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The Orange County Register ISO: Duke was just following orders ?The power
producer says the ???? ???????agency's disclosure that it ordered units ramped up and down discredits whistleblowers. July ???????2, 2001 By KATE BERRY San Diego Union Tribune Duke Energy lashes back at charge of price rigging By Bill Ainsworth ???STAFF WRITER ?July 2, 2001 Los Angeles Times, July 2, 2001 Monday, Home Edition, Page 1, 1338 words, ????THE NATION; ; Rule May Spur Firms to Waste Energy, JOSEPH MENN, TIMES STAFF ????WRITER, PALO ALTO Los Angeles Times, July 2, 2001 Monday, Home Edition, Page 1, 1708 words, ????NEWS ANALYSIS; For Unit of Edison, a Rough Road Ahead; Power: Mission ????Energy's ability to grow is being hampered by its parent's efforts to stay ????out of Bankruptcy Court., JERRY HIRSCH, TIMES STAFF WRITER Los Angeles Times, July 2, 2001 Monday, Home Edition, Page 7, 297 words, ????The State; ; Californians Cut Energy Use 12.3% From Last Year, TWILA DECKER, ????TIMES STAFF WRITER Los Angeles Times, July 2, 2001 Monday, Home Edition, Page 7, 746 words, ????The State; ; Beating Up a Powerful Friend and Creating a Good Impression, ????GEORGE SKELTON, SACRAMENTO The San Francisco Chronicle, JULY 2, 2001, MONDAY,, FINAL EDITION, NEWS;, ????Pg. A1, 1080 words, Usage down -- Davis' team gloats; ???Energy advisers ????call campaign big success, Jim Doyle The San Francisco Chronicle, JULY 2, 2001, MONDAY,, FINAL EDITION, NEWS;, ????Pg. A1, 1394 words, Why suppliers get away with huge profits; ????Manipulation of power market appears to be legal, experts say, Carolyn Said AP Online, July 1, 2001; Sunday, Domestic, non-Washington, general news ????item, 411 words, Power Grid Operator Details Swings, LOS ANGELES The Associated Press State & Local Wire, July 1, 2001, Sunday, BC cycle, ????Business News, 637 words, Reports say Calif. power grid operator behind Duke ????plant's output swings, LOS ANGELES The Associated Press State & Local Wire, July 1, 2001, Sunday, BC cycle, ????State and Regional, 614 words, Report: State grid operator behind plant's ????output swings, LOS ANGELES The Associated Press State & Local Wire, July 1, 2001, Sunday, BC cycle, ????State and Regional, 506 words, State: Californians cut power use 12 percent ????last month, By LESLIE GORNSTEIN, AP Business Writer, LOS ANGELES ISO: Duke was just following orders The power producer says the agency's disclosure that it ordered units ramped up and down discredits whistleblowers. July 2, 2001 By KATE BERRY The Orange County Register The California Independent System Operator, the agency that runs California's electric grid, said Sunday that Duke Energy was following its orders to ramp generating units up and down during a three-day period in January when the company was accused by three whistleblowers of price- manipulation. Duke Energy said the disclosure Friday that the ISO was responsible for "ramping up" and "ramping down" its generating units would discredit the accusations of the three former plant employees. The whistleblowers were lauded last month by Gov. Gray Davis as "heroes." They testified June 22 before a Senate committee that Duke controlled its power supplies to drive up prices. Duke is the subject of several federal and state investigations, including a grand jury inquiry, into whether generators operated to drive up prices in California's unregulated wholesale electricity market. Steve Maviglio, a spokesman for Davis, could not explain why the governor or the Senate committee were unaware that the ISO was responsible for having the generating units ramp up and down. On Friday, the ISO released a memo to the state's Electricity Oversight Board stating that Duke's "peaking" unit in Chula Vista was "in accordance" with ISO regulations. The memo said Duke followed the agency's orders to increase and decrease production 38 times during a three-day period in mid-January. Duke spokesman Tom Williams said the ISO memo refutes the testimony of the whistleblowers. "These former employees had an incomplete picture of what was going on," he said. "They made assumptions." Stephanie McCorkle, an ISO spokeswoman, said her agency did not rebut the testimony of the former employees because the ISO was not asked to testify, nor was it involved in the Senate committee hearings. She said the ISO routinely tells generating units - especially peaker plants -- to ramp up and ramp down at a moment's notice to control the ebb and flow of electricity through the grid. The plant's production was an automated dispatch system that allowed the ISO, not Duke, to control the output. The ramping up and down of units can be done for several reasons, including price, fluctuating demand, operating reserves and congestion, she said. The ISO is still investigating Duke's bidding pattern during the period from Jan. 17 to Feb. 14, when Duke routinely charged prices as high as $3,880 a megawatt-hour. Neither the ISO nor Duke has released pricing information from their plants. The Federal Energy Regulatory Commission ordered Duke to refund $20 million for the prices it charged in January and February, even though the company has not been paid for the power purchases. "It's not a secret that we had high prices in this period because of credit reasons," Williams said. "The price issue has been fully fleshed out. People need to not lose sight of the fact that we haven't been paid." Peter Navarro, an economics professor at the University of California, Irvine, said the Duke whistleblowers also testified about the broader issue of power plants being kept offline for routine maintenance - a central reason in why California faced threats of rolling blackouts in the winter. "It would be a shame if Duke came out looking like a wronged white knight just because of the governor's overexuberance in targeting power suppliers," said Navarro, who has been highly critical of Davis' handling of the electricity crisis. Duke Energy lashes back at charge of price rigging By Bill Ainsworth STAFF WRITER July 2, 2001 SACRAMENTO -- Duke Energy, which has been stung by allegations of price gouging at its Chula Vista plant, has begun fighting back by selectively releasing documents it says exonerate the company of trying to drive up prices by withholding electricity during a critical power shortage in January. Duke has released a memo from the state electricity grid manager saying the company was following state orders when it powered the plant up and down during three days in January. But the company has refused to release price information that a spokeswoman from the Independent System Operator, the grid manager, said was critical to fully understanding whether the company engaged in price gouging. The dispute is part of a larger battle between Gov. Gray Davis and the power generating companies that have made enormous profits from the California energy crisis. Last month, in a dramatic public hearing before a state Senate committee, three former workers at the Chula Vista plant accused Duke of turning electricity production up and down to manipulate prices, throwing away spare parts and prolonging plant outages. Duke, which is based in North Carolina, leases the plant from the San Diego Unified Port District. Duke officials called the allegations "baseless," saying plant workers weren't in a position to know why the plant was powered up and down. Duke spokesman Tom Williams acknowledged that the company never explained its actions to employees, saying it was none of their business. Duke said the plant was following orders from the ISO when it powered down on Jan. 16 during a Stage 3 alert, when electricity supplies were so low that rolling blackouts were threatened. Yesterday, the company released a memo from the grid manager confirming that from Jan. 16 through Jan. 18, the company followed ISO direction. "The units did follow the ISO dispatch orders," the memo said. But Duke refused to disclose how much it charged the state for electricity on those days, saying the information was confidential. The ISO, in a March report, accused Duke and other generating companies of manipulating the market by withholding power and by bidding prices higher than the state can afford. Stephanie McCorkle, spokeswoman for the ISO, said the pricing information is needed to get a complete picture of Duke's actions in January. She said the grid manager may have ordered the South Bay plant to power down because Duke was charging prices so high the state could not afford them. "The ISO frequently orders plants to ramp down because the plant owner is charging high prices. Output will certainly fluctuate if the price is so astronomical we can't afford it," she said. The ISO has the pricing information but is not allowed to release it without authorization from the power company. Duke spokesman Williams yesterday said the ISO memo shows that Duke reduced plant output to keep the electricity grid in balance -- that is, to make sure that supply was equal to demand. He said Duke charged high prices during those three days in January, including the record price of $3,880 per megawatt-hour, because it feared it would not be paid. "It's not a secret at this time that we had some high credit prices," he said. Michael Aguirre, a lawyer who is suing Duke and who helped get the ex-workers to testify to the Senate committee, chastised the company for not fully disclosing the prices. "They should have the courage that these workers had to come forward with all the information," he said. "They should make a full disclosure." The memo from the ISO does not address broader charges by the former employees that the company had been powering its plant up and down for the entire year to drive up the price of electricity. Glenn Johnson, a former mechanic at the South Bay plant, has said working turbines frequently were taken offline for "economic reasons." He and other plant workers say that meant the company was trying to drive prices higher. Williams yesterday said "economic reasons" meant the cost of running the extra turbines was so high the company could not recover the operating costs. "It's not to drive prices up, it's because you can't produce the power and make money," he said. Aguirre said he was skeptical that Duke could not make money operating close to capacity at a time when wholesale electricity prices were skyrocketing. Lt. Gov. Cruz Bustamante yesterday accused the company of trying to explain away its price gouging. "Duke should stop trying to manipulate the media the way it has California's energy market," he said. On Friday, Duke asked the ISO to release its memo to just two news organizations, the Los Angeles Times? and the Charlotte Observer? in North Carolina. But McCorkle refused, saying a document should be available to everybody or to nobody. The newspapers nevertheless obtained the document. Williams said the company selected those two news organizations because it had been working with them for weeks on the story. He said Duke plans to release the memo to the public at a news conference today. Davis wants nearly $9 billion in refunds from Duke and other companies that, under the state's flawed deregulated electricity system, acquired power plants from public utilities and raised wholesale rates dramatically. Duke Energy, which has been accused by state and federal regulators of overcharging California customers for its power, set a California record when it sought $3,880 per megawatt-hour in January. By comparison, during the first half of 2000, power sold for about $30 a megawatt-hour. Los Angeles Times July 2, 2001 Monday ?Home Edition SECTION: Part A; Part 1; Page 1; National Desk LENGTH: 1338 words HEADLINE: THE NATION; Rule May Spur Firms to Waste Energy BYLINE: JOSEPH MENN, TIMES STAFF WRITER DATELINE: PALO ALTO BODY: ??The fluorescent lights are burning bright on the top floor of a Hewlett-Packard Co. office building here, even as sunlight streams in from skylights and windows, and it pains HP electricity conservation czar Erik Andres. ??Although the Silicon Valley computer firm has spent more than $1 million on the latest conservation software and gadgetry and has cut electricity consumption by 12% from a year ago, Andres won't switch off any more lights. ??If he did, it would make it harder for the company to comply when Pacific Gas & Electric orders Hewlett-Packard to cut its power use by as much as 15% in 15 minutes. That's the curtailment promise HP and more than 50 other large companies around the state recently made to their utilities to win exemptions from rolling blackouts. ??"We could cut our power 10% right now and not feel it," Andres said, gesturing upward. "The only reason the lights are on in here is for the curtailment." ??Andres' dilemma illustrates an unfortunate paradox: California's main program for protecting businesses from blackouts is perversely rewarding firms that, on most days, conserve the least. Power wasted in the resulting game-playing is driving up demand and may increase the likelihood of blackouts for Californians who aren't exempt, according to utility customers and analysts. ??Since few companies will confess to using more power than they need, it's impossible to know how much energy is squandered. But few believe Hewlett-Packard, considered to be among Silicon Valley's better corporate citizens, is alone. ??"HP isn't the only one who's got smart people," said Richard McCann, a partner at energy consulting firm M.Cubed in Davis, Calif. "Every program you have, you're going to have people that figure out how to work the system." ??A lot is at stake in the curtailment program, which was approved in its current form in May by the California Public Utilities Commission. PG&E, which has signed up the most customers for the plan, says a 10% power savings from those companies would amount to 77 megawatts--enough to keep the lights on in 50,000 homes. That kind of savings could have mitigated the effect of the last rotating blackouts PG&E had to impose. Southern California Edison and smaller utilities are also participating in the program. ??But if companies can win blackout exemptions later by burning a few more bulbs now, they will. ??"Anything a business can do to avoid rolling blackouts has a tremendous appeal," said Joe Desmond, a software executive who works on energy issues for the Silicon Valley Manufacturing Group. ??Firms Agree to Energy Cuts Under Program ??The prospect of dozens, even hundreds, of hours of outages this summer has large companies fretting about millions of dollars in lost productivity, ruined equipment and other damages. Given that, industry experts say companies in the curtailment program are only responding logically to the details in the PUC plan, which carries a title so bureaucratic they find it hard to say with a straight face: the Optional Binding Mandatory Curtailment Program. ??The program works like this: ??If a company pledges to cut power use from a utility's circuit, the utility will leave that circuit on when it blacks out other areas. (Smaller businesses and other users that share a circuit have a much harder time meeting the requirements, so fewer have applied.) ??Failure to meet the utility's reduction target--whether 5%, 10% or 15%--is severely punished. The excess use is billed at $6,000 a megawatt-hour, compared with recent market prices of about $100 an hour. And repeated misses get companies barred from the program for five years. ??The trick lies in what usage level the reductions are measured from. ??Under PUC rules, that baseline level is an average of the power consumed during the 10 most recent days without calls for power curtailment. Weekends are excluded, if the call comes during the workweek. ??That means the more power a company uses now, the easier it is to meet the target when the call comes. ??"It has taken away the incentive for people to do voluntary conservation," said Oracle Corp. Energy Director Mukesh Khattar. "There is a dark side that comes to your mind" and suggests letting the air conditioning rip. Oracle and most other companies interviewed say they haven't stopped saving electricity. ??But anecdotal evidence shows that "some people are reluctant to conserve, so that they can keep their average high," said Jennifer Tachera, a staff attorney at the California Energy Commission. ??Hewlett-Packard, Oracle and others complain that the curtailment program gives them little credit for the conservation measures they have already taken, such as installing more efficient air conditioners and lights. HP has cut its electricity use by 12.5% in the six months through April from a year earlier. ??The companies also point out that the 10 most recent days without a curtailment call are likely to have lower temperatures, and lower air-conditioning demand, than the first day with a call. That makes the baseline artificially low--and makes it even more tempting to conserve less in advance. ??"They're measuring on the 10 days when it's cool, as opposed to the one day when it's 103 in San Francisco," said consultant Carolyn Kehrein of Energy Management Services. ??Solutions to Problem Aren't Readily Found ??The big energy users and trade groups have suggested alternatives for setting the baseline. ??One scenario would set the baseline at the level used on the same day a year earlier. But many companies have added or closed facilities since then. ??Another solution, said William Booth of the California Large Energy Consumers' Assn., would be to allow each customer to negotiate a reasonable baseline with its electricity supplier. ??"Any blanket approach is going to affect different companies in different ways," Booth said. But the utilities say they don't have the staff for that. ??A third proposal would set the baseline at the level of consumption when the call comes in. But opponents are worried that as daily demand projections get more sophisticated, companies could manipulate that baseline as well. ??"We understand that the reluctance to go there is mainly based on the fear of 'gaming,' where a customer will jack up their usage just before they believe they will be called," said Dorothy Rothrock, vice president of the California Manufacturers and Technology Assn. She said monitoring could catch that type of maneuver. ??And a fourth idea, supported by Hewlett-Packard and other industrial users, would adjust the baseline for temperature changes. ??"It would be a lot better than what we have now," said Bill Smith of the Electric Power Research Institute, a utility think tank, who for a year has been advocating the use of such a formula. ??Jonathan Lakritz, an energy expert at the PUC, said all baselines are subject to manipulation and the agency had to pick one quickly before temperatures started rising. ??"We were doing this under extreme time pressure," Lakritz said. "Certainly some people are going to find it in their best interest to raise their baseline." ??In the program as it stands, the PUC and the utilities say they hadn't heard about companies manipulating the system. ??Then again, Lakritz said, "there weren't very many people that were coming to the commission and explaining how they were going to game the system." ??Lakritz said that the PUC is making minor adjustments to the program but that more serious changes probably won't be made until the summer is over. ??Lynda Ziegler, Southern California Edison's director of business and regulatory planning, said she was disappointed to hear of possible abuses. ??"I think that is very unfortunate," Ziegler said. "It's against what everyone in California is trying to do, which is make it through this summer." ??* ??MORE INSIDE ??Saving energy: Consumers are doing their part. B7 ??Power costs: Edison unit's ability to grow is at risk. C1 LOAD-DATE: July 2, 2001 ?????????????????????????????10 of 149 DOCUMENTS ??????????????????????Copyright 2001 / Los Angeles Times ??????????????????????????????Los Angeles Times ??????????????????????July 2, 2001 Monday ?Home Edition SECTION: Business; Part 3; Page 1; Financial Desk LENGTH: 1708 words HEADLINE: NEWS ANALYSIS; For Unit of Edison, a Rough Road Ahead; Power: Mission Energy's ability to grow is being hampered by its parent's efforts to stay out of Bankruptcy Court. BYLINE: JERRY HIRSCH, TIMES STAFF WRITER BODY: ??For the first time in months, Edison International can see a path through the financial and political labyrinth that previously looked to dead-end in bankruptcy proceedings. ??Yet the survival of the Rosemead-based power company is by no means assured, as its moves to dodge a date with a federal bankruptcy judge have taken a tremendous toll. ??In particular, a desperate effort to save itself last week may have dealt a debilitating blow to Edison's best remaining business, a subsidiary that builds and operates power plants around the world. ??That company, Edison Mission Energy, was once considered the crown jewel of independent power producers. ??But today, the Irvine-based subsidiary is burdened with more than a billion dollars of debt, used to help its parent company repay loans and avoid insolvency last week; key managers have fled; and industry analysts and former company executives say it has little hope for growth and will be at a financial disadvantage to its competitors for years to come. ??In the end, Edison's strategy to save itself and its Southern California Edison utility may prove to be a successful but Pyrrhic victory, producing enough cash flow to stave off bankruptcy but not nearly the capital needed for a healthy future. ??"The path we are on is difficult and fraught with peril," John Bryson, Edison International's chief executive, said in an interview Friday. "But it is clear to us that trying to work this out is vastly preferable to trying to do it with lawyers and judges and creditors committees in a bankruptcy court." ??The latter course is the one chosen by PG&E Corp., the San Francisco holding company that voluntarily plunged its Pacific Gas & Electric utility into Chapter 11 proceedings in April. PG&E was willing to trade the chance that a federal bankruptcy judge would strip the utility of important assets to pay creditors but otherwise leave untouched its other main business, independent power producer National Energy Group. ??Both utilities became mired in debt, losing billions of dollars buying electricity when wholesale prices spiked during the last year. ??While Edison executives cope with a legislative stalemate in Sacramento--where attempts to craft a rescue plan for SCE have stalled--they can take heart in several recent developments. ??Major new power plants are coming online, including a Kern County joint venture of Mission Energy and a division of Texaco Inc. Wholesale energy prices have declined, at least for now. SCE has reached repayment agreements with a group of small generators, the most skittish of its creditors. ??"A number of elements have come together," Bryson said. ??Having survived a near-death experience last week, when Wall Street nearly balked at Edison's efforts to refinance $1.2 billion in loans and bonds that started to come due Saturday, Bryson sees an Aug. 15 deadline for a rescue plan worked out with Gov. Gray Davis as the next critical milestone for the company. ??The question now, said Theodore Craver Jr., Edison's chief financial officer and point man on Wall Street, is how long creditors will wait if they don't see a plan coalescing at the state level. ??"This is just not a matter of keeping lightbulbs on," Craver said. "There are still billions of dollars of unpaid debt and bills that need to be taken care of. And the people who are owed that money are anything but relaxed." ??The utility rescue plan worked out between Edison and Davis still lies stagnant in the California Legislature--its key provision being the state's purchase of the company's electricity transmission grid for nearly $2.8 billion--and alternative proposals have thus far failed to gather momentum. ??Although the state Senate recently began hearings on the deal at the governor's request, no votes have been cast, and there is widespread acknowledgment among lawmakers that the proposal, as written, is functionally dead. ??Moreover, with the $100-billion state budget and other major matters demanding the attention of Democrats and Republicans alike, there is little effort being made in the Capitol to craft a solution before the mid-August deadline the utility had given state leaders. ??In fact, with lawmakers set to take their annual summer break next month after the end of partisan budget theatrics, it is almost certain that no SCE rescue would be approved before fall, if at all. ??Senate President Pro Tem John Burton (D-San Francisco) bluntly stated at a recent news conference that he feels no pressure to approve a deal with so many consequences for the people of California in so little time. ??Assembly Speaker Bob Hertzberg (D-Sherman Oaks), meanwhile, continues to lead efforts to craft an alternative plan that would place much of the burden of financing an SCE rescue on big business. In exchange, companies would be allowed to bypass the traditional utilities and contract directly with energy marketers for power. ??Although the plan has gathered the most support yet among lawmakers, it also has met with opposition from business leaders, who contend that they alone should not shoulder the costs of the energy crisis. ??Bryson is concerned but not panicked over the inaction at the legislative level. ??"It is a long process trying to understand what has to be done and who needs to do it," he said. ??Yet he concedes that persuading creditors to remain patient is a difficult and at times "testy experience"--not to mention something that worries analysts. ??"You still have the risk that if any creditors get spooked, it is very easy for just a few of them to get together and file an involuntary-bankruptcy petition," said Jon Cartwright, a bond analyst at Raymond James & Associates in St. Petersburg, Fla. ??Whether or not Edison winds up in U.S. Bankruptcy Court, analysts say the company's extraordinary efforts to prevent a bankruptcy filing will have a long-term effect on Mission Energy. ??Independent power producers depend on strong cash flow and borrowing power to grow. That's because power plants generally have a limited output. They don't work like a retail chain, which will see profit soar when sales per store increase. Independent power producers grow by building new plants and adding generating capacity. ??"There's no question that if credit costs at Edison Mission Energy are extremely high, we will be encumbered in our efforts to grow the company," Bryson said. Last week's bond sale to refinance Edison International's debt was secured by Mission Energy and had a yield of 14%, about double what a healthy company would pay. ??Analysts are more pessimistic. ??"It's going to be difficult to even get a project," analyst Cartwright said. "You need a customer before you can do anything, and who is going to sign up with Mission Energy right now?" ??Specifically, he said, Mission's ability to generate the cash flow required to start construction of new projects has been placed in doubt. ??The company has grown rapidly in recent years, nearly quadrupling generation capacity since 1998. As of July 2000, Mission Energy trailed only AES Corp. of Arlington, Va., internationally, according to Platts, an information company that tracks the independent power industry. ??Mission Energy's revenue soared 260% to $3.2 billion from 1998 to 2000. But profit growth has not kept pace. Net income of $125.3 million in 2000 was nearly $7 million less than what the company earned in 1998 on a fraction of the revenue. ??Just as worrisome to the company's ability to grow is the recent flight of executives. ??As the energy crisis in California grew, nearly a dozen key executives bolted, including Chief Financial Officer James Iaco, Corporate Secretary Martha Spikes and Thomas Legro, a vice president. ??These latest defections add to what has become a nearly complete turnover in Mission Energy's management since early 2000, including the departures of Chief Executive Ed Muller, Senior Vice President S. Linn Williams and Michael Childers, a vice president of business development who was one of the company's chief architects for growth. ??Bryson said it should surprise no one that people are leaving. ??"The skill base remains very good," he said, "but people want to be sure they have a future to exercise their skills at building a company." ??Bryson believes that such opportunities remain at Mission Energy. He noted that the company is working on four or five projects. And there is room, he said, to boost cash flow and profit through smart management and improving operating efficiencies at the company's formidable stable of existing power plants. ??* ??Times staff writer Miguel Bustillo in Sacramento contributed to this report. ??RELATED STORIES ??Power paradox: Businesses pad use to gain in blackouts. A1 ??Energy savers: State residents are consuming less power. B7 ??Moving Up ??Edison Mission Energy has been producing more power in recent years and moving up in the ranks of the world's top independent power producers: ??2000 ??Rank/company Megawatts of generating capacity 1. AES 33,044 2. Edison Mission Energy 22,935 3. International Power 14,933 ??1999 ??Rank/company Megawatts of generating capacity 1. AES 20,459 2. International Power 16,362 3. Mirant 12,660 4. Edison Mission Energy 9,383 ??1998 ??Rank/company Megawatts of generating capacity 1. AES 16,241 2. International Power 10,562 3. TXU 6,973 4. Edison Mission Energy 6,223 Sources: Platts, McGraw-Hill ??Rising Revenue, Falling Profit ??Edison Mission Energy's revenue has risen rapidly in recent years, but profit growth hasn't kept pace. ??* ??Operating revenue (In billions) ??1998: $0.89 billion ??1999: $1.64 billion ??2000: $3.24 billion ??* ??Net income (In millions) ??1998: $132.1 million ??1999: $130.3 million ??2000: $125.3 million ??Source: Company reports GRAPHIC: GRAPHIC: Rising Revenue, Falling Profit, Los Angeles Times GRAPHIC: Moving Up, Los Angeles Times LOAD-DATE: July 2, 2001 ?????????????????????????????11 of 149 DOCUMENTS ??????????????????????Copyright 2001 / Los Angeles Times ??????????????????????????????Los Angeles Times ??????????????????????July 2, 2001 Monday ?Home Edition SECTION: California; Part 2; Page 7; Metro Desk LENGTH: 297 words HEADLINE: The State; ; Californians Cut Energy Use 12.3% From Last Year BYLINE: TWILA DECKER, TIMES STAFF WRITER BODY: ??Blackout-weary Californians are apparently doing what has been asked of them: consuming less energy. ??State residents used 12.3% less power in June 2001 compared with June last year, according to findings released Sunday by the California Energy Commission. ??The figures also show that during peak times of the day, energy consumption was cut even further to 14.1%. ??"It's all the little things Californians are doing," said Roger Salazar, a spokesman for Gov. Gray Davis. "Whether it's changing to fluorescent lightbulbs, setting the thermostat at 78 degrees . . . or turning in old appliances. All of these things are adding up." ??The conservation efforts coupled with the addition of three new power plants, two of which are expected to be online this week, lessens the likelihood of a summer of rolling blackouts, Salazar said. ??On Wednesday, a 320-megawatt power plant opened near Bakersfield. Today, a 550-megawatt plant is scheduled to open in Sutter County. A third is set to open in Contra Costa County on July 9. ??But Salazar cautioned that no one can control Mother Nature. ??"We're not in the prediction business," he said. "If we have a week of hot days, that could increase demand. All we can do is do the things that are in our control." ??In compiling its figures, the commission factored in changes in economic growth, population increases and temperature variations between June 2000 and June 2001. ??Without factoring in those differences, there was an actual meter reduction of 3,834 megawatts. ??Though the figures are a good sign, Davis warned residents not to become complacent. ??"Every kilowatt saved is money we keep in California and out of the pockets of out-of-state generators," he said. "For those of you who can, I urge you to do more." LOAD-DATE: July 2, 2001 ?????????????????????????????12 of 149 DOCUMENTS ??????????????????????Copyright 2001 / Los Angeles Times ??????????????????????????????Los Angeles Times ??????????????????????July 2, 2001 Monday ?Home Edition SECTION: California; Part 2; Page 7; Metro Desk LENGTH: 746 words HEADLINE: The State; ; Beating Up a Powerful Friend and Creating a Good Impression BYLINE: GEORGE SKELTON DATELINE: SACRAMENTO BODY: ??Politicians are too predictable, you say. Well, here's a twist: Republican conservative beats up on big business. ??Secretary of State Bill Jones, running uphill for governor, lectured the power industry "to change business practices or face consequences." ??Consequences like being shut out of California's huge electricity market--12% of the nation's population, the world's fifth-largest economy. ??Jones scolded: ??"Either you get with the program, or Californians may take matters into their own hands. I tell you, if you do not get up and do something to help this state--and by doing so, help yourselves--then you as energy providers face a dim future here . . . ??"Let me remind you of a little process we have out here in California called the ballot initiative. When people get angry enough, voters can and do take action directly through the polls." ??You probably have not read or heard about this dressing down by a pro-business Republican of profiteering power suppliers, some of whom he asserted "simply got greedy." ??That's because Jones normally does not attract a lot of attention. Too dull and predictable, we newsies say. And he gave this dinner speech late on a weeknight, June 21, in out-of-the-way Ojai. The audience was relatively small--62 people attending a conference of the Western Power Trading Forum. ??"I probably was not as welcome leaving as I was coming in," Jones says. "But it's the kind of speech those folks needed to hear." ??"He got a mixed reaction," recalls the power group's executive director, Gary Ackerman. "We'd like to see stronger support from gubernatorial candidates because we feel we've done nothing wrong and have played by the rules. ??"But there's some sympathy and understanding that any politician worth his salt is not going to stand up and go 'rah-rah' for the generators. . . . ??"He's in a lot of good company with people who feel the same way." ??That's verified by a new Times poll. When registered voters were asked whether they agree or disagree that "independent power companies have manipulated the electricity market in California in order to make a higher profit," 89% agreed--77% "strongly." ??Moreover, 90% of voters called energy a serious problem, but only 35% believed "there is an actual shortage" of electricity. ??The problem, voters think, is gaming and gouging. ??So even if Jones was in strange territory for a Republican politician, he was on safe ground with voters. ??Jones' strategy, however, is not merely to pander to voters. His aim is to be seen as a straight shooter--an experienced politician who's knowledgeable and doesn't pull punches. ??That contrasts with his only announced opponent for the GOP gubernatorial nomination, megabucks businessman Bill Simon, who never before has run for office. Simon is still doing crash homework on basic issues and is super-cautious in answering questions about his views. ??Asked last week at the Sacramento Press Club whether he thinks power producers have gouged consumers, the onetime prosecutor replied, "That really rests on the investigations. . . . I wouldn't want to prejudge culpability." ??If he had answered the Times poll, Simon would have been among the very few--6%--who weren't sure. ??Former Mayor Richard Riordan, who's being egged on by President Bush to run for governor, probably won't be attacking greedy generators either. That's because he could be branded one himself. The L.A. DWP was one of the biggest gougers last winter while selling electricity to the state. ??That's priceless fodder for Jones. But in Ojai, he pounded primarily on Gov. Gray Davis--"he took a problem and made it into a crisis"--and the private producers. ??Jones admonished the power companies to embrace the Federal Energy Regulatory Commission's new wholesale electricity price caps. ??"You are in many ways waging war on yourselves," he said. "The reports of never-before-heard-of profits of several generators have fueled resentment . . . and soured the long-term prospects for true market reforms." ??Ackerman, the dinner host, said Jones arrived as an unknown, but "left people with a positive image. . . . ??"I'll add one thing. This man has integrity. I talked to him about [campaign] contributions. He didn't hesitate. He said he wouldn't accept money from generators during the [energy] crisis." ??This is intriguing strategy. Beat up a usual ally. Leave a good impression. Earn praise for ethics. ??Refreshing politics. LOAD-DATE: July 2, 2001 ?????????????????????????????13 of 149 DOCUMENTS ?????????????????Copyright 2001 The Chronicle Publishing Co. ?????????????????????????The San Francisco Chronicle ?????????????????????JULY 2, 2001, MONDAY, FINAL EDITION SECTION: NEWS; Pg. A1 LENGTH: 1080 words HEADLINE: Usage down -- Davis' team gloats; Energy advisers call campaign big success SOURCE: Chronicle Staff Writer BYLINE: Jim Doyle BODY: Gov. Gray Davis' top energy advisers took credit yesterday for the apparent success so far of their new conservation campaign, calling it the most aggressive energy-savings effort in the nation's history. ???California's new conservation programs have sparked the public imagination to significantly reduce energy use -- 12.3 percent less electricity used last month alone -- save money and avoid blackouts, state energy officials told reporters during a conference call. ???"People are choosing by the millions to conserve," said David Freeman, the governor's senior energy adviser. "It is a demonstration of enormous implications not only for California but the rest of the country. . . . Californians are acting in their own self-interest and in a patriotic way." ???He noted that the sales of clotheslines in the state have "gone through the roof," and that fans are practically sold out. ???Reduced power demand was a key factor in the state's avoidance of rolling blackouts last month, Freeman said. But, he said, "We're not out of the woods yet," meaning that the new conservation bandwagon is still unlikely to get the state through the summer without major rolling blackouts. ???"We'll be keeping our fingers crossed," Freeman said. "We're not making any predictions. . . . We don't know what the temperature is going to be. We haven't had a situation where you have real hot weather throughout the state three or four days in a row. We don't know how many power plants will break down in July." ???The biggest indicator that Californians appear to be saving more power than expected came when the governor's energy advisers released figures for the state's reduced demand for electricity, indicating that for the second month in a row Californians exceeded the governor's request to cut power usage by 10 percent. For June, electricity use was down 12.3 percent from last year; in May, the state's power use was down 11 percent. ???The savings last month came even though June was a bit hotter than last year, and there are 500,000 more residents in California than a year ago. ???"Conservation is really working. It's really phenomenal," Steve Larson, executive director of the California Energy Commission, said in the call. ???"People have stepped to the plate and knocked the ball out of the park. . . . The demand is down," he said, praising consumers for, among other things, setting thermostats at higher temperatures in warm weather to reduce air conditioning. ???EVERYONE'S SAVING ENERGY ???"In all areas of the state, people are conserving and at a fairly consistent rate," he said. "It's all sectors. It's business, residents, everyone who uses electricity. . . . (But) we don't know if these numbers are going to hold." ???In addition to the overall reduction in use, electricity demand at peak times during June 2001 declined by 5,570 megawatts -- or 14.1 percent compared to June 2000. Those savings are equivalent to shutting down half a dozen major power plants. ???The state experienced 10 days in June 2000 where power demand exceeded 40,000 megawatts -- a threshold level that can result in emergency blackouts. Last month, however, there were no comparable days of extreme power demand. ???Energy officials also noted that new power plants are going online, adding that the governor will flip the switch on a new, 500-megawatt unit today near Yuba City in Sutter County. ???"We have record conservation. We have record (power) generation. And we've locked in long-term energy at reasonable rates," said Roger Salazar, the governor's deputy press secretary. "It is having a tremendous impact." ???DOUBTING THOMASES ???Skeptics say the numbers aren't as rosy as they are cracked up to be. ???Some have said California's energy savings are simply the result of businesses shutting down in the stalled-out economy. Others suggest the state has twiddled the latest conservation figures -- based on differences in this year's temperature and population growth -- in search of good ink for the governor. ???And political polls show that Californians are skeptical about the reasons for the state's energy crisis. ???But the governor's energy advisers insist that state economic growth has continued and that businesses and residential customers are making significant reductions in power use. ???"It's real conservation that is taking place," Freeman said. "The bulk of the savings are coming from voluntary actions that consumers are taking. There's nothing unreal about the money people can save in saving energy. I think there is a combination of a selfish desire to save money and an unselfish desire to avoid blackouts for the community as a whole." ???Not surprisingly, state energy officials credit the governor's initiatives for the latest favorable statistics. ???"None of this is happening accidentally," Freeman said. "(These programs), in combination, are the most aggressive energy conservation programs ever enacted in the United States of America." ???10 COMPONENTS ???California's energy conservation programs involve 10 major components, ranging from special pleas to CEOs and ads directed at residential power users to consumer rebates and new penalties for the biggest power users: ???-- A paid advertising campaign urges California residents and businesses to conserve energy to not only help avoid blackouts but also to save money. ???-- Residential users whose power usage is 20 percent lower than last year are entitled to an additional 20 percent discount off their electricity bills. ???-- $850 million has been set aside for rebates and monetary incentives for consumers who buy new refrigerators and air conditioners that are the most energy efficient available. ???-- Industrial users who increase their power usage face stiff penalties in the form of steep rate hikes. ???"We've reached out to everyone from CEOs to building managers and janitors to schoolchildren," said Aileen Adams, secretary of the state Department of Consumer Services. "We feel that all these things taken together have a huge impact." ???In addition, new energy efficiency standards recently went into effect for state buildings. ???Wally McGuire, director of the California Conservation Campaign, said 236 organizations have signed declarations of their intent to immediately cut at least 20 percent of their electrical power use. ???The governor's energy advisers declined to indicate the cost of their energy conservation efforts.E-mail Jim Doyle at jdoyle@sfchronicle.com. GRAPHIC: PHOTO LOAD-DATE: July 2, 2001 ?????????????????????????????14 of 149 DOCUMENTS ?????????????????Copyright 2001 The Chronicle Publishing Co. ?????????????????????????The San Francisco Chronicle ?????????????????????JULY 2, 2001, MONDAY, FINAL EDITION SECTION: NEWS; Pg. A1 LENGTH: 1394 words HEADLINE: Why suppliers get away with huge profits; Manipulation of power market appears to be legal, experts say SOURCE: Chronicle Staff Writer BYLINE: Carolyn Said BODY: Most Californians think power generators have "gamed" the electricity market, illegally gouging the state to make billions of dollars. But if energy companies are so blatantly villainous, why hasn't anyone been able to collar them? ???The answer is simple, said Harry Snyder, who follows electricity deregulation for the West Coast office of Consumers Union. ???"Gaming is legal under market theory," he said. "It's called maximizing profits. They didn't need to break the law in order to screw consumers." ???For months, dozens of investigators from the attorney general's office, the Public Utilities Commission, the California Independent System Operator and a special state Senate committee have pored over reams of documents, conducted copious interviews and visited power plants up and down the state. ???All they want is to prove what seems self-evident to most consumers: Energy firms drove up electricity prices by withholding supply, shutting down plants and exploiting the bidding process. ???It's not that simple, say most experts. California created the dysfunctional trading market; the companies figured out ways to play by its rules and still make out like bandits. ???"The state of California can make all the allegations about gaming and manipulation that it wants, but, damn, it set up the system," said Arthur O'Donnell, editor and associate publisher of California Energy Markets. "It's resulted in high prices because of imbalance between supply and demand. Stop whining about it and fix the damn system." ???PROFIT PARADISE ???Deregulation created a kind of happy hunting ground for energy traders. There was no "demand elasticity" -- no matter how high the price got, grid operators couldn't just say, "No thanks, we'll buy less power and have a rolling blackout today instead." That meant power companies could charge an arm and a leg, and California would pay it. ???"It is not illegal for a company to jack up its prices or to put less out on the market in order to keep a higher price in the market," said Severin Borenstein, director of the University of California Energy Institute. "Those are both legal as long as a company does it on its own; it can't collude with other companies to do it." ???Still, the generators' behavior is so suspicious that California may be able to prove antitrust violations, said state Sen. Joseph Dunn, D-Santa Ana, chairman of the Senate committee investigating alleged price manipulation. ???'MARKET POWER' ???Making an antitrust case breaks down into two parts: Prove the companies had "market power," then prove that they exercised it in concert. ???Market power itself is not illegal. Simply put, it means the ability to set a price without competitive consequences -- without losing business, in other words. ???For example, Dunn said, if an auto dealer suddenly decides to raise car prices by $5,000, the logical consequence would be for car buyers to visit other dealers. But if a dealer raises prices and does not lose business -- because other dealers also raise their prices -- market power has been exercised. ???You can see market power at work in everything from milk to plane tickets. Grocers and airlines shop their competitors to see how much they are charging and adjust their prices accordingly. ???Most economists and other experts agree that market power exists in California's wholesale electricity market, primarily among the big five generators -- Duke Energy, Dynegy, Williams Energy, Reliant and Mirant. ???But, again, the mere existence of market power does not prove wrongdoing. However, if power generators (or grocers or airlines) did, indeed, hold a secret meeting to set prices, that would be collusion, an illegal activity. ???SEARCH FOR EVIDENCE ???"It's very hard to prove collusion cases unless you have a smoking gun -- tapes, a document, a witness who will testify or wear a wire," Borenstein said. ???Absent a smoking gun, investigators can try to prove indirect collusion or concerted activity by scrutinizing plant records and examining instances of power being withheld and prices going up. ???"There is behavior in the California market that you can't explain in any other way than by concerted activity," Dunn said. ???"If all five (big generators) withhold their full capacity when demand exists, it suggests the companies are not acting in competition with each other but in complement. We can't yet identify any legitimate reasons for across-the-board withholding," Dunn said. ???"The only thing that results from all this withholding on a given day is that they drive up the price tomorrow." ???There is ample evidence that withholding has occurred, but no definite proof so far that it happened in concert. The Chronicle reported in May that several power firms ramped their generators up and down to create artificial shortages, which jacked up prices. Those shortages caused the blackouts early this year, which were unprecedented because they occurred in the winter, when electricity demand is low. ???Three former Duke Energy employees testified before Dunn's committee last month that the firm raised and lowered plant production, idled units and destroyed some equipment -- all to drive up prices. ???Duke, which will testify later this month, took out full-page newspaper ads across the state to rebut the allegations, saying it was merely following directives from California grid operators. ???Yesterday, the Los Angeles Times reported that, according to its review of internal documents, grid operators in fact had instructed Duke to vary its power output at the plant in question. ???To make a case, investigators still have to link withholding by individual firms into a mosaic that shows they acted in concert. ???Even if an antitrust case cannot be proved, power companies may still be liable for civil penalties. The PUC intends to file a case this summer that would levy such civil charges as violation of contract, unfair business practices and fraud. ???Gary Cohen, general counsel of the PUC, said: "We have evidence and will be able to prove that there have been times when the grid was in an alert, an emergency, and the ISO put out a dispatch order for a particular unit to come to full power and they didn't (although) there was no maintenance or other mechanical reason that would have prevented them. ???"At a minimum, that would be a violation of the ISO tariff, which is like a contract. That's breach of contract." ???Fraud charges could come if generators gave misleading information about why plants were shut down, he said. "They may have thought it looked bad to say 'We're taking a break' and (instead) said they were down for mechanical reason. If they said something that's not true, what follows from that is a fraud case," Cohen said. ???Unfair business practices could be charged if power firms intentionally withheld supply during power emergencies to drive up the price, he said. ???Cohen said he hopes the PUC investigation will also lead to changing the law, so these practices would be illegal. "If we don't have the right rules, maybe we need to make some new rules." ??------------------------------------------------------- ??Examining energy pricesThese are among the federal and state investigations of California's energy crisis: -- Federal Energy Regulatory Commission: has been examing the high natural gas prices in California that contributed to the state's spiraling electricity costs. The agency has also reviewed allegations that companies overcharged for power in the energy market. ???-- California Senate Committee to Investigate Price Manipulation of the Wholesale Energy Market: has been looking into charges of price manipulation. ???-- California Attorney General Bill Lockyer: has been pressing ahead with a review of the practices of wholesale power companies. ???-- California Public Utilities Commission: has undertaken a broad investigation into the origins of the state's energy problems and whether the market for power was manipulated.Chronicle Research ??------------------------------------------------------- ??Tell us what you think-- What are your suggestions for saving energy? Send your best tips to Energy Desk, San Francisco Chronicle, 901 Mission St., San Francisco, CA 94103; or put your ideas in an energy-efficient e-mail to energysaver@sfchronicle.com. ??E-mail Carolyn Said at csaid@sfchronicle.com. LOAD-DATE: July 2, 2001 ?????????????????????????????17 of 149 DOCUMENTS ???????????????????????Copyright 2001 Associated Press ??????????????????????????????????AP Online ?????????????????????????????July 1, 2001; Sunday SECTION: Domestic, non-Washington, general news item LENGTH: 411 words HEADLINE: ?Power Grid Operator Details Swings DATELINE: LOS ANGELES BODY: ???The operator of the state's power grid has acknowledged that it was responsible for swings in production at a power plant that Gov. Gray Davis said were evidence of price gouging by out-of-state energy companies, two newspapers reported Sunday. ??The California Independent System Operator told its oversight board that records showed Duke Energy was following its orders to adjust output in order to help balance the grid and not to drive up prices, the Los Angeles Times and The Charlotte (N.C.) Observer reported. ??Three former workers at a Duke Energy power plant near San Diego told state investigators on June 22 that production units were shut down in what they called a scheme to drive up electricity prices. ??Duke responded last week with full-page ads in newspapers from California to its home state of North Carolina, saying production was increased and decreased at the order of the ISO. ??The company said the three workers ''did not know and were not in an operational capacity to know that the ISO directs output.'' ??The ISO gave its analysis to selected lawmakers late Friday after Duke, based in Charlotte, N.C., gave the agency's confidential orders to the Times and the Observer. ??The ISO analysis found that Duke's South Bay plant had accurate logs showing that the units followed the ISO's orders. ??''It's regrettable that some people have inferred things that just weren't the case,'' said Duke spokesman Tom Williams. ??However, the ISO findings may not clear Duke entirely of charges that it manipulated power supplies during three days in January when prices skyrocketed, said Gregg Fishman, an ISO spokesman. ??State officials cautioned that further investigation is still needed to determine if Duke used other tactics to manipulate the power market. ??Duke is one of several out-of-state generators that entered the California market after the state deregulated its power industry in 1998. It operates four plants and accounts for about 5 percent of the state's generating capacity. ??The Federal Regulatory Commission last month found the company overcharged California by millions earlier this year when it was charging $3,880 a megawatt-hour for electricity. The commission found that Duke was entitled to only $273 per megawatt-hour. In one month, the average home in North and South Carolina uses one megawatt hour at a cost of $73. ?????(PROFILE ?????(CO:Duke Energy Corp; TS:DUK; IG:ELC;) ?????) LOAD-DATE: July 1, 2001 ?????????????????????????????18 of 149 DOCUMENTS ???????????????????The Associated Press State & Local Wire The materials in the AP file were compiled by The Associated Press. ?These materials may not be republished without the express written consent of The Associated Press. ????????????????????????July 1, 2001, Sunday, BC cycle SECTION: Business News LENGTH: 637 words HEADLINE: Reports say Calif. power grid operator behind Duke plant's output swings DATELINE: LOS ANGELES BODY: ??The operator of California's power grid has acknowledged that it was responsible for swings in production at a Duke Energy power plant that Gov. Gray Davis held as an example of price gouging by out-of-state energy companies. ??The Los Angeles Times and Charlotte Observer reported Sunday that the California Independent System Operator told its oversight board that records showed Charlotte, N.C.-based Duke Energy was following orders to help balance the grid and not driving up prices. ??Three former workers at Duke Energy's San Diego-area plant told state investigators June 22 that production units were shut down in what they called a scheme to drive up electricity prices. ??Duke responded last week by taking out full-page newspaper ads defending itself against the accusations by the former workers. ??Duke officials said in the ads - which appeared in newspapers in California, Texas, South Carolina and North Carolina - that plant production was increased and decreased at the order of Cal-ISO, the agency that controls the state's power grid and monitors supply and demand. ??The California version of Duke's advertisement specifically denied the workers' allegations, and claimed they "did not know - and were not in an operational capacity to know - that the ISO directs output. ..." ??Davis had praised the three workers as heroes and Lt. Gov. Cruz Bustamante said they had delivered the "smoking gun" needed to prove price gouging. ??Cal-ISO has not yet publicly acknowledged its role in the ramping up and down of electricity production, but gave its analysis late Friday to selected lawmakers. The move came after Duke gave the agency's confidential orders to the Times and the Observer. ??The agency's analysis found that Duke's South Bay units had accurate logs showing that the units followed Cal-ISO's dispatch orders. ??Duke's documents also show the company offered all available power from the plant to the ISO. Sometimes, the agency bought the right to generating capacity but did not - even under threat of imminent blackouts - exercise that right by asking Duke to produce the power. ??ISO's memo does not address Duke's assertions of how much power it made available to the ISO or how much power the agency bought and didn't buy. ??"It's regrettable that some people have inferred things that just weren't the case," said Duke spokesman Tom Williams. ??Duke, like other generators, has refused to supply prices for power it sold and offered to sell, citing competitive pressures. Without that information, accurate conclusions can't be drawn about Duke's business practices, ISO spokeswoman Stephanie McCorkle said. She said the agency is not ready to provide additional information. ??Duke has been challenged for its production tactics and pricing at the state and national level. The Federal Regulatory Commission last month found the company had overcharged California by millions earlier this year when it was charging $3,880 a megawatt-hour for electricity. The commission found that Duke was entitled to only $273 per megawatt-hour. ??In one month, the average home in North and South Carolina uses one megawatt hour at a cost of $73. ??Duke is one of several out-of-state generators that entered the California market after the state deregulated its power industry in 1998. With three plants it owns and the leased South Bay plant, Duke accounts for about 5 percent of the state's generating capacity. ??On Thursday, the state Senate committee investigating Duke and others held two generators in contempt for failing to provide records of their operations in California. Duke was not held in contempt because it agreed to turn over documents by the July 10 deadline, said Ronda Paschal, a spokeswoman for state Sen. Joe Dunn, D-Santa Ana, a committee leader. LOAD-DATE: July 2, 2001 ?????????????????????????????19 of 149 DOCUMENTS ???????????????????The Associated Press State & Local Wire The materials in the AP file were compiled by The Associated Press. ?These materials may not be republished without the express written consent of The Associated Press. ????????????????????????July 1, 2001, Sunday, BC cycle SECTION: State and Regional LENGTH: 614 words HEADLINE: Report: State grid operator behind plant's output swings DATELINE: LOS ANGELES BODY: ??The operator of the state's power grid has acknowledged that it was responsible for swings in production at a power plant that Gov. Gray Davis held as an example of price gouging by out-of-state energy companies. ??The Los Angeles Times and Charlotte Observer reported Sunday that the California Independent System Operator told its oversight board that records showed Duke Energy was following orders to help balance the grid and not driving up prices. ??Three former workers at Duke Energy's San Diego-area plant told state investigators June 22 that production units were shut down in what they called a scheme to drive up electricity prices. ??Duke responded last week by taking out full-page newspaper ads defending itself against the accusations by the former workers. ??Duke officials said in the ads - which appeared in newspapers in California, Texas, South Carolina and North Carolina - that plant production was increased and decreased at the order of Cal-ISO, the agency that controls the state's power grid and monitors supply and demand. ??The California version of Duke's advertisement specifically denied the workers' allegations, and claimed they "did not know - and were not in an operational capacity to know - that the ISO directs output. ..." ??Governor Davis had praised the three workers as heroes and Lt. Gov. Cruz Bustamante said they had delivered the "smoking gun" needed to prove price gouging. ??Cal-ISO has not yet publicly acknowledged its role in the ramping up and down of electricity production, but gave its analysis late Friday to selected lawmakers. The move came after Charlotte, N.C.-based Duke gave the agency's confidential orders to the Times and the Charlotte Observer newspaper. ??The agency's analysis found that Duke's South Bay units had accurate logs showing that the units followed Cal-ISO's dispatch orders. ??"It's regrettable that some people have inferred things that just weren't the case," said Duke spokesman Tom Williams. ??The agency's findings may not clear Duke entirely of charges that it manipulated power supplies during three days in January when prices skyrocketed, said Gregg Fishman, an ISO spokesman. ??"Those facts are all correct, but they may not add up to a complete picture of what happened during those three days," Fishman told the Charlotte Observer on Saturday. ??State officials cautioned that further investigation is still needed to determine if Duke used other tactics to manipulate the power market. ??"ISO's comments on the ramping still do not resolve the full question," said state Sen. Joe Dunn, D-Santa Ana. ??Duke has been challenged for its production tactics and pricing at the state and national level. The Federal Energy Regulatory Commission last month found the company had overcharged California by millions earlier this year when it was charging $3,880 a megawatt-hour for electricity. The commission found that Duke was entitled to only $273 per megawatt-hour. ??In one month, the average home in North and South Carolina uses one megawatt hour at a cost of $73. ??Duke is one of several out-of-state generators that entered the California market after the state deregulated its power industry in 1998. With three plants it owns and the leased South Bay plant, Duke accounts for about 5 percent of the state's generating capacity. ??On Thursday, the state Senate committee investigating Duke and others held two generators in contempt for failing to provide records of their operations in California. Duke was not held in contempt because it agreed to turn over documents by the July 10 deadline, said Ronda Paschal, a spokeswoman for Dunn, a leader of the committee. LOAD-DATE: July 2, 2001 ?????????????????????????????20 of 149 DOCUMENTS ???????????????????The Associated Press State & Local Wire The materials in the AP file were compiled by The Associated Press. ?These materials may not be republished without the express written consent of The Associated Press. ????????????????????????July 1, 2001, Sunday, BC cycle SECTION: State and R
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