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Sac Bee, Fri, 6/8: As prices fall, state seeks better deals Sac Bee, Fri, 6/8: Energy rebate may reward ex-gluttons Sac Bee, Fri, 6/8: PG&E may pay small creditors first, execs say Sac Bee, Fri, 6/8: Energy Digest: Low-income discounts grow SD Union, Fri, 6/8: PG&E president defends request for $17.5 million in=20 bonuses SD Union, Fri, 6/8: PUC lowers electric bills by 5 percent for low-income= =20 ratepayers LA Times, Fri, 6/8: THE NATION Emergency-Power Price Cap Is Working, Data= =20 Indicate Energy: Much-criticized plan cut costs by 64% the first time it was used, source=20 shows. Broader downturn also seen LA Times, Fri, 6/8: THE ENERGY CRISIS Paying for Power a Struggle for Some= =20 Utilities: Consumers on tight budgets face crises. Requests for aid flood agencies, bu= t=20 many of those eligible for discount programs are not signing up=20 LA Times, Fri, 6/8: Los Angeles THE ENERGY CRISIS Universal May Get Break o= n=20 Electricity Bills Legislature: Senate passes bill to allow the theme park and several= =20 other businesses to=20 buy DWP's cheaper power LA Times, Fri, 6/8: California L.A. Businesses to Get 'Real-Time' Electrici= ty=20 Meters Energy: Devices are part of larger plan to cut peak summer demand by at least 2,000= =20 megawatts=20 LA Times, Fri, 6/8: California Sonoran Has Customers Lined Up for Gas=20 Pipeline=20 SF Chron, Fri, 6/8: A tax on greed (Editorial) SF Chron, Fri, 6/8: Crisis propels obscure federal regulators into limeligh= t SF Chron, Fri, 6/8: State 'turning a corner' / Davis expresses optimism abo= ut=20 crisis,=20 seeks blackout protection for refineries SF Chron, Fri, 6/8: Legislators considered acquisition of PG&E @dk,1,18 Pla= n=20 also included=20 buying Edison firm @t SF Chron, Fri, 6/8: More poor to pay less for their PG&E bills / PUC votes = to=20 increase low-income discount SF Chron, Fri, 6/8: Creditors hear PG&E's bonus defense / Executives say=20 retention is critical to smoothing bankruptcy process SF Chron, Fri, 6/8: Investigators request records from L.A. utility brokers Mercury News, Fri, 6/8: Voltage-reduction project may stave off blackouts Mercury News, Fri, 6/8: Lieberman hearings spotlight regulators' role, his= =20 ambition Contra Costa Times, Fri, 6/8: Davis touts conservation success Contra Costa Times, Fri, 6/8: Martinez investigates power plant possibility Contra Costa Times, Fri, 6/8: State reviewing 2 proposed Valero power plant= s Contra Costa Times, Fri, 6/8: Energy prices drop in California OC Register, Fri, 6/8: California's energy prices suddenly drop OC Register, Fri, 6/8: Energy notebook State on track to spend $20 billion buying electricity OC Register, Fri, 6/8: PUC raises rate discount for poor families OC Register, Fri, 6/8: Taco Bell's taco bill includes energy fee AP Newswires, Fri, 6/8: Developments in California 's energy crisis NY Times, Fri, 6/8: California Gets a Reprieve as Power Prices Fall NY Times, Fri, 6/8: Senate Democrats to Press Inquiry Into High Energy Pric= es=20 (Ken Lay mentioned) WSJ, Fri, 6/8: Electricity Prices Fall in California, But Can It Last? ---------------------------------------------------------------------------= --- -------------------------------------------- As prices fall, state seeks better deals By Dale Kasler and Emily Bazar Bee Staff Writers=20 (Published June 8, 2001) A dramatic decline in wholesale electricity prices left California official= s=20 so confident Thursday that they threatened to back out of some long-term=20 power contracts unless suppliers agree to lower their prices.=20 But private experts cautioned that spot-market prices could rebound and sai= d=20 the state would be taking a huge risk by wriggling out of any long-term=20 contracts.=20 The state, which got into the power-buying business in mid-January, has bee= n=20 signing long-term contracts in order to stabilize prices and supply. On=20 Thursday state officials said they've essentially tamed the market by signi= ng=20 38 long-term contracts and by threatening power generators with reprisals f= or=20 alleged price gouging.=20 "These contracts are taking a big chunk out of the market," said Ray Hart,= =20 who oversees power buying for the Department of Water Resources.=20 By signing the contracts, the state doesn't have to buy as much last-minute= =20 power at notoriously unpredictable prices. This summer the state will have = to=20 make only about half its purchases on the spot market during peak-demand=20 times, when prices are highest.=20 While a drop in temperatures, conservation efforts and the return to servic= e=20 of several major power plants have helped, state officials said the contrac= ts=20 are driving down spot-market prices.=20 Spot prices are so low, Hart said the state would scrap 23 long-term=20 contracts -- deals that have been agreed to in principle but not finalized = --=20 unless suppliers give in to the state's demands for lower prices.=20 "We will walk away," Hart said.=20 He said the state will honor the contracts that have been finalized.=20 Suppliers said they'd resist any attempt to reduce prices long term. "I don= 't=20 think that the spot prices we're seeing this week will have much impact on = a=20 four- or five-year deal," said John Stout, senior vice president of Reliant= =20 Energy Inc., a power generator that's in negotiations with the state water= =20 department.=20 Analysts said the markets are still volatile enough that the state shouldn'= t=20 back out of any long-term contracts.=20 "It would be really foolish for them to bail on any of those contracts," sa= id=20 Arthur O'Donnell, editor of California Energy Markets.=20 "It's not like we have a significant cushion (of power) to withstand an=20 extended heat wave," O'Donnell said. "We don't know what's going to happen.= "=20 While the state hasn't released the terms of specific contracts signed so= =20 far, it said they carry an average price of $138 a megawatt-hour through=20 year's end and $70 over 10 years.=20 While that's barely half the spot market prices the state was paying for=20 power the first four months of the year, it's higher than current spot mark= et=20 prices.=20 Spot prices Thursday ranged between $50 and $60 a megawatt-hour, the lowest= =20 California has seen in about a year.=20 The irony is that wholesale prices are dropping just as most Californians a= re=20 starting to feel the impact of the energy crisis on their wallets. The=20 just-approved 37 percent rate hike will show up in bills mailed this month = to=20 Pacific Gas and Electric Co. and Southern California Edison customers, whil= e=20 Sacramento Muni-cipal Utility District customers were handed a 22 percent= =20 increase last month.=20 Still, if wholesale prices stay low, it would be undeniably good news to=20 California. It could ease the strain on a state treasury that has committed= =20 more than $8 billion to buy power on behalf of its troubled electric=20 utilities. It could also lower the chances of chronic rolling blackouts tha= t=20 some experts have forecast, although Hart said the threat of blackouts is f= ar=20 from over.=20 "If we have a period of five days of 105 degrees in the Valley and high=20 temperatures in Southern California, it's going to be very difficult to fin= d=20 enough energy to meet the need," the water department official said.=20 Nancy McFadden, senior adviser to Gov. Gray Davis, said power generators ma= y=20 be softening prices in response to recent allegations of price gouging and= =20 market manipulation.=20 She called the scrutiny of generators a "factor that is difficult to quanti= fy=20 but is nonetheless there."=20 Davis has threatened generators with plant seizures, windfall profits taxes= =20 and other measures as a response to spot prices that got as high as $1,900 = a=20 mega-watt-hour last month. Meanwhile, the new Democratic control over the= =20 U.S. Senate could bring a push for price caps on wholesale power.=20 But Reliant's Stout, whose company was ripped by the governor for charging= =20 $1,900 per megawatt-hour for power from one plant, said the political heat= =20 has had no effect on prices.=20 "I don't think anybody like Enron or Reliant is too scared," added Patrick= =20 O'Neill, who follows Western power markets for the Portland, Ore., consulti= ng=20 firm Economic Insight Inc.=20 O'Neill and other analysts said much of the price drop is due to weather an= d=20 other factors beyond the state's control -- factors that could easily turn= =20 against California.=20 It's too early to tell if the price drop is a lasting trend "or just a=20 short-term anomaly," Stout said.=20 O'Donnell noted that futures prices -- an indicator of where traders believ= e=20 the market is heading -- are still hovering near $200 a megawatt-hour for= =20 August supplies.=20 "Let's wait four to six weeks and see where we stand," said Gary Ackerman o= f=20 the Western Power Trading Forum, an association of generators and traders.= =20 The great unknown is the weather, which lately has helped California. Hot= =20 weather in May caused prices to shoot up temporarily but melted the snow=20 earlier than usual in the Pacific Northwest, filling reservoirs and bringin= g=20 in surprisingly strong supplies of cheap hydroelectricity, O'Neill said.=20 Now the weather has cooled off, keeping demand down, O'Neill said.=20 Yet the early snowmelt, coupled with drought-like conditions, means there= =20 will be less hydro power available later this summer and beyond, he said. A= nd=20 if the summer turns hotter, prices are likely to move up.=20 The lack of hydro could raise the price of natural gas, another key source = of=20 electricity generation in California, said analyst David Costello at the U.= S.=20 Department of Energy.=20 Natural gas prices have come down in the past two months, but that could=20 change when gas-fired power generators crank up in earnest for the summer.= =20 "When peak demand (for power) comes in, there's going to be a lot of pressu= re=20 on gas," Costello said. "The situation in California's so uncertain that no= =20 one should say 'Don't worry about gas prices.' "=20 One reason California natural gas prices have dipped: A key company has=20 relaxed its stranglehold on the major pipeline into Southern California, sa= id=20 Severin Borenstein of the University of California Energy Institute.=20 El Paso Natural Gas Co. sold almost 40 percent of the pipeline's capacity= =20 last year to an affiliate, El Paso Merchant Energy, prompting state officia= ls=20 to charge that El Paso could manipulate the market. The contract expired la= st=20 week, and the pipeline capacity is now owned by 30 companies.=20 El Paso, whose behavior is the subject of hearings by the Federal Energy=20 Regulatory Commission, has denied any wrongdoing.=20 The Bee's Dale Kasler can be reached at (916) 321-1066 or dkasler@sacbee.co= m.=20 Energy rebate may reward ex-gluttons By Edie Lau Bee Science Writer=20 (Published June 8, 2001) When it comes to saving electricity, the hard truth is that the more=20 extravagant your past power use, and the more money you're willing to inves= t=20 in energy-efficiency, the more likely you can conserve a lot -- and perhaps= =20 be rewarded with a rebate for your efforts.=20 California's "20/20 Program," which began this month, gives a 20 percent=20 discount to most power users who use at least 20 percent less electricity= =20 this summer than last summer.=20 The offer applies to customers of the investor-owned utilities -- Pacific G= as=20 and Electric Co., Southern California Edison and San Diego Gas & Electric C= o.=20 People served by the Sacramento Municipal Utility District and other public= =20 utilities are not eligible. However, Roseville is funding its own program= =20 modeled after the state's, with one key difference: Customers get a 10=20 percent discount for cutting their power use by 10 percent.=20 Roseville chose a more modest goal to enable more people to be successful,= =20 said Bernie Fargen, city utility spokesman.=20 "We looked at the state's program," he said, "and it appeared to us that=20 customers were either going to have to make a major investment in some majo= r=20 energy consumer in their home -- it could be replacing a refrigerator or=20 replacing their air conditioner -- or they were going to have to reduce=20 consumption through conservation ... at a level that would cause some major= =20 comfort sacrifice."=20 Roger Salazar, a spokesman for Gov. Gray Davis, who established the 20/20= =20 program by executive order, said the governor hopes all Californians will c= ut=20 back at least 10 percent. The rebate, he said, is meant for those who "go= =20 above and beyond the call of duty."=20 More to the point, the issue is not moral, but practical. "The people who= =20 have been conserving all along are the true heroes in this situation,"=20 Salazar said. "We're in a tough situation here; unfortunately, we have to g= o=20 where the megawatts are. It's a sad truth that most of the megawatts we can= =20 save ... are going to come from those who've been energy guzzlers."=20 Chris and Shannon Devine of Chico are among those who historically have use= d=20 little electricity. They turn off all unnecessary lights in their two-bedro= om=20 apartment, and set the thermostat at 82 in summer.=20 Now, Chris Devine said, it feels like they're being penalized. "To think=20 about conserving now, what are we going to do? Any hotter in the apartment,= =20 and we can't sleep. Any less lights, and we'll be in the dark."=20 Still, he said he understands the state's needs. "We're not the people=20 they're after."=20 The state estimates that if one out of 10 Californians cut power use by 20= =20 percent this summer, the savings in electricity costs will equal between $4= 00=20 million and $1.3 billion.=20 The Hathaway family in Rocklin has its sights set on the rebate and has=20 invested heavily to save electricity.=20 The biggest expenses: erecting a large patio cover to shade the south and= =20 west sides of the house ($5,000); installing a whole-house fan ($1,000); an= d=20 replacing incandescent light bulbs with compact fluorescents ($150).=20 The family also unscrewed a bunch of unnecessary light bulbs (there are thr= ee=20 bathrooms, each with a vanity mirror ringed by 10 bulbs); turns off porch= =20 lights except when company's coming; closes the blinds during the day; uses= =20 the clothes and dishwashers for full loads only; and has unplugged two of= =20 three VCRs.=20 The savings have been huge. Robin Hathaway's records show they used 42=20 percent less electricity this April than last April; and 21.5 percent less = in=20 May.=20 It's not just for the money that the family has altered its power=20 consumption. "We just want to feel like we're doing our part," Hathaway sai= d.=20 "In the long run, who says this (energy shortage) is going to go away?"=20 The state rebate offer stands from June through September. Utility company= =20 customers who save 20 percent or more will get an automatic 20 percent=20 discount on each month's bill. (San Diego customers, who saw the state's=20 first price spikes last summer, need save only 15 percent to get the rebate= ,=20 a nod to the conservation they achieved last year.)=20 In Roseville, those who wish to participate must sign up by June 30; bill= =20 credits will be available after summer. Details are available by calling=20 774-5110.=20 In Sacramento, SMUD considered offering a similar rebate, but decided to=20 concentrate on programs that promote longer-term conservation measures, sai= d=20 district spokeswoman Dace Udris.=20 The absence of a rebate has not discouraged many SMUD customers from avidly= =20 playing the conservation game.=20 Bruce Cherubin brings his bills to the office every month, bragging about h= ow=20 low they are. (Last month's was $24.) "We've all been doing that," said=20 Cherubin, who works for the state Department of Alcohol and Drug Programs.= =20 When the temperature rose to 106 last week, it was 90 degrees inside=20 Cherubin's three-bedroom house in Valley Hi. He did not turn on the air=20 conditioner.=20 "If there are major outages, I want to be prepared to live without=20 electricity," he said. "I think we have all been pampered. We have gotten= =20 used to the easy life."=20 A Web site created by Lawrence Berkeley National Laboratory,=20 http://savepower.lbl.gov, offers a prescription for cutting electricity use= =20 by 20 percent.=20 The Bee's Edie Lau can be reached at (916) 321-1098 or elau@sacbee.com. PG&E may pay small creditors first, execs say Generators and banks may have to wait until lesser claims clear By Claire Cooper Bee Legal Affairs Writer=20 (Published June 8, 2001) SAN FRANCISCO -- The top executives of Pacific Gas and Electric Co. on=20 Thursday told some of the utility's smallest creditors -- a woman who sells= =20 rubber gaskets, a man who can't cash a rubber check -- that they may be pai= d=20 first in PG&E's bankruptcy reorganization plan.=20 The largest of PG&E's 30,000 creditors -- power generators and banks -- may= =20 have to stand in line behind what PG&E bankruptcy lawyer James Lopes referr= ed=20 to as "an administrative convenience class," often made up of small=20 businesses whose claims clutter the books.=20 "It's certainly something that will be considered," Lopes said in answer to= a=20 question from creditor Howard T. Ash, a market consultant, who suggested=20 paying people with claims of less than $10,000 ahead of "those who put you = in=20 the problem."=20 The executives were unable to say how many creditors fall in that category.= =20 The exchange was the most productive of the debtor-creditor meeting, one=20 required under the bankruptcy law. A scattering of protesters gathered=20 outside the Hastings College of Law auditorium where the meeting was held.= =20 Inside, the harshest criticism came from consumer activist Medea Benjamin,= =20 who scolded the executives for "doubling your salaries when your company is= =20 bankrupt."=20 The utility has requested court permission to pay $17.5 million in bonuses = to=20 keep managers from quitting.=20 "Which of you is going to jump ship if you don't get those raises?" Benjami= n=20 demanded.=20 No one volunteered. But Gordon Smith, the utility's president and chief=20 executive officer, said a steady management team is essential while "PG&E i= s=20 doing its darnedest to provide electricity day in and day out."=20 He noted that the official creditors committee supports the bonuses.=20 The San Francisco-based utility sought bankruptcy court protection April 6= =20 after running up more than $8 billion in debt for electricity purchases aft= er=20 wholesale rates spiked while customer rates remained frozen.=20 After the meeting, however, U.S. trustee Linda Ekstrom Stanley, the=20 bankruptcy court's administrator, said she'll formally oppose the bonus=20 request next week.=20 On other issues the executives acknowledged they've hired a law firm to loo= k=20 into matters concerning their supplier generators but refused, on Lopes'=20 advice, to say whether the firm is investigating possible wholesale energy= =20 overcharges. Lopes also cut short discussion of a law that bars PG&E from= =20 selling off its own remaining power plants before 2006.=20 Kent Harvey, PG&E's senior vice president and chief financial officer, deni= ed=20 that the utility's crisis was caused by shifting billions of dollars to its= =20 parent corporation.=20 But several creditors were focused on smaller sums.=20 The issue for Aline I. Varanese of Bay Rubber Co. in Oakland was a $600=20 discrepancy between her records and the amount PG&E claims it owes her for= =20 gaskets.=20 For Jim Gormly, it was a check PG&E sent him before filing for bankruptcy= =20 protection. He hasn't been able to cash it. Lopes told him the check is "de= ad=20 and void," and he's now a creditor, like 30,000 others. Energy Digest: Low-income discounts grow=20 (Published June 8, 2001)=20 With utility bills rising, state regulators Thursday expanded the discounts= =20 available to low-income Californians.=20 The Public Utilities Commission deepened the discounts and eased the=20 eligibility requirements for its CARE program, or California Alternate Rate= s=20 for Energy. The decision applies to customers of Pacific Gas and Electric= =20 Co., Southern California Edison, San Diego Gas & Electric and Southern=20 California Gas Co.=20 The discount will increase to 20 percent from 15 percent. Californians maki= ng=20 175 percent of the federal poverty level will now be eligible; the old figu= re=20 was 150 percent.=20 The decision will shift about $47 million in costs to other ratepayers, sai= d=20 a spokeswoman for the commission.=20 -- Dale Kasler=20 Matsui energy bill WASHINGTON -- Tax legislation designed to promote energy production and=20 conservation was introduced in the House Thursday by Rep. Robert Matsui,=20 D-Sacramento.=20 The Matsui bill is identical to legislation that's been pending in the Sena= te=20 since March sponsored by New Mexico Sen. Jeff Bingaman, the new Democratic= =20 chairman of the Senate Energy and Natural Resources Committee.=20 Called the Energy Security and Tax Incentive Policy Act, it includes tax=20 incentives and credits for a wide range of developments in energy=20 conservation and production.=20 The House and Senate bills would provide tax credits or deductions for home= =20 and commercial building energy efficiency additions.=20 -- David Whitney=20 PG&E president defends request for $17.5 million in bonuses=20 By Karen Gaudette ASSOCIATED PRESS=20 June 7, 2001=20 SAN FRANCISCO =01) The head of California's largest utility defended a rece= nt=20 request for $17.5 million in employee bonuses, saying the money is necessar= y=20 to keep valuable employees from jumping ship at the bankrupt company.=20 "The restoration of the company's financial health requires that we have a= =20 rank-and-file team," said Gordon Smith, president of Pacific Gas and Electr= ic=20 Co. "Retention is a key factor."=20 Several hundred of the more than 50,000 cities, businesses and individuals = to=20 whom PG&E owes money had the chance Thursday to ask about the utility's=20 financial health and its plans for paying its creditors. PG&E executives to= ld=20 the room of more than 300 people it would file its plan for paying back=20 creditors as soon as possible.=20 Steve Johnson, an attorney with the U.S. Trustee's office that is overseein= g=20 the bankruptcy proceedings, grilled a handful of PG&E executives and=20 attorneys about the utility's financial activities during the past few year= s.=20 The $17.5 million bonus program, which must be approved by a bankruptcy=20 judge, is designed to encourage about 226 top managers to remain with the= =20 company through the next two years=20 The planned payments are modest compared with the billions of dollars PG&E= =20 owes to tens of thousands of creditors in the biggest utility bankruptcy in= =20 U.S. history.=20 PG&E's petition for the bonuses has drawn fire from consumer critics, who f= or=20 months have argued the utility's management could have avoided the financia= l=20 crisis if it had reacted more swiftly to rapidly changing conditions in the= =20 power market.=20 This isn't the first time PG&E's employee compensation has rankled the=20 utility's critics.=20 The night before filing for bankruptcy on April 6, the utility transferred= =20 $50 million in bonuses and raises to 6,000 workers. At the time, management= =20 said it wanted to ensure its employees received adequate paychecks before t= he=20 company plunged into the uncertainty of bankruptcy court. PUC lowers electric bills by 5 percent for low-income ratepayers=20 By Karen Gaudette ASSOCIATED PRESS=20 June 7, 2001=20 SAN FRANCISCO =01) Low-income ratepayers of California's public utilities w= ill=20 save 5 percent more on their electric bills, state power regulators ordered= =20 Thursday.=20 The Public Utilities Commission voted unanimously to expand the low-income= =20 discount from 15 percent to 20 percent. Commissioner Carl Wood said the=20 savings would help ease the financial worries of the state's poorest=20 ratepayers.=20 "It is critical that we act to provide relief to these most vulnerable=20 customers," Wood said.=20 The PUC delayed action on a proposal to order the state's two largest=20 utilities to pay 15 percent of the more than $1 billion they owe small powe= r=20 plants throughout the state for past electricity deliveries.=20 Money previously allocated by the Legislature to help low-income users woul= d=20 cover the cost of expanding the discount through the year, said Paul Clanon= ,=20 executive director of the PUC's energy division.=20 To get the discount, low-income ratepayers usually have to apply by mail to= =20 the California Alternate Rates on Energy program. Many of those eligible=20 haven't signed up, and Wood and PUC President Loretta Lynch are looking at= =20 creating an automatic enrollment system.=20 The PUC also approved a request from San Diego Gas & Electric Co. and San= =20 Diego County businesses to be paid by the utilities for using diesel=20 generators during power emergencies, thus lowering the state's electricity= =20 demand.=20 The PUC lowered the payment from a proposed 35 cents per kilowatt hour save= d=20 to 20 cents per kilowatt hour. Those customers already avoid paying for=20 electricity by running generators during those times, the PUC said.=20 San Diego County representatives countered that it costs thousands to rent,= =20 buy and fuel generators, and say they are being good citizens by finding=20 alternative solutions.=20 National Desk=20 THE NATION Emergency-Power Price Cap Is Working, Data Indicate Energy:=20 Much-criticized plan cut costs by 64% the first time it was used, source=20 shows. Broader downturn also seen. RICARDO ALONSO-ZALDIVAR ?=20 06/08/2001=20 Los Angeles Times=20 Home Edition=20 Page A-22=20 Copyright 2001 / The Times Mirror Company=20 WASHINGTON -- A widely criticized federal order to limit California power= =20 prices significantly reduced rates for last-minute electricity purchases=20 during two power emergencies last week, new data show.=20 Also Thursday, more evidence emerged of a broad downward trend in Californi= a=20 energy prices--well beyond what can be attributed to the consequences of=20 government intervention.=20 The unexpectedly positive data on the initial effect of the Federal Energy= =20 Regulatory Commission's price limits immediately touched off a stormy debat= e.=20 The agency's besieged chairman claimed vindication. But critics said=20 electrical generators were already finding loopholes in the price limits an= d=20 argued that the order needs more toughening to be truly effective.=20 The FERC order--which went into effect May 29--resulted in a 64% cut in the= =20 wholesale price of power immediately after an emergency was declared the ne= xt=20 day, according to data posted on the California Independent System Operator= 's=20 Internet site.=20 Prices dropped from $300 per megawatt-hour just before noon to $108.47 the= =20 following hour after Cal-ISO, the state's power grid operator, declared an= =20 official emergency that triggered the federal price limits.=20 A similar scenario unfolded during another declared emergency on May 31.=20 Prices dropped from $187 per megawatt-hour before the emergency declaration= =20 to $66.51 immediately after.=20 During the May 31 emergency, power plant owners in California began selling= =20 more electricity to out-of-state buyers. That electricity can later be sold= =20 back to the state by out-of-state marketers, who are not as tightly=20 controlled by FERC's order. Market watchers call that "megawatt laundering.= "=20 "We saw an increase in exports pretty quickly as a result of that" FERC=20 order, said Ray Hart, deputy director of the state Department of Water=20 Resources, in an interview. "So that clearly shows they're looking for ways= =20 around it. As soon as they export it, they bring it right back through a=20 marketer, and then the marketer has a price that's not challengeable under= =20 the FERC order."=20 FERC Chairman Curt Hebert disputed that, saying the agency can order=20 marketers to justify their prices.=20 Meanwhile, the continued across-the-board drop in California power prices i= s=20 beginning to attract at least as much attention as the controversy over=20 FERC's actions.=20 According to analysts at Platts Electric Utility Week, which monitors the= =20 industry, forward-looking prices for August delivery of electricity in=20 Southern California have fallen 69% since April. Prices for August=20 electricity stood at $220 per megawatt-hour on Wednesday, down from $700 in= =20 April.=20 The figures are significant because they apply to purchases made under=20 long-term fixed contracts, not just the emergency purchases made by Cal-ISO= =20 and subject to the FERC order.=20 Market watchers at Natural Gas Week reported that gas prices at a key=20 pipeline junction on the California -Arizona border had dropped=20 precipitously. Prices fell from $8.16 per million British thermal units on= =20 Wednesday to $5.93 at the close of business Thursday--a 27% plunge in one= =20 day.=20 High natural gas rates have been widely blamed for aggravating California '= s=20 power crisis, since gas is the fuel most commonly used by electricity=20 generators.=20 At FERC, a small federal agency that functions like a national utility=20 commission, Hebert said the lower prices during last week's power emergenci= es=20 show that the commission's efforts are finally paying off.=20 "Thus far, what we are seeing is that the price mitigation order is bringin= g=20 real-time prices down, which is exactly what I said it would do," Hebert sa= id=20 in an interview.=20 But Cal-ISO officials said it was too soon to break out the champagne.=20 Indeed, the state is threatening to sue Hebert's agency for not doing enoug= h=20 to restore "just and reasonable" prices in California .=20 "It is too early to make any conclusions at this point," said Stephanie=20 McCorkle, a Cal-ISO spokeswoman. "We just feel we need more days of=20 emergencies to see how it is really working."=20 And there were signs that generators were looking for ways to sidestep the= =20 FERC order.=20 The federal order relies on a complex formula to limit the price power plan= t=20 owners can charge whenever the state's electricity reserves are depleted. T= he=20 maximum price allowed in any given hour can vary according to factors=20 included in a formula. The FERC order requires California generators to off= er=20 all their available power for sale when Cal-ISO declares an emergency.=20 But by contracting to sell electricity a day or more in advance, generators= =20 can essentially tell Cal-ISO they have no power available to sell in an=20 emergency. Such a maneuver becomes all the more attractive if prices being= =20 paid in surrounding states are higher than the controlled price offered in= =20 California during an emergency.=20 Mike Wilczek, a senior market reporter for Platts, said that on Wednesday o= f=20 last week, when the first emergency was declared under the FERC order,=20 generators were unsure how to respond. But by the second emergency on=20 Thursday, a strategy seemed to be emerging.=20 "People were selling ahead to try to get away from the order," Wilczek said= .=20 "They wanted to avoid being 'mitigated.' In the northern part of California= ,=20 we saw some hours in which the ISO couldn't get any offers, even when they= =20 [generators] were being forced to sell into the ISO."=20 Hart said his market watchers observed the same ploy. The Department of Wat= er=20 Resources is purchasing power for the state's financially hobbled utilities= .=20 Rep. Doug Ose (R-Sacramento) said FERC needs to toughen the order by=20 extending it to all hours--not just periods covered by power emergencies--a= nd=20 to every Western state. Ose said his proposal is picking up support among= =20 Republicans who oppose Democratic demands for FERC to impose fixed price ca= ps=20 on wholesale electricity in the West.=20 "The evidence is that the FERC order is working," Ose said. "If it works,= =20 then let's use it. They need to take their order and extend it. Let's take = it=20 to all the Western states. Twenty-four/seven coverage needs to be in there= =20 also."=20 Paul Joskow, a Massachusetts Institute of Technology economist who supports= =20 temporary price caps, said strengthening the FERC order may prove to be a= =20 workable compromise to rein in costs for the rest of the summer. "It's=20 getting late in the game, and expanding the number of hours of mitigating,= =20 making sure there aren't loopholes, would be a very productive thing to do,= "=20 he said.=20 FERC Chairman Hebert said the commission plans to review the order, but he= =20 would not commit in advance to suggested changes. "My position as chairman = is=20 not to follow House or Senate members, or anybody else, but to do what is i= n=20 the best interest of America," he said.=20 Meanwhile, power generators complained the FERC order is forcing them to se= ll=20 at rates below their costs. "We had no power plants that were producing pow= er=20 at a cost of $108 on Wednesday," said John Stout, a vice president of=20 Reliant. "Some were in the mid-$100s, others were above $200."=20 Reliant is urging FERC to adopt a new formula to more fully account for=20 higher natural gas prices in Southern California .=20 *=20 Times staff writer Nancy Vogel in Sacramento contributed to this story. California ; Metro Desk=20 THE ENERGY CRISIS Paying for Power a Struggle for Some Utilities: Consumers= =20 on tight budgets face crises. Requests for aid flood agencies, but many of= =20 those eligible for discount programs are not signing up. TIM REITERMAN ?=20 06/08/2001=20 Los Angeles Times=20 Home Edition=20 Page B-1=20 Copyright 2001 / The Times Mirror Company=20 In San Francisco, a retired music teacher with polio came within 48 hours o= f=20 losing gas to heat his apartment and electricity to charge the motorized=20 scooter that takes him to the doctor and to church.=20 In Santa Cruz County, a former insurance company administrator dropped=20 insurance for her mobile home because she could find no other way to pay he= r=20 mounting utility bills.=20 In Los Angeles, a former foster care provider whose gas bills are running= =20 about $100 a month can't make ends meet on her $289 Social Security check.= =20 Up and down the state, problems encountered by utility ratepayers on fixed= =20 incomes and tight budgets are bad and getting worse, according to the state= 's=20 anti-poverty agency.=20 Tens of thousands of Californians are flocking to special programs that off= er=20 discounts on energy bills, cash assistance and home weatherproofing that=20 reduces utility costs.=20 Social service agencies say they are swamped with applications for assistan= ce=20 from low- and moderate-income people, even before the largest electricity= =20 rate increase in state history starts showing up on bills this month. The= =20 clients, they say, range from single-parent and working-class families to= =20 seniors who have sold their estate jewelry and even condominiums because=20 utility bills pushed them beyond the limits of fixed incomes.=20 Several agencies contacted by The Times say they already have provided more= =20 assistance this year than during all of last year. Some have been forced to= =20 hire extra staff to handle the crush. Others temporarily ran out of funds.= =20 Many people are turned away because there is not enough money to go around = or=20 they do not qualify under the income guidelines or other criteria for=20 assistance.=20 "We have to make tough choices about serving eligible seniors or disabled o= r=20 people with children," said Sigmund Vays, president of Community Enhancemen= t=20 Services, which serves Hollywood and the San Fernando Valley. The agency is= =20 able to assist about one of five applicants.=20 The state Public Utilities Commission approved a rate increase of 3 cents p= er=20 kilowatt hour on March 27. Officials say that translates to an increase of = $4=20 to $85 a month for residential customers. Natural gas rates have soared=20 throughout the state as well.=20 Rising energy costs hit people living at the margins particularly hard=20 because utilities eat up such a high proportion of their income. Some are= =20 saddled with bills of $1,000 or more; others are doing without medicine and= =20 scrimping on food to keep their power on.=20 "We got numerous e-mails from seniors, the disabled and others on fixed=20 income because their utility bills have increased two, three or four times,= "=20 said Toni Curtis, chief deputy of the state Department of Community Service= s=20 and Development. "They can't pay them."=20 Elizabeth Berryhill, 81, longtime artistic director of a Bay Area theater= =20 group, was getting by on frugality, Social Security and a little money from= =20 renting space in her house in San Anselmo.=20 Then her utility bill tripled last winter to about $300. A community=20 organization now provides up to $230 a month in assistance.=20 With the new electricity rate increases, Berryhill said, "I am hugely=20 concerned. . . . I don't know how long the program will go on, or how long= =20 they will be able to help me."=20 'More Lip Service Than a Real Safety Net'=20 State regulators recently directed utilities to redouble efforts to enroll= =20 low-income customers in programs infused with tens of millions from state= =20 coffers.=20 While encouraged by the increased funding, consumer advocates and community= =20 service agencies are worried that the programs will not reach the millions= =20 who qualify, let alone those who might need help even though they don't=20 qualify.=20 "The promises of protection become more lip service than a real safety net,= "=20 said Doug Heller of the Foundation for Taxpayer and Consumer Rights in Sant= a=20 Monica.=20 California officials estimate that one-fifth of the state's households, or= =20 2.7 million customers, are eligible for two major utility-run programs.=20 But only 60% of them are participating in the California Alternate Rates fo= r=20 Energy program, which provides low-income customers a discount that the PUC= =20 increased from 15% to 20% Thursday and exempts them from this year's rate= =20 hikes.=20 Only a small portion of those in the program are also enrolled in the=20 Low-Income Energy Efficiency program, which provides home energy improvemen= ts=20 such as insulation and new appliances.=20 Utilities administer the programs and receive $200 million to fund them=20 through small surcharges on customer bills. Recent legislation provides an= =20 additional $120 million.=20 The federal Low-Income Home Energy Assistance Program, created during the= =20 energy crisis two decades ago, pays customers' bills when they face cutoff = of=20 their utilities for nonpayment. Even with another $120 million from=20 California , state officials say, the program has enough money for less tha= n=20 10% of the 2.1 million households that could qualify.=20 "Everyone realizes there is not enough to go around," said Alex Sotomayor,= =20 director of the Maravilla Foundation in East Los Angeles, which has=20 distributed 40% more money this year than last.=20 San Diego Gas & Electric refused to release figures on service disconnectio= ns=20 this year. Pacific Gas & Electric Co. sent about 1 million 48-hour notices= =20 from February through April, and disconnected about 53,000 customers. From= =20 January through April, Southern California Edison cut off about 133,000=20 customers. The numbers are roughly the same as a year ago.=20 The 22,000 shut-offs at Southern California Gas Co. in the first four month= s=20 of 2001 represent a 40% increase from last year, but are below its three-ye= ar=20 average for the period.=20 More Outreach, Funding Cutting Disconnections=20 Utilities say their efforts have helped prevent shut-offs from rising highe= r.=20 Southern California Gas, for example, notes that it offered nearly 1 millio= n=20 extensions to customers through April, up 82%.=20 Social service agencies say increased outreach and funding this year also a= re=20 helping hold down disconnections for now, but with rate boosts, they are=20 concerned about this summer and beyond. "Our concern at this point is how w= e=20 will help prevent disconnections on an enormous scale and the loss that wil= l=20 ensue in the coming winter," wrote Dennis Osmer of the Community Action Boa= rd=20 in Santa Cruz County in a May 21 report for the state Senate Office of=20 Research.=20 To the north, retired organist, singer and teacher John von Spreckelsen, 65= ,=20 lives in a spartan apartment near San Francisco City College. He survived= =20 polio and a heart attack. He manages to get across town to Grace Cathedral= =20 for Sunday services and occasionally to the symphony by using his electric= =20 scooter, public transportation and transit for the disabled.=20 The energy crisis, however, threw him. His electricity and gas bill from PG= &E=20 went from about $40 to $140 and ate a huge chunk of his $712-a-month=20 disability payment. When he couldn't pay his bills, von Spreckelsen said, h= e=20 was notified his power would be shut off in two days.=20 "I travel with an electric scooter, and I have to keep it plugged in every= =20 night," he said. "Because I'm sedentary, I keep my thermostat at 75. They a= sk=20 us to turn it down to 68, but I freeze to death."=20 A community service agency enrolled von Spreckelsen in the utility discount= =20 program and paid $840 of his bills. "It was astronomical," he said. "It mea= ns=20 I even have change for the next bill."=20 Melissa Porter, a 32-year-old mother of two, says she faces the cutoff of= =20 utilities to her rented house in El Cajon unless she pays a $600 bill by Ju= ne=20 19. That, she said, will not be easy.=20 Her husband died of a heart attack on March 20. She is in a leg cast with a= n=20 injury, and can work only one of her two jobs for a private firm that assis= ts=20 the elderly.=20 "I am cutting everything back," Porter said. "I had to let my car payments= =20 and insurance go. I managed to pay rent for May just last week and to buy= =20 food for my kids. It [isn't] much food either. . . . We're eating lots of= =20 macaroni and cheese." Porter said she has been trying for two weeks to get= =20 help with her utility bill, without success.=20 A number of customers reached by The Times through service providers did no= t=20 want their relatives and neighbors to know about their plight, so they aske= d=20 that their names not be used.=20 One Los Angeles woman is a former foster care provider and part-time studen= t=20 who receives $289 in Social Security and cannot afford her $100 monthly gas= =20 bills. "I can never catch up," she said. "I now owe $372." Her children pay= =20 the mortgage on the Koreatown home she has owned since 1965 and help her wi= th=20 food.=20 A former insurance administrator lives on a fixed income of $711 a month, b= ut=20 $495 of that goes to pay her utilities and mobile home space in Soquel, sou= th=20 of Santa Cruz.=20 "I had to drop my homeowners insurance because I could not pay for it and t= he=20 utility bill," she said. Like a number of her neighbors, she said, she also= =20 has cut back on food.=20 Thanks to government programs, she gets discounted electricity and received= a=20 free high-efficiency refrigerator.=20 "Lots of people are too proud to admit they need help," she said. "That's t= he=20 way I was too."=20 Marin County is synonymous with the good life, but the energy-price explosi= on=20 is damaging those least able to roll with it.=20 "It's terrible," said Layne Schneider of Community Action Marin, which has= =20 helped five times more people with their utility bills this year than last= =20 and ran out of money a week ago.=20 After 35 years as a travel agent, Christina Thomas of Sausalito did not=20 expect to find herself so frail at 63. She has osteoporosis and emphysema.= =20 She needs to be on oxygen 24 hours a day. Thomas tried to conserve but fell= =20 behind on her utility bills.=20 "I seldom put the TV on," she said, "but I can't cut down on my oxygen."=20 She received $300 in one-time assistance, but a 15-day shut-off notice=20 arrived recently, saying she owed $900.=20 Thomas plans to make the minimum payment of $134. "That would keep me going= =20 until the next bill," she said. "I worked all my life and paid my taxes, an= d=20 it has come to this."=20 (BEGIN TEXT OF INFOBOX / INFOGRAPHIC)=20 Aid to Low-Income Customers Through programs, California provides discounte= d=20 electricity rates, assistance with bills and weatherization services to=20 low-income customers of investor-owned utilities:=20 CALIFORNIA ALTERNATE RATES FOR ENERGY (CARE)=20 Funding: Surcharge on utility bills, augmented by state money.=20 Benefit: Discounts on gas and electricity bills, which the state Public=20 Utilities Commission increased from 15% to 20% Thursday.=20 Eligibility: Households with incomes below 175% of poverty level, or about= =20 $30,000 for a family of four.=20 LOW-INCOME ENERGY=20 EFFICIENCY (LIEE)=20 Funding: Surcharge on utility bills, augmented by state funds.=20 Benefit: Weatherization services to low-income households.=20 Eligibility: Households with incomes below 175% of poverty level, or 200% o= f=20 poverty level for elderly and disabled.=20 LOW-INCOME HOME ENERGY=20 ASSISTANCE PROGRAM (LIHEAP)=20 Funding: $62.7 million in federal funds, plus $120 million in state funds= =20 this year.=20 Benefit: Payment assistance, with a sliding scale by income levels.=20 Eligibility: For federal funds, households with incomes below 60% of state= =20 median income. For state funds, households with incomes below 250% of pover= ty=20 level.=20 UTILITY PROGRAMS=20 Pacific Gas & Electric Co.:=20 Relief for Energy Assistance through Community Help (REACH) is administered= =20 through the Salvation Army and provides help with bills. Last year, the=20 average was $180 for about 18,000 households.=20 Southern California Edison:=20 The Energy Assistance Fund, administered by the United Way, provided one-ti= me=20 payments averaging $86 to 5,185 households last year.=20 Southern California Gas:=20 The Gas Assistance Fund provides a one-time credit of up to $150 on the bil= ls=20 of qualified low-income customers.=20 San Diego Gas & Electric:=20 The Neighbor to Neighbor program provides half the monthly bill, up to $200= ,=20 during winter months.=20 Sources: State Senate Office of Research, Department of Community Services= =20 and Development, Public Utilities Commission. California ; Metro Desk=20 Los Angeles THE ENERGY CRISIS Universal May Get Break on Electricity Bills= =20 Legislature: Senate passes bill to allow the theme park and several other= =20 businesses to buy DWP's cheaper power. CARL INGRAM ?=20 06/08/2001=20 Los Angeles Times=20 Home Edition=20 Page B-3=20 Copyright 2001 / The Times Mirror Company=20 SACRAMENTO -- Over protests of special-interest favoritism, the state Senat= e=20 passed legislation Thursday to give Universal City a break on its electrici= ty=20 bills during the California energy crisis.=20 Bipartisan approval of the measure contrasted starkly with the defeat last= =20 month of a similar bill that would have cut the power costs of public=20 agencies in Los Angeles County.=20 "The public got shafted while the private interests got taken care of,"=20 complained Los Angeles County Supervisor Zev Yaroslavsky, who fought for th= e=20 bill that would have benefited the local government entities.=20 The bill, SB 1172, introduced by state Sen. Sheila Kuehl (D-Santa Monica) o= n=20 behalf of Universal Studios and its theme park, would allow Universal and= =20 several other businesses to switch from Southern California Edison to the L= os=20 Angeles Department of Water and Power, whose electricity is cheaper.=20 The bill cleared the Senate on a 29-4 vote despite the objections of Sen.= =20 Debra Bowen (D-Marina del Rey). Its future in the Assembly is uncertain.=20 Kuehl said saving money for Universal, an influential enterprise that makes= =20 political contributions, was not the foremost issue. She said Universal was= =20 more concerned about safety during a blackout because visitors might get=20 stranded on rides.=20 Chances of avoiding a blackout with the DWP seem better than with Edison, s= he=20 said, adding, however, that there is no "guarantee the DWP won't have=20 blackouts."=20 Bowen warned the Senate against approving a bill that she said would feed a= =20 perception that special interests can get what they want in Sacramento "if= =20 they just have enough political clout."=20 She said that if Universal's power bills were to go down, bills for other= =20 electricity customers throughout California would go up.=20 "How do we expect other businesses and other residents of California to=20 conserve and sacrifice, if not everyone has to do it?" Bowen asked.=20 Universal and about a dozen other businesses straddle the service boundary= =20 between Southern California Edison Co. and the Los Angeles Department of=20 Water and Power. Those customers are hooked up to both utilities and pay tw= o=20 electricity bills.=20 The legislation would enable Universal and the other customers, including= =20 Cedars-Sinai Medical Center, to buy all their power from the DWP, a municip= al=20 utility whose prices are much lower.=20 However, Bowen, one of the Legislature's energy experts, noted that the=20 electricity sold to Universal at low cost would no longer be available to t= he=20 state Department of Water Resources, which is buying power on behalf of=20 bankrupt Pacific Gas & Electric Co. and financially crippled Edison.=20 "So the bill provides a benefit to these businesses at the expense of=20 everyone else," Bowen charged.=20 "How do we tell a child-care center down the street that they are going to = be=20 subject to blackout risks, but these businesses are not because they happen= =20 to have this power?" Bowen asked.=20 Kuehl responded that it was "speculative" for Bowen to predict shifts in=20 power costs.=20 She noted that Universal, a Target department store, the hospital and other= s=20 would have to pay Edison an "exit" fee. The bill would enable each customer= =20 to consume a maximum of 50 megawatts, a relatively small amount of power.= =20 "I resent the implication that I, of all people, am carrying a bill for ric= h=20 businesses," Kuehl told a reporter later. "I'm always at least No. 1 or No.= 2=20 on the hit list of the California Chamber of Commerce for not generally=20 voting with the rich and powerful."=20 Bowen, who said that "everyone needs to pitch in" to resolve the power=20 crunch, spearheaded the vote to defeat the public agencies' low-cost power= =20 bill in May. The bill failed in her Energy Committee by one vote.=20 That bill, AB 15x by Assemblyman Roderick Wright (D-Los Angeles), would hav= e=20 allowed five entities in Los Angeles County to purchase the lower-cost powe= r=20 from the DWP instead of Edison.=20 Bowen argued against the bill, saying it would drive up electricity costs f= or=20 other consumers throughout California .=20 Yaroslavsky noted Thursday that the five public agencies face substantially= =20 higher power bills that would be reduced, freeing funds for other services,= =20 if they could switch to DWP electricity .=20 The beneficiaries would have been Los Angeles County, the Los Angeles Unifi= ed=20 School District, a community college district, the county Board of Educatio= n=20 and the Metropolitan Transportation Authority.=20 Yaroslavsky said he and others came up with the idea of government agencies= =20 switching to the cheaper city power and rejected efforts of Universal and= =20 others to be included in Wright's bill.=20 "We end up doing the right thing and get screwed, and they [Universal and= =20 Target] get a piece of legislation out of the Senate," he said. Business; Financial Desk=20 California L.A. Businesses to Get 'Real-Time' Electricity Meters Energy:=20 Devices are part of larger plan to cut peak summer demand by at least 2,000= =20 megawatts. NANCY RIVERA BROOKS ?=20 06/08/2001=20 Los Angeles Times=20 Home Edition=20 Page C-2=20 Copyright 2001 / The Times Mirror Company=20 Los Angeles businesses will get first crack at a new program designed to=20 slice peak power usage through sophisticated electricity meters that allow= =20 utilities to calculate bills based on when power is used.=20 Gov. Gray Davis officially launched a program Thursday to install "real-tim= e"=20 electricity meters in Los Angeles in order to reduce peak electricity use b= y=20 as much as 240 megawatts this summer.=20 The Los Angeles Department of Water and Power expects to install more than= =20 3,400 real-time electricity meters at commercial and industrial customers= =20 with peak electricity demand of 200 kilowatts or greater. Such customers=20 include large retail stores, manufacturing operations and office buildings.= =20 Real-time meters measure not only how much electricity is used but also whe= n=20 it is used. Because wholesale electricity costs more when demand is high,= =20 such metering encourages businesses to reschedule shifts, conserve or shift= =20 energy use to take advantage of lower prices during times of low electricit= y=20 demand.=20 "Real-time metering is another innovative way California is cutting demand= =20 for electricity as we continue to bolster supply" by licensing new power=20 plants, Davis said. "As other municipal and investor-owned utilities instal= l=20 these sophisticated electricity meters, this program alone is estimated to= =20 cut our state's peak energy use by another 500 megawatts this summer."=20 Under the state plan, customers with real-time meters will be able to shave= =20 15% off their electricity bills by measurably reducing peak energy use, he= =20 said.=20 "The hope is if people could see the real-time price of energy, they would= =20 use less of it," said Eric Tharp, DWP vice president of public affairs.=20 Although DWP territory is not part of the power-short electricity grid=20 operated by the California Independent System Operator, the blackout-plague= d=20 territories of Southern California Edison, Pacific Gas & Electric and San= =20 Diego Gas & Electric will still benefit, Tharp said. DWP has committed to= =20 sell power to the state equal to the amount saved under the program at=20 cost-based prices, which are still being negotiated, Tharp said.=20 The DWP meters, and others that will follow across the state, are being=20 funded through AB 29X, legislation Davis signed in April that sets aside $3= 5=20 million for the purchase and installation of such meters. The DWP portion i= s=20 about $5 million, Tharp said.=20 The meters are part of a larger energy conservation plan to cut peak summer= =20 demand by at least 2,000 megawatts, or enough to power about 1.5 million=20 homes.=20 How fast DWP and other utilities can get these programs operating depends= =20 largely on the supply of the equipment, which can be difficult to get, Thar= p=20 said. Business; Financial Desk=20 California Sonoran Has Customers Lined Up for Gas Pipeline ?=20 06/08/2001=20 Los Angeles Times=20 Home Edition=20 Page C-2=20 Copyright 2001 / The Times Mirror Company=20 A venture between Kinder Morgan Energy Partners and Calpine Corp. has=20 attracted more than enough customers to build a $1.7-billion natural-gas=20 pipeline for energy-starved California by the summer of 2003.=20 Sonoran Pipeline, the joint venture, expects to sell capacity on the=20 1,030-mile project within 60 days and gain federal approval by year's end,= =20 Sonoran Vice President Scott Parker said in a statement.=20 California , which is in the midst of an electricity shortage, depends on= =20 natural gas to fuel many of its power plants. The Sonoran line would carry= =20 enough gas to generate 9,000 megawatts of power, Calpine spokeswoman=20 Katherine Potter said. A megawatt can light 750 California homes.=20 The project would deliver 750 million cubic feet of natural gas a day from= =20 gas fields in northern New Mexico to the California -Arizona border. A seco= nd=20 segment would connect with other pipelines to deliver as much as 1 billion= =20 cubic feet a day to the San Francisco area.=20 Sonoran Pipeline received binding agreements and nonbinding interest for mo= re=20 than 1 billion cubic feet a day for the first run of pipe, and interest in= =20 1.5 billion cubic feet a day for the second phase, the company said.=20 Calpine, a San Jose-based power plant developer, has committed to ship 400= =20 million cubic feet a day on the Sonoran line for 20 years.=20 In New York Stock Exchange trading, Calpine shares rose $1.54 to close at= =20 $45.30, erasing this year's decline, and Houston-based Kinder Morgan's shar= es=20 fell 95 cents to close at $70.05.=20 EDITORIALS=20 A tax on greed ?=20 06/08/2001=20 The San Francisco Chronicle=20 FINAL=20 Page A.24=20 (Copyright 2001)=20 IT'S TIME to get tough in solving the state's energy crisis. Billions of=20 dollars are flowing from state coffers to electric generators, whose profit= s=20 have jumped five-fold in the past year. It's greed, gouging or windfall=20 profits -- the winnings collected from a broken market.=20 One sensible rescue plan -- a cap on the wholesale price of electricity --= =20 was ruled out by President Bush on his trip to California last week althoug= h=20 a similar proposal remains alive in the Senate. But next week, the state=20 Assembly will take up another answer: a tax on the inordinate profits earne= d=20 by a handful of energy generators.=20 The measure would set a base of $60 per megawatt (the amount of electricity= =20 used by 1,000 homes) and impose increasing levels of taxes of 50 to 90=20 percent for prices above the starting point. The proposal, by Assemblywoman= =20 Ellen Corbett, a San Leandro Democrat, gives California a powerful weapon i= n=20 restraining a runaway market.=20 Consider the damage done. The state has spent $8 billion to buy power on=20 behalf of financially-weakened utilities. This money is expected to be paid= =20 back in higher power bills for residents and businesses, but it also means = a=20 huge diversion of funds from parks, schools, or health care. The revenue=20 flowing to Sacramento from the state's economy is essentially going down an= =20 energy rathole.=20 The $60 per megawatt figure is nearly double the average charged for=20 electricity in January 2000, a time when major electricity generators were= =20 already earning healthy profits. The average price on January of this year= =20 was $278. Since then, the gyrating spot market for power has touched $1,900= =20 and higher on high-demand days when vital electricity was in short supply.= =20 Imposing taxes on a lopsided, cartel-dominated market could pay back the=20 state for the enormous expenses of the energy crisis. It could act as a=20 brake, inducing the mulish generators to lower prices that are busting the= =20 budgets of residents and businesses.=20 The Corbett bill would return the tax money to state coffers. A second=20 similar bill, by state Sen. Nell Soto, D-Pomona, would return the money to= =20 taxpayers via tax credits. In a session with The Chronicle editorial board= =20 yesterday, Gov. Gray Davis repeated his willingness to sign such a tax on= =20 excessive generator profits.=20 A special tax aimed at the flagrant misconduct of a single industry is not= =20 always the best public policy. But with billions in state money at stake, a= nd=20 few effective controls over energy prices, a windfall profits levy makes=20 sense at this time. NEWS=20 Crisis propels obscure federal regulators into limelight Zachary Coile ?=20 06/08/2001=20 The San Francisco Chronicle=20 FINAL=20 Page A.12=20 (Copyright 2001)=20 For most of its 24-year history, the Federal Energy Regulatory Commission w= as=20 an agency so low-profile that only those in the power business paid it much= =20 attention.=20 That is, until the lights went out in California .=20 Once viewed as mundane, the commission's written orders and biweekly meetin= gs=20 now are front-page news. Its acronym, FERC, has become part of the lexicon = --=20 at least among California residents anxious about rising energy bills and= =20 blackouts.=20 The five members of the commission and the agency's 1,200 staff members,=20 tucked in a sleek 11-story office tower hidden behind the train tracks at= =20 Union Station, now find their every move second- guessed by politicians,=20 economists and the media.=20 "At some level, I think they probably are enjoying it," says Larry Foster,= =20 who edits Inside FERC, a weekly newsletter about the agency read by energy= =20 executives, lobbyists and state regulators.=20 "I say that because these are people who have worked long and hard for many= =20 years on important issues with absolutely no recognition at all. Now there = is=20 public awareness that what they do is important.=20 Foster added: "Having said that, do they enjoy being vilified daily by (Gov= .)=20 Gray Davis? No, probably not."=20 The regulatory commission's defenders say it hasn't ignored California 's= =20 power woes. But critics argue that the commission has exacerbated the crisi= s=20 by refusing to order wholesale price limits on electricity and by not=20 investigating alleged market abuses. Sen. Dianne Feinstein, D-Calif., is=20 asking for hearings into whether energy executives exerted influence over k= ey=20 decisions by the commission.=20 "Energy companies have learned how to game the system. It really has been t= o=20 their benefit and to the detriment of California consumers," said Adam=20 Goldberg, energy policy analyst for Consumers Union. "FERC has let that=20 happen and has done nothing to rectify the situation or to punish the=20 wrongdoers."=20 The commission, whose members are nominated by the president, oversees the= =20 guts of America's energy system: interstate oil and gas pipelines, electric= =20 transmission lines and hydropower dams. The agency's most critical task is = to=20 ensure "just and reasonable" energy prices -- a responsibility critics say = it=20 has abdicated during California 's energy crunch.=20 Because it regulates only wholesale prices for transmitting and trading=20 electricity and natural gas, the commission usually draws less attention th= an=20 state regulators, who set the energy prices consumers pay. Even in=20 Washington, the agency is far less visible than its regulatory siblings, su= ch=20 as the Federal Communications Commission and the Federal Trade Commission.= =20 An independent agency under the Department of Energy, the Federal Energy=20 Regulatory Commission was established in 1977 to replace the Federal Power= =20 Commission, which had regulated the energy industry since 1920. In the=20 aftermath of an oil embargo and rising energy prices, President Jimmy Carte= r=20 and Congress renamed the agency and change its mission. The new goal was to= =20 ease regulation and help energy companies increase production and lower=20 prices.=20 The Federal Power Commission had long set rates for the price of transmitti= ng=20 gas across state lines, and a 1954 Supreme Court decision gave the age
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