Energy Issues-Mon

Please see the following articles:

Sac Bee, (AP) Mon 5/21: New poll suggests Californians haven't been this=20
gloomy for years.

Sac Bee, (AP) Mon 5/21:Grid officials, others studying planned blackouts

Sac Bee, (AP) Mon 5/21:'Baseline' becoming key word for electric customers

SD Union, Mon 5/21: Grid officials, others studying planned blackouts

SD Union, Mon 5/21: Governor told to try seizure in power war

SD Union, Mon 5/21: Davis intensifies attacks on Texas firms

SD Union, Mon, 5/21: Head of PUC unveils evidence of power plant manipulati=
on

SD Union, Mon, 5/21: California economy braces for $5.7 billion electric ra=
te=20
hike=20

SD Union, Mon, 5/21: Price information sought from natural gas companies

LA Times, Mon 5/21: Davis Sharpens Attack on Bush Energy Plan

LA Times, Mon 5/21: PUC Allegations Detailed

LA Times, Mon 5/21: Utility Exec Rejects the Governor's Criticism

LA Times, Mon 5/21: PUC Chief Alleges Price Collusion=20

LA Times, Mon 5/21: Critics Say Bush Proposal Leaves California in the Dark=
=20

LA Times, Mon 5/21: Wall St. Cautious Over Energy Sector's Outlook for Next=
=20
Year

LA Times, Mon 5/21: Municipal Utilities Seek Exemptions From Blackouts

LA Times, Mon 5/21: A United Defense (Commentary)

SF Chron, Mon 5/21: Cheney blames Davis for crisis=20
'They knew over a year ago they had a problem'

SF Chron, Mon 5/21: Lighting technology leading the way in energy conservat=
ion

SF Chron , Mon 5/21: SAN FRANCISCO=20
PG&E cable failure hits Pier 39 businesses

SF Chron , Mon 5/21: THE ENERGY CRUNCH=20
Oakland council to vote on waiving energy permits=20
Residents' solar, wind power plans for their homes now face high costs, lon=
g=20
delays=20

SF Chron, Mon 5/21: ENERGY CRUNCH Investigations=20
Power firms fueled by greed, Lockyer says=20
Out-of-state generators face multiple probes

SF Chron, Mon 5/21: Davis slams Bush's energy policy=20
He says president should ensure 'reasonable' prices
=09=09
SF Chron, Mon 5/21: Power juggling ramped up price=20
Insiders say manipulation also strained equipment

Mercury News, Mon 5/21: Grid officials, others studying planned blackouts

OC Register, Tues, 5/21: Planning ahead for blackouts

OC Register , Tues, 5/21: Is price gouging root of crisis?

OC Register, Tues, 5/21: Generator could help during future energy shortage=
s

OC Register, Tues, 5/21: Energy-saving measures implemented

Individual.com, Mon 5/21: Calif. Utilities Make Accusation

Individual.com, Mon 5/21: PG&E Targets Business Customers for Energy=20
Reduction; Utility Steps Up
Efforts to Encourage Conservation; Awaits More State Funding

WSJ, Mon 5/21: Power Crisis May Can Northwest Aluminum

=20

___________________________________________________________________________=
___
__________

New poll suggests Californians haven't been this gloomy for years
SAN FRANCISCO (AP) -- Not since the mid-'90s have more Californians believe=
d=20
the state is headed in the wrong direction.=20
And it may get worse. Nearly 60 percent of state residents expect the econo=
my=20
to worsen in the next year, while about 40 percent see a brighter horizon,=
=20
according to a new poll.=20
The telephone survey of 2,001 adult Californians was done over eight days i=
n=20
early May by the nonpartisan Public Policy Institute of California. The pol=
l=20
was conducted in English and Spanish.=20
The twin culprits were the souring economy and the electricity crisis.=20
"Californians clearly see the electricity crisis as a harbinger of other=20
growth-related problems," said Mark Baldassare, the research institute's=20
survey director. "This crisis and general economic uncertainty have severel=
y=20
undermined public confidence in California's future and in its leaders."=20
Change has come swiftly.=20
In January, 62 percent of state residents said California was headed in the=
=20
right direction, compared to 48 percent this month.=20
Other key findings include:=20
82 percent of respondents said population growth over the next 20 years wil=
l=20
make California a less desirable place to live.=20
86 percent of respondents said the electricity crisis will hurt the state's=
=20
economy.=20
43 percent of respondents favor building more power plants, up from 32=20
percent in January. The second most popular solution, re-regulating the=20
electricity industry, was the favored solution in January.=20
Traffic congestion, affordable housing, air pollution and a shortage of goo=
d=20
jobs top the list of negative consequences respondents foresee from the=20
state's population growth.=20

Grid officials, others studying planned blackouts
By Jennifer Coleman=20
Associated Press Writer=20
SACRAMENTO (AP) -- Could Californians be waking up to hear a weather report=
,=20
a pollen count and an electricity blackout forecast?=20
It's not out of the question, say some lawmakers.=20
"I actually think it's a thoughtful plan ... to give folks an opportunity t=
o=20
understand the likelihood of blackouts on a daily basis," Assemblyman Fred=
=20
Keeley, D-Boulder Creek, the Assembly's point man on energy.=20
Keeley compared it to "weather forecasting, to be able to look at the next=
=20
three or four days, have a percentile about the likelihood of blackouts."=
=20
The Independent System Operator, keeper of the state's power grid, is=20
expected to release a report Monday detailing how such a plan would work.=
=20
The idea is "to provide a lot of information so people can make choices to=
=20
live with blackouts on a temporary basis this summer," Keeley said.=20
Peter Navarro, a University of California, Irvine, economics professor,=20
released a report last month with a consumer group that recommends the stat=
e=20
set a price limit on what they'll pay for power. And if generators don't=20
lower the price, the state should schedule blackouts to cut consumption, he=
=20
said.=20
The report by Navarro and the Utility Consumers' Action Network says the=20
state's current method of "highly disruptive random rolling blackouts" need=
s=20
to be revamped.=20
UCAN suggests that the state be divided into blackout zones that utilities=
=20
could notify ahead of time that power would be cut at a specific time and f=
or=20
a certain duration.=20
Scheduling blackouts could attract criminals to outage areas, Keeley=20
acknowledged, and possibly could subject the state to legal liability for=
=20
traffic accidents or other incidents if power is deliberately shut off.=20
"That is a genuine problem and genuine concern," Keeley said. "I think we=
=20
would have to work with local governments so they could have a sufficient=
=20
advance notice to be able to foresee that and try to deploy their resources=
=20
appropriately."=20
Critics of the planned blackouts said power producers simply could sell the=
ir=20
unused electricity to other states, or trim back production to keep supplie=
s=20
short.=20
Assemblyman Mike Briggs, R-Fresno, plans to introduce a bill this week that=
=20
would have the Public Utilities Commission notify businesses and homeowners=
=20
as much as one month ahead of time when they would have their power cut.=20
"We owe the people of this state some kind of schedule," Briggs said. "If=
=20
businesses and individuals knew what days their power could potentially be=
=20
shut off or blacked out, they could plan for that blackout accordingly."=20
The Central Valley Republican said the ability to plan for outages would be=
=20
especially benefit farmers, who need power to irrigate their crops.=20
Assembly Speaker Robert Hertzberg, who convened a special subcommittee on=
=20
blackouts, has also suggested the state should consider scheduling daily=20
blackouts to cut the state's power use and drive down prices. Democratic=20
Assembly members plan to introduce their own version of a blackout plan.=20
Sen. Debra Bowen, D-Marina del Rey, has said she envisions giving consumers=
=20
three to five days notice that their power will be cut during a particular=
=20
period, so businesses could opt to shut down or shift their operations to=
=20
nonpeak hours such as nights and weekends.=20
And by treating blackouts as a first option rather than a last resort, the=
=20
state could cut its peak power needs and drive down prices, Bowen said.=20
California power consumers would in essence form "a reverse cartel to stop=
=20
the market manipulation and the price gouging," she said.=20
The planned blackout suggestions come as state officials grow increasingly=
=20
concerned that power prices will keep rising this summer, even beyond the=
=20
extraordinary levels the state already has been paying on behalf of three=
=20
cash-strapped privately owned utilities.=20
Gov. Gray Davis said the state paid $1,900 per megawatt hour at one point=
=20
last week.=20
The state has dedicated $6.7 billion since mid-January to purchase power fo=
r=20
Pacific Gas and Electric, Southern California Edison and San Diego Gas and=
=20
Electric.=20
Those expenditures will be repaid this summer when the state issues $13.4=
=20
billion in revenue bonds. The bonds will be repaid by ratepayers over 15=20
years.=20

Grid officials, others studying planned blackouts=20

By Jennifer Coleman
ASSOCIATED PRESS=20
May 21, 2001=20
SACRAMENTO =01) Could Californians be waking up to hear a weather report, a=
=20
pollen count and an electricity blackout forecast?=20
It's not out of the question, say some lawmakers.=20
"I actually think it's a thoughtful plan ... to give folks an opportunity t=
o=20
understand the likelihood of blackouts on a daily basis," Assemblyman Fred=
=20
Keeley, D-Boulder Creek, the Assembly's point man on energy.=20

Keeley compared it to "weather forecasting, to be able to look at the next=
=20
three or four days, have a percentile about the likelihood of blackouts."=
=20

The Independent System Operator, keeper of the state's power grid, is=20
expected to release a report Monday detailing how such a plan would work.=
=20
The idea is "to provide a lot of information so people can make choices to=
=20
live with blackouts on a temporary basis this summer," Keeley said.=20
Peter Navarro, a University of California, Irvine, economics professor,=20
released a report last month with a consumer group that recommends the stat=
e=20
set a price limit on what they'll pay for power. And if generators don't=20
lower the price, the state should schedule blackouts to cut consumption, he=
=20
said.=20
The report by Navarro and the Utility Consumers' Action Network says the=20
state's current method of "highly disruptive random rolling blackouts" need=
s=20
to be revamped.=20
UCAN suggests that the state be divided into blackout zones that utilities=
=20
could notify ahead of time that power would be cut at a specific time and f=
or=20
a certain duration.=20
Scheduling blackouts could attract criminals to outage areas, Keeley=20
acknowledged, and possibly could subject the state to legal liability for=
=20
traffic accidents or other incidents if power is deliberately shut off.=20
"That is a genuine problem and genuine concern," Keeley said. "I think we=
=20
would have to work with local governments so they could have a sufficient=
=20
advance notice to be able to foresee that and try to deploy their resources=
=20
appropriately."=20
Critics of the planned blackouts said power producers simply could sell the=
ir=20
unused electricity to other states, or trim back production to keep supplie=
s=20
short.=20
Assemblyman Mike Briggs, R-Fresno, plans to introduce a bill this week that=
=20
would have the Public Utilities Commission notify businesses and homeowners=
=20
as much as one month ahead of time when they would have their power cut.=20
"We owe the people of this state some kind of schedule," Briggs said. "If=
=20
businesses and individuals knew what days their power could potentially be=
=20
shut off or blacked out, they could plan for that blackout accordingly."=20
The Central Valley Republican said the ability to plan for outages would be=
=20
especially benefit farmers, who need power to irrigate their crops.=20
Assembly Speaker Robert Hertzberg, who convened a special subcommittee on=
=20
blackouts, has also suggested the state should consider scheduling daily=20
blackouts to cut the state's power use and drive down prices. Democratic=20
Assembly members plan to introduce their own version of a blackout plan.=20
Sen. Debra Bowen, D-Marina del Rey, has said she envisions giving consumers=
=20
three to five days notice that their power will be cut during a particular=
=20
period, so businesses could opt to shut down or shift their operations to=
=20
nonpeak hours such as nights and weekends.=20
And by treating blackouts as a first option rather than a last resort, the=
=20
state could cut its peak power needs and drive down prices, Bowen said.=20
California power consumers would in essence form "a reverse cartel to stop=
=20
the market manipulation and the price gouging," she said.=20
The planned blackout suggestions come as state officials grow increasingly=
=20
concerned that power prices will keep rising this summer, even beyond the=
=20
extraordinary levels the state already has been paying on behalf of three=
=20
cash-strapped privately owned utilities.=20
Gov. Gray Davis said the state paid $1,900 per megawatt hour at one point=
=20
last week.=20
The state has dedicated $6.7 billion since mid-January to purchase power fo=
r=20
Pacific Gas and Electric, Southern California Edison and San Diego Gas and=
=20
Electric.=20
Those expenditures will be repaid this summer when the state issues $13.4=
=20
billion in revenue bonds. The bonds will be repaid by ratepayers over 15=20
years.

Governor told to try seizure in power war=20

By Philip J. LaVelle=20
UNION-TRIBUNE STAFF WRITER=20
May 19, 2001=20
A major San Diego business group urged Gov. Gray Davis yesterday to take=20
emergency steps in the energy crisis, including seizing power plants -- an=
=20
action the governor said may be in the cards.=20
Davis met over lunch for nearly two hours with members of the San Diego=20
Building Owners and Managers Association, overseers of about 250 commercial=
=20
properties here.=20
The meeting, at the University Club at Symphony Towers downtown, was closed=
=20
to the media.=20

In remarks to reporters later, Davis repeated his hard line against=20
out-of-state energy producers, relating a threat made to a dozen power=20
executives in a private meeting May 9.

"I told the generators face to face, as close as I am to you .?.?.=20
'Gentlemen, you are going to lose your plants, and I'm going to sign a=20
windfall-profits tax, unless you help us get through this summer without=20
blackouts and without staggering prices.'?"=20
Davis also said he told them: "You know you've been ripping us off, acting =
in=20
a predatory manner. If you do it this summer, you leave me no choice but to=
=20
take your plants and sign a windfall-profits tax. So the ball is in your=20
court, gentlemen."=20
Building association executive Craig Benedetto said the group had "a frank=
=20
exchange" with Davis. "We want to do our fair share (on conservation), but=
=20
we're also concerned about the supply side," he said. The group "strongly=
=20
urged him to use his emergency powers to do whatever is necessary, includin=
g=20
seizing plants."=20
Association President Cybele Thompson said Davis asked for a string of=20
conservation measures. Yet some cannot be implemented without state=20
intervention, she said. For example, Davis urged that air-conditioning=20
thermostats be set at 78 degrees, but "a lot of our leases don't permit it,=
"=20
she said.=20
While in San Diego, Davis received an honorary doctor of science degree fro=
m=20
Scripps Research Institute.

Davis intensifies attacks on Texas firms=20

By Ed Mendel=20
UNION-TRIBUNE STAFF WRITER=20
May 19, 2001=20
SACRAMENTO -- Gov. Gray Davis is stepping up his attacks on Texas energy=20
companies, shifting blame in the California electricity crisis to the home=
=20
state of President Bush.=20
"We are literally in a war with energy companies who are price-gouging us,"=
=20
Davis told reporters while responding to Bush's energy plan this week. "Man=
y=20
of those companies are in Texas."=20
The governor suggested that most of the power plants that California=20
utilities sold under a failed deregulation plan were purchased by energy=20
companies in the Southwest.=20
Anyone could have purchased the California power plants, Davis said, "but t=
he=20
people who bought them just happened to be from the Southwest .?.?. "=20
However, a state Energy Commission report shows that when California=20
utilities sold more than 20 power plants capable of producing 20,000=20
megawatts, Texas firms purchased plants producing about 7,000 megawatts.=20
Davis also suggested that the Bush administration is failing to give=20
California the same price relief on electricity that Texas has imposed on=
=20
itself.=20
"So if Texas can have some kind of price relief," Davis said, "I think=20
California is entitled to price relief."=20
But the cap that Texas adopted in March prevents energy companies from=20
offering to sell power for more than $1,000 per megawatt-hour -- far above=
=20
the $346 average that California expects to pay for non-contracted power th=
is=20
spring.=20
The campaign operation for Davis, who is up for re-election next year and h=
as=20
been mentioned as a potential Bush opponent in 2004, distributed a news=20
release yesterday saying that "Davis is emerging as a national spokesman fo=
r=20
the Democrats on energy issues."=20
The governor yesterday appointed two members of former Democratic=20
presidential candidate Al Gore's campaign, Mark Fabiani and Chris Lehane, a=
s=20
interim communication consultants. He named Gore's former deputy chief of=
=20
staff, Nancy McFadden, as senior adviser.=20
The governor will give the Democratic response to Bush's weekly radio addre=
ss=20
today.=20
While Davis blames the Lone Star State, none of Pacific Gas and Electric's=
=20
power plants, which produce 7,400 megawatts, was sold to Texas firms. They=
=20
were sold to Duke of North Carolina, Mirant of Georgia, and Calpine of=20
California.=20
The biggest purchaser of Southern California Edison power plants was AES=20
Corp. of Virginia, which obtained 4,706 megawatts. Reliant, a Texas firm,=
=20
bought plants from Edison that can produce 4,000 megawatts.=20
Destec of Houston and NRG Energy of Minneapolis purchased two Edison plants=
=20
with an output of 1,583 megawatts. Dynegy of Houston and NRG Energy purchas=
ed=20
plants producing 1,347 megawatts from San Diego Gas and Electric.=20
Davis has said in nationally televised interviews that there is an historic=
=20
transfer of wealth from California to Houston. A large electricity marketin=
g=20
firm with close ties to Bush, Enron, also is based in Houston.=20
But Davis has focused much of his criticism on Reliant, whose profits soare=
d=20
last year. Reliant openly rejected Davis' call last week for generators to=
=20
accept a 30 percent reduction in the debt they are owed by California=20
utilities.=20
Reliant also was the only generator that appealed a federal court order to=
=20
provide emergency power to California. Davis began singling out Reliant aft=
er=20
it charged the state $1,900 per megawatt hour for emergency power needed by=
=20
the California grid.=20
Reliant's president, Joe Bob Perkins, said in a teleconference with=20
California reporters yesterday that Reliant charged the high price because =
it=20
did not want to run a small reserve plant that can only be used for a limit=
ed=20
number of days.=20
The state of California, which has spent about $7 billion buying power for=
=20
utility customers since January, made emergency purchases of 336 megawatt=
=20
hours from Reliant on May 9 and 10, paying $1,900 per megawatt hour for a=
=20
total of $638,400.=20
In Texas, the Public Utilities Commission adopted a $1,000 per megawatt hou=
r=20
cap on bids to supply emergency power as a "circuit-breaker" in case prices=
=20
somehow skyrocketed after Texas deregulates next year.=20
"I realize that amount has been reached in California," said Terry Hadley, =
a=20
spokesman for the Texas PUC. "Nothing close to that has been reached in=20
Texas."=20
Hadley said the most paid for emergency power by the Texas grid operator wa=
s=20
$500 per megawatt hour in 1999. He said the average price is $47 to $48 per=
=20
megawatt hour.=20
Texas has a surplus of power, unlike California, which has to import about =
20=20
percent of its power. Texas also has a self-contained power grid that cover=
s=20
about 85 percent of the state, including Houston, Dallas, San Antonio, and=
=20
Austin. California is part of a sprawling Western power grid.=20
Davis and others have been pushing for wholesale price caps on power in the=
=20
West. The Texas PUC rejected price caps and adopted a high bid cap as a=20
fail-safe, saying that would still allow prices to signal whether new power=
=20
plants are needed.=20
The governor yesterday also appointed a new energy adviser, Kellan Fluckige=
r,=20
who is on loan from the Independent System Operator, which operates the=20
California power grid.

Head of PUC unveils evidence of power plant manipulation=20

ASSOCIATED PRESS=20
May 19, 2001=20
LOS ANGELES =01) The head of the California Public Utilities Commission pro=
vided=20
a state Senate committee with evidence showing three power generators reduc=
ed=20
electricity production and then benefited from the resulting high prices.=
=20
While testifying before the committee Friday, PUC President Loretta Lynch=
=20
displayed charts that tracked electricity prices and power generation at=20
three plants on a single day last November.=20
According to the graphs, after the plants reduced production during the=20
middle of the day, the state was forced to declare two separate power=20
emergencies which indicate electricity reserves had fallen seriously low.=
=20
After the shortfall in supply helped cause a spike in prices, the companies=
=20
operating the three plants suddenly increased their electricity production =
to=20
almost full capacity, allowing them to capitalize on the much higher rates.=
=20
"We certainly see a pattern," Lynch told the committee, which is=20
investigating alleged manipulation of the state's wholesale power market by=
=20
energy suppliers. "Many generators are playing on their experience and=20
playing, to an extent, California."=20
Maintenance records reviewed by investigators show that there were no valid=
=20
reasons for the plants to cut back production, Lynch said.=20
She would not identify the power plants involved, however, Lynch did say th=
at=20
they are owned by at least two companies.=20
Sen. Joseph Dunn, who heads the special committee investigating alleged=20
market manipulation, said Lynch's testimony, on its face, is "very damning.=
"=20
He said his committee has uncovered additional preliminary evidence showing=
=20
that several power companies have allegedly engaged in similar behavior.=20
During a break in Friday's hearing, a spokeswoman for a trade group of majo=
r=20
power suppliers told the Los Angeles Times that there have been no=20
coordinated efforts to shrink supplies to increase profits.=20
"There has been no collusion," said Jean Muoz of the Independent Energy=20
Producers Association.=20
The PUC and state Atty. Gen. Bill Lockyer are jointly investigating the=20
exorbitant wholesale power prices that have cost California billions and=20
brought major utilities to financial ruin

California economy braces for $5.7 billion electric rate hike=20

By Michael Liedtke
ASSOCIATED PRESS=20
May 19, 2001=20
SAN FRANCISCO =01) Higher power costs zapped restauranteur Marino Sandoval =
and=20
his customers even before California regulators decided this week how to=20
allocate a $5.7 billion electricity rate hike =01) the highest in the state=
's=20
history.=20
Faced with soaring natural gas rates that tripled his utility bill, Sandova=
l=20
last month raised the prices at his popular Mexican restaurant chain, El=20
Balazo, by as much as 20 percent on some items. A giant burrito that cost=
=20
$4.95 at the end of March costs $5.95 Saturday.=20
"We had to do it because it seemed like the price of everything, from our=
=20
beans to our tortillas, was going up almost every day. Our higher prices ha=
ve=20
everything to do with the higher energy prices," said Sandoval, who runs si=
x=20
restaurants in San Francisco and the East Bay.=20
From hotels to bagel shops, businesses throughout California have been=20
raising their prices or imposing special surcharges to offset rising power=
=20
costs. Most of the increases so far have reflected higher natural gas costs=
,=20
which utilities have been passing along to their customers throughout the=
=20
state's power crisis.=20
Now, businesses and households are bracing for electricity rate increases=
=20
that could balloon the bills of the largest users of the state's two bigges=
t=20
utilities, Pacific Gas and Electric Co. and Southern California Edison Co.=
=20
The higher rates, which will begin appearing in June's utility bills,=20
threaten to jolt the state's already jittery economy.=20
"Pretty soon, we may see California staring down the barrel of a recession,=
"=20
said Dave Puglia, a vice president for APCO, a public affairs firm hired by=
=20
California business interests to study the economic effect of the state's=
=20
energy woes.=20
Until now, California businesses have only had to pay a fraction of the=20
state's staggering electricity bill, which is on a pace to reach $70 billio=
n=20
this year =01) about 10 times more than in 1999.=20
By itself, the $5.7 billion rate increase approved by the California Public=
=20
Utilities Commission probably isn't enough to topple the state's roughly $1=
=20
trillion economy =01) the sixth largest in the world.=20
"It will cause some hardships, particularly for some small business owners,=
=20
but from the macro point of view, these rate increases aren't going to have=
a=20
major impact on California's output," predicted Sung Won Sohn, chief=20
economist for Wells Fargo & Co., which runs the biggest bank headquartered =
in=20
the state.=20
But some business leaders are worried the hike will represent the coup de=
=20
grace for many companies already reeling from rising expenses for gasoline,=
=20
natural gas, health care benefits and workers' compensation insurance.=20
Against this backdrop, many employers also face pressure to raise their=20
workers' wages to help pay for California's high housing costs.=20
"If this keeps up, at some point, we are going to reach a breaking point in=
=20
the economy," said Allan Zaremberg, president of the California Chamber of=
=20
Commerce.=20
The California Chamber is part of the California Alliance for Energy and=20
Economic Stability, a coalition that sought to shift more of the electricit=
y=20
rate increase from businesses to households.=20
Under the plan approved by the PUC, businesses are expected to pay about $4=
.6=20
billion more for electricity and households will pay an additional $1.1=20
billion.=20
Even if they are spared on their utility bills, consumers still will be=20
pinched by higher prices for goods and services as businesses pass along=20
their electricity price increases.=20
Some California firms, particularly those making commodities sold around th=
e=20
world, won't be able to substantially raise their prices without losing=20
business from customers who will buy from competitors in other states and=
=20
countries.=20
Manufacturers of cement, glass, paper products and steel are among the=20
companies that probably won't be able to pass along their higher energy=20
costs, Puglia said.=20
The rate increases mean that utility bills will consume about 25 percent to=
=20
30 percent of a big manufacturer's budget, Puglia estimated, up from about =
15=20
percent now.=20
"I wouldn't be surprised if we see some companies go out of business becaus=
e=20
of this," said Justin Bradley, director of energy programs for the Silicon=
=20
Valley Manufacturing Association, a high-tech trade group.=20
Even if they don't shut down completely, many companies likely will lay off=
=20
workers as they cut costs to pay for power. The California Manufacturers an=
d=20
Technology Association estimates that the energy crisis will result in the=
=20
loss of 135,755 jobs =01) or about 40,000 more than the entire dot-com indu=
stry=20
has laid off nationwide during the past 16 months.=20
Painful though they may be, higher electricity rates and some resulting=20
layoffs are a better alternative than the increased number of blackouts tha=
t=20
probably would have occurred if retail prices hadn't been raised, according=
=20
to most economists.=20
"People are wildly exaggerating how much this is going to hurt the Californ=
ia=20
economy," said Stephen Levy, director of the Center for Continuing Study of=
=20
the California Economy, a Palo Alto research firm. "The rate increases are=
=20
part of a long-term solution for California. We needed them to stabilize th=
e=20
market. On balance, this is a good thing."=20
Even though his monthly utility bill at one of his restaurants rose from=20
$1,500 last year to $4,500 this year, El Balazo's Sandoval shares Levy's=20
optimism. After all, customers continue to pour into his restaurants, despi=
te=20
his restaurant's higher menu prices.=20
"Business is so good that I have been too busy to think about whether I am=
=20
going to have to raise my prices again," he said. "If I have to, I will. I=
=20
don't think people are going to stop eating because of this."

Price information sought from natural gas companies=20

By H. Josef Hebert
ASSOCIATED PRESS=20
May 19, 2001=20
WASHINGTON =01) A federal regulatory agency late Friday directed natural ga=
s=20
companies selling in California to provide detailed information for better=
=20
investigations of possible price gouging and market abuses.=20
The Federal Energy Regulatory Commission said it viewed the unusually high=
=20
prices of wholesale natural gas in California as "a matter of serious=20
concern" but didn't have enough information to determine if they are illega=
l.=20
It noted that the spot price of natural gas charged at the California borde=
r=20
has been exceedingly high since December when it ranged between $11.79 and=
=20
$18.80 per thousand cubic feet, compared to $4 to $7 elsewhere in the count=
y.=20
The most recent prices at the California border exceed $9, more than twice=
=20
the wholesale price in other parts of the country. Such a disparity over su=
ch=20
a long period of time would not be expected in a competitive market, the=20
agency said.=20
California officials have argued for months that FERC should intervene and=
=20
more aggressively investigate high natural gas prices, which have been a=20
major cause of some of the run-up in electricity costs in the state. Many o=
f=20
the state's power plants run on natural gas.=20
The order asks for a wide range of information at the end of each calendar=
=20
quarter including volumes of gas sold, prices, transportation rates, daily=
=20
operational pipeline capacity and volumes flowing in and out of the state.=
=20
Allegations of price gouging and market manipulation have been at the cente=
r=20
of a hearing by a FERC administrative law judge all this week. The hearing=
=20
will continue next week.=20
The case involves a major natural gas pipeline owned by the Houston-based E=
l=20
Paso Corp., which supplies Southern California.=20
California regulators, and two of the states financially troubled utilities=
,=20
filed a formal complaint with FERC, alleging that manipulation by two El Pa=
so=20
subsidiaries =01) one a gas marketer and the other an operator of the pipel=
ine =01)=20
led to $3.7 billion in natural gas overcharges since March 2000.=20
El Paso Corp. has strongly denied the allegation.=20
For the past week, attorneys for El Paso have questioned witnesses from the=
=20
California Public Utilities Commission in an attempt to disprove the charge=
s.=20
The witnesses admitted they failed to consider some additional factors that=
=20
could have affected prices in their analyses, but they did not back away fr=
om=20
their conclusion.=20
In support of their argument, California officials have provided internal E=
l=20
Paso memos =01) which have not been disclosed publicly =01) that allegedly =
discuss=20
market control in connection with gas flowing through the pipeline.=20
Administrative Law Judge Curtis Wagner has said the documents contain=20
statements "that could lead one to believe there was an abuse" of pipeline=
=20
capacity. He is not expected to make a ruling on the case until later this=
=20
summer. A final decision on what action to take, if any, would be up to the=
=20
full commission.=20

Davis Sharpens Attack on Bush Energy Plan=20
Power: He also hires high-profile consultants in effort to boost his=20
political standing.=20

By DAN MORAIN and MARK Z. BARABAK, Times Staff Writers

?????SACRAMENTO--Gov. Gray Davis is going on the attack as the Democratic=
=20
Party's point man against President Bush's energy plan, even as he seeks to=
=20
bolster his drooping standing in California by hiring consultants who honed=
=20
their crisis-management skills during the scandal-ridden Clinton=20
administration.
?????Davis was expected to again criticize Bush's energy plan today as he=
=20
makes the official Democratic response to Bush's weekly radio address.
?????In the last week, Davis has variously blasted the president's energy=
=20
plan and Texas energy companies on an ABC talk show, on CNN, and in an=20
opinion piece for the Washington Post. In an interview with Associated Pres=
s,=20
Davis vowed to "hold everyone accountable: myself, the energy producers and=
=20
the president of the United States."
?????"We are literally in a war with energy companies who are price gouging=
=20
us," Davis said Friday. "Many of those companies are in Texas. Mr. Presiden=
t,=20
you didn't create this problem, but you are the only one who can solve it."
?????At the same time, Davis all but acknowledged his own political problem=
s=20
when he announced that he has retained two political aides, Mark Fabiani an=
d=20
Chris Lehane. The two, who also do work for Southern California Edison, wil=
l=20
be paid by taxpayers at a combined rate of $30,000 per month--more than the=
=20
$13,750 earned by the governor himself.
?????Lehane, known for his tart-tongued commentary, was Vice President Al=
=20
Gore's main campaign spokesman, and had a knack for getting under Bush's sk=
in=20
during the 2000 campaign.
?????Fabiani, a Harvard law school graduate, became a highly partisan and=
=20
acerbic White House defender when President Clinton was mired in=20
investigations ranging from the Whitewater land deal to the Monica Lewinsky=
=20
affair. Fabiani developed his reputation for being able to handle crises=20
while defending Mayor Tom Bradley against various investigations near the e=
nd=20
of the late mayor's tenure.
?????In political circles, the nickname of their firm is Masters of Disaste=
r.
?????Davis' decision to retain Lehane and Fabiani comes as the governor's=
=20
once-sterling poll numbers have fallen sharply and he faces persistent=20
criticism over his handling of the energy crisis.
?????Their arrival also corresponds to Davis' increasingly aggressive stand=
=20
on the energy crisis. In recent days, Davis for the first time has attacked=
=20
an individual generator, Reliant Energy of Houston, for charging a record=
=20
$1,900 per megawatt for electricity on two days last week. He also dared=20
President Bush and Vice President Dick Cheney to "stand up" to their=20
"friends" in the energy business by capping wholesale electricity prices=20
charged in California.
?????Davis' more assertive stance comes as Democrats nationwide step up the=
ir=20
attacks on the president, using the energy plan to launch a broader assault=
=20
on Bush's leadership and policies.
?????"One of the glaring flaws in the Bush energy plan is that it offers no=
=20
short-term relief for consumers," said Dan Pfeiffer, a spokesman for the=20
Democratic Governors Assn., which Davis chairs. "And there is no better=20
example of that than the fact he does nothing to control runaway prices in=
=20
California."
?????In addition to portraying Bush as ignoring the plight of California--t=
he=20
nation's largest electoral prize--Democrats see Bush's energy response as a=
=20
way of confirming their broader assertion that he is captive to oil interes=
ts.
?????"This is a way for us to show how they are really an administration an=
d=20
a party that is bought and paid for by special interests," said Jenny Backu=
s,=20
a spokeswoman for the Democratic National Committee.
?????To press the case, the party has created a snide Web=20
site--www.grandoldpetroleum--and will soon start running TV ads attacking G=
OP=20
lawmakers over the energy issue, including in California.
?????Paul Maslin, the governor's pollster, said Davis had given the preside=
nt=20
a grace period after he took office in January to see how Bush would addres=
s=20
the energy problem. But the governor grew increasingly frustrated when it=
=20
became clear "we weren't going to get any help from Washington."
?????For his part, Bush made glancing reference to California in a speech=
=20
Friday at a hydroelectric plant in Pennsylvania, part of his tour to sell t=
he=20
administration's energy blueprint. The president praised Californians for=
=20
doing "a fantastic job in conservation."
?????"And yet they're lacking energy. They're having blackouts," Bush said.=
=20
"We all must be deeply concerned about our fellow citizens in the great sta=
te=20
of California. But the problems in California show that you cannot conserve=
=20
your way to energy independence."
?????While Bush did not mention the governor, the president's deputies have=
=20
rushed to criticize him.
?????Virginia Gov. James Gilmore, head of the Republican National Committee=
,=20
suggested Davis was hypocritical to attack Bush when "the president is the=
=20
one who came forward with the first energy plan we've seen in years."
?????"He's going to have to answer the question of what he's done as=20
governor," Gilmore said. "While he's in the process of attacking, one might=
=20
suspect he may be diverting attention away from his own record."
?????On Thursday, Environmental Protection Agency administrator Christine=
=20
Todd Whitman was overheard criticizing Davis to Iowa Republican Party=20
official Darrell Kearney.
?????"He's had plenty of time to do something, and he hasn't done anything,=
"=20
she said as she left a meeting room in Nevada, Iowa, where Bush had just=20
finished speaking.
?????Some more independent observers see political liabilities in the Bush=
=20
plan, namely the focus on long-term solutions at a time voters are growing=
=20
increasingly upset about high gas prices and soaring utility bills.
?????"While [the administration] talks about how we approach things in the=
=20
next five years, there's not a lot of empathy or understanding for what's=
=20
affecting people now," said Stuart Rothenberg, a nonpartisan political=20
analyst in Washington.
?????"Maybe it's unfair to talk about Bush and Cheney's oil backgrounds and=
=20
Texas backgrounds," Rothenberg said. "But it's an obvious thing for critics=
=20
to do."
?????Rothenberg predicted a backlash that could cost Republicans control of=
=20
Congress next year, "if the energy issue continues to grow and Americans=20
really become concerned. . . . It puts the burden on the White House and=20
Republicans to change that."
?????Davis' new aides, while considered expert in solving the kind of=20
political crisis threatening Davis, pose the potential of controversy on=20
their own.
?????As consultants, Lehane and Fabiani, unlike government officials, are n=
ot=20
required to file conflict of interest statements detailing their holdings a=
nd=20
sources of income.
?????However, in an interview on Friday, Lehane acknowledged that he and=20
Fabiani have worked for about two months as consultants for Southern=20
California Edison. He insisted there is no conflict.
?????Davis is struggling to win legislative approval of a deal he struck wi=
th=20
Edison to rescue the utility from bankruptcy. Several lawmakers oppose the=
=20
deal, contending that it is too rich for Edison.
?????"Both sides [Edison and Davis] are in agreement on what needs to be do=
ne=20
here," Lehane said. "As the governor said . . . we are literally in a war=
=20
with these out-of-state generators."
?????Although Lehane and Fabiani will be working on broader communications=
=20
issues for Davis, Harry Snyder of Consumers Union, a critic of the=20
Davis-Edison deal, blasted Davis' decision to hire consultants who also wor=
k=20
for the utility.
?????"Davis has done everything politically wrong," Snyder said. "He hasn't=
=20
done anything that is consistent with the democratic process. It is the wor=
st=20
abuse of power that I have seen in 25 years of lobbying."
?????Others suggested that Davis was helping himself by bringing the duo=20
aboard.
?????"Mark is the premier crisis manager in the country in terms of=20
communication strategy," Democratic political consultant Bill Carrick said.=
=20
"He has tremendous experience. . . . He takes the incoming. You get hit wit=
h=20
something in the morning. He knows how to turn it around by the afternoon."
?????Lehane said the governor's decision to hire them does not suggest Davi=
s=20
will become more pugnacious, although he added that Davis is "not someone=
=20
afraid to pick a fight when someone, like the out-of-state generators,=20
represent policies that are bad for the people of California."
?????"Gov. Davis has been very successful in politics for quite some time i=
n=20
this state," Lehane said. "He has a keen understanding of how this state=20
works and how politics in this state works. I don't think his style is goin=
g=20
to change or be any different than he has been throughout his career."

Copyright 2001 Los Angeles Times=20

PUC Allegations Detailed=20
Hearing: The commission president tells a Senate panel that maintenance=20
records show no valid reason for generators to cut power production.=20

By ROBERT J. LOPEZ and RICH CONNELL, Times Staff Writers

?????The head of the California Public Utilities Commission Friday provided=
=20
fresh details showing that power generators scaled back electricity=20
production and then benefited from the resulting high prices.
?????In sworn testimony before a state Senate committee, PUC President=20
Loretta Lynch said the companies' behavior helped drain so much electricity=
=20
from the state's grid that officials were forced to declare emergency alert=
s.
?????Lynch's testimony followed her comments Thursday to The Times that sta=
te=20
investigators have found evidence of power plants being shut down=20
unnecessarily to create "artificial shortages," often when the state was mo=
st=20
desperate for electricity.
?????During her testimony Friday, Lynch went beyond her assertions about=20
unnecessary plant shutdowns and accused generators of also needlessly=20
throttling back generation.
?????The PUC and state Atty. Gen. Bill Lockyer are jointly investigating th=
e=20
exorbitant wholesale power prices that have cost California billions and=20
brought major utilities to financial ruin.
?????Generators have said they never engaged in any conduct intended to=20
manipulate wholesale electricity prices, including unnecessarily shutting=
=20
down their plants or reducing supply. The facilities, theysay, are aging an=
d=20
have run so hard during the state's crisis that they often require extensiv=
e=20
maintenance.
?????But the details released by Friday by Lynch added to the questions=20
surrounding the generators' activities.
?????Lynch displayed charts that track electricity prices and power=20
generation at three plants on a single day last November. After the plants=
=20
reduced production during the middle of the day, the graphs show, the state=
=20
was forced to declare two separate power emergencies because electricity=20
reserves had fallen seriously low.
?????The shortfall in supply helped cause a spike in prices. With that, the=
=20
companies operating the three plants suddenly increased their electricity=
=20
production to almost full capacity, allowing them to capitalize on the much=
=20
higher rates.
?????"We certainly see a pattern," Lynch told the committee, which=20
isinvestigating alleged manipulation of the state's wholesale power market =
by=20
energy suppliers. "Many generators are playing on their experience and=20
playing, to an extent, California."
?????Maintenance records reviewed by investigators show that there were no=
=20
valid reasons for the plants to cut back production, Lynch said. She declin=
ed=20
to identify the power plants involved, saying only that they are owned by a=
t=20
least two companies.
?????Sen. Joseph Dunn (D-Santa Ana), who heads the special committee=20
investigating alleged market manipulation, said Lynch's information, on its=
=20
face, is "very damning."
?????He said his committee has uncovered additional preliminary evidence=20
showing that several power companies have allegedly engaged in similar=20
behavior.
?????"We are looking at data that is suspicious," Dunn said.
?????During a break in Friday's hearing, a spokeswoman for a trade group of=
=20
major power suppliers said there have been no coordinated efforts to shrink=
=20
supplies to increase profits.
?????"There has been no collusion," said Jean Mu=0Foz of the Independent En=
ergy=20
Producers Assn.
?????She said many of the plants bought by out-of-state generators under=20
California's flawed deregulation plan are more than 30 years old. The plant=
s=20
have been running at high levels to help the state with its energy crunch,=
=20
she said.
?????Mu=0Foz told reporters that the plants owned by out-of-state companies=
=20
last year produced 60% more electricity than the previous year.
?????Although no firm has been singled out by the PUC or the attorney=20
general's office, Atlanta-based Mirant Corp. said inspectors have visited=
=20
company plants more than 100 times this year and have found no wrongdoing.=
=20
"Mirant has run its plants voluntarily and continually throughout the=20
crisis," the company said in a statement Friday.
?????But Lynch said Friday that visits to more than 80 plants by PUC=20
investigators since December show that generators are not always producing=
=20
all the power they can.
?????"It appears that there have been numerous instances within the past=20
half-year where generation units were not producing the amount of electrici=
ty=20
that they were capable of producing," Lynch said.=20

Copyright 2001 Los Angeles Times

Utility Exec Rejects the Governor's Criticism=20
Power: Leader of Reliant Energy defends policies and says Davis' rhetoric=
=20
could harm California.=20

By NANCY VOGEL, Times Staff Writer

?????SACRAMENTO--The top executive of a Houston-based energy company single=
d=20
out for criticism this week by Gov. Gray Davis defended his company Friday=
=20
and warned that the governor's rhetoric will ultimately hurt California.
?????"On Wednesday we were called obstructionist," said Joe Bob Perkins,=20
chief executive of Reliant Energy, which bought five Southern California=20
power plants when the state launched deregulation in 1998.
?????"I don't think it's obstructionist to supply record amounts of power=
=20
from old plants in order to keep the lights on," Perkins said. "I don't thi=
nk=20
it's obstructionist to invest more than $80 million in 2000 alone to upgrad=
e=20
the plants and reduce emission levels. I don't think it's obstructionist to=
=20
continue to run our facilities at times when there's been no guarantee of=
=20
payment."
?????In a telephone conference call with reporters, Perkins said, "Californ=
ia=20
officials must lessen the rhetoric and focus on efforts to mitigate the=20
impacts of summer blackouts."
?????Perkins said threats of windfall profits taxes and plant seizures coul=
d=20
scare off substantial business from California.
?????For months, Davis has disparaged private power plant owners in=20
California as gougers and profiteers, but until last week he did not single=
=20
out individual companies.
?????Last Thursday, after state power buyers paid an extraordinary $1,900 p=
er=20
megawatt-hour, Davis broke the confidentiality he had maintained on state=
=20
power purchases and named Reliant as the seller.
?????Reliant has sued to get out of its obligation to sell power to the sta=
te=20
and refused to discuss forgiving some portion of the $307 million it is owe=
d=20
by California utilities.
?????"They're one of only a couple of generators that say absolutely no way=
,=20
no how are they going to negotiate for anything less than 100%," Davis=20
spokesman Steve Maviglio said after the Reliant executive's remarks.
?????The governor's recent attack has made some Reliant officials wonder if=
=20
he is building a case to seize control of its power plants. Davis has=20
threatened to commandeer plants to bring down wholesale power costs.
?????Perkins said his company set a high price last week to discourage the=
=20
state from buying the power, which was produced at a small, inefficient pla=
nt=20
near Santa Barbara that cannot run more than nine days a year because of ai=
r=20
pollution regulations.
?????Reliant officials said they wanted to reserve the plant for use later=
=20
this summer.
?????Maviglio said Reliant's argument "defies logic."
?????"When you make a bid . . . you want somebody to buy the power."

Copyright 2001 Los Angeles Times

PUC Chief Alleges Price Collusion=20
Power: She cites evidence that plants were shut down to create "artificial=
=20
shortages." An industry spokesman calls the accusation "idiocy."=20

By RICH CONNELL and ROBERT LOPEZ, Times Staff Writers=20

?????State investigators have uncovered evidence that a "cartel" of power=
=20
companies shut down plants for unnecessary maintenance to ratchet up prices=
,=20
the head of the California Public Utilities Commission asserted Thursday.
?????PUC President Loretta Lynch said her agency, working with the state=20
attorney general's office, is probing patterns of plant outages that have=
=20
created "artificial shortages," particularly when the state has issued=20
emergency alerts because of seriously low levels of electricity.
?????"There are instances where plants could have produced, and they chose=
=20
not to," Lynch said in an interview at The Times.
?????"And it is clear that there are instances that plants, when called to=
=20
produce, chose not to produce," even when they were obligated to do so unde=
r=20
special contracts with the state and utility companies.
?????Lynch said the ongoing investigation has already produced enough=20
information for the PUC and attorney general's office to take legal action=
=20
against the generators next month. The exact nature of that action, she sai=
d,=20
is still under review.
?????Lynch, who is an attorney, did not name specific suppliers or provide=
=20
documentation of her assertions. She said that information will remain=20
confidential until court proceedings are undertaken.
?????Generators have long denied any attempt at manipulating the power mark=
et=20
in any unlawful way, including orchestrating plant shutdowns. They say the=
=20
facilities are so old and have been run so hard during the power crisis tha=
t=20
breakdowns are a recurring problem.
?????Lynch and Gov. Gray Davis, who has been particularly critical of=20
out-of-state generators, have not suggested that every plant shutdown has=
=20
been unwarranted.
?????In fact, the governor's top advisor on power plants released a stateme=
nt=20
last week saying inspectors determined that a Bay Area plant shutdown was=
=20
justified and that the company's officials were "accommodating."
?????State Atty. Gen. Bill Lockyer was not available for comment on his joi=
nt=20
investigation with the PUC. A spokesman would only confirm that Lockyer's=
=20
office is investigating plant shutdowns as part of a wide-ranging probe of=
=20
possible civil and criminal violations.
?????So far, the attorney general's office has subpoenaed documents in 91=
=20
categories from generators, including records of plant operations, pricing=
=20
practices and information the merchants may have shared with one another=20
about California's power market.
?????"We're looking for behavior that would violate antitrust or unfair=20
business practice laws," Lockyer has told The Times.
?????Although he has not provided details of his office's findings, he=20
recently said the inquiry is "beginning to get interesting."
?????Lynch said evidence of allegedly unnecessary plant shutdowns was amass=
ed=20
during interviews by investigators and in a review of the voluminous=20
subpoenaed records, obtained after intense legal battles with the power=20
companies.
?????In addition, investigators have been entering plants where unplanned=
=20
shutdowns have occurred to examine operations and maintenance records, Lync=
h=20
said. At times, the investigators have been denied access and have had to=
=20
exert legal pressure to get in, she said.=20
?????The plant shutdowns are a key factor in the soaring power prices, whic=
h=20
have gone from $200 a megawatt-hour in December to as high as $1,900 last=
=20
week.
?????"I would argue it's no accident," Lynch said of the high prices. "That=
=20
in fact it's [due to] the coordinated behavior of a cartel."
?????The power generators have repeatedly said they have acted within the=
=20
rules of California's flawed deregulation program, which allowed them to bu=
y=20
power plants formerly run by the state's three largest utilities.
?????Gary Ackerman, a spokesman for a trade association of large power=20
producers, said Lynch's allegations were "the height of idiocy."
?????The reason many plants have been down in recent months, he said, is th=
at=20
power producers must perform maintenance now in anticipation of heavy summe=
r=20
demand.
?????He said he doubted that state investigators could prove wrongdoing=20
because there was no conspiracy to turn off supplies.
?????"My members do not make money by shutting down their plants so their=
=20
competitors can make money," said Ackerman, executive director of the Weste=
rn=20
Power Trading Forum.
?????State analysts have argued, however, that power traders can reap=20
extraordinary profits by withholding power because the prices for the power=
=20
that is sold are so high.
?????According to Lynch, investigators have found that some companies were=
=20
more aggressive than others in allegedly using plant shutdowns to manipulat=
e=20
the state's power market.
?????She said investigators have also found a suspicious pattern: When=20
operators of the state electricity grid declare a Stage 1 alert--meaning th=
at=20
electricity reserves have dropped below 7%--plants that do not need repairs=
=20
suddenly are yanked offline. That, she said, aggravates the shortages, and=
=20
the cost of wholesale electricity soars.
?????Before December, state analysts alleged that power traders had driven =
up=20
prices primarily through bidding. At the time, the market was designed to p=
ay=20
all power suppliers the highest amount accepted by the state's grid operato=
r.
?????That changed in December, when new federal regulations restructured=20
California's wholesale power market to loosen price controls, Lynch said.=
=20
Since then, a new pattern of plant shutdowns has emerged--"not coincidental=
ly=20
in my view," she said. Now, she added, the state has endured "historically=
=20
high levels of unplanned plant outages."
?????The investigation is not focusing on power plants still operated by=20
utility companies because they have not been "going off [line] at record=20
levels," Lynch said.
?????The California Energy Commission reported last week that the state's=
=20
electrical grid has been sorely tested by plant shutdowns at a rate several=
=20
times higher than in the last two years.
?????A Times analysis of state data found that, throughout the last two=20
months, about 12,000 megawatts of production was offline, more than a third=
=20
of the peak power used in California on a typical day. That has been about=
=20
evenly divided between scheduled and sudden plant shutdowns.
?????By contrast, shutdowns in the same period of 1999 and 2000 took only=
=20
3,300 to 5,700 megawatts offline.
?????Last month, the Federal Energy Regulatory Commission ordered electrici=
ty=20
supplier Williams Energy Marketing and Trading to pay $8 million in=20
connection with allegations that plants were improperly shut down to raise=
=20
prices. The company agreed to settle the case without admitting any=20
wrongdoing.
?????However, FERC released a study in February of closures at three other=
=20
California plants that it concluded were not undertaken to create a scarcit=
y=20
of power.
?????After talking to plant operators by telephone, reviewing documents and=
=20
visiting the three plants, federal inspectors concluded that "the companies=
=20
appeared to have taken whatever steps were necessary to bring the generatin=
g=20
facilities back online as soon as possible by accelerating maintenance and=
=20
incurring additional expenses."
---=20
?????Times staff writer Nancy Vogel in Sacramento contributed to this story=
.

Copyright 2001 Los Angeles Times

Critics Say Bush Proposal Leaves California in the Dark=20
Effect: President's energy plan may not even offer a silver lining for the=
=20
power-deprived Golden State.=20

By JENIFER WARREN and ROBIN FIELDS, Times Staff Writers=20

?????California lawmakers, analysts and others waist-deep in the state's=20
power crisis reached a single conclusion Thursday about the White House=20
energy plan:
?????By the time many of President Bush's proposals kick in, it will be too=
=20
late to do the Golden State much good.
?????"This plan does absolutely nothing to help California get through the=
=20
next critical 18 months," groused state Sen. Debra Bowen (D-Marina del Rey)=
.=20
"You can't focus just on the long term here. Because the patient will be de=
ad=20
before we get the life-support systems in place."
?????Gov. Gray Davis and others say the single best step Bush could take to=
=20
help the state is to impose controls on runaway electricity prices that are=
=20
draining California's treasury and forcing massive utility rate increases.
?????Instead, the president has offered an energy blueprint anchored by an=
=20
expansion in drilling for natural gas and oil, increased reliance on nuclea=
r=20
power and more than $10 billion in tax credits for conservation and energy=
=20
development.
?????Most of Bush's proposals, however, are slow-acting remedies, and many=
=20
others already are being applied in California, which was hit by energy woe=
s=20
far ahead of other states.
?????The plan's dozens of incentive programs designed to boost output or=20
promote conservation cannot be ramped up in time to protect the state from=
=20
blackouts and painful spikes in electricity prices, experts say.
?????"Overall, the message in this plan is, 'Drop dead, California,' " said=
=20
Eric Heitz of the Energy Foundation, a San Francisco-based research and=20
advocacy group.
?????"I don't think it delivers another megawatt to California," added=20
Loretta Lynch, president of the California Public Utilities Commission.
?????State economic analysts say the plan fails California by viewing the=
=20
power crisis as an ongoing emergency, rather than a temporary one.=20
California's supply crunch should ease dramatically by summer 2003, once 27=
=20
new power plants--15 of them licensed, 12 in the pipeline--start churning.
?????"It's not that we don't have long-term problems," said Stephen Levy,=
=20
director of the Palo Alto-based Center for Continuing Study of the Californ=
ia=20
Economy. "It's just that energy isn't among them."
?????Others, including many environmentalists, say Bush could have made a=
=20
noticeable impact by, for example, beefing up energy efficiency programs--a=
=20
quick, clean and relatively inexpensive way to cut demand.
?????"Why not provide aggressive incentives [rebates] to get people to=20
purchase more efficient air conditioners?" asked Dan Reicher, assistant=20
Energy secretary in the Clinton administration. "Over the course of the yea=
r,=20
a program like that can make a dramatic difference" because air conditionin=
g=20
consumes nearly one-third of California's peak energy supply.
?????Instead, Reicher noted, Bush earlier this year rolled back efficiency=
=20
standards for air conditioners, a move that critics say will require the=20
country to build 43 new power plants.
?????Even the few elements of the plan that looked promising for California=
=20
were clouded by doubt.
?????Bush, for example, directed the Energy secretary to explore ways to=20
relieve a key transmission bottleneck, known as "Path 15," between Northern=
=20
and Southern California. But he specified that the upgrade, which requires=
=20
building a 90-mile line at an estimated cost of $225 million, be funded by=
=20
"nonfederal contributions"--meaning the financially strapped utilities migh=
t=20
be expected to bear the cost.
?????Gov. Davis, who lately has stepped up his pleas for help from=20
Washington, said the Bush plan offers too little too late for California an=
d=20
criticized the president for allowing "the price-gouging energy companies,=
=20
many of which reside in Texas, to get away with murder."
?????Davis said the state is "doing everything possible to build and conser=
ve=20
our way out of the problem," but it desperately needs federal price control=
s=20
on energy costs. In 1999, California energy users spent about $7 billion;=
=20
this year, even with consumption down 5%, the bill could top $50 billion.
?????But Bush and Vice President Dick Cheney, who led the task force that=
=20
prepared the plan, are opposed to price caps, preferring to let market forc=
es=20
reign.
?????Davis said that laissez faire approach puts California's economy in=20
peril.
?????"Just saying, over the long haul, everything will work out is turning =
a=20
blind eye to the bleeding and hemorrhaging that exist in this state," Davis=
=20
said. "Small businesses . . . literally will go out of business because the=
y=20
can't afford these rates."
?????Analysts who studied the Bush plan say they are particularly=20
disappointed because it covers a lot of ground already plowed by California=
.
?????Bush recommends building 1,900 power plants over the next 20=20
years--about eight plants a month. But California is already on a=20
plant-building spree that will give it a comfortable supply within two year=
s.
?????The president also wants to streamline approval of plants and is pushi=
ng=20
for a renewed commitment to nuclear power. The California governor, however=
,=20
has already ordered expedited licensing of new plants under an executive=20
order issued in February.
?????There is little evidence, meanwhile, that Californians are eager to=20
approve an expansion in nuclear power. Nationwide, not one new nuclear plan=
t=20
has been licensed in more than 20 years. And a Times Poll in February found=
=20
that 60% of Californians oppose more nuclear reactors in the state.
?????"You can barely