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Sac Bee, Wed, 6/20: Weather an early test for fee caps:=20 Any severe jump in prices will likely be curbed, experts say Sac Bee, Wed, 6/20: State to borrow up to $5 billion to buy energy Sac Bee, Wed, 6/20: Dan Walters: Once burned, lawmakers are very wary of Davis-Edison agreement SD Union, Wed, 6/20: Senate Democrats lay back to see if FERC action=20 provides rate relief=20 SD Union, Wed, 6/20: House panel erases Bush energy cuts LA Times, Wed, 6/20: Davis, Regulators Face Off at Hearing LA Times, Wed, 6/20: Energy on Agenda, but Issue Is Blame LA Times, Wed, 6/20: Blackout Forecasts' Dark Side LA Times, Wed, 6/20: FERC Move Short-Circuits for Hard Price Caps LA Times, Wed, 6/20: Plan Won't Raise Rates, Davis Says LA Times, Wed, 6/20: State to Pay Electric Bill With Loan, Not Taxes LA Times, Wed, 6/20: Edison Unveils Blackout Warning Plan LA Times, Wed, 6/20: State Joins Challenge to Bush on Air-Conditioner=20 Standards LA Times, Wed, 6/20: New Price Caps Not a Deterrent, Power Firms Say LA Times, Wed, 6/20: The FERC's Action Is Good, Bad, Ugly (Commentary) SF Chron, Wed, 6/20: Davis OKs stopgap loan=20 CRISIS POWERS: Action sidesteps Legislature SF Chron, Wed, 6/20: Experts say state must seize the day=20 ANALYSIS: Price caps set stage for future SF Chron, Wed, 6/20: California's energy crisis hits Northwest like a tidal= =20 wave SF Chron, Wed, 6/20: Davis demands nearly $9 billion for electricity=20 overcharges SF Chron, Wed, 6/20: Fed price caps placate Demos=20 But Feinstein's bill to regulate energy producers was more strict SF Chron, Wed, 6/20: Potrero Hill power plant hit by 2 lawsuits=20 Neighbors, city ask court to cut back hours of operation SF Chron, Wed, 6/20: Washington wakes up Mercury News, Wed, 6/20: Feinstein halts electricity price caps bill=20 Mercury News, 6/20: FERC's fixes have fallen short (Commentary) OC Register, Wed, 6/20: Easing the crunch on costs of power (Commentary) Individual.com (Bridgenews), Wed, 6/20: [B] POWER UPDATE/ US Senate panel to hold off vote on Calif. cap bill=20 Individual.com (Bridgenews), Wed, 6/20: [B] FERC order seen having little= =20 effect on US generator profits Individual.com (PRnewswire), Wed, 6/20: SCE Unveils Rotating Blackout Web S= ite and Public Notification Plan=20 Individual.com (AP), Wed, 6/20: Edison CEO/ Ruling Hasn't Helped NY Times, Wed, 6/20: At Last, Action on California (Editorial) NY Times, Wed, 6/20: Regulators' Order Could Bring Broad California Power= =20 Accord Wash. Post, Wed, 6/20: Davis Finds Hope in Calif. Power Crunch NY Times, Wed, 6/20: The Lesson of When to Give Aid to Free Markets ---------------------------------------------------------------------------= --- ------------------------------- Weather an early test for fee caps: Any severe jump in prices will likely b= e=20 curbed, experts say. By Dale Kasler Bee Staff Writer (Published June 20, 2001)=20 California electricity prices have shot back up recently, potentially posin= g=20 an early test of a new federal price-control plan that takes effect today.= =20 Warm weather has sent wholesale prices doubling this week, partially=20 reversing a dramatic slide that had some state officials believing they'd= =20 tamed the wildly unpredictable California electricity market.=20 The rebound in prices "would be expected," said Arthur O'Donnell, editor of= =20 the California Energy Markets newsletter. "It's 110 degrees in Phoenix, and= =20 it's 100 degrees (in Sacramento) and points in between."=20 Prices this week moved back above $100 a megawatt hour, about double what= =20 they were last week -- although well below the roughly $300 suppliers were= =20 charging California in mid-May. Prices showed signs of stabilizing Tuesday,= =20 analysts said.=20 Experts said the Federal Energy Regulatory Commission's new price-mitigatio= n=20 plan is likely to curb the most severe price spikes. "This will eliminate t= he=20 astronomical prices," said Severin Borenstein, director of the University o= f=20 California Energy Institute.=20 But the plan probably won't bring California a cascade of cheap power,=20 either.=20 Prices likely will bump up constantly against FERC's new price caps, which= =20 will fluctuate from time to time, and they're not likely to go much below t= he=20 caps unless there's a significant glut of energy, said Peter Stiffler of th= e=20 energy consulting firm Economic Insight Inc.=20 "Traders will always trade in at the price ceiling," Stiffler said. "They'r= e=20 going to offer power at the highest price they can."=20 The fluctuating FERC caps are tied to the production costs of the=20 least-efficient, most-expensive generating plant operating in California wh= en=20 supplies are tight and an official "power alert" is declared by the state's= =20 Independent System Operator, which runs most of the power grid. When there= =20 isn't a power alert, prices can't exceed 85 percent of the price establishe= d=20 during the most recent alert.=20 FERC said the system would begin today with a cap of $108.49 a megawatt hou= r=20 but would rise to $127.64 if a power alert is declared.=20 But the cap can fluctuate significantly. Under the old FERC plan, the price= =20 cap in May was set at $267 a megawatt hour. The old plan was similar to the= =20 new system but applied only to California and only kicked in during power= =20 alerts.=20 With the caps flexible, generators could have incentives to withhold power = at=20 some plants in order to raise the caps, said Stanford University economist= =20 Frank Wolak.=20 The FERC plan "still doesn't solve the problem of withholding," said Wolak,= =20 chairman of the ISO's market surveillance committee.=20 Wolak also said he's afraid FERC will let power generators exaggerate their= =20 costs in order to bump up the caps.=20 "The good news is, they seem to be more serious," Wolak said of the=20 oft-criticized commissioners. "But given how many times we've been taken in= ,=20 I'm wary."=20 In addition, generators will be allowed to exceed the price caps if they ca= n=20 justify it to FERC officials. Borenstein said FERC in the past has allowed= =20 generators to justify just about every price level imaginable, and he's=20 suspicious that the commission will let generators do the same in order to= =20 evade the new price controls.=20 State officials, while cautiously optimistic about the plan, were upset tha= t=20 FERC will allow a 10 percent price premium on electricity because of the ri= sk=20 of selling to the California market.=20 "We recognize that the risk of nonpayment in California continues to be=20 greater" than in other states, the commission said in its written opinion,= =20 released late Tuesday.=20 Gov. Gray Davis' spokesman, Steve Maviglio, called the premium ludicrous=20 because the state Department of Water Resources has been buying electricity= =20 ever since the state's troubled utilities exhausted their credit in=20 mid-January.=20 "The state is as creditworthy a buyer as you can get," Maviglio said.=20 Experts said the plan also won't correct the state's energy imbalance.=20 "None of this is going to have much effect on blackouts," Borenstein said.= =20 "This is solving part of the problem; I'm worried people will think=20 everything has been solved.=20 "The emphasis now has to be on getting California to conserve," he added.= =20 A spokesman for power generators, Gary Ackerman, said the price controls=20 could worsen shortages this summer and will discourage generating firms fro= m=20 investing in the new power plants the West desperately needs.=20 Builders "are going to sit on the fence and think about this," said Ackerma= n,=20 head of the Western Power Trading Forum.=20 Acting in the face of mounting political pressure and unrelenting criticism= =20 from California, FERC voted Monday to impose round-the-clock price controls= =20 throughout the 11-state Western region.=20 The FERC plan replaces a three-week-old plan that applied only to Californi= a=20 and took effect only when power reserves fell to below 7 percent of demand= =20 and an official "power alert" was declared.=20 By extending the plan to the entire West, experts said the commission=20 probably put an end to the phenomenon known as "megawatt laundering," in=20 which power was shipped out of California and then re-imported. Imported=20 power wasn't subject to the old price controls.=20 The new controls, said consultant Stiffler, "significantly narrow the abili= ty=20 of a trader to move power around and play the market."=20 The Bee's Dale Kasler can be reached at (916) 321-1066 or dkasler@sacbee.co= m. State to borrow up to $5 billion to buy energy=20 By Emily Bazar Bee Capitol Bureau (Published June 20, 2001)=20 State Treasurer Phil Angelides announced Tuesday that he will borrow up to = $5=20 billion to pay for future power purchases, a move he said was necessary to= =20 avoid a continued drain on California's budget and cuts in other state=20 programs.=20 Since mid-January, energy purchased by the state Department of Water=20 Resources on the spot market and under long-term contracts has come out of= =20 the state's general fund, the source of most state spending.=20 Once the loan becomes final by the end of next week, however, energy will b= e=20 purchased with the proceeds.=20 Made possible by an emergency order from the governor, the loan ultimately= =20 will be paid off by customers of the state's investor-owned utilities throu= gh=20 their electricity rates.=20 "In essence, it stops the general fund bleeding," Angelides said.=20 The state has so far committed $8.2 billion from the general fund to=20 electricity purchases. Of that amount, Angelides said the Department of Wat= er=20 Resources has actually spent about $6.1 billion through June 12 on power=20 purchases, and has received about $900 million back from customers'=20 electricity rates.=20 Officials expect the loan to finance power purchases through September, whe= n=20 they plan to issue up to $13.4 billion in revenue bonds.=20 The bonds will reimburse the general fund and and pay off the loan.=20 "This gives the state some more running room, some more cushion in case=20 anything goes awry with the bond sale to make sure ... the state does not r= un=20 out of general fund money, jeopardizing education programs, law enforcement= =20 programs, children's and health services," the Democratic treasurer said.= =20 Angelides said he has obtained firm commitments for $3.5 billion from JP=20 Morgan and Lehman Brothers at a blended interest rate of about 4.5 percent.= =20 If the long-term bonds are not issued by Oct. 31, the interest rate would= =20 climb to about 7 percent.=20 Lawmakers initially had hoped to close the short-term loan in May and float= =20 the long-term bonds shortly thereafter. However, Republicans in the state= =20 Legislature balked at the plan, forcing the delay of the bond sale until=20 mid-August.=20 Rather than wait, Gov. Gray Davis invoked his emergency powers to allow for= =20 the loan and circumvent the delay.=20 Assembly Republicans don't mind that the governor used his emergency powers= =20 to expedite the loan, said James Fisfis, a spokesman for the caucus. Instea= d,=20 he said, they're concerned the loan could backfire and hurt Californians.= =20 "If the larger bond offering falls through, the penalties and added interes= t=20 could add up on ratepayers' bills," he said.=20 But Angelides argued that the loan would benefit ratepayers on several=20 fronts: Power generators can no longer argue the state should pay a "credit= =20 premium" on electricity, he said, and for the most part will not be able to= =20 walk away from long-term energy contracts that have provisions requiring th= e=20 Department of Water Resources to obtain external financing by July 1.=20 Outside the Legislature, the announcement drew praise from financial analys= ts=20 who had criticized the state for buying power with taxpayer money.=20 In late April, for instance, Standard & Poor cited fears over the state's= =20 mounting power costs when it downgraded California's credit rating on state= =20 bonds.=20 But S&P managing director Steven Zimmermann called the governor's executive= =20 order a step in the right direction.=20 "We're very happy," Zimmermann said. "We were very anxious for the state to= =20 take the general fund out of the energy purchasing position it's been in."= =20 The Bee's Emily Bazar can be reached at (916) 326-5540 or ebazar@sacbee.com= . Dan Walters: Once burned, lawmakers are very wary of Davis-Edison agreement (Published June 20, 2001)=20 The Capitol's politicians rarely attempt to resolve big, complicated policy= =20 issues, preferring to occupy their time with relatively trivial matters --= =20 which also tend to be the priorities of well-heeled and generous interest= =20 groups.=20 And when they even acknowledge a need to address something big, they'll oft= en=20 just nibble at the edges rather than confront the underlying conflicts=20 squarely. That's been the pattern on water, transportation, population grow= th=20 and public education, to name but a few of many examples.=20 The Capitol completed just one comprehensive, or seemingly comprehensive, b= it=20 of policymaking during the last quarter-century. But the issue on that=20 occasion was electric utility deregulation, which has exploded into an ener= gy=20 crisis of monumental proportions. And that experience is having a paralyzin= g=20 effect on the Capitol's denizens.=20 Some Capitol old-timers call it "1890 disease," named after the number of t= he=20 1996 bill that created California's fatally flawed system of pricing electr= ic=20 power. The legislation was written largely by lobbyists for affected intere= st=20 groups and then presented to the full Legislature for take-it-or-leave-it= =20 approval. The measure was passed without a single dissenting vote, even=20 though only a few lawmakers even began to understand its ramifications.=20 It was a huge failure of the legislative process, virtually a dereliction o= f=20 duty, and those who participated have been doing some fancy explaining. But= =20 given the history, both veteran legislators and those who came to the Capit= ol=20 after 1996 are very leery about putting their names on additional pieces of= =20 energy policy that could backfire if the real-world outcome is markedly=20 different from the purported effects.=20 One example is the $43 billion in long-term energy supply contracts=20 negotiated by Gov. Gray Davis' administration to end the state's dependence= =20 on volatile spot market prices. When the long-term contracting program was= =20 authorized by the Legislature early this year, it was on the assurances of= =20 the administration that it could obtain large quantities of power at cheap= =20 prices. But by the time that the contracts were made final, months later, t= he=20 average price was 25 percent higher than what was stated earlier, while the= =20 spot market had fallen dramatically. Now the long-term contracts that seeme= d=20 like such a good idea in January and February could become financial=20 albatrosses.=20 An even more telling example is the deal Davis made with Southern Californi= a=20 Edison to keep the utility from joining Pacific Gas and Electric in=20 bankruptcy. The utilities accumulated at least $13 billion in debts in six= =20 months, buying power at prices much higher than they were allowed to=20 recapture from their customers. Consumer groups are denouncing the Edison= =20 deal as a corporate bailout that would impose multibillion-dollar burdens o= n=20 customers while imposing virtually no financial onus on Edison or its=20 creditors. And the deal's critics are pouncing on legislators' reluctance t= o=20 do something that might haunt them later -- especially in 2002, a critical= =20 election year.=20 "Five years ago, lawmakers and the utilities foolishly foisted this=20 deregulation scheme onto California consumers, and now the governor and=20 Edison expect the ratepayers to pay billions more to save the utilities fro= m=20 their own mismanagement and bad policy decisions," consumer gadfly Harvey= =20 Rosenfield said Tuesday as legislative hearings opened on the Edison deal.= =20 "This time, the whole world is watching the Legislature."=20 Harry Snyder of Consumers Union echoed Rosenfield's pledge to hold=20 legislators accountable. "It looks a lot like 1890," Snyder said. "It's too= =20 big, (and) this is the same process all over again."=20 The sheer complexity and potential ramifications of the deal are weighing= =20 heavily on lawmakers. "This is not a Mother's Day resolution," Senate Energ= y=20 Committee Chairwoman Debra Bowen said wryly as the hearings began. Davis an= d=20 Edison lobbyists are pulling out all the stops, but legislators are very,= =20 very nervous about taking another big step that could generate public=20 backlash.=20 The Bee's Dan Walters can be reached at (916) 321-1195 or dwalters@sacbee.c= om . Senate Democrats lay back to see if FERC action provides rate relief=20 By Finlay Lewis COPLEY NEWS SERVICE=20 June 19, 2001=20 WASHINGTON =01) Key Senate Democrats called a truce Tuesday in the politica= l=20 wars raging over California's energy crisis, as they adopted a wait-and-see= =20 posture over the Federal Energy Regulatory Commission's latest order=20 restricting electricity prices across much of the West.=20 Senators of both parties expressed relief over FERC's action on Monday. But= =20 Sen. Dianne Feinstein, D-Calif., said she was skeptical that the order woul= d=20 end wholesale price manipulation by power providers or result in refunds to= =20 overcharged ratepayers.=20 Feinstein and Sen. Gordon Smith, R-Ore., have prepared legislation seeking = a=20 much tighter pricing formula than the one FERC used. But she asked that the= ir=20 bill be set aside temporarily in deference to the agency's action.=20 "I think we should wait and see what happens," Feinstein said during a Sena= te=20 Energy and Natural Resources Committee hearing on the FERC order.=20 Democrats on the committee pressed FERC Chairman Curtis L. Hebert and the= =20 four other commissioners on why they had not acted sooner to control the=20 daily price turbulence in the California energy market. A market-interventi= on=20 order issued by FERC in April was designed to cope only with energy-supply= =20 emergencies, despite pleas by California Gov. Gray Davis and other Californ= ia=20 Democrats for more drastic measures.=20 "It's time to stop blaming and start problem-solving," said Hebert, a=20 Republican appointed chairman by President Bush.=20 Hebert noted that electricity prices on the volatile spot market have dropp= ed=20 considerably since the April order. Prices on the energy futures market hav= e=20 also tumbled, as have natural gas prices =01) a key component in the cost o= f=20 electricity.=20 On Monday, FERC unanimously ordered around-the-clock restraints on wholesal= e=20 electricity prices in California and 10 neighboring states over the next 15= =20 months.=20 As was the case with the April measure, prices will be pegged to the costs = of=20 the least efficient power provider when reserves in California fall below 7= =20 percent. But when reserves are more plentiful, the prices will drop to 85= =20 percent of the level established during supply shortages.=20 The order also provides for a 22-day period, involving arbitration and revi= ew=20 by an administrative law judge, for resolving price-gouging allegations and= =20 providing refunds in cases of improper pricing.=20 Adamantly opposing price controls earlier, FERC acted after coming under=20 intense pressure from lawmakers of both parties. Republicans said they were= =20 worried that their GOP colleagues in California would have been blamed and= =20 possibly imperiled at the polls if FERC had failed to act.=20 Bush, who also took a hard line against price caps, blessed FERC's action= =20 after it was taken.=20 Hebert criticized the bill advanced by Feinstein and Smith as an attempt to= =20 solve California's problem by "bureaucratic fiat."=20 Their measure would calculate wholesale electricity prices based on the=20 reported production costs of the individual generators, with an added=20 allowance for a profit margin.=20 Hebert argued that the "mitigation price" that FERC will establish "is not = a=20 blunt, arbitrary figure that bears no resemblance to market conditions and = is=20 subject to political pressures and whims."=20 Meanwhile, Commissioner William Massey made it clear that he harbors=20 misgivings about the FERC measure, although he supported it.=20 He said the agency should have acted earlier to avoid the subsequent=20 "carnage" in California, has failed to provide guidelines that would assure= =20 refunds to overcharged consumers and has acted questionably in allowing pow= er=20 providers to impose a 10-percent surcharge to cover credit-worthiness risks= .=20 Massey, a Democrat who has consistently criticized his colleagues for movin= g=20 too slowing in the California crisis, also said he wondered whether the ord= er=20 would provide an unintended incentive for generators to continue using=20 inefficient units in order to assure higher profit margins for their more= =20 modern facilities.=20 Sen. Barbara Boxer, D-Calif., said she would propose legislation later this= =20 week designed to assure refunds to customers who have had to pay unfair=20 prices for their electricity.=20 "If FERC won't do it ... Congress should," Boxer said.=20 A spokesman for Sen. Jeff Bingaman, D-N.M., chairman of the committee, said= =20 Bingaman agreed with Feinstein on the need for a time-out while the FERC=20 order is being implemented.=20 Gov. Davis will testify today (6/20) before the Senate Government Affairs= =20 Committee, which is investigating FERC's role in the crisis. Hebert and the= =20 other commissioners will also appear.=20 House panel erases Bush energy cuts=20 By Alan Fram ASSOCIATED PRESS=20 June 19, 2001=20 WASHINGTON =01) A House subcommittee voted Tuesday to spend $1.2 billion mo= re=20 next year than President Bush proposed for energy and water programs,=20 underlining lawmakers' sensitivity to the West's power problems and their= =20 desire for home-district projects.=20 The $23.7 billion measure, approved by voice vote by a panel of the House= =20 Appropriations Committee, is normally one of the more routine of the 13=20 annual spending measures Congress must approve. But with this year's=20 escalating battle between Bush and Democrats over energy policy, the=20 measure's profile has been raised.=20 The bill would provide $18.7 billion for the Energy Department, $641 millio= n=20 more than Bush requested and $444 million more than this year. Fiscal 2002,= =20 which the bill covers, begins Oct. 1.=20 It also includes nearly $4.5 billion for the Army Corps of Engineers and th= e=20 hundreds of water projects it has under way across the country, $568 millio= n=20 more than Bush proposed but $73 million less than this year.=20 The measure was approved shortly after top members of the committee met wit= h=20 Bush at the White House.=20 Participants said Bush and the lawmakers reaffirmed their goal of keeping t= he=20 price tag of the 13 bills to $661 billion, which is one-third of the overal= l=20 federal budget. That would be a 4 percent boost over 2001, which many=20 Democrats =01) and some Republicans in private =01) say is too low.=20 "He said there would be attempts to raise this as we go through the process= ,=20 and let's stick with him," said Rep. Sonny Callahan, R-Ala., chairman of th= e=20 energy and water subcommittee.=20 Illustrating the pressures Republicans face, David Sirota, spokesman for th= e=20 Democrats on the committee, said the bill lacked the new spending needed fo= r=20 renewable energy and other programs that could help alleviate power=20 shortages.=20 Under the bill approved Tuesday, renewable energy programs would get $377= =20 million, $100 million more than Bush wanted and $1 million more than this= =20 year. Nuclear energy, basic energy sciences, biological and environmental= =20 research and a study of whether spent nuclear fuel should be stored at a=20 Nevada site would all get about what Bush proposed.=20 The bill's $7.03 billion for environmental cleanups is $699 million more th= an=20 Bush proposed. Programs aimed at containing the nuclear arsenals of former= =20 Soviet states would get $845 million, $71 million more than Bush's plan.=20 Members voted to hold the brief meeting behind closed doors after citing th= e=20 national security sensitivity of publicly discussing some of the nuclear=20 weapons programs covered by the bill.=20 Davis, Regulators Face Off at Hearing From Reuters=20 ?????WASHINGTON -- California Governor Gray Davis, a Democrat, today blamed= a=20 Republican-led energy regulatory agency for not doing enough to help his=20 energy-starved state and demanded refunds of $6.7 billion for alleged=20 price-gouging by power generators. ?????Davis, whose political future has been linked to his state's electrici= ty=20 woes, was testifying at a Senate hearing with members of the Federal Energy= =20 Regulatory Commission. ?????The hearing marked the first time that Davis met face to face with all= =20 five FERC commissioners. ?????FERC regulates interstate electricity markets and has jurisdiction to= =20 order refunds by power generators found to have overcharged utilities. ?????Earlier this week the agency, led by a Republican majority, rejected= =20 Davis' pleas for strict caps on prices that soared above $400 per megawatt= =20 hour last month. ?????Sen. Joseph Lieberman, the former Democratic vice presidential nominee= ,=20 heads the Senate Governmental Affairs Committee that quizzed the FERC=20 commissioners and Davis on efforts to stabilize the chaotic Western=20 electricity market. ?????Davis accused FERC of failing to act aggressively against alleged=20 price-gouging by out-of-state generators. ?????"To date, not a single penny in refunds has been returned to=20 Californians," Davis said. "It is unconscionable for the generators to prof= it=20 from their egregious overcharges. FERC must move quickly to enforce the law= =20 and order the energy companies to give back the money." ?????Davis said the state is owed refunds of at least $6.7 billion.=20 California's grid operator has estimated that from May 2000 to May 2001,=20 power generators charged the state nearly $9 billion more than a competitiv= e=20 market would warrant, he said. ?????California, the nation's most populous state, has been hit with a seri= es=20 of rolling blackouts, the bankruptcy of its largest utility, and an economi= c=20 slowdown since the power crisis began last year. ?????The state is expected to convene a criminal grand jury to investigate= =20 whether some power generators withheld supplies, shut down plants or=20 exploited the bidding process to drive up prices. Out-of-state generators= =20 deny any illegal activity, saying the high prices simply reflect supply=20 shortages. ?????Today also marks the day that FERC's newly expanded "price mitigation"= =20 program goes into effect in all 11 Western states with a wholesale price=20 limit of $107.9 per megawatt hour linked to a market formula. The plan had= =20 previously applied only to California during emergency power outages. ?????Since FERC's action earlier this week, Senate Democrats dropped a=20 legislative effort to strictly cap electricity prices in the West. However,= =20 California Democrats in the House were still trying to force a full vote on= a=20 package of energy amendments, including a price cap. ?????The Bush administration and many Republicans oppose price caps,=20 contending they would discourage more power production. ?????Separately, today the U.S. Energy Department issued a study that=20 supported the White House's view that strict price caps would hurt, not hel= p,=20 California. ?????The study found California faces about 113 hours of rolling blackouts= =20 this summer, a level that would double if wholesale prices were capped at= =20 $150 per megawatt because some 3,600 megawatts of generating capacity would= =20 shut down. An alternative approach of setting a price cap based on producti= on=20 costs plus $25 per megawatt would delay or close about 1,300 megawatts of= =20 capacity scheduled to be built in the state, according to the study. ?????However, lawmakers from both political parties have scrambled for some= =20 kind of solution to address the shortages in California well before the=20 congressional elections next year. ?????The FERC plan expands an existing "price mitigation" program in=20 California to 10 other Western states. The plan, which runs through Septemb= er=20 2002, means that during nonemergency periods the price for wholesale power= =20 cannot exceed 85 percent of the cost of electricity sold during a Stage 1= =20 power shortage emergency in California. ?????A Stage 1 emergency is declared when electricity supplies fall below 7= =20 percent of demand on the Western power grid. ?????The plan also imposes a 10 percent surcharge on all power sales into= =20 California as financial protection for generators reluctant to sell to the= =20 state's financially weak utilities. ?????Davis was due to meet the two newest FERC commissioners, Patrick Wood = of=20 Texas and Nora Brownell of Pennsylvania, today. Both are former utilities= =20 regulators in states that successfully deregulated their power industry and= =20 nominated to the agency by President Bush. Copyright 2001 Los Angeles Times=20 NEWS ANALYSIS Energy on Agenda, but Issue Is Blame=20 Politics: Gov. Davis will try to sway voter anger toward the GOP as he face= s=20 a Senate panel.=20 By RONALD BROWNSTEIN, Times Political Writer=20 ?????WASHINGTON--When California Gov. Gray Davis testifies at a high-profil= e=20 Senate hearing today, the issue formally on the table will be the expanded= =20 electricity price controls that federal regulators approved this week. But= =20 the session's political subtext will be the escalating struggle between Dav= is=20 and national Republicans to determine where California voters look for=20 solutions--and blame--for the state's power woes. ?????In both California and Washington, Republican strategists believe Davi= s=20 is trying to manufacture a succession of conflicts with the White House tha= t=20 will allow him to run in 2002 as much against President Bush as against=20 whomever the state GOP nominates in the gubernatorial race. In return,=20 Republicans are trying to shift the focus back toward Davis--most=20 aggressively through a California-wide television advertising campaign=20 organized by Scott Reed, a former executive director of the Republican=20 National Committee. ?????"Our goal is to get the focus back to Sacramento, where it belongs,"= =20 Reed said. ?????Both sides see the same prize in this tug of war: the opportunity to= =20 determine where most Californians direct their anger during what could be a= =20 long, hot summer of power shortages. ?????"The situation is that the public's minds are not made up on this=20 issue--whether it is Sacramento or Washington who has acted too little, too= =20 late," said Mark Baldassare, a pollster at the independent Public Policy=20 Institute of California. "That gives both sides an opportunity to get their= =20 messages out. The stakes are fairly high in terms of how the public in=20 California ends up assessing blame over the next few months." ?????A Slight Uptick in Davis' Popularity ?????Overall, Davis' political situation appears to be stabilizing. After= =20 months of runaway power costs, the prices the state pays for wholesale=20 electricity are falling and new plants will come online next month. And=20 following a free fall in private polls, Davis has seen his numbers tick bac= k=20 up slightly. Similarly, a poll financed by independent power generators=20 showed that in mid-June, for the first time in months, Californians were=20 becoming slightly more confident that the crisis is easing. ?????Within the state Capitol, Davis is asserting himself, demanding that= =20 lawmakers hold hearings on his rescue plan for Southern California Edison. = On=20 Monday, he released details of a similar plan for San Diego Gas & Electric.= =20 Last week, he announced an agreement that is likely to increase generation = by=20 alternative energy producers, who account for about a fourth of the state's= =20 supply. ?????"This guy is changing," said state Sen. Steve Peace (D-El Cajon), who = a=20 few months back had been urging that Davis take a more aggressive stance on= =20 the crisis. "There is a difference in his demeanor and focus." ?????Yet the energy crisis still looms as a vast cloud over a reelection=20 campaign that once looked like a stroll on the beach. ?????The paradox for Davis is that the substantive victory for pricecontrol= =20 advocates at the Federal Energy Regulatory Commission meeting this week may= =20 complicate his political goal of maintaining a heavy focus on Washington.= =20 Though Davis and some congressional Democrats portrayed FERC's decision as= =20 insufficient, it appears to have lanced the pressure for federal legislatio= n=20 to impose the tighter price controls that Davis supports.=20 ?????Sen. Dianne Feinstein (D-Calif.), a principal sponsor of that bill, on= =20 Tuesday announced she would shelve the measure for six months to give the n= ew=20 FERC plan time to work. ?????As a result, the political effect of the FERC ruling could be to shift= =20 the focus away from Washington back toward decisions in Sacramento, which i= s=20 exactly what Republicans prefer. "Gray Davis is the dog that finally caught= =20 the car," said Dan Schnur, a San Francisco-based GOP consultant. "Davis is= =20 going to keep screaming about price caps and refunds, but now Republicans c= an=20 point to substantive action." ?????Davis: 'Much More They Should Do' ?????For months, Davis has criticized Bush for refusing to support=20 electricity price controls and other measures that the governor says could= =20 ease California's energy crunch. At almost every opportunity, Davis offers= =20 the same message: California is taking the steps it needs to, but Washingto= n=20 has failed to help enough. That was precisely Davis' message Monday when FE= RC=20 significantly expanded the limited price caps it had imposed previously. ?????While saying that FERC had "finally taken a step in the right=20 direction," Davis added: "There is much more they should do"--including=20 providing refunds to California for alleged overcharges. The overall tone o= f=20 Davis' statement was much more skeptical about FERC's action than the remar= ks=20 from Feinstein, who described the decision as "a giant step forward." ?????Aides say Davis plans to repeat that two-part message in his appearanc= e=20 today before the Senate Governmental Affairs Committee, chaired by Sen.=20 Joseph I. Lieberman (D-Conn.). In his testimony, and in a round of schedule= d=20 television appearances, Davis will demand that FERC order refunds in the=20 range of $5 billion to $6 billion to the state, aides said. Davis also will= =20 distribute to every member of Congress a 177-page book chronicling the=20 state's response to the crisis. ?????Inside the Bush White House, some officials see in Davis' cool respons= e=20 to FERC's decision more evidence that the governor is determined to use the= =20 White House as a foil in his reelection campaign. The prevailing view, one= =20 official said, is that, no matter what concessions the administration offer= s,=20 Davis will immediately raise the bar and demand something else--the way he= =20 did by talking about rebates as soon as FERC offered tougher price controls= . ?????"That is Davis' M.O.," said one official involved in the White House's= =20 energy strategy. "He asks the administration to do something, the=20 administration does it, and then he attacks the administration for not doin= g=20 enough. . . . He needs someone to blame." ?????Davis aides reject that characterization, arguing that the governor is= =20 merely representing the state's interests against an administration that th= ey=20 maintain is favoring energy producers over consumers. But Davis advisors=20 acknowledge that they have used focus groups to test campaign messages that= =20 pin the blame for the energy crunch primarily on Davis' Republican=20 predecessor, Pete Wilson, and a "Republican president who has failed to sto= p=20 his rich friends in the energy industry" from gouging consumers, one aide= =20 said. ?????"You don't have to tell people in focus groups more than once how this= =20 is connected," the Davis aide said. ?????Gubernatorial Rivals Are Free of Blame ?????Baldassare, the independent pollster, notes it may be especially=20 imperative for Davis to keep Bush's energy decisions in the spotlight becau= se=20 none of his potential Republican opponents in 2002--California Secretary of= =20 State Bill Jones, former Los Angeles Mayor Richard Riordan or businessman= =20 William E. Simon Jr.--is easily tagged with complicity in the problem. "Non= e=20 of them were really involved in the decision-making over deregulation,"=20 Baldassare said. "The only one else to blame, in a political sense, is=20 Washington and the Bush administration." ?????The new independent advertising campaign against Davis was inspired=20 largely by the fear of that strategy succeeding--damaging the standing in= =20 California not only of Bush but also of other Republicans, particularly tho= se=20 in Congress. Reed, whose American Taxpayers Alliance is funding the ads, sa= id=20 he decided to launch the campaign after Davis appeared to gain the upper ha= nd=20 in the media debate following Bush's visit to California late last month. ?????"The Bush trip really changed the terms of debate about Davis' problem= =20 and made it more of a possible national Republican problem," Reed said. "Th= e=20 entire terms of debate turned around and was focused on the issue of price= =20 caps as opposed to negligence on Davis' behalf. Our group is attempting to = go=20 out and engage Davis." ?????To "engage" Davis, Reed's group, which has not revealed its donors, is= =20 spending what he said would be $1.5 million on an initial ad criticizing=20 Davis this week, though a spot check of TV stations around the state=20 indicated a far more modest buy. Reed said the group is planning to air a n= ew=20 ad as soon as this week. ?????Democrats plan to answer the ads with attacks of their own and will be= =20 filing complaints with the IRS and other federal agencies about the anonymo= us=20 funding of the Reed ad. ?????Today's Senate hearing will give Davis another chance to respond to th= e=20 GOP and make his case for greater help from Washington. But Lieberman aides= =20 acknowledge the hearing is likely to be much less confrontational than it= =20 would have been if FERC had not acted Monday. The agency's decision "change= d=20 the dynamic," the aide said. ?????That assessment may apply not only to the conflict between FERC and it= s=20 critics but also equally to the hostilities between Davis and the White Hou= se. ---=20 ?????Times staff writers Dan Morain in Sacramento and Mark Z. Barabak in Lo= s=20 Angeles contributed to this story. Copyright 2001 Los Angeles Times=20 Blackout Forecasts' Dark Side=20 If optimists are wrong and the power runs out, California's energy crisis= =20 could quickly cost lives and cripple the economy.=20 By JENIFER WARREN, Times Staff Writer=20 ?????It's here. Summer 2001, the blackout season, is only a day away. ?????Already Californians anticipate power outages when temperatures rise. = By=20 August, the occasional annoyances endured so far--stoplights gone dark,=20 computers, air conditioners and elevators idled--could seem almost quaint. ?????Gov. Gray Davis insists we needn't worry. Four large new power plants= =20 are firing up soon, he said, and government's best and brightest are lockin= g=20 up still more megawatts to help meet our peak summer need. Californians,=20 Davis predicts, will valiantly heed his call to conserve, helping the state= =20 survive the hot months, no sweat. ?????With luck, he'll be right. Power prices have stabilized, and some ener= gy=20 analysts are wondering whether California may have tamed the blackout beast= . ?????But what if those plants don't get built in time, people don't trim=20 their electricity use 7% and energy imports are more meager than expected? ?????And what if the state gets hit by a summer that is not moderately hot,= =20 as Davis bets, but blistering, record-setting hot? ?????Government experts who ponder such questions don't expect disaster in= =20 the coming months. But they are planning for it nonetheless. ?????At best, they say, Californians can expect some gridlocked=20 intersections, an occasionally overloaded 911 system, perhaps some business= =20 bankruptcies, certainly inconvenience. At worst, the Western power grid cou= ld=20 crash, causing uncontrolled blackouts that might lead to looting,=20 contaminated water supplies, even civil unrest. ?????"How bad could this summer get?" said state Sen. Joe Dunn (D-Santa Ana= ).=20 "This summer could be the worst disaster to ever hit the state of Californi= a." ?????Imagine it's a Thursday morning in the third week of July. Relentless= =20 heat grips California, the curse of a stubborn high-pressure ridge that jus= t=20 won't budge. ?????As air conditioners from Redding to Chula Vista lumber to life, manage= rs=20 of the state's power grid in Folsom gulp their third and fourth cups of=20 coffee, stare at a bank of computers and begin to fret. ?????Demand is jumping. Supply is static, Canada and Arizona have nothing t= o=20 sell. It's looking tight. ?????Thirty minutes later, the picture is gloomier. A brush fire shuts down= =20 transmission lines near Fresno, squeezing supply in the Central Valley. In= =20 the Bay Area, the unusual heat drives demand well past projections. ?????By noon things look bleak. Operators of the Diablo Canyon nuclear powe= r=20 plant near San Luis Obispo have cut output by 80%. The trouble? Chunks of= =20 kelp have lodged in one of the plant's seawater intake valves, creating a= =20 clog like one that plagued the facility in January. ?????With a chorus of groans, the grid's keepers scour the market for power= =20 to offset the Diablo loss. No luck. As the mercury climbs and the Golden=20 State economy roars into full swing, electricity consumption ticks upward,= =20 minute by minute. And when managers of a power plant near Long Beach cut=20 output because of a cracked turbine, everyone knows what it means. ?????Alert the utilities. It's lights out, California, for the fourth day i= n=20 a row. ?????Dr. J. Michael Leary dreads blackouts--not personally, but=20 professionally. Leary is an emergency room physician in the desert city of= =20 Rancho Mirage. When air conditioners go on the blink there, the=20 victims--scores of them, mostly old folks--wind up in his ER. ?????In a normal year, 75% of his emergency patients are geriatrics. Like= =20 infants, the elderly are unusually vulnerable to the heat. When blackouts= =20 hit, they are most at risk. ?????"It's as if you lived in Maine and they turned the heat off in January= ,"=20 Leary said. "This is an extreme environment we live in. The effects can be= =20 devastating." ?????Many desert seniors are on fixed incomes and live in mobile homes, som= e=20 of them poorly insulated boxes that turn into ovens under the brutal summer= =20 sun. Take away the air conditioning and the humans inside start baking, qui= ck. ?????For Leary, the specter of continual, back-to-back blackouts in=20 July--and, some predict, in June and August too--conjures images of an=20 82-year-old man, living alone in one of those mobile homes, taking medicati= on=20 for heart disease. The cardiovascular drugs plague the man with numerous si= de=20 effects; one inhibits his body's ability to cool itself. ?????When a person gets overheated, body temperature eventually rises=20 uncontrollably. Then comes a nasty spiral of effects, and pretty soon "you = go=20 into shock," Leary said. "Everything just shuts down." ?????On average each year, 371 Americans die from heat-related causes, more= =20 than the number killed by earthquakes, tornadoes, hurricanes, lightning and= =20 floods combined. In 1995, a record hot spell in Chicago killed 465 people.= =20 Eleven Californians died from the heat in 1998. ?????A new report by the United Seniors Assn. predicts that more than half = a=20 million elderly Californians could need hospitalization for heat-related=20 ailments this summer.=20 ?????Some communities have laid plans for cooling shelters, wading pools an= d=20 other measures to provide relief. But will all who need help get it? Or get= =20 it in time? ?????Out in the desert, paramedics expect a crush of 911 calls when the pow= er=20 goes out and the ill, frail and frightened seek help. Leary and others at= =20 Eisenhower Medical Center will be waiting, armed with ice packs, cooled IVs= =20 and ventilators. ?????"I am very, very worried," the doctor said. "I think we'll see a great= =20 toll in human suffering, even mortality." ?????California's tomato processors are no less anxious. They wash, cook,= =20 peel, chop, mash and can about 1 million tons of tomatoes a week from July = to=20 October--enough to account for half the world's supply. For them, a string = of=20 unexpected power losses could mean economic ruin in a matter of days. ?????The reason lies in the peculiar nature of food processing--a sterile= =20 system instantly contaminated if the power fails and the plant's precise=20 temperature is disturbed. ?????Once a batch of tomatoes is tainted, it must be thrown out--all 50,000= =20 pounds. The plant must then be sanitized, a painstaking process that takes= =20 about 36 hours. ?????"If you get hit by blackouts every third day for, say, two weeks, you'= re=20 starting, stopping, cleaning, restarting--it's a nightmare," said Jeff Boes= e,=20 president of the California League of Food Processors. "You could lose thre= e=20 batches and be out $40 million before you knew what hit you." ?????Meanwhile, farmers with still more truckloads of tomatoes line up=20 outside the plant, waiting to be paid for their crop: "If we can't process= =20 them, the farmers have spent an entire season growing them for nothing,"=20 Boese said. ?????In Sonoma County, the object in peril is the chicken. Egg producers=20 equip their laying houses with fans and swamp coolers to keep the hens=20 comfortable. Power is also needed to run giant refrigerators filled with eg= gs. ?????"In a blackout, those hens can overheat in no time," said Rich Matteis= =20 of the Pacific Egg and Poultry Assn. "In 20 or 30 minutes, you could have= =20 100,000 birds die." ?????Many large producers have backup generators, but they are not designed= =20 for ongoing, intensive use. Will they hold up? Small-scale egg producers=20 often have no backup power at all. ?????Hundreds of other California businesses could suffer if summer shapes = up=20 as bad as some predict. ?????The Valero Refining Co. of California, northeast of San Francisco,=20 produces 115,000 barrels of gasoline a day. Because restarting a refinery i= s=20 a complicated task, two or three blackouts close together could prompt=20 officials to shutter it until electricity supplies stabilize--costing=20 California about 10% of its gasoline supply. ?????At a Berkeley medical laboratory, doctors say power losses to their=20 freezers could destroy bone marrow needed to give young leukemia patients= =20 lifesaving transplants. The state's 400 dialysis centers, where patients=20 without kidney function go to have their blood cleansed every other day, ar= e=20 in the same fix. Few have backup generators, so when an outage hits,=20 technicians must crank the machines by hand. ?????Most Californians, of course, face far more ordinary consequences. The= =20 scoreboards will fizzle at summer softball games, joggers on treadmills wil= l=20 be stopped in their tracks, electric organs will go silent, leaving choirs = to=20 sing without accompaniment. ?????Parents will be asked to retrieve children from day-care centers when= =20 the lights and cooling systems conk out. Anniversary lunches may be ruined= =20 when restaurants cannot grill salmon or blend margaritas. ?????Most people will tolerate occasional disturbances, psychologists say,= =20 doing their part in a time of crisis. But what if such irritations become a= n=20 everyday fact of life? ?????Hundreds of "essential" energy users--including prisons, fire=20 departments and airports--are protected from blackouts, and hundreds more= =20 have applied for exemptions. That means the pool of people bearing the=20 blackout burden is shrinking, so more frequent outages are likely. ?????Blackout predictions vary widely, but at least one forecaster, a=20 consultant for California water districts, anticipates an outage almost eve= ry=20 afternoon of every workday this summer if temperatures are unusually warm. ?????Californians are accustomed to trash compactors, giant-screen TVs and= =20 having the Internet at their fingertips. How much deprivation will they=20 tolerate? ?????"So far, the version of blackouts we've experienced hasn't looked too= =20 scary to people--it happens on a workday, in the afternoon, and you basical= ly=20 have to come home and reset your VCR," said Dan Kammen, a professor of ener= gy=20 and society at UC Berkeley. ?????But if outages become daily events, and start to invade the evening=20 hours, the public mood could change abruptly. ?????"When there's a disaster or crisis or trauma, people tend to act=20 heroically and work together," said Robert Butterworth, a Los Angeles=20 psychologist and trauma specialist. "But the civilized behavior only lasts = a=20 short period. Then people start acting in unpredictable ways." ?????That tendency may be exacerbated, Butterworth said, by the nature of t= he=20 energy crisis--not a natural disaster, but a man-made one. ?????"People start to look for a scapegoat," he said. "People will look for= a=20 target, and there's a tendency to strike out at whoever is closest to you." ?????One place that tendency may surface, Butterworth said, is on=20 traffic-clogged roads. Blackouts already have led to scores of accidents. A= dd=20 summer heat to the mix, and repeat the pattern day after day at rush hour,= =20 and motorists' patience could wear thin, law enforcement officials say. ?????"We're bracing for . . . possible acts of violence and road rage," sai= d=20 Sacramento County Sheriff's Lt. Larry Saunders. ?????Lon House is the water consultant who predicts California could see=20 blackouts almost every summer weekday. Among the worries for the 440 water= =20 agencies he represents: losing the ability to pump water during wildfire=20 season. ?????"I'm telling them to be ready for a major earthquake every day this=20 summer--meaning all your power is out throughout your district for multiple= =20 hours," House said. ?????House insists he isn't an alarmist. But on top of the fire fears, he= =20 warns that blackouts of more than a few hours would allow air into water=20 pipes, contaminating supplies. If that happens, Californians would be urged= =20 to boil their water until the system can be disinfected from one end of the= =20 pipe to the other. ?????Though rolling blackouts are risky, they remain essentially a controll= ed=20 phenomenon, occurring when and where the grid managers and utilities decide= .=20 Far more frightening--and devastating--are unexpected, cascading outages th= at=20 could shut down the entire Western power grid. It happened in August 1996,= =20 leaving 4 million people without power during a triple-digit heat wave. ?????The problem began when power lines in Oregon sagged into trees and shu= t=20 themselves off. That triggered a chain reaction of automatic switch-offs an= d=20 oscillating surges of energy that ultimately shut down all four of the main= =20 power arteries between California and the Pacific Northwest. ?????That robbed the system of thousands of megawatts--enough to power the= =20 city of Seattle four times over--and scattered outages across California an= d=20 six other Western states. Thousands of customers were without power for mor= e=20 than a day. ?????Though such an episode is rare, California grid managers say it is mor= e=20 likely today because the system is taxed by the ever-increasing load of=20 electricity it bears. ?????"The system is very dynamic, and when it's heavily loaded and highly= =20 stressed, like it is now, the smallest little thing could cause big trouble= ,"=20 said Kevin Bakker, who oversees California's connection to the greater=20 Western power grid.=20 ?????If a massive, uncontrolled outage should hit, the ramifications could = be=20 dizzying, said Mike Guerin, chief of law enforcement for the state Office o= f=20 Emergency Services. Police departments would probably go to tactical alert,= =20 guarding against looting by criminals who might take advantage of disabled= =20 alarm systems and darkened street lights. ?????In hot areas, cities might convert municipal buses--parked with air=20 conditioners running--into cooling shelters, Guerin said. The state would= =20 provide emergency generators to nursing homes and others in need, while the= =20 California National Guard might be called into action. ?????"With this kind of blackout scenario, you're not worried about the=20 bologna going bad in the refrigerator," Guerin said. "We're talking about= =20 doctors doing surgeries on backup generators for three days. We're talking= =20 about a lot of things we don't like to think about." ---=20 ?????Times staff writers Nancy Vogel and Alexander Gronke and researcher=20 Patti Williams contributed to this story. Copyright 2001 Los Angeles Times=20 FERC Move Short-Circuits Push for Hard Price Caps=20 By RICHARD T. COOPER and JANET HOOK, Times Staff Writers=20 ?????WASHINGTON--The Federal Energy Regulatory Commission's decision to=20 impose full-time price ceilings on wholesale electricity in California and= =20 the West appears to have deflated the congressional drive for a return to= =20 traditional utility regulation. ?????Sen. Dianne Feinstein (D-Calif.), calling the "price mitigation" syste= m=20 FERC unveiled Monday "a giant step forward," announced Tuesday that she is= =20 pulling back her bill to force a return to the "cost of service" pricing=20 system that prevailed before deregulation. Republican Sen. Gordon Smith of= =20 Oregon, a co-sponsor, agreed, as did Sen. Jeff Bingaman (D-N.M.), chairman = of=20 the Senate Energy Committee. ?????House Democrats vowed to fight on for tougher controls, but they were= =20 given little chance to succeed. ?????As a result, although the political blame game will rage on, the reali= ty=20 of a long, ugly summer for California appears to have arrived: at least=20 several months of tears, toil, sweat--and fast-rising electric bills. ?????California consumers are likely to face an unpleasant paradox, energy= =20 analysts said: Given present power shortages, blackouts are virtually=20 inevitable this summer. And, since state authorities are beginning to let= =20 high wholesale prices flow through into retail bills after months of=20 subsidies, many consumers could face higher charges at the same time their= =20 lights begin to flicker. ?????Even if FERC's order succeeds and wholesale prices fall, as they have= =20 begun to do in recent weeks, consumers' bills are likely to rise. Since=20 retail charges lag well behind wholesale prices, closing the gap will=20 probably mean a period of higher costs for consumers, regardless of what=20 happens in wholesale markets. ?????There is light at the end of the tunnel, energy analysts said, but it = is=20 probably a year away. And reaching it, they said, depends in part on=20 government officials taking no action that might spook investors and disrup= t=20 present plans for expanding the region's capacity to generate and deliver= =20 more power. ?????The new FERC system, which its designers said would provide temporary= =20 price relief while preserving incentives for energy investment, imposes=20 cost-based curbs on wholesale prices throughout the West and covers all suc= h=20 sales, not just those during periods of extreme shortages, as did the order= =20 issued in April. ?????FERC Chairman Curtis L. Hebert Jr. told the committee the new system= =20 will prevent "megawatt laundering" and other potential abuses. He said his= =20 agency is "committed to ferreting out any forms of market misbehavior 24=20 hours a day, seven days a week." ?????With the apparent collapse of demands for more intervention, Congress= =20 now seems ready to give FERC a year or more of leeway to see whether its pl= an=20 will curb wholesale prices and create what FERC member Linda Breathitt, a= =20 Democrat, called "a breathing spell" in which California and the West can= =20 "repair their dysfunctional markets." ?????"It still remains to be seen whether there can be manipulation, but I= =20 think we should wait and see," Feinstein said Tuesday at a Senate Energy=20 Committee meeting attended by all five FERC members. The commissioners call= =20 their new system "price mitigation," not price caps, but Feinstein said it= =20 amounts to the same thing. ?????"Whether you call it price mitigation or something else, a rose is a= =20 rose is a rose," said Feinstein, a member of the energy committee. ?????And Sen. Barbara Boxer (D-Calif.), appearing before the committee as a= =20 witness, said: "I was very pleased with [Monday's] about-face by FERC. I=20 believe they have a new tone." ?????Democrats on the other side of the Capitol pledged to keep fighting fo= r=20 traditional regulation, but with Republicans in control of the House, the= =20 struggle appears to be largely symbolic. ?????House Democrats wanted to introduce amendments on price controls and= =20 other energy policy to a mid-year supplemental appropriation bill due to co= me=20 before the House today. However, GOP leaders expected to block Democrats fr= om=20 even offering the amendments on procedural grounds. ?????The most sweeping of the amendments would set cost-based limits on=20 wholesale energy prices in the West. Rep. Henry A. Waxman (D-Los Angeles) a= nd=20 other sponsors insisted that the measure is still needed in spite of the FE= RC=20 action, which he said would continue to provide windfall profits to=20 generators, encourage suppliers to withhold power and do too little to=20 restrain the price of natural gas. ?????He called the FERC policy an "experiment" that is using California and= =20 other Western states as subjects. ?????Similarly, Rep. Nancy Pelosi (D-San Francisco) said: "Although the FER= C=20 decision [Monday] is a step in the right direction, I am concerned it does= =20 not remove incentives for energy suppliers to withhold power, drive up pric= es=20 and gouge consumers." ?????The commission went as far as it did in part because of the specter of= =20 broader price control legislation, Pelosi said. "They felt the heat, they s= aw=20 the amendments coming and decided to act." ?????And Rep. Bob Filner (D-San Diego), in an interview Tuesday, said he wi= ll=20 press ahead with legislation to impose hard price caps. "I would advise the= =20 senators that after a year of dealing with these price gougers that they wi= ll=20 easily manipulate this latest order," he said, calling it a "Swiss cheese= =20 order--full of holes."=20 ?????Feinstein's shift put House Democrats in an awkward political position= =20 because it came just as they prepared to make their big push for tougher=20 controls. But the Democrats tried to minimize the differences in legislativ= e=20 strategy. ?????"She too is waiting to see if the FERC experiment works," Waxman said.= =20 "I'm a little more skeptical, but we're both watching carefully." ?????As a political matter, a Democratic leadership aide acknowledged, the= =20 FERC order muddies the debate at a time when Democrats have been working ha= rd=20 to make it a defining issue--and one they had hoped would help them win=20 control of the House in the 2002 elections. ?????"It's hard to describe to people what the difference is between what w= e=20 want and what FERC has done," said the aide. ?????And Republicans said FERC's action had clearly taken the wind out of t= he=20 sails of price control efforts that some GOP strategists feared might have= =20 passed the House. ?????"I would have thought [it would pass] last week," said John Feehery,= =20 spokesman for House Speaker J. Dennis Hastert (R-Ill.). "But now, with what= =20 FERC did, it takes a lot of air out of the balloon." ?????"I think the FERC action will dissipate that strong push," agreed Emil= y=20 Miller, a spokeswoman for House Majority Whip Tom DeLay (R-Texas). "It will= =20 take the heat off." ?????House Majority Leader Dick Armey (R-Texas) said the message to Democra= ts=20 was, "It's time to come off your political high horse." ?????He said he wanted to keep Democrats from offering their price control= =20 amendment to Wednesday's supplemental appropriation bill because the propos= al=20 is "a political statement, not a policy statement." ---=20 ?????Times staff writers Megan Garvey and Richard Simon contributed to this= =20 story. Copyright 2001 Los Angeles Times=20 Plan Won't Raise Rates, Davis Says=20 Edison: Governor seeks to assure Senate, where Democrats say action is a=20 bailout of nearly bankrupt utility.=20 By CARL INGRAM, Times Staff Writer=20 ?????SACRAMENTO--Gov. Gray Davis sought to assure the state Senate on Tuesd= ay=20 that his plan to save Southern California Edison from threatened financial= =20 collapse would work without increasing customer rates. ?????Davis sent assurances to the Senate Energy Committee through his top= =20 attorney, Barry Goode, who helped negotiate the controversial proposal with= =20 the utility. ?????Senate Republicans have taken a wait-and-see attitude on the plan. But= =20 they generally contend that the business of utilities belongs in the hands = of=20 private enterprise. ?????But Democrats in both houses have charged that the deal between Democr= at=20 Davis and Edison represents a state bailout of the nearly bankrupt=20 Rosemead-based utility. The analysis is shared by leading consumer activist= s. ?????At the first in a series of Senate hearings on the package, which is= =20 considered all but dead in its current form, Sen. Byron Sher (D-Palo Alto)= =20 voiced concerns about political problems with the plan. ?????He asked Goode, who was flanked at a witness table by Edison executive= s,=20 whether monthly bills of the utility's customers would increase as a=20 consequence of approval of the governor's package. ?????"Our models say there will be no additional impact on the ratepayers,"= =20 Goode replied. ?????Other members appeared ready to pursue rate increase questions, but=20 Chairwoman Debra Bowen (D-Marina del Rey) cut them short. She said the issu= e=20 would be fully examined at a later hearing. ?????To spare Edison from going into bankruptcy and to restore its=20 credit-worthiness, Davis and executives of the utility reached a complex=20 compromise in April, the centerpiece of which was a state purchase of=20 Edison's transmission grid
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