 
how conventional utility companies pay for electrical power from cogenerators 
and how they get it. 
Some environmental groups are grudgingly on board. ``They're making all the 
right noises,'' said Phil Clapp, the president of the National Environmental 
Trust, a Washington ecology lobby. ``But the proof is going to be in what 
they send to Capitol Hill.'' 


Contact Seth Borenstein at sborenstein@krwashington.com. 









Conservation lab test begins 
Published Thursday, May 17, 2001, in the San Jose Mercury News 
HERE'S the experiment into which California residents and businesses have 
been dragooned: Will higher prices cause consumers to cut back their use of 
electricity? 
On Tuesday, the California Public Utilities Commission bowed to the reality 
of the electricity shortage. People will have to pay more. Industry will pay 
a lot more. One beneficial side effect should be that they use less power. 
Until now, consumers have been buffered from high electricity prices. 
Starting June 1, that's over, except for residents who are especially 
thrifty. 
The PUC imposed an overall rate increase of 3 cents per kilowatt hour in 
March, but it did not decide until Tuesday how to apportion the pain among 
residents, farmers, businesses and industry. 
The allocation of pain left no one happy. The only thing certain in cases 
like these is that each class of customers feels in its heart that the other 
guys are getting a sweet deal. 
The PUC ``caves in to industry lobbying,'' said the consumer group TURN. The 
PUC ``strangled'' business, said the Silicon Valley Manufacturing Group. 
Discounting the hyperbole, industry has the more compelling grievance, even 
though industrial rates have declined relative to residential rates over the 
past two decades, from a time when they were almost the same. 
Electricity costs less per unit to deliver to industries than to residences. 
In the PUC's rate hike, industry should have been asked to pay only the 3 
cents a kilowatt hour instead of roughly 3.5 cents. That still would have 
given it a much larger percentage increase than residences. 
Residents will hardly welcome higher bills. They will rightly suspect that 
generators of electricity are taking advantage of the shortage to squeeze 
consumers. That is a claim to be pursued in Sacramento, Washington and the 
courts. 
The PUC had no choice but to raise rates, given what the state has been 
paying to buy electricity. And despite what hysterical protesters at the PUC 
meetings have said, residents can keep their bills manageable with a litle 
sacrifice. 
Electricity usage that falls below 130 percent of the so-called baseline 
level is exempt from the rate increase. While 130 percent of baseline is less 
electricity than many households need, those who use up to 200 percent of 
baseline, a more achievable goal, will see their bills rise only 7 percent, 
from $76 to $81 for average households in the Bay Area. 
The PUC correctly structured the rate schedule to be punitive toward those 
households that use the most electricity. For those who use 300 percent of 
baseline or more, the bills rise 37 percent. 
If there is any consolation here, it is this: California consistently ranks 
among the states using the least amount of electricity per capita. While 
higher rates will harm some businesses and residents, the state economy as a 
whole is not dependent on an abundance of cheap power. 
The rate hike will cost users of electricity $5.7 billion, which the state's 
economy can absorb. And if it serves as a stimulus for California to become 
even more energy-efficient, the pain will provide at least some gain.














Backups for blackouts 
O.C. events and companies prepare for expected summer power outages. 
May 17, 2001 
By TIFFANY MONTGOMERY
The Orange County Register 







PINK-LIGHT STICKS will make any power outages more festive at the Orange 
County Fair in July.
Photo: Chas Metivier / The Register
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?

Orange County Fair organizers have bought 10,000 glow sticks to make rolling 
blackouts more festive, reserved an extra generator and acquired 15 tower 
lights for parking lots. 
Officials at Edison International Field in Anaheim are conferring with Major 
League Baseball and umpires about what to do if the lights go out during a 
game. 
And several cities are lining up generators for sewer and water pumps and 
installing pricey battery backups for traffic signals to prevent a rash of 
accidents. 
People all over Orange County are readying for a summer of rolling blackouts, 
preparations that intensified after outages this month. Some experts have 
estimated that the state could be facing 15 hours of darkness a week when the 
heat hits. 
"We think it's a good safety measure for the public," said Don Vestal, city 
manager of Westminster, which will spend $240,000 to outfit 81 signals with 
battery packs. 
Medieval Times in Buena Park plans to be ready. The entertainment company, 
which performs 365 days a year, is shelling out $220,000 to buy and install a 
generator to ensure that the show goes on even if the power goes out. 
"This is something the company has been thinking about for years," said 
spokesman David Manuel. "But now we really need it." 












2 FERC nominees pledge gas inquiry 
At Senate committee hearing, Feinstein grills candidates on why Southern 
California is paying more. 
May 17, 2001 
By DENA BUNIS
The Orange County Register 
WASHINGTON Nora Brownell and Patrick Wood promised Sen. Dianne Feinstein on 
Wednesday that if they are confirmed as the nation's newest federal energy 
regulators they will get to the bottom of why the cost of bringing natural 
gas into Southern California has skyrocketed. 
Feinstein, D-Calif., asked the two nominees to the Federal Energy Regulatory 
Commission why natural gas was selling at $11.52 per measured unit Tuesday in 
Southern California and $4.31 in the San Juan Basin in Arizona. The nominees 
were questioned by the Senate Committee on Energy and Natural Resources, 
which must vote to send their nominations to the full Senate. 
"You have hit upon an ingredient in the dysfunctionality that we do not fully 
understand,'' said Brownell, a Pennsylvania public utility commissioner. 
"Both Pat and I have asked a lot of questions and have been unable to get 
answers that are satisfactory to us.'' 
The numbers just don't add up, said Wood, chairman of the Texas Public 
Utilities Commission. 
"We've been asking a lot of different players in the market: Where is the 
money going? Which pocket is it in? Who's got it? I'm not sure I've got the 
right answer to those questions.'' 
President George W. Bush nominated the two Republicans to fill vacancies on 
the five-member FERC. Bush is expected to name Wood, an old friend of his, as 
FERC chairman if he is confirmed. 
Feinstein believes California might have found two allies, who are expected 
to easily win Senate confirmation. "The market is broken in California, and I 
think they understand,'' Feinstein said. 
Feinstein has been stinging in her criticism of FERC since the beginning of 
the state's electricity crisis last year. And she has been consistent in 
calling on FERC to impose temporary price controls to stabilize the 
electricity market, something the majority of the commissioners have refused 
to do. 
Feinstein stopped short of predicting that California might have two votes 
for such caps. And nothing the nominees said at the hearing implied they were 
ready to vote for such controls. 
Both nominees come from states that are in the process of re-regulating their 
electricity markets. And both said they support a market-based system. 
"Rate caps are one of many things that need to be considered, but need to be 
considered in an extremely cautious way'' Brownell said at the hearing. 
Nonetheless, Feinstein was encouraged. She has not been able to ask the 
nominees flat- out whether they would vote for price caps because then they 
would have to recuse themselves if such a vote came up before the commission. 
"You have to nip around the edges and try to figure out" where they stand, 
Feinstein said. "They are knowledgeable; they don't appear to me to be 
ideologues. 
"All I can say is I'm reasonably optimistic.'' 












Illuminating alternatives 
Leaving little to chance, O.C.'s public and private sectors prepare to 
enlighten darker hours. 
May 17, 2001 
By TIFFANY MONTGOMERY
The Orange County Register 







DAVE BROKAW, the county fair's public safety chief, shows the power of light 
sticks
Photo: Chas Metivier / The Register
?
?

Orange County residents, businesses and city governments are scrambling to 
prepare for a predicted wave of rolling blackouts this summer that could shut 
off power for as much as 15 hours a week. 
The uptick in preparations comes as the governor and Legislature continue to 
struggle to resolve the power crisis and as state regulators imposed the 
biggest electricity rate increases in state history. 
Communities are taking dramatic steps to ensure traffic flow with battery 
backups for signals and generators for critical sewage and water systems, 
Businesses also are ramping up. 
Lowe's in Westminster has a 600-kilowatt generator parked on a semi-trailer 
in the back of the building so the home-improvement store can run at full 
capacity during a blackout. 
"In this case it allows us to stay open and free up energy for others during 
a (electricity) shortage," said company spokeswoman Suzanne McCoy. 
The Laguna Hills Holiday Inn has quadrupled its supply of flashlights and 
plans to have employees stationed on each floor during a blackout. At the 
Laguna Hills Mall, diesel generators can light common areas of the center for 
eight hours, but independent boutiques must close during outages, said Lisa 
Emerzian, marketing director. 
Randy Schlotthauer, vice president of Slotsy Tours and Travel in Fullerton, 
learned how power-dependent his business was last year when a car took out a 
nearby telephone pole. His high-tech phone system, which rings through 200 to 
300 calls a day, was useless, as were his computers, which connect to airline 
reservation systems. 
That day, he bought a $600 generator. 
"I always prepare for the worst and hope for the best," he said. 
Orange County Fair plans to ride it out 
Oakley Inc. in Foothill Ranch decided to prepare for the worst in December 
when it bought a temporary generator that could keep the 540,000-square-foot 
plant manufacturing sunglasses, clothing, shoes and watches during blackouts. 
The company is currently negotiating to buy a permanent generator that would 
automatically switch on when the power goes out, said Al Krueger, a company 
manager. 
Venues that draw large crowds, such as the Orange County Fair, have been 
preparing for blackouts for months. Some attractions, such as the two 
carnivals, always run on generators. This year, nine machines will power the 
rides at the fair, which runs from July 13-29. 
The Arlington Theatre also has a backup generator, and another unit to light 
the main mall, security and first-aid areas has been reserved, said Orange 
County Fair General Manager Becky Bailey-Findley. 
Edison Field must play outages by ear 
Edison International Field of Anaheim also has back-up generators to provide 
some electricity during blackouts, but not enough to power the field lights 
during a night game, said John Drum, manager of ballpark operations. 
If a game is in progress, umpires and Anaheim officials will have to decide 
whether to end the game or delay it until the power returns. That decision 
could depend on many things, including how long the lights will be out and 
what inning it is. 
Edison Field officials also have been talking with employees about what to do 
during a blackout, including how to clear the stadium. 
"We have to think about what happens if there's 45,000 people here and we 
lose power," Drum said. 
People driving during blackouts often get confused at intersections where 
traffic signals aren't working, police say. Several cities, including Laguna 
Niguel, Mission Viejo, Westminster and San Clemente are currently installing 
battery back-ups for signals in major intersections to prevent collisions. 
When the power gets cut, signals with batteries become blinking red lights 
instead of going black. The battery packs cost about $3,000 each. 
Several other cities are planning to install the backups or are considering 
the move. Many are planning to use money saved from converting to 
energy-efficient Light Emitting Diode (LED) traffic lights to help fund the 
battery packs. 
City managers have been sharing blackout preparation tips at monthly local 
League of Cities meetings. And if blackouts become a crisis, the county's 
Emergency Operation Center will open and coordinate emergency efforts, just 
as it does during disasters like fires and earthquakes. 
In San Juan, a truck filled with stop signs, barricades and orange cones is 
parked behind City Hall 24 hours a day. City workers have identified key 
intersections that will need stops signs during a blackout, a step many 
cities, including Los Alamitos, Villa Park and Laguna Beach have taken. 
Strategies for sewer and water pumps 
Laguna Beach has readied one mobile generator for sewer pump stations that 
can't function without electricity. 
"We only have to worry about six stations," said City Engineer Steve May. 
"One hour (blackouts) shouldn't be a problem." 
Huntington Beach also has back-up generators for sewer stations. Trabuco 
Canyon and Rancho Santa Margarita water districts have emergency generators 
for water pumps, as does the city of Fountain Valley. 
Tustin is in the process of retrofitting its wells with generators and 
recently tested a mobile unit. Officials have ordered two more, $100,000 
mobile generators. 
The Irvine Ranch Water District has already used generators extensively this 
year. 
The district is on the "interruptible" plan - a program where users agree to 
shut down power during a shortage in exchange for lower rates. So far this 
year, the district has turned off power and turned on their fuel-powered 
generators 14 times, using 70 percent of the allotted generator usage allowed 
by air quality regulators. 
"We're trying to save that 30 percent we have left for the summer months," 
said district spokeswoman Marilyn Smith. 
County officials are preparing for blackouts by setting up emergency 
generators for the downtown Santa Ana building that houses the offices of the 
county assessor, clerk-recorder and treasurer-tax collector. The $300,000 
project should be complete by July. 
The Costa Mesa Senior Center considered buying a generator but found the 
units too expensive. 
"Our biggest crisis would be if we had a power outage on a Thursday during 
bingo," said Diane Schwartz, facilities manager. "We would have to call the 
numbers by hand." 










Bush offers varied plan for energy 
Conservation, exploration and nuclear efforts are in the proposal. 
May 17, 2001 
By DAVID E. SANGER
The New York Times 
WASHINGTON President George W. Bush's long-awaited energy plan proposes 
loosening regulations on oil and gas exploration, conservation-minded efforts 
like a review of gas-mileage standards, and a $4 billion tax credit for a new 
generation of highly fuel-efficient cars. 
It also urges a reconsideration of a quarter-century ban on the reprocessing 
of nuclear fuel. 
With a declaration that the energy problems threaten the nation's economy and 
security, the Bush plan also orders a sweeping review of public lands to 
determine whether more energy resources can be extracted. 
"America in the year 2001 faces the most serious energy shortage since the 
oil embargoes of the 1970s," the report by the president's energy task force 
states. 
Without action, projected energy shortfalls in coming years "will inevitably 
undermine our economy, our standard of living and our national security." 
The proposals are among 105 initiatives outlined in the report, according to 
a senior government official who briefed reporters on its contents Wednesday 
night. 
The White House released an eight-page overview of the document, which will 
be distributed in full today. 
The official said Bush would also issue two executive orders this week that 
will direct all federal agencies to consider the effects of all new 
regulations on energy production and to expedite permits for all energy 
projects "while remaining mindful of protecting the environment." 
The executive order directing agencies to speed up permits for power plants 
and other energy projects is an element officials pointed to when asked how 
Bush's plan would help California's electricity crisis. 
The plan also directs Secretary of Energy Spencer Abraham to review whether 
the federal government should help with the widening of Path 15, the 
transmission conduit that connects Northern and Southern California. 
The inadequacy of that path has created a bottleneck and made it difficult to 
move power from one end of the state to the other. 
Bush will also order the secretary of the interior, Gale Norton to "look at 
any impediments" that discourage exploration for oil and gas. 
The report repeats Bush's commitment to explore in the Arctic National 
Wildlife Refuge - a proposal that seems unlikely to survive in Congress - but 
it also urges a review that will include other locations in Alaska, the Rocky 
Mountains and the Gulf Coast. 
The decision to offer a relatively hefty tax credit for "hybrid" cars, which 
use a combination of gas and battery power, is bound to help both Detroit and 
two Japanese automakers - Honda and Toyota - which are already marketing such 
vehicles in the United States. 
They will be less enthusiastic about orders by Bush for the government to 
review the federal standards for automotive fuel efficiency - though the 
report makes no commitment that those standards will be raised. 
The plan also calls for a new evaluation of nuclear reprocessing, a 
technology that takes advantage of the fact that as reactors consume uranium, 
they also produce plutonium. If the plutonium is chemically scavenged from 
the fuel, it can be used to run reactors. 
But the technology has drawbacks. The work is dirty, with the threat of 
radioactive releases, and it is expensive. For the past decade at least, it 
has been far cheaper to fuel reactors with new uranium than to recover 
plutonium. 
And while uranium fuel used in power reactors cannot be used to make a bomb, 
plutonium can. 
That raises the threat of world commerce in a material that could be diverted 
by countries, or even terrorists, that want a bomb. 
The report mixes a number of existing initiatives with new ones, particularly 
in the area of conservation. 
For example, of $10 billion in proposed tax credits over the next 10 years, 
$3.7 billion are already in the proposed fiscal 2002 budget. 
There are no credits or other tax breaks for oil or gas producers, or 
electric utilities - a reflection of the White House's sensitivity to 
criticism that Vice President Dick Cheney, who headed the task force, and 
other top officials spent their private-sector years in the energy industry. 
But the tone of deregulation, reassessment of the merits of the Clean Air 
Act, and the emphasis on opening of federal lands to more energy production - 
everything from wind power to oil and gas drilling - provides those 
industries with effective subsidies totaling in the billions. 
Register staff writer Dena Bunis contributed to this report. 













Energy notebook 
FERC won't let small generators out of state contracts -- yet 
May 17, 2001 
From staff and wire reports 
WASHINGTON Federal energy regulators stopped short of letting small power 
generators in California get out of existing contracts with utilities that 
cannot pay, though they said they will revisit the issue. 
The Federal Energy Regulatory Commission extended waivers to allow small 
generating facilities to shift their power elsewhere in the event that a 
judge orders they can break their contracts. 
"The commission is not acting unilaterally to abrogate existing contracts," 
FERC Chairman Curt Hebert said. 
He said the FERC was following the wishes of Gov. Gray Davis. 
Some generators in the state aren't operating at full capacity because they 
haven't been paid. 
Davis wrote to Hebert this week asking the commission to hold off on allowing 
the generators to break their contracts until the state has a chance to work 
things out with generators. 
Officials of Southern California Edison, the state's second-largest utility, 
also urged the FERC not to intervene, saying any remedy that lets generators 
refuse to sell power to utilities that can't pay will prompt generators to 
sell their electricity elsewhere. 
Two Democrats urge a 'buyer's cartel' in West 
SACRAMENTO Two Democratic lawmakers Wednesday called for a Western region 
"buyer's cartel,'' in which Californians would endure planned blackouts when 
the state turns away from high-priced power. 
Assemblyman Fred Keeley of Boulder Creek, the resolution's author, and 
Assemblyman Paul Koretz, D-West Hollywood, said they wanted to encourage Gov. 
Gray Davis to coordinate with Oregon and Washington to become a regional 
cartel. 
The goal of such an action, said Keeley, the Assembly's point man on energy, 
is to force generators to lower their energy prices. 
California can't continue to pay exorbitant prices - up to $1,900 a 
megawatt-hour - for power, Keeley said. 
"This is a bold proposition, and blackouts need to be managed in a 
thoughtful, predictable way,'' Keeley said. 
The concept was first proposed by the Utility Consumer Action Network and 
Peter Navarro, a University of California, Irvine, economics professor. 
Davis said the concept is one of the many options he's considering, but he 
hasn't made a decision. 
GOP lawmakers proposing a San Diego public utility 
SACRAMENTO A number of Republican lawmakers from San Diego are proposing that 
their county form a municipal utility district that would have the authority 
to condemn San Diego Gas & Electric's facilities. 
The bill is authored by Assemblyman Mark Wyland, R-Del Mar. Wyland wants to 
form a San Diego Municipal Utility District, but the new public utility would 
not have power plants to generate electricity for its customers. 
The municipal district would have the authority to take over San Diego Gas & 
Electric's existing plants and transmission lines. 
Assemblywoman Pat Bates, D-Laguna Niguel, is also supporting the bill. 
The bill, AB206, applies only in San Diego County. The 100,000 south Orange 
County residents served by San Diego Gas & Electric would remain with the 
utility. 
A Sempra spokesman would not comment on how Orange County residents would be 
affected if a public San Diego utility seized a number of the company's 
generating and transmission facilities. 
Governor signs measure for state power authority 
SACRAMENTO California will no longer be held captive by energy suppliers 
charging high prices for power, Gov. Gray Davis said Wednesday as he 
officially put California into the electricity wholesale business. 
By signing a bill by Senate Leader John Burton, D-San Francisco, Davis 
created the California Consumer Power and Conservation Financing Authority - 
a new state agency that can issue up to $5 billion in revenue bonds to build, 
purchase, lease or operate power plants. 
Plants financed by the authority will provide cost- based electricity to 
California consumers, Davis said, which will help stabilize the state's 
volatile energy market. 
The power authority is modeled after one in New York, which has 10 power 
plants, 1,400 miles of transmission lines and produces about 25 percent of 
the state's power. 
Nebraska also has a power authority, which created a market in which 
residents pay 22 percent less than the national average, Burton said. 
PG&E to pay 49 counties $41 million in back taxes 
SAN FRANCISCO Forty-nine California counties soon will receive roughly $41 
million in late property taxes due from bankrupt Pacific Gas & Electric Co. 
U.S. Bankruptcy Judge Dennis Montali approved a request from the utility 
Wednesday to pay the counties for taxes owed before it filed for bankruptcy 
on April 6. 
"Somebody's going to have to tell me why I should hold 49 counties of 
California hostage for taxes that are due and owing," Montali told other 
creditors, who wanted the payment postponed until the court determines how 
much PG&E will pay everyone to whom it owes money. 
Montali also allowed the utility to spend around $260 million to fund energy- 
efficiency programs approved before April 6 that could help Californians arm 
themselves with vital megawatts in the state's battle against rolling 
blackouts. 
More than 100 protesters gathered outside the court demanding that low-income 
ratepayers be represented at future court hearings. 
The protesters waved signs that said: "Bankruptcy court does not protect the 
poor." 
Register staff writer Hanh Kim Quach, Bloomberg News and The Associated Press 
contributed to this report. 





Calif. Enters Wholesale Business



By JENNIFER COLEMAN
Associated Press Writer




SACRAMENTO (AP) _ Gov. Gray Davis signed a bill Wednesday
creating a state agency that will be able to borrow up to $5
billion to build, buy, lease or operate power plants.


California will no longer be held captive by energy suppliers
charging high prices for power, Davis pledged, as he officially put
the state into the electricity wholesale business.


Plants financed by the California Consumer Power and
Conservation Financing Authority will provide cost-based
electricity to California consumers, Davis said, which will help
stabilize the state's volatile energy market.


The power authority is modeled after one in New York, which has
10 power plants, 1,400 miles of transmission lines and produces
about 25 percent of the state's power. Nebraska also has a power
authority, which created a market in which residents pay 22 percent
less than the national average.


An increase in power plants down for repairs this year ``is
strong evidence that people are manipulating the market by
withholding power to drive up prices,'' Davis said.


``The only way we can fight back against this type of price
gouging and manipulation is to build more plants,'' he said.


Having a public power authority will ``supplement not supplant''
private energy sources, Davis said.


``In a deregulated world, the only way you can guarantee
reliable affordable power is to build it yourself if private
companies won't do it,'' he said.


Few Republicans in the Legislature supported the bill, saying
the state shouldn't get further into the power business. They also
warned that it could discourage private companies from building
plants.


The bill was created by Senate Leader John Burton and sponsored
by state treasurer Philip Angelides. Angelides conceded that it
won't save California from blackouts this summer but will help
stabilize the energy markets as more generators are built.


Angelides added that the bill is the ``beginning of the end for
deregulation ... which has proven to be a disaster.''


He repeatedly blamed the crisis on out-of-state power
generators: ``There is a tremendous drain on California because of
generators' prices. And that drain is heading straight to the heart
of Texas.''


Other key lawmakers urged Davis Wednesday to join with the
governors of Washington and Oregon to set a limit on the price the
states would pay for power this summer, creating a ``buyers'
cartel.''


The states would refuse to pay more than a predetermined price
that would give electricity generators a ``reasonable'' profit
under a resolution sponsored by nine Assembly Democrats.


If generators refused to lower their prices, that would mean
almost certain blackouts in California this summer, said
Assemblyman Paul Koretz, the measure's author.


But those will happen anyway, by all accounts, and the price cap
would let the state better predict and manage the outages, he said.


The resolution proposes that caps be installed for two years,
until enough power plants can be built to allow the market to
function naturally.


The state has been buying power for the customers of three major
utilities since mid-January. The utilities' credit was cut off
after they amassed debts of more than $14 billion dollars due to
high wholesale electricity prices that they were unable to pass on
to customers.






[B] POWER UPDATE/ Bush calls on FTC to investigate price gouging complaints





(BridgeNews) May 16, 2118 GMT/1718 ET

.................................................................


TOP STORIES:


Bush calls on FTC to investigate complaints of energy price gouging


Washington, May 16 (BridgeNews) - President Bush Wednesday called on the
U.S. Federal Trade Commission to investigate charges of energy price gouging,
if circumstances warrant, saying he does not want American consumers to be
"overcharged"  for gasoline, electricity or natural gas.

( Story .21973, .21829, .20005, .16888 )


Court okays PG&amp;E request to continue public purpose payments


San Francisco, May 16 (BridgeNews) - The U.S. Bankruptcy Court Wednesday
approved Pacific Gas and Electric's motion to confirm that the funds collected
by the utility for public purpose programs can be used immediately to pay
obligations incurred before its April 6 petition. The court also allowed 
PG&amp;E
to pay its pre-petition portion of its property taxes.

( Story .21644 )


FERC finds no need for refunds for April Calif. power sales


San Francisco, May 16 (BridgeNews) - There will be no refunds for wholesale
power sold into California in April, said a U.S. Federal Energy Regulatory
Commission order issued Monday. FERC determined a $318 per Megawatt-hour
clearing price for April but could not apply it to any power sales since the
state did not call a Stage 3 power emergency last month to kick in the refund
mechanism.

( Story .21750 )


FERC nominees noncommittal on California electric price caps


Washington, May 16 (BridgeNews) - President Bush's two nominees to the
Federal Energy Regulatory Commission on Wednesday sidestepped lawmakers'
questions on imposing price controls on the cost of wholesale electricity in
California, leaving open to question whether as commissioners they will move 
to
cap spiraling power costs in the nation's most-populous state.

( Story .19400 )


.................................................................


OF INTEREST:


--AMERICAS--


Edison utility fncl stabilization bill seen Thurs: spokesman


San Francisco, May 16 (BridgeNews) - California Senator Richard Polanco (D)
will introduce legislation Thursday to implement the memorandum of
understanding between Southern California Edison and California Gov. Gray 
Davis
to stabilize the utility's financial health, Steve Maviglio, Davis spokesman,
said Wednesday. Maviglio said that the bill will just address the MOU and will
not take into account alternate  "Plan Bs"  being circulated by other
legislators.

( Story .20409 )


Calif. governor signs power plant authority bill


San Francisco, May 16 (BridgeNews) - California Gov. Gray Davis Wednesday
signed a bill to create the California Consumer Power and Conservation
Financing Authority, which will be given broad powers to construct, own and
operate electric generation and power facilities and has the power of eminent
domain to take over plants as need be. The authority can also invest in 
natural
gas projects, using the up to $5 billion in revenue bonds it can issue.

( Story .21741 )


CMS says leak reported on offshore Sea Robin natgas pipeline


New York, May 16 (BridgeNews) - CMS Sea Robin is investigating a reported
leak on its offshore natural gas pipeline system near Eugene Island Block 295
on the  "J"  leg. The investigation requires the  "J"  segment of the pipeline
to be removed from service. A CMS spokesman declined to comment on how much


a

natural gas volume or capacity was being affected by the outage, citing 
company
policy.

( Story .19949 )


PG&amp;E calls customer-specific flow order on Calif. natgas pipe


New York, May 16 (BridgeNews) - Pacific Gas &amp; Electric's California Gas
Transmission (CGT) unit has issued a customer-specific operational flow order
(OFO) for its natural gas pipeline system effective Thursday. CGT forecasts
natural gas flows on its pipeline to be outside of operating limits Thursday
and Friday and much above limits Saturday. PG&amp;E's citygate prices are seen
being pressured Thursday as most Wednesday trades were done before the OFO was
issued.

( Story .21120 )


Williams Northwest flow order pressures Rockies cash prices


New York, May 16 (BridgeNews) - An operational flow order (OFO) issued for
Williams' Northwest natural gas pipeline continues to pressure prices in the
Rocky Mountain region. The order, restricting volumes through the Kemmerer
Compressor, was effective Tuesday.

( Story .21499 )


Off spec natgas seen pressuring prices, forcing pipe alerts


New York, May 16 (BridgeNews) - Natural gas containing high levels of
hydrocarbons are currently flowing on many pipelines, a fact that some
observers say is partly responsible for the recent pressure on cash prices.
Several major pipelines in the Gulf and Midcontinent region are issuing alerts
due to off-spec natural gas flowing into their pipelines.

( Story .19669 )







GOP Promises Energy Package Push



By H. JOSEF HEBERT
Associated Press Writer




WASHINGTON (AP) _ Awaiting an energy blueprint from the White
House, Senate Majority Leader Trent Lott promised to move quickly
on legislation, hoping Congress can complete action before the end
of summer.


But Lott said Wednesday that some of President Bush's expected
recommendations, such as expanded drilling on federal land and
taking private land for power lines, ``will be hotly debated'' on
Capitol Hill.


Democrats launched a pre-emptive strike Wednesday, saying the
Bush energy package will do little to address soaring gasoline
prices, the West Coast power crisis and the need to get Americans
to use less energy.


``The president seems almost totally indifferent'' to soaring
electricity problems and blackouts in the West, said House Minority
Leader Richard Gephardt, D-Mo.


White House press secretary Ari Fleischer insisted that the
president's energy task force, while focusing on long-term energy
problems, also will have measures that ``will help in the short
term.''


The ``comprehensive approach'' to be outlined by the president's
105 specific energy proposals ``will help consumers'' this summer,
said Fleischer, who didn't provide details.


Other government sources said the task force recommendations
will direct Environmental Protection Agency Administrator Christie
Whitman to look into ways to give refiners more leeway in blending
gasoline to spur supply and ease distribution.


The task force will ask the EPA to try to get states to abandon
requirements for ``boutique'' gasoline blends as part of their air
pollution control strategies.


The industry has blamed the requirement for many different
blends for some of the refinery and distribution problems, a claim
disputed by environmentalists.


The task force also will call for increased funding of the
federal programs to help low-income families pay for cooling and
heating costs, said the sources, who spoke on condition of
anonymity.


Both Republicans and Democrats in Congress agree those funds
should be beefed up.


Lott, R-Miss., speaking to reporters, said he hoped to bring an
energy bill to the Senate floor next month and have it to the
president by July 4 ``or certainly this summer.''


As for Democratic criticism that the GOP approach tilts too
heavily toward production, Lott said, ``I don't believe we can
conserve ourselves into (meeting) the energy needs we'll have in
the future.''


``The president has no program for the short term, telling
people that they're on their own. And the only long-term solution
is to waive environmental protections,'' Gephardt countered at a
news conference.


Among the recommendations that will be made by the president's
energy task force is a call for more transmission lines and power
plants to address future electricity needs and changes in air
pollution rules to improve the production and distribution of
gasoline, according to government sources.


Against strong opposition from environmentalists, the task force
also will call for lifting the ban on oil drilling in the Arctic
National Wildlife Refuge in Alaska. Specifically, Bush will call
for opening 8 percent of the pristine territory to oil drilling,
Fleischer said Wednesday.


But none of these proposals will provide much help this summer,
officials acknowledge.


Meanwhile industry experts predicted more severe power problems
in California, including frequent rolling blackouts; possible power
disruptions in the Northeast; and tight electricity supplies in the
Pacific Northwest because of the region's severe drought.


The North American Electric Reliability Council, an
industry-sponsored watchdog organization, said in a report Tuesday
that California's power problems this summer are likely to be worse
than even state officials have predicted, with 260 hours of rolling
blackouts _ an average of 20 hours a week _ likely because of a
power shortfall that could be as much as 5,000 megawatts during
peak demand periods.


A megawatt is enough power to serve 1,000 homes.


While most of the country will have enough electricity, the
council's report also warned of potential problems in the
Northeast, with possible power disruptions if there is a persistent
heat wave, and in the Pacific Northwest as well as possibly in
Texas. The New York City area could have blackouts if there are
transmission problems on lines into the region, the report said.


While Texas has plenty of electricity, it ``should be closely
watched'' because the state is shifting into a retail competitive
market in June and consolidating some grid management activities,
David Cook, the reliability council's general counsel, said.


``There is no magic bullet, no single thing to be done that will
solve the challenges we face'' in trying to assure electricity
reliability, Cook said in testimony before the Senate Energy and
Natural Resources Committee.


In the Pacific Northwest, there is expected to be enough power
to meet summer demand despite low hydroelectric generation as a
result of a severe drought. But, the report said, if the region's
drought continues, there could be rolling blackouts next winter.






Covanta Energy to Provide California With 500 Megawatts of New Power



FAIRFIELD, N.J.--(BUSINESS WIRE)--May 16, 2001 via NewsEdge Corporation  -



California Energy Commission Grants Approval to Three Mountain


Power Facility


Covanta Energy Corporation (NYSE: COV) announced that the
California Energy Commission (CEC) today unanimously approved the
Company's "Application for Certification" for its proposed
500-megawatt Three Mountain Power project. The decision, which was
announced at a CEC business meeting in Sacramento, California, grants
Covanta a license to construct and operate the natural gas-fired,
combined cycle facility to be located in Burney, approximately 45
miles northeast of Redding, California. Project construction is
expected to begin in the fall of 2001, with commercial operations
expected to commence in late 2003 or early 2004.


"Three Mountain Power will be a vital addition to California's
energy supply, adding 500 megawatts of environmentally friendly,
dependable power to the grid," said Scott Mackin, President and Chief
Executive Officer of Covanta Energy. "Given the urgent need for power,
we're pleased that CEC has approved this project. With its
state-of-the-art technology, Three Mountain Power will be among the
cleanest and most efficient power plants of its kind in the nation, if
not the world."


The Three Mountain Power project will also bring significant
economic benefits to the Burney region. An average of 200 construction
workers will build the project over two years, with an estimated
construction payroll of $25 million. Three Mountain Power will also
create between 20 and 25 new permanent jobs, with an annual payroll of
over $1 million. To allow local residents to train and potentially
compete for these jobs, Three Mountain Power is sponsoring Lassen
Community College's power plant operator training class in the
community. Once operational, the facility is expected to pay $2.5
million annually in property taxes.


Covanta Energy Corporation is an internationally recognized
designer, developer, owner and operator of power generation projects
and provider of related infrastructure services. The Company's
independent power business develops, structures, owns, operates and
maintains projects that generate power for sale to utilities and
industrial users worldwide. Its waste-to-energy facilities convert
municipal solid waste into energy for numerous communities,
predominantly in the United States. The Company also offers
single-source design/build/operate capabilities for water and
wastewater treatment infrastructures. Additional information about
Covanta can be obtained via the Internet at www.covantaenergy.com, or
through the Company's automated information system at 866-COVANTA
(268-2682).



CONTACT: Covanta Energy Corporation | Investor Relations: | 
Louis M. Walters, 973-882-7260 | Media Relations: | Danielle Tinman, 
415-538-3718












By David Wagman
dwagman@ftenergy.com
This is the second in a three-part series examining the Northeast's debate 
over three key issues: generation, transmission and environment. How the 
region deals with these issues could become a model for the rest of the 
country.

Power plant developers in the Northeast did what experts expected them to do 
when markets first opened to competition: They flocked to the region. 


In fact, so much new construction is underway that observers now fret over 
possible overbuilding and depressed power prices. But as new power plant 
construction continues apace, some owners of existing plants worry that 
strict new local environmental rules favor natural gas so much the region may 
end up at risk due to the fuel's price volatility. 

"The new regulations tend to favor combined-cycle natural gas facilities," 
said Bryan Riley, Eastern regional vice president with NRG Energy. "We 
advocate that fuel diversity is essential in electric supply going forward." 

Not a surprising position, perhaps, given that Minneapolis-based NRG Energy 
owns the 117-MW Somerset station, one of what Massachusetts officials call 
the "filthy five" (actually six, but the alliteration is better) power plants 
targeted for scrubbing, fuel switching or shutdown. 



"The standard in Massachusetts for CO2 (carbon dioxide) is, at least with 
current technology, impossible to meet with a coal-fired facility," Riley 
said. "We can't afford to spend hundreds of millions of dollars to bring it 
up to standards." 

The Providence, R.I., Journal-Bulletin quoted Massachusetts officials as 
saying the plants targeted under the plan produce 40% of the state's 
electricity. Even so, enough energy would be available to meet the state's 
needs if all six shut down, the officials said, noting 14 new plants should 
come into operation by 2005. 

Indeed, according to Boulder, Colo.-based RDI's NEWGen database, more than 
15,000 MW of new generating capacity is either under construction or in the 
advanced stages of development in the Northeast Power Coordinating Council 
(NPCC) region, which includes New York, New England and eastern Canada. 
Almost all the new capacity will be natural gas-fired. 



Nearly half of the capacity*some 7,300 MW*will be in Massachusetts. Another 
2,800 MW will be in New York state, including the proposed Athens generating 
station, which PG&E National Energy Group plans to have on-line by 2004, 
provided the hotly contested plant wins necessary permits. 

NEW CAPACITY ADDITIONS IN NPCC SPREADSHEET
http://public.resdata.com/ei_departments/lead/canada.xls

But the sheer volume of activity doesn't mean all areas will end up being 
served equally. 

Bottlenecks
Three major transmission constraints*one affecting Boston and northeastern 
Massachusetts, one affecting New York City and one affecting Long Island, 
N.Y.*leave those areas with limited ability to bring in power from outside 
the immediate area to meet electric demand. At the same time, local siting 
issues make it tough to build new power plants. As a result, high consumer 
demand has meant that some older, dirtier and less efficient plants are still 
in service, giving policy makers a target for stricter air quality controls. 

Some of the oldest, least efficient and most expensive plants are in 
southeastern New York state and New York City, said Doug Logan, principal 
with RDI Consulting. But high demand for power means this capacity is 
unlikely to leave service anytime soon. Consolidated Edison, New York City's 
utility, said in early May it planned to restart its 50-year-old Hudson 
Avenue generating station. Environmentalists objected, telling the New York 
Times the plant would create more pollution per pound of fuel consumed than 
any other in the city. 

Worm in the Big Apple
But those responsible for regulating the state's power supplies point to a 
dilemma facing New York City. 

In testimony before a state oversight panel in March, Public Utility 
Commission Chair Maureen O. Helmer said at least 80% of New York City's 
projected peak load must be met by generation located within the city. She 
said the New York Independent System Operator (ISO) projected peak load for 
the city of 10,535 MW, meaning roughly 8,428 MW would have to be generated in 
the city, due to its import constraints. 

But the same ISO report found only 8,031 MW of in-city generating capacity as 
of Feb. 15. If correct, that adds up to a 397-MW shortfall, under normal 
weather conditions. Under extreme weather conditions, New York City's peak 
load could reach 11,125 MW, the ISO said. That would raise the corresponding 
in-city capacity requirement to 8,900 MW. 

"Thus," Helmer said, "the in-city generating deficiency would increase to 869 
MW rather than 397 MW." Given the transmission constraints and the 
possibility of much hotter than normal weather, "397 MW must be viewed as a 
floor, not a ceiling," she said. 

Bottom line: Approve new capacity and install it quickly. The New York Power 
Authority plans to add 450 MW of capacity within New York City before the 
start of the summer peak demand season. Helmer said this amount would meet 
minimum requirements and would help avoid calling on older, dirtier 
generating plants. 

Tougher rules
Policy makers in Massachusetts and Connecticut are waging an environmental 
war of their own by imposing highly restrictive rules. 

The Connecticut rules*described by one source as the "toughest air emission 
regulations in the country"* were adopted in December and follow an executive 
order from Gov. John G. Rowland to reduce SO2 emissions by over 40,000 tons a 
year (a 50% reduction) and NOx emissions by nearly 3,500 tons a year (a 
20%-30% reduction) from 61 large emission units statewide, including power 
plants. 

In April, Massachusetts imposed new rules of its own, targeting power plant 
emissions of NOx, SO2, mercury and*for the first time*carbon dioxide, the 
same stuff we exhale with every breath. 

The Massachusetts rules are aimed squarely at six power plants (the so-called 
"filthy five") and will force them by 2004 to cut their NOx emissions to 
about half what federal law allows. By 2006, the plants would have to cut SO2 
emissions by 53%-74%. Carbon dioxide emissions would be reduced by 10%, and 
airborne mercury emissions would also fall, by an amount to be set next year. 

As an alternative, state officials gave power plant owners until 2008 to 
switch to natural gas.

"We would utilize the rules under the second strategy and re-permit the 
plant," said NRG Energy's Riley, speaking of his company's Somerset station. 

Another source at a generating company in the area, who asked to remain 
anonymous, said his company is still trying to figure out the regulations and 
where air quality standards are going overall. Signs point to a shift in 
strategy among states. 

"After 10 years of the states and the feds saying there's a place for 
regionally based market trading (of emission credits), all of a sudden 
they're throwing it out the window and going individually," the power 
industry source said. "It's incongruous. As we're getting larger competitive 
markets, we're seeing legislatures becoming more specific" in writing 
environmental rules. 

$100 million and 100 years
Alex Farrell, research engineer in the Department of Engineering and Public 
Policy at Carnegie Mellon University, agreed. States appear less willing to 
let power companies "average" emissions across a region's entire fleet of 
power plants. Rather than trade over-compliance at one plant for 
under-compliance at another, regulators are clamping down on all power 
plants. But that strategy could backfire. 

A power plant operator might invest $100 million on scrubber technology for a 
baseload plant that runs at a 90% capacity factor, said Riley. But a $100 
million investment may be harder to swallow at a peaking plant with a 30% 
capacity factor or less, he said. 

Using a regional averaging and emission trading approach, overachieving at a 
big baseload plant could produce enough credits to offset emissions at a less 
frequently used peaking facility. That would leave both plants economical to 
run. 

Under the new rules, baseload and peaking plants are treated the same and 
expected to scrub. State-specific emission trading programs are being 
contemplated, but no assurances exist that what has worked at the more 
dynamic regional level can work on a smaller, more confined local level. 

"If you force someone to make a $100 million investment to a plant and the 
operator looks and sees it will take 100 years to recover, then you may need 
to shut the plant down," Riley said. The result "threatens the reliability of 
the system," particularly if peaking plants end up at risk, he said. 

Capacity additions
Among other large power plant projects tracked by NEWGen in the Northeast are 
the 800-MW Gorham station being built in Maine by American National Power 
Inc., the 792-MW Lake Road facility being built in Connecticut by PG&E 
National Energy and the 750-MW Nickel Hill Energy plant being built by 
Constellation Power in Massachusetts. In the Canadian portion of NPCC, the 
largest power plant under construction is an 870-MW hydro facility being 
built by Hydro-Quebec. The Sainte-Marguerite station is due to enter service 
this spring. 

The single largest capacity addition currently planned in the Northeast would 
be PG&E National Energy Group's 1,080-MW Athens station. Though the plant was 
proposed in April 1997, it may not be available until 2004 at the earliest, 
due to skirmishes over local siting issues, state siting authority and 
federal project reviews. 

When Athens was first proposed, three-quarters of the state's fossil-fired 
plants were at least 35 years old. Many of these plants were oil-fired and 
built before passage of the federal Clean Air Act. Athens was conceived to 
displace these older assets and serve the New York City market, said Dan 
Whyte, director of permitting for PG&E National Energy Group. 

But the power plant ran afoul of local preservation groups, which objected to 
the developer's choice of a site within view of the estate of a 19th century 
leader of the Hudson River school of landscape painting. 

Court cases followed, including a challenge to New York's Article X and the 
siting board's authority to waive local zoning rules to approve a plant 
proposal. In April, a state appellate court upheld the siting board's 
authority and said private applicants like PG&E National Energy Group have no 
duty to look at alternate locations. 

The action isn't finished, however. The U.S. Army Corps of Engineers*one of a 
handful of federal agencies reviewing the plans*has yet to issue a project 
permit. Reports say the corps is also considering the "landscape view" issue 
and could, under federal law, require the developer to consider alternative 
sites. 

Also worth watching is the expected return*between December 2001 and December 
2005*of several nuclear units operated by Ontario Power Generation, adding 
3,600 MW of capacity to the market. 

Their return would mean a "flood of power coming into the market," 
potentially driving prices lower on already low-cost portions of New York 
state's grid, said RDI's Logan. "Any one of the units could have a 
substantial impact on the market, at least in western New York state and 
perhaps even in the East Central Area Reliability Council region," which 
includes parts of the industrial Midwest. 










Gas Pain:
Nation Wants Energy,
And Drillers Find It
In People's Back Yards
---
Owners Have Little Recourse
When They Learn They
Don't Own Mineral Rights
---
A Clash in La Plata County 
By Chip Cummins 
? 
05/17/2001 
The Wall Street Journal 
Page A1 
(Copyright (c) 2001, Dow Jones & Company, Inc.) 
DURANGO, Colo. -- From their patio just outside this Rocky Mountain resort 
town, Mark Brown and Brenda Nash can see almost 30 miles as ponderosa pines 
give way to open range. "All we can hear here is the birds, the wind and the 
coyotes," says Ms. Nash. 
Not for long. J.M. Huber Corp., a New Jersey oil company, plans to cut a 
swath of scrub oak and pine from the hill where the couple's log-frame home 
sits to make room for a 100-foot-high rig that will work around the clock for 
several days drilling for natural gas. Then, depending on how the well goes, 
Huber could set up a 25-foot steel pump jack just a stone's throw from the 
couple's back porch. 
The head of another Huber pump jack already creaks slowly up and down on a 
cleared lot across the road from the entrance to the Homestead Ranches 
subdivision where the couple live. "Look where they want to put it," says Ms. 
Nash. "It's right in the middle of a suburb." 
Environmentalists and politicians are girding for a fight with the Bush 
administration over plans, expected to be announced today, to open more 
federal land in Alaska and the West to drilling. But here and in many other 
parts of the country, property owners are already engaged in -- and losing -- 
a battle over drilling on private land. 
Natural-gas drilling has exploded as companies pour record profits from high 
prices back into exploration and development. Baker Hughes Inc., a drilling 
contractor, says 994 rigs are drilling for natural gas in the U.S. these 
days, up 57% from this time last year and the highest number since it started 
counting them in 1987. Some states have loosened restrictions in gas-rich 
areas on how far apart wells need to be. 
At the same time, once-rural communities where much of the drilling takes 
place have seen surges in new residents fleeing the cities, putting the two 
sides on a collision course. Now, "a lot of our production is out in the 
areas where people live," says Adam Keller, a planner for Durango's La Plata 
County. 
More drilling adds welcome tax revenue and jobs. But in many cases, the 
people who look out their windows on the rigs and pumps aren't seeing a dime. 
New wells often are drilled on land where the surface rights and the mineral 
rights are separate. The landowner can farm or build a home, but the returns 
from oil or gas production go to someone else. 
In most states that have large mining or oil-and-gas production, surface and 
mineral rights were severed decades ago as landowners sold one or the other. 
Now, thanks to inheritance, for every deed to a property's surface, there may 
be numerous mineral-rights owners. In exchange for royalties on production, 
these owners can lease their rights to oil and gas companies, which face only 
a few restrictions on how and when they can exploit the underground riches. 
To put in a well, oil companies clear and cover with gravel a drilling pad as 
big as several acres, move in a rig and dig a pit where mud used for 
lubricant is mixed and stored. The process can take up to four weeks. Once 
the well is finished, landowners are left with about an acre of cleared land 
sporting a shoulder-high "Christmas tree" of pipes, gauges and valves, plus 
storage tanks and sometimes a compressor and two-story-high pump jack, all of 
which may stay on the land for years. "The one person that's getting nothing 
out of this is the landowner without any mineral rights," says Jerry 
Campbell, a land developer in North Texas. 
With the boom, homeowners and developers all over Texas, the biggest 
gas-producing state, are battling oil companies over well placements. 
Oklahoma's Conservation Commission has put out a brochure telling landowners 
how to deal with geologists conducting seismic studies with explosives on 
their land. Farmers and new homeowners in western New York and parts of West 
Virginia are complaining of noise and traffic related to drilling. 
The clash has been fierce in the West, in places like southwestern Colorado's 
La Plata County, an expanse of mesa and wooded foothills that draws mountain 
bikers and rafters in the summer and the ski and snowboard set in winter. The 
population here has been growing about 3% a year, and annual building permits 
now run double those of a decade ago. 
La Plata County also sits above the San Juan Basin, by some estimates holding 
40 trillion cubic feet of recoverable gas, much of it trapped in underground 
coal seams. It's so rich that production from this county alone is enough to 
meet natural-gas demand for the entire state. 
Drilling here, after taking a jump in the early 1990s, fell off as gas prices 
remained low. But interest revived in a hurry last year after gas prices 
soared and then leveled off recently at a profitable $4.50 per million 
British thermal units. The county planning office, tucked in the courthouse 
basement, expects to approve about 100 drilling permits this year, compared 
with 62 in 1999, for operators like Huber and BP PLC. 
Last year the Colorado Oil and Gas Conservation Commission ruled that 
drillers could sink one well per 160 acres in parts of the county, twice the 
previous density. That move gave the county some 600 new drilling sites -- 
parcels of a couple of dozen acres that are known as "windows." It also 
ignited outcries from residents. "This isn't West Texas," says Josh Joswick, 
a county commissioner. "I don't think people want this to turn into the gas 
patch." 
Mr. Brown, a 47-year-old supervisor for United Parcel Service, and his wife, 
Ms. Nash, 52, moved here two years ago. Ms. Nash, a native of rural Georgia 
who doesn't much care for noise or neighbors, was put off by all the drilling 
activity. Along a 10-mile stretch of curving county road on the way to the 
couple's home, farms give way to modest homes, many with horses in the 
backyard. Driveways alternate with gated roads leading to well sites, most 
with a pump jack, a compressor and an assortment of storage tanks. "All I 
could think about was `Dallas,' " the television show, says Ms. Nash, a tall 
woman with a mane of wild blond hair. "I didn't even want to be close to 
anything like that." 
They settled on a one-story, 1,200-square-foot home on 10 acres of wooded 
hillside in the Homestead Ranches subdivision. Ms. Nash says she made clear 
to her real-estate agent that she didn't want to be near drilling but adds 
that she didn't know about the separate ownership of mineral rights, and it 
never was discussed. 
She soon found out. While Ms. Nash was unpacking, a neighbor dropped by to 
say hello. "You know you're in the window?" Ms. Nash remembers the neighbor 
saying after handing over a batch of cookies. Part of the property, it turned 
out, fell inside an approved drilling area. A few months later, Huber called 
to say that the company, based in Edison, N.J., had leased the mineral rights 
under the couple's home and intended to drill. "Our hearts just sank," says 
Ms. Nash. 
The couple considered trying to sue the real-estate agent but decided the 
cost would be too high. However, when negotiations with Huber over where to 
drill broke down, they joined other surface-rights owners in a suit against 
Huber and a unit of BP. The suit asks a state court for a judgment to clarify 
a state-supreme-court ruling on the rights of property owners and oil 
companies. 
Huber won't discuss this well site, citing the litigation, but its project 
engineer for the area, Scott Zimmerman, says the company has come to terms 
with other surface owners. "Most of them realize there is a mineral estate, 
so we work together to find a site that's good for both of us," he says. But 
he adds, "We have the rights to develop the minerals." 
Indeed, Colorado law allows operators to drill over property owners' 
objections after posting a bond of as little as $5,000 per well against 
possible surface damage. State regulators say about a third of the drilling 
permits they grant each year are on sites where the surface rights and 
mineral rights have been separated, and in most of those cases, drillers post 
bonds rather than hammer out agreements with surface owners in advance. Mr. 
Zimmerman says Huber operates 60 wells in La Plata County and intends to 
drill six to eight more this year, but so far it hasn't had to resort to 
posting bonds. 
Drillers can generally use an amount of land that is considered "reasonable" 
to recover their minerals. The regulators who grant drilling permits use 
various criteria including spacing rules and population density. In Colorado 
neighborhoods where there is at least one home every two acres, for instance, 
wells have to be at least 350 feet from homes. 
Oil companies blame real-estate agents for not telling buyers about potential 
drilling. But there's only so much agents can say for sure, says Sandy 
Cooper, president of the Durango Area Association of Realtors. She says she 
can point out existing wells and designated drilling windows on a map hanging 
in her office, and sometimes sends clients to the county planning office and 
the oil companies. 
Colorado requires real-estate brokers to disclose known defects of property. 
Drilling issues are a different matter. Last month, the state enacted a law 
requiring that title insurers tell a property's buyer if the property's 
mineral rights have been severed, and thus that there may be oil or gas 
drilling on the land someday. At the same time, the new law requires owners 
of the surface rights -- the homeowners -- to notify those who own or lease 
mineral rights of any plans to change the use of the surface, such as by 
building a subdivision on it. 
That could be difficult where mineral rights have been scattered among heirs. 
Ms. Cooper says a title commitment on a property that crossed her desk 
recently listed 17 mineral-rights owners, including one who had an interest 
of 127/552 dating from 1956. "It's worse than your family tree," she says. 
The drilling boom even baffles some homeowners and developers who are savvy 
about mineral rights. Allen Arnold ran an oil company for 10 years before 
investing two years ago in 187 acres near the flyspeck town of Rhome in Wise 
County, Texas. The county is growing quickly, absorbing spillover from Fort 
Worth and Dallas to the south. A new regional airport and auto racetrack 
nearby have added to growth. 
But Mitchell Energy & Development Corp. of the Woodlands, Texas, and smaller 
operators are hard at work drilling for natural gas in Wise County. The Texas 
Railroad Commission, which regulates the oil-and-gas industry in the state, 
recently loosened well-spacing rules for the local Barnett Shale formation. 
Mitchell plans to drill 276 holes in Wise and neighboring counties this year, 
up from 124 last year. 
The company says it has been trying to work with surface owners and has run 
newspaper ads warning homebuyers to check on mineral rights. But Mr. Arnold, 
who is 50, wasn't ready for its latest move: asking Rhome officials to let 
the company drill a well on the second phase of Mr. Arnold's Ellis Homestead 
development, between what he hopes will someday be two residential lots. The 
first phase has paved roads, sewers and a handful of brick homes that sell 
for up to $200,000. 
Mr. Arnold, who puts his investment in the project at about $2 million, says 
he is selling two to three lots a month. But if people "see a wellhead, a 
pumping unit or a tank battery, they're going to think there's a safety issue 
and they're not going to want into the neighborhood," he says. He adds that 
he has no obligation to disclose drilling in the area, but if prospective 
buyers ask, "I'll tell them there is a possibility that there will be a well 
there or anywhere around here." Mr. Arnold says a well on his land "could 
kill my subdivision," and he intends to fight it. 
"That situation, to me, is a sad situation," responds Doug Mitchell, Mitchell 
Energy's construction superintendent. "There's not going to be a fight. 
Mitchell has the right to drill there, and they're going to exercise their 
right." 
Mr. Mitchell, 47 years old and no relation to Mitchell Energy's founder, 
knocks on doors to inform landowners their property is slated for a well. He 
negotiates land-use agreements that may include cash or landscaping valued at 
as much as $2,000 for surface damage. "I've had women just break down and 
bawl and squawl when I go down to settle with them," he says. "My skin, if 
you cut into me right now, is about this thick," he says, indicating with a 
thumb and forefinger the thickness of one of the sirloins served at the 
nearby Ponder Steakhouse. 
Mr. Mitchell pulls his truck under the stone archway of another subdivision 
to meet with a developer. Lifesize statues of a cowboy and a small herd of 
longhorns greet visitors, though the development has only a few homes. As Mr. 
Mitchell and the developer prepare to discuss some wells near the land, the 
man complains that Mitchell and other oil and gas companies ought to pay 
market value for the lots they drill on, with gas prices so high. 
Mr. Mitchell isn't biting. "My rebuttal to him," he says later, "is, `Hey, no 
doubt, I can read a tax roll as well as anyone. But why should I pay again 
for rights I've paid for already?' " 









National Desk; Section A 
IN ENERGY PLAN, BUSH URGES NEW DRILLING, CONSERVATION AND NUCLEAR POWER 
REVIEW 
By DAVID E. SANGER 
? 
05/17/2001 
The New York Times 
Page 1, Column 6 
c. 2001 New York Times Company 
WASHINGTON, May 16 -- President Bush's long-awaited energy plan proposes 
loosening regulations on oil and gas exploration, conservation-minded efforts 
like a review of gas mileage standards and a $4 billion tax credit for a new 
generation of highly fuel efficient cars, and urges a reconsideration of a 
quarter-century ban on the reprocessing of nuclear fuel. 
With a declaration that the energy problems threaten the nation's economy and 
security, the Bush plan also orders a sweeping review of public lands to 
determine whether more energy resources can be extracted. 
''America in the year 2001 faces the most serious energy shortage since the 
oil embargoes of the 1970's,'' the administration's energy report states. 
Without action, it continues, projected energy shortfalls in coming years 
''will inevitably undermine our economy, our standard of living and our 
national security.'' [Excerpts, Page A21.] 
The proposals are among 105 initiatives outlined in the administration's 
energy report, said a senior government official who briefed reporters on its 
contents tonight. The White House released an eight-page overview of the 
document, which will be distributed in full on Thursday. 
The official said Mr. Bush would also issue two executive orders later this 
week directing all federal agencies to consider the effects of all new 
regulations on energy production and to expedite permits for all energy 
projects ''while remaining mindful of protecting the environment.'' 
The overview released tonight states that federal regulation of the nation's 
energy producers has unduly inhibited production and increased prices. 
''Regulation is needed in such a complex field, but it has become overly 
burdensome,'' the report says. ''Regulatory hurdles, delays in issuing 
permits and economic uncertainty are limiting investment in new facilities, 
making our energy markets more vulnerable to transmission bottlenecks, price 
spikes and supply disruptions.'' 
Mr. Bush will also order Interior Secretary Gale A. Norton, an outspoken 
proponent of seeking new sources of energy on federal lands, to ''look at any 
impediments'' that discourage exploration for oil and gas. 
The report repeats Mr. Bush's commitment to explore in the Arctic National 
Wildlife Refuge -- a proposal that seems unlikely to survive in Congress -- 
and also urges a review that will include other places in Alaska, the Rocky 
Mountains and along the Gulf Coast. 
The report also urges the revision or reinterpretation of a major clause of 
the Clean Air Act that requires long government review of any modifications 
of power plants that affect their emissions. 
The senior government official, who was deeply involved in the development of 
the plan, argued tonight that the ''new source reviews'' by the Environmental 
Protection Agency are a ''time-consuming process'' that often ''discourage 
fuel efficiency.'' 
The Justice Department will also be ordered to review several 
multi-million-dollar lawsuits brought by the Clinton administration against 
utilities accused of ignoring the law. 
One official of an environmental group said the report was about what he had 
expected, and he predicted that conservation organizations would be highly 
critical of it. 
''This has just a lot of opportunity for mischief from the energy producers 
and no real solid commitments for the green components,'' the official, David 
G. Hawkins, senior lawyer for the Natural Resources Defense Council, said. 
Mr. Hawkins said he was ''astounded'' that the policy would recommend a 
review of legal actions now under way on utility emissions, calling it 
''political interference with law enforcement.'' 
Mr. Bush is to announce his plan on Thursday morning at an innovative energy 
plant in St. Paul. But even before he begins his campaign for a national 
energy policy, he has touched off a heated political argument between 
Democrats and Republicans over how to balance environmental concerns against 
growing energy needs, and whether to impose temporary price caps in places 
like California, where a deregulation program and soaring demand has sent 
prices rocketing. 
Democrats have urged the use of such controls, while Mr. Bush will argue 
''vociferously'' on Thursday, one aide said, that the controls would only 
discourage the production of more electricity. 
Mr. Bush's report adopts a tone that is by turns admonishing and encouraging. 
''The complacency of the past decade must now give way to swift, but 
well-considered, action,'' it says in its introduction, echoing themes that 
Mr. Bush and Vice President Dick Cheney, who headed the task force, have 
sounded in recent weeks. 
''Present trends are not encouraging, but they are not immutable,'' the 
report says. 
Then, in a clear effort to separate Mr. Bush's approach from President Jimmy 
Carter's politically disastrous calls for household austerity during the 
energy crises of the late 1970's, it adds: ''Our country has met many great 
tests. Some have imposed extreme hardship and sacrifice. Others have demanded 
only resolve, ingenuity and clarity of purpose. Such is the case with energy 
today.'' 
The decision to offer a relatively hefty tax credit for ''hybrid'' cars, 
which use a combination of gasoline and battery power, is bound to help both 
Detroit and two Japanese automakers -- Honda and Toyota -- which are already 
marketing such vehicles in the United States. 
They will be less enthusiastic, however, about orders by Mr. Bush for the 
government to review the federal standards for automotive fuel efficiency, 
though the report makes no commitment that those standards will be raised. 
The plan also calls for a new evaluation of nuclear reprocessing, a 
technology that takes advantage of the fact that as reactors consume uranium, 
they also produce plutonium. If the plutonium is chemically scavenged from 
the fuel, it can be used to run reactors. 
But the technology has drawbacks. The work is dirty, with the threat of 
radioactive releases, and it is expensive. 
For the last decade at least, it has been far cheaper to fuel reactors with 
new uranium than to recover plutonium. And while uranium fuel used in power 
reactors cannot be used to make a bomb, plutonium can, raising the threat of 
world commerce in a material that could be diverted by countries -- or 
terrorist groups -- that want a bomb. 
Britain, France and Japan currently reprocess fuel, although the British are 
considering ending the practice because it is so expensive. 
But reprocessing can reduce the volume of plutonium requiring disposal, which 
is important because plutonium is so long-lived and difficult to store 
safely. 
Some opponents of the technology said today that they believed it had been 
included in the Bush plan as a sop to Nevada, where the Energy Department is 
trying to build a waste repository. But reprocessing would not eliminate the 
need for such a repository. 
The plan also calls for cooperation with Canada on building a pipeline that 
could bring more natural gas into the United States. 
The report mixes several existing initiatives with new ones, particularly in 
the area of conservation. For example, of $10 billion in proposed tax credits 
over the next 10 years, $5 billion in credits are already in the budget or 
the result of extending existing ones. 
Other programs get modest increases. The administration recommends $300 
million in new money for the Low Income Home Energy Assistance Program and 
calls for funneling some oil and gas royalty payments, which companies pay 
the federal government for extracting resources on public land, to the 
program for the poor. 
Similarly, in an effort directed toward environmentalists, it would commit 
royalties from any energy extracted in the Arctic National Wildlife Reserve 
for land conservation. 
There are no credits or other tax breaks for oil or gas producers, or 
electric utilities -- a reflection of the sensitivity of the White House to 
criticism that Mr. Cheney and other top officials spent their private-sector 
years in the energy industry. But the tone of deregulation, reassessment of 
the merits of the Clean Air Act and the emphasis on opening of federal lands 
to more energy production -- everything from wind power to oil and gas 
drilling -- provides those industries with effective subsidies totaling in 
the billions of dollars. 
Much of the report simply urges companies to build, build and build some 
more, including 38,000 miles of new gas pipelines, 255,000 miles of 
distribution pipelines and a new power plant every few days for the next 20 
years. But for every such proposal, Mr. Bush's team carefully inserted 
proposals for expanding the use of renewable fuels, from geo-thermal energy 
sources to the methane produced in landfills. 
The nuclear power industry gets one major concession: a tax break that would 
eliminate the double taxation of money put aside for decommissioning plants. 
Those taxes have been a deterrent to buying and selling nuclear plants. It 
commits $2 billion over 10 years to a clean-coal technology program in the 
Department of Energy. 
It urges the Federal Energy Regulatory Commission to speed the licensing of 
hydroelectric power plants, and seeks ''market-based incentives'' to reduce 
pollutants that cause global climate change. 
But this winter Mr. Bush rejected any American participation in the Kyoto 
treaty on global warming, which would have mandated cuts in American 
emissions, at considerable economic cost. 

Photos: The president met yesterday with cabinet members, including Secretary 
of State Colin L. Powell and Defense Secretary Donald H. Rumsfeld. (Stephen 
Crowley/The New York Times)(pg. A1); Speaker J. Dennis Hastert, left, and 
Representative Dick Armey yesterday after a meeting on energy with Vice 
President Dick Cheney. (Associated Press)(pg. A20)