30 days is hardly long-term.... i think we should call him on it.


From: Jeff Dasovich on 03/05/2001 04:34 PM
Sent by: Jeff Dasovich
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McCubbin/NA/Enron@Enron, mpalmer@enron.com, Christopher F Calger/PDX/ECT@ECT, 
Tim Belden/HOU/ECT@ECT, Robert Badeer/HOU/ECT@ECT, Mary Hain/HOU/ECT@ECT, Joe 
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Subject: Davis announces first round of long-term power contracts 

FYI--Davis includes us as one of the companies he signed up. I'm only aware 
of a 30-day deal with an option to extend for 5 years (option ends toward the 
end of the month, as I understand it). Not aware of any other deals we've 
done with DWR at this time, though others are on the table----DWR's 
creditworthiness remains an issue.
Best,
Jeff

Davis announces first round of long-term power contracts 
DON THOMPSON, Associated Press Writer
Monday, March 5, 2001 
,2001 Associated Press 
(03-05) 12:31 PST SACRAMENTO (AP) -- The state has reached 40 long-sought 
long-term contracts and other agreements to keep power flowing to customers 
of two financially ailing utilities, Gov. Gray Davis announced Monday. 
The deals will supply an average of nearly 8,900 megawatts per year for 
Southern California Edison and Pacific Gas and Electric Co. customers over 
the next 10 years and let the state buy power for far less than it has been 
paying on the costly spot market, Davis said in a written statement. 
One megawatt is enough power for about 1,000 households. 
For the first five years, the contracts provide power at an average price of 
$79 per megawatt hour, about 75 percent below recent costs on the spot 
electricity market, Davis said. 
The price drops to an average of $61 per megawatt hour, about 80 percent 
below spot prices, he said. 
``These agreements are the bedrock of a long-term energy solution,'' Davis 
said in remarks prepared for delivery Monday afternoon in Los Angeles. ``The 
provide reliability at a reasonable price.'' 
Some of the contract negotiations will result in accelerated power plant 
construction, adding an estimated 5,000 megawatts to the state grid within 
the next two years, some by this summer, Davis said. 
The contracts amount to 75 percent of the long-term deals the Davis 
administration has sought under a new law that lets the state spend an 
estimated $10 billion over a decade to buy power for Edison and PG&E 
customers. 
Davis has pitched such contracts as one way to lift California out of its 
energy crisis. Negotiations have taken longer than expected, however, as his 
administration and power providers haggled over how much the state should 
pay. 
The Davis administration wants to stop paying for power on the expensive spot 
market, where desperation to keep the lights on leads to inflated prices. 
On Friday, the state released another $500 million to continue making such 
purchases on behalf of the state's two big cash-strapped utilities, bringing 
its spending so far to some $3.2 billion since early January. 
The agreements announced Monday include more than 20 power suppliers, 
including electricity giants Duke Energy, Calpine, Dynegy, Enron and Reliant. 
Davis declined to release details on individual contracts. 
Duke Energy said it has reached a $4 billion, nine-year agreement to sell 
electricity to the state. 
The memorandum of understanding calls for Duke to provide 550 megawatts 
starting next Jan. 1. That's enough power for roughly 550,000 households. 
That amount would rise to 800 megawatts Jan. 1, 2003, enough electricity for 
the equivalent of 800,000 households. The contract would continue through 
2010. 
``We believe long-term contracts provide the critical underpinning for a 
stable electricity market and are happy the state is moving in that 
direction,'' Bill Hall, head of Duke's California operations, said in a 
written statement. 
The state is buying about one-third of the power used by the customers of 
Edison and PG&E. Both have been denied credit by suppliers who fear the 
financially troubled utilities won't pay for the power. 
California plans to recover those costs by issuing $10 billion in revenue 
bonds in May, with the rest of that money going to finance the cheaper, 
long-term power contracts. 
In addition to the long-term contracts, the Department of Water Resources has 
reached 11 agreements letting it buy a substantial amount of power on the 
day-ahead market, cutting the state's payment of premium prices on the 
real-time market, Davis said. 
A Stage 1 power alert was called Monday morning with reserves threatening to 
drop to 7 percent due to power plant maintenance and low electricity imports, 
said Patrick Dorinson, spokesman for the Independent System Operator. The ISO 
manages the state's power grid.