----- Forwarded by Jeff Dasovich/NA/Enron on 03/14/2001 06:23 PM -----

	Jean Munoz <jmunoz@mcnallytemple.com>
	03/14/2001 05:49 PM
		 
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		 cc: 
		 Subject: IEP News Update

Following is the latest IEP news . including an Associated Press story that 
quotes Jan's response to the State Senate Investigation announced earlier 
today.

Thanks,
Jean


______________________________________
March 14, 2001, Wednesday, BC cycle
5:10 PM Eastern Time

SECTION: State and Regional

LENGTH: 941 words

HEADLINE: California lawmakers probe energy markets for manipulation

BYLINE: By JENNIFER COLEMAN, Associated Press Writer

DATELINE: SACRAMENTO, Calif.

BODY:

  State lawmakers announced Wednesday they will investigate whether energy
wholesalers manipulated California's power and natural gas markets to drive up
prices, a probe they say could lead to action by the state attorney general.

  Meanwhile, federal regulators said they will make several changes in
oversight to expand the West's power supply, including speeding approval of
natural gas pipeline projects and letting major power users who cut 
consumption
resell the electricity they save.

  In California, Senate leader John Burton announced creation of a committee 
to
investigate the state's volatile electricity market. A similar Assembly panel
has been formed to look into natural gas prices. Both expect to begin hearings
next month.

  The state has been struggling with a tight electricity supply since summer
due in part to high natural gas prices and power plant outages for scheduled 
and
unplanned maintenance.

  Burton said he suspected electricity wholesalers shut down plants to create
an artificial shortage and boost prices. If lawmakers find evidence of that,
they will turn it over to the state attorney general for action, which could
include prosecution and court action to seek refunds.

  "Clearly, early evidence suggests that there has been market manipulation by
the power generators which led to rolling blackouts and then higher 
electricity
prices," said Burton, D-San Francisco, referring to outages that hit Northern
Californians twice in January.

  California saw a modest 4 percent increase in demand in one year, while
wholesale power prices in that time rose 328 percent, he said.

  Committee Chairman Joe Dunn said the panel will ask energy wholesale
executives to testify, and issuing subpoenaes if necessary. Duke, Dynegy, 
Mirant
and Reliant will be among major providers included, he said.

  Jan Smutny-Jones, executive director of the Independent Energy Producers 
industry group, said wholesalers will cooperate, but warned that if it 
becomes a
"witch hunt" it could discourage them from building plants in California.

  "We believe this investigation will find nothing except that power producers
have been working around the clock to keep the lights on in California," he 
said
in a written statement.

  Burton said the investigation could affect any rescue deal Gov. Gray Davis 
crafts with the state's two largest utilities, Pacific Gas and Electric and
Southern California Edison.

  Davis is negotiating the state purchase of transmission lines owned by
Edison, PG&E and a third investor-owned utility, San Diego Gas & Electric, to
help Edison and PG&E pay their wholesale power bills.

  Lawmakers need to know how much of the money owed to the wholesalers "is
reasonable and how much of it was basically gaming the system," Burton said.

  The power generators blame the high prices on poor planning by California 
lawmakers who voted to deregulate the state's electricity market in 1996.

  That law prevents PG&E and Edison from passing on high wholesale prices to
their customers. The utilities say they are nearly $14 billion in debt and on
the brink of bankruptcy due to wholesale power prices that have soared since
June, in part because of rising natural gas prices.

  Wholesalers have cut off their credit, leading the state to buy power for
them. California has committed $3.7 billion in tax money to such purchases 
since
early January and plans to recoup it from utility customers over several 
years.

  The California Independent System Operator, which oversees the state's power
grid, says generators imposed "unjust and unreasonable" charges totaling $555
million during December and January.

  The Federal Energy Regulatory Commission, a strong supporter of 
deregulation,
last week found that wholesalers have been overcharging for California 
electricity, ordering 13 companies to refund $69 million. It gave the 
companies
until March 23 to appeal.

  Attorneys general in California, Washington and Oregon are pursuing similar
investigations. U.S. Rep. Anna Eshoo, D-Calif., has asked the Justice 
Department
and Federal Trade Commission to launch inquiries.

  Sen. Bill Morrow, R-Oceanside, said he wasn't "overly impressed with
investigative efforts so far on the federal level with FERC and others in 
their
willingness to actually turn over the stones."

  Tom Williams, spokesman for North Carolina-based Duke Energy, expressed
annoyance at the news of a Senate probe.

  "It is wearing thin," said Williams, noting that Duke already has been
subjected to federal investigations and has testified twice before the state's
legislative energy committee, with no findings of wrongdoing.

  The Assembly committee is investigating natural gas pipeline capacity and
reserves. That committee plans to call gas company executives and FERC
representatives to testify.

  Because natural gas is largely regulated by the federal government, 
lawmakers
are trying to determine whether they have authority to investigate market
manipulation, said Assemblyman Fred Keeley, D-Boulder Creek.

  In Washington, FERC said it would overhaul its regulation of the Western
energy market to increase supply. Changes include:

  - Letting large commercial power users sell power they save at a wholesale
rate to be set by the commission.

  - Reallocating FERC staff to work on applications for natural gas pipeline
and hydroelectric projects.

  - Urging hydroelectric plant operators to examine how they can more fully 
use
their available water resources by adding or upgrading turbines or making 
other
improvements.


  On the Net:


  California ISO: www.caiso.com

  FERC: www.ferc.fed.us



GRAPHIC: AP Photos SC101-102

LOAD-DATE: March 14, 2001

                              10 of 28 DOCUMENTS

                   The Associated Press State & Local Wire

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

                     March 14, 2001, Wednesday, BC cycle

                             4:13 PM Eastern Time

SECTION: State and Regional

LENGTH: 203 words

HEADLINE: Senate rejects utility bankruptcy bill

BYLINE: By MARCY GORDON, AP Business Writer

DATELINE: WASHINGTON

BODY:

  A proposal that would have required California's financially troubled
utilities to pay their power bills even if they file for bankruptcy protection
was rejected Wednesday by the Senate.

  Senaourt to avoid their debts," Wyden said.

  The proposal had brought objections from Sen. Dianne Feinstein, D-Calif., 
who
said it would put the Senate in the inappropriate position of deciding the
"pecking order" of creditors in a bankruptcy proceeding.

  California's two biggest utilities, Southern California Edison and Pacific
Gas and Electric, say they've been pushed to the brink of bankruptcy by more
than $13 billion in high wholesale power costs that state law has barred them
from recouping from consumers.

  Both were denied credit by electricity wholesalers earlier this year. To 
keep
the lights on for their customers, the state in early January began spending
billions to buy power on their behalf.

  Meanwhile, Gov. Gray Davis is negotiating with Edison, PG&E and the state's
third investor-owned utility, San Diego Gas & Electric Co., to purchase their
transmission lines.

  The governor says the state acquisition would give the utilities a
much-needed influx of cash and help them pay their debts.

LOAD-DATE: March 14, 2001

                              12 of 28 DOCUMENTS

                   The Associated Press State & Local Wire

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

                     March 14, 2001, Wednesday, BC cycle

                             2:37 PM Eastern Time

SECTION: State and Regional

LENGTH: 1326 words

HEADLINE: California's electricity crisis at-a-glance

BYLINE: By The Associated Press

BODY:

  Here is a look at developments in California's electricity crisis:

  WEDNESDAY:


  - Sens. John Burton and Joe Dunn announce a Senate committee will 
investigate
whether power generators illegally manipulated California's electricity market
to drive up prices over the past year. If the panel finds wrongdoing, the 
state
attorney general should sue for refunds, Burton said.

  The committee will ask wholesalers' executives to testify, and subpoena them
if they refuse, said Burton, D-San Francisco, the Senate leader.

  - A legislative aide says the Senate panel is considering issuing subpoenaes
for wholesaler documents on the California market and asking the companies'
executives to testify.

  - Duke Energy spokesman Tom Williams expresses annoyance at the news of a
Senate probe, saying there have already been several investigations and no
finding of wrongdoing.

  - Assemblyman Fred Keeley says the Assembly has formed a committee to look
into natural gas issues. Because natural gas is largely regulated by the 
federal
government, lawmakers are trying to figure out whether they have the authority
to investigate whether supply and prices were manipulated.

  - Gov. Gray Davis' administration continues negotiations with Edison, PG&E
and San Diego Gas & Electric over the governor's plan to buy their 
transmission
lines to help Edison and PG&E pay their debts.

  - The state remained free of power alerts as power reserves stayed at 
healthy
levels.

  - Assembly members Fred Keeley and Hannah-Beth Jackson and environmental
groups plan a news conference to urge approval of energy conservation and
renewable energy proposals.

  TUESDAY:


  - Davis issues an executive order promising 20 percent rebates to Southern
California Edison, Pacific Gas and Electric Co. and San Diego utility 
customers
who cut power use 20 percent this summer.

  - Legislative Analyst Elizabeth Hill's office says Davis is underestimating
California's summer electricity shortage. The state faces a shortfall of 3,900
to 7,100 megawatts during daily periods of peak demand, the report says. One
megawatt is enough for about 1,000 homes.

  Using flawed state Energy Commission numbers, the governor is overestimating
how much new electricity generation will be online this summer, especially 
early
in the season, and overestimates savings from conservation, the report says.

  - The state Senate plans to form a special committee to investigate whether
power generators illegally manipulated California's electricity market to 
drive
up prices. The suppliers vehemently deny such allegations.

  - Citing skyrocketing energy costs, particularly in the West, President Bush
backs off a campaign pledge and tells Congress he will not regulate carbon
dioxide emissions from power plants. The decision comes after heavy lobbying
from the coal industry and is a blow to conservationists who see curbing
emissions of such "greenhouse gases" as key to reducing global warming.

  - State Controller Kathleen Connell says legal issues prevent her from
releasing records on state power purchases sought under the state open records
law by The Associated Press and several other news organizations. Connell says
she is awaiting an opinion by Attorney General Bill Lockyer on whether she can
release the information. Davis opposes releasing it.

  - Secretary of State Bill Jones calls for an audit of the state's energy
spending, saying the secrecy around the contracts for power purchases has led 
to
a lack of oversight and accountability.

  - Proposals for two new power plants that could be running by summer have
been received by the California Energy Commission. The plants, which together
will produce 225 megawatts, will be fast-tracked through the application 
process
to help meet higher electricity demands this summer. That's roughly enough 
power
for 225,000 homes.

  - Officials say guidelines expected Wednesday on whether Edison, PG&E or
their customers will begin paying off the $3.7 billion in taxpayer money
committed to buying power on their behalf will likely be delayed.

  - No power alerts are declared, as operators of the state grid continue to
find enough electricity to meet demand.

  - Eight California counties expect to lose $11.1 million in property taxes 
in
the next five months because the five energy producers who owe the money say
they are due even more from Southern California Edison. Some school districts 
in
those counties - Imperial, San Joaquin, Riverside, Alameda, Contra Costa, 
Inyo,
Kern and San Bernardino - say the defaults could hurt their ability to finance
expansions or repairs.

  - Utah Gov. Mike Leavitt meets with Los Angeles city officials to discuss
expanding a coal-fired power station in Utah to send electricity to Southern
California. 

  - The United Farmworkers Union holds a protest in Blythe, a desert community
near the Arizona border, to protest a proposed power plant opponents contend
would pollute the air farmworkers breathe.

  - U.S. Rep. Anna Eshoo, a Palo Alto Democrat, asks U.S. Attorney General 
John
Ashcroft to investigate whether electricity wholesalers engaged in unlawful
trade practices to drive prices higher.

  - A 510-megawatt power plant in western San Diego County moved a step closer
to final approval. The Otay Mesa generating project won approval from the
California Energy Commission's siting committee. The public 30 days to comment
on the plan.

  - Edison International stock falls 47 cents a share to close at $14.88;
Pacific Gas and Electric Corp. stock closes at $14.24, dropping 28 cents a
share.



  WHAT'S NEXT:


  - The Legislature considers dozens of bills to encourage energy 
conservation,
increase alternative power and streamline power plant siting.

  - The California Public Utility Commission meets Thursday to consider 
whether
to bar PG&E and Edison from laying off about 3,000 workers. The utilities say 
it
could help them cut costs and ease their $14 billion debt. A PUC 
administrative
law judge says the layoffs could cause response times to customer outages to
suffer.

  The PUC will also discuss restructuring the interruptible customer program.
The program gives big electricity users a discounted rate in return for 
shutting
down their power when the state is short of electricity. After January's 
rolling
blackouts, the PUC froze the program and said PG&E and Edison could no longer
fine interruptible customers for not complying.

  - An order from Davis requiring businesses to substantially reduce outdoor
lighting after business hours takes effect Thursday. Businesses that fail to
comply face a potential fine of $1,000 a day.

  - Attorneys for three generators and the ISO return to federal court March
19, when a judge is expected to decide whether power suppliers can be forced 
to
sell to the grid.

  - Generators have until March 23 to appeal an order by federal regulators to
refund $69 million in January power charges. The Federal Energy Regulatory
Commission required suppliers to justify prices exceeding $150 per megawatt
hour. It determined last week that some sales were priced too high, even 
taking
into account high natural gas prices, air quality control costs and plant
maintenance.



  THE PROBLEM:


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

  Edison and PG&E say they've lost $13.7 billion since June to high wholesale
prices that the state's electricity deregulation law bars them from passing 
onto
ratepayers, and are close to bankruptcy.

  Electricity and natural gas suppliers, scared off by the two companies' poor
credit ratings, are refusing to sell to them, leading the state to start 
buying
power for the utilities' nearly 9 million residential and business customers.

LOAD-DATE: March 14, 2001