Generators flock to get low-cost loans for new plants				San Francisco Chronicle 	09/07/2001 
PUC vote on direct-access power deals blocked for a week			San Francisco Chronicle 	09/07/2001
Calif. Official Asks FERC To Probe ISO, DWR 'Collusion'			Dow Jones			09/07/2001 
Calif. firm says Powerex overcharged 						The Globe and Mail 		09/07/2001
California Utilities Protest Plan 							Los Angeles Times 		09/07/2001
Assembly OKs Bill to Rebuild Edison's Finances Energy				Los Angeles Times 		09/07/2001 
The State Enron Records to Stay Secret Court					Los Angeles Times 		09/07/2001
California Assembly Passes Southern California Edison Rescue Bill		Dow Jones 			09/07/2001 
Developments In California 's Energy Crisis At A Glance				Dow Jones 			09/07/2001 
California 's Plan for $12.5 Billion of Bonds 					Dow Jones 			09/07/2001 
California 's PUC Approves Some Agreements, But All is Not Go on Power Sale  The Bond Buyer 		09/07/2001
Good Omens for Calif. Gos								The Bond Buyer 		09/07/2001 
California 's Plan for $12.5 Billion of Bonds						Wall Street Journal 		09/07/2001 
Calif. Assembly passes SoCal Edison rescue bill					Reuters				09/07/2001 
Enron must give documents to Calif. lawmakers-judge				Reuters				09/07/2001 
Calif. moves key vote on power choice to Sept 13					Reuters				09/07/2001 
California `Windfall Profits' Power Vote Delayed 					Bloomberg			09/07/2001
Enron Wins Document Protection Order From Calif Judge 			Dow Jones			09/07/2001
CPUC Postpones Vote To Suspend Choice Of Elec Suppliers 			Dow Jones			09/07/2001

----------------------------------------------------------------------------------------------------------------------------------------------------------------------

Generators flock to get low-cost loans for new plants
Mark Martin, Lynda Gledhill

09/07/2001 
The San Francisco Chronicle 
FINAL 
Page A.4 
(Copyright 2001) 
Despite energy companies' claims that California is a bad place to do business, dozens of electricity generators want to cash in on low- cost state loans to build power plants. 
Giants like Enron Corp. and Reliant Energy, along with a handful of small companies that generate electricity through windmills and solar power, have submitted proposals to the California Power Authority. The authority has billions to spend on new power plants that would keep Californians' homes from going dark when electricity is scarce. 
Generators have complained that the state hasn't paid them in full for power deliveries, and they say pending legislation could make it more difficult to do business in California . But financing deals offered by the brand new power authority are too good to pass up. 
"Right now, it's hard to tell if your investment will pay off," said Sandy Fruhman, spokeswoman for Reliant. "Going this route seems safe." 
This morning, the five-member power authority will begin discussing proposals to build plants that would be used to bolster electricity reserves. 
The authority is charged with everything from encouraging construction of new power plants to helping low-income homeowners buy energy-efficient refrigerators. While critics have called the agency an unnecessary new bureaucracy, its five members could have a profound impact on the state's energy future. 
They have up to $5 billion to spend and are expected to soon begin signing contracts to provide financing for companies that want to build so-called peaker plants, which would be used when electricity supplies are low. The authority also will reserve the right to eventually own the plants -- meaning the state's role in energy markets would continue long into the future. 
The goal is to make sure California has a 15 percent energy reserve at all times, says S. David Freeman, chairman of the authority. When power is scarce and prices are climbing, the authority would provide cheap electricity . 
"We'll be the Wal-Mart of energy," said Freeman, who is one of four authority members appointed by Gov. Gray Davis. The fifth member is state Treasurer Phil Angelides. 
Freeman says encouraging the development of power sources that rely on renewable resources like wind and the sun is one of his top priorities. 
Power plants typically use natural gas to run the turbines that produce electricity . Skyrocketing natural gas prices last winter led in part to the surging electricity prices that bankrupted Pacific Gas and Electric Co. and plunged the state into crisis. 
The Davis administration has been criticized for shutting out renewable power companies when it signed long-term contracts to buy electricity earlier this year. Now, Freeman says, the power authority could use up to half of its money to fund wind farms, solar-powered generators and other plants that rely on renewable sources. 
"The renewables are a hedge against natural gas prices," he said. 
Companies that have submitted proposals range from EnXco, which operates wind farms on the Altamont Pass and in Palm Springs and the Mojave Desert, and Yanke Energy, a Boise, Idaho, company that turns wood and other waste from landfills into power. 
Details of their proposals will be released today. 
Freeman said dozens of energy companies, including Enron and Reliant, had submitted proposals to erect gas-fired peaker power plants. The state would offer financing for the plants, which would be run by the companies. 
Reliant and Enron officials both said their proposals called for their companies to oversee the construction of the plants, but the state would own them. The plants would be built by next summer. 
Those proposals come amid increasingly heated rhetoric by the group representing power generators. 
Jan Smutny-Jones, spokesman for the Independent Energy Producers, has blasted the state for failing to fully pay companies for energy they've supplied California . He said legislation such as a bill that would limit energy companies' profits made "countries like Bangladesh or Bulgaria more stable places to invest in." 

PUC vote on direct-access power deals blocked for a week
Bernadette Tansey

09/07/2001 
The San Francisco Chronicle 
FINAL 
Page A.4 
(Copyright 2001) 
A conservative appointee to the state Public Utilities Commission blocked a vote yesterday on banning businesses from cutting private electricity deals with generators, saying he wanted to give more firms time to sign up. 
Commissioner Richard Bilas put a one-week hold on the PUC action to suspend direct access, a major element of California 's 1996 deregulation plan that lets consumers bypass the utilities and shop around for better deals on power. 
Bilas' move drew an exasperated response from fellow commissioner Carl Wood, who said the delay in approving the ban was letting big companies desert the utilities and sticking small customers with a greater share of the state's multibillion-dollar power bill. 
"There's a gold rush going on," said Wood, an opponent of deregulation. "They clearly are continuing to make these deals." 
Bilas, a free-market advocate appointed to the commission by former Gov. Pete Wilson, said he held out a slim hope that state lawmakers would order the PUC to salvage the direct access option. But barring that, he said, the one-week delay could give businesses a final opportunity to lock in cheaper electricity contracts. 
"That would be my hope," Bilas said. 
As far back as January, direct access seemed doomed. The state Legislature directed the PUC to suspend the option as a way of keeping the largest number of consumers with the utilities so they could help pay the state for its power purchases. 
Industry groups lobbied hard to preserve direct access, but none of the legislative proposals to do that has passed. Under the proposal that the PUC put off yesterday, direct access contracts would be banned retroactive to July 1. 
Energy companies say they will challenge any retroactive ban in court. That in turn could delay the sale of $12.5 billion in state bonds to reimburse the treasury for the state's power buys. 
The PUC has not estimated how much revenue the state stands to lose if direct access contracts dating to July are allowed to stand. In July alone, more than 6,000 businesses signed such deals. 
The commission is now scheduled to take up the issue next Thursday. It is also supposed to consider an array of other measures needed before state Treasurer Phil Angelides can complete the state bond offering. 
Those include a proposal that Pacific Gas and Electric Co. customers pay $600 million more than Southern California consumers to reimburse the state for its electricity deals. 

Calif. Official Asks FERC To Probe ISO, DWR 'Collusion'

09/07/2001 
Dow Jones Energy Service 
(Copyright (c) 2001, Dow Jones & Company, Inc.) 
(This article was originally published Wednesday.) 
 
   By Bryan Lee   
OF DOW JONES NEWSWIRES 
WASHINGTON (Dow Jones)--Bill Jones, California 's secretary of state, Wednesday asked the U.S. Federal Energy Regulatory Commission to investigate possible power market manipulation by state agencies. 
In a letter sent Wednesday to FERC Chairman Pat Wood, Jones called for the commission to investigate "possible significant price and market manipulation of electrical energy by several energy-related entities in the administration of California 's Gov. Gray Davis." 
Jones, a Republican, intends to challenge Davis in next year's gubernatorial election. Davis administration officials dismissed Jones's allegations as politically motivated. 
Specifically, Jones wants FERC to determine if the California Independent System Operator, whose governing board consists of Davis appointees, ordered Southern California Edison Co. (EIX) to reduce its power output in order to lessen financial losses under long-term power-supply contracts entered into by the Department of Water Resources. 
The letter was prompted by an Aug. 29 Dow Jones Newswires report that the ISO directed Edison to ramp down its low-cost, 1,500-megawatt Mohave generating station in Nevada at various times in recent months. The report cited ISO sources saying the motivation was to prevent the DWR from selling its contracted power supplies at a loss. 
"The sole apparent purpose of these output reduction orders has been to diminish California 's need to sell surplus power at a loss," Jones said in the letter to FERC. "Such a loss would have a negative public relations impact on the Davis administration," he said. 
The Mohave plant produces power around the clock for about $20 per megawatt-hour, as opposed to the above-market $70/MWh to $100/MWh the DWR is purchasing electricity for under long-term contracts. 
"I am very concerned that the Cal ISO, in concert or collusion with the Department of Water Resources, is abusing its broad authority over the transmission of electrical power over interstate power lines in order to avoid political embarrassment for the Davis administration," Jones wrote. 
"This abuse, because it involves the interstate transmission of electrical power, must be investigated by your agency under the authority granted to you by the Federal Power Act," Jones said in the letter to Wood, who was unavailable for comment Wednesday. 
For months now, competitive power providers have been asking FERC to decide whether the ISO meets the commission's requirements for independent governance, given that its board is appointed by Davis and the state is deeply involved in power markets. 
FERC was expected to issue an order in late July acting on the governance issue, but the order was stricken from the commission's meeting agenda at the behest of Wood and other commission members, according to FERC sources. 
Those sources say they expect the commission to ultimately act on the matter, and rule that the politically appointed board runs afoul of FERC's requirement for independence from market participants. 
Davis spokesman Steve Maviglio dismissed Jones's allegations as "ludicrous. It's all politics. There's no substance." 
"It's completely false to say we're in collusion with Cal ISO," said DWR spokesman Oscar Hidalgo, calling Jones's allegations "really reaching" and without merit. 
But industry officials note that the Mohave plant is a "baseload" power plant designed to run 24 hours a day, and not have its output adjusted in response to daily demand fluctuations. 
"Mohave is a plant that should be running all the time," said Edison spokesman Steve Conroy. 
ISO spokesman Greg Fishman, citing confidentiality rules, declined to discuss specific power-dispatch orders involving Mohave. But he did suggest that a lack of "flexibility" among generators could account for the anomalous orders directing the baseload plant to curb output. 
The ISO has complained to FERC that generators are refusing the power-grid operator's orders to either ramp up or ramp down plant output as part of the ISO's responsibility to balance supply and demand across the state's power system. 
"We have not seen the flexibility we like to see in the market," said Fishman. "In certain cases we may need to ask power plants to back down that ordinarily would not be asked," he said. 
   
-By Bryan Lee, Dow Jones Newswires

Calif. firm says Powerex overcharged B.C. Hydro export arm says matter already being addressed in a FERC proceeding
WENDY STUECK

09/07/2001 
The Globe and Mail 
Metro 
Page B3 
"All material Copyright (c) Bell Globemedia Publishing Inc. and its licensors. All rights reserved." 
VANCOUVER -- B.C. Hydro's Powerex Corp. was accused this week of overcharging one of its California customers by $586-million (U.S.). 
The allegations were made during a hearing into power prices that began on Wednesday in Washington, D.C., by the United States Federal Energy Regulatory Commission (FERC). 
The hearings, set to conclude today, are examining claims by electricity customers in the Pacific Northwest, including the cities of Seattle and Tacoma, that power sellers overcharged them by as much as $2-billion between last December and June. 
Yesterday, British Columbia Hydro and Power Authority spokesman Elisha Odowichuk said that representatives for the California Department of Water Resources alleged this week that power sellers in the Pacific Northwest, including Powerex -- the utility's export sales arm -- overcharged the agency by about $1-billion between December and June of this year. 
Of those alleged overcharges, $586-million was attributed to Powerex, Ms. Odowichuk said. 
The California Department of Water Resources is a state agency that took over electricity purchasing in January, after state utilities fell into debt and were not able to buy power on the spot market. 
CDWR's statements are "inappropriate" because alleged overcharging in the California market is already being addressed in a separate FERC proceeding, she said. 
"We believe they [alleged overcharges] are a separate issue and are already being dealt with," she said yesterday. 
Ms. Odowichuk said that Powerex was a net power importer during the period in question, and that the company believes the allegations against it are unfounded. 
Representatives for the CDWR were attending hearings yesterday and not available for comment. 
Powerex has generated windfall profits over the past few years by selling electricity to out-of-province customers, especially California . But along with other power sellers, it has come under scrutiny for its pricing practices during periods when power prices spiked last year and in the first six months of 2001. 
The state of California maintains it is owed almost $9-billion in refunds from power sellers. 
During failed settlement talks in July between the state and power sellers, Powerex offered to reduce the amount it is owed by California purchasing agencies by $125-million. 
That offer, along with others from U.S. power sellers, was rejected. 
A FERC judge is now studying the California refund issue, and is expected to make recommendations to FERC by early November. 
Powerex is owed $290-million by California customers, who ran into financial difficulties and were unable to pay their bills when power prices spiked last year. 
The hearing into alleged overcharging in the Pacific Northwest is scheduled to wrap up this week, and recommendations to follow this fall. 

California Utilities Protest Plan Giving State-Bought Power Priority Energy: Proposal could force distribution of more-expensive electricity purchased by California Department of Water Resources.
JERRY HIRSCH; NANCY RIVERA BROOKS

09/07/2001 
Los Angeles Times 
Home Edition 
Page C-2 
Copyright 2001 / The Times Mirror Company 
California 's two largest utilities are protesting a proposed requirement that could force them to distribute power the state has purchased before selling their own lower-cost electricity . 
The state Department of Water Resources--which started buying electricity on behalf of 25 million Californians when Pacific Gas & Electric and Southern California Edison became insolvent earlier this year--is seeking the requirement because it has contracted for more power than is needed, PG&E said. 
If forced to distribute that surplus power in place of typically lower-cost nuclear, hydroelectric and other energy from their generating sources, PG&E and SCE would face added financial hardships, and the higher costs eventually might show up in consumer rates, the companies said. 
"This would not be in the best interest of utility customers," Southern California Edison said in a filing with the California Public Utilities Commission. The commission will consider whether to adopt the "must-take" requirement later this month, when it sets the terms by which the state will be repaid for its power purchases. 
"We believe DWR has a current surplus of high-priced power under contract, and therefore is seeking authority from the CPUC to charge our customers for that high-priced power," Pacific Gas & Electric, a unit of PG&E Corp. of San Francisco, said. 
In comments filed at the utilities commission earlier this week, Pacific Gas & Electric said the rate agreement would be illegal because Assembly Bill 1X--which put the state in the energy-purchasing business in January--does not allow customers to be charged for DWR power that is not delivered to them. Instead, the utility said, the law says the DWR may sell surplus power on the open market. 
California entered the power business when a surge in wholesale electricity prices and a regulatory freeze on consumer rates created billions of dollars in losses for the two utilities. That eventually pushed Pacific Gas & Electric to seek protection from its creditors in Bankruptcy Court; SCE, a unit of Edison International in Rosemead, has avoided following suit but is insolvent and is seeking a financial rescue from the state. 
The proposed rate agreement between DWR and the utilities commission guarantees that the water agency would recover whatever it spends on electricity for PG&E and SCE as well as Sempra Energy unit San Diego Gas & Electric, which is financially healthy but also turned to DWR for power after the state's primary power market collapsed in late January. 
PG&E said one section of the draft rate agreement would require the utilities commission to order that DWR power be delivered to utility customers whenever the water agency requests, "even if the DWR power is millions, if not billions, of dollars more expensive than the utilities' own power supplies or power available from third parties." 
The state has signed long-term power contracts totaling $43 billion at rates that average 6 cents to 8 cents a kilowatt-hour for so-called base-load power, or electricity produced by the large power plants that operate most hours of the day. 
PG&E's cost of generation for its nuclear power is 3.5 cents a kilowatt-hour. SCE said cost of the power it generates through its plants averages about 4.5 cents a kilowatt-hour. 
At issue is what is called a "must take" or "must deliver" clause in the agreement between the two state agencies. This would allow the DWR to force any surplus power on the utilities and require them to cut their own generation. 
DWR spokesman Oscar Hidalgo said such surpluses would happen infrequently because the department also has short-term contracts that can be adjusted to reduce the amount of electricity the state must buy. 
Nevertheless, many energy analysts believe that in the state's effort to use long-term contracts to lock in prices and tame the volatile wholesale power market, California officials purchased too much power and paid too much for it. 
A Los Angeles Times analysis of DWR reports found that surpluses would probably peak in 2004, when the state has purchased electricity that amounts to 43% of the needs of the three large investor-owned utilities. But according to current trends, the utilities need the state to supply only about 35%. 
Whether such surpluses are infrequent or become chronic, they can prove costly. In July, the state racked up $46 million in losses after selling excess power for one-fifth the price it paid. The state has not released data for August. 

Assembly OKs Bill to Rebuild Edison's Finances Energy: Lawmakers battle late into the night over the $2.9-billion package pushed by Gov. Davis. Foes say the plan, which faces hurdles in the Senate, is a bailout.
MIGUEL BUSTILLO

09/07/2001 
Los Angeles Times 
Home Edition 
Page B-1 
Copyright 2001 / The Times Mirror Company 
SACRAMENTO -- Despite threats of a ballot backlash, the state Assembly late Thursday approved a $2.9-billion bill to restore Southern California Edison to something close to financial health. 
Passage by a 41-32 vote, almost along party lines, came only after the Legislature's Democratic leaders arranged for Democratic Assemblyman Gil Cedillo, who had been home in Los Angeles with his ailing wife, to fly to Sacramento for a late evening vote. 
The bill must still be reconciled with a different version that passed the Senate in July. 
The bill would allow Edison to float bonds to pay off about three-quarters of the massive debt it accumulated during the energy crisis. The company would have to find its own way to handle the remaining debt of about $1 billion. 
The bonds would be paid off by the top 180,000 of the utility's large and medium-sized business consumers. Homeowners and smaller businesses would not be burdened with the cost. 
Gov. Gray Davis and other supporters of the bill say the bonds could be paid off without any additional electricity rate increases, but foes of the bill have challenged that assertion. 
Even without a rate increase, the bill has been bitterly opposed by consumer activists, who have labeled it a bailout and have threatened a ballot initiative to reverse it. The prospect of running for reelection next year with such an initiative on the ballot has spooked many lawmakers, deepening their reluctance to vote for the bill. 
But Edison and Davis have spent weeks lobbying intensely for votes. Majority Democrats argued that keeping the utility out of bankruptcy was in the public interest. Minority Republicans charged that the bill might not actually keep the utility out of bankruptcy, but would certainly place an unfair burden on business. 
"Have we lost our minds?" asked Assembly Republican Leader Dave Cox (R-Fair Oaks). "Has this body lost its sense of direction? People outside must be thinking, 'These people must be drinking on the job.' " 
The Assembly action was by far the most significant step in what has been a controversial six-month crusade to rescue the Rosemead-based utility through government intervention--a circus-like process that has flooded the Capitol with lobbyists for every special-interest group imaginable. 
But the bill, SB 78xx by state Sen. Richard Polanco (D-Los Angeles), still faces major obstacles. The version that passed the Senate narrowly won approval. The Senate's Democratic leaders are now concerned that changes made by their counterparts in the lower house have made the measure even more politically unpalatable. 
One indication of the closeness of the vote came shortly before debate began about 9 p.m. as Cedillo (D-Los Angeles) arrived in the chamber. Cedillo had been home with his ill wife, but Democratic leaders, needing his vote, arranged for him to fly back to Sacramento. 
Senate President Pro Tem John Burton (D-San Francisco) said Thursday that he and his colleagues would need a few days to review the dozens of amendments recently added to the bill. He predicted the upper house would probably make changes of its own and send a new version of the bill back to the Assembly for a final vote by Sept. 14, the deadline to pass legislation this year. 
Consumer activists vow to continue their efforts to thwart the rescue plan in the Senate. 
"This is one of those devastating displays of disregard for constituents' needs and consumer needs," said Doug Heller of the Foundation for Taxpayer and Consumer Rights. "At the end of the day, the people of the state of California are going to have to depend on John Burton and the Senate to stop this obscene giveaway." 
This spring, Davis and Edison reached an agreement in principle for a government rescue of the utility. The company accumulated its huge debt last year and early this year when it had to buy electricity on the open market for far more than it could charge its customers under a state-imposed rate freeze. 
But the proposal hit the Legislature like a ton of bricks, and has struggled ever since. With polls showing that the public considered the utilities to be culprits in the energy crisis, lawmakers have worried about the political consequences of voting for legislation perceived as a bailout. And five years after approving a landmark deregulation of the state's electricity market that was widely blamed for the problem, lawmakers worried about making another mistake. 
Many lawmakers also wondered whether a utility bankruptcy was as harmful as supporters of the bill contend. California 's largest utility, Pacific Gas & Electric Co., chose to take itself into bankruptcy in the spring rather than seek a government solution to its problems, and the lights did not go dark in Northern California as a result. 
But Davis and other supporters of the bill argued that the state's only way out of the power crisis is to have the private utilities regain their financial health. That would allow the state to get out of the expensive business of buying power on behalf of the utilities' customers. Bankruptcy would only further delay the state's exit from the power business, they argued. 
"This bill is complicated. It's complicated in my view because the issue is complicated," said Assemblyman Fred Keeley (D-Boulder Creek), who presented the bill to the lower house. "But it is in my view the last piece of the puzzle we need to put out this forest fire." 
Since January, California has spent billions of taxpayer dollars purchasing electricity to avert blackouts because the utilities were too encumbered with debt to continue supplying customers. State leaders hope to leave the power business in 2003. 
Even so, the bill traveled a bumpy road in the Assembly. Lawmakers took out some elements of the plan to obtain votes in one committee, only to put them back in to get it through the next panel. And only a surprising Republican vote from Assemblyman Bill Leonard of San Bernardino allowed the bill to clear the Assembly's energy committee. 
In the end, the bill is considerably slimmed down from what Davis and Edison officials first proposed in the spring. 
Under the bill, Edison would be permitted to use the money from its bonds to pay off the debt it owes banks and the state's small, alternative energy producers. The company would use its own resources for the remaining $1 billion it owes large energy companies. Democratic lawmakers contend those companies engaged in price gouging during the energy crisis and are opposed to giving them all they are owed. 
"We have been getting gouged by these guys for a year now, and this is our opportunity to give them a haircut," said Assemblyman Dario Frommer (D-Los Angeles). "They don't get any money from this, not one dime." 
Edison representatives say the plan should allow the company to recover financially--but that it falls short of guaranteeing it would be made whole. 

The State Enron Records to Stay Secret Court: A judge orders confidentiality for the power firm's documents. A Senate panel probing electricity price gouging has subpoenaed them.
NANCY VOGEL

09/07/2001 
Los Angeles Times 
Home Edition 
Page B-8 
Copyright 2001 / The Times Mirror Company 
SACRAMENTO -- Enron Corp., the giant Texas-based seller of electric power, won a court ruling Thursday in its quest to guarantee the secrecy of hundreds of thousands of internal business documents sought by state lawmakers. 
A Senate committee investigating price gouging in California 's wholesale electricity market subpoenaed Enron's documents in April, seeking records of electricity sales, bidding strategies, prices and out-of-state transactions. 
The company refused to make the documents available without a court order protecting the confidentiality of the records. Enron sued July 11, and on Thursday Sacramento County Superior Court Judge Charles C. Kobayashi granted the company's request for a protective order. 
The judge noted in his order that Enron is a business competitor of the California Department of Water Resources, which began buying electricity on behalf of the state's two largest utilities last January. 
"Although the committee argues that the Senate is not in competition with plaintiff," wrote Kobayashi, "the functions of the Senate and the Department of Water Resources are intertwined in so many ways that there is no doubt that not only may there be appearances of conflict, actual conflicts can arise." 
Kobayashi's order is a reversal of an earlier, tentative ruling, in which he concluded that imposing a protective order for Enron would be an "unacceptable" intrusion by the courts into the internal operations of the Legislature. 
Karen Denne, a spokeswoman for the Houston-based company, described executives as "very pleased" with the court ruling. "Turning over the documents was never the issue," she said, "The issue was always protecting our rights." 
Enron officials will work with committee Chairman Sen. Joe Dunn (D-Santa Ana) to craft an agreement that details which documents will be reviewed by the eight lawmakers and their aides, Denne said. 
Reliant Energy of Houston, another company that resisted demands for business records, on Wednesday signed a confidentiality agreement with Dunn's committee and will begin bringing 250,000 documents to a depository in Sacramento, said Reliant spokesman Marty Wilson. 
Dunn said other companies have begun to deliver documents to Sacramento, but not all are fully complying with subpoenas. 
"There are some major holes that have to be plugged by the market participants," he said. 
On July 21, the Senate Select Committee to Investigate Price Manipulation of the Wholesale Energy Market voted to recommend that Enron be cited for contempt for not turning over its documents. 
The full Senate has yet to vote on that recommendation. 
The committee, which the Senate created in March, has focused its investigation on the private companies that purchased power plants after California moved to deregulate its electricity market in 1996. 

California Assembly Passes Southern California Edison Rescue Bill

09/07/2001 
Dow Jones Business News 
(Copyright (c) 2001, Dow Jones & Company, Inc.) 
LOS ANGELES -- The California Assembly late Thursday passed legislation that would rescue Southern California Edison from the brink of bankruptcy by authorizing the utility to sell $2.9 billion in bonds to pay off part of its debt. 
Edison, which has a market capitalization of about $4.6 billion, has racked up billions of dollars in debt it accumulated from buying power at high prices on the open market because of the California electricity crisis. 
The assembly voted 41-32 in favor of the measure and secured a vote from an assembly republican. The bill needed a minimum of 41 votes for passage. During the past six months, republicans have voiced opposition to an Edison bailout. 
The legislation, which was passed by the State Senate in July and recently amended by the Assembly, would allow the unit of Edison International (EIX), Rosemead, Calif., to pay off commercial paper holders and small power producers with the bond sale. However, the utility will still need to raise about $1 billion to pay large generators. 
The Assembly debated the bill for about two hours Thursday evening and attempted to introduce several amendments dealing with conservation easements. The proposed amendments were killed and the full Assembly then voted. 
"We're encouraged by the forward progress the Assembly vote represents toward creating a workable framework to get the state out of the power procurement business and restore us to credit worthiness," said Bob Foster, Edison International senior vice president. 
The bill "provides just $2.9 billion which still leave us at risk," Mr. Foster said. 
The bill goes to the full Senate for a floor vote which could take place as soon as Monday, lawmakers said. Senate President Pro Tem John Burton (D-San Francisco) said this week that the bill, as amended by the Assembly, was "dead on arrival." 
Other lawmakers, including State Senator Debra Bowen (D-Redondo Beach), also indicated that they would likely not support the bill as amended. 
The Assembly version of the bill would give the state a five-year option to buy the utility's power lines for $2.4 billion, or an estimated two times the current book value. 
When the Senate passed the Edison rescue bill in July, it only authorized the utility to sell $2.5 billion in bonds and gave the state the option during the next five years to buy the power lines at current book value of $1.2 billion. 
The Senate has one week to decide whether it will pass the SoCal Edison rescue bill before the Senate adjourns for the year Sept. 15. 
A state-mandated rate freeze prohibited SoCal Edison from passing on rising power costs to consumers, leading to the company amassing $3.9 billion in debt since May 2000. 
Copyright (c) 2001 Dow Jones & Company, Inc. 

Developments In California 's Energy Crisis At A Glance

09/07/2001 
Dow Jones Energy Service 
(Copyright (c) 2001, Dow Jones & Company, Inc.) 
THURSDAY: 
--The state Assembly approves a deal to rescue Southern California Edison from bankruptcy by letting the utility issue $2.9 billion in bonds backed by ratepayers. The bill, by Sen. Richard Polanco, D-Los Angeles, carries the deal negotiated by the governor in April. The 41-32 vote was the bare minimum needed to pass the measure and came after hours of delays and debate on the bill. 
--The Public Utilities Commission delays a vote on direct access -the option of consumers to switch from their local utility to a competitor for cheaper power or electricity generated using renewable fuels. Consumer advocates warn that businesses will use the time to convince officials that direct access should stay -thereby shrinking the pool of ratepayers from which the state plans to recoup its power-buying costs. Consumer groups fear that will force the state to raise rates on the remaining customers. 
--State treasurer Phil Angelides says the state will have to re-time its expected sale of $12.5 billion in bonds because of the PUC's delay on suspending direct access and a host of other issues key to shaping California 's response to its energy debacle. The state must sell the bonds to repay the genreal fund. 
--The Assembly Appropriations Committee approves a bill to alter how the California Department of Water Resources issues bonds. The bill, by Sen. John Burton, D-San Francisco, sets aside a portion of existing customer rates to pay for the $12.5 billion in bonds the department plans to issue this fall. It also requires the DWR to hold public hearings on their power procurement process. The bill now moves to the full Assembly for a vote. 
--The PUC announces more than 400 businesses now are exempt from rolling blackouts, including plastic surgery clinics, power generators, blood and dialysis labs, jails, nursing homes and nursing centers. More than 9,000 applied for the exemptions, ranging from pet cemeteries and bakeries to Pacific Bell Park and amusement parks. 
--Gov. Gray Davis signs legislation that requires an electric company or local publicly owned electric utility to immediately notify law enforcement agencies of the possibility of a rolling blackout. The measure, AB 4XX by Assemblyman Dennis Cardoza, D-Merced, makes permanent an executive order Davis issued on June 5, 2001, when many feared a summer plagued by rolling outages. 
--Enron Corp. must turn over sensitive financial documents to a state Senate committee investigating possible price manipulation of wholesale energy prices, a judge rules. But the state must provide the energy company with a protective order that the judge will approve. 
--Sen. Ross Johnson, R-Irvine, tries to amend a bill in the Senate to cut the salary of S. David Freeman, chairman of the California Consumer Power and Conservation Financing Authority. Freeman draws a salary of $200,008. Johnson tried to limit it to no more than the salary that Gov. Gray Davis is authorized to get -$175,000. "Many of us feel Mr. Freeman ripped off taxpayers of California so the (Los Angeles) Department of Water and Power could pay off its debts early," Johnson said. The amendments failed. 
--Shares of PG&E Corp. fall 20 cents to close at $16.30. Shares of Edison International fall 7 cents to close at $13.60. Sempra Energy, parent company of San Diego Gas and Electric, rose 9 cents to close at $27.50. 
--No power alerts Thursday as electricity reserves remain above 7%. 
WHAT'S NEXT: 
--State power regulators have announced a meeting Sept. 13, when they are expected to vote on issues that will affect California electric bills, including: 
A proposal to grant the state's power-buying agency the authority to raise electric rates on its own without PUC review to ensure such rates are justified; 
A proposal to raise rates for San Diego Gas and Electric Co. residential customers by an average of 12 percent; 
A proposal that bills Pacific Gas and Electric Co. $6.5 billion, Southern California Edison Co. $4 billion and SDG&E $1.5 billion to help the state recoup its power-buying costs; 
And the suspension of consumers' choice to switch from a local utility to a competing power marketer. 
THE PROBLEM: 
--High demand, high wholesale energy costs, transmission glitches and a tight supply worsened by scarce hydroelectric power in the Northwest and maintenance at aging California power plants are all factors in California 's electricity crisis. 
--Southern California Edison and Pacific Gas and Electric say they've lost nearly $14 billion since June 2000 to high wholesale prices the state's electricity deregulation law bars them from passing on to consumers. PG&E, saying it hasn't received the help it needs from regulators or state lawmakers, filed for federal bankruptcy protection April 6. Electricity and natural gas suppliers, scared off by the companies' poor credit ratings, are refusing to sell to them, leading the state in January to start buying power for the utilities' nearly 9 million residential and business customers. The state is also buying power for a third investor-owned utility, San Diego Gas & Electric, which is in better financial shape than much larger Edison and PG&E but is also struggling with high wholesale power costs. 
--The Public Utilities Commission has approved average rate increases of 37% for the heaviest residential customers and 38% for commercial customers, and hikes of up to 49% for industrial customers and 15% or 20% for agricultural customers to help finance the state's multibillion-dollar power buys. 


California 's Plan for $12.5 Billion of Bonds to Cover Electricity Costs Runs Into Snags

09/07/2001 
Dow Jones Business News 
(Copyright (c) 2001, Dow Jones & Company, Inc.) 
California 's plan to sell $12.5 billion worth of bonds to cover extraordinary electricity costs is hitting snags that could delay the record debt issuance well into next year, forcing the state to issue more short-term paper than expected to cover a financing gap, Friday's Wall Street Journal reported. 
The bond issuance is contingent on the state's being able to ensure a secure revenue stream from electricity sales so it can both pay power suppliers and cover interest payments on the planned bonds. But this week the state's largest utility, Pacific Gas & Electric Co., a unit of PG&E Corp., San Francisco, said it would go to court rather than pay $500 million more for electricity procured by the state than the utility believes is its rightful share. 
Pacific Gas, which earlier this year sought bankruptcy-court protection, objects to a proposed order by the California Public Utilities Commission to place 54% of the power costs incurred by the California Department of Water Resources on PG&E customers. The department began procuring power on behalf of cash-strapped utilities in January after wholesale-power prices in California surged to unprecedented levels. 
According to the draft order, due to be voted on by the commission later this month, the state plans to charge PG&E for power obtained in the northern part of the state. Critics say this ignores the fact that the tally of costs has to do more with where power plants are located than it does with where electricity is consumed. Energy is shifted around the state through a high-voltage transmission system. 
The upshot would be that PG&E customers would pay the department 14 cents a kilowatt hour for electricity . By contrast, customers of No. 2 utility Southern California Edison Co., a unit of Edison International, Rosemead, Calif., would pay 10 cents a kilowatt hour. SoCal Edison also has been financially weakened by California 's energy crisis, and is awaiting passage of a bill in the state legislature that would give it cash in exchange for its transmission and other assets. 
Copyright (c) 2001 Dow Jones & Company, Inc. 
All Rights Reserved.

California 's PUC Approves Some Agreements, But All is Not Go on Power Sale
By Deborah Finestone

09/07/2001 
The Bond Buyer 
Page 48 
Copyright (c) 2001 Thomson Financial, Inc. All Rights Reserved. 
SAN FRANCISCO -- The California Public Utilities Commission yesterday narrowly approved three utility servicing agreements that need to be in place before the state Department of Water Resources can begin its planned October sale of $12.5 billion in power purchase revenue bonds. 
Commissioners postponed voting on the controversial issue of suspending ratepayer choice enacted as part of the state's deregulated power market. Suspending a utility customer's ability to seek electricity from sources outside the utility is seen as a crucial element for the bond sale, because it will ensure the number of customers whose rate payments will secure the bonds. 
The five-member commission now plans to vote Thursday on that and other topics postponed earlier this week, including agreeing to cover DWR's revenue needs in retail rates and approving the rate agreement -- the contract giving the DWR rate-making authority to cover its costs until the bonds have been repaid. The commission also will vote on raising rates for San Diego Gas & Electric customers. 
State Treasurer Philip Angelides warned late Wednesday afternoon that "the state of California cannot move forward to market and sell the bonds" until the commission takes the required actions. 
Angelides said in a statement that his office will release a revised timetable for bond issuance only after the PUC has acted on all the items, indicating that the deal could possibly be postponed again if the PUC continues to delay voting on critical matters. 
The servicing agreements approved yesterday are the contracts that spell out that Pacific Gas & Electric Co., Southern California Edison, and San Diego Gas & Electric will act as billing and collection agents for the DWR, will distribute the power DWR buys for its customers, and will each maintain a separate fund for revenues to remit to DWR. 
Dissenting commissioners Richard Bilas and Henry Duque opposed the agreements because the portion of rates for the DWR will not be a separate item on customers' bills. Like some consumer groups and utilities, the commissioners are concerned that DWR has too much power since it became authorized to buy electricity for the state under Assembly Bill 1X. 
"People should know that the rate increases are for DWR, but the utilities are taking the heat ... since DWR began spending, in effect, like a drunken sailor," Bilas said. "This approval of the agreements will display to the financial community that we are moving forward on AB 1X, but I think AB 1X was a mistake." 
Duque expressed his hopes for passage of a Senate bill currently under consideration that would show the DWR set-aside on customer's utility bills. The bill, if approved, would set aside part of existing consumer electricity rates to guarantee the state has enough money to pay off bonds issued by the DWR but subject other expenses to review by the PUC. The bill, sponsored by Sen. John Burton, D-San Francisco, reportedly passed a key Assembly committee yesterday. 
When AB 1X became law in February, Angelides had expected the bonds to sell in May. Until earlier this week, the treasurer had planned to begin issuing bonds in late October. 
After the PUC acts, there is a one- to two-month appeal period. 
Commissioner Carl Wood expressed concern that the commission was taking so long to end ratepayer choice. 
"We're being negligent in failing to respond to this threat not only to the viability of the state bond issue but to basic fairness," Wood said. "The longer we drag this out, the more damage that is done." 
However, delays to address the complex issues prior to selling the bonds will help ensure a more successful bond sale, according to David Blair, a senior analyst at Nuveen Advisory Corp. 
"It's encouraging to see the state being very diligent and addressing issues before the bonds come out," he said. "The various delays and complications certainly make me more careful in evaluating it ... but it underscores the importance of having a structure that is rock solid and protected by law." 

Good Omens for Calif. Gos
By Deborah Finestone

09/07/2001 
The Bond Buyer 
Page 1 
Copyright (c) 2001 Thomson Financial, Inc. All Rights Reserved. 
SAN FRANCISCO -- California 's $500 million general obligation sale Tuesday should meet strong demand despite uncertainties surrounding the long-delayed $12.5 billion power bond deal still hanging in the wings, investors said. 
The GO deal is expected to do well because investors continue to seek alternatives to the equity markets and because prices for outstanding California GOs have rebounded following a sell-off earlier this year at the height of the state's energy crisis. 
"Because of the lack of supply in California , the deal should do really well regardless of uncertainty around the power deal," said Dan Solender, California fund manager for Vanguard Group Inc. "The state's GO bonds are still considered a good credit. There hasn't been a large new issue in California in the last few weeks, so it's a great time to bring in a new deal." 
The bonds, to be sold in 14 separate series under 12 bond acts authorized by state voters over the years, will be priced competitively. More than $300 million of the proceeds will be used to fund school facility improvements. Insurance can be obtained at the option of the bidders. 
Vanguard was one of many funds that sold California bonds earlier in the year because of uncertainty surrounding the state's credit rating, but "we started buying them back around the June GO deal when spreads really widened, so they were really attractive to buy," Solender said. 
Spreads have since tightened because the energy crisis seems to have died down, he said. 
When California sold GOs last June it was forced to pay 25 basis points above the triple-A scale on bonds due in 30 years, but the sale was considered a success because some had feared the state would have to pay as much as 30 basis points more to sell the bonds. The sale came on the heels of downgrades by Moody's Investors Service and Standard & Poor's. Standard & Poor's in April cut the state to A-plus from AA. In May, Moody's downgraded the state to Aa3 from Aa2. 
Yield spreads on bonds due in 30 years tightened to 8 basis points above the triple-A scale in the secondary market on Wednesday as California experienced fewer rolling blackouts this summer than expected, and after wholesale power prices declined because of federal mitigation and the state's negotiation of long-term contracts that allowed it to avoid buying so much power at high market prices. Nevertheless, ratings analysts still assign the state a negative outlook. 
"It seems the situation has improved, even if the state hasn't gotten the power deal done," Solender said. 
Even though the short-term outlook has brightened, California still has to find a way to complete the Department of Water Resources' $12.5 billion revenue bond sale, Solender said. 
The state needs to sell those bonds in order to obtain funds to reimburse itself for more than $6 billion it has spent this year to purchase power on behalf of the state's crippled utilities and to have cash on hand to finance more power purchases. But the deal -- which would be the largest municipal bond offering in history -- has been delayed several times because of the complexities of putting such a massive debt offering together. 
"We all expected ups and downs through the whole process, but there are still a lot of questions to get answered," Solender said. "We all expect the state to get it done, otherwise it would be hurting the trading value" on GO bonds. 
As much as the state may try to detach the power bonds from more normal financing plans, investors are looking at both, another investment analyst said. 
David Blair, senior analyst at Nuveen Advisory Corp., said the two issues are connected because, even though the general fund is no longer being used to fund power purchases, California needs the power bond proceeds to replenish it. 
"In looking at the state's outlook, you have to look at some of the risks it faces in resolving the power crisis. While there's a general expectation in the market that the power bond deal will get done, it's not guaranteed, so people are keeping their eye on the developments," Blair said. 
While officials continue piecing together the power bond deal, the state's general fund should not need to loan more to the Water Resources Department, even if power bonds are not issued this fiscal year, according to official documents for the GO sale. The department also has sufficient funds available to purchase power for the rest of the fiscal year. As of mid-August, about $1.9 billion in the department's power-purchase fund had not yet been committed. 
The state expects to maintain adequate cash reserves for the fiscal year even if the department cannot sell the bonds and repay the $6.3 billion in loans it owes the general fund, according to official documents. Officials also said none of the litigation regarding the energy situation seeks a judgment against the general fund. 
California plans to issue $5.7 billion in revenue anticipation notes on Thursday to meet cash-flow needs. 
"The Ran deal gives the state a little more flexibility, so things aren't as dire as they looked several months ago," Blair said. 
But completing the power bond sale is crucial to California 's financial health, according to Blair, because the state's cash balances at the end of fiscal 2002 will be much lower without the $6 billion expected from the power bonds. 
Blair noted that the October sale date for the power bonds was looking less likely given this week's postponement by the Public Utilities Commission of rulings needed to sell the bonds, including a vote on a rate agreement that would provide the revenue to repay the debt. 
Still, the energy crisis has stabilized in the past several months, allowing the California bond market to strengthen, especially in the retail sector, he said. 
"People are running for shelter from the equity market," he said. 
Fitch affirmed its AA rating on the new issue and the state's $23.6 billion in outstanding GO debt, which has been on Rating Watch Negative since April. 
The negative watch reflects continued uncertainties about the state's power-purchase program and billions of dollars in outstanding loans to the department. Financial risk to the general fund will continue until it is reimbursed, Fitch analysts said. 
Additionally, state revenue estimates were lowered in May, largely due to volatile capital gains and personal income tax receipts. But in July, the first month of the fiscal year, revenues were 4.7% over estimates, though the California economy is evidently slowing. 
The state expects to end the year with a general-fund balance of $3.4 billion, Fitch said. 
On Wednesday, Standard & Poor's assigned its highest note rating to the state's Ran offering and affirmed its A-plus rating with a negative outlook on the GOs. The rating reflects the potential for additional general-fund purchases if the current power bond plan falls through and electricity prices rise, the possible long-term detrimental effect on the state's economy of retail electric rate hikes, and possible further rate increases to recapitalize the state's insolvent investor-owned utilities. 
However, analysts said California 's economy remains strong and diversified and continues to grow. Projected fund balances are adequate --assuming reimbursement of the general fund with power bond proceeds. 
Moody's was expected to release its rating report on the GOs today. 
Public Resources Advisory Group serves as the state's financial adviser on the GO deal. Orrick, Herrington & Sutcliffe is bond counsel, the Law Office of Pamela S. Jue is co-bond counsel, and Quateman & Zidell is disclosure counsel. 

California 's Plan for $12.5 Billion of Bonds
To Cover Electricity Costs Runs Into Snags
By Rebecca Smith

09/07/2001 
The Wall Street Journal 
Page A4 
(Copyright (c) 2001, Dow Jones & Company, Inc.) 
California 's plan to sell $12.5 billion worth of bonds to cover extraordinary electricity costs is hitting snags that could delay the record debt issuance well into next year, forcing the state to issue more short-term paper than expected to cover a financing gap. 
The bond issuance is contingent on the state's being able to ensure a secure revenue stream from electricity sales so it can both pay power suppliers and cover interest payments on the planned bonds. But this week the state's largest utility, Pacific Gas & Electric Co., a unit of PG&E Corp., San Francisco, said it would go to court rather than pay $500 million more for electricity procured by the state than the utility believes is its rightful share. 
Pacific Gas, which earlier this year sought bankruptcy-court protection, objects to a proposed order by the California Public Utilities Commission to place 54% of the power costs incurred by the California Department of Water Resources on PG&E customers. The department began procuring power on behalf of cash-strapped utilities in January after wholesale-power prices in California surged to unprecedented levels. 
According to the draft order, due to be voted on by the commission later this month, the state plans to charge PG&E for power obtained in the northern part of the state. Critics say this ignores the fact that the tally of costs has to do more with where power plants are located than it does with where electricity is consumed. Energy is shifted around the state through a high-voltage transmission system. 
The upshot would be that PG&E customers would pay the department 14 cents a kilowatt hour for electricity . By contrast, customers of No. 2 utility Southern California Edison Co., a unit of Edison International, Rosemead, Calif., would pay 10 cents a kilowatt hour. SoCal Edison also has been financially weakened by California 's energy crisis, and is awaiting passage of a bill in the state legislature that would give it cash in exchange for its transmission and other assets. 
"There is nothing on God's green Earth that can justify that differential," PG&E Senior Vice President Dan Richard said. 
Anticipating a possible delay to the bond issue, the state is planning to issue $5.7 billion worth of revenue anticipation notes, or RANs, on Sept. 25. RANs are a financing tool routinely used to smooth out cash-flow imbalances caused by the occasionally jerky flow of tax receipts. In this case, though, the money is being collected to tide the state over until the power bonds can be issued. 
In June, California borrowed $4.3 billion from banks to augment the roughly $8 billion it has borrowed from the state's general fund for power purchases. State Treasurer Philip Angelides said this week that once the RANs are issued, the state will have enough money to cover its power costs until the middle of next year. However, a delay in issuing bonds would in turn postpone repayment of the bank debt, whose interest rate steps up over time. 
Until now, the state's timetable for issuing bonds has assumed that all legal challenges to about half a dozen funding-related orders expected to be issued by the public-utilities commission would be completed in October. Mr. Angelides said he hopes the state still can issue bonds in November but acknowledges "it's subject to change as events unfold." 

USA: Calif. Assembly passes SoCal Edison rescue bill.
By Alex Gronke

09/07/2001 
Reuters English News Service 
(C) Reuters Limited 2001. 
SACRAMENTO, Calif., Sept 7 (Reuters) - The California Assembly on Thursday passed a bill designed to save utility Southern California Edison (SCE) from bankruptcy and it now moves to the state Senate where it faces potentially its toughest hurdle. 
The bill, based on a memorandum of understanding between Calif. Gov. Gray Davis and the utility in April, passed on a 41-32 vote. Under Assembly rules it had needed to secure at least 41 votes to pass the 80-member chamber. 
It would allow the company to recover about $2.9 billion of the estimated $3.9 billion debt it incurred buying power for its customers at skyrocketing wholesale prices last year. 
Consumer groups have been leading the campaign against the bill which they consider a bail-out at the expense of the utility's ratepayers. 
The bill originated in the state Senate but has been extensively amended by Assembly committees and the current version is much more favorable to the utility than the one cleared by the Senate in a tight 22-17 vote last month. 
Davis has been lobbying intensively for the bill but several leading lawmakers, including Senate leader John Burton, have indicated the revised version will face an uphill task winning sufficient support when it returns to the Senate for concurrence on Assembly amendments. 
SCE, a unit of Edison International , was prohibited from passing on its higher costs due to a retail price freeze imposed under the state's power deregulation legislation. 
The bill would allow the utility, California's second largest, to recover the $2.9 billion through a bond issue that would be repaid by a mandatory charge on business customers. 
The state's largest utility, PG&E Corp. unit Pacific Gas & Electric, filed for Chapter 11 bankruptcy protection in April after failing to agree on a salvage plan with Davis and his negotiating team. 
California took over purchasing power for customers of the utilities in January as plunging credit ratings made it impossible for them to buy power in the wholesale market. 
The state has been seeking to make SCE creditworthy again so it can resume purchasing power on behalf of its customers. 
SCE, based in Rosemead, Calif., has some 11 million customers while San Francisco-based Pacific Gas & Electric has around 13 million. 


Enron must give documents to Calif. lawmakers-judge.

09/06/2001 
Reuters English News Service 
(C) Reuters Limited 2001. 
SAN FRANCISCO, Sept 6 (Reuters) - Enron Corp. must turn over sensitive financial documents to a state Senate committee probing charges of price gouging during the state's energy crisis, a California judge ruled on Thursday. 
But Sacramento Superior Court Judge Charles Kobayashi also ruled lawmakers must provide Enron with a confidentiality agreement, saying he was not convinced the committee would respect the firm's right to maintain proprietary secrets. 
"If the committee could take the requested action in the name of the public interest, then the committee ostensibly could require newspapers to surrender their confidentiality rights, attorneys to surrender their attorney-client privilege, (and) psychiatrists to surrender their privileges," the judge wrote. 
The Senate Select Committee to Investigate Market Manipulation has subpoenaed documents from a number of energy firms to probe accusations California power agencies and utilities were overcharged some $8.9 billion for wholesale electricity during the state's energy crisis which saw power prices in the state soar tenfold. 
Independent energy merchants have blamed the price spike on the state's poorly designed electricity deregulation law and a failure to build enough power plants to meet the growing needs of its 34 million residents and its industries. 
An Enron spokeswoman said on Thursday the firm has already turned over tens of thousands of documents, but wanted assurances that certain sensitive documents containing proprietary trade secrets, for example, would be protected under a confidentiality agreement. 
The firm will now work with the committee to hammer out the specifics of such an agreement, said Enron spokeswoman Karen Denne. 
"We are pleased with the judge's order in that he agreed that our constitutional right would be protected," Denne said. "The issue has always been protecting the confidential documents." 
The committee has already asked the full Senate to cite Enron as well as Reliant Energy Inc. for contempt for failing to comply with a subpoena seeking confidential documents. It would be the first such citation imposed by the state Senate since 1929, but has not yet come up for a vote. 
Atlanta-based Mirant Corp. however, avoided the contempt threat by agreeing with legislators' demands to sign confidentiality agreements, open a document depository close to Sacramento, and begin placing documents there relating to the company's recent business in California. 


USA: Calif. moves key vote on power choice to Sept 13.

09/06/2001 
Reuters English News Service 
(C) Reuters Limited 2001. 
SAN FRANCISCO, Sept 6 (Reuters) - The California Public Utilities Commission on Thursday delayed again a vote to suspend retail power choice, one of the cornerstones of the state's 1996 electricity deregulation law. 
Loretta Lynch, president of the CPUC, said a vote on a proposed order to suspend retail customers' right to select their power supplier was delayed until a special meeting on Sept. 13. 
That meeting's agenda will also include several items that establish the legal framework for the state to move ahead with a record sale of $12.5 billion in power purchase bonds. 
The regulators have delayed votes on both issues since early this year while they have held hearings and prepared the complex measures needed to get the bond issue under way. 
Retail choice - also called direct access - gives electricity users the right to pick their power provider, bypassing the local utility in the search for the most competitively priced energy. 
The option was built into California's deregulation scheme, but almost all residential and small business customers ignored it and stuck with their local utility to provide "bundled" energy services. 
CPUC Commissioner Carl Wood said that despite "populist rhetoric" about retail choice in the deregulation law, big businesses demanded that the option be included so they could switch power suppliers and "avoid paying their share" of past debts incurred by the utilities. 
When power shortages sent wholesale power prices soaring last year, independent power suppliers "dumped their customers back on the utilities," Wood said. 
"Now, when some order has been restored to the market and the high prices have come down, suddenly direct access looks viable again.... It's a Gold Rush," he added. 
State officials fear that keeping the direct access option in place offers industrial customers a way to buy power from new suppliers and dodge paying for the emergency power supplies already purchased by California's Department of Water Resources. 
The water agency has spent more than $7 billion to buy power for the state's financially troubled utilities - PG&E Corp.'s Pacific Gas & Electric and Edison International's Southern California Edison. 
The PG&E utility is bankrupt, and Gov. Gray Davis is scrambling to get the legislature to approve a $2.9 billion rescue plan for Southern California Edison. 
The two utilities ran out of money buying power in the state's volatile electricity market. The deregulation law blocked them from passing their power costs to consumers. 
State Treasurer Phil Angelides wants to take the bonds to market by late October so the state can begin to recover the money spent buying electricity. 

California `Windfall Profits' Power Vote Delayed (Update1)
By Michael B. Marois 
Sacramento, California, Sept. 6 (Bloomberg) -- The California Assembly won't vote today on a measure to charge power producers a ``windfall profits'' tax on earnings in the state that are deemed excessive. 
The bill would levy a tax on some profits by power sellers. The proceeds from the tax would be returned to Californians through an annual holiday from state sales taxes during the first weekend in December. The bill needs 54 votes, or two-thirds of the Assembly, for passage. 
The Assembly had planned on taking up the measure for vote this afternoon. That vote probably won't happen until tomorrow or over the weekend because of a snafu over printing new amendments to the bill, said Kirsten Xanthippe, an aide to Assemblywoman Ellen Corbett, the Democrat from San Leandro who wrote the legislation. 
California Governor Gray Davis has denounced generators as ``out-of-state profiteers'' and is asking federal regulators to order billions of dollars in refunds. Generators say their prices have been fair. A windfall-profits tax is unnecessary and would discourage power-plant construction in the state, power providers including Dynegy Inc. and Reliant Energy Inc. have said. 
California's two largest electric utilities, owned by PG&E Corp. and Edison International, are insolvent after accruing more than $14 billion in losses buying power at prices higher than they were allowed to charge customers. PG&E's Pacific Gas & Electric filed for bankruptcy protection in April. 
The Assembly Appropriations Committee this morning approved a similar bill by Senator Nell Soto, a Democrat from Ontario, that would require the California Public Utilities Commission to determine a reasonable price for power companies to charge, including a set profit. Companies selling power at higher rates would face a 100 percent tax on the additional profit. 

Enron Wins Document Protection Order From Calif Judge 
OF DOW JONES NEWSWIRES 
LOS ANGELES (Dow Jones)--A Sacramento Superior Court judge Thursday ruled that Enron Corp  must comply with a legislative subpoena of financial documents, but reversed an earlier decision and granted the company a protective order of the documents, according to a copy of the ruling seen by Dow Jones Newswires. 
Enron said the ruling was a victory, as the company has always maintained it would be happy to comply with the subpoena by the state Senate committee as long as the company received a protective order. 
"We are obviously very happy with the ruling and look forward to working with the committee to come up with a protective order that truly protects our proprietary information," said Enron spokesman Mark Palmer. 
The Senate Select Committee To Investigate Market Manipulation has already cited Enron and Reliant Energy, Inc  with contempt for refusing to provide documents, a charge for which the companies could be fined. 
Once Enron and the committee draft a protective order and the judge agrees to it, the company will hand over any documents that the committee wants, Palmer said. 
However, an attorney for the committee expressed skepticism that the company would actually follow through. 
"We have no indication from Enron that they would agree to produce the documents we've requested, even with the confidentiality order," said Larry Drivon, special counsel to the committee. 
He added that he could not speculate if the committee would drop its contempt charge if Enron did produce all requested documents. 
In his decision granting the protective order, Judge Charles Kobayashi wrote that he was not convinced the committee has solid standards in place to ensure Enron's protection. 
"It is clear that there are no standards for determining what are the available protections, no procedure for determining what is a legitimately confidential, privileged, proprietary matter, no procedure for oversight and no prescribed remedy for (Enron) for any unauthorized disclosures," Kobayashi wrote. 
Last week, a San Francisco Superior Court judge granted Enron a protective order in a separate investigation by the state attorney general. 
-By Jessica Berthold; Dow Jones Newswires;

CPUC Postpones Vote To Suspend Choice Of Elec Suppliers 
LOS ANGELES (Dow Jones)--The California Public Utilities Commission Thursday postponed until Sept. 13 voting on a plan to suspend customer choice of electricity providers, one of several measures that needs to be passed before the state can issue $12.5 billion in revenue bonds. 
As reported, the commission also postponed voting on a rate agreement that would allow the state Department of Water Resources to recover power-buying costs without regulatory review, and a vote that would set the amount of revenue the CDWR can receive from utilities through 2002. The CDWR has been buying power on behalf of the state's three investor-owned utilities since January. 
The commission also suspended a vote for a 12% rate hike for customers of Sempra unit San Diego Gas and Electric Co. All of the above measures need to be passed before the state bond sale can proceed. The CPUC hopes to vote on all outstanding items related to the bond sale Sept. 13, Lynch said Thursday. The state plans to sell a record $12.5 billion in revenue bonds by late October. The bonds will be used to repay about $9 billion borrowed from the state's general fund for power purchases, as well as smooth out payments on $43 billion in long-term power contracts. 
Lynch said Wednesday she did not know if the vote postponements would push the date of the bond sale. No one at the State Treasurer's office, which is handling the bond sale, could be reached for comment. 
The commission did approve measures Thursday to establish servicing agreements between the three utilities and the CDWR, which would set formal payment arrangements for power procurement. Those votes were also needed to move the bond sale forward. 
-By Jessica Berthold; Dow Jones Newswires;