Please see the following articles:


Sac Bee, Thurs. 6/14:  Court dismisses suit alleging gasoline price-fixing

SD Union, Thurs. 6/14:  GOP vulnerability in California prompts Bush shift on 
power prices

SD Union, Thurs. 6/14:  House panel rejects Democratic plan for energy price 
caps

SD Union, Thurs. 6/14:  Plan would allow private energy companies to own grid 
rights

SD Union, Thurs. 6/14:  PUC to determine role in handling SoCal Edison deal 

SD Union, Thurs. 6/14:  Customers feel pain of energy surcharges

SD Union, Thurs. 6/14:  Chula Vista to get larger peak-use power plant 

SD Union, Thurs. 6/14:  Duke Energy drops warm-water request

LA Times, Thurs. 6/14:  Some try to con Edison 

LA Times, Thurs. 6/14:  Federal energy panel finding itself pushed and pulled 
toward change 

LA Times, Thurs. 6/14:  State objects to power pricing formula 

SF Chron, Thurs. 6/14:  Refineries may keep chugging in outages: PUC looks to 
grant blackout exemption 

SF Chron, Thurs. 6/14:  FERC set to extend power caps: Government sources say 
price controls will be round-the-clock

SF Chron, Thurs. 6/14:  Judge orders contract disclosures: State told to 
release edited versions of energy agreements tomorrow






Court dismisses suit alleging gasoline price-fixing


Updated: June 14, 2001 - 11:35 a.m. 
SAN FRANCISCO -- The California Supreme Court dismissed a class-action suit 
Thursday alleging major oil refineries colluded to gouge consumers for 
cleaner-burning gasoline. 

The unanimous court said the suit did not provide enough evidence to support 
allegations that nine major oil companies in California conspired to limit 
supply and fix prices. 

In ruling that the case cannot go to trial, Justice Stanley Mosk said that 
the 1996 suit presented evidence that the petroleum companies may have 
possessed the motive, opportunity and means to unlawfully conspire. 

"But that is all. That is not enough," Mosk wrote for the court. 

The suit alleged that the state's largest refiners decided to share 
confidential information and hold back on supplies of reformulated gasoline 
after the state required refiners to make gasoline that would not create as 
much pollution as previous formulas. 

The case was granted class action status in 1997. The following year, a San 
Diego County judge tossed out the case, siding with the oil companies who 
said evidence was insufficient to persuade a jury. 

Then, that judge, David Danielsen, reversed his own decision. The companies 
appealed and in January 2000, an appeals court concurred with the judge's 
initial decision. 

The oil companies sued were Atlantic Richfield Co., Chevron Corp., Mobile Oil 
Co., 76 Products Co., Shell Oil Co., Texaco Refining and Marketing Inc., 
Tosco Corp., and Ultramar Inc. 

The case is Aguilar v. Atlantic Richfield Co., S086738.

-- Associated Press 







GOP vulnerability in California prompts Bush shift on power prices 



By Finlay Lewis
COPLEY NEWS SERVICE 
June 14, 2001 
WASHINGTON ) A lengthening list of politically endangered California 
Republicans appears to have spurred the Bush administration into a retreat on 
the state's volatile electricity pricing issue. 
White House desire to keep Republican control of the U.S. House in next 
year's elections will be an unspoken but clear concern when the Federal 
Energy Regulatory Commission meets Monday to reconsider its pricing policy, 
according to a wide range of analysts who have studied the situation. 
The expected turnaround on the part of FERC and the White House is due at 
least partly to complaints from embattled California House Republicans that 
Democrats have gained the political high ground as voters come to believe 
that out-of-state energy companies are engaged in price gouging and 
profiteering. 
"Republicans have come to realize that the entire pricing structure here ... 
is a potential political killer," said Tony Quinn, a Sacramento political 
analyst with past ties to the GOP. 
After months of condemning price controls, the administration gave the green 
light to FERC to devise a plan to restrain wholesale electricity prices in 
California and 10 nearby states by pegging them to the costs of the least 
efficient producer in a given market. 
This approach has already been invoked in California in energy-supply 
emergencies. The plan before FERC would leave it in place during the summer 
months in California and much of the rest of the West regardless of energy 
availability. 
While far more generous to the industry than the price-cap formula being 
advanced by congressional Democrats and California Gov. Gray Davis, the 
pricing mechanism likely to be embraced by FERC represents a substantial 
retreat by the agency and the White House. Until now, both have insisted on 
giving free play to market forces except in emergencies. 
"The more savvy Republican leaders here have figured out that you can't go 
down in flames for an ideological position when your constituents are being 
hurt," said political scientist Sherry Bebitch Jeffe of Claremont Graduate 
University. 
With the GOP enjoying only an 11-vote margin over the Democrats in the House, 
Republican strategists in recent days have focused on assessments showing 
that a number of Republican-held seats in California could switch hands due, 
in large part, to soaring electricity prices. 
The list includes Reps. Doug Ose of Sacramento, author of the pricing plan 
now under consideration by FERC, and Rep. Steve Horn of Long Beach, a widely 
respected moderate. 
According to some analysts, others in jeopardy are Reps. Elton Gallegly of 
Simi Valley, Richard Pombo of Tracy, and Gary Miller of Diamond Bar. 
Quinn also argued that Rep. David Dreier of San Dimas, chairman of the 
powerful Rules Committee and a rising GOP star in the House, could face 
energy-related problems and that Rep. Mary Bono of searingly hot Palm Springs 
could find herself losing some ground in her otherwise safe GOP constituency. 
"(The California energy crisis) has all the earmarks of a classic attack 
issue," said John R. Pitney, a political scientist at Claremont-McKenna 
College. "You have a Republican administration headed by two people with 
connections to the oil industry, and you have a very visible problem and a 
solution that is easy and plausible ) (Democratic) price controls." 
Alarmed by these developments, House Majority Whip Tom DeLay of Texas this 
week launched a damage-control effort by assigning a team of Republicans to 
help counter Democratic attacks on the White House. The team's assignment 
includes daily floor speeches defending Bush's energy policies. 
The energy crisis is only the latest development in a trend that has 
increased the sense of Republican congressional vulnerability in California. 
Even before this spring's blackouts and stratospheric energy bills, long-term 
demographic shifts were tilting the state in a Democratic direction. 
Congressional redistricting also is expected to exact a toll on the 
Republican delegation. 
Compounding the party's troubles was the perception that Bush, having lost 
California handily to Democrat Al Gore last fall, had written off the state 
in terms of his expected re-election campaign in 2004. 
Then came the loss of Republican control of the U.S. Senate, a development 
that reminded GOP strategists of their tenuous position in the U.S. House. 
"The administration soon discovered that California is still populated by a 
large number of Republican congressmen who didn't appreciate the White 
House's stance on the problem," said Steve Smith, head of a think tank at 
Washington University in St. Louis that studies problems of politics and 
economics. 
Meanwhile, Democrats here appear to be betting that the pending FERC plan 
will solve neither California's energy pains nor the GOP's political 
problems. 
House Minority Leader Richard Gephardt told reporters on Thursday that the 
measure would amount to only a "kind of tweaking" of FERC's existing 
emergency pricing order for California ) an approach that he said has proven 
"ineffective, overly complicated, and loaded with loopholes." 
Gephardt added, "It still allows huge price gouging by the electric companies 
with regard to wholesale prices in California." 




House panel rejects Democratic plan for energy price caps 



By Alan Fram
ASSOCIATED PRESS 
June 14, 2001 
WASHINGTON ) House Republicans rejected a Democratic effort Thursday to 
impose federal price caps on electricity prices in the Western United States 
amid an intensifying partisan divide over energy. 
By a near party-line 34-27 vote, the House Appropriations Committee rejected 
a proposal by Rep. Nancy Pelosi, D-Calif., that would have required the 
Federal Energy Regulatory Commission to tightly limit electricity rates. 
"You've made your own bed in California," said Rep. Sonny Callahan, R-Ala., 
who chairs the panel's energy and water subcommittee. 
Pelosi's proposed cost-based caps, which would have expired in March 2003, 
would have been stricter than both the price restrictions that FERC ordered 
imposed in April and limits the agency plans to approve at a special meeting 
next Monday. 
Her proposal also would have allowed states to go to federal court to seek 
refunds for overcharges since June 2000. 
"I think Republicans don't know how much damage they did to themselves 
today," Pelosi told reporters afterward. "They've voted in favor of the 
gougers." 
In a subsequent interview, she said it was as if Republicans had been "lining 
up to drink Kool-Aid," a reference to the poisoned drink used in the 1978 
Jonestown mass suicide and murder in Guyana. 
Pelosi's amendment was among several energy proposals by Democrats that the 
GOP-controlled committee shot down as it approved a $6.5 billion measure 
providing extra money this fiscal year, mostly for the Pentagon. 
In other largely party-line votes, the panel defeated Democratic amendments 
that would have doubled the bill's money for energy assistance for the poor 
to $600 million; added $125 million for hydroelectricity improvements; and 
provided $350 million to support loans to improve the capacity of 
transmission grids. 
"It's pure demagoguery," House Majority Whip Tom DeLay, R-Texas, said in a 
brief interview regarding the Democratic amendments. "If Democrats had an 
energy policy, they'd have had one in the last eight years. They have no 
credibility on this issue whatsoever. They are responsible for the energy 
crunch more than anybody I know." 
Spotlighting the high political stakes, House Minority Leader Dick Gephardt, 
D-Mo., took the unusual step of issuing a written statement about the 
committee's energy votes. He said President Bush and Republicans are 
"committed to helping the Big Energy special interests" and accused them of 
obstruction. 
Republicans from California and other Western states voted with few 
exceptions against the Democratic energy proposals, underlining the degree to 
which the response to the region's energy crisis has become a partisan issue. 
Many in the GOP support Bush's emphasis on increasing energy production and 
argue that price caps will prompt supply shortages. 
"A lot of these are put there to try to save the governor's political 
donkey," Rep. Randy "Duke" Cunningham, R-Calif., said, speaking in an 
interview about the Democratic amendments. 
California Gov. Gray Davis, a Democrat, has repeatedly demanded that the 
federal government cap wholesale electricity prices. Bush opposes the idea. 
Rep. J.C. Watts of Oklahoma, chairman of the House Republican Conference, 
said Thursday at a natural gas industry luncheon, "Price caps do not address 
the core issues of high energy prices and volatility. ... They will lead to 
rationing and blackouts." 
During the debate over the price cap amendment, DeLay placed blame for the 
power crisis on California officials. 
"This was the result of over-government regulation responding to 
environmental extremism" and as a result limiting electricity supplies, he 
said. 
But Democrats accused the GOP of opposing action that could help suffering 
Californians. 
"If you think 'let them eat cake' is your party motto, be my guest," said 
Rep. David Obey, D-Wis. "I don't think the American people will think much of 
that." 
A subcommittee of the House Energy and Commerce Committee also has rejected a 
price cap proposal similar to Pelosi's. 
In other votes Thursday, the Appropriations panel rejected an amendment by 
Rep. Nita Lowey, D-N.Y., to provide $200 million to fight AIDS overseas. And 
it voted to prod the State Department to find unspent money it could use to 
help El Salvador rebuild from two devastating earthquakes that struck early 
this year. 
??

On the Net: House Appropriations Committee: www.house.gov/appropriations/ 
House members: www.house.gov/house/MemberWWW.html 
Federal Energy Regulation Commission: www.ferc.gov/ 




Plan would allow private energy companies to own grid rights 



ASSOCIATED PRESS 
June 14, 2001 
SACRAMENTO ) The federal government has endorsed a plan that calls for 
private energy companies to purchase the rights of a key piece of 
California's transmission grid. 
The plan would allow those private companies to control the flow of 
electricity and charge transmission fees to any agency or utility wanting to 
move power on the lines. 
The U.S. Department of Energy on Wednesday invited private energy companies 
to help pay for the expansion of the transmission grid known as Path 15 ) an 
85-mile stretch of high-tension wires in the Central Valley. The wires can 
move about 3,000 megawatts of power between Southern California and Silicon 
Valley and San Francisco. 
Pacific Gas & Electric owns the original lines and has been urged by state 
officials to expand the grid's capacity. 
The wires may become increasingly important this summer when rolling 
blackouts are expected. Long-term contracts recently signed by the state and 
power wholesalers are for electricity produced in Southern California but 
transported to Northern California through Path 15. 
Gov. Gray Davis has sought to outright purchase transmission grids owned by 
PG&E, Southern California Edison and San Diego Gas & Electric. 
Several power generators said Wednesday they didn't know whether they would 
pursue rights to the Path 15 grid. Expanding the grid will cost between $200 
and $300 million and take two years to complete. Companies have until July 12 
to express their interest to the federal government. 
One company based in Washington, D.C., has shown interest in Southern 
California Edison's grid. Trans-Elect executive vice president Robert L. 
Mitchell said he plans to send a letter next week to Edison chief John Bryson 
offering to buy the grid for $1.8 billion. 




PUC to determine role in handling SoCal Edison deal 



By Justin Pritchard
ASSOCIATED PRESS 
June 14, 2001 
SAN FRANCISCO ) California's top power regulators are expected to decide 
Thursday what role they should play in handling a deal where Southern 
California Edison would sell its power lines to the state in an effort to 
avoid bankruptcy. 
The five-member California Public Utilities Commission faces a lengthy 
agenda, but nothing will be more spotlighted than a series of proposals that 
would begin to clear the way for approval of a deal Gov. Gray Davis struck 
with Edison on April 9. 
But before the PUC will push through the deal, its members must vote on 
whether they have legal authority over it, said PUC President Loretta Lynch. 
Davis on Wednesday warned that time is growing short for legislative action. 
"I believe the patience of (Edison's) creditors is wearing very thin," he 
said. "I'm beginning to see the same signs as ... with PG&E" before that 
utility declared bankruptcy. 
Senate leader John Burton, D-San Francisco, said the Legislature and the 
public need to know exactly what is in the deal and would hold hearings on 
the it as soon as next week. 
Davis and Edison signed a "Memorandum of Understanding" on April 9. 
The commission plans to address several items in that MOU at the meeting 
Thursday, including a decision on delaying a review of how much Edison 
charges customers for power until 2003. 
On Wednesday, the PUC voted 5-0 to approve a version of a deal that Edison 
struck with smaller generators called "qualifying facilities." It should let 
these plants keep churning out power as they look to collect more than $1 
billion that PG&E and Edison owe them, Lynch said. 
Small generators account for about one-third of the state's daily power 
supply. But many powered down because Edison and now-bankrupt PG&E didn't pay 
for months of power they used earlier this year. 
The commission-approved plan offers stable rates for five years to generators 
using wind, solar, geothermal or other renewable sources. It also raises the 
rates the utilities must pay to gas-fired generators. 
Small generators have said they will suspend their lawsuits against Edison 
for 180 days if they receive back payments. Under the deal, Edison will pay 
at least 15 percent of what it owes to qualifying facilities. 
"If they pay back what they owe us, the lawsuits would be dismissed and the 
claims would be settled," said Jerry Bloom, a spokesman for the California 
Co-generation Council, which represents many small, natural gas-fired power 
generators. 
Wednesday's vote should also help California's power managers in their daily 
search for enough power to avert more rolling blackouts during the summer, 
Lynch said. 
She said that while the small generators could have received a higher rate 
for their power by breaking their contracts and selling electricity on the 
open market, the deal guarantees the state's utilities will buy the power. 
"It gives them stability," Lynch said. "Having the qualifying facilities on 
line this summer is so crucial." 
In March, the PUC ordered PG&E and Edison to pay qualifying facilities for 
power delivered starting in April. Since that cash began to flow, many small 
generators have kick-started their operations, adding much needed power to 
the grid. 
Davis called the PUC approval "a substantial move forward." 
But the qualifying facilities agreement the PUC approved Wednesday might fall 
apart if the Legislature doesn't approve a Davis' larger rescue plan to buy 
Edison's transmission lines. 
Lynch said she hopes to resolve most outstanding matters on the Edison 
agreement at a PUC meeting scheduled for June 28. She called the 60-day time 
frame Davis gave to resolve the issue "arbitrary" and said the PUC is pushing 
ahead at "an amazingly quick pace." 
Lynch said, however, that while Edison officials have pressured regulators to 
approve the deal, they have not fully cooperated during PUC hearings. 
She said that while Edison has not cooperated with PUC requests for 
information during hearings on the deal, the utility has pressured the PUC to 
rubber stamp its agreement with Davis. 
Edison officials objected to Lynch's assertion that the utility was less than 
forthcoming, saying any insinuation that it has not fully cooperated with all 
of the PUC's requests and investigations is wrong and offensive. 
??
) 
On the Net: 
www.cpuc.ca.gov/ 




Customers feel pain of energy surcharges 



By Frank Green?
UNION-TRIBUNE STAFF WRITER 
June 14, 2001 
Roland Hogue is getting nickel-and-dimed to death by the energy crisis. 
It seems that everywhere the retired General Dynamics worker shops these days 
-- be it the diner, cleaners or florist -- he's forced to cough up a 
surcharge to help the business defray its soaring electricity costs. 
Such incremental charges are separate, of course, from his home utility bill, 
which has more than doubled in the last year. 
"It's getting ridiculous," said Hogue, who was waiting yesterday afternoon in 
front of the Pacific Theatres at Grossmont Center to buy a ticket -- priced 
with an extra 25-cent surcharge advertised on a nearby sign. "I'm on a fixed 
income. I need every penny I can save." 
California residents have for months endured rolling blackouts and spiking 
electricity rates. Now they're increasingly paying extra energy fees at the 
corner shop. And many aren't taking the drubbing in stride. 
You can see the increased checks at Domino's -- where customers calling for 
pizza delivery are warned in a recorded message that a 93-cent energy 
surcharge will be tacked onto their bill. Or at parks like the San Diego Zoo 
($1.50 extra per ticket) and hotels such as the Hyatt Regency in La Jolla (a 
$3.32 per-room surcharge) and the Sheraton Harbor Island ($2.50). 
"We didn't have a choice because our gas and electric bill has gone from 
$4,000 a month to $10,000 a month," Bruce Ross, the manager at Boulevard 
Cleaners & Laundry, said about the 50-cent utility surcharge the business 
recently added to each customer invoice. "We could have folded our costs into 
the overall bill, but we wanted our customers to know where the money was 
going." 
The fee has been costly to Boulevard. Several customers miffed by the charge 
"have picked up their clothes and stormed out for good," Ross said. 
A few companies have been forced to rescind their energy surcharge after 
negative reactions from customers. 
Taco Bell, for instance, this week reluctantly withdrew the 15-cent energy 
surcharge it imposed at some of its Southern California outlets on Friday 
after it was inundated with consumer complaints. 
Taco Bell, which did not specify how many stores issued the surcharges, said 
it had added them to offset power cost increases. 
"Some people are getting nasty," one local Domino's clerk said about the 
company's surcharge. "They cuss at you and hang up the phone." 
San Diego-based Jack in the Box is among companies that have opted to raise 
prices instead of imposing surcharges. 
Primarily because of higher energy costs, the firm hiked the prices of its 
Jumbo Jacks and tacos by 1.8 percent in the first quarter, and is about to 
institute another round of price increases that will be "lower than before," 
spokeswoman Karen Bachmann said. 
Increase temporary
Analysts say many businesses are choosing the surcharge over raising prices 
because consumers understand that energy costs are soaring. The surcharge 
also implies that the fee will be temporary. 
"Raising prices in this very competitive environment has been tough to do for 
the last five years," said George Whalin, president of Retail Management 
Consultants in San Marcos. "By adding a surcharge, retailers can package it, 
and soften the blow." 
Meanwhile, consumers in other parts of the country likewise are beginning to 
feel the pinch of energy surcharges, especially at hotel chains. 
Hotel officials say the surcharges are a temporary response to the higher 
costs of natural gas and electricity. 
Hilton Hotels Corp., Wyndham International, Bass Hotels & Resorts Inc., 
Starwood Hotels & Resorts Worldwide Inc. and Marriott International have 
tacked on the surcharges to guests' hotel bills in, among other places, 
Boston, Chicago, Dallas and Miami. 
The highest fees have been in New York City, where Marriott International 
recently was charging $5 per room per night in all of its Manhattan hotels. 
Charles Porter, general manager of the Sheraton Steamboat Resort in Steamboat 
Springs, Colo., has so far resisted implementing a surcharge despite a 97 
percent jump in natural gas prices. 
Porter said many large groups book their rooms months and even years in 
advance and changing the contract could lead to cancellations. 
"We're reacting to competitive conditions that change on a daily basis," 
Porter said. 
Costs jumped
Porter said his gas and electric bills for January, February and March 
totaled $166,000, compared with $92,000 during the same period last year. 
Figures for April and May are not available because the hotel is closed those 
months. 
"You just don't budget for that," Porter said. 
Not only do hotels buy electricity from natural gas-powered generating 
plants, they also use the fuel for heating, cooking and laundering tons of 
linens every day. 
Most chains have taken conservation measures, including installing 
low-wattage light bulbs, adjusting thermostats and cutting down on exterior 
lighting. Some suggest to guests who are staying multiple nights that they 
not have their towels and bed linens changed each day. 
"Right now the costs are so astronomical that we have to take other steps as 
well," and add the surcharge, said Kathy Shepard, a spokeswoman for Hilton. 
So far, hotel officials report no widespread complaints. 
"There's very little I could do -- that's what they're charging me for," said 
Bill Bowmans of Denver, who paid a surcharge at a Residence Inn in 
Sacramento. Bowmans travels at least three times a month as part of his job 
as a network systems engineer with Avaya Communication. 
The Associated Press contributed to this report. 
Frank Green's e-mail address is frank.green@uniontrib.com. His phone number 
is (619) 293-1233. 
? 


Chula Vista to get larger peak-use power plant 



By Amy Oakes 
UNION-TRIBUNE STAFF WRITER 
June 14, 2001 
The California Energy Commission yesterday approved plans for a 
62.4-megawatt, peak-use power plant to be built in Chula Vista, despite the 
city's objections. 
Ramco Inc. will begin construction of the natural gas-fired combustion 
turbine generator by June 25 at the company's site at 3497 Main St., said 
Dale Mesple, a Ramco consultant. The location already houses a 44-megawatt, 
peak-use plant. The new facility must be operational by Sept. 30, 2001, 
according to Gov. Gray Davis' emergency procedure for siting plants. 
This is the 10th license granted for plants that will only be used during 
peak periods when power supplies are low, according to the governor's Web 
site. 
Chula Vista, having already approved plans for the company's first peak-use 
plant in September, opposed the additional facility, citing increases in 
noise and air pollution. 
The commission, in response, directed Ramco to comply with the special 
land-use conditions placed on the 44-megawatt plant. The larger plant must 
conform to all applicable local, state and federal land-use requirements, 
including general plan policies, zoning regulations and local development 
standards. The commission also required Ramco to extend a planned sound wall 
completely around the facility. 
Mesple said it will not be a problem to extend the wall, which was going to 
be built on the southern side of the 3.52-acre site and to follow the 
federal, state and local regulations applied to the first plant. 
"I'm meeting all of the same requirements and qualifications as I would have 
if I had applied through the city," Mesple said. 
Councilwoman Patty Davis said it is good that Ramco will have to follow 
previous regulations, such as a 60-decibel noise level threshhold, but she 
still feels the additional plant should not be built here. 
"Really, I feel like we've done our fair share," Davis said referring to the 
approval of the first peak-use plant and the South Bay Power Plant. "But, 
with the governor's orders, we don't really have any choice." 
The governor in February gave the commission authority to fast-track peak-use 
plants that could be operating by Sept. 30. Under his plan, proposals would 
be exempt from the California Environmental Quality Act review process. 
Mesple has said the company had not planned to expand its Chula Vista 
facility until the governor's order that reduced a normally 18-to 24-month 
process to 21 days. 
Ramco submitted a complete application with the commission May 21. The 
commission held a public hearing and site tour eight days later. 
The city held its own public hearing June 1 for residents who live near the 
Ramco plant. The City Council, upset over losing its land-use authority, sent 
a letter outlining its concerns to the commission. 
? 

Duke Energy drops warm-water request 



By Terry Rodgers 
UNION-TRIBUNE STAFF WRITER 
June 14, 2001 
Duke Energy, which operates the South Bay Power Plant, yesterday withdrew its 
request to increase the temperature of its sea-water discharge into San Diego 
Bay. 
The firm's action averted a confrontation with environmentalists and 
government scientists, who warned that the hotter water could ultimately harm 
endangered birds and marine life, including green sea turtles. 
Appearing before the San Diego Regional Water Quality Board meeting at Chula 
Vista City Hall, Duke Energy executives said they were dropping their request 
because of a condition proposed by the board's staff. 
The staff was willing to allow a higher temperature as long as Duke Energy 
would agree to pay to fix any environmental problems arising from the 
warm-water discharge. 
That condition would require Duke Energy to write "a potential blank check" 
by making it responsible for unknown mitigation costs, said company spokesman 
Thomas C. Williams. "No business could be expected to put itself through that 
kind of uncertainty." 
The South Bay plant, which generates enough power for 700,000 homes, is 
allowed to discharge coolant water that is 15 degrees warmer, over a 24-hour 
average, than the natural temperature of the bay. 
The company had asked to increase the limit to 23 degrees. 
Duke executives said their request was made solely to comply with an 
executive order by Gov. Gray Davis urging power companies to generate as much 
electricity as possible to minimize the likelihood of rolling blackouts this 
summer. 
Raising the temperature limits of the plant's coolant water would have 
enabled it to produce more power during off-peak hours. 
The plant already operates at maximum levels during peak hours when energy is 
most in demand, and that won't change, the company said. 
Laura Hunter of the Environmental Health Coalition said: "We shouldn't be 
experimenting with the bay's ecology in such a reckless way. Duke hasn't made 
an adequate case that they need to do this." 
? 


Some Try to Con Edison 
Electricity: Utilities are clamping down on power theft, dispatching sleuths 
to examine suspicious meters. 

By MARLA DICKERSON and STUART SILVERSTEIN, Times Staff Writers 

?????In the back of a dingy duplex in South-Central Los Angeles, utility 
investigator John Foegen pulls two battered electric meters from their wall 
sockets and smiles.
?????"Well looky here," he said with satisfaction, pointing a gloved finger 
at two thick strands of red wire jammed into the guts of the utility panel. 
Someone has helped himself to free electricity, using a hot-wiring technique 
that skirts the meter.




L.A. Department of Water and Power investigator John Foegen examines a meter 
with altered wiring. U.S. utilities lost nearly $2 billion to swindlers last 
year, according to the Edison Electric Institute.
KEN LUBAS / Los Angeles Times

?????Just how much these particular freeloaders have siphoned will take a 
little sleuthing by Foegen, who works for the Los Angeles Department of Water 
and Power. In the meantime, he carefully extracts the wire "shunts" for 
evidence, cuts the power, locks the meters and seals the utility panel to 
discourage more tampering.
?????Juice jackers. Meter beaters. Kilowatt crooks. 
?????Call them what you will, but electricity thieves are helping themselves 
to billions of dollars in power every year--illicit activity that's expected 
to grow as rates climb nationwide. The problem is particularly worrisome in 
California, where prices are skyrocketing and many residents hail from 
countries where filching electricity is a time-honored tradition. Using tools 
as crude as kitchen knives or as cutting edge as light sensors, energy 
grifters are rigging meters, tapping into underground power mains, 
piggybacking on their neighbors' lines, even registering their pets as 
customers to game the billing system.
?????Utilities are fighting back with squads of theft investigators such as 
Foegen, who use everything from fiber-optic scopes and computer analysis to 
good old-fashioned shoe leather. They are battling to protect profits as well 
as public safety; sloppy voltage smugglers have been known to burn down homes 
and electrocute themselves.
?????Discouraging electricity cons isn't easy. Even when caught, scofflaws 
are rarely prosecuted. With rates rising and anger at power companies 
growing, the industry is bracing for a long, hot summer.
?????"The higher the rates, the more the incentive," said Randy Shipley, head 
of an Oregon firm that makes high-tech devices to snare energy bandits. 
"Utilities are getting more sophisticated. But so are the bad guys."
?????People have been pinching electricity since the light bulb was invented. 
Theft is rampant in developing nations where creaky government utilities are 
no match for the resourceful. In India's state of Delhi for example, nearly 
half of the available power is being pilfered, according to a recent study.




White wire has been rigged to bypass meter. Voltage smugglers have been known 
to cause devastating fires with makeshift work.
KEN LUBAS / Los Angeles Times

?????By comparison, the Edison Electric Institute today will report that U.S. 
utilities lost nearly $2 billion to swindlers last year, or less than 1% of 
industry revenue. But some energy consultants say the trade group's estimates 
traditionally have been too low. They peg the losses at well beyond $5 
billion a year.
?????The dirty little secret, they say, is that U.S. power companies for 
decades had scant incentive to pursue crooks. Electricity was cheap and 
companies routinely won rate hikes to cover their costs, burying theft in 
catch-all categories such as "line losses," according to Lee Cordner, a 
former Pacific Gas & Electric manager and now an energy consultant in San 
Rafael, Calif.
?????"They just charge everyone else more" to make up for it, Cordner said.
?????Now that generation costs are soaring, regulators and consumer watchdogs 
are expected to take a harder look at such hidden expenses. Deregulation is 
likewise expected to give power companies incentive to crack down on theft to 
boost profitability.
?????U.S. utilities have formed theft-fighting associations to share 
detection tips and notify each other when shady characters leave one service 
territory for another. Most large utilities now have "revenue protection" 
departments whose sole mission is to ferret out cheats.

?????Utilities Step Up Investigations
?????PG&E, Southern California Edison and San Diego Gas & Electric all 
declined to talk about their crime-fighting efforts--perhaps worried about 
giving customers ideas in the midst of huge rate hikes. But published reports 
indicate that PG&E, for example, more than doubled its revenue protection 
staff in the mid-1990s, putting 48 investigators on the streets after power 
diversion soared to about $100 million a year.
?????DWP is looking to beef up its investigation staff, which totals six 
people for the utility's 1.4 million meters. In 1998 the unit tracked down 
nearly 1,000 scofflaws, billing them more than $3.2 million for stolen power, 
up from $135,000 in 1988.
?????So who's stealing electricity? You name it, said Cleve Freeman, a 
Southern California Gas Co. executive and chairman of the International 
Utilities Revenue Protection Assn. He says perpetrators typically can be 
classified as "the needy and the greedy."
?????They include the working poor, the unemployed and retirees for whom 
electricity is becoming increasing unaffordable. Mobsters and marijuana 
farmers hijack electricity to avoid suspiciously large utility bills. But 
legitimate businesses and rich people do it too.
?????The DWP once nabbed an L.A. stockbroker who siphoned $9,000 worth of 
juice to heat his pool and cool his luxury home. The man pleaded ignorance 
and coughed up the money, according to Wayne Wohler, an assistant supervisor 
with DWP's revenue security unit. But he said the high-quality job was 
obviously the work of a professional "fixer" whose handiwork turned up in 
other homes in the tony neighborhood.
?????Contractors and electricians are among the wiliest culprits because they 
possess the skills to pilfer power relatively safely, then cover their 
tracks. Unscrupulous builders cut their costs on construction sites by 
illegally diverting power from nearby transmission lines. Former Midwest 
utility employee Patrick Keener recalls an Iowa contractor who swiped enough 
juice to construct an entire subdivision before he was discovered.
?????"He built 36 homes off one meter," said Keener, now the customer and 
energy services manager for the city of Redding in Northern California. "He 
got busted big time, but he was a darn good electrician."
?????Power police say the most successful thieves don't go for the home run, 
because nothing grabs their attention faster than a meter that reads zero. 
Wohler said he's seen clever bandits rig their meters with light sensors and 
other devices to create on-off switches that allow them to run their meters 
part of the time to avoid suspicion.
?????Those who aren't mechanically inclined can always try to game the 
billing system with false names. A utility manager who pleaded for anonymity 
said his company got burned by a customer with the moniker "U. Ben Hadd." 
Others simply sign up their pets for service.
?????"How do you collect from Fido Smith?" wondered John Rilling, an energy 
theft consultant in Norcross, Ga.

?????Checking Out Tips Can Be Hazardous
?????Going head-to-head with meter beaters is a daily adventure for power 
cops such as Foegen of the DWP, who prowls Los Angeles armed with dog 
repellent and the addresses of suspected crooks. Most tips come from 
gimlet-eyed meter readers trained to spot a broken meter lock or suspicious 
wiring. Others come from computer analysis of changes in customers' usage 
patterns. But feuding family members and nosy neighbors are valuable 
informants as well. Like most utilities, DWP has a hotline people can use to 
rat on suspected cheats.
?????"We get the best stuff from ex-spouses," said Foegen, cruising past 
liquor stores and brightly painted taco stands on Washington Boulevard in a 
white, electric-powered SUV.
?????His territory spans some of the poorest sections of the city, including 
Pico-Union and South-Central Los Angeles. Most power thefts here are hack 
jobs--cutlery jammed into meter dials, jumper cables hooked to overhead 
lines, multiple dwellings wired to a single connection--which are easy to 
spot but potentially lethal for power cops and hackers alike.
?????Foegen said he has defused jury-rigged connections so dangerous "I could 
feel the hair standing up on the back of my neck." DWP's Wohler recalls at 
least three electrocutions and "countless injuries" to juice jackers and 
their neighbors over his 25-year career. Earlier this year, shoddy wiring 
from an illegal hookup sparked an early-morning row house fire in South 
Philadelphia that killed a woman and destroyed three homes.
?????Electrocution and fires aren't the only perils. Suspected thieves jumped 
Foegen in a back alley in February, breaking his nose after he dismantled 
their illegal connection. The 52-year-old was back on the job within a few 
weeks undeterred. His one regret?
?????"They stole my tools," he groused.
?????While there's no substitute for a sharp eye and insulated pliers, 
utilities increasingly are employing high-tech equipment to keep up with 
criminals.
?????Shipley's Portland, Ore.-based H.J. Arnett Industries manufactures the 
White Knight, a $3,600 "tap detector" that sends an impulse through electric 
wires to pinpoint power diversions. Then there's the auditing "check meter," 
which records discrepancies between actual power usage and what's showing up 
on a customer's meter. Utilities place the $1,500 device on nearby utility 
poles and disguise them to look like a transformers or telephone equipment. 
But alert crooks are getting wise to the decoys.
?????"We've had a few returned to us with bullet holes," Shipley said.
?????Massachusetts-based Optim Inc. is applying the same fiber-optic 
technology used in medical proctoscopes to probe electrical conduit for 
irregularities. Power cops are eavesdropping on Internet chat rooms looking 
for juice-jacking braggarts. Meanwhile, investigators at the nonprofit 
Electric Power Research Institute in Palo Alto are devising computer defenses 
to block hackers from tapping into utilities' computers to lower their bills.
?????Utilities also are installing automated "smart" meters that can be read 
remotely and can alert them when someone has tampered with the device. Given 
the high price of the technology, which can cost up to three times more than 
conventional meters, automated equipment is being phased in slowly. Thus for 
the foreseeable future, utilities are stuck in the unenviable position of 
letting the foxes guard the chicken coop. 
?????"It's the only industry I know where the cash register . . . is on the 
customer's property," said Howard Dean, a former PG&E revenue protection 
specialist who's now an energy theft consultant in Hawaii.

?????Some Say Energy Theft Is Rarely Punished
?????He and others complain that energy theft is punished too rarely and too 
lightly to deter wrongdoers. It's a felony in California, punishable by jail 
time and heavy fines. In reality, power companies usually settle for 
restitution, utility officials admit. 
?????Still, they occasionally pursue small-time, serial offenders just to 
send a message. Take the Rev. Ray Ector Sr., for example. The Baptist 
minister pleaded no contest last year to five misdemeanor counts of stealing 
water and electricity from the DWP, agreeing to perform 300 hours of 
community service and pay about $2,500 in restitution.
?????Ector now says he's too broke to pay and he remains unrepentant. A 
gregarious 71-year-old who sports an "I Love Jesus" baseball cap, he says he 
was forced to filch utilities to provide for the recovering drug addicts who 
reside in his homeless shelter.
?????"The Lord helps those who help themselves," said Ector, pastor of Little 
Fellowship Missionary Baptist Church.
?????But Foegen said that spiritual dictum doesn't include helping oneself to 
free power. He said Ector's "homeless shelter" is really just rental property 
and that some wacky wiring has been spotted at his church as well.
?????Preacher or no preacher, "I'm keeping an eye on him," Foegen said.




Federal Energy Panel Finding Itself Pushed and Pulled Toward Change 
Power: New members take a more activist role on the electricity crisis, even 
as political pressure mounts. 

By RICARDO ALONSO-ZALDIVAR, Times Staff Writer 

?????WASHINGTON--The Federal Energy Regulatory Commission is clearly heeding 
external politics as it prepares for a larger role in California's power 
crisis, but the biggest catalyst for change may be within its walls.
?????On the outside, a new Democrat-controlled Senate and powerful 
Republicans in the House have been clamoring for more assertive intervention.
?????But inside, two pragmatists recently appointed by President Bush to 
FERC's five-member governing board have already compromised the laissez-faire 
course that Chairman Curtis L. Hebert Jr. had set for the small, insular 
agency.
?????FERC's new power crisis policy, to be unveiled at a special board 
meeting Monday, is expected to move closer to the fixed price caps sought by 
California leaders. FERC's version would allow electricity prices in the West 
to move up and down significantly but with upper limits.
?????However, the plan was still a subject of intense internal debate 
Thursday at FERC. Even after its expected approval by the FERC board, it must 
survive additional rounds of political and technical vetting by other key 
players in the power crisis.
?????As California has already learned, tinkering with power markets is no 
easy task, and today's solutions can swiftly turn into tomorrow's unintended 
consequences.
?????For Hebert, 38, a proud Mississippian and avid free-market advocate, 
growing impatience with FERC on Capitol Hill is not the only problem. He 
risks losing a working majority on his own commission if the two new members 
ally themselves with dissenter William L. Massey in favor of stronger 
intervention. That would isolate and embarrass Hebert, who is already in a 
difficult spot because of persistent rumors that Bush will replace him as 
chairman with newly appointed Commissioner Patrick H. Wood III.
?????"What we see here is someone who is a strong noninterventionist 
Republican who has found himself in a position where he has to abandon that 
to some extent," said James J. Hoecker, immediate past FERC chairman in the 
Clinton administration. "Chairman Hebert . . . doesn't have to be a 
weatherman to know which way the wind is blowing."
?????FERC, which functions like a national public utility commission, is 
charged by law with assuring "just and reasonable" rates for wholesale 
electricity. Last year, the commission made a formal finding that prices in 
California were neither. But the modest "price mitigation" measures it 
adopted were widely criticized as mere nibbling around the edges.
?????Not so, says Hebert. "I don't think there is any doubt that the 
commission's plan is working and is bringing down prices," he told reporters 
this week. He condemned what he called "the ideology of price caps."
?????The two new FERC members, Wood and Nora M. Brownell, have not offered 
ringing endorsements of FERC's actions to date. During Senate confirmation 
hearings last month, they indicated they favored closer, tighter scrutiny of 
industry. Wood, past chairman of the Texas Public Utility Commission and a 
confidant of the president, signaled in interviews that a return to 
regulation would be preferable to dysfunctional markets that deprive 
consumers of the benefits of competition.
?????"No tool is off the table, even if it's a bad tool," Wood told the PBS 
program "Frontline."
?????The two newcomers sounded more like Massey, the commission's lone 
in-house critic, than like Hebert, the market purist. In April, when the 
commission first adopted price limits, Massey pointed out flaws that FERC now 
seems poised to address.
?????For one, he said, the limits only applied during power emergencies. "The 
evidence is persuasive that the problem [of unfair prices] exists 24 hours a 
day, seven days a week," Massey said. "I have no confidence that prices will 
be just and reasonable during all hours."
?????Massey's view was voiced by many others as Wood prepared to assume his 
new job on the panel. Wood told The Times in an interview that he heard 
complaints from Republicans as well as Democrats.
?????Prominent among the Republicans demanding more aggressive action by FERC 
is Rep. Doug Ose of Sacramento, author of a bill calling for round-the-clock 
price limits throughout the West.
?????Massey was no longer a voice in the wilderness. 
?????In fact, how he votes and what he says Monday will be closely watched on 
Capitol Hill and in California, particularly by Democrats looking for an 
early signal of the plan's credibility. "His viewpoint is considered very 
highly," said Howard Gantman, a spokesman for Sen. Dianne Feinstein 
(D-Calif.).
?????As Massey's stock rose, Hebert's portfolio was in growing jeopardy.
?????The Democratic changeover in the Senate improved the prospects of price 
cap legislation introduced by Feinstein and Sen. Gordon Smith (R-Ore.). Fixed 
price caps are anathema to Bush as well as Hebert but may prove politically 
unstoppable if California electricity costs spiral out of control this summer.
?????"The debate has changed from doing nothing to mitigation to doing 
something punitive," said one FERC official who requested anonymity. 
?????Running out of maneuvering room--and perhaps time as chairman--Hebert 
decided to make a bold move. On Monday, he announced that he would convene a 
special commission meeting for next Monday to strengthen FERC's "price 
mitigation" plan for California and the West.
?????"Price mitigation appears to be a way to avoid using the words 'price 
cap' or 'cost-based rate,' which some members of the Bush administration find 
objectionable," Feinstein said. "Frankly, I don't care what they call it as 
long as they get the job done."
?????FERC sources said the options being discussed include round-the-clock 
price limits throughout the West, requiring all generators in the region to 
sell available power during emergencies, establishing a framework for large 
power users to sell back electricity at peak times and tightening rules on 
energy traders.
?????On Tuesday, leading House Republicans sent a letter to Hebert endorsing 
Ose's price-limit approach, giving Hebert some cover on the political right.
?????Even if a political compromise can be worked out within FERC, more 
difficulties are bound to arise. Thorny technical problems must be addressed. 
For example: Generators have complained that FERC's current price limits 
force them to sell some power below cost; currently, no framework exists for 
setting price limits throughout the Western region, and FERC has no authority 
over large public generators such as the Bonneville Power Administration.
?????Former FERC Chairman Hoecker said Hebert's gradual metamorphosis 
resembles that of California Gov. Gray Davis, who at first swore he would not 
accept rate increases for consumers.
?????"It's kind of creeping reform," Hoecker said. "FERC didn't do the most 
aggressive thing first--just like the governor of California. Everybody is 
sidling into it, incrementally, a little bit at a time."




State Objects to Power Pricing Formula 
Energy: Air quality officials say generators can boost profits by increasing 
pollution.
By GARY POLAKOVIC and MIGUEL BUSTILLO, Times Staff Writers 
?????SACRAMENTO--California air quality officials charged on Thursday that a 
federal order to contain electricity prices is vulnerable to manipulation and 
creates powerful incentives for energy companies to increase pollution to 
boost profits.
?????The order by the Federal Energy Regulatory Commission, which took effect 
May 29, places a limit on how much generators can charge when the state's 
electricity reserves are depleted. The price is based in part on the maximum 
cost incurred by any of them to generate a megawatt of electricity.
?????State clean-air officials object to that pricing formula. In addition to 
fuel and labor costs, power companies can include prices paid for air 
pollution credits, as well as the penalties and fees assessed for producing 
excessive emissions from power plants running to keep the lights on.
?????Air quality officials are concerned that may entice companies to 
manipulate the price of the credits in order to inflate their overall base 
costs, thereby raising the profit bar for everyone. The issue is crucial, 
because FERC is scheduled Monday to consider expanding the price limits to 
all time periods.
?????"Nobody else that we can figure out would benefit from this" but power 
generators, said Barbara Baird, legal counsel for the South Coast Air Quality 
Management District. "The power companies would all be able to recover that 
cost, regardless of whether they actually incurred that cost." 
?????Ironically, power plants no longer are required to buy and sell credits 
to exceed the standards after Gov. Gray Davis granted them special relief 
earlier this year. Nonetheless, power companies, among others, continue to 
actively trade the credits on the open market. That practice, air quality 
officials say, is driving up the costs of the credits and making it harder 
for other industries to buy them.
?????Because of increased electricity generation, the price of pollution 
credits traded in the Los Angeles region has risen astronomically in the past 
year. Credits that traded for about 25 cents per pound of pollution a few 
years ago now fetch roughly $40 per pound.
?????Mike Scheible, deputy executive officer for the state Air Resources 
Board, says the federal order also creates incentives for generators to use 
high-polluting equipment, which is more expensive to operate, in order to 
boost the amount they can charge for electricity when rate limits affect 
pricing.
?????"It's unfair to make California ratepayers pay more for electricity to 
mitigate their emissions. It doesn't pass the straight-face test for being 
fair," Scheible said.
?????Since California power prices began to escalate last year, third parties 
have bought pollution credits and then sold them back to the power companies 
at a steep profit, air quality managers told state senators at a hearing 
Thursday. 
?????Carol Coy, deputy executive officer at the AQMD, said one company, 
Phoenix-based Pinnacle West, reported a $412,500 air emissions credit 
purchase on March 12, then sold the same credits March 29 for $1.1 million.
?????Company spokesman Alan Bunnell said the transaction was perfectly legal 
and not dissimilar from other trades that routinely occur in the emissions 
trading market.
?????But state Sen. Joe Dunn (D-Santa Ana), chairman of the Senate select 
committee inquiring into the matter, said wholesalers often blame the cost of 
the credits in part for the high price of electricity. He said he is 
concerned that there has been "a laundering of NOx [nitrogen oxide] credits" 
that's driving up the cost of both the credits and electricity. Nitrogen 
oxide is a smog-forming gas caused by fuel combustion.
?????"It actually would be beneficial for energy companies to have those 
[smog credit] costs go higher," said state Sen. Debra Bowen (D-Marina del 
Rey).
?????Air quality officials aired their objections on Thursday before Dunn's 
committee, which is investigating whether companies manipulated California 
power prices for greater profits after the state deregulated electricity in 
1996. In recent weeks, it has begun to subpoena documents from various energy 
companies and utilities.
?????The federal order regulating prices has been widely criticized in 
California as full of loopholes that will allow power producers to continue 
making exorbitant profits. During official power emergencies spurred by 
shortages of electricity, it requires generators to charge prices based on a 
complex formula that includes pollution mitigation costs and the price of 
natural gas.
?????Air quality officials have also filed objections with FERC. The federal 
regulator has been reluctant to interfere in the energy crisis and has 
continued to defend the free market as a solution to the state's power 
problems, but it is under increasing pressure to act.
?????The state Senate committee, known as the Select Committee to Investigate 
Price Manipulation of the Wholesale Energy Market, was also expected to hear 
testimony Thursday from Southern California Edison. However, in a turn of 
events that surprised and angered lawmakers, the utility refused to send a 
witness. It also sent a letter stating it would not comply with a formal 
request to produce documents. 
?????"At present, our company's resources are devoted to survival," a company 
lawyer wrote, adding that "our law department is stretched to the limit."


Refineries may keep chugging in outages 
PUC looks to grant blackout exemption 
Kelly St. John, Chronicle Staff Writer
Thursday, June 14, 2001 
,2001 San Francisco Chronicle 
URL: 
http://www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2001/06/14/M
N58088.DTL&type=news 
Demands by the state's oil refineries for protection from rolling blackouts 
should be met, a member of the state Public Utilities Commission said 
yesterday in releasing a draft decision to grant the exemption. 
While the recommendation from PUC Commissioner Carl Wood still faces a full 
hearing by the five-member PUC later this month, oil industry officials 
consider it a promising development in their intense lobbying campaign to 
keep refineries running. 
"This is a very good step," said Scott Folwarkow, spokesman for the Valero 
refinery in Benicia, which has no backup generators to use in blackouts. "We 
do play an essential role, and (the refinery) needs to be protected." 
The industry has repeatedly issued warnings that gasoline prices would soar 
if refineries were hit by rolling power blackouts. Power interruptions of 
just an hour can send refineries out of commission for days, shrinking gas 
supplies and leading to higher prices. 
Earlier this month, San Francisco-based Chevron Corp. warned that it would 
reduce gasoline production at its two California refineries unless it was 
exempted from power outages. 
Gov. Gray Davis has also urged the PUC to designate petroleum refineries as 
"essential-use customers" who are exempt from blackouts because their 
services are needed for public health and safety. 
A Davis spokesman declined comment on the draft decision last night. 
Skilled-nursing facilities and water agencies have joined oil refineries in 
intense lobbying for the "essential-use" designation. But the PUC has a 
limited number of exemptions it can offer to businesses. 
By the agency's own standard, at least 40 percent of the electrical load must 
be exposed to blackouts. Today, half of the load is already exempt, leaving 
just a 10 percent margin to divide between facilities. 
Yesterday, a PUC administrative law judge issued a companion ruling asking 
energy producers, the California Energy Commission and electric utilities to 
provide additional information on fossil fuel production. 
The PUC will consider that information, along with public comment, when it 
votes on Wood's draft decision June 28. 
"While the economic impacts caused by disruption of fossil fuel production 
are potentially devastating," Wood said, "the commission must balance these 
economic impacts against the potential impacts on public health and safety 
asserted by applicants in our other exemption process." 
Last January, the Bay Area got a glimpse of what can arise when refineries 
are hit by power outages. 
Pacific Gas and Electric Co. interrupted power for Kinder Morgan Energy 
Partners, a pipeline company servicing local refineries, for four consecutive 
days. The curtailments threatened to cause a fuel shortage at San Francisco 
International Airport before politicians -- including Mayor Willie Brown -- 
intervened. 
E-mail Kelly St. John at kstjohn@sfchronicle.com. 
,2001 San Francisco Chronicle ? Page?A - 17


FERC set to extend power caps 
Government sources say price controls will be round-the-clock 
Carolyn Lochhead, Chronicle Washington Bureau
Thursday, June 14, 2001 
,2001 San Francisco Chronicle 
URL: 
http://www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2001/06/14/M
N215916.DTL&type=news 
Washington -- Federal regulators are poised to impose round-the-clock price 
restrictions on wholesale electricity sold to California, a move short of 
what Democrats have urged but far stronger than what the Bush administration 
has for months indicated it was willing to do. 
The Federal Energy Regulatory Commission is expected Monday to extend its 
April 26 order -- which limits prices generators can charge during power 
emergencies -- to apply at all times and across the entire Western region, 
sources inside the agency confirmed yesterday. 
FERC also is expected to increase market monitoring, expand refunds for 
overcharges by generators during power emergencies and order generators to 
sell into the Western grid during power emergencies, among other things. 
FERC Commissioner William Massey, a Democratic appointee who strongly 
dissented from the April order because he believed it was too narrow, would 
not comment on the expected action other than to say he had been urging 
greater intervention relentlessly for some time. 
Although power prices are plunging for the first time since the crisis began, 
Massey said it was "too soon to declare victory." 
"We don't know what's going to happen in the next hour or tomorrow or the 
next month," Massey said. "We are certain this is a market short of power 
plants. Supply and demand are not in reasonable equilibrium, and, when that 
is true, prices can soar at the drop of a hat and the wealth transfer can be 
exorbitant." 
Massey said that until supply and demand came into "reasonable balance" in 
California, which he expects to occur in 18 months to two years as new power 
plants come on line, "there has got to be 24-hours-a-day, seven-days-a-week 
price mitigation in effect to protect consumers, period." 
The expected FERC action coincides with rising political pressure on the 
agency from Democrats and increasing numbers of Republicans to intervene more 
forcefully in California's power market despite fierce resistance to price 
controls from the Bush administration. 
REINFORCEMENTS
That pressure ratcheted up sharply when Democrats assumed control of the 
Senate and began scheduling legislation to order FERC to impose price caps. 
The agency's move also coincides with the arrival of two new Bush appointees, 
Patrick Wood III and Nora Mead Brownell, who are widely viewed as more 
receptive to intervention than the current chairman, Curt Hebert, a 
Republican appointed by former President Bill Clinton and named chairman by 
President Bush. 
The agency's April order, which took effect May 26, puts a ceiling on prices 
pegged to the least efficient power plant. It has been applied during two 
power emergencies so far. Experts are divided on how much, if any, effect the 
order has contributed to the recent sharp drop in prices. Many factors, from 
cool weather to increased conservation to the return of several nuclear 
generators that were down for maintenance, are also at work. 
Rep. Doug Ose, a Sacramento Republican who first pushed FERC to expand its 
April order, said yesterday he believed the expected new action would provide 
"a pretty good middle ground" between Democrats' call for a specific maximum 
price -- or cap -- the generators can charge and the Bush administration's 
opposition to price controls. 
Rep. Darryl Issa, an Oceanside Republican, added that the agency's action was 
part of "a pattern of escalating engagement" by the administration and "a 
more activist FERC." 
'AS LONG AS IT WORKS' 
Sen. Dianne Feinstein said the action expected Monday was likely to fall 
short of what she wanted, although she called it "another step forward." 
While FERC is likely to avoid using the words "price caps" to describe its 
plan (it called its original order "price mitigation"), Feinstein said, "I 
don't care what you call it as long as it works." 
Feinstein, testifying yesterday at a Government Affairs Committee hearing on 
energy, said she believed the new order would still permit price manipulation 
because the caps are set at the price charged by the least- efficient -- 
therefore highest cost and most polluting -- generators. 
Feinstein's bill to force FERC to impose price caps until 2003 is scheduled 
for committee action this month. She wants firm price caps based on each 
generator's costs, much like the regulatory regime in place before 
California's electricity restructuring. 
Some economists argue, however, that the type of price controls FERC is 
expected to use more closely correspond to the price that a functioning 
market would produce. 
Price caps have become the nexus of the entire Washington debate over 
California's electricity crisis. The Bush administration contends that price 
controls would make blackouts worse by discouraging electricity sales and 
investment, while Democrats, led by Feinstein and California Gov. Gray Davis, 
contend that generators are deliberately withholding power to jack up prices. 
OBJECTIONS TO CONTROLS WITHER
Republicans on Capitol Hill, many of whom face re-election next year, have 
shown less resistance to price controls, and that resistance melted even more 
yesterday after a letter from several House Republicans urged FERC to 
intervene more forcefully. 
Still, most of the Republicans now urging greater federal regulation of 
electricity markets hail from California. Republicans from outside the state 
yesterday blasted Davis for mishandling the crisis and blaming the Bush 
administration for not helping. 
"The efforts to place the blame on the current administration or hire $30, 
000 a month consultants to spin the issue . . . do not help," said Sen. Fred 
Thompson, R-Tenn., referring to two high-priced political aides Davis has 
hired. 
"Some suggest temporary price controls through 2003," Thompson said. "While 
that may get us through the next election, temporary price controls have 
rarely stayed temporary." 
Sen. Larry Craig, an Idaho Republican, argued there were a host of reasons 
for California's blackouts, from a drought in the Northwest to a shortage of 
power plant construction across the West. 
"Leave it to politicians running scared and looking for scapegoats to 
obfuscate this otherwise obvious reality," Craig said. "Put simply and 
bluntly, 
this reality does not suit the political needs of Gov. Davis and his 
compatriots." 
Energy at a glance 
Energy-related developments yesterday: 
-- PUC TELLS EDISON TO PAY 15% OF BILL OWED TO SMALL FIRMS 
Small companies that need cash to continue generating power will be paid 15 
percent of their back bills by Southern California Edison under an order 
passed yesterday by the state Public Utilities Commission. 
The measure is one of the remedies designed to ensure that 680 small power 
plants stick with their contracts to sell electricity to California's three 
cash-strapped utilities. Pacific Gas and Electric Co. has already been 
ordered by a bankruptcy judge to pay 20 percent of its back debt to its small 
generators. San Diego Gas and Electric Co. had no outstanding bills. 
The commission also opened the door to higher rates for small suppliers that 
can prove their operating costs are not being covered by a state payment 
formula. Others can opt for a new fixed-rate contract. All can earn higher 
rates if they boost their power output. 
DAVIS SAYS PRICES FALLING ON SPOT MARKET
Gov. Gray Davis released new figures yesterday showing that the state has 
been able to secure lower prices on the spot market for electricity. 
Davis released figures that show the average price for power on the day- 
ahead spot market was $275 per megawatt hour Jan. 17-31. The price was $236 
in February, $212 in March, $262 in April, $243 in May and $121 so far in 
June. 
Davis credits the state's long-term contracts with shrinking the amount of 
power that has to purchased on the spot market. -- Chronicle staff reports 
E-mail Carolyn Lochhead at clochhead@sfchronicle.com. 
,2001 San Francisco Chronicle ? Page?A - 1 


Judge orders contract disclosures 
State told to release edited versions of energy agreements tomorrow 
Bob Egelko, Chronicle Staff Writer
Thursday, June 14, 2001 
,2001 San Francisco Chronicle 
URL: 
http://www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2001/06/14/M
N183457.DTL&type=news 
A day after Gov. Gray Davis agreed to release previously withheld details of 
the state's long-term energy contracts, his attorney asked for a two-week 
delay. But a judge ordered the state to disclose edited versions of the 
contracts tomorrow. 
San Diego Superior Court Judge Linda Quinn scheduled another hearing for June 
27 to decide whether more details of the long-term deals should be disclosed 
and whether short-term energy contracts should be released over Davis' 
opposition. 
Since the state started buying power for customers of California's reeling 
utilities in January, Davis has refused to make the contracts public, saying 
disclosure would reveal the state's negotiating strategies, give power 
sellers an advantage and drive prices up. In court documents, the governor's 
lawyers said the information should remain secret until January 2003, when 
the state's current power purchasing authority expires. 
News organizations, including The Chronicle, and eight Republican legislators 
sued for disclosure, saying the documents were public records that would let 
Californians evaluate the spending of billions of tax dollars. 
On Tuesday, Davis reversed course and said he was willing to make public 
immediately the details of $42.8 billion in long-term contracts with 18 
suppliers if the judge released the state from confidentiality agreements in 
the contracts. The governor said that market conditions had improved and that 
enough contracts had been signed that disclosure would not seriously damage 
the state's bargaining position. 
He gave reporters a few more details yesterday, acknowledging that the state 
was locked into some long-term contracts at prices above those now available 
on the spot market. 
"We were paying a lot more in January and February than we are now on the 
spot market because we have dramatically shrunk the spot market, providing 
reliable power for California at affordable rates," Davis said. 
In court yesterday, however, Deputy Attorney General Timothy Muscat sought to 
delay contract disclosure two weeks to give the energy sellers -- who are not 
parties to the lawsuit -- time to comment. 
But the judge said the state's failure to keep contracting companies abreast 
of the suit did not justify delaying disclosure. Quinn ordered the long-term 
contracts released Friday after the state deletes details that would reveal 
suppliers' trade secrets and other proprietary information. 
Muscat said the state would edit out several categories of information he 
described as technical, including energy delivery points and data on 
suppliers' efficiency in converting natural gas to electricity. News media 
lawyer Alonzo Wickers IV protested any deletions. 
"Keeping those so-called technical issues secret thwarts the public's 
understanding of the contracts," he said. 
Quinn said she would consider objections to the deletions at the June 27 
hearing. Muscat, the state's lawyer, contended secrecy was essential for 
deal- making in the volatile short-term market. 
"We are heading into a hot, long summer," he said. "If we have to reveal our 
negotiation strategy . . . we are going to have blackouts." 
Tell us what you think -- What are your suggestions for saving energy? Send 
your best tips to Energy Desk, San Francisco Chronicle, 901 Mission St., San 
Francisco, CA 94103; or put your ideas in an energy-efficient e-mail to 
energysaver@sfchronicle.com. 
Correspondent Valerie Alvord contributed to this report from San Diego. / 
E-mail Bob Egelko at begelko@sfchronicle.com. 
,2001 San Francisco Chronicle ? Page?A - 17