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Sac Bee, Tues, 6/26: Energy-refund talks open on divisive note Sac Bee, Tues, 6/26: Daniel Weintraub: Davis' energy contracts preserve=20 long-term pain Sac Bee, Tues, 6/26: State, generators lock horns in talks Sac Bee, Tues, 6/26: Davis commends 3 'heroes' in generator refunds fight Sac Bee, Tues, 6/26: San Onofre blast released no radiation, spokesman says Sac Bee, Mon, 6/25: Congress demands list of participants in Cheney energy= =20 meetings Sac Bee, Mon, 6/25: Creditor expects no quick fix in PG&E's venture into=20 bankruptcy LA Times, Tues, 6/26: State, Power Firms Urged to Make a Deal LA Times, Tues, 6/26: Commerical Real Estate Apartments to Provide Own Powe= r LA Times, Tues, 6/26: Officials Oppose Utility Choice Power SF Chron, Tues, 6/26: Billions of dollars at stake as power talks begin SF Chron, Tues, 6/26: Compromise urged in electricity refund talks SF Chron, Tues, 6/26: Developments in California's energy crisis=20 SF Chron, Tues, 6/26: News briefs on California's power crisis Mercury News, Tues, 6/26: The haggling over refunds is under way=20 OC Register, Tues, 6/26: Power workers supported OC Register, Tues, 6/26: Judge sets tone at energy talks NY Times, Tues, 6/26: California and Energy Providers in Talks Over Electri= c=20 Fees NY Times, Tues, 6/26: Cheney Withholds List of Those Who Spoke to Energy Pa= nel WSJ, Tues, 6/26: Love, War and California Electricity=20 ---------------------------------------------------------------------------= --- -----------------------------------------=20 Energy-refund talks open on divisive note=20 By David Whitney Bee Washington Bureau (Published June 26, 2001)=20 WASHINGTON -- More than 130 lawyers and corporate chiefs crowded into a=20 courtroom Monday to begin secret talks aimed at ending months of bitterness= =20 and accusations over who should pay for California's haywire energy market.= =20 But the largely closed-door sessions before a Federal Energy Regulatory=20 Commission judge could be doomed from the start by sharply divided estimate= s=20 of how much money it will take to leave the past behind and launch Californ= ia=20 toward a new energy future.=20 The state says its consumers have been overcharged by at least $8.9 billion= ,=20 but Curtis Wagner, FERC's chief administrative law judge who is presiding= =20 over the settlement negotiations, said he believes at most it will be $2=20 billion to $2.5 billion.=20 "We told everyone that $8.9 billion is the floor. It is the most conservati= ve=20 possible number," Michael Kahn, a power grid official who is heading the=20 state's delegation, told reporters after Monday's talks.=20 The state's firm stance and Wagner's 15-day deadline for results had many= =20 predicting that little would come of the talks.=20 "I believe California is going to scuttle the talks. I believe that nothing= =20 will be good enough for them," said Arthur O'Donnell, editor of California= =20 Energy Markets, an industry newsletter.=20 More than $6 billion of the state's claims involve deals that are ineligibl= e=20 for refunds because of the seller or the date sold, O'Donnell said. FERC=20 doesn't have jurisdiction over all traders, and it already has excluded man= y=20 months of trades from refunds.=20 If the parties fail to settle within 15 days, Wagner has another week to=20 submit his own recommendations to the five FERC commissioners on how he=20 thinks they should resolve the disputes.=20 Wagner warned the parties that settlement would be the far preferable cours= e.=20 "I can tell you now that you are far better off to work out the refund issu= e=20 in these settlement proceedings," the blunt-speaking judge said. "The time = to=20 put California's past energy problems to rest and (to) structure a new=20 arrangement for California's energy future is now."=20 Wagner held out a carrot to the generators, who have been pummeled by Gov.= =20 Gray Davis and state Attorney General Bill Lockyer over allegations of mark= et=20 manipulation to drive up prices and their profits. "There are questions=20 concerning whether the settlement should offer immunity from existing and= =20 future lawsuits and prosecutions against generators," Wagner said.=20 California argues that power plant owners and traders manipulated a badly= =20 flawed market to drive up prices, racking up $9 billion in overcharges from= =20 May 2000 until May 2001. But electricity sellers say they obeyed the law, a= nd=20 they contend it's unfair to change the rules retroactively.=20 Assuming the refund issue is resolved, Wagner said there are at least six= =20 other issues on the table. They include agreement on moving power out of th= e=20 volatile spot market and selling it under long-term contracts; eliminating= =20 natural gas transmission constraints blamed for the high cost of gas in=20 California; and settlement of financial issues connected with PG&E's=20 bankruptcy filing.=20 Wagner began the brief, public opening of the negotiations by reading a=20 statement from FERC's two newest members, Patrick Wood III and Nora Mead=20 Brownell, the forces behind the order convening the talks.=20 Wood and Brownell said in a statement that it is in "everyone's best intere= st=20 to bring closure" to the crisis, and urged the participants to resist tryin= g=20 to blame each other for the power debacle. "Everyone must leave (the=20 negotiations) with more than they came in with," they said.=20 But skepticism remained high Monday. "We didn't take two weeks to get into= =20 this," said one participant late in the day. "It's hard to see how we'll ge= t=20 out of this in two weeks."=20 Among the participants are legal teams representing about 50 government=20 agencies, utilities and power generators, including Pacific Gas and Electri= c=20 Co., Southern California Edison, San Diego Gas & Electric and their corpora= te=20 parents and subsidiaries.=20 The talks also include municipal utilities such as the Sacramento Municipal= =20 Utility District, more than a dozen California towns and irrigation=20 districts, and utilities in Washington, Montana, Idaho, Colorado, New Mexic= o=20 and Arizona.=20 Meanwhile, FERC commissioners Wood and Brownell were in Sacramento to confe= r=20 with Davis and legislative leaders, then conduct a fact-finding hearing wit= h=20 California regulators on the high price of natural gas.=20 Brownell and Wood, Davis said, are "committed to working together with us t= o=20 drive down the price of natural gas in California to get it closer to what= =20 the rest of the country is paying."=20 "I think we are turning a corner," he said. "Conservation has been=20 spectacular. The outlook looks much more positive than it did two months=20 ago."=20 For more information: For the latest information on the state's energy=20 crisis, including rolling blackouts, visit www.sacbee.com. Also, sign up fo= r=20 the latest news headlines and Stage 3 power alerts at=20 www.sacbee.com/news/news2go=20 The Bee's David Whitney can be reached at (202) 383-0004 or=20 dwhitney@mcclatchydc.com.=20 Bee Staff Writers Carrie Peyton and Emily Bazar contributed to this report. Daniel Weintraub: Davis' energy contracts preserve long-term pain (Published June 26, 2001)=20 With blackouts held at bay, federal price controls taking effect and the sp= ot=20 market cost for wholesale electricity declining toward historic lows, thing= s=20 are looking good for Gov. Gray Davis. If current trends continue, the=20 governor's public approval ratings might soon resemble one of those fever= =20 charts tracking the meteoric rise in electricity prices last winter.=20 But even if his strategy turns out to be a political success, a major probl= em=20 created by the governor's approach will loom as a quiet threat to the state= 's=20 economy for years to come.=20 The centerpiece of his solution to the energy crisis was a series of 38=20 agreements with electricity generators under which the state will buy power= =20 for the next 10 years. Davis signed those deals in desperation, just when= =20 prices were peaking, with the very companies he has been accusing of gougin= g=20 the state.=20 Now that prices have begun to fall, Davis is taking credit. His advisers ar= e=20 even trying to suggest that the existence of the long-term contracts has=20 contributed to the more favorable conditions in the market.=20 "It's economics 101," says David Freeman, one of the governor's closest=20 energy advisers.=20 But the most famous rule of economics 101 -- the law of supply and demand -= -=20 suggests that the contracts have little, if anything, to do with the recent= =20 decline in electricity prices. In a properly functioning market, prices=20 decline when supply exceeds demand. When demand chases a limited supply,=20 prices climb. It's true that the contracts have reduced the state's demand= =20 for power on the spot market. But they also have reduced, by an identical= =20 amount, the supply of electricity available on the spot market. That=20 shouldn't have any effect on the price.=20 Long-term contracts, used prudently, are a fine idea, but they are not=20 necessary for a stable market to exist. For two years after California's=20 deregulation plan took effect, the state's utilities bought power at=20 rock-bottom prices without the benefit of any contracts at all. By state=20 edict, all electricity was bought and sold on the spot market, and as long = as=20 supply was plentiful, the price was low. The generators were standing in li= ne=20 to sell us their electricity.=20 Then, a little more than a year ago, things went haywire. Demand caught up= =20 with supply, and at the same time, the price of natural gas, which is used = to=20 produce most of our electricity, rose rapidly. The design of the electricit= y=20 system created by the state also appears to have allowed the private=20 generators to game the market. It's still not clear whether their behavior= =20 was legal or not, but they did gain the upper hand. We needed their=20 electrons, and the generators suddenly were in the position to demand any= =20 price they liked.=20 It was at just this moment that Davis decided to lock up as much electricit= y=20 as he could under contract. Wanting to avoid a retail rate increase that he= =20 feared would prove unpopular, Davis sought the lowest possible price. To ge= t=20 it, he signed contracts with the longest possible terms. Shorter terms woul= d=20 have preserved the state's flexibility for the future. But the governor sai= d=20 he was willing to pay a price for stability, and so he locked every custome= r=20 of Pacific Gas & Electric and Southern California Edison into his plan.=20 Some suggest it's unfair to second-guess Davis now that prices have begun t= o=20 decline and his contracts are starting to look expensive. Severin Borenstei= n,=20 an economist and energy expert at UC Berkeley, compares the governor's=20 strategy to buying homeowners insurance.=20 "If your house doesn't burn down," Borenstein says, "that doesn't mean it w= as=20 a mistake to buy the insurance."=20 The trouble is that Davis bought his policy after the house was already on= =20 fire. Peter Navarro, a UC Irvine economics professor and consumer advocate,= =20 warned at the time that the governor was pursuing a faulty strategy. He=20 correctly saw then that the same private generators on whom Davis was=20 declaring war were rubbing their hands at the prospect of signing deals wit= h=20 the governor at top-of-the-market prices.=20 "They know there is going to be a highly competitive market in a couple of= =20 years," Navarro told me in March. "Rather than have to fight it out in the= =20 spot market at that point, of course they'd want to lock in 10-year=20 contracts. The governor is adopting a long-term strategy to address what is= =20 essentially a short-term problem."=20 Now, with prices drifting back down even sooner than expected, Navarro is= =20 more convinced than ever that Davis erred.=20 "The contracts were bargained in a panic from the utmost position of=20 weakness," Navarro said last week. "The cumulative effect of this strategic= =20 error will be a cost in the billions. It will be like driving the Californi= a=20 economy with the emergency brake on."=20 Voters may never notice the drag. But if companies start eyeing lower=20 electricity rates in Nevada and Arizona, and jobs get harder to come by, al= l=20 of California will be paying a long-term price for the governor's desire to= =20 avoid some short-term pain.=20 The Bee's Daniel Weintraub can be reached at (916) 321-1914 or at=20 dweintraub@sacbee.com. State, generators lock horns in talks=20 Davis' $8.9 billion refund call too high, judge says By Toby Eckert=20 COPLEY NEWS SERVICE=20 June 26, 2001=20 WASHINGTON -- California officials staked out a tough bargaining position= =20 yesterday at the start of talks aimed at resolving disputes over refunds an= d=20 other thorny issues arising from the state's power crisis.=20 California's lead negotiator, Michael Kahn, called the $8.9 billion in=20 refunds Gov. Gray Davis has demanded from power sellers "an extremely=20 conservative estimate" and indicated the state would reserve the right to= =20 press for more in court.=20 The judge overseeing the hearings has called the state's refund estimate to= o=20 high.=20 Some power industry sources, meanwhile, were pessimistic about whether the= =20 negotiations would lead to a settlement between the long-warring sides, giv= en=20 the state's position.=20 Some 150 representatives from state agencies, cities, utilities and numerou= s=20 power-generating and marketing firms packed a hearing room at the Federal= =20 Energy Regulatory Commission for the first day of the talks. The negotiator= s=20 will attempt to settle the state's claim that power sellers have gouged=20 California for more than a year, and the sellers' contention that they are= =20 still owed billions of dollars for power they provided.=20 Pacific Northwest states were also invited into the discussions and are=20 seeking $6 billion in refunds from the power companies.=20 The electricity sellers deny wrongdoing, saying several factors converged t= o=20 drive up prices, including California's faulty power deregulation law, a hu= ge=20 spike in the price of natural gas that is used to generate most electricity= =20 in the state, and a short supply of electricity.=20 Speaking to reporters during a break in the closed-door session, Kahn said= =20 the state would not trim its estimate of what it believes it is owed for=20 electricity overcharges. Kahn chairs the Independent System Operator, the= =20 organization that manages most of California's power grid.=20 "Let there be no mistake. We are not going to ask the courts or FERC in=20 proceedings for $9 billion. We're going to ask for a lot more money than th= at=20 in our litigation position," he said. "The governor has said that he believ= es=20 FERC should order refunds at $8.9 billion now."=20 FERC Chief Administrative Law Judge Curtis Wagner Jr., who is mediating the= =20 talks, has said he believes the refund amount the state is seeking is far t= oo=20 high. A more realistic figure would be around $1 billion to $2.5 billion, h= e=20 said.=20 Wagner also said that one of the issues up for discussion would be whether= =20 power generators should be offered immunity from current and future legal= =20 action if a settlement is reached.=20 Kahn argued that the time period subject to refunds should start in May 200= 0,=20 when power prices started a dramatic upward spiral in California. Wagner ha= d=20 indicated he would scrutinize prices going back only to October, when FERC= =20 started examining the market.=20 When California officials took the price curbs that FERC approved last week= =20 for future power sales and applied them to power charges going back to May= =20 2000, the refunds owed to the state would came to roughly $9 billion, out o= f=20 $43.8 billion in total sales, Kahn said.=20 "I am absolutely confident that we have valid legal claims back to May. The= re=20 is no way that we are going to do anything to compromise those claims. That= =20 includes last summer, when San Diegans were terribly overcharged," Kahn sai= d.=20 "Last summer is a very important period to Californians that are seeking=20 redress. And we are not going to abandon those claims just because .?.?. FE= RC=20 has decided not to include them," he added.=20 Wagner asked the California officials to provide more information to back= =20 their numbers.=20 Power sellers continued to maintain that Davis' estimates of excessive powe= r=20 charges are wildly inflated. One group that represents generators gave a=20 bleak prognosis on the chances for a settlement.=20 "It's hard for us to contemplate how we're going to come to some agreement= =20 with 130 players in the room," said Gary Ackerman, executive director of th= e=20 Western Power Trading Forum.=20 "We stand by our business dealings in California," said Richard Wheatley, a= =20 spokesman for Reliant Energy, one of the companies targeted by the state fo= r=20 refunds. "Our power was priced competitively."=20 But Wagner, a courtly veteran of such complex discussions, appeared to take= =20 the sparring in stride.=20 "Everybody has to stick to their guns for a while," he told reporters after= =20 the first day of talks ended. "Everybody has their say, and now we're getti= ng=20 ready to get down to brass tacks."=20 Still, the starkly different positions taken by the state and the power=20 sellers illustrate the daunting task facing Wagner after months of bitter= =20 charges and countercharges between the two sides. FERC, which ordered the= =20 settlement talks as part of its price-curb order, gave the parties 15 days = to=20 reach an agreement.=20 If they fail, Wagner will have an additional seven days to make a=20 recommendation to FERC.=20 "I can tell you now that you are far better off to work out the refund issu= e=20 in these settlement proceedings," Wagner admonished the parties before the= =20 hearing room doors were closed to the media. "The time to put California's= =20 past energy problems to rest and structure a new arrangement for California= 's=20 energy future is now."=20 Wagner, who underlined his role as a broker by sitting among the parties to= =20 the talks instead of presiding from the bench, also warned the participants= =20 not to talk to reporters about specific negotiations.=20 While most of the attention has focused on refunds, Wagner laid out a broad= =20 agenda for the talks, including:=20 ?Moving more power sales in California into long-term contracts and away fr= om=20 the volatile spot market.=20 ?Ensuring there is a "creditworthy party" to pay for power in California.= =20 ?Resolving concerns about the independence of the California grid manager,= =20 the Independent System Operator, whose board is appointed by Davis.=20 ?Exploring natural gas issues, including transportation constraints and hig= h=20 prices in Southern California.=20 ?The bankruptcy of California's largest utility, Pacific Gas and Electric,= =20 which sought protection from creditors after it was unable to pay soaring= =20 wholesale power costs.=20 Davis commends 3 'heroes' in generator refunds fight=20 By Bill Ainsworth=20 UNION-TRIBUNE STAFF WRITER=20 June 26, 2001=20 SACRAMENTO -- Gov. Gray Davis praised three former employees at Duke Energy= 's=20 Chula Vista plant as "heroes" yesterday for coming forward with allegations= =20 that Duke policies created power shortages that raised electricity prices.= =20 For the second time in recent days, the three plant veterans dominated even= ts=20 in Sacramento with explosive allegations of mismanagement and market=20 manipulation by a company that has reaped enormous profits in California.= =20 Ed Edwards, Glenn Johnson and Jimmy Olkjer made those claims, under oath, o= n=20 Friday before a state Senate committee.=20 Davis and other Democratic politicians yesterday said these first insider= =20 accounts of how power plant operations might have manipulated prices will= =20 help the state in its attempt to get $9 billion in refunds from Duke and=20 other energy generating companies.=20 "There's no question in my mind a lot of money has been stolen from=20 California, and these men are going to help us get it back," said=20 Assemblywoman Barbara Matthews, D-Tracy.=20 The ex-employees told Davis that Duke risked jeopardizing equipment by=20 constantly powering the 706-megawatt plant up and down, dumped new spare=20 parts and took working turbines off-line for "economic reasons."=20 Davis said the power plant workers confirmed his suspicions that North=20 Carolina-based Duke and other companies engaged in price gouging.=20 "There's a concerted effort to suck every dime out of California and send i= t=20 back to Houston or North Carolina," he said.=20 Davis cautioned that he hadn't yet heard Duke's version of events. "The=20 company is entitled to their point of view," he said. "But they've got some= =20 explaining to do."=20 Duke Energy spokesman Tom Williams called the governor's meeting with the= =20 former workers "unfair and unproductive."=20 Williams said a review of company logs shows that during a Stage 3 energy= =20 alert the Chula Vista plant powered down under orders from California's=20 electricity grid manager, the Independent System Operator.=20 He said the company was doing its job by supplying the state with "spinning= =20 reserves" that could be added to the system in 10 minutes to balance the lo= ad=20 -- that is, to make sure that supply equaled demand.=20 ISO spokeswoman Stephanie McCorkle said the agency buys four types of=20 ancillary services to balance the load, including spinning reserves.=20 But she said only Duke can release information from Jan. 16. Williams said= =20 Duke soon plans to release logs from that day and several others.=20 Meanwhile, another former Chula Vista plant employee confirmed the=20 allegations of the other three workers. All of them had worked for San Dieg= o=20 Gas & Electric when the utility owned the plant before Duke took over its= =20 operation. Duke was required to keep the SDG&E employees on for two years,= =20 but it then let many of them go.=20 Rick Connors, a former operator who turned down an offer from Duke to stay = on=20 at the South Bay plant, said the plant output frequently was down for=20 "economic reasons."=20 The governor brought up those allegations during a subsequent meeting with= =20 two new FERC commissioners, Pat Wood and Nora Brownell. Davis asked the=20 federal regulators to look into possible price gouging, the high price of= =20 natural gas and the $9 billion in refunds he is seeking.=20 After meeting with Davis, Wood said he thinks California will emerge from t= he=20 energy crisis in 2003 or 2004 and become an energy trendsetter. He said he= =20 believes California leaders have the will to build more power plants and=20 improve natural gas pipelines that fuel new generators. But he cautioned th= at=20 there will be "some short-term pain."=20 "I think you folks will seem some blackouts this summer," he said.=20 Staff writer Ed Mendel contributed to this report.=20 San Onofre blast released no radiation, spokesman says=20 But motorists on I-5 weren't so sure By Bruce Lieberman=20 UNION-TRIBUNE STAFF WRITER=20 June 26, 2001=20 SAN ONOFRE -- Charlene Engel was driving with a few friends up Interstate 5= =20 Sunday when she saw flames and smoke shoot suddenly skyward from the nuclea= r=20 power plant.=20 Pieces of silvery material were fluttering through the air and drifting=20 toward the freeway. Traffic began speeding up.=20 "Everybody sort of saw it and thought, 'Oh my God, have we just been=20 irradiated or what?'?" said Engel, a Rancho Bernardo artist.=20 In fact, the explosion of a transformer was far outside the twin reactors a= t=20 the San Onofre Nuclear Generating Station, and posed no radiation danger, R= ay=20 Golden, a plant spokesman, said yesterday.=20 But Engel and her friends, who were heading to the Los Angeles County Museu= m=20 of Art for a Winslow Homer exhibit, didn't know that. "You don't actually= =20 know how things are hooked up, so you don't want to hang around," Engel sai= d.=20 "We moved north pretty quickly."=20 Santee resident Richard Carrico, whose niece was driving him to Dana Point,= =20 said the fireball rose about 50 feet. "My God, I thought she was going to= =20 faint," said Carrico, 93.=20 No one was injured in the explosion, which occurred at 11:03 a.m. and was= =20 followed by a fire that lasted about 40 minutes. The transformer was=20 destroyed, but no other equipment at the plant was damaged and the twin=20 reactors continued to operate at full power without interruption, Golden=20 said.=20 Yesterday, San Onofre investigators were still trying to figure out why the= =20 transformer failed. They should have some answers, and a new transformer=20 installed, in about a week.=20 The transformer was one of 54 in the plant's switching yard used to reduce= =20 the voltage of a sample of outgoing electricity. The so-called "potential= =20 transformers" step down the current sample to 115 volts so instruments can= =20 test the amperage and wattage. Electricity leaves San Onofre at 238,000 vol= ts=20 in transmission lines.=20 The explosion scattered shards of ceramic and aluminum debris, and 90 gallo= ns=20 of burning insulation oil, hundreds of feet, Golden said. Pieces of the=20 transformer, some as large as one foot square, landed on Old Highway 101.= =20 Plant operators feared debris would land on I-5, but the California Highway= =20 Patrol did not report any there, a dispatcher said. The CHP received severa= l=20 911 calls from drivers reporting a fireball.=20 The last time a potential transformer exploded at the plant's switching yar= d=20 was in 1994, Golden said. Plant workers discovered that corrosion caused by= =20 ocean air rusted the transformer's carbon-steel casing, allowing water to= =20 enter and contaminate the insulation oil.=20 After that, the plant replaced four transformers and repaired three. All ar= e=20 periodically washed down with high-pressure fire hoses to prevent corrosion= ,=20 Golden said. He would not speculate on the cause of the latest explosion, o= r=20 whether it could lead to the replacement of other transformers.=20 "If the root cause shows that it needs to be repaired or replaced, it will,= "=20 he said.=20 Although Sunday's explosion did not shut down the plant or release any=20 radiation, it was the latest in a string of mishaps this year. On Feb. 2, a= =20 faulty circuit breaker ignited a fire and cut off lubricating oil to Unit 3= 's=20 turbine generators, causing about $45 million in damage and shutting the=20 reactor down for four months.=20 On May 30, a portable crane dropped 40 feet to the ground when a sling on a= =20 large gantry crane failed. On June 6, workers inadvertently overfilled a=20 300-gallon steel bin with hydrazine, a toxic chemical used to purify water = in=20 the plant's cooling systems, spilling about 20 gallons.=20 Golden said the four accidents this year do not indicate that the plant is= =20 unsafe. "We perform hundreds, if not thousands, of work activities a day," = he=20 said.=20 Congress demands list of participants in Cheney energy meetings=20 By Scott Lindlaw ASSOCIATED PRESS=20 June 25, 2001=20 WASHINGTON =01) Congressional investigators are intensifying pressure on th= e=20 White House to identify who met privately with Vice President Dick Cheney's= =20 energy task force.=20 The General Accounting Office has sent Cheney's lawyer a 10-page letter=20 asserting a legal right to the lists and advising Cheney that it may make a= =20 formal demand for the information, rather than the polite requests it has= =20 made in recent weeks.=20 Comptroller General David M. Walker "is prepared to issue a demand letter .= ..=20 if we do not receive timely access to the information," the GAO said in a= =20 10-page letter dated Friday from office General Counsel Anthony H. Gamboa t= o=20 David S. Addington, attorney for the vice president.=20 The GAO is the investigative arm of Congress, and it has legal authority to= =20 federal agency records under the law. A demand letter could begin a legal= =20 battle: It would give Cheney's office 20 days to respond, either by turning= =20 over the names, or providing a reason why it is not compelled to do so, sai= d=20 Lynn Gibson, a lawyer for the GAO.=20 If Cheney declined to turn over the records, the GAO would notify Congress= =20 and Attorney General John Ashcroft, among others. The GAO would also be=20 authorized to file a civil action in court seeking the record, Gibson said.= =20 She knew of no previous case in which the GAO was forced to go to court to= =20 obtain agency records.=20 The White House team that developed the national energy plan, released last= =20 month, met with more than 130 interest groups, from environmentalists and= =20 unions, often at odds with Republicans, to major Bush supporters who got=20 private sessions with Cheney.=20 Reps. Henry Waxman, D-Calif., and John Dingell, D-Mich., in April asked the= =20 GAO to provide information on who served on the task force, what informatio= n=20 was presented to the panel, who presented it and what the task force spent.= =20 The White House has asserted that the GAO does not have the authority to as= k=20 for names of participants. However, it agreed that the GAO is entitled to= =20 financial records of the task force, and two administration officials said= =20 the vice president's office provided 77 pages of financial documents to the= =20 GAO last week.=20 The GAO contends it is entitled to a wider range of records. Federal law=20 "extends GAO's audit authority to all matters related to the use of public= =20 money, not just matters related to costs of activities," it argued in its= =20 letter to Cheney. "Over the years, GAO has conducted many reviews that=20 involve a wide range of White House programs and activities."=20 Juleanna Glover Weiss, a spokeswoman for Cheney, declined to comment on the= =20 GAO's assertions, other than to say, "I'm sure the GAO and the vice=20 president's office will be talking about that."=20 Waxman and Dingell called on Cheney to provide the information they seek.= =20 "The vice president should stop stonewalling and start cooperating with GAO= 's=20 investigation," Waxman said Monday. "Congress is entitled to know the=20 identity of the special interests that met with the Cheney energy task=20 force."=20 Creditor expects no quick fix in PG&E's venture into bankruptcy=20 By Ed Mendel=20 June 25, 2001=20 SACRAMENTO -- California's biggest utility, Pacific Gas and Electric, thoug= ht=20 it was moving toward an early exit from the power crisis by filing for=20 Chapter 11 bankruptcy in early April.=20 The top PG&E executive, Robert Glynn, optimistically told a Wall Street=20 publication that he hoped a settlement might be negotiated with creditors i= n=20 four to six months.=20 But an official with one of the 12 parties on the PG&E creditors committee,= =20 which includes the Bank of America and the state of Tennessee, said he does= =20 not see a quick end to the bankruptcy.=20 "My personal opinion," David Adante, executive vice president of Davey Tree= =20 Surgery, said last week, "is that it's going to take longer than everyone= =20 would like."=20 Adante said he thinks a resolution is likely to go beyond the bankruptcy=20 court and involve the state Public Utilities Commission, Gov. Gray Davis an= d=20 perhaps the Legislature.=20 "The rate part won't be resolved in the bankruptcy process," said Adante.= =20 Davey Tree Surgery, which is based in Kent, Ohio, trims trees that encroach= =20 on power lines for several California utilities.=20 PG&E owes Davey Tree $13 million, making it one of the smallest creditors o= n=20 a committee that includes big power providers, Enron and Dynegy, and big Wa= ll=20 Street firms, Morgan Guaranty and Merrill Lynch.=20 A turning point in the PG&E bankruptcy may have come earlier this month whe= n=20 the federal bankruptcy judge, Dennis Montali, declared that electricity rat= es=20 should be set by state regulators.=20 Experts disagreed about whether a bankruptcy judge could order a rate chang= e=20 for a utility without the approval of state regulators, in this case the PU= C.=20 "The public interest is better served by deference to the regulatory scheme= =20 and leaving the entire regulatory function to the regulator," Montali ruled= .=20 PG&E said it entered bankruptcy because the regulatory process failed,=20 denying a rate increase last fall that might have prevented the utility fro= m=20 running up what it says is a debt of at least $8 billion.=20 PG&E also said the political process failed when, among other things, the= =20 governor's negotiator broke a handshake agreement that included the state= =20 purchase of PG&E's transmission system.=20 "But we have said all along that intersection with the regulatory and=20 political process would probably reoccur," a PG&E spokesman said last week.= =20 The Legislature, after months of delay, held a hearing last week on the=20 governor's plan to keep Southern California Edison out of bankruptcy, which= =20 includes the state purchase of the Edison transmission system.=20 Legislative leaders say the plan is too generous to Edison. Undaunted, Davi= s=20 hopes to win legislative approval of some version of his Edison plan, and= =20 then persuade the PG&E creditors committee to accept a similar plan. But ev= en=20 if Davis can get his rescue plan approved by the Legislature and the PG&E= =20 committee, it's likely to be challenged with a ballot initiative by consume= r=20 groups, who denounce the proposal as a "bailout" for utilities.=20 Meanwhile, the period in which only PG&E can file a bankruptcy reorganizati= on=20 plan ends Aug. 5, allowing creditors or other parties to make proposals. An= d=20 if the Legislature does not act by Aug. 15, the agreement that the governor= =20 negotiated with Edison can be waived by either party.=20 But of course, as with most things in the electricity crisis, the deadlines= =20 could be extended.=20 ED MENDEL is Capitol bureau chief for the Union-Tribune.=20 State, Power Firms Urged to Make a Deal=20 Energy: Mediator says a refund pact would benefit both sides. Meanwhile,=20 Davis tones down his rhetoric as regulators come calling.=20 By MEGAN GARVEY and DAN MORAIN, Times Staff Writers=20 ?????WASHINGTON--After being vilified for months by Gov. Gray Davis, federa= l=20 energy regulators here and in Sacramento took steps Monday to show they are= =20 determined to respond to California's energy crisis. ?????A top federal regulator began mediating Davis' demand for nearly $9=20 billion in what the governor says are overcharges by power generators--and= =20 warned a room full of dark-suited lawyers, energy executives and state=20 officials here that they will be "far better off" if they decide among=20 themselves how big a refund the state is due. ?????Meanwhile, in Sacramento, Patrick H. Wood III and Nora M. Brownell,=20 President Bush's first appointees to the five-member Federal Energy=20 Regulatory Commission, spent the afternoon conferring with Davis and=20 legislative leaders. Then they held a fact-finding hearing with California= =20 regulators on the high price of natural gas, the fuel that spins most new= =20 electricity turbines in California. ?????"We're going to be working together through tough issues," Brownell=20 said. "We're going to work through them and solve them and move forward. It= =20 is a lot easier when people have sat down and gotten to know each other." ?????Davis has been attacking federal energy regulators--a majority of whom= =20 are holdovers from the Clinton administration--for failing to take a variet= y=20 of steps to bail California out of its energy woes. ?????On Monday, however, Davis toned down his bellicose attacks on the=20 federal commission. Brownell and Wood, Davis said, are "committed to workin= g=20 together with us to drive down the price of natural gas in California to ge= t=20 it closer to what the rest of the country is paying." ?????"I think we are turning a corner," Davis said, as temperatures across= =20 the state were moderate and electricity demand was low. "Conservation has= =20 been spectacular. Californians have responded heroically. The federal=20 government is now finally taking some positive actions. The outlook looks= =20 much more positive than it did two months ago." ?????The developments in Washington and Sacramento come as Davis issues=20 campaign-style demands for more aid from the federal government and as poll= s=20 show that voters are skeptical of how Davis and Bush are handling=20 California's energy crisis. ?????Republican lawmakers in Sacramento contend that the regulatory=20 commission has granted Davis virtually everything he has sought. The=20 commission earlier this month imposed temporary price restraints, a step=20 Davis said is helping to lower wholesale electricity prices paid by the sta= te. ?????Senate Republican leader Jim Brulte said Monday that he has "no doubt"= =20 the commission, known as FERC, will order power generators to issue refunds= =20 to California, as Davis has requested. ?????But Brulte, of Rancho Cucamonga, also predicted that Davis will find t= he=20 order wanting: "The governor's game is a political one. . . . The Davis=20 administration has a clear strategy--that no matter what FERC does, it isn'= t=20 enough." ?????In Washington, the roughly 150 participants who showed up for day one = of=20 a 15-day settlement conference on refunds showed little sign they were read= y=20 to agree, at least not yet. ?????For now, the differences remain considerable: about $9 billion in=20 refunds demanded by California's representatives at the talks, plus $6=20 billion more that other Western states say they have been unfairly charged.= =20 Power generators hotly dispute those figures. ?????"The time to put California's past energy problems to rest and structu= re=20 a new arrangement for California's energy future is now," said Curtis L.=20 Wagner, the chief administrative law judge for FERC. "We can do it if we tr= y." ?????Wagner, who told reporters last week he believed refunds of about $2= =20 billion were probably justified, is mediating the closed-door talks. Davis = is=20 asking that the refunds cover the period since May 2000. ?????"These out-of-state energy companies are taking us for a ride," Davis= =20 said in a brief interview in Sacramento on Monday. "I am determined to get= =20 every penny back that California is owed. The generators have bilked us=20 mercilessly, and I'm fighting back. I'm not giving up nothing." ?????Consumers wouldn't see refunds directly. Rather, the money would go to= =20 the state or to private utilities, such as Southern California Edison, for= =20 electricity purchases made during the energy crisis. ?????Participants in the Washington meeting represent about 70 entities wit= h=20 stakes in the electricity dispute. If they fail to reach agreement among=20 themselves within the allotted 15 days, Wagner will have seven days to make= a=20 formal recommendation of his own to FERC's five-member governing board. ?????The settlement negotiations are confidential; Wagner promised those=20 present he would shred his notes and transcripts at their completion. He=20 allowed reporters in the hearing room, where oversized pots of coffee perch= ed=20 on every table, only long enough to listen to his opening remarks and to a= =20 prepared statement he read from two of the five FERC commissioners. ?????Wagner, who asked that all sides send advocates with the authority to= =20 reach an agreement, said the issues to be resolved include: ?????* Refunds for past electricity purchases, including how much money is= =20 involved and who needs to be paid. ?????* Moving additional quantities of electricity off the spot market and= =20 into long-term contracts. ?????* Ensuring that generators receive payment for electricity already=20 provided. ?????* The bankruptcy of Pacific Gas & Electric. ?????Wagner said the talks also should address whether any settlement=20 provides generators with immunity from existing and future lawsuits and=20 prosecutions. ?????The statement from FERC commissioners Wood and Brownell encouraged=20 participants to "focus on what they absolutely need and not what they want.= "=20 But sorting out which is which may prove challenging. ?????The head of California's delegation, for example, reiterated Davis'=20 demands for $8.9 billion in refunds. ?????"We want our refunds. We want them now," Michael Kahn, one of Davis' t= op=20 energy advisors, told reporters during a break in the negotiations. ?????Kahn said the officials he is representing--the governor, state=20 legislators, the Electricity Oversight Board and the Public Utilities=20 Commission--consider the $8.9 billion figure to be an "extremely conservati= ve=20 estimate." ?????He indicated the delegation had little interest in relinquishing the= =20 right to sue for additional funds, even if power generators offered to make= =20 refunds for time periods before the Oct. 2 cutoff that FERC has proposed. ?????As they have in the past, electricity generators staked out a far=20 different position, characterizing as "absurd" the state's overcharge=20 estimate. ?????"We've done absolutely nothing wrong," said Tom Williams, a spokesman= =20 for Duke Energy Co., adding that his company was "gratified that all the=20 parties are at the table to discuss this." ?????The settlement negotiations were mandated by FERC last week as the=20 agency put in place an expanded "price mitigation plan" for Western=20 electricity markets. ---=20 ?????Garvey reported from Washington, and Morain from Sacramento. Copyright 2001 Los Angeles Times=20 Business; Financial Desk=20 Commerical Real Estate Apartments to Provide Own Power MORRIS NEWMAN ?=20 06/26/2001=20 Los Angeles Times=20 Home Edition=20 Page C-1=20 Copyright 2001 / The Times Mirror Company=20 With its wall of fins, abstract patterns and varying surfaces and colors,= =20 Colorado Court in Santa Monica is shaping up to be a real head-turner.=20 But the apartment complex is no mere exercise in style over substance. What= =20 makes the project groundbreaking in power-starved California is that it wil= l=20 generate nearly all its own energy: electricity , heat and hot water, all= =20 from alternative technologies.=20 The 44-unit complex at 5th Street and Colorado Avenue, scheduled to open in= =20 October, will be adorned with 199 solar panels, which will supply about a= =20 third of the building's electricity . The rest of the power will come=20 primarily from a micro-turbine, a generator that runs on clean-burning=20 natural gas. Southern California Edison will supply only a fraction of the= =20 building's energy needs.=20 "Colorado Court is unique because the building will produce 92% of its own= =20 power, which is very significant," said Bob Johnson, managing director of= =20 California Energy Coalition, a nonprofit energy conservation group based in= =20 Laguna Beach. In comparison, solar power sources for a proposed single-fami= ly=20 subdivision in Placer County would supply 30% to 50% of household energy=20 needs.=20 Intended as "single-room occupancy" housing for low-income renters, the=20 $5.8-million Santa Monica project has become a closely watched test case of= =20 still-experimental electricity generation equipment.=20 Though not outlandish, the Colorado Court building probably will make many= =20 driving down 5th Street look twice: Framed inside a rectangular shell of=20 light-colored plaster and concrete is a giant window of dark glass; the=20 "window" is an assemblage of many solar panels. The rear of the building is= =20 covered in an abstract pattern of vertical fins; the fins shade the=20 building's southern face from direct sunlight.=20 Sensible Concept for Low-Income Tenants=20 Although some may be surprised that a building intended for low-income=20 residents is the beneficiary of expensive energy technology, the concept=20 makes sense for people with limited incomes, said Robin Raida, project=20 manager for the builder, Community Corp. of Santa Monica. Energy efficiency= =20 is "especially important in affordable housing, because our tenants don't= =20 have extra money to spend on high utility bills," she said.=20 A host of public and private entities--including the cities of Santa Monica= =20 and Irvine, Southern California Edison and the California Energy=20 Coalition--are involved in planning, funding and monitoring the innovative= =20 building. The two cities, the conservation group and the utility have forme= d=20 a group known as Regional Energy Efficiency Initiative, which has contribut= ed=20 about $250,000 to energy-saving devices in the building. In addition, Santa= =20 Monica itself is contributing about $250,000 toward electricity generators.= =20 The building will be loaded with energy-saving and environmentally benign o= r=20 "sustainable" devices. Heat from the micro-turbine will produce hot water,= =20 eliminating the need for a conventional water heater.=20 The project also uses compact fluorescent lighting throughout the building,= =20 insulation made from recycled material and double-pane windows with a layer= =20 of heat-retardant krypton gas. Each apartment will be equipped with=20 energy-saving refrigerators that do not use chlorofluorocarbons, the widely= =20 used refrigerant linked to damage in the Earth's ozone layer.=20 Prevailing breezes will cool the building, which will have no mechanical ai= r=20 conditioners. The U-shaped structure "acts like a giant wind scoop," said= =20 architect Larry Scarpa, a principal of Santa Monica-based Pugh & Scarpa.=20 In yet another "green" flourish, the building will collect all the rainwate= r=20 from the alley behind the property and funnel it into a series of undergrou= nd=20 chambers. The water will slowly percolate back into the soil, which will=20 filter the pollutants from the water while preventing contaminated water fr= om=20 spilling into Santa Monica Bay. The drainage system was paid for separately= =20 by the city of Santa Monica.=20 The concept of a building that would be energy self-sufficient emerged abou= t=20 two years ago, when Santa Monica officials met with members of the Californ= ia=20 Energy Coalition. The city's Housing Division, which funds construction of= =20 low-income housing, chose to make a low-income housing project into a dream= =20 project of "green" construction, and Colorado Court became the target.=20 "We needed a demonstration project because a lot of developers feel that th= e=20 technologies are unproven," Raida said.=20 A number of apartment buildings in Santa Monica and Irvine are to be equipp= ed=20 with energy-saving technology by the Regional Energy Efficiency Initiative,= =20 but the Santa Monica building is the only project attempting to provide its= =20 own power as well.=20 Rebates from the state Energy Commission helped defray the high cost of the= =20 energy-generating equipment. The state's rebate on the solar panels, which= =20 cost about $225,000, will be about $62,000. The $57,000 micro-turbine and= =20 heat exchanger will yield a $15,000 rebate from Southern California Gas Co.= =20 If recent research and development has yielded new ways of conserving energ= y=20 and producing electricity , regulations and building codes have not kept=20 pace.=20 Prospects Uncertain for Conventional Buildings=20 In one instance, architects had to obtain special permission from the city = to=20 hang solar panels outside the exterior stairwells because building inspecto= rs=20 said the solar panels "enclosed" the stairwells and triggered requirements= =20 for floors, ceilings and fire-rated walls.=20 If energy-saving devices and electrical generators make sense for a buildin= g=20 that has $500,000 in subsidies, do the same costly materials make sense for= a=20 conventional apartment building? Opinions vary.=20 Even with rebates, the added cost of the conservation and energy-generating= =20 equipment may be a hard sell for developers of market-rate apartment units.= =20 Such developers often sell their projects shortly after completion and migh= t=20 not be able to fetch a higher price for energy-efficient buildings.=20 For a nonprofit like Community Corp., which plans to retain ownership of it= s=20 buildings for 80 years, the added front-end cost could be worthwhile becaus= e=20 the equipment will hold down energy costs for low-income tenants for years. California ; Metro Desk=20 Officials Oppose Utility Choice Power: They say users leaving traditional= =20 firms could jeopardize state's repayment of $50 billion in energy purchases= . TIM REITERMAN ?=20 06/26/2001=20 Los Angeles Times=20 Home Edition=20 Page B-1=20 Copyright 2001 / The Times Mirror Company=20 Consumer choice was a mantra when California moved in 1996 to restructure i= ts=20 electricity industry. But the right of utility customers to shop around for= =20 power is falling victim to the state's own strategy to drag itself from the= =20 energy debacle.=20 Warning of a "spiral of declining customers and rising power rates," top=20 state officials are calling for swift action to curtail the freedom of=20 utility patrons to buy from alternative electricity providers.=20 They fear that California 's ability to pay for nearly $50 billion in past= =20 and future electricity purchases would be jeopardized unless regulators or= =20 legislators suspend or restrict the state's so-called direct-access program= .=20 A flight of customers from the traditional utilities, the officials say,=20 would saddle the remaining businesses and consumers with paying off an unfa= ir=20 share of those billions.=20 Under direct access, thousands of utility customers--ranging from big=20 commercial and industrial users to environmentally aware residential=20 consumers who wanted "green power"--signed up with companies promising lowe= r=20 prices, better service or the security of long-term contracts.=20 But the energy crisis changed all that.=20 In January, the state's Department of Water Resources became the major=20 electricity purchaser for most Californians, as skyrocketing wholesale pric= es=20 put Pacific Gas & Electric Co. and Southern California Edison deeply into= =20 debt and many suppliers refused to sell to them. The same legislation that= =20 authorized the department's purchases called on the California Public=20 Utilities Commission to suspend direct access until the state stops buying= =20 power--which could be almost two decades under some of the long-term=20 contracts the state has signed with suppliers.=20 The commission is poised to vote Thursday on a proposal to suspend direct= =20 access by July 1, and it is expected to pass. Bills in the Legislature woul= d=20 resurrect the program while requiring new customers to pay "exit fees"=20 designed to protect the state's planned $13.4-billion bond sale for=20 electricity purchases, but the proposals have been mired in negotiations.= =20 In any case, state officials say they can ill afford to lose big commercial= =20 and industrial users as utility customers help pay off the state's current= =20 $8-billion power tab and more than $40 billion in long-term power contracts= .=20 "If such customers are permitted to 'exit the system' without [paying] thei= r=20 share of costs incurred by DWR . . . the burden of covering debt service=20 payments will fall on a smaller base of remaining customers, significantly= =20 and unfairly increasing their power rates," said a June 12 memo from state= =20 Treasurer Phil Angelides and the heads of the Finance and Water Resources= =20 departments to the PUC and the Legislature.=20 "There is a concern that as power rates paid by the remaining customers wou= ld=20 rise, customers would have additional economic incentive to abandon DWR=20 power, creating a spiral of declining customers and rising power rates," th= e=20 memo said.=20 Statewide, the total number of direct-access customers has fallen from a pe= ak=20 of more than 200,000 to about 88,000 in mid-May. Figures from the Californi= a=20 Energy Commission show that these customers--including hotel and hospital= =20 chains, factories, farms, the state's university systems and about 78,000= =20 residences--accounted for about 2.1% of the power consumed in California .= =20 The level of participation by residential customers was 1.1%--about a third= =20 as high as for large commercial and industrial customers.=20 The penetration rates were much higher early this year, when about 13% of= =20 industrial users had direct-access contracts. But many providers sent their= =20 customers back to Edison, PG&E and San Diego Gas & Electric, as wholesale= =20 energy costs soared and they could not compete with the utilities, whose=20 rates were frozen by the 1996 deregulation law.=20 One provider, AES NewEnergy, claims 60 to 70 customers, ranging from=20 mom-and-pop stores to grocery chains. About a year ago, the company had 150= =20 to 200 customers.=20 "Direct access is at the heart of the concept of competition and choice,"= =20 said Aaron Thomas, the company's manager of government relations. "The [PUC= ]=20 order stinks, and it is not necessary to put a stake in the heart of direct= =20 access to float a bond."=20 Said Rick Counihan, a spokesman for Green Mountain Energy: "Unless we see a= =20 legislative solution, direct access is dead. We're being driven out of=20 California ."=20 Green Mountain, a Vermont-based company that sells power from renewable=20 sources, has seen its California customer base shrink from 60,000 to 7,000,= =20 all in San Diego and Orange counties.=20 Although they have never fled en masse to direct access, many businesses an= d=20 institutions want to maintain direct access as an option, especially becaus= e=20 it is uncertain whether the state's power contracts will prove to be a=20 bargain or a bust in the long run.=20 Bill Dombrowski, president of the California Retailers Assn., representing= =20 more than 50 large companies, said it is important to maintain direct acces= s=20 as an option because "the market is in a shambles."=20 "At its peak, before the market was dysfunctional, you saw 5% to 10%=20 reductions [in electricity rates] compared to local utilities, which is=20 significant dollars when you are talking about larger companies," he said.= =20 Like other proponents, Dombrowski maintains that the fears expressed by sta= te=20 officials and Wall Street bond underwriters are exaggerated.=20 "Realistically, you will not see a wave of people going to direct access," = he=20 said.=20 The utilities commission measure, which would halt new direct-access=20 enrollments, was put off until this week in hopes that a solution could be= =20 worked out in Sacramento. PUC Commissioner Jeff Brown, one of three=20 appointees of Gov. Gray Davis on the five-member commission, said that, lik= e=20 the governor, he favors direct access on philosophical grounds but sees no= =20 way to avoid suspending the program.=20 "We are tied up in the realities of the bond sale," he said. "If the=20 Legislature wants to do something in the future, fine."=20 Commissioner Richard Bilas, another supporter of direct access, acknowledge= s=20 that "it could at the margins jeopardize the bond sale." But direct access,= =20 he said, "is what restructuring was about in the first place. . . . Without= =20 it, you no longer have restructuring."=20 Advocates of direct access remain hopeful that a legislative solution could= =20 balance the desires of the business community and the bond underwriters. A= =20 bill by state Sen. Debra Bowen (D-Marina del Rey) would require exit fees a= nd=20 other provisions sought by state finance officials. Billions of dollars at stake as power talks begin=20 MARK SHERMAN, Associated Press Writer Tuesday, June 26, 2001=20 ,2001 Associated Press=20 URL:=20 http://www.sfgate.com/cgi-bin/article.cgi?file=3D/news/archive/2001/06/26/f= inanc ial0338EDT0014.DTL=20 (06-26) 00:38 PDT WASHINGTON (AP) --=20 Energy users and providers are billions of dollars apart in their estimates= =20 of how much the power crisis in the Western states has cost. The federal=20 official overseeing confidential settlement talks wants them to come to ter= ms=20 quickly.=20 With just two weeks to reach agreement, Federal Energy Regulatory Commissio= n=20 chief administrative law judge Curtis L. Wagner said he wants all sides to= =20 start using realistic numbers when they meet Tuesday for the second day of= =20 negotiations.=20 "Now we're getting ready to get down to brass tacks," Wagner said Monday,= =20 after the first day of talks.=20 Led by California, Western states say power-generating companies overcharge= d=20 them by $15 billion in the past year.=20 Michael Kahn, California's chief negotiator, said the $9 billion in refunds= =20 his state claims it is owed should be the first order of business. "We want= =20 our refunds. We want them now," said Kahn, chairman of the California=20 Independent System Operator, which manages the state's power grid.=20 The states claim that the companies unfairly drove up prices to take=20 advantage of a power shortage. Prices frequently surpassed $300 a=20 megawatt-hour, 10 times what they were in 1999. One megawatt is enough to= =20 power about 750 homes.=20 The power companies argue that the charges were justified. In some cases,= =20 older, more costly power plants were pressed into service to deal with the= =20 high demand and tight supply.=20 Wagner attributed the states' claims to the rhetorical flourishes that ofte= n=20 accompany the start of negotiations. "Everybody has to stick to their guns= =20 for a while," he said.=20 The judge, who is playing a mediator's role in the negotiations, said he ha= s=20 seen nothing to change his previously stated view that refunds in any=20 settlement probably would not exceed $2.5 billion.=20 He cautioned all sides that a brokered settlement would be preferable to a= =20 plan he would recommend to federal regulators should talks fail.=20 More than 150 people representing about six dozen entities gathered in a=20 government hearing room for negotiations. The talks were one result of a=20 federal order last week extending price controls on spot power sales in=20 California and imposing limits in 10 other Western states.=20 Wagner laid out several issues negotiators will have to tackle, including h= ow=20 much generators are owed for power they supplied to California without=20 getting paid.=20 The size of the refunds and the unpaid bills "must be, both ways, resolved = at=20 the outset to put everyone on the same playing field," Wagner said. Any=20 settlement probably would also have to answer whether the generators should= =20 have immunity from existing and future lawsuits and prosecution, he said.= =20 The parties also have to try to reach agreement on additional long-term pow= er=20 contracts, which would reduce the amount of power California would have to= =20 purchase on the volatile spot market.=20 The attendees included representatives from California and a dozen city and= =20 county governments, investor-owned and municipal utilities, power generator= s=20 and natural gas companies.=20 On the Net: Federal Energy Regulatory Commission: www.ferc.gov/=20 ,2001 Associated Press ?=20 Compromise urged in electricity refund talks=20 Zachary Coile, Chronicle Washington Bureau Tuesday, June 26, 2001=20 ,2001 San Francisco Chronicle=20 URL:=20 http://www.sfgate.com/cgi-bin/article.cgi?file=3D/chronicle/archive/2001/06= /26/M N122522.DTL=20 Washington -- With armies of lawyers on each side, California officials and= =20 representatives of the nation's power generators began the first day of=20 federally ordered settlement talks yesterday far apart on the issue of=20 electricity refunds.=20 California officials, including attorneys for the investor-owned utilities,= =20 stuck to their claim that the state was owed nearly $9 billion in alleged= =20 overcharges by the generators.=20 But electricity suppliers were equally adamant in their opposition to=20 refunds, arguing the prices they charged were legitimate. Suppliers are=20 demanding payment for billions of dollars they are owed for electricity=20 already sold into the state.=20 The mediator in the talks, veteran Federal Energy Regulatory Commission=20 administrative law Judge Curtis L. Wagner Jr., warned both sides they would= =20 have to compromise -- or accept a settlement imposed by federal regulators.= =20 "The time to put California's past energy problems to rest and structure a= =20 new arrangement for California's energy future is now," Wagner said. "We ca= n=20 do it if we try."=20 The difficulty of the task was made clear when the judge asked those in the= =20 hearing room yesterday to stand and identify themselves. About 140 people -= -=20 nearly all lawyers -- stood to declare which state, city, power exchange or= =20 generator they represented.=20 In addition to a host of energy firms, other Western states are involved in= =20 the talks. Officials in Washington and Oregon say they may ask for up to $6= =20 billion in refunds.=20 Wagner opened the talks by reading a letter from new FERC Commissioners=20 Patrick Wood and Nora Mead Brownell urging both sides to compromise.=20 "Parties must only focus on what they absolutely need, not what they want,"= =20 the statement read. "This is not the place to debate the shopping list, nor= =20 is it the place to assign blame."=20 If the parties can't settle the money fight in 15 days, Wagner will have=20 seven days to recommend action to FERC's five commissioners.=20 "I can tell you now that you are far better off to work out the refund issu= e=20 in these settlement proceedings than to have me recommend an answer to the= =20 commission," Wagner said.=20 As the talks started in Washington, Wood and Brownell met yesterday in=20 Sacramento with Gov. Gray Davis, legislative leaders and other groups=20 involved in solving the energy crisis.=20 Davis said in a statement that he was more encouraged by FERC's actions=20 recently since the two joined the regulatory body.=20 "In a refreshing change . . . these commissioners offered a problem-solving= =20 approach in resolving California's energy challenge," Davis said.=20 Wood expressed optimism the settlement talks would be fruitful.=20 "I think it is far better to settle than to stretch out through litigation,= =20 even if the state were to ultimately prevail," he said. "This is really=20 (about) businesspeople who need to re-establish a business relationship tha= t=20 has been poisoned."=20 Although the divide between California officials and the generators is vast= ,=20 some have faith in the mediator, a 72-year-old judge with a track record of= =20 reaching settlements in difficult cases.=20 "He's a miracle worker," said FERC commissioner William Massey. "He's very= =20 good at persuading parties that it's in their best interests to settle rath= er=20 than proceed" with lawsuits.=20 Wagner set the tone yesterday by ordering reporters out of the hearing room= =20 after half an hour explaining the ground rules. And Wagner warned=20 participants to keep the discussions confidential.=20 "I would hate to read something in the business section tomorrow that=20 somebody
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