Please see the following articles:

Sac Bee, Thurs, 5/31:  A rush to duck power outages: About half of the
state's electric users already have been exempted from rolling blackouts

SD Union, Thurs, 5/31:  Sempra chief: County may fare OK on outages

SD Union, Thurs, 5/31:  'Plan B' gains key support in Assembly

SD Union, Thurs, 5/31:  FERC boss unfazed by Davis' lawsuit threat

SD Union, Thurs, 5/31:  Chula Vista names itself a municipal power entity

SD Union (AP), Thurs, 5/31:  Circuit breaker 
Giddy investors in the power trade get their wires crossed

SD Union (AP), Thurs, 5/31: After months of pressure, mayor agrees on power 
plant 

SD Union, Wed, 5/30:  Panel OKs weakened utility district bill

SD Union, Wed, 5/30:  Davis fails to sway Bush on price caps

SD Union, Wed, 5/30:  Head of FERC confident California suit will fail

SD Union (AP), Wed, 5/30: Grid managers call Stage 2 alert, but hope to avoid 
blackouts 

LA Times, Thurs, 5/31: FERC Chief Unfazed By Threat of Third Lawsuit

LA Times, Thurs, 5/31:  The Home Energy Drain

SF Chron, Thurs, 5/31:  Heat's on, but so are lights 
100-degree temperatures aren't widespread, sparing the grid

SF Chron, Thurs, 5/31: Municipal utilities warned 
Governor says he'll seize excess electricity if prices don't come down

SF Chron, Thurs, 5/31: Regulators want state trade-off for caps 
Davis asked to give up control of power lines

SF Chron, Thurs, 5/31:  Plan would have biggest customers pay Edison's debt

Mercury News, Thurs, 5/31:  San Jose mayor changes course, endorses power 
plant

Mercury News, Thurs, 5/31:  State admits power-deal secrecy 

Mercury News, Thurs, 5/31: California Gov. Davis blasts Bush energy policy 

Mercury News, Thurs, 5/31: Mayor sees the light on power plant  (Editorial) 

OC Register, Thurs, 5/31: Building a new plant? More power to them

OC Register, Thurs, 5/31:  Watering down fun
Many summer activities in O.C. will be diminished by the electricity crunch

OC Register, Thurs, 5/31:  Energy notebook
San Jose mayor switches position, backs power plant

OC Register, Thurs, 5/31: Deadline near on regional power grid 

OC Register, Thurs, 5/31:  Bush standing tall as Davis plays blame game   
(Commentary)

Individual.com (Businesswire), Thurs, 5/31: Electrical Emergency Stepped Up 
to Stage Two; 
Need for Energy Conservation is Critical  

Individual.com (AP), Thurs, 5/31:  Washington's Role Helped Spark 
California's Power Crunch

Individual.com (Businesswire), Thurs, 5/31:  Energy Experts Say Solution to 
California Crisis is
Inescapable/ Build More Power Plants and Ensure Competition

NY Times, Thurs, 5/31: In California, Blackouts Spur A Search for Home 
Remedies

------------------------------------------------------------------------------
-------------------------------------

A rush to duck power outages: About half of the state's electric users 
already have been exempted from rolling blackouts.
By Carrie Peyton, Terri Hardy and Clint Swett
Bee Staff Writers
(Published May 31, 2001) 
Up and down California, businesses, government agencies, campuses and others 
are scrambling to join the millions who will escape this summer's predicted 
waves of rolling blackouts. 
Some have gotten state regulators to change blackout rules. Some have given 
different versions of their needs to utilities, changing their stories in 
ways that satisfy exemption standards. Some have persuaded legislators to 
propose laws just for them. 
"People that have political power or economic power are going to find ways of 
getting exempted. It happens all the time," said Richard Bilas, one of five 
appointed members of the state Public Utilities Commission. 
Every addition to the largely confidential list of those exempt from outages 
boosts the frequency of blackouts for everyone else. 
While a few thousand institutions -- including hospitals, fire departments 
and prisons -- are deemed "essential" users who should not be blacked out, 
nearly half the state is spared outages because millions more share circuits 
with those exempt facilities. 
In Sacramento, for example, the electric utility will not cut power to a 
water treatment facility along the American River for fear of endangering 
water quality. But sheltering that circuit also spares the sprawling 
California State University, Sacramento, campus nearby. 
If exemptions grow, "at some point, you lose the ability to reliably have 
rolling blackouts," said PUC commissioner Carl Wood. He has estimated that 
fewer than 1,000 more institutions can be exempted without compromising the 
system that rolls outages from one part of the state to the next when the 
electric grid can't supply power for everyone. 
With close to half of the state sitting out outages, "that means the other 
half is going to get blacked out twice as often. It's basically unfair to the 
rest of the community," said Paul Perkovic, who sits on the board of the 
Montara Sanitary District, which provides sewer, garbage and other services 
to a San Mateo County community. 
Perkovic urged the PUC last week to make more government agencies, including 
his tiny district, eligible for blackouts, arguing that they should be 
prepared for other emergencies anyway. 
The deluge of exemption requests has created a dilemma of values and numbers. 
Should nursing homes be placed on the essential list? What about outpatient 
surgical clinics or transit agencies or schools? And when, if ever, should 
someone review existing exemptions to see if they're still needed? 
Utilities and regulators say they try to apply the rules fairly. But 
inconsistencies appear, and the rules keep changing as the realization sinks 
in that many more blackouts could await California. 
The state's two biggest utilities are close in size, but one shields about 25 
percent more customers than the other from outages. 
The Sacramento Municipal Utility District, which sets its own outage 
standards, exempts only 21 of its 530,000 customers. 
Pacific Gas and Electric Co., which applies rules set by the PUC, is much 
more generous, giving 2,600 of its 4.8 million customers the "get out of 
blackouts free card." 
Southern California Edison is even more open handed in its interpretation of 
the same rules, doling out 3,600 exemptions among its 4.3 million customers. 
The roads to getting an exemption are varied. There are at least three places 
to start for those who want to stay cool and bright when all around are going 
dark. 
Businesses or governments can apply to their utility, which determines 
whether they fit rules for a public safety exemption. 
Or if their utility is regulated by the PUC, they can apply directly to a new 
program set up to examine their petition for exemptions. 
Finally, they can go to the state Legislature, where lawmakers have 
introduced a range of bills that would protect schools, nursing homes, 
refineries -- even Universal Studios. 
But in the attempt to quickly piece together a system to grant exemptions, 
critics say, a haphazard process has been developed. 
Dan Johnson, associate vice president for facilities development and 
operations at San Jose State University, said he has sought an exemption from 
PG&E and is still waiting, while campuses with similar circumstances have 
succeeded. Now he wonders about the fairness of what seems to him a murky 
decision-making process. 
"Each utility has its own way of dealing with exemptions," he said. "If it 
appears that the decision is arbitrary and capricious, we hope that when we 
appeal to the PUC some sanity prevails." 
One person in PG&E's tariff's department has done nothing but process 
exemption requests since March, officials said, after the job became too big 
to be absorbed in another worker's duties. 
About 200 requests have come in since early this year, and PG&E has approved 
45 of them and denied 72, with 79 still pending. 
The process is aimed at being a straightforward evaluation of whether an 
entity fits into existing PUC categories of "essential" customers. 
But it isn't always that simple, said Roland Risser, PG&E director of tariffs 
and compliance. 
Sometimes, said Risser, a customer will say it has adequate backup 
generation, and PG&E will let the customer know the backup disqualifies it 
from an exemption. Later, the customer calls back and says "we've 
re-evaluated" and the backup generator won't supply all its needs. 
"We just take their word for it," Risser said. "We don't police." 
From universities to transit agencies, a wide range of customers worry that 
as different utilities apply PUC standards, those regulations don't always 
yield the same results. 
So far, at least eight campuses within the University of California and CSU 
systems will not be subject to rolling blackouts, including UC Davis. 
In a letter to PG&E asking for an exemption, UC Davis stressed the potential 
danger to animals in its veterinary hospital and the possible destruction of 
research. But PG&E spokesman Ron Low said health and safety arguments are the 
only ones that matter. PG&E granted the exemption because the campus does not 
have generators for its airport and its radio station -- which is part of the 
emergency broadcasting network. 
Transportation officials say they're frustrated by the mixed signals sent by 
utilities. 
While the PUC has declared the Bay Area Rapid Transit District exempt from 
blackouts, Edison says Los Angeles' Municipal Transportation Authority is 
not. Ralph de la Cruz, deputy executive director of operations for the MTA, 
doesn't understand that logic. True, BART travels under the bay. But the 
MTA's Green Line runs down the middle of the I-105 Century Freeway. Some MTA 
rail lines are elevated, and passengers trying to extricate themselves from a 
stalled train could plunge to the ground. 
The MTA asked Edison to reconsider and has appealed to the PUC. 
"We are anxious to see this resolved as quickly as possible, before blackouts 
occur," de la Cruz said. "My God, we don't want to be in the position of our 
lines experiencing the prospect of stranded passengers." 
The San Francisco Giants also have appealed to the PUC to be exempt during 
games. A blackout at Pacific Bell Park would "pose major operational 
challenges," said Staci Slaughter, a Giants' spokeswoman. 
Electric turnstiles wouldn't work. Concession stands could only accept cash 
only for hot dogs and beers. The field would go dark and night games would 
have to be canceled. 
The PUC has been so swamped with bids to escape blackouts that it has hired a 
scientific and engineering consulting firm to study who else should be added. 
Meanwhile, it has asked utilities to look into ways to reconfigure the wiring 
so that each essential customer won't take so many nonessential ones out of 
the blackout pool. A report on those efforts is due Friday. 
"We've been deluged at the commission by individual requests that do have a 
broader public policy good," said PUC president Loretta Lynch, including one 
from the lone U.S. maker of a blood-clotting agent for hemophiliacs. 
The PUC has hired Exponent, a Menlo Park consulting firm, for $615,000 to 
analyze who else should be exempt. 
Exemption applications are due Friday and will be reviewed by people with 
specialties ranging from toxicology to environmental sciences to electrical 
engineering, said Robert Caligiuri, an Exponent vice president. 
The company will rank applicants based on safety risks, and it will work with 
utilities to determine the potential impacts of adding each one to the 
exemption pool. It will report to the commission in July, and Wood expects a 
decision in early August. He hopes the new rules can be implemented by 
utilities soon after. 
But no one within the PUC is taking an equally rigorous look at those who are 
already exempt, and the commission is split on whether such a study is 
necessary. Wood, who specializes in the blackout issue, believes that the 
commission simply doesn't have the time for such an effort during the current 
emergency. 
Unsure of their prospects with utilities or the PUC, some are taking their 
cases to the Capitol. 
State Sen. Sheila Kuehl, D-Santa Monica, said lawmakers are scrambling to 
draft energy policies that help all Californians, and at the same time, look 
after interests in their districts. 
One example is Kuehl's bill that would allow 15 businesses -- including 
Universal Studios -- which straddle the boundary between Edison and the Los 
Angeles Department of Water and Power to get their electricity from DWP. Not 
only would that deal provide them with cheaper rates, but it would likely 
exempt them from blackouts. 
The Los Angeles city utility is not part of the region controlled by the 
state Independent System Operator, and so it functions independently when the 
ISO orders utilities to impose blackouts. 
Kuehl said the proposal is fair because those businesses were harmed by a 
"geographic quirk," where parts of the park are in DWP territory but they are 
solely an Edison customer. 
"These are already DWP customers," Kuehl said. "They should be able to draw 
all their energy from DWP." 
Other lawmakers are carrying bills for public schools, oil refineries and 
customers in areas where there are extreme temperatures. Sen. Richard 
Polanco, D-Los Angeles, is proposing a law that would ensure municipal 
utilities -- such as his district's DWP -- don't have to participate in 
blackouts. 
Sen. Debra Bowen, D-Marina del Rey, chairwoman of the Senate energy 
committee, said the state has to realize that not everyone can be exempt. 
"All these bills that seek to put one group of folks in a better position 
than someone else do is Balkanize the issue," Bowen said. "Unfortunately, 
instead of having people come together to try and share the pain equally, 
we're seeing folks rushing for their own lifeboat without regard for who gets 
thrown overboard in the process." 

The Bee's Carrie Peyton can be reached at (916) 321-1086 or 
cpeyton@sacbee.com. 




Sempra chief: County may fare OK on outages 



By Kristen Green 
UNION-TRIBUNE STAFF WRITER 
May 31, 2001 
San Diego County may be more insulated from blackouts this summer than the 
rest of the state, the chief executive officer of Sempra Energy said 
yesterday. 
Stephen Baum said power supply shortages aren't as profound in Southern 
California, in part, because the capabilities for importing energy are 
better. 
And that might mean Northern Californians will face more days in the dark 
than San Diegans over the next three months, he said. 

In a lecture at University of California San Diego yesterday, Baum, who 
oversees San Diego Gas & Electric's parent company, said the state will 
probably have at least 30 days of rolling blackouts this summer, an estimate 
often repeated by other energy experts. 
But Baum hopes to limit San Diego County energy outages by introducing a 
rolling blackout reduction program. Sempra is asking the state to support the 
program, which would give San Diego County credit for the energy that 
businesses contribute to statewide energy supplies when electricity reserves 
drop dangerously low. 
Local companies would turn on generators as the state nears blackouts, which 
would make more energy available. In return, Sempra asks that the state 
reduce the number of households that would be blacked out in San Diego 
County. The state Public Utilities Commission has not considered the idea 
yet. 
State officials, however, have suggested that the program be applied 
statewide. That would mean San Diego County businesses that run generators 
would contribute to the state's energy supply, but the number of local 
residents impacted by blackouts would not shrink. 
During the afternoon lecture, attended by about 30 UCSD students and 
visitors, Baum acknowledged the significance of President Bush's visit 
Tuesday but said he disagrees with Bush's opposition to price caps. 
And he expressed frustration that a resolution seems so far off. 
"I see no leadership in this issue," he said. 
The lecture was sponsored by the Irwin and Joan Jacobs School of Engineering, 
the Graduate School of International Relations & Pacific Studies, and the 
Center for Energy Research. 







'Plan B' gains key support in Assembly 



Lawmakers also want state costs on energy to be fully disclosed
By Ed Mendel?
UNION-TRIBUNE STAFF WRITER 
May 31, 2001 
CALIFORNIA'S POWER CRISIS 

SACRAMENTO -- Assembly Democratic leaders have decided to back an alternative 
to Gov. Gray Davis' plan to keep Southern California Edison out of bankruptcy 
that places less emphasis on state purchase of the Edison transmission 
system. 
The long-awaited "Plan B" from Assembly Speaker Robert Hertzberg, D-Van Nuys, 
is taking shape as legislative leaders are demanding that the governor reveal 
detailed information about state power purchases, which total more than $7 
billion. 
"You can't come to a solution of this problem until you know exactly what the 
Department of Water Resources is spending," said Senate President Pro Tempore 
John Burton, D-San Francisco. 
A Davis spokesman said the administration expects to begin complying with the 
legislators' request soon. But there is a question about whether standard 
confidentiality clauses prevent release of long-term contracts and concern 
that revealing daily purchases would result in higher prices. 
"The governor philosophically wants to release them as soon as possible," 
said Steve Maviglio, Davis' press secretary. "We just want to make sure we 
don't adversely affect our ability to get power at lower cost for the 
summer." 
Reserve power levels dropped yesterday, and the state power grid operator 
declared a Stage 2 alert for the first time in three weeks. The Independent 
System Operator said some power plants were off-line for maintenance and hot 
weather across the state increased demand. Fewer imports were available 
yesterday in comparison to last week. 
Another reason legislative leaders are pushing for a full disclosure of state 
spending on power is to help the Legislature prepare a new state budget for 
the fiscal year that begins July 1. 
"There are many reasons that having very precise numbers in that regard are 
important to Sen. Burton and the speaker," said Assemblyman Fred Keeley, 
D-Boulder Creek, who has been active on the power issue in the Legislature. 
Keeley said disclosure of power spending costs might encourage Republican 
legislators to provide an urgency vote allowing the prompt sale of a bond of 
up to $13.4 billion to repay the state general fund for the power purchases. 
Without an urgency vote the state cannot begin issuing the massive bond 
before late August, nearly two months into the new fiscal year. The bond 
would be paid off by ratepayers over 15 years. 
In addition, said Keeley, detailed information about state spending might 
also lead to an agreement on legislation sought by Republicans that would 
allow "direct access" purchase of electricity, where businesses and other 
consumers contract with generators and marketers. 
The state began buying power for utility customers in January after a failed 
deregulation plan, which froze customer rates as power costs soared, resulted 
in a combined $13 billion debt for Edison and Pacific Gas and Electric and 
left them unable to borrow. 
After PG&E went into bankruptcy in early April, Davis quickly completed a 
memorandum of understanding to purchase the Edison transmission system for 
$2.76 billion as part of a plan to keep Edison out of bankruptcy and able to 
resume buying power for its customers by the end of next year. 
But Republican legislators immediately opposed the state purchase of the 
transmission system. Democratic legislators think the plan is too generous 
for Edison and are reluctant to approve what consumer groups have called a 
"bailout" of the utility. 
Burton said that before legislators can evaluate an alternative to the 
governor's plan they need to know how much the state power purchasing agency, 
the Department of Water Resources, is spending and how much money has been 
committed for the future. 
"Until we can find that out it's kind of tough to plan," Burton said. 
Speaker Hertzberg has asked Keeley and senior Assembly staff members to 
prepare the documents for an alternative to the governor's plan that 
Hertzberg is expected to propose in a few days. 
"The transmission purchase is not featured as prominently as it was in the 
governor's proposal," Keeley said. 
One of the options considered by the Assembly Democratic "Plan B" group was a 
proposal by Assemblymen John Dutra of Fremont and Joe Nation of San Rafael 
that would give the state the option of purchasing the Edison transmission 
system for $1.2 billion within five years. 
A key part of both the governor's plan and the Dutra-Nation proposal is 
giving Edison part of the revenue from monthly utility bills, a "dedicated 
rate component," that could be used to pay off Edison's debt and allow the 
utility to resume buying power. 
Both plans also would require Edison to make other concessions, including 
providing low-cost power and the return of a $400 million tax refund that 
Edison gave to its parent firm. Generators would be asked to forgive 30 
percent of what they are owed. 
Assembly Republicans said last week that what the state should receive in 
exchange for aiding Edison is not the transmission system, but an agreement 
that Edison would build new power plants to provide low-cost power.






FERC boss unfazed by Davis' lawsuit threat 



Court has dismissed similar action already
By Toby Eckert 
COPLEY NEWS SERVICE 
May 31, 2001 
WASHINGTON -- The head of the Federal Energy Regulatory Commission said 
yesterday he is confident the agency would prevail in a legal battle with 
California Gov. Gray Davis over electricity price controls. 
"I feel good about our chances," said FERC Chairman Curtis Hebert, citing a 
federal court's decision Tuesday to dismiss a similar lawsuit filed by 
California legislative leaders. 
Davis has threatened to sue the FERC for allegedly failing to meet its legal 
obligation to ensure that wholesale power costs are "just and reasonable." 
Such a move would be the latest escalation in Davis' running battle with the 
agency over its response to California's power crisis. 
"I think the 9th Circuit (federal appeals court) made very clear that the 
commission is doing its job appropriately," Hebert told reporters. 
A three-judge panel of the San Francisco-based court rejected a suit by 
California Senate President Pro Tempore John Burton and Assembly Speaker 
Robert Hertzberg that sought to force the FERC to impose wholesale price 
controls. The court said the lawmakers "have not demonstrated that this case 
warrants the intervention of this court." 
Davis says his administration has laid a firmer legal foundation for a 
lawsuit by first pursuing administrative remedies at the FERC. Several state 
agencies made a flurry of filings with the commission last week, asking it to 
crack down on wholesale prices that have increased tenfold over the past 
year. 
"The (legislative leaders') lawsuit was thrown out .?.?. because there wasn't 
a preliminary filing with FERC asking for the relief that the plaintiffs went 
into court to seek," Davis said Tuesday. "We have made such filings as 
recently as Friday. .?.?. So we have to give them some time to review that 
information." 
But legal experts said the state may have a tough time building a successful 
case against the FERC. 
Federal statutes generally "give a great deal of discretion to agencies in 
carrying out their duties," said Peter Shuck, an expert in regulatory policy 
at Yale Law School. "So it would be very hard for the state to prevail." 
Hebert and fellow Commissioner Linda Breathitt have rejected the firm price 
controls sought by Davis, overruling Commissioner William Massey, who favors 
them. 
Hebert says the commission has taken steps to lower wholesale power prices in 
California and punish price gouging. He cites $125 million in refunds 
recently ordered by the agency and a "price mitigation" plan that went into 
effect Tuesday. 
The plan will use a complicated formula to set a price ceiling for power 
sales during severe shortage periods. Generators breaching the limit will 
have to justify their prices to the FERC or pay refunds. 
Davis and other critics say the plan is riddled with loopholes and will bring 
little relief to the state. They also say the refunds ordered by the FERC to 
date fall far short of the billions of dollars in overcharges the state has 
endured. 
Meanwhile, a spokesman for the California Independent System Operator, which 
controls most of California's power grid, said the agency intends to meet a 
Friday deadline for filing comments with the FERC on joining a regional grid 
management organization. The FERC has threatened to revoke the limited price 
curbs if the ISO fails to present a plan for joining the organization. 






Chula Vista names itself a municipal power entity 



Move is latest effort to combat energy crisis
By Amy Oakes 
UNION-TRIBUNE STAFF WRITER 
May 31, 2001 
CHULA VISTA -- The city has declared itself a municipal utility district as 
one possible way to cope with the state's crippling energy crisis. 
The declaration, approved by the City Council on Tuesday, is the city's first 
step in examining the costs and benefits of owning and operating all or part 
of an energy generation and distribution system. 
"It's a fairly simple act in a complex environment," Assistant City Attorney 
Glen Googins told the council. 

The council also approved an energy conservation and strategy plan, which 
outlines eight options for the city to review. The choices, range from 
entering into a fixed-price contract with an energy service provider to 
partnering with a third party, such as Duke Energy, to operate a power 
generation facility. 
The council also voiced concerns about a proposed 62.4 megawatt peak-use 
plant to be built near Main Street. Ramco Inc., which wants to build an 
enclosed gas turbine plant, held a site tour and information meeting Tuesday 
evening. 
If approved by the California Energy Commission, the plant would be 
operational by Sept. 30. 
The city has scheduled its own informational public hearing for residents 
from 6 to 8 p.m. Friday at the Otay Community Center, 1671 Albany Ave. 
Several on the council said another plant could harm the air quality in the 
city because the peak-use facilities primarily use natural gas. 
The city is home to Duke's South Bay facility and has approved plans for a 
49.5 megawatt peak-use plant near Main Street. 
"We think another peaker plant is a little much," Councilwoman Patty Davis 
said yesterday. "I think Chula Vista has done its job." 
Davis said the council had not received any information about the Ramco 
project. She said she learned about the proposal Tuesday before the council 
meeting. 
By naming itself a municipal utility district, the city can consider 
establishing and operating public works for its residents, such as water 
distribution. The decision does not commit the city to providing those 
services. 
The council on Tuesday also approved using $50,000 from its traffic signal 
fund to install backup battery power supply packs and light emitting diodes 
at 55 intersections. The battery packs will ensure that the traffic lights 
will function if the area is subject to a rolling blackout.






Circuit breaker 



Giddy investors in the power trade get their wires crossed
By Brad Foss 
ASSOCIATED PRESS 
May 31, 2001 
NEW YORK -- Investors in power companies who were sipping champagne after 
President Bush unveiled his national energy strategy got a bad case of the 
hiccups when Democrats regained control of the Senate. 
Shares of companies that trade power climbed higher in the days following the 
release of the Bush plan. They've been sliding since Sen. James Jeffords of 
Vermont defected from the Republican Party, and Wall Street analysts say 
perceptions about the fate of the Bush plan are definitely a factor. 
"The energy bill was so favorable it almost seemed like (power companies) got 
everything they would have asked for," said Barry Abramson, utility analyst 
at UBS Warburg. "Now it looks like everything is going to be more difficult 
to achieve, but not impossible." 
The Bush plan seeks to give oil and gas drillers easier access to public 
lands, to speed up the review process for refinery and power plant expansions 
and spur renewed interest in nuclear power. 
Shares of Calpine, Dynegy, Mirant and San Diego-based Sempra Energy, climbed 
between May 16 and May 21 -- the time between the release of the Bush plan 
and reports of a Senate shake-up. 
These stocks began to descend May 23, when Sen. Jeffords announced he was 
leaving the GOP, and have continued downward, with Calpine and Dynegy losing 
13 percent, Mirant off 17 percent and Sempra Energy down more than 4 percent. 
Still, analysts say investors might be overreacting. 
"Despite the fanfare following the unveiling of President Bush's energy plan, 
we believed its chances of passage -- even with a Republican majority -- was 
slim at best," said Daniel Ford, head of a team of energy analysts at Lehman 
Brothers. "With Jeffords' move, the effort may be even more remote, but the 
most likely outcome, inaction, has not changed." 
Ford acknowledged that talk of capping wholesale electricity prices for 
California has resurfaced in the Senate, though he dismissed the likelihood 
of this happening -- even with a Democratic majority -- because "Bush still 
has veto power and, to date, has been steadfastly against caps." 
Democrats no doubt will emphasize conservation more than Republicans would 
have, but the momentum shift in the Senate will not be overly dramatic, 
according to Bill Breier, vice president of the Edison Electric Institute, a 
Washington-based group that represents utilities. 
But other experts note how quickly political positions could shift if Western 
power markets suffer the kind of meltdown San Diego experienced last summer. 
During that crisis, power bills quickly tripled, costs were passed directly 
to electricity consumers and even the most conservative local Republican 
leaders called for an end to the open market and a cap on wholesale 
electricity prices. 
There still will be fierce battles over efforts to relax power plant 
emissions -- a Bush proposal that would benefit coal burners -- and proposals 
to expand the nation's electricity and natural gas infrastructure. 
"There's going to have to be consensus and we've known that from the get-go," 
Breier said. 
Analysts emphasized that it would be wrong to assume that much of the Bush 
energy plan is now dead-on-arrival with Democrats in control of the Senate. 
For instance, attention has been given to the fact that Sen. Jeff Bingaman, a 
Democrat from New Mexico, will take over as chairman of the Senate Energy and 
Natural Resources Committee, replacing Sen. Frank Murkowski of Alaska. 
Bingaman, however, supports legislation critical to the nuclear power 
industry, including the Price Anderson Act, a 1957 law set to expire in 2002 
that limits corporate liability from a nuclear accident. 
Other energy strategies favored by Bush, such as the deregulation of 
electricity markets and the construction of 1,300 power plants over the next 
20 years, will not be affected by the Senate overhaul simply because their 
implementation is heavily dependent on state government, not federal, said 
Ray Niles, who analyzes the power and natural gas industries for Salomon 
Smith Barney. 
"I don't think it makes a huge amount of difference," Niles said. "Things 
like increasing drilling were going to be a hard haul for the country 
anyway." 
Staff writer Craig D. Rose contributed to this report. 







After months of pressure, mayor agrees on power plant 



By Brian Bergstein
ASSOCIATED PRESS 
May 31, 2001 
SAN JOSE ) After months of pressure, Mayor Ron Gonzales has dropped his 
opposition to a proposed large power plant in southern San Jose. 
In a crowded news conference in his office Wednesday, Gonzales announced his 
staff had negotiated important concessions from the companies that want to 
build the $400 million Metcalf Energy Center ) Calpine Corp. and Bechtel 
Enterprises Inc. 
The companies agreed to donate $6.5 million to community programs, offer 
long-term power contracts at below-market rates to San Jose businesses and 
take extra steps to keep the plant's pollution levels down. 
"We came to the conclusion this power plant was on its way to San Jose, and 
we needed to do everything we could to use our leverage to make this the best 
facility we could," Gonzales said. "We worked hard to make this plant better 
for the people of San Jose." 
Gonzales and the entire City Council in November voted against the 
600-megawatt Metcalf plant on the grounds it would be too close to 
residential areas. 
But as California's energy crisis deepened, Gonzales' position became 
increasingly unpopular. Gov. Gray Davis, state representatives, county 
supervisors and the Sierra Club called for the plant to be built. 
The decision on whether the plant will be built now rests with the California 
Energy Commission, which did not return a call for comment Wednesday. The 
agency, which is expected to vote this summer, could have approved the plant 
even without Gonzales' support. 
But Gonzales said the city still "could have made it difficult" by refusing 
to extend San Jose's recycled water line to the plant. Calpine and Bechtel 
agreed to pay for part of the extension. 
Peter Cartwright, president and chief executive of San Jose-based Calpine, 
also said Gonzales' support was important. 
"We didn't want a situation where the Energy Commission overruled the city," 
Cartwright said. "We have to live here." 
Construction on the natural gas-fueled plant could begin this summer, meaning 
it could start generating enough electricity for 450,000 homes in 2003. 
The Metcalf plant would be built in the Coyote Valley, one of the city's last 
remaining chunks of open space. The plant has been opposed by Internet 
equipment maker Cisco Systems Inc., which plans to build a $1.3 billion 
office complex nearby. A Cisco spokesman did not return a call for comment 
Wednesday. 
Members of the Santa Teresa Citizen Action Group, based in a neighborhood 
near the proposed plant, said the mayor failed to win any significant 
environmental concessions on the Metcalf plant. The group's president, 
Elizabeth Cord, said she will go to court to block the plant if necessary. 






Panel OKs weakened utility district bill 



By Ed Mendel 
UNION-TRIBUNE STAFF WRITER 
May 30, 2001 
SACRAMENTO -- A watered-down bill originally intended to create a San Diego 
County municipal utility district was approved by an Assembly committee 
yesterday after San Diego Gas & Electric dropped its opposition. 
The committee rejected a bill last week authorizing the creation of a new 
municipal utility district. The new version of the bill simply expresses the 
"intent" that the county, cities and special districts cooperate to obtain a 
stable source of low-priced power. 
The author, Assemblyman Mark Wyland, R-Escondido, pledged to bring the bill 
back to the committee for final approval after attempting to negotiate 
agreements in the Senate on the operation, governing and public approval of a 
proposed new agency. 

"What we are really asking for today is to let this proceed out of this 
committee, because we do need to address many, many, many of the issues that 
were raised and then have the bill come back to this committee for its final 
working," Wyland told the committee. 
Wyland said he hopes to negotiate a bill that would allow the new agency to 
obtain cheap long-term power contracts, possibly by forming groups of 
customers that could purchase power directly from generators or marketers. 
He said the agency might also generate some power through San Diego County 
Water Authority hydroelectric facilities or by purchasing the South Bay plant 
in Chula Vista, which is owned by the San Diego Unified Port District and 
operated by Duke Energy under a lease. 
One thing the new agency would not be doing is using the public power of 
"eminent domain" to force SDG&E to sell any of its property. An SDG&E 
lobbyist said the utility dropped its opposition after it was made clear that 
the proposed new agency would not have the power of eminent domain. 
Wyland said he thought the original version of the bill was rejected by the 
committee partly because SDG&E "felt burdened" and partly because committee 
members thought it might influence attempts to create municipal utility 
districts in other areas of the state. 
Advocates of municipal utility districts say they have historically provided 
cheaper power than investor-owned utilities. The Los Angeles Department of 
Water and Power has continued to provide low-cost power to its customers 
during the current electricity crisis. 
A proposal to create a new municipal utility district may appear on the 
ballot in San Francisco this fall. Backers of the San Diego proposal 
initially wanted to create a new district without a vote of the people, 
hoping to quickly get cheaper power. 
Now legislators have made it clear that a vote of the people will be 
required. But there is a dispute over whether approval should require a 
majority vote or a two-thirds vote, as urged by some Republicans who think 
the proposed new agency might be able to raise taxes. 
Wyland said that even if the legislation is approved this year, getting a 
detailed proposal ready for the ballot next March may be difficult. Some 
groups in Escondido and San Marcos have been talking about creating municipal 
utility districts in those cities. 
Jim Madaffer, a San Diego city councilman, told the committee that he 
believed the bill could allow streamlining and efficiencies and other steps 
that SDG&E might find beneficial. 
"It's on that premise that I am here today," Madaffer said, "and I believe 
also that SDG&E is now allowing it to move forward." 
Madaffer was corrected by the committee chairman, Rod Wright, D-Los Angeles, 
who said the committee decides whether bills pass. Madaffer quickly agreed, 
saying he meant to say that SDG&E had dropped its opposition. 
Wright, who opposed the original version of the bill last week, joined in the 
13-to-0 vote for the new measure. 
"You have a lot of work yet to do," Wright told Wyland. 
The committee also approved a bill by Assemblyman Jay La Suer, R-La Mesa, 
that would require the SDG&E "balancing account" debt to be paid off by 
ratepayers over a five-year period. 
Legislation capped SDG&E rates last September at a level far below the 
wholesale cost of power, producing a debt of more than $600 million by last 
month, a sum known as the balancing account. 
An aide said La Suer wants to protect ratepayers from a large "balloon 
payment" due in a short period. The Utility Consumers' Action Network of San 
Diego opposed the bill, arguing that the debt might be lowered by 
negotiations or regulatory action. 
The aide said the bill does not specify the amount of the debt and that La 
Suer is willing to discuss the issue with the consumer group. 







Davis fails to sway Bush on price caps 



Meeting cordial, but president remains opposed to controls
By John Marelius 
UNION-TRIBUNE STAFF WRITER 
May 30, 2001 
LOS ANGELES -- After a weeklong buildup worthy of international summitry, 
President Bush and Gov. Gray Davis met yesterday to discuss California's 
electricity crisis, leaving unresolved their fundamental disagreement over 
the merits of imposing federal price controls to curb soaring utility rates. 
While the meeting between two political rivals was steeped in cordiality, it 
ended with Davis proclaiming he intended to sue the federal government if it 
didn't deliver price relief to California electricity consumers. 
"I am going to pursue every recourse available to me," Davis told reporters 
after the 35-minute meeting. "We will file a lawsuit against the Federal 
Energy Regulatory Commission for failing to discharge its legal obligation." 
While Bush refused to budge on wholesale electricity price caps, Davis said 
he was pleased by one Bush action. The president designated Pat Wood III, 
Bush's first appointee to the FERC, to act as a personal emissary between the 
governor and the regulatory commission's investigation into allegations of 
market manipulation by Texas natural gas distributors who charge California 
three times what they charge New York. 
More than four months into his presidency, Bush yesterday made his first 
public appearances in California as president of the United States. 
The president met with Marines and their families at Camp Pendleton in the 
early morning, then traveled to Los Angeles, where he delivered a speech on 
energy and economic policy to the Los Angeles World Affairs Council. 
Summing up his approach to unpredictable electricity prices and supplies, the 
president said: 
"My administration will continue to work to help California through the 
difficult months ahead. All our efforts are guided by a simple test: Will any 
action increase supply at fair and reasonable prices? Will it decrease demand 
in equitable ways? Anything that meets that test will alleviate the 
shortages, and we will move swiftly to adopt it. Anything that fails that 
test will make the shortage worse." 
The president outlined his opposition to electricity price controls -- a 
stance Democrats have exploited to portray the Bush administration as a 
lackey for profiteering energy companies. 
"We will not take any action that makes California's problems worse. And 
that's why I oppose price caps," he said. "At first blush, for those 
struggling to pay high energy bills, price caps may sound appealing. But 
their result will ultimately be more serious shortages and therefore even 
higher prices." 
An long-distance war of words between Democrat Davis and Republican 
administration officials, particularly Vice President Dick Cheney, has 
escalated in recent weeks over energy policy. 
With Davis two seats away on the World Affairs Council dais, Bush pointedly 
called for an end to the acrimony. 
"For too long, too often, too many have wasted energy pointing fingers and 
laying blame," the president said. "Energy is a problem that requires action 
-- not politics, not excuses, but action. Blame shifting is not action; it is 
a distraction." 
Leading up to yesterday's meeting was a week of posturing by spokesmen for 
the two leaders on seemingly every detail, including who invited whom to the 
meeting in the first place. 
But when the two met -- Bush and Davis are casual acquaintances from their 
briefly overlapping tenures as governors -- the session was, by all accounts, 
as devoid of rancor as it apparently was of productivity. 
"The meeting was cordial, informational, businesslike," Davis said. 
As Davis told it, he even deployed the only remaining weapon in his 
gubernatorial arsenal -- the threat of a lawsuit -- delicately. 
"I said, 'Mr. President, you understand I have to do everything in my power 
to seek relief for the people of this state. You would do the same thing if 
you were in my position,' and he agreed," Davis said. 
Karl Rove, Bush's hard-nosed chief political adviser, also characterized the 
meeting in amiable terms. 
"They did agree on one thing: that California is entitled to price relief," 
Rove told reporters. Of course, he went on, the president's prescription for 
price relief lies in conservation and development of new energy sources, not 
price controls. 
"When the cap was lowered by the administration in California, 3,000 
megawatts of power disappeared from California (to be sold elsewhere)," Rove 
said. 
For his part, Davis contended the Bush administration's free-market economic 
arguments against price caps are beside the point. He maintained federal law 
compels the FERC to guarantee reasonable wholesale electricity prices and 
stabilize wildly fluctuating markets. 
Lawsuits by states against the federal government have little history of 
success. Indeed, a lawsuit against the FERC by Assembly Speaker Bob 
Hertzberg, D-Van Nuys, was thrown out by the 9th U.S. Circuit Court of 
Appeals yesterday just as Davis was threatening another one. 
Davis said the court rejected Hertzberg's suit because it failed to allow 
administrative remedies to be exhausted. The governor said he filed a number 
of motions with FERC seeking rate relief last Friday and would wait 30 days 
or so for those to run their administrative course before proceeding with 
legal action. 
Davis said the total electricity bill in California went from $7 billion in 
1999 to a projected $50 billion this year. He said he reminded the president 
of the potential political disaster facing both of them if the electricity 
situation is not brought under control. 
"I did tell him that if we have to pay $50 billion for power, it could well 
trigger a recession in California, which could drag down the American economy 
into a recession as well," he said. 
Bush was greeted at both stops yesterday by protesters denouncing his energy 
and environmental policies. Three women -- one of them former Green Party 
U.S. Senate candidate Medea Benjamin -- tried to disrupt Bush's World Affairs 
Council speech and were removed from the ballroom. 
Earlier in the day, Davis held a session where several San Diegans told how 
they were affected by soaring electricity costs: YMCA director Michael 
Brunker, Gabriel and Christine Rodriguez of Chiquita's Mexican Restaurant, 
and Cybele Thompson, president of the San Diego Building Owners and Managers 
Association. 
"It may not be as obvious as an earthquake," said Brunker of the Jackie 
Robinson Family YMCA. "But it's hit us in such a way that it's really 
crippling a lot of people." 
Staff writer Ed Mendel contributed to this report. 






Head of FERC confident California suit will fail 



By Toby Eckert
COPLEY NEWS SERVICE 
May 30, 2001 
WASHINGTON ) The head of the Federal Energy Regulatory Commission said 
Wednesday he is confident the agency would prevail in a legal battle with 
California Gov. Gray Davis over electricity price controls. 
"I feel good about our chances," FERC Chairman Curtis Hebert said, citing a 
federal court's decision Tuesday to dismiss a similar suit filed by 
California legislative leaders. 
Davis has threatened to sue the FERC for allegedly failing to meet its legal 
obligation to ensure that wholesale power costs are "just and reasonable." 
Such a move would be the latest escalation in Davis' running battle with FERC 
over its response to California's power crisis. 
"I think the 9th Circuit (federal appeals court) made very clear that the 
commission is doing its job appropriately," Hebert told reporters. 
A three-judge panel of the San Francisco-based court rejected a lawsuit by 
California Senate President Pro Tempore John Burton and Assembly Speaker 
Robert Hertzberg that sought to force FERC to impose wholesale price 
controls. The court said the lawmakers "have not demonstrated that this case 
warrants the intervention of this court." 
Davis says that his administration has laid a firmer legal foundation for a 
suit by first pursuing administrative remedies at FERC. Several state 
agencies made a flurry of filings with the commission last week, asking it to 
crack down on wholesale prices that have increased ten-fold over the past 
year. 
"The (legislative leaders') lawsuit was thrown out ... because there wasn't a 
preliminary filing with FERC asking for the relief that the plaintiffs went 
into court to seek," Davis said Tuesday. "We have made such filings as 
recently as Friday. ... So we have to give them some time to review that 
information." 
But legal experts said the state may have a tough time building a successful 
case against FERC. 
Federal statutes generally "give a great deal of discretion to agencies in 
carrying out their duties," said Peter Shuck, an expert in regulatory policy 
at Yale Law School. "So it would very hard for the state to prevail." 
Hebert and fellow Commissioner Linda Breathitt have rejected the firm price 
controls sought by Davis, overruling Commissioner William Massey, who favors 
them. 
Hebert insists the commission has taken steps to lower wholesale power prices 
in California and punish price gouging. He cites $125 million in refunds 
recently ordered by the agency and a "price mitigation" plan that went into 
effect Tuesday. 
The plan will use a complicated formula to set a price ceiling for power 
sales during severe shortage periods. Generators breaching the limit will 
have to justify their prices to FERC or pay refunds. 
Davis and other critics say the plan is riddled with loopholes and will bring 
little relief to the state. They also say the refunds ordered by FERC to date 
fall far short of the billions of dollars in overcharges the state has 
endured. 
Meanwhile, a spokesman for the California Independent System Operator, which 
controls most of California's power grid, said the agency intends to meet a 
Friday deadline for filing comments with FERC on joining a regional grid 
management organization. FERC has threatened to revoke the limited price 
curbs if the ISO fails to present a plan for joining the organization. 
California's three investor-owned utilities ) Southern California Edison, San 
Diego Gas & Electric and Pacific Gas & Electric ) plan to make similar 
filings. 







Grid managers call Stage 2 alert, but hope to avoid blackouts 



ASSOCIATED PRESS 
May 30, 2001 
SACRAMENTO ) Managers of the state's power grid called a Stage 2 alert 
Wednesday and asked customers to conserve power as temperatures climbed. 
The Independent System Operator said it did not expect blackouts, although 
spokeswoman Stephanie McCorkle said electricity supplies were "obviously very 
tight." 
Higher temperatures statewide were driving up electricity use about 1,200 
megawatts over Tuesday, she said. 
Power plants off-line for repairs and increased power usage caused the 
state's electricity reserves to dip below 5 percent, prompting officials to 
declare a Stage 2. A Stage 3 alert is called when reserves are in danger of 
falling below 1.5 percent and can be followed by rolling blackouts. 







FERC Chief Unfazed By Threat of Third Lawsuit 


By RICARDO ALONSO-ZALDIVAR and JUDY PASTERNAK, Times Staff Writers 

?????WASHINGTON--The beleaguered chairman of the Federal Energy Regulatory 
Commission said Wednesday that he was not fazed by California Gov. Gray 
Davis' threat to sue the agency for failing to cap wholesale electricity 
rates.
?????California officials have gone to the federal courts twice before to 
force FERC to impose price caps, Curt Hebert told reporters. And the U.S. 9th 
Circuit Court of Appeals in San Francisco has twice rejected the suits.
?????Davis, observing that FERC has a legal obligation to ensure that 
wholesale electricity rates are "just and reasonable," threatened to go to 
court again after he failed in a meeting Tuesday to persuade President Bush 
to support caps on wholesale electricity prices.
?????"They've sued us two times and they have been [dismissed] two times," 
Hebert said. "I feel very good about it."
?????Responding to reporters' questions, Hebert also appeared to be unaware 
of media reports that President Bush had asked a rival for his chairmanship, 
Patrick Wood III, to play a special role in dealing with California's 
problems.
?????Wood, a Bush confidant who until now had been chairman of the Texas 
Public Utility Commission, was confirmed by the Senate as a FERC commissioner 
last week and is widely expected to be named to Hebert's job. The president 
can designate any FERC commissioner as chairman without further action by the 
Senate.
?????White House officials said during Bush's visit to Los Angeles on Tuesday 
that Wood would follow up on concerns raised in the president's meeting with 
Davis.
?????Wood said in an interview that he talked briefly with Davis three weeks 
ago and more recently with California PUC President Loretta Lynch. He said 
his charge is vague: to review the entire situation.
?????"I'm looking at short-term things and long-term things," he said, noting 
that he had heard from lawmakers "on both sides of the aisle" complaining 
that FERC had not gone far enough.
?????Wood, who advocates a more activist role for FERC, said he wants to 
monitor how the agency's efforts to limit price spikes in California are 
working and that he might push for changes. Unlike Hebert, he said the 
agency's standard for deciding whether a company has market power--enough 
influence to sway prices--needs to be reconsidered. He said he is also open 
to increasing the amount of rebates ordered to utilities for January.
?????And he said he thought FERC should also take another look at the design 
of California's deregulated market. "Your work never stops," Wood said. "You 
never get there and say, 'We're done.' "
?????California, he added, "is salvageable," though he said blackouts are 
inevitable this summer.
?????FERC itself has acknowledged that California is paying unfair prices for 
electricity, particularly during power shortages. But instead of imposing 
price caps, the agency has instituted a complex system to monitor the market 
and seek refunds from power sellers that overcharge during emergencies.
?????A majority of FERC's governing board believes that price caps would 
deter investors from building new power plants in California, thereby 
complicating efforts to increase energy supplies. Price caps "would destroy 
what is left of California," Hebert said Wednesday.
?????State officials disagree.
?????With California paying as much as $1,900 per megawatt hour to avert 
blackouts earlier this month--five times the current market price--state 
officials argue that FERC's approach is no deterrent and that the agency has 
a legal obligation to impose price caps.
?????Davis and others contend that temporary controls would bring order to 
the power markets and prevent further damage to California's economy. They 
point out that the energy industry operated efficiently under government-set 
rates until the recent onset of deregulation. 
?????But the courts have held that FERC has wide latitude in fulfilling its 
obligations under federal law.
?????In an April 11 decision denying a petition for relief by the city of San 
Diego, a 9th Circuit panel ruled that the same law that gives FERC authority 
to impose price caps also allows it to pursue alternatives.
?????On Tuesday, the same court dismissed a petition from state Senate leader 
John Burton, citing its earlier decision in the San Diego case.

Copyright 2001 Los Angeles Times 






The Home Energy Drain 
How Appliances Draw Electricity, Even When Off 

By DAVE WILSON, Times Staff Writer 

?????When devices such as stereos are turned off, we think of them as dead. 
But it turns out they're only mostly dead. And mostly dead is a little bit 
alive.



Graphic: Standby power consumption of common appliances. 

?????For instance, have you ever wondered how a television set can understand 
the "power on" command from the remote control if the TV isn't using any 
power at all? The fact is nearly all television sets--in fact, most home 
appliances--use power as long as they're plugged in to a live electrical 
outlet, if only to receive and interpret remote control signals or keep the 
little clock running.
?????All those little trickles of electricity can add up to a steady stream 
of juice that users end up paying for--power that's being drained from a 
system that can't meet the state's needs as California enters a summer of 
rolling blackouts and rising power bills. Plus, the delicate electronic 
circuitry that makes our favorite gizmos work can be damaged when the power 
flow abruptly stops and starts.
?????Researchers refer to this sort-of-off-but-sort-of-on condition as 
"standby power" and say the drain on the electrical supply is 
significant--and continuing to rise.
?????"When you add up all these things like TVs and VCRs, it looks like 
standby use in California is almost 10% of the residential use of 
electricity," said Alan Meier, staff scientist at the Berkeley Laboratory and 
an internationally recognized expert on the phenomenon of standby power drain.







Shopping for a Surge Supressor
Fluctuating power levels can cause damage under certain conditions to devices 
that draw power all the time. One tactic to prevent damage is using a surge 
supressor.
 When shopping for a surge suppressor, the key number is the maximum level 
of electricity that will be let through in case of a surge. This number is 
referred to as, depending on the marketing guys behind the product, "clamping 
voltage," "let-through voltage" or "voltage rating." The lower the number, 
the better.
 Right now, the best rating you can get is a surge suppressor carrying the 
UL inspection seal certifying that it's met the 1449 standard and a clamping 
voltage rating of 330 volts.
Also, look for suppressors with a 1-nanosecond response time or less; 
cheaper suppressors take longer to respond to a spike, which can be too late 
to protect your components.

-- DAVE WILSON


?????The cost of this drain probably isn't especially onerous to most 
consumers. Leaving your answering machine plugged in all the time, for 
instance, will cost you about 37 cents a month, assuming you're paying about 
17 cents a kilowatt-hour.
?????The total cost of standby power probably is in the neighborhood of $100 
a year per household at current rates, though that figure will rise as 
electricity becomes more expensive. Though that's not a vast sum to many 
people, reducing electricity usage is critical to maintaining a steady power 
supply in California.
?????The difference between a Stage 2 power emergency and Stage 3--the point 
at which rolling blackouts kick in--is only 3.5% of total reserve electrical 
capacity. So cutting back on that leaking 10% in homes can make the 
difference.
?????Not all the standby power is wasted. An answering machine is pretty 
useless if it doesn't have access to power all the time since part of the 
device's job is to be primed to pick up the phone if it should ring. It's 
those other devices, such as the microwave oven clock that pulls power even 
though nothing's being cooked, that are the problem. All devices that use 
standby power could be designed to use as little electricity as possible.
?????Standby power drain is getting worse as more of the items we have in our 
homes move from mechanical switches and timers to electronic controls. The 
typical household today uses 7,000 kilowatt-hours of power each year.
?????Overall, residential consumption of power has risen 17.6%, from 68,000 
gigawatt-hours in 1990 to an estimated 80,000 gigawatt-hours, according to 
the California Energy Commission. Even when adjusted for population growth, 
Californians use more power than they did 10 years ago--despite the fact that 
household appliances got more energy efficient.
?????One reason: We've got a lot more energy-gobbling devices in our homes. 
For instance, Fred Johnson, who works in Silicon Valley's high-tech industry, 
has three TVs, each with a DVD player. He's also got two TiVo digital 
recorder boxes, four computers and two stereo systems.
?????"Fortunately, it's not all on simultaneously," he said.
?????Another reason for the increase in power draw is a simultaneous increase 
in the number of devices that are always on. For instance, older microwave 
ovens used a mechanical timer, which means the device didn't draw power 
unless the oven was actually heating something up. Newer ovens use electronic 
touch pads and digital clocks, both of which require a steady stream of 
power. Part of the reason for the shift was interest in reliability; 
mechanical switches wear out or need maintenance, whereas electronic controls 
are generally service free.
?????Those digital controls are showing up in things such as stoves, 
dishwashers, washers and dryers, which means these devices also leak 
electricity even when they're not actually working.
?????Some devices are so badly designed that they generally use as much 
electricity when they're theoretically off as when they're on, Meier said. 
"The set-top boxes for cable and satellite television broadcasts are good 
examples," he said. Manufacturers aren't under any pressure to improve the 
design of electronic components in the home because there's no financial 
incentive for them to do so.
?????Consumers wind up paying the price.
?????"We think there are typically 20 devices in a home that are consuming 
standby power," Meier said. "In the average home in California, standby power 
is somewhere around 500 kilowatt-hours a year. And some users are paying 20 
cents a kilowatt. So that's about $100 a year for appliances that aren't 
actually doing what you bought them for." 
?????That hundred bucks during the course of a year might seem a pretty small 
price to pay for the ability to change the music coming out of the CD player 
without having to lever yourself off the couch.
?????But even if it does bother you, there's not a lot you can do, short of 
unplugging devices when they're not in use. Sometimes unplugging a device 
isn't practical, though, because many components will lose information stored 
in them if the power goes out. Your radio might forget its presets, your VCR 
will lose the time and some TVs will have to be reprogrammed with the local 
television stations available. ?????On a fundamental level, this is an issue 
that has to be addressed by electronics manufacturers, who, until now, 
largely ignored the issue. Meier has been leading a fight during the last 
couple of years to get manufacturers to build devices that use standby power 
more efficiently, to keep that functionality but make better use of 
electricity.
?????"Some of these devices draw 15 or 20 watts," Meier said. New designs can 
reduce that flow to 1 watt, but few manufacturers have shown enthusiasm for 
the goal. That might change as governments put pressure on manufacturers. 
Australia, for one, recently endorsed the goal of 1-watt standby drain for 
all appliances. 
?????In addition, there is some concern that, under certain conditions, 
devices that draw power all the time could be slightly more vulnerable to 
damage caused by fluctuations in the power supply than devices that are 
completely powered down.
?????If that's true, it makes such things as surge suppressors and 
uninterruptible power supplies even more important to consumers at a time 
when rolling blackouts are expected to become a regular occurrence.
?????Surge suppressors are designed to choke off a spike of electricity 
before it can reach your valuable components and damage them. Typically, a 
lightning strike a mile or so away can flow down electric, telephone or cable 
television wires and fry any component connected to the line, such as a home 
computer. The surge suppressor intercepts that overload.
?????These surges can occur in many different situations, such as apartment 
buildings where large motors--for instance, those used in air conditioners 
and elevators--routinely go on and off.
?????"Any time the power goes off and goes back on again, that's a tremendous 
hit on the electrical system, and that can cause surges," said John 
Drengenberg, an electrical engineer who's manager of global consumer affairs 
for Underwriters Laboratories, the nonprofit testing organization. "I think 
maybe right now in California, in particular, installing transient voltage 
surge suppressors would be a good idea."
?????Surge suppressors don't help at all with a brownout, which is an 
insufficient flow of electricity through the wires.
?????Brownouts are most often caused by things such as a squirrel shorting 
out a line and can be identified by suddenly dimmed lights. Low voltage can 
seriously damage appliances that use motors--such as refrigerators and air 
conditioners--so if the lights go dim and stay dim, unplug such appliances 
until the power company makes repairs.
?????Items that use electricity to create heat or produce light will continue 
to function with little chance of damage; they just won't get as hot or be as 
bright.
?????Some devices, such as computers, will get trashed by low power or sudden 
loss of power, especially if the power fluctuates while the system is writing 
data to the hard drive. Computers should be turned off using the standard 
shutdown procedure for their particular make and model to avoid corruption of 
the operating system, which can create lots of headaches for users.
?????To avoid that, consider an uninterruptible power supply, basically just 
a system of rechargeable batteries that's always plugged in to the electrical 
outlet. Plug the components into the UPS, and if the voltage on the line 
drops or disappears, the juice flows from the batteries to the device.
?????Many of these systems also come with surge suppressors built in as well, 
protecting equipment from both too much and too little electricity. A 
high-end consumer UPS costs less than $200.
?????Most of these systems are designed to safely power down a computer in 
the event of a power outage. They won't provide enough juice for more than a 
few minutes on a standard desktop computer.
?????And of course, the debate about whether some conservation efforts have 
diminishing returns continues. Turning off your computer reduces electricity 
consumption, but repeatedly turning the computer off and on can stress the 
electronic circuitry, which could cause it to fail sooner.
?????Devices that are pulling down considerably less electricity might eke 
out an hour or two on a UPS. If you find yourself growing increasingly 
annoyed at having to reset the clock on the VCR or microwave, a 
consumer-level UPS might provide enough stored power to get you through a 
blackout that lasts an hour or two.
?????Don't plan on watching TV or making popcorn. We're talking strictly 
about keeping the clock on line, although most people probably won't be 
interested. "Spending $150 because you don't want to set the clock on the VCR 
probably won't be very appealing to many people," said James Little, a 
spokesman for Belkins Components, which makes such devices.
?????And there's no such thing as a free lunch. UPS systems are also a drain 
on power. It costs money to keep the batteries charged in preparation for the 
blackout. So don't look to a UPS as a solution to conservation.
?????What you can do is plug components that can safely be completely shut 
down into a surge suppressor and kill the power to that surge suppressor when 
you're not using them.
?????For instance, think about running all the power cords for every 
component that makes up your stereo system--amplifier, CD player, DVD 
player--into a single power strip equipped with a surge suppressor. Most 
surge suppressors have a kill switch, a button that will cut off all power to 
the devices plugged into it.
?????Hit the switch and make those components more than mostly dead.

* * *
?????Dave Wilson is The Times' personal technology columnist.

Copyright 2001 Los Angeles Times 







Heat's on, but so are lights 
100-degree temperatures aren't widespread, sparing the grid 
Matthew B. Stannard, Carolyn Said, Chronicle Staff Writers
Thursday, May 31, 2001 
,2001 San Francisco Chronicle 
URL: http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2001/05/31/MN206011.DTL 

Thermometers reached triple digit records around the Bay Area yesterday, 
feeding several fires and challenging, but not quite breaking, the state's 
power grid. 
The sweltering heat was caused by a huge dome of hot air that blocked the sea 
breezes that normally keep the Bay Area comparatively cool this time of year. 
National Weather Service forecasters said the high pressure system, centered 
over Nevada, should head east today and allow temperatures to return to 
somewhere near normal by tomorrow. 
The short duration and highly localized nature of the heat wave -- 
concentrated mainly in Central and Northern California -- kept it from adding 
much to the state's energy woes, said Stephanie McCorkle, a spokeswoman for 
the Independent System Operator, which oversees the state's power grid. 
"Those are the kinds of heat waves that we like: the type that are isolated 
to one area." 
Yesterday presented California's grid operators with a better scenario than 
two weeks ago, when more-pervasive hot weather and numerous plant service 
interruptions set off two days of rolling blackouts. 
While no rolling blackouts were ordered, the ISO declared a Stage 2 energy 
alert at 2 p.m., asking customers to conserve power as temperatures climbed 
and the state's energy reserves dipped below 5 percent. 
Aiding yesterday's situation was the availability of more power plants in 
service than during the May 7 and May 8 blackouts. About 14,400 megawatts of 
power generation -- one-third of the state's capacity -- were offline for 
repairs and other reasons on May 7 and 8, while yesterday the figure was 10, 
700 megawatts out of service. 
Meanwhile, downtown San Francisco melted as the thermometer hit 101 degrees, 
higher than any day in May since at least 1914. Not quite the city's all-time 
high of 103, but close enough to drive some people out of the city 
altogether. 
FLEEING HOT S.F.
Sonafman Allah, 22, drove to Lake Temescal in Oakland with his friends Nabila 
Suleiman, 20, and her sister, Saida, 19. 
"It's a quick little getaway from San Francisco," Allah said, relaxing on a 
blanket spread under the shade of a tree. 
But Oakland was pretty hot, too. Temperatures at the airport hit 94, the 
hottest May 30 since 1978. May 30 records were also shattered in San Jose, 
where the mercury hit 100; San Rafael, which saw 99; Santa Cruz, where 
surfers sweltered in 92 degree heat. 
Redwood City, at a record 101, was hot enough to make John Handley loath to 
leave his nicely air-conditioned Office Depot delivery truck. 
"I stay in there as long as I can," Handley said, hustling a cart of office 
supplies across the steaming concrete into San Mateo County's Hall of 
Justice. 
FIREFIGHTERS HAMPERED
Elsewhere in the state, the heat and low humidity hampered thousands of 
firefighters. 
An early morning fire near the Sonoma-Napa county line quickly built to a 
100-plus acre blaze and was battled by 30 engines, five bulldozers, and 11 
hand crews from state and local fire stations. Fire officials are still 
investigating the cause. 
The fire, near Kellogg, had imperiled some homes in the early part of the 
day, but the threat abated by 12:30 p.m., according to Mike Parkes of the 
California Department of Forestry. It was fully contained last night. 
Nearly 250 miles away, near Susanville, more than 1,900 firefighters were on 
the scene of a 4,346 acre fire yesterday, and officials said they hoped the 
blaze, fed by heat and strong winds, would be contained by 6 p.m. today. 
Investigators believe that the fire was caused by target shooting near 
Williams Creek and have cited a man they identified as William Bushey for 
allegedly sparking the blaze. The cost of suppressing the fire so far has 
been $3.1 million, and $2.5 million in timber has been lost, fire officials 
estimate. 
SUISUN CITY BLAZE
And late yesterday, the Solano County Sheriff's Department reported a 75- 
acre fire burning out of control near Suisun City. It was being battled by 
volunteers and its cause is under investigation. 
The good news, forecasters said last night, is that the heat spell should 
prove short-lived: temperatures in San Francisco should collapse back into 
the 80s today, and inland cities should see relief by tomorrow. 
Chronicle staff writers Suzanne Herel, Pamela J. Podger and Pia Sarkar 
contributed to this report. / E-mail the writers at mstannard@sfchronicle.com 
and csaid@sfchronicle.com. 
,2001 San Francisco Chronicle ? Page?A - 1 



Municipal utilities warned 
Governor says he'll seize excess electricity if prices don't come down 
David Lazarus, Chronicle Staff Writer
Thursday, May 31, 2001 
,2001 San Francisco Chronicle 
URL: http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2001/05/31/MN154796.DTL 
Sacramento -- Gov. Gray Davis threatened last night to seize excess power 
generated by California's municipal utility districts, which he said have 
charged even higher electricity prices than out-of-state generators. 
Davis said in an interview with The Chronicle that some municipal utility 
districts have charged the state as much as 10 percent more than the average 
wholesale cost demanded by private power companies. 
The governor's tough talk came as California suffered through a Stage 2 power 
alert and faced the prospect of a long, hot summer of rolling blackouts and 
skyrocketing electricity prices. So far this year, the state has paid more 
than $8.2 billion to buy power for its cash-strapped utilities. 
In a variation on his threat to seize power plants from out-of-state 
generators if they continue gouging California ratepayers, the governor said 
he would use his executive powers to claim excess juice from the locally 
owned utilities if they do not lower their prices. 
He said he is ready to go to court if they offer resistance. 
"We're going to get that power one way or another," Davis said. 
Municipal utilities are city-owned power companies. In Northern California, 
there are municipal utilities in Alameda, Palo Alto, Redding, Sacramento and 
Santa Clara. Los Angeles has the largest municipal utility in the state. 
30 DAYS TILL CONTRACT DETAILS 
For the first time, the governor also gave a time frame for releasing details 
of more than 40 long-term electricity contracts California is signing with 
generators since the financial meltdown of the state's two biggest utilities. 
He said that after about six more contracts get nailed down, he expects full 
details to be made available within 30 days. 
Although the contracts involve nearly $40 billion in public funds, Davis and 
other state officials have adamantly refused to divulge their contents, 
insisting that secrecy is needed to remain competitive during negotiations. 
The Chronicle and other media outlets have filed suit for access to the 
contracts, arguing that the public has a right to know how its money is being 
spent. 
RUDE AWAKENING
While going toe-to-toe with the out-of-state generators, the last thing Davis 
needed was for municipal utilities -- the home team, as it were -- to emulate 
the Texas big boys and dig deep into California's pockets. 
Yet the governor's negotiators have been struggling for weeks to convince 
municipals that they are obliged to provide power at cost -- which Davis 
insisted they are required to do by law. 
He met last week with the heads of a dozen municipal utilities and told them 
explicitly that he would not tolerate gouging from within the state as 
California faces a summer of potential blackouts. 
The governor said after the meeting that the municipals had agreed "to make 
most of their excess power available this summer . . . at prices 
significantly lower than those being charged on the spot market." 
Apparently, however, little progress has been made since that declaration. 
Davis told The Chronicle last night that he is still "trying very hard to 
promote this notion that we're all in this together." 
While unwilling to specify which municipal utilities have been most 
aggressive in their pricing, and refusing to place a dollar amount on how 
much the utilities charged, Davis said he is prepared to seize up to 800 
megawatts of output if the they do not change their ways. 
Eight hundred megawatts is enough power to light about 800,000 homes. 
Representatives of the various municipal utilities could not be reached for 
comment, nor could a spokesperson for the California Municipal Utilities 
Association in Sacramento. 
"I told them that they will either (reduce their prices) voluntarily or 
involuntarily," the governor said. 
UNCERTAIN FUTURE
It remains to be seen, however, whether the municipal utilities will play 
ball. To date, they have shown a firm inclination to go their own way. 
In March, Lodi's municipal utility district and a Northern California 
municipal utility cooperative that includes Palo Alto, Santa Clara and 
Alameda told Pacific Gas and Electric Co. that they will not participate in 
rolling blackouts during power shortages. 
"I won't arbitrarily screw my customers . . . so 5,000 PG&E customers can 
turn on their lights somewhere else," said Alan Vallow, director of the 
utility serving Lodi's 58,000 residents. 
E-mail David Lazarus at dlazarus@sfchronicle.com. 
,2001 San Francisco Chronicle ? Page?A - 1 




Regulators want state trade-off for caps 
Davis asked to give up control of power lines 
Bernadette Tansey, Chronicle Staff Writer
Thursday, May 31, 2001 
,2001 San Francisco Chronicle 
URL: http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2001/05/31/MN221412.DTL 
California's testy relationship with federal energy regulators could turn 
into a showdown tomorrow, when state power officials must decide whether to 
surrender some control over the state's electricity market or risk losing 
limited price curbs that kicked in this week. 
In agreeing last month to set flexible caps to restrict price gouging during 
electricity shortages, the Federal Energy Regulatory Commission said the 
state and its utilities must agree to let an independent organization manage 
California's power transmission lines. 
Under that setup, California would be one of a group of Western states 
sharing a linked transmission grid whose rates and access rules would be set 
by independent managers. 
It is part of the commission's drive to create regional electricity markets 
throughout the country and make it easier to trade power across state lines. 
The regional grids would be a prelude to the nationwide free market in 
electricity advocated by the Bush administration and power marketers like 
Enron. 
But California Assembly Democrats who have challenged the federal demand say 
the requirement could interfere with some of the state's homegrown solutions 
to its energy crisis, such as Gov. Gray Davis' proposal that the state buy 
and run transmission lines owned by Southern California Edison Co. 
"A lot of folks were wondering how those two things would interact and are 
they mutually exclusive," said Paul Hefner, an aide to Assembly Speaker 
Robert Hertzberg, D-Sherman Oaks. 
Other officials say the federal requirement is premature because no regional 
organization yet exists that California can join. 
Mike Florio, a board member of the California Independent System Operator, 
which manages the state's power grid, said California is already part of 
regional efforts to clear transmission bottlenecks and share surplus power. 
But Florio said no Western state will rush into a regional arrangement and 
surrender part of its authority without ensuring a good deal for its own 
consumers. 
"We certainly don't want to be forced into an entity where generators or 
power marketers get to dictate the terms," Florio said. "This has got to be a 
long courtship rather than a shotgun wedding." 
When federal regulators initiated the move toward regional transmission grids 
during the Clinton administration in 1999, participation was voluntary, said 
Gary Cohen, general counsel to the state Public Utilities Commission. 
But in its April 26 order, the federal energy commission made its offer of 
limited price relief contingent on a filing by June 1 from the Independent 
System Operator committing the state to a regional management plan. 
The PUC and the Assembly are challenging that requirement. If anything, Cohen 
said, the state needs to increase control over its energy system while it 
recovers from its disastrous debut into deregulation, rather than submit to a 
regional authority that would be overseen by the federal government. 
"This doesn't seem to be the time to be doing more experimenting," Cohen 
said. "We certainly have not been able to rely on FERC to look out for the 
interests of Californians." 
WAITING FOR STATE'S RESPONSE
Curt Hebert, chairman of the federal commission, declined to say yesterday 
whether the government would immediately yank the soft price caps that went 
into effect this week if it found the ISO response unsatisfactory. 
"He said he didn't want to prejudge the case," said commission spokeswoman 
Tamara Young-Allen. "He will wait to see what California files." 
PUC Commissioner Jeff Brown said he would be willing to give up some state 
control of the grid in exchange for meaningful price controls. But, he said, 
the federal measures granted fell far short of what California needed. 
"Hell, those caps are pretty toothless as they are," Brown said. 
The price controls are in effect only during power shortages. The cap is the 
price offered by the least-efficient generating plant. And generators can 
challenge any federal ruling that they have exceeded the caps, by claiming 
high costs. 
The controls were in place for the first time yesterday, when the state 
declared a Stage 2 power emergency, meaning reserves fell below 5 percent of 
available capacity. 
Florio said state power managers' answer to the federal government will 
probably be that they are already doing within California much of what a 
regional transmission organization would do. 
ISO COULD PLAY A ROLE
The ISO manages the grid to ensure that power gets to where it is needed in 
the state, the organization told federal regulators in January. The agency 
could represent California when a Western regional organization develops, it 
said. 
The governor declined to say yesterday what stand he would take on federal 
regulators' demand. 
"I'm of a mind to do something, but I still have to talk to my lawyers," 
Davis said. 
Assembly Democrats say regulators in Washington have no right to withhold 
actions to correct California's dysfunctional power market. 
"They're required to . . . ensure that just and reasonable rates prevail in 
the market," Hefner said. "Why should we have to dicker to get them to do the 
job Congress created them to do?" 
E-mail Bernadette Tansey at btansey@sfchronicle.com. 
,2001 San Francisco Chronicle ? Page?A - 1 




NEWS 

Plan would have biggest customers pay Edison's debt 
Greg Lucas 
Sacramento Bureau Chief 
?
05/31/2001 
The San Francisco Chronicle 

FINAL 
A.5 
(Copyright 2001) 
?

?
Legislative leaders are drafting a new rescue plan for Southern California 
Edison that would put the utility back on its feet financially at the expense 
of its biggest customers. 
The plan would leave manufacturers, refineries and other big industrial 
customers with the burden of paying nearly all the utility's $3.5 billion 
back debt through a dedicated charge. Residential and small commercial users 
would be on the hook for only a fraction of the back debt. 
?


Big users say it is unfair to saddle them with all of Edison's debt, but 
supporters of the plan say it's these users that wanted deregulation and 
should shoulder the costs it created. 
"We're trying to put something together in a way that solves all these 
problems, and if people are to be pigheaded about it, we won't solve any 
problems," said Assemblyman Fred Keeley, D-Boulder Creek (Santa Cruz County). 
Although the plan is an alternative to Gov. Gray Davis' proposed deal to put 
Edison back on its feet financially, it could be used as a model to help 
restore Pacific Gas and Electric Co. to solvency. 
Democrats say the plan contains some elements desired by Republicans, but GOP 
lawmakers object to saddling large business users with Edison's debt. 
The plan is based on the way gas customers are divided into "core" and 
"noncore" users. 
SEPARATING 'CORE' USERS 
Under this proposal, electrical users would be divided the same way. Core 
users would be customers who use 500 kilowatts or less a month. Noncore would 
be those using more than 500 kilowatts. 
Out of Edison's 4.2 million customers, only 3,600 would be noncore customers. 
But those 3,600 customers use about 26 percent of Edison's demand for energy. 
Core customers would get their power from generators owned by Edison, 
long-term contracts and alternative energy producers, such as wind farms and 
solar panels, on contract with the utility. 
That would mean those customers would no longer be subject to the whims of 
the spot market, which has far higher prices than other sources of 
electricity. 
Large users, the noncore customers, would be given the right to negotiate to 
buy their power directly from generators or build on- site power plants to 
make themselves energy self-sufficient. 
The plan would be phased in through January 2003 to give large energy 
customers time to prepare for buying power on the open market. 
During that period, residential, small business and large industrial users 
would all share in paying off Edison's debt. But in 2003, that burden would 
shift exclusively to the big users. 
Republican lawmakers and those same large users have been clamoring to be 
given what is called "direct access" to generators so they can negotiate 
cheaper rates. 
Enron is also backing the idea of cutting loose the largest electricity users 
because that would create a built-in market for the energy the company sells. 
Large users who want to remain on the grid could do so. 
EDISON 'ENCOURAGED' 
Sources said Edison officials met with lawmakers over the weekend to iron out 
details of the plan. 
A spokesman for Edison said he was "encouraged" by the talks. 
"I haven't seen a finished product or a plan," said Bob Foster, a senior vice 
president with Edison. "They're approaching this in a spirit of goodwill and 
trying to find a solution." 
Big businesses complain that the plan does not work because right now, there 
is nowhere they can buy cheap electricity. 
"We're very concerned that separating the core from the noncore means we will 
experience extreme rate hikes over the next two years," said D.J. Smith, a 
lobbyist for the California Large Energy Consumers Association. 
"When you add blackouts, the multiple interruptions of production and another 
potentially huge rate hike, the result would be catastrophic to the economy," 
Smith said. 
Added Dorothy Rothrock, a lobbyist for the California Manufacturers and 
Technology Association: "What's the rationale for the noncore to be paying 
the entire Edison undercollection? It sounds to me like just pure politics. 
They don't want voters to pay because they vote." 
CONSUMER ADVOCATE SMELLS A RAT 
Harvey Rosenfield, head of the Foundation for Taxpayer and Consumer Rights, 
said he thought the plan would eventually turn into a bailout as business 
interests muscle lawmakers into pushing some portion of Edison's debt onto 
residential and smaller commercial customers. 
"I think it's a trick. We've seen this same tactic used at the Public 
Utilities Commission, where what were supposed to be rate increases for big 
business end up costing more for residential and small businesses," 
Rosenfield said. 
The new plan also does not include the outright purchase of Edison's part of 
the transmission system that loops electricity around the state. 
Davis backs buying the lines for $2.7 billion. Democrats have insisted that 
for the state's financial help, taxpayers receive something of value. 
Republicans have insisted that they will back no proposal that includes state 
purchase of transmission lines. 
In the new proposal, the state would have a five-year option to buy the 
transmission lines for $1.2 billion -- the book value of the asset. 
In addition, the utility would make $1.5 billion available to the state to 
either purchase other assets -- such as Edison's hydroelectric facilities, 
for example -- or use it in partnership to build new power plants. 

PHOTO; Caption: "If people are to be pigheaded about it, we won't solve any 
problems," said Assemblyman Fred Keeley. 

		

		
		
		






San Jose mayor changes course, endorses power plant 
Posted at 10:29 p.m. PDT Wednesday, May 30, 2001 
MIKE 
ZAPLER 
Mercury News 

After a year of staunch opposition to a major power plant in South San Jose, 
Mayor Ron Gonzales reversed course Wednesday and endorsed the project, 
removing the largest remaining barrier to construction and angering residents 
of a nearby neighborhood he had pledged to protect. 
Speaking before news cameras and reporters in his City Hall office, Gonzales 
said he had negotiated an agreement with Calpine that eased his concerns 
about the Metcalf Energy Center project. The deal, he said, contains 
provisions to help shield the Santa Teresa neighborhood from air pollution, 
gives local businesses the chance to negotiate below-market electricity rates 
and provides a sure energy source for local residents. 
``We need power in San Jose and we believe this power plant is needed in San 
Jose,'' Gonzales said. ``We've worked hard to make this plant better for the 
neighborhoods and better for the city.'' 
But the city entered talks with Calpine about five weeks ago in a vastly 
weakened position, and its chief negotiator, mayoral budget director Joe 
Guerra, was unable to extract most of the concessions the city and 
neighborhood had sought. Santa Teresa leader Elizabeth Cord called the 
neighborhood protection provisions ``totally not substantive,'' and another 
opponent said a lawsuit is likely if the plant is ultimately approved. 
``The mayor's deal does nothing to reduce the impact on this neighborhood,'' 
Santa Teresa activist Issa Ajlouny said. ``It's the same project as it was 
two years ago except San Jose residents will be paying millions of dollars 
more.'' 
Shift by Cisco? 
Cisco Systems, which is planning a 20,000-worker campus adjacent to the 
proposed plant and has strenuously opposed it, appears to be softening its 
opposition. Kent Jenkins Jr., a spokesman for the company, said Wednesday 
that Cisco would still prefer not to have the plant, but that officials were 
pleased, at first glance, with the health and safety concessions Gonzales had 
negotiated. Asked whether Cisco might file a lawsuit, Jenkins said, ``We're 
not ruling anything in or out and by that, I don't want to imply we are 
considering anything.'' 
He added that the agreement will have no bearing on the company's plans to 
build the campus. ``All along we were committed to pursuing Coyote Valley and 
that remains unchanged,'' he said. 
With experts predicting a summer of rolling blackouts, and with the 
California Energy Commission expected soon to override the city council's 
November rejection of the plant, Gonzales was under enormous pressure to 
strike a deal. Polls taken by Calpine had shown overwhelming public support 
for the plant, another ominous sign for the mayor who is up for re-election 
next year. 
While the city probably could not have blocked approval of the plant once it 
got state approval, the mayor indicated as late as April?18 that the city 
might fight it in court. But that possibility vanished with Wednesday's 
announcement, leaving a possible neighborhood-backed lawsuit as the only 
potential threat. 
``This power plant is coming to San Jose. That's clear from the support it 
has gathered in Sacramento,'' Gonzales conceded, referring to Gov. Gray 
Davis' endorsement in April. So rather than continue to fight an uphill 
battle, Gonzales decided it was best to negotiate what he could. 
At the news conference, Gonzales touted provisions in the deal that will 
provide two additional air monitoring stations to ensure the plant complies 
with local air quality standards. The agreement also provides a three-month 
window, prior to the plant's opening, for San Jose businesses to negotiate 
long-term power contracts with the Metcalf plant at a ``below-market'' rate, 
said Calpine chief executive officer Peter Cartwright. 
City's concessions 
But the city clearly got less than it wanted, which was at least partly the 
price of Gonzales' longtime resistance to the 600-megawatt plant: 
?One key negotiating point was how much Calpine would pay to extend a 
recycled-water pipeline seven miles to the plant site. The city started by 
asking the company to pay at least $25 million of the roughly $50 million 
price tag. But, in a provision Gonzales touted as a victory, Calpine will pay 
20 percent of the cost, or $10 million, and the city will pick up the 
remaining $40 million. Calpine said the company is simply paying its fair 
share. 
?In an effort to protect neighborhoods from pollution, the city wanted 
Metcalf to operate full time, since emissions are highest when a power plant 
first fires up. The city tried to arrange a long-term contract with the state 
to buy power from Metcalf to keep it running constantly, but officials balked 
at such a commitment. 
Calpine said it intends to keep the plant running constantly as long as 
demand -- in the form of annual contracts with the state -- justifies it. If 
demand is lacking, the company will lower the number of potential times the 
generator will start up by 25 percent, from 624 per year to 468 annually. 
That restriction would last five years, by which time the energy crisis in 
California is expected to be long over. 
?In the fall, Calpine offered $10 million in electricity discounts to help 
win the city's backing for Metcalf. Wednesday's agreement includes a $6.5 
million benefits package, including $5 million for parks and open space 
acquisition in Santa Teresa; $1 million for energy conservation programs and 
assistance to low-income people to help pay their energy bills; and $500,000 
to help provide health insurance to San Jose children. 
?Calpine has agreed to install new technologies that reduce or eliminate the 
use of ammonia, which would be extremely hazardous if accidentally released, 
as soon as those systems are deemed ``economically feasible'' and approved by 
state regulators. But because there is no standard in the agreement, the 
burden would fall on the city to prove that a new technology was feasible. If 
the two sides disagreed, the decision would fall to a third-party arbitrator. 
There is also a significant question of whether ammonia-free technology, 
known as SCONOx, already is viable -- a position taken by the U.S. 
Environmental Protection Agency. 
Calpine's Cartwright, who appeared with Gonzales, said Wednesday that the 
company is committed to switching as soon as possible from liquid ammonia to 
less hazardous solid ammonia. 
The city council is scheduled to take up the agreement at its Tuesday 
meeting. Although Gonzales persuaded the council to vote with him against the 
controversial project last fall, most members are expected to go along with 
the mayor's switch. At a closed-door meeting on Tuesday, council members 
Forrest Williams, who represents Santa Teresa, and Linda LeZotte aired 
significant concerns with the pact's environmental provisions, but there was 
no other notable dissent, an attendee said. 
The project would then go through the city planning process again this fall. 
Calpine hopes to begin construction this year and to have the plant up and 
running by summer 2003. 


Contact Mike Zapler at mzapler@sjmercury.com or at (408) 275-0140. 









State admits power-deal secrecy 
Posted at 10:55 p.m. PDT Wednesday, May 30, 2001 
BY JOHN WOOLFOLK 

Mercury News 


As state officials cut deals in recent months to spend millions of taxpayer 
dollars to purchase electricity, they signed agreements not to reveal the 
terms of those contracts to the public. 
Even the state's chief energy czar admits the confidentiality clause 
conflicts with the public's right to know how its money is spent, and that 
officials are trying to get around it. But the clause gives sellers veto 
power over releasing information. 
``Our hope would be to release these contracts, but we can't release them, at 
least our lawyers tell us, without consent of the parties,'' said S. David 
Freeman, who acknowledged the agreements for the first time Wednesday. 
Consumer advocates voiced outrage. 
``There's no such thing as a non-disclosure agreement with regards to 
taxpayer money,'' said Doug Heller of the Foundation for Taxpayer and 
Consumer Rights. 
The administration's secret electricity spending has been a top concern among 
lawmakers and public advocates since January, when the state stepped in to 
buy power for its troubled utilities at a cost that has reached more than $70 
million a day. 
Freeman said Wednesday that the state was so pressured to sign contracts to 
lock up lower-cost power supplies that negotiators never considered the 
ramifications of the secrecy clause. He said violating that agreement could 
void the contracts. 
Would companies bail? 
A representative for power companies said Thursday that he doubts companies 
would bail on existing contracts but might not sign more. 
Without seeing details of the spending, lawmakers this month approved a 
record $13.4 billion in ratepayer-backed bonds to cover power costs that have 
reached nearly $8 billion. Critics question whether the state is getting a 
good deal and wonder whether the bonds will cover the costs. 
Until now, Gov. Gray Davis has answered critics by arguing that revealing the 
deals would jeopardize the state's bargaining position, exposing ratepayers 
to even higher costs. Critics said the administration never before mentioned 
confidentiality clauses. 
``These contracts have been out there for a couple of months and this is an 
excuse I've never heard before,'' said Mindy Spatt of the Utility Reform 
Network, a consumer group. ``It makes me wonder whether they've really got a 
good reason or something they're trying to hide.'' 
The state routinely enters into contracts in other areas, and those contracts 
are governed by public-records law and open for review. But Freeman suggested 
new rules may be in play. 
``Businesses don't reveal their contracts, and the state has gone into the 
business of buying power,'' Freeman said. ``I recognize that if the state 
does something that people have a right to know about it. On the other hand, 
if the government is acting in an emergency way as businesses do, there's a 
clash.'' 
Freeman said the administration plans to reveal the contracts ``in the very 
near future'' and is working to find a way around ``this legal problem'' with 
the confidentiality clause. 
``We have nothing to hide,'' Freeman said. ``We're very proud of those 
contracts.'' 
2003 release date 
But in response to lawsuits from news agencies and lawmakers seeking to 
compel disclosure, the administration has argued it shouldn't reveal the 
contracts until Jan. 1, 2003, when they are no longer commercially sensitive. 
The state's power-buying authority ends on that date. 
News agencies, whose case will be heard Friday, say there's no evidence 
disclosure would jeopardize the state's bargaining position, and that the 
secrecy serves the governor's political interests more than the public's. 
Alonzo Wickers, a lawyer for the news agencies, including the Mercury News, 
said the administration hasn't made an argument based on confidentiality 
clauses, and that the law wouldn't support that claim. 
``The courts have said you can't do that if you're a public agency,'' Wickers 
said. 
Jamie Fisfis, spokesman for Assemblyman Dave Cox, R-Sacramento, said the 
confidentiality argument is ``frankly outrageous.'' 
``If he signed a contract to build roads, would he then argue he couldn't 
disclose it?'' Fisfis said. 
Daily deals costly 
The contracts guarantee a supply of power at costs below today's high market 
prices, helping to avoid rolling blackouts and limit rising rates. Without 
the deals, the state must scramble to buy power day by day at much higher 
prices. 
The administration has signed dozens of contracts ranging from several months 
to a decade or more, and said the average price over 10 years is 7.1 cents 
per kilowatt-hour, a bargain compared with the 20- to 30-cent daily rates. 
Even with the contracts already signed, the state still will have to buy half 
to two-thirds of its power day by day this summer. It's unclear how many 
sellers might walk away from deals if the state discloses them. 
A spokesman for Calpine of San Jose, which has signed two, 10-year contracts 
and another for 20 years, said it already has revealed the basic terms and 
wouldn't oppose further disclosure. 
``I don't know any reason for us to get upset,'' said Calpine spokesman Bill 
Highlander. ``We came in at a very attractive price that we think is good for 
California and good for us.'' 
A representative of several major power sellers said companies probably 
wouldn't walk away from deals they've already signed. But he said 
confidentiality is important. 
``It certainly would drive away people from doing deals like this in the 
future,'' said Gary Ackerman, executive director of the Western Power Trading 
Forum. ``It's just not professional.'' 


Contact John Woolfolk at jwoolfolk@sjmercury.com or (408) 278-3410 









California Gov. Davis blasts Bush energy policy 
NEW YORK (Reuters) - California Gov. Gray Davis on Thursday blasted President 
George Bush's energy policy, saying in a newspaper op-ed piece that the 
president is setting a ''perilous'' course by opposing caps on wholesale 
electricity prices. 
Davis, writing in The New York Times, likened California's long-running 
energy crunch to the U.S. energy shock in the 1970s and said the Bush 
administration ``must adopt a more responsible energy policy.'' 
The comments follow a meeting earlier this week between Davis and Bush that 
underscored their differences on federal price caps. Bush reiterated his 
opposition to caps on wholesale electricity prices at the meeting, Davis 
said. 
Davis called caps necessary to prevent price-gouging by power companies, 
while Bush asserted that caps will make the situation worse by discouraging 
investment in new power plants. 
The governor told President Bush on Tuesday that he would seek a court order 
to force action by the Federal Energy Regulatory Commission (FERC). 
In his op-ed piece, Davis cited an estimate that the size of California's 
energy crisis is likely to be in the range of $40 billion to $50 billion this 
year. 
Defending his own methods of dealing with the power crisis, which has caused 
rolling blackouts in the state, Davis said only FERC has the power to ensure 
a reasonable wholesale electricity market in California. ``This is not a 
matter of discretion for federal regulators,'' the Governor wrote, ``It is an 
obligation.'' 
Davis acknowledged that California's power problems stemmed from ``a 
fundamentally flawed'' 1996 state electricity deregulation law, and he 
repeatedly raised the specter of economic turmoil brought on by policies 
favored by President Bush. 
``The threat is real,'' Davis wrote, ``and the Bush administration must adopt 
a more responsible energy policy, one that restrains energy price 
manipulation and creates a fair and competitive energy market across the West 
and the whole country.''












Mayor sees the light on power plant 
Published Thursday, May 31, 2001, in the San Jose Mercury News 
THE mayor standing on the tracks waving a red flag at the onrushing 
locomotive has calculated the effects of a collision. Calpine's proposal for 
the Metcalf power plant at the north end of Coyote Valley is now fine with 
Ron Gonzales. 
It's been fine with almost everybody else outside the immediate neighborhood 
since the plant was proposed by Calpine and Bechtel more than a year ago. It 
escalated from fine to urgent as the shortage of electricity pushed prices 
into the clouds and led to blackouts. 
In the process, the opposition of Gonzales and the San Jose City Council, on 
thin factual ice from the start, couldn't withstand the weight of the forces 
in favor of the 600-megawatt plant, enough to serve 600,000 homes. 
The Legislature and Gov. Gray Davis wondered what San Jose could be thinking. 
The California Energy Commission has the last word on power plant siting 
regardless of the city's position. Denial would be flabbergasting. 
Wednesday afternoon, Gonzales yielded gracefully; Calpine, along with its 
partner Bechtel, triumphed politely. The city will ``provide all requested 
municipal services in a timely matter.'' And it won't sue to overturn Energy 
Commission approval. 
Calpine will add two stations to monitor air quality, reduce the number of 
pollution-creating stops and starts at the plant, give $5 million for parks 
in the area, and contribute $1.5 million for community programs, including 
assistance with energy bills. 
These are not trivial additions to the original proposal. But Calpine/Bechtel 
held all the cards. Almost certainly, it could have jammed the plant through 
without sweeteners. 
Instead, both parties recognized that Calpine and the city must do business 
together for the plant to work well. Calpine depends, for instance, on 
recycled water from the city's sewage treatment plant. And the city needs 
customers like Calpine, which will consume 3 million gallons a day, to use up 
that water. 
It's a mutually beneficial arrangement, just as it was from the start.
























?
?

Gordon Dillow
gldillow@aol.com
?
?


Building a new plant? More power to them 
May 31, 2001 
By GORDON DILLOW
Orange 
County Register 
As you probably know, the main reason we're in a power crisis in California 
is because we haven't built enough power-generating plants. And one reason we 
haven't built enough plants is NIMBY-ism: When faced with having a new power 
plant nearby, most people shout "Not in my back yard!" 
Well, I just found out that a new power plant is being built in my back yard. 
And frankly, I think it's a dandy idea. 
The power plant in question is being built at the county Olinda Alpha 
Landfill in Brea. The plan is to take the methane gas formed by the natural 
decomposition of refuse in the dump - which ordinarily would have to be 
flared off -- and burn it in engines to produce electricity. Actually, 
they've been producing power at the landfill that way for years, but now, 
with power at a premium, a New Jersey-based company called Ridgewood Power 
wants to expand the plant's output by about 50 percent. 
True, the power plant isn't literally in my back yard; it's a couple of 
ridgelines away. But it's still close enough for the Air Quality Management 
District to recently send me a letter informing me of increased pollution 
from the plant - and warning me that the plant emissions could cause cancer. 
Now, ordinarily those would be the sort of grim tidings that would cause 
palpitations in my homeowner's heart. So why am I being so welcoming to my 
new power-generating, air-polluting neighbor? 
Several reasons. First, it's a pretty tiny power plant. Even with the 50 
percent production boost, it will only crank out 8 megawatts - enough to 
provide power to about 8,000 homes, but still less than 1 percent of the 
juice produced by one reactor at the San Onofre nuclear power plant. 
Also, the increased air pollution hardly seems like enough to worry about. 
For example, the AQMD says the plant will produce up to 9 pounds of fine 
particulates per day - which is probably about the same amount of 
particulates I release into the atmosphere when I burn a steak on the 
barbecue. And according to the AQMD's calculations, I'd have to suck in the 
plant's air for 70 years to run even a 1-in-1 million risk of developing 
cancer from the emissions. 
But the big thing in favor of the landfill power plant is that it's exactly 
the sort of clever power-producing scheme we need right now. It takes 
something we don't need - the methane from our garbage - and turns it into 
something we desperately need: electric power. These days, every 8 megawatts 
helps. 
And now that I think on it, there's another, more personal advantage to 
having the landfill power plant nearby: 
Without requiring any real sacrifices on my part, it makes me feel like a 
non-NIMBYist. So when they start looking around for a place to build another 
power plant to help ease the energy crunch, I can strongly suggest - no, 
demand! -- that they build it in somebody else's back yard. 
Because I already have one in mine.














Watering down fun 
Many summer activities in O.C. will be diminished by the electricity crunch. 
May 31, 2001 
Story by TIFFANY MONTGOMERY
Photos by MICHAEL KITADA
The Orange County Register 







LEISURE WORLD resident Jackie Lane works out five days a week in the pool and 
says she notices the 2-degree difference in the water temperature.
?
?

Many in Orange County will find the power crunch crimping their fun this 
summer as some cities and groups slash pool hours, turn off tennis-court 
lights, raise swimming-class fees and drop pool temperatures to cut utility 
bills and conserve energy. 
Two Orange County community colleges will switch from night to day football 
games come fall, along with most of their 12-team conference. And Orange city 
officials have even floated the idea of moving popular adult softball leagues 
to weekend afternoons rather than weekday nights. 
"If we need to save energy, I'm all for it," said Saddleback College 
defensive back Derrick Waddell, 19, who prefers the excitement of evening 
games. "I just never expected (the power crisis) to go this far that it would 
affect a football game." 
Athletic Director Tony Lipold said the college needed to cut utility bills, 
and stadium lights are expensive - a $1,500 demand charge to turn them on 
each month, then $45 an hour. Plus, the school wants the community to know it 
is conserving. 
"When people drive by the stadium and see lights burning, we don't want them 
to say, 'Hey, what's going on?' " Lipold said. 
Fullerton College will also switch to day games next season, and Santa Ana 
has played in the afternoon for years. Orange Coast and Golden West colleges 
share a stadium, so one team often plays in the day, the other at night. 
An official with the southern section of the California Interscholastic 
Federation, or CIF, which oversees high school athletics in the region, said 
he has not heard whether high schools are giving up Friday night football 
games. 






HERE'S A SWITCH: Conservation efforts are apparent at Leisure World.

?
?

In Seal Beach, the city has raised fees ($7 for residents and $12 for others) 
for swimming lessons and recreation and lap swimming (50 cents) because the 
Recreation Department's utility budget has jumped $21,000, a 123 percent 
increase. Mission Viejo has stopped illuminating courts at the Felipe Tennis 
Center on weekends and will open the Sierra Recreation Center pool this 
summer for five hours during the day instead of eight. 
Fullerton is raising tennis-court fees by $2 for peak hours and $1 other 
times with its new budget in July to cover energy costs. Currently the fees 
are $6 or $7 per hour depending on day and time. And the city of Westminster 
and the Newport-Mesa Unified School District have shut off court lights all 
together. 
Newport-Mesa will also begin charging the cities of Newport Beach and Costa 
Mesa for heating four school pools that the cities use for summer swim 
programs. Mike Fine, the district's assistant superintendent of business 
services, has calculated that it costs $24 a day for each degree of heat. 
As a result, Newport Beach is raising swim-lesson fees by $5 and will squeeze 
most of its programs, including lessons and short periods for recreation and 
lap swimming, into the Newport Harbor High School pool, which it will share 
part of the time with Costa Mesa. The pool at Corona del Mar High School will 
be open for lap swimming, but not heated. 
"You can't teach swim lessons with kids (in a cold pool)," said Andrea 
McGuire, Newport Beach recreation-services manager. "They turn blue, their 
teeth chatter and they're not happy." 
Newport Beach will also raise lap fees by varying amounts but keep recreation 
swim costs the same. 
Costa Mesa has decided to absorb the added cost of heating the pools, 
estimated to be about $5,000 for the summer, instead of passing it on, said 
Ruth Raheb, a recreation supervisor. 
Colder pools have also affected swimming routines at Leisure World in Laguna 
Woods. Temperatures at all six pools have been dropped 2 degrees, so some 
have begun exercising in the afternoons when it's warmer, said Debby Lamb, 
recreation director. Officials did keep one pool a toasty 84 degrees for 
those with achy bones. 
Alan Davis, 69, a heart patient, recently had to exercise in colder waters 
while pool four, the warm pool, was being renovated. 
"It was a shock to get into," he said. "If it's too cold it doesn't work well 
with arthritis." 
The warmer water, he said, soothes and restores his body, so he was happy 
when pool four opened again last week. 
The energy crunch has also affected the ceramics studio at Leisure World, 
which draws about 300 people a week. Electric- and gas-powered kiln usage has 
been cut back to save money. 
"It's slowed us down," said Marjorie Amstadter, president of the Potters and 
Sculptors Club. She estimates they are two to three weeks behind in firing, 
but people have generally understood, she said. 
"The only people who are complaining are non-Leisure World residents ... who 
may have to wait until next fall (when classes start again) to pick up their 
pieces," she said. 
Those in charge of cutting or adjusting recreation programs said most people 
have been very understanding about the energy crisis. After all, Californians 
are already conservation minded: The state ranks 49th in per capita energy 
consumption, according to a 1999 Energy Information Administration report. 
Wally Johnson is one of the understanding ones. A fierce Saddleback football 
fan, he has gone to 256 straight games and doesn't plan to miss one because 
of a time change. 
"I'll go to them anytime - daytime, nighttime, midnight, Sunday," he said. 
"Day games are fun. They don't get quite so cold." 












Energy notebook 
San Jose mayor switches position, backs power plant 
May 31, 2001 
From Register news services 
SAN JOSE After months of pressure, Mayor Ron Gonzales has reversed course and 
decided to support a large proposed power plant in southern San Jose. 
Gonzales said Wednesday that the companies that would build the $400 million 
Metcalf Energy Center - Calpine Corp. and Bechtel Enterprises Inc. - have 
agreed to donate money to community programs, offer long- term power 
contracts at competitive rates to San Jose businesses, and take extra steps 
to ensure the safety of the surrounding neighborhood. 
Gonzales and the entire City Council in November voted against the 
600-megawatt Metcalf plant on the grounds that it would be too close to 
residential areas. 
But as California's energy crisis deepened, Gonzales' position became 
increasingly unpopular. Gov. Gray Davis, state representatives, county 
supervisors and the Sierra Club called for the plant to be built. 
The decision on whether the plant will be built now rests with the California 
Energy Commission, which is expected to vote on the issue this summer. 
New hydroelectric plant goes on line a year early 
HEMET A new hydroelectric facility at a huge new reservoir began generating 
power Wednesday, a full year earlier than planned. 
The facility at Diamond Valley Lake will provide power for 13,000 households 
initially and 40,000 households once the reservoir is completely full next 
year, officials said. The lake is about three-fourths full now. 
"This may just be a drop in the bucket for California, but we believe that 
every little bit counts, especially this summer," said Phillip J. Pace, 
chairman of the Metropolitan Water District board. 
The facility is the first new hydroelectric generator in the state in six 
years, according to the California Energy Commission. 
Lab's Web site posts potential blackout data 
BERKELEY Californians can now get their own information about whether the 
lights will stay on without waiting for the Independent System Operator to 
issue blackout warnings. 
Residents can see supply and demand levels rise and fall before their eyes on 
a new Web site put together by Lawrence Berkeley Laboratory scientists. 
The site -- found at http://energycrisis.lbl.gov -- also shows statewide 
power imports and exports and the capacity that's out of service on any given 
day. 
In other news: 
California power reserves fell below 5 percent because higher temperatures 
spurred demand for electricity to run air conditioners, prompting a state 
agency to call an alert. 
The California Independent System Operator, which runs the state 
power-transmission system, called a Stage Two alert at 2 p.m. No blackouts 
were necessary. 
Forecasters say today will be even hotter, with the mercury rising to 100 in 
San Bernardino. 
Anaheim will only reach 82, because of an onshore breeze. 
Gov. Gray Davis said Wednesday that he'll give federal energy regulators at 
least 30 days to respond to his requests for massive electricity rebates or 
rate cuts before taking them to court. 
He said judges are "reluctant to tell agencies what to do until agencies 
review the matter." 
Bloomberg News, The Associated Press and Register staff writer Gary Robbins 
contributed to this report. 













Deadline near on regional power grid 
State has until Friday to abide by FERC call to join transmission network. 
May 31, 2001 
By JOHN HOWARD
The Orange County Register 
SACRAMENTO Gov. Gray Davis has until Friday to decide whether to place 
California's 28,000 miles of electricity lines under increased federal 
control by joining other Western states in a regional power grid. 
The decision, which has provoked little public discussion, has long-term 
implications for the way the state will be able to control its electricity. 
Federal energy regulators believe creating about 18 huge multistate grids 
across the United States - known as regional transmission organizations, or 
RTOs - will make it easier to speed electricity across the country. That will 
limit outages and lower prices for consumers, according to the Federal Energy 
Regulatory Commission. 
Critics of deregulation, however, contend the creation of an RTO in effect 
turns over the state's lines to the Bush administration, which has close ties 
to power companies that have profited mightily in California. 
"The whole (FERC) plan is to federalize the transmission lines and federalize 
energy policy, and to get the biggest state to commit to this scheme, (which) 
would be a huge boost for Bush and his allies," said San Diego energy 
consumer advocate Michael Shames. 
The RTOs would have the authority to levy transmission charges on wholesale 
power, subject to FERC's approval, and control the flow of electricity 
throughout the grids. The FERC wants the RTOs up and running by December. 
FERC has given California's three investor-owned utilities and the grid 
manager, the Independent System Operator, until Friday to describe how they 
would participate. 
Davis, although not directly deciding the issue, wields influence over the 
ISO board, which he appointed, and has been in negotiations with at least two 
of the utilities. The reports to FERC are expected to largely reflect his 
will. 
Missing Friday's deadline could cause the Bush administration to halt the 
so-called "soft cap" price controls currently on California's roiling 
electricity market. But the threat that holds little worry for Davis. 
Last month, FERC decided to set targets for power prices when state 
electricity reserves fall to 7.5 percent or lower during Stage 1, 2 or 3 
power alerts. Davis and others complained that the targets were "soft caps" 
that could easily be ignored by power companies. 
Stanford University energy economist Frank Wolak suggested that California 
should refuse to join an existing RTO, but devise its own plan and present it 
to FERC. Others agree, saying such a huge state could be a single-state RTO, 
its grid managed internally but required to participate in the regional flow 
of power. 
That might better play into a proposal for the state to buy the transmission 
lines from the utilities. 
"I would basically say, 'Thanks, but no thanks,' and this is where FERC has 
left a giant opening for California to do something clever,'' Wolak said. 
Advocates of the RTOs say they represent the reality of geography and the 
marketplace - not artificially created political borders. 
"Markets are regional; they don't stop at the state border," said Elizabeth 
Moler, a former FERC chairwoman. 
Register reporters Kate Berry and Dena Bunis contributed to this story. 

















Thursday, May 31, 2001 






Bush standing tall as Davis plays blame game 
So Gov. Gray Davis had a short meeting and is going to sue to set price caps 
on energy ["Bush: No price caps," Front Page, May 30]. What gives a judge the 
power to set price caps on anything?
Going through an old high school yearbook, I found a gasoline receipt from 
Wilshire Gas where I paid 25 cents per gallon. Why doesn't good old Gov. 
Davis have the prices rolled back on everything? My first apartment in Santa 
Monica was $150 per month, and I'm sure people would like to see apartment 
rents rolled back to that rate. 
However, to keep everything equal, the judge would also have to roll back 
salaries to earlier levels of decades past. The latest trend is to go into 
court and ask a judge to legislate what should be done. Doesn't anyone 
question whether judges have the authority to do that? 
I don't like higher prices, but how can a California judge order Pacific Gas 
& Electric or Southern California Edison to sell power for one-third of what 
it pays to bring energy from Idaho? Of course, both would go bankrupt and 
shut down. Then, energy costs would go down because there wouldn't be any. 
Stock up on candles. 
Burl Estes
Mission Viejo 
I have nothing but the utmost respect for President Bush for standing firm in 
his refusal to implement price caps on wholesale energy prices. Even though I 
personally stand to suffer from any electricity rate hikes passed on to 
customers by Southern California Edison, I firmly support Bush's hands-off 
policy and any other federal or state policies that help transfer price 
controls to those of a free market: the basic controlling forces of supply 
and demand. I remind all Californians that the whole reason we are suffering 
energy problems today are past attempts to unnaturally control prices and 
production. I will happily endure any rate hikes, even beyond 500 percent, 
knowing full well that such rate increases are essential steps to our 
recovery from the terrible effects of regulation and our so-called 
"deregulation."
Dennis Chang
Seal Beach 
Gov. Davis wants the Federal Energy Regulatory Commission to set price caps 
for wholesale electric rates, but FERC refuses because it believes wholesale 
electric rates are "fair and reasonable." Well, if Davis really wants price 
caps, all he has to do is start charging all federal customers the actual 
wholesale rate for electricity. Imagine if all the post offices, federal 
courthouses, FBI offices, INS offices and IRS offices in California had to 
pay the actual wholesale rate for electricity, plus assorted delivery 
charges. That might get FERC to consider price caps. And it would put an end 
to California subsidizing federal customers. The federal customers could not 
complain because FERC says that wholesale electric rates are fair and 
reasonable.
Douglas Ditonto
Yorba Linda 
President Bush announced during his visit to California that he was opposed 
to capping energy prices for fear that caps would only lead to more shortages 
and higher prices for gas and electricity. Why does that sound more like a 
thinly veiled threat from an extortionist than concern from a nation's 
leader? I did not vote for George Bush. It seemed obvious to me that he would 
be more inclined to support the views of the wealthy in this country, 
particularly those of the oil industry, than those of the working class. It 
appears that Bush will live down to my expectations. 
Leslie E. Lyon
Anaheim 






Electrical Emergency Stepped Up to Stage Two; Need for Energy Conservation is 
Critical



FOLSOM, Calif.--(BUSINESS WIRE)--May 30, 2001 via NewsEdge Corporation  -
The California
Independent System Operator (California ISO) declared a Stage Two
Electrical Emergency today, Wednesday, May 30, 2001, at 2:00 p.m. with
operating reserves dipping below five percent. A number of factors are
contributing to today's emergency condition:
--  With higher than expected temperatures and the corresponding use


of air conditioning units, the demand for power is trending


approximately 1,200 megawatts over the forecast.
--  Net imports are running at 4,000 megawatts; 3,000 less than last


week.
--  A total of 9,800 megawatts worth of generation remains unavailable


today with power plants off-line because of preventative repairs


and plant malfunctions.


Consumers are asked to step up conservation efforts as the
California ISO's job of balancing the supply and demand for power
becomes more challenging this afternoon and into the evening peak
hours. Demand across the California ISO Control Area is expected to
peak at 36,174 megawatts around 3:00 p.m. this afternoon. Today's
Stage Two Emergency is in effect until midnight. With the Stage Two
declaration, the California ISO is able to access emergency resources
that will help maintain operating reserves.


A Stage Two Emergency is declared when operating reserves dip
below five percent or are expected to within the next two hours. If an
operating reserve shortfall of less than one-and-a-half percent is
unavoidable, Stage Three will be initiated. Involuntary curtailments
of service to customers, including "rotating blackouts," are possible
during this emergency declaration.


The California ISO is charged with managing the flow of
electricity along the long-distance, high-voltage power lines that
make up the bulk of California's transmission system. The
not-for-profit public-benefit corporation assumed the responsibility
in March, 1998, when California opened its energy markets to
competition and the state's investor-owned utilities turned their
private transmission power lines over to the California ISO to manage.
The mission of the California ISO is to safeguard the reliable
delivery of electricity, facilitate markets and ensure equal access to
a 25,526 circuit mile "electron highway."


Information about the California ISO control area's electricity
supply and the current demand is available on the web at
www.caiso.com.


Other helpful contacts:


Pacific Gas and Electric           415/973-5930


Southern California Edison         626/302-2255


San Diego Gas and Electric         877/866-2066



CONTACT: California ISO  |              Stephanie McCorkle, 888/516-NEWS








Washington's Role Helped Spark California's Power Crunch



WASHINGTON, May 29, 2001 (States News Service via COMTEX)  via NewsEdge 
Corporation  - Although it is
popular in Washington to point the finger at California for its energy crisis,
the federal government shares a good deal of blame for the California energy
crisis.

In 1995, the Federal Energy Regulatory Commission helped lay the foundation 
for
what has become the debacle of the new millenium when it rejected a state plan
calling for new power plants that today would be providing 1,300 megawatts in
new electricity.


What's more, records from that year show that the regulatory commission
expressed "grave concerns about the need" for new power generation in the 
state.


Had those power plants been built, they would be generating power for an
estimated 1.3 million homes at the wholesale fixed cost of between 3.5 and 6.6
cents per kilowatt-hour with binding, long-term contracts.


At the time, retail prices averaged 9 cents per kilowatt-hour, according to 
FERC
documents.


In recent months, wholesale prices have been averaging between 12 cents to 13
cents per kilowatt-hour, according to California Public Utility Commission
spokesman James Hendry. During peak usage, those prices can reach 20 cents to 
40
cents and at times have rocketed to a record $1.90 since last December.


"Everybody is saying those prices will go higher this summer," Hendry added.


Nevertheless, members of the Federal Energy Regulatory Commission -- known as
FERC -- have regularly blamed California for failing to build new power plants
to meet present power needs that have sparked energy shortages and higher 
prices
throughout the West.


The commission also shares the widely held view that faulty legislation aimed 
at
deregulating the state's power industry in 1996 is to blame.


Although FERC put limited price caps into effect on wholesale electricity on
Tuesday, the commission continues to resist broader demands to stabilize 
prices
in the Western region, as has been sought by California Gov. Gray Davis, and
other lawmakers. They claim that FERC has ignored their responsibility to 
ensure
that electricity rates are "just and fair."


President Bush has sided with FERC's limited price caps because he believes 
that
market-oriented supply and demand is the only sure way to restore permanent
order to the crisis.


The messy trail of the Golden State's rolling blackouts and power failures
passed through Washington in January 1995 when several California utility
companies asked FERC to rule against the state's plans to build power 
facilities
around the state.


As part of that plan, first announced in 1992, the California Public Utilities
Commission nailed down bids through a competitive auction process to build two
new geothermal plants, one wind farm, and the repowering of an existing steam
plant in Southern California. A "badly needed" gas-powered plant on the San
Francisco Peninsula also was called for.


All would have been up and running by 1999.


Had the plants been build, California's electrical utilities would have been
required to buy power from them under a long-standing policy first enacted by
Congress in 1978, the Public Utility Regulatory Policies Act. But two utility
companies protested, claiming they didn't need more electricity. Besides, they
said they could provide or purchase cheaper electricity elsewhere if needed.


California used "a flawed auction process," recalled Art Larson, spokesman for
Sempra Energy, parent company of San Diego Gas &amp; Electric, when asked 
about the
decision. "It didn't consider the least-cost bids," he said, because 
California
mandated the use of renewable energy.


So, just two months before construction on the plants was to begin, Southern
California Edison and San Diego Gas &amp; Electric filed a protest with FERC. 
The
five-member regulatory commission approves rates for wholesale electric sales 
of
electricity and transmission in interstate commerce.


Both utility companies argued that because the PUC favored renewable energy
generation, it ignored less expensive ways to provide electricity such as
gas-fired plants and other sources.


Southern California Edison also expressed concerns about California's efforts 
to
deregulate the electric utility industry that soon would be approved the
following year. Such legislation would likely bring down energy costs, it
predicted.


Other parties also weighed in on the complaint, including the National Coal 
and
Western Fuels Association, which claimed that Edison could purchase power from
out-of-state sources at 3 cents a kilowatt hour. Today, FERC and other critics
of California's electricity policies believe that the state relies far too
heavily on out-of-state sources.


California responded to the complaints by noting that it did approve gas 
powered
turbines in its plans, but also wanted "clean" energy suppliers as part of the
state's environmental objectives. After factoring in the costs of controlling
pollution in California caused by other forms of energy production, the price
for electricity provided from alternative sources would be competitive, it 
said.


California's argument fell of deaf ears and FERC sided with the utility
companies. In its ruling, the commission stated that California's auction
procedure violated the standards set by PURPA because the state explicitly
sought out renewable energy providers and ignored other sources in the bidding
process.


FERC added that "we have grave concerns about the need" for added electricity 
in
California. It also cautioned that the fact that the state was moving toward
deregulating the electricity industry, "heightens our concern" about forcing
utility companies into long-term contracts.


FERC's controversial ruling, which was opposed by many independent energy
organizations, still disturbs Loretta Lynch, chairman of the California Public
Utilities Commission.


What derailed the effort to build more power "was not the actions of 
California,
but instead the actions of FERC itself," she said last December when FERC 
first
denied requests to place wholesale price caps on electricity in western states
and blamed California for not building enough power plants.


And how do the utility companies now feel about the power plants they fought 
in
1995 when long-term contracts would have been had for a fraction of the cost
they are now paying?


"20/20 hindsight is a luxury," responds Larson of Sempra Energy. "But the 
prices
were out of line in the 1990s."




By David Phinney







Energy Experts Say Solution to California Crisis is Inescapable/ Build More 
Power Plants and Ensure Competition



ATLANTA--(BUSINESS WIRE)--May 30, 2001 via NewsEdge Corporation  -
As the Bush Administration
continues to face harsh criticism in California over perceived
inaction regarding the energy crisis, industry executives appear to be
lining up behind Bush's assertion that enhancing the availability and
reliability of the nation's energy supply is the long-term solution.


And they consider creating more supply while maintaining the
transition to a deregulated marketplace crucial, reports the May issue
of Energy Competition Strategy Report, published by Atlanta-based NHI
Publications.


One leading utility executive says the solution to the nation's
long-term supply problem is inescapable. "We need to build new power
plants. And those new plants will be built only if we allow the
competitive market to do its job," says William Hecht, chairman,
president, and CEO of Allentown, PA-based PPL Corp. Price caps - which
California is pushing for and Bush opposes - "reduce the incentive to
invest in new production and unnecessarily prolong and exacerbate the
current supply and demand mismatch," Hecht adds.


PPL is aggressively developing new power plants in Connecticut,
New York, Pennsylvania, Washington, and Arizona that will add more
than 4,000 megawatts of supply. Other members of the Washington,
DC-based Electric Power Supply Association, such as ABB Energy
Ventures of Switzerland and Zeigler Coal Holding of Ashland, KY, are
building new, unregulated merchant power plants.


Meanwhile, EPSA is asking Congress to enact legislation that would
allow federal eminent domain for transmission siting and establish a
standardized interconnection policy to make it easier for generation
companies to "get onto the grid."


Other highlights of this month's Energy Competition Strategy
Report include:
-0-
*T
-- A new energy market study finds that despite several major
setbacks, including California's ongoing crisis, the energy industry
still has its sights set on achieving full competition. Retail Energy
Markets (REM), produced annually by Xenergy, a Burlington, MA,
research firm, is featured in the report and includes a wealth of data
suggesting that, despite restructuring problems, the shift to
competition continues.
-- Get a detailed look at PowerSolution, a core technology
platform that helps energy companies manage their data by integrating
business applications, external trading partners, and legacy systems.
-- Regional utilities are forging loyalties with big commercial
and industrial chains through National Accounts programs that provide
value-added, one-stop customer service. Award-winning Southern Co.
shares its secrets to success.
-- Can fuel cells meet the growing demands for electricity? A
large energy company plans to build, operate, and maintain an electric
generation plant that will use six fuel cells to generate primary
electric supplies.
-- Evaluate opportunities for investment. Use this process to
assess whether any of 700 technologies spanning the energy value chain
are appropriate investments.
*T


Free three-month trial subscriptions to Energy Competition
Strategy Report are available by sending an e-mail with your full
mailing address to nhi@nhionline.net, calling 800-597-6300 or
404-607-9500, or faxing your address to 404-607-0095.



CONTACT:    NHI Publications, Atlanta     |  David Schwartz, 404-607-9500













Business/Financial Desk; Section A 
In California, Blackouts Spur A Search for Home Remedies 
By LAURA M. HOLSON 
? 
05/31/2001 
The New York Times 
Page 1, Column 5 
c. 2001 New York Times Company 
LOS ANGELES, May 30 -- For Evans Keller, a turkey farmer in the Central 
Valley of California, the energy crisis has become a matter of life and 
death. 
For 17 years, he and his family have raised turkeys near Fresno, far from the 
dot-com companies of Silicon Valley and the ''Baywatch'' beaches most 
outsiders associate with the state. In his world, where daily summer 
temperatures soar above 100 degrees on dusty ranches, Mr. Keller is forced to 
use electric fans and fog-making machines to cool his one million turkeys -- 
or watch them roast in tin-roofed sheds. 
But with energy experts forecasting more than 260 hours of blackouts this 
summer and no relief in sight from regulators or politicians, Mr. Keller has 
taken matters into his own hands. In April, he bought eight small generators 
at Costco that he could hook up to tractors and use to keep the fans and 
misters running when the Pacific Gas and Electric Company cuts his power. 
Since then he has regularly conducted drills on the 14 farms that supply him 
with turkeys -- 4 farms he owns and 10 run by independent contractors -- and 
has spent weeks winnowing the routine down to 40 minutes, barely enough time 
before the birds begin to wither under the searing sun. 
''Believe me, we're not proud,'' said Mr. Keller, who said he had appealed 
earlier this year, without success, to Pacific Gas and Electric for advance 
warnings of blackouts. ''We'll do what we have to to protect our 
investment.'' 
The energy crisis here has come to this: from tourist attractions in sunny 
Southern California, to farmers who dominate the central region of the state, 
to technology concerns up north, businesses are coming up with novel ways to 
cope with what many fear will be an unpleasant summer. 
The concerns are understandable given the issues that many businesses face, 
including lost revenue and potential layoffs, as the state's power shortages 
continue. ''The uncertainty is what kills you,'' Jerry Meek, utility 
operations manager at Roche Pharmaceuticals in Palo Alto, said. 
Trying to reduce that uncertainty, businesses are applying to the state's 
Public Utilities Commission for exemptions from having their power turned off 
this summer. (The deadline is Friday.) Last week, Gov. Gray Davis announced 
that the state would begin a three-tiered warning system for residences and 
businesses that are likely to be affected. The first warning will come two 
days before a blackout; the second, one day in advance; and the final 
warning, one hour before the lights go out. 
A more radical approach is being suggested by Mike Briggs, a Republican 
assemblyman from Fresno. He is asking the state to schedule potential 
blackout days as much as months in advance so business owners know when their 
turn is coming. ''It is scary what this has come to,'' Mr. Briggs said. ''But 
this gives people options.'' 
Farmers in the Central Valley, for instance, have to order water for their 
crops a day ahead. But if the power is off when the water shows up in an 
irrigation canal, he said, ''they can't open the gates and the water flows 
right past them.'' One business owner told Mr. Briggs that he spent $30,000 
one month to lease two generators that were never used. ''He said it would 
have been nice to know ahead of time so he could rent the generators for a 
day,'' the assemblyman said. 
Of course critics worry that burglars will know when the lights go out, too. 
''Yes, there is the downside of more potential burglaries,'' Mr. Briggs said. 
''But maybe people are willing to make that trade-off.'' 
Even those business owners who say they are currently protected from power 
failures are making preparations -- just in case. The Legoland California 
amusement park in Carlsbad, near San Diego, has an arrangement with its 
utility, the San Diego Gas and Electric Company, to keep the lights on, said 
a spokeswoman, Courtney Simmons. Still, she added, the park is prepared in 
the event of a loss. 
The contingency plan consists of keeping open the 3 rides, of the 20 total, 
that are not powered by electricity, she said. Barbecues would be rolled out 
to cook food, and the park's boulevards would be flooded with performers, 
including singers, dancers, jugglers and musicians who will entertain until 
the power comes back on. ''We are prepared for outages no matter what the 
cause this summer,'' she said. 
Many tourist attractions, including Disneyland in Anaheim, are already 
prepared because they upgraded their systems in 1999, fearing a Year 2000 
disaster that would threaten the power grid. ''A lot of these things were 
already tested and documented,'' said Ray Gomez, director of communications 
at Disneyland Resorts. ''We are skilled at emergency evacuations. Energy is 
only one part of that.'' 
As part of its plan, Disneyland shored up its emergency operations center, 
holding employee drills to turn on emergency power. This summer, Disneyland 
will have employee volunteers who roam the park day and night, turning out 
lights and replacing incandescent bulbs with more energy-efficient ones. The 
park also works with the city of Anaheim, which supplies the park with power, 
to conserve 5 to 10 percent, minimizing the risk of blackouts at all. 
Oddly enough, Disneyland is reviving its Main Street Electrical Parade, a 
29-year-old light show that had most recently been an attraction in Florida. 
Leslie Goodman, a senior vice president for strategic communications for Walt 
Disney Parks and Resorts, said the park had made sure that the parade did not 
use energy when Californians need it most. The lights in the parade are 
powered by battery, and are recharged during off-peak hours. But, she added, 
despite what was a difficult decision and a potential public relations 
nightmare, ''the show goes on.'' 
While most businesses make an effort to conserve (if for no other reason than 
to save money as rates soar), some communities are giving corporations added 
incentives. The city of Palo Alto, for example, has agreed not to cut off 
power to Roche Pharmaceuticals as long as the company reduces energy 
consumption by 15 percent within 30 minutes of an announced Stage 3 alert, 
the state's most critical. Only once has Roche lost power, said Mr. Meek, the 
company's utility operations manager. And that, he added, was because of a 
mistake. 
Roche has a plan to ensure that a blackout does not happen. Once Mr. Meek 
gets an alert on his pager from a city representative (who can see how much 
is being saved because the company has a real-time meter for the 15-building 
campus), voice mail and e-mail messages are sent to more than 1,000 employees 
asking them to turn off nonessential lights. The air-conditioning is changed 
to raise the temperature in most areas to 78 degrees from a normal 72 
degrees. Lighting in all offices is reduced, and some employees move from 
their dark cubicles to the window-walled cafeteria to work, he said. 
''The question is, do you treasure light or do you want your computer shut 
down?'' Mr. Meek asked. If these measures do not reduce overall demand by 15 
percent, Roche will switch on backup generators to power the laboratories. 
Why? If laboratory tools are not properly shut off before a loss of power, it 
takes days to recalibrate them, costing thousands of dollars and wasted time, 
Mr. Meek said. ''My focus with the uncertainty is to do what we can to get 
around it,'' he said. 
One way that California businesses are seeking certainty is by appealing to 
the state's Public Utilities Commission for relief. One commissioner, Carl 
Wood, said in a recent interview that about half the customers who got 
electricity from the state's three largest utilities were exempt from 
blackouts because their services were considered essential, like fire 
stations or hospitals, or because they shared power with an essential source. 
No more than 60 percent of the state's customers can be exempted from 
blackouts. 
Recently, an exemption was granted for the Bay Area Rapid Transit District, 
which runs 95 miles of commuter train service in the San Francisco 
metropolitan area, Mr. Wood said. Pacific Bell Park, home of the San 
Francisco Giants, has asked for one, too; that request is being reviewed. 
''It can be extremely disruptive and expensive if there are lots of blackouts 
this summer,'' he said. ''This is a big economic issue.'' 
Just imagine, he said, musing about how the summer could end: ''Disneyland 
without rides?''