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IEP News 5/10Today's IEP news...for more headlines please visit
www.rtumble.com. Thanks, Jean AP Online, May 10, 2001; Thursday, 7:25 AM, Eastern Time, Domestic, ????non-Washington, general news item, 630 words, Californians Fear High ????Electric Bills, SETH HETTENA, SAN DIEGO AP Online, May 10, 2001; Thursday, 2:21 AM, Eastern Time, Domestic, ????non-Washington, general news item, 678 words, California Blackout Season ????Begins, JENNIFER COLEMAN, SACRAMENTO, Calif. ?Copley News Service, May 10, 2001, Thursday, State and regional, 1162 words ????, Davis asks generators to 'share pain', Ed Mendel, SACRAMENTO Los Angeles Times, May 10, 2001 Thursday, Home Edition, Page 1, 1331 words, ????Bush Energy Stance Begins to Worry Some in GOP, GREG MILLER, RICHARD SIMON, ????TIMES STAFF WRITERS, WASHINGTON Los Angeles Times, May 10, 2001 Thursday, Home Edition, Page 1, 1630 words, ????Rate Hikes Up to 60% Proposed by PUC Chief; Power: Lynch says about half the ????residential customers of Edison, PG&E would escape increases. Her plan draws ????fire from all sides., TIM REITERMAN, NANCY RIVERA BROOKS, TIMES STAFF ????WRITERS, SAN FRANCISCO Los Angeles Times, May 10, 2001 Thursday, Home Edition, Page 8, 798 words, ????The State; ; Governor Asks Generators to Take Less Than They're Owed; ????Power: Meeting with firms, Davis says that settling for 70% of debt would ????help Edison stay solvent. One executive bristles., DAN MORAIN, TIMES STAFF ????WRITER, SACRAMENTO Los Angeles Times, May 10, 2001 Thursday, Home Edition, Page 8, 784 words, ????The State; ; Time to Give Some of the Power Players a Haircut, GEORGE ????SKELTON, SACRAMENTO Los Angeles Times, May 10, 2001 Thursday, Home Edition, Page 1, 989 words, ????Davis Faces Budget Cuts, Report Says; Finance: The state surplus shrinks by ????$3.4 billion as tech-firm troubles reduce tax revenue. Meanwhile, spending ????on the energy crisis mounts., JULIE TAMAKI MIGUEL BUSTILLO, CARL INGRAM, ????TIMES STAFF WRITERS, SACRAMENTO The New York Times, May 10, 2001, Thursday, Late Edition - Final, Section ????A; Page 30; Column 2; National Desk, 250 words, California Seeks Power Debt ????Relief, AP, SACRAMENTO, May 9 The San Francisco Chronicle, MAY 10, 2001, THURSDAY,, FINAL EDITION, NEWS;, ????Pg. A1, 1101 words, Power bills set to skyrocket for heavy users; ????Graduated rate increase would take effect in June, David Lazarus The San Francisco Chronicle, MAY 10, 2001, THURSDAY,, FINAL EDITION, NEWS;, ????Pg. A10, 826 words, Generators silent on Davis plan; ???He offers lower ????compensation to stave off Edison bankruptcy, Lynda Gledhill, Sacramento The Associated Press State & Local Wire, May 10, 2001, Thursday, BC cycle, ????9:48 AM Eastern Time, State and Regional, 807 words, Developments in ????California's energy crisis, By The Associated Press The Associated Press, May 10, 2001, Thursday, BC cycle, 7:02 AM Eastern ????Time, Domestic News, 605 words, For many Californians, fear of high ????electricity bills is a bigger threat than blackouts, By SETH HETTENA, ????Associated Press Writer, SAN DIEGO The Associated Press State & Local Wire, May 10, 2001, Thursday, BC cycle, ????3:43 AM Eastern Time, State and Regional, 467 words, PG&E says fewer small ????power plants offline, By KAREN GAUDETTE, Associated Press Writer, SAN ????FRANCISCO Copyright 2001 Associated Press AP Online ?????????????????May 10, 2001; Thursday 7:25 AM, Eastern Time SECTION: Domestic, non-Washington, general news item LENGTH: 630 words HEADLINE: ?Californians Fear High Electric Bills BYLINE: SETH HETTENA DATELINE: SAN DIEGO BODY: ???Ray Marquez wonders whether he'll have to cut back on food or gas in order to pay his electricity bill. ??The 34-year-old Orange County maintenance man usually pays $80 a month for power during summer months. Now, he's trying to figure out how to pay an electricity bill that could push $130 come June 1. ??''Since I got married and had children, you know, I've been dealing with balancing bills,'' he said Wednesday. ''But if I now have to pay more for electricity, I'm not going to have money for gas or food for the kids.'' ??As Californians coped with rolling blackouts that darkened thousands of businesses and homes Monday and Tuesday, many struggled with an even bigger worry: how to pay for soaring energy costs. ??In March, the state Public Utilities Commission approved the biggest rate increase in California history, up to 46 percent for customers of Southern California Edison and Pacific Gas & Electric. Those rate hikes start hitting customers in next month's bill. ??Gailen Kyle, who raises alfalfa on 1,600 acres in the Mojave Desert, says a 40 percent increase would put his farm out of business. ??''It would end us,'' the third-generation farmer said. ''Everybody here that farms alfalfa would be out of business.'' ??Kyle, 46, said he has to pump water nearly around the clock from wells drilled 310 feet below his farm near Lancaster. A small increase in the price of energy a few months ago added $80,000 to the $400,000 annual bill he was already paying. ??To save money, Kyle agreed to become an ''interruptible'' customer, meaning he voluntarily allows his power to be shut off during statewide electricity shortages in exchange for reduced rates. So far this year, his power has been cut 26 times. ??Even before the state utilities commission raised rates, residents were paying 26 percent more for electricity than the nationwide average, according to federal statistics. Only customers in New England, New York, Alaska and Hawaii pay more. ??One of the problems is that the wholesale cost of electricity has risen sharply over the past year but under California's 1996 deregulation law the state's largest utilities, PG&E and SoCal Edison, have been prevented from passing their costs to customers. In April, PG&E declared bankruptcy. ??The West isn't just facing spiraling costs and a shortage of supplies, however. Its transmission system is fragmented and overworked and would take years to improve, power officials told the region's governors Wednesday. ??''There is no immediate solution,'' said Idaho Gov. Dirk Kempthorne, one of four governors participating in a six-hour, round-table meeting with industry representatives. ??The Western Governors Association was told there is no established method for paying for transmission upgrades, and market and regulatory barriers stand in the way. It's not even clear where new power lines are most needed. ??The group, which included the governors of Utah, Idaho, Montana and Wyoming, has given energy experts until July 15 to recommend ways to eliminate bottlenecks. ??Meanwhile Californians, who've already weathered six days of rolling blackouts this year, fear they'll soon be paying more for less service. ??The Independent System Operator, which runs the state's power grid, has forecast more than 30 days of blackouts this summer due to severe shortages of electric supply. ??Dee Ann Hendirx, 53, of San Francisco, has stocked up on candles and battery-operated clocks. ??''I hate to say this but it's getting to be a way of life in California,'' she said. ??___ ??On the Net: ??Western Governors Association: http://www.westgov.org ?????(PROFILE ?????(CO:Southern California Edison Co.; TS:SCE;) ?????(CO:Pacific Gas and Electric; TS:PCG; IG:ELC;) ?????) LOAD-DATE: May 10, 2001 ??????????????????????????????5 of 110 DOCUMENTS ???????????????????????Copyright 2001 Associated Press ??????????????????????????????????AP Online ?????????????????May 10, 2001; Thursday 2:21 AM, Eastern Time SECTION: Domestic, non-Washington, general news item LENGTH: 678 words HEADLINE: ?California Blackout Season Begins BYLINE: JENNIFER COLEMAN DATELINE: SACRAMENTO, Calif. BODY: ???California's newest season blackout season is here, and it arrived earlier than expected. ??State officials had anticipated a crunch in June, when air conditioners are cranked up for summer weather. But already, California has been hit with back-to-back blackouts on Monday and Tuesday, and the operators of the state's power grid barely scraped together enough energy to avoid blackouts Wednesday. ??''We're definitely in blackout season,'' said Michael Shames, executive director of the Utility Consumer Action Network. ''Right now, there's almost a disbelieving frustration that is going to elevate quickly to downright irritable if we go through a summer of this.'' ??Grid officials expected fewer problems Thursday, when temperatures were expected to cool slightly and a large power plant was to return to service. ??Hot weather, a high number of power plants down for maintenance and little power available from other states led to rolling blackouts this week that affected hundreds of thousands of customers. ??Experts expect a long, hot summer of similar drills calls for conservation, followed by blackouts. California has had six days of rolling blackouts so far this year, and state regulators are forecasting at least 30 more this summer. ??For consumers, the early start of the season has created a mixture of resignation and exasperation. ??''The first day we have a hot day we have an energy crisis,'' said San Francisco resident Dee Ann Hendrix. ''I hate to say this, but it's getting to be a way of life in California.'' ??Fe Burian, 46, who moved to San Francisco from the Philippines, said the blackouts had not affected her yet, ''but I come from a Third World country so I know how it is.'' ??It has been a year since consumers in San Diego got the first dose of shortages and higher costs. Since then, Gov. Gray Davis and other leaders have tried to deal with the crisis with mixed results. ??The state has spent $4.7 billion since January to buy power for its two largest cash-strapped utilities. On Wednesday, the Legislature approved the sale of $13.4 billion in revenue bonds to buy electricity. ??Last month, the state Public Utilities Commission approved the biggest rate increase in California history: up to 46 percent for customers of Southern California Edison and Pacific Gas & Electric. ??Under a plan proposed Wednesday by PUC President Loretta Lynch, the increase would be structured so that residential customers who use the most electricity would face average rate hikes of 35 percent 40 percent, while industrial users could face increases of 50 percent or more. ??In February, Davis streamlined the permit process for new power plants and created an ambitious conservation program to head off summer blackouts. ??But the governor's plan to have 5,000 megawatts of new power online by midsummer is unrealistic, said Michael Zenker, director of Cambridge Energy Research Associates, an energy consulting firm. ??''There's no basis in fact in that number. We expect between 750 to 1,000 new megawatts,'' he said. A megawatt is roughly enough power for 750 homes. ??Zenker's organization predicted several months ago that the state would see 200 days of severe shortages this summer and 20 days of blackouts. But since then, the forecast has gotten bleaker because drought in the Northwest is expected to reduce output from hydroelectric plants. ??''Any sort of warm weather will be enough to push us into blackouts,'' Zenker said. ??As for conservation, it will make blackouts shorter and less severe, Shames said, ''but it won't stop the blackouts from happening.'' ??Meanwhile, a judge said Wednesday that PG&E can continue paying its natural gas suppliers, even as other creditors wait to recoup billions of dollars from the utility. ??The decision allows PG&E, which last month filed for Chapter 11 bankruptcy protection, to buy gas that it sells to homes and ??usinesses. ?????(PROFILE ?????(CO:Southern California Edison Co.; TS:SCE;) ?????(CO:Pacific Gas and Electric; TS:PCG; IG:ELC;) ?????) LOAD-DATE: May 10, 2001 ?????????????????????????????14 of 110 DOCUMENTS ??????????????????????Copyright 2001 Copley News Service ?????????????????????????????Copley News Service ????????????????????????????May 10, 2001, Thursday SECTION: State and regional LENGTH: 1162 words HEADLINE: Davis asks generators to 'share pain' BYLINE: Ed Mendel DATELINE: SACRAMENTO BODY: ??Gov. Gray Davis met yesterday with power generators he has accused of price-gouging and asked them to ''share in the pain'' of California's electricity crisis by settling for 70 percent of what they are owed by utilities. ??The governor said he told the generators that a key part of his rescue plan for utilities, the purchase of the Southern California Edison transmission system by the state, might not be approved by legislators if payments to generators are not reduced. ??Davis said he warned the generators that if Edison is forced to join Pacific Gas and Electric in bankruptcy, the generators would probably not be paid for three or four years and might receive even less than 70 percent of what they are owed as the judge distributes payments to creditors. ??''They could just do the math,'' said Davis, ''and see the value of having a certain amount of money this year can be higher in many cases than what you can expect to get out of the bankruptcy.'' ??Davis said he told the generators to be prepared to negotiate with legislators in the next few days. He said he believes that generators understand that they must reduce the amount of their current claims. ??''I think they understand they have to share in the pain,'' Davis said. ''They have to share in the solution.'' ??Davis said that of the $3.5 billion that Edison owes, about $1.1 billion to $1.2 billion is owed to generators. He said he did not have similar figures for PG&E. One of the generator executives who attended the nearly four-hour meeting in the governor's office did not immediately dismiss the suggestion that generators be paid less than they are owed. ??''I wouldn't say it's completely off the table,'' said Randy Harrison, chief executive officer of Mirant. ''I think anything that's part of a long-term comprehensive solution might be something we could discuss at some point.'' ??But another generator executive who attended the meeting disagreed with the governor's assessment that generators at the meeting understood that they must reduce the amount of their claims. ??''At this point we feel like we played by the rules,'' said John Stout, Reliant senior vice president. ??It was revealed last week that Duke Energy offered a plan to provide the state more power and to settle for less than what it was owed if all lawsuits and investigations into price-gouging were dropped. Davis rejected the offer. ??''We are not dropping any lawsuits,'' Davis said he told generators. ''We are not dropping any investigations. Quite the contrary, we are pursuing all those to the hilt.'' ??Legislators have proposed seizing the power plants of generators and imposing criminal penalties for price-gouging. The Senate approved a bill this week that could impose a 100 percent tax on any generator revenue of more than $80 per megawatt hours. The state estimates that it will pay an average of $346 per megawatt hour for power purchased on the spot market during the second quarter of this year. ??Davis suggested a windfall-profit tax goes against his instincts, but he has not ruled it out. ??''It would cause blackouts,'' warned Reliant's Stout. ??The meeting in the governor's office yesterday was attended by the chief executive officers of Mirant, Enron, Edison Mission Energy, Calpine and Williams. ??Also attending were executives from Reliant, PG&E's National Energy Group, Duke, AES and El Paso Natural Gas. Executives from Sempra and Dynegy participated by telephone. ??Davis said the main topic was a discussion of ways to help California meet its energy needs this summer. He said there was an agreement to publicize the results of power-plant inspections in response to accusations that plants are being taken off line to drive up electricity prices. ??Stout said there was a suggestion that the state sell electricity to the Northwest during off-peak hours to reduce the drain on hydroelectric facilities there and produce revenue for California. ??Davis said some of the suggestions from generators were ''blue-sky'' ideas. ''I have no idea if they have merit,'' he said. ??Earlier in the day, the state Senate sent Davis a bill authorizing $13.4 billion in bonds to repay the state general fund for power purchases, which total more than $6 billion so far. ??But because Republicans refused to provide the votes needed to allow the bill to take effect immediately, a special session on energy will be ended prematurely Monday to allow the bond measure to take effect 90 days later in August. ??Senate President Pro Tempore John Burton, D-San Francisco, said that a new special session will be called and steps will be taken to return dozens of stranded bills to their positions in the legislative process, avoiding the need to repeat hearings and votes. ??The state began buying power for utility customers in January after PG&E and Edison, whose rates were frozen by deregulation as wholesale power costs soared, ran up a $13 billion debt and could no longer borrow. ??Davis urged Republicans to reconsider their vote and approve a bond sale before the new fiscal year begins July 1. If the state general fund is not repaid, he said that funding may have to be reduced for ''transportation, hospitals, schools, the environment, law enforcement and other important'' programs. ??Assembly Republicans, who wanted to reduce the size of the bonds by not repaying the general fund for $6.5 billion worth of power, said yesterday that the new state budget should include a $4 billion reserve for power purchases. ??The Assembly GOP point man on the budget, George Runner of Lancaster, said he fears that the situation is deteriorating and that California may have to consider rationing the amount of electricity. ??''I believe we are coming very closely to this line that we are no longer dealing with conservation issues we are dealing with rationing,'' Runner said. ??In other action yesterday: ???Legislation that would allow San Diego County to form its own municipal utility district cleared a key hurdle after the bill's author, Assemblyman Mark Wyland, R-Escondido, agreed to require voter approval for any new district. ??The bill, which has bipartisan support from the San Diego delegation, would require majority approval before a district could be formed. Current law requires a two-thirds vote. ???Loretta Lynch, chairwoman of the California Public Utilities, said she hopes to spare 50 percent of residential power users from any increases under the pending rate hikes for PG&E and Edison. ??The hikes, which amount to about 3 cents per kilowatt hour and raise about $5 billion annually to cover power costs, will be formally approved Monday by the commission. Lynch's proposal, which she released yesterday, is one of several for allocating the increase and calls for heavier electricity users to pay more than moderate users. ??SDG&E's request for a rate hike will be considered later. Staff writer Craig D. Rose contributed to this report. LOAD-DATE: May 10, 2001 ?????????????????????????????18 of 110 DOCUMENTS ??????????????????????Copyright 2001 / Los Angeles Times ??????????????????????????????Los Angeles Times ?????????????????????May 10, 2001 Thursday ?Home Edition SECTION: Part A; Part 1; Page 1; Metro Desk LENGTH: 1331 words HEADLINE: Bush Energy Stance Begins to Worry Some in GOP BYLINE: GREG MILLER, RICHARD SIMON, TIMES STAFF WRITERS DATELINE: WASHINGTON BODY: ??As power shortages and price spikes spread beyond California, congressional Republicans are beginning to worry that the Bush administration's reluctance to offer much immediate relief could hurt the party in the 2002 elections. ??A national energy plan to be unveiled by the White House next week will focus on long-term strategies. But with California and other states bracing for a summer of electricity turmoil and gasoline prices surging across the country, some GOP lawmakers are pressing for short-term solutions. ??"The White House has been taking a look at the big picture," said a GOP leadership aide in the House. "But they're going to be around in four years. We might not have members around in two years if we don't show we care." ??That sentiment is being voiced by a rising number of GOP lawmakers. "We're in a crisis situation, which is only going to get worse if we don't act very aggressively," Rep. Elton Gallegly (R-Simi Valley) said Wednesday. Gallegly is one of four congressional Republicans from California to break with the administration by supporting temporary price controls on wholesale electricity. ??The rising anxiety, which has begun spreading beyond the California delegation, underscores how much has changed since the state declared its first Stage 3 power emergency in December. At that time, Congress' response was largely: That's Gov. Gray Davis' problem. ??Not anymore. ??Thirty-nine Stage 3 alerts later, a House committee today will take up a GOP-drafted emergency bill that would, among other things, allow Davis to temporarily waive certain emission standards for power plants during an emergency and provide federal aid to relieve a notorious bottleneck in the California power grid. ??But some GOP lawmakers say the legislation doesn't go far enough, and plan to offer amendments containing their own ideas. Rep. Mary Bono (R-Palm Springs) plans to push for $100 million in energy assistance to low-income households and for a directive to federal facilities in the West to cut energy use by 20%. ??"House leaders recognize that they could lose the House in California if there's not an action plan that members can campaign on," said Scott Reed, a GOP strategist. ??As lawmakers search for ways to provide immediate relief, the White House continues to cite California's troubles as evidence of the need to upgrade an aging, overburdened electricity transmission system. ??Responding to reports that the administration would propose legislation to give the federal government eminent domain authority in siting power lines, White House press secretary Ari Fleischer said Bush wants to ensure that the distribution infrastructure can move electricity from regions with surpluses to regions that need more power. ??"That's one of the reasons that California is going through the difficulties it's going through," Fleischer said. "There is energy available in other parts of the country, but it can't be shipped to California as easily as you would hope, because of infrastructure problems." ??Fleischer took exception to a front-page story in The Times reporting that Bush, in a speech delivered Tuesday, "offered no hint of what his administration might do" to help California avert a possible economic downturn caused by power blackouts. ??Though the president did not specifically mention possible actions in the speech, Fleischer said Bush last week "announced a series of steps, including conservation," to help California get through an energy crisis this summer. ??He said that the Pentagon is reducing its energy needs within California by 10% and that all other federal agencies, at Bush's direction, are reviewing their energy consumption patterns. ??Environmentalists already have begun blasting the administration's energy plan--even before its details are made public--for what they characterize as a failure to emphasize energy efficiency and investments in renewable fuels. ??Activists Say Crisis Isn't Real ??At a Wednesday news briefing, a coalition of environmental advocates disagreed with the administration's assertion that the country is experiencing an energy "crisis," and accused it of crafting a plan designed to boost the profits of key campaign contributors. ??"We cannot drill our way out of this situation," said Dan Becker of the Sierra Club. He and others argued that conserving fuel--with cars that use less gasoline and appliances that use less electricity, for example--is the best way to avoid energy shortages in the short term. ??So far, it is not clear whether the energy crisis will work to either party's advantage. Many on Capitol Hill are bracing for an election year that could be brutal for incumbents of both parties if voters who endure high energy bills this summer vent their frustration in the voting booth next year. ??Some House Republicans acknowledged that they have been pushing the White House to appear more engaged in finding near-term solutions. ??When House Republicans met with Cheney last week, "they urged him and all the administration to at least make it clear that a lot of effort is going into finding a way to solve the problem," said Jim Specht, a spokesman for Rep. Jerry Lewis (R-Redlands), leader of the California GOP delegation. ??Though some Republicans have offered ideas to address the immediate problem, it is not clear whether any will receive congressional approval. ??Indeed, the emergency assistance bill being taken up today by the House energy subcommittee faces trouble, although it was drafted by the panel's chairman, Rep. Joe Barton (R-Texas). ??Barton stripped out a number of provisions opposed by environmentalists. But Democrats plan to seek a vote on capping wholesale electricity prices, a proposal most Republicans oppose. Democrats also plan to introduce an amendment to target natural gas prices. ??House Minority Leader Richard Gephardt (D-Mo.) said the bill "fails miserably" to address California's problems. "During the campaign, President Bush promised a sensible energy policy," Gephardt said. "In recent weeks, however, the president has responded to the gathering crisis by throwing up his hands and saying there's nothing we can do, there's no way to give people immediate relief from blackouts and sky-high increases of price of gasoline at the pump." ??Lawmakers of both parties acknowledge that they are hearing a rising chorus of constituent complaints about the energy price spikes and supply shortages. ??Rep. Chris Cox (R-Newport Beach) was caught in a blackout during a tour of a computer chip factory in his district. "They said it cost them $1 million if the power goes off even for five minutes," said Cox, who nonetheless opposes price controls. ??Cox said he is worried about how the California electricity crisis might affect the national economy. He said that when he asks business owners about expanding in California, "they just look at you like you're nuts. They don't consider California an option because of this uncertainty." ??"People come up to you and want you to help solve the problem," said Rep. George Radanovich (R-Mariposa). ??He has explained that there is little the federal government can do in the short term. ??"Californians want somebody to do something," said John J. Pitney Jr., associate professor of government at Claremont McKenna College. "When people are in a mood like that, politicians get nervous thinking that they're the ones who might get blamed." ??Said Reed, the GOP strategist: "Every incumbent in California is vulnerable in the next election, in both parties. This is an issue that is not ideological. It's about action and solving a short-term problem. "Politics have taken over this issue, like it or not," he said. "They may have been raging in California for the last three or four months. It's now a national political issue." ??* ??Times staff writers James Gerstenzang, Edwin Chen, Elizabeth Shogren and Ricardo Alonso-Zaldivar contributed to this story. GRAPHIC: PHOTO: U.S. Rep. Mary Bono, left, and Gov. Gray Davis discuss meeting with executives of power-generating companies. Bono plans to seek $100 million to help poor people pay energy bills. PHOTOGRAPHER: Associated Press LOAD-DATE: May 10, 2001 ?????????????????????????????19 of 110 DOCUMENTS ??????????????????????Copyright 2001 / Los Angeles Times ??????????????????????????????Los Angeles Times ?????????????????????May 10, 2001 Thursday ?Home Edition SECTION: Part A; Part 1; Page 1; Metro Desk LENGTH: 1630 words HEADLINE: Rate Hikes Up to 60% Proposed by PUC Chief; Power: Lynch says about half the residential customers of Edison, PG&E would escape increases. Her plan draws fire from all sides. BYLINE: TIM REITERMAN, NANCY RIVERA BROOKS, TIMES STAFF WRITERS DATELINE: SAN FRANCISCO BODY: ??About 4 million California residential electricity customers will face increases in their monthly bills of up to about 60% under a proposal unveiled Wednesday by the state's chief utility regulator. Interest groups on all sides promptly condemned the plan as too hard on either consumers or businesses. ??The proposal by California Public Utilities Commission President Loretta Lynch would increase the bills of roughly half of Southern California Edison's residential customers, who consume medium to heavy amounts, by $8 to $93 a month. Pacific Gas & Electric Co. customers would be hit with hikes of $6 to $87 a month. ??About half of the residential customers of the state's two biggest public utilities would see no increase under the proposal if they continued to consume energy at their current pace. ??Lynch said she could not guarantee that more rate increases would not be necessary. "Even these astronomical average rates may prove inadequate," she said, noting that wholesale electricity prices are still high and unpredictable. ??The rate hike, Lynch said at a news conference, is necessary because "federal regulators have failed to follow federal laws to ensure just and reasonable prices." ??The deepening energy crisis compelled Lynch to release her proposal after public hearings on the rate increase already had begun. Lynch said that she wished her proposal had been ready sooner, but that at least some of the remaining public hearings will have the benefit of reviewing it. ??PUC passage of the essential elements of Lynch's plan seems likely. ??Along with two of her colleagues on the five-member commission, Lynch was appointed by Gov. Gray Davis, and they often vote as a bloc. Lynch said, however, that testimony later this week from utilities, the public and other interested parties could prompt modifications. ??Structuring the $5-billion rate increase is an important but politically sensitive step in California's attempt to restore stability to the delivery of power to 9 million customers of two financially troubled utilities while protecting the state budget. ??The PUC has tried to design rates that would encourage conservation without damaging business. Competing interest groups, ranging from consumer advocates to large manufacturers, have been jockeying for advantage for weeks. ??The PUC approved a rate increase of 3 cents per kilowatt-hour March 27 to help pay the state's mounting power tab, which now exceeds $5 billion. This week, the commission is conducting statewide hearings on how the pain should be shared among millions of residents and businesses. On Monday the panel is set to vote on Lynch's plan and a similar one by a PUC administrative law judge. ??Neither proposal appeared to please anyone. ??"The PUC says everyone should share the pain, but we think the fair share of the pain for residential consumers should be zero," said Mindy Spatt, spokeswoman for the Utility Reform Network, a San Francisco consumer group. "It should be paid by commercial and industrial customers who wanted and still want deregulation." ??Consumer activist Harvey Rosenfield said regulators should go after power generators and their hefty profits rather than ratepayers. ??"Rate increases are not the answer, and this is not going to be the end of them," said Rosenfield, president of the Foundation for Taxpayer and Consumer Rights in Santa Monica. "This is like organized crime: The more you give them, the more they want." ??Commercial and industrial customers would see increases of up to 50%, and agricultural interests would face increases of 23% to 30% under Lynch's proposal. ??Business interests contend that the rate hikes hit them much harder than residential users. ??Calling the proposal "a death knell for the California economy," Jack M. Stewart of the California Manufacturers and Technology Assn. estimated that industrial customers would see their power rates increase an average of 53%. And the pain of the rate hikes will be compounded by blackouts this summer, which the group contends will cost California businesses $21.8 billion in lost productivity. ??"For most large manufacturers, energy is a large piece of their operating costs," Stewart said. "If you add 53% to that, it's going to severely hamper their ability to do business." ??Unlike residential customers, the business customers are not grouped into tiers based on their amount of usage. Lynch said there was insufficient time to establish a tiering system for nonresidential customers by June 1, when the rate hikes will start showing up on bills. ??An earlier proposal by Lynch had attempted to narrow the gap between residential rates and the lower rates paid by nonresidential customers. But the commission president said that goal could not be immediately achieved without seriously damaging the state's economy. ??To protect the largest users from gigantic rate increases, Lynch's proposal caps the maximum bill increase at 300% for most customers and 250% for agricultural customers. ??"While we understand bill limiters may have some troubling conservation impacts, at some point, price signals are unbearable for customers. Bill limiters will protect customers from unanticipated extraordinary bill impacts," Lynch wrote. ??In recent weeks, the commission has received about 20 plans for structuring the rate increase, including one from Davis, who had proposed a slightly smaller overall rate increase. Lynch said her plan incorporates a number of features of the governor's plan, including a tiered structure that would punish heavy users and reward those who conserve. ??Under state legislation, there is no rate increase for consumption up to 130% of baseline, the amount deemed the minimum needed by a customer in a given area and noted on ratepayer bills. Also exempted are low-income customers who already receive discounted electricity rates. ??Edison and PG&E said they could not assess how the PUC proposals would affect their customers because the commission had not provided details to the utilities as of late Wednesday. ??But PG&E has disputed the commission's claim that half of customers would not be affected by the increase, noting that only 32% of PG&E customers never exceeded 130% of baseline usage in the last year. ??Industrial and commercial customers complained that the plan should not exempt such a large group of residential customers, in any event. A rate increase for these users--based on the PUC's estimate that the group will constitute about half of residential customers--could generate an extra $1 billion. ??If the PUC insists on exempting so many, the $1-billion shortfall should be covered solely by other residential users, businesses say. ??Under Lynch's plan the burden of paying that amount would be split equally among commercial, industrial and nonexempt residential customers. ??If covering the shortfall were not shared by the three groups, Lynch said, some residential customers would suffer a 100% increase in their bills. ??The proposal calls for a pilot program, including one that would let federal agencies based in California "experiment with their own market rate policies." ??Lynch challenged federal agencies to try to live with "real time," or hourly, prices in the volatile wholesale marketplace--a slap at officials of the Federal Energy Regulatory Commission who favor a free wholesale market over price caps. Use of real-time pricing requires installing a special meter. ??"'It would be great if the federal users respond to price signals enough that prices come down," Lynch said, adding that she was skeptical that would happen in today's dysfunctional market. ??A FERC spokeswoman declined to comment on Lynch's proposal. ??During the third day of PUC hearings, about 200 people gathered at Fullerton College. Seventy people testified, most venting their anger at elected officials and utility companies, whom they blame for the state's flawed deregulation plan. ??"I am opposed to any rate increase for residences and small business," testified Ruth Shapin, a Santa Ana attorney. "This crisis was created by politicians. PG&E and SCE have transferred billions of dollars to their parent companies. Let them bail themselves out, not the ratepayers." ??Others said the baselines might be unfair because the commission had not taken into consideration home size, the number of occupants and the location. ??"It's going to be hard for many people to stay below the 130% baseline," said Sylvia Hartman of Lakewood. "Some customers could easily go 400% over the baseline." ??* ??Reiterman reported from San Francisco, Rivera Brooks from Los Angeles. Times staff writer Dan Weikel in Fullerton contributed to this story. ??Rate Hike Proposal ??A proposal by California Public Utilities Commission President Loretta Lynch charges the highest rates to residential customers who use the most electricity. The standard for measuring use is a customer's baseline, which is considered the minimum amount of electricity needed. Under state law, consumption up to 130% of baseline is exempt from the rate increase. The following shows the projected monthly bill increase for various levels of electricity use: ??Southern California Edison ??Usage level ????% increase ?Cost increase Baseline ???????????0% ???????????$0 200% of baseline ????9% ???????????$8 300% of baseline ??43% ??????????$45 400% of baseline ???61% ??????????$93 ??* ??Pacific Gas & Electric ??Usage level % increase Cost increase ??Baseline ???????????0% ???????????$0 200% of baseline ???7% ???????????$6 300% of baseline ??15% ??????????$24 400% of baseline ??40% ??????????$87 ??Source: California Public Utilities Commission GRAPHIC: PHOTO: Elisabeth Charion is among about 70 people testifying at a PUC hearing Wednesday in Fullerton, most venting their anger at elected officials and utility companies, whom they blame for the crisis. PHOTOGRAPHER: IRFAN KHAN / Los Angeles Times GRAPHIC-TABLE: Rate Hike Proposal, Los Angeles Times LOAD-DATE: May 10, 2001 ?????????????????????????????20 of 110 DOCUMENTS ??????????????????????Copyright 2001 / Los Angeles Times ??????????????????????????????Los Angeles Times ?????????????????????May 10, 2001 Thursday ?Home Edition SECTION: California; Part 2; Page 8; Metro Desk LENGTH: 798 words HEADLINE: The State; ; Governor Asks Generators to Take Less Than They're Owed; Power: Meeting with firms, Davis says that settling for 70% of debt would help Edison stay solvent. One executive bristles. BYLINE: DAN MORAIN, TIMES STAFF WRITER DATELINE: SACRAMENTO BODY: ??After spending months bashing independent power generators, Gov. Gray Davis on Wednesday called on them to take 30% less than the $1.2 billion they are owed by Southern California Edison. ??"The Legislature [is] going to insist on a reduction," Davis said after a meeting in his office with representatives of a dozen power generating companies. Davis said he told them that "70% this year was more valuable to them than whatever they get two or three years down the line" if Edison is forced into bankruptcy. ??Davis urged generators to help California extricate itself from a summer of rolling blackouts by selling every available electron to the state. ??He held out the possibility that he might sign legislation imposing a windfall profits tax on generators if they fail to help out this summer. ??"My attitude on that would depend a lot on whether they showed good faith and cooperated throughout this process," Davis said, emerging after a four-hour, closed-door meeting with the generators. ??The Democratic governor issued an invitation last week to the chief executive officers of power generating and marketing companies including Enron, Reliant, Duke Energy and others to meet with him in Sacramento. But most of the executives who attended were a few pay grades below CEO. ??Davis said he urged that the executives press lawmakers to approve the deal he struck with Edison in which the state would give the ailing utility an infusion of cash by buying its transmission system for $2.76 billion. Edison would use the money to restructure its debt and pay its creditors. ??Davis said lawmakers will not approve the deal unless the independent power generators take less than they are owed. ??He noted that the state and the power generators have "a collective interest in seeing that this summer has as few disruptions as possible." If California is hit with repeated blackouts, Davis has said, other states will delay or end efforts to deregulate their electricity markets. ??Executives, who braved taunts from a few protesters wearing pig masks and carrying a small but loudly squealing pig, characterized the meeting as businesslike. But at least some generators are less than enthusiastic about taking less than they are owed. ??"I have a real concern about the notion that we should give back some of the money we made," said John Stout, a senior vice president of the Houston-based Reliant Energy, which says it is owed $300 million by Southern California Edison and Pacific Gas & Electric. ??Stout said that much of the money Reliant made in California is being reinvested in power plant construction--although he added that the company has no generators under construction in California. ??"Political uncertainty has put a huge risk factor on investment in California," Stout said. ??Randy Harrison, an executive with Mirant, based in Atlanta, said the issue of a so-called "haircut" was discussed, though not in detail. Harrison said it is "not completely off the table." But he added that his company is not profiteering. Nor has it withheld electricity in any attempt to manipulate wholesale energy prices. ??"Our people are working 24 hours a day and we are spending millions of dollars to try and keep our power plants up and running," Harrison said. ??The meeting was aimed at opening communication with the generators. But Davis aides said the governor also wanted to bring attention to companies that he believes are at least partly responsible for California's energy crisis. ??The meeting occurred as polls show that voters are increasingly angry about the energy crisis and as lawmakers, fearful that the energy crisis will wreck California's economy, sharpen their attacks on power generators. ??Legislators have introduced bills to impose a windfall profits tax on generators and make it a felony to manipulate electricity markets. Lt. Gov. Cruz Bustamante and Assemblywoman Barbara Matthews (D-Tracy) sued several generators last week. Atty. Gen. Bill Lockyer is investigating whether generators violated antitrust and other laws as wholesale prices soared to record heights, hobbling Edison and helping push PG&E into bankruptcy. ??Voters are not sure who is to blame, but they are convinced that "whoever is taking our money is taking way too much," said Democratic political consultant Richie Ross. ??"They want to find this deregulation's Charles Keating," Ross said, referring to a central figure in the 1980s savings and loan debacle. ??Still, as much as Davis and others demonize generators, the state needs them, some officials say. ??"We don't have enough power without them," said Assembly Energy Committee Chairman Roderick Wright (D-Los Angeles). "There needs to be an adult discussion to see what can be worked out." GRAPHIC: PHOTO: CHP Officer Stacey Brashares holds a pig taken from protesters outside the Capitol, where Gov. Gray Davis was meeting with executives of power generating companies. Masks worn by the protesters carry the names of some of the companies. PHOTOGRAPHER: ROBERT DURELL / Los Angeles Times PHOTO: Gov. Gray Davis, after a meeting in his office with representatives of a dozen power generating companies. PHOTOGRAPHER: Associated Press LOAD-DATE: May 10, 2001 ?????????????????????????????21 of 110 DOCUMENTS ??????????????????????Copyright 2001 / Los Angeles Times ??????????????????????????????Los Angeles Times ?????????????????????May 10, 2001 Thursday ?Home Edition SECTION: California; Part 2; Page 8; Metro Desk LENGTH: 784 words HEADLINE: The State; ; Time to Give Some of the Power Players a Haircut BYLINE: GEORGE SKELTON DATELINE: SACRAMENTO BODY: ??Gray and the Grid. Sounds like an old rock group. And it's slipping fast on the Capitol charts. ??Same with MOU. That's not a rapper, but it's making about as much sense to most legislators. ??MOU--Memo of Understanding--is the complex deal Gov. Gray Davis cut with Southern California Edison last month to rescue the utility from bankruptcy. The key provision is Davis' offer to buy Edison's high-voltage lines--its grid--for $2.76 billion. ??Of that, $1.5 billion would go to Edison's creditors, the electricity suppliers the utility has stiffed. Edison customers would kick in another $2 billion to pay off the total debt, estimated at $3.5 billion. ??The state would repair and expand the clogged grid--for less money than Edison could--and collect transmission fees to pay for the lines. It also would be in better position to possibly buy bankrupt PG&E's lines and ultimately place the entire California grid under public ownership. ??Problem is, this deal must be approved by the Legislature. And the governor can't even find a lawmaker willing to sponsor the bill. ??Politicians have looked at polls and seen that voters regard private utilities as the No. 1 villain in this energy mugging. They're leery of supporting anything that might smack of a public bailout for Edison. ??"It's seen as a gift," Senate leader John Burton (D-San Francisco) says of the MOU. ??The Davis deal seems DOA. So both legislative houses are drafting alternatives. ??Most Democrats--who own Sacramento--think the creditors should "take a haircut." That's Capitol jargon for discounting the debt. ??Burton figures that a 30% haircut will be necessary for any Edison deal. That's justified, he and others say, because the creditors--mainly out-of-state power companies--have been gouging the utilities anyway. ??On Wednesday, Davis agreed. He proposed a 30% haircut in a meeting with stunned power generators, who had little response. ??There must be shared pain, Davis and Burton assert. Shared by creditors, Edison's parent company, the utility itself and ratepayers. Under the MOU, only ratepayers suffer pain. ??The liberal Senate leader was an early advocate of acquiring the grid. And he still is. But he asserts this MOU isn't needed for that. Perhaps the grid can be picked up as a separate ticket. ??Across the Capitol, freshman Assemblywoman Jackie Goldberg (D-Los Angeles)--the former L.A. council member--has been meeting with a small group that is looking for alternatives to the Davis deal. ??"It's uncertain whether we can pass the MOU in its current form," she says. "But nobody wants to leave this hanging in limbo." ??Among the options, she says, is acquiring the grid without paying for it. Edison would just shift title. That way there'd be no legislative haggling over price. ??But the state would take care of the utility's debts after creditor haircuts. Good trims. ??"There's no definition of gouging that wouldn't be appropriate here," Goldberg says. ??"Maybe the governor could have moved faster. There are a lot of shouldas, wouldas. But when I get angry, I get angry at FERC and the price gougers." ??FERC and the Price Gougers--at the very bottom of the Capitol charts. ??Burton and Assembly Speaker Bob Hertzberg (D-Sherman Oaks) announced plans Monday to sue the Federal Energy Regulatory Commission. They want to force FERC to protect California consumers against the gougers. Obey the law and make sure the power pirates charge only "just and reasonable" prices. Return unfair profits. Set wholesale price caps. ??"This case is about old people in convalescent homes, which are not exempt from blackouts," said the legislators' veteran trial attorney, Joseph Cotchett. "We're talking about health and welfare. People on life support machines. This is not about swimming pool heaters." ??It's a longshot suit--two legislative leaders suing the federal government. There's a doctrine about separation of powers. But the action illustrates Sacramento's current frustration. ??On Wednesday, there was a new group: Gray and the Generators. ??The governor invited in the gougers for some frank talk in his office. Earlier, he had accused them of "just satisfying their greed and sucking money out of the state." ??They weren't in the mood for a Capitol haircut. ??But one power official confided that many do wish FERC would be more aggressive--set hard rules, order refunds if justified and just handle it. The state Capitol wouldn't be so overheated and there'd be less pressure on the generators if the Feds did their job. ??In that regard, Californians now are beginning to discover another group: Bush and the Blackouts. ??The boos are becoming more raucous. LOAD-DATE: May 10, 2001 ?????????????????????????????22 of 110 DOCUMENTS ??????????????????????Copyright 2001 / Los Angeles Times ??????????????????????????????Los Angeles Times ?????????????????????May 10, 2001 Thursday ?Home Edition SECTION: California; Part 2; Page 1; Metro Desk LENGTH: 989 words HEADLINE: Davis Faces Budget Cuts, Report Says; Finance: The state surplus shrinks by $3.4 billion as tech-firm troubles reduce tax revenue. Meanwhile, spending on the energy crisis mounts. BYLINE: JULIE TAMAKI MIGUEL BUSTILLO, CARL INGRAM, TIMES STAFF WRITERS DATELINE: SACRAMENTO BODY: ??The suffering of California's high-tech firms is taking its toll on the fortunes of state government, according to the nonpartisan legislative analyst, who said Wednesday that the state budget surplus has shrunk by $3.4 billion. ??To keep the budget out of the red, Gov. Gray Davis will have to slash his state spending plan, an unpleasant prospect for those who rely on state services and a politically dicey task for a governor facing reelection next year. Among the areas that could be hit are anticipated transportation projects and a program to extend health insurance to poor people. ??Elizabeth Hill's grim update on the state's financial outlook complicates an already difficult situation for state officials trying to pay for services amid an extraordinarily expensive energy crisis. More than $6 billion has been drained from California coffers to pay for energy purchases. Hill's assessment of the state economy and its effect on the budget does not take that money into account because it assumes that a bond issue, approved Wednesday, will repay the state's general fund. ??Should that fall through, her budget estimates would grow more dire. ??Hill's office previously estimated an $8-billion state surplus over this year and next. But California has been particularly hard-hit by the struggles of the state's high-tech firms, which in recent years had fueled huge state tax receipts as employees cashed out stock options, said Brad Williams, senior economist for Hill's office. ??"This shouldn't be too terribly surprising given the negative developments in the economy and the negative developments in the stock market," Williams said. "The economic picture has changed significantly since January." ??In a letter to lawmakers, Hill said onetime and ongoing spending cuts will be needed to stave off a deficit that would occur if the governor's spending plan were put in place. Under that plan, money would be spent faster than it would come in, according to Hill's projections. ??At the rate of spending contemplated by the governor's current budget proposal, the deficit would hit $1.5 billion in the 2001-02 budget year and rise to $6 billion by 2002-03, Hill predicted. To avoid running into the red, Hill floated the possibility of $2.5 billion in onetime cuts in the next budget and an annual reduction of $1.7 billion through the 2002-03 fiscal year. ??Department of Finance spokesman Sandy Harrison said the Davis administration would not comment on Hill's projection Wednesday, adding only that the governor would account for updated revenue estimates Monday when he releases his revised spending plan. ??But lawmakers are reacting with alarm and are vowing to cut whatever programs are expendable to avoid what some consider the worst alternative: a tax increase. ??"That's the last thing we want to do," said Assembly Budget Committee Chairman Tony Cardenas (D-Sylmar). "It has crossed our minds. We do not like the fact that it has crossed our minds." ??Senate Budget Committee Chairman Steve Peace (D-El Cajon) said the nearly $ 5-billion shortfall that Hill predicts for the 2001-02 fiscal year is optimistic. He believes revenue actually could sink as much as $20 billion. ??Peace said Hill appears to be projecting that revenue will begin to rebound toward the end of the year, but he predicted a continued decline as the economic downturn manifesting itself on Wall Street trickles down to Main Street. ??"I think we are in for a huge problem and that assumes no impact from the energy stuff," Peace said. ??Though legislators appear most determined to avoid a tax increase, cutting services would represent a political challenge. ??Peace suggested that up to $2 billion could be saved by delaying certain onetime transportation programs that have yet to get off the ground. He warned that a proposed expansion of the Healthy Families program, which provides health insurance to low-income Californians, could be in jeopardy. ??Education funding in the upcoming budget year probably will still rise over the previous year, but fall short of the level contemplated by Davis in January by about half a billion dollars, Peace predicted. ??Davis' $1.45-billion, three-year plan to extend the middle school year has faced substantial opposition in the Legislature and may be rejected, which would relieve the need to cut other programs. ??Without question, the biggest cloud hanging over the budget is whether the general fund will be repaid for billions of dollars in energy purchases--a possibility that is quickly dismissed in Hill's analysis. ??To avoid blackouts, California has been buying massive quantities of electricity since January because the state's private utilities had become too burdened with debt to continue making purchases on the expensive wholesale power market. ??Davis had planned to reimburse the budget with proceeds from a record $ 12.5-billion bond sale and that utility ratepayers would then pay off the bonds. But the sale has been delayed until August at the earliest, leaving a gaping hole in state coffers as lawmakers plan the budget. ??Cardenas said it is likely that legislators will be forced to craft a two-tiered budget this year, one that assumes a bond sale is completed and one that prepares for the possibility it is not. ??There are other uncertainties as well. Consumer activists say they are considering challenging the bond issue with a ballot measure--a threat that could further undermine confidence about the bond issue, and California's financial health, on Wall Street. California's credit rating has already been lowered by one credit rating agency because of concerns over repayment of the state budget. ??If the bond issue does not go through, "then we have to make cuts everywhere," Cardenas said. "Everything is up for grabs." ??* ??Times staff writer Dan Morain contributed to this story. GRAPHIC: PHOTO: Elizabeth Hill, the state's legislative analyst, previously had estimated an $8-billion state surplus over this year and next. PHOTOGRAPHER: ROBERT DURELL / Los Angeles Times LOAD-DATE: May 10, 2001 ?????????????????????????????26 of 110 DOCUMENTS ??????????????????Copyright 2001 The New York Times Company ??????????????????????????????The New York Times ?????????????????May 10, 2001, Thursday, Late Edition - Final SECTION: Section A; Page 30; Column 2; National Desk LENGTH: 250 words HEADLINE: California Seeks Power Debt Relief BYLINE: ?AP DATELINE: SACRAMENTO, May 9 BODY: ??Gov. Gray Davis asked power generators today to accept a 30 percent cut in money they are owed by Southern California Edison, the state's second largest utility, to help keep it afloat. ??The California governor's request came after two days of rolling blackouts caused by high temperatures and scarce electricity. Grid operators avoided blackouts today after temperatures dropped slightly. ???Officials at the Independent System Operator, which manages the state's electricity grid, said that supplies would still be tight on Thursday, but that slightly cooler weather would help them meet demand. ??Southern California Edison owes generators more than $1.1 billion, but they are unlikely to see their money for years if it declares bankruptcy, Mr. Davis said he told 12 electricity and natural gas producers. ??"I think they understand they have to share in the pain," the governor said. "They have to share in the solution. I believe they are willing to take some reduction in the amount of money they are currently claiming." ??So far no one is volunteering to forgive the debts. ??Southern California air regulators are close to slashing their market-based system for controlling power plant pollution. The move is intended to allow large power plants to operate at full capacity without facing stiff fines as they try to meet demand. ??The change was promoted by an executive order from Governor Davis requiring air districts to let large generators run at the greatest capacity. ??http://www.nytimes.com LOAD-DATE: May 10, 2001 ?????????????????????????????27 of 110 DOCUMENTS ?????????????????Copyright 2001 The Chronicle Publishing Co. ?????????????????????????The San Francisco Chronicle ????????????????????MAY 10, 2001, THURSDAY, FINAL EDITION SECTION: NEWS; Pg. A1 LENGTH: 1101 words HEADLINE: Power bills set to skyrocket for heavy users; Graduated rate increase would take effect in June SOURCE: Chronicle Staff Writer BYLINE: David Lazarus BODY: As state regulators outlined plans to raise residential electricity bills by as much as 40 percent, the head of the Public Utilities Commission warned yesterday that power rates could soar even higher. ???The PUC, which adopted an increase in March, is scheduled to approve details of the new rates in San Francisco on Monday. Consumers will see the higher rates in their June utility bills. ???State regulators say nearly half of all consumers will see no change in their power bills. The remainder will experience rate increases ranging from 3 percent to more than 50 percent, depending on the type of customer and the amount of power used. ???The increases would be added to an average 10 percent increase adopted in January. ???PUC President Loretta Lynch suggested that rates could rise yet again if wholesale electricity prices continue to surge this summer. ???"If the sellers decide to turn up the heat and raise prices, we'll have to look again at the numbers," she said. ???INCREASE WILL CONTRIBUTE LITTLE ???The proposed rate increase would bring in about $5 billion annually -- a fraction of the estimated $65 billion California will spend this year purchasing power on behalf of the state's cash-strapped utilities. ???Lynch said she expects the remainder to be made up by issuing bonds. The state Senate yesterday approved $13.4 billion in bonds to help cover California's power costs. ???However, those bonds would not be released until August, by which time California's energy tab would be billions of dollars higher. ???"There's huge cause for concern that this latest rate increase is a down payment rather than anything close to a final installment," said Bob Finkelstein, staff attorney for The Utility Reform Network in San Francisco. ???The PUC's Lynch stressed that while California's new rate structure would place a greater burden on the state's heaviest power users, the increases are intended to spread the pain among all consumers. ???"Energy is expensive for every hour of every day for every customer," she said. ???LINING UP TO GET PAID ???That includes the state Department of Water Resources, which is spending about $70 million a day to keep California's lights on. ???While the PUC is moving to have more money collected from consumers to pay California's power bills, it has yet to address the thorny question of how the proceeds will be distributed among the various parties lined up for compensation. ???The Water Resources Department wants all rate-related revenues to first replenish state coffers, while Pacific Gas and Electric Co. and Southern California Edison Co. insist that they be paid as well for their own expenses. ???The utilities' costs include payments to small power generators that can no longer afford natural gas to run their plants. The recent closure of hundreds of such facilities is a key reason California is experiencing blackouts this week. ???Although PG&E said yesterday that most of the smaller generators with which it does business are now back online, it is not yet clear whether the utility will be able to keep paying for their power. ???"It appears that everything (from the rate increase) is going to DWR (the Water Resources Department)," said John Nelson, a PG&E spokesman. ???Lynch said the PUC will take up the matter of apportioning funds at an unspecified future date. ???CONSERVATIVE USE PAYS ???For the moment, state regulators have their hands full digesting two competing -- and highly complex -- proposals for how rates should be increased next week. ???One proposal was submitted by an administrative law judge working with the PUC and the other by Lynch. Commissioners will choose between them on Monday. ???The two proposals are largely identical. Under both, residential customers who can keep electricity usage within 130 percent of predetermined limits would experience no rate increase. ???The "baseline usage" figure -- included near the bottom of PG&E bills -- represents the minimal amount of power consumers require. It includes a number of variables, such as climate, time of year and type of fuel used. ???The PUC said about half of all utility customers statewide historically stay within 130 percent of baseline limits. ???Heavy residential users whose electricity usage tops 400 percent of baseline figures would see power bills rise by as much as 40 percent. Heavy commercial and industrial users would see bills rise by more than 50 percent. ???The average increase for all PG&E residential customers would be about 16 percent, the PUC said, although this number is skewed by the addition of all those customers whose bills would remain unchanged. ???Harvey Rosenfield, head of the Foundation for Taxpayer and Consumer Rights in Santa Monica, questioned whether these rate increases will be sufficient to motivate greater conservation among consumers and thus ease California's energy woes. ???He called instead for the state's political leaders to seize generating plants from out-of-state power companies and impose a special tax on the companies' "windfall" profits. ???"Unless our elected officials take action, this is just the beginning of our rate increases," Rosenfield warned. ???FEDERAL BUILDINGS IN SIGHTS ???One of the main differences between the two rate-increase proposals is Lynch's inclusion of a "real-time pricing program" for federal agencies. ???If enacted, she said, federal buildings in California would be fully exposed to the volatile wholesale power market and would pay whatever California pays to keep the lights on throughout the day. ???Lynch denied that this is an effort on the part of California officials to drive home to federal authorities the impact of sky-high wholesale electricity prices. ???"It's just an experiment," she said. ???While California officials have called on federal regulators and the Bush administration to assist the state by capping wholesale power prices, Washington has provided only limited relief to date. ???The Utility Reform Network's Finkelstein complained that the proposed rate increases place a severe burden on residential customers when commercial and industrial users account for the greater percentage of power consumption. ???"It was the commercial and industrial customers who were clamoring for deregulation," he said. "You didn't hear any calls for deregulation from residential customers." ???Lynch said she was aware that residential users are being asked to carry a high proportion of the load but said efforts to force industrial users to pay higher rates ran into political opposition.E-mail David Lazarus at dlazarus@sfchronicle.com. GRAPHIC: PHOTO, Associated Presshi
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