Please see the following articles:

Sac Bee, Fri, 6/29: Power firms held in contempt    (Enron mentioned)

Sac Bee, Fri, 6/29: Edison's parent gets new cash

Sac Bee, Fri, 6/29: Refineries exempt from power cuts 

SD Union, Thurs, 6/28: Enron, Mirant cited for contempt by Senate committee

SD Union, Thurs, 6/28: Secretary of State accuses governor of failing state 
in energy crisis

LA Times, Fri, 6/29: Congress Reacts Sluggishly to Bush's Energy Proposals

LA Times, Fri, 6/29: Senate Panel Lashes Out at 2 Energy Firms

SF Chron (AP), Fri, 6/29: California Senate committee cites power companies 
for contempt
for withholding documents

SF Chron (AP), Fri, 6/29: California oil refineries exempt from rolling 
blackouts

SF Chron, Fri, 6/29: Conservation funds restored to energy legislation by Bush

SF Chron, Fri, 6/29: Refineries exempt from blackouts 
Oil firms' support services also shielded

Mercury News, Fri, 6/29: Officials criticize energy report

Mercury News, Fri, 6/29: Extra `power plant' shows deregulation can spur 
innovation  (Editorial) 

OC Register, Fri, 6/29: Gas Co. to give consumers nearly 50% price break in 
July

Individual.com (Business wire), Fri, 6/29: California Municipal Electric 
Utility Launches Apogee
Demand Exchange to Reduce Peaks 

Wash. Post, Fri, 6/29: Greenspan Unafraid Of Energy Price Caps; Calif. 
Problems Ease, 
Fed Chief Says

WSJ, Fri, 6/29: Federal Energy Panel Approves
Power Price Controls for New York
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Power firms held in contempt 
By Emily Bazar
Bee Capitol Bureau
(Published June 29, 2001) 
A special legislative committee investigating electricity price manipulation 
voted Thursday to hold two power companies in contempt for refusing to turn 
over thousands of pages of documents. 
By unanimously declaring Enron Corp. and Mirant in violation of its 
subpoenas, the state Senate committee summoned powers that haven't been 
invoked in the Legislature for more than 70 years. 
As a result of the unusual move, power company executives could find 
themselves facing jail time. Possible punishments include fines or the forced 
turnover of documents. 
"There isn't a lot of legal precedent," said the chairman of the committee, 
Sen. Joe Dunn, D-Santa Ana, after the hearing. "Jailing an individual is an 
option, and we intend to preserve all of our options." 
The committee is trying to determine whether electricity generators or 
marketers have artificially inflated prices of wholesale electricity. Other 
state agencies, including the attorney general's office and the Public 
Utilities Commission, also have initiated investigations. 
Under the committee's 5-0 decision, Mirant and Enron have until July 10 to 
change course and turn over documents. If they do so, the contempt charges 
will be expunged. If not, the committee will forward its contempt findings to 
the full Senate, which will determine which punishments, if any, should be 
levied. 
As part of its investigation, the committee began requesting documents from 
most generators in April. After receiving little or no response -- and 
complaints from companies concerned about giving out proprietary information 
-- the panel issued subpoenas to several companies June 11. 
The subpoenas called for documents of all kinds, including those with 
specific details -- prices, quantities and capacity -- of companies' 
transactions in the state's wholesale electricity market. Telephone bills, 
e-mail messages and personal appointment books also were requested. 
Many of those companies did not respond to the subpoenas until the deadline 
Thursday. Only two -- Dynegy Inc. and Reliant Energy Inc. -- actually 
provided documents. 
During the nearly four-hour meeting, Dunn interrupted the proceedings several 
times to announce that various letters or documents arrived moments before. 
For example, Dunn said midway through the hearing that Dynegy had just 
delivered 18,603 documents to his Capitol office. 
For those companies that didn't comply with the subpoena, but promised to 
deliver the necessary documents before July 10, the committee agreed to 
withhold judgment until that date. 
Robert Bittman, who represented Mirant at the hearing -- and was allowed to 
make a hasty phone call to the company in an attempt to avoid the contempt 
finding -- in the end was unable to adequately assure the senators that 
Mirant would deliver all required documents before July 10. 
After the hearing, Mirant spokesman Patrick Dorinson said the company will do 
everything it can before July 10 to resolve the dispute. 
"What Mirant needs is assurance from the committee that the company-specific 
information in these documents doesn't find its way to some public forum 
where it could be misused," he said. 
Legislators were particularly irked by energy marketer Enron, which didn't 
send a representative to the hearing. 
Instead, Enron delivered a letter to Dunn on Thursday questioning whether the 
committee was violating the Federal Energy Regulatory Commission's 
jurisdiction in its investigation. 
"My great frustration here is getting a letter from Enron on the day the 
(documents) are due explaining why we don't have jurisdiction," said Sen. 
Debra Bowen, D-Marina del Rey. 
Rather than jail time, Bowen said she would like to see fines levied against 
companies that have violated the subpoenas. 
The last time the Legislature held someone in contempt was 1929. The case 
involved a price-fixing conspiracy, but the commodity was concrete. Several 
officials from concrete companies were subpoenaed, but some declined to 
testify or divulge documents to a Senate committee. 

The Bee's Emily Bazar can be reached at (916) 326-5540 or ebazar@sacbee.com. 
 

Edison's parent gets new cash
By Dale Kasler
Bee Staff Writer
(Published June 29, 2001) 
In a move that keeps creditors at bay for now, Southern California Edison's 
parent company obtained $1.19 billion in fresh financing Thursday. But the 
troubled company had to pay a higher interest rate than it originally 
expected, reflecting investors' anxieties about the state energy crisis. 
The move doesn't affect the beleaguered Edison utility, which has been on the 
verge of bankruptcy for months, but eases immediate financial stress on its 
parent Edison International. 
The parent, through a newly created subsidiary called Mission Energy Holding 
Co., borrowed the funds at rates of up to 14 percent. That's one percentage 
point higher than Edison expected last week, according to Standard & Poor's 
Corp. The company had to restructure the deal because of investor 
uncertainty, S&P said, and there was speculation by analysts the deal might 
get scrapped. 
Even with the higher interest rate, the financing was a must-do for Edison 
International, said S&P analyst Richard Cortright Jr. 
The proceeds will go to pay off numerous Edison International debts, 
including a $618 million bank loan due Saturday and $250 million in bonds due 
July 18. The company has told the Securities and Exchange Commission that it 
needed new financing "to meet its cash requirements." 
The company paid a steep price for meeting those requirements. Part bank loan 
and part bond sale, the financing cost Edison International about twice what 
a creditworthy corporation would pay. The bank loan is at a variable rate 7.5 
percentage points above the London Interbank Offered Rate, a common benchmark 
for loans. 
The deal originally called for Edison International to sell nearly $1.2 
billion in bonds, but the company had to scale back the bond offering and 
pull together the bank loan to make up the shortfall, analysts said. 
Analysts said the new financing still leaves Edison International about $33 
million short of having enough to pay the bond and bank debt coming due this 
year. The company said it will sell its Edison Select unit to Tyco 
International Ltd. for an undisclosed price. Edison Select provides home 
security and warranty-repair services. 

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


Refineries exempt from power cuts 


(Published June 29, 2001) 
Oil refineries and makers of key chemicals they use will be exempted from 
rotating outages to avoid gasoline shortages, state utility regulators voted 
unanimously Thursday. 
Members of the state Public Utilities Commission said they were acting at the 
urging of the governor and the state Energy Commission, which had warned that 
even a one-minute outage could shut down a refinery for up to three weeks. 
Energy officials told regulators that because California has only 13 
refineries, loss of fuel production from even one of them could cause a sharp 
drop in inventories, triggering substantial price hikes at the pump. 
The interim decision, which commissioners said they could expand or revise 
later, does not apply to storage or other facilities. 
--Carrie Peyton 
State off 'credit watch'
With California's budget squeeze temporarily eased by a bridge loan, a 
leading Wall Street credit agency removed the state from its dreaded "credit 
watch" list. 
Standard & Poor's said it was removing California from "credit watch" -- the 
term it uses for entities whose credit ratings might be downgraded -- because 
the state was able to borrow $4.3 billion for electricity purchases. The loan 
is designed to tide the state over until California can sell $12.5 billion or 
more worth of electricity bonds this fall. 
"The interim loan facility buys the general fund time to find a satisfactory 
workout situation," S&P said. 
State Treasurer Phil Angelides said last week he'd lined up $4.55 billion in 
bridge loans. But he still hasn't finalized a $255 million loan from State 
Street Corp. of Boston, said a spokeswoman for the treasurer. So for now the 
bridge loans total $4.3 billion. 
S&P had downgraded the state's credit rating two notches in April because of 
the mushrooming cost of electricity purchases and kept California on its 
"credit watch" list, indicating that the credit rating might fall further. 
California's credit rating stands at "A-plus," with a negative outlook, S&P 
said. The agency said it was still concerned by the "state's continued rapid 
level of spending for power purchases." 
--Dale Kasler 
Contracts to be released
State Controller Kathleen Connell on Thursday said she will release unedited 
copies of the state's long-term electricity contracts next week, even if Gov. 
Gray Davis appeals a court ruling requiring him to do so. 
Connell, who has been highly critical of her fellow Democrat's handling of 
the state's energy crisis, said Davis negotiated the contracts "in a moment 
of panic" earlier this year. 
Davis for months refused to provide copies of the pacts but sent out edited 
copies earlier this month as a San Diego Superior Court judge ordered them 
released. On Wednesday, the judge expanded her ruling, telling the state's 
power buyers to make public the unedited versions. The administration has 
until Thursday to appeal. 
But Connell, speaking at a forum in Los Angeles, said she will post them on 
the Internet on Thursday no matter what Davis decides to do. "There is no 
reason that the veil of secrecy should not be lifted," she said. 
--Dan Smith 




Enron, Mirant cited for contempt by Senate committee 



By Jennifer Coleman
ASSOCIATED PRESS 
June 28, 2001 
SACRAMENTO ) A Senate committee investigating possible price manipulation in 
California's energy markets voted Thursday to cite generators Enron Corp. and 
Mirant Inc. for contempt. 
Both companies had been subpoenaed to produce documents earlier this month by 
the Senate Select Committee to Investigate Market Manipulation, along with 
four other generating companies that complied in various ways with the 
subpoenas. 
Houston-based Enron said it keeps its documents in Texas, which is outside 
the committee's jurisdiction. Reliant Energy, also based in Houston, said 
that too, but it agreed to turn over 1,800 documents. 
An attorney for Mirant, based in Atlanta, said the company wanted to comply, 
but Mirant did not act fast enough for the committee, which then included it 
with Enron in the contempt citation. 
If the full Senate agrees with the committee's contempt request, it will be 
the first time since 1929. Then, the Senate briefly jailed a balky witness 
during a committee's investigation of price fixing and price gouging 
allegations involving cement sales to the state, said Laurence Drivon, the 
committee's special counsel. 
The state Supreme Court eventually upheld the Senate's right to jail those 
who fail to comply with its subpoenas, Drivon said, but ordered that 
particular witness freed after determining senators hadn't followed all the 
proper procedures. 
By seeking the contempt citations, the committee needs the full Senate to 
follow through. There are no set penalties, Drivon said ) by law, "the Senate 
can take such action as it deems necessary and appropriate." 
Sen. Joe Dunn, D-Santa Ana, chairman of the committee, said there was little 
precedent for what penalties the Senate could impose. 
"Jailing an individual is an option and we're going to preserve all our 
options," he said, adding the Senate could also vote to fine the companies if 
they don't comply. 
Enron's claim the committee lacked jurisdiction outraged Sens. Steve Peace, 
D-Chula Vista, and Debra Bowen, D-Marina del Rey. They said previous 
legislative investigations have called on documents throughout the country 
and from overseas. 
"If they've done nothing, if they've got nothing to hide, there's no reason" 
not to comply, said Bowen. 
The committee has been negotiating with the companies over the conditions 
under which they would release the documents, including those that would 
remain confidential. The committee has also asked the generators to sign 
agreements not to destroy any potentially relevant documents. 
So far, some companies have agreed verbally; none has signed an agreement. 
"These are the same documents we requested April 5, and to date the summary 
is: three months, zero documents," Drivon said. 
Dynegy Energy Services has provided 18,000 documents, committee members said, 
although no one knows for sure what they include. 
Duke Energy agreed to comply with the subpoenas and store documents in a 
repository in Sacramento as long as the company and the committee agree on 
how to keep the documents confidential. Lawyers for both sides said they 
could work out an agreement. 
Williams, AES, Reliant, Dynegy, Duke and NRG will have until July 10 to turn 
the requested documents over to the repository. Enron and Mirant can have 
their contempt citations purged if they also comply by then. 
The Senate Rules Committee subpoenaed the documents ) which include details 
on bidding, pricing and other aspects of power sales ) earlier this month. 
Generators said they haven't complied because they have not been able to 
negotiate an acceptable confidentiality agreement.







Secretary of State accuses governor of failing state in energy crisis 



By Michelle Dearmond
ASSOCIATED PRESS 
June 28, 2001 
LONG BEACH ) Giving a glimpse at the hostile tone the state's next 
gubernatorial contest likely will take, Secretary of State Bill Jones 
attacked Democratic Gov. Gray Davis on Thursday for his handling of 
California's energy crisis. 
Jones, who is seeking the Republican nomination for governor in 2002, expects 
to face Davis in next year's general election. 
Davis, who is expected to seek re-election, has not formally announced his 
candidacy but has already raised more than $26 million. Jones has not had to 
report his campaign contributions yet but it is widely believed he will have 
only a fraction of that sum. 
"During all my years in public service, I have never seen anyone shirk as 
many tough decisions or seek to blame as many people for his own shortcomings 
as I've seen from Gray Davis in the last two years," the secretary of state 
said at a Long Beach Chamber of Commerce luncheon. 
"His inattention to duty, inaction and lack of leadership has unnecessarily 
caused much of the economic turmoil our state faces today." 
Davis press secretary Steve Maviglio said Thursday the governor will be 
"putting more power online in the next two weeks than in the previous 12 
years." He pointed to Davis' 23 executive orders to speed the building of 
power plants and the 25 percent reduction in energy use in state-run 
buildings. 
"The facts speak for themselves," Maviglio said. "The governor licensed the 
first power plant in 12 years within four months of taking office, in April 
1999. While federal regulators were still holding hearings, the governor last 
summer signed legislation and executive orders." 
Davis has cited the energy deregulation plan signed into law by his 
Republican predecessor, former Gov. Pete Wilson, as the start of California's 
energy woes and has accused power suppliers of manipulating prices. 
He also has attacked the Federal Energy Regulatory Commission, which 
regulates wholesale energy transactions, and President Bush for not stepping 
in to help the state. Regulators recently agreed to cap electricity prices 
throughout the West; Bush has opposed price controls in energy markets. 
Jones laid the blame for the state's energy crisis on Davis, who he said 
failed to heed early warning signs of the problem last summer and has devoted 
more attention to building his campaign coffers than solving the state's 
problems. 
"Rather than practicing political gamesmanship, Gray Davis should have paid 
more attention to the state's pressing policy issues and avoided his 
multibillion dollar energy mistakes," Jones said. 
Although Davis took office during a time of prosperity, the state now faces a 
weakening economy and "antibusiness climate," Jones said. Stealing a page 
from the book of California's favorite son, former President Reagan, he asked 
voters if they are better off than they were four years ago. 
A survey published Thursday by the Los Angeles Times showed that a majority 
of Californians agree with Davis that energy companies have manipulated the 
electricity market to boost their profits. Nearly half of those polled also 
gave Davis low marks for his handling of the crisis. Still, he received 
nearly four times as much support as Bush. 
More than 60 percent of respondents deemed the energy crisis the state's top 
problem and more than half believe there hasn't been enough progress to 
resolve it. 
The Times interviewed 1,541 residents over four days beginning Saturday. The 
paper said the poll had a margin of error of plus or minus 3 percentage 
points. 
Jones made no reference in his speech to his Republican opponents by name, 
but noted that he's the only GOP candidate to have won statewide elections 
twice. Outgoing Los Angeles Mayor Richard Riordan, a moderate Republican who 
has endorsed Democrats in the past, is contemplating a run for the office, 
and businessman William E. Simon Jr. recently announced his candidacy. 
In an interview with The Associated Press, Jones criticized Riordan for 
having crossed party lines in partisan races with both endorsements and 
donations. Jones also trumpeted his own experience as a longtime lawmaker and 
faithful Republican and noted that Simon hasn't held statewide office. 






Congress Reacts Sluggishly to Bush's Energy Proposals 


By JANET HOOK and RICHARD SIMON , Times Staff Writers 

?????WASHINGTON--More than a month after the White House unveiled its 
national energy plan with great fanfare, President Bush's proposals are 
languishing on Capitol Hill, casting doubt on whether Congress has the 
political will to pass the kind of sweeping redirection of policy that Bush 
is seeking.
?????Several powerful trends are contributing to the impasse: Gasoline prices 
are moderating across the country. So far, there have been no summer power 
outages in California. Members of Bush's own party are obstructing efforts to 
expand oil and gas drilling. And polls suggest the public isn't really sure 
if the country faces a true energy crisis.
?????Fearful that one of its signature policy initiatives has been all but 
unplugged, the administration fought back Thursday by launching a new public 
relations offensive.
?????Leaders of both parties still promise passage of energy legislation 
later this year, but it seems increasingly likely to be far less sweeping 
than the bold action sought by Bush and Vice President Dick Cheney. 
?????Many Republicans, for example, have broken ranks with the White House on 
oil and gas exploration in Alaska's Arctic National Wildlife Refuge.
?????Last week, the House voted to ban drilling off the Florida coast and in 
national monuments. And Thursday, a sizable contingent of House Republicans 
teamed with Democrats to ban drilling under the Great Lakes.
?????"We're worried about it," acknowledged Majority Leader Dick Armey 
(R-Texas). "Those votes were disturbing."
?????"Of course, we're discouraged," added Rep. W.J. "Billy" Tauzin (R-La.), 
chairman of the House Energy and Commerce Committee.
?????Democrats aren't getting their way either. Their proposals to impose 
rigid price caps on electricity in the West are going nowhere in the House, 
and Senate sponsors are holding off on pursuing the issue.
?????To be sure, probably nothing would help Bush's energy plan more than an 
ugly summer of blackouts in California to stoke the nation's sense of urgency 
about the problem. One reason political momentum has flagged, analysts say, 
is the perception that the crisis is abating in California and elsewhere.
?????"The urgency in California is starting to dissipate," said Sen. John B. 
Breaux (D-La.), who supports much of the Bush plan but put the chances of 
passage of comprehensive energy legislation at no better than 50-50. "There's 
less of a rush" to act.
?????"The shoe isn't tight enough," said Sen. Frank H. Murkowski (R-Alaska), 
who until recently was the chairman of the Senate Energy and Natural 
Resources Committee. "The prices aren't high enough."
?????Noted Stephen Bell, chief of staff to Sen. Pete V. Domenici (R-N.M.), a 
senior member of the Senate Energy and Natural Resources Committee: "The 
momentum behind a comprehensive energy package has seriously dissipated. The 
truth is, not many people have any idea what to do."
?????Bush sought to put the spotlight back on his plan Thursday by announcing 
$86 million in federal grants to encourage educational institutions and 
private firms to develop more efficient fuel technologies.
?????He also unveiled a variety of actions to curb energy use within the 
federal bureaucracy, including setting new standards for "vampire" electrical 
devices that drain energy even when not in use. These devices include many 
consumer products and household appliances.

?????Bush Cites Need for 'Wise Choices'
?????"Our nation must have a strategy, a broad, comprehensive energy strategy 
that calls upon the best of the nation's entrepreneurs to help us develop the 
technologies necessary to make wise choices in the marketplace as well as 
calls upon our nation's innovative technologies to help us find new sources 
of energy," he said. 
?????Referring to California, Bush said he was "pleased to see" a new power 
plant come on line Wednesday in Kern County, calling it "the beginnings of 
what is a rational energy policy that will help the good people of California 
get out from underneath 10 years of neglect."
?????Congressional Republicans, many of whom are heading home today for a 
weeklong recess, have been armed with talking points, computer presentations 
and briefing papers to tout Republican energy plans at town hall meetings 
with constituents. White House strategists are meeting daily to plot strategy.
?????"The president has taken many steps to help people who are feeling the 
energy crunch right now," said Jim Wilkinson, a White House official involved 
in the effort. "It's up to us to make sure they know he's fighting for them."
?????That effort is driven, in part, by GOP concerns that Democrats have been 
promoting their solution to the West's electricity crisis--price 
controls--without an aggressive Republican rejoinder.
?????Democrats, especially in the House, continue to see political advantage 
in the issue. They believe that if energy woes intensify in California and 
around the country this summer, Republicans will bear the political blame if 
they are seen as doing nothing to remedy the problem.
?????On Wednesday, House Democrats began circulating a petition to force 
Republican leaders to bring price-control legislation to a vote. 
Congressional investigators, prodded by Democrats, are pressing Cheney to 
release records of private meetings held with special interests during 
drafting of the energy plan. If the documents are not provided, subpoenas 
could be issued.
?????The contrast with the way Congress considered Bush's tax cut is 
striking. Both issues were central to Bush's campaign for the presidency. 
After he became president, the House began work on his tax cut even before he 
submitted a formal plan. And the entire bill barreled through Congress in a 
mere four months.
?????But his energy initiative met with more ambivalence from the outset. 
?????"It's not like taxes, where the Democrats knew they were in trouble on 
the issue," said David M. Nemtzow, president of the Alliance to Save Energy, 
a Washington-based coalition of business, consumer, government and 
environmental advocates. "Democrats are gleeful about picking a fight on 
energy."
?????Even as Cheney was unveiling the plan in mid-May, Republicans were 
expressing reservations about key elements. The proposal to expand energy 
exploration in the Arctic refuge was treated as dead on arrival. A proposal 
to empower federal authorities to condemn private property for new power 
lines met with immediate opposition, even from conservatives within Bush's 
own party.
?????Polls show widespread public concern about the environmental effects of 
the energy proposals. 
?????"On offshore drilling, [tougher sport-utility vehicle fuel economy] 
standards, more emphasis on conservation, you see Republicans not all that 
different from Democrats," said Carroll Doherty, political analyst at the Pew 
Research Center for the People and the Press.
?????Meanwhile, action by the Federal Energy Regulatory Commission to 
restrain utility price hikes in California and the West has eased pressure on 
Congress to act.
?????The change of leadership in the Senate also has had a big effect. 
Republicans had planned to bring up an energy bill in June but lost control 
of the Senate after Sen. James M. Jeffords of Vermont left the GOP and became 
an independent.
?????Democrats, instead, brought up legislation to expand patients' legal 
rights in dealing with health maintenance organizations.
?????Senate Majority Leader Tom Daschle (D-S.D.) said he would move energy 
legislation in the "not too distant future." He didn't say exactly what would 
be in the bill but added that one thing certainly would not be: Bush's 
proposal to expand drilling in Alaska's wildlife refuge.
?????Republicans plan to hammer Democrats during the July recess, arguing 
that they have relegated the nation's growing energy needs to the back burner.
?????In the House, where Republicans are still in the majority, leaders have 
asked committees that handle pieces of energy policy to draft their part of 
the legislation by mid-July, in hopes of bringing it to the floor before the 
August recess.
?????But it's not clear how far they can go in pushing Bush's proposals to 
increase energy production.
?????"What's striking is that even Republicans are unenthusiastic about the 
administration's energy plan," said Marshall Wittmann, senior fellow at the 
conservative Hudson Institute, citing recent anti-drilling votes in the 
GOP-controlled House. "If you can't make it there, you can't make it 
anywhere."
?????Senate Energy Committee Chairman Jeff Bingaman (D-N.M.), who met with 
Bush at the White House on Thursday, said he hopes to draft a comprehensive 
bill that would put more emphasis on promoting conservation, energy 
efficiency and renewable energy sources. But he doubted it would be ready to 
move to the Senate floor until after the summer recess.

?????Both Parties' Bills May Be Combined
?????Efforts are underway to consolidate common features of Democratic and 
Republican energy bills into a package that could be acted upon quickly.
?????Such a measure would likely include provisions to promote conservation, 
offer tax credits for buying fuel-efficient gas-electric hybrid cars, reduce 
the patchwork of gasoline recipes blamed for contributing to price spikes and 
supply shortages, boost energy assistance to low-income people, and extend a 
law limiting the liability of nuclear power plants in the event of an 
accident. 
?????The administration also is moving ahead to implement a number of 
directives that can be carried out by executive order or through the actions 
of regulatory agencies, without requiring congressional approval.
--- 
?????Times staff writer Edwin Chen contributed to this story.

Copyright 2001 Los Angeles Times 






Senate Panel Lashes Out at 2 Energy Firms 
Hearings: Lawmakers hold Enron and Mirant in contempt for refusing to help in 
pricing probe. 

By CARL INGRAM, Times Staff Writer 

?????SACRAMENTO--Angered by the refusal of electricity wholesalers to 
surrender information about suspected price gouging, a Senate committee voted 
Thursday to hold two big energy companies in contempt of the Legislature.
?????It was uncertain what punishment, if any, may be in store for Enron 
Corp. of Houston and Mirant Corp. of Atlanta. But committee members said 
potential sanctions could include heavy fines and/or the jailing of corporate 
executives.
?????"Jailing of an individual is an option and we intend to preserve all our 
options," warned state Sen. Joe Dunn (D-Santa Ana), chairman of the committee 
investigating whether the wholesalers had manipulated the market. 
?????"Could we impose, say, $9 billion in fines?" Sen. Debra Bowen (D-Marina 
del Rey) asked rhetorically. 
?????Enron reacted angrily. "This is a shakedown," charged spokesman Mark 
Palmer. "And if this is a shakedown, we're going to protect our legal rights."
?????Enron had further enraged the committee by sending a letter saying the 
legislative panel had no authority to conduct its investigation because 
wholesale prices were the "exclusive jurisdiction" of the Federal Energy 
Regulatory Commission.
?????A spokesman for Mirant said the company intends to keep talking to the 
committee to reach an agreement.
?????The bipartisan committee had been prepared to find eight 
generators--mostly out-of-state companies--in contempt for refusing to 
produce the subpoenaed records. But by the end of the four-hour hearing, 
companies that said they would cooperate--AES, Duke, Dynergy, NRG, Reliant 
and Williams--escaped a citation, at least temporarily.
?????Though the committee found Enron and Mirant in contempt, its action is 
subject to ratification by the full Senate.
?????Dunn said contempt citations are so rare there are few guidelines to 
follow in determining a punishment. He said it "could be anything that the 
Senate believes is necessary and reasonable."
?????The finding of contempt for failure to obey a legislative subpoena is 
rarely used in California. Sources said it last was done in 1929 when an 
officer of a cement company refused to cooperate in a price-fixing 
investigation.
?????Late in 2000 and earlier this year, the profits of major electricity 
wholesalers soared astronomically, throwing the state's two biggest 
utilities, Pacific Gas and Electric Co. and Southern California Edison Co., 
into financial chaos. Edison is teetering on bankruptcy and PG&E is in 
Bankruptcy Court.
?????The committee, which first asked the companies to provide the 
information voluntarily in April, encountered strong resistance from the 
energy companies. They complained that their trade secrets might be exposed 
to competitors, the public and government regulators.
?????Frustrated, the committee two weeks ago issued subpoenas demanding the 
information, including whether the power sellers had destroyed any records.
?????The committee set Thursday as the deadline for compliance and threatened 
to find violators in contempt, a tactic that appeared to turn around all but 
Enron and Mirant.
?????"Let's move forward. We want to facilitate your investigation," said 
Duke attorney Joel Kleinman of Washington, whose company had objected to its 
subpoena.
?????At the last minute, several sellers began sending urgent fax letters or 
witnesses to Dunn. Dunn said a quick scan of the letters showed wholesalers 
were pleading for a second chance and assuring that the subpoenaed data would 
be forthcoming.
?????Kleinman told the committee Duke did not want to be held in contempt.
?????"We will make tens of thousands of documents available for inspection," 
Kleinman said.
?????But he said Duke and the committee staff still must settle on a 
confidentiality agreement, a matter he indicated was close to resolution. 
Other wholesalers appeared to fall into line.
?????Dunn said he was concerned that "minor problems" in reaching a 
confidentiality agreement might become a tactic for further delay.
?????The committee gave the six companies until July 10 to reach 
confidentiality agreements and turn over a vast assortment of records.
?????The contempt finding against Mirant and Enron would be abandoned if 
they, too, provided the confidential documents by July 10, when the committee 
will review the companies' compliance.
?????The wholesalers also are the targets of similar investigations by Atty. 
Gen. Bill Lockyer and the state Public Utilities Commission.
--- 
?????Times staff writer Nancy Vogel contributed to this story.

Copyright 2001 Los Angeles Times 





California Senate committee cites power companies for contempt for 
withholding documents JENNIFER COLEMAN, Associated Press Writer
Friday, June 29, 2001 
,2001 Associated Press 
URL: 
http://www.sfgate.com/cgi-bin/article.cgi?file=/news/archive/2001/06/29/nation
al0450EDT0476.DTL 
(06-29) 01:50 PDT SACRAMENTO, Calif. (AP) -- 
A Senate committee investigating possible price manipulation in California's 
energy markets cited two power generators for not turning over documents 
requested for the probe. 
The documents -- which include details on bidding, pricing and other aspects 
of power sales -- had been requested in subpoenas issued earlier this month 
to Enron Corp., Mirant Inc. and four other generating companies. 
On Thursday, the Senate Select Committee to Investigate Market Manipulation 
approved a contempt motion, citing Enron and Mirant for not producing the 
materials. The other four generators complied. 
The motion still needs approval by the full Senate. 
The Senate Rules Committee had subpoenaed the materials. 
Enron, based in Houston, said its documents are outside the committee's 
jurisdiction because they are kept in Texas. An attorney for Atlanta-based 
Mirant said the company wanted to comply, but did not act quickly enough to 
avoid the contempt vote. 
California law does not specify penalties for a contempt finding, said 
Laurence Drivon, the committee's special counsel. "The Senate can take such 
action as it deems necessary and appropriate," he said. 
Enron's claim that the committee lacked jurisdiction outraged some senators, 
who said previous legislative investigations have sought documents from 
throughout the world. 
"If they've done nothing, if they've got nothing to hide, there's no reason" 
not to comply, Sen. Debra Bowen said. 
The committee has been negotiating with the companies to try to reach a 
confidentiality agreement for the release of the documents, and has asked the 
generators to sign agreements not to destroy any potentially relevant 
documents. 
So far, some companies have agreed verbally, but none has signed. 
Duke Energy agreed to comply with the subpoenas and store documents in a 
repository in Sacramento, if the company and the committee can agree on how 
to keep the documents confidential. Lawyers for both sides said they could 
work out an agreement. 
Enron and Mirant can have the contempt citations withdrawn if they turn over 
the requested documents to the repository by July 10. 
On the Net: 
Senate select committee: 
www.sen.ca.gov/ftp/sen/committee/select/INVESTIGATE/_home1/PROFILE.H TM 
Enron: www.enron.com 
Mirant: www.mirant.com 
,2001 Associated Press ? 





California oil refineries exempt from rolling blackouts 
KAREN GAUDETTE, Associated Press Writer
Friday, June 29, 2001 
,2001 Associated Press 
URL: 
http://www.sfgate.com/cgi-bin/article.cgi?file=/news/archive/2001/06/29/state1
545EDT0208.DTL 
(06-29) 00:02 PDT SAN FRANCISCO (AP) -- 
Rolling blackouts will no longer threaten the oil refineries that produce 
more than a third of California's gasoline supply. 
State power regulators voted unanimously Thursday to exempt the refineries 
and associated pipelines and chemical factories from power outages, ensuring 
a stable fuel supply and helping keep gasoline prices from rising at the 
height of the summer driving season. 
An outage of even a minute can knock a refinery out of service for up to a 
week, the California Energy Commission told state power regulators. 
Carl Wood, a member of the state Public Utilities Commission, said he 
proposed the exemption after the petroleum industry, Gov. Gray Davis, the 
Legislature and the California Energy Commission warned the PUC that the gas 
supply could drop and prices could soar without quick action. 
"The importance of the petroleum industry to California's economy has been 
recognized by the Legislature," Wood said. 
The vote affects 13 refineries in Pacific Gas and Electric Co. and Southern 
California Edison territory. 
Four oil refiners -- Valero Energy, Tosco, Exxon Mobil and Equilon 
Enterprises -- had petitioned for blackout exemptions at their facilities 
which produce about one-fourth of the state's refining capacity. That's about 
2.3 million barrels a day. 
The state's largest refiner, San Francisco-based Chevron Corp., bypassed the 
PUC and told Davis it would stop production at its two California refineries 
if regulators and state lawmakers did not protect them from blackouts. 
Chevron controls about 18 percent of the state's refining capacity. 
The PUC is still reviewing applications from nearly 10,000 other businesses 
which hope to be protected from rolling blackouts. Wood said exempting the 
refineries only accounts for one percent of the pool of customers that can 
receive outages. That means the PUC can exempt only 9 percent more from that 
pool when it decides in August who will get to keep their lights on and their 
businesses running when blackouts roll through. 
On the Net: 
www.cpuc.ca.gov/ 
,2001 Associated Press ? 





Conservation funds restored to energy legislation by Bush 
New York Times
Friday, June 29, 2001 
,2001 San Francisco Chronicle 
URL: 
http://www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2001/06/29/M
N73892.DTL 
Washington -- President Bush sent Congress proposed energy legislation 
yesterday that includes the restoration of nearly $300 million for 
Clinton-era research programs on energy conservation. 
The conservation money came after a series of polls showed that Americans 
believed Bush's energy plans were primarily about helping oil companies and 
drilling in the Arctic, rather than encouraging energy savings. 
Bush's focus on conservation runs contrary to earlier dismissive references 
made by Vice President Cheney, who suggested that conservation did not 
constitute an energy strategy. 
In addition to restoring the research funds, Bush called for federal and 
corporate work on small devices called "vampire slayers" that could cut the 
power consumption of appliances that draw electricity as they await use -- 
copiers, fax machines and cell-phone chargers. 
Environmental groups said Bush was avoiding mention of conservation measures 
that could prove far more effective, such as raising fuel-efficiency 
standards for cars. 
"Everything he did on the standby power problem is good, but it is 
comparatively small potatoes," said David Nemtzow, president of Alliance to 
Save Energy, which has been lobbying for more conservation measures. Both 
mileage standards and restoring the Clinton administration's proposals on air 
conditioner efficiency would save far more power than anything the president 
discussed yesterday, he said. 
,2001 San Francisco Chronicle ? Page?A - 7 





Refineries exempt from blackouts 
Oil firms' support services also shielded 
Bernadette Tansey, Chronicle Staff Writer
Friday, June 29, 2001 
,2001 San Francisco Chronicle 
URL: 
http://www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2001/06/29/M
N168779.DTL 
Yielding to appeals from Gov. Gray Davis and industry officials, state 
regulators exempted oil refineries yesterday from rolling blackouts that may 
sweep California this summer if electricity supplies run short. 
The state Public Utilities Commission shielded the state's 13 refineries from 
service interruptions that Chevron and other companies said could disrupt 
gasoline production for weeks and increase prices. 
The new exemption also covers some support services, such as waste- treatment 
plants and contractor firms, that the oil companies maintain are essential to 
keep the refineries running. 
The decision is good news for motorists, said Scott Folwarkow, a spokesman 
for the Valero refinery in Benicia. 
"California has a tight supply-demand balance (for gasoline)," Folwarkow 
said. "By ensuring that refineries are exempt from blackouts, you should not 
have shortages that could translate into higher prices at the pump." 
The commission had stripped the refineries of exemptions earlier this year as 
California's utilities tried to prune the ranks of customers immune from 
blackouts to eliminate any that did not qualify as "essential services," such 
as hospitals and fire stations. To avoid a power system crash, the utilities 
must each have 40 percent of their customers vulnerable to blackouts. 
During power emergencies, customers on numbered circuits known as "blocks" 
take their turn suffering interruptions that may affect no more than one 
block and last for two hours or less. 
But refinery officials warned that even brief blackouts that forced units to 
shut down suddenly could damage equipment and halt production for days or 
weeks. 
In response to the industry call for a blanket refinery exemption, the PUC in 
May invited not only refineries but all other businesses to make their case 
that public health or safety could be threatened if they were not spared from 
breaks in service. Those applications are now being considered by a 
consultant, 
and the commission is not scheduled to act on them until August. 
But as summer approached, Chevron sent a letter to Davis warning that it 
would cut back production at its two refineries in Richmond and El Segundo if 
the company could not be assured of a reliable power supply. Chevron said it 
would produce only at levels that could be supported by its cogeneration 
plants. 
Davis followed up with a letter to the PUC urging a blanket refinery 
exemption, a measure supported by the California Energy Commission, state 
Assemblyman Joe Canciamilla, D-Pittsburg, and other state officials. 
Chevron spokesman Fred Gorell said the PUC action yesterday was "good public 
policy and in the best interest of California consumers." 
"This provides the reliability we need to operate at or near capacity," 
Gorell said. 
E-mail Bernadette Tansey at btansey@sfchronicle.com. 
,2001 San Francisco Chronicle ? Page?A - 7 








Officials criticize energy report 
Posted at 8:06 p.m. PDT Thursday, June 28, 2001 
BY CHRIS O'BRIEN 

Mercury News 


California's energy crisis is expected to increase unemployment, reduce 
production and aggravate an already weakening economy, according to 
researchers at the University of California-Los Angeles. 
The impact, however, will likely depend on how state officials choose to deal 
with the failed deregulation scheme. The authors of the report released 
Thursday come down heavily in favor of lifting price controls and 
dramatically increasing the price consumers pay as a way to reduce the 
economic fallout. 
``California's economy is sufficiently large and dynamic that it will weather 
the current power crisis without being derailed,'' the report says. 
``However, our analysis reveals that this impact can be moderated by an 
approach that does not shift today's problems to tomorrow.'' 
The study, ``Short Circuit: Will the California Energy Crisis Derail the 
State's Economy,'' came under fierce criticism from Gov. Gray Davis' office. 
Steven Maviglio, Davis' spokesman, said many of the assumptions used to 
produce the report are either outdated or flat wrong. 
``It deserves its rightful place sitting on the shelf gathering dust,'' 
Maviglio said. ``Like any crystal-ball report, it's essentially irrelevant.'' 
Edward Lamer, a UCLA professor, and Christopher Thornberg, a visiting 
professor at UCLA, collaborated on the report with a team of researchers from 
the Cambridge Energy Research Associates. 
The study concludes that California's gross state product will be cut by 
anywhere from .7 percent to 1.5 percent in 2001 as a result of the energy 
crisis. In addition, energy problems will increase unemployment by .5 percent 
in 2001 and 1.1 percent in 2002. The report predicts consumers can expect 112 
hours of rolling blackouts this year. 
However, the report argues that the impact could be dramatically reduced if 
the state would raise the price consumers pay for energy to match the 
wholesale costs. This could reduce blackouts to 12 hours, lower the debt and 
interest the state will have to pay for electricity and encourage investment 
in the state to increase energy supplies. 
But Peter Navarro, a management professor at the University of 
California-Irvine, was skeptical of the report's findings. He said it was 
almost impossible to build models complex enough to take into account all the 
factors that affect energy prices in the state. 
In addition, he said the report seems to assume that there is no manipulation 
of the current market, which Navarro argues could be distorting prices as 
well. 
``How do you justify raising retail rates to 45 cents for power that costs a 
nickel to generate when there is some evidence that the market is flawed?'' 
Navarro said. ``This report seems to have an industry point of view and an 
industry agenda.'' 


Contact Chris O'Brien at cobrien@sjmercury.com or (415) 477-2504. 











Extra `power plant' shows deregulation can spur innovation 
Published Friday, June 29, 2001, in the San Jose Mercury News 
CALIFORNIA fired up a medium-sized power plant on Wednesday, and might be 
about to discover another one hiding in the electric grid. 
The first is of the steel-and-concrete variety. The Sunrise Cogeneration and 
Power Project near Bakersfield is a 320-megawatt plant, generating power for 
some 240,000 homes. The plant will be eligible for a $1 million bonus for 
opening ahead of schedule. But while the construction was speeded along by 
new state policies, the application for the plant was filed in December 1998. 
The plant illustrates both the previous unhurried permit process and the 
current speedy one. 
More intriguing is the second ``power plant,'' which is not a plant at all, 
but a way of operating the grid to squeeze more electricity out of it. 
Scientists and technicians think that reducing the voltage coming into homes 
from 120 volts to 117 volts would save the equivalent of 500 megawatts 
statewide. 
We'll take their word for it. But in any event, such a reduction evidently 
would not damage appliances or electronic equipment. If that's true, it 
should be implemented. It's a free power plant. 
Encouraging such ingenuity is one benefit of a deregulated market in 
electricity.
















Gas Co. to give consumers nearly 50% price break in July 
An average user can expect to save $5.73 compared with a year ago. 
June 29, 2001 
By KATE BERRY
The Orange County Register 
After months of paying the highest natural-gas prices in the country, 
consumers in Southern California will get some relief this summer. Southern 
California Gas Co. said it will cut gas prices nearly 50 percent on July 
bills, the largest drop in four years. 
The Gas Co. will cut its price per therm to 27 cents for July bills,down from 
52.1 cents in June and 46.1 cents in July 2000. A therm is a measure of heat 
energy. It takes 0.02 therm to brew a pot of tea. 
An average consumer who uses roughly 30 therms a month can expect to pay 
$20.10, including distribution charges, on the July gas bill, vs. $25.83 a 
year ago, said Ed van Herik, a spokesman. 
The company is required to reduce consumer rates when wholesale gas prices 
fall. The San Diego-based utility, which supplies 5 million households with 
gas, had raised prices as high as 74 cents per therm in March because of a 
shortage of natural-gas supplies. 
Prices have fallen because the company is buying natural gas mostly from 
producers in the Southwest, rather than at the California border, where 
prices are higher, spokeswoman Denise King said. 
Border prices are the subject of investigations by federal regulators. El 
Paso Energy Corp. of Houston, the major gas supplier to Southern California, 
is the target of federal inquiries to determine why gas prices in California 
are so much higher than in other parts of the country. 
The wholesale cost of natural gas delivered to Southern California has ranged 
from $11 per million British thermal units earlier this month to as much as 
$60 per million Btus in December. 
On Thursday, prices at hubs in the Western region fell to as low as $3.34 per 
million Btu. 









California Municipal Electric Utility Launches Apogee Demand Exchange to 
Reduce Peaks 






June 29, 2001 




ATLANTA--(BUSINESS WIRE)--June 28, 2001 via NewsEdge Corporation - 
Sacramento Municipal Utility District (SMUD), one of California's largest 
municipal electric utilities, is using Apogee Interactive's Demand 
Exchange(SM) Internet platform to reduce peak electric loads with its 
commercial and industrial customers. With SMUD's voluntary, web-based 
programs EnergyNet (Demand-Bid) and EnergyDirect (Direct Load Control), SMUD 
offers customers financial incentives in exchange for load reductions. All 
communication and transactions are conducted over the web and customers are 
given anywhere from one hour to two days to plan ahead for reduced electrical 
use. 
Using The Demand Exchange website, EnergyNet customers review SMUD's offered 
price for upcoming peak periods and automatically calculate what their 
financial savings will be using various load reduction scenarios. If they 
elect to participate, they submit their pledge over the website. 
"For us the key to making a curtailment program work is automation. The 
Demand Exchange platform lets us notify many customers simultaneously, see 
how they plan to respond, and streamline the process of posting bill credits 
associated with those customers' participation," said Harlan Coomes, program 
manager for SMUD. 
SMUD is just one of the California utilities using The Demand Exchange. The 
California Energy Commission has approved The Demand Exchange as one of six 
key components in its Peak Load Reduction Program menu. 
"The Demand Exchange offers customers an easy way to reduce costs and 
utilities an effective way to aggregate relatively small individual loads to 
achieve significant system-wide impact at enormously reduced administrative 
costs," said Joel Gilbert, chief executive officer of Apogee. 
The number of utilities using The Demand Exchange has jumped to more than 25, 
including San Diego Gas & Electric Co. (NYSE: SRE), Portland General 
Electric, Entergy (NYSE: ETG), GPU Energy (NYSE: GPU) and Southern Company 
(NYSE: SO). Apogee projects the Exchange will facilitate 100,000 
megawatt-hours in peak load reductions this summer and twice that amount by 
the end of the year. 
SMUD's EnergyNet and EnergyDirect programs are a cooperative effort between 
SMUD, Apogee Interactive, ABB Energy Interactive Inc. and Stonewater 
Software. 
Formed in 1994, Apogee is a leading provider of Internet solutions, web 
content and e-learning courseware to the energy industry. Apogee's clients 
include all of the major U.S. investor-owned utilities and many of the 
country's cooperatives and municipal systems. Company information is 
available at www.apogee.net. 
CONTACT: Apogee Interactive | Kathy Hart | Mobile: 404/271-1489 | Office: 
770/270-6512 | Fax: 770/270-6532 | khart@apogee.net










Financial 
Greenspan Unafraid Of Energy Price Caps; Calif. Problems Ease, Fed Chief Says
John M. Berry
? 
06/29/2001 
The Washington Post 
FINAL 
Page E03 
Copyright 2001, The Washington Post Co. All Rights Reserved 
In a broad analysis of the state of U.S. energy markets, Federal Reserve 
Chairman Alan Greenspan last night disagreed sharply with the Bush 
administration's argument that capping spot prices for electricity in 
California would discourage construction of new power plants. 
Greenspan, in a speech to the Economic Club of Chicago, argued exactly the 
opposite. 
"Analogies to the economics of office buildings are evident," Greenspan said. 
"Few office buildings would be constructed in the absence of the ability to 
reach long-term leases. Short-term rental agreements are no more conducive to 
new office construction than spot prices for electric power are to the 
building of new power plants." A copy of the text was released in Washington. 
California 's energy problems appear to be easing, but they still represent a 
"worrisome situation for Californians, certainly," Greenspan said. "And 
because the state comprises one-eighth of our national [economy], it should 
be a concern for the U.S. economic outlook as well. Fortunately, the overall 
effects on the California economy, and on those of its neighboring states, 
seems to have been modest, at least to date." 
Greenspan noted that large increases in the cost of gasoline and other 
petroleum products, natural gas, and electricity have hurt the U.S. economy 
in several ways. The most significant is the reduced profitability of 
non-energy firms, which has forced many companies to reduce spending for new 
plants and equipment. 
"As best we can infer, a substantial part of the rise in the total costs of 
corporations between the second quarter of last year and the first quarter of 
this year reflected higher energy costs, only a small part of which companies 
apparently were able to pass through into higher prices" of the things they 
sell, he said. 
Most recently, however, natural gas prices "have fallen significantly" and so 
have gasoline prices, particularly in the Midwest, Greenspan said. " 
Electricity power costs continued to rise through May, but overall energy 
prices paid in April and May were down from the levels of the first quarter, 
suggesting some easing in pressures on profit margins from energy this 
quarter." 
Greenspan cautioned that "because of the unpredictability of events in the 
Middle East," crude oil supplies are never fully secure. "Nonetheless, it is 
encouraging that in market economies, well-publicized forecasts of crises, 
such as earlier concerns about gasoline price surges this summer, more often 
than not fail to develop, or at least not with the frequency and intensity 
proclaimed by headline writers." 
Greenspan said it was necessary to rely on market forces to guide both energy 
production and consumption. "In the short run, energy markets must be 
monitored closely for their potential effects on the cyclical behavior of the 
macro economy," he said. "Over the longer haul, the experience of the past 50 
years -- and indeed much longer than that -- suggest the central role that 
can be played by market forces in conserving scarce energy resources, 
directing those resources to their highest valued uses, and ultimately 
ensuring adequate productive capacity for the future." 
By Greenspan's analysis, California made a serious mistake by insisting that 
companies supplying power to retail customers buy that power only on the spot 
market. 

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










Economy 

Federal Energy Panel Approves
Power Price Controls for New York
By Andrew Caffrey
? 
06/29/2001 
The Wall Street Journal 
Page A2 
(Copyright (c) 2001, Dow Jones & Company, Inc.) 
Federal energy regulators, who last week authorized electricity price 
controls for California and 10 other Western states, yesterday approved a 
plan by New York officials to curb price spikes in that state's volatile 
wholesale electricity markets. 
However, the Federal Energy Regulatory Commission expressed concern that the 
New York measure could restrict electricity prices that are legitimately 
high. The agency, therefore, allowed the New York curbs only as a temporary 
measure through Oct. 31, which would see New York through the 
high-power-demand summer months. State officials had sought approval for the 
measure as a continuing tool to keep prices in check. 
New York officials say the mitigation plan is necessary this summer to 
prevent power generators from taking advantage of the state's tight supply 
market and charging excessive prices for electricity when demand is at its 
greatest. 
The federal commission's approval is "an important step toward protecting 
energy consumers," New York Gov. George Pataki said in a statement. Mr. 
Pataki's appointees at the New York Public Service Commission had first 
pushed for the price-curb plan after concluding in December that the state's 
wholesale power markets are "dangerously vulnerable to market power abuse 
during a normal or hotter- than-normal summer." 
Under the plan, the New York Independent System Operator Inc., which 
administers the state's wholesale trading markets, would automatically review 
generators' bids when power prices exceed $150 a megawatt hour during periods 
of high demand or when many electric plants are offline. System Operator 
officials would look for bids that are either $100 more or 300% higher than a 
historic average of bids from an individual facility to determine whether the 
generator is trying to manipulate the market. If the generator can't offer a 
good explanation for its high bid, System Operator officials automatically 
would lower it to the historic average. 
But the federal commission was hardly enthusiastic about the New York plan. 
The agency sided with power generators in contending the New York plan would 
allow officials to cancel high bids in cases lacking evidence of generators' 
trying to manipulate the market. The federal commission, saying the plan 
should be only a "temporary solution," also expressed concern that the system 
wouldn't allow for "sufficient consultation" with generators. 
While expressing "disappointment" in the ruling, Gavin Donohue, executive 
director of the Independent Power Producers of New York Inc., said he was 
heartened that the federal commission "recognized there's problems" with the 
new plan and applied it for a limited time period. 
Mr. Pataki and New York Attorney General Eliot Spitzer both called on the 
federal commission to now authorize a separate pending proposal that would 
allow the New York System Operator to assess hefty fines and publicize the 
names of generators found to be charging excessive prices. 
The federal commission's approval yesterday follows its decision last week to 
impose price controls on California and 10 other states in the Western power 
market. The Western states' plan differs from New York's in that it uses 
California -specific energy data, such as natural-gas prices, to calculate a 
"proxy" price for electricity . That price is presumed "reasonable" and is 
applied, with minor variation, throughout the electrically interconnected 
11-state region. Generators can charge more, but, as in New York, may be 
forced to justify higher prices to federal regulators. The proxy price now is 
$92 a megawatt hour.