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IEP News 5/11Today's IEP news...
Thanks, Jean AP Online, May 10, 2001; Thursday, 11:03 PM, Eastern Time, Domestic, ????non-Washington, general news item, 385 words, Calif. Governor Signs Power ????Bill, DON THOMPSON, SACRAMENTO Contra Costa Times, May 11, 2001, Friday, STATE AND REGIONAL NEWS, K0934, ????882 words, Colossal bond sale has big ifs, By Mike Taugher and Rick Jurgens Contra Costa Times, May 11, 2001, Friday, CC-ENERGY, 540 words, Energy ????Generators Plea to Quit California Electric Firm's Contracts, By Matt ????Sebastian Copley News Service, May 11, 2001, Friday, State and regional, 850 words, ????Davis raps GOP foes of power bond, Ed Mendel, SACRAMENTO THE ELECTRICITY DAILY, May 11, 2001, Friday, Vol. 16, No. 91, 440 words, ????California Crisis Reaches $22 Billion and Still Climbing Los Angeles Times, May 11, 2001 Friday, Home Edition, Page 17, 713 words, ????Commentary; ; Don't Write Off Davis Energy Plan, ALAN BLINDER, Alan Blinder, ????a professor of economics at Princeton University, was, vice chairman of the ????Federal Reserve from 1994-96. He is the senior, advisor to Saber Partners, ????which is advising Gov. Gray Davis on energy, policy Los Angeles Times, May 11, 2001 Friday, Home Edition, Page 26, 1200 words, ????THE ENERGY CRISIS; NEWS ANALYSIS; Bush, Rivals Don't Dare Ask Public to Make ????Sacrifices in Energy Crunch, RONALD BROWNSTEIN, TIMES POLITICAL WRITER, ????WASHINGTON Los Angeles Times, May 11, 2001 Friday, Home Edition, Page 26, 927 words, ????THE ENERGY CRISIS; ; House Committee Rejects Electricity Price Controls; ????Strategy: In a blow to California's governor, Congress signals it won't rein ????in soaring costs., GREG MILLER, RICHARD SIMON, TIMES STAFF WRITERS, ????WASHINGTON Los Angeles Times, May 11, 2001 Friday, Home Edition, Page 1, 1646 words, ????THE ENERGY CRISIS; NEWS ANALYSIS; Power Rescue Plan Rests on Many 'Ifs', ????NANCY VOGEL, RICH CONNELL, ROBERT J. LOPEZ, TIMES STAFF WRITERS Los Angeles Times, May 11, 2001 Friday, Orange County Edition, Page 1, 924 ????words, Orange County; ; Restarting of 2 Generators in O.C. OKd; Energy: ????State panel grants a 10-year run for the AES Corp. units despite concerns of ????Huntington Beach officials and residents., JENIFER WARREN, TIMES STAFF ????WRITER, SACRAMENTO The New York Times, May 11, 2001, Friday, Late Edition - Final, Section A; ????Page 30; Column 4; National Desk, 672 words, House Moving to Ease California ????Power Crisis, By PHILIP SHENON, WASHINGTON, May 10 The New York Times, May 11, 2001, Friday, Late Edition - Final, Section C; ????Page 1; Column 2; Business/Financial Desk, 1819 words, A Conservation ????Countdown, By BARBARA WHITAKER, LOS ANGELES, May 9 San Jose Mercury News, May 11, 2001, Friday, STATE AND REGIONAL NEWS, K0884 ????, 669 words, House panel votes down price cap legislation, By Jim ????Puzzanghera The San Francisco Chronicle, MAY 11, 2001, FRIDAY,, FINAL EDITION, NEWS;, ????Pg. A19, 638 words, GOP members of House oppose price cap plan; ???Three ????from Southern California vote against Feinstein on electricity, Carolyn ????Lochhead, Washington The San Francisco Chronicle, MAY 11, 2001, FRIDAY,, FINAL EDITION, NEWS;, ????Pg. A19, 525 words, PUC chief's proposal called petulant; ???Federal ????agencies would pay full tab for power, Zachary Coile The San Francisco Chronicle, MAY 11, 2001, FRIDAY,, FINAL EDITION, NEWS;, ????Pg. A1, 812 words, High bills may not spur conservation; ???PG&E, critics ????agree increases are too small to change habits, David Lazarus The Associated Press State & Local Wire, May 11, 2001, Friday, BC cycle, ????8:46 AM Eastern Time, State and Regional, 731 words, Energy task force ????expected to recommend tax breaks, By H. JOSEF HEBERT, Associated Press ????Writer, WASHINGTON AP Online, May 10, 2001; Thursday, Domestic, non-Washington, general news ????item, 678 words, California Blackout Season Begins, JENNIFER COLEMAN, ????SACRAMENTO, Calif. AP Online, May 10, 2001; Thursday, Washington - general news, 703 words, ????Bush Panel to Urge Relaxed Air Rules, H. JOSEF HEBERT, WASHINGTON AP Online, May 10, 2001; Thursday, Washington - general news, 372 words, ????House Addresses California Crisis, H. JOSEF HEBERT, WASHINGTON The Associated Press, May 10, 2001, Thursday, BC cycle, Domestic News; ????Business News, 355 words, Calif. governor signs bill authorizing $13.4 in ????bonds to repay treasury for power buying, By DON THOMPSON, Associated Press ????Writer, SACRAMENTO The Associated Press State & Local Wire, May 10, 2001, Thursday, BC cycle, ????State and Regional, 467 words, PG&E says fewer small power plants offline, ????By KAREN GAUDETTE, Associated Press Writer, SAN FRANCISCO The Associated Press State & Local Wire, May 10, 2001, Thursday, BC cycle, ????State and Regional, 570 words, Governor signs bill authorizing $13.4 in ????bonds to repay treasury, By DON THOMPSON, Associated Press Writer, ????SACRAMENTO, California The Associated Press State & Local Wire, May 10, 2001, Thursday, BC cycle, ????State and Regional, 754 words, Developments in California's energy crisis, ????By The Associated Press CBS News Transcripts, CBS EVENING NEWS (6:30 PM ET), May 10, 2001, Thursday ????, 398 words, CALIFORNIA BUSINESSES SUFFERING UNDER RATE INCREASES AND ????ROLLING BLACKOUTS, DAN RATHER, JERRY BOWEN ?Copyright 2001 Associated Press ??????????????????????????????????AP Online ????????????????May 10, 2001; Thursday 11:03 PM, Eastern Time SECTION: Domestic, non-Washington, general news item LENGTH: 385 words HEADLINE: ?Calif. Governor Signs Power Bill BYLINE: DON THOMPSON DATELINE: SACRAMENTO BODY: ???Gov. Gray Davis signed a law Thursday letting the state borrow $13.4 billion to pay for electricity for three cash-starved utilities. ??Davis couldn't guarantee the 15-year bond will be enough to cover the state's electricity purchases. But he said the $13.4 billion price tag represents ''the best thinking of our financial analysts,'' and includes a reserve in case electricity prices remain higher than expected. ??The state spent $1,900 per megawatt hour Wednesday as state grid operators narrowly avoided a third consecutive day of blackouts, Davis said, reiterating his call for federal price caps. Cooler weather helped the state avoid blackouts Thursday. ??Wednesday's costs were a record or near-record since the state purchases began in January, said Oscar Hidalgo, a spokesman for the power-buying Department of Water Resources. ??Davis said he hopes the state can stop buying power for Pacific Gas and Electric, Southern California Edison and San Diego Gas and Electric by the end of next year. ??Davis accused Assembly Republicans of putting their political opposition above the state's welfare by refusing to support the bond bill. That means the bonds can't be issued for three months, which Davis said will drive up the interest ratepayers will be charged for the bond. ??''This measure is a lifeboat that allows us to stay afloat,'' he said. ??In a statement, Assembly GOP Leader Dave Cox called the bond bill ''a dangerous gamble for California a gamble Republicans couldn't support without a clear endgame ... The governor obviously believes that history will judge that his was the right decision. He had better be right.'' ??Also Thursday, a federal bankruptcy judge considered ordering PG&E to make millions of dollars in back payments to small power plant owners that provide nearly a third of California's electricity. ??And California power regulators continued struggling over how to divide record electric rate increases among the 9 million customers of the state's two largest utilities, Edison and PG&E. The Public ??tilities Commission is rushing to adopt the higher rates Monday. ?????(PROFILE ?????(CO:Pacific Gas and Electric; TS:PCG; IG:ELC;) ?????(CO:Southern California Edison Co.; TS:SCE;) ?????(CO:Sempra Energy; TS:SRE; IG:ELC;) ?????) LOAD-DATE: May 10, 2001 ??????????????????????????????8 of 106 DOCUMENTS ??????????????Copyright 2001 Knight Ridder/Tribune News Service ???????????????????????Knight Ridder/Tribune News Service ??????????????????????????????Contra Costa Times ?????????????????????????????May 11, 2001, Friday SECTION: STATE AND REGIONAL NEWS KR-ACC-NO: ?K0934 LENGTH: 882 words HEADLINE: Colossal bond sale has big ifs BYLINE: By Mike Taugher and Rick Jurgens BODY: ??WALNUT CREEK, Calif. _ Gov. Gray Davis gave the go-ahead to the largest municipal bond sale in U.S. history on Thursday amid questions about whether it would be enough to extricate the state from its energy mess. ??Davis aides said the bond issue, which could go as high as $13.4 billion, would be enough to finance high electricity prices over the next 18 months. But the state already has spent nearly $6 billion of that money during the past four months and at its current rate could end up spending $10 billion of taxpayer money before it can sell any bonds to investors beginning in August. ??But under an intricate plan designed by Davis and his advisers, the governor says electricity costs will begin to drop dramatically in coming weeks and months. The plan relies heavily on Californians to conserve electricity, and assumes, among other things, that Southern California Edison stays out of bankruptcy and that small, alternative energy firms will restart generating units. ??"Do a number of things need to come to be? Yes. Absolutely," said Joseph Fichera, a financial adviser to the governor. ??If the plan's assumptions hold true, it should be unnecessary for the state to impose new electricity rate hikes or borrow even more money on the bond market, according to Davis aides. ??But critics, including Republican lawmakers and consumer advocates, questioned whether those assumptions were realistic and condemned the decision to borrow so much money as tantamount to a "blank check" to be backed by the customers of the state's three largest electric utilities. ??"This is not the end, by any means, of the energy spending," said Jamie Fisfis, spokesman for Assembly Republicans. "There's no part of this that is tied to an energy plan that has any credibility with anybody." ??Republicans opposed the bond issue and prevented Davis from getting the two-thirds majority he needed to issue the bonds immediately. Now, the governor will have to wait three months, a development that could allow generators who have signed long-term electricity contracts to back out of those contracts or increase the price California must pay until the bonds are issued. ??That is because some of those contracts have provisions that allow generators to renegotiate with the state if bonds are not sold by a certain date. ??"We are at risk," Fichera said. ??The billions of dollars California borrows from investors will be used to repay taxpayers for electricity purchases since January and to soften the blow that extremely high wholesale prices would otherwise pose for customers of Pacific Gas & Electric, Southern California Edison and San Diego Gas & Electric. ??Investors who buy the bonds will be repaid through electric bills over the next 15 years. ??Among assumptions included in an analysis of the deal prepared by Davis' advisers are expectations that Californians will reduce electricity consumption and that the average spot market price for electricity will drop to $230 per megawatt-hour during the entire year of 2001 and drop to $185 next year. As long-term contracts and conservation begin to take effect, the state will have to buy less electricity on the spot market and prices will fall, the governor's team says. ??By contrast, prices have been much higher than what the governor's plan forecasts. The average price on the California spot market during the first three months of the year was $346. ??Davis also singled out Reliant Energy of Houston for criticism on Thursday, saying the company charged Californians nearly $2,000 per megawatt-hour for a relatively small amount of power as grid managers were trying to avoid blackouts a day earlier. ??"That is an example of the extraordinary problem that we're dealing with," Davis said. "There is a huge transfer of wealth from California to Texas and other parts of the Southwest." ??The final bond deal will need to include a financial plan that generates enough revenue for the state Department of Water Resources to fund its power buys and make payments to bond holders, said Ray Murphy, an analyst for Moody's Investor Services, a credit rating agency. ??The utilities could complicate those plans if they mount legal challenges to how state regulators divert utility customer payments to the state. PG&E and Edison already have objected to preliminary decisions by the Public Utilities Commission that pave the way for the commission to send money to the state that the utilities contend they are owed. ??Another risk looms in the background. ??Because the money will be collected from electricity users by the state's utilities, including bankrupt PG&E, there is at least a danger that some creative lawyer for the utility's creditors will try to have a portion of the revenue diverted into the company's bankruptcy estate _ the pot of assets to be divided up to pay off PG&E's debts. ??That probably won't happen. ??"It is believed that PG&E does not have any claim to the revenue that is collected," said Murphy, the Moody's analyst. ??Still, he noted that the bankruptcy judge has not ruled on that question. ??KRT CALIFORNIA is a premium service of Knight Ridder/Tribune ??© 2001, Contra Costa Times (Walnut Creek, Calif.). ??Visit the Contra Costa Times on the Web at http://www.cctimes.com/ JOURNAL-CODE: CC LOAD-DATE: May 11, 2001 ??????????????????????????????9 of 106 DOCUMENTS ??????????????Copyright 2001 Knight Ridder/Tribune Business News ???????????????????????Copyright 2001 Contra Costa Times ??????????????????????????????Contra Costa Times ?????????????????????????????May 11, 2001, Friday KR-ACC-NO: CC-ENERGY LENGTH: 540 words HEADLINE: Energy Generators Plea to Quit California Electric Firm's Contracts BYLINE: By Matt Sebastian BODY: ??SAN FRANCISCO--Alternative energy generators warned a federal judge Thursday that Californians could be in for more dark days this summer if they're not freed from unfavorable contracts with bankrupt Pacific Gas & Electric Co. ??A group of four gas-fired co-generation facilities in the San Joaquin Valley asked Judge Dennis Montali to cancel their contracts with the utility, saying the utility owes them $ 58 million in pre-bankruptcy payments. ??The generators' attorneys and lawyers for several other firms with similar cases before the U.S. Bankruptcy Court warned that the power companies could start shutting down again if they're not allowed to sell their electricity at higher rates on the open market. ??Two days of blackouts in March were blamed, in part, on the high number of alternative generators, known as qualifying facilities, that went off-line because they hadn't been paid. More than 300 QFs say they're owed nearly $ 1 billion by PG&E. ??"At this date and time, the state of California needs every megawatt it can get," said attorney Richard Lapping, who represents Calpine Corp., which PG&E owes $ 267 million for energy produced by its QFs. ??Because natural gas prices are so high and the price PG&E pays the generators for energy is so low under the contracts, the power companies argue they could go bankrupt as well if they're not soon granted relief. ??Attorneys for the generators told the judge that PG&E saves $ 284 million a month by buying 2,500 megawatts of electricity -- enough to power 2.5 million homes -- from QFs rather than buying it on the volatile market. ??"If the stay's not lifted and we're paid a rate that doesn't cover our costs we will financially fail," Bruce Leaverton, an attorney representing the San Joaquin Valley plants, told Montali. ??The judge grilled both sides, pointing out that the generators would still be trapped in unfavorable contracts had PG&E not declared bankruptcy. "Isn't that the risk you bargained for?" Montali asked. ??But he also questioned why PG&E insists on waiting months to decide whether to keep or drop the QF contracts. That decision usually doesn't happen until a bankrupt company files its reorganization plan. ??The bankrupt utility, for its part, questioned the failing fiscal health of the San Joaquin Valley generators, pointing out that they're half-owned by Texaco. ??"It's not a little guy who's about to go out of business," said Jim Lopes, PG&E's lead bankruptcy counsel. "It's a big guy that doesn't like the terms of his contract." ??"I don't think we want to get into parentage," Montali quipped, referring to accusations that PG&E's parent company, PG&E Corp., is profiting during the utility's bankruptcy. ??Montali delayed ruling on the QFs' motion until later this month in order to give PG&E's attorneys time to respond to a last-minute motion filed by the generators. ??The judge may weigh in on the topic sooner than that, though, as more than a dozen other alternative energy producers line up in similar attempts to drop their contracts. Two such hearings are scheduled for next week. ??----- ??To see more of the Contra Costa Times, or to subscribe to the newspaper, go to http://www.hotcoco.com/ JOURNAL-CODE: CC LOAD-DATE: May 11, 2001 ?????????????????????????????10 of 106 DOCUMENTS ??????????????????????Copyright 2001 Copley News Service ?????????????????????????????Copley News Service ?????????????????????????????May 11, 2001, Friday SECTION: State and regional LENGTH: 850 words HEADLINE: Davis raps GOP foes of power bond BYLINE: Ed Mendel DATELINE: SACRAMENTO BODY: ??Gov. Gray Davis attacked Republicans yesterday as he signed a record $13.4 billion bond to repay the state general fund for power purchases, warning that their opposition could harm the state budget and the California economy. ??Davis threatened to travel to the districts of Republican legislators and spell out how law enforcement, transportation, health care, education, and senior programs may have to be cut because the bond money will not be available until August. ??The governor also criticized three Republicans in Congress for voting against a proposal in committee yesterday to impose tighter federal controls on wholesale power prices. ??Assembly GOP Leader Dave Cox of Fair Oaks predicted that Davis soon ''will be visiting up and down the state trying to get re-elected, that is why he using fear politics, the blame game.'' ??The open partisan warfare erupted as Davis reported the incredibly high price the state paid for electricity Wednesday to avoid blackouts. ??A spokesman for the state Department of Water Resources, which buys power on behalf of the utilities, said the state paid Houston-based Reliant Energy Inc. $1,900 per megawatt-hour for 168 megawatt-hours, costing a total of $319,200. ??''If it's not a record, it's very close to it,'' said Oscar Hidalgo, a department spokesman. ''No one can recall anything higher. But we haven't delved into all of the history.'' ??Hidalgo said the state purchased 300,000 megawatt-hours of electricity Wednesday. The state has previously reported spending as much as $90 million a day to buy power, but the total that the state spent for power on Wednesday was not available. ??Davis has declined to reveal details of state spending for power, arguing that generators would use the information to submit higher bids. Republican legislators and a group of newspapers have filed lawsuits to force the state to release the information. ??The state has been revealing rough totals of the power spending by periodically notifying the Legislature that a $500 million increment will be spent in 10 days. ??On Monday, the Department of Finance notified the Legislature that the state will begin spending another $500 million increment in 10 days. By that time, the state expects to have spent more than $6.7 billion buying power. ??The total includes $5.9 billion from the general fund, $302 million from the state Department of Water Resources budget, and about $545 million received from investor-owned utilities whose customers receive the power purchased by the state. ??The state began buying power for utility customers in January after Pacific Gas and Electric and Southern California Edison, whose rates were frozen under deregulation as wholesale power costs soared, ran up a combined debt of about $13 billion and could no longer borrow. ??The $13.4 billion bond authorization signed by Davis yesterday is intended to repay the state general fund and provide some additional money for long-term power contracts. ??Republicans refused to provide the two-thirds vote needed for an urgency measure allowing the bonds to be sold before the new state fiscal year begins July 1. Assembly Republicans wanted a smaller, $8 billion bond, lowering future bills for ratepayers who will pay off the bonds over 15 years. ??''I want people to understand that we are going to have to pare back important programs in our budget since we won't have the cash on July 1,'' Davis said. ''We will have the cash, best case, mid- to late August.'' ??The Assembly GOP leader, Cox, said a bipartisan deal on a bond could have been reached if the governor and Democratic legislators had responded to the Republican proposal and tried to negotiate an agreement. ??Davis is scheduled to propose a revised budget Monday. ??Meanwhile, a group of San Diego County businessmen said yesterday they plan to ask county government to finance the purchase of 25 diesel generators, capable of generating 2 megawatts apiece, to operate at large businesses that don't have emergency generators. ??Robert L. Simmons II, leader of the Coalition for Electricity Independence, said the program could provide 50 megawatts of new generation by this summer and reduce the need for blackouts in San Diego County by cutting demand on the grid. ??Simmons is seeking $15 million in funding from the county Board of Supervisors to finance acquisition of the equipment. Private funds also are being raised, he said. ??''We are asking our leaders to step up to the plate with action,'' said Simmons, chief executive of Senior Aerospace Ketema in El Cajon, who said his company would be willing to use one of the portable generators. ??San Diego Gas & Electric last week announced a similar proposal. The company wants businesses with existing generators to sign contracts agreeing to turn them on and drop off the power grid when the region is in a power emergency. Officials say that plan, which requires state Public Utilities Commission approval, could provide 50 megawatts. Staff writer Karen Kucher contributed to this report. ??WAGNER-CNS-SD-05-10-01 2221PST LOAD-DATE: May 11, 2001 ?????????????????????????????11 of 106 DOCUMENTS ???????????????????????Copyright 2001 Elsevier Science ????????????????????????????THE ELECTRICITY DAILY ?????????????????????????????May 11, 2001, Friday SECTION: Vol. 16, No. 91 LENGTH: 440 words HEADLINE: California Crisis Reaches $22 Billion and Still Climbing BODY: ??Forecasts of the economic impact of California s power crisis continue to climb, with the latest business-backed study claiming $22 billion of lost productivity if California Independent System Operator projections of 100 hours of blackouts are accurate. The ISO forecast also translates to statewide household income reductions of $4.5 billion and job losses of 135,000, according to the study by the high-tech heavy California Manufacturers & Technology Association(CMTA) and other business groups. ??Each time electricity prices are hiked -- particularly if business is the target -- damage from the blackouts is multiplied, said CMTA president Jack Stewart. Part of the underlying motivation for the study is clearly a move to "implement an equitable rate increase structure that encourages greater conservation by residential and business users alike," Stewart said. ?The CMTA study comes on the heels of work by AUS Consultants of New Jersey, a market research firm, which concluded just last month the crisis would cause some $16 billion of lost productivity statewide. ?Against that backdrop, California Gov. Gray Davis is publicly claiming that independent generators such as Dynegy, Reliant Energy, Mirant, and others are "making more money than God" and sucking the cash out of the state for coffers in Texas and other Southwest states. ??Davis also blasted the Bush administration, saying the administration has "utterly failed to discharge its responsibility" in the crisis, adding that Vice President Dick Cheney is "grossly misinformed" when it comes to California s efforts to solve the situation. Because federal regulators have refused to cap wholesale power prices, the California Public Utilities Commission has proposed that federal facilities including office buildings and military bases pay full prices for real-time energy. ??Under a plan by PUC president Loretta Lynch, rates will jump as much as 48 percent for residential consumers using 130 percent or more above 2000 baseline levels; up to 45 percent for commercial customers; and as much as 52 percent for industrial users. The PUC is set to meet Monday to approve the rate design. If approved, implementation is set for June 1, retroactive to March 27. ??Separately, the California Senate approved sale of $13.4 billion in revenue bonds to pay for electricity supplies. The average electricity consumer will pay an extra $2,000 over the next 15 years. Davis must sign the bill before it becomes law. The state Assembly approved it recently . LOAD-DATE: May 10, 2001 ?????????????????????????????13 of 106 DOCUMENTS ??????????????????????Copyright 2001 / Los Angeles Times ??????????????????????????????Los Angeles Times ??????????????????????May 11, 2001 Friday ?Home Edition SECTION: California; Part 2; Page 17; Opinion Desk LENGTH: 713 words HEADLINE: Commentary; ; Don't Write Off Davis Energy Plan BYLINE: ALAN BLINDER, Alan Blinder, a professor of economics at Princeton University, was, vice chairman of the Federal Reserve from 1994-96. He is the senior, advisor to Saber Partners, which is advising Gov. Gray Davis on energy, policy BODY: ??Might Californians finally be seeing a dim light at the end of the energy tunnel? This spring and summer will be difficult times unless everything breaks just right. But Gov. Gray Davis' recently announced energy plan offers at least short-run management of the crisis--and a hope for a long-run solution. And that's about all anyone should ask the government to do. ??Ignoring the history and some mind-numbingly complex details, the electricity problem comes down to this: Demand now outstrips supply by a wide margin even on a normal day, and by much more on days of peak demand. With the utilities no longer credit-worthy, the state must fill the gap by buying on the wholesale market. These days, that means buying high and selling low. ??Any comprehensive attack on this problem must have three components: mechanisms for reducing demand, mechanisms for increasing supply and a pile of money to cover the bills while the medicine works. The governor's plan, while not perfect, has the three elements. It also avoids the wackier suggestions from both the right and the left. ??Let's work backward through the three components. First, the state needs money to keep the lights on. One naive remedy would be to raise taxes to pay all the bills. No danger that any politician will ever latch onto that one. But a related bad idea--raising retail electricity rates to cover all the costs--does have a following. Why is that a bad idea? Because the utilities are saddled with debt from the past. And things almost certainly will be brighter (pun intended) in the future. ??Like a family, when a government is faced with a huge, one-time expense--say, to build a highway--it generally borrows most of the money. That's sound financial practice because it spreads what otherwise would be a ruinously high cost over time. Davis wants to spread the cost of the current crisis by issuing bonds worth about $12 billion to $13 billion, secured by future payments for electricity. I do not know whether this is exactly the right number. But the principle is clear, and it's too bad the Legislature delayed the bond issue. ??Next comes supply. Wishful thinkers on the right have a simple solution: Just let retail prices rise, and more supply will come. The trouble is that it won't, at least not in the short run. Over years, greater supply is the only lasting solution. But to expect much supply response in the short run is dreaming. ??The left has its own favorite silly idea: The state should seize control of power plants and take over the business of supplying electricity. Seize? How much good would that do to California's business climate? And does anyone really believe that the state can, over the long run, generate and supply electricity better than private business? There are, in fact, traces of public ownership in the Davis plan: The state is buying transmission lines, and a new public authority would build power plants if private industry fails to do so. But the governor sees public ownership as a last, not a first, resort. ??Finally, we come to the demand side, where true believers offer the same remedy: Just let the retail price rise enough to cut demand back to the available supply. Sound harsh? It is. Higher electricity prices must be part of the solution, at least in the short run. But relying exclusively on higher rates would be foolhardy and perhaps even ruinous to California's economy, because titanic price hikes would be needed to cut demand by enough in short order. So we would wind up inflicting pain on consumers without calling forth greater generating or transmission capacity. ??The governor at first resisted the conclusion that consumer prices had to rise. But he has now embraced it. His package includes not just price hikes for big energy users, but also financial incentives for those who reduce consumption. More can be done in this regard, but he is at least on the right track. ??Will these conservation measures get California through the next few months? I wouldn't bet on it. But unless the federal government truly caps wholesale electricity prices temporarily, demand management is about the only short-run game in town. ??Pray for a cool summer and for a lot more rain behind the dams in the Pacific Northwest. LOAD-DATE: May 11, 2001 ?????????????????????????????14 of 106 DOCUMENTS ??????????????????????Copyright 2001 / Los Angeles Times ??????????????????????????????Los Angeles Times ??????????????????????May 11, 2001 Friday ?Home Edition SECTION: Part A; Part 1; Page 26; National Desk LENGTH: 1200 words HEADLINE: THE ENERGY CRISIS; NEWS ANALYSIS; Bush, Rivals Don't Dare Ask Public to Make Sacrifices in Energy Crunch BYLINE: RONALD BROWNSTEIN, TIMES POLITICAL WRITER DATELINE: WASHINGTON BODY: ??Amid their looming conflicts on energy policy, President Bush and his critics appear to have reached agreement on an unlikely point: Neither side is preparing to ask for significant sacrifices from the public to respond to rising prices and squeezed supplies. ??In the energy policy blueprint it will release next week, the administration is expected to present enhanced production as the key to easing the energy crunch. Democrats and environmentalists, in response, are stressing measures to prod manufacturers to design more energy-efficient products, from cars to air conditioners. ??But neither side is yet suggesting that ordinary Americans--whose average energy consumption has increased steadily over the last 15 years--may have to scale back lifestyles that increasingly include mammoth sport-utility vehicles, dawn-to-dark home computer use and new houses 50% larger than a generation ago. ??In fact, as the debate over Bush's plan approaches, both sides are working overtime to insist that their solutions will allow Americans to use virtually as much energy as they want--without sacrifice. ??In a striking declaration earlier this week, White House spokesman Ari Fleischer portrayed unconstrained energy use as virtually an American birthright. "That's a big no," he answered when asked if Bush believes Americans need to curtail their energy use. "The president believes that's an American way of life and that it should be the goal of policymakers to protect the American way of life." ??More surprising, environmentalists mobilizing to fight Bush's plan are sending a similar message. "We don't need to sacrifice a lifestyle in order to save energy," says Dan Becker, director of the global warming and energy program for the Sierra Club. ??This improbable consensus reflects a deeper political calculation shaping both sides' response to the energy challenge. After a decade in which American life on almost every front--from energy to jobs to federal revenues--has been defined by abundance, politicians have grown extremely reluctant to confront voters with hard choices and unpleasant alternatives. ??The big question is whether either side's preferred solutions can resolve the long-term energy problem without forcing Americans to face at least some of those hard choices. ??Compared to most issues, public opinion about the energy debate is unformed, analysts in both parties agree. That's largely because few Americans have thought much about the problem since the last gas lines disappeared 20 years ago. "People aren't settled on what are the causes of the problem, let alone what are some of the solutions," says pollster Mark Baldassare, a senior fellow at the Public Policy Institute of California. ??As the struggle to shape public opinion begins, the central division is likely to exist between Bush's emphasis on new production and the Democratic/environmentalist push for greater reliance on renewable energy and conservation. But that loud dispute threatens to obscure the remarkable convergence on an equally important point: To the extent either side sees conservation as part of the solution, they portray it primarily as something done for consumers rather than by consumers. ??White House aides say Bush isn't likely to completely ignore the value of individual conservation; the Democratic energy alternative includes a provision that could eventually compel the government to discourage the use of vehicles with poor fuel efficiency. But overall both sides are promising minimal disruption--a stark contrast to the admission by California officials that higher prices are needed to deter electricity consumption. ??Indeed, it's telling that, instead of discussing conservation, both Bush and his critics are increasingly talking about energy efficiency. That formulation implies engineering strategies rather than lifestyle changes to reduce consumption. "With technology, there's no reason why . . . you've got to live in the dark, turn out all the lights, don't enjoy the things that our modern society brings you," Vice President Dick Cheney said this week. ??Looming over these political and rhetorical calculations is the ghost of President Carter, whose administration was plagued by repeated energy shocks in the late 1970s. When Carter unveiled his comprehensive energy plan just months after taking office in 1977, his message hit a strikingly different note: The crisis, Carter said, "will demand that we make sacrifices and changes in every life." ??Behind those words, Carter offered an agenda bristling with thorny ideas to discourage energy use: new taxes on gas-guzzling cars, automatic taxes on gasoline triggered when consumption rose too fast, utility reforms that increased costs for the heaviest users. ??But Congress rejected almost all these ideas, focusing instead on tax incentives to encourage more efficient energy use, and Carter's efforts to encourage voluntary conservation (like turning down the heat in winter) became a lasting symbol of weakness and ineffectuality. ??Today strategists on both sides agree that the public is even less inclined to sacrifice. And in that climate, neither Bush nor Democrats are focusing on a paradox central to the energy riddle: While most products have grown more energy efficient over the past generation, energy use per person in America is still rising. ??In the immediate aftermath of the 1970s oil shocks, per capita U.S. energy use declined by roughly 8% from 1973 through 1985. But as the memory of those disruptions faded, energy use per person increased almost 10% from 1985 through 1999, according to the federal Energy Information Administration. ??On several fronts, it appears the demand for bigger energy-intensive products is offsetting the efficiency gains of improved technology. Take homes. In an April study, the National Assn. of Home Builders concluded that because of such innovations as greater use of insulated windows and more efficient furnaces, new homes today use energy twice as efficiently as they did 30 years ago. But despite those improvements, the overall trend among new homes is toward greater energy consumption. ??In the first years after the 1970s oil shock, average fuel efficiency for all passenger vehicles in America steadily increased, peaking at 25.9 miles per gallon in 1987. Since then average fuel efficiency has declined, dropping to 24 mpg in 2000, the lowest it has been since 1980, according to the Environmental Protection Agency. ??Some analysts think both sides are selling the public short by exempting them from sacrifice in the growing energy debate. "Americans have heard messages about changing their ways and have been accepting when it comes to conservation," says Baldassare. ??But the dominant instinct is to target other causes--and solutions--for the challenge, with Bush blaming environmental restrictions that have blocked drilling or new power plant construction and Democrats pointing fingers at oil companies, car manufacturers and the administration's links to both. ??"Nobody wants to be in a position of telling the American public they can't have what they want," acknowledges one top Bush political advisor. LOAD-DATE: May 11, 2001 ?????????????????????????????15 of 106 DOCUMENTS ??????????????????????Copyright 2001 / Los Angeles Times ??????????????????????????????Los Angeles Times ??????????????????????May 11, 2001 Friday ?Home Edition SECTION: Part A; Part 1; Page 26; National Desk LENGTH: 927 words HEADLINE: THE ENERGY CRISIS; ; House Committee Rejects Electricity Price Controls; Strategy: In a blow to California's governor, Congress signals it won't rein in soaring costs. BYLINE: GREG MILLER, RICHARD SIMON, TIMES STAFF WRITERS DATELINE: WASHINGTON BODY: ??In the first test of congressional sentiment on California's power problems, a House panel on Thursday rebuffed an effort by Democratic lawmakers to legislate price caps on wholesale electricity. ??The proposal, voted down 20 to 12 by the House energy and air quality subcommittee, would have required the Federal Energy Regulatory Commission to impose price controls keyed to the cost of generating power. ??The Republican-controlled panel went on to approve a bill containing a number of less aggressive energy crisis measures, such as allowing California to relax environmental restrictions on power plants and extending daylight saving time to reduce evening electricity consumption. ??But the vote on price controls, which split largely along party lines, was the most contentious issue addressed by the subcommittee. Although price cap advocates are expected to press their campaign at least twice more in the House, Thursday's vote was a significant setback. It signaled that Congress is not inclined to rein in soaring energy prices, despite repeated pleas from Gov. Gray Davis and other state officials to do so. ??Rep. Henry A. Waxman (D-Los Angeles), who offered the price control measure as an amendment to the energy bill, argued that it would protect consumers from price gouging while preserving "reasonable" profit margins for power suppliers. ??Without price controls, he said, the bill "does not do for California what we need, and it does a lot of things for our state we don't want." ??But the other three Californians on the subcommittee--all Republicans--disagreed, and voted against Waxman's amendment, saying they believe price controls would exacerbate the problem by discouraging investment in new sources of energy. ??"I recognize there's tremendous political pressure on us, but do not believe it's the right thing to do," said Rep. Mary Bono (R-Palm Springs). ??She was joined in voting against the measure by Reps. Christopher Cox (R-Newport Beach) and George P. Radanovich (R-Mariposa). The three California Republicans ensured the amendment's defeat, because one Democrat who voted against the measure, Rep. Ralph M. Hall of Texas, said he would have supported it if all of the California members of the subcommittee had done so. ??In Sacramento, Davis lashed out at Bono, Cox and Radanovich for opposing price caps. ??"I find it very surprising that people here in California experiencing this crisis can go back to Washington and vote against the best interests of constituents of this state," Davis said. ??Waxman indicated he would attempt to revive the price cap amendment when the bill is taken up by the full House Energy and Commerce Committee. ??A final test could come later this month, when the full House is expected to vote on the bill. Four California Republicans who are not on the energy committee have already signaled they would support a price control amendment. ??Thursday's vote was the first congressional action directed at California's energy crisis, and underscored the extent to which the center of political debate on the issue is shifting from Sacramento to Washington. ??Next week, the White House plans to unveil a comprehensive national energy strategy. The plan is expected to emphasize long-term solutions, ranging from new oil exploration in Alaska to construction of hundreds of new power plants and refineries. ??With California experiencing rolling blackouts and gasoline prices surging nationwide, the White House has become increasingly sensitive to criticism that its plan won't provide much immediate help. ??At a news conference Thursday, White House spokesman Ari Fleischer stressed that "the president's focus is going to be on doing everything he can for all terms: short-term, medium-term and long-term." ??House Republicans attending Thursday's subcommittee session were careful to endorse the administration's position that the federal government's ability to help California in the short term is limited. ??"We can't make it rain. We can't make it snow. We can't make it cool in Palm Springs," said Rep. Joe Barton (R-Texas), sponsor of the emergency bill and chairman of the subcommittee. ??Still, he said, Congress can provide some assistance. Barton's bill, which was approved 17 to 13 by the subcommittee, contains more than a dozen provisions designed to curb consumption and enhance power supplies. ??Some of the key provisions would: ??* Authorize California's governor to waive some emission requirements on natural gas-fired power plants on "emergency" days of high demand. Democrats said Davis hasn't sought such discretion, and the measure is unlikely to help because environmental regulations have not hindered power generation. ??* Allow energy users to resell some of the electricity they are entitled to consume but don't. Republicans said this would create a financial incentive to conserve, but Democrats said they fear it would undercut existing state programs that reward conservation. ??* Allow some power suppliers to suspend contracts with financially strapped utilities. The measure is designed to enable companies that have cut off supplies for lack of payment to cut new deals with other utilities or users. ??* Require federal facilities in states where electricity emergencies have been declared to curb their consumption by at least 20% compared with a year earlier. ??* Permit California to extend daylight saving time beyond October. ??* ??Times staff writers Edwin Chen in Washington and Dan Morain in Sacramento contributed to this story. LOAD-DATE: May 11, 2001 ?????????????????????????????16 of 106 DOCUMENTS ??????????????????????Copyright 2001 / Los Angeles Times ??????????????????????????????Los Angeles Times ??????????????????????May 11, 2001 Friday ?Home Edition SECTION: Part A; Part 1; Page 1; Metro Desk LENGTH: 1646 words HEADLINE: THE ENERGY CRISIS; NEWS ANALYSIS; Power Rescue Plan Rests on Many 'Ifs' BYLINE: NANCY VOGEL, RICH CONNELL, ROBERT J. LOPEZ, TIMES STAFF WRITERS BODY: ??The success of Gov. Gray Davis' plan to end California's energy crisis rides on assumptions that, if wrong, could lead to billions of dollars in runaway costs for taxpayers. ??Davis, who signed a historic $13.4-billion bond measure Thursday to finance the plan, has refused to release key data and presented a single model for how California will buy electricity--and pay for it--over the next 15 years. ??If Davis and his cadre of financial advisors are right, the state will emerge from the most ominous period of the crisis in less than two years, flush with cash and the prospect of electricity rate cuts. By then, the hope goes, the power suppliers Davis has vilified will be reined in. ??If his predictions are off by modest margins, which even many state officials and energy experts say is likely, the state may have to employ tactical blackouts to control costs, siphon money that could be used for other services, go deeper in debt or raise electricity rates above the record increases of this year. ??The governor's plan largely rests on these crucial assumptions: that consumers will conserve a record amount of power at peak usage times, that energy prices will drop precipitously, and that the state will lock in far more contracts for long-term power. But those three assumptions could prove faulty, according to government financial records and interviews with state officials, Wall Street analysts and energy experts. ??Davis is banking on that troika to quickly tame the wild prices of last-minute power--which hit an apparent record of $2,000 for a megawatt-hour Wednesday. Such purchases so far have put the state on the hook for $6 billion and pushed major utilities to the brink of ruin. ??Davis' plan assumes that the state will reduce peak demand by 2,484 megawatts--enough to supply nearly 2 million homes--through three programs run by the California Independent System Operator, which keeps power running to homes and businesses across the state. ??But Cal-ISO managers say they will be lucky to achieve a fraction of that savings this summer. ??They say that one of the programs listed in the governor's plan was shelved because regulators had raised concerns about air pollution. Another, aimed at businesses, is likely to yield only about half of the 600 megawatts the governor has assumed will be saved when supplies are tight this summer, said Cal-ISO Project Manager Bill Wagner. ??"There's a lot of 'ifs' in there," he said of the conservation program, which would pay businesses to cut back during critical hours. He said the utilities are months behind in installing meters to measure the savings. ??Officials at another state agency in charge of a similar conservation program, the Public Utilities Commission, also said they are not sure about hitting targets on which the bond plan is based. ??PUC Senior Analyst Robert Strauss said he has no idea how many businesses will agree to curtail electricity consumption in exchange for cheaper power rates this summer. The program is only a month old, he said. ??"We're in a new situation that we don't have good experience with," Strauss said. "Who's going to sign up for these programs? We don't really know." Another program that Davis hopes will conserve 1,600 megawatts has attracted interest from just two businesses since March. ??"It's pretty ambitious to think we're going to get 1,600 megawatts by June in that program," said Cal-ISO's Wagner. ??Beyond Davis' assumptions about conservation, the success of his hard-fought bond measure relies heavily on how much the state will pay for electricity during the next two summers. If the price is higher than forecast by Davis, the bond money could be consumed more quickly, potentially forcing the state to borrow more, dip into tax funds or raise customer rates again. ??To keep prices down, the Davis administration has struggled to lock up in contracts most of the peak-hour power needed for the next two summers to avoid premium, eleventh-hour prices. ??In his effort to push his bond legislation through the Capitol, he has suggested that about 50 such contracts will be signed to produce half of the peak demand the state needs. And that, his advisors say, doesn't count other contracts they think will materialize. ??So far, the administration has fallen far short, achieving final agreements on only 28 contracts as of Thursday. ??If that gap persists, the state will probably be forced to buy electricity on the expensive spot market, which could eat into the bond money. ??"I think the operative word is uncertainty," said Paul Patterson, an energy analyst with Credit Suisse First Boston. "There are too many pieces, [and] all you need is for one or two of those not to work out substantially and things change." ??Patterson, who says he remains cautiously optimistic about the governor's plan, was among a group of Wall Street analysts who were briefed last week by Davis' top advisors. ??Some wondered about who would provide the additional power that Davis had incorporated into his plan. Others questioned whether investors would buy the bonds with so many assumptions built into the measure. ??During the briefing, the governor's advisors said one option being considered is to refuse to pay the highest prices for power and "accept some sort of rolling blackout scenario." ??One of the governor's chief energy consultants, Joseph Fichera, told the Wall Street analysts that if suppliers think they can profit by holding back power until the threshold of blackouts, the state may simply say no, leaving them with no sale. ??Through calculations that include contracts and conservation, Davis' advisors arrived at another assumption that has drawn skepticism. They insist that the purchase of any power not under contract will average just $195 per megawatt-hour this summer--helping slash overall power costs by hundreds of millions. ??Critics say the California market is simply too volatile to forecast. Before Tuesday's blackouts, for example, prices on the last-minute market had been below $800 for a megawatt-hour, a considerable amount. But not as much as it was Wednesday when the state paid Houston-based Reliant Energy $2,000, Davis said Thursday. ??A report by Republican Assembly members concluded that if Davis' assumption that non-contracted power will average $195 is off by just 10%, electricity would cost an additional $250 million by September. Over two years, those additional costs could soar to $1.1 billion, the GOP study found. ??Democratic state Controller Kathleen Connell, whose staff has attempted to analyze the governor's report, is warning that rising power costs could tear through the bond funds and possibly expose the state's general fund. ??Connell accused the governor of tailoring his assumptions and numbers to neatly fit his goal of assuring the public--and Wall Street--that an end to the crisis is near. ??Fichera, who helped prepare the report, insists that the administration's bond plan is conservative and presents the most reasonable scenario of the converging forces of conservation and prices. ??Even if things do not fall into place, Fichera said, there is an extra $1 billion packaged into the measure, along with an expectation of billions more in later years to cover any shortfalls. ??"Any realistic scenario," Fichera said, "we believe we have the resources to cover." ??Fichera said he sees only a slim possibility that power costs in the next two years could outpace the available bond money, forcing the state to borrow more. He said such a loan could easily be paid back by the recent utility rate increases, which would cover both dropping costs of power and the bonds within the next three years. ??Fichera declined to provide The Times with figures showing at what point higher power costs could consume the cushion he said is built into the governor's plan. Public officials and newspapers, including The Times, have sued the administration for more details about the state's power costs. ??But Davis and his consultants say key financial information must be kept secret to prevent energy traders from gaining more leverage in the state's power market. ??But that confidence was tempered in a state document given to Wall Street analysts that recently accompanied an unrelated bond issue. ??The document acknowledged that the assumptions underlying Davis' financial plan to restore stability to the California electricity market were "subject to many uncertainties." "There can be no assurance," the document concluded, "that there will not be future disruptions in energy supplies or related developments which could adversely affect the state's economy." ??Making Assumptions ??Gov. Gray Davis' energy rescue plan, financed by a $13.4-billion bond measure he signed Thursday, rests on several questionable assumptions. Key among them: ??CONSERVATION: California businesses and residents will cut more than 7,200 megawatts from peak demand this summer. That is about one-sixth of the height of demand on a hot August day. ??PRICES: Conservation and new energy sources coming online soon will create downward pressure on California's wholesale electricity market, causing the average prices the state pays for power to drop sharply. ??CONTRACTS: The state will finalize about 50 long-term contracts for power that will cover the expected shortfall in electricity expected this summer during periods of the highest energy use. So far, the state has only 28 signed contracts. ??* ??RELATED STORIES ??Rising Hopes: Discovery of a natural gas deposit beneath Delano has town dreaming of riches, B1 ??Defiance: Ayn Rand Institute, a bastion of laissez-faire capitalism, denounces calls to conserve, B5 ??Approval: State clears the way for two idle generators in Huntington Beach to resume operation, B6 GRAPHIC: PHOTO: Gov. Gray Davis heads toward news conference at which he signed a $13.4-billion bond measure. PHOTOGRAPHER: ROBERT DURELL / Los Angeles Times LOAD-DATE: May 11, 2001 ?????????????????????????????17 of 106 DOCUMENTS ??????????????????????Copyright 2001 / Los Angeles Times ??????????????????????????????Los Angeles Times ??????????????????May 11, 2001 Friday ?Orange County Edition SECTION: California; Part 2; Page 1; Metro Desk LENGTH: 924 words HEADLINE: Orange County; ; Restarting of 2 Generators in O.C. OKd; Energy: State panel grants a 10-year run for the AES Corp. units despite concerns of Huntington Beach officials and residents. BYLINE: JENIFER WARREN, TIMES STAFF WRITER DATELINE: SACRAMENTO BODY: ??Granting the governor's wish that power plants receive speedy approval, the California Energy Commission cleared the way Thursday for the restart of two idled generators that will double the output of a plant in Huntington Beach. ??The vote came despite concerns from city officials and nearby residents that potential environmental and health risks associated with the restart were not adequately examined by regulators. ??The commission's action allows AES Corp. to run the two controversial units for at least 10 years, provided that a midterm review finds that operators are taking steps to limit any harm the plant may cause to seawater quality and marine life. ??The commission also required the company to sell all the power generated by the units, enough to supply about 337,500 homes, within California--a restriction unprecedented in the state. ??Some attorneys questioned whether the panel had the legal authority to place such a restriction. But Commissioner Robert Laurie said that while the limit "may not be good long-term policy," the state's power emergency warrants it now. ??The commission's unanimous vote capped weeks of arduous negotiations involving AES, the state and Huntington Beach officials, who called the 10-year permit "a major disappointment." AES officials pushed for the 10 years on grounds that a shorter time frame made the economics of the project iffy. ??City officials preferred a five-year permit, noting that the company's track record--it once paid a $17-million fine for allowing too much pollution to spew from its Long Beach plant--raises doubts about its future performance. The commission's staff also favored five years, with the possibility of a five-year extension. ??"They have not exactly been great corporate citizens," Matt Lamb, project manager for Huntington Beach, said of AES. "This is a grossly inefficient plant that has been mothballed and they're basically kick-starting it. We don't think it deserves 10 years." ??But Gov. Gray Davis--who has publicly pushed the commission to approve plants quickly--hailed the decision. "That's good news. That's supply we're counting on," he said. ??The two Huntington Beach units are 40 years old and have been idle since 1995. But the energy crisis has made the old valuable once again, and AES plans to invest $150 million to repower the generators--once scheduled for demolition. ??The units represent almost 10% of the 5,000 megawatts Davis has said he would bring into service this summer to avert an electricity shortage. Recent estimates, however, suggest the governor's pledge was overly optimistic. ??Time Frame Still Uncertain ??And while both Davis and the Energy Commission are expecting the Huntington Beach project to come on line in August, AES Southland President Mark Woodruff said Thursday that it's unclear whether the units would be up and running that soon. ??The AES project is among a handful receiving fast-track approval under the governor's executive order earlier this year requiring expedited review of such plants. It's the first restart to be approved. ??In normal times, a 450-megawatt project such as the one approved Thursday might have taken a year's worth of study, public hearings and other scrutiny, said Claudia Chandler, a commission spokeswoman. Today's expedited review shrinks that to just 60 days. ??That clearly rankles some Huntington Beach residents, who, in testimony before the commission, wondered whether emissions, ocean pollution and other threats had been thoroughly studied. ??"I think it's almost outrageous what's being foisted on the public," said Rich Lloyd, who lives about a quarter mile from the plant. "What relief are you going to give to all these people, all these schoolchildren, who have to breathe these emissions for 10 years?" ??Huntington Beach Councilwoman Shirley Dettloff said she too was troubled by the fast-track licensing process. "We're taking a risk as a city," she said. "If a price has to be paid, our citizens will be paying that price." ??Critics are alarmed by a UC Irvine study concluding that the plant--which now uses and discharges about 300 million gallons of seawater each day as coolant--may combine with ocean currents to attract sewage released miles offshore. Many residents suspect the plant contributed to pollution that caused repeated beach closures in 1999. ??Acknowledging the concerns, the commission required AES to spend $1 million to study whether water quality is at risk. The company also must spend another $ 2.5 million to monitor fish deaths caused by its seawater intake system. If too many white croaker, queenfish and other species become trapped and die, AES may be required to modernize its equipment, commission officials said. ??Other complaints have focused on the noise, smoke and smells produced by the plant. Jane Riley, who lives nearby, plans her outings with son Daniel, 6, around the thick clouds of yellow-brown smoke that are a part of everyday life. ??"I try to avoid it. I take a look at which direction it's going," Riley said. With two more units fired up, a bad situation will only get worse, she fears. ??In other action Thursday, the commission approved a 95-megawatt "peaker" plant in the Central Valley city of Hanford. Peaker plants can produce large amounts of power in short bursts, and the governor is counting on such facilities to make up about 40% of California's electricity deficit this summer. ??* ??Times staff writers Seema Mehta and Dan Morain contributed to this story. GRAPHIC: GRAPHIC: Powering Up, Los Angeles Times LOAD-DATE: May 11, 2001 ?????????????????????????????18 of 106 DOCUMENTS ??????????????????Copyright 2001 The New York Times Company ??????????????????????????????The New York Times ??????????????????May 11, 2001, Friday, Late Edition - Final SECTION: Section A; Page 30; Column 4; National Desk LENGTH: 672 words HEADLINE: House Moving to Ease California Power Crisis BYLINE: ?By PHILIP SHENON DATELINE: WASHINGTON, May 10 BODY: ??With members of Congress stepping up the partisan fight over California's energy crisis, the House moved today toward passage of a bill that Republican sponsors said would increase the supply of electricity in California but would not impose the energy price caps sought by Democrats. ??The bill, which would allow for an easing of clean-air laws to keep power plants in service and would simplify rules allowing the federal government to sell its power to the state, was approved 17 to 13 in an energy subcommittee. The vote, which was along strict party lines, moves the bill to the full Energy and Commerce Committee. ???The vote came after a debate in which lawmakers made clear that they sensed both political danger and political opportunity from the crisis that has led to rolling electricity blackouts across California, the nation's most populous state. The situation is expected to worsen with the arrival of the summer heat. ??Democrats tried to place much of the blame for the crisis on the Bush administration, which they said had done little to alleviate the electricity shortage. "Have a tough summer -- that's the message from the Bush administration," said Representative Edward J. Markey, Democrat of Massachusetts. "The message is, 'Help is not on its way.' " ??Republicans said that the Democratic governor of California, Gray Davis, and the Democrat-controlled State Legislature were responsible for the energy shortage because they failed to act earlier to negotiate long-term contracts for electricity. ??Representative George P. Radanovich, Republican of California, defended the Bush administration and federal energy regulators as he took aim at Governor Davis. ??"It's not the lack of federal involvement that's caused this problem," Mr. Radanovich said. "It was really the mismanagement of this issue for the past year by the governor and the State Legislature in California. That's what brings us here." ??For his part, Governor Davis released a letter in Washington in which he insisted that he was "doing everything I can in my state to remedy the energy crisis," noting that no major power plants had been built in California in the 12 years before he took office, when the state's governors were Republicans. ??The letter to the subcommittee asked that the bill under debate today include an amendment that would cap the price of wholesale electricity to prevent price-gouging that could drive utility companies to bankruptcy. ??"The current structure is allowing energy suppliers to charge excessive, unwarranted rates for wholesale energy," he said. "States do not have the authority to regulate wholesale interstate energy prices; that power falls within the sole jurisdiction of the federal government." ??But the subcommittee rejected the governor's request, defeating an amendment from Representative Henry A. Waxman, Democrat of California, that would have capped wholesale prices in Western markets for 18 months. ??Representative Billy Tauzin, the Louisiana Republican who is chairman of the Energy and Commerce Committee, said that price caps would "do nothing, not one single thing, to get one additional watt of electricity to California when it needs it most." He said that price limits would worsen the crisis because they would "justify every utility and municipality in the West holding onto their reserves for their own customers." ??At the White House, President Bush's spokesman, Ari Fleischer, said that the president remained "worried about energy prices" and that he would "remain vigilant to make sure there's no price-gouging." Next week Mr. Bush is planning to release
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