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Please see the following articles:
Sac Bee, Tues, 5/15: "Budget plan shrinks: Davis responds to an uncertain economy but preserves a boost in education funding" Sac Bee, Tues, 5/15: "PG&E goes to court for rate relief" Sac Bee, Tues, 5/15: "Energy Digest: PUC delays vote on rate proposals"=20 Sac Bee, Tues, 5/15: "Dan Walters: Davis wants to preserve rosy budget,=20 let red ink rain on Legislature" Sac Bee, Tues, 5/15: "Daniel Weintraub: Consumer rep envisions ultimate=20 confrontation" SD Union, Mon, 5/14: "How will state's leaders get out of the business of= =20 power-buying?" SD Union (AP), Tues, 5/15: "PUC delays decision on electricity rate hikes; SDG&E isn't affected" SD Union (Reuters), Tues, 5/15: "Edison, SoCal Edison extend credit=20 facilities" SD Union (AP), Tues, 5/15: "PG&E, state regulators spar in bankruptcy cour= t" SD Union (AP), Tues, 5/15: "California power regulators delay decision on= =20 rate hikes" SD Union (Reuters), Tues, 5/15: "California faces 260 hours of blackouts,= =20 says industry" SD Union (Reuters), Mon, 5/14: "AES to restart 2 retired South California= =20 power plants" LA Times, Tues, 5/15: "PUC Delays Decision on Power Rate Hike" LA Times, Tues, 5/15: "El Paso Gas Supplier Denies Monopoly" LA Times, Tues, 5/15: "Labor Courted on Bush Reform Plan" LA Times, Tues, 5/15: "Judge Asked to Block Freeze on Power Rate" LA Times, Tues, 5/15: "Edison Deal Sets High Legislative Hurdle for Davis" SF Chron, Tues, 5/15: "PUC stalls decision on rate boost=20 ANGER: Consumer group says big business to benefit" SF Chron, Tues, 5/15: "NATURAL GAS: Experts says market probably fixed " SF Chron (AP), Tues, 5/15: "Developments in California's energy crisis" SF Chron (AP), Tues, 5/15: "PG&E, state regulators spar in bankruptcy cour= t=20 " SF Chron, Tues, 5/15: "NATURAL GAS: Experts says market probably fixed " SF Chron, Tues, 5/15: "Davis forced to trim budget=20 Minor cuts, unspent funds used to cover $3.5 billion deficit " Mercury News, Tues, 5/15: "PUC puts off vote on rates" Mercury News, Tues, 5/15: "Cheney urges patience over energy costs" Mercury News, Tues, 5/15: "Finding: gas-price inflation possible" OC Register, Tues, 5/15: "Edison has loss of $617 million" OC Register, Tues, 5/15: "Edison shareholders feeling the heat as values= =20 plunge" OC Register, Tues, 5/15: "Energy notebook: PUC postpones decision on power rate hikes to today" OC Register, Tues, 5/15: "Gas supplier faces charges of price fixing" Individual.com (Bridgenews), Tues, 5/15: "[B] POWER UPDATE/ Calif. PUC delays final rate hike vote to Tues" ---------------------------------------------------------------------------= --- ----------------------------------------------- Budget plan shrinks: Davis responds to an uncertain economy but preserves a= =20 boost in education funding.=20 By John Hill Bee Capitol Bureau (Published May 15, 2001)=20 Gov. Gray Davis laid out his plan for coping with diminished revenues and= =20 growing fiscal uncertainty Monday, slashing the state budget he proposed in= =20 January while preserving much of the spending for education and public=20 safety.=20 "Every proposal I made was warranted, needed and, in some cases, long=20 overdue," Davis said. "But a budget by definition is the act of making=20 choices."=20 Davis' new proposal launches what is likely to be an intense month-and-a-ha= lf=20 struggle over the $103 billion budget for the fiscal year that begins July = 1.=20 State revenue, which over the years has grown far more sensitive to economi= c=20 cycles, plunged with the stock market, leaving a $4.2 billion hole in the= =20 January budget proposal.=20 For the first time in years, the governor and the Legislature must deal wit= h=20 shrinking expectations, and it's happening during a period of intense=20 partisan bickering over the state energy crisis.=20 The revised budget proposal counts on the sale of bonds in August to repay= =20 the state treasury for electricity purchases, which now total more than $7= =20 billion. Davis admitted in announcing his new plan that the assumption is= =20 risky and once again criticized Republicans for holding up a bill that woul= d=20 have allowed an earlier bond sale.=20 "If anything else goes wrong, like a natural disaster or some precipitous= =20 drop in the economy, then we could be in real trouble," he said.=20 Davis' plan depends on delaying for two years a commitment to shift sales t= ax=20 on gasoline from the state's general fund to a special fund dedicated to=20 transportation projects. The move, which would save $1.1 billion, is likely= =20 to be opposed by Republicans, who fought for the shift.=20 Davis said his proposal would not delay transportation projects in the=20 pipeline because more money is available than is needed right now, but migh= t=20 affect those that haven't been approved.=20 The revised budget proposal makes numerous cuts, with some one-time=20 expenditures eliminated altogether.=20 A $250 million payment to local governments to use as they see fit is gone.= =20 So, too, is $200 million that would have rewarded cities and counties that= =20 increased the number of housing permits they issued.=20 A $40 million pilot project for touch-screen voting got the ax, as did a=20 three-day "holiday" from sales taxes this summer, designed to give parents = a=20 break in paying for school supplies.=20 A program to clean up California's beaches was slashed from $100 million to= =20 $10 million. Another that would encourage the development of parkways along= =20 rivers was cut in half, from $70 million to $35 million.=20 "Generally, if it was a new program that was not law the year before, it go= t=20 pared back significantly and sometimes entirely," Davis said.=20 The revised proposal also calls for a 2.5 percent across-the-board cut for= =20 state departments, except for those involved in public safety or making mon= ey=20 for the state. That move is expected to save $50 million.=20 The governor said his revised budget preserves much of the school spending = he=20 proposed in January.=20 "Notwithstanding the reduction in revenues, I'm not about to let our=20 commitment to education backslide," he said.=20 Still, Davis made some adjustments to his education plan. In January, he=20 proposed expanding the middle school year from 180 days to 210 days. That= =20 proposal has been pared back to 200 days.=20 Davis also had hoped to increase rewards to schools that do well from $63 p= er=20 student to $150, but that increase has been jettisoned.=20 On the plus side, the new proposal adds $220 million to help schools=20 performing poorly on standardized testing, and $541 million to help offset= =20 school districts' increased spending on energy and to promote conservation.= =20 School districts taking part in that program must commit to cutting their= =20 energy use 10 percent.=20 Overall, the amount spent on each student would drop $6 from the $7,174=20 proposed in January.=20 Davis, however, touted a 43 percent increase in education spending since he= =20 became governor. He invited several education leaders to the news conferenc= e=20 announcing the revised budget, and his office released a collection of quot= es=20 from the educators praising him for maintaining school funding.=20 Even Republicans found something to like in the Democratic governor's=20 education proposals.=20 "Certainly, if he kept education whole, we agree with that," said Assemblym= an=20 Dave Cox, R-Sacramento, the Assembly minority leader.=20 But that was about the extent of bipartisan harmony.=20 "We simply don't think the governor is moving in a prudent direction," Cox= =20 said.=20 He blasted the proposed budget for reducing the reserve from $1.9 billion t= o=20 $1 billion. Republicans have advocated maintaining the reserve and adding a= =20 special energy reserve to avoid the need for borrowing or raising electrici= ty=20 rates again next year.=20 Davis said the $1 billion is enough. "Reserves are for rainy days," he said= .=20 "It's starting to rain."=20 Republicans oppose Davis' plan to allow a quarter-cent sales tax increase= =20 that was eliminated this year to go into effect again next January.=20 Cox said Republicans also would oppose the delay in shifting gasoline sales= =20 tax to a special fund to relieve traffic congestion. He said Republicans=20 fought for the change, believing that a gasoline tax should be dedicated to= =20 transportation projects.=20 Republican opposition to that provision, key to Davis' plan to balance the= =20 budget, could spell trouble for the budget bill. The bill requires a=20 two-thirds vote and must garner the support of at least a handful of=20 Republicans.=20 Senate President Pro Tem John Burton, D-San Francisco, said the delay in=20 shifting gasoline sales tax money means that "program cuts don't go as deep= =20 as they might have."=20 The revised budget preserves spending for home health care workers and=20 part-time community college workers, Burton said.=20 "But we're going to have to find more money for child care," he said.=20 In addition, Burton said, he hoped that the Legislature could find a way to= =20 give raises to state workers.=20 He said that barring an economic rebound, next year's budget will be far=20 tougher because the state will no longer enjoy a big cushion.=20 The Bee's John Hill can be reached at (916) 326-5543 or jhill@sacbee.com. PG&E goes to court for rate relief=20 By Claire Cooper Bee Legal Affairs Writer (Published May 15, 2001)=20 SAN FRANCISCO -- Pacific Gas and Electric Co. warned in bankruptcy court=20 Monday that it could be forced out of business by a March regulatory ruling= =20 that prolonged a freeze on retail electricity rates.=20 But U.S. Bankruptcy Court Judge Dennis Montali said PG&E might still be in= =20 financial trouble, even without the accounting change by the state Public= =20 Utilities Commission in March. Montali expressed reservations about the=20 utility's request for an injunction to block the change.=20 The accounting question -- and the timing of the expiration of the rate=20 freeze -- centers on whether PG&E has made up its transition costs in movin= g=20 from a regulated to an unregulated market.=20 Montali said he'll rule as soon as possible, given the importance and=20 complexity of the issue.=20 PG&E projects a loss of $12.9 billion by next March because of an imbalance= =20 between low retail electricity rates and high wholesale rates since June.= =20 Without relief, said PG&E lawyer Jerome Falk, the utility could be forced t= o=20 liquidate.=20 In April, the utility filed for reorganization under Chapter 11 of the=20 Bankruptcy Code, which requires judicial authorization for most actions tha= t=20 reduce the value of the debtor's assets. PG&E contends the PUC violated tha= t=20 requirement by forcing it to operate under the rate freeze.=20 But the PUC contends that PG&E's real motive is to free itself from state= =20 regulatory control.=20 "We're talking about disabling the commission" by ending its authority over= =20 rates, PUC lawyer Walter Rieman told Montali.=20 The commission didn't need court authorization because its action --=20 technically just an accounting change -- preceded PG&E's bankruptcy filing,= =20 Rieman argued.=20 Rieman said such a regulatory action needs no authorization and that the 11= th=20 Amendment -- the sovereign immunity clause of the U.S. Constitution -- bars= =20 PG&E from hauling the PUC into court.=20 The Bee's Claire Cooper can be reached at (415) 551-7701 or=20 ccooper@sacbee.com. Energy Digest: PUC delays vote on rate proposals=20 (Published May 15, 2001)=20 People who run shops and farms, refineries and concrete plants have to wait= =20 another day to learn how big a share they'll pay of an already approved=20 electricity rate hike.=20 The state Public Utilities Commission delayed until today its vote on at=20 least two proposals for new rate structures, and a third proposal could=20 emerge.=20 PUC President Loretta Lynch said the commission needed more time to work on= =20 last-minute revisions, triggered by input during last week's public hearing= s.=20 The delay came after protesters urged the commission Monday to reject any= =20 rate increases, and instead seize power plants from new owners who have=20 raised wholesale prices under deregulation. Several called for boycotting t= he=20 higher electric bills.=20 The new rates will apply to customers of Pacific Gas and Electric Co. and= =20 Southern California Edison. They will vary widely by customer, but proposal= s=20 before the commission call for average residential PG&E rate increases of 1= 5=20 percent to 17 percent, and industrial increases of about 50 percent.=20 The rate increases, which will be applied toward paying off enormous=20 wholesale power bills, will raise about an extra $4.8 billion annually for= =20 the two utilities.=20 --Carrie Peyton=20 Edison parent has loss Its losses still piling up from soaring wholesale power costs, the parent= =20 company of Southern California Edison reported a $617.3 million loss and=20 scrapped its shareholder dividend payment again Monday.=20 Edison International said the loss, for the three months that ended March 3= 1,=20 amounted to $1.89 a share.=20 The Rosemead-based utility said it was canceling its common stockholder=20 dividend for the third straight quarter. It also is continuing to defer=20 payments on preferred shares.=20 --Dale Kasler Dan Walters: Davis wants to preserve rosy budget, let red ink rain on=20 Legislature (Published May 15, 2001)=20 Once upon a time, the grammatically incorrect "May revise" was a low-level= =20 exercise in fine-tuning income and outgo numbers prior to passage of a stat= e=20 budget.=20 Beginning in the late 1990s, however, the spring ritual became elevated in= =20 importance because an exploding economy was generating billions of=20 unanticipated tax dollars, thus allowing the governor and legislators to=20 create lavish new spending programs.=20 A year ago, Gov. Gray Davis and the state legislators were looking at a $14= =20 billion budget surplus, fueling another round of tax cuts and spending. But= =20 the high-technology balloon has burst, the tech-oriented Nasdaq market has= =20 tanked and Monday's budget revision, released by the Davis administration,= =20 anticipates about a $4.2 billion reduction in revenues from what was=20 originally projected in January.=20 If it's a cold dose of reality on the revenue side of the ledger, however,= =20 the expenditure column of the revised budget is swathed in politically=20 contrived fantasy -- and represents the beginning of a high-stakes chess ga= me=20 pitting Davis against a Legislature dominated by fellow Democrats.=20 While the revised Davis budget for fiscal 2001-02 reduces overall general= =20 fund spending from the January version -- with reductions principally in=20 transportation, housing and proposed tax cuts -- it boosts spending on K-12= =20 schools and community colleges to nearly $5 billion over the minimum=20 guarantees of the California Constitution.=20 Davis said his goal was to "curb government spending but ... protect my two= =20 highest priorities: public education and law enforcement." And to reinforce= =20 that stance, the governor's office packed the budget news conference with= =20 representatives of public schools, ranging from the superintendent of the L= os=20 Angeles Unified School District to teachers union lobbyists. They played=20 their designated role in the mini-drama by publicly lauding the governor's= =20 school money, even if privately many acknowledged that the additional schoo= l=20 financing is far from certain.=20 The real story of this year's May budget revision is that Davis is trying t= o=20 force the Legislature into making the spending cuts that economic reality -= -=20 and the state energy crisis -- will probably require so that he can maintai= n=20 his image as the champion of education going into his re-election campaign.= =20 The new Davis budget is plainly unworkable. By maintaining education spendi= ng=20 and cutting reserves to the bone, the spending plan makes no allowance for= =20 further drops in revenues, even though harsh experience is that in an=20 economic slump, income tends to fall much further and faster than Departmen= t=20 of Finance bean-counters project.=20 Furthermore, the budget assumes that the $7 billion -- and still rising -- = in=20 general fund expenditures for electric power will be completely reimbursed= =20 from a $13.4 billion state bond issue and that no additional money will be= =20 needed during the high energy consumption summer months. But that, too, fli= es=20 in the face of reasonable expectations. The governor's energy purchase plan= s=20 are based on very optimistic conservation numbers and, most ominously, on a= =20 declining price of electricity while the futures market indicates that pric= es=20 may, in fact, jump by 50 percent over the next few months.=20 It's entirely possible that the entire bond issue will have been consumed b= y=20 the time the bonds are sold in August and that the state will still be layi= ng=20 out billions of dollars each month for juice. State legislative leaders, ev= en=20 the most liberal ones, want to create a multibillion-dollar budget reserve= =20 for those huge uncertainties, but with Davis taking his damn-the-torpedoes= =20 approach, they would be the ones to cut spending, including for the schools= ,=20 to build up reserves. Or they could approve the Davis budget more or less a= s=20 proposed and let him take the heat if, and when, the uncertainties become a= =20 multibillion-dollar red ink shower.=20 While politicians scramble to claim credit when times are good, they scheme= =20 to shift the blame when times turn sour, and Davis' budget is the opening= =20 move of that finger-pointing game.=20 The Bee's Dan Walters can be reached at (916) 321-1195 or dwalters@sacbee.c= om . Daniel Weintraub: Consumer rep envisions ultimate confrontation (Published May 15, 2001)=20 Now that Gov. Gray Davis has rallied his fellow Democrats, run over the=20 Republican opposition in the Legislature and set the state on a course to= =20 borrow $13 billion to pay for a few months of electricity purchases, there'= s=20 probably only one person who can stop him: Harvey Rosenfield.=20 Rosenfield is the Santa Monica-based consumer advocate who tried to halt=20 California's experiment in electricity deregulation before it got started.= =20 His 1998 ballot measure failed, and that campaign is blamed in some circles= =20 for delaying construction of new power plants just long enough to cause the= =20 electricity shortage that's helped send prices heavenward.=20 But if Rosenfield's last ballot initiative got the state's energy=20 establishment in a snit, the one he's contemplating now would positively pu= sh=20 them over the edge. He is seriously considering launching a signature drive= =20 to force a referendum on the legislation Davis just signed to authorize his= =20 $13 billion energy bond measure.=20 That bond, to be repaid by ratepayers, is supposed to reimburse the state's= =20 general fund for the cost of electricity the state has been buying for=20 consumers since January, when Pacific Gas & Electric and Southern Californi= a=20 Edison ran out of money. The bond measure also will be used to delay the pa= in=20 of the extremely high prices expected this summer. Without it, consumers=20 would immediately face another staggering rate increase, probably well into= =20 triple digits.=20 The alternative would be a state budget in shambles. All the tax money Davi= s=20 has spent on electricity this year already was earmarked for traditional=20 services such as education, roads and health care. A referendum that killed= =20 the bond measure would leave a gaping hole in the budget that could only be= =20 filled by a huge tax increase or unprecedented spending cuts.=20 Rosenfield is something of a publicity hound, and his talk of a referendum= =20 may be just that. Collecting 750,000 signatures in less than 90 days, which= =20 is what's required to qualify the referendum, would be a massive undertakin= g.=20 Even Rosenfield concedes that the chances are no better than 50-50 that he= =20 will proceed. But this is a man who has qualified two measures for the ball= ot=20 already, including one in 1988 that brought on regulation of the California= =20 insurance industry. You have to take him seriously.=20 The question is why he would even consider it. Why would a man who fancies= =20 himself a friend of the ratepayer ponder a move that would force consumers = to=20 swallow a massive rate hike, or else bankrupt the state? Because Rosenfield= 's=20 goal is to see the destruction of the entire private power system that's no= w=20 serving California -- and raking in enormous profits for its owners.=20 And if it were up to him, he'd be willing to risk economic catastrophe to= =20 make it happen. His theory is that the power generators will simply keep=20 raising their prices as long as the governor keeps putting more money on th= e=20 table. It is, he says, like giving crack to an addict. Take that money away= ,=20 and the generators will kick the habit, fast.=20 "If bleeding dry the general fund is foreclosed, and politically or as a=20 matter of economics you can't raise rates that high in the state, the only= =20 thing the governor can do is turn to the generators and say, 'I'm taking yo= ur=20 plants.' At which point they will say, 'OK, all right, we're lowering our= =20 prices,' or some face-saving thing will happen. The ultimate showdown betwe= en=20 naked capitalism and populist outrage occurs." And he's convinced that=20 capitalism will blink.=20 "If the lights go off in California, and the economy goes down the tubes,= =20 then 20 years of Republican ideology, of less government, free markets,=20 competition -- all of that goes down the tubes.=20 "All you have to do is look at history to see that when there have been=20 economic cataclysms that have decimated the economy, people want action and= =20 they'll do anything, whether its seizing private property, or whatever. The= re=20 will be a revolution, and I don't think the political institutions in this= =20 country are prepared to push things to that point."=20 The Legislature already has set a Nov. 15 deadline after which the state=20 budget is supposed to be off-limits to Davis' power-buying ways. But that's= =20 not good enough for Rosenfield. By then, he thinks, Davis will have burned= =20 through the entire proceeds of the first bond measure and the total tab wil= l=20 be approaching $20 billion. Rates will have to rise again to pay that bill.= =20 Rosenfield is prescribing an economic amputation -- without anesthesia -- t= o=20 stop a painful and dangerous infection. But he is not the only one thinking= =20 about the doomsday scenario.=20 The power generators themselves have lately been lining up to try to cut=20 deals with the state. They have offered to take caps on their profits,=20 forgive some of the debt that's owed them, anything to keep the system=20 running without further provoking the public's ire. They know that=20 Rosenfield's kind of anger can be contagious. They want to contain it befor= e=20 it spreads.=20 The Bee's Daniel Weintraub can be reached at (916) 321-1914 or at=20 dweintraub@sacbee.com. How will state's leaders get out of the business of power-buying?=20 Inside Politics / ED MENDEL=20 May 14, 2001=20 SACRAMENTO -- The California electricity crisis began the big meltdown in= =20 January when the state made the now-questionable decision to begin buying= =20 power for utility customers.=20 The alternative, which seemed unthinkable to Gov. Gray Davis and most=20 legislators at the time, was to allow Pacific Gas and Electric and Southern= =20 California Edison to be taken into bankruptcy.=20 A grim Davis said on the evening of Jan. 17 that he and legislative leaders= =20 had just held a long telephone conversation with the chief executive office= rs=20 of four big generators: Duke, Southern (now Mirant), Reliant and Dynegy.=20 "Those generators were prepared to pull down the utilities into bankruptcy= =20 tomorrow at 12:01 p.m.," Davis told reporters. "They have agreed, if=20 legislation passes tomorrow, they will not do that. They will provide us th= e=20 power necessary to keep the lights on."=20 Legislation authorizing the state to begin buying power for utility custome= rs=20 was passed, and the lights stayed on. But the crisis has clearly gotten=20 worse, not better, since January.=20 PG&E took itself into bankruptcy early last month. Rolling blackouts, which= =20 have hit many parts of the state, now are a day-to-day possibility.=20 And today, the state Public Utilities Commission is expected to decide who= =20 will be hit hardest by a record rate increase, while the governor proposes = a=20 revised state budget with a gaping hole.=20 The state general fund that is paying for power, more than $6 billion so fa= r,=20 may not be repaid until late August, when a $13.4?billion bond that=20 ratepayers will pay off over 15 years is issued -- well after the new fisca= l=20 year begins on July 1.=20 One of the main problems facing the governor and the Legislature now is=20 simply this: Having gotten themselves into the power-buying business, how d= o=20 they get out?=20 The governor's plan to get the utilities back on their financial feet and= =20 able to buy power by the end of next year must overcome obstacles, which se= em=20 bigger with each passing week.=20 A key part of the plan, the state purchase of the Edison transmission syste= m,=20 is basically a transaction intended to make state aid for the utility look= =20 less like a bailout. The state would get something in return.=20 But Democratic legislators, who urged Davis to make the purchase, do not li= ke=20 the agreement that the governor negotiated with Edison. Democrats in both= =20 houses are talking about alternatives that would be less favorable to Ediso= n.=20 If Davis is somehow able to work out a compromise acceptable to both=20 Democratic legislators and Edison, another obstacle remains: Persuading PG&= E=20 creditors that they would be better off under an Edison-like deal than in= =20 bankruptcy court.=20 As the state faces soaring power costs this summer, and solving complex=20 problems in the political arena looks increasingly futile, some argue that= =20 the chance to let the utilities go bankrupt in January was a missed=20 opportunity.=20 "The credit of the utilities could have been restored by reorganizing under= =20 the bankruptcy laws, the lights would have stayed on, and ratepayers would= =20 actually have ended up paying less than they're going to end up paying with= =20 all the interest-heavy borrowing you're doing now," Sen. Tom McClintock,=20 R-Northridge, said during a debate on the ratepayer bond last week.=20 But the fateful decision in January changed everything. If Edison joins PG&= E=20 in bankruptcy now, the state may have to continue buying power for years as= a=20 way is worked out to pay off the utility debt.=20 Ed Mendel is Sacramento bureau chief for the Union-Tribune.=20 PUC delays decision on electricity rate hikes; SDG&E isn't affected=20 By Karen Gaudette=20 ASSOCIATED PRESS=20 May 15, 2001=20 SAN FRANCISCO -- California ratepayers from Orange County to the Oregon=20 border will have to wait at least one more day to find out how deep they'll= =20 be expected to dig into their pockets to pay electric bills.=20 Businesses are hoping that state power regulators use that time to revise= =20 proposed new rates they contend are too hard on commercial customers.=20 Stung by an outcry from every type of energy consumer in California in the= =20 last few days, the state's top energy regulator said yesterday she needs mo= re=20 time to consider feedback from residents and businesses -- each demanding= =20 that the largest rate hikes in state history take a bigger bite from the=20 other's account.=20 In her initial proposal, Loretta Lynch, president of the Public Utilities= =20 Commission, would have spared many residential users from the highest bills= =20 and placed more of the burden on businesses and farms.=20 That feedback also includes Gov. Gray Davis' statement Sunday that he prefe= rs=20 his own plan, which would distribute rate hikes more evenly among residenti= al=20 and business customers.=20 Consumer activists worry that the PUC's one-day delay could mean bigger rat= e=20 hikes for residential customers. The PUC is scheduled to vote this afternoo= n.=20 San Diego Gas and Electric Co. customers would not be affected.=20 SDG&E has requested a rate hike, but the PUC has not considered it yet.=20 "Much as we hope the commission heard what the public had to say last week,= =20 we know the voices of business and industrial customers are very, very loud= ,"=20 said Mindy Spatt, a spokeswoman for The Utility Reform Network.=20 Business groups hope the hunch is right.=20 "We can only hope that this extra time means that they're carefully=20 evaluating a plan that will perhaps be more balanced and more proportional= =20 than what they've put forward so far," said Michelle Montague-Bruno,=20 spokeswoman for the Silicon Valley Manufacturing Group that represents 190= =20 businesses.=20 PUC Commissioner Jeff Brown said after yesterday's meeting that he and othe= r=20 commissioners are trying to lower proposed industrial rates, but said that'= s=20 tricky business.=20 Commissioner Carl Wood said that today is the latest date the PUC can make= =20 its decision and still give Pacific Gas and Electric Co. and Southern=20 California Edison Co., the state's two largest utilities, enough time to ad= d=20 the new rates to electric bills by June 1.=20 Energy experts fear that's already too late for the price shock to spur vit= al=20 conservation this summer and help stave off more rolling blackouts.=20 Lynch's initial proposal would raise rates anywhere from 7 percent to 61=20 percent.=20 Since it unanimously approved an increase March 27, the commission has=20 struggled to fashion specific rate hikes that will simultaneously recoup th= e=20 billions the state has spent buying power, return the state's largest=20 utilities to solvency and trigger conservation.=20 The allocation the PUC approves will be retroactive to March 27. Charges fo= r=20 interim power use will be spread over the next 12 months, Lynch has said.= =20 Lynch and PUC Administrative Law Judge Christine Walwyn introduced proposal= s=20 last week that business interests said would unfairly make them pay too muc= h=20 of the overall rate hike -- as much as 50 percent more than they pay now=20 depending what time of day they use the electricity.=20 State law shields average residential customers from severe rate hikes on= =20 much of their power use.=20 Edison, SoCal Edison extend credit facilities=20 REUTERS=20 May 15, 2001=20 NEW YORK, =01) Edison International said Tuesday that it and its troubled= =20 Southern California Edison utility unit extended two 364-day bank credit=20 facilities that were scheduled to mature Monday.=20 Rosemead, Calif.-based Edison said it extended a $618 million facility, whi= ch=20 it had fully drawn down, until June 30, while SoCal Edison extended a $200= =20 million facility until Sept. 15.=20 Edison said it and SoCal Edison also agreed with their banks, which are led= =20 by J.P. Morgan Chase & Co., to extend "forbearance agreements," under which= =20 the banks agree not to act upon defaults, to June 30 for Edison and to Sept= .=20 15 for its utility unit.=20 Edison made the disclosures Tuesday in a quarterly filing with the Securiti= es=20 and Exchange Commission. On Monday it reported a first-quarter loss of $617= =20 million, or $1.89 per share, including a $661 million charge for power cost= s.=20 SoCal Edison, California's second-largest utility, and Pacific Gas & Electr= ic=20 Co., the largest, have struggled because a rate freeze blocked them from=20 passing on their massive wholesale power costs to consumers. Pacific G&E, a= =20 unit of San Francisco-based PG&E Corp., sought bankruptcy protection last= =20 month.=20 PG&E, state regulators spar in bankruptcy court=20 By Michael Liedtke ASSOCIATED PRESS=20 May 15, 2001=20 SAN FRANCISCO =01) Contending California regulators illegally seek billions= of=20 dollars that should be paid to its creditors, Pacific Gas and Electric Co.= =20 urged a federal bankruptcy judge to dismantle the accounting framework=20 insulating the utility's customers from additional electricity price=20 increases.=20 Looking to guard its turf, the California Public Utilities Commission=20 portrayed its actions as legal maneuvers protected from federal government= =20 interference under the U.S. Constitution.=20 The 2 -hour bout of arguments Monday before U.S. Bankruptcy Judge Dennis=20 Montali represented the first major legal showdown in PG&E's bankruptcy cas= e=20 =01) the largest ever filed by a utility. After peppering attorneys from bo= th=20 sides with tough questions, Montali took the matter under submission withou= t=20 providing a timetable for issuing a decision.=20 The complex issue centers on arcane sections of the U.S. bankruptcy code th= at=20 could sway the balance of power in PG&E's case and determine whether the=20 utility's 4.6 million customers =01) or more than 150,000 creditors =01) ab= sorb the=20 costs underlying an estimated $13 billion in wholesale electricity purchase= s=20 made from June 2000 through March 2002.=20 As part of the 1998 deregulation of California's electricity market, PG&E's= =20 retail rates were to remain frozen through March 2002 or whenever the utili= ty=20 pooled enough money from above-market rates and asset sales to pay for=20 unprofitable investments made during its long history as a regulated utilit= y.=20 PG&E says it cleared the hurdle for lifting the rate freeze sometime betwee= n=20 May 2000 and August 2000 =01) around the same time the utility's costs for= =20 wholesale electricity began to soar far above the frozen rate charged to it= s=20 customers. Between January 1998 and May 2000, PG&E accumulated a $2.75=20 billion operating profit from a favorable gap between its wholesale costs a= nd=20 retail rates for electricity.=20 The utility said it could have proved its case for lifting the rate freeze= =20 and passing on its electricity costs if the PUC hadn't adopted new accounti= ng=20 guidelines March 27 =01) 10 days before PG&E filed for bankruptcy. Besides= =20 changing the accounting rules governing the rate freeze, the PUC's March 27= =20 order also authorized average price increases of up to 40 percent for=20 households and up to 52 percent for businesses.=20 PG&E says those increases =01) expected to begin showing up in June electri= city=20 bills =01) still aren't enough to recoup its costs.=20 The accounting rules imposed by the PUC will make it virtually impossible f= or=20 PG&E to lift the rate freeze before the end of March 2002, PG&E attorney=20 Jerome B. Falk Jr. told Montali on Monday.=20 The rate freeze dumped the utility into an $8.9 billion hole between June= =20 2000 and February of this year and could siphon another $4 billion from PG&= E=20 by the end of March 2002, Falk said. PG&E contends federal law prevents thi= rd=20 parties from taking money from companies protected under bankruptcy.=20 If Montali kills the new accounting rules, Falk said, "it would be our=20 expectation that (the PUC) would do the right thing under California law" a= nd=20 allow the utility to raise its rates even more.=20 The PUC contends Montali is prevented from ruling on the matter under an 11= th=20 Amendment guarantee of "sovereign immunity" to state government agencies as= =20 long as they are obeying the law.=20 "It's not an appropriate matter to litigate here," PUC attorney Walter Riem= an=20 told Montali. "Regulation is shielded (under the Constitution), whether it'= s=20 smart or not smart."=20 California power regulators delay decision on rate hikes=20 By Karen Gaudette ASSOCIATED PRESS=20 May 15, 2001=20 SAN FRANCISCO =01) California ratepayers still don't know how much more the= y'll=20 owe on next month's electric bills, and consumer activists fear the delay= =20 could mean even higher rates for residential customers.=20 Loretta Lynch, President of the Public Utilities Commission, postponed a vo= te=20 on proposed new rates until Tuesday afternoon, saying she needed more time = to=20 review feedback from every type of energy consumer in California.=20 "What we're doing is fine-tuning and tweaking the proposal," Lynch said aft= er=20 Monday's meeting. "Everybody in California is going to pay more."=20 In her initial proposal, Lynch would have spared many residential users fro= m=20 the highest bills and placed more of the burden on businesses and farms.=20 But an outcry from businesses proclaiming that the rate hikes will doom=20 California's economy =01) followed by a Sunday statement from Gov. Gray Dav= is=20 chiding the PUC for not allocating rates evenly over all ratepayers =01) ha= s=20 consumer groups wondering if Davis has urged the PUC to shifting more of th= e=20 rate hikes onto residential customers.=20 "The big industrial customers have been on a lobbying rampage the past=20 several days trying to get more of the increase placed on residential=20 customers," said Mike Florio, senior attorney with The Utility Reform=20 Network.=20 Steve Maviglio, a Davis spokesman, maintained that the PUC is an independen= t=20 body. Three of the five commissioners, however, are Davis appointees.=20 Commissioner Jeff Brown said Monday he was looking into lessening the impac= t=20 on businesses.=20 Business groups definitely hope the extra day translates into a lighter=20 touch.=20 "We can only hope that this extra time means that they're carefully=20 evaluating a plan that will perhaps be more balanced and more proportional= =20 than what they've put forward so far," said Michelle Montague-Bruno,=20 spokeswoman for the Silicon Valley Manufacturing Group that represents 190= =20 busineses.=20 Commissioner Carl Wood said Tuesday is the latest date the PUC can make its= =20 decision and still give Pacific Gas and Electric Co. and Southern Californi= a=20 Edison Co., the state's two largest utilities, enough time to add the new= =20 rates to electric bills by June 1.=20 Energy experts fear that's already too late for the price shock to spur vit= al=20 conservation this summer and help stave off some of the 30 days of rolling= =20 blackouts predicted by managers of the state power grid.=20 Lynch's initial proposal raises rates anywhere from 7 percent to 61 percent= =01)=20 depending on everything from whether the customer manufactures sweatshirts,= =20 heats a swimming pool or processes tomatoes. Nearly everyone would feel som= e=20 pain.=20 Since it unanimously approved rate hikes March 27, the commission has=20 struggled to fashion rates that will simultaneously recoup the $5.2 billion= =20 the state has spent buying power, return the state's largest utilities to= =20 solvency and trigger enough conservation to help fend off some of this=20 summer's rolling blackouts.=20 The allocation the PUC approves will be retroactive to March 27. Charges fo= r=20 interim power use will be spread over the next 12 months, Lynch has said.= =20 Lynch and PUC Administrative Law Judge Christine Walwyn introduced proposal= s=20 last week that business interests said would unfairly make them pay too muc= h=20 of the overall rate hike =01) as much as 50 percent more than they pay now= =20 depending what time of day they use the electricity.=20 Under Lynch's plan, as many as half of PG&E and SoCal Edison's 9 million=20 customers would not see their bills rise at all. She would bill residential= =20 customers at several different levels based on how much power they use.=20 San Diego Gas and Electric Co. customers would not be affected. Neither wou= ld=20 ratepayers who buy their electricity directly from energy wholesalers rathe= r=20 than through utilities, such as the state's public university systems.=20 While state law shields average residential customers from severe rate hike= s=20 on much of their power use, businesses would have to pay more for every=20 kilowatt so the state can raise around $5 billion.=20 That worries small businesses like Spretto, an Oakland restaurant that no= =20 longer serves lunch and laid off five workers because of its growing electr= ic=20 bill.=20 "It's horrendous," said Pamela Drake, a spokeswoman with the Oakland Allian= ce=20 for Community Energy. "Small businesses operate within a smaller margin, ev= en=20 successful ones, and can't afford to pay anymore."=20 Consumer activists sporting white jumpsuits emblazoned with the word=20 "Ratebusters" and other members of the public told the PUC to stop taking= =20 public comment if it didn't plan to listen and protect residents from rate= =20 hikes.=20 "I was raised to pay my bills and be responsible," said April Lankford of S= an=20 Francisco. "But I have a right to my own health and safety. That's about ho= t=20 water. That's about turning on the heat when it gets cold. I am not going t= o=20 not pay my health insurance just to afford electricity."=20 California faces 260 hours of blackouts, says industry=20 REUTERS=20 May 15, 2001=20 WASHINGTON =01) California will have an estimated 260 hours of rotating=20 electricity blackouts this summer, more than the state or regional=20 authorities have predicted, the North American Electric Reliability Council= =20 (NERC) said on Tuesday.=20 Texas, New England, and New York City also face the threat of summer power= =20 outages, NERC officials said at a news conference to unveil their summer=20 outlook. The Pacific Northwest, which produces huge amounts of hydropower,= =20 can meet its own demand this summer but will have no extra power to sell to= =20 California because of drought conditions, NERC said.=20 "The assessment concludes that California will experience difficulties=20 meeting its projected electricity demand this summer and California=20 electricity users will experience rotating blackouts, much more so than las= t=20 summer or this winter," said Michehl Gent, president of NERC.=20 California's "deficiencies will be more severe" than estimates by the=20 California Independent System Operator, NERC officials said. NERC said=20 curtailments of power in the state could total as much as 260 hours over th= e=20 course of the summer, with an average curtailment of about 2,150 megawatts.= =20 Previous estimates from the state and region estimated about 200 hours of= =20 rotating blackouts this summer.=20 NERC is a non-profit entity formed after the 1965 blackouts in the=20 northeastern United States and promotes reliability of the nation's bulk=20 electricity systems.=20 AES to restart 2 retired South California power plants=20 REUTERS=20 May 14, 2001=20 ARLINGTON, VA =01) United States power giant AES Corp. Monday said it will= =20 refurbish two retired gas-fired power plants in Southern California,=20 generating an additional 450 megawatts of power for electricity-strapped=20 state.=20 Arlington, Virginia-based AES said the California Energy Commission certifi= ed=20 the company's refurbishing of units 3 and 4 at its Huntington Beach,=20 California facility about 30 miles(48 km) south of Los Angeles. Both units= =20 were retired in 1995 before AES bought them.=20 The company said the project will bring the two power plants up-to-date,=20 replacing old boilers and installing state-of-the-art emissions controls.= =20 "Not only will these units be on line in time to address California's urgen= t=20 need for electricity this summer, but the modifications will make this plan= t=20 one of the cleanest gas-fired plants in California," said Ed Blackford,=20 President of AES Huntington Beach.=20 PUC Delays Decision on Power Rate Hike=20 Energy: Panel will discuss a new plan today that would shift more of the=20 burden to residences from business.=20 By TIM REITERMAN and MARLA DICKERSON, Times Staff Writers=20 ?????SAN FRANCISCO--The state's utility regulators delayed a decision Monda= y=20 on how to structure a $5-billion electricity rate increase until today, whe= n=20 they will take up a revised plan that is expected to shift a larger share= =20 onto residential customers. ?????Assailed by power users and pressured by the governor, the California= =20 Public Utilities Commission said more time was needed to assess the impact = on=20 competing interest groups. ?????"The problem here is making sure we are allocating [the increase]=20 equitably," PUC President Loretta Lynch said after the meeting. That, she= =20 said, is "tricky." ?????About half the residential customers of the state's two largest=20 utilities would see increases under Lynch's plan proposed last week. Bills= =20 for Southern California Edison customers who use moderate to heavy amounts = of=20 power would rise about 9% to 60%. Similar customers of Pacific Gas & Electr= ic=20 Co. would experience increases of about 7% to 40%. ?????To encourage conservation, Lynch said, she favors moving more of the= =20 overall burden of the increases to residential customers who are moderate= =20 users of electricity. Other commissioners say they believe that such a shif= t=20 is necessary to protect the state's business climate. ?????Consumer advocates voiced concern that the PUC may be yielding to=20 pressure from industry groups that enjoy relatively low rates but say they= =20 are being hit unfairly with much larger percentage increases than residenti= al=20 customers. ?????"The fear is the commission is caving in and taking [the increase] off= =20 big [business] customers and putting it on residential users above 130% of= =20 baseline," said Mike Florio, senior attorney for the Utility Reform Network= . ?????The baseline amount on a bill is the minimum of electricity deemed=20 necessary for a customer and varies by region. Under state legislation, the= re=20 is no rate increase for consumption up to 130% of baseline. Also exempted a= re=20 low-income customers who already receive discounted electricity rates. ?????The commission passed an increase of 3 cents a kilowatt hour March 27.= =20 In recent weeks, the panel has been conducting hearings on how to divvy up= =20 the increase among 9 million customers of Edison and PG&E. Monday's meeting= =20 was supposed to climax that process, paving the way for utilities to start= =20 billing customers June 1. ?????Dozens of speakers addressed the commission, and boisterous protesters= =20 in white coveralls repeatedly criticized the rate increase, chanting: "I=20 ain't payin' no hike, while they're getting rich from our power rates! Who= =20 you gonna call? Rate Busters!" One had to be dragged away from the micropho= ne. ?????To stunned surprise, Lynch later announced that the commission would n= ot=20 vote on her rate design proposed last week or a similar one proposed by a P= UC=20 administrative law judge. ?????Lynch revised the plan over the weekend and some commissioners said th= ey=20 had not yet seen the changes. ?????The delay means two commissioners will be out of town when the=20 five-member panel designs the state's largest rate increase ever.=20 Commissioner Richard Bilas is undergoing a medical procedure in Mendocino= =20 County. Commissioner Henry Duque is traveling to Texas as a director of the= =20 National Assn. of Utilities Commissioners. They said the law permits them t= o=20 vote by phone as long as they do it from a publicly accessible place. ?????Lynch's proposal called for average rate increases of about 20% to 50%= =20 for various classes of customers. But officials said the proposal was being= =20 reviewed after testimony late last week and mounting concerns among some=20 commissioners that it would hit industry and big commercial customers too= =20 hard, potentially hurting the state's economy. ?????After his financial advisors reviewed the PUC's proposals, Gov. Gray= =20 Davis put out a statement over the weekend saying his own proposal, includi= ng=20 a slightly smaller rate hike, was better. ?????"My plan raises sufficient revenues to deal with the problem without= =20 putting an undue burden on California consumers and businesses that might= =20 hurt our economy," he said. ?????The governor's office last week asked the PUC to "come around," said= =20 press secretary Steve Maviglio. "There are gaps between his proposal and th= e=20 PUC's." ?????Carl Wood, one of three Davis appointees on the commission, said that = he=20 was generally comfortable with the Lynch proposal but that "this is a big= =20 decision, and it is not ready" for a vote. ?????Jeff Brown, another Davis appointee, said he spoke to the governor's= =20 office recently and learned that Davis had two primary concerns about the= =20 proposal: "No. 1 that there be sufficient price signals within the=20 residential class [to make people conserve], and that the industrials not b= e=20 walloped and have some mitigation of the rate increase." ?????Brown said he would like to see industrial users paying less than the= =20 50% hike in Lynch's proposal. He said that would mean residents who consume= =20 300% of their baseline amount would have their rates rise 28% instead of=20 about 15%. ?????"I want [the proposed amount for industrial customers] to go down=20 somewhat but can't put all the burden on residentials," he said. "There are= =20 no good answers." ?????Duque and Bilas, appointees of former Republican Gov. Pete Wilson,=20 expressed concerns that the rate proposal would further damage the economy. ?????"Industry is not getting a fair shake," Bilas said. "If you want to=20 achieve maximum conservation, you put [the increase] where demand is most= =20 elastic. It should be placed on you and me." ?????Duque said: "I think [industrial users] are getting an undue amount." ?????Business groups have argued strongly that consumers must endure their= =20 fair share of the pain in order to encourage conservation. ?????Carl Guardino, president and chief executive of the Silicon Valley=20 Manufacturing Group, said his group phoned Davis' staff to voice their=20 opposition to the proposed rate structure. ?????"We found a receptive audience," he said. "They saw that this [propose= d=20 rate structure] will deeply hinder our economy." ---=20 ?????Reiterman reported from San Francisco, Dickerson from Los Angeles. Copyright 2001 Los Angeles Times=20 El Paso Gas Supplier Denies Monopoly=20 Energy: In trial-like hearing, federal panel is told company had control ov= er=20 Southern California market.=20 By RICARDO ALONSO-ZALDIVAR, Times Staff Writer=20 ?????WASHINGTON--A Texas energy conglomerate accused of driving up natural= =20 gas prices in California might have amassed monopolistic power at times las= t=20 year, according to opening testimony Monday before the Federal Energy=20 Regulatory Commission. ?????FERC economist Jonathan Ogur said that under certain conditions during= =20 the past year, a subsidiary of El Paso Corp. of Houston might have controll= ed=20 as much as 45% of the pipeline capacity for shipping gas to Southern=20 California. That share exceeds a commonly used threshold of 35%, raising=20 concern with regulators. ?????"We obviously disagree with that," said Bill Sherman, lead lawyer for = El=20 Paso Merchant Energy, which markets natural gas. Merchant is accused by the= =20 California Public Utilities Commission and Southern California Edison of=20 withholding supply in a bid to raise prices. It had contracted with its=20 pipeline affiliate--El Paso Natural Gas Co.--for rights to ship 1.2 billion= =20 cubic feet of natural gas a day to California. ?????The El Paso firms say the allegations are based on a misrepresentation= =20 of how their relationship worked. They argue that natural gas prices in=20 California have spiked much higher than elsewhere in the country because of= =20 insatiable demand from power plants, a lack of pipeline capacity within the= =20 state, and shortages brought on by unusual weather. High prices for natural= =20 gas are a key component of California's soaring energy bills. ?????"We did nothing wrong," said Norma Dunn, a vice president with El Paso= =20 Corp. "We need to look at this in context. All shippers were trying to move= =20 as much gas as they could into the state. The problem is you can't get all= =20 that much gas into the state." ?????The issue of market share appeared to loom large in the administrative= =20 hearing, which has become the closest thing to a trial arising from=20 California's energy crisis. A company that controls a large portion of any= =20 market enhances its ability to dictate prices and other conditions. ?????El Paso Merchant has argued that its market share should be computed a= s=20 a proportion of the statewide natural gas market, in which case it would fa= ll=20 below 20% and would not raise anti-competitive concerns. ?????But the PUC counters that, because of difficulties in shipping gas fro= m=20 north to south within the state, El Paso's true market is limited to Southe= rn=20 California. ?????"The question of the geographic market makes a tremendous difference i= n=20 how El Paso Merchant's market share will be measured and the results,"=20 acknowledged Judge Curtis L. Wagner Jr. in an opening statement. "If the=20 market is Southern California and not the entire state, the figures tend to= =20 demonstrate a rather high level of concentration in El Paso Merchant." ?????Ogur said in prepared testimony filed last week that it is "likely" th= at=20 El Paso exercised market power in Southern California. ?????Wagner will hear the evidence and present a decision to the FERC board= ,=20 which has the authority to order El Paso to surrender any ill-gotten profit= s. ?????During cross-examination Monday, Sherman sought to discredit the=20 testimony of Sandra Rovetti, a technical analyst with the PUC. Rovetti had= =20 submitted testimony in which she said she studied the market in a "controll= ed=20 experiment" and concluded that El Paso Merchant had wielded monopolistic=20 power to drive up prices. ?????But Sherman won an admission from Rovetti that she had not considered= =20 the price impact of such factors as unusual weather and power plant outages= . ?????The hearing is expected to last all week and a decision from Wagner is= =20 due before June 30. Copyright 2001 Los Angeles Times=20 Labor Courted on Bush Reform Plan=20 Politics: The meeting with union leaders prefaces today's counterproposal b= y=20 Democrats.=20 By RICHARD SIMON and EDWIN CHEN, Times Staff Writers=20 ?????WASHINGTON--The Bush administration aimed its energy policy campaign a= t=20 an unusual constituency Monday, telling union leaders that building more=20 power plants and increasing oil and gas drilling will mean more jobs for=20 their members. ?????Vice President Dick Cheney and Labor Secretary Elaine Chao courted=20 leaders of about a dozen unions during a private White House session that= =20 appeared designed to drive a wedge into the labor-environmental coalition= =20 that has blocked previous pro-business initiatives. ?????"I don't think we're being used," Teamsters President James P. Hoffa= =20 told reporters after the meeting. "Don't forget. American workers will be= =20 solving this problem. They will be building the resources to refine and=20 generate new energy." ?????It was the latest round in an escalating public relations battle over= =20 the comprehensive national energy policy drafted by a task force headed by= =20 Cheney. The plan will be unveiled Thursday by President Bush. ?????Today, House Democrats plan to gather at a Washington gas station to= =20 announce their own formula for reducing the nation's energy problems. It wi= ll=20 call for immediate steps to address high energy prices and supply shortages= ,=20 such as asking federal regulators to investigate allegations of price gougi= ng. ?????A group of 67 Democratic lawmakers sent Bush a letter Monday urging hi= m=20 to pressure the Organization of Petroleum Exporting Countries to increase= =20 world crude oil production. ?????"Notwithstanding our confidence in your Cabinet's extensive knowledge = of=20 and experience with the petroleum industry, we remain concerned that your= =20 administration has done little at this late date to address the coming cris= is=20 in gasoline prices," the letter says.=20 ?????Cheney reiterated his belief that there are no short-term fixes for th= e=20 combination of factors contributing to higher gasoline prices nationwide an= d=20 continuing shortages of electricity in California. ?????The vice president criticized Gov. Gray Davis for suggesting that the= =20 administration's opposition to electricity price controls is tied to its=20 political support from Texas-based energy producers who are profiting off= =20 California's troubles. ?????In the Associated Press interview, Cheney characterized appeals for=20 price controls and a federal investigation of gasoline prices as "exactly t= he=20 kind of misguided--I'm trying to think how to state this=20 gracefully--politically motivated policies we've had in the past."=20 ?????Cheney said Bush might back a reduction of the 18.4-cent-per-gallon=20 federal gasoline tax, AP reported. Opponents say such a move could threaten= =20 highway projects funded by the tax. ?????The administration's comprehensive energy plan is expected to call for= =20 opening more federal land to oil and gas exploration, promoting increased u= se=20 of nuclear power and streamlining the approval process for power plants, ga= s=20 pipelines and oil refineries. ?????In addition, the plan is expected to propose a massive upgrade of the= =20 nation's electricity transmission system, including granting federal=20 authorities eminent domain authority to acquire private property for power= =20 transmission lines.=20 ?????Environmentalists and their Democratic allies contend the plan leans t= oo=20 far toward the supply side. But the administration has said it will include= =20 proposals to promote conservation, energy efficiency and use of renewable= =20 energy sources.=20 ?????White House officials disputed the notion that the meeting with union= =20 leaders was designed to divide the labor-environmental coalition. ?????Cheney was scheduled to meet today with advocates of renewable energy= =20 sources, such as wind and solar power. ?????Hoffa said his group was not provided with enough details of the=20 administration's energy plan to offer an immediate endorsement. ?????Mike Mathis, government affairs director of the Teamsters, said, "We'r= e=20 going to be supportive of a program that creates jobs." Copyright 2001 Los Angeles Times=20 Judge Asked to Block Freeze on Power Rate=20 By MAURA DOLAN, Times Legal Affairs Writer=20 ?????SAN FRANCISCO--Lawyers for Pacific Gas & Electric clashed with attorne= ys=20 for the state in federal bankruptcy court here Monday over whether the cour= t=20 should block a state regulatory order that prolongs an electricity rate=20 freeze. ?????After three hours of arguments, U.S. Bankruptcy Judge Dennis Montali= =20 said he will prepare a written decision. "It will be issued when I am ready= =20 to issue it," Montali told a packed courtroom. ?????The legal battle represents PG&E's first attempt to use its bankruptcy= =20 petition to protect itself from state regulators--the California Public=20 Utilities Commission.=20 ?????PG&E has asked Montali to block a key accounting order the commissione= rs=20 approved March 27, several days before the Northern California utility file= d=20 for Chapter 11 bankruptcy protection. ?????The utility contends that the order illegally extended a freeze on=20 electricity rates. Lawyers for the state counter that the PUC has sovereign= =20 immunity under the 11th Amendment, and the judge has no power to intrude on= =20 its regulatory decision making.=20 ?????Montali asked a PG&E lawyer how he could get around the protection=20 argument. ?????"Because we have commissioners who are shielded by sovereign immunity,= =20 don't I have to find a potential ongoing violation of federal law [to=20 intervene]?" the judge asked. ?????Jerome Falk, the lawyer for PG&E, said the regulatory commission was= =20 breaking federal law by blocking the utility's ability to use the Bankruptc= y=20 Act's protections to reorganize. ?????Under PG&E's calculation, the rate freeze imposed by deregulation shou= ld=20 have ended in mid-2000. The utility stands to lose $4 billion because of th= e=20 continuation of the freeze, Falk told Montali. ?????"Don't let it get $4 billion worse," he pleaded. ?????Walter Rieman, representing the state, countered that the commissioner= s=20 were acting in their regulatory capacity when they approved the accounting= =20 change. ?????"Here we have rate-making and regulation in its classic and purest=20 form," Rieman told the judge.=20 ?????Because of the rate freeze, the utility must buy power at a cost highe= r=20 than the rates it charges, Falk said. ?????"Money is going out. . .," Falk said. "Assets of the estate are=20 threatened with diminution, major diminution, as a result of this order." ?????Montali asked him what would happen if he blocked the regulatory order= .=20 Would the rate freeze immediately end? ?????Falk replied that PG&E would return to the PUC and make its case for a= n=20 end to the freeze. "I am not asking you to set rates."=20 ?????Lawyers for the state pointed out that PG&E happily accepted the rate= =20 freeze when it allowed the utility to sell power at higher than market rate= s.=20 In their view, PG&E wants a ruling against the rate order to give the utili= ty=20 more leverage against the state in the future. ?????Montali questioned Rieman about what authority, if any, the Bankruptcy= =20 Court has over the utilities commission. ?????"You want me to say that everything the commission has done or will do= =20 is insulated," Montali said. "I don't know how I can do that, and maybe I= =20 can't." ?????The judge asked Rieman whether the PUC could eventually approve=20 retroactive rate increases. Rieman said it was "possible" but he was not su= re=20 retroactive hikes would be "appropriate." ?????PG&E filed for bankruptcy protection after accumulating more than $9= =20 billion in debts since state-ordered deregulation in 1996. The case is the= =20 third largest bankruptcy in U.S. history. Copyright 2001 Los Angeles Times=20 Edison Deal Sets High Legislative Hurdle for Davis=20 Capitol: Rescue bill faces opposition from lawmakers and competition from= =20 plans that include buying utility.=20 By DAN MORAIN and NANCY VOGEL, Times Staff Writers=20 ?????SACRAMENTO--Gov. Gray Davis faces the toughest legislative challenge o= f=20 his tenure as he tries to win votes for a deal he says is needed to keep=20 Southern California Edison out of bankruptcy--even as lawmakers work on=20 alternative plans. ?????Davis has tapped Sen. Richard Polanco to carry the bill, and the Los= =20 Angeles Democrat is expected to introduce legislation implementing key part= s=20 of the Edison deal this week. But even before hearings begin, key lawmakers= =20 say the Davis plan has little chance of success, at least not in its curren= t=20 form. ?????Some Democrats in the Assembly are considering t
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