Please respond to Ken Smith A similar article appeared in today's Sacramento Bee.  It's in the clips
Miyung circulated.
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Sent: Tuesday, July 10, 2001 6:52 AM
Subject: LA Times Article


This is the Los Angeles Times article Mark has been working on...

California; Metro Desk
Electricity Cost Data Spread the Blame Power: Many suppliers charged more
than the firms that Davis has pilloried, records show.
RICH CONNELL; ROBERT J. LOPEZ; DOUG SMITH
TIMES STAFF WRITERS

07/10/2001
Los Angeles Times
Home Edition
B-1
Copyright 2001 / The Times Mirror Company



SACRAMENTO -- California's energy meltdown involves a far more diverse
group of wholesale electricity merchants than suggested by Gov. Gray Davis,
who has aggressively blamed a handful of Texas companies, state records
show.


During the first three months of this year--one of the worst stretches of
power shortages during the crisis--an assortment of public and private
entities charged the state prices averaging well above some of those paid
to Texas firms, according to documents released to The Times on Monday by
the Department of Water Resources, which now buys power for California.


Among those setting and collecting some of the highest average prices per
megawatt-hour were a Canadian public utility, a subsidiary of San Diego Gas
& Electric's parent company, and the Los Angeles Department of Water and
Power, the report shows. Their average prices ranged from $498 a
megawatt-hour charged by Powerex, the trading arm of British Columbia's BC
Hydro, to $292 an hour by the DWP.


In fact, some of the biggest private power companies singled out for
criticism by Davis and other state officials--Dynegy Inc., Duke Energy and
Mirant--charged less than the average prices the state paid for the period.
Those companies' average prices ranged from $146 to $240 per megawatt-hour,
according to an analysis of the documents.


The figures cover the various types of spot and longer-term power purchased
by the state during three months that included rolling blackouts and more
than a month of razor-thin reserves, leading to continuous power
emergencies.


Davis spokesman Steve Maviglio said the governor has directed his sharpest
barbs at private out-of-state generators because, in general, they have
reaped the highest profits over the longest period.


"You have to look at the whole picture," Maviglio said.


"The governor was expressing his displeasure with the arrogance of the
generators who wear cowboy hats," he said. "Their profits were 100% to 400%
above last year. . . . Just because there are other entities who are
charging us more [per megawatt-hour] doesn't change the fact that we are
getting ripped off by companies from Houston, Tulsa, Atlanta or Charlotte."


The report by the Department of Water Resources was provided to The Times
on the same day the state released 1,700 pages of documents on California's
electricity purchases on the volatile spot market for the year's first
quarter.


The records detail how the state spent nearly $8 billion buying power in
the first five months of the year, and underscore the complexity of the
state's energy problem. They also show that patterns of high prices are not
limited to a few generators.


Oscar Hidalgo, a spokesman for the water resources agency, said that the
reports together show that prices were extremely volatile early in the
year. "All the prices were high," he said, noting the downward trend in
costs since his agency began buying power in mid-January.


The average price per megawatt-hour for all state purchases went from $316
in January to $243 in May. Spot prices fell from an average of $321 per
hour to $271, the reports show.


In the first quarter of the year, some public entities' prices far exceeded
those of the biggest private companies. For example, Houston-based Enron,
one of the nation's biggest power traders, charged an average of $181 per
megawatt-hour. And Atlanta-based Mirant, which sold the most to the state,
a total of $706 million, charged an average of $225 per megawatt-hour.


By contrast, a Calgary, Canada, firm, TransAlta Energy, averaged $335 a
megawatt-hour, and the Sacramento Municipal Utility District had average
charges of $330 per megawatt-hour.


A spokesman for Enron, Mark Palmer, said recently that the "vilification of
Enron was based on politics, not facts." Spokesmen for BC Hydro could not
be reached late Monday to comment on its huge sales to the state. In the
past, the utility has defended its pricing practices, saying it has offered
last-minute hydroelectric power that helped keep California's lights on.


A spokeswoman for Sempra, the parent company of San Diego Gas & Electric,
said late Monday the company was unable to comment because it had yet to
see the figures released by the state. Officials at DWP, who could not be
reached Monday evening, have defended their pricing, saying the costs of
producing the power needed by the state were extremely high.


More Power Bought Than Projected


Hidalgo, of the Department of Water Resources, said his agency's efforts,
coupled with conservation by business and consumers and falling natural gas
prices, have begun to tame the state's market.


Still, the state had to purchase $321 million in power in April and May,
about 10% more than Davis' analysts had projected.


Hidlago said that was because of hot weather in May and other supply
problems in April. He said reports will show that power purchases fell
short of state projections in June and early July.


The reports also will show that prices paid by the state were down in June
and July, partly because spot prices have fallen sharply, often to well
under $100 a megawatt-hour.


A summary Department of Water Resources report released Monday credited
Davis' program of nurturing new power generation and establishing long-term
power contracts with with "moving the California electric energy industry
closer to normalcy."

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