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Sac Bee, Wed, 6/13: FERC weighs wider energy price controls Sac Bee, Wed, 6/13: FERC weighs wider energy price controls Sac Bee, Wed, 6/13: Dan Walters: Repaying huge power debts still looms as a high political hurdle=20 Sac Bee, Wed, 6/13: Burton accuses Davis of veto talk Sac Bee, Wed, 6/13: PG&E trustee rips execs' bonus plan SD Union, Wed, 6/13: Congress presses regulators to lower electricity price= s=20 in West SD Union, Wed, 6/13: Cheney: No help from administration on power prices SD Union, Wed, 6/13: Governor plans to release details of long-term power= =20 contracts LA Times, Wed, 6/13: Power Deals Exceed Prices on Spot Market LA Times, Wed, 6/13: Federal Panel May Extend Price Limits LA Times, Wed, 6/13: Energy Execs Gain Millions in Stock Sales (Ken Lay,= =20 Jeff Skilling mentioned) LA Times, Wed, 6/13: Edison Reaches Accord with Alternative Generators LA Times, Wed, 6/13: California-Only Sales Rule Fought by Plant SF Chron, Wed, 6/13: Power kingpins rake in millions in stock deals=20 Capital gains enriched 76 insiders, records show (Enron mentioned) SF Chron, Wed, 6/13: Grand jury to look at energy suppliers=20 Inquiry into possible price manipulation SF Chron, Wed, 6/13: Santa Rita solar array starts making electricity=20 Jail's system will make 500 kilowatts SF Chron, Wed, 6/13: 'Dig-it-out-burn-it-up' methods won't work SF Chron, Wed, 6/13: California governor to release details of state's pow= er=20 purchases SF Chron, Wed, 6/13: Developments in California's energy crisis SF Chron, Wed, 6/13: Energy Report SF Chron, Wed, 6/13: Edison reaches deal with small generators SF Chron, Wed, 6/13: Governor set to reveal terms of power deals=20 Court must decide confidentiality issue SF Chron, Wed, 6/13: Senate to probe Western energy problems Mercury News, Wed, 6/13: Expanded power price caps studied Mercury News, Wed, 6/13: Electricity, ethanol...maybe there is a plot again= st=20 us (Editorial) Mercury News, Wed, 6/13: Well, Texas does hate California (Commentary) OC Register, Wed, 6/13: FERC may expand cap Individual.com (AP), Wed, 6/13: Lower Electric Rates in West Sought Energy Insight, Wed, 6/13: Power Crisis puts Bonneville on political hot se= at Wash. Post, Wed, 6/13: No Energy Price Caps, Cheney Tells Calif.; Hill's=20 Democrats Warn of 'Disaster' ---------------------------------------------------------------------------= --- ----------------------------- FERC weighs wider energy price controls=20 By David Whitney Bee Washington Bureau (Published June 13, 2001)=20 WASHINGTON -- The Federal Energy Regulatory Commission next week is expecte= d=20 to extend an existing price-control plan effective only during California= =20 power emergencies to all 13 Western states and around the clock,=20 congressional sources said Tuesday.=20 FERC scheduled an unusual Monday meeting to discuss electricity pricing in= =20 California, a sign that the panel will expand its efforts to rein in high= =20 wholesale rates. The commission is now up to full strength with the seating= =20 of two new Bush administration nominees.=20 Vice President Dick Cheney, who met for nearly an hour with California=20 lawmakers Tuesday, told them the White House, while still strongly opposed = to=20 price controls, would be closely watching the meeting.=20 "We'll see what happens next Monday," Rep. David Dreier, chairman of the=20 California Republican delegation, quoted Cheney as saying.=20 Other members who attended gave similar reports of Cheney's remarks,=20 indicating that the vice president is hoping that whatever the independent= =20 panel does will ratchet down the political heat the White House has been=20 feeling from Western lawmakers because of high wholesale rates.=20 Commission press aides were not saying what the nature of Monday's agenda= =20 would be, other than that it would arise out of the same case in which the= =20 panel agreed in April to set a benchmark price for wholesale power sold on= =20 the spot markets during emergencies.=20 That order has been widely criticized because it applies only in California= =20 during periods of near or imminent blackouts and sets the spot-market rate= =20 for all spot-market suppliers at the cost of production for the most costly= ,=20 least-efficient plant selling into the grid. During such emergencies,=20 spot-market sales can account for nearly a third of power deliveries.=20 Since the commission's order took effect late last month, wholesale prices= =20 have plummeted even though they've been triggered only twice by power=20 emergency declarations. Other factors, including conservation success and= =20 lower natural gas prices, also have contributed to that drop.=20 According to a price chart cited by the vice president, spot-market prices = a=20 day ahead of delivery that were $400 a megawatt hour May 22 had dropped to= =20 less than $50 by June 6, which is close to the going rate before the=20 electricity crisis erupted a year ago.=20 The idea of broadening the April order to apply throughout the West and=20 around the clock was first proposed by Rep. Doug Ose, R-Sacramento, chairma= n=20 of the House Government Reform Committee's energy panel. Rep. Billy Tauzin,= =20 R-La., chairman of the House Energy and Commerce Committee, urged the=20 commission to adopt Ose's idea in a letter Tuesday.=20 Ose, citing the periodical Electric Utility Week, said that on the two=20 occasions that the commission order was invoked, California's power rates= =20 fell by almost two-thirds to between $108 and $135 a megawatt hour -- proof= =20 that it was working to bring prices down.=20 Broadening that order is certain to further dampen rates, but Democrats are= =20 solid in the belief that it won't help enough and raises other concerns.=20 "It would be a step in the right direction," said Sen. Barbara Boxer. But s= he=20 said it also would reward the most inefficient, dirty plants by basing=20 spot-market rates on their cost of production.=20 Gov. Gray Davis and several West Coast lawmakers, most of them Democrats, a= re=20 calling for the commission to re-regulate wholesale rates by basing them on= =20 production costs plant by plant, with a fixed profit margin, for 18 months = or=20 so while California builds its way out of the power crisis.=20 The commission's meeting Monday comes just as that plea is finding a=20 receptive audience in the new Democrat-controlled Senate.=20 Sen. Joe Lieberman, D-Conn., chairman of the Governmental Affairs Committee= ,=20 has scheduled a hearing for June 20 at which Davis will be the lead witness= =20 in an inquiry into whether federal regulators are meeting their=20 responsibilities under the Federal Power Act to assure just and reasonable= =20 rates.=20 There have been changes in FERC, too, that may have played an even stronger= =20 force behind the Monday meeting. When the April order was issued, the=20 five-member commission was operating with just three seated members. The vo= te=20 was 2-1, with Commissioner William Massey the lone vote against it. Massey= =20 said it wouldn't help California, adding that he thought skyrocketing price= s=20 throughout the West warranted stronger price controls.=20 Since then, two new commissioners have joined the panel. Patrick Wood III,= =20 chairman of the Texas Public Utility Commission who is widely thought to be= =20 President Bush's choice to take over as FERC chairman, and Pennsylvania=20 Utility Commissioner Nora Mead Brownell will attend their first meeting=20 today.=20 At their confirmation hearing in April, both Wood and Brownell refused to= =20 rule out price controls.=20 Davis' top energy adviser, S. David Freeman, called Wood a "good guy," addi= ng=20 that he is "encouraged" that the reconstituted commission was taking up the= =20 California rate case again.=20 While wholesale prices are trending down now, Freeman said they likely woul= d=20 soar anew during a prolonged hot spell, and he is powerless to do anything= =20 about that.=20 "We are in desperate need of help from FERC," he said. "This is the most=20 massive failure of regulation in the history of electricity regulation. ...= =20 We feel we are in a war for the economic vitality of the state."=20 The Bee's David Whitney can be reached at (202) 383-0004 or=20 dwhitney@mcclatchydc.com. FERC weighs wider energy price controls=20 By David Whitney Bee Washington Bureau (Published June 13, 2001)=20 WASHINGTON -- The Federal Energy Regulatory Commission next week is expecte= d=20 to extend an existing price-control plan effective only during California= =20 power emergencies to all 13 Western states and around the clock,=20 congressional sources said Tuesday.=20 FERC scheduled an unusual Monday meeting to discuss electricity pricing in= =20 California, a sign that the panel will expand its efforts to rein in high= =20 wholesale rates. The commission is now up to full strength with the seating= =20 of two new Bush administration nominees.=20 Vice President Dick Cheney, who met for nearly an hour with California=20 lawmakers Tuesday, told them the White House, while still strongly opposed = to=20 price controls, would be closely watching the meeting.=20 "We'll see what happens next Monday," Rep. David Dreier, chairman of the=20 California Republican delegation, quoted Cheney as saying.=20 Other members who attended gave similar reports of Cheney's remarks,=20 indicating that the vice president is hoping that whatever the independent= =20 panel does will ratchet down the political heat the White House has been=20 feeling from Western lawmakers because of high wholesale rates.=20 Commission press aides were not saying what the nature of Monday's agenda= =20 would be, other than that it would arise out of the same case in which the= =20 panel agreed in April to set a benchmark price for wholesale power sold on= =20 the spot markets during emergencies.=20 That order has been widely criticized because it applies only in California= =20 during periods of near or imminent blackouts and sets the spot-market rate= =20 for all spot-market suppliers at the cost of production for the most costly= ,=20 least-efficient plant selling into the grid. During such emergencies,=20 spot-market sales can account for nearly a third of power deliveries.=20 Since the commission's order took effect late last month, wholesale prices= =20 have plummeted even though they've been triggered only twice by power=20 emergency declarations. Other factors, including conservation success and= =20 lower natural gas prices, also have contributed to that drop.=20 According to a price chart cited by the vice president, spot-market prices = a=20 day ahead of delivery that were $400 a megawatt hour May 22 had dropped to= =20 less than $50 by June 6, which is close to the going rate before the=20 electricity crisis erupted a year ago.=20 The idea of broadening the April order to apply throughout the West and=20 around the clock was first proposed by Rep. Doug Ose, R-Sacramento, chairma= n=20 of the House Government Reform Committee's energy panel. Rep. Billy Tauzin,= =20 R-La., chairman of the House Energy and Commerce Committee, urged the=20 commission to adopt Ose's idea in a letter Tuesday.=20 Ose, citing the periodical Electric Utility Week, said that on the two=20 occasions that the commission order was invoked, California's power rates= =20 fell by almost two-thirds to between $108 and $135 a megawatt hour -- proof= =20 that it was working to bring prices down.=20 Broadening that order is certain to further dampen rates, but Democrats are= =20 solid in the belief that it won't help enough and raises other concerns.=20 "It would be a step in the right direction," said Sen. Barbara Boxer. But s= he=20 said it also would reward the most inefficient, dirty plants by basing=20 spot-market rates on their cost of production.=20 Gov. Gray Davis and several West Coast lawmakers, most of them Democrats, a= re=20 calling for the commission to re-regulate wholesale rates by basing them on= =20 production costs plant by plant, with a fixed profit margin, for 18 months = or=20 so while California builds its way out of the power crisis.=20 The commission's meeting Monday comes just as that plea is finding a=20 receptive audience in the new Democrat-controlled Senate.=20 Sen. Joe Lieberman, D-Conn., chairman of the Governmental Affairs Committee= ,=20 has scheduled a hearing for June 20 at which Davis will be the lead witness= =20 in an inquiry into whether federal regulators are meeting their=20 responsibilities under the Federal Power Act to assure just and reasonable= =20 rates.=20 There have been changes in FERC, too, that may have played an even stronger= =20 force behind the Monday meeting. When the April order was issued, the=20 five-member commission was operating with just three seated members. The vo= te=20 was 2-1, with Commissioner William Massey the lone vote against it. Massey= =20 said it wouldn't help California, adding that he thought skyrocketing price= s=20 throughout the West warranted stronger price controls.=20 Since then, two new commissioners have joined the panel. Patrick Wood III,= =20 chairman of the Texas Public Utility Commission who is widely thought to be= =20 President Bush's choice to take over as FERC chairman, and Pennsylvania=20 Utility Commissioner Nora Mead Brownell will attend their first meeting=20 today.=20 At their confirmation hearing in April, both Wood and Brownell refused to= =20 rule out price controls.=20 Davis' top energy adviser, S. David Freeman, called Wood a "good guy," addi= ng=20 that he is "encouraged" that the reconstituted commission was taking up the= =20 California rate case again.=20 While wholesale prices are trending down now, Freeman said they likely woul= d=20 soar anew during a prolonged hot spell, and he is powerless to do anything= =20 about that.=20 "We are in desperate need of help from FERC," he said. "This is the most=20 massive failure of regulation in the history of electricity regulation. ...= =20 We feel we are in a war for the economic vitality of the state."=20 The Bee's David Whitney can be reached at (202) 383-0004 or=20 dwhitney@mcclatchydc.com. Dan Walters: Repaying huge power debts still looms as a high political hurd= le (Published June 13, 2001)=20 Gov. Gray Davis has been running around California lately proclaiming that= =20 California is "turning the corner" on the energy crisis, explicitly citing= =20 sharply lower wholesale prices for electricity and, implicitly, his improve= d=20 standing in polls.=20 Events will reveal whether Davis' June hubris was justified. Despite the=20 recent drop in spot power prices, however, many aspects of the energy crisi= s=20 remain unresolved, and chief among them is liquidating the $20 billion-plus= =20 in debts that utilities and the state have accumulated for power purchases.= =20 A $13.4 billion bond issue that is supposed to reimburse the state's genera= l=20 fund for more than $8 billion advanced for power purchases and then finance= =20 future electricity buys has been hung up by demands of potential bond=20 underwriters for more assurances about repayment. The bonds may not be sold= =20 until August, if ever. And by then, nearly the entire bond issue may have t= o=20 flow to the state's general fund, leaving little to finance future power=20 buys.=20 And then there are the $14 billion or so in debts that the state's two big= =20 utilities, Pacific Gas and Electric and Southern California Edison, incurre= d=20 for power purchases before their credit was cut off in January. PG&E alread= y=20 has declared bankruptcy, and Edison was on the verge when Davis hurriedly= =20 signed a "memorandum of understanding" (MOU) on a rescue scheme, the=20 centerpieces being state purchase of Edison's share of the intercity power= =20 grid, plus a plan for ratepayers to pay off the utility's debts.=20 The Edison scheme has been denounced as a "bailout" by consumer activists a= nd=20 faces certain legislative rejection, despite a multimillion-dollar lobbying= =20 and public relations drive by the utility. And it's sparked a complex set o= f=20 private maneuvers in and around the Capitol that are fraying the already co= ol=20 relations between Davis and the Legislature's most powerful leader, Senate= =20 President Pro Tem John Burton.=20 Davis called a dozen senators into his office Monday to press approval of t= he=20 Edison MOU with minimal changes. Burton, who didn't attend, says the govern= or=20 threatened legislators with rejection of their bills or budget appropriatio= ns=20 if they didn't play ball, and promised retaliation if Davis uses strong-arm= =20 tactics for Edison.=20 "On an issue like this, they (legislators) ought to be able to vote their= =20 consciences," Burton told reporters, denouncing the Edison deal as a=20 "flat-ass bailout."=20 Davis spokesman Steve Maviglio rejected Burton's account: "The governor's t= oo=20 smart to do any of that."=20 As the public squabbling heats up, so is the private search for a compromis= e=20 that Edison, consumerists and other principal players can accept -- without= =20 much confidence that it can be found. A dizzying array of MOU alternatives = is=20 being floated, including an effort by Burton and Assembly Speaker Bob=20 Hertzberg to persuade Edison creditors to write off part of the debt, and f= or=20 big industrial and power consumers to shoulder the rest in return for=20 recapturing the authority to make power supply deals outside the utility=20 grid.=20 In effect, the plan would create two power systems, one with regulated rate= s=20 for individual and small business customers and unregulated "direct access"= =20 for big users. Former Assemblyman Phil Isenberg, a lobbyist whose firm=20 includes energy generators, is acting as a mediator on behalf of Hertzberg.= =20 Sources close to the negotiations say the big users won't entertain the dea= l=20 until they know how much power the state has been buying, and at what price= s.=20 Davis has insisted on keeping that data secret, and has been sued by the ne= ws=20 media and others to force release, but on Tuesday announced that he will=20 agree to opening the supply contracts to inspection.=20 The chances of an Edison deal coming together this summer are no better tha= n=20 50-50 -- about the same odds of the state's completing its bond sale. And= =20 those uncertainties are compounded by great fears that California still fac= es=20 the prospect of widespread and prolonged power blackouts this summer. "I=20 don't think it's over," Burton said Tuesday in a jab at Davis.=20 The Bee's Dan Walters can be reached at (916) 321-1195 or dwalters@sacbee.c= om . Burton accuses Davis of veto talk=20 By Kevin Yamamura Bee Capitol Bureau (Published June 13, 2001)=20 State Senate leader John Burton charged Tuesday that Gov. Gray Davis=20 threatened lawmakers earlier this week in an attempt to gain support for a= =20 struggling deal with Southern California Edison.=20 While answering questions on the Edison deal, Burton alleged that Davis=20 suggested he would veto non-energy legislation if Senate Democrats did not= =20 back a deal he struck with Edison in April.=20 Davis aides denied the charge, as did some lawmakers, but the episode=20 suggested that support for the governor's plan remains distant.=20 Davis met Monday with 13 senators as part of an ongoing lobbying effort for= =20 the Edison deal. Under Davis' tentative agreement, the state would pay the= =20 utility $2.76 billion for its transmission lines and dedicate a portion of= =20 electricity rates to help pay off its debts. The deal requires legislative= =20 approval.=20 Burton said he was not invited to the Monday meeting. His claims were based= =20 on reports from colleagues, he said.=20 The Senate leader said the governor told senators that their past support f= or=20 his proposals "didn't mean anything if they voted against this."=20 "If that turns out to be the case," Burton said, "I've been around long=20 enough to know how to play that game with the executive branch as well."=20 "He's too smart to do that," said Davis spokesman Steve Maviglio, referring= =20 to alleged threats. "I think he expressed his strong support for the=20 legislation, but he's too smart to do that."=20 Three senators who attended the meeting with Davis disagreed with Burton's= =20 characterization. One declined comment; others did not return telephone cal= ls=20 on the subject.=20 "I heard no threats in anything (Davis) said," said Sen. Sheila Kuehl,=20 D-Santa Monica. "He said, 'Look, I want my bill to go up for a vote.' And w= e=20 said, 'As it stands, we're not sure how much support it has.' "=20 Two months after the Edison deal was first unveiled, most lawmakers have=20 rejected it as written. Leaders in both houses are discussing various=20 alternatives to the governor's plan, which is contained in legislation by= =20 Sen. Richard Polanco, D-Los Angeles.=20 "As it is before us, it is nothing more than a bailout for the utilities,"= =20 Burton said.=20 He reiterated Tuesday that he wants to see generators and creditors take a = 30=20 percent cut in the debt they are owed for energy purchases. He is supportiv= e=20 of a plan that would shift costs to big energy consumers and protect=20 residents.=20 Burton also unveiled three new energy proposals Tuesday. One would require= =20 the California Energy Commission to provide backup power for high-priority= =20 traffic signals. Another would prevent a 10 percent rate increase scheduled= =20 to take effect next year. The third is a resolution that would support the= =20 governor in seizing power plants.=20 "We're going to show him that there is support in the Senate for seizing=20 these power plants from these generators who, in fact, have been ripping us= =20 off," Burton said.=20 Discussions on the governor's Edison proposal could begin as soon as next= =20 week. Three Senate committees -- judiciary, energy and natural resources --= =20 are likely to take up the bill.=20 Maviglio said that the governor remains open to changes to the deal -- a=20 compromise Davis will have to make given that few lawmakers are willing to= =20 support the existing plan.=20 "I don't think there's a lot of support for (the deal) as it is, in every= =20 aspect now," Kuehl said. "But I would say that among my colleagues, there i= s=20 support for purchasing some assets in exchange for enabling Edison to come= =20 back to health."=20 The Bee's Kevin Yamamura can be reached at (916) 326-5542 or=20 kyamamura@sacbee.com. PG&E trustee rips execs' bonus plan=20 By Claire Cooper Bee Legal Affairs Writer (Published June 13, 2001)=20 SAN FRANCISCO -- The U.S. bankruptcy trustee has blasted a proposal by=20 Pacific Gas and Electric Co.'s top managers to pay themselves millions of= =20 dollars for sticking with the utility as it navigates a course through its= =20 financial chaos.=20 The utility asked U.S. Bankruptcy Judge Dennis Montali May 25 for permissio= n=20 to pay $17.5 million to 223 members of its "leadership team." The official= =20 committee of PG&E creditors has expressed support for the plan, which has= =20 drawn criticism from consumer groups.=20 In filing a formal statement of opposition on Monday, trustee Linda Ekstrom= =20 Stanley, who serves as the court's administrator, pointed out that the plan= =20 would benefit only the top 1 percent of the PG&E work force, and give 20 to= p=20 managers more than $5 million.=20 That focus, said Stanley, "suggests those employees with the most to gain a= re=20 the active proponents" of the plan.=20 Bonuses aren't needed to keep top managers on the job because the utility i= s=20 in no danger of folding and because the managers aren't likely to walk away= =20 from their pay and retirement packages, Stanley said.=20 If PG&E wants to hand out incentives, Stanley suggested that it consider=20 giving stock in its parent company, PG&E Corp.=20 Stanley made a distinction between PG&E's bonus plan and those of other=20 debtors in bankruptcy that have rewarded loyal employees, such as America= =20 West Airlines. In 1994, America West was given bankruptcy court permission = to=20 reward rank and file employees who had stayed with the airline through wage= =20 cuts and other misfortunes not experienced by PG&E managers, she said.=20 Montali has set a hearing on the matter for Monday.=20 The Bee's Claire Cooper can be reached at (415) 551-7701 or=20 ccooper@sacbee.com. Congress presses regulators to lower electricity prices in West=20 By H. Josef Hebert ASSOCIATED PRESS=20 June 12, 2001=20 WASHINGTON =01) Federal regulators came under growing congressional pressur= e=20 Tuesday to act further to lower the price of electricity in the West and st= em=20 alleged abuses by power producers.=20 Democrats, who just became the Senate's majority party, planned hearings on= =20 Western electricity prices including a look Wednesday into the Federal Ener= gy=20 Regulatory Commission's handling of the power crisis.=20 The FERC, which regulates wholesale electricity transactions and natural ga= s=20 transport, has stepped up its activities in recent weeks and plans a specia= l=20 meeting next Monday on California's power markets. Regulators are expected = to=20 decide at that meeting whether to take additional steps to rein in prices.= =20 Meanwhile, political support has been growing on Capitol Hill, even among= =20 some Republicans, for legislation to force FERC to impose temporary price= =20 caps on Western power sales.=20 In recent days, wholesale electricity prices have dropped significantly in= =20 California and the Northwest, but the threats still loom of a price rebound= =20 and, in California, power blackouts.=20 The Bush administration remains strongly opposed to even limited price=20 controls that interfere in the free market.=20 Vice President Dick Cheney, in a meeting Tuesday with more than three dozen= =20 Republican and Democratic lawmakers from California, said the administratio= n=20 remains opposed "to any type of price control legislation," according to=20 lawmakers present.=20 But Sen. Jeff Bingaman, D-N.M., who became chairman of the Energy and Natur= al=20 Resources Committee when Democrats assumed the Senate majority, warned FERC= =20 to take additional action or face legislation demanding price caps.=20 "I hope that FERC will act more aggressively," Bingaman said during an ener= gy=20 forum, "and we will not have to have legislation."=20 But he said he was prepared to move a bill out of his committee before the= =20 July 4 recess, similar to one offered by Sens. Dianne Feinstein, D-Calif.,= =20 and Gordon Smith, R-Ore., that would require FERC to impose electricity pri= ce=20 controls based on cost of production and a reasonable profit.=20 At the same time, the Senate Governmental Affairs Committee, chaired by Sen= .=20 Joe Lieberman, D-Conn., planned to hear Wednesday from several energy=20 economists about FERC's handling of wholesale power markets in the West. Mo= st=20 of the witnesses, including Cornell economist Alfred Kahn, an advocate of= =20 electricity deregulation, have urged additional price controls under curren= t=20 circumstances.=20 While most Republicans, following the White House lead, remain opposed to= =20 legislating price caps, there have been growing fears among GOP House membe= rs=20 about potential political fallout over high Western electricity prices.=20 In a letter to FERC Chairman Curtis Hebert on Tuesday, Rep. Billy Tauzin,= =20 R-La., chairman of the Energy and Commerce Committee, and 14 other GOP=20 lawmakers urged FERC to be more aggressive in pursing allegations of price= =20 abuse and to expand the limited price mitigation program it approved in=20 April.=20 That order by FERC reins in wholesale electricity prices when California's= =20 electricity reserves fall below 7.5 percent, triggering an emergency. It=20 limits prices to those charges for power from the most inefficient power=20 plants.=20 California Gov. Gray Davis has called the FERC limits inadequate and said= =20 they've had little impact on prices. Tauzin, however, cited evidence that= =20 FERC's order already has dampened electricity prices, which recently have= =20 fell significantly.=20 The letter to FERC calls for the same mitigation to be broadened to include= =20 all power transaction, not only those during emergencies, and for the limit= s=20 to be expanded to include other parts of the Western power grid.=20 Rep. Joe Barton, R-Texas, chairman of a key Energy and Commerce subcommitte= e,=20 was among those who signed the letter, but he said he opposes broader price= =20 controls such as those favored by most congressional Democrats.=20 "There have been no instances where price caps have worked," insisted Barto= n=20 at an energy forum sponsored by The Atlantic Monthly. The recent easing of= =20 electricity prices shows "the market has begun to work," he said.=20 House Minority leader Richard Gephardt, D-Mo., said at a news conference th= at=20 price caps pegged to the cost of producing power are needed "to restore=20 reliable and affordable" electricity supplies.=20 "Price controls are catastrophic," retorted Majority Leader Dick Armey,=20 R-Texas. "If you want blackouts in California, have price controls. He and= =20 other Republicans say price controls inhibit electricity supplies.=20 ?? On the Net: Federal Energy Regulatory Commission: www.ferc.gov/=20 Senate Governmental Affairs Committee witness list:=20 www.senate.gov/(tilde)gov=01)affairs/061301witness=01)list.htm=20 Cheney: No help from administration on power prices=20 By Mark Sherman ASSOCIATED PRESS=20 June 12, 2001=20 WASHINGTON =01) Vice President Dick Cheney told Californians in Congress Tu= esday=20 not to expect energy price controls from the Bush administration=20 The reaction of Democrats ranged from disappointment to anger.=20 "We just got blown off by the vice president," said Rep. Maxine Waters, D-L= os=20 Angeles, as she left the private meeting with Cheney at the Capitol.=20 The hourlong session between Cheney and more than 40 of the state's 52 Hous= e=20 members and two senators amounted to little more than a reiteration of=20 previously expressed positions.=20 Democrats generally support price caps, while Republicans fear that limits= =20 could worsen the power shortage.=20 Cheney was not immediately available after the meeting.=20 "Price caps add... not a single kilowatt to the electrical grid in=20 California," said his spokeswoman, Juleanna Glover Weiss, describing the vi= ce=20 president's message to the delegation. "In fact, they could do just the=20 opposite."=20 The partisan nature of the gathering and its aftermath was inescapable.=20 "You'd think the president only thinks he's president of the states that=20 voted for him," said Rep. Henry Waxman, D-Los Angeles.=20 Rep. Anna Eshoo, D-Palo Alto, said at one point Cheney told her that she=20 '"was being very rude'" by interrupting him.=20 Rep. Ellen Tauscher, D-Walnut Creek, said Cheney defended the record prices= =20 charged by power suppliers as the workings of the free market.=20 "In truth, it's a freak market," Tauscher said as she made an early exit.= =20 Several Democrats claimed Cheney agreed to the meeting only because=20 California Republicans have been feeling increased political pressure to ac= t=20 to ease the energy crisis.=20 Weiss said scheduling problems precluded a get-together before Tuesday.=20 Governor plans to release details of long-term power contracts=20 By Alexa Haussler ASSOCIATED PRESS=20 June 12, 2001=20 SACRAMENTO =01) After fighting off demands for information for months, Gov.= Gray=20 Davis plans to release this week the much-sought details of 38 long-term=20 contracts between the state and power generators, aides said Tuesday.=20 Davis now believes, senior adviser Nancy McFadden said, it's better to=20 release the information than keep it secret.=20 Republican lawmakers and several news organizations, including The Associat= ed=20 Press, sued Davis in March, saying his refusal to release the contracts'=20 details violates the California Public Records Act.=20 Still, Davis refused, saying that revealing the details would put the state= =20 at a competitive disadvantage in other contract talks.=20 The state has bought power since January for customers of three cash-strapp= ed=20 utilities. Much of that has been on the expensive spot market, although the= =20 state has more long-term contracts in recent weeks.=20 Davis aides also said details will be released this week about the state's= =20 spot market power buys in January.=20 Raymond Hart, Department of Water Resources deputy director, wrote power=20 generators Monday saying the department will ask a judge Wednesday to throw= =20 out a confidentiality provision in the contracts.=20 While revealing the details still might pose some problems in negotiations,= =20 "those impacts are far more limited than they might have been had the=20 contracts been released even two weeks ago," Hart wrote.=20 Oklahoma-based Williams Energy, one of the generators with a state contract= ,=20 opposes the release of the contract details, a spokeswoman said.=20 "Information contained in those is proprietary information that allows us t= o=20 be competitive and to bid competitively," said spokeswoman Paula=20 Hall-Collins.=20 Senate leader John Burton, D-San Francisco, said lawmakers need to see the= =20 details of the contracts before they could approve the governor's plan to= =20 rescue Southern California Edison, or any alternate plan.=20 "Until we see those contracts, and know exactly what's in them, we can't ma= ke=20 a determination," Burton said. "There was an argument that I think was vali= d=20 that the governor made at beginning of the contracts. ... We're totally=20 beyond that now."=20 Burton said Tuesday he'll introduce three energy-related measures in the=20 Legislature =01) including one that would repeal a 10 percent rate hike=20 scheduled to take effect next year.=20 The 1996 electricity deregulation law included an automatic 10 percent rate= =20 reduction until March 2002. Burton's bill would remove that out from state= =20 law, but the Public Utilities Commission could still raise rates if=20 commissioners felt it was needed.=20 Burton is also authoring a bill to provide backup battery power for traffic= =20 signals in some intersections to keep the lights on during blackouts.=20 Burton's third measure is a resolution that voices support for Davis to=20 commandeer power plants under his emergency powers authority.=20 "The governor talks about it," Burton said. "We're going to show him that= =20 there is support in the Senate for seizing these power plants from these=20 generators who have been ripping us off."=20 Power Deals Exceed Prices on Spot Market=20 Crisis: State has agreed to long-term pacts at rates far higher than=20 currently available. Defenders say prices are falling because the deals tak= e=20 pressure off market.=20 By ROBERT J. LOPEZ and RICH CONNELL, Times Staff Writers=20 ?????California officials have agreed to purchase power for years to come a= t=20 prices higher than those now being paid in the daily spot market, according= =20 to confidential government records. ?????The 38 long-term contracts, totaling nearly $43 billion, could saddle= =20 consumers with unnecessarily high utility rates for years if recently=20 declining prices represent a trend in the volatile electricity market. ?????Gov. Gray Davis in recent days has largely credited these contracts wi= th=20 breaking the fever of the energy crisis. But the cooling prices--and fresh= =20 details of the contracts--raise concerns that the 18 energy companies may= =20 have gotten the better end of the deals. ?????Perhaps adding to the downward pressure on prices, senior officials of= =20 the Federal Energy Regulatory Commission said Tuesday that the agency is=20 considering new ways to curb California electricity prices this summer. ?????Among other things, the commission might extend its current wholesale= =20 price limits--now in effect only during power emergencies--to 24 hours a da= y,=20 seven days a week. ?????The contract records obtained by The Times show that the state is=20 committed to buying power at prices up to $154 a megawatt-hour for peak=20 electricity and more than $95 for energy that includes times of day when=20 demand is lowest. ?????By contrast, with a recent tumble in wholesale power prices, the state= =20 purchased peak daytime electricity at less than $100 an hour and less than= =20 $20 at night when demand trails off. On Tuesday, prices for last-minute pea= k=20 power in California were under $58 a megawatt-hour, according a Bloomberg= =20 news service survey. ?????In some contracts, the state may pay more or less in the years ahead,= =20 depending on the price of natural gas. Under terms negotiated by the Davis= =20 administration, one company receives $80 million to $90 million a year simp= ly=20 to be ready to produce, even if no electricity is sold. ?????The good news surrounding current market prices could change rapidly= =20 this summer as temperatures climb and use of air conditioning surges. ?????Nonetheless, experts say, the recent prices could be an omen of the=20 future, when as many as 15 new power plants come online, adding thousands o= f=20 megawatts to the California grid. ?????"The theme here is the governor embarked on a long-term strategy for a= =20 short-term crisis," said Peter Navarro, an economist at UC Irvine, who=20 reviewed some of the contract terms at the request of The Times. "They pret= ty=20 much got this exactly wrong." ?????State officials, including Davis, say they are proud of the hard-fough= t=20 concessions they won from the power merchants, who have reaped immense=20 profits from the state's failed deregulation scheme. ?????They say the benefits of the power contracts, while less predictable i= n=20 the long term, have already helped alter the marketplace. Perhaps most=20 important, they say, the contracts have freed the state from a nearly total= =20 reliance on last-minute purchases in the costly spot market. ?????Officials say the contracts have locked up nearly half the state's pea= k=20 power needs this summer. The remainder will come from short-term contracts,= =20 last-minute purchases and reduced demand from conservation programs. "This= =20 was all a well thought-through plan of action," said Davis energy advisor S= .=20 David Freeman, former head of the Los Angeles Department of Water and Power= .=20 "The war ain't over. But we have landed on enemy territory and we are rolli= ng=20 them back." ?????Freeman seemed less confident, however, when asked whether the state m= ay=20 end up being stuck with high-priced contracts. "We hardly know the present,= "=20 he said, "we certainly don't know the future." ?????Ray Hart, deputy director of the Department of Water Resources, said t= he=20 state is absolutely not overpaying for power under the contracts his agency= =20 is helping to negotiate. He acknowledged that the average price the state i= s=20 paying under the contracts is higher than current market prices. ?????And that is the way it should be, he said, because the state has=20 dampened the volatility of the spot market by reducing last-minute purchase= s. ?????"If we didn't have contracts," Hart said, "we'd be buying 100% on the= =20 spot market . . . spending $300-plus [a megawatt-hour] for energy." ?????Many of the contract details remain shrouded in mystery, making it=20 difficult to gauge the true extent of the state's financial commitment. ?????News Organizations Seek Disclosure of Deals ?????The Times and other news organizations have sued the state to release= =20 the contracts and provide details on the state's daily power purchases, now= =20 totaling more than $7 billion. The Davis administration previously refused = to=20 release the information, saying that it would undercut the state's efforts = to=20 secure additional long-term contracts. ?????But on Tuesday the governor announced that he intended to release the= =20 contracts as early as today "with only very minor redactions." ?????The about-face came after state Atty. Gen. Bill Lockyer said publicly= =20 that the contracts should no longer be kept secret and preceded by a day a= =20 hearing before a San Diego Superior Court judge on the case brought by the= =20 news organizations.=20 ?????The administration sent letters to the 18 power producers and marketer= s=20 that have the contracts with the state notifying them of the hearing. ?????In a letter to one firm, the administration said the San Diego hearing= =20 "may be the only such opportunity for your firm to indicate whether it has= =20 any objection to the public disclosure of the contract." ?????More than one firm is likely to object. ?????"We have always maintained that there's information in the contracts= =20 that's proprietary that allows us to operate competitively," said Williams= =20 Companies spokeswoman Paula Hall-Collins.=20 ?????Most of the contracts have been released under confidentiality=20 agreements to federal regulators, state Controller Kathleen Connell and a= =20 congressional committee probing the power crisis. ?????One congressman who has studied the contracts, Doug Ose (R-Sacramento)= ,=20 criticized the governor for locking the state into "high rates for years to= =20 come." ?????"This sort of short-term fix," Ose said, "has squandered our [state=20 budget] surplus and hampers the state treasury for the foreseeable future." ?????The records obtained The Times show that the contracts vary widely in= =20 cost and complexity. ?????For example, in a series of agreements for power in Southern Californi= a,=20 the state has agreed to pay Dynegy Inc. some rates fixed at a $119 a=20 megawatt-hour for peak power beginning next year, more than double the pric= e=20 of electricity on the spot market Tuesday. ?????Under a separate deal for the same three-year period, the Houston-base= d=20 company has an entirely different rate structure that could minimize its ri= sk=20 of losses. The state will pay $21.65 a megawatt-hour, in addition to coveri= ng=20 fuel and other production costs that could rise or fall dramatically. ?????Hart, of the state water agency, argues that California consumers coul= d=20 benefit should natural gas prices fall. ?????A pair of contracts with Constellation Energy Group illustrates the=20 horse trading.=20 ?????In one two-year deal, the Baltimore-based company will receive $154 a= =20 megawatt-hour for peak power, the highest price in the records reviewed by= =20 The Times. The state also agreed to take a larger amount of power around th= e=20 clock. That deal, at $58 a megawatt-hour, extends over eight years beginnin= g=20 in 2003. ?????Freeman, who helped broker many of the deals, said the state had to si= gn=20 long-term contracts to lock in electricity needed this year and next--a=20 necessary "quid pro quo." ?????Freeman said critics do not recognize the difficult negotiating positi= on=20 the state faced earlier this year. ?????Some energy insiders say the state hurt itself by waiting too long to= =20 begin those negotiations, when prices had soared and its largest utilities= =20 were buried in debt. ?????Last summer, Houston-based Enron and several other firms offered to se= ll=20 power to California's utilities for just five years at about $50 a=20 megawatt-hour, according to Mark Palmer, an Enron spokesman. "Now you've go= t=20 the state committed to 10 years of buying power at what appears to be=20 significantly over market [prices]," he said. ?????Freeman blamed the Public Utilities Commission for balking at long-ter= m=20 contracts for fear that ratepayers would be stuck with overpriced energy if= =20 prices fell. ---=20 ?????Times staff writers Doug Smith in Los Angeles, Nancy Vogel and Dan=20 Morain in Sacramento and Ricardo Alonso-Zaldivar in Washington contributed = to=20 this story. Copyright 2001 Los Angeles Times=20 Federal Panel May Extend Price Limits=20 Utilities: Regulatory commission weighs expanding the plan beyond emergenci= es=20 and throughout the West.=20 By RICARDO ALONSO-ZALDIVAR, Times Staff Writer=20 ?????WASHINGTON--The Federal Energy Regulatory Commission, responding to=20 pressure from lawmakers, state officials and consumers, is considering a=20 significant expansion of its plan to limit California electricity prices th= is=20 summer, senior agency officials said Tuesday. ?????Commissioners and staff members are engaged in intense negotiations in= =20 advance of a key meeting Monday to finalize an emergency plan for Californi= a=20 and the West. ?????According to several commission officials, the options being discussed= =20 include: ?????* Extending FERC's current price limits--now in effect only during pow= er=20 emergencies in California--to 24 hours a day, seven days a week. The limits= ,=20 intended to prevent price spikes, were invoked during two emergencies last= =20 month and resulted in immediate cuts in the price of wholesale electricity.= =20 FERC is also considering applying such limits throughout the West. ?????* Requiring power generators in the entire Western region to sell=20 available electricity to California or into their local power grids during= =20 emergencies, reducing the threat of blackouts. ?????* Establishing a regional framework for large power users to sell=20 electricity back into the grid during peak usage times. Some companies that= =20 have long-term power contracts at low rates may be able to make money by=20 scaling back their operations and selling electricity. ?????* Tightening rules on what energy marketers--firms that buy and resell= =20 power contracts much like stockbrokers trade shares--can charge for their= =20 electricity. ?????* Expanding an order issued last year that authorized refunds for=20 excessive markups during the most extreme power emergencies. That refund=20 order would now apply to excessive prices during all power emergencies. ?????The measures under consideration stop short of the price caps being=20 sought by Gov. Gray Davis and California Democrats. But they may go far=20 enough to provide an acceptable compromise. ?????"The whole thing is in flux, but it is moving toward a much more=20 effective price mitigation plan, not only for California but for the West,"= =20 said an agency official. ?????Strong political pressure from Senate Democrats and House Republicans= =20 appears to have galvanized FERC into taking a more decisive role. "We're so= rt=20 of the last to get it," the official said. ?????FERC has been bitterly criticized by Davis for abandoning California.= =20 FERC Chairman Curtis L. Hebert Jr. has responded by citing dozens of modest= =20 FERC actions to assist the state. ?????But Hebert has resisted Davis' central demand that FERC use its legal= =20 authority to order a temporary return to fixed electricity rates. Such fixe= d=20 rates, based on the cost of producing power plus an allowance for profit,= =20 were standard before deregulation. ?????"The politics of the situation have changed significantly, and=20 commissioners are not immune to politics," said another senior agency=20 official. "The message from Capitol Hill has gotten stronger with a=20 Democratic Senate. Even the Bush administration is saying we should make su= re=20 there is no price gouging." ?????FERC members have been summoned to testify before the Senate=20 Governmental Affairs Committee chaired by Sen. Joseph I. Lieberman (D-Conn.= )=20 a week from today. Meanwhile, Sen. Jeff Bingaman (D-N.M.), the new Senate= =20 Energy Committee chairman, has told FERC he will move legislation to cap=20 electricity rates in the West unless it acts soon. ?????Agency officials said commissioners do not want to face Lieberman next= =20 week empty-handed. ?????House Republicans have also been prodding the agency. On Tuesday, Ener= gy=20 Committee Chairman W.J. "Billy" Tauzin (R-La.) wrote Hebert to urge=20 Western-wide, round-the-clock price limits. ?????"We strongly urge the commission to implement a comprehensive plan to= =20 mitigate wholesale prices and aggressively monitor wholesale sales of=20 electric energy . . . within the entire Western Systems Coordinating=20 Council," wrote Tauzin, referring to the Western power grid. ?????FERC officials said a strong effort is underway to achieve a consensus= =20 on the five-member commission, lately riven by ideology but now bolstered b= y=20 two new pragmatic commissioners who favor active oversight of industry. ?????Commissioner William Massey, who for months has been a lonely dissente= r,=20 is continuing to press for the traditional price caps sought by Davis,=20 officials said. Once marginalized, Massey apparently is now being actively= =20 wooed by the other members. ?????S. David Freeman, an energy advisor to Gov. Davis, said Tuesday that= =20 expanding FERC's current price limits would be a positive step. But he adde= d=20 that the governor continues to advocate a return to traditional, fixed rate= s. ?????"Any strengthening of the [FERC] plan is in the public interest,"=20 Freeman told reporters at a Washington news conference. ?????FERC's price limits are not keyed to a particular dollar amount but ar= e=20 flexible. ?????When a power emergency is called by the state, FERC's plan limits the= =20 price that generators can charge to what it costs to produce power at the= =20 least efficient plant running at that time. (The costs of all the plants ar= e=20 determined beforehand by California's grid operator based on data filed by= =20 the generators.) ?????Another requirement of the FERC plan forces generators using the=20 California grid to sell any power they have available during emergency=20 conditions. ?????When the price limits were tested in two emergencies late last month,= =20 prices came down quickly. But power sellers complained that the limits were= =20 too strict. And by the second emergency, there was evidence that some selle= rs=20 had started finding ways around the limits. Copyright 2001 Los Angeles Times=20 Energy Execs Gain Millions in Stock Sales=20 Power: Some say they have profited from the state's crisis. Others say the= =20 practice is standard.=20 By JERRY HIRSCH, Times Staff Writer=20 ?????Top executives and directors at many of the large power companies that= =20 California officials accuse of profiteering from the energy crisis have=20 collected tens and even hundreds of millions of dollars through stock sales= . ?????Beginning early last year, these executives exercised options and sold= =20 stock for huge gains at two, three and even 10 times the level of prior=20 years, according to a study by The Times of trading data supplied by First= =20 Call/Thomson Financial and federal regulatory filings. Executives' Stock Deals Click to see full graphic. ?????Most of the energy companies would not discuss specific trades by=20 executives, but said that granting stock options is a standard practice use= d=20 to compensate top managers and other key players. ?????In selling in the last year, the executives have demonstrated a knack= =20 for timing the transactions near the top of the market, a logical strategy,= =20 executive-pay experts said. Indeed, many of these companies' shares have=20 fallen since the bulk of the stock sales. ?????But critics say it is the energy crisis in California and the West tha= t=20 has driven up corporate profits at these companies--including AES Corp. of= =20 Virginia, Duke Energy Corp. of North Carolina and Houston-based energy=20 concerns Enron Corp. and El Paso Corp. The crisis created a bull market for= =20 publicly traded power companies--and made the shares held by the executives= =20 especially lucrative. ?????Enron Chairman Kenneth L. Lay netted $123 million in option transactio= ns=20 last year, according to a filing with the Securities and Exchange Commissio= n.=20 That was nearly three times his gains the previous year and nearly 10 times= =20 what he made in 1998. ?????Lay has made additional gains this year. He has cashed in options and= =20 sold shares to net nearly $23 million since November, while holding on to= =20 50,000 additional shares with a market value of $2.5 million, according to= =20 First Call/Thomson Financial data. ?????Meanwhile, Jeffrey K. Skilling, Enron's chief executive, netted more= =20 than $62 million last year in options gains. ?????Other executives are exercising options for huge gains but then holdin= g=20 on to the shares. Roger W. Sant, chairman of AES, bought 436,500 shares in= =20 the Arlington, Va.-based company Oct. 26, paying $1.62 a share and producin= g=20 a paper gain of more than $21.5 million at the time of the transaction. ?????But some also cashed out large holdings acquired over years. For=20 example, Robert Hemphill Jr., a longtime AES executive who now serves on it= s=20 board of directors, has sold $50 million of the company's stock in the last= =20 13 months. ?????David Arledge, a director of El Paso Corp. and former executive at a= =20 company acquired by the Houston natural gas firm, has sold nearly $27 milli= on=20 in stock since Nov. 1. ?????Cashing in when an industry is hot is typical of corporate executives = in=20 the U.S., said Graef Crystal, a Las Vegas-based expert on executive=20 compensation. But when an individual's transactions approach or cross the= =20 hundred-million-dollar level, he said, the gains become unusual. ?????California officeholders and policymakers expressed outrage but not=20 surprise at the transactions. ?????"It is part of a pattern of smart trading by these guys," said state= =20 Sen. Debra Bowen (D-Marina del Rey), who chairs the Senate Energy, Utilitie= s=20 and Communications Committee. "The mentality is to get everything that you= =20 can and then ride out the bust. ?????"I think they are figuring that by this time next year the party will = be=20 over and they will be left sitting in a room with plastic cups half-filled= =20 with stale beer," Bowen said. ?????Said Loretta Lynch, president of the California Public Utilities=20 Commission: "It stands to reason that if the companies are making exorbitan= t=20 profits, then the individuals who run the companies are also making=20 exorbitant profits." ?????Government Agencies Investigating Firms ?????Indeed, the stock sales have taken place against a backdrop of acrimon= y=20 between state officials and the power companies. ?????Last month, Lynch told The Times that state investigators have uncover= ed=20 evidence that a "cartel" of power companies shut down plants for unnecessar= y=20 maintenance to create shortages and thus increase prices and profits. Lynch= =20 did not name the companies. ?????State and federal agencies are investigating the actions of several of= =20 the big energy companies, seeking to verify charges that they have conspire= d=20 to boost prices by limiting construction of power plants, in one case, or b= y=20 limiting the amount of natural gas available in the power-hungry California= =20 market. ?????Executives at firms not accused of price gouging also have cashed in. ?????Ann B. Curtis, chief financial officer of Calpine Corp., a San=20 Jose-based power plant builder and generator, has netted more than $10=20 million in option transactions in the last year. That compares with a total= =20 of $5 million in the four previous years. ?????Some analysts say the transactions are to be expected, considering the= =20 changing nature of the power industry. ?????"Unlike at the old-line utilities where insiders rarely sell, we've=20 grown accustomed to insider sales at the diversified power producers," said= =20 Paul Elliott, a First Call/Thomson Financial analyst. "I'm not convinced th= at=20 these sales raise any red flags at this point." ?????Although no one is saying that any of the stock trades were illegal,= =20 critics link the value of the transactions to the profits streaming out of= =20 California. ?????"The generators have no shame," said Steve Maviglio, a spokesman for= =20 California Gov. Gray Davis. "It speaks to how there has been a massive=20 transfer of wealth from California and the West to Texas and the Southeast.= " ?????In reporting record financial results for the first quarter of this=20 year, Enron said it posted a 281% increase in revenue to $50.1 billion and = a=20 20% increase in net income to $406 million. ?????The company did not break out numbers for its California business but= =20 did note that it sold nearly twice as much electricity in North America=20 compared with a year earlier, and that sales of natural gas had risen by a= =20 third. ?????Lay, the Enron chairman, "has given himself very generous stock option= s=20 over the years," compensation expert Crystal said. ?????"You might think of him as a farmer who has planted thousands of acres= =20 of stock options. Now he is harvesting a bumper crop. What he is harvesting= =20 is the hard-earned paychecks of California workers and taxpayers." ?????Mark Palmer, an Enron spokesman, declined to talk about executives'=20 stock trading activity. ?????"All Enron employees are shareholders. How they decide to use that as = a=20 form of compensation is completely up to them," Palmer said. "Mr. Lay is no= t=20 going to talk about his compensation."=20 ?????A spokesman for AES also declined to talk about stock sales by its=20 employees. ?????Other companies were more willing to discuss such sales. ?????"Many of these people have a lot of stock, and this [is] an opportunit= y=20 to diversify their personal portfolios at an opportune time when Duke's sto= ck=20 is up," said Terry Francisco, a spokesman for Duke Energy. ?????Francisco said many of the sellers at Duke continue to hold large=20 amounts of the company's stock. That also holds true for executives of the= =20 other firms. ?????Calpine Chief Executive Peter Cartwright, for example, sold nearly $20= =20 million in his company's shares since May 2000, when wholesale electricity= =20 prices started rising and the state's energy crisis took root. His remainin= g=20 holdings have a market value of more than $400 million, according to SEC=20 filings. ?????'Getting Out While the Getting Is Good'? ?????El Paso spokeswoman Norma Dunn noted that Arledge, one of the largest= =20 sellers, was CEO of Coastal Corp., a company acquired by El Paso, and chose= =20 to sell some of his holdings after the merger. ?????One factor in the heavy sales of energy company shares is that=20 executives at these companies may be reading the changing marketplace and= =20 seeing increased political pressure to rein in energy prices, analysts said= . ?????"They may feel that this power game is not going to go on forever, so= =20 they are getting out while the getting is good," said David Moreland, a=20 benefits consultant with CMG Consulting Inc. in San Jose. ?????Much of the executives' gains stem from the common practice of grantin= g=20 low-priced options to management. At Calpine, for example, both Curtis and= =20 Cartwright gained millions of dollars selling shares purchased from the=20 company at just 7 cents and $1.07 a share and then sold for more than $40 a= =20 share. ?????Companies grant these options as an incentive for management to increa= se=20 the investment value of shareholders. They provide for giant payoffs withou= t=20 the company having to fork out cash. ?????Yet there is a cost to the company, analyst Crystal said. The deals=20 increase the number of shares outstanding, incrementally diminishing the=20 holdings of other investors. ?????When the option tab hits tens of millions of dollars or more, the=20 company is in essence handing the money to executives rather than using it = to=20 expand the company, Crystal said. ?????"This is not the tooth fairy," he said. Copyright 2001 Los Angeles Times=20 Edison Reaches Accord With Alternative Generators=20 By NANCY RIVERA BROOKS and TIM REITERMAN, Times Staff Writers=20 ?????Southern California Edison reached an agreement Tuesday to stabilize= =20 prices and pay part of its debts to alternative power producers, an importa= nt=20 source of electricity that could help California avoid blackouts this summe= r. ?????The deal, reached with key representatives of the power producers, cal= ls=20 for an end to litigation by those small companies that produce power from= =20 alternative sources such as wind, solar, geothermal, biomass and at gas-fir= ed=20 cogeneration facilities. ?????Edison owes those generators millions of dollars for electricity, and = 33=20 lawsuits have been filed against the Rosemead utility to recover debts,=20 attach assets and get out of the contracts. The small generators have been= =20 viewed as some of Edison's most dangerous creditors because they would be= =20 more likely than large financial institutions to force Edison into Bankrupt= cy=20 Court. ?????"We hope this agreement will help bring stability back to this segment= =20 of California's energy market," said Brian Bennett, Edison vice president o= f=20 external affairs. ?????About 700 of the small producers generate more than one-fourth of the= =20 state's electricity. Rolling blackouts in March were caused in part by the= =20 alternative generators, many of which cut production because they weren't= =20 being paid by Edison and Pacific Gas & Electric. ?????The PUC ordered the utilities to begin paying the generators in late= =20 March, and most are again producing power. ?????Edison did not release details of the agreement, which it filed with t= he=20 California Public Utilities Commission late Tuesday, other than to say that= =20 it deals with payment to the producers, pricing of power purchased from the= =20 generators and settlement of litigation. ?????"I hear it's a good deal," said Joe Ronan, chairman of the Independent= =20 Energy Producers Assn., which has been involved in the negotiations. ?????Ronan, a Calpine vice president, said he learned the deal calls for a= =20 multiyear contract that would pay generators $53.70 per megawatt-hour. Even= =20 though the prices are lower than historic highs of $200 or more for=20 alternative energy, Ronan said the multiyear deals will bring much needed= =20 stability. ?????Gas-fired plants, he said, would be protected from volatility in the= =20 natural gas market because the price they receive will go up if a wholesale= =20 price index does. ?????The PUC is scheduled to consider a proposal for resolving the issue=20 today at a special meeting. ?????An earlier proposal called for Edison and PG&E to make payments of 15%= =20 of the amount due to the small energy providers that demonstrate a need for= =20 the money to keep operating. ?????The PUC recently deferred taking action on the order because the=20 commission wanted to make sure that its order was in line with a court ruli= ng=20 in PG&E's bankruptcy case and to provide added time for negotiations=20 conducted by the governor's office to succeed, President Loretta Lynch said= . ?????The alternative producers have been meeting recently with the utilitie= s=20 and Davis energy czar David Freeman in hopes of resolving their differences= =20 over past payments. But Davis spokesman Roger Salazar said late Tuesday tha= t=20 he was unaware of the settlement and noted that Freeman was in Washington o= n=20 Tuesday. ?????"I don't know if they have done something on their own," he said. ?????PUC Commissioner Carl Wood, a key player in the controversy, said he= =20 heard
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