* from Govt Affairs 
*  hearing was Mon, Apr 30

---------------------- Forwarded by Jennifer Rudolph/HOU/EES on 05/03/2001 
10:41 AM ---------------------------


Susan J Mara@ENRON
05/01/2001 07:30 PM

----- Forwarded by Susan J Mara/NA/Enron on 05/01/2001 05:27 PM -----

	"Chris Micheli" <cmicheli@carpentersnodgrass.com>
	04/30/2001 06:19 PM
		 
		 

As you may know, SB 1x (Soto/Scott) passed the Senate Appropriations 
Committee by an initial vote of 7-3 (the bare minimum).
Senator Soto said that the Legislature must make a "bold proposition" with 
this bill.  She said that this experience is "like no consumer has been 
gouged before."  The Legislature must cap rates.  This bill guarantees a 
generous profit to generators.
Senator Scott said that these generator profits have been gained off of 
consumers.  According to FERC, over $500 million in excess profits have been 
reaped.  Californians have been "royally mistreated" by generators.  This 
"money has left the state (to Texas and other places)."  This bill is the 
only solution.  The PUC can change the $80 rate.  Based upon the January 
Field Poll, Californians support this concept.  We have to "stand up to the 
generators and say no more."
Supporters were:  TURN and CTRA (Lenny Goldberg).  Lenny said that the FERC 
will not give any relief to CA ratepayers, so the Legislature has to.  This 
bill needs to be combined with the power authority by Senator Burton to hold 
prices down.
Other supporters of the bill included:  Congress of CA Seniors; CalPIRG; CA 
Consumer Federation; CA Labor Federation; SEIU; Public Power Now.  SEIU 
(public employee union) said that this bill is "the only way to put caps on 
rates."
Opponents were CMTA ("this is the wrong medicine for solving the problem"); 
WSPA (does nothing to resolve the shortage of energy; we should be doing 
bills to stimulate greater investment in supply); Intergen said that they are 
looking at California market, but will not build with this bill out there.  
CA Wind Energy Assn (QFs oppose this bill because the rate is too low); and 
IEP (most productive answer to our problem is the build power plants).
Senator Battin said that the price cap is lower than some of the Governor's 
long-term contracts at $86 per hour.  Senator Scott said that the munis are, 
indeed, covered by the bill.  He also said that the PUC can change the rates 
contained in this bill.  Scott also said that the PUC can exempt renewables 
under the bill.
Senator Bowen stated that the $80 figure should be removed from the bill 
("this price may be inappropriate").  She suggested using the "FERC proxy 
price."  She suggested that they look at an exemption for contracts with the 
state.  She saw no reason to exempt the renewables because they would make a 
bundle with an $80 cap.
Senator Poochigian said he was concerned about the majority vote issue 
(because this bill is allegedly revenue neutral).  Scott said all of the 
money raised by the bill will go to ratepayers.  He said that Legislative 
Counsel gave him an opinion (I don't know if it is written or verbal) that 
this scheme was permitted.  Poochigian said it was ironic that the PUC was 
being given the authority to set rates under this bill.
Senator Scott stated that they would take as an author's amendment to exclude 
all long-term contracts from the provisions of this bill.
Next stop for the bill is the Senate Floor.
 

Chris Micheli, Esq.
Carpenter Snodgrass & Associates
1201 K Street, Suite 710
Sacramento, CA  95814
(916) 447-2251
FAX: (916) 445-5624
EMAIL: cmicheli@carpentersnodgrass.com