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Date: Tue, 29 May 2001 12:17:15 -0500
From: "Tracey Bradley" <tbradley@bracepatt.com>
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Cc: "Aryeh Fishman" <afishman@bracepatt.com>, "Andrea Settanni" 
<asettanni@bracepatt.com>, "Charles Ingebretson" 
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Racicot" <mracicot@bracepatt.com>, "Neil Giles" <ngiles@bracepatt.com>, "Paul 
Fox" <pfox@bracepatt.com>, "Ronald Carroll" <rcarroll@bracepatt.com>, "Scott 
Segal" <ssegal@bracepatt.com>
Subject: UPDATE 1-New energy moves by W.House before Bush-Davis meet
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FYI


UPDATE 1-New energy moves by W.House before Bush-Davis meet

WASHINGTON, May 28 (Reuters) - On the eve of a showdown meeting on 
California's power crisis between California Gov. Gray Davis and President 
George W. Bush, the Bush administration on Monday moved to help ease the 
crisis.

Energy Secretary Spencer Abraham unveiled plans to boost extra transmission 
capacity in California, which he said would be a "big step" in easing rolling 
power blackouts.

Abraham ordered the Western Area Power Administration -- an Energy Department 
arm responsible for marketing electricity from federal water projects in 15 
Western states -- to wrap up planning for building extra transmission 
capacity.

The move came as Bush headed to California for his first presidential visit, 
and a critical meeting on Tuesday in Los Angeles with the Democratic governor.

Davis will ask Bush to impose wholesale electricity price controls and order 
refunds for overcharged consumers, aides said, but the White House on Monday 
reiterated Bush's position that such steps would be counterproductive.

Davis spokesman Steven Maviglio said the steps announced by Abraham were not 
new and were not the kind of help California needed to meet its immediate 
crisis. "That's been kicked around for a while," he said.

Davis said last week he was prepared to "go to court" if Bush failed to act. 
"The law says we're entitled to relief and it hasn't been coming," Davis said.

White House spokeswoman Claire Buchan said that while Bush had "worked very 
hard" to help California, through measures such as ordering the Defense 
Department to reduce its energy use by 10 percent in California and easing 
rules for using backup power generators, price controls "make the problem 
worse."



TRANSMISSION BOTTLENECK

At issue in Abraham's order is so-called Path 15, an 84-mile stretch of power 
lines with insufficient capacity to carry the necessary load between southern 
California and the northern part of the state, especially during peak hours.

Abraham told WAPA to determine whether outsiders were interested in financing 
and co-owning a new transmission line. "The level of interest will be a 
factor in the decision to build the line later this year," the Energy 
Department said in a statement.

The statement did not make clear whether the federal government would go 
ahead with the project in the absence of outside financing, nor did it give 
cost details.

It said WAPA, which manages nearly 17,000 miles of transmission lines, would 
prepare the necessary environmental and feasibility studies and review 
easement and land acquisition issues.



LEADERSHIP ROLE

"The Bush administration is taking a leadership role in addressing a 
long-neglected problem in California's electricity transmission system," 
Abraham said. "California's electricity problems developed over a period of 
years and cannot be solved overnight. However, we can move now on actions 
that will help avert the same types of problems from recurring year after 
year.

"Removing the so-called Path 15 bottleneck is a big step in the right 
direction," he said.

The Energy Department said a new line could transmit across the state an 
additional 1,500 megawatts of electricity, enough to power 1.5 million homes.

Planning for additional transmission in the Path 15 area was started in the 
mid-1980s.

California's energy crisis is rooted in a flawed 1996 deregulation plan that 
allowed wholesale power prices to soar while capping retail rates.

The result has brought rolling blackouts, spotty power supplies and put 
intense pressure on Davis to come up with ways to solve a worsening energy 
crunch that has also drained billions of dollars from state coffers.

It has also energized potential opposition to Davis's expected 2002 
reelection bid. Bush has encouraged Los Angeles Mayor Richard Riordan to 
challenge Davis.



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Copyright , 2001 Reuters Limited