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Sac Bee, Wed, July 25: Another push to rescue Edison Sac Bee, Wed, July 25: PG&E questions state's cost analysis Sac Bee, Wed, July 25: Blackouts don't justify takeout, Connell says Sac Bee, Wed, July 25: Utilities sell excess power -- at a loss Sac Bee, Wed, July 25: Dan Walters: Blackout threat dims, but state still= =20 faces tough energy decisions Sac Bee, Wed, July 25: Water crisis alert sought: El Dorado Hills could run= =20 out by the end of summer, officials to tell state SD Union, Wed, July 25: PG&E, Edison disagree on rate increase=20 State says just more than half of revenue needed; rest for utilities SD Union, Wed, July 25: News briefs on the California power crisis=20 SD Union, Wed, July 25: U.S. plans upgrading of energy bottleneck=20 Firms bid on Path 15 grid job, Abraham says LA Times, Wed, July 25: Reliant Energy sues California=20 SF Chron, Wed, July 25: Electricity fire sale reflects success, experts say SF Chron, Wed, July 25: Federal energy regulators meet Wednesday SF Chron, Wed, July 25: Energy giant finances library improvements=20 SF Chron, Wed, July 25: News briefs on the California power crisis SF Chron, Wed, July 25: PG&E demands hearing on state power buys Officials blast release of erroneous data SF Chron, Wed, July 25: State ISO vulnerable to power play Mercury News, Wed, July 25: PG&E asks for public hearing on electricity rat= e=20 data=20 Mercury News, Wed, July 25: Energy expense strains schools Mercury News, Wed, July 25: PG&E challenges claim that no rate will be need= ed OC Register, Wed, July, 24: Energy notebook Official says absence of blackouts may give wrong idea OC Register, Wed, July 24: Lawmakers adjourn without Edison deal=20 Dow Jones Interactive, Wed, July 25: Arizona regulators move to kill=20 electric competition Dow Jones Interactive, Wed, July 25: Hardin electrical generator will be=20 coal gasification plant Dow Jones Interactive, Wed, July 25: Optimistic Edison says turnaround is= =20 possible electricity Energy Insight, Wed, July 25: Mining suffering an 'energy' shortage Another push to rescue Edison=20 By Kevin Yamamura Be Capitol Bureau (Published July 25, 2001)=20 State Assembly leaders Tuesday began another attempt to strike a deal spari= ng=20 Southern California Edison from bankruptcy, even as company officials=20 predicted lawmakers would not meet their mid-August deadline.=20 Gov. Gray Davis and the legislators have tried for months to craft an=20 agreement that would restore Edison to financial health and thereby relieve= =20 California of having to purchase energy for the state's second-largest=20 utility. An initial agreement worked out by Edison and the Democratic=20 governor set an Aug. 15 deadline for legislative approval.=20 While most lawmakers have left Sacramento for the beginning of a monthlong= =20 summer recess, Assembly leaders have set an ambitious schedule this week th= at=20 could lead to a vote as soon as Friday, said Paul Hefner, a spokesman for= =20 Assembly Speaker Robert Hertzberg, D-Sherman Oaks.=20 That scenario would require calling back 80 Assembly members from throughou= t=20 the state and beyond. Leaders would have to negotiate a consensus deal befo= re=20 Friday.=20 Even if the Assembly passes a plan, the Senate would also have to return to= =20 send it to the governor -- a move Senate President Pro Tem John Burton=20 earlier said he did not support.=20 And in a conference call Tuesday with creditors, an Edison official said he= =20 does not expect a final deal by the original deadline.=20 "I think we have to concede the ability to get everything completed by Augu= st=20 15," said Ted Craver, chief financial officer of Edison International, the= =20 parent company of Southern California Edison. "We do expect to continue to= =20 work hard on a negotiated solution."=20 Edison has an estimated $3.5 billion in debts to generators, banks and=20 alternative energy producers. Because any three creditors that are owed=20 $10,000 each could ask a bankruptcy judge to force the issue, some lawmaker= s=20 want to broker a deal that would ward off the threat.=20 Davis has threatened to call another special legislative session to have=20 lawmakers return to pass an Edison deal by Aug. 15.=20 "He thinks the date is very real and that they should work toward making th= at=20 deadline," said Steven Maviglio, a Davis spokesman. "Also, it sends a very= =20 strong signal to Wall Street that we intend to get this done on time."=20 So far, creditors have been patient with Edison, but that won't last=20 indefinitely, said Donald Sheetz, president of Street Asset Management, who= =20 is advising a committee of unsecured creditors.=20 "It's likely within the next month that something could happen if we don't= =20 resolve it as quickly as possible," he said.=20 But creditors seem willing to hold off "because of the diligence of the=20 Legislature to work the thing out," Sheetz added.=20 The Senate and the Assembly discussed three proposals last week that could= =20 not muster enough support to reach the governor's desk. A group of=20 legislators and Davis officials is trying this week to merge the three plan= s=20 -- two from the Assembly and one from the Senate -- into one that could gai= n=20 support.=20 The original deal between the governor and Edison focused on California=20 purchasing the utility's power lines for $2.76 billion, in exchange for a= =20 series of obligations by the company. The Senate scrapped that plan last we= ek=20 in favor of its own.=20 The Senate's proposal, SB 78xx by Sen. Byron Sher, D-Palo Alto, is now the= =20 anchor for a legislative deal. It would have the state issue $2.5 billion i= n=20 bonds to pay off Edison's debts to alternative generators and banks. The=20 state's large businesses would repay the money through a portion of their= =20 monthly rates.=20 The principal Assembly plan, AB 82xx, backed by Hertzberg and written by=20 Assemblyman Fred Keeley, D-Boulder Creek, would have the state purchase=20 Edison's transmission grid for $2.4 billion. Another Assembly proposal woul= d=20 charge customers a monthly fee to pay off Edison's debt.=20 Components of the two Assembly bills are likely to be included in either th= e=20 Senate plan or other connected legislation to be released today.=20 Bob Foster, Edison senior vice president, said he believes the two Assembly= =20 proposals have a "reasonable chance" of restoring the utility's credit and= =20 relieving the state from buying energy. But the Senate plan, he said, would= =20 leave Edison with $1 billion in debts that it could not absorb.=20 The Bee's Kevin Yamamura can be reached at (916) 326-5542 or=20 kyamamura@sacbee.com <mailto:kyamamura@sacbee.com<.=20 Bee Staff Writers Emily Bazar and Carrie Peyton contributed to this report. PG&E questions state's cost analysis=20 By Carrie Peyton Bee Staff Writer (Published July 25, 2001)=20 Pacific Gas and Electric Co. on Tuesday called for public hearings on how t= he=20 state has calculated electricity costs for years to come.=20 It said state cost projections, released to reporters Sunday evening and=20 filed with regulators on Monday, appear to be too incomplete to support the= =20 sweeping conclusions the state made.=20 In particular, PG&E said in a press release, the "missing data, discrepanci= es=20 and conflicting claims" make it impossible to determine how much money the= =20 state Department of Water Resources wants to collect from PG&E customers.= =20 Although PG&E just passes along state power charges, it is concerned about= =20 the collection formula because that could affect how much money might=20 eventually be available for both PG&E's ongoing operations and its past=20 debts.=20 PG&E filed for bankruptcy protection in April and has repeatedly clashed wi= th=20 regulators over how much money it should be allowed to charge in rates.=20 State determinations about power costs "affect the property, legal rights a= nd=20 duties of PG&E," and so the utility has a right to a hearing on the issue,= =20 PG&E said Tuesday in a letter faxed and mailed to DWR director Thomas=20 Hannigan.=20 State officials acknowledged Tuesday that they had mistakenly released some= =20 inaccurate numbers that conflicted with their final report to the state=20 Public Utilities Commission.=20 But they insisted that the result is the same: No rate increase will be=20 needed to repay the billions of dollars the state is spending to buy power = on=20 behalf of three cash-strapped utilities, including PG&E.=20 "It was just an unfortunate error and somebody is trying to exploit that in= to=20 something that it's not," said Joseph Fichera, a Wall Street financier=20 advising Gov. Gray Davis.=20 After studying the numbers for two days, however, PG&E felt that "there's= =20 very little evidence to support all the conclusions that they offered,"=20 utility spokesman John Nelson said.=20 In particular, PG&E is concerned that the state appears to be increasing th= e=20 amount of money it wants PG&E to pay in 2002 from 9.5 cents to 13.7 cents p= er=20 kilowatt-hour.=20 It also wants the state to explain how it can declare its own costs are "ju= st=20 and reasonable" at the same time that state agencies have been telling=20 federal regulators they want refunds because wholesale power costs were=20 unfair.=20 The Bee's Carrie Peyton can be reached at (916) 321-1086 or=20 cpeyton@sacbee.com <mailto:cpeyton@sacbee.com<. Blackouts don't justify takeout, Connell says=20 By Ed Fletcher Bee Capitol Bureau (Published July 25, 2001)=20 While operating in "crisis" mode, Department of Water Resources staff worke= d=20 20-hour days, slept in conference rooms and were fed pizza and sushi by the= =20 state as the department tried to keep California's lights on.=20 Saying the department "charged enough to feed a small army," state Controll= er=20 Kathleen Connell now is asking those employees to pay the state back about= =20 $3,600 for department food purchases in January.=20 "We are not going to be paying these bills," Connell told reporters Tuesday= .=20 The state does not buy business-hour meals for staff while they are in town= ,=20 Connell said. Additionally, the use of a government-issued credit card to= =20 make the purchases was improper, she said. If the department does not requi= re=20 the employees to pay for the takeout meals, she said, the department will= =20 have to absorb the cost.=20 The Department of Water Resources began scrambling to buy power Jan. 17 aft= er=20 Gov. Gray Davis declared a state of emergency -- the same day Northern=20 California was hit with rolling power blackouts. As a result of the=20 department's new responsibility, staff members buying power were asked to= =20 work nearly around the clock, said Oscar Hidalgo, a department spokesman.= =20 Buying food for staff during crisis situations is nothing out of the norm,= =20 Hidalgo said.=20 "Under emergencies such as these ... we believe we were in a position to do= =20 this. Our staff did nothing other than it would do during a flood," Hidalgo= =20 said.=20 California's recent success in keeping the lights on has led people to forg= et=20 the level of crisis the state was in, Hidalgo said. "It seems at every turn= =20 ... people are making Monday morning quarterback calls," he said.=20 Connell and her aides said buying power is not the same as firefighters=20 getting food while battling a blaze.=20 They said using the "Cal-Card" for buying food is specifically prohibited.= =20 "It's not an open line of credit," she said.=20 The Bee's Ed Fletcher can be reached at (916) 326-5548 or=20 efletcher@sacbee.com <mailto:efletcher@sacbee.com<. Utilities sell excess power -- at a loss=20 By Carrie Peyton Bee Staff Writer (Published July 25, 2001)=20 Nobody expected a year like this.=20 First there were blackouts in January, when there's supposed to be a surplu= s=20 of power.=20 Now utilities are dumping excess electricity in July, a month when they're= =20 used to barely squeaking by.=20 So what's going on?=20 California is using less power than expected because of a surge in=20 conservation and unseasonably cool weather.=20 So those who stocked up -- including the state Department of Water Resource= s=20 and the Sacramento Municipal Utility District -- are now selling megawatts= =20 for less than they paid.=20 The state sold 177,571 megawatt hours of surplus power in the first half of= =20 July for an average of about $37 a megawatt hour, after lining up supplies= =20 for an average of $118 per megawatt hour -- a loss of about $14 million ove= r=20 16 days.=20 Those who want California out of the power-buying business call this proof= =20 that electricity is better left to private businesses, which will buy more= =20 wisely because they're trying to maximize profits.=20 "History has proven that there is nothing less efficient than a=20 government-run monopoly," said Assemblyman John Campbell, who prodded the= =20 state to release the statistics on its power-sale losses.=20 Campbell, R-Irvine, said Tuesday that his office will be requesting more da= ta=20 from the Water Resources Department, possibly as early as today, to bring= =20 more scrutiny to pre-July losses and to any ongoing sales.=20 "The broader issue here is, in the past, when an Edison or a PG&E does this= ,=20 their shareholders bear the loss," he said.=20 That's not generally the case, say those who have monitored utility issues= =20 for years. Investor-owned utilities such as Pacific Gas and Electric Co. ha= ve=20 long been allowed to pass reasonable costs along to ratepayers, although=20 regulators have disallowed costs that were found to be serious blunders.=20 There is nothing in the surplus sales that looks like a blunder at this=20 point, said Mike Florio, an attorney for The Utility Reform Network, a=20 consumer group that often has gone to regulators to challenge utility=20 spending.=20 "Everyone on occasion sells power at a loss. Enron sells power at a loss," = he=20 said. "The question is, what is their track record over an extended period?= "=20 Unless utilities want to buy all their power in the costly spot market, the= y=20 will always have too much electricity on some days and too little on others= ,=20 said Jim Tracy, SMUD's planning director.=20 That's because they will buy power in advance, in blocks, to lock in lower= =20 prices than they expect at the last minute.=20 "When we buy a contract, it's for every day of the week," Tracy said. "If= =20 it's 98 degrees, we need it. If it's 88 degrees, we don't need it."=20 It's very common for utilities to be 1 percent to 2 percent off on their=20 forecasts over a year's time, and in any single month it's not uncommon to = be=20 3 percent to 5 percent off target, largely because of fluctuations in=20 weather, Tracy said. The variations can get even more dramatic over shorter= =20 periods.=20 "You could have a real cool June and a hot July and they offset themselves = in=20 the big picture," he said.=20 But this year has been much less predictable than usual for SMUD and other= =20 utilities, he added, because the public has responded so well to pleas for= =20 conservation.=20 SMUD began unloading power at a loss in spring, when it first became obviou= s=20 its customers were cutting back on use, sometimes by as much as 10 percent,= =20 and it went through another round of sales in July as temperatures stayed= =20 well below normal.=20 "It's hurting us," Tracy said. "It's nice and cool, so our customers don't= =20 want it ... (and) we're selling it for less than what we planned."=20 He said he couldn't provide any detailed figures because SMUD staffers=20 generally don't prepare reports on individual sales; instead, they just giv= e=20 the utility's elected board a monthly report on overall finances.=20 While SMUD has taken a hit so far, Tracy said, he still expects to come in = on=20 target for power purchases this fiscal year.=20 The state Department of Water Resources also minimized its losses from powe= r=20 sales, saying it had purchased about 5 percent more power than it needed=20 between July 1 and July 16, a variation well within industry norms for a=20 two-week period.=20 This is really normal," said Pete Garris, chief of operations for the state= 's=20 power-buying arm.=20 "The July temperatures and the conservation have made forecasting a little= =20 bit harder," he acknowledged, but he said he still hopes to end the year=20 within 5 percent of the projections supplied to his office by the state's= =20 three big utilities.=20 The Bee's Carrie Peyton can be reached at (916) 321-1086 or=20 cpeyton@sacbee.com <mailto:cpeyton@sacbee.com<. Dan Walters: Blackout threat dims, but state still faces tough energy=20 decisions (Published July 25, 2001)=20 Unusually cool summer weather, and conservation efforts, have lowered power= =20 consumption in California and forestalled -- at least for the moment -- the= =20 threat of blackouts, but political and financial aspects of the energy cris= is=20 remain very unsettled.=20 When the Legislature recessed for a monthlong vacation, it left behind the= =20 highly controversial issue of whether the state should rescue Southern=20 California Edison from the threat of bankruptcy. The larger Pacific Gas and= =20 Electric Co. has already sought bankruptcy protection, and Edison officials= =20 have said that without state intervention, Edison would likely follow.=20 The Legislature's inability to agree on an Edison plan after weeks of publi= c=20 and private debate and negotiations -- and the likelihood that nothing will= =20 happen until late August, at the earliest -- add more complexity to an=20 already uncertain financial picture.=20 Had the Legislature simply rejected Gov. Gray Davis' bailout deal with=20 Edison, at least the utility, its creditors, the state Public Utilities=20 Commission and other players in the financial game would have known=20 something. But by leaving it unsettled -- not only what kind of plan, but= =20 whether there will be any plan at all -- the Legislature left a very key=20 piece of the puzzle unfilled.=20 The state Department of Water Resources, which has been buying power for=20 California ever since the utilities lost their ability to borrow money in= =20 January, declared this week that it can refinance the state's $8 billion-pl= us=20 in power purchase debts, plus pay for future power buys, within the existin= g=20 utility rate structure, which includes a hefty rate boost enacted last=20 spring. But those assurances are dependent on keeping wholesale power rates= ,=20 which have declined dramatically in recent weeks, low and that, in turn,=20 depends on the unregulated prices of natural gas.=20 The Department of Water Resources also says there's enough "headroom" in th= e=20 rate to begin chipping away at the utilities' $13 billion-plus in power=20 purchase debt, but that's pure conjecture at this point. Had the Legislatur= e,=20 Davis and Edison agreed on a bailout scheme, the dimensions of Edison's deb= t=20 would have been known. The Legislature is insisting that Edison's parent=20 company and its debtors absorb some debt, rather than place it all on=20 ratepayers -- but how big a "haircut," if any, will be decreed is also=20 uncertain.=20 The uncertainty extends to the Public Utilities Commission, which must deci= de=20 soon how the revenue stream is to be divided among various claimants, wheth= er=20 rates need another boost, whether Edison's parent company should share=20 liability for its debts, and whether the Department of Water Resources will= =20 be allowed to pass along its costs to ratepayers without PUC agreement.=20 If this all sounds very confusing, it's because it is. Even the experts don= 't=20 know whether all of these elements can fit together in some workable fashio= n=20 -- uncertainty that was reflected in the sharp questions Tuesday to the=20 firm's chief financial officer, Ted Craver, by holders of Edison debt.=20 Craver described the legislative bailout plan as "still a work in progress"= =20 and expressed optimism that a working group of legislators and Davis=20 administration officials could agree on a compromise scheme.=20 Craver, under persistent questioning, indicated that Edison would be willin= g=20 to allow an Aug. 15 deadline for enacting its deal with Davis to slide -- a= n=20 important element, since the Legislature won't return to Sacramento until= =20 Aug. 20. But he said that even if there's agreement on a deal, Edison still= =20 doesn't know whether it will mesh with the pending Department of Water=20 Resources and PUC actions that will affect rates.=20 So while power blackouts are not imminent, the tightly interwoven issues of= =20 bailing out Edison, the Department of Water Resources' power purchases, the= =20 pending state bond issue, and PUC policy remain up in the air. And there ar= e=20 absolutely no guarantees that those involved can make it all work. They are= ,=20 after all, the folks who created this mess in the first place by=20 restructuring utilities through expedient politics and reacting slowly when= =20 matters began to deteriorate last year.=20 The Bee's Dan Walters can be reached at (916) 321-1195 or dwalters@sacbee.c= om=20 <mailto:dwalters@sacbee.com<. Water crisis alert sought: El Dorado Hills could run out by the end of=20 summer, officials to tell state.=20 By Peter Hecht Bee Staff Writer=20 (Published July 25, 2001) Warning that the community of El Dorado Hills could run out of water by the= =20 end of summer, El Dorado County water officials said Tuesday they will ask= =20 state and federal officials to declare a water crisis and allow them to pum= p=20 more water from Folsom Lake.=20 Amid heated exchanges at a Monday night community meeting, board members of= =20 the El Dorado Irrigation District were unable to agree on a plan that would= =20 have required strict water conservation measures for the fast-growing=20 community bordering Sacramento County.=20 So on Tuesday, district officials went to work on a strategy to obtain more= =20 water from Folsom Lake, construct a new pipeline to bring water down from t= he=20 upper Sierra or negotiate to purchase water from other agencies.=20 "We will not allow the system to run empty," EID General Manager Bill Wilki= ns=20 said. He said the district was writing to the state Water Resources Control= =20 Board, asking the agency to throw its political weight behind the district'= s=20 bid for more Folsom Lake water.=20 The EID argues it is entitled to take more than its current allotment from= =20 Folsom Lake by exercising its water rights for a hydroelectric dam and wate= r=20 delivery system -- called Project 184 -- in eastern El Dorado County. The= =20 system, heavily damaged by storms in 1997, is able to pull out only about= =20 two-thirds of the water it normally would take from the American River. The= =20 remainder merely flows down into Folsom Lake.=20 But, citing a shrunken lake level due to low snowmelt this year, the U.S.= =20 Bureau of Reclamation cut the amount that all regional water districts coul= d=20 pull from Folsom Lake by 15 percent. Federal officials say the EID is=20 entitled no special treatment.=20 Tom Aiken, the bureau's Central California manager, said the EID's request = to=20 pull 1,700 to 2,000 acre-feet of water from Folsom Lake above its allotment= =20 for the year could draw too much cold water from deeper depths of the lake.= =20 The bureau must release a certain amount of cold water into the American=20 River to protect steelhead and salmon populations downstream, he said.=20 Aiken also said the EID had plenty of time to plan for its water needs=20 because the bureau issued warnings, starting in February, that lake levels= =20 would be low.=20 But the EID says it is in trouble because Folsom Lake is the primary water= =20 source for El Dorado Hills. While the EID has had problems with Project 184= ,=20 the agency also has been unable to ship water to El Dorado Hills from some= =20 reservoirs in eastern El Dorado County as a result of restrictions imposed = by=20 the state Department of Health Services.=20 That agency ordered the EID to construct enclosed water tanks to prevent=20 pollutants from entering treated water basins. Until the work is done, two= =20 primary water storage basins can't be used to supply water to western El=20 Dorado County.=20 EID officials say El Dorado Hills, a booming community of more than 20,000= =20 residents, needs 6,700 acre-feet of water from Folsom Lake to meet the need= s=20 of current residents and an ongoing surge in residential construction. EID= =20 officials say they'll only receive about 5,350 acre-feet from Folsom Lake a= s=20 a result of the cutbacks ordered by the Bureau of Reclamation.=20 At Monday night's special meeting, EID board member Al Vargas and other=20 officials warned that the community would run out of water by September if= =20 urgent action is not taken. "We're in a crisis situation and we need to do= =20 something," Vargas said.=20 He urged the EID to immediately declare a Stage 3 "water emergency" for El= =20 Dorado Hills. Such a declaration would allow the EID to conduct hearings on= =20 whether to issue citations for failure to conserve water, suspend water met= er=20 sales and impose higher, drought-year water rates.=20 On June 18, the EID imposed a Stage 2 "water warning" that sought a 5 perce= nt=20 to 10 percent reduction in water use for all customers in the EID's more th= an=20 200-square-mile service area in El Dorado County. Mandatory measures includ= ed=20 prohibitions against using potable, or drinking, water to wash driveways an= d=20 parking lots or to fill ponds.=20 With only three of five EID board members present Monday night, Vargas and= =20 fellow board member Howard Kastan voted to order the more severe Stage 3=20 "water emergency" restrictions for El Dorado Hills. The plan failed to win= =20 the required three votes to pass when board member Dirk Gillmeister decline= d=20 to go along.=20 Gillmeister said he wanted to delay action until an Aug. 6 meeting when two= =20 other board members would be present.=20 Vargas, saying there was no time to waste, voted against continuing the ite= m.=20 "The board has consistently tried to sweep this under the rug as if there i= s=20 no problem here."=20 Ultimately, the board directed the EID staff to pursue three possible=20 options: begin negotiations to buy water from other agencies, seek more wat= er=20 from Folsom Lake or build a $300,000 pipeline to carry more water from=20 eastern El Dorado County.=20 But Wilkins said the pipeline project, which would take up to 45 days to=20 complete, would would free up only 600 to 800 acre-feet for El Dorado Hills= ,=20 much less than needed.=20 While the EID wants more water from Folsom Lake, its failure to adopt=20 stricter conservation measures may not help politically.=20 "We felt if they would implement mandatory water conservation measures=20 immediately, they could probably squeeze through" and meet their needs for= =20 the year, Aiken said.=20 The Bee's Peter Hecht can be reached at (916) 608-8667 or phecht@sacbee.com= =20 <mailto:phecht@sacbee.com<. PG&E, Edison disagree on rate increase=20 State says just more than half of revenue needed; rest for utilities By Ed Mendel=20 UNION-TRIBUNE STAFF WRITER=20 July 25, 2001=20 SACRAMENTO -- Pacific Gas & Electric yesterday sharply questioned whether t= he=20 Davis administration can avoid an additional rate increase, but a Southern= =20 California Edison official said the existing rates may cover all the costs.= =20 The opposite reactions to an administration proposal for splitting rate=20 revenue between the state and the utilities reflects differing views of how= =20 Gov. Gray Davis has handled the electricity crisis.=20 PG&E broke off negotiations with Davis in early April and filed for=20 bankruptcy. Edison has been working with Davis on a legislative rescue plan= =20 to avoid bankruptcy, and the Assembly may be asked to return Friday to vote= =20 on the proposal.=20 The latest disagreement is over the administration's announcement Sunday th= at=20 the state will need only a little more than half of the revenue from a reco= rd=20 rate increase, leaving the rest for the struggling utilities.=20 The increase began appearing in the bills of PG&E and Edison customers last= =20 month. The Public Utilities Commission is expected to approve a similar rat= e=20 increase for San Diego Gas & Electric next month.=20 The Davis administration said it will need 1.65 cents of a 3 cents per=20 kilowatt-hour rate increase for PG&E and Edison customers to pay off a $12.= 5=20 billion power bond that will be issued in the fall.=20 Davis consultants, after weeks of speculation, said no additional rate=20 increases will be needed to cover the bond, pay for long-term power contrac= ts=20 and provide a revenue stream for additional bonds to pay off utility debts.= =20 But PG&E and Edison reached different conclusions after looking at the=20 information that the administration provided to the PUC. The commission wil= l=20 decide how to split the rate revenue next month.=20 Edison's chief financial officer, Ted Craver, told bondholders during a=20 conference call yesterday that all of the costs appear to fit into the=20 existing rates, if the administration's model and numbers are accepted.=20 "But we must remember that we started deregulation with forecasts that made= =20 it look like everything fit, too," Craver said. "We are facing highly=20 volatile gas prices."=20 PG&E said the information provided by the administration seems to add up to= =20 an additional rate increase next year and called for a public hearing. PG&E= =20 said the administration filing only contains data for the next 18 months.= =20 "Such an omission makes it impossible to analyze (the administration's)=20 claims to the media that a rate decrease could be likely in 2003," PG&E sai= d=20 in a statement.=20 The governor's press secretary, Steve Maviglio, said yesterday evening that= =20 the administration is preparing a point-by-point refutation of the issues= =20 raised in PG&E's statement.=20 The Senate approved an Edison rescue plan last week before leaving for a=20 monthlong summer recess. Assembly Speaker Robert Hertzberg, D-Van Nuys,=20 adjourned the Assembly on call.=20 The speaker's press secretary said a working group is meeting with=20 representatives of the Senate and the administration on a modification of t= he=20 Senate plan that may be ready for an Assembly vote as soon as Friday.=20 News briefs on the California power crisis=20 ASSOCIATED PRESS=20 July 25, 2001=20 RIVERSIDE =01) The Board of Supervisors wants a proposed power-line route t= hat=20 would run through the southwest part of the county to stay clear of cities.= =20 The board will ask the state Public Utilities Commission to direct San Dieg= o=20 Gas and Electric, which has submitted the power-line plans, to look for=20 alternate routes, including areas east of Temecula.=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 plan, which is estimated at $271 million, must be approved by PUC=20 members.=20 SDG&E officials said they are willing to meet with county administrators to= =20 discuss alternative routes. Residents opposing the project said the utility= =20 should upgrade its existing lines.=20 =01)=01) DIAMOND BAR =01) Air quality officials on Tuesday rejected a proposal by an= =20 energy company to start building a power plant near a state prison because= =20 there aren't strict smog prevention measures in place.=20 The South Coast Air Quality Management District told Delta Power Co. of New= =20 Jersey to come back Aug. 22 with a revised plan. That will leave a little= =20 more than a month before the plant is supposed to be operational under the= =20 governor's emergency fast-track program for new power plants.=20 Delta wants to build a power plant near the California Institution for Men = in=20 Chino which would supply about 135,000 homes with electricity. The natural= =20 gas facility would cost about $125 million.=20 The governor's emergency plan eases pollution restrictions and shortens the= =20 review process but the plant still must receive approval by the AQMD.=20 The agency agreed to give Delta a permit back in May. But after=20 environmentalists protested, board members expressed concerns about excess= =20 nitrogen dioxide that would be emitted by the plant.=20 "We're under an obligation to act quickly, but we're under no obligation to= =20 suspend our rules," AQMD official Peter Mieras said Tuesday.=20 =01)=01) SAN LUIS OBISPO =01) Pacific Gas and Electric Co. has been cutting down tre= es=20 near its nuclear power plant to reduce the possibility of a fire that could= =20 knock out power lines during peak demand.=20 However, utility officials said Tuesday that it won't cut as many trees as = it=20 had originally planned. PG&E officials said they would cut about 7 percent = of=20 the trees and not the 30 to 50 percent once planned.=20 "We found that we were able to get the canopy separation we need by removin= g=20 fewer trees," said Jeff Lewis, PG&E spokesman.=20 PG&E began cutting down the trees last week beneath high-voltage lines=20 connected to the Diablo Canyon nuclear power plant. Work won't be completed= =20 for another two weeks.=20 U.S. plans upgrading of energy bottleneck=20 Firms bid on Path 15 grid job, Abraham says By Gordon Smith=20 COPLEY NEWS SERVICE=20 July 24, 2001=20 LOS ANGELES -- Raising the political stakes in a battle over how to solve t= he=20 state's power crisis -- and who will get credit for it -- Energy Secretary= =20 Spencer Abraham said yesterday that the federal government plans to have=20 private companies upgrade central California's Path 15, a bottleneck in the= =20 state's electrical transmission grid.=20 Abraham, speaking at a news conference here, said federal officials have=20 received 13 bids from unspecified companies interested in building a third= =20 transmission line along an 84-mile corridor between Los Banos, in Merced=20 County, and Gates, near Coalinga in Fresno County. The line and related=20 improvements would enable an additional 1,500 megawatts -- enough power for= =20 1.5 million households -- to flow from generating plants in Southern=20 California to the northern part of the state, he said.=20 "There have been moments during the recent blackouts when the southern part= =20 of the state had an excess (of power) . . . and we couldn't get the=20 electricity from the south to the north," Abraham said. "Fifteen hundred=20 megawatts would have made a major difference."=20 The bids from private contractors mean the line, which will cost an estimat= ed=20 $300 million, can now be built "in a way that doesn't require either the=20 taxpayers or ratepayers of California or the United States of America to ha= ve=20 to take responsibility for it," Abraham said.=20 However, that claim was contradicted by Michael Hacskaylo, an administrator= =20 for the Western Area Power Administration who appeared with Abraham.=20 Hacskaylo said ratepayers ultimately would bear the cost of building the li= ne=20 through higher electricity rates.=20 "One way or another there will probably be a transmission rate charge to mo= ve=20 power over this (new line) . . . and it would show up in the overall cost o= f=20 power. It would not, I think, show up as a separate charge" on electricity= =20 bills, he said.=20 Yesterday's announcement by Abraham caught state officials by surprise. Ste= ve=20 Maviglio, a spokesman for Gov. Gray Davis, said the governor did not know o= f=20 the announcement in advance and was unaware of details of the federal=20 proposal to upgrade Path 15.=20 "The governor is skeptical of any effort by private companies to increase= =20 their stranglehold over the power system in California," Maviglio said.=20 John Tremayne, a spokesman for Pacific Gas and Electric, which owns the=20 existing Path 15 transmission lines, said the company has been working with= =20 the California Public Utilities Commission for months on a separate proposa= l=20 to upgrade Path 15 on its own.=20 More recently, PG&E also has cooperated with federal officials seeking to= =20 take command of the project, Tremayne said, and the company is willing to d= o=20 a limited amount of the expansion work in conjunction with other partners.= =20 "We are continuing to work on both" project alternatives, he said.=20 Carl Wood, a PUC commissioner, called the Department of Energy's proposal= =20 "not helpful . . . they're giving us help in areas where we don't need it."= =20 Meanwhile, Gregg Fishman, a spokesman for the California Independent System= =20 Operator, which manages most of the state's power grid, said Path 15 needs = to=20 be upgraded but noted that his agency is neutral on whether it should be=20 accomplished under the direction of federal or state officials.=20 Members of President George Bush's Cabinet have made a concerted effort in= =20 recent weeks to stump for the administration's recently announced energy=20 policy, and yesterday's announcement was in that vein.=20 Abraham said that solving the long-standing problem of the Path 15 bottlene= ck=20 "was one of the recommendations in the president's energy plan."=20 "The kinds of costs being borne by the people and the economies in the=20 communities affected (by blackouts) will be considerably greater if we don'= t=20 act soon," he added. Reliant Energy Sues California =20 By Associated Press=20 HOUSTON -- Reliant Energy Cos. has sued California to recover money the=20 company says it is owed under power contracts it signed with the state. Reliant said it is owed $337 million for unpaid power bills in California,= =20 but the lawsuit involves only a portion of that amount. A Reliant spokesman= =20 did not immediately have a dollar figure available and the company did not= =20 specify in the lawsuit how much it is seeking. The lawsuit, filed Friday in Los Angeles Superior Court, applies to contrac= ts=20 that Reliant made through the California Power Exchange Corp., the=20 now-defunct exchange that was the state's middleman for the buying and=20 selling of power. Among the contracts Reliant entered into were those for future purchases, t= he=20 Houston Chronicle reported Wednesday. Reliant said in its lawsuit that because of defaults by purchasers Pacific= =20 Gas & Electric Co. and Southern California Edison Co., the Power Exchange= =20 started liquidating contracts to distribute money to companies such as=20 Reliant. But the state seized the contracts before the liquidation was complete and= =20 transferred the rights to the California Department of Water Resources, the= =20 suit said. Reliant said that constitutes taking the Power Exchange's property rights= =20 without just compensation under the California constitution. The Houston-based company says it should be paid for the reasonable value o= f=20 the contracts and hasn't been compensated for damages it suffered when the= =20 state took the contracts. Steven Maviglio, press secretary for California Gov. Gray Davis, called the= =20 lawsuit "just another example of Reliant having no shame when it comes to= =20 greed." Maviglio told the newspaper that the state has said it will pay a fair and= =20 just value for the contracts. The state's compensation and claims board is= =20 expected to come up with the amount, but Maviglio said that may take some= =20 time. (PROFILE (CO:Southern California Edison Co.; TS:SCE;) )=20 For information about reprinting this article, go to=20 <http://www.lats.com/rights/register.htm<;=20 Electricity fire sale reflects success, experts say=20 Lynda Gledhill, Chronicle Sacramento Bureau <mailto:lgledhill@sfchronicle.c= om< Wednesday, July 25, 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= 7/25/ MN218245.DTL< Sacramento -- California's sale of surplus electricity at a loss during the= =20 first few weeks of July is a natural consequence of the state's entry into= =20 the power- buying business, several energy analysts said yesterday.=20 While critics blasted the administration for what they called inept handlin= g=20 of power purchases, some energy experts and representatives of Gov. Gray=20 Davis said the numbers actually reflect a turnaround in the state's energy= =20 market.=20 State officials disclosed this week that mild weather and strong conservati= on=20 efforts left California with more power than it needed on some days.=20 During the first three weeks of July, the state sold 117,571 megawatt hours= =20 at a loss estimated to be about $14 million. The sale represents about 5=20 percent of all electricity purchased during the same period.=20 "We have achieved one goal -- which is to bring some normalcy to the entire= =20 process," said Oscar Hidalgo, spokesman for the Department of Water=20 Resources, the agency purchasing the state's power. "The same things that= =20 happen normally to a utility are happening to us."=20 Hidalgo said California is now the biggest power buyer in the nation. "We= =20 have an impact on the markets every day," he said. "They know when we don't= =20 need power, and the prices go down. They see the market conditions and . . = .=20 adjust to our needs."=20 Susan Oto of the Sacramento Municipal Utility District said her district=20 sometimes finds itself, as does the state, in the position of having to sel= l=20 off surplus power.=20 "It's not unusual when you look at an annual basis to be off 1 or 2 percent= =20 either way," she said. "If you look at one day or one month the fluctuation= s=20 are going to look much larger."=20 Since Jan. 17, the state has bought $8 billion of power for California's=20 troubled utilities. It has also entered into a series of long-term contract= s=20 that will continue to provide power for the next 15 to 20 years.=20 Some energy experts said the loss is not alarming given the unusual July=20 weather.=20 "This wouldn't be an issue if it was a hot July and the prices were high,"= =20 said Mark Bernstein, a senior policy analyst with Rand.=20 Bernstein said more moderate prices have the energy market on a more even= =20 trend, although he expects natural gas prices rising again as more power=20 plants come on line.=20 The key is for the state not to buy too much power at high prices that it= =20 will be constantly selling at a loss, said Michael Florio of The Utility=20 Reform Network. "At this point, the losses look like pretty small potatoes,= "=20 he said. "The questions are: What is the magnitude and have they seriously= =20 overbought into the future?"=20 Hidalgo, who did not dispute the estimated $14 million loss figure, said th= e=20 Department of Water Resources tries to strike a balance in its contracts. T= he=20 goal has been to have a mix of contracts that include peak power, long- ter= m=20 and short-term supply.=20 State power buyers intend to have about 95 percent of estimated demand --= =20 which is determined by the utilities -- lined up in advance, leaving a smal= l=20 amount exposed to the volatile spot market.=20 According to documents released at the end of May, the state has about 40= =20 percent of the estimated demand for the third quarter of the year locked up= =20 in long-term contracts.=20 "There are going to be days when there is a surplus and days when we are=20 short," Hidalgo said. "This is a product that is bought based on a weather= =20 forecast. If we had planned on July being cool and it wasn't, we would have= =20 been in big trouble."=20 In a letter to Assemblyman John Campbell, R-Irvine, the director of the DWR= =20 said that since July 1, the state had sold 177,571 megawatt hours at a rate= =20 of $36.95 each, while it paid just over $118 a megawatt hour for about 3.5= =20 million megawatts over the same period.=20 E-mail Lynda Gledhill at lgledhill@sfchronicle.com=20 <mailto:lgledhill@sfchronicle.com<.=20 ,2001 San Francisco Chronicle </chronicle/info/copyright< Page A - 10=20 Federal energy regulators meet Wednesday=20 MARK SHERMAN, Associated Press Writer Wednesday, July 25, 2001=20 ,2001 Associated Press=20 URL:=20 <http://www.sfgate.com/cgi-bin/article.cgi?file=3D/news/archive/2001/07/25/= natio nal1916EDT0220.DTL< (07-25) 00:01 PDT WASHINGTON (AP) --=20 With California's energy crisis in a relative lull, federal energy regulato= rs=20 are taking one last look at the state's power issues before they begin a lo= ng=20 summer break.=20 The Federal Energy Regulatory Commission meets Wednesday for the last time= =20 until after Labor Day. Among the agenda items are the recommendations of=20 FERC's chief administrative law judge, who failed to broker a settlement=20 between California and power wholesalers on allegations of overcharges.=20 Judge Curtis L. Wagner Jr. called for a trial-like hearing within 60 days t= o=20 resolve the dispute. California claims generators overcharged by $8.9=20 billion; wholesalers offered to refund slightly more than $700 million.=20 After presiding over 15 days of closed-door talks at the commissioners'=20 request, Wagner said California failed to make its case for $8.9 billion, b= ut=20 "that very large refunds are due is clear." He said refunds could amount to= =20 "hundreds of millions of dollars, probably more than $1 billion."=20 California officials have said they hope FERC will reject Wagner's=20 recommendation for several reasons; for one thing, California wants=20 overcharges dating back to May 2000; Wagner suggested going back only to=20 October.=20 FERC ordered the talks in the hope that brief, but intense negotiations cou= ld=20 produce a settlement, particularly with the threat of regulatory action=20 hanging over the participants.=20 Michael Kahn is chairman of the California Independent System Operator, whi= ch=20 manages most of the state's electricity grid, and California's lead=20 negotiator in the talks. He said commissioners have more than enough eviden= ce=20 to support ordering refunds on Wednesday.=20 "I hope they don't order 60 more days of hearings and all that," Kahn said.= =20 "FERC has in front of it an enormous record."=20 Commissioners also may discuss the independence of the ISO board of=20 directors. Wagner referred to the board's independence as a "joke," accordi= ng=20 to participants in the failed negotiations. And energy suppliers have=20 complained that the board, appointed by Gov. Gray Davis, is too closely=20 allied with the state Department of Water Resources, which buys power for t= he=20 state.=20 Davis succeeded in replacing the old board of directors, which included=20 energy industry representatives. Davis said they ignored consumer interests= .=20 FERC imposed around-the-clock controls on wholesale power prices in June.= =20 Previously prices were capped only during power emergencies. But a=20 combination of mild weather, conservation and new power plants has given=20 California a reprieve from power emergencies and rolling blackouts.=20 Electricity has been so plentiful in July that the state has resold 5 perce= nt=20 of the electricity it had purchased at a loss of $14 million.=20 ,2001 Associated Press=20 MARTINEZ=20 Energy giant finances library improvements=20 <mailto:chronfeedback@sfchronicle.com< Wednesday, July 25, 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= 7/25/ MNL1690155.DTL< Contra Costa County supervisors accepted a $2 million donation from energy= =20 giant Mirant Corp. yesterday to improve library service in east Contra Cost= a.=20 The donation by Mirant, which has been under investigation for alleged ener= gy=20 price manipulation, will give $400,000 a year over the next five years to= =20 libraries in the region. The county librarian will work with the East Regio= n=20 Library Board to develop a plan for using the donation.=20 Compiled from Chronicle staff reports=20 ,2001 San Francisco Chronicle </chronicle/info/copyright< Page A - 14=20 News briefs on the California power crisis=20 The Associated Press Wednesday, July 25, 2001=20 ,2001 Associated Press=20 URL:=20 <http://www.sfgate.com/cgi-bin/article.cgi?file=3D/news/archive/2001/07/25/= state 0643EDT0130.DTL< (07-25) 03:43 PDT RIVERSIDE, Calif. (AP) --=20 The Board of Supervisors wants a proposed power-line route that would run= =20 through the southwest part of the county to stay clear of cities.=20 The board will ask the state Public Utilities Commission to direct San Dieg= o=20 Gas and Electric, which has submitted the power-line plans, to look for=20 alternate routes, including areas east of Temecula.=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 plan, which is estimated at $271 million, must be approved by PUC=20 members.=20 SDG&E officials said they are willing to meet with county administrators to= =20 discuss alternative routes. Residents opposing the project said the utility= =20 should upgrade its existing lines.=20 DIAMOND BAR, Calif. (AP) -- Air quality officials on Tuesday rejected a=20 proposal by an energy company to start building a power plant near a state= =20 prison because there aren't strict smog prevention measures in place.=20 The South Coast Air Quality Management District told Delta Power Co. of New= =20 Jersey to come back Aug. 22 with a revised plan. That will leave a little= =20 more than a month before the plant is supposed to be operational under the= =20 governor's emergency fast-track program for new power plants.=20 Delta wants to built a power plant near the Chino Institute for Men in Chin= o,=20 Calif., which would supply about 135,000 homes with electricity. The natura= l=20 gas facility would cost about $125 million.=20 The governor's emergency plan eases pollution restrictions and shortens the= =20 review process but the plant still must receive approval by the AQMD.=20 The agency agreed to give Delta a permit back in May. But after=20 environmentalists protested, board members expressed concerns about excess= =20 nitrogen dioxide that would be emitted by the plant.=20 "We're under an obligation to act quickly, but we're under no obligation to= =20 suspend our rules," AQMD official Peter Mieras said Tuesday.=20 SAN LUIS OBISPO, Calif. (AP) -- Pacific Gas and Electric Co. has been cutti= ng=20 down trees near its nuclear power plant to reduce the possibility of a fire= =20 that could knock out power lines during peak demand.=20 However, utility officials said Tuesday that it won't cut as many trees as = it=20 had originally planned. PG&E officials said they would cut about 7 percent = of=20 the trees and not the 30 to 50 percent once planned.=20 "We found that we were able to get the canopy separation we need by removin= g=20 fewer trees," said Jeff Lewis, PG&E spokesman.=20 PG&E began cutting down the trees last week beneath high-voltage lines=20 connected to the Diablo Canyon nuclear power plant. Work won't be completed= =20 for another two weeks.=20 ,2001 Associated Press=20 PG&E demands hearing on state power buys=20 Officials blast release of erroneous data=20 Bernadette Tansey, Chronicle Staff Writer <mailto:btansey@sfchronicle.com< Wednesday, July 25, 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= 7/25/ MN74804.DTL< State officials who reassured California consumers that they would be spare= d=20 further electricity rate increases failed to back up their claims, Pacific= =20 Gas and Electric Co. officials said yesterday as they demanded a public=20 hearing on the cost of state power purchases.=20 Officials of California's largest utility said the data issued Sunday and= =20 Monday by the state Department of Water Resources about its long-term=20 electricity contracts are so sketchy and inconsistent that it is impossible= =20 to tell how much customers will have to pay -- and whether current rates wi= ll=20 cover PG&E's costs.=20 "The more they appear to keep information from the public, the harder it wi= ll=20 be for people to accept their statements, like, 'There won't be another rat= e=20 increase,' " said PG&E spokesman John Nelson.=20 The utility released a letter urging the Department of Water Resources to= =20 hold an evidentiary hearing at which it would publicly detail its=20 expenditures and flesh out its conclusion that rate increases will not be= =20 necessary.=20 Gov. Gray Davis' aides reacted angrily to PG&E's position, saying the utili= ty=20 had been invited to ask the state for any additional information it needed.= =20 "They're dazed and confused," said Davis financial adviser Joseph Fichera,= =20 chief executive officer of Saber Partners LLC.=20 Fichera said PG&E participated in a telephone conference call Monday in whi= ch=20 administration officials answered questions about the state's power purchas= es=20 and the $12.6 billion bond issue that will reimburse the state for advancin= g=20 the money. He said PG&E had refused to share information with the state on= =20 the operating costs that it wants covered through utility rates.=20 PG&E says that after Department of Water Resources officials told reporters= =20 Sunday that no rate increase was needed and that a decrease was even possib= le=20 by 2003, the department filed revised numbers Monday that reflected increas= es=20 of up to $930 million in its revenue needs from PG&E customers.=20 Fichera said PG&E is making hay out of an innocent mistake by a state=20 employee who issued an initial report containing the wrong numbers -- a=20 mistake that was quickly corrected.=20 "They're making charges based on an erroneous document," Fichera said.=20 At stake for PG&E is the leftover money to pay the utility's costs after th= e=20 state takes its share for power purchases -- a split that will be reviewed = by=20 the state Public Utilities Commission. Under state legislation that=20 authorized the Department of Water Resources to buy power for the utilities= =20 starting in January, the PUC has no authority to disapprove any of the=20 agency's expenditures.=20 E-mail Bernadette Tansey at btansey@sfchronicle.com=20 <mailto:btansey@sfchronicle.com<.=20 ,2001 San Francisco Chronicle </chronicle/info/copyright< Page A - 10=20 State ISO vulnerable to power play /=20 Zachary Coile, Edward Epstein, Chronicle Washington Bureau=20 <mailto:zcoile@sfchronicle.com< Wednesday, July 25, 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= 7/25/ MN205555.DTL< Washington -- A nasty power struggle is looming between Gov. Gray Davis and= =20 federal energy regulators over who should control California's energy marke= t.=20 The possible outcome? The five Davis appointees on the board of the=20 California Independent System Operator, which runs the state's power grid,= =20 will be dumped in favor of a new board composed of so-called disinterested= =20 parties -- mostly energy experts from industry and academia.=20 Davis' press spokesman, Steve Maviglio, said this week that the state has= =20 been told informally that the Federal Energy Regulatory Commission's move= =20 could come as early as today. When it does, the state will fight.=20 "The governor says he will declare nuclear war if they take the ISO away fr= om=20 the state," Maviglio said.=20 Regulatory commission officials are poised to discuss the change at the=20 urging of private electricity producers who complain that the current Cal-I= SO=20 board fails to meet federal requirements and is weighted against them.=20 But consumer advocates wonder why the commission would make changes in the= =20 state's energy program just when it seems that California might be digging= =20 its way out of its crisis through a combination of conservation and power= =20 plant construction.=20 The timing of the possible regulatory commission order is a question mark,= =20 however. California congressional sources say members of the regulatory=20 commission staff have told them the move probably won't come soon.=20 The furor started earlier this month when regulatory commission Chairman Cu= rt=20 Hebert was quoted as saying that he wants to issue an order to replace the= =20 current Cal-ISO board as soon as August.=20 But the commission could delay such an order in an attempt to first deal wi= th=20 other pressing topics. These include ordering a 60-day evidentiary hearing= =20 into California's demand for $8.9 billion in alleged overcharges by power= =20 generators. Or it could be that Hebert cannot muster a majority of the=20 five-member federal regulatory board to support him.=20 WHERE STATE COMES FROM The state's position is that federal authorities, who have clashed repeated= ly=20 with Davis during the state's energy crisis, do not have the legal power to= =20 "take away a state-created authority," said Maviglio.=20 The idea of stripping away state control of the ISO is being pushed by the= =20 Electric Power Supply Association, a group of 42 power marketers and seller= s.=20 The group petitioned the commission to reorganize the board in April.=20 Industry representatives argue that the five-member board is too politicall= y=20 tied to the Democratic governor and the Legislature, and to the state throu= gh=20 the Department of Water Resources, which is California's No. 1 power buyer.= =20 The power producers have been up in arms since January, when the state=20 replaced a 26-member ISO board balanced between power producers and consume= rs=20 with the smaller five-member board handpicked by the governor.=20 Davis argued that the old board was unwieldy and clogged with people direct= ly=20 beholden to the power industry. The new board would be more responsive to t= he=20 state's needs, state officials argued.=20 That's the problem, power producers said.=20 CONTROL AT STAKE "It gives too much control to the buyer, which is the state," said Lynne=20 Church, president of the industry association.=20 Church said she has member marketers and power sellers who would like to se= ll=20 directly to customers, especially California's big industrial power buyers.= =20 But because the state is about to float a multibillion-dollar bond measure= =20 for electricity purchases, it will require that all power sales go through= =20 the state and not through such private buyers.=20 "They're just going to be able to keep (competitors) out of the grid," Chur= ch=20 said. She said an impartial ISO board would help ensure an open marketplace= .=20 Mark Stultz, a vice president of the power suppliers' association, said his= =20 group hopes that a possible regulatory commission order to regear the ISO= =20 would be the first step toward creating one or two regional power buying=20 authorities for the entire Western U.S. grid.=20 "We'd be happy with a larger regional transmission organization, one with= =20 greater independence," Stultz said.=20 But Marc Cooper of the Consumer Federation of America said that shaking up= =20 the ISO is a bad idea.=20 "It would appear California has made a lot of progress in dealing with the= =20 problem," he said. "Why do they want to fuss with these people?"=20 MOTIVES SUSPECT Cooper said he distrusted the power companies' motives for dismantling the= =20 current ISO.=20 "These guys are not interested in the public interest, only in the private= =20 interest," he said.=20 E-mail the writers at zcoile@sfchronicle.com <mailto:zcoile@sfchronicle.com= <=20 and eepstein@sfchronicle.com <mailto:eepstein@sfchronicle.com<.=20 ,2001 San Francisco Chronicle </chronicle/info/copyright< Page A - 1=20 PG&E asks for public hearing on electricity rate data SACRAMENTO (AP) -- Pacific Gas and Electric Co. officials asked Tuesday for= a=20 public hearing on revised state revenue requirement figures it says show PG= &E=20 customers could see a 44 percent rate increase in 2003.=20 The California Department of Water Resources said no rate increase should b= e=20 necessary under updated figures it filed Monday with the California Public= =20 Utilities Commission.=20 ``The new CDWR filing makes clear that the department is seeking to charge= =20 PG&E customers a much higher rate, especially in 2002,'' the utility said i= n=20 a letter to DWR.=20 Utility officials said the DWR will need to charge PG&E customers 13.7 cent= s=20 per kilowatt hour in 2002. The department currently gets 9.5 cents per=20 kilowatt hour for power purchased for PG&E customers.=20 In a conference call with reporters, Gov. Gray Davis' energy advisers said= =20 PG&E was distorting the numbers.=20 ``There will be no need to change rates to implement this plan,'' said Jose= ph=20 Fichera, a consultant with Saber Partners who advises Davis.=20 The DWR has been purchasing electricity for customers of three California= =20 utilities -- Southern California Edison, San Diego Gas and Electric Co., an= d=20 PG&E -- since January, when energy wholesalers stopped selling to the=20 companies because they had amassed more than $14 billion in debts. Energy expense strains schools Utilities eat into increased state funding for education, despite efforts b= y=20 districts to conserve and a $250 million allocation by the Legislature to help pay power bills.=20 BY JESSICA PORTNER Mercury News=20 Even as they rejoice in the record schools budget Gov. Gray Davis is set to= =20 sign into the law this week, Silicon Valley educators are preparing to chop= =20 programs, halt hiring, and freeze salary increases as they brace for anothe= r=20 year of soaring utility bills.=20 District leaders say the $250 million included in the budget to help school= s=20 cover their higher power costs is not nearly enough to patch the holes=20 created in their finances by electricity bills that have doubled in some=20 cases in two years.=20 ``We are planning for the worst,'' said Jim Ritchie, superintendent of=20 Moreland School District in West San Jose. Ritchie said the elementary=20 district may not be able to hire as many teachers as it might need next yea= r=20 after dipping into reserves to pay an anticipated $600,000 utility bill.=20 ``It's like taking it out of the cookie jar,'' Ritchie said. ``Taking it ou= t=20 for utilities means you can't take it out if you need a new teacher.''=20 Education was by far the biggest winner in the state budget battle that end= ed=20 Monday. The final legislation, which Davis has said he would sign by week's= =20 end, increases K-12 spending by 8.5 percent to $32.5 billion in the fiscal= =20 year that began July 1. That brings state spending to about $7,200 per=20 student.=20 In addition to a 3.8 percent cost-of-living adjustment that schools may use= =20 as they please, the budget includes $200 million for schools that score in= =20 the bottom half on state tests. Several competing bills still winding throu= gh=20 the Legislature would determine exactly how schools should spend that money= .=20 The budget also includes $30 million more to expand after-school programs a= s=20 well as $40 million in additional school aid to correct historic funding=20 inequities among districts.=20 The $250 million to offset energy costs will provide approximately $35 per= =20 student to every district t
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