Calif Sen Pwr Probe Committee OKs Deposing Energy Execs ?????
???Updated: Friday, July 20, 2001 08:16 AM?ET ????? ?(This article was 
originally published ???
???Thursday) ?By Jason Leopold ?OF DOW JONES NEWSWIRES 

Contra Costa Times, July 20, 2001, Friday, STATE AND REGIONAL NEWS, K3856,
????777 words, Energy secretary, former Gov. Wilson speak on energy crisis, By
????Rick Jurgens

Los Angeles Times, July 20, 2001 Friday, Home Edition, Page 25, 809 words,
????Edison Bailout Bills Remain Stalled, MIGUEL BUSTILLO, CARL INGRAM, TIMES
????STAFF WRITERS, SACRAMENTO

Los Angeles Times, July 20, 2001 Friday, Home Edition, Page 1, 1233 words,
????Edison May Avert Bankruptcy Filing; Energy: Thanks to a rate increase and
????natural gas price drop, the utility's improved cash flow may cover its
????electricity costs., JERRY HIRSCH, TIMES STAFF WRITER

The San Francisco Chronicle, JULY 20, 2001, FRIDAY,, FINAL EDITION, NEWS;,
????Pg. A1, 863 words, State advisers forced to sell energy stocks; 
???CONFLICT:
????Holdings called unethical, Mark Martin, Sacramento

The San Francisco Chronicle, JULY 20, 2001, FRIDAY,, FINAL EDITION, NEWS;,
????Pg. A19, 447 words, Democrats defy Davis with bill on PUC; ???Utilities
????panel would keep power over rates, Lynda Gledhill, Sacramento

The San Francisco Chronicle, JULY 20, 2001, FRIDAY,, FINAL EDITION,
????EDITORIAL;, Pg. A24;, 295 words, More energy fallout

The Associated Press State & Local Wire, July 20, 2001, Friday, BC cycle,
????3:31 AM Eastern Time, State and Regional, 648 words, PUC agrees to adjust
????electric rates if necessary, By KAREN GAUDETTE, Associated Press Writer, 
SAN
????FRANCISCO

CBC TV, THE NATIONAL ( 10:00 PM ET ), July 19, 2001, Thursday, 1466 words,
????Power Struggle, ALISON SMITH

Daily News, Los Angeles, Calif., July 19, 2001, Thursday, LD-CHEAPER-POWER,
????809 words, Cheaper Energy Undercuts California's Long-Term Power 
Contracts,
????By Dana Bartholomew

Scripps Howard News Service, July 19, 2001, Thursday, COMMENTARY, 687 words
????, Six months later, utility debts are still toughest nut to crack, DAN
????WALTERS, SACRAMENTO, Calif.



Calif Sen Pwr Probe Committee OKs Deposing Energy Execs ?????
Updated: Friday, July 20, 2001 08:16 AM?ET ????? 
?

(This article was originally published Thursday) 

By Jason Leopold 

OF DOW JONES NEWSWIRES 

LOS ANGELES (Dow Jones)--A California Senate committee investigating 
manipulation in the state's wholesale power market approved a measure late 
Thursday, authorizing the committee to depose the chief executives of major 
energy companies to provide insight into the companies' trading practices. 

The Senate Select Committee to Investigate Market Manipulation voted 28-6 in 
favor of deposing some of the energy sector's most powerful chief executives. 


The move comes a day after the committee held Reliant Energy Inc. (REI, news, 
msgs) and Enron Corp. (ENE, news, msgs) in contempt for refusing to provide 
documents on its electricity trading and sales practices. The full Senate is 
expected to vote on the contempt charge and decide the punishment to impose. 

Sen. Joe Dunn, D-Santa Ana, the committee chair, would have carte blanche to 
depose executives, such as Enron Chairman Ken Lay, who has been singled out 
by Attorney General Bill Lockyer for gouging consumers in the state. 

Representatives of the energy companies under investigation were not 
available for comment. 

The committee has been investigating whether energy companies knowingly 
manipulated the state's wholesale electricity market to drive up prices and 
create artificial shortages. 

It has yet to uncover a "smoking gun." But has secured the testimony of 
former Duke Energy (DUK, news, msgs) power plant employees who told the 
committee that the company reduced output at a San Diego power plant during 
power emergencies to drive up power prices. 

The state's Independent System Operator, however, conceded that it ordered 
the fluctuations in capacity at the power plant. 

-By Jason Leopold; Dow Jones Newswires; 323-658-3874; 
jason.leopold@dowjones.com 


??????????????Copyright 2001 Knight Ridder/Tribune News Service
???????????????????????Knight Ridder/Tribune News Service

??????????????????????????????Contra Costa Times

????????????????????????????July 20, 2001, Friday

SECTION: STATE AND REGIONAL NEWS

KR-ACC-NO: ?K3856

LENGTH: 777 words

HEADLINE: Energy secretary, former Gov. Wilson speak on energy crisis

BYLINE: By Rick Jurgens

BODY:

??SAN FRANCISCO _ Two prominent Republicans came here on Thursday to promote
free-market solutions to the energy crisis that has hit California and 
threatens
to spread nationwide.

??Spencer Abraham, energy secretary in the Bush administration, only briefly
mentioned the state's current troubles and instead regaled 600 attendees at a
Bay Area Council banquet with the promises of new technologies.

??Earlier, former Gov. Pete Wilson focused on the past as he offered 90 people
at the Public Policy Institute of California a rambling defense of the 1996
electricity industry restructuring law he signed.

??At the heart of electricity industry restructuring is a traditional
Republican theme: a preference for market forces and competition over 
regulators
and government planning. But the fate of California's electricity industry
restructuring plan now rests in the hands of Gray Davis, the state's 
Democratic
governor. ?

??Abraham never mentioned Davis.

??"I didn't come here to play the blame game," he said in a news conference.

??California's electricity problems are merely the most intense in a nation
facing "rising demand, stagnant supplies and an energy (infrastructure) that 
is
out of date and in need of repair," he said.

??Picking up on an initiative that has emerged as a priority for some 
advocates
of restructuring, Abraham stressed the need for enhanced federal authority to
meld regional networks of high-voltage transmission lines into a national 
grid.

??But Abraham's main pitch was that California technology companies could
contribute "intellectual capital and ingenuity to the world of megawatts."

??Looking far into the new century, he offered a vision of an energy industry
replete with micro turbines, fuel cells and hybrid engines.

??"Our carbon-based economy itself may pass from the scene to be replaced,
perhaps, by a hydrogen- based economy," he said.

??Wilson's concerns were more prosaic. He defended restructuring _ now plagued
by soaring prices and rolling blackouts _ as a step forward from the previous
structure, where electricity came from regulated monopolies.

??"There were flaws," Wilson said of the restructuring bill that he signed 
into
law in 1996. "I acknowledge that. They were less important than launching
California on the path to deregulation."

??Restructuring was the only way to bring down power costs that were higher
than in other states, and to break a regulatory logjam that had limited power
plant development, he said.

??Wilson criticized the law's retail rate freeze. Although it triggered a
financial crisis for the state's utilities, the freeze was largely "a
self-inflicted wound," insisted upon by utilities seeking to be repaid for
costly investments in nuclear plants and contracts with small generators, he
said.

??Wilson also said it had been a mistake to forbid the utilities to sign
long-term contracts with generators. Those were ruled out because regulators
feared such contracts would give utilities an unfair advantage as competition
developed, he said.

??Noting that he had been singled out for criticism by Davis, Wilson fired
back, saying that Davis had been too slow to invoke the "virtually 
dictatorial"
powers that the governor has in emergencies, including electricity shortages.

??But Wilson expressed some sympathy for Davis, noting that the Legislature
would not have allowed faster power plant siting and construction without a
crisis.

??He also grudgingly complimented his successor's political skills.

??"I admire Gov. Davis' ability to conduct public relations," Wilson said,
noting that a visit by President George W. Bush had turned into an "absolute
public relations triumph for the governor."

??Wilson echoed some of Davis' themes. Under presidents Clinton and Bush, the
Federal Energy Regulatory Commission's response to the crisis had been "a bit
slow off the mark," Wilson said.

??There remain "unanswered questions" about the role of natural gas suppliers,
and whether shortages and high prices in California resulted from "artificial 
or
real constraints on pipeline capacity," he added.

??Generators, while not the cause of the crisis, should also be held to
account.

??"If people have been guilty of gouging, they should pay up," he said.

??Wilson said the current troubles are a symptom of the state's failure to 
plan
for growth. The electricity crisis "will be dwarfed in the future by a water
crisis," he warned.

??ARCHIVE PHOTOS on NewsCom (from KRT Photo Service, 202-383-6099):

??SPENCER ABRAHAM

??KRT CALIFORNIA is a premium service of Knight Ridder/Tribune

??(c) 2001, Contra Costa Times (Walnut Creek, Calif.).

??Visit the Contra Costa Times on the Web at http://www.cctimes.com/
 
JOURNAL-CODE: CC

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

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

??????????????????????July 20, 2001 Friday ?Home Edition

SECTION: Part A; Part 1; Page 25; Metro Desk

LENGTH: 809 words

HEADLINE: Edison Bailout Bills Remain Stalled

BYLINE: MIGUEL BUSTILLO, CARL INGRAM, TIMES STAFF WRITERS

DATELINE: SACRAMENTO

BODY:

??Leading lawmakers conceded they would probably leave on their summer break
without passing legislation aimed at rescuing Southern California Edison from
its financial straits as competing bailouts stalled in the Legislature 
Thursday.

??The Assembly is expected to consider one of two rival measures to save 
Edison
today, and the Senate is expected to take up an Edison rescue deal of its own.

??But all three pending measures face long odds and none have sufficient
support to clear both houses, legislative leaders said.

??With the Legislature set to quit for the summer as early as today, the
leaders predicted they would be forced to continue negotiations during the
monthlong recess in hopes of brokering a deal.

??"I can't imagine that in the next 24 hours" lawmakers will reach consensus 
on
an Edison rescue, said Assemblyman Fred Keeley (D-Boulder Creek), who 
coauthored
one of the lower house's rescue bills with Assembly Speaker Bob Hertzberg
(D-Sherman Oaks).

??One indication of the lack of enthusiasm for the legislation is that Keeley
himself does not support the measure that bears his name. "I don't believe 
that
this bill in its current form should become law," he said. "This bill is not
ready."

??The maneuvering in both houses Thursday capped a day of frenetic activity in
the state Capitol, which has become flooded with cell phone-carrying lobbyists
seeking to influence the Edison deal for seemingly every special interest in 
the
state.

??Yet amid the flurry of action, there seemed little chance of actually making
law. Many of the participants said the legislative debate appeared to be less 
an
attempt to pass a bill than a war of one-upsmanship between the houses to see
who could "lob a grenade" into the rival house and go home until August. That
way, if Edison soon winds up in Bankruptcy Court, leaders of each house could
argue they were not to blame.

??Hoping to head off a growing sentiment among lawmakers that bankruptcy may
not be such a bad alternative, Gov. Gray Davis spent the day working the 
phones
in hopes of persuading legislators that a government rescue of Edison would be
good for the state.

??To avoid mass blackouts, California has been purchasing billions of dollars
worth of electricity since the beginning of this year because the state's two
largest private utilities, Edison and Pacific Gas & Electric, are no longer
credit-worthy enough to buy power on behalf of their customers.

??The utilities lost that status and ran up billions in debt the last two 
years
because they were paying high prices for power on the wholesale market and 
could
not recover those costs from customers because of a state-imposed rate freeze.

??As a result, the state government is stuck in the power-buying business 
until
the utilities regain their financial footing--an expensive predicament that
threatens the state's financial health.

??Davis attempted to head off the crisis by negotiating rescues of the two
utilities, but PG&E lost faith in the talks and opted to take itself into
Bankruptcy Court in April, embarrassing the Democratic governor. 

??Days later, Davis reached a tentative rescue deal with Southern California
Edison. But the plan hit the Legislature with a thud amid concerns it was 
overly
generous to Edison, and it has languished for months.

??Last week, lawmakers finally picked up the pace and began moving forward 
with
a series of competing proposals to alter the governor's deal with Edison. But 
it
was clear from the outset that no consensus had emerged, and many lawmakers 
are
becoming convinced that legislative inaction--even if it means bankruptcy--may
be the best way to resolve Edison's financial predicament.

??"We're bailing out people who don't need to be bailed out," said Sen. Ross
Johnson (R-Irvine).

??Legislative leaders hoped to pass something before today when the Assembly
and Senate are scheduled to break for their traditional summer recess. The 
date
is considered important because Edison and Davis had set an Aug. 15 deadline 
for
lawmakers to take action on the rescue deal. If no bill is passed by then--as
seems likely--the utility has the right to walk away from negotiations.

??However, it became evident Thursday that the dueling measures making their
way through both houses lacked strong support.

??In the Assembly, the Hertzberg-Keeley bill, a modification of Davis' 
original
plan, was competing against a rival bill by Assemblyman Rod Wright (D-Los
Angeles), who had teamed with Republicans to push what he bluntly called a
"straight bailout" of Edison.

??In the Senate, Davis' original plan was amended by Sen. Byron Sher
(D-Stanford) and turned into a trimmed-down rescue plan that was opposed by
Edison.

??Sher's bill was voted down twice in policy committees Wednesday and 
Thursday,
but it was resuscitated both times, and is now on the Senate floor.

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

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

??????????????????????July 20, 2001 Friday ?Home Edition

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

LENGTH: 1233 words

HEADLINE: Edison May Avert Bankruptcy Filing;
Energy: Thanks to a rate increase and natural gas price drop, the utility's
improved cash flow may cover its electricity costs.

BYLINE: JERRY HIRSCH, TIMES STAFF WRITER

BODY:

??For the first time in months, Southern California Edison is collecting more
money than it is spending on electricity, a shift that could enable the 
utility
to avoid bankruptcy without a state intervention as dramatic as the proposed $
2.8-billion purchase of the company's transmission lines.

??The turnabout has come during the last several weeks as natural gas 
prices--a
major component in the cost of electricity--have plummeted and as Edison has
collected more money from customers through a record increase in rates 
approved
by state regulators.

??The utility this month expects to collect more than it will spend on
electricity--the first time that has happened since the state's power crunch
started in May 2000. If the trend holds, Edison would be able to cover several
hundred million dollars in losses that piled up after Feb. 1 from its 
purchases
of electricity, said executives at the Rosemead-based company.

??Edison's relief comes against a backdrop in which the California power 
crisis
appears to be easing, as consumers conserve energy, new power plants come 
online
and wholesale prices moderate from the high levels of last winter.

??The executives said that barring an unusually severe heat wave, which would
prompt customers to crank up energy-guzzling air conditioners, or another 
spike
in natural gas prices, Edison by early next year also could make payments on a
proposed bond offering to pay down its $3.5 billion in debt from energy
purchases before Feb. 1.

??Creditors of the utility and consultants working with the governor's office
agree that such a scenario could mean that Edison would be able to stay out of
U.S. Bankruptcy Court without the state buying the company's transmission 
lines,
which is a key element in Gov. Gray Davis' now-stalled proposal to rescue the
utility.

??Jim Scilacci, the utility's chief financial officer, has hinted at improving
company finances during conference calls with creditors holding $931 million 
in
defaulted bonds and notes in recent weeks. Investors have responded 
positively,
boosting the company's depressed stock price about 45% in the last six weeks 
to
a Thursday close of $14.70 on the New York Stock Exchange.

??Although Edison's cash flow may be enough to cover its electricity costs, 
its
huge debts keep it far from solvency. Moreover, the company still faces two 
wild
cards in its fight to avoid bankruptcy: California's own claims on that cash 
and
the utility's uncertain prospects of gaining state approval to use the money 
to
repay its debts.

??The Department of Water Resources is buying electricity for 27 million
Californians served by Edison and the state's two other regulated utilities. 
The
agency could disclose as soon as today how big a slice it will take from
Edison's rate collections to repay a proposed $13.4-billion bond offering to
cover the state's purchases.

??The water agency began buying electricity from private generators in 
January,
after Edison and Pacific Gas & Electric Co., the Northern California utility,
became mired in debt. PG&E went on to file for bankruptcy protection in April.

??"What this means for Edison all depends on how much money it can keep," said
Paul Patterson, an analyst with investment bank ABN Amro in New York.

??The water department's requirements could eat up much of the margin that has
provided Edison with its small cushion this month. However, Joseph Fichera,
chief executive of Saber Partners, which is advising the governor, said the
latest numbers indicate that there is enough money in current rates to 
implement
the governor's plan to pay for the utility's debt as well as the state's 
current
and future power purchases.

??Even if the water department allocation still left room for Edison to pay 
off
its debts, such a course of action would require approval by the state
Legislature and the Public Utilities Commission. Although energy trends appear
to allow the utility to regain its financial footing, analysts cautioned that
the utility still could find itself in Bankruptcy Court if the state doesn't
provide a method for Edison to pay its debts.

??"While we might be able to cover our costs going forward, it is equally
important that we have a way to pay off that $3.5-billion debt," said Brian
Bennett, an Edison vice president. "But without knowing what [the water
department's] revenue needs are, we won't know what is left over in rates to
cover our costs."

??Bennett blamed the utility's so-called under-collection--debts that piled up
as frozen consumer rates could not cover soaring wholesale electricity 
costs--on
what he called "flawed regulatory policies."

??Based on recent energy prices, Bennett said, "We are just only beginning to
repay the under-collection."

??The recently enacted rate increases, which kicked in last month, have pushed
what Edison can charge customers for the electricity component of their bills
from about 7 cents a kilowatt-hour to 10.27 cents.

??At the same time, declining natural gas prices have sliced in half what the
utility must pay to a group of small and alternative-energy companies that
generate about 27% of its electricity needs. Edison, for example, paid this
group 18.6 cents a kilowatt-hour in February. That dropped to 13.6 cents by 
May
and now stands at about 7.5 cents. Each penny decline in the cost of 
electricity
from this group of generators represents more than $200 million in savings for
Edison on an annual basis.

??Bennett cautioned that if the water department requires additional funds or
if Edison's energy costs were to turn upward again, "then rates once again may
not be adequate to cover our generation costs. It is therefore imperative that
this uncertainty in the rate structure be cured now so we establish 
predictable,
stable rates for our customers."

??Three plans to aid Edison to varying degrees are working their way through
the Legislature, though late Thursday it appeared none would be approved 
before
lawmakers adjourn for a summer recess. Several legislators have said they are
content to let Edison join PG&E in bankruptcy.

??Any plan that would allow Edison to use a portion of the rates it is
collecting to pay off a bond offering would meet the objection of some 
consumer
groups, which label the concept a corporate bailout.

??"Just as the utilities gambled on deregulation and were winners at first,
Edison now has to be responsible for its losses," said Harvey Rosenfield,
president of the Foundation for Taxpayer and Consumer Rights in Santa Monica. 
He
said Bankruptcy Court is the most appropriate place for Edison to resolve its
financial problems.

??Several creditors of the utility, however, said that as long as Edison can
tread water or even work down its debts, there is little incentive to put the
company into bankruptcy, which would only add another legal layer and more
expenses to an exceptionally complicated situation.

??Creditors could move against the company if they believed its finances were
declining and thus shrinking the amount of cash and assets that could be
distributed in a bankruptcy proceeding. They also could put Edison into
involuntary bankruptcy if some creditors exacted payment from the company 
ahead
of others that are owed money.

??MORE INSIDE

??Powerful computers: Regulators will track real-time prices. A24

??Edison on hold: Hopes dim for bailout bill before summer recess. A25

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

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

?????????????????????JULY 20, 2001, FRIDAY, FINAL EDITION

SECTION: NEWS; Pg. A1

LENGTH: 863 words

HEADLINE: State advisers forced to sell energy stocks;

CONFLICT: Holdings called unethical

SOURCE: Chronicle Staff Writer

BYLINE: Mark Martin

DATELINE: Sacramento

BODY:
One consultant hired by the state to negotiate long-term electricity contracts
owned stock in a company that signed billion-dollar deals with California.

???Another fresh hire bought more than $10,000 in stock in Enron Corp. -- the
Houston power trader frequently vilified by Gov. Gray Davis and lawmakers -- 
as
he helped the state develop electricity buying strategy.

???A top Davis lawyer told the two consultants and seven others on Wednesday
morning to sell off stock in companies like Enron and Calpine Corp. within 
four
hours or lose their jobs.

???Having a financial interest in electric companies while working for the
state on power issues was not ethical, said Barry Goode, Davis' legal affairs
secretary, in a memo.

???All nine complied with the directive, said Davis spokesman Steve Maviglio
said, but controversy intensified yesterday over whether some of the state's
hired guns managing the energy crisis have conflicts of interest.

???The stock investments have come to light in the past week as 35 consultants
hired by the state to buy and schedule power and to negotiate energy contracts
have submitted documents detailing their personal finances.

???Most of the consultants who owned stock list their jobs as schedulers --
those who schedule electricity deliveries after power has been purchased.

???But others more directly involved with power trading also owned stock in
energy companies, documents show.

???Richard Ferreira earns $200 an hour to help negotiate and manage the 
state's
long-term contracts with power companies. He started his job Jan. 31.

???According to Ferreira's financial statement, he owned between $2,000 and $
10,000 worth of stock in Calpine Corp. -- the company based in San Jose that
announced on Feb. 28 it had signed two long-term contracts with the state 
worth
$8.3 billion.

???Ferreira could not be reached for comment, and spokesmen for the Department
of Water Resources, which hired the consultants, said he did not know if
Ferreira worked on the Calpine contracts.

???Another consultant, Richard Nichols, bought between $10,000 and $100,000
worth of stock in Enron in April -- more than three months after his company
signed on with the state to help "in the procurement of power supplies,"
according to his job description. The stock buy came at a time when the 
Federal
Energy Regulatory Commission was taking a hard line against wholesale
electricity price caps for California.

???Nichols' company, Navigant Consulting, Inc., could make as much as $800,000
for its work for the state this year. Nichols could not be reached for 
comment.

???Citing invoices from Controller Kathleen Connell's office, Secretary of
State Bill Jones, an announced GOP candidate for governor, argued that there 
are
at least seven other Navigant employees who are billing the state for work on
energy issues. None of them have disclosed their financial interests.

???Jones said he takes issue with the Davis administration's decisions on who
should file financial statements and who should be exempt.

???FINANCES NOT DISCLOSED

???Several consultants, including two Wall Street firms that made $275,000 a
month to negotiate the state's attempts to bail out troubled public utilities,
have not disclosed their finances because Davis officials have concluded they 
do
not fit the definition of a consultant.

???Jones has suggested that the state's long-term deals with several companies
to deliver electricity might be invalid if negotiators had a financial stake 
in
those companies.

???Maviglio said Davis officials were investigating whether there had been any
direct conflicts. The state attorney general's office and the state's Fair
Political Practices Commission also are reviewing Jones' allegations.

???Maviglio and a spokesman for the state's Department of Water and Power 
could
not say yesterday whether new employees were asked before they were hired
whether they had any financial stake in the energy market.

???STOCKS SOLD VOLUNTARILY

???But some consultants acknowledged a potential conflict and got rid of 
stocks
before this week. In his filing, Mark Skowdronski reports owning more than $
10,000 worth of Reliant Energy stocks when he began his job in March of
negotiating long-term contracts for the state. When he was given the task of
negotiating with Reliant, he said he sold his stock on March 20.

???Jones has stopped short of accusing anyone of criminal activity. And a
letter from Attorney General Bill Lockyer to Jones notes that the consultants
would have to own more than 3 percent of a company they dealt with to be
prosecuted criminally.

???Maviglio said the accusations come from a man who is launching his run for
Davis' job next year.

???"This is all politics," said Steve Maviglio, Davis' press secretary. "We're
following the law."

???He said that when the state was forced to enter the business of buying 
power
earlier this year, officials had to quickly hire people who knew the energy
business, including some who still had investments in power companies.

???"If you want a plumber, you hire a guy who has plumbing experience,"
Maviglio said.E-mail Mark Martin at markmartin@sfchronicle.com.

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

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

?????????????????????JULY 20, 2001, FRIDAY, FINAL EDITION

SECTION: NEWS; Pg. A19

LENGTH: 447 words

HEADLINE: Democrats defy Davis with bill on PUC;

Utilities panel would keep power over rates

SOURCE: Chronicle Sacramento Bureau

BYLINE: Lynda Gledhill

DATELINE: Sacramento

BODY:
Lawmakers moved with lightning speed yesterday to undo a plan that would force
California regulators to raise electricity rates whenever state power buyers
deem it necessary.

???A hastily introduced bill pits Democratic lawmakers against the
administration of Gov. Gray Davis, which is counting on the state Public
Utilities Commission to approve rate increases to pay for electricity without
questioning whether the state got a good price.

???Historically, utilities bought their electricity and asked the PUC to
approve rate hikes. The PUC decided whether the requests were justified.

???But with the utilities now deeply in debt and the state buying electricity,
the old system has broken down. This week, the PUC issued a draft agreement 
that
would guarantee the state would get as much money as it needs to pay for the
electricity it is buying.

???Consumer advocates said the proposed agreement would force the PUC to cede
its responsibility to protect customers from unreasonable rate increases.

???Senate leader John Burton, D-San Francisco, called the agreement
"overreaching" by the governor's Department of Water Resources, which is 
buying
the state's power.

???Under Burton's bill, consumers would still have to repay $13.4 billion in
bonds that the state plans to float to cover its purchases. But the bill would
allow the PUC to scrutinize the state's expenses beyond those covered by the
bond -- costs mounting to billions of dollars over the next 15 to 20 years.

???The bill passed out of two committees with bipartisan support yesterday and
now faces a vote by the full Senate. Both business and consumer groups 
expressed
their support for the measure.

???"This is better for ratepayers," said Lenny Goldberg of the Utility Reform
Network. "It makes the bond issue secure and gives a chance to look into all 
of
the contracts."

???PUC Commissioner Richard Bilas said some change is needed to restore
commission oversight.

???"The only check and balance on the Department of Water Resources as it is
would be the governor," Bilas said. "I think it takes a different branch of
government to do that oversight."

???But Bruce Van Dusen, a lawyer hired by the Department of Water Resources,
said Burton's bill could delay the bond sale and jeopardize the general fund.

???The concern is that while Burton's bill guarantees that the bond issue 
would
be repaid, it does not spell out how all the long-term electricity contracts
that the state has signed will be covered. The contracts stipulate that the
generators will be paid through electricity rates.Chronicle staff writer
Bernadette Tansey contributed to this report. / E-mail Lynda Gledhill at
lgledhill@sfchronicle.com.

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

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

?????????????????????JULY 20, 2001, FRIDAY, FINAL EDITION

SECTION: EDITORIAL; Pg. A24; EDITORIALS

LENGTH: 295 words

HEADLINE: More energy fallout

BODY:
THEY SAY nothing is fair in love and war. It isn't. But nor is it fair when it
comes to energy.

???In Washington, Vice President Dick Cheney, champion of the drill-and-burn
industry, asks the Navy to foot the electric bills for his mansion.

???At the same time, the vice president refuses to disclose the costs incurred
by his energy task force or to reveal the hot shots from the oil and gas
industry who helped shape its final policies.

???Closer to home, California residents brace for the aftershocks of the 
energy
crisis. With the state now locked into secret, long-term and costly energy
contracts, it is the public -- not the energy suppliers who made out like
bandits -- who will be burdened by the billions spent purchasing electricity.

???At present, only 39 percent of those surveyed approve of the way Gov. Gray
Davis has handled this crisis. Approval may drop even lower when California 
residents absorb the astonishing news that we suddenly enjoy an energy surplus
and that our state is now selling it on a glutted market.

???Add to the disgruntled those folks who were already in the habit of 
shutting
off lights and lowering their thermostats. For them, the mail brought no 20
percent rebate on their electricity bill. It is the watt hogs, who never 
lowered
the air conditioner and left lights burning all over their homes, whose paltry
efforts netted them the governor's award.

???Give the governor credit for keeping the lights on in California. But his
less-than-bold decisions will result in serious political and economic
consequences. Soon, we will have to confront the grave reality that we have
mortgaged many of our dreams for expanded health care, improved education and
support for the mentally ill for a future burdened by crushing debt.

LOAD-DATE: July 20, 2001

??????????????????????????????11 of 39 DOCUMENTS

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

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

???????????????????????July 20, 2001, Friday, BC cycle

?????????????????????????????3:31 AM Eastern Time

SECTION: State and Regional

LENGTH: 648 words

HEADLINE: PUC agrees to adjust electric rates if necessary

BYLINE: By KAREN GAUDETTE, Associated Press Writer

DATELINE: SAN FRANCISCO

BODY:

??When the California Department of Water Resources asks the Public Utilities
Commission to raise electric rates, the PUC no longer will be able to refuse 
if
it feel those hikes are unjustified or are not in the public's best interest.

??So reads a proposal between the DWR and the state Public Utilities 
Commission
released earlier this week that could go into effect next month and has both 
PUC
members and public advocacy groups worried.

??"This gives an unelected unaccountable state agency ... the unilateral right
to order rate increases for the next 15 years," Harvey Rosenfield, President 
of
the Foundation for Taxpayer and Consumer rights said earlier this week. "Every
mistake they could possibly make will also be passed along to ratepayers."

??The numbers that will indicate whether the state will need to try out the
proposed process are scheduled to be released by the DWR on Friday. Loretta
Lynch, PUC president, and Oscar Hidalgo, a DWR spokesman, both said they 
believe
current electric rates cover the state's power buying costs for now.

??But the thought of a state agency potentially hitting residents and
businesses in the pocketbook without any oversight so troubles Sen. John 
Burton,
D-San Francisco, that he is pushing legislation that would retain the PUC's
authority to say no.

??Since January, the DWR has spent more than $8 billion buying electricity for
the customers of three financially ailing utilities. It will likely spend $43
billion to supply Californians with electricity over the next 20 years.

??The PUC raised rates twice already this year, money which the utilities pass
along to the DWR to help it pay its debts. But in order for the state to issue
some $13 billion in bonds later this summer, it must show Wall Street that it
has a solid stream of money rolling in that will cover its power-buying needs.
Ratepayers will pay off those bonds over 15 years, and state officials say a
solid revenue stream could help keep interest low.

??The PUC/DWR proposal gives the DWR - a state agency whose director is not
elected, critics point out - the ability to ask for rate increases that would
essentially be rubber-stamped by the PUC with a 30 to 90 day turnaround.

??"This authority to pass through costs without CPUC review would never be
permitted for costs incurred by a utility," Burton wrote.

??Burton's bill would set aside a certain amount of ratepayer revenue to go to
DWR, rather than steering the entire amount in its direction.

??Power buying expenses and administrative costs would be reviewed by the PUC
and the public to determine if it is appropriate to raise electric rates to 
fund
them.

??The bill would also retain the right of Californians to have someone other
than their local utility provide their electricity, a tenant of deregulation 
which the PUC has seemed likely to end.

??In May, the PUC issued a record rate increase that raises electric rates by
roughly 38 percent for residential ratepayers who use the most power, and by
varying amounts for farmers and businesses. That followed a roughly 10 percent
rate hike in January.

??The state has bought electricity for the customers of Pacific Gas and
Electric Co., Southern California Edison Co. and San Diego Gas and Electric 
Co.
since January, when the utilities warned the state that high power prices and
the inability to recoup their costs through frozen electric rates were driving
them into debt.

??PG&E filed for federal bankruptcy protection April 6. Edison and SDG&E both
have agreed to sell their transmission lines at above market value to the 
state
for to make up for their losses, though the Legislature has not decided 
whether
to approve the deals.

??The PUC will take comments on the agreement until Aug. 1.


??On the Net:

??http://www.dwr.ca.gov
 
??http://www.cpuc.ca.gov
 
??http://www.pge.com
 
??http://www.sce.com
 
??http://www.sempra.com
 
LOAD-DATE: July 20, 2001

??????????????????????????????22 of 39 DOCUMENTS

???????????????Copyright 2001 Canadian Broadcasting Corporation

????????????????????????????????????CBC TV

??????????????????????SHOW: THE NATIONAL ( 10:00 PM ET )

???????????????????????????July 19, 2001, Thursday

LENGTH: 1466 words

HEADLINE: Power Struggle

ANCHORS: ALISON SMITH

BODY:

??ALISON SMITH: Oil. Gas. Alberta. Three words often said in the same breath.
But it's coal that supplies the province with most of its electricity. A
plentiful resource with enormous potential. Especially for export to the 
United
States. Canada's largest private power company TransAlta is planning a huge
expansion to one of its coal fired plants. But it's a plan that's meeting 
plenty
of resistance. Here's the CBC's Margo McDiarmid with the power struggle.

??TYKE DREVER: It used to be where the kids used to play in the sand and the
level of the lake was basically right here. At that point in time I could 
bring
my motor boat into here and actually winch it into the boathouse for the 
winter.
Now if we look in the distance behind me, you'll see how far out my motor boat
is now.

??MARGO MCDIARMID: Tyke Drever has seen his lake change a lot over the years.
The water is simply disappearing.

??DREVER: That used to all be lake bottom. That was all lake bottom. There was
water covering all that but not has turned into green grass.

??MCDIARMID: Drever's home is on Lake Wabamun, about 75 kilometers west of
Edmonton, one of the region's most popular recreation spots. It's also the 
site
of three coal fired power plants owned by TransAlta, two of them right on the
lake. The coal comes from the mine right across the bay. Drever and his
neighbours have an on-going battle with TransAlta, Canada's largest private
power company. They blame TransAlta for blocking streams that drain into the
lake, for sucking up water to make power.

??DREVER: I think it would be fair to say that probably the mining is the
starting point of the problems because nobody knows what in actual fact, what
the mining has done to the natural mother nature's inflow, influx of water 
into
the lake.

??MCDIARMID: And now there'll be an even larger power plant just down the 
road.
TransAlta wants to double the size of its Keephills plant, adding two new
generators like these. Alone they'd be enough to power a city the size of
Edmonton.

??LINDA DUNCAN (Wabamun Lake Resident): I'd rather have the lake back.

??UNIDENTIFIED MAN (1): I'd rather have the lake back too.

??MCDIARMID: Drever and other members of a local group don't like the thought
of an even bigger power plant nearby.

??DREVER: They will say that the Keephills plant is outside of the watershed
area of the Lake Wabamun. Question mark. We don't know that.

??BOB CALHOON (Wabamun Lake Resident): It scares me.

??MCDIARMID: Why is that?

??CALHOON: Because we've seen the damage that is done now with the plants we
have here now. What kind of damage is going to be done when they expand these
plants even greater than they are now?

??MCDIARMID: TransAlta hasn't built a new plant in years because of 
uncertainty
over deregulation. Now the rules are clear. Power is bought and sold by 
private
companies. With an energy shortage in Alberta, TransAlta is ready to expand.

??MIKE KELLY (TransAlta): We have such a shortage of electricity and demand is
so high that we thought we really had to move, to do something about that, to
fill the gap.

??MCDIARMID: TransAlta says most of its new power will stay in Alberta. Any
extra will be exported to B.C. and then possibly to California. But Americans
want more from any Alberta company willing to sell. With natural gas prices
going up, cheap Alberta coal power is a hot item.

??MURRAY SMITH: When the Americans come to visit you, they don't come for tea.
And they want things.

??MCDIARMID: Energy Minister Murray Smith says Alberta will help them out. At 
a
recent gathering of energy ministers, Smith pointed out the province is ready 
to
cash in on the export business.

??SMITH: I think that exports are actually, in the long run, a good thing for
Alberta. To be able to reach out with exports allows us to build the grids,
build the inner connects and then allows us to generate more power that will
give Albertans lower prices.

??MCDIARMID: And they're already lining up to buy Alberta's power. The 
National
Energy Board is now juggling seven applications for export licenses to bring
power from Alberta to the U.S. and more than half are from big American
companies. One of the largest is Morgan Stanley, an international investment
bank based in New York. Morgan Stanley wants a 20 year export license from the
National Energy Board. The plan? Buy up extra power in Alberta and sell it to
California.

??BRIAN STAZINSKI (Clean Air Coalition): I think they're profiteers. They're
coming in here and asking for about three percent of our supply to sell to the
United States and when we ask them where are you getting supplied from, they 
go,
hm, we don't know. We don't care. We're just going to get a piece of the 
action
and make some money on this. What's cost effective about continuing to 
generate
all kinds of emissions?

??MCDIARMID: Brian Stazinski is an environmentalist, named on of Time Magazine
six heroes of the planet for his work with conservation. But now he's taken on
new work. To stop Morgan Stanley's export application and others like it.
Because exports mean building more plants and burning more coal.

??STAZINSKI: It's just fast track approval all the way to the bank. And so
we're going to see a lot of developments if the Morgan Stanley's get their 
way.
I don't think the people of Alberta understand that.

??PAT SPILSTEAD (Wabamun Lake Resident): So many of these things are now
sensible.

??MCDIARMID: The residents of Wabamun Lake understand it. They just have to
look out the window. TransAlta is expanding one plant now. The power will 
mostly
stay in Alberta. But no one around this table thinks it will stop there.

??DREVER: At five or six applications a year, it's not unreasonable to assume
that there might be eight plants around the shore of this lake. I mean where
does it stop?

??DUNCAN: We're swamped and we keep saying who's there in the Government of
Alberta and the Government of Canada to represent the interests of the public 
of
Alberta?

??SPILSTEAD: Where do the economics become more important than the 
environment.
Now we're an isolated little problem, but maybe a perfect example of a great
intrusion on the Alberta environment.

??MCDIARMID: And critics say the environment will pay the price. Alberta coal
is considered cleaner because it has low amounts of chemicals that cause smog.
But burning it still creates a long list of toxins like particulants -- tiny
bits of dust that can lodge in the lungs. They're considered a toxic 
substance.
Coal power increases carbon dioxide linked to global warming. And then there's
mercury. It's linked to birth defects and nerve damage. New research by 
federal
committee on mercury shows that among the provinces, Alberta's coal plants
generate 41 percent of all the mercury in the country, the highest rate in
Canada. Environmentalists are pushing for a public debate on exporting power.

??STAZINSKI: They should have a say about whether or not we should be digging
up our farm land, burning the coal, getting all of the emissions so that the
Americans can get the benefits of the electricity. People of Alberta should 
have
an opportunity to say whether or not that's a good idea.

??UNIDENTIFIED MAN (2): Anything you didn't understand or anything you need to
clarify?

??MCDIARMID: Power companies are well aware the public is nervous.

??UNIDENTIFIED MAN (3): I was just wondering how much increase of mercury...

??MCDIARMID: TransAlta is hosting meetings to answer questions. It's promising
the Keephills plant will use state of the art technology to keep its pollution
to a minimum.

??KELLY: There are new standards that have been put in place by Alberta
environment and we're going to meet those standards and we're going to put on
some, some pretty solid technology actually to control our emissions.

??DREVER: Come on, Kilt

???Come on

???That a girl



??MCDIARMID: It will get busier in the Lake Wabamun area. TransAlta wants to
open its bigger plant in four years. The company says the Keephills plant and
the mine are too far away to affect the lake. In fact, it's now putting some 
of
the water back to raise the level. Tyke Drever would like to think that's 
true.

??DREVER: Wouldn't it be wonderful if in my lifetime I could see this water
lapping at those piers again, lapping at those railway ties again? And my 
kids'
kids playing in water at the edge here. Kiltie

???Come on Kilt



??MCDIARMID: Drever is also realistic. He knows there's a big thirst for
electricity. It's very political. New projects will be hard to stop. And he
wonders what price in the end Alberta will have to pay for its power.

??DREVER: It's raining. It's raining a little bit.

??MCDIARMID: For The National, I'm Margo McDiarmid in Wabamun Lake, Alberta.

??SMITH: We'll be back in a moment with a program note.

??(COMMERCIAL BREAK)

LOAD-DATE: July 20, 2001

??????????????????????????????27 of 39 DOCUMENTS

??????????????Copyright 2001 Knight Ridder/Tribune Business News
???????????????????????????Copyright 2001 Daily News

???????????????????????Daily News, Los Angeles, Calif.

???????????????????????????July 19, 2001, Thursday

KR-ACC-NO: LD-CHEAPER-POWER

LENGTH: 809 words

HEADLINE: Cheaper Energy Undercuts California's Long-Term Power Contracts

BYLINE: By Dana Bartholomew

BODY:


??California suddenly faces an energy surplus, forcing the state to sell power
it bought for an average of $ 138 per megawatt for as little as a dollar,
electricity traders say.

??In fact, the state has sold its unused power so cheaply that the Los Angeles
Department of Water and Power -- which has made tens of millions selling power
to the state during the crisis -- has become an occasional buyer of power from
the state at rates below its normal costs.

??State officials acknowledged that cool temperatures and the surprising
success of conservation efforts have glutted the energy market in the past 
week
but they dismissed the surplus as a "blip."

??They said they are getting $ 15 to $ 30 per megawatt for up to 6,000
megawatts a day during the early-morning hours -- losing millions of dollars 
on
power purchased in recent months under long-term contracts.

??"Both $ 1 and $ 5 have occurred," said Gary Ackerman, executive director of
the Western Power Trading Forum, which represents many generators and 
utilities
that sell millions in power to the state each day.

??"It gives Californians a great glimpse of what happens when the state moves
into private industry. They (legislators) do the right thing politically, and 
it
backfires economically," he said.

??Critics say the state, in an effort to capture runaway wholesale energy 
costs
this spring, locked in power at too high a price. Ultimately, ratepayers of 
such
private utilities as Southern California Edison, will be forced to pick up the
tab.

??"We think it's an outrage," said Kris Vosburgh of the Howard Jarvis 
Taxpayers
Association. "The governor went willingly into these agreements and tried to
prevent the public and the press from seeing them (and) didn't ask for public 
or
expert participation.

??"Now it's the ratepayers that are paying for his mistake."

??The state, assisted by former Los Angeles DWP General Manager David Freeman,
has negotiated more than $ 42 billion in such contracts that stretch as far as
2021.

??State officials disputed the rock-bottom rates quoted by forum traders.

??"I'm looking at the average price, and (it) far exceeds a dollar," said 
Oscar
Hidalgo, spokesman for the state Department of Water Resources, which now 
spends
$ 30 million a day on power, down from $ 65 million in May.

??"This is an overall blip on our picture here."

??Gov. Gray Davis defended the state's purchases, saying through spokesman
Steve Maviglio that they had stabilized the market.

??"Like we said all along, we're doing everything within our power to control
the situation and stabilize things," he told The New York Times. "But the
weather is not within our control. When the utilities were in this business,
they ran into this situation routinely."

??While the state once spent most of its money for energy on the volatile spot
market, it currently buys 95 percent of its power under long-term contracts.

??Unlike natural gas, electrical energy can't be stored and must be passed on.
When usage fails to meet expected demand, during a cooler summer for example,
suppliers are forced to accept whatever price they can get for the surplus --
sometimes at a loss.

??Some of that loss, Hidalgo said, was to pay back power loans from the 
federal
Bonneville Power Authority in Washington state.

??While the state admitted shedding up to 20 percent of its power since July
11, Ackerman said that up to 6,000 megawatts a night of surplus power was
previously "laid off."

??Selling surplus power is common to any utility -- or acting utility -- in 
the
energy business. California Energy Markets, a trade weekly, said the state 
sold
such power July 12 at $ 25 a megawatt.

??Critics have called the state contracts with 42 energy generators turkeys 
for
locking in power purchases at $ 138 per megawatt hour, or $ 70 long-term.

??"The state was in a terrible bargaining position at the time (it wrote the
contracts)," said Pasadena Councilman Sid Tyler, chairman of the Deregulation 
Committee for the Pasadena Water and Power Department.

??"There's nothing quite as bad as having to buy high and sell low -- we all
know the consequences of that, long-term."

??Assemblyman Keith Richman, R-Granada Hills, has written an alternative bill
to rescue Southern California Edison that he said has a provision to scrap the
state's energy contracts.

??Richman, who had sued the state to release details of the contracts, said an
estimate from the state Controller's Office pegs them closer to $ 50 billion.

??"I am very concerned we have entered into these long-term contracts that 
will
not only cause an excess of power, but will cost the ratepayers for years to
come and be a burden on the back of Californians."


??-----

??To see more of the Daily News, or to subscribe to the newspaper, go to
http://www.dailynews.com/
 


JOURNAL-CODE: LD

LOAD-DATE: July 20, 2001

??????????????????????????????33 of 39 DOCUMENTS

?????????????????????Copyright 2001 Scripps Howard, Inc.

?????????????????????????Scripps Howard News Service

???????????????????????????July 19, 2001, Thursday

SECTION: COMMENTARY

LENGTH: 687 words

HEADLINE: Six months later, utility debts are still toughest nut to crack

SOURCE: Scripps-McClatchy Western Service

BYLINE: DAN WALTERS

DATELINE: SACRAMENTO, Calif.

BODY:

??When Gov. Gray Davis and other state politicians finally became engaged in
the energy crisis last January - a half-year late - the state's major
investor-owned utilities had already amassed more than $13 billion in debt 
from
runaway power costs and were out of credit.

??Davis and the Legislature launched a massive state power purchase program, a
speed-up of new power plants, conservation subsidies and other actions, not 
all
of which have successful. But everyone involved knew that the utilities' 
debts,
which had driven them to the brink of bankruptcy, would be the most complex 
and
politically difficult aspect of the crisis.

??Six months later, that's still true.

??An administration team negotiated for weeks with Pacific Gas and Electric 
and
Southern California Edison on schemes to retire their debts and bring them 
back
to a creditworthy status. The talks with PG&E went nowhere and three months 
ago,
the huge San Francisco-based utility filed for bankruptcy. Davis, clearly
concerned that Edison would follow, hammered out a deal with the smaller 
utility
within hours.

??It was, by any standard, a sweet deal for Edison and its parent company,
Edison International, too sweet for just about everyone in the Legislature, 
and
immediately efforts began to change it.

??Edison lobbyists worked the Legislature and the utility cranked up a massive
advertising and public relations campaign, to no apparent avail. And Davis,
oddly, pulled back from the fray. The governor concentrated on another aspect 
of
the crisis with greater political sex appeal: demanding that generators, many 
of
whom are PG&E and Edison creditors, be forced to repay many billions of 
dollars
because, as he put it, they had gouged the state. Ultimately, Davis' campaign
failed, although his strident advocacy did, apparently, arrest his decline in
public opinion polls. Meanwhile, the Edison deal languished. With the
Legislature now poised to leave Sacramento on a month-long summer recess and a
self-imposed deadline for enacting the Edison plan approaching, the Capitol is
newly aflutter with efforts.

??"Complex" doesn't even begin to describe the situation. There are at least
three alternative plans kicking around, none of which can be passed as 
written.
Davis may be willing to accept almost anything that would save him from the
embarrassment of another utility bankruptcy on his watch, but currently backs 
a
scheme ginned up by Assembly Democratic leaders. Edison, however, has split 
with
Davis and now favors an alternative offered by Republicans and some moderate
Democrats - one that consumer advocates denounced as a corporate bailout.
Meanwhile, liberal senators are pushing another version that Edison likes even
less, but its critics among consumer activists like more.

??With both lawmakers and outside interest groups so widely scattered over
what, if anything, should be done to rescue Edison, a consensus developed late
Thursday to keep the vehicles alive with preliminary floor votes, but continue
private negotiations through the month-long vacation recess.

??The many-sided stalemate stems from both the rivals plans' provisions -
farmers, for example, fear environmentalists' gaining authority through the
state over Edison-owned watershed in the Sierra - and the convoluted dynamics 
of
the Capitol.

??Legislative leadership is very weak in the era of term limits, especially in
the Assembly, and lawmakers are leery about voting for any complex utility
measure, particularly one that might raise rates. Some call it "1890 disease"
for the number of the 1996 deregulation bill that backfired so badly.

??Then, too, some liberals and consumer activists appear to want all of the
measures to fail, forcing Edison into bankruptcy court. Then, they believe, 
the
newly created but still inactive state power authority could step in, using 
its
$5 billion in untapped bonding authority, and pick up assets of the utilities 
on
the cheap, thus creating a massive state utility system.

??Wheels within wheels, and none of them meshing.

??(Contact Dan Walters of the Sacramento Bee in California at
http://www.sacbee.com.)

LOAD-DATE: July 20, 2001