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Sac Bee, Wed, 7/11: Mediator talked of a bigger refund: He reportedly suggested a $4.5 billion deal midway through the failed talks Sac Bee, Wed, 7/11: Davis repeats threat to sue FERC to get full refund Sac Bee, Wed, 7/11: Dan Walters: Davis plays in a virtual world while the= =20 energy reality continues=20 Sac Bee, Wed, 7/11: Energy Digest: Ratepayer panel shot down again Sac Bee, Wed, 7/11: Missing megawatts: Conservation saving state from=20 blackouts (Editorial) SD Union, Wed, 7/11: Governor tells FERC to be fair and then some SD Union, Wed, 7/11: Calpine says deal with state close on alleged overchar= ges SD Union, Wed, 7/11: Judge refuses to let ratepayers form official committe= e=20 in utility bankruptcy case LA Times, Wed, 7/11: Judge Bars Ratepayers Panel From PG&E Case SF Chron, Wed, 7/11: Developments in California's energy crisis SF Chron, Wed, 7/11: Enron Corp. sues to block Senate from forcing document= =20 release SF Chron, Wed, 7/11: Governor threatens to sue utilities for refunds=20 Davis says California won't settle for $1 billion SF Chron, Wed, 7/11: News briefs on the California power crisis Mercury News, Wed, 7/11: White House bends under energy conservation pressu= re=20 Mercury News, Wed, 7/11: Davis ups the voltage (Editorial) OC Register, Wed, 7/11: Lights go out on Davis' power show (Commentary) ---------------------------------------------------------------------------= --- ------------------------------------------------------------------------ Mediator talked of a bigger refund: He reportedly suggested a $4.5 billion= =20 deal midway through the failed talks. By David Whitney Bee Washington Bureau (Published July 11, 2001)=20 WASHINGTON -- Midway through the negotiations between California and power= =20 sellers to settle the myriad issues arising out of the state's energy crisi= s,=20 the mediator told California's negotiating team that he thought a deal wort= h=20 more than $4.5 billion would be appropriate -- a much higher figure than he= =20 suggested after the talks ended Monday.=20 Whether the statement by Curtis Wagner, the chief administrative law judge= =20 for the Federal Energy Regulatory Commission, was a negotiating ploy or a= =20 reflection of his evolving beliefs is not clear.=20 Before the settlement talks began two weeks earlier, Wagner said he thought= =20 Gov. Gray Davis' demand for $8.9 billion in refunds was too high and that a= =20 settlement probably would be in the range of $2 billion to $2.5 billion.=20 The disclosure that Wagner had contemplated a much higher figure midway=20 through the negotiations suggests the state had more support than the judge= =20 let on Monday when he said after the talks foundered that he thought a deal= =20 should involve "hundreds of millions, maybe a billion" dollars.=20 While the state wants $8.9 billion, $3 billion of that was for overcharges= =20 during the five months preceding last October and are beyond FERC's scope o= f=20 review. Even as a starting point then, the $4.5 billion mentioned by Wagner= =20 represented 75 percent of the money the state was demanding for alleged pri= ce=20 gouging between October and May.=20 The judge's $4.5 billion figure, divided between cash payments and savings= =20 from long-term power contracts, was confirmed by three sources who asked to= =20 be identified only as "close to the negotiations" because participants had= =20 been required to sign confidentiality statements.=20 The sources gave virtually identical accounts of a July 2 meeting with Wagn= er=20 in which the judge also dismissed as "inadequate" a $670 million settlement= =20 offer made by power generators and marketers.=20 By Monday, the settlement offer had risen to $716 million. But the state=20 refused to back off its $8.9 billion demand, and there never was any seriou= s=20 back-and-forth negotiations during the 15-day period the regulatory=20 commission had given Wagner to craft a deal.=20 As a consequence of the failed talks, Wagner said Monday that within a week= =20 he will send the five-member commission his recommendations on how it might= =20 approach an order refunding power overcharges.=20 Among Wagner's suggestions is that the commission convene a hearing before = a=20 different administrative judge to take testimony from generators, marketers= =20 and the state on how to arrive at a fair settlement.=20 The options sketchily outlined by Wagner on Monday included limiting the ti= me=20 when refunds are allowed -- something that could reduce state claims by abo= ut=20 one-third -- and changing the way power plant costs are calculated to a=20 formula more favored by generators.=20 It is not clear whether Wagner, who moved from one negotiating team to=20 another during his two-week quest for a deal, ever raised the $4.5 billion= =20 settlement figure to the power marketers and generators.=20 Joel Newton, who represented Dynegy Power, Duke Energy, Reliant Energy,=20 Williams-AES and Mirant in the talks, said Tuesday he was bound by the=20 confidentiality pledge to keep silent on the internal negotiations.=20 Wagner also is refusing all media calls.=20 According to the account of the negotiations confirmed by sources Tuesday,= =20 Wagner was angry at the snail's pace of progress after the first week of th= e=20 talks.=20 On Friday, June 29, Wagner called everyone into his hearing room and scolde= d=20 them. He condemned the California team, saying they all ought to wear "clow= n=20 suits" because they were "in the pocket" of Davis and refused to show any= =20 independence.=20 He then turned to the generators and said that after a week of talks, nothi= ng=20 had been heard from them. He told them he wanted them to produce "real=20 numbers, and hard numbers" over the weekend and that if they didn't, he wou= ld=20 -- "and you're not going to like it."=20 Wagner's admonition apparently moved no one toward a deal. On Monday, in th= e=20 meeting with the California delegation, one source quoted Wagner as saying= =20 the settlement number he received from the generators and marketers "is so= =20 low I can't even present it to you."=20 "I'm not happy with the figures, they're not adequate," others quoted the= =20 judge as saying.=20 At that point, the sources said, Wagner said he was thinking of a settlemen= t=20 of $2.5 billion in cash, $2 billion in long-term contract savings and other= =20 money from out-of-state investor-owned utilities and even the federal=20 Bonneville Power Administration, which markets power from dams in the=20 Northwest.=20 But as the clock wound down on the negotiations, nothing much happened unti= l=20 Friday and Saturday, when the California team met with the five largest pow= er=20 generators.=20 It was at those meetings that the generators offered $510 million in refund= s=20 to settle their disputes with the state. But the money would have gone to= =20 reduce the tab for what they were owed by the state and California utilitie= s,=20 and it was loaded with conditions, including the state dropping all of its= =20 investigations and lawsuits.=20 Wagner declared the talks over Monday, saying he was unable to bring the=20 parties together.=20 The Bee's David Whitney can be reached at (202) 383-0004 or=20 dwhitney@mcclatchydc.com. Davis repeats threat to sue FERC to get full refund=20 By Emily Bazar Bee Capitol Bureau=20 (Published July 11, 2001)=20 Gov. Gray Davis shot words of caution at federal regulators Tuesday, warnin= g=20 that he will sue them if they order power companies to refund anything less= =20 than the $8.9 billion he and other state officials have demanded.=20 The Democratic governor also lobbed threats at state legislators, suggestin= g=20 that he may call a special session to prevent them from embarking upon a=20 monthlong summer break next week.=20 Instead of vacationing, Davis said, lawmakers must work to approve an=20 agreement between the state and Southern California Edison that would save= =20 the utility from bankruptcy.=20 Though the governor has indicated previously that the state may take the=20 Federal Energy Regulatory Commission to court, his announcement Tuesday mad= e=20 it clear he intends to follow through.=20 Settlement talks with power generators to determine how much, if any, the= =20 companies overcharged California for electricity concluded Monday with no= =20 resolution.=20 Now, the decision rests with the FERC's governing board, and Davis said the= =20 state won't back away from the $8.9 billion figure it demanded during talks= .=20 "You order what you think is fair," Davis said during a news conference wit= h=20 the state's top negotiators. "We'll take what you order, and we'll see you = in=20 court."=20 Davis acknowledged that a legal battle could drag out for months or years.= =20 He added that he believes the disagreement -- or even a protracted court=20 battle -- will not affect a tentative agreement between the state and Ediso= n.=20 Under terms of the deal, money to pay off the utility's debt would come fro= m=20 a state purchase of its transmission lines and from a portion of consumers'= =20 electricity rates.=20 According to the agreement, the Legislature must approve the deal by Aug. 1= 5,=20 and Davis said he intends to hold lawmakers to that date.=20 Davis said the deadline is important because creditor committees will=20 scrutinize the Legislature's every move to determine whether to force Ediso= n=20 into bankruptcy court rather than await a political deal.=20 Legislators are scheduled to leave for summer recess July 20 and return Aug= .=20 20.=20 Davis threatened to use his executive powers to force lawmakers to remain i= n=20 Sacramento and work on the Edison agreement, if necessary.=20 The Bee's Emily Bazar can be reached at (916) 326-5540 or ebazar@sacbee.com= . Dan Walters: Davis plays in a virtual world while the energy reality contin= ues (Published July 11, 2001)=20 California still has a very real and very severe energy crisis, to wit:=20 The state is still running up massive debts as it pays more for power than = it=20 can recover from ratepayers and is having trouble borrowing billions of=20 dollars to cover the debt.=20 There is a strong possibility, perhaps a probability, that when summer's he= at=20 truly descends, there will be severe power blackouts as air conditioners=20 demand more juice than California can generate or buy.=20 One major utility, Pacific Gas and Electric, has filed for bankruptcy=20 protection and a second, Southern California Edison, is on the brink of=20 joining it.=20 There is, however, a virtual energy crisis consisting of political spin,=20 media leaks and made-for-television buzz words -- and it is rapidly becomin= g=20 dominant, while the real situation fades into the background.=20 This week's comic opera proceedings before a Federal Energy Regulatory=20 Commission administrative judge in Washington had little to do with reality= =20 and everything to do with the virtual version.=20 Gov. Gray Davis and other officials demanded $8.9 billion in refunds from t= he=20 generators and brokers who have been selling California power for the past= =20 year, alleging that California is, in Davis' words, "being gouged and rippe= d=20 off." But the number itself was more or less plucked out of thin air -- an= =20 arithmetic exercise by the state power grid's traffic controller not intend= ed=20 for a refund proceeding. And while Judge Curtis Wagner saw it as unrealisti= c,=20 Davis and other state officials insisted on its validity.=20 "There are refunds due that total hundreds of millions of dollars and maybe= a=20 billion dollars," Wagner said as a final negotiating session collapsed. But= =20 that's a far cry from the $8.9 billion that Davis insists is due. "If you= =20 think California is going to settle for $1 billion in refunds, we will see= =20 you in court," Davis said Tuesday.=20 Why is Davis being so belligerent? Because it's good politics. Ever since h= e=20 began berating out-of-state generators and accusing them of ripping off=20 California, Davis' approval ratings have been climbing. If he settled for= =20 substantially less -- the power generators probably would agree to a couple= =20 of billion dollars to rid themselves of the matter -- Davis would be=20 embarrassed. Politically, he's served by continuing to portray himself as= =20 fighting for California and against the out-of-state generators.=20 That it's more political construct than reality is indicated by another eve= nt=20 this week, Davis' release of state power purchase data from early in the ye= ar=20 -- numbers that were made public only because a judge told him he had to do= =20 it.=20 Davis and his minions have been accusing Texas-based generators and power= =20 brokers of particularly egregious price gouging -- clearly playing on=20 Californians' instinctive mistrust of anything Texan and implying that Texa= n=20 George W. Bush is a co-conspirator. But the power purchase records -- which= =20 were released only to journalists willing to pay a stiff fee -- indicate th= at=20 less than 10 percent of California's power purchase dollars were going to= =20 Texas and the private sellers, in general, charged the state less than such= =20 publicly owned utilities as the Los Angeles Department of Water and Power.= =20 The clearly adverse position being taken by FERC and the purchase data that= =20 undercut his jingoistic sloganeering are not, however, deterring Davis from= =20 continuing to operate, at least for public consumption, in the melodramatic= =20 virtual world.=20 One cannot, however, ignore reality forever. The likelihood of a=20 pro-generator decision from FERC means that there will be no easy out for= =20 Davis, or for his pending deal to prevent Southern California Edison from= =20 slipping into bankruptcy court. The Legislature has refused to act on the= =20 Edison rescue plan while it awaited an indication of whether the utility's= =20 debts would be slimmed down by FERC.=20 This week's farcical events make it more likely that the Edison deal will= =20 stall out permanently in the Legislature and its creditors will force the= =20 utility into bankruptcy court later this summer. That's part of that nasty= =20 old reality that cannot simply be wished away.=20 The Bee's Dan Walters can be reached at (916) 321-1195 or dwalters@sacbee.c= om . Energy Digest: Ratepayer panel shot down again (Published July 11, 2001)=20 SAN FRANCISCO -- U.S. Bankruptcy Judge Dennis Montali on Tuesday reaffirmed= =20 his earlier decision to disband a ratepayers committee that would have give= n=20 consumers an official voice in the Pacific Gas and Electric Co. bankruptcy= =20 case.=20 The judge said bankruptcy court isn't the right forum for refunding rates o= r=20 settling potential future claims.=20 He eliminated erroneous statements from the opinion he originally issued=20 seven weeks ago. U.S. bankruptcy trustee Linda Ekstrom Stanley, who had mov= ed=20 for reconsideration, called the new version "a very careful decision" but d= id=20 not rule out an appeal.=20 Stanley on May 4 appointed an official committee of ratepayers to represent= =20 PG&E customers, saying they might be forced to pay for the utility's massiv= e=20 losses.=20 --Claire Cooper Missing megawatts: Conservation saving state from blackouts (Published July 11, 2001)=20 A public that doesn't believe that California's electricity crisis is genui= ne=20 is nonetheless acting as if it is. Experts are revising down scary=20 predictions of rolling blackout after rolling blackout as Californians have= =20 opted to conserve rather than consume.=20 During June, Californians cut back on electricity use by roughly 4,750=20 megawatts when it mattered the most, on hot afternoons. Those decisions=20 shaved about 12 percent from the expected demand. That's equivalent to the= =20 output of nine or 10 medium-size power plants. Last June, grid operators ha= d=20 to call six shortage alerts. This June, which was hotter, they called none.= =20 For a state that's been derided as selfish and wasteful, that's nothing sho= rt=20 of amazing.=20 Some of what Californians are doing now to conserve isn't likely to become= =20 habit in the long run. Businesses may want to turn back on all the banks of= =20 lights. Homeowners may decide that 82 degrees is the right temperature when= =20 power is short but too warm when California's supply emergency is over.=20 Yet there's a huge potential payoff into the future if some of these change= s=20 become permanent. It's encouraging that the most effective forms of=20 conservation -- switching to more energy-efficient appliances or=20 manufacturing techniques -- have yet to be implemented on a large scale.=20 Subsidies for these programs have yet to translate into changes in business= es=20 and in homes that will lower demand even further.=20 For a while this spring, some attempted to diminish the role of conservatio= n.=20 Conservation is a "personal virtue," said Vice President Dick Cheney. But= =20 Californians know it's become both a personal and public necessity. The=20 public may have thought the electricity shortage was an illusion, but=20 everyone knew that the higher electricity bills that began arriving in June= =20 were real. And so was the risk that the lights would go out on hot days.=20 Yes, the state needs more supply to catch up with the growth in demand. Yet= =20 long after the crisis is over, there will be plenty of potential on the=20 efficiency side of the equation as well, to protect the quality of life and= =20 reduce the high electricity costs that will likely plague the state for yea= rs. Governor tells FERC to be fair and then some=20 Davis firm on demand for $8.9 billion refund By Ed Mendel=20 UNION-TRIBUNE STAFF WRITER=20 July 11, 2001=20 SACRAMENTO -- Gov. Gray Davis had a tough message for federal regulators=20 yesterday after the failure of settlement talks in California's bid to get = an=20 $8.9 billion refund from electricity suppliers: "See you in court."=20 The governor said California will seek a full $8.9 billion refund for=20 electricity overcharges, even if federal regulators award the maximum refun= d=20 of $5.4 billion allowed under their guidelines.=20 "Our message is just order what you are going to order," Davis said of the= =20 Federal Energy Regulatory Commission. "We believe you should order $8.9=20 billion. But you order what you think is fair. We will take what you order,= =20 then we will see you in court."=20 Davis, joined by his negotiating team, made the remarks at a news conferenc= e=20 a day after two weeks of closed-door talks with suppliers in Washington=20 failed to reach an agreement.=20 An administrative law judge made a recommendation to the regulatory=20 commission that Davis' top negotiator, Michael Kahn, chairman of the=20 California Independent System Operator, expects to result in a refund of mo= re=20 than $1 billion.=20 Davis said that a revealing decision will be made by the commission, which = he=20 hopes has embarked on a "new path" with the appointment by President Bush o= f=20 two new members, Pat Wood of Texas and Nora Brownell of Pennsylvania.=20 "Are they on the side of consumers, as the federal power act envisions them= =20 being," Davis asked, "or are they just there to do the industry's bidding, = as=20 they have so often in the past?"=20 Kahn said rules adopted by FERC cut off the refund period at last October,= =20 trimming $3 billion from the $8.9 billion overcharge claimed by California= =20 dating to May 2000.=20 He said FERC has no jurisdiction over municipal utilities, such as the Los= =20 Angeles Department of Water and Power, that sold power to the state. The=20 municipal districts overcharged the state by about $600 million, according = to=20 Kahn.=20 As a result, he said, the maximum refund that FERC could order for Californ= ia=20 is about $5.4 billion.=20 "We made it clear to everyone that if we did not settle for $8.9 billion, w= e=20 would seek redress in court for the remainder of the money above $5.4=20 billion," Kahn said.=20 Calpine of San Jose and several other generators have expressed interest in= =20 the state's offer to negotiate one-on-one with the state while the federal= =20 regulators consider their decision, Kahn said. Calpine says deal with state close on alleged overcharges=20 By Don Thompson ASSOCIATED PRESS=20 July 10, 2001=20 SACRAMENTO =01) Calpine Corp. said Tuesday it is near agreement with Califo= rnia=20 officials over money the state says the company overcharged for electricity= .=20 That would make it the first company to settle a part of the $8.9 billion t= he=20 state wants in negotiations before the Federal Energy Regulatory Commission= .=20 However, San Jose-based Calpine has offered far less than the $236 million= =20 the state claims it is owed.=20 "We obviously disagree with that number, because we disagree with some of t= he=20 assumptions" used for the estimate, said Calpine spokesman Bill Highlander.= =20 "We don't think it's anywhere near that. We think it's a low number."=20 He wouldn't specify the company's counteroffer, but noted new FERC figures= =20 showing the company did $29 million in business with the state in the first= =20 five months of this year.=20 The California Independent System Operator estimated the company owed more = in=20 overcharges than it had in total sales for the period from May 2000 to May= =20 2001, a financial impossibility, Highlander said.=20 The ISO essentially multiplied what Calpine was able to produce by the amou= nt=20 it charged for electricity, Highlander said, without taking into account ho= w=20 much electricity the company actually sold.=20 ISO spokesman Michael Bustamante defended the projections by the state's gr= id=20 operator, estimates he said were validated during two weeks of FERC=20 negotiations that ended Monday. The ISO took the methodology adopted by the= =20 federal regulator in a June 19 order capping electricity rates, then worked= =20 backward to May 2000 to reach its estimate, Bustamante said.=20 Generators and state negotiators were unable to reach a settlement during t= he=20 two weeks of talks overseen by FERC chief administrative law judge Curtis L= .=20 Wagner, leaving Wagner to make his own recommendation to the commission.=20 Wagner said Monday the state may be owed perhaps $1 billion in overcharges,= =20 but said that could be offset by money the generators are owed for the powe= r=20 they sold into the state.=20 California officials believe generators owe about $4 billion in refunds usi= ng=20 the June 19 order that Wagner adopted as his benchmark, even given Wagner's= =20 determination that the commission can only consider overcharges after Oct. = 2.=20 At one point during negotiations, Wagner told California officials he thoug= ht=20 an appropriate settlement should top $4.5 billion, according to one=20 negotiator who spoke on condition he not be named. Wagner suggested=20 generators could pay $2.5 billion in cash and $2 billion in long-term=20 electricity contracts at cheaper rates, the source said.=20 That was very different from the $670 million in refunds Wagner privately= =20 said generators were offering. For instance, the source said, while Reliant= =20 Energy on Monday offered $50 million in refunds, California believes=20 Reliant's share of overcharges is closer to $1 billion.=20 Jan Smutny-Jones, executive director of the Independent Energy Producers,= =20 applauded the possibility that some generators will settle with the state= =20 without waiting for a FERC decision and likely protracted court battle.=20 "We need to solve this problem and move on," Smutny-Jones said.=20 ?? =01) Associated Press writer Mark Sherman contributed to this story from=20 Washington, D.C.=20 Judge refuses to let ratepayers form official committee in utility bankrupt= cy=20 case=20 ASSOCIATED PRESS=20 July 10, 2001=20 SAN FRANCISCO =01) The federal judge overseeing Pacific Gas and Electric Co= .'s=20 bankruptcy case ruled Tuesday the utility's ratepayers cannot form an=20 official committee to represent their interests.=20 Ratepayer advocates had sought such recognition to ensure the utility would= =20 not raise rates further as a way of paying off its debts.=20 But U.S. Bankruptcy Judge Dennis Montali agreed with PG&E and the official= =20 creditors committee and rejected the idea for the second time in two months= .=20 Montali suggested instead that ratepayers organize an informal committee to= =20 bring their concerns to the court, and said the ratepayers also could bring= =20 matters before the state Public Utilities Commission.=20 A separate committee of ratepayers would have been able to vote on the fina= l=20 reorganization of the company, a plan that could affect power service and= =20 rates.=20 PG&E filed for Chapter 11 bankruptcy April 6, and owes billions of dollars = to=20 more than 50,000 creditors. It was brought down, in part, by California's= =20 botched experiment with deregulation.=20 Judge Bars Ratepayers Panel From PG&E Case Power: Customers are not creditors in the utility's bankruptcy, ruling says= .=20 Action does not preclude refunds for consumers. TIM REITERMAN TIMES STAFF WRITER July 11 2001 SAN FRANCISCO -- A federal judge Tuesday reaffirmed his decision to bar a= =20 ratepayers committee from Pacific Gas & Electric Co.'s bankruptcy case and= =20 denounced the committee's attorney for suggesting that the action could=20 prevent PG&E customers from receiving refunds for excessive energy charges. Judge Dennis Montali ruled against a U.S. trustee and the ratepayers=20 committee in deciding that ratepayers as a group had no claims and were not= =20 creditors when PG&E filed for bankruptcy on April 6. But Montali criticized "misguided remarks" by a committee attorney on July = 5=20 and news media accounts that followed the hearing. The judge said the repor= ts=20 left the misconception that by disallowing a ratepayers committee, he would= =20 reject all claims of ratepayers and they could lose out on future refunds. The judge and PG&E officials emphasized that there are no matters involving= =20 PG&E customer refunds before the state Public Utilities Commission. State officials are seeking about $9 billion in refunds, however, from the= =20 Federal Energy Regulatory Commission for alleged overcharges to Californian= s=20 by energy companies since last year. The distribution of any ratepayer refunds would be decided by the PUC, and= =20 customers would be paid whether or not they filed Bankruptcy Court claims b= y=20 a Sept. 5 deadline, the judge and PG&E attorneys said. The judge took the highly unusual step of directing PG&E and U.S. Trustee= =20 Linda Ekstrom Stanley to consider remedies to allay any confusion among=20 PG&E's 5.5 million customers. He suggested publishing clarifications in newspapers that carried the=20 erroneous information, in PG&E customer bills and on Web sites. Stanley had formed a ratepayers committee of business, government and=20 consumer representatives, saying they will be affected by PG&E's Chapter 11= =20 reorganization. But Montali decided that ratepayers do not qualify as creditors under=20 bankruptcy law and are not entitled to official status that allows them to= =20 participate in the bankruptcy and receive funding from PG&E. Stanley said she has not yet decided whether to appeal the ruling to federa= l=20 district court.=20 Copyright 2001, Los Angeles Times=20 Developments in California's energy crisis=20 The Associated Press Wednesday, July 11, 2001=20 ,2001 Associated Press=20 URL:=20 http://www.sfgate.com/cgi-bin/article.cgi?file=3D/news/archive/2001/07/11/s= tate1 036EDT0129.DTL=20 (07-11) 07:36 PDT (AP) --=20 Developments in California's energy crisis:=20 WEDNESDAY=3D * No power alerts Wednesday as electricity reserves stay above 7 percent.= =20 TUESDAY=3D * U.S. Bankruptcy Judge Dennis Montali again agreed with PG&E and the=20 official creditors committee, saying such a committee of Pacific Gas and=20 Electric Co. ratepayers has no legal standing in bankruptcy court. Ratepaye= r=20 advocates had sought the recognition to ensure the utility would not raise= =20 rates further as a way of paying off its debts.=20 * PG&E has agreed to pay $4.1 million in tax penalties to 49 counties where= =20 the utility owns property. The utility already paid $41.2 million in overdu= e=20 property taxes in May -- the additional amount covers a 10 percent fee for= =20 paying those taxes late.=20 * Calpine Corporation says it is near agreement with California officials= =20 over money the state says the company overcharged for electricity. That wou= ld=20 make it the first company to settle a portion of the $8.9 billion dollars t= he=20 state is seeking in proceedings before the Federal Energy Regulatory=20 Commission. But the San Jose-based company is offering much less than the= =20 $236 million dollars the state claims it is owed.=20 * No power alerts Tuesday as electricity reserves stay above 7 percent.=20 * Shares of Edison International closed at $14.05, up 5 cents. PG&E Corp.= =20 drop 55 cents to close at $13.55. Sempra Energy, the parent company of San= =20 Diego Gas & Electric Co., closed at $27.67, up 15 cents.=20 WHAT'S NEXT=3D * The Senate committee investigating possible price manipulation in=20 California's energy market meets Wednesday. The committee will vote on=20 contempt citations against generators Mirant and Enron, which failed to=20 comply with subpoenas for documents. The committee will meet again July 18 = to=20 consider compliance by six other suppliers that have until Tuesday to turn= =20 over documents.=20 THE PROBLEM: High demand, high wholesale energy costs, transmission glitches and a tight= =20 supply worsened by scarce hydroelectric power in the Northwest and=20 maintenance at aging California power plants are all factors in California'= s=20 electricity crisis.=20 Southern California Edison and Pacific Gas and Electric say they've lost=20 nearly $14 billion since June 2000 to high wholesale prices the state's=20 electricity deregulation law bars them from passing on to consumers. PG&E,= =20 saying it hasn't received the help it needs from regulators or state=20 lawmakers, filed for federal bankruptcy protection April 6. Electricity and= =20 natural gas suppliers, scared off by the companies' poor credit ratings, ar= e=20 refusing to sell to them, leading the state in January to start buying powe= r=20 for the utilities' nearly 9 million residential and business customers. The= =20 state is also buying power for a third investor-owned utility, San Diego Ga= s=20 & Electric, which is in better financial shape than much larger Edison and= =20 PG&E but is also struggling with high wholesale power costs.=20 The Public Utilities Commission has approved average rate increases of 37= =20 percent for the heaviest residential customers and 38 percent for commercia= l=20 customers, and hikes of up to 49 percent for industrial customers and 15=20 percent or 20 percent for agricultural customers to help finance the state'= s=20 multibillion-dollar power buys.=20 Track the state's blackout warnings on the Web at=20 www.caiso.com/SystemStatus.html.=20 ,2001 Associated Press ?=20 Enron Corp. sues to block Senate from forcing document release=20 DON THOMPSON, Associated Press Writer Wednesday, July 11, 2001=20 ,2001 Associated Press=20 URL:=20 http://www.sfgate.com/cgi-bin/article.cgi?file=3D/news/archive/2001/07/11/s= tate1 212EDT0141.DTL=20 (07-11) 09:12 PDT SACRAMENTO (AP) --=20 Enron Corp. is suing state officials to stop a Senate subpoena of its=20 financial records in a dispute over alleged overcharges for its electricity= =20 sales to California.=20 "They've sent two things to Texas -- our money and these documents, and the= y=20 saying we can't get either one back," said Laurence Drivon, special legal= =20 counsel to the Senate Select Committee to Investigate Market Manipulation.= =20 The suit came hours before the committee will consider asking the full Sena= te=20 to cite the Houston-based company for contempt Wednesday. The other subject= =20 of possible sanctions, Atlanta-based Mirant Inc., appears to be cooperating= ,=20 Drivon said.=20 Committee chairman Joe Dunn, a Santa Ana Democrat, said the committee's=20 investigation will continue despite Enron's "pure act of intimidation. We'r= e=20 not going to back down."=20 Enron's suit said the company's financial papers are outside the committee'= s=20 jurisdiction because most of its operations and paperwork are outside=20 California.=20 That shouldn't matter, Drivon said, citing last year's successful of=20 out-of-state documents during the investigation into the activities of form= er=20 Insurance Commissioner Chuck Quackenbush. Previous investigations have=20 included documents subpoenaed from other nations, he said.=20 Companies doing business in California cannot claim immunity from its laws = or=20 oversight, Drivon and Dunn said. Houston-based Reliant Energy made the same= =20 argument but then agreed to turn over 1,800 documents.=20 ,2001 Associated Press ?=20 Governor threatens to sue utilities for refunds=20 Davis says California won't settle for $1 billion=20 Mark Martin, Chronicle Staff Writer Wednesday, July 11, 2001=20 ,2001 San Francisco Chronicle=20 URL:=20 http://www.sfgate.com/cgi-bin/article.cgi?file=3D/chronicle/archive/2001/07= /11/M N139275.DTL=20 Sacramento -- One day after a federal judge rebuked California's claim that= =20 energy generators owe the state $8.9 billion, Gov. Gray Davis all but vowed= =20 to sue the companies to recoup the money.=20 "If you think California will settle for $1 billion in refunds, we'll see y= ou=20 in court," Davis said yesterday.=20 Continuing his heated rhetoric on the energy crisis, Davis blasted the ener= gy=20 companies for being inflexible during a 14-day negotiation session in=20 Washington, D.C., that ended Monday. Both the state and power generators=20 argue each is owed money as a result of California's dysfunctional=20 electricity market.=20 Federal Energy Regulatory Commission chief administrative law Judge Curtis = L.=20 Wagner ended the talks by saying the state was owed far less than it claime= d,=20 but the FERC's governing board will make a final decision on who owes what = to=20 whom in the coming months.=20 Yesterday, Davis made it clear he wouldn't accept a FERC decision that=20 strayed far from the state's calculations that power companies overcharged= =20 California nearly $9 billion.=20 "The ball is in the FERC's court," he said. "They must step up and provide= =20 the refunds we've asked for."=20 While Davis said California officials had gone to Washington prepared to=20 discuss ways to reach a settlement, including renegotiating long-term=20 contracts to buy power, an energy industry official faulted the state for i= ts=20 unwillingness to compromise.=20 Generators put forward an offer even though they believe no refunds are owe= d,=20 said Jan Smutny-Jones, executive director of the Independent Energy=20 Producers.=20 Smutny-Jones said the state needed to stop thinking it would get the $8.9= =20 billion.=20 "It's clear from the way the issue was characterized by the judge that $9= =20 billion is not something the state is going to see any time in the near=20 future, " he added. "It is not based in reality."=20 Davis also took heat from Republicans yesterday.=20 "He desperately needs that refund, so he can renegotiate the dreadful=20 contracts he has entered into," said Rob Stutzman, a consultant for the=20 California Republican Party. "He's sitting at the poker table with very few= =20 chips."=20 In other energy news yesterday, a judge refused to let a committee represen= t=20 the public in the Pacific Gas & Electric Co. bankruptcy case and said a=20 consumer lawyer's "irresponsible position" at a hearing last week could=20 mislead PG&E customers into filing needless refund claims with the court.= =20 U.S. Bankruptcy Judge Dennis Montali said any refunds owed to customers wer= e=20 unrelated to the bankruptcy case and would be determined by regulators.=20 At the hearing Thursday, attorney KaarenThomas argued that unless a committ= ee=20 represented customers' interests, PG&E could try to bar all refund claims= =20 that weren't filed by Sept. 5.=20 Montali ruled in May that the committee was not authorized by federal=20 bankruptcy law, and reaffirmed his ruling yesterday.=20 Chronicle staff writers Lynda Gledhill and Robert Egelko contributed to thi= s=20 report.=20 E-mail Mark Martin at markmartin@sfchronicle.com.=20 ,2001 San Francisco Chronicle ? Page?A - 3=20 News briefs on the California power crisis=20 The Associated Press Wednesday, July 11, 2001=20 ,2001 Associated Press=20 URL:=20 http://www.sfgate.com/cgi-bin/article.cgi?file=3D/news/archive/2001/07/11/s= tate0 738EDT0118.DTL=20 (07-11) 04:38 PDT SAN JOSE, Calif. (AP) --=20 Energy supplier Calpine Corp. has reached a deal to purchase 236 billion=20 cubic feet of natural gas in Texas and New Mexico for $355 million plus=20 assumption of nearly $50 million of debt.=20 Company officials made the announcement Tuesday and said the purchase will= =20 increase its natural gas reserves.=20 "This transaction meets our desire to own and operate production in a=20 strategic basin," said Cathy Piece, Calpine's director of land and=20 acquisitions. "These assets significantly strengthen our reserve base and= =20 will help fuel our growing Western power program."=20 The San Jose-based company has agreed to purchase 35 wells in New Mexico th= at=20 produce 6 million cubic feet of gas per day from The Bayless Companies. The= =20 second transaction involves the acquisition of a majority interest of Micha= el=20 Petroleum of Houston. The Texas company produces about 43 million cubic fee= t=20 of gas per day.=20 Calpine officials said the agreements will allow them to meet their future= =20 capacity demands for both natural gas and electricity. The company wants to= =20 generate more than 70,000 megawatts of electricity by the end of 2005 and= =20 have natural gas reserves of 6.7 trillion cubic feet.=20 LOS ANGELES (AP) -- Newly elected Mayor James Hahn has postponed selling th= e=20 city's surplus power to the state so he can examine how it will impact=20 ratepayers.=20 Hahn's predecessor, Richard Riordan, said last month the city's Department = of=20 Water and Power would sell its extra electricity -- about 500 megawatts a= =20 day_ to the state at cost between July and September.=20 The contract was supposed to have been signed last week.=20 Steve Maviglio, a spokesman for Gov. Gray Davis, said Tuesday that the stat= e=20 is ready to sign the contract.=20 "We're ready to sign," he said. "Like most negotiations that aren't final,= =20 things go back and forth. The new (Hahn) administration wants to review the= =20 document before it."=20 Davis had threatened to seize surplus power from municipal utilities, which= =20 haven't been subjected to the California energy crisis, because he claimed= =20 they were gouging the state.=20 TEMECULA, Calif. (AP) -- State officials said they are studying alternative= =20 routes for a power transmission line proposed by San Diego Gas and Electric= =20 Co.=20 The utility wants to run a 500,000-volt power line through southwestern=20 Riverside County connecting its power grid with Southern California Edison'= s.=20 The cost of the project is estimated at $271 million and must be approved b= y=20 the state's Public Utilities Commission.=20 But state officials listed alternative routes in papers released at a publi= c=20 hearing Tuesday. Some of the other ideas include putting the transmission= =20 line around the edges of an Indian reservation or running a route through t= he=20 Cleveland National Forest.=20 Once a final selection is made, the information will be given to PUC=20 commissioners who will either approve or deny the project.=20 Many residents who live in the path of the proposed transmission line don't= =20 want the project. An attorney representing several groups that oppose SDG&E= 's=20 plans said there was no mention of alternative routes in environmental=20 documents submitted by the company.=20 "Looking at the various route segments offered by SDG&E as alternatives is= =20 like trying to arrange the deck chairs on the Titanic," said attorney Mark= =20 Mihaly.=20 ,2001 Associated Press ?=20 White House bends under energy conservation pressure=20 Posted at 6:25 a.m. PDT Wednesday, July 11, 2001=20 BY H. JOSEF HEBERT=20 Associated Press Writer=20 WASHINGTON (AP) -- Under pressure to include more conservation measures tha= t=20 reduce energy use, congressional Republicans are moving toward a compromise= =20 to increase fuel efficiency requirements for sport utility vehicles as part= =20 of an energy package.=20 Key House GOP lawmakers said Tuesday they expect some increase in fuel=20 economy requirements, especially for SUVs, in energy legislation working it= s=20 way through the House. Democrats, who have a majority in the Senate, also= =20 favor requiring improved motor vehicle fuel efficiency.=20 At the same time, the Bush administration signaled its willingness Tuesday = to=20 begin a rule-changing process that would allow the first increase in 25 yea= rs=20 in the federal corporate automobile fuel economy, or CAFE, standard.=20 Transportation Secretary Norman Mineta asked Congress to lift immediately a= =20 six-year prohibition that bans the department from consideration of fuel=20 economy increases. Lawmakers already agreed this year not to extend the ban= =20 beyond September, but Mineta said he wants to start examining possible=20 changes right away.=20 CAFE standards, which mandate fuel economy requirements for vehicle fleets,= =20 have not been increased since their introduction in 1975. That year's law,= =20 spurred by energy shortages in the early 1970s, required passengers cars to= =20 meet a fleet average of at least 27.5 miles per gallon. Light trucks -- a= =20 category that includes SUVs, vans and pickups -- have to meet a 20.7 mpg=20 fleet average.=20 With the widespread popularity of SUVs and vans in recent years, many=20 environmentalists have argued that the lower truck standard has compromised= =20 the intent of the 1975 law. SUVs and vans comprise more than 40 percent of= =20 the passenger vehicles on the road today.=20 As three committees began crafting energy legislation, lawmakers were=20 searching for a bipartisan compromise to increase fuel economy requirements= =20 for motor vehicles. Some increase in the CAFE requirement was virtually=20 assured, several GOP lawmakers said, although disagreements remain on how= =20 much of an increase, whether it should apply to automobiles as well as SUVs= ,=20 vans and small trucks, and the timetable for phasing in new requirements.= =20 Energy legislation that the House Energy and Commerce Committee was taking = up=20 later Wednesday contains no fuel economy provision.=20 But Rep. Billy Tauzin, R-La., the committee chairman, said discussions were= =20 under way to work out a compromise on a fuel economy proposal. He said he= =20 expects an amendment on CAFE to be added to the bill, either during=20 deliberations in his committee or on the House floor.=20 Rep. Joe Barton, R-Texas, chairman of the subcommittee drafting the energy= =20 package, saw a good chance the truck standards will be raised and said the= =20 automobile standard might be increased as well. Other GOP sources who talke= d=20 about the private discussions on condition of not being identified by name= =20 said a likely outcome is that the truck standard will be increased three or= =20 four mpg and the auto standard left alone.=20 Momentum for some CAFE increase has been growing in recent weeks as GOP=20 lawmakers came under increasing pressure to come up with additional=20 conservation proposals to those proposed in the White House's energy policy= .=20 It largely focuses on production, with few specific measures to dramaticall= y=20 curb energy demand.=20 Democrats have pressed for tougher automobile fuel economy standards.=20 Automakers have fought attempts to increase the standards. They say such=20 government edicts limit consumer choice and force manufacturers to build=20 smaller cars that customers don't want. Supporters of increased fuel econom= y=20 argue that new technologies are available to increase fuel efficiency witho= ut=20 decreasing vehicle size.=20 President Bush's energy blueprint would consider CAFE increases, but not=20 before a National Academy of Sciences report is issued, probably this month= ,=20 on impact of the standard on energy savings, safety and auto industry=20 competition. Davis ups the voltage=20 Published Wednesday, July 11, 2001, in the San Jose Mercury News=20 Vow to sue for refunds may be a bluff, but he should keep pushing FERC=20 THE strategic choice facing Gov. Gray Davis in the struggle over electricit= y=20 price refunds has come down to three questions: When do you negotiate, when= =20 do you demand, and when do you bluff?=20 Negotiations are over, Davis declared Tuesday. He demanded that the Federal= =20 Energy Regulatory Commission order refunds now. ``The case is nearly a year= =20 old,'' he said. ``They have to decide which side they're on.''=20 Probably no one but Davis knew to what extent he was bluffing when he also= =20 said, ``If you think California is going to settle for $1 billion in refund= s,=20 we will see you in court.''=20 A FERC administrative judge said Monday that the amount due the state may b= e=20 around $1 billion, or perhaps nothing at all, when counter-claims against t= he=20 state are subtracted.=20 Energy experts are divided about whether the state would win a suit to=20 overturn a decision by a federal commission. The federal courts have some= =20 limited jurisdiction, according to University of California Energy Institut= e=20 director Severin Borenstein, but that a court would reverse a commission in= a=20 case like this is ``extremely unlikely.''=20 Frank Wolak, a Stanford economist, had the opposite view, when asked whethe= r=20 the state has a good chance of winning: ``I think so. It happens all the=20 time.''=20 At a Sacramento press conference, Davis continued to insist that there have= =20 been overcharges of $8.9 billion. But other state officials conceded that= =20 only $5.4 billion of that is actually on the table in the FERC proceedings.= =20 Davis said he'll take what he can get there, and sue for the rest.=20 The state argues that because FERC has determined that wholesale prices hav= e=20 not met the Federal Power Act's requirement to be ``just and reasonable,''= =20 refunds are in order. But the commission has not defined what portion=20 exceeded ``just and reasonable.''=20 Throughout his press conference, Davis used the prospect of litigation like= a=20 goad to spur the federal regulators into action. But if you listened=20 carefully, he also indicated he'll give them more time to consider the case= .=20 Considering the iffy odds of winning in court, we suggest he keep goading t= he=20 federal commissioners -- while giving them all the time they need. Wednesday, July 11, 2001=20 Lights go out on Davis' power show=20 Three new developments show that some economic reality finally is being=20 applied to California's electricity crisis:=20 First, "The nation's chief energy judge said Monday that California is owed= =20 maybe $1 billion in refunds from power generators, a fraction of the $8.9= =20 billion demanded by Gov. Gray Davis," reported the Register yesterday. Even= =20 that $1 billion amount might be balanced by the amount the state still owes= =20 the power producers.=20 To suggest workable and market-oriented solutions to the California=20 electricity crisis. Judge Curtis Wagner's recommendation will be taken up by the Federal Energy= =20 Regulatory Commission, which is being petitioned for the money by the state= =20 of California.=20 Because the judge's words will bolster FERC's apparent desire not to grant= =20 the "refunds," the state probably will go to court, where the matter could = be=20 stuck for years. "In the long term, this may indicate that competitive electricity has a=20 future even in California, but not thanks to the state," Robert Michaels, a= =20 professor of economics at Cal State Fullerton, told us. He's referring to t= he=20 state's botched 1996 "deregulation" effort, which has been made worse by Go= v.=20 Gray Davis and other officials since the crisis began a year ago. "FERC since the 1980s favors competition, within the parameters of politica= l=20 reality," Mr. Michaels added. "Now we're at square one: The industry doesn'= t=20 owe $9 billion to California." As this process continues, he said, another= =20 positive aspect will be that a lot of facts will get aired. "We'll see what= =20 has been happening in the markets" in which power is bought and sold. Second, light already is shining on one area: This crisis was not "Made in= =20 Texas'' by cronies of President Bush, as Gov. Davis and other Democrats hav= e=20 been contending.=20 In May, the governor attacked the president for ignoring "the greed of thes= e=20 Texas energy companies," such as Reliant and Dynergy. In fact, according to information on state power contracts the governor=20 finally released Monday, Texas companies were way down on the list of=20 producers.=20 "In roughly the first five months of the year, the state shelled out $1.2= =20 billion to Atlanta-based Mirant, the most any company was paid for=20 electricity, followed by $1 billion to Powerex, the marketing arm of BC Hyd= ro=20 in British Columbia [in Canada]. It also paid $331 million to the Los Angel= es=20 Department of Water and Power," reported the San Jose Mercury News. Only about 10 percent of our state's power during this period came from=20 companies with headquarters in Texas. Third, and finally, a new study by the Cato Institute shows what should be= =20 done next:=20 lAbolish retail rate caps, allowing prices to be set by the market.=20 This would be a better system than the present one, where the state buys th= e=20 electricity and passes much of the cost along through the state budget (pai= d=20 by taxpayers) and bonds paid for by long-term electricity price increases.= =20 Higher immediate prices would encourage conservation and production, leadin= g=20 in time to lower prices. lMove to real-time pricing so people shift activities such as washing to=20 off-peak hours.=20 lAbolish the Independent System Operator, which moves electrons around.=20 Give this function back to the utilities, who did it far better before=20 "deregulation." Gov. Davis should set the pace by ending his Clintonian bla= me=20 shifting and embracing these realistic solutions.=20
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