The guy negotiating the bill on behalf of IEP told me that there's a 35-40% 
chance that it will make it out of the Senate by the end of next week, which 
means that it still has quite a ways to go.

Best,
Jeff



	Michael Etringer@ECT
	02/23/2001 04:39 PM
		 
		 To: Jeff Dasovich/NA/Enron@Enron
		 cc: 
		 Subject: Article on AB47X

Jeff,
Do you know how this bill is progressing.  I was on an IEP call last night 
where they seem to be rallying the troops to respond in very short order on 
this bill .   During the call they where working towards a Tuesday deadline.  
It sounded as if there would be some consideration of the bill on Tuesday?  
If you have any insight it would be greatly appreciated.

Mike

---------------------- Forwarded by Michael Etringer/HOU/ECT on 02/23/2001 
02:44 PM ---------------------------


Steve C Hall
02/23/2001 10:41 AM
To: Michael Etringer/HOU/ECT@ECT
cc:  
Subject: Article on AB47X

Mike,

Here is an article on the QF bill.


Small electric producers OK big
 price cut



 By Ed Mendel 
 STAFF WRITER 

 February 23, 2001 


 SACRAMENTO -- Legislators said yesterday that small generators who
 produce about 30 percent of the state's power have agreed to cut their power
 prices in half, an important step toward easing the electricity crisis.

 Negotiations continued on what Gov. Gray Davis has called the final step: the
 state purchase of the transmission systems of the three investor-owned 
utilities
 in exchange for paying off their huge debt.

 Meanwhile, the amount that the state is spending to buy power for the
 customers of the utilities grows. Officials gave notice that an additional 
$500
 million will be needed in 10 days, bringing the total to $2.6 billion.

 But for the first time in nearly six weeks the state did not declare an alert
 yesterday due to power shortages. More power was available from other
 states, and some power plants that had been shut down for maintenance
 resumed operation.

 Two legislators, Sen. Jim Battin, R-Palm Desert, and Assemblyman Fred
 Keeley, D-Boulder Creek, said they introduced legislation that sharply
 reduces the prices paid to small generators after weeks of difficult
 negotiations.

 "Ultimately, this bill will reduce the cost of energy to the state and its
 ratepayers by billions of dollars," said Battin, who represents eastern San
 Diego County.

 About half of the small generators use "renewable" technologies such as 
solar,
 wind, geothermal and biomass. The rest is "co-generation," when fuel is used
 for industrial purposes and electricity is generated as a by-product.

 The small generators have grown to produce nearly a third of California's
 power under a two-decade-old federal "qualifying facilities" program, which
 requires utilities to buy their power.

 Battin and Keeley said that under the bill, SB 47X, the average price for 
these
 QF contracts could drop from the current 17 cents per kilowatt-hour to about
 8 to 8.5 cents per kilowatt-hour.

 "We believe that the rates are at least that low, if not lower," said Jan
 Smutny-Jones, executive director of the Independent Energy Producers,
 which represents small and large generators.

 The small generators support the bill because it will give them a stable 
price
 for five years, avoiding ups and downs and the possibility that state 
regulators
 might make a more unfavorable price cut.

 Much of the current price formula is based on the price of natural gas at the
 California border, which has soared this winter. The legislation spreads the
 price bench mark over a five-year period.

 "We encourage the Legislature to take quick action to approve SB 47X as
 quickly as possible to help stabilize the electricity crisis," Smutny-Jones 
said.

 He said one of the side agreements to the legislation is the creation of a
 portfolio of long-term contracts to purchase natural gas for some
 co-generators, lowering their production costs.

 The legislation was applauded as "a major step forward" by a group of small
 generators who formed a creditors committee last week and threatened to
 take the utilities into bankruptcy.

 "We call on the Legislature and the governor to act on it immediately," said
 Chris Thompson, a spokesman for the group.

 Thompson said Southern California Edison continues to collect money from
 ratepayers, as the state buys power for its customers, but is not paying
 anything to the small non-polluting generators.

 A spokesman for a geothermal generator in El Centro, which filed a lawsuit
 seeking $45 million from Edison for power provided since November,
 welcomed the legislation for giving generators stability and ratepayers 
cheaper
 power.

 But Vince Signorotti, a spokesman for CalEnergy, said it would be
 "premature" to consider dropping the lawsuit.

 Battin and Keeley said that payment of the small generators depends on the
 governor's attempt to negotiate the purchase of the transmission systems of
 Edison, Pacific Gas and Electric, and San Diego Gas and Electric in exchange
 for payment of their debt.

 As part of the governor's plan, the utilities would agree to provide low-cost
 power for five to 10 years from their generators, which provide about a third
 of the state's power.

 Davis aides are attempting to negotiate long-term contracts with generators
 for the remaining third of the power required by the state, sharply reducing 
the
 cost of buying power on the expensive spot market.

 But the governor said this week that many generators are reluctant to sign
 long-term contracts until they know how the utilities will pay their debt for
 previous power purchases.

 The state called off all power alerts yesterday for the first time since
 mid-January, rescinding a Stage 1 alert declared Wednesday. Grid operators
 made the change after increased power supplies became available.

 "The supply situation this week has gradually been improving," said Lorie
 O'Donley, a spokeswoman with the California Independent System Operator,
 which manages most of the state's power supplies.

 However, she said the improvements shouldn't deter consumers from
 conservation.

 "It is good news to be out of electrical emergencies but we just want to
 remind everybody that we are looking at a long-term power supply situation
 here," she said. "And the high-demand summer is just around the corner. So
 we would ask that people continue with their conservation efforts."

 In San Francisco yesterday, state power regulators decided unanimously that
 the Department of Water Resources is responsible for buying any power that
 cash-strapped utilities are unable to generate or buy on their own -- no 
matter
 what price wholesalers are charging.

 But the PUC voted 3-2 against taking action that would have allowed the
 DWR to receive a portion of ratepayer revenues from the utilities to help
 cover the cost of buying electricity.

 The state, through the DWR, was authorized by a recent law to buy power
 for the utilities. Edison and PG&E have such low credit ratings that no power
 companies will sell to them. SDG&E's rating is much better, but its debt also
 was mounting.

 The DWR purchases that portion of electricity beyond what the utilities
 provide through their own generating plants and through existing long-term
 contracts. But the DWR has refused to buy power beyond a certain price.
 That means more last-minute power purchases on the expensive spot market.

 The utilities and the state had disagreed over how the DWR will be
 reimbursed -- whether through state bonds or ratepayer dollars -- and the
 extent of its power-buying role.

 The author of the bill authorizing the long-term contracts, Assemblyman
 Keeley, said the legislation's intent was to fully cover the one-third of the
 power that utilities purchased on the spot market, either through extended
 contracts or through the state ISO.

 Staff writer Karen Kucher and The Associated Press contributed to this
 report.