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Enron Mail |
Greetings:
Sorry to bombard, but there is simply so much in the press today that affec= ts=20 just about everything that this group has been, and will continue to be,=20 struggling with, that I thought it might be useful information for folks to= =20 have. Note in particular the story about the bonds in today's WSJ. My=20 apologies if you feel spammed. Feel free to lash out if that's the case. Best, Jeff PS We had not idea that Maviglio owned our stock. =20 ***************************************************************************= *** *************************** Sac Bee, Tues, 7/31: Davis spokesman under fire for stock=20 Sac Bee, Tues, 7/31: Davis energy aide leaves -- without pay=20 Sac Bee, Tues, 7/31: Power delivery efficiency questioned: Output at low-co= st=20 generating plants has been cut while costlier ones continue to operate Sac Bee, Tues, 7/31: Davis: FERC excluding $5 billion of owed refunds=20 Sac Bee, Tues, 7/31: Bill would streamline the path to local power: More=20 cities, including Davis, are taking a look at creating municipal utility=20 districts SD Union, Tues, 7/31: SDG&E denies it deceived ratepayers about debt=20 SD Union, Tues, 7/31: Sempra set to unveil plans for new plant, business pa= rk SD Union, Tues, 7/31: Davis press secretary confirms buying energy company= =20 stock LA Times, Tues, 7/31: Davis' Energy Advisors Draw SEC Attention SF Chron, Tues, 7/31: California governor's press secretary confirms buying= =20 energy company stock=20 SF Chron, Tues, 7/31: PG&E's $500,000,000 second-quarter surprise=20 SF Chron, Tues, 7/31: Power and 'juice'=20 SF Chron, Tues, 7/31: S.F. to vote on electric power to the people=20 Measures would start public utility districts=20 Mercury News, Tues, 7/31: Davis' advisers probed by SEC=20 OC Register, Tues, 7/31: Ethics issue in stock buy?=20 OC Register, Tues, 7/31: Aide denies stock deal was improper=20 OC Register, Tues, 7/31: Power firms amp up lobbying=20 OC Register, Tues, 7/31: Gouger Gray Davis (Commentary) Energy Insight, Tues, 7/31: Turning coal into a tradable commodity WSJ, Tues, 7/31: Debt Pitch: California's Next Test In Electricity Crisis: Selling Power Bonds LA Times, Tues, 7/31: California ; Op Ed Desk=20 Commentary The State Will Pay for Davis' Panic WSJ, Tues, 7/31: Electrical Switch: Now, Cheaper Power Is Causing Hefty Losses for California=20 ---------------------------------------------------------------------------= --- ------------------------------------------------------------- Davis spokesman under fire for stock=20 By Amy Chance and Dale Kasler Bee Staff Writers (Published July 31, 2001)=20 Davis administration spokesman Steve Maviglio acknowledged Monday that he= =20 bought stock in Calpine Corp. in June, at a time when the company was=20 announcing a breakthrough in its bid to build a controversial San Jose powe= r=20 plant.=20 His disclosure came several days after Gov. Gray Davis dismissed five state= =20 power purchasers for owning stock in the company and drew new complaints th= at=20 Davis administration officials may have improperly mixed their private=20 finances and their public roles.=20 Maviglio, now acting as interim communications director for the=20 administration, said he put in an "open" order for Calpine stock May 31,=20 agreeing to buy 300 shares once the stock hit a certain price.=20 He said that threshold was met June 20, the day after an action by the=20 Federal Energy Regulatory Commission brought down "all energy stock prices= =20 across the board."=20 Maviglio said he bought the stock for his individual retirement account, an= d=20 it has since declined in value. Under terms of the open order, he said, he= =20 had no control over the exact date of purchase.=20 Maviglio touted the company in his role as spokesman to the governor in a= =20 story published June 27 in The Bee. He said Monday that he was simply=20 responding to a reporter's question about the company's positive reputation= .=20 "They have made a clear commitment to invest in California's future,"=20 Maviglio said at the time. "Their pricing has been far more reasonable than= =20 any other generator."=20 In the interview, Maviglio also contrasted Calpine and Texas-based=20 generators. He said Calpine "took a different tack from the Joe Bobs of the= =20 world," an apparent reference to Joe Bob Perkins, a senior executive with= =20 Reliant Energy Inc. of Houston.=20 Maviglio acknowledged the stock ownership several days after the=20 administration ended its relationship with several energy consultants who= =20 held stock in energy companies, including Calpine.=20 Under pressure from Secretary of State Bill Jones, a Republican who hopes t= o=20 challenge Davis for governor next year, the Davis administration has spent= =20 several weeks scrambling to answer questions about the stock holdings and= =20 potential conflicts of its consultants and energy traders.=20 Jones said Monday that Maviglio should be fired.=20 "These actions are unethical, unconscionable, unacceptable, and heads shoul= d=20 roll," he said in a statement. He said the Democratic governor should direc= t=20 all of his staff to immediately file updated conflict-of-interest statement= s=20 to reflect current holdings.=20 Jones, who last week asked the Securities and Exchange Commission to=20 investigate administration consultants for insider trading, also said the= =20 probe should be expanded "to include all of the governor's staff."=20 Federal law and SEC regulations forbid anyone from trading stocks while=20 possessing "insider information" -- relevant facts not available to the=20 public, according to the SEC. Violations can bring lawsuits and criminal=20 prosecution.=20 Michael Prozan, a Menlo Park lawyer and expert on insider trading, said the= =20 prohibition against it originally focused on halting company executives fro= m=20 profiting from news before it was disclosed publicly.=20 But the laws have been broadened to include others besides company employee= s.=20 Investment bankers, lawyers and journalists have been snared by=20 insider-trading crackdowns.=20 Davis' office was instrumental earlier this year in paving the way for=20 removing barriers to construction of a Calpine plant in San Jose. On May 30= ,=20 after opposing the project for years, San Jose Mayor Ron Gonzales announced= =20 he had negotiated an agreement addressing his concerns and agreed to suppor= t=20 construction.=20 His action came after Davis in April endorsed the plant's construction and = as=20 the state Energy Commission threatened to approve it over local objections.= =20 On June 20, the company announced it had won tentative state approval to=20 build the plant.=20 Maviglio said he buys many stocks and that Enron Corp. and Calpine are the= =20 only energy generators among them. He owns 100 shares of Enron stock, which= =20 he purchased in 1996.=20 "I deal with hundreds of California companies just about every day, and thi= s=20 was one that I saw that looked like a good investment based on public=20 knowledge," he said. "I read six newspapers a day or more, and I know what'= s=20 going on in the world. If there's a standard that I can't invest in somethi= ng=20 that I have general public knowledge of, then I wouldn't have any stocks at= =20 all."=20 Maviglio said that the "open" order he placed meant that he could not have= =20 used inside information to make his stock purchase.=20 "Had I had specific knowledge about a contract being signed or what actuall= y=20 happened in the office of the mayor of San Jose ... that would have been=20 unrelated," Maviglio said. "There was no timing-based sequence to it."=20 Calpine stock, despite the company's considerable success, has slipped in= =20 recent weeks because of general investor anxiety about the California energ= y=20 crisis.=20 The stock, which trades on the New York Stock Exchange, closed at $49.30 on= =20 May 31, the day Maviglio says he placed the purchase order. The order was= =20 executed as the stock dipped below $40 on June 20, closing that day at=20 $39.85.=20 The day before, the Federal Energy Regulatory Commission announced a=20 price-control plan that investors believed was damaging to generators'=20 profits. On Monday, the stock closed at $37.13.=20 Last week, the Davis administration stopped doing business with five energy= =20 traders under contract with the administration after Maviglio said=20 administration lawyers "came to the determination that there are possible= =20 violations of the law or close to it."=20 "It's not a crime to own energy stock," Maviglio said Monday. "The differen= ce=20 with these traders is they're making governmental decisions. They're=20 committing the state's resources by spending money to buy power."=20 Jim Knox, director of California Common Cause, said he believes the=20 Governor's Office made critical errors while hiring staff to purchase energ= y=20 for the state.=20 "Had the Governor's Office gone to the trouble to have these people fill=20 statements of economic interest, as they were required to do by law, they= =20 should have known this before they were hired and they shouldn't have been= =20 hired," Knox said.=20 The Bee's Amy Chance can be reached at (916) 326-5535 or achance@sacbee.com= =20 <mailto:achance@sacbee.com<.=20 Emily Bazar of The Bee Capitol Bureau contributed to this report. Davis energy aide leaves -- without pay=20 By Emily Bazar Bee Capitol Bureau (Published July 31, 2001)=20 A high-paid consultant to Gov. Gray Davis who came under fire for his=20 dealings with a California utility has cut ties with the administration and= =20 won't be paid for work already completed.=20 Under terms of a settlement made final Monday, former Clinton damage contro= l=20 specialist Chris Lehane will no longer help shape Davis' public response to= =20 the energy crisis.=20 Neither Lehane nor partner Mark Fabiani -- who were hired by Davis in May o= n=20 a six-month, $30,000-a-month contract -- will receive any money for their= =20 services. Fabiani left last month.=20 Because Lehane and Fabiani each received at least $10,000 under contract wi= th=20 Southern California Edison in the past year, Lewis Uhler, president of the= =20 National Tax Limitation Committee, filed a lawsuit alleging that conflict o= f=20 interest laws had been violated.=20 But Davis spokesman Steve Maviglio said Lehane and Fabiani were instrumenta= l=20 in persuading the Federal Energy Regulatory Commission to limit the wholesa= le=20 cost of power in the state.=20 "Chris Lehane provided an invaluable service to the people of California in= =20 helping us get action after a yearlong wait from FERC," he said. "It's a=20 shame that politics gets in the way of public service."=20 Uhler, however, said he believes Lehane and Fabiani represent a larger=20 problem in the Davis administration, and he pointed to the recent dismissal= =20 of energy traders who held stock in energy companies.=20 "Doesn't anybody in the Governor's Office understand conflict of interest?"= =20 Uhler asked.=20 "This is really sending a signal that the Governor's Office thinks that it = is=20 somehow above the law."=20 The Bee's Emily Bazar can be reached at (916) 326-5540 or ebazar@sacbee.com= =20 <mailto:ebazar@sacbee.com<. Power delivery efficiency questioned: Output at low-cost generating plants= =20 has been cut while costlier ones continue to operate. By Carrie Peyton Bee Staff Writer (Published July 31, 2001)=20 California is sometimes deliberately cutting output from low-cost power=20 plants while running more expensive ones, utility and grid officials say.= =20 The sporadic episodes haven't cost much yet, but they illustrate a=20 potentially troubling disconnect in the system that has quickly grown betwe= en=20 two agencies that help deliver electricity to a power-strapped state.=20 "We seem to be building this inefficiency into the system, and it doesn't= =20 seem to be getting better," said Mike Florio, a consumer advocate who sits = on=20 the governing board of the Independent System Operator.=20 The trouble is that the ISO, created in 1996 to manage the power grid in a= =20 deregulated electric market, tries to run the grid by auctions that -- in= =20 theory -- provide the cheapest electricity for the state's consumers.=20 Meanwhile, the state Department of Water Resources, which in January steppe= d=20 in to buy power on behalf of cash-strapped utilities, isn't bidding at some= =20 auctions because it believes it can provide cheaper power if it doesn't.=20 "We have an inefficient market and an inept government entity. It's sort of= =20 the worst of both worlds," Florio said, criticizing his agency and the DWR.= =20 ISO staffers decline to discuss the situation in detail, saying it involves= =20 confidential bidding behavior.=20 But Pete Garris, chief of operations for the power-buying arm of the=20 Department of Water Resources, confirmed that the ISO has been asking his= =20 agency to take part in more auctions, but the state has declined.=20 The state's role is to buy electricity for customers of utilities whose=20 credit was no longer good enough to buy on their own, he said.=20 "We're not in it to do those kinds of marketing functions," he said. "It's= =20 not necessarily a good fit."=20 Some of the ISO auctions are used to lessen congestion on transmission line= s.=20 Others are used to stabilize the grid by slightly increasing or decreasing= =20 output when demand doesn't match forecasts.=20 Generally, the highest-cost power plants should be the ones cutting back, a= =20 process the industry calls "decking."=20 But since May, on ISO orders, Southern California Edison has repeatedly=20 throttled back on the Mohave Generating Station, which produces some of the= =20 cheapest power available to California today, costing as little as $10 to $= 20=20 a megawatt-hour.=20 Edison, which owns a majority share of Mohave, has cut its output by 5,660= =20 megawatt-hours between May and July, about one-half of 1 percent, at the=20 ISO's behest, according to data Edison provided to The Bee.=20 The ISO could probably have saved the state's consumers $370,000 at one pla= nt=20 if it had asked a higher-cost gas-burning plant to cut back instead of=20 Mohave, a coal-burning workhorse in Laughlin, Nev., Florio said.=20 The amount sounds like "small potatoes," but in some ways it is more alarmi= ng=20 than the $14 million the state lost recently by selling excess power for le= ss=20 than it paid, he said.=20 Industry experts agree that such below-cost sales are common in a business= =20 where power needs fluctuate dramatically based on the weather.=20 By contrast, "this is a dead weight loss. Higher costs are being incurred f= or=20 no good reason," Florio said.=20 "The question is, why is the ISO calling on Mohave and not (cheaper) gas=20 plants? The answer is, the gas plants aren't bidding ... probably because= =20 they're contracted with DWR," he said.=20 Four Corners, another low-cost coal plant partly owned by Edison, has also= =20 been throttled back at ISO request, Edison officials said.=20 In addition, so few bidders have shown up at ISO auctions to ease stress on= =20 transmission lines that the system has fallen into disarray, with the ISO= =20 instead ordering across-the-board power production cuts that are boosting= =20 costs, Florio said.=20 For its part, the ISO will say only that "we are making the most economical= =20 decisions we can based on the bids available," said spokeswoman Stephanie= =20 McCorkle.=20 DWR's Garris said the state and the ISO have been meeting repeatedly on=20 bidding and other coordination issues, and he hopes to have a=20 smoother-running system in place by next summer.=20 The Bee's Carrie Peyton can be reached at (916) 321-1086 or=20 cpeyton@sacbee.com <mailto:cpeyton@sacbee.com<. Davis: FERC excluding $5 billion of owed refunds=20 By Jim Sanders Bee Capitol Bureau (Published July 31, 2001)=20 A ruling by the Federal Energy Regulatory Commission last week could cost= =20 Californians $5 billion in energy refunds, according to Gov. Gray Davis, wh= o=20 filed a formal request Monday for a rehearing in the case.=20 Although the commission's order suggested that California is owed refunds= =20 because of exorbitant electricity prices during the recent energy crisis, t= he=20 order's fine print placed severe limits on such refunds, Davis said.=20 "FERC is up to its old tricks again," he said. "They talk about refunds for= =20 California. But in this case, talk really is cheap: The details of its late= st=20 order show it has no intention of making California whole."=20 Tamara Young-Allen, a FERC spokeswoman, declined comment Monday and said th= e=20 agency does not discuss pending cases.=20 California is seeking $8.9 billion in alleged overcharges for electricity= =20 purchased from May 2000 to June 19, when FERC imposed new rules to prevent= =20 price gouging.=20 On Wednesday, FERC ordered hearings to determine precisely how much money= =20 electricity generators would have to pay in refunds to California.=20 At the time, Davis applauded FERC's ruling, saying it validates California'= s=20 claim that "significant refunds are due" and that the agency's action "gets= =20 us closer to realizing that refund."=20 But after poring over details of the 40-page order, state officials said=20 Monday that it excludes from consideration more than half the amount sought= =20 by the state -- leaving $3.9 billion in dispute.=20 Attorney Barry Goode and Nancy McFadden, key members of Davis' energy team,= =20 said the FERC order would not allow refunds:=20 For about $2 billion in alleged overcharges stemming from electricity=20 purchased by Californians between May and October of last year.=20 For electricity bought by the state Department of Water Resources from=20 private companies this year. The state says it is owed about $3 billion fro= m=20 such purchases.=20 The FERC ruling means that only DWR's purchases through the state's=20 now-defunct Power Exchange or through the operator of a statewide electrici= ty=20 transmission grid will be considered for refunds, officials said.=20 Such limitations by the regulatory agency are impractical because the marke= t=20 was dysfunctional, leaving DWR with few options, when the state began buyin= g=20 electricity for debt-strapped private utilities in January, Goode said.=20 "Now FERC says Californians are not entitled to refunds even though they=20 determined the prices were excessively high," Davis said. "It's time for FE= RC=20 to decide who they are working for: the greedy out-of-state generators or t= he=20 people of California."=20 The motion filed Monday sets the stage for a possible lawsuit.=20 "We are calling on FERC to change its order," Davis said. "If it doesn't, w= e=20 will be in court."=20 The Bee's Jim Sanders can be reached at (916) 326-5538 or jsanders@sacbee.c= om=20 <mailto:jsanders@sacbee.com<. Bill would streamline the path to local power: More cities, including Davis= ,=20 are taking a look at creating municipal utility districts.=20 By Ed Fletcher Bee Capitol Bureau (Published July 31, 2001)=20 With the future of California's investor-owned utilities clouded by the=20 state's energy crisis, more and more cities, including Davis, are looking t= o=20 control their own power destinies.=20 Cities, public-power advocates and state Sen. Nell Soto, D-Pomona, are=20 pushing a bill through the state Legislature that would make it easier to= =20 create municipal utility districts.=20 "My solution to the power crisis is to reassert our interests and declare o= ur=20 independence from out-of-state gougers and in-state irresponsible utility= =20 companies," said Soto, who is carrying the bill, SB 23xx.=20 The Senate approved the bill earlier this month. The Assembly is expected t= o=20 take it up when the Legislature reconvenes in mid-August. The state's three= =20 investor-owned utilities are fighting the proposal.=20 Davis and other cities look longingly at the Sacramento Municipal Utility= =20 District's success in sheltering ratepayers from the brunt of rate increase= s.=20 Given the cloudy financial future of Davis' power provider, Pacific Gas and= =20 Electric Co., public power supporters say it's easy to understand why citie= s=20 want local control. If run well, public power can be cheaper and more stabl= e=20 than that supplied by investor-owned utility companies, they say.=20 "You get to choose the type of energy you want. ... I can't think of a bad= =20 reason" to have public power, said Robert Milbrodt, a Davis resident active= =20 in the drive.=20 After Yolo County officials last year denied an effort to form a public pow= er=20 authority in Davis, the city is ready to take a fresh look. The city, which= =20 did not formally support last year's attempt, this week is expected to name= =20 members to a public power task force. It is also hiring a consultant to hel= p=20 evaluate the pros and cons of a Davis version of SMUD.=20 Soto's bill would create a path to public power that takes county local=20 agency formation commissions out of the process. Under the bill, if all the= =20 cities and counties affected by the proposed municipal utility district sig= n=20 on, the plan bypasses the local LAFCO, goes directly to the California Pubi= c=20 Utilities Commission for analysis and then to the voters of the affected=20 areas.=20 It was the Yolo County Local Agency Formation Commission that turned down t= he=20 Davis request a year ago, saying critical issues were unresolved. Davis=20 public power activists said their plan would have put the basic formation= =20 question before the voters, leaving the details to be worked out later.=20 Public power boosters said lobbying by PG&E doomed their plans.=20 SB 23xx also simplifies the approval process, allowing a simple majority of= =20 voters in the proposed district to create the new power district.=20 Seizing transformers, power lines and other utility company infrastructure= =20 through eminent domain would become much easier for agencies starting=20 municipal utility districts under the bill. A utility company would not be= =20 able to challenge the taking of property based on the merits, but could onl= y=20 fight over price.=20 The utility companies say the provision would take away a key protection=20 against abuse.=20 Surveys show Californians like the idea of local officials controlling thei= r=20 power, in part because they blame investor-owned utilities for the state's= =20 electricity mess.=20 Nearly two-thirds say local governments taking the place of investor-owned= =20 utilities would be a good thing, according to a poll released earlier this= =20 month by the Public Policy Institute of California.=20 There are those that warn, however, that pubic power is not without risk.= =20 "This bill does not address generation," said Dale Hunter, a PG&E lobbyist,= =20 and municipal utility districts that can't generate their own power will be= =20 "exposing ratepayers to the volatility of the (power purchasing) market."= =20 In Los Angeles, the Department of Water and Power has been highly successfu= l=20 because it has surplus power to sell, Hunter said. SMUD has only recently= =20 been forced to raise its rates largely because it generates some of its=20 power, Hunter said.=20 By creating a way around LAFCOs, shifting the Public Utilities Commission t= o=20 an advisory role and stripping the right of utility companies to fight in= =20 court, the bill would be removing important public safeguards, Hunter said.= =20 The Bee's Ed Fletcher can be reached at (916) 326-5548 or=20 efletcher@sacbee.com <mailto:efletcher@sacbee.com<. SDG&E denies it deceived ratepayers about debt =20 \ objattph=20 Company calls gain on sales, debts 'separate transactions' By Craig D. Rose= =20 UNION-TRIBUNE STAFF WRITER July 31, 2001 San Diego Gas & Electric yesterd= ay=20 denied allegations that it systematically lied about the debt it racked up= =20 during the power crisis, despite revelations that the company earned hundre= ds=20 of millions from some power sales. SDG&E and its parent company, Sempra=20 Energy, acknowledged making profits from selling electricity but insisted= =20 those gains have no bearing on the $750 million debt the utility claims to = be=20 owed by customers for power purchases during the energy crisis. "Those are= =20 completely separate transactions," said Ed Van Herik, a spokesman for SDG&E= .=20 The company's effort to seal a deal with the state to clear the $750 millio= n=20 debt has come under attack by the Utility Consumers' Action Network. The Sa= n=20 Diego-based consumer group says SDG&E's claimed debt is the result of=20 selective bookkeeping, bordering on fraud. The bottom line, says UCAN, is= =20 that SDG&E engaged in deception and probably owes its customers money. =20 SDG&E, which claimed to have sold customers electricity without markups,=20 actually "was buying electricity at a low price and selling it at a higher= =20 price to us," said Shames. "SDG&E customers have been systematically lied t= o=20 over the past year about this balancing account." UCAN says that SDG&E=20 earned an estimated $450 million from its power sales to the state, while= =20 publicly declaring that it was posting only losses from buying power. Sham= es=20 said much of the information leading to UCAN's conclusion came from a=20 detailed analysis of documents made available in recent weeks. The state= =20 Office of Ratepayer Advocates, meanwhile, yesterday said a new filing by=20 SDG&E that claims its power-sales profits belong to stockholders, not=20 consumers, is "specious" and "without merit." Van Herik insisted the compa= ny=20 had not been misleading. The spokesman noted that the company earlier was= =20 required to buy electricity from the Power Exchange, a now-defunct=20 marketplace established by the state as part of its deregulation plan. "Wh= at=20 we said is that we were buying electricity for our customers and passing=20 along the cost without markup," said Van Herik. What SDG&E failed to=20 publicly announce was that it was simultaneously selling electricity to the= =20 Power Exchange for an apparently healthy profit. Under certain contracts,= =20 SDG&E had locked in electricity at prices substantially below going rates= =20 during the ongoing power crisis. The company declined yesterday to reveal= =20 terms of the contracts. But UCAN estimates the contracts provided electrici= ty=20 to the utility at no more than 5 cents per kilowatt-hour. SDG&E then sold= =20 that relatively cheap power to the Power Exchange for a higher price and=20 pocketed the profit, which it also declined to disclose. As it profited fr= om=20 the power sales, SDG&E bought power at higher prices from the exchange and= =20 billed customers for what it paid. Whenever SDG&E's costs to buy electrici= ty=20 exceeded what state regulators would allow the utility to charge customers,= =20 it recorded the amounts in balancing accounts. That account grew to $750=20 million. But SDG&E never offset its losses from electricity purchases with= =20 its profit from sales. Van Herik said the practice was appropriate because= =20 the lucrative contracts for cheap power were owned by the company's=20 shareholders, not its customers. The practice of keeping profits and losses= =20 entirely separate, he said, was endorsed by a California Public Utilities= =20 Commission audit. But the first formal ruling on that matter came in June,= =20 when the full commission ruled that all profits from SDG&E's contractual=20 power deals belong to its customers. SDG&E went to court to overturn the= =20 commission's ruling, but put the legal effort on hold shortly before Sempra= =20 reached a tentative agreement with the state to clear the $750 million debt= .=20 The proposal with the state would reverse the utilities commission ruling a= nd=20 award the company's shareholders ownership of the profits SDG&E made from= =20 selling power. Van Herik said yesterday that the state made the concession= =20 because it recognized that SDG&E had a strong legal case. But Shames says= =20 the state had a strong case and noted that the Office of Ratepayer Advocate= s=20 agreed. He is asking the utilities commission to reject the deal. State Se= n.=20 Steve Peace, D-El Cajon, said he believes that consumer objections to the= =20 balancing account deal are aimed at getting ratepayers a better deal -- and= =20 that's something he supports. "If Michael Shames can improve on the=20 balancing account deal I'm in full support as long as we don't lose any of= =20 the gains we've already gotten," he said. A spokesman for Gov. Gray Davis= =20 did not return a telephone call seeking reaction to the UCAN allegations. = =20 Outside UCAN's office in Little Italy yesterday, a group of trade unionists= =20 demonstrated in support of SDG&E's position. Dave Moore, a business manager= =20 for the International Brotherhood of Electrical Workers Local 465, said SDG= &E=20 has handled its power purchases in accordance with utilities commission=20 rulings. But Shames said the company sought to shield its actions from the= =20 scrutiny of consumer groups and the public. "They consistently said they= =20 were not making money from this," said the consumer advocate. "For them to= =20 split hairs and say, 'We didn't make money from purchases, we made it from= =20 sales,' is disingenuous." Staff writer Bill Ainsworth contributed to this= =20 report.=20 Sempra set to unveil plans for new plant, business park =20 \ objattph=20 By Jonathan Heller UNION-TRIBUNE STAFF WRITER July 31, 2001 ESCONDIDO --= =20 City officials are expecting to get their first look today at long-awaited= =20 plans to build the largest power plant in North County since the Encina pla= nt=20 came on line more than 30 years ago. Sempra Energy Resources will file a= =20 200-page application with the city Planning Department for a 550-megawatt,= =20 natural gas-fired power plant and roughly 100-acre business park in southwe= st=20 Escondido, Sempra spokesman Tom Murnane said. "It (the application) is ver= y=20 detailed," Murnane said. "We have not done an application of this sort=20 before. This is the first time Sempra Energy Resources has been involved in= =20 the development of a business park." Sempra is building the project in=20 partnership with JRM Real Estate, a Carlsbad-based developer. The Californ= ia=20 Energy Commission will have final say on the power plant, which could take= =20 three to four years to get on line. The City Council will decide on the=20 industrial park. City officials have awaited Sempra's bid ever since the= =20 idea was broached in January. The project addresses two needs: The power=20 plant would provide enough energy to power almost a half-million homes, and= =20 the business park would bring higher-paying jobs to a city with the lowest= =20 median income in North County. "I'm awaiting with great anticipation to se= e=20 what they have planned," said City Councilwoman June Rady. "I have met with= =20 Sempra officials several times in the past and what they have shared with m= e=20 I've been very excited about." Sempra has promised that its proposed plant= =20 would have lower emission levels than any plant now in the state. The compa= ny=20 also has said the plant would not have a tall smokestack, or a visible vapo= r=20 plume such as the one produced by the city's Iceoplex generating plant. Th= e=20 plant and park are slated for Quail Hills, the last large parcel of vacant= =20 industrial land in the city. Several previous plans by other developers hav= e=20 failed after they discovered the high costs involved with building on the= =20 hilly terrain. Neighbors near the area have voiced concerns about noise,= =20 traffic and dust associated with rock crushing, which would be needed to=20 create level foundations for the project. Davis press secretary confirms buying energy company stock =20 \ objattph=20 ASSOCIATED PRESS July 31, 2001 SACRAMENTO =01) Gov. Gray Davis' press=20 secretary recently purchased the same energy stock as five consultants the= =20 governor fired last week, he disclosed Monday. Steve Maviglio confirmed th= at=20 on June 20, he bought 300 shares of stock in Calpine Corp., a San Jose-base= d=20 power generator that has received about $13 billion in state contracts to= =20 supply electricity for up to 20 years. Maviglio's disclosure comes after= =20 Davis' office hastily ended the contracts of five consultants who helped=20 negotiate state power contracts and held stock in energy companies. In a= =20 related development, an anonymous source told the Los Angeles Times on Mond= ay=20 that the Securities and Exchange Commission has launched a preliminary=20 inquiry into whether the consultants used inside information to trade the= =20 energy stocks. About two dozen Davis energy consultants were required to= =20 fill out financial disclosure statements after complaints of conflict of=20 interest by Republicans and consumer groups. "When we reviewed them, we=20 found possible violations of the law and took swift action," Maviglio said= =20 Monday before Secretary of State Bill Jones issued a press release calling= =20 for his termination. Jones, a Republican, is a candidate for the GOP=20 nomination to challenge Davis in November 2002. Maviglio defended his=20 purchase, saying that he "owns several stocks in companies in all fields th= at=20 are growing and are based in California." Maviglio said Monday that he=20 requested on May 31 to purchase the stock if it dipped to $40 a share, whic= h=20 it did two days after a June 18 ruling by federal energy regulators=20 restricting wholesale electricity prices in California and 10 other states.= =20 Maviglio served as Davis' chief spokesman urging the Federal Energy=20 Regulatory Commission to impose price ceilings on electricity wholesalers. = =20 He also said he owns between $10,000 and $100,000 stock in Houston-based=20 Enron Corp. He said he purchased the stock in 1997 and has reported it on= =20 financial disclosure forms. He said that it is "closer to $10,000." =20 Meanwhile, two energy consultants to Davis have agreed to forgo more than= =20 $50,000 in work they did for the state. Chris Lehane and Mark Fabiani will= =20 forgo the payments as part of a settlement with a Sacramento-area resident= =20 who filed a lawsuit objecting to their hiring, calling it a conflict of=20 interest. Fabiani could not be reached for comment Monday. In the=20 settlement, they admitted no wrongdoing. Lehane issued a statement through= =20 the governor's office, calling it "simply not worth the bother to challenge= =20 the controller in court." Davis has come under fire for his May hiring of= =20 Lehane, former press secretary for Vice President Al Gore, and Fabiani, a= =20 deputy campaign manager for Gore's presidential run. They were hired to he= lp=20 shape Davis' response to the energy crisis, and helped craft Davis'=20 aggressive attack on Texas-based energy companies and President Bush. Both= =20 also have advised Southern California Edison, which is negotiating for stat= e=20 help in avoiding bankruptcy. Financial disclosure forms showed they have ea= ch=20 received at least $10,000 from Edison in the past year. Davis announced at= =20 the end of June that Fabiani terminated his contract, and Davis scaled back= =20 Lehane's role with the state. State Controller Kathleen Connell then said= =20 she would not pay Lehane and Fabiani for any of their work and now the two= =20 have agreed they will not fight her decision, Maviglio said. Lewis K. Uhle= r,=20 the Placer County man who filed the lawsuit, said the settlement=20 "accomplished our objectives." "We wanted to block the egregious use of=20 taxpayer funds for essentially political spinmeisters," he said. Uhler is= =20 president of the Roseville-based National Tax Limitation Committee. Mavigl= io=20 said that Fabiani and Lehane "did good work for the state" and helped the= =20 state win victories with federal regulators.=20 THE STATE Davis' Energy Advisors Draw SEC Attention Probe: Under review is the possible use of inside information to buy power= =20 company stocks. GOP rival of governor requested the inquiry. By WALTER HAMILTON JEFFERY L. RABIN and DARYL KELLEY TIMES STAFF WRITERS July 31 2001 The Securities and Exchange Commission has launched a preliminary inquiry= =20 into whether energy consultants advising Gov. Gray Davis used inside=20 information to trade stocks of power companies doing business with the stat= e,=20 a source with knowledge of the matter said Monday. The federal agency began its review late last week, the source said, in=20 response to a request from California Secretary of State Bill Jones. A=20 Republican rival of Davis, Jones charged that stock trading by consultants= =20 may have violated federal laws barring buying and selling based on=20 information not available to the public. On Friday, top aides to the governor disclosed that five consultants had be= en=20 fired for possible conflicts of interest between their official positions a= nd=20 their personal finances. As news of the SEC inquiry spread through the=20 capital Monday, Davis officials were confronted by a flurry of questions=20 about who in the administration owns energy stocks. Financial disclosure records filed by the governor's spokesman, Steve=20 Maviglio, show that he owns between $10,000 and $100,000 in a Texas company= =20 he and his boss have accused of making "obscene" profits while California h= as=20 been "on its knees." Maviglio said he bought the shares in Houston-based=20 Enron Corp. in 1996. "It's not a crime to own energy stock," Maviglio said. He also owns 300 shares of San Jose-based Calpine Corp., which has the=20 largest share of the $43 billion in long-term state power contracts. Maviglio placed the order for the stock on May 31, one day after San Jose's= =20 mayor dropped his opposition to a controversial Calpine plant favored by th= e=20 governor and others. Under the terms of Maviglio's purchase, the transactio= n=20 was completed about three weeks later when the stock reached $40 a share, a= =20 value of $12,000. It has since fallen in value. "I viewed it as a good long-term investment," Maviglio said, adding that he= =20 purchased the shares for his retirement account based on publicly available= =20 information. The Davis administration has spared Calpine the kind of fierce criticisms= =20 that it has leveled at other electricity suppliers, such as Enron. But=20 California's grid operator has identified the company as one of many energy= =20 merchants to overcharge the state millions of dollars. The fired consultants also owned shares in Calpine, ranging in value from= =20 several thousand dollars to more than $100,000, records show. Another top Davis administration official, legal affairs secretary Barry=20 Goode, disclosed in his economic interest statement that he recently held= =20 between $100,000 and $1 million in another out-of-state company accused of= =20 multimillion-dollar price gouging. In a statement, Goode said he sold his stock in Williams Co's. a month afte= r=20 he began working for the governor in February. Goode said the shares were= =20 supposed to be sold before he went on the state payroll, but his broker=20 failed to do so. In light of the recent disclosures, Secretary of State Jones said the=20 governor must do more to ensure the public that its interest comes first. "The governor should direct all of his staff to immediately file updated=20 conflict of interest statements that reflect current holdings and any=20 activity since their last statement of economic interest was filed," said= =20 Jones, who is seeking the GOP nomination for governor. Word of the SEC's entry into California's energy problems comes as the=20 governor faces harsh criticism from lawmakers and others for the quick and= =20 broad hiring of highly paid private consultants to guide him through the=20 crisis. In his written request to the SEC, Jones said that recently filed disclosur= e=20 documents showed that at least one consultant bought and sold shares of two= =20 energy companies within the same month, raising "a red flag" about the=20 possibility of insider trading. State law prohibits officials from participating in decisions involving the= ir=20 personal financial interests. The five consultants fired last week were among 11 named in Jones' letter,= =20 delivered to the San Francisco office of the SEC last Wednesday. It was not= =20 clear which individuals are the focus of the SEC's inquiry, or whether the= =20 agency's review would result in any charges. Two of the former traders said Monday that they had not been contacted by= =20 federal investigators and knew nothing of an inquiry into possible insider= =20 trading. But William Mead, fired Thursday, said it is no mystery why so many of his= =20 colleagues owned Calpine stock. Mead said he bought it 2 1/2 years ago and made so much money he recommende= d=20 it to his colleagues last year, while they all still worked for the=20 now-defunct California Power Exchange in Alhambra. Calpine power was not=20 traded on that exchange, so there was no conflict of interest, he said. Mead and three other energy traders--hired by the state in February and=20 March--were terminated by the Davis administration for allegedly buying pow= er=20 for the state from Calpine while owning the company's stock. Fired traders= =20 Herman Leung, Peggy Cheng and Constantine Louie did not list the date of=20 their Calpine purchases on financial statements that the state required to = be=20 filed only two weeks ago. "But I'm sure they bought it while they were still at the power exchange,= =20 because that's when we discussed it," Mead said. "It was kind of like a=20 hobby. I'm sure it wasn't done with the intent to manipulate." Former trader Elaine Griffin, who also owned Calpine stock and resigned two= =20 weeks ago to take another job, said she didn't know she owned energy=20 securities until she checked with her financial advisor July 13, just befor= e=20 leaving her state job. Griffin said she and her husband own about $10,000 worth of Calpine stock i= n=20 individual retirement accounts managed by their advisor, who bought the sto= ck=20 Feb. 1 without their knowledge, she said, after research found it to be a= =20 good investment. "I kind of feel like we've been used for political reasons," Griffin said.= =20 "We would have disclosed anything right at first, but they never asked." As a trader, Griffin said she occasionally bought Calpine power for the=20 state, but only at market prices. Meanwhile, two Democratic political consultants, who helped Davis polish hi= s=20 image after the ongoing energy crisis caused his poll numbers to plummet,= =20 have agreed to accept no payment for their work as part of an out-of-court= =20 settlement of a taxpayer lawsuit. Tom Hiltachk, a lawyer for conservative anti-tax activist Lewis Uhler, said= =20 the settlement was reached last Friday after negotiations with lawyers for= =20 communications consultants Mark Fabiani and Chris Lehane. "Now they will not receive one red cent," said Hiltachk. "Very simply Mr.= =20 Fabiani and Mr. Lehane have agreed to cease all activities for the governor= ,=20 to accept no payments for their services and to basically get out of the=20 consulting business with the governor." As his part of the agreement, Hiltachk said, Uhler withdrew his lawsuit=20 Monday morning. Uhler had filed a lawsuit against the two consultants and Controller Kathle= en=20 Connell in June contending that they should not receive any payments becaus= e=20 of a conflict of interest. The two men also did consulting work for=20 financially troubled Southern California Edison, which was seeking help fro= m=20 Davis and the Legislature. Connell, a former Los Angeles mayoral candidate who has been at odds with= =20 Davis since he endorsed an opponent, had held up the payments pending the= =20 outcome of the lawsuit. Under an agreement with Davis, the men were to have been paid $30,000 a mon= th=20 for six months. Fabiani and Lehane could not be reached for comment. * Times staff writers Nancy Vogel and Virginia Ellis in Sacramento and Robert= =20 J. Lopez in Los Angeles contributed to this story.=20 Copyright 2001, Los Angeles Times <http://www.latimes.com<;=20 California governor's press secretary confirms buying energy company stock= =20 ALEXA HAUSSLER, Associated Press Writer Tuesday, July 31, 2001=20 ,2001 Associated Press=20 URL: < http://www.sfgate.com/cgi-bin/article.cgi?file=3D/news/archive/2001/07/31/n= ation al1023EDT0543.DTL< (07-31) 07:23 PDT SACRAMENTO, Calif. (AP) --=20 Gov. Gray Davis' press secretary says he owns stock in the same energy=20 company as five state consultants who were fired because of possible confli= ct=20 of interest.=20 Steve Maviglio confirmed Monday that on June 20 he bought 300 shares of sto= ck=20 in Calpine Corp., a San Jose-based power generator that has received about= =20 $13 billion in state contracts to supply electricity for up to 20 years.=20 Secretary of State Bill Jones called for Maviglio's termination. Jones is a= =20 candidate for the GOP nomination to challenge Davis in November 2002.=20 The five energy consultants were fired last week because they owned shares = in=20 Calpine and also had helped the state buy electricity from the company. "We= =20 did not want them making governmental decisions and holding these stocks,"= =20 said Barry Goode, the governor's legal affairs secretary.=20 An anonymous source told the Los Angeles Times on Monday that the Securitie= s=20 and Exchange Commission has launched a preliminary inquiry into whether the= =20 consultants used inside information to trade energy stocks.=20 Maviglio defended his investment, saying that he "owns several stocks in=20 companies in all fields that are growing and are based in California."=20 He said he had arranged to buy Calpine stock if it dipped to $40 a share,= =20 which it did two days after a June 18 ruling by federal energy regulators= =20 restricting wholesale electricity prices in California and 10 other states.= =20 Calpine stock closed Monday at $37.13.=20 Maviglio had served as Davis' chief spokesman urging the Federal Energy=20 Regulatory Commission to impose price ceilings on electricity wholesalers.= =20 He also said he owns stock worth $10,000 to $100,000 in Houston-based Enron= =20 Corp., the nation's largest power wholesaler. He said he bought the stock i= n=20 1997 and has reported it on financial disclosure forms. He said his holding= =20 is "closer to $10,000."=20 ,2001 Associated Press=20 PG&E's $500,000,000 second-quarter surprise=20 Verne Kopytoff, Chronicle Staff Writer <mailto:vkopytoff@sfchronicle.com< Tuesday, July 31, 2001=20 ,2001 San Francisco Chronicle </chronicle/info/copyright<=20 URL: < http://www.sfgate.com/cgi-bin/article.cgi?file=3D/chronicle/archive/2001/07= /31/B U213760.DTL< PG&E Corp. said yesterday that it will earn $500 million to $600 million mo= re=20 than anticipated in the second quarter because its bankrupt utility was abl= e=20 to buy cheaper electricity in March as wholesale prices dropped.=20 As a consequence, PG&E reduced the amount of money it says the utility,=20 Pacific Gas and Electric Co., lost during California's energy crisis from= =20 $5.2 billion to between $4.6 billion and $4.7 billion.=20 "Its a good thing for PG&E," said Paul Fremont, an energy industry analyst= =20 with Jefferies & Co., an investment bank in New York. "But it clearly does= =20 not get them to the level where they are able to emerge from bankruptcy and= =20 make all of their creditors whole."=20 The disclosure by PG&E Corp. yesterday adds a modest boost to its quarterly= =20 earnings report, set for tomorrow morning. The company is expected to repor= t=20 an operating profit of 71 cents per share, according to analysts polled by= =20 Thomson Financial/First Call, an investment research firm.=20 PG&E Corp. is the owner of Pacific Gas & Electric Co., which filed for=20 Chapter 11 bankruptcy protection in April after electricity prices soared= =20 this year. The utility had previously estimated that it lost $1.1 billion i= n=20 the first quarter and $4.1 billion in the fourth because it was prohibited = by=20 the state Public Utilities Commission from passing higher costs on to=20 consumers.=20 PG&E Corp. also includes a energy producing unit, which generally makes=20 money, and a venture capital arm. Neither of those divisions is affected by= =20 the utility's bankruptcy.=20 The utility said it got a small break in March as the price it was paying t= o=20 the California Independent System Operator for energy declined sharply. The= =20 unanticipated drop was attributed to declining demand because of energy=20 conservation, low tempera-=20 tures and the opening of new power plants in the state.=20 The utility also benefited from the cancellation of power contracts by=20 companies that did not want to do business with a bankrupt partner. Those= =20 contracts were for selling power at below cost.=20 What is the utility's gain, though, may be a negative for PG&E's power-=20 producing division. The lower prices could mean the energy-producing group= =20 will make less money from its sales, analysts said.=20 E-mail Verne Kopytoff at vkopytoff@sfchronicle.com=20 <mailto:vkopytoff@sfchronicle.com<.=20 ,2001 San Francisco Chronicle </chronicle/info/copyright< Page E - 1=20 Power and 'juice'=20 <mailto:chronfeedback@sfchronicle.com< Tuesday, July 31, 2001=20 ,2001 San Francisco Chronicle </chronicle/info/copyright<=20 URL: < http://www.sfgate.com/cgi-bin/article.cgi?file=3D/chronicle/archive/2001/07= /31/E D133454.DTL< GOV. GRAY DAVIS seems to have an ethical blind spot when it comes to the=20 hiring of outsiders to help manage California's energy crisis.=20 Throughout the crisis, Davis has been intolerably slow in responding to=20 questions about whether certain members of his inner circle -- drawing big= =20 checks off the public payroll -- might have possible financial conflicts.= =20 As of yesterday, the governor's office still has not required 16 contractor= s=20 to file public disclosure documents that would reveal whether they have any= =20 financial stake in companies affected by policies they help develop.=20 Steve Maviglio, the governor's press secretary, said 42 energy "consultants= "=20 have filed their economic disclosure statements. But he said the other 16= =20 were "contractors" -- without actual decisionmaking authority -- and were= =20 thus not required to fill out the forms.=20 Maviglio's "contractor versus consultant" distinctions are technical and=20 semantic. His spin simply doesn't wash.=20 The bottom line is that "contractors" who are making big decisions involvin= g=20 big dollars for the state are not playing by the same rules as others in th= e=20 public trust.=20 For example, Davis has exempted two Wall Street executives, Joseph Fichera= =20 and Michael Hoffman, who are putting together a rescue plan that involves a= =20 $12.5 billion bond issue. They are getting $275,000 a month for their advic= e.=20 Yet they have not been required to fill out disclosure forms, which would= =20 allow the governor -- and any other Californian -- to assess whether a=20 potential conflict exists.=20 "They told us they don't have any conflicts," said Maviglio, who,=20 incidentally, confirmed yesterday that in June he bought $12,000 worth of= =20 stock in the Calpine Corp., the generating company with the largest chunk o= f=20 state power contracts. On July 2, Davis publicly praised Calpine as "the mo= st=20 responsible of the generators."=20 Davis should have finally learned his lesson last week after having to fire= =20 five consultants -- all involved in energy trading -- when their belatedly= =20 filed disclosure forms showed serious potential conflicts. A sixth consulta= nt=20 quit. Four of those traders owned Calpine shares.=20 A week earlier, the Davis administration was forced to order a group of=20 consultants to hastily unload their power-company holdings or lose their=20 contracts.=20 The governor's office also has been stung by revelations that political=20 consultants Chris Lehane and Mark Fabiani, hired at $30,000 a month to=20 develop energy-related "communications strategies," also had a contract wit= h=20 Southern California Edison.=20 Moreover, some of the disclosure forms that have been filed to date have be= en=20 less than complete, especially regarding the timing of the buying and selli= ng=20 of energy stocks.=20 How many scandals will it take for Davis to insist on full disclosure -- an= d=20 the highest ethical standards -- of everyone who is working for him on the= =20 energy crisis?=20 ,2001 San Francisco Chronicle </chronicle/info/copyright< Page A - 16=20 S.F. to vote on electric power to the people=20 Measures would start public utility districts=20 Rachel Gordon, Chronicle Staff Writer <mailto:rgordon@sfchronicle.com< Tuesday, July 31, 2001=20 ,2001 San Francisco Chronicle </chronicle/info/copyright<=20 URL: < http://www.sfgate.com/cgi-bin/article.cgi?file=3D/chronicle/archive/2001/07= /31/M NW145417.DTL< San Francisco -- After decades of trying to persuade San Francisco to take= =20 control of its electrical system, advocates of public power now have the=20 issue before city voters.=20 "The timing couldn't be better," said consumer advocate Medea Benjamin, co-= =20 director of San Francisco's Global Exchange.=20 "It's not just the threat of blackouts or the highest rate hikes in history= .=20 It's the fact that PG&E is in bankruptcy. It's the depletion of the state= =20 budget," she said. "This is a hell of an opportunity."=20 The opportunity she is talking about centers on two November ballot measure= s=20 that would pave the way for creating a public power system and taking Pacif= ic=20 Gas and Electric Co. out of the city's electricity market.=20 Under the proposed measures, an elected board of directors would set the=20 rates and have control over everything from the terms for buying electricit= y=20 to whether to use more renewable energy sources, such as wind, hydroelectri= c=20 and solar power.=20 Public power would base policies "on a more localized basis, where the valu= es=20 of an individual community can be put into practice," said Ed Smeloff, a=20 longtime public power advocate who was recently hired as an assistant gener= al=20 manager at the San Francisco Public Utilities Commission.=20 One proposal, an initiative placed on the ballot by residents, calls for=20 setting up a municipal utility district in San Francisco and neighboring=20 Brisbane. The district would be governed by an elected board of directors.= =20 The other measure, placed on the ballot last week by the Board of=20 Supervisors, would create a municipal water and power agency and would affe= ct=20 only San Francisco.=20 PG&E has mounted a campaign to defeat the measures, so far pumping more tha= n=20 $200,000 into the effort.=20 "We think the (ballot proposals) are a bad idea," said Frank Gallagher,=20 spokesman for the Coalition for Affordable Public Services, the PG&E-financ= ed=20 group fighting the measures. "They're confusing and do nothing to address t= he=20 problem."=20 The company has a history of opposing public power proposals, derailing a= =20 plan in Davis in the 1990s and using a legal challenge to stall the start o= f=20 Sacramento's Municipal Utility District for two decades.=20 For years, private utilities have enjoyed a powerful hold on state and loca= l=20 politicians. But the energy crisis has caused widespread public anger and= =20 concern, forcing city and state officials to take another look at public=20 power.=20 A poll conducted this month by the Public Policy Institute of California, a= =20 nonpartisan think tank in San Francisco, found that nearly two-thirds of=20 Californians support the replacement of private electric companies with=20 municipal power authorities formed by local governments.=20 San Francisco already owns a power system, Hetch Hetchy, which provides pow= er=20 for city departments. PG&E provides power to residents and businesses.=20 The San Francisco Charter amendment placed on the ballot by the supervisors= =20 calls for abolishing the city's existing Public Utilities Commission, which= =20 is run by commissioners and a director appointed by the mayor. The proposed= =20 public power board would have seven elected directors, but the agency still= =20 would retain some ties to City Hall.=20 The supervisors' plan is intended to be used as a backup to the municipal= =20 utility district -- commonly known as a MUD -- which is considered to be mo= re=20 vulnerable to the expected legal challenges from PG&E.=20 "It's a great marriage, and will ensure that we get public power in San=20 Francisco," said Board of Supervisors President Tom Ammiano, chief sponsor = of=20 the board's measure.=20 San Francisco is not alone in looking at public power. San Diego, the first= =20 city to feel the hard pinch of the energy crisis, wants to establish a=20 regional public power system in an attempt to pool resources and bring down= =20 energy costs.=20 The East Bay Municipal Utility District, which provides water and sewer=20 service, is considering expanding its reach to power. In the Bay Area, the= =20 cities of Alameda and Palo Alto already have public power. The two largest= =20 public power agencies in the state serve Los Angeles and Sacramento.=20 In San Francisco, the pro-public power forces are going to tout the promise= d=20 virtues of turning the electric utility over to a public authority that by= =20 law cannot turn a profit. That, they contend, means lower rates.=20 "It's an expectation, but it's also tried and true," said Ross Mirkarimi,= =20 campaign director of MUD Now, the group sponsoring the ballot initiative.= =20 On average, consumers pay 18 percent less for power from public utilities, = he=20 said.=20 Gallagher, spokesman for the opposition campaign, said ratepayers shouldn't= =20 assume that public power means lower energy bills. "There's no way the rate= s=20 are going down," he said.=20 He blamed the energy crisis not on deregulation but on a shortage of=20 electricity, which jacked up prices and undercut reliability.=20 "The measures do nothing about supply," Gallagher said. "All this will do i= s=20 cost people money. You can't just take PG&E's assets. You have to pay for= =20 them."=20 E-mail Rachel Gordon at rgordon@sfchronicle.com=20 <mailto:rgordon@sfchronicle.com<.=20 ,2001 San Francisco Chronicle </chronicle/info/copyright< Page A - 11=20 Davis' advisers probed by SEC=20 Published Tuesday, July 31, 2001, in the San Jose Mercury News=20 BY WALTER HAMILTON, JEFFERY L. RABIN AND DARYL KELLEY=20 Los Angeles Times=20 The Securities and Exchange Commission has launched a preliminary inquiry= =20 into whether energy consultants advising California Gov. Gray Davis used=20 inside information to trade stocks of power companies doing business with t= he=20 state, a source with knowledge of the matter said Monday.=20 The federal agency began its review late last week, the source said, in=20 response to a request from California Secretary of State Bill Jones, who is= =20 seeking the GOP nomination for governor. Jones charged that stock trading b= y=20 consultants may have violated federal laws barring buying and selling based= =20 on information not available to the public.=20 On Friday, top aides to the governor disclosed that five consultants had be= en=20 fired for possible conflicts of interest between their official positions a= nd=20 their personal finances.=20 In addition, financial disclosure records filed by the governor's spokesman= ,=20 Steve Maviglio, show that he owns between $10,000 and $100,000 in a Texas= =20 company he and his boss have accused of making ``obscene'' profits while=20 California has been ``on its knees.'' Maviglio said he bought the shares in= =20 Houston-based Enron Corp. in 1996.=20 ``It's not a crime to own energy stock,'' Maviglio said.=20 Calpine purchase=20 He also owns 300 shares of San Jose-based Calpine Corp., which has the=20 largest share of the $43 billion in long-term state power contracts.=20 Maviglio placed an order for the stock with an electronic broker May 31, on= e=20 day after San Jose Mayor Ron Gonzales dropped his opposition to a=20 controversial Calpine plant under pressure from the governor and others.=20 Under the terms of Maviglio's instructions, the stock was automatically=20 purchased on his behalf when Calpine fell to $40 a share, according Hilary= =20 McLean, a spokeswoman for the governor. It has since fallen in value.=20 ``I viewed it as a good long-term investment,'' Maviglio said, adding that = he=20 purchased the shares for his retirement account based on publicly available= =20 information.=20 The Davis administration has spared Calpine the kind of fierce criticisms i= t=20 has leveled at other electricity suppliers, such as Enron. But California's= =20 grid operator has identified the company as one of many energy merchants to= =20 overcharge the state millions of dollars.=20 The fired consultants also owned shares in Calpine, ranging in value from= =20 several thousand dollars to more than $100,000, records show.=20 Another top Davis administration official, legal affairs secretary Barry=20 Goode, disclosed in his economic interest statement that he recently held= =20 between $100,000 and $1 million in another out-of-state company accused of= =20 multimillion-dollar price gouging.=20 In a statement, Goode said he sold his stock in Williams Co's. a month afte= r=20 he began working for the governor in February. Goode said the shares were= =20 supposed to be sold before he went on the state payroll but his broker fail= ed=20 to do so.=20 In light of the recent disclosures, the secretary of state said the governo= r=20 must do more to assure the public that its interest comes first.=20 ``The governor should direct all of his staff to immediately file updated= =20 conflict of interest statements that reflect current holdings and any=20 activity since their last statement of economic interest was filed,'' Jones= =20 said.=20 Word of the SEC's entry into California's energy problems comes as the=20 governor faces harsh criticism from lawmakers and others for the quick and= =20 broad hiring of highly paid private consultants to guide him through the=20 crisis.=20 In his written request to the SEC, Jones said that recently filed disclosur= e=20 documents showed that at least one consultant bought and sold shares of two= =20 energy companies within the same month, raising ``a red flag'' about the=20 possibility of insider trading.=20 State law prohibits officials from participating in decisions involving the= ir=20 personal financial interests.=20 The five consultants fired last week were among 11 named in Jones' letter,= =20 delivered to the San Francisco office of the SEC last Wednesday. It was not= =20 clear which individuals are the focus of the SEC's inquiry, or whether the= =20 agency's review would result in any charges.=20 Two of the former traders said Monday that they had not been contacted by= =20 federal investigators and knew nothing of an inquiry into possible insider= =20 trading.=20 But William Mead, fired Thursday, said it's no mystery why so many of
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