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Sac Bee, Fri, 5/4: "Expect prices to shoot up, analysts say" Sac Bee, Fri, 5/4: "GOP: Shrink plan for bonds" Sac Bee, Fri, 5/4: "FERC chief defends plan for state" Sac Bee, Fri, 5/4: "PG&E to judge: ISO, $1 billion tab will drain us" Sac Bee, Fri, 5/4: "Jack Sirard: PG&E's woes a warning to utility investor= s" SD Union (AP), Fri, 5/4: "Legislature sends power authority bill to govern= or" LA Times, Fri, 5/4: "GOP Tries to Force Its Dramatically Different Energy Plan on Governor" LA Times, Fri, 5/4: "Secretary of Energy, Davis Meet on U.S. Plan to Boost Conservation" LA Times, Fri, 5/4: "PG&E Seeks Relief From High-Priced Power Purchases" LA Times, Fri, 5/4: "SDG&E Blackout Plan Would Pay Firms to Use Generators= " SF Chron, Fri, 5/4: "Been there, done that=20 Bay Area finds little new in Bush's ideas " SF Chron, Fri, 5/4: "Bush calls power supply the solution=20 He says conservation useful but secondary " SF Chron (AP), Fri, 5/4: "SDG&E unveils plan to contend with rolling=20 blackouts" SF Chron (AP), Fri, 5/4: "California crisis brings new talk of energy=20 conservation"=20 SF Chron (AP), Fri, 5/4: "Developments in California's energy crisis" SF Chron, Fri, 5/4: "Energy at a glance" SF Chron, Fri, 5/4: "Ships would help during blackouts=20 Ready reserve fleet has power to provide"=20 SF Chron, Fri, 5/4: "PG&E chairman wants to keep power lines" Mercury News, Fri, 5/4: "Bush shifts policy on conservation after meeting= =20 with GOP" Mercury News, Fri, 5/4: "Senate plans public power" Mercury News, Fri, 5/4: "All Caps Hed" OC Register, Fri, 5/4: "Energy notebook Vote delayed on $12 billion state bond for power" OC Register, Fri, 5/4: "US conservation order called Bush's best effort" Individual.com (Bridgenews), Fri, 5/4: "[B] POWER UPDATE/ Bush directs fed= s to save energy in California" Individual.com (AP), Fri, 5/4: "Judge Dismisses $10B PG&E Suit" Individual.com (Business wire), Fri, 5/4: "Bankruptcy Update/ PG&E Files= =20 Motion to Require CAISO to Follow Federal Law" ---------------------------------------------------------------------------= --- ---------------------------------------------- Expect prices to shoot up, analysts say By Dale Kasler Bee Staff Writer (Published May 4, 2001)=20 Gov. Gray Davis' plan for solving the energy crisis relies partly on a=20 striking assumption: that the state's power expenditures will drop=20 dramatically this summer.=20 But energy-market analysts believe Davis is underestimating the cost of=20 electricity and say the state should brace for a significant run-up in pric= es=20 during what is likely to be a summer of chronic shortages.=20 In particular, analysts question Davis' prediction the state will pay an=20 average of $195 a megawatt-hour on the spot market from July to September, = a=20 44 percent reduction from the projected average price for April through Jun= e.=20 "One hundred and ninety-five dollars? Boy, I wish it were true," said Sever= in=20 Borenstein of the University of California Energy Institute. "My estimate i= s=20 substantially higher."=20 Yet Davis' advisers are sticking by their projection of the state's power= =20 costs, released Monday to a skeptical Legislature by private consultants to= =20 the governor. They say the lower cost estimates reflect expected increases = in=20 supplies, the projected impact of California's new conservation program and= =20 the state's growing ability to wean itself from the ultra-expensive spot=20 market and buy much of its power through cheaper long-term contracts.=20 Prices may rise, but spending by the state will decline, starting this=20 summer, they insist.=20 "This is a very credible plan," said Joseph Fichera, a Wall Street financie= r=20 advising the governor. "We have done things to mitigate our exposure (to th= e=20 spot market)."=20 The credibility of the projections is crucial to the state's plan to sell $= 10=20 billion worth of bonds -- a key element of Davis' rescue plan. The bonds=20 would compensate the state for past and future power purchases made on beha= lf=20 of moribund Southern California Edison and Pacific Gas and Electric Co., wi= th=20 ratepayers ultimately footing the bill. Davis expects the state to spend=20 $18.7 billion on power by June 2002.=20 But if electricity costs go higher than Davis expects, the strain on the=20 state's budget could worsen, complicating the bond sale. Republican=20 lawmakers, wary of higher costs and distrustful of Davis' projections, have= =20 been threatening to block the sale.=20 Higher-than-expected costs also would increase the likelihood of blackouts;= =20 Davis acknowledged last week that the state might stop purchasing electrici= ty=20 at times when prices go out of sight.=20 And many private-sector experts believe prices will surely rise.=20 "I see no reason, given what's happened the past six months, that the next= =20 six months is going to be dramatically different," said Keith Bailey, chief= =20 executive of generator Williams Cos., which sells power to California.=20 One great unknown is the impact of a "price mitigation" plan approved last= =20 week by the Federal Energy Regulatory Commission. Price caps would kick in= =20 when California's power reserves are less than 7 percent of demand -- the= =20 so-called "power alert" days.=20 Bailey said the plan would have "a very real effect," but state officials= =20 called it inadequate. "More holes than Swiss cheese," Davis said this week.= =20 In Washington, Sen. Dianne Feinstein, D-Calif., and other Western senators= =20 tore into FERC Chairman Curtis Hebert Jr. at a hearing on the price=20 mitigation plan. Feinstein wondered aloud why the FERC didn't simply=20 establish a firm ceiling on prices.=20 As it stands now, California officials have been spending upward of $50=20 million a day for Edison and PG&E; the tab can fluctuate wildly from day to= =20 day as prices shoot up and down. On Thursday, prices in California ranged= =20 between $214 and $240 a megawatt-hour, depending on location, for peak-time= =20 power, according to industry newsletter Enerfax Daily.=20 Because summertime demand is typically about 50 percent higher than it is i= n=20 spring, most analysts expect prices to rise. California electricity futures= =20 prices, considered by many to be a decent gauge of where prices are going,= =20 are trading at $375 a megawatt-hour for July and $525 for August, Enerfax= =20 said.=20 "I would trust the traders," said Gary Ackerman of the Western Power Tradin= g=20 Forum, an association of power generators. "They've been right more often= =20 than the Davis administration."=20 The Northwest drought, robbing California of cheap hydropower, is a key=20 reason many analysts believe costs won't drop.=20 "What it all adds up to is much less imported hydroelectric power than we'r= e=20 used to," said Arthur O'Donnell, editor of the California Energy Markets=20 newsletter.=20 But Davis' consultants say new power is coming from other sources this=20 summer, easing prices. New power plants, scheduled to begin operations this= =20 summer, will add 4,500 megawatts of power to California's energy-starved=20 grid, Davis said.=20 O'Donnell, though, said the new plants won't provide immediate relief. "Pow= er=20 plants, in their start-up phase, frequently have problems," he said.=20 Another unknown quantity is the fate of hundreds of cogenerators, wind farm= s=20 and other alternative-energy providers that deliver more than 20 percent of= =20 the state's electricity under contract to the utilities.=20 After going months without payment from PG&E and Edison, scores of these=20 producers shut down in February and March, depriving the state of an=20 estimated 3,000 megawatts of power and contributing mightily to two days of= =20 blackouts in March.=20 About 800 megawatts of power returned to service in April, after PG&E and= =20 Edison were ordered to resume paying the generators, the two utilities said= .=20 And Fichera said more will come back starting June 1, when their contracts= =20 say they must operate or face financial penalties.=20 But some generators say they won't produce full throttle this summer. Anger= ed=20 at a new payment schedule that substantially cuts their income, they'll run= =20 "the absolute bare minimum" to fulfill their contracts, said Hal Dittmer of= =20 Wellhead Electric Co., a small generator that's been shut down.=20 Representatives of the small generators met with Davis on Thursday, with=20 Davis agreeing to work with them on the possibility of increasing their=20 payments, said generators' attorney Jerry Bloom.=20 Davis, meanwhile, also is betting that energy usage will fall. Recently=20 approved rate hikes will create "sticker shock" that will cut demand 3=20 percent, Fichera said. The state's conservation program will contribute an= =20 additional 4 percent, he said.=20 "If we buy less than what (generators) expect, prices drop," Davis said.=20 Above all, the state has completed or is in final negotiations on a slew of= =20 long-term contracts with major generators -- deals that will substantially= =20 cut the state's dependence on the spot market and reduce its overall power= =20 bill, said Ron Nichols of Navigant Consulting Inc., which developed the=20 power-cost estimates for Davis.=20 The Bee's Dale Kasler can be reached at (916) 321-1066 or dkasler@sacbee.co= m.=20 David Whitney of The Bee's Washington Bureau contributed to this report.=20 GOP: Shrink plan for bonds By John Hill Bee Capitol Bureau (Published May 4, 2001)=20 The state should bite the bullet and use $5 billion of its surplus to pay f= or=20 electricity instead of borrowing the money and prolonging the fiscal agony,= =20 Assembly Republicans said Thursday.=20 Paying up front is preferable to a Democratic plan that would "saddle=20 electric customers with higher utility rates to pay the state back with=20 interest," said Assemblyman Bill Leonard of San Bernardino, one of 30 membe= rs=20 of the Assembly Republican Caucus.=20 But the caucus's plan drew fire from state Treasurer Phil Angelides, a=20 Democrat in charge of putting together the bond deal. He said a GOP block o= f=20 the bond deal would cut into this year's spending for education and=20 transportation and "take the state toward fiscal insolvency."=20 Angelides said the Republican stance will force the Legislature to pass the= =20 bill authorizing bonds with a simple majority, needing no GOP votes but=20 requiring a 90-day wait for the bill to become law. By that time, he said,= =20 the state will be perilously close to running out of money.=20 "It is to me, from a business perspective, one of the most irresponsible ac= ts=20 I've witnessed," he said.=20 The Assembly Republican plan calls for the state to sell $8 billion in bond= s,=20 instead of the $12.5 billion proposed by Gov. Gray Davis. This move would= =20 relieve pressure for more electricity rate increases, Leonard said.=20 The Republicans would make up the difference by taking $5 billion from the= =20 state's general fund. That's money the Democratic governor proposed in=20 January would go to one-time expenditures on a variety of projects, from=20 clean beaches to housing, as well as new spending on schools.=20 The Republican plan calls for rate rebates for people whose electric=20 utilities are publicly owned, such as the Sacramento Municipal Utility=20 District. Some argue that these ratepayers are getting a bad deal because= =20 their tax money is subsidizing ratepayers whose utilities are in financial= =20 trouble.=20 It also includes past Republican proposals that have stagnated in the=20 Legislature, such as allowing residential customers to make deals with=20 independent electricity providers and encouraging quick building of power= =20 plants.=20 Although the Republicans are in the minority, they wield leverage in the=20 energy debate because a bill that would authorize a bond sale requires a=20 two-thirds vote. At least five of the 30 Assembly Republicans would have to= =20 vote for it.=20 The Republicans say they are uncomfortable with the size of the bond deal= =20 proposed by Davis, which combined with other energy bond sales could top $2= 0=20 billion. "It's too much to swallow," said James Fisfis, a spokesman for the= =20 caucus.=20 Fisfis said the plan represents a preliminary response to Democratic=20 proposals -- a "starting point in negotiations and a vision of Republicans= =20 and what they would do if they were governing."=20 "We don't want those phony messages that everything's fine and hunky-dory,= =20 and it's not," he said. "This is a time for financial restraint."=20 The Republican proposal blasts as "expensive gimmickry" a plan by Angelides= =20 to get a $4.1 billion bridge loan from three major lenders to keep the stat= e=20 flush until the bonds are sold.=20 Angelides said such loans are routine when California and other states sell= =20 bonds. The loan in this case, he said, provides "momentum" for what's likel= y=20 to be the biggest bond sale in U.S. history. "It's three of the most powerf= ul=20 investment banks in the country side by side with us, signalling to the wor= ld=20 marketplace that they believe in this transaction," he said.=20 The fees to the investment banks of several million dollars represent a=20 fraction of one day of the state's power costs, he said.=20 Legislative Analyst Elizabeth Hill said the proposal would require all $2.3= =20 billion in one-time expenditures in the governor's budget to be axed, as we= ll=20 as $2.7 billion of proposed year-to-year spending.=20 In addition, state revenues for the fiscal year starting July 1 appear to b= e=20 lower than anticipated, so the Republican plan might force even more cuts,= =20 she said.=20 The Republican caucus plan came the same day that Secretary of State Bill= =20 Jones, the lone Republican statewide officeholder and a GOP candidate for= =20 governor next year, released his own ideas on the energy crisis.=20 Jones, in a letter to Vice President Dick Cheney, said the state "is on the= =20 brink of fiscal insolvency" because of Davis' efforts to buy power.=20 Instead of selling bonds or negotiating to buy the utility companies'=20 transmission lines or other assets, the state should ask power generators t= o=20 forgive some of the nearly $14 billion they're owed in exchange for immedia= te=20 payment, Jones said.=20 In addition, the state should offer low-interest loans to utilities to help= =20 them repay their debt, using the power lines as collateral. Finally, he sai= d,=20 the utilities' parent companies should help reduce the debt.=20 While Jones said the Davis plan is "socializing the delivery of power," the= =20 state Senate on Thursday sent the governor a bill that will likely drive th= e=20 state further into the energy business by allowing a public power authority= =20 to run its own power plants.=20 The authorizing bill, SB 6x by state Senate President Pro Tem John Burton,= =20 D-San Francisco, passed the Senate on a 24-14 party-line vote.=20 The agency would have access to $5 billion in bond money with which it coul= d=20 build, run and seize power facilities and institute conservation programs.= =20 The Bee's John Hill can be reached at (916) 326-5543 or jhill@sacbee.com.= =20 Kevin Yamamura of The Bee Capitol Bureau contributed to this report.=20 FERC chief defends plan for state=20 By David Whitney and David Westphal Bee Washington Bureau (Published May 4, 2001)=20 WASHINGTON -- The chairman of the Federal Energy Regulatory Commission=20 sternly defended the panel's new plan for controlling California electricit= y=20 prices Thursday amid mounting criticism that it is too little and too late = to=20 do much good.=20 The criticism came from Democrats and one Republican, Oregon Sen. Gordon=20 Smith, at a hastily arranged hearing of the Senate Energy and Natural=20 Resources Committee that was intended to be a forum for FERC Chairman Curt= =20 Hebert Jr. to dispel concerns that the plan won't protect consumers from=20 price-gouging electricity marketers.=20 The order, approved last week by a 2-1 vote, is supposed to dampen prices= =20 without rigid price controls by ordering generators to sell all the power= =20 they produce and setting a benchmark price based on the highest-cost,=20 least-efficient plant operating during periods of emergency shortages.=20 "FERC is acting," Hebert said. "FERC is acting responsibly. ... We're doing= =20 what we can do."=20 But the commission's lone dissenter on last week's order, William Massey,= =20 charged that the measures to control skyrocketing prices would be in effect= =20 only during power emergencies when supplies were tightest. And while that= =20 might be as much as 40 percent or 45 percent of the time during the long ho= t=20 summer, he said, that still leaves most of the time when power marketers ar= e=20 free to sell at whatever price they can get.=20 "I have no confidence that prices will be fair and just at all times this= =20 summer," Massey said.=20 Sen. Dianne Feinstein, D-Calif., continued on that theme. She produced what= =20 was described as a "megawatt laundering" blueprint she had received detaili= ng=20 how FERC's order could be used to trade power back and forth between=20 marketers to bid up wholesale prices in a way that would be outside FERC=20 monitoring.=20 The contentious hearing came as the FERC is about to publish notice in the= =20 Federal Register to expand the price monitoring plan to Oregon, Washington= =20 and other Western states.=20 But Smith said he thought the commission was misreading the political=20 firestorm brewing throughout the West if it thought its plan would quell=20 outrage over rising prices.=20 "Are you aware of the head of steam that is building up?" asked Smith, who= =20 said prices in his region are 10 or 12 times what they were a year ago. "Th= is=20 is unsustainable, for this administration, for this Congress."=20 Smith and Feinstein have introduced legislation that would temporarily cap= =20 wholesale power rates at the cost of production plus a fixed profit margin.= =20 Feinstein, who was more supportive of the FERC order after its release last= =20 week, said after the hearing that she now believes it is flawed by too many= =20 loopholes and problems.=20 "I can't understand why they are doing this," she said.=20 Meanwhile, one of California's biggest power customers, the U.S. military,= =20 vowed Thursday to reduce its peak-hours electricity use by 10 percent this= =20 summer as President Bush expressed new concern about the state's looming=20 season of blackouts.=20 "We're worried about blackouts that may occur this summer and we want to be= =20 part of any solutions," said Bush, who gave federal officials 30 days to=20 implement electricity-reducing plans.=20 Gov. Gray Davis welcomed the president's comments, but said the plan falls= =20 short. "Surely the federal government can do more and match California's 20= =20 percent savings at all state buildings," he said.=20 Vice President Dick Cheney, in a speech earlier this week, spoke dismissive= ly=20 of conservation efforts in the 1970s, and warned that the nation won't be= =20 able to "simply conserve or ration our way out of the situation we're in."= =20 But Bush spoke repeatedly Thursday of the importance of conserving. "We've= =20 got to do both," he said. "We must conserve, but we've also got to find new= =20 sources of energy."=20 The administration set no target for reducing federal power use, but=20 recommended actions such as turning off escalators and raising thermostats = to=20 78 degrees when state reserves fall below 5 percent.=20 "We're not trying to pick a figure arbitrarily out of the sky," said Energy= =20 Secretary Spencer Abraham.=20 Earlier, in a letter to Congress, Davis excoriated federal inaction on=20 soaring electricity rates as he prepared to meet in Sacramento with Abraham= =20 on Thursday evening.=20 "With all our actions in California, it is a travesty that on the one issue= =20 over which the federal government has exclusive jurisdiction -- wholesale= =20 energy prices -- it has utterly failed to discharge its responsibility,"=20 Davis said.=20 The Bee's David Whitney can be reached at (202) 383-0004 or=20 dwhitney@mcclatchydc.com.=20 PG&E to judge: ISO, $1 billion tab will drain us By Claire Cooper Bee Legal Affairs Writer (Published May 4, 2001)=20 SAN FRANCISCO -- Pacific Gas and Electric Co. asked a federal bankruptcy=20 judge Thursday to bar the operator of California's power grid from buying= =20 electricity for the utility or collecting almost $1 billion now due for pas= t=20 wholesale purchases.=20 PG&E's bankruptcy estate would be depleted by paying the high prices passed= =20 on by the California Independent System Operator, the utility said in askin= g=20 U.S. Bankruptcy Judge Dennis Montali to issue an injunction.=20 PG&E filed for Chapter 11 bankruptcy reorganization April 6. The utility's= =20 corporate parent, San Francisco-based PG&E Corp., is not part of the=20 bankruptcy proceedings.=20 The ISO buys electricity from independent wholesalers to supplement whateve= r=20 power the utilities can send to the grid, matching supply with demand on a= =20 daily basis. Throughout the past year it has provided as much as 30 percent= =20 of the state's electricity and as little as 10 percent on any given day, sa= id=20 ISO spokesman Patrick Dorinson.=20 ISO Vice President Elena Schmid said Thursday that the ISO stopped buying= =20 electricity for PG&E after being told to do so April 6 by the Federal Energ= y=20 Regulatory Commission because the utility no longer was creditworthy.=20 But the PG&E legal complaint said the ISO continued making purchases throug= h=20 April 30 at an average cost almost six times as high as the frozen retail= =20 rates that PG&E can charge its customers.=20 Even with an upcoming rate increase, said the complaint, PG&E could lose $2= 28=20 million a month if it depended on the ISO for 25 percent of its electricity= .=20 Since mid-January, the California Department of Water Resources also has be= en=20 buying electricity for PG&E and Southern California Edison, under AB 1x,=20 legislation that authorized state power purchases and rate increases if=20 necessary to repay the state.=20 PG&E said in the complaint that the state water department has limited its= =20 purchases to power it can buy at rates it deems reasonable, leaving it to t= he=20 ISO to obtain "at extremely high rates" the remainder of the electricity PG= &E=20 needed to balance supply and demand.=20 PG&E has been able to generate or has contracts for between 50 percent and = 60=20 percent of its retail electricity demand.=20 PG&E spokesman Ron Low said the DWR has been buying about 85 percent of the= =20 balance, but the company doesn't know how much the ISO is buying until it= =20 receives the bills.=20 ISO's Schmid said no decision had been reached concerning the effect of the= =20 bankruptcy proceedings on PG&E's outstanding billion-dollar bill for=20 electricity purchases in January and February.=20 "We're certainly going to live by whatever terms the Bankruptcy Court puts = on=20 it," she said.=20 Two weeks ago, ISO advised PG&E that ISO's January and February invoices, t= o=20 the extent they conflicted with the bankruptcy process, were submitted only= =20 for record-keeping purposes.=20 But PG&E said ISO still plans to hold the company responsible for the bills= .=20 A hearing has been set for June 4.=20 The Bee's Claire Cooper can be reached at (415) 551-7701 or=20 ccooper@sacbee.com.=20 Jack Sirard: PG&E's woes a warning to utility investors (Published May 4, 2001)=20 Q: Like so many other investors, I bailed out of my Pacific Gas and Electri= c=20 shares. I am now looking at Con Ed. It looks fairly priced with a great=20 yield. Would it be wise to take the money I got from PG&E and buy Con Ed?= =20 My biggest concern is that Con Ed could suffer a fate similar to the one th= at=20 devastated PG&E. What do you think?=20 --Robert A., Carmichael=20 A: Consolidated Edison (ticker symbol ED) is one of the nation's largest=20 investor-owned energy companies. The company provides a wide range of=20 energy-related services to customers in New York, New Jersey and=20 Pennsylvania.=20 For the three months ended March 31, revenues increased 24 percent to $2.89= =20 billion while its net income declined 5 percent to $179.1 million.=20 The company's stock closed Thursday at $36.26, near its 52-week high of=20 $39.50 and well above its low of $29.61. The company pays a generous annual= =20 dividend of $2.20 a share, giving it a current yield of 6.04 percent.=20 Last week the company said it would spend $483 million this year as part of= a=20 program to prepare for the summer of 2001, enhance reliability and improve= =20 infrastructure. And over the next five years, Con Ed plans to invest $2.4= =20 billion to upgrade its electric delivery system, which serves New York City= =20 and Westchester County.=20 You're certainly right to be concerned about any utility's plans to deal wi= th=20 the energy crisis.=20 Here's what I found about Con Ed. The company sold most of its power plants= =20 and, like California utilities, failed to lock in multiyear contracts with= =20 suppliers to protect its customers against rising wholesale prices. But Con= =20 Ed can pass wholesale electricity price increases through to consumers. Las= t=20 summer, a spike in wholesale prices briefly pushed Con Ed electric rates up= =20 43 percent and that could happen again this summer.=20 Value Line says Con Ed stock is expected to lag the market but says=20 income-oriented investors might want to build a stake. The company has been= =20 increasing its dividend slowly but surely over the years. If you buy the=20 stock, keep a close eye on it. Utilities, unfortunately, no longer can be= =20 bought and tucked away.=20 Q: Our gross income is $100,000 a year and, other than our house payment, w= e=20 have no outstanding debt except a car payment of $250 a month. We have abou= t=20 $175,000 in investments including our stocks, mutual funds and 401(k), whic= h=20 we are adding about $1,000 a month to.=20 We have two kids, age 10 and 12, and hope to retire from our jobs with the= =20 state in about seven years at age 53 to 55 and convert our investments to 2= 5=20 percent CDs, 25 percent bond funds, 25 percent stocks and 25 percent mutual= =20 funds. What do you think?=20 --Jim R., Sacramento=20 A: After looking at the stocks (down 74 percent) and mutual funds (down 51= =20 percent) that you have bought on your own, I'd suggest that you need=20 professional help with your investing. Admittedly, you have taken a hit by= =20 being heavily invested in technology components. By comparison, your 401(k)= =20 is down only 23 percent.=20 Instead of being concerned about how to invest once you retired, if I were= =20 you, I'd focus my attention on whether I had enough money to retire. Becaus= e=20 you and your spouse both work for the state, your retirement benefits shoul= d=20 be solid, but I think you need to get a professional review of your financi= al=20 situation to see if all the numbers add up. At first glance, it doesn't loo= k=20 to me that they do.=20 You're at the age when you need to have a financial game plan in place that= =20 can pay for college for the children and your own retirement. In your case = --=20 as with many others -- spending some time and money now with a professional= =20 will pay off in the future.=20 The Bee's Jack Sirard can be reached at (916)321-1041 or jsirard@sacbee.com= =20 Legislature sends power authority bill to governor=20 By Audrey Cooper ASSOCIATED PRESS=20 May 3, 2001=20 SACRAMENTO =01) California is poised to enter the power business after the = state=20 Senate approved the creation of a public power authority and sent its bill = to=20 Gov. Gray Davis Thursday.=20 A power authority, supporters said, will give the state more control over i= ts=20 wholesale electricity market by building and operating its own power plants= .=20 State-owned plants could charge lower prices, and building new plants could= =20 increase supply and ease wholesale prices.=20 If signed by the Davis, the bill creates a California Consumer Power and=20 Conservation Financing Authority that could issue up to $5 billion in reven= ue=20 bonds to pay for power plants, natural gas storage and additional pipelines= =20 and conservation programs.=20 Davis has said he supports creating a public power authority similar to one= =20 in New York. The New York authority has 10 power plants, 1,400 miles of=20 transmission lines and produces about 25 percent of the state's power.=20 Nebraska also has a power authority, which created a market in which=20 residents pay 22 percent less than the national average, said Sen. John=20 Burton, D-San Francisco, who wrote the bill.=20 A Davis spokesman said Thursday that although the governor has supported th= e=20 concept of a power authority, he has not decided whether or not to sign the= =20 legislation.=20 The authority would be run by the state treasurer and four other members=20 appointed by the governor.=20 Opponents of the plan, most of them Republicans, have said an authority=20 thrusts the state into a power market in which it doesn't belong and could= =20 obstruct private interests' efforts to build and operate power plants.=20 The new board would also be able to seize plants by eminent domain, a power= =20 the governor also has under an emergency order issued in January.=20 Sen. Steve Peace, D-El Cajon, said California needs the authority because t= he=20 1996 deregulation law didn't create real competition and the Federal Energy= =20 Regulatory Commission refuses to control rising wholesale prices.=20 The state's deregulation is "the economic equivalent to the World Wrestling= =20 Federation," Peace said. "The wrestlers follow a script and the referee,=20 FERC, ensures it is entertaining. It is not real competition."=20 The authority won't help the state escape blackouts this summer, but will= =20 help restore reliable and affordable electricity in the future, said consum= er=20 advocate Harvey Rosenfield with the Foundation for Taxpayer and Consumer=20 Rights.=20 "The agency is California's key to survival and independence from the energ= y=20 cartel," he said.=20 Davis and state lawmakers are also considering purchasing Southern Californ= ia=20 Edison's transmission system, which would be governed by a separate public= =20 authority. Negotiations with San Diego Gas & Electric Co. are continuing. T= he=20 Legislature would have to approve those buys.=20 The authority's main power would be over generator construction, said=20 Stanford University economist Frank Wolak. Energy companies would likely be= =20 hired to build the plants, something the companies are already pursuing.=20 "As far as operating power plants, we're not as good as these other guys=20 are," he said.=20 However, the authority may speed the siting of power plants, an approval=20 process mostly anchored in state agencies. Centering the approval process i= n=20 the state government could speed the process, he said.=20 Richard Sklar, the governor's new energy czar, said the goal of the state's= =20 power authority will be to balance the energy market in California and keep= =20 private companies from controlling the prices.=20 "The power authority is a sensible long-term strategy," Sklar said. "It's n= ot=20 a bad idea for the state, if the private sector will not build it, to build= =20 plants so supply won't fall short of demand and this game won't be able to = be=20 played."=20 Opponents said California should create total deregulation of the electrici= ty=20 market, not a government solution.=20 The 24-14 vote on the bill, written by San Francisco Democratic Sen. John= =20 Burton, was split down party lines.=20 Some of the most "feared words in the English language are 'I'm from the=20 government and I'm here to help you,'" said Sen. Bill Morrow, R-Oceanside.= =20 The state Assembly passed the bill last week in a 47-28 vote split along=20 party lines.=20 Pacific Gas and Electric Co. spokesman Ron Low declined comment on the=20 legislation. Officials from San Diego Gas and Electric Co. didn't return=20 calls seeking comment.=20 ?? Read Burton's SB6X www.leginfo.ca.gov=20 GOP Tries to Force Its Dramatically Different Energy Plan on Governor=20 By MIGUEL BUSTILLO, Times Staff Writer=20 ?????SACRAMENTO--Republican lawmakers are trying to force Gov. Gray Davis= =20 into a dramatically different exit strategy for the energy crisis: writing= =20 off the $5 billion the state has already spent on electricity and borrowing= =20 billions less to finance future power purchases. ?????GOP lawmakers are holding up emergency legislation needed to replenish= =20 the budget for power costs, because they don't think the Democratic=20 governor's plan to get California out of the power business will work. They= =20 say the plan is full of dangerously optimistic assumptions, such as estimat= es=20 that 90% of the state's alternative energy producers will be generating=20 electricity this summer--only two-thirds are now--and that Californians wil= l=20 use 7% less electricity. ?????Although Republicans don't control either house, the emergency=20 legislation requires a two-thirds vote, which gives the GOP significant swa= y. ?????The plan from the Republican leadership would commit taxpayer money fo= r=20 the first time to an electricity problem that has only affected customers o= f=20 private utilities. Because the plan is sure to draw strong opposition from= =20 politicians in Los Angeles and other areas served by public power agencies,= =20 Republicans have included a complex, $1.5-billion proposal to provide refun= ds=20 to those served by municipal utilities. ?????By blocking the emergency legislation, Republicans may stop state=20 Treasurer Phil Angelides from securing a $4.13-billion loan to repay state= =20 coffers for electricity purchases--a failure that would reduce the money=20 available to Davis for his next budget and possibly delay his plan to resol= ve=20 the energy crisis. Angelides needs the bill to guarantee repayment for the= =20 loan. ?????If Angelides does not obtain legislative approval by Monday, he will= =20 miss a Tuesday deadline lenders had given him to close the loan. That would= =20 clearly leave Davis with less money for new education, police and=20 road-building programs as he begins planning his next budget this month. ?????Moreover, failure to pass the bill could delay a record bond issue tha= t=20 Davis promised would replenish the budget and shield it from further energy= =20 drains by summer. And it could harm sagging confidence on Wall Street that= =20 California can deliver on its plans to manage the energy crisis, Angelides= =20 said. ?????California's credit rating has already been downgraded by one credit= =20 agency, Standard & Poor's, largely because of concerns about the effect of= =20 electricity purchases on state finances. ?????Negotiations Are Continuing ?????"The Republicans appear to be digging in and playing a dangerous game = of=20 financial roulette with the state. This is really ludicrous to me," Angelid= es=20 said. "Standard & Poor's has already downgraded us. The other credit rating= =20 agencies are watching. I just don't understand what the Republicans are=20 thinking." ?????Said Assembly Republican leader Dave Cox (R-Fair Oaks): "We're not=20 prepared to give the governor a blank check." ?????Democrats threatened Thursday to test the Republicans' resolve by=20 bringing the bill to a vote in the Assembly, but backed down. Negotiations= =20 among legislative leaders continue. ?????To avoid widespread blackouts, the state government entered the=20 electricity-buying business in January after the private utilities became t= oo=20 burdened with debt to continue purchasing power on the expensive wholesale= =20 market. ?????Under a plan approved by the Legislature and signed into law by Davis,= =20 the state budget is to be repaid for the power purchases through a massive= =20 municipal bond issue, expected to be the largest in American history. The= =20 bonds, in turn, are to be paid off by utility ratepayers through a slice of= =20 their monthly bills. ?????However, the plan was based on the premise that the state would quickl= y=20 bring down power costs by entering into long-term contracts with suppliers-= -a=20 scenario that has yet to materialize. ?????In fact, California's power costs have gone up since January. Lawmaker= s=20 initially estimated that $10 billion in bonds would allow the budget to be= =20 repaid and cover future power purchases. Davis is now proposing $12.5 billi= on=20 in bonds--and higher electric bills--to finance the state's costs until 200= 3. ?????Republicans are convinced that it will not be enough. They say the=20 Angelides bridge loan is not needed because the state has money in various= =20 funds that could cover power purchases well into the fall. ?????They also confess to political considerations. Republican legislators= =20 believe that by allowing Angelides to obtain his loan now, they will be=20 powerless to oppose further borrowing later. The loan Angelides set up with= =20 J.P. Morgan Chase and several other financial services companies is to be= =20 repaid with the bond issue. If the loan is not repaid by the end of the=20 summer, the interest rate will rise dramatically, a situation that would ma= ke=20 it hard for the minority Republicans to oppose more bonds. ?????The strong GOP views were shaped in part by Democratic state Controlle= r=20 Kathleen Connell, who met with Republican legislators earlier this week and= =20 shared a highly critical appraisal of Davis' plan. ?????Connell told the Republicans that the governor's strategy was based on= a=20 series of assumptions about electricity market conditions in California thi= s=20 summer that, in her view, are highly improbable. ?????"It is almost impossible for all these hypothetical situations=20 envisioned in their scenario to occur at once," Connell said. ?????But even if all the assumptions came to pass, she predicted that=20 California would still need to secure another source of financing by next= =20 spring to continue energy purchases. Davis administration officials have=20 rebutted her claim. ?????"I am deeply troubled by this incremental approach to this financing= =20 that is long-term in nature and is going to burden the state for many years= ,"=20 Connell said, in what appeared to be a reference to Davis' reputation as a= =20 plodder.=20 ?????Using Surplus to Pay for Electricity ?????Republicans, who have traditionally been opposed to financing public= =20 programs with large bond issues, contend that Davis needs to reevaluate his= =20 plan. By proposing to essentially forget the $5 billion the state has spent= =20 so far on power, they are advocating using up the state's projected budget= =20 surplus on electricity costs, even if it means cutting new government=20 programs. ?????"If Gov. Davis continues down this path, he could bankrupt the state,"= =20 said Assemblyman Dennis Mountjoy (R-Monrovia). "That would have a far great= er=20 impact on education." ?????Democrats, who strongly believe that the surplus should be invested in= =20 roads, schools and to meet other long-term future needs, are unlikely to ev= er=20 support the idea. Lawmakers are already discussing outflanking the=20 Republicans by drafting a bill to repay the budget on a nonemergency basis,= =20 which would only require a majority vote. ?????That, however, would probably delay the financing until at least Augus= t,=20 since nonemergency measures do not take effect for 90 days--giving Californ= ia=20 only about six weeks to cut the largest municipal bond deal ever before sta= te=20 coffers begin to empty, according to Angelides. ?????There is another potential consequence: Many of the long-term contract= s=20 the Davis administration has reached to purchase electricity contain clause= s=20 that may make them void if the state does not obtain financing by July. ?????"This is a very dangerous game," Angelides said. ?????In other electricity developments Thursday: ?????* Over Republican objections, Democrats in the state Senate approved a= nd=20 sent to Davis a far-reaching bill that would put state government in the=20 business of operating its own power plants and selling electricity at cheap= er=20 rates than private companies. The bill, SB 6x by Senate leader John Burton= =20 (D-San Francisco), would create a state power authority with the ability to= =20 finance, buy, own and build generation plants and sell the energy at=20 cost-based rates. ?????on likened the proposed government body to the New York Power Authorit= y,=20 approved by GOP Gov. George Pataki, which brought about a 10% reduction in= =20 rates. ?????The difference from the current situation is that "the people of=20 California, the ratepayers, would benefit, and not the corporate officers a= nd=20 not the shareholders" of private energy companies, Burton said. ?????But Republicans attacked the power authority as "more government" that= =20 would impose itself on an enterprise better suited for private operators wi= th=20 years of expertise. ?????"This is a horrific mistake and one that California ratepayers will be= =20 paying for many years to come," said state Sen. Tom McClintock (R-Thousand= =20 Oaks.) ?????* California Secretary of State Bill Jones, a GOP gubernatorial hopefu= l,=20 released his plan to address the electricity crisis, criticizing Davis'=20 efforts as a state takeover of the power industry. ?????Jones called on the utilities' parent companies to help bail out their= =20 troubled subsidiaries and said creditors should accept lower payments on ba= ck=20 debts. He also called for creation of a state-federal emergency management= =20 plan to deal with any blackouts this summer. Jones made his three-page=20 proposal in a letter to Vice President Dick Cheney, head of the Bush=20 administration's energy task force. ---=20 ?????Times staff writers Carl Ingram in Sacramento and Mark Z. Barabak in L= os=20 Angeles contributed to this story. Copyright 2001 Los Angeles Times=20 Secretary of Energy, Davis Meet on U.S. Plan to Boost Conservation=20 Crisis: Federal buildings and military bases, accounting for 1.5% of state'= s=20 usage, will cut back.=20 By RICHARD SIMON and DAN MORAIN, Times Staff Writers=20 ?????SACRAMENTO--In a visit meant to underscore the Bush administration's= =20 heightened concern about the California electricity crisis, Secretary of=20 Energy Spencer Abraham met Thursday with Gov. Gray Davis in Sacramento to= =20 discuss federal energy conservation plans. ?????"I think we have an approach that can result in significant savings,"= =20 Abraham told Davis. The energy secretary said he was in California "to gaug= e=20 what we can do to add to what California is already doing." ?????The trip came after President Bush revealed plans for a series of=20 conservation measures for federal buildings and military bases nationwide.= =20 Those facilities in California account for 1.5% of the state's total energy= =20 use. Today, Abraham is scheduled to meet with federal officials in San=20 Francisco to work out details of the nationwide program for more than 500,0= 00=20 federal buildings. ?????After meeting with Abraham at the White House earlier Thursday, Bush= =20 said: "We're worried about blackouts that may occur this summer, and we wan= t=20 to be a part of any solutions. This administration is deeply concerned abou= t=20 California and its citizens." ?????Defending his response to the California crisis, Bush said, "As I said= =20 from the very beginning of my administration, we'll work to help California= =20 in any way we can." ?????Also Thursday, Davis met with alternative energy producers in an attem= pt=20 to persuade them to continue operations, despite being owed more than $1=20 billion by California's private utilities. ?????Alternative energy producers, including oil companies that generate=20 electricity as a byproduct of their operations, account for about 27% of th= e=20 electricity consumed in California. Several have stopped producing after th= e=20 utilities could no long afford to pay soaring prices for their power. ?????Davis assigned S. David Freeman and former Assemblyman Richard Katz, a= =20 Davis appointee to a state water board, to be in charge of negotiations.=20 Davis said he hoped that the talks could be completed within a week. ?????And in a sign that major energy companies may get more involved in the= =20 California crisis, Kenneth Lay, CEO of the Houston-based energy giant Enron= =20 Corp., met Thursday with Davis, Assembly Speaker Bob Hertzberg (D-Sherman= =20 Oaks) and Senate President Pro Tem John Burton (D-San Francisco). ?????Meanwhile, Bush on Thursday directed federal agencies to "take=20 appropriate actions to conserve energy use at their facilities." ?????In California, such measures could include setting thermostats to 78= =20 degrees, lowering lighting and turning off escalators during Stage 2 and=20 Stage 3 power emergencies, administration officials said. Those occur when= =20 the state's electricity reserves fall below 5% and 1.5%, respectively, and= =20 can trigger interruptions in service. ?????Bush did not set an energy-saving target. But the Defense Department,= =20 one of the state's single largest energy consumers--using about 1% of peak= =20 demand--pledged to reduce peak use by 10% this summer and an additional 5% = by=20 summer 2002. That would make available 200 megawatts, officials said, enoug= h=20 to provide electricity to about 150,000 homes during the summer. ?????The federal government accounts for about 1.5% of total energy use=20 across the country, making it one of the nation's largest energy consumers,= =20 according to the Energy Department. ?????Bush also offered to make available to the state power-generating unit= s=20 owned by the federal government. ?????But his efforts failed to mollify Democratic critics, who renewed call= s=20 for the administration to impose price controls on wholesale electricity. ?????"The generating companies are gouging California consumers while the= =20 president turns his back on us," Sen. Barbara Boxer (D-Calif.) said in a=20 statement. ?????Rep. Sam Farr (D-Carmel), leader of the California Democratic=20 congressional delegation, sent a letter to Vice President Dick Cheney=20 protesting Democrats' exclusion from Cheney's meeting this week with=20 California GOP lawmakers. ?????"As we head into the high summer demand months, it is unfortunate that= =20 you have decided to keep Democrats in the dark about the administration's= =20 plans to deal with the crisis," Farr said. ?????Bush's conservation initiative comes after Cheney, who is heading a ta= sk=20 force on national energy policy, was assailed by some critics for emphasizi= ng=20 production over conservation. ?????"Conservation has got to be an integral part of making sure we've got = a=20 reasonable energy policy," Bush said Thursday. "But what the vice president= =20 was saying is we can't conserve our way to energy independence, nor can we= =20 conserve our way to having enough energy available. We've got to do both. W= e=20 must conserve, but we've also got to find new sources of energy." ?????David M. Nemtzow, president of the Alliance to Save Energy, called the= =20 directive an "emergency answer to a long-term problem." ?????"We need to fix the underlying problem by investing in energy-efficien= t=20 lighting, cooling and controls," he said. "We hope that this crisis will=20 encourage the president to increase the budget for energy management rather= =20 than cut it by 48% as previously proposed." ?????Political analysts said the effort was driven by concerns for not only= =20 electrons but also elections. ?????"It's all about political conservation," said Marshall Wittmann, senio= r=20 fellow at the conservative Hudson Institute. ?????Thomas E. Mann, senior fellow at the nonpartisan Brookings Institution= ,=20 agreed: "The administration has come to the view that just because they can= 't=20 win California in a presidential election doesn't mean the Republican Party= =20 can afford to kiss off the largest state in the Union." ?????Analysts speculated that the administration came under pressure from= =20 California Republicans in Congress who worried about perceptions that the= =20 White House was not being aggressive enough in responding to the crisis. ?????As federal officials search for ways that California can avoid blackou= ts=20 this summer, a Woodland Hills-based advocacy group, More Power to You, has= =20 suggested that the Navy hook its nuclear-powered ships to the state power= =20 grid to provide energy while in port. ?????The Navy has nuclear-powered aircraft carriers and submarines in San= =20 Diego and Washington state. ?????But Navy officials said it is not technologically feasible to use the= =20 nuclear reactors aboard the ships to provide power for the grid because mos= t=20 of that power goes directly to the propulsion systems. ?????Even to "capture" power not used for propulsion would require extensiv= e=20 construction on shore and retrofitting aboard ship, officials said. Also,= =20 using ships to provide onshore power could disrupt training and deployment= =20 schedules, they said. ---=20 ?????Times staff writer Tony Perry contributed to this report. Copyright 2001 Los Angeles Times=20 PG&E Seeks Relief From High-Priced Power Purchases=20 Bankruptcy: Utility asks judge to order grid operator to stop buying=20 electricity on its behalf at prices beyond its means.=20 By TIM REITERMAN, Times Staff Writer=20 ?????SAN FRANCISCO--Pacific Gas & Electric Co. asked a federal bankruptcy= =20 judge Thursday to order the state's power grid operator to stop buying=20 electricity for its customers on the sky-high spot market, unless the utili= ty=20 can recover the full cost. ?????The move represents PG&E's latest attempt in Bankruptcy Court to get= =20 relief from actions that the company says are driving it deeper into debt. ?????PG&E asked Judge Dennis Montali to enjoin the California Independent= =20 System Operator from making the company pay the costs of power purchased on= =20 the utility's behalf. The company said it recently received a $1-billion bi= ll=20 for such purchases in January and February. ?????"By purchasing wholesale power at a cost higher than the retail rates= =20 and sending us the bill, [Cal-ISO] . . . could be reducing the value of our= =20 assets by hundreds of millions of dollars a month," said PG&E spokesman Ron= =20 Low. ?????In its motion, the company argued that Cal-ISO is violating bankruptcy= =20 law by requiring the utility to pay more for power than it can collect from= =20 state-regulated rates frozen under California's deregulation plan. PG&E sai= d=20 Cal-ISO's actions would force the utility to seek credit on onerous terms. ?????The motion also contended Cal-ISO is violating an April 6 order by the= =20 Federal Energy Regulatory Commission that said the grid operator could only= =20 buy power on behalf of credit-worthy entities. ?????That same day, PG&E sought Chapter 11 protection from creditors, sayin= g=20 it was $9 billion in debt. It later filed a motion seeking to halt an=20 accounting change ordered by the California Public Utilities Commission,=20 which the company says is prolonging the rate freeze and preventing it from= =20 recouping the cost of power. ?????Elena Schmid, Cal-ISO's vice president of corporate and strategic=20 development, said she has not seen the motion and could not fully comment. ?????But she said Cal-ISO has been discussing billings with PG&E in hopes o= f=20 determining which payments fall within the FERC ruling and which are subjec= t=20 to the bankruptcy case. ?????"We will live by the FERC ruling and whatever constraints the Bankrupt= cy=20 Court places on us," Schmid said. "We have indicated to them (PG&E) that we= =20 are sending the bill . . . and they should treat it as information, until w= e=20 can work it through." ?????PG&E listed Cal-ISO as one of its biggest creditors, with $1.1 million= =20 owed for power purchased from third parties. Copyright 2001 Los Angeles Times=20 SDG&E Blackout Plan Would Pay Firms to Use Generators=20 Utilities: Program in which large customers produce their own power is=20 forecast to cut demand by as much as 50 megawatts, save $1.6 billion.=20 By NANCY RIVERA BROOKS, Times Staff Writer=20 ?????San Diego Gas & Electric unveiled a novel plan Thursday to pay custome= rs=20 to fire up their backup generators when blackouts threaten. ?????The utility said the program could cut demand on the power grid by 50= =20 megawatts--enough to serve about 37,500 homes--allowing it to avoid or=20 minimize blackouts this summer in San Diego and southern Orange County. ?????"California needs an infusion of new power supplies, but in the interi= m,=20 we hope this unique program will help shield San Diego from some of the=20 devastating effects of rolling blackouts this summer, including the increas= ed=20 risks to public safety and health," SDG&E President Debra L. Reed said. ?????The Rolling Blackout Reduction Program, as the Sempra Energy subsidiar= y=20 has dubbed it, would cost $15 million to implement but could save the regio= n=20 as much as $1.6 billion in lost revenue, reduced productivity and property= =20 damage, the utility has estimated. ?????Energy experts are forecasting a dark summer for California, with=20 blackout totals ranging between 20 hours and 1,100 hours. The California=20 Independent System Operator, which runs the electricity transmission grid f= or=20 most of the state, has said residents face 34 days of rotating outages if= =20 they use the same amount of electricity this summer as they did last summer= . ?????The state and utilities have been working feverishly to develop progra= ms=20 that will reduce electricity use this summer. ?????SDG&E, Edison International's Southern California Edison and PG&E=20 Corp.'s Pacific Gas & Electric have programs that grant large customers low= er=20 electricity rates in exchange for cutting electricity use when Cal-ISO=20 declares a Stage 2 emergency as power reserves dip below 5%. But=20 participation in those programs has dropped sharply because of repeated pow= er=20 interruptions. ?????SDG&E's "interruptible" program represents 49 megawatts of demand, hal= f=20 of what it was in October, spokesman Ed Van Herik said. ?????The new SDG&E program, which must be approved by the California Public= =20 Utilities Commission, would kick in whenever Cal-ISO declares a Stage 3=20 emergency, indicating that power reserves are down to 1.5% of demand and th= at=20 rolling blackouts are imminent. ?????SDG&E hopes to sign up 50 megawatts of backup generation, representing= =20 about 40 large commercial and industrial customers, but believes customers= =20 capable of generating a total of 200 megawatts may be eligible for the=20 program, Van Herik said. ?????"We found a lot of customers are interested in this program," he said.= =20 "This is an opportunity for San Diego to become involved." ?????During a Stage 3 order, program participants would be asked to start= =20 their backup generators and then reduce the electricity they receive from= =20 SDG&E by the same amount. ?????Participants would be paid a monthly fee of $7 per kilowatt of=20 generation capacity. On top of that, they would receive 35 cents for every= =20 kilowatt-hour of power they generate for their own use. That price is about= =20 what power plant owners have been commanding in California's pricey=20 electricity market. ?????"We think the fees we are proposing are fair," Van Herik said. "These= =20 aren't people who are in the generation business, and undoubtedly there wil= l=20 be wear and tear on equipment and increased personnel and fuel costs." ?????The program, which SDG&E wants to implement by June 1, would operate i= n=20 compliance with air pollution regulations, the utility said. Copyright 2001 Los Angeles Times=20 Been there, done that=20 Bay Area finds little new in Bush's ideas=20 Joe Garofoli, Bob Egelko, Matthew Yi, Chronicle Staff Writers Friday, May 4, 2001=20 ,2001 San Francisco Chronicle=20 URL: http://www.sfgate.com/cgi-bin/article.cgi?f=3D/c/a/2001/05/04/MN236123= .DTL=20 Californians who have been sweating for months to cut their home energy usa= ge=20 20 percent didn't blink yesterday at President Bush's suggestion that feder= al=20 offices conserve half that much.=20 Sure, some might nod off at their desks this summer, when thermostats at=20 federal buildings will be set at 78 degrees during power shortages. And som= e=20 will get an aerobic workout, when the escalators at those same buildings ar= e=20 turned off.=20 But civilians and federal employees alike yawned at yesterday's conservatio= n=20 suggestions such as "unplug unused coffee pots" after doing everything shor= t=20 of burning their shoelaces for wattage during the past few months.=20 Conservation tips are so December to any Californian worth his baseline.=20 "I don't think it's frustrating to (us) because most people know what's goi= ng=20 on, that we're in an energy crisis," said Ansara Johnson, 40, revenue offic= er=20 at the Internal Revenue Service in Oakland.=20 The Bush administration may be setting the pace in the moving-stair=20 department, however. BART, whose escalators don't run so great in the best = of=20 times, said yesterday it is looking at operating escalators with an automat= ic=20 stop-start system to save power this summer. The escalators would be dorman= t=20 until passengers activated them.=20 "It is kind of ironic, considering we just spent $20 million to fix the=20 escalators," BART spokesman Ron Rodriguez said.=20 Just don't turn them off during peak hours, Ingrid Severson pleaded while= =20 pulling her massage chair onto an escalator at the 12th Street BART station= =20 in downtown Oakland.=20 "That would suck," said the 23-year-old massage therapist. "There are certa= in=20 things that shouldn't be sacrificed."=20 San Francisco International Airport already is turning off escalators durin= g=20 down times, though the long, long moving sidewalks are going to keep going = no=20 matter what, spokesman Ron Wilson said.=20 Those with customers to serve, however, embraced the Bush energy plan as=20 warmly as a meter-reader.=20 While federal employees will be working up a sweat this summer hiking up=20 stairs to work, shoppers at Concord's Sunvalley Mall will be coolly cruisin= g=20 down the moving stairs to Victoria's Secret.=20 "We have no plans to shut down our escalators," said Sunvalley general=20 manager Tom McCracken. "How else would people get from floor to floor?"=20 FASHION VICTIMS The new guidelines could have an unintended effect. They may provoke a=20 fashion revolution among federal employees, not a group traditionally known= =20 for its couture choices.=20 It's not their fault. There's only so much you can do with postal blue or= =20 judicial black. But with Bush's directive that thermostats be set at 78=20 degrees, many employees said, something has to change. Like their wardrobes= .=20 Start with the long-suffering post office sales associates -- the clerks=20 behind the counter -- whom government regulations have shackled in long woo= l-=20 blend pants.=20 "I still have not heard a clear-cut reason why we're not allowed to wear=20 shorts and the mail carriers are," said Steve Wellington, a postal sales=20 associate in Concord. The former postal union leader said the=20 shorts-vs.-pants debate has been a hot one for a long time.=20 "Look at these pants," Wellington said, offering a visitor a touch of his= =20 trousers. "These get real warm in the summer."=20 While postal officials were happy to point out that their San Francisco=20 offices have used 17 percent less electricity than last year, they wouldn't= =20 touch the shorts issue. "I don't think we need to comment on that," said=20 Horace Hinshaw, a spokesman for the U.S. Postal Service.=20 JUDGES GET EXEMPTION Then there are judges. Attorneys and court employees said the bench needs t= o=20 take the lead in the casual attire revolution. Ditch those heavy black robe= s=20 in favor of, say, a black polo shirt.=20 "Black really magnifies the heat," said Napa attorney Paul Carey. "They=20 should allow judges to wear lighter colors, like yellow or chartreuse. If t= he=20 judges would allow it, every attorney I know would love to wear a T-shirt,= =20 shorts and sandals into court."=20 However, there was one indication that judges may be thermostat-exempt, at= =20 least at the Phillip Burton Federal Building, a 20-story tower at 450 Golde= n=20 Gate Ave. in San Francisco that houses federal courts and numerous agencies= .=20 A contractor who was working yesterday to install new thermostat controls i= n=20 the building said two areas were excluded: computer rooms, to protect the= =20 equipment, and courtrooms.=20 "That was the mandate," said Erik Ahrens, vice president of Syserco, which= =20 has a contract for heating and vent control. "Courtrooms are on separate=20 units. "=20 At the Ronald V. Dellums Federal Building in downtown Oakland, lights alrea= dy=20 have been dimmed in hallways, and workers have been encouraged to turn off= =20 unneeded lights and computers since early this year. Cynthia Mackey, 38, a= =20 revenue officer for the Internal Revenue Service, wasn't happy to hear the= =20 thermostat would be going up.=20 "Oh, no. I guess I'll just work at home," where Mackey said the thermostat = is=20 set at 68 degrees. "If it's set at 78, and with all the employees and all t= he=20 computers, it would be hot."=20 Then it will be time to change -- habits and clothes.=20 E-mail the reporters at jgarofoli@sfchronicle.com, begelko@sfchronicle.com = or=20 myi@sfchronicle.com.=20 ,2001 San Francisco Chronicle ? Page?A - 1=20 Bush calls power supply the solution=20 He says conservation useful but secondary=20 Marc Sandalow, Washington Bureau Chief Friday, May 4, 2001=20 ,2001 San Francisco Chronicle=20 URL: http://www.sfgate.com/cgi-bin/article.cgi?f=3D/c/a/2001/05/04/MN234937= .DTL=20 Even as he ordered a new conservation effort in California, President Bush= =20 insisted yesterday that finding new sources of energy -- not cutting back o= n=20 consumption -- is the long-term answer to the nation's energy woes.=20 "You cannot conserve your way to energy independence," Bush said. "We can d= o=20 a better job in conservation, but we darn sure have to do a better job of= =20 finding more supply."=20 Bush's comments, his most extensive to date on California's energy crisis,= =20 called on all federal managers to conserve energy "to the maximum extent=20 consistent with the effective discharge of public responsibilities."=20 As part of that effort, the Defense Department -- one of California's large= st=20 consumers of energy -- announced plans to curtail electrical use by at leas= t=20 10 percent by this summer.=20 "This administration is deeply concerned about California and its citizens,= "=20 Bush said after a meeting with his top energy advisers. "We're worried abou= t=20 blackouts that may occur this summer, and we want to be a part of any=20 solution. "=20 While touting the value of conservation, Bush repeatedly identified the=20 limits to that approach. In respo
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