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Sac Bee, Wed, 6/27: Here's a switch: Generator praised for pricing, efficiency Sac Bee, Wed, 6/27: PG&E given OK for cleanups SD Union, Wed, 6/27: State gets $4.3 billion loan to buy energy SD Union, Wed, 6/27: New border plants will take toll on air quality LA Times, Wed, 6/27: New Plant to Generate Electricity--and Hope LA Times, Wed, 6/27: Edison Delays Sale of $1.2 Billion in Bonds LA Times, Wed, 6/27: Union Seeks to Return to Reliant Power Plant LA Times, Wed, 6/27: Retired PG&E Executives Seek Full Pensions in Bankruptcy Case SF Chron, Wed, 6/27: 600-megawatt plant OKd in San Jose council reversal SF Chron, Wed, 6/27: California to justify its claim of $9 billion in overcharges SF Chron, Wed, 6/27: Cheaper electricity won't trim bills Rate increase to pay off big state debts takes effect next month SF Chron, Wed, 6/27: Duke buys ads to deny claim of workers Firm not allowed to speak at hearing SF Chron, Wed, 6/27: News briefs on California's power crisis SF Chron, Wed, 6/27: State to take delivery of cheap electricity L.A. selling at cost, Bakersfield plant opening early Mercury News, Wed, 6/27: New plants, voltage plan may help reduce blackouts Mercury News, Wed, 6/27: Utilities await OK to reduce voltage Mercury News, Wed, 6/27: PUC should keep consumers plugged in to power choices Individual.com (PRnewswire), Wed, 6/27: Retail Energy Supporters Urge the PUC not to Suspend Direct Access Business Organizations, Energy Service Providers, Direct Access Customers Support Continuing Focus on Legislative Solution to Maintain Retail Choice WSJ, Wed, 6/27: California Secures Loan of $4.3 Billion for Power ------------------------------------------------------------------------------ ------------------------------------------------ Here's a switch: Generator praised for pricing, efficiency By Dale Kasler Bee Staff Writer (Published June 27, 2001) SAN JOSE -- If the power generators profiting from California's energy crisis are a reckless band of megawatt cowboys, as their critics claim, then Calpine Corp. bills itself as the guy in the white hat. Unlike many of its rivals, this fast-growing power plant builder and operator hasn't been accused by federal regulators of overcharging California for electricity. Gov. Gray Davis, who routinely accuses generators of price gouging, exempts the San Jose-based company from his criticism. He further praises Calpine's efforts to build thousands of megawatts' worth of new power plants, enough to make a significant dent in California's energy shortage. Known for its relatively clean-burning plants, Calpine even gets support from some environmentalists. "They have made a clear commitment to invest in California's future," said Davis spokesman Steve Maviglio. "Their pricing has been far more reasonable than any other generator." Taking a dig at Calpine's Texas-based rivals, he said Calpine "took a different tack from the Joe Bobs of the world," an apparent reference to executive Joe Bob Perkins of Houston's Reliant Energy Inc. In some respects, Calpine seems quaint when compared with its swashbuckling competitors. Rather than cash in on the lucrative but flighty spot market for power, Calpine builds comparatively efficient plants and sells the energy via stable, long-term contracts, such as its contract to deliver power to Sacramento from its just-completed plant in Sutter County. When the Federal Energy Regulatory Commission ordered several generators to refund more than $124 million to California because of overcharging, it left Calpine off the list. However, Calpine is participating in the FERC-sponsored settlement talks under way in Washington that could result in generators making refunds to California. The company wouldn't comment on those talks but takes great pains to separate its behavior from the conduct of other generators. "We're not a speculator in this business," said Pete Cartwright, the company's 71-year-old founder, president and chief executive. "We're not in it to speculate on high prices. To that extent, I think we're distinct from all of the others." But Calpine isn't building plants out of charity. Although its stock price has suffered lately because of investor skittishness about the energy crisis, the company's financial performance hasn't missed a beat. Calpine's profits jumped five-fold to $94.8 million in the first quarter of this year. Revenue soared to $1.23 billion from $235 million. And despite its disdain for speculation, Calpine is arguably the most daring power plant builder in the business. Coming from seemingly out of nowhere, Calpine has embarked on what experts believe is the most ambitious power-plant construction program in U.S. history. The company currently operates about 7,100 megawatts of power plant generation in 30 states; its plan is to operate 70,000 megawatts in five years. That would make Calpine the largest supplier of electricity in the United States, and probably the world, said company spokesman Bill Highlander. Although Calpine has run into problems in some locations -- including San Jose, where opposition arose to its proposed plant in the Coyote Valley -- it has generally found smooth sailing. "There are others doing this," Cartwright said. "But somebody has to be No. 1. So we decided it would be us." One of the first U.S. power companies to seize on deregulation of the wholesale electricity business, it has concentrated on the United States, while rivals have built plants around the world. "Many of our competitors were off building plants in China and Indonesia; we elected to focus at home," Cartwright said. "That's given us a real jump on our competition." The ambitious nationwide blueprint includes building plants that will produce about 11,000 megawatts of new power in California. That would bring Calpine's total capacity in California to more than 12,000 megawatts, enough to power about 9 million homes. That would make Calpine the largest power generator in the state, eclipsing Pacific Gas and Electric Co. The company is adding 60 employees to its 90-employee construction-management office in Folsom. Calpine's 500-megawatt plant in Sutter County, which has its formal opening in July, has already begun generating power for the state Department of Water Resources and has sold under contract about a third of its electricity to the Sacramento Municipal Utility District. Calpine's reach is extending far beyond California. Its new plant in Middletown, N.Y., scheduled to open in 2004, will be Calpine's fifth in that state. It's developing its second and third plants in Florida and is doubling its number of Texas plants to 10. There will be plants in Goldendale, Wash., and Oxford, Conn., and Calgary, Alberta, and points in between. The company also is building a $624 million natural gas pipeline into Southern California from New Mexico in a joint venture with pipeline operator Kinder Morgan Energy Partners, a move that could dramatically ease California's natural gas shortage. A second phase of the project, to cost $1.1 billion, would extend the line into Northern California. Calpine's profile is growing in other ways. In Houston, where it runs a trading desk, it's building a 32-story office tower in the "power corridor" downtown, taking its place in the skyline among such power titans as Enron Corp. Cartwright said Calpine can handle its phenomenal growth just fine. "We determined that the market would support that many megawatts, that we had the organization and the project opportunities and the financing and the equipment to make it happen," he said. "It's a program that's well under way now, and we are ahead of schedule. "We've been building to this for years." A veteran of General Electric Co.'s nuclear plant division, Cartwright founded Calpine in 1984 with other GE employees. A consulting firm at first, Calpine in 1989 bought its first generator, a tiny geothermal plant in Sonoma County, and proceeded to add other small thermal plants throughout Northern California. Its breakthrough came in 1995, when it built its first big plant, a 250-megawatt facility in Pasadena, Texas. The project thrust Calpine into the fledgling world of "merchant generation," wholesale plants selling electricity in a newly deregulated field. "They caught the market just as it was coming on the upside," said Gary Ackerman of the Western Power Trading Forum, an association of generators and traders. About that time Calpine was making another important decision about its future. Its owner, a Swiss energy conglomerate, was being sold by its parent, the investment banker Credit Suisse. Merger talks with several energy companies went nowhere, and Calpine instead sold stock to the public. Today its market capitalization is about $11.6 billion. Cartwright "made a tired old industry called utility generation and turned it into an exciting commodity on Wall Street," Ackerman said. Calpine's secret is energy efficiency. It uses modern natural gas-fired turbines that are probably 40 percent more fuel efficient than traditional products, said investment analyst Michael Worms of Gerard Klauer Mattison & Co. in New York. And although Calpine typically sells the lion's share of its electricity through long-term contracts, it profits from spikes in the spot market, too. That's because spikes raise the prices everyone charges, regardless of costs. "Our ability ... to generate electricity at a lower cost is what gives us strength," Cartwright said. Calpine isn't welcomed everywhere. It abandoned plans for a 765-megawatt plant in Edgerton, Wis., after residents fought it. And Calpine spent months dealing with a revolt in its hometown over a proposed 600-megawatt plant in San Jose's Coyote Valley, a fight led by the mayor and high-tech heavyweight Cisco Systems Inc. Cisco is planning a corporate campus near the plant site. The plant finally won the backing of the City Council in early June, but only after state officials indicated they would OK the project regardless of the city's objections. Cisco withdrew many of its objections to the project. Cartwright noted that the project won the approval of the Sierra Club, which argued that newer, cleaner-burning plants should be developed to replace older, dirtier generators. The need for cleaner plants is a major reason why Cartwright, in spite of the current slump in spot-market prices, believes there won't be a power glut any time soon. "What we're building is the largest fleet of modern power plants -- it has to be done," he said. "It will lower the cost of electricity for consumers, it will drastically reduce air emissions, carbon dioxide emissions." Nor is Cartwright bothered by the turmoil in California's energy markets and political climate. He's signed contracts with the state Department of Water Resources to supply electricity for up to 20 years, at prices ranging from $58 to $115 a megawatt-hour. Cartwright, whose company gave Davis $19,000 in campaign contributions last year, one of the highest totals among energy companies, said he doubts the state will seize power plants or enact a windfall profits tax. Asked about other generators reportedly putting new plants on hold because of the political climate, Cartwright said: "Good, that's fine. We're not holding off. We think California is a great place to do business." The Bee's Dale Kasler can be reached at (916) 321-1066 or dkasler@sacbee.com. PG&E given OK for cleanups (Published June 27, 2001) SAN FRANCISCO -- A federal bankruptcy judge Tuesday approved a request by Pacific Gas and Electric Co. to spend up to $22 million a year on environmental cleanup projects at about 50 sites. The figure is slightly higher than the utility has spent on average in recent years but much lower than the total $307 million cost it has reported to the federal Securities and Exchange Commission. PG&E spokesman Jon Tremayne said the SEC total represents "liabilities that we might have, including liabilities we're not aware of now." He said the utility has no backlog of neglected environmental work. PG&E's motion covered only costs of fixing environmental problems. It did not cover court judgments or settlements for personal injuries or property damage. By filing for bankruptcy protection in April, the utility automatically blocked payment of those claims until the bankruptcy case is resolved. --Claire Cooper State gets $4.3 billion loan to buy energy By Ed Mendel UNION-TRIBUNE STAFF WRITER June 27, 2001 SACRAMENTO -- The state made more progress toward easing the electricity crisis yesterday by obtaining a $4.3 billion short-term loan to pay for future power purchases, shifting the burden from taxpayers to utility ratepayers. Since the state began buying power for utility customers in January, the money has been coming from the taxpayer-supported general fund that pays for schools, health care and other state programs. The general fund is expected to be paid back in September when the state issues the biggest municipal bond in the nation's history, up to $13.4 billion, which will be paid off by ratepayers over 15 years. Now the short-term "bridge" loan obtained yesterday will pay for power purchased until September and stop the drawing down of the general fund that has already spent at least $6.2 billion buying power. "This short-term financing will stabilize the state's fiscal condition by stopping the daily drain of taxpayer dollars to pay for power," said state Treasurer Philip Angelides. The big ratepayer bond issued in September will be used to repay the general fund, pay off the $4.3 billion short-term loan and provide funds for power purchases until they are covered by monthly revenue from ratepayers. Gov. Gray Davis and the Legislature decided to use the bond to spread the high cost of power over the next 15 years, avoiding the need for even higher rate increases this year. One of the unanswered questions yesterday was whether the short-term loan or the general fund will pay for an undisclosed amount of power received by the state but not yet paid for under the billing cycle. The state Department of Finance said the general fund had spent $6.2 billion on power as of yesterday. But the department has sent the Legislature a series of notices saying it expected to spend up to $8.2 billion on power. "Apparently some of those were never acted on," said Sandy Harrison, a finance department spokesman. The price of power dropped this month for a number of reasons: The state began buying more power through less expensive long-term contracts, power plants down for maintenance and a lack of funding resumed operating, conservation and cooler weather reduced demand, federal price caps were imposed last week, and accelerated snowpack runoff has generated more hydropower than expected. The state paid $55 million to $70 million a day for power last month, but has only been paying about $30 million a day this month, said Oscar Hidalgo, a spokesman for the state power-purchasing agency. In another development, Gov. Gray Davis today is scheduled to throw the switch on a new power plant near Bakersfield that was not expected to come on line until August. The 320-megawatt Sunrise plant was built in 61/2 months by the parent firm of Southern California Edison and will qualify for an "acceleration bonus" of about $1 million under a state program to encourage rapid power-plant construction. Also, Calpine plans to open new power plants near Yuba City and Pittsburg early next month, adding more than 1,000 megawatts to the grid. A megawatt provides enough power for 750 to 1,000 homes. New border plants will take toll on air quality By Diane Lindquist? UNION-TRIBUNE STAFF WRITER June 27, 2001 Two large power plants that will supply Californians with electricity will greatly boost emissions in Mexicali and Imperial County, a cross-border region already plagued by air quality problems. The plants are being built outside Mexicali, Mexico, just 10 miles from the California city of Calexico. When the plants begin operating in 2003, they will send more than 4,000 tons of pollutants a year into the skies above Mexicali and neighboring Imperial County, says a recent report by the Imperial County Air Pollution Control District. "We're not opposed to power plants, but we are concerned about the emission levels and the impact it will have on the health of the citizens of the two areas and the impact it could have on the region's economic development," said Steve Birdsall, a district pollution control officer. "We believe that could be significant," he said. One plant is being built by Sempra Energy of San Diego and, the report notes, will be outfitted with the latest pollution control devices. The other, being built by the global power generation firm InterGen, wouldn't meet California power plant requirements but is well within Mexican standards. At projected levels, emissions from the two plants will boost total emissions in Mexicali by 12.6 percent. Emissions in the entire cross-border air basis will rise 7.7 percent. The report was based on data from permit applications filed with the Mexican government. Today, Imperial County's Board of Supervisors is scheduled to discuss the air quality problem for a second time with representatives of InterGen. Meanwhile, a coalition of concerned citizens, business leaders and community activists from both sides of the border has formed the Imperial Valley Clean Air Stakeholders Group and launched a campaign to address concerns about the plants. Representatives of that group are sending letters to government officials in Baja California and California to complain that the emissions are too high. They plan to make the same point soon in meetings with representatives of the two companies. Joel Epstein, an InterGen consultant, said the company's research indicates the emissions won't have a significant impact on either side of the border. Nevertheless, he said, InterGen will present the supervisors a voluntary initiative today that should address local concerns. Epstein wouldn't reveal details of the initiative but said it "will both improve the emissions profile as well as improve the overall quality of the Imperial Valley region on both sides of the border." The Imperial County report underscores the fact that environmental standards for power plants are much less stringent in Mexico: ?If built in the United States, the plants would be required to be fitted with equipment known as Best Available Control Technology and continuous emission monitors. Neither technology is mandatory in Mexico. ?Mexico doesn't impose any limits on carbon monoxide emissions, which are tightly regulated under the U.S. Clean Air Act. Carbon monoxide takes oxygen out of the bloodstream, making it a concern for people with heart disease. ?Mexico's standards for nitrogen oxides, which contribute to smog and damage the lungs, are significantly lower than U.S. limits. ?Mexico doesn't require data on particulate emissions, which can damage the lungs and contribute to asthma, emphysema, respiratory infection, heart attack and smaller lung growth in children. Because of the two plants' total emission levels, the report says they will have "a far greater negative impact on U.S. and Mexican citizens living in the border region than if these plants were constructed a few miles to the north in the United States." Both plants have building and environmental permits from the Mexican government and are ready to start construction about a mile apart in Colonia Progreso on Mexicali's western edge. Together, the plants could provide enough electricity to power about 600,000 homes in California. The 500-megawatt Sempra Energy plant, Termoel,ctrica de Mexicali, will export all its electricity to U.S. consumers. The InterGen plant, called La Rosita, will export about 30 percent of its output. The rest will serve customers in Baja California. La Rosita was originally planned to generate 750 megawatts, but another 250 megawatts capacity reportedly was added after the Imperial County air quality study was done. The study also didn't include data for two other power plants that could be built in the Mexicali area. One is a 257-megawatt natural-gas-fired plant; the other is a coal-fired plant with an unknown capacity. Mexico is urging other energy companies to build plants in Baja California to export electricity to energy-strapped California. In La Jolla several weeks ago, Mexican Energy Secretary Ernesto Martens said the country won't set any limits on the number of plants it will allow. The Sempra and InterGen plants will be fired by natural gas, a cleaner, more efficient fuel than fuel oil or coal. Nevertheless, natural gas does produce emissions. Sempra Energy is fitting its plant with Best Available Control Technology and continuous emission monitors to cut the output. InterGen is using neither of the technologies, which are required on all new plants in the United States. The only pollution control technology the company plans to install is low-nitrogen oxide burners. Its backup power source is a dual-fuel diesel engine, which usually runs dirtier than natural gas and produces more particulates. As a result, air emissions of nitrogen oxides and carbon monoxide at InterGen's La Rosita plant will total 21,026 pounds a day, or 3,838 tons a year. Sempra has pledged that emissions at its plant will be less than one-tenth as much -- 2,066 pounds a day, or 377 tons a year. The plant, "as clean and efficient as any plant that can be constructed," according to Sempra spokesman Art Larson, is the only facility in Mexico fitted with the pollution controls. As such, he said, it will be the cleanest power plant in the country. Pollution levels in Imperial County and Mexicali already are too high, said Jan Cortez, an official of the American Lung Association of San Diego and Imperial Counties. The association is one of the organizers of the Clean Air Stakeholders Group. The cross-border region, with a population of 900,000, shares an air basin polluted by industrial manufacturing, dust and pesticide residue from agricultural activities, diesel bus and truck exhaust, cars without pollution controls and idling traffic at the border crossings. Even without the new plants, Calexico's carbon monoxide levels exceed those established by the U.S. Clean Air Act. And Mexicali's carbon monoxide levels exceeded Mexico's standard on 77 days in 1998, the latest year for which data is available. The Clean Air Stakeholders Group believes measures could be taken to offset the pollution to be generated by the new plants, Cortez said. Trucks and buses running on diesel fuel could be converted to natural gas, she said. Or they could be retrofitted with particulate-matter traps. Such measures are being used in the San Diego region so a power plant can be built on Otay Mesa without exceeding U.S. air pollution limits. "Offsets haven't even been discussed with InterGen and Sempra about the plants they're building," Cortez said. New Plant to Generate Electricity--and Hope Power: The Sunrise facility in Kern County is the state's first to start up in 13 years. By MITCHELL LANDSBERG, Times Staff Writer ?????It isn't much to look at. Just a couple of big turbines housed in dun-colored buildings that crouch on a dusty oil field in western Kern County. But the Sunrise Power Plant, which officially starts production today, represents a significant turn in California's energy fortunes. ?????After months in which the state's power supplies have ebbed more than flowed, Gov. Gray Davis will flip a switch this afternoon to start up California's first major new power plant in 13 years. ?????By itself, the Sunrise plant offers only a modest infusion of megawatts to the state's electrical grid, and blackouts remain likely during prolonged heat waves this summer. Its two generators--one will be fired up today and one tomorrow--will produce only slightly more than half the power that the plant should eventually be capable of generating when it reaches full capacity in two years. ?????But it is a start, one that is to be followed in the next week by two fully completed plants in Northern California. Together with a hodgepodge of other, smaller sources of electrical generation, the plants are expected to give California a 3,000-megawatt boost in electricity supplies by the end of July, enough to serve between 2 million and 3 million homes. ?????That isn't quite the 5,000 megawatts Davis had once promised to have in place by the start of the summer. But combined with a strong conservation effort, it is a significant addition to the state's bulwark against blackouts. ?????The state's newest source of power comes from what some might view as an unlikely source: Edison Mission Energy. Mission is one of the moneymaking arms of Edison International, whose flagship, Southern California Edison, has been laid low by the same set of circumstances that made Sunrise an appealing business prospect for its sibling. ?????Finished Ahead of Schedule ?????Edison Mission Energy is expected to earn about $1 million in state incentive awards by finishing the Sunrise plant more than a month ahead of schedule. The plant, begun Dec. 7, was completed in less than seven months, with crews sometimes working 18 hours a day, six days a week. ?????Its opening steals the spotlight from Calpine Corp., whose Sutter Power Plant north of Sacramento had been expected to be the first major plant to open in California since 1988. The Sutter plant is scheduled to begin official operations Monday, followed five days later by another Calpine project, the Los Mendanos plant in Contra Costa County. All three plants, Sunrise, Sutter and Los Mendanos, have been selling some power into the statewide transmission grid during shakedown tests over the last few weeks. ?????Edison signed a long-term contract with the state Department of Water Resources on Monday under which it will sell electricity from the Sunrise plant to the state for 10 years at an average price of 6 cents a kilowatt-hour, said Ronald Litzinger, a senior vice president with Mission Energy. That is substantially less than the prices charged by most companies, but Edison Mission Energy was bound by the terms of a larger bailout deal between the state and Edison, Litzinger said. ?????He said Mission Energy could cancel the power contract if the bailout failed to pass the Legislature, which appears increasingly possible. ?????Southern California Edison sold most of its natural gas-fired power plants to out-of-state companies after California deregulated its electricity market in 1998. The company fell into deep financial difficulty last year when an increase in natural gas rates kicked off a huge run-up in the wholesale price of electricity--including the power produced at former Edison plants. Unlike its Northern California counterpart, Pacific Gas & Electric, Edison has not filed for protection in Bankruptcy Court, but it has incurred huge debts and agreed to sell its vast transmission grid to the state. ?????Single-Cycle Operation ?????Edison Mission Energy, formed in 1986, owns about 80 power plants in nine countries and in more than half a dozen U.S. states. In addition to Sunrise, it owns nine smaller plants in California. ?????The plant that opens today is a relatively simple, single-cycle operation that burns natural gas to create electricity. A single-cycle plant operates much like a jet engine, burning fuel to spin turbines. The energy generated by the turbines is then converted into electricity. ?????By the summer of 2003, the plant will be converted to a more efficient combined-cycle plant, which turns the exhaust from the turbines into steam. The steam is then used to run another set of turbines and generate still more electricity. ?????As a single-cycle plant, Sunrise will be capable of producing about 320 megawatts. When it is converted into a combined-cycle operation, it will be able to produce 585 megawatts. ?????The completion of the three large plants in Kern, Sutter and Contra Costa counties is one of several positive developments recently in California's electricity crisis. ?????Another was the decision of the Federal Energy Regulatory Commission to place a temporary cap on wholesale electricity prices throughout 11 Western states. And, just as significant, the California Energy Commission announced recently that Californians had not only met, but exceeded, the state's conservation goals. ?????Not everything has gone so well. Many of the small "peaker" power plants--so named because they are intended to operate only at periods of peak electricity use--are behind schedule, or at least behind the timetable laid out by the state earlier this year. ?????"We've slipped on that," conceded Claudia Chandler, a spokeswoman for the Energy Commission. Still, she insisted that the state is on track to come within a couple hundred megawatts of Davis' 5,000-megawatt goal by the end of September--too late for the peak of the summer, but useful for the fall "shoulder," when coastal California often experiences its hottest days. ?????"I think it's working out well," Chandler said. "I guess our learning curve here was that the development of these facilities took longer than we anticipated, but we'll still have them in September." ?????Meanwhile, after months of paying high electricity prices, the state is continuing to seek repayment for what it considers overcharges by electricity generating companies. ?????In Washington on Tuesday, FERC recessed an overcharge settlement conference after about 30 minutes of closed-door discussions. ?????Curtis L. Wagner, the FERC administrative law judge who is mediating the refund talks, said he will hold individual meetings with conference participants before resuming discussions with all parties. ?????California officials participating in the negotiations were expected to meet with Wagner today. ?????Wagner has scheduled 15 days of talks with about 150 individuals representing 70 stakeholders in the West's electricity crisis. ?????On Monday, the opening day of the settlement conference, the judge admonished participants to reach agreement among themselves on how much money power generators should refund to the state. Davis has pegged the amount owed at nearly $9 billion, but state records show that figure may be flawed. Generators say the governor's number is wildly overstated. --- ?????Times staff writer Anuj Gupta in Washington contributed to this story. Copyright 2001 Los Angeles Times Edison Delays Sale of $1.2 Billion in Bonds Utilities: Slated offering was to repay bank loans due Saturday and later this year, but the parent of SCE appears unable to interest investors. By JERRY HIRSCH, Times Staff Writer ?????A financial rescue plan for Edison International was placed in doubt Tuesday when the company delayed a bond offering intended to pay off $618 million in bank loans that come due Saturday. ?????The delay of the $1.2-billion note sale indicated investors were reluctant to lend more money to the corporate parent of Southern California Edison, fearful that Edison and its utility could be forced to file for bankruptcy in the coming weeks, said Jon Cartwright, a bond analyst at Raymond James & Associates in St. Petersburg, Fla. ?????"This is a disaster waiting to happen," Cartwright said. ?????Last week, a spokesman for Edison's investment bank Goldman Sachs Group said the note offering was expected to be completed Monday. Goldman Sachs then moved the sale to Tuesday. But by the time U.S. markets closed Tuesday, the seven-year notes still were not sold. ?????Goldman Sachs officials did not return calls. In a conference call with SCE creditors, Edison officials would not talk about the bond offering or its status. ?????Analysts said Edison and Goldman Sachs officials are searching for ways to get the sale completed before Saturday's deadline. Their choices range from restructuring the deal to make it more attractive to investors, to simply continuing to raise the interest rate on the notes. ?????The note sale, which would be secured by Edison's profitable Edison Mission Energy subsidiary, would have paid off the company's outstanding bank debt on the notes due Saturday, $250 million in notes due July 18 and $350 million due Nov. 1. ?????To lure investors, the Rosemead-based company has repeatedly boosted the interest rate it's willing to pay. ?????When Edison first talked about the offering several weeks ago, analysts said it could carry an interest rate of about 10%. But that figure has increased to 12% and then 13% in recent days, and now Wall Street sources say the latest talk has the interest rate set at 13.5%. ?????Carrying a Standard & Poor's credit rating of BB-minus, the proposed seven-year notes would have an interest rate double what a credit-worthy company would pay for a similar issue. Indeed, Sempra Energy, owner of San Diego Gas & Electric and the Southern California Gas Co., sold $500 million in three-year notes Tuesday at 6.8%. Edison's rumored rate is 2 percentage points higher than the average rate for other "junk," or speculative, bonds. ?????"Every day they don't price suggests they can't get the orders," Cartwright said. He said it may take a 14% or 15% rate to get potential buyers interested. ?????Meanwhile on Tuesday, investors bid up the price of bonds for Edison Mission Energy in the belief that its parent won't be able to pull off the note sale, and thus not encumber the profitable subsidiary with new debt. That was viewed as a positive development for Edison Mission Energy, said Douglas Christopher, a utility analyst at Crowell, Weedon & Co. in Los Angeles. ?????If the proposed bond offering fails, Edison might have to deplete most of its cash reserves, Christopher said. ?????The company had about $3 billion in cash at the end of March, according to Securities and Exchange Commission documents. But about $1.5 billion is tied up at SCE. SCE holds another $500 million that is committed to the California Department of Water Resources. ?????SCE creditors, who hold $931 million in defaulted utility bonds and debt, probably would block any attempt by Edison to tap into the utility's funds, even if they had to file an involuntary bankruptcy petition against the utility, said Nellwyn Voorhies, a San Diego lawyer who represents SCE bondholders. ?????Edison also could go back to its bankers and request continued forbearance. That would buy time until the $250 million in notes come due in July. ?????Edison shares, which trade on the New York Stock Exchange, fell 33 cents to close at $11.24 Tuesday. ?????The notes are being offered by Mission Energy Holding Co., a company created by Edison for the purpose of issuing the notes. The assets of Edison Mission Energy, which owns a network of power plants across the United States and in Asia, Australia and New Zealand, will secure the debt. Mission Energy Holding plans to issue the proceeds to Edison in the form of dividends. ?????Edison's financial troubles developed over the last year as SCE lost billions of dollars on electricity sales when energy prices peaked. Copyright 2001 Los Angeles Times Union Seeks to Return to Reliant Power Plant By NANCY CLEELAND, Times Staff Writer ?????Workers at a San Bernardino power plant bought by Houston-based Reliant Energy Inc. will vote Tuesday on whether to bring back the union that represented them when the facility was owned by Southern California Edison. ?????The rancorous campaign leading up to the vote illustrates one ancillary result of deregulation, which pushed the state's three largest utilities to sell their generating plants. ?????Of a dozen plants sold by Rosemead-based Edison International, nine that were bought by Reliant and Virginia-based AES Corp. went nonunion over the last year. In contrast, Duke Energy Corp. and Mirant Corp. retained union work forces at five plants they bought from San Francisco-based Pacific Gas & Electric Co. ?????The change in Edison territory affected two union locals, but the harder hit by far was the Utility Workers Union of America, Local 246, which lost half its membership in a matter of months. The vote planned for Tuesday at the Etiwanda plant in San Bernardino, which has 34 eligible employees, is the first test of that union's efforts to rebuild. ?????Organizers said the campaign has met with resistance. "It's tough going," local President Dan Davis said. "People are afraid of losing their jobs, and [Reliant] has a lot of money to throw around." ?????This month, Reliant lost a similar battle at its Coolwater generating plant in Barstow, where employees voted to rejoin the International Brotherhood of Electrical Workers, Local 47. ?????IBEW business agent Pat Lavin said that all 35 employees had signed union pledge cards, but that the company would not recognize the union without a federally supervised election. During the intervening months, employees were aggressively lobbied to reject the IBEW. "The union is only here for your money," wrote plant manager Danny Ross in a June 1 letter to workers. "They did not offer you a job. I DID!" ?????The union barely won, by a vote of 17 to 15. ?????Several days later, Reliant announced an "extraordinary incentive program," offering $500 to $2,000 per month to workers at California generating plants who meet basic production goals. There was one catch, however: The program, which runs through October, is not available to workers who are unionized or have filed a petition for a union election. ?????Davis said the offer had an immediate chilling effect on his local's campaign at Etiwanda and dims the prospect of organizing other Reliant plants. "People have called us asking, can't we put off the election until the summer's over?" he said. ?????Reliant spokesman Richard Wheatley said the program was intended to improve production during the difficult summer months, not to blunt the union campaign. "We have not used the letter to coerce employees but to inform them," Wheatley said. "We are being upfront. . . . As a company, we are prohibited by law from improving existing wages or benefits during the course of a union campaign." ?????A spokesman for the National Labor Relations Board said the offer fell into a gray area of labor law that would be examined by the agency if the union filed a grievance. Such an investigation would delay the vote, however. ?????In California, as across the nation, unions objected strenuously to deregulation, claiming the trend could lead to an erosion of wages and benefits as well as safety and reliability. The generators argued that deregulation would bring lower rates, greater choice for consumers and improved service. ?????The union hopes a victory Tuesday will build momentum for reorganizing other plants, but they concede it's a tough fight for plants that were once theirs. "It's like trying to move a mountain, one grain at a time," said Dan Dominguez, an organizer for the Utility Workers Union of America. ?????Reliant shares fell 5 cents to close at $30.50 on the New York Stock Exchange. Copyright 2001 Los Angeles Times Retired PG&E Executives Seek Full Pensions in Bankruptcy Case Power crisis: Members of group lost part of their retirement money when firm filed for protection. By TIM REITERMAN, Times Staff Writer ????? SAN FRANCISCO--While Pacific Gas & Electric Co. hopes to pay millions of dollars in bonuses to retain its current managers, dozens of retired high-ranking PG&E executives have lined up as creditors in the utility's bankruptcy case, saying part of their pensions have stopped coming. ?????The retirees--ranging from chief executive officers to vice presidents--are upset to find themselves among those owed money by the company they once ran, their attorney said. ?????"Some are more so than others, depending on how it has affected them financially," John T. Hansen said. "They think the company . . . should have done something to avoid this situation. Most were career employees . . . and represent close to 1,000 years' service to a company they felt owed them better treatment than this." ?????A company spokesman said a portion of the executives' pensions was not guaranteed and "unfortunately" had to be suspended once the company filed for bankruptcy protection. ?????PG&E filed for Chapter 11 protection from creditors April 6, declaring $9 billion in debts related to the energy crisis. The company identified thousands of creditors, including vendors, banks and energy companies that supplied power to the utility's customers. ?????But because of their longtime service to PG&E, the 33 former executives are perhaps the most unlikely group to band together and hire an attorney to ensure they receive their due as the company's financial affairs are reorganized. ?????Among them are onetime CEOs Frederick Mielke, Richard A. Clarke and Stanley T. Skinner. Former PG&E presidents George Maneatis and Barton W. Shackelford also are claimants, along with former vice presidents who oversaw such areas as natural gas and electricity supplies, engineering, customer service and human resources. ?????Court records list them as the Committee of PG&E Retirees and Survivors, which was formed to seek their benefits under what is known as the Supplemental Executive Retirement Plan. The plan was designed to provide additional retirement benefits to PG&E's highest-paid employees. ?????Unlike the pensions of rank-and-file workers, the supplemental plan was not secured, or guaranteed, under federal retirement rules. ?????"Part of their pensions are protected, but in many cases that is a small part of their pensions," lawyer Hansen said. "The more you make, the greater part of your pension is not qualified, or protected." ?????Shackelford, who put in 39 years before retiring as president in 1985, said, "We knew part of [the pension] was at risk. But, of course, I don't think many people thought that PG&E was likely to go into bankruptcy." ?????The former executives, Shackelford said, only seek to be treated like other unsecured creditors, meaning they want PG&E to make good on its vow to make creditors whole. ?????"I don't know how long it will take," he said. ?????The executives' claims are expected to amount to millions of dollars. Hansen said the total covers not only missed monthly pension payments in May and June but also lifetime payments for the retirees and, in some cases, for spouses. ?????Some claimants left the company almost a quarter of a century ago and are in their 80s. Others took early retirement and are in their 50s. Two are widows, and two are ex-spouses. ?????Most remain well-situated financially, Hansen said, but one recently put his house on the market out of concern for his finances. ?????"Many of them made pretty good salaries while there, and if they were at all prudent, they have assets," the attorney said. "For many of them their main assets are stock in PG&E, so they have lots of depressed stock which is not paying a dividend now." ?????The retiree committee did not intervene recently when PG&E asked for and received tentative approval from the federal bankruptcy judge to spend $17.5 million on bonuses to help retain its present management team. But the committee's bylaws state that it would use litigation, if necessary, to ensure "the continuation of all pension payments, deferred compensation, insurance annuity payments and other similar benefits." ?????PG&E spokesman Ron Low said 50 retired executives and about 35 other senior employees have a portion of their retirement benefits in unsecured plans and are considered creditors. ?????The company declined as a matter of policy to discuss the pensions of individual employees. But Low noted that under federal law, the maximum benefit that can be paid through secured plans is $140,000 a year, so anything above that is not guaranteed. ?????"Unfortunately, individuals who have a portion of their retirement in non-qualified programs are unsecured creditors," Low said. "It means [unsecured] benefits would be suspended until the company emerges from Chapter 11." ?????That means their claims will be handled in U.S. Bankruptcy Court with those of other unsecured creditors, whose debts are not backed by utility assets. The company has identified more than 100,000 potential claimants. On July 7, PG&E will mail "proof of claim" forms to potential creditors, and nongovernmental claimants must return them by Sept. 5. --- ?????Times researcher Vicki Gallay contributed to this story. Copyright 2001 Los Angeles Times 600-megawatt plant OKd in San Jose council reversal Chronicle Staff Report Wednesday, June 27, 2001 ,2001 San Francisco Chronicle URL: http://www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2001/06/27/M N75885.DTL The San Jose City Council gave final approval last night to plans for a controversial power plant that was mired in debate for the past year. The council voted 10 to 1 to approve the Metcalf Energy Center, a $400 million, 600-megawatt plant that will be built this year for Calpine Corp. by Bechtel Enterprises. Last night's proposal is essentially the same plan the council unanimously rejected in November, before California's energy crisis had taken hold. Mayor Ron Gonzales originally argued that the power plant was too close to a neighborhood and to workers at a huge office park that Cisco Systems is planning to build. But the city took a nationwide public-relations beating for its opposition, and the proposal was appealed to the California Energy Commission. City officials, anticipating that their opposition would be overturned by the commission, negotiated an agreement in which Calpine gives San Jose $6.5 million in "community benefits" payments for city cooperation. ,2001 San Francisco Chronicle ? Page?A - 13 California to justify its claim of $9 billion in overcharges MARK SHERMAN, Associated Press Writer Wednesday, June 27, 2001 ,2001 Associated Press URL: http://www.sfgate.com/cgi-bin/article.cgi?file=/news/archive/2001/06/27/state1 933EDT0238.DTL (06-27) 01:30 PDT WASHINGTON (AP) -- California officials will attempt to justify their claim that energy providers overcharged the state by $9 billion when federal settlement talks over the West's energy crisis resume Wednesday. California's allegations of price-gouging during the last 13 months are expected to dominate the third day of confidential negotiations involving scores of entities who buy and sell power in California and 10 other Western states. A new analysis backs up the $9 billion figure, said Michael Kahn, chairman of the California Independent System Operator, which manages much of the state's electricity grid. But that study, as well as an earlier analysis prepared by the grid operator, suggest that several billion dollars might lie beyond the reach of federal energy regulators. Last week, regulators ordered the talks as part of an effort to get a handle on Western energy prices. The commission's order last week extended price controls in California and imposed them in the rest of the Western power grid, covering all sellers. It also gave the parties until July 9 to settle a host of issues, including $15 billion in alleged overcharges in California and elsewhere in the West, generators' unpaid bills and additional long-term power contracts. Kahn said roughly $3 billion in alleged overcharges occurred before Oct. 1, which FERC has said marks the start of its authority to investigate pricing abuses. Another portion of the money California is seeking in refunds would come from municipal utilities and other power sellers that until now have not come under the energy commission's jurisdiction. California will try to argue that neither of those factors should influence a settlement. "We respectfully disagree with FERC on the October situation," Kahn said. "We think we suffered greatly last summer. It's inexplicable to us that we would not be allowed to seek refunds for that period." Kahn, the state's chief representative at the Washington talks, will contend that the regulators' expanded view of their authority also should apply retroactively. "We determined that if the plan had been in effect since May 2000, that the numbers were approximately $9 billion," Kahn said. A negotiated settlement -- rather than an order from regulators -- also could allow power users and providers to reach agreement on issues that might not be in FERC's domain. Those issues include whether generators would be protected from lawsuits over their prices, said Mark Cooper, research director for the Consumer Federation of America. "It's one of the concerns we have, that we might not get a clear ruling and that we run the risk of losing our litigation rights," Cooper said. Wholesale power costs in California were $7 billion in 1999, rose to $27 billion last year and could top $50 billion this year, according to state estimates. Federal regulators have on several occasions said the recently deregulated electricity market is dysfunctional. Power wholesalers have dismissed the state's claim as grossly inflated. They say high prices have been justified by a shortage in natural gas, which fuels many power plants. The generators said they have yet to be paid billions of dollars for power that already has been supplied. "California for some reason feels that they're entitled to free energy," said Richard Wheatley, a spokesman for Houston-based Reliant Energy. "Reliant and other generators have been California's energy bankers for some time." Wheatley said Reliant is owed $337 million for past power sales. Generators probably would have to pay no more than $2.5 billion in refunds, said Curtis Wagner, who is FERC's chief administrative law judge and is overseeing the negotiations. Associated Press Writer Don Thompson in Sacramento contributed to this story. On the Net: Federal Energy Regulatory Commission: www.ferc.gov ,2001 Associated Press ? Cheaper electricity won't trim bills Rate increase to pay off big state debts takes effect next month Tyche Hendricks, Chronicle Staff Writer Wednesday, June 27, 2001 ,2001 San Francisco Chronicle URL: http://www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2001/06/27/M N204070.DTL A rate increase passed last month will begin showing up on electricity bills next month to pay off billions of dollars in debt that the state has incurred buying power on the spot market. And new long-term energy contracts may lock California into paying higher-than-market rates for future electricity. The only bright spot for ratepayers is that consumer prices for natural gas, which went through the roof last winter, are at last back to reasonable levels. Oakland resident Linda Lewis, 45, a security guard, said something has to change. One month's bill -- gas and electricity combined -- for her drafty two- bedroom apartment in a converted garage ran $700 last winter. K.J. Jennings, 36, a Walnut Creek electrician, said he is crossing his fingers that his electricity bill will come down, now that wholesale prices are dropping. "Of course, I'm hoping. Hope springs eternal," he said. "But I doubt it will. Once it goes up, it's hard to get it to go back down." In fact, unlike retail rates for natural gas, which go up and down with the market price, electricity rates are set by law and adjusted by state regulators. "I wouldn't expect to see decreases anytime soon," said Matt Freedman, a staff attorney for The Utility Reform Network, a consumer advocacy group in San Francisco. "We're in a very short-term dip here. We have no idea what the price of power will be next week or next month or next year." Freedman said that if wholesale electricity prices stay low his group would fight for lower bills for consumers. But the recent rate increase will be needed for years to come to help the state pay off the $8 billion it has spent buying power on the wholesale market for the utilities to distribute to their customers, he said. The state stepped in in January when the utilities were unable to pay their bills and power generators threatened to stop selling them electricity. HUGE DEBTS TO REPAY "The state has these huge debts . . . that will be paid by the ratepayers," Freedman said. "That's why people shouldn't expect that prices going down temporarily will rescind the rate increase." In addition, the state's utility companies are negotiating with Gov. Gray Davis for debt relief that, if approved, could cost ratepayers an additional $10 billion over the next decade, according to Freedman. Finally, he said, "whether or not power is cheap on the spot market may not matter at all" now that Davis has approved long-term contracts with energy generators that guarantee the state will pay a consistent price. Although the contracts provide some stability in a volatile situation, it remains to be seen whether or not the governor got a favorable rate. "It may end up being far more expensive than the alternatives available on the market," said Freedman. "It would be like getting a fixed-rate mortgage at the worst possible time." RATE INCREASES OF UP TO 36% Under electricity rate increases approved by the state Public Utilities Commission in March, medium users will pay 9 percent more and bills for the heaviest users will increase by 36 percent, while the lowest users will pay about the same. Meanwhile, consumers are beginning to get some relief in the price of natural gas, which in recent months has made up the lion's share of residential utility bills. "The gas portion fluctuated pretty wildly this winter" but seems to be settling down, said Pacific Gas and Electric Co. spokeswoman Staci Homrig. This month, the price of one therm of gas was 48 cents, down dramatically from January, when it cost $1.42, but still higher than January 2000, when the rate was 31 cents per therm, according to Homrig. Those rates translated into an average residential gas bill of $122 for January 2001, compared with $46 for January 2000, she said. The average bill for June 2001 was $26, she said, only slightly higher than the June 2000 bill of $23. In warmer months, when furnaces get turned off, gas usage is usually less than half that in the winter, said Homrig, and prices drop as a result. But because natural gas prices are passed through to the consumer, they could rise again at any time, said Freedman. "I would caution folks who think that there's a trend toward lower prices," he said. "We're in for an extended period of volatility." PUC rate increases The electricity increases approved last month are intended to punish the heaviest users. A look at the average increase for residential users: -- -- Baseline: $0 (0% increase) -- 200% of baseline: $6 (7% increase) -- 300% of baseline: $24 (15% increase) -- 400% of baseline: $87 (40% increase) E-mail Tyche Hendricks at thendricks@sfchronicle.com. ,2001 San Francisco Chronicle ? Page?A - 1 Duke buys ads to deny claim of workers Firm not allowed to speak at hearing Kelly St. John, Chronicle Staff Writer Wednesday, June 27, 2001 ,2001 San Francisco Chronicle URL: http://www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2001/06/27/M N167985.DTL The Duke Energy Corp. has begun a statewide advertising campaign to rebut assertions by former employees that it decreased production at a power plant to drive up electricity prices. Duke has purchased full-page advertisements in more than a dozen California newspapers -- including The Chronicle, Los Angeles Times and Sacramento Bee -- which read, "Duke Energy categorically denies the allegations, and we want you to know the truth." "Our reputation is critical to us," said Duke spokesman Tom Williams yesterday in a phone interview. "We're going to set the record straight." The ad blitz is the North Carolina company's first statewide advertising campaign and marks the first time the company has used advertising to defend itself against public accusations, Williams said. It comes after public testimony Friday by Glenn Johnson, Jimmy Olkjer and Ed Edwards before a state Senate committee investigating price manipulation in the California energy market. The men, all employees of San Diego Gas & Electric Co., worked at Duke's Chula Vista plant as contract employees until April. They said Duke Energy ramped production up and down at the Chula Vista plant, idled some units altogether and threw away unused equipment -- all in attempts to drive up electricity prices. Company spokesmen have called the three whistle-blowers "disgruntled." They were not hired by Duke after their contract was terminated. Duke Energy was not allowed to testify Friday morning in response to the allegations, Williams said. The advertisements say that Duke Energy's plants were operated under the Independent System Operator's direction, noting that Duke's average price for power in early 2001 was well below the spot market price for the same period. The ads also address testimony by Olkjer, a former control room operator, who took the Senate committee through a smuggled operation log and said at least one unit reduced its power output just minutes before a Stage 3 alert. The ads say output is directed by California's Independent System Operator, not Duke. They note that the employees were not in a position to know that. The Chronicle received $62,178 for the ad running in today's main news section. E-mail Kelly St. John at kstjohn@sfchronicle.com. ,2001 San Francisco Chronicle ? Page?A - 13 News briefs on California's power crisis The Associated Press Wednesday, June 27, 2001 ,2001 Associated Press URL: http://www.sfgate.com/cgi-bin/article.cgi?file=/news/archive/2001/06/27/state0 512EDT0125.DTL (06-27) 02:12 PDT CALEXICO, Calif. (AP) -- Two power plants that will be built outside Mexicali, Mexico will boost emissions in the border region that already has air quality problems, according to a recent report. The Imperial County Air Pollution Control District found that the two plants will pump more than 4,000 tons of pollutants every year into the skies above Mexicali and Imperial County. Mexicali is only 10 miles from the California city of Calexico. "We're not opposed to power plants, but we are concerned about the emission levels and the impact it will have on the health of the citizens of the two areas and the impact it could have on the region's economic development," said Steve Birdsall, a district pollution control officer. The total emissions from the two plants would rise by more than 12 percent in Mexicali while cross-border emissions would increase by more than 7 percent. The report was based on information from permit applications filed with the Mexican government. The two plants are being built by Sempra Energy of San Diego and global power generation firm InterGen. The plants, which will be operating in two years, could provide electricity to 600,000 homes in California. Both energy providers have permits from the Mexican government and are ready to start construction. Environmental standards for power plants are less stringent in Mexico than the United States. The report said the generators will have "a far greater negative impact on U.S. and Mexican citizens living in the border region than if these plants were constructed a few miles to the north in the United States." A coalition of business leaders, community activists and residents have launched a campaign to address concerns about the generators. They plan to send letters to government officials on both sides of the border that stress the emission levels are too high. But Joel Epstein, a consultant for InterGen, said the company's research shows the emissions won't have a significant impact on either side of the border. TEMECULA, Calif. (AP) -- San Diego Gas & Electric Co. has apologized to the state's Public Utilities Commission for a series of newspaper advertisements that misstated the board's support of its proposed 31-mile power line through southwestern Riverside County. In a letter sent Tuesday to PUC Administrative Law Judge Michelle Cooke, SDG&E attorney Steve Nelson wrote the utility incorrectly said the commission considered the transmission line a state priority. "We regret any implication that the commission has already found that the project is needed and any ... confusion this statement may have caused to either the commission or the residents of southwestern Riverside County," Nelson wrote. The judge, who previously expressed doubts about the project, said the letter will be placed in the case file. The utility wants to build a 500,000-volt power line that will connect its grid to a unit operated by Southern California Edison. The California Independent System Operator has approved the project but it still needs the green light from the PUC. The ads ran in The Riverside Press-Enterprise and The Californian and said the state commission "identified the transmission line as one of the most important in the state of California." Representatives of a group opposing the project said the letter spreads misinformation to the public. "They are just trying to gloss it over and appease the commission," said Sandy Spooner, a board member for Save Southwest Riverside County, an organization that brought the ads to the attention of the commission. "The only reason they sent the letter is that they got called on it." ,2001 Associated Press ? State to take delivery of cheap electricity L.A. selling at cost, Bakersfield plant opening early Lynda Gledhill, Chronicle Sacramento Bureau Wednesday, June 27, 2001 ,2001 San Francisco Chronicle URL: http://www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2001/06/27/M N212287.DTL Sacramento -- California will get an influx of cheap power from several different sources starting this week as the state continues attempts to stave off summer blackouts. The Department of Water Resources has reached an agreement in principle to receive as much as 500 megawatts of power from Los Angeles at cost. And Gov. Gray Davis travels to Bakersfield today to flip the switch at a new power plant that is starting up 32 days ahead of schedule. "I think the department wants to continue to be a good neighbor," said David Wiggs, general manager of Los Angeles Department of Water and Power. "We want to be part of the solution, not part of the problem." The agreement with Los Angeles comes less than a month after Davis threated to seize excess power generated by California's municipal utility districts, which he said charged the state as much as 10 percent more than private out-of- state generators. Last month, the governor said he would use his executive powers to claim excess power from the municipal utilities if they do not lower their prices. In Northern California, there are municipal utilities in Alameda, Palo Alto, Redding, Sacramento and Santa Clara. Los Angeles has the largest municipal utility in the state. Wiggs said his department's three-month contract, which should be approved by the board this week, will provide the state enough power to serve 500,000 homes. Los Angeles had been offering short-term power earlier in the year at cost plus 15 percent. But the longer contract will allow for cheaper natural gas and push down costs. "It is easier for us to plan and for the state to plan," he said. "We will re-evaluate it in September." A spokesman for the Department of Water Resources would not comment on the contract because it is not yet final. The Davis administration is also touting three new power plants that are coming on line this month. Today, he starts the Sunrise Plant, which will eventually provide 585 megawatts by 2003 and is owned and operated by Southern California Edison. Under the terms of the memorandum of understanding between Davis and Edison, the power from the plant is scheduled to be provided to the state at cost for the next 10 years. If the state does not ratify the memorandum, the company can walk away from the deal. The plant was constructed in less than seven months, with employees working 18-hour days, six days a week, said Steve Larson, executive director of the California Energy Commission. "This is a red-letter day," Larson said. "The company and crew did a remarkable job, pitched in and made it happen." Edison and its contractors are eligible for about $1 million in bonuses for completing the project ahea
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