----- Forwarded by Jeff Dasovich/NA/Enron on 03/05/2001 05:52 PM -----

	Jean Munoz <jmunoz@mcnallytemple.com>
	03/05/2001 05:26 PM
		 
		 To: Katie Kaplan <kaplan@iepa.com>, "'Andy Brown (E-mail)'" 
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		 Subject: Re: Governors Press Release

IEP Response:


Contact:  Jean Munoz                FOR IMMEDIATE RELEASE
         916-447-8186                March 5, 2001

Statement by Jan Smutny-Jones,
Executive Director of Independent Energy Providers,
in Response to Today?s News Conference by Governor Davis

"We support the Governor?s efforts to secure power for California through
long-term contracts . a solution that we?ve been advocating for months to
help stabilize energy prices and bring down the cost of electricity.

"Many of our companies were offering long-term contracts to the utilities
last summer that would have dramatically reduced the cost of power and
helped prevent the current crisis.  Likewise, many of our companies signed
or are negotiating long-term contracts with the California Department
of Water Resources.

"Long-term contracts are a very important first step in the long process
of increasing California?s generating capacity and securing reliable and
affordable power for the state?s homes and businesses.  As the people who
generate the power, we?re an  important part of the solution and pledge to
continue doing all we can to help keep the lights on.

"Another equally important step that must be taken quickly is to approve
SBx1 47 which will save ratepayers billions of dollars while protecting a
vital source of California?s electricity supply . the QF operators who
provide 30% of the state?s power using clean and renewable technologies like
solar, wind, geothermal and cogeneration.  Most of these generators are
small, independent businesses that have been providing power for months
without being paid.  SBx1 47 will be an important step to ensure their
ability to serve California customers."

#         #         #


on 3/5/01 3:02 PM, Katie Kaplan at kaplan@iepa.com wrote:

> He called "leading power generators"! That's good---  IEP is preparing a
> response we will be sending out later today.
> 
> 
> Governors Press Release
> GOVERNOR DAVIS ANNOUNCES PORTFOLIO OF CONTRACTS FOR ELECTRICITY 3/5/2001
> 
> Price State Buys for Power to Drop Dramatically
> 
> 
> LOS ANGELES 
> 
> Governor Gray Davis today announced the signing of 40 long-term contracts
> and agreements between the California Department of Water Resources (DWR)
> and power generators, significantly reducing the price the state will pay
> for electricity over the next decade.
> 
> "These agreements are the bedrock of a long-term energy solution," said
> Governor Davis. "They provide reliability at a reasonable price. With these
> deals in place, California's energy future is looking a whole lot brighter."
> 
> The agreements announced by Governor Davis today, which will supply an
> average of 8,886 MW per year over the next 10 years, are the result of more
> than four weeks of negotiations between state officials from the DWR and
> more than two dozen power generators. Generators submitted bids to the state
> in Internet auctions held last month.
> 
> The 40 agreements resulted in a diversified long-term portfolio with an
> average price of $69/MWh. For the first five years, the average price is
> $79/MWh - approximately 75 percent below the recent spot market prices. For
> the second five years, the average price drops to $61/MWh - about 80 percent
> below recent spot market prices (all prices include "superpeak" periods).
> 
> The contracts are of varying lengths - from four months to 10 years, with
> one contract for 20 years. A total of more than 629 million MWh is under
> contract under the agreements.
> 
> The contracts include a diverse mix of more than 20 suppliers and power
> companies. They include leading power generators, such as Calpine, Duke,
> Dynegy, Enron, Reliant, and Williams as well as Sempra, Merrill Lynch,
> Morgan Stanley, El Paso, Constellation, Panda, Cal Peak, Avista, PX BFM,
> PacifiCorp, and Primary Power. Details of the individual contracts were not
> released.
> 
> The agreements also include seasonal power exchanges with the Bonneville
> Power Administration (BPA) and Powerex. These agreements will offer
> significant operational benefits and reduce dependence on the spot market,
> according to Governor Davis.
> 
> In addition, the negotiations for contracts will result in expediting
> construction of new power plants. Some 5,000 MW is slated to come on-line
> within 24 months, including some as early as this summer.
> 
> According to Governor Davis, priority was given to contracts that will
> result in construction of new power plants and offer long term price
> stability. Ten-year contracts were limited to generators that can provide
> power supplies starting no later than the third quarter of 2001.
> 
> Negotiations are continuing with generators for additional short- and
> long-term contracts. Further announcements are expected.
> 
> The announcement today includes signed contracts as well as agreements still
> under legal review. The price, quantity, and terms of the agreements have
> been agreed upon by the state and suppliers, and detailed terms will be made
> final during the next few months.
> 
> In addition to the announcement about long-term contracts, Governor Davis
> said that 11 short term contracts also have been signed by DWR. These
> ongoing contracts allow DWR to buy 75 percent of its power by the end of
> February on the less-expensive
> day-ahead markets and 95 percent in the day- and hour-ahead markets -
> substantially reducing dependence of the state's buying electricity at
> premium prices on the real-time market.
> 
> These contracts also have slashed the price of DWR's average cost of
> purchases in the short term market from $330/MWh to $228/MWh by the end of
> February.
> 
> The state was given the authority to negotiate contracts as the result of AB
> 1X, landmark legislation passed in this year's special emergency session of
> the legislature and signed by Governor Davis on February 2, 2001. The
> legislation was sponsored by Assembly Members Fred Keely (D-Boulder Creek)
> and Carole Migden (D-San Francisco). Assembly Speaker Robert Hertzberg was
> the principal author of the bill.
> 
> Los Angeles Department of Water and Power Director David Freeman, who was
> appointed by Governor Davis to advise the Department of Water Resources
> (DWR) on the purchases while on leave from the municipal agency, was the
> lead negotiator for the state. Legal, technical, and analytic support was
> provided by the Department of Water Resources.
> 
> Please link below to view the charts of Covered Net Short and Contract
> Prices Compared to Spot Prices.
> 
> 
> Katie Kaplan
> Manager of State Policy Affairs
> Independent Energy Producers Association
> (916) 448-9499
> 
>