Please see the following articles:

Sac Bee, Mon, 5/7:  "It's crunch time on power rates"

SD Union, Sun, 5/6:  "SDG&E shutoff notices increasing"

SD Union, Sun, 5/6:  "State OKs $7 billion contract"

SD Union, Sun, 5/6:  "The energy crisis gives Filner some easy targets"

SD Union, Sat, 5/5:  "Gephardt tells rally here he's pushing price caps"

LA Times, Mon, 5/7:  "Proud Linemen Take a Hit"

LA Times, Sun, 5/6:  "Utility's Workers Watch Helplessly as Company Falls"

LA Times, Mon, 5/7:  "Utility Bills Are Just One Way People Pay for Energy 
Crisis"

LA Times, Mon, 5/7:  "Questions Remains Who'll Take Brunt of the Rate Hikes"

LA Times, Sun, 5/6:  "Riordan and Freeman's Feud Erupts in Public"

LA Times, Sat, 5/5:  "Cheney Rejects Price Caps, Aid for Calif. Power Crisis"

SF Chron, Mon, 5/7:  "Rolling Health Hazards 
Summer Blackouts May Pose Public Health Risks"

SF Chron, Mon, 5/7:  "Oh, that boom in 2002 "

SF Chron (AP), Mon, 5/7:  "Developments in California's energy crisis" 

SF Chron, Mon, 5/7:  "U.S. considers withdrawing lawsuits against coal 
industry 
Pollution controls affect power plants "

SF Chron, Mon, 5/7:  "Swimming pool owners get PG&E discounts 
Operating pumps at night saves energy "

SF Chron, Sun, 5/6:  "Legislators plan to sue U.S. panel on energy 
Top state Democrats want cap on prices"

SF Chron, Sun, 5/6:  "Nevada's winning hand -- power 
State sees profit in California's crisis"

Mercury News, Mon, 5/7:  "Share prices rise amid news of big energy deals"

Mercury News, Mon, 5/7:  "Florida shrugs off Calif-blackout scenario"

Mercury News, Mon, 5/7:  "Hot days worry energy watchers"

OC Register, Mon, 5/7:  "Unplugged
Manking has lived thousands of years without electricity.  The Amish still do.
Californians may have to. We called an Ohio hardware store to find out how"

Individual.com (AP), Mon, 5/7:  "Mexico Continues Power Exports To 
California"
WSJ, Mon, 5/7:  "Charged Up: Texas May Face a Glut of Electricity, but that
Won't Aid Rest of U.S."

Energy Insight, Mon, 5/7:  "Out of Eden: California on the edge"
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It's crunch time on power rates
By Carrie Peyton
Bee Staff Writer
(Published May 7, 2001) 
In a San Francisco hearing room, lawyers settled into squeaky green seats, 
flopped their briefcases onto the orange carpet and waited. 
Where was Gov. Gray Davis' plan for how a whopping electric rate hike should 
be spread among homes and stores, farms and offices? 
Where were the underlying calculations that explained why Pacific Gas and 
Electric Co. customers should pay a stiffer increase than Southern California 
Edison's customers? 
And where was the sworn witness who would answer tough questions after 
formally introducing the governor's plan at quasi-legal rate hearings at the 
state Public Utilities Commission? 
The Governor's Office knew that business and utility lawyers were asking for 
details and for someone they could cross-examine, Administrative Law Judge 
Christine Walwyn assured those gathered in the dingy hearing room last week. 
"We have relayed all parties' comments to their office. There has been no 
response," she said. 
Chuckles and snorts played over the room. "Surprise, surprise" one attorney 
muttered. 
"Frankly, it was handled terribly," Shelly Sharp, PG&E's director of rates, 
said later. "It's sort of a mockery of the process." 
Rarely has the interplay between Sacramento and San Francisco been as visibly 
strained as it was in the rate-making drama that has unfolded for the past 
month. 
At stake are issues that will touch virtually every home and business in the 
state and could drastically alter California's power landscape. 
The right rates could spur conservation, reduce summer blackouts and drive 
down wholesale costs, many believe. The wrong ones could decimate businesses 
and kill jobs, regulators have been warned. 
The PUC, which regulates rates, has been gathering data to decide which 
consumers will get hit hardest by the $4.8 billion rate hike approved in late 
March. Normally, it takes six months to a year to make such decisions. 
Now, the PUC is trying to do the job in about six weeks, and Walwyn is 
scheduled to release her draft decision Tuesday. Community hearings will be 
held across the state before commissioners vote May 14, two weeks before the 
new charges start showing up on customers' bills June 1. 
Hanging over it all have been two patches of fog. The state did not give 
regulators the details on how much money it thinks it needs in rates until 
Wednesday -- so late it was "useless" for this round of rate design, said a 
source familiar with the process. 
The wait for the data has been "just purely frustrating and leaves everyone 
in the dark," said Ed Yates, vice president of the California League of Food 
Processors. 
And the governor, who outlined some general ideas for rates in a speech April 
5, followed up two weeks later by trying to submit, as written testimony, a 
short question-and-answer summary and slides from his Web site. 
"There's no meat on the bones. There are hardly any bones," said Bob 
Finkelstein, an attorney for The Utility Reform Network in San Francisco. 
Ultimately, the judge refused to admit Davis' offerings as testimony, letting 
them into the record only as "reference items" that do not carry the weight 
of evidence. 
The governor's press office has said it believes Davis' opinions will be 
thoroughly considered by the commission in that format. 
Davis gave the PUC the same template he gave the Legislature, said spokesman 
Steve Maviglio, and "the outlines of the plan are clear." He added that PUC 
staffers assured the Governor's Office the information was "acceptable." 
The episode was nerve-wracking for participants because of the clout Davis is 
believed to carry at the PUC, where three of the five commissioners are his 
appointees. 
"The parties are legitimately afraid that the governor's proposal might be 
rammed down their throats," consumer advocate James Weil said. 
The parties include everyone from winemakers to oil refineries. They've been 
presenting witnesses, firing off briefs and trying to persuade regulators to 
set rates in ways that will have the least possible effect on their 
operations. 
Do this wrong, and "you're going to lose whole industries," lobbyist D.J. 
Smith warned in an interview. 
Do this wrong, and "we're going to have severe economic disruption of the 
state, of the sort we haven't seen in 30 years," energy economist Severin 
Borenstein testified. 
Taking the first stab at sorting the wrong choices from the right ones will 
be Walwyn, the judge and former Nevada PUC commissioner whom business groups 
accuse of tending to favor small consumers. She will have to sift conflicting 
arguments on two key issues and scores of smaller ones, often with hundreds 
of millions of dollars at stake: 
First, how can rates be designed to encourage conservation? 
Borenstein, who heads the University of California Energy Institute, urged 
the commission to get tough with virtually everyone, despite political 
pressure. Big users should be forced onto real-time rates that fluctuate with 
the power market, and household users should get rebates for cutting use and 
face steep charges if they surpass baseline rates. 
Such calls have met with strong opposition from businesses least able to cut 
consumption when prices are highest, such as canneries that operate around 
the clock and department stores that want to stay open at peak hours. 
A second, equally contentious issue is who should bear the brunt of the rate 
hike. 
PUC President Loretta Lynch, the commissioner assigned to oversee this rate 
case, suggested early on that her colleagues should consider reversing a 
long-standing policy of charging the biggest users some of the lowest prices. 
Before this year's twin rate hikes, PG&E's household rates averaged more than 
10 cents a kilowatt-hour while its largest industrial customers paid less 
than 5 cents. Heavy industries contend such imbalances are fair because the 
biggest power users cost less to serve. They consume steady amounts of 
electricity around the clock, while homeowners' consumption shoots up during 
high-priced peaks. 
The overall rate hike approved unanimously by commissioners March 27 gives 
PG&E and Edison the right to collect the equivalent of an extra 3 cents for 
every kilowatt-hour of electricity they sell. 
There are at least two ways to do that: Charge everyone 3 cents more or send 
everyone's rates up about 29 percent for PG&E customers and 26 percent for 
Edison's. 
"Any time you use an equal-cents allocation, it's going to be to the benefit 
of smaller customers," said Sharp, PG&E's rate director. The equal-cent 
method is also fairer than equal percentage hikes, she said, because those 
are based on "very, very old" calculations about how much it costs to serve 
different customers. 
But Edison has taken the opposite stand, urging the commission to go easier 
on its biggest customers, with rate hikes that top out at about 30 percent 
for any one group. "We want to ensure that the increase is allocated fairly 
among customer classes," said Akbar Jazayeri, Edison's manager of pricing and 
tariffs. 

The Bee's Carrie Peyton can be reached at (916) 321-1086 or 
cpeyton@sacbee.com. 
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SDG&E shutoff notices increasing 



By Jeff McDonald 
UNION-TRIBUNE STAFF WRITER 
May 6, 2001 
Not much bigger than a postcard, the final notice from San Diego Gas & 
Electric Co. came curled inside the front gate of her Lakeside mobile home. 
Marie Maurer found it only after hearing rustling outside. The bill collector 
was already on his way to a nearby mobile home, without having spoken a word 
to the 72-year-old woman. 
The news was not good. SDG&E wanted $200 -- a big chunk of her $283.95 debt 
-- and Maurer was $47 short. The retired nurse had three days to come up with 
the money or have her electricity shut off. 
"I try so hard to save and to budget," said Maurer, who gets by on a few 
hundred dollars a week in Social Security and government rental assistance. 
"I don't go anywhere. I collect cans. I pawn stuff." 
Maurer is among a growing number of fixed-income senior citizens, 
small-business owners and others getting pinched by rising electricity costs 
-- and increasingly fearful of what the hot summer months might bring. 
Unable to meet the commanding debt piling up on their electric and 
natural-gas bills, ratepayers such as Maurer are facing 72-hour disconnect 
notices, or in many cases agreeing to what amounts to revolving 
pay-as-you-can accounts. 
SDG&E refused to say how many customers have had their power shut off for 
nonpayment in recent months, saying such information is proprietary and 
confidential. 
But consumer groups and business resource centers report a fresh influx of 
calls for help in finding what little relief is available. 
"I'm getting more people contacting me with disconnection notices," said Jodi 
Beebe, an analyst with the Utility Consumers' Action Network. "They're 
flooded. It's very frustrating for many people." 
Ken M. Clark of the Small Business Development Center at Southwestern College 
said he gets 10 or 12 calls a week from business owners worried about the 
price of power. At this time last year, he was receiving none. 
"Some of them are looking for a shoulder to cry on," Clark said. "They're not 
necessarily looking to solve the energy crisis, but possibly to buy some time 
or make a strategy to get through this." 
The situation could grow worse in a hurry. Gov. Gray Davis has suggested that 
the Public Utilities Commission allow SDG&E to raise its electricity rate by 
44 percent. 
Not only that, but barely half the low-income ratepayers in California 
eligible for relief programs have enrolled. Regulators blame the low figure 
on less-than-diligent outreach efforts by the utilities. 
At their meeting last week, commissioners warned utility companies to work 
harder at signing up more of the 2 million or so customers eligible for the 
California Alternate Rates for Energy program. 
"If they don't, we'll order them to," PUC President Loretta Lynch said. 
Eligibility rules allow customers with incomes of up to 175 percent of the 
federal poverty level to qualify. A one-or two-resident home is now eligible 
with an income of $21,233 or less; a three-person home, $25,083. 
The program, which offers a 15 percent discount on electricity, is funded by 
a 25-to 50-cent surcharge on the bills of other customers. That fee may rise 
once regulators decide how to implement the latest rate increase. 
Low-income customers are exempt from the recent rate hike. 
Officials at SDG&E, where almost 20 percent of the 1.2 million ratepayers are 
eligible for discounted electric rates, say they steer as many customers as 
they can into the programs. Customer service representatives also are 
available to help consumers arrange payment plans, the utility said. 
"Whenever we hear that a customer has a problem, we want to contact them and 
see if we can't solve the problem," spokesman Ed Van Herik said. "We work to 
keep customers' power on." 
Jane Johnson isn't so sure. 
The disabled woman from San Diego's Lomita neighborhood received a disconnect 
notice Friday. SDG&E demanded $210 to avoid shutting off the power within 
three business days. 
"We were fairly good, but every now and then the bill was late," Johnson 
said. "Last August our bills tripled, and ever since then I have not been 
able to get caught up." 
The run-up in electricity costs last summer prompted state regulators to 
order SDG&E to stop shutting off power to customers who could not pay their 
bills. But that directive lasted only through October. 
By November, the utility began asking larger users to bring their bills 
current, and the same request was made of small businesses in December. SDG&E 
began requiring residential customers to pay off their debts in January. 
Those who cannot pay are subject to a $15 disconnect fee and a $9 charge for 
delivering final notices. Even more daunting, a deposit equal to twice the 
consumer's highest monthly bill may be required before service is restored. 
It is difficult to gauge how deeply the crisis has hurt low-income people. 
SDG&E will only discuss in vague terms the numbers of customers who have been 
issued disconnect notices or been forced into revolving payment plans. 
"After resuming credit collections, we did have an accelerated number of 
customers who entered into pay agreements," Van Herik said. 
For Maurer and Johnson, assistance came in the form of intervention by Beebe, 
the Utility Consumers' Action Network analyst who works with SDG&E in 
restructuring customer payments. 
Nonetheless, "it's a constant worry," said Maurer, who said she had to sell a 
gold watch to finance part of her latest utility bill. "I don't think we're 
going to have any real relief for two or three years."
The Associated Press contributed to this report. 
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State OKs $7 billion contract 



Sempra unit to sell half its power output
By Ed Mendel 
UNION-TRIBUNE STAFF WRITER 
May 6, 2001 
SACRAMENTO -- A San Diego-based firm that is building several efficient, 
clean-burning power plants has agreed to sell about half its output to the 
state under a 10-year contract worth $7 billion. 
Sempra Energy Resources becomes the second-largest provider as the state puts 
together a portfolio of cheaper long-term power contracts, lowering the cost 
of buying power for utility customers on the expensive spot market. 
As the state struggles to find power at reasonable prices to keep the lights 
and air conditioners on this summer, Sempra Energy Resources will begin 
providing 250 megawatts next month during peak-load periods, enough to supply 
power to 188,000 to 250,000 households. 
Sempra Energy Resources, an unregulated sister company to San Diego Gas & 
Electric, will provide as much as 1,900 megawatts by 2004 as new plants at 
Bakersfield, Phoenix and Mexicali come on-line. The company is seeking 
permits for a new plant in Escondido and an expansion of a plant near Las 
Vegas. 
"The fact that we are taking roughly half of our output and committing that 
to the state I think is a good outcome for us and the state," said Donald 
Felsinger, group president of Sempra Energy's unregulated units. 
State officials said the price paid for power under the Sempra contract is 
lower than the portfolio long-term average of 6.9 cents per kilowatt-hour and 
that the price will be a third to a half cheaper this summer than current 
spot market prices. They have not revealed the exact price of power specified 
in any of the energy contracts. 
"This is a positive step toward increasing the available power supply to 
California at a significantly lower price than currently found on the spot 
market," Gov. Gray Davis said in a statement. 
Felsinger said Sempra is investing $2 billion in power plants with the latest 
technology capable of using about 40 percent less natural gas while producing 
the same amount of power as older models. 
"We are probably one of the more attractive prices that has been negotiated," 
said Felsinger, "because we have a brand-new, efficient fleet." 
Sempra Energy of San Diego is the parent firm of Sempra Energy Resources and 
SDG&E, the local utility. 
In one of the ironies of the California electricity crisis, the state will be 
buying power from one unit of Sempra Energy and providing the power to the 
customers of another Sempra unit, SDG&E. 
The state began buying power for utility customers in January after Southern 
California Edison and Pacific Gas and Electric, whose rates were frozen under 
deregulation as wholesale power costs soared, ran up a $13 billion debt and 
were no longer able to borrow. 
Monthly bills for customers of SDG&E, the first utility to be deregulated, 
doubled and tripled last summer before they were capped by legislation in 
September. 
The state has spent about $6 billion buying power for the customers of the 
three investor-owned utilities. Davis wants to repay the state general fund 
with a $12.5 billion bond that would be paid off by ratepayers over 15 years. 
Assembly Republicans have proposed that the state surplus be used to pay for 
$5 billion of the power costs, lowering the bond to $8 billion and reducing 
monthly bills for ratepayers in the months ahead. 
There are grim predictions of blackouts and soaring costs as the demand for 
power increases this summer, traditionally by about half because of air 
conditioning and other factors. 
The agency that manages the power grid, the Independent System Operator, has 
forecast that the peak demand could reach 50,303 megawatts next month, 3,647 
megawatts above the generation expected to be available in the region. 
The state has to purchase only about a third of the total supply -- the "net 
short" remaining after the power provided from utility generators and small 
nonutility generators operating under the federal "qualifying facilities" 
program. 
The state contract with Sempra, which jointly operates a 480-megawatt plant 
near Las Vegas with Reliant Energy of Houston, does not add new generation 
but will lower state spending. 
An analysis issued by the governor's consultants last week forecast that 37 
percent of the power that the state will have to buy from July through 
September will be covered by long-term contracts. 
The rest of the power will have to be purchased on the expensive spot market. 
Some think the analysts' prediction that the average price will be 19.5 cents 
per kilowatt-hour is optimistic. 
The analysts expect a decline in the average price of 35 cents per 
kilowatt-hour from April through June because of additional small plants 
operating during peak periods and conservation, including "sticker shock" 
from a rate increase that may boost the average residential bill 26 percent. 
The state Department of Water Resources, which purchases power for the state, 
also is trying to negotiate more contracts like the Sempra agreement that 
will help lower costs this summer. 
"I don't think we have any others quite that large under negotiation," said 
Ray Hart, DWR deputy director, "but we are still working on a number of 
contracts." 
Hart said that only a contract with a San Jose-based firm, Calpine, is larger 
than the Sempra contract announced yesterday. Calpine reportedly has an 
agreement to sell the state $12.9 billion worth of power.
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The energy crisis gives Filner some easy targets 



He's carving new niche, bringing state woes to Washington's attention
By Philip J. LaVelle 
UNION-TRIBUNE STAFF WRITER 
May 6, 2001 
When he passed on the 2000 San Diego mayor's race, Rep. Bob Filner based his 
decision, at least in part, on a flawed political calculation. 
"I thought the Democrats would be in the majority in Congress," Filner said 
in a recent interview. "Given my seniority, I would have a large role to 
play." 
He was dead wrong. In November, Republicans retained slim control in the 
107th Congress while the Electoral College gave the White House to a 
Republican who now governs from the right. 
Hard times for an old-school liberal like Filner? 
Not to hear him tell it. 
His party may be out of power, but Filner, 58, is carving a niche for himself 
in California's energy crisis, an issue he caught on to last year, long 
before it popped up on Washington's radar screens. 
Filner is attacking the issue with his well-known brand of aggressive action. 
As a San Diego City Council member (1987-1992) he led the Gang of Five, a 
dissident bloc that opposed then-Mayor Maureen O'Connor. 
As a congressman, the San Diego Democrat reveled in making life difficult for 
visiting GOP big shots, crashing local events featuring former Senate 
Majority Leader Bob Dole and ex-House Speaker Newt Gingrich. 
He peppers county newsrooms with news releases of his energy pronouncements 
and frenetic schedule, including a protest Friday with House Minority Leader 
Dick Gephardt, D-Mo., outside Duke Energy's South Bay plant. 
The crisis provides easy targets: 
Democratic Gov. Gray Davis? "You cannot be moderate to solve this problem," 
Filner said. 
Republican President Bush? "Basically a prop of the big, big corporations, 
and the energy crisis shows it." 
Out-of-state energy producers? "They know they can rob our state blind 
because they have a friend in the White House." 
Energy prices actually began their rise through the stratosphere when 
Democrat Bill Clinton was president. 
Fifth term
Voters in Filner's solidly Democratic 50th Congressional District seem to 
approve. In November they handed him a fifth term with a commanding 69 
percent of the vote against light opposition. 
A tough campaigner, Filner has consistently won re-election in his South Bay 
district by comfortable margins, and ran unopposed in 1998. His biggest 
primary challenge came from Democrat Juan Vargas, then on the City Council, 
who lost to Filner by 9 percent in 1996. Vargas is now a state assemblyman. 
Filner follows the late House Speaker Tip O'Neill's maxim that all politics 
is local. After first meeting Filner, people of all stripes typically receive 
great-to-meet-you letters, usually within 48 hours. 
His district, which abuts the U.S.-Mexico border, includes the southern half 
of the city of San Diego, plus National City and Chula Vista. It is one of 
the most ethnically diverse in the nation, at 41 percent Latino, 29 percent 
Anglo, 15 percent Filipino and 15 percent African-American. 
Back in Washington, despite the Republican domination, Filner says he is well 
positioned to pursue national leadership roles in the energy crisis and 
border infrastructure. 
Filner sits on the House Veterans Affairs Committee and the Transportation 
and Infrastructure Committee. His successes include helping get an 
international sewage treatment plant built here; securing limited benefits 
for Filipino veterans of the U.S. military; and securing greater benefits for 
all veterans. 
He has failed, so far, in efforts to restore full benefits to Filipino 
veterans of World War II. 
Wide interests
At times, Filner's interests range far afield, from championing a homeland 
for the Kurds, a policy rejected by the U.S. government, to co-sponsoring 
legislation this term condemning destruction of pre-Islamic statues in 
Afghanistan by the Taliban regime. 
On core issues, Filner swims against a strong tide. Congress "is totally 
controlled by the Republican majority," said UC San Diego political scientist 
Gary Jacobson, making "the role of the minority severely circumscribed." 
Filner's top areas of interest have been slow to gain traction in the 
Beltway. The border is a neglected issue there, but the energy crisis has 
finally become a national story. 
On border infrastructure -- "my key thing" -- Filner supports completing 
state Route 905 to link the Otay Mesa crossing with the interstate freeway 
system. He also hopes to revive the San Diego & Arizona Eastern Railway to 
create a "jobs train" that could spur commerce here. 
"If we can do this border infrastructure .?.?. we not only help trade between 
the two nations, we transform the economy of this region," he said. 
Julie Meier Wright, president of the San Diego Regional Economic Development 
Corp., applauds Filner's focus but finds his positions inconsistent, given 
his opposition to the North American Free Trade Agreement. "Border 
infrastructure is needed in significant part because of the increased 
economic activity" spurred by NAFTA, she said. 
Being anti-NAFTA fits his political base; organized labor, which opposed 
NAFTA, ranks consistently among Filner's biggest institutional sources of 
campaign cash, according to the Center for Responsive Politics. 
Paul Ganster, director of San Diego State University's Institute for Regional 
Studies of the Californias, sees no inconsistency. "It's possible to be very 
critical of NAFTA and at the same time recognize there are very positive 
benefits that can be brought by free trade," he said. 
Border problems
Filner and others are concerned that the NAFTA has increased problems along 
the border that are not being addressed. 
"That's my biggest disappointment, that we have not been able to bring the 
border to its rightful place in national consciousness. .?.?. Nobody gives a 
damn about it in Washington," said Filner, who attended Mexican President 
Vicente Fox's inauguration and is in his second year of Spanish lessons. 
Filner got on the energy crisis last year when San Diego became the first 
California city to bear the brunt of the state's 1996 deregulation 
legislation. His working-class district has been particularly hard hit. 
In January, he introduced a bill to force the Federal Energy Regulatory 
Commission to cap energy rates, retroactive to last June. It was supported by 
Rep. Duncan Hunter, R-El Cajon, a conservative about as far from Filner on 
the political spectrum as one can get. Filner now supports another energy 
bill advanced by representatives from California, Washington and Oregon. 
Filner may have no desire to ever run for governor -- but if he held the job, 
he said, there would be no mistaking him for Gov. Davis on the energy issue. 
"I'd be all over the place. .?.?. I'd probably be in jail because I'd be 
joining protests." 
He's been there before. 
In 1961, as a Cornell University undergraduate, Filner took on segregation 
and went to Mississippi as a Freedom Rider. He integrated a lunch counter, 
which landed him in state prison for a few months. 
A Pittsburgh native raised in New York City, Filner, with a doctorate in the 
history of science, is one of the most highly educated members of Congress. 
He taught history at SDSU for 20 years. In the mid-1970s he was an aide to 
the late Sen. Hubert H. Humphrey. Filner was on the San Diego school board 
from 1978 to 1983 before being elected to the City Council. 
Will Filner run for mayor in 2004? 
"It's a possibility," he said. But if Mayor Dick Murphy "continues the job 
he's doing, he's there for two terms, and that puts me a pretty old guy." He 
may choose instead to attempt a long House career, hoping the Democrats 
become the majority in next year's midterm elections. "The more terms -- 
assuming you stay in touch with your constituents -- gives you a chance to do 
all kinds of things." 
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Gephardt tells rally here he's pushing price caps 



By Ronald W. Powell and Craig D. Rose 
UNION-TRIBUNE STAFF WRITERS 
May 5, 2001 
CHULA VISTA -- The nation's electric power crisis heated up here yesterday as 
House Minority Leader Richard Gephardt demanded that President Bush and the 
Federal Energy Regulatory Commission work to immediately curb runaway 
electric rates. 
Standing before a noontime crowd of more than 300 angry electricity consumers 
outside the bay-front South Bay Power Plant, Gephardt said Bush should tell 
the commission to cap the prices power companies can charge. And he said he 
is pushing a bill that would impose caps on energy prices. 
The former presidential aspirant from Missouri exhorted the throng to 
organize and fight against the power generators that have dramatically raised 
rates in California and the West. 
"This is your country," said Gephardt, pounding the podium to rousing cheers. 
"If you vote, if you make yourself heard, we can solve this problem." 
Rep. Bob Filner, D-San Diego, who organized the rally, said federal 
regulators should order more refunds to consumers for overcharges by what he 
described as an "energy cartel." 
"This is the kind of pressure that will bring down prices," Filner said. 
Filner chose the South Bay plant as the backdrop for the rally because 
critics are accusing the facility, operated by Duke Energy, of charging 
exorbitant electric rates after receiving a low-cost lease from the San Diego 
Unified Port District. The 10-year deal was negotiated in 1998. 
According to the terms of the deal, Duke is obligated to build a replacement 
plant off-site before its lease expires. Duke then should dismantle the 
existing plant and turn over to the port 200 acres, including the plant 
property, free of contamination and ready for development. 
But critics say taxpayers may not get what was advertised because Duke wants 
to build the new plant on 30 of the promised acres. 
Filner is joining those who say the existing plant and any new plant should 
be publicly owned and offer affordable rates. He said Duke and other 
generators are using their facilities to charge illegal power prices -- a 
breach of the lease. 
"They have broken the terms of the lease and we should take it back," Filner 
said. 
Jerry Butkiewicz, secretary-treasurer of the San Diego-Imperial Counties 
Labor Council, accused Duke of gouging consumers. 
"We want the government and the port to take back this property," Butkiewicz 
told the crowd. "We own this (plant)." 
Duke officials insist the company is abiding by its lease with the port. 
After the rally, Duke spokesman Tom Williams said the company does not have 
to do anything about building a replacement plant at this time, but is acting 
"proactively" by exploring the possibility of constructing a new generating 
plant on the same site. 
Chula Vista Mayor Shirley Horton, interviewed at the rally, chided Gephardt 
and the other congressional representatives, including Rep. Susan Davis, 
D-San Diego, for criticizing Duke for raising electric rates while doing 
nothing about power plants owned by the federal government that have also 
hiked rates. 
"What are they doing to provide affordable energy at reasonable prices (at 
the federally operated plants)?" Horton asked. Horton wants to see a new 
power plant built on a part of the 200-acre site that is south of the current 
facility and inland from the bay. She said Chula Vista is negotiating with 
Duke in hopes of striking a deal that would allow joint ownership of a new 
plant. 
Michael Aguirre, a local lawyer suing power companies on behalf of Lt. Gov. 
Cruz Bustamante and on behalf of ratepayers in a separate class-action case, 
said Duke is among a handful of companies in an energy cartel that have 
manipulated prices statewide. Aguirre said the port should move to void its 
lease with the company. 
But Williams, the Duke spokesman, denied accusations that the South Bay plant 
sold power at illegal prices. The Federal Energy Regulatory Commission 
recently required the company to issue refunds, but Williams said those 
payments are related to surcharges the company imposed on power sales to 
compensate for growing credit risks in California. 
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Second of three articles
EDISON'S AGONY
Proud Linemen Take a Hit 
Energy: Morale sinks as the utility's workers are forced to do the 
unthinkable: leave customers in the dark. 

By NANCY CLEELAND, Times Staff Writer 

?????Lineman Ernie Lopez has been rousted out of bed on countless cold, rainy 
nights. He's climbed 100-foot utility poles in heavy winds and grabbed live 
electrical lines with nothing but a pair of rubber gloves to protect him. 
?????But the hardest thing Lopez has done in 20 years at Southern California 
Edison is walk away from a darkened apartment building while residents 
pleaded for their heat.




Lineman Ernie Lopez repairs ground wire in Hacienda Heights. He doesn't look 
forward to work like he used to.
BRIAN WALSKI / Los Angeles Times

?????It happened in late January. Sinking in debt, Edison had just announced 
drastic budget cuts, including a ban on most overtime. The new rule: If it's 
not a public safety problem, it has to wait until the next business day. 
?????Edison's 990 linemen, as well as the people they left shivering in the 
dark, howled. Within a week, the utility loosened its overtime restriction. 
But Lopez had already done the unthinkable--twice--and remained shellshocked.
?????"You get the lights on at all costs. That was bred into us from the 
get-go," he said two weeks after leaving customers without power in Whittier 
and La Puente. "It's in the preamble of our [union] contract." 
?????Months of uncertainty and bad press have chipped away at the pride 
linemen like Lopez once took in their jobs. Customers harangue him, 
complaining about rate increases and fat Edison salaries. Service levels are 
deteriorating. It's going to be a terrible summer. "I don't look forward to 
coming to work as much as I used to."
?????As Lopez drives toward an outage in Covina, he shouts into a cell phone 
over the rattling of his big white truck. "I just wish I knew what direction 
they're heading in," he says. "They're not telling us much. . . . We're not 
so sure they care about us or the customers anymore."

?????Edison Lacks Enough Veteran Linemen
?????This is bad news for anyone in Edison territory. The utility can't 
afford to alienate its veteran linemen because there aren't enough to go 
around. Journeymen are in short supply, drawing big signing bonuses and 
promises of generous overtime. Edison was trying to hire more than 100 when 
the financial crisis hit last summer. Now it faces the triple whammy of a 
hiring freeze, low morale and overtime pay cuts that could set off an exodus 
of talent. 
?????Already, there have been some defections, including several to the flush 
cross-town rival, the Los Angeles Department of Water and Power. Lopez and 
other veterans remain loyal, but they're checking the Internet, just in case. 
"Everybody's depressed, bummed out," he says.




Ernie Lopez now spends more time with his family in Chino Hills. Cutbacks at 
Edison have meant less overtime for linemen.
BRIAN WALSKI / Los Angeles Times

?????Linemen like to see themselves as roughneck heroes, riding into town to 
turn on the lights, to help the kitty out of the tree. Many are loners, 
outsiders, proud of their cowboy culture. They don't tend to move up to 
office jobs. They prefer to be out in the field. They are well paid, but what 
many love even more are the small signs of gratitude, the cup of coffee from 
a customer, the sound of applause when the lights go back on. 
?????"We don't do it for the money. We do it for the glory," says Lopez, 
almost serious. 
?????Along with weathered faces and fallen arches from standing astride 
poles, most linemen have developed a rigid sense of civic duty. It is what 
makes them leave a warm bed and barge into a downpour at 3 a.m. They've 
missed birthdays, anniversaries, Christmas with the kids for their jobs. 
Every one of them has stories, of working through hurricanes, ice storms and 
earthquakes. Some have been close to death. Some have watched other linemen 
die. 
?????"Our whole careers have been designed to provide people with power, not 
cut it off," says Pat Lavin, a veteran Edison lineman, now business agent for 
the International Brotherhood of Electrical Workers, Local 47. "I think our 
members would probably offer to work for free if they thought it would help. 
They like working for Edison. It's a pride thing."

?????Team Spirit Takes a Hit
?????You see this ethos in Kansas City, home of the International Lineman's 
Rodeo. Every September, hundreds of utility field-worker teams pour in from 
as far as Jamaica and England to test their skills and stamina against other 
linemen. 
?????They scramble up wooden poles in seconds, replace transformers and 
rescue "hurt man" dummies from the wires. In one event that tests focus as 
well as strength and dexterity, a lineman climbs a 45-foot pole holding the 
handle of a bucket in his teeth. In the bucket is an egg. At the top, the 
lineman ties the bucket to a wire, puts the egg in his mouth and climbs back 
down, taking care not to bite.
?????Last year, Edison's senior team--45 years and older--placed fourth out 
of 213. It was a huge coup and a career highlight for team member Joe Baker, 
a crew foreman and 25-year Edison veteran working out of the Barstow office. 
His parents came down from Iowa to watch. His wife and son--an Edison 
apprentice--were cheering from the bleachers. Baker had been training for 
months, and was in top form. "If you look at the scores," he notes, "you'll 
see that we were awfully close to first."
?????He might have made it to the top this year, but Edison won't be sending 
linemen to Kansas City in September. The rodeo team is one more casualty of 
the California crisis.
?????Seven months after his big win, Baker watches as pieces of Barstow go 
dark. Planned blackouts sweep across the southern part of the state for the 
first time since World War II. Traffic lights blink off; drivers skid into 
intersections. Manufacturing lines stop cold. Root canals go unfinished. 
Customers call, confused and angry. They see the men in the white trucks and 
wonder, are they pulling the switch?
?????"Today I went into a grocery store. I had on an Edison hat," Baker said 
in early April. "The store manager, who's a friend of mine, says, 'Is it safe 
to wear that around here?' He wasn't joking. These days, people look at you 
funny, like it's all your fault."

?????Union Opposed Deregulation Plan
?????For decades, Edison's linemen enjoyed a strong safety record, 
top-of-the-line equipment and lifetime job security. Then came 
deregulation--a concept that the linemen's union opposed long before the 1996 
state law was adopted, convinced it would destabilize their lives.
?????They were downsized. Their jobs were contracted out or given to 
temporary workers. They felt exposed and vulnerable. As early as 1998, an 
Edison veteran warned on a linemen's Web site: "All you guys, look out when 
deregulation comes your way. . . . SCE is still good, but not like the old 
days."
?????Among the 2,000 jobs Edison cut in January were hundreds of contracted 
linemen working on large construction projects. Veteran linemen absorbed huge 
losses in their half-million-dollar retirement accounts based on Edison stock.









Joe Baker, a 25-year Edison veteran who works in Barstow, says he's noticed a 
change in public attitude since power crisis began.
BRIAN WALSKI / Los Angeles Times

?????The utility was on the TV news every night. Linemen began spending more 
time with customers, explaining, defending. They blamed the state regulators 
who set up the dysfunctional market and the energy suppliers who took 
advantage and reaped huge profits, but they also wondered: Why isn't the 
company doing more to get the facts out? Why isn't it being more aggressive?
?????In February, the union launched its own campaign, organizing a protest 
march at a Huntington Beach generating plant owned by AES, a giant 
Texas-based energy wholesaler. The message was that Edison was the victim of 
gouging by the generators. But what motorists saw as they drove by were angry 
picketers at a power plant, wearing Edison hats and jackets. Victim and 
villain were confused. The problem was too complex to fit on a placard. No 
more protests are planned.
?????Soon after Edison's belt-tightening, the electrical workers union filed 
objections with the state Public Utilities Commission, arguing that the 
layoffs and overtime restrictions would seriously reduce the level of service 
in Edison territory--a violation of PUC rules.
?????Two months later, the PUC agreed and ordered Edison to restore jobs and 
hours that could affect service. By then, some linemen argued, it was too 
late. "The customers will remember we weren't there for them," says Lopez, a 
longtime union activist and an officer of Local 47.
?????Even after the PUC ruling, overtime restrictions for routine work 
continue to cut linemen's pay by at least 20%, far more in some cases. It's a 
traumatic loss for those who have grown accustomed to fat checks, and to 
nearly doubling their base pay of about $65,000.
?????"For someone with no college degree, earning six figures is not bad," 
says Russ Neal, a supervisor in the Santa Ana distribution center. "But keep 
in mind, this job is hard on personal lives. A lot of these guys are paying 
ex-wives, child support. They're not all choosing between a boat and a 
camper."
?????For some, the change has been a partial blessing. Elite "troublemen" 
like Lopez, who are the first on the scene of an outage, get to sleep through 
the night, spend more time with their children and read them bedtime stories.
?????"Having Dad home has been wonderful," says Peggy Lopez, Ernie's wife of 
20 years. "We have a son, and there's been a lot of bonding lately."
?????But they all miss what the linemen call blood money. The Lopez family is 
scaling back on weekend trips and dinners out. Peggy wonders whether she'll 
need to go back to work after staying home for 11 years with her two 
children. Nine-year-old Albert is in tears after a day of teasing at school: 
Your dad's going to lose his job, the kids taunt.
?????"We hadn't shared with the children how serious it was," says Peggy. 
"Afterward, he and Ernie had that talk. Now we just pray that things get 
worked out."
?????Job-wise, Edison's linemen are probably safe, no matter what happens. 
After all, someone has to keep the power going, even through bankruptcy or 
state ownership. Still, it's unsettling. Linemen who were once disciplined 
for accidentally tripping brief outages are now ordered to cut off customers 
for an hour at a stretch. They're nervous and distracted. They want this 
crisis to end, but see no end in sight. Supervisors worry about their 
linemen's ability to concentrate, to stay focused. After all, in this job, a 
moment's carelessness can be deadly.
?????"It's important that we talk to them more and let them vent a little," 
says Bob Woods, who manages Edison's Santa Ana operating center. "When you 
read that your company is on the verge of bankruptcy, it's frightening. We 
don't want them thinking about that out in the field."
?????Into Woods' office walks Paul Miller, a clean-cut 34-year-old 
troubleman, earnest, eager. He's been with the company 15 years. His job is 
to make the scene safe, restore as much power as possible, then call in the 
regular field crews for heavy-duty work.
?????He's out a lot on weekend nights, when drunk drivers tend to knock down 
poles. He's busy when the weather is lousy. He missed Christmas with his wife 
and toddler son last year when winds blew lines down all over north Orange 
County. Woods called him in for a 12-hour day, along with the station's 11 
other troublemen. "I didn't hear one complaint," Woods says.
?????Miller is so proud of his job that he had his name embroidered on his 
khaki Edison uniform, along with that odd title, Troubleman. He hopes to 
retire from Edison someday. He hasn't had to walk away from a job, not yet. 
But it bothered him when he was sent to a Santa Ana apartment building that 
had been without power all night. 
?????"They were pretty unhappy. Nobody's used to that kind of service. We've 
always been right there. . . . I can't stand it, actually, leaving people 
off."

Copyright 2001 Los Angeles Times 
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EDISON'S AGONY
Utility's Workers Watch Helplessly as?Company Falls
Energy: Proud engineers and technicians, wincing as the firm is pilloried, 
blame deregulation rules. Firm was "dragged into this kicking and screaming," 
one says.
By NANCY CLEELAND, Times Staff Writer






"I'd cry if I had any more emotion."
John Ballance keeper of Southern?California Edison's transmission and 
distribution grid for most of he past 32 years.

?????There are hundreds of them at Southern California Edison--engineers and 
technicians hired a generation ago at the height of California's 
build-and-grow frenzy. Steady Eddies. Methodical thinkers.
?????They designed massive things like nuclear reactors and gas-fired 
generators and kept electrons flowing over 50,000 square miles of territory. 
They did their jobs so well that no one ever noticed.
?????For more than 100 years their precise, problem-solving nature defined 
Edison culture, and distinguished the company as one of the country's most 
highly regarded utilities.
?????Then came deregulation, which eventually cut the financial guts out of 
Edison, creating a crisis solvable only by political consensus.
?????For once the engineers were stumped. Mathematical logic no longer 
served. They lacked the intangibles--the finesse, the gifts of spin and 
horse-trading--to put their company back together.
?????Today they draw up intricate plans to salvage the company, but the plans 
go nowhere with regulators and politicians.
?????The world hates and blames Edison, and the engineers cannot understand 
why. They brandish the truth--Blame a flawed deregulation system, not us!--as 
if it might redeem them. Yet each week finds them more marginalized. 
Bewildered, some have been reduced to waiting, with nothing to do but watch 
their legacy disintegrate. It's a cruel way to end a career that was built on 
long-term planning and the power of rational thought.
?????"I'd cry if I had any more emotion," says John Ballance, keeper of 
Edison's transmission and distribution grid for most of the last 32 years.
?????He is a soft-spoken, church-volunteering grandfather with twinkling eyes 
and a navy blue cardigan. Mr. Rogers with a slide rule. He was hired in the 
late 1960s straight out of UC Berkeley, where he played clarinet in the 
marching band. Edison brought him back to his hometown. It was a dream job.
?????Now 53, Ballance still gets excited thinking about the highlights: that 
hot early summer when he installed six temporary transformers in a weekend to 
avoid blackouts. That post-earthquake scramble when he guided crews to 
restore a substation that powered Ventura and Santa Barbara counties. Seven 
years later, he remembers every detail: 23 lines tripped at 4:17 a.m., all 
back up by 12:30 p.m.
?????"It was a good day when you had a problem come up that wasn't 
anticipated but you had a contingency plan for it, and it worked," he says 
nostalgically.
?????No one anticipated this: Edison on the verge of bankruptcy. And so far, 
none of the contingency plans has worked.
?????By early January, Edison has had to pay so much money to power 
wholesalers that it owes several billion dollars and is bleeding nearly $20 
million more a day. Each time a customer turns on a light or a computer or a 
hair dryer, the debt grows.
?????Here's what passes for humor at utility headquarters in suburban 
Rosemead, 10 miles east of downtown Los Angeles: When you lose money on every 
kilowatt, you don't make it up in volume.
?????Edison defaults on loans and suspends its dividends for the first time 
in its history. Creditors threaten to haul it 




Edison engineer John Ballance, left, with systems operator Kenneth House, 
never dreamed the firm would be on the brink of bankruptcy.
??Photos by BRIAN WALSKI / 
Los Angeles Times

into bankruptcy court. Budgets are slashed, and nearly 2,000 employees get 
pink slips. More than 100 executives work a week for free.
?????"It's very depressing," says Donald Fellows, who once designed power 
plants and is now reduced to feeding numbers to the state commission that 
sets utility rates. "Most people go to work for a utility because they have 
high security needs. You don't find a lot of risk takers here."
?????A large, balding man with a penchant for mirthful sarcasm and a tendency 
to answer questions by pulling out a calculator, Fellows becomes downright 
grumpy when talking about his current job: manager of revenues and tariffs.
?????Pure frustration, he huffs. He spends far too much time in hearing 
rooms, listening to "self-serving drivel" from Edison's many critics and 
second-guessers, who seem to pass right over the numbers Fellows so 
meticulously gathers.
?????In his view, state regulators micro-managed Edison into this mess, by 
forcing it to buy power on the volatile spot market. Wholesale prices 
exploded, from 3 to 30 cents a kilowatt. Now the people who made the rules 
are blaming Edison for letting it happen. And getting away with it.
?????"You sit in those hearings and sometimes it's like Alice in Wonderland, 
the way things get twisted," he says. "You look around and wonder: Did I fall 
into a trapdoor?"
?????He is just back from a Public Utilities Commission meeting in San 
Francisco, where he pleads Edison's case for a 30% rate hike. Nothing less 
will keep the utility solvent, he warns.
?????Consumer advocates are hostile, suspicious. The commission compromises 
by raising rates about 10%. Edison's stock plunges, at one point losing half 
its value in a few hours of trading. Credit agencies downgrade its investment 
rating to just above junk status. Banks suspend corporate credit cards.
?????Fellows, who put in 28 mostly good years at Edison, loses the bonus that 
was nearly half his salary last year. He looks at his worthless stock options 
and wonders whether he can still afford that early retirement in May, when he 
turns 55. And if so, should he take it? Is it right to walk away?

?????Panicked Retirees Flood Firm With Calls
?????The winter passes in a painful fog of uncertainty across the bland 
1970s-era Edison complex, home to 4,000 engineers, lawyers, managers and 
clerks. Employees keep their heads down, but they cannot escape the crisis.
?????It jumps out from the cafeteria entrance, where a posting advertises 
brown-bag sessions on resume writing and interview techniques. It startles 
them every evening at 5, when a too-loud recorded voice warns that power will 
soon shut down to emergency levels. Television crews camp outside, lining up 
for live shots every few hours. Employees pray for other breaking news, 
anything to take them off the front page for a while. Managers cut budgets, 
look for expendable jobs. Public relations spokesmen set up a SWAT team to 
deal with all the calls.
?????Jo Ann Goddard, parent company Edison International's vice president for 
investor relations, fields calls from dozens of panicked retirees. One 
80-year-old man, who lost a fourth of his income when dividends were 
suspended, calls every week for an update. He always takes time to ask how 
she's holding up.
?????Pam Bass, Southern California Edison's vice president for customer 
relations, takes flak from angry business owners in the state-regulated 
"interruptibles" program, which was designed to handle rare emergencies. For 
weeks now, the businesses have had to shut down several hours a day. Some 
have lost millions and laid off entire shifts.
?????As the company's value dives, it takes down children's college funds, 
vacation dreams, early starts on retirement. Yet many engineers are even more 
troubled by the steep erosion of service.
?????Ballance is close to tears as he guts his construction budget, canceling 
orders and contracts that were eagerly placed just six months earlier. This 
was going to be a big year, a chance to fix Edison's aging collection of 
poles, substations and wires.
?????He hesitates, scarcely believing what he is about to say: "We're 
knowingly taking on risk. . . . If we get extreme temperatures this summer, 
only a few pockets out could cause serious problems."
?????Through his office window, he looks out on a trail of hulking 
transmission towers marching toward the horizon, a solid, sturdy bit of 
evidence that Edison is still the proud source of power for Southern 
California. What he doesn't know is that the lines themselves will soon be 
caught up in the energy debacle.

?????An Odd Sense of Hope and Mission
?????Along with nail-biting anxiety, January brings an odd sense of hope and 
mission to Edison headquarters. State and federal legislators are finally 
paying attention, trying to understand what happened. Auditors are going 
through the books. Gov. Gray Davis says he will consider a state plan to 
rescue California's private utilities, but with a daunting pair of 
parameters--no utility bankruptcies and no rate increases.
?????Edison must analyze hundreds of contract, rate and transmission-cost 
variables--months of work--within a couple of days. At last the problem 
solvers have something to sink their teeth into.
?????"I've seen this time and again over the 21 years I've worked here," says 
an optimistic Charles Basham, who runs Edison's internal Web site and 
considers himself its unofficial historian. "We work best in a crisis."
?????Corridors that thread past gray cubicles and into wood-paneled executive 
offices are strangely silent. No gossip around the water coolers. No shrieks 
of exasperation. Just lots of conference calls and long nights with cold 
pizza and coffee.
?????Alan J. Fohrer, who helped design the San Onofre nuclear plant, has come 
back to help. These days he runs Irvine-based Edison Mission Energy, a 
fast-growing, unregulated sister company to Southern California Edison that 
owns and operates generating plants around the world.
?????Fohrer's wife is out of town. At dawn he dashes home to Arcadia to wake 
his kids before they notice he's gone, make their lunches and get them off to 
school. Then he rushes back for another day of calculations.
?????After 36 hours, Fohrer wears a tentative smile. There is a way--if a 
series of events falls perfectly in line--to pay off Edison's debts without 
raising rates.
?????"We have an opportunity," says the 50-year-old executive, laying out all 
the little pieces. "But we have to move quickly. The problem gets bigger 
every day."
?????Weeks pass. Fohrer's plan becomes moot because state legislative 
proposals keep adding demands: Edison must hand over a chunk of company 
stock. Or all of its prized hydroelectric system. Or its valuable 
transmission lines. These ideas come and go, almost whimsically, without ever 
taking solid form. The urgency that once distracted Edison employees 
dissolves into a numbing sense of powerlessness.
?????Fohrer--intense, serious, focused, a veteran of the 1990s deregulation 
debate, when he says most of his ideas were ignored--struggles for words to 
describe his frustration, then finally sputters, "This is silly."
?????He graduated from USC in 1973 with a degree in civil engineering. He 
dreamed of designing huge, complex structures like oil refineries, and talked 
to all the major international firms. Then Edison courted him, and Fohrer was 
charmed. Edison was at the tail end of a five-year hiring binge, ramping up 
to design and build dozens of new power plants for the fast-growing state.
?????The expansion didn't last long. Inflation hit, raising the cost of 
construction. The Arab oil embargo struck, straining supplies and making 
conservation look like a good idea. The Three Mile Island nuclear plant 
leaked radiation, setting off a fierce antinuclear backlash. Edison built 
only two generators after 1973.
?????None of that compares to the current mess, says John L. Jurewitz, an 
economist and Edison's manager of regulatory policy. Like many veterans, he 
knows precisely when it started: April 1994, when the PUC announced that it 
was moving to an open retail market.
?????"Starting at that point," Jurewitz says, "we were in damage control 
mode."
?????Edison executives worked with state legislators to fashion the 1996 
state law that became the framework for restructuring. But Ballance, Fohrer, 
Jurewitz and others directly involved in those talks insist that what they 
lobbied for was a far cry from what was later implemented.
?????They want the world to know that, as Fellows puts it, "the utility was 
dragged into this kicking and screaming." They highlight passages and fax 
reports and letters dating back to 1993.
?????But the old papers are dense and complicated. Southern California 
Edison--big, familiar, accessible--continues to be a target.
?????The engineers shout at the television. They cringe at the morning 
newspaper. They riffle through their files to find the old documents that 
will prove their point. But by then it's too late. The media, the 
politicians, the public have moved from one oversimplified idea to the next.
?????And these consumer advocates!
?????"How do they get coverage so easy just because they sound good?" asks 
Danny Haberern, an engineer who lost his Illinois railroad job when the line 
went bankrupt, then fled to a "safe," regulated utility. He's now district 
supervisor in Edison's Montebello center. "I don't get it."
?????Edison is getting bundles of hate mail. Edison is the butt of shock 
radio programs. Edison employees are being snubbed at their children's 
basketball games.
?????It's not our fault, they say, a little too desperately. We never wanted 
to sell our power plants. We asked for long-term contracts four years ago. We 
pleaded for a rate hike in December. When we ran the system, it never failed.
?????Facing the new market, Edison slashed its staff through a series of 
layoffs and voluntary retirements in the mid-1990s. In 1998, to comply with 
deregulation, it sold 12 gas-fired power plants and bought the electricity 
back through a state-supervised market where prices fluctuate daily.
?????Other retailers are invited to jump in and compete, but retail 
competition never materializes in force, and prices do not drop but soar. By 
last December, it is clear that the market is dysfunctional. Under the 
deregulation law, Edison cannot respond by raising rates. By the end of the 
year, the utility is out of cash and comes within a filament of cutting power 
to customers.
?????Back in the old days, John Ballance could make a troubled generator 
continue running if the grid needed juice. He could get on the phone and tell 
the manager, "You'll just have to hang on for a few hours, until we get past 
the peak." And it would happen.
?????Now those same plants go offline whenever the new owners say, and all 
the begging in the world won't bring them back.
?????In February an international energy firm, PA Management Group, names 
Edison the most reliable utility in the Western region, based on 1999 
figures. The veterans chuckle. They know it will be many years before Edison 
is lauded for reliability again. They try not to think about it, gathered in 
the cafeteria, graying heads bent over the tortilla soup.
?????"It used to be something to be proud of, to work for the utility," says 
John R. Fielder, 56, a senior vice president for regulation, who once 
directed Edison's information technology team.
?????"There was an ethic and an attitude, being good citizens, financially 
healthy, part of the communities we serve," he says. "Now people don't 
understand. They wonder, 'How did you let this happen? Who's going to get 
fired?' It's just destroying the whole fabric of the place."
?????Ballance leaves for a long-planned family vacation, to visit his new 
grandchild in Massachusetts. "I wonder if I'll have a job to come back to," 
he says. He checks the Internet for news every morning and night, and draws a 
blank.
?????It's only after his return that Ballance learns the state will buy 
Edison's transmission grid--half of his job--in exchange for a "bailout." The 
federal government won't let it happen, he says. Besides, it makes no sense.
?????"I fail to see what the state or customers are going to actually get for 
all of this," Ballance says, hours after Gov. Gray Davis announces a 
tentative deal for the wires in late February. "I just don't understand the 
rationale, when it seems to me that there's a fairly simple solution, and 
that is to raise the rates of electricity."
?????In March, saturated with frustration, Fellows decides to take that early 
retirement. He will move to central Oregon with his wife, his mother and his 
28-year-old paraplegic son. He will play golf and try to forget about 
California's new, deregulated world.
?????"It's hard," he says. "You almost feel like you're abandoning the place. 
I've wrestled with that for a while. But my wife wants to go, and I've come 
to the conclusion that I'm probably not indispensable after all."
?????He stays around long enough to watch California's other struggling 
utility, Pacific Gas & Electric, file for bankruptcy protection. It happens 
April 6, a Friday. On Saturday, members of Fellows' staff work through the 
night, gathering numbers for a final deal with the state, which Davis unveils 
with great fanfare Monday.
?????Already disengaged, watching from an emotional distance, Fellows 
pronounces the deal DOA; the Legislature won't approve it. His voice is 
uncharacteristically unburdened. This is no longer his problem.

Copyright 2001 Los Angeles Times 
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Utility Bills Are Just One Way People Pay for Energy Crisis 
Money: From hotel rates to zoo admission, fees are being added. 

By JENIFER WARREN, Times Staff Writer 

?????Do you depend on a dry-cleaner? Dine out now and then? Do you patronize 
a hair salon, pump iron at a gym, send flowers occasionally or plan to take a 
vacation this year?
?????If so, you'll probably be paying an energy surcharge on those and many 
other goods and services. In some cases, you already are.
?????Visitors at the San Diego Zoo found a $1.50 "energy assistance fee" 
tacked onto the admission as of last week. The Water Grill in downtown Los 
Angeles raised prices about 3% last month. And the San Francisco Federal 
Reserve Bank predicts the average Californian will spend at least $750 extra 
over the next year on new energy-related costs.
?????Hotels were the first to pass on the pain of the state's spiking utility 
costs, but now the practice is spreading. The result: Many Californians will 
get stung by the energy crisis multiple times: once through rate hikes coming 
next month, then again and again through special fees tacked on by businesses 
coping with their own power bills.
?????The surcharges aren't popping up just on luxuries such as a stay at a 
beach-side inn or an hour in a tanning bed. Even staples such as milk could 
cost more.
?????Milk processors have asked the state Department of Food and Agriculture 
for a price adjustment, a shift that--if approved at a hearing late this 
month--could bump up costs at the supermarket. And gasoline prices--already 
about $2 a gallon--could be nudged further upward if summer blackouts shut 
down refineries and pinch fuel supplies.
?????For some Californians, the risks are more basic. Some businesses, 
reluctant to raise prices too high for fear of scaring off customers, will 
offset soaring utility costs by laying off employees, cutting wages or 
slashing benefits.
?????"We will see an impact on unemployment rates, we will see an impact on 
wages, we will see an impact on benefits," said Shirley Knight, assistant 
state director of the National Federation of Independent Business. "When 
you're a small business owner and your [power] bill triples, you simply have 
no choice."
?????Four months after the energy crisis hit California full force, financial 
repercussions continue to multiply. The state is spending upward of $50 
million a day buying energy for struggling utilities, and the sale of $12.5 
billion in bonds to return that money to government coffers is clouded by 
politics and a legal dispute.

?????Summer Blackouts Threaten Economy
?????The state's $1.25-trillion economy, while still strong, is already 
showing wear and tear as uncertainty about energy costs and supply endure, 
some economists say. A summer of blackouts, meanwhile, threatens to hurt 
business productivity, discourage new investment and push inflation rates up, 
they say.
?????"Elevated energy costs present a significant drag on the economy and can 
be expected to reduce growth and economic output and employment," a study by 
the Bay Area Economic Forum said. The study said 42% of Bay Area businesses 
report that power problems have already hurt their profit margins and their 
competitiveness relative to competitors outside the region.
?????Steven Cochrane, a senior economist at Economy.com in West Chester, Pa., 
is not surprised: "There are strong downsides to this [energy crisis] for the 
state both short term and long term. Everyone is watching California."
?????For most residents of the Golden State, the most visceral blow will be 
felt through rate hikes, beginning--but probably not ending--with the 
increase reaching as high as 46% for some that will show up in June bills.
?????But the effects go far beyond that, and some analysts are attempting to 
quantify them. The San Francisco Federal Reserve Bank study estimating a $750 
annual hit for an average Californian figures $250 for electricity bill 
increases, $200 for additional natural gas charges and $300 for the indirect, 
day-to-day costs that will rise because of power-related surcharges and price 
hikes.
?????The report's authors emphasize that their figure "would rise 
substantially" if the full increase in wholesale electricity prices borne by 
the state was taken into account.
?????Even so, $750--representing 1.5% of the average Californian's annual 
income--is a very real bite, especially for the poor. Already, community 
organizations report increases in calls for help from people forced to choose 
among keeping their power on, buying food or paying for day care.
?????"It's that whole fixed-income thing," said Dennis Osmer, who runs a 
nonprofit organization in Santa Cruz County that helps the poor pay their 
energy bills. "If they're living on Social Security and just getting by, any 
kind of increase in anything can push them right off the edge."

?????Extra Outlay Just 'Sunk Down a Hole'
?????Veterans of the state's consumer groups warn that the consequences of 
the energy crisis for Californians--and the fiscal health of the state as a 
whole--are staggering, and not yet fully known. Harry Snyder, a senior 
advocate for Consumers Union, likens it to "a 7.0 earthquake that hits 
everyone, everywhere."
?????"Wherever you turn, there's an impact," Snyder said. "The cafe owner 
around the corner said his utility costs doubled in the last year and are now 
the same as his rent. A friend who owns a bakery says his suppliers have 
added a 20% surcharge. This all gets passed on to us, and it's just money 
sunk down a hole--it's not spending that advances our well-being in any way."
?????California business owners say they have little choice but to tack on 
costs to help with their own ballooning bills. And they say that along with 
the rising natural gas and electricity bills, they have been hit with a jump 
in the minimum wage--by 50 cents in January--and high gasoline prices. 
Workers' compensation rates are up as well.
?????Hotels, which spend about 3.6% of their revenue on energy costs, led the 
charge in passing on the extra expense. In January, most began adding fees 
ranging from $1 to $4. Stay at the venerable Westin St. Francis on San 
Francisco's Union Square and you're looking at $2.85 extra per night, per 
room. At the Quality Inn in Mammoth Lakes, it's $2.50.
?????In San Diego, the zoo added the energy charge Thursday. Though many 
visitors might not think of the zoo as a big energy gobbler, public relations 
director Ted Molter said many exhibits consume lots of kilowatts.
?????Reptiles, for example, require warm temperatures and lighting, while 
pumps and filtration systems run constantly to keep water clear in the 
underwater viewing portion of the hippo enclosure.
?????Molter said the zoo, a nonprofit organization, experienced a 290% 
increase in the amount it pays per kilowatt hour during the last year. "We 
don't take this fee lightly and look forward to the day when we can roll it 
back," he said.
?????At the Calistoga Village Inn & Spa near Napa, Manager Gisela Schaefer 
said the natural gas bill has risen 500%--to $7,000 in March--making a price 
increase at the 41-room compound inevitable. The spa includes numerous 
energy-guzzling Jacuzzis, pools and saunas, and its natural hot springs 
require pumps to draw water from underground.
?????But Californians need not travel to the wine country to experience 
energy surcharges. At Foasberg Cleaners in Long Beach, owners in February 
posted signs announcing a fee--about 3% per item--to account for spiking 
utility costs.
?????Vice President James Foasberg said the cleaners' natural gas bill has 
tripled in the last year, and he expects his June bill from Southern 
California Edison to show a 40% increase in his electricity rate.
?????"We hate to do this, but we have no choice," said Foasberg, who has also 
been pinched by high gasoline prices that cost him more for deliveries. "Some 
of our smaller competitors are afraid to raise prices, so they're just 
closing down a few days a week. It's terrible."
?????Restaurant owners also are getting hit from two sides: reeling from 
higher utility costs and getting squeezed by linen, dairy and produce 
suppliers who are raising prices because of the energy crisis. Signs advising 
customers of surcharges have begun popping up next to the cream pitchers at 
coffee shops, while managers of some restaurants are reluctantly opting to 
charge more for meals.
?????Jeff King is chairman of a company that owns 11 restaurants from 
Calabasas to San Diego, including the Water Grill in Los Angeles and iCugini 
and Ocean Avenue Seafood in Santa Monica. King said energy costs for the 
eateries rose by $150,000 during the last four months, prompting him to raise 
menu prices about 3% last month.
?????"The last thing you want to do is charge the guests more," King said. 
"But this is a major hit. And unfortunately, I think it's just the beginning."
?????Economist Cochrane agrees, predicting the energy debacle will cause a 2% 
increase in California's inflation rate overall, showing up in price hikes 
for every conceivable product and service.
?????"Power is such an essential component of production, so for most 
businesses there's no escape," said Cochrane, who studies California for his 
economic forecasting company. "These rate increases are so large, and they're 
hitting so quickly, that those businesses that don't go under have no choice 
but to raise prices."
--- 
?????Times researcher Patti Williams contributed to this story.

Copyright 2001 Los Angeles Times 
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Question Remains Who'll Take Brunt of the Rate Hikes 
Power: Everyone has opinions on how to allocate the increases. PUC will hold 
hearings before selecting a plan. 

By TIM REITERMAN, Times Staff Writer 

?????SAN FRANCISCO--When the California Public Utilities Commission approved 
the largest electricity rate hike in state history, it ignited debate over 
how the pain of almost $5 billion in increased power charges will be shared.
?????Everyone from the governor and the PUC president to consumer groups and 
industry associations has weighed in, with about 20 plans.
?????They all say their formulas translate into equitable charges that will 
encourage serious energy belt-tightening.
?????The PUC, as the state's chief regulator, must decide how to divvy the 
rate increase among millions of utility customers, ranging from single-family 
homes to factories that employ thousands of people.
?????Beginning today in Santa Monica, the commission will hold a series of 
hearings to let the general public have its say before the scheduled adoption 
of a rate plan on May 14.
?????PUC officials say rates will increase by an average of almost 30%. The 
question is: Who gets hit the hardest?
?????The rate structuring is a pivotal piece of California's strategy for 
surviving the summer without economic devastation and extricating the state 
from a crisis that already has wreaked hardship on the state budget, 
utilities and customers alike.
?????The PUC not only must assess a welter of competing proposals that 
sometimes clash head-on. It also must design the rate structure without 
knowing with certainty how much money the state will need to buy power in the 
future.
?????Roughly half of residential users--including low-income customers--would 
see no rate increases, and that number could grow, experts say, if customers 
conserve significantly. Under proposals from Pacific Gas & Electric Co. and 
Southern California Edison, rates for heavy users would increase by 50% or 
more.
?????One battle shaping up is over whether residential customers alone should 
pay for the increased cost of delivering power to those conserving enough to 
be exempted from the rate hikes. Or should it be shared with businesses and 
other nonresidential customers?
?????The answers are politically and economically tricky because someone is 
going to feel the pinch.
?????"It is enough money to cause a noticeable increase for customers to whom 
it is allocated," Paul Clanon, head of the PUC energy division, said. 
?????PUC President Loretta Lynch, Gov. Gray Davis and others say rates should 
be tiered to reward energy savers and punish heavy users. The proposals 
involve fluctuation of a customer's baseline, an amount utilities determine 
as the minimum level needed for household usage, varying by climate and 
region.
?????Some proposals call for four tiers of residential users; others for five.
?????Under Southern California Edison's proposal, residential customers would 
receive a 5% rate hike for usage that sometimes exceeds 130% of their 
baseline amount but falls below 200%. Customers who use 300% above the 
baseline less than six months a year would see a 45% increase. Above that, 
the rate would climb to 70%.
?????Lynch's proposed rate design attempts to reduce the gap between what 
residential customers pay and the lower rates paid by commercial and 
industrial customers.
?????The California Large Energy Consumers Assn., representing big steel and 
cement companies, said a rate hike of 3 cents a kilowatt hour--approved in 
March by the PUC--amounts to a huge increase for large industrial users who 
currently pay substantially lower rates than residential customers.
?????"One class should not pay an increase that is twice or three times [the 
percentage] . . . as others," said William H. Booth, lawyer for the 
association.
?????Farmers and food processors express concerns that they would take a 
heavy hit because, unlike some industries, they are less able than some 
customers to shift power use to nonpeak times.
?????"The bulk of the crops go to processors in the summer," said Ron 
Liebert, staff attorney for the 94,000-member California Farm Bureau 
Federation. "We can't say we'll do a double shift at night. Some crops have 
to be irrigated around the clock."
?????The commission also must resolve a $1 billion disagreement over how much 
money the rate increase will raise.
?????If the utilities have their way, the 3 cents per kilowatt hour increase 
will be multiplied by the total number of kilowatt hours used by its 
residential, commercial and industrial customers.
?????However, The Utility Reform Network (TURN) contends that total should 
not reflect energy usage by low-income customers and other residential 
customers who consume less than 130% baseline--groups exempted from rate 
increases. That means the utilities would collect a total of about $4 billion 
from customers, not $5 billion. 
?????TURN's proposal, according to staff attorney Bob Finkelstein, also would 
mean "less money will be flowing to [the Department of Water Resources] for 
power purchases."

Copyright 2001 Los Angeles Times 
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Riordan and Freeman's Feud Erupts in Public 
Power: Each questions the other's role in keeping the city free of 
California's energy crisis.
By MICHAEL FINNEGAN and TERENCE MONMANEY, Times Staff Writers

?????With California mired in energy troubles, Mayor Richard Riordan and his 
former power chief S. David Freeman trumpet the extraordinary fortune of Los 
Angeles: no rate hikes and no blackouts.
?????Yet Riordan and Freeman have sullied their mutual success story by 
waging bitter campaigns to discredit one another--at first behind the scenes 
but now in public.
?????Pettiness, ingratitude, conflicts of interest, overblown claims of 
achievement: Such is the back and forth between two leaders who would seem to 
have good reason to pat one another on the back.
?????To Freeman, who has resigned as general manager of the L.A. Department 
of Water and Power to become chief energy advisor to Gov. Gray Davis, it 
seems Riordan resents his high-profile role in trying to steer California out 
of the energy crisis.
?????So the mayor, Freeman charged, has elbowed his way into energy issues 
that he is ill-equipped to handle and taken steps along the way that could 
harm the environment.
?????"With all due respect, I have 25 years of experience and knowledge--and 
he has 25 days," Freeman said. "But he's the mayor, and he didn't like it 
that I didn't just say yes to everything he came up with."
?????To Riordan, Freeman's efforts to fight air pollution have given short 
shrift to the threat of skyrocketing power rates in Los Angeles. The mayor 
said Freeman also failed to recognize potential conflicts of interest between 
his city and state roles in the power crisis. And he scoffed at Freeman for 
saying he had lifted morale at DWP.
?????"Morale was terrible under him," Riordan said. "I mean, they are so 
relieved right now."
?????The backbiting has left associates suspecting the clash is really about 
egos. City Councilwoman Ruth Galanter sees Riordan and Freeman as proud, 
successful men unable to say, "I couldn't have done it without X, Y and Z."
?????"Each of them is used to being the boss and taking pleasure at being 
recognized as the boss," she said. 
?????Much of the conflict has taken place in private meetings. And the mayor, 
a Republican multimillionaire, has taken pains to play down his dispute with 
Freeman, a liberal Democrat from Tennessee who wears a cowboy hat and speaks 
with a Southern drawl.
?????In an interview after his resignation, Freeman laid out the conflict 
point by point, often in terms bluntly critical of the mayor. One of his 
concerns, Freeman said, was that Riordan in his final two months as mayor 
could reverse the agency's progress in protecting the environment.
?????Freeman cited Riordan's plans concerning coal-fired power plants in 
Nevada and Utah that are partly controlled by the DWP, the nation's largest 
municipal utility. The first is the Mohave Generating Station in Laughlin, 
Nev., a plant that has been blamed for spreading some of the haze that 
shrouds the Grand Canyon. The DWP had planned to sell its stake in the plant, 
but Freeman said Riordan ordered him to back out of the sale.
?????He described the mayor's move as a sign that Riordan and his appointees 
on the board that oversees DWP were "completely insensitive to the fact that 
that power plant is one of the most environmentally troubling plants in the 
West."
?????"I've worked real hard to try to build some environmental sensitivity 
into the DWP policy," Freeman said. "And I am concerned as to whether the 
current commissioners and the mayor have that sensitivity, and what they 
might do in the interim to basically overturn the progress we've made."
?????The other plant is part of the Intermountain Power Project in central 
Utah. Riordan has proposed building a new coal-fired generating unit there, 
but Freeman said he objected because of the pollution it would cause.
?????In both cases, Riordan said he was striking the appropriate balance 
between protecting the environment and meeting the energy needs of Los 
Angeles at an affordable cost. By keeping its share of the Mohave plant and 
expanding the Utah plant, Los Angeles can avert the astronomical price hikes 
of natural gas--and the sharp rise in ratepayers' bills that would follow, 
Riordan said. 
?????Natural gas, which provides 26% of the fuel for DWP plants, causes less 
air pollution than coal, which provides 51%. The rest is mainly nuclear and 
hydroelectric. Los Angeles has averted rate hikes and blackouts in part 
because the DWP relies less on natural gas than most other California power 
providers.
?????"I favor clean air and more natural gas, but not to the point where 
we're going to destroy the economy of Los Angeles," Riordan said.
?????On the Mohave plant, Riordan questioned the benefit of selling the 
city's share to a buyer that would simply continue running it.
?????"It's still going to be coal-driven," he said. "How does selling it help 
the environment?"
?????The tension between the two has built steadily as the state power crisis 
has worsened. With the charismatic DWP chief drawing favorable news coverage 
in stories on how L.A. has dodged the crisis, Riordan and the DWP 
commissioners began to view him as "too big for my britches," Freeman said.
?????The conflict reached its peak on April 17, the day Freeman resigned to 
become the governor's advisor. The DWP board president, Kenneth T. Lombard, 
said the mayor told commissioners that day that "it made the most sense to 
release him immediately."
?????"All we were doing, frankly, was release him from his responsibilities, 
and then whatever time he needed to clean out his office was fine with us," 
Lombard said.
?????From Riordan's standpoint, Freeman needed to be stripped of his 
authority right away because of a potential conflict of interest: The city 
utility sells surplus power to the state, so Freeman would be on both sides 
of the sales.
?????Freeman, who had voluntarily bowed out of a DWP meeting on the state 
power crisis earlier that day, was outraged at his sudden release, in part 
because he was denied the chance to say goodbye to agency employees. In an 
interview, he called the conflict of interest assertion "complete malarkey."
?????"The insinuation that I have done anything less than protect the 
interests of the city of Los Angeles is bordering on slanderous, considering 
what I've accomplished here," he said.
?????Brian D'Arcy, who heads the union local that represents 6,000 DWP 
employees, agreed that Riordan and his commissioners "kind of ran him out of 
here. For David to be summarily jettisoned out of here without even a 
howdy-do is absolutely tacky," D'Arcy said. 
?????Riordan said Freeman deserves "an A-plus" for his work at DWP. The mayor 
conceded that he knew of nothing that Freeman had done "to hurt Los Angeles." 
But, he added, "when you have a conflict of interest, you have to act before 
anything happens."
?????Freeman has long bridled at the oversight of DWP, not just by the mayor, 
but by the agency's board and the City Council. In 1998, he called for City 
Charter amendments to consolidate authority in a more independent board of 
directors. The proposal went nowhere.
?????Freeman's concerns were echoed in a report to be released Monday. The 
Rand Enterprise Analysis report was commissioned by the DWP. It calls for 
restructuring DWP management much the way Freeman proposed. But Riordan and 
Galanter, who chairs the Council's Commerce, Energy and Natural Resources 
Committee, rejected the concept.

Copyright 2001 Los Angeles Times 
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Cheney Rejects Price Caps, Aid for Calif. Power Crisis
By DOYLE McMANUS and RICHARD SIMON, Times Staff Writers


?????WASHINGTON--Vice President Dick Cheney said Friday that there is little 
more the Bush administration can do to alleviate California's energy crisis 
this year and declared his opposition to further federal intervention in the 
energy market even if the problem threatens the nation's economy.
?????"It's all you can do in the short term," Cheney said of the modest 
energy conservation measures President Bush announced earlier this week, such 
as turning down air conditioners in federal buildings.
?????In an interview with The Times, Cheney, whom Bush has put in charge of 
designing a new national energy policy, said he strongly believes that energy 
prices should not be capped or regulated under any circumstances.
?????He said he disagreed with the Federal Energy Regulatory Commission's 
decision last month to place limits on wholesale electricity prices during 
emergency shortages.
?????"I'm a skeptic. I've never seen price regulations that I've felt very 
good about," Cheney said.
?????"If I had been at FERC, I would never had voted for short-term price 
caps. But that's their decision. . . . I hope for their sake, and 
California's, it works."
?????FERC, an independent regulatory commission, decided April 25 to cap 
wholesale prices when statewide electricity reserves fall below 7%, using a 
formula pegged to the cost of production for the least efficient generating 
plant.
?????Consumer groups and Democratic members of Congress have criticized the 
decision as too soft, but Cheney--like other advocates of 
deregulation--condemned it as a step too far.
?????"Price caps are not a help. They take us in exactly the wrong 
direction," the vice president said. "The way you address these issues is you 
either have to reduce demand or increase supply. And anything that doesn't do 
that is counterproductive, especially if it takes us in the opposite 
direction, which to some extent price caps may because they discourage 
investment."
?????"Ultimately, I think we're going to be better off if we have a 
deregulated energy market in this country," he added.
?????Asked whether he might soften his opposition to price controls if the 
energy crisis began to produce significant damage to the national economy, 
Cheney shook his head ruefully.
?????"I start with a strong view, based on prior experience, that government 
should intervene in the marketplace with great reluctance.
?????"I admit that I was traumatized in my youth by being part of the Nixon 
wage and price controls," he said with a wry smile. In 1971, when President 
Nixon sought to tame inflation with federal controls, Cheney was an obscure 
White House official.
?????"I remember how we started out with 14 pages of regulations . . . which 
I typed up myself." A few years later, "we had a roomful."
?????More important, Cheney recalled, the Nixon price controls led to a 
series of "unintended consequences," including a decline in domestic 
production of oil, increased reliance on foreign energy sources and the 
failure of the U.S. automobile industry to build fuel-efficient cars.
?????Cheney, speaking in his West Wing office, acknowledged that the 
administration's tough position against price caps could offend many 
California voters in the short run, but he said he was confident that 
Californians would come to accept his position in the long run.
?????"There is a much greater willingness today . . . to have this debate," 
he said.
?????Cheney said the administration has done "virtually everything" that Gov. 
Gray Davis has asked, except to impose price controls.
?????"We're doing everything we can. Remember, we've been here 100 days. Our 
predecessor left this area virtually untouched, I think primarily because it 
involves very tough issues. It means you've got to go out and address some of 
the most sensitive political issues . . . and we're doing that. That should 
have been done years ago. If it had been done years ago, California wouldn't 
have trouble today."
?????Cheney said the national energy policy manifesto he plans to issue later 
this month will touch on California--but largely as an example for the rest 
of the nation to shun, not as a focus for federal action.
?????"We talk about California; there are a lot of examples there in terms of 
what needs to be done and, to some extent, what to avoid. . . . [But] the 
things we focus on with respect to policy are long-term in nature and aren't 
going to provide any relief this summer."
?????Cheney offered a glimpse of his strategy for building political support 
for a national energy policy that is expected to promote domestic production 
of oil, gas, coal and nuclear power.
?????Contending that technological advancements have reduced the 
environmental risks of oil and gas exploration on public lands, he said, "We 
can, in fact, have both: a clean environment and adequate supplies of energy."
?????While Cheney has been criticized for emphasizing the supply side over 
energy conservation, he said, "Conservation has a role to play, but it's not 
sufficient. You cannot build an energy policy just on the notion of 
conservation. . . . People have used the conservation arguments in order to 
avoid some of the tough issues associated with increasing supply."
?????Acknowledging that increased reliance on nuclear power--an issue he has 
embraced--has been a tough sell, Cheney said public attitudes appear to be 
changing. He said he recently asked a group of moderate lawmakers whether 
they would be open to construction of new nuclear power plants. "Nearly every 
hand went up," he said, touting the "environmental values" of nuclear power.
?????Cheney also said that, although he believes that unilateral economic 
sanctions "rarely work," he understands there are "special problems" in 
removing sanctions against oil exporters such as Libya and Iran. Bush has 
said he has no intention at the moment of removing sanctions on Libya and 
Iran; Cheney said he favors a review of sanctions.
?????The task force report will deal with another controversial proposal: 
industry efforts to allow federal authorities to exercise the power of 
eminent domain to obtain rights-of-way for new electrical transmission lines, 
as they already do for gas pipelines.
?????Cheney would not say whether the task force would recommend that 
authority. But such a proposal is likely to face opposition from state and 
local officials.

Copyright 2001 Los Angeles Times 
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Rolling Health Hazards 
Summer Blackouts May Pose Public Health Risks 
David Bragi, Special to SF Gate
Monday, May 7, 2001 
,2001 SF Gate 
URL: 
http://www.sfgate.com/cgi-bin/article.cgi?file=/gate/archive/2001/05/07/health
watch.DTL 
On May 1, just prior to putting the finishing touches on this column from my 
El Cerrito home, I heard the low, mournful howl of a disaster siren in the 
neighboring city of Richmond. A car had slammed into a utility pole, knocking 
out electrical power to the General Chemical Corp. plant. 
The company's backup generators had failed to kick in and the ensuing power 
outage tripped a safety valve which shut down the compressor. After power was 
restored, the safety valve would not reopen, causing a leakage of sulfuric 
gas into the air. By the time workers plugged the leak, approximately 100 
people, all in Richmond, had arrived at area hospitals with minor ailments. 
Although not caused by the state's energy crisis, this electrical outage 
highlights how the prospect of chronic blackouts could pose some very real 
and unexpected threats to public health. So far we have been lucky, with 
planned rolling blackouts lasting no longer than about 90 minutes. 
But if sudden, unexpected shortfalls in electrical supply cause outages 
lasting longer than a few hours, Californians may face such health hazards as 
unclean drinking water, food spoilage, vaccine shortages, heat stroke and 
disabled and elderly residents living without electricity. 
For instance, widespread outages could affect the availability and safety of 
water supplies. Local water districts are concerned that the state Public 
Utilities Commission has not exempted their facilities, such as pumping 
stations that transport water uphill and treatment plants that purify water, 
from rolling blackouts. 
"In addition to our own facilities, outages could affect the State Water 
Project and the Central Valley Project's ability to get water to us," said 
Marty Grimes, public information representative for the Santa Clara Valley 
Water District, which provides wholesale water supplies to Santa Clara 
County. On the retail level, some of the smaller suppliers lack large storage 
tanks and would themselves run out of water quickly. 
If treatment plants go off-line, water quality might also decline in some 
areas, in which case consumers would have to boil their tap water for at 
least 20 minutes before drinking it. "We are doing all we can to minimize 
this possibility and see it as unlikely," says Grimes. "If that were to 
happen, we'd be ready to inform everyone in the affected area immediately." 
To help keep the water flowing during outages, the district has installed 
backup generators in treatment facilities and key pumping stations, and is 
keeping Anderson Reservoir as full as possible. "It is high enough in 
altitude that electricity is not needed to get the water to our treatment 
plants. Gravity does all the work," says Grimes. 
The district also recommends that consumers use less water when the weather 
is very hot or outages are likely to occur. "In essence," says Grimes, 
"saving water can save energy." 
Since refrigerators and freezers run on electricity, when the power goes out, 
so does your ability to keep perishables fresh. One health risk occurs when 
somebody carelessly reheats and eats yesterday's frozen casserole long after 
a blackout has already thawed it back to life. 
"It goes way beyond spoilage," says Susan Conley, director of food safety 
education for the Food Safety and Inspection Service at the U.S. Department 
of Agriculture. "If, because of the blackouts, the temperature in the 
refrigerator or the freezer goes above dangerous levels, then you could have 
a problem with bacterial contamination," such as botulism. 
Contrary to popular opinion, simply sniffing around is not a good way to tell 
whether food is safe to eat, since not all bacteria produce noticeable odors. 
A better course is to learn how to keep your food cold for as long as 
possible and which foods last for how long at what temperatures. 
For instance, a blackout lasting under four hours will not spoil the food in 
your refrigerator. A freezer will keep frozen food safe for at least a day. 
To keep the cold air inside, keep refrigerator and freezer doors closed 
unless you absolutely need to retrieve food. 
Some foods, muffins for instance, will last longer than others, such as eggs. 
For an easy-to-read spoilage chart that recommends when to use, refreeze or 
discard various foods, go to the USDA's Keeping Food Safe During A Power 
Outage page. It also has a collection of practical tips, such as safe 
temperature levels, using thermometers, and handling dry ice. 
As for food spoilage at grocery stores, I asked a butcher at Armond's Quality 
Meats in El Cerrito how well the meats in the store's refrigerated glass 
display counter would hold up during an extended outage. He said they would 
keep the counter closed; since the case is kept at just above freezing, the 
meat would remain safe until the next day. 
Medical facilities also rely upon refrigerators to keep perishables cold and 
safe. Unfortunately, like water facilities, smaller clinics and hospitals in 
California are not exempt from planned blackouts, although major hospitals 
are. 
According to Dr. Barbara Ramsey, medical director the Native American Health 
Center's community health clinic in Oakland, if power goes down for more than 
two hours, their biggest problem will be vaccine spoilage. In addition, 
replacing them may also prove difficult if power outages to other clinics 
across the state or nation result in widespread shortages. 
"We have episodic vaccine shortages without blackouts," she says, largely 
because drug manufacturers allegedly limit the supply of medicines to improve 
profit margins. "We just had one with tetanus. For those vaccines that aren't 
profitable, I would see a particular risk." 
Ramsey recommends that parents of children between 15 months and 30 months 
and 4 to 6 years get them vaccinated as soon as possible, especially if they 
expect to enroll them in a school or day care center that requires 
inoculations prior to admission. Often, says Ramsey, "the parents go, 'Oh, 
the kid turned 4 but I've two years to do these vaccines.' Then suddenly the 
parent wants boosters given today because preschool starts tomorrow. But if I 
don't have the vaccine, tough luck." 
Otherwise, having experienced a rolling blackout a few weeks ago, she gives 
mixed reviews about the clinic's ability to operate without power. Since the 
clinic is "a fairly low-tech operation," Ramsey says she is confident that it 
can continue to provide basic services, with the exception of the EKG machine 
and dental equipment. "Just to shine that light in your mouth requires 
electricity," she says. 
Other medical issues must be dealt with in the home, especially for elderly 
and disabled residents. Medicines kept in the refrigerator can spoil, 
life-support equipment can shut down, and heat stroke can result in serious 
illness or death. Some Bay Area communities plan to open summer "cooling 
shelters" for seniors during hot days. 
Keeping tabs on San Francisco's homebound elderly and disabled residents 
during a disaster is largely the responsibility of a volunteer disaster 
preparedness program called NERT, for Neighborhood Emergency Response Team. 
In other cities it might go by another acronym, such as NEAT (Neighborhood 
Emergency Assistance Team) or CERT (Community Emergency Response Team). 
While distributing informational flyers, Susan Yip, NERT coordinator for San 
Francisco's Balboa Terrace neighborhood, noticed some notes pasted to a front 
door indicating that a disabled person lived inside. So she left a note of 
her own asking if the occupant would like to contact her in order to be 
placed on a list of local residents who may have special needs during a 
neighborhood-wide emergency. 
"His son phoned me and told me about his father, who lived alone in the 
house," was in his late 90s, mostly bedridden, and on an oxygen machine, says 
Yip. "He explained to me which window to climb in and that he has a chair 
right there to jump down on, that kind of thing." 
Not long after, a rolling blackout hit the neighborhood. She quickly paged 
the son, they met at the father's house, and went inside together. 
Fortunately, the oxygen machine did not depend upon AC power and was 
operating normally. "Because the rolling blackout happened during the daytime 
and it just lasted an hour and a half, it was just a good drill for us," she 
says. 
Yip is more concerned about the consequences of nighttime outages. "If it 
were dark and he went to turn on his light and that didn't go on, there might 
just be that fear of what's going on." So an important part of a NERT 
volunteer's job is providing neighbors with information, reassurance and a 
sense of hope. 
Even in a power outage, the greatest impediments to good health are apathy 
and ignorance. So if we take steps to protect health and safety during the 
energy crisis, then the next string of blackouts may end not with a trip to 
the hospital and a lot of embarrassing questions, but with an excuse to sit 
on the front porch and enjoy the balmy evenings of summer. 
If you would like a NERT volunteer to visit an elderly or disabled San 
Francisco resident during a community-wide emergency, call (415) 554-9960. If 
you live in another community, contact your local fire department for 
information. 




	
David Bragi, a freelance journalist who lives in El Cerrito, California, is 
Editor of the multicultural webzine New Tribal Dawn. 	? 

,2001 SF Gate ? 
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Oh, that boom in 2002 
Jon Carroll
Monday, May 7, 2001 
,2001 San Francisco Chronicle 
URL: http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2001/05/07/DD168333.DTL 
I THINK WE must now believe and accept that there is no bailout coming, no 
miracle cure. Human behavior will remain the same, which takes care of the 
demand end, and human avarice and incompetence are also reliable, which takes 
care of the supply end. 
Which means we will have blackouts this summer. 
It seems ironic in the inner Bay Area, where our power needs drop 
precipitously from May to October (except for a little furnace action on 
those brisk, foggy summer days), but the rest of the state wants to stay cool 
cool cool. 
I can't blame it. If I lived in Fresno, I would succumb to temptation, I'm 
pretty sure. What with those rotating blocks, I'd get hit only once every 
fourth blackout or so. I could live with that. 
Hell, I will live with it, even though I don't own an air conditioner, even 
though daylight saving will cut my illumination needs substantially, even 
though we have already unplugged the freezer and turned out lights like 
little Boy Scouts. And, of course, like little Girl Scouts -- equally 
virtuous energy savers. 
Nevertheless, we are all in this together, just like in the old days. We are 
experiencing solidarity in our misery. Maybe we'll make up folk songs as we 
sit around the blocks of ice. 
Perhaps you remember 1989, when the bridge fell down. Everything was 
different for a while. Many of us took ferries and said, "God, this is the 
only way to travel. I'm never going back to my car again." 
Yes, well. Bad habits die hard. 
SO I AM thinking what it might be like when the great blackouts start to 
happen. I am thinking of people learning to live without television or 
computers. I am thinking about people at loose ends, wandering around their 
homes or places of businesses. 
"What did people do for fun before there was electricity?" Various 
suggestions will come up: quoits, bearbaiting, starting a land war in Asia. 
And then Person A will look at Person B and remember the oldest recreation 
known to humanity. It's free, it gets better the more you do it, it wastes 
not a gram of our precious fossil-fuel resources. Batteries are not even 
necessary (although, of course, optional). Salmon habitats are untouched; air 
quality remains the same. 
The heat, of course, would be a deterrent. The boredom, on the other hand, 
would be a goad. It would be the old heat/boredom dilemma. I'm betting on 
boredom here. "The hell with it, we can always take a cold shower," some 
romantic person can say. 
I am envisioning people putting locks on the Xerox-room door. You know what 
I'm saying? 
SO LET US think big picture. Let us think downstream. Let us count to nine 
starting from July: August, September . . . May! I am strongly suggesting 
here that obstetrics wards staff up for May 2002. Extra beds, extra people. 
Hospitals may already be preparing the budgets for that time frame -- don't 
be caught off guard. 
Oh, and think of the names. Blackie will suddenly be fashionable for boys, 
and maybe Blaze for the girls. Or even Heather, with a little hyphen between 
the t and the h. Wouldn't that be cunning? I suspect we may see a few kids 
named Xerox too. 
Couples will not be able to hear the phrase "rolling blackout" without 
giggling. 
Maybe, under the pressure of circumstance, old fires will be rekindled. Two 
parents might suddenly come home from their darkened workplaces in the middle 
of the day to a blessedly silent house . . . violins and roses. People in 
cubicles facing dead computers might begin to chat . . . incense and 
peppermints. People will say, "This is great! We should keep doing it even 
when the energy crisis is just a memory!" 
Just like we're all riding the ferry now. 
Giving a whole new meaning to the phrase "gridlock," it's fun in the dark. 
Skyrockets in flight, afternoon jcarroll@sfchronicle.com. 
,2001 San Francisco Chronicle ? Page?B - 10 
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Developments in California's energy crisis 
The Associated Press
Monday, May 7, 2001 
,2001 Associated Press 
URL: 
http://www.sfgate.com/cgi-bin/article.cgi?file=/news/archive/2001/05/07/state0
940EDT0145.DTL&type=news 
, , -- (05-07) 06:40 PDT Developments in California's energy crisis: 
MONDAY:
--Democrat state lawmakers say they will announce that they are suing federal 
energy regulators for refusing to cap the spiraling cost of electricity. 
-- A legislative committee is expected to vote on a bill to tax power 
generators' windfall profits. 
-- The state Assembly could consider a bill to authorize $12.5 billion in 
bonds for power buys. Republican members have balked at financing that much 
money, suggesting that the state instead use some of its surplus to buy 
electricity for customers of three cash-strapped utilities. 
-- The state remains free of power alerts as reserves stay above 7 percent. 
FRIDAY:
-- Customers of Pacific Gas and Electric Co. will have their own committee in 
the utility's bankruptcy proceedings, a move to which PG&E officials 
immediately objected. The nine-member committee will be the consumers' voice 
at the bargaining table, says Nettie Hoge, executive director of The Utility 
Reform Network, and a member of the panel appointed by the U.S. Trustee's 
office. PG&E spokesman Ron Low says ratepayers could be represented by the 
state attorney general and didn't need a committee. 
-- California's power buyers announce a $7 billion contract with Sempra 
Energy Resources for electricity for the customers of three utilities. The 
10-year contract will provide 250 megawatts of electricity starting June 1, 
eventually increasing to 1,900 megawatts, the governor's office says. One 
megawatt is roughly enough power for 750 homes. 
-- Southern California Edison and several organizations kick off an 
advertising campaign Saturday to urge support for Gov. Gray Davis' plan to 
rescue the utility by purchasing its power lines. Among the members of the 
coalition running the television and radio ads are the California Small 
Business Roundtable, California Professional Firefighters and the California 
Taxpayers Association. 
-- Energy Secretary Spencer Abraham visits San Francisco to trumpet a Bush 
administration plan directing federal facilities to conserve electricity. 
Abraham says the effort, which does not specify how much power must be saved, 
is an important step as the administration prepares to release its national 
energy policy later this month. But he also stresses that conservation is not 
the panacea to California's power affliction and that the state also must 
build new power generators. 
-- Shares of Edison International closed at $9.25, down 3 cents. PG&E Corp. 
closed at $9, up 14 cents. 
-- No power alerts are reported as reserves stay above 7 percent. 
WHAT'S NEXT:
-- The governor meets Wednesday with the CEOs of several major energy 
suppliers to discuss the money they're owed by the state's two largest 
utilities, the state's creditworthiness and how wholesalers can help the 
state during the energy crisis. Davis says he won't be discussing any of the 
investigations into price manipulation in the wholesale market. 
-- Davis' representatives continue negotiating with Sempra, the parent 
company of San Diego Gas and Electric Co., to buy the utility's transmission 
lines. 
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. 
Edison and PG&E say they've lost nearly $14 billion since June 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 two 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 also struggling with high wholesale power 
costs. 
The Public Utilities Commission has raised rates as much as 46 percent to 
help finance the state's multibillion-dollar power buys. 
,2001 Associated Press ? 
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U.S. considers withdrawing lawsuits against coal industry 
Pollution controls affect power plants 
Katharine Q. Seelye, New York Times
Monday, May 7, 2001 
,2001 San Francisco Chronicle 
URL: 
http://www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2001/05/07/M
N213627.DTL&type=news 
Washington -- The Bush administration is considering pleas from coal and 
electric companies to drop a series of government lawsuits initiated by the 
Clinton administration to require the utilities to install modern pollution 
controls on old, coal-fired power plants. 
The request, which the coal industry says would let it quickly increase its 
output of power, has touched off a debate within the administration. Christie 
Whitman, administrator of the Environmental Protection Agency, which 
initiated the litigation, is resisting the industry's suggestion, while Vice 
President Dick Cheney and Energy Secretary Spencer Abraham are sympathetic. 
The Bush administration is determined to increase the nation's use of fossil 
fuels to produce power in response to what it deems an energy crisis. 
The coal industry says the EPA's enforcement of the Clean Air Act is 
preventing investments that would generate tens of thousands of megawatts of 
electricity from existing coal-fired plants and that the cost of new 
pollution controls would have to be paid by consumers. 
"There is a recognition that plants aren't modernizing because the burden is 
too onerous," a White House official said yesterday. 
Discussions within the administration about the lawsuits have intensified in 
recent days, as the White House completes a report by a energy task force 
headed by Cheney. The report is to be printed this evening. 
"The coal industry is pushing very hard to lock this in and make it part of 
the report," said an environmentalist who has been following the case 
closely. 
At stake are emissions that would cost millions of dollars to control and 
that account for a significant share of the nation's air pollution. 
The Clean Air Act exempted many older plants from strict emissions controls, 
but required modern controls when owners modified plants in ways that 
increased emissions. 
For years, the agency says, plants evaded the requirements by insisting that 
certain modifications were merely "routine maintenance." But the agency found 
that a number of major electric utilities had been modernizing their plants 
with projects that increased emissions. 
Since 1988, the EPA has sued 11 companies over controls at 49 power plants. 
If the administration dropped these lawsuits and otherwise softened 
regulations, the council argues, coal-fired plants could provide an increased 
capacity of 40,000 megawatts within three years, almost twice the capacity of 
all new power plants built last year, and 5 percent of the total generating 
capacity available nationwide. 
,2001 San Francisco Chronicle ? Page?A - 3 
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Swimming pool owners get PG&E discounts 
Operating pumps at night saves energy 
Michael McCabe, Chronicle Staff Writer
Monday, May 7, 2001 
,2001 San Francisco Chronicle 
URL: 
http://www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2001/05/07/M
N121100.DTL&type=news 
A penny here, a penny there, a megawatt here and a megawatt there, for 
Pacific Gas and Electric Co it all adds up -- maybe. 
In the fervent hope and fear that each tiny zap of electricity is going to 
count this summer, PG&E is offering owners of private swimming pools $20 if 
they set their pool timers to operate the pumps during off-peak hours. 
Shifting 15 megawatts off peak demand, the daylight time of day when power 
shortages are most likely to occur, may sound like a drop in the bucket. But 
PG&E says 134,000 private pools exist in Northern and Central California, and 
that's enough to save 15 megawatts, or enough to power 15,000 homes at any 
one moment. 
And that could add up to a sizable savings in light of the grim predictions 
for this summer. 
The Independent System Operator, which oversees the state's power market, 
estimates that on any given day in June, the state will fall 6,815 megawatts 
short of demand. That would put nearly 7 million homes in the dark. 
So PG&E figures every bit of conservation helps, even pumping dirt and debris 
and other foreign matter out of swimming pools at night or in the early 
morning. 
To qualify for the $20 check -- a one-time rebate, owners of in-ground 
swimming pools must agree to set their timers to operate the pumps between 8 
p. m. and 10 a.m. 
The offer does not extend to public pools for public health reasons or to 
solar-heated pools, which do not use power from the grid. 
"Obviously, this is not a silver bullet to solving the energy crisis, but it 
is one BB among many," said Staci Homrig, a PG&E spokeswoman. "Every little 
bit helps, and this is just our latest among many programs offering 
incentives to customers who are more energy efficient at home." Other PG&E 
programs include offering $3 off energy star-labeled compact fluorescent 
lamps, which use 75 percent less energy than standard incandescent bulbs; $75 
rebates for Energy Star-labeled clothes washers and $50 for dishwashers. PG&E 
also offers $75 rebates for refrigerators that meet the 2001 Department of 
Energy efficiency standard. 
Some pool installation companies say the $20 offer sounds like a good idea, 
generally. But they caution that pool owners who operate their sometimes 
noisy pumps only at night may run into problems with local noise-abatement 
ordinances. 
"If you run your pumps at night, then you are going to hear it running," said 
John Maguire, owner of the Pool Man, which serves Sonoma County. "But I'm 
sure PG&E will get a good response -- a lot of people will be happy to take 
$20." 
Other pool experts said, however, that the most modern pool equipment is very 
quiet and pumps manufactured in recent years should not cause a noise 
problem. 
Generally, though, the reaction was that PG&E probably could spend whatever 
money it has left more wisely. 
"The trouble is that $20 is not a whole lot of money," said Rick Wolpin, 
director of Sales and Marketing for Lifetime Pools in Palo Alto. "If it was 
$20 a month off their bill, I could see people jumping at it." 
At least one pool owner agrees. 
"I don't think 20 bucks is much of an incentive, but I probably would have 
done it anyway -- and also take the $20," said Deborah Clark, who has a lap 
pool in her San Jose backyard. 
Indeed, most pool owners already shut their pumps down during the day, said 
Randy Saunders, division manager for Adams Pool Solutions based in 
Pleasanton. "I would bet 90 percent of the pool owners would be happy to do 
that because the backyard pool doesn't care what time of day it is as long as 
it gets four to eight hours of circulation," Saunders said. "I think it's a 
terrific idea, assuming PG&E can afford it." 
PG&E officials say they will have little problem coming up with the $2 
million or so the program may cost if 80 percent of its pool-owning customers 
enroll in the program. 
PG&E's Homrig said all the rebates will come after the bankruptcy filing, and 
so will not be affected by its filing for Chapter 11 on April 6. She said the 
money for the rebates will come from the utility's customers, who pay a small 
portion of each month's bill for energy efficient programs. 
To make sure that those who sign up for the $20 are actually turning off 
their pumps during the day, PG&E plans random inspections, Homrig said. The 
utility is also counting on the honesty of their valued customers, she said. 
E-mail Michael McCabe at mmccabe@sfchronicle.com. 
,2001 San Francisco Chronicle ? Page?A - 13 
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Legislators plan to sue U.S. panel on energy 
Top state Democrats want cap on prices 
Jim Herron Zamora, Chronicle Staff Writer
Sunday, May 6, 2001 
,2001 San Francisco Chronicle 
URL: 
http://www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2001/05/06/M
N233207.DTL&type=news 
The two top leaders in the California Legislature said yesterday that they 
plan to sue federal energy regulators for allowing electricity rates to 
spiral out of control. 
"The commission is not complying with the law," Senate President Pro Tem John 
Burton said of the Federal Energy Regulatory Commission. 
"The Federal Power Act requires (the commission) to make sure that energy 
prices are just and reasonable," he said. "Clearly, rates are anything but 
just and reasonable." 
Burton, D-San Francisco, said yesterday that he and Assembly Speaker Robert 
Hertzberg, D-Sherman Oaks, will file the suit tomorrow in federal court. The 
suit will accuse the commission of neglecting its duty by refusing to cap the 
escalating cost of electricity in the midst of the power crisis. 
Gov. Gray Davis is not a party to the suit, but "is supportive of any effort 
to make sure FERC does its job," said Davis spokesman Steve Maviglio. 
No one answered the phones at the federal commission's media office 
yesterday, and commission officials could not be reached for comment. 
Late last month, the commission ordered a one-year cap on electricity sold 
into the state during power emergencies, when power reserves fall below 7.5 
percent, in order to avoid rolling blackouts. 
But the Democratic governor and state power regulators dismissed the cap as 
too little, too late. 
The pending lawsuit follows months of lobbying by Davis and legislative 
leaders of both parties. Hertzberg also is working on a tri-state plan to 
lower electricity costs and cut the risk of blackouts in the drought-stricken 
Pacific Northwest. 
Burton said those efforts may bear fruit, but that legal action against the 
commission is needed as well. 
"California is in a crisis, and we need FERC to do its job," Burton said. "'I 
don't know if they have fallen asleep or if they are trying to screw 
California, but the net effect is the same -- we are being gouged by energy 
wholesalers." 
Joseph Cotchett, a Burlingame-based attorney with strong political 
connections to Democratic leaders, will represent the legislative leaders for 
$1 a month. 
This will be the second suit filed in less than a week alleging that 
Californians have been gouged during the power crisis. 
On Wednesday, Lt. Gov. Cruz Bustamante filed a suit against wholesale energy 
producers on behalf of California's taxpayers. 
Bustamante's suit accuses Duke Energy Inc., Dynegy Inc., Reliant Energy Inc. 
, Mirant Corp. and the Williams power company of engaging in a price-fixing 
conspiracy and using unlawful trading practices to manipulate the state's 
electricity market. 
Chronicle news services contributed to this report. / E-mail Jim Herron 
Zamora at jzamora@sfchronicle.com. 
,2001 San Francisco Chronicle ? Page?A - 16 
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Nevada's winning hand -- power 
State sees profit in California's crisis 
David Lazarus, Chronicle Staff Writer
Sunday, May 6, 2001 
,2001 San Francisco Chronicle 
URL: 
http://www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2001/05/06/M
N18476.DTL&type=news 

Reno -- California's energy crisis is possibly the best thing to happen to 
Nevada since gangster Bugsy Siegel chanced upon a backwater town called Las 
Vegas in the 1940s. 
Construction workers are scrambling not to erect new casinos but nearly a 
dozen new power plants -- an ambitious scheme hatched by state leaders and 
power companies to profit from California's chronic shortages. 
While California may get fresh power supplies, Nevada, by hosting the plants, 
will benefit from additional tax revenues and jobs, a more stable electricity 
network and a level of energy self-sufficiency the Golden State can only 
dream of achieving. 
And, to a great extent, Nevada's gains will be financed by California 
ratepayers. 
"While you guys in California have been putzing around politically, we got 
together and figured out what to do," said Nevada state Sen. Randolph 
Townsend, 
chairman of the Committee on Commerce and Labor that oversees energy matters. 
"We're bringing the same mentality to power plants that we brought to 
casinos," he said. "You build, and then you build some more." 
In embarking on an unprecedented energy building boom, Nevada's first 
priority is to secure enough electricity to meet all its needs for years to 
come. 
No less importantly, though, the state is looking to position itself as the 
battery pack of the West -- a regional energy hub that will be to electricity 
what Texas is to oil. 
California's acute need for juice, at virtually any price, is what will make 
this otherwise fanciful goal a reality. 
"Our strategy is to overbuild," Nevada Gov. Kenny Guinn said during an 
interview in his Carson City office. "We have short-term plans and long-term 
plans, and those plans affect California tremendously." 
Those plans also include trade-offs that some environmentalists fear place 
business interests ahead of natural resources, as well as hardball tactics 
intended to force generators to provide at least a portion of their output to 
Nevada, rather than sell it all across the border. 
"Energy developers are looking at us with big grins and drooling chops," said 
Jane Feldman, a spokeswoman for the southern Nevada branch of the Sierra 
Club. "This really makes us nervous." 
While California Gov. Gray Davis has been forced to take a crash course in 
energy issues, Nevada's Guinn boasts 20 years of experience in the utility 
business, including a stint as head of Southwest Gas Corp., a leading natural 
gas supplier. 
He said he has discussed California's energy troubles with Davis several 
times, and each time urged Davis to be more aggressive in building new power 
plants. 
"I think he's frustrated that he can't move as fast as we can," Guinn said, 
with a satisfied smile. The Nevada governor is a Republican. His California 
counterpart is a Democrat. 
Of course, Nevada's commitment to energy independence is not solely the 
result of political will. It also is what the gaming industry wants, and 
Nevada lawmakers take notice when the casinos flex their considerable muscle. 
Today, Las Vegas is the fastest-growing city in America, and the glitzy 
gaming palaces that are its lifeblood soak up about 10 percent of all 
available power. 
Casinos and related sales and services account for no less than 60 percent of 
Nevada's economy, according to the state Commission on Economic Development. 
Six of every 10 Nevadans work for a casino or a casino-related company. 
"The casino industry cannot tolerate blackouts like you've had in 
California," said Harvey Whittemore, legislative counsel for the Nevada 
Resort Association in Las Vegas. "We need predictable and reliable energy 
resources." 
Not surprisingly, Nevada legislators voted last month to halt deregulation of 
the state's electricity market in its tracks and to shield local utilities 
from the sort of financial ruin that led Pacific Gas and Electric Co. to file 
for bankruptcy protection. 
They also wasted no time in rolling out the red carpet for power companies 
eager to build new plants while California electricity prices remain at sky- 
high levels. 
The governor stood alongside executives from four leading power companies to 
announce that his state will fast-track approval of new plants so it can 
double Nevada's electricity output within just two years. 
A licensing process that might take as long as four years in California has 
been reduced to months in Nevada. 
"We don't want to be like other states, like California, who can't control 
their own destiny," Guinn said. 
This is music to the ears of power companies, which see Nevada as an 
affordable and hospitable base from which to pump electricity into the 
captive California market. 
"If you could, you would build all your California plants in Nevada," said 
Jack Farley, president of western operations for Houston's Reliant Energy. 
"The political climate is more stable, there's no state income tax and the 
labor is cheaper." 
Reliant will spend about $1 billion on three new plants outside Las Vegas, 
which together will generate enough power to light about 1.4 million homes. 
North Carolina's Duke Energy Corp., meanwhile, is looking to build a 
sprawling facility near Las Vegas capable of lighting more than 1 million 
homes and a second plant about half that size near Reno. 
Tom Williams, a Duke spokesman, said one reason power companies are heading 
into Nevada is because they hope to rapidly recover their construction costs 
from California consumers. 
"Clearly, building a plant rapidly in a market that has a shortfall is an 
objective," he said. "The sooner you get to a market that has a desperate 
need for power, the better off you will be." 
In a desert canyon outside Reno, along the same path once followed by the 
ill-fated Donner Party, the West's newest power plant is due to begin 
operating by the end of the month. 
The $130 million facility, bankrolled by brokerage Morgan Stanley, will not 
only fuel Reno's lavish resorts but also pump electricity over the mountains 
and into neighboring California. 
Huge gray transformers and turbines dominate the construction site as workers 
battle dust storms and the harsh sun to meet their deadline. 
"If we could have a year to do this, it would be simple," said Ray Kaufman, a 
technical consultant with Energy Services, the engineering firm hired by 
Morgan Stanley to build the plant. "Doing it in four months is very 
difficult." 
State officials insist that no environmental regulations were waived to get 
Nevada's new power plants off the drawing board in record time. They say the 
normally slow bureaucratic process was simply streamlined. 
Consumer activists are not so sure. 
"The state is moving too fast," said Kalynda Tilges, a spokeswoman for Las 
Vegas' grassroots Citizen Alert. "There needs to be more discussion." 
At the same time, she and other activists worry that Nevada will be giving up 
precious natural resources for power plants that will be producing 
electricity for consumers elsewhere. 
The new plants require groundwater for cooling -- something Nevada does not 
have in abundance. 
"I don't think most Nevadans realize what's happening," Tilges said. "They 
have no idea how much groundwater will be used, and how much of the power 
will be going to California." 
To ensure that at least some of the output stays close to home, Nevada 
authorities have driven a hard bargain with power companies. Access to 
groundwater will be permitted in return for 25 percent of all electricity 
produced, which is to be sold to Nevada utilities at low rates. 
Richard Wimmer, deputy general manager of the Southern Nevada Water 
Authority, said he was surprised to find that power companies seemed 
comfortable with, and perhaps even respected, his state's strong-arm tactics. 
"This is what these people do all the time," he observed, adding that Nevada 
saw how poorly California fared when it attempted to negotiate without any 
leverage. 
In this sense, Nevada and the big energy companies have gotten off to a fine 
start. They both speak the same language -- a readiness to seize 
opportunities and to roll the dice on risky endeavors. 
"Our economy may not have been built by gamblers, but it's a spirit we like, 
" said Sen. Townsend. "Just turn us loose and let us get things done. 
"It's not so much that we want to profit from California," he added. "We're 
just trying to survive." 
E-mail David Lazarus at dlazarus@sfchronicle.com. 
,2001 San Francisco Chronicle ? Page?A - 1 
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Share prices rise amid news of big energy deals 
Posted at 7:44 a.m. PDT Monday, May 7, 2001 
NEW YORK (AP) -- Share prices rose tentatively in early trading Monday as 
investors tried to absorb the impact of two big energy mergers and weakness 
in the hand-held computer sector. 
In early trading, the Dow Jones industrial average was up 28.50 at 10,979.74. 
The Nasdaq composite index rose 16.54 to 2,208.07, while the Standard & 
Poor's 500 index was up 1.56 at 1,268.17. 
Two energy deals were announced in the hours just before the market opening. 
Williams Companies of Tulsa, Okla., said Monday it will buy natural gas 
producer Barrett Resources for $2.3 billion in cash and stock, topping a $2 
billion hostile bid by the U.S. unit of Royal Dutch/Shell Group. 
Denver-based Barrett put itself up for sale in a formal auction after Shell 
mounted its effort in March. 
Shares in Barrett soared $2.79 to $70.09, while Williams' stock was down 
$2.77 at $38.90. 
Meanwhile, Valero Energy Corp. said it was buying Texas rival Ultramar 
Diamond Shamrock Corp. for about $4 billion in cash and stock in a deal that 
will make Valero the second-largest U.S. refiner of petroleum products. The 
companies said the deal was approved by both boards over the weekend, but 
still must be sanctioned by regulators. 
Valero's shares dropped 37 cents to $45.10, while those in Ultramar Diamond 
Shamrock were up $9.38 at $52.09. 
In the high-tech sector, Handspring Inc. announced that it was lowering the 
price of its Visor Deluxe handheld computers to $199 from $249. The company 
also said it was offering two promotions: a $50 rebate on the purchase of any 
new Visor Platinum and $30 rebates on select Springboard modules with the 
purchase of any Visor handheld. 
Investors feared the action would set off a price-war in the sector, which 
has been dominated by Palm Inc. 
Shares in Handspring were down 45 cents at $12.58. Palm's were up 13 cents at 
$8.52. 
Also Monday, 3Com Corp., which spun off Palm last year, announced a second 
round of layoffs Monday, cutting 3,000 jobs. The networking company aims to 
trim costs by $1 billion a year. 
Its shares were up 20 cents to $7.10 on the news. 
The market last week ended on an upbeat note after dismal unemployment 
figures led investors to expect the Federal Reserve to aggressively cut 
interest rates when it meets next week. Most analysts expect the Fed to cut 
interest rates at least a half a percentage point for the fifth time this 
year. 
The Russell 2000 index, which measures the performance of smaller companies 
stocks, was up 1.07 at 493.96. 
Advancing issues were slightly ahead of declining issues on the New York 
Stock Exchange, where volume came to 114.58 million shares, compared with 
138.10 at the same time last Friday. 
Overseas markets were mixed on Monday. In afternoon trading in Europe, 
Germany's DAX index was off 0.18 percent at 6,127.15. France's CAC-40 was up 
0.79 percent at 5,498.45, and Britain's FT-SE 100 was up 1.81 percent at 
5,870.30. 
The benchmark 225-issue Nikkei Stock Average rose 107.77 points, or 0.74 
percent, to 14,529.41. It was the strongest close since the index registered 
14,552.29 on Dec. 15. 
------ 
On the Net: 
New York Stock Exchange: http://www.nyse.com 
Nasdaq Stock Market: http://www.nasdaq.com 
AP-WS-05-07-01 1036EDT

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Florida shrugs off Calif.-blackout scenario 
Posted at 7:38 a.m. PDT Monday, May 7, 2001 
BY JOAN GRALLA 
NEW YORK (Reuters) - Florida is confident it will not face next year the 
rolling power blackouts that have bedeviled California, but one analyst who 
foresaw trouble for the West Coast says the same problems may lie ahead for 
the Gold Coast. 
California's self-imposed black eye with deregulation has left a number of 
states, from Wisconsin to Florida, disinclined to go ahead with similar 
plans. That is especially true in the Southeast, where states have less 
reason to deregulate because their power costs are fairly low. 
Florida residents are not expected to experience soaring power prices this 
summer when the thermometer rises since power companies say they have enough 
supply to meet customer needs. 
But whether Floridians run short of power next year might be decided by 
factors beyond the state's control: how hot the summer is, whether utilities 
accurately predict demand growth, and whether they can add new power as fast 
as they project, analyst Mark Bernstein recently told Reuters. 
``Two-and-a-half years ago we said California could face a problem. It wasn't 
a prediction, it was one of our scenarios,'' said the policy analyst with the 
Santa Monica, California-based think tank RAND. 
But California ran into some tough luck, including a drought that dried up 
hydropower. ``For California to have the problem it had, everything had to go 
wrong,'' Bernstein said. 
California's crisis stems from a flawed 1996 deregulation plan that allowed 
wholesale energy prices to soar but capped retail rates. The result has been 
rolling blackouts, soaring prices and the bankruptcy of the state's biggest 
utility. 
Bernstein sees an eerie similarity between what California experts said two 
years ago and what Florida analysts now say. ''What they're saying in Florida 
is the same thing they said in California a couple of years ago. We're not 
predicting problems in Florida, but if you look at the direction they're 
going in they could have the same problems as California.'' 
Tom Ballinger, an energy supervisor with the Division of Safety and 
Electricity Reliability for Florida's Public Service Commission, said he was 
confident the state could meet demand. 
For 2002, for example, the peninsula area, which accounts for some 90 percent 
of Florida demand, has a 19 percent reserve margin. That will climb to 26 
percent by 2005 before drifting back down to 23-25 percent in the years 
ahead. 
``The peninsula in times past has gotten by with a 15 percent reserve 
margin,'' Bernstein pointed out. 
DEREGULATION LOOKS LESS DESIRABLE 
Back in 1995, Wisconsin was tracking California on the path to electricity 
deregulation, although it planned a slower approach. But the process ground 
to a halt after California's problems singed its reputation, economy and 
living standards. 
``When California occurred, it froze everybody,'' said State Rep. Tim Hoven, 
a Republican from Port Washington and chairman of the Wisconsin Legislature 
utilities oversight committee. He said the state now was focusing more on 
reliability, adding, ''We don't want to duplicate what they did in 
California.'' 
In an interim report, a Florida study group recommended creating a 
competitive wholesale market. 
That would not be done by requiring utilities to divest themselves of 
generators, as New York State has done, for example; Florida utilities would 
transfer power sources to an affiliate or third party, said Billy Stiles, 
executive director of the Florida Energy 2020 Study Commission. 
Once the generators were transferred, the utilities would have long-term 
contracts with their old units -- unlike California, whose utilities could 
buy only on the spot market. The amount of power Florida utilities contracted 
for would decline over time, opening the market up to merchant power plants, 
Stiles explained. 
``Once the transition is over ... they have the ability to buy (power) from 
anybody selling in the market, including their own affiliate or merchant,'' 
he said. 
Florida's deregulation proposal stalled partly because of concerns that 
consumers might not get repaid for the hugely expensive power generators they 
helped pay for in the form of higher electricity rates. 
The study group proposed transferring power plants at their book value: how 
much the plant is listed at on the utility's balance sheet. But some critics 
charged the plants were worth more than their book value, and after they were 
transferred they eventually might be sold to other independent power 
producers. 
``There was a belief that the gain on the sale of plants will escape 
recognition of the regulator ... that the customers will be deprived of that 
gain,'' Stiles said. 
He did not agree that power plants necessarily would fetch more than their 
book values. Still, he added, ``some mechanisms may need to be devised to 
recognize that gain.'' 
FLORIDA SEES POWER SUPPLY AS SATISFACTORY 
Among the concerns Bernstein raised about Florida's plans were questions 
about whether its utilities might experience delays in building new power 
sources. 
``If those plans actually emerge on time, maybe they'll be OK, but years of 
experience on things like this (shows) things get delayed,'' the RAND analyst 
said. 
Ballinger, the Florida Public Service Commission expert, recognized that as a 
risk, but only over the longer term. He said he was confident the utilities' 
demand projections, on which the state relies, were solid. 
``They're looking at it all the time,'' he said, explaining that utilities 
routinely analyzed population growth, customer accounts, the economy and 
other factors. 
Bernstein also raised the possibility Florida's weather might turn aberrant, 
with a warmer winter than usual, for example, which could raise demand for 
cooling. Balllinger said the state's assumptions -- compiled from data 
provided by its utilities -- were based on normal temperatures. 
Although parts of the Northeast such as New York have gone ahead with at 
least partial deregulation, they had a fairly strong incentive to do so. 
New York's retail rates ran around 14.2 cents per kilowatt hour, according to 
the Energy Information Administration. In contrast, Floridians paid only 
about 8 cents, and such low rates were the norm for most states in the 
Southeast, giving them less incentive to deregulate. 
``I don't think you're going to see deregulation in the South anytime soon,'' 
said John Sell, a spokesman for Southern Company, which owns power providers 
in Georgia, the Florida Panhandle, Alabama and Mississippi. 
REUTERS Reut10:26 05-07-01 

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Hot days worry energy watchers 
Published Monday, May 7, 2001, in the San Jose Mercury News 
BY GARY RICHARDS 

Mercury News 


Hot weather will cover the state today and Tuesday, and edgy energy officials 
are asking people not to turn on air conditioners or fans at home or at work. 
Temperatures are expected to remain in the high 80s in Silicon Valley today 
and the low 90s in Sacramento and Southern California. That could lead to an 
energy drain and more threats of rolling blackouts as the workweek begins. 
``When it warms up, demand does skyrocket and we're definitely on guard and 
asking consumers to step up their conservation,'' said Stephanie McCorkle, a 
spokeswoman for the California Independent System Operator. 
However, energy watchers won't know until this morning whether California has 
enough power to get through these warm days. The peak demand doesn't hit 
until about 4 p.m. in spring and summer. Weather forecasters say temperatures 
will return to the mid-70s by Wednesday, which is normal for this time of 
year. Sunday's high was 87 in San Jose, far short of the record 99 for May 6. 


Contact Gary Richards at mrroadshow@sjmercury.com or (408) 920-5335. 
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Unplugged 
Mankind has lived thousands of years without electricity. The Amish still do. 
Californians may have to. We called an Ohio hardware store to find out how. 
May 7, 2001 
By ANDRE MOUCHARD
The Orange County Register
This spring, nearly 16 months after Y2K failed to unplug our 
electricity-addicted world and just weeks before we figure to get browned out 
by our erratic power suppliers, Southern California is turning its eyes to 
the Amish of northern Ohio. 
The Amish, like us, are busy. They run farms and small manufacturing 
companies and even dabble in real estate. And while they might shun things 
like SportsCenter and Marilyn Manson, they're not totally without comfort. 
The Amish, like us, like their clothes clean, their food hot and their coffee 
beans ground to a powder suitable for drip-style brewing. 
What the Amish don't like is electricity. They live as plug-free as possible. 
Here in backward Southern California (where an almost totally non-Amish 
population sucks down more electricity than anybody in the world) many wonder 
how. Hence our sudden interest in northern Ohio. 
"Nowadays, we get calls nearly every day from people in Southern California," 
says Glenda Lehman-Ervin, marketing director of Lehman's Hardware and 
Appliances Inc., a Kidron, Ohio-based retailer that, since 1955, has 
specialized in selling non-electric appliances to, among others, the Amish, 
survivalists and Martha Stewart. 
Lehman's, which is privately held, says only that its non-electric appliance 
sales to California have "dramatically increased" in the past year, 
particularly as power outages and rate hikes have become the norm. 
"Apparently, there is some concern out there about electricity." 
Apparently. 
So even with a blackout summer only weeks away, it's not too late to go 
plugless. The process might not be cheap. It might involve some damp 
undergarments. And it almost certainly won't include a curling iron or a hair 
dryer. But some unplugging - without batteries even - is possible. 
Here's a breakdown of some non-battery-powered devices that can unplug the 
most electric of all events - the morning ritual: 
STEP 1: WAKING UP 
One way to save a lot of electricity would be to sleep in so long that you 
get fired. You could then hang out all day by a pool or the ocean and live 
almost exclusively on solar power. 
Sigh. 
Let's assume you're not yet so dedicated to easing our strained power grid. 
Let's assume you've got to wake up. To do that, unplugged, you'll need a 
mechanical alarm clock. 
Mechanicals are no oddity. They dominated time keeping from about 1000 AD 
until just after World War II. Most run on power generated by gravity or 
springs. And when they're attached to bells, they double as extremely loud 
alarm clocks. 
Some companies still make mechanicals (one way to find them is to look on the 
Internet under the words "mechanical alarm clocks"). Some say new mechanicals 
aren't as good as old mechanicals. But one company that made the old 
mechanicals is still around. 
A new Westclox mechanical will cost about $20, and a near antique - from the 
early 1900s - will run around $50, according to Aaron Kaplan, owner of 
Friendly Clock and Watch Repair in Santa Ana. 
"They're still pretty functional," Kaplan says. "If you maintain them 
properly, they'll keep time to within a minute or two." 
Amishness rating: 100 
STEP 2: CLEAN DUDS 
In the larger world of waking up and putting on clothes, one thing is always 
true: clean and dry is better than dirty and wet. 
In Southern California, most clean, dry clothes come out of a washer and 
dryer, two machines that also are electricity hogs. 
But it doesn't have to work that way. 
An Amish family, for example, might get its clean, dry clothes from a 
washboard (technology circa 500 AD) and a clothesline. That's fine if you've 
got about eight hours to get ready for work and you don't mind a T-shirt that 
crunches. 
Other unplugged washing options are hand-cranked, mechanical washers followed 
up by hand-cranked ringers that make line-drying faster. Lehman's sells a few 
of these products. There are also dozens of alternative energy washers and 
dryers on the market. Like clocks, those can be found over the Internet. 
A San Diego company, Explorer Appliances, even sells an alternative energy 
combo device, a washer/dryer that runs on propane, natural gas or even 
wind-created power. The machine also drinks less water than conventional 
washer/dryer combos, according to Explorer VP Paul Real. 
What it doesn't provide, necessarily, is socks that come out of the dryer 
toasty warm. 
"Centrifugal force," Real says, describing how the washer-dryer dries. "That 
gets almost all the moisture out." 
Unplugging other parts of the morning's clothing thing isn't that tricky. You 
can find irons that reuse heat from the stove. Lehman's also sells an iron 
that runs on burning embers. "You need a small shovel or something to get the 
embers in there. It's kind of fun," spokeswoman Lehman-Ervin says. 
Amishness rating: 75 (subtract 25 points if your clothes are synthetic or 
brightly colored.) 
STEP 3: VITTLES 
Eating plug-free isn't as easy as it looks. You can eat raw stuff, but that's 
probably going to involve a refrigerator and, in most homes, that involves a 
plug. You can decide to cook some stuff, look at your gas-powered range, and 
think you're OK. But you're not. Check out the oven. Electric. Bummer. 
Anyway, all of this gets particularly tricky in the morning. Breakfast is a 
huge electricity user. Milk (if it's cold) needs a plug. Toast has its own 
plug-in machine. Same for waffles. And coffee, the absolutely must-have drink 
for most morning routines, needs a plug-in machine for brewing and another 
plug-in machine to grind the beans. 
Or not. 
See, the good news is there are non-electric versions of virtually every 
kitchen appliance. The fridge can run on propane or natural gas or wind if 
you're so inclined. (Check the Internet under "alternative energy 
appliances.") And Lehmans, among others, sells wood stoves, including a model 
that has a catalytic converter that'll make your wood-stove electricity free 
and a smog-buster at the same time. 
"Think about your car 30 years ago. You didn't have airbags or seat belts and 
things like that. And it didn't get good mileage. Well, wood stoves have 
gotten a lot better over the years, just like cars," Lehman-Ervin says. 
Lehman's and others also sell toasters that toast using the heat from the 
stove and a waffle iron that does the same thing. The company (as well as 
some coffee shops) also sells hand-cranked coffee bean grinders, something 
that's quiet and, because it doesn't generate a lot of bean-burning heat, 
better for the coffee. After that, you can use a water-drip device to make 
the coffee without a plug. 
If you care to go further, you can grind your own grain and churn your own 
butter with non-electric devices. 
"We even have a hand-crank blender," Lehman-Ervin says. 
"The Amish like it for milkshakes, but out there, in California, maybe you 
could use it for margaritas." 
Not before work. 
Amishness rating: 10 
STEP 4: BLOW DRYING 
"Sacrifices must be made." 
That's not the opening line to your pink slip. It's what Lehman-Ervin and 
others say when asked about how to unplug the morning routine. Essentially, 
there are parts of waking up and getting ready for work that must be changed, 
not unplugged. 
"There is no non-electric blow dryer, except maybe when you stick your head 
out the window of your car or something," Lehman-Ervin says. 
Curling irons fall into this category. Electric shavers, too, but they're 
easy to replace with foam and hot water and a razor. 
Television, CD and DVD players, Nintendo - they all need a plug or a battery 
which, for our purposes, rule them out. Same for microwaves and trash 
compactors. 
Eventually, unplugging - even in the morning - boils down to a question of 
"what you really need vs. what you simply want," Lehman-Ervin says. 
"The biggest benefit is self-sufficiency. As you're finding out in 
California, it's not always great to rely on somebody else to maintain your 
lifestyle. 
"But there are many, many people in this country who don't have electricity 
or who have unreliable electricity, and they manage to wake up and get ready 
for work. 
"If you absolutely have to have something, there is probably a non-electric 
version of it." 
So how can you find out more? 
"Uh, with a computer," Lehaman-Ervin says, laughing. 
And that, she adds, "needs a plug." 
Amishness: 0 

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Mexico Continues Power Exports To California



MEXICO CITY, May 4, 2001 (El Economista/Infolatina via COMTEX)  via NewsEdge 
Corporation  - Mexican
state-owned power utility the Federal Electricity Commission (CFE) will 
continue
to supply the U.S. state of California with electricity, in light of the 
state's
ongoing power shortage, CFE head Alfredo Elias Ayub said Thursday. Speaking 
to a
gathering of California officials and business leaders, Elias said excess
electricity supply from the northern Mexican state of Baja California would
continue to be exported to the United States, Mexican financial daily El
Economista reported. Baja California, for geographical reasons, is not 
connected
to Mexico's national power grid, and the state's excess supply, therefore,
cannot be channeled to areas of the country suffering supply shortfalls or low
operating reserve margins, explained Elias. He said rapidly rising demand for
electricity on both sides of the border made expansion of interconnection
capacity a priority. Interconnection capacity currently stands at 400 
megawatts,
he said. New transmission lines, to be completed by 2002, will boost
cross-border interconnection capacity to 2,000 megawatts, he said.
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Charged Up:
Texas May Face a Glut
Of Electricity, but That
Won't Aid Rest of U.S.
---
Pride and Policy Make State
A Magnet for Power Plants
And an Island Unto Itself
---
A Wire Enshrined in Lucite 
By Alexei Barrionuevo and Russell Gold 
? 
05/07/2001 
The Wall Street Journal 
Page A1 
(Copyright (c) 2001, Dow Jones & Company, Inc.) 
While California struggles to keep its lights on and New York City braces for 
possible electricity shortages this summer, Texas utilities could soon face 
the opposite problem: a power glut. 
Texas' wide-open spaces and relatively weak zoning and environmental rules 
have helped make the Lone Star state a magnet for power-generation companies 
as it prepares to deregulate its electricity market next year. The result: 
Texas' electricity-production capacity this summer is expected to exceed its 
peak power demand by 11,000 megawatts -- nearly enough to light up New York 
City. By the summer of 2002, the excess may be closer to 15,000 megawatts, 
enough to power 15 million homes. And with 27 new generating plants under 
construction, more than any other state, some power producers fear that 
overbuilding ultimately could send Texas' wholesale electricity prices into a 
tailspin. 
All this sounds like good news for the electricity-starved East and West 
Coasts -- but it isn't. That's because the U.S. is divided into three major 
power grids -- with the West on one, the East on another and most of Texas on 
a third, with very few links to the rest of the country. In the world of 
electricity, that makes Texas "an island with a couple of little footpaths 
over to it," says Larry Makovich, senior director for electric power research 
at Cambridge Energy Research Associates, a Cambridge, Mass., consulting firm. 
Some Texas utility executives argue that their state's island status is 
principally an accident of geography. But no one disputes the fact that good 
old Texas pride -- and a deep-seated skepticism toward federal regulation -- 
also played a role in shaping the state's grid. So, too, did a renegade 
utility's desperate 1976 bid to save itself from a corporate breakup and the 
resulting four-year legal battle, which the industry later dubbed the "Texas 
Range War." 
Texas' isolation isn't expected to end anytime soon. If Texas became fully 
interconnected, its big utilities say, the state could become more 
susceptible to blackouts, if other regions drew off too much power. "From a 
reliability standpoint, it would be a degradation to the Texas grid," says 
Steve Schaeffer, a senior vice president at Reliant Energy Inc., the former 
Houston Lighting & Power Co. 
Moreover, the utilities estimate that building the transmission lines needed 
for a full connection to the nation's other grids would take at least three 
years and cost Texas ratepayers about $600 million. They don't want to invest 
that much money to sell power to California or New York to ease what they 
view as temporary imbalances. 
Some in the state also believe low rates and excess power could give it an 
advantage in persuading businesses to locate there. "America will be shy 
enough electricity that this will be one of our greatest inducements for 
growing Texas," says Matthew Simmons, president of Houston investment bank 
Simmons & Co. 
Texas is an extreme example of the haphazard way electricity grids developed 
in the U.S. Until the 1960s, most power plants were built near the customers 
they served. Then, utilities began building larger, more-efficient coal and 
nuclear plants, connecting them with their neighbors to ensure that if one of 
these big plants went down, there would be a backup ready to keep the power 
flowing. 
But the old-line Texas utilities, which have long benefited from the state's 
plentiful supplies of fuels such as natural gas and lignite coal, were 
reluctant to join in this wave of interconnections. Back then, in the mid- to 
late 1970s, electricity outside Texas was generally more costly. And 
surrounding states weren't planning big enough plants to back up the huge new 
ones Texas was building to power its fast-growing cities and energy-thirsty 
petrochemical industry. "There was no big money to be made by shipping power 
one way or the other over the lines," says Reliant's Mr. Schaeffer. 
By confining their grid to Texas, state utilities also avoided oversight by 
the Federal Energy Regulatory Commission. Thus, FERC couldn't force Texas to 
send power out of state in case of an emergency. 
The state's dominant utilities -- Texas Utilities Inc., the Dallas-based 
predecessor of what is now TXU Corp., and Houston Lighting -- went to great 
lengths to ensure there were no interstate connections. The switches at a 
hydroelectric plant on the Texas-Oklahoma border were wired to prevent power 
from flowing between the states. Elsewhere along the border, a system of 
relays was installed to prevent unauthorized interstate transmissions. 
Only one big utility didn't like the setup: Central & South West Corp., a 
Dallas holding company that owned power plants in both Texas and Oklahoma. In 
1976, it faced a crisis. If it couldn't show that its plants in both states 
were interconnected, it ran the risk of being broken up under a federal law. 
The law, which barred holding companies from owning unconnected utilities in 
separate states, was decades old. But, until then, it hadn't been strictly 
enforced. 
On May 4, 1976 -- eight days before the Securities and Exchange Commission 
was set to consider the matter -- Central & South West took an extraordinary 
step. At 5:30 a.m., it sent one of its line crews to secretly rewire a 
substation in Vernon, Texas, near the Oklahoma border, allowing power to flow 
freely between the two states. For a few hours, the grids were connected by a 
minuscule thread. Later that morning, officials at Central & South West 
phoned other Texas utilities to tell them the company was engaged in 
interstate commerce. 
Texas' other major utilities reacted angrily. "The sons of bitches are trying 
to steal my lignite!" Texas Utilities Chairman Louis Austin bellowed, 
according to former Texas Public Utility Commissioner George Cowden, who 
recalls Mr. Austin making the remark during a private meeting between the two 
men. 
Around noon, Houston Lighting cut its system off from the rest of the state's 
utilities. Texas Utilities followed suit hours later. By day's end, the 
state's utilities had broken the grid into a half-dozen pieces. 
That same day, one of Texas Utilities' chief lawyers, a 6-foot-6 former 
college-football star named J.A. "Tiny" Gooch, dispatched one of his 
company's crews to disconnect the link Central & South West had made between 
Vernon and Altus, Okla. "They made it so it was physically impossible to 
[connect] it again," says Mr. Gooch's son, Gordon, then a lawyer representing 
Houston Lighting. The elder Mr. Gooch, who died in 1986, is considered the 
patron saint of Texas' electrical independence. 
At an emergency meeting of the utility commission three days later, Mr. 
Austin of Texas Utilities expressed disgust at the prospect of having to burn 
Texas lignite and natural gas to satisfy "Yankees," according to a 
transcript. And, he added: "I don't like federal regulations." (Mr. Austin 
died in 1997.) 
A wire reputed to have formed part of Central & South West's brief 
Texas-Oklahoma interconnection later was cut into pieces, encased in Lucite 
and given out as paperweights by Dallas law firm Worsham, Forsythe & 
Woolridge, which represented Texas Utilities. 
Alan Erwin, a state utility commissioner in 1976 who still has the souvenir 
on his desk, used the wiring episode as fodder for a 1979 novel, "The Power 
Exchange," in which a winter storm cripples Northeast power production and 
the nation turns to Texas for electricity. Texas refuses to ship the 
electricity, fearful that other regions would drain it of "what little cheap 
fuel was left." Ultimately, Texas becomes a scapegoat and ends up seceding 
from the union. 
In reality, the outcome was less dramatic. The grid conflict wound its way 
through many courtrooms. Central & South West -- recently acquired by 
American Electric Power Co. of Columbus, Ohio -- lost almost every round. 
After about four years, the utilities hashed out a compromise, at the urging 
of the federal government. 
Rather than link the Texas grid to the East, so that electricity could flow 
freely across state borders through alternating-current cables, they agreed 
to build two direct-current lines. Operators could control the flow over 
these bridges, which at peak capacity could carry a mere 820 megawatts. The 
parties to the deal, which included the federal government, agreed these 
links wouldn't bring the Texas grid under federal jurisdiction. Today, Texas 
power continues to be regulated in Austin, not Washington. 
"It's just a Texas thing," says Pat Wood III, chairman of the state utility 
commission and a recent Bush administration nominee to FERC. "We want control 
of our own destiny." 
That independent attitude has extended in recent years to Texas' 
business-friendly approach to deregulating its power industry. Unlike 
California, with its stringent emissions and zoning rules, Texas has made it 
quick and easy for power companies to locate their plants almost anywhere 
they can find a place to hook up to the grid. Last year, Texas completed a 
major upgrade to alleviate bottlenecks on the grid, and it has six similar 
projects under way. Unlike most other states, it decided to charge grid users 
a flat rate to move power anywhere in the state, so they could put plants in 
low-cost rural areas, far from their customers. 
Those policies, as well as projections that the state's electricity demand 
would grow by a robust 3.5% a year, set off a flurry of power-plant 
construction, beginning in 1998. Since then, $11 billion worth of power 
plants have been completed or started in Texas, and more are on the drawing 
board. 
By contrast to California's approach to deregulation, which largely failed to 
bring new plants online, Texas' strategy "encouraged an overbuild," says Mr. 
Makovich, of Cambridge Energy Research Associates. 
Consider tiny Seguin in south central Texas, where Constellation Energy Group 
Inc. of Baltimore is building an 800-megawatt gas-powered plant in a former 
cornfield. Fifteen miles to the west, Texas Independent Energy LP of Dallas 
recently finished a 1,000-megawatt plant. About the same distance to the 
north, American National Power, a Houston-based unit of Britain's 
International Power PLC, is building a 1,100-megawatt plant. 
If generators don't get cold feet, Texas is on track to have a capacity 
surplus of 9% this summer and 11% by summer 2002, says Cambridge Energy 
Research Associates. That's in addition to the 15% surplus that most experts 
consider an adequate cushion. Some areas of the country, including parts of 
the Southeast, Upper Midwest, New York City and the West, are struggling with 
razor-thin capacity margins. After factoring in a similar 15% cushion, the 
West has an 8% capacity deficit and the Upper Midwest has a 4% deficit. 
As a result, while electricity futures prices for summer are running at as 
much as $400 per megawatt hour in the Northwest and around $100 in the 
Northeast, Texas futures prices are averaging only $72 to $74 per megawatt 
hour. 
Calpine Corp. of San Jose, Calif., is making the boldest wager that 
overcapacity and a lack of export possibilities won't sink Texas' wholesale 
electricity prices. The company has six plants under construction in the 
state, two of which are expected to come on line next month. And it plans to 
add an additional five plants over the next two years. Altogether, Calpine 
plans to spend about $2.8 billion in the state, its largest investment 
outside California. 
"People from day one probably thought Calpine was crazy," says Darrell 
Hayslip, a company vice president. "But so far, we are absolutely convinced 
that this is the right bet." He says Calpine's newer gas-fired plants are 40% 
more efficient than older plants in the state, a third of which are at least 
30 years old. Calpine expects that edge to force rivals to retire older 
plants, thus keeping electricity prices from sagging. 
Others aren't so sure. After initially planning new plants in Texas, Duke 
Energy Corp. began to worry that the state was getting overbuilt. Last May, 
Duke, of Charlotte, N.C., sold its 80% stake in a plant under construction in 
south Texas to Calpine. "We sized up the market early, and then realized too 
many followers were doing the same thing," says Jim Donnell, president and 
CEO of Duke Energy North America. 
If the electricity situation outside Texas grows too grim and too much supply 
sinks prices in the state, there could be "renewed pressure" for Texas to 
study interconnection options, says John Stauffacher, vice president for 
regulatory affairs at Houston-based Dynegy Inc., which has 1,000 megawatts of 
capacity in Texas. 
Calpine, for one, wouldn't mind sharing Texas power with the East and West. 
"I would love to be able to wheel power from Texas to California," says Mr. 
Hayslip. But, so far, the Texas utilities haven't budged in their opposition 
to exports. 
A few generators are trying to find the best of both worlds. Tenaska Inc. of 
Omaha, Neb., is building plants at the border between the Texas and eastern 
grids. Though utilities aren't allowed to be connected to both grids at once, 
the plants are designed to allow the company to switch between grids as 
demand and prices warrant. 
In rural Grimes County, about 90 miles outside Houston, Tenaska plant manager 
Frank Carelli boasts that his 830-megawatt plant could disconnect from one 
grid, connect to the other and be back at full power within an hour. A 
similar Tenaska plant is slated to begin operations this month in Rusk 
County, near the Louisiana border. 




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By David Wagman
dwagman@ftenergy.com
"And it never failed that during the dry years the people forgot about the 
rich years, and during the wet years they lost all memory of the dry years. 
It was always that way."
-John Steinbeck
East of Eden, 1952

Electricity in the West this summer will rise and fall on the whim of 
nature's elemental forces: water for power generation, weather for its effect 
on demand, and fire*or the threat of it*for its potential damage to 
transmission lines and the grid.

And then there's Harvey Rosenfield. 

A force of nature in his own right, perhaps no one wields more clout over 
California's politicians and the rest of the West than Rosenfield. Political 
watchers say his skill as a consumer advocate and master of California's 
potent ballot initiative process is so great that he has all but sapped Gov. 
Gray Davis' ability to act decisively in this crisis. 


Given California's role as the West's largest state and biggest economy, this 
leadership gridlock leaves the region facing a virtual political vacuum even 
as it gropes to find a broader solution to problems of supply and price that 
are poised to infect at least Oregon and Washington. 

Running for cover
California's political gridlock is so bad that one observer equates the 
situation to the uncertainty and confusion of a mob during a riot.

"Politicians respond when there is a quantifiable problem," said Dan Walters, 
political columnist for the Sacramento Bee newspaper. But the energy crisis 
is a "fourth-dimensional problem that mutates every day," making it tough for 
politicians to respond. Walters said a growing sense within the California 
state legislature is that the die is cast for this summer and it's time to 
run for political cover. 

But a governor and a legislature bent on self-preservation may be unwilling 
or unable to act on a number of important energy issues. 


"We hope the legislature doesn't become dysfunctional because there's some 
stuff that's gotta move," said Tom Williams, a California-based spokesman for 
Duke Energy. 

One of many priorities is legislative action on the proposed Southern 
California Edison (SoCal Ed) transmission asset buyout and what observers say 
is an almost mandatory fix to the imbalance between wholesale and retail 
markets. Approval of this item has been clouded by questions about the value 
of owning only a portion of the state's transmission system. Members of 
Davis' own party appear unconvinced by arguments that SoCal Ed could follow 
PG&E into bankruptcy protection. 


"I've never been afraid of bankruptcy from the beginning," Democratic Senate 
leader John Burton told the Orange County Register in mid-April. "Bankruptcy 
court is a better venue for open discussion and investigation." 

The outlook for action on the second big legislative item may be even worse 
as California politicians hope to shield the consuming/voting public from 
market forces for as long as possible. 

"Californians are paying for a product below cost. Customers need to see the 
link between wholesale and retail prices," said Alex Papalexopoulos, 
president of ECCO International, a San Francisco-based company that designs 
regional market structures. 

News reports also revealed the state spent nearly $5 billion buying power 
between January and mid-April. In one two-week stretch from late March to 
mid-April, the state's average weekday power costs rose from $45.8 million to 
$73 million, a 60% increase. Gov. Davis blamed generators for the higher 
costs, saying they face greater risk of not being paid. But observers worry 
the state itself may be headed toward bankruptcy if it continues to spend for 
electric supplies. 

CALIFORNIA'S RISING DAILY ELECTRICITY BILL

Against this fast-changing backdrop, annual assessments for summer power 
supplies for California and the West are being released. Perhaps more than at 
any other time, the politics of energy are as critical for industry insiders 
to understand as the more traditional forecasts of hydro flow, gas 
availability and transmission constraints. 

Bleak assessment
By those more traditional measures, the summer power assessment is bad 
enough. Below-normal precipitation in the Northwest has led power planners to 
say for months the region will be short of power. The California Independent 
System Operator (ISO) said if consumers use the same amount of electricity 
this summer as last the state could face 34 days of rotating blackouts. 

The Western States Coordinating Council's summer assessment forecasts a peak 
demand of 53,893 MW in the U.S. portion of its California-Mexico subregion. 
Load management and interruptible demand are expected to account for almost 
1,000 MW of demand, leaving a net internal demand of 52,899 MW, expected for 
August. 

But California's tight power supply market may be squeezed further by 
conditions in the Pacific Northwest. There, electricity prices have recently 
outpaced California's, according to daily prices reported by Megawatt Daily. 
Those high prices suggest the Northwest's hydro shortage is driving the 
region's crisis, said Doug Logan, principal with RDI Consulting. 

MONTHLY PEAK PRICE TRENDS IN THE WEST SPREADSHEET

"California is screaming, but the Northwest is desperate" for power, he said. 

Market vulnerabilities
Published reports also suggest that almost anything short of a cool summer 
will overtax supplies and lead to rolling blackouts in California. Unexpected 
power plant outages also could trigger blackouts and price spikes, a 
possibility some say points to market manipulation by power generators. 
Others say the outages are a natural result of running older plants harder 
and longer than ever before. 

For example, Duke Energy's 165-MW Oakland plant, built in 1895 and 
revitalized in 1978, typically ran no more than 70 hours a year, said 
spokesman Tom Williams. During 2000, Oakland ran for 800 hours before its 
turbines burned up. Its loss prompted a call from the California ISO, which 
said the plant was still needed for baseload operation, Williams said. 


The danger for much of California is that as the state's older generating 
plants are called on to run harder and longer this summer, they will break 
down more often and add to the supply problem. With supplies constrained, the 
loss of even a single plant could throw the market into turmoil. 

"It doesn't matter what the market demand is like if supply is tight," said 
Papalexopoulos. Under tight supply conditions, "every market breaks down." 

Another critical factor will be environmental controls mandated by the 
federal Clean Air Act and administered by state air quality management 
districts. Plants whose NOx emissions exceeded permitted levels last year had 
to enter the market to buy emission credits. At one point, demand for the 
credits was so high they were all but unavailable at any price. When credits 
were available, their price left some power generators paying almost as much 
for them as for wholesale power. Thus, a crucial factor to watch will be the 
willingness (or ability) of air quality management districts to ease or 
modify environmental restrictions. 

CALIFORNIA SUPPLY & DEMAND FROM ECONOMIC FORUM SPREADSHEET

Kern River rescue
One bright spot seems to be natural gas supplies, which appear adequate or 
even improved compared with last year. The improved outlook is due in part to 
the fast-track approval by the Federal Energy Regulatory Commission of a 135 
million-cubic-foot per day expansion to the Kern River pipeline into 
California. The expanded capacity will import relatively low-cost natural gas 
from the Rocky Mountain region for use in California's gas-fired power 
plants. This should help deflect some price pressure that built up last year 
at a pipeline choke point on the California-Arizona border. 

HOW HIGH COULD CALIFORNIA'S ELECTRIC BILL GO? SPREADSHEET

But even this bright spot looks a bit cloudy, said Mike Farina, a power 
consultant with RDI Consulting in Boulder, Colo. Uncertainty remains over 
whether Kern River's extra gas capacity can make it through a second 
unrelated congestion point at Wheeler Ridge, Calif. There, the pipeline 
connects with a web of in-state distribution pipes. What's more, low hydro 
supplies will lead to even more reliance on gas-fired power plants for 
electricity. And, Farina said, a cold snap could boost demand for natural gas 
for space heating. That could cause an unexpected twin demand peak coincident 
with electric generation demand. A similar dual peak occurred last summer, 
adding to upward pressures on natural gas prices. 

READ MORE ABOUT THE GAS FACTOR

Sending price signals
On the demand side, a key factor will be how effective the recent rate 
increase approved by the California Public Utilities Commission is at 
dampening consumer demand. 

The rate hike could send a powerful price signal for consumers to reduce 
demand, said John Egan, director of strategic and marketing issues for 
Boulder, Colo.-based E Source, the retail consulting division of Financial 
Times Energy. Reports already have made much of the fact that California's 
market lacks a good set of demand-side tools to send price signals to 
consumers. One exception has been in the industrial sector where 
interruptible contracts and real-time metering have regularly forced 
conservation responses. 

AVERAGE ELECTRIC WHOLESALE PRICES SPREADSHEET

Indeed, large energy users have already reacted to the crisis by moving away 
from interruptible contracts and toward aggressive energy hedging strategies 
just to remain in business, said Brennan Higgins, market intelligence manager 
for Louisville, Ky.-based Summit Energy. His clients include large end-users 
nationwide. "Manufacturers have quit looking at rates in terms of saving 
money and now are looking at their ability to run their plants," he said. 

READ MORE ABOUT CALIFORNIA'S CAPACITY ISSUES

Looking beyond the summer, a primary factor for California's recovery will be 
how much new generating capacity is added. As one gauge, insiders watch to 
see how lenders and developers respond to what some say are frequent and 
numerous rule changes within the state. 

"The rules change almost on a real-time basis," said Jerry Pfeffer, a 
Washington, D.C.-based attorney who specializes in utility finance. As a 
result, risk premiums have risen and may work against the state's efforts to 
expand its generating capacity. 


In the past, baseload coal or nuclear plants were all but impossible to move 
once they were approved for a specific location. Today, natural gas turbine 
technologies*and the money to build them*are more mobile. With other parts of 
the country growing anxious for new generating capacity, lenders and 
developers can take their turbines to states offering less political 
volatility and uncertainty. 

The power supply assessment for California and the Pacific Northwest this 
summer appears bleak. Uncontrollable forces of nature*temperature, rainfall 
and fire*may make or break a market where political blunders have exposed 
gaping vulnerabilities. As a result, the "Harvey factor," as the game of 
energy politics in California is coming to be known, emerges as a central 
theme for California and the West. 

READ MORE ABOUT THE HARVEY FACTOR

In California this summer, said E Source's John Egan, "there is a much 
shorter list of things that could go right." 

To read more analysis about the California energy situation, click on the 
links below.

READ MORE ABOUT CONSERVE

READ MORE ABOUT HYDRO

READ MORE ABOUT MONEY TALKS

READ MORE ABOUT SOLUTIONS