CA Reviews State Power Auction Results
California's closely watched entry into the long-term, bulk power market 
turned up 39 bidders at an average 6.9 cents/kWh price, the governor's office 
reported late Wednesday, as the state government finished its whirlwind 
27-hour, sealed-bid power auction. 
Gov. Gray Davis said the state received a "very representative bid with a 
good deal of power bid for, and it was a very good sample, certainly one that 
gives us all optimism." 
Tom Hannigan, director of the state water resource department who oversaw the 
auction, said the state obtained "a useful sample across all times of the day 
across the spectrum of the year, and we are quite pleased with the initial 
results. I look forward to looking through bids and developing some long-term 
contracts. Our fundamental responsibility here is to purchase power at the 
best possible prices for consumers and businesses." 
On Wednesday as the bids from the Internet-based auction were initially 
accessed, Davis said he expected a new law from the state legislature by Feb. 
1, giving the state authority to consummate deals involving the best of the 
bids received in the quick-turnaround auction. 
The bids covered six-month, three-, five- and 10-year durations. Hearings in 
Sacramento continued on the omnibus new law(s) that would give the state 
long-term buying authority, and also decide how to handle operation of the 
utility hydroelectric generation system and over-market purchased power 
contracts with so-called "qualifying facilities" (QFs). 
Bidders, utilities and other market participants expressed initial enthusiasm 
for the state's new program, with San Diego-based Sempra's CEO telling the 
financial community Thursday that he is "encouraged" by the state auction. 
"We don't yet have detailed information on the bids in the first round --- 
and in my opinion that's what it is, a first round --- but from what the 
governor has said, I am quite encouraged that we are going to see power 
allocated to the three utilities at below the costs that they have recently 
been paying in the wholesale power market," said Sempra's Stephen Baum. "That 
should ease the financial situation of all three utilities and give us 
greater liquidity, opening the way to further measures being discussed, such 
as securitization of uncollected balances." 
California's governor also pushed ahead on several other fronts, announcing 
three new energy-related advisors plucked from the public and private 
sectors: Mike Peevey, a former utility president turned-successful-energy 
startup entrepreneur; S. David Freeman, general manager of the nation's 
largest municipal utility and a veteran of more than four decades in public 
power; and Frank Zarb, NASDAQ Stock Market CEO and a former top-level energy 
adviser in Presidents Nixon and Ford administrations in Washington, D.C. in 
the 1970s. 
Peevey, whose wife was elected to the state legislature in November, will 
serve as Davis's energy adviser; Freeman will help the state water resources 
department develop long-term power contracts and Zarb will advise Davis on 
energy finance and market issues. 
Also on Wednesday, Davis announced the newly created five-member politically 
appointed board for the state-chartered transmission grid operator (Cal-ISO) 
held its first meeting. It replaces a 26-member industry stakeholder board 
that Davis has regularly criticized for representing energy companies rather 
than consumers. The new members include close aides to the governor, such as 
his business/transportation cabinet-level secretary, head of the state 
Electricity Oversight Board, and his senior policy adviser, along with a 
veteran consumer group attorney and the chief staff person at the Silicon 
Valley Manufacturing Group. 
A California-based spokesperson for Duke, Tom Williams, confirmed that his 
company participated in the auction and that its bids are "all contingent on 
coming to agreeable credit terms." Reliant also reportedly participated in 
the auction. 
"The balls in the state's court now," Williams said. In addition to 
announcing it had made "credible bids" in the state water resources 
department-run electricity auction, Duke noted that pre-scheduled outages of 
two power plant units to upgrade their air emission controls --- one each at 
Moss Landing and San Diego's South Bay --- were nearing completion and would 
be back the end of January (Moss) and March respectively.