San Jose Mercury News, April 19, 2001, Thursday, SJ-POWER, 593 words,
????Testimony Indicates California Electricity Market Was Troubled in 1998, By
????Brandon Bailey (Quotes Smutny on behalf of IEP)
 
The Associated Press State & Local Wire, April 19, 2001, Thursday, BC cycle
????, 9:55 AM Eastern Time, State and Regional, 930 words, Developments in
????California's energy crisis, By The Associated Press (Quotes Smutny on 
behalf of IEP)
 
The Associated Press State & Local Wire, April 19, 2001, Thursday, BC cycle
????, 9:32 AM Eastern Time, State and Regional, 820 words, Legislators probe
????possible power, natural gas collusion, By DON THOMPSON, Associated Press
????Writer, SACRAMENTO (Quotes Smutny on behalf of IEP)
 
The Associated Press State & Local Wire, April 18, 2001, Wednesday, BC
????cycle, State and Regional, 833 words, Legislators probe possible power,
????natural gas collusion, By DON THOMPSON, Associated Press Writer, 
SACRAMENTO 
???(Quotes Smutny on behalf of IEP)
 
The Associated Press State & Local Wire, April 18, 2001, Wednesday, BC
????cycle, State and Regional, 841 words, Developments in California's energy
????crisis, By The Associated Press (Quotes Smutny on behalf of IEP)

Power bloc blasts seizure idea Producers say talk of bold action fuels crisis 
???????By Steve Geissinger SACRAMENTO BUREAU ?-- Oakland Tribune 
(Quotes Smutny on behalf of IEP)

Copley News Service, April 19, 2001, Thursday, State and regional, 780
????words, Windfall-profits tax gets Davis' backing, Bill Ainsworth, 
SACRAMENTO

Los Angeles Times, April 19, 2001, Thursday,, Home Edition, Page 3, 772
????words, CAPITOL JOURNAL; ?CALIFORNIA AND THE WEST; ??Price Caps Don't Fit 
in
????Cheney's Head for Figures, GEORGE SKELTON, SACRAMENTO

Los Angeles Times, April 19, 2001, Thursday,, Home Edition, Page 3, 1373
????words, CALIFORNIA AND THE WEST; ??DAVIS BACKS SILICON VALLEY POWER 
PROJECT;
????ENERGY: GOVERNOR URGES QUICK APPROVAL OF SAN JOSE PLANT DESPITE OPPOSITION
????BY CITY AND A POWERFUL FIRM., JENIFER WARREN and TERENCE MONMANEY, TIMES
????STAFF WRITERS, SACRAMENTO

The Orange County Register, April 19, 2001, Thursday, STATE AND REGIONAL
????NEWS, K7970, 275 words, Ex-energy chief leery of state buying power lines,
????By Kate Berry

The San Francisco Chronicle, APRIL 19, 2001, THURSDAY,, FINAL EDITION,
????NEWS;, Pg. A18, 585 words, Alameda public utility rents four backup
????generators; ???Extra electricity will be used during summer rolling
????blackouts, Matthew Yi, Alameda

The San Francisco Chronicle, APRIL 19, 2001, THURSDAY,, FINAL EDITION,
????NEWS;, Pg. A3, 845 words, Davis' gouging claims disputed; ???Officials say
????no link between PG&E bankruptcy, high prices, David Lazarus

The San Francisco Chronicle, APRIL 19, 2001, THURSDAY,, FINAL EDITION,
????NEWS;, Pg. A3, 888 words, Davis backs San Jose power plant; ???He also
????acknowledges bailout for Edison will be uphill fight, Lynda Gledhill,
????Sacramento

The Vancouver Sun, April 19, 2001 Thursday, 731 words, B.C. Hydro's credit
????to California firms exceeded 1999 guidelines, David Baines

The Associated Press State & Local Wire, April 18, 2001, Wednesday, BC
????cycle, Business News, 348 words, Williams again target of overcharging
????allegations from federal regulators, TULSA, Okla.

The Associated Press State & Local Wire, April 18, 2001, Wednesday, BC
????cycle, State and Regional, 332 words, Governor, congressman to fight
????proposals for national power deregulation policy, By MARGERY BECK,
????Associated Press Writer, LINCOLN, Neb.

San Jose Mercury News, April 18, 2001, Wednesday, SJ-POWER-PLANT, 1038
????words, California Governor May Back Energy Firm's Proposed Power Plant

Scripps Howard News Service, April 18, 2001, Wednesday, DOMESTIC NEWS, 588
????words, Davis says Edison agreement may need altering, EMILY BAZAR and 
KEVIN
????YAMAMURA, SACRAMENTO, Calif.




San Jose Mercury News
April 19, 2001, Thursday
KR-ACC-NO: SJ-POWER
LENGTH: 593 words
HEADLINE: Testimony Indicates California Electricity Market Was Troubled in 
1998

BYLINE: By Brandon Bailey

BODY:


??SACRAMENTO, Calif.--California's electricity market was showing signs of
trouble as far back as 1998, the year that it was officially opened to
competition, members of a special legislative investigating committee were 
told
Wednesday.

??Abnormal price spikes -- far higher than what should have occurred in a
competitive market -- were showing up in August 1998, the committee was told 
by
Frank Wolak, a Stanford economist and top advisor to the California 
Independent
System Operator, which runs the state's transmission grid.

??Appearing on the first day of hearings called by a state Senate select
committee to investigate alleged wholesale energy price manipulation, Wolak
testified that the ISO's economic advisors repeatedly found signs that power
suppliers were able to influence prices over the last three years -- even 
before
wholesale prices soared skyhigh last summer.

??By controlling even a relatively small portion of power supply, just enough
to make a difference in whether the state could meet consumers' needs, Wolak
said, generators have been able to charge prices far higher than their costs.

??All told, the ISO has estimated, power suppliers collected more than $ 6
billion in unjustified profits last year.

??In his opinion, Wolak added, that violates the terms by which federal
regulators allowed the suppliers to enter the state's newly deregulated market
when it opened in 1998.

??The ISO is now filing petitions with the Federal Energy Regulatory
Commission, asking that agency to revoke the generators' right to charge
unregulated prices.

??But Wolak repeatedly told the committee that he had no evidence that the
suppliers acted in collusion or that they had violated any federal anti-trust
laws.

??When state Senator Joe Dunn, D-Garden Grove, pressed him on the point, Wolak
insisted, "I can't say yes, I can't say no. There's a lot of things that
certainly look puzzling. It's hard without further information and analysis to
say definitively, but there's lots of things to seem to be worth looking 
into."

??Dunn, a former consumer attorney, is leading the Legislature's efforts to
answer a question that a host of other state and federal officials have also
posed: have California's electricity prices been the result of any illegal or
unethical acts?

??Power suppliers and their representatives have repeatedly said the answer is
no. They say their prices are the result of short supplies and natural market
swings.

??"Eleven investigations into California's electricity market have been
conducted or are currently under way," said a statement issued Wednesday by 
Jan
Smutny-Jones, executive director of the Independent Energy Producers
Association. "Not one has found or proven any wrongdoing by generators."

??Dunn, however, said Wednesday's testimony was only the start of what he
promised would be a vigorous investigation. He said the committee has already
asked several power companies for records and other information and he hinted
that subpoenas may be issued in the coming weeks.

??"We will try to figure out how to stop these high prices if they are
unjustified," Dunn said at the beginning of the hearing.

??"We're not going to be looking for ways to finance these payments," he 
added.
The state is now paying $ 70 million a day to buy power for California
consumers, after major utilities wracked up billions in debts while buying 
power
on the open market in recent months.


??-----

??To see more of the San Jose Mercury News, or to subscribe to the newspaper,
go to http://www.sjmercury.com



JOURNAL-CODE: SJ

LOAD-DATE: April 19, 2001

???????????????????????????????2 of 5 DOCUMENTS

???????????????????The Associated Press State & Local Wire

The materials in the AP file were compiled by The Associated Press. ?These
materials may not be republished without the express written consent of The
Associated Press.

??????????????????????April 19, 2001, Thursday, BC cycle

?????????????????????????????9:55 AM Eastern Time

SECTION: State and Regional

LENGTH: 930 words

HEADLINE: Developments in California's energy crisis

BYLINE: By The Associated Press

BODY:

??Developments in California's energy crisis:

??THURSDAY:


??- The state remains free of power alerts as reserves stay above 7 percent.

??- Gov. Gray Davis meets with 25 members of the California congressional
delegation at the Los Angeles International Airport to discuss the state's 
power
crisis.

??- An Assembly committee continues hearings on the natural gas supply and
possible price manipulation.

??-The Public Utilities Commission meets in San Francisco to decide whether to
investigate if a key bloc of independent generators are purposely keeping 
their
plants offline.

??WEDNESDAY:


??- Unchecked free-market forces drove up the price of natural gas to Southern
California Edison by about $750 million over the last year, an industry
consultant tells the Assembly Electricity Oversight Subcommittee.

??Meanwhile, the Senate's Select Committee to Investigate Price Manipulation 
of
the Wholesale Energy Market begins investigating whether electric generators
artificially inflated power prices.

??An industry spokesman predicts the investigations will uncover nothing
illegal.

??- The state offers financial backing to Houston-based Dynegy, which worried
it would not be paid for power generated at its plants in California. Dynegy
agrees to sell 300 megawatts of power from 17 small turbine generators in
Carlsbad after receiving an offer from the California Department of Water
Resources.

??- Gov. Gray Davis urges state regulators to approve the construction of a
controversial 600-megawatt power plant in south San Jose to provide 
electricity
to roughly 450,000 homes in the Silicon Valley.

??- The Democratic governor lobbies Senate Democrats to support his plan to 
pay
$2.7 billion for the transmission lines owned by Southern California Edison.

??State spending on electricity has jumped by more than 50 percent since
Pacific Gas and Electric Corp. declared bankruptcy April 6, thanks in part of
surcharges tacked on by power generators worried they won't be repaid, Davis
said.

??- The Senate Appropriations Committee sends the full Senate a bill creating 
a
public power authority that would loan out up to $5 billion to build or buy
power plants that would be required to sell electricity to consumers at low
rates.

??- An Assembly committee advances a bill ending the exemption under which
utility lobbyists do not have to follow the same reporting requirements as do
other lobbyists. The bill now goes to the Assembly Appropriations Committee.

??- A Pacific Gas and Electric Corp. shareholder sues the company, claiming it
misled shareholders by forecasting annual profits for two quarters last year
when, the suit says, the company knew it was incurring losses.

??-Public Utilities Commission President Loretta Lynch issues a statement late
Wednesday, saying inaction by the Federal Energy Regulatory Commission forced
Southern Caifornia Edison Co. to take a large write-off of debt. "The company
should not have to shoulder these liabilities and neither should its 
customers,"
Lynch says.

??- Edison International's stock closes at $11.40, down 48 cents, while stock
in PG&E's parent closes up 14 cents at $9.04.

??- The state remains free of power alerts as reserves stay above 7 percent.



??WHAT'S NEXT:


??- The Assembly's Energy Oversight Subcommittee plans to resume hearings
Thursday in its inquiry into California's highest-in-the-nation natural gas
prices with testimony from gas companies.

??- Davis' representatives continue negotiating with Sempra, the parent 
company
of San Diego Gas and Electric Co., to buy the utility's transmission lines.
Davis says he expects to have an agreement within two weeks.

??- The state Public Utilities Commission will decide Thursday whether to
investigate why a key block of power generators is staying off-line despite
regulators' order last month that they start getting paid by the state's
utilities. Independent Energy Producers Executive Director Jan Smutny-Jones 
says
the generators can't afford to operate because they are still owed more than a
billion dollars, and because the PUC's rates don't cover their operating 
costs.

??PUC President Loretta Lynch also wants the commission to decide Thursday to
investigate whether PG&E's April 6 bankruptcy protection filing is enough of a
threat to the PUC's regulatory authority to prompt more PUC involvement in the
bankruptcy proceedings.



??THE PROBLEM:


??High demand, high wholesale energy costs, transmission glitches and a tight
supply worsened by scarce hydroelectric power in the Northwest and maintenance
at aging California power plants are all factors in California's electricity
crisis.

??Edison and PG&E say they've lost nearly $14 billion since June to high
wholesale prices that the state's electricity deregulation law bars them from
passing on to consumers. PG&E, saying it hasn't received the help it needs 
from
regulators or state lawmakers, filed for federal bankruptcy protection April 
6.

??Electricity and natural gas suppliers, scared off by the two companies' poor
credit ratings, are refusing to sell to them, leading the state in January to
start buying power for the utilities' nearly 9 million residential and 
business
customers. The state is also buying power for a third investor-owned utility,
San Diego Gas & Electric, which is in better financial shape than much larger
Edison and PG&E but also struggling with high wholesale power costs.

??The Public Utilities Commission has raised rates up to 46 percent to help
finance the state's multibillion-dollar power-buying.

LOAD-DATE: April 19, 2001

???????????????????????????????3 of 5 DOCUMENTS

???????????????????The Associated Press State & Local Wire

The materials in the AP file were compiled by The Associated Press. ?These
materials may not be republished without the express written consent of The
Associated Press.

??????????????????????April 19, 2001, Thursday, BC cycle

?????????????????????????????9:32 AM Eastern Time

SECTION: State and Regional

LENGTH: 820 words

HEADLINE: Legislators probe possible power, natural gas collusion

BYLINE: By DON THOMPSON, Associated Press Writer

DATELINE: SACRAMENTO

BODY:

??Southern California Edison was charged about $750 million more this year for
natural gas because of unchecked free-market forces, an industry consultant
testified.

??Paul Carpenter told the Assembly Electricity Oversight Subcommittee on
Wednesday the price spikes came after the El Paso Natural Gas Co. contracted
first with Dynegy and later with its own marketing affiliate, El Paso Merchant
Energy, to control the pipeline capacity.

??Officials with El Paso and other natural gas suppliers are expected to
testify Thursday that they did not illegally manipulate the market.

??The California Public Utilities Commission estimated a year ago that
overcharges by the companies that control natural gas flow drove up prices by 
$
100 million a year to California gas and electricity customers.

??But PUC attorney Harvey Morris said that was before last summer's price
spikes, which he blamed on natural gas suppliers using a "monopoly" to "game 
the
system."

??"It's way worse than we could possibly have imagined," Morris said after
testifying before the subcommittee. "It's obviously way higher than $100
million."

??Natural gas rates at the California border generally tracked national prices
until November, when they spiked as high as 11 times higher than the price of
natural gas elsewhere in the nation, Carpenter said.

??"I have never seen gas prices like this anywhere in the world," said
Carpenter, who has been studying the energy market for 20 years for Cambridge,
Mass.-based consultant The Brattle Group. The Brattle Group was hired by 
Edison
to study the natural gas market.

??The committee is one of two legislative committees exploring whether illegal
market manipulation in the electricity and natural gas markets has driven up
California's energy costs.

??"This is a market that is plagued by the exercise of market power," Frank
Wolak, chairman of the California Independent System Operator's Market
Surveillance Committee, told the Senate Select Committee to Investigate Price
Manipulation of the Wholesale Energy Market. The ISO runs the state's power
grid.

??However, "there is no law against me saying, 'I'm not going to sell to 
you,"'
Wolak said. Market manipulation only becomes illegal when there is collusion,
Wolak said, and such evidence is hard to find.

??Electricity generators and natural gas suppliers say a severe supply and
demand imbalance - not market manipulation - has led to higher prices.

??"Everybody's busy doing investigations. They're not interested in solving 
the
problem," said Independent Energy Producers Executive Director Jan 
Smutny-Jones.

??Investigations "are wasting everybody's time," Smutny-Jones said, adding 
that
previous probes and lawsuits have uncovered no wrongdoing. He said the state's
power problems came because state regulators denied utilities the chance to 
sign
long-term energy contracts when they had the chance.

??"People have been playing by the rules," Smutny-Jones said.

??But the Senate committee's first witnesses are ISO officials who authored
studies that claim the state paid more than $6 billion too much for power last
year.

??Committee chair Joseph Dunn, D-Garden Grove, also has slated state Auditor
Elaine Howell, who last month blamed buyers and sellers for skyrocketing
electricity costs. Dunn also has scheduled future testimony from state, 
federal,
academic and private investigators studying the power market.

??He invited five major generators to attend the committee's second hearing
next week. All five - Reliant, Dynegy, Williams Energy, Duke Energy and 
Mirant -
say they are eager to cooperate and clear their names, Dunn said.

??Dunn asked the five for a total of 86 specific documents. If the companies
feel they cannot provide documents because of legal or confidentiality 
concerns,
Dunn said he will subpoena them.

??Smutny-Jones said investigators appear to be growing desperate to blame the
state's natural gas and electricity price hikes on illegal market manipulation
instead of natural market forces.

??He cited Attorney General Bill Lockyer's announcement last week that any
informant who helped prove wrongdoing would be entitled to a percentage of the
state's recovery he estimated could range from $50 million to hundreds of
millions of dollars.

??"If the state's offering a $50 million reward, they haven't found anything,"
Smutny-Jones said. "I don't think you're going to find the fact that anybody 
did
anything criminal here."

??Assemblywoman Jenny Oropeza, D-Long Beach, said she believes otherwise after
Wednesday's testimony: "I think it is very clear there was some price
manipulation going on."

??But Assemblyman John Campbell, R-Irvine, isn't sure there was anything
illegal.

??"There clearly are market forces at work, that's evident," Campbell said.
"Whether you make the jump to market manipulation ... I haven't seen 
conclusive
evidence that leads me to make that jump."

LOAD-DATE: April 19, 2001

???????????????????????????????4 of 5 DOCUMENTS

???????????????????The Associated Press State & Local Wire

The materials in the AP file were compiled by The Associated Press. ?These
materials may not be republished without the express written consent of The
Associated Press.

?????????????????????April 18, 2001, Wednesday, BC cycle

SECTION: State and Regional

LENGTH: 833 words

HEADLINE: Legislators probe possible power, natural gas collusion

BYLINE: By DON THOMPSON, Associated Press Writer

DATELINE: SACRAMENTO

BODY:

??Unchecked free-market forces drove up the price of natural gas to Southern
California Edison by about $750 million over the last year, an industry
consultant testified Wednesday.

??Paul Carpenter told the Assembly Electricity Oversight Subcommittee the 
price
spikes came after the El Paso Natural Gas Co. contracted first with Dynegy and
later with its own marketing affiliate, El Paso Merchant Energy, to control 
the
pipeline capacity.

??The California Public Utilities Commission estimated a year ago that
overcharges by the companies that control natural gas flow drove up prices by 
$
100 million a year to California gas and electricity customers.

??But PUC attorney Harvey Morris said that was before last summer's price
spikes, which he blamed on natural gas suppliers using a "monopoly" to "game 
the
system."

??"It's way worse than we could possibly have imagined," Morris said after
testifying before the subcommittee. "It's obviously way higher than $100
million."

??Natural gas rates at the California border generally tracked national prices
until November, when they spiked as high as 11 times higher than the price of
natural gas elsewhere in the nation, Carpenter said.

??"I have never seen gas prices like this anywhere in the world," said
Carpenter, who has been studying the energy market for 20 years for Cambridge,
Mass.-based consultant The Brattle Group. The Brattle Group was hired by 
Edison
to study the natural gas market.

??Officials with El Paso and other natural gas suppliers have denied illegally
manipulating the market. They are scheduled to testify Thursday. El Paso
officials did not return telephone calls for comment Wednesday.

??The committee is one of two legislative committees exploring whether illegal
market manipulation in the electricity and natural gas markets has driven up
California's energy costs.

??"This is a market that is plagued by the exercise of market power," Frank
Wolak, chairman of the California Independent System Operator's Market
Surveillance Committee, told the Senate Select Committee to Investigate Price
Manipulation of the Wholesale Energy Market. The ISO runs the state's power
grid.

??However, "there is no law against me saying, 'I'm not going to sell to 
you,"'
Wolak said. Market manipulation only becomes illegal when there is collusion,
Wolak said, and such evidence is hard to find.

??Electricity generators and natural gas suppliers say a severe supply and
demand imbalance - not market manipulation - has led to higher prices.

??"Everybody's busy doing investigations. They're not interested in solving 
the
problem," said Independent Energy Producers Executive Director Jan 
Smutny-Jones.

??Investigations "are wasting everybody's time," Smutny-Jones said, adding 
that
previous probes and lawsuits have uncovered no wrongdoing. He said the state's
power problems came because state regulators denied utilities the chance to 
sign
long-term energy contracts when they had the chance.

??"People have been playing by the rules," Smutny-Jones said.

??But the Senate committee's first witnesses are ISO officials who authored
studies that claim the state paid more than $6 billion too much for power last
year.

??Committee chair Joseph Dunn, D-Garden Grove, also has slated state Auditor
Elaine Howell, who last month blamed buyers and sellers for skyrocketing
electricity costs. Dunn also has scheduled future testimony from state, 
federal,
academic and private investigators studying the power market.

??He invited five major generators to attend the committee's second hearing
next week. All five - Reliant, Dynegy, Williams Energy, Duke Energy and 
Mirant -
say they are eager to cooperate and clear their names, Dunn said.

??Dunn asked the five for a total of 86 specific documents. If the companies
feel they cannot provide documents because of legal or confidentiality 
concerns,
Dunn said he will subpoena them.

??Smutny-Jones said investigators appear to be growing desperate to blame the
state's natural gas and electricity price hikes on illegal market manipulation
instead of natural market forces.

??He cited Attorney General Bill Lockyer's announcement last week that any
informant who helped prove wrongdoing would be entitled to a percentage of the
state's recovery he estimated could range from $50 million to hundreds of
millions of dollars.

??"If the state's offering a $50 million reward, they haven't found anything,"
Smutny-Jones said. "I don't think you're going to find the fact that anybody 
did
anything criminal here."

??Assemblywoman Jenny Oropeza, D-Long Beach, said she believes otherwise after
Wednesday's testimony: "I think it is very clear there was some price
manipulation going on."

??But Assemblyman John Campbell, R-Irvine, isn't sure there was anything
illegal.

??"There clearly are market forces at work, that's evident," Campbell said.
"Whether you make the jump to market manipulation ... I haven't seen 
conclusive
evidence that leads me to make that jump."

LOAD-DATE: April 19, 2001

???????????????????????????????5 of 5 DOCUMENTS

???????????????????The Associated Press State & Local Wire

The materials in the AP file were compiled by The Associated Press. ?These
materials may not be republished without the express written consent of The
Associated Press.

?????????????????????April 18, 2001, Wednesday, BC cycle

SECTION: State and Regional

LENGTH: 841 words

HEADLINE: Developments in California's energy crisis

BYLINE: By The Associated Press

BODY:

??Developments in California's energy crisis:

??WEDNESDAY:


??- Unchecked free-market forces drove up the price of natural gas to Southern
California Edison by about $750 million over the last year, an industry
consultant tells the Assembly Electricity Oversight Subcommittee.

??Meanwhile, the Senate's Select Committee to Investigate Price Manipulation 
of
the Wholesale Energy Market begins investigating whether electric generators
artificially inflated power prices.

??An industry spokesman predicts the investigations will uncover nothing
illegal.

??- The state offers financial backing to Houston-based Dynegy, which worried
it would not be paid for power generated at its plants in California. Dynegy
agrees to sell 300 megawatts of power from 17 small turbine generators in
Carlsbad after receiving an offer from the California Department of Water
Resources.

??- Gov. Gray Davis urges state regulators to approve the construction of a
controversial 600-megawatt power plant in south San Jose to provide 
electricity
to roughly 450,000 homes in the Silicon Valley.

??- The Democratic governor lobbies Senate Democrats to support his plan to 
pay
$2.7 billion for the transmission lines owned by Southern California Edison.

??State spending on electricity has jumped by more than 50 percent since
Pacific Gas and Electric Corp. declared bankruptcy April 6, thanks in part of
surcharges tacked on by power generators worried they won't be repaid, Davis
said.

??- The Senate Appropriations Committee sends the full Senate a bill creating 
a
public power authority that would loan out up to $5 billion to build or buy
power plants that would be required to sell electricity to consumers at low
rates.

??- An Assembly committee advances a bill ending the exemption under which
utility lobbyists do not have to follow the same reporting requirements as do
other lobbyists. The bill now goes to the Assembly Appropriations Committee.

??- A Pacific Gas and Electric Corp. shareholder sues the company, claiming it
misled shareholders by forecasting annual profits for two quarters last year
when, the suit says, the company knew it was incurring losses.

??-Public Utilities Commission President Loretta Lynch issues a statement late
Wednesday, saying inaction by the Federal Energy Regulatory Commission forced
Southern Caifornia Edison Co. to take a large write-off of debt. "The company
should not have to shoulder these liabilities and neither should its 
customers,"
Lynch says.

??- Edison International's stock closes at $11.40, down 48 cents, while stock
in PG&E's parent closes up 14 cents at $9.04.

??- The state remains free of power alerts as reserves stay above 7 percent.



??WHAT'S NEXT:


??- The Assembly's Energy Oversight Subcommittee plans to resume hearings
Thursday in its inquiry into California's highest-in-the-nation natural gas
prices with testimony from gas companies.

??- Davis' representatives continue negotiating with Sempra, the parent 
company
of San Diego Gas and Electric Co., to buy the utility's transmission lines.
Davis says he expects to have an agreement within two weeks.

??- The state Public Utilities Commission will decide Thursday whether to
investigate why a key block of power generators is staying off-line despite
regulators' order last month that they start getting paid by the state's
utilities. Independent Energy Producers Executive Director Jan Smutny-Jones 
says
the generators can't afford to operate because they are still owed more than a
billion dollars, and because the PUC's rates don't cover their operating 
costs.

??PUC President Loretta Lynch also wants the commission to decide Thursday to
investigate whether PG&E's April 6 bankruptcy protection filing is enough of a
threat to the PUC's regulatory authority to prompt more PUC involvement in the
bankruptcy proceedings.



??THE PROBLEM:


??High demand, high wholesale energy costs, transmission glitches and a tight
supply worsened by scarce hydroelectric power in the Northwest and maintenance
at aging California power plants are all factors in California's electricity
crisis.

??Edison and PG&E say they've lost nearly $14 billion since June to high
wholesale prices that the state's electricity deregulation law bars them from
passing on to consumers. PG&E, saying it hasn't received the help it needs 
from
regulators or state lawmakers, filed for federal bankruptcy protection April 
6.

??Electricity and natural gas suppliers, scared off by the two companies' poor
credit ratings, are refusing to sell to them, leading the state in January to
start buying power for the utilities' nearly 9 million residential and 
business
customers. The state is also buying power for a third investor-owned utility,
San Diego Gas & Electric, which is in better financial shape than much larger
Edison and PG&E but also struggling with high wholesale power costs.

??The Public Utilities Commission has raised rates up to 46 percent to help
finance the state's multibillion-dollar power-buying.

LOAD-DATE: April 19, 2001

Power bloc blasts seizure idea
Producers say talk of bold action fuels crisis 
By Steve Geissinger
SACRAMENTO BUREAU ?-- Oakland Tribune

SACRAMENTO -- Outraged by a report in The Oakland Tribune that some lawmakers 
asked the governor to seize high-priced power contracts, a key industry group 
Tuesday warned the Davis administration and Legislature that such action 
would worsen the energy crisis. 

"We're publicly saying . . . this kind of rhetoric will have dire 
consequences on both the reliability and cost of power in California for 
years to come," said Jan Smutny-Jones, executive director of the Independent 
Energy Producers Association. 

"It is the kind of rhetoric one would expect in Indonesia or the Philippines, 
not the sixth largest economy on the planet," he said in a teleconference. 

At the same time, Davis administration officials confirmed that seizing 
contracts of allegedly profiteering brokers is the most likely last-ditch 
move if options continue to narrow, ahead of the previously discussed 
concepts of seizing California power plants owned by out-of-state firms or 
passing a windfall profits tax. 

Davis spokesman Steve Maviglio pointed out the governor already seized power 
contracts on which California's investor-owned utilities were defaulting in 
early February. 

The state, trying to buy its way out of the energy crisis with no clear end 
in sight, lost a substantial measure of control over electricity prices and 
supplies to the courts with the recent bankruptcy filing by the Pacific Gas 
and Electric Co. 

Gov. Gray Davis, a Democrat, employed hard-sell tactics Tuesday in an effort 
to convince reluctant Democrats that their failure to embrace his plan to 
financially rescue teetering Southern California Edison could plunge that 
utility into bankruptcy, as well. 

While most Republicans are flatly opposed to the plan as misguided, 
Democrats, who hold a majority in the Legislature, worry it's a public 
bailout of an investor-owned utility and would hand the state control over 
only Edison's south-state piece of the strategic high-voltage transmission 
grid in California. 

Soaring wholesale power costs have financially shattered utilities, forcing 
the state into runaway, multibillion-dollar spending that helps keep the 
lights on but threatens the state budget. The manager of the state's power 
grid has accused generators and marketers of overcharging Californians more 
than $6 billion in recent months. 

Assembly Speaker Robert Hertzberg, D-Van Nuys, said Monday that members of 
both legislative houses were interested in seizure of California power 
plants' contracts with brokers, who sell to customers within or outside the 
state. 

Sen. Don Perata, D-Oakland, an outspoken critic of the Davis administration's 
handling of the crisis, said some lawmakers had asked the governor to use 
emergency or eminent domain powers to seize the overpriced contracts and were 
awaiting Davis' answer this week. 

Supporters of the move said seizure would allow the state to control where 
the power is sold and decrease price markups by eliminating the middleman. 

But myriad questions remain unanswered, including regulatory and interstate 
commerce issues as well as any state reimbursement of the brokers. 

Any move to seize power contracts would be overturned by the courts, said 
Gary Ackerman, executive director of the Western Power Trading Forum. 

"Instead of trying to do what's legally within their reach, they go to 
extreme measures that are on their very face unlawful and unconstitutional," 
Ackerman said. 

Moreover, industry officials said, seizure would not only chill industry 
investment in California's power system and lead to higher power costs but 
would be ironic since California has shunned lower-cost, long-term contracts, 
industry officials said. 

"It would create a very unstable political, regulatory environment," 
Smutny-Jones said. "It would have extremely adverse consequences for 
California in the long term." 

Even so, the talk has worried the industry. 

Smutny-Jones said his clients are "very, very troubled by this sudden turn in 
rhetoric." 

"I assume when senior members of the Legislature make pronouncements about 
potentially seizing contracts, it's designed to get our attention and we 
obviously take those things seriously," he said. 

The Independent Energy Producers group is "in the process" of contacting the 
Davis administration and lawmakers, said Smutny-Jones. "You'll hear more 
about this." 

Copyright 2001 Copley News Service
Copley News Service
April 19, 2001, Thursday

SECTION: State and regional

LENGTH: 780 words

HEADLINE: Windfall-profits tax gets Davis' backing

BYLINE: Bill Ainsworth

DATELINE: SACRAMENTO

BODY:

??Federal regulators' failure to stop what they described as anti-competitive
practices in the natural-gas industry added $750 million to Southern 
California
Edison's cost of electricity, a consultant estimated yesterday.

??The consultant, Paul Carpenter of the Brattle Group, spoke to an Assembly
subcommittee investigating why California pays the highest natural-gas prices 
in
the nation. Natural gas is a critical part of the electricity crisis because
most of the state's generating plants run on natural gas.

??Natural-gas prices have soared throughout the nation, but the bench mark
price paid at California's border has been double that paid at other bench 
mark
locations throughout the nation for months, according to figures released by 
the
Assembly Subcommittee on Energy Oversight.

??Next week, Carpenter plans to testify at hearings in Washington, D.C., on
behalf of Southern California Edison and the California Public Utilities
Commission, which are asking federal regulators to intervene.

??The giant utility and the state regulatory body contend that a sweetheart
deal between El Paso Natural Gas and El Paso Merchant Energy gave the sister
companies enough market power to artificially raise the price of natural gas
that flows into Southern California from Texas.

??El Paso owns the major pipeline bringing natural gas from fields in New
Mexico and Texas to Southern California. El Paso Merchant Energy is an
unregulated sister company.

??Carpenter called the prices paid in Southern California ''simply
unprecedented'' in the United States. He estimated that the sister companies
manipulated the market enough to add $2.60 to the price of a million British
thermal units of gas.

??In addition, he said, El Paso Merchant Energy owns part of 20 smaller power
plants, ''qualifying facilities'' that get paid based on the price of natural
gas in California. The higher natural-gas prices increase the company's
revenues, Carpenter said.

??El Paso company officials are expected to testify in front of the Assembly
subcommittee today, but in proceedings before the federal regulators they have
denied any sweetheart deal.

??In a report they commissioned, the company blamed the higher natural-gas
prices in Southern California on increased demand and constraints on pipeline
capacity.

??Gov. Gray Davis, meanwhile, gave his strongest endorsement yet to a
windfall-profits tax on generators as a Senate committee chaired by Joseph 
Dunn,
D-Laguna Niguel, began a series of hearings to probe possible price gouging by
generators.

??''I believe the Legislature would be well within its prerogative to insist
that generators receive an appropriate reduction, whether it's 20 percent or 
any
other number the Legislature hit upon,'' Davis said.

??Senate Democrats, Davis said, will form a special committee to help work on
his plan for the state purchase of the transmission system of Southern
California Edison for $2.76 billion, in exchange for state aid in paying off 
the
utilities' debt.

??The governor said he told Senate Democrats, a number of whom are skeptical 
of
the plan, that Edison's parent firm has agreed to back a $3 billion upgrade of
the neighborhood distribution system retained by Edison and to return a $400
million tax refund to the utility.

??At the natural-gas hearing yesterday, state officials said that after El 
Paso
Merchant Energy bought a significant part of the pipeline capacity from its
sister company, it withheld natural gas to drive prices up.

??''Marketers have gamed the system and figured out how to hoard capacity and
undermine competition,'' said Harvey Morris, an attorney for the California
Public Utilities Commission.

??State regulators want the Federal Energy Regulatory Commission, which
regulates natural gas, to open the market to more competitors.

??But the commission has repeatedly rejected similar complaints in the past. 
On
March 28, FERC ruled that the affiliates did not arrange a sweetheart deal.

??''The fact that El Paso Merchant controls a large volume of capacity does
not, in and of itself, render the El Paso contracts unjust, unreasonable or
unduly discriminatory,'' FERC ruled.

??In other cases involving natural gas, federal regulators acknowledged that
certain contract provisions allowed anti-competitive behavior, but they 
approved
those contracts anyway.

??Lawmakers said they were puzzled by the federal regulators' lack of action.

??''It baffles me that we've found the problem anti-competitive behavior and
market gaming, but there's no cure because federal regulators won't take
action,'' said Assemblyman Juan Vargas, D-San Diego.

Staff writer Ed Mendel contributed to this report.



LOAD-DATE: April 19, 2001

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??????????????????????Copyright 2001 / Los Angeles Times

??????????????????????????????Los Angeles Times

????????????????????April 19, 2001, Thursday, Home Edition

SECTION: Part A; Part 1; Page 3; Metro Desk

LENGTH: 772 words

HEADLINE: CAPITOL JOURNAL;

CALIFORNIA AND THE WEST;

Price Caps Don't Fit in Cheney's Head for Figures

BYLINE: GEORGE SKELTON



DATELINE: SACRAMENTO

BODY:


??Want price caps on wholesale electricity to staunch the bleeding of billions
from California? Not going to happen, Vice President Dick Cheney insists. 
Don't
waste your energy thinking about it.

??"Frankly, California is looked on by many folks as a classic example of the
kinds of problems that arise when you do use price caps," Cheney said in a
telephone interview Wednesday.

??The vice president was referring to another type of price cap--the infamous
state cap on consumer rates that has left the private utilities billions short
of enough revenue to pay their gouging wholesalers. What political leaders in
California and the Northwest are pleading for from the Federal Energy 
Regulatory
Commission is a regional cap on wholesale prices.

??Early last year, a megawatt-hour was selling wholesale in California for $
30. By year's end, it had risen to an average $ 300, according to state
officials. At peak, prices have soared to $ 1,500. Meanwhile, demand increased
last year by less than 4%. In fact, demand last month was 9% less than in 
March
2000.

??This is the sorry news for ratepayers/ taxpayers: Californians paid $ 7.4
billion for electricity in 1999. This year, the tab--without price caps--is
projected at $ 70 billion. Gov. Gray Davis disclosed Tuesday that his
administration has been shelling out $ 73 million a day to buy electricity for
the pauper utilities.

??The profits of power producers--many of them Texans and Bush backers--have
risen 400%-500%-600%.


??*

??But none of this budges the Bush administration.

??Price caps, Cheney declares, may provide "short-term political relief for 
the
politicians. But they don't do anything to deal with the basic fundamental
problem." That problem is supply, he says; price caps discourage investment in
new power plants and encourage consumption.

??Counters Garry South, Davis' political strategist: "The notion by free 
market
zanies that you have to let profits rise 500%-600% is ludicrous. Reasonable
profits can be made without bankrupting the system. They're just trying to
protect the profits of their friends in the energy business."

??In truth, California is building power plants as fast as it can. But not
enough new megawatts apparently will be online by summer to prevent
blackouts--and the bleeding of billions more into the pockets of out-of-state
profiteers.

??How about a temporary price cap?

??"Six months? Six years?" Cheney replies. "Once politicians can no longer
resist the temptation to go with price caps, they usually are unable to ever
muster the courage to end them . . .

??"I don't see that as a possibility . . . Any package you can wrap it in, any
fancy rhetoric you can prop it up with, it does not solve the problem."


??*

??The White House clearly understands it has a problem in California--a
political problem. A problem with a Democratic-dominated state that voted
overwhelmingly for Al Gore. And now a problem with that mythical 
headline--Bush
to California: Drop Dead--which seems to be getting bigger each day.

??There have been several recent California: Drop Dead stories. One was in
Sunday's New York Times--"Bush Devoting Scanty Attention to California."
Tuesday, the Sacramento Bee reported that when Cheney met with Northwest 
members
of Congress to discuss West Coast energy, he barred Californians from the 
room.

??Cheney flatly denies it.

??But Sen. Dianne Feinstein (D-Calif.) says she has had trouble making contact
with the Bush White House. She has sent two letters to President Bush asking 
for
a meeting on energy. The first time, she got back a form letter with her name
misspelled. On the second try, she got a group meeting with Cheney.

??"It was very disappointing," she says. "He spoke about letting the free
market work and drilling in Alaska . That's not going to help California in 
the
short-term. We need price caps until we're able to fix this very broken 
market.
. .

??"There seems no interest in really wanting to understand the California
situation."

??I asked Cheney whether he sensed an anti-California bias across the country?
"No more than there's an anti-Texas bias," he replied. "I wouldn't get 
paranoid
about it.

??"The fact is, California is one of the leading states in the nation. Often a
trendsetter. . . . Well, we hope not to emulate your energy policy. Hopefully,
we'll learn from that."

??His message to California: "There's no reason not to be optimistic. The
energy crunch obviously is a significant problem. . . . But it too will pass."

??While learning from California, the Bush White House also might take a
refresher course in the free market Hoover administration.

LOAD-DATE: April 19, 2001

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??????????????????????Copyright 2001 / Los Angeles Times

??????????????????????????????Los Angeles Times

????????????????????April 19, 2001, Thursday, Home Edition

SECTION: Part A; Part 1; Page 3; Metro Desk

LENGTH: 1373 words

HEADLINE: CALIFORNIA AND THE WEST;

DAVIS BACKS SILICON VALLEY POWER PROJECT;

ENERGY: GOVERNOR URGES QUICK APPROVAL OF SAN JOSE PLANT DESPITE OPPOSITION BY
CITY AND A POWERFUL FIRM.

BYLINE: JENIFER WARREN and TERENCE MONMANEY, TIMES STAFF WRITERS



DATELINE: SACRAMENTO

BODY:


??Attempting to show that no region in California is safe from sacrifice, Gov.
Gray Davis on Wednesday called for quick state approval of a controversial 
power
plant proposed for the Silicon Valley.

??The governor's action locks him in combat with the San Jose City Council,
which has unanimously rejected the plant, and Cisco Systems, the computer
networking giant that wants to build its worldwide headquarters on adjacent
land.

??In praising the proposed plant as a model of low-polluting efficiency, Davis
said all regions of California must share the pain as the state expands its
power supply--a key step toward ending blackouts and reducing sky-high
electricity prices.

??If approved, the plant would be the 14th licensed by the California Energy
Commission since Davis took office. The 13th--a 510-megawatt plant near San
Diego--was approved unanimously by the commission Wednesday with little
controversy.

??Rushing to expand the state's overtaxed energy supply, the governor has
recently cut in half the approval times for the licensing of some plants. Six
are under construction, according to Davis, and three are scheduled to begin
operation this summer. A fourth--the AES Corp. generator in Huntington Beach
that is due to be restarted --could add more megawatts to the supply this
summer.

??V. John White, an energy consultant in Sacramento, said the governor's newly
active role as an advocate for power plants was a necessary step given the
urgency of the supply shortage.

??"It's very rare, and I wouldn't want him to short-circuit the commission's
review process," White said. "But I think he's trying to reassure folks we're
doing everything we can and not just sitting around in our hot tubs."

??Davis urged the Energy Commission--a five-member panel dominated by his
appointees--to stop talking about the project and grant it a license. If the
commission does so, it will mark only the third time the panel has usurped a
local government's authority over zoning.

??"We are all in this together," Davis said, flanked by a forest of electric
transformers near the Capitol. "We are one state, and we all have to make the
sacrifices necessary to make up for the mistakes of the last 12 years, when no
major power plants were built."

??The governor said the plant's developers, Calpine Corp. and Bechtel
Enterprises Holdings Inc., have made "numerous concessions" to San Jose
officials, including an agreement to sell power exclusively in the region.

??He added that the $ 300-million plant--expected to supply about 450,000
homes--will be equipped with state-of-the-art systems that make it "one of the
cleanest plants to go up in the nation."

??The commission's staff has recommended licensing the project, and some
analysts said the governor's intervention--said to be unprecedented--should 
fuel
momentum for approval.

??Commissioner Robert Laurie--one of two members who held evidentiary hearings
on the project and is preparing a recommendation for the full 
commission--would
not comment on the plant's prospects. But Laurie, an appointee of former Gov.
Pete Wilson, insisted that the project would receive an impartial review.

??"I know the importance of independent decision-making," he said.

??San Jose officials say the Calpine project conflicts with the aesthetics of
its site in a bucolic valley 15 miles south of downtown. On Wednesday, Mayor 
Ron
Gonzales urged the Energy Commission to "give serious attention" to the city's
concerns about the plant's potential impact on residents and the environment.

??"As the project has been designed and proposed to operate . . . it would
present an unfair burden to our community," the mayor said.

??A spokeswoman for the Calpine/Bechtel partnership disagreed and 
characterized
the plant as key to restoring energy stability in the Silicon Valley, a region
heavily dependent on imported power.

??"This is the only project in the pipeline that can help Silicon Valley out 
of
its predicament in the near future," said the spokeswoman, Lisa Poelle.

??She expressed hope that the governor's comments, which cap numerous meetings
between the partnership staff and Davis aides, would encourage San Jose to
soften its stance on the project.

??The 600-megawatt plant is proposed for a swath of open space currently 
leased
to a rancher and occupied by grazing cattle. A preliminary ruling by Laurie 
and
the other commissioner scrutinizing the project is expected by June. The full
commission would take a final vote about a month later, and if a license were
granted, the plant would begin operations sometime in 2003.

??From the beginning, the plant has been dogged by opposition, and the Energy
Commission has held more than 20 hearings--an unusually large number--on its
fate.

??On Wednesday, a spokesman for its heftiest foe, San Jose-based Cisco, said
the company still has serious concerns about "health and safety issues."

??Cisco has strongly opposed the plant because the company wants to build a $
1.3-billion headquarters for 20,000 employees nearby. In the past, Cisco
officials have threatened to relocate to another state if the power plant is
built.

??Company spokesman Steve Langdon said the firm's plans to build an industrial
campus were not scuttled by the announcement Monday that it is cutting 8,500
workers from its payroll because of slumping sales of its Internet networking
equipment.

??But he suggested that the plans were flexible enough to be scaled down for a
smaller work force and that the campus may not house the company's 
headquarters.

??"It doesn't all get built at once," he said. "We will build and occupy the
site over time in phases as needed."

??Another leading opponent of the power plant argued Wednesday that the Energy
Commission lacks authority to override San Jose officials and license the
project. The Santa Teresa Citizen Action Group, launched by homeowners near 
the
site, says the commission may only take such a step if a better plant site
hasn't been identified.

??The group charges that the commission is aware of other available sites,
including one in an industrial part of the East Bay area, and lists eight 
other
reasons the plant should not be built, among them the noise and emissions it
would produce.

??The local Sierra Club chapter, however, has endorsed the plant largely on
grounds that it would run cleaner than existing plants in the area. By
offsetting emissions from those older plants, the new project would actually
reduce air pollution, said Kurt Newick of the Sierra Club's Loma Prieta 
chapter.

??On another front, Davis continued to lobby legislators for support for his
plan to rescue Southern California Edison from bankruptcy through purchase of
the utility's transmission grid.

??Emerging from lunch with state Senate Democrats who are openly wary of the
deal, Davis said he'd made progress to "bridge some of the gaps." It was the
governor's third meeting in two days with lawmakers of both parties.

??Some of the toughest skeptics are members of his own party in the Senate.
Many fear that the deal Davis struck with Edison will hand the utility too 
much
at the expense of ratepayers, and some say bankruptcy might be a better option
for the state's second-largest private utility. Pacific Gas & Electric Co. 
filed
for bankruptcy April 6.

??To assuage concerns, Davis proposed that a special Senate committee be named
to meet with his energy advisors as the administration and Edison finalize
details of the deal before it goes to the Legislature for approval.

??Senate leader John Burton (D-San Francisco), who has called the Edison
agreement "problematic," said he may appoint such a committee but continued to
suggest that an Edison bankruptcy might be acceptable.

??"Many of the Fortune 100 companies have gone into Chapter 11 bankruptcy and
it ain't like the end of the world for anybody," Burton said.


??*

??Times staff writer Carl Ingram contributed to this story.



??Powering Up California

??Power plant projects recently licensed by the California Energy Commission
and when they are expected to go online:


??*

??* Two of four turbines are expected to go online in December 2001; the other
two are expected to go online in March 2002.

??Source: California Energy Commission

GRAPHIC: PHOTO: (2 photos) Gov. Gray Davis urges California Energy Commission 
to
approve Metcalf Energy Center, a 600-megawatt power plant planned for San 
Jose.
Demonstrators greet Davis on his way to news conference in Sacramento.
PHOTOGRAPHER: Associated Press PHOTO: (2 photos) Gov. Gray Davis urges
California Energy Commission to approve Metcalf Energy Center, a 600-megawatt
power plant planned for San Jose. Demonstrators greet Davis on his way to news
conference in Sacramento. ?PHOTOGRAPHER: ROBERT DURELL / Los Angeles Times
GRAPHIC: Powering Up California, Los Angeles Times

LOAD-DATE: April 19, 2001

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??????????????Copyright 2001 Knight Ridder/Tribune News Service
???????????????????????Knight Ridder/Tribune News Service

??????????????????????????The Orange County Register

???????????????????????????April 19, 2001, Thursday

SECTION: STATE AND REGIONAL NEWS

KR-ACC-NO: ?K7970

LENGTH: 275 words

HEADLINE: Ex-energy chief leery of state buying power lines

BYLINE: By Kate Berry

BODY:

??ONTARIO, Calif. _ Former Energy Secretary Bill Richardson said Wednesday 
that
he is "uncomfortable" with the state's $2.76 billion purchase of the
transmission lines of Southern California Edison because it would derail 
future
plans to fully deregulate the state's electricity market.

??"I'm leery of a state purchase," Richardson said at an economic conference 
in
Ontario, adding that "the jury is still out" on a plan by Gov. Gray Davis to
keep Edison out of bankruptcy.

??He called for a rescue of Pacific Gas and Electric, the San Francisco 
utility
that filed for bankruptcy two weeks ago.

??In a half-hour speech, Richardson admonished the Bush administration for
failing to take a more active role in the California crisis. He backs a 
one-year
regional price cap to calm the volatile wholesale market.

??"In the Clinton administration, California was gold," he said. "With the new
administration, it's another ballgame."

??Richardson also pushed for a bipartisan energy bill with Democratic themes
including energy-efficiency standards, conservation and environmental
regulations.

??"We need an energy policy for this country that embraces both parties'
proposals," he said.

??Energy Secretary Spencer Abraham has sparred with Richardson by trying to
rescind new energy-efficiency standards for air conditioners that were 
approved
in the last 30 days of the Clinton administration.

??ARCHIVE PHOTOS available from NewsCom-PressLink:

??Richardson.

??KRT CALIFORNIA is a premium service of Knight Ridder/Tribune

??(c) 2001, The Orange County Register (Santa Ana, Calif.).

??Visit the Register on the World Wide Web at http://www.ocregister.com/
 
JOURNAL-CODE: OC

LOAD-DATE: April 19, 2001

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?????????????????Copyright 2001 The Chronicle Publishing Co.

?????????????????????????The San Francisco Chronicle

???????????????????APRIL 19, 2001, THURSDAY, FINAL EDITION

SECTION: NEWS; Pg. A18

LENGTH: 585 words

HEADLINE: Alameda public utility rents four backup generators;

Extra electricity will be used during summer rolling blackouts

SOURCE: Chronicle Staff Writer

BYLINE: Matthew Yi

DATELINE: Alameda

BODY:
Alameda's public utility announced yesterday that it is leasing four portable
diesel electrical generators to avoid the one woe of the state's energy crisis
they haven't been able to duck so far -- rolling blackouts.

???The utility's move to provide a backup source of electricity for its
customers is part of a trend among city-owned utilities to gear up for 
expected
power shortages during the dog days of summer.

???Healdsburg, Santa Clara and Palo Alto -- all with their own electric grids
-- are also initiating their own energy backup plans.

???The generators would kick in only during severe energy shortages when
rolling blackouts are on the horizon.

???In Alameda, four generators -- each the size of a tractor trailer -- 
arrived
last week and are ready to be fired up, Alameda Mayor Ralph Appezzato said
yesterday.

???"We're going to be the masters of our destiny," he said.

???Alameda Power and Telecom is one of about 30 municipal utilities in
California that opted not to deregulate with the rest of the state four years
ago. Consequently, its customers' power rates are expected to be stable this
year while Pacific Gas and Electric Co. customers face huge rate increases.

???But municipal utilities such as Alameda's are still part of the statewide
power grid, which is managed by the Independent System Operator, and are 
subject
to rolling blackouts like everybody else when the state's energy reserves dip
below 1.5 percent.

???Each of Alameda's four diesel generators will produce 1.5 megawatts of
power. Each megawatt can light up 1,000 homes, utility officials say.

???The units, leased at a total cost of $68,000 a month through the end of the
year, are parked at Alameda Point.

???Their cost will be paid through the municipal utility's reserve fund and
customers' power bills won't be affected, said Junona Jonas, the utility's
general manager.

???"I think in the long run, we'll see more supply in the state, but until 
that
happens, there will be communities that'll have to take these short-term 
drastic
measures," Jonas said.

???The utility's spokesman, Matthew McCabe, said the diesel exhaust from the
generators won't be an environmental factor.

???"Our environmental record is extremely important to us," McCabe said. "The
diesel generators are only for emergency backup. . . . Besides, these things 
are
clean -- it's not like standing next to a diesel bus."

???The city is also getting help from the U.S. Maritime Administration, which
operates more than a dozen ships at the former Navy station in Alameda. When 
the
juice is low, those ships will unplug from the port and use onboard 
generators,
Jonas said.

???In the North Bay, Healdsburg officials are waiting for the arrival of two
diesel generators. Combined, they are expected to produce 3.5 megawatts of
power, which can account for about 20 percent of the city's expected summer 
peak
load, said Bill Duarte, city utility director.

???"We're taking matters into our own hands," he said.

???Farther south, both Santa Clara and Palo Alto are considering leasing
portable generators, officials said.

???Bill Reichmann, senior electric utility engineer at Santa Clara's Silicon
Valley Power, said the utility is planning to lease eight generators, 
operating
them in the southeastern end of town near the San Jose International Airport.

???Palo Alto's municipal utility also has recommended that the City Council
approve renting two generators starting next month, said spokeswoman Rima
Johnson.E-mail Matthew Yi at myi@sfchronicle.com.

LOAD-DATE: April 19, 2001

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?????????????????Copyright 2001 The Chronicle Publishing Co.

?????????????????????????The San Francisco Chronicle

???????????????????APRIL 19, 2001, THURSDAY, FINAL EDITION

SECTION: NEWS; Pg. A3

LENGTH: 845 words

HEADLINE: Davis' gouging claims disputed;

Officials say no link between PG&E bankruptcy, high prices

SOURCE: Chronicle Staff Writer

BYLINE: David Lazarus

BODY:
Officials on the front lines of California's energy mess yesterday challenged
Gov. Gray Davis' assertion that the state is being gouged by power companies
because of PG&E's bankruptcy filing.

???Such dissent from the governor's own subordinates could make it harder for
Davis to gain support for his energy measures in the state Legislature.

???Despite Davis' latest claims, the Department of Water Resources, which is
spending about $70 million a day buying power, said there is no evidence 
linking
recent price increases to Pacific Gas and Electric Co. filing for bankruptcy
protection on April 6.

???"It is a seller's market," said Viju Patel, executive manager of the
Department of Water Resources' power systems department. "The power companies 
do
not need an excuse to raise prices."

???Critics say Davis' penchant for secrecy on energy issues has come back to
haunt him at a time when he needs all the allies he can find.

???"People aren't taking his words at face value," said Michael Shames,
executive director of the Utility Consumers' Action Network in San Diego.

???Republican lawmakers -- and even some Democrats -- have challenged a number
of the governor's initiatives, including a multibillion-dollar bailout scheme
for Southern California Edison.

???Nevertheless, Davis reiterated his belief yesterday that recent electricity
price increases are "an aberration driven by the bankruptcy of PG&E."

???He said California's spending on power jumped 40 percent in the week
following PG&E's bankruptcy filing because generators say they face a greater
risk of not being paid.

???"Nothing else in the equation has changed," said Steve Maviglio, a 
spokesman
for the governor. "Everything is the same except the bankruptcy."

???However, power companies were quick to challenge this assertion. They
insisted that PG&E's bankruptcy actually was seen as a positive development by
those in the energy business.

???"If anything, PG&E provides some solace for traders because the bankruptcy
provides an organized mechanism for recovery of payments," said Gary Ackerman,
executive director of the Western Power Trading Forum, a Menlo Park
energy-industry association.

???On the other hand, he acknowledged that power companies are becoming
increasingly wary of the state of California's creditworthiness as an energy
buyer.

???The Department of Water Resources already has spent nearly $5 billion 
buying
electricity and has yet to recoup a dime from ratepayers. State regulators are
still trying to come up with a way to apportion the limited revenues from 
power
rates among the various parties in California's energy picture.

???Rating agency Fitch Inc. said yesterday it may cut the state's credit 
rating
because of questions surrounding recovery of energy costs.

???"People are keeping an eye on things," Ackerman said. "They're watching how
California finances things."

???If a premium on electricity sales to the state exists, he said it probably
has been in place since the beginning of the year, well before PG&E's current
woes.

???UCAN's Shames agreed. He said power companies added a "risk premium" to
their California power sales late last year when it looked like the state's
energy troubles were worsening.

???"PG&E's bankruptcy may have increased the uncertainty," Shames said, "but
we've been paying a risk premium for months now."

???Richard Wheatley, a spokesman for Reliant Energy in Houston, insisted that
his company's traders are not using questions about PG&E's or California's
financial solvency as a fresh excuse for higher prices.

???"I haven't seen any evidence of it," he said.

???Mark Palmer, a spokesman for Houston's Enron Corp., laid blame for recent
price increases on low rainfall throughout the West, which has cut output at
hydroelectric facilities, as well as on California's chronic power shortage.

???"It's not that there's a premium on prices," he said. "It's just supply and
demand."

???That said, Palmer acknowledged that California's firm insistance on
blackouts being avoided at all costs leaves the state vulnerable to virtually
any price generators choose to demand.

???"This means prices will be used to allocate a scarce resource," he said.
"There's no other way it could work."

???Bottom line for consumers: It's going to be a long, hot summer, and
electricity prices will soar even higher as demand surges.

???And despite the best efforts of state officials, a daily threat of 
blackouts
remains a virtual certainty as California's beleaguered power grid is 
stretched
to the breaking point.

???At the Department of Water Resources' command center in a Sacramento
shopping mall, the state's team of electricity traders has moved onto a new,
high-tech trading floor, where they negotiate power deals each day from the
crack of dawn.

???The department's Patel said daily blackouts may be averted this summer 
after
consumers see skyrocketing power prices reflected in their bills.

???"People will respond to these prices and they are going to conserve like
never before," Patel predicted.E-mail David Lazarus at 
dlazarus@sfchronicle.com.

GRAPHIC: PHOTO, Gov. Gray Davis urged the California Energy Commission to
approve construction of the proposed 600-megawatt power plant. / Associated
Press

LOAD-DATE: April 19, 2001

??????????????????????????????14 of 63 DOCUMENTS

?????????????????Copyright 2001 The Chronicle Publishing Co.

?????????????????????????The San Francisco Chronicle

???????????????????APRIL 19, 2001, THURSDAY, FINAL EDITION

SECTION: NEWS; Pg. A3

LENGTH: 888 words

HEADLINE: Davis backs San Jose power plant;

He also acknowledges bailout for Edison will be uphill fight

SOURCE: Chronicle Sacramento Bureau

BYLINE: Lynda Gledhill

DATELINE: Sacramento

BODY:
Gov. Gray Davis urged the state Energy Commission yesterday to approve a
controversial power plant in San Jose, saying California needs every megawatt 
it
can harness.

???Davis' recommendation runs counter to the wishes of the San Jose City
Council and Mayor Ron Gonzales, who have come out against the 600-megawatt
Metcalf Energy Center in south San Jose's Coyote Valley. It also puts the
governor at odds with one of his political allies, Cisco Systems chief John
Chambers, whose company opposes the plant because it would be built near the
tech firm's proposed new campus.

???Davis' announcement came the same day he all but admitted he lacks the
support he needs in the state Senate for the deal he reached with Southern
California Edison to restore the utility to financial health. Davis has
portrayed that deal and construction of new power plants as essential to 
making
California's energy market functional again.

???"I think when we have an opportunity to put more power on line we should
seize it," Davis said. "I believe we spend too much time talking about 
Metcalf.
It's time to start building it."

???The Energy Commission has been reviewing the proposal by Calpine Corp. and
Bechtel Enterprises Inc. for months. The commission's staff recommended in
October that the plant be built, and a final decision is expected by summer. 
If
it is approved, the plant could come on line next year and provide enough
electricity for 600,000 homes.

???None of the five commissioners could be reached yesterday. Three are
Democrats appointed by Davis and two are Republicans appointed by former Gov.
Pete Wilson.

???Gonzales and the rest of the City Council rejected the Metcalf plant in
November. Until yesterday, Davis had sat on the sidelines as the energy crisis
deepened and a long line of state and federal officials, including four of the
five Assembly members from Silicon Valley, urged the commission to overturn 
the
council's vote.

???Some neighborhood groups oppose the plant, along with computer networking
giant Cisco, which hopes to build a 20,000-worker campus on a neighboring
parcel. Cisco chief Chambers donated $50,000 to Davis in the first six months 
of
last year.

???Cisco's reaction yesterday was restrained.

???"We have great respect for the governor and respect his decision," said
Cisco spokesman Steve Langdon.

???However, Langdon added: "We still have serious concerns about health and
safety issues related to the proposed power plant."

???Some neighbors were much angrier.

???"He's trying to act like he's the big, bad tough governor, and he's
spineless," said Issa Ajlouny, who lives in the Santa Teresa neighborhood, 
less
than a mile from the proposed plant. "He knows the approval process isn't
working in his favor, so he's trying to come out and act like a hero to the
state of California. But he's nothing but backstabbing the city of San Jose on
the environmental issues."

???Supporters of the plant see the 14 acres of former junkyard as the perfect
site -- right next to Pacific Gas and Electric Co.'s largest substation in the
South Bay, close to major transmission lines and shielded from its neighbors 
by
a 350-foot hill.

???But a housing development is also nearby, and residents fear the power 
plant
will belch pollutants in an area already suffering from some of the worst air
quality in the Bay Area.

???Mayor Gonzales continued to express his concern yesterday.

???"I would support clean power plants that will help us achieve greater 
energy
self-sufficiency for San Jose residents and business," Gonzales said. "As the
Metcalf project has been designed and proposed to operate, however, it would
present an unfair burden on our community."

???That's not what Davis said, however, calling Metcalf "one of the cleanest,
most efficient plants in the country."

???Davis praised the efforts of Calpine/Bechtel to work with the local
community and said he was especially pleased that the venture had agreed to
commit all the power to the local region.

???"The Silicon Valley is obviously the engine driving our economy, but they
are very dependent on outside power," Davis said.

???Also in Sacramento yesterday, after an hourlong session with Senate
Democrats -- the toughest legislative sell for Davis' proposed Edison deal --
the governor all but admitted his plan could not win enough votes for Senate
approval.

???"I think he knew there weren't enough votes going in," said Sen. Don 
Perata,
D-Oakland. "But there may be a way of perfecting a deal people can at least
think of supporting."

???Senate Democrats have openly opposed Edison's deal, saying the only
beneficiaries are Edison shareholders and power generators who would be paid
every cent owed them by the utility -- at the expense of customers who would 
pay
more to erase Edison's debt.

???Unlike his meeting with Assembly Democrats, after which Davis said he was
encouraged, the governor said yesterday he wanted the Senate to appoint a
special committee to iron out differences over the Edison deal.

???Senate President Pro Tem John Burton, D-San Francisco, said he was "not
aware a committee was being set up." He said he favored an up-or-down vote on
Davis' current proposal.Chronicle staff writers Greg Lucas, Alan Gathright and
Maria Alicia Gaura contributed to this report. / E-mail Lynda Gledhill at
lgledhill@sfchronicle.com.

GRAPHIC: PHOTO, Gov. Gray Davis urged the California Energy Commission to
approve construction of the proposed 600-megawatt power plant. / Associated
Press

LOAD-DATE: April 19, 2001

??????????????????????????????15 of 63 DOCUMENTS

??????????????????????Copyright 2001 Pacific Press Ltd.

??????????????????????????????The Vancouver Sun

????????????????????April 19, 2001 Thursday FINAL EDITION

SECTION: BUSINESS, Pg. F1 / Front

LENGTH: 731 words

HEADLINE: B.C. Hydro's credit to California firms exceeded 1999 guidelines

BYLINE: David Baines

SOURCE: Vancouver Sun

BODY:

??A confidential document issued in late 1999 shows that B.C. Hydro's
power-trading subsidiary, Powerex, set a credit limit of $100 million US for 
its
California customers.

??However, by the end of 2000, Powerex had extended three times that amount of
credit to those customers -- the California Independent System Operator and 
the
California Power Exchange. With the California Power Exchange and Cal-ISO's
major customer, Pacific Gas & Electric, under Chapter 11 bankruptcy 
protection,
repayment of this debt is now in doubt.

??Powerex spokesman Wayne Cousins noted that the document obtained by The
Vancouver Sun, which is marked "strictly confidential," was issued in November
1999.

??"That's an old copy of our risk-management policy," he said in an interview
Wednesday.

??"Credit limits have changed since then based on careful assessment of 
several
factors including market conditions, risks, maintaining long-standing
relationships and helping California meet its electricity needs to prevent
crisis situations.

??"Temporary revisions were only implemented after very diligent review
incorporating the best market intelligence available, our own due diligence 
and
on-going dialogue with appropriate market participants."

??He refused to say when the credit limits for Cal-ISO and the California 
Power
Exchange were increased.

??"That type of information is confidential. You have a copy that, I assume,
was leaked in some way, but this is commercially confidential information."

??He said the increase in credit limits helped B.C. Hydro achieve record net
income of about $1 billion during the year ending March 31. This figures does
not include any write-downs that may occur if Powerex determines that any of 
its
customer accounts are not collectible.

??Cousins, however, was insistent that all debts will be collected: "We
continue to pursue monies owing and we expect to be paid for electricity we 
have
sold."

??He noted that Powerex suspended trades to all California entities on Dec. 8
unless those trades were fully secured by creditworthy customers.

??By that time, Cal-ISO and California had racked up an unpaid bill of about $
300 million US, or $475 million Cdn -- about half the net income that Hydro 
has
tentatively reported for the year ending March 31.

??The confidential document states that Powerex's policies and procedures are
designed to control "the risk of financial loss due to changes in market 
prices
or volatility" and "the risk that a counterparty (customer) in a commodity
transaction defaults on delivery and/or settlement."

??It states that the amount of credit to be advanced to any customer depends 
on
its credit rating. An "AAA" customer, for example, may be granted credit to a
maximum of $20 million.

??Cal-ISO and California Power Exchange are not utilities, they are power
pools. They purchase power from Powerex and other suppliers and re-sell it to
utilities such as Pacific Gas & Electric and Southern California Edison.

??The pools are not rated, but are assigned specific credit limits. As of
November 1999, Cal-ISO had a credit limit of $40 million US and the 
California 
Power Exchange $60 million US.

??The risk-management document notes that the credit-worthiness of these pools
depends on that of its suppliers.

??"The Powerex credit-risk manager and the treasury manager are responsible 
for
initially evaluating, and then monitoring, the credit-authorization policies 
and
credit limits for each power pool in which Powerex trades," the document 
states.
"Significant alterations in the credit policies of a power pool will trigger a
mandatory reappraisal of the power-pool credit limit."

??California has been caught in a power vice in recent months. The problem
dates back to 1996, when the state developed a plan to deregulate the 
electricity business. Competition was supposed to lower rates below a price 
cap
that had been imposed.

??However, dry conditions cut the ability to generate hydro-electric power and
a surge in the state's economy created unprecedented demand for electricity. 
Prices soared.

??The result was that the California utilities paid record prices for power,
but weren't allowed to pass along the full cost to consumers.

??Pacific Gas & Electric and Southern California Edison, the state's two
biggest utilities, now owe about $12 billion.

??dbaines@pacpress.southam.ca
 
TYPE: Business

LOAD-DATE: April 19, 2001

??????????????????????????????27 of 63 DOCUMENTS

???????????????????The Associated Press State & Local Wire

The materials in the AP file were compiled by The Associated Press. ?These
materials may not be republished without the express written consent of The
Associated Press.

?????????????????????April 18, 2001, Wednesday, BC cycle

SECTION: Business News

LENGTH: 348 words

HEADLINE: Williams again target of overcharging allegations from federal
regulators

DATELINE: TULSA, Okla.

BODY:

??Federal regulators are once against targeting Williams for allegedly
overcharging Californians for electricity. 

??The Tulsa-based energy company was cited in a notice this week from the
Federal Energy Regulatory Commission for allegedly overcharging California 
customers $25,574 in March.

??Two other companies were also cited in the notice from federal regulators
Monday.

??Dynegy Power Marketing Inc. of Houston was cited for overcharging California
customers $469,662, while Mirant California LLC, of Atlanta, was cited for
overcharges of $92,620.

??The commission told Williams and the other two companies to either refund 
the
money or justify their prices, which exceeded a price of $300 per megawatt 
hour
that was set by the Federal Energy Regulatory Commission because of the
California's electricity shortage.

??Williams also was accused of excessive charges of $8 million in January and 
$
21.6 million in February, for a total of $29.6 million.

??Williams spokeswoman Paula Hall-Collins said while the overpricing
allegations against Williams in March were not as significant as in the other
months, the process of justifying them will be the same as in previous months.

??"They determine the price that they feel is fair and justifiable, and then 
we
come back and say why we charged what we did," she said.

??Hall-Collins said federal regulators haven't said whether they are satisfied
with how Williams justified its alleged overcharges from previous months.

??Also in March, the commission accused Williams and AES Southland of
generating less power to drive up electricity prices in May and June 2000,
resulting in alleged overcharging of $10.8 million.

??Williams denies overcharging for electricity it provides.

??In other news, Williams Express Inc., a unit of Williams, announced Tuesday
it was selling 198 MAPCO Express convenience stores to Israel-based Delek 
Group
for $147 million. Most of the stores are in Tennessee and executives expect to
close the deal by the end of May.

??Williams will keep 29 MAPCO stores in Alaska.

LOAD-DATE: April 19, 2001

??????????????????????????????30 of 63 DOCUMENTS

???????????????????The Associated Press State & Local Wire

The materials in the AP file were compiled by The Associated Press. ?These
materials may not be republished without the express written consent of The
Associated Press.

?????????????????????April 18, 2001, Wednesday, BC cycle

SECTION: State and Regional

LENGTH: 332 words

HEADLINE: Governor, congressman to fight proposals for national power
deregulation policy

BYLINE: By MARGERY BECK, Associated Press Writer

DATELINE: LINCOLN, Neb.

BODY:

??Gov. Mike Johanns and Rep. Lee Terry, R-Neb., said Wednesday they will be
working to make sure national leaders understand Nebraska's stance on a 
national
energy policy.

??Nebraska's unique status as the only 100 percent public power state in the
nation and its reliance on the corn-based fuel additive ethanol make the 
state's
input in the development of national energy policy important, Johanns said.

??"Public power has worked very well for Nebraska consumers by providing low
cost electricity," he said, adding that the deregulated state of California 
has
suffered through weeks of rolling blackouts. "We are committed to protecting
public power in this environment of deregulation."

??Terry said he has talked at length to the staff of Vice President Dick
Cheney, who has been tapped to come up with a national energy policy draft. 
That
draft will end up before the House Energy and Commerce Committee, on which 
Terry
serves.

??"There will be a discussion about a national deregulation policy," Terry
said.

??A national deregulation policy would threaten Nebraska's public power 
system,
Terry and Johanns said. Terry said he plans to push for a states' rights
exemption to any such policy.

??"It is absolutely necessary that Nebraska have a voice in that discussion,"
Terry said.

??Terry said he also has pleaded with the Bush administration not to grant a
request from California to wave the Clean Air Act's gasoline oxygen 
requirement.

??Such a move is considered a death knell to ethanol, a clean-air fuel
additive, because other states would be expected to follow suit in requesting 
-
and receiving - similar waivers, thereby destroying ethanol's market.

??"They did not telegraph their position on the waiver," Terry said of White
House, which is expected to decide on California's request this spring.

??Other energy concerns Nebraska leaders hope to address are rising heating
costs and gasoline prices, which are expected to top $2 a gallon in Nebraska
this summer.

LOAD-DATE: April 19, 2001

??????????????????????????????49 of 63 DOCUMENTS

??????????????Copyright 2001 Knight Ridder/Tribune Business News
??????????????????????Copyright 2001 San Jose Mercury News

????????????????????????????San Jose Mercury News

??????????????????????????April 18, 2001, Wednesday

KR-ACC-NO: SJ-POWER-PLANT

LENGTH: 1038 words

HEADLINE: California Governor May Back Energy Firm's Proposed Power Plant

BODY:


??Under intense pressure to increase California's energy supply, Gov. Gray
Davis is expected to announce today his support for Calpine Corp.'s proposed
South San Jose power plant -- a move that could ensure the state's most
controversial power project is built.

??Davis said for months that he would not interfere in the environmental 
review
of the proposed 600-megawatt power plant. But a source close to the governor 
said Davis has decided to use Calpine's Coyote Valley project to send a signal
that California is ready to build more power plants and is "open to business."

??San Jose has strenuously opposed the power plant. But Davis' decision to 
urge
the California Energy Commission to approve it would likely hold sway with the
agency, which has authority over where plants are located but has almost never
overridden local opposition.

??The commission -- three of whose five members were appointed by Davis -- is
expected to complete its environmental review and make a decision early this
summer.

??A spokesman for the governor declined to confirm the endorsement. But late
Tuesday, the governor scheduled a press conference for this morning to make an
"important energy generation announcement."

??San Jose Mayor Ron Gonzales declined to comment. But another of the plant's
leading opponents pledged to keep fighting what would be the South Bay's 
largest
power plant.

??An endorsement from Davis would cap a stunning turnaround for the project.

??Five months ago, Calpine's Metcalf Energy Center was unanimously rejected by
the San Jose City Council, which decided that the power plant would be
incompatible with the city's plans to develop high-tech campuses in North 
Coyote
Valley.

??Some Calpine officials even considered giving up plans to build the power
plant.

??But as California's energy woes intensified, the Metcalf plant increasingly
became a poster child for the need for more power generation to reduce the
skyrocketing cost of electricity and avoid rolling blackouts. Silicon Valley,
one of the state's largest electricity consumers, produces only a fraction of
the energy it uses.

??Despite fierce opposition from local residents concerned about the
environmental effects of a large power plant, a steady stream of state and 
local
organizations lined up behind the project, including the Silicon Valley
Manufacturing Group, the San Jose Silicon Valley Chamber of Commerce and the
local chapters of the Sierra Club and American Lung Association.

??The California Assembly voted unanimously in February to urge the energy
commission to override San Jose and license the power plant.

??And top officials and attorneys at the energy commission have been working
for months to ensure that the project wins approval, a Mercury News
investigation of the commission's environmental review of the project showed.
The officials undermined negative environmental assessments of the Metcalf 
site
and silenced commission analysts who said other sites would be better.

??The energy commissioners are weighing the staff's recommendation to approve
the plant.

??Commissioner Robert A. Laurie, who oversaw hearings on the project, insisted
at one hearing two months ago that the commission would complete an 
independent
review.

??Although Davis has stressed his efforts to speed construction of new power
plants, the governor insisted he would not take a position on the project.

??"The governor has repeatedly said he wants the process to play out," Davis
press secretary Steve Maviglio said last week. "The governor believes the 
energy
commission should complete its review."

??But there have been growing signs that Davis would throw his weight behind
Calpine's project.

??A senior energy commission official said aides to the governor have been
calling the commission for months to urge quick approval of the Metcalf plant.
The governor's press secretary said no calls have been made.

??When Davis was looking for a backdrop to hold a press conference earlier 
this
year to announce his plans to speed up approval of new power plants, he chose
Calpine's new plant in Sutter.

??The company also has actively campaigned for the governor's support.

??Earlier this year, Calpine offered to sell the state cheaper power from the
plant if it is approved.

??When Calpine and its development partner Bechtel Enterprises were looking 
for
a lobbyist in Sacramento, the companies turned to Platinum Advisors, whose
president, Darius Anderson, was finance chairman of Davis' 1998 gubernatorial
campaign.

??The San Jose-based company gave the governor $ 19,000 last year, according 
to
state campaign finance reports.

??Maviglio said the governor's ties to Calpine are no different from his
relationship with Cisco Systems CEO John Chambers, who has opposed the power
plant. Campaign finance reports show Chambers gave Davis $ 50,000 last year.

??Calpine officials said Tuesday they did not know of the governor's impending
announcement. But they said they were not surprised. "We've been working with
the governor on a number of issues," said project manager Ken Abreu. "Metcalf 
is
just one of them."

??Meanwhile, Calpine's opponents in San Jose City Hall and in the neighborhood
nearest the proposed power plant appear more isolated than at any time since 
the
contentious debate over the Metcalf site began more than two years ago.

??Mayor Gonzales refused to comment on Davis' planned announcement. "I don't
respond to rumors," said the mayor, who has helped lead opposition to Metcalf.
"I have not heard anything. If he makes a statement, I'll respond."

??But one of Calpine's fiercest local opponents said the nearby Santa Teresa
neighborhood will continue to fight. "We have a strong case," said longtime
South San Jose resident Issa Ajlouny. "And we will win."

??The Mercury News strives to avoid use of unnamed sources. When unnamed
sources are used because information cannot otherwise be obtained, the 
newspaper
generally requires more than one source to confirm the information.


??By Noam Levey and Mark Gladstone. Mike Zapler of the Mercury News 
contributed
to this report.


??-----

??To see more of the San Jose Mercury News, or to subscribe to the newspaper,
go to http://www.sjmercury.com
 


JOURNAL-CODE: SJ

LOAD-DATE: April 19, 2001

??????????????????????????????50 of 63 DOCUMENTS

?????????????????????Copyright 2001 Scripps Howard, Inc.

?????????????????????????Scripps Howard News Service

??????????????????????????April 18, 2001, Wednesday

SECTION: DOMESTIC NEWS

LENGTH: 588 words

HEADLINE: Davis says Edison agreement may need altering

SOURCE: Scripps-McClatchy Western Service

BYLINE: EMILY BAZAR and KEVIN YAMAMURA

DATELINE: SACRAMENTO, Calif.

BODY:

??Gov. Gray Davis indicated Wednesday that he may need to alter the agreement
to purchase Southern California Edison's transmission lines if he wants
legislators to approve the deal.

??Though the Democratic governor declined to discuss particulars, he said he
asked Senate leaders to appoint a special committee dedicated to resolving
disagreements between the administration and lawmakers.

??Many provisions of the memorandum of understanding, the document that lays
out the terms of the Edison deal, must be approved by the Legislature and the
state Public Utilities Commission.

??"There is a determination to try and solve this problem whether or not it
means amending the MOU or trying a slightly different approach," Davis said
after meeting with Senate Democrats.

??A spokesman for the utility declined to comment on the governor's 
statements.

??Davis announced the Edison agreement April 9, just three days after Pacific
Gas & Electric Co. unexpectedly cut off transmission line negotiations with 
the
governor and filed for bankruptcy protection.

??The deal would require the state to pay $2.76 billion for Edison's
transmission lines, or 2.3 times book value. In addition, a portion of 
consumer
electricity rates would be dedicated to paying off the remainder of the
utility's debt, estimated at about $5 billion.

??Both Edison and PG&E stockpiled massive debt when wholesale electricity 
prices soared. Price caps prevented them from passing along the entire cost of
electricity to consumers.

??Since the Edison deal was announced, however, legislators have been critical
of certain provisions, suggesting that California consumers will receive 
little
in return for relieving the utility of billions of dollars in debt.

??"It's clear that the deal, as is, could well be problematic," said Senate
President Pro Tem John Burton, D-San Francisco. "This has to do with what's in
the bill, what's in it for the people of the state."

??Lawmakers initially believed they would have little ability to change the
agreement, and referred to it as a "take it or leave it" deal.

??In fact, the memorandum of understanding itself says the deal can be
nullified "in the event any law is passed, adopted or repealed ... (which) 
would
materially impede or frustrate the ability of the Parties to effectuate all of
the elements of the plan as a package."

??But in his meeting with Senate Democrats, Davis indicated he may be willing
to compromise. His goal, he said, is to keep Edison from following PG&E into
bankruptcy.

??"We still have some work to do," Davis said. "I think the appointment of a
special Senate committee, assuming that happens, will let us work through the
detail in an appropriate fashion."

??Burton said he has not decided whether to appoint a committee.

??Other senators came out of the meeting guardedly optimistic that they could
compromise with the governor.

??"It was obvious that there were concerns from members," said Sen. Don 
Perata,
D-Alameda. "He is open and ready to have the proposal perfected as it moves
through the legislative process."

??Sen. Jackie Speier, D-Hillsborough, said she hopes to amend the deal to
ensure power generators are penalized for over-charging the utilities and the
state for electricity.

??"The way it's presently crafted, (generators) are being rewarded," she said.
"They are getting a premium for selling electricity at a higher premium than
ever conceived of by humankind."

??(Contact Emily Bazar and Kevin Yamamura of the Sacramento Bee in California 
at http://www.sacbee.com.)

LOAD-DATE: April 19, 2001




???