Please see the following articles:

Sac Bee, Fri, 5/18: Energy plan generates debate: California in peril offered 
'no relief,' governor says

Sac Bee, Fri, 5/18: Judge dims PG&E producers' shot at relief

Sac Bee, Fri, 5/18: Politicians try to stay plugged in:Fear that the power 
crisis will short-circuit their jobs pushes leaders to foster an active image.

Sac Bee, Fri, 5/18: Bush's mixed message:  Fossil Fuels tomorrow don't solve 
crisis now

SD Union, Fri, 5/18: Bush energy plan greeted with avalanche of praise, 
criticism

SD Union, Fri, 5/18:  Bush warns country about California

SD Union, Fri, 5/18: Gov. Davis attacks Bush energy plan

SD Union, Fri, 5/18: Carter recalls an energy crisis that was far worse

SD Union, Fri, 5/18: Governor signs bill on energy authority

SD Union, Fri, 5/18: State to review Escondido power plant plan

LA Times, Fri,  5/18: PUC Chief alleges Price Collusion

LA Times, Fri, 5/18: Critics Say Bush Proposal Leaves California in the Dark

LA Times, Fri, 5/18: Wall St. Cautious Over Energy Sector's Outlook for Next 
Year

LA Times, Fri, 5/18: Municipals Utilities Seek Exemptions From Blackouts

SF Chron, (AP) Fri, 5/18: Californians fault Bush energy proposal
		
SF Chron, Fri, 5/18: California utilities commission chief says power plants 
shut down to 
drive up prices
		
SF Chron, (AP) Fri, 5/18: Bush faces tough fight on energy strategy.  
ANALYSIS:Californians must sweat out summer

		
SF Chron , Fri, 5/18: Probe finds 'artificial' shortages Unneeded plant 
shutsdown drove up state electricity prices, PUC chief says

SF Chron, Fri, 5/18:  PG&E plans new plants outside California Higher profits 
from building elsewhere

SF Chron, Fri, 5/18: Bush faces tough fight on energy strategy 
REACTION: Criticism from environmentalists 

SF Chron, Fri, 5/18:Presidential power 
The energy problem has tested the mettle of many U.S. leaders 

SF Chron, Fri, 5/18:Making a case for WASTE 
President's tax credits for biomass energy development could be boon for two 
of the state's thriving industries 

Mercury News, Fri, 5/18:Today's energy shortages far less ominous than in 
frantic '70s

Mercury News, Fri, 5/18: Bush points to California as a warning

Mercury News, Fri, 5/18: Californians fault Bush Energy proposal

Mercury News, Fri, 5/18:  Bush says the Right Stuff (editorial)

Individual.com, Fri, 5/18: Bush Energy Plan Will Make California Crisis 
Worse; Taxpayer Boondoggles, More Deregulation Equals Higher Prices, Taxes

Individual.com, Fri, 5/18: PG&E's CEO faces off with angry shareholders at 
company's annual meeting

NY Times, Fri, 5/18:THE ENERGY PLAN: THE OVERVIEW 
BUSH, PUSHING ENERGY PLAN, OFFERS SCORES OF PROPOSALS TO FIND NEW POWER 
SOURCES

WSJ, Fri, 5/18: Power Politics:n Era of Deregulation,
Enron Woos Regulators More Avidly Than Ever

WASH Post, Fri, 5/18: Bush Issues Energy Warning; President Unveils New 
Policy, to Praise and Attacks on Party Lines

______________________________________________________________________________
_____________________________



Energy plan generates debate: California in peril offered 'no relief,' 
governor says
By Emily Bazar and Carrie Peyton
Bee Staff Writers
(Published May 18, 2001) 
Gov. Gray Davis on Thursday declared President Bush's newly unveiled power 
plan an inadequate proposal that turns "a blind eye to the bleeding and 
hemorrhaging that exists in this state." 
The Democratic governor, who addressed reporters in Sacramento after Bush 
formally unveiled his proposal in St. Paul, Minn., said California will not 
conquer its power crisis unless the Federal Energy Regulatory Commission 
temporarily caps the price of wholesale electricity. 
The Bush plan -- which calls for opening more public lands to oil and gas 
exploration and tax credits for the purchase of fuel-efficient cars -- would 
do little for the state in the short term, when it needs help the most, Davis 
said. 
"For those of us who are already in immediate peril, it offers no relief," he 
said. "If those (federal) commissioners don't do anything to solve the 
problem ... then there will be a lot of blood on the floor and a lot of 
corpses along the way." 
In Washington, D.C., GOP congressional leaders vowed to speed key parts of 
the energy package to Bush's desk. But the strong and conflicting response to 
the 163-page report, crafted over four months by a task force led by Vice 
President Dick Cheney, presaged an extensive debate on Capitol Hill. 
"We're going to have a crisis on our hands in the next two or three months," 
said Rep. Robert Matsui, a Sacramento Democrat. "I just wish the president 
had attempted to address that. If he doesn't like our idea of rate caps and 
price stability, then at least he should come up with an alternative to try 
to get us through the next 18 months." 
But Republicans like North Carolina Rep. Richard Burr, vice chairman of the 
House Energy and Commerce Committee, were quick to praise the package. 
"This is the most aggressive, long-term energy policy our country has seen 
from an administration in a generation," Burr said. 
As in Washington, California lawmakers split down party lines in response to 
the president's energy plan. Democrats said the proposal would do little to 
help California in the short term, while Republicans applauded its focus on 
increasing the power supply through expanded reliance on nuclear energy and 
other sources. 
While environmentalists found several aspects of the blueprint troubling, 
utilities including Pacific Gas and Electric Co. and power generating 
companies said they were encouraged by the president's call to speed the 
process of building new power plants, transmission lines and natural gas 
pipelines. 
"It appears at first glance to be a very balanced document with combinations 
of conservation as well as the need to create new ... sources of energy," 
said Keith Bailey, chairman of Williams Co., which markets electricity from 
Southern California power plants owned by AES. 
PG&E, however, which is mired in bankruptcy proceedings because of runaway 
wholesale power prices, repeated its call for federally imposed price caps on 
wholesale electricity, something Bush has specifically rejected. 
On that one point, at least, the utility has found allies in Davis and other 
California Democrats. 
"I'm calling on you (Bush) to find some creative way to give us temporary 
price relief while our new plants come on line," Davis said. 
State Sen. Debra Bowen, D-Marina del Rey and chairwoman of the Senate Energy 
Committee, echoed the governor's plea. 
"We can't just focus on the long term here," she said. "The patient will be 
dead before we get the life-support systems in place." 
Republican Secretary of State Bill Jones, who is running for governor, also 
commended the president for proposing a "comprehensive" plan with long-term 
vision. 
"What President Bush understands that Gray Davis does not, is that the time 
to propose solutions is not in the middle of a crisis, but before, when you 
see the warning signs and have time to plan a thoughtful course of action," 
he said. 
In one of more than 100 specific proposals, Bush urged the FERC to strengthen 
its role in electric grid reliability, partly through new laws that would let 
it oversee mandatory industry standards. 
Such a move could strip away some of the benefits of Davis' proposal to buy 
the state's transmission grid, because it could extend federal control to 
transmission lines owned by public agencies, said Michael Shames, head of the 
San Diego-based Utility Consumers' Action Network. 
It could also threaten the autonomy of municipal utilities such as the 
Sacramento Municipal Utility District and the Los Angeles Department of Water 
and Power, and would face a vigorous fight in Congress, Shames said. 
Other specifics of the plan, such as its recommendation to reassess offshore 
oil drilling, troubled environmental groups. 
The president is probably too realistic to move immediately to reinstate 
drilling off California's coast, but opponents will have to stay vigilant to 
prevent it, said Warner Chabot, a vice president of the Center for Marine 
Conservation. 
The plan was also blasted by the California Public Interest Research Group 
for over-reliance on new power plants, drilling on public lands and increased 
subsidies for coal and nuclear power, while the Sierra Club faulted the lack 
of proposals to raise fuel economy standards for cars and sport-utility 
vehicles. Sierra Club Executive Director Carl Pope said such standards are 
"the biggest single step President Bush could have taken to cut our oil 
dependence and curb global warming." 

The Bee's Emily Bazar can be reached at (916) 326-5540 or ebazar@sacbee.com. 
James Rosen of The Bee's Washington Bureau contributed to this report. 


Judge dims PG&E producers' shot at relief
By Claire Cooper
Bee Legal Affairs Writer
(Published May 18, 2001) 
SAN FRANCISCO -- U.S. Bankruptcy Judge Dennis Montali delivered a sharp blow 
to a large number of small energy generators, signaling in an opinion 
released Thursday that he'll probably require them to continue selling power 
within California and at state-regulated rates. 
The tentative ruling in the Pacific Gas and Electric Co. bankruptcy case 
denied most of the relief requested by the first four generators to have 
their cases decided. The Central Valley power-generating plants have warned 
that financial pressures may force them to shut down in June, cutting into 
the power needed to avoid rolling blackouts this summer. 
They asked to be released from their contracts with PG&E or for higher prices 
for the power they sell to the utility. 
Montali responded by sweeping beyond the technical confines of bankruptcy 
law, saying, "The court cannot and will not ignore other considerations," 
such as "the need to keep (the generators) on-line, producing power for 
California." 
While the four facilities provide less than 1 percent of the utility's 
electricity, the tentative opinion sent out a broad message to scores of 
small power producers -- which together provide more than 20 percent of 
PG&E's electricity -- that Montali will give them just enough relief to keep 
them generating. 
Montali, however, said he isn't likely to release them from contracts to PG&E 
that stand in the way of selling their electricity on the spot market -- 
possibly to the state Department of Water Resources -- at "potentially 
extreme prices." 
Montali's decision, posted Thursday, was dated Wednesday, the same day the 
Federal Energy Regulatory Commission issued an order ensuring energy 
producers the right to sell to the highest bidder if they can get out of 
their contractual obligations. 
Montali also declined to raise the price PG&E must pay under current 
contracts. While conceding the energy producers are entitled to a reasonable 
rate, he cited FERC findings that under certain conditions, spot market rates 
in the California market have been "unjust and unreasonable." 
Instead, Montali held out the likelihood of far more modest relief. He 
ordered immediate negotiations to increase the cash flow sufficiently at the 
four Central Valley power facilities -- Mid-set Cogeneration, Coalinga 
Cogeneration, Salinas River Cogeneration and Sargent Canyon Cogeneration -- 
with the goal of ensuring they will be able to "perform when needed." 
The four generators had warned in court documents of "June shutdown 
scenario," which would have cut into the power needed to avoid rolling 
blackouts this summer. 
They are owed $58 million out of a total $1 billion PG&E debt to 300 
producers of wind and solar energy, cogeneration and biomass that provide 
roughly 13 percent to 22 percent of the electricity distributed by the 
utility. 
Most, including a plant that generates energy from rice hulls, are small or 
mid-sized, but several are owned by some of the nation's largest 
corporations, including Texaco. They're paid on the basis of various formulas 
set by contracts or a formula set by the Public Utilities Commission. 
Ed Feo, a lawyer representing the creditors' committee, which will be 
included in the negotiations, said Montali's tentative ruling "will probably 
be the template" for the way he deals with all of the small producers 
operating at PUC-approved rates that don't cover their costs. 
The committee represents thousands of businesses and individuals who are owed 
money by PG&E. It had asked in a hearing a week ago that all of the small 
generator cases be consolidated for a single ruling because of the likely 
impact. 
Montali refused, saying the complications would be "more than I can 
comprehend" because each case presents different facts. 
About two dozen facilities have petitioned Montali for relief so far, 
including 15 that have curtailed or ceased operations at times this spring, 
claiming PG&E's payments were insufficient to keep them on-line. 
Several have hearings scheduled within the next three weeks, but at least two 
-- Berry Petroleum and Crockett Cogeneration -- have reached settlement 
agreements with the utility. 
In response to Montali's tentative ruling on the four Central Valley 
generators, PG&E spokesman Ron Low said only that the utility "will meet with 
them and try to resolve the issues." 
Lawyers representing the generators did not return phone calls. 


Politicians try to stay plugged in: Fear that the power crisis will 
short-circuit their jobs pushes leaders to foster an active image.
By Emily Bazar
Bee Capitol Bureau
(Published May 18, 2001) 
Rising unemployment is one of the many dire predictions spawned by the 
state's worsening energy crisis. 
Among those worried about losing their jobs: California politicians. 
Fearing for their hides, state leaders are moving forcefully into the energy 
fray, hoping both to fend off irritated voters and emerge from their 
typically low-profile posts. 
Lt. Gov. Cruz Bustamante recently filed suit against five energy generators. 
Attorney General Bill Lockyer offered rewards of at least $50 million to 
informants who could help prove market manipulation by power sellers. And 
state Treasurer Phil Angelides has aggressively pushed for a state-run power 
authority. 
"We're seeing among a range of officeholders on the Democratic and Republican 
side that they want to be seen as being out front of this issue," said Mark 
Baldassare, a senior fellow at the Public Policy Institute of California. "As 
they go through this re-election year coming up, they don't want to be 
accused by people who are competing for office of not doing anything." 
Since January, legislators have introduced at least 211 energy-related bills, 
including a proposal to finance the construction of an Auburn dam and another 
to exempt farmers from paying sales and use taxes on diesel fuel during the 
last half of this year. 
Whenever possible, Gov. Gray Davis schedules news conferences at power 
plants, which provide optimal backgrounds for photo opportunities. 
Power plants also are the focus of the state's latest television and radio 
ads encouraging energy conservation, which boast that California is "working 
aggressively" to build 13 major new plants. 
Although Davis' chief political adviser, Garry South, says it's a 
coincidence, the Democratic governor's political consultants recently tested 
a spot that also touts the state's record on power generation. 
The energy crisis has led lower-profile politicians to increase their 
visibility. 
Republican Secretary of State Bill Jones, who is running for governor, and 
Democratic state Controller Kathleen Connell, who ran for Los Angeles mayor, 
have both used the crisis to criticize Davis' leadership. 
As lieutenant governor, Bustamante generally remains out of the public eye 
and struggling for attention. 
But the Democrat sponsored a bill that would make energy price gouging a 
felony and filed a civil lawsuit against five out-of-state generators, 
alleging a price-fixing conspiracy. 
Bustamante said he is merely stepping up to calls from constituents who are 
clamoring for him to act. 
Political consultant Richie Ross, who works for Bustamante and other 
Democrats, is convinced the energy crisis will have political consequences 
and could ultimately ruin careers. 
He believes those lawmakers who take action to "defend the public" will have 
a better chance of political survival than those who don't. 
"The public is looking for who is on their side," he said. "They're not 
interested in all the complexity." 
Republican political consultant Wayne Johnson recommends that all politicians 
who want to be re-elected engage themselves and get to know the power issue 
"backward and forward." 
Consultants say pollsters are busier than usual, as politicians rush to 
determine their standing -- and that of their opponents -- with voters. 
So far, those who have seen the results say Republicans and Democrats are 
taking an equal beating. 
"Every politician in the state's popularity rating is lower than it once 
was," said Davis pollster Paul Maslin. 
Though lawmakers like to say they inherited the crisis from the previous 
administration and Legislature, that explanation doesn't resonate with 
Californians, who are more interested in solutions. 
Many voters are saying they don't care who was in power at the time 
deregulation was conceived and they don't care who is in power now, South 
said. They just want it to be over. 
"This is not a partisan thing. It's a pox on everybody's house," said David 
Townsend, a Democratic political consultant. "People are basically saying, 
'Fix it.' " 
The public's level of frustration is expected to escalate in the coming 
months, when the effects of the power crisis multiply. 
Baldassare is in the midst of surveying Californians on the energy crisis and 
has dropped in on a number of focus groups. Many participants reported that 
they're generally unhappy with the situation but still aren't sure whom to 
blame. 
According to Sherry Bebitch Jeffe, a political scientist at the University of 
Southern California, politicians are doing what they can to make sure it's 
not them. 
"Each legislator out there is trying to insulate himself or herself from the 
worst blame for the energy crisis," she said. "They're ... attempting to 
inoculate themselves from inevitable attacks from opponents." 

The Bee's Emily Bazar can be reached at (916) 326-5540 or ebazar@sacbee.com. 





Bush's mixed message: Fossil fuels tomorrow don't solve crisis now


(Published May 18, 2001) 

President Bush seeks to focus public attention on tomorrow's energy challenge 
while doing little to prevent a looming electricity crisis that may start in 
California this summer and spread to other parts of the country. 
The existing crisis is so serious, and so neglected by the president, it will 
be hard for Californians to focus on his glossy new energy blueprint, which 
he unveiled Thursday with campaign-style fanfare. Documents such as these 
(this one has more than 100 specific recommendations), when successful, end 
up serving the broader purpose of launching public discussion and political 
debate. 
This time, though, the president has no choice but to enter this debate in 
the present, not the future. California waits, wonders and bleeds as billions 
of dollars in excess electricity profits go to generating companies and 
traders. 
What's so perplexing about this president is the emerging philosophical 
inconsistency between how he sees the energy future and the present. Line by 
line, recommendation by recommendation, Bush's long-term energy strategy 
proposes to fully insert the government as a guiding hand of tomorrow's 
energy marketplace. Rather than leave the market to itself, Bush seeks to 
shape it via direct subsidies, tax incentives or new fossil-fuel 
opportunities on public lands. 
Yet today for California, the president sticks to a hands-off approach, 
rejecting intervention in a horribly distorted electricity marketplace. Why? 
Viewed as an a-la-carte menu, Bush's energy strategy offers something for 
everyone. Appetizers range from tax breaks to fuel-conscious motorists who 
want to buy hybrid cars to billions of dollars in new research to burn coal 
more cleanly. The main course, however, is more fossil fuels and more nuclear 
power plants. And some cutting-edge stuff, such as new funds for alternative 
fuels research, are tied to one controversial source -- royalties from new 
gas and oil development in Alaska's Arctic National Wildlife Refuge. 
The charts and graphs all speak to matching future supply with demand, as if 
the challenge is two dimensional. It is not. The third piece, barely 
mentioned by Bush, is global warming. Energy policy must address, not avoid, 
the compelling evidence that our fossil-fuel consumption is dangerously 
warming the planet. Bush's plan doesn't mandate improvements in any vehicle's 
fuel efficiency by a single mile per gallon. Viewed by other countries that 
take global warming more seriously, Bush's energy plan will be the equivalent 
of political gasoline. 
We need to have a serious discussion about the nation's long-term energy 
future. Bush's plan, whatever its shortcomings, started the debate. But even 
more than talk, California and the West need federal action to curb runaway 
wholesale electricity prices this summer. Bush yesterday failed to step up to 
the challenge. 





Bush energy plan greeted with avalanche of praise, criticism 




By Toby Eckert
COPLEY NEWS SERVICE 
May 17, 2001 
WASHINGTON ) Battle lines hardened Thursday over President Bush's energy 
policy, leaving little apparent room for compromise. 
House Democrats began the day with a high-tech assault on the plan that 
featured three San Diego-area residents pleading via satellite for immediate 
relief from soaring utility bills and blackouts. An environmental group 
staged a more low-tech stunt, dumping five tons of coal in front of Vice 
President Dick Cheney's residence. 
Republicans, meanwhile, embraced the plan. But some cautioned that its 
legislative elements were likely to be tinkered with and that some relief for 
consumers may have to come quicker than Bush envisions. 



Much of the Democratic criticism centered on Bush's failure to offer 
immediate help for the power crisis rocking California and the high gas 
prices plaguing motorists. They also repeated their accusation that, by 
stressing more use of oil, coal and nuclear power, Bush was sacrificing the 
environment for the sake of energy industry profits. 
To dramatize those arguments, Reps. Susan Davis and Bob Filner, both San 
Diego Democrats, used a satellite broadcast to beam three constituents into a 
packed news conference on Capitol Hill. The lawmakers have been pressing for 
price controls on wholesale power sold in California, a strategy Bush has 
rejected. 
"We need help now," said Patti Finnegan, who runs Niederfrank's Ice Cream in 
National City. "I understand that we need more supply, but in the meantime, I 
don't think thieves should be out legally taking our money like this." 
Finnegan said the business' power bills had quadrupled and that "rolling 
blackouts have the potential to put me out of business" by melting her 
inventory. 
Michael Brucker, executive director of San Diego's Jackie Robinson YMCA, and 
San Diego resident Jaime Salazar told similar tales of soaring power bills 
and sacrifice. 
"It's a really great plan if you're a seller of energy. But if you're a 
consumer of energy ... this is not a good energy plan," said Davis. 
"It was crafted behind closed doors with a lot of input from energy 
executives and in a highly secretive way that doesn't serve the public 
interest," added House Minority Leader Richard Gephardt, D-Mo. "... It really 
looks like the Exxon-Mobil annual report, and maybe that's really what it 
is." 
Republicans countered that the proposal was balanced. They cited Bush's call 
for tax credits for energy conservation and efficiency and his promise to 
take environmental impacts into account as domestic oil drilling is expanded. 
Rep. Randy "Duke" Cunnigham, R-Escondido, called the blueprint "comprehensive 
and mindful of the environment." While Bush "didn't talk about it in the 
plan," the administration has taken several steps to aid to California, 
Cunningham said, including expediting permits for new power plants. 
"We've got to throw out the extremists on both side of this and solve the 
problem," he said. 
Republican leaders said they would start hearings on the plan as early as 
next week and hope to have a bill finished by mid-summer. 
Fearing a voter backlash if they appear to be ignoring consumer complaints 
about high energy costs, some GOP lawmakers are advocating short-term 
measures like immediate tax incentives for home energy conservation and 
suspension of the federal gasoline tax. 
"Congress will be working with the president to enhance his plan. ... I will 
be offering some amendments," said Sen. Kay Bailey Hutchison, R-Texas. 
Despite the heated rhetoric from the Democrats, Senate Majority Leader Tom 
Daschle, D-S.D., refused to declare the Bush plan "dead-on-arrival." 
"Obviously, there is a lot there ... that we can work together on. We're 
hopeful that we can do that," Daschle said. 
Outside interest groups will have a big influence on how the debate unfolds 
and on molding public perceptions of the Bush plan. 
Environmentalists vowed to join Democrats in a sustained attack that includes 
rallies, advertising and attention-grabbing stunts like the coal dumping at 
Cheney's residence, which was orchestrated by Greenpeace. 
Cheney led the White House task force that developed the energy policy. 
"We are going to continue keeping up the pressure on the Bush-Cheney 
administration over the summer because we think this is going to be a hot 
issue," said Greenpeace spokesman Gary Skulnik. 
Supporters of the Bush plan in the business community, including energy 
companies, have organized the Alliance for Energy and Economic Growth to 
counter the environmentalists' message and lobby for the Bush plan. 
"What this country needs to do is diversify its energy portfolio. We've got a 
huge challenge in front of us," said Bruce Josten, executive vice president 
for government affairs at the U.S. Chamber of Commerce. 






Bush warns country about California 




By Finlay Lewis
COPLEY NEWS SERVICE 
May 17, 2001 
ST. PAUL, Minn. ) President Bush took to the road Thursday to sound dire 
warnings about "a darker future" for the nation if it fails to follow his 
path of more oil drilling and nuclear plants. 
After touring a power plant fired with new technology, the president urged 
the country to rally around his just-unveiled energy plan or risk seeing 
power problems now plaguing California spread. 
"If we fail to act, this great country could face a darker future: a future 
that is unfortunately being previewed in rising prices at the gas pump and 
rolling blackouts in California," he said. 
"If we fail to act, Americans will face more and more widespread blackouts. 
If we fail to act, our country will become more reliant on foreign crude oil, 
putting our national energy security into the hands of foreign nations, some 
of whom do not share our interests. 
"And," he added, "if we fail to act, our environment will suffer, as 
government officials struggle to prevent blackouts in the only way possible ) 
by calling on more polluting emergency backup generators, and by running less 
efficient, old power plants too long and too hard." 
But, trying to build support for the report previewed the night before by 
White House officials ) and to stay ahead of the criticism of some of its 
politically controversial recommendations ) the president also sounded an 
optimistic note that stressed technology and conservation as the keys to 
avoiding California's missteps. 
Bush called for "a new harmony between our energy needs and our environmental 
concerns," arguing that energy development and environmental protection were 
not at odds. 
He made only passing references to the report's proposals to drill in an 
Arctic wildlife refuge, bury the nuclear power industry's waste and 
commandeer private lands in order to expand interstate electricity 
transmission grids. 
Proposals such as those have aroused the ire of many Democrats and 
environmentalists who charge Bush and Vice President Dick Cheney, the 
report's main author, with using the energy situation as a pretext to give an 
economic boost to the energy industry that made them wealthy. 
Meanwhile, Bush cited his own roster of villains ) President Clinton, Iraq's 
Saddam Hussein and California. 
He noted pointedly that the nation, beginning in the early 1970s, made 
strides in energy efficiency, but declared that "this improvement slowed in 
the 1990s" ) during the Clinton administration. 
He also defended his proposal to drill in Alaska's Arctic National Wildlife 
Refuge by noting that doing so would produce 600,000 barrels a day "for the 
next 47 years." 
He added, "That happens to be exactly the amount we import from Saddam 
Hussein's Iraq." 
Bush started his visit here by dropping by a power facility that combines 
innovative heat and power technologies to burn coal, natural gas, oil, and 
renewable wood biomass to provide low-cost heating to 146 large buildings and 
298 single-family residences in downtown St. Paul, Minn., and adjacent areas. 
In his speech, Bush referred to the facility and noted other technological 
advances that have led to a solar powered house that produces more energy 
than it uses and to "hybrid cars" that can convert to battery power to reduce 
emissions and get up to 70 miles per gallon. 
"These are our early glimpses of a future in which Americans will meet our 
energy needs in ways that are efficient, clean, convenient and affordable. 
That future is achievable ) if we make the right choices now." 
Later, he praised the state as an "impressive conservation leader," but 
added, "California has not built a major new power plant in a decade. And not 
even the most admirable conservation effort could keep up with the state's 
demand." 
Bush argued that his plan "will speed up progress on conservation where it 
has slowed and restart it where it has faltered." 
At the same time, he described the report as an effort to cut through the 
federal government's regulatory regime to make it possible for Americans to 
reap conservation's rewards. 
Warning that the country's growing dependence on foreign oil sources poses a 
national security threat, Bush described technology as a way out of the 
dilemma and added, "New technology makes drilling for oil more productive as 
well as environmentally friendly than it was 30 or 40 years ago." 
Bush argued that the renewal and expansion of existing nuclear facilities 
"can generate tens of thousands of megawatts of electricity at a reasonable 
cost without pumping a gram of greenhouse gas into the atmosphere." 
Reprising one of his signature campaign promises, Bush said, "Just as we need 
a new tone in Washington, we also need a new tone in discussing energy and 
the environment ) one that is less suspicious, less punitive, less rancorous. 
We've yelled at each other enough." 







Gov. Davis attacks Bush energy plan 




By Alexa Haussler
ASSOCIATED PRESS 
May 17, 2001 
SACRAMENTO ) Gov. Gray Davis attacked President Bush's energy plan Thursday, 
accusing the administration of "turning a blind eye to the bleeding and 
hemorrhaging that exists in this state." 
The Democratic governor said Bush's pledge to speed up power plant permits 
and conserve at federal facilities offers no short-term relief for 
California's rolling blackouts and record power bills. 
By not doing anything Bush is "allowing the price gouging energy companies, 
many of whom reside in Texas, to get away with murder," Davis said. 
"Californians wants to know if (Bush) is going to be on their side," Davis 
said. 
Davis repeated his plea for the federal government to impose caps on 
wholesale energy prices that he says have driven the state's largest 
investor-owned utility into bankruptcy and two others on the brink of 
collapse. 
"If he wants to be helpful to California, he could send a strong signal that 
the Federal Energy Regulatory Commission should grant some kind of relief," 
he said. 
California has been struck by six days of rolling blackouts since January, 
and officials predict more as temperatures rise this summer. With little 
notice, the outages have swept through the state snapping off power to homes 
and businesses from San Francisco to San Diego. 
Bush announced his long-term energy plan Thursday in St. Paul, Minn., and he 
has yet to visit California, the state in the grips of the nation's worst 
energy crisis. 
But shortly into the speech, Bush warned that California is previewing the 
power troubles the nation could face if it doesn't boost its energy supply 
and cut demand. 
"Californians are learning, regrettably, that sometimes when you flick on the 
light switch, the light does not come on at any price," Bush said. 
He said his 163-page energy plan provides solutions that will help ease the 
state's power woes. 
"I'm deeply concerned about the impact of blackouts on the daily lives of the 
good people of the state of California, and my administration is committed to 
helping California," Bush said. 
Davis agreed that California is likely only the first state to experience a 
power crisis. 
"We're the first one in line to suffer. We want to look out for the interests 
of other states that could be affected in a year or two," he said. 
He urged the president to look at "creative solutions," such as ordering the 
power generators to refund some of the recent high wholesale power prices. 
"His long term approach is basically on-track, but for those of us who are in 
immediate peril, it offers no relief," Davis said. 
California is in danger of spiraling into a recession because of the high 
wholesale energy costs are "literally dragging down our economy," he said. 
California Senate Republican Leader Jim Brulte said he thinks the president's 
plan will help California, particularly in helping to speed construction of 
new power plants. 
Brulte said it's a mistake for California to blame Bush and the federal 
government for its problems. 
"Gov. Davis and his administration made significant mistakes on this energy 
issue and rather than trying to find a solution, he's playing the political 
blame game," Brulte said. 






Carter recalls an energy crisis that was far worse 



By Calvin Woodward
ASSOCIATED PRESS 
May 17, 2001 
WASHINGTON ) Less than two weeks into his presidency, Jimmy Carter donned a 
sweater and went on TV to tell Americans they should turn down their 
thermostats and learn to live thriftily. 
Now, nearly a quarter century after the energy crisis that dogged him, Carter 
says Thursday's problems are not so bad. 
"No energy crisis exists now that equates in any way with those we faced in 
1973 and 1979," Carter said Thursday in an article in The Washington Post. 
He noted that world energy supplies are adequate and stable, and "automobiles 
aren't waiting in line at service stations." 
President Bush released his energy plan Thursday, emphasizing the need to 
increase production and proposing incentives for energy to be used more 
efficiently. 
He is not proposing the tough efficiency standards or penalties for energy 
waste that Carter fought for. But the former Democratic president said Bush 
does not have as big a problem on his hands. 
Two major oil crises struck the U.S. economy in the 1970s ) first in 1973 and 
then in the late 1970s, during Carter's presidency ) as major oil exporters 
reacted to the Iran hostage crisis, causing gas station lineups and high 
prices. Carter was defeated in 1980, partly because of fallout from the 
energy crisis. 
Now, he says Bush should seek a balance between conservation and new energy 
production, just as he did. 
Although Carter's plan was known mostly for its push to curb demand, he also 
acted to spur coal production and speed the approval of nuclear power plants, 
as well as encourage alternative energy. 
Carter, in his column, also renewed his opposition to Bush's plans to drill 
in Alaska's Arctic National Wildlife Refuge. In 1980, Carter signed a law 
that protected the refuge's 1.5 million-acre coastal plain, where the oil is, 
while opening 95 percent of Alaska's coastal areas to oil exploration. 
Carter wrote that "some officials are using misinformation and scare tactics 
to justify such environmental atrocities as drilling in the Arctic National 
Wildlife Refuge." 
He added that drilling advocates "are careful to conceal the facts that 
almost none of the electricity in energy-troubled California is generated 
from oil." 
In his February 1977 address to the nation, Carter said the energy shortages 
could be dealt with "if we all cooperate and make modest sacrifices, if we 
learn to live thriftily and remember the importance of helping our 
neighbors." 
Then, in April, he declared "the moral equivalent of war" on the energy 
crisis and outlined tough measures, including a tax on gas-guzzling cars.






Governor signs bill on energy authority 



Legislation allows state to build plants
By Bill Ainsworth and Ed Mendel 
UNION-TRIBUNE STAFF WRITERS 
May 17, 2001 
SACRAMENTO -- Declaring California at war with price-gouging energy 
producers, Gov. Gray Davis signed legislation yesterday that he said would 
allow the state to fight back by building its own power plants. 
"We're retaking control of our own energy destiny," Davis said. "The power 
will be generated here. It will stay here, and it will be made available to 
the people of California at reasonable prices." 
The bill is the most far-reaching legislation sparked by the energy crisis. 
Many cities, including Los Angeles and Sacramento, have publicly owned 
utility districts, but the state has never owned or operated plants on a 
large scale. 
The legislation, which takes effect in 90 days, creates a state power 
authority that can finance, build or seize plants and is controlled by four 
appointees of the governor and the state treasurer. It's modeled on a New 
York agency that operates 10 power plants. 
California's new authority could issue up to $5 billion in bonds to pay for 
the construction of new plants. The bonds would be paid off by revenue from 
the power produced by the plants. 
The goal of the new state authority is to break the state's dependence on 
electricity imports controlled largely by out-of-state companies. California 
imports 20 percent of its electricity. 
Davis said he believes the authority could start building peaker plants by 
September. Such plants operate when power demand is at its highest. 
Senate President Pro Tempore John Burton, D-San Francisco, who authored 
Senate Bill 6X, said it would have the "longest and most lasting impact" on 
California's ability to reduce electricity prices and end rolling blackouts. 
State Treasurer Philip Angelides, who sponsored the bill, said it "will help 
ensure that California is never again held hostage by an unregulated private 
energy market run amok." 
Assembly Republican Leader Dave Cox of Fair Oaks has derided the plan as 
"socialism." 
Davis said he was disappointed that no Republicans supported the bill, saying 
it's a sign that they have retreated to their "ideological point of view and 
refuse to be problem-solvers." 
At the news conference, Davis said a California Energy Commission report 
shows huge increases in the number of power plants out of service in the 
first four months of 2001 over a similar period last year. 
"To me, this is strong evidence that people are manipulating the market by 
withholding the power to drive up prices," he said. 
Energy producers have denied withholding power, saying they are maintaining 
their aging plants because they have to operate them longer and harder to 
provide California with more power. 
Davis called on power companies to run their plants during the summer when 
blackouts are expected routinely or face the penalties. 
"If they don't act responsibly and do everything in their power to help us 
get through the summer, which means operating at full capacity, then I'll 
have no choice but to sign a windfall profits tax and seize a plant," he 
said. 
To curb soaring power costs, two Assembly members introduced a resolution 
urging Davis to form a buyers' cartel with Oregon and Washington to limit the 
price the three states will pay for power. 
Assemblymen Fred Keeley, D-Boulder Creek, and Paul Koretz, D-West Hollywood, 
said the buyers of power must act because federal regulators have refused to 
cap the wholesale prices that generators can charge. 
"We will pay these power generators a fair price, but we will no longer allow 
ourselves to be cash cows," Koretz said. 
Davis said he would consider the plan. 
The formation of a buyers cartel was proposed last month by a San Diego 
consumer group, the Utility Consumers' Action Network, which also said the 
state should consider planned blackouts to give consumers time to prepare. 
A generator spokesman said state officials should have begun planning earlier 
for choosing between paying high prices for power and more blackouts. 
"In a crisis I think this kind of decision has to be made," said Gary 
Ackerman of the Western Power Trading Forum. "It's economic triage." 
Meanwhile, federal energy regulators, whose reaction to California's problem 
has been criticized by state officials, waded into the dispute over the role 
of small-capacity generators yesterday. 
The Federal Energy Regulatory Commission allowed operators of the plants to 
sell electricity to third parties if they have more power than they need to 
meet their contracts. 
But FERC did not approve a plan releasing the generators, known as 
"qualifying facilities," from long-term contracts with the state's two 
biggest utilities, which have had trouble paying their bills. 
California Governor Gray Davis had urged FERC to stay out of the issue, 
saying state officials were working with small power producers and 
cogeneration plants to solve the problem.






State to review Escondido power plant plan 



UNION-TRIBUNE 
May 17, 2001 
ESCONDIDO -- The California Energy Commission was expected to start the 
21-day review period today for a 49-megawatt power plant proposed for 
Enterprise Street. 
Jonathan Brindle, the assistant planning director, told the City Council 
yesterday that CalPeak Power of San Diego had supplied all the necessary 
paperwork to the commission. 
The commission has scheduled a public hearing for 6 p.m. May 24 in the City 
Council chambers. 
To the dismay of Escondido officials, CalPeak withdrew its application with 
the city recently and is seeking a state permit. 
Escondido officials maintain that CalPeak will still have to obtain city 
approval, but the commission has said it will have final say under an 
executive order signed by Gov. Gray Davis. 






PUC Chief Alleges Price Collusion 
Power: She cites evidence that plants were shut down to create "artificial 
shortages." An industry spokesman calls the accusation "idiocy." 

By RICH CONNELL and ROBERT LOPEZ, Times Staff Writers 

?????State investigators have uncovered evidence that a "cartel" of power 
companies shut down plants for unnecessary maintenance to ratchet up prices, 
the head of the California Public Utilities Commission asserted Thursday.
?????PUC President Loretta Lynch said her agency, working with the state 
attorney general's office, is probing patterns of plant outages that have 
created "artificial shortages," particularly when the state has issued 
emergency alerts because of seriously low levels of electricity.
?????"There are instances where plants could have produced, and they chose 
not to," Lynch said in an interview at The Times.
?????"And it is clear that there are instances that plants, when called to 
produce, chose not to produce," even when they were obligated to do so under 
special contracts with the state and utility companies.
?????Lynch said the ongoing investigation has already produced enough 
information for the PUC and attorney general's office to take legal action 
against the generators next month. The exact nature of that action, she said, 
is still under review.
?????Lynch, who is an attorney, did not name specific suppliers or provide 
documentation of her assertions. She said that information will remain 
confidential until court proceedings are undertaken.
?????Generators have long denied any attempt at manipulating the power market 
in any unlawful way, including orchestrating plant shutdowns. They say the 
facilities are so old and have been run so hard during the power crisis that 
breakdowns are a recurring problem.
?????Lynch and Gov. Gray Davis, who has been particularly critical of 
out-of-state generators, have not suggested that every plant shutdown has 
been unwarranted.
?????In fact, the governor's top advisor on power plants released a statement 
last week saying inspectors determined that a Bay Area plant shutdown was 
justified and that the company's officials were "accommodating."
?????State Atty. Gen. Bill Lockyer was not available for comment on his joint 
investigation with the PUC. A spokesman would only confirm that Lockyer's 
office is investigating plant shutdowns as part of a wide-ranging probe of 
possible civil and criminal violations.
?????So far, the attorney general's office has subpoenaed documents in 91 
categories from generators, including records of plant operations, pricing 
practices and information the merchants may have shared with one another 
about California's power market.
?????"We're looking for behavior that would violate antitrust or unfair 
business practice laws," Lockyer has told The Times.
?????Although he has not provided details of his office's findings, he 
recently said the inquiry is "beginning to get interesting."
?????Lynch said evidence of allegedly unnecessary plant shutdowns was amassed 
during interviews by investigators and in a review of the voluminous 
subpoenaed records, obtained after intense legal battles with the power 
companies.
?????In addition, investigators have been entering plants where unplanned 
shutdowns have occurred to examine operations and maintenance records, Lynch 
said. At times, the investigators have been denied access and have had to 
exert legal pressure to get in, she said. 
?????The plant shutdowns are a key factor in the soaring power prices, which 
have gone from $200 a megawatt-hour in December to as high as $1,900 last 
week.
?????"I would argue it's no accident," Lynch said of the high prices. "That 
in fact it's [due to] the coordinated behavior of a cartel."
?????The power generators have repeatedly said they have acted within the 
rules of California's flawed deregulation program, which allowed them to buy 
power plants formerly run by the state's three largest utilities.
?????Gary Ackerman, a spokesman for a trade association of large power 
producers, said Lynch's allegations were "the height of idiocy."
?????The reason many plants have been down in recent months, he said, is that 
power producers must perform maintenance now in anticipation of heavy summer 
demand.
?????He said he doubted that state investigators could prove wrongdoing 
because there was no conspiracy to turn off supplies.
?????"My members do not make money by shutting down their plants so their 
competitors can make money," said Ackerman, executive director of the Western 
Power Trading Forum.
?????State analysts have argued, however, that power traders can reap 
extraordinary profits by withholding power because the prices for the power 
that is sold are so high.
?????According to Lynch, investigators have found that some companies were 
more aggressive than others in allegedly using plant shutdowns to manipulate 
the state's power market.
?????She said investigators have also found a suspicious pattern: When 
operators of the state electricity grid declare a Stage 1 alert--meaning that 
electricity reserves have dropped below 7%--plants that do not need repairs 
suddenly are yanked offline. That, she said, aggravates the shortages, and 
the cost of wholesale electricity soars.
?????Before December, state analysts alleged that power traders had driven up 
prices primarily through bidding. At the time, the market was designed to pay 
all power suppliers the highest amount accepted by the state's grid operator.
?????That changed in December, when new federal regulations restructured 
California's wholesale power market to loosen price controls, Lynch said. 
Since then, a new pattern of plant shutdowns has emerged--"not coincidentally 
in my view," she said. Now, she added, the state has endured "historically 
high levels of unplanned plant outages."
?????The investigation is not focusing on power plants still operated by 
utility companies because they have not been "going off [line] at record 
levels," Lynch said.
?????The California Energy Commission reported last week that the state's 
electrical grid has been sorely tested by plant shutdowns at a rate several 
times higher than in the last two years.
?????A Times analysis of state data found that, throughout the last two 
months, about 12,000 megawatts of production was offline, more than a third 
of the peak power used in California on a typical day. That has been about 
evenly divided between scheduled and sudden plant shutdowns.
?????By contrast, shutdowns in the same period of 1999 and 2000 took only 
3,300 to 5,700 megawatts offline.
?????Last month, the Federal Energy Regulatory Commission ordered electricity 
supplier Williams Energy Marketing and Trading to pay $8 million in 
connection with allegations that plants were improperly shut down to raise 
prices. The company agreed to settle the case without admitting any 
wrongdoing.
?????However, FERC released a study in February of closures at three other 
California plants that it concluded were not undertaken to create a scarcity 
of power.
?????After talking to plant operators by telephone, reviewing documents and 
visiting the three plants, federal inspectors concluded that "the companies 
appeared to have taken whatever steps were necessary to bring the generating 
facilities back online as soon as possible by accelerating maintenance and 
incurring additional expenses."
--- 
?????Times staff writer Nancy Vogel in Sacramento contributed to this story.







Critics Say Bush Proposal Leaves California in the Dark 
Effect: President's energy plan may not even offer a silver lining for the 
power-deprived Golden State. 

By JENIFER WARREN and ROBIN FIELDS, Times Staff Writers 

?????California lawmakers, analysts and others waist-deep in the state's 
power crisis reached a single conclusion Thursday about the White House 
energy plan:
?????By the time many of President Bush's proposals kick in, it will be too 
late to do the Golden State much good.
?????"This plan does absolutely nothing to help California get through the 
next critical 18 months," groused state Sen. Debra Bowen (D-Marina del Rey). 
"You can't focus just on the long term here. Because the patient will be dead 
before we get the life-support systems in place."
?????Gov. Gray Davis and others say the single best step Bush could take to 
help the state is to impose controls on runaway electricity prices that are 
draining California's treasury and forcing massive utility rate increases.
?????Instead, the president has offered an energy blueprint anchored by an 
expansion in drilling for natural gas and oil, increased reliance on nuclear 
power and more than $10 billion in tax credits for conservation and energy 
development.
?????Most of Bush's proposals, however, are slow-acting remedies, and many 
others already are being applied in California, which was hit by energy woes 
far ahead of other states.
?????The plan's dozens of incentive programs designed to boost output or 
promote conservation cannot be ramped up in time to protect the state from 
blackouts and painful spikes in electricity prices, experts say.
?????"Overall, the message in this plan is, 'Drop dead, California,' " said 
Eric Heitz of the Energy Foundation, a San Francisco-based research and 
advocacy group.
?????"I don't think it delivers another megawatt to California," added 
Loretta Lynch, president of the California Public Utilities Commission.
?????State economic analysts say the plan fails California by viewing the 
power crisis as an ongoing emergency, rather than a temporary one. 
California's supply crunch should ease dramatically by summer 2003, once 27 
new power plants--15 of them licensed, 12 in the pipeline--start churning.
?????"It's not that we don't have long-term problems," said Stephen Levy, 
director of the Palo Alto-based Center for Continuing Study of the California 
Economy. "It's just that energy isn't among them."
?????Others, including many environmentalists, say Bush could have made a 
noticeable impact by, for example, beefing up energy efficiency programs--a 
quick, clean and relatively inexpensive way to cut demand.
?????"Why not provide aggressive incentives [rebates] to get people to 
purchase more efficient air conditioners?" asked Dan Reicher, assistant 
Energy secretary in the Clinton administration. "Over the course of the year, 
a program like that can make a dramatic difference" because air conditioning 
consumes nearly one-third of California's peak energy supply.
?????Instead, Reicher noted, Bush earlier this year rolled back efficiency 
standards for air conditioners, a move that critics say will require the 
country to build 43 new power plants.
?????Even the few elements of the plan that looked promising for California 
were clouded by doubt.
?????Bush, for example, directed the Energy secretary to explore ways to 
relieve a key transmission bottleneck, known as "Path 15," between Northern 
and Southern California. But he specified that the upgrade, which requires 
building a 90-mile line at an estimated cost of $225 million, be funded by 
"nonfederal contributions"--meaning the financially strapped utilities might 
be expected to bear the cost.
?????Gov. Davis, who lately has stepped up his pleas for help from 
Washington, said the Bush plan offers too little too late for California and 
criticized the president for allowing "the price-gouging energy companies, 
many of which reside in Texas, to get away with murder."
?????Davis said the state is "doing everything possible to build and conserve 
our way out of the problem," but it desperately needs federal price controls 
on energy costs. In 1999, California energy users spent about $7 billion; 
this year, even with consumption down 5%, the bill could top $50 billion.
?????But Bush and Vice President Dick Cheney, who led the task force that 
prepared the plan, are opposed to price caps, preferring to let market forces 
reign.
?????Davis said that laissez faire approach puts California's economy in 
peril.
?????"Just saying, over the long haul, everything will work out is turning a 
blind eye to the bleeding and hemorrhaging that exist in this state," Davis 
said. "Small businesses . . . literally will go out of business because they 
can't afford these rates."
?????Analysts who studied the Bush plan say they are particularly 
disappointed because it covers a lot of ground already plowed by California.
?????Bush recommends building 1,900 power plants over the next 20 
years--about eight plants a month. But California is already on a 
plant-building spree that will give it a comfortable supply within two years.
?????The president also wants to streamline approval of plants and is pushing 
for a renewed commitment to nuclear power. The California governor, however, 
has already ordered expedited licensing of new plants under an executive 
order issued in February.
?????There is little evidence, meanwhile, that Californians are eager to 
approve an expansion in nuclear power. Nationwide, not one new nuclear plant 
has been licensed in more than 20 years. And a Times Poll in February found 
that 60% of Californians oppose more nuclear reactors in the state.
?????"You can barely build clean-burning gas plants here, let alone nuclear 
plants," said Edward Kahn, a San Francisco-based energy consultant with 
Analysis Group/Economics.
?????Among other elements of the plan that could affect California is a 
proposal to allow federal authorities to take private land for power lines. 
Currently, the U.S. government's power to forcibly acquire private property 
applies only to highways and gas pipelines. Expanding that power is likely to 
enrage property owners and property-rights advocates, who typically expect 
backing from Bush-style conservatives.
?????"I'm just surprised that this administration would want to preempt the 
state's [authority] over its own land," said Lynch of the PUC.
?????The issue is already heated in California. Communities in southwestern 
Riverside County have mobilized to resist San Diego Gas & Electric's attempts 
to use eminent domain to obtain private land for 31 miles of transmission 
lines. The Legislature is considering a bill that would require state energy 
officials and utilities to grab public land first before reaching for private 
acreage.
?????Bush also proposed a unified, private national electricity grid, an idea 
that seems at odds with Southern California Edison's effort to sell its 
transmission lines to the state. But Edison officials said they hope to have 
their deal worked out long before the president's idea comes to fruition--if 
it ever does.
?????Unveiling his energy program in St. Paul, Minn., Bush said he is "deeply 
concerned about the impact of blackouts on the daily lives of the good people 
of the state of California."
?????But S. Davis Freeman, the former Los Angeles Department of Water and 
Power chief who is now the governor's energy advisor, said Bush has let down 
the state by failing to "answer the 911 call."
?????"It's like your house is on fire," Freeman said. "You call the fire 
department, and they say, 'No, we're not coming, but we're building a 
super-duper firetruck that will be ready five years from now.' "
--- 
?????Times staff writers Dan Morain and Richard Simon and researcher Patti 
Williams contributed to this story.







Wall St. Cautious Over Energy Sector's Outlook for Next Year 
Stocks: Earnings for many oil and natural gas producers are expected to top 
out in 2001 as prices stabilize. 

By JOSH FRIEDMAN and TOM PETRUNO, Times Staff Writers 

?????President Bush's energy plan, unveiled Thursday, helped spark a broad 
rally across the energy sector and among firms that stand to benefit by 
selling equipment and services to oil and natural gas companies.
?????Yet Wall Street has been taking a cautious stance toward energy shares 
in recent months, and Thursday's rally doesn't change much, some analysts and 
money managers say.
?????Despite the long-term earnings boost the sector could get under Bush's 
plan, many oil and gas companies are expected to post lower earnings in 2002 
than in 2001, analysts estimate.
?????That reflects expectations that crude oil and natural gas prices will at 
best stabilize at current levels--which are down sharply from their 2000 
peaks--or head lower.
?????Thus, after heady gains in 1999 and 2000 as oil and gas prices rocketed, 
many energy stocks have stalled this year.
?????The American Stock Exchange index of 15 major natural-gas-related 
stocks, for example, is down 4% year to date. The Standard & Poor's index of 
six large oil and gas exploration and production companies has lost 5.3%.
?????Schlumberger (ticker symbol: SLB), a leading oil-field services company, 
has seen its shares pull back 15% since Jan. 1, even with a gain of $1.78 to 
$67.99 on Thursday.
?????By contrast, the blue-chip S&P 500 index is down 2.4% this year.
?????Craig T. Callahan, manager of Icon Energy stock mutual fund and chief 
investment officer at the Icon Funds group, said investors need to be choosy 
to find good buys today in the energy sector.
?????"We're leaning more toward the refiners than the drillers because 
they're the better bargains," he said. "And at this point the good news looks 
fully priced into the services and equipment group."
?????After betting big on the energy sector in early-1999, Callahan took 
profits earlier this year. "We just don't see energy as a leader anymore--its 
leadership days are done," he said.
?????Callahan shrugged off any potential windfalls from Bush's proposal. "We 
look at these companies from the bottom up and pretty much ignore the macro 
trends," he said.
?????For the near term, investors have to cope with the prospect that 
earnings at many energy companies will decline in 2002.
?????Chevron (CHV), for example, is expected to earn $7.20 a share this year, 
according to analysts' consensus estimate as tracked by IBES/Thomson 
Financial. But next year the company's earnings are expected to fall to $6.20.
?????At the stock's current price--it rose 41 cents to $95.66 Thursday--the 
price-to-earnings ratio based on estimated 2002 results is 15. That is lower 
than the average blue-chip stock P/E of 21, but experts note that energy 
stocks generally have lower P/Es because of the inherently cyclical nature of 
the business.
?????Still, some analysts believe the Bush energy plan could revive interest 
in many energy shares, if investors take a longer-term view.
?????Companies that explore for, produce and refine oil and gas could be 
among the biggest beneficiaries of Bush's initiatives, said Corey McElveen, 
stock analyst at Morningstar Inc. In particular, he cites Phillips Petroleum 
(P) and Exxon Mobil (XOM), which already have operations in energy-rich 
Alaska. Phillips rose $1.72 to $65.87 on Thursday, while Exxon Mobil eased 77 
cents to $88.73.
?????Callahan, however, favors companies that focus on refining. Ashland 
(ASH), Pennzoil-Quaker State (PZL) and Sunoco (SUN) are among the refining 
stocks with reasonable valuations and plenty of upside, he said.
?????Ashland eased 17 cents to $43.50 Thursday, Pennzoil-Quaker added 5 cents 
to $15.96 and Sunoco rose 98 cents to $41.45.
?????Some money managers prefer to leave the traditional oil and gas stocks 
for others--in favor of alternative energy issues.
?????John Hammerschmidt, manager of Turner New Energy & Power Technology 
Fund, likes the potential of companies such as Energy Conversion (ENER), 
which is seeking to develop cheaper and sturdier solar panels, and AstroPower 
(APWR), another solar firm.
?????Energy Conversion jumped $3.53 to $31.28 on Thursday while AstroPower 
leaped $3.38 to $54.93.
?????In the fuel cell industry, Hammerschmidt pointed to Ballard Power 
Systems (BLDP), whose products are being used in clean-running buses in Los 
Angeles and elsewhere, and FuelCell Energy (FCEL). A tax credit for fuel-cell 
vehicles, as proposed by Bush, "could be huge" for such firms, he said.
?????Ballard jumped $8.37 to $57.60 and FuelCell rose $4.98 to $85.28.
?????But fuel cell companies, are, for the most part, far away from 
profitability, Hammerschmidt warned, so they may make for an especially 
speculative and risky investment.
?????Many alternative-energy shares also rallied strongly in 2000--only to 
tumble.







Municipal Utilities Seek Exemptions From Blackouts 
Power: Those connected to state grid, L.A. not among them, say their 
customers should not be deprived to aid others. 

By SCOTT GOLD, Times Staff Writer 

?????A group of California cities that run their own electric utilities and 
have plenty of power to weather the energy crunch this summer will ask the 
federal government today to exempt them from blackouts.
?????Their quiet campaign challenges the very foundation of the power grid in 
California, and could change the dynamics of how electricity is doled 
out--just as the state is bracing for a summer of rolling outages.
?????Most Californians pay large, investor-owned utilities like Southern 
California Edison Co. for power. But about a quarter of households, from the 
tiny desert city of Needles to the state capital, are billed for electricity 
by cities, counties or local districts that run their own nonprofit 
utilities. There are 30 "municipal" utilities.
?????Four of them--serving Los Angeles, Burbank, Glendale and the Imperial 
Valley, east of San Diego--are independent of the state power grid and do not 
face any outages. But the others are required by contract to give electricity 
back to the California Independent System Operator, which runs the grid, by 
participating in rolling blackouts--although they have plenty of power to 
serve their customers.
?????"It makes them wonder why they went out and did their jobs," said 
California Municipal Utilities Assn. attorney Tony Braun.
?????These utilities argue that they are suffering for the myopic decisions 
behind the deregulation of California's electricity market and the power 
shortage.
?????"We believe our power was purchased for the citizens of Riverside and 
that we don't have the right--nor does anyone else--to take it away from them 
when they need it," said Riverside Utilities Director Tom Evans. "Our 
customers are being denied something that they are fundamentally entitled to."
?????Leading the campaign is the tiny Los Angeles County city of Vernon, 
which filed a complaint last week asking the Federal Energy Regulatory 
Commission to exempt it from rolling blackouts.
?????Vernon's public utility has 2,000 customers, all but 30 of which are 
industrial operations such as glass manufacturers and meatpacking plants. The 
city launched its own distribution system primarily to lure industry with 
electric rates that are typically among the lowest in the state, said Jorge 
Somoano, Vernon's assistant director of resource management.
?????FERC set a deadline today for other municipal utilities to support the 
campaign. Up to half, including Riverside, are expected to either file their 
own complaints or file documents supporting Vernon, said Washington attorney 
Bonnie Blair, who represents municipal utilities in Azusa, Banning and Colton.
?????Even the campaign's supporters are unsure whether it will succeed. Blair 
acknowledged that there is no precedent for presenting this type of legal 
challenge to FERC, which is expected to decide on the issue by mid-June. And, 
she said, municipal utilities might have a tough time proving they have done 
enough to insulate themselves from the energy crisis.
?????Some cities with municipal utilities, such as Anaheim, are not planning 
to join the campaign.
?????Marcie Edwards, general manager of Anaheim Public Utilities, said the 
relationships between municipal utilities and Cal-ISO are too complicated to 
make a clean break. She said it is rare that a power shortage can be blamed 
entirely on the large investor-owned utilities--including this summer's 
energy crunch. And until that can be proved, she said, municipal utilities 
still have an obligation to support California's power grid.
?????"It's not right to go either way 100%," she said. "The fact remains that 
municipals still have an obligation to serve."
?????Most of the municipal utilities are linked to the grid through 
agreements with Cal-ISO that call for them to share electricity in an 
emergency.
?????Those utilities tend to believe that the agreements were reserved for 
natural disasters, such as earthquakes, or other sudden and monumental 
problems, such as a plane running into a transmission line.
?????"The failure or inability of other utilities to schedule sufficient 
supplies," Vernon contended wryly in its papers filed with FERC, does not 
constitute an emergency.
?????"The obligation to share in [rolling blackouts] did not contemplate 
situations where some utilities were not meeting their basic obligation to 
provide resources to serve their customers," Blair said. "If they are forced 
to participate in rolling blackouts, the effect is that the ISO is taking 
energy that has been bought and paid for by some customers and effectively 
giving it to somebody else that has been unable to buy it."
?????Jim Detmers, Cal-ISO's vice president of operations, said the 
organization plans to fight the campaign. He said emergency provisions of 
Cal-ISO's agreements with the municipal utilities cover the current energy 
crunch.
?????Detmers said that exempting municipal utilities from blackouts would 
increase the share of those events shouldered by communities that do not have 
their own electricity distribution. He compared the exemption request to a 
homeowner declining to fight a fire at a neighbor's because he wants to keep 
his water for himself.
?????"What we're dealing with is an overall shortage," Detmers said. "We want 
to make sure that we are making the right choices when everyone's lives are 
at risk."
?????Ronald Nunnally, Edison's director of federal regulations and contracts, 
said the municipal utilities have an obligation to uphold the integrity of 
the power grid to which they are connected.
?????"The ability to use the grid requires to keep it whole, if you will, 
under all circumstances," he said.
?????Blair said those arguments don't hold up. Indeed, she said the municipal 
utilities will argue that the California Constitution expressly prohibits 
giving public property, such as electricity bought by a municipal utility, to 
a private enterprise, such as investor-owned electric companies.
?????"Our customers are paying for it," she said. "That's the bottom line."






Californians fault Bush energy proposal 
GARY GENTILE, AP Business Writer
Friday, May 18, 2001 
,2001 Associated Press 
URL: 
http://www.sfgate.com/cgi-bin/article.cgi?file=/news/archive/2001/05/18/state0
301EDT0100.DTL&type=news 
(05-18) 00:01 PDT LOS ANGELES (AP) -- 
Government officials, environmental groups and many energy consumers found 
little comfort in President Bush's national energy plan released Thursday. 
The plan, which includes a pledge to speed up power plant permits and 
conserve at federal facilities, was sharply criticized by Gov. Gray Davis, 
who accused the administration of "turning a blind eye to the bleeding and 
hemorrhaging that exists in this state." 
Davis repeated his plea for the federal government to impose caps on 
wholesale energy prices that he says have driven the state's largest 
investor-owned utility into bankruptcy and two others to the brink of 
collapse. 
"If he wants to be helpful to California, he could send a strong signal that 
the Federal Energy Regulatory Commission should grant some kind of relief," 
he said. 
California has been struck by six days of rolling blackouts since January, 
and officials predict more as temperatures rise this summer. Customers of the 
state's two largest private utilities, Pacific Gas and Electric Co. and 
Southern California Edison, will see unprecedented rate increases soon. 
In announcing his plan Thursday, Bush warned that California is previewing 
the power troubles the nation could face if it doesn't boost its energy 
supply and cut demand. 
"Californians are learning, regrettably, that sometimes when you flick on the 
light switch, the light does not come on at any price," Bush said. 
He said his energy plan provides solutions that will help ease the state's 
power woes. 
"I'm deeply concerned about the impact of blackouts on the daily lives of the 
good people of the state of California, and my administration is committed to 
helping California," Bush said. 
Some consumers didn't see the president's sympathy. 
"I don't really think he has my concerns as his priority," said Jodi 
Reynolds, 38, a Culver City legal secretary. "I can already see that I need 
to conserve energy. I don't need the president to tell me that." 
Others gave Bush credit for addressing the nation's long-term energy needs, 
but faulted the president for not doing more for California now. 
"We give him kudos for addressing the supply issue," said Brian Bennett, vice 
president of external affairs for Southern California Edison, one of the 
state's cash-strapped electric utilities. 
"However, when it comes to addressing the California crisis, the Bush 
administration has chosen to ignore what they could have done to help lessen 
the crisis here -- impose on a short-term basis cost-based pricing on the 
wholesale market." 
That theme ran through some of the comments by the state's environmental and 
consumer groups. 
"In the last energy crisis, a handful of nations in the Middle East had us 
over a barrel," said Harvey Rosenfield, head of the Foundation for Taxpayer 
and Consumer Rights in Santa Monica. "Now it's a handful of energy companies 
in the Southern United States. The only solution is to bust the Texas-based 
OPEC." 
Environmentalists said Bush's energy policy lacks proposals that could offer 
short-term relief from higher electricity and gasoline prices, such as power 
price controls, incentives for more efficient appliances and tighter 
fuel-efficiency requirements for vehicles. 
The Bush plan also steps away from assurances he made during the campaign 
that he would not rescind a moratorium on new offshore oil leases created by 
his father and extended until 2012 by President Clinton. The plan calls for 
the secretaries of commerce and the interior to re-examine the moratorium. 
"We are concerned what he is stepping toward," said Allison Detmer, manager 
of the ocean and resources unit of the state Coastal Commission, which is 
suing the federal government over the existing leases. "This might be the 
first step toward opening up the coast again." 
Some utility and government officials said Bush correctly focused on 
expanding the nation's energy infrastructure, building more natural gas 
pipelines and strengthening the electricity transmission grid. 
But the president's support for new nuclear power plants won little support. 
"The political realities in California are we're not going to see an 
increased reliance to nuclear power in the near future," said Carl Wood, a 
member of the California Public Utilities Commission. 
Perhaps predictably, state Democrats found little to like in Bush's plan, 
while Republicans found much to praise. 
"The president's plan will help California this summer by expediting new 
power plants and ordering state agencies to conserve," said Rep. Randy 
Cunningham, R-Escondido. 
"There's nothing in there for California. Nothing," said Rep. Brad Sherman, 
D-Los Angeles. "The headline is: Bush to California, drop dead." 




California utilties commission chief says power plants shut down to drive up 
prices 
Friday, May 18, 2001 
,2001 Associated Press 
URL: 
http://www.sfgate.com/cgi-bin/article.cgi?file=/news/archive/2001/05/18/nation
al0842EDT0531.DTL&type=news 
(05-18) 05:42 PDT LOS ANGELES (AP) -- 
There is evidence that a "cartel" of power companies shut down plants for 
unnecessary maintenance to increase energy prices, the head of the California 
Public Utilities Commission said. An energy official called the allegation 
"idiocy." 
PUC President Loretta Lynch told the Los Angeles Times on Thursday that her 
agency and the state attorney general's office are probing plant outages that 
she said created "artificial shortages" that contributed to skyrocketing 
power prices. 
"There are instances where plants could have produced, and they chose not 
to," Lynch said. "And it is clear that there are instances that plants, when 
called to produce, chose not to produce." She said that happened even when 
plants were obligated to do so under special contracts with utility companies 
and the state. 
Gary Ackerman, executive director of the Western Power Trading Forum, 
dismissed Lynch's allegations as "the height of idiocy." 
Power generators have repeatedly said they have been acting within the rules 
of the state's deregulation system. The reason many plants have been down in 
recent months, Ackerman said, is that power producers must perform 
maintenance now in anticipation of heavy summer demand. 
"My members do not make money by shutting down their plants so their 
competitors can make money," said Ackerman, who represents a trade 
association of large power producers. 
But Lynch said the probe has produced enough information for the PUC and 
attorney general to take legal action next month against some power 
generators. She did not identify them, and the exact nature of the legal 
action is still under review, she said. 
Investigators conducted interviews and reviewed subpoenaed records, obtained 
after legal battles with the power companies, to gather evidence of allegedly 
unnecessary plant shutdowns, Lynch said. 
Power plants where unplanned shutdowns have happened also were visited to 
examine operations and maintenance records, Lynch said. 
Power prices have gone from $200 a megawatt hour in December to as much as 
$1,900 last week, and plant shutdowns have been a key factor in the soaring 
prices. 
"I would argue it's no accident," Lynch said. "That in fact it's due to the 
coordinated behavior of a cartel." 
Lynch said one suspicious pattern has emerged: When operators of the state's 
electricity grid declared a Stage 1 alert, which means that electricity 
reserves had dipped below 7 percent, plants that didn't need repairs were 
suddenly pulled off-line. 
,2001 Associated Press ? 




Bush faces tough fight on energy strategy 
ANALYSIS: Californians must sweat out summer 
Marc Sandalow, Washington Bureau Chief
Friday, May 18, 2001 
,2001 San Francisco Chronicle 
URL: 
http://www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2001/05/18/M
N71543.DTL&type=news 
Washington -- The White House's reluctance to bail California out of its 
electricity woes was made plain by President Bush's decision to release his 
energy plan 1, 425 miles from the state border. 
Traveling as far west as the Mississippi River, Bush spoke sympathetically of 
California's well-known energy shortage, saying he is "deeply concerned about 
the impact of blackouts on the daily lives of the good people of the state." 
Yet the 163-page report he distributed bluntly acknowledges that its 105 
recommendations will do little to prevent rolling blackouts or lower gas 
prices this summer. 
"Unfortunately, there are no short-term solutions to long-term neglect," 
states a section on "California's Energy Challenge," generously illustrated 
with pictures of the Golden Gate Bridge and other California landscapes. 
"Our energy crisis has been years in the making, and will take years to put 
fully behind us." 
Several provisions may make electricity more plentiful for California years 
into the future, including one to allow the government to seize private land 
to build transmission lines and another to speed the permit process for power 
generators. 
That will be cold comfort to millions of Californians whose lights and 
laptops go dark this spring as they confront staggering increases in utility 
bills. 
TOUGH-LOVE APPROACH
As California faces the prospect of a long energy-deprived summer, the 
administration has clung to a tough-love approach, insisting that short-term 
fixes -- like the price limits advocated by Democrats -- will compound the 
problem down the road. 
Warned by California Republicans that such an approach could have politically 
disastrous consequences, the administration in recent days has softened its 
language, speaking more sympathetically about California's plight. 
Bush aides suggest that some immediate price relief might come from the 
"psychological" effect of knowing that more energy supplies are on the way. 
"The quicker you implement this policy, the quicker we're going to get rid of 
some of the problems like California (is experiencing)," a senior 
administration told reporters at a briefing. 
Pressed specifically on what recommendations would ease the state's current 
troubles, the official pointed to a plan to speed the permit process for 
power plants, something he acknowledged has been going on for months. 
"You've got to look at this from the perspective that it's been neglected for 
a long time," the official said of California's problems. "It's going to take 
some time." 
DEMOCRATS SPEAK OUT
California Democrats -- some who feel the outrage of their constituents, and 
others who sense a political opening -- would have nothing of it. 
"Mr. President, you didn't create this problem, but you are the only one who 
can solve it," Gov. Gray Davis said. "With all due respect, Californians want 
to know Mr. President, whether you're going to be on their side." 
Davis, who has predicted that the state will have enough power to be out of 
the mess by the end of the year, said the White House's laissez faire 
attitude carries a human toll. 
"The president can say the problem will correct itself, and that's true -- 
but there will be a lot of blood on the floor along the way," Davis said. "I 
do not think he wants Californians to suffer, however, by doing nothing." 
Many Democrats have hinted that Bush's hands-off policy toward California 
might be different if it wasn't benefiting oil interests from his home state 
of Texas. 
"This lengthy document will not provide one more kilowatt to California this 
summer, prevent one less minute of blackouts, or keep one less dollar from 
being transferred from California into the hands of the Texas-based energy 
producers," said California Sen. Dianne Feinstein. 
Her colleague and fellow Democrat, California Sen. Barbara Boxer, added, "The 
president's energy plan does nothing to ease California's energy pain." 
Even non-Californians joined the assault. 
'DROP DEAD' 
"George Bush's message to California from day one has been, 'Drop dead,' " 
Democratic Party Chair Terry McAuliffe said on ABC's "Good Morning America." 
To showcase the frustration of Californians, Democrats led by House Minority 
Leader Dick Gephardt, D-Mo., will conduct an energy hearing in the Bay Area 
at the end of the month. 
Bush, who has yet to visit the state as president, plans to travel to 
Southern California at the end of the month. 
A hard line on California, which voted overwhelmingly for Democratic former 
Vice President Al Gore in November, may not be as big a political risk 
outside the Golden State. 
"For much of America, California is a land of fruits and nuts, and they 
deserve whatever they get," said Stuart Rothenberg, author of a political 
newsletter in Washington. 
But Rothenberg warned that there is danger "if there is a perception that he 
doesn't have a policy that helps California, then he might not have a policy 
that helps Michigan, or any place else, and that could be alarming." 
In fact, Bush's popularity has sunk in places like Michigan, according to 
independent pollster Ed Sarpolous. 
"People in Michigan may not be as sympathetic to (California's) plight as 
Californians, but not coming up with answers isn't helping his stature." 
Chronicle staff writer Lynda Gledhill contributed to this report. / E-mail 
Marc Sandalow at msandalow@sfchronicle.com. 




Probe finds 'artificial' shortages 
Unneeded plant shutdowns drove up state electricity prices, PUC chief says 
Chuck Squatriglia, Chronicle Staff Writer
Friday, May 18, 2001 
,2001 San Francisco Chronicle 
URL: 
http://www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2001/05/18/M
N226948.DTL&type=news 
State energy regulators have uncovered evidence that some electric power 
companies drove up prices by repeatedly shutting down generating plants for 
unnecessary maintenance, it was disclosed yesterday. 
Investigators with the California Public Utilities Commission and the state 
attorney general's office have found patterns of plant closings that created 
"artificial shortages," said commission president Loretta Lynch. 
What's more, many of those unnecessary plant shutdowns came when California's 
power supplies were critically low, causing exorbitant prices. Since January, 
the state has spent $6 billion buying electricity on behalf of cash-strapped 
utilities, Lynch said. 
"We are talking about individual acts (of wrongdoing)," Lynch told The 
Chronicle last night. "I believe those acts, taken together, drove up 
prices." 
In some cases, the generators, whom Lynch declined to name, refused to 
produce power even when required to do so under contracts with the state and 
utility companies, Lynch said. 
"There are instances where plants could have produced and they chose not to, 
" she charged. "And it is clear that there are instances that plants, when 
called to produce, chose not to." 
Gary Ackerman, executive director of the Western Power Trading Forum, denied 
any effort by the power generators to ratchet up prices. 
'SMALLER AND SMALLER WINDOW' 
"Generators have a smaller and smaller window in which to perform maintanence 
to prepare for summer," he said. "It's always going to look like an untimely 
decision, but you have to do it." 
Power companies make money by running their plants, not by shutting them down 
and giving competitors the advantage, he said. 
Lynch said the joint investigation by the PUC and Attorney General Bill 
Lockyer's office has uncovered sufficient evidence to take legal action, but 
she declined to say what penalties the power generators could face. 
"That's not within the PUC's bailiwick," Lynch said last night. 
Lockyer could not be reached for comment. 
Although Lynch said investigators have evidence that several companies shut 
down plants to ratchet up prices, there is no evidence at this point of 
collusion. She declined to provide specifics of the the investigation, which 
she said would be completed within 60 says, and would not name the generators 
that are targets. 
INVESTIGATION BEGAN IN AUGUST
Lockyer's office began investigating last August whether power companies have 
been manipulating prices to maximize profits as California struggles with a 
deepening energy shortage. 
But even if investigators prove that electricity generators are "gaming" the 
market with a variety of price-influencing techniques, it remains to be seen 
whether their actions violate the law. 
Meanwhile, the PUC has been investigating why so many plants are down 
simultaneously for maintenance. The plant shutdowns are a key factor in the 
soaring power prices, which have gone from $200 in December to as high as $1, 
900 a megawatt hour last week. 
Lynch said investigators amassed their evidence during interviews and a 
review of subpoenaed records obtained from the power companies. Moreover, 
inspectors have visited plants that have seen unscheduled shutdowns to 
examine maintenance records and other documents, she said. 
BOTCHED DEREGULATION PLAN
Power generators have consistently argued that they are acting within the 
rules of California's botched deregulation plan, which required the state's 
three largest utilities to sell off their plants. 
Lynch's disclosure was news to Gov. Gray Davis, whose office has been working 
closely with Lockyer during the attorney general's probe. 
"This is news to me," Davis spokesman Steve Maviglio said last night. "It 
wouldn't be surprising, but we will reserve judgment until we see what they 
have." 
The Los Angeles Times contributed to this report. / E-mail Chuck Squatriglia 
at csquatriglia@sfchronicle.com. 




PG&E plans new plants outside California 
Higher profits from building elsewhere 
David Lazarus, Chronicle Staff Writer
Friday, May 18, 2001 
,2001 San Francisco Chronicle 
URL: 
http://www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2001/05/18/M
N222441.DTL&type=news 
PG&E Corp., which insists that California's energy woes will end only when 
new power plants are built, will begin construction of five generating 
facilities this year and has at least four others on the drawing board. 
Unfortunately for California, not one of these plants will be in the state. 
Rather, PG&E will build more than 9,000 megawatts of new generation -- enough 
power to light about 9 million homes -- in New York, New Jersey, Wisconsin, 
Michigan, Arizona, Illinois, Oregon and Nevada. 
PG&E may talk about the importance of building power plants in California, 
but the simple fact is that the company generally can construct generating 
facilities more quickly and cheaply elsewhere -- and still benefit from high 
electricity prices. 
The company's ambitious building boom was outlined this week at PG&E's annual 
shareholder meeting in San Francisco. 
"It is not perceived as advantageous for them to build their plants in 
California," Keith Hannigan, a Chicago lawyer specializing in power plants, 
said yesterday. "It's naive to think that PG&E will behave in any way except 
to maximize its returns." 
PG&E Corp. has only one major plant under way in its home state: the 1,000- 
megawatt La Paloma facility near Bakersfield, due to begin operating by the 
middle of next year. 
The company received approval from state authorities last month for a 510- 
megawatt plant in San Diego, but it plans to sell the project to San Jose's 
Calpine Corp. 
"The businesses that we have outside California are designed to grow 
shareholder value," PG&E Chairman Robert Glynn told shareholders on 
Wednesday. 
Indeed, PG&E's National Energy Group, which oversees the company's power 
plants, is the corporation's fastest-growing division -- a marked contrast to 
PG&E's cash-strapped utility operations. 
The National Energy Group saw operating earnings skyrocket by 165 percent 
last year, compared with just 2 percent for the utility and 13 percent for 
the corporation overall. 
Operating earnings exclude one-time charges related to California's current 
energy crisis. 
While state officials expressed disappointment that PG&E would build its 
plants elsewhere, they quickly noted that nothing can be done to change the 
situation. 
"What the holding company does is different from the regulated utility," said 
Richard Bilas, a member of the California Public Utilities Commission. "The 
holding company is able to do things that ain't right for California, but 
that's what they do." 
Under California's 1996 deregulation of the state's electricity market, PG&E 
sold off most of its power plants to out-of-state energy companies -- the 
same companies that PG&E now says are gouging California consumers and 
driving its utility deeper into debt. 
Meanwhile, PG&E Corp. owns, or holds stakes in, more than 30 power plants in 
11 states and has been especially aggressive in the New England area, where 
the company now has 21 generating facilities. 
The largest investor-owned utility in Massachusetts asked federal regulators 
this week to block PG&E Corp. from raising electricity prices during power 
shortages. 
PG&E countered that the rates it charges customers in the Boston area are 
"fair and reasonable." 
Most power companies say the same about what they are charging California 
consumer these days. Supply and demand, they say, means that prices go up 
when inventories go down. 
The situation in California is gradually changing. Four new plants, 
accounting for almost 2,000 megawatts, will begin operating this summer, 
according to the California Energy Commission. 
Another four should be online by next year, and seven others are scheduled to 
be up and running by 2004. 
Total production from all 15 new plants will be about 9,800 megawatts. 
Yet California's demand for electricity will continue to grow during that 
same period, and the state is expected to continue purchasing power from out- 
of-state sources. 
One of those sources could be PG&E. The company is in the final stages of 
securing permits for a 1,000-megawatt plant near Las Vegas -- one of nearly a 
dozen generating facilities being fast-tracked by Nevada authorities to make 
the state the energy hub of the West. 
Nevada's primary goal is to secure enough electricity for the state's glitzy 
gaming palaces. But it also wants to have enough power on hand to be able to 
export electricity elsewhere. 
"We're obviously very interested in the Nevada market," said PG&E spokeswoman 
Sandra McDonough. "It's a fast-growing market and we want to be in it. To the 
extent that power is not needed there, we would sell it elsewhere in the 
West." 
In other words, to California -- potentially at the same sky-high prices that 
Pacific Gas and Electric Co. is now being charged and wants to pass along to 
customers. 
"The new power plants are trying to get on line as quickly as possible," said 
Don Soderberg, chairman of the Nevada Public Utilities Commission. "These 
superhigh electricity prices are artificial and won't last forever." 
PG&E's Glynn seems to understand this. 
"There are many challenges in the future," he said. "But there is also a 
solid foundation on which to move forward and grow." 
Presumably, he wasn't referring to his bankrupt utility. 
E-mail David Lazarus at dlazarus@sfchronicle.com. 




Bush faces tough fight on energy strategy 
REACTION: Criticism from environmentalists 
Carolyn Lochhead, Chronicle Washington Bureau
Friday, May 18, 2001 
,2001 San Francisco Chronicle 
URL: 
http://www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2001/05/18/M
N191563.DTL&type=news 

Washington -- President Bush warned yesterday that California's blackouts are 
a "preview" for the rest of the nation if it fails to increase energy 
supplies, but his plan to do so met with a hail of ridicule from 
environmental groups and Democrats. 
So quick and fierce were the attacks that the Bush plan may do less to ease 
public concerns about energy than to set off an all-out political war with 
environmentalists and their Democratic allies. 
"If we fail to act, this great country could face a darker future, a future 
that is unfortunately being previewed in rising prices at the gas pump and 
rolling blackouts in the great state of California," Bush said at a St. Paul, 
Minn., utility where he revealed his 163-page energy plan. 
"Californians are learning, regrettably, that sometimes when you flick on the 
light switch, the light does not come on at any price." 
Bush insisted that by exploiting new technologies, energy production and 
environmental protection can go hand in hand, urging "a new tone in 
discussing energy and the environment, one that is less suspicious, less 
punitive, less rancorous." 
"We've yelled at each other enough," Bush said. "Now it's time to listen to 
each other and to act." 
But no sooner did Bush release his plan than it met a barrage of criticism 
from environmental groups and Democrats who set up "war rooms" in the 
basement of the Capitol and derided the plan as a payoff to the energy 
industry. 
Greenpeace activists dumped a heap of coal and oil drums outside Vice 
President Dick Cheney's residence. Opponents previewed television commercials 
depicting the administration as an auctioneer selling off public lands and 
clean air. 
Gov. Gray Davis joined the fray from Sacramento. "By not doing anything, 
(Bush) is allowing price gouging by the energy companies -- many of whom 
reside in Texas," Davis said. He urged Bush to tell federal regulators to 
impose price controls on wholesale electricity. 
House Minority Leader Dick Gephardt, D-Mo., mocked the report as full of 
pretty colored pictures. "It really looks like the Exxon Mobil annual report, 
and maybe that's really what it is." 
BUSH HAS TOUGH ROW TO HOE
White House press secretary Ari Fleischer acknowledged that Bush has a 
difficult selling job ahead. "If presidents lead by polls when it comes to 
energy, America's lights will slowly go out," Fleischer said. 
Bush's plan calls for easing regulatory barriers to more nuclear power, more 
natural gas and oil drilling on public lands, more pipelines and a total 
overhaul of the nation's electricity grid. 
Environmental regulations have "created a Catch-22," Bush said, that has "too 
often blocked environmental progress by discouraging companies from 
installing newer and cleaner equipment." 
Attempting to soften his policy's strong tilt toward fossil fuels, Bush 
called for a basket of tax credits for solar, biomass, wind, geothermal and 
other "green" fuels, along with a hefty consumer subsidy for hybrid cars that 
run on gasoline and electricity. 
But he said energy-efficient California proves that "not even the most 
admirable conservation effort could keep up with the state's demand for 
electricity. . . . Even the sleekest laptop needs to plug into an electrical 
outlet from time to time." 
CALL FOR NATIONWIDE GRID
Citing California's infamous "Path 15" transmission bottleneck that keeps 
electricity from moving freely south to north, Bush called for the creation 
of a national grid, condemning private property if necessary to make way for 
new transmission lines. 
"Highways connect Miami with Seattle, phone lines link Los Angeles and New 
York," Bush said. "It is time to match our interstate highway and phone 
systems with an interstate electrical grid." 
While promising no quick relief for high gasoline prices, Bush said his plan 
to review the dozen different "boutique" fuel blends required by varying 
environmental rules would help ease limitations on refinery production. 
And he vowed that new technologies can make conservation painless. 
"Conservation does not mean doing without," Bush said, citing such things as 
"smart" electric meters on homes and sensors that switch off lights when 
people leave a room. "Wise regulation and American innovation will make this 
country the world's leader in energy efficiency and conservation in the 21st 
century." 
Bush's conciliatory language was a twist on former President Bill Clinton's 
oft-used rhetoric to fend off criticism from the right that environmental 
protection would cost jobs. 
GREEN GROUPS MOBILIZE
While Bush is trying to keep those on the left at bay, environmental groups 
promised an intense effort to kill the president's plan. 
Bush "creates a thin veil of energy efficiency to hide a cesspool of 
political giveaways" to the energy industry, said Dan Becker of the Sierra 
Club. 
Sen. Dianne Feinstein and nearly every other Democrat in the California 
delegation attacked the plan as doing nothing to aid California, urging 
electricity price controls instead. 
"For Big Oil and other suppliers, the Bush energy plan is a dream come true, 
" Feinstein said. "But among those most left behind 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." 
Environmentalists said the plan offered only a sorry sop to conservation and 
avoided calling for higher fuel-efficiency standards on sport utility 
vehicles. 
Yet like both political parties, environmental leaders also avoided pressing 
for public sacrifices. 
"Most people didn't buy an SUV because they wanted to spend a lot of money on 
gasoline," said Philip Clapp, president of the National Environmental Trust. 
"It is not a consumer choice to buy inefficient SUVs." 
PLAN'S PROSPECTS IN CONGRESS
The Bush plan is likely to ignite a free-for-all in Congress to divvy up 
benefits among competing energy sources ranging from coal and nuclear power 
to wind and biomass. Tax credits for "green fuels" such as solar and 
geothermal are wildly popular in both parties. 
Regional interests split the parties on other issues, from greater use of 
coal and oil, to higher auto fuel-efficiency standards -- opposed by many 
representatives in automaking states but favored by New England Republicans. 
Both parties agree with Bush on encouraging construction of a huge pipeline 
to bring natural gas from Prudhoe Bay in Alaska to the lower 48 states. 
Alliances are likely between Democrats and moderate Republicans on more 
conservation and higher efficiency standards, which have broad support. 
Bush's controversial proposal to drill in the Arctic National Wildlife Refuge 
faces a rough road, with nearly united Democratic opposition and possibly 
enough Republican resistance to quash it. 
Energy proposal 
For the complete report of the National Energy Policy Development Group, go 
to whitehouse.gov/energy. For the full text of President Bush's energy 
speech, go to sfgate.com/energy. 
PRODUCTION
-- Ease restrictions on oil and gas development on public lands. 
-- Open part of the Arctic National Wildlife Refuge in Alaska to drilling. 
-- Ease the permit process for refinery expansion and construction. 
-- Provide $2 billion over 10 years for developing clean coal technologies. 
POWER PLANTS
-- Give government authority to take property through eminent domain for 
power lines to create a national electricity grid connecting the isolated 
grids existing now. 
-- Ease regulatory barriers, including clean air rules, to make plants more 
efficient. 
NUCLEAR POWER
-- Pursue a national nuclear waste repository. 
-- Give tax breaks for purchase of nuclear plants. 
-- Reauthorize law that limits industry liability from a nuclear accident. 
RENEWABLE ENERGY
-- As part of $6.3 billion in new spending, provide tax credits to encourage 
development of energy plants that use organic waste, or biomass. 
-- Continue tax credits for wind energy generation. 
-- Give tax credit of 15 percent, up to $2,000, for homeowners who purchase 
solar panels. 
-- Ease permits for geothermal, wind and other renewable-fuel plants on 
public lands. 
-- Extend tax credits to landfill methane projects. 
-- Increase funding for hydrogen and fusion research, which hope to produce 
energy by fusing atoms. 
CONSERVATION
-- Tax credits for high-mileage, gas-electric hybrid vehicles. 
-- Promote "smart meters" on homes and businesses to monitor electricity use 
throughout the day. 
-- Review auto fuel-efficiency, or CAFE, standards, pending a study by the 
National Academy of Sciences due in July. 
Source: National Energy Policy Development Group 
E-mail Carolyn Lochhead at clochhead@sfchronicle.com. 




Presidential power 
The energy problem has tested the mettle of many U.S. leaders 
Carl Nolte, Chronicle Staff Writer
Friday, May 18, 2001 
,2001 San Francisco Chronicle 
URL: 
http://www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2001/05/18/M
N115683.DTL&type=news 
President Bush compared his new energy policy yesterday to President 
Eisenhower's vision of an interstate highway program, but presidents have 
been down the energy road many times before. 
In the days when American resources seemed limitless, the federal government 
had a limited role in energy policy. 
This started to change in the 1930s, when President Franklin D. Roosevelt's 
New Deal developed the Tennessee Valley Authority, which built dams and 
generated 100 billion kilowatt hours of electricity, and the Bonneville power 
project on the Columbia River, which supplies the Pacific Northwest - and 
California - with electricity. 
New energy policies and debates about national resources seem to come and go 
like the tide. Here is a look at presidents and their policies: . 
Dwight Eisenhower 
In World War II, the United States developed the most fearsome of all energy 
sources: nuclear fission. Nuclear weapons killed at least 280,000 people 
in Hiroshima and Nagasaki and held the world under the threat of destruction. 
In December of 1953, President Eisenhower in his famous "Atoms for Peace" 
speech at the United Nations, proposed an international pool for the 
development of the peaceful uses of nuclear power. 
One result: Congress passed the Atomic Energy Act of 1954, for a public- 
private development of nuclear power. The Navy developed nuclear submarines, 
but only one nuclear civilian ship, the freighter Savannah, was ever built. 
It was not a success. . 
Lyndon Johnson 
The Johnson years are more remembered for his Great Society programs and the 
war in Vietnam, but it was also a boom time for commercial nuclear power. 
However, there were growing questions about safety, and disposal of waste. 
In 1965 came the great blackout - a massive power failure on the East Coast, 
the first sign of a major energy problem. . 
Richard Nixon 
Nixon was the first president to send an energy message to Congress. His 1971 
message sounds eerily familiar: He said the country could not take its energy 
supply for granted. He wanted a department of natural resources, but the plan 
went nowhere, since gas was cheap and so was electricity. 
In 1973, Nixon asked for a department of energy. An Arab oil boycott spurred 
the launch of a new energy program, called Project Independence. Nixon wanted 
Americans to lower their thermostats, drive their cars more slowly, turn down 
the lights. There were long lines at gas stations. Nixon compared his program 
to save energy to other great projects, like landing men on the moon. 
Nixon, who was being overwhelmed by the Watergate crisis, announced that the 
energy crisis had been solved in March, 1974. In August, he resigned. . 
Jimmy Carter 
The energy problem was one of the overwhelming factors that spoiled Carter's 
presidency. Carter, who had emphasized his role as a nuclear engineer, 
announced an era of limits on American energy use. He asked Americans to save 
energy, and to turn down the heat. His famous television address on energy, 
which showed the President wearing a coat, sweater and looking grim, was a 
defining negative image of his administration. . 
Ronald Reagan 
The new president's solution to the energy crisis was to abolish the 
cabinet-level Department of Energy - but he never succeeded. He also 
rescinded Carter's order to turn down government building thermostats. Energy 
policy, he thought, was best made by the free market. 
James Watt, his secretary of the Interior, urged development of federally 
protected natural resources for energy use. The policy backfired as the 
environmental movement used Watt's words against him. 
Meanwhile, Secretary of Energy James Edwards proclaimed that the energy 
crisis was over. . 
George H.W. Bush 
On July 26, 1989, President Bush announced a new comprehensive energy 
strategy. The country would rely on market forces, environmental protections, 
and fairly priced energy. It was one of the administration's top priorities. 
In the meantime, in August, 1990, the policy was overtaken by events, when 
Iraq invaded Kuwait and threatened Saudi Arabia. Had the Iraqis taken the 
Saudi oil fields, they would have controlled 40 percent of the world's oil 
supply. The result was an ultimatum to force Iraq to withdraw from Kuwait. 
When that was ignored, the Gulf War followed. . 
Bill Clinton 
Among Clinton's pledges was one to "Reinvent government." While the elder 
President Bush's secretary of energy claimed he had overhauled the department 
and made it the finest in the government, Hazel O'Leary, Clinton's choice for 
secretary of energy, found it was "a mess." 
The Department of Energy, Clinton said, had been "sorely underutilized." For 
decades, Clinton said, energy was "the Achilles' heel" of the economy. He 
pledged a change. Then came the winter of 2000-2001. 
Chronicle researcher Johnny Miller contributed to this report. / E-mail Carl 
Nolte at cnolte@sfchronicle.com 




Making a case for WASTE 
President's tax credits for biomass energy development could be boon for two 
of the state's thriving industries Tom Abate, Chronicle Staff Writer
Friday, May 18, 2001 
,2001 San Francisco Chronicle 
URL: 
http://www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2001/05/18/B
U196463.DTL&type=news 

Included in the Bush administration's 163-page energy plan is a call for tax 
credits to spur the development of biomass, a form of energy generation that 
spans everything from old-style wood burning to futuristic processes such as 
extracting ethanol from agricultural waste. 
Although Bush envisions biomass playing a tiny role in solving the nation's 
immediate energy woes, high-level support for the technology could be 
important for two California industries: biotechnology and agriculture. 
Sharon Shoemaker, director of the California Institute of Food and 
Agricultural Research at the University of California at Davis, is a 
proponent of using biotechnology to reinvent biomass as an industry. The aim 
is to extract clean energy and mineral byproducts from plant waste, while 
giving distressed farmers a new market for harvest leftovers. 
"There's no commercial (biomass) plant like this out there yet, but we're 
just on the verge of making it happen," said Shoemaker, who will hold a 
biomass conference at Davis in June. 
California's biomass industry, which contributes about 1.5 percent of the 
state's electricity, is based primarily on burning waste wood from sawmills, 
forests and orchards. 
The keys to reinventing biomass are genetically engineered bacteria and 
bioengineered enzymes that can turn cellulose -- the material that gives 
plants their strength -- into ethanol in a process similar to fermenting 
grain or grapes into alcohol. 
In addition to producing ethanol to blend with gasoline, new biomass 
breweries would extract valuable minerals from plants and even convert the 
cellulose in plant waste into plastic substitutes. 
"Some of our members are making shirts that feel like polyester, but they're 
made from corn, not oil," said Megan Smith with the American Bioenergy 
Association, a Washington, D.C., lobby whose members include the Palo Alto 
biotech firm Genencor International. 
After ethanol and mineral byproducts have been extracted from plant waste, 
biomass plants would burn the remaining material, called lignin -- the 
substance found in peat bogs. Left alone over geologic time, lignin would 
compress and turn into coal. 
Evidence of Bush's interest in biomass surfaced earlier this year, when the 
administration slashed research budgets for alternative energy sources such 
as wind and solar power, but barely touched biomass research. Some of that 
money came to Northern California biotech firms. Genencor and Novozymes 
Biotech in Davis each recently won competing $15 million research contracts 
to cut the expense of turning cellulose into ethanol. 
"Today the enzymes used in the process cost 45 cents per gallon of ethanol 
produced," Novozymes President Glenn Nedwin said. "We want to get it down to 
5 cents a gallon." 
From political and policy viewpoints, Bush's affinity for biomass is clear. 
Gregg Morris, director of the Green Power Institute -- a Berkeley nonprofit 
that performs alternative energy research -- recalled a recent ethanol 
conference in Las Vegas. 
"One of the agricultural lobby guys said that whenever he visits 
administration officials, he brings a map that shows which states voted for 
Bush," Morris said. The map showed solid Republican support in the farm-belt 
states that would benefit most from biomass techniques that provide new 
markets for field waste. 
The policy rationale for biomass energy was laid out in a 1999 article titled 
"The New Petroleum" that appeared in the influential journal Foreign Affairs. 
The authors, Sen. Richard Lugar, R-Ind., and former CIA Director James 
Woolsey, warned that America was headed for economic disaster and another 
Gulf War unless it reduced oil imports. The vehicle, they said, was to use 
biotechnology to turn abundant farm waste into ethanol. 
"If genetically engineered biocatalysts and advanced processing technologies 
can make a transition from fossil fuels to biofuels affordable, the world's 
security picture could be different in many ways," they said, making another 
oil embargo or Mideast war less likely. 
The nation annually consumes about 120 billion gallons of gasoline and 
produces about 1.9 billion gallons of ethanol. 
The new biomass fever must be tempered by recognition that today's biomass 
industry is controversial and subsidized, and the futuristic processing 
plants envisioned by boosters exist only in the pilot stage. 
California, for instance, has 29 biomass plants in operation, fueled 
primarily by wood waste, Morris said. An equal number of biomass plants has 
been idled or dismantled for a variety of reasons, including a lack of wood 
for fuel. The fastest way to ramp up the wood supply would be thinning the 
state's forests, but that could stir environmental opposition, Morris said. 
In the Midwest, biomass has a different, though no less controversial, 
meaning. In the grain-producing states, biomass means turning corn kernels 
into ethanol. The same kernels that might get popped in the movie theater or 
fed to the livestock are instead put through an ethanol conversion plant. 
Two factors make this possible. First, corn kernels are rich in starch, which 
is relatively easy to ferment. The stalks and the cobs -- which contain the 
cellulose so valued in biomass dreams -- are thrown away because they aren't 
economical to convert. 
Second -- and steeped in controversy -- is a 53-cent-per-gallon federal 
subsidy that helps put it on par with competing petroleum products. Free 
market groups, such as the Cato Institute in Washington, D.C., have attacked 
this as a handout to the corn belt that primarily benefits one company -- 
Archer Daniels Midland -- the nation's leading ethanol producer. 
Backers of the new biomass are counting on that subsidy to help support the 
challenging task of taking ethanol from cellulose waste. "Without the 
53-cent- a-gallon subsidy, the corn ethanol industry wouldn't be here today," 
said Mike Bryan of BBI Associates, a Colorado firm that conducts feasibility 
studies for ethanol plants. "The cellulose ethanol industry will need similar 
support for a while." 
Although much of the talk about biomass centers on futuristic applications, 
the newest aspect of the Bush energy plan benefits the oldest form of biomass 
- - burning waste to generate power. 
Smith, the Bioenergy Association lobbyist, said Bush has proposed giving 
biomass power generators access to an existing, but unused, tax credit of 1.7 
cents per kilowatt hour. 
When Congress enacted the credit in 1992, it was intended for biomass 
generators who burned plant matter specifically grown to harvest as fuel. 
"This has cost the treasury nothing, because nobody does it," said Morris, 
the Green Power expert in Berkeley. 
Bush has proposed making this credit available to biomass furnaces that burn 
waste wood, something that would benefit California biomass generators. 
Seeking a renewable resource 
President Bush's energy plan calls for tax credits to promote the development 
of biomass-based fuels. Biomass systems use bacteria or heat to convert farm 
waste into energy and products. The Iowa Energy Center project is using 
cornstalks. Here's a look inside the demonstration facility that President 
Bush visited in Nevada, Iowa yesterday. 
President Bush unveiled his energy plan yesterday. The plan outlines broad 
changes in the national energy policy and proposes increasing the production 
of conventional fuels, encouraging conservation and the development of 
renewable energy. 
What goes in 
Cornstalks are passed through a grinder and mixed with water. 
Fertilizer 
What comes out 
Animal feed 
Chemicals used in cosmetics and plastics. 
Ethanol that can be burned to run electrical generators or vehicles. 
Water and carbon dioxide 
Plant residue 
The waste is fermented for several days in 1,500-gallon tanks. Bacteria 
produce enzymes that break down cellulose into needed products. 
Methane 
The fermentation residue is mixed with other plant waste. . 
Energy 
Fuel cells could produce all the electricity and heat needed to run the 
facility. Fuel cells work like a battery, using chemicals to generate 
electricity cleanly and efficiently. Source: Iowa Energy Center Associated 
Press Graphic 
Email Tom Abate at tabate@sfchronicle.com 









Today's energy shortages far less ominous than in frantic '70s 
Posted at 10:49 p.m. PDT Thursday, May 17, 2001 
KEN MORITSUGU 
WASHINGTON -- As President Bush unveiled his energy plan Thursday, nearly 200 
new power plants were under construction across the United States and 1,000 
drilling rigs were burrowing for new sources of natural gas. 
Today's high energy prices and shortages are driving massive energy-industry 
investments that over time -- with or without government intervention -- will 
bring supplies up and prices down. 
To call the current situation a crisis is an exaggeration, with the exception 
of the severe electricity shortage in California that all but guarantees 
temporary blackouts this summer and possibly next. It pales in comparison 
with the 1970s crises that forced motorists to line up for limited gasoline 
supplies and drove the U.S. economy into recession. 
``There's an electricity crisis in California,'' said Paul Krugman, a 
Princeton University economist. ``Nothing else out there justifies talking 
about a crisis. Energy demand surged in the late 1990s and the capacity for 
delivering and refining the stuff didn't keep up, basically because producers 
were caught by surprise. So we have high prices by recent standards, but all 
that will solve itself.'' 
That does not mean there are not serious energy issues facing the nation, 
including bottlenecks in making gasoline from crude oil, and delivering 
electricity over heavily burdened transmission lines and natural gas through 
nearly full pipelines. 
But even today's high gasoline prices, when adjusted for inflation, are 30 
percent lower than their historic peak in 1980. 
Consumers enjoyed a period of extremely low energy prices for most of the 
1990s. Such depressed prices won't return anytime soon. Instead, homeowners 
and drivers are likely to be saddled with higher prices for gasoline, heating 
oil and natural gas for months and maybe a few years. 
While higher energy costs always pose a threat to the overall economy, it's a 
much more distant one today than in the 1970s. Then, oil prices soared 200 
percent in a year, and the impact rippled through gasoline and electricity 
markets. 
By comparison, energy costs rose 35 percent last year and are projected to 
rise an additional 9 percent this year, according to DRI-WEFA, a Lexington, 
Mass., economic-forecasting firm. 
``We're better off today, because we have a much more diversified energy 
supply,'' said Jim Osten, chief energy economist at DRI-WEFA. 
The country is much less dependent on oil, particularly for electricity 
generation, where the use of coal, nuclear and more recently natural gas has 
expanded. Also, conservation has helped contain -- though it hasn't stopped 
-- the growth in energy use. 
The one risk is California. 
``In the end, disaster probably will be avoided, but it's going to be 
nasty,'' Krugman said. 
Outside California, the outlook is much less bleak. Power companies have 
built or significantly expanded 123 power plants in the past 14 months, 
according to Resource Data International, a Boulder, Colo.-based 
energy-information and -consulting firm. An additional 197 are under 
construction, up from 121 this time a year ago. 
That pace of construction is enough to meet the upper end of the Bush 
administration's estimate that the country will need 1,300 to 1,900 new power 
plants over the next 20 years. 
``We are on the right road and we are building up front a lot of what is 
needed over the 20-year period,'' said Judah Rose, managing director of 
wholesale power at ICF Consulting, a Fairfax, Va.-based energy-consulting 
firm. 
Richmond, Va.-based Dominion sees no power shortages in its markets in North 
Carolina, Ohio, Pennsylvania, Virginia and West Virginia, said Thomas Capps, 
the company's president. 
Likewise, the natural-gas market is adjusting to recent supply shortages that 
drove up prices last winter when the weather turned unusually cold. As of 
last week, there were 994 rigs drilling for gas in the United States, up from 
up from 634 a year ago and 365 two years ago, according to a weekly survey by 
Baker Hughes Inc., a Houston-based maker of drilling equipment. 
``As the price rises, there's economic incentive to drill more,'' said Gary 
Flaharty, director of investor relations for Baker Hughes. ``Eventually 
you'll drill to the point where there is enough gas on the market and the 
price will come down.'' 
Still, future gas supply will have to keep up with new demand from the 
construction boom in power plants, the vast majority of which are powered by 
natural gas. 
To meet that expected demand, most analysts support construction of a 
proposed pipeline to bring in new supplies of natural gas from Alaska. 
Bush also has proposed opening previously restricted federal lands in the 
Rockies to exploration for natural gas. While environmental concerns surround 
these areas, economists say there is enough of a projected need for natural 
gas that they should not be written off without review. 
``We need a coherent set of policies for deciding on when and how access to 
federal lands will be opened up to gas and oil exploration and development,'' 
said Paul Joskow, director of the Center for Energy and Environmental Policy 
Research at the Massachusetts Institute of Technology. ``This inevitably 
involves a careful assessment of the environmental consequences of 
exploration and development in particular areas and research and development 
on ways to minimize environmental damage.'' 
Ultimately, the problem may not be finding natural gas or generating 
electricity, but getting those products to where they are needed. 
New pipelines and electric transmission lines need to be built to keep up 
with the nation's growing appetite for power. In many cases, local opposition 
has blocked construction. Also, uncertainty surrounding what the rules will 
be for electricity deregulation has reduced the incentives to build 
transmission lines while increasing the risks. 
``I think the power plants will get built, but moving the power around and 
moving the gas to them is going to be problematic,'' Dominion's Capps said. 


Seth Borenstein contributed to this report. Contact Ken Moritsugu at 
kmoritsugu@krwashington.com.















Bush points to California as a warning 
Posted at 10:55 p.m. PDT Thursday, May 17, 2001 
BY RON HUTCHESON AND SETH BORENSTEIN 

Mercury News Washington Bureau 


ST. PAUL, Minn. -- President Bush warned Thursday that America could suffer 
widespread power blackouts, skyrocketing fuel costs and more dependence on 
foreign oil unless the nation follows his energy strategy. 
``America cannot allow that to be our future. And we will not,'' Bush said, 
as he formally presented his energy program at a fuel-efficient plant in St. 
Paul. 
The president's 163-page plan seeks to increase supplies of virtually all 
fuels by easing federal regulations and encouraging production. It also 
encourages energy efficiency and calls for constructing more and better 
energy-delivery systems, such as pipelines, power lines and refineries. 
In California, Democratic leaders criticized Bush for doing little to further 
regulate an energy market that is daily sucking up tens of millions of 
dollars from the state's treasury. 
``I want to commend President Bush for facing up to America's energy crisis. 
I agree with him that we need more supply,'' Gov. Gray Davis said Thursday in 
Sacramento. ``But I fault the president for not providing California with any 
immediate relief.'' 
Davis has asked the federal government to cap wholesale electricity prices. 
``We are literally in a war with energy companies who are price-gouging us 
.?.?. and the only person who can give us relief is the president,'' Davis 
said. ``I have no legal authority -- none -- over the price of wholesale 
electricity.'' 
The Bush administration has consistently opposed price caps and the energy 
policy announced Thursday offered little to deal with California's immediate 
electricity crisis. 
Sen. Dianne Feinstein, D-Calif., called the energy plan ``a bible for 
long-term energy production and not even a pamphlet for the urgent short-term 
actions needed to help us get out of the crisis'' in her home state. She 
particularly criticized Bush's refusal to call for price caps on electricity 
in California. 
Stage set for battles 
Congressional leaders promised swift action to turn Bush's proposals into 
law, but hard fights lie ahead. Democrats and environmentalists condemn the 
plan as a sellout to Big Oil. Many of the proposals pit powerful interest 
groups against each other along lines they have fought over bitterly for 
decades. And energy politics typically split the nation by region, as 
fuel-producing Sun Belt states are often in conflict with price-sensitive 
consumers in Frost Belt states. 
Even Bush's allies concede that Congress is likely to reject his proposal to 
drill for oil and gas in Alaska's Arctic National Wildlife Refuge. 
Other flash points of controversy include his proposals: 
?To give the federal government authority to erect power lines on private 
land. 
?To consider easing clean-air restrictions on old coal-fired electric plants. 
?To possibly pursue energy exploration in federal lands in the Rocky 
Mountains and coastal waters that are now off limits. 
?To boost reliance on nuclear power. 
The president said his 105 recommendations would head off a potentially bleak 
future by seeking ``a new harmony between our energy needs and environmental 
protection. .?.?. But if we fail to act, this great country could face a 
darker future: a future that is unfortunately being previewed in rising 
prices at the gas pump and rolling blackouts in California.'' 
Republicans blame Democratic neglect in the Clinton years for the nation's 
energy woes. 
``If you look at the tin-cup diplomacies of the Clinton administration, where 
they had to send the secretary of energy over to beg OPEC for more 
production, and what did OPEC do? They tightened production and increased the 
price. .?.?. That was the kind of energy policy we had yesterday,'' said Sen. 
Frank Murkowski, R-Alaska, chair of the Senate Energy Committee. 
``We have denied ourselves sources all over this country -- offshore, 
nuclear, coal -- all of these have been under the attack,'' said Sen. Jeff 
Sessions, R-Ala. 
Democrats, in turn, cast Bush and Vice President Dick Cheney, the plan's 
chief architect, as lackeys for the energy industry that they once worked in. 
House Minority Leader Richard Gephardt, D-Mo., mocked Bush's plan as a sop to 
Big Oil. ``It's slick,'' Gephardt said. ``It looks like the annual report of 
ExxonMobil. And maybe that's what it is.'' 
Business groups hailed Bush's plan, and environmental groups panned it. 
``Clearly a long-term energy strategy is needed, and we applaud the 
administration for putting forward this opening salvo,'' said Michael E. 
Baroody of the National Association of Manufacturers. 
A coalition of the nation's top environmental groups unleashed a harsh 
attack. It is ``dirty, dangerous and doesn't deliver for consumers,'' said 
Gene Karpinski, executive director of the U.S. Public Interest Research Group 
in Washington. ``It's a recipe for more drilling, more spilling, more asthma 
attacks, more nuclear waste and more global warming.'' 
Attacks via TV 
Environmental groups will sponsor a TV ad that portrays America being 
auctioned off to oil and gas interests. The ad will be shown in 12 markets, 
including Philadelphia, Tallahassee and Tampa, Fla., and Bismarck, N.D. The 
environmental groups, which chastise industry spending on lobbying, would not 
reveal how much they are spending on their ad campaign. 
Bush sought to calm passions Thursday, saying environmentalists and energy 
producers can find common ground. 
``The truth is, energy production and environmental protection are not 
competing priorities. They are dual aspects of a single purpose: to live well 
and wisely upon the Earth,'' he said. ``We've yelled at each other long 
enough. Now, it's time to listen to each other -- and to act.'' 
Sensitive to criticism that he is anti-environment, Bush and his aides 
emphasized Earth-friendly proposals in presenting their plan. His glossy 
energy report is filled with photographs of majestic mountain peaks, pristine 
woodlands and other natural wonders. 
Bush formally unveiled his proposal in St. Paul after touring an innovative 
energy plant that uses steam from the production of electricity to generate 
heat. The president will continue to promote his plan today during a visit to 
a Pennsylvania hydroelectric plant that has taken steps to protect fish. 
If the Bush plan were implemented in full, it would potentially double what 
the administration had planned to spend over 10 years for renewable-energy 
research and for tax incentives for people and companies that purchase 
energy-efficient products, like hybrid cars. 
But the estimated $10 billion commitment over that period is below what the 
Clinton administration had projected spending for roughly the same period, 
and well below what energy experts say would be required to make some new 
energy technologies commonplace. 
Bush's energy plan includes new or expanded tax breaks for home solar 
projects, cars that rely on electricity or other alternative fuels, solar and 
wind power, and projects that produce methane gas from landfills. It also 
directs the Energy Department to consider tougher efficiency standards for 
home appliances. 


Mercury News staff writer Noam Levey and wire services contributed to this 
report. Ron Hutcheson reported from St. Paul, Seth Borenstein from 
Washington. Jackie Koszczuk and James Kuhnhenn of the Mercury News Washington 
Bureau also contributed. 



Contact Ron Hutcheson at rhutcheson@krwashington.com or Seth Borenstein at 
sborenstein@krwashington.com. 











Californians fault Bush energy proposal 
Posted at 6:27 a.m. PDT Friday, May 18, 2001 
BY GARY GENTILE 

AP Business Writer 



LOS ANGELES (AP) -- Government officials, environmental groups and many 
energy consumers found little comfort in President Bush's national energy 
plan released Thursday. 
The plan, which includes a pledge to speed up power plant permits and 
conserve at federal facilities, was sharply criticized by Gov. Gray Davis, 
who accused the administration of ``turning a blind eye to the bleeding and 
hemorrhaging that exists in this state.'' 
Davis repeated his plea for the federal government to impose caps on 
wholesale energy prices that he says have driven the state's largest 
investor-owned utility into bankruptcy and two others to the brink of 
collapse. 
``If he wants to be helpful to California, he could send a strong signal that 
the Federal Energy Regulatory Commission should grant some kind of relief,'' 
he said. 
California has been struck by six days of rolling blackouts since January, 
and officials predict more as temperatures rise this summer. Customers of the 
state's two largest private utilities, Pacific Gas and Electric Co. and 
Southern California Edison, will see unprecedented rate increases soon. 
In announcing his plan Thursday, Bush warned that California is previewing 
the power troubles the nation could face if it doesn't boost its energy 
supply and cut demand. 
``Californians are learning, regrettably, that sometimes when you flick on 
the light switch, the light does not come on at any price,'' Bush said. 
He said his energy plan provides solutions that will help ease the state's 
power woes. 
``I'm deeply concerned about the impact of blackouts on the daily lives of 
the good people of the state of California, and my administration is 
committed to helping California,'' Bush said. 
Some consumers didn't see the president's sympathy. 
``I don't really think he has my concerns as his priority,'' said Jodi 
Reynolds, 38, a Culver City legal secretary. ``I can already see that I need 
to conserve energy. I don't need the president to tell me that.'' 
Others gave Bush credit for addressing the nation's long-term energy needs, 
but faulted the president for not doing more for California now. 
``We give him kudos for addressing the supply issue,'' said Brian Bennett, 
vice president of external affairs for Southern California Edison, one of the 
state's cash-strapped electric utilities. 
``However, when it comes to addressing the California crisis, the Bush 
administration has chosen to ignore what they could have done to help lessen 
the crisis here -- impose on a short-term basis cost-based pricing on the 
wholesale market.'' 
That theme ran through some of the comments by the state's environmental and 
consumer groups. 
``In the last energy crisis, a handful of nations in the Middle East had us 
over a barrel,'' said Harvey Rosenfield, head of the Foundation for Taxpayer 
and Consumer Rights in Santa Monica. ``Now it's a handful of energy companies 
in the Southern United States. The only solution is to bust the Texas-based 
OPEC.'' 
Environmentalists said Bush's energy policy lacks proposals that could offer 
short-term relief from higher electricity and gasoline prices, such as power 
price controls, incentives for more efficient appliances and tighter 
fuel-efficiency requirements for vehicles. 
The Bush plan also steps away from assurances he made during the campaign 
that he would not rescind a moratorium on new offshore oil leases created by 
his father and extended until 2012 by President Clinton. The plan calls for 
the secretaries of commerce and the interior to re-examine the moratorium. 
``We are concerned what he is stepping toward,'' said Allison Detmer, manager 
of the ocean and resources unit of the state Coastal Commission, which is 
suing the federal government over the existing leases. ``This might be the 
first step toward opening up the coast again.'' 
Some utility and government officials said Bush correctly focused on 
expanding the nation's energy infrastructure, building more natural gas 
pipelines and strengthening the electricity transmission grid. 
But the president's support for new nuclear power plants won little support. 
``The political realities in California are we're not going to see an 
increased reliance to nuclear power in the near future,'' said Carl Wood, a 
member of the California Public Utilities Commission. 
Perhaps predictably, state Democrats found little to like in Bush's plan, 
while Republicans found much to praise. 
``The president's plan will help California this summer by expediting new 
power plants and ordering state agencies to conserve,'' said Rep. Randy 
Cunningham, R-Escondido. 
``There's nothing in there for California. Nothing,'' said Rep. Brad Sherman, 
D-Los Angeles. ``The headline is: Bush to California, drop dead.''










Bush says the right stuff 
Published Friday, May 18, 2001, in the San Jose Mercury News 
PRESIDENT Bush may tour innovative power plants and put conservation first in 
his energy speeches, but until the money and the regulations back up the 
rhetoric, we'll suspect him of being a fossil-fuel kind of guy. 
Bush covered the spectrum of energy options in the much-awaited plan he 
released Thursday: more conservation, more supply, more wires and pipes to 
get the power to the people. 
All must play a part. But Bush's background in the oil business and the role 
of energy producers in drafting the plan foster the impression that he's most 
enthusiastic about loosening the environmental leash on the oil, coal and 
nuclear industries. 
A failure to act, Bush repeatedly implied, would leave the nation in the same 
straits as California now finds itself. 
The comparison is inexact. California would have benefited from better energy 
planning five years ago. But the current shortage has little to do with 
environmental obstacles to new plants or a lack of fuel. It's caused by a 
dysfunctional market. 
On that score, Bush continued to reject the one federal action -- wholesale 
price controls -- that might help California get through the summer without 
paying a king's ransom for electricity. 
California would benefit, in the years to come, from Bush's call for 
improvements in the transmission system for gas and electricity. Retrofitting 
and expanding an aging network would provide both more energy and greater 
flexibility in its distribution. 
Underlying Bush's plan is the thesis that fossil fuels will remain central to 
America's energy supply for decades to come. That may be true. But the role 
of national energy policy is not primarily to augment the supply of fuels the 
free market already easily provides. 
Burning fossil fuels creates smog and global warming. The government ought to 
be leading the search for ways to squeeze more energy from fossil fuels and 
for alternatives to them. 
Whether from conviction or from the backlash over Vice President Cheney's 
recent disparagement of living with less, Bush offered some plans to improve 
efficiency and conservation. He'd spend $4 billion on tax credits for the 
purchase of gasoline/electric hybrid cars. In all, $10 billion in tax credits 
would stimulate conservation. 
Drafting the federal budget for next year, however, Bush cut research on 
energy efficiency by a third and on renewable fuels by half. 
On one obvious target for greater efficiency, mileage standards for cars, 
Bush's energy plan is far too timid, proposing only to study them. America 
has been backsliding on fuel-efficiency; stricter standards are overdue. 
Bush seeks, instead, to find more fuel to put in the tank. He'd drill in the 
Arctic Wildlife Refuge, a needless environmental insult that Congress, 
thankfully, is unlikely to countenance. With revisions in a host of 
environmental regulations, Bush would make it easier to extract oil or 
natural gas from public lands or under coastal waters. 
Exploitation of natural resources is last century's energy policy. The 
domestic resource Bush should be exploiting more energetically is America's 
ingenuity, to use energy more wisely.





FTCR/ Bush Energy Plan Will Make California Crisis Worse; Taxpayer 
Boondoggles, More Deregulation Equals Higher Prices, Taxes



LOS ANGELES, May 17, 2001 (U.S. Newswire via COMTEX)  via NewsEdge 
Corporation  - The Bush-Cheney energy
plan will make things worse for beleaguered Californians, who are facing an
economic and public health catastrophe this summer as a result of 
deregulation,
a California-based citizen group said today.

"California's facing a catastrophe because a handful of energy companies have
seized control of our electricity supply under deregulation, and have been
manipulating the supply of electricity to create artificial shortages and
maximize their profits," said Harvey Rosenfield, president of the non-profit
Foundation for Taxpayer and Consumer Rights. "The federal government could 
stop
this assault and order rate reductions and refunds of overcharges. Instead, 
the
Bush-Cheney plan calls for more deregulation, massive tax breaks for energy
companies and the construction of multi-billion dollar boondoggles like 
nuclear
power, all of which will benefit the same energy companies that are holding
California hostage."


With Bush-Cheney Plan, Crisis History Repeats Itself


FTCR noted that the last energy "crisis" to strike America was inspired not by
supply shortages but by greed -- of the OPEC nations, which in the 1970s used
their control of petroleum supplies to create shortages and massive price 
hikes.
American energy companies took advantage to profit from their resources as 
well.
In response, the U.S. Congress passed a then-staggering multi-billion dollar
billion package of tax breaks and grants to the energy industry to build power
plants that would manufacture "synthetic fuels." These plants ultimately 
became
taxpayer-funded boondoggles, while nuclear power, hailed by the energy 
industry
as a source of clean energy, turned out to be prohibitively expensive and a
public health threat.


Ironically, California's 1996 deregulation law required ratepayers to pay off
over $20 billion of the California utility companies' bad debts, most of which
were incurred by the utilities as cost-overruns in construction of nuclear 
power
plants in the 1970s.


"California's economy, health and safety, and the quality of life in the 
Golden
State are threatened by the skyrocketing energy prices inspired by 
deregulation.
The Bush-Cheney plan not only does nothing to protect us against the energy
cartel, it calls for more deregulation, higher taxes and prices," said
Rosenfield.


"In the last energy crisis, a handful of nations in the Middle East created a
cartel to exploit their control over energy supplies; two decades later, a
handful of energy companies from the Southern United States have created a
cartel to exploit their control over our electricity supply," said Rosenfield.
"The only solution to the current crisis is to break the cartel: to bust the
Texas-based OPEC."






CONTACT:          Doug Heller of the Foundation for Taxpayer and Consumer
                  Rights, 310-392-0522, ext. 30



Copyright (C) 2001, U.S. Newswire





PG&E's CEO faces off with angry shareholders at company's annual meeting




meeting&lt;


AP Photos FX103-104&lt;


By MICHAEL LIEDTKE=


AP Business Writer=


SAN FRANCISCO (AP) _ PG&amp;E Corp. chief executive Robert Glynn
brushed off the scorn of shareholders burned by the company's
bankrupt utility during a prickly annual meeting that ended with
three consumer activists being dragged out of the auditorium by
security officers.


Throughout out the two-hour meeting, Glynn repeatedly sought to
reassure the sometimes hostile audience of nearly 500 people that
the San Francisco-based company remained a solid long-term
investment despite the bankruptcy of its main revenue source,
Pacific Gas and Electric.


He repeated previous promises that the company intends to
recover most, if not all, of its dlrs 9 billion in unreimbursed
electricity expenses accumulated since May 2000, allowing the
utility to regain its financial footing and repay its more than
150,000 creditors.


The company is seeking rulings in bankruptcy court and other
legal venues that might open the door for the utility to
retroactively charge its customers for above-market electricity
bought from June 2000 through February of this year.


``We are not seeking a bailout, a rescue or a handout,'' Glynn
said.


Glynn's arguments didn't seem to win over many shareholders,
some of whom worried that it would take 10 years for the company's
shares to climb back above dlrs 30 _ the stock's value less than
nine months ago. PG&amp;E's stock closed Wednesday at dlrs 11, down 55
cents.


Shareholders this year also missed out on their first quarterly
dividend since World War I.


Several investors lambasted PG&amp;E's nine-member board of
directors and the company's auditors, Deloitte and Touche, but most
shareholders saved their harshest words for Glynn and his executive
team.


``The truth of the matter is you all should be fired for
incompetence,'' Orinda resident Clyde Vaughn, 79, told Glynn.


PG&amp;E agreed to an electricity rate freeze beginning in 1998 as
part of California's electricity deregulation. From January 1998
through May 2000, PG&amp;E's utility made a dlrs 2.7 billion operating
profit on electricity because the frozen customer rates were
usually much higher than the prices on the wholesale market until
last summer.











Power Politics:
In Era of Deregulation,
Enron Woos Regulators
More Avidly Than Ever
---
CEO Lay Leaves an Imprint
On Bush Energy Plan,
Seeks Friends at FERC
---
An Interstate for Electricity 
By Bob Davis and Rebecca Smith 
? 
05/18/2001 
The Wall Street Journal 
Page A1 
(Copyright (c) 2001, Dow Jones & Company, Inc.) 
WASHINGTON -- Every energy executive in America would have liked a half-hour 
with Vice President Dick Cheney as he fashioned the Bush administration's 
national energy program. Enron Corp. Chairman Kenneth Lay got it. 
Mr. Lay used the time to set out an eight-point agenda intended, among other 
things, to head off price controls on wholesale electricity, provide Enron 
and other energy traders with unfettered access to the nation's 
electricity-transmission system and remove regulatory obstacles to building 
new generating plants and power lines. The energy plan President Bush 
unveiled yesterday reflected many of those same priorities. 
In an interview last week, the vice president said he also met with other 
energy executives, but Mr. Lay was the only one he named. Mr. Cheney says he 
sought Mr. Lay's advice because "Enron has a different take than most energy 
companies." 
Indeed, Enron Corp. is a modern paradox. It has transformed itself over the 
past 15 years from a stodgy gas-pipeline operator into the nation's largest 
trader of gas and electricity and a formidable player in newer markets such 
as telecommunications services and emissions-reduction credits. Today, it's 
the quintessential model of a company dedicated to free markets. 
Yet as much as any company in the U.S., it has cultivated close ties with 
government. Since the late 1980s, the Houston-based company, which was 
President George W. Bush's biggest corporate campaign donor, has beefed up 
its lobbying staff, boosted its political contributions and sought out 
friends in the world of politics. Now, with Mr. Bush in the White House, it 
is in a unique position to see whether those efforts will pay off. 
Enron's lobbying blitz reflects one of the ironies of the era of 
deregulation. Just as government created immense telephone, electric and gas 
monopolies early in the last century, Enron and other players feel they need 
the government's help in opening up those monopolies and gaining access to 
once-closed markets. 
In particular, Enron wants the Federal Energy Regulatory Commission to ensure 
that energy is deregulated on terms favorable to the company. Rather than 
having the nation's transmission lines controlled by the utilities, it wants 
those lines to provide open access for new entrants such as Enron eager to 
buy and sell power. 
Mr. Lay is on a first-name basis with a half-dozen members of the Bush 
cabinet and knows many senior White House staffers from their days in the 
Texas governor's mansion with Mr. Bush. Before joining the administration, 
both White House economist Lawrence Lindsey and U.S. Trade Representative 
Robert Zoellick were on Enron's advisory board, which pays members an annual 
stipend of $50,000. 
Under Mr. Lay, Enron has donated nearly $2 million to Mr. Bush during his 
political career. Since the start of the 2000 campaign, Enron and its 
employees have contributed $1.3 million to the Bush presidential drive, the 
Republican Party and the presidential inauguration, says the Center for 
Responsive Politics. Enron also accounted for $461,000 in contributions 
during Mr. Bush's two runs for governor, according to the Center for Public 
Integrity. 
Mr. Lay, who holds a doctorate in economics, says all he wants from 
government is a fair shake. Enron supports candidates "you believe in," he 
says. "You believe in their value system, you believe in their philosophy and 
you believe they'll do the right things as leaders." 
But it's clear that Mr. Lay wants more than that from government. For now, he 
is focusing on FERC, where he worked in the early 1970s when the agency was 
known as the Federal Power Commission. He hopes to make FERC his ally in 
beating back the power of utilities. Long dismissed as a regulatory backwater 
overseeing wholesale transactions by electric and gas utilities, the 
commission has emerged as the chief navigator of the nation's transition to a 
fully deregulated energy marketplace. 
Even before Mr. Bush took office, FERC had begun to rein in the market power 
of utilities. In December, FERC told the nation's utilities that it wanted 
them to voluntarily surrender their high-voltage lines -- those that can 
dispatch electricity across state lines -- to independent grid operators, 
such as those already in place in California and the Northeast, which would 
provide open access to the lines. Although it told the utilities to submit 
plans for doing so, many of them have been reluctant to relinquish control of 
their lines to such independent organizations. 
Mr. Lay wants FERC to go further, forcing the utilities to cede direct 
control of their lines. He also is seeking rules that would end what he calls 
energy "balkanization" and create "seamless" interstate electricity markets. 
"Enron is the biggest gas and electric company entirely dependent on the 
competitive side of the business," says Andre Meade, an analyst for 
Commerzbank. "To the extent deregulation slows down, their business slows 
down." 
Right now it's a lucrative strategy. Enron typically targets tightly 
controlled markets just as they are opening up, using its financial clout and 
risk-management savvy to gain a dominant market position. In doing so, it 
frequently portrays itself as an insurgent taking on entrenched interests. 
In electricity, for instance, Enron buys the output of generating plants, 
sometimes days, weeks or years before the power is actually produced. Using 
sophisticated weather data, it determines the most lucrative market for the 
power, finds a buyer and then arranges delivery via transmission lines owned 
by others. It hedges its positions with other contracts. Its wholesale 
trading volume climbed 55% for natural gas and more than doubled for 
electricity in the first quarter alone. Such growth pushed Enron's wholesale 
energy-trading income, before taxes and interest, up more than threefold to 
$785 million during the first quarter. 
Between 1996 and 2000, Enron's yearly net income nearly doubled to $979 
million and its revenue increased almost eightfold to $100.8 billion. Over 
the same period, Enron's stock price, adjusted for splits, rose more than 
fourfold. 
At the start of the Bush administration, FERC's future was very much up for 
grabs. Two of the five seats on the commission were vacant, and Enron quickly 
sought to fill them with activist Republicans. President Bush named a friend 
of his and Enron's to one of those seats: Texas utility-regulator Pat Wood. 
Mr. Wood had worked closely with Enron during a six-year effort to open 
Texas' retail electricity market. Mr. Wood also had shown the kind of 
backbone Enron wanted in a separate fight over telephone deregulation when he 
insisted on closely monitoring phone utilities to make sure they opened their 
networks to competitors. 
For the second slot, Enron backed Nora Mead Brownell, a Pennsylvania utility 
regulator. She had come to Enron's aid in 1997 when she voted to block an 
electricity-market restructuring plan backed by Philadelphia's utility and by 
GOP Gov. Tom Ridge. Enron argued that the plan would have locked it out of 
the Philadelphia market. 
Enron worked to raise Ms. Brownell's visibility by lobbying the House 
Commerce Committee to include her as an expert witness on energy issues and 
as a member of an informal advisory group, say Enron and congressional aides. 
Mr. Lay provided heavyweight support. He says Enron included Ms. Brownell's 
name on its "priority list" of a half-dozen prospective FERC nominees. And 
when her candidacy ran into opposition from Pennsylvania officials with 
bitter memories of her 1997 decision, Mr. Lay says he phoned Karl Rove, the 
White House's top political strategist, to tell him that "she was a strong 
force in getting the right outcome" in Pennsylvania." 
A White House spokeswoman says that a number of individuals and industry 
groups weighed in in favor of Ms. Brownell, but she declined to name any. Ms. 
Brownell says she was unaware of any concerted Enron campaign on her behalf. 
She didn't ask the White House who had supported her because, she says, "I 
didn't want to be beholden." 
Meanwhile, Enron was using its Democratic contacts to strengthen its ties 
with Linda Breathitt, a Kentucky Democrat on the commission. Earlier this 
spring, the company hired two of former Vice President Al Gore's closest 
friends as lobbyists: Nashville lawyer Charles Bones and Mr. Gore's 
campaign-finance director, Johnny Hayes. Both had come to know Ms. Breathitt 
through Democratic politics. 
Ms. Breathitt says she wasn't very familiar with Enron's interests, but that 
she accepted when Mr. Hayes invited her to dinner at a Washington restaurant 
in April to meet Richard Shapiro, Enron's managing director for government 
affairs. "Everyone likes to get to know the FERC commissioners," Ms. 
Breathitt says, adding that she always pays for her own meals. 
Enron has long played this kind of insider's game. Mr. Lay has been friendly 
with both Democratic and Republican administrations over the past 25 years, 
sharing time on the links with Presidents Bill Clinton and Gerald Ford. He's 
been a particularly close friend of the Bush family. In the late 1980s, he 
ran then-Vice President George H.W. Bush's fund-raising drives in Texas. 
After the younger Bush became governor, he appointed Mr. Lay to run the 
influential Governor's Business Council. Mr. Lay also made Enron's fleet of 
corporate jets available to the new governor and won his help in lobbying 
officials considering Enron projects. 
In March 1997, Mr. Lay wrote Gov. Bush to ask that he lobby the Texas 
congressional delegation to support export-finance credits critical to Enron, 
according to letters released by the Texas State Archivist's office. In April 
1997, when Enron was negotiating a $2 billion natural-gas joint venture in 
Uzbekistan, Mr. Lay wrote to thank the governor for meeting with the 
Uzbekistani ambassador to the U.S. Six months later, another Lay thank-you 
note concerned a phone call Mr. Bush made to Pennsylvania Gov. Ridge to 
support Enron's plan to enter the Philadelphia electricity market. "I am 
certain it will have a positive impact," Mr. Lay wrote. 
Mr. Lay says he hasn't sought Mr. Bush's aid directly since Mr. Bush won the 
presidency. Last month, he talked with the president briefly at a Houston 
benefit for the Barbara Bush Foundation for Family Literacy, on which Mr. Lay 
serves as co-chairman. "It's not a matter of us going off hunting or fishing 
or sitting around and having drinks," he says. 
Not all Mr. Lay's initiatives have been successful. When Mr. Bush reneged in 
March on a campaign pledge to fight global warming by requiring reductions in 
carbon-dioxide levels produced by burning hydrocarbons, Mr. Lay says he 
telephoned Mr. Cheney to complain. "The scientific evidence, although 
certainly not conclusive, is pretty compelling that there could be a 
climate-change problem," he says he told the vice president. "The 
administration should still look very seriously at it." 
Around the same time, Mr. Lay also called Mr. Rove, the White House political 
adviser, to urge him to talk to Fred Krupp, the head of the moderate 
Environmental Defense Fund. Messrs. Krupp and Rove spoke briefly but found 
little common ground. Later, Enron, which has plans to add emission credits 
to the commodities it trades, joined a coalition urging mandatory reductions 
in carbon-dioxide levels. 
But Enron saved its main lobbying push for Mr. Cheney's energy task force. In 
April, Mr. Lay met with the panel's staff director, Andrew Lundquist, and 
later, with Mr. Cheney, whom Mr. Lay had come to know well when the vice 
president was chief of Halliburton Co., a Dallas construction company. "We 
built Enron Field together," says Mr. Lay, referring to Houston's new 
ballpark. 
In both meetings, say Enron and White House officials, Mr. Lay presented a 
broad agenda for opening up the nation's electrical system and used the 
gas-transmission system as a point of comparison. In both cases, he argues, 
pipelines and transmission lines should be like the federal highway system 
that offers easy access to all. 
The Cheney report uses similar language, describing the electrical grid as 
"the highway for interstate commerce in electricity." As Enron sought, the 
report directs the energy secretary to determine by the end of the year 
whether it makes sense to establish a national grid, and to identify 
bottlenecks in the transmission system as well as how to remove them. An 
effort to make the grid national would enhance FERC's power, as Enron has 
urged. 
The report is mum on some Enron concerns, such as requiring utilities to join 
regional transmission organizations, an idea strongly opposed by the utility 
industry. A White House aide says the task force didn't want to get involved 
in such battles between industries. 
As solid as its support in the White House has turned out to be, Enron is 
worried about the backlash against electricity deregulation in Western states 
and possibly in New York, should electricity rates surge this summer. Nevada 
repealed its deregulation law last month, spooked by the way skyrocketing 
wholesale-electricity prices in neighboring California were undermining the 
Golden State's economy. California and Oregon are contemplating 
state-government purchases of major utility assets. 
Enron's biggest fear is that the political pressure will lead the states, or 
perhaps Congress, to control prices, which could undermine Enron's business. 
In response, Enron has formed a coalition with eight other energy marketers 
in New York, who each have pledged $50,000 to pay for a media and lobbying 
campaign. It also has hired former Montana Gov. Marc Racicot and dispatched 
him to court Western politicians. Two weeks ago, Mr. Racicot had breakfast 
with an old colleague, Oregon's Democratic Gov. John Kitzhaber. After the two 
chatted about fly-fishing, says Mr. Kitzhaber, "Marc did say he was working 
to re-energize the discussion about energy and had some ideas for a framework 
the governors might want to consider." 
Though Mr. Kitzhaber says he knew that Mr. Racicot had joined the Washington, 
D.C., lobbying firm Bracewell & Patterson, Mr. Racicot didn't disclose that 
he was on retainer to Enron -- and the star of Enron's Western states 
"advocacy team." For his part, Mr. Racicot says he was working "not at 
Enron's direction but with their knowledge" to advance positions that he, 
too, feels are important. 
--- 
Jeffrey White contributed to this article. 













National Desk; Section A 
THE ENERGY PLAN: THE OVERVIEW 
BUSH, PUSHING ENERGY PLAN, OFFERS SCORES OF PROPOSALS TO FIND NEW POWER 
SOURCES 
By DAVID E. SANGER with JOSEPH KAHN 
? 
05/18/2001 
The New York Times 
Page 1, Column 6 
c. 2001 New York Times Company 
NEVADA, Iowa, May 17 -- President Bush began an intensive effort today to 
sell his plan for developing new sources of energy to Congress and the 
American people, arguing that the country had a future of ''energy 
abundance'' if it could break free of the traditional antagonism between 
energy producers and environmental advocates. 
Mr. Bush's plea for a new dialogue came as his administration published the 
report of an energy task force containing scores of specific proposals -- 
many that he can impose by executive order -- for finding new sources of 
power and encouraging a range of new energy technologies. 
His critics swarmed over the specifics, noting that the plan set no targets 
for improved energy efficiency, offered no short-term relief for 
out-of-control electricity prices in the West and provided only modest 
financing for research into clean energy technology. 
The president appeared at a highly efficient heating and cooling plant near 
St. Paul that burns a variety of fuels, including oil, coal and waste wood, 
to sound a theme he plans to repeat day after day. The parties in the energy 
debate have ''yelled at each other enough,'' Mr. Bush said. ''Now it's time 
to listen to each other.'' [Excerpts, Page A14.] 
''Too often Americans are asked to take sides between energy production and 
environmental protection,'' Mr. Bush added, before flying here, to a farming 
town north of Des Moines, to continue his argument at a small biomass plant 
that makes power by burning materials derived from animal waste and plants. 
''As if people who revere the Alaskan wilderness do not also care about 
America's energy future; as if the people who produce America's energy do not 
care about the planet their children will inherit.'' 
Mr. Bush appeared to be weaving a careful political thread, arguing that if 
America failed to act now, ''this great country could face a darker future, a 
future that is, unfortunately, being previewed in rising prices at the gas 
pump and rolling blackouts in the great state of California.'' 
Mr. Bush also said rising energy prices had put an intolerable burden on 
families and farmers. But some of the statistics in his own report seemed to 
undercut that claim. One chart showed that the share of disposable household 
income spent on energy had declined to less than 5 percent today from 8 
percent during the early days of the Reagan administration. (That percentage 
has begun to rise again, but only to the levels of the mid-1990's, before a 
sharp drop in energy prices.) 
Mr. Bush talked not only of blackouts but of blackmail, raising the specter 
of a future in which the United States is increasingly vulnerable to foreign 
oil suppliers. He argued, for example, that the Arctic National Wildlife 
Reserve, which he wants to open to drilling, can produce 600,000 barrels of 
oil a day for the next 47 years. ''That happens to be exactly the amount the 
United States now imports from Iraq,'' he said. 
Opening the Alaskan refuge to drilling is just one source of contention with 
Democrats and some moderate Republicans, many of whom argue that the Bush 
administration has put undue emphasis on increasing supplies of fossil fuels 
at the expense of the environment. 
Critics say that although the report seems designed to suggest a balanced 
approach, it minimizes the potential role of alternative sources of energy 
and the possibility of reducing future demand through efficiency and 
conservation. 
''America must embrace the promise offered by new technologies,'' said 
Senator Joseph I. Lieberman, Democrat of Connecticut. ''The energy crisis is 
not an excuse for creating an environmental crisis.'' 
Republicans offered far more support for the president. Senator Frank H. 
Murkowski of Alaska, chairman of the Senate Energy Committee, said he planned 
hearings next week to begin consideration of 25 recommendations in the Bush 
report that require legislative action. 
''Not everyone is going to like this plan,'' Mr. Murkowski said, ''but at 
least now we have a plan to kick around.'' 
He said the previous administration had failed to grapple with the nation's 
energy sources through a comprehensive plan. Clinton administration officials 
disputed the assertion and blamed Congress for failing to enact energy 
legislation. 
Yet even Mr. Murkowski sounded a note of caution about Mr. Bush's approach. 
He said the report offered few immediate remedies for California's 
electricity crisis or for rising gasoline prices. He said Republicans might 
have to consider a gas-tax rollback or the temporary suspension of some 
environmental provisions to address supply bottlenecks. 
Mr. Bush was praised by many groups for laying out a long-term energy policy. 
His report contained 105 initiatives -- although many of them are 
endorsements of actions already in place. And while in his public comments he 
always started with talk of conservation, the report itself was much more 
specific when it came to tapping new supplies. 
''No matter how much we conserve, we're still going to need more energy,'' he 
said here this afternoon. ''The State of California is the second best state 
at conservation, and yet they are still running out of energy.'' 
Among those who took a different view was former president Jimmy Carter, who 
wrote in The Washington Post this morning that the United States did not 
confront an energy crisis comparable to those of 1973 and 1979. 
''World supplies are adequate and reasonably stable, price fluctuations are 
cyclical, reserves are plentiful,'' he argued. Mr. Carter said ''exaggerated 
claims seem designed to promote some long-frustrated ambitions of the oil 
industry at the expense of environmental quality.'' 
Some chapters of the energy plan resemble the annual reports issued by energy 
companies, with color photos of bears living happily in the wilderness, 
forests that can absorb carbon dioxide and fly-fishermen wading in pristine 
water, practicing the favorite sport of the report's main author, Vice 
President Dick Cheney. 
While the report clinically assessed all the available sources of energy and 
promised to encourage development of those that do the least environmental 
damage, it fell far short of describing the moon-shot approach to efficiency 
and renewable energy that was an ambition of the Carter years. 
In fact, federal spending on research and development of wind, solar, 
geothermal and biomass energy sources, as well as on energy efficiency 
technology, has never equaled the $3 billion spent in 1980, Mr. Carter's 
final year in office, even after adjustments for inflation. 
If the Bush plan were fully put into effect, it would potentially double what 
the administration had planned to spend over 10 years for renewable energy 
research and for tax incentives for people and companies that purchase 
energy-efficient products, like hybrid cars. 
But the estimated $10 billion commitment over that period is below what the 
Clinton administration had projected spending for roughly the same period, 
and well below what energy experts say would be required to make some 
cutting-edge energy technologies commonplace. 
''Americans spend $600 billion a year on energy,'' said John Holdren, an 
energy and environmental policy expert at Harvard who helped draft a Clinton 
administration study of clean energy sources. ''The Bush people are proposing 
to change habits by incentives that amount to about one-tenth of one percent 
of that amount each year. It's not very significant.'' 
Though the report devotes more chapters and more recommendations to measures 
related to the environment, conservation and renewable energy than those 
related to traditional sources the impact of what the administration intends 
to do to increase traditional energy supplies greatly outweighs what it 
aspires to do to diminish demand. 
The report notes that efficiency in homes and offices could help reduce the 
need for new power plants, which it says must total at least 1,300 by 2020. 
But it adopts no goal for such improvements. 
In the same manner, addressing auto efficiency standards, the report reviews 
how Corporate Average Fuel Economy mandates improved the performance of 
combustion engines in the 1980's. But it puts off any decision on whether to 
raise those standards now, saying the administration would wait for a study 
to be completed. 
The report is far less tentative in the area regulations it identifies as 
hindering the oil, gas, nuclear and utility industries. 
It mentions about a dozen areas -- including land-use restrictions in the 
Rockies, lease stipulations on offshore areas attractive to oil companies, 
the vetting of locations for nuclear plants, environmental reviews to upgrade 
power plants and refineries -- that could be streamlined or eliminated to 
help industry find more oil and gas and produce more electricity and 
gasoline. 
California, where soaring electricity prices and rolling blackouts have been 
the main contributor to the idea that the nation faces on energy crisis, gets 
little in the Bush plan. The report notes that federal agencies have been 
asked to reduce peak power use in California in coming months, but that is 
far less than California officials want. 
Senator Dianne Feinstein, Democrat of California, called the plan ''a bible 
for long-term energy production and not even a pamphlet for the urgent 
short-term actions needed to help us get out of the crisis'' in her home 
state. She particularly criticized Mr. Bush's refusal to call for electricity 
price caps in California. 
In what seems likely to be one of its most contested recommendations, the 
Bush team recommends creating a national electricity grid, akin to the 
interstate highway system, and giving federal agencies the right to take land 
for electricity transmission by eminent domain. That proposal has already 
come under attack by Western governors and is sure to be a battle in 
Congress. 

Photos: President Bush, Christie Whitman, head of the Environmental 
Protection Agency, and Mayor Norm Coleman of St. Paul, second from right, 
with officials of a power plant that burns wood chips as well as oil. 
(Associated Press)(pg. A1); President Bush toured an efficient heating and 
cooling plant, District Energy, yesterday near St. Paul, with the company's 
vice president, Michael Burns. The plant burns fuels like oil, coal and waste 
wood. The parties in the energy debate have ''yelled at each other enough,'' 
Mr. Bush said. (Associated Press)(pg. A14) Chart: ''STATUS REPORT -- A 
Lighter Burden'' The percentage of personal income spent on energy has risen 
recently, but it is still much lower than during the energy crisis of the 
1980's. Graph tracks percentage of income spent on energy from 1981 to 2000. 
(Sources: U.S. Bureau of Economic Analysis)(pg. A14) 







	
	

	
	
	
	

	
	Browse Entire Paper
	Return to Front Pages
	
	

	
	
	
	
	

	
	
	
A Section 
Bush Issues Energy Warning; President Unveils New Policy, to Praise and 
Attacks on Party Lines 
Mike Allen and Dana Milbank 
? 
05/18/2001 
The Washington Post 
FINAL 
Page A01 
Copyright 2001, The Washington Post Co. All Rights Reserved 
	ST. PAUL, Minn., May 17 -- President Bush unveiled his much-anticipated 
energy policy to the nation today from the banks of the Mississippi River, 
warning of widespread misery if Congress resists his plan to increase the 
country's power production. 
	Bush flew to a convention center here to announce his proposals after four 
months of deliberations, winning acclaim from Republicans and the energy 
industry, which stands to make billions of dollars from his ideas, and 
complaints from Democrats and environmentalists, who hope to exploit the 
policy as a way to portray the president -- a former Texas oilman -- as a 
captive of industry. 
	"If we fail to act, Americans will face more, and more widespread, 
blackouts," Bush said. "America cannot allow that to be our future, and we 
will not." The president, adding a tone of urgency to his long-term 
proposals, said a future without new sources of energy "is unfortunately 
being previewed in rising prices at the gas pump and rolling blackouts in the 
great state of California." 
	In California, Gov. Gray Davis (D) accused the administration of "turning a 
blind eye to the bleeding and hemorrhaging that exists in this state." He 
excoriated Bush for refusing to cap wholesale energy prices. "We are 
literally in a war with energy companies, many of which reside in Texas," 
Davis said. 
	The White House today released the full 170-page report, which provides more 
detail but follows closely the outline Bush advisers introduced Wednesday 
night. Bush seeks reduced regulations to encourage more oil, gas and nuclear 
production, tax incentives to boost coal output, and other tax incentives 
aimed at conservation and renewable fuels. The president said the nation 
needs 1,300 to 1,900 new power plants over the next 20 years, and 38,000 
additional miles of natural gas pipelines and 263,000 miles of distribution 
lines. 
	Some of the proposals, notably the call to drill in Alaska's Arctic National 
Wildlife Refuge, are considered nonstarters in Congress, where the plan is 
likely to be amended with more short-term solutions to the California energy 
squeeze. But the bulk of the recommendations are in executive orders and 
regulatory changes, which the administration can do with little resistance. 
Bush plans to sign an order next week directing federal agencies to expedite 
permits for new energy plants. 
	The president's allies in Congress vowed swift action. House Resources 
Committee Chairman James V. Hansen (R-Utah) said his panel would work quickly 
to accommodate the plan by opening up protected areas for oil drilling and 
coal mining. 
	The thrust of the energy recommendations could be seen today in the initial 
reactions: satisfaction from industry, consternation from conservationists. 
	"It's balanced -- I think it has something for everybody and it addresses the 
problems that should be addressed," said Thomas E. Capps, chairman of 
Dominion Resources Inc., the Richmond energy company that is Virginia's 
largest electricity supplier. "California has an energy crisis now. The rest 
of the country is going to have one unless something is done." 
	Industry representatives voiced few if any objections; at a White House 
briefing, an administration official took a lengthy pause when asked if any 
part of the report would disappoint industry. "That's a good point," he said, 
noting tax credits that go to conservation rather than oil and gas. 
	Leading environmental groups held a joint news conference in Washington to 
denounce Bush's proposal, which they said would spoil natural resources but 
do little to ease the short-term energy shortage. They unveiled a television 
ad featuring a mock auctioneer selling the nation's resources to the highest 
bidder. And they argued that Bush's plan, by increasing reliance on fossil 
fuels, would increase global warming emissions by 35 percent over 20 years. 
	Environmentalists were particularly miffed that the plan ties the few 
benefits conservationists sought to more controversial elements such as 
expanding drilling on public land. "In what is a truly cruel joke, the Bush 
plan would also use oil revenues from the Arctic refuge to pay for land 
protection and renewable energy programs," said William H. Meadows, president 
of the Wilderness Society. "That's like burning your furniture to heat your 
home." 
	Objections came from government watchdogs too. The libertarian Cato Institute 
argued that the administration "is simply positioning itself to take credit 
for what the market is already busily accomplishing." Cato analyst Jerry 
Taylor said the nation is in a power plant construction boom, with 90,000 
megawatts of new capacity to be available by 2002 and as much as 200,000 
megawatts by 2004. "This will not only burst the electricity price bubble but 
will probably produce an electricity glut in the near future," Taylor said. 
He decried a "smorgasbord of handouts and subsidies for virtually every 
energy lobby in Washington." 
	On Capitol Hill, reactions to Bush's proposals fell predictably along party 
lines. House Speaker J. Dennis Hastert (R-Ill.) pledged to start hearings 
immediately on the plan, which he praised as well-balanced. "I believe it 
meets the goals most important to the American people by increasing our 
energy supplies, providing price stability and protecting our precious 
environment," he said in a statement. 
	House Minority Leader Richard A. Gephardt (D-Mo.), on the other hand, held an 
elaborate news conference in the Capitol with other Democrats that featured a 
satellite connection to three San Diego residents facing rising energy 
prices. "We think the president's plan makes the wrong choices for America 
and the American people," Gephardt declared in front of projected images of a 
gas pump and the Arctic National Wildlife Refuge. "It was crafted behind 
closed doors with a lot of input from energy executives, and in a highly 
secretive way that doesn't serve the public interest." Democrats say they 
view the issue as one of the GOP's top vulnerabilities in the months to come. 
	Senate Majority Leader Trent Lott (R-Miss.) said he wants to begin hearings 
on one big energy policy bill next week. House Energy and Commerce Committee 
Chairman W.J. "Billy" Tauzin (R-La.), whose panel will move much of the 
energy-related legislation, predicted his committee would take up 
conservation measures first and then move to the question of supply. In the 
coming months, Tauzin said, Congress will take steps to allow consumers to 
sell power back to their local energy grids, urge the auto industry to adopt 
stricter fuel efficiency standards and promote better transmission 
technologies. 
	Bush is the first president since Jimmy Carter in 1979 to ask Americans to 
think about their energy supply, and the tones were as different as the 
times. Carter proposed a windfall profits tax for oil companies and asked 
citizens to follow the speed limit, drive 15 fewer miles a week and carpool 
once a week. Bush declared, "Conservation doesn't have to mean doing without. 
Thanks to technology, it can mean doing better and smarter and cheaper." 
	The plan leaves many issues to be hashed out. For instance, it directs Energy 
Secretary Spencer Abraham to "propose comprehensive electricity legislation" 
that promotes competition while protecting consumers. It directs 
Transportation Secretary Norman Y. Mineta to consider higher fuel-economy 
standards for new vehicles, but said they must "increase efficiency without 
negatively impacting the U.S. automotive industry." 
	Before Bush's speech, he toured a power plant that runs off natural gas, 
low-sulfur coal and wood waste. In his energy report, the page with a message 
from Vice President Cheney is stamped "Printed on Recyclable Paper," and the 
plan is larded with color photos that include an oil derrick bathed by a 
fiery sunset, a fly-fisherman in a red plaid shirt with a snow-capped 
mountain behind him, and a farm family bounding through a hayfield toward a 
combine. 
	Bush drew applause from the crowd, which had been selected by a local 
business group, when he called on his critics to work with him. "Just as we 
need a new tone in Washington, we also need a new tone in discussing energy 
and the environment -- one that is less suspicious, less punitive, less 
rancorous," he said. "We've yelled at each other enough. Now it's time to 
listen to each other, and act." 
	Still, Bush could see signs of the struggle to come in the energy debate 
between industry and environmentalists. He was met here by demonstrators with 
signs saying, "I Breathe and I Vote," and "Got Oil?" 
	Milbank reported from Washington. Staff writers Juliet Eilperin and Peter 
Behr contributed to this report. 
	
Contact: http://www.washingtonpost.com