Please see the following articles:

Sac Bee, Wed, 6/27:  Here's a switch: Generator praised for pricing, 
efficiency

Sac Bee, Wed, 6/27: PG&E given OK for cleanups

SD Union, Wed, 6/27: State gets $4.3 billion loan to buy energy

SD Union, Wed, 6/27: New border plants will take toll on air quality

LA Times, Wed, 6/27: New Plant to Generate Electricity--and Hope

LA Times, Wed, 6/27: Edison Delays Sale of $1.2 Billion in Bonds

LA Times, Wed, 6/27: Union Seeks to Return to Reliant Power Plant

LA Times, Wed, 6/27: Retired PG&E Executives Seek Full Pensions in Bankruptcy 
Case

SF Chron, Wed, 6/27: 600-megawatt plant OKd in San Jose council reversal

SF Chron, Wed, 6/27: California to justify its claim of $9 billion in 
overcharges

SF Chron, Wed, 6/27:  Cheaper electricity won't trim bills 
Rate increase to pay off big state debts takes effect next month

SF Chron, Wed, 6/27: Duke buys ads to deny claim of workers 
Firm not allowed to speak at hearing

SF Chron, Wed, 6/27: News briefs on California's power crisis

SF Chron, Wed, 6/27: State to take delivery of cheap electricity 
L.A. selling at cost, Bakersfield plant opening early

Mercury News, Wed, 6/27: New plants, voltage plan may help reduce blackouts

Mercury News, Wed, 6/27: Utilities await OK to reduce voltage 

Mercury News, Wed, 6/27: PUC should keep consumers plugged in to power 
choices 

Individual.com (PRnewswire), Wed, 6/27: Retail Energy Supporters Urge the PUC 
not
to Suspend Direct Access Business Organizations, Energy Service Providers, 
Direct Access Customers Support Continuing Focus on Legislative Solution to
Maintain Retail Choice

WSJ, Wed, 6/27: California Secures Loan of $4.3 Billion for Power

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 Here's a switch: Generator praised for pricing, efficiency 
By Dale Kasler
Bee Staff Writer
(Published June 27, 2001) 
SAN JOSE -- If the power generators profiting from California's energy crisis 
are a reckless band of megawatt cowboys, as their critics claim, then Calpine 
Corp. bills itself as the guy in the white hat. 
Unlike many of its rivals, this fast-growing power plant builder and operator 
hasn't been accused by federal regulators of overcharging California for 
electricity. 
Gov. Gray Davis, who routinely accuses generators of price gouging, exempts 
the San Jose-based company from his criticism. He further praises Calpine's 
efforts to build thousands of megawatts' worth of new power plants, enough to 
make a significant dent in California's energy shortage. Known for its 
relatively clean-burning plants, Calpine even gets support from some 
environmentalists. 
"They have made a clear commitment to invest in California's future," said 
Davis spokesman Steve Maviglio. "Their pricing has been far more reasonable 
than any other generator." 
Taking a dig at Calpine's Texas-based rivals, he said Calpine "took a 
different tack from the Joe Bobs of the world," an apparent reference to 
executive Joe Bob Perkins of Houston's Reliant Energy Inc. 
In some respects, Calpine seems quaint when compared with its swashbuckling 
competitors. Rather than cash in on the lucrative but flighty spot market for 
power, Calpine builds comparatively efficient plants and sells the energy via 
stable, long-term contracts, such as its contract to deliver power to 
Sacramento from its just-completed plant in Sutter County. 
When the Federal Energy Regulatory Commission ordered several generators to 
refund more than $124 million to California because of overcharging, it left 
Calpine off the list. However, Calpine is participating in the FERC-sponsored 
settlement talks under way in Washington that could result in generators 
making refunds to California. The company wouldn't comment on those talks but 
takes great pains to separate its behavior from the conduct of other 
generators. 
"We're not a speculator in this business," said Pete Cartwright, the 
company's 71-year-old founder, president and chief executive. "We're not in 
it to speculate on high prices. To that extent, I think we're distinct from 
all of the others." 
But Calpine isn't building plants out of charity. Although its stock price 
has suffered lately because of investor skittishness about the energy crisis, 
the company's financial performance hasn't missed a beat. Calpine's profits 
jumped five-fold to $94.8 million in the first quarter of this year. Revenue 
soared to $1.23 billion from $235 million. 
And despite its disdain for speculation, Calpine is arguably the most daring 
power plant builder in the business. 
Coming from seemingly out of nowhere, Calpine has embarked on what experts 
believe is the most ambitious power-plant construction program in U.S. 
history. The company currently operates about 7,100 megawatts of power plant 
generation in 30 states; its plan is to operate 70,000 megawatts in five 
years. That would make Calpine the largest supplier of electricity in the 
United States, and probably the world, said company spokesman Bill 
Highlander. 
Although Calpine has run into problems in some locations -- including San 
Jose, where opposition arose to its proposed plant in the Coyote Valley -- it 
has generally found smooth sailing. 
"There are others doing this," Cartwright said. "But somebody has to be No. 
1. So we decided it would be us." 
One of the first U.S. power companies to seize on deregulation of the 
wholesale electricity business, it has concentrated on the United States, 
while rivals have built plants around the world. 
"Many of our competitors were off building plants in China and Indonesia; we 
elected to focus at home," Cartwright said. "That's given us a real jump on 
our competition." 
The ambitious nationwide blueprint includes building plants that will produce 
about 11,000 megawatts of new power in California. That would bring Calpine's 
total capacity in California to more than 12,000 megawatts, enough to power 
about 9 million homes. That would make Calpine the largest power generator in 
the state, eclipsing Pacific Gas and Electric Co. The company is adding 60 
employees to its 90-employee construction-management office in Folsom. 
Calpine's 500-megawatt plant in Sutter County, which has its formal opening 
in July, has already begun generating power for the state Department of Water 
Resources and has sold under contract about a third of its electricity to the 
Sacramento Municipal Utility District. 
Calpine's reach is extending far beyond California. Its new plant in 
Middletown, N.Y., scheduled to open in 2004, will be Calpine's fifth in that 
state. It's developing its second and third plants in Florida and is doubling 
its number of Texas plants to 10. There will be plants in Goldendale, Wash., 
and Oxford, Conn., and Calgary, Alberta, and points in between. 
The company also is building a $624 million natural gas pipeline into 
Southern California from New Mexico in a joint venture with pipeline operator 
Kinder Morgan Energy Partners, a move that could dramatically ease 
California's natural gas shortage. A second phase of the project, to cost 
$1.1 billion, would extend the line into Northern California. 
Calpine's profile is growing in other ways. In Houston, where it runs a 
trading desk, it's building a 32-story office tower in the "power corridor" 
downtown, taking its place in the skyline among such power titans as Enron 
Corp. 
Cartwright said Calpine can handle its phenomenal growth just fine. "We 
determined that the market would support that many megawatts, that we had the 
organization and the project opportunities and the financing and the 
equipment to make it happen," he said. "It's a program that's well under way 
now, and we are ahead of schedule. 
"We've been building to this for years." 
A veteran of General Electric Co.'s nuclear plant division, Cartwright 
founded Calpine in 1984 with other GE employees. A consulting firm at first, 
Calpine in 1989 bought its first generator, a tiny geothermal plant in Sonoma 
County, and proceeded to add other small thermal plants throughout Northern 
California. 
Its breakthrough came in 1995, when it built its first big plant, a 
250-megawatt facility in Pasadena, Texas. The project thrust Calpine into the 
fledgling world of "merchant generation," wholesale plants selling 
electricity in a newly deregulated field. 
"They caught the market just as it was coming on the upside," said Gary 
Ackerman of the Western Power Trading Forum, an association of generators and 
traders. 
About that time Calpine was making another important decision about its 
future. Its owner, a Swiss energy conglomerate, was being sold by its parent, 
the investment banker Credit Suisse. Merger talks with several energy 
companies went nowhere, and Calpine instead sold stock to the public. Today 
its market capitalization is about $11.6 billion. 
Cartwright "made a tired old industry called utility generation and turned it 
into an exciting commodity on Wall Street," Ackerman said. 
Calpine's secret is energy efficiency. It uses modern natural gas-fired 
turbines that are probably 40 percent more fuel efficient than traditional 
products, said investment analyst Michael Worms of Gerard Klauer Mattison & 
Co. in New York. 
And although Calpine typically sells the lion's share of its electricity 
through long-term contracts, it profits from spikes in the spot market, too. 
That's because spikes raise the prices everyone charges, regardless of costs. 
"Our ability ... to generate electricity at a lower cost is what gives us 
strength," Cartwright said. 
Calpine isn't welcomed everywhere. It abandoned plans for a 765-megawatt 
plant in Edgerton, Wis., after residents fought it. 
And Calpine spent months dealing with a revolt in its hometown over a 
proposed 600-megawatt plant in San Jose's Coyote Valley, a fight led by the 
mayor and high-tech heavyweight Cisco Systems Inc. Cisco is planning a 
corporate campus near the plant site. 
The plant finally won the backing of the City Council in early June, but only 
after state officials indicated they would OK the project regardless of the 
city's objections. Cisco withdrew many of its objections to the project. 
Cartwright noted that the project won the approval of the Sierra Club, which 
argued that newer, cleaner-burning plants should be developed to replace 
older, dirtier generators. The need for cleaner plants is a major reason why 
Cartwright, in spite of the current slump in spot-market prices, believes 
there won't be a power glut any time soon. 
"What we're building is the largest fleet of modern power plants -- it has to 
be done," he said. "It will lower the cost of electricity for consumers, it 
will drastically reduce air emissions, carbon dioxide emissions." 
Nor is Cartwright bothered by the turmoil in California's energy markets and 
political climate. He's signed contracts with the state Department of Water 
Resources to supply electricity for up to 20 years, at prices ranging from 
$58 to $115 a megawatt-hour. Cartwright, whose company gave Davis $19,000 in 
campaign contributions last year, one of the highest totals among energy 
companies, said he doubts the state will seize power plants or enact a 
windfall profits tax. 
Asked about other generators reportedly putting new plants on hold because of 
the political climate, Cartwright said: "Good, that's fine. We're not holding 
off. We think California is a great place to do business." 

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





PG&E given OK for cleanups


(Published June 27, 2001) 
SAN FRANCISCO -- A federal bankruptcy judge Tuesday approved a request by 
Pacific Gas and Electric Co. to spend up to $22 million a year on 
environmental cleanup projects at about 50 sites. 
The figure is slightly higher than the utility has spent on average in recent 
years but much lower than the total $307 million cost it has reported to the 
federal Securities and Exchange Commission. 
PG&E spokesman Jon Tremayne said the SEC total represents "liabilities that 
we might have, including liabilities we're not aware of now." 
He said the utility has no backlog of neglected environmental work. 
PG&E's motion covered only costs of fixing environmental problems. It did not 
cover court judgments or settlements for personal injuries or property 
damage. By filing for bankruptcy protection in April, the utility 
automatically blocked payment of those claims until the bankruptcy case is 
resolved. 
--Claire Cooper








State gets $4.3 billion loan to buy energy 



By Ed Mendel 
UNION-TRIBUNE STAFF WRITER 
June 27, 2001 
SACRAMENTO -- The state made more progress toward easing the electricity 
crisis yesterday by obtaining a $4.3 billion short-term loan to pay for 
future power purchases, shifting the burden from taxpayers to utility 
ratepayers. 
Since the state began buying power for utility customers in January, the 
money has been coming from the taxpayer-supported general fund that pays for 
schools, health care and other state programs. 
The general fund is expected to be paid back in September when the state 
issues the biggest municipal bond in the nation's history, up to $13.4 
billion, which will be paid off by ratepayers over 15 years.

Now the short-term "bridge" loan obtained yesterday will pay for power 
purchased until September and stop the drawing down of the general fund that 
has already spent at least $6.2 billion buying power. 
"This short-term financing will stabilize the state's fiscal condition by 
stopping the daily drain of taxpayer dollars to pay for power," said state 
Treasurer Philip Angelides. 
The big ratepayer bond issued in September will be used to repay the general 
fund, pay off the $4.3 billion short-term loan and provide funds for power 
purchases until they are covered by monthly revenue from ratepayers. 
Gov. Gray Davis and the Legislature decided to use the bond to spread the 
high cost of power over the next 15 years, avoiding the need for even higher 
rate increases this year. 
One of the unanswered questions yesterday was whether the short-term loan or 
the general fund will pay for an undisclosed amount of power received by the 
state but not yet paid for under the billing cycle. 
The state Department of Finance said the general fund had spent $6.2 billion 
on power as of yesterday. But the department has sent the Legislature a 
series of notices saying it expected to spend up to $8.2 billion on power. 
"Apparently some of those were never acted on," said Sandy Harrison, a 
finance department spokesman. 
The price of power dropped this month for a number of reasons: The state 
began buying more power through less expensive long-term contracts, power 
plants down for maintenance and a lack of funding resumed operating, 
conservation and cooler weather reduced demand, federal price caps were 
imposed last week, and accelerated snowpack runoff has generated more 
hydropower than expected. 
The state paid $55 million to $70 million a day for power last month, but has 
only been paying about $30 million a day this month, said Oscar Hidalgo, a 
spokesman for the state power-purchasing agency. 
In another development, Gov. Gray Davis today is scheduled to throw the 
switch on a new power plant near Bakersfield that was not expected to come on 
line until August. 
The 320-megawatt Sunrise plant was built in 61/2 months by the parent firm of 
Southern California Edison and will qualify for an "acceleration bonus" of 
about $1 million under a state program to encourage rapid power-plant 
construction. 
Also, Calpine plans to open new power plants near Yuba City and Pittsburg 
early next month, adding more than 1,000 megawatts to the grid. A megawatt 
provides enough power for 750 to 1,000 homes. 








New border plants will take toll on air quality 



By Diane Lindquist?
UNION-TRIBUNE STAFF WRITER 
June 27, 2001 
Two large power plants that will supply Californians with electricity will 
greatly boost emissions in Mexicali and Imperial County, a cross-border 
region already plagued by air quality problems. 
The plants are being built outside Mexicali, Mexico, just 10 miles from the 
California city of Calexico. 
When the plants begin operating in 2003, they will send more than 4,000 tons 
of pollutants a year into the skies above Mexicali and neighboring Imperial 
County, says a recent report by the Imperial County Air Pollution Control 
District. 
"We're not opposed to power plants, but we are concerned about the emission 
levels and the impact it will have on the health of the citizens of the two 
areas and the impact it could have on the region's economic development," 
said Steve Birdsall, a district pollution control officer. 
"We believe that could be significant," he said. 
One plant is being built by Sempra Energy of San Diego and, the report notes, 
will be outfitted with the latest pollution control devices. 
The other, being built by the global power generation firm InterGen, wouldn't 
meet California power plant requirements but is well within Mexican 
standards. 
At projected levels, emissions from the two plants will boost total emissions 
in Mexicali by 12.6 percent. Emissions in the entire cross-border air basis 
will rise 7.7 percent. 
The report was based on data from permit applications filed with the Mexican 
government. 
Today, Imperial County's Board of Supervisors is scheduled to discuss the air 
quality problem for a second time with representatives of InterGen. 
Meanwhile, a coalition of concerned citizens, business leaders and community 
activists from both sides of the border has formed the Imperial Valley Clean 
Air Stakeholders Group and launched a campaign to address concerns about the 
plants. 
Representatives of that group are sending letters to government officials in 
Baja California and California to complain that the emissions are too high. 
They plan to make the same point soon in meetings with representatives of the 
two companies. 
Joel Epstein, an InterGen consultant, said the company's research indicates 
the emissions won't have a significant impact on either side of the border. 
Nevertheless, he said, InterGen will present the supervisors a voluntary 
initiative today that should address local concerns. 
Epstein wouldn't reveal details of the initiative but said it "will both 
improve the emissions profile as well as improve the overall quality of the 
Imperial Valley region on both sides of the border." 
The Imperial County report underscores the fact that environmental standards 
for power plants are much less stringent in Mexico: 
?If built in the United States, the plants would be required to be fitted 
with equipment known as Best Available Control Technology and continuous 
emission monitors. Neither technology is mandatory in Mexico. 
?Mexico doesn't impose any limits on carbon monoxide emissions, which are 
tightly regulated under the U.S. Clean Air Act. Carbon monoxide takes oxygen 
out of the bloodstream, making it a concern for people with heart disease. 
?Mexico's standards for nitrogen oxides, which contribute to smog and damage 
the lungs, are significantly lower than U.S. limits. 
?Mexico doesn't require data on particulate emissions, which can damage the 
lungs and contribute to asthma, emphysema, respiratory infection, heart 
attack and smaller lung growth in children. 
Because of the two plants' total emission levels, the report says they will 
have "a far greater negative impact on U.S. and Mexican citizens living in 
the border region than if these plants were constructed a few miles to the 
north in the United States." 
Both plants have building and environmental permits from the Mexican 
government and are ready to start construction about a mile apart in Colonia 
Progreso on Mexicali's western edge. 
Together, the plants could provide enough electricity to power about 600,000 
homes in California. 
The 500-megawatt Sempra Energy plant, Termoel,ctrica de Mexicali, will export 
all its electricity to U.S. consumers. 
The InterGen plant, called La Rosita, will export about 30 percent of its 
output. The rest will serve customers in Baja California. 
La Rosita was originally planned to generate 750 megawatts, but another 250 
megawatts capacity reportedly was added after the Imperial County air quality 
study was done. 
The study also didn't include data for two other power plants that could be 
built in the Mexicali area. One is a 257-megawatt natural-gas-fired plant; 
the other is a coal-fired plant with an unknown capacity. 
Mexico is urging other energy companies to build plants in Baja California to 
export electricity to energy-strapped California. In La Jolla several weeks 
ago, Mexican Energy Secretary Ernesto Martens said the country won't set any 
limits on the number of plants it will allow. 
The Sempra and InterGen plants will be fired by natural gas, a cleaner, more 
efficient fuel than fuel oil or coal. Nevertheless, natural gas does produce 
emissions. 
Sempra Energy is fitting its plant with Best Available Control Technology and 
continuous emission monitors to cut the output. 
InterGen is using neither of the technologies, which are required on all new 
plants in the United States. The only pollution control technology the 
company plans to install is low-nitrogen oxide burners. Its backup power 
source is a dual-fuel diesel engine, which usually runs dirtier than natural 
gas and produces more particulates. 
As a result, air emissions of nitrogen oxides and carbon monoxide at 
InterGen's La Rosita plant will total 21,026 pounds a day, or 3,838 tons a 
year. 
Sempra has pledged that emissions at its plant will be less than one-tenth as 
much -- 2,066 pounds a day, or 377 tons a year. 
The plant, "as clean and efficient as any plant that can be constructed," 
according to Sempra spokesman Art Larson, is the only facility in Mexico 
fitted with the pollution controls. As such, he said, it will be the cleanest 
power plant in the country. 
Pollution levels in Imperial County and Mexicali already are too high, said 
Jan Cortez, an official of the American Lung Association of San Diego and 
Imperial Counties. The association is one of the organizers of the Clean Air 
Stakeholders Group. 
The cross-border region, with a population of 900,000, shares an air basin 
polluted by industrial manufacturing, dust and pesticide residue from 
agricultural activities, diesel bus and truck exhaust, cars without pollution 
controls and idling traffic at the border crossings. 
Even without the new plants, Calexico's carbon monoxide levels exceed those 
established by the U.S. Clean Air Act. And Mexicali's carbon monoxide levels 
exceeded Mexico's standard on 77 days in 1998, the latest year for which data 
is available. 
The Clean Air Stakeholders Group believes measures could be taken to offset 
the pollution to be generated by the new plants, Cortez said. Trucks and 
buses running on diesel fuel could be converted to natural gas, she said. Or 
they could be retrofitted with particulate-matter traps. 
Such measures are being used in the San Diego region so a power plant can be 
built on Otay Mesa without exceeding U.S. air pollution limits. 
"Offsets haven't even been discussed with InterGen and Sempra about the 
plants they're building," Cortez said. 








New Plant to Generate Electricity--and Hope 
Power: The Sunrise facility in Kern County is the state's first to start up 
in 13 years. 

By MITCHELL LANDSBERG, Times Staff Writer


?????It isn't much to look at. Just a couple of big turbines housed in 
dun-colored buildings that crouch on a dusty oil field in western Kern 
County. But the Sunrise Power Plant, which officially starts production 
today, represents a significant turn in California's energy fortunes.
?????After months in which the state's power supplies have ebbed more than 
flowed, Gov. Gray Davis will flip a switch this afternoon to start up 
California's first major new power plant in 13 years.
?????By itself, the Sunrise plant offers only a modest infusion of megawatts 
to the state's electrical grid, and blackouts remain likely during prolonged 
heat waves this summer. Its two generators--one will be fired up today and 
one tomorrow--will produce only slightly more than half the power that the 
plant should eventually be capable of generating when it reaches full 
capacity in two years.
?????But it is a start, one that is to be followed in the next week by two 
fully completed plants in Northern California. Together with a hodgepodge of 
other, smaller sources of electrical generation, the plants are expected to 
give California a 3,000-megawatt boost in electricity supplies by the end of 
July, enough to serve between 2 million and 3 million homes.
?????That isn't quite the 5,000 megawatts Davis had once promised to have in 
place by the start of the summer. But combined with a strong conservation 
effort, it is a significant addition to the state's bulwark against blackouts.
?????The state's newest source of power comes from what some might view as an 
unlikely source: Edison Mission Energy. Mission is one of the moneymaking 
arms of Edison International, whose flagship, Southern California Edison, has 
been laid low by the same set of circumstances that made Sunrise an appealing 
business prospect for its sibling.

?????Finished Ahead of Schedule
?????Edison Mission Energy is expected to earn about $1 million in state 
incentive awards by finishing the Sunrise plant more than a month ahead of 
schedule. The plant, begun Dec. 7, was completed in less than seven months, 
with crews sometimes working 18 hours a day, six days a week.
?????Its opening steals the spotlight from Calpine Corp., whose Sutter Power 
Plant north of Sacramento had been expected to be the first major plant to 
open in California since 1988. The Sutter plant is scheduled to begin 
official operations Monday, followed five days later by another Calpine 
project, the Los Mendanos plant in Contra Costa County. All three plants, 
Sunrise, Sutter and Los Mendanos, have been selling some power into the 
statewide transmission grid during shakedown tests over the last few weeks.
?????Edison signed a long-term contract with the state Department of Water 
Resources on Monday under which it will sell electricity from the Sunrise 
plant to the state for 10 years at an average price of 6 cents a 
kilowatt-hour, said Ronald Litzinger, a senior vice president with Mission 
Energy. That is substantially less than the prices charged by most companies, 
but Edison Mission Energy was bound by the terms of a larger bailout deal 
between the state and Edison, Litzinger said.
?????He said Mission Energy could cancel the power contract if the bailout 
failed to pass the Legislature, which appears increasingly possible.
?????Southern California Edison sold most of its natural gas-fired power 
plants to out-of-state companies after California deregulated its electricity 
market in 1998. The company fell into deep financial difficulty last year 
when an increase in natural gas rates kicked off a huge run-up in the 
wholesale price of electricity--including the power produced at former Edison 
plants. Unlike its Northern California counterpart, Pacific Gas & Electric, 
Edison has not filed for protection in Bankruptcy Court, but it has incurred 
huge debts and agreed to sell its vast transmission grid to the state.

?????Single-Cycle Operation
?????Edison Mission Energy, formed in 1986, owns about 80 power plants in 
nine countries and in more than half a dozen U.S. states. In addition to 
Sunrise, it owns nine smaller plants in California.
?????The plant that opens today is a relatively simple, single-cycle 
operation that burns natural gas to create electricity. A single-cycle plant 
operates much like a jet engine, burning fuel to spin turbines. The energy 
generated by the turbines is then converted into electricity.
?????By the summer of 2003, the plant will be converted to a more efficient 
combined-cycle plant, which turns the exhaust from the turbines into steam. 
The steam is then used to run another set of turbines and generate still more 
electricity.
?????As a single-cycle plant, Sunrise will be capable of producing about 320 
megawatts. When it is converted into a combined-cycle operation, it will be 
able to produce 585 megawatts.
?????The completion of the three large plants in Kern, Sutter and Contra 
Costa counties is one of several positive developments recently in 
California's electricity crisis.
?????Another was the decision of the Federal Energy Regulatory Commission to 
place a temporary cap on wholesale electricity prices throughout 11 Western 
states. And, just as significant, the California Energy Commission announced 
recently that Californians had not only met, but exceeded, the state's 
conservation goals.
?????Not everything has gone so well. Many of the small "peaker" power 
plants--so named because they are intended to operate only at periods of peak 
electricity use--are behind schedule, or at least behind the timetable laid 
out by the state earlier this year.
?????"We've slipped on that," conceded Claudia Chandler, a spokeswoman for 
the Energy Commission. Still, she insisted that the state is on track to come 
within a couple hundred megawatts of Davis' 5,000-megawatt goal by the end of 
September--too late for the peak of the summer, but useful for the fall 
"shoulder," when coastal California often experiences its hottest days.
?????"I think it's working out well," Chandler said. "I guess our learning 
curve here was that the development of these facilities took longer than we 
anticipated, but we'll still have them in September."
?????Meanwhile, after months of paying high electricity prices, the state is 
continuing to seek repayment for what it considers overcharges by electricity 
generating companies.
?????In Washington on Tuesday, FERC recessed an overcharge settlement 
conference after about 30 minutes of closed-door discussions. 
?????Curtis L. Wagner, the FERC administrative law judge who is mediating the 
refund talks, said he will hold individual meetings with conference 
participants before resuming discussions with all parties.
?????California officials participating in the negotiations were expected to 
meet with Wagner today.
?????Wagner has scheduled 15 days of talks with about 150 individuals 
representing 70 stakeholders in the West's electricity crisis.
?????On Monday, the opening day of the settlement conference, the judge 
admonished participants to reach agreement among themselves on how much money 
power generators should refund to the state. Davis has pegged the amount owed 
at nearly $9 billion, but state records show that figure may be flawed. 
Generators say the governor's number is wildly overstated.
---
?????Times staff writer Anuj Gupta in Washington contributed to this story.

Copyright 2001 Los Angeles Times 








Edison Delays Sale of $1.2 Billion in Bonds 
Utilities: Slated offering was to repay bank loans due Saturday and later 
this year, but the parent of SCE appears unable to interest investors. 

By JERRY HIRSCH, Times Staff Writer


?????A financial rescue plan for Edison International was placed in doubt 
Tuesday when the company delayed a bond offering intended to pay off $618 
million in bank loans that come due Saturday.
?????The delay of the $1.2-billion note sale indicated investors were 
reluctant to lend more money to the corporate parent of Southern California 
Edison, fearful that Edison and its utility could be forced to file for 
bankruptcy in the coming weeks, said Jon Cartwright, a bond analyst at 
Raymond James & Associates in St. Petersburg, Fla.
?????"This is a disaster waiting to happen," Cartwright said.
?????Last week, a spokesman for Edison's investment bank Goldman Sachs Group 
said the note offering was expected to be completed Monday. Goldman Sachs 
then moved the sale to Tuesday. But by the time U.S. markets closed Tuesday, 
the seven-year notes still were not sold.
?????Goldman Sachs officials did not return calls. In a conference call with 
SCE creditors, Edison officials would not talk about the bond offering or its 
status.
?????Analysts said Edison and Goldman Sachs officials are searching for ways 
to get the sale completed before Saturday's deadline. Their choices range 
from restructuring the deal to make it more attractive to investors, to 
simply continuing to raise the interest rate on the notes.
?????The note sale, which would be secured by Edison's profitable Edison 
Mission Energy subsidiary, would have paid off the company's outstanding bank 
debt on the notes due Saturday, $250 million in notes due July 18 and $350 
million due Nov. 1.
?????To lure investors, the Rosemead-based company has repeatedly boosted the 
interest rate it's willing to pay.
?????When Edison first talked about the offering several weeks ago, analysts 
said it could carry an interest rate of about 10%. But that figure has 
increased to 12% and then 13% in recent days, and now Wall Street sources say 
the latest talk has the interest rate set at 13.5%.
?????Carrying a Standard & Poor's credit rating of BB-minus, the proposed 
seven-year notes would have an interest rate double what a credit-worthy 
company would pay for a similar issue. Indeed, Sempra Energy, owner of San 
Diego Gas & Electric and the Southern California Gas Co., sold $500 million 
in three-year notes Tuesday at 6.8%. Edison's rumored rate is 2 percentage 
points higher than the average rate for other "junk," or speculative, bonds.
?????"Every day they don't price suggests they can't get the orders," 
Cartwright said. He said it may take a 14% or 15% rate to get potential 
buyers interested.
?????Meanwhile on Tuesday, investors bid up the price of bonds for Edison 
Mission Energy in the belief that its parent won't be able to pull off the 
note sale, and thus not encumber the profitable subsidiary with new debt. 
That was viewed as a positive development for Edison Mission Energy, said 
Douglas Christopher, a utility analyst at Crowell, Weedon & Co. in Los 
Angeles.
?????If the proposed bond offering fails, Edison might have to deplete most 
of its cash reserves, Christopher said.
?????The company had about $3 billion in cash at the end of March, according 
to Securities and Exchange Commission documents. But about $1.5 billion is 
tied up at SCE. SCE holds another $500 million that is committed to the 
California Department of Water Resources.
?????SCE creditors, who hold $931 million in defaulted utility bonds and 
debt, probably would block any attempt by Edison to tap into the utility's 
funds, even if they had to file an involuntary bankruptcy petition against 
the utility, said Nellwyn Voorhies, a San Diego lawyer who represents SCE 
bondholders.
?????Edison also could go back to its bankers and request continued 
forbearance. That would buy time until the $250 million in notes come due in 
July.
?????Edison shares, which trade on the New York Stock Exchange, fell 33 cents 
to close at $11.24 Tuesday.
?????The notes are being offered by Mission Energy Holding Co., a company 
created by Edison for the purpose of issuing the notes. The assets of Edison 
Mission Energy, which owns a network of power plants across the United States 
and in Asia, Australia and New Zealand, will secure the debt. Mission Energy 
Holding plans to issue the proceeds to Edison in the form of dividends.
?????Edison's financial troubles developed over the last year as SCE lost 
billions of dollars on electricity sales when energy prices peaked.

Copyright 2001 Los Angeles Times 








Union Seeks to Return to Reliant Power Plant 
By NANCY CLEELAND, Times Staff Writer


?????Workers at a San Bernardino power plant bought by Houston-based Reliant 
Energy Inc. will vote Tuesday on whether to bring back the union that 
represented them when the facility was owned by Southern California Edison.
?????The rancorous campaign leading up to the vote illustrates one ancillary 
result of deregulation, which pushed the state's three largest utilities to 
sell their generating plants.
?????Of a dozen plants sold by Rosemead-based Edison International, nine that 
were bought by Reliant and Virginia-based AES Corp. went nonunion over the 
last year. In contrast, Duke Energy Corp. and Mirant Corp. retained union 
work forces at five plants they bought from San Francisco-based Pacific Gas & 
Electric Co.
?????The change in Edison territory affected two union locals, but the harder 
hit by far was the Utility Workers Union of America, Local 246, which lost 
half its membership in a matter of months. The vote planned for Tuesday at 
the Etiwanda plant in San Bernardino, which has 34 eligible employees, is the 
first test of that union's efforts to rebuild.
?????Organizers said the campaign has met with resistance. "It's tough 
going," local President Dan Davis said. "People are afraid of losing their 
jobs, and [Reliant] has a lot of money to throw around."
?????This month, Reliant lost a similar battle at its Coolwater generating 
plant in Barstow, where employees voted to rejoin the International 
Brotherhood of Electrical Workers, Local 47. 
?????IBEW business agent Pat Lavin said that all 35 employees had signed 
union pledge cards, but that the company would not recognize the union 
without a federally supervised election. During the intervening months, 
employees were aggressively lobbied to reject the IBEW. "The union is only 
here for your money," wrote plant manager Danny Ross in a June 1 letter to 
workers. "They did not offer you a job. I DID!"
?????The union barely won, by a vote of 17 to 15.
?????Several days later, Reliant announced an "extraordinary incentive 
program," offering $500 to $2,000 per month to workers at California 
generating plants who meet basic production goals. There was one catch, 
however: The program, which runs through October, is not available to workers 
who are unionized or have filed a petition for a union election. 
?????Davis said the offer had an immediate chilling effect on his local's 
campaign at Etiwanda and dims the prospect of organizing other Reliant 
plants. "People have called us asking, can't we put off the election until 
the summer's over?" he said.
?????Reliant spokesman Richard Wheatley said the program was intended to 
improve production during the difficult summer months, not to blunt the union 
campaign. "We have not used the letter to coerce employees but to inform 
them," Wheatley said. "We are being upfront. . . . As a company, we are 
prohibited by law from improving existing wages or benefits during the course 
of a union campaign."
?????A spokesman for the National Labor Relations Board said the offer fell 
into a gray area of labor law that would be examined by the agency if the 
union filed a grievance. Such an investigation would delay the vote, however.
?????In California, as across the nation, unions objected strenuously to 
deregulation, claiming the trend could lead to an erosion of wages and 
benefits as well as safety and reliability. The generators argued that 
deregulation would bring lower rates, greater choice for consumers and 
improved service.
?????The union hopes a victory Tuesday will build momentum for reorganizing 
other plants, but they concede it's a tough fight for plants that were once 
theirs. "It's like trying to move a mountain, one grain at a time," said Dan 
Dominguez, an organizer for the Utility Workers Union of America.
?????Reliant shares fell 5 cents to close at $30.50 on the New York Stock 
Exchange.

Copyright 2001 Los Angeles Times 








Retired PG&E Executives Seek Full Pensions in Bankruptcy Case 
Power crisis: Members of group lost part of their retirement money when firm 
filed for protection. By TIM REITERMAN, Times Staff Writer


????? SAN FRANCISCO--While Pacific Gas & Electric Co. hopes to pay millions 
of dollars in bonuses to retain its current managers, dozens of retired 
high-ranking PG&E executives have lined up as creditors in the utility's 
bankruptcy case, saying part of their pensions have stopped coming.
?????The retirees--ranging from chief executive officers to vice 
presidents--are upset to find themselves among those owed money by the 
company they once ran, their attorney said.
?????"Some are more so than others, depending on how it has affected them 
financially," John T. Hansen said. "They think the company . . . should have 
done something to avoid this situation. Most were career employees . . . and 
represent close to 1,000 years' service to a company they felt owed them 
better treatment than this."
?????A company spokesman said a portion of the executives' pensions was not 
guaranteed and "unfortunately" had to be suspended once the company filed for 
bankruptcy protection.
?????PG&E filed for Chapter 11 protection from creditors April 6, declaring 
$9 billion in debts related to the energy crisis. The company identified 
thousands of creditors, including vendors, banks and energy companies that 
supplied power to the utility's customers.
?????But because of their longtime service to PG&E, the 33 former executives 
are perhaps the most unlikely group to band together and hire an attorney to 
ensure they receive their due as the company's financial affairs are 
reorganized.
?????Among them are onetime CEOs Frederick Mielke, Richard A. Clarke and 
Stanley T. Skinner. Former PG&E presidents George Maneatis and Barton W. 
Shackelford also are claimants, along with former vice presidents who oversaw 
such areas as natural gas and electricity supplies, engineering, customer 
service and human resources.
?????Court records list them as the Committee of PG&E Retirees and Survivors, 
which was formed to seek their benefits under what is known as the 
Supplemental Executive Retirement Plan. The plan was designed to provide 
additional retirement benefits to PG&E's highest-paid employees.
?????Unlike the pensions of rank-and-file workers, the supplemental plan was 
not secured, or guaranteed, under federal retirement rules.
?????"Part of their pensions are protected, but in many cases that is a small 
part of their pensions," lawyer Hansen said. "The more you make, the greater 
part of your pension is not qualified, or protected."
?????Shackelford, who put in 39 years before retiring as president in 1985, 
said, "We knew part of [the pension] was at risk. But, of course, I don't 
think many people thought that PG&E was likely to go into bankruptcy."
?????The former executives, Shackelford said, only seek to be treated like 
other unsecured creditors, meaning they want PG&E to make good on its vow to 
make creditors whole.
?????"I don't know how long it will take," he said.
?????The executives' claims are expected to amount to millions of dollars. 
Hansen said the total covers not only missed monthly pension payments in May 
and June but also lifetime payments for the retirees and, in some cases, for 
spouses.
?????Some claimants left the company almost a quarter of a century ago and 
are in their 80s. Others took early retirement and are in their 50s. Two are 
widows, and two are ex-spouses.
?????Most remain well-situated financially, Hansen said, but one recently put 
his house on the market out of concern for his finances.
?????"Many of them made pretty good salaries while there, and if they were at 
all prudent, they have assets," the attorney said. "For many of them their 
main assets are stock in PG&E, so they have lots of depressed stock which is 
not paying a dividend now."
?????The retiree committee did not intervene recently when PG&E asked for and 
received tentative approval from the federal bankruptcy judge to spend $17.5 
million on bonuses to help retain its present management team. But the 
committee's bylaws state that it would use litigation, if necessary, to 
ensure "the continuation of all pension payments, deferred compensation, 
insurance annuity payments and other similar benefits."
?????PG&E spokesman Ron Low said 50 retired executives and about 35 other 
senior employees have a portion of their retirement benefits in unsecured 
plans and are considered creditors.
?????The company declined as a matter of policy to discuss the pensions of 
individual employees. But Low noted that under federal law, the maximum 
benefit that can be paid through secured plans is $140,000 a year, so 
anything above that is not guaranteed.
?????"Unfortunately, individuals who have a portion of their retirement in 
non-qualified programs are unsecured creditors," Low said. "It means 
[unsecured] benefits would be suspended until the company emerges from 
Chapter 11."
?????That means their claims will be handled in U.S. Bankruptcy Court with 
those of other unsecured creditors, whose debts are not backed by utility 
assets. The company has identified more than 100,000 potential claimants. On 
July 7, PG&E will mail "proof of claim" forms to potential creditors, and 
nongovernmental claimants must return them by Sept. 5.
---
?????Times researcher Vicki Gallay contributed to this story.

Copyright 2001 Los Angeles Times 








600-megawatt plant OKd in San Jose council reversal 
Chronicle Staff Report
Wednesday, June 27, 2001 
,2001 San Francisco Chronicle 
URL: 
http://www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2001/06/27/M
N75885.DTL 
The San Jose City Council gave final approval last night to plans for a 
controversial power plant that was mired in debate for the past year. 
The council voted 10 to 1 to approve the Metcalf Energy Center, a $400 
million, 600-megawatt plant that will be built this year for Calpine Corp. by 
Bechtel Enterprises. Last night's proposal is essentially the same plan the 
council unanimously rejected in November, before California's energy crisis 
had taken hold. 
Mayor Ron Gonzales originally argued that the power plant was too close to a 
neighborhood and to workers at a huge office park that Cisco Systems is 
planning to build. But the city took a nationwide public-relations beating 
for its opposition, and the proposal was appealed to the California Energy 
Commission. 
City officials, anticipating that their opposition would be overturned by the 
commission, negotiated an agreement in which Calpine gives San Jose $6.5 
million in "community benefits" payments for city cooperation. 
,2001 San Francisco Chronicle ? Page?A - 13 




California to justify its claim of $9 billion in overcharges 
MARK SHERMAN, Associated Press Writer
Wednesday, June 27, 2001 
,2001 Associated Press 
URL: 
http://www.sfgate.com/cgi-bin/article.cgi?file=/news/archive/2001/06/27/state1
933EDT0238.DTL 
(06-27) 01:30 PDT WASHINGTON (AP) -- 
California officials will attempt to justify their claim that energy 
providers overcharged the state by $9 billion when federal settlement talks 
over the West's energy crisis resume Wednesday. 
California's allegations of price-gouging during the last 13 months are 
expected to dominate the third day of confidential negotiations involving 
scores of entities who buy and sell power in California and 10 other Western 
states. 
A new analysis backs up the $9 billion figure, said Michael Kahn, chairman of 
the California Independent System Operator, which manages much of the state's 
electricity grid. 
But that study, as well as an earlier analysis prepared by the grid operator, 
suggest that several billion dollars might lie beyond the reach of federal 
energy regulators. Last week, regulators ordered the talks as part of an 
effort to get a handle on Western energy prices. 
The commission's order last week extended price controls in California and 
imposed them in the rest of the Western power grid, covering all sellers. It 
also gave the parties until July 9 to settle a host of issues, including $15 
billion in alleged overcharges in California and elsewhere in the West, 
generators' unpaid bills and additional long-term power contracts. 
Kahn said roughly $3 billion in alleged overcharges occurred before Oct. 1, 
which FERC has said marks the start of its authority to investigate pricing 
abuses. 
Another portion of the money California is seeking in refunds would come from 
municipal utilities and other power sellers that until now have not come 
under the energy commission's jurisdiction. 
California will try to argue that neither of those factors should influence a 
settlement. 
"We respectfully disagree with FERC on the October situation," Kahn said. "We 
think we suffered greatly last summer. It's inexplicable to us that we would 
not be allowed to seek refunds for that period." 
Kahn, the state's chief representative at the Washington talks, will contend 
that the regulators' expanded view of their authority also should apply 
retroactively. 
"We determined that if the plan had been in effect since May 2000, that the 
numbers were approximately $9 billion," Kahn said. 
A negotiated settlement -- rather than an order from regulators -- also could 
allow power users and providers to reach agreement on issues that might not 
be in FERC's domain. Those issues include whether generators would be 
protected from lawsuits over their prices, said Mark Cooper, research 
director for the Consumer Federation of America. 
"It's one of the concerns we have, that we might not get a clear ruling and 
that we run the risk of losing our litigation rights," Cooper said. 
Wholesale power costs in California were $7 billion in 1999, rose to $27 
billion last year and could top $50 billion this year, according to state 
estimates. Federal regulators have on several occasions said the recently 
deregulated electricity market is dysfunctional. 
Power wholesalers have dismissed the state's claim as grossly inflated. They 
say high prices have been justified by a shortage in natural gas, which fuels 
many power plants. 
The generators said they have yet to be paid billions of dollars for power 
that already has been supplied. 
"California for some reason feels that they're entitled to free energy," said 
Richard Wheatley, a spokesman for Houston-based Reliant Energy. "Reliant and 
other generators have been California's energy bankers for some time." 
Wheatley said Reliant is owed $337 million for past power sales. 
Generators probably would have to pay no more than $2.5 billion in refunds, 
said Curtis Wagner, who is FERC's chief administrative law judge and is 
overseeing the negotiations. 
Associated Press Writer Don Thompson in Sacramento contributed to this story. 
On the Net: 
Federal Energy Regulatory Commission: www.ferc.gov 
,2001 Associated Press ? 




Cheaper electricity won't trim bills 
Rate increase to pay off big state debts takes effect next month 
Tyche Hendricks, Chronicle Staff Writer
Wednesday, June 27, 2001 
,2001 San Francisco Chronicle 
URL: 
http://www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2001/06/27/M
N204070.DTL 
A rate increase passed last month will begin showing up on electricity bills 
next month to pay off billions of dollars in debt that the state has incurred 
buying power on the spot market. And new long-term energy contracts may lock 
California into paying higher-than-market rates for future electricity. 
The only bright spot for ratepayers is that consumer prices for natural gas, 
which went through the roof last winter, are at last back to reasonable 
levels. 
Oakland resident Linda Lewis, 45, a security guard, said something has to 
change. One month's bill -- gas and electricity combined -- for her drafty 
two- bedroom apartment in a converted garage ran $700 last winter. 
K.J. Jennings, 36, a Walnut Creek electrician, said he is crossing his 
fingers that his electricity bill will come down, now that wholesale prices 
are dropping. 
"Of course, I'm hoping. Hope springs eternal," he said. "But I doubt it will. 
Once it goes up, it's hard to get it to go back down." 
In fact, unlike retail rates for natural gas, which go up and down with the 
market price, electricity rates are set by law and adjusted by state 
regulators. 
"I wouldn't expect to see decreases anytime soon," said Matt Freedman, a 
staff attorney for The Utility Reform Network, a consumer advocacy group in 
San Francisco. "We're in a very short-term dip here. We have no idea what the 
price of power will be next week or next month or next year." 
Freedman said that if wholesale electricity prices stay low his group would 
fight for lower bills for consumers. But the recent rate increase will be 
needed for years to come to help the state pay off the $8 billion it has 
spent buying power on the wholesale market for the utilities to distribute to 
their customers, he said. The state stepped in in January when the utilities 
were unable to pay their bills and power generators threatened to stop 
selling them electricity. 
HUGE DEBTS TO REPAY
"The state has these huge debts . . . that will be paid by the ratepayers," 
Freedman said. "That's why people shouldn't expect that prices going down 
temporarily will rescind the rate increase." 
In addition, the state's utility companies are negotiating with Gov. Gray 
Davis for debt relief that, if approved, could cost ratepayers an additional 
$10 billion over the next decade, according to Freedman. 
Finally, he said, "whether or not power is cheap on the spot market may not 
matter at all" now that Davis has approved long-term contracts with energy 
generators that guarantee the state will pay a consistent price. 
Although the contracts provide some stability in a volatile situation, it 
remains to be seen whether or not the governor got a favorable rate. 
"It may end up being far more expensive than the alternatives available on 
the market," said Freedman. "It would be like getting a fixed-rate mortgage 
at the worst possible time." 
RATE INCREASES OF UP TO 36%
Under electricity rate increases approved by the state Public Utilities 
Commission in March, medium users will pay 9 percent more and bills for the 
heaviest users will increase by 36 percent, while the lowest users will pay 
about the same. Meanwhile, consumers are beginning to get some relief in the 
price of natural gas, which in recent months has made up the lion's share of 
residential utility bills. 
"The gas portion fluctuated pretty wildly this winter" but seems to be 
settling down, said Pacific Gas and Electric Co. spokeswoman Staci Homrig. 
This month, the price of one therm of gas was 48 cents, down dramatically 
from January, when it cost $1.42, but still higher than January 2000, when 
the rate was 31 cents per therm, according to Homrig. 
Those rates translated into an average residential gas bill of $122 for 
January 2001, compared with $46 for January 2000, she said. The average bill 
for June 2001 was $26, she said, only slightly higher than the June 2000 bill 
of $23. In warmer months, when furnaces get turned off, gas usage is usually 
less than half that in the winter, said Homrig, and prices drop as a result. 
But because natural gas prices are passed through to the consumer, they could 
rise again at any time, said Freedman. 
"I would caution folks who think that there's a trend toward lower prices," 
he said. "We're in for an extended period of volatility." 
PUC rate increases 
The electricity increases approved last month are intended to punish the 
heaviest users. A look at the average increase for residential users: 
-- -- Baseline: 
$0 (0% increase) 
-- 200% of baseline: 
$6 (7% increase) 
-- 300% of baseline: 
$24 (15% increase) 
-- 400% of baseline: 
$87 (40% increase) 
E-mail Tyche Hendricks at thendricks@sfchronicle.com. 
,2001 San Francisco Chronicle ? Page?A - 1 




Duke buys ads to deny claim of workers 
Firm not allowed to speak at hearing 
Kelly St. John, Chronicle Staff Writer
Wednesday, June 27, 2001 
,2001 San Francisco Chronicle 
URL: 
http://www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2001/06/27/M
N167985.DTL 
The Duke Energy Corp. has begun a statewide advertising campaign to rebut 
assertions by former employees that it decreased production at a power plant 
to drive up electricity prices. 
Duke has purchased full-page advertisements in more than a dozen California 
newspapers -- including The Chronicle, Los Angeles Times and Sacramento Bee 
-- which read, "Duke Energy categorically denies the allegations, and we want 
you to know the truth." 
"Our reputation is critical to us," said Duke spokesman Tom Williams 
yesterday in a phone interview. "We're going to set the record straight." 
The ad blitz is the North Carolina company's first statewide advertising 
campaign and marks the first time the company has used advertising to defend 
itself against public accusations, Williams said. 
It comes after public testimony Friday by Glenn Johnson, Jimmy Olkjer and Ed 
Edwards before a state Senate committee investigating price manipulation in 
the California energy market. 
The men, all employees of San Diego Gas & Electric Co., worked at Duke's 
Chula Vista plant as contract employees until April. 
They said Duke Energy ramped production up and down at the Chula Vista plant, 
idled some units altogether and threw away unused equipment -- all in 
attempts to drive up electricity prices. 
Company spokesmen have called the three whistle-blowers "disgruntled." They 
were not hired by Duke after their contract was terminated. 
Duke Energy was not allowed to testify Friday morning in response to the 
allegations, Williams said. 
The advertisements say that Duke Energy's plants were operated under the 
Independent System Operator's direction, noting that Duke's average price for 
power in early 2001 was well below the spot market price for the same period. 
The ads also address testimony by Olkjer, a former control room operator, who 
took the Senate committee through a smuggled operation log and said at least 
one unit reduced its power output just minutes before a Stage 3 alert. 
The ads say output is directed by California's Independent System Operator, 
not Duke. They note that the employees were not in a position to know that. 
The Chronicle received $62,178 for the ad running in today's main news 
section. 
E-mail Kelly St. John at kstjohn@sfchronicle.com. 
,2001 San Francisco Chronicle ? Page?A - 13 




News briefs on California's power crisis 
The Associated Press
Wednesday, June 27, 2001 
,2001 Associated Press 
URL: 
http://www.sfgate.com/cgi-bin/article.cgi?file=/news/archive/2001/06/27/state0
512EDT0125.DTL 
(06-27) 02:12 PDT CALEXICO, Calif. (AP) -- 
Two power plants that will be built outside Mexicali, Mexico will boost 
emissions in the border region that already has air quality problems, 
according to a recent report. 
The Imperial County Air Pollution Control District found that the two plants 
will pump more than 4,000 tons of pollutants every year into the skies above 
Mexicali and Imperial County. Mexicali is only 10 miles from the California 
city of Calexico. 
"We're not opposed to power plants, but we are concerned about the emission 
levels and the impact it will have on the health of the citizens of the two 
areas and the impact it could have on the region's economic development," 
said Steve Birdsall, a district pollution control officer. 
The total emissions from the two plants would rise by more than 12 percent in 
Mexicali while cross-border emissions would increase by more than 7 percent. 
The report was based on information from permit applications filed with the 
Mexican government. 
The two plants are being built by Sempra Energy of San Diego and global power 
generation firm InterGen. The plants, which will be operating in two years, 
could provide electricity to 600,000 homes in California. Both energy 
providers have permits from the Mexican government and are ready to start 
construction. 
Environmental standards for power plants are less stringent in Mexico than 
the United States. The report said the generators will have "a far greater 
negative impact on U.S. and Mexican citizens living in the border region than 
if these plants were constructed a few miles to the north in the United 
States." 
A coalition of business leaders, community activists and residents have 
launched a campaign to address concerns about the generators. They plan to 
send letters to government officials on both sides of the border that stress 
the emission levels are too high. 
But Joel Epstein, a consultant for InterGen, said the company's research 
shows the emissions won't have a significant impact on either side of the 
border. 
TEMECULA, Calif. (AP) -- San Diego Gas & Electric Co. has apologized to the 
state's Public Utilities Commission for a series of newspaper advertisements 
that misstated the board's support of its proposed 31-mile power line through 
southwestern Riverside County. 
In a letter sent Tuesday to PUC Administrative Law Judge Michelle Cooke, 
SDG&E attorney Steve Nelson wrote the utility incorrectly said the commission 
considered the transmission line a state priority. 
"We regret any implication that the commission has already found that the 
project is needed and any ... confusion this statement may have caused to 
either the commission or the residents of southwestern Riverside County," 
Nelson wrote. 
The judge, who previously expressed doubts about the project, said the letter 
will be placed in the case file. 
The utility wants to build a 500,000-volt power line that will connect its 
grid to a unit operated by Southern California Edison. The California 
Independent System Operator has approved the project but it still needs the 
green light from the PUC. 
The ads ran in The Riverside Press-Enterprise and The Californian and said 
the state commission "identified the transmission line as one of the most 
important in the state of California." 
Representatives of a group opposing the project said the letter spreads 
misinformation to the public. 
"They are just trying to gloss it over and appease the commission," said 
Sandy Spooner, a board member for Save Southwest Riverside County, an 
organization that brought the ads to the attention of the commission. "The 
only reason they sent the letter is that they got called on it." 
,2001 Associated Press ? 




State to take delivery of cheap electricity 
L.A. selling at cost, Bakersfield plant opening early 
Lynda Gledhill, Chronicle Sacramento Bureau
Wednesday, June 27, 2001 
,2001 San Francisco Chronicle 
URL: 
http://www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2001/06/27/M
N212287.DTL 
Sacramento -- California will get an influx of cheap power from several 
different sources starting this week as the state continues attempts to stave 
off summer blackouts. 
The Department of Water Resources has reached an agreement in principle to 
receive as much as 500 megawatts of power from Los Angeles at cost. And Gov. 
Gray Davis travels to Bakersfield today to flip the switch at a new power 
plant that is starting up 32 days ahead of schedule. 
"I think the department wants to continue to be a good neighbor," said David 
Wiggs, general manager of Los Angeles Department of Water and Power. "We want 
to be part of the solution, not part of the problem." 
The agreement with Los Angeles comes less than a month after Davis threated 
to seize excess power generated by California's municipal utility districts, 
which he said charged the state as much as 10 percent more than private 
out-of- state generators. 
Last month, the governor said he would use his executive powers to claim 
excess power from the municipal utilities if they do not lower their prices. 
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. 
Wiggs said his department's three-month contract, which should be approved by 
the board this week, will provide the state enough power to serve 500,000 
homes. 
Los Angeles had been offering short-term power earlier in the year at cost 
plus 15 percent. But the longer contract will allow for cheaper natural gas 
and push down costs. 
"It is easier for us to plan and for the state to plan," he said. "We will 
re-evaluate it in September." 
A spokesman for the Department of Water Resources would not comment on the 
contract because it is not yet final. 
The Davis administration is also touting three new power plants that are 
coming on line this month. 
Today, he starts the Sunrise Plant, which will eventually provide 585 
megawatts by 2003 and is owned and operated by Southern California Edison. 
Under the terms of the memorandum of understanding between Davis and Edison, 
the power from the plant is scheduled to be provided to the state at cost for 
the next 10 years. 
If the state does not ratify the memorandum, the company can walk away from 
the deal. 
The plant was constructed in less than seven months, with employees working 
18-hour days, six days a week, said Steve Larson, executive director of the 
California Energy Commission. 
"This is a red-letter day," Larson said. "The company and crew did a 
remarkable job, pitched in and made it happen." 
Edison and its contractors are eligible for about $1 million in bonuses for 
completing the project ahead of schedule through a program instituted through 
an executive order by Davis. 
"We are extremely proud that Sunrise is coming on in a rapid fashion," said 
Ron Litzinger, a senior vice president for Edison. "We will be providing low- 
cost power for the people of California over the next 10 years." 
California has been importing about 20 percent of its power in recent years. 
Even though about a dozen power plants are approved or under construction, 
Davis does not expect supply to match demand until late 2003. 
E-mail Lynda Gledhill at lgledhill@sfchronicle.com. 
,2001 San Francisco Chronicle ? Page?A - 13 








New plants, voltage plan may help reduce blackouts 
Posted at 11:32 p.m. PDT Tuesday, June 26, 2001 
JOHN 
WOOLFOLK 
Mercury News 

California's first major power plant in more than a decade will begin pumping 
badly needed electricity into the grid today, leading a new wave of 
generators to ease the state's energy drought. 
Gov. Gray Davis at noon will flip the switch at the 320-megawatt Sunrise 
Cogeneration and Power Project near Bakersfield, unleashing enough 
electricity for some 240,000 homes. It is the first of three power plants to 
come online in the next two weeks. 
``This really is a red-letter day,'' said Steve Larson, executive director of 
the California Energy Commission. ``This is the first of the major power 
plants to come online that we've been planning for.'' 
On the heels of the Sunrise plant are two major Calpine projects. The 
500-megawatt Sutter Power Plant in Yuba City begins operation early next 
week, followed the week after by the company's 559-megawatt Los Medanos 
Energy Center in Pittsburg. 
California's failure to build enough new power plants for its needs has been 
the core of the state's deregulation failure, spawning an energy crisis and 
national ridicule. Davis, elected in 1998, has been quick to point out to 
critics that the new plants put more power online than all the plants 
approved during the previous administration. 
Blackout threats linger 
Together, the three plants add nearly 1,400 megawatts to the power grid as 
the state enters its hottest months, when energy demand for air conditioning 
peaks. 
The big new guns in California's energy arsenal won't end the state's 
blackout threats. The California Independent System Operator estimates 
shortages from a few hundred to a thousand or more megawatts this summer, 
depending on weather and plant failures. 
But with most of the state's plants dating to the 1950s and '60s and prone to 
breakdowns, the new generators offer considerable relief. 
``It's very encouraging for us as the operator of the state's grid to see new 
generation of this magnitude come online to help manage the shortfalls 
expected this summer,'' said Jim Detmers, vice president of grid operations 
at the ISO. 
The state's last major power plant, the 385-megawatt ARCO Watson Cogeneration 
plant in Los Angeles, opened in April 1988. 
The $200 million Sunrise plant, a joint project of Edison Mission Energy and 
Texaco, will go online just six and a half months after the state approved it 
and 32 days ahead of schedule. Edison has offered the plant's power to the 
state at cost-based rates. 
The record construction rate makes Sunrise the first and only project 
eligible for the $1 million carrot that Davis dangled for companies that got 
new generators online before July, Davis spokesman Roger Salazar said. Crews 
worked 18 hours a day, six days a week. 
History of new plants 
In the early 1990s, before deregulation, the state approved 11 small and 
mid-size power plants. Of those, eight totaling 952 megawatts were built, but 
three others were not, including a 242-megawatt project turned down by San 
Francisco. 
As the state began restructuring its energy system, market uncertainty 
discouraged investment in new power plants, and no companies proposed them 
from 1994 to 1997. 
Since deregulation in 1998, the state has approved 28 plants totaling more 
than 11,000 megawatts. Half of them totaling about 4,000 megawatts will be 
online by the end of this year. 
The Sunrise plant will spend its first two years as a simple-cycle 
``peaker,'' fired up to meet peak daytime demand. But its pollution output is 
low enough to qualify for round-the-clock operation, said Ron Litzinger, an 
Edison senior vice president. 
Edison plans to upgrade the plant to a more efficient, combined-cycle design 
generating 585 megawatts by the summer of 2003. 
Speedy construction 
Builders said they didn't cut corners to claim the state's $1 million prize 
but rather benefited from local experience in constructing this type of 
plant. 
``There was nothing unusual about the design or process that contributed to 
quick construction,'' said Doug Zimmerman, executive secretary of the Kern 
County Building Trades Council. ``They are not new to cogeneration plants. 
They have built quite a few in the area over the years. Once you build one, 
they all seem to be the same.'' 
Edison signed a 10-year contract Monday to sell the plant's power to the 
state at a rate based upon the price of natural gas plus a capacity payment. 
The cost averages $60 per megawatt-hour, or 6 cents a kilowatt-hour, based 
upon current gas prices, Litzinger said. 
The company can back out of the deal if the state doesn't approve a proposed 
bailout to rescue Southern California Edison by buying its transmission lines 
for $2.76 billion, Litzinger said. That proposal has gotten a chilly 
reception among lawmakers. 


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












Utilities await OK to reduce voltage 
Posted at 11:31 p.m. PDT Tuesday, June 26, 2001 
BY PAUL ROGERS 

Mercury News 


After two weeks of quiet but successful testing, California's three major 
utilities have agreed in principle to slightly reduce the voltage across much 
of the state's power grid, a change that could reduce blackouts this summer 
by saving substantial amounts of electricity. 
The three -- Pacific Gas & Electric Co., Southern California Edison and San 
Diego Gas & Electric -- announced the reduction is feasible during a 
conference call with state officials and scientists on Monday afternoon. 
Before taking significant action, however, the utilities plan more tests, and 
are awaiting direction from Gov. Gray Davis, who could make an announcement 
later this week or early next week, the Mercury News has learned. They also 
must address the concerns of customers, who may be unfamiliar with the 
concept and worried it could damage appliances or computers. 
Changes could begin in the next several weeks and continue into the summer as 
workers adjust substations statewide, turning down voltages like motorists 
slightly lifting their foot from the accelerator to save fuel. 
For now, supporters say, the idea is one of the more promising ways to help 
get California through the summer. 
``I would be surprised if there is anything that derails it at this point,'' 
said Bob Kinosian, energy adviser to Loretta Lynch, president of the state 
Public Utilities Commission. ``We are being very careful. But barring some 
totally unforeseen circumstances, I expect we'll be doing it.'' 
No noticeable change 
Under the proposal, the utilities would reduce the voltage delivered to homes 
and businesses from the present level of 120 volts to roughly 117 volts. 
Such a drop, if widely imposed across the state, could save 500 megawatts of 
electricity during hot days -- the equivalent of a large new power plant, or 
enough electricity for 375,000 homes. 
A small voltage drop of 2 or 3 percent would cause almost no noticeable 
change to appliances and computers, but might occasionally dim some lights, 
experts say. 
``People should see no negative effects at 117 volts,'' said Larry Conrad, a 
member of the voltage standard committee of the American National Standards 
Institute, a non-profit organization in Washington, D.C., that helps 
coordinate electrical levels. 
``It sounds like a good deal to me.'' 
The utilities, supported by a number of prominent California scientists, are 
playing a delicate balancing game. 
Under state law, the power grid must deliver electricity at a range of 114 
volts to 126 volts. Most appliances are built to operate best at about 115 
volts, but can range from 110 to 130. 
But if voltage is dropped too low, say below 110 volts, it can damage 
appliances by overheating motors. 
``We're never concerned at 114 at the meter,'' said Conrad. ``But if it got 
to 110 I'd be worried about air conditioning and refrigerators -- as voltage 
gets that low, you start losing efficiency.'' 
PG&E's adjustments 
John Nelson, a spokesman for PG&E, said that PG&E supports dropping voltages 
lower where it can, but will not go below the state standard. 
``The utilities agreed to analyze the test results from the past several 
weeks and use them to determine on a circuit-by-circuit basis where 
additional voltage conservation can occur, and then implement that 
conservation wherever practical,'' Nelson said. 
PG&E must manually adjust many of its 700 substations and 2,900 circuits, a 
job that could take several months to finish, he said. 
Nelson noted that officials of the Public Utilities Commission have said they 
will meet as soon as July 12 to discuss the issue. The PUC may debate 
granting utilities an emergency waiver from the standards that would allow 
some homes -- particularly in outlying areas at the end of long circuits 
where voltage tends to drop off slightly -- to receive power as low as 110 
volts temporarily, he said. 
Turning down the voltage would be easier for Southern California Edison, 
which can make the change along most of its system by radio control. 
``It appears to work. It's got enough potential to look hard at,'' said John 
Ballance, director of network engineering at Edison. 
``It's probably a good thing to do,'' he added. ``As long as we keep the 
voltages above 114, we can do that. If it is going to go below 114, the PUC 
has to step in.'' 
Duration unknown 
It's unclear yet whether the change would be permanent all summer, or only 
reduce voltages during power emergencies. Utilities are still studying that. 
Roger Salazar, a spokesman for Gov. Davis, said the governor is still 
listening to advice from experts. 
``We think it's a very interesting idea,'' he said. ``We are looking for 
every additional opportunity to squeeze more megawatts from the system.'' 
The latest plan grew from experiments at PG&E's San Ramon testing center in 
April. Bill Wattenburg, a nuclear physicist and former professor of 
electrical engineering at the University of California-Berkeley, helped 
oversee experiments to turn down voltages on appliances, TVs, computers, pool 
pumps and other equipment. The tests showed that small changes in voltage 
would not damage the appliances and could ``give the governor the equivalent 
of a new power plant or two so he could play poker better with these power 
suppliers,'' Wattenburg said earlier this month. 
Wattenburg, who also hosts a program on KGO radio, did not return calls 
Tuesday. 
How would the change affect Silicon Valley? 
Most companies wouldn't notice, said Justin Bradley, director of energy 
programs for the Silicon Valley Manufacturing Group. 
``But there may be others who do,'' he said. ``We're glad they are looking 
into creative solutions. We are very interested in it and will have an 
official position in a few days.'' 


Contact Paul Rogers at progers@sjmercury.com or (408) 920-5045. 











PUC should keep consumers plugged in to power choices 
Published Wednesday, June 27, 2001, in the San Jose Mercury News 
AT the beginning, the restructured California electricity market was supposed 
to include competition among sellers of electricity -- offering green power 
or cheaper power -- not just competition among generators. 
As things played out, retail competition was nearly smothered. Now, with the 
state buying electricity on behalf of utilities, it could take a further 
blow. 
State officials are leery of letting customers go to other suppliers now that 
the state will buy huge amounts of electricity over the next decade. 
The Public Utilities Commission Thursday might suspend ``direct access,'' the 
ability of consumers large and small to cut their own deals with electricity 
suppliers, instead of being forced to buy through the state/utilities. 
The PUC should leave it alone. Instead, the Legislature should continue 
discussing ways of revitalizing direct access without leaving the state with 
long-term contracts and not enough customers. 
Ultimately, the state should get out of the electricity business. Keeping 
retail competition alive is one avenue of escape.











Retail Energy Supporters Urge the PUC not to Suspend Direct Access Business 
Organizations, Energy Service Providers, Direct Access Customers Support 
Continuing Focus on Legislative Solution to Maintain Retail Choice 






June 27, 2001 




Business Organizations, Energy Service Providers, Direct Access Customers 
Support Continuing Focus on Legislative Solution to Maintain Retail Choice 
SACRAMENTO, Calif., June 26 /PRNewswire/ -- In light of expectations that the 
PUC will suspend direct access at their June 28 hearing, the Alliance for 
Retail Energy Markets (AReM), business organizations and energy customers 
supporting retail choice or "direct access," held a news conference to stress 
that the PUC does not have to suspend direct access to facilitate the state's 
upcoming $13 billion bond sale. Participants stated that the Legislature 
continues to work on a direct access solution that will not interfere with 
the bond sale and should be allowed to continue its work unimpeded as the 
bonds to do have to be sold until September. 
"Energy consumers' access to the retail energy market is a cornerstone of 
effective deregulation," said Rick Counihan of GreenMountain Energy Company 
and AReM spokesman. "We are concerned that direct access may be suspended for 
convenience's sake-to make the job of taking the bonds to market easier. But 
this issue is too important to the long-term solution to California's energy 
problems for it to be so summarily dismissed." 
In addition to AReM coalition members, participants included the California 
Chamber of Commerce, California Manufacturers & Technology Association, 
California Retailers Association, Qualcomm, City of Palm Springs, Building 
Owners and Managers Association of California, New York Mercantile Exchange, 
and the School Project for Utility Rate Reduction. 
Participants underscored their agreement that any direct access legislation 
must ensure that the state will be reimbursed for power that it may purchase 
on behalf of utility customers and that this is why direct access proponents 
are willing to accept reasonable exit fees. However, they added that the 
state's "net short" position on its long-term contracts over the next decade 
still provides room for customers to leave utilities in order to ink their 
own deals. 
"Businesses must be allowed the tools that let them manage their own energy 
destinies," said Aaron Thomas of AES NewEnergy. "Such tools enhance 
California's ability to attract and retain business and California cannot 
afford to take business for granted." 
Alliance for Retail Energy Markets (AReM) is a coalition whose member 
companies serve nearly all of the California customers who have chosen a 
competitive energy provider instead of their traditional utility provider. 
AReM members include AES NewEnergy, Inc., Calpine, Commonwealth Energy Corp., 
Enron Energy Services, Inc., GreenMountain Energy Company, The New Power 
Company, Shell Energy Services, and Strategic Energy, L.L.C.. 
MAKE YOUR OPINION COUNT - Click Here 
http://tbutton.prnewswire.com/prn/11690X62515991 
SOURCE Alliance for Retail Energy 
CONTACT: Tracy Fairchild, 916-442-2331, or 916-835-9007, or Erica Manuel, 
916-442-2331, or 916-201-5029, both for Alliance for Retail Energy Markets 











California Secures Loan
Of $4.3 Billion for Power
? 
06/27/2001 
The Wall Street Journal 
Page A6 
(Copyright (c) 2001, Dow Jones & Company, Inc.) 
SACRAMENTO, Calif. -- The state of California said it closed on a $4.3 
billion loan, receiving funds that will be used to buy wholesale electricity 
. Due to the shaky finances of California 's largest utilities, a state 
agency has been buying a large proportion of energy consumed there since 
January. 
State Treasurer Philip Angelides said the participating lenders, led by J.P. 
Morgan Chase & Co., will receive an overall interest rate of 4.14%. J.P. 
Morgan contributed $2.5 billion, Lehman Brothers Holdings Inc. lent $1 
billion, Commerzbank Group lent $500 million and Bayerische Landesbank lent 
$300 million. 
The loan makes it possible for the state to quit tapping the general fund to 
pay for power, Mr. Angelides said. By October, the state hopes to sell some 
$13.4 billion of revenue bonds. The proceeds will be used to retire the $4.3 
billion loan, to repay the general fund for roughly $7 billion of borrowings, 
and to finance continued power purchases.