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Sac Bee, Mon, 5/18: Bush may back some price caps Sac Bee, Mon, 5/18: TV ads to pin blame on Davis for power woes Sac Bee, Sun, 5/17: Dan Walters: Political war between Sacramento and=20 Washington is escalating Sac Bee, Sat, 5/16: Veil is lifted on pacts SD Union, Mon, 5/18: Deal would let SDG&E clients off the hook SD Union, Mon, 5/18: State officials to hold hearings on proposed=20 high-voltage line=20 SD Union, Sun, 5/17: Power grid operators issue blackout warnings for first= =20 time SD Union, Sun, 5/17: High energy prices to continue long term, experts say SD Union, Sun, 5/17: Ad criticizing Davis expected as officials consider=20 price caps SD Union, Sat, 5/16: Energy deals rest on unsteady markets LA Times, Mon, 5/18: Bush Says FERC Plan Is Not Price Controls LA Times, Mon, 5/18: U.S. May Hike Aid for Poor's Utilities LA Times, Sat, 5/16: Power Debate Heats Up as Davis Reveals Contracts LA Times, Sat, 5/16: Ad Will Blame Davis for Crisis SF Chron, Mon, 5/18: Blackout alert for next 2 days=20 State's first advance warning puts PG&E's Block 1 on notice SF Chron, Mon, 5/18: California's path to energy independence (by Gray Dav= is) SF Chron, Mon, 5/18: Developments in California's energy crisis SF Chron, Mon, 5/18: Federal panel considering ways to rein in Western ener= gy=20 prices SF Chron, Mon, 5/18: Tougher price caps prompt controversy=20 Consumer boon or bane? Experts split SF Chron, Sun, 5/17: THE ENERGY CRUNCH=20 Pacts may give upper hand to gas traders=20 Clause allows price of electricity to change with production cost SF Chron, Sun, 5/17: The zero percent solution SF Chron, Sat, 5/16: Davis reveals power contracts=20 Critics point fingers after forced release of details Mercury News, Mon, 5/18: California energy market strategy criticized Mercury News, Mon, 5/18: U.S. energy regulators to vote on power caps for W= est Mercury News, Mon, 5/18: Bush: FERC Western power plan not price controls OC Register, Mon, 5/18: FERC considers new price limits today OC Register, Mon, 5/18: Atomic generation revisited OC Register, Mon, 5/18: Blackouts could hit today, Cal-ISO says OC Register, Mon, 5/18: San Onofre generating power full bore again OC Register, Mon, 5/18: Opening the contracts (Commentary) Individual.com (AP), 5/18: California ISO Unveils Outage Notification Plan; Meets Deadline for Governor's Executive Order to Roll Out Warnings to Publi= c=20 Individual.com (AP), 5/18: BPA and California Ink Summer Assistance Plan=20 Wash Post, Mon, 5/18: California 's Energy Woes (Cont'd) (Editorial) Wash Post, Mon, 5/18: Bush to Back FERC Energy Price Limits; Proposed=20 Restraints Would Affect 11 States WSJ, Mon, 5/18: California Struggles in Role of a Large Buyer of Power ---------------------------------------------------------------------------= --- ------------------------------------------------------ Bush may back some price caps Updated: June 18, 2001 - 6:38 a.m.=20 WASHINGTON -- President Bush, who has argued against price caps on Californ= ia=20 electricity, plans to support less-stringent price limits expected to be se= t=20 by the Federal Energy Regulatory Commission today, administration officials= =20 said Sunday. FERC will meet today to consider new restraints on the wholesale price of= =20 electricity in California. An aide to Gov. Gray Davis said the governor=20 considers the commission's leading proposal to be "too little, too late" as= =20 the state continues its efforts to stave off the threat of rolling blackout= s. But with summer officially beginning this week, a statewide heat wave=20 prompted the California Independent System Operator, the agency that manage= s=20 much of the state's transmission grid, to report that a Stage 2 power alert= =20 is probable for today and Tuesday and that a Stage 3 alert is possible both= =20 days. In a Stage 2 alert, consumers are urged to reduce their use of=20 electricity, while rotating blackouts would be instituted between noon and = 8=20 p.m. under Stage 3. On Sunday, Bush administration officials said they would argue that the=20 president can support new FERC limits that are based on market factors and= =20 would contend Bush has not changed his position. Nevertheless, the willingness to embrace new limits should temper the anxie= ty=20 of some Capitol Hill Republicans, who fear the Bush administration has=20 handled the matter callously. Rep. Anna Eshoo, D-Atherton, said Vice President Dick Cheney had rankled so= me=20 members of the California delegation during a meeting last week. "He lectured us about markets," Eshoo said Sunday during a conference call= =20 organized by Davis' office. "When I reminded him that our market was=20 dysfunctional and that in a healthy market there's competition, he looked a= t=20 his watch." FERC, an independent agency with the commissioners appointed by the=20 president, now has limits on wholesale electricity prices in California tha= t=20 are in effect only during emergency power shortages. FERC sets a target pri= ce=20 based on the costs of the least-efficient producer, and companies have to= =20 explain in writing if they exceed that target. At its special meeting today to deal with California energy issues, the=20 commissioners will consider a proposal from congressional Republicans that= =20 would extend those restraints around the clock during the next year and to = 10=20 other Western states. Two recently appointed members of the commission -- Patrick Wood III, forme= r=20 chairman of the Texas Public Utility Commission, and Nora Mead Brownell, a= =20 former member of the Pennsylvania Public Utility Commission -- will=20 participate in their first meeting today. At their confirmation hearings, Wood and Brownell won praise from Democrati= c=20 Sen. Dianne Feinstein, D-Calif., after they said they thought FERC should= =20 move further than it had so far to rein in high wholesale prices and did no= t=20 rule out price controls. Among those most heartened to see the new members was William Massey, a=20 Democrat and frequent dissenter on the five-member panel who strongly favor= s=20 price controls to head off what he's described as a looming economic=20 catastrophe for the state this summer. "I never thought I would be so thrilled to see two Republicans coming over= =20 the horizon," Massey said last week. While FERC renews its focus on California's power problems, Congress also i= s=20 feeling heat from constituents over rising energy costs and is seeking ways= =20 to help. Lawmakers may vote as early as this week on a big budget increase= =20 for a once-obscure federal program that helps the poor pay their utility=20 bills. The House measure would appropriate $300 million in current-year emergency= =20 funding -- twice as much as requested by Bush -- for the Low-Income Home=20 Energy Assistance Program. The Senate is talking about doubling the figure= =20 again, to $600 million. Even bigger increases appear probable for 2002. Bush is seeking $1.7 billio= n=20 for the program, up from $1.4 billion this year. In the Senate, there's tal= k=20 of a $3.4 billion budget. "There's been a change in mood," said Rep. Bernard Sanders, a Vermont=20 independent who has joined Democrat Barbara Lee of Oakland and Republican= =20 John M. McHugh of New York in a campaign to boost the emergency funding bil= l=20 to $800 million "People in California, among others, are now concerned about this issue in = a=20 way that had not been the case. ... Plus the fact that oil prices are going= =20 up all over this country," Sanders said. Passage of the emergency appropriation may be Congress' first direct respon= se=20 to the energy price spikes and supply shortages that have bedeviled=20 California and states. The assistance program, which arose from the 1970s energy crises, works=20 directly with utilities to help lower low-income households' air-conditioni= ng=20 and heating bills and avoid utility cutoffs for nonpayment. The surge of support in Congress for the program is broad and bipartisan,= =20 even though the program offers nothing to more-affluent Americans who also= =20 would like relief from higher energy expenses. Those eligible for assistance include a large number of senior citizens, an= =20 important political constituency for Republicans and Democrats. And the=20 program is endorsed by utility companies because it helps people pay their= =20 heating and cooling bills. Compiled from Washington Post and Los Angeles Times. David Whitney of The B= ee=20 Washington Bureau contributed to this report. TV ads to pin blame on Davis for power woes By Amy Chance Bee Political Editor (Published June 18, 2001)=20 An interest group calling itself the American Taxpayers Alliance is set to= =20 begin airing television ads in California today aimed at Gov. Gray Davis,= =20 saying he "ignored all the warning signals" about the state's energy troubl= es=20 and "turned the problem into a crisis."=20 The ads, featuring grainy footage of Davis, also maintain that he has done= =20 too little to boost energy generation and thwarted utilities' efforts last= =20 year to buy electricity under long-term contracts.=20 Aides to Davis said Sunday they believe Republican political strategists an= d=20 at least one energy generator are behind the spots, which were delivered to= =20 television stations late last week.=20 "The governor believes strongly that Californians will see right through th= e=20 smokescreen," said Davis spokesman Steve Maviglio, who said in a conference= =20 call with reporters that "the generators that have robbed billions from us"= =20 are now "trying to con us into believing what they're doing is a good idea.= "=20 He cited a newly released Time magazine article which alleges that Reliant= =20 Energy is one of "hundreds of corporations" providing funding for the ad.= =20 A consultant for Reliant, however, said while the company is considering a= =20 broader informational campaign on the energy crisis, it is not political in= =20 nature.=20 "I doubt very much that hundreds of corporations have funded any given ad= =20 campaign. They may have funded the sponsoring organization," said Darry=20 Sragow, a Democratic political consultant to Reliant. "Whether Reliant Ener= gy=20 is one of them or not, I have no idea."=20 He said he would not doubt, however, that Republicans are behind the effort= .=20 "Gray Davis is not terminally damaged, but he's in a tough spot, and he has= =20 not had any significant resources directed against him in ... some kind of= =20 political message that reaches voters," Sragow said. "It doesn't take a=20 political rocket scientist to figure out that's a tempting situation for th= e=20 Republicans."=20 The television campaign against Davis will begin as the Federal Energy=20 Regulatory Commission meets to once again address the Democratic governor's= =20 call for federal price caps on wholesale electricity prices.=20 The commission is widely expected to expand an earlier price control plan= =20 effective only during California power emergencies, making it apply to all = 13=20 Western states and around the clock.=20 Democrats said they appreciated the effort, but said the effort is simply t= oo=20 little, too late.=20 "This puts into place the highest price from the dirtiest generators. If=20 that's price relief, I'll eat my hat," said Rep. Anna=20 Eshoo, D-Atherton. She said while her delegation has been calling for "real= =20 PR -- price relief," the FERC and the Bush administration have resisted=20 serious attempts at price control.=20 "And yet the gouging that is taking place, the dollars that have been cream= ed=20 off the top of our constituents are now being poured into a campaign to blu= r=20 the issue," Eshoo said.=20 Democrats in Congress have weighed in recently with political messages of= =20 their own, releasing radio ads on Memorial Day weekend blaming President Bu= sh=20 and congressional Republicans for higher gas and electricity prices.=20 The Bee's Amy Chance can be reached at (916) 326-5535 or achance@sacbee.com= .=20 Bee metro staff contributed to this report.=20 Bee Column Dan Walters: Political war between Sacramento and Washington is escalating (Published June 17, 2001) A U.S. diplomat negotiated at least a temporary cease-fire last week in the= =20 months-long violent conflict between Israelis and Palestinians, which=20 threatened to become a wider Mideast war.=20 Having achieved the near-impossible, perhaps the envoy, CIA Director George= =20 Tenet, should now take on another escalating conflict: the political war=20 between President Bush and Gov. Gray Davis.=20 Davis is simultaneously attempting to manage a severe energy crisis, burnis= h=20 his own image for a re-election campaign next year, and position himself as= a=20 potential Democratic challenger to Bush in 2004. With advice from veterans = of=20 the Clinton-Gore political operation, Davis has been dispatching increasing= ly=20 sharp political salvoes accusing Bush of neglecting California while servin= g=20 the interests of Texas-based energy companies.=20 The more partisan, even personalized, tone of the Davis attacks has been=20 working from a purely political standpoint, gaining Davis face time on=20 national television and, according to his own pollsters, arresting the=20 decline in his approval ratings in California.=20 The turning point came during a Bush visit to California a couple of weeks= =20 ago, which included a brief personal meeting with Davis. The governor and h= is=20 political advisers orchestrated the event to his advantage while Bush=20 demonstrated little empathy for California's travails.=20 The visit bolstered Davis' efforts to shift the onus for California's energ= y=20 woes from himself to the Federal Energy Regulatory Commission. And while=20 Davis aides crowed about the salutatory effects on their boss's image,=20 Republicans -- especially those in California -- began worrying that the=20 White House was exposing them to political fallout. The Democrats'=20 congressional campaign organization began broadcasting ads in the districts= =20 of potentially vulnerable GOP congressmen in California, portraying them as= =20 lackeys of the Bush White House and Texas energy firms.=20 Those targeted congressmen -- such as Sacramento's Doug Ose -- have been=20 demanding that FERC step into the California crisis by imposing some form o= f=20 price controls. And FERC last week began emitting signals that it's plannin= g=20 some price-control step that would implicitly provide Bush and Republican= =20 congressmen with political cover. A Democratic takeover of the U.S. Senate= =20 adds still another dimension to the politics of the feud -- Senate hearings= =20 on the crisis, with Davis as a star witness, being one example.=20 Bush doesn't appear to be particularly concerned about his own image in=20 California. He lost the state by more than a million votes last November=20 while amassing enough electoral votes to win the presidency in other states= =20 -- a feat that validated an oft-voiced theory among GOP strategists that=20 California was not as important in presidential politics as most analysts= =20 assumed. And presumably, his strategy for 2004 assumes that he won't have= =20 California's votes.=20 That said, the very narrow GOP margin of control in the House could vanish = if=20 Democrats take away enough seats from Republicans in California through a= =20 combination of redistricting and using the Bush administration as a whippin= g=20 boy on energy.=20 The war took still another turn last week when the White House dismissed a= =20 California plea to lift the federal requirement that "oxygenates" be added = to=20 gasoline sold in the state to fight air pollution. Davis had already decree= d=20 that MTBE be removed from gasoline because it pollutes water, leaving only= =20 ethanol as a replacement. But adding huge quantities of the alcohol distill= ed=20 from agricultural wastes would add substantially to California gasoline=20 prices. The Bush decree may irritate Californians and their politicians, bu= t=20 it shores up Bush's environmental credentials and his position in the=20 Midwest, where ethanol is a major product. And it will benefit=20 Archer-Daniels-Midland, the nation's leading ethanol producer and a major= =20 source of campaign funds.=20 One can only wonder where the next skirmish in the war will break out, but= =20 there are plenty of potential battlegrounds -- offshore oil drilling,=20 perhaps, or timber harvesting, or water.=20 The Bee's Dan Walters can be reached at (916) 321-1195 or dwalters@sacbee.c= om . Veil is lifted on pacts The scrutiny begins, but one thing is certain -- prices can go either way By Carrie Peyton, Dale Kasler and John Hill Bee Staff Writers=20 (Published June 16, 2001) The $43 billion California is spending on long-term power contracts is only= =20 an estimate, state officials acknowledged Friday, and the amount could easi= ly=20 go higher or lower because about half the supply is tied to fluctuating=20 natural gas prices.=20 The disclosure came as the state released edited versions of the 38=20 electricity contracts it has signed so far, many at prices that exceed the= =20 newly deflated spot and futures markets.=20 It also unveiled the most detailed portrait yet of $7.6 billion in state=20 spending since January, when California stepped in to buy power on behalf o= f=20 battered utilities which said they could no longer afford to pay their=20 suppliers. For the first time, the state provided a day-by-day list of mone= y=20 spent and power bought through March 31, and it promised similar tallies wi= ll=20 be released each quarter.=20 The power contracts came in for immediate criticism from those who said=20 California picked the worst time to try to lock in long-term deals and now= =20 will be stuck for a decade or more with above-market electricity costs.=20 But Gov. Gray Davis and his energy advisers contend the recent dip in=20 last-minute or "spot" prices simply proves that their long-term deals have= =20 helped cool an overheated wholesale market, robbing sellers of some of thei= r=20 clout.=20 While people can "nit pick" if they choose, Davis said, "On May 10, the sta= te=20 spent $110 million for power, total cost. Two days ago we spent $29 million= =20 for total power. So clearly our strategy is beginning to work."=20 The state contracts provide for a dizzying array of deals to purchase power= =20 -- on-peak, off-peak, around the clock, and even swaps -- many of them=20 intricately priced. They cover about half the power the state will need to= =20 buy and will cost an average of $69 per megawatt-hour over the next 10 year= s,=20 state officials have said.=20 Up to 70 percent of the electricity will come from new plants yet to come= =20 online, said Ray Hart, deputy director of the state Department of Water=20 Resources, which handles the state's power buying.=20 That was one of the few bright spots seen by consumer advocates, who said= =20 such deals might help finance the building of newer, cleaner power plants.= =20 It will take analysts days to read through the hundreds of pages of contrac= ts=20 to determine how good or bad the newly unveiled deals are for California --= =20 and even then it might be hard to tell, experts said.=20 A contract with power trader Dynegy, for example, "looks to me like an=20 extremely high fixed price," said Robert Michaels, an economics professor a= t=20 California State University, Fullerton, and a consultant to generators and= =20 traders.=20 The $119.50 a megawatt-hour for power in 2002 through 2004 is close to twic= e=20 what it would cost today for delivery in Southern California, but that's no= t=20 enough information to truly evaluate the contract, he said.=20 The state edited out all references to which plants will supply the power,= =20 where it will be delivered and what transmission will be used, and without= =20 that, Michaels said, "essentially you can't see whether the state got rooke= d=20 really badly or not."=20 State officials, who balked for months at releasing the contracts because= =20 they said it would tip their negotiating hand, changed their stance just=20 before a hearing in a lawsuit by several news organizations to force the=20 release. A further hearing is scheduled into whether the state will be=20 permitted to keep some details private.=20 Overall, "we're very proud of these contracts," said S. David Freeman, a ke= y=20 energy adviser to Davis who helped negotiate some of the deals. He said the= =20 state has no interest in turning its back on any of the contracts, even=20 though they were signed when the state was frantic to escape a blistering= =20 spot market.=20 Legislators and consumer advocates have already begun talking about whether= =20 the state can find escape clauses from buying power that now sounds too=20 pricey.=20 But generators said the state got a better deal than the critics realize.= =20 "It's a lot of fun to pick on the governor, but spot prices go down and spo= t=20 prices go up," said Pete Cartwright, president and chief executive of San= =20 Jose-based generator Calpine Corp., which signed billions of dollars worth = of=20 contracts ranging from $58 to $115 a megawatt-hour.=20 "(Davis) has stabilized prices for a long time, and that's good," he said.= =20 Among the sellers are affiliates of two of the utilities for which the wate= r=20 department is buying the electricity: Sempra Energy Resources, whose parent= =20 company owns San Diego Gas & Electric; and PG&E Energy Trading, whose paren= t=20 owns Pacific Gas and Electric Co.=20 The Sempra contract pays the seller $189 a megawatt-hour this summer, even= =20 though summer power was selling for more than $320 back when the contract w= as=20 signed in early May.=20 "We're trying to be part of the solution," said Michael Niggli, president o= f=20 Sempra Energy.=20 However, the contract would revert to the May market prices -- $320 and up = --=20 if the state doesn't complete its multibillion-dollar bond offering by Sept= .=20 30, and if Sempra backs out of the deal. The bond offering is to raise mone= y=20 for the power purchases and to spread their cost over many years.=20 The PG&E Energy Trading contract, calling for 66.6 megawatts of capacity=20 through September 2011, will cost the state $58.50 a megawatt-hour.=20 The costliest contract -- in terms of dollars per megawatt -- appears to be= =20 with Alliance Colton of Littleton, Colo., which has begun delivering power= =20 from two "peaker plants" that generally operate only during high-demand=20 periods. Alliance will be paid $258 a megawatt-hour beginning Aug. 1 and $2= 78=20 next summer, although the price will vary from year to year. The contract= =20 runs out in 2010.=20 "It's a peaker, which is usually more expensive," said water department=20 spokesman Oscar Hidalgo.=20 Some of the cheapest power, at about $58 per megawatt-hour, comes from PG&E= =20 Energy and Calpine.=20 Now that prices have fallen, Assembly Speaker Pro Tem Fred Keeley said he= =20 wants to examine the contracts to see if the state can bail out. Seven=20 Assembly staffers began going through the contracts immediately, and Assemb= ly=20 leaders plan to get together Sunday night to discuss what they've found, he= =20 said.=20 The information comes just in time, Keeley said, giving lawmakers the kind = of=20 detail they'll need to decide on Davis' plan to keep Southern California=20 Edison out of bankruptcy, as well as options for letting some consumers=20 choose their power suppliers.=20 Sen. Debra Bowen, D-Marina del Rey, said she also has had discussions about= =20 possible bailout provisions, saying it will be "real, real tempting to=20 second-guess" the administration's contracts.=20 "But none of the second-guessers have more experience negotiating contracts= =20 than David Freeman," she said.=20 Assembly Republicans were among the first second-guessers.=20 Republican leader Dave Cox of Fair Oaks questioned several provisions,=20 including ones that appeared to allow some generators to pass along tax=20 increases in their prices, make the state liable for some emission credit= =20 payments for exceeding pollution standards, and prevent the Public Utilitie= s=20 Commission from cutting electric rates unless the state can prove it won't= =20 jeopardize its contract payments.=20 "These contracts are sweetheart deals for the generators Gray Davis is so= =20 busy trying to demonize," Cox said in a press release.=20 Other critics included Mirant California, which owns Bay Area power plants= =20 and bristled at the state unveiling the terms of its deal, which pays it $1= 48=20 per megawatt-hour from June 1 through the end of 2002.=20 However, energy economist Severin Borenstein, defending the contracts on th= e=20 governor's behalf, said that just because the spot price has fallen, "that= =20 ... is not evidence the contract was a mistake."=20 "When you sign long-term contracts you're buying an insurance contract," he= =20 said. "If your house didn't burn down at the end of the year, you don't sco= ld=20 yourself."=20 The Bee's Carrie Peyton can be reached at (916) 321-1086 or=20 cpeyton@sacbee.com.=20 Bee Staff Writer Stuart Leavenworth contributed to this report.=20 Deal would let SDG&E clients off the hook=20 Tentative pact has state paying $1 billion for lines By Ed Mendel=20 UNION-TRIBUNE STAFF WRITER=20 June 18, 2001=20 SACRAMENTO -- San Diego Gas & Electric ratepayers would not have to pay off= =20 any of the utility's $750 million debt for power purchases under a tentativ= e=20 agreement that would have the state buy SDG&E's transmission system for $1= =20 billion.=20 The apparent deal was reached by Gov. Gray Davis and SDG&E after months of= =20 closed-door negotiations, according to sources close to the talks.=20 Davis wants the state to purchase the transmission systems of California's= =20 three major utilities to help them pay off huge debts caused by soaring=20 wholesale electricity costs.=20 It was widely believed that SDG&E's customers would have to pay off the=20 utility's debt, often referred to as a "balancing account" or=20 "undercollection." Some San Diego legislators and lobbyists were enthusiast= ic=20 last week about the possibility that the pending agreement might eliminate= =20 SDG&E's debt without burdening ratepayers.=20 With control over the transmission systems, the state could use low-interes= t=20 government financing to remove bottlenecks and could gain leverage over pow= er=20 generators, whom state officials accuse of price-gouging.=20 In exchange for relieving ratepayers of the debt, SDG&E would get most of t= he=20 controversial profit -- reportedly more than $200 million -- from two=20 power-purchasing agreements made several years ago.=20 Spokesmen for the governor and SDG&E yesterday were optimistic, but guarded= .=20 "Negotiations are continuing, and progress is being made," said Steve=20 Maviglio, Davis' press secretary.=20 "We have made substantial progress in the negotiations," said Doug Kline, a= n=20 SDG&E spokesman. "At this point we don't have anything to announce."=20 If the agreement is completed as expected, it is not clear how it will be= =20 received by the Legislature. Some key legislators who once supported the id= ea=20 of the state purchasing the utility transmission systems are now cool to th= e=20 plan.=20 The $1 billion that the state would pay for the 1,800-mile SDG&E transmissi= on=20 system is said to be comparable to the governor's stalled proposal to buy t= he=20 Southern California Edison transmission system.=20 Fear that SDG&E ratepayers eventually would be stuck with a "balloon paymen= t"=20 was one of the criticisms of legislation that capped rates for residences a= nd=20 many small businesses last September.=20 SDG&E's cost for power as wholesale electricity prices soared was far above= =20 the capped rate it could collect from customers. The difference came to $75= 0=20 million earlier this year.=20 The debt stopped growing in February after the state began buying a large= =20 amount of electricity for SDG&E customers.=20 SDG&E says the state purchases have ranged from 40 to 70 percent of the tot= al=20 amount of power used by its customers. SDG&E serves about 3 million people= =20 and has 1.2 million metered customers, including 100,000 in southern Orange= =20 County.=20 Other parts of the tentative agreement would require SDG&E to provide=20 low-cost power for a decade from its share of the San Onofre nuclear power= =20 plant, which is about 20 percent of the plant's capacity, or 440 megawatts.= =20 Sempra, SDG&E's parent firm, would be required to spend "billions" to impro= ve=20 the electricity and natural gas distribution systems, an investment that=20 presumably would be recovered from ratepayers over time, according to=20 sources.=20 The agreement also would give the state the right to purchase environmental= ly=20 sensitive land owned by SDG&E in the Colorado River area. And SDG&E would= =20 drop any lawsuits that could affect the agreement.=20 The profits SDG&E has made from two previous power agreements, and would=20 largely keep under the tentative agreement, had been in dispute.=20 Last week, officials in San Diego complained that the governor's negotiatio= ns=20 appeared to be giving SDG&E, rather than ratepayers, more than $300 million= =20 in profits from those two long-term power contracts.=20 After deregulation was enacted in 1996, SDG&E obtained the two contracts fo= r=20 250 megawatts from Pacific Corp. and Louisville Gas & Electric.=20 Those long-term contracts were said to be a hedge to make sure SDG&E would= =20 recover all of its "stranded costs" -- the power plant investments and othe= r=20 power-purchase contracts thought to be uneconomical in a deregulated market= .=20 SDG&E argued that the two contracts in question were financed by=20 shareholders, at no risk to ratepayers, and the power was sold on the open= =20 market, which produced big profits last year when wholesale power prices=20 skyrocketed.=20 The state Public Utilities Commission ruled that the profits should be give= n=20 to ratepayers, but SDG&E contested the ruling and filed an appeal with an= =20 appellate court.=20 The tentative agreement allows SDG&E to keep most of the contract profits, = an=20 amount which is said to be less than a third of the utility's $750 million= =20 undercollection debt.=20 The agreement apparently gives SDG&E other things in exchange for absorbing= =20 all of that debt instead of passing it on to ratepayers. But sources close = to=20 the negotiations said they were not aware of all of the provisions of the= =20 tentative deal.=20 Whether the state would be overpaying for the SDG&E transmission system may= =20 be another issue. Davis wants to buy the larger Edison transmission system= =20 for $2.76 billion, or 2.3 times book value.=20 The $1 billion offered for the SDG&E system is a roughly similar deal. SDG&= E=20 says the book value of its transmission system is $430 million.=20 Book value is a standard accounting device that reflects depreciation from= =20 the original price and other factors. But the market value is much higher= =20 because of the current cost of building a similar system. For the SDG&E dea= l=20 to go through, the governor will need support from state legislators. The= =20 state Public Utilities Commission could enact most of the agreement, but th= e=20 Legislature would have to approve the purchase of the transmission system.= =20 The governor's proposal to buy the Edison transmission system, part of a=20 sweeping rescue plan for that more-troubled utility, has been stalled in th= e=20 Legislature for two months. Critics say it is an overly generous bailout fo= r=20 Edison.=20 The state purchase of the major utilities' transmission systems was suggest= ed=20 in early February by a San Diego consumer group, the Utility Consumers Acti= on=20 Network.=20 Senate President Pro Tempore John Burton, D-San Francisco, among others, wa= s=20 an early supporter of purchasing utility transmission systems.=20 But the situation has changed since then. Pacific Gas and Electric filed fo= r=20 bankruptcy in early April, and Davis would now have to persuade PG&E=20 creditors to approve the sale of the transmission system.=20 Burton said last week that he is no longer focusing on the purchase of the= =20 transmission systems, but on a controversial new plan that would have the= =20 large businesses that pushed for deregulation pay off most of the utility= =20 debt.=20 State officials to hold hearings on proposed high-voltage line=20 ASSOCIATED PRESS=20 June 18, 2001=20 TEMECULA =01) State officials will travel to Southern California this week = to=20 hear from local residents about a proposed high voltage transmission line= =20 that would crisscross area subdivisions and vineyards.=20 The $271 million Valley-Rainbow Project would connect San Diego Gas &=20 Electric Co.'s grid to that of Southern California Edison, helping link the= =20 southern portion of the state to power plants being built elsewhere in the= =20 Southwest and Mexico.=20 The Public Utilities Commission will collect comments during a series of=20 public hearings scheduled for Monday through Wednesday, and plans to hold a= =20 prehearing conference Thursday.=20 "Right now, we are one of the weakest links," said James Avery, SDG&E's=20 senior vice president for fuel and power operations. "If there's a break in= =20 the line at one point, everything else is in trouble."=20 The California Independent System Operator, which manages the state's power= =20 grid, has already signed off on the project to string the 500,000-volt=20 transmission lines across the Temecula area.=20 That move sparked an outcry among local officials and residents concerned= =20 about the project, which would force property owners to give up their land.= =20 "All along this route, people are calling their real estate agents asking,= =20 'What is going to happen?'" said Loma Bosinger, co-chairwoman of the=20 grassroots-group Save Southwest Riverside County.=20 SDG&E officials said the project is required to bring more power to the San= =20 Diego area by 2004.=20 "I have an obligation and responsibility to maintain reliability and power = to=20 our customers," Avery said. "This line is the only way I can do that."=20 But increased local generation of power =01) perhaps two dozen new plants b= y=20 2004 in San Diego County alone =01) could make that a moot point, activists= =20 claim.=20 "In order to keep a balanced grid, you need to disperse the power ... or=20 build more lines. You don't have to do both," said Michael Shames, executiv= e=20 director of Utility Consumers Action Network, a San Diego watchdog group.= =20 Power grid operators issue blackout warnings for first time=20 ASSOCIATED PRESS=20 June 17, 2001=20 SAN FRANCISCO =01) Blackout warnings were issued Sunday by the agency that = runs=20 California's power grid.=20 The California Independent System Operator said potential blackouts could= =20 occur Monday and Tuesday afternoons between noon and 8 p.m. both days.=20 The early word marked the first time the ISO issued warnings under the new= =20 early warning system, which lets customers know of possible outages 24 to 4= 8=20 hours in advance.=20 Temperatures in the mid-90s to triple digits are expected Monday and Tuesda= y=20 in many areas served by Pacific Gas and Electric Co. beyond the San Francis= co=20 and Humboldt Bay regions, from Redding to Bakersfield. As a result, an=20 increased energy demand is forecast. The ISO expects Monday's load to peak = at=20 37,735 megawatts.=20 Pacific Gas and Electric Co. officials said if rolling blackouts are ordere= d,=20 they will begin in block one, which is the next scheduled rotating outage= =20 block.=20 High energy prices to continue long term, experts say=20 Contracts' provisions leave state ratepayers vulneralble By Craig D. Rose? UNION-TRIBUNE STAFF WRITER=20 June 17, 2001=20 The 600 pages of contracts that commit California to $43 billion in=20 electricity purchases over the next decade contain a host of potential=20 surprises -- and few may be pleasant for state residents, experts say.=20 Among the details in the deals with 18 suppliers:=20 ?Should electricity prices rise, some providers could reduce their=20 deliveries, leaving the state little recourse but to return to spot power= =20 markets for expensive purchases.=20 Attempts to impose windfall profit taxes on generators -- an idea being=20 considered by the Legislature -- will be complicated by at least one=20 agreement, which promises reimbursement for such taxes.=20 ?California will pay all new emission costs -- a potentially expensive outl= ay=20 -- under agreements with several large suppliers.=20 And there is one pleasant possibility: Natural gas prices might fall and=20 provide cheaper-than-expected electricity under some of the deals. Then=20 again, gas prices might rise.=20 Roger Bohn, an associate professor of management at UCSD and a former membe= r=20 of the California Power Exchange's market monitoring unit, said the state d= id=20 not have a strong hand going into negotiations with electricity suppliers.= =20 And, he added, the results reflect that weakness.=20 "The state negotiators have locked in high prices in the years beyond 2004,= =20 and they haven't solved the short-term problem," said Bohn, who was retaine= d=20 by The San Diego Union-Tribune to examine the contracts.=20 "To a large extent, we're still at the mercy of generators who have lots of= =20 market power and still want to stick it to us."=20 Bohn said energy experts he has consulted calculate that the contracts will= =20 cause the state to pay 33 percent above market rates over the next five=20 years.=20 "Compared to the panic situation we experienced in March, we did as well as= =20 can be expected," Bohn said. "Compared to what we'll be thinking in two=20 years, there is a high chance we'll be regretting a lot of these contracts.= "=20 The documents were released Friday at the order of a San Diego Superior Cou= rt=20 judge. The Copley Press, which publishes the Union-Tribune, and several oth= er=20 news organizations sought the order after Gov. Gray Davis refused to reveal= =20 specific details from the contracts.=20 California turned to long-term contracts as a refuge from spot market price= s=20 for electricity that soared under deregulation to an average $275 per=20 megawatt-hour for the first five months this year, or about nine times high= er=20 than last year's levels.=20 Energy companies and others insisted the high prices were largely a result = of=20 the state's excessive dependence on day-ahead power purchases. Others warne= d=20 that turning to long-term contracts at the height of the crisis was akin to= =20 buying flood insurance in the midst of a deluge.=20 Spot prices have plummeted in recent weeks to trade between $40 and $70 for= =20 most hours of the day.=20 S. David Freeman and Vikram Budhraja, leaders of the state's bargaining tea= m=20 for the deals, say the long-term contracts are largely responsible for the= =20 decline in spot prices. And they insist they have taken a big step toward= =20 resolving the crisis with agreements that secure nearly half the state's ke= y=20 power purchases for 10 years.=20 Budhraja hailed average prices of $80 per megawatt-hour for the first five= =20 years and $69 for a decade as a victory given the market conditions earlier= =20 this year.=20 "You can't let the perfect solution be the enemy of the good solution," sai= d=20 Budhraja, who helped draft the contracts while on retainer as a consultant = to=20 Southern California Edison.=20 But as examination of the agreements continues, it's clear the state has=20 again paid a steep price for deregulation, which promised to lower prices f= or=20 power customers.=20 Michael Shames, executive director of the Utility Consumers' Action Network= ,=20 noted that some of the agreements will have the state pay more than $180 fo= r=20 power in the years 2003 and 2004, the same years traders report power is=20 available for about $50 per megawatt-hour.=20 "What we're seeing now is prices that were extorted out of the state when i= t=20 had no bargaining leverage," Shames said. He added that if an array of lega= l=20 investigations against electricity suppliers result in successful=20 prosecutions, he would expect many of these agreements to be nullified.=20 In the meantime, the state could find itself confronting an array of=20 troubling contractual aspects.=20 Under an agreement with Williams Cos., for example, the Tulsa company has a= =20 contractual obligation to provide 1,000 megawatts. But the generator could= =20 reduce the amount far below that level with little penalty, Bohn said.=20 "So basically Williams can sell or not sell to the state depending on price= ,"=20 he said.=20 The state's contract with Dynegy has a similar weakness, Bohn added.=20 California's agreement with Calpine will have the state shouldering increas= es=20 in costs from windfall profit taxes or any other source. Bohn said the=20 state's contract with Calpine appears to include what he characterized as a= =20 very high subsidy for new plant construction.=20 The state's new portfolio of contracts also puts the parent company of San= =20 Diego Gas and Electric in a curious position. Sempra Energy Resources, a=20 sister company of the local utility, now becomes one of the state's key pow= er=20 suppliers, providing up to 1,900 megawatts of electricity.=20 Bohn said there was an inherent conflict between Sempra's power selling=20 business -- which seeks the highest prices -- and SDG&E, which is charged= =20 with seeking the lowest prices for consumers.=20 A spokesman for Sempra Energy said the company avoids the conflict because = it=20 sells its power to the state, not SDG&E.=20 For nearly half the contracted power, meanwhile, information about natural= =20 gas costs -- the prime fuel for generating electricity -- remains secret.= =20 Industry experts forecast tightening supplies of natural gas as new gas-fir= ed=20 generating plants are built across the country.=20 Bohn said he fails to understand the state's continued secrecy surrounding= =20 those prices. Budhraja yesterday declined to disclose what assumptions were= =20 made about gas prices in estimating future electricity costs.=20 The secrecy creates concern.=20 "We're hitching the future of the California economy to the volatility of= =20 natural gas prices," said Matt Freeman, attorney for Toward Utility Rate=20 Normalization, a San Francisco consumer group.=20 But Harvey Rosenfield, president of the Foundation for Taxpayer and Consume= r=20 Rights, said there is a larger concern: "We've just locked in a long-term= =20 energy crisis for the next decade. Clearly, they made things worse by=20 agreeing to terms of 10 years or more." Staff writer Dean Calbreath and library researcher Cecilia Iniguez=20 contributed to this report.=20 Ad criticizing Davis expected as officials consider price caps=20 By Andrew Bridges ASSOCIATED PRESS=20 June 17, 2001=20 LOS ANGELES =01) Power company profits gained in California's electricity c= runch=20 are funding a new ad campaign blaming Gov. Gray Davis for rising costs, sta= te=20 Democratic officials said Sunday.=20 The television advertisement is set to begin airing Monday, the same day=20 federal officials are expected to slap new limits on wholesale electricity= =20 prices in the state.=20 The ad campaign, credited to a group called American Taxpayers Alliance but= =20 produced by GOP strategists, features grainy footage of Davis and attacks h= im=20 for failing to secure long-term, cost-saving contracts before the wholesale= =20 price of electricity soared.=20 Democrats said Sunday in a conference call with reporters that they expect= =20 the group will spend $5 million on the ad campaign. Time magazine reported= =20 that Reliant Energy, one of the companies state officials have accused of= =20 price-gouging, is among hundreds of corporations providing money for the=20 campaign.=20 "The dollars that have been creamed off the top of our constituents are now= =20 being poured into a campaign to blur the issue," said Rep. Anna Eshoo,=20 D-Calif.=20 S. David Freeman, Davis' chief energy adviser, said California has been=20 overcharged anywhere from $8 billion to $15 billion for the electricity it= =20 uses.=20 But some relief for California may come as early as Monday at a special=20 meeting of the Federal Energy Regulatory Commission. The commission, which= =20 regulates wholesale electricity transactions, is expected to slap 24-hour= =20 caps on the price of power in the West, The Washington Post reported Sunday= .=20 FERC approved a limited price "mitigation" program in April to rein in the= =20 wholesale price of power. California officials said Sunday the move had=20 accomplished little, and asked for more direct action.=20 "If FERC does not intervene and help us we are subject again to the whims a= nd=20 caprices of the generators," said Michael Kahn, chairman of the California= =20 Independent System Operator, which manages the state's power grid.=20 California officials maintain that long-term contracts secured by the state= =20 and an aggressive conservation program have led to a recent softening of=20 electricity prices. The state has signed $43 billion in long-term power=20 contracts, but still buys about half of its electricity on the volatile spo= t=20 market.=20 "The reason the spot market prices are lower is we have added to supply and= =20 subtracted from demand," Freeman said.=20 The expected FERC action would control the wholesale price of power around= =20 the clock, expanding on the current order that reins in prices only during= =20 the most drastic shortages. The move comes as House Democrats =01) and some= =20 Republicans =01) have pushed for legislation that would force FERC to impos= e=20 some sort of price caps.=20 Freeman said he favors cost-based price caps, which make allowances for=20 "reasonable" profits.=20 Kahn said if the new limits do nothing more than extend the previous=20 mitigation plan, they will accomplish little.=20 "We would have to say that is too little, too late and simply not enough,"= =20 Kahn said.=20 Davis will take up the issue himself on Wednesday, when he is expected to= =20 testify before the Senate Governmental Affairs Committee.=20 The committee, whose new chairman is Sen. Joseph Lieberman, D-Conn., will= =20 examine how the federal government regulates energy.=20 Energy deals rest on unsteady markets=20 Predictions tough; many power plants yet to be constructed By James P. Sweeney and Michael Gardner=20 COPLEY NEWS SERVICE and Ed Mendel and Craig D. Rose=20 UNION-TRIBUNE STAFF WRITERS=20 June 16, 2001=20 SACRAMENTO -- Long-term electricity contracts that were expected to lead=20 California out of its energy crisis depend heavily on unpredictable natural= =20 gas prices and power plants yet to be built.=20 Of nearly $43 billion worth of power secured for the next decade, the price= =20 of half will fluctuate with the natural gas market, said S. David Freeman,= =20 Gov. Gray Davis' chief energy adviser.=20 Seventy percent of the contracted energy has been promised from power plant= s=20 that don't yet exist.=20 But Freeman and other state officials said they believe the electricity wil= l=20 be delivered at an average price of $69 per megawatt-hour.=20 That price, which is 6.9 cents per kilowatt-hour in consumer terms, is abou= t=20 what most utility customers pay now.=20 An energy industry analyst, however, said that predicting electricity price= s=20 from these deals is problematic because of the link to natural gas costs,= =20 which can fluctuate almost as wildly as electricity costs.=20 Natural gas prices, which earlier had been below $3 per million British=20 thermal units, stayed above $10 for weeks this winter and spiked to $60 in= =20 December.=20 "Has the state locked in electricity prices? Probably not," said Andrew=20 Safir, president of Recon Research Corp. in Los Angeles.=20 Harry Snyder, a senior advocate for Consumers Union in San Francisco, blast= ed=20 the contracts as a bad deal for customers, even if they can deliver power a= t=20 $69 a megawatt-hour.=20 "The price of power from all these generators is going down, with the marke= t=20 predicting a lot of power plants coming online," Snyder said. "And now they= =20 are locked in at $69."=20 The long-term deals, intended to wring some of the windfall profits out of= =20 the deregulated energy market, stretch from a few months for some contracto= rs=20 to 20 years for a San Jose-based generator, Calpine Energy Services.=20 The contracts should cover 45 percent of the state's peak power needs in th= e=20 immediate future, and all of its projected demand in 2004, before scaling= =20 back in later years, state officials said.=20 The threat of rolling blackouts, however, has not been lifted.=20 "No one is declaring victory. No one is saying the crisis is over, but we a= re=20 very proud of the role long-term contracts are playing," Freeman said.=20 The state released the details of 38 electricity contracts with 18 supplier= s=20 to comply with an order issued by a San Diego Superior Court judge.=20 Several news organizations, including The Copley Press, which publishes The= =20 San Diego Union-Tribune, sought the order after Davis refused to make the= =20 contracts public.=20 The complex contracts, which cover more than 600 pages, promise nearly 600= =20 million megawatt hours over the next decade. Contract sections considered= =20 sensitive or proprietary were blacked out, making comparisons and analyses= =20 difficult.=20 A spot check late yesterday raised questions about some aspects of the=20 contracts for one expert.=20 Could be trouble "There appear to be a lot of little 'gotcha' clauses here that if the selle= r=20 wanted to push them could be troublesome to the state," said Roger Bohn, a= =20 professor of management at UCSD and co-author of the book "Spot Pricing of= =20 Electricity." He is a former member of the market monitoring committee of t= he=20 California Power Exchange.=20 Such provisions might allow a supplier to alter the quantity of electricity= =20 it provided to the state in response to spot market prices in a way that=20 would be a disadvantage to California, Bohn said. The Union-Tribune? retain= ed=20 Bohn to examine the agreements.=20 The state has struck tentative deals on an additional 23 contracts that cou= ld=20 be signed in the coming weeks or months.=20 The 6.9 cent average, if it holds up, is more than double what power cost= =20 before prices spiked last summer. Advocates had predicted that deregulation= =20 would lower electricity prices 20 percent by 2002.=20 "Some of these contracts are very expensive deals," said Michael Shames,=20 executive director of Utility Consumers' Action Network of San Diego.=20 He criticized a deal that will pay Dynegy $140 per megawatt-hour -- 14 cent= s=20 per kilowatt-hour -- through 2004. Power likely will drop to $50 per=20 megawatt-hour by 2003, he said.=20 But the governor and Freeman said the long-term contracts, some of which ha= ve=20 already kicked in, have punctured an inflated market.=20 "The reason the spot market is down where it is, is we've reduced the volum= e=20 we have to buy in that market," Freeman argued.=20 Conservation effort California businesses and households also have responded to the governor's= =20 call for a conservation effort.=20 While contracts for half the energy allow generators to pass along natural= =20 gas prices, Freeman and Raymond Hart, a deputy director of the state=20 Department of Water Resources, said they expect natural gas rates to contin= ue=20 to decline.=20 Natural gas accounts for about 80 percent of the cost of electricity in=20 gas-fired plants, Freeman said. As a safeguard, the state reserved the righ= t=20 to purchase gas supplies directly for power plants.=20 Hart suggested that the state also will attempt to line up a share of its= =20 projected natural gas needs at fixed rates.=20 Michael Aguirre, an attorney pressing a class action suit against generator= s,=20 said consumer attention should now be on natural gas prices.=20 "We shifted from one volatile commodity to another," Aguirre said. "This is= a=20 ruse. It does not give the people of California the protection we thought i= t=20 gave us."=20 While some of the anticipated new power plants could be delayed or might=20 never be built, Hart said, the generators who want to build the plants woul= d=20 not even be able to get financing without the long-term contracts.=20 "That means we're going to have more competition in the future," he said.= =20 Mike Niggli, president of Sempra Energy Resources of San Diego, suggested= =20 that the lengthy agreements may calm the market.=20 'Service to customers' "Not only does it minimize price spikes, there's less to be purchased and= =20 sold on the spot market," Niggli said. "The state, having locked up long-te= rm=20 energy, has done a service to customers."=20 At least one power supplier, however, apparently sought to safeguard itself= =20 against tough state action that could occur if volatility returns. A contra= ct=20 with Allegheny Energy Supply Co. includes provisions for special payments t= o=20 the company in the event California seizes its plants using powers of emine= nt=20 domain.=20 UCSD's Bohn called the feature an unusual inclusion in an electricity power= =20 supply contract.=20 Not much in any of the contracts appealed to Assembly Republican Leader Dav= e=20 Cox, who dismissed the agreements as "sweetheart deals for the generators= =20 Gray Davis is so busy trying to demonize."=20 "The most frightening aspect of these contracts is that Gov. Davis'=20 mismanagement has saddled this state with high rates and an uncompetitive= =20 economy for years to come," said Cox of Sacramento.=20 But Democratic state Sen. Debra Bowen, one of the Legislature's utility=20 experts, said the state simply traded lower costs today for higher prices= =20 later.=20 "There weren't a lot of choices. They didn't hold many cards," she said of= =20 state negotiators.=20 Steve Stengel, a spokesman for Dynegy, a Houston-based generator, agreed th= at=20 the contracts "have the potential to take some of the volatility out of the= =20 market."=20 Supply and demand But Reliant spokeswoman Pat Hammond cautioned that "supply and demand remai= n=20 the driving force behind price spikes." Houston-based Reliant and the state= =20 have been negotiating a multiyear contract to no avail.=20 Much of the relatively cheap power that the state will purchase during peak= =20 periods this summer comes from long-term contracts seized from the defunct= =20 Power Exchange, a step taken by the governor earlier this year under his=20 emergency powers.=20 The seized contracts provided 1,150 megawatts during February through March= =20 for prices ranging from $46 to $91.50 per megawatt-hour. In the second=20 quarter, April through June, the contracts are providing 775 megawatts for= =20 $53 to $78.50 per megawatt-hour.=20 In July through September, the contracts will provide 1,425 megawatts at=20 prices from $71.20 to $146 per megawatt-hour. Most of the contracts seized = by=20 the state from the Power Exchange are with Duke, Mirant, Enron and=20 Constellation.=20 Among the contracts negotiated by the state Department of Water Resources, = a=20 Houston firm, Coral Power, receives some of the highest prices for power=20 delivered during peak periods this year, $249 per megawatt-hour. Coral agre= ed=20 to provide 100 megawatts during peak hours this month, 150 megawatts in Jul= y,=20 250 megawatts in August, and 325 megawatts in September. Bush Says FERC Plan Is Not Price Controls From Times Wire Services=20 ?????President Bush said today he did not consider an electricity=20 price-relief plan for the Western region that the Federal Energy Regulatory= =20 Commission was expected to approve to be a form of price controls. ?????Bush said he remained opposed to electricity price controls. But he sa= id=20 the plan that FERC was expected to approve for limited wholesale price curb= s=20 in the West was different. ?????"I'm interested to see what FERC comes up with. They're not talking=20 about firm price controls, they're talking about a mechanism to mitigate an= y=20 severe price spike that may occur, which is completely different from price= =20 controls," Bush told reporters. ?????Amid mounting congressional pressure for action, FERC was to hold a=20 special meeting to address the chronic electricity problems affecting=20 California and the rest of the West. ?????FERC, which oversees interstate power sales, was widely expected to vo= te=20 for a compromise approach to limit prices on wholesale electricity sold in= =20 the West, according to congressional sources. ?????That approach would mean expanding a monitoring plan rolled out last= =20 month that only applied to California after state officials declared a powe= r=20 emergency. ?????Under the agency's existing "price mitigation" plan, the California=20 price limits are based on the amount that generators can charge to produce= =20 power at the least efficient plant. Generators may charge higher prices if= =20 they can justify them to the agency. ?????Expanding the plan to the entire Western region would fall short of th= e=20 strict price caps sought by California Gov. Gray Davis and many Democrats b= ut=20 would still amount to a significant change in policy for FERC. ?????The stricter price caps sought by Democrats would allow a generator to= =20 sell wholesale power based on a formula covering actual production costs,= =20 plus a moderate profit. That approach would be similar to the way U.S.=20 utilities were regulated for decades. ?????FERC's Republican chairman, Curtis Hebert, has repeatedly rejected the= =20 idea of price caps, saying market forces should set power prices. ?????However, Republican lawmakers fear they may take a political hit for t= he=20 Bush administration's decision to oppose strict price caps and therefore=20 pushed for the compromise that calls on FERC to expand its limited price=20 curbs. ?????The White House says it is worried that price caps would discourage=20 investment in new power plants and fail to encourage consumers to cut home= =20 energy use. ?????Today's meeting, due to begin at 1 p.m. EDT, would also mark the first= =20 time that FERC has been fully staffed with five commissioners since the=20 California energy crisis began last year. ?????Republican commissioners Pat Wood of Texas and Nora Brownell of=20 Pennsylvania were nominated to the agency by President Bush. Wood is viewed= =20 as a Bush confidant, having led the Texas Public Utilities Commission while= =20 Bush was governor of the state. ?????FERC has been under growing pressure from Democrats and Republicans to= =20 help find a solution to California's power deregulation fiasco. ?????Agency officials say that their measures are working. Since the FERC= =20 plan for California price relief went into effect on May 29, wholesale powe= r=20 prices in the state have dropped under $100 a megawatt from more than $300= =20 earlier in May. Copyright 2001 Los Angeles Times U.S. May Hike Aid for Poor's Utilities=20 Energy: Congress is likely to boost funds for program that arose from 1970s= =20 crises. It could be the first direct response to price spikes and supply=20 shortages.=20 By RICHARD SIMON, Times Staff Writer=20 ?????WASHINGTON--Members of Congress, feeling heat from constituents over= =20 rising energy costs, are preparing to approve a big budget increase for a= =20 once-obscure federal program that helps the poor pay their utility bills. ?????California, where an estimated 2.1 million low-income households are= =20 eligible for assistance, would receive a proportionately larger share of th= e=20 money than ever before. ?????The House may vote as early as this week to appropriate $300 million i= n=20 current-year emergency funding--twice as much as requested by President=20 Bush--for the Low-Income Home Energy Assistance Program. The Senate is=20 talking about doubling the figure again, to $600 million. ?????Even bigger increases appear likely for 2002. The president is seeking= =20 $1.7 billion, up from $1.4 billion this year. In the Senate, there's talk o= f=20 a $3.4-billion budget. ?????"There's been a change in mood," said Rep. Bernard Sanders, a Vermont= =20 independent who has joined Democrat Barbara Lee of Oakland and Republican= =20 John M. McHugh of New York in a campaign to boost the emergency funding bil= l=20 to $800 million. "People in California, among others, are now concerned abo= ut=20 this issue in a way that had not been the case. . . . Plus the fact that oi= l=20 prices are going up all over this country." ?????Passage of the emergency appropriation may be Congress' first direct= =20 response to the energy price spikes and supply shortages that have bedevile= d=20 California and other parts of the country. ?????The assistance program, which arose from the 1970s energy crises, work= s=20 directly with utilities to help lower low-income households' air-conditioni= ng=20 and heating bills and avoid utility cutoffs for nonpayment. ?????To be eligible for this assistance in California, a family of four mus= t=20 earn less than $33,125 a year. Priority is given to low-income families who= se=20 fuel bills consume a large proportion of their incomes, and to the elderly,= =20 the disabled and families with young children. The average benefit is $326= =20 per year. ?????California officials also use about a fourth of the program funds to= =20 offer free home weatherization services to low-income families, as well as= =20 providing more energy-efficient appliances. ?????Supporters acknowledge that LIHEAP's surging popularity represents a= =20 remarkable comeback: Several years ago, lawmakers were talking about killin= g=20 the program.=20 ?????One Senate Democrat, John D. "Jay" Rockefeller IV of West Virginia, ev= en=20 wants to expand the concept by creating a federal program to help poor peop= le=20 buy gasoline for long drives to work, school or medical appointments. ?????Rockefeller has proposed initial funding of $500 million to provide ga= s=20 subsidies of $25 to $75 a month to low-income workers who must commute more= =20 than 30 miles a day or 150 miles a week. ?????While Rockefeller's gasoline subsidy appears to be a longshot for now,= =20 more money is clearly headed toward LIHEAP. ?????"We finally have the attention of the administration on the need for= =20 some additional funds," said Sen. Jeff Bingaman of New Mexico, the new=20 Democratic chairman of the Senate Energy Committee. Bingaman wants to=20 disentangle the assistance program from the array of other energy policy=20 issues that Congress will be debating this year, so it can boost funding=20 sooner rather than later. ?????Sen. John F. Kerry (D-Mass.) said there is "far greater support" for a= =20 funding increase now than ever before. But he cautioned that more work lies= =20 ahead "with the fiscal straitjacket imposed by President Bush's=20 budget-busting tax bill." ?????The surge of support for the program is broad and bipartisan, even=20 though the program o
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