Please see the following articles:

Sac Bee, Thurs, 6/7:  GOP scraps House energy bill

Sac Bee, Thurs, 6/7: Norton open to drilling off Santa Barbara

SD Union, Thurs, 6/7: Energy relief bill mired in dispute over price caps 

SD Union, Thurs, 6/7: Escondido eyed profit from Hanover plant

SD Union, Thurs, 6/7: Increased hydropower behind price drop

SD Union, Thurs, 6/7: PUC could expand utility discounts to low-income 
ratepayers

LA Times, Thurs, 6/7: Senator Fires Warning Shot on Power Costs

SF Chron, Thurs, 6/7: Power switch -- contracts now in limbo 
Nosedive in electricity prices will let state deal from strength

SF Chron, Thurs, 6/7: Developments in California's energy crisis

SF Chron, Thurs, 6/7: House GOP leaders backing away from short-term fix

SF Chron, Thurs, 6/7: Power switch -- contracts now in limbo 
Nosedive in electricity prices will let state deal from strength

SF Chron, Thurs, 6/7: Senator ready to strong-arm energy panel 
New committee chairman to give regulators 2 weeks to set price caps

SF Chron, Thurs, 6/7: Underwriters wary of bond deal 
State needs funds to cover costs of buying power

Mercury News, Thurs, 6/7: It's looking better on energy front  

Contra Costa Times, Thurs, 6/7:   Four-day week for city halls?

Contra Costa Times, Thurs, 6/7:  Labor leaders demand power plant takeovers

Contra Costa Times, Thurs, 6/7:  Senate shift puts pressure on FERC

OC Register, Thurs, 6/7: A power-bill surge

OC Register, Thurs, 6/7:  Energy notebook
Many experts see light at the end of the crisis sooner than expected

OC Register, Thurs, 6/7: Market spotlight: PG&E woes push down share of 
power generators 

OC Register, Thurs, 6/7: California ISO's independence at issue 

OC Register, Thurs, 6/7:  We still don't get it                (Commentary)
A history of price controls: They didn't work for Sumeria, they won't work 
for California


Individual.com (PRnewswire), Thurs, 6/7:  Exponent Advises CPUC on Rolling 
Blackout Exemptions 

Individual.com (AP), Thurs, 6/7:  Calif. Targeted in Antitrust Probe

Individual.com (PRnewswire), Thurs, 6/7: More Utilities, Industries Must 
Reduce Power Purchases
From BPA To Hold Rates Down 

Individual.com (PRnewswire), Thurs, 6/7: SCE Customers to See Major Changes 
to June Bills
Adding Group Numbers Will Help Consumers Prepare for Rotating Blackouts; 
Conservation
Rebates, Discounts Available to Income-Qualified Customers 

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GOP scraps House energy bill 
By David Whitney
Bee Washington Bureau
(Published June 7, 2001) 
WASHINGTON -- Republican leaders in the House abruptly scuttled any further 
work on an emergency electricity bill for California on Wednesday, saying 
they were unable to reach agreement with Democrats on reining in sky-high 
wholesale power costs. 
"It became clear we would not be able to come to agreement," said Rep. Billy 
Tauzin, R-La., chairman of the Energy and Commerce Committee. 
Rep. Joe Barton, R-Texas, the energy subcommittee chairman whose panel wrote 
the bill last month, blamed House Minority Leader Dick Gephardt, D-Mo., for 
forcing Democrats to insist that wholesale rates be based on the cost of 
production to stem price gouging. 
Stunned Democrats disputed just about everything committee Republicans said. 
"We are disappointed that the Republican leadership canceled this opportunity 
to bring price relief to California," said Rep. Henry Waxman of Los Angeles, 
the senior Democrat on the energy panel. 
"The Federal Energy Regulatory Commission, the White House and now the 
Republican Congress has decided it won't help California," Waxman said. "We 
feel an outrage that we won't get to mark up a bill that is supposed to help 
Californians." 
In the Senate, however, where Democrats took charge Wednesday with a one-vote 
majority, Democratic leaders threatened congressional action unless federal 
regulators took immediate steps to bring down wholesale rates. 
Sen. Jeff Bingaman, D-N.M., the new chairman of the Senate Energy and Natural 
Resources Committee, gave federal regulators two weeks to act, saying that 
his panel may resort to legislation. 
Pending before the committee is legislation sponsored by Sen. Dianne 
Feinstein, D-Calif., that would peg the wholesale price of electricity to its 
cost of production, plant by plant, plus a margin that would allow for a 
reasonable profit. 
Feinstein said she's hopeful that, barring a change of heart by regulators, 
her bill will move shortly. 
Behind the congressional sniping is a deep political divide. The Republicans 
are opposed to anything that looks like government intervention in the 
marketplace, while Democrats believe that government cannot sit by idly while 
the pocketbooks of consumers are emptied because of a dysfunctional 
electricity market. 
Price controls have been the sticking point all along on Barton's bill. Most 
of its controversial environmental rollbacks were excised before it came to a 
subcommittee vote, and Republican leaders admitted that much of what was left 
already was being implemented by the Bush administration and Gov. Gray Davis. 
"There has already been demand reduction, supply improvement and action by 
the California governor adopting several features of this bill," Tauzin said. 
"California is improved today because this bill moved as far as it has." 
In an effort to break the stalemate, Republican leaders were prepared to 
offer as a compromise legislation sponsored by Sacramento Rep. Doug Ose, the 
Republican chairman of the House Government Reform Committee's energy panel. 
Ose's bill grew out of an April order by the Federal Energy Regulatory 
Commission to control rising prices by instituting a spot-market ceiling 
based on the cost of production at the least-efficient, most costly plant 
selling into the market during a power emergency. Ose's bill would make that 
order effective every day, all day. 
But Waxman said Ose's legislation is "not viable." "The effect would be to 
give the least-efficient, dirtiest plant a guarantee to the highest prices, 
and extend that to the rest of the generators," he said. 
Tauzin said the committee was sending a letter to the commission Wednesday 
urging it to consider Ose's proposal, but Ose's own letter touting his 
approach already is on file at the commission. 
Ose said he was disappointed that his legislation "fell victim to partisan 
politics." 
"It appears that the Democratic leadership in Congress is more interested in 
rescuing Governor Davis' re-election campaign than providing immediate relief 
to California consumers," he said. 
Barton said he believed there were enough votes on the committee to defeat 
Democratic price-control amendments and to pass his bill, but that it 
probably would have drawn only two or three Democrats on final passage. 
That margin was too slim for the committee to demonstrate bipartisan support 
as the measure headed to the House floor. And with the clock running out on 
being able to do anything for California this summer, Barton and Tauzin 
decided to pull the plug. 
"This is not the end of this process," Tauzin said, saying that leftover 
provisions of the Barton measure will be taken up when the committee 
addresses broader energy legislation this summer. 
But Democrats, too, said the issue isn't over. 
Waxman said they're beginning a drive immediately to collect the necessary 
218 signatures on a petition to force the House Republican leadership to 
bring cost-based wholesale pricing legislation to the floor. 

The Bee's David Whitney can be reached at (202) 383-0004 or 
dwhitney@mcclatchydc.com. 



Norton open to drilling off Santa Barbara
By David Whitney
Bee Washington Bureau
(Published June 7, 2001) 
WASHINGTON -- Interior Secretary Gale Norton, testifying at a House hearing 
Wednesday, did not rule out resumption of oil and gas exploration off the 
California coast, particularly near Santa Barbara, where offshore areas are 
not covered by a leasing moratorium. 
"This is very bad news for the north Santa Barbara Channel," Rep. George 
Miller of Martinez, a senior Democrat on the House Resources Committee, said 
after the hearing. 
Norton appeared before the committee to discuss the Bush administration's 
energy policy, one provision of which calls upon the Interior Department to 
review legal and policy issues concerning offshore development. 
Norton said the administration will abide by moratoriums in effect until 2012 
on leasing off much of the West Coast, Florida and the Carolinas. 
But when asked by Miller about existing lease areas off Santa Barbara and the 
Florida coast that are not covered by the moratoriums, Norton indicated that 
there is nothing to prevent additional leasing activity now and that, in the 
case of Florida, a departmental review already is under way. 
Miller called that a concern because of efforts in the Santa Barbara area to 
buy back outstanding leases. 
"They are clearly setting their sights on the leases," Miller said. "You read 
all the directives from the Minerals Management Service, the Department of 
Interior's energy opinions -- you pull all those together -- and it's pretty 
clear they want to figure out how to get them into production. They are 
looking at a range of laws that have to be changed, and I think weakened, to 
bring those into production." 
An advisory committee recently recommended that the Interior Department 
launch a test program to identify the five top offshore natural gas deposits 
around the country to see if deals could be reached with local and state 
officials to lift drilling moratoriums. 
Norton declined comment on the issue, saying the recommendation had not 
reached her desk. 

The Bee's David Whitney can be reached at (202) 383-0004 or 
dwhitney@mcclatchydc.com. 



Energy relief bill mired in dispute over price caps 



By Finlay Lewis 
COPLEY NEWS SERVICE 
June 7, 2001 
WASHINGTON -- Prospects for prompt action in the House to ease California's 
energy crisis virtually vanished yesterday, as Republicans scuttled a 
short-term relief bill when Democrats refused to drop demands for wholesale 
electricity price caps. 
At the same time, Sen. Tom Daschle, D-S.D., used the occasion of his first 
day as Senate majority leader to set the stage for a two-house, partisan 
showdown by throwing his weight behind price caps. 
"I will support all necessary efforts to meet that goal," Daschle said in a 
letter to Sen. Dianne Feinstein, D-Calif., who is sponsoring price-cap 
legislation. 

President Bush is adamantly opposed to price caps, a position backed by most 
leading Republicans. 
Rep. Billy Tauzin, chairman of the House Energy and Commerce Committee, said 
a potential agreement on the energy relief measure collapsed in the lower 
house because Democrats insisted on including price caps. Republicans blamed 
House Minority Leader Richard Gephardt, D-Mo., for scuttling the deal. 
"Gephardt .?.?. apparently has made a decision to kowtow to the more radical 
elements of the Democratic caucus in the House, and the centerpiece of their 
policy is price caps," said Rep. Joe Barton, R-Texas, an energy subcommittee 
chairman who prepared the Republican version of the bill. 
California Democrats on the energy committee immediately fired back, claiming 
Tauzin, R-La., had reneged on a pledge to involve them in negotiations over 
the bill during the Memorial Day recess. 
"We never heard from them," said Rep. Henry Waxman of Los Angeles, who is 
carrying the Democratic House bill. He denied Gephardt was calling the 
Democratic shots on the negotiations and contended that a partisan deal on 
the bill was never close at hand. 
Rep. Jane Harman, D-Redondo Beach, blamed an "ideological group" within the 
White House and the House GOP caucus with opposing the imposition of 
"temporary, short-term, cost-plus rates .?.?. that will end the gaming in the 
system." 
Some California Republicans seemed uneasy by the impasse. 
"It's going to be a long, hot, difficult summer," said Rep. Mary Bono, R-Palm 
Springs, referring to anticipated blackouts across the state as air 
conditioners crank up. 
The Democratic measure in the House would pressure the Federal Energy 
Regulatory Commission to roll back soaring wholesale electricity rates, which 
have forced California utilities to the brink or into bankruptcy. The state 
has been buying power for California's major utilities, spending some $8 
billion since January. 
Power generators in some cases charge more than $3,000 per megawatt-hour in 
California, though the average cost has been estimated about $300 -- still 10 
times higher than it was a year ago. Recently, costs have dropped 
dramatically. 
A megawatt-hour can power between 750 and 1,000 homes. 
Specifically, the bill carried by Waxman seeks to force federal regulators to 
impose a rate-setting formula on electricity generators allowing them to 
recover only their production costs plus a reasonable rate of return. 
The Bush administration opposes price controls, contending it would 
discourage the investments needed to develop new energy sources. 
The Waxman bill now in limbo attempts to do a number of things: improve the 
electricity transmission system to get rid of a bottleneck in the Central 
Valley; provide assistance to help the poor pay their energy bills; and grant 
Gov. Gray Davis the authority to temporarily waive some air-pollution limits 
to increase power production when blackouts are imminent. 
Some of the provisions have been advanced on a separate track by the Bush 
administration. 
Tauzin told reporters that while the House bill is going nowhere, he 
acknowledged the Democratic takeover in the Senate means there's "no 
avoiding" an eventual House vote on price caps. 
He suggested that the GOP strategy may be to play for time. Consumer 
conservation efforts, among other things, have resulted in decreased 
wholesale prices in California, at least temporarily. He also cited prospects 
that new sources of energy may be coming on line. 
But Daschle made clear in his letter to Feinstein that he is ready to move 
ahead with price caps. He noted a recent media report wrongly stated he was 
opposed to price controls. 
"Unless FERC acts soon, your legislation should be taken up and passed to 
direct FERC to take action," Daschle wrote. 
In another energy-related matter, Interior Secretary Gale Norton told a House 
committee the administration did not rule out resumption of oil and gas 
exploration off the California coast, particularly near Santa Barbara where 
offshore areas are not covered by a leasing moratorium. 
"This is very bad news for the north Santa Barbara Channel," California Rep. 
George Miller, a senior Democrat on the House Resources Committee, told 
Scripps-McClatchy Western Service. 
Norton appeared before the committee to discuss the administration's energy 
policy, one provision of which calls upon the Interior Department to review 
legal and policy issues concerning offshore development. 
Norton said the Bush administration will abide by moratoriums in effect until 
2012 on leasing off of much of the West Coast, Florida and the Carolinas, 
according to Scripps-McClatchy. 
But when asked by Miller about existing lease areas off Santa Barbara and the 
Florida coast that are not covered by the moratoriums, Norton indicated there 
is nothing to prevent additional leasing activity now, and that, in the case 
of Florida, a departmental review already is under way. 






Escondido eyed profit from Hanover plant 



Sides were close, but deal crumbled
By Jonathan Heller 
UNION-TRIBUNE STAFF WRITER 
June 7, 2001 
ESCONDIDO -- You don't need much to build a small power plant: A jet engine 
off a junked 747, a generator, some emission-control systems and a permit to 
build somewhere. 
But how much money can you make on such an investment? Most people have no 
idea exactly how much. But a rare glimpse into the big-money world of energy 
production can be found in Escondido, where a deal for a proposed 49-megawatt 
plant on city-owned land recently went sour. 
Documents obtained by The San Diego Union-Tribune show that the deal, if it 
had gone through, would have guaranteed the city up to $27 million over 10 
years, and made a millionaire of the city's energy consultant. 
The Houston-based Hanover Co. was willing to gamble about $35 million to 
build a "peaker" plant on leased land in the city's public works yard. The 
plant was designed to run part-time, feeding energy into the region's power 
grid during times of peak demand. 
Hanover and the city negotiated in secret for more than three months before 
the deal fell apart. But the two sides appeared close to an agreement on 
several key points: 
?The city would have made $1 million a year in rent, plus a share of the 
profits from the sale of wholesale electricity. In a figures adjusted for 
inflation, the city was expecting to earn from $6.7 million to $27 million 
over the initial 10-year lease. 
?Hanover was expecting average rate of return of about 37 percent, according 
to conservative estimates, and recouping its $35 million within five years. 
Any profits above that were to be split 60 percent for Hanover, 40 percent 
for the city. 
?Dean Tibbs of Concord, a consultant hired by the city, was paid $100 an hour 
and stood to make 10 percent of any revenue the city received. Tibbs' income 
was projected to be from $1 million to $3.9 million over 10 years. 
Whether this deal is typical of other peaker plant proposals around the 
county is not clear. Most of those are on private property, and not subject 
to public disclosure. Some think the Escondido proposal was too optimistic. 
"Those numbers are phenomenal," said Brian O'Neill, vice president of 
Alliance Power, which is building several power plants in other parts of the 
state. "That's absolutely very rich." 
"I would never enter in a deal like that," agreed Dale Mesple, an energy 
consultant with Ramco, a San Diego company that is building a similar power 
plant on private property on Escondido's West Mission Avenue. "The developer 
is taking all the risk." 
The deal would have achieved Escondido's stated goal of a power plant with no 
financial risk to the city. Its biggest cost would have been paying Tibbs. 
When council members learned how much he stood to make, they asked him to 
restructure his contract. But that never happened because the deal fell 
through and he was fired. Tibbs, who did not return phone calls seeking 
comment, was paid $26,500 for 265 hours of work. 
Mesple said it was smart of Escondido to load Tibbs' contract with incentives 
-- such as the 10 percent commission -- because the city had no expertise. 
"This way, the city's interests and his interests were aligned," he said. 
"This is a tremendous multibillion-dollar business and you don't just 
arbitrarily step into that." 
City Council members were reluctant to discuss the proposed plant, which was 
debated mostly in closed sessions. But Councilwoman June Rady said she 
opposed the deal because it wouldn't benefit ratepayers. 
"It was a deal for the power-generating industry and a deal for the 
consultant," she said. "I could not see where there was a good deal for the 
people of Escondido." 
Ratepayers might not have benefited, but Escondido would have cashed in on 
the electricity crisis. 
The one-acre parcel at the city's public works yard was appraised at about 
$350,000, a small fraction of the minimum guaranteed return of $6.7 million 
the city would have earned, according to a report done for the city by Keyser 
Marston Associates. "On this basis alone, KMA finds that the proposed lease 
will provide significant financial benefit to the city," the report said. 
It was unclear exactly why Hanover rejected the deal. A Hanover 
representative did not return calls seeking comment, but a letter from 
Hanover executive Chet Erwin to the city said the proposal was "excessively 
landlord-oriented." 
Erwin also complained about "significant public opposition to the plant." 
That comment was mysterious to city officials because details of the proposal 
were never released to the public. There was, however, some public opposition 
to other power plants proposed in the city. 
Experts in the power-plant industry said they were not surprised that Hanover 
backed away. While it stood to make millions, its lease payments and revenue 
sharing might have made it hard to make a profit in the future if energy 
prices nose-dived. 
"A million dollars a year (in rent)? I don't think electricity prices are 
going to be there for the next 10 years," said Alliance's O'Neill. 
Bob Therkelsen, deputy director of the California Energy Commission, said he 
had heard of deals where cities have been able to charge almost whatever they 
wanted to lease land to power plant developers. "This is an interesting time 
and lots of interesting arrangements are coming out of this," Therkelsen 
said. But the big question was whether Hanover had long-term contracts to 
sell its electricity. 
"Prices are high now but there's no certainty they're going to last more than 
a couple of years," Therkelsen said. 






Increased hydropower behind price drop 



By Craig D. Rose 
UNION-TRIBUNE STAFF WRITER 
June 7, 2001 
Experts say state electricity prices are falling because of a surprising 
level of hydropower, cooler weather, increased supplies and pressure from 
investigations into industry practices. 
But despite the recent price declines, they note, electricity costs remain 
nearly 50 percent above last year and volatile, with few believing California 
has seen an end to its power crisis. 
Peak prices slipped yesterday another $15, falling to a range of $62 to $79 
per megawatt hour, according to Bloomberg News. This compares with market 
prices that were routinely more than $300 per megawatt hour from late winter 
into the early weeks of spring. 
Future prices have also declined with contracts for delivering power in July 
reportedly available for about $175 per megawatt. 
Gary Ackerman, executive director of the Western Power Trading Forum, an 
industry group, said hydropower -- the cheapest electricity source -- has 
been running at roughly average levels despite below average levels of 
snowpack in the mountains. 
Ackerman said the correlation between snowpack levels and water runoff is 
imperfect. He added that there was no certainty that runoff levels would 
continue at average levels through the summer. 
A spokesman for Sempra Energy Trading, a sister company of San Diego Gas & 
Electric Co., agreed that increased hydropower was helping to lower prices. 
The spokesman also noted that some power plants in California that had been 
out of commission have returned to service. 
The state had a record number of plants out of service for months because of 
what suppliers said were required maintenance outages or unplanned 
breakdowns. 
Doug Kline, the Sempra spokesman, said the state's success at securing 
long-term contracts has also taken pressure off spot markets. 
A veteran power industry consultant said investigations into alleged market 
manipulation and a sharpened political focus on high prices have cooled the 
industry ardor for pushing the market as high as it might otherwise. 
"When everyone was not looking, it was a lot easier (to keep prices high)," 
the expert said. 
SDG&E said recent price declines have brought its retail power costs down to 
7.7 cents per kilowatt hour -- the lowest since last summer -- but still 48 
percent more than last year's rates at this time. 
Consumer advocates said beleaguered California electricity customers should 
hesitate to draw optimistic conclusions from the recent price declines. 
"Even the current prices are ridiculously inflated," said Harvey Rosenfield, 
of the Foundation for Taxpayer and Consumer Rights in Santa Monica. 
Rosenfield said it was possible that the "energy cartel" had blinked in what 
he describes as its war on consumers. But he added that it is too soon to 
tell whether this will become permanent behavior. And he warned that 
California still faces what he says are exorbitant prices from long-term 
electricity contracts already signed by the state. 
Michael Shames, executive director of the Utility Consumers Action Network, 
noted that the hottest months and potentially higher prices are ahead. 
"These prices are not staying here," Shames said. 






PUC could expand utility discounts to low-income ratepayers 



By Karen Gaudette
ASSOCIATED PRESS 
June 6, 2001 
SAN FRANCISCO ) Reports of slipping energy prices aren't an indication that 
California is on its way out of the energy crisis yet, a state energy 
regulator cautioned Wednesday. 
"It really is premature to say that energy costs are on a downward trend," 
said Jeff Brown, one of five members of the state Public Utilities 
Commission. "We still have a tough summer to go through, and we still have 
the same inherent problems we had a month ago or a week ago." 
Those "inherent problems" ) high demand, low supply and a hunch that 
suppliers purposely limit that supply to drive prices skyward ) are still 
under investigation by the PUC and the state attorney general's office. 
Short-term solutions, such as the electricity price caps Gov. Gray Davis so 
desperately wants, are vehemently opposed by the very officials who would 
have to enact them ) the Bush administration and the Federal Energy 
Regulatory Commission. 
On Thursday, the PUC considers what state-level action it can take to curb 
California's power woes. 
The meeting agenda includes a request from Commissioner Carl Wood to raise 
the discount that low-income utility customers receive on their electric 
bills. 
Ratepayers enrolled in the California Alternate Rates on Energy program 
currently save 15 percent on their bills, though not all eligible ratepayers 
have applied for the program. 
Expanding the discount would mean either the utilities or ratepayers would 
have to absorb the $50 million to $60 million difference, Brown said. A small 
portion of residential ratepayers' electric bills already goes to support 
CARE. 
The welfare of small power plants fueled by solar, wind, geothermal, biomass 
power or natural gas, which generate as much as a third of the state's energy 
supply, also is on the agenda. 
The PUC plans to review whether payments it ordered the utilities to make to 
those plants have been enough for the plants to resume producing as much 
electricity as possible to help increase the state's meager supply of 
megawatts. 
The PUC recently ordered the utilities to pay the plants after Pacific Gas 
and Electric Co. and Southern California Edison Co. paid little or nothing 
for several months of electricity deliveries. 
Both utilities owe the plants millions of dollars in back payments, but say 
so far they have kept up with PUC requirements. 






Senator Fires Warning Shot on Power Costs 


By RICHARD SIMON, Times Staff Writer 

?????WASHINGTON--The new Democratic chairman of the Senate energy committee 
bluntly warned federal regulators Wednesday to act more aggressively to rein 
in electricity costs in coming weeks or prepare for Congress to intervene.
?????As Sen. Jeff Bingaman (D-N.M.) turned up the political pressure on the 
Federal Energy Regulatory Commission, House GOP leaders scuttled an emergency 
bill designed to help power-short California through a difficult summer. The 
measure became bogged down in partisan wrangling over price controls.
?????Bingaman's comments were a sign of the sudden shift in energy politics 
in Washington after Vermont Sen. James M. Jeffords' switch from Republican to 
independent and the Democrats taking control of the Senate.
?????In his first day as chairman of the Energy and Natural Resources 
Committee, Bingaman urged the Bush administration to "step up to its 
responsibility" to ensure that wholesale power rates charged in California 
are just and reasonable.
?????And new Senate Majority Leader Tom Daschle (D-S.D.) expressed similar 
sentiment in a letter to California Gov. Gray Davis.
?????"Unless FERC takes action," Daschle wrote, "I believe that Congress will 
have to consider legislation to address the issue."
?????Bingaman is co-sponsor of a bill introduced by Sens. Dianne Feinstein 
(D-Calif.) and Gordon Smith (R-Ore.) that would direct FERC to limit prices 
while ensuring that power suppliers recover their costs and still make a 
reasonable profit. The Bush administration has opposed price controls, 
contending they would discourage power plant construction.
?????The Feinstein bill appeared unlikely to come up for a vote in the Energy 
Committee under the former chairman, Sen. Frank Murkowski (R-Alaska). 
Feinstein said she hopes that if FERC doesn't act within a few weeks, the 
committee will take up her bill. "We intend to keep the pressure up," she 
said.
?????Even if such a measure were to pass the Senate, it would face stiff 
opposition in the GOP-controlled House of Representatives and probably a 
presidential veto. Nor is it clear to what extent Congress can dictate to 
FERC, an independent body, what actions to take. But with their newfound 
power, the Democrats believe they can, at minimum, increase political and 
public pressure on the regulators.
?????On broader energy policy, the Democratic control of the Senate has 
dashed GOP hopes for speedy approval of comprehensive energy legislation. 
Democrats complain that President Bush's energy plan relies too heavily on 
coal, oil and nuclear power. They are expected to push for greater emphasis 
on conservation, energy efficiency and renewable energy such as wind and 
solar power.
?????Bingaman said that in the short term he hopes to boost energy assistance 
to low-income households, address gasoline price spikes--perhaps by revising 
the patchwork of regional fuel recipes--and reduce electricity prices in the 
West.
?????In a breakfast meeting with energy reporters, Bingaman expressed hope 
that two new FERC commissioners would act more aggressively in response to 
electricity prices, which have bankrupted California's biggest private 
utility, Pacific Gas & Electric, and cost the state billions of dollars.
?????But he noted that there are limits to what Congress can do. "Once a law 
is on the books, and a federal agency is not enforcing it, then usually the 
remedy is in the courts," he said. Davis has threatened to sue FERC.
?????FERC officials said they did not want to get into a war of words with 
Bingaman and would let the agency's record speak for itself. "This agency is 
continuing to work extremely hard on the issues facing the country in regard 
to energy," said Walter Ferguson, a top staffer for FERC Chairman Curtis L. 
Hebert Jr.
?????The commission actions "are our testament," Ferguson added. "The 
interests of consumers are paramount, and we will act accordingly."
?????In the House, GOP leaders declared dead a bill that would have provided 
some short-term help to California, such as federal aid to ease a notorious 
bottleneck in the state's power grid and authority for the governor to ease 
emission rules to boost power supplies during an emergency.
?????Democrats suggested that the legislation was killed to save California 
Republicans from a politically difficult vote on price controls. Republicans 
contended that Democratic leaders were unwilling to compromise.
?????Rep. Joe Barton (R-Texas), the bill's author, said the impasse made it 
unlikely that the legislation could pass Congress and clear the president's 
desk in time to help California this summer.
?????Barton complained that his GOP colleagues felt like Charlie Brown about 
to kick the football only to have the Democrats, like Lucy, pull it away at 
the last minute.
?????But Rep. Henry A. Waxman (D-Los Angeles) asserted, "We were never close 
to a deal."
?????"The Republicans say they cannot move forward on energy legislation 
because Democrats refuse to support any energy legislation that does not 
include wholesale price controls, and I say . . . right." added Rep. Bob 
Filner (D-San Diego). "What good is a bill that does nothing for consumers?"
?????House Democrats vowed to continue to press for price controls. Some 
Republican leaders who have resisted price controls appeared to be softening 
their position, as long as it's called something else.
?????Rep. W.J. "Billy" Tauzin (R-La.), chairman of the House Energy and 
Commerce Committee, said he was drafting a letter urging FERC to expand its 
"price mitigation" order that limits the price that power generators can 
charge.
?????The order now applies only when the state's power supplies slip low 
enough to trigger an energy emergency. Rep. Doug Ose (R-Sacramento) has 
introduced legislation to expand the order to cover all times of day and the 
entire Western region.
?????Democrats contend the Republican proposal doesn't go far enough. For 
example, the top price paid for power would still be set by the least 
efficient generator, providing bigger profits for newer, more efficient 
generators.
?????Davis said in a letter to lawmakers that the FERC order is a "faulty 
foundation on which to build relief for California. It is extremely limited 
in its scope and applicability and provides little, if any, real price relief 
for consumers and businesses in California."
?????FERC rules prevent staffers from commenting on specific matters 
scheduled for commission action, such as any changes to the California price 
control plan. "That issue is pending and we are prohibited from commenting on 
it," said Ferguson.
?????Democrats contend that as Californians begin receiving higher utility 
bills in the mail, the pressure will grow on Washington officials to clamp 
down more vigorously on wholesale electricity prices.
?????But Rep. Mary Bono (R-Palm Springs), who has opposed price controls, 
said that at a recent town hall meeting in her district, "out of probably 30 
questions, one came up on caps. People in California are looking for real 
solutions, and they recognize that's a quick political fix."
--- 
?????Times staff writer Ricardo Alonso-Zaldivar contributed to this story.

Copyright 2001 Los Angeles Times 





Power switch -- contracts now in limbo 
Nosedive in electricity prices will let state deal from strength 
David Lazarus, Chronicle Staff Writer
Thursday, June 7, 2001 
,2001 San Francisco Chronicle 
URL: http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2001/06/07/MN177308.DTL 
Emboldened by an unexpected plunge in electricity prices, state officials 
said yesterday that they are prepared to press their advantage and walk away 
from nearly two dozen long-term power contracts that now are at above-market 
rates. 
This represents a complete reversal from the state's position of just a few 
weeks ago, when officials were at the mercy of power companies and were all 
but begging for any available megawatts. 
The state Department of Water Resources already has signed 38 contracts to 
purchase electricity at fixed prices over the next decade. But 23 other 
contracts, or about 40 percent of the total, remain in negotiations. 
"We may not need all 23," said Ray Hart, deputy director of the state 
Department of Water Resources. The department so far has spent about $8 
billion for electricity on behalf of California's cash-strapped utilities. 
If power companies are unwilling to meet the state's demands for more 
favorable prices, he said, "I don't think all those contracts will come to 
term." 
Steve Maviglio, a spokesman for Gov. Gray Davis, was quick to underline 
California's changed fortunes as an electricity buyer. 
"We're in the driver's seat now," he said. "There's no question about that." 
Other officials were feeling similarly encouraged by California's stronger 
position to press their attack on power companies that they suspect of having 
pushed electricity prices higher. 
Larry Drivon, special counsel to a state Senate committee investigating 
alleged price manipulation, said the sudden drop in power costs will not 
derail attempts to determine if power companies illegally gouged customers. 
"Prices have gone down, but they're also capable of going back up again in a 
hurry," he said. 
Electricity prices have tumbled to the lowest levels since April 2000 -- as 
low as $50 per megawatt hour yesterday, compared with more than $500 earlier 
this year. 
Experts attributed the drop to a decline in the price of natural gas, which 
is the fuel that runs most power plants. Milder weather has cut power demand 
by reducing use of air conditioners, which in turn slashes the amount of gas 
required by generators. 
Experts also cited increased electricity production at plants and dams, as 
well as greater conservation by consumers and businesses. 
"The Armageddon we thought we were facing this summer has backed away a bit, 
" said Severin Borenstein, director of the University of California Energy 
Institute in Berkeley. 
"These lower prices are saying that the market is not going to be as tight as 
expected," he said. "That means fewer blackouts." 
It also means California's long-term contracts increasingly appear to be a 
raw deal if power prices continue to fall. 
A state report to be released today says the average contract price is about 
$70 per megawatt hour over 10 years and that the average price over the next 
five years is $84 -- well above current market rates. 
The average contract price in the third quarter of 2001 is $138, rising to 
$142 in the fourth quarter, the report says. 
LOOKING FOR BETTER DEALS
"I want to work for more favorable deals," said Hart at the Department of 
Water Resources. 
However, he said, details of the accords will not be made available for the 
foreseeable future because that could jeopardize the state's bargaining 
position in any subsequent talks with generators. 
This contradicted a pledge from the governor last week that details of the 
contracts would be revealed within 30 days. 
The Chronicle and other media outlets are suing for access to the accords, 
arguing that the public has a right to know how $40 billion in tax dollars is 
being spent. 
Senate President Pro Tem John Burton, D-San Francisco, said he plans to 
discuss with colleagues how the drop in power prices can be used to 
accelerate the release of the contracts. 
"We can't know if the contracts show whether the state is being smart or 
stupid until we see them," he said. 
PRICE DROP OUT OF BLUE
This much at least is clear: Almost no one could have forecast just weeks ago 
that wholesale electricity prices would drop below $100 this summer. 
A few months ago, June electricity prices on the forward power market were 
running close to $400. 
One reason for the changed outlook, ironically, is last week's heat wave, 
which left Northern California sizzling and would have been expected to cause 
electricity prices to soar as millions of air conditioners kicked into gear. 
Instead, power prices remained steady, "and that really changed the 
psychology of the market," said Brian Jordan, who monitors electricity 
trading at energy market researcher Platts. 
Michael Wilczek, another Platts analyst, said that price stability was 
bolstered by an increased number of generating plants returning to service 
after spring repairs. 
He also cited a surge in electricity output from regional dams as the high 
temperatures caused mountain snow to melt. 
NIGHTMARE HAS ABATED
"Now, things aren't looking like the nightmare scenario some people were 
expecting," Wilczek said. "But it still could be a volatile summer." 
Jeff Brown, a member of the state Public Utilities Commission, said the 
situation could change "in a New York minute." 
"It's only June," Brown said. "We've got to go through July, August and 
September." 
Paul Clanon, the head of PUC's energy division, agreed with Brown that 
natural gas costs could spike again. 
"I wouldn't hold out big hope for anyone that those decreases are going to be 
permanent," Clanon said. 
Indeed, if there is one thing Californians have learned, it is that trying to 
guess where energy prices are headed is a sucker's game. In April, for 
example, the August electricity price on forward markets was about $700. 
Yesterday it was closer to $200. 
This summer's weather will be the deciding factor in determining whether the 
actual August price on daily markets will be as low as $30 or back up at the 
$1,900 level seen earlier this year. 
"The battle isn't over," said Borenstein at the UC Energy Institute. "But 
we've seen real progress." 
Chronicle staff writer Bernadette Tansey contributed to this report. / E-mail 
David Lazarus at dlazarus@sfchronicle.com. 
,2001 San Francisco Chronicle ? Page?A - 1 




Developments in California's energy crisis 

Thursday, June 7, 2001 
,2001 Associated Press 
URL: 
http://www.sfgate.com/cgi-bin/article.cgi?file=/news/archive/2001/06/07/state1
105EDT0153.DTL 
(06-07) 08:05 PDT (AP) -- 
Developments in California's energy crisis: 
THURSDAY:
* No power alerts Thursday as reserves stay above 7 percent. 
WEDNESDAY:
* No power alerts Wednesday as reserves stay above 7 percent. 
* Federal antitrust regulators join the crowd of government authorities 
looking for possible abuses in California's high-priced wholesale electricity 
market. The U.S. Justice Department last month opened an antitrust probe into 
a power sales partnership between Arlington, Va.-based AES Corp. and Tulsa, 
Okla.-based Williams Energy. AES disclosed the investigation in a Securities 
and Exchange Commission filing this week. 
* Reports of slipping energy prices aren't an indication that California is 
on its way out of the energy crisis yet, says Jeff Brown, one of five members 
of the state Public Utilities Commission. He warns of "a tough summer" ahead 
and says the state still has "the same inherent problems we had a month ago 
or a week ago." 
* The Assembly, by a 42-7 vote, approves a resolution asking the Federal 
Energy Regulatory Commission to "impose interim price caps until the 
California power market has stabilized." 
* Officials at the Del Mar Fair say they will keep midway rides going without 
pulling power from the grid by operating on generators during the fair run 
from June 15 to July 4. 
* Shares of Edison International close at $9.98, down 7 cents. PG&E Corp. 
closes at $11.07, down 18 cents. Sempra Energy, the parent company of San 
Diego Gas & Electric, closes at $26.71, down 20 cents. 
WHAT'S NEXT:
* Davis' representatives continue negotiating with Sempra, the parent company 
of San Diego Gas and Electric Co., to buy the utility's transmission lines. 
THE PROBLEM:
High demand, high wholesale energy costs, transmission glitches and a tight 
supply worsened by scarce hydroelectric power in the Northwest and 
maintenance at aging California power plants are all factors in California's 
electricity crisis. 
Edison and PG&E say they've lost nearly $14 billion since June to high 
wholesale prices the state's electricity deregulation law bars them from 
passing on to consumers. PG&E, saying it hasn't received the help it needs 
from regulators or state lawmakers, filed for federal bankruptcy protection 
April 6. 
Electricity and natural gas suppliers, scared off by the two companies' poor 
credit ratings, are refusing to sell to them, leading the state in January to 
start buying power for the utilities' nearly 9 million residential and 
business customers. The state is also buying power for a third investor-owned 
utility, San Diego Gas & Electric, which is in better financial shape than 
much larger Edison and PG&E but also struggling with high wholesale power 
costs. 
The Public Utilities Commission has approved average rate increases of 37 
percent for the heaviest residential customers and 38 percent for commercial 
customers, and hikes of up to 49 percent for industrial customers and 15 
percent or 20 percent for agricultural customers to help finance the state's 
multibillion-dollar power buys. 
,2001 Associated Press ? 



House GOP leaders backing away from short-term fix 
H. JOSEF HEBERT, Associated Press Writer
Thursday, June 7, 2001 
,2001 Associated Press 
URL: 
http://www.sfgate.com/cgi-bin/article.cgi?file=/news/archive/2001/06/07/nation
al0411EDT0472.DTL 
(06-07) 01:11 PDT WASHINGTON (AP) -- 
A partisan fight over price caps on Western electricity sales has brought a 
halt to House attempts to enact short-term energy legislation aimed at 
helping California deal with this summer's power crisis. 
House Republicans said Wednesday they were no longer pursuing the 
legislation, but would concentrate on putting President Bush's long-term 
energy plan into law, beginning with a bill aimed at addressing refinery 
problems in making gasoline. 
"We were no longer going to waste any more time to try to resolve an issue 
that can't be resolved," Rep. Billy Tauzin, R-La., chairman of the Energy and 
Commerce Committee, said in an interview, when asked about the dispute over 
electricity price caps. 
Tauzin dismissed charges by Democrats that he was bottling up the 
legislation, fearing a price cap was gaining momentum and might pass the full 
House. "I think we would have prevailed on the floor as well," said Tauzin, 
an opponent of the price cap legislation. 
Amid astronomical power prices in California and other parts of the West, 
there has been growing political pressure in Congress for legislation to 
force federal regulators to take additional steps to rein in wholesale 
electricity prices that have been ten times what they were pre-crisis in 
1999. 
California so far has paid nearly $50 billion for power this year, compared 
to about $7 billion in all of 1999. Utilities in the Northwest also have 
sharply boosted prices as shortages in hydroelectric power have forced 
purchasers to buy on the expensive spot market, driving up retail prices. 
Rep. Henry Waxman, D-Calif., had planned to offer an amendment to a 
short-term energy bill that would force the Federal Energy Regulatory 
Commission to peg wholesale electricity prices in the West to cost of 
production plus a "reasonable" profit. Republicans have rejected the 
amendment and when negotiations on a compromise failed Tauzin canceled a 
series of votes on the bill Wednesday. 
House Democratic leader Richard Gephardt of Missouri accused the Republican 
majority of "ignoring the concerns of millions of Americans" by foreclosing 
further action on short-term energy legislation, including price caps. 
Democrats, who took control of the Senate on Wednesday, have said they would 
take up a price cap proposal shortly, although its prospects for Senate 
passage are uncertain because of strong Republican opposition. 
GOP congressional leaders are following the lead of President Bush, who 
repeatedly has voiced his opposition to federal price controls arguing they 
will hinder development of more electricity supplies and add to the risk of 
blackouts. California officials and many Democrats contend price caps can be 
structured in such a way as to provide adequate profits to spur investment. 
Likewise federal regulators have refused to impost cost-of-service price 
caps. 
"The president's not willing to do anything," said Waxman in an interview. 
"The Federal Energy Regulatory Commission is giving us the back of their 
hands. Now the Republican Congress is telling us as well that they have no 
interest in the problem." 
Tauzin said many of the provisions in the energy bill that had awaited a vote 
in his committee -- such as additional money for low income energy assistance 
and a long-term plan to ease power grid congestion in California -- are being 
done anyway. 
"All they (Democrats) wanted is price caps, and they're not going to get 
that," said Tauzin. 
Instead, Tauzin said he was turning to legislation addressing Bush's broader 
energy plan, beginning with measures to address gasoline price spikes. He 
said he hoped within a few weeks to move a bill easing the requirement for 
so-called "boutique" gasoline blends imposed to meet clean air requirements. 
It's not certain whether such legislation would come soon enough to ease this 
summer's gasoline price problems, but Tauzin said it could help avert price 
spikes next summer. 
The White House also has asked the Environmental Protection Agency to address 
the boutique fuel issue administratively. Sen. Jeff Bingaman, D-N.M., the new 
chairman of the Senate Energy and Natural Resources Committee, also has 
singled out this issue as one he wants to resolve in a way, he says, that air 
quality does not suffer. 
Tauzin said that after the gasoline legislation, he planned to focus 
attention on a package of energy efficiency and conservation measures, 
followed by separate legislation addressing energy production issues. 
,2001 Associated Press ? 



Power switch -- contracts now in limbo 
Nosedive in electricity prices will let state deal from strength 
David Lazarus, Chronicle Staff Writer
Thursday, June 7, 2001 
,2001 San Francisco Chronicle 
URL: 
http://www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2001/06/07/M
N177308.DTL 
Emboldened by an unexpected plunge in electricity prices, state officials 
said yesterday that they are prepared to press their advantage and walk away 
from nearly two dozen long-term power contracts that now are at above-market 
rates. 
This represents a complete reversal from the state's position of just a few 
weeks ago, when officials were at the mercy of power companies and were all 
but begging for any available megawatts. 
The state Department of Water Resources already has signed 38 contracts to 
purchase electricity at fixed prices over the next decade. But 23 other 
contracts, or about 40 percent of the total, remain in negotiations. 
"We may not need all 23," said Ray Hart, deputy director of the state 
Department of Water Resources. The department so far has spent about $8 
billion for electricity on behalf of California's cash-strapped utilities. 
If power companies are unwilling to meet the state's demands for more 
favorable prices, he said, "I don't think all those contracts will come to 
term." 
Steve Maviglio, a spokesman for Gov. Gray Davis, was quick to underline 
California's changed fortunes as an electricity buyer. 
"We're in the driver's seat now," he said. "There's no question about that." 
Other officials were feeling similarly encouraged by California's stronger 
position to press their attack on power companies that they suspect of having 
pushed electricity prices higher. 
Larry Drivon, special counsel to a state Senate committee investigating 
alleged price manipulation, said the sudden drop in power costs will not 
derail attempts to determine if power companies illegally gouged customers. 
"Prices have gone down, but they're also capable of going back up again in a 
hurry," he said. 
Electricity prices have tumbled to the lowest levels since April 2000 -- as 
low as $50 per megawatt hour yesterday, compared with more than $500 earlier 
this year. 
Experts attributed the drop to a decline in the price of natural gas, which 
is the fuel that runs most power plants. Milder weather has cut power demand 
by reducing use of air conditioners, which in turn slashes the amount of gas 
required by generators. 
Experts also cited increased electricity production at plants and dams, as 
well as greater conservation by consumers and businesses. 
"The Armageddon we thought we were facing this summer has backed away a bit, 
" said Severin Borenstein, director of the University of California Energy 
Institute in Berkeley. 
"These lower prices are saying that the market is not going to be as tight as 
expected," he said. "That means fewer blackouts." 
It also means California's long-term contracts increasingly appear to be a 
raw deal if power prices continue to fall. 
A state report to be released today says the average contract price is about 
$70 per megawatt hour over 10 years and that the average price over the next 
five years is $84 -- well above current market rates. 
The average contract price in the third quarter of 2001 is $138, rising to 
$142 in the fourth quarter, the report says. 
LOOKING FOR BETTER DEALS
"I want to work for more favorable deals," said Hart at the Department of 
Water Resources. 
However, he said, details of the accords will not be made available for the 
foreseeable future because that could jeopardize the state's bargaining 
position in any subsequent talks with generators. 
This contradicted a pledge from the governor last week that details of the 
contracts would be revealed within 30 days. 
The Chronicle and other media outlets are suing for access to the accords, 
arguing that the public has a right to know how $40 billion in tax dollars is 
being spent. 
Senate President Pro Tem John Burton, D-San Francisco, said he plans to 
discuss with colleagues how the drop in power prices can be used to 
accelerate the release of the contracts. 
"We can't know if the contracts show whether the state is being smart or 
stupid until we see them," he said. 
PRICE DROP OUT OF BLUE
This much at least is clear: Almost no one could have forecast just weeks ago 
that wholesale electricity prices would drop below $100 this summer. 
A few months ago, June electricity prices on the forward power market were 
running close to $400. 
One reason for the changed outlook, ironically, is last week's heat wave, 
which left Northern California sizzling and would have been expected to cause 
electricity prices to soar as millions of air conditioners kicked into gear. 
Instead, power prices remained steady, "and that really changed the 
psychology of the market," said Brian Jordan, who monitors electricity 
trading at energy market researcher Platts. 
Michael Wilczek, another Platts analyst, said that price stability was 
bolstered by an increased number of generating plants returning to service 
after spring repairs. 
He also cited a surge in electricity output from regional dams as the high 
temperatures caused mountain snow to melt. 
NIGHTMARE HAS ABATED
"Now, things aren't looking like the nightmare scenario some people were 
expecting," Wilczek said. "But it still could be a volatile summer." 
Jeff Brown, a member of the state Public Utilities Commission, said the 
situation could change "in a New York minute." 
"It's only June," Brown said. "We've got to go through July, August and 
September." 
Paul Clanon, the head of PUC's energy division, agreed with Brown that 
natural gas costs could spike again. 
"I wouldn't hold out big hope for anyone that those decreases are going to be 
permanent," Clanon said. 
Indeed, if there is one thing Californians have learned, it is that trying to 
guess where energy prices are headed is a sucker's game. In April, for 
example, the August electricity price on forward markets was about $700. 
Yesterday it was closer to $200. 
This summer's weather will be the deciding factor in determining whether the 
actual August price on daily markets will be as low as $30 or back up at the 
$1,900 level seen earlier this year. 
"The battle isn't over," said Borenstein at the UC Energy Institute. "But 
we've seen real progress." 
Chronicle staff writer Bernadette Tansey contributed to this report. / E-mail 
David Lazarus at dlazarus@sfchronicle.com. 
,2001 San Francisco Chronicle ? Page?A - 1 



Senator ready to strong-arm energy panel 
New committee chairman to give regulators 2 weeks to set price caps 
Carolyn Lochhead, Chronicle Washington Bureau
Thursday, June 7, 2001 
,2001 San Francisco Chronicle 
URL: 
http://www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2001/06/07/M
N99766.DTL 
Washington -- The new Democratic chairman of the Senate Energy and Natural 
Resources Committee warned yesterday that unless federal regulators act 
within two weeks to intervene in California's electricity market, the Senate 
will try to force them to do so. 
But over in the House of Representatives, a partisan brawl over limits on the 
wholesale price of energy led Republicans to withdraw their bill, which is 
intended to help California out of its electricity mess. 
Even as Republicans insisted that price caps would never win approval in the 
House, they sent a letter to federal regulators urging a tough stand on 
market manipulation and all but conceded that the issue was beginning to hurt 
them politically. 
The actions put the two chambers -- and the two parties -- on a collision 
course over price controls that promises to play out in Washington through 
the summer, waxing or waning with California's expected blackouts. 
The Bush administration strongly opposes controls, saying they would not 
alleviate the blackouts and might make them worse. Gov. Gray Davis and 
Democrats in Congress insist that price controls will solve the short-term 
problem by stanching the flow of money out of the state. 
The effort by the Democrats has been given a boost by their takeover of the 
Senate. Soft-spoken and Stanford-educated Democratic Sen. Jeff Bingaman of 
New Mexico, who now heads the energy committee, warned he would wait several 
weeks to see if President Bush's two new appointees to the Federal Energy 
Regulatory Commission would take stronger action on prices. 
Patrick Wood, head of the Texas public utilities commission, and Nora Mead 
Brownell, a Pennsylvania public utilities commissioner, were sworn in this 
week, and Wood is said to be in line for the regulatory commission 
chairmanship. 
Bingaman has co-sponsored California Democrat Dianne Feinstein's bill to 
order the regulatory commission to impose price caps. Senate Majority Leader 
Tom Daschle, D-S.D., wrote Feinstein on Tuesday saying he supported her bill, 
too, and would try to bring it to a vote. 
"I hope that FERC will act on its own volition," Bingaman said yesterday. "I 
don't think Congress has the experience to step in and do it for them." 
But if the energy regulators are unwilling, he said, he would consider Senate 
action. 
In the House, however, Republicans charged the Democrats with using the price 
caps issue purely to score political points with voters. 
Rep. Billy Tauzin, the Louisiana Republican who heads the House Commerce 
Committee, said he decided to pull the energy legislation late Tuesday 
evening "for tactical and practical reasons," saying many of the proposals -- 
such as plans to clear the state's Path 15 transmission bottleneck -- had 
already been adopted by Davis or Bush. 
Tauzin also said that while Republicans had the votes to move the bill, it 
would pass narrowly and probably arrive too late to avert this summer's 
expected problems. 
Tauzin effusively praised Rep. Henry Waxman, D-Los Angeles, for making a 
"very sincere effort" to bridge the partisan differences over price controls. 
But Texas Republican Joe Barton charged that House Democratic leader Dick 
Gephardt had short-circuited the talks so the Democrats could keep price 
controls alive as a political issue. 
"Mr. Gephardt apparently made a decision to kowtow to the more radical 
elements of the Democratic caucus," Barton said. He said committee Democrats, 
including Anna Eshoo of Palo Alto and Waxman, "would get real close" to 
agreement, but then like Lucy with the football in the Peanuts cartoon, 
pulled away at the last minute. 
"It appeared to me that Mr. Gephardt did not want a deal," Barton said. 
No sooner did the Republicans leave their press conference than Democrats 
charged into the same room to deny any such thing. 
"We were never close to a deal," Waxman said. The Democrats said a proposal 
by Sacramento Republican Doug Ose to widen an April order by the Federal 
Energy Regulatory Commission -- which imposes a benchmark price during Stage 
3 power alerts and heightened scrutiny of power sales over that price -- was 
grossly inadequate. 
Waxman charged that the Republicans were deliberately letting California 
suffer. 
"The FERC has said they weren't going to do anything to help California, the 
president has refused to do anything to help California, and now the 
Republican Congress is refusing to help us as well," Waxman said. 
But Fresno Republican George Radanovich said the two parties had been in 
serious discussions on a Democratic proposal to impose price caps until 80 
percent of the state's electricity purchases are locked into long-term 
contracts. 
But that fell apart, he said, when some worried whether 80 percent was the 
correct number and whether Congress should even be making such decisions. 
"For politics, they want to keep the price cap issue," Radanovich said of the 
Democrats. "To me it's really a red herring. I think the governor's been 
successful in trying to make this argument, and I think he needs to focus on 
getting himself out of the electricity purchasing business, restoring the 
creditworthiness of the utilities and getting them into long-term contracts. 
If he'd put all his energy into those three things, we'd be out of this 
problem." 
The price-control clash is heating up again just as electricity prices are 
suddenly dropping as Californians conserve more than expected and natural gas 
prices fall. Whether prices remain low or spike up again could influence the 
debate in Congress. 
Bingaman also said that although he shares Bush's desire for a long-term 
energy plan, he would put that on hold until "later this summer and into the 
fall." 
E-mail Carolyn Lochhead at clochhead@sfchronicle.com. 
,2001 San Francisco Chronicle ? Page?A - 15 



Underwriters wary of bond deal 
State needs funds to cover costs of buying power 
Greg Lucas, Sacramento Bureau Chief
Thursday, June 7, 2001 
,2001 San Francisco Chronicle 
URL: 
http://www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2001/06/07/M
N168905.DTL 
Sacramento -- A $12.5 billion bonds-for-electricity deal considered critical 
to California's budget solvency may be delayed unless the state takes steps 
quickly to assure underwriters that the bonds are a sound investment. 
Backers want greater certainty that buyers of the bonds will be guaranteed 
revenue from utility ratepayers before taking the sale to market, according 
to state bankers and lawmakers. 
Without those assurances, the bond sale could be delayed or, if it is not, 
the selling costs could be higher for the state if buyers see the bond issue 
as a riskier investment. Providing that certainty, however, could mean a rate 
increase should the state's energy costs rise. 
"The bond market simply is not going to respond to a sale where there is not 
an assured revenue stream," said Sen. Steve Peace, D-Chula Vista, chairman of 
the upper house's budget committee. "And that revenue stream is not there 
yet." 
STATE BUDGET AT RISK
Without the bond sale, the state budget would be forced to absorb the more 
than $8 billion it has spent since January to purchase power for 
cash-strapped utilities. A financial blow of that size could only be absorbed 
by making deep cuts in spending, raising taxes or both. 
The three state budget proposals created by the Democratic governor, the 
Assembly and the Senate all assume the bonds will be sold and the state's 
coffers replenished. 
But a lot must be done to accomplish that. 
Although underwriters and bond lawyers working with State Treasurer Phil 
Angelides declined to comment, Angelides and other sources close to the 
negotiations said several key elements necessary to market the bonds are not 
in place. 
The first of these is that buyers of the bonds want to be sure they will get 
paid. 
The plan is for a portion of each utility customer's bill to be devoted to 
paying off bond holders. 
Essential to the bond deal is a formal agreement between the Public Utilities 
Commission and the state that whatever costs the state incurs, buying power 
will be covered by the rates charged utility customers. 
That pledge, which could mean a rate increase if energy prices don't keep 
falling, is intended to give bond buyers the confidence there will be enough 
revenue to pay them off. 
The Department of Water Resources, which buys the state's power, estimates 
that it needs about $700 million a month to cover its costs -- a total of 
$9.2 billion through June 2002. 
The assumption is that as energy prices fall, state costs will drop, freeing 
up cash to pay off bond holders. 
"Ratepayer revenues, including the most recent rate increase, are expected to 
cover all of (the state's) costs and the debt service," said Tim Gage, 
director of Gov. Gray Davis' Department of Finance, which is involved in the 
negotiations with the PUC. 
PUC DUBIOUS ABOUT DEAL
Participants in the negotiations say the PUC is reluctant to sign the 
agreement because it would surrender its power over deciding whether the 
state spent more than it should in buying power. 
PUC Commissioner Jeff Brown said that giving a blanket assurance the state's 
expenses will be covered might lead to an automatic rate increase if current 
rates turn out to be too low to cover both utility costs and the state's 
power purchases. 
"The PUC has rate setting authority," Brown said. "We have to be in a 
position to protect the ratepayers." 
But Brown said the PUC has just begun the process of determining how the 
money will be shared, an issue that is likely to be hotly contested over the 
next month. 
UNRESOLVED ISSUES
There are still other issues that must be resolved before the bond sale. 
The state must sign agreements with Pacific Gas and Electric Co., Southern 
California Edison and San Diego Gas & Electric on how the utilities will 
route ratepayer money to the state to pay its costs. 
And the PUC must increase rates for SDG&E customers because higher rates for 
those ratepayers is part of the revenue flow to the state, Angelides said. 
Peace and others predict that the bonds will eventually be sold, probably at 
high yields for investors and higher costs for the state. 
The sale probably won't happen in August as first hoped, however. 
Angelides said the two weeks before Labor Day are poor ones to sell the bonds 
because many so people are on vacation. He predicts a sale some time in 
September. 
That would put the state uncomfortably close to the time it will no longer be 
able to raid various funds to cover the drain on the general fund from 
revenue buys. 
"It's a pretty narrow window that has to be met," Angelides said. 
Energy at a glance Energy-related developments yesterday: 
-- EL PASO CASE TOO COMPLEX 
FOR QUICK RULING -- JUDGE
The judge in a federal investigation of possible market manipulation by a 
Texas energy company said yesterday that he might not issue his findings 
until September. 
The case involving El Paso Corp. proved so complex that Curtis Wagner, chief 
administrative law judge for the Federal Energy Regulatory Commission, 
extended the schedule for written arguments until July 24. The commission 
then extended the deadline for his report from July 12 to Sept. 4. 
El Paso has been accused by California regulators and utilities of causing 
huge run-ups of gas and electricity prices by restricting supplies of natural 
gas flowing into the state on a company pipeline. 
The company has denied that it did anything wrong and says the price 
increases were the result of normal market forces. 
-- SMALL GENERATORS 
MAY RECEIVE PAYMENTS
Hundreds of small power generators that are owed millions by state utilities 
could get a cash infusion to keep them online under a proposal to be 
considered today by the state Public Utilities Commission. 
Any small supplier that shows it will be forced to stop operating unless it 
is paid part of the back debt would receive 15 percent of the amount owed by 
Pacific Gas and Electric Co., Southern California Edison or San Diego Gas & 
Electric Co. 
The small plants stopped receiving full payments during the winter as 
skyrocketing electricity prices drove the utilities into debt. 
Chronicle staff writer Bernadette Tansey contributed to this report. / E-mail 
Greg Lucas at glucas@sfchronicle.com. 
,2001 San Francisco Chronicle ? Page?A - 15 







It's looking better on energy front 
Posted at 9:50 p.m. PDT Wednesday, June 6, 2001 
BY STEVE JOHNSON AND JOHN WOOLFOLK 

Mercury News 


After months of pessimistic predictions that California was facing a summer 
of blackouts, the energy outlook is brightening. 
Increased conservation, new power plants and more electricity imports are 
easing the threat of routine summer outages. 
``I feel good,'' said Bob Therkelsen, deputy director of the California 
Energy Commission, crediting a crash program to speed power-plant 
construction and persuade people to use less electricity. ``Overall, that 
objective of increasing supply and reducing demand is happening.'' 
While no experts say the crisis is over -- and some warn the situation could 
quickly worsen -- state energy analysts and some industry officials are 
revising their dire forecasts. 
Things certainly didn't look good two months ago. Back then, power plant 
breakdowns and routine repairs had made nearly 15,000 megawatts of power 
unavailable in California -- about a third of what the state normally uses. 
And Gov. Gray Davis was warning that by May and early June, the state could 
be ravaged by blackouts. 
But a lot has changed since then. On Wednesday, only about 6,000 megawatts 
was unavailable because of plant repairs. Other than two blackout days -- on 
May 7 and May 8 -- last month and the first part of June have had relatively 
few power problems. Moreover, appeals to conserve appear to be sinking in. On 
Sunday, state officials announced an 11 percent drop in electrical use last 
month compared with May last year. 
Not wasting power is especially crucial, said Richard Grix, an analyst with 
the California Energy Commission. 
``It's really been the people who have turned up the thermostats, put in the 
fluorescent energy-efficient light bulbs and run their dryers at night,'' he 
said. ``It's all the efforts of people trying to conserve electricity that 
have made the outlook a lot better. And that still has to happen'' to avert 
blackouts this summer. 
James Macias, executive director of the San Jose-based power plant developer 
Calpine Corp., said he expected fewer blackouts and lower electricity prices 
than predicted this summer because of the number of new plants coming online. 
``I'm optimistic things are improving,'' he said in a New York briefing. 
News from Northwest 
California's prospects for buying electricity from other states appear to be 
better, too. 
The state normally relies on such imports for about one-fourth of the power 
it uses, with much of it coming from the Pacific Northwest. In recent months, 
California officials had feared those supplies might dry up this summer, 
because a drought had reduced the amount of water needed to drive the 
region's hydroelectric dams. But those concerns have eased. 
``We're not out of the woods yet,'' concluded a study last week by the 
Northwest Power Planning Council. But since its last analysis of available 
power supplies in March, it added, ``the situation has improved 
considerably.'' 
Officials at the Bonneville Power Administration, the giant Portland, Ore., 
federal hydropower agency, sounded a similarly sunny note. They said 
agreements by aluminum and other major industries to reduce their power usage 
has made more power available for California. 
Bonneville, with 29 dams and a nuclear plant, generates 8,000 megawatts and 
is obligated to deliver 11,000 megawatts. Typically, it buys the difference 
on the market. So with power prices soaring, Bonneville asked the industries 
to reduce demand by 3,000 megawatts or face price increases up to 250 
percent. 
So far, the companies have committed to drop 1,200 megawatts, which means 
there is that much more electricity available for other customers, including 
California, said Bonneville spokesman Mike Hansen. ``We're not out there 
competing with everyone else for that power,'' he said. ``We're feeling 
pretty good about this summer.'' 
Help from the weather 
Even the weather appears to be cooperating. 
To be sure, May was hotter than normal and temperatures are expected to be 
unusually hot across much of the Southwest. That could drive up electricity 
use for air conditioning in places like Arizona, potentially limiting the 
Southwest's ability to ship power here. But the long-term forecast for 
California looks normal, which means ``no apocalyptic forecast here and 
that's good,'' said Walter Snell, a meteorologist with the National Weather 
Service in Monterey. 
Such guarded optimism about the state's power supplies comes as electricity 
prices have unexpectedly fallen to levels not seen since last spring before 
California's energy crisis erupted. 
Market experts say prices reflect lower power-plant fuel costs, more imports 
and increased conservation, but caution that prices, like the blackout 
threat, are likely to again rise this summer. 
Words of caution 
Arthur O'Donnell, editor of California Energy Markets, said a big reason that 
hydroelectric supplies have increased in the Pacific Northwest is that the 
snow has melted a month earlier than usual. While that unexpected surge of 
power has helped bring down electricity prices across the West, he said, it 
could cause those same supplies to peter out earlier than expected this 
summer. 
Others warn that a sudden rash of power-plant breakdowns or an unexpected 
spell of hot weather could easily push California back to the brink of 
blackouts. In addition, they fear some generators might withhold power to 
drive up prices, although suppliers have denied doing that. 
Gov. Davis' spokesman Steve Maviglio said it's wise not to take any 
predictions about what might happen this summer too seriously. 
``They're all educated guesses,'' Maviglio said. ``Nobody knows for sure.'' 
As a result, he added, ``We're preparing for the worst and hoping for the 
best.''


Contact Steve Johnson at sjohnson@sjmercury.com or (408) 920-5043. 











Published Thursday, June 7, 2001 
Four-day week for city halls?
POWER CRISIS 
Antioch and Vallejo are considering Fridays off to cut power costs 
By John Simerman
TIMES STAFF WRITER 
Antioch and Vallejo are among several California cities looking to shed 
energy use by cutting back on the number of days that city hall stays open. 
Local agencies have started to feel the pinch of higher electricity bills, 
and some are beginning to exhaust their efforts to squeeze out savings from 
conservation. 
Antioch officials soon will consider a move to close City Hall every other 
Friday, but will keep the doors open longer on other days. 
"Once you put something like that in place, I think we'd look at that as 
being permanent," said Ron Ward, the city's community development director. 
"It provides a little more flexibility for the commute public and it provides 
a benefit for employees." 
The city has budgeted a 46 percent increase in electricity and natural gas 
costs for the fiscal year beginning July 1. It is not yet clear how much the 
extra day of darkness would save. 
In Vallejo, the City Council next week will consider starting a four-month 
pilot program for a four-day work week at City Hall, with extended hours on 
the other four days. The city figures it can save 28 percent off its energy 
bill, and may also realize a $50,000 profit in a program to sell its saved 
energy back to the statewide grid. 
"It has the potential to become permanent and expand to other buildings. It 
also has the potential to go away if it doesn't result in the savings we 
expect," said Mary Hill, assistant city manager. 
Beginning next week, Las Positas College in Livermore and Chabot College in 
Hayward will shut down on Fridays through the end of July. Energy costs for 
the Chabot-Las Positas district will run about $800,000 more than budgeted 
for this year, said district spokeswoman Jennifer Aries. 
Many cities and public agencies have switched to more efficient traffic 
signal lights, ratcheted back air conditioners and installed motion sensors 
to dim lights when nobody's around. Even with those measures, energy costs 
are expected to rise dramatically over last year. 
Making matters worse in the Bay Area, a power pool that secured cheap 
electricity for 56 public agencies took a bath last month under the weight of 
the state's energy debacle, forcing those agencies to seek refuge under 
Pacific Gas & Electric's regulated rates. PG&E has told some cities that 
their rates could run more than twice as high as they were paying in the 
power pool. 
Albany, Antioch, Benicia, Berkeley, El Cerrito, Hercules, Moraga, Orinda, 
Pinole, Pleasanton, San Pablo, Vallejo and Contra Costa County were among the 
agencies in the pool. San Mateo County, which also was in the pool, has 
closed one of its main administrative buildings on Fridays to reduce 
consumption. 
Officials in most East Bay cities, however, said they consider such cutbacks 
a last resort. Officials with several cities said they found it would not 
save much. In some, police occupy the same building as city hall, making it 
impossible to shut off power to the building. 
"People get very accustomed to being able to get their building permits and 
pay their utility bills on whatever day," said Scott Baker, Pleasanton's 
assistant director of public works. He said city officials "casually" 
discussed such a move, but decided against it. 
In a survey conducted in late May by the League of California Cities, many 
city officials reported they were pondering a move to curtail hours, but had 
not yet made a final decision. To some, the savings is not enough to justify 
a long weekend. 
"There's not a whole lot we can save," said Bill Norton, Clayton's interim 
city manager. "And you've got citizens who will say, 'You're going down to 
four days a week, show us why.'" 
Reach John Simerman at 925-943-8072 or jsimerman@cctimes.com. 










Published Thursday, June 7, 2001 
Labor leaders demand power plant takeovers 
POWER CRISIS 
They bolster Gov. Gray Davis in Oakland in the first of six rallies planned 
around California 

By Ethan Rarick 
TIMES STAFF WRITER 
Stepping up their involvement in California's electricity crisis, the state's 
labor leaders literally took to the streets Wednesday in a protest that 
hammered President Bush, bolstered Gov. Gray Davis and displayed the unions' 
own reinvigorated political muscle. 
In the first of six planned protests around the state, the California Labor 
Federation held a rally in downtown Oakland and then marched to a nearby 
power plant owned by Duke Power, one of the out-of-state power companies 
demonized by Davis as greedy marauders pillaging the Golden State. 
"We are tired of being gouged by Duke Power and those other power producers," 
said Art Pulaski, executive secretary-treasurer of the labor group. "We're 
here to say, 'No, we're not going to take that anymore.'" 
In front of the plant at Jack London Square, protesters unveiled a huge 
"People's Notice of Eminent Domain" suggesting the state should take over 
power plants to solve the crisis. 
The demonstrations, which will continue throughout June and July, give the 
labor federation a chance to capitalize on its growing role in California 
politics. In 1998, unions played a big role in helping to elect Davis, and 
last year labor groups were a key element in Democrat Al Gore's bid for the 
presidency. 
Union officials insisted their new campaign is sparked by concern over union 
members' utility bills, but the political implications are clearly near the 
surface. 
"If we don't speak up, big corporations and the Bush administration will 
resolve this crisis on the backs of working families," Pulaski said in a 
written statement issued before the protest. "We lobbied and held press 
conferences in Sacramento this spring. Now it's time to take the action to 
the streets." 
The Davis and Bush administrations have traded potshots over the energy 
crisis, with the governor attacking the president for doing too little to 
limit wholesale prices, and the president and his aides saying California has 
failed to focus on energy production. 
The rivalry continued even after the governor and president met to discuss 
the issue last week in Los Angeles. 
Labor officials echoed Davis in calling on the Federal Energy Regulatory 
Commission to cap wholesale prices for natural gas and electricity. 
Pulaski said union members are being gouged on their utility bills thanks to 
outrageous prices. 
"This is not a rally; this is a campaign that involves consumers across the 
state," Pulaski said. "We're building momentum from San Francisco to San 
Diego to give consumers an opportunity to speak up." 
But labor leaders also were more vigorous than Davis in calling for plants to 
be seized. During his State of the State address last January, Davis 
threatened to take over plants, but since then has held the idea at arm's 
length. 
Unions often have differed with Davis on other minor points, despite their 
general support for the governor. Although Davis signed a bill restoring 
California's requirement for overtime pay after eight hours of work in a day, 
he also vetoed union-backed bills increasing workers' compensation and 
unemployment insurance benefits. 
Tom Williams, a spokesman for Duke Energy, the North Carolina-based company 
that owns the plant where Wednesday's protest occurred, said the 
demonstration would do nothing to help solve the crisis. 
"All of this discussion doesn't generate a single kilowatt of electricity," 
Williams said. "I think it's unfortunate." 
Williams also noted that all four of Duke's California plants are unionized, 
including the one where the protest occurred. 










Published Thursday, June 7, 2001 
Senate shift puts pressure on FERC
POWER CRISIS 
New energy committee chairman warns regulators to rein in energy costs or 
face new legislative action 
By Richard Simon
LOS ANGELES TIMES 
WASHINGTON -- The new Democratic chairman of the Senate Energy Committee 
bluntly warned federal regulators Wednesday to act more aggressively to rein 
in electricity costs in coming weeks or prepare for Congress to intervene. 
As Sen. Jeff Bingaman, D-N.M., turned up the political pressure on the 
Federal Energy Regulatory Commission, House GOP leaders scuttled an emergency 
bill designed to help power-short California through a difficult summer. The 
measure became bogged down in partisan wrangling over price controls. 
Bingaman's message was a sign of the sudden shift in energy politics in 
Washington after Vermont Sen. James M. Jeffords' switch from Republican to 
independent and the Democrats' taking control of the Senate. 
In his first day as chairman of the energy panel, Bingaman urged the Bush 
administration to "step up to its responsibility" to ensure that wholesale 
power rates charged in California are just and reasonable. 
New Senate Majority Leader Tom Daschle, D-S.D., expressed similar sentiment 
in a letter to Gov. Gray Davis. 
"Unless FERC takes action," Daschle wrote, "I believe that Congress will have 
to consider legislation to address the issue." 
Bingaman is co-sponsor of a bill introduced by Sens. Dianne Feinstein, 
D-Calif., and Gordon Smith, R-Ore., that would direct FERC to limit prices 
while ensuring that power suppliers recover their costs and still make a 
reasonable profit. The Bush administration has opposed price controls, 
contending they would discourage power plant construction. 
The Feinstein bill appeared unlikely to come up for a vote in the energy 
committee under the former chairman, Sen. Frank Murkowski, R-Alaska. 
Feinstein said she hopes that if FERC doesn't act within a few weeks, the 
committee will take up her bill. "We intend to keep the pressure up," she 
said. 
Even if such a measure were to clear the Senate, it would face stiff 
opposition in the GOP-controlled House of Representatives and probably a 
presidential veto. But with their newfound power, the Democrats have the 
ability to increase political and public pressure on FERC, an independent 
body. 
In a breakfast meeting with reporters, Bingaman expressed hope that two new 
FERC commissioners would act more aggressively in response to electricity 
prices, which have bankrupted California's biggest private utility, Pacific 
Gas & Electric, and cost the state billions of dollars. 
But he noted that there are limits to what Congress can do. "Once a law is on 
the books, and a federal agency is not enforcing it, then usually the remedy 
is in the courts," he said. 
FERC officials said they did not want to get into a war of words with 
Bingaman and would let the agency's record speak for itself. "This agency is 
continuing to work extremely hard on the issues facing the country in regard 
to energy," said Walter Ferguson, a top staffer for FERC Chairman Curt 
Hebert. 
In the House, GOP leaders declared dead a bill that would have provided some 
short-term help to California, such as federal aid to ease a notorious 
bottleneck in the state's power grid and authority for the governor to ease 
emission rules to boost power supplies during an emergency. 
Democrats suggested that the legislation was killed to save California 
Republicans from a politically difficult vote on price controls. Republicans 
contended that Democratic leaders were unwilling to compromise. 
Rep. Joe Barton, R-Texas, the bill's author, said the impasse made it 
unlikely that the legislation could pass Congress and clear the president's 
desk in time to help California this summer. 
But some Republican leaders who have resisted price controls appeared to be 
softening their position, so long as it's called something else. 
Rep. W.J. "Billy" Tauzin, R-La., chairman of the House Energy and Commerce 
Committee, said he was drafting a letter urging FERC to expand its "price 
mitigation" order that limits the price that power generators can charge. 
The order now applies only when the state's power supplies slip low enough to 
trigger an energy emergency.













A power-bill surge 
For consumers who use more than average, higher rates to show up on this 
month's statements. 
June 7, 2001 
By ANNE C. MULKERN
The Orange County Register 
After a year of hearing about the state's electricity crisis, the bulk of 
Orange County consumers now start feeling more of the financial costs. 
Power bills with new, higher rates will start arriving Friday for customers 
of Southern California Edison Co., which serves most of Orange County. 
The average consumer will pay 37 percent more, although customers who use the 
lowest amounts of power escape the rate increase entirely. 
Approved by state regulators in May, higher rates are intended to raise $5 
billion to repay the state for power purchases. 
Because cash-strapped Edison is unable to purchase power, the state's 
Department of Water Resources now buys a portion of the power needed by 
Edison customers. 
The rate hike, however, does not fully cover the wholesale cost of that 
power, and there is no guarantee there will not be future increases. 
"I don't know what the future holds for ratepayers," said Steve Maviglio, 
Gov. Gray Davis' spokesman. 
"Our goal is to avoid electric-rate shock to business and ratepayers.'' 
The hike comes on top of a 9 percent increase approved in January. 
The higher rates also will cover current and future electricity costs. 
Utilities have run up billions in debt paying for power over the past year. 
That debt will be reimbursed through bonds, which will be sold and then paid 
back through a surcharge on electric bills. 
The bills also wraps in Davis' olive branch to consumers: a 20 percent rebate 
for those who can cut their power consumption by 20 percent from last year's 
levels. Those who can't cut usage that much won't see any rebate. 
The rate hike also encourages conservation by targeting consumers who use the 
most power. Those consuming more than 300 percent of their baseline - an 
amount considered necessary for essential uses - will pay the most for that 
extra power. 
The highest rate of the five-tier plan, including the cost of generating and 
delivering the power -- is more than twice as much as the lowest rate. 
Customers with low incomes, those who use medical equipment and those who use 
less than 130 percent of their baseline amount, will not pay higher rates. 
Edison said about half its residential customers will not see any increase. 
Orange resident Conrad Moreno, however, said he doesn't think he can shrink 
his power usage low enough to avoid the rate hike. 
Moreno, 55, used more than twice his baseline amount last summer. He's cut 
back on air conditioning, except on the hottest days, bought a more-efficient 
refrigerator and turns off lights. 
But he thinks he'll still face higher bills. He paid about $145 last August, 
and thinks this year's peak bills will be more than $200. 
"I don't see how anybody -- unless they never use air conditioning at all -- 
can stay under baseline,'' Moreno said. 
"The only way you can keep it down that far is to not use (air conditioning) 
at all.'' 
The rate increase does not affect San Diego Gas & Electric Co. customers in 
south Orange County. 
That utility has applied for a similar increase, which regulators will 
consider June 28. 














Energy notebook 
Many experts see light at the end of the crisis sooner than expected 
June 7, 2001 
The Orange County Register 
San Francisco California's power crisis, which has led to repeated statewide 
blackouts and the bankruptcy of the state's largest utility, may end sooner 
than expected, some observers are saying. 
Gov. Gray Davis has predicted that the problems will ease by mid-2003. 
Dropping wholesale power prices and new plants coming on line this summer are 
leading some to predict an earlier end to the crisis. 
"We're going to be surprised to see the results of the market starting to 
correct itself," James Macias, an executive director with California 
power-plant owner Calpine Corp., said at a briefing in New York. "I'm 
optimistic things are improving, and it won't be as bad as people thought." 
Calpine's 540-megawatt South Point Energy Center in Mohave County, Ariz., 
opened last week. Two new plants in California that can generate a combined 
1,080 megawatts, or enough power to light 810,000 typical California homes, 
will open within six weeks, company spokeswoman Katherine Potter said. 
California electricity prices plunged to a nine-month low Wednesday as 
several power plants returned to service after spring repairs, while milder 
weather reduced air-conditioning demand. 
Regulators may put off decision on exemption for oil refineries 
Los Angeles California utility regulators likely won't decide until August 
whether to exempt refiners from rolling blackouts this summer, a spokesman 
for the California Public Utilities Commission said Wednesday. 
That delay could lead to spiking prices for gasoline and other fuels, as at 
least two major California refiners have threatened to cut production if the 
exemptions aren't granted. 
"The applications will be reviewed, and a decision will likely be made in 
August," said PUC spokesman Armando Rendon. 
Enron chairman says company would deal on state settlement 
Houston Enron Corp. Chairman Kenneth Lay said the world's largest energy 
trader would accept less than 100 percent of the money it's owed for power 
sold to California if it could reach a settlement with the state. 
Lay, who spoke on PBS's "Frontline" television program, refused to say how 
much of a "haircut" the company would accept. 
In other news: 
California utilities would have to pay some alternative-energy producers 15 
percent of back debts under a plan by state energy regulators to reduce the 
likelihood of power shortages. 
The proposal, which the California Public Utilities Commission plans to vote 
on today, would permit payments to individual alternative-power generators 
that show they need the money to keep making electricity. 
House Republicans declared dead Wednesday a proposed bill to help 
electricity-starved California avoid summer power outages, after Democrats 
refused to drop demands for wholesale price caps opposed by President George 
W. Bush. 
Edison International's Southern California Edison asked a state judge to take 
control of more than 30 lawsuits filed in different courts by small 
generators seeking past-due payments from the state's No. 2 utility. Southern 
California Edison wants one judge to hear all the cases to eliminate the 
potential for conflicting verdicts from different courts. 
The Assembly, by a 42-7 vote, approves a resolution asking the Federal Energy 
Regulatory Commission to "impose interim price caps until the California 
power market has stabilized." 














Market spotlight: PG&E woes push down shares of power generators 
Investors fear the companies won't be paid, and energy prices are falling. 
June 7, 2001 
Bloomberg News 
Shares of Calpine Corp., Reliant Energy Inc. and other U.S. power generators 
have fallen as much as 21 percent since late May because investors are more 
worried that the companies won't be paid as part of Pacific Gas & Electric's 
bankruptcy filing, executives and analysts said. 
Falling spot and forward electricity prices in California and elsewhere also 
have hurt shares, analysts said. 
Shares of Calpine have fallen 21 percent since May 21. Shares of Reliant have 
fallen 13 percent since May 24. NRG Energy has fallen 13 percent since May 
24. 
"Investors are concerned about the PG&E bankruptcy proceeding," Calpine 
spokesman Richard Barraza said in an interview in New York. PG&E Corp.'s 
utility, California's biggest, filed for Chapter 11 bankruptcy protection in 
early April with almost $9 billion in losses from buying electricity at 
soaring prices that couldn't be passed on to customers. 
Falling power prices also contributed to the share-price decline, Commerzbank 
Securities analyst Andre Meade said. Electricity in the California-Oregon 
border region for day-ahead delivery fell Wednesday to the lowest level in 11 
months, dropping 12 percent to $60 a megawatt-hour, according to Bloomberg 
Energy Service statistics. A megawatt hour can light 750 California homes for 
an hour. 
"We don't have any summer weather to speak of, and as a result, the forward 
price for electricity is declining," John Hancock Patriot Group fund manager 
Gregory Phelps said. 
The price on the California-Oregon border for July and August delivery has 
fallen 56 percent to $222.50 a megawatt-hour from a high this year of $505 on 
April 1, Bloomberg statistics said. 
The price in New York for July and August delivery has fallen 22 percent to 
$58.25 a megawatt-hour from a high this year of $75 on April 16. 
Shares of AES Corp., the biggest U.S. power-plant developer, have fallen 11 
percent since May 23. They fell 7 cents Wednesday to $42.47. 
AES said Tuesday that the Justice Department is investigating allegations it 
agreed with the Williams Cos. to limit expansion of electric generators in 
California near AES's own electric plants. 
Williams fell $1.20, to $37, Wednesday. The stock has fallen 12 percent since 
May 21. Calpine rose 46 cents, to $43.76. Reliant fell $1.29, to $41.46. NRG 
fell 55 cents, to $26.28. 













California ISO's independence at issue 
Federal regulators could object to the state acting as a 'market 
participant.' 
June 7, 2001 
By REBECCA SMITH
The Wall Street Journal 
As California politicians wade deeper into the energy crisis, the state's 
electric-grid operator appears headed toward a showdown with federal energy 
regulators over whether its board is independent enough. 
The California Independent System Operator bowed to pressure from the Federal 
Energy Regulatory Commission and submitted its qualifications to continue as 
a federally sanctioned grid operator. 
But the tardy filing is almost certain to be challenged by federal regulators 
and market participants because the ISO's governance structure has strayed 
from a "bedrock requirement" that it be "independent of control by any market 
participant." 
The market participant casting the long shadow is the state of California. 
Since January, when the state of California began buying huge sums of 
electricity on behalf of its nearly broke utilities, the ISO has been under 
pressure to give state officials preferential treatment and unique access to 
market-sensitive information. 
Its chief operations officer, paid $245,000 a year according to the most 
recent IRS filing, is on indefinite loan to the governor's office where he is 
working as an energy adviser. 
This politicization of the ISO is significant because the organization's 
purpose is to run a market for power needed to keep the electric system in 
balance and to give buyers and sellers impartial access to the power lines on 
which they depend to move electricity. Unlike other commodities, electricity 
can't be stored. Transactions, therefore, depend completely on instantaneous 
access to the electric superhighway of high-voltage lines. The FERC worries 
that a loss of political independence by the ISO will further degrade the 
state's already dysfunctional energy market. 
The FERC hasn't formally accused the ISO of acting improperly, but it is 
clear that a wall between the state and the ISO that once was solid has 
become permeable. Last month, the ISO notified the FERC that the state of 
California had asserted "it must have access to the ISO control room floor" 
and "nonpublic information" as a "necessary condition" of continuing to buy 
power, even though such preferential access violates ISO rules. But without 
the state to back power purchases - it has spent nearly $8 billion on 
electricity since January - the ISO's market would collapse and blackouts and 
chaos likely would ensue. 
The governance issue, which may appear esoteric, actually cuts to the heart 
of the power crisis in California. State officials feel they have ceded too 
much control to the FERC, which they accuse of shirking its duty to protect 
consumers. As a consequence, the state has forced its way into the inner 
workings of the formerly arcane ISO, a public-benefit corporation formed 
three years ago amid California's push to deregulate its electricity market. 
In January, the Legislature authorized the governor to eject a FERC-approved 
board of directors and hand-pick his own five-member ISO board. The state 
attorney general ordered old board members to resign or face personal fines 
of $5,000. Currently, one ISO board member is a former member of the 
governor's staff, while another, on the governor's behalf, negotiated the 
proposed purchase of utility transmission assets by the state, all the while 
serving as chairman of the supposedly independent board. 
The ISO's chairman says changes in the board structure have made the ISO more 
answerable to the citizenry and "efficient." Michael Kahn, who is a San 
Francisco attorney, added that the governance structure had to change to 
reflect the fact that "we're in a state of emergency." 
In its filing Friday, the ISO took the position that the tighter relationship 
between the ISO's board and the state doesn't violate the FERC's requirement 
that ISO boards be free of control by market participants. Even though the 
state has been "required to provide financial support," the ISO asserts, this 
"participation does not make ... the State a market participant." Many market 
watchers scoff at that contention. 
"Inevitably, this will lead to a showdown," said N. Beth Emery, former 
general counsel of the ISO and now an energy attorney for Ballard, Spahr, 
Andrews & Ingersoll in Washington, D.C. "Clearly, the ISO is in violation of 
the independence requirement." 
But the FERC doesn't have many tools for enforcing its vision of autonomy. 
That may explain why it has failed to intervene. It can order the ISO to make 
board changes, for instance. But if it refuses, there may not be much the 
FERC can do except threaten to rescind the ISO's operating tariffs. That, of 
course, is the opposite of what the FERC wants to do, which is encourage 
creation of multistate grid organizations free of any political favoritism. 
But California's angry isolationism appears to be growing. Gov. Gray Davis 
said the ISO's filing ensured the state will "maintain control of our own 
energy destiny and not be subject to the whims of federal regulators or the 
interests of other states." 













Thursday, June 7, 2001 






We still don't get it 
A history of price controls: They didn't work for Sumeria, they won't work 
for California 
June 3, 2001
By John Seiler
The Orange County Register
In the midst of California's electricity crisis, Gov. Gray Davis and other 
Democrats keep calling for price controls on the wholesale price California 
is charged for power. 
At his meeting Tuesday with President George W. Bush, Gov. Davis insisted on 
"some form of price relief" from the Federal Energy Regulatory Commission and 
promised a lawsuit against the FERC; the president insisted that price 
controls don't work. 
Also on Tuesday, the 9th Circuit Court of Appeals turned down a suit by 
California legislators, led by Senate President Pro Tem John Burton, to get 
the Federal Energy Regulatory Commission to order price controls.
In Congress, Sens. Dianne Feinstein and Barbara Boxer are pushing legislation 
to impose price controls.
But this is folly. Throughout all human history, wage and price controls have 
been tried and failed in every case.
The facts are in Forty Centuries of Wage and Price Controls: How Not to Fight 
Inflation, by Robert Schuettinger and Eamonn Butler, published in 1979 by the 
Heritage Foundation:
lSumeria. Price controls and other government actions destroyed the ancient 
kingdom's economy. But in about 2350 B.C. the new king, Urakagina, ended "the 
burdens of excessive government regulations over the economy, including 
controls on wages and prices." The kingdom recovered. The king's documents 
also use the word amargi, apparently the first recorded use of the word 
"freedom." 
lBabylon. The Code of Hammurabi is famous as the "first of the great written 
law codes," the authors note, but it's also a long list of price and wage 
controls. This produced "a decline in trade in the reign of Hammurabi and his 
successors." The authors quote another historian, W.F. Leemans, who wrote, 
"Prominent and wealthy tamkaru [merchants] were no longer found in 
Hammurabi's reign." 
In the same way, California's price control threats have retarded the 
construction of new power plants here. "If you are a generator, you would be 
inclined to look in the 49 other states to invest," California Energy 
Commission member Robert Laurie said May 22. 
All those Texas energy tamkaru are reluctant to get near our state.
lEgypt. Price controls helped destroy the ancient Egyptian dynasties and 
their economy collapsed in the third century B.C. 
lChina. Price controls were common throughout ancient Chinese history. The 
policy was such a failure that, according to historian Huan-chang Chen, 
"since the Ch'in dynasty (221-206 B.C.), the government of modern China has 
not controlled the economic life of the people as did the government of 
ancient China." (This history was written in 1911, before the communist 
controls beginning in 1949 or the partial restoration of capitalism in 1979.) 
lGreece. When grain prices rose too high in ancient Athens, the government 
appointed "sitonai, corn-buyers, who ... introduced price reductions and 
rationing," according to historian M.I. Finley. Violators could be put to 
death. 
In a similar fashion, California Attorney General Bill Lockyer said on May 
22, "I would love to personally escort [Enron Corp. Chairman Kenneth] Lay to 
an 8-by-10 cell that he could share with a tattooed dude who says, 'Hi my 
name is Spike, honey'."
The Greeks also executed inspectors who failed to control prices, something 
that might give pause to California officials plumping for price controls. 
"Despite the high mortality rates for merchants and bureaucrats alike, the 
price of grain continued to rise when supplies were short and continued to 
fall when supply was plentiful," the Heritage authors note.
lRome. The ancient Latins imposed their worst price controls during the 
tyrannical reign of the emperor Diocletian (284-305 A.D.). According to 
historian M. Rostovtzeff, the controls brought "great harm" and "terrible 
bloodshed, without bringing any relief. Diocletian shared the pernicious 
belief of the ancient world in the omnipotence of the state, a belief which 
many modern theorists continue to share with him and with it." 
Diocletian was forced to abdicate and the controls were lightened, but 60 
years later Julian the Apostate again imposed controls (361-63 A.D.), which 
proved a failure and helped bring about the decline and fall of the Roman 
empire.
lMedieval times. Charlemagne imposed crop price controls in 806. The controls 
failed. 
In 1330, the government of England fixed wine prices. But prices kept rising.
After the Black Death in 1348 killed one-third of Europe's population, 
workers were in demand. Governments across Europe imposed wage laws, which 
led to laborers withholding their work and to Wat Tyler's rebellion in 
England in 1381.
lColonial America. In 1630 in Massachusetts, the General Court fixed wages 
and prices, imposing a fine of 10 shillings on offenders. The controls 
"lasted about six months and were repealed," the Heritage authors note. The 
government then tried to regulate trade with Indians; that didn't work, 
either. 
In Connecticut, "The New Haven Colony was made notorious by its minute 
inquisition into the details of buying and selling, of eating and dressing 
and of domestic difficulties," noted a history compiled by the Connecticut 
Bureau of Labor Statistics in 1887. "It utterly failed. The people were wise 
enough to see that it was a failure."
lThe American Revolution. In 1777, Pennsylvania froze commodities used by 
George Washington's continental army to try to help the troops as well as the 
local population. "The prices of uncontrolled goods, mostly imported, rose to 
record heights," the Heritage book says. "Most farmers kept back their 
produce, refusing to sell at what they regarded as an unfair price. Some who 
had large families to take care of even secretly sold their food to the 
British who paid in gold." 
The result was that Washington's continentals "nearly starved to death" at 
Valley Forge. The Continental Congress then adopted a resolution, which read, 
"[R]esolved, that it will be recommended to the several states to repeal or 
suspend all laws or resolutions within the said states respectively limiting, 
regulating or restraining the Price of any Article, Manufacture or Commodity."
When the controls were removed, prices soared to "80 times their pre-war 
level for a short period before settling down to a level just greater than 
the pre-war average, where they remained for the next decade," the Heritage 
authors write.
Washington's army then could buy provisions and won the War of Independence.
lThe French Revolution. The first Law of the Maximum "provided that the price 
of grain and flour in each district of France should be the average of local 
market prices which were in effect from January to May 1793." This caused 
shortages and popular uprisings so that "by August of that year the May law 
was generally regarded as a dead letter." 
lWorld War I. The war brought "the most widespread and extensive system of 
economic controls in history." In England after the war, The Economist noted 
in 1919, "[T]he country now can view the results. On every side failure is 
visible and palpable. No single branch of trade which the government has 
touched shows a success." 
lNazi Germany. "Nazi price control was more rigorous and elaborate than 
anything seen earlier in Germany or any other nation," the Heritage authors 
write. However, "even this rigid structure could not prevent all of the 
problems associated with wage and price controls that basic economic theory 
would predict." The result was a huge black market and shortages, which 
fortunately damaged Nazi military production. While awaiting trial at 
Nuremberg, Hermann Goering admitted "trying to control people's wages and 
prices ... . I tried it and failed." 
lThe Soviet Union. After the Russian Revolution in 1917, the Soviet Union 
imposed "total wage and price control," the book notes. The result was 
endemic shortages, malnutrition that in the early years led to famines that 
killed millions, a vast black market and the eventual implosion of the Soviet 
economy. 
If Nazis and Soviets couldn't maintain effective price controls, even with 
the threat of torture, concentration camps and execution, what makes modern 
governments think they can succeed?
lAmerica in World War II. Price controls were delayed two years apparently 
because the Roosevelt administration saw they didn't work in Germany and 
Italy. When the controls were imposed, noted economist Milton Friedman, "Even 
60,000 bureaucrats backed by 300,000 volunteers plus widespread patriotism 
were unable during World War II to cope with the ingenuity of millions of 
people finding ways to get around price and wage controls that conflicted 
with their individual sense of justice." 
A personal account comes from a Pennsylvania farmer, Marshall L. Jones, in 
his book Recollections. "There was a normal potato crop in 1943 but prices 
were rising due to war-time demand," he writes. The government then put a 
ceiling on prices. In the past, some farmers stored supplies to get a higher 
price in the spring. "As a result, all potato growers, including myself, sold 
their potatoes during the fall and early winter as soon as they reached the 
ceiling price. In the spring of 1944 all potato supplies (except seed) were 
gone ... . It seems that sometimes when governmental agencies interfere with 
normal marketing procedures the result is just the opposite of that desired." 
lThe 1970s Malaise. In 1971, President Nixon imposed wage and price controls 
to deal with inflation, ending most of them in 1974. "During this period, the 
Wholesale Price Index (WPI), nevertheless, increased at an annual rate of 12 
percent and the Consumer Price Index (CPI) increased at an annual rate of 7.2 
percent," the Heritage book reports. "Just prior to the freeze, the rate of 
inflation was running about 4.5 percent per annum." 
The law of supply and demand is as inflexible as the law of gravity. Trying 
to short-circuit it with wage and price controls is pure folly. It hasn't 
worked across 4,000 years and it won't work if imposed in California.
Indeed, much of our problem stems from controls that remain on retail 
electricity prices. Imposing more controls on wholesale prices would add a 
new chapter to the four millennia of price-control failure. 
John Seiler is an Orange County Register editorial writer. 







Exponent Advises CPUC on Rolling Blackout Exemptions 







June 7, 2001 







MENLO PARK, Calif., June 5 /PRNewswire/ via NewsEdge Corporation - 
Exponent, Inc., (Nasdaq: EXPO) announced today that it is assisting the 
California Public Utilities Commission (CPUC) evaluate applications from 
customers of the three investor-owned utilities in California for exemption 
from this summer's rotating electrical outages ("rolling blackouts"). 
Exponent is providing consulting services to assist the Commission in 
assessing the potential impact of rolling blackouts on public health and 
safety at various facilities. Economic impact will not be considered. The 
Commission has already exempted select customers that provide public health 
and safety services (e.g., police, fire, hospitals, air traffic control, and 
communication utilities) from rolling blackouts since the early 1980s. 
"The multidisciplinary nature of Exponent's organization allows us to draw 
upon the expertise of leaders from a variety of technical areas which gives 
us the capability to undertake an assignment of this complexity," stated 
Exponent CEO Michael Gaulke. 
The CPUC has concluded that at least 40% of the summer peak electricity load 
must be available for rolling blackouts. Currently, the three largest 
utilities have approximately 50% of their summer peak load available for use 
during rotating outages. Therefore less than 10% of the summer peak load is 
available for additional exemptions. 
In order to determine which businesses will make up this 10%, Exponent has 
assisted the CPUC in the selection of key parameters and indices to be used 
in the risk assessment. Over the past few weeks, Exponent has developed an 
Internet-based questionnaire for data collection from exemption candidates. 
The CPUC has approved and finalized this questionnaire and, with the 
assistance of the three investor-owned utilities, has notified customers of 
the application process. Currently various California business customers are 
in the process of submitting exemption applications on the Exponent managed 
web site -- www.rotating-outages.com. About 10,000 exemption applications 
have been submitted to date. In early August, the CPUC plans to make a final 
decision regarding additional exemptions. 
Exponent, Inc., is a leading engineering and scientific consulting firm with 
expertise in over 70 technical disciplines. Exponent's multidisciplinary 
organization of engineers, scientists, physicians and business consultants, 
addresses complicated issues facing industry and government today. The firm's 
consultants provide product design analysis, development and testing; analyze 
failures and accidents to determine their cause and prevention; and evaluate 
environmental and human health concerns to find cost-effective solutions. 
Exponent is certified to ISO 9001 and is authorized by the General Services 
Administration (GSA) to provide professional engineering services. Exponent 
may be reached at 888-656-EXPO, info@exponent.com, or www.exponent.com. 
MAKE YOUR OPINION COUNT - Click Here 
http://tbutton.prnewswire.com/prn/11690X96318475 
SOURCE Exponent, Inc. 
CONTACT: Dr. Angela Meyer of Exponent, Inc., 888-656-EXPO, or 
ameyer@exponent.com 
Web site: http://www.exponent.com (EXPO) 








Calif. Targeted in Antitrust Probe 







June 7, 2001 







By MICHAEL LIEDTKE
AP Business Writer
SAN FRANCISCO (AP) via NewsEdge Corporation - 
Federal antitrust regulators have joined the crowd of government authorities 
looking for possible abuses in California's high-priced wholesale electricity 
market. 
The U.S. Justice Department last month opened an antitrust probe into a power 
sales partnership between Arlington, Va.-based AES Corp. and Tulsa, 
Okla.-based Williams Energy. AES disclosed the investigation in a Securities 
and Exchange Commission filing made earlier this week. 
A Justice Department spokeswoman declined to say Wednesday whether the agency 
is investigating other power wholesalers selling electricity in California. 
The inquiry is examining whether the alliance between AES and Williams is 
discouraging the expansion at three Southern California plants that generate 
about 4,000 megawatts of electricity. AES bought the plants from Southern 
California Edison in 1998, but Williams sells the power under an exclusive 
marketing agreement. 
The Justice Department's probe is just one of many investigations unfolding 
in California. The state Attorney General, California Public Utilities 
Commission, California Electricity Oversight Board and Federal Regulatory 
Energy Commission also are examining whether wholesalers manipulated power 
prices in California, where this year's total electricity bill is expected to 
be seven to 10 times higher than two years ago. 
Williams last month agreed to refund $8 million in electricity sales after 
FERC accused officials of the temporary closure of AES plants to drive up 
power prices in California. 
AES denies any wrongdoing, but is cooperating with the Justice Department 
investigation, said spokesman Aaron Thomas. 
___= ?On The Net: ?http://www.aesc.com ?http://www.williams.com ????????More Utilities, Industries Must Reduce Power Purchases From BPA To Hold Rates ?Down ????????June 7, 2001 ??????PORTLAND, Ore., June 6 /PRNewswire/ via NewsEdge Corporation - ?The Pacific Northwest has reached the halfway point in its effort to hold the ?Bonneville Power Administration's Oct. 1 rate increase below 100 percent, BPA ?acting Administrator Steve Wright said Wednesday. ?"If we stopped where we are today with about 1,200 megawatts of load ?reductions, the rate increase would be more than 150 percent in year one," ?said Wright. "On the other hand, if we push ahead and get another 1,200 ?megawatts, we can reduce the rate hike below 75 percent. We need those ?utilities and industries that have not yet taken action to step up to the ?plate." ?Wright said BPA wholesale customers have 16 days left to make commitments to ?reduce their purchases from BPA. The goal is for all customer groups to ?reduce their overall purchases by 2,400 megawatts. To date, the aluminum ?industry has been the biggest contributor to the load reduction effort, ?having met 75 percent of its share of the load reduction target. ?Public and private utilities so far have contributed 11 percent and 25 ?percent, respectively, of their share. In addition, the private utilities are ?also negotiating long-term agreements to reduce their purchases from BPA. ?Wright noted that some customers can cancel their load reduction commitments ?if enough other customers do not sign up. That increases the urgency for the ?region to achieve the additional commitments. ?"We could actually lose some of the progress we have made on load and rate ?reduction unless the rest of our customers make load reduction commitments in ?the next two weeks," Wright said. ?BPA is scheduled to issue its final decision June 20. That rate structure ?will be submitted to the Federal Energy Regulatory Commission for approval. ?The rate could include adjustments every six months based on market ?conditions. The driving factor is the amount of power BPA must purchase in ?the market to meet the demands of its customers. Market prices have been at ?all-time highs but recently have been declining. ?BPA supplies about 46 percent of the region's power. BPA needs about 3,700 ?average megawatts of additional supply to meet all of its customers' loads in ?the six months starting Oct. 1. So far, the agency has purchased 1,300 ?megawatts, and utilities and industries have reduced their demand on BPA by ?1,200 megawatts. That leaves 1,200 to go. ?"The more BPA needs to buy, the higher the market price will be because the ?sellers respond to higher demand by raising prices," Wright explained. "On ?the other hand, less demand will ultimately cause prices to fall. Absent ?unforeseen factors, market prices could even decline in the months ahead if ?the region avoids purchases." ?Wright emphasized that a rate increase of 150 percent or more would deal a ?harsh blow to the Northwest's economy. ?"The wholesale customers of BPA can and should do their part by reducing ?their loads. We have two weeks left to get the job done, and I remain ?confident that the region can reassert control of its energy destiny," Wright ?said. ?MAKE YOUR OPINION COUNT - Click Here ?http://tbutton.prnewswire.com/prn/11690X36565175 ?SOURCE Bonneville Power Administration ?CONTACT: Ed Mosey or Mike Hansen of Bonneville Power Administration, ?503-230-5131 ?Web site: http://www.bpa.gov ?????????SCE Customers to See Major Changes to June Bills Adding Group Numbers Will ?Help Consumers Prepare for Rotating Blackouts; Conservation Rebates, ?Discounts Available to Income-Qualified Customers ????????June 7, 2001 ????????Adding Group Numbers Will Help Consumers Prepare for Rotating Blackouts; ?Conservation Rebates, Discounts Available to Income-Qualified Customers ?ROSEMEAD, Calif., June 6 /PRNewswire/ -- Beginning this week, Southern ?California Edison (SCE) customers will see several major changes to their ?utility bills, as directed by the California Public Utilities Commission ?(CPUC) and the governor's office. ?Most notably, SCE bills now contain the "Rotating Outage Group" number ?assigned to all customers, which will help them better prepare for outages ?during statewide power emergencies. Another addition to the bill is the ?CPUC's newly adopted "tiered-rate" billing structure. And later this month, ?when bills are prepared reflecting June power use, a new line item called ?"California 20% Rebate" will be added for customers who meet the summer ?conservation requirements of the state's new "20/20" bill rebate program. ?"Whenever major changes are made to the bill, we get a considerable number of ?customer inquiries," said Pam Bass, SCE's senior vice president for customer ?service. "That's why our customer care representatives are standing ready to ?help consumers understand the new information and how they can use it as an ?effective tool to manage their energy costs and to cope through the ?inconveniences caused by rotating outages." ?Rotating Outage Group Numbers ?Customers can now find an alphanumeric Rotating Outage Group number on the ?upper left portion of the bill, next to the service account number. This ?number represents a group of circuits -- the smallest units of the ?distribution grid -- that can be turned on and off to manage electrical load ?when SCE is ordered to do so by the California Independent System Operator ?(Cal-ISO) during critical power emergencies. ?By knowing the rotating outage group to which their homes and businesses are ?assigned, customers will be able to monitor whether they will likely be ?affected when rotating blackouts are in effect. ?For example, if the news media were to report that rotating outage groups ?A035 through A045 were likely to be affected in the next round of blackouts, ?customers in group A038 would know that they may be affected and could take ?steps to prepare. With some exceptions, SCE generally interrupts customer ?groups in numerical order, based on the amount of electrical load reduction ?required by Cal-ISO when power reserves are critically low throughout the ?state. ?Group numbers may change, without advance notice, for operational reasons and ?as the CPUC revises its policy regarding customers exempted from blackouts. ?SCE will notify customers of such changes as quickly as practical. ?Customers are advised to stay informed of power forecasts every day through ?the news media and a special online service offered by SCE. A new "pop-up" ?window automatically greets visitors who click onto SCE's Web site ?(www.sce.com), which provides a wide range of rotating blackout information. ?When outages are in effect, the site will display a chronological listing of ?group numbers and communities that were previously interrupted, those that ?are currently being interrupted and group numbers and communities that are ?likely to be affected next (if blackouts are expected to continue). SCE will ?offer similar information through its toll-free number, (800) 611-1911. ?Before calling, customers should have both their service account and rotating ?outage group numbers available. ?New Tiered-Rate Structure ?The CPUC's newly adopted "tiered-rate" structure now appears on residential ?bills, showing up to five tiers of energy consumption and the escalating ?surcharges applied to each tier. Customers who use more will pay more. ?Those who use 130% or less of their "baseline" allocation (Tiers 1 & 2) are ?exempt from any rate increase, as are those income-qualified customers ?participating in the CARE program. However, consumption above this level will ?be billed at higher tier levels in the form of surcharges authorized by the ?CPUC. Customers whose usage reaches Tier 5, for example, will pay the highest ?surcharge for each kWh exceeding 300% of their baseline allocation. ?The structure was designed to encourage conservation and to recover the cost ?for wholesale electricity purchased for customers by the California ?Department of Water Resources. These charges are being collected by SCE only ?as an agent for CDWR. ?California 20/20 Rebate Program ?Later this month, a new line item, "California 20% Rebate," will appear on ?the bills of those customers who use at least 20% less electricity than for ?the same period last year. A 20% bill credit will be applied to the bills of ?qualifying customers for their usage in June, July, August and September. ?SCE has launched a comprehensive public information effort to help consumers ?understand the new bill changes, ways to conserve energy, and to reinforce ?the importance of preparation and safety during rotating blackouts. The ?program components include bill inserts, radio advertising, public outreach ?and presentations, media briefings and SCE's Web site that addresses all of ?these programs and services. Customers are encouraged to visit www.sce.com ?frequently for updated information and new resources provided by SCE. ?In addition, customers can obtain new rate and bill information by calling ?the company's 24-hour customer number at (800) 655-4555. ?SOURCE Southern California Edison ?CONTACT: Corporate Communications of Southern California Edison, 626-302-2255 ?Web site: http://www.sce.com ?Web site: http://www.edisonnews.com (EIX) ???