Please see the following articles:

Sac Bee, Fri, 7/13: Lawmakers vow a vote on Edison
Sac Bee, Fri, 7/13: No outcry to ease clean-air process
Sac Bee, Fri, 7/13: State lawmakers lobby for refund on energy purchases
Sac Bee, Fri, 7/13: Energy conflicts revealed 
SD Union, Thurs, 7/12: Judge says California owed 'hundreds of millions of 
dollars' ) not billions
SD Union, Thurs, 7/12: Southern California gas fights FERC over routine 
decision that may cost millions
LA Times, Fri, 7/13: Options Debated in Edison Rescue
LA Times, Fri, 7/13: Developer Pulls Plug on Power Plant in Chula Vista
LA Times, Fri, 7/13: Some State Energy Consultants Own Generators' Stock
LA Times, Fri, 7/13: Plan Uses Public in Refund Demand
SF Chron, Fri, 7/13: 2 sides face off at EPA hearing on regulating energy 
plant emissions 
SF Chron, Fri, 7/13: 7 California advisers own energy stocks 
Secretary of state calls for investigation 
SF Chron, Fri, 7/13: PG&E customers get a payback for conservation 
Nearly one-third earn rebates for cutting electricity use 20% 
SF Chron, Fri, 7/13: Judge spells out opposition to power refund claim 
Opinion says $8.9 billion in alleged overcharges for electricity 'cannot be 
substantiated'
SF Chron, Fri, 7/13: News briefs on the California power crisis
SF Chron, Fri, 7/13: Wholesale prices drop by largest amount in 28 months
Mercury News, Fri, 7/13: Power rebate generates shockingly high interest 
Mercury News, Fri, 7/13: Settlement talks unsuccessful 
OC Register, Fri, 7/13: Rate hike may hit businesses 
Wash. Post, Fri, 7/13: Judge Rejects Power Refunds For California 
WSJ, Fri, 7/13: Mediator Questions California 's Claims To Power Refunds
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 Lawmakers vow a vote on Edison 
By Kevin Yamamura and Emily Bazar
Bee Capitol Bureau
(Published July 13, 2001) 
Facing a looming deadline and pressure from the governor, legislative leaders 
said Thursday they will push for a vote next week on a revised plan to save 
Southern California Edison from bankruptcy court. 
Under competing proposals from each house of the state Legislature, large 
businesses would pay for the majority of Edison's $3.5 billion debt and power 
generators would be pressed to accept less than they are owed for past energy 
purchases. 
A vote next week would come three months after Gov. Gray Davis first struck 
an agreement with Edison. His original arrangement would have the state 
purchase the company's transmission lines for $2.76 billion and use a portion 
of consumer rates to help pay off Edison's debt. 
But lawmakers roundly criticized the Democratic governor's agreement in 
subsequent weeks and floated alternatives soon afterward. Lawmakers 
acknowledged that the latest alternatives are still under negotiation. 
The governor's agreement with Edison has an Aug. 15 deadline, which falls 
toward the end of the Legislature's summer recess. Because the monthlong 
break is scheduled to begin next Friday, lawmakers plan to vote before then. 
The Assembly could vote on a proposal as early as Saturday. 
Davis on Tuesday threatened to call a special session to keep legislators in 
Sacramento if they do not approve the Edison plan before the break. But 
Senate President Pro Tem John Burton, D-San Francisco, challenged that 
threat, saying, "Only the Legislature can keep the Legislature here." 
Senate Democrats are studying a plan by Sen. Byron Sher, D-Palo Alto, that 
would have large businesses pay off most of Edison's debt and force 
generators to reduce by 30 percent the amount they are owed by the utility. 
That would leave about $1.2 billion in debt, for which Edison itself would be 
responsible without relying on ratepayers, Sher said. 
His plan also gives the state the option to purchase Edison's transmission 
lines for book value -- less than half the price Davis offered to pay. 
Burton said his house will vote on a version of Sher's proposal next week. 
Burton said he prefers Sher's version because large businesses and industrial 
users, not consumers or small businesses, would be responsible for paying the 
majority of Edison's debt. He reiterated that businesses were among the most 
ardent advocates for electricity deregulation. 
"We're trying to do something legislatively that protects the people and 
isn't a bailout for the utility," Burton said. "I don't think it's fair that 
small users pay for any of (the debt)." 
While the Senate toils over Sher's proposals, members of the Assembly are 
drafting their own version of a plan. Their version, too, would separate 
users into large and small categories, according to Paul Hefner, a spokesman 
for Assembly Speaker Robert Hertzberg, D-Sherman Oaks. 
Under the plan, electricity for small users -- some residential and 
small-business customers -- would come from the cheapest sources -- Edison's 
own power plants and renewable energy sources known as "qualifying 
facilities." Larger users would pay more because they would obtain power from 
the long-term contracts that have been signed by the state Department of 
Water Resources. 
Ultimately, as the amount of electricity supplied by the long-term contracts 
declines over the course of several years and the overall supply increases, 
costs to large businesses are expected to decline as they buy more power on 
the open market, presumably at lower prices. 
The plan envisions a portion of business and residential rates dedicated to 
reducing Edison's debt for at least the first year, with businesses picking 
up more of the burden in future years. Like the Senate plan, the state would 
have an option to buy transmission lines. 

The Bee's Kevin Yamamura can be reached at (916) 326-5542 or 
kyamamura@sacbee.com <mailto:kyamamura@sacbee.com>. 




No outcry to ease clean-air process
By Chris Bowman
Bee Staff Writer
(Published July 13, 2001) 
The Bush administration did not receive much sympathy from California at a 
hearing Thursday about its concerns that some environmental rules make it 
hard for industry to meet demands for electricity and gasoline. 
No owners of California power plants testified in Sacramento at the second of 
four public hearings examining whether clean air rules unnecessarily impeded 
energy production. 
President Bush ordered the 90-day review by the U.S. Environmental Protection 
Agency in May as part of his national energy policy. 
As for California's gasoline producers, a few representatives called for 
streamlining and clarifying the EPA rules, but not relaxing them. 
At issue are federal Clean Air Act regulations collectively called "new 
source review" that apply to businesses looking to build or expand 
refineries, power plants and other sites that generate air pollution. The 
rules call for installation of the best-available pollution-control hardware, 
plus smog-cutting measures that more than offset the added air emissions. 
California's smog officials saw the lack of industry protest Thursday as 
evidence that rules do not need major fixing. 
"The system is working," Peter Venturini, a state Air Resources Board 
official, said at the hearing, which was attended mostly by industry 
representatives and environmentalists. 
Venturini said smog-forming emissions from businesses in the state have 
declined 50 percent the past 20 years despite a 40 percent increase in 
population and commensurate industry growth. 
"That tells us we can have a healthy economy and protect our environment," he 
said. 
That balance has been put to the test during the state's energy crisis. 
Venturini testified to EPA officials Thursday that California's fast-tracked 
system of permitting new power plants within 30 days shows that new-source 
rules can be flexed to meet a sudden thirst for more energy. 
Several industry representatives said the Clinton administration had 
interpreted the rules in confusing ways that inhibited even routine plant 
maintenance and upgrades, some of which improved efficiency and cut emissions 
of pollutants. 
Worse, they said, state and local regulators of the rules would impose their 
own, often conflicting, interpretations of the rules. 
"A system in which different agencies reach different conclusions from the 
same set of facts is no system at all," said Shannon Broome, spokeswoman for 
the Air Permitting Forum, a national coalition of manufacturers seeking to 
streamline the rules. 
Environmentalists argued the Bush administration was exploiting the 
California energy crisis to roll back environmental regulations at the 
expense of public health. They said any relaxation would result in thousands 
of premature deaths of heart and respiratory patients. 
Priscilla High of the Care for God's Creation Committee of the Roman Catholic 
Diocese of Sacramento reminded EPA officials that emissions from power plants 
and automobiles trap the Earth's heat, contributing to climate change that 
alters "the natural world as we know it." 

The Bee's Chris Bowman can be reached at (916) 321-1069 or cbowman@sacbee.com 
<mailto:cbowman@sacbee.com>. 




State lawmakers lobby for refund on energy purchases
By Dale Kasler
Bee Staff Writer
(Published July 13, 2001) 
Thwarted in their quest for an $8.9 billion refund from wholesale power 
suppliers, state officials began applying political pressure Thursday on 
federal regulators who will set refund levels. 
A month after pressure from Congress prompted the Federal Energy Regulatory 
Commission to accept price controls on electricity, House Democrats from 
California urged FERC to support Gov. Gray Davis' refund demands. 
"The congressional delegation is doing all it can," Rep. Sam Farr, head of 
the state's Democratic delegation, told reporters during a conference call 
with Davis. Farr called $8.9 billion a reasonable refund. 
Recommending a more lenient standard for calculating refunds, the Democrats 
said in a letter that FERC should order refunds for power sales dating back 
to May 1, 2000. FERC, however, has ruled previously that it cut off the 
refund period at Oct. 2. 
The state says about one-third of the alleged overcharges, or nearly $3 
billion, took place between May and October. 
Meanwhile, a FERC administrative law judge reiterated his belief that the 
refunds would total "hundreds of millions of dollars, probably more than a 
billion dollars," but less than the $8.9 billion California says it was 
overcharged. 
Judge Curtis Wagner, who oversaw two weeks of negotiations between California 
and the suppliers, said "the amount claimed by the State of California has 
not and cannot be substantiated." In a report to FERC commissioners, he 
repeated his earlier comment that the state owes more to the suppliers for 
unpaid power bills than the suppliers owe the state for overcharges. 
On Thursday, Wagner formally recommended that FERC hold a public hearing to 
calculate the overcharges. 
In setting the guidelines for figuring out refunds, Wagner said the 
calculations should be tied to production costs, a guideline urged by 
California's negotiators. But the judge included a guideline likely to favor 
the sellers: For sales taking place after Jan. 5, 2001, the sellers can add 
10 percent to their cost calculations as a risk premium. 
That was the date Pacific Gas and Electric Co. and Southern California Edison 
were placed on junk bond status by Wall Street credit-rating agencies, making 
sellers reluctant to deliver power to the two utilities. The state stepped in 
two weeks later to buy power for PG&E and Edison. 
Davis, speaking to reporters before Wagner's recommendation, said the judge's 
cost formulas would help California prove his case. "The number comes up 
close to $8.9 billion," he said. 
But the governor, who has threatened to sue FERC if he didn't get $8.9 
billion, suggested he'll need political help from Congress to get his way 
with FERC. 
It is widely believed that political pressure made FERC abandon its 
free-market orientation last month and place price controls on wholesale 
electricity prices throughout the West. Davis credited "a concerted effort by 
Democrats in Congress, accompanied by a few good Republicans," with getting 
FERC to change its mind. 

The Bee's Dale Kasler can be reached at (916) 321-1066 or dkasler@sacbee.com 
<mailto:dkasler@sacbee.com>. 



Energy conflicts revealed 
By Amy Chance
Bee Political Editor
(Published July 13, 2001) 
Several state energy traders now working to buy electricity on ratepayers' 
behalf own stock in at least one energy generator, conflict-of-interest forms 
released Thursday show. 
Despite Davis administration claims to the contrary, many energy consultants 
who went to work for the state earlier this year didn't file the statements 
until Thursday afternoon. 
Secretary of State Bill Jones, a potential Republican candidate for governor, 
had charged at a Wednesday news conference that the Davis administration had 
neglected its responsibility to report any potential conflicts. 
"We're very concerned that these documents were not available for public 
review throughout the time that energy decisions were being made in the early 
stages of this crisis," said Alfie Charles, assistant secretary of state for 
communications. "It's disturbing that the governor's office lied about the 
existence of these documents earlier this week." 
Charles said the content of the reports is of even greater concern because 
they show that a number of the employees hold stock in companies selling 
power to the state. 
Gov. Gray Davis' press secretary, Steven Maviglio, said Wednesday that all 
consultants required to file the statement had done so or would do so within 
the required time period. But he acknowledged a day later that most of the 
reports had not been filed until Thursday. 
He said administration lawyers were investigating any possible conflicts. 
"If there's anything inappropriate, individuals will be dealt with," he said. 
One energy trader reported holding stock in Enron Corp. Several "energy 
schedulers" reported owning stock in Calpine, another power generator, 
including one who reported holdings valued between $100,001 and $1 million. 
Jones said the Democratic governor should have known such financial interests 
were unacceptable. 
"Clearly, if you have any type of asset involvement ... you have a potential 
conflict," he said. "We've spent $43 billion (on electricity) and now we're 
sitting here with the people who did the purchasing having a conflict." 

The Bee's Amy Chance can be reached at (916) 326-5535 or achance@sacbee.com 
<mailto:achance@sacbee.com>. 



Judge says California owed 'hundreds of millions of dollars' ) not billions  


\
objattph 
By Jennifer Coleman ASSOCIATED PRESS  July 12, 2001  SACRAMENTO ) An 
administrative law judge mediating talks between the state of California and 
energy companies says the state is likely owed "hundreds of millions of 
dollars" in refunds, much less than the $8.9 billion the state wants.  Judge 
Curtis L. Wagner Jr., in a recommendation released Thursday, said that while 
there are "vast sums" due for overcharges, California utilities, grid 
managers and the state agency purchasing power owe generators even more.  
Gov. Gray Davis and California officials who attended the 15-day talks held 
out for $8.9 billion in refunds, but Wagner said that amount "has not and 
cannot be substantiated.  "That very large refunds are due is clear," Wagner 
wrote, likely amounting to "hundreds of million of dollars, probably more 
than a billion dollars in an aggregate sum."  Davis said he hoped the Federal 
Energy Regulatory Commission would reject the recommendation.  "Californians 
have, by and large, gotten a raw deal from FERC during the past year," he 
said in a statement. "Now the day of reckoning for the new FERC has come. I 
would like to believe the commission, with two new commissioners, will be 
more sensitive to California consumers and order all the refunds that are 
due."  U.S. Sen. Barbara Boxer, D-Calif., said the recommendation "undermines 
the consumer protections that FERC is supposed to safeguard by law."  The 
differences between what the state wants and what the sellers believe they 
owe should be decided in a "trial-type, evidentiary hearing" that should be 
held in 60 days, Wagner said.  The judge recommended a method for calculating 
refunds back to October. California's estimate is based on figures from May 
1, 2000.  Peter Navarro, a University of California, Irvine economist who 
works on energy issues, called the recommendation "insulting" to California.  
The refund order should reach back until at least July, he said, when energy 
prices had spiraled to record levels and utilities were accruing billions of 
dollars in debts.  "Setting it arbitrarily from October keeps billions and 
billions of dollars more in refunds from the state of California," he said.  
In calculating costs, the judge recommends using the "heat rate" for the 
least efficient plant that sold power into the California market on each day. 
That plant's costs to produce power will be the basis for setting a benchmark 
prices that day.  Navarro said that's unfair to California and basing refunds 
on each individual plant's costs would be the best way to calculate what was 
overcharged.  "By choosing that methodology, the judge limits the ability of 
California to recover what's really owed to it," Navarro said. "It reduces 
the total judgment by as much as 80 percent."  Officials with Reliant Energy, 
which participated in the negotiations, were still reviewing the order, but 
Melissa Kinch, a company spokeswoman, said they were "hopeful that with the 
formula, all the correct data will come out."  Wagner said California hasn't 
provided information he requested about the state's long-term contracts. 
Further compounding the calculations, he said he has yet to receive 
information from the California Department of Water Resources, the utilities 
and the Independent System Operator listing amounts they believe they owe to 
generators. 



Southern California gas fights FERC over routine decision that may cost 
millions  


\
objattph 
By Joe Cantlupe COPLEY NEWS SERVICE  July 12, 2001  WASHINGTON ) A 
little-noticed decision by federal energy regulators last year is forcing a 
San Diego gas company to spend up to $100 million more for its deliveries, 
with some of that cost expected to be passed on to consumers.  The decision 
by the Federal Energy Regulatory Commission (FERC) was already controversial 
because critics contend it favored a Texas natural gas pipeline company now 
accused of manipulating California's power markets.  As a result, Southern 
California Gas ) a division of Sempra Energy ) is preparing to fight the 
Federal Energy Regulatory Commission in court over control over deliveries on 
a key natural gas pipeline.  The pipeline in question is an interconnection 
known as a "delivery point" at the Colorado River near Topock, Ariz.  Despite 
objections from California officials and SoCal Gas, federal regulators last 
year cut by nearly two-thirds SoCal Gas's natural gas deliveries from Topock, 
according to FERC records.  Instead, the federal agency allowed other 
shippers to make most of the remaining deliveries at the Topock connection, a 
key pipeline for access into Southern California. The decision forced SoCal 
Gas to tap into more expensive natural gas basins in the Southwest, and take 
other more costly and indirect pipeline routes into San Diego.  FERC "has 
severely limited the ability of SoCal Gas to use its reserved pipeline 
capacity to access cheaper gas," said Marcel Hawiger of The Utility Reform 
Network, the consumer watchdog group based in San Francisco.  SoCal Gas 
serves 18 million households and small businesses in more than 23,000 square 
miles of southern and central California. But two-thirds of its service area 
include 1,500 large industrial and electrical generators, such as San Diego 
Gas & Electric Co.  Natural gas powers most of the electrical generators in 
California.  SoCal Gas estimated a $50 million to $100 million price tag ) at 
minimum ) to comply with the regulators' decision.  "It's complicated and 
expensive," said Lad Lorenz, director of capacity and operational planning 
for Southern California Gas. Lorenz said SoCalGas is evaluating the financial 
fallout and possible impact on consumers.  SoCal Gas is preparing to 
challenge the FERC ruling with the U.S. Court of Appeals in Washington.  FERC 
said it was prompted to parcel out deliveries among gas shippers on SoCal 
Gas's Topock pipeline connection after receiving complaints about one of the 
nation's largest pipeline companies, El Paso Corp. of Houston.  El Paso owns 
two of the five major interstate pipelines that export natural gas to 
California, and it has four major delivery points in the vicinity of Topock, 
where it transfers gas to other systems, including SoCal Gas. Nearly half of 
California's natural gas imports come from the San Juan and Permian basins in 
the Southwest.  SoCalGas and a number of energy companies said they had been 
complaining for years that El Paso was "overselling" deliveries to gas 
shippers on its pipelines, records show.  Industry experts compared the El 
Paso tactic to an airline overbooking passengers on flights. The result was 
chaotic scheduling and skyrocketing expenses for energy companies that 
reported losing millions of dollars, according to several industry officials 
and documents filed with FERC.  Trying for solutions, FERC initially 
attempted to let the gas shipping companies sort out the problems themselves. 
That effort failed, records show.  In October, 2000, FERC determined that El 
Paso's actions were "unjust and unreasonable." FERC officials, speaking on 
the condition of anonymity, said the agency sought an equitable solution to 
the problem by divvying up the delivery capacity to dozens of gas shippers 
that had been controlled by SoCal Gas at the Topock delivery point.  The 
regulators also defended their legal position, saying that SoCal Gas did not 
have the authority to control the flow of natural gas at the Topock delivery 
point, despite long-term contracts. FERC commissioners have not commented on 
the case.  SoCal Gas officials insist that FERC's solution punished the San 
Diego utility, not El Paso Corp. Some industry observers contend that FERC 
botched its oversight of El Paso, which is facing unrelated allegations of 
market manipulation.  "FERC allowed El Paso to divvy up the space at the 
California border in such a way so as to benefit marketers and shippers, the 
gas middlemen, to the detriment of the utility (SoCal Gas), which has to ship 
gas to residential customers in Southern California," said Hawiger of the 
watchdog group TURN.  California public utilities officials had other 
concerns, saying in documents filed with FERC that the decision made state 
consumers "unwitting victims of El Paso's overselling practice."  Moreover, 
state officials wrote, El Paso has reaped a "significant transfer of wealth" 
by its actions. Officials did not provide details.  Earlier this year, 
California officials filed separate, unrelated allegations against El Paso, 
charging that the Texas company improperly withheld natural gas from the 
state to drive up prices.  California officials contend El Paso overcharged 
consumers by $3.8 billion. El Paso denies the allegations, which are being 
reviewed by an administrative law judge.  Ultimately, FERC will decide 
whether El Paso should be disciplined once again. 



THE ENERGY CRISIS
Options Debated in Edison Rescue
Energy: Legislature is still sharply split over Davis' plan. Some want to let 
the utility fall into bankruptcy.
MIGUEL BUSTILLO and NANCY VOGELS
TIMES STAFF WRITER

July 13 2001

SACRAMENTO -- A week before its annual summer recess, the California 
Legislature remains deeply divided over Gov. Gray Davis' plan to rescue 
Southern California Edison from financial ruin--and a growing number of 
lawmakers are proposing to let the state's second largest utility fall into 
bankruptcy.

Convinced that Davis' plan is political suicide, leading Democrats in the 
Assembly and Senate on Thursday advanced slimmed-down alternatives to save 
Edison.

"The fact of the matter is that we just have to act," said Assembly Speaker 
Bob Hertzberg (D-Sherman Oaks), who introduced an alternative plan to rescue 
Edison Thursday afternoon and scheduled hearings on it throughout the 
weekend. At issue are competing priorities with important ramifications. 
Advocates of the rescue say it is needed to keep the utility solvent and 
prevent California from descending further into its long-running energy 
crisis. Critics say it is politically impossible to sell a bailout for the 
utility and argue that bankruptcy may be a better solution.

In recent days, those critics have appeared to be gaining ground. Lawmakers 
conceded Thursday that none of the counterproposals to Davis' bailout plan 
appears to have sufficient support to clear both houses--and none has the 
blessing of the utility, which contends that only the original Davis version 
would make it credit-worthy.

In fact, some lawmakers and lobbyists working on the Edison deal contend the 
sudden legislative push is a political exercise designed to deflect criticism 
and provide cover in case the company goes under.

California is spending billions to buy about a third of the electricity 
needed to serve the state because its two largest utilities, Edison and 
Pacific Gas & Electric, are too burdened with debt to do so. That dilemma can 
end only when the utilities are able to resume their role as procurers of 
power.

PG&E opted to take itself into Bankruptcy Court in April rather than wait for 
a political solution to its financial problem, but Edison reached a sweeping 
deal with Davis later that month. That plan has languished in the Legislature 
ever since.

The agreement calls for California to purchase Edison's power transmission 
grid for $2.76 billion. In turn, the company would use the money to retire 
some of the $3.5 billion in debt it racked up between May 2000 and January 
2001, when it bought billions of dollars' worth of electricity in the 
wholesale power market but could not recover those costs from customers 
protected by a state utility rate freeze.

As a result of the state assistance, Edison would resume buying electricity 
for the 11 million people it serves in January 2003. If the Legislature does 
not approve the deal, Davis argues, the state will be left in the business of 
buying that power for far longer.

But angry consumer groups are threatening to derail any rescue deal with an 
initiative campaign, calling such proposals massive government bailouts. And 
some leery lawmakers are convinced that Bankruptcy Court would provide a 
better forum for resolving Edison's unwieldy problem.

"Tell me why bankruptcy is any worse than any other proposal," said state 
Sen. Mike Machado (D-Linden), echoing a view he said was shared by many of 
his colleagues.

"PG&E," he added, "seems to be doing quite well."

In recent weeks, said state Sen. Ross Johnson (R-Irvine), he has received a 
series of letters from constituents with a penny attached--the amount they 
said they were willing to contribute to a rescue of Edison.

"PG&E declared bankruptcy months ago," Johnson said, "and contrary to 
prevailing notions, the world did not come to an end."

The tentative rescue deal Davis reached with Edison allows the utility to 
back out of the agreement if the Legislature does not approve it by Aug. 
15--a deadline lawmakers will almost certainly miss unless they strike a deal 
before they recess.

Edison Officials Voice Optimism

Edison officials remain optimistic, however, that lawmakers will soon fashion 
an agreement. Davis threatened this week to haul legislators into a special 
session on Edison's woes later this month if they fail to forge a compromise, 
a tactic that encouraged representatives of the utility.

"We're feeling better about the likelihood of having this be resolved in 
time," said Edison spokesman Brian Bennett.

The Edison deal is among many interrelated facets of Davis' efforts to end 
the energy crisis and escape with a working electricity market in California. 
As such, it is a complicated proposal.

Indeed, even some of the basics are hard to discern. For one thing, the 
continuing debate in Washington over whether California is owed billions in 
refunds for overcharges by power generators makes it difficult for lawmakers 
even to be sure how big Edison's debt truly is.

California leaders had hoped a mediator would find common ground between the 
state and energy companies, but those talks broke down earlier this month. 
The refund dispute now moves to the Federal Energy Regulatory Commission--and 
possibly to the courts, where it could take years to resolve.

"Now we have to act, not knowing what the outcome of that process will be," 
said Assemblyman Fred Keeley (D-Boulder Creek), one of the legislators 
working to craft an Edison deal.

Then there is the $43 billion in long-term power contracts that Davis signed 
with energy companies this year in hopes of stabilizing supplies for years to 
come.

Many lawmakers are convinced that those contracts, which are to be paid off 
over the next 15 years by utility consumers, will leave less money for the 
utilities to regain their financial footing. That would probably force the 
state to raise electric rates again in coming months.

That, in turn, would make it more politically difficult for lawmakers to 
approve the Edison deal, which calls for utility ratepayers to retire the 
company's $3.5-billion under-collection through a special surcharge on their 
bills.

"One of the major problems is those long-term contracts," said Assemblyman 
Keith Richman (R-Northridge), who is leading the GOP's efforts to cut an 
Edison deal in the Assembly. "These contracts are going to burden the 
ratepayers for generations, and appear to be a major impediment to a solution 
with Edison."

Moreover, many lawmakers want to ensure as part of the Edison deal that at 
least the largest business consumers maintain the right to shop around for 
the cheapest power providers--one of the main selling points of California's 
1996 experiment in electricity deregulation.

While businesses have been demanding the so-called direct access, lawmakers 
and some consumer groups have voiced concern. They say droves of businesses 
will flee the utilities for better deals than the governor's long-term 
contracts provide--leaving residential customers in the lurch.

Amid all these obstacles, a team of Senate Democrats has been huddling with 
representatives of the Davis administration for the last two days, working on 
a new version of the Edison agreement.

A draft being discussed Thursday evening would abandon the controversial plan 
to purchase the utility's transmission grid, whose value has been questioned. 
Also, it would not give Edison any help in erasing the roughly $1 billion it 
owes power plant owners, leaving the utility to try to get that debt 
eliminated in the federal fight with the generators.

Instead, the new agreement would only help Edison shrink the $2.5 billion in 
debt it owes to banks and smaller, alternative energy producers. Large power 
customers would bear the burden of the costs.

"These guys are going to come up with something," said Senate President Pro 
Tempore John Burton (D-San Francisco) of his Senate team. "If Edison doesn't 
like it, they'll have to take a chance" and send the Davis-backed deal up for 
a vote.

Rival Proposal Is Unveiled

In the Assembly, meanwhile, a team of lawmakers Thursday unveiled a rival 
Edison proposal that would also attempt to shield homeowners and smaller 
businesses from high rates.

To do so, it would force industrial consumers to pay the utility's 
debts--including a portion of the amount owed generators--in exchange for 
allowing big consumers the chance to negotiate their own power deals on the 
open market.

The proposal represents an effort to coax generators into accepting less than 
they are owed by Edison, because it would allow them to quickly receive 
prompt payment from large power consumers if they agreed to accept only a 
fraction of their bills. 
Copyright 2001, Los Angeles Times <http://www.latimes.com> 



THE ENERGY CRISIS
Developer Pulls Plug on Power Plant in Chula Vista
Electricity: A San Diego company cancels plans to build a controversial 
facility. City officials, community opponents are 'thrilled.'
MITCHELL LANDSBERG
TIMES STAFF WRITER

July 13 2001

A San Diego company has canceled plans to build a controversial power plant 
in Chula Vista, angrily blaming state officials for failing to guarantee that 
the plant would turn a profit.

The announcement from Ramco Inc., made public Thursday, is the latest setback 
to Gov. Gray Davis' campaign to get more electricity on line this summer. But 
one state official characterized the decision as evidence that California is 
now dealing with power companies from a position of strength, and can afford 
to turn down projects if the price isn't right.

"That's the exact position California wants to be in, frankly, where we can 
negotiate and, if we need to, walk away from the table," said Oscar Hidalgo, 
a spokesman for the state Department of Water Resources. "So we'll move on to 
other, more willing participants." Ramco apparently gave up after failing to 
strike a deal with the department for energy from the proposed plant, which 
would have been near a community recreation center and elementary school in 
Chula Vista, a city of 173,000 in southwestern San Diego County.

The plant would have provided 62 megawatts of "peaking" power, which is 
primarily intended for use during periods of heaviest electricity use. 
Sixty-two megawatts is enough to serve about 50,000 homes.

The developer's announcement follows the decision of another San Diego 
company to withdraw plans for a plant in the Baldwin Hills area of Los 
Angeles, also in the face of community opposition. State officials conceded 
earlier this week that several other power plant projects appear to be behind 
schedule.

Chula Vista Opposed Ramco Power Plant

The Chula Vista City Council had opposed the Ramco project, which would have 
been built next to another new power plant in a highly urbanized area that is 
a jumble of industry, residences and other uses. The first plant began 
operating around July 1.

City officials had complained that the proposed plant would run initially 
without advanced pollution control devices, and, together with other new and 
proposed plants in the area, would have a disproportionate impact on a poor, 
predominantly Latino population. Some community activists opposed the plant 
on similar grounds.

Despite the opposition, the Energy Commission approved the plant's license on 
June 13.

The company did not mention community opposition in its letter to the 
commission, and Ramco officials did not return telephone calls seeking 
comment Thursday. Opponents reacted with relief that the plans were being 
scrapped.

"We're thrilled," said Michael Meacham, special operations manager for the 
city of Chula Vista. "Regardless of the reason for withdrawal, we're happy 
about it."

Josie Lopez-Calderon, president of San Diego's Mexican American Business and 
Professional Assn. and a leading opponent of the plant, was similarly 
pleased, and said the community opposition had led to the company's 
withdrawal.

"I think if it was solely for the reasons they've given, all the other peaker 
plants would be pulling out, and I don't see that happening," she said. "So I 
think our concerns might have had some effect."

Robert Laurie, the state energy commissioner to whom the company's letter was 
addressed, said that he was not sure he understood the company's rationale, 
but that it seemed clear that Ramco was unhappy with the Department of Water 
Resources. Since last winter, when the state's large investor-owned utilities 
became unable to pay for their own energy purchases, the agency has been 
buying most of the state's electricity.

"To me, it called into question what the policies of DWR were," Laurie said. 
"Are they seeking to add power or are they not seeking to add power?"

In his letter, Ramco President Richard McCormack wrote that the company had 
been optimistic that the department would "provide the credit support" for 
the company to supply power to the Independent System Operator, which runs 
the statewide electrical transmission grid. "Unfortunately," he said, the 
department had "specifically rejected such support."

Officials at Cal-ISO and the department said they didn't understand 
McCormack's comments.

Ramco Couldn't Foresee 'a Reasonable Return'

The letter also said that Ramco needed to expect "a reasonable return on its 
investment while dealing with a credit-worthy entity in an environment where 
the sanctity of contract exists. There is simply no evidence that we can see, 
even on the horizon, that would suggest conditions will improve to the point 
where Ramco could once again consider investing in new power plants in 
California."

Hidalgo, the department spokesman, said the agency still intends to sign 
contracts with energy providers, and is willing to continue talks with Ramco, 
but can now afford to be pickier than it was earlier this year, when it was 
criticized for signing more than $40 billion in long-term contracts at rates 
that some considered exorbitant.

Gary Ackerman, a spokesman for the Western Power Trading Forum, an 
organization of power traders and generators, said he didn't understand why 
Ramco's failure to sign a contract with the department would doom the 
project. After all, he said, the agency is not the only buyer of electricity.

"You could take market risk and build that plant," he said. Abandoning it 
"doesn't make any sense." He said he knew of no other energy generator 
contemplating a similar pullout.

Rob Schlichting, a spokesman for the Energy Commission, noted that Ramco 
could still build the plant. Under the terms of its license, the plant would 
have to be completed by Sept. 30. 
Copyright 2001, Los Angeles Times <http://www.latimes.com> 





THE ENERGY CRISIS
Some State Energy Consultants Own Generators' Stock
Ethics: They negotiate deals and buy electricity from power firms. GOP 
officials claim credit for forcing the disclosure of potential conflict.
ERIC BAILEY
TIMES STAFF WRITER

July 13 2001

SACRAMENTO -- More than half a dozen consultants hired by the state to 
purchase electricity and to negotiate long-term power deals own stock in 
generating companies such as Calpine and Enron that have profited handsomely 
during California's energy crisis.

The potential conflict of interest emerged Thursday with the release of 
financial disclosure statements by consultants who have been hired by the 
state since the start of the power crunch.

Among those disclosing stock ownership were two key negotiators of long-term 
energy contracts and two workers hired to purchase electricity from 
generators, including some of the firms in which they hold an interest. 
Several other consultants who played key roles in the state's energy efforts 
decided not to file financial disclosure statements, citing legal exemptions 
under state law.

Among those who did not file the financial disclosure statements were a pair 
of executives at two Wall Street firms that stand to make $14 million if the 
state buys California's power grid. Of about 50 consultants hired by the 
state in the past six months, 27 filed the disclosures.

The disclosures follow a firestorm in Sacramento last month over the hiring 
by Gov. Gray Davis of two media consultants also employed by Southern 
California Edison, the troubled utility that is negotiating with the state 
over a bailout package.

Steve Maviglio, a Davis spokesman, said the governor's legal staff was 
reviewing the financial disclosure forms for any potential conflicts of 
interest.

"If there's anything inappropriate," Maviglio said, "then we'll deal with it."

Republicans, however, said the hired workers had revealed overt conflicts 
that clearly violated state law.

Secretary of State Bill Jones, a Republican running for governor against 
Davis next year, said the revelations call into question the work performed 
by the consultants on high-priced energy contracts that are "going to 
mortgage our children's future for decades to come."

"If you show a conflict, the potential is there for collusion," Jones said. 
"I'm not accusing anyone, but that's why you have disclosure."

Rob Stutzman, a state GOP spokesman, said he was particularly troubled 
because the consultants had delayed filing the disclosure forms for months. 
Under state law, the forms are supposed to be submitted within 30 days after 
the consultants go to work for the state.

Most of the energy consultants, who could not be reached for comment, 
reported owning relatively small amounts of stock in energy firms, generally 
less than $10,000.

But one of the new workers, William Mead, disclosed that he owned between 
$100,000 and$1 million in Calpine, a San Jose-based energy firm. Mead did not 
report when the stock had been purchased.

Only one of the contractors reported selling off stock after coming to work 
for the state.

Vikram Budhraja, president of Pasadena-based Electric Power Group LLC, on 
Jan. 11 purchased between $10,000 and $100,000 in stock of Dynegy, a 
electricity and natural gas producer. He sold it off on Jan. 29, 10 days 
after he came to work for the state. Budhraja has been a top negotiator of 
the state's long-term energy contracts, which have included a deal concluded 
March 2 with Dynegy.

Richard Ferreira, a retired Sacramento Utility District executive hired by 
the state to negotiate long-term power contracts, reported the purchase of 
between $2,000 and $10,000 of stock in Calpine, a San Jose-based energy firm, 
in August 2000. He also purchased a similar amount of stock in General 
Electric Co., which produces power plant equipment, in April 2000.

Bernard Barretto, an energy trader, reported that he owned an undisclosed 
amount of stock in Enron Corp., a big Texas-based energy firm. Elaine Griffin 
purchased between $10,000 and $100,000 in Calpine stock on Feb. 1, less than 
three weeks before she came to work for the state as an energy trader. 
Constantine Louie, an energy scheduler, reported owning between $10,000 and 
$100,000 in Calpine stock.

Republicans took credit for forcing the Davis administration to file the 
reports, a charge the governor's office brushed aside.

Jones, the secretary of state, held a news conference Tuesday to complain 
about the failure of nearly all the state's energy consultants to file any 
sort of financial disclosure forms. The statements were only made available 
late in the afternoon Thursday, months after many consultants went to work 
for the state.

Maviglio, the governor's spokesman, said the delays were explained in part by 
negotiations that began in March with the Fair Political Practices 
Commission, the state's ethics watchdog, to determine if the consultants were 
required to file the forms.

He also suggested that Jones' accusations were fueled more by campaign 
politics than any devotion to constitutional duty.

"One needs to question why the secretary of state is using taxpayer money to 
investigate something beyond his jurisdiction," Maviglio said. "That's why we 
have an FPPC, to look at these kinds of things." 
Copyright 2001, Los Angeles Times <http://www.latimes.com> 






THE ENERGY CRISIS
Plan Uses Public in Refund Demand
Legislature: Democrats' proposal to pressure 'greedy' firms is attacked by 
GOP as political ploy.
CARL INGRAM
TIMES STAFF WRITER

July 13 2001

SACRAMENTO -- The Democratic-led state Senate intends to fill constituent 
mailboxes with a taxpayer-financed appeal urging Californians to demand 
nearly $9 billion in energy price refunds from "greedy out-of-state power 
generators."

Senate leader John Burton (D-San Francisco) said the mailers will ask 
Californians to join the Senate and Gov. Gray Davis in insisting that the 
Federal Energy Regulatory Commission order the refunds of alleged overcharges.

Senate Democrats set the high target despite a federal mediator's ruling 
against Davis earlier this week. The mediator said California would be 
entitled to only about $1 billion in generator overcharges, not the $8.9 
billion that Davis has fought for. Senate officers said the cost of the mail 
campaign will be paid from the budgets of senators, at taxpayer expense, as 
part of the Legislature's constituent service mail program.

But Republicans attacked the mailer as political propaganda that may violate 
state law and Senate policy barring issuance of "partisan" documents at 
public expense.

Sketchy details of the quietly developed project surfaced on the Senate floor 
Thursday. Staffers who worked on it said it was virtually impossible to 
calculate the program's cost.

But they indicated that if all 26 Democrats agreed to send up to 30,000 
mailers each to constituents, the postage alone would cost $140,400.

If each mass mailing exceeded 30,000 pieces, a higher postage rate would 
apply, raising the cost, officials said.

In the mailer, constituents are asked to return an attached card to their 
state senator, urging "full refunds of the outrageous prices charged by the 
greedy out-of-state power generators."

Cynthia Lavagetto, manager of the Senate mail program, said each member will 
decide what do do with the returned cards, including simply filing them or 
sending them on to FERC.

Lavagetto said a prototype mailer was prepared with the help of the Select 
Committee on Citizen Participation, a panel that has no chairman or members, 
since it has not been activated this year. But it does maintain an office and 
has three staffers on the Senate payroll.

Burton dismissed the Republican charges of partisanship as baseless. "We do 
this all the time on a variety of issues," he said. "We're saying, 'Stop 
stealing California's money.' "

But Sen. Ross Johnson of Irvine, the Senate's senior Republican, denounced 
the mailing as clearly partisan. He said it appeared to reflect a developing 
2002 election strategy of Davis and Democrats to blame the FERC and 
out-of-state generators for California's energy mess.

"I seriously question the appropriateness of using taxpayer money to get 
people to lobby [for the refunds]," Johnson said.

Johnson and Sen. Ray Haynes (R-Riverside) suggested that Democrats turn their 
criticism to municipal utilities, including the Los Angeles Department of 
Water and Power. Some utilities charged the state even higher prices last 
winter than did private generators.

"Why are they not attacking the DWP?" Johnson asked.

He noted that S. David Freeman was running the DWP at the time some of its 
highest prices were charged to the state, which is buying power for 
California's financially crippled utilities. Later, Davis hired Freeman as 
his top energy price negotiator.

"Doesn't David Freeman more properly belong in that same jail cell as the guy 
called Spike than he does in the governor's office?" Johnson asked.

"Spike" has become a character in the California energy debate, thanks to 
Atty. Gen. Bill Lockyer, who is investigating whether power sellers engaged 
in price-gouging and antitrust behavior.

In an interview with the Wall Street Journal in May, Lockyer said he would 
"love to personally escort [Enron Corp. Chairman Kenneth] Lay to an 8-by-10 
cell that he could share with a tattooed dude who says, 'Hi. My name is 
Spike, honey.' " 
Copyright 2001, Los Angeles Times <http://www.latimes.com> 







2 sides face off at EPA hearing on regulating energy plant emissions 
Jane Kay, Chronicle Environment Writer <mailto:jkay@sfchronicle.com>
Friday, July 13, 2001 
,2001 San Francisco Chronicle </chronicle/info/copyright> 
URL: 
<http://www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2001/07/13/
MN233685.DTL>
Sacramento -- Power plants, refineries and factories need relief from federal 
clean air laws if they are expected to respond to energy needs during a 
crisis, industry officials told the U.S. Environmental Protection Agency 
yesterday. 
California regulators and environmentalists, on the other hand, said the 
federal policy that requires the best available pollution control equipment 
to be installed when a new pollution source comes online is absolutely 
necessary to protect air quality and health. 
The Bush administration's National Energy Plan, released in May, recommended 
that the EPA perform a 90-day review of the policy to determine its effects 
on investment in new utility and refinery capacity, energy efficiency and 
environmental protection. 
Industry and environmental representatives lined up yesterday at one of four 
hearings held by the U.S. Environmental Protection Agency across the country 
to argue over the importance of requiring tough reviews and emission 
controls. 
The EPA's existing policy creates a disincentive for energy efficiency and is 
overly complex, said Shannon Broome, a lawyer for the Air Permitting Forum. 
The trade group includes General Electric, General Motors, Ford Motor Co., 
Exxon Mobil, International Paper and Merck. 
When a manufacturer wants to add new equipment that would improve the 
efficiency of the operation but may emit some pollution, Broome said, the EPA 
has been requiring a wider plant review that might include installing 
thousands of dollars of new pollution-control technology. 
Instead, said Nelson Meeks, a Clorox executive who spoke on behalf of the 
National Association of Manufacturers, the EPA should allow companies to make 
routine changes in the physical plant without triggering a wider examination 
of the plants and their pollution controls. 
Roland Hwang, senior analyst at Natural Resources Defense Council, disagreed 
with any attempt by the Bush administration to solve energy problems by 
backing off pollution control. 
"Weakening protections would have a devastating impact on air quality and 
public health in California," he said. "Allowing a new power plant to operate 
without the controls -- even running on natural gas -- would create 
significant emissions of oxides of nitrogen, a precursor of smog that has 
been found to cause lung damage." 
Terry Davis, of Sacramento, described himself as the father of a daughter who 
has asthma and depends on two inhalators every day. So far this summer, 
Sacramento has had 26 days of air considered unhealthful to her. 
Referring to an evaluation paper that the EPA released this week on its own 
policy, Davis said, "I'm really worried that the evaluation . . . seems to 
put production over health." 
Speaking for the California Air Resources Board, Peter Venturini, chief of 
the stationary source division, said the federal EPA's policy might need some 
tidying up, but it's generally acceptable. California would not like to see 
it weakened, he said. 
"We believe very strongly that the best time to apply controls is when a new 
facility is constructed or undergoes major modification," Venturini said. He 
said it saves money to incorporate the original technological controls into 
the design. 
California's stricter review process has allowed for approval of 12,000 
megawatts of new power from 46 plants, including some peaker plants, since 
1999, Venturini said. Some have been reviewed within 21 days, a streamlined 
period initiated by Gov. Gray Davis last year. 
E-mail Jane Kay at jkay@sfchronicle.com <mailto:jkay@sfchronicle.com>. 
,2001 San Francisco Chronicle </chronicle/info/copyright> Page A - 13 






7 California advisers own energy stocks 
Secretary of state calls for investigation 
Mark Martin, Chronicle Staff Writer <mailto:mmartin@sfchronicle.com>
Friday, July 13, 2001 
,2001 San Francisco Chronicle </chronicle/info/copyright> 
URL: 
<http://www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2001/07/13/
MN98940.DTL>
At least seven consultants hired by Gov. Gray Davis to help California buy 
and deliver power own stock in power companies doing business with the state, 
according to financial statements released yesterday. 
The personal financial statements prompted Secretary of State Bill Jones, an 
announced GOP candidate for governor, to call for an investigation into a 
conflict of interest that Jones said could compromise California's position 
as an electricity buyer. 
"It's unbelievable. How does the public know these people are staying at 
arm's length from their investments?" Jones said. 
A Davis spokesman said administration lawyers are reviewing the documents and 
will determine if any of the new employees have a conflict. 
According to statements filed with the state's Fair Political Practice 
Commission, six of 45 new consultants hired by Davis own stock in San Jose- 
based Calpine Corp., while one has investments in Enron Corp. of Houston. 
Both companies are power generators that sell electricity to the state. 
In January, the state began buying power as the biggest California utilities 
teetered on financial disaster. Since then, state officials say they've spent 
more than $8 billion on electricity. 
Of the seven, two describe their new jobs as energy traders. Traders buy 
power for the state. Four others list their jobs as schedulers, who receive 
invoices from traders and coordinate energy deliveries across the state. The 
seventh lists his job as consultant. 
Three of the stockholders said they own between $2,000 and $10,000 in stocks; 
two own between $10,000 and $100,000, and one consultant said he owns between 
$100,000 and $1 million in Calpine. 
"We just received the documents today, and our lawyers are going over them, " 
said Steve Maviglio, the governor's press secretary. 
Jones held a press conference Wednesday blasting the Davis administration 
because the new hires had not filed statements of economic interest. He said 
state law requires public officials to fill out the statements within 30 days 
of beginning a job, and said many of the consultants had worked for the state 
for months. 
Davis officials insist the employees have until Monday, but 27 filed their 
statements Wednesday or yesterday. The others are not required to fill out 
the forms because of their job duties, Maviglio said. 
The news comes amid charges by Jones and state Controller Kathleen Connell 
that two former Clinton-Gore campaign operatives hired by Davis to work on 
the power crisis had ties to Southern California Edison. Davis is negotiating 
with Edison on a bailout for the utility. 
Connell has refused to pay Mark Fabiani and Chris Lehane for their work as 
communications consultants. 
E-mail Mark Martin at markmartin@sfchronicle.com 
<mailto:markmartin@sfchronicle.com>. 
,2001 San Francisco Chronicle </chronicle/info/copyright> Page A - 12 







PG&E customers get a payback for conservation 
Nearly one-third earn rebates for cutting electricity use 20% 
Joe Garofoli, Chronicle Staff Writer <mailto:jgarofoli@sfchronicle.com>
Friday, July 13, 2001 
,2001 San Francisco Chronicle </chronicle/info/copyright> 
URL: 
<http://www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2001/07/13/
MN186973.DTL>
Nearly a third of Pacific Gas & Electric customers who have received this 
month's bill got rebates totaling $7.6 million as a reward for slashing 
electricity use in June, the utility said yesterday. 
The program that cuts 20 percent off ratepayers' bills if they reduce usage 
by 20 percent was a high-profile initiative by Gov. Gray Davis to promote 
conservation and decrease dependence on out-of-state generators. 
So far, PG&E has given credits to 394,000 ratepayers, or 29 percent of those 
who have received their bills, said utility spokeswoman Staci Homrig. 
Thousands of additional ratepayers stand to get rebates because the utility 
has processed only a third of its billing cycle. 
The news was giddily received by the Davis administration, which has made 
conservation a cornerstone its plan to dig out of California's energy mess. 
Administration officials had projected that 10 to 20 percent of customers 
would conserve enough to get a rebate. 
If only 10 percent of customers qualified, Davis estimated that the savings 
to the state, which has been buying power on behalf of financially troubled 
utilities, would be between $400 million and $1.3 billion. The less power 
used means the less power the state has to purchase for the utilities on the 
expensive spot market. 
'HEROIC EFFORT' 
"Wow, this is fantastic," said Davis spokesman Roger Salazar. "What this says 
is that Californians are taking their conservation seriously. The governor 
could not be prouder of their heroic effort so far." 
About half the rebate amount, $3.7 million, went to 355,000 residential 
customers, with $3.9 million going to 39,000 agricultural, industrial and 
commercial customers. The utility will not have the amount of the average 
rebate until later this month, when it completes the billing cycle. 
To qualify, customers have to reduce their electricity use by 20 percent for 
any of the four monthly billing periods that end in July, August, September 
and October over a comparable period in 2000. Customers can get the rebate 
for more than one month. 
The rebate is labeled "California 20/20 Rebate," and appears on monthly bills 
right above the line marked, "Total amount due." 
Whether it be out of fear of dodging 260 hours of rolling blackouts predicted 
for the state this summer or the desire to save cash, the number of rebates 
is another signal that Californians are conserving energy -- even if there is 
some disagreement on how much. 
Last month, Davis announced that power usage was down 11 percent in May after 
being adjusted for growth and weather. In terms of raw, unadjusted data, 
California's overall electricity consumption in May was down only about 2 
percent from the previous year. 
SWEET REWARD
That was little matter to those who received a rebate. For them, it was a 
sweet reward for months of bumbling through darkened rooms, watching less TV 
and enduring skyrocketing power bills. 
Those who didn't get the rebate were disappointed. Especially if they have 
endured small personal sacrifices in the hope of saving power and cash. For 
example, Pierre Chomat, a retired engineering firm manager in Pacific Grove, 
takes only two baths a week as part of his conservation plan. Despite his 
bathing cutback -- and replacing incandescent bulbs with fluorescent ones and 
turning off pilot lights -- Chomat's utility usage went up last month. 
He blamed his three houseguests for robbing him of the chance at a rebate. 
"They were taking baths and doing all sorts of things like that," Chomat 
said. "And they were here for three weeks." 
Chomat hopes to get a rebate next month. It may be his last chance for a 
while; more houseguests are scheduled to arrive in August. 

For more information about the rebate program, go to www.pge.com/2020 
<http://www.pge.com/2020>/ 
,2001 San Francisco Chronicle </chronicle/info/copyright> Page A - 1 



Judge spells out opposition to power refund claim 
Opinion says $8.9 billion in alleged overcharges for electricity 'cannot be 
substantiated' 
Christian Berthelsen, Chronicle Staff Writer 
<mailto:cberthelsen@sfchronicle.com>
Friday, July 13, 2001 
,2001 San Francisco Chronicle </chronicle/info/copyright> 
URL: 
<http://www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2001/07/13/
MN162115.DTL>
In a final written ruling that portrayed California negotiators as obstinate 
and unwilling to compromise, the judge who led talks over electricity price 
refunds said yesterday the state's claim of $8.9 billion in overcharges "has 
not and cannot be substantiated." 
Three days after negotiations to reach an agreement ended in failure, Curtis 
Wagner Jr., the chief administrative law judge of the Federal Energy 
Regulatory Commission, said any refund to California would have to be much 
less than what state representatives sought -- and would not come in cash. 
"That very large refunds are due is clear," Wagner wrote in a 12-page opinion 
to members of the commission, expanding on remarks he made publicly Monday. 
"While the amount of such refunds is not $8.9 billion as claimed by the state 
of California, they do amount to hundreds of millions of dollars, probably 
more than a billion dollars. 
"However," he went on, "the amount claimed by the state of California has not 
and cannot be substantiated." 
Wagner's opinion appeared to paint the California delegates to the 15 days of 
talks as unreasonable, unwilling to negotiate and perhaps more motivated to 
score political points than resolve the state's yearlong dispute over energy 
prices. 
"There is an old saying down South that you can take a horse to water but you 
can't make him drink," Wagner wrote. "The problem was that there were those 
who simply did not want to negotiate, but rather, stood firm on their 
litigation position with no movement." 
Wagner wrote that California's negotiators had "summarily" rejected his 
settlement proposal, but did not say what that was. 
Collectively, the state's power providers made a counteroffer of slightly 
more than $700 million. It was not clear if they ever offered to come up. 
Michael Kahn, president of the state's Independent System Operator board and 
Davis' chief negotiator during the sessions, said the state refused to budge 
because generators had demanded exemptions from various inquiries. He said 
the California delegation did not summarily reject the judge's proposal to 
bring the parties to the table, saying Wagner never came up with a specific 
plan or dollar figure. 
Some energy analysts have argued that the $8.9 billion figure produced by the 
ISO was flawed from the start. The ISO made inaccurate assumptions about gas 
prices and the rate at which some plants burn it to generate electricity, 
critics said, and it didn't look at whether the state's two main utilities 
also charged prices above the competitive benchmark. 
The ISO also looked at a period stretching back to May 2000, even though the 
date from which refunds would be considered in the negotiations began in 
October. 
Wagner said California and its utilities' debts to the energy providers -- 
estimated at $4.5 billion by some participants -- is larger than any refund 
the power companies owe. As a result, he said, any refunds awarded to the 
state should come in the form of either forgiveness of debt or lower prices 
on long-term power contracts the state has signed. 
Wagner suggested the federal commissioners hold 60 days of evidentiary 
hearings, rather than relying on economic analysis, to figure out how much 
the state might be owed. 
E-mail Christian Berthelsen at cberthelsen@sfchronicle.com 
<mailto:cberthelsen@sfchronicle.com>. 
,2001 San Francisco Chronicle </chronicle/info/copyright> Page A - 13 





News briefs on the California power crisis 
The Associated Press
Friday, July 13, 2001 
,2001 Associated Press 
URL: 
<http://www.sfgate.com/cgi-bin/article.cgi?file=/news/archive/2001/07/13/state
0900EDT0147.DTL>
(07-13) 06:00 PDT CHULA VISTA, Calif. (AP) -- 
An energy company has scrapped plans to build a new power plant in Chula 
Vista, blaming state officials for failing to guarantee that the facility 
would turn a profit. 
Officials from Ramco Inc., made the announcement Thursday after they couldn't 
reach an agreement with the state Department of Water Resources on the amount 
of energy to be generated at the proposed plant. 
The natural gas-fired generator would have produced up to 62 megawatts during 
peak usage and was scheduled to be operational by Sept. 30. 
The state's Energy Commission approved the company's plans last month, 
despite opposition from the Chula Vista City Council and residents. City 
officials said the plant would have contributed to air pollution and noise. 
"We're thrilled," said Michael Meacham, special operations manager for the 
city of Chula Vista, a city in southwestern San Diego County. "Regardless of 
the reason for withdrawal, we're happy about it." 
An Energy Commission spokesman said that energy company could still build the 
plant because its license doesn't expire until the end of September. 
SACRAMENTO (AP) -- State legislators are taking their campaign against the 
Federal Energy Regulatory Commission public. 
The Democratic-led Senate wants to send mailers to Californians asking them 
to join Gov. Gray Davis in demanding that FERC commissioners order the 
refunds of alleged overcharges by power companies. State officials claim 
California is owed $8.9 billion but a federal mediator said this week that 
"hundreds of millions of dollars" should likely be refunded. 
People who receive the mailers would be asked to return an attached card to 
their state senator, urging full refunds. Senators then would decide whether 
to file the cards or send them to FERC. 
Talk about the mailers surfaced on the Senate floor Thursday. Senate officers 
said the cost of the mailer campaign would come at taxpayers' expense. The 
cost hasn't been determined but if Democrats agreed to send up to 30,000 
mailers, the postage would cost more than $140,000. 
Republicans said they were opposed to the idea, claiming it violated state 
law and Senate policy prohibiting the issuance of partisan documents that are 
paid by taxpayers. 
"I seriously question the appropriateness of using taxpayer money to get 
people to lobby for the refunds," said Sen. Ross Johnson, R-Irvine. 
Senate leader John Burton, D-San Francisco, dismissed the GOP charge and said 
legislators and the public need to send a strong message to FERC 
commissioners. 
"We're saying, 'Stop stealing California's money,"' Burton said. 
,2001 Associated Press 



Wholesale prices drop by largest amount in 28 months 
MARTIN CRUTSINGER, AP Economics Writer
Friday, July 13, 2001 
,2001 Associated Press 
URL: 
<http://www.sfgate.com/cgi-bin/article.cgi?file=/news/archive/2001/07/13/finan
cial0836EDT0021.DTL>
(07-13) 06:39 PDT WASHINGTON (AP) -- 
Prices at the wholesale level plunged 0.4 percent in June as record declines 
in residential electricity and natural gas prices and a big drop in gasoline 
costs gave the country the best performance on wholesale inflation in more 
than two years. 
The Labor Department reported that the drop in its produce price index, which 
measures price pressures before they reach the consumer, was the first 
decline since last August and the biggest drop since a 0.5 percent fall in 
February 1999. 
Analysts had been expecting that inflation would moderate after steep 
increases earlier this year driven by a big jump in energy prices. They also 
said the sharp slowdown in economic activity was helping to ease inflationary 
pressures as wage demands soften with the rising jobless rate. 
Meanwhile, a second report Friday showed that retail sales rose 0.2 percent 
in June, pushed up by a strong 1.5 percent surge in sales of new cars. While 
the overall number was slightly weaker than analysts had been expecting, the 
government revised its estimate for May sales sharply higher to 0.4 percent, 
rather than the original estimate of a much smaller 0.1 percent gain. 
Beginning last summer, U.S. economic growth has slowed dramatically, with 
many analysts believing that growth in the just completed April-June quarter 
will come in at a weak annual rate of 0.5 percent, even worse than the 1.2 
percent growth recorded in the first three months of the year. 
Still, economists believe consumers will keep the economy out of a full-blown 
recession with their spending expected to increase in coming months, 
reflecting the boost provided by lower interest rates and the big tax cut 
passed by Congress. 
The Federal Reserve has cut interest rates six times so far this year, its 
most aggressive credit easing in the next two decades, in an effort to make 
sure that the U.S. economy does not tip into recession. 
Analysts said the good news on inflation will give the Fed room to cut 
interest rates further if needed to provide fuel for an economic rebound. The 
Fed's next meeting is Aug. 20. 
Ken Mayland, chief economist at ClearView Economics in Cleveland, said that 
both the benign report on wholesale prices and the moderate gain in retail 
sales pointed to an economy that would rebound in the second half of this 
year. 
"There is reason to be optimistic about the economy's prospects. We are going 
to be transitioning to considerably better growth in the third quarter," said 
Mayland, whose own forecast puts overall economic growth at a 3 percent rate 
in the third quarter, three times the 1 percent growth figure he expects for 
the second quarter. 
President Bush, who next week will attend his first economic summit of the 
world's seven richest countries in Genoa, Italy, is counting on the Fed's 
rate cuts and the stimulative effect of his $1.35 trillion tax cut, to lift 
the economy to a stronger growth rate later this year. 
The 0.4 percent drop in wholesale prices in June left inflation at this level 
rising at an annual rate of 2.4 percent through the first six months of this 
year, far better than last year's 3.6 percent. 
The news was just as good excluding volatile energy and food prices. The 
so-called core rate of inflation edged up just 0.1 percent in June, even 
better than the small 0.2 percent increases in April and May. So far this 
year, the core rate of inflation at the wholesale level is rising at an 
annual rate of just 1.6 percent. 
For June, the big drop in overall prices was led by a 2.5 percent plunge in 
energy costs, the biggest one-month decline since a 3.5 percent drop in April 
2000. 
The good news on energy reflected record drops of 1.5 percent in residential 
energy costs and 5.8 percent in natural gas prices. Gasoline prices fell by 
3.7 percent, the biggest decline since a 3.9 percent fall last August. 
Economists had been predicting that energy prices would retreat following a 
sharp run-up last winter that was caused by a shortage of supplies. Still, 
residents of California face difficult problems and potential power shortages 
this summer because of the shortage of electrical generating capacity. 
Motorists this summer have been getting a break at the gas pump after world 
crude oil prices eased and refiners rushed to fill shortages that developed 
during the spring. 
Food prices in June edged up 0.1 percent after having fallen by 0.4 percent 
in May. The increase reflected gains of 0.9 percent for beef and 1.6 percent 
for dairy products. 
Outside of food and energy, prices remained well contained. 
Prescription drug prices fell by 0.7 percent, their biggest drop since 
January 1999. 
Tobacco prices, which had risen a sharp 4.9 percent in May, were up just 0.1 
percent in June. 
New car prices rose 0.1 percent in June after having falling 0.1 percent in 
May. 
,2001 Associated Press 



Power rebate generates shockingly high interest 
Posted at 10:00 p.m. PDT Thursday, July 12, 2001 
BY 
DANA 
HULL 
In another sign that energy conservation is paying off, hundreds of thousands 
of consumers are opening power bills this month to find that they have earned 
a 20 percent rebate from the state for slashing summer electricity use. 
What's more, preliminary figures compiled by utility companies indicate that 
many more households and businesses are qualifying for the automatic cash 
credit than Gov. Gray Davis and his energy team anticipated. 
Pacific Gas & Electric has processed about 1.5 million bills this month, and 
394,000 customers, or 29 percent, have qualified for the rebate, said 
spokeswoman Staci Homrig. Early expectations were that only 10 percent to 20 
percent would qualify. 
``It warms the cockles of one's heart to hear these numbers,'' S. David 
Freeman, the governor's chief energy adviser, said Thursday. ``Nobody dreamed 
we would have gotten this kind of response. The people of California are 
smart. Money talks.'' 
Homrig said thrifty consumers -- including residential, commercial, 
industrial and agricultural customers -- earned $7.6 million in credits. Of 
that, $3.7 million went to 355,000 residential users and nearly $3.9 million 
to the others. 
Consumer interest in conservation has been high, particularly since a 
progressive electricity rate increase kicked in June 1. The full extent of 
participation in the rebate program will be known as the month progresses. 
Utilities process bills daily, rather than at once. 
The numbers elsewhere 
Southern California Edison has yet to calculate its figures. But in San 
Diego, where consumers have to cut back only 15 percent to get the 20 percent 
rebate, the numbers are even higher: 38 percent have earned rebates. San 
Diego customers were the first in the state to suffer skyrocketing costs for 
electricity and began conserving last summer, so their conservation threshold 
was lowered for the program. 
The rebates, which compare this summer's use to last summer's, are available 
to about 10 million homes and businesses that get electricity from PG&E, 
Southern California Edison and San Diego Gas & Electric. Originally the 
rebate was to come at the end of the summer but now appears on each monthly 
summer bill. 
Unplugging a second refrigerator or turning off an air conditioner can result 
in large energy savings, and many consumers have swarmed Web sites and phone 
lines for other ways to cut usage. Still, utility executives and state 
officials alike are astonished at the high early figures. 
``This is excellent news, and we applaud our customers for making the 
effort,'' said Jennifer Andrews of Sempra Energy, the parent company of San 
Diego Gas & Electric. ``In our first five cycles of billing, we have applied 
approximately $1.5 million in rebates.'' 
Nearly $1.1 million went to residential customers, $400,000 to other 
accounts. 
Brett Kennedy of Morgan Hill first became a conservation fanatic over the 
winter, when the cost soared for propane to heat his home. He insulated his 
attic and installed double-pane, high-efficiency windows. 
He still uses his air conditioner but has changed his light bulbs and has 
bought an Energy Star refrigerator. The moves have paid off. His electricity 
use is down 33 percent from this time last year. 
``I got a $15.25 rebate on my bill,'' Kennedy said. ``Pretty tough way to 
earn $15.'' 
The early rebate numbers are in line with recent statewide conservation 
figures. Californians used 12 percent less electricity this June than last. 
``I think it's phenomenal,'' said Susanne Garfield of the California Energy 
Commission. ``The rebate is icing on the cake.'' 
Critics have blasted the 20/20 program for rewarding those who have been 
wasteful in the past. 
``We feel we're being burned yet again by the governor,'' said Kathy 
Erpenbeck of Menlo Park. ``We would have to unplug our fridge, our computer, 
the water heater, the TV and the one or two lights we use each day to 
approach a 20 percent decrease, thanks to our past low volume of use.'' 
But state officials say those consumers will see lower power bills because 
low energy users largely escape the rate increase. 
Savings on demand 
The figures drive home the fact that California residents, whether motivated 
by a fear of high bills or a desire to fight back against power companies, 
are making a huge dent in the state's electricity demand. 
``We've shrunk the spot market,'' Freeman said. ``People are using 
clotheslines, and fans are being bought by the thousands.'' 
The ambitious campaign was designed in part to get the state through the hot 
summer months without rolling blackouts; the last was May 8. 
Information on the rebate program is available at www.pge.com  
<http://www.pge.com >. 


Contact Dana Hull at dhull@sjmercury.com <mailto:dhull@sjmercury.com> or 
(510) 790-7311. 





Settlement talks unsuccessful 
Posted at 10:05 p.m. PDT Thursday, July 12, 2001 
BY JOHN WOOLFOLK AND STEVE JOHNSON 

Mercury News 


The state has failed to prove California was overcharged anywhere near $8.9 
billion for electricity, a federal judge said Thursday in a sharply critical 
recommendation on calculating potential refunds. 
After two weeks of unsuccessful settlement talks, the judge overseeing them 
agreed California is due ``very large refunds,'' but repeated his earlier 
estimates that the amount is closer to $1 billion. 
``The amount claimed by the state of California has not and cannot be 
substantiated,'' Judge Curtis Wagner wrote in a 12-page recommendation urging 
a hearing within 60 days on the refund. 
It is now up to the five-member Federal Energy Regulatory Commission to hold 
hearings and order refunds. 
Wagner sharply criticized state officials for refusing to budge on the $8.9 
billion. 
Peter Navarro, an economist at the University of California-Irvine, said the 
judge ``sided with the generators on every single key issue.'' 
``The FERC judge adopted a set of rules that effectively slashed the size of 
California's possible refunds by up to 80 percent,'' Navarro said. 
The recommendation left neither side cheering. State leaders were irked the 
judge didn't back their number. They will press commissioners to order the 
full refund immediately instead of the hearing. 
``It is clear that Judge Wagner's recommendation undermines the consumer 
protections that FERC is supposed to safeguard by law,'' U.S. Sen. Barbara 
Boxer, D-Calif., said. 
Gov. Gray Davis said he hopes President Bush's two new appointees on the 
commission ``will be more sensitive to California consumers and order all the 
refunds that are due.'' 
Energy suppliers, who offered the state $703.6 million to settle the matter, 
and industry officials greeted the recommendation with caution. 
Gary Ackerman, executive director of the Western Power Trading Forum, a trade 
group, said he was ``encouraged'' the judge didn't back the state's figure. 
But he added, ``there is no reason for us to be confident or comfortable.'' 
``We'll have to see how this hearing unfolds,'' he said. 
A spokesman for Mirant Corp., one of the five major California power 
generators, was circumspect. ``This is just another step in this process,'' 
Pat Dorinson said. 
Wagner offered no specific refund figure of his own, repeating instead 
estimates he made before the talks began. 
``That very large refunds are due is clear,'' Wagner said. ``While the amount 
of such refunds is not $8.9 billion as claimed by the state of California, 
they do amount to hundreds of millions of dollars, probably more than a 
billion dollars.'' 
That amount is far more than the $125 million in potential refunds federal 
regulators had identified earlier this year. But it's still less than what 
the state owes energy suppliers for past sales, meaning any refund would 
probably be in the form of canceled debt. 
The state's $8.9 billion figure was calculated by analysts who oversee the 
power grid and has been hotly challenged by suppliers. 
A key dispute is the period subject to refund. The state figure is based upon 
sales from May 2000 to May 2001. But Wagner said the number should be 
calculated from last October, when the federal commission notified sellers 
they could face refunds. 
Michael Kahn, the state's chief negotiator, said the figure could be up to $5 
billion and said it was ``disappointing'' the judge wouldn't consider earlier 
refunds. The state, he said, would continue pressing for them. 
The judge recommended that the commission calculate refunds using its latest 
price control order issued last month and applying it to sales since October, 
with a few modifications. 


Contact John Woolfolk at jwoolfolk@sjmercury.com 
<mailto:jwoolfolk@sjmercury.com> or (408) 278-3410. 







Rate hike may hit businesses 
Residential rates would stay level under Democrats' proposal. 
July 13, 2001 
By JOHN HOWARD, HANH KIM QUACH and KATE BERRY
The Orange County Register 
SACRAMENTO -- Businesses would be socked with a big rate increase, while 
residential rates could hold steady, under the latest plan to rescue Southern 
California Edison and resolve major energy matters the state has been 
wrangling over since January. 
The proposal by Assembly Democrats likely will draw fire from business 
interests. Rates easily could triple for some companies. 
Meantime, the Davis administration was wrapping up a plan likely to include 
further rate hikes to pay for $13.4 billion in borrowing planned this fall. 
The clock is ticking down for lawmakers to rescue the near- bankrupt Edison 
and figure out how the state will pay for billions of dollars in energy 
costs. The Legislature is slated to adjourn July 20. The Assembly could vote 
on a deal as early as Saturday; Gov. Gray Davis' plan could be released any 
day. 
The Assembly plan would reserve the cheapest electricity - that generated by 
Edison itself, or bought from small generators - for residential users and 
small businesses that use fewer than 20 kilowatts at peak periods. 
Everyone else - more than 123,000 businesses from restaurants to steel 
manufacturers - would buy the more expensive electricity secured under 
long-term contracts. 
Senate Leader John Burton said decisions must come swiftly. "There's a ... 
deadline," he said. "You gotta have something up for a vote."








A Section 
Judge Rejects Power Refunds For California 
Peter Behr

07/13/2001 
The Washington Post 
FINAL 
Page A05 
Copyright 2001, The Washington Post Co. All Rights Reserved 
California 's claim for $8.9 billion in refunds for excessive electricity 
charges "cannot be substantiated," the federal government's chief energy 
regulatory judge said yesterday, concluding his two-week attempt to mediate 
the California energy dispute. 
Curtis L. Wagner Jr., chief judge of the Federal Energy Regulatory 
Commission, said "very large refunds" are due the state because of 
overcharging by generators, saying the figure would probably amount to more 
than $1 billion. 
But Wagner, in a report to the commission, indicated that the state might not 
get even that. Generators serving California are owed even more than $1 
billion for power delivered to the state but not yet paid for by utilities 
and state power agencies. 
"Can a cash refund be required where a much larger amount is due the seller? 
The chief judge thinks not," he said. Wagner's report formalizes comments he 
made Monday at the close of the failed mediation effort. 
Although Wagner said the $8.9 billion demand by Gov. Gray Davis (D) was 
unsupportable, he did not attempt to calculate a figure of his own. Wagner 
recommended that FERC convene a public hearing to set both the amount of 
overcharging that occurred and the amounts that generators are owed by the 
state. 

http://www.washingtonpost.com 
Contact: http://www.washingtonpost.com 






Mediator Questions 
California 's Claims
To Power Refunds

07/13/2001 
The Wall Street Journal 
Page A2 
(Copyright (c) 2001, Dow Jones & Company, Inc.) 
WASHINGTON -- A federal mediator said California 's claim to $8.9 billion in 
electricity refunds "cannot be substantiated," and questioned whether the 
state should get any money because it owes huge sums to energy sellers for 
unpaid bills. 
Curtis L. Wagner Jr., the Federal Energy Regulatory Commission's chief 
administrative law judge, said the state is owed "probably more than a 
billion dollars" of refunds from power companies. But he also said the state 
and its utilities owe energy sellers "even larger amounts." 
Mr. Wagner, who recently presided over unsuccessful talks aimed at settling 
the dispute, urged the commission to convene a "trial-type" hearing to figure 
refunds within 60 days. He said the FERC should use a modified version of a 
pricing plan it set on June 19 to stabilize markets and ensure competitive 
rates. 
"The differences between what the state of California believes the buyers in 
California markets are owed in refunds and what the sellers in the California 
market believe should be refunded raise material issues of fact," Mr. Wagner 
said. 
In his report, Mr. Wagner said the state had "summarily rejected" a 
settlement proposal he personally devised during the talks. The energy 
companies offered about $700 million, which also was refused. 
California officials have vowed to go to court to recover any amounts the 
FERC doesn't order reimbursed. Among other differences, the state claims 
refunds should date from May 2000, but the FERC says it is authorized to 
order relief only from October. 
California Gov. Gray Davis said it would be "unconscionable" for FERC to not 
order refunds for the longer period. A spokesman added that the state and its 
legislature are working out arrangements on reimbursing the power companies 
-- albeit at a substantial haircut.