-----Original Message----- 
From:   Schultz, Don  
Sent:   Monday, October 22, 2001 11:07 AM 
To:     Boyd,Kelly; Brown,Jeff; Chinn,Randy; Clark,Woody; Ferrera, Anna; Johannesson,Magnus; Kelly,Brian; Lingbloom, Lawrence; Lipper,Kip; Lyons, Joseph; Phillips,Guy; Sherriff,Rona; Symonds,Toni; Zeps,Gabrielle

Cc:     Bondonno,Maria; Campbell,Rod; Hartmann,Audra; Julian, Bill 
Subject:        CPCFA updates 



CALIFORNIA ENERGY MARKETS 
u u Friday, October 19, 2001 u u No. 640 u u 


[1] Power Authority Faces Legislative Backlash 
After a three-month honeymoon, the new California Power Authority 
is being shredded in the winds of politics this week with the Legislature 
looking into its deals, the California Energy Commission annoyed with its 
monopolizing ventures and the Department of Water Resources rebuffing 
its plan to sell its power through state contracts. Other than skepticism 
from legislative staff about its microturbine bid plan, the Power Authority 
escaped major problems in its requests for bids for photovoltaics and 
fuel cells at [18]. 

[18] Assembly to Investigate Power Authority 
(from [1]) 
Is the California Power Authority a dangerously 
out-of-control state agency, or is it the best hope for get-ting 
back some state control over electricity supplies? 
The Joint Legislative Audit Committee is looking into the 
Power Authority's role thus far in carrying out the letter 
and spirit of SBx2-6 in a hearing set for November 1. 
The move is spearheaded by the offices of Assem-blymember 
Fred Keeley (D-Boulder Creek), the chair 
of the joint committee, and Assembly speaker Bob 
Hertzberg (D-Van Nuys). Both members were princi-pal 
authors of the Power Authority's enabling legisla-tion, 
SBx2-6. Legislative staff are questioning the 
Energy Foundation's 
unpaid role in devel-oping 
the Power 
Authority's requests 
for bids, particularly 
the RFB for microtur-bines. 
Only one com-pany, 
Capstone, can 
meet the requirement written into the RBF by the Energy 
Foundation, and staff are looking into potential overlaps 
between Capstone and the Energy Foundation. 
Political maneuvers are swirling around the Con-sumer 
Power and Conservation Financing Authority. 
Not only elected officials are concerned; the staff and 
heads of other agencies the Power Authority must 
work with are digging in their collective heels to op-pose 
Power Authority overtures. Tom Hannigan, di-rector 
of the Department of Water Resources rebuffed 
Power Authority board chair David Freeman's pro-posal 
to have it buy peaker output. California Energy 
Commission members said they are at policy odds 
with the Power Authority's siting plans. 
In an October 4 letter to Freeman, Hannigan said 
that the Power Authority's power-wind and fossil 
peakers-is likely too expensive, overblown and not 
able to respond quickly enough to balancing power 
needs. "The letters of intent already approved by the 
Power Authority could far exceed [DWR's] ability to ab-sorb 
that power given the outlook for net-short need." 
Freeman assumes that the market for Power Authority 
power will be via contract, not the spot market. "Selling 
on the spot market is difficult to finance and risky," said 
Power Authority spokesperson Amber Pasricha. 
The Power Authority is the only agency cur-rently 
in the position of actually being able to acquire 
new energy as the state's $12.5 billion bond issue to 
underwrite continued DWR power purchases is in 
limbo and the California Independent System Operator 
is still not creditworthy. Still, the Power Authority 
cannot issue bonds until it has its own economic 
house in order, and an Assembly investigation might 
jeopardize that [J.A. Savage]. 
[18.1] Power Authority RFB Drafts Too 
Narrow to Grow Market, Say 
Respondents 
The Power Authority received a remarkably 
reserved response to its draft request for bids for mi-croturbines, 
fuel cells and photovoltaics, but most say 
the parameters it sets are too restrictive. The Power 
Authority planned to finalize the projects in its Octo-ber 
19 meeting. 
The microturbine maker Capstone is the only com-pany 
that can comply with the draft RFB in the short 
term, according to Jennifer Rice, Capstone vice presi-dent 
of governmental affairs. Others involved with the 
RFB also readily admit that Capstone, a known entity 
in Los Angeles Department of Water & Power terri-tory, 
is the only game in town. 
Sempra Energy, in its comments to the Power 
Authority, said that it had filed a response simply 
because it wanted to keep a placeholder to make sure 
that larger microturbines would not be excluded in 
future RFBs. Turbec, which has experience in the 
European market, also questioned the size restriction 
of microturbines in the RFB, noting that its standard 
unit is 100 KW. The RFB as written calls for 70 KW 
or smaller turbines. 
In the photovoltaics bid process, the Sacramento 
Municipal Utility District said it was dismayed that 
the Consumer Power and Conservation Financing 
Authority was stepping on its territory and that the 
authority was limiting bids to a turnkey system, which 
SMUD maintains pads the cost. Green Mountain 
also wanted to expand the bid to consider existing in-stallations, 
central-station plants and power purchase 
contracts [J.A. S]. 
<http://www.capowerauthority.ca.gov/MediaRelease/PR01%20006.pdf>