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San Jose Mercury News, April 19, 2001, Thursday, SJ-POWER, 593 words,
????Testimony Indicates California Electricity Market Was Troubled in 1998, By ????Brandon Bailey (Quotes Smutny on behalf of IEP) The Associated Press State & Local Wire, April 19, 2001, Thursday, BC cycle ????, 9:55 AM Eastern Time, State and Regional, 930 words, Developments in ????California's energy crisis, By The Associated Press (Quotes Smutny on behalf of IEP) The Associated Press State & Local Wire, April 19, 2001, Thursday, BC cycle ????, 9:32 AM Eastern Time, State and Regional, 820 words, Legislators probe ????possible power, natural gas collusion, By DON THOMPSON, Associated Press ????Writer, SACRAMENTO (Quotes Smutny on behalf of IEP) The Associated Press State & Local Wire, April 18, 2001, Wednesday, BC ????cycle, State and Regional, 833 words, Legislators probe possible power, ????natural gas collusion, By DON THOMPSON, Associated Press Writer, SACRAMENTO ???(Quotes Smutny on behalf of IEP) The Associated Press State & Local Wire, April 18, 2001, Wednesday, BC ????cycle, State and Regional, 841 words, Developments in California's energy ????crisis, By The Associated Press (Quotes Smutny on behalf of IEP) Power bloc blasts seizure idea Producers say talk of bold action fuels crisis ???????By Steve Geissinger SACRAMENTO BUREAU ?-- Oakland Tribune (Quotes Smutny on behalf of IEP) Copley News Service, April 19, 2001, Thursday, State and regional, 780 ????words, Windfall-profits tax gets Davis' backing, Bill Ainsworth, SACRAMENTO Los Angeles Times, April 19, 2001, Thursday,, Home Edition, Page 3, 772 ????words, CAPITOL JOURNAL; ?CALIFORNIA AND THE WEST; ??Price Caps Don't Fit in ????Cheney's Head for Figures, GEORGE SKELTON, SACRAMENTO Los Angeles Times, April 19, 2001, Thursday,, Home Edition, Page 3, 1373 ????words, CALIFORNIA AND THE WEST; ??DAVIS BACKS SILICON VALLEY POWER PROJECT; ????ENERGY: GOVERNOR URGES QUICK APPROVAL OF SAN JOSE PLANT DESPITE OPPOSITION ????BY CITY AND A POWERFUL FIRM., JENIFER WARREN and TERENCE MONMANEY, TIMES ????STAFF WRITERS, SACRAMENTO The Orange County Register, April 19, 2001, Thursday, STATE AND REGIONAL ????NEWS, K7970, 275 words, Ex-energy chief leery of state buying power lines, ????By Kate Berry The San Francisco Chronicle, APRIL 19, 2001, THURSDAY,, FINAL EDITION, ????NEWS;, Pg. A18, 585 words, Alameda public utility rents four backup ????generators; ???Extra electricity will be used during summer rolling ????blackouts, Matthew Yi, Alameda The San Francisco Chronicle, APRIL 19, 2001, THURSDAY,, FINAL EDITION, ????NEWS;, Pg. A3, 845 words, Davis' gouging claims disputed; ???Officials say ????no link between PG&E bankruptcy, high prices, David Lazarus The San Francisco Chronicle, APRIL 19, 2001, THURSDAY,, FINAL EDITION, ????NEWS;, Pg. A3, 888 words, Davis backs San Jose power plant; ???He also ????acknowledges bailout for Edison will be uphill fight, Lynda Gledhill, ????Sacramento The Vancouver Sun, April 19, 2001 Thursday, 731 words, B.C. Hydro's credit ????to California firms exceeded 1999 guidelines, David Baines The Associated Press State & Local Wire, April 18, 2001, Wednesday, BC ????cycle, Business News, 348 words, Williams again target of overcharging ????allegations from federal regulators, TULSA, Okla. The Associated Press State & Local Wire, April 18, 2001, Wednesday, BC ????cycle, State and Regional, 332 words, Governor, congressman to fight ????proposals for national power deregulation policy, By MARGERY BECK, ????Associated Press Writer, LINCOLN, Neb. San Jose Mercury News, April 18, 2001, Wednesday, SJ-POWER-PLANT, 1038 ????words, California Governor May Back Energy Firm's Proposed Power Plant Scripps Howard News Service, April 18, 2001, Wednesday, DOMESTIC NEWS, 588 ????words, Davis says Edison agreement may need altering, EMILY BAZAR and KEVIN ????YAMAMURA, SACRAMENTO, Calif. San Jose Mercury News April 19, 2001, Thursday KR-ACC-NO: SJ-POWER LENGTH: 593 words HEADLINE: Testimony Indicates California Electricity Market Was Troubled in 1998 BYLINE: By Brandon Bailey BODY: ??SACRAMENTO, Calif.--California's electricity market was showing signs of trouble as far back as 1998, the year that it was officially opened to competition, members of a special legislative investigating committee were told Wednesday. ??Abnormal price spikes -- far higher than what should have occurred in a competitive market -- were showing up in August 1998, the committee was told by Frank Wolak, a Stanford economist and top advisor to the California Independent System Operator, which runs the state's transmission grid. ??Appearing on the first day of hearings called by a state Senate select committee to investigate alleged wholesale energy price manipulation, Wolak testified that the ISO's economic advisors repeatedly found signs that power suppliers were able to influence prices over the last three years -- even before wholesale prices soared skyhigh last summer. ??By controlling even a relatively small portion of power supply, just enough to make a difference in whether the state could meet consumers' needs, Wolak said, generators have been able to charge prices far higher than their costs. ??All told, the ISO has estimated, power suppliers collected more than $ 6 billion in unjustified profits last year. ??In his opinion, Wolak added, that violates the terms by which federal regulators allowed the suppliers to enter the state's newly deregulated market when it opened in 1998. ??The ISO is now filing petitions with the Federal Energy Regulatory Commission, asking that agency to revoke the generators' right to charge unregulated prices. ??But Wolak repeatedly told the committee that he had no evidence that the suppliers acted in collusion or that they had violated any federal anti-trust laws. ??When state Senator Joe Dunn, D-Garden Grove, pressed him on the point, Wolak insisted, "I can't say yes, I can't say no. There's a lot of things that certainly look puzzling. It's hard without further information and analysis to say definitively, but there's lots of things to seem to be worth looking into." ??Dunn, a former consumer attorney, is leading the Legislature's efforts to answer a question that a host of other state and federal officials have also posed: have California's electricity prices been the result of any illegal or unethical acts? ??Power suppliers and their representatives have repeatedly said the answer is no. They say their prices are the result of short supplies and natural market swings. ??"Eleven investigations into California's electricity market have been conducted or are currently under way," said a statement issued Wednesday by Jan Smutny-Jones, executive director of the Independent Energy Producers Association. "Not one has found or proven any wrongdoing by generators." ??Dunn, however, said Wednesday's testimony was only the start of what he promised would be a vigorous investigation. He said the committee has already asked several power companies for records and other information and he hinted that subpoenas may be issued in the coming weeks. ??"We will try to figure out how to stop these high prices if they are unjustified," Dunn said at the beginning of the hearing. ??"We're not going to be looking for ways to finance these payments," he added. The state is now paying $ 70 million a day to buy power for California consumers, after major utilities wracked up billions in debts while buying power on the open market in recent months. ??----- ??To see more of the San Jose Mercury News, or to subscribe to the newspaper, go to http://www.sjmercury.com JOURNAL-CODE: SJ LOAD-DATE: April 19, 2001 ???????????????????????????????2 of 5 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. ??????????????????????April 19, 2001, Thursday, BC cycle ?????????????????????????????9:55 AM Eastern Time SECTION: State and Regional LENGTH: 930 words HEADLINE: Developments in California's energy crisis BYLINE: By The Associated Press BODY: ??Developments in California's energy crisis: ??THURSDAY: ??- The state remains free of power alerts as reserves stay above 7 percent. ??- Gov. Gray Davis meets with 25 members of the California congressional delegation at the Los Angeles International Airport to discuss the state's power crisis. ??- An Assembly committee continues hearings on the natural gas supply and possible price manipulation. ??-The Public Utilities Commission meets in San Francisco to decide whether to investigate if a key bloc of independent generators are purposely keeping their plants offline. ??WEDNESDAY: ??- Unchecked free-market forces drove up the price of natural gas to Southern California Edison by about $750 million over the last year, an industry consultant tells the Assembly Electricity Oversight Subcommittee. ??Meanwhile, the Senate's Select Committee to Investigate Price Manipulation of the Wholesale Energy Market begins investigating whether electric generators artificially inflated power prices. ??An industry spokesman predicts the investigations will uncover nothing illegal. ??- The state offers financial backing to Houston-based Dynegy, which worried it would not be paid for power generated at its plants in California. Dynegy agrees to sell 300 megawatts of power from 17 small turbine generators in Carlsbad after receiving an offer from the California Department of Water Resources. ??- Gov. Gray Davis urges state regulators to approve the construction of a controversial 600-megawatt power plant in south San Jose to provide electricity to roughly 450,000 homes in the Silicon Valley. ??- The Democratic governor lobbies Senate Democrats to support his plan to pay $2.7 billion for the transmission lines owned by Southern California Edison. ??State spending on electricity has jumped by more than 50 percent since Pacific Gas and Electric Corp. declared bankruptcy April 6, thanks in part of surcharges tacked on by power generators worried they won't be repaid, Davis said. ??- The Senate Appropriations Committee sends the full Senate a bill creating a public power authority that would loan out up to $5 billion to build or buy power plants that would be required to sell electricity to consumers at low rates. ??- An Assembly committee advances a bill ending the exemption under which utility lobbyists do not have to follow the same reporting requirements as do other lobbyists. The bill now goes to the Assembly Appropriations Committee. ??- A Pacific Gas and Electric Corp. shareholder sues the company, claiming it misled shareholders by forecasting annual profits for two quarters last year when, the suit says, the company knew it was incurring losses. ??-Public Utilities Commission President Loretta Lynch issues a statement late Wednesday, saying inaction by the Federal Energy Regulatory Commission forced Southern Caifornia Edison Co. to take a large write-off of debt. "The company should not have to shoulder these liabilities and neither should its customers," Lynch says. ??- Edison International's stock closes at $11.40, down 48 cents, while stock in PG&E's parent closes up 14 cents at $9.04. ??- The state remains free of power alerts as reserves stay above 7 percent. ??WHAT'S NEXT: ??- The Assembly's Energy Oversight Subcommittee plans to resume hearings Thursday in its inquiry into California's highest-in-the-nation natural gas prices with testimony from gas companies. ??- Davis' representatives continue negotiating with Sempra, the parent company of San Diego Gas and Electric Co., to buy the utility's transmission lines. Davis says he expects to have an agreement within two weeks. ??- The state Public Utilities Commission will decide Thursday whether to investigate why a key block of power generators is staying off-line despite regulators' order last month that they start getting paid by the state's utilities. Independent Energy Producers Executive Director Jan Smutny-Jones says the generators can't afford to operate because they are still owed more than a billion dollars, and because the PUC's rates don't cover their operating costs. ??PUC President Loretta Lynch also wants the commission to decide Thursday to investigate whether PG&E's April 6 bankruptcy protection filing is enough of a threat to the PUC's regulatory authority to prompt more PUC involvement in the bankruptcy proceedings. ??THE PROBLEM: ??High demand, high wholesale energy costs, transmission glitches and a tight supply worsened by scarce hydroelectric power in the Northwest and maintenance at aging California power plants are all factors in California's electricity crisis. ??Edison and PG&E say they've lost nearly $14 billion since June to high wholesale prices that the state's electricity deregulation law bars them from passing on to consumers. PG&E, saying it hasn't received the help it needs from regulators or state lawmakers, filed for federal bankruptcy protection April 6. ??Electricity and natural gas suppliers, scared off by the two companies' poor credit ratings, are refusing to sell to them, leading the state in January to start buying power for the utilities' nearly 9 million residential and business customers. The state is also buying power for a third investor-owned utility, San Diego Gas & Electric, which is in better financial shape than much larger Edison and PG&E but also struggling with high wholesale power costs. ??The Public Utilities Commission has raised rates up to 46 percent to help finance the state's multibillion-dollar power-buying. LOAD-DATE: April 19, 2001 ???????????????????????????????3 of 5 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. ??????????????????????April 19, 2001, Thursday, BC cycle ?????????????????????????????9:32 AM Eastern Time SECTION: State and Regional LENGTH: 820 words HEADLINE: Legislators probe possible power, natural gas collusion BYLINE: By DON THOMPSON, Associated Press Writer DATELINE: SACRAMENTO BODY: ??Southern California Edison was charged about $750 million more this year for natural gas because of unchecked free-market forces, an industry consultant testified. ??Paul Carpenter told the Assembly Electricity Oversight Subcommittee on Wednesday the price spikes came after the El Paso Natural Gas Co. contracted first with Dynegy and later with its own marketing affiliate, El Paso Merchant Energy, to control the pipeline capacity. ??Officials with El Paso and other natural gas suppliers are expected to testify Thursday that they did not illegally manipulate the market. ??The California Public Utilities Commission estimated a year ago that overcharges by the companies that control natural gas flow drove up prices by $ 100 million a year to California gas and electricity customers. ??But PUC attorney Harvey Morris said that was before last summer's price spikes, which he blamed on natural gas suppliers using a "monopoly" to "game the system." ??"It's way worse than we could possibly have imagined," Morris said after testifying before the subcommittee. "It's obviously way higher than $100 million." ??Natural gas rates at the California border generally tracked national prices until November, when they spiked as high as 11 times higher than the price of natural gas elsewhere in the nation, Carpenter said. ??"I have never seen gas prices like this anywhere in the world," said Carpenter, who has been studying the energy market for 20 years for Cambridge, Mass.-based consultant The Brattle Group. The Brattle Group was hired by Edison to study the natural gas market. ??The committee is one of two legislative committees exploring whether illegal market manipulation in the electricity and natural gas markets has driven up California's energy costs. ??"This is a market that is plagued by the exercise of market power," Frank Wolak, chairman of the California Independent System Operator's Market Surveillance Committee, told the Senate Select Committee to Investigate Price Manipulation of the Wholesale Energy Market. The ISO runs the state's power grid. ??However, "there is no law against me saying, 'I'm not going to sell to you,"' Wolak said. Market manipulation only becomes illegal when there is collusion, Wolak said, and such evidence is hard to find. ??Electricity generators and natural gas suppliers say a severe supply and demand imbalance - not market manipulation - has led to higher prices. ??"Everybody's busy doing investigations. They're not interested in solving the problem," said Independent Energy Producers Executive Director Jan Smutny-Jones. ??Investigations "are wasting everybody's time," Smutny-Jones said, adding that previous probes and lawsuits have uncovered no wrongdoing. He said the state's power problems came because state regulators denied utilities the chance to sign long-term energy contracts when they had the chance. ??"People have been playing by the rules," Smutny-Jones said. ??But the Senate committee's first witnesses are ISO officials who authored studies that claim the state paid more than $6 billion too much for power last year. ??Committee chair Joseph Dunn, D-Garden Grove, also has slated state Auditor Elaine Howell, who last month blamed buyers and sellers for skyrocketing electricity costs. Dunn also has scheduled future testimony from state, federal, academic and private investigators studying the power market. ??He invited five major generators to attend the committee's second hearing next week. All five - Reliant, Dynegy, Williams Energy, Duke Energy and Mirant - say they are eager to cooperate and clear their names, Dunn said. ??Dunn asked the five for a total of 86 specific documents. If the companies feel they cannot provide documents because of legal or confidentiality concerns, Dunn said he will subpoena them. ??Smutny-Jones said investigators appear to be growing desperate to blame the state's natural gas and electricity price hikes on illegal market manipulation instead of natural market forces. ??He cited Attorney General Bill Lockyer's announcement last week that any informant who helped prove wrongdoing would be entitled to a percentage of the state's recovery he estimated could range from $50 million to hundreds of millions of dollars. ??"If the state's offering a $50 million reward, they haven't found anything," Smutny-Jones said. "I don't think you're going to find the fact that anybody did anything criminal here." ??Assemblywoman Jenny Oropeza, D-Long Beach, said she believes otherwise after Wednesday's testimony: "I think it is very clear there was some price manipulation going on." ??But Assemblyman John Campbell, R-Irvine, isn't sure there was anything illegal. ??"There clearly are market forces at work, that's evident," Campbell said. "Whether you make the jump to market manipulation ... I haven't seen conclusive evidence that leads me to make that jump." LOAD-DATE: April 19, 2001 ???????????????????????????????4 of 5 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. ?????????????????????April 18, 2001, Wednesday, BC cycle SECTION: State and Regional LENGTH: 833 words HEADLINE: Legislators probe possible power, natural gas collusion BYLINE: By DON THOMPSON, Associated Press Writer DATELINE: SACRAMENTO BODY: ??Unchecked free-market forces drove up the price of natural gas to Southern California Edison by about $750 million over the last year, an industry consultant testified Wednesday. ??Paul Carpenter told the Assembly Electricity Oversight Subcommittee the price spikes came after the El Paso Natural Gas Co. contracted first with Dynegy and later with its own marketing affiliate, El Paso Merchant Energy, to control the pipeline capacity. ??The California Public Utilities Commission estimated a year ago that overcharges by the companies that control natural gas flow drove up prices by $ 100 million a year to California gas and electricity customers. ??But PUC attorney Harvey Morris said that was before last summer's price spikes, which he blamed on natural gas suppliers using a "monopoly" to "game the system." ??"It's way worse than we could possibly have imagined," Morris said after testifying before the subcommittee. "It's obviously way higher than $100 million." ??Natural gas rates at the California border generally tracked national prices until November, when they spiked as high as 11 times higher than the price of natural gas elsewhere in the nation, Carpenter said. ??"I have never seen gas prices like this anywhere in the world," said Carpenter, who has been studying the energy market for 20 years for Cambridge, Mass.-based consultant The Brattle Group. The Brattle Group was hired by Edison to study the natural gas market. ??Officials with El Paso and other natural gas suppliers have denied illegally manipulating the market. They are scheduled to testify Thursday. El Paso officials did not return telephone calls for comment Wednesday. ??The committee is one of two legislative committees exploring whether illegal market manipulation in the electricity and natural gas markets has driven up California's energy costs. ??"This is a market that is plagued by the exercise of market power," Frank Wolak, chairman of the California Independent System Operator's Market Surveillance Committee, told the Senate Select Committee to Investigate Price Manipulation of the Wholesale Energy Market. The ISO runs the state's power grid. ??However, "there is no law against me saying, 'I'm not going to sell to you,"' Wolak said. Market manipulation only becomes illegal when there is collusion, Wolak said, and such evidence is hard to find. ??Electricity generators and natural gas suppliers say a severe supply and demand imbalance - not market manipulation - has led to higher prices. ??"Everybody's busy doing investigations. They're not interested in solving the problem," said Independent Energy Producers Executive Director Jan Smutny-Jones. ??Investigations "are wasting everybody's time," Smutny-Jones said, adding that previous probes and lawsuits have uncovered no wrongdoing. He said the state's power problems came because state regulators denied utilities the chance to sign long-term energy contracts when they had the chance. ??"People have been playing by the rules," Smutny-Jones said. ??But the Senate committee's first witnesses are ISO officials who authored studies that claim the state paid more than $6 billion too much for power last year. ??Committee chair Joseph Dunn, D-Garden Grove, also has slated state Auditor Elaine Howell, who last month blamed buyers and sellers for skyrocketing electricity costs. Dunn also has scheduled future testimony from state, federal, academic and private investigators studying the power market. ??He invited five major generators to attend the committee's second hearing next week. All five - Reliant, Dynegy, Williams Energy, Duke Energy and Mirant - say they are eager to cooperate and clear their names, Dunn said. ??Dunn asked the five for a total of 86 specific documents. If the companies feel they cannot provide documents because of legal or confidentiality concerns, Dunn said he will subpoena them. ??Smutny-Jones said investigators appear to be growing desperate to blame the state's natural gas and electricity price hikes on illegal market manipulation instead of natural market forces. ??He cited Attorney General Bill Lockyer's announcement last week that any informant who helped prove wrongdoing would be entitled to a percentage of the state's recovery he estimated could range from $50 million to hundreds of millions of dollars. ??"If the state's offering a $50 million reward, they haven't found anything," Smutny-Jones said. "I don't think you're going to find the fact that anybody did anything criminal here." ??Assemblywoman Jenny Oropeza, D-Long Beach, said she believes otherwise after Wednesday's testimony: "I think it is very clear there was some price manipulation going on." ??But Assemblyman John Campbell, R-Irvine, isn't sure there was anything illegal. ??"There clearly are market forces at work, that's evident," Campbell said. "Whether you make the jump to market manipulation ... I haven't seen conclusive evidence that leads me to make that jump." LOAD-DATE: April 19, 2001 ???????????????????????????????5 of 5 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. ?????????????????????April 18, 2001, Wednesday, BC cycle SECTION: State and Regional LENGTH: 841 words HEADLINE: Developments in California's energy crisis BYLINE: By The Associated Press BODY: ??Developments in California's energy crisis: ??WEDNESDAY: ??- Unchecked free-market forces drove up the price of natural gas to Southern California Edison by about $750 million over the last year, an industry consultant tells the Assembly Electricity Oversight Subcommittee. ??Meanwhile, the Senate's Select Committee to Investigate Price Manipulation of the Wholesale Energy Market begins investigating whether electric generators artificially inflated power prices. ??An industry spokesman predicts the investigations will uncover nothing illegal. ??- The state offers financial backing to Houston-based Dynegy, which worried it would not be paid for power generated at its plants in California. Dynegy agrees to sell 300 megawatts of power from 17 small turbine generators in Carlsbad after receiving an offer from the California Department of Water Resources. ??- Gov. Gray Davis urges state regulators to approve the construction of a controversial 600-megawatt power plant in south San Jose to provide electricity to roughly 450,000 homes in the Silicon Valley. ??- The Democratic governor lobbies Senate Democrats to support his plan to pay $2.7 billion for the transmission lines owned by Southern California Edison. ??State spending on electricity has jumped by more than 50 percent since Pacific Gas and Electric Corp. declared bankruptcy April 6, thanks in part of surcharges tacked on by power generators worried they won't be repaid, Davis said. ??- The Senate Appropriations Committee sends the full Senate a bill creating a public power authority that would loan out up to $5 billion to build or buy power plants that would be required to sell electricity to consumers at low rates. ??- An Assembly committee advances a bill ending the exemption under which utility lobbyists do not have to follow the same reporting requirements as do other lobbyists. The bill now goes to the Assembly Appropriations Committee. ??- A Pacific Gas and Electric Corp. shareholder sues the company, claiming it misled shareholders by forecasting annual profits for two quarters last year when, the suit says, the company knew it was incurring losses. ??-Public Utilities Commission President Loretta Lynch issues a statement late Wednesday, saying inaction by the Federal Energy Regulatory Commission forced Southern Caifornia Edison Co. to take a large write-off of debt. "The company should not have to shoulder these liabilities and neither should its customers," Lynch says. ??- Edison International's stock closes at $11.40, down 48 cents, while stock in PG&E's parent closes up 14 cents at $9.04. ??- The state remains free of power alerts as reserves stay above 7 percent. ??WHAT'S NEXT: ??- The Assembly's Energy Oversight Subcommittee plans to resume hearings Thursday in its inquiry into California's highest-in-the-nation natural gas prices with testimony from gas companies. ??- Davis' representatives continue negotiating with Sempra, the parent company of San Diego Gas and Electric Co., to buy the utility's transmission lines. Davis says he expects to have an agreement within two weeks. ??- The state Public Utilities Commission will decide Thursday whether to investigate why a key block of power generators is staying off-line despite regulators' order last month that they start getting paid by the state's utilities. Independent Energy Producers Executive Director Jan Smutny-Jones says the generators can't afford to operate because they are still owed more than a billion dollars, and because the PUC's rates don't cover their operating costs. ??PUC President Loretta Lynch also wants the commission to decide Thursday to investigate whether PG&E's April 6 bankruptcy protection filing is enough of a threat to the PUC's regulatory authority to prompt more PUC involvement in the bankruptcy proceedings. ??THE PROBLEM: ??High demand, high wholesale energy costs, transmission glitches and a tight supply worsened by scarce hydroelectric power in the Northwest and maintenance at aging California power plants are all factors in California's electricity crisis. ??Edison and PG&E say they've lost nearly $14 billion since June to high wholesale prices that the state's electricity deregulation law bars them from passing on to consumers. PG&E, saying it hasn't received the help it needs from regulators or state lawmakers, filed for federal bankruptcy protection April 6. ??Electricity and natural gas suppliers, scared off by the two companies' poor credit ratings, are refusing to sell to them, leading the state in January to start buying power for the utilities' nearly 9 million residential and business customers. The state is also buying power for a third investor-owned utility, San Diego Gas & Electric, which is in better financial shape than much larger Edison and PG&E but also struggling with high wholesale power costs. ??The Public Utilities Commission has raised rates up to 46 percent to help finance the state's multibillion-dollar power-buying. LOAD-DATE: April 19, 2001 Power bloc blasts seizure idea Producers say talk of bold action fuels crisis By Steve Geissinger SACRAMENTO BUREAU ?-- Oakland Tribune SACRAMENTO -- Outraged by a report in The Oakland Tribune that some lawmakers asked the governor to seize high-priced power contracts, a key industry group Tuesday warned the Davis administration and Legislature that such action would worsen the energy crisis. "We're publicly saying . . . this kind of rhetoric will have dire consequences on both the reliability and cost of power in California for years to come," said Jan Smutny-Jones, executive director of the Independent Energy Producers Association. "It is the kind of rhetoric one would expect in Indonesia or the Philippines, not the sixth largest economy on the planet," he said in a teleconference. At the same time, Davis administration officials confirmed that seizing contracts of allegedly profiteering brokers is the most likely last-ditch move if options continue to narrow, ahead of the previously discussed concepts of seizing California power plants owned by out-of-state firms or passing a windfall profits tax. Davis spokesman Steve Maviglio pointed out the governor already seized power contracts on which California's investor-owned utilities were defaulting in early February. The state, trying to buy its way out of the energy crisis with no clear end in sight, lost a substantial measure of control over electricity prices and supplies to the courts with the recent bankruptcy filing by the Pacific Gas and Electric Co. Gov. Gray Davis, a Democrat, employed hard-sell tactics Tuesday in an effort to convince reluctant Democrats that their failure to embrace his plan to financially rescue teetering Southern California Edison could plunge that utility into bankruptcy, as well. While most Republicans are flatly opposed to the plan as misguided, Democrats, who hold a majority in the Legislature, worry it's a public bailout of an investor-owned utility and would hand the state control over only Edison's south-state piece of the strategic high-voltage transmission grid in California. Soaring wholesale power costs have financially shattered utilities, forcing the state into runaway, multibillion-dollar spending that helps keep the lights on but threatens the state budget. The manager of the state's power grid has accused generators and marketers of overcharging Californians more than $6 billion in recent months. Assembly Speaker Robert Hertzberg, D-Van Nuys, said Monday that members of both legislative houses were interested in seizure of California power plants' contracts with brokers, who sell to customers within or outside the state. Sen. Don Perata, D-Oakland, an outspoken critic of the Davis administration's handling of the crisis, said some lawmakers had asked the governor to use emergency or eminent domain powers to seize the overpriced contracts and were awaiting Davis' answer this week. Supporters of the move said seizure would allow the state to control where the power is sold and decrease price markups by eliminating the middleman. But myriad questions remain unanswered, including regulatory and interstate commerce issues as well as any state reimbursement of the brokers. Any move to seize power contracts would be overturned by the courts, said Gary Ackerman, executive director of the Western Power Trading Forum. "Instead of trying to do what's legally within their reach, they go to extreme measures that are on their very face unlawful and unconstitutional," Ackerman said. Moreover, industry officials said, seizure would not only chill industry investment in California's power system and lead to higher power costs but would be ironic since California has shunned lower-cost, long-term contracts, industry officials said. "It would create a very unstable political, regulatory environment," Smutny-Jones said. "It would have extremely adverse consequences for California in the long term." Even so, the talk has worried the industry. Smutny-Jones said his clients are "very, very troubled by this sudden turn in rhetoric." "I assume when senior members of the Legislature make pronouncements about potentially seizing contracts, it's designed to get our attention and we obviously take those things seriously," he said. The Independent Energy Producers group is "in the process" of contacting the Davis administration and lawmakers, said Smutny-Jones. "You'll hear more about this." Copyright 2001 Copley News Service Copley News Service April 19, 2001, Thursday SECTION: State and regional LENGTH: 780 words HEADLINE: Windfall-profits tax gets Davis' backing BYLINE: Bill Ainsworth DATELINE: SACRAMENTO BODY: ??Federal regulators' failure to stop what they described as anti-competitive practices in the natural-gas industry added $750 million to Southern California Edison's cost of electricity, a consultant estimated yesterday. ??The consultant, Paul Carpenter of the Brattle Group, spoke to an Assembly subcommittee investigating why California pays the highest natural-gas prices in the nation. Natural gas is a critical part of the electricity crisis because most of the state's generating plants run on natural gas. ??Natural-gas prices have soared throughout the nation, but the bench mark price paid at California's border has been double that paid at other bench mark locations throughout the nation for months, according to figures released by the Assembly Subcommittee on Energy Oversight. ??Next week, Carpenter plans to testify at hearings in Washington, D.C., on behalf of Southern California Edison and the California Public Utilities Commission, which are asking federal regulators to intervene. ??The giant utility and the state regulatory body contend that a sweetheart deal between El Paso Natural Gas and El Paso Merchant Energy gave the sister companies enough market power to artificially raise the price of natural gas that flows into Southern California from Texas. ??El Paso owns the major pipeline bringing natural gas from fields in New Mexico and Texas to Southern California. El Paso Merchant Energy is an unregulated sister company. ??Carpenter called the prices paid in Southern California ''simply unprecedented'' in the United States. He estimated that the sister companies manipulated the market enough to add $2.60 to the price of a million British thermal units of gas. ??In addition, he said, El Paso Merchant Energy owns part of 20 smaller power plants, ''qualifying facilities'' that get paid based on the price of natural gas in California. The higher natural-gas prices increase the company's revenues, Carpenter said. ??El Paso company officials are expected to testify in front of the Assembly subcommittee today, but in proceedings before the federal regulators they have denied any sweetheart deal. ??In a report they commissioned, the company blamed the higher natural-gas prices in Southern California on increased demand and constraints on pipeline capacity. ??Gov. Gray Davis, meanwhile, gave his strongest endorsement yet to a windfall-profits tax on generators as a Senate committee chaired by Joseph Dunn, D-Laguna Niguel, began a series of hearings to probe possible price gouging by generators. ??''I believe the Legislature would be well within its prerogative to insist that generators receive an appropriate reduction, whether it's 20 percent or any other number the Legislature hit upon,'' Davis said. ??Senate Democrats, Davis said, will form a special committee to help work on his plan for the state purchase of the transmission system of Southern California Edison for $2.76 billion, in exchange for state aid in paying off the utilities' debt. ??The governor said he told Senate Democrats, a number of whom are skeptical of the plan, that Edison's parent firm has agreed to back a $3 billion upgrade of the neighborhood distribution system retained by Edison and to return a $400 million tax refund to the utility. ??At the natural-gas hearing yesterday, state officials said that after El Paso Merchant Energy bought a significant part of the pipeline capacity from its sister company, it withheld natural gas to drive prices up. ??''Marketers have gamed the system and figured out how to hoard capacity and undermine competition,'' said Harvey Morris, an attorney for the California Public Utilities Commission. ??State regulators want the Federal Energy Regulatory Commission, which regulates natural gas, to open the market to more competitors. ??But the commission has repeatedly rejected similar complaints in the past. On March 28, FERC ruled that the affiliates did not arrange a sweetheart deal. ??''The fact that El Paso Merchant controls a large volume of capacity does not, in and of itself, render the El Paso contracts unjust, unreasonable or unduly discriminatory,'' FERC ruled. ??In other cases involving natural gas, federal regulators acknowledged that certain contract provisions allowed anti-competitive behavior, but they approved those contracts anyway. ??Lawmakers said they were puzzled by the federal regulators' lack of action. ??''It baffles me that we've found the problem anti-competitive behavior and market gaming, but there's no cure because federal regulators won't take action,'' said Assemblyman Juan Vargas, D-San Diego. Staff writer Ed Mendel contributed to this report. LOAD-DATE: April 19, 2001 ??????????????????????????????8 of 63 DOCUMENTS ??????????????????????Copyright 2001 / Los Angeles Times ??????????????????????????????Los Angeles Times ????????????????????April 19, 2001, Thursday, Home Edition SECTION: Part A; Part 1; Page 3; Metro Desk LENGTH: 772 words HEADLINE: CAPITOL JOURNAL; CALIFORNIA AND THE WEST; Price Caps Don't Fit in Cheney's Head for Figures BYLINE: GEORGE SKELTON DATELINE: SACRAMENTO BODY: ??Want price caps on wholesale electricity to staunch the bleeding of billions from California? Not going to happen, Vice President Dick Cheney insists. Don't waste your energy thinking about it. ??"Frankly, California is looked on by many folks as a classic example of the kinds of problems that arise when you do use price caps," Cheney said in a telephone interview Wednesday. ??The vice president was referring to another type of price cap--the infamous state cap on consumer rates that has left the private utilities billions short of enough revenue to pay their gouging wholesalers. What political leaders in California and the Northwest are pleading for from the Federal Energy Regulatory Commission is a regional cap on wholesale prices. ??Early last year, a megawatt-hour was selling wholesale in California for $ 30. By year's end, it had risen to an average $ 300, according to state officials. At peak, prices have soared to $ 1,500. Meanwhile, demand increased last year by less than 4%. In fact, demand last month was 9% less than in March 2000. ??This is the sorry news for ratepayers/ taxpayers: Californians paid $ 7.4 billion for electricity in 1999. This year, the tab--without price caps--is projected at $ 70 billion. Gov. Gray Davis disclosed Tuesday that his administration has been shelling out $ 73 million a day to buy electricity for the pauper utilities. ??The profits of power producers--many of them Texans and Bush backers--have risen 400%-500%-600%. ??* ??But none of this budges the Bush administration. ??Price caps, Cheney declares, may provide "short-term political relief for the politicians. But they don't do anything to deal with the basic fundamental problem." That problem is supply, he says; price caps discourage investment in new power plants and encourage consumption. ??Counters Garry South, Davis' political strategist: "The notion by free market zanies that you have to let profits rise 500%-600% is ludicrous. Reasonable profits can be made without bankrupting the system. They're just trying to protect the profits of their friends in the energy business." ??In truth, California is building power plants as fast as it can. But not enough new megawatts apparently will be online by summer to prevent blackouts--and the bleeding of billions more into the pockets of out-of-state profiteers. ??How about a temporary price cap? ??"Six months? Six years?" Cheney replies. "Once politicians can no longer resist the temptation to go with price caps, they usually are unable to ever muster the courage to end them . . . ??"I don't see that as a possibility . . . Any package you can wrap it in, any fancy rhetoric you can prop it up with, it does not solve the problem." ??* ??The White House clearly understands it has a problem in California--a political problem. A problem with a Democratic-dominated state that voted overwhelmingly for Al Gore. And now a problem with that mythical headline--Bush to California: Drop Dead--which seems to be getting bigger each day. ??There have been several recent California: Drop Dead stories. One was in Sunday's New York Times--"Bush Devoting Scanty Attention to California." Tuesday, the Sacramento Bee reported that when Cheney met with Northwest members of Congress to discuss West Coast energy, he barred Californians from the room. ??Cheney flatly denies it. ??But Sen. Dianne Feinstein (D-Calif.) says she has had trouble making contact with the Bush White House. She has sent two letters to President Bush asking for a meeting on energy. The first time, she got back a form letter with her name misspelled. On the second try, she got a group meeting with Cheney. ??"It was very disappointing," she says. "He spoke about letting the free market work and drilling in Alaska . That's not going to help California in the short-term. We need price caps until we're able to fix this very broken market. . . ??"There seems no interest in really wanting to understand the California situation." ??I asked Cheney whether he sensed an anti-California bias across the country? "No more than there's an anti-Texas bias," he replied. "I wouldn't get paranoid about it. ??"The fact is, California is one of the leading states in the nation. Often a trendsetter. . . . Well, we hope not to emulate your energy policy. Hopefully, we'll learn from that." ??His message to California: "There's no reason not to be optimistic. The energy crunch obviously is a significant problem. . . . But it too will pass." ??While learning from California, the Bush White House also might take a refresher course in the free market Hoover administration. LOAD-DATE: April 19, 2001 ??????????????????????????????9 of 63 DOCUMENTS ??????????????????????Copyright 2001 / Los Angeles Times ??????????????????????????????Los Angeles Times ????????????????????April 19, 2001, Thursday, Home Edition SECTION: Part A; Part 1; Page 3; Metro Desk LENGTH: 1373 words HEADLINE: CALIFORNIA AND THE WEST; DAVIS BACKS SILICON VALLEY POWER PROJECT; ENERGY: GOVERNOR URGES QUICK APPROVAL OF SAN JOSE PLANT DESPITE OPPOSITION BY CITY AND A POWERFUL FIRM. BYLINE: JENIFER WARREN and TERENCE MONMANEY, TIMES STAFF WRITERS DATELINE: SACRAMENTO BODY: ??Attempting to show that no region in California is safe from sacrifice, Gov. Gray Davis on Wednesday called for quick state approval of a controversial power plant proposed for the Silicon Valley. ??The governor's action locks him in combat with the San Jose City Council, which has unanimously rejected the plant, and Cisco Systems, the computer networking giant that wants to build its worldwide headquarters on adjacent land. ??In praising the proposed plant as a model of low-polluting efficiency, Davis said all regions of California must share the pain as the state expands its power supply--a key step toward ending blackouts and reducing sky-high electricity prices. ??If approved, the plant would be the 14th licensed by the California Energy Commission since Davis took office. The 13th--a 510-megawatt plant near San Diego--was approved unanimously by the commission Wednesday with little controversy. ??Rushing to expand the state's overtaxed energy supply, the governor has recently cut in half the approval times for the licensing of some plants. Six are under construction, according to Davis, and three are scheduled to begin operation this summer. A fourth--the AES Corp. generator in Huntington Beach that is due to be restarted --could add more megawatts to the supply this summer. ??V. John White, an energy consultant in Sacramento, said the governor's newly active role as an advocate for power plants was a necessary step given the urgency of the supply shortage. ??"It's very rare, and I wouldn't want him to short-circuit the commission's review process," White said. "But I think he's trying to reassure folks we're doing everything we can and not just sitting around in our hot tubs." ??Davis urged the Energy Commission--a five-member panel dominated by his appointees--to stop talking about the project and grant it a license. If the commission does so, it will mark only the third time the panel has usurped a local government's authority over zoning. ??"We are all in this together," Davis said, flanked by a forest of electric transformers near the Capitol. "We are one state, and we all have to make the sacrifices necessary to make up for the mistakes of the last 12 years, when no major power plants were built." ??The governor said the plant's developers, Calpine Corp. and Bechtel Enterprises Holdings Inc., have made "numerous concessions" to San Jose officials, including an agreement to sell power exclusively in the region. ??He added that the $ 300-million plant--expected to supply about 450,000 homes--will be equipped with state-of-the-art systems that make it "one of the cleanest plants to go up in the nation." ??The commission's staff has recommended licensing the project, and some analysts said the governor's intervention--said to be unprecedented--should fuel momentum for approval. ??Commissioner Robert Laurie--one of two members who held evidentiary hearings on the project and is preparing a recommendation for the full commission--would not comment on the plant's prospects. But Laurie, an appointee of former Gov. Pete Wilson, insisted that the project would receive an impartial review. ??"I know the importance of independent decision-making," he said. ??San Jose officials say the Calpine project conflicts with the aesthetics of its site in a bucolic valley 15 miles south of downtown. On Wednesday, Mayor Ron Gonzales urged the Energy Commission to "give serious attention" to the city's concerns about the plant's potential impact on residents and the environment. ??"As the project has been designed and proposed to operate . . . it would present an unfair burden to our community," the mayor said. ??A spokeswoman for the Calpine/Bechtel partnership disagreed and characterized the plant as key to restoring energy stability in the Silicon Valley, a region heavily dependent on imported power. ??"This is the only project in the pipeline that can help Silicon Valley out of its predicament in the near future," said the spokeswoman, Lisa Poelle. ??She expressed hope that the governor's comments, which cap numerous meetings between the partnership staff and Davis aides, would encourage San Jose to soften its stance on the project. ??The 600-megawatt plant is proposed for a swath of open space currently leased to a rancher and occupied by grazing cattle. A preliminary ruling by Laurie and the other commissioner scrutinizing the project is expected by June. The full commission would take a final vote about a month later, and if a license were granted, the plant would begin operations sometime in 2003. ??From the beginning, the plant has been dogged by opposition, and the Energy Commission has held more than 20 hearings--an unusually large number--on its fate. ??On Wednesday, a spokesman for its heftiest foe, San Jose-based Cisco, said the company still has serious concerns about "health and safety issues." ??Cisco has strongly opposed the plant because the company wants to build a $ 1.3-billion headquarters for 20,000 employees nearby. In the past, Cisco officials have threatened to relocate to another state if the power plant is built. ??Company spokesman Steve Langdon said the firm's plans to build an industrial campus were not scuttled by the announcement Monday that it is cutting 8,500 workers from its payroll because of slumping sales of its Internet networking equipment. ??But he suggested that the plans were flexible enough to be scaled down for a smaller work force and that the campus may not house the company's headquarters. ??"It doesn't all get built at once," he said. "We will build and occupy the site over time in phases as needed." ??Another leading opponent of the power plant argued Wednesday that the Energy Commission lacks authority to override San Jose officials and license the project. The Santa Teresa Citizen Action Group, launched by homeowners near the site, says the commission may only take such a step if a better plant site hasn't been identified. ??The group charges that the commission is aware of other available sites, including one in an industrial part of the East Bay area, and lists eight other reasons the plant should not be built, among them the noise and emissions it would produce. ??The local Sierra Club chapter, however, has endorsed the plant largely on grounds that it would run cleaner than existing plants in the area. By offsetting emissions from those older plants, the new project would actually reduce air pollution, said Kurt Newick of the Sierra Club's Loma Prieta chapter. ??On another front, Davis continued to lobby legislators for support for his plan to rescue Southern California Edison from bankruptcy through purchase of the utility's transmission grid. ??Emerging from lunch with state Senate Democrats who are openly wary of the deal, Davis said he'd made progress to "bridge some of the gaps." It was the governor's third meeting in two days with lawmakers of both parties. ??Some of the toughest skeptics are members of his own party in the Senate. Many fear that the deal Davis struck with Edison will hand the utility too much at the expense of ratepayers, and some say bankruptcy might be a better option for the state's second-largest private utility. Pacific Gas & Electric Co. filed for bankruptcy April 6. ??To assuage concerns, Davis proposed that a special Senate committee be named to meet with his energy advisors as the administration and Edison finalize details of the deal before it goes to the Legislature for approval. ??Senate leader John Burton (D-San Francisco), who has called the Edison agreement "problematic," said he may appoint such a committee but continued to suggest that an Edison bankruptcy might be acceptable. ??"Many of the Fortune 100 companies have gone into Chapter 11 bankruptcy and it ain't like the end of the world for anybody," Burton said. ??* ??Times staff writer Carl Ingram contributed to this story. ??Powering Up California ??Power plant projects recently licensed by the California Energy Commission and when they are expected to go online: ??* ??* Two of four turbines are expected to go online in December 2001; the other two are expected to go online in March 2002. ??Source: California Energy Commission GRAPHIC: PHOTO: (2 photos) Gov. Gray Davis urges California Energy Commission to approve Metcalf Energy Center, a 600-megawatt power plant planned for San Jose. Demonstrators greet Davis on his way to news conference in Sacramento. PHOTOGRAPHER: Associated Press PHOTO: (2 photos) Gov. Gray Davis urges California Energy Commission to approve Metcalf Energy Center, a 600-megawatt power plant planned for San Jose. Demonstrators greet Davis on his way to news conference in Sacramento. ?PHOTOGRAPHER: ROBERT DURELL / Los Angeles Times GRAPHIC: Powering Up California, Los Angeles Times LOAD-DATE: April 19, 2001 ??????????????????????????????10 of 63 DOCUMENTS ??????????????Copyright 2001 Knight Ridder/Tribune News Service ???????????????????????Knight Ridder/Tribune News Service ??????????????????????????The Orange County Register ???????????????????????????April 19, 2001, Thursday SECTION: STATE AND REGIONAL NEWS KR-ACC-NO: ?K7970 LENGTH: 275 words HEADLINE: Ex-energy chief leery of state buying power lines BYLINE: By Kate Berry BODY: ??ONTARIO, Calif. _ Former Energy Secretary Bill Richardson said Wednesday that he is "uncomfortable" with the state's $2.76 billion purchase of the transmission lines of Southern California Edison because it would derail future plans to fully deregulate the state's electricity market. ??"I'm leery of a state purchase," Richardson said at an economic conference in Ontario, adding that "the jury is still out" on a plan by Gov. Gray Davis to keep Edison out of bankruptcy. ??He called for a rescue of Pacific Gas and Electric, the San Francisco utility that filed for bankruptcy two weeks ago. ??In a half-hour speech, Richardson admonished the Bush administration for failing to take a more active role in the California crisis. He backs a one-year regional price cap to calm the volatile wholesale market. ??"In the Clinton administration, California was gold," he said. "With the new administration, it's another ballgame." ??Richardson also pushed for a bipartisan energy bill with Democratic themes including energy-efficiency standards, conservation and environmental regulations. ??"We need an energy policy for this country that embraces both parties' proposals," he said. ??Energy Secretary Spencer Abraham has sparred with Richardson by trying to rescind new energy-efficiency standards for air conditioners that were approved in the last 30 days of the Clinton administration. ??ARCHIVE PHOTOS available from NewsCom-PressLink: ??Richardson. ??KRT CALIFORNIA is a premium service of Knight Ridder/Tribune ??© 2001, The Orange County Register (Santa Ana, Calif.). ??Visit the Register on the World Wide Web at http://www.ocregister.com/ JOURNAL-CODE: OC LOAD-DATE: April 19, 2001 ??????????????????????????????12 of 63 DOCUMENTS ?????????????????Copyright 2001 The Chronicle Publishing Co. ?????????????????????????The San Francisco Chronicle ???????????????????APRIL 19, 2001, THURSDAY, FINAL EDITION SECTION: NEWS; Pg. A18 LENGTH: 585 words HEADLINE: Alameda public utility rents four backup generators; Extra electricity will be used during summer rolling blackouts SOURCE: Chronicle Staff Writer BYLINE: Matthew Yi DATELINE: Alameda BODY: Alameda's public utility announced yesterday that it is leasing four portable diesel electrical generators to avoid the one woe of the state's energy crisis they haven't been able to duck so far -- rolling blackouts. ???The utility's move to provide a backup source of electricity for its customers is part of a trend among city-owned utilities to gear up for expected power shortages during the dog days of summer. ???Healdsburg, Santa Clara and Palo Alto -- all with their own electric grids -- are also initiating their own energy backup plans. ???The generators would kick in only during severe energy shortages when rolling blackouts are on the horizon. ???In Alameda, four generators -- each the size of a tractor trailer -- arrived last week and are ready to be fired up, Alameda Mayor Ralph Appezzato said yesterday. ???"We're going to be the masters of our destiny," he said. ???Alameda Power and Telecom is one of about 30 municipal utilities in California that opted not to deregulate with the rest of the state four years ago. Consequently, its customers' power rates are expected to be stable this year while Pacific Gas and Electric Co. customers face huge rate increases. ???But municipal utilities such as Alameda's are still part of the statewide power grid, which is managed by the Independent System Operator, and are subject to rolling blackouts like everybody else when the state's energy reserves dip below 1.5 percent. ???Each of Alameda's four diesel generators will produce 1.5 megawatts of power. Each megawatt can light up 1,000 homes, utility officials say. ???The units, leased at a total cost of $68,000 a month through the end of the year, are parked at Alameda Point. ???Their cost will be paid through the municipal utility's reserve fund and customers' power bills won't be affected, said Junona Jonas, the utility's general manager. ???"I think in the long run, we'll see more supply in the state, but until that happens, there will be communities that'll have to take these short-term drastic measures," Jonas said. ???The utility's spokesman, Matthew McCabe, said the diesel exhaust from the generators won't be an environmental factor. ???"Our environmental record is extremely important to us," McCabe said. "The diesel generators are only for emergency backup. . . . Besides, these things are clean -- it's not like standing next to a diesel bus." ???The city is also getting help from the U.S. Maritime Administration, which operates more than a dozen ships at the former Navy station in Alameda. When the juice is low, those ships will unplug from the port and use onboard generators, Jonas said. ???In the North Bay, Healdsburg officials are waiting for the arrival of two diesel generators. Combined, they are expected to produce 3.5 megawatts of power, which can account for about 20 percent of the city's expected summer peak load, said Bill Duarte, city utility director. ???"We're taking matters into our own hands," he said. ???Farther south, both Santa Clara and Palo Alto are considering leasing portable generators, officials said. ???Bill Reichmann, senior electric utility engineer at Santa Clara's Silicon Valley Power, said the utility is planning to lease eight generators, operating them in the southeastern end of town near the San Jose International Airport. ???Palo Alto's municipal utility also has recommended that the City Council approve renting two generators starting next month, said spokeswoman Rima Johnson.E-mail Matthew Yi at myi@sfchronicle.com. LOAD-DATE: April 19, 2001 ??????????????????????????????13 of 63 DOCUMENTS ?????????????????Copyright 2001 The Chronicle Publishing Co. ?????????????????????????The San Francisco Chronicle ???????????????????APRIL 19, 2001, THURSDAY, FINAL EDITION SECTION: NEWS; Pg. A3 LENGTH: 845 words HEADLINE: Davis' gouging claims disputed; Officials say no link between PG&E bankruptcy, high prices SOURCE: Chronicle Staff Writer BYLINE: David Lazarus BODY: Officials on the front lines of California's energy mess yesterday challenged Gov. Gray Davis' assertion that the state is being gouged by power companies because of PG&E's bankruptcy filing. ???Such dissent from the governor's own subordinates could make it harder for Davis to gain support for his energy measures in the state Legislature. ???Despite Davis' latest claims, the Department of Water Resources, which is spending about $70 million a day buying power, said there is no evidence linking recent price increases to Pacific Gas and Electric Co. filing for bankruptcy protection on April 6. ???"It is a seller's market," said Viju Patel, executive manager of the Department of Water Resources' power systems department. "The power companies do not need an excuse to raise prices." ???Critics say Davis' penchant for secrecy on energy issues has come back to haunt him at a time when he needs all the allies he can find. ???"People aren't taking his words at face value," said Michael Shames, executive director of the Utility Consumers' Action Network in San Diego. ???Republican lawmakers -- and even some Democrats -- have challenged a number of the governor's initiatives, including a multibillion-dollar bailout scheme for Southern California Edison. ???Nevertheless, Davis reiterated his belief yesterday that recent electricity price increases are "an aberration driven by the bankruptcy of PG&E." ???He said California's spending on power jumped 40 percent in the week following PG&E's bankruptcy filing because generators say they face a greater risk of not being paid. ???"Nothing else in the equation has changed," said Steve Maviglio, a spokesman for the governor. "Everything is the same except the bankruptcy." ???However, power companies were quick to challenge this assertion. They insisted that PG&E's bankruptcy actually was seen as a positive development by those in the energy business. ???"If anything, PG&E provides some solace for traders because the bankruptcy provides an organized mechanism for recovery of payments," said Gary Ackerman, executive director of the Western Power Trading Forum, a Menlo Park energy-industry association. ???On the other hand, he acknowledged that power companies are becoming increasingly wary of the state of California's creditworthiness as an energy buyer. ???The Department of Water Resources already has spent nearly $5 billion buying electricity and has yet to recoup a dime from ratepayers. State regulators are still trying to come up with a way to apportion the limited revenues from power rates among the various parties in California's energy picture. ???Rating agency Fitch Inc. said yesterday it may cut the state's credit rating because of questions surrounding recovery of energy costs. ???"People are keeping an eye on things," Ackerman said. "They're watching how California finances things." ???If a premium on electricity sales to the state exists, he said it probably has been in place since the beginning of the year, well before PG&E's current woes. ???UCAN's Shames agreed. He said power companies added a "risk premium" to their California power sales late last year when it looked like the state's energy troubles were worsening. ???"PG&E's bankruptcy may have increased the uncertainty," Shames said, "but we've been paying a risk premium for months now." ???Richard Wheatley, a spokesman for Reliant Energy in Houston, insisted that his company's traders are not using questions about PG&E's or California's financial solvency as a fresh excuse for higher prices. ???"I haven't seen any evidence of it," he said. ???Mark Palmer, a spokesman for Houston's Enron Corp., laid blame for recent price increases on low rainfall throughout the West, which has cut output at hydroelectric facilities, as well as on California's chronic power shortage. ???"It's not that there's a premium on prices," he said. "It's just supply and demand." ???That said, Palmer acknowledged that California's firm insistance on blackouts being avoided at all costs leaves the state vulnerable to virtually any price generators choose to demand. ???"This means prices will be used to allocate a scarce resource," he said. "There's no other way it could work." ???Bottom line for consumers: It's going to be a long, hot summer,
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