Please see the following articles:

Sac Bee, Wed, 7/11: Mediator talked of a bigger refund: He reportedly
suggested a $4.5 billion deal midway through the failed talks

Sac Bee, Wed, 7/11: Davis repeats threat to sue FERC to get full refund

Sac Bee, Wed, 7/11: Dan Walters: Davis plays in a virtual world while the 
energy reality continues 

Sac Bee, Wed, 7/11: Energy Digest: Ratepayer panel shot down again

Sac Bee, Wed, 7/11: Missing megawatts: Conservation saving state from 
blackouts (Editorial)

SD Union, Wed, 7/11: Governor tells FERC to be fair and then some

SD Union, Wed, 7/11: Calpine says deal with state close on alleged overcharges

SD Union, Wed, 7/11: Judge refuses to let ratepayers form official committee 
in utility
bankruptcy case

LA Times, Wed, 7/11: Judge Bars Ratepayers Panel From PG&E Case

SF Chron, Wed, 7/11: Developments in California's energy crisis

SF Chron, Wed, 7/11: Enron Corp. sues to block Senate from forcing document 
release

SF Chron, Wed, 7/11: Governor threatens to sue utilities for refunds 
Davis says California won't settle for $1 billion

SF Chron, Wed, 7/11: News briefs on the California power crisis

Mercury News, Wed, 7/11: White House bends under energy conservation pressure 

Mercury News, Wed, 7/11: Davis ups the voltage  (Editorial)

OC Register, Wed, 7/11: Lights go out on Davis' power show   (Commentary)

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Mediator talked of a bigger refund: He reportedly suggested a $4.5 billion 
deal midway through the failed talks.
By David Whitney
Bee Washington Bureau
(Published July 11, 2001) 
WASHINGTON -- Midway through the negotiations between California and power 
sellers to settle the myriad issues arising out of the state's energy crisis, 
the mediator told California's negotiating team that he thought a deal worth 
more than $4.5 billion would be appropriate -- a much higher figure than he 
suggested after the talks ended Monday. 
Whether the statement by Curtis Wagner, the chief administrative law judge 
for the Federal Energy Regulatory Commission, was a negotiating ploy or a 
reflection of his evolving beliefs is not clear. 
Before the settlement talks began two weeks earlier, Wagner said he thought 
Gov. Gray Davis' demand for $8.9 billion in refunds was too high and that a 
settlement probably would be in the range of $2 billion to $2.5 billion. 
The disclosure that Wagner had contemplated a much higher figure midway 
through the negotiations suggests the state had more support than the judge 
let on Monday when he said after the talks foundered that he thought a deal 
should involve "hundreds of millions, maybe a billion" dollars. 
While the state wants $8.9 billion, $3 billion of that was for overcharges 
during the five months preceding last October and are beyond FERC's scope of 
review. Even as a starting point then, the $4.5 billion mentioned by Wagner 
represented 75 percent of the money the state was demanding for alleged price 
gouging between October and May. 
The judge's $4.5 billion figure, divided between cash payments and savings 
from long-term power contracts, was confirmed by three sources who asked to 
be identified only as "close to the negotiations" because participants had 
been required to sign confidentiality statements. 
The sources gave virtually identical accounts of a July 2 meeting with Wagner 
in which the judge also dismissed as "inadequate" a $670 million settlement 
offer made by power generators and marketers. 
By Monday, the settlement offer had risen to $716 million. But the state 
refused to back off its $8.9 billion demand, and there never was any serious 
back-and-forth negotiations during the 15-day period the regulatory 
commission had given Wagner to craft a deal. 
As a consequence of the failed talks, Wagner said Monday that within a week 
he will send the five-member commission his recommendations on how it might 
approach an order refunding power overcharges. 
Among Wagner's suggestions is that the commission convene a hearing before a 
different administrative judge to take testimony from generators, marketers 
and the state on how to arrive at a fair settlement. 
The options sketchily outlined by Wagner on Monday included limiting the time 
when refunds are allowed -- something that could reduce state claims by about 
one-third -- and changing the way power plant costs are calculated to a 
formula more favored by generators. 
It is not clear whether Wagner, who moved from one negotiating team to 
another during his two-week quest for a deal, ever raised the $4.5 billion 
settlement figure to the power marketers and generators. 
Joel Newton, who represented Dynegy Power, Duke Energy, Reliant Energy, 
Williams-AES and Mirant in the talks, said Tuesday he was bound by the 
confidentiality pledge to keep silent on the internal negotiations. 
Wagner also is refusing all media calls. 
According to the account of the negotiations confirmed by sources Tuesday, 
Wagner was angry at the snail's pace of progress after the first week of the 
talks. 
On Friday, June 29, Wagner called everyone into his hearing room and scolded 
them. He condemned the California team, saying they all ought to wear "clown 
suits" because they were "in the pocket" of Davis and refused to show any 
independence. 
He then turned to the generators and said that after a week of talks, nothing 
had been heard from them. He told them he wanted them to produce "real 
numbers, and hard numbers" over the weekend and that if they didn't, he would 
-- "and you're not going to like it." 
Wagner's admonition apparently moved no one toward a deal. On Monday, in the 
meeting with the California delegation, one source quoted Wagner as saying 
the settlement number he received from the generators and marketers "is so 
low I can't even present it to you." 
"I'm not happy with the figures, they're not adequate," others quoted the 
judge as saying. 
At that point, the sources said, Wagner said he was thinking of a settlement 
of $2.5 billion in cash, $2 billion in long-term contract savings and other 
money from out-of-state investor-owned utilities and even the federal 
Bonneville Power Administration, which markets power from dams in the 
Northwest. 
But as the clock wound down on the negotiations, nothing much happened until 
Friday and Saturday, when the California team met with the five largest power 
generators. 
It was at those meetings that the generators offered $510 million in refunds 
to settle their disputes with the state. But the money would have gone to 
reduce the tab for what they were owed by the state and California utilities, 
and it was loaded with conditions, including the state dropping all of its 
investigations and lawsuits. 
Wagner declared the talks over Monday, saying he was unable to bring the 
parties together. 

The Bee's David Whitney can be reached at (202) 383-0004 or 
dwhitney@mcclatchydc.com.



Davis repeats threat to sue FERC to get full refund 
By Emily Bazar
Bee Capitol Bureau 
(Published July 11, 2001) 
Gov. Gray Davis shot words of caution at federal regulators Tuesday, warning 
that he will sue them if they order power companies to refund anything less 
than the $8.9 billion he and other state officials have demanded. 
The Democratic governor also lobbed threats at state legislators, suggesting 
that he may call a special session to prevent them from embarking upon a 
monthlong summer break next week. 
Instead of vacationing, Davis said, lawmakers must work to approve an 
agreement between the state and Southern California Edison that would save 
the utility from bankruptcy. 
Though the governor has indicated previously that the state may take the 
Federal Energy Regulatory Commission to court, his announcement Tuesday made 
it clear he intends to follow through. 
Settlement talks with power generators to determine how much, if any, the 
companies overcharged California for electricity concluded Monday with no 
resolution. 
Now, the decision rests with the FERC's governing board, and Davis said the 
state won't back away from the $8.9 billion figure it demanded during talks. 
"You order what you think is fair," Davis said during a news conference with 
the state's top negotiators. "We'll take what you order, and we'll see you in 
court." 
Davis acknowledged that a legal battle could drag out for months or years. 
He added that he believes the disagreement -- or even a protracted court 
battle -- will not affect a tentative agreement between the state and Edison. 
Under terms of the deal, money to pay off the utility's debt would come from 
a state purchase of its transmission lines and from a portion of consumers' 
electricity rates. 
According to the agreement, the Legislature must approve the deal by Aug. 15, 
and Davis said he intends to hold lawmakers to that date. 
Davis said the deadline is important because creditor committees will 
scrutinize the Legislature's every move to determine whether to force Edison 
into bankruptcy court rather than await a political deal. 
Legislators are scheduled to leave for summer recess July 20 and return Aug. 
20. 
Davis threatened to use his executive powers to force lawmakers to remain in 
Sacramento and work on the Edison agreement, if necessary. 

The Bee's Emily Bazar can be reached at (916) 326-5540 or ebazar@sacbee.com.





Dan Walters: Davis plays in a virtual world while the energy reality continues


(Published July 11, 2001) 
California still has a very real and very severe energy crisis, to wit: 
The state is still running up massive debts as it pays more for power than it 
can recover from ratepayers and is having trouble borrowing billions of 
dollars to cover the debt. 
There is a strong possibility, perhaps a probability, that when summer's heat 
truly descends, there will be severe power blackouts as air conditioners 
demand more juice than California can generate or buy. 
One major utility, Pacific Gas and Electric, has filed for bankruptcy 
protection and a second, Southern California Edison, is on the brink of 
joining it. 
There is, however, a virtual energy crisis consisting of political spin, 
media leaks and made-for-television buzz words -- and it is rapidly becoming 
dominant, while the real situation fades into the background. 
This week's comic opera proceedings before a Federal Energy Regulatory 
Commission administrative judge in Washington had little to do with reality 
and everything to do with the virtual version. 
Gov. Gray Davis and other officials demanded $8.9 billion in refunds from the 
generators and brokers who have been selling California power for the past 
year, alleging that California is, in Davis' words, "being gouged and ripped 
off." But the number itself was more or less plucked out of thin air -- an 
arithmetic exercise by the state power grid's traffic controller not intended 
for a refund proceeding. And while Judge Curtis Wagner saw it as unrealistic, 
Davis and other state officials insisted on its validity. 
"There are refunds due that total hundreds of millions of dollars and maybe a 
billion dollars," Wagner said as a final negotiating session collapsed. But 
that's a far cry from the $8.9 billion that Davis insists is due. "If you 
think California is going to settle for $1 billion in refunds, we will see 
you in court," Davis said Tuesday. 
Why is Davis being so belligerent? Because it's good politics. Ever since he 
began berating out-of-state generators and accusing them of ripping off 
California, Davis' approval ratings have been climbing. If he settled for 
substantially less -- the power generators probably would agree to a couple 
of billion dollars to rid themselves of the matter -- Davis would be 
embarrassed. Politically, he's served by continuing to portray himself as 
fighting for California and against the out-of-state generators. 
That it's more political construct than reality is indicated by another event 
this week, Davis' release of state power purchase data from early in the year 
-- numbers that were made public only because a judge told him he had to do 
it. 
Davis and his minions have been accusing Texas-based generators and power 
brokers of particularly egregious price gouging -- clearly playing on 
Californians' instinctive mistrust of anything Texan and implying that Texan 
George W. Bush is a co-conspirator. But the power purchase records -- which 
were released only to journalists willing to pay a stiff fee -- indicate that 
less than 10 percent of California's power purchase dollars were going to 
Texas and the private sellers, in general, charged the state less than such 
publicly owned utilities as the Los Angeles Department of Water and Power. 
The clearly adverse position being taken by FERC and the purchase data that 
undercut his jingoistic sloganeering are not, however, deterring Davis from 
continuing to operate, at least for public consumption, in the melodramatic 
virtual world. 
One cannot, however, ignore reality forever. The likelihood of a 
pro-generator decision from FERC means that there will be no easy out for 
Davis, or for his pending deal to prevent Southern California Edison from 
slipping into bankruptcy court. The Legislature has refused to act on the 
Edison rescue plan while it awaited an indication of whether the utility's 
debts would be slimmed down by FERC. 
This week's farcical events make it more likely that the Edison deal will 
stall out permanently in the Legislature and its creditors will force the 
utility into bankruptcy court later this summer. That's part of that nasty 
old reality that cannot simply be wished away. 

The Bee's Dan Walters can be reached at (916) 321-1195 or dwalters@sacbee.com
.




Energy Digest: Ratepayer panel shot down again


(Published July 11, 2001) 
SAN FRANCISCO -- U.S. Bankruptcy Judge Dennis Montali on Tuesday reaffirmed 
his earlier decision to disband a ratepayers committee that would have given 
consumers an official voice in the Pacific Gas and Electric Co. bankruptcy 
case. 
The judge said bankruptcy court isn't the right forum for refunding rates or 
settling potential future claims. 
He eliminated erroneous statements from the opinion he originally issued 
seven weeks ago. U.S. bankruptcy trustee Linda Ekstrom Stanley, who had moved 
for reconsideration, called the new version "a very careful decision" but did 
not rule out an appeal. 
Stanley on May 4 appointed an official committee of ratepayers to represent 
PG&E customers, saying they might be forced to pay for the utility's massive 
losses. 
--Claire Cooper







Missing megawatts: Conservation saving state from blackouts


(Published July 11, 2001) 

A public that doesn't believe that California's electricity crisis is genuine 
is nonetheless acting as if it is. Experts are revising down scary 
predictions of rolling blackout after rolling blackout as Californians have 
opted to conserve rather than consume. 
During June, Californians cut back on electricity use by roughly 4,750 
megawatts when it mattered the most, on hot afternoons. Those decisions 
shaved about 12 percent from the expected demand. That's equivalent to the 
output of nine or 10 medium-size power plants. Last June, grid operators had 
to call six shortage alerts. This June, which was hotter, they called none. 
For a state that's been derided as selfish and wasteful, that's nothing short 
of amazing. 
Some of what Californians are doing now to conserve isn't likely to become 
habit in the long run. Businesses may want to turn back on all the banks of 
lights. Homeowners may decide that 82 degrees is the right temperature when 
power is short but too warm when California's supply emergency is over. 
Yet there's a huge potential payoff into the future if some of these changes 
become permanent. It's encouraging that the most effective forms of 
conservation -- switching to more energy-efficient appliances or 
manufacturing techniques -- have yet to be implemented on a large scale. 
Subsidies for these programs have yet to translate into changes in businesses 
and in homes that will lower demand even further. 
For a while this spring, some attempted to diminish the role of conservation. 
Conservation is a "personal virtue," said Vice President Dick Cheney. But 
Californians know it's become both a personal and public necessity. The 
public may have thought the electricity shortage was an illusion, but 
everyone knew that the higher electricity bills that began arriving in June 
were real. And so was the risk that the lights would go out on hot days. 
Yes, the state needs more supply to catch up with the growth in demand. Yet 
long after the crisis is over, there will be plenty of potential on the 
efficiency side of the equation as well, to protect the quality of life and 
reduce the high electricity costs that will likely plague the state for years.












Governor tells FERC to be fair and then some 






Davis firm on demand for $8.9 billion refund
By Ed Mendel 
UNION-TRIBUNE STAFF WRITER 
July 11, 2001 
SACRAMENTO -- Gov. Gray Davis had a tough message for federal regulators 
yesterday after the failure of settlement talks in California's bid to get an 
$8.9 billion refund from electricity suppliers: "See you in court." 
The governor said California will seek a full $8.9 billion refund for 
electricity overcharges, even if federal regulators award the maximum refund 
of $5.4 billion allowed under their guidelines. 
"Our message is just order what you are going to order," Davis said of the 
Federal Energy Regulatory Commission. "We believe you should order $8.9 
billion. But you order what you think is fair. We will take what you order, 
then we will see you in court." 
Davis, joined by his negotiating team, made the remarks at a news conference 
a day after two weeks of closed-door talks with suppliers in Washington 
failed to reach an agreement. 
An administrative law judge made a recommendation to the regulatory 
commission that Davis' top negotiator, Michael Kahn, chairman of the 
California Independent System Operator, expects to result in a refund of more 
than $1 billion. 
Davis said that a revealing decision will be made by the commission, which he 
hopes has embarked on a "new path" with the appointment by President Bush of 
two new members, Pat Wood of Texas and Nora Brownell of Pennsylvania. 
"Are they on the side of consumers, as the federal power act envisions them 
being," Davis asked, "or are they just there to do the industry's bidding, as 
they have so often in the past?" 
Kahn said rules adopted by FERC cut off the refund period at last October, 
trimming $3 billion from the $8.9 billion overcharge claimed by California 
dating to May 2000. 
He said FERC has no jurisdiction over municipal utilities, such as the Los 
Angeles Department of Water and Power, that sold power to the state. The 
municipal districts overcharged the state by about $600 million, according to 
Kahn. 
As a result, he said, the maximum refund that FERC could order for California 
is about $5.4 billion. 
"We made it clear to everyone that if we did not settle for $8.9 billion, we 
would seek redress in court for the remainder of the money above $5.4 
billion," Kahn said. 
Calpine of San Jose and several other generators have expressed interest in 
the state's offer to negotiate one-on-one with the state while the federal 
regulators consider their decision, Kahn said.






Calpine says deal with state close on alleged overcharges 






By Don Thompson
ASSOCIATED PRESS 
July 10, 2001 
SACRAMENTO ) Calpine Corp. said Tuesday it is near agreement with California 
officials over money the state says the company overcharged for electricity. 
That would make it the first company to settle a part of the $8.9 billion the 
state wants in negotiations before the Federal Energy Regulatory Commission. 
However, San Jose-based Calpine has offered far less than the $236 million 
the state claims it is owed. 
"We obviously disagree with that number, because we disagree with some of the 
assumptions" used for the estimate, said Calpine spokesman Bill Highlander. 
"We don't think it's anywhere near that. We think it's a low number." 
He wouldn't specify the company's counteroffer, but noted new FERC figures 
showing the company did $29 million in business with the state in the first 
five months of this year. 
The California Independent System Operator estimated the company owed more in 
overcharges than it had in total sales for the period from May 2000 to May 
2001, a financial impossibility, Highlander said. 
The ISO essentially multiplied what Calpine was able to produce by the amount 
it charged for electricity, Highlander said, without taking into account how 
much electricity the company actually sold. 
ISO spokesman Michael Bustamante defended the projections by the state's grid 
operator, estimates he said were validated during two weeks of FERC 
negotiations that ended Monday. The ISO took the methodology adopted by the 
federal regulator in a June 19 order capping electricity rates, then worked 
backward to May 2000 to reach its estimate, Bustamante said. 
Generators and state negotiators were unable to reach a settlement during the 
two weeks of talks overseen by FERC chief administrative law judge Curtis L. 
Wagner, leaving Wagner to make his own recommendation to the commission. 
Wagner said Monday the state may be owed perhaps $1 billion in overcharges, 
but said that could be offset by money the generators are owed for the power 
they sold into the state. 
California officials believe generators owe about $4 billion in refunds using 
the June 19 order that Wagner adopted as his benchmark, even given Wagner's 
determination that the commission can only consider overcharges after Oct. 2. 
At one point during negotiations, Wagner told California officials he thought 
an appropriate settlement should top $4.5 billion, according to one 
negotiator who spoke on condition he not be named. Wagner suggested 
generators could pay $2.5 billion in cash and $2 billion in long-term 
electricity contracts at cheaper rates, the source said. 
That was very different from the $670 million in refunds Wagner privately 
said generators were offering. For instance, the source said, while Reliant 
Energy on Monday offered $50 million in refunds, California believes 
Reliant's share of overcharges is closer to $1 billion. 
Jan Smutny-Jones, executive director of the Independent Energy Producers, 
applauded the possibility that some generators will settle with the state 
without waiting for a FERC decision and likely protracted court battle. 
"We need to solve this problem and move on," Smutny-Jones said. 
??
)
Associated Press writer Mark Sherman contributed to this story from 
Washington, D.C. 












Judge refuses to let ratepayers form official committee in utility bankruptcy 
case 






ASSOCIATED PRESS 
July 10, 2001 
SAN FRANCISCO ) The federal judge overseeing Pacific Gas and Electric Co.'s 
bankruptcy case ruled Tuesday the utility's ratepayers cannot form an 
official committee to represent their interests. 
Ratepayer advocates had sought such recognition to ensure the utility would 
not raise rates further as a way of paying off its debts. 
But U.S. Bankruptcy Judge Dennis Montali agreed with PG&E and the official 
creditors committee and rejected the idea for the second time in two months. 
Montali suggested instead that ratepayers organize an informal committee to 
bring their concerns to the court, and said the ratepayers also could bring 
matters before the state Public Utilities Commission. 
A separate committee of ratepayers would have been able to vote on the final 
reorganization of the company, a plan that could affect power service and 
rates. 
PG&E filed for Chapter 11 bankruptcy April 6, and owes billions of dollars to 
more than 50,000 creditors. It was brought down, in part, by California's 
botched experiment with deregulation. 









Judge Bars Ratepayers Panel From PG&E Case
Power: Customers are not creditors in the utility's bankruptcy, ruling says. 
Action does not preclude refunds for consumers.
TIM REITERMAN
TIMES STAFF WRITER

July 11 2001

SAN FRANCISCO -- A federal judge Tuesday reaffirmed his decision to bar a 
ratepayers committee from Pacific Gas & Electric Co.'s bankruptcy case and 
denounced the committee's attorney for suggesting that the action could 
prevent PG&E customers from receiving refunds for excessive energy charges.

Judge Dennis Montali ruled against a U.S. trustee and the ratepayers 
committee in deciding that ratepayers as a group had no claims and were not 
creditors when PG&E filed for bankruptcy on April 6.

But Montali criticized "misguided remarks" by a committee attorney on July 5 
and news media accounts that followed the hearing. The judge said the reports 
left the misconception that by disallowing a ratepayers committee, he would 
reject all claims of ratepayers and they could lose out on future refunds.

The judge and PG&E officials emphasized that there are no matters involving 
PG&E customer refunds before the state Public Utilities Commission.

State officials are seeking about $9 billion in refunds, however, from the 
Federal Energy Regulatory Commission for alleged overcharges to Californians 
by energy companies since last year.

The distribution of any ratepayer refunds would be decided by the PUC, and 
customers would be paid whether or not they filed Bankruptcy Court claims by 
a Sept. 5 deadline, the judge and PG&E attorneys said.

The judge took the highly unusual step of directing PG&E and U.S. Trustee 
Linda Ekstrom Stanley to consider remedies to allay any confusion among 
PG&E's 5.5 million customers.

He suggested publishing clarifications in newspapers that carried the 
erroneous information, in PG&E customer bills and on Web sites.

Stanley had formed a ratepayers committee of business, government and 
consumer representatives, saying they will be affected by PG&E's Chapter 11 
reorganization.

But Montali decided that ratepayers do not qualify as creditors under 
bankruptcy law and are not entitled to official status that allows them to 
participate in the bankruptcy and receive funding from PG&E.

Stanley said she has not yet decided whether to appeal the ruling to federal 
district court. 
Copyright 2001, Los Angeles Times 




Developments in California's energy crisis 
The Associated Press
Wednesday, July 11, 2001 
,2001 Associated Press 
URL: 
http://www.sfgate.com/cgi-bin/article.cgi?file=/news/archive/2001/07/11/state1
036EDT0129.DTL 
(07-11) 07:36 PDT (AP) -- 
Developments in California's energy crisis: 
WEDNESDAY=
* No power alerts Wednesday as electricity reserves stay above 7 percent. 
TUESDAY=
* U.S. Bankruptcy Judge Dennis Montali again agreed with PG&E and the 
official creditors committee, saying such a committee of Pacific Gas and 
Electric Co. ratepayers has no legal standing in bankruptcy court. Ratepayer 
advocates had sought the recognition to ensure the utility would not raise 
rates further as a way of paying off its debts. 
* PG&E has agreed to pay $4.1 million in tax penalties to 49 counties where 
the utility owns property. The utility already paid $41.2 million in overdue 
property taxes in May -- the additional amount covers a 10 percent fee for 
paying those taxes late. 
* Calpine Corporation says it is near agreement with California officials 
over money the state says the company overcharged for electricity. That would 
make it the first company to settle a portion of the $8.9 billion dollars the 
state is seeking in proceedings before the Federal Energy Regulatory 
Commission. But the San Jose-based company is offering much less than the 
$236 million dollars the state claims it is owed. 
* No power alerts Tuesday as electricity reserves stay above 7 percent. 
* Shares of Edison International closed at $14.05, up 5 cents. PG&E Corp. 
drop 55 cents to close at $13.55. Sempra Energy, the parent company of San 
Diego Gas & Electric Co., closed at $27.67, up 15 cents. 
WHAT'S NEXT=
* The Senate committee investigating possible price manipulation in 
California's energy market meets Wednesday. The committee will vote on 
contempt citations against generators Mirant and Enron, which failed to 
comply with subpoenas for documents. The committee will meet again July 18 to 
consider compliance by six other suppliers that have until Tuesday to turn 
over documents. 
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. 
Track the state's blackout warnings on the Web at 
www.caiso.com/SystemStatus.html. 
,2001 Associated Press ? 





Enron Corp. sues to block Senate from forcing document release 
DON THOMPSON, Associated Press Writer
Wednesday, July 11, 2001 
,2001 Associated Press 
URL: 
http://www.sfgate.com/cgi-bin/article.cgi?file=/news/archive/2001/07/11/state1
212EDT0141.DTL 
(07-11) 09:12 PDT SACRAMENTO (AP) -- 
Enron Corp. is suing state officials to stop a Senate subpoena of its 
financial records in a dispute over alleged overcharges for its electricity 
sales to California. 
"They've sent two things to Texas -- our money and these documents, and they 
saying we can't get either one back," said Laurence Drivon, special legal 
counsel to the Senate Select Committee to Investigate Market Manipulation. 
The suit came hours before the committee will consider asking the full Senate 
to cite the Houston-based company for contempt Wednesday. The other subject 
of possible sanctions, Atlanta-based Mirant Inc., appears to be cooperating, 
Drivon said. 
Committee chairman Joe Dunn, a Santa Ana Democrat, said the committee's 
investigation will continue despite Enron's "pure act of intimidation. We're 
not going to back down." 
Enron's suit said the company's financial papers are outside the committee's 
jurisdiction because most of its operations and paperwork are outside 
California. 
That shouldn't matter, Drivon said, citing last year's successful of 
out-of-state documents during the investigation into the activities of former 
Insurance Commissioner Chuck Quackenbush. Previous investigations have 
included documents subpoenaed from other nations, he said. 
Companies doing business in California cannot claim immunity from its laws or 
oversight, Drivon and Dunn said. Houston-based Reliant Energy made the same 
argument but then agreed to turn over 1,800 documents. 
,2001 Associated Press ? 




Governor threatens to sue utilities for refunds 
Davis says California won't settle for $1 billion 
Mark Martin, Chronicle Staff Writer
Wednesday, July 11, 2001 
,2001 San Francisco Chronicle 
URL: 
http://www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2001/07/11/M
N139275.DTL 
Sacramento -- One day after a federal judge rebuked California's claim that 
energy generators owe the state $8.9 billion, Gov. Gray Davis all but vowed 
to sue the companies to recoup the money. 
"If you think California will settle for $1 billion in refunds, we'll see you 
in court," Davis said yesterday. 
Continuing his heated rhetoric on the energy crisis, Davis blasted the energy 
companies for being inflexible during a 14-day negotiation session in 
Washington, D.C., that ended Monday. Both the state and power generators 
argue each is owed money as a result of California's dysfunctional 
electricity market. 
Federal Energy Regulatory Commission chief administrative law Judge Curtis L. 
Wagner ended the talks by saying the state was owed far less than it claimed, 
but the FERC's governing board will make a final decision on who owes what to 
whom in the coming months. 
Yesterday, Davis made it clear he wouldn't accept a FERC decision that 
strayed far from the state's calculations that power companies overcharged 
California nearly $9 billion. 
"The ball is in the FERC's court," he said. "They must step up and provide 
the refunds we've asked for." 
While Davis said California officials had gone to Washington prepared to 
discuss ways to reach a settlement, including renegotiating long-term 
contracts to buy power, an energy industry official faulted the state for its 
unwillingness to compromise. 
Generators put forward an offer even though they believe no refunds are owed, 
said Jan Smutny-Jones, executive director of the Independent Energy 
Producers. 
Smutny-Jones said the state needed to stop thinking it would get the $8.9 
billion. 
"It's clear from the way the issue was characterized by the judge that $9 
billion is not something the state is going to see any time in the near 
future, " he added. "It is not based in reality." 
Davis also took heat from Republicans yesterday. 
"He desperately needs that refund, so he can renegotiate the dreadful 
contracts he has entered into," said Rob Stutzman, a consultant for the 
California Republican Party. "He's sitting at the poker table with very few 
chips." 
In other energy news yesterday, a judge refused to let a committee represent 
the public in the Pacific Gas & Electric Co. bankruptcy case and said a 
consumer lawyer's "irresponsible position" at a hearing last week could 
mislead PG&E customers into filing needless refund claims with the court. 
U.S. Bankruptcy Judge Dennis Montali said any refunds owed to customers were 
unrelated to the bankruptcy case and would be determined by regulators. 
At the hearing Thursday, attorney KaarenThomas argued that unless a committee 
represented customers' interests, PG&E could try to bar all refund claims 
that weren't filed by Sept. 5. 
Montali ruled in May that the committee was not authorized by federal 
bankruptcy law, and reaffirmed his ruling yesterday. 
Chronicle staff writers Lynda Gledhill and Robert Egelko contributed to this 
report. 
E-mail Mark Martin at markmartin@sfchronicle.com. 
,2001 San Francisco Chronicle ? Page?A - 3 





News briefs on the California power crisis 
The Associated Press
Wednesday, July 11, 2001 
,2001 Associated Press 
URL: 
http://www.sfgate.com/cgi-bin/article.cgi?file=/news/archive/2001/07/11/state0
738EDT0118.DTL 
(07-11) 04:38 PDT SAN JOSE, Calif. (AP) -- 
Energy supplier Calpine Corp. has reached a deal to purchase 236 billion 
cubic feet of natural gas in Texas and New Mexico for $355 million plus 
assumption of nearly $50 million of debt. 
Company officials made the announcement Tuesday and said the purchase will 
increase its natural gas reserves. 
"This transaction meets our desire to own and operate production in a 
strategic basin," said Cathy Piece, Calpine's director of land and 
acquisitions. "These assets significantly strengthen our reserve base and 
will help fuel our growing Western power program." 
The San Jose-based company has agreed to purchase 35 wells in New Mexico that 
produce 6 million cubic feet of gas per day from The Bayless Companies. The 
second transaction involves the acquisition of a majority interest of Michael 
Petroleum of Houston. The Texas company produces about 43 million cubic feet 
of gas per day. 
Calpine officials said the agreements will allow them to meet their future 
capacity demands for both natural gas and electricity. The company wants to 
generate more than 70,000 megawatts of electricity by the end of 2005 and 
have natural gas reserves of 6.7 trillion cubic feet. 
LOS ANGELES (AP) -- Newly elected Mayor James Hahn has postponed selling the 
city's surplus power to the state so he can examine how it will impact 
ratepayers. 
Hahn's predecessor, Richard Riordan, said last month the city's Department of 
Water and Power would sell its extra electricity -- about 500 megawatts a 
day_ to the state at cost between July and September. 
The contract was supposed to have been signed last week. 
Steve Maviglio, a spokesman for Gov. Gray Davis, said Tuesday that the state 
is ready to sign the contract. 
"We're ready to sign," he said. "Like most negotiations that aren't final, 
things go back and forth. The new (Hahn) administration wants to review the 
document before it." 
Davis had threatened to seize surplus power from municipal utilities, which 
haven't been subjected to the California energy crisis, because he claimed 
they were gouging the state. 
TEMECULA, Calif. (AP) -- State officials said they are studying alternative 
routes for a power transmission line proposed by San Diego Gas and Electric 
Co. 
The utility wants to run a 500,000-volt power line through southwestern 
Riverside County connecting its power grid with Southern California Edison's. 
The cost of the project is estimated at $271 million and must be approved by 
the state's Public Utilities Commission. 
But state officials listed alternative routes in papers released at a public 
hearing Tuesday. Some of the other ideas include putting the transmission 
line around the edges of an Indian reservation or running a route through the 
Cleveland National Forest. 
Once a final selection is made, the information will be given to PUC 
commissioners who will either approve or deny the project. 
Many residents who live in the path of the proposed transmission line don't 
want the project. An attorney representing several groups that oppose SDG&E's 
plans said there was no mention of alternative routes in environmental 
documents submitted by the company. 
"Looking at the various route segments offered by SDG&E as alternatives is 
like trying to arrange the deck chairs on the Titanic," said attorney Mark 
Mihaly. 
,2001 Associated Press ? 







White House bends under energy conservation pressure 
Posted at 6:25 a.m. PDT Wednesday, July 11, 2001 
BY H. JOSEF HEBERT 

Associated Press Writer 



WASHINGTON (AP) -- Under pressure to include more conservation measures that 
reduce energy use, congressional Republicans are moving toward a compromise 
to increase fuel efficiency requirements for sport utility vehicles as part 
of an energy package. 
Key House GOP lawmakers said Tuesday they expect some increase in fuel 
economy requirements, especially for SUVs, in energy legislation working its 
way through the House. Democrats, who have a majority in the Senate, also 
favor requiring improved motor vehicle fuel efficiency. 
At the same time, the Bush administration signaled its willingness Tuesday to 
begin a rule-changing process that would allow the first increase in 25 years 
in the federal corporate automobile fuel economy, or CAFE, standard. 
Transportation Secretary Norman Mineta asked Congress to lift immediately a 
six-year prohibition that bans the department from consideration of fuel 
economy increases. Lawmakers already agreed this year not to extend the ban 
beyond September, but Mineta said he wants to start examining possible 
changes right away. 
CAFE standards, which mandate fuel economy requirements for vehicle fleets, 
have not been increased since their introduction in 1975. That year's law, 
spurred by energy shortages in the early 1970s, required passengers cars to 
meet a fleet average of at least 27.5 miles per gallon. Light trucks -- a 
category that includes SUVs, vans and pickups -- have to meet a 20.7 mpg 
fleet average. 
With the widespread popularity of SUVs and vans in recent years, many 
environmentalists have argued that the lower truck standard has compromised 
the intent of the 1975 law. SUVs and vans comprise more than 40 percent of 
the passenger vehicles on the road today. 
As three committees began crafting energy legislation, lawmakers were 
searching for a bipartisan compromise to increase fuel economy requirements 
for motor vehicles. Some increase in the CAFE requirement was virtually 
assured, several GOP lawmakers said, although disagreements remain on how 
much of an increase, whether it should apply to automobiles as well as SUVs, 
vans and small trucks, and the timetable for phasing in new requirements. 
Energy legislation that the House Energy and Commerce Committee was taking up 
later Wednesday contains no fuel economy provision. 
But Rep. Billy Tauzin, R-La., the committee chairman, said discussions were 
under way to work out a compromise on a fuel economy proposal. He said he 
expects an amendment on CAFE to be added to the bill, either during 
deliberations in his committee or on the House floor. 
Rep. Joe Barton, R-Texas, chairman of the subcommittee drafting the energy 
package, saw a good chance the truck standards will be raised and said the 
automobile standard might be increased as well. Other GOP sources who talked 
about the private discussions on condition of not being identified by name 
said a likely outcome is that the truck standard will be increased three or 
four mpg and the auto standard left alone. 
Momentum for some CAFE increase has been growing in recent weeks as GOP 
lawmakers came under increasing pressure to come up with additional 
conservation proposals to those proposed in the White House's energy policy. 
It largely focuses on production, with few specific measures to dramatically 
curb energy demand. 
Democrats have pressed for tougher automobile fuel economy standards. 
Automakers have fought attempts to increase the standards. They say such 
government edicts limit consumer choice and force manufacturers to build 
smaller cars that customers don't want. Supporters of increased fuel economy 
argue that new technologies are available to increase fuel efficiency without 
decreasing vehicle size. 
President Bush's energy blueprint would consider CAFE increases, but not 
before a National Academy of Sciences report is issued, probably this month, 
on impact of the standard on energy savings, safety and auto industry 
competition.











Davis ups the voltage 
Published Wednesday, July 11, 2001, in the San Jose Mercury News 
Vow to sue for refunds may be a bluff, but he should keep pushing FERC 
THE strategic choice facing Gov. Gray Davis in the struggle over electricity 
price refunds has come down to three questions: When do you negotiate, when 
do you demand, and when do you bluff? 
Negotiations are over, Davis declared Tuesday. He demanded that the Federal 
Energy Regulatory Commission order refunds now. ``The case is nearly a year 
old,'' he said. ``They have to decide which side they're on.'' 
Probably no one but Davis knew to what extent he was bluffing when he also 
said, ``If you think California is going to settle for $1 billion in refunds, 
we will see you in court.'' 
A FERC administrative judge said Monday that the amount due the state may be 
around $1 billion, or perhaps nothing at all, when counter-claims against the 
state are subtracted. 
Energy experts are divided about whether the state would win a suit to 
overturn a decision by a federal commission. The federal courts have some 
limited jurisdiction, according to University of California Energy Institute 
director Severin Borenstein, but that a court would reverse a commission in a 
case like this is ``extremely unlikely.'' 
Frank Wolak, a Stanford economist, had the opposite view, when asked whether 
the state has a good chance of winning: ``I think so. It happens all the 
time.'' 
At a Sacramento press conference, Davis continued to insist that there have 
been overcharges of $8.9 billion. But other state officials conceded that 
only $5.4 billion of that is actually on the table in the FERC proceedings. 
Davis said he'll take what he can get there, and sue for the rest. 
The state argues that because FERC has determined that wholesale prices have 
not met the Federal Power Act's requirement to be ``just and reasonable,'' 
refunds are in order. But the commission has not defined what portion 
exceeded ``just and reasonable.'' 
Throughout his press conference, Davis used the prospect of litigation like a 
goad to spur the federal regulators into action. But if you listened 
carefully, he also indicated he'll give them more time to consider the case. 
Considering the iffy odds of winning in court, we suggest he keep goading the 
federal commissioners -- while giving them all the time they need.









Wednesday, July 11, 2001 






Lights go out on Davis' power show 
Three new developments show that some economic reality finally is being 
applied to California's electricity crisis: 
First, "The nation's chief energy judge said Monday that California is owed 
maybe $1 billion in refunds from power generators, a fraction of the $8.9 
billion demanded by Gov. Gray Davis," reported the Register yesterday. Even 
that $1 billion amount might be balanced by the amount the state still owes 
the power producers. 




To suggest workable and market-oriented solutions to the California 
electricity crisis.

Judge Curtis Wagner's recommendation will be taken up by the Federal Energy 
Regulatory Commission, which is being petitioned for the money by the state 
of California. 
Because the judge's words will bolster FERC's apparent desire not to grant 
the "refunds," the state probably will go to court, where the matter could be 
stuck for years.
"In the long term, this may indicate that competitive electricity has a 
future even in California, but not thanks to the state," Robert Michaels, a 
professor of economics at Cal State Fullerton, told us. He's referring to the 
state's botched 1996 "deregulation" effort, which has been made worse by Gov. 
Gray Davis and other officials since the crisis began a year ago.
"FERC since the 1980s favors competition, within the parameters of political 
reality," Mr. Michaels added. "Now we're at square one: The industry doesn't 
owe $9 billion to California." As this process continues, he said, another 
positive aspect will be that a lot of facts will get aired. "We'll see what 
has been happening in the markets" in which power is bought and sold.
Second, light already is shining on one area: This crisis was not "Made in 
Texas'' by cronies of President Bush, as Gov. Davis and other Democrats have 
been contending. 
In May, the governor attacked the president for ignoring "the greed of these 
Texas energy companies," such as Reliant and Dynergy.
In fact, according to information on state power contracts the governor 
finally released Monday, Texas companies were way down on the list of 
producers. 
"In roughly the first five months of the year, the state shelled out $1.2 
billion to Atlanta-based Mirant, the most any company was paid for 
electricity, followed by $1 billion to Powerex, the marketing arm of BC Hydro 
in British Columbia [in Canada]. It also paid $331 million to the Los Angeles 
Department of Water and Power," reported the San Jose Mercury News.
Only about 10 percent of our state's power during this period came from 
companies with headquarters in Texas.
Third, and finally, a new study by the Cato Institute shows what should be 
done next: 
lAbolish retail rate caps, allowing prices to be set by the market. 
This would be a better system than the present one, where the state buys the 
electricity and passes much of the cost along through the state budget (paid 
by taxpayers) and bonds paid for by long-term electricity price increases. 
Higher immediate prices would encourage conservation and production, leading 
in time to lower prices.
lMove to real-time pricing so people shift activities such as washing to 
off-peak hours. 
lAbolish the Independent System Operator, which moves electrons around. 
Give this function back to the utilities, who did it far better before 
"deregulation." Gov. Davis should set the pace by ending his Clintonian blame 
shifting and embracing these realistic solutions.