Today's News....Thanks - Jean





Housten Chronicle, May 24, Stand up, Texas, against California's bullying 
???By JONATHAN WILCOX, Commentary 

Sacramento Bee, May 24, Davis to push backup diesel, By Chris Bowman

Contra Costa Times, May 24, 2001, Thursday, CC-ELECTRICITY, 874 words,
????California Official Cites Evidence of Electricity Price Manipulation, By
????Mike Taugher

Los Angeles Times, May 24, 2001 Thursday, Home Edition, Page 26, 1042 words
????, THE NATION; A SENATOR'S DECISION; Shift May Empower California, RICHARD
????SIMON, ELIZABETH SHOGREN, TIMES STAFF WRITERS, WASHINGTON

Los Angeles Times, May 24, 2001 Thursday, Home Edition, Page 16, 930 words,
????The Nation; ; Texas Firm's Chief Denies Driving Up Calif. Natural Gas
????Prices; Energy: At federal panel hearing, he says his company missed out 
on
????making more money from rapid hikes., RICARDO ALONSO-ZALDIVAR, TIMES STAFF
????WRITER, WASHINGTON

Los Angeles Times, May 24, 2001 Thursday, Home Edition, Page 1, 3167 words,
????CAMPAIGN 2001; A Rapid, Sometimes Bumpy, Rise; Assembly: People skills 
aided
????Villaraigosa, now running for mayor. But inexperience showed., RONE 
TEMPEST,
????TIMES STAFF WRITER, SACRAMENTO

Los Angeles Times, May 24, 2001 Thursday, Home Edition, Page 8, 331 words,
????The State; THE ENERGY CRISIS; Bush, Davis to Meet on President's Visit to
????State, DAN MORAIN, EDWIN CHEN, TIMES STAFF WRITERS

Los Angeles Times, May 24, 2001 Thursday, Home Edition, Page 8, 504 words,
????The State; THE ENERGY CRISIS; Reliant Offers to Slash Prices if Rules
????Waived; Pollution: The power firm tells officials that plants could 
produce
????more if not curtailed by air quality rules., NANCY VOGEL, TIMES STAFF 
WRITER
????, SACRAMENTO

Los Angeles Times, May 24, 2001 Thursday, Home Edition, Page 1, 520 words,
????Use of Diesel Generators Proposed to Bolster Grid; Energy: State says 
small
????backup systems, which lack pollution controls, could avert blackouts.
????Activists and air quality officials protest., GARY POLAKOVIC, TIMES STAFF
????WRITER

The San Francisco Chronicle, MAY 24, 2001, THURSDAY,, FINAL EDITION, NEWS;,
????Pg. A1, 888 words, Davis to order 1-hour notice of blackouts; ???Plan also
????in works to give law enforcement even earlier alerts, Lynda Gledhill,
????Sacramento

The San Francisco Chronicle, MAY 24, 2001, THURSDAY,, FINAL EDITION, NEWS;,
????Pg. A17, 1085 words, Californians angry across the board in energy crisis;
????Poll rates Bush worse than Davis, John Wildermuth

The Associated Press State & Local Wire, May 24, 2001, Thursday, BC cycle,
????3:07 AM Eastern Time, State and Regional, 431 words, Davis proposal for 
more
????diesel power draws environmental criticism, LOS ANGELES
 

May 23, 2001, 6:18PM


Stand up, Texas, against California's bullying 
By JONATHAN WILCOX 


LADIES and gentlemen: May I present to you the Hon. Bill Lockyer, attorney 
general of the state of California, from the May 22 Wall Street Journal: 

"I would love to personally escort (Enron Corp. Chairman Kenneth) Lay to an 8 
x 10 cell that he could share with a tattooed dude who says, `Hi, my name is 
Spike, honey.' " 

When you stop gagging, join me in celebrating Lockyer's crude, lewd and 
unsubdued behavior. It has stripped away whatever veneer of respectability 
California officials had by virtue of the offices they hold and exposed them 
as braggarts and bullies of the first order. But they also wield enormous and 
destructive power -- and they intend to use it. 

The sooner Texans realize this the better. 

As citizens of the state that is home to much of the nation's energy 
production, the people of Texas are intimately familiar with the booms and 
busts of the oil and natural gas industries. Sometimes, prices are high, new 
supply is nigh and willing buyers can only sigh. 

Other times, gluts occur, demand fluctuates, competition grows ruthless and 
revenues seep out like the last remnants of black crude from a stripper well. 

These are the principles of American capitalism, free market forces and the 
give-and-take and push-pull that separate this nation's economic capacity 
from all others. It is a fundamentally fair system, it has served us 
remarkably well and every time we have tampered with it, it has been to our 
ultimate detriment. 

Witness California's partial "deregulation" of its electricity market. 

The Golden State, for all its vanity, pride and preening machismo, actually 
knows very little of tough times. Sure, we can handle the occasional 
spectacular episode, like an earthquake or wildfire. That's part of the 
thrill of living in California. 

But when it comes to our economic expectations and their interrelationship 
with our desired lifestyle, we only know the California way: more, more often 
and with no end in sight. 

And if we don't get what we want, when we want it, it's someone else's fault. 

In that light, it is no surprise that we are saddled with our current 
governor, Gray Davis, and our current law enforcement chief, the 
aforementioned Lockyer. 

Despite his frequent jittery appearances on national television, Davis is a 
politically shrewd man. He may not know which public policy choices are best 
for the state's future, but that's not his highest priority. 

Item No. 1 on Davis' "To Do" list is to get re-elected next year. But this 
has been complicated by the state's year of energy woes, Davis' ineffectual 
response and the fact that California is a largely one-party state. 

Of California's eight statewide elected offices, seven are held by Democrats, 
including Davis and Lockyer. You don't have to be a Delphic oracle to discern 
that if Davis gets tossed out, he will take more than a few of his political 
brethren with him. 

So, as California tiptoes toward its long, hot summer of rolling blackouts 
and unprecedented electricity shortages, Davis is busy digging his personal 
bomb shelter. He's preparing for the big one, calculating that while the 
damage will be great, and the fallout potentially lethal, he and the other 
cockroaches, like Lockyer, will survive. 

How will they do this? By finding some fall guys to take the rap. 

Call it the Texas two-step: First, Davis declares "war" on Texas energy 
producers. Next, Lockyer says he expects to file civil charges against 
suppliers, with, he hopes, criminal counts to follow. 

For a demonstration of how not to deal with Lockyer and other California 
aggressors, examine the rejoinder of Mark Palmer, Enron's vice president for 
corporate communications. Lockyer's comment about Lay, he said, "is so 
counterproductive that it doesn't merit a response." 

Wrong. Weak. Ineffective. Decency in the face of demagoguery may be 
dignified, but it's little more than an invitation to further abuse and, for 
Enron, public villainy. 

Enron had a chance to do something corporations under hostile government fire 
only dream about: Embarrass, disarm and neutralize a corrupt public official 
out to smear their good name. 

By challenging Lockyer to either reassess or renounce his remarks, Enron 
could have injected common sense and rare truth into a debate that has become 
twisted and warped by the tirades of California officials. Best of all, Enron 
could have extracted the kind of retraction that would have adorned Lockyer 
with the scarlet "A" of contrite politicians: apology. 

Lockyer and other state officials may not yet know the ceiling of scorn Enron 
will tolerate from them. But they surely know the floor: Joking with 
journalists of the pleasure they would take from the arranged assault of 
Kennth Lay in a California prison. 

------------------------------------------------------------------------
Wilcox is a former speechwriter for California Gov. Pete Wilson. He can be 
reached at jwilcox1967@earthlink.net. 



Davis to push backup diesel
By Chris Bowman

Bee Staff Writer
(Published May 24, 2001)

In a major reversal of environmental policy, Gov. Gray Davis will announce a 
plan to relieve California's overloaded electricity grid this summer by 
paying businesses to run their high-polluting backup generators in advance of 
anticipated blackouts, a top energy adviser to the governor said Wednesday.

"The backup generators will help us get through the summer," said S. David 
Freeman, who recently resigned as general manager of the Los Angeles 
Department of Water and Power to lead Davis' drive for energy conservation.

Freeman said he would leave it to Davis to disclose details of the plan.

"The governor will announce what he's going to do," he said Wednesday in a 
wide-ranging interview on energy issues with The Bee.

Roger Salazar, the governor's deputy press secretary, would not confirm when 
or whether Davis would make such an announcement.

"I don't know that the governor has signed off on anything like that," 
Salazar said.

Under the plan, participating businesses would turn on backup generators and 
simultaneously disconnect from the electricity grid when power supplies are 
at Stage 3 -- nearly depleted.

The state would pay the companies for the much-needed power that would be 
saved by converting to diesel generation.

Deploying diesel-powered generators -- the dirtiest of internal combustion 
engines -- to forestall blackouts is another sign of the governor's struggle 
to get more megawatts flowing through California.

Earlier this week Davis lowered his estimate of the amount of new power that 
will come on line this summer from 5,000 megawatts to 4,000 megawatts. A 
megawatt is enough power for 750 to 1,000 households.

The diesel plan also marks a significant turnabout in the Davis 
administration's policy.

The governor and his appointees at the state Air Resources Board uniformly 
have rejected such proposals from industries, utilities and the operator of 
the state's electricity grid, arguing that routine use of the backup diesels 
would endanger public health.

San Diego Gas & Electric has one such proposal scheduled for a vote today by 
the Davis-appointed state Public Utilities Commission.

Environmentalists who have been catching word of the Davis plan this week 
argue that it would shatter the governor's repeated promises to stand firm on 
air quality standards during the energy crisis.

A letter signed Wednesday by several of the state's leading environmental 
organizations, including the American Lung Association of California, urged 
Davis to reconsider.

"Given your awareness of the public health threats of diesel emissions, 
please stop and have these proposals considered in a more thoughtful and 
public manner," the letter states.

Freeman argued, however, that the additional health threat from non-emergency 
use of diesel generators is "marginal" compared with the health and safety 
problems triggered by power outages.

"This is a no-brainer," Freeman said. "You've got human lives at stake here. 
This is a scary situation."

Freeman cited, for example, people on life-support systems that could go awry 
in blackouts.

But Sandra Spelliscy, attorney for the environmentalist Planning and 
Conservation League, countered, "If the health impacts are so marginal, why 
has the governor's own air quality enforcement agency opposed this?"

Industries ranging from hospitals to food processing plants and data 
management centers have diesel-powered generators -- some the size of 
locomotives -- that kick on when a storm or earthquake knocks out power.

Unlike diesel-powered trucks and buses, most diesel standby generators run 
with little or no pollution controls because they are intended only for 
emergencies.

Though the latest models run cleaner and more efficiently, most generators in 
use today produce about 500 times more emissions of smog-forming nitrogen 
oxides per megawatt-hour as a new natural gas-fired power plant, according to 
air board engineers. Further, the diesels spew high amounts of breathable 
soot particles that can cause cancer, the engineers say.

Davis' plan would limit the use of the generators to days when the grid 
operator declares a Stage 3 alert, meaning the power supplies are running low 
and rolling blackouts may be ordered to keep the state's entire grid from 
collapsing, according to Freeman.

Salazar, the governor's spokesman, said only, "Any backup generation 
involving diesel will have to be used as a last resort to prevent blackouts."

Environmentalists who are trying to head off the plan said it would have the 
state paying participating businesses at least 35 cents per kilowatt-hour, 
roughly three times the rate consumers typically pay for electricity. Freeman 
would not confirm the pay rate.

The Davis administration has offered generators willing to sell new power 
exclusively to the state 50 percent discounts on the air emission credits 
they would need to comply with smog rules.

For operators of existing power plants, the governor has agreed to have 
taxpayers pay the entire cost of polluting above allowable limits in order to 
keep the lights on.

The latest plan to pay companies to run the dirty diesels during energy 
alerts further loosens the environmental reins.
The Bee's Chris Bowman can be reached at (916) 321-1069 or cbowman@sacbee.com
.



Copyright 2001 Knight Ridder/Tribune Business News
Copyright 2001 Contra Costa Times
Contra Costa Times
May 24, 2001, Thursday

KR-ACC-NO: CC-ELECTRICITY

LENGTH: 874 words

HEADLINE: California Official Cites Evidence of Electricity Price Manipulation

BYLINE: By Mike Taugher

BODY:


??An investigation into electricity prices has turned up evidence that
generators are throttling their power plants up and down to drive up prices,
according to California's top utility regulator.

??Loretta Lynch, president of the state Public Utilities Commission, said
Wednesday that an investigation started last year to examine electricity 
prices,
and which later turned to examine unprecedented numbers of power plant 
outages,
has found instances where generating units were backed down until electricity
emergencies were declared and then brought back up in such a way as to 
maximize
profits.

??"What we saw was a pattern of individual behavior," Lynch said.

??Generators acknowledge that they vary the output from their power plants, 
but
say they do so for legitimate business reasons. Included among those reasons 
is
a little-known tactic to insure themselves against breakdowns that would be
limited under a federal order that is to take effect next week.

??Although Lynch would not reveal more specifics, her comments, which echoed
revelations she made before a state Senate committee last week in Southern
California, come as accusations, legal threats and rhetoric are all swirling 
to
a boil.

??Earlier this week, Attorney General Bill Lockyer, whose office is working
with the PUC in one of several ongoing electricity market investigations,
reportedly said that he wanted to escort Enron Corp. Chairman Kenneth Lay to a
prison cell "that he could share with a tattooed dude who says, 'Hi, my name 
is
Spike, honey."'

??The heated rhetoric and continuing legal threats have infuriated generators,
who continue to trot out figures showing that they are running power plants
harder than ever.

??"There's nothing that gets under our skins more than somebody -- some
government official -- who is ill-informed making those judgments," said Tom
Williams, a spokesman for Duke Energy, a North Carolina-based company that 
owns
three major power plants in California and is building a fourth.

??Duke generated 50 percent more electricity from those plants last year than
it did the previous year, Williams said. And the company is on track to 
generate
even more this year, he added.

??But Lynch and other state leaders are becoming increasingly hostile in their
remarks about the half- dozen out-of-state power companies that bought
utility-owned power plants in 1998 and 1999 as the state moved to restructure 
the electricity industry.

??Lynch said state regulators are at least a month away from taking legal
action, but she also said that in addition to looking at power plant outages,
the investigation was looking at patterns in the way power plants are run,
allegedly to influence prices and then capitalize on them.

??"There are several ways the generators game the system," she said.

??The companies acknowledge they might limit output because of environmental
restrictions and in situations where the cost of running a plant is higher 
than
the price they could get for electricity at a given point in time.

??But there is another reason, too. It is a practice that has troubling
implications because it sets up a situation where the higher prices go, the 
more
incentive companies have to hold back power.

??Documents filed with the Federal Energy Regulatory Commission show that some
companies ease off their units' throttles in order to insure themselves 
against
the possibility of a breakdown at another unit. Their logic is this: Energy
companies typically sell electricity in advance, so they have an obligation to
provide that electricity to their buyers. If they are running at 100 percent
capacity and a unit breaks down, the company has to scramble to buy 
electricity
at high, last-minute prices in order to meet its contractual obligations.

??Last summer, for example, a large, 750-megawatt unit at Duke's Moss Landing
power plant broke down, and Duke found itself spending $ 1.2 million an hour 
to
meet its contracts.

??By holding some of their power-generating capacity in reserve, the companies
can insure themselves against a breakdown somewhere else. And the higher 
prices
go, the more insurance they might want to keep.

??"That is a rationale they are using," said PUC energy division director Paul
Clanon.

??Duke, Mirant Corp. and Pacific Gas & Electric were among the companies who
objected to a draft order from federal regulators that would put an end to the
practice of withholding power from the spot- market to cover the possibility 
of
a breakdown.

??In papers that Mirant filed with FERC, the Atlanta-based generator said that
if its ability to withhold power in that way was restricted, then regulators
should allow the company to charge even more for its electricity.

??But FERC shot that argument down, saying that although it is reasonable for 
a
company to not sell all of its electricity ahead of time, there is no reason 
to
hold back power from the hour-to-hour spot market, as Mirant wanted to do.

??The federal commission said that, contrary to Mirant's claims, "the 
generator
faces no financial risk" if it is forced to sell all its available power on 
the
spot market.


??-----

??To see more of the Contra Costa Times, or to subscribe to the newspaper, go
to http://www.hotcoco.com/
 


JOURNAL-CODE: CC

LOAD-DATE: May 24, 2001

??????????????????????????????4 of 58 DOCUMENTS

??????????????????????Copyright 2001 / Los Angeles Times

??????????????????????????????Los Angeles Times

?????????????????????May 24, 2001 Thursday ?Home Edition

SECTION: Part A; Part 1; Page 26; National Desk

LENGTH: 1042 words

HEADLINE: THE NATION;
A SENATOR'S DECISION;
Shift May Empower California

BYLINE: RICHARD SIMON, ELIZABETH SHOGREN, TIMES STAFF WRITERS

DATELINE: WASHINGTON

BODY:

??James M. Jeffords has never mattered much to Californians. Until now.

??The Vermont senator's widely anticipated decision to abandon his fellow
Republicans and put Democrats in control of the Senate could have big
implications for California, particularly on energy and environmental policy,
lawmakers and lobbyists said Wednesday.

??The change, which Jeffords is expected to announce today, could increase
political pressure on the Bush administration to respond more aggressively to
California's electricity crisis, these insiders said.

??And it might force the White House to compromise on key elements of the
national energy policy it unveiled last week. In fact, the
administration's proposed budget cuts for programs to promote renewable energy
were said to be a factor in Jeffords' decision.

??At the very least, Senate observers said, Sen. Dianne Feinstein (D-Calif.) 
is
likely to get the floor vote she has sought on price controls for wholesale
electricity.

??That doesn't necessarily mean that the administration's critics will be able
to have everything their way. Even if the Senate approves electricity price
caps, for example, the measure would face stiff opposition in the 
GOP-dominated
House--and a likely veto if it made it to the president's desk.

??Still, a Democratic majority in the Senate would give Feinstein and other
party members a platform to turn up the political heat on the administration 
and
congressional Republicans on energy policy.

??"It kicks up the dust," groaned one energy industry lobbyist who requested
anonymity.

??Observed Sen. John F. Kerry (D-Mass.): "If President Bush's hard-edged
conservative approach has in fact caused the balance to shift towards 
Democrats
in the Senate, it will have profound implications not just for California, but
for the environment and our nation's energy policy."

??Environmentalists seemed almost giddy as they contemplated the possible
impact of Jeffords' decision on the policies they care about.

??All of a sudden, they said, it seems less likely that oil exploration will
take place in the Arctic National Wildlife Refuge, that recreational 
snowmobiles
will have free access to Yellowstone National Park, or that the
administration's desire to promote nuclear power will be embraced by Congress.

??On the other hand, it seems more probable that Congress would approve a new
plan for managing a vast swath of the Sierra Nevada to protect the region's
oldest trees, consider legislation to restrict emissions of carbon dioxide 
from
power plants and protect California from a resurgence of offshore oil 
drilling.

??"It's stunning how broad the repercussions are, particularly on the
environment," said Gregory Wetstone of the Natural Resources Defense Council.
"We're trying not to count our chickens before they hatch. But it will be 
easier
for us in our battles at least to keep from moving backwards."

??For instance, Jeffords is a chief advocate of a bill that would regulate
carbon dioxide from power plants. And if events play out as expected, he'll
become the new chairman of the Senate committee with jurisdiction over the
issue.

??Another issue under his purview would be the two-decade dispute over a
proposed repository for the nation's spent nuclear fuel at Yucca Mountain in
Nevada.

??"Yucca Mountain is a dead turkey," declared Michael Francis of the 
Wilderness
Society.

??Environmentalists had been worried that a number of pro-development
provisions would be packed into appropriation bills. But with Democratic
senators in charge, that would become less of a threat, they said.

??"Every wacko idea Republicans have will get a higher level of scrutiny,"
Francis said.

??The biggest change would be the power of Senate Democrats to decide which
bills will be considered in committees, and which ones will make it to the 
floor
of the Senate for votes.

??As part of a new Democratic majority, Feinstein and fellow California
Democrat Barbara Boxer are likely to gain leverage with the administration on 
a
number of issues considered important to the state.

??"That translates into more federal assistance for California across the
board," predicted Steve Maviglio, spokesman for Gov. Gray Davis. 

??"I think it means more attention to our state, for sure," Boxer said. "Right
now, the president doesn't seem to give a darn. They're all looking at
California as a Democratic state. They're not interested."

??Feinstein, who has been unable to arrange a meeting with Bush to discuss the
energy crisis, may get better treatment if winning Democratic support becomes
more important to the administration. She has been regarded as a 
bridge-builder
who worked effectively with Republicans in the past.

??"This has not been a warm and friendly administration," she complained
Wednesday. "They've got people who know all the answers and don't want to
listen."

??The White House disputed that. In fact, Bush agreed Wednesday to meet with
Davis during the president's first visit to California next week.

??Under a Democratic majority, Feinstein would be in line to chair two
subcommittees: the military construction panel of the Senate Appropriations
Committee, and the technology, terrorism and government information 
subcommittee
of the Senate Judiciary Committee.

??Boxer would be in line to chair the subcommittee on Superfund, waste control
and risk assessment, and the Foreign Relations subcommittee on international
operations and terrorism.

??Maviglio predicted that the effects of Jeffords' expected party defection
would be felt immediately.

??The chairmanship of the Senate Energy and Natural Resources Committee would
be taken away from Frank H. Murkowski (R-Alaska), who has been "openly hostile
to California's plight," and handed to Jeff Bingaman (D-N.M.), who supports
Davis' request for electricity price controls, according to Maviglio.

??Democrats have assailed Bush's energy plan for tilting heavily toward the
supply side. With Democrats in charge of the Senate, the administration would 
be
more likely to compromise, perhaps beefing up funding for Democrat-supported
causes such as increased energy assistance to low-income households and more
aggressive promotion of conservation and renewable energy sources such as wind
and solar power.

LOAD-DATE: May 24, 2001

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??????????????????????Copyright 2001 / Los Angeles Times

??????????????????????????????Los Angeles Times

?????????????????????May 24, 2001 Thursday ?Home Edition

SECTION: Part A; Part 1; Page 16; National Desk

LENGTH: 930 words

HEADLINE: The Nation;
;
Texas Firm's Chief Denies Driving Up Calif. Natural Gas Prices;
Energy: At federal panel hearing, he says his company missed out on making 
more
money from rapid hikes.

BYLINE: RICARDO ALONSO-ZALDIVAR, TIMES STAFF WRITER

DATELINE: WASHINGTON

BODY:

??The head of a Houston energy company denied driving California natural gas
prices to unprecedented levels and testified Wednesday that his firm actually
passed up an opportunity to make nearly $700 million in additional profits.

??But the company still earned a net profit of $184 million on an initial
investment of $38.5 million, according to testimony by El Paso Merchant Group
President Ralph Eads in a trial-like hearing before the Federal Energy
Regulatory Commission.

??The El Paso case is significant because it represents the closest thing yet
to a full-blown trial of allegations that the actions of unscrupulous energy
companies have been a chief cause of California's energy crisis.

??The California Public Utilities Commission and Southern California Edison
have charged that El Paso Merchant, which sells natural gas, withheld space 
on a
pipeline owned by an affiliated company last year to create an artificial
shortage that sent prices zooming.

??Edison's experts estimate that the alleged scheme has added $3.7 billion to
California's total energy costs, since most of the state's power plants are
fueled by natural gas.

??Executive Testifies About 'Hedge' Deals

??But Eads, under oath, denied that Merchant was after predatory profits.

??The strongest evidence of that, he testified, is that the company entered
into long-term, fixed-price deals called "hedges" for much of the shipping
rights it bought from pipeline owner El Paso Natural Gas Co. in February 2000.

??When California prices spiked last November, Eads said Merchant was locked
into its hedge contracts and was unable to reap the full potential profit.

??Merchant made $105 million in profits from the pipeline deal last year after
subtracting losses of $262 million on hedged contracts, Eads testified.

??In the first three months of this year, Eads said, Merchant made an
additional $79 million in profits on the deal after subtracting losses of $429
million on hedges.

??Hedge contracts function like insurance against sudden swings in market
prices.

??In this case, Eads said Merchant entered into the deals to protect itself
from a potential price drop. But he said the company lost out on a huge 
windfall
when the market moved in the opposite direction.

??"If we had thought that we could drive up prices, we certainly wouldn't have
hedged," said Eads, 41, who holds an economics degree from Duke University and
has been in the energy business for 17 years. "The hedge cost us hundreds of
millions. So it's certainly not rational to hedge if you think you can drive
prices up."

??Merchant's expert witnesses have testified that high demand for electricity,
low storage levels of natural gas in California and a lack of pipeline 
capacity
within the state are to blame for the high prices.

??Eads testified that Merchant has made a profit of 76 cents per million
British thermal units on gas shipped to California.

??That is good by industry standards but a far cry from markups of $8 or more
per million BTUs being charged at the California border.

??Administrative Law Judge Curtis L. Wagner Jr. listened intently to the
testimony, at times questioning Eads himself.

??Hearing Is Taking Longer Than Expected

??The hearing--originally scheduled to last for five days--entered its eighth
day Wednesday.

??Eads was the first witness with in-depth personal knowledge of the
controversial transactions between El Paso Merchant Group and El Paso Natural
Gas Co., both subsidiaries of El Paso Corp.

??Wagner must render an initial decision to the federal commission's governing
board on whether Merchant acquired monopolistic power in California's natural
gas market and used it to harm consumers. The board can order the company to
return any ill-gotten gains.

??Eads also provided new details of how his company came to acquire the right
to ship 1.2 billion cubic feet a day of natural gas through El Paso Natural 
Gas
Co.'s pipeline.

??Eads testified that his subordinates first proposed to bid for the publicly
advertised shipping rights and settled on a price of $38.5 million. Eads said 
he
approved the deal.

??The commission has already ruled that the contract between Merchant and El
Paso Natural Gas was proper.

??However, questions have been raised about a briefing prepared by Merchant 
for
a Feb. 14, 2000, meeting with William A. Wise, the chief executive of the El
Paso parent company.

??The presentation remains under court seal, but the New York Times has
reported that the presentation discussed how the pipeline deal would give El
Paso more control of the California market.

??Eads testified that Wise had no role in approving the bid. Such a role would
have violated commission rules.

??Merchant's attorneys, while opposing public release of the Feb. 14
presentation, say it has been taken out of context.

??PUC attorney Harvey Morris, cross-examining Eads, suggested that the
executive was not giving a complete picture of how El Paso Corp. might have
profited from the actions of Merchant and the pipeline subsidiary. The company
has other energy interests, including power generators that stood to benefit
from high prices for power in California.

??Senate Panel Approves 2 Board Nominations

??In a related development, the Senate Energy and Natural Resources Committee
unanimously approved President Bush's nomination of state regulators Patrick
Wood and Nora Brownell to fill out the energy commission's five-member board.
The nominations now go to the full Senate for consideration.

??Cross-examination of Eads resumes today.

LOAD-DATE: May 24, 2001

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??????????????????????Copyright 2001 / Los Angeles Times

??????????????????????????????Los Angeles Times

?????????????????????May 24, 2001 Thursday ?Home Edition

SECTION: Part A; Part 1; Page 1; Metro Desk

LENGTH: 3167 words

SERIES: CAMPAIGN 2001

HEADLINE: CAMPAIGN 2001;
A Rapid, Sometimes Bumpy, Rise;
Assembly: People skills aided Villaraigosa, now running for mayor. But
inexperience showed.

BYLINE: RONE TEMPEST, TIMES STAFF WRITER

DATELINE: SACRAMENTO

BODY:

??Even on the extremely fast track paved by term limits, Antonio 
Villaraigosa's
race to power in Sacramento was lightning quick.

??Only three years after arriving here as a rookie legislator, in his first
elective office, Villaraigosa gathered enough support in the Assembly to push
his popular colleague, Cruz Bustamante, out of the speakership months before 
he
wanted to go.

??Building allies in the Assembly as party whip and later as majority leader,
and tirelessly campaigning for fellow Democrats across the state in the 1996
elections, Villaraigosa quickly captured the speaker's job.

??In the back-slapping, favor-trading environment of the Capitol, he turned 
his
considerable skills as a bipartisan schmoozer into a record of constructive
compromise--including marshaling a massive, $9.2-billion school bond issue in
1998 and a $2.1-billion parks bond issue in 1999.

??Although he served only two years and three months as speaker, he benefited
hugely from a booming economy, which buttressed him as he shepherded bills
through to expand health care for poor families, establish peer review of
teachers and impose bans on assault weapons, among others. The accomplishments
form the bulwark of his campaign for mayor of Los Angeles against City Atty.
James K. Hahn, which ends in the June 5 runoff.

??Yet Villaraigosa's inexperience also showed: A lackluster detail man by his
own admission, he was forced by his weaknesses in the mechanics of policy to
lean heavily on a strong staff as well as on intellectually gifted colleagues
who didn't always agree with him.

??Some fellow Democrats accuse him of padding his resume by claiming credit 
for
bills on which others had done most of the hard work. He suffered a bitter 
break
with his longtime friend and successor as speaker, Bob Hertzberg (D-Sherman
Oaks), that colored the last year of his term. Hertzberg is conspicuously 
absent
from Villaraigosa's list of endorsers.

??In his relatively brief tenure at the top, Villaraigosa was blessed with 
good
timing. There were none of the fiscal or natural disasters that circumscribed
the actions of past state figures. Nor was he there long enough to be saddled
with a continuing crisis.

??Yet his tenure did change him. The liberal who arrived here in 1994 after
being elected from Los Angeles' ethnically mixed 45th Assembly District--fresh
from tenures as a teachers union leader and president of the local ACLU
chapter--emerged six years later with bouquets from conservative Republicans.

??"In this environment," said Capitol veteran Bill Leonard, a Republican
assemblyman from San Bernardino, "anyone who can rise to leadership knows how 
to
work a fast track--gaining allies, answering critics. The hit on Antonio, of
course, was that he was this radical legislator from Los Angeles. He had to
answer that because, in the Legislature, anything of substance is bipartisan. 
.
. . Every possible coalition has to be in on the decision."

??Indeed, Republicans expected a firebrand and ended up with Mr. Congeniality.
In a tribute given as term limits forced Villaraigosa from the Assembly last
year, conservative Republican Roy Ashburn of Bakersfield talked about 
defending
him at Rotary and Kiwanis club meetings.

??"You can imagine my dilemma," Ashburn said. "A guy from Bakersfield asked
about the speaker and I would say, 'Well, he's a former ACLU [leader] from Los
Angeles, but he's a good guy.' I had a lot of explaining to do."

??That was almost impossible to predict when Villaraigosa came to the Assembly
in 1994. The lower house had been placed in the hands of the Republicans for 
the
first time in more than two decades.

??During the 1995-96 session, Villaraigosa had only modest success with the
three dozen bills he wrote, mostly involving education, labor and health care
issues. His attempt at a bill requiring trigger locks on firearms went down in
flames. So did a bill to commute prison sentences for terminally ill 
prisoners.

??His most notable success, achieved on a second attempt with the support of
Orange County Republican leader Scott Baugh, was a bill permitting women to
breast-feed their children in public.

??Perhaps Villaraigosa's biggest vote came when he joined in the now-infamous
unanimous approval of the 1996 bill that helped deregulate electricity in
California. (The Los Angeles Department of Water and Power was not required to
deregulate.)

??"Look," said Villaraigosa, "every member of the state Legislature voted for
deregulation. In hindsight, it was not a good vote. I had some concerns about
the bill, but I knew that Los Angeles was protected because of its municipal
utility, and that was a big factor in my mind.'

??Democratic Landslide Helped

??Borne by good relations with colleagues, Villaraigosa became speaker in
January 1998. His security in the job was greatly enhanced in the 1998 general
election, when a Democratic landslide added a record five seats to the party's
membership in the Assembly, giving it a powerful majority of 48 in the 
80-member
house.

??Villaraigosa says he never gets enough credit for helping expand his party's
majority. Instead, he says, reporters focused on the loss of a "safe" 
Democratic
seat in Oakland to Green Party candidate Audie Bock in a 1999 special 
election.

??The new speaker also had an ally in the governor's office. Even though
Villaraigosa initially supported millionaire Al Checchi over Gray Davis in the
1998 governor's race, he quickly forged a strong bond with Davis during the
campaign.

??"I'm hitching my wagon to his horse," Villaraigosa told reporters. Davis has
endorsed Villaraigosa for mayor.

??Any speaker, particularly a Democrat, is inevitably compared to the 
legendary
Willie Brown, who held the post for 14 years before term limits booted him to
the San Francisco mayor's office. By that yardstick, Villaraigosa had a mixed
record.

??Patsy Kurakawa, Villaraigosa's policy director, said he was almost as
successful at working over Assembly members as her old boss Brown. "The bottom
line was that he was really good at getting votes," Kurakawa recalled.

??Brown, an early endorser of Villaraigosa for mayor, said:

??"In the time period Antonio ran the place as speaker, the budget process
moved smoothly, the membership responded appropriately and the output was what
it was supposed to be. Fortunately for him, he didn't have the energy crisis."

??But if Villaraigosa approached Brown's hold on the membership, he lacked the
former speaker's sense of detail and instant grasp of policy. Part of the
difference was experience--Brown's three decades in the Assembly to
Villaraigosa's six years.

??The experience gap showed, to Villaraigosa's disadvantage, in the first of
the 1998 Big Five budget meetings he attended. At the table were Gov. Pete
Wilson (32 years in elected office), Senate President John Burton (28 years) 
and
minority leaders Ross Johnson and Bill Leonard (20 years each)--a century's
experience in Sacramento, Washington and local office.

??"I'd come in with this big, thick binder because I knew I had to be
extra-prepared," Villaraigosa recalled. "These guys had forgotten more than I
had learned."

??In the early meetings, he remembered, Burton referred to him in front of the
others as "the kid." Villaraigosa never won the full respect of the irascible
Burton, who remains skeptical about his qualifications for mayor. But Wilson 
and
the other Republicans eventually warmed to him.

??"The first meeting was awkward when he was the new kid in the room," said
Leonard, who then led the GOP senators. "Burton and Wilson were from the same
generation and were singing old television commercials--a trivia kind of 
thing.
By the next meeting [Villaraigosa] had some old TV commercial of his own to
offer. He was a quick learner."

??Still, some members contend that the inexperience exacted a price.

??"The Assembly didn't do all that well that year in the Big Five meeting,"
recalled one Democrat. "Given the experiential mismatch, he did OK. But the
Senate and the governor mostly set the agenda on the budget while Antonio was
there."

??Villaraigosa Always on the Move

??Complicating Villaraigosa's learning curve was a frenetic style, which often
made it hard to get his attention on complicated issues. One former staffer
jokingly described it as the "ADD [Attention Deficit Disorder] Antonio." 
Another
said she learned to keep contact with the speaker by holding onto his sleeve.

??"You could brief Willie in the hallway on his way to the floor," recalled 
one
staff member who worked for both men. As for Villaraigosa, the staffer said, 
"I
can't tell you how many times I would turn my head and, when I looked back, he
would be gone--poof!"

??Villaraigosa admits that he is not keen on details, but says he makes up for
it by hiring the best staff and identifying the best minds available.

??"Anyone who says that I don't have an attention to detail," he said, "fails
to take into account that I hired staff with that attention and I delegated to
fill the gap. My job as speaker was the big picture."

??He cites as an example his "top accomplishment" as speaker--the 1998 school
bond issue. He gives much of the credit to then-deputies Hertzberg and Tom
Torlakson, a former Antioch schoolteacher.

??The creative breakthrough in the bill came when Hertzberg and Torlakson
linked school improvements to a cap on the "developer fees" that school
districts charge home builders.

??Villaraigosa quickly saw the potential and sold the compromise to Democrats.
When it came time to negotiate with Republicans, Leonard recalled, 
Villaraigosa
was there to close the deal.

??Another example occurred in 1999 when the state's largest utility, Pacific
Gas & Electric, mounted a full-court press for a bill that would allow it to
sell hydroelectric power plants that provide the state with a critical 10,000
megawatts.

??The power crisis was not yet evident, but Villaraigosa said he sensed that
PG&E was moving too fast. "It was toward the end of the legislative session," 
he
recalled. "I said it would be irresponsible to act now."

??He effectively killed the PG&E push by assigning top lieutenant Fred Keeley
(D-Boulder Creek) to the conference committee considering the measure.
Assemblyman Keeley, who fiercely opposed the PG&E effort, had sponsored an
alternative bill calling for public ownership of the hydroelectric facilities.

??Had the PG&E push been successful, Keeley estimates now, the results would
have been devastating and cost the state millions of dollars more when it 
began
buying power for the crippled utilities earlier this year.

??Overall, Villaraigosa got high marks for his selection of deputies. Besides
Keeley, his other pro-tem was well-regarded Assemblywoman Sheila Kuehl 
(D-Santa
Monica). His key committee appointments included Hertzberg, in Rules, and 
Carole
Migden of San Francisco in Appropriations.

??"He had the confidence to surround himself with smart people who were not
going to shy away from a fight. None of these people were sycophants," 
recalled
former Assemblyman Richard Katz (D-Sylmar), who was majority leader when
Villaraigosa served as whip.

??State Sen. Don Perata (D-Alameda) said Villaraigosa would need an equally
strong team to succeed at City Hall. A "very strong chief of staff" would free
Villaraigosa to deal with the City Council, said Perata, who served with the
candidate in the Assembly.

??For all his efforts to translate personal charisma into political advantage,
Villaraigosa has come under some virulent criticism, largely from Democrats in
the highly fractious Latino Caucus who are loyal to state Sen. Richard Polanco
of Los Angeles. Villaraigosa defeated Polanco's candidate to reach the 
Assembly.

??Polanco ally Martha Escutia, now a state senator from Whittier, accuses
Villaraigosa of hijacking her 1997 bill to create the Healthy Families 
program,
which provides medical coverage for children in low-income households.

??Villaraigosa lists the Healthy Families legislation as one of his four key
accomplishments in Sacramento, along with the school and parks bond measures 
and
his participation in a 1999 assault weapons ban.

??According to the legislative record, Escutia was the first in the 1997-98
session to offer a comprehensive bill on low-income health coverage for
children. Moreover, the final bill that emerged, with Villaraigosa listed as a
principal author, contained much of the same language as the Escutia bill but
does not carry her name.

??"All I know," she said, "is that I was the first one to introduce the 
Healthy
Families bill, but by the time [the final measure was drafted in committee] I
was not a member, nor was I listed as an author. The lesson I learned is to be
more vigilant about my work product."

??Added Polanco: "It's like someone taking a test and putting your name on it.
You don't take someone's work and put your name on it."

??Villaraigosa dismissed those claims, saying he had introduced similar
"universal coverage for children" bills in previous sessions. One such bill in
1996 never made it out of the health committee but did have a line stating 
that
all children under 18 "should be entitled to child health care."

??Amy Dominguez-Arms, vice president of Children Now, an Oakland-based
children's advocacy group that was a principal sponsor of the bill that 
finally
passed, said Villaraigosa legitimately deserves most of the credit.

??"We had already been talking to [Villaraigosa's] staff when the Escutia bill
was introduced," she said. "We found him to be a very receptive author, and he
certainly championed the bill throughout the legislative session."

??Villaraigosa also takes credit for successfully pushing the assault weapons
ban. As Hahn has attacked him as being too soft on crime, the measure has 
become
an important part of Villaraigosa's public safety record.

??"My role in the assault weapons ban was to get it out of the Assembly," he
said. "You guys wrote that it was going down. That was a time I pulled people
into my office one at a time. They came to Jesus about how this was an 
important
Democratic initiative that we had to get behind. We needed 41 votes and we got
them."

??But the bill's author Perata--while recognizing Villaraigosa's help--said 
the
legislation would have passed without the speaker's intervention. Villaraigosa
"jockeyed the bill in the Assembly, but jockeying should not be confused with
passing it or writing it," he said.

??The highest-profile rift with Villaraigosa featured the unlikeliest of
prospects, his longtime political ally and Sacramento roommate Hertzberg.
Hertzberg, a hyperkinetic former bond attorney, replaced Villaraigosa as 
speaker
in April 2000.

??Part of the problem between the two friends was predictable: a transition in
the abbreviated atmosphere of term limits. Hertzberg, who organized
Villaraigosa's 1994 campaign for Assembly before joining him there two years
later, helped Villaraigosa nudge Bustamante from the speakership in 1998. But 
by
the spring of 1999, Hertzberg was already gathering signatures and making his
own move against Villaraigosa.

??Villaraigosa wanted to remain as speaker through last summer's Democratic
National Convention in Los Angeles, which he figured would give him a
high-profile platform for the mayor's race.

??Articles already identifying Hertzberg as speaker-in-waiting had angered
Villaraigosa, and there was a confrontation between Hertzberg and a 
Villaraigosa
aide in March 1999 during the annual legislative leaders' trip to Washington.

??For several months after that, the two men rarely spoke, although they
continued to live together in the home they shared in Sacramento.

??The question of campaign money also fed the feud. Villaraigosa was a potent
fund-raiser for the Democratic caucus, and as part of the transition returned 
$
1.5 million to the Democratic leadership when he left power. But Villaraigosa
also kept $1.3 million for his own campaign chest, putting it in an account to
run for state Senate in 2002 should his mayoral campaign fail.

??Bustamante had done the same thing, taking more than $1 million he had 
raised
as speaker to finance his successful 1998 campaign for lieutenant governor.
Villaraigosa had loudly criticized the Bustamante move, so most of his
colleagues in the Democratic caucus expected him to leave the money behind.
Villaraigosa defends the money transfer by saying, accurately, that he had
already given more money back to Democrats than any previous speaker.

??As for Hertzberg's lack of endorsement, the speaker said: "I am working 24
hours, seven days a week on the energy crisis and other issues facing the 
state.
So it is hard for me to get involved in the mayor's race."

??Villaraigosa said he hopes Hertzberg will relent. "It's been painful, more
personally than politically," Villaraigosa said.

??This personal fallout aside, Villaraigosa's legacy as speaker remains his
ability to get along with most of Sacramento's influential figures, building
political bridges as he went.



??Helping Hands in the Legislature From his six years in the California
Assembly, including two years as speaker, Antonio Villaraigosa lists four 
bills
as his greatest accomplishments. In each case, however, Democratic colleagues
contend that at least some of the the heavy lifting was done by other 
lawmakers.

??HEALTHY FAMILIES (AB 1126): This 1997 bill, passed when Villaraigosa was
majority leader, brought 250,000 California children from working poor 
families
into a health insurance program. But Whittier state Sen. Martha Escutia 
contends
that Villaraigosa took her bill, filed earlier, and morphed it into his own.

??SCHOOL BONDS (SB 50): Villaraigosa calls this 1998 Senate bill the "crown
jewel" of his term as speaker. But it is named the Leroy F. Greene School
Facilities Act after another education-minded former Democratic legislator 
from
Sacramento. After two embarrassing earlier failures, Villaraigosa finally
succeeded in getting the $9.2-billion bond bill out of the Assembly, largely
because of a compromise brokered by fellow lawmakers in a marathon weekend of
negotiations.

??GUN CONTROL (SB 23): This landmark 1999 legislation banning the manufacture,
import and sale of assault weapons tops Villaraigosa's list in the crime and
public safety category. Villaraigosa carried the bill on the Assembly floor, 
but
it was mainly the result of a lifetime effort in in gun legislation by Alameda
Democratic Sen. Don Perata. "It would have passed with or without Antonio,"
Perata says.

??PARKS BONDS (AB 18): This 1999 bill, the largest successful parks bond in
U.S. history, was mainly the product of a long legislative effort by Boulder
City Democratic Assemblyman Fred Keeley to improve state parks. But 
Villaraigosa
added the urban element with funding for city parks and forcefully powered it
through the Assembly. Now part of the statute requires that signs at park
construction sites identify it as "Paid for by the Villaraigosa-Keeley Act."

GRAPHIC: PHOTO: Antonio Villaraigosa admits he's not a detail person, but says
he hires aides who are. PHOTOGRAPHER: LAWRENCE K. HO / Los Angeles Times 
PHOTO:
State Sen. Kevin Murray hugs Assemblyman Antonio Villaraigosa after the 
Assembly
passed a racial-profiling bill in August. In the Capitol, Villaraigosa took
advantage of his formidable schmoozing skills. PHOTOGRAPHER: Associated Press
PHOTO: (Orange County Edition, B6) Antonio Villaraigosa, with state Sen. Kevin
Murray, turned his skills as a bipartisan schmoozer into a record of
constructive compromise. PHOTOGRAPHER: RICH PEDRONCELLI / Los Angeles Times

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??????????????????????????????Los Angeles Times

?????????????????????May 24, 2001 Thursday ?Home Edition

SECTION: California; Part 2; Page 8; Metro Desk

LENGTH: 331 words

HEADLINE: The State;
THE ENERGY CRISIS;
Bush, Davis to Meet on President's Visit to State

BYLINE: DAN MORAIN, EDWIN CHEN, TIMES STAFF WRITERS

BODY:

??President Bush agreed Wednesday to take time on his first trip to California
as chief executive to meet with Gov. Gray Davis, even as tensions grow between
the two administrations.

??The agreement to meet came after a weekend during which Vice President Dick
Cheney called one of the Democratic governor's ideas "goofy" and labeled as a
"harebrained scheme" Davis' decision to buy electricity, and Davis blasted the
Bush-Cheney energy plan for failing to address California's needs.

??White House Press Secretary Ari Fleischer said Bush will meet with Davis 
next
week, probably Tuesday.

??"The president has invited Gov. Davis to meet with him, to get together to
talk about issues important to California, including, of course, energy. And 
the
president looks forward to meeting with Gov. Davis," Fleischer said.

??Davis had called the White House on Tuesday, though he didn't reach Bush. He
followed up with a letter dated Wednesday in which he requested a meeting "to
discuss the most difficult issue facing the consumers and businesses of
California: energy."

??In his letter, Davis warned that California's energy crisis "is a national
economic issue."

??"I agree with you," Davis' letter said, "that long-term solutions are
necessary to our nation's energy challenge. However, Californians can't afford
to wait four or five years for a permanent solution. We need relief today."

??Davis has been demanding that the Bush administration cap wholesale
electricity prices charged by independent energy companies, something the
president opposes.

??Fleischer said Bush and Davis were expected to discuss their differences 
over
the federal response to California's electricity shortages and price spikes, 
but
other issues probably would be addressed as well.

??"It wouldn't surprise me if the president wanted to talk about education,
maybe taxes. There'll be a series of issues they want to talk about," 
Fleischer
said.. "But energy will, of course, be at the top of the list."

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SECTION: California; Part 2; Page 8; Metro Desk

LENGTH: 504 words

HEADLINE: The State;
THE ENERGY CRISIS;
Reliant Offers to Slash Prices if Rules Waived;
Pollution: The power firm tells officials that plants could produce more if 
not
curtailed by air quality rules.

BYLINE: NANCY VOGEL, TIMES STAFF WRITER

DATELINE: SACRAMENTO

BODY:

??A Houston-based energy wholesaler singled out by Gov. Gray Davis for 
charging
sky-high amounts offered on Wednesday to slash prices 80% if air pollution
regulators waive certain rules.

??Reliant Energy, owner of five Southern California power plants, told top
state energy and environmental officials that a boost in the number of hours 
its
power plants can run would allow the company to drop its bids from between $
1,500 and $1,900 per megawatt-hour to $150 to $250 per megawatt-hour.

??Three of the company's power plants can run only a limited number of hours
each year under air pollution rules designed to reduce smog.

??In a letter to Davis' energy advisors, company Vice President John Stout
proposed that the state not subtract from Reliant's allotted hours whenever 
its
plants are ordered to run by state grid operators, who buy power on an 
emergency
basis to prevent uncontrolled blackouts.

??"Right now when we are called upon by the state to run these units, it's
eating away the hours of run time that we were counting on," said Stout.

??"That's what causes us to bid in the high prices," he said, "because we
ultimately think we're going to have to go out and buy replacement power in 
the
spot market later this summer to make up for the hours that get eaten up in 
the
spring or early summer by these emergency dispatches by the state."

??Earlier this month, the state power buyers paid Reliant $1,900 per
megawatt-hour, several times recent market prices, to avoid blackouts on a hot
afternoon. Davis complained publicly, naming the price and the
seller--information that grid operators are supposed to keep confidential 
under
federal rules.

??Davis spokesman Roger Salazar said the governor will evaluate Reliant's 
latest offer carefully.

??But Southern California air pollution regulators said they already have
relaxed Reliant's regulations or offered to do so months ago.

??"We're not sure of the logic behind Reliant's proposal," said Doug Allard,
top regulator at the Santa Barbara County Air Pollution Control District. "The
implication seems to be that air quality mitigation is contributing
substantially to the cost of power. We find that impossible to believe."

??Allard said his staff has been ready since last August to amend a permit 
that
allows Reliant's small power plant near Goleta to run 200 hours a year. He 
said
the district offered to add 500 hours of operation time each year with no
strings attached.

??That is possible, Allard said, because a 1991 test of the plant's pollution
concluded that it released only one-third as much nitrogen oxide--a precursor 
to
smog--as regulators believed when they wrote the permit years ago.

??Ventura County air pollution control officer Dick Baldwin, who regulates two
plants owned by Reliant, said the company seems to want to be able to produce
more electricity to sell on the spot market--where prices can soar--in 
exchange
for giving the state a break on the electricity it is ordered to sell during
emergencies.

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SECTION: California; Part 2; Page 1; Metro Desk

LENGTH: 520 words

HEADLINE: Use of Diesel Generators Proposed to Bolster Grid;
Energy: State says small backup systems, which lack pollution controls, could
avert blackouts. Activists and air quality officials protest.

BYLINE: GARY POLAKOVIC, TIMES STAFF WRITER

BODY:

??Gov. Gray Davis' administration is considering pressing into service
thousands of diesel-powered generators, a move that would eke out a little 
more
electricity but pump massive quantities of pollutants into the air.

??The proposal, part of an emerging strategy to avert blackouts this summer, 
is
one of several options being advanced by Richard Sklar, whom Gov. Davis 
appointed last month to bring more electricity online with less red tape.

??"If backup generators were to be used, it would only be as a last resort to
avoid blackouts," said Davis spokesman Roger Salazar. "Unfortunately, we are 
in
an emergency situation. Everything is on the table."

??But environmentalists and air quality officials are outraged, calling the
plan a recipe for unhealthy air during the smoggiest months in the nation's 
most
polluted state. The legions of small backup generators typically burn diesel
fuel and have no pollution controls.

??"They could have a huge negative effect on air quality," said Ellen Garvey,
executive officer for the Bay Area Air Quality Management Agency. "It's one
thing to run these generators during blackouts and emergency conditions, but
using them for other purposes could be devastating."

??The plan is one of several options being developed by the governor. One
approach would pay operators to run the generators when supplies are stretched
to alleviate demand on the state's power grid.

??California has about 17,200 backup generators, most in hospitals, office
buildings, sewage treatment plants and university labs, although some are
portable rentals.

??Each generator spews 500 times more nitrogen dioxide for each megawatt of
electricity than a natural-gas fired power plant, according to the state Air
Resources Board. The generators also release soot.

??Under a worst-case scenario prepared by the California Air Pollution Control
Officers Assn., generators could produce nearly 17,000 tons of pollutants if
they all ran 40 days during blackouts and Stage 3 emergencies. Half of the
pollution would be concentrated in the air quality region that includes Los
Angeles, Orange and parts of Riverside and San Bernardino counties. That is 
the
smog equivalent to the nitrogen dioxide all the cars in California produce in 
13
days, according to the Air Resources Board. Nitrogen dioxide contributes to
ozone and microscopic airborne particles, two abundant air pollutants.

??Backup generators are so small that collectively they do not produce much
power. Only about 550 megawatts could be generated each day, officials say, 
in a
state that requires nearly 100 times as much to function.

??Nevertheless, business groups are lobbying for the change, including the
League of Food Processors, the California Manufacturers and Technology Assn. 
and
San Diego Gas & Electric Co.

??"These generators could go a long way to taking some demand off the electric
grid and putting some supply back into the power system," said Gino DiCaro,
spokesman for the manufacturers association.

??*

??MORE INSIDE

??Official visit: President Bush agrees to meet with Gov. Gray Davis during 
his
California trip. B8

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?????????????????????????The San Francisco Chronicle

????????????????????MAY 24, 2001, THURSDAY, FINAL EDITION

SECTION: NEWS; Pg. A1

LENGTH: 888 words

HEADLINE: Davis to order 1-hour notice of blackouts;

Plan also in works to give law enforcement even earlier alerts

SOURCE: Chronicle Sacramento Bureau

BYLINE: Lynda Gledhill

DATELINE: Sacramento

BODY:
Gov. Gray Davis will issue an executive order today requiring that 
Californians
be given at least one hour's notice before blackouts hit, according to a top
administration official.

???The one-hour notice is double what the California Independent System
Operator, managers of the state's electrical grid, proposed earlier this week.
The ISO board is scheduled to discuss its plan at a meeting today.

???Details of Davis' plan were still being worked out, said the administration
official, who spoke on the condition of anonymity. But any plan would have to
order the ISO to give more notice of potential blackouts.

???Davis also hopes to give 48-hour and then 24-hour notices of probable
blackout scenarios. Administration officials said the two-day notice would go 
to
law enforcement, while everyone would get a 24-hour warning.

???Business groups welcomed the executive order.

???"We need to plan, we need to make adjustments in business schedules," said
Jeanne Cain, vice president for government relations for the California 
Chamber
of Commerce. "There are concerns about employee safety issues. The more notice
we have, the better we can accommodate the blackout."

???Carl Guardino, an ISO board member and president of the Silicon Valley
Manufacturing Group, has been pushing for an advanced notification plan and
working with the governor.

???"Sixty minutes is twice as good" as 30 minutes, he said.

???With little doubt that blackouts will hit this summer, lawmakers have been
searching for a way to make them easier on residents and businesses.

???"As much notice as possible would be helpful. It's helpful to have some
advance notice for planning purposes, but small businesses will still be hurt 
by
the blackouts," said Shirley Knight, assistant state director of the National
Federation of Independent Business.

???"Most small businesses are in the service sector so they're open during the
day, which means small-business owners aren't going to be able to recoup those
blackout costs like a manufacturer might be able to," Knight said.

???But one consumer group said Davis should be doing more to stop the 
blackouts
from happening in the first place.

???"It's like saying you're going to know a half hour earlier that an
earthquake is coming," said Doug Heller of the Foundation for Taxpayer and
Consumer Rights. "We should be stopping blackouts by standing up to the energy
generators, rather than giving us an extra 30 minutes."

???'POWER WATCH'

???The Independent System Operator's proposed plan for forecasting potential
blackouts envisions a system that would provide a 24-hour notice of 
high-demand
days. A "Power Watch" would be declared whenever a Stage 1 or Stage 2 alert is
likely, while a "Power Warning" would be issued whenever there is at least a 
50
percent chance of a Stage 3 alert, when electricity reserves drop below 1.5
percent.

???Until now, the agency has refused to give more than a few minutes' warning
of blackouts, saying it did not want to alarm people when there was still a
chance that a last-minute purchase of power could stave off blackouts.

???Pacific Gas and Electric Co. said it would welcome the advance notice to be
able to notify customers who rely on electricity for life-critical equipment 
and
large businesses.

???"We welcome advance notice from the ISO that would allow us to communicate
to customers about pending rotating outages," said Ron Low, a spokesman for
PG&E.

???The public safety aspect must be taken into account, said one consumer
group.

???"Blackouts have serious consequences, not just economic," said Mindy Spatt,
spokeswoman for The Utility Reform Network in San Francisco. "They create 
public
safety hazards, and all of those issues cannot be addressed from warnings. But
knowing in advance is better."

???E-MAIL ALERTS

???The ISO also has been working to upgrade its Web site to provide the most
current information about how much electricity is being used and how much is
available. It will also establish a system this summer through which that
information can be sent in an hourly e-mail.

???This information may make it easier for larger users of electricity to plan
their operations.

??-------------------------------------------------------

??Enlightening advice to prepare for blackoutsHere's some advice from PG&E and
local utilities about how to prepare for blackouts:

???-- Have a flashlight and radio with fresh batteries available. If you light
candles, observe the usual safety precautions.

???-- If the lights go out, check with neighbors to determine if your home
alone is affected. It may be a downed power line or some other problem, in 
which
case you should alert PG&E or your city electrical bureau.

???-- Unplug or turn off all appliances, TVs and computers. Leave one light on
to warn you when the power comes back on.

???-- When the power returns, turn one appliance on at a time to prevent power
surges.

???-- Don't plug a generator into the wall; when the lights return, it can 
send
a high-voltage current through the system that can electrocute power workers.

???-- Don't open your refrigerator, so your food will remain cold.

???-- Tell children who are home alone to remain calm, turn off the TV and
computers and not to use candles.Chronicle staff writer Greg Lucas contributed
to this report. / E-mail Lynda Gledhill at lgledhill@sfchronicle.com.

LOAD-DATE: May 24, 2001

??????????????????????????????12 of 58 DOCUMENTS

?????????????????Copyright 2001 The Chronicle Publishing Co.

?????????????????????????The San Francisco Chronicle

????????????????????MAY 24, 2001, THURSDAY, FINAL EDITION

SECTION: NEWS; Pg. A17

LENGTH: 1085 words

HEADLINE: Californians angry across the board in energy crisis;

Poll rates Bush worse than Davis

SOURCE: Chronicle Political Writer

BYLINE: John Wildermuth

BODY:
Californians are increasingly unhappy with the way Gov. Gray Davis has handled
the state's power crunch, but he has plenty of company in their energy 
doghouse,
a Field Poll shows.

???The state's power companies, out-of-state energy providers, President Bush
and the Legislature all come out worse than Davis in the survey.

???"Davis' ratings have gone down, but a lot of others are given lower 
ratings"
when people are asked to rank how the politicians and institutions are 
handling
the state's energy situation, said Mark DiCamillo, director of the Field Poll.

???Growing worries about the seriousness of the power problem have sent 
ratings
skidding for anyone connected with the energy business.

???"Everyone has gotten tarred," DiCamillo said.

???A solid 57 percent of those surveyed believe that Pacific Gas and Electric
Co. and the state's other private electric utilities have done a poor or very
poor job with the energy problem, with out-of-state power providers ranked
almost as low. But 54 percent also put Bush's efforts in the poor/very poor
category, and 52 percent consigned the Federal Energy Regulatory Commission to
the same level.

???The growing disdain for the federal energy program probably can be linked
with the president's refusal to back limits on energy prices, which are
supported by a wide range of California residents, DiCamillo said.

???"To the extent that federal officials are seen as not bending on that
issue," he said, "I suspect that their ratings will continue to be rather
dismal."

???The survey showed that Davis has had some success in his attempt to deflect
the blame for California's energy woes from his office, but there are
indications that that strategy may not work forever.

???Although 41 percent thought the governor was doing a good or very good job
with the power crisis in January, that number fell to 27 percent in the new
survey. The percentage of residents giving him poor or very poor marks jumped 
to
38 percent, up from 22 percent in January.

???The survey was conducted May 11 to May 20 of 1,015 California residents. It
has a margin of error of plus or minus 3.2 percentage points.

???In the survey, Californians were quick to congratulate themselves on their
own response to the energy problem. The poll showed that 39 percent believe
residential energy consumers are doing a good or very good job responding to 
the
problem, up from 26 percent in January.

???"People think they're making an effort to conserve," DiCamillo said. "In 
the
public's eye, it's everyone else that is not doing what they should be doing."

???The survey also shows that the public has few illusions about the
seriousness of the energy crunch. More than 80 percent believe it will be a 
year
or more before the energy crisis is resolved, and more than half are convinced
it will take at least two years to ensure a steady supply of electricity.

???"The gravity of the situation is such that the public is bracing itself for
a long haul," DiCamillo said. "The state hasn't been able to fix the problem 
in
a hurry, and people don't believe it's going to happen."

???The survey also showed that nearly half the state's residents believe that
PG&E's bankruptcy will make it harder to continue to supply electricity to its
customers while 59 percent say it would be a serious problem if businesses 
began
to leave the state because of the possibility of blackouts.

???Concern about the continuing energy problem was strong across the state,
DiCamillo said.

???"This is recognized as a major statewide issue," he said. "People think it
will have an effect on them, regardless of where they live."

??-------------------------------------------------------


CHART (1):

??Field Poll/Performance rating

??May 2001 rating of the job being done by officials and groups in their

attempts to improve the energy situation in California.

??Ranked in order of negative appraisals
?????????????????Good/Very good ??Fair ??Poor/Very poor ?No opinion
California's private electric utilities
???????????????????????15% ????????24% ??????57% ???????????4%

Out-of-state energy providers
???????????????????????17 ?????????20 ???????55 ????????????8

President George W. Bush
???????????????????????22 ?????????20 ???????54 ????????????4
Federal Energy Regulatory Comm.
???????????????????????13 ?????????26 ???????52 ????????????9

State Public Utilities Comm.
???????????????????????14 ?????????28 ???????52 ????????????6

Vice President Dick Cheney
???????????????????????17 ?????????25 ???????43 ???????????15
State Legislature ?????16 ?????????34 ???????41 ????????????9

Gov. Gray Davis ???????27 ?????????32 ???????38 ????????????3

U.S. Energy Sec. Spencer Abraham
???????????????????????16 ?????????26 ???????37 ???????????19
Ind. and bus. energy consumers
???????????????????????27 ?????????33 ???????34 ????????????6
Residential energy consumers
???????????????????????39 ?????????33 ???????22 ????????????6

??The Field Poll was conducted between May 11and May 20 with a statewide

telephone sample of 1,015 adults in either English or Spanish. According to

statistical theory, 95% of the sample would have an error of +/ 3.2 percentage

points.
Source: The Field Poll
Chronicle Graphic

------------------------------------------------

??CHART (2):

????Field Poll/ Resolving the energy crisis
How long will it take before the energy crisis is resolved and steady supplies

of electricity (no blackouts) can be assured?
????8% ???No opinion
???10% ???> 5 years
???10% ???6 mos
???11% ???4-5 years
???13% ???3 years
???24% ???2 years
???24% ???1 year
Source: The Field Poll, May 11-20, 2001
Chronicle Graphic



???E-mail John Wildermuth at jwildermuth@sfchronicle.com.

GRAPHIC: CHART (2): SEE END OF TEXT

LOAD-DATE: May 24, 2001

??????????????????????????????17 of 58 DOCUMENTS

???????????????????The Associated Press State & Local Wire

The materials in the AP file were compiled by The Associated Press. ?These
materials may not be republished without the express written consent of The
Associated Press.

???????????????????????May 24, 2001, Thursday, BC cycle

?????????????????????????????3:07 AM Eastern Time

SECTION: State and Regional

LENGTH: 431 words

HEADLINE: Davis proposal for more diesel power draws environmental criticism

DATELINE: LOS ANGELES

BODY:

??California would get a little power and a lot of pollution from a proposal
being considered by Gov. Gray Davis that would pay owners of backup generators
to produce electricity. 

??The proposal, one of several options the governor is considering, would pay
for diesel power - which at its dirtiest is 500 times more polluting than the
cleanest natural gas power plants - when electricity supplies are stretched.

??"If backup generators were to be used, it would only be as a last resort to
avoid blackouts," said Davis spokesman Roger Salazar. "Unfortunately, we are 
in
an emergency situation. Everything is on the table."

??California's persistent power shortage has led to rolling blackouts around
the state several times this year, with more anticipated when hot summer 
weather
prompts people to use air conditioning.

??If all of the state's backup generators ran full time, they would produce
about 425 tons of nitrogen dioxide per day. That's more than nine times the
pollution power plants produced on an average day in 1999, according to state
Air Resources Board data.

??And the state would get only about 550 megawatts of electricity - barely 1
percent of the state's peak power needs - from the backup generators. That 
would
be enough to power about 550,000 homes.

??"They could have a huge negative effect on air quality," said Ellen Garvey,
executive officer for the Bay Area Air Quality Management Agency. "It's one
thing to run these generators during blackouts and emergency conditions, but
using them for other purposes could be devastating."

??Business groups that support the proposal include the League of Food
Processors, the California Manufacturers and Technology Association and San
Diego Gas & Electric. 

??"These generators could go a long way to taking some demand off the electric
grid and putting some supply back into the power system," said Gino DiCaro,
spokesman for the manufacturers and technology association.

??Most of the state's 17,200 backup generators are small units that run on
diesel fuel and lack pollution controls. Some are rentals, and others can be
found at hospitals, office buildings, sewage treatment plants and university
labs.

??Unlike backup generators intended for home use, which are not regulated,
industrial-sized units are limited in the number of hours they can operate. 
But
since the state's power crunch began, regional air-quality regulators have
issued emergency rules allowing them to run more frequently.

??Diesel engines produce carcinogenic soot and oxides of nitrogen - a building
block of asthma-inducing smog.

LOAD-DATE: May 24, 2001