|
|
Enron Mail |
Please see the following articles:
Sac Bee, Wed, 5/16: "Double power punch: Rate hikes set; blackout blues=20 ahead" Sac Bee, Wed, 5/16: "An energy council expects five times the outages=20 forecast" Sac Bee, Wed, 5/16: "Generator, environmental groups strike deal " Sac Bee, Wed, 5/16: "Blackouts may create shortage of water: State officia= ls=20 warn that supplies for drinking and fire hydrants are vulnerable because=20 pumps can fail during power outages" Sac Bee, Wed, 5/16: "Dan Walters: Rate raise -- Genuine conflict or tightl= y=20 scripted political melodrama?" Sac Bee, Wed, 5/16: "Budget reserve plan stirs up a fight: Gov. Davis back= s=20 drawing down the emergency fund. Others say it could lead to tax hikes or= =20 massive cuts" Sac Bee, Wed, 5/16: "Democrats lay out energy plan: Leaders call for caps = on=20 wholesale prices and tax breaks for oil and gas production" Sac Bee, Wed, 5/16: "Judge names panel in PG&E case" SD Union, Wed, 5/16: "SDG&E area spared for now by big rate hikes" SD Union, Wed, 5/16: "State credit rating takes another hit over energy=20 crisis" SD Union, Wed, 5/16: "House Democratic plan calls for power price caps" SD Union (AP), Tues, 5/15: "Southern California Gas plans pipeline expansi= on" SD Union (AP), Tues, 5/15: "Cheney's energy plan will offer no quick fixes= =20 on gasoline prices" LA Times, Wed, 5/16: "$5.7-Billion Energy Rate Hike Is OKd" LA Times, Wed, 5/16: "State Has Lost Global Lead in 'Green' Power" LA Times, Wed, 5/16: "All-Out Attack on Bush Energy Plan Is Readied" LA Times, Wed, 5/16: "A One-Two Punch in the Budget" LA Times, Wed, 5/16: "260 Hours of Summer Blackouts Predicted" LA Times, Wed, 5/16: "Your new electric bill" (Graphic) LA Times, Wed, 5/16: "Just Not Enough Electricity" (Audio from Gil=20 Alexander, Calif. Edison) http://www.latimes.com/business/reports/power/gr_bill010516.htm# SF Chron, Wed, 5/16: "The power behind the POWER=20 Business as usual for PG&E's well-connected board" SF Chron, Wed, 5/16: "The Power behind the POWER=20 PG&E board doesn't suffer from energy crisis " SF Chron (AP), Wed, 5/16: "California electric rates jump to second highes= t=20 in country" SF Chron (AP), Wed, 5/16: "Industry sees worse-than-expected summer power= =20 shortages" SF Chron, Wed, 5/16: "Contra Costa acts on energy=20 Hiring freeze, lawsuits planned by supervisors" SF Chron, Wed, 5/16: "Memo suggests Texas firm manipulated gas market " SF Chron, Wed, 5/16: "Bush follows stump script on energy=20 Policy announcement today was presaged in Michigan talk" SF Chron, Wed, 5/16: "PUC tags consumers with huge rate boost=20 ELECTRICITY BILLS: Burden shifts from business to heavy residential users" SF Chron, Wed, 5/16: "Davis finds his ramrod for risky energy bill " SF Chron, Wed, 5/16: "Energy at a Glance" SF Chron, Wed, 5/16: "PUC tags consumers with huge rate boost=20 NEWS ANALYSIS=20 Politicians see no need to promote urge to conserve" SF Chron, Wed, 5/16: "SAN JOSE=20 County conserving its air conditioning" Mercury News, Wed, 5/16: "California rate hike hits homes, businesses" Mercury News, Wed, 5/16: "Electricity users struggle to meet savings targe= t" Mercury News, Wed, 5/16: "What is the baseline on electricity bills, and w= hy=20 has it become so important?" Mercury News, Wed, 5/16: "California PUC approves power rate hike plan" Mercury News, Wed, 5/16: "Energy report may lead to new battle on drilling= =20 along California's coast" Mercury News, Wed, 5/16: "Energy plan gives GOP the jitters" =20 (Commentary) OC Register, Wed, 5/16: "Biggest rate hike in state history" OC Register (AP), Wed, 5/16: "Democrats want energy price limits" OC Register, Wed, 5/16: "Energy notebook Electricity-bond delay lowers state credit standing" OC Register, Wed, 5/16: "Burden falls on residents" OC Register, Wed, 5/16: "Anaheim Mills runs out of gas" OC Register (AP), Wed, 5/16: "Judge: Memo hints at gas market abuse" Energy Insight, Wed, 5/16: "Power in the Northeast thinking locally, actin= g=20 locally" Individual.com (AP), Wed, 5/16: "PG&E, State Regulators Spar in Court" NY Times, Wed, 5/16: "Bush Task Force on Energy Worked in Mysterious Ways" WSJ, Wed, 5/16: "California Could Face Cash Crunch Soon --- Spending on=20 Power Worries Treasurer, and Moody's Cuts State Bond Ratings" ---------------------------------------------------------------------------= --- --------------------------------------------------- Double power punch: Rate hikes set; blackout blues ahead By Carrie Peyton Bee Staff Writer (Published May 16, 2001)=20 The shouts and chants, boos and catcalls were the sound of the other shoe= =20 dropping.=20 Seven weeks after state regulators voted to raise electric rates for=20 customers of Pacific Gas and Electric Co. and Southern California Edison by= =20 $5 billion annually, Tuesday they sorted out just who will pay and just how= =20 much.=20 Some of the state's biggest industries will have to spend 50 percent more f= or=20 their electricity, starting June 1.=20 Even so, their cost per kilowatt-hour will be about half that paid by the= =20 most electricity-guzzling homeowners and renters. Their bills, overall, wou= ld=20 increase 37 percent under a complex, five-step rate scale.=20 The decision dismayed representatives of small consumers and big businesses= =20 alike, and triggered an outpouring of rage from those who said the state=20 instead should seize power plants from owners who have jacked up wholesale= =20 prices.=20 "Shame, shame, shame, shame," protesters chanted after the 3-2 vote by the= =20 state Public Utilities Commission before a packed auditorium in San=20 Francisco.=20 "This is a cave-in to the big industrial lobby and the big agricultural lob= by=20 that's been on the warpath for the last week," said Mike Florio, an attorne= y=20 with The Utility Reform Network, a Bay Area consumer group.=20 For weeks, the commission has been backing away from ideas floated by PUC= =20 President Loretta Lynch, who argued that substantially lower charges paid b= y=20 big businesses for decades need to be leveled out, to come closer to=20 residential and small-business rates.=20 A proposal she outlined in March would have raised some business rates at= =20 some hours up to sixfold. But by last week, the largest business increases = in=20 two different proposals had come down to no more than 55 percent. On Tuesda= y,=20 that was lowered again to 49 percent.=20 Even so, the decision was criticized by commissioner Richard Bilas as a=20 "disastrous rate design ... (that) will send the California economy into a= =20 recessionary death spiral."=20 He warned that businesses will shut down or flee the state, with consequenc= es=20 that will ripple through the economy as jobs and taxes are lost. Bilas and= =20 Henry Duque, the two remaining Republican appointees on the five-member=20 commission, voted against the rate design proposed by Lynch. It was support= ed=20 by commissioners Geoffrey Brown and Carl Wood, who, like Lynch were appoint= ed=20 by Gov. Gray Davis.=20 "Every consumer in California is justified in feeling outrage at the rates = we=20 approve today and the bills they will have to pay tomorrow," Lynch wrote in= =20 her 69-page decision, blaming the increases on "wholesale price gouging" an= d=20 inaction by federal regulators.=20 Lynch said the new rates will fuel conservation, but business interests hav= e=20 argued that so many power users are fully or partly shielded that it will= =20 blunt the conservation signal that could be sent by even higher rates.=20 Under Tuesday's decision, agricultural rate hikes were capped at 15 percent= =20 to 20 percent, partly in response to Davis' urgings.=20 The governor, who had urged the commission to go easier on agriculture and= =20 enact a lower overall increase, said in a statement that the rate hikes mad= e=20 "modest improvements" over earlier proposals but "my plan represented a mor= e=20 balanced approach."=20 The rate hikes also spare households that use less than 130 percent of a=20 minimal "baseline" amount to comply with a state law passed this year.=20 Pacific Gas and Electric's baseline varies depending on the region and the= =20 season.=20 Households that qualify for special low-income rates or special medical rat= es=20 also won't face increases.=20 For other residential power users, electricity will get progressively more= =20 expensive, but only above 130 percent of baseline, so overall bills won't= =20 rise as sharply.=20 Under the five new residential rate tiers, a PG&E customer whose use tops o= ut=20 in the third tier would pay an additional $6 a month, increasing an average= =20 $76 bill about 5 percent to $81, the PUC calculated.=20 Those whose usage rises into the fourth tier would pay about 18 percent mor= e=20 per month, seeing their bills rise from $122 to $143, and those whose usage= =20 creeps into the fifth tier would pay an extra $85, or 37 percent of their= =20 total bill, which would increase from an average of $232 to $317, the=20 commission said.=20 Small businesses would face increases ranging from 34 percent to 45 percent= .=20 While the percentage increases would seem to favor smaller consumers, the= =20 underlying rates are highest for residential customers.=20 Households with usage above 130 percent of baseline will now pay PG&E an=20 average of 22 cents per kilowatt-hour for the additional power, Lynch=20 calculated. That compares with 16.7 cents for small businesses, 14.2 cents= =20 for agriculture, 15.4 cents for large commercial users and 12.2 cents for= =20 industrial users, she wrote.=20 It was the comparatively lower rates for the biggest users that angered=20 advocates for residential consumers.=20 "I don't know why they feel compelled to give those guys a break when they'= re=20 the ones who wanted us to get into this deregulation mess in the first=20 place," said TURN's Florio.=20 But Bill Booth, who represents the California Large Energy Consumers=20 Association, said the decision is "a horrible result for business. This is= =20 going to have a really negative effect on the economy."=20 Agricultural interests were more upbeat, with Ron Liebert, an attorney for= =20 the California Farm Bureau Federation, praising the decision for recognizin= g=20 "the unique difficulties agriculture faces," including dwindling water=20 supplies, higher pumping costs and higher fuel costs for farm equipment.=20 The rate hikes allow PG&E and Edison to collect an additional $700 million= =20 over the next year. That amount represents revenue that the utilities would= =20 have collected if they had been able to immediately impose the rate hike=20 March 27, the day the increase was approved.=20 The rate hikes affect customers of PG&E and Southern California Edison, the= =20 state's two largest investor-owned utilities. They don't affect customers o= f=20 ratepayer-owned systems such as the Sacramento Municipal Utility District,= =20 where locally elected officials set rates. SMUD raises its rates an average= =20 of 22 percent this month, driven partly by the same turbulence in wholesale= =20 electricity markets that has sent PG&E into bankruptcy.=20 The Bee's Carrie Peyton can be reached at (916) 321-1086 or=20 cpeyton@sacbee.com. An energy council expects five times the outages forecast By Dale Kasler Bee Staff Writer (Published May 16, 2001)=20 In the bleakest assessment yet of California's summertime energy shortage, = an=20 industry association Tuesday predicted the state will suffer five times as= =20 many rolling blackouts as previously forecast.=20 Moreover, the group said the blackouts will be twice as widespread --=20 affecting twice as many Californians at a time -- as any the state has=20 experienced this year.=20 The North American Electric Reliability Council predicted 15 hours of=20 blackouts a week through September, vs. about three hours under assumptions= =20 released by the Independent System Operator, which runs California's power= =20 grid. The council's prediction sharply contrasted with predictions by Gov.= =20 Gray Davis, who has said the state will avoid major problems this summer.= =20 "All indications are, there are going to be chronic problems this summer,"= =20 said Tim Gallagher, manager of technical services at the reliability counci= l.=20 He said Californians for the first time can expect blackouts during odd hou= rs=20 and on weekends, instead of just the late-afternoon hours when electricity= =20 consumption usually peaks.=20 A Princeton, N.J., nonprofit group funded by the energy industry and=20 dedicated to monitoring the nation's power supplies, the reliability counci= l=20 said electricity supplies may be iffy this summer in the Pacific Northwest,= =20 New York, New England and Texas. The only state where it predicted blackout= s=20 was California.=20 Taking note of the ISO's study, the council was far more pessimistic about= =20 the levels of available power this summer from California's existing=20 hydroelectric, nuclear and natural gas-fired generating plants. It also=20 predicted fewer imports from out of state and said California will get less= =20 power than expected from the host of new power plants scheduled to begin=20 operation over the summer.=20 The council did say the demand for power is likely to be less than the ISO= =20 estimated, thanks to the impact of conservation programs and a hefty rate= =20 increase approved by the Public Utilities Commission. But the council said= =20 conservation programs are likely to generate only a third of the savings=20 predicted by state officials.=20 California has experienced six days of rolling blackouts this year, includi= ng=20 two last week, the result of hydropower shortages, unexpected plant shutdow= ns=20 and the financial crisis facing the state's two main utilities, Pacific Gas= =20 and Electric Co. and Southern California Edison.=20 The second blackout, on Jan. 18, was the most widespread, cutting power to= =20 750,000 homes at a time.=20 The reliability council said the average blackout this summer will be twice= =20 as bad, taking down 1.6 million homes at a time.=20 Predicting the impact of summertime blackouts has become something of a=20 cottage industry, with various independent consultants forecasting billions= =20 in economic losses. Recently a consultant hired by top business lobbyists= =20 said the state will lose 135,000 jobs if it suffers 110 hours of blackouts = --=20 less than half as many hours as predicted by the reliability council, which= =20 is owned by 10 Regional Reliability Councils whose members come from all=20 segments of the electric industry.=20 The effect on the business climate remains to be seen. "We really have no= =20 experience with this," said chief economist Ted Gibson of the California=20 Department of Finance.=20 Various industry analysts have predicted anywhere from 20 to 36 days of=20 rolling blackouts this summer. The ISO has said the state could face=20 blackouts any day when total demand exceeds 40,000 megawatts, which happene= d=20 34 times last summer.=20 The ISO, which is scheduled to update its summer forecast next week, didn't= =20 predict the number of hours of blackouts. But the reliability council fed= =20 ISO's assumptions into its computer model and came up with 55 hours of=20 blackouts this summer. Using its own, more pessimistic assumptions, the=20 council estimated 260 hours, or about 15 hours a week.=20 "It wouldn't shock me," said Severin Borenstein of the University of=20 California Energy Institute. "It's a little high, compared to the other=20 estimates, but there's a lot of uncertainty about what's going to be=20 available in state and out of state."=20 The ISO had no comment on the council's projections, but Davis' office said= =20 the forecast is overly pessimistic.=20 "Their calculations are based on the worst conditions occurring all day,=20 every day," said Davis spokesman Steve Maviglio.=20 He said the council overlooks the expected supplies from new "peaker" power= =20 plants and two Orange County plants that will fire up this summer after fiv= e=20 years in mothballs. The report also underestimates the level of power that= =20 neighboring states will sell to California, he said.=20 "They assume it's going to be blazing hot in Phoenix, Portland and San=20 Francisco all on the same day (drastically reducing imports), and that neve= r=20 happens," Maviglio said.=20 Davis has tried recently to minimize the impact of blackouts, saying: "We'l= l=20 get through the summer without major disruptions. A couple of difficult day= s,=20 but no major disruptions."=20 The council and the ISO are far apart in their assessment of supplies. The= =20 ISO, for instance, predicted that the state will get nearly 2,600 additiona= l=20 megawatts of power by July from new plants under construction, enough=20 electricity for nearly 2 million homes. The council said new plants typical= ly=20 don't operate at full efficiency when they're starting up. Its prediction:= =20 500 megawatts, or enough for only 375,000 homes.=20 Similarly, the ISO said the drought will curtail hydro supplies by 1,000=20 megawatts. The council said the shortfall will reach 2,400 megawatts by=20 August.=20 And while the ISO figured unexpected plant shutdowns will erase 2,500=20 megawatts of power, the council predicted the damage will be more than 4,50= 0=20 megawatts.=20 The Bee's Dale Kasler can be reached at (916) 321-1066 or dkasler@sacbee.co= m. Generator, environmental groups strike deal=20 By Tom Knudson Bee Staff Writer (Published May 16, 2001)=20 Days after state regulators gave Duke Energy the go-ahead to expand its Mos= s=20 Landing Power Plant near Monterey Bay last fall, documents show four=20 environmental groups made their own deal with the utility giant.=20 The four signed an agreement not to "participate in any lawsuit (or)=20 regulatory challenge" that might slow or stop the project in exchange for a= =20 financial concession: $1 million from Duke for environmental "monitoring an= d=20 research."=20 Balancing power generation and environmental protection always has been=20 difficult. But today, as power-starved California scrambles to find and=20 permit new energy sources, some fear the Moss Landing agreement shows that= =20 money can sway even environmentalists -- and tip the scales too far in favo= r=20 of economic development.=20 Environmentalists who signed the agreement, though, said that despite their= =20 concerns about the plant expansion, they had little chance of stopping it,= =20 especially after it was approved by the California Energy Commission and=20 Central Coast Regional Water Quality Control Board.=20 So they took the potentially controversial step: entering into an agreement= =20 with Duke for financial resources to pay for studies of the plant's impact = on=20 the marine environment.=20 Other environmentalists, though, criticized that approach.=20 Mitigation payments Duke Energy's efforts to modernize the Moss Landing Power Plant resulted in= =20 mitigation payments to environmental and other groups, including:=20 $7 million to the Elkhorn Slough Foundation to mitigate the plant's use of= =20 seawater.=20 $425,000 to the Monterey Bay Sanctuary Foundation over three years to monit= or=20 heated seawater discharge in the ocean.=20 $1 million to the Monterey Bay Sanctuary Foundation over five years to=20 monitor water quality through a program sponsored by Save Our Shores, the= =20 Center for Marine Conservation, the Friends of the Sea Otter and the Otter= =20 Project.=20 $100,000 to the Marine Mammal Center to relocate its triage center for=20 injured animals onto power plant property.=20 $3.4 million to the Moss Landing Chamber of Commerce over 20 years for=20 infrastructure improvements in the Moss Landing community.=20 $100,000 to design and construct a boardwalk for additional beach access in= =20 Moss Landing.=20 $60,000 for an environmental assessment for a proposed Elkhorn Slough Circl= e=20 Trail. If approved, Duke would provide an additional $250,000 endowment to= =20 maintain the trail.=20 Source: Duke Energy, North America=20 "It is very disheartening," said Carolyn Nielson, a retired teacher who alo= ng=20 with some other local residents is waging a battle against what they consid= er=20 an environmentally harmful power plant cooling system.=20 "These environmental groups have the expertise, the biologists, the=20 attorneys," said Nielson, who has taken her case to the State Water Resourc= es=20 Control Board. "We could have been much more successful with their help. Bu= t=20 there wouldn't have been any financial reward in it for them."=20 Such criticisms are off-base, according to Warner Chabot, regional director= =20 for the Center for Marine Conservation, a national environmental group that= =20 was among those to sign the deal. He said environmentalists got the best de= al=20 possible in the current energy climate.=20 "Look at what's happening with power plant approvals in California right=20 now," said Chabot, referring to the state's push to bring new energy source= s=20 on line.=20 The Moss Landing project -- which is scheduled to add 1,060 megawatts in=20 2002, enough to serve one million homes -- is a key part of that energy=20 expansion plan.=20 No money will go to the four environmental groups -- the Center for Marine= =20 Conservation, along with Save Our Shores, Friends of the Sea Otter and the= =20 Otter Project. It will be routed, in five yearly installments of $200,000= =20 each, to the Monterey Bay Sanctuary Foundation, a nonprofit organization th= at=20 helps support sanctuary programs, including scientific research.=20 Chabot helped found the sanctuary foundation and sits on its board. He said= =20 the money will be used to monitor the health of Elkhorn Slough, a=20 biologically rich estuary that borders the plant and is linked to Monterey= =20 Bay.=20 "Not a dime comes to the Center for Marine Conservation," he said. "Not a= =20 penny comes to me."=20 Duke representatives said the controversy about the arrangement has been=20 stirred by a handful of people.=20 "It's a million dollars worth of water quality studies," said Duke spokesma= n=20 Tom Williams. "Our whole effort wasn't to try to buy anybody off. It was=20 designed to help increase people's comfort level where there wasn't a comfo= rt=20 level."=20 The $1 million agreement signed in November is part of a package of more th= an=20 $12 million in Duke payments to civil, government and environmental groups = in=20 connection with the plant modernization.=20 The heftiest award -- $7 million to the Elkhorn Slough Foundation, a=20 nonprofit environmental organization -- was negotiated by state agencies to= =20 "mitigate" environmental impacts of the plant.=20 Formed in 1982, the slough foundation exists to promote "the wise use and= =20 conservation of Elkhorn Slough and surrounding wetlands," its Web site says= .=20 However, some environmentalists say the state-approved mitigation plan is= =20 inadequate.=20 "If you want to say, 'Who did Duke roll with a big chunk of money?' I would= =20 say they rolled the California Energy Commission and the Regional Water Boa= rd=20 for the price of mitigation," Chabot said. "The agencies got bought off=20 cheap. And the environment got taken to the cleaners."=20 Duke's Williams strongly disagreed. Environmental mitigation "must be based= =20 on science, not on buying anybody off," he said. "That is inappropriate, an= d=20 we would not participate in that.=20 "That suggestion is offensive to us. And it should be offensive to any=20 environmentalist."=20 Bob Haussler, head of the Energy Commission's environmental protection=20 office, said the mitigation plan is biologically sound. "We are confident i= t=20 will improve the slough ecosystem," he said.=20 Madeline Clark, a local businesswoman and founder of Monterey Parkway -- a= =20 citizens group that scrutinizes local public works projects -- called the= =20 recipients of Duke's payments a "shopping list" of government agencies,=20 environmental groups and civic organizations. She was particularly critical= =20 of the $1 million deal with environmental groups.=20 "You know what bothers me?" Clark said. "Environmental groups get tons of= =20 donations. Their purpose is to protect and defend the environment. If a big= =20 corporation like Duke can come in and buy them off, I have a real problem= =20 with that."=20 Construction began in November on Duke's project to add 1,060 megawatts of= =20 natural gas-fired electrical capacity to the Moss Landing plant, purchased= =20 from PG&E in 1998.=20 If the expansion is finished next year, as scheduled, it would account for= =20 more than 30 percent of all new generation in California in 2002.=20 "This is a big deal," said Williams, the Duke spokesman. "It will be the=20 largest plant in California. If that plant is delayed a month or two, we lo= se=20 the summer of 2002. And that affects not only Duke Energy, but the state of= =20 California."=20 Opponents say it's not the power they oppose, but the plant's cooling syste= m,=20 which will pump about 1.2 billion gallons of seawater each day from Moss=20 Landing Harbor. Such pumping, they say, will degrade Elkhorn Slough. They= =20 argue for an alternative cooling system, such as towers that recirculate=20 water.=20 "Basically, what that plant will do is take 25 percent of the volume of the= =20 harbor and slough, run it through a pipe and dump it back into the ocean wi= th=20 much of the marine life cooked and dead," said Steve Shimek, executive=20 director of the Otter Project.=20 For Shimek and other environmentalists, scientific studies commissioned by= =20 Duke during the permitting process left key questions unanswered about the= =20 plant's impact on the environment.=20 "There was no scientific evidence that would literally point to Duke causin= g=20 harm to the environment," said Vicki Nichols, executive director of Save Ou= r=20 Shores. "We felt we didn't have strong standing to sue."=20 Instead, the environmentalists began negotiating with Duke for financial=20 payments for studies of environmental impacts of the modernization project.= =20 The process "gave me tremendous pause and great concern," Nichols said. "I= =20 knew there was going to be some perception that we were doing the wrong=20 thing."=20 She was right.=20 "As far as I'm concerned, with the price-gouging going on by the energy=20 wholesalers, they are just receiving stolen goods," said Clark, of the=20 citizens group.=20 Her skepticism was sharpened by the recent disclosure that Duke Energy=20 approached Gov. Gray Davis with a secret deal offering financial concession= s=20 if the state dropped lawsuits and investigations into the power generator.= =20 Chabot, with the Center for Marine Conservation, discouraged any comparison= =20 between the two offers, calling it "grossly unfair and inaccurate."=20 Regardless of what was intended with the payments, Nielson said they stain= =20 the process. "It is so destructive in terms of making everyone cynical," sh= e=20 said.=20 Shimek took a different view. "We convinced Duke to spend $1 million toward= =20 monitoring that, frankly, five years from now could very well come back to= =20 haunt them," he said.=20 "Did we do the right thing? I have no idea. Did we try our best? Yes, we=20 did."=20 The Bee's Tom Knudson can be reached at tknudson@sacbee.com. Blackouts may create shortage of water: State officials warn that supplies= =20 for drinking and fire hydrants are vulnerable because pumps can fail during= =20 power outages. By Chris Bowman Bee Staff Writer (Published May 16, 2001)=20 State health authorities are notifying public water utilities to secure=20 emergency water and backup power so fire hydrants won't run dry and drinkin= g=20 water remains safe during blackouts.=20 The notice, which is being issued this week to all 8,700 public water syste= ms=20 in the state, also advises utilities to warn the public that tap water coul= d=20 turn cloudy or contaminated during a prolonged power outage at the utilitie= s'=20 well pumps.=20 The Department of Health Services also suggested alerting consumers to=20 "immediately discontinue any non-essential water usage" during water outage= s=20 or low water pressure.=20 Clamping down on water use, particularly outdoor irrigation and car washing= ,=20 reduces the chances of water systems losing pressure or running dry, state= =20 officials said.=20 Loss of pressure can introduce bacterial contamination into the=20 drinking-water supply. Water pipes inevitably leak, and the leakage that=20 mixes with soil can get sucked back into the system through cracks in the= =20 underground delivery network. The effect, called back-siphonage, is similar= =20 to sipping water through a straw.=20 As a precaution, the state health notice advises water utilities to increas= e=20 monitoring for harmful microbes in areas that lose power.=20 Changes in water pressure also can churn up sediment settled in pipes,=20 causing tap water to turn brown or cloudy. Consumers are advised to open ho= t-=20 and cold-water faucets when normal water service is restored to flush the= =20 lines until the water turns clear.=20 The state health advisory comes at the beginning of air-conditioning season= =20 that threatens to drain California's power-short supplies on hot days.=20 The Association of California Water Agencies is telling its members to=20 "prepare for multiple, multi-hour power outages: 80-100 hours of power=20 outages (during the summer) based on average assumptions, up to 1,000 hours= =20 if things get worse."=20 At issue are the electrical pumps that extract water from wells and keep=20 supplies flowing at a constant rate through underground networks of municip= al=20 water mains and pipes.=20 The state Public Utilities Commission has exempted services "necessary to= =20 protect public health and safety" from planned blackouts that power manager= s=20 impose to avert a collapse of the state's electricity grid.=20 The exemption, however, does not apply to water-supply or sewage-treatment= =20 systems, which rely on electric pumps to keep raw wastewater from spilling= =20 out of utility holes.=20 As a result, water-supply systems are at risk, even for firefighting=20 agencies, which are exempt from the blackouts.=20 "Those who provide the necessary water for those services should likewise b= e=20 exempted," said the water-utilities association, which is pressing the PUC= =20 for an exemption from blackouts.=20 PUC officials said that most water utilities have adequate backup generator= s,=20 though they have agreed to further consider the utilities' case. Many of th= e=20 generators were bought in anticipation of the Y2K computer havoc that large= ly=20 failed to materialize.=20 State health and local utility officials said those generators would prove= =20 critical if the power outages became more frequent and prolonged as expecte= d=20 this summer.=20 In its notice to utilities this week, the state health department says it= =20 "encourages all utilities to secure backup power capabilities and to=20 routinely test their emergency power generating equipment. ... In addition,= =20 storage should be maintained as full as possible."=20 The advisory also asks utilities to update their "disaster response plans" = so=20 the state can better help utilities in emergencies.=20 Cliff Sharpe, chief of the health department's drinking-water enforcement f= or=20 Northern California, said small community water systems are at greatest ris= k=20 because they lack adequate water storage.=20 But larger systems such as those in the Sacramento area could have delivery= =20 breakdowns if the outages at the well pumps last more than two hours, he=20 said.=20 Officials at Citizens Water Resources, which serves 180,000 residents in th= e=20 unincorporated areas of metropolitan Sacramento, said it has water-sharing= =20 arrangements with the city of Sacramento and other suppliers in the event o= f=20 a water outage.=20 Having enough power to deliver the water, however, is an open question, sai= d=20 Herb Niederberger, Citizens operations manager. The utility has several=20 portable generators and many more on order to install at its wellheads.=20 Still, officials said they would need the help of residents to make sure th= e=20 system gets by. They are asking residents to confine outdoor watering from= =20 midnight to 10 a.m.=20 "If the blackouts occur during peak hours of energy use and many customers= =20 are using their sprinklers, we'll lose pressure immediately," Niederberger= =20 said.=20 The Bee's Chris Bowman can be reached at (916) 321-1069 or cbowman@sacbee.c= om . Dan Walters: Rate raise -- Genuine conflict or tightly scripted political= =20 melodrama? (Published May 16, 2001)=20 California's historic -- and terribly flawed -- experiment in the generatio= n,=20 transmission and pricing of electric energy began as a drive by big=20 industrial and commercial power customers to reduce their costs.=20 At the time, California was mired in the worst recession since the Great=20 Depression, hundreds of thousands of jobs had disappeared and business=20 executives were complaining about the high costs of operating in the state.= =20 Improving the "business climate" had become an oft-chanted political mantra= ,=20 and executives wanted power supplies by competitive bid outside the regulat= ed=20 utility grid.=20 The demands of business for "direct access" to competitive power morphed,= =20 thanks to an unfortunate meeting of minds between academic theorists and=20 vote-hungry politicians, into a broad scheme that was called "deregulation"= =20 but was really a hybrid shaped by powerful interest groups.=20 Among the many ironies that attach themselves like lamprey eels to the=20 state's energy crisis is that the big users that wanted to reduce their cos= ts=20 now are being saddled with sharp spikes in power rates to ease the immense= =20 debts the utilities and the state have amassed. And that irony comes with a= =20 tale of political intrigue.=20 During late 2000 and early 2001, business leaders, worried that the utiliti= es=20 were being driven into bankruptcy and power supplies could be interrupted,= =20 repeatedly urged Gov. Gray Davis to allow utility rates to rise. The=20 Democratic governor rebuffed the pleas for months, agreeing only to a token= =20 and supposedly temporary increase in January. But in April, with the state'= s=20 own treasury being hammered by power purchases, Davis relented and agreed t= o=20 allow rates to rise by around one-third.=20 How that came about is still a bit mysterious. Davis acted after the state= =20 Public Utilities Commission, controlled by his appointees and headed by a= =20 former political adviser, unveiled its own rate increase scheme, one heavil= y=20 oriented toward imposing most of the burden on business rather than=20 residential customers. Davis insisted that the PUC had acted on its own,=20 which produced nothing but guffaws in the Capitol.=20 PUC President Loretta Lynch plowed ahead with her $5 billion plan, business= =20 executives howled and on Sunday, just as the commission was poised to act,= =20 Davis publicly rejected it. "My plan raises sufficient revenues to deal wit= h=20 the problem without putting an undue burden on California consumers and=20 business that might hurt the economy," Davis said. The next day, Lynch=20 postponed adoption of her plan, saying it was undergoing revisions, and on= =20 Tuesday a new version, somewhat closer to the governor's and less onerous t= o=20 business, was unveiled. Davis, it became apparent, had interceded with othe= r=20 commissioners, including newly appointed Jeff Brown, to lessen the impact o= n=20 agriculture and business.=20 Consumer groups howled about what they characterized as a sellout to=20 business, arguing that the executives who pressed for deregulation in the= =20 mid-1990s should swallow the rate increases that result from the failure of= =20 the scheme to increase competition and lower power costs. But during a PUC= =20 meeting disrupted by anti-rate increase protesters, the scheme was approved= =20 on a 3-2 vote.=20 What no one outside Davis' immediate circle knows is whether all of this wa= s=20 a genuine conflict between the governor and Lynch, the one-time political= =20 strategist he chose to head the PUC, or whether it was a setup to make Davi= s=20 appear to be a moderate who saved business from killer utility rates. Davis= =20 is certainly no stranger to the triangulation approach to political issues;= =20 he has often positioned himself as the protector of business, and collected= =20 huge amounts of campaign cash from business groups. And the situation is mo= re=20 than faintly reminiscent of several incidents that occurred during the Jerr= y=20 Brown governorship, when Davis was Brown's chief of staff.=20 Perhaps it was a genuine conflict, but it certainly has all the earmarks of= a=20 scripted melodrama, with Davis casting himself as the rescuer of business= =20 damsels in distress.=20 The Bee's Dan Walters can be reached at (916) 321-1195 or dwalters@sacbee.c= om . Budget reserve plan stirs up a fight: Gov. Davis backs drawing down the=20 emergency fund. Others say it could lead to tax hikes or massive cuts. By John Hill Bee Capitol Bureau (Published May 16, 2001)=20 Budget reserves are for a rainy day, Gov. Gray Davis says -- and it's=20 starting to rain.=20 But what if the rain keeps falling and turns into a deluge?=20 That was one of the questions being asked at the Capitol the day after the= =20 Democratic governor released his revised budget proposal for the fiscal yea= r=20 that begins July 1.=20 Among an array of cuts and transfers, Davis proposes to draw down the state= 's=20 reserve by $900 million -- from $1.9 billion to $1 billion.=20 Davis says the reserve was meant to get the state through times such as thi= s,=20 when a sudden drop in the stock market takes a chunk out of state revenues.= =20 But others, including some Democrats, question whether Davis' plan leaves= =20 enough of a reserve to avoid the need for taxes or massive budget cuts a ye= ar=20 from now.=20 "The thing we find most egregious is the reduction in surplus," said Assemb= ly=20 Republican leader Dave Cox of Fair Oaks. The Republicans have advocated a= =20 reserve of $4 billion just for the state's future electricity purchases, in= =20 addition to a reserve for other contingencies.=20 Wall Street seemed to take notice as well. On Tuesday, Moody's, one of the= =20 three leading credit rating agencies, lowered its rating for California's= =20 general obligation bonds from Aa3 to Aa2.=20 Moody's cited the failure of the Legislature to approve a bill that would= =20 have allowed the immediate sale of bonds to repay the state treasury for=20 electricity purchases the state has been making since January. The bill,=20 which required a two-thirds majority, was blocked by Assembly Republicans,= =20 forcing a 90-day wait for the massive bond sale.=20 But Moody's also cited Davis' budget proposal, which it said "leaves little= =20 cushion for additional bad news." Moody's downgrade follows a similar move= =20 last month by Standard & Poor's and will increase the state's costs of=20 borrowing.=20 Sen. Steve Peace, D-El Cajon, agreed that the state could find itself in di= re=20 straits next year without a big enough reserve. Peace, chairman of the stat= e=20 Senate Budget Committee, said a $4 billion reserve "is on the low end of=20 where we ought to be."=20 Peace said the state may be headed into a period similar to the budget=20 disarray of the recession of the early 1990s.=20 "Having lived through the early '90s experience and having less confidence = in=20 the institutional ability to deal with a crisis environment, I think it wou= ld=20 be wiser to operate on more conservative expectations," he said.=20 But Ted Gibson, chief economist at the state Department of Finance, said th= e=20 early '90s "was a once-in-the-past-century event" that occurred largely=20 because the state's economy was so dependent on the aerospace industry. Hig= h=20 technology, while suffering a slowdown, "is more diverse in what they do an= d=20 where they sell," he said, and can be expected to bounce back.=20 The state budget increasingly lives and dies with the stock market. The=20 income tax on stock options and capital gains has grown as a percentage of= =20 general fund revenues from 5.6 percent in the mid-1990s to nearly one-quart= er=20 in the current fiscal year. That number drops to 16 percent in Davis' revis= ed=20 budget proposal.=20 But while the sudden drop of the stock market dealt the state a severe blow= ,=20 Gibson said, the pain is unlikely to last because stock prices historically= =20 rise.=20 "I would argue that the big drop in stock market income has to be considere= d=20 a one-time affair, and is not going to provide a huge drag," Gibson said.= =20 Gibson and other economists believe the economy will lag the rest of this= =20 year, but gradually improve in 2002 and 2003, avoiding full-blown recession= .=20 Gibson said the administration prepared for the sudden downturn by using=20 stock market windfalls for one-time expenditures that didn't have to be kep= t=20 year after year.=20 But Republicans say Davis has not done enough in his new proposal to cut=20 year-to-year spending, relying instead on transfers between accounts and=20 using the reserve to make ends meet.=20 "If we do not make good decisions this year, we absolutely are putting=20 ourselves in some very challenging territory for next year's budget," said= =20 Assemblyman George Runner, R-Lancaster.=20 Runner questioned Davis' claim that he had kept a lid on spending.=20 "It's interesting to say that and have government grow by a third in the=20 three years you've been in office," he said.=20 The Bee's John Hill can be reached at (916) 326-5543 or jhill@sacbee.com. Democrats lay out energy plan: Leaders call for caps on wholesale prices an= d=20 tax breaks for oil and gas production. By David Whitney Bee Washington Bureau (Published May 16, 2001)=20 WASHINGTON -- House Democrats called for price controls on wholesale=20 electricity rates and for tax incentives to spur oil and gas production=20 Tuesday, but emphasized they are not asking Americans to trim their=20 lifestyles or stop driving gas-guzzling cars to cut energy consumption.=20 The Democrats' initiative is an effort to take the steam out of the energy= =20 strategy President Bush will unveil Thursday. That proposal is expected to= =20 emphasize opening new areas to oil and gas exploration and building hundred= s=20 of new power plants, but will not include temporary price caps on=20 electricity. Many in California and the West regard caps as crucial to curb= =20 runaway prices.=20 California Democrats also expect that the Bush administration will call for= =20 reopening areas off the California coast to oil and gas leasing, and they= =20 will announce today a resolution in opposition to any such proposal.=20 At a luncheon with reporters, House Democratic Leader Dick Gephardt said he= =20 thinks the energy crisis can be solved without "sacrificing" the environmen= t.=20 "Most people want an energy policy that is consistent with the Clean Air an= d=20 Clean Water acts," Gephardt said.=20 Gephardt criticized the administration for pressing to open the coast of=20 Alaska's Arctic National Wildlife Refuge to oil drilling, saying it would= =20 take too long and produce too little oil to help the current crisis. But=20 Gephardt said the government should approve tax incentives to hasten=20 construction of a natural gas pipeline from the North Slope because those= =20 reserves could be a great help for electricity generation.=20 Gephardt released a 19-page report by the House Democratic Caucus' energy= =20 task force that calls for various tax incentives to promote conservation,= =20 sales of new energy-saving cars and appliances, and home and office=20 weatherization.=20 Gephardt said Democrats favor such incentives over mandatory measures to=20 lower fuel consumption in cars and trucks -- ideas that in the past have be= en=20 traditional rallying cries among Democratic representatives.=20 The task force report, titled "Principles for Energy Prosperity," includes = a=20 cover photograph of a family washing a sport-utility vehicle next to a=20 wilderness photo of a snow-capped mountain.=20 Gephardt said he believes that government incentives will work to bring=20 energy supply and demand into balance without infringing on lifestyle=20 choices.=20 "We need to spawn efficiency so that Americans can get what they want -- lo= w=20 (energy) prices and a clean environment," he said.=20 The Bee's David Whitney can be reached at (202) 383-0004 or=20 dwhitney@mcclatchydc.com. Judge names panel in PG&E case=20 By Claire Cooper Bee Legal Affairs Writer (Published May 16, 2001)=20 SAN FRANCISCO -- The federal bankruptcy administrator Tuesday defended her= =20 appointment of an unusual committee of ratepayers in the Pacific Gas and=20 Electric Co. case, saying it's the only way to protect the public.=20 Ratepayers are entitled to a place at the table, said U.S. Trustee Linda=20 Ekstrom Stanley, because of "the possibility they will be asked to fund a= =20 plan that pays PG&E's creditors and shareholders."=20 PG&E has challenged Stanley's legal authority in naming the committee, whic= h=20 would have broad powers to investigate and negotiate alongside the utility= =20 and its creditors. Judge Dennis Montali will hear oral arguments on the=20 matter Friday.=20 "It could be argued the state of California has abandoned ratepayers in the= =20 bankruptcy case," Stanley said in a brief filed with Montali on Tuesday. "A= s=20 an alternative to the state's appearance, a committee broadly representativ= e=20 of virtually all ratepayer constituences is essential to assure the=20 ratepayers' interests are protected."=20 PG&E contends that only the state could represent ratepayers. The state has= =20 bowed out, citing its 11th Amendment right of sovereign immunity.=20 Stanley said the creditors' committee, a standard participant in bankruptcy= =20 proceedings, also cannot speak for consumers in this case because the=20 creditors may lack a strong interest in pursuing claims against power=20 generators and the utility's parent company, PG&E Corp.=20 In asking Montali to disband the committee, PG&E objected particularly to t= he=20 inclusion of leaders of Consumers Union and The Utility Reform Network,=20 groups that sometimes have thwarted PG&E in state regulatory hearings. Othe= rs=20 on the ratepayers' committee represent a diverse mix of organizations,=20 ranging from the California School Boards Association to the California=20 Manufacturers & Technology Association.=20 Two organizations -- the Greenlining Institute and Latino Issues Forum --= =20 have criticized Stanley for not making the committee more inclusive.=20 The Bee's Claire Cooper can be reached at (415) 551-7701 or=20 ccooper@sacbee.com. SDG&E area spared for now by big rate hikes=20 Edison, PG&E customers hit hard by state action By Craig D. Rose? UNION-TRIBUNE STAFF WRITER=20 May 16, 2001=20 In the preview of a movie SDG&E customers don't want to see, the state Publ= ic=20 Utilities Commission walloped customers of California's other major utiliti= es=20 with electricity rate increases as high as 50 percent yesterday.=20 The historic increases follow a PUC decision in March to raise electricity= =20 bills for Pacific Gas and Electric and Southern California Edison customers= =20 by a total $5.2 billion annually.=20 That decision, however, did not specify how the increase would be allocated= .=20 Yesterday's vote ordered rate increases of up to 37 percent for residential= =20 customers and up to 49.5 percent for business customers. The 3-2 vote drew= =20 howls of protest from demonstrators at the commission's San Francisco=20 meeting.=20 Similar increases are expected for San Diego Gas and Electric's 1.2 million= =20 customers in coming months. Public hearings for the SDG&E raises are expect= ed=20 next month.=20 Although yesterday's rate increase allocation was stunning, commission=20 President Loretta Lynch warned of worse increases ahead unless the Federal= =20 Regulatory Energy Commission caps wholesale power costs.=20 "Unless and until the FERC decides to enforce the law, even these=20 astronomical new average rates may prove inadequate to cover exorbitant=20 wholesale electricity prices in the California market," Lynch wrote in the= =20 approved rate increase decision.=20 The PUC was pressed to raise rates in order to cover California's cost of= =20 purchasing electricity. The state took over purchasing power earlier this= =20 year as utilities moved toward insolvency.=20 The utilities said that with customer payments frozen under terms of the=20 state's deregulation law, they were unable to pay the soaring cost of=20 wholesale power. Critics noted the same utilities transferred billions in= =20 payments to parent companies and shareholders during the first years of=20 deregulation.=20 The new increases for the 9 million customers of PG&E and Edison will begin= =20 appearing in June bills but will be retroactive to March, when the rate=20 adjustment was approved.=20 Consumer groups said yesterday's vote was delayed by a day because of frant= ic=20 lobbying by business interests seeking to shift a greater share of the new= =20 costs onto residential ratepayers.=20 Mike Florio, senior attorney for The Utility Reform Network, the San=20 Francisco-based consumer group, calculated that last-minute lobbying by=20 businesses advocates pushed about $105 million more of the increase onto=20 residential customers, compared to an earlier version of the rate increase= =20 allocation, which was also written by Lynch.=20 "This decision shows how desperately we need control over our electric syst= em=20 and how costly deregulation has become for California," Florio said.=20 Demonstrators at the PUC session yesterday suggested the commission is=20 failing to protect the public and should henceforth be called the "Private= =20 Utilities Commission." Others issued calls for seizing power plants.=20 Commissioner Geoffrey Brown shouted back at protesters that rate increases= =20 were necessary.=20 Under the rate design approved yesterday, homeowners able to keep electrici= ty=20 use within 130 percent of the so-called baseline allowance will be spared= =20 increases, as will the lowest-income customers and those with certain medic= al=20 conditions. The baseline is a minimum level of electricity, and it varies b= y=20 location. The baseline amount, measured in kilowatt-hours, is printed on=20 electricity bills.=20 The Office of Ratepayer Advocates within the commission estimates these=20 exemptions will shield more than 60 percent of all residential consumers.= =20 Others will pay progressively more as their use rises, with the highest=20 increases of 37 percent for those consuming more than 300 percent of baseli= ne=20 allowances.=20 Average industrial rates will increase about 49 percent, while agricultural= =20 rates could rise as much as 20 percent for customers of PG&E and Edison.=20 The California Manufacturers and Technology Association warned of layoffs i= f=20 businesses are forced to pay a disproportionate share. But consumer advocat= es=20 said it was large-business interests that pressed for deregulation in the= =20 first place.=20 "Once again residential and small-business ratepayers, the innocent victims= =20 of deregulation, are being forced to pay for the debacle," said Doug Heller= =20 of the Foundation for Taxpayer and Consumer Rights in Santa Monica.=20 Gov. Gray Davis, who resisted rate increases through the first months of th= e=20 power crisis, recently offered a proposal of his own to boost rates.=20 "While the PUC's revised rate increase made some modest improvements, my pl= an=20 represented a more balanced approach," Davis said.=20 All three commissioners appointed by Davis voted for the increase, while th= e=20 two commissioners appointed by former Gov. Pete Wilson were opposed.=20 Commissioner Richard Bilas, who voted against the increase, said it would= =20 push the state into recession and was a "grave mistake." Henry Duque, the= =20 other dissenter, objected to slapping customers who use more power with=20 higher percentage rate increases and urged more equal treatment. Both said= =20 the increases would fail to encourage needed conservation.=20 But Commissioner Carl Wood said the increases were made necessary by FERC's= =20 failure to cap wholesale power prices.=20 "Every consumer in California is justified in feeling outraged," Wood said.= =20 "They are facing an unlawful price regime for a fundamental necessity. We= =20 continue to look to the federal government to moderate prices."=20 Bilas, Duque and Lynch were not present in San Francisco for the vote but= =20 participated in the meeting via telephone. State credit rating takes another hit over energy crisis=20 Move should add to cost of bonds By Craig D. Rose and Karen Kucher=20 UNION-TRIBUNE STAFF WRITERS=20 May 16, 2001=20 On the same day that the Federal Reserve lowered interest rates, a Wall=20 Street rating firm raised the cost of borrowing for California because of= =20 deepening concerns about the electricity crisis.=20 Moody's Investors Service downgraded California's credit yesterday, pushing= =20 it into a group of 12 states that has the firm's lowest rating.=20 That is still better than the Standard & Poor's rating for the state, which= =20 last month downgraded California to among the three lowest rated states.=20 Lenders demand higher interest rates for loans to lower-rated borrowers.=20 The state treasurer's office was unable yesterday to quantify how much the= =20 downgrades could cost California as it approaches a record $13 billion bond= =20 sale this summer. The bonds are needed to pay for the soaring cost of=20 electricity.=20 In other energy developments:=20 ?Federal regulators determined this week that no refunds will be ordered fo= r=20 April's energy bills in California because the state's grid managers did no= t=20 declare any Stage 3 emergencies during the month.=20 In March, the Federal Energy Regulatory Commission decided refunds would on= ly=20 apply to charges for power during the most dire shortages, when wholesale= =20 electricity costs are highest. Critics have argued that power prices have= =20 been far from "just and reasonable" during other periods as well.=20 The agency also has dismissed a request to reconsider the refund amounts it= =20 directed power providers to pay for alleged overcharges made in January.=20 Southern California Edison and Pacific Gas and Electric had wanted provider= s=20 who allegedly overcharged for wholesale electricity to pay much larger=20 refunds than federal regulators envisioned. The commission has ordered powe= r=20 providers to refund $124 million if they can't justify their prices.=20 FERC said its action is not subject to requests for rehearings at this poin= t,=20 although such a request may be refiled when the commission issues its forma= l=20 order in the case.=20 ?A FERC judge said yesterday that a memo in a case he is hearing implies th= e=20 natural gas market was abused to drive up California energy costs last year= .=20 The memo "certainly has statements in it that could lead one to believe the= re=20 was an abuse" of the gas market, Curtis Wagner, the Federal Energy Regulato= ry=20 Commission's chief administrative law judge, said in a hearing in Washingto= n.=20 California regulators have pointed to the memo to accuse Houston-based El= =20 Paso Corp. of using its market power to inflate the price of natural gas so= ld=20 in California last year by as much as $3.7 billion.=20 El Paso Corp. owns a gas marketing company, El Paso Merchant, and one of th= e=20 largest pipelines connecting Southwest gas fields to California. The compan= y=20 has denied the allegations.=20 Wagner wouldn't release the memo, dated Feb. 14, 2000, and attorneys wouldn= 't=20 discuss the contents.=20 The New York Times has reported that El Paso Merchant said in a Feb. 14,=20 2000, memo that it would have "more control" of gas markets because of a de= al=20 it made with El Paso Natural Gas that gave it the right to ship 1.2 billion= =20 cubic feet of gas a day on El Paso's pipeline.=20 Wagner's ruling is expected next month. The full Federal Energy Regulatory= =20 Commission can accept or reject his ruling. The hearing began Monday and=20 should continue through next week.=20 ?Southern California Gas Co., a division of San Diego-based Sempra Energy,= =20 announced yesterday that it plans to add a 32-mile pipeline to its=20 transmission system to help it keep pace with growing demand.=20 The additional 6 percent of capacity would allow the company to deliver an= =20 additional 200 million cubic feet of natural gas per day.=20 Natural gas fuels most of the plants that generate electricity in the state= ,=20 and demand increased dramatically as the electricity crisis worsened. The g= as=20 company said the expansion is enough to fuel three 500-megawatt power plant= s.=20 The pipeline is expected to cost $40 million and to be completed by the end= =20 of the year. It will extend from a company compressor station in Adelanto t= o=20 the Kern-Mojave Pipeline near Kramer Junction. El Paso Corp. and the Willia= ms=20 Cos. own the Kern-Mojave Pipeline.=20 ?The power crunch this summer may be worse than earlier estimates, with=20 California suffering blackouts on an average of 20 hours a week and possibl= e=20 power disruptions in the Northeast if hot weather persists, an=20 industry-sponsored group reported yesterday.=20 The North American Electric Reliability Council said there may be as many a= s=20 260 hours of rolling blackouts in California during the summer months.=20 The Associated Press contributed to this report.=20 House Democratic plan calls for power price caps=20 By Finlay Lewis? COPLEY NEWS SERVICE=20 May 16, 2001=20 WASHINGTON -- House Democratic leaders yesterday unveiled a plan for coping= =20 with the nation's energy crisis that includes caps on wholesale electricity= =20 prices in California and across the West.=20 The plan mixes other short-term approaches such as emergency energy funds f= or=20 schools with long-range conservation measures that would improve automobile= =20 gas mileage and provide tax credits for energy-efficient homes and cars.=20 At a news conference outside a Capitol Hill gas station, House Minority=20 Leader Dick Gephardt and several colleagues scolded the Bush administration= =20 for crafting its own energy plan in secret with energy industry executives.= =20 They also chided President Bush for ignoring his own campaign rhetoric abou= t=20 pressuring OPEC to lower the price of imported crude oil.=20 The president tomorrow will travel to Minnesota and Iowa to announce the=20 administration's energy plan, created by a task force headed by Vice=20 President Dick Cheney. The administration plan is expected to focus on=20 developing new-energy resources, but will not include price caps.=20 Gephardt said, "We do not accept the belief that this administration=20 apparently has, that we have to drill our way out of this problem, that we= =20 basically have to sacrifice our environment to solve the problem."=20 In California, Gov. Gray Davis praised the plan from fellow Democrats for= =20 recognizing that the state's "electricity problem is a national issue that= =20 demands immediate federal action."=20 The governor added, "No comprehensive federal energy policy should exclude= =20 immediate and meaningful wholesale price relief in the West."=20 Following the Democratic news conference, White House press secretary Ari= =20 Fleischer reiterated the Republican administration's opposition to price=20 caps.=20 "Price controls will cause more harm than good in the economy in terms of= =20 people's ability to get energy," Fleischer said. "They will drive supply=20 down, they will create more demand."=20 Strategists for both political parties say that the political stakes posed = by=20 the energy crisis could be substantial.=20 Democrats continued to link the administration with the oil industry, notin= g=20 that private energy corporation executives participated in the drafting of= =20 the administration plan. Bush's and Cheney's backgrounds as energy company= =20 executives have also been a point of contention for their critics.=20 Rep. Edward Markey, D-Mass., told reporters that the administration would= =20 produce "a policy written by energy companies who want to use the Bush-Chen= ey=20 plan as a Trojan horse to take environmental and health laws off the books.= "=20 Democrats also quoted candidate Bush as last year demanding the Clinton=20 administration pressure the foreign oil cartel "to open (its) spigots."=20 "Today when crude oil prices stand at $28 a barrel, this White House is=20 silent," said Rep. Rosa L. DeLauro, D-Conn.=20 Fleischer shrugged off questions about the influence of American oil=20 executives on Cheney's task force. He also said the president is engaged in= =20 "quiet" diplomacy with OPEC leaders.=20 In their plan, the Democrats are demanding a federal crackdown on "price=20 gouging" by the energy industry and call for limiting wholesale power price= s=20 until March 2003.=20 They also urge Bush to keep open the option of drawing on the Strategic=20 Petroleum Reserve to counter future oil market disruptions, a policy the=20 administration rejected.=20 The Democratic plan outlines an array of tax credits, including up to $4,00= 0=20 to encourage energy conservation with more efficient homes and vehicles.=20 Also proposed are short-term steps to help the poor and elderly with energy= =20 bills, to encourage the use of mass-transit systems and car pools, and to= =20 provide $200 million this year in emergency assistance to Western schools= =20 staggered by energy costs.=20 For the longer term, the Democrats want more money for a low-income housing= =20 weatherizing program, and efforts to boost domestic energy production.=20 The latter step calls for increased production on federal lands already ope= n=20 for drilling and that account for 89 percent of the nation's proven oil and= =20 gas reserves.=20 The proposals include tax incentives for domestic production of crude oil,= =20 natural gas and "clean" coal.=20 The plan also calls for expedited pipeline construction, bolstered safety a= t=20 nuclear power plants, improved electricity transmission grids, expanded=20 refining capacity and encourages the development of renewable energy source= s.=20 Fleischer noted that the Democrats had offered "some areas of overlapping= =20 commonality" with the administration's plan.=20 However, Democrats spotlighted their opposition to the administration's cal= l=20 for drilling in a small portion of Alaska's Arctic National Wildlife Refuge= =20 and Bush's decision not to clamp down on carbon dioxide emissions from powe= r=20 plants as he had promised during the campaign.=20 "I would note that their idea seems to be to drill, to dig and to detonate= =20 our way out of this mess, and to throw away environmental protections," sai= d=20 Rep. John Dingell, D-Mich.=20 Southern California Gas plans pipeline expansion=20 By Seth Hetten
|