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Sac Bee, Thurs, 7/5: Many rural towns to escape blackouts, utility maps sho= w Sac Bee, Tues, 7/3: Details emerge in power contracts SD Union, Thurs, 7/5: New FERC member seems attuned to state's woes SD Union, Wed, 7/4: Electricity price-cap tests spark allegations SD Union, Wed, 7/4: Renewable energy fades from picture in rush for solutio= n SD Union, Wed, 7/4: SDG&E spreads word of looming blackouts SD Union, Wed, 7/4: Two more energy whistleblowers slated to come forward SD Union, Wed, 7/4: Disabled PG&E employees ask state for help in getting= =20 disability checks LA Times, Thurs, 7/5: Powerful Judge Illuminates Energy Practices Law:=20 'Folksy' jurist, 72, stuns utility executives and lawyers alike with his=20 courtroom incisiveness. SF Chron, Thurs, 7/5: Davis lauds California generator=20 Vote of confidence at Calpine's festival=20 SF Chron, Wed, 7/4: Activists stage anti-corporate march to power plant=20 SF Chron, Wed, 7/4: Davis asks PUC to let utilities cut voltage=20 1% savings on energy consumption predicted SF Chron, Wed, 7/4: Federal price limits backfire=20 Some generators withhold power rather than abide by rate caps SF Chron, Wed, 7/4: Two more energy whistleblowers slated to come forward Mercury News, Wed, 7/4: Davis seeking cheaper contracts=20 ---------------------------------------------------------------------------= --- ------------------------------------------------------------- Many rural towns to escape blackouts, utility maps show=20 By Carrie Peyton Bee Staff Writer (Published July 5, 2001)=20 Huge stretches of Northern California, including many rural foothill and=20 valley communities, won't face rolling blackouts this summer, spared by a= =20 combination of geography and circuitry.=20 Placerville and Loomis, Esparto and Isleton are among the many towns that= =20 will be largely or entirely bypassed by deliberate blackouts, according to= =20 new Pacific Gas and Electric Co. outage maps.=20 Such communities are served by so few circuits that each one has been=20 exempted from outages because a critical facility, such as a fire station o= r=20 a water treatment plant, lies along the circuit somewhere, PG&E spokesman= =20 John Nelson said.=20 Both PG&E and the Sacramento Municipal Utility District have begun shedding= =20 more light on their strategies for rotating outages in the wake of a=20 governor's order requiring utilities to let people know where blackouts wil= l=20 strike next.=20 For PG&E, that has meant quickly posting and then updating blackout maps on= =20 its Web site. For SMUD it has meant publicly detailing, for the first time,= =20 the boundaries of 78 separate rotating outage areas and listing by number= =20 which areas could be tapped next.=20 "We were contemplating putting the map on the Web before the governor's=20 order, but the timing coincided very well," said John DiStasio, SMUD's=20 assistant general manager for customer service.=20 SMUD updated its Web site, www.smud.org, on June 22 so that now people can= =20 click on "rotating outages" and then "next likely locations and map" to see= =20 the shape of outages to come.=20 The map replaces less-precise neighborhood names, which is all SMUD supplie= d=20 until Gov. Gray Davis ordered utilities to give the public "common=20 geographical boundaries, grid or block numbers, maps or similar identifying= =20 information" about where outages will strike.=20 With six days of rolling blackouts already behind California this year, and= =20 forecasts that more probably lie ahead, Davis has told utilities and the=20 state Independent System Operator to give better notice of when and where= =20 blackouts might occur.=20 Grid operators and utilities have cautioned that Davis' program of two-day,= =20 one-day and one-hour warnings could produce many false alarms because power= =20 supplies often come through at the last minute. There is also some wariness= =20 about outage maps, which SMUD and PG&E warn could change at any time.=20 But the maps do provide insight into how each utility will roll blackouts= =20 through its territory. PG&E's maps, on the Web at www.pge.com under "find= =20 your outage block" and then "rotating outage block map," have recently been= =20 updated to be searchable by zip code.=20 They show that the vast majority of El Dorado and Placer counties and much = of=20 Yolo County are in PG&E's "block 50," a designation for a circuit that won'= t=20 be in line for rolling outages because someone along it is crucial to healt= h=20 or safety.=20 Police stations, fire stations, hospitals and airports are all deemed=20 essential customers that should keep functioning even when the state power= =20 grid is so overloaded that blackouts are needed to keep it from collapsing.= =20 In densely populated areas, circuits tend to be compact, leaving lots of=20 neighborhoods eligible for rolling blackouts, Nelson said.=20 But "in rural areas, particularly remote rural areas, a circuit can go on f= or=20 miles and miles," Nelson said. "You can have multiple communities on one=20 circuit =01( (and) virtually every community has either a police station or= a=20 fire station or a hospital or a drinking water facility."=20 That has been good news for communities like Placerville, which scrambled f= or=20 traffic control earlier this year when a rolling outage took out the signal= =20 lights on Highway 50, which bisects the town of 10,000.=20 "That has been our biggest concern because of the amount of traffic that go= es=20 through there," said City Manager John Driscoll. Placerville will be spared= =20 future outages because regulators now are protecting more hospitals from=20 blackouts, and much of the rest of the town shares circuits with hospitals.= =20 "We didn't ask to be exempted out, but I feel very happy that we are. From = a=20 selfish standpoint, it feels very nice," Driscoll said.=20 The Bee's Carrie Peyton can be reached at (916) 321-1086 or=20 cpeyton@sacbee.com.=20 =20 Details emerge in power contracts By Carrie Peyton and Chris Bowman Bee Staff Writers=20 (Published July 3, 2001) California's power bills for the next decade probably will exceed the=20 forecasts of Gov. Gray Davis, the State Controller's Office said Monday as = it=20 released unedited versions of long-term contracts in a new jab at the=20 governor.=20 The electricity contracts, which Davis' office sought in court to keep=20 secret, offer a glimpse into the rapid, high-stakes deals struck early in t= he=20 state's power crisis and illustrate the way deregulation's unraveling could= =20 haunt California for years to come.=20 Some show that builders of new power plants could recoup the entire cost of= =20 those plants in four years or less. Some show lucrative swaps for power,=20 including one arranged the same day California was rocked by rolling=20 blackouts.=20 More than two dozen additional administrative contracts detail the price=20 California is paying its consultants to seek a way out of the power mess,= =20 from tens of thousands for Davis' aides down to $51 an hour for copying and= =20 phone answering.=20 The governor's office defended its estimates of the state's future power=20 bill.=20 The 41 long-term contracts, 27 consulting contracts, five short-term deals= =20 and stacks of receipts and invoices released Monday by state Controller=20 Kathleen Connell may just be the start.=20 Her office hopes to provide details about how much California has already= =20 paid individual power generators in the volatile short-term, or "spot,"=20 market.=20 The deals include so many intricate pricing formulas that Connell said she= =20 couldn't immediately predict exactly how high California's hourly power cos= ts=20 would go.=20 Walter Barnes, chief deputy controller of finance, said the contracts=20 probably would be "well in excess" of the $69 a megawatt-hour that Davis on= ce=20 said would be California's average cost for contract power for the next=20 decade.=20 The contracts' prices range from $55 to $249 a megawatt-hour, and most are= =20 more than the $69, Connell said.=20 The state Department of Water Resources, the state's power buying arm, late= r=20 revised the $69 forecast to $70 a megawatt-hour through the end of 2010, wi= th=20 the higher priced power coming first.=20 If anything, those figures could decline because natural gas, the fuel for= =20 most new power plants, is getting cheaper, DWR spokesman Oscar Hidalgo said= ,=20 adding that his office sticks with its forecasts.=20 "We're on pretty solid ground here," he said.=20 As the statewide elected official who pays California's bills, Connell=20 repeatedly has criticized the governor for his electricity spending, saying= =20 that she never believed the contracts should be kept secret.=20 But Davis' office blasted her for giving out details that power generators= =20 and traders could use to learn the state's negotiating positions and buying= =20 practices and said the information could boost wholesale prices within days= .=20 "When they open their electric bill next time, every Californian can thank= =20 Kathleen Connell for higher electricity costs," Davis spokesman Steve=20 Maviglio said.=20 The long-term contracts were first released June 15 by the water resources= =20 department with power plant names, performance data, delivery points and=20 other details blocked out under heavy black strokes.=20 Analysts said that was the sort of data they could have used to calculate h= ow=20 much more than the production costs the state was going to be paying for th= e=20 electricity purchased on behalf of three cash-strapped investor-owned=20 utilities.=20 As analysts began sizing up some of the specifics Monday, early reactions= =20 were wary.=20 "This just shows when the state comes in and takes over the utility system,= =20 we're just going to be in deep from all sorts of expenses and inefficiencie= s=20 that we were trying to get away from" with deregulation, said Arthur=20 O'Donnell, who edits a trade newsletter, California Energy Markets.=20 Bill Marcus, a power consultant who had analyzed the edited contracts for a= =20 consumer group, quickly read through the unedited versions muttering things= =20 such as "offensive" and "they got absolutely ripped here."=20 In one swap that was negotiated on a day of rolling blackouts in March, the= =20 state agreed to send Powerex, the trading arm of British Columbia's=20 government utility, 2* times more electricity in the spring than Powerex=20 would return in the summer.=20 Although seasonal swaps are common, the 2*-to-1 ratio was a sign of "panic"= =20 and inexperience on the state's part, he said.=20 The consultants who advise California on power deals were frenetic at the= =20 time, with one staffer at the Navigant consulting firm billing for hours=20 worked that were the equivalent of 9.7 hours a day for 34 consecutive days.= =20 The power purchase terms disclosed Monday confirm many energy analysts'=20 predictions that California consumers would be paying premium prices for=20 years to cover the costs of the new plants coming on line.=20 In several of the contracts, the state agreed to pay generators a 25 percen= t=20 to 30 percent annual return on their plant construction costs, which could= =20 pay off the entire plant in four years or less.=20 Before deregulation, utilities generally received 3 percent to 18 percent= =20 annual return on their capital investments over 30 years, said Marcus, a=20 veteran energy analyst whose firm, JBS Energy Inc. of West Sacramento,=20 represents ratepayer groups.=20 "We're all going to have to pay more for power plants over the next 10 or= =20 more years because the generators are looking to pay off their plants in ha= lf=20 the time," he said.=20 "Beyond blackouts and price spikes, this will be the long-term legacy of=20 deregulation," he said. "The private market needs a high rate of return on= =20 their investment."=20 Several contracts were drafted in the late winter and early spring when=20 California endured Stage 2 and Stage 3 energy alerts.=20 The unmasked terms in some of those agreements reflect the state's=20 desperation for megawatts amid fears of routine blackouts when temperatures= =20 and energy use began to rise in the summer.=20 For example, the state agreed in a March 29 contract to pay Calpine $232 a= =20 megawatt-hour to supply 300 megawatts nonstop from July 1 through Sept. 30.= =20 But a more recent Calpine contract calls for about $59 a megawatt-hour,=20 starting Oct. 1.=20 Time made all the difference, said Jim Macias, a Calpine senior vice=20 president. He said that last winter, Calpine couldn't guarantee that plants= =20 under construction in Sutter County and the East Bay would be on line by=20 summer. So the company bought the power on the spot market for the state,= =20 Macias said.=20 "Back in the winter, $232 was a good price for electricity this summer," he= =20 said.=20 Calpine officials said that they made no money on the sale and even knocked= =20 15 percent off their price to maintain good relations with the state power= =20 buyers.=20 The gesture more than paid off with the signing of the 10-year contract, sa= id=20 Kathleen Potter, Calpine spokeswoman.=20 "It was a great transaction for us," Potter said. "We appreciate the=20 business."=20 Proponents of "free-market" energy buying have said that in the long-run,= =20 competitive forces would result in more-efficient, less-costly power=20 generation.=20 But the contracts show that pressed for more electricity this summer and=20 fall, officials resorted to buying power from some of the least-efficient= =20 plants in the state, guaranteeing owners of these aging generators 10 more= =20 years of income.=20 The Bee's Carrie Peyton can be reached at (916) 321-1086 or=20 cpeyton@sacbee.com. New FERC member seems attuned to state's woes=20 Texan may become agency's next chief By Toby Eckert=20 COPLEY NEWS SERVICE=20 July 5, 2001=20 WASHINGTON -- During his first weeks at the Federal Energy Regulatory=20 Commission, Pat Wood has set a decidedly different tone in the agency's=20 strained relationship with California.=20 After meeting with Gov. Gray Davis last week, Wood -- who was recently=20 appointed to the commission by President Bush and is widely expected to be= =20 named chairman soon -- praised the state's efforts to come to grips with it= s=20 power problems. It was a stark contrast to the almost constant criticism fr= om=20 FERC Chairman Curtis Hebert.=20 "It certainly seems to me that both the political leadership and the=20 regulatory leadership of the state are committed to the kind of=20 infrastructure upgrades that are needed to really get supply and demand bac= k=20 into whack," Wood said, referring to power plants being built in California= .=20 The former Texas utility regulator also raised the possibility of closer=20 cooperation between FERC and state regulators, including a "joint effort" o= n=20 inspecting power plants. State officials have accused generators of idling= =20 plants to drive up electricity costs, a charge generators deny.=20 "If we're kind of co-regulators with the state, and in many regards we are,= =20 it's helpful to work off the same set of facts so you get to conclusions mu= ch=20 more expeditiously," Wood said, though he was quick to add that he has not= =20 seen any evidence of intentional withholding of supply.=20 State officials hope Wood's statements signal that FERC is poised to take a= =20 more aggressive role in helping the state. If elevated to chairman, Wood=20 would set FERC's agenda and shape its approach to dealing with California.= =20 The agency regulates wholesale electricity and natural gas markets, which= =20 have subjected the state to skyrocketing prices.=20 Wood "has brought a very good perspective to FERC," said Howard Gantman, a= =20 spokesman for Sen. Dianne Feinstein, D-Calif., a frequent critic of the=20 commission. "He seems very interested in getting to the root of the problem= =20 and finding solutions."=20 Throughout the crisis, the state's relationship with FERC has been poisonou= s.=20 Davis criticized the commission for being slow to rein in electricity price= s,=20 while Hebert faulted the state for crafting a bad deregulation law and=20 failing to build enough plants to keep up with demand.=20 Davis issued a guardedly conciliatory statement after his meeting in=20 Sacramento with Wood and Commissioner Nora Brownell, who is also new to FER= C.=20 "In a refreshing change from my past dealings over the past year with the= =20 agency, these commissioners offered a problem-solving approach in resolving= =20 California's energy challenge," Davis said. He added, "It appears that FERC= =20 may finally be poised to do its job controlling energy costs."=20 Threats criticized Despite the soothing words, there is no shortage of potential flash points= =20 between Davis and FERC.=20 Wood, who professes a "religious zeal about competition," raised concerns= =20 about a possible move by the California Public Utilities Commission to keep= =20 retail power customers from shopping around for alternative providers.=20 He also criticized threats that Davis and other California politicians have= =20 made to seize power plants and impose a windfall profits tax on power=20 sellers.=20 "I think the rhetoric's still pretty hot out there. If I were a generator= =20 looking at 50 states, one that's talking about a windfall profits tax and= =20 expropriation of property and all that is not a great climate," Wood said.= =20 For his part, Davis has questioned whether the recent price curbs imposed b= y=20 FERC in the West will be enough to tame soaring wholesale power costs that= =20 have bankrupted one utility, cost the state treasury billions of dollars an= d=20 raised consumers' power bills.=20 Davis has also made it clear that he expects hefty refunds to result from t= he=20 FERC-brokered talks between the state and power providers, which are in the= ir=20 second week.=20 "I will be vigilant in insisting that Californians get their money back,"= =20 Davis said.=20 California consumer activists are taking a wait-and-see attitude toward Woo= d,=20 saying they know little about him.=20 A major role "My impression from afar is he seems to be more moderate," said Harvey=20 Rosenfield, president of the Foundation for Taxpayer and Consumer Rights in= =20 Santa Monica.=20 Once considered a bureaucratic backwater, the five-member FERC has come to= =20 play a high-profile role in the California debacle and other disputes=20 involving the largely deregulated wholesale power markets.=20 The commission is charged with ensuring that "just and reasonable" prices= =20 prevail.=20 Bush is expected to make Wood the FERC chairman because Hebert is seen as t= oo=20 much of a lightning rod.=20 Before coming to Washington, Wood, who turned 39 yesterday, headed the Texa= s=20 Public Utility Commission. There he oversaw the state's move toward a=20 deregulated electricity market. Like Hebert, Wood is convinced that a free= =20 market will deliver cheaper power to consumers than a highly regulated one.= =20 "I just think customers fare better when they have more choices," Wood said= .=20 But consumer advocates and others who have worked with Wood in Texas say hi= s=20 zeal is tempered by a healthy dose of pragmatism.=20 "Bottom line, it's all about the customer. Y'all will hear me say that unti= l=20 you get sick of it," Wood said. "We want to make sure that the world we're= =20 moving to is better than the one we left."=20 Electricity price-cap tests spark allegations=20 Suppliers said to have held back; industry blames ISO By Craig D. Rose and Bill Ainsworth=20 UNION-TRIBUNE STAFF WRITERS=20 July 4, 2001=20 The first emergency tests of new electricity price controls have generated= =20 accusations that suppliers were withholding power and questions that the ca= ps=20 might need to be revised or scrapped.=20 And in a case of turnabout, a power industry spokesman yesterday said the= =20 Independent System Operator, which manages the state's electricity grid,=20 might be using the federal price caps to manipulate the electricity market.= =20 This time, however, the charge is that the ISO is gaming to push prices=20 lower.=20 At any rate, California survived its second consecutive day of power=20 emergencies without blackouts under price caps recently imposed by federal= =20 regulators, but not without some bumps along the way.=20 The main culprit was hot weather that baked Western states for two days,=20 forcing the ISO to issue Stage 1 and then Stage 2 alerts. Yesterday, the IS= O=20 warned that rolling blackouts might hit in the afternoon.=20 But as has happened often this year, the ISO bought power in the last minut= es=20 to avoid outages. The grid operator also credited conservation efforts with= =20 shaving from 2,000 to 4,000 megawatts of consumption. A megawatt can power= =20 about 750 homes.=20 "It was a lot hotter than expected and a lot more humid," said Kristina=20 Werst, spokeswoman for the ISO.=20 Today, state officials expect to avoid any blackouts because of the holiday= ,=20 which tends to decrease electricity demand, Werst said.=20 The price controls ordered last month by the Federal Energy Regulatory=20 Commission set up formulas for maximum prices during emergency and=20 nonemergency periods. The FERC said the complex system was intended to=20 balance the need for lower costs with its desire to promote a power market.= =20 But questions are growing about the effectiveness of the FERC price caps.= =20 A Department of Water Resources spokesman, which buys power for the state,= =20 said generators withheld between 660 and 1,500 megawatts of electricity=20 during a critical period earlier this week because of the price caps. That= =20 would be enough to cut electricity reserves from 7 percent to 5 percent and= =20 bump a Stage 1 alert to a Stage 2.=20 Sempra Energy Trading, a marketing unit of San Diego Gas & Electric Co.'s= =20 parent corporation, admitted that it ceased selling power to the state for= =20 what could have been a critical 30 minutes Monday.=20 A spokesman for the trading company said it halted sales for the half-hour= =20 because it was unsure about where the ISO would set maximum prices during t= he=20 first power emergency under the new caps.=20 When power emergencies are called under the FERC plan, a new price cap is s= et=20 based on the cost of operating the least efficient, most costly electric=20 generating plant. Because the identity of that plant is unknown beforehand,= =20 the selling price is set retrospectively by the ISO.=20 "It was unclear to the traders what the proxy price would be," said Doug=20 Kline, a Sempra spokesman, who emphasized that the company's trading unit= =20 resells power generated by other companies. "So it was unclear whether the= =20 ISO would come back later and say, 'You purchased power at $70 per=20 megawatt-hour but we're only going to pay you $60.'?"=20 For its part, the ISO said the impact of price controls on electricity=20 supplies during emergencies is still unclear. The controls this week kept= =20 emergency prices Monday from a little over $70 per megawatt-hour to a high = of=20 about $90. FERC's nonemergency price cap has been about $92 per=20 megawatt-hour.=20 Earlier this year, the average price per megawatt-hour was nearly $300.=20 Before the power crisis hit last year, the price was about $30.=20 The ISO said several factors other than the price controls might have=20 contributed to tight supplies this week, including plant shutdowns in other= =20 states and the regional heat wave.=20 But a spokeswoman for Nevada Power said the utility believed the price caps= ,=20 or confusion over their implementation, had contributed to a power shortfal= l=20 that led to blackouts Monday. The utility fell about 100 megawatts short of= =20 its need as temperatures in some of its service areas hit 122 degrees.=20 "Power is tight in the region," said Sonya Heagen of Nevada Power. "What=20 tipped it over (for southern Nevada) was several utilities decided to hold= =20 back power."=20 Gary Ackerman, executive director of the Western Power Trading Forum, an=20 industry group, said the FERC's price-control plan fails to allow the=20 recovery of electricity transportation costs. That has the effect of keepin= g=20 electricity in the region in which it is generated, rather than where it=20 might be needed most, he said.=20 Ackerman said transportation costs, which typically run from $2 to $8 per= =20 megawatt-hour, are more significant now that overall prices have settled in= to=20 a $100 range.=20 "They didn't mean as much to the suppliers when they were getting $400 per= =20 megawatt-hour," Ackerman said.=20 He also said some of his members suspect the ISO made moves during power=20 alerts to artificially keep prices lower.=20 The FERC pricing regime sets nonemergency prices at 85 percent of the last= =20 full hour of a Stage 1 emergency. But this week, the ISO twice went from a= =20 Stage 1 to a Stage 2 alert in less than an hour. That kept the nonemergency= =20 price cap in place at about $92 per megawatt-hour, set back in May.=20 "Some traders said the ISO is 'gaming the market' to keep the price lower,"= =20 Ackerman said. "I have a few traders who think the price should be higher."= =20 The ISO rejected the charge of manipulation and said it continues to make i= ts=20 emergency declarations based on power supply and demand. The ISO also said = it=20 has not identified transportation costs as a problem under the FERC order.= =20 Other energy experts, however, said the FERC system of using the most=20 inefficient power plants to set emergency prices was a mistake.=20 Frank Wolak, a member of the ISO's market monitoring unit and a Stanford=20 University economist, said the plan invited energy companies to keep their= =20 least efficient plants in operation to ensure the highest prices.=20 But James Sweeney, also a Stanford professor and energy expert, said he=20 preferred the FERC plan to a rigid market price cap.=20 Consumer advocate Doug Heller of the Foundation for Taxpayer & Consumer=20 Rights said the FERC plan is too complex and urged a return to a regulated= =20 system, which pays generators for their production costs plus a reasonable= =20 profit. Gov. Gray Davis supports a similar approach.=20 Arthur O'Donnell, editor of California Energy Markets, saw much of the=20 maneuvering this week as an industry road test of new price regime.=20 "I think they were testing the boundaries," O'Donnell said. "This is the we= ek=20 where we test the bugs in the system."=20 Copley News Service correspondent Toby Eckert and The Associated Press=20 contributed to this report.=20 Renewable energy fades from picture in rush for solution=20 By Ed Mendel=20 UNION-TRIBUNE STAFF WRITER=20 July 4, 2001=20 SACRAMENTO -- The electricity crisis is putting the squeeze on the renewabl= e=20 energy industry: the power plants that use the sun, wind or underground hea= t.=20 The environmentally friendly, alternative energy provides about 12 percent = of=20 the state's power. But the energy crunch and the state's effort to resolve = it=20 could end up shrinking the role of renewable energy in the coming years jus= t=20 as backers were hoping to see it expand.=20 For example:=20 ?Long-term power contracts obtained by the state to reduce costs will cover= =20 most state needs for a decade. Nearly all of the contracts are with natural= =20 gas-fired plants, reducing the long-term market for new renewable plants.= =20 ?The uncertainty and lack of payment resulting from the crisis have slowed= =20 the development of renewable plants under an incentive program created as= =20 part of the state electricity deregulation plan.=20 ?Regulators are poised to prevent marketers from selling electricity,=20 including "green power" from renewable sources, directly to customers. A=20 large base of ratepayers must stay in the state program to pay off a power= =20 bond of up to $13.4 billion over 15 years. The state Public Utilities=20 Commission yesterday for the second time put off a decision whether to=20 curtail such direct access.=20 State and federal programs had been encouraging renewable energy to reduce= =20 dependency on the new wave of relatively clean and efficient natural-gas=20 power plants. The cost of electricity from those plants could go up if the= =20 demand for gas outpaces supply.=20 Renewable energy, with the exception of some biomass plants, also avoids th= e=20 pollution problems of power plants fueled by oil and coal -- not to mention= =20 the safety and radioactive waste-disposal problems of nuclear power.=20 A spokesman for a coalition of renewable generators and environmental group= s=20 said he thinks renewable energy has suffered during the electricity crisis= =20 because of a lack of attention, not a shift in state policy.=20 "I think the renewables are an unintended casualty," said V. John White of= =20 the Center for Energy Efficiency and Renewable Technologies.=20 The state became a major player in the power equation in January when it=20 began buying power for debt-ridden utilities.=20 State officials say they would like to have a mix of power to spread the ri= sk=20 if something goes wrong with one source. For example, soaring natural gas= =20 prices last winter were part of the reason for the high cost of electricity= .=20 In a trade-off, the state scrambled to obtain long-term contracts that woul= d=20 lower the price of electricity now in exchange for prices that are expected= =20 to be above the market in the years to come.=20 The 38 contracts, worth $43 billion over the next decade, will help finance= =20 the construction of gas-fired power plants. About 70 percent of the power= =20 will come from plants that have not yet been built.=20 Only four of the contracts are for renewable power, and their 120 megawatts= =20 is a tiny fraction of the total amount of power now under state contract. A= =20 megawatt can provide power for 750 to 1,000 homes.=20 "We agree the portfolio is lopsided and should be more diverse than it is,"= =20 Ray Hart, head of the power purchasing unit in the state Department of Wate= r=20 Resources, told the Senate Energy Committee last month.=20 The state has agreements in principle on an additional 19 contracts for 1,2= 70=20 megawatts from renewable sources. Most of the power, 1,172 megawatts, would= =20 come from wind generation.=20 "Anything could happen," said Oscar Hidalgo, a Water Resources spokesman. "= It=20 could increase or decrease, depending on what gets signed."=20 One renewable generator, CalEnergy, said the state rejected its offer to=20 provide 340 megawatts from a geothermal plant in the Imperial Valley for 20= =20 years at 6.9 cents per kilowatt-hour, a price that is said to be the 10-yea= r=20 average of the state contracts.=20 "We were astonished," said Jonathan Weisgall, CalEnergy vice president.=20 Hidalgo said state power purchasers "don't recall the specifics" of the=20 CalEnergy offer. He said the proposal may have been rejected because of its= =20 length, the time of the power delivery, or other reasons.=20 "They may have to regroup, restructure, repackage, and look for what we=20 want," Hidalgo said.=20 Under deregulation, part of monthly ratepayer bills were earmarked for a fu= nd=20 to encourage renewable energy sources. The fund provides five-year incentiv= es=20 of up to 1.5 cents per kilowatt hour.=20 The state held auctions in 1998 and again last summer that awarded $202=20 million in incentives for dozens of new small renewable plants that could= =20 produce about 1,000 megawatts. The average incentive was .4 cents per=20 kilowatt hour.=20 But at this point, said Marwan Masri of the California Energy Commission,= =20 only plants capable of producing 180 megawatts have been completed.=20 "There is the overall issue of who will buy the power," said Masri, "and at= =20 what price and for how long."=20 A firm that specialized in marketing "green power" from renewable sources f= or=20 the environmentally conscious has taken a double hit from the electricity= =20 crisis.=20 Green Mountain Energy of Austin, Texas., sells power to customers in a part= =20 of deregulation that is often called "direct access," which bypassed=20 utilities and later the state after it began buying power for utility=20 customers.=20 The firm canceled contracts with 50,000 customers because the price was=20 indexed to the state Power Exchange, which went bankrupt last spring after= =20 the debt-ridden utilities defaulted on their debt.=20 Green Mountain still has contracts with about 7,000 customers in San Diego= =20 County who receive power under contracts at a fixed rate, 8.5 cents per=20 kilowatt-hour.=20 The state Public Utilities Commission is still expected to prohibit future= =20 direct-access contracts, a step directed by the legislation authorizing the= =20 state to buy power for utility customers.=20 "That was the second blow to us," said Rick Counihan of Green Mountain. "It= =20 meant that we couldn't go out and buy a block of fixed-price power to sell = to=20 customers."=20 The ban on direct-access contracts is vigorously opposed by business groups= ,=20 who say that direct access would lower the cost of doing business in=20 California.=20 But supporters of the direct-access ban say that if customers bypass the=20 utilities, the remaining ratepayers will be stuck with paying off a bond of= =20 up to $13.4 billion that is expected to be issued in September for power=20 costs.=20 Despite the problems, some representatives of the renewable energy industry= =20 are optimistic about its potential for growth in the future.=20 "A lot of the market is being served by rapidly aging power plants that=20 should be replaced," said Jan Smutny-Jones of the Independent Energy=20 Producers. "I think we also are going to see additional demand."=20 Moreover, state government may take more steps to encourage the renewable= =20 industry.=20 The Energy Commission is proposing a goal for the incentive program that=20 would increase the amount of power coming from renewable sources to 17=20 percent of the total by 2006, up from 12 percent.=20 State Sen. Byron Sher, D-Stanford, has introduced a bill, SB 531, that woul= d=20 set a goal of increasing the renewable share of state power to 20 percent b= y=20 2010. SDG&E spreads word of looming blackouts=20 By Jeff McDonald=20 UNION-TRIBUNE STAFF WRITER=20 July 4, 2001=20 While power supplies dwindled and the likelihood of blackouts loomed, San= =20 Diego Gas & Electric Co. for the first time yesterday was able to warn=20 customers in advance that they might go dark.=20 Under increasing pressure from businesses and residents, SDG&E launched a n= ew=20 system to notify customers by pager and e-mail whenever the state declares= =20 supply emergencies that might lead to blackouts.=20 Some 5,000 customers signed up for the warnings, which ended up being false= =20 alarms by midafternoon when the Independent System Operator, which manages= =20 the state's electricity grid, was able to find enough megawatts to avoid th= e=20 first blackouts since May.=20 "This at least gives people the opportunity to make a switch over to backup= =20 generation, to power down essential equipment or to back up critical files,= "=20 SDG&E spokesman Ed Van Herik said.=20 "It's definitely an improvement, but we'll certainly look for ways to=20 increase the effectiveness of the notification process."=20 Even so, the warnings from SDG&E came barely an hour before the ISO was=20 expected to issue a Stage 3 power alert, meaning that demand had climbed to= =20 within 1.5 percent of available supplies. As it turned out, the state never= =20 rose above a Stage 2 alert.=20 As the threat of blackouts continues to vex state power officials, early=20 warnings about potential outages have become a key issue for businesses and= =20 residents who rely on uninterrupted service.=20 During blackouts earlier this year, darkened traffic lights caused numerous= =20 accidents, people were stranded in elevators and business owners complained= =20 of losses that could have been minimized.=20 "Regular notification is a good idea," said Samuel Ingersoll-Weng of the Sa= n=20 Diego Community Technology Group, which works with hundreds of local=20 organizations to promote computer literacy.=20 "It would be very helpful in terms of scheduling staff, canceling or holdin= g=20 classes and also to protect equipment from power spikes or suddenly being= =20 shut off," he said.=20 For most of the year, SDG&E was telephoning a small number of such customer= s=20 on mornings they worried that demand for electricity might exceed supplies.= =20 But the problem is that when orders to pull megawatts from the grid come fr= om=20 the ISO, the utility has only minutes to cut supplies and there has been=20 little time to warn people they may lose power.=20 Yesterday, SDG&E was told 90 minutes ahead of time that a Stage 3 warning= =20 would likely be called at 3 p.m. The company issued the mass e-mails and=20 pages within 30 minutes.=20 Gov. Gray Davis announced plans this spring to provide neighborhoods 48-,= =20 24-and 1-hour notices when blackout orders might be called. The ISO issued = no=20 such notice yesterday, when it came the closest it had in weeks to ordering= =20 blackouts.=20 Ratepayers interested in signing up to be notified early of potential=20 blackouts can call the utility at (800) 411-SDGE.=20 Two more energy whistleblowers slated to come forward=20 By Don Thompson ASSOCIATED PRESS=20 July 4, 2001=20 SACRAMENTO =01) Two more former workers at a San Diego-area Duke Energy pla= nt=20 are slated to talk with state investigators Thursday, echoing concerns by= =20 other employees over how the plant was run when the state needed its power= =20 most.=20 However, another former worker at the Chula Vista plant said he discarded= =20 perfectly good equipment three to five years ago, while the plant was still= =20 owned by San Diego Gas and Electric.=20 "Stuff that cost $3- to $5,000 we were throwing away," said Don Perkins of= =20 Alpine, a mechanic at SDG&E plants for nearly 25 years.=20 That undercuts testimony from other former workers who told the Senate Sele= ct=20 Committee to Investigate Price Manipulation of the Wholesale Energy Market= =20 last month that they discarded valuable repair parts on the orders of Duke= =20 supervisors.=20 Like the other former SDG&E employees who have come forward, Perkins was no= t=20 hired by Duke when it took over full operation of the plant in April. Perki= ns=20 said he is happy in retirement, but like his former co-workers believes Duk= e=20 was driving up energy prices =01) which the company vehemently denies.=20 He and the three other former workers suggested Duke did not adequately=20 maintain its equipment, leading to unnecessary repairs they said cut power= =20 generation and may have helped boost prices by cutting supply. That include= d=20 running a 15-megawatt jet-fuel fired turbine until it broke down.=20 "We ran the heck out of the plant, you bet we did,"responded Duke spokesman= =20 Tom Williams. But he said the plant had fewer outages under Duke's ownershi= p=20 than while it was owned by SDG&E.=20 Duke eventually had to completely rebuild the jet-fuel fired turbine,=20 Williams said.=20 "It ran more last year than the previous 37 years combined, because the sta= te=20 needed the power," Williams said.=20 An attorney for Lt. Gov. Cruz Bustamante, who is to introduce the two new= =20 whistleblowers Thursday, said they will echo their co-workers complaints th= at=20 maintenance slipped once Duke took over the plant.=20 Williams dismissed the news conference as "a media event" and the workers'= =20 complaints as old news the company has rebutted since the earlier testimony= =20 before the committee.=20 Disabled PG&E employees ask state for help in getting disability checks=20 ASSOCIATED PRESS=20 July 4, 2001=20 SAN FRANCISCO =01) After not receiving checks for work-related disabilities= for=20 months, more than 200 Pacific Gas and Electric Co. employees have asked the= =20 state to take over their disability payments.=20 The employees stopped getting checks after Pacific Service Employees=20 Association sent them a letter saying it did not have enough funds. Until= =20 this year, the association had paid almost all of PG&E's disability claims.= =20 PG&E said it has no legal responsibility to help the disabled workers and= =20 blames the employee association. But workers waiting for their payments=20 disagree.=20 "The association and PG&E are one and the same," A.J. Cavallaro, an=20 electrical engineer with PG&E for 25 years who is on disability leave due t= o=20 a sleep disorder, told the San Francisco Chronicle.=20 Originally created by PG&E workers to organize social events, the associati= on=20 has its own board of directors and is legally separate from the utility and= =20 its parent company. The association began offering a short-term disability= =20 plan to PG&E workers in 1949.=20 Pacific Service transferred its members to the State Disability Insurance= =20 plan on Jan. 1. But about 230 PG&E workers decided to stay with the=20 association's plan after they were told they would continue to receive thei= r=20 disability checks.=20 Mike Colon, the association's general manager filed an appeal with the=20 California Unemployment Insurance Appeals Board for the state to take over= =20 the group's payments.=20 Ralph Hilton, chief counsel for the appeals board in Sacramento, said that = if=20 the board decides the state should take over the payments, checks would be= =20 issued within days of the ruling.=20 Workers may have to wait until August for the case to be heard.=20 National Desk=20 THE NATION Powerful Judge Illuminates Energy Practices Law: 'Folksy' jurist= ,=20 72, stuns utility executives and lawyers alike with his courtroom=20 incisiveness. RICARDO ALONSO-ZALDIVAR ?=20 07/05/2001=20 Los Angeles Times=20 Home Edition=20 Page A-12=20 Copyright 2001 / The Times Mirror Company=20 WASHINGTON -- The silver-haired judge handling federal negotiations on=20 refunds for alleged overcharges by power generators in California is often= =20 described as a Southern gentleman.=20 But Curtis L. Wagner Jr. can lose the folksy charm in a New York minute.=20 Wagner, chief judge of the Federal Energy Regulatory Commission, showed his= =20 knack for cutting through nonsense when he tangled with a smooth energy=20 company executive in his hearing room in May. The executive confidently=20 insisted he didn't need his boss' approval to enter into a $39-million=20 natural gas transportation deal.=20 Wagner didn't buy it.=20 "I'm appalled that you're trying to pull this over my eyes," intoned the=20 judge, stunning a courtroom of high-priced lawyers into catatonic silence.= =20 "Just answer my question . . .=20 "Did you get approval . . . whether you got it after the meeting, whether y= ou=20 got it the day before, whether you got it in the head while you were both= =20 relieving yourselves?"=20 Added Wagner, owner of a 32-foot sailboat named "Hizzoner": "The head, for= =20 non-boating people, is the restroom."=20 Visibly squirming, the witness acknowledged that his boss had, in fact, OKd= =20 the deal.=20 That kind of mettle prompted FERC's governing board to assign the overcharg= e=20 settlement case to the 72-year-old judge, who likes to stay in shape by=20 attending early-morning aerobics classes in the agency's exercise room. "I= =20 think Judge Wagner is the toughest tool in our toolbox," said FERC=20 Commissioner Patrick H. Wood III.=20 Expectations are low that anybody can bridge the chasm between California a= nd=20 electricity generators and marketers, with the state alleging it was gouged= =20 by $9 billion and the companies muttering about governmental extortion.=20 "There are some very large numbers being talked about, which makes it=20 unlikely that the companies would want to agree to a settlement," said Kit= =20 Konolidge, an electricity industry analyst with Morgan Stanley in New York.= =20 But in an interview, Wagner said he feels "pretty good" about the chances. = "I=20 never give up until the very end. With these things, it looks impossible, a= nd=20 then all of a sudden it comes together."=20 FERC, the equivalent of a national utility commission, is also dangling som= e=20 carrots in front of the parties. Along with refunds, Wagner is trying to ge= t=20 a deal on long-term contracts for power and guarantees that the generators,= =20 which are owed hundreds of millions of dollars, will be paid.=20 The commission set a short time frame for the negotiations, which are to=20 conclude Monday. If a settlement is not reachable, FERC would impose its ow= n=20 solution. A mandated settlement is likely to be challenged in federal court= ,=20 where it could bog down for years.=20 FERC employs more than a dozen administrative law judges like Wagner to hea= r=20 disputes involving the companies it regulates. While presiding over the=20 closed-door settlement talks, Wagner has traded his robes for a business=20 suit.=20 He has come down from the bench and sits at a table, eye-level with more th= an=20 140 lawyers in his hearing room. "There's a lot of billable hours there," h= e=20 said.=20 The lawyers have been sorted into three big working groups, representing=20 state agencies, power sellers and energy marketers. The negotiations are=20 expected to intensify this week, and participants said Wagner admonished al= l=20 sides on Friday to be ready to deal or face summary judgment from the FERC= =20 commission.=20 The judge has been variously quoted as saying that $1 billion, $2 billion o= r=20 $2.5 billion might be an appropriate total refund. "None of those [figures]= =20 are really attributable to me. I did make a statement--and I probably=20 shouldn't have--that it was probably less than $9 billion." Of the $9 billi= on=20 in overcharges claimed by the state, only $5.4 billion is attributable to= =20 sellers within FERC's jurisdiction.=20 James J. Hoecker, immediate past FERC chairman in the Clinton administratio= n,=20 said that, in 23 years as chief judge, Wagner has built a reputation for=20 making things happen in difficult situations.=20 "What is behind that is a lot of years on the bench and a certain amount of= =20 self-confidence," Hoecker said. "He has the ability . . . to move the parti= es=20 closer together. Sometimes that requires some fairly dramatic statements,= =20 which are calculated to get people to feel the heat and get more creative= =20 about the flexibility they might have."=20 A senior FERC official said Wagner is like a pitcher who gets called from t= he=20 bullpen when the game is on the line. "When things are tough, we turn stuff= =20 over to Curtis," said the official, who asked not to be identified.=20 Wagner has had many big cases over the years, on matters too arcane to garn= er=20 national attention.=20 He is handling a second major case before FERC. It involves allegations tha= t=20 Houston-based El Paso Corp. manipulated California 's natural gas market la= st=20 year, thereby adding an estimated $3.7 billion to the state's energy costs.= =20 It was in that case that he grilled the executive.=20 Success in the California settlement negotiations would cap Wagner's 47th= =20 year as a government lawyer. The Tennessee native started at the Justice=20 Department on Aug. 2, 1954. He got into regulatory law by representing the= =20 military in railroad disputes arising from the Korean War. After serving as= a=20 civilian lawyer for the Army for more than a decade, he joined FERC's=20 predecessor agency in 1974.=20 But Wagner, a widower, doesn't dwell on his place in the annals of FERC. He= =20 tells agency employees he is working too many hours and missing his aerobic= s=20 classes.=20 Davis lauds California generator=20 Vote of confidence at Calpine's festival=20 Suzanne Herel, Chronicle Staff Writer Thursday, July 5, 2001=20 ,2001 San Francisco Chronicle=20 URL:=20 http://www.sfgate.com/cgi-bin/article.cgi?file=3D/chronicle/archive/2001/07= /05/M N166801.DTL=20 Gov. Gray Davis took the stage at the San Jose America Festival yesterday a= nd=20 pledged to "keep the lights on" -- with the help of the Calpine energy=20 company, which sponsored the fete.=20 "You've heard me say some pretty tough things about out-of-state energy=20 companies trying to bleed us dry," said Davis, standing against the backdro= p=20 of a huge Calpine banner proclaiming, "Reliable Energy for a Brighter=20 Future."=20 "Calpine is from California," he said. "They're going to make sure the ligh= ts=20 stay on."=20 Davis was a surprise guest sandwiched between musical acts Nina Storey and= =20 John Brown's Body during the daylong Fourth of July festival, which feature= d=20 music, food and vendors near the San Jose Airport.=20 The governor thanked the crowd of at least 1,000 for joining other=20 Californians in conserving energy. Conservation surpassed the 10 percent ma= rk=20 statewide in May and June, he said.=20 "We could not get through the summer without you doing your part," he said.= =20 Davis was introduced by Calpine chief executive Peter Cartwright -- whose= =20 multimillion-dollar stock option cash-in made news last month -- and San Jo= se=20 Mayor Ron Gonzalez, who unsuccessfully opposed Calpine's planned 600-megawa= tt=20 Metcalf Energy Center in Coyote Valley.=20 In an interview after his appearance, Davis countered criticism leveled at= =20 him this week by State Controller Kathleen Connell, who accused him of=20 foolishly locking California into expensive long-term energy contracts.=20 "You have to look at the total cost of electricity," he said.=20 The state paid $109 million in May, he said, but that cost dropped to about= =20 $33 million last month.=20 Earlier yesterday, after walking in the Redwood City Fourth of July parade,= =20 Davis said that the price drop was a direct result of the long-term=20 contracts.=20 "That would not have happened without the security and stability of long-= =20 term contracts," he said. "We did the right thing."=20 In San Jose, he also said that the $15 million the state was paying=20 consultants to help negotiate power contracts was money well spent.=20 "Before, it was like the Yankees winning the World Series against the sandl= ot=20 baseball team," he said. "We're finally getting some stars on our team. "= =20 E-mail Suzanne Herel at sherel@sfchronicle.com.=20 ,2001 San Francisco Chronicle ? Page?A - 2=20 Activists stage anti-corporate march to power plant=20 GISELE DURHAM, Associated Press Writer Wednesday, July 4, 2001=20 ,2001 Associated Press=20 URL:=20 http://www.sfgate.com/cgi-bin/article.cgi?file=3D/news/archive/2001/07/04/s= tate2 024EDT0201.DTL=20 (07-04) 17:24 PDT LONG BEACH, Calif. (AP) --=20 Consumer activists rallied against rising energy prices and pledged their= =20 independence from corporate "tyrants" amid Fourth of July celebrations=20 Wednesday.=20 About 200 people carrying signs reading " public power, not corporate=20 bailout" and "human need, not corporate greed" marched two miles from a loc= al=20 park in the Los Angeles suburb to the Alamitos generating station.=20 "We feel we have been gouged and bled dry," said Medea Benjamin, founding= =20 director of Global Exchange, a San Francisco-based consumer advocacy group.= =20 "We've been treated the way tyrants treat their servants."=20 The protest was a joint effort of several national and local consumer=20 activist organizations. No arrests were made, although dozens of police=20 officers were out in force for crowd control.=20 Earlier this week, a federal judge issued a temporary restraining order=20 preventing the city from enforcing an ordinance that could have blocked the= =20 march.=20 The law requires organizers of public protests to give 30 days notice of th= e=20 event, post an insurance bond and pay for police protection at the rate of= =20 $55 per hour for each officer.=20 At the plant, organizers had intended to serve officials with a "notice of= =20 seizure by eminent domain" declaring the facility to be public property. Bu= t=20 nobody appeared at the front gate. The demonstrators posted the notice on t= he=20 chain-link fence and staged about a 40-minute rally before dispersing.=20 The symbolic notice was meant to emphasize the groups' discontent with=20 skyrocketing power prices during the past year, the use of state budget mon= ey=20 for power purchases, and the activists' desire to have the state take over= =20 power plants to stabilize market prices.=20 "The money they're making off of us is criminal," said Loni Baker, one of t= he=20 marchers. "They're greed is taking money away from our kids' schools."=20 Representatives of Arlington, Va.-based AES, Corp., which owns the plant, d= id=20 not immediately return calls seeking comment.=20 Last month, the U.S. Justice Department opened an antitrust investigation= =20 into a power sales partnership between AES and Williams Energy, the Tulsa,= =20 Okla.-based company that sells power for AES under an exclusive marketing= =20 agreement.=20 Both companies have denied wrongdoing but in May, Williams agreed to refund= =20 $8 million after the Federal Energy Regulatory Commission accused of the=20 company of temporarily closing AES plants to drive up power prices.=20 Davis asks PUC to let utilities cut voltage=20 1% savings on energy consumption predicted=20 David Perlman, Chronicle Science Editor Wednesday, July 4, 2001=20 ,2001 San Francisco Chronicle=20 URL:=20 http://www.sfgate.com/cgi-bin/article.cgi?file=3D/chronicle/archive/2001/07= /04/M N29133.DTL=20 Gov. Gray Davis asked the Public Utilities Commission yesterday to allow=20 electric companies to lower voltage levels on power lines delivering=20 electricity to consumers this summer.=20 The move will save about 1 percent in the state's electricity consumption,= =20 the equivalent of building a new 500-megawatt power plant.=20 Lowering voltages by 2.5 percent will prove barely noticeable by domestic= =20 users who might see their incandescent light bulbs dim slightly.=20 Refrigerators and electric motors, such as those that run air conditioners,= =20 should operate more efficiently on the lower voltages, experts said.=20 The move should save consumers about 1 percent on their electricity bills,= =20 according to Energy Commissioner Arthur Rosenfeld.=20 With support already promised by the state's major power companies, the PUC= =20 is expected to approve the change in its voltage rules within weeks, Robert= =20 Kinosian, energy adviser to PUC President Loretta Lynch, said at a Sacramen= to=20 press conference.=20 Similar voltage decreases have gone into effect in several other states=20 during power emergencies in recent years, Rosenfeld said. But this is the= =20 first time it will occur statewide throughout an entire period of peak powe= r=20 demand.=20 PUC rules now require power companies to deliver between 114 and 126 volts = to=20 consumers all the time.=20 Less than two months ago, Bill Wattenburg, a maverick engineer and longtime= =20 consultant to the Lawrence Livermore National Laboratory, assembled a team = to=20 test the effects on lights, appliances, microwave ovens and motors operatin= g=20 at voltages that were lowered by 5 percent or more.=20 At the press conference yesterday, Wattenburg said those tests -- conducted= =20 with utility company senior engineers -- showed that no devices were damage= d,=20 nor was their performance impaired. But cooking food on electric ranges --= =20 whether boiling water or making a roast reach a given temperature -- would= =20 take longer and consume slightly more power under any lowered voltage, he= =20 said.=20 John Ballance, director of network engineering at Southern California Ediso= n,=20 said his company is equipped to control its voltage levels electronically a= nd=20 can lower them as soon as the PUC approves the change.=20 But Pacific Gas & Electric Co. operates differently and will have to change= =20 its voltage levels at each of its 2,400 substations individually -- a task= =20 that could take several weeks, Rosenfeld said.=20 "This proposal may well achieve new efficiencies and reduce electric bills= =20 for California ratepayers," Davis said in a statement. "I urge the PUC to= =20 give it serious consideration."=20 E-mail David Perlman at dperlman@sfchronicle.com.=20 ,2001 San Francisco Chronicle ? Page?A - 13=20 Federal price limits backfire=20 Some generators withhold power rather than abide by rate caps=20 David Lazarus, Chronicle Staff Writer Wednesday, July 4, 2001=20 ,2001 San Francisco Chronicle=20 URL:=20 http://www.sfgate.com/cgi-bin/article.cgi?file=3D/chronicle/archive/2001/07= /04/M N186091.DTL=20 Officials in California and Nevada, after months of lobbying for federal=20 regulators to cap Western power prices, warned yesterday that the newly=20 imposed limits have had the unintended consequence of increasing a threat o= f=20 blackouts in the two states.=20 The warnings were issued as California came within minutes of rolling=20 blackouts yesterday afternoon, and one day after the first-ever rolling=20 blackouts in Las Vegas forced energy-hungry casinos to shut off fountains a= nd=20 reduce air conditioning.=20 The two states are asking the Federal Energy Regulatory Commission to take = a=20 closer look at the so-called price mitigation plan and come up with revisio= ns=20 that would deter power companies from withholding electricity during=20 shortages.=20 "We need some clarity to this order," said Oscar Hidalgo, a spokesman for t= he=20 California Department of Water Resources, which is spending billions of=20 dollars to keep the state's lights on.=20 "Generators need to be held accountable," he said.=20 The crux of the problem is that price limits kick in during shortages, yet= =20 power companies say these caps force them to sell power at below-market rat= es=20 during periods of high demand.=20 Some companies have responded by holding back power rather than face the=20 expense of shipping electricity from state to state. Each mile that=20 electricity must be transmitted adds to the overall cost.=20 "No one's going to pay for transmission if the cost is near the caps," said= =20 Gary Ackerman, executive director of the Western Power Trading Forum, an=20 energy-industry association in Menlo Park.=20 Ackerman said several companies in his organization decided that there was = no=20 economic advantage to offering power in regional markets when price control= s=20 are in effect.=20 "This means individual regions like California or Las Vegas could end up no= t=20 having enough," Ackerman said. "It increases the threat of blackouts."=20 BLACKOUT ALERT CANCELED California authorities issued a blackout alert at 1:45 p.m. yesterday when= =20 power reserves dipped to dangerously low levels. They canceled the alert=20 about an hour later, after finding additional supplies.=20 "Everyone in the West is fighting for megawatts," said Stephanie McCorkle, = a=20 spokeswoman for the California Independent System Operator, which oversees= =20 the state's power network.=20 The Golden State's latest brush with lights-out conditions came a day after= =20 Nevada experienced its own rolling blackouts for the first time, prompting= =20 heavy power users such as the MGM Grand and Caesars Palace to dim their=20 lights.=20 Don Soderberg, chairman of the Nevada Public Utilities Commission, said tha= t=20 the sudden power emergency took state authorities by surprise and that they= =20 are investigating to see what role the federal price limits may have had in= =20 exacerbating Monday's shortage.=20 "We're looking very closely at this," he said. "There seems to be a potenti= al=20 for unintended consequences."=20 Specifically, Soderberg said Nevada is focusing on operators of older, less= -=20 efficient plants who would find profit margins shrinking, if not vanishing,= =20 under capped prices.=20 "We're going to see how the caps might have played into this," he said.=20 The federal ceiling in 10 Western states, excluding California, is about $9= 2=20 per megawatt hour. In California, a 10 percent surcharge is added because o= f=20 the state's credit risk, bringing the price to just over $101.=20 Ackerman at the Western Power Trading Forum said regional price controls ha= ve=20 extended California's power crisis to neighboring states.=20 "California sneezed and the rest of the region caught the virus," he said.= =20 'LAWYERS LOOKING FOR LOOPHOLES'=20 California and Nevada officials, however, said that they still have faith= =20 that price limits can stabilize Western electricity markets but that federa= l=20 regulators may have to tweak the system so that power companies cannot=20 withhold output.=20 "The generators have banks of lawyers looking for loopholes (in the plan),"= =20 said Hidalgo at the Department of Water Resources.=20 Unfortunately, it may take some time for the regulators to revisit an issue= =20 that they took up only with the greatest reluctance. For months, federal=20 regulators refused to impose price controls, preferring instead to let supp= ly=20 and demand determine costs.=20 Hidalgo said that when it appeared that power companies were throttling bac= k=20 on output Monday, California officials immediately dialed the hot line numb= er=20 provided by the Federal Energy Regulatory Commission in case of emergencies= .=20 "No one answered," he said. "They were closed."=20 State officials tried again yesterday, and this time were told that the=20 commission would look into the matter. They were not given a time frame for= =20 when the commission might come up with a response.=20 E-mail David Lazarus at dlazarus@sfchronicle.com.=20 ,2001 San Francisco Chronicle ? Page?A - 1=20 Two more energy whistleblowers slated to come forward=20 DON THOMPSON, Associated Press Writer Wednesday, July 4, 2001=20 ,2001 Associated Press=20 URL:=20 http://www.sfgate.com/cgi-bin/article.cgi?file=3D/news/archive/2001/07/04/s= tate0 336EDT0118.DTL=20 (07-04) 00:36 PDT SACRAMENTO (AP) --=20 Two more former workers at a San Diego-area Duke Energy plant are slated to= =20 talk with state investigators Thursday, echoing concerns by other employees= =20 over how the plant was run when the state needed its power most.=20 However, another former worker at the Chula Vista plant said he discarded= =20 perfectly good equipment three to five years ago, while the plant was still= =20 owned by San Diego Gas and Electric.=20 "Stuff that cost $3- to $5,000 we were throwing away," said Don Perkins of= =20 Alpine, a mechanic at SDG&E plants for nearly 25 years.=20 That undercuts testimony from other former workers who told the Senate Sele= ct=20 Committee to Investigate Price Manipulation of the Wholesale Energy Market= =20 last month that they discarded valuable repair parts on the orders of Duke= =20 supervisors.=20 Like the other former SDG&E employees who have come forward, Perkins was no= t=20 hired by Duke when it took over full operation of the plant in April. Perki= ns=20 said he is happy in retirement, but like his former co-workers believes Duk= e=20 was driving up energy prices -- which the company vehemently denies.=20 He and the three other former workers suggested Duke did not ade
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