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Sac Bee, Fri, 6/29: Power firms held in contempt (Enron mentioned) Sac Bee, Fri, 6/29: Edison's parent gets new cash Sac Bee, Fri, 6/29: Refineries exempt from power cuts=20 SD Union, Thurs, 6/28: Enron, Mirant cited for contempt by Senate committee SD Union, Thurs, 6/28: Secretary of State accuses governor of failing state= =20 in energy crisis LA Times, Fri, 6/29: Congress Reacts Sluggishly to Bush's Energy Proposals LA Times, Fri, 6/29: Senate Panel Lashes Out at 2 Energy Firms SF Chron (AP), Fri, 6/29: California Senate committee cites power companies= =20 for contempt for withholding documents SF Chron (AP), Fri, 6/29: California oil refineries exempt from rolling=20 blackouts SF Chron, Fri, 6/29: Conservation funds restored to energy legislation by B= ush SF Chron, Fri, 6/29: Refineries exempt from blackouts=20 Oil firms' support services also shielded Mercury News, Fri, 6/29: Officials criticize energy report Mercury News, Fri, 6/29: Extra `power plant' shows deregulation can spur=20 innovation (Editorial)=20 OC Register, Fri, 6/29: Gas Co. to give consumers nearly 50% price break in= =20 July Individual.com (Business wire), Fri, 6/29: California Municipal Electric=20 Utility Launches Apogee Demand Exchange to Reduce Peaks=20 Wash. Post, Fri, 6/29: Greenspan Unafraid Of Energy Price Caps; Calif.=20 Problems Ease,=20 Fed Chief Says WSJ, Fri, 6/29: Federal Energy Panel Approves Power Price Controls for New York ---------------------------------------------------------------------------= --- ------------------------------------ Power firms held in contempt=20 By Emily Bazar Bee Capitol Bureau (Published June 29, 2001)=20 A special legislative committee investigating electricity price manipulatio= n=20 voted Thursday to hold two power companies in contempt for refusing to turn= =20 over thousands of pages of documents.=20 By unanimously declaring Enron Corp. and Mirant in violation of its=20 subpoenas, the state Senate committee summoned powers that haven't been=20 invoked in the Legislature for more than 70 years.=20 As a result of the unusual move, power company executives could find=20 themselves facing jail time. Possible punishments include fines or the forc= ed=20 turnover of documents.=20 "There isn't a lot of legal precedent," said the chairman of the committee,= =20 Sen. Joe Dunn, D-Santa Ana, after the hearing. "Jailing an individual is an= =20 option, and we intend to preserve all of our options."=20 The committee is trying to determine whether electricity generators or=20 marketers have artificially inflated prices of wholesale electricity. Other= =20 state agencies, including the attorney general's office and the Public=20 Utilities Commission, also have initiated investigations.=20 Under the committee's 5-0 decision, Mirant and Enron have until July 10 to= =20 change course and turn over documents. If they do so, the contempt charges= =20 will be expunged. If not, the committee will forward its contempt findings = to=20 the full Senate, which will determine which punishments, if any, should be= =20 levied.=20 As part of its investigation, the committee began requesting documents from= =20 most generators in April. After receiving little or no response -- and=20 complaints from companies concerned about giving out proprietary informatio= n=20 -- the panel issued subpoenas to several companies June 11.=20 The subpoenas called for documents of all kinds, including those with=20 specific details -- prices, quantities and capacity -- of companies'=20 transactions in the state's wholesale electricity market. Telephone bills,= =20 e-mail messages and personal appointment books also were requested.=20 Many of those companies did not respond to the subpoenas until the deadline= =20 Thursday. Only two -- Dynegy Inc. and Reliant Energy Inc. -- actually=20 provided documents.=20 During the nearly four-hour meeting, Dunn interrupted the proceedings sever= al=20 times to announce that various letters or documents arrived moments before.= =20 For example, Dunn said midway through the hearing that Dynegy had just=20 delivered 18,603 documents to his Capitol office.=20 For those companies that didn't comply with the subpoena, but promised to= =20 deliver the necessary documents before July 10, the committee agreed to=20 withhold judgment until that date.=20 Robert Bittman, who represented Mirant at the hearing -- and was allowed to= =20 make a hasty phone call to the company in an attempt to avoid the contempt= =20 finding -- in the end was unable to adequately assure the senators that=20 Mirant would deliver all required documents before July 10.=20 After the hearing, Mirant spokesman Patrick Dorinson said the company will = do=20 everything it can before July 10 to resolve the dispute.=20 "What Mirant needs is assurance from the committee that the company-specifi= c=20 information in these documents doesn't find its way to some public forum=20 where it could be misused," he said.=20 Legislators were particularly irked by energy marketer Enron, which didn't= =20 send a representative to the hearing.=20 Instead, Enron delivered a letter to Dunn on Thursday questioning whether t= he=20 committee was violating the Federal Energy Regulatory Commission's=20 jurisdiction in its investigation.=20 "My great frustration here is getting a letter from Enron on the day the=20 (documents) are due explaining why we don't have jurisdiction," said Sen.= =20 Debra Bowen, D-Marina del Rey.=20 Rather than jail time, Bowen said she would like to see fines levied agains= t=20 companies that have violated the subpoenas.=20 The last time the Legislature held someone in contempt was 1929. The case= =20 involved a price-fixing conspiracy, but the commodity was concrete. Several= =20 officials from concrete companies were subpoenaed, but some declined to=20 testify or divulge documents to a Senate committee.=20 The Bee's Emily Bazar can be reached at (916) 326-5540 or ebazar@sacbee.com= .=20 =20 Edison's parent gets new cash By Dale Kasler Bee Staff Writer (Published June 29, 2001)=20 In a move that keeps creditors at bay for now, Southern California Edison's= =20 parent company obtained $1.19 billion in fresh financing Thursday. But the= =20 troubled company had to pay a higher interest rate than it originally=20 expected, reflecting investors' anxieties about the state energy crisis.=20 The move doesn't affect the beleaguered Edison utility, which has been on t= he=20 verge of bankruptcy for months, but eases immediate financial stress on its= =20 parent Edison International.=20 The parent, through a newly created subsidiary called Mission Energy Holdin= g=20 Co., borrowed the funds at rates of up to 14 percent. That's one percentage= =20 point higher than Edison expected last week, according to Standard & Poor's= =20 Corp. The company had to restructure the deal because of investor=20 uncertainty, S&P said, and there was speculation by analysts the deal might= =20 get scrapped.=20 Even with the higher interest rate, the financing was a must-do for Edison= =20 International, said S&P analyst Richard Cortright Jr.=20 The proceeds will go to pay off numerous Edison International debts,=20 including a $618 million bank loan due Saturday and $250 million in bonds d= ue=20 July 18. The company has told the Securities and Exchange Commission that i= t=20 needed new financing "to meet its cash requirements."=20 The company paid a steep price for meeting those requirements. Part bank lo= an=20 and part bond sale, the financing cost Edison International about twice wha= t=20 a creditworthy corporation would pay. The bank loan is at a variable rate 7= .5=20 percentage points above the London Interbank Offered Rate, a common benchma= rk=20 for loans.=20 The deal originally called for Edison International to sell nearly $1.2=20 billion in bonds, but the company had to scale back the bond offering and= =20 pull together the bank loan to make up the shortfall, analysts said.=20 Analysts said the new financing still leaves Edison International about $33= =20 million short of having enough to pay the bond and bank debt coming due thi= s=20 year. The company said it will sell its Edison Select unit to Tyco=20 International Ltd. for an undisclosed price. Edison Select provides home=20 security and warranty-repair services.=20 The Bee's Dale Kasler can be reached at (916) 321-1066 or dkasler@sacbee.co= m.=20 Refineries exempt from power cuts=20 (Published June 29, 2001)=20 Oil refineries and makers of key chemicals they use will be exempted from= =20 rotating outages to avoid gasoline shortages, state utility regulators vote= d=20 unanimously Thursday.=20 Members of the state Public Utilities Commission said they were acting at t= he=20 urging of the governor and the state Energy Commission, which had warned th= at=20 even a one-minute outage could shut down a refinery for up to three weeks.= =20 Energy officials told regulators that because California has only 13=20 refineries, loss of fuel production from even one of them could cause a sha= rp=20 drop in inventories, triggering substantial price hikes at the pump.=20 The interim decision, which commissioners said they could expand or revise= =20 later, does not apply to storage or other facilities.=20 --Carrie Peyton=20 State off 'credit watch' With California's budget squeeze temporarily eased by a bridge loan, a=20 leading Wall Street credit agency removed the state from its dreaded "credi= t=20 watch" list.=20 Standard & Poor's said it was removing California from "credit watch" -- th= e=20 term it uses for entities whose credit ratings might be downgraded -- becau= se=20 the state was able to borrow $4.3 billion for electricity purchases. The lo= an=20 is designed to tide the state over until California can sell $12.5 billion = or=20 more worth of electricity bonds this fall.=20 "The interim loan facility buys the general fund time to find a satisfactor= y=20 workout situation," S&P said.=20 State Treasurer Phil Angelides said last week he'd lined up $4.55 billion i= n=20 bridge loans. But he still hasn't finalized a $255 million loan from State= =20 Street Corp. of Boston, said a spokeswoman for the treasurer. So for now th= e=20 bridge loans total $4.3 billion.=20 S&P had downgraded the state's credit rating two notches in April because o= f=20 the mushrooming cost of electricity purchases and kept California on its=20 "credit watch" list, indicating that the credit rating might fall further.= =20 California's credit rating stands at "A-plus," with a negative outlook, S&P= =20 said. The agency said it was still concerned by the "state's continued rapi= d=20 level of spending for power purchases."=20 --Dale Kasler=20 Contracts to be released State Controller Kathleen Connell on Thursday said she will release unedite= d=20 copies of the state's long-term electricity contracts next week, even if Go= v.=20 Gray Davis appeals a court ruling requiring him to do so.=20 Connell, who has been highly critical of her fellow Democrat's handling of= =20 the state's energy crisis, said Davis negotiated the contracts "in a moment= =20 of panic" earlier this year.=20 Davis for months refused to provide copies of the pacts but sent out edited= =20 copies earlier this month as a San Diego Superior Court judge ordered them= =20 released. On Wednesday, the judge expanded her ruling, telling the state's= =20 power buyers to make public the unedited versions. The administration has= =20 until Thursday to appeal.=20 But Connell, speaking at a forum in Los Angeles, said she will post them on= =20 the Internet on Thursday no matter what Davis decides to do. "There is no= =20 reason that the veil of secrecy should not be lifted," she said.=20 --Dan Smith=20 Enron, Mirant cited for contempt by Senate committee=20 By Jennifer Coleman ASSOCIATED PRESS=20 June 28, 2001=20 SACRAMENTO =01) A Senate committee investigating possible price manipulatio= n in=20 California's energy markets voted Thursday to cite generators Enron Corp. a= nd=20 Mirant Inc. for contempt.=20 Both companies had been subpoenaed to produce documents earlier this month = by=20 the Senate Select Committee to Investigate Market Manipulation, along with= =20 four other generating companies that complied in various ways with the=20 subpoenas.=20 Houston-based Enron said it keeps its documents in Texas, which is outside= =20 the committee's jurisdiction. Reliant Energy, also based in Houston, said= =20 that too, but it agreed to turn over 1,800 documents.=20 An attorney for Mirant, based in Atlanta, said the company wanted to comply= ,=20 but Mirant did not act fast enough for the committee, which then included i= t=20 with Enron in the contempt citation.=20 If the full Senate agrees with the committee's contempt request, it will be= =20 the first time since 1929. Then, the Senate briefly jailed a balky witness= =20 during a committee's investigation of price fixing and price gouging=20 allegations involving cement sales to the state, said Laurence Drivon, the= =20 committee's special counsel.=20 The state Supreme Court eventually upheld the Senate's right to jail those= =20 who fail to comply with its subpoenas, Drivon said, but ordered that=20 particular witness freed after determining senators hadn't followed all the= =20 proper procedures.=20 By seeking the contempt citations, the committee needs the full Senate to= =20 follow through. There are no set penalties, Drivon said =01) by law, "the S= enate=20 can take such action as it deems necessary and appropriate."=20 Sen. Joe Dunn, D-Santa Ana, chairman of the committee, said there was littl= e=20 precedent for what penalties the Senate could impose.=20 "Jailing an individual is an option and we're going to preserve all our=20 options," he said, adding the Senate could also vote to fine the companies = if=20 they don't comply.=20 Enron's claim the committee lacked jurisdiction outraged Sens. Steve Peace,= =20 D-Chula Vista, and Debra Bowen, D-Marina del Rey. They said previous=20 legislative investigations have called on documents throughout the country= =20 and from overseas.=20 "If they've done nothing, if they've got nothing to hide, there's no reason= "=20 not to comply, said Bowen.=20 The committee has been negotiating with the companies over the conditions= =20 under which they would release the documents, including those that would=20 remain confidential. The committee has also asked the generators to sign=20 agreements not to destroy any potentially relevant documents.=20 So far, some companies have agreed verbally; none has signed an agreement.= =20 "These are the same documents we requested April 5, and to date the summary= =20 is: three months, zero documents," Drivon said.=20 Dynegy Energy Services has provided 18,000 documents, committee members sai= d,=20 although no one knows for sure what they include.=20 Duke Energy agreed to comply with the subpoenas and store documents in a=20 repository in Sacramento as long as the company and the committee agree on= =20 how to keep the documents confidential. Lawyers for both sides said they=20 could work out an agreement.=20 Williams, AES, Reliant, Dynegy, Duke and NRG will have until July 10 to tur= n=20 the requested documents over to the repository. Enron and Mirant can have= =20 their contempt citations purged if they also comply by then.=20 The Senate Rules Committee subpoenaed the documents =01) which include deta= ils=20 on bidding, pricing and other aspects of power sales =01) earlier this mont= h.=20 Generators said they haven't complied because they have not been able to=20 negotiate an acceptable confidentiality agreement. Secretary of State accuses governor of failing state in energy crisis=20 By Michelle Dearmond ASSOCIATED PRESS=20 June 28, 2001=20 LONG BEACH =01) Giving a glimpse at the hostile tone the state's next=20 gubernatorial contest likely will take, Secretary of State Bill Jones=20 attacked Democratic Gov. Gray Davis on Thursday for his handling of=20 California's energy crisis.=20 Jones, who is seeking the Republican nomination for governor in 2002, expec= ts=20 to face Davis in next year's general election.=20 Davis, who is expected to seek re-election, has not formally announced his= =20 candidacy but has already raised more than $26 million. Jones has not had t= o=20 report his campaign contributions yet but it is widely believed he will hav= e=20 only a fraction of that sum.=20 "During all my years in public service, I have never seen anyone shirk as= =20 many tough decisions or seek to blame as many people for his own shortcomin= gs=20 as I've seen from Gray Davis in the last two years," the secretary of state= =20 said at a Long Beach Chamber of Commerce luncheon.=20 "His inattention to duty, inaction and lack of leadership has unnecessarily= =20 caused much of the economic turmoil our state faces today."=20 Davis press secretary Steve Maviglio said Thursday the governor will be=20 "putting more power online in the next two weeks than in the previous 12=20 years." He pointed to Davis' 23 executive orders to speed the building of= =20 power plants and the 25 percent reduction in energy use in state-run=20 buildings.=20 "The facts speak for themselves," Maviglio said. "The governor licensed the= =20 first power plant in 12 years within four months of taking office, in April= =20 1999. While federal regulators were still holding hearings, the governor la= st=20 summer signed legislation and executive orders."=20 Davis has cited the energy deregulation plan signed into law by his=20 Republican predecessor, former Gov. Pete Wilson, as the start of California= 's=20 energy woes and has accused power suppliers of manipulating prices.=20 He also has attacked the Federal Energy Regulatory Commission, which=20 regulates wholesale energy transactions, and President Bush for not steppin= g=20 in to help the state. Regulators recently agreed to cap electricity prices= =20 throughout the West; Bush has opposed price controls in energy markets.=20 Jones laid the blame for the state's energy crisis on Davis, who he said=20 failed to heed early warning signs of the problem last summer and has devot= ed=20 more attention to building his campaign coffers than solving the state's=20 problems.=20 "Rather than practicing political gamesmanship, Gray Davis should have paid= =20 more attention to the state's pressing policy issues and avoided his=20 multibillion dollar energy mistakes," Jones said.=20 Although Davis took office during a time of prosperity, the state now faces= a=20 weakening economy and "antibusiness climate," Jones said. Stealing a page= =20 from the book of California's favorite son, former President Reagan, he ask= ed=20 voters if they are better off than they were four years ago.=20 A survey published Thursday by the Los Angeles Times showed that a majority= =20 of Californians agree with Davis that energy companies have manipulated the= =20 electricity market to boost their profits. Nearly half of those polled also= =20 gave Davis low marks for his handling of the crisis. Still, he received=20 nearly four times as much support as Bush.=20 More than 60 percent of respondents deemed the energy crisis the state's to= p=20 problem and more than half believe there hasn't been enough progress to=20 resolve it.=20 The Times interviewed 1,541 residents over four days beginning Saturday. Th= e=20 paper said the poll had a margin of error of plus or minus 3 percentage=20 points.=20 Jones made no reference in his speech to his Republican opponents by name,= =20 but noted that he's the only GOP candidate to have won statewide elections= =20 twice. Outgoing Los Angeles Mayor Richard Riordan, a moderate Republican wh= o=20 has endorsed Democrats in the past, is contemplating a run for the office,= =20 and businessman William E. Simon Jr. recently announced his candidacy.=20 In an interview with The Associated Press, Jones criticized Riordan for=20 having crossed party lines in partisan races with both endorsements and=20 donations. Jones also trumpeted his own experience as a longtime lawmaker a= nd=20 faithful Republican and noted that Simon hasn't held statewide office.=20 Congress Reacts Sluggishly to Bush's Energy Proposals=20 By JANET HOOK and RICHARD SIMON , Times Staff Writers=20 ?????WASHINGTON--More than a month after the White House unveiled its=20 national energy plan with great fanfare, President Bush's proposals are=20 languishing on Capitol Hill, casting doubt on whether Congress has the=20 political will to pass the kind of sweeping redirection of policy that Bush= =20 is seeking. ?????Several powerful trends are contributing to the impasse: Gasoline pric= es=20 are moderating across the country. So far, there have been no summer power= =20 outages in California. Members of Bush's own party are obstructing efforts = to=20 expand oil and gas drilling. And polls suggest the public isn't really sure= =20 if the country faces a true energy crisis. ?????Fearful that one of its signature policy initiatives has been all but= =20 unplugged, the administration fought back Thursday by launching a new publi= c=20 relations offensive. ?????Leaders of both parties still promise passage of energy legislation=20 later this year, but it seems increasingly likely to be far less sweeping= =20 than the bold action sought by Bush and Vice President Dick Cheney.=20 ?????Many Republicans, for example, have broken ranks with the White House = on=20 oil and gas exploration in Alaska's Arctic National Wildlife Refuge. ?????Last week, the House voted to ban drilling off the Florida coast and i= n=20 national monuments. And Thursday, a sizable contingent of House Republicans= =20 teamed with Democrats to ban drilling under the Great Lakes. ?????"We're worried about it," acknowledged Majority Leader Dick Armey=20 (R-Texas). "Those votes were disturbing." ?????"Of course, we're discouraged," added Rep. W.J. "Billy" Tauzin (R-La.)= ,=20 chairman of the House Energy and Commerce Committee. ?????Democrats aren't getting their way either. Their proposals to impose= =20 rigid price caps on electricity in the West are going nowhere in the House,= =20 and Senate sponsors are holding off on pursuing the issue. ?????To be sure, probably nothing would help Bush's energy plan more than a= n=20 ugly summer of blackouts in California to stoke the nation's sense of urgen= cy=20 about the problem. One reason political momentum has flagged, analysts say,= =20 is the perception that the crisis is abating in California and elsewhere. ?????"The urgency in California is starting to dissipate," said Sen. John B= .=20 Breaux (D-La.), who supports much of the Bush plan but put the chances of= =20 passage of comprehensive energy legislation at no better than 50-50. "There= 's=20 less of a rush" to act. ?????"The shoe isn't tight enough," said Sen. Frank H. Murkowski (R-Alaska)= ,=20 who until recently was the chairman of the Senate Energy and Natural=20 Resources Committee. "The prices aren't high enough." ?????Noted Stephen Bell, chief of staff to Sen. Pete V. Domenici (R-N.M.), = a=20 senior member of the Senate Energy and Natural Resources Committee: "The=20 momentum behind a comprehensive energy package has seriously dissipated. Th= e=20 truth is, not many people have any idea what to do." ?????Bush sought to put the spotlight back on his plan Thursday by announci= ng=20 $86 million in federal grants to encourage educational institutions and=20 private firms to develop more efficient fuel technologies. ?????He also unveiled a variety of actions to curb energy use within the=20 federal bureaucracy, including setting new standards for "vampire" electric= al=20 devices that drain energy even when not in use. These devices include many= =20 consumer products and household appliances. ?????Bush Cites Need for 'Wise Choices' ?????"Our nation must have a strategy, a broad, comprehensive energy strate= gy=20 that calls upon the best of the nation's entrepreneurs to help us develop t= he=20 technologies necessary to make wise choices in the marketplace as well as= =20 calls upon our nation's innovative technologies to help us find new sources= =20 of energy," he said.=20 ?????Referring to California, Bush said he was "pleased to see" a new power= =20 plant come on line Wednesday in Kern County, calling it "the beginnings of= =20 what is a rational energy policy that will help the good people of Californ= ia=20 get out from underneath 10 years of neglect." ?????Congressional Republicans, many of whom are heading home today for a= =20 weeklong recess, have been armed with talking points, computer presentation= s=20 and briefing papers to tout Republican energy plans at town hall meetings= =20 with constituents. White House strategists are meeting daily to plot strate= gy. ?????"The president has taken many steps to help people who are feeling the= =20 energy crunch right now," said Jim Wilkinson, a White House official involv= ed=20 in the effort. "It's up to us to make sure they know he's fighting for them= ." ?????That effort is driven, in part, by GOP concerns that Democrats have be= en=20 promoting their solution to the West's electricity crisis--price=20 controls--without an aggressive Republican rejoinder. ?????Democrats, especially in the House, continue to see political advantag= e=20 in the issue. They believe that if energy woes intensify in California and= =20 around the country this summer, Republicans will bear the political blame i= f=20 they are seen as doing nothing to remedy the problem. ?????On Wednesday, House Democrats began circulating a petition to force=20 Republican leaders to bring price-control legislation to a vote.=20 Congressional investigators, prodded by Democrats, are pressing Cheney to= =20 release records of private meetings held with special interests during=20 drafting of the energy plan. If the documents are not provided, subpoenas= =20 could be issued. ?????The contrast with the way Congress considered Bush's tax cut is=20 striking. Both issues were central to Bush's campaign for the presidency.= =20 After he became president, the House began work on his tax cut even before = he=20 submitted a formal plan. And the entire bill barreled through Congress in a= =20 mere four months. ?????But his energy initiative met with more ambivalence from the outset.= =20 ?????"It's not like taxes, where the Democrats knew they were in trouble on= =20 the issue," said David M. Nemtzow, president of the Alliance to Save Energy= ,=20 a Washington-based coalition of business, consumer, government and=20 environmental advocates. "Democrats are gleeful about picking a fight on=20 energy." ?????Even as Cheney was unveiling the plan in mid-May, Republicans were=20 expressing reservations about key elements. The proposal to expand energy= =20 exploration in the Arctic refuge was treated as dead on arrival. A proposal= =20 to empower federal authorities to condemn private property for new power=20 lines met with immediate opposition, even from conservatives within Bush's= =20 own party. ?????Polls show widespread public concern about the environmental effects o= f=20 the energy proposals.=20 ?????"On offshore drilling, [tougher sport-utility vehicle fuel economy]=20 standards, more emphasis on conservation, you see Republicans not all that= =20 different from Democrats," said Carroll Doherty, political analyst at the P= ew=20 Research Center for the People and the Press. ?????Meanwhile, action by the Federal Energy Regulatory Commission to=20 restrain utility price hikes in California and the West has eased pressure = on=20 Congress to act. ?????The change of leadership in the Senate also has had a big effect.=20 Republicans had planned to bring up an energy bill in June but lost control= =20 of the Senate after Sen. James M. Jeffords of Vermont left the GOP and beca= me=20 an independent. ?????Democrats, instead, brought up legislation to expand patients' legal= =20 rights in dealing with health maintenance organizations. ?????Senate Majority Leader Tom Daschle (D-S.D.) said he would move energy= =20 legislation in the "not too distant future." He didn't say exactly what wou= ld=20 be in the bill but added that one thing certainly would not be: Bush's=20 proposal to expand drilling in Alaska's wildlife refuge. ?????Republicans plan to hammer Democrats during the July recess, arguing= =20 that they have relegated the nation's growing energy needs to the back burn= er. ?????In the House, where Republicans are still in the majority, leaders hav= e=20 asked committees that handle pieces of energy policy to draft their part of= =20 the legislation by mid-July, in hopes of bringing it to the floor before th= e=20 August recess. ?????But it's not clear how far they can go in pushing Bush's proposals to= =20 increase energy production. ?????"What's striking is that even Republicans are unenthusiastic about the= =20 administration's energy plan," said Marshall Wittmann, senior fellow at the= =20 conservative Hudson Institute, citing recent anti-drilling votes in the=20 GOP-controlled House. "If you can't make it there, you can't make it=20 anywhere." ?????Senate Energy Committee Chairman Jeff Bingaman (D-N.M.), who met with= =20 Bush at the White House on Thursday, said he hopes to draft a comprehensive= =20 bill that would put more emphasis on promoting conservation, energy=20 efficiency and renewable energy sources. But he doubted it would be ready t= o=20 move to the Senate floor until after the summer recess. ?????Both Parties' Bills May Be Combined ?????Efforts are underway to consolidate common features of Democratic and= =20 Republican energy bills into a package that could be acted upon quickly. ?????Such a measure would likely include provisions to promote conservation= ,=20 offer tax credits for buying fuel-efficient gas-electric hybrid cars, reduc= e=20 the patchwork of gasoline recipes blamed for contributing to price spikes a= nd=20 supply shortages, boost energy assistance to low-income people, and extend = a=20 law limiting the liability of nuclear power plants in the event of an=20 accident.=20 ?????The administration also is moving ahead to implement a number of=20 directives that can be carried out by executive order or through the action= s=20 of regulatory agencies, without requiring congressional approval. ---=20 ?????Times staff writer Edwin Chen contributed to this story. Copyright 2001 Los Angeles Times=20 Senate Panel Lashes Out at 2 Energy Firms=20 Hearings: Lawmakers hold Enron and Mirant in contempt for refusing to help = in=20 pricing probe.=20 By CARL INGRAM, Times Staff Writer=20 ?????SACRAMENTO--Angered by the refusal of electricity wholesalers to=20 surrender information about suspected price gouging, a Senate committee vot= ed=20 Thursday to hold two big energy companies in contempt of the Legislature. ?????It was uncertain what punishment, if any, may be in store for Enron=20 Corp. of Houston and Mirant Corp. of Atlanta. But committee members said=20 potential sanctions could include heavy fines and/or the jailing of corpora= te=20 executives. ?????"Jailing of an individual is an option and we intend to preserve all o= ur=20 options," warned state Sen. Joe Dunn (D-Santa Ana), chairman of the committ= ee=20 investigating whether the wholesalers had manipulated the market.=20 ?????"Could we impose, say, $9 billion in fines?" Sen. Debra Bowen (D-Marin= a=20 del Rey) asked rhetorically.=20 ?????Enron reacted angrily. "This is a shakedown," charged spokesman Mark= =20 Palmer. "And if this is a shakedown, we're going to protect our legal right= s." ?????Enron had further enraged the committee by sending a letter saying the= =20 legislative panel had no authority to conduct its investigation because=20 wholesale prices were the "exclusive jurisdiction" of the Federal Energy=20 Regulatory Commission. ?????A spokesman for Mirant said the company intends to keep talking to the= =20 committee to reach an agreement. ?????The bipartisan committee had been prepared to find eight=20 generators--mostly out-of-state companies--in contempt for refusing to=20 produce the subpoenaed records. But by the end of the four-hour hearing,=20 companies that said they would cooperate--AES, Duke, Dynergy, NRG, Reliant= =20 and Williams--escaped a citation, at least temporarily. ?????Though the committee found Enron and Mirant in contempt, its action is= =20 subject to ratification by the full Senate. ?????Dunn said contempt citations are so rare there are few guidelines to= =20 follow in determining a punishment. He said it "could be anything that the= =20 Senate believes is necessary and reasonable." ?????The finding of contempt for failure to obey a legislative subpoena is= =20 rarely used in California. Sources said it last was done in 1929 when an=20 officer of a cement company refused to cooperate in a price-fixing=20 investigation. ?????Late in 2000 and earlier this year, the profits of major electricity= =20 wholesalers soared astronomically, throwing the state's two biggest=20 utilities, Pacific Gas and Electric Co. and Southern California Edison Co.,= =20 into financial chaos. Edison is teetering on bankruptcy and PG&E is in=20 Bankruptcy Court. ?????The committee, which first asked the companies to provide the=20 information voluntarily in April, encountered strong resistance from the=20 energy companies. They complained that their trade secrets might be exposed= =20 to competitors, the public and government regulators. ?????Frustrated, the committee two weeks ago issued subpoenas demanding the= =20 information, including whether the power sellers had destroyed any records. ?????The committee set Thursday as the deadline for compliance and threaten= ed=20 to find violators in contempt, a tactic that appeared to turn around all bu= t=20 Enron and Mirant. ?????"Let's move forward. We want to facilitate your investigation," said= =20 Duke attorney Joel Kleinman of Washington, whose company had objected to it= s=20 subpoena. ?????At the last minute, several sellers began sending urgent fax letters o= r=20 witnesses to Dunn. Dunn said a quick scan of the letters showed wholesalers= =20 were pleading for a second chance and assuring that the subpoenaed data wou= ld=20 be forthcoming. ?????Kleinman told the committee Duke did not want to be held in contempt. ?????"We will make tens of thousands of documents available for inspection,= "=20 Kleinman said. ?????But he said Duke and the committee staff still must settle on a=20 confidentiality agreement, a matter he indicated was close to resolution.= =20 Other wholesalers appeared to fall into line. ?????Dunn said he was concerned that "minor problems" in reaching a=20 confidentiality agreement might become a tactic for further delay. ?????The committee gave the six companies until July 10 to reach=20 confidentiality agreements and turn over a vast assortment of records. ?????The contempt finding against Mirant and Enron would be abandoned if=20 they, too, provided the confidential documents by July 10, when the committ= ee=20 will review the companies' compliance. ?????The wholesalers also are the targets of similar investigations by Atty= .=20 Gen. Bill Lockyer and the state Public Utilities Commission. ---=20 ?????Times staff writer Nancy Vogel contributed to this story. Copyright 2001 Los Angeles Times=20 California Senate committee cites power companies for contempt for=20 withholding documents JENNIFER COLEMAN, Associated Press Writer Friday, June 29, 2001=20 ,2001 Associated Press=20 URL:=20 http://www.sfgate.com/cgi-bin/article.cgi?file=3D/news/archive/2001/06/29/n= ation al0450EDT0476.DTL=20 (06-29) 01:50 PDT SACRAMENTO, Calif. (AP) --=20 A Senate committee investigating possible price manipulation in California'= s=20 energy markets cited two power generators for not turning over documents=20 requested for the probe.=20 The documents -- which include details on bidding, pricing and other aspect= s=20 of power sales -- had been requested in subpoenas issued earlier this month= =20 to Enron Corp., Mirant Inc. and four other generating companies.=20 On Thursday, the Senate Select Committee to Investigate Market Manipulation= =20 approved a contempt motion, citing Enron and Mirant for not producing the= =20 materials. The other four generators complied.=20 The motion still needs approval by the full Senate.=20 The Senate Rules Committee had subpoenaed the materials.=20 Enron, based in Houston, said its documents are outside the committee's=20 jurisdiction because they are kept in Texas. An attorney for Atlanta-based= =20 Mirant said the company wanted to comply, but did not act quickly enough to= =20 avoid the contempt vote.=20 California law does not specify penalties for a contempt finding, said=20 Laurence Drivon, the committee's special counsel. "The Senate can take such= =20 action as it deems necessary and appropriate," he said.=20 Enron's claim that the committee lacked jurisdiction outraged some senators= ,=20 who said previous legislative investigations have sought documents from=20 throughout the world.=20 "If they've done nothing, if they've got nothing to hide, there's no reason= "=20 not to comply, Sen. Debra Bowen said.=20 The committee has been negotiating with the companies to try to reach a=20 confidentiality agreement for the release of the documents, and has asked t= he=20 generators to sign agreements not to destroy any potentially relevant=20 documents.=20 So far, some companies have agreed verbally, but none has signed.=20 Duke Energy agreed to comply with the subpoenas and store documents in a=20 repository in Sacramento, if the company and the committee can agree on how= =20 to keep the documents confidential. Lawyers for both sides said they could= =20 work out an agreement.=20 Enron and Mirant can have the contempt citations withdrawn if they turn ove= r=20 the requested documents to the repository by July 10.=20 On the Net:=20 Senate select committee:=20 www.sen.ca.gov/ftp/sen/committee/select/INVESTIGATE/_home1/PROFILE.H TM=20 Enron: www.enron.com=20 Mirant: www.mirant.com=20 ,2001 Associated Press ?=20 California oil refineries exempt from rolling blackouts=20 KAREN GAUDETTE, Associated Press Writer Friday, June 29, 2001=20 ,2001 Associated Press=20 URL:=20 http://www.sfgate.com/cgi-bin/article.cgi?file=3D/news/archive/2001/06/29/s= tate1 545EDT0208.DTL=20 (06-29) 00:02 PDT SAN FRANCISCO (AP) --=20 Rolling blackouts will no longer threaten the oil refineries that produce= =20 more than a third of California's gasoline supply.=20 State power regulators voted unanimously Thursday to exempt the refineries= =20 and associated pipelines and chemical factories from power outages, ensurin= g=20 a stable fuel supply and helping keep gasoline prices from rising at the=20 height of the summer driving season.=20 An outage of even a minute can knock a refinery out of service for up to a= =20 week, the California Energy Commission told state power regulators.=20 Carl Wood, a member of the state Public Utilities Commission, said he=20 proposed the exemption after the petroleum industry, Gov. Gray Davis, the= =20 Legislature and the California Energy Commission warned the PUC that the ga= s=20 supply could drop and prices could soar without quick action.=20 "The importance of the petroleum industry to California's economy has been= =20 recognized by the Legislature," Wood said.=20 The vote affects 13 refineries in Pacific Gas and Electric Co. and Southern= =20 California Edison territory.=20 Four oil refiners -- Valero Energy, Tosco, Exxon Mobil and Equilon=20 Enterprises -- had petitioned for blackout exemptions at their facilities= =20 which produce about one-fourth of the state's refining capacity. That's abo= ut=20 2.3 million barrels a day.=20 The state's largest refiner, San Francisco-based Chevron Corp., bypassed th= e=20 PUC and told Davis it would stop production at its two California refinerie= s=20 if regulators and state lawmakers did not protect them from blackouts.=20 Chevron controls about 18 percent of the state's refining capacity.=20 The PUC is still reviewing applications from nearly 10,000 other businesses= =20 which hope to be protected from rolling blackouts. Wood said exempting the= =20 refineries only accounts for one percent of the pool of customers that can= =20 receive outages. That means the PUC can exempt only 9 percent more from tha= t=20 pool when it decides in August who will get to keep their lights on and the= ir=20 businesses running when blackouts roll through.=20 On the Net:=20 www.cpuc.ca.gov/=20 ,2001 Associated Press ?=20 Conservation funds restored to energy legislation by Bush=20 New York Times Friday, June 29, 2001=20 ,2001 San Francisco Chronicle=20 URL:=20 http://www.sfgate.com/cgi-bin/article.cgi?file=3D/chronicle/archive/2001/06= /29/M N73892.DTL=20 Washington -- President Bush sent Congress proposed energy legislation=20 yesterday that includes the restoration of nearly $300 million for=20 Clinton-era research programs on energy conservation.=20 The conservation money came after a series of polls showed that Americans= =20 believed Bush's energy plans were primarily about helping oil companies and= =20 drilling in the Arctic, rather than encouraging energy savings.=20 Bush's focus on conservation runs contrary to earlier dismissive references= =20 made by Vice President Cheney, who suggested that conservation did not=20 constitute an energy strategy.=20 In addition to restoring the research funds, Bush called for federal and=20 corporate work on small devices called "vampire slayers" that could cut the= =20 power consumption of appliances that draw electricity as they await use --= =20 copiers, fax machines and cell-phone chargers.=20 Environmental groups said Bush was avoiding mention of conservation measure= s=20 that could prove far more effective, such as raising fuel-efficiency=20 standards for cars.=20 "Everything he did on the standby power problem is good, but it is=20 comparatively small potatoes," said David Nemtzow, president of Alliance to= =20 Save Energy, which has been lobbying for more conservation measures. Both= =20 mileage standards and restoring the Clinton administration's proposals on a= ir=20 conditioner efficiency would save far more power than anything the presiden= t=20 discussed yesterday, he said.=20 ,2001 San Francisco Chronicle ? Page?A - 7=20 Refineries exempt from blackouts=20 Oil firms' support services also shielded=20 Bernadette Tansey, Chronicle Staff Writer Friday, June 29, 2001=20 ,2001 San Francisco Chronicle=20 URL:=20 http://www.sfgate.com/cgi-bin/article.cgi?file=3D/chronicle/archive/2001/06= /29/M N168779.DTL=20 Yielding to appeals from Gov. Gray Davis and industry officials, state=20 regulators exempted oil refineries yesterday from rolling blackouts that ma= y=20 sweep California this summer if electricity supplies run short.=20 The state Public Utilities Commission shielded the state's 13 refineries fr= om=20 service interruptions that Chevron and other companies said could disrupt= =20 gasoline production for weeks and increase prices.=20 The new exemption also covers some support services, such as waste- treatme= nt=20 plants and contractor firms, that the oil companies maintain are essential = to=20 keep the refineries running.=20 The decision is good news for motorists, said Scott Folwarkow, a spokesman= =20 for the Valero refinery in Benicia.=20 "California has a tight supply-demand balance (for gasoline)," Folwarkow=20 said. "By ensuring that refineries are exempt from blackouts, you should no= t=20 have shortages that could translate into higher prices at the pump."=20 The commission had stripped the refineries of exemptions earlier this year = as=20 California's utilities tried to prune the ranks of customers immune from=20 blackouts to eliminate any that did not qualify as "essential services," su= ch=20 as hospitals and fire stations. To avoid a power system crash, the utilitie= s=20 must each have 40 percent of their customers vulnerable to blackouts.=20 During power emergencies, customers on numbered circuits known as "blocks"= =20 take their turn suffering interruptions that may affect no more than one=20 block and last for two hours or less.=20 But refinery officials warned that even brief blackouts that forced units t= o=20 shut down suddenly could damage equipment and halt production for days or= =20 weeks.=20 In response to the industry call for a blanket refinery exemption, the PUC = in=20 May invited not only refineries but all other businesses to make their case= =20 that public health or safety could be threatened if they were not spared fr= om=20 breaks in service. Those applications are now being considered by a=20 consultant,=20 and the commission is not scheduled to act on them until August.=20 But as summer approached, Chevron sent a letter to Davis warning that it=20 would cut back production at its two refineries in Richmond and El Segundo = if=20 the company could not be assured of a reliable power supply. Chevron said i= t=20 would produce only at levels that could be supported by its cogeneration=20 plants.=20 Davis followed up with a letter to the PUC urging a blanket refinery=20 exemption, a measure supported by the California Energy Commission, state= =20 Assemblyman Joe Canciamilla, D-Pittsburg, and other state officials.=20 Chevron spokesman Fred Gorell said the PUC action yesterday was "good publi= c=20 policy and in the best interest of California consumers."=20 "This provides the reliability we need to operate at or near capacity,"=20 Gorell said.=20 E-mail Bernadette Tansey at btansey@sfchronicle.com.=20 ,2001 San Francisco Chronicle ? Page?A - 7=20 Officials criticize energy report=20 Posted at 8:06 p.m. PDT Thursday, June 28, 2001=20 BY CHRIS O'BRIEN=20 Mercury News=20 California's energy crisis is expected to increase unemployment, reduce=20 production and aggravate an already weakening economy, according to=20 researchers at the University of California-Los Angeles.=20 The impact, however, will likely depend on how state officials choose to de= al=20 with the failed deregulation scheme. The authors of the report released=20 Thursday come down heavily in favor of lifting price controls and=20 dramatically increasing the price consumers pay as a way to reduce the=20 economic fallout.=20 ``California's economy is sufficiently large and dynamic that it will weath= er=20 the current power crisis without being derailed,'' the report says.=20 ``However, our analysis reveals that this impact can be moderated by an=20 approach that does not shift today's problems to tomorrow.''=20 The study, ``Short Circuit: Will the California Energy Crisis Derail the=20 State's Economy,'' came under fierce criticism from Gov. Gray Davis' office= .=20 Steven Maviglio, Davis' spokesman, said many of the assumptions used to=20 produce the report are either outdated or flat wrong.=20 ``It deserves its rightful place sitting on the shelf gathering dust,''=20 Maviglio said. ``Like any crystal-ball report, it's essentially irrelevant.= ''=20 Edward Lamer, a UCLA professor, and Christopher Thornberg, a visiting=20 professor at UCLA, collaborated on the report with a team of researchers fr= om=20 the Cambridge Energy Research Associates.=20 The study concludes that California's gross state product will be cut by=20 anywhere from .7 percent to 1.5 percent in 2001 as a result of the energy= =20 crisis. In addition, energy problems will increase unemployment by .5 perce= nt=20 in 2001 and 1.1 percent in 2002. The report predicts consumers can expect 1= 12=20 hours of rolling blackouts this year.=20 However, the report argues that the impact could be dramatically reduced if= =20 the state would raise the price consumers pay for energy to match the=20 wholesale costs. This could reduce blackouts to 12 hours, lower the debt an= d=20 interest the state will have to pay for electricity and encourage investmen= t=20 in the state to increase energy supplies.=20 But Peter Navarro, a management professor at the University of=20 California-Irvine, was skeptical of the report's findings. He said it was= =20 almost impossible to build models complex enough to take into account all t= he=20 factors that affect energy prices in the state.=20 In addition, he said the report seems to assume that there is no manipulati= on=20 of the current market, which Navarro argues could be distorting prices as= =20 well.=20 ``How do you justify raising retail rates to 45 cents for power that costs = a=20 nickel to generate when there is some evidence that the market is flawed?''= =20 Navarro said. ``This report seems to have an industry point of view and an= =20 industry agenda.''=20 Contact Chris O'Brien at cobrien@sjmercury.com or (415) 477-2504.=20 Extra `power plant' shows deregulation can spur innovation=20 Published Friday, June 29, 2001, in the San Jose Mercury News=20 CALIFORNIA fired up a medium-sized power plant on Wednesday, and might be= =20 about to discover another one hiding in the electric grid.=20 The first is of the steel-and-concrete variety. The Sunrise Cogeneration an= d=20 Power Project near Bakersfield is a 320-megawatt plant, generating power fo= r=20 some 240,000 homes. The plant will be eligible for a $1 million bonus for= =20 opening ahead of schedule. But while the construction was speeded along by= =20 new state policies, the application for the plant was filed in December 199= 8.=20 The plant illustrates both the previous unhurried permit process and the=20 current speedy one.=20 More intriguing is the second ``power plant,'' which is not a plant at all,= =20 but a way of operating the grid to squeeze more electricity out of it.=20 Scientists and technicians think that reducing the voltage coming into home= s=20 from 120 volts to 117 volts would save the equivalent of 500 megawatts=20 statewide.=20 We'll take their word for it. But in any event, such a reduction evidently= =20 would not damage appliances or electronic equipment. If that's true, it=20 should be implemented. It's a free power plant.=20 Encouraging such ingenuity is one benefit of a deregulated market in=20 electricity. Gas Co. to give consumers nearly 50% price break in July=20 An average user can expect to save $5.73 compared with a year ago.=20 June 29, 2001=20 By KATE BERRY The Orange County Register=20 After months of paying the highest natural-gas prices in the country,=20 consumers in Southern California will get some relief this summer. Southern= =20 California Gas Co. said it will cut gas prices nearly 50 percent on July=20 bills, the largest drop in four years.=20 The Gas Co. will cut its price per therm to 27 cents for July bills,down fr= om=20 52.1 cents in June and 46.1 cents in July 2000. A therm is a measure of hea= t=20 energy. It takes 0.02 therm to brew a pot of tea.=20 An average consumer who uses roughly 30 therms a month can expect to pay=20 $20.10, including distribution charges, on the July gas bill, vs. $25.83 a= =20 year ago, said Ed van Herik, a spokesman.=20 The company is required to reduce consumer rates when wholesale gas prices= =20 fall. The San Diego-based utility, which supplies 5 million households with= =20 gas, had raised prices as high as 74 cents per therm in March because of a= =20 shortage of natural-gas supplies.=20 Prices have fallen because the company is buying natural gas mostly from=20 producers in the Southwest, rather than at the California border, where=20 prices are higher, spokeswoman Denise King said.=20 Border prices are the subject of investigations by federal regulators. El= =20 Paso Energy Corp. of Houston, the major gas supplier to Southern California= ,=20 is the target of federal inquiries to determine why gas prices in Californi= a=20 are so much higher than in other parts of the country.=20 The wholesale cost of natural gas delivered to Southern California has rang= ed=20 from $11 per million British thermal units earlier this month to as much as= =20 $60 per million Btus in December.=20 On Thursday, prices at hubs in the Western region fell to as low as $3.34 p= er=20 million Btu.=20 California Municipal Electric Utility Launches Apogee Demand Exchange to=20 Reduce Peaks=20 June 29, 2001=20 ATLANTA--(BUSINESS WIRE)--June 28, 2001 via NewsEdge Corporation -=20 Sacramento Municipal Utility District (SMUD), one of California's largest= =20 municipal electric utilities, is using Apogee Interactive's Demand=20 Exchange(SM) Internet platform to reduce peak electric loads with its=20 commercial and industrial customers. With SMUD's voluntary, web-based=20 programs EnergyNet (Demand-Bid) and EnergyDirect (Direct Load Control), SMU= D=20 offers customers financial incentives in exchange for load reductions. All= =20 communication and transactions are conducted over the web and customers are= =20 given anywhere from one hour to two days to plan ahead for reduced electric= al=20 use.=20 Using The Demand Exchange website, EnergyNet customers review SMUD's offere= d=20 price for upcoming peak periods and automatically calculate what their=20 financial savings will be using various load reduction scenarios. If they= =20 elect to participate, they submit their pledge over the website.=20 "For us the key to making a curtailment program work is automation. The=20 Demand Exchange platform lets us notify many customers simultaneously, see= =20 how they plan to respond, and streamline the process of posting bill credit= s=20 associated with those customers' participation," said Harlan Coomes, progra= m=20 manager for SMUD.=20 SMUD is just one of the California utilities using The Demand Exchange. The= =20 California Energy Commission has approved The Demand Exchange as one of six= =20 key components in its Peak Load Reduction Program menu.=20 "The Demand Exchange offers customers an easy way to reduce costs and=20 utilities an effective way to aggregate relatively small individual loads t= o=20 achieve significant system-wide impact at enormously reduced administrative= =20 costs," said Joel Gilbert, chief executive officer of Apogee.=20 The number of utilities using The Demand Exchange has jumped to more than 2= 5,=20 including San Diego Gas & Electric Co. (NYSE: SRE), Portland General=20 Electric, Entergy (NYSE: ETG), GPU Energy (NYSE: GPU) and Southern Company= =20 (NYSE: SO). Apogee projects the Exchange will facilitate 100,000=20 megawatt-hours in peak load reductions this summer and twice that amount by= =20 the end of the year.=20 SMUD's EnergyNet and EnergyDirect programs are a cooperative effort between= =20 SMUD, Apogee Interactive, ABB Energy Interactive Inc. and Stonewater=20 Software.=20 Formed in 1994, Apogee is a leading provider of Internet solutions, web=20 content and e-learning courseware to the energy industry. Apogee's clients= =20 include all of the major U.S. investor-owned utilities and many of the=20 country's cooperatives and municipal systems. Company information is=20 available at www.apogee.net.=20 CONTACT: Apogee Interactive | Kathy Hart | Mobile: 404/271-1489 | Office:= =20 770/270-6512 | Fax: 770/270-6532 | khart@apogee.net Financial=20 Greenspan Unafraid Of Energy Price Caps; Calif. Problems Ease, Fed Chief Sa= ys John M. Berry ?=20 06/29/2001=20 The Washington Post=20 FINAL=20 Page E03=20 Copyright 2001, The Washington Post Co. All Rights Reserved=20 In a broad analysis of the state of U.S. energy markets, Federal Reserve=20 Chairman Alan Greenspan last night disagreed sharply with the Bush=20 administration's argument that capping spot prices for electricity in=20 California would discourage construction of new power plants.=20 Greenspan, in a speech to the Economic Club of Chicago, argued exactly the= =20 opposite.=20 "Analogies to the economics of office buildings are evident," Greenspan sai= d.=20 "Few office buildings would be constructed in the absence of the ability to= =20 reach long-term leases. Short-term rental agreements are no more conducive = to=20 new office construction than spot prices for electric power are to the=20 building of new power plants." A copy of the text was released in Washingto= n.=20 California 's energy problems appear to be easing, but they still represent= a=20 "worrisome situation for Californians, certainly," Greenspan said. "And=20 because the state comprises one-eighth of our national [economy], it should= =20 be a concern for the U.S. economic outlook as well. Fortunately, the overal= l=20 effects on the California economy, and on those of its neighboring states,= =20 seems to have been modest, at least to date."=20 Greenspan noted that large increases in the cost of gasoline and other=20 petroleum products, natural gas, and electricity have hurt the U.S. economy= =20 in several ways. The most significant is the reduced profitability of=20 non-energy firms, which has forced many companies to reduce spending for ne= w=20 plants and equipment.=20 "As best we can infer, a substantial part of the rise in the total costs of= =20 corporations between the second quarter of last year and the first quarter = of=20 this year reflected higher energy costs, only a small part of which compani= es=20 apparently were able to pass through into higher prices" of the things they= =20 sell, he said.=20 Most recently, however, natural gas prices "have fallen significantly" and = so=20 have gasoline prices, particularly in the Midwest, Greenspan said. "=20 Electricity power costs continued to rise through May, but overall energy= =20 prices paid in April and May were down from the levels of the first quarter= ,=20 suggesting some easing in pressures on profit margins from energy this=20 quarter."=20 Greenspan cautioned that "because of the unpredictability of events in the= =20 Middle East," crude oil supplies are never fully secure. "Nonetheless, it i= s=20 encouraging that in market economies, well-publicized forecasts of crises,= =20 such as earlier concerns about gasoline price surges this summer, more ofte= n=20 than not fail to develop, or at least not with the frequency and intensity= =20 proclaimed by headline writers."=20 Greenspan said it was necessary to rely on market forces to guide both ener= gy=20 production and consumption. "In the short run, energy markets must be=20 monitored closely for their potential effects on the cyclical behavior of t= he=20 macro economy," he said. "Over the longer haul, the experience of the past = 50=20 years -- and indeed much longer than that -- suggest the central role that= =20 can be played by market forces in conserving scarce energy resources,=20 directing those resources to their highest valued uses, and ultimately=20 ensuring adequate productive capacity for the future."=20 By Greenspan's analysis, California made a serious mistake by insisting tha= t=20 companies supplying power to retail customers buy that power only on the sp= ot=20 market.=20 http://www.washingtonpost.com=20 Contact: http://www.washingtonpost.com=20 Economy=20 Federal Energy Panel Approves Power Price Controls for New York By Andrew Caffrey ?=20 06/29/2001=20 The Wall Street Journal=20 Page A2=20 (Copyright © 2001, Dow Jones & Company, Inc.)=20 Federal energy regulators, who last week authorized electricity price=20 controls for California and 10 other Western states, yesterday approved a= =20 plan by New York officials to curb price spikes in that state's volatile=20 wholesale electricity markets.=20 However, the Federal Energy Regulatory Commission expressed concern that th= e=20 New York measure could restrict electricity prices that are legitimately=20 high. The agency, therefore, allowed the New York curbs only as a temporary= =20 measure through Oct. 31, which would see New York through the=20 high-power-demand summer months. State officials had sought approval for th= e=20 measure as a continuing tool to keep prices in check.=20 New York officials say the mitigation plan is necessary this summer to=20 prevent power generators from taking advantage of the state's tight supply= =20 market and charging excessive prices for electricity when demand is at its= =20 greatest.=20 The federal commission's approval is "an important step toward protecting= =20 energy consumers," New York Gov. George Pataki said in a statement. Mr.=20 Pataki's appointees at the New York Public Service Commission had first=20 pushed for the price-curb plan after concluding in December that the state'= s=20 wholesale power markets are "dangerously vulnerable to market power abuse= =20 during a normal or hotter- than-normal summer."=20 Under the plan, the New York Independent System Operator Inc., which=20 administers the state's wholesale trading markets, would automatically revi= ew=20 generators' bids when power prices exceed $150 a megawatt hour during perio= ds=20 of high demand or when many electric plants are offline. System Operator=20 officials would look for bids that are either $100 more or 300% higher than= a=20 historic average of bids from an individual facility to determine whether t= he=20 generator is trying to manipulate the market. If the generator can't offer = a=20 good explanation for its high bid, System Operator officials automatically= =20 would lower it to the historic average.=20 But the federal commission was hardly enthusiastic about the New York plan.= =20 The agency sided with power generators in contending the New York plan woul= d=20 allow officials to cancel high bids in cases lacking evidence of generators= '=20 trying to manipulate the market. The federal commission, saying the plan=20 should be only a "temporary solution," also expressed concern that the syst= em=20 wouldn't allow for "sufficient consultation" with generators.=20 While expressing "disappointment" in the ruling, Gavin Donohue, executive= =20 director of the Independent Power Producers of New York Inc., said he was= =20 heartened that the federal commission "recognized there's problems" with th= e=20 new plan and applied it for a limited time period.=20 Mr. Pataki and New York Attorney General Eliot Spitzer both called on the= =20 federal commission to now authorize a separate pending proposal that would= =20 allow the New York System Operator to assess hefty fines and publicize the= =20 names of generators found to be charging excessive prices.=20 The federal commission's approval yesterday follows its decision last week = to=20 impose price controls on California and 10 other states in the Western powe= r=20 market. The Western states' plan differs from New York's in that it uses=20 California -specific energy data, such as natural-gas prices, to calculate = a=20 "proxy" price for electricity . That price is presumed "reasonable" and is= =20 applied, with minor variation, throughout the electrically interconnected= =20 11-state region. Generators can charge more, but, as in New York, may be=20 forced to justify higher prices to federal regulators. The proxy price now = is=20 $92 a megawatt hour.=20
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