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Los Angeles Times, July 31, 2001 Tuesday, Home Edition, Page 13, 629 words,
????Commentary; ; The State Will Pay for Davis' Panic, KATHLEEN CONNELL, PETER
????NAVARRO, Kathleen Connell is California state controller. Peter Navarro 
is,
????an associate professor of economics and public policy at UC Irvine

Los Angeles Times, July 31, 2001 Tuesday, Home Edition, Page 1, 1300 words,
????The State; ; Davis' Energy Advisors Draw SEC Attention; Probe: Under 
review
????is the possible use of inside information to buy power company stocks. GOP
????rival of governor requested the inquiry., WALTER HAMILTON JEFFERY L. 
RABIN,
????DARYL KELLEY, TIMES STAFF WRITERS

Salon.com, July 31, 2001 Tuesday, Feature, 1723 words, Gray Davis' Edison
????problem, By William Bradley

The San Francisco Chronicle, JULY 31, 2001, TUESDAY,, FINAL EDITION, NEWS;,
????Pg. A11, 849 words, S.F. to vote on electric power to the people;
????Measures would start public utility districts, Rachel Gordon, San 
Francisco

The San Francisco Chronicle, JULY 31, 2001, TUESDAY,, FINAL EDITION, NEWS;,
????Pg. A1, 990 words, Davis' top spokesman bought stock in power firm;
????Adviser denies conflict of interest, Lynda Gledhill, Sacramento

The Associated Press State & Local Wire, July 31, 2001, Tuesday, BC cycle,
????8:40 AM Eastern Time, State and Regional, 317 words, Will BGE split lead 
to
????Calif. power problems?, BALTIMORE

The Associated Press State & Local Wire, July 31, 2001, Tuesday, BC cycle,
????7:17 AM Eastern Time, State and Regional, 651 words, Davis press secretary
????confirms buying energy company stock, By ALEXA HAUSSLER, Associated Press
????Writer, SACRAMENTO, Calif.

AP Online, July 30, 2001; Monday, Domestic, non-Washington, general news
????item, 365 words, Calif. Sees $4B Less in Power Refunds, KAREN GAUDETTE, 
SAN
????FRANCISCO

AP Online, July 30, 2001; Monday, Domestic, non-Washington, general news
????item, 263 words, Texas Inches Toward Power Deregulation, NATALIE GOTT,
????AUSTIN, Texas

The Associated Press State & Local Wire, July 30, 2001, Monday, BC cycle,
????State and Regional, 471 words, Federal order limits potential state 
refunds
????by $3 billion, By KAREN GAUDETTE, Associated Press Writer, SAN FRANCISCO

The Associated Press State & Local Wire, July 30, 2001, Monday, BC cycle,
????State and Regional, 539 words, Developments in California's energy crisis,
????By The Associated Press


Copyright 2001 / Los Angeles Times
Los Angeles Times
July 31, 2001 Tuesday ?Home Edition

SECTION: California; Part 2; Page 13; Op Ed Desk

LENGTH: 629 words

HEADLINE: Commentary;
;
The State Will Pay for Davis' Panic

BYLINE: KATHLEEN CONNELL, PETER NAVARRO, Kathleen Connell is California state
controller. Peter Navarro is, an associate professor of economics and public
policy at UC Irvine

BODY:

??The five-to-20-year power contracts signed in a panic by the Davis
administration have saddled California with billions of dollars of "stranded
costs" that will burden our economy and state budget for years to come.

??Now, Gov. Gray Davis' spin doctors want us to believe that these $43-billion
long-term contracts were both necessary and the impetus for a moderating 
energy
market. Here's the real story:

??Last summer, under a flawed deregulation, a handful of large out-of-state
generators effectively cornered California's wholesale electricity market. 
This
"sellers cartel" first drained our electric utilities dry. In November, it
became the taxpayers' turn to be victimized, when the Davis administration 
gave
carte blanche authority to the Department of Water Resources for energy
purchases. Between November and July, the department burned through $8 billion
in short-term energy purchases, devouring almost the entire state budget
surplus. This required the state Public Utilities Commission to pass the 
largest
rate hike in California history and will require the state to issue $12.4
billion in bonds this fall to service this debt.

??In February, with spot market prices at all-time highs and rolling blackouts
rippling through the state, the governor's representatives began to negotiate
long-term contracts with the sellers cartel. This was an ill-advised long-term
strategy to fight a short-run crisis. To understand why, look at the 
negotiating
chessboard from the electricity cartel's perspective. The cartel's negotiators
knew that within 18 to 24 months, there would be a huge glut of power on the
market as many power plants were already under construction in California and
throughout the West. Once the new energy resources were available, the cartel
would no longer be able to manipulate the market. This supply glut would drive
prices back to the 1999 range of three to five cents per kilowatt-hour, far
lower than the prices now set in the long-term energy contracts.

??To the cartel members, this looming power glut was a recipe for heavy 
losses.
Locking the state into long-term contracts at lucrative rates was their
redemption. The Davis administration walked into this market inferno, 
bargaining
from extreme weakness at the top of the market, signing contracts that were 
too
expensive. The administration also capitulated on two highly objectionable
clauses. The first requires the state to absorb all costs of environmental
protection for many of the generators. The second holds the generators
"harmless" for any increase in taxes imposed on the generators by the state.
This provision essentially freezes taxes on the generators over the next 
several
years, requiring taxpayers to pick up the tab.

??Notwithstanding the administration's spin, the current improvement in our
energy situation may be traced to at least four other factors: This summer has
been unusually cool, Californians have increased their conservation,
recessionary forces have reduced demand and, most important, the Federal 
Energy
Regulatory Commission finally imposed price caps on the sellers cartel,
dampening market manipulation.

??The bottom line is this: Long after the rolling blackouts stop, California 
still will be saddled with billions of dollars of unnecessary electricity 
costs
and high bond debt. These higher costs will hurt consumers and businesses, put
heavy pressure on the state budget for years and inhibit the state's economic
growth.

??There are two lessons from this multibillion-dollar mistake. The first is to
have full public review of major energy decisions. Equally important, the 
Public
Utilities Commission must be allowed to retain its rate-making authority so 
that
problems are not hidden in a state bureaucracy.

LOAD-DATE: July 31, 2001

??????????????????????????????5 of 50 DOCUMENTS

??????????????????????Copyright 2001 / Los Angeles Times

??????????????????????????????Los Angeles Times

?????????????????????July 31, 2001 Tuesday ?Home Edition

SECTION: California; Part 2; Page 1; Metro Desk

LENGTH: 1300 words

HEADLINE: The State;
;
Davis' Energy Advisors Draw SEC Attention;
Probe: Under review is the possible use of inside information to buy power
company stocks. GOP rival of governor requested the inquiry.

BYLINE: WALTER HAMILTON JEFFERY L. RABIN, DARYL KELLEY, TIMES STAFF WRITERS

BODY:

??The Securities and Exchange Commission has launched a preliminary inquiry
into whether energy consultants advising Gov. Gray Davis used inside 
information
to trade stocks of power companies doing business with the state, a source 
with
knowledge of the matter said Monday.

??The federal agency began its review late last week, the source said, in
response to a request from California Secretary of State Bill Jones. A
Republican rival of Davis, Jones charged that stock trading by consultants may
have violated federal laws barring buying and selling based on information not
available to the public.

??On Friday, top aides to the governor disclosed that five consultants had 
been
fired for possible conflicts of interest between their official positions and
their personal finances.

??As news of the SEC inquiry spread through the capital Monday, Davis 
officials
were confronted by a flurry of questions about who in the administration owns
energy stocks.

??Financial disclosure records filed by the governor's spokesman, Steve
Maviglio, show that he owns between $10,000 and $100,000 in a Texas company he
and his boss have accused of making "obscene" profits while California has 
been
"on its knees." Maviglio said he bought the shares in Houston-based Enron 
Corp.
in 1996.

??"It's not a crime to own energy stock," Maviglio said.

??He also owns 300 shares of San Jose-based Calpine Corp., which has the
largest share of the $43 billion in long-term state power contracts.

??Maviglio placed the order for the stock on May 31, one day after San Jose's
mayor dropped his opposition to a controversial Calpine plant favored by the
governor and others. Under the terms of Maviglio's purchase, the transaction 
was
completed about three weeks later when the stock reached $40 a share, a value 
of
$12,000. It has since fallen in value.

??"I viewed it as a good long-term investment," Maviglio said, adding that he
purchased the shares for his retirement account based on publicly available
information.

??The Davis administration has spared Calpine the kind of fierce criticisms
that it has leveled at other electricity suppliers, such as Enron. But
California's grid operator has identified the company as one of many energy
merchants to overcharge the state millions of dollars.

??The fired consultants also owned shares in Calpine, ranging in value from
several thousand dollars to more than $100,000, records show.

??Another top Davis administration official, legal affairs secretary Barry
Goode, disclosed in his economic interest statement that he recently held
between $100,000 and $1 million in another out-of-state company accused of
multimillion-dollar price gouging.

??In a statement, Goode said he sold his stock in Williams Co's. a month after
he began working for the governor in February. Goode said the shares were
supposed to be sold before he went on the state payroll, but his broker failed
to do so.

??In light of the recent disclosures, Secretary of State Jones said the
governor must do more to ensure the public that its interest comes first.

??"The governor should direct all of his staff to immediately file updated
conflict of interest statements that reflect current holdings and any activity
since their last statement of economic interest was filed," said Jones, who is
seeking the GOP nomination for governor.

??Word of the SEC's entry into California's energy problems comes as the
governor faces harsh criticism from lawmakers and others for the quick and 
broad
hiring of highly paid private consultants to guide him through the crisis.

??In his written request to the SEC, Jones said that recently filed disclosure
documents showed that at least one consultant bought and sold shares of two
energy companies within the same month, raising "a red flag" about the
possibility of insider trading.

??State law prohibits officials from participating in decisions involving 
their
personal financial interests.

??The five consultants fired last week were among 11 named in Jones' letter,
delivered to the San Francisco office of the SEC last Wednesday. It was not
clear which individuals are the focus of the SEC's inquiry, or whether the
agency's review would result in any charges.

??Two of the former traders said Monday that they had not been contacted by
federal investigators and knew nothing of an inquiry into possible insider
trading.

??But William Mead, fired Thursday, said it is no mystery why so many of his
colleagues owned Calpine stock.

??Mead said he bought it 2 1/2 years ago and made so much money he recommended
it to his colleagues last year, while they all still worked for the 
now-defunct
California Power Exchange in Alhambra. Calpine power was not traded on that
exchange, so there was no conflict of interest, he said.

??Mead and three other energy traders--hired by the state in February and
March--were terminated by the Davis administration for allegedly buying power
for the state from Calpine while owning the company's stock. Fired traders
Herman Leung, Peggy Cheng and Constantine Louie did not list the date of their
Calpine purchases on financial statements that the state required to be filed
only two weeks ago.

??"But I'm sure they bought it while they were still at the power exchange,
because that's when we discussed it," Mead said. "It was kind of like a hobby.
I'm sure it wasn't done with the intent to manipulate."

??Former trader Elaine Griffin, who also owned Calpine stock and resigned two
weeks ago to take another job, said she didn't know she owned energy 
securities
until she checked with her financial advisor July 13, just before leaving her
state job.

??Griffin said she and her husband own about $10,000 worth of Calpine stock in
individual retirement accounts managed by their advisor, who bought the stock
Feb. 1 without their knowledge, she said, after research found it to be a good
investment.

??"I kind of feel like we've been used for political reasons," Griffin said.
"We would have disclosed anything right at first, but they never asked."

??As a trader, Griffin said she occasionally bought Calpine power for the
state, but only at market prices.

??Meanwhile, two Democratic political consultants, who helped Davis polish his
image after the ongoing energy crisis caused his poll numbers to plummet, have
agreed to accept no payment for their work as part of an out-of-court 
settlement
of a taxpayer lawsuit.

??Tom Hiltachk, a lawyer for conservative anti-tax activist Lewis Uhler, said
the settlement was reached last Friday after negotiations with lawyers for
communications consultants Mark Fabiani and Chris Lehane.

??"Now they will not receive one red cent," said Hiltachk. "Very simply Mr.
Fabiani and Mr. Lehane have agreed to cease all activities for the governor, 
to
accept no payments for their services and to basically get out of the 
consulting
business with the governor."

??As his part of the agreement, Hiltachk said, Uhler withdrew his lawsuit
Monday morning.

??Uhler had filed a lawsuit against the two consultants and Controller 
Kathleen
Connell in June contending that they should not receive any payments because 
of
a conflict of interest. The two men also did consulting work for financially
troubled Southern California Edison, which was seeking help from Davis and the
Legislature.

??Connell, a former Los Angeles mayoral candidate who has been at odds with
Davis since he endorsed an opponent, had held up the payments pending the
outcome of the lawsuit.

??Under an agreement with Davis, the men were to have been paid $30,000 a 
month
for six months.

??Fabiani and Lehane could not be reached for comment.

??*

??Times staff writers Nancy Vogel and Virginia Ellis in Sacramento and Robert
J. Lopez in Los Angeles contributed to this story.

LOAD-DATE: July 31, 2001

??????????????????????????????6 of 50 DOCUMENTS

????????????????????????Copyright 2001 Salon.com, Inc.

??????????????????????????????????Salon.com

????????????????????????????July 31, 2001 Tuesday

SECTION: Feature

LENGTH: 1723 words

HEADLINE: Gray Davis' Edison problem

BYLINE: By William Bradley

HIGHLIGHT:
The governor struggles to orchestrate a multimillion-dollar bailout of the
utility that has spent big bucks on his campaign.

BODY:

??Ever since his January State of the State address, in which he dwelled on 
the
state's power crisis but neglected to mention private utilities' central role 
in
devising the deregulation scheme that caused it, California Gov. Gray Davis 
has
been searching for a way to bail out the insolvent Southern California Edison,
which has contributed more than $350,000 to Davis' campaign coffers. Now his
drive to save the battered utility, which claims nearly $4 billion in debt and
is no longer creditworthy enough to buy power, has gone into overtime, with no
solution yet in sight. An attempt to bring the California Assembly back from 
its
summer recess to vote on a new bailout bill Friday was just the latest such
effort to fall apart.

??The drive to bail out Edison, one of the biggest proposed corporate rescues
in U.S. history, remains very troubled, despite a flurry of high-level 
activity
over the past two weeks. The Aug. 15 deadline for legislative approval of some
semblance of the very sweet deal negotiated last spring by Davis looms, yet 
the
California Legislature is in recess until Aug. 20. One bill pronounced
unacceptable by Edison, backed by Senate President John Burton, the fiery San
Francisco liberal, and Sen. Byron Sher of Palo Alto, passed the Senate last 
week
before the Legislature went on recess.

??This bill would require Edison -- which lobbied through the disastrous
electric power deregulation scheme in 1996 and made billions in profits, which
were transferred to the utility's holding company, before being outmaneuvered 
by
the very firms to which it sold its power plants -- to eat more than a billion
dollars in losses. Not surprisingly, Davis and Edison preferred a more 
generous
bill by Assembly Speaker Bob Hertzberg of Los Angeles. But that bill, its fate
complicated by an even more straightforward bailout offered by another Los
Angeles Democrat, didn't make it through the Assembly.

??Hertzberg and Davis have just failed in a bid to bring the Assembly back 
into
session to pass another bailout bill, this one more generous than the 
Hertzberg
bill that stalled last week, omitting the state's acquisition of transmission
lines that would make the transaction a "buyout rather than a bailout," as the
governor's mantra went. The transmission lines are major strategic assets
affording the state more leverage over power generators, which is why their
acquisition by the state is opposed by the Bush-Cheney administration.

??The bailout is a huge priority for Davis, who has populated the top ranks of
his energy team with Edison alumni. Davis' new communications chief, former Al
Gore press secretary Chris Lehane (who had been working for an Edison bailout 
at
the same time he worked for the state, until the conflict-of-interest heat
finally got too hot), has said: "The governor and Edison have the same energy
policy" -- a striking point of view, and not at all inaccurate. But the 
original
Davis bailout plan -- negotiated, oddly, on behalf of the state by former
Southern California Edison president Michael Peevey -- received little support
beyond that of Edison and the Los Angeles Times, on whose board Edison
International chairman John Bryson, one of the principal backers of
deregulation, once sat. So Davis joined with Hertzberg for slightly tougher
versions of the original deal, only to see them languish, with only the
substantially tougher version backed by Burton, his frequent antagonist,
currently standing.

??Of the $1 million Davis raised from utilities and energy companies since he
started running for governor (he has stopped taking energy money), Edison has
provided by far the biggest chunk, over 35 percent. This is twice as much as
given by now bankrupt Pacific Gas & Electric, a larger company.

??The ties and tilt are obvious. Not only did Peevey head the
administration's negotiation with the utilities, but former Edison executive
Vikram Budhraja has a $6.2 million state contract to manage the state's $43
billion in long-term power contracts. And Davis officials were remarkably mum 
on
the woes of Edison's San Onofre nuclear power plant, one reactor of which was
offline for the first five months of the year, despite the fact that the
accident caused blackouts, raised serious questions about the company's
management and maintenance practices, and cost the state a billion dollars for
replacement power. These close ties have been pointed up by the governor's
hiring of two nationally prominent spin controllers, former top Clinton-Gore
operatives who helped Davis finally accede to the obvious and pound away at 
the
White House's dense web of connections to the energy industry. Ironically, 
their
hiring highlighted the dense web of connections between Davis and Edison.

??Lehane and Clinton damage control counsel Mark Fabiani played a major role 
in
implementing the new strategy of bashing Bush and Cheney. But the two brought 
an
enormous amount of controversy with them to their roles, both because of 
their $
30,000 monthly contract with the state and because they worked concurrently 
for
Edison. After some confusing reports several weeks ago suggesting that the duo
had dropped their work for Edison, Lehane brushed them aside and told me that,
yes, they were still working for Edison to gain a state bailout of the company
and that there was no conflict of interest there. "The governor and Edison," 
he
said, "have the same energy policy; there's no conflict in working for both."

??Finally recognizing that that comment was uncomfortably akin to another, 
more
hypothetical statement -- "The president and Enron have the same energy 
policy;
there's no conflict in working for both" -- Davis redefined his relationship
with the two.

??Davis let Fabiani go, retaining Lehane but cutting his pay by a third, and
requiring him to stop working for Edison. A seemingly fair result, though some
public interest advocates insist that state conflict-of-interest law prohibits
his employment in any event, pointing out that his work for Edison occurred
within the last year. Adding injury to insult, state controller Kathleen
Connell, a fellow Democrat who is sharply critical of Davis' handling of the
energy crisis, refuses to pay Lehane and Fabiani. ?Meanwhile, top Edison
officials said again last week that the utility will go bankrupt without a
bailout. Its parent company, Edison International, whose assets have been
shielded from the utility's woes after being boosted by transfers of billions
from the utility, just posted a big loss. Wall Street had expected a modest
profit.

??Despite the Assembly's failure to reconvene, bailout talks will continue
among an informal working group of top Davis officials, legislators, staffers
and lobbyists. Through the L.A. Times, Edison this week trumpeted its 
utility's
recently improved cash flow, which may well stave off moves by creditors to
force the utility into bankruptcy while the politicians try again to sort 
things
out.

??But the governor's close ties to Edison continue to rankle many in the
Capitol and elsewhere. Davis has long been aligned with Edison chieftain John
Bryson, who made his reputation as a pro-alternative energy Public Utilities
Commission president in the Jerry Brown administration before becoming a bete
noire to many environmentalists and renewable power advocates in his current
role.

??Consumer advocates, like deregulation opponent Harvey Rosenfield of the
Foundation for Taxpayer & Consumer Rights, oppose any bailout of the utility,
California's second largest, preferring that it join its larger cousin, 
Pacific
Gas & Electric, in bankruptcy. Rosenfield promises to mount an initiative
campaign to derail any bailout deal.

??Many legislators feel the same way, noting that the sky did not fall after
PG&E went bankrupt. Sen. Mike Machado, a conservative Central Valley Democrat,
says that bankruptcy court can do a better job of sorting out Edison's 
finances
than the Legislature. Some liberals privately disdain Edison for its role in
crafting the state's deregulation debacle. And Republican legislators are 
having
a field day sounding like consumer advocates.

??Notwithstanding the struggle over the fate of Edison, California is in 
better
shape than most feared a few months ago. Surprisingly mild weather 
(California's
hot summer has materialized in Japan, which just set a record for electric 
power
usage), coupled with increased conservation, power companies controlling
themselves to save deregulation and retain the credibility with a divided
federal government to enter lucrative new businesses, and federal restraint of
the most egregious price spikes have reduced an across-the-board calamity to a
mere multifaceted crisis.

??But Davis, who after a very slow start deserves credit for at least some of
the good news, is under fire for the huge long-term power contracts his
administration negotiated, which, after months of secrecy, turn out to be more
expensive than advertised and perpetrate a green blackout, ignoring renewable
energy in favor of fossil fuel generation. Not only do the contracts eschew
renewables, a number of them provide the actual financial underpinnings for a
new generation of fossil fuel plants, guaranteeing their profitability for the
companies developing them. A troubling result for the Democratic 
administration
of a state that by itself is the world's fifth-largest economy, especially at 
a
time when most of the rest of the world is criticizing the Republican
administration in Washington for refusing to deal with the greenhouse effect.

??Ironically, given all the furor over the Bush-Cheney energy plan, it is the
Davis plan that is actually furthering California's dependency on fossil 
fuels.
"The state's contracts are the biggest public power project in the country,"
notes Center for Energy Efficiency and Renewable Technologies director John
White, "and yet they are a festival of fossil fuel development."

??Meanwhile, there has been no federal order of refunds for the astonishing
price run-up California has experienced over the past year. With refunds, the
state could bail out Edison and perhaps PG&E as well. But two weeks of
negotiations in Washington earlier this summer between state officials and 
power
generators went nowhere. Which is precisely where the Edison bailout remains.

LOAD-DATE: July 31, 2001

??????????????????????????????7 of 50 DOCUMENTS

?????????????????Copyright 2001 The Chronicle Publishing Co.

?????????????????????????The San Francisco Chronicle

????????????????????JULY 31, 2001, TUESDAY, FINAL EDITION

SECTION: NEWS; Pg. A11

LENGTH: 849 words

HEADLINE: S.F. to vote on electric power to the people;

Measures would start public utility districts

SOURCE: Chronicle Staff Writer

BYLINE: Rachel Gordon

DATELINE: San Francisco

BODY:
After decades of trying to persuade San Francisco to take control of its
electrical system, advocates of public power now have the issue before city
voters.

???"The timing couldn't be better," said consumer advocate Medea Benjamin,
co-director of San Francisco's Global Exchange.

???"It's not just the threat of blackouts or the highest rate hikes in 
history.
It's the fact that PG&E is in bankruptcy. It's the depletion of the state
budget," she said. "This is a hell of an opportunity."

???The opportunity she is talking about centers on two November ballot 
measures
that would pave the way for creating a public power system and taking Pacific
Gas and Electric Co. out of the city's electricity market.

???Under the proposed measures, an elected board of directors would set the
rates and have control over everything from the terms for buying electricity 
to
whether to use more renewable energy sources, such as wind, hydroelectric and
solar power.

???Public power would base policies "on a more localized basis, where the
values of an individual community can be put into practice," said Ed Smeloff, 
a
longtime public power advocate who was recently hired as an assistant general
manager at the San Francisco Public Utilities Commission.

???One proposal, an initiative placed on the ballot by residents, calls for
setting up a municipal utility district in San Francisco and neighboring
Brisbane. The district would be governed by an elected board of directors.

???The other measure, placed on the ballot last week by the Board of
Supervisors, would create a municipal water and power agency and would affect
only San Francisco.

???PG&E has mounted a campaign to defeat the measures, so far pumping more 
than
$200,000 into the effort.

???"We think the (ballot proposals) are a bad idea," said Frank Gallagher,
spokesman for the Coalition for Affordable Public Services, the PG&E-financed
group fighting the measures. "They're confusing and do nothing to address the
problem."

???The company has a history of opposing public power proposals, derailing a
plan in Davis in the 1990s and using a legal challenge to stall the start of
Sacramento's Municipal Utility District for two decades.

???For years, private utilities have enjoyed a powerful hold on state and 
local
politicians. But the energy crisis has caused widespread public anger and
concern, forcing city and state officials to take another look at public 
power.

???A poll conducted this month by the Public Policy Institute of California, a
nonpartisan think tank in San Francisco, found that nearly two-thirds of
Californians support the replacement of private electric companies with
municipal power authorities formed by local governments.

???San Francisco already owns a power system, Hetch Hetchy, which provides
power for city departments. PG&E provides power to residents and businesses.

???The San Francisco Charter amendment placed on the ballot by the supervisors
calls for abolishing the city's existing Public Utilities Commission, which is
run by commissioners and a director appointed by the mayor. The proposed 
public
power board would have seven elected directors, but the agency still would
retain some ties to City Hall.

???The supervisors' plan is intended to be used as a backup to the municipal
utility district -- commonly known as a MUD -- which is considered to be more
vulnerable to the expected legal challenges from PG&E.

???"It's a great marriage, and will ensure that we get public power in San
Francisco," said Board of Supervisors President Tom Ammiano, chief sponsor of
the board's measure.

???San Francisco is not alone in looking at public power. San Diego, the first
city to feel the hard pinch of the energy crisis, wants to establish a 
regional
public power system in an attempt to pool resources and bring down energy 
costs.

???The East Bay Municipal Utility District, which provides water and sewer
service, is considering expanding its reach to power. In the Bay Area, the
cities of Alameda and Palo Alto already have public power. The two largest
public power agencies in the state serve Los Angeles and Sacramento.

???In San Francisco, the pro-public power forces are going to tout the 
promised
virtues of turning the electric utility over to a public authority that by law
cannot turn a profit. That, they contend, means lower rates.

???"It's an expectation, but it's also tried and true," said Ross Mirkarimi,
campaign director of MUD Now, the group sponsoring the ballot initiative.

???On average, consumers pay 18 percent less for power from public utilities,
he said.

???Gallagher, spokesman for the opposition campaign, said ratepayers shouldn't
assume that public power means lower energy bills. "There's no way the rates 
are
going down," he said.

???He blamed the energy crisis not on deregulation but on a shortage of
electricity, which jacked up prices and undercut reliability.

???"The measures do nothing about supply," Gallagher said. "All this will do 
is
cost people money. You can't just take PG&E's assets. You have to pay for 
them."

??E-mail Rachel Gordon at rgordon@sfchronicle.com.

LOAD-DATE: July 31, 2001

??????????????????????????????8 of 50 DOCUMENTS

?????????????????Copyright 2001 The Chronicle Publishing Co.

?????????????????????????The San Francisco Chronicle

????????????????????JULY 31, 2001, TUESDAY, FINAL EDITION

SECTION: NEWS; Pg. A1

LENGTH: 990 words

HEADLINE: Davis' top spokesman bought stock in power firm;

Adviser denies conflict of interest

SOURCE: Chronicle Sacramento Bureau

BYLINE: Lynda Gledhill

DATELINE: Sacramento

BODY:
Already on the defensive over its energy advisers' financial holdings, Gov. 
Gray
Davis' administration came under fresh attack yesterday when his chief 
spokesman
admitted buying $12,000 worth of Calpine Corp. stock last month.

???Steve Maviglio, Davis' acting director of communications, denied that his
purchase of the San Jose energy company's stock constituted a conflict of
interest. He said he would sell the stock if Davis or administration lawyers
asked him to.

???"I invested in a growing California company," Maviglio said. "It's sad when
somebody tries to link owning energy stock with a conflict of interest."

???The revelation came the same day that two high-priced consultants Davis
brought in earlier this year to help sell his energy policies to the public
agreed not to take any money for the work they have done. Davis was criticized
for hiring the two, partly because they had also worked as consultants for
Southern California Edison.

???On Friday, Davis fired five energy advisers for possible
conflict-of-interest problems after they helped negotiate state spot-market
purchases or long-term power contracts. Four of the five owned stock in 
Calpine,
and the fifth held Enron shares.

???ON THE DEFENSIVE

???Maviglio, who had the task of explaining the firings, was on the defensive
himself yesterday.

???He bought the Calpine stock in June after asking his broker to invest in it
when shares hit a certain price, he said. He said that showed he had made his
decision independently of whatever action he might have taken in the 
governor's
office on any particular day.

???Calpine's stock has dropped some in the past month. As of yesterday, the 
300
shares that Maviglio bought for $12,000 were worth about $11,100.

???Maviglio said he had spoken out against Calpine as much as other energy
companies. He also owns Enron stock that he bought in February 1996 and has
disclosed on all forms, he added.

???"I've called them pirates and gougers and lumped them in with all the rest
of the generators," Maviglio said.

???Secretary of State Bill Jones, an announced GOP opponent of Davis for
governor in 2002, said Maviglio should be fired.

???"These actions are unethical and unacceptable," said Jones, who called on
the governor's staff to release updated conflict-of-interest statements. "He 
had
the power to promote Calpine through press releases. That seems to me to be a
clear conflict of interest."

???Calpine sold the state $14 million worth of power earlier this year and has
a large share of the $43 billion in long-term contracts for electricity that 
the
state has entered into.

???Earlier this month, when he threw the ceremonial switch on a new Calpine 
plant in Pittsburg, Davis singled out the company as being more cooperative 
with
California than out-of-state suppliers that the governor has characterized as
gougers.

???IMAGE-POLISHING

???The Davis administration tried to put another energy-related controversy
behind it yesterday as the two consultants brought in by the governor to 
burnish
his image agreed to forgo more than $50,000 in work they did for the state.

???Chris Lehane and Mark Fabiani will receive no compensation and will leave
the Davis administration immediately, under a settlement in a lawsuit filed on
behalf of a national taxpayer rights group.

???Lehane and Fabiani -- nicknamed the "Masters of Disaster" for their work in
getting former President Bill Clinton out of political jams -- started in the
governor's office in May and were originally supposed to be paid $30,000 a
month.

???It was later revealed that they had also worked as consultants for Southern
California Edison, which is trying to swing a deal with the state to avoid
bankruptcy. State Controller Kathleen Connell said she would not pay the two.

???"It really raises the question in my mind, what is it about
conflict-of-interest and other ethical rules that the governor's office 
doesn't
understand?" said Lewis Uhler, president of the National Tax Limitation
Committee, which filed the lawsuit.

???In June, Davis said Fabiani was no longer a communications consultant
because his work had been "successfully implemented." Lehane, on the other 
hand,
dropped his contract with Edison and signed a new agreement with Davis.

???Lehane's new contract required him to work a maximum of 66 hours a month at
$150 an hour. His payments were to be capped at $76,000 for work from June 26 
to
Nov. 20, 2001.

???'OUTRAGEOUS EXPENSE'

???"This was an outrageous expense to taxpayers," Uhler said. "I believe there
was a clear violation of conflict-of-interest laws."

???The consultants decided it was not worth the legal fees to fight the
lawsuit, Maviglio said. The two could not be reached for comment.

???"It's shameful when people have to surrender their jobs in public service
because of a lawsuit," Maviglio said.

???Jones, who filed a complaint with the Fair Political Practices Commission
concerning the two consultants, said, "I think it's clear from recent actions 
by
the governor's office that there have been rampant violations of the state's
conflict-of-interest laws. Their attempts to mitigate the damage from these
violations is too little, too late."

???Jones said Davis should immediately require all of the consultants hired
during the energy crisis to file financial statements. There are 21 advisers
involved in power purchasing whom Davis has exempted, he said.

???All the contractors who are required to file reports have done so, said
Maviglio.

???In a related development, the Los Angeles Times quoted a source as saying
the Securities and Exchange Commission has launched a preliminary inquiry into
whether energy consultants advising Davis used inside information to trade
stocks of power companies doing business with the state.

???The federal agency began its review late last week, the source said, in
response to a request from Jones.E-mail Lynda Gledhill at
lgledhill@sfchronicle.com.

LOAD-DATE: July 31, 2001

??????????????????????????????9 of 50 DOCUMENTS

???????????????????The Associated Press State & Local Wire

The materials in the AP file were compiled by The Associated Press. ?These
materials may not be republished without the express written consent of The
Associated Press.

???????????????????????July 31, 2001, Tuesday, BC cycle

?????????????????????????????8:40 AM Eastern Time

SECTION: State and Regional

LENGTH: 317 words

HEADLINE: Will BGE split lead to Calif. power problems?

DATELINE: BALTIMORE

BODY:

??Whether Baltimore Gas and Electric can remain profitable after spinning off
its power generating and marketing efforts to create a new company is the
subject of a three-day before state regulators this week.

??Regulators are hoping to avoid the problems that followed the deregulation 
of
the electricity market in California, where skyrocketing power prices led to
blackouts and financial problems for utilities unable to pass on higher costs 
to
consumers because of rate regulations.

??The Public Service Commission will decide whether BGE, the largest utility 
in
the state, can remain profitable if it is allowed to leave Constellation 
Energy
Group Inc. later this year.

??Regulators are concerned about the utility's ability to provide electricity
to consumers at rates frozen until 2006 under last year's deregulation 
agreement.

??Constellation announced plans in October to split into two publicly traded
companies. Constellation Energy Group would become a fast-growth national 
power
producer and marketer, and BGE Corp., would be a slow-growth company that will
include the regulated utility.

??Testimony filed by the state people's counsel, which represents consumers
before the PSC, pointed to concerns about the $2.4 billion in debt BGE will
carry after the split.

??A consultant to the people's counsel warned that such a high debt level 
could
make it difficult for the utility to handle unexpected problems such as severe
ice storms, hurricanes or spikes in the price of electricity.

??Constellation has submitted extensive confidential information to the PSC
about the separation, but it is still unclear what could happen if the
commission seeks to alter or block the plan.

??Although Constellation has fully cooperated with the PSC, company officials
maintain that the state has no authority over the transaction.

??The hearing, which begins Monday, runs through Wednesday.

LOAD-DATE: July 31, 2001

??????????????????????????????10 of 50 DOCUMENTS

???????????????????The Associated Press State & Local Wire

The materials in the AP file were compiled by The Associated Press. ?These
materials may not be republished without the express written consent of The
Associated Press.

???????????????????????July 31, 2001, Tuesday, BC cycle

?????????????????????????????7:17 AM Eastern Time

SECTION: State and Regional

LENGTH: 651 words

HEADLINE: Davis press secretary confirms buying energy company stock

BYLINE: By ALEXA HAUSSLER, Associated Press Writer

DATELINE: SACRAMENTO, Calif.

BODY:

??Gov. Gray Davis' press secretary recently purchased the same energy stock as
five consultants the governor fired last week, he disclosed Monday.

??Steve Maviglio confirmed that on June 20, he bought 300 shares of stock in
Calpine Corp., a San Jose-based power generator that has received about $13
billion in state contracts to supply electricity for up to 20 years.

??Maviglio's disclosure comes after Davis' office hastily ended the contracts
of five consultants who helped negotiate state power contracts and held stock 
in
energy companies.

??In a related development, an anonymous source told the Los Angeles Times on
Monday that the Securities and Exchange Commission has launched a preliminary
inquiry into whether the consultants used inside information to trade the 
energy
stocks.

??About two dozen Davis energy consultants were required to fill out financial
disclosure statements after complaints of conflict of interest by Republicans
and consumer groups.

??"When we reviewed them, we found possible violations of the law and took
swift action," Maviglio said Monday before Secretary of State Bill Jones 
issued
a press release calling for his termination.

??Jones, a Republican, is a candidate for the GOP nomination to challenge 
Davis
in November 2002.

??Maviglio defended his purchase, saying that he "owns several stocks in
companies in all fields that are growing and are based in California."

??Maviglio said Monday that he requested on May 31 to purchase the stock if it
dipped to $40 a share, which it did two days after a June 18 ruling by federal
energy regulators restricting wholesale electricity prices in California and 
10
other states.

??Maviglio served as Davis' chief spokesman urging the Federal Energy
Regulatory Commission to impose price ceilings on electricity wholesalers.

??He also said he owns between $10,000 and $100,000 stock in Houston-based
Enron Corp. He said he purchased the stock in 1997 and has reported it on
financial disclosure forms. He said that it is "closer to $10,000."

??Meanwhile, two energy consultants to Davis have agreed to forgo more than $
50,000 in work they did for the state.

??Chris Lehane and Mark Fabiani will forgo the payments as part of a 
settlement
with a Sacramento-area resident who filed a lawsuit objecting to their hiring,
calling it a conflict of interest.

??Fabiani could not be reached for comment Monday. In the settlement, they
admitted no wrongdoing.

??Lehane issued a statement through the governor's office, calling it "simply
not worth the bother to challenge the controller in court."

??Davis has come under fire for his May hiring of Lehane, former press
secretary for Vice President Al Gore, and Fabiani, a deputy campaign manager 
for
Gore's presidential run.

??They were hired to help shape Davis' response to the energy crisis, and
helped craft Davis' aggressive attack on Texas-based energy companies and
President Bush.

??Both also have advised Southern California Edison, which is negotiating for
state help in avoiding bankruptcy. Financial disclosure forms showed they have
each received at least $10,000 from Edison in the past year.

??Davis announced at the end of June that Fabiani terminated his contract, and
Davis scaled back Lehane's role with the state.

??State Controller Kathleen Connell then said she would not pay Lehane and
Fabiani for any of their work and now the two have agreed they will not fight
her decision, Maviglio said.

??Lewis K. Uhler, the Placer County man who filed the lawsuit, said the
settlement "accomplished our objectives."

??"We wanted to block the egregious use of taxpayer funds for essentially
political spinmeisters," he said. Uhler is president of the Roseville-based
National Tax Limitation Committee.

??Maviglio said that Fabiani and Lehane "did good work for the state" and
helped the state win victories with federal regulators.

LOAD-DATE: July 31, 2001

??????????????????????????????12 of 50 DOCUMENTS

???????????????????????Copyright 2001 Associated Press

??????????????????????????????????AP Online

????????????????????????????July 30, 2001; Monday

SECTION: Domestic, non-Washington, general news item

LENGTH: 365 words

HEADLINE: ?Calif. Sees $4B Less in Power Refunds

BYLINE: KAREN GAUDETTE


DATELINE: SAN FRANCISCO

BODY:

???California will receive refunds for overpriced electricity, but not as much
as it had asked for.

??A closer reading of last week's order from federal energy regulators shows
the amount the state will receive could be slashed to just under $4 billion 
less
than half what the state requested.

??Gov. Gray Davis plans to appeal the Federal Energy Regulatory Commission
decision Monday, state officials said. Refunds could help prevent the state 
from
raising electric rates to cover its power buying costs, which are now beyond 
$8
billion.

??''We found a number of disturbing things that lead us to believe FERC may 
not
be so pro-refund as they want Californians to believe,'' said Nancy McFadden, 
an
adviser to Davis.

??For months, Davis and other state officials have asked the commission to 
rule
electricity prices charged since May 2000 to be unjust and unreasonable prices
which climbed 10 times higher than past years.

??The state stands to lose a portion of the billions it has spent buying
electricity for Pacific Gas and Electric Co. customers and two other 
financially
ailing utilities. Power companies maintain they did not work together to drive
up power prices to unreasonable levels.

??The commission's 40-page decision confirms it will only order refunds for
power bought since October 2000, rather than May 2000. That means $2 billion
less than the state, utilities and others could hope to receive, McFadden 
said.

??In addition, the commission also said it will not issue refunds for power 
the
state Department of Water Resources bought directly from power companies. FERC
only will recognize purchases through the state's now-defunct power market or
from the manager of the state's power grid.

??That stripped another $3 billion off the potential refund amount, reducing
the refund by a total of $5 billion. State officials had hoped to receive up 
to
$9 billion in refunds.

??A call to FERC for comment was not immediately returned Sunday.

??The commission has ordered an evidentiary hearing, to be completed within 60
days, to determine the size of the refund from providers of wholesale power.


??___


??On the Net:

??http://www.ferc.gov
 
??http://www.water.ca.gov
 
LOAD-DATE: July 30, 2001

??????????????????????????????13 of 50 DOCUMENTS

???????????????????????Copyright 2001 Associated Press

??????????????????????????????????AP Online

????????????????????????????July 30, 2001; Monday

SECTION: Domestic, non-Washington, general news item

LENGTH: 263 words

HEADLINE: ?Texas Inches Toward Power Deregulation 

BYLINE: NATALIE GOTT


DATELINE: AUSTIN, Texas

BODY:

???After several delays, the entrance of Texas into the deregulated 
electricity
market is set to begin Tuesday.

??Under a pilot program, officials of the state's electrical grid will begin
switching some customers to new power providers at 12:01 a.m. Tuesday.

??The Legislature created the pilot program to give power companies several
months to test their systems before full-scale deregulation, which is 
scheduled
to begin Jan. 1 in most of the state.

??Industry officials have promised that deregulation will be smoother in Texas
than in California, where it has been blamed for rolling blackouts and
skyrocketing utility rates. They say the recent construction of several new
power plants in Texas will help the state avoid supply shortfalls that have
plagued California. 

??The Electric Reliability Council of Texas, which manages the state's grid,
gave the go-ahead for the pilot program last week.

??Deregulation allows customers to choose their power provider much like they
select a long-distance telephone carrier. Under the Texas pilot program, up 
to 5
percent of electric customers can switch power companies.

??The pilot program is getting under way nearly two months after its first
scheduled start date of June 1. Numerous delays were caused by computer
problems.

??While the delays were unfortunate, ''we think waiting until all the systems
are ready will let us provide good customer service,'' said Eleanor Scott,
spokeswoman for Austin-based Green Mountain Energy.


??___


??On the Net:

??Electric Reliability Council of Texas: http://www.ercot.com
 
LOAD-DATE: July 30, 2001

??????????????????????????????14 of 50 DOCUMENTS

???????????????????The Associated Press State & Local Wire

The materials in the AP file were compiled by The Associated Press. ?These
materials may not be republished without the express written consent of The
Associated Press.

???????????????????????July 30, 2001, Monday, BC cycle

SECTION: State and Regional

LENGTH: 471 words

HEADLINE: Federal order limits potential state refunds by $3 billion

BYLINE: By KAREN GAUDETTE, Associated Press Writer

DATELINE: SAN FRANCISCO

BODY:

??California will receive refunds for overpriced electricity, but not as much
as it had asked for.

??A closer reading of last week's order from federal energy regulators shows
the amount the state will receive could be slashed to just under $4 billion -
less than half of what the state requested.

??Gov. Gray Davis plans to appeal the Federal Energy Regulatory Commission
decision Monday, state officials said Sunday afternoon. Refunds could help
prevent the state from raising electric rates to cover its power buying costs,
which are now beyond $8 billion.

??"We found a number of disturbing things that lead us to believe FERC may not
be so pro-refund as they want Californians to believe," said Nancy McFadden, 
an
adviser to Davis.

??For months, Davis and other state officials have asked the FERC to find
electricity prices charged since May 2000 to be unjust and unreasonable - 
prices
which climbed 10 times higher than past years.

??The state stands to lose a portion of the billions it has spent buying
electricity for Pacific Gas and Electric Co. customers and two other 
financially
ailing utilities. Power companies maintain they did not work together to drive
up power prices to unreasonable levels.

??The FERC's 40-page decision confirms the commission will only order refunds
for power bought since October 2000, rather than May 2000. That means $2 
billion
less than the state, utilities and others could hope to receive, McFadden 
said.

??In addition, the FERC also said it will not issue refunds for power the 
state
Department of Water Resources bought directly from power companies. FERC only
will recognize purchases through the state's now-defunct power market or from
the manager of the state's power grid.

??That stripped another $3 billion off the potential refund amount, reducing
the refund by a total of $5 billion.

??The DWR bought most of its megawatts directly from power companies after a
FERC ruling in December abolished the Power Exchange, the state's key entity
that bought and sold power. The Independent System Operator, keeper of the
state's grid, then began adding a surcharge on big purchases, McFadden said.

??All told, the most the state could expect to get back would be roughly $3.9
billion, said Barry Goode, a legal secretary to Davis. And despite the
overcharges, some of that money has to pay power companies for past power
deliveries at a price FERC determines is just and reasonable.

??State officials had hoped to receive up to $9 billion in refunds.

??A call to FERC for comment was not immediately returned Sunday afternoon.

??The FERC has ordered an evidentiary hearing, to be completed within 60 days,
to determine the size of the refund from providers of wholesale power.

??---

??On the Net:

??http://www.ferc.gov
 
??http://www.water.ca.gov
 
LOAD-DATE: July 31, 2001

??????????????????????????????15 of 50 DOCUMENTS

???????????????????The Associated Press State & Local Wire

The materials in the AP file were compiled by The Associated Press. ?These
materials may not be republished without the express written consent of The
Associated Press.

???????????????????????July 30, 2001, Monday, BC cycle

SECTION: State and Regional

LENGTH: 539 words

HEADLINE: Developments in California's energy crisis

BYLINE: By The Associated Press

BODY:

??Developments in California's energy crisis:

??MONDAY:

??- After several delays, the entrance of Texas into the deregulated 
electricity market is set to begin Tuesday. Under a pilot program, officials 
of
the state's electrical grid will begin switching some customers to new power
providers at 12:01 a.m. Tuesday.

??- The third largest bankruptcy in U.S. history is also becoming the most
complex. As Pacific Gas and Electric Co. wades through its pile of debts, many
of the legal and financial teams representing the utility and its creditors
often run into conflicts of interest.

??- The state has been joined by natural gas industry players in accusing
Houston-based El Paso Corp. of restricting the flow of natural gas into
California to drive up its price and ultimately the cost to ratepayers. The 
gas
shippers that lease the pipeline space now also say El Paso is to blame for
soaring California energy prices. Those accusations came following a federal
regulatory hearing in May, the San Francisco Chronicle reported Sunday.

??- California will receive refunds for overpriced electricity, but not as 
much
as it had asked for. A closer reading of last week's order from federal energy
regulators shows the amount the state will receive could be slashed to just
under $4 billion - less than half of what the state requested.

??SUNDAY:

??- Gov. Gray Davis plans to appeal the Federal Energy Regulatory Commission
decision, state officials say. Refunds could help prevent the state from 
raising
electric rates to cover its power buying costs, which are now beyond $8 
billion.

??WHAT'S NEXT:

??- The deadline for the Legislature to approve Davis' rescue deal for 
Southern
California Edison is Aug. 15.

??THE PROBLEM:

??High demand, high wholesale energy costs, transmission glitches and a tight
supply worsened by scarce hydroelectric power in the Northwest and maintenance
at aging California power plants are all factors in California's electricity 
crisis.

??Southern California Edison and Pacific Gas and Electric say they've lost
nearly $14 billion since June 2000 to high wholesale prices the state's
electricity deregulation law bars them from passing on to consumers. PG&E,
saying it hasn't received the help it needs from regulators or state 
lawmakers,
filed for federal bankruptcy protection April 6. Electricity and natural gas
suppliers, scared off by the companies' poor credit ratings, are refusing to
sell to them, leading the state in January to start buying power for the
utilities' nearly 9 million residential and business customers. The state is
also buying power for a third investor-owned utility, San Diego Gas & 
Electric,
which is in better financial shape than much larger Edison and PG&E but is 
also
struggling with high wholesale power costs.

??The Public Utilities Commission has approved average rate increases of 37
percent for the heaviest residential customers and 38 percent for commercial
customers, and hikes of up to 49 percent for industrial customers and 15 
percent
or 20 percent for agricultural customers to help finance the state's
multibillion-dollar power buys.

??---

??On the Net:

??Track the state's blackout warnings on the Web at
www.caiso.com/SystemStatus.html.

LOAD-DATE: July 31, 2001