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Following is today's IEP news....thanks! ?Jean
-- Jean Munoz McNally Temple Associates, Inc. 916-447-8186 916-447-6326 (fx) Copley News Service, June 20, 2001, Wednesday, State and regional, 509 ????words, Customers might have to pay SDG&E debt, advocate says, Craig D. Rose, ????SAN DIEGO Los Angeles Times, June 20, 2001 Wednesday, Home Edition, Page 13, 771 ????words, Commentary; ; The FERC's Action Is Good, Bad,Ugly, PETER NAVARRO, ????Peter Navarro is an associate professor of economics and public, policy at ????UC Irvine. E-mail: pnavarro@uci.edu Los Angeles Times, June 20, 2001 Wednesday, Home Edition, Page 7, 865 words ????, The State; THE ENERGY CRISIS; New Price Caps Not a Deterrent, Power Firms ????Say; Regulation: Producers are unhappy with the federal action but say it is ????unlikely to discourage them from constructing new plants., NANCY VOGEL, ????THOMAS S. MULLIGAN, TIMES STAFF WRITERS Los Angeles Times, June 20, 2001 Wednesday, Home Edition, Page 7, 704 words ????, The State; THE ENERGY CRISIS; Plan Won't Raise Rates, Davis Says; ?Edison: ????Governor seeks to assure Senate, where Democrats say action is a bailout of ????nearly bankrupt utility., CARL INGRAM, TIMES STAFF WRITER, SACRAMENTO Los Angeles Times, June 20, 2001 Wednesday, Home Edition, Page 3, 771 words ????, Los Angeles; ; France and California--Vive the Differences and ????Similarities, PATT MORRISON Los Angeles Times, June 20, 2001 Wednesday, Home Edition, Page 1, 820 words ????, State to Pay Electric Bill With Loan, Not Taxes, MIGUEL BUSTILLO, TIMES ????STAFF WRITER, SACRAMENTO Los Angeles Times, June 20, 2001 Wednesday, Home Edition, Page 15, 1163 ????words, THE ENERGY CRISIS; ; FERC Move Short-Circuits Push for Hard Price ????Caps, RICHARD T. COOPER, JANET HOOK, TIMES STAFF WRITERS, WASHINGTON Los Angeles Times, June 20, 2001 Wednesday, Home Edition, Page 1, 1508 ????words, NEWS ANALYSIS; Energy on Agenda, but Issue Is Blame; Politics: Gov. ????Davis will try to sway voter anger toward the GOP as he faces a Senate ????panel., RONALD BROWNSTEIN, TIMES POLITICAL WRITER, WASHINGTON Los Angeles Times, June 20, 2001 Wednesday, Home Edition, Page 1, 2450 ????words, COLUMN ONE; Blackout Forecasts' Dark Side; * If optimists are wrong ????and the power runs out, California's energy crisis could quickly cost lives ????and cripple the economy., JENIFER WARREN, TIMES STAFF WRITER The New York Times, June 20, 2001, Wednesday, Late Edition - Final, Section ????A; Page 14; Column 3; National Desk, 708 words, Regulators' Order Could ????Bring Broad California Power Accord, By LAURA M. HOLSON with JEFF GERTH, LOS ????ANGELES, June 19 The New York Times, June 20, 2001, Wednesday, Late Edition - Final, Section ????A; Page 14; Column 3; National Desk, 1022 words, The Lesson of When to Give ????Aid to Free Markets, By DAVID E. SANGER, WASHINGTON, June 19 The New York Times, June 20, 2001, Wednesday, Late Edition - Final, Section ????A; Page 22; Column 1; Editorial Desk, 503 words, At Last, Action on ????California The Orange County Register, June 20, 2001, Wednesday, WASHINGTON DATELINE, ????K0253, 808 words, Senate Democrats drop price caps bill; energy ????commissioners go to Hill, By Dena Bunis San Jose Mercury News, June 20, 2001, Wednesday, WASHINGTON DATELINE, K0244 ????, 1181 words, Feinstein drops price caps bill; energy commissioners go to ????Capitol Hill, By Jim Puzzanghera The San Francisco Chronicle, JUNE 20, 2001, WEDNESDAY,, FINAL EDITION, ????NEWS;, Pg. A1, 1126 words, Experts say state must seize the day; ????ANALYSIS: Price caps set stage for future, David Lazarus The San Francisco Chronicle, JUNE 20, 2001, WEDNESDAY,, FINAL EDITION, ????NEWS;, Pg. A13, 683 words, Potrero Hill power plant hit by 2 lawsuits; ????Neighbors, city ask court to cut back hours of operation, Rachel Gordon The San Francisco Chronicle, JUNE 20, 2001, WEDNESDAY,, FINAL EDITION, ????NEWS;, Pg. A11, 729 words, Fed price caps placate Demos; ???But Feinstein's ????bill to regulate energy producers was more strict, Carolyn Lochhead, ????Washington The Washington Post, June 20, 2001, Wednesday, Final Edition, A SECTION; ????Pg. A06, 1093 words, Davis Finds Hope in Calif. Power Crunch, Rene Sanchez ????and Peter Behr, Washington Post Staff Writers, LOS ANGELES, June 19 Chicago Tribune, June 20, 2001 Wednesday, NORTH SPORTS FINAL EDITION, News; ????Pg. 9; ZONE: N, 333 words, California gets loan for energy purchases, ????Reuters., SACRAMENTO The Associated Press State & Local Wire, June 20, 2001, Wednesday, BC cycle ????, 9:23 AM Eastern Time, State and Regional, 473 words, FERC still looking ????into high Northwest power prices, By KATHERINE PFLEGER, Associated Press ????Writer, WASHINGTON ??????????????????????Copyright 2001 Copley News Service ?????????????????????????????Copley News Service ???????????????????????????June 20, 2001, Wednesday SECTION: State and regional LENGTH: 509 words HEADLINE: Customers might have to pay SDG&E debt, advocate says BYLINE: Craig D. Rose DATELINE: SAN DIEGO BODY: ??Despite assurances from the governor and San Diego Gas & Electric, the threat to local ratepayers of paying most of a $750 million debt to the utility is not gone, a local consumer leader said yesterday. ??Michael Shames, executive director of the Utility Consumers' Action Network, said an agreement crafted by SDG&E and the governor to deal with the debt might avoid raising rates to pay it off but that it will take consumer money from other pockets. ??Gov. Gray Davis and SDG&E officials on Monday said their two-part plan would eliminate the debt along with transferring ownership of the utility's transmission system to the state for $1 billion. ??Under the complex agreement, said Shames, ''It appears we will be paying 90 percent or more of the $750 million.'' ??SDG&E officials underscored that the debt, which they estimated might reach as much as $400 per residential customer, would be removed without raising rates. ??The debt began building when the Legislature last fall capped local power rates to contain the electricity crisis. But SDG&E still had to purchase power at market prices higher than the capped rates collected from customers. The utility's ''undercollection'' grew to about $750 million in a balancing account until California began buying power on behalf of the state's utility companies in February. ??Shames said the two-part deal announced by the governor is devoid of significant concessions by the utility and pays far too much for its transmission lines. This comes from the man who first suggested the state purchase of transmission lines from financially troubled utilities as a component of resolving the crisis caused by electricity deregulation. ??''I could not find anything in there of benefit to consumers,'' he said. ??In particular, Shames criticized the deal for crediting SDG&E with hundreds of millions in profits from power sales to the state. The consumer leader said these profits belong to ratepayers, a view that had been supported by the California Public Utilities Commission. ??Shames said further that SDG&E's payment of $100 million to settle claims regarding its power purchasing practices allows the utility to avoid scrutiny of how it bought power during a six-month period at the height of the electricity crisis. ??It remains unclear, he said, whether the agreement will win its required approval from the PUC. ??''It depends on how independent the commission is,'' Shames said. ''If they jump when the governor tells them to do something or if they maintain their constitutionally mandated independence.'' ??The president of SDG&E yesterday reiterated his view that the agreements involve concessions on the utility's behalf, including a contribution of $219 million in profits that SDG&E says were due its shareholders, not its customers. ??''We feel like we've done some great things for the customer here,'' said Edwin Guiles, the utility company president. ''This is win-win situation for our customers, the state and for SDG&E.'' ??WAGNER-CNS-SD-06-19-01 2224PST LOAD-DATE: June 20, 2001 ?????????????????????????????13 of 120 DOCUMENTS ??????????????????????Copyright 2001 / Los Angeles Times ??????????????????????????????Los Angeles Times ????????????????????June 20, 2001 Wednesday ?Home Edition SECTION: California; Part 2; Page 13; Opinion Desk LENGTH: 771 words HEADLINE: Commentary; ; The FERC's Action Is Good, Bad,Ugly BYLINE: PETER NAVARRO, Peter Navarro is an associate professor of economics and public, policy at UC Irvine. E-mail: pnavarro@uci.edu BODY: ??The Federal Energy Regulatory Commission's new wholesale price caps will save the Western states literally tens of billions of dollars in electricity bills. As wonderful as that sounds, the FERC order still allows wholesale generators to extract enough windfall profits to drive the region into recession. ??The FERC's approach may also perversely lead to more air pollution and natural gas shortages. ??Let's look at what the FERC did right. First, the order approved Monday establishes price caps on a 24/7 basis rather than simply during power emergencies--a long overdue reform. ??Second, the order protects the entire West, not just California. This regional cap will end "megawatt laundering," whereby in-state generators sold power across California lines and then resold it back into the state to evade caps. ??Third, the order closes the ridiculous broker loophole that made the FERC's previous price caps Swiss cheese. Before, generators could redirect their sales from the market to energy brokers who were exempt from the price caps. ??So where did the FERC go wrong? The problem may be traced to the two competing methods of imposing price caps and the all-important concept of "economic rent." ??Economic rent, in the wholesale electricity market, is the market price of electricity minus the producer's cost, where cost includes not just labor and fuel but a "fair profit" on the invested capital as well. In traditional regulation, this fair profit is calculated very simply as the market cost of the money borrowed to build the power plant. ??Under this definition, if the producer's cost is a nickel a kilowatt hour and he can sell it for 35 cents--as producers in the West have been doing--the producer can extract 30 cents of economic rent from consumers. ??In California, the extraction of such economic rent through market manipulation has taken place on a grand-theft scale. In 1999, California's electricity bill was about $7 billion. Last year, it was almost $30 billion for roughly the same amount of electricity. This year, California's bill is well on its way to $50 billion annually. ??To stop this rip-off, Gov. Gray Davis proposed "cost-based" price caps. Such caps are calculated on a plant-specific basis. Each generator is allowed to recover its cost of production, including the fair profit, but not a penny more. ??Thus, for example, a newer, highly efficient plant generating power at a nickel per kilowatt hour would collect a nickel. The oldest, least efficient plant that generated power for 20 cents would be allowed to collect 20 cents. ??By setting different prices for different plants, the economic rents are driven to zero. Yet each generator still has a fair profit incentive to produce. From a public policy perspective, it's the best of all possible worlds. And it was categorically rejected by the FERC. Instead, the FERC sets a single price for all generators based on the cost of the "least efficient plant." ??The obvious problem with this umbrella pricing rule is that it still allows generators to extract billions in economic rent from consumers. ??In our previous example, and under the FERC's rule, the least efficient plant still collects 20 cents a unit to recover costs. However, the most efficient plant producing power at a nickel-per-kilowatt also collects 20 cents rather than a nickel and thus extracts a full 15 cents of economic rent. ??Thus, under the FERC's rule, wholesale generators still will be able to capture tens of billions of dollars more from consumers and businesses than under Davis' cost-based rule. ??The FERC's approach is still subject to the same kind of strategic gaming that has been the hallmark of this crisis. Generators will ensure that during peak times, when the price cap is being established, the most expensive possible plant is in operation--whether it needs to be or not. This will peg the price at the highest level. ??In addition, the FERC provides generators with a perverse incentive to run their least efficient units more often. Since these least efficient plants are also the highest polluting, the result will be dirtier air. Moreover, the excessive running of these plants may also put a strain on already stretched natural gas supplies. These least efficient plants use up to 40% more natural gas to produce a unit of electricity. ??The bottom line: The FERC "done good." But it could have done a lot better. And the way things stand now, there still is a danger that higher electricity costs could push California and the rest of the West--and eventually the nation--into a nasty recession. LOAD-DATE: June 20, 2001 ?????????????????????????????14 of 120 DOCUMENTS ??????????????????????Copyright 2001 / Los Angeles Times ??????????????????????????????Los Angeles Times ????????????????????June 20, 2001 Wednesday ?Home Edition SECTION: California; Part 2; Page 7; Metro Desk LENGTH: 865 words HEADLINE: The State; THE ENERGY CRISIS; New Price Caps Not a Deterrent, Power Firms Say; Regulation: Producers are unhappy with the federal action but say it is unlikely to discourage them from constructing new plants. BYLINE: NANCY VOGEL, THOMAS S. MULLIGAN, TIMES STAFF WRITERS BODY: ??The expanded electricity price limits approved by federal regulators could squeeze big energy traders but will probably not discourage power plant construction in California, electricity producers said Tuesday. ??Power plant owners and marketers said they had not had time to digest the 53-page order and thus could not say exactly how it would affect California and the 10 other Western states it covers. ??But the companies generally asserted Tuesday that the order would not deter them from investing in the vast, power-starved Western region--though they have often raised such a prospect in arguing against price controls. ??Whatever its long-term effects, Monday's order by the Federal Energy Regulatory Commission appeared to have an immediate effect in dampening prices in California's volatile daily, or spot, market. ??The order does not take effect until today, but the prospect of new measures aimed at limiting prices appeared to tame markets Tuesday. Californians used more electricity at the late-afternoon peak than on any day this year, yet market prices hovered around $100 a megawatt-hour. ??That is well below the average of $284 a megawatt-hour that the state paid for electricity from January through April, with prices soaring as high as $ 1,900 at times of tight supply. ??"All the markets in the West have come down," said Mike Wilczek, senior power markets reporter for Platts, the energy market information division of the McGraw-Hill Cos. "It's bearish news." ??Nevertheless, several generators minimized the effects of the FERC order, contradicting earlier warnings from some industry sources and officials of the Bush administration who consider price limits to be impediments to future investment in power plants. ??"Calpine will have no problem operating under this order," said Joe Ronan, vice president of regulatory affairs for San Jose-based Calpine Corp., which has three power plants under construction in California and plans to build at least three others. ??The federal order lasts only until September 2002, he said, and because it sets prices based on the cost of running the most expensive, inefficient power plant in the market, it should guarantee the owners of modern plants a profit. ??Another company planning major investments in California, Duke Energy Corp. of North Carolina, said it will not be seriously affected by the federal order because it has sold the output of its four California plants well into the future. ??"We've already forward-sold 90% of our generation for 2001 and 70% for 2002," company spokesman Pat Mullen said. ??Reliant Energy Inc. of Houston, which owns five power plants in California, was not so sanguine about the federal order, but it has not backed away from plans to install more generators. ??"We remain committed to California, as hard as it is to do business here today," spokesman Richard Wheatley said. "We have plans that are on the drawing boards for at least one, possibly two projects." ??On Monday, Reliant Chief Executive Joe Bob Perkins called the FERC action "more of a political response" than an acknowledgment of the gap between electricity supply and demand in California. ??"Price caps don't work," Perkins said, and he warned California consumers against assuming that the energy crisis is over simply because wholesale electricity prices have recently dropped to their lowest levels in a year. ??Prices are falling because of mild weather, not price controls, he said. ??"Without sound economics that increase available supply and reduce peak demand . . . consumers can only hope for favorable weather and look forward to [rolling blackouts]," Perkins said. ??Energy analyst Frederick Schultz of Raymond James & Associates in Houston called the FERC order "a nonevent to the California generators" because so much of their power is now being sold through long-term contracts. ??However, every long-term deal reduces the size of the electricity market, which supplies about 20% of California's needs. And that, in turn, limits trading opportunities for such firms as Enron Corp., which profit on the daily market's ups and downs, Schultz said. ??Enron representatives did not respond to calls for comment. ??The federal order imposes round-the-clock price curbs on wholesale electricity sold in 11 Western states that are connected by transmission grids. ??Under the order, traders say, market prices will probably hover around $100 a megawatt-hour, depending upon the price of the natural gas that fuels most of the state's electric generating plants. Though that is well below recent market prices, it is higher than the average of about $32 a megawatt-hour that California utilities paid in 1999, before the state's deregulated market spiraled out of control. ??The FERC order dictates that the price for spot market electricity across the West will be based on the cost of producing one megawatt-hour of power at the least-efficient plant selling to California grid operators. May 31, when a previous FERC order based on a similar formula took effect, the price set was $ 127 a megawatt-hour. ??Vogel reported from Sacramento, Mulligan from New York. LOAD-DATE: June 20, 2001 ?????????????????????????????15 of 120 DOCUMENTS ??????????????????????Copyright 2001 / Los Angeles Times ??????????????????????????????Los Angeles Times ????????????????????June 20, 2001 Wednesday ?Home Edition SECTION: California; Part 2; Page 7; Metro Desk LENGTH: 704 words HEADLINE: The State; THE ENERGY CRISIS; Plan Won't Raise Rates, Davis Says; Edison: Governor seeks to assure Senate, where Democrats say action is a bailout of nearly bankrupt utility. BYLINE: CARL INGRAM, TIMES STAFF WRITER DATELINE: SACRAMENTO BODY: ??Gov. Gray Davis sought to assure the state Senate on Tuesday that his plan to save Southern California Edison from threatened financial collapse would work without increasing customer rates. ??Davis sent assurances to the Senate Energy Committee through his top attorney, Barry Goode, who helped negotiate the controversial proposal with the utility. ??Senate Republicans have taken a wait-and-see attitude on the plan. But they generally contend that the business of utilities belongs in the hands of private enterprise. ??But Democrats in both houses have charged that the deal between Democrat Davis and Edison represents a state bailout of the nearly bankrupt Rosemead-based utility. The analysis is shared by leading consumer activists. ??At the first in a series of Senate hearings on the package, which is considered all but dead in its current form, Sen. Byron Sher (D-Palo Alto) voiced concerns about political problems with the plan. ??He asked Goode, who was flanked at a witness table by Edison executives, whether monthly bills of the utility's customers would increase as a consequence of approval of the governor's package. ??"Our models say there will be no additional impact on the ratepayers," Goode replied. ??Other members appeared ready to pursue rate increase questions, but Chairwoman Debra Bowen (D-Marina del Rey) cut them short. She said the issue would be fully examined at a later hearing. ??To spare Edison from going into bankruptcy and to restore its credit- worthiness, Davis and executives of the utility reached a complex compromise in April, the centerpiece of which was a state purchase of Edison's transmission grid for about $2.8 billion, more than twice its book value. ??Edison has estimated that it owes $3.5 billion to creditors, including wholesale power generators, as a result of deregulation of retail electricity prices in 1996. ??Because of a freeze in retail rates, Edison was prohibited from passing its energy costs to customers. ??Other features of the deal include dedicating a portion of consumer rates to help pay off the debt, a guaranteed 11.6% rate of return to Edison on its sales and investments, and termination of an ongoing Public Utilities Commission investigation into financial dealings of Edison's parent company, Edison International. ??The energy committee held the hearing for fact-finding purposes and did not consider the Edison bill, SB 78x by Sen. Richard Polanco (D-Los Angeles). ??But the Davis-Edison deal has angered consumer activists, who contended that bankruptcy for Edison would be preferable. ??They deplored it as a bailout that would cost Edison customers $5 billion to $7 billion. ??"If the Legislature makes the mistake of forcing the ratepayers of California to pay one more penny to bail out these companies, we will put [an initiative] right on the ballot," said Harvey Rosenfield of the Foundation for Taxpayer and Consumer Rights. ??Consumer organizations in 1998 put to the voters an initiative to junk the 1996 deregulation law. The measure failed. ??Rosenfield, Harry Snyder of Consumers Union and Matt Freedman of the Utility Reform Network all asserted at a news conference that the Davis rescue program should be killed. ??Snyder, who opposed deregulation, said the governor's bill is shaping up as a replay of 1996. ??"It's too big, too complicated. . . . This is the same process that brought about this [deregulation] disaster," Snyder said. ??Separately, San Diego Gas & Electric agreed Monday to sell its transmission grid to the state for about $1 billion on the same terms as Edison. ??With all the controversy surrounding the Edison deal, the chance of SDG&E winning legislative approval of its sale is slightly better than 50%, said Stephen L. Baum, chief executive of Sempra Energy, parent of SDG&E. ??"I think there's a widely shared view in the Legislature that they don't want the state in the long-term business of power procurement. . . . In order to get Edison back into that business there has to be this infusion of capital" to pay off past electricity debts and make the utility credit-worthy, Baum said. ??Times staff writer Nancy Rivera Brooks contributed to this story. LOAD-DATE: June 20, 2001 ?????????????????????????????16 of 120 DOCUMENTS ??????????????????????Copyright 2001 / Los Angeles Times ??????????????????????????????Los Angeles Times ????????????????????June 20, 2001 Wednesday ?Home Edition SECTION: California; Part 2; Page 3; Metro Desk LENGTH: 771 words HEADLINE: Los Angeles; ; France and California--Vive the Differences and Similarities BYLINE: PATT MORRISON BODY: ??Did you happen to feel it? That sudden impulse to buy gas by the liter? A furtive urge to smoke a foul, unfiltered cigarette? Did you wonder what was going on? ??I'll tell you what it was: California has burst out like Lance Armstrong passing the pack in the fiscal Tour de France. The Bear Flag Republic, all by itself, has overtaken La Belle France to become the Chanel No. 5 of the world of wealth, the fifth most powerful economic force du monde and gaining on Germany and Japan and Mother England and the other 49 states put together. In sum, our GDP now is bigger than their GDP. ??But California is not Bismarck's Germany. So the Golden State was more gilded than Gaul by about 50 billion; it is not our style to grind the loser ignominiously into the dust. We are more than a benevolent nation-state; we are the world. We bestowed Euro Disney on France, and allowed Marcel Marceau into the country. ??Differences? Bien sur. Californians cavort in the streets for a champion basketball team; the French break out the confetti for poets. ??The French get six weeks' vacation, your average Californian gets two. Maybe that's why we are the world's cinquieme economic engine and France is sucking our low-emission fumes. (The laid-back Californian was the malicious invention of East Coast pundits. Farmers and movie stars, our rugged pioneer forebears, both start work at the crack of dawn.) ??France gets its electricity from nuclear power, we get ours from Texas' power. ??California was glad to let nuclear bombs be tested in Nevada, home of a fake Eiffel Tower; France tries out its nuclear arsenal in the South Pacific, far from the real Eiffel Tower. ??The French very sensibly take their dogs to restaurants and leave their children at home. Californians, regrettably, do it the other way around. ??France is pretty creeped out by Scientology. Here it's the state religion of Hollywood. ??The French revere their language. We treat ours like Silly Putty. ??Hollywood grinds out the entertainment that makes the French intelligentsia scream about cultural imperialism (even as your average Jean eats it up). Last week, Sumner Redstone, that ubermaster of Viacom, Paramount, MTV, UPN and half the known entertainment world, told me with breezy contempt, "People all over the world . . . they want American movies. They don't want French movies." ??In France you can get red wine at McDonald's. Until recently, in Orange County you couldn't order red wine at the Performing Arts Center lest you spilled it on the white carpets. (The vines that made Los Angeles a winemaking powerhouse in the 19th century were imported by a French immigrant named Vignes.) ??France preens itself on the Concorde. California birthed the Stealth bomber. Paris has the Jeu de Paume museum, and a museum of locks. Los Angeles has MOCA, and a bra museum. ??A French company named Vivendi makes movies at Universal. A California company named Kaufman and Broad builds suburbs in France. ??The French believe in public transit. Californians believe in the sanctity of one-man, one-car. L.A. is considering hiring a French firm to build its bus shelters. During Los Angeles' transit strike, Mayor Riordan set a good example by bicycling--except that he did it in France. ??And yet we look in the mirror and see something of each other. California goes its own stubborn way in the U.S. just as France charts its own wayward course in Europe. ??Parisians feel kinship with San Franciscans; both have miserable summer weather. Southern California is more south-of-France-friendly; Cannes and Beverly Hills are sister cities. ??California and France are the makers of fashion and food style. Maitres Splichal and Puck trained in the best kitchens in France; Alice Waters, the mother of California cuisine, was invited to open a restaurant near the sacred precincts of the Louvre. ??France and California both have moderate-minded Roman Catholic cardinals named Roger. Marie Antoinette, important Frenchwoman, lost her head to the mob. Rose Bird, important California woman, had her head handed to her by voters. ??So rest easy, France. We may have passed you, but we won't forget you. We are too much alike. ??Charles DeGaulle observed pungently that "Only peril can bring the French together. One can't impose unity out of the blue on a country that has 265 different kinds of cheese." ??Gray Davis, governor of a nation-state with a hundred different kinds of athletic shoes, united only by perils natural and man-made, would understand perfectly. ??* ??Patt Morrison's column appears Wednesdays. Her e-mail is patt.morrison@latimes.com LOAD-DATE: June 20, 2001 ?????????????????????????????17 of 120 DOCUMENTS ??????????????????????Copyright 2001 / Los Angeles Times ??????????????????????????????Los Angeles Times ????????????????????June 20, 2001 Wednesday ?Home Edition SECTION: California; Part 2; Page 1; Metro Desk LENGTH: 820 words HEADLINE: State to Pay Electric Bill With Loan, Not Taxes BYLINE: MIGUEL BUSTILLO, TIMES STAFF WRITER DATELINE: SACRAMENTO BODY: ??California taxpayers, who have had to bankroll billions of dollars in electricity purchases for the teetering power utilities, will soon no longer see their money evaporate at record rates, under an executive order by Gov. Gray Davis. ??As early as next week, the order will stop the hemorrhaging of the state budget by allowing Treasurer Phil Angelides to borrow $5 billion to buy electricity. That money is expected to cover power purchases until this fall, when the state plans to sell an unprecedented $12.5 billion in bonds to repay the general tax fund and buy future electricity. ??Angelides said Tuesday that he has already lined up $3.5 billion in loans from two Wall Street firms, and expects to secure at least another billion by next week, when he plans to close the deal and obtain the money. ??The loan is critical, he said, because without it, electricity purchases would completely deplete state coffers as early as October. ??"In essence, it stops the general-fund bleeding," Angelides said. "What this interim financing does is take the pressure off the general fund and, hopefully, avert a cash crisis." ??The loan could also ease concerns on Wall Street that California's risky entry into the power business has placed the state budget in a precarious position. Those concerns were one of the main reasons two major credit rating agencies downgraded the state earlier this year. ??"We have been looking forward to this day," said Ray Murphy, a vice president at Moody's Investors Service, one of the two firms that downgraded California's credit rating. "We view this as a positive first step toward getting the state out of the power business. We wanted the state to get the general fund out of the business as quickly as possible." ??California has allocated $8.2 billion in taxpayer money for electricity since January because the state's private utilities became too saddled with debt to continue purchasing power on the open market. and massive blackouts loomed. ??Under a plan devised by Davis and approved by the Legislature, the state budget is supposed to be reimbursed for the power purchases with the bond issue, the largest in American history. The bonds, in turn, are to be paid off by utility ratepayers through their monthly bills. ??The bond issue, however, has been delayed by partisan politics and complex legal issues raised by the bankruptcy of Pacific Gas & Electric Co., the state's largest private utility. ??A bond sale initially planned for May is now scheduled for late September, according to Angelides' latest estimate. The state's Public Utilities Commission still needs to take a number of technical actions before the sale can take place. ??As a result, the state budget has been drained for power purchases far longer than initially anticipated--a situation that has imperiled spending on education, transportation and other critical needs, at least temporarily. ??Angelides had earlier sought to secure a $4-billion bridge loan to repay the state budget for power purchases until the bonds were sold, but was rebuffed by Republicans in the Legislature, who argued that the loan was not necessary. ??Davis' executive order, issued late Monday as part of the Democratic governor's emergency powers during the energy crisis, gives Angelides the authority to press ahead. ??But it does not allow the treasurer to use the loan to repay the budget for the billions spent so far this year on electricity, as he had originally intended. Rather, it permits Angelides to use the loan proceeds to assist the Department of Water Resources, the state agency buying power, with its future electricity expenses. ??If the bond issue is further delayed, Angelides estimated, the loan would gives California another four to six months before it would begin to run out of money. Furthermore, the loan closes a potential loophole that existed in the long-term contracts Davis had signed to stabilize the cost of electricity, which would have let power suppliers walk away from the deals if the state had not secured a source of financing by next month. ??But Republicans warned that by entering into a bridge loan deal without knowing when the bonds would be sold, Davis and the Democrats were incurring major risks that could further drive up the price tag of the crisis. ??The loan carries a blended interest rate of about 4.5%, but if it is not repaid by Oct. 31, the rate jumps to 7%. Because the loan is to be repaid by the bonds, which have been marred by a history of delay, GOP officials Tuesday were already calling the bridge loan a "bridge to nowhere." ??"The thing that is most troubling is that the governor did not bother to consult with anyone," said Assembly Republican leader Dave Cox (R-Fair Oaks), who learned of Davis' order from reporters. "It's disappointing, but the governor does not seem to recognize there is a legislative branch." LOAD-DATE: June 20, 2001 ?????????????????????????????18 of 120 DOCUMENTS ??????????????????????Copyright 2001 / Los Angeles Times ??????????????????????????????Los Angeles Times ????????????????????June 20, 2001 Wednesday ?Home Edition SECTION: Part A; Part 1; Page 15; National Desk LENGTH: 1163 words HEADLINE: THE ENERGY CRISIS; ; FERC Move Short-Circuits Push for Hard Price Caps BYLINE: RICHARD T. COOPER, JANET HOOK, TIMES STAFF WRITERS DATELINE: WASHINGTON BODY: ??The Federal Energy Regulatory Commission's decision to impose full-time price ceilings on wholesale electricity in California and the West appears to have deflated the congressional drive for a return to traditional utility regulation. ??Sen. Dianne Feinstein (D-Calif.), calling the "price mitigation" system FERC unveiled Monday "a giant step forward," announced Tuesday that she is pulling back her bill to force a return to the "cost of service" pricing system that prevailed before deregulation. Republican Sen. Gordon Smith of Oregon, a co-sponsor, agreed, as did Sen. Jeff Bingaman (D-N.M.), chairman of the Senate Energy Committee. ??House Democrats vowed to fight on for tougher controls, but they were given little chance to succeed. ??As a result, although the political blame game will rage on, the reality of a long, ugly summer for California appears to have arrived: at least several months of tears, toil, sweat--and fast-rising electric bills. ??California consumers are likely to face an unpleasant paradox, energy analysts said: Given present power shortages, blackouts are virtually inevitable this summer. And, since state authorities are beginning to let high wholesale prices flow through into retail bills after months of subsidies, many consumers could face higher charges at the same time their lights begin to flicker. ??Even if FERC's order succeeds and wholesale prices fall, as they have begun to do in recent weeks, consumers' bills are likely to rise. Since retail charges lag well behind wholesale prices, closing the gap will probably mean a period of higher costs for consumers, regardless of what happens in wholesale markets. ??There is light at the end of the tunnel, energy analysts said, but it is probably a year away. And reaching it, they said, depends in part on government officials taking no action that might spook investors and disrupt present plans for expanding the region's capacity to generate and deliver more power. ??The new FERC system, which its designers said would provide temporary price relief while preserving incentives for energy investment, imposes cost-based curbs on wholesale prices throughout the West and covers all such sales, not just those during periods of extreme shortages, as did the order issued in April. ??FERC Chairman Curtis L. Hebert Jr. told the committee the new system will prevent "megawatt laundering" and other potential abuses. He said his agency is "committed to ferreting out any forms of market misbehavior 24 hours a day, seven days a week." ??With the apparent collapse of demands for more intervention, Congress now seems ready to give FERC a year or more of leeway to see whether its plan will curb wholesale prices and create what FERC member Linda Breathitt, a Democrat, called "a breathing spell" in which California and the West can "repair their dysfunctional markets." ??"It still remains to be seen whether there can be manipulation, but I think we should wait and see," Feinstein said Tuesday at a Senate Energy Committee meeting attended by all five FERC members. The commissioners call their new system "price mitigation," not price caps, but Feinstein said it amounts to the same thing. ??"Whether you call it price mitigation or something else, a rose is a rose is a rose," said Feinstein, a member of the energy committee. ??And Sen. Barbara Boxer (D-Calif.), appearing before the committee as a witness, said: "I was very pleased with [Monday's] about-face by FERC. I believe they have a new tone." ??Democrats on the other side of the Capitol pledged to keep fighting for traditional regulation, but with Republicans in control of the House, the struggle appears to be largely symbolic. ??House Democrats wanted to introduce amendments on price controls and other energy policy to a mid-year supplemental appropriation bill due to come before the House today. However, GOP leaders expected to block Democrats from even offering the amendments on procedural grounds. ??The most sweeping of the amendments would set cost-based limits on wholesale energy prices in the West. Rep. Henry A. Waxman (D-Los Angeles) and other sponsors insisted that the measure is still needed in spite of the FERC action, which he said would continue to provide windfall profits to generators, encourage suppliers to withhold power and do too little to restrain the price of natural gas. ??He called the FERC policy an "experiment" that is using California and other Western states as subjects. ??Similarly, Rep. Nancy Pelosi (D-San Francisco) said: "Although the FERC decision [Monday] is a step in the right direction, I am concerned it does not remove incentives for energy suppliers to withhold power, drive up prices and gouge consumers." ??The commission went as far as it did in part because of the specter of broader price control legislation, Pelosi said. "They felt the heat, they saw the amendments coming and decided to act." ??And Rep. Bob Filner (D-San Diego), in an interview Tuesday, said he will press ahead with legislation to impose hard price caps. "I would advise the senators that after a year of dealing with these price gougers that they will easily manipulate this latest order," he said, calling it a "Swiss cheese order--full of holes." ??Feinstein's shift put House Democrats in an awkward political position because it came just as they prepared to make their big push for tougher controls. But the Democrats tried to minimize the differences in legislative strategy. ??"She too is waiting to see if the FERC experiment works," Waxman said. "I'm a little more skeptical, but we're both watching carefully." ??As a political matter, a Democratic leadership aide acknowledged, the FERC order muddies the debate at a time when Democrats have been working hard to make it a defining issue--and one they had hoped would help them win control of the House in the 2002 elections. ??"It's hard to describe to people what the difference is between what we want and what FERC has done," said the aide. ??And Republicans said FERC's action had clearly taken the wind out of the sails of price control efforts that some GOP strategists feared might have passed the House. ??"I would have thought [it would pass] last week," said John Feehery, spokesman for House Speaker J. Dennis Hastert (R-Ill.). "But now, with what FERC did, it takes a lot of air out of the balloon." ??"I think the FERC action will dissipate that strong push," agreed Emily Miller, a spokeswoman for House Majority Whip Tom DeLay (R-Texas). "It will take the heat off." ??House Majority Leader Dick Armey (R-Texas) said the message to Democrats was, "It's time to come off your political high horse." ??He said he wanted to keep Democrats from offering their price control amendment to Wednesday's supplemental appropriation bill because the proposal is "a political statement, not a policy statement." ??* ??Times staff writers Megan Garvey and Richard Simon contributed to this story. GRAPHIC: PHOTO: (lead photo) Federal energy regulators testify before the Senate Energy Commission on power prices. From left are Patrick H. Wood III, Linda Breathitt, Curtis L. Hebert Jr. and William L. Massey. PHOTOGRAPHER: Associated Press LOAD-DATE: June 20, 2001 ?????????????????????????????19 of 120 DOCUMENTS ??????????????????????Copyright 2001 / Los Angeles Times ??????????????????????????????Los Angeles Times ????????????????????June 20, 2001 Wednesday ?Home Edition SECTION: Part A; Part 1; Page 1; National Desk LENGTH: 1508 words HEADLINE: NEWS ANALYSIS; Energy on Agenda, but Issue Is Blame; Politics: Gov. Davis will try to sway voter anger toward the GOP as he faces a Senate panel. BYLINE: RONALD BROWNSTEIN, TIMES POLITICAL WRITER DATELINE: WASHINGTON BODY: ??When California Gov. Gray Davis testifies at a high-profile Senate hearing today, the issue formally on the table will be the expanded electricity price controls that federal regulators approved this week. But the session's political subtext will be the escalating struggle between Davis and national Republicans to determine where California voters look for solutions--and blame--for the state's power woes. ??In both California and Washington, Republican strategists believe Davis is trying to manufacture a succession of conflicts with the White House that will allow him to run in 2002 as much against President Bush as against whomever the state GOP nominates in the gubernatorial race. In return, Republicans are trying to shift the focus back toward Davis--most aggressively through a California-wide television advertising campaign organized by Scott Reed, a former executive director of the Republican National Committee. ??"Our goal is to get the focus back to Sacramento, where it belongs," Reed said. ??Both sides see the same prize in this tug of war: the opportunity to determine where most Californians direct their anger during what could be a long, hot summer of power shortages. ??"The situation is that the public's minds are not made up on this issue--whether it is Sacramento or Washington who has acted too little, too late," said Mark Baldassare, a pollster at the independent Public Policy Institute of California. "That gives both sides an opportunity to get their messages out. The stakes are fairly high in terms of how the public in California ends up assessing blame over the next few months." ??A Slight Uptick in Davis' Popularity ??Overall, Davis' political situation appears to be stabilizing. After months of runaway power costs, the prices the state pays for wholesale electricity are falling and new plants will come online next month. And following a free fall in private polls, Davis has seen his numbers tick back up slightly. Similarly, a poll financed by independent power generators showed that in mid-June, for the first time in months, Californians were becoming slightly more confident that the crisis is easing. ??Within the state Capitol, Davis is asserting himself, demanding that lawmakers hold hearings on his rescue plan for Southern California Edison. On Monday, he released details of a similar plan for San Diego Gas & Electric. Last week, he announced an agreement that is likely to increase generation by alternative energy producers, who account for about a fourth of the state's supply. ??"This guy is changing," said state Sen. Steve Peace (D-El Cajon), who a few months back had been urging that Davis take a more aggressive stance on the crisis. "There is a difference in his demeanor and focus." ??Yet the energy crisis still looms as a vast cloud over a reelection campaign that once looked like a stroll on the beach. ??The paradox for Davis is that the substantive victory for price-control advocates at the Federal Energy Regulatory Commission meeting this week may complicate his political goal of maintaining a heavy focus on Washington. Though Davis and some congressional Democrats portrayed FERC's decision as insufficient, it appears to have lanced the pressure for federal legislation to impose the tighter price controls that Davis supports. ??Sen. Dianne Feinstein (D-Calif.), a principal sponsor of that bill, on Tuesday announced she would shelve the measure for six months to give the new FERC plan time to work. ??As a result, the political effect of the FERC ruling could be to shift the focus away from Washington back toward decisions in Sacramento, which is exactly what Republicans prefer. "Gray Davis is the dog that finally caught the car," said Dan Schnur, a San Francisco-based GOP consultant. "Davis is going to keep screaming about price caps and refunds, but now Republicans can point to substantive action." ??Davis: 'Much More They Should Do' ??For months, Davis has criticized Bush for refusing to support electricity price controls and other measures that the governor says could ease California's energy crunch. At almost every opportunity, Davis offers the same message: California is taking the steps it needs to, but Washington has failed to help enough. That was precisely Davis' message Monday when FERC significantly expanded the limited price caps it had imposed previously. ??While saying that FERC had "finally taken a step in the right direction," Davis added: "There is much more they should do"--including providing refunds to California for alleged overcharges. The overall tone of Davis' statement was much more skeptical about FERC's action than the remarks from Feinstein, who described the decision as "a giant step forward." ??Aides say Davis plans to repeat that two-part message in his appearance today before the Senate Governmental Affairs Committee, chaired by Sen. Joseph I. Lieberman (D-Conn.). In his testimony, and in a round of scheduled television appearances, Davis will demand that FERC order refunds in the range of $5 billion to $6 billion to the state, aides said. Davis also will distribute to every member of Congress a 177-page book chronicling the state's response to the crisis. ??Inside the Bush White House, some officials see in Davis' cool response to FERC's decision more evidence that the governor is determined to use the White House as a foil in his reelection campaign. The prevailing view, one official said, is that, no matter what concessions the administration offers, Davis will immediately raise the bar and demand something else--the way he did by talking about rebates as soon as FERC offered tougher price controls. ??"That is Davis' M.O.," said one official involved in the White House's energy strategy. "He asks the administration to do something, the administration does it, and then he attacks the administration for not doing enough. . . . He needs someone to blame." ??Davis aides reject that characterization, arguing that the governor is merely representing the state's interests against an administration that they maintain is favoring energy producers over consumers. But Davis advisors acknowledge that they have used focus groups to test campaign messages that pin the blame for the energy crunch primarily on Davis' Republican predecessor, Pete Wilson, and a "Republican president who has failed to stop his rich friends in the energy industry" from gouging consumers, one aide said. ??"You don't have to tell people in focus groups more than once how this is connected," the Davis aide said. ??Gubernatorial Rivals Are Free of Blame ??Baldassare, the independent pollster, notes it may be especially imperative for Davis to keep Bush's energy decisions in the spotlight because none of his potential Republican opponents in 2002--California Secretary of State Bill Jones, former Los Angeles Mayor Richard Riordan or businessman William E. Simon Jr.--is easily tagged with complicity in the problem. "None of them were really involved in the decision-making over deregulation," Baldassare said. "The only one else to blame, in a political sense, is Washington and the Bush administration." ??The new independent advertising campaign against Davis was inspired largely by the fear of that strategy succeeding--damaging the standing in California not only of Bush but also of other Republicans, particularly those in Congress. Reed, whose American Taxpayers Alliance is funding the ads, said he decided to launch the campaign after Davis appeared to gain the upper hand in the media debate following Bush's visit to California late last month. ??"The Bush trip really changed the terms of debate about Davis' problem and made it more of a possible national Republican problem," Reed said. "The entire terms of debate turned around and was focused on the issue of price caps as opposed to negligence on Davis' behalf. Our group is attempting to go out and engage Davis." ??To "engage" Davis, Reed's group, which has not revealed its donors, is spending what he said would be $1.5 million on an initial ad criticizing Davis this week, though a spot check of TV stations around the state indicated a far more modest buy. Reed said the group is planning to air a new ad as soon as this week. ??Democrats plan to answer the ads with attacks of their own and will be filing complaints with the IRS and other federal agencies about the anonymous funding of the Reed ad. ??Today's Senate hearing will give Davis another chance to respond to the GOP and make his case for greater help from Washington. But Lieberman aides acknowledge the hearing is likely to be much less confrontational than it would have been if FERC had not acted Monday. The agency's decision "changed the dynamic," the aide said. ??That assessment may apply not only to the conflict between FERC and its critics but also equally to the hostilities between Davis and the White House. ??* ??Times staff writers Dan Morain in Sacramento and Mark Z. Barabak in Los Angeles contributed to this story. LOAD-DATE: June 20, 2001 ?????????????????????????????20 of 120 DOCUMENTS ??????????????????????Copyright 2001 / Los Angeles Times ??????????????????????????????Los Angeles Times ????????????????????June 20, 2001 Wednesday ?Home Edition SECTION: Part A; Part 1; Page 1; Metro Desk LENGTH: 2450 words HEADLINE: COLUMN ONE; Blackout Forecasts' Dark Side; * If optimists are wrong and the power runs out, California's energy crisis could quickly cost lives and cripple the economy. BYLINE: JENIFER WARREN, TIMES STAFF WRITER BODY: ??It's here. Summer 2001, the blackout season, is only a day away. ??Already Californians anticipate power outages when temperatures rise. By August, the occasional annoyances endured so far--stoplights gone dark, computers, air conditioners and elevators idled--could seem almost quaint. ??Gov. Gray Davis insists we needn't worry. Four large new power plants are firing up soon, he said, and government's best and brightest are locking up still more megawatts to help meet our peak summer need. Californians, Davis predicts, will valiantly heed his call to conserve, helping the state survive the hot months, no sweat. ??With luck, he'll be right. Power prices have stabilized, and some energy analysts are wondering whether California may have tamed the blackout beast. ??But what if those plants don't get built in time, people don't trim their electricity use 7% and energy imports are more meager than expected? ??And what if the state gets hit by a summer that is not moderately hot, as Davis bets, but blistering, record-setting hot? ??Government experts who ponder such questions don't expect disaster in the coming months. But they are planning for it nonetheless. ??At best, they say, Californians can expect some gridlocked intersections, an occasionally overloaded 911 system, perhaps some business bankruptcies, certainly inconvenience. At worst, the Western power grid could crash, causing uncontrolled blackouts that might lead to looting, contaminated water supplies, even civil unrest. ??"How bad could this summer get?" said state Sen. Joe Dunn (D-Santa Ana). "This summer could be the worst disaster to ever hit the state of California." ??Imagine it's a Thursday morning in the third week of July. Relentless heat grips California, the curse of a stubborn high-pressure ridge that just won't budge. ??As air conditioners from Redding to Chula Vista lumber to life, managers of the state's power grid in Folsom gulp their third and fourth cups of coffee, stare at a bank of computers and begin to fret. ??Demand is jumping. Supply is static, Canada and Arizona have nothing to sell. It's looking tight. ??Thirty minutes later, the picture is gloomier. A brush fire shuts down transmission lines near Fresno, squeezing supply in the Central Valley. In the Bay Area, the unusual heat drives demand well past projections. ??By noon things look bleak. Operators of the Diablo Canyon nuclear power plant near San Luis Obispo have cut output by 80%. The trouble? Chunks of kelp have lodged in one of the plant's seawater intake valves, creating a clog like one that plagued the facility in January. ??With a chorus of groans, the grid's keepers scour the market for power to offset the Diablo loss. No luck. As the mercury climbs and the Golden State economy roars into full swing, electricity consumption ticks upward, minute by minute. And when managers of a power plant near Long Beach cut output because of a cracked turbine, everyone knows what it means. ??Alert the utilities. It's lights out, California, for the fourth day in a row. ??Dr. J. Michael Leary dreads blackouts--not personally, but professionally. Leary is an emergency room physician in the desert city of Rancho Mirage. When air conditioners go on the blink there, the victims--scores of them, mostly old folks--wind up in his ER. ??In a normal year, 75% of his emergency patients are geriatrics. Like infants, the elderly are unusually vulnerable to the heat. When blackouts hit, they are most at risk. ??"It's as if you lived in Maine and they turned the heat off in January," Leary said. "This is an extreme environment we live in. The effects can be devastating." ??Many desert seniors are on fixed incomes and live in mobile homes, some of them poorly insulated boxes that turn into ovens under the brutal summer sun. Take away the air conditioning and the humans inside start baking, quick. ??For Leary, the specter of continual, back-to-back blackouts in July--and, some predict, in June and August too--conjures images of an 82-year-old man, living alone in one of those mobile homes, taking medication for heart disease. The cardiovascular drugs plague the man with numerous side effects; one inhibits his body's ability to cool itself. ??When a person gets overheated, body temperature eventually rises uncontrollably. Then comes a nasty spiral of effects, and pretty soon "you go into shock," Leary said. "Everything just shuts down." ??On average each year, 371 Americans die from heat-related causes, more than the number killed by earthquakes, tornadoes, hurricanes, lightning and floods combined. In 1995, a record hot spell in Chicago killed 465 people. Eleven Californians died from the heat in 1998. ??A new report by the United Seniors Assn. predicts that more than half a million elderly Californians could need hospitalization for heat-related ailments this summer. ??Some communities have laid plans for cooling shelters, wading pools and other measures to provide relief. But will all who need help get it? Or get it in time? ??Out in the desert, paramedics expect a crush of 911 calls when the power goes out and the ill, frail and frightened seek help. Leary and others at Eisenhower Medical Center will be waiting, armed with ice packs, cooled IVs and ventilators. ??"I am very, very worried," the doctor said. "I think we'll see a great toll in human suffering, even mortality." ??California's tomato processors are no less anxious. They wash, cook, peel, chop, mash and can about 1 million tons of tomatoes a week from July to October--enough to account for half the world's supply. For them, a string of unexpected power losses could mean economic ruin in a matter of days. ??The reason lies in the peculiar nature of food processing--a sterile system instantly contaminated if the power fails and the plant's precise temperature is disturbed. ??Once a batch of tomatoes is tainted, it must be thrown out--all 50,000 pounds. The plant must then be sanitized, a painstaking process that takes about 36 hours. ??"If you get hit by blackouts every third day for, say, two weeks, you're starting, stopping, cleaning, restarting--it's a nightmare," said Jeff Boese, president of the California League of Food Processors. "You could lose three batches and be out $40 million before you knew what hit you." ??Meanwhile, farmers with still more truckloads of tomatoes line up outside the plant, waiting to be paid for their crop: "If we can't process them, the farmers have spent an entire season growing them for nothing," Boese said. ??In Sonoma County, the object in peril is the chicken. Egg producers equip their laying houses with fans and swamp coolers to keep the hens comfortable. Power is also needed to run giant refrigerators filled with eggs. ??"In a blackout, those hens can overheat in no time," said Rich Matteis of the Pacific Egg and Poultry Assn. "In 20 or 30 minutes, you could have 100,000 birds die." ??Many large producers have backup generators, but they are not designed for ongoing, intensive use. Will they hold up? Small-scale egg producers often have no backup power at all. ??Hundreds of other California businesses could suffer if summer shapes up as bad as some predict. ??The Valero Refining Co. of California, northeast of San Francisco, produces 115,000 barrels of gasoline a day. Because restarting a refinery is a complicated task, two or three blackouts close together could prompt officials to shutter it until electricity supplies stabilize--costing California about 10% of its gasoline supply. ??At a Berkeley medical laboratory, doctors say power losses to their freezers could destroy bone marrow needed to give young leukemia patients lifesaving transplants. The state's 400 dialysis centers, where patients without kidney function go to have their blood cleansed every other day, are in the same fix. Few have backup generators, so when an outage hits, technicians must crank the machines by hand. ??Most Californians, of course, face far more ordinary consequences. The scoreboards will fizzle at summer softball games, joggers on treadmills will be stopped in their tracks, electric organs will go silent, leaving choirs to sing without accompaniment. ??Parents will be asked to retrieve children from day-care centers when the lights and cooling systems conk out. Anniversary lunches may be ruined when restaurants cannot grill salmon or blend margaritas. ??Most people will tolerate occasional disturbances, psychologists say, doing their part in a time of crisis. But what if such irritations become an everyday fact of life? ??Hundreds of "essential" energy users--including prisons, fire departments and airports--are protected from blackouts, and hundreds more have applied for exemptions. That means the pool of people bearing the blackout burden is shrinking, so more frequent outages are likely. ??Blackout predictions vary widely, but at least one forecaster, a consultant for California water districts, anticipates an outage almost every afternoon of every workday this summer if temperatures are unusually warm. ??Californians are accustomed to trash compactors, giant-screen TVs and having the Internet at their fingertips. How much deprivation will they tolerate? ??"So far, the version of blackouts we've experienced hasn't looked too scary to people--it happens on a workday, in the afternoon, and you basically have to come home and reset your VCR," said Dan Kammen, a professor of energy and society at UC Berkeley. ??But if outages become daily events, and start to invade the evening hours, the public mood could change abruptly. ??"When there's a disaster or crisis or trauma, people tend to act heroically and work together," said Robert Butterworth, a Los Angeles psychologist and trauma specialist. "But the civilized behavior only lasts a short period. Then people start acting in unpredictable ways." ??That tendency may be exacerbated, Butterworth said, by the nature of the energy crisis--not a natural disaster, but a man-made one. ??"People start to look for a scapegoat," he said. "People will look for a target, and there's a tendency to strike out at whoever is closest to you." ??One place that tendency may surface, Butterworth said, is on traffic-clogged roads. Blackouts already have led to scores of accidents. Add summer heat to the mix, and repeat the pattern day after day at rush hour, and motorists' patience could wear thin, law enforcement officials say. ??"We're bracing for . . . possible acts of violence and road rage," said Sacramento County Sheriff's Lt. Larry Saunders. ??Lon House is the water consultant who predicts California could see blackouts almost every summer weekday. Among the worries for the 440 water agencies he represents: losing the ability to pump water during wildfire season. ??"I'm telling them to be ready for a major earthquake every day this summer--meaning all your power is out throughout your district for multiple hours," House said. ??House insists he isn't an alarmist. But on top of the fire fears, he warns that blackouts of more than a few hours would allow air into water pipes, contaminating supplies. If that happens, Californians would be urged to boil their water until the system can be disinfected from one end of the pipe to the other. ??Though rolling blackouts are risky, they remain essentially a controlled phenomenon, occurring when and where the grid managers and utilities decide. Far more frightening--and devastating--are unexpected, cascading outages that could shut down the entire Western power grid. It happened in August 1996, leaving 4 million people without power during a triple-digit heat wave. ??The problem began when power lines in Oregon sagged into trees and shut themselves off. That triggered a chain reaction of automatic switch-offs and oscillating surges of energy that ultimately shut down all four of the main power arteries between California and the Pacific Northwest. ??That robbed the system of thousands of megawatts--enough to power four cities the size of Seattle for four days--and scattered outages across California and six other Western states. Thousands of customers were without power for more than a day. ??Though such an episode is rare, California grid managers say it is more likely today because the system is taxed by the ever-increasing load of electricity it bears. ??"The system is very dynamic, and when it's heavily loaded and highly stressed, like it is now, the smallest little thing could cause big trouble," said Kevin Bakker, who oversees California's connection to the greater Western power grid. ??If a massive, uncontrolled outage should hit, the ramifications could be dizzying, said Mike Guerin, chief of law enforcement for the state Office of Emergency Services. Police departments would probably go to tactical alert, guarding against looting by criminals who might take advantage of disabled alarm systems and darkened street lights. ??In hot areas, cities might convert municipal buses--parked with air conditioners running--into cooling shelters, Guerin said. The state would provide emergency generators to nursing homes and others in need, while the Califor
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