We have not been subpoened this time, but some of our firends have.  It seems as if they are going after their own now.  I just don't get it.

 -----Original Message-----
From: 	Ronald Carroll [mailto:rcarroll@bracepatt.com] 
Sent:	Thursday, September 27, 2001 7:13 AM
To:	breilley@coral-energy.com; MMilner@coral-energy.com; acomnes@enron.com; jsteffe@enron.com; Alvarez, Ray; smara@enron.com
Subject:	Fwd: State subpoenas 16 energy officials

 

--------- Inline attachment follows ---------

From:  <tbradley@bracepatt.com>
To: Aryeh Fishman <afishman@bracepatt.com>, Andrea Settanni <asettanni@bracepatt.com>, Dan Watkiss <dwatkiss@bracepatt.com>, Jacqueline Java <jjava@bracepatt.com>, Kimberly Curry <kcurry@bracepatt.com>, Ronald Carroll <rcarroll@bracepatt.com>
Date: Thursday, September 27, 2001 1:29:25 GMT
Subject: 

FYI - the list of people who received the subpoenas is at the end of this article.  

State subpoenas 16 energy officials 

Senate investigating decisions that led to lifting limits on electricity prices 

Mark Martin, Chronicle Staff Writer
Thursday, September 27, 2001 
?2001 San Francisco Chronicle 

URL: http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2001/09/27/MN227803.DTL 


A state Senate committee began delivering subpoenas yesterday to 16 California energy officials to determine whether they colluded to manipulate the state's dysfunctional power market. 

The probe will focus on decisions made last December that led federal regulators to lift limits on the price of electricity and sent costs skyrocketing, said state Sen. Joseph Dunn, D-Santa Ana. 

Dunn wants to know why Terry Winter, the man in charge of the state's power grid, defied his board of directors and Gov. Gray Davis when he asked federal regulators to remove key price caps. 

A spokesman for Winter said that the limits were causing energy producers to abandon California and that Winter acted to keep the state from plunging into darkness. 

But with the price ceilings eliminated, energy prices soared and California's three electricity utilities began tumbling toward insolvency -- forcing the state to begin buying power with taxpayer dollars, according to Dunn. 

"The way things unfolded in December are very suspicious, and they directly led to the disaster that struck in January," said Dunn, chairman of a special Senate committee investigating energy market manipulation. 

Winter, who is president and chief executive officer of the Independent System Operator, and 15 others will be required to provide sworn testimony in depositions. They also must provide e-mail messages, notes and phone records. 

The others facing subpoenas include high-level ISO management officials and current and former board members. 

The ISO board, which had members who worked for energy producers, was accused by many of being too cozy with power providers and was replaced in January by a five-member panel appointed by Davis. 

Dunn hopes to retrace events surrounding some of the peak days of the state's energy crisis. 

The ISO board had throughout the year lowered the limits at which energy producers could sell power. Price controls that were set at $750 per megawatt were reduced dramatically by October. 

But soaring natural gas prices greatly increased the costs of producing electricity, and by the end of the month, generators sent a flurry of letters to the Federal Energy Commission urging an end to price limits. 

By December, electricity producers were not interested in selling power to California utilities at rates that meant they would lose money, said Gregg Fishman, an ISO spokesman. 

"The market was completely dysfunctional at that point," Fishman said. "There was no energy being bid. We're supposed to keep the lights on, so something had to be done." 

On Friday, Dec. 8, without telling ISO board members or the governor, Winter and other top ISO managers sent a 50-page request to Federal Energy Regulatory Commission officials asking that they make an emergency ruling and drop price caps. The commission, which had outlined a plan in November to end the price limits, approved the request. 

Generators were allowed to charge more than $250 per megawatt as long as they could prove their costs. 

Average prices the utilities paid for electricity shot up from $484 per megawatt on Dec. 5 to $677 per megawatt on Dec. 11. Less than a month later, the state began buying power for cash-strapped utilities, which couldn't afford the high prices. 

"They (ISO officials) poured gasoline on a fire," said Steve Maviglio, the governor's spokesman. 

Although Winter, who serves at the pleasure of the board, was acting within ISO rules during an emergency, the governor and some power grid board members were outraged at the behind-the-scenes maneuvering. Dunn wants to know whether the ISO and energy producers campaigned together to eliminate the price limits. 

"I was appalled we weren't consulted about something so significant," said Michael Florio, a consumer advocate who sits on the ISO board. "It was bad judgment at the very least." 

Florio, one of those subpoenaed by Dunn's committee, said the ISO board met the next week to discuss Winter's actions, but he said a majority of board members didn't want to get rid of the president of the power grid in the middle of a crisis. 



--------------------------------------------------------------------------------
Subpoenaed 
The 16 people subpoenaed in the state Senate investigation of energy market manipulation are: 


STAFF MEMBERS:
Terry Winter, ISO president and chief executive officer 

Kellan Fluckiger, ISO chief operations officer 

Anjali Sheffrin, ISO director of market analysis 

Jim Detmers, ISO vice president of grid operations 

Elena Schmid, ISO vice president of corporate and strategic development 


FORMER ISO BOARD MEMBERS
Barbara Barkovich 

Gregory Blue 

John Fielder 

Michael Florio, still serves 

Karen Johanson 

Carolyn Kehrein 

Jan Smutny-Jones 

V. John White 

Ken Wiseman 

Michael Woods 

Eric Woychik 

E-mail Mark Martin at markmartin@sfchronicle.com. 

?2001 San Francisco Chronicle   Page A - 13