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SD Union, Sun, 6/3: Poor find more red tape than federal energy aid SD Union, Sun, 6/3: Top energy adviser confident of gaining pact for L.A.= =20 surplus SD Union, Sun, 6/3: Energy firm ties enriched top advisers to president=20 SD Union, Sun, 6/3: Report: State may have little money left to head of=20 blackouts SD Union, Sat, 6/2: San Onofre reactor back on line, sending power to state= =20 grid SD Union, Sat, 6/2: State files to manage energy on its own SD Union, Sat, 6/2: Escondido not running power plant process, ex-official= =20 says=20 SD Union, Sat, 6/2: PG&E bankruptcy judge won't challenge state regulation SD Union, Sat, 6/2: New majority leader says nay to electricity price caps LA Times, Sun, 6/3: Watchdogs Take a Hit in State's Power Ills LA Times, Sat, 6/2: Duke Charged Record Price for Electricity=20 LA Times, Sat, 6/2: Incoming Senate Leader Daschle Lukewarm on Power Price= =20 Caps LA Times, Sat, 6/2: PUC May Trip Bailout of Edison LA Times, Mon, 6/4: Better Than Bankruptcy (Commentary) SF Chron, Mon, 6/4: Electricity usage shrinks by 11%=20 State's consumers beat goal set by governor SF Chron, Mon, 6/4: Enron is my spiritual teacher (Commentary) SF Chron, Mon, 6/4: Change in Senate control slows Bush's energy plan SF Chron, Mon, 6/4: Developments in California's energy crisis SF Chron, Mon, 6/4: Electricity usage shrinks by 11%=20 State's consumers beat goal set by governor SF Chron, Mon, 6/4: Gov. Davis -- please act SF Chron, Mon, 6/4: Power buying by cities gets Assembly OK=20 S.F. could contract for cheaper electricity if bill becomes law SF Chron, Sun, 6/3: Critics say FERC ignored California's deregulation fla= ws=20 Mercury News, Mon, 6/4: New market overwhelms U.S. agency=20 Mercury News, Mon, 6/4: U.S. agency's actions invited power disaster=20 Mercury News, Mon, 6/4: Gov. Davis, by failing to act, is to blame for ener= gy=20 crisis (Commentary) OC Register, Mon, 6/4: Conservation paying off OC Register, Mon, 6/4: O.C. firms' energy-saving moves Individual.com (Businesswire), Mon, 6/4: Pacific Gas and Electric Company= =20 Launches=20 Campaign to Enhance Outage Preparedness; State Predicts More Power Shortage= s=20 In Coming Weeks And Months=20 Individual.com (Businesswire), Mon, 6/4: PG&E Issues Statement After Court= =20 Decision=20 On Its Request for Stay=20 WSJ, Mon, 6/4: The Pros and Cons of Power Price Caps=20 ---------------------------------------------------------------------------= --- ---------------------------------------- Poor find more red tape than federal energy aid=20 By Jeff McDonald? UNION-TRIBUNE STAFF WRITER=20 June 3, 2001=20 When George W. Bush arrived in California last week for the first time as= =20 president, he quickly reaffirmed his belief that temporary price caps would= =20 do nothing to reverse the runaway energy costs plaguing the Golden State.= =20 Bush did, however, offer to stir an extra $150 million into the pot of=20 government money doled out each year to help poor families pay their utilit= y=20 bills.=20 If lawmakers approve that gesture, a share of those proceeds could end up a= t=20 Metropolitan Area Advisory Committee, known as MAAC, and Campesinos Unidos= =20 Inc., the only agencies through which federal energy-assistance dollars=20 headed into San Diego County may pass. For some, that is a worrisome prospect.=20 The two nonprofit organizations oversee millions of dollars in government= =20 assistance to low-income San Diego-area families that need help meeting the= ir=20 energy payments and weather-proofing their homes.=20 For hundreds of senior citizens on fixed incomes and cash-strapped househol= ds=20 struggling to stay afloat, applying for the Low-Income Home Energy Assistan= ce=20 Program can be an impossible task.=20 Office hours can be sketchy. Telephone messages often go unanswered.=20 Applications by mail are returned for minor omissions, pushing back relief= =20 for desperate people with overwhelming debt or pending shut-off notices.=20 "I've been on the phone for two solid weeks and nobody tells me anything,"= =20 said Brenda Hunt, a crossing guard from Santee who has been trying to secur= e=20 help paying down a $1,500 utility bill racked up by her elderly parents.=20 "It's frustrating."=20 The federal program started in the 1970s as a modest effort to help poor=20 families. At the time, it was minuscule by Washington standards. The energy= =20 assistance program since has ballooned into a $1.8 billion appropriation.= =20 The cost of administering the block grants and complying with onerous=20 reporting rules often diverts resources from their primary purpose.=20 Huge chunks of money intended for social services and energy assistance=20 instead pay for salaries, lawyers, accountants, travel bills and a range of= =20 unspecified expenses, a review by the Union-Tribune has found.=20 "The irony is the government demands a high level of reporting, but doesn't= =20 want to look at it very closely," said Peter Manzo, who directs the Center= =20 for Nonprofit Management in Los Angeles. "It's a real administrative burden= ."=20 Last year, with special emergency allocations, MAAC and Campesinos Unidos= =20 received more than twice the federal money for low-income energy assistance= =20 -- and aided more than twice as many clients -- than they had in each of th= e=20 two previous years.=20 Campesinos Unidos, Spanish for "united farm workers," is an Imperial=20 County-based social service agency that received more than $4 million last= =20 year to help needy families with utility bills, and millions more to run=20 preschool and other programs. It provided energy assistance to 11,500 clien= ts=20 in 2000.=20 According to tax records required to be made public, the agency spent $4.5= =20 million on salary and benefits for 220 employees, $260,000 on attorneys and= =20 $178,000 on travel, among other expenses, on 1999 income of $7.2 million.= =20 Overhead costs at MAAC also eat up 65 percent of the money taken in by the= =20 National City-based social service agency. MAAC provides energy and housing= =20 assistance, a preschool, and drug-and alcohol-abuse programs.=20 MAAC received more than $2.2 million in energy assistance grants and assist= ed=20 6,000 people in 2000.=20 From a total revenue of $11.1 million, MAAC paid more than $6.1 million in= =20 salary and benefits to its 275 workers, an additional $1 million in=20 professional fees and almost $170,000 for phone service, recent IRS filings= =20 show.=20 In outside audits required by the state, both organizations were cited for= =20 lax records or internal financial controls. Two years ago, Campesinos Unido= s=20 emerged from Chapter 11 bankruptcy, which it sought after paying a $600,000= =20 judgment in a sexual harassment case.=20 Officials from the nonprofits say the cost of running the variety of progra= ms=20 is in line with what other agencies spend. They said they meet all=20 restrictions attached to the money.=20 "We can only spend X-number of dollars on administration," said Campesinos= =20 Unidos director Jose M. Lopez, who reports to a board made up entirely of= =20 Imperial County residents. "We cannot spend more than the formula tells us= =20 to."=20 Modest beginnings Federal energy-assistance began as a 1974 pilot project in Maine with a=20 $478,000 grant. Aid expanded through the years and by 1982, the Low-Income= =20 Home Energy Assistance Program received $1.8 billion a year.=20 The 2002 budget plan pitched by Bush includes $1.7 billion in=20 energy-assistance spending released to states in grants by the U.S.=20 Department of Health and Human Services. Other money is awarded by the=20 federal Department of Energy.=20 State governments disperse the funds locally, either directly to counties o= r=20 to nonprofits such as MAAC and Campesinos Unidos. Much of the money goes to= =20 the densely populated Northeastern states to help reduce home heating costs= .=20 In California, which ranked sixth among the 50 states with $83 million in= =20 energy-assistance funding, the cash is distributed by the little-known stat= e=20 Department of Community Services and Development.=20 Eleven field monitors oversee the 44 local agencies that hand out relief=20 dollars, and inspections are few. Four staff auditors review financial=20 reports filed by the agencies receiving the federal grants. No suspensions = or=20 disciplinary action has been taken against any of the contractors, official= s=20 say.=20 "We try to get out to each agency at least once every two years," said Toni= =20 Curtis, chief deputy of the Department of Community Services and Developmen= t.=20 "In the interim, we do what's called a desk-monitoring evaluation."=20 Those reports are written by state monitors based on telephone calls to the= =20 agencies. All agencies that give out federal money and weather-proof homes= =20 must file bi-monthly work summaries in Sacramento.=20 The law requires participating agencies to spend no more than 8 percent of= =20 the energy assistance grant money on administration. To meet that standard,= =20 the cost of offices, staff, phone service and other needs typically is spre= ad=20 around other budgets within the nonprofit structure.=20 Rules specify that energy assistance applications be prioritized in favor o= f=20 disabled people, seniors and families with young children. There are far mo= re=20 eligible households than can be served before the money runs out.=20 Best-kept secret Help for underprivileged families dealing with rising energy costs extends= =20 beyond the federal assistance. San Diego Gas and Electric steers needy=20 customers to other programs funded by ratepayers, donors and state tax=20 dollars.=20 Gov. Gray Davis signed legislation last month requiring utilities to enroll= =20 more customers in the CARE program, an under-used effort that discounts rat= es=20 for low-income customers with money paid by utility customers.=20 Less than 60 percent of the 225,000 households eligible for that program si= gn=20 up, a ratio that SDG&E was told to improve.=20 The overwhelming leader in energy subsidies is the federal low-income=20 assistance plan. Many San Diego County residents worry that too little of= =20 that money makes its way to needy families.=20 "It's not a fair and equitable distribution of government money," said Dean= =20 Russo, a disabled Point Loma man who qualified for a $200 credit on his SDG= &E=20 bill after writing dozens of letters to state officials.=20 "It's the best-kept secret in government: that there's money available but = no=20 outreach to tell people about it. They give out a phone number, but there's= =20 nobody there to answer the phone."=20 MAAC and Campesinos Unidos set aside just a few hours a week to schedule=20 appointments. Because of the volume of calls they receive, getting through= =20 can be like winning the lottery. Critics say the agencies do too little=20 outreach, and that they can be slow to respond to pleas for help.=20 Jill Van Cleve, a 61-year-old Ramona woman who gets by on disability, maile= d=20 what she thought was a completed application for SDG&E credit early this=20 year. Campesinos Unidos returned the paperwork weeks later, saying it was= =20 missing details that Van Cleve said she could have provided by telephone.= =20 "I felt they were playing a shell game as to which documents I needed to=20 provide them with to establish my eligibility," she said.=20 Long before electricity rates spiraled out of control in San Diego County= =20 last year, MAAC program manager Sandra Cordova heard such complaints. There= =20 may never be enough money to help everyone who qualifies, Cordova said.=20 "Even when we got $2.6 million in emergency relief from President Clinton= =20 last July, it was still not enough," Cordova said.=20 Questions raised There is no general standard among charities for how much money should be= =20 spent on administration and overhead vs. how many dollars are directed to t= he=20 cause, nonprofit consultants say.=20 Guidelines from the Council of Better Business Bureaus suggest that=20 fund-raising and administrative expenses be kept below 50 percent of the=20 organization's total income.=20 The appropriateness of nonprofit spending can be affected by a variety of= =20 factors, but most important is the specific mission of any particular=20 charity, said Manzo, the Los Angeles management consultant.=20 "But if people aren't getting service, that's an issue," he said. "There ma= y=20 be things they could be doing differently."=20 The paperwork can be daunting.=20 Tax statements filed by MAAC and Campesinos Unidos contain apparent=20 oversights. For the year ending June 1999, Campesinos Unidos failed to deta= il=20 the number of clients served, and reportedly paid no contractor more than= =20 $50,000 even though it spent more than $1 million on lawyers, travel and=20 other services or supplies.=20 MAAC reported in 1999 that it paid $5.3 million to its officers and=20 directors, when it should have attributed that sum to all employees.=20 Both groups spent little or nothing on fund raising -- a management policy= =20 that may work against the charities' missions, Manzo said. Soliciting priva= te=20 donors could raise unrestricted money for additional projects.=20 Roger Caldwell, MAAC senior vice president, is aware of past bookkeeping=20 problems and said new computer software to improve the system already is on= =20 order. Board members are weighing whether to expand fund raising, but they= =20 worry about diverting resources from existing programs.=20 "We do the best we can with what we have," Caldwell said. "We're trying to= =20 address the needs of clients. That's where we've been directing our service= s." =20 Top energy adviser confident of gaining pact for L.A. surplus=20 By Danny Pollock=20 ASSOCIATED PRESS=20 June 3, 2001=20 CALIFORNIA'S POWER CRISIS=20 LOS ANGELES -- California's top energy adviser vowed yesterday that the sta= te=20 will get a guarantee from its biggest municipal supplier to provide power= =20 through the summer.=20 "We will get (a contract) in the next few days, one way or another" from th= e=20 Los Angeles Department of Water and Power, S. David Freeman told an energy= =20 summit in Studio City.=20 "We want a contract for all its surplus over the summer," he said.=20 Freeman, former head of the department, did not provide details. But his=20 remark follows recent warnings by Gov. Gray Davis that he was prepared to u= se=20 executive authority, if necessary, to obtain power from municipal utilities= =20 and other providers at lower rates.=20 The governor has accused city utilities of gouging the state.=20 Freeman said the department, the state's largest municipal utility, has mad= e=20 $300 million in profits by selling its excess power to the state's energy= =20 grid.=20 During a panel discussion, department assistant general manager Henry=20 Martinez said the agency is continuing contract negotiations with the state= .=20 "We're willing to negotiate .?.?. to make excess power available, but we ha= ve=20 to make sure the city is taken care of first," Martinez said.=20 Los Angeles wants to ensure it won't face blackouts or big rate increases i= f=20 it makes a long-term deal to sell some of its power, he said.=20 Californians are facing rolling blackouts this summer, even though Davis ha= s=20 expedited the building of more than a dozen new power plants.=20 Freeman said new plants would ease the energy crunch, and California should= =20 be able to meet its demand by next year. The state could begin producing=20 surplus power within two years, he said.=20 "By 2003, we will have the problem behind us," Freeman said. "We are not=20 fighting the war on drugs. We are breaking the back of the problem one powe= r=20 plant, one efficient refrigerator and one wind plant at a time."=20 There were no power alerts yesterday as electricity reserves stayed above 7= =20 percent because of lower temperatures and more power plants back on-line.= =20 A nuclear reactor at the San Onofre Nuclear Generating Station that was shu= t=20 down in the wake of a February fire was restarted Friday. The reactor was= =20 expected to be running at full capacity by today, cranking out enough power= =20 for 840,000 homes.=20 Freeman, in his keynote speech to the summit, praised Californians for=20 conserving energy, noting that 9 percent less electricity in May was used= =20 than during the same month last year.=20 "Our huge weapon is the market power of the people of California cutting=20 back," Freeman said.=20 He also took aim at President Bush's energy plan, which calls for oil=20 drilling in Alaska but offers little in the way of short-term help for=20 California.=20 "We do not need to drill in the Arctic or slash and burn what's left of=20 America the beautiful," Freeman told the 300 people attending the summit,= =20 which was sponsored by Los Angeles radio station KFWB-AM.=20 The summit also featured Stephen Frank, chairman and CEO of Southern=20 California Edison, and John Stout, senior vice president of Reliant Energy.= =20 Reliant, a Houston-based power generator, outraged state government officia= ls=20 last month when it charged California $1,900 per megawatt hour of=20 electricity.=20 Another generator, Duke Energy Co. of North Carolina, confirmed Friday that= =20 it sold electricity in California for as much as $3,880 per megawatt hour.= =20 During the panel discussion, Stout blamed high costs on a reduction of as= =20 much as 25 percent in hydroelectric power from the Pacific Northwest becaus= e=20 of a drought, and a sevenfold rise in the past year for natural gas, which= =20 fuels generating plants.=20 Energy firm ties enriched top advisers to president=20 Enron made big push to shape Bush's policy By Joseph Kahn=20 NEW YORK TIMES NEWS SERVICE=20 June 3, 2001=20 WASHINGTON -- At least three top White House advisers involved in drafting= =20 President Bush's energy strategy held stock in Enron Corp. or earned fees= =20 from the large, Texas-based power trading company, which lobbied aggressive= ly=20 to shape the administration's approach to energy issues.=20 Karl Rove, Bush's chief political strategist; Lawrence Lindsey, the top=20 economic coordinator; and I. Lewis Libby, Vice President Dick Cheney's chie= f=20 of staff, all said in financial disclosure statements released Friday that= =20 they had divested or intended to divest themselves of holdings in Enron, th= e=20 nation's leading trader and marketer of electricity and natural gas, as wel= l=20 as holdings in other energy companies.=20 Lindsey received $50,000 last year from Enron for consulting. Rove's=20 statement said he intended to sell stock holdings in Enron valued at $100,0= 00=20 to $250,000, though the statement does not make clear if he has completed t= he=20 sale. Libby sold his stake in the company.=20 The financial disclosures for senior White House aides show that many of=20 Bush's top advisers are millionaires. Among the wealthiest are Rove, Lindse= y,=20 Libby and Andrew Card, the chief of staff, who earned $479,138.77 as chief= =20 lobbyist for General Motors and reported assets of $810,000 to $2.1 million= .=20 Mary Matalin, Cheney's senior counselor and a former political commentator,= =20 reported income of more than $1.5 million last year from speaking fees and= =20 television appearances. Her husband, James Carville, a Democratic commentat= or=20 and political adviser, made $2.1 million last year on the speaking circuit,= =20 Matalin's financial disclosure shows.=20 Enron was one of the largest contributors to Bush's presidential campaign.= =20 Kenneth Lay, the chairman, has close ties to the president, as he did to=20 Bush's father, and he has had considerable access to the Bush White House.= =20 The administration's energy strategy issued last month recommended opening= =20 protected lands to oil and gas drillers, building hundreds of power plants= =20 and easing some environmental controls, measures strongly favored by the=20 industry. It suggested that the federal government exercise more authority= =20 over electricity transmission networks, a longtime Enron goal.=20 Lay and other Enron officials interviewed several candidates to fill=20 vacancies on the Federal Energy Regulatory Commission, which regulates=20 Enron's main markets. Bush selected two people for the panel who were favor= ed=20 by Enron and some other energy companies.=20 White House officials have said that Enron's views were not crucial to thei= r=20 selections. Report: State may have little money left to head of blackouts=20 ASSOCIATED PRESS=20 June 3, 2001=20 SANTA ANA =01) If California keeps buying high-priced power at its current = pace,=20 the $12.5 billion Gov. Gray Davis hopes to borrow to head off summer=20 blackouts will soon be gone, a newspaper reported Sunday.=20 According to a projection of the state's numbers by The Orange County=20 Register, the state is currently spending 66-point-nine million dollars a d= ay=20 on electricity. And if it continues at this pace, it will have spent $10.4= =20 billion =01) or 83 percent =01) of what it plans to borrow through a bond s= ale by=20 mid-August.=20 That leaves only $2.1 billion to buy future energy; and according to the=20 state's own estimates, its needs at least $2.7 billion to pay for such=20 contracts just through June 2002.=20 But Davis' energy team says not to worry. The outlook is brightening for th= e=20 energy supply because of new energy contracts =01) some taking effect this = month=20 =01) continued conservation and new power plants, administration officials = told=20 the Register. The increased supply should drive down prices, thus reducing= =20 the average amount the state is spending each day on energy.=20 "We'll have room to spare," said Davis spokesman Steve Maviglio.=20 However, Brad Williams, chief economist in the nonpartisan Legislative=20 Analyst's Office, is concerned that the governor is relying on theories.=20 "There's certainly a vulnerability to these assumptions," Williams said. "T= he=20 administration assumption that prices will fall is very risky."=20 State Controller Kathleen Connell, a Democrat, also has her doubts.=20 "We don't know whether the governor's estimates are correct. They haven't= =20 been correct to date. ... I have always argued that $12.5 billion is not=20 going to be enough."=20 According to the Davis administration, it will need to repay itself only $7= .9=20 billion of the bonds it plans to issue Aug. 14, leaving $4.6 billion =01)= =20 presumably enough to buy an adequate supply of relatively cheap electricity= =20 on long-term contracts.=20 San Onofre reactor back on line, sending power to state grid=20 UNION-TRIBUNE=20 June 2, 2001=20 SAN ONOFRE -- After four months of repairs, the nuclear power plant's Unit = 3=20 reactor began sending electricity to the state's power grid early yesterday= ,=20 officials said.=20 Operators at San Onofre Nuclear Generating Station connected the reactor to= =20 the grid at 2:30 a.m., said Ray Golden, a plant spokesman.=20 Twelve hours later, the reactor was running at 42.5 percent of full power a= nd=20 sending 350 megawatts of electricity to the grid, Golden said.=20 The reactor, which generates 1,120 megawatts at full power -- enough=20 electricity for at least 1 million households -- is expected to be running = at=20 capacity by tomorrow morning.=20 San Onofre's Unit 3 reactor was shut down Feb. 3 after an electrical fire= =20 ignited in a switching room outside the reactor's containment dome.=20 The fire didn't result in any release of radiation, but it did cause major= =20 damage to the reactor's steam turbines and electrical generator.=20 State files to manage energy on its own=20 By Ed Mendel=20 UNION-TRIBUNE STAFF WRITER and Toby Eckert=20 COPLEY NEWS SERVICE=20 June 2, 2001=20 CALIFORNIA'S POWER CRISIS SACRAMENTO -- State officials and two utilities proposed yesterday that=20 California establish itself as a regional power grid, grudgingly making the= =20 offer so that federal limits on the cost of emergency power will stay in=20 place.=20 Federal regulators threatened to lift the price limits if California failed= =20 to make a proposal to join what is known as a regional transmission=20 organization. But California suggested that it form its own organization an= d=20 not join with other states.=20 Under the federal vision, the regional grids are steps toward an interstate= =20 highway for electricity that could one day let power flow efficiently in th= e=20 West as more states move toward deregulation and a free market.=20 Filing under protest, California said it meets the criteria for a regional= =20 transmission organization and proposed that it be designated as such, while= =20 working with other states to improve the flow of power in the region.=20 An official of California's power grid operator, the Independent System=20 Operator, said the state needs to correct its own problems of soaring price= s=20 and transmission congestion before joining a regional power network.=20 Charles Robinson, ISO general counsel, said California has moved further=20 toward a free market than states in two other organizations, RTO West and= =20 Desert Star, which mainly have "vertically integrated" utilities that still= =20 provide most of the generation, transmission and distribution.=20 "While they are working out their issues, I think it would be prudent for u= s=20 to work out ours before we bite off more than perhaps we can chew," Robinso= n=20 said.=20 California officials began pleading with the Federal Energy Regulatory=20 Commission last year to impose regional price caps on power. But the order= =20 the FERC finally issued April 25 only limits prices when power reserves dro= p=20 to an emergency level.=20 State officials said most power is not bought during an emergency and that= =20 FERC limits will do little to control price gouging. The cost of power in= =20 California is expected to grow to about $50 billion this year from $9 billi= on=20 in 1999.=20 Gov. Gray Davis remains closemouthed on specific details of the state's pow= er=20 purchases, but Duke Energy revealed that it sold power during the first=20 quarter for an average price of $136 per megawatt-hour, or more than triple= =20 last year's typical rates during the same period.=20 Duke also sold power to California for $3,880 per megawatt-hour, which=20 translates to a retail rate of $3.80 per kilowatt-hour, or nearly 100 times= =20 the typical consumer rates at this time last year.=20 The North Carolina company said less than 1 percent of its electricity sale= s=20 to California were at this price. Duke officials said the $3,880 price=20 reflected credit surcharges the company applied because it feared nonpaymen= t=20 or partial payment of its charges because of financial problems at Pacific= =20 Gas and Electric Co. and Southern California Edison Co.=20 Last month, Davis blasted Reliant Energy for selling power to the state for= =20 $1,900 per megawatt-hour.=20 Duke also said it charged the state an average $76 per megawatt-hour for=20 power last year, or nearly double the average rate paid before California's= =20 deregulated market began spiraling out of control in June 2000.=20 Meanwhile, a Superior Court judge said yesterday that she will hold a heari= ng=20 Wednesday on a demand from several newspapers in the state, including The S= an=20 Diego Union-Tribune,? and a state assemblyman for specific details about=20 long-term power contracts the state has signed.=20 The new federal price controls were in place on two days this week when the= =20 state made emergency power purchases. ISO officials said yesterday they wil= l=20 not be able to say until next week if FERC limits kept prices down.=20 "We are not confident that the benefits will necessarily prove out to be=20 worthwhile," said Michael Kahn, ISO board chairman.=20 The FERC approved the creation last month of RTO West, which involves nine= =20 utilities in eight states stretching from the Canadian border to Nevada. A= =20 second RTO, Desert Star, covers the Southwest and sprawls from Arizona to= =20 western Texas and eastern Wyoming.=20 FERC member Linda Breathitt said she was not surprised by the limited=20 California proposal, but added that she expects California to join a=20 multistate RTO eventually.=20 "RTOs are evolving," Breathitt said. "While our goal may be for there to be= =20 large ones, I realize that may take some time."=20 She said it will take the FERC staff "some time to go through the filing" t= o=20 determine whether it meets the RTO standards laid out by the commission.=20 The proposal for a California-only RTO filed with the FERC yesterday came= =20 from the ISO, San Diego Gas & Electric Co. and Edison. PG&E, the largest=20 California utility, made a separate filing proposing that California join a= =20 multistate RTO.=20 "We feel that there are primarily reliability and efficiency reasons that a= =20 regional RTO in the long run makes more sense than trying to go it alone,"= =20 said John Nelson, a spokesman for PG&E, which filed for bankruptcy two mont= hs=20 ago.=20 Staff writer Craig D. Rose contributed to this report.=20 Escondido not running power plant process, ex-official says=20 By Jonathan Heller=20 UNION-TRIBUNE STAFF WRITER=20 June 2, 2001=20 ESCONDIDO -- A former planning commissioner says the city's failure to set= =20 standards for proposed power plants has eroded its control of the planning= =20 process.=20 "The city has taken a very inadequate position in maintaining high=20 standards," James Di Luca said.=20 Di Luca, who served on the commission for 31/2 years, resigned last week so= =20 he could devote more time to a new job with a Carlsbad startup company, whi= ch=20 he declined to name. He is an engineer who works in fiber optics and=20 telecommunications.=20 In his last few months as a commissioner, Di Luca urged that Escondido form= a=20 special committee of city officials and residents that would determine=20 standards -- on such things as air pollution, noise and appearance -- for= =20 proposed power plants.=20 Instead, city officials have tried to frame the standards by taking input= =20 from various sources, including the volunteer Environmental Advisory Board,= =20 the Planning Commission and residents.=20 Thus far, the City Council has yet to adopt any power plant guidelines,=20 although it recently approved a new policy requiring all power plant=20 proposals to qualify for a special zoning permit known as a conditional-use= =20 permit. That will require a more rigorous review.=20 Karen Allgeier, Planning Commission chairwoman, agreed with Di Luca. She sa= id=20 the city's focus on small "peaker" plants, designed to provide power during= =20 peak demand times, has been shortsighted.=20 "We need to set the standards, and the power plants need to meet those=20 standards," Allgeier said. "I realize there's a crisis, but peaker plants a= re=20 just a Band-Aid on a bigger problem."=20 Escondido should be in a favorable position when it comes to power plants= =20 because high-voltage lines and a natural-gas transmission pipeline run=20 through it, and it has an electricity substation, Di Luca said. The city is= =20 also retrofitting its sewage plant to produce reclaimed water that can be= =20 sold to power plants for cooling purposes.=20 "I feel the city is in a position to be very selective in who and what we= =20 choose for a power plant," he said.=20 At one point, three peaker plants and a much larger, 500-megawatt plant wer= e=20 in the city's planning pipeline. The city already has approved a 44-megawat= t=20 plant by Ramco Inc. and is awaiting plans from Sempra Energy Resources for= =20 the 500-megawatt plant.=20 Hanover Co. of Houston, however, has pulled out of a potential deal to buil= d=20 a peaker plant at a city public works yard on Washington Avenue, city=20 officials say. The two sides had been locked in secret negotiations for=20 months but were unable to strike a deal.=20 The city may have lost any say in a plant proposed by CalPeak Power of San= =20 Diego. CalPeak withdrew its application with Escondido for a 49-megawatt=20 peaker plant in April after it grew impatient with the city's approval=20 process. The California Energy Commission has taken over the proposal and h= as=20 asserted exclusive jurisdiction over it.=20 City Attorney Jeffrey Epp has said that under the law, CalPeak must also=20 apply for a local permit.=20 Donna Jones, a San Diego attorney representing CalPeak, said the city's=20 position is "contrary to common sense." In a letter to Epp, Jones said Gov.= =20 Gray Davis' executive order granting the commission broad powers in approvi= ng=20 power plants was intended to streamline the permitting process.=20 Davis' order allowed the commission to use an expedited, 21-day approval=20 process so that more power plants could be brought online swiftly to deal= =20 with the power crisis. To require an applicant to go through both the local= =20 and state bureaucracies would be pointless, Jones wrote. PG&E bankruptcy judge won't challenge state regulation=20 By Karen Gaudette ASSOCIATED PRESS=20 June 2, 2001=20 SAN FRANCISCO =01) California power regulators can still order the state's= =20 largest utility to perform an accounting change the company claims will end= =20 its chance to recover billions in undercollected electric rates from its=20 customers, a federal bankruptcy judge ruled Friday.=20 In his decision, U.S. Bankruptcy Judge Dennis Montali dismissed Pacific Gas= =20 and Electric Co.'s complaint against the Public Utilities Commission, sayin= g=20 the bankrupt utility must defer to the PUC's regulation.=20 "The public interest is better served by deference to the regulatory scheme= =20 and leaving the entire regulatory function to the regulator, rather than=20 selectively enjoining the specific aspects of one regulatory decision that= =20 PG&E disputes," Montali wrote in his decision.=20 The decision settles weeks of speculation over whether PG&E could=20 successfully avoid what it considered an illegal order from the PUC by aski= ng=20 Montali to halt the request, hence, potentially pitting the federal=20 bankruptcy court against a state regulatory agency.=20 The dispute emerged after the cash-starved utility filed for federal=20 bankruptcy protection April 6, unable to collect enough money from ratepaye= rs=20 to pay its expenses due to a rate freeze and soaring wholesale power prices= .=20 The PUC had ordered PG&E, as well as fellow financially floundering utility= =20 Southern California Edison Co., to rebalance their accounts to better refle= ct=20 how much money they earned selling off power plants under the state's 1996= =20 deregulation law against how much money they lost being unable to charge th= e=20 full cost of electricity.=20 The accounting change order emerged from a request by San Francisco-based= =20 consumer group The Utility Reform Network. The group told the PUC that=20 without the change, ratepayers would be forced unfairly to empty their=20 pockets to rescue the utility from its debt.=20 PG&E has repeatedly called the change illegal, and one of its first motions= =20 after bankruptcy was to ask Montali on April 9 to block the PUC's March 27= =20 order.=20 In a printed statement Friday, PG&E said it was "disappointed that the cour= t=20 did not grant immediate relief from the unlawful and retroactive CPUC order= .=20 However, today's decision was not on the overall merits of the CPUC action.= "=20 The utility "will continue to pursue all legal challenges to this unlawful= =20 CPUC decision," the statement said.=20 In its own printed statement, the PUC said it was pleased by Montali's=20 decision to dismiss PG&E's complaint against the commission.=20 "The Commission is pleased, but not surprised, that Judge Montali has ruled= =20 that PG&E cannot evade proper state regulation by choosing to file for=20 bankruptcy and seeking protection from Bankruptcy Court," said PUC Presiden= t=20 Loretta Lynch.=20 New majority leader says nay to electricity price caps=20 ASSOCIATED PRESS=20 June 2, 2001=20 LOS ANGELES =01) A Senate controlled by Democrats will hold hearings on=20 California's energy crisis, says incoming Majority Leader Tom Daschle, but= =20 isn't likely to cap power costs as California wants.=20 The South Dakota Democrat told the Los Angeles Times on Friday it will be= =20 difficult to pass wholesale price controls with a Republican president and= =20 the leadership of the Republican party still in control of the House of=20 Representatives.=20 "We've got an uphill battle," he said, adding that not even all Democrats i= n=20 Congress believe price controls are needed.=20 President Bush has come out against price caps, saying they neither promote= =20 conservation nor increase supplies.=20 Daschle didn't go into detail about the possible hearings but said an=20 announcement would probably come next week. Democratic legislators have=20 already said they plan to investigate oil companies and their role in risin= g=20 natural gas prices.=20 He said he believes the best avenue toward granting California relief may b= e=20 legislation ordering the Federal Energy Regulatory Commission to use its=20 existing powers to protect consumers from price gouging by suppliers.=20 "The possibility of passing price caps is not as great as other options tha= t=20 we could choose," he said, "especially the one forcing FERC to do its job."= =20 A spokesman for Gov. Gray Davis said Congress may change its mind this summ= er=20 if increased power use extends the energy crisis beyond California.=20 "I think as summer goes on and more and more states are affected in the=20 Midwest and New England and New York, you'll hear hue and cry for the caps,= "=20 said Steve Maviglio.=20 Watchdogs Take a Hit in State's Power Ills Energy: Ex-federal officials say oversight of California's deregulation=20 suffered due to a push for free-market competition. By JUDY PASTERNAK and ALAN C. MILLER, Times Staff Writers ?????WASHINGTON--California was the first test, and right from the start=20 economists at the Federal Energy Regulatory Commission saw trouble coming.= =20 Their bosses were worried too. In hindsight, some admit they could have don= e=20 better. ?????But five years ago, when California officials were rushing to deregula= te=20 electricity, the federal watchdog charged by law with overseeing the proces= s=20 and guarding against runaway prices decided not to bark. ?????In their zeal for free-market competition and their ideological=20 commitment to shifting authority away from Washington to the states, FERC's= =20 commissioners brushed aside their qualms and let the process roll forward. ?????"There were a lot of issues that got swept under the rug," said=20 economist Carolyn A. Berry, who headed FERC's analysis of the California=20 plan. "We were trying to point out the ugly warts, but it wasn't our job to= =20 set policy." ?????Former FERC Chairman James J. Hoecker, who presided over the approval,= =20 said the agency "should have been far less deferential." John Rozsa, a stat= e=20 legislative analyst who played a key role in the deregulation law, laughed= =20 when he heard that. "FERC wanted it badly," he said. ?????Today, FERC stands accused of failing to exercise its oversight,=20 enforcement and political muscle just when they were needed most. The agenc= y,=20 critics on the inside and outside agree, helped launch a radical economics= =20 experiment without sufficient preparation, adequate staff or a clear sense = of=20 how to carry out its mission. ?????With fully half the states considering deregulation, the story of what= a=20 previously obscure federal agency did not do has become more than a case=20 study in regulatory shortcomings. It has become a warning shot across the b= ow=20 of the whole country. ?????FERC has approved deregulation plans in New England, New York and the= =20 mid-Atlantic states. At stake is a reliable supply of a commodity that fuel= s=20 virtually every home and workplace in America. California's example is hard= ly=20 encouraging: months of blackouts and an electric bill that has rocketed fro= m=20 $7 billion in 1999 to as much as $50 billion this year. ?????Now the commission is caught in what some see as an identity crisis,= =20 divided and uncertain as politicians in California and Washington call for= =20 mutually contradictory action. ?????"I think the commission needs to decide what it wants to do when it=20 grows up," said Hoecker, who headed the agency during a critical period=20 ending in January. His own leadership, he concedes, was not always all it= =20 might have been. ?????Without question, there is ample blame for everyone, not just FERC.=20 Certainly in California, state officials devised a flawed deregulation sche= me=20 and then insisted on carrying it out. Some power company executives have=20 extracted windfall profits. Politicians have wilted when things went awry. ?????And, as FERC officials continually point out, its authority is limited= =20 to wholesale markets. State officials are responsible for the local utiliti= es=20 and other retailers selling power to consumers. ?????Nonetheless, it is FERC that Congress charged with overseeing=20 electricity markets and assuring "just and reasonable" prices. ?????How did FERC choose the course it took? What factors influenced its=20 decisions? ?????Certainly energy companies, consumer advocates, lawmakers and others= =20 lobbied the agency. ?????Yet even FERC critics say such influence was not dominant. FERC is not= =20 insulated from lobbying, but David Nemtzow, president of the Alliance to Sa= ve=20 Energy, a coalition of business, consumer and environmental leaders, said:= =20 "They are less sensitive to those forces than a lot of other players." ?????Rather, this seems to have been a case of government decisions driven = by=20 ideology. The commissioners, both Republicans and Democrats, were wedded to= =20 the idea that deregulation at the wholesale level would lead to lower retai= l=20 bills. The market, they believed, would inexorably produce greater=20 competition, greater efficiency and falling prices. ?????To Mark Cooper of the Consumer Federation of America, the primary=20 problem was "their excessive faith in the market." ?????Even after price spikes occurred across the Midwest and in California = as=20 early as 1998, FERC officials dismissed suggestions the surges might reflec= t=20 market instability or manipulation. ?????And as California's situation worsened, FERC's response was shaped by = a=20 continuing commitment to market forces with a minimum of government=20 intervention--witness its April order allowing temporary price caps but onl= y=20 in narrowly defined emergencies. ?????In the last few months, under enormous pressure, FERC has ordered a=20 dozen companies to justify high prices or refund $124.5 million to Californ= ia=20 utilities for January and February. It won an $8-million settlement from=20 Williams Cos. of Tulsa, Okla., which it had accused of shutting power plant= s=20 last spring to drive up prices. Williams did not admit guilt. ?????Detractors, including California officials, howl that FERC's actions a= re=20 too little too late. They have called for a range of solutions, from flat-o= ut=20 price caps, as in the old days of full regulation, to much higher rebates= =20 from generators caught price-gouging, to retractions of individual firms'= =20 permission to charge market-based rates. ?????If the agency chose to wield all of its authority, it also could force= =20 witnesses to testify under oath and subpoena tapes of phone calls among pow= er=20 traders, and even force the state to change the way the market operates. ?????Curtis L. Hebert Jr., the free-market champion who succeeded Hoecker a= s=20 chairman, insisted "FERC is being vigilant in its efforts to ensure just an= d=20 reasonable rates, while at the same time ensuring" that it fosters new ener= gy=20 supplies. ?????"I would vehemently disagree with anyone who says otherwise," he added= ,=20 noting he transferred 75 attorneys--half of the agency's litigators--into= =20 market oversight. ?????Still, a consensus that it's time for aggressive action seems to be=20 forming among commissioners, including two nominees confirmed by the Senate= =20 last month: Patrick H. Wood III and Nora M. Brownell. ?????Wood, a Texas utility regulator nominated by Bush and probably FERC's= =20 next chairman, said the agency needs to evolve into a "market cop with a=20 great big old stick," adding: "There is a role that only the federal=20 government can take. . . . The free market ain't a free and full market yet= ." ?????Already named FERC's special liaison for California, Wood remains=20 dedicated to market principles but vows to take a fresh look.=20 ?????Commissioner Linda Breathitt, a Democrat, also talks of change. And=20 commissioner William L. Massey describes agency officials as naive in their= =20 past actions, in contrast to what he calls the "very sophisticated players"= =20 on the industry side. ?????If some commissioners are starting to sound more like watchdogs, that'= s=20 partly because they feel the tug of two conflicting ideas in their mandate = to=20 open markets while assuring fair prices. ?????Americans have always loved the way capitalism gives opportunities to= =20 the shrewd and energetic. At the same time, the country has repeatedly turn= ed=20 to government regulation when it thought particular industries, such as the= =20 railroads, waxed too powerful. ?????How well FERC deals with this intrinsic conflict and meets its=20 challenges may have a sizable effect on the country's energy future. ?????Frightened by events on the West Coast, some states have slowed their= =20 progress toward deregulation. Others have decided not to try at all, at lea= st=20 for now. ?????"If the commission wants to have competitive markets," Hoecker said,= =20 "it's going to have to pull the bacon out of the fire." ?????Though it traces roots back to the Federal Power Commission and=20 development of hydroelectric power in the 1920s, FERC began its present=20 incarnation in the 1980s, with the Reagan administration's deregulation=20 campaign. ?????FERC undertook to deregulate natural gas, then, spurred by a Democrati= c=20 Congress and the first President Bush, it moved on to electricity. ?????The problem is that electricity and its markets differ significantly= =20 from natural gas. Electric power cannot be stored to meet future shortages,= =20 as gas can. Its markets are more volatile. And the effect of shortages or= =20 price spikes cascades through the economy much faster. ?????Without anyone quite realizing it, FERC was sailing into uncharted=20 waters. ?????Moreover, as FERC's staff took up the original California deregulation= =20 plan, it faced a significant constraint: The commissioners had made a=20 conscious call to let the state have its way most of the time. ?????As state officials saw it, so much power was available for the Western= =20 electrical grid that prices would surely come down. FERC economists, on the= =20 other hand, saw myriad problems. ?????For example, the state's scheme called for generators to submit blind= =20 bids with a separate quote for each hour of the coming day. With any power= =20 plant, the unit cost is highest when a generator is started up and declines= =20 as it runs. So the price charged for later hours should be lower than for t= he=20 first--but only if the operator can sell both the beginning and the later= =20 hours. ?????Under the California blueprint, though, bidders could not be sure whic= h=20 hours the purchaser might buy. That meant bidders would have to load the=20 higher start-up costs into each hour throughout the cycle to make sure thos= e=20 costs were recovered. By contrast, the mid-Atlantic market requires the pow= er=20 purchaser to add separate payments to cover start-up costs. ?????Other issues were deferred rather than solved before FERC granted=20 approval, including such questions as how to manage congestion on the grid= =20 and what the transmission rights should be for municipalities that generate= d=20 and sold power. ?????State legislative aide Rozsa argues that such matters were not crucial= =20 and that the biggest flaw in the plan--the insistence that the system=20 operator not have any generators of its own--was conceived with FERC=20 guidance. Both FERC and the state, he said, had "an exaggerated sense of=20 their knowledge and ability." ?????As the California launch, originally scheduled for January 1998, drew= =20 near, FERC's nervousness increased. As late as the Christmas holidays, the= =20 state was still tinkering. The agency ordered the state to provide two week= s'=20 written notice before taking the final step, even though FERC had already= =20 approved the plan. ?????When California finally "went to market," FERC analysts snickered at t= he=20 timing: The first electricity auction was held March 31 for power to be=20 delivered the next day--April Fool's Day. ?????As for the commissioners, "We were somewhat naive," Massey said. "The= =20 commission believed there was so much inefficiency built into the=20 old-fashioned . . . regime that any new market would be better." ?????With the nation's largest state deregulating, FERC began blessing plan= s=20 on the East Coast. Hundreds of companies lined up for permission to charge= =20 market rates in various open trade zones. ?????FERC, according to its rules, was supposed to reject any firm that hel= d=20 a big enough share in a market--generally defined as about 20%--to influenc= e=20 prices for a sustained period. But doing the necessary market analyses prov= ed=20 impractical. ?????For one thing, the rising workload was overwhelming the staff, which h= ad=20 shrunk by more than 25% from its 1980 high of 1,600 employees. The agency, = as=20 critics see it, simply buckled. ?????"Once it got going, it took over," Berry said of the momentum behind= =20 deregulation. "FERC was handing out [permission] to anybody who walked in." ?????FERC economist Steven A. Stoft was infuriated. He wanted to start=20 cautiously, opening one small market, testing before expanding nationally. ?????"To put in markets everywhere, to affect a lot of people, to just wait= =20 and see how it turns out, that's completely irresponsible," said Stoft, who= =20 now lives in California and is writing a book for regulators about how to= =20 design markets. ?????At first, the staff Cassandras seemed wrong. Prices generally headed= =20 down. ?????But during the summer of 1998, prices spiked twice--once in the Midwes= t,=20 once in California. ?????In the Midwest, several aging nuclear plants shut down for maintenance= =20 just as a heat wave sent air conditioners into overdrive. Wholesale=20 electricity rose past $7,000 per megawatt-hour, 100 times normal. Consumers= =20 and politicians screamed.=20 ?????The weather cooled and new supply came in fast. Prices ebbed. ?????To consumer groups and several FERC economists, the sudden increase=20 suggested the worst can happen. Hoecker and FERC member Vicky Bailey drew a= =20 different lesson, as did a staff investigation: The market worked to correc= t=20 an unusual confluence of events that was unlikely to recur.=20 ?????About the same time, a strange thing happened in California's reserve= =20 market, where the state's independent system operator pays generators with= =20 extra capacity to stand ready to meet unexpected surges in demand. ?????So few companies offered to sign such contracts that the ISO sometimes= =20 had little choice but to accept whatever bid came in. It was just a matter = of=20 time before someone took advantage. One day in that summer of 1998 someone= =20 did: The only offer to provide reserve power was an astronomical $9,999 per= =20 megawatt-hour. ?????To some, it was proof that the California market could--and would--be= =20 manipulated. "I was horrified," Berry said. ?????FERC quickly granted California's request for permission to cap prices= =20 in the reserve. The authority quietly expired in November. There was no=20 outcry about this spike because reserve costs are spread around to the=20 states' utilities, thus diffusing their effect. ?????"Of course, it should have been a warning that the sellers were severa= l=20 steps ahead of us," commissioner Massey says.=20 ?????In a memo last June, Ron Rattey, a senior FERC economist who has been= =20 with FERC since 1975, complained that the staff was "impotent in our abilit= y=20 to monitor, foster and ensure competitive electric power markets." He added= =20 in an interview: "FERC doesn't want to discover that the policy changes it'= s=20 making aren't working." ?????Commissioners at the quasi-judicial agency are forbidden by law from= =20 privately discussing pending cases. So companies and Congress must official= ly=20 content themselves with filing briefs, writing letters and testifying at=20 hearings. ?????No such restraints apply to the issue of who sits on the commission.= =20 There, the jockeying for influence can be intense. ?????Commissioners are appointed by the president and confirmed by the Sena= te=20 to staggered five-year terms, with a limit of three members of a political= =20 party on the panel. The president can also designate at any time which=20 commissioner serves as chairman, a position that bestows broad authority ov= er=20 the FERC's agenda and staff. ?????When Bush took office, he picked Hebert, then the lone Republican on t= he=20 commission, to the chairmanship and named his choices for the two vacancies= .=20 It was unclear whether Hebert would keep the chair once Bush's nominees wer= e=20 confirmed. ?????Soon afterward, Hebert talked by telephone with Kenneth L. Lay, who=20 heads Enron Corp., a Houston-based energy marketing giant that recently saw= =20 its profits triple in a year. FERC policy decisions could have a huge=20 influence on its future. ?????Enron spokesman Mark Palmer says Lay, whose friendship with Bush is we= ll=20 known, was returning a call from Hebert. Palmer says Hebert wanted Lay's=20 support for remaining chairman. ?????Hebert told a FERC official, who heard the new chairman's end of the= =20 conversation, that Lay offered support but only if the chairman changed his= =20 views in ways that would aid Enron. The official says he heard Hebert decli= ne=20 and characterizes him as offended. The discussion was first reported in the= =20 New York Times. ?????Lay has never been shy about offering advice, nor about courting=20 political access. He golfed with President Clinton, and Palmer wrote a lett= er=20 to Clinton's personnel chief touting Hoecker for chairman. The Enron=20 executive's ties with Bush bind especially tight; Lay raised and donated=20 hundreds of thousands of dollars to Bush's campaigns and related efforts. ?????Power companies also scouted candidates for the two slots. Enron went = so=20 far as to send the White House a list of a dozen people Lay considered=20 qualified (the two new commissioners were on it). ?????In the end, however, the evidence suggests that such lobbying mattered= =20 less than the faith in free markets and less federal intervention shared by= =20 two presidents and just about every recent FERC member. "FERC is filled wit= h=20 true believers," Rozsa said. ?????The agency's recent California orders underline the point. In December= ,=20 FERC concluded the market was dysfunctional and ordered a limited version o= f=20 the price caps that free marketers abhor. ?????Still, prices remained above $300 a megawatt-hour--10 times the=20 pre-crisis average. So in April, FERC concluded it had to take further acti= on. ?????But the new version of price caps, approved 2 to 1, actually narrowed= =20 the circumstances under which they could be imposed, though it gave the sta= te=20 more flexibility. Even temporarily, the commission would not abandon its=20 market principles. ?????"I was reluctant to stop in my tracks," said Breathitt, the swing vote= .=20 She didn't want "to go back to a form of regulation that this commission an= d=20 I had departed from five or six years ago." Copyright 2001 Los Angeles Times=20 Duke Charged Record Price for Electricity Crisis: But energy firm agrees to waive 80% of its $3,880-per-megawatt-hour= =20 tab, if it gets paid.=20 By THOMAS S. MULLIGAN and NANCY RIVERA BROOKS, Times Staff Writers ?????Duke Energy Corp., one of the power wholesalers that the state has=20 accused of price gouging, charged $3,880 per megawatt-hour for electricity= =20 during a brief period last winter--by far the highest price yet disclosed f= or=20 emergency power. ?????The price was more than double the $1,900 that Gov. Gray Davis=20 excoriated Texas wholesaler Reliant Energy Inc. for charging during an=20 emergency last month. ?????Spokespeople for Davis and Duke agreed Friday--but for entirely=20 different reasons--that the case illustrates nearly everything that has gon= e=20 wrong with California's power market. ?????From the governor's perspective, the Duke sales represent a clear-cut= =20 case of gouging. He has cited the opportunism of such out-of-state energy= =20 merchants as a major cause of the ongoing energy crisis. ?????"It's obscene," Davis spokesman Steven Maviglio said. "The state is on= =20 its knees, and they're out to get every last dime from us." ?????But Duke, based in Charlotte, N.C., said that it hasn't yet received a= =20 dime for the power and that if it ever does get paid, it will gladly waive= =20 the "credit premiums" that made up 80% of the $3,880. ?????Moreover, Duke said it made the sales in question only because it was= =20 ordered to do so by the California Independent System Operator, the private= =20 agency that runs 75% of the state's power grid. To provide the power, Duke= =20 had to start up an idle generating unit at its Chula Vista station--the=20 dirtiest and least efficient of the four units at that former San Diego Gas= &=20 Electric Co. plant, spokeswoman Cathy S. Roche said. ?????"We tried to convince ISO that this was not a good unit to run in=20 January--that the power would be more needed in the summer," Roche said. ?????ISO declined to comment on the sales, citing a policy of confidentiali= ty=20 regarding its transactions, spokesman Gregg Fishman said. ?????The sales, first reported Friday by the Charlotte (N.C.) Observer, too= k=20 place over eight or nine days beginning Jan. 17 and continuing into early= =20 February, Roche said. Each sale occurred after ISO had declared a Stage=20 3--highest level--emergency, and two of the sales took place on days when= =20 there were rolling blackouts. ?????In all, Duke said it sold 5,000 megawatt-hours at $3,880 each, for a= =20 total of $19.4 million. The sales represent less than one-tenth of 1% of th= e=20 power Duke sold in California during the first three months of this year, t= he=20 company said. A megawatt-hour is enough power to serve about 750 homes for = an=20 hour. ?????Duke's average price in California over that span was $136 per=20 megawatt-hour, up from $76 per megawatt-hour during all of 2000, the compan= y=20 said Friday. ?????Duke, like other wholesalers, tacks on credit premiums as a kind of=20 insurance to reflect the financial condition of its buyers. ?????In this case, though ISO ordered the sales, the actual buyers were=20 SDG&E, Southern California Edison and Pacific Gas & Electric Co. Edison and= =20 PG&E were on the brink of insolvency and discussing bankruptcy at the time,= =20 though it was not until April 6 that PG&E filed for bankruptcy protection.= =20 Their shaky finances justified the big surcharges, Roche said. ?????By imposing an 80% credit premium, Duke indicated it wouldn't expect t= o=20 get more than 20 cents on the dollar in a bankruptcy. ?????However, Maviglio and Joe Newlin, consumer advocate at the Foundation= =20 for Taxpayer and Consumer Rights in Santa Monica, both called the surcharge= s=20 excessive. ?????"It's greed on top of greed," Newlin said. ?????Subtracting the 80% premium leaves a price of $776 per megawatt-hour,= =20 which Newlin said is still unjustifiably high. ?????But Tom Williams, another Duke spokesman, explained it this way: To=20 start up a generator that it hadn't planned on operating, Duke had to buy= =20 natural gas on the spot market at a stratospheric $30 to $40 per million=20 British thermal units (BTUs), which meant it cost $450 per megawatt-hour fo= r=20 fuel alone. ?????The balance of the price included operating and maintenance costs, a= =20 large fee for emissions credits to run the environmentally costly plant, pl= us=20 a reasonable profit, Williams said. ?????The Duke sales were different from Reliant's; Reliant sold its=20 $1,900-per-megawatt-hour electricity to the state Department of Water=20 Resources, which has become the emergency purchaser of power. ?????"The difference is, Reliant got paid," Roche said. ?????In any case, consumers do not pay these market prices. Instead, their= =20 power rates are set by the state Public Utilities Commission. ?????But if residential customers were on the hook for Duke's $3,880 per=20 megawatt-hour on a regular basis, it would translate into $3.88 per=20 kilowatt-hour on a household's bill. ?????That compares to the 7.5 cents per kilowatt-hour that Southern=20 California Edison customers have paid for electricity since January, with= =20 another 5.5 cents per kilowatt-hour going to such services as transmission= =20 and distribution. In March, the PUC added another 3 cents per kilowatt-hour= =20 on average to electricity rates. ?????If the average household in Edison territory paid that $3.88 for each = of=20 the roughly 500 kilowatt-hours used each month, the electricity portion alo= ne=20 of the monthly bill would reach $1,940. Copyright 2001 Los Angeles Times=20 Incoming Senate Leader Daschle Lukewarm on Power Price Caps Capitol: Ordering FERC to rein in electricity costs is a more likely=20 strategy, the Democrat says. By MARK Z. BARABAK, Times Political Writer Sen. Tom Daschle Meets With Times Editors Audio of Full Interview Broadband Video: =01=07 National impact of Calif. power crisis =01=07 An emphasis on conservation =01=07 Forcing FERC to lower prices =01=07 Prospects for an investigation ?????Dashing California's hopes for relief from a reconstituted U.S. Senate= ,=20 incoming Majority Leader Tom Daschle on Friday all but ruled out passage of= =20 federal price controls on soaring electricity costs. ?????But Daschle indicated that Democrats will hold hearings into the cause= =20 of the energy crunch, which has bankrupted California's biggest private=20 utility, PG&E, and cost state taxpayers billions of dollars. ?????"We may have a multitiered, multicommittee analysis of the circumstanc= es=20 through hearings that I think will be very instructive and helpful," the=20 South Dakota Democrat said in an interview. ?????The remarks signaled the shifting dynamic in Washington as Democrats= =20 prepare to assume control of the Senate for the first time in six years,=20 thanks to the party switch of Sen. James M. Jeffords of Vermont. A=20 Republican, Jeffords will formally switch to independent next week, which= =20 will give Democrats a 50-49 advantage over Republicans in the Senate. ?????One of the m
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