Today's IEP News... Condit appears to be taking attention away from 
electricity.



For more headlines please visit www.rtumble.com.

Thanks! ?Jean



?AP July 13, 2001, Friday, BC cycle, ?Domestic News, ?246 words, ?Judge says 
power companies likely owe California 'hundreds of millions,' but not 
billions, ?By JENNIFER COLEMAN, Associated Press (QUOTES SMUTNY)

Writer, ?SACRAMENTO, Calif. Los Angeles Times, July 16, 2001 Monday, Home 
Edition, Page 1, 1785 ???
???words, THE NATION; ; Smog Feared in Power Buildup; Electricity: Bush
???administration's plan for up to 1,900 plants over 20 years poses a threat 
to
???air quality, especially in the Midwest and South, experts say., GARY
???POLAKOVIC, TIMES ENVIRONMENTAL WRITER

The New York Times, July 16, 2001, Monday, Late Edition - Final, Section A;
????Page 1; Column 6; National Desk, 1305 words, DROP IN FUEL PRICE MAY WEAKEN
????PUSH FOR ENERGY PLANS, By JOSEPH KAHN, WASHINGTON, July 15

The San Francisco Chronicle, JULY 16, 2001, MONDAY,, FINAL EDITION, NEWS;,
????Pg. A1, 1935 words, Municipal power firms cleaned up; ???Public producers
????charged state far more than private, Mark Martin, Lynda Gledhill, 
Sacramento

Contra Costa Times, July 15, 2001, Sunday, CC-ENERGY-RATES, 906 words,
????California Faces Possible Third Power Rate Hike

Contra Costa Times, July 15, 2001, Sunday, CC-UTILITY, 530 words, Many
????California Energy Consumers Cash In on Conservation, By Katie Oyan

Copley News Service, July 15, 2001, Sunday, State and regional, 1228 words,
????Controller Connell keeps heat on Davis, but could it cost her? ???????By
????Bill Ainsworth, SACRAMENTO

Los Angeles Times, July 15, 2001 Sunday, Home Edition, Page 1, 1899 words,
????The Bashers Are Back; The electricity crisis has given critics of 
California
????a new opening to predict catastrophe., JOEL KOTKIN

Sacramento Bee, July 15, 2001, Sunday, Pg. D3;, 174 words, Save energy,
????save cash, Loretta Kalb


Copyright 2001 Associated Press

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

????????????????????????????July 13, 2001; Friday

SECTION: Domestic, non-Washington, general news item

LENGTH: 248 words

HEADLINE: ?Judge: Calif Power Cos. Owe Refunds

BYLINE: JENNIFER COLEMAN


DATELINE: SACRAMENTO

BODY:

???An administrative judge mediating talks between California and energy
companies says the generators likely owe the state ''hundreds of millions of
dollars'' in refunds, far less than the $8.9 billion California wants.

??Judge Curtis Wagner Jr., in a recommendation released Thursday, said that
while California is due ''vast sums'' for overcharges, the state's major
utilities, which have amassed crippling debts due to high wholesale prices, 
owe
generators even more.

??Gov. Gray Davis and California officials who attended the 15-day talks
pressed for $8.9 billion in refunds, but Wagner said that amount can't be
substantiated.
??''That very large refunds are due is clear,'' Wagner wrote, likely amounting
to ''hundreds of million of dollars, probably more than a billion dollars in 
an
aggregate sum.''

??The judge recommended a method for calculating refunds back to October;
California's estimate was based on figures from May 1, 2000.

??The differences between what the state wants and what the sellers believe
they owe should be decided in a trial-type, evidentiary hearing, Wagner said.

??Jan Smutny-Jones, executive director of the Independent Energy Producers,
said the state's refund estimate was based on a ''faulty analysis'' and the
judge was correct in lowering the amount.

??Davis said he hoped the Federal Energy Regulatory Commission would reject 
the
lowered recommendation.


?????????????????????????????The Associated Press

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 13, 2001, Friday, BC cycle

SECTION: Domestic News

LENGTH: 246 words

HEADLINE: Judge says power companies likely owe California 'hundreds of
millions,' but not billions

BYLINE: By JENNIFER COLEMAN, Associated Press Writer

DATELINE: SACRAMENTO, Calif.

BODY:

??An administrative judge mediating talks between California and energy
companies says the generators likely owe the state "hundreds of millions of
dollars" in refunds, far less than the $8.9 billion California wants.

??Judge Curtis Wagner Jr., in a recommendation released Thursday, said that
while California is due "vast sums" for overcharges, the state's major
utilities, which have amassed crippling debts due to high wholesale prices, 
owe
generators even more.

??Gov. Gray Davis and California officials who attended the 15-day talks
pressed for $8.9 billion in refunds, but Wagner said that amount can't be
substantiated.

??"That very large refunds are due is clear," Wagner wrote, likely amounting 
to
"hundreds of million of dollars, probably more than a billion dollars in an
aggregate sum."

??The judge recommended a method for calculating refunds back to October;
California's estimate was based on figures from May 1, 2000.

??The differences between what the state wants and what the sellers believe
they owe should be decided in a trial-type, evidentiary hearing, Wagner said.

??Jan Smutny-Jones, executive director of the Independent Energy Producers,
said the state's refund estimate was based on a "faulty analysis" and the 
judge
was correct in lowering the amount.

??Davis said he hoped the Federal Energy Regulatory Commission would reject 
the
lowered recommendation.



?

Copyright 2001 / Los Angeles Times

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

??????????????????????July 16, 2001 Monday ?Home Edition

SECTION: Part A; Part 1; Page 1; Metro Desk

LENGTH: 1785 words

HEADLINE: THE NATION;
;
Smog Feared in Power Buildup;
Electricity: Bush administration's plan for up to 1,900 plants over 20 years
poses a threat to air quality, especially in the Midwest and South, experts 
say.

BYLINE: GARY POLAKOVIC, TIMES ENVIRONMENTAL WRITER

BODY:

??The Bush administration's plans for a massive buildup of power plants
nationwide could result in dirtier air in places where smog is already bad and
getting worse--particularly in the Midwest and the South, air quality experts
fear.

??Smog levels have been cut nationwide in the last 20 years, but the 1990s saw
deteriorating air quality in places such as Columbus, Ohio, where the number 
of
smoggy days jumped 78% during the decade, and Memphis, Tenn., where they
doubled, according to figures from the federal Environmental Protection 
Agency.

??A large part of the deterioration is attributable to power plant 
emissions--a
major contributor to ozone, which is colorless, and haze. Despite cleanup
efforts, power plant emissions are up across much of the fast-growing South 
and
in the Plains states.

??Meanwhile, generating plants running at peak capacity to produce electricity
for California are sullying Western skies too. Smokestack emissions are up 
from
Washington state to Utah and Arizona to Montana, the EPA says.

??"The interior West has fantastic visibility, and power plants are one of the
primary causes of visibility degradation," said Bruce Driver, executive 
director
of the Land and Water Fund of the Rockies. "The emissions stand out like 
pouring
red wine on white carpet. We have concerns about building new power plants in
the West."

??The administration's energy plan calls for building up to 1,900 plants over
the next two decades, increasing the nation's electrical generating capacity 
by
at least half. That is equivalent to two new 300-megawatt plants a week--the
fastest rate of expansion over such a long period since the end of World War 
II,
according to the Department of Energy.

??Republicans at the White House and in Congress say they are confident they
can chart a path toward energy stability without harming the environment.

??"Whichever way we go, we'll maintain the air quality standards," said Rep.
Joe Barton (R-Texas), who chairs the House energy and air quality 
subcommittee.

??In theory, more power plants do not have to mean worse air quality. Even
plants burning coal, which is the dirtiest of the fuels in current use, can be
made much cleaner. (A separate problem--emission of gases that can contribute 
to
global warming--is worsened by any increase in the number of power plants
burning coal, oil or natural gas.)

??What most concerns air quality officials is that the administration not only
has proposed increasing the number of plants, but it also has stalled efforts
initiated by the Clinton administration to force dozens of dirty, older
coal-fired plants to install up-to-date pollution control equipment through a
rule, known as new source review, that is designed to control emissions from 
new
and modified plants.

??Administration officials began a series of public hearings last week on 
their
proposals to replace the new source review rules.

??When it comes to air quality, the administration's energy plan offers a fork
in the road, said John D. Bachmann, associate director of science policy in 
the
EPA's air quality division.

??"The good path is: We can build a lot of new power plants with modern
technology that have less emissions and phase out older plants," he said. "Or 
we
can loosen emissions caps and the new source review regulations, burn lots of
coal and let the power plants go."

??Under that scenario, "you would see a worsening of air quality," he said.

??Power plants will be the major factor governing air quality in much of the
nation for decades, said William Chameides, a chemist in the School of Earth 
and
Atmospheric Sciences at the Georgia Institute of Technology.

??"Extra power plants will put more emissions in the air," he said. "I don't
know if people have thought this out very well, and I don't think people are
aware of the magnitudes we are talking about."

??In the optimistic view, the future could look like the Polk Power Station,
now operating in a swamp near Fort Lonesome, Fla. The plant is one of two
commercial clean-coal plants, which burn gases emitted from superheated coal. 
It
emits 85% fewer nitrogen oxides than a typical coal-fired plant.

??Nitrogen oxides, which contribute to haze and acid rain, are one of the 
major
pollutants produced by power plants. In the air, they are key to forming 
ozone,
a toxic gas that can sear lung tissue and cause shortness of breath, 
headaches,
nausea and long-term loss of lung function.

??Nitrogen oxides are also the only major pollutant targeted under the Clean
Air Act that is not in decline. Emissions have increased nearly 20% since 
1970,
according to the EPA, with most growth due to coal-fired power plants and
heavy-duty diesel engines.

??Nationwide, emissions of all smog-forming pollutants from power plants
dropped slightly over the last 10 years. But across the rapidly growing South
and parts of the Great Plains and Midwest, emissions during the decade
rose--growing as much as one-third in some areas, according to EPA figures.

??The administration has committed $2 billion to clean coal research over the
next 10 years. President Bush comes from Texas, which uses more coal-fired 
power
than any other state; Vice President Dick Cheney hails from Wyoming, the 
largest
coal-producing state.

??But power plants like the one at Fort Lonesome are only clean relative to
conventional coal plants and are expensive to construct. The Florida plant 
emits
20 times more nitrogen oxides than a comparable plant fired by natural gas and
costs three times as much to build. Moreover, a coal-burning plant, even with
the cleanest technologies, poses much more of a global warming problem than a
plant using natural gas or oil.

??The major provision of the Clean Air Act that is aimed at controlling
emissions from new power plants is the new source review rule. EPA officials 
say
the rule has typically resulted in emissions cuts at power plants of 70% to 
95%.

??Air pollution control officials consider new source review to be a key to
controlling power plant emissions. Weakening the rules will certainly worsen 
air
quality in many areas of the country, said S. William Becker, executive 
director
of the State and Territorial Air Pollution Program Administrators and the 
Assn.
of Local Air Pollution Control Officials.

??Administration officials, by contrast, consider the rule bureaucratic, 
costly
and ineffective. "New source review is a roadblock to clean-burning energy
plants," said Cheney's spokeswoman, Julienna Glover-Weiss.

??What the administration favors is a market-based program that would cap 
total
emissions from power plants and allow companies to buy and sell credits to 
reach
reduction targets. Companies that reduce more than their pollution allocation
can sell to companies that produce over their limit.

??Such programs are favored by free-market advocates, industry groups and many
economists. Supporters say market-based programs cost less, offer businesses
more options for knocking down emissions and rely on the invisible hand of the
marketplace rather than the strong arm of regulatory mandate to find the most
effective remedies.

??Air-quality officials and environmental activists fear that the proposed
market-based programs would not work. And they say the administration is 
already
showing signs of backsliding in its enforcement of air quality regulations.

??Under intense lobbying pressure from power companies, the White House 
earlier
this year instructed the Justice Department and the EPA to review enforcement
actions against companies accused of violating the Clean Air Act.

??In 1999, federal officials charged that 32 coal-fired power plants in 
several
Southern and Midwestern states had ignored a requirement that companies 
install
advanced emission controls whenever their plants are upgraded.

??The government reached a settlement with Tampa Electric Co. Two other
settlements are pending with Cinergy Corp. and Virginia Power Co. But several
other cases are being reconsidered, including ones against Duke Power Corp.,
Southern Co. and the Tennessee Valley Authority.

??Critics of the administration's plans also say the record of market-based
approaches is mixed. On the one hand, the nation's 11-year-old program to 
reduce
acid rain by allowing power plants to trade emissions credits is widely 
credited
with cutting emissions and saving compliance costs. It corrals hundreds of
coal-fired power plants into one market-trading block, caps the annual 
emissions
at 9 million tons and then lets power producers swap credits to achieve the
goal.

??On the other hand, a similar market-based program to cut smog in Los Angeles
has not worked. Called RECLAIM, it was the world's first attempt to harness
market forces to tackle urban smog. Eight years after its inception, however,
polluters have avoided installing controls and the state's power crisis has 
led
to a shortage of pollution credits that has driven up compliance costs. The
program has failed to cut emissions as expected, although officials are trying
to salvage it.

??Many environmentalists oppose market-based strategies to fight pollution.
They say they are difficult to enforce, allow too much self-policing by
businesses and have the potential to concentrate emissions in poor and 
minority
communities.

??A coalition of 20 environmental groups earlier this month urged EPA
Administrator Christie Todd Whitman to suspend trading programs being 
considered
by four states. That request came a week after a letter from the EPA's 
inspector
general's office agreed to investigate concerns about market-based programs.



??Smog U.S.A.

??Power plant emissions of nitrogen oxides are down nationwide over the last
decade, but the reductions are not uniform. Added emissions in the South and
parts of the Midwest contribute to deteriorating air quality.

??*

??Days per year exceeding 8-hour ozone limit

??Los Angeles

??Average of '90-'92: 132

??Average of '97-'99: 37

??*

??Knoxville, TN

??Average of '90-'92: 13

??Average of '97-'99: 50

??*

??Atlanta

??Average of '90-'92: 28

??Average of '97-'99: 47

??*

??Charlotte, NC

??Average of '90-'92: 17

??Average of '97-'99: 36

??*

??Pittsburgh

??Average of '90-'92: 13

??Average of '97-'99: 27

??*

??Louisville, KY

??Average of '90-'92: 9

??Average of '97-'99: 27

??*

??Raleigh, NC

??Average of '90-'92: 7

??Average of '97-'99: 20

??*

??Youngstown, OH

??Average of '90-'92: 9

??Average of '97-'99: 15

??*

??Indianapolis

??Average of '90-'92: 9

??Average of '97-'99: 14

??*

??New Orleans

??Average of '90-'92: 4

??Average of '97-'99: 11

??*

??Ozone is in decline in Los Angeles and the Northeast, but progress against
smog is lacking across much of the nation.

??Source: U.S. Environmental Protection Agency

GRAPHIC: GRAPHIC: Smog U.S.A., Los Angeles Times

LOAD-DATE: July 16, 2001

??????????????????????????????7 of 77 DOCUMENTS

??????????????????Copyright 2001 The New York Times Company

??????????????????????????????The New York Times

?????????????????July 16, 2001, Monday, Late Edition - Final

SECTION: Section A; Page 1; Column 6; National Desk

LENGTH: 1305 words

HEADLINE: DROP IN FUEL PRICE MAY WEAKEN PUSH FOR ENERGY PLANS

BYLINE: ?By JOSEPH KAHN

DATELINE: WASHINGTON, July 15

BODY:

??As the Bush administration begins a campaign-style push to drum up support
for its energy plan this week, the sense of crisis that had propelled the plan
forward has receded while energy shortages ease and fuel prices fall, at least
for now.

??Gasoline prices have been going down for six weeks straight and now average
$1.47 a gallon, compared with $1.71 a gallon during the week of May 14, when 
the
administration unveiled its energy strategy, according to the Department of
Energy. Natural gas prices have dropped even faster and now average less than 
a
third of the peak levels they reached early this year. In both cases, high
prices spurred fresh production.

???In California, where record electricity prices and local blackouts captured
national attention for months, wholesale power prices have fallen to the 
lowest
levels in more than a year. Analysts credit new power supplies, a state-led
conservation effort and federal price controls for averting what many had 
feared
would be a catastrophic summer of scarcity.

??Administration officials said their energy strategy was intended to address
long-term shortages, not short-term market fluctuations. But the surge of
gasoline, natural gas and electricity supplies appears to undercut the
administration's contention, as stated at the beginning of its energy strategy
report, that "America in the year 2001 faces the most serious energy shortage
since the oil embargoes of the 1970's."

??The White House had once counted on a sense of emergency to persuade 
Congress
to allow drilling on more protected lands and to change or abandon some
regulations seen as impeding energy production.

??Lower prices have diminished the sense of crisis and forced the
administration to retreat from some priorities on Capitol Hill. The only
energy-related proposals that have garnered broad bipartisan support are those
that push energy conservation, a subject that critics say got short shrift in
the president's energy plan.

??"If we were having blackouts every day you can be sure the president would 
be
out there insisting that we drill in the Arctic or else," said David Freeman,
who is coordinating California's response to its electricity shortages for 
Gov.
Gray Davis, a Democrat. "The fact that we've managed to keep the lights on and
bring prices way down doesn't help his case much."

??The president's case has also been hurt by polls showing that many people
view his energy policies as favoring big oil companies at the expense of the
environment. Some Republicans said a backlash against the energy plan had
diminished the influence of Vice President Dick Cheney, its main architect.

??Mr. Bush is still turning to Mr. Cheney, and to members of the cabinet, to
stir up public and Congressional enthusiasm for drilling and other measures as
the House takes up energy legislation this week.

??On Monday, Mr. Cheney is moderating a town hall meeting on energy in
Pittsburgh. Energy Secretary Spencer Abraham is in Chicago, Interior Secretary
Gale A. Norton is in South Dakota, Commerce Secretary Donald L. Evans is in
Charlotte, N.C., and Transportation Secretary Norman Y. Mineta is in 
Cleveland.
Christie Whitman, the administrator of the Environmental Protection Agency, is
in Connecticut.

??Yet even House Republicans say prospects for the most contested measures 
have
faded with the price scare. For instance, Representative Sherwood Boehlert, a
New York Republican, said there was no chance Congress would approve drilling 
in
the Arctic National Wildlife Refuge.

??"A.N.W.R. is to energy policy as vouchers are to education policy," Mr.
Boehlert said. "It's going nowhere."

??Mr. Boehlert said Mr. Cheney had rebounded from criticism that the
administration's energy plan paid only lip service to conservation, energy
efficiency and renewable energy.

??"That was a misstep," he said. ?"But since then, there's been a concerted
effort by the administration to get other points of view."

??Mr. Cheney's aides insist that any miscalculations by the vice president 
were
in tone and not in substance, and that at any rate he is now back on course.

??"The main point is that we've been here six months, and not only have we
produced a comprehensive energy plan, but specific initiatives are being 
marked
up in Congress," said Mary Matalin, Mr. Cheney's chief political adviser.

??The White House got a rare legislative victory on energy last week when the
Senate rejected a measure to block new drilling activity in the Gulf of 
Mexico.
But that vote came after the administration scaled back its own plan to drill 
in
the eastern gulf, caving in to criticism from many Florida politicians,
including Gov. Jeb Bush, the president's brother.

??The administration has fared less well in other votes. The Senate voted last
week against opening lands designated national monuments for coal, oil and gas
exploration. The House passed a measure that would ban drilling under the 
Great
Lakes.

??And though the administration says it is awaiting a scientific analysis
before deciding whether to set higher fuel economy standards for cars and 
light
trucks, a pivotal House panel voted last week to mandate that sport utility
vehicles and minivans perform more efficiently.

??As the administration seeks to cobble together an energy package in 
Congress,
it is not likely to have the backdrop of ever-rising energy prices to help 
close
the sale.

??When the White House began preparing its energy plan last winter, Mr. Bush,
Mr. Cheney and other top officials, many of whom have had extensive experience
in the energy industry, repeatedly sounded the alarm. They said price spikes
were the result of chronic underinvestment linked to regulatory impediments.

??But independent analysts now argue that the scare may have had more to do
with ordinary business decisions by energy companies. Facing record low prices
in the late 1990's, companies did not invest much in new oil and gas 
exploration
or gasoline and electricity production, creating shortages. Higher prices 
since
then have had the reverse effect on investment, supply and prices.

??The Energy Information Administration of the Department of Energy, for
example, notes that gasoline prices have fallen sharply during the summer
driving season because of a "dramatic response in gasoline production" last
spring, when prices were high. At that time, Mr. Abraham, the energy 
secretary,
warned that prices could hit $3 a gallon this summer because refineries could
not produce enough gasoline.

??Natural gas markets also seemed deeply troubled a few months back. With the
number of rigs drilling gas wells at 550 in early 2000, supplies were thin and
prices sky-high. But the industry responded without federal intervention. Now,
1,050 rigs are drilling for natural gas without any new lands opened for
exploration. Prices have collapsed.

??"We doubled the rig count in less than 18 months, which is phenomenal," said
Darryl Smette, senior vice president for marketing at Devon Energy of 
Oklahoma.

??In a widely publicized speech, Mr. Cheney used California, which has prided
itself on its low per capita consumption of electricity, to illustrate his
contention that conservation cannot be the basis of a sound energy policy.

??The administration also steadfastly opposed any federal price controls for
wholesale electricity markets in California, arguing that such interference
would only distort the market and do little to relieve the state's woes.

??California officials now say tht prices have plunged this summer because of 
a
conservation drive that brought electricity consumption down 11 percent 
compared
with last year. They say several new power plants helped increase supply. And
they credit federal price controls, which an independent federal agency 
imposed
after resisting the measure for months, with helping to contain prices as 
well.


??http://www.nytimes.com
 
GRAPHIC: Chart: "UPDATE: Falling Energy Prices"
National average prices for gasoline and natural gas have been declining
recently.

REGULAR GASOLINE

Graph showing the average price of gasoline per gallon, from January 2000 to 
May
2001.

NATURAL GAS

Graph showing the average price of natural gas per million B.T.U.'s, from
January 2000 to May 2001*.

* May-July 2001 figures are estimates.
(Source: Energy Information Administration)(pg. A10)

LOAD-DATE: July 16, 2001

??????????????????????????????8 of 77 DOCUMENTS

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

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

?????????????????????JULY 16, 2001, MONDAY, FINAL EDITION

SECTION: NEWS; Pg. A1

LENGTH: 1935 words

HEADLINE: Municipal power firms cleaned up;

Public producers charged state far more than private

SOURCE: Chronicle Staff Writers

BYLINE: Mark Martin, Lynda Gledhill

DATELINE: Sacramento

BODY:
From the start of the state's energy meltdown, Gov. Gray Davis and many
lawmakers have cast private out-of-state energy companies -- especially those 
in
Texas -- as pirates plundering California's economy.

???But a Chronicle analysis found that some of the most expensive megawatts
California bought during the bleak winter months actually came from what many
would consider to be sympathetic traders -- publicly owned power producers.

???The Chronicle study of spot market purchases shows that as a whole, public
agencies in California and elsewhere charged an average of about $344 per
megawatt hour during the first three months of the year, while private 
companies
charged less than $250.

???More than 80 percent of the power sold by public agencies was above the 
$269
per megawatt hour average that California paid all power providers. Less than 
a
third of the power from private companies exceeded that average.

???"I think anybody who ripped off the state ought to be investigated," said
Harvey Rosenfield, head of the consumer group Foundation for Taxpayer and
Consumer Rights. "A publicly owned utility shouldn't be prospering from this
crisis. And those munis that did ought to immediately forfeit any excessive
profits."

???Yet, like with everything in the power crisis, not everything is always as
it appears, and public utility officials say they're hardly to blame for the
sky-high electricity prices.

???Interviews with operators of publicly owned power providers paint a picture
of state Department of Water Resources electricity buyers sometimes so 
desperate
to avert rolling blackouts that they didn't haggle over price.

???"DWR called us and said we're looking for power at $500 a megawatt hour for
a seven-hour period," said Kate Hora, a spokeswoman for the Modesto Irrigation
District, which delivers power to 95,000 customers in the Central Valley. 
"There
was no negotiation. We just helped them out at the price they named."

???Pete Garris, chief of operations for the DWR department in charge of buying
and selling power, said something like that would not have been typical.

???MUNIS PROVIDE 'RELIABLE ENERGY'

???"I could see offering $500 per megawatt hour when the market was trading at
$650," he said. "One thing munis do for the most part is provide reliable
energy. If they say they are going to deliver so many megawatts, they are 
going
to deliver."

???But that reliability can be expensive.

???Much of the public power was hydroelectric from the Pacific Northwest,
usually delivered at expensive peak demand hours. And municipal agencies say
they were forced to press into operation old, inefficient generators.

???"(State officials) would call and say, 'We need the energy,' " said Ignacio
Troncoso, director of public service for Glendale Water and Power. "We didn't
really want to give it to them because it meant using some very inefficient
turbines, but they said they needed it. Sometimes, it cost $1,000 or $2,000 
per
megawatt hour, but they paid it."

???S. David Freeman, Davis' top energy adviser, said the state bought a
relatively small percentage of its power from municipal utilities, and it was 
at
a time when the state was getting nearly all of its electricity in the 
volatile
spot market.

???20% FROM PUBLIC AGENCIES

???About 20 percent of the power purchased by California in the first quarter
of 2001 came from publicly owned agencies in the United States, Canada or
Mexico.

???"You have to consider the volume," said Freeman, whose hiring in April was
controversial because he headed the Los Angeles Department of Water and Power.

???Los Angeles charged California on average $292 per megawatt hour for power.
Before he joined the state in April, Freeman said Los Angeles' rates were 
based
on cost plus 15 percent.

???"I don't say we're angels, but we're being neighborly," he said then. 
"We're
not giving you a cup of sugar, we're selling it, but not at exorbitant 
prices."

???Like Los Angeles, Canada's publicly owned BC Hydro sold more than 800,000
megawatts to the state in the first three months of the year at above-average
costs. Spokeswoman Elisha Odowichuk said the utility's rates to California 
were
higher because of delivery costs.

???But the utility made enough money to give their Canadian customers a $130
rebate.

???DAVIS WANTS $8.9 BILLION BACK

???Davis has demanded $8.9 billion in refunds for electricity prices the state
says were excessive. The state estimates that it is owed about $600 million 
from
the municipals, Michael Kahn, chairman of the board of the Independent System
Operator, said last week.

???The state is hoping that the Federal Energy Regulatory Commission will 
order
private providers to issue refunds. But the commission has no jurisdiction 
over
municipal utilities.

???At least one offer was put on the table by municipal utilities and is under
consideration, said Steve Maviglio, spokesman for Davis. If no deal is 
reached,
the state is prepared to go to court, he said.

???"Anybody who is on the list of price gougers, we intend to seek refunds
from," he said.

???WHY PUBLIC POWER COST MORE

???Energy experts suggested several reasons why public power may have cost the
state more than electricity offered by Enron, Duke and other private 
companies.

???The state probably bought most public power during peak usage hours in the
evening or during days when rolling blackouts loomed, said Severin 
Borenstein, a
professor with the University of California's Energy Institute in Berkeley.

???That's how the Modesto Irrigation District briefly got into the business of
selling power to the state. The district sold 175 megawatts to California on
Feb. 13 for $500 per megawatt hour.

???The district bought power from an Oregon utility for $375 per megawatt hour
and delivered it to the state from 1 to 7 p.m. during a Stage 3 power alert. 
The
state avoided blackouts that day.

???Seattle City Light earned on average the most per megawatt hour of any
public utility, getting a price of $634. But an official there also said there
were no negotiations with the state.

???The utility had a contract to deliver electricity to 35 Nordstrom stores in
California. State power grid officials determined that the stores weren't 
using
all the power and then snapped up the excess for what is referred to as the
clearing price: the highest price paid for electricity during that hour.

???SEATTLE'S CHARGES DEFENDED

???But Seattle isn't rolling in money because of its dealings with California.
The utility has raised rates three times this year, spokesman Dan Williams 
said.

???Modesto's and Seattle's experiences are probably similar to other public
utilities, said Michael Shames of the Utilities Consumer Action Network, based
in San Diego.

???"The munis did make a profit," he said. "But there's no evidence that Los
Angeles or any other city made the same kind of sky-high profits that the 
Dukes
of the world did. We haven't seen any municipal utility officials taking
expensive vacations because of the crisis."

???Shames suggested that public utilities' high rates may not have been as 
high
as private companies' offers.

???"When they (state energy officials) got really tight, the private companies
were probably offering to sell at exorbitant prices," he said.

???STATE WAS NO CHARITY CASE

???Still, several publicly owned agencies acknowledge that they didn't treat
the state Department of Water Resources as a charity case.

???When the state was desperate for megawatts, Burbank officials would look 
for
power on the open market and sell it to the state if they could make a 10
percent profit to cover such things as administrative expenses, said Fred
Fletcher, assistant general manager of the utility. Sacramento Municipal 
Utility
District did the same, a spokesman said.

???Fletcher scoffed at any charge that municipal utilities owe California a
refund.

???"It's insulting to ask for any money back. We weren't part of the problem,
and we helped the state in a crisis," he said. "And it's not like we're doing
well."

???Glendale residents face a 10 percent increase in electricity rates 
beginning
this month, and Burbank ratepayers will see their power bills rise 17 percent
beginning this month.

??-----------------------------------------------------------


CHART:

???The cost of power for California
???Some of the most expensive megawatts that California purchased on behalf of

financially troubled utilities at the height of the energy crisis came from

publicly owned power generators. The average price paid during the first three

months of the year exceeded the prices paid to private power companies.

??Name ???????????????????????????????????????MWh ???Average price

??City of Seattle, City Light Department ?????3,870 ???$634.17

??Modesto Irrigation District ??????????????????175 ???$500.00

??Powerex (trading arm of BC Hydro) ????????804,302 ???$497.87

??Tacoma Power ???????????????????????????????5,889 ???$475.43

??Eugene Water & Electric Board ????????????151,850 ???$432.37

??Grant County PUD (Washington) ?????????????91,209 ???$348.18

??Sacramento Municipal Utility District ?????47,555 ???$330.34

??City of Glendale ??????????????????????????27,325 ???$326.99

??Bonneville Power Administration ??????????461,144 ???$304.64

??Los Angeles Dept. of Water & Power ???????805,479 ???$292.28

??Silicon Valley Power (City of Santa Clara) ???400 ???$290.00

??City of Burbank ???????????????????????????28,940 ???$273.13

??MSR Public Power Agency (Modesto) ?????????????65 ???$255.00

??Turlock Irrigation District ???????????????10,675 ???$237.31

??California Dept. of Water Resources ??????287,454 ???$205.25

??Commission de Federale Electricidad(x) ????50,752 ???$192.91

??City of Riverside ????????????????????????????330 ???$190.00

??Northern California Power Agency ??????????27,172 ???$186.87

??East Bay Municipal Utility District ????????1,424 ???$173.00

??Salt River Project (Arizona) ??????????????80,076 ???$169.17

??City of Vernon ????????????????????????????22,145 ???$161.67

??City of Anaheim ???????????????????????????33,532 ???$152.60
???Megawatts used from public agencies ????2,941,763 ???$343.67

?????????????????????????????????????????????MWh ?????Average price

Total megawatts used from private sources ??9,943,224 ?$246.79
?Total megawatts purchased from all sources 12,884,987 ?$268.90

??(x) Mexico
???Source: California Department of Water Resources, Chronicle research
???Chronicle Graphic


???Chronicle staff writer Jonathan Wang contributed to this report. / E-mail
the reporters at markmartin@sfchronicle.com and lgledhill@sfchronicle.com.

GRAPHIC: PHOTO, CHART: SEE END OF TEXT

LOAD-DATE: July 16, 2001

??????????????????????????????14 of 77 DOCUMENTS

??????????????Copyright 2001 Knight Ridder/Tribune Business News
???????????????????????Copyright 2001 Contra Costa Times

??????????????????????????????Contra Costa Times

????????????????????????????July 15, 2001, Sunday

KR-ACC-NO: CC-ENERGY-RATES

LENGTH: 906 words

HEADLINE: California Faces Possible Third Power Rate Hike

BODY:


??Is another electricity rate hike in the offing?

??State officials plan to release updated numbers early next week showing how
much money California needs to buy electricity and make payments on what is
expected to be the largest municipal bond issue in history.

??And those figures will largely determine whether Californians will absorb a
third electricity rate hike this year.

??The release will be part of a scramble of regulatory filings during the next
several weeks as California prepares to sell $ 13.4 billion in bonds.

??Those decisions will determine whether electricity bills will rise -- or 
even
fall -- and how much autonomy the state's electricity buyers will have in
increasing rates. They will determine how much money from ratepayers will go 
to
the state and how much to utilities, and whether businesses can choose to buy
electricity directly from suppliers.

??In a related development, the Legislature seems to have escaped the doldrums
that had slowed progress on a bailout of Southern California Edison.

??Friday, Gov. Gray Davis, citing "a flurry of activity in both the Senate and
the Assembly," said action could come as early as next week. Ted Craver, the
financial chief of Edison International, the parent of Southern California 
Edison, said that he also was encouraged by activity in the Legislature.

??With Pacific Gas & Electric Co. already in bankruptcy court, a similar move
by Edison would constitute a major setback to Davis and his efforts to restore
normalcy to the state's electricity industry.

??Craver wasn't completely upbeat. "We're running out of days," he said. "We
need to have things accomplished."

??In the meantime, the state remains in the power-buying business bigtime. In
January, the state Legislature gave the California Department of Water 
Resources
a blank check, with the promise that the Public Utilities Commission would 
raise
electricity rates high enough to cash it.

??Monday, PUC President Loretta Lynch plans to release a proposal spelling out
the mechanisms that will allow the DWR to cash the check. The water agency is
expected to provide estimates of its financial needs within days after that.

??The agreement being drawn up by Lynch also is pivotal to the $ 13.4 billion
bond issue the state is counting on to finance its power buying.

??Investors are seeking assurance from the PUC that the money will be there to
repay the bonds. That money will come from ratepayers, through the sale of
electricity, and the bonds won't be backed by the taxpayers. That makes it
essential for the success of the bond issue that the PUC ensure there is 
enough
revenue from ratepayers to cover everybody, Lynch said.

??Oscar Hidalgo, a water agency spokesman, dismissed widespread speculation
Friday that the figures the agency plans to release early next week will show
that rate increases are needed.

??"It's totally off," Hidalgo said. "We don't anticipate there being an
increase beyond what's already been done."

??Still, it's not that simple. After the department's numbers are revealed, 
the
state's utilities will stake their claims to compensation for the power they
generate at the power plants they still own.

??So even if the water agency thinks there's enough money in the till, there
nevertheless might not be once the utilities get their share.

??"There's going to have to be another rate increase," said PUC Commissioner
Richard Bilas, a Republican on a Democratic-controlled commission that is
divided sharply along party lines.

??You can't recover the "tons of billions" of dollars the state is spending
with relatively modest increases, the commissioner said.

??Bilas said he wants retail rates fully deregulated so that the market would
determine electricity bills. Failing that, he acknowledged that he has no idea
how high the commission would have to set regulated rates to cover the state's
expenses.

??But Democrats in control of the commission were noncommittal Friday.

??"I don't have the numbers," said Lynch.

??Carl Wood, another Democratic commissioner who often works closely with
Lynch, said he too could not guess whether rate hikes would be needed.

??"Not before we get the revenue requirement (from the water department)," 
Wood
said. "And even after we see the revenue requirement, unless it's something 
that
jumps out at you, it's going to need analysis."

??If another rate increase is ordered, it would come on top of new rates that
average about 40 percent higher than last year.

??But even the higher rates may not be enough to cover the state's $ 8 billion
tab for electricity during the first half of the year, back the rest of the $
13.4 billion bond issue and finance future power buying.

??Earlier this week, the DWR disclosed that it spent $ 3.9 billion buying 
power
in April and May, about 9 percent more than it forecast in financial 
projections
given to the PUC in May. Spending in May was about $ 2 billion, about $ 243.1
million, or 12 percent, ahead of the projection.

??Hidalgo, the DWR spokesman, blamed the higher-than-expected spending in May
on record heat, but noted that June spending was "under forecast." In a May 2
filing with the state PUC, the DWR predicted that its power commitments during
June would total $ 1.1 billion.


??By Mike Taugher and Rick Jurgens


??-----

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JOURNAL-CODE: CC

LOAD-DATE: July 16, 2001

??????????????????????????????15 of 77 DOCUMENTS

??????????????Copyright 2001 Knight Ridder/Tribune Business News
???????????????????????Copyright 2001 Contra Costa Times

??????????????????????????????Contra Costa Times

????????????????????????????July 15, 2001, Sunday

KR-ACC-NO: CC-UTILITY

LENGTH: 530 words

HEADLINE: Many California Energy Consumers Cash In on Conservation

BYLINE: By Katie Oyan

BODY:


??Whether it's the call of duty or the cash incentive, the first wave of power
bills reflecting a state rebate program show a large number of Californians 
are
lining up to ease the grid.

??Savings from Pacific Gas & Electric's 20/20 rebate program total $ 7.6
million so far, a spokesman said.

??The program, an initiative by Gov. Gray Davis to promote conservation, 
shaves
20 percent off customers' bills for using 20 percent less energy this summer
than last summer.

??PG&E has processed one-third of its July power bills, and the results show
that 29 percent of customers sliced enough electricity use last month to earn
the reward.

??Out of about 1.3 million bills processed, 394,000 customers qualified for 
the
credits.

??Thousands more still stand to gain as the company sifts through remaining
bills. PG&E serves 4.7 million customers in Northern California, from Baker to
the Oregon border.

??"Twenty-nine percent are meeting the qualifications, which is good," said
PG&E spokesman Jon Tremayne,. "That's a significant chunk."

??The results also are significant compared to previous expectations. Davis
administration officials estimated that 10 percent to 20 percent of customers
would earn the rebate.

??Of those who qualified, 355,000 were residential customers and 39,000 fell
under commercial, industrial or agriculture categories.

??The savings were divided roughly in half. Residents saved $ 3.7 million;
businesses, factories, farms and ranches saved $ 3.9 million.

??The average residential customer who qualified for the discount sheared $
10.50 off energy costs. Commercial, industrial and agricultural customers --
whose bills can reach $ 200,000 a month --saved an average of $ 100.

??"In general, these are all very positive results," Tremayne said. "It shows
that Californians as a whole, individually and collectively, do our part."

??Davis ordered investor-owned utilities -- PG&E, Southern California Edison
and San Diego Gas & Electric Co. -- to take part in rebate programs in March.

??The campaign was designed to stave off rolling blackouts and spare the state
from having to import loads of expensive electricity on behalf of its
financially distressed utilities.

??The programs benefit California's biggest energy guzzlers the most. Those 
who
used very little electricity to begin with have little room to cut back.

??Merle Luck, a senior citizen who lives in a one-bedroom apartment in 
Concord,
said the 20/20 reward is likely out of her grasp.

??"My bill isn't that high, so I don't come up to the baseline," she said.

??If Luck uses any less electricity than she already does, she'll roast.

??"I'm more careful and I think twice, but my big thing is the air
conditioner," she said. "I'm not keeping it quite as cool as I would like, 
but I
have lots of windows and lots of sun, and it can get very warm."

??Even with her conservation efforts, Luck's $ 28 power bill wasn't as steep 
as
she expected.

??"It's a little more than last year at this time, but I think we've had more
heat," she said.


??-----

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JOURNAL-CODE: CC

LOAD-DATE: July 16, 2001

??????????????????????????????16 of 77 DOCUMENTS

??????????????????????Copyright 2001 Copley News Service

?????????????????????????????Copley News Service

????????????????????????????July 15, 2001, Sunday

SECTION: State and regional

LENGTH: 1228 words

HEADLINE: Controller Connell keeps heat on Davis, but could it cost her?

?By Bill Ainsworth

DATELINE: SACRAMENTO

BODY:

??Controller Kathleen Connell is a Democrat with a fading political career who
occupies a little known office she must leave next year.

??Yet during the past five months, she's been able to use her narrow area of
authority the power to write checks to become one of the most high-profile
critics of Gov. Gray Davis' energy policy.

??Connell has repeatedly undermined and embarrassed her fellow Democrat by
disputing the fundamental premise of his energy plan, publicizing lucrative
contracts he has awarded to consultants and refusing to pay a controversial
public relations operative the governor hired.

??Davis' aides call Connell known around Sacramento as a mercurial, demanding
and combative personality a ''publicity hound and showboat'' who is making it
more difficult for California to climb out of the financial swamp created by 
the
energy crisis.

??Garry South, top political adviser to Davis, said Connell turned on the
governor despite his support for her in her first run for office in 1994.

??''She's a viper,'' South said. ''She's one of the most vile people I've ever
known in politics.''

??Connell dismisses such attacks as ''unfortunate finger-pointing,'' saying
she's trying to prevent foolish financial decisions.

??''The controller is a safety valve,'' said Connell, who will be forced from
office by term limits. ''I see myself as a circuit breaker, someone who
independently reviews financial matters for taxpayers.''

??In that sense, she said, she's simply following the playbook written by her
predecessor the governor himself in using the controller's office to provide
independent financial advice.

??''I'm compelled to speak out to prevent an expensive energy crisis from
morphing into a financial meltdown of our economy,'' she said.

??When Davis was controller, from 1987 to 1995, however, he aimed his
broadsides at governors from the other party.

??By contrast, Connell has provided ammunition for Republicans.

??Her projections questioning the governor's electricity plan were cited by
Assembly Republicans as one reason they opposed, and delayed, the $13.4 
billion
bond the governor is seeking.

??Her conflict-of-interest allegations against Davis' energy consultants have
been amplified by Republican gubernatorial candidate Bill Jones, who has used
them to try to discredit the administration.

??Connell chose a highly public forum, the California Democratic Party
convention, to begin attacking Davis. During her March speech she criticized 
his
''delaying and incremental'' approach to energy.

??Since then, Connell has escalated her criticisms, focusing on the central
part of Davis' energy rescue plan: long-term electricity contracts.

??These $43 billion contracts, Davis argues, have not only decreased the 
amount
of electricity the state must buy on the volatile spot market, but they have 
had
the effect of lowering prices on the market. Others cite different reasons 
for a
drop in spot market prices.

??Connell insists the state was wrong to sign so many long-term contracts when
electricity prices were at their peak. She has accused the Davis 
administration
of vastly underestimating the total cost for these contracts.

??''It will cost California a fortune,'' she said. ''They are a bad business
deal for California.''

??She released the contracts to the public earlier than Davis had planned.

??Connell has questioned the Davis administration's ethics. She has refused to
pay Chris Lehane, a public relations consultant Davis hired, because he had
previously worked for Southern California Edison, one of the utilities the 
state
is trying to rescue.

??She also objected to Davis' contract with the two Wall Street firms he hired
to advise him on energy policy. The Blackstone Group and Saber Partners stand 
to
earn more than $14 million if the state buys transmission lines from 
utilities.

??Connell said the contract is ''bizarre'' because the firms get more money if
the state pays a higher price for the transmission lines. She believes their
compensation shouldn't depend on what the state pays the utilities. As it
stands, the transmission-line deals are in jeopardy.

??She said last week that she may not write the check because Saber Partners
might have a conflict of interest. The firm's Web site says that one of the
financial products it developed was used by Southern California Edison.

??Davis press secretary Steve Maviglio said Saber Partners never worked for
Southern California Edison. Further, he defended the contract as a standard
arrangement with just one difference: the firms are working for the state at
about half their normal cost.

??Maviglio said Connell's criticism of the contracts is typical of her 
reckless
approach.

??''She goes off half-cocked without the facts,'' he said.

??Maviglio accused her of undermining Davis' energy policy with Wall Street
interests who must prepare and assess the $13.4 billion bond the state wants 
to
sell to pay for electricity, which would be paid off by ratepayers over 15
years.

??If they believe Connell's charges that the state is in dire financial
straits, he said, ratepayers could be forced to pay millions more in interest
costs.

??''She continues to raise the red flag when the governor is trying to 
convince
Wall Street we're on stable ground,'' he said.

??Maviglio and others suggest that Connell may be angry at Davis for endorsing
a rival, former Assembly speaker Antonio Villaraigosa, for mayor of Los 
Angeles.

??Connell, who entered the contest late, finished sixth in the primary, the
last place of any major candidate. The controller said she never expected 
Davis'
endorsement.

??In most areas, she said, she agrees with the governor, whom she said she
helped prepare for the 1998 gubernatorial debates, something South said is not
true.

??Connell, who served in the housing administration for former Los Angeles
Mayor Tom Bradley and worked as an investment banker, exploded onto the
political scene in 1994. She was a no-nonsense, business savvy Democrat who 
used
her wealth to finance her own campaign and win election in a year that was a
disaster for the party.

??A political loner, Connell has earned a reputation as a difficult boss whose
actions prompted an exodus from the office.

??In one case, she appeared on the television news program ''60 Minutes'' to
criticize delays in prosecuting Medi-Cal fraud cases. But she never mentioned
that her office had reprimanded the one employee who had expedited such
prosecutions.

??In 1998, she decided at the last moment against running for governor and ran
instead for re-election.

??When Davis became governor, he paid her back by trying to get her removed
from one of her most important posts, the Franchise Tax Board. She pleaded 
with
the governor in a phone call, and he dropped the plan.

??Later, Davis tried to take away her job of issuing refund checks for
incorrectly collected smog fees.

??Connell's efforts to gain publicity from a backwater office, and her
political ambition have made her a ''female version of Gray Davis,'' said 
Bruce
Cain, a political scientist who heads the Institute of Governmental Studies at
UC Berkeley.

??Despite Connell's dismal finish in the Los Angeles mayor's race, Cain said
the controller may challenge the governor in the Democratic primary, something
Connell denies she's planning.

??''Her only shot is up or out,'' Cain said.

LOAD-DATE: July 16, 2001

??????????????????????????????19 of 77 DOCUMENTS

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

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

??????????????????????July 15, 2001 Sunday ?Home Edition

SECTION: Opinion; Part M; Page 1; Op Ed Desk

LENGTH: 1899 words

HEADLINE: The Bashers Are Back;
The electricity crisis has given critics of California a new opening to 
predict
catastrophe.

BYLINE: JOEL KOTKIN

BODY:

??California-bashing, that great staple of the early 1990s, has returned.
Emboldened by the state's embarrassing energy woes and the thundering crash of
its dot-com economy, California's traditional detractors--Texas energy barons,
Western economic-development officials and Eastern media moguls--are again
predicting the state's imminent demise.

??Business Week, for example, recently devoted its cover to California's ills.
"The Golden State's prospects," it intoned, "seem to be getting dimmer and
dimmer." Stories now abound of job recruiters from the South and West landing 
in
San Jose handing out flashlights to supposedly itchy-to-leave Silicon Valley
executives. The old, familiar themes of overcrowding, ethnic tensions, 
Hollywood
discontent and environmental degradation have been pressed into service to
sustain the dreary predictions.

??To be sure, there is much to be concerned about. Sacramento's management of
the energy crisis has been uneven, California's public education system is 
slow
to improve and the state's housing shortage is deepening. Furthermore, the
Anderson Business Forecast at UCLA recently predicted a contraction in the 
state
economy because of the electricity crisis.

??Yet, California is not about to fall into a long-term decline. Now the
world's fifth-largest economy, recently surpassing that of France, the Golden
State has emerged as the dominant force in both the "hard" and "soft" ends of
the digital revolution. For this reason, if for no other, the state seems
virtually assured of maintaining a global leadership position that no
one--certainly not Texas or New York, much less geriatric Europe or Japan--is
likely to overcome in the foreseeable future.

??David Shulman, an economist with Lehman Bros. and one of the most
knowledgeable Wall Street experts on California, says the resurgence of
California-bashing is not justified by the facts. Unlike the early 1990s, when
the cratering defense economy fueled some extreme pessimism, today's 
California
economy is remarkably diversified.

??"With the end of the Cold War, I saw the justification for some
California-bashing," recalls Shulman, who back then was with Salomon Bros. 
"But
the California improvement in the 1990s was pretty evident. The economy has
changed. This is clearly where people go to create wealth."

??The most troubling problem spots in the U.S. economy lie elsewhere, notes
Milken Institute regional economist Ross C. DeVol. Especially hurt is the
industrial Midwest, which has been hammered by the precipitous decline in "big
ticket" purchases such as cars and refrigerators. The Great Plains, facing a
falling population and largely uncoupled from the digital economy, suffers 
from
weak commodity prices. Even in the high-technology sector, most of the severe
losses are being felt at the manufacturing level (chips, computers), which is
increasingly concentrated in lower-cost regions like the deep South and 
Western
locales like Phoenix.

??Shulman thus traces much of the current bashing to wishful thinking in 
places
like New York City, where hopes are again being raised that the painfully
prolonged California era is at an end. "At this stage, it's illogical, more
psychological than real," Shulman suggests. "It makes people back here feel
better."

??The best way to gain perspective on the revival of California-bashing is to
revisit the early 1990s. Then, the end of the "California dream" was so widely
predicted and accepted, even in the state itself, that it took fortitude, or
blind faith, to think otherwise.

??Remember the headlines? "California: End of the Dream." "California Dream
Turns Into a Nightmare." "State of Collapse." The doomsayers were not just
trend-jumping journalists but also Wall Street analysts such as Prudential
Bache's George Salem, who wrote in 1992 that California "appears in the early
stages of a long-term economic slide." It would take at least a decade to
recover, he proclaimed, if ever.

??It wasn't just the economy that was wrong. Salem and others saw the state,
particularly riot-scared Los Angeles, as a racially divided dystopia. Two
leading scholars associated with USC's Southern California study center
described the City of Angels as "a superficial gloss of striking beauty, 
glowing
light and pastel hues, which together conspire to conceal a hideous culture of
malice, mistrust and mutiny." Furthermore, as late as the mid-1990s, UCLA
forecastors, who were intially slow to predict the downturn, saw little 
evidence
of an eventual recovery.

??So what happened? Within two years of Salem's predicted "long-term decline,"
the California economy, after taking a huge hit from the collapse of the
long-dominant aerospace economy, started to show unmistakable signs of 
recovery.
Hollywood, which the USC professors had predicted was about to leave town for
good, went on a hiring binge, boosting its employment base by two-thirds.
Silicon Valley, widely thought to be on its heels in the face of the Japanese
juggernaut, took off on one of the most spectacular expansions in the history 
of
modern economies, establishing itself even more as the global epicenter of the
digital revolution.

??California not only came back. It also gained ground on the rest of the
country, not to mention the world. Statewide job growth since 1994 has been
roughly 30% higher than the national average. Over the past three years,
California's job growth has been stronger than "booming" Texas, Washington 
state
and Florida, and light years above that of competing industrial states like 
New
York, Michigan, Ohio and Pennsylvania.

??Even more important has been California's performance in the high-tech
sector. Since the early 1990s, according to economist Steven D. Levy, 
California
has gained market share in everything from computer services to medical
instruments, biotechnology and communications equipment. Despite losses in
aerospace and electronic-component manufacturing, the state's total share of 
the
nation's high-tech jobs has risen from 19.5% in 1990 to 21.5% today.

??In addition to its core strengths in technology and entertainment, 
California
has also expanded its national leadership in many other fields, including
agriculture, international trade and even diversified manufacturing. Los 
Angeles
and Long Beach remain the nation's leading ports, and the region has reclaimed
its place as a primary destination for tourists. Overall, out-migration from 
the
state, some 430,000 in 1993, has fallen to barely 80,000. The annual rate of 
net
population growth, driven largely by births to residents, now stands at nearly
three times the levels of the mid-1990s.

??The biggest problems on the collective California public mind are not
economic collapse or racial tension but quality-of-life issues like traffic,
pollution and metropolitan sprawl. Electricity and, increasingly, water
shortages are symptomatic of the state's unexpectedly strong recovery.

??California is certainly not immune to the recessionary forces affecting 
parts
of the country. Gov. Gray Davis' spotty leadership in dealing with the energy
crisis poses serious short-and even mid-term problems for companies. Yet to
date, there is little sign of a mass exodus of companies or people to other
states. "There's a hoped-for feeding frenzy," suggests one Northern California
development official, "but right now it's just hoped for."

??In sharp contrast to the early 1990s, California's unemployment has stayed
relatively steady at historically low levels. Economic growth, although 
clearly
slowing in the Bay Area, remains fairly solid throughout Southern California,
particularly in the Inland Empire, which has emerged as one of the most 
dynamic
economies in the advanced industrial world. Housing prices, except at the
extreme high end, remain strong throughout much of the state.

??Other factors suggest that California won't underperform the rest of the
nation or on the verge of hemorrhaging jobs and population to other states. 
For
one thing, many of the prime beneficiaries of the last California
recession--places like Denver, Portland and Seattle--no longer offer 
individuals
or companies the cost advantages they could in the early 1990s. Similarly, 
these
areas, themselves now leading centers of the digital economy, also boast
regulatory regimes and anti-growth movements as powerful as any in the Golden
State.

??At the same time, many of the lifestyle and ethnic problems associated with
California-bashing in the early 1990s have spread to competitive regions. Mass
in-migration to places like Las Vegas and Phoenix, both from within the nation
and abroad, has transformed these cities into smaller versions of ethnically
diverse, sprawling and congested California cities. "Los Angeles: America's
First Third World City" was the headline on an early 1990s Arizona Republic
screed, which indicated that most middle-class Anglos were looking for a way
out. Now, according to one recent poll, nearly half of Phoenix's residents say
they would move away if they could.

??But most important of all, Californians, despite all their doubts, seem to 
be
adjusting, if at times uneasily, to the state's evolving character. Although
significant anti-immigrant sentiment remains under the surface, most
entrepreneurs and corporate strategists are not seeking to escape the state's
multiracial society but instead are targeting the burgeoning Latino and Asian
middle classes, which are increasingly driving the economy of virtually every
urban center of the state.

??Class remains a critical issue, particularly given the skills required to
adapt to a digital economy, but the widely accepted idea of California as a
place of unusually intense racial and class conflict is overblown. The best
advertisements for urban dysfunction are not in California but in older 
Eastern
cities like Cincinnati, Hartford or St. Louis, all of which have continued to
lose jobs and population in the past decade. In fact, since the mid-1990s,
unemployment among Latinos and African Americans in California has dropped
dramatically, far more than among whites. Poverty rates have fallen, too,
despite the continued absorption of immigrants; the number of minority-owned
businesses has mushroomed. "This is still the place," says economist Shulman,
"where people from around the world go to create wealth."

??The Bush administration's parochial abuse of power and Sacramento's
managerial mediocrity may help transfer dollars to Texas, but the forces of
climate, culture, technology and demography ultimately favor California. New
York may control the printing presses and the airwaves, but the institutional
regime there cannot compete long-term with the entrepreneurial inventiveness 
of
the Golden State. Barring the most extreme distress, creative people will not
desert San Francisco or Santa Monica in droves for the privilege of moving 
back
to Cleveland, Indianapolis or Philadelphia.

??The reality is that the bashers, off target a decade ago, are simply wrong
again. As was true in 1990, and even more so now, the California dream is far
from over. More likely it's only just beginning.

??*

??Joel Kotkin, a contributing editor to Opinion, is a senior fellow at the
Davenport Institute for Public Policy at Pepperdine University and at the 
Milken
Institute. He is author of "The New Geography: How the Digital Revolution is
Reshaping the American Landscape."

GRAPHIC: PHOTO: (no caption) PHOTOGRAPHER: NOAH WOODS/For The Times

LOAD-DATE: July 15, 2001

??????????????????????????????25 of 77 DOCUMENTS

??????????????????Copyright 2001 McClatchy Newspapers, Inc.

????????????????????????????????Sacramento Bee

??????????????????July 15, 2001, Sunday METRO FINAL EDITION

SECTION: BUSINESS; Pg. D3; YOUR MONEY Money Wise

LENGTH: 174 words

HEADLINE: Save energy, save cash

BYLINE: Loretta Kalb

BODY:

??Now that the heat of summer has arrived, here's a reminder for consumers who
get their electricity from Pacific Gas and Electric Co.

??Gov. Gray Davis, you may recall, has promised to reward ratepayers who cut
power use by offering rebates to those who conserve.

??So PG&E customers who cut electricity use by at least 20 percent during one
month this summer will receive a one-time, 20 percent rebate off their bill.

??The governor's 20/20 plan applies to the months of June through September.

??To find out about other rebates available , visit www.flexyourpower.ca.gov 
on
the Web and read the "financial incentives" feature.

??The item links to a chart of California utilities and their rebate programs.

??In the case of the PG&E 20/20 program, the company's electricity customers
can save money by reducing usage in any one month by 20 percent below the
comparable year-earlier month. Those who succeed also will see a 20 percent
credit on PG&E bills.

??* * *

??The Bee's Loretta Kalb can be reached at (916) 321-1052 or lkalb@sacbee.com
.

LOAD-DATE: July 16, 2001