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Sac Bee, Tues, 7/24: Transmission lines project draws bidders Sac Bee, Tues, 7/24: Dan Walters: Blame game over California's energy crisi= s=20 will continue for years (Enron mentioned) Sac Bee, Tues, 7/24: Initiative effort seeks to lower natural-gas prices Sac Bee, Tues, 7/24: Daniel Weintraub: There's no shame in doing nothing fo= r=20 Edison (Editorial) SD Union, Mon, 7/23: State consultants don't see need for more rate hikes= =20 SD Union, Mon, 7/23: Senate committee told Morgan Stanley destroyed power= =20 records=20 SD Union, Tues, 7/24: News briefs on the California power crisis SD Union, Mon, 7/23: State sells surplus power at a loss=20 LA Times, Tues, 7/24: Rush for Power Plant in Chino Raises Concerns LA Times, Tues, 7/24: Surplus Power Sold at a Loss LA Times, Tues, 7/24: Pacific Gas Gets 4-Month Extension on Filing Plan SF Chron, Tues, 7/24: State sells surplus electricity at a loss=20 BUY HIGH, SELL LOW: $14 million deficit=20 SF Chron, Tues, 7/24: San Diego tries to undo the damage=20 THE PLAN: Regional public power=20 SF Chron, Tues, 7/24: 13 plans submitted to alleviate power transmission=20 bottleneck=20 SF Chron, Tues, 7/24: Developments in California's energy crisis=20 Mercury News, Tues, 7/24: Figures show state lost big on extra power=20 Mercury News, Tues, 7/24: Temperatures likely to rise all week=20 Individual.com (AP), Tues, 7/24: Wholesale Competition Contributed to Trend= =20 of Lower Power Prices, According to New EPSA Study=20 ---------------------------------------------------------------------------= --- -------------------------------------- Transmission lines project draws bidders By Dale Kasler Bee Staff Writer (Published July 24, 2001)=20 Aiming to ease one of the festering problems in California's energy crisis,= =20 13 companies and public agencies have bid for the right to widen a notoriou= s=20 bottleneck in the state's transmission lines, federal officials said Monday= .=20 The bidders range from the East Bay Municipal Utility District to wholesale= =20 power generators such as Mirant Corp., Calpine Corp. and Williams Cos. Some= =20 independent experts argue that if a generator wins the bid, it could use it= s=20 control over those transmission lines to manipulate the electricity market.= =20 The bottleneck is Path 15, a narrow 90-mile stretch of power lines near Los= =20 Banos that carries electricity between Northern and Southern California. It= =20 has less transmission capacity than other portions of the power grid, which= =20 has led to blackouts.=20 In January, Northern California suffered power outages in part because Path= =20 15 couldn't deliver the surplus electricity that was available in Southern= =20 California. The proposed expansion would add 1,500 megawatts of capacity.= =20 "It's a very big issue; there's been a lot of congestion," said Severin=20 Borenstein of the University of California Energy Institute.=20 In addition, the Independent System Operator, which manages the power grid,= =20 estimates the congestion generated by Path 15 added an estimated $221.7=20 million to California's power bill in a 16-month period that ended in=20 December.=20 Borenstein said he believes there are considerable hidden costs as well,=20 because the bottleneck has created an incentive for sellers to withhold=20 power. Path 15 effectively cuts California into two separate markets, makin= g=20 it easier for sellers to manipulate each submarket to raise prices, he said= .=20 Pacific Gas and Electric Co., which owns the existing Path 15 transmission= =20 lines, already has been conducting environmental studies with an eye toward= =20 widening the path. To speed things along, the federal government in May ask= ed=20 for bids on the project, which sparked proposals from generators and others= .=20 Borenstein said having a generator widen Path 15 could bring new problems.= =20 Whoever builds the additional power lines owns them and can charge "tolls" = to=20 companies that use the lines to transmit electricity. A power generator cou= ld=20 deliberately withhold supplies, thereby increasing the congestion on Path 1= 5,=20 and increase the tolls, Borenstein said.=20 PG&E is among those bidding to widen the path. So is its sister company, an= =20 unregulated entity called PG&E National Energy Group. Other bidders include= a=20 partnership led by Sempra Energy Resources, an unregulated sister company o= f=20 San Diego Gas & Electric Co.=20 The federal government estimates it will take $300 million and three or fou= r=20 years to widen Path 15. The costs are ultimately paid by utility customers.= =20 U.S. Energy Secretary Spencer Abraham, speaking to reporters in Los Angeles= =20 on Monday, called the expansion of Path 15 "a critical component in solving= =20 the long-term power crisis in this state."=20 The Bee's Dale Kasler can be reached at (916)321-1066 or dkasler@sacbee.com= =20 <mailto:dkasler@sacbee.com<.=20 Bee news services contributed to this report. Dan Walters: Blame game over California's energy crisis will continue for= =20 years (Published July 24, 2001)=20 The wrestling match between politicians and Enron Corp. moved into a more= =20 intense arena over the weekend when a state Senate investigating committee= =20 sought contempt penalties because the huge energy company has refused to tu= rn=20 over internal documents.=20 Although Houston-based Enron owns no major power plants in California, it h= as=20 adopted the toughest stance of all energy companies against the multiple=20 investigations of why wholesale energy prices spiked so high. And it has=20 become, in turn, a whipping boy for California politicians.=20 At one point last spring, state Attorney General Bill Lockyer said he wante= d=20 criminal charges against Enron and its chairman, Kenneth Lay. "I would love= =20 to personally escort Lay to an 8-by-10 cell that he could share with a=20 tattooed dude who says, 'Hi, my name is Spike, honey,' " Lockyer said. With= =20 less colorful language, Gov. Gray Davis has often castigated Texas-based=20 companies as price gougers -- even though Texas firms have been fairly mino= r=20 suppliers to California.=20 Some of it is just buzzword politics. Lockyer and Davis know that=20 Californians dislike anything associated with Texas, and Lay has been one o= f=20 President Bush's major political supporters. Enron, meanwhile, cites the=20 rhetoric as evidence that Lockyer, Davis and legislative investigators are= =20 interested less in finding the truth than in seeking scapegoats. Enron also= =20 filed a lawsuit challenging the legality of the Senate's subpoenas of tradi= ng=20 data.=20 Most other energy companies have complied with the demands, creating=20 Sacramento repositories of the data under elaborate confidentiality=20 agreements worked out with the special Senate committee headed by Sen. Jose= ph=20 Dunn, D-Santa Ana. But Enron has refused, and on Saturday, Dunn submitted a= =20 report asking the Senate for "an appropriate coercive sanction."=20 Does Enron have something to hide? Or does it sincerely believe that what's= =20 happening in California is political scapegoating? Are the companies' fears= =20 about the confidentiality of the data sought by the Senate justified? Would= =20 data be selectively leaked to show the firms in the worst light? Would data= =20 be used by competitors? Or could the information find its way into the hand= s=20 of class-action attorneys?=20 Dunn, a prominent trial attorney himself, insists that confidentiality will= =20 be protected and that the information being sought is only for legislative= =20 purposes. But Enron and the other companies have some reason to be wary of= =20 turning over confidential information to politicians. Similar information w= as=20 leaked -- without penalty -- in last year's investigation of former state= =20 Insurance Commissioner Chuck Quackenbush. And there are indications that=20 private lawyers are working closely with investigators.=20 Mike Aguirre, the San Diego attorney seeking a "smoking gun" to prove=20 collusion among energy companies, supplied Dunn's committee with a few=20 dissident Duke Energy workers who alleged, in highly publicized hearings,= =20 that the firm had manipulated production at its San Diego plant to create= =20 artificial shortages and drive up spot market power prices. Duke then refut= ed=20 the charges by releasing some excerpts from the records of the Independent= =20 System Operator, the controller of California's power grid, indicating that= =20 ISO had ordered the plant operational changes.=20 Aguirre subsequently asked the governor's office to pressure the ISO -- now= =20 under Davis' direct control -- to release all of the Duke-related documents= =20 that would show, he says, that the firm actually manipulated the situation.= =20 Duke and other companies insist that the ISO-held documents are proprietary= .=20 Aguirre pleaded with one Davis adviser in an e-mail that "we need your help= =20 in properly getting this information out." But Aguirre, in an interview, sa= id=20 he had not yet obtained cooperation from Davis aides.=20 The political and legal struggle to affix blame for California's energy woe= s=20 will continue for months, perhaps years. The crisis will cost ratepayers at= =20 least $50 billion, and they'll want to know why as they make out their=20 utility bill checks.=20 The Bee's Dan Walters can be reached at (916) 321-1195 or dwalters@sacbee.c= om=20 <mailto:dwalters@sacbee.com<. Initiative effort seeks to lower natural-gas prices=20 By Jim Miller Bee Capitol Bureau (Published July 24, 2001)=20 Amid higher utility rates, the threat of rolling blackouts and legislative= =20 indecision on how to solve California's energy problems, there is one=20 proposal to get voters involved.=20 A ballot initiative to let cities, counties and other public agencies, such= =20 as municipal utilities and irrigation districts, buy and sell natural gas h= as=20 been cleared for signature collection by the secretary of state's office.= =20 The initiative emerged from the office of Assemblyman Dennis Cardoza,=20 D-Merced, whose district includes three electricity-supplying irrigation=20 districts.=20 To Cardoza and others, putting public agencies in the natural-gas business= =20 would result in lower gas and electricity prices for consumers because most= =20 generators run on natural gas.=20 Cardoza's proposal is the first of what observers say could be several=20 energy-related measures on future ballots.=20 For months, consumer advocates have warned that they would use the initiati= ve=20 process if they feel lawmakers are saddling taxpayers with the costs of the= =20 state's botched energy deregulation.=20 "As soon as we find out what the Legislature has done or has not done this= =20 fall, we'll react appropriately," said Jamie Court, executive director of t= he=20 Foundation for Taxpayer and Consumer Rights, one of the groups considering = an=20 initiative.=20 "If there's a bailout (of utilities), we'll go to the ballot box. If there= =20 isn't a bailout, it's not clear what we'll do," Court said. "Right now, we'= re=20 fund raising to be able to have the capacity to do whatever needs to be=20 done."=20 The future of Cardoza's initiative is uncertain.=20 Since its approval by the secretary of state's office May 29, there has bee= n=20 no effort to collect signatures or to raise money for a campaign. The=20 initiative needs the signatures of 670,816 registered voters by Oct. 26 to= =20 qualify for the ballot.=20 The electric industry strongly opposes the Cardoza initiative.=20 "This came about during the winter because it looked like there was going t= o=20 be a natural-gas shortage," said Stephanie Espinosa, a spokeswoman for=20 Pacific Gas and Electric Co. "Since then, we've been able to provide=20 sufficient natural gas to our customers."=20 A recent poll, however, showed Californians may be in the mood to approve= =20 energy-related ballot measures. The Public Policy Institute of California= =20 poll found that 65 percent of all adults believe measures on the 2002 ballo= t=20 are the best way to solve the energy crisis. Thirty percent said the=20 Legislature and Gov. Gray Davis would provide the best solution.=20 The Modesto Bee's Jim Miller can be reached at (916) 326-5544 or=20 jmiller@modbee.com <mailto:jmiller@modbee.com<. Daniel Weintraub: There's no shame in doing nothing for Edison (Published July 24, 2001)=20 To understand why state lawmakers are inching closer to handing over billio= ns=20 of dollars of consumers' money to California's second-largest utility, you= =20 need to appreciate the collective psyche of the Legislature. Not appreciate= =20 as in enjoy. But appreciate in a scientific way, in the manner of an=20 anthropologist studying the mores of a foreign culture.=20 Confronted with a big problem, legislators think they need to solve it. Doi= ng=20 nothing is not a comfortable option. It makes them feel ineffective and=20 impotent. When the governor is demanding a bill, the pressure grows even mo= re=20 intense. They want to do something -- anything -- rather than having to go= =20 back to their districts and admit that the problem is not theirs to fix.=20 In this case, though, doing nothing might be the wisest course.=20 Lawmakers now have on their desks three bills that take various approaches = to=20 rescuing Southern California Edison from the brink of bankruptcy. The compa= ny=20 has a $3.5 billion debt left over from the state's failed experiment in=20 electricity deregulation. If something isn't done about it in the next few= =20 weeks, the utility's future is likely to wind up in the hands of a judge.= =20 But all three bills ignore a fundamental fact: Edison got itself into this= =20 mess. Maybe the utility should get itself out.=20 Edison was a big cheerleader for the 1996 bill that restructured the way=20 electricity was bought and sold in California. Supporting a freeze on retai= l=20 rates, which was the centerpiece of that legislation, the company took a hu= ge=20 gamble. If wholesale prices remained low, Edison would rake in billions by= =20 capturing the difference between the price it paid for power and the much= =20 higher price it was allowed to charge its customers. The money would go to= =20 compensate the utility for power plants it built as a regulated monopoly,= =20 plants that might no longer be profitable in a free-market, competitive=20 industry.=20 Like all gambles, this one came with a risk. If wholesale prices rose, they= =20 might exceed the retail rate cap. Edison would be forced to sell its=20 electricity at retail for less than it was paying in the wholesale market.= =20 The tide of dollars that flowed in so nicely would begin to flow back out= =20 again.=20 And that's exactly what happened. Some of the world's smartest utility mind= s=20 guessed wrong. An electricity surplus turned into a shortage. Wholesale=20 prices soared. Things got so bad at Edison that the state stepped in to buy= =20 power on the company's behalf.=20 But before things got ugly, Edison enjoyed two flush years of artificially= =20 high rates. During 1998 and 1999, the company pocketed billions from its=20 customers, paid down debt and sent money to its parent firm, Edison=20 International.=20 Now Edison wants to divide the question. The money that flowed in, Edison= =20 says, the company should get to keep. And the money that flowed out -- well= ,=20 that should be someone else's responsibility. The utility is asking the=20 Legislature to ignore the first two years of hefty profits and reimburse th= e=20 company for the one year of big losses.=20 Gov. Gray Davis negotiated his version of the Edison bailout several months= =20 ago, but that deal was seen as so rich for the company that it went nowhere= =20 in the Legislature. The Senate approved its version last week, a bill that= =20 would reduce the payout to Edison by $1 billion and then stick business wit= h=20 the remaining tab. The Assembly, meanwhile, is considering two other=20 measures, both of which would spread the pain between business and=20 residential consumers.=20 "This is corporate welfare at its worst," state Sen. Bill Morrow,=20 R-Oceanside, said of the Senate bill. "This is not even a bailout. It's a= =20 corporate handout."=20 Edison and the state's other big utility, Pacific Gas & Electric, which is= =20 already in bankruptcy, say they are entitled to the money because they neve= r=20 should have been put in the position of charging less for electricity than= =20 they were paying to obtain it. That's a legal argument that belongs before = a=20 judge. There is a good chance the court would want to balance the profits t= he=20 utilities made under deregulation with the losses they incurred. Under that= =20 scenario, they wouldn't need a bailout.=20 But even if the utilities were to win their case, consumers probably would= =20 fare no worse than they would under the various legislative proposals under= =20 consideration.=20 Sen. Steve Peace, D-San Diego, who helped craft the 1996 bill that=20 restructured the industry and who now supports the Edison bailout, lectured= =20 his fellow senators on the floor the other day about the need to take a ris= k.=20 "We can do nothing and be safe," Peace said. "Or we can do something, and d= o=20 our job."=20 Everyone is weary of the state's energy crisis. It is human nature to want = to=20 get it behind us, to sweep it away, even at great cost. But lawmakers=20 shouldn't feel it's their job to "do something" -- especially when that thi= ng=20 carries a multibillion-dollar price tag for consumers.=20 This time, doing nothing means standing up for ratepayers. What's the shame= =20 in that?=20 The Bee's Daniel Weintraub can be reached at (916) 321-1914 or at=20 dweintraub@sacbee.com <mailto:dweintraub@sacbee.com<. State consultants don't see need for more rate hikes =20 \ objattph=20 Outlook brightens; price cut may be possible by 2003 By Ed Mendel =20 UNION-TRIBUNE STAFF WRITER July 23, 2001 SACRAMENTO -- State consultants,= =20 releasing a new estimate of power costs with an improved outlook, said=20 yesterday they do not believe an additional rate increase will be needed --= =20 and a rate cut may be possible by 2003. The state issued a long-awaited=20 "revenue requirement" asking for a little more than half of the revenue fro= m=20 a record rate increase imposed by the state Public Utilities Commission=20 earlier this year. The state power-purchasing agency, the Department of=20 Water Resources, wants 1.65 cents of an increase of 3 cents per kilowatt-ho= ur=20 that began last month for customers of Pacific Gas and Electric and Souther= n=20 California Edison.=20 The PUC is not expected to rule on the state's revenue request until the=20 middle of next month, when the regulators also are scheduled to approve an= =20 increase for the customers of San Diego Gas & Electric. PG&E and Edison di= d=20 not immediately say whether the state's proposal would leave enough money f= or=20 the utilities. But as if expecting criticism, the state consultants said=20 utilities often ask for larger rate increases than they are granted. An=20 adviser to Gov. Gray Davis said the administration was "mocked" by critics= =20 when it forecast in April that the average cost of power would drop during= =20 the summer, even though heat would drive up the demand for power. "Quote:= =20 'They just don't know what they are doing,' " consultant S. David Freeman= =20 recalled the critics saying. "Well, we did know what we were doing. Quite= =20 frankly, I think this is a good-news story of major proportions." The wide= ly=20 derided forecast issued in April said the average cost of power that must b= e=20 purchased on the expensive spot market would drop from $346 per megawatt-ho= ur=20 in April through June to $195 in July through September. Now the "reasonab= ly=20 conservative" estimate is that the average price of power in July through= =20 September will be $129 to $130 per megawatt-hour, said Ron Nichols of=20 Navigant Consulting. Nichols attributed the price drop to a number of=20 factors: long-term contracts, cooler weather, cheaper natural gas used by= =20 generators, more small and large generators back online and floating federa= l=20 price caps. The state began buying power for utility customers Jan. 17 aft= er=20 PG&E and Edison, whose rates were frozen by deregulation as wholesale power= =20 costs soared, ran up massive debts and were no longer able to borrow. The= =20 consultants estimated that the state will have spent $13 billion on power b= y=20 the end of next year. But they also predicted that the state power-purchasi= ng=20 fund would develop a substantial surplus by then. "That would allow for a= =20 rate decrease in 2003, based on our current projections," said Joseph Fiche= ra=20 of Saber Partners. The new revenue requirement issued by the state yesterd= ay=20 is needed for a series of actions planned by the PUC next month to pay for = a=20 record bond issue to repay the taxpayer-supported state general fund for=20 power purchases. Fichera said that, despite reports to the contrary, the= =20 recommendation is for a $12.5 billion bond -- leaving a cushion in the=20 authorization of $13.4 billion. The bond will be paid off by ratepayers ove= r=20 15 years. The consultants said their projection of state power costs is=20 cautious. They assume consumer conservation will drop from 7 percent to 6= =20 percent, though it actually has been 11 percent and 12 percent in recent=20 months. The projections are intended to leave some ability to absorb=20 unforeseen costs, such as scorching temperatures later this summer or next= =20 summer, or a spike in natural gas prices as happened last winter. The cost= =20 projections do not include any overcharge refund from generators. Davis has= =20 asked federal regulators for an $8.9 billion refund and has vowed to seek= =20 full recovery in the courts. The governor wants to get the state out of th= e=20 power-buying business by the end of next year. But that requires legislativ= e=20 approval of a rescue plan for Edison that could become a model for getting= =20 PG&E out of bankruptcy. The Senate, which left for a monthlong recess afte= r=20 approving a state budget early yesterday, approved an Edison rescue plan th= at=20 the utility says is too weak to restore its ability to borrow. The Assembl= y=20 is struggling with two competing Edison rescue plans. Talks may continue=20 during the recess in an attempt to reach an agreement before the Aug. 15=20 deadline set by Davis to reach a deal to keep Edison out of bankruptcy. Th= e=20 consultants say there is enough room in the existing rates to give the two= =20 utilities a revenue stream for bonds to pay off their debts -- 0.4 cent per= =20 kilowatt-hour for Edison and 0.7 cent for PG&E. Fichera said he disagrees= =20 with speculation that falling power prices and the rate increase might give= =20 Edison enough revenue to avoid bankruptcy without a legislative rescue plan= . =20 To pay off Edison's $3.5 billion debt, he said, $2 billion would come from= =20 the bond, but $1.5 billion would have to come from the sale of Edison's=20 transmission system to the state under the governor's plan.=20 Senate committee told Morgan Stanley destroyed power records =20 \ objattph=20 ASSOCIATED PRESS July 23, 2001 SACRAMENTO =01) Morgan Stanley, a multibil= lion=20 dollar financial firm and adviser to several power generators, destroyed=20 documents that potentially could show efforts to gouge California consumers= =01)=20 and a state Senate committee wants to know why. The company recently also= =20 has come under the scrutiny of an Oregon lawmaker who is concerned the=20 company's purchase of the rights to move power between California and Orego= n=20 could result in artificially high prices. For several weeks, Morgan Stanle= y=20 had told the committee it would provide the documents, but said last week= =20 they had been destroyed as a matter of routine "years ago," said Sen. Joe= =20 Dunn, D-Santa Ana, the committee's chairman. Members of the committee are= =20 trying to determine whether power companies worked together to raise prices= =20 by purposefully holding back electricity to drive up demand. Morgan=20 Stanley's involvement would have been several years ago, when it advised=20 out-of-state energy companies to buy California power plants up for sale. = A=20 Morgan Stanley attorney told the Orange County Register that the company di= d=20 not destroy any documents after Dunn's committee requested the documents Ma= y=20 16. "At the end of the project, they decided what they were going to keep= =20 and what they weren't going to keep, and those decisions were made years=20 before the energy crisis and years before the committee existed," said Paul= =20 Patono, a company attorney. Dunn noted it is not illegal to raise prices a= s=20 long as a company doesn't collude to force prices upward. Private utilitie= s=20 became able to sell their plants as part of the 1996 plan to deregulate the= =20 electricity market. Although the plants were expected to sell below their= =20 book value, they instead sold for up to three times that price, although th= e=20 state then had an oversupply of electricity and old plants. While the publ= ic=20 was told deregulation would lead to lower electricity prices, energy=20 officials and experts testifying before the committee have said it's unlike= ly=20 investors would buy aging power plants if they believed that to be true. = =20 Dunn is curious if there was any kind of plan or advertising that said the= =20 plants, if bought a certain way, would give of the buyers market power in t= he=20 wholesale electricity market. The committee is still moving forward with= =20 contempt proceedings against Houston-based power marketers Enron Corp. and= =20 Reliant Energy for refusing to hand over documents to committee=20 investigators. New York-based Morgan Stanley, now Morgan Stanley Dean Witt= er=20 & Co., got into the energy trading in 1984 and now is one of the top 20 U.S= .=20 power marketers. The company also has come under the scope of Rep. Peter= =20 DeFazio, D-Ore. Morgan Stanley bought the rights to transmit just under a= =20 third of the power flowing between California and Oregon from the Bonnevill= e=20 Power Administration through February 2002. DeFazio has written a letter t= o=20 the BPA, asking that the agency make sure the Northwest keeps its "reliable= ,=20 affordable" energy source. "The ability of a financial services company,= =20 which has no obligation to serve electricity consumers, to lock up all=20 available capacity for a year raises serious concerns," DeFazio wrote. A= =20 company spokeswoman said Morgan Stanley acquired the transmission capacity= =20 from BPA to meet its power delivery obligations in the Northwest, and had n= o=20 intention of manipulating the market.=20 News briefs on the California power crisis =20 \ objattph=20 ASSOCIATED PRESS July 24, 2001 IRVINE =01) Future Olympic swimmers in Sou= thern=20 California may no longer have a training facility if the state's power cris= is=20 continues. Utility bills have jumped significantly over the past couple of= =20 months and aquatic centers across Southern California have felt the pinch. = =20 At Heritage Park in Irvine, home to gold medalist Amanda Beard and silver= =20 medalist Aaron Peirsol, the monthly energy bill has doubled from $7,000 to= =20 between $13,000 and $15,000. Officials at the Rose Bowl Aquatics Center in= =20 Pasadena have raised membership fees 10 percent to offset electricity costs= =20 that have more than doubled. The Industry Hills Aquatics Complex in Indust= ry=20 may close its doors on Sept. 9, in part because of the rate increases. =20 Gas-powered heaters and electric motors run 24 hours a day at most swimming= =20 centers to keep water temperatures warm. Some swim coaches said a temperatu= re=20 drop in the pool can hamper an athlete's training regiment and possibly rai= se=20 health concerns. Swimming facilities run on a tight budget, say coaches, a= nd=20 the soaring energy costs have eaten away any profit margins the training=20 programs once had. The Industry Hills facility has even used trash and=20 methane gas from the landfill it sits on to heat the pool. But the complex= =20 lost about $85,000 last year and operators expect natural gas costs will=20 double this winter. The property management company, which owns the land, h= as=20 given a Sept. 9 deadline to reduce operating costs or close the swimming=20 center. =01)=01) CHINO =01) The largest of 11 power plants that are suppo= sed to be=20 built by Sept. 30 under the governor's emergency fast-track program appears= =20 to be running behind schedule. The concrete foundation hasn't been poured = at=20 the $125-million natural gas facility, which sits near the California=20 Institution for Men in Chino. The plant, being built by Delta Power Co. of= =20 New Jersey, would supply about 135,000 homes with electricity. =20 Environmentalists warn that the plant will produce smog five times more tha= n=20 the legal limit and want state air quality officials, who will conduct a=20 hearing Tuesday, to deny a final operating permit to Delta Power. Delta=20 officials said they hope to meet the Sept. 30 deadline despite the objectio= ns=20 by environmentalists and residents who live near the proposed plant. They= =20 also pledged to install equipment by November that would reduce nitrogen=20 oxide compounds, which contribute to smog. If Delta and other energy=20 companies finish their power plants by the end of September, they receive= =20 incentives such as eliminating environmental analyses and the ability to em= it=20 pollutants for months at levels exceeding state standards.=20 State sells surplus power at a loss =20 \ objattph=20 ASSOCIATED PRESS July 23, 2001 LOS ANGELES =01) State officials sold exce= ss=20 electricity at a loss of nearly $14 million in the first 16 days of July = =01)=20 roughly 4.5 percent of the total amount the state spent on power during tha= t=20 period. According to the Department of Water Resources, the state purchase= d=20 3.5 million megawatt-hours at an average price of $118 per megawatt-hour. I= t=20 sold off 177,000 surplus megawatt-hours at an average price of $36.95 per= =20 megawatt-hour. Industry officials told the Los Angeles Times it is routine= =20 for utilities and electric companies to at times either sell power at a los= s,=20 work out an exchange or give it away when they find themselves with surplus= =20 power. However, some say this is an indication that the state government do= es=20 not belong in the power business. The sales of surplus power "get to the= =20 issue of, do these people really know what they're doing? Are they really= =20 competent to be managing this to the lowest cost for the ratepayers?" said= =20 Assemblyman John Campbell, R-Irvine. "It reinforces to me that we should ge= t=20 the state out of doing this as soon as practically possible." Department o= f=20 Water Resources Director Thomas Hannigan disclosed the details in response = to=20 an inquiry by Campbell. Assemblyman Roderick Wright, D-Los Angeles, said h= e=20 did not see a problem with DWR's power sales. "Right now the summer is=20 cool," said Wright, who is also chairman of the Assembly utilities committe= e.=20 "If this had been a normal July, we would have used all that power." =20 Department of Water Resources officials expect the sales to stop if=20 temperatures heat up later this week. Department spokesman Oscar Hidalgo= =20 said the sales show that the water department has stabilized the state's=20 electricity market. The average price the department has paid for a=20 megawatt-hour is falling, from $271 in May to $119 in June to $89 so far in= =20 July. Since January, the state has spent more than $8 billion buying=20 electricity for the customers of three financially ailing utilities =01) Pa= cific=20 Gas and Electric Co., Southern California Edison Co. and San Diego Gas and= =20 Electric Co. The state had to take over buying electricity to keep the=20 state's lights on after federal energy regulators ruled that only=20 creditworthy entities could buy electricity.=20 CHINO Rush for Power Plant in Chino Raises Concerns Energy: The facility may exceed pollution limits if it begins operations by= =20 Sept. 30. Opponents say that would endanger public health. By TERENCE MONMANEY TIMES STAFF WRITER July 24 2001 CHINO -- Seldom are government bureaucrats criticized for moving too quickl= y,=20 but so goes the battle here over a power plant slated for the sun-blasted= =20 grounds of a men's prison. The proposed plant--big enough to supply 135,000 homes--is one of five in= =20 California that have been licensed to start up despite exceeding pollution= =20 standards as part of Gov. Gray Davis' rush to bring more power online. The program, covering small to mid-size facilities that run during hours of= =20 peak demand, slashes licensing review from a year to three weeks, eliminate= s=20 comprehensive environmental analyses, and authorizes plants to emit=20 pollutants for months at levels exceeding state and federal air quality law= s.=20 The catch is that the plants must operate by Sept. 30 or those rare and=20 lucrative incentives could be withdrawn--a possibility confronting develope= rs=20 of the Chino plant, which a growing number of environmentalists opposes. So far, with only 69 days left until the deadline, workers haven't poured a= =20 drop of concrete foundation for the $125-million natural gas-burning=20 facility, developed by Delta Power Co. of New Jersey. The site is on the=20 outskirts of the California Institution for Men. The proposed plant, the largest of 11 so-called peakers given expedited=20 approval, is galvanizing opposition to the governor's emergency fast-track= =20 program. Environmentalists decry the fact that until the plant installs=20 devices to reduce nitrogen oxide compounds, which contribute to smog, the= =20 level of the pollutant will reach five times the legal limit. Five groups, including the Natural Resources Defense Council and the Planni= ng=20 and Conservation League, have joined in petitioning state air quality=20 officials to deny the plant a final operating permit. They contend that=20 excess nitrogen oxides will endanger public health and that the fast-track= =20 process jeopardizes decades of gains against smog. "We're not necessarily opposed to a power plant on the site," said Gail=20 Ruderman Feuer, an attorney in the Los Angeles office of the Natural=20 Resources Defense Council. "We're just opposed to one without environmental= =20 review and without all the pollution controls." Critics also are wary of the fast-track process because the state has a=20 vested interest in making sure the plants are built quickly. The Davis=20 administration has promised to spend billions buying electricity from plant= s=20 that aren't built yet. "It's a massive subterfuge," said Sandra Spelliscy, an attorney with the=20 Planning and Conservation League in Sacramento. Jay Roland, manager of the Chino facility for Pegasus Power Partners, a=20 subsidiary of Delta, said the extra nitrogen oxides released from the plant= =20 for a month or so are "not going to cause damage to anybody." Roland said he is so frustrated by the "interveners," he sometimes wishes t= he=20 whole state would go dark, to underscore the power shortage that the plant = is=20 intended to address. Though opponents have made a tough job even tougher, he said he hoped to ma= ke=20 the end-of-summer deadline. Missing it could mean applying to the state all= =20 over again under the old rules, he said. "Then I sit here nine months with= =20 $120 million in equipment that's not generating any revenue." State officials said it was necessary to approve the extra-polluting plants= =20 because of the need to avoid blackouts and because there is a backlog of=20 emissions-control equipment. Besides, they said, state-of-the-art gas-burni= ng=20 plants emit fewer pollutants without controls than do many older plants wit= h=20 them. Kevin Kennedy, a California Energy Commission official who reviewed the Chi= no=20 project, acknowledged that public involvement in the process has suffered= =20 somewhat. "It's been difficult to get the word out . . . to make sure peopl= e=20 in the communities have enough information to know what's going on." Site Seems Ideal for Power Plant In many respects, the 11-acre Chino site looks right for a power plant. It= =20 rests on flat surplus land at the northern boundary of the state's largest= =20 prison property, where grasslands cover hundreds of acres. Half a mile away is a booming warehouse district and a Southern California= =20 Edison substation, which would relay the new power to the transmission grid= . Moreover, Pegasus runs a small power plant on the prison property across a= =20 narrow utility road from the site. Supplying steam and a few megawatts to t= he=20 penal institution, the company sells the bulk of its 27 megawatt output to= =20 Edison. Delta's president, Dean Vanech, bristles at charges that his company doesn'= t=20 care about the environment. He said equipment to reduce nitrogen oxide compounds won't be available unt= il=20 around November, at which time engineers will work "as quickly as humanly= =20 possible" to install it. Other air pollutants, such as carbon monoxide and= =20 microscopic dust particles, will be controlled from the beginning. Also, though energy officials reviewed the proposal in a matter of weeks,= =20 they closely scrutinized the company's nine-part application, which took tw= o=20 months and $1 million to assemble, plant officials say. The company moved the plant's site after biologists discovered two protecte= d=20 bird species nesting nearby--burrowing owls and red-tailed hawks. That=20 required engineers to redesign gas, water and transmission lines and tinker= =20 with the plant structure, Roland said. Owlets in a nest by a proposed transmission tower still pose an obstacle. "= We=20 have to wait for the babies to leave," construction manager Robert Surette= =20 said. Key decisions over the plant's future lie with the South Coast Air Quality= =20 Management District, the air pollution agency, which said in May it would= =20 give the Chino plant a construction permit. But after environmental groups petitioned in late June, the agency asked=20 Pegasus for more data describing the possible impact of elevated levels of= =20 nitrogen oxides on people in the plant's vicinity. "We're still in the evaluation phase, and we're not going to prejudge this= =20 project," said district executive director Barry Wallerstein. He said the plant emissions were probably negligible compared with those fr= om=20 the parade of diesel trucks in the nearby warehouse district. Those "could = be=20 a larger health hazard to the community than this particular power plant," = he=20 said. Public Hearing to Be Held Today The air quality agency has scheduled a public hearing today at its Diamond= =20 Bar office to weigh issuing the plant a waiver needed to exceed state air= =20 quality standards. The U.S. Environmental Protection Agency has indicated i= t=20 will not prosecute the Pegasus plant for temporarily emitting more nitrogen= =20 oxides than the federal Clean Air Act permits. Vanech of Delta said the company would want to build the plant even if it h= ad=20 not received expedited approval: "The reason we're doing the project is tha= t=20 we have a favorable long-term view of the California energy market.' Delta operates 13 power plants nationwide, five of them in California on=20 state-controlled property. The Chino plant promises to benefit this diverse, mostly blue-collar city o= f=20 66,000. Although the developer is leasing the property from the state, Delt= a=20 agreed to pay the city $500,000 up front, plus $75,000 annually and million= s=20 more over the years in water and natural gas fees. Vanech said the half-million-dollar "host fee" was compensation to City Hal= l=20 for its swift handling of the project's mountainous paperwork and for the= =20 wear and tear that construction crews will cause on city roads. In the neighborhood closest to the plant, where large new houses rest on=20 half-acre lots fronted by bridle paths, residents seemed divided. Jim Tippings, 59, who is retired, said he didn't have a problem with the=20 plant running a month or so without full nitrogen oxide controls: "I don't= =20 think a month is going to hurt us." Rising utility bills are what really=20 hurt, he said. Up the street, 35-year-old Kent Hobbenslefken was not aware that a power=20 plant was going up a mile away. A former hazardous waste manager who sells= =20 health insurance, he was skeptical of the need to run the generators withou= t=20 full pollution controls, just to meet a bureaucratic deadline. "What's a couple of months delay?" he said. "We're already in the crisis.= =20 What's it going to do for John Q. Public? Are our rates going to go down? I= =20 don't think so." MORE INSIDE Power glut: An excess forces sale of power at a $14-million loss. B8 Getting soaked: High utility costs threaten swimming programs. D1=20 Copyright 2001, Los Angeles Times <http://www.latimes.com<;=20 Surplus Power Sold at a Loss Electricity: Cool summer and effective conservation efforts result in exces= s=20 supplies. Industry officials say it's a routine move. By NANCY VOGEL TIMES STAFF WRITER July 24 2001 SACRAMENTO -- Caught with an excess of electricity as a result of cool=20 weather and heavy conservation, the state government sold power at a loss= =20 approaching $14 million in the first 16 days of July. The loss amounts to roughly 3.5% of the total amount the state spent on pow= er=20 during that period. To keep power flowing to 27 million Californians, the state purchased 3.5= =20 million megawatt-hours at an average price of $118 per megawatt-hour,=20 according to the state Department of Water Resources. It sold off 177,000= =20 surplus megawatt-hours at an average price of $36.95 per megawatt-hour.=20 Department of Water Resources Director Thomas Hannigan disclosed the detail= s=20 in response to an inquiry by Assemblyman John Campbell (R-Irvine). The sales of surplus power "get to the issue of, do these people really kno= w=20 what they're doing? Are they really competent to be managing this to the=20 lowest cost for the ratepayers?" Campbell said. "It reinforces to me that w= e=20 should get the state out of doing this as soon as practically possible." Industry officials, however, say it is routine for utilities and electricit= y=20 companies to at times find themselves with more electricity than their=20 customers need. They either sell the power at a loss, work out an exchange = of=20 power or give it away. "It's not all that uncommon for utilities to be buying one day and selling= =20 the next," said one Pacific Northwest trader who asked not to be identified= =20 because his company does not permit him to talk to reporters. He said a rul= e=20 of thumb in the industry is to match supply to demand within 1% to 2%,=20 although "5% on a load like California isn't that much." Assemblyman Roderick Wright (D-Los Angeles), chairman of the Assembly=20 utilities committee, said he did not see a problem with DWR's power sales. "Right now the summer is cool," he said. "If this had been a normal July, w= e=20 would have used all that power." "The worm could have turned the other way." Department of Water Resources spokesman Oscar Hidalgo said the state's crew= =20 of 15 power purchasers found themselves selling a "very minimal" amount of= =20 electricity in May. In June, more power was sold, but less than was sold in= =20 July, he said. The department has not released those figures. Department officials expect the sales to stop if temperatures heat up later= =20 this week. The water department was thrust into the role of buying 30% to 50% of the= =20 state's overall electricity in January after the state's major utilities=20 became so financially crippled by high wholesale electricity prices that=20 energy companies refused to sell to them. The department has so far spent roughly $8 billion of taxpayer money=20 purchasing power that is sent to the customers of Pacific Gas & Electric,= =20 Southern California Edison and San Diego Gas & Electric. Hidalgo said the sales show that the water department has stabilized the=20 state's electricity market. The average price the department has paid for a= =20 megawatt-hour is falling, from $271 in May to $119 in June to $89 so far in= =20 July. "If we were out scrambling for power right now," Hidalgo said, "the market= =20 would reflect that and adjust to it, and we would most likely be paying muc= h=20 more in overall purchases." Campbell said he assumes the department sold its most expensive, marginal= =20 megawatts of power. But Hidalgo said that is not necessarily so. The=20 department does not track what it paid for the power it sells, he said. The department's statement to Campbell shows sales to 25 different companie= s,=20 including the federal Bonneville Power Administration, the Los Angeles=20 Department of Water and Power, and several private energy companies that=20 bought power plants from California's utilities under the state's 1996=20 deregulation scheme. Those firms include Dynegy Corp., Reliant Energy, Mira= nt=20 Corp. and Duke Energy.=20 Copyright 2001, Los Angeles Times <http://www.latimes.com<;=20 Pacific Gas Gets 4-Month Extension on Filing Plan Bloomberg News July 24 2001 PG&E Corp.'s Pacific Gas & Electric, California's largest utility, won a=20 four-month extension to file a Chapter 11 recovery plan free from=20 interference from creditors and other groups. The utility's sole right to file a plan was extended from Aug. 6 to Dec. 6.= =20 Creditors, shareholders and others with a stake in the case could have=20 presented their own plans had the extension not been granted. Companies reorganizing under Chapter 11 have the sole right to advance a=20 recovery plan in the first 120 days after filing for bankruptcy. Courts=20 routinely extend this period in large and complex cases. A committee=20 representing unsecured creditors in court papers said it "firmly believes= =20 that all parties in interest should move quickly and provide assurance that= =20 any filed plan will pay creditors in full and remedy PG&E's various issues= =20 and problems." PG&E Corp. shares fell 75 cents to close at to $14.25 on the New York Stock= =20 Exchange.=20 Copyright 2001, Los Angeles Times <http://www.latimes.com<;=20 State sells surplus electricity at a loss=20 BUY HIGH, SELL LOW: $14 million deficit=20 Paul Feist, Lynda Gledhill, Chronicle Staff Writers=20 <mailto:lgledhill@sfchronicle.com< Tuesday, July 24, 2001=20 ,2001 San Francisco Chronicle </chronicle/info/copyright<=20 URL:=20 <http://www.sfgate.com/cgi-bin/article.cgi?f=3D/c/a/2001/07/24/MN217124.DTL= < California has lost $14 million during the past three weeks selling surplus= =20 electricity back to power generators as mild temperatures and energy=20 conservation slackened demand statewide.=20 The state, which has spent more than $8 billion purchasing power on behalf = of=20 financially troubled utilities, became an electricity seller this month,=20 racking up losses and triggering criticism from Republican lawmakers and=20 consumer groups.=20 State Department of Water Resources Director Thomas M. Hannigan said in a= =20 letter that since July 1, the state had sold 177,571 megawatt hours at a ra= te=20 of $36.95 each. California paid just over $118 a megawatt hour for the=20 electricity, Hannigan said in the letter to Assemblyman John Campbell, R-= =20 Irvine.=20 Some of the exports to 25 buyers went to out-of-state power providers such = as=20 Atlanta-based Mirant and Texas-based Reliant Energy, which a state Senate= =20 committee has found in contempt for not complying with subpoenas for=20 documents as part of its investigation into alleged price manipulation.=20 Excess electricity also went to public power agencies such as the Los Angel= es=20 Department of Water and Power and even abroad to Powerex, the trading arm o= f=20 BC Hydro. The giant Canadian power firm has started issuing rebates to its= =20 customers, citing "strong exports" to California and elsewhere earlier this= =20 year.=20 "To me this reinforces the idea that the state should get out of the power= =20 buying business as soon as practically possible," Campbell said.=20 TAXPAYERS GET STUCK When Pacific Gas & Electric Co. or Southern California Edison makes a simil= ar=20 mistake, he said, shareholders pay for it. But when the Department of Water= =20 Resources is to blame, taxpayers are left holding the bag.=20 A spokesman for Gov. Gray Davis defended the losses, calling them minuscule= =20 in the bigger context of the state's power-purchasing strategy.=20 "This is all an inexact science," said Davis spokesman Steve Maviglio. "Thi= s=20 has been a handful of days over seven months, and the amount is minuscule. = If=20 the choice is keeping the lights on or having rolling blackouts, it's a sma= ll=20 risk to take."=20 Because power can't be stored, all power trading operations are occasionall= y=20 forced to sell excess electricity, Maviglio said. He said that people would= =20 have laughed in January had the administration predicted that the state wou= ld=20 have more than enough power this summer.=20 Mild weather and a strong conservation effort by Californians have led to= =20 days when the state hasn't needed all the power it has on hand.=20 SHARP DROP IN DEMAND In recent days, the peak load on California's grid has been around 33,000= =20 megawatts -- far below the 40,000-plus megawatt demand that can come on a h= ot=20 summer day.=20 "When we bought power at these prices, who would have thought that it was= =20 going to be the coolest July in 20 years?" said Assemblyman Rod Wright, D-L= os=20 Angeles. "The problem becomes when you second-guess things."=20 The state Department of Water Resources has negotiated about $43 billion=20 worth of electricity contracts spanning 15 to 20 years. The contracts were= =20 made public after media organizations, including The Chronicle, and GOP=20 lawmakers sued the Davis administration.=20 Consumer groups yesterday criticized the losses, calling them an inevitable= =20 byproduct of the state's entry into the power-buying business.=20 "It's one of the costs of secrecy. You've got an agency that is totally=20 unaccountable to the public," said Doug Heller, a consumer advocate with th= e=20 Foundation for Taxpayer and Consumer Rights. "They haven't done a great job= =20 of serving the public's needs for energy procurement."=20 Assemblywoman Carole Migden, D-San Francisco, said Campbell and other criti= cs=20 were not being fair to the Davis administration.=20 "You can't say at one time get the energy situation under control, but then= =20 question every line item a month out," she said.=20 E-mail the reporters at pfeist@sfchronicle.com=20 <mailto:pfeist@sfchronicle.com< and lgledhill@sfchronicle.com=20 <mailto:lgledhill@sfchronicle.com<.=20 ,2001 San Francisco Chronicle </chronicle/info/copyright< Page A - 1=20 San Diego tries to undo the damage=20 THE PLAN: Regional public power=20 David Lazarus, Chronicle Staff Writer <mailto:dlazarus@sfchronicle.com< Tuesday, July 24, 2001=20 ,2001 San Francisco Chronicle </chronicle/info/copyright<=20 URL:=20 <http://www.sfgate.com/cgi-bin/article.cgi?f=3D/c/a/2001/07/24/MN190387.DTL= < San Diego -- This city, which was first to bear the brunt of the state's=20 energy crisis a year ago as electricity bills tripled, is now aiming to be= =20 first with a long- term solution: regional public power.=20 A bill is making its way through the Legislature -- and being fought at eve= ry=20 turn by the power industry -- to make San Diego County one of the largest= =20 municipal utility districts in the nation.=20 If the measure fails, San Diego officials intend to refashion the local wat= er=20 authority as an alternative utility hub that would construct efficient new= =20 plants and steal business away from costlier, decades-old facilities owned = by=20 out-of-state generators.=20 Some consumer advocates believe that San Diego's efforts could serve as a= =20 model for large-scale public power systems in Northern California.=20 "If we can pull this off, we can bring down prices and show the way to ener= gy=20 independence," said Rep. Bob Filner, D-San Diego. "If we don't change the= =20 rules, we're going to be back where we were."=20 It won't be easy, though. Even if San Diego can overcome vigorous oppositio= n=20 from power companies, its public-power scheme still could run afoul of Gov.= =20 Gray Davis, who is counting on statewide revenue to finance next month's=20 municipal bond offering, the largest in U.S. history. Going its own way as = a=20 municipal utility district would mean San Diego could avoid purchasing=20 electricity from the state Department of Water Resources, thus reducing the= =20 flow of cash into California's coffers.=20 Steve Maviglio, a spokesman for the governor, said Davis would not take a= =20 position on San Diego's public-power bill until it cleared the Legislature.= =20 "But the governor would obviously look extremely carefully at anything that= =20 would affect revenue to pay off the bonds," he said.=20 Twelve months after California's energy crisis first erupted in San Diego,= =20 leading to statewide blackouts and financial catastrophe for utilities,=20 residents of this city, to a large extent, have tried to put last summer's= =20 difficulties behind them.=20 San Diego Gas & Electric Co., owned by Sempra Energy, had been the first of= =20 California's three investor-owned utilities to pay off outstanding debts an= d=20 thus qualify for a lifting of the rate freeze that accompanied deregulation= =20 of the state's power market.=20 Unfortunately for San Diegans, wholesale electricity prices suddenly=20 skyrocketed, and San Diego Gas & Electric was free to pass along its rising= =20 costs directly to consumers.=20 Customers of Pacific Gas and Electric Co. and Southern California Edison we= re=20 still protected by the rate freeze and thus saw no changes in their power= =20 bills -- although the two utilities, in turn, were forced to absorb about $= 14=20 billion in unrecovered expenses.=20 San Diego power rates subsequently were limited by state regulators to=20 restore stability to the local market -- but not before many residential an= d=20 business customers saw their monthly bills go through the roof.=20 "I'm still paying almost double what I was paying before," said George=20 Aguilar, owner of a downtown jewelry store. "We should talk to lawyers and= =20 sue the people in the government responsible for this. It was pure=20 negligence."=20 WELL-INFORMED POLITICIANS In fact, San Diego's political leaders are now among the best informed in t= he=20 nation about energy issues and the volatility of electricity markets.=20 When power bills spiked last year, outraged consumers demanded that their= =20 representatives take steps to remedy the situation. Democrats and Republica= ns=20 alike took a crash course in the frequently arcane minutiae of the energy= =20 business.=20 "We didn't create this problem. We didn't make any mistakes," said San Dieg= o=20 Supervisor Dianne Jacob, who has been among the most aggressive local=20 politicians in responding to the energy mess and is a leading proponent of= =20 the county's public-power plan.=20 "But one way or another, we're going to have to pay for it," she said. "Thi= s=20 was a very bad experiment."=20 Her solution is to establish a vast municipal utility that essentially woul= d=20 take over the entire service area of San Diego Gas & Electric, which provid= es=20 power to 1.2 million customers.=20 PLANS FOR NEW POWER PLANTS The county-run utility would build its own power plants and renewable- ener= gy=20 resources and would transmit electricity to customers over existing San Die= go=20 Gas & Electric lines. Funding for the municipal utility's activities is not= =20 yet clear.=20 "There's no question in my mind that we can generate power for less than wh= at=20 the generators are putting on the market," Jacob said.=20 REGIONAL APPROACH PRAISED Medea Benjamin, a San Francisco consumer advocate, said the regional approa= ch=20 sought by San Diego -- which requires a rewriting of state law -- would=20 benefit consumers by making construction of new plants more economically=20 feasible.=20 Municipal utility districts statewide are now limited to individual cities.= =20 The Los Angeles Department of Water and Power is one of the few large enoug= h=20 to generate its own juice and sell off excess capacity.=20 San Francisco voters will be asked in November whether to replace the=20 existing San Francisco Public Utilities Commission with an independent powe= r=20 and water authority.=20 "It would be wonderful if San Diego's disastrous experience with deregulati= on=20 results in them taking a leadership role in creation of regional public=20 power," Benjamin said.=20 Not everyone, however, backs the plan. San Diego Gas & Electric's parent,= =20 Sempra, has actively lobbied against the public-power bill in Sacramento,= =20 fearing that it would allow seizure of the utility's distribution system by= a=20 county energy authority.=20 "It's unclear what the bill is trying to accomplish," said Art Larson, a=20 Sempra spokesman. "California's energy crisis isn't a local-utility problem= .=20 It's a demand-and-supply problem."=20 PUBLIC OWNERSHIP CRITICIZED Another considerable opponent of the plan is Jessie Knight, head of the San= =20 Diego Regional Chamber of Commerce and a former member of the state Public= =20 Utilities Commission.=20 He believes that public officials are no match for savvy power-industry=20 executives in a competitive marketplace and that the county cannot guarante= e=20 lower rates by building its own plants.=20 "This thing looks like the biggest shell game in the world," Knight said.= =20 Moreover, he said, he could not see how San Diego would win legislative=20 backing for regional public power when state authorities, including the=20 governor, were counting on revenue from all customers to back California's= =20 multibillion-dollar bond offering.=20 Assemblyman Mark Wyland, R-Escondido (San Diego County), author of the=20 public-power bill, said it was too soon for anyone to speculate about San= =20 Diego's breaking away from the rest of the state's power grid.=20 "We have to be realistic about the future of this," he said. "Right now,=20 SDG&E is the utility in San Diego County, and there is no intent to transfo= rm=20 that overnight."=20 Meanwhile, in case Wyland's bill is defeated, a separate legislative effort= =20 is taking shape to expand the San Diego water authority's jurisdiction to= =20 include electricity.=20 E-mail David Lazarus at dlazarus@sfchronicle.com=20 <mailto:dlazarus@sfchronicle.com<.=20 ,2001 San Francisco Chronicle </chronicle/info/copyright< Page A - 1=20 13 plans submitted to alleviate power transmission bottleneck=20 Carolyn Lochhead, Chronicle Washington Bureau=20 <mailto:clochhead@sfchronicle.com< Tuesday, July 24, 2001=20 ,2001 San Francisco Chronicle </chronicle/info/copyright<=20 URL:=20 <http://www.sfgate.com/cgi-bin/article.cgi?file=3D/chronicle/archive/2001/0= 7/24/ MN185739.DTL< Washington -- More than a dozen private investors have turned in proposals = to=20 ease a Central Valley bottleneck in California's electricity transmission= =20 grid that can contribute to blackouts in Northern California, Energy=20 Secretary Spencer Abraham said yesterday.=20 The 13 investment plans were in response to the Bush administration's=20 national energy plan, which called for the expansion of Path 15, an 84-mile= =20 stretch of interconnected transmission lines located between Los Banos=20 (Merced County) and Coalinga (Fresno County). The lines form the main link= =20 for power flows between the northern and southern parts of the state.=20 "When we announced our plan in May to upgrade Path 15, it was dismissed as = an=20 old idea on which little had ever been done," Abraham said in a statement.= =20 "Today, I am pleased to announce that those days of neglect and inaction ar= e=20 over."=20 The administration's plan calls for $230 million in new investment from loc= al=20 utilities and other private entities. Abraham called it "the first concrete= =20 step to relieve congestion on the state's power grid."=20 The Bush administration, he said, "is taking a leadership role in addressin= g=20 a long-neglected problem in Caifornia's electricity transmission system."= =20 Pacific Gas and Electric Co. owns Path 15. During the late 1980s, the utili= ty=20 held public hearings in the Central Valley to discuss a possible expansion,= =20 but dropped the plans after concluding that existing transmission lines cou= ld=20 handle future demand.=20 When California's electricity shortages began to mount last year, Path 15= =20 proved to be a major bottleneck. By preventing an increased flow of power= =20 from the southern to the northern parts of the state, it contributed to=20 blackouts in Northern California. Earlier this year, the state PUC ordered = an=20 upgrade to the transmission system.=20 The federal Western Area Power Administration, which manages hydropower=20 projects in the Central Valley, is conducting studies for the Path 15=20 expansion and will be holding environmental impact hearings in Coalinga on= =20 Aug.=20 27 and in Los Banos on Aug. 28. More information is available on the agency= 's=20 Web site at www.WAPA.gov <http://www.WAPA.gov<;.=20 The agency will review the proposals and make a recommendation to Abraham.= =20 The proposals were made by, among others, PG&E Corp., Calpine Corp. and=20 Mirant Corp, the Western Area Power Administration said.=20 The expansion plans calls for a third transmission line and other upgrades= =20 that would permit an additional 1,500 megawatts of transmission capacity,= =20 enough to power 1.5 million homes. Construction time is estimated at three = to=20 four years and would cost $300 million.=20 The companies are expected to recapture their investment by adding a=20 surcharge on power transmitted over the new lines, Abraham said.=20 The expansion is likely to follow the same route identified in the hearings= a=20 decade ago, running in a 2,000-foot-wide corridor through the foothills wes= t=20 of Interstate 5, mainly over privately owned ranchland.=20 In a related development, Sen. Barbara Boxer, D-Calif., hailed an agreement= =20 between the House and Senate to spend $1.3 million for the new environmenta= l=20 impact report and feasibility studies to expand Path 15. The money will go = to=20 the Western Area Power Administration.=20 Tell us what you think -- What are your suggestions for saving energy? Send= =20 your best tips to Energy Desk, San Francisco Chronicle, 901 Mission St., Sa= n=20 Francisco CA 94103; or put your ideas in an energy-efficient e-mail to=20 energysaver@sfchronicle.com <mailto:energysaver@sfchronicle.com<.=20 Chronicle news se
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